Press Releases
The Chefs' Warehouse Reports Fourth Quarter 2016 Financial Results
Financial highlights for the fourth quarter of 2016 compared to the fourth quarter of 2015:
- Net sales increased 17.0% to
$342.9 million for the fourth quarter of 2016 from$293.1 million for the fourth quarter of 2015. - GAAP net income was
$9.1 million or$0.34 per diluted share, for the fourth quarter of 2016 compared to$6.7 million , or$0.25 per diluted share, in the fourth quarter of 2015. - Modified pro forma earnings per diluted share1 was
$0.18 for the fourth quarter of 2016 compared to$0.26 for the fourth quarter of 2015. - Adjusted EBITDA1 was
$19.9 million for the fourth quarter of 2016 compared to$20.8 million for the fourth quarter of 2015.
"We continued to show very strong and consistent growth in our business during the fourth quarter. We also continued to make great progress in our protein businesses as margins improved in line with expectations," said
Fourth Quarter Fiscal 2016 Results
Net sales for the quarter ended
Gross profit increased approximately 15.6% to
Total operating expenses increased by approximately 7.5% to
Operating income for the fourth quarter of 2016 was
Interest expense increased to
Net income for the fourth quarter of 2016 was
Adjusted EBITDA1 was
Full Year 2017 Guidance
Based on current trends in the business, the Company is providing the following financial guidance for fiscal year 2017:
- Net sales between
$1.25 billion and$1.28 billion - Gross profit between
$320.0 million and$330.0 million - Net income between
$9.0 million and$10.5 million - Net income per diluted share between
$0.34 and$0.40 - Adjusted EBITDA between
$62.0 million and$66.0 million - Modified pro forma net income per diluted share between
$0.34 and$0.41
This guidance is based on an effective tax rate of approximately 41.5% to 42.0% and fully diluted shares of approximately 26.5 million shares. Note that the Company does not expect the outstanding convertible notes to be dilutive and accordingly those convertible shares are not included in the fully diluted share count.
Fourth Quarter 2016 Earnings Conference Call
The Company will host a conference call to discuss fourth quarter 2016 financial results today at
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 ability to successfully deploy its operational initiatives to achieve synergies from the acquisition of the
About The Chefs' Warehouse
1 Please see the Consolidated Statements of Operations at the end of this earnings release for a reconciliation of EBITDA, Adjusted EBITDA, modified pro forma net income and modified pro forma EPS to these measures' most directly comparable GAAP measure.
THE | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
FISCAL QUARTERS AND YEARS ENDED | ||||||||||||||||
(in thousands except share amounts and per share data) | ||||||||||||||||
Fiscal Quarter Ended | Fiscal Year Ended | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
$ | 342,904 | $ | 293,089 | $ | 1,192,866 | $ | 1,046,878 | |||||||||
Cost of Sales | 253,840 | 216,021 | 891,649 | 778,167 | ||||||||||||
Gross Profit | 89,064 | 77,068 | 301,217 | 268,711 | ||||||||||||
Operating Expenses | 66,660 | 61,994 | 253,978 | 228,311 | ||||||||||||
Operating Income | 22,404 | 15,074 | 47,239 | 40,400 | ||||||||||||
Interest Expense | 6,361 | 3,673 | 41,632 | 12,984 | ||||||||||||
Loss (Gain) on Disposal of Assets | (112) | 45 | (69) | (295) | ||||||||||||
Income Before Income Taxes | 16,155 | 11,356 | 5,676 | 27,711 | ||||||||||||
Provision for Income Tax Expense | 7,013 | 4,701 | 2,653 | 11,502 | ||||||||||||
Net Income | $ | 9,142 | $ | 6,655 | $ | 3,023 | $ | 16,209 | ||||||||
Net Income Per Share: | ||||||||||||||||
Basic | $ | 0.35 | $ | 0.26 | $ | 0.12 | $ | 0.63 | ||||||||
Diluted | $ | 0.34 | $ | 0.25 | $ | 0.12 | $ | 0.63 | ||||||||
Weighted Average Common Shares Outstanding: | ||||||||||||||||
Basic | 25,942,327 | 25,870,644 | 25,919,480 | 25,532,172 | ||||||||||||
Diluted | 27,249,659 | 27,169,323 | 26,029,609 | 26,508,994 | ||||||||||||
THE | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
AS OF | |||||||
