The Chefs’ Warehouse Inc ((CHEF)) has held its Q1 earnings call. Read on for the main highlights of the call.
The Chefs’ Warehouse Inc. recently held its earnings call for the first quarter of 2025, revealing a balanced sentiment with notable achievements and challenges. The company reported strong revenue growth and successful digital platform expansion, alongside improved operating income. However, it also faced challenges such as a decline in gross profit margins and attrition of non-core businesses impacting sales. Overall, the sentiment was balanced, showcasing both positive growth metrics and areas needing attention.
Strong Revenue Growth
The Chefs’ Warehouse Inc. reported a significant increase in net sales for the first quarter of 2025, reaching approximately $950.7 million, an 8.7% rise from $874.5 million in the first quarter of 2024. This growth highlights the company’s ability to expand its market presence and drive sales.
Specialty Sales Increase
Specialty sales saw a notable increase of 10.7% over the previous year. This growth was driven by unique customer growth of approximately 4.5%, placement growth of 7.7%, and specialty case growth of 5.7%, indicating a robust demand for the company’s specialty products.
Digital Platform Expansion
The company’s digital platform has seen significant adoption, with approximately 58% of customers ordering through domestic specialty locations now doing so online. This is an increase from 56% at the end of 2024 and 48% at the end of 2023, reflecting a successful shift towards digital engagement.
Improved Operating Income
Operating income for the first quarter of 2025 improved to $22.7 million, compared to $16 million in the first quarter of 2024. This increase demonstrates the company’s effective cost management and operational efficiency.
Positive Adjusted EBITDA Growth
The company reported an increase in adjusted EBITDA to $47.5 million for the first quarter of 2025, up from $40.2 million in the prior year. This 18.2% growth underscores the company’s strong financial performance and profitability.
Gross Profit Margin Decline
Despite the positive financial metrics, the company experienced a decline in gross profit margins, which decreased by approximately 18 basis points to 23.8%. This indicates a need for strategic adjustments to improve profitability.
Center of the Plate Volume Decline
The company reported a 1.3% decline in pounds in the center of the plate category compared to the prior first quarter. This decrease highlights a challenge in maintaining volume in this key category.
Attrition of Non-Core Business
Attrition of certain low-margin non-core customer business resulted in a 0.7% lower year-over-year sales impact, particularly affecting the center of the plate category. This attrition reflects the company’s strategic focus on higher-margin core businesses.
Challenges from Tariffs
Potential impacts from tariffs remain a concern for The Chefs’ Warehouse Inc., although no immediate impact was noted in the current projects. This ongoing challenge requires careful monitoring and strategic planning.
Forward-Looking Guidance
Looking ahead, The Chefs’ Warehouse Inc. provided guidance for the full year, estimating net sales to be between $3.96 billion and $4.04 billion. Gross profit is expected to range from $954 million to $976 million, with adjusted EBITDA projected between $234 million and $246 million. These forecasts reflect the company’s confidence in its growth trajectory and strategic initiatives.
In conclusion, The Chefs’ Warehouse Inc.’s earnings call for the first quarter of 2025 presented a balanced outlook with strong revenue growth and digital expansion, alongside challenges such as declining gross profit margins. The company’s forward-looking guidance suggests continued growth and strategic focus, positioning it well for future success.