The Chefs’ Warehouse Reports First Quarter 2021 Financial Results
Financial highlights for the first quarter of 2021:
- Net sales decreased 25.4% to
$280.2 million for the first quarter of 2021 from$375.4 million for the first quarter of 2020. - GAAP net loss was
$17.9 million , or$(0.49) per diluted share, for the first quarter of 2021 compared to net loss of$14.1 million , or$(0.48) per diluted share, in the first quarter of 2020. - Adjusted EPS1 was
$(0.50) for the first quarter of 2021 compared to$(0.60) for the first quarter of 2020. - Adjusted EBITDA1 was
$(9.5) million for the first quarter of 2021 compared to$(13.8) million for the first quarter of 2020.
“As anticipated, January and February business activity were significantly impacted by the COVID related restrictions implemented during the fourth quarter of 2020,” said
First Quarter Fiscal 2021 Results
Net sales for the quarter ended
Gross profit decreased approximately 31.0% to
Selling, general and administrative expenses decreased by approximately 26.3% to
Other operating income decreased by approximately
Operating loss for the first quarter of 2021 was
Total interest expense decreased to
Net loss for the first quarter of 2021 was
Adjusted EBITDA1 was
___________
1EBITDA, Adjusted EBITDA, adjusted net income (loss) and adjusted EPS are non-GAAP measures. Please see the schedules accompanying this earnings release for a reconciliation of EBITDA, Adjusted EBITDA, adjusted net income (loss) and adjusted EPS to these measures’ most directly comparable GAAP measure.
Full Year 2021 Guidance
Due to the continued uncertainty regarding the pace of broader economic recovery, lifting of in-room-dining restrictions across key markets, and the timing of event and travel related business activity, the Company will not be providing guidance for 2021 at this time. The Company will look to provide guidance as it gains more clarity as to the pace of recovery and outlook regarding these conditions and the broader COVID-19 related environment.
First Quarter 2021 Earnings Conference Call
The Company will host a conference call to discuss first quarter 2021 financial results today at
Forward-Looking Statements
Statements in this press release regarding the Company’s business that are not historical facts are “forward-looking statements” that involve risks and uncertainties and are based on current expectations and management estimates; actual results may differ materially. The risks and uncertainties which could impact these statements include, but are not limited to the following: our sensitivity to general economic conditions, including disposable income levels and changes in consumer discretionary spending; our ability to expand our operations in our existing markets and to penetrate new markets through acquisitions; we may not achieve the benefits expected from our acquisitions, which could adversely impact our business and operating results; we may have difficulty managing and facilitating our future growth; conditions beyond our control could materially affect the cost and/or availability of our specialty food products or center-of-the-plate products and/or interrupt our distribution network; our increased distribution of center-of-the-plate products, like meat, poultry and seafood, involves increased exposure to price volatility experienced by those products; our business is a low-margin business and our profit margins may be sensitive to inflationary and deflationary pressures; because our foodservice distribution operations are concentrated in certain culinary markets, we are susceptible to economic and other developments, including adverse weather conditions, in these areas; fuel cost volatility may have a material adverse effect on our business, financial condition or results of operations; our ability to raise capital in the future may be limited; we may be unable to obtain debt or other financing, including financing necessary to execute on our acquisition strategy, on favorable terms or at all; interest charged on our outstanding debt may be adversely affected by changes in the method of determining London Interbank Offered Rate (LIBOR), or the replacement of LIBOR with an alternative rate; our business operations and future development could be significantly disrupted if we lose key members of our management team; and significant public health epidemics or pandemics, including COVID-19, may adversely affect our business, results of operations and financial condition. Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. A more detailed description of these and other risk factors is contained in the Company’s most recent annual report on Form 10-K filed with the