(in thousands) | |||||||
2016 | 2015 | ||||||
(unaudited) | |||||||
Cash | $ | 32,862 | $ | 2,454 | |||
Accounts receivable, net | 128,030 | 124,139 | |||||
Inventories, net | 87,498 | 92,758 | |||||
Prepaid expenses and other current assets | 16,101 | 9,164 | |||||
Total current assets | 264,491 | 228,515 | |||||
Equipment and leasehold improvements, net | 62,183 | 54,283 | |||||
Software costs, net | 5,927 | 4,511 | |||||
163,784 | 155,816 | ||||||
Intangible assets, net | 131,131 | 132,211 | |||||
Other assets | 6,022 | 4,467 | |||||
Total assets | $ | 633,538 | $ | 579,803 | |||
Accounts payable | $ | 65,514 | $ | 64,888 | |||
Accrued liabilities | 21,196 | 24,258 | |||||
Accrued compensation | 5,748 | 7,732 | |||||
Current portion of long-term debt | 14,795 | 6,266 | |||||
Total current liabilities | 107,253 | 103,144 | |||||
Long-term debt, net of current portion | 317,725 | 267,349 | |||||
Deferred taxes, net | 6,958 | 4,060 | |||||
Other liabilities | 7,842 | 17,286 | |||||
Total liabilities | 439,778 | 391,839 | |||||
Preferred stock | - | - | |||||
Common stock | 263 | 263 | |||||
Additional paid in capital | 127,180 | 125,170 | |||||
Cumulative foreign currency translation adjustment | (2,186) | (2,949) | |||||
Retained earnings | 68,503 | 65,480 | |||||
Stockholders' equity | 193,760 | 187,964 | |||||
Total liabilities and stockholders' equity | $ | 633,538 | $ | 579,803 | |||
THE | |||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||
FOR THE FISCAL YEARS ENDED | |||||||
(in thousands) | |||||||
2016 | 2015 | ||||||
(unaudited) | |||||||
Cash flows from operating activities: | |||||||
Net Income | $ | 3,023 | $ | 16,209 | |||
Adjustments to reconcile net income to net cash provided by | |||||||
operating activities: | |||||||
Depreciation | 7,082 | 5,960 | |||||
Amortization | 11,433 | 9,453 | |||||
Provision for allowance for doubtful accounts | 3,224 | 2,909 | |||||
Deferred credits | 1,568 | 850 | |||||
Deferred taxes | 3,679 | (809) | |||||
Amortization of deferred financing fees | 1,807 | 1,228 | |||||
Loss on debt extinguishment | 22,310 | - | |||||
Stock compensation | 2,579 | 3,539 | |||||
Gain on disposal of assets | (69) | (295) | |||||
Change in fair value of earn-out liability | (10,031) | 558 | |||||
Changes in assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | (2,503) | (11,055) | |||||
Inventories | 7,038 | (6,109) | |||||
Prepaid expenses and other current assets | (7,168) | 1,314 | |||||
Accounts payable and accrued liabilities | (1,061) | 15,351 | |||||
Other liabilities | (2,882) | (471) | |||||
Other assets | (1,115) | (905) | |||||
Net cash provided by operating activities | 38,914 | 37,727 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (16,623) | (21,656) | |||||
Proceeds from asset disposals | 550 | 16,187 | |||||
Cash paid for acquisitions, net of cash received | (19,742) | (123,831) | |||||
Net cash used in investing activities | (35,815) | (129,300) | |||||
Cash flows from financing activities: | |||||||
Payment of debt | (158,880) | (23,893) | |||||
Proceeds from issuance of debt | 315,810 | 25,000 | |||||
Net change in revolving credit facility | (93,382) | 93,382 | |||||
Cash paid for deferred financing fees | (7,782) | (1,012) | |||||
Cash paid for debt extinguishment expenses | (21,219) | - | |||||
Cash paid for contingent earnout obligation | (6,743) | (1,420) | |||||
Excess tax benefits on stock compensation | - | 81 | |||||
Surrender of shares to pay withholding taxes | (570) | (1,092) | |||||
Net cash used in financing activities | 27,234 | 91,046 | |||||
Effect of foreign currency translation adjustment on cash | 75 | (347) | |||||
and cash equivalents | |||||||
Net decrease in cash and cash equivalents | 30,408 | (874) | |||||
Cash and cash equivalents at beginning of period | 2,454 | 3,328 | |||||
Cash and cash equivalents at end of period | $ | 32,862 | $ | 2,454 | |||
THE | ||||||||||||||||
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA TO NET INCOME | ||||||||||||||||
FISCAL QUARTERS AND YEARS ENDED | ||||||||||||||||
(unaudited; in thousands) | ||||||||||||||||
Fiscal Quarter Ended