EX-99.1 2 q22019pressreleaseex991.htm EXHIBIT 99.1 Exhibit


 
Exhibit 99.1
 
 
The Chefs’ Warehouse Reports Second Quarter 2019 Financial Results
Net Sales Growth of 11.1%
Ridgefield, CT, July 31, 2019 - The Chefs’ Warehouse, Inc. (NASDAQ: CHEF) (the “Company”), a premier distributor of specialty food products in the United States and Canada, today reported financial results for its second quarter ended June 28, 2019.

Financial highlights for the second quarter of 2019 compared to the second quarter of 2018:

•
Net sales increased 11.1% to $411.4 million for the second quarter of 2019 from $370.4 million for the second quarter of 2018.
•
Gross profit increased 14.2% to $106.5 million for the second quarter of 2019 from $93.2 million for the second quarter of 2018.
•
GAAP net income was $7.7 million, or $0.26 per diluted share, for the second quarter of 2019 compared to $6.8 million, or $0.24 per diluted share, in the second quarter of 2018.
•
Adjusted EPS1 was $0.33 for the second quarter of 2019 compared to $0.24 for the second quarter of 2018.
•
Adjusted EBITDA1 was $26.0 million for the second quarter of 2019 compared to $21.5 million for the second quarter of 2018.

“First quarter momentum continued into the second quarter of 2019, with strength in both revenue and gross profit dollar growth.” said Chris Pappas, chairman and chief executive officer of The Chefs’ Warehouse, Inc. “Second quarter volume growth in the specialty category was slightly lower than our typical range, primarily due to year-over-year comparisons and product mix changes. However, we are pleased with our team’s execution in driving solid organic growth and strong margins. We continue to focus on growing our customer base and enhancing our service model as the premier marketing and distribution partner to independent restaurants in the geographies we serve.”

Second Quarter Fiscal 2019 Results

Net sales for the quarter ended June 28, 2019 increased 11.1% to $411.4 million from $370.4 million for the quarter ended June 29, 2018. Organic growth contributed $14.6 million, or 4.0% to sales growth in the quarter. The remaining sales growth of $26.4 million, or 7.1%, resulted from acquisitions. Organic case count grew approximately 2.4% in the Company’s specialty category with unique customers and placements growth at 4.4% and 3.5%, respectively, compared to the prior year quarter. Pounds sold in the Company’s center-of-the-plate category increased 1.0% compared to the prior year quarter. Estimated inflation was 2.6% in the Company’s specialty categories and 1.9% in the center-of-the-plate categories compared to the prior year quarter.
 
Gross profit increased approximately 14.2% to $106.5 million for the second quarter of 2019 from $93.2 million for the second quarter of 2018. Gross profit margin increased approximately 71 basis points to 25.9% from 25.2%. Gross margins in the Company’s specialty category increased 44 basis points and gross margins increased 122 basis points in the Company’s center-of-the-plate category compared to the prior year quarter.
 
Total operating expenses increased by approximately 16.2% to $90.9 million for the second quarter of 2019 from $78.3 million for the second quarter of 2018. As a percentage of net sales, operating expenses were 22.1% in the second quarter of 2019 compared to 21.1% in the second quarter of 2018. The increase in

1EBITDA, Adjusted EBITDA, adjusted net income 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 and adjusted EPS to these measures’ most directly comparable GAAP measure.


total operating expenses includes a $2.6 million increase in non-cash charges for changes in the fair value of certain contingent earn-out liabilities compared to the prior year quarter. The earn-out adjustments and higher distribution costs versus the prior year quarter were the primary drivers of the increase in the ratio of operating expense to revenue. This was partially offset by lower selling and general administration related expenses as a percentage of revenue versus the second quarter of 2018. Excluding the impact of the earn-out adjustments, total operating expenses increased 12.8%.

Operating income for the second quarter of 2019 was $15.5 million compared to $14.9 million for the second quarter of 2018. The increase in operating income was driven primarily by increased gross profit, offset in part by higher operating expenses, as discussed above. As a percentage of net sales, operating income was 3.8% in the second quarter of 2019 as compared to 4.1% in the second quarter of 2018.

