The Chefs' Warehouse, Inc. (NASDAQ:CHEF) Q4 2018 Earnings Conference Call Transcript

Feb 13, 2019 • 05:00 pm ET

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The Chefs' Warehouse, Inc. (NASDAQ:CHEF) Q4 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Greetings, and welcome to the Chefs' Warehouse Fourth Quarter 2018 Earnings Conference Call. As a reminder, this conference is being recorded.

I'd now like to turn the conference over to your host, Alex Aldous, General Counsel, Corporate Secretary and Chief Government Relations Officer. Please go ahead.

Executive
Alexandros Aldous

Thank you, operator. Good afternoon, everyone. With me on today's call are Chris Pappas, Founder, Chairman and CEO; and Jim Leddy, our CFO. By now, you should have access to our fourth quarter 2018 earnings press release. It can also be found at www.chefswarehouse.com, under the Investor Relations section.

Throughout this conference call, we will be presenting non-GAAP financial measures including among others historical and estimated EBITDA, and adjusted EBITDA , as well as both historical and estimated adjusted net income, and adjusted earnings per share. These measurements are not calculated in accordance with GAAP and may be calculated differently, and similarly titled non-GAAP financial measures used by other companies. Quantitative reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures appear in today's press release.

Before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements, including statements regarding our estimated financial performance. Such forward-looking statements are not guarantees of future performance and therefore you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Some of these risks are mentioned in today's release, others are discussed in our Annual Report on Form 10-K and quarterly reports on Form 10-Q, which are available on the SEC website.

Today, we are going to provide a business update, go over our fourth quarter results in detail, and review our 2019 full-year guidance, then we will open up the call for questions.

With that, I will turn the call over to Chris Pappas. Chris?

Executive
Christopher Pappas

Thank you, Alex, and thank you all for joining our fourth quarter 2018 earnings call. Our team delivered solid revenue and gross profit growth in the fourth quarter. We experienced strong year-over-year case growth in specialty and center-of-the-plate pound growth continue to build momentum. I would like to thank the entire Chefs' team for producing strong financial results in 2018, while continuing to grow and enhance the Chefs' Warehouse brand and service model within our growing customer base and expanding geographical presence. A few highlights from the fourth quarter include 5.4% organic growth in net sales. Specialty sales were up 6.5% organically over the prior year. It was driven by unique customer growth of approximately 5.9%, placement growth of 4.4%, specialty case growth of 6.5%, and organic pound growth and center-of-the-plate of 4.9%.

Gross margins increased approximately 20 basis points. Gross margins in the specialty category declined 93 basis points, as compared to the fourth quarter of 2017, while gross margin in the center-of-the-plate category increased 135 basis points year-over-year. In addition, gross profit dollars grew approximately 11.2% versus prior-year fourth