About The Chefs’ Warehouse
The Chefs’
Contact:
Investor Relations
THE CHEFS’
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands except share amounts and per share data)
| Thirteen Weeks Ended | |||||||
| Net sales | $ | 280,217 | $ | 375,431 | |||
| Cost of sales | 221,270 | 289,943 | |||||
| Gross profit | 58,947 | 85,488 | |||||
| Selling, general and administrative expenses | 80,245 | 108,882 | |||||
| Other operating (income) expenses, net | (1,170 | ) | (6,336 | ) | |||
| Operating loss | (20,128 | ) | (17,058 | ) | |||
| Interest expense | 4,763 | 5,124 | |||||
| Loss before income taxes | (24,891 | ) | (22,182 | ) | |||
| Provision for income tax benefit | (6,970 | ) | (8,097 | ) | |||
| Net loss | $ | (17,921 | ) | $ | (14,085 | ) | |
| Net loss per share: | |||||||
| Basic | $ | (0.49 | ) | $ | (0.48 | ) | |
| Diluted | $ | (0.49 | ) | $ | (0.48 | ) | |
| Weighted average common shares outstanding: | |||||||
| Basic | 36,401,748 | 29,621,433 | |||||
| Diluted | 36,401,748 | 29,621,433 | |||||
THE CHEFS’
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF
(in thousands)
| (unaudited) | |||||||
| Cash and cash equivalents | $ | 175,000 | $ | 193,281 | |||
| Accounts receivable, net | 99,459 | 96,383 | |||||
| Inventories, net | 91,814 | 82,519 | |||||
| Prepaid expenses and other current assets | 32,631 | 33,479 | |||||
| Total current assets | 398,904 | 405,662 | |||||
| Equipment, leasehold improvements and software, net | 113,450 | 115,448 | |||||
| Operating lease right-of-use assets | 110,726 | 115,224 | |||||
| 214,888 | 214,864 | ||||||
| Intangible assets, net | 108,219 | 111,717 | |||||
| Deferred taxes, net | 12,560 | 7,535 | |||||
| Other assets | 3,835 | 3,875 | |||||
| Total assets | $ | 962,582 | $ | 974,325 | |||
| Accounts payable | $ | 69,461 | $ | 57,515 | |||
| Accrued liabilities | 26,829 | 27,924 | |||||
| Short-term operating lease liabilities | 16,898 | 17,167 | |||||
| Accrued compensation | 10,603 | 9,401 | |||||
| Current portion of long-term debt | 6,043 | 6,095 | |||||
| Total current liabilities | 129,834 | 118,102 | |||||
| Long-term debt, net of current portion | 396,489 | 398,084 | |||||
| Operating lease liabilities | 105,016 | 109,133 | |||||
| Other liabilities | 3,227 | 4,416 | |||||
| Total liabilities | 634,566 | 629,735 | |||||
| Preferred stock | — | — | |||||
| Common stock | 379 | 373 | |||||
| Additional paid in capital | 304,994 | 303,734 | |||||
| Cumulative foreign currency translation adjustment | (1,970 | ) | (2,051 | ) | |||
| Retained earnings | 24,613 | 42,534 | |||||
| Stockholders’ equity | 328,016 | 344,590 | |||||
| Total liabilities and stockholders’ equity | $ | 962,582 | $ | 974,325 | |||
THE CHEFS’
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THIRTEEN WEEKS ENDED
(unaudited, in thousands)
| Cash flows from operating activities: | |||||||
| Net loss | $ | (17,921 | ) | $ | (14,085 | ) | |
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 5,107 | 4,762 | |||||
| Amortization of intangible assets | 3,539 | 3,298 | |||||
| Provision for allowance for doubtful accounts | (451 | ) | 18,431 | ||||
| Non-cash operating lease expense | 109 | 244 | |||||
| (Benefit) provision for deferred income taxes | (5,025 | ) | (1,900 | ) | |||
| Amortization of deferred financing fees | 864 | 762 | |||||
| Stock compensation | 2,458 | 851 | |||||
| Change in fair value of contingent earn-out liabilities | (1,308 | ) | (6,812 | ) | |||
| Loss on asset disposal | 5 | 42 | |||||