Total interest expense decreased to $4.8 million for the second quarter of 2019 compared to $5.4 million for the second quarter of 2018 due primarily to lower effective interest rates charged on the Company’s outstanding debt and the conversion of the $36.8 million of convertible subordinated notes during the third quarter of 2018.

Net income for the second quarter of 2019 was $7.7 million, or $0.26 per diluted share, compared to net income of $6.8 million, or $0.24 per diluted share, for the second quarter of 2018.

Adjusted EBITDA1 was $26.0 million for the second quarter of 2019 compared to $21.5 million for the second quarter of 2018. For the second quarter of 2019, adjusted net income1 was $9.8 million, or $0.33 per diluted share compared to adjusted net income of $7.0 million, or $0.24 per diluted share for the second quarter of 2018.

Full Year 2019 Guidance

Based on current trends in the business, the Company is updating financial guidance for fiscal year 2019 and now expects the following:

•
Net sales between $1.57 billion and $1.61 billion
•
Gross profit between $400.0 million and $409.0 million
•
Net income between $26.3 million and $29.2 million
•
Net income per diluted share between $0.88 and $0.98
•
Adjusted EBITDA1 between $89.0 million and $93.0 million
•
Adjusted EPS1 between $0.96 and $1.05

This guidance is based on an effective tax rate of approximately 27.5% and approximately 30 million shares, on a fully diluted basis.

Second Quarter 2019 Earnings Conference Call

The Company will host a conference call to discuss second quarter 2019 financial results today at 5:00 p.m. EST. Hosting the call will be Chris Pappas, chairman and chief executive officer, and Jim Leddy, chief financial officer. The conference call will be webcast live from the Company’s investor relations website at http://investors.chefswarehouse.com/. The call can also be accessed live over the phone by dialing (877) 407-4018, or for international callers (201) 689-8471. A replay will be available one hour after the call and can be accessed by dialing (844) 512-2921 or (412) 317-6671 for international callers; the conference ID is 13692150. The replay will be available until Wednesday, August 7, 2019, and an online archive of the webcast will be available on the Company’s investor relations website for 30 days.



2



Forward-Looking Statements

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: 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 Company’s sensitivity to general economic conditions, including disposable income levels and changes in consumer discretionary spending; the Company’s ability to expand its operations in its existing markets and to penetrate new markets through acquisitions; the Company may not achieve the benefits expected from its acquisitions, which could adversely impact its business and operating results; the Company may have difficulty managing and facilitating its future growth; conditions beyond the Company’s control could materially affect the cost and/or availability of its specialty food products or center-of-the-plate products and/or interrupt its distribution network; the Company’s increased distribution of center-of-the-plate products, like meat, poultry and seafood, involves increased exposure to price volatility experienced by those products; the Company’s business is a low-margin business and its profit margins may be sensitive to inflationary and deflationary pressures; because the Company’s foodservice distribution operations are concentrated in certain culinary markets, the Company is susceptible to economic and other developments, including adverse weather conditions, in these areas; fuel cost volatility may have a material adverse effect on the Company’s business, financial condition or results of operations; the Company’s ability to raise capital in the future may be limited; the Company may be unable to obtain debt or other financing, including financing necessary to execute on our acquisition strategy, on favorable terms or at all; and the Company’s business operations and future development could be significantly disrupted if it loses key members of its management team. 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 Securities and Exchange Commission (“SEC”) on March 1, 2019 and other reports filed by the Company with the SEC since that date. The Company is not undertaking to update any information in the foregoing report until the effective date of its future reports required by applicable laws. Any projections of future results of operations are based on a number of assumptions, many of which are outside the Company’s control and should not be construed in any manner as a guarantee that such results will in fact occur. These projections are subject to change and could differ materially from final reported results. The Company may from time to time update these publicly announced projections, but it is not obligated to do so.

About The Chefs’ Warehouse

The Chefs’ Warehouse, Inc. (http://www.chefswarehouse.com) is a premier distributor of specialty food products in the United States and Canada focused on serving the specific needs of chefs who own and/or operate some of the nation’s leading menu-driven independent restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolatiers, cruise lines, casinos and specialty food stores. The Chefs’ Warehouse, Inc. carries and distributes more than 55,000 products to more than 34,000 customer locations throughout the United States and Canada.

Contact:
Investor Relations
Jim Leddy, CFO, (718) 684-8415




3


THE CHEFS’ WAREHOUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN AND TWENTY-SIX WEEKS ENDED JUNE 28, 2019 AND JUNE 29, 2018
(unaudited, in thousands except share amounts and per share data)
 
Thirteen Weeks Ended
 
Twenty-six Weeks Ended
 
June 28, 2019
 
June 29, 2018
 
June 28, 2019
 
June 29, 2018
Net Sales
$
411,420

 
$
370,442

 
$
768,447

 
$
689,057

Cost of Sales
304,945

 
277,202

 
571,783

 
516,295

Gross Profit
106,475

 
93,240

 
196,664

 
172,762

 
 
 
 
 
 
 
 
Operating Expenses
90,939

 
78,292

 
174,978

 
152,074

Operating Income
15,536

 
14,948

 
21,686

 
20,688

 
 
 
 
 
 
 
 
Interest Expense
4,845

 
5,381

 
9,396

 
10,360

Loss on Asset Disposal
6

 
30

 
40

 
30

Income Before Income Taxes
10,685

 
9,537

 
12,250

 
10,298

 
 
 
 
 
 
 
 
Provision for Income Tax Expense
2,939

 
2,718

 
3,370

 
2,935

 
 
 
 
 
 
 
 
Net Income
$
7,746

 
$
6,819

 
$
8,880

 
$
7,363

 
 
 
 
 
 
 
 
Net Income Per Share:
 

 
 

 
 

 
 

Basic
$
0.26

 
$
0.24

 
$
0.30

 
$
0.26

Diluted
$
0.26

 
$
0.24

 
$
0.30

 
$
0.26

 
 
 
 
 
 
 
 
Weighted Average Common Shares Outstanding:
 

 
 

 
 

 
 

Basic
29,527,167

 
28,166,875

 
29,492,138

 
28,144,782

Diluted
29,848,285

 
29,595,247

 
29,844,614

 
28,311,549


4


THE CHEFS’ WAREHOUSE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 28, 2019 AND DECEMBER 28, 2018
(in thousands)
 
June 28, 2019
 
December 28, 2018
 
(unaudited)
 
 

Cash
$
24,294

 
$
42,410

Accounts receivable, net
157,461

 
161,758

Inventories, net
122,592

 
112,614

Prepaid expenses and other current assets
12,650

 
11,953

Total current assets
316,997

 
328,735

 
 
 
 
Equipment, leasehold improvements and software, net
90,198

 
85,276

Operating lease right-of-use assets (1)
128,922

 
—

Goodwill
193,526

 
184,280

Intangible assets, net
144,420

 
130,033

Other assets
3,688

 
4,074

Total assets
$
877,751

 
$
732,398

 
 
 
 
Accounts payable
$
86,814

 
$
87,799

Accrued liabilities
24,787

 
24,810

Short-term operating lease liabilities (1)
16,554

 
—

Accrued compensation
10,779

 
12,872

Current portion of long-term debt
304

 
61

Total current liabilities
139,238

 
125,542

 
 
 
 
Long-term debt, net of current portion
281,628

 
278,169

Operating lease liabilities (1)
121,846

 
—

Deferred taxes, net
10,153

 
9,601

Other liabilities
7,491

 
10,410

Total liabilities
560,356

 
423,722

 
 
 
 
Preferred stock
—

 
—

Common stock
303

 
300

Additional paid in capital
209,016

 
207,326

Cumulative foreign currency translation adjustment
(2,048
)
 
(2,221
)
Retained earnings
110,124

 
103,271

Stockholders’ equity
317,395

 
308,676

 
 
 
 
Total liabilities and stockholders’ equity
$
877,751

 
$
732,398


(1) Fiscal 2019 includes new balance sheet captions due to the adoption of the new lease accounting standard, effective on the first day of fiscal 2019

5


THE CHEFS’ WAREHOUSE, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE TWENTY-SIX WEEKS ENDED JUNE 28, 2019 AND JUNE 29, 2018
(unaudited, in thousands)
 
June 28, 2019
 
June 29, 2018
Cash flows from operating activities:
 
 
 
Net income
$
8,880

 
$
7,363

 
 
 
 
Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Depreciation
6,055

 
4,500

Amortization
6,184

 
5,983

Provision for allowance for doubtful accounts
1,914

 
1,646

Non-cash operating lease expense
1,151

 
471

Deferred taxes
1,332

 
185

Amortization of deferred financing fees
1,044

 
1,102

Stock compensation
2,003

 
1,909

Loss on asset disposal
40

 
30

Change in fair value of contingent earn-out liability
2,795

 
228

Changes in assets and liabilities, net of acquisitions:
 

 
 

Accounts receivable
7,424

 
(173
)
Inventories
(7,965
)
 
(10,182
)
Prepaid expenses and other current assets
(640
)
 
1,524

Accounts payable and accrued liabilities
(5,482
)
 
5,692

Other assets and liabilities
(2,845
)
 
(1,360
)
Net cash provided by operating activities
21,890

 
18,918

 
 
 
 
Cash flows from investing activities:
 

 
 

Capital expenditures
(8,549
)
 
(5,545
)
Proceeds from asset disposals
—

 
30

Cash paid for acquisitions, net of cash received
(28,292
)
 
(11,899
)
Net cash used in investing activities
(36,841
)
 
(17,414
)
 
 
 
 
Cash flows from financing activities:
 

 
 

Payment of debt
(1,716
)
 
(2,248
)
Payments under asset based loan facility
(960
)
 
—

Cash paid for deferred financing fees
—

 
(534
)
Cash paid for contingent earn-out liability
(200
)
 
—

Proceeds from exercise of stock options
558

 
—

Surrender of shares to pay withholding taxes
(868
)
 
(571
)
Net cash used in financing activities
(3,186
)
 
(3,353
)
 
 
 
 
Effect of foreign currency translation on cash and cash equivalents
21

 
(62
)
 
 
 
 
Net decrease in cash and cash equivalents
(18,116
)
 
(1,911
)
Cash and cash equivalents at beginning of period
42,410

 
41,504

Cash and cash equivalents at end of period
$
24,294

 
$
39,593


6


THE CHEFS’ WAREHOUSE, INC.
RECONCILIATION OF GAAP NET INCOME PER COMMON SHARE
FOR THE THIRTEEN AND TWENTY-SIX WEEKS ENDED JUNE 28, 2019 AND JUNE 29, 2018
(unaudited; in thousands except share amounts and per share data)

 
Thirteen Weeks Ended
 
Twenty-six Weeks Ended
 
June 28, 2019
 
June 29, 2018
 
June 28, 2019
 
June 29, 2018
Numerator:
 
 
 
 
 
 
 
Net Income
$
7,746

 
$
6,819

 
$
8,880

 
$
7,363

Add effect of dilutive securities:
 
 
 
 
 
 
 
Interest on convertible notes, net of tax
—

 
164

 
—

 
—

Net Income available to common shareholders
$
7,746

 
$
6,983

 
$
8,880

 
$
7,363

Denominator:
 
 
 
 
 
 
 
Weighted average basic common shares outstanding
29,527,167

 
28,166,875

 
29,492,138

 
28,144,782

Dilutive effect of unvested common shares
321,118

 
190,998

 
352,476

 
166,767

Dilutive effect of convertible notes
—

 
1,237,374

 
—

 
—

Weighted average diluted common shares outstanding
29,848,285

 
29,595,247

 
29,844,614

 
28,311,549

 
 
 
 
 
 
 
 
Net Income Per Share:
 
 
 
 
 
 
 
Basic
$
0.26

 
$
0.24

 
$
0.30

 
$
0.26

Diluted
$
0.26

 
$
0.24

 
$
0.30

 
$
0.26




7


THE CHEFS’ WAREHOUSE, INC.
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA TO NET INCOME
FOR THE THIRTEEN AND TWENTY-SIX WEEKS ENDED JUNE 28, 2019 AND JUNE 29, 2018
(unaudited; in thousands)
 
Thirteen Weeks Ended
 
Twenty-six Weeks Ended
 
June 28, 2019
 
June 29, 2018
 
June 28, 2019
 
June 29, 2018
Net Income
$
7,746

 
$
6,819

 
$
8,880

 
$
7,363

Interest expense
4,845

 
5,381

 
9,396

 
10,360

Depreciation
3,174

 
2,184

 
6,055

 
4,500

Amortization
3,307

 
3,080

 
6,184

 
5,983

Provision for income tax expense
2,939

 
2,718

 
3,370

 
2,935

EBITDA (1)
22,011

 
20,182

 
33,885

 
31,141

 
 