| Changes in assets and liabilities, net of acquisitions: | |||||||
| Accounts receivable | (2,585 | ) | 33,141 | ||||
| Inventories | (9,357 | ) | 2,501 | ||||
| Prepaid expenses and other current assets | 850 | (8,855 | ) | ||||
| Accounts payable, accrued liabilities and accrued compensation | 12,026 | (14,311 | ) | ||||
| Other assets and liabilities | 26 | 3,916 | |||||
| Net cash provided (used in) by operating activities | (11,663 | ) | 21,985 | ||||
| Cash flows from investing activities: | |||||||
| Capital expenditures | (2,896 | ) | (3,093 | ) | |||
| Cash paid for acquisitions, net of cash received | — | (63,450 | ) | ||||
| Net cash used in investing activities | (2,896 | ) | (66,543 | ) | |||
| Cash flows from financing activities: | |||||||
| Payment of debt, finance lease and other financing obligations | (32,834 | ) | (687 | ) | |||
| Proceeds from debt issuance | 51,750 | — | |||||
| Payment of deferred financing fees | (1,450 | ) | — | ||||
| Surrender of shares to pay withholding taxes | (1,192 | ) | (838 | ) | |||
| Cash paid for contingent earn-out liabilities | — | (500 | ) | ||||
| Borrowings under asset based loan facility | — | 100,000 | |||||
| Payments under asset based loan facility | (20,000 | ) | — | ||||
| Net cash (used in) provided by financing activities | (3,726 | ) | 97,975 | ||||
| Effect of foreign currency translation on cash and cash equivalents | 4 | (133 | ) | ||||
| Net (decrease) increase in cash and cash equivalents | (18,281 | ) | 53,284 | ||||
| Cash and cash equivalents at beginning of period | 193,281 | 140,233 | |||||
| Cash and cash equivalents at end of period | $ | 175,000 | $ | 193,517 | |||
THE CHEFS’
RECONCILIATION OF GAAP NET LOSS PER COMMON SHARE
(unaudited; in thousands except share amounts and per share data)
| Thirteen Weeks Ended | |||||||
| Numerator: | |||||||
| Net loss | $ | (17,921 | ) | $ | (14,085 | ) | |
| Denominator: | |||||||
| Weighted average basic common shares outstanding | 36,401,748 | 29,621,433 | |||||
| Weighted average diluted common shares outstanding | 36,401,748 | 29,621,433 | |||||
| Net loss per share: | |||||||
| Basic | $ | (0.49 | ) | $ | (0.48 | ) | |
| Diluted | $ | (0.49 | ) | $ | (0.48 | ) | |
THE CHEFS’
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA TO NET LOSS
(unaudited; in thousands)
| Thirteen Weeks Ended | |||||||
| Net loss | $ | (17,921 | ) | $ | (14,085 | ) | |
| Interest expense | 4,763 | 5,124 | |||||
| Depreciation | 5,107 | 4,762 | |||||
| Amortization | 3,539 | 3,298 | |||||
| Provision for income tax benefit | (6,970 | ) | (8,097 | ) | |||
| EBITDA (1) | (11,482 | ) | (8,998 | ) | |||
| Adjustments: | |||||||
| Stock compensation (2) | 2,458 | 851 | |||||
| Other operating income (3) | (1,170 | ) | (6,336 | ) | |||
| Duplicate rent (4) | 695 | 698 | |||||
| Adjusted EBITDA (1) | $ | (9,499 | ) | $ | (13,785 | ) | |
- We are presenting EBITDA and Adjusted EBITDA, which are not measurements determined in accordance with the
U.S. generally accepted accounting principles, or GAAP, because we believe these measures provide additional metrics to evaluate our operations and which we believe, when considered with both our GAAP results and the reconciliation to net income, provide a more complete understanding of our business than could be obtained absent this disclosure. We use EBITDA and Adjusted EBITDA, together with financial measures prepared in accordance with GAAP, such as revenue and cash flows from operations, to assess our historical and prospective operating performance and to enhance our understanding of our core operating performance. The use of EBITDA and Adjusted EBITDA as performance measures permits a comparative assessment of our operating performance relative to our performance based upon GAAP results while isolating the effects of some items that vary from period to period without any correlation to core operating performance or that vary widely among similar companies. - Represents non-cash stock compensation expense associated with awards of restricted shares of our common stock and stock options to our key employees and our independent directors.
- Represents non-cash changes in the fair value of contingent earn-out liabilities related to our acquisitions, non-cash charges related to asset disposals, asset impairments, including intangible asset impairment charges, and certain third-party deal costs incurred in connection with our acquisitions or financing arrangements.
- Represents duplicate rent and occupancy costs for our
Los Angeles, CA facility.
THE CHEFS’
RECONCILIATION OF ADJUSTED NET LOSS TO NET LOSS
(unaudited; in thousands except share amounts and per share data)
| Thirteen Weeks Ended | |||||||
| Net loss | $ | (17,921 | ) | $ | (14,085 | ) | |
| Adjustments to Reconcile Net Loss to Adjusted Net Loss (1): | |||||||
| Other operating expenses (2) | (1,170 | ) | (6,336 | ) | |||
| Duplicate rent (3) | 695 | 698 | |||||
| Tax effect of adjustments (4) | 131 | 2,058 | |||||
| Total adjustments | (344 | ) | (3,580 | ) | |||
| Adjusted net loss | $ | (18,265 | ) | $ | (17,665 | ) | |
| Diluted adjusted loss per common share | $ | (0.50 | ) | $ | (0.60 | ) | |
| Diluted shares outstanding - adjusted | 36,401,748 | 29,621,433 | |||||
- We are presenting adjusted net income and adjusted earnings per common share (EPS), which are not measurements determined in accordance with
U.S. generally accepted accounting principles, or GAAP, because we believe these measures provide additional metrics to evaluate our operations and which we believe, when considered with both our GAAP results and the reconciliation to net income available to common stockholders, provide a more complete understanding of our business than could be obtained absent this disclosure. We use adjusted net income available to common stockholders and adjusted EPS, together with financial measures prepared in accordance with GAAP, such as revenue and cash flows from operations, to assess our historical and prospective operating performance and to enhance our understanding of our core operating performance. The use of adjusted net income available to common stockholders and adjusted EPS as performance measures permits a comparative assessment of our operating performance relative to our performance based upon our GAAP results while isolating the effects of some items that vary from period to period without any correlation to core operating performance or that vary widely among similar companies. - Represents non-cash changes in the fair value of contingent earn-out liabilities related to our acquisitions, non-cash charges related to asset disposals, asset impairments, including intangible asset impairments, and certain third-party deal costs incurred in connection with our acquisitions or financing arrangements.
- Represents duplicate rent and occupancy costs for our
Los Angeles, CA facility. - Represents the tax effect of items 2 through 3 above.
THE CHEFS’
RECONCILIATION OF ADJUSTED EARNINGS PER COMMON SHARE
(unaudited; in thousands except share amounts and per share data)
| Thirteen Weeks Ended | |||||||
| Numerator: | |||||||
| Adjusted net loss | $ | (18,265 | ) | $ | (17,665 | ) | |
| Denominator: | |||||||
| Weighted average basic common shares outstanding | 36,401,748 | 29,621,433 | |||||
| Weighted average diluted common shares outstanding | 36,401,748 | 29,621,433 | |||||
| Adjusted earnings per share: | |||||||
| Diluted | $ | (0.50 | ) | $ | (0.60 | ) | |
Source: The Chefs' Warehouse, Inc.