 
 
 
 
 
 
Adjustments:
 

 
 

 
 

 
 

Stock compensation (2)
1,088

 
1,072

 
2,003

 
1,909

Duplicate rent (3)
163

 
—

 
163

 
—

Integration and deal costs/third party transaction costs (4)
32

 
115

 
210

 
290

Change in fair value of earn-out obligation (5)
2,688

 
104

 
2,795

 
228

Loss on asset disposal (6)
6

 
30

 
40

 
30

Moving expenses (7)
—

 
—

 
61

 
—

 
 
 
 
 
 
 
 
Adjusted EBITDA (1)
$
25,988

 
$
21,503

 
$
39,157

 
$
33,598


1.
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.
2.
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.
3.
Represents duplicate rent for our Los Angeles, CA facility.
4.
Represents transaction related costs incurred to complete and integrate acquisitions, including due diligence, legal and integration.
5.
Represents the non-cash change in fair value of contingent earn-out liabilities related to our acquisitions.
6.
Represents the non-cash charge related to the disposal of certain equipment.
7.
Represents moving expenses for the consolidation and expansion of our Ridgefield, CT and Toronto, Canada facilities.



8


THE CHEFS’ WAREHOUSE, INC.
RECONCILIATION OF ADJUSTED NET INCOME TO NET INCOME
FOR THE THIRTEEN AND TWENTY-SIX WEEKS ENDED JUNE 28, 2019 AND JUNE 29, 2018
(unaudited; in thousands except share amounts and per share data)
 
Thirteen Weeks Ended
 
Twenty-six Weeks Ended
 
June 28, 2019
 
June 29, 2018
 
June 28, 2019
 
June 29, 2018
Net Income
$
7,746

 
$
6,819

 
$
8,880

 
$
7,363

 
 
 
 
 
 
 
 
Adjustments to Reconcile Net Income to Adjusted Net Income (1):
 

 
 

 
 
 
 

Duplicate rent (2)
163

 
—

 
163

 
—

Integration and deal costs/third party transaction costs (3)
32

 
115

 
210

 
290

Moving expenses (4)
—

 
—

 
61

 
—

Change in fair value of earn-out obligations (5)
2,688

 
104

 
2,795

 
228

Loss on asset disposal (6)
6

 
30

 
40

 
30

Tax effect of adjustments (7)
(794
)
 
(70
)
 
(899
)
 
(156
)
 
 
 
 
 
 
 
 
Total Adjustments
2,095

 
179

 
2,370

 
392

 
 
 
 
 
 
 
 
Adjusted Net Income
$
9,841

 
$
6,998

 
$
11,250

 
$
7,755

 
 
 
 
 
 
 
 
Diluted Earnings per Share - Adjusted
$
0.33

 
$
0.24

 
$
0.38

 
$
0.27

 
 
 
 
 
 
 
 
Diluted Shares Outstanding - Adjusted
29,848,285

 
29,595,247

 
29,844,614

 
29,548,923


1.
We are presenting adjusted net income and adjusted earnings per 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.

2.
Represents duplicate rent for our Los Angeles, CA facility.

3.
Represents transaction related costs incurred to complete and integrate acquisitions, including due diligence, legal and integration.

4.
Represents moving expenses for the consolidation and expansion of our Ridgefield, CT and Toronto, Canada facilities.

5.
Represents the non-cash change in fair value of contingent earn-out liabilities related to our acquisitions.

6.
Represents the non-cash charge related to the disposal of certain equipment.

7.
Represents the tax effect of items 2 through 6 above.



9


THE CHEFS’ WAREHOUSE, INC.
RECONCILIATION OF ADJUSTED NET INCOME PER COMMON SHARE
FOR THE THIRTEEN AND TWENTY-SIX WEEKS ENDED JUNE 28, 2019 AND JUNE 29, 2018
(unaudited; in thousands except share amounts and per share data)

 
Thirteen Weeks Ended
 
Twenty-six Weeks Ended
 
June 28, 2019
 
June 29, 2018
 
June 28, 2019
 
June 29, 2018
Numerator:
 
 
 
 
 
 
 
Adjusted Net Income
$
9,841

 
$
6,998

 
$
11,250

 
$
7,755

Add effect of dilutive securities:
 
 
 
 
 
 
 
Interest on convertible notes, net of tax
—

 
164

 
—

 
328

Adjusted Net Income available to common shareholders
$
9,841

 
$
7,162

 
$
11,250

 
$
8,083

Denominator:
 
 
 
 
 
 
 
Weighted average basic common shares outstanding
29,527,167

 
28,166,875

 
29,492,138

 
28,144,782

Dilutive effect of unvested common shares
321,118

 
190,998

 
352,476

 
166,767

Dilutive effect of convertible notes
—

 
1,237,374

 
—

 
1,237,374

Weighted average diluted common shares outstanding
29,848,285

 
29,595,247

 
29,844,614

 
29,548,923

 
 
 
 
 
 
 
 
Adjusted Net Income per share:
 
 
 
 
 
 
 
Diluted
$
0.33

 
$
0.24

 
$
0.38

 
$
0.27



10


THE CHEFS’ WAREHOUSE, INC.
RECONCILIATION OF ADJUSTED EBITDA GUIDANCE FOR FISCAL 2019
(unaudited; in thousands)

 
Low-End Guidance
 
High-End Guidance
Net Income:
$
26,250

 
$
29,150

Provision for income tax expense
10,000

 
11,100

Depreciation & amortization
25,300

 
25,300

Interest expense
19,250

 
19,250

EBITDA (1)
80,800

 
84,800

 
 
 
 
Adjustments:
 

 
 

Stock compensation (2)
4,900

 
4,900

Duplicate rent (3)
200

 
200

Integration and deal costs/third party transaction costs (4)
200

 
200

Change in fair value of earn-out obligation (5)
2,800

 
2,800

Loss on asset disposal (6)
35

 
35

Moving expenses (7)
65

 
65

 
 
 
 
Adjusted EBITDA (1)
$
89,000

 
$
93,000

 
1.
We are presenting estimated 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 currently estimated results and which we believe, when considered with both our estimated GAAP results and the reconciliation to our estimated 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 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.

2.
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.
3.
Represents rent and occupancy costs expected to be incurred in connection with the Company's facility consolidations while we are unable to use those facilities.
4.
Represents transaction related costs incurred to complete and integrate acquisitions, including due diligence, legal and integration.
5.
Represents the non-cash change in fair value of contingent earn-out liabilities related to our acquisitions.
6.
Represents the non-cash charge related to the disposal of certain equipment.
7.
Represents moving expenses for the consolidation and expansion of our Ridgefield, CT and Toronto, Canada facilities.

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THE CHEFS’ WAREHOUSE, INC.
2019 FULLY DILUTED EPS GUIDANCE RECONCILIATION TO 2019 ADJUSTED EPS GUIDANCE (1)(2)

 
Low-End
 
High-End
 
Guidance
 
Guidance
 
 
 
 
Net income per diluted share
$
0.88

 
$
0.98

 
 
 
 
Change in fair value of earn-out obligations (3)
0.07

 
0.06

Integration and deal costs/third party transaction costs (4)
0.01

 
0.01

 
 
 
 
Adjusted net income per diluted share
$
0.96

 
$
1.05

 
1.
We are presenting estimated adjusted EPS, which is not a measurement determined in accordance with U.S. generally accepted accounting principles, or GAAP, because we believe this measure provides an additional metric to evaluate our currently estimated results and which we believe, when considered with both our estimated GAAP results and the reconciliation to estimated net income per diluted share, provides a more complete understanding of our expectations for our business than could be obtained absent this disclosure. We use 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 EPS as a performance measure permits a comparative assessment of our expectations regarding our estimated operating performance relative to our estimated operating performance based on 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.

2.
Guidance is based upon an estimated effective tax rate of 27.5% and an estimated fully diluted share count of approximately 30 million shares.

3.
Represents the non-cash change in fair value of contingent earn-out liabilities related to our acquisitions.

4.
Represents transaction related costs incurred to complete and integrate acquisitions, including due diligence, legal and integration.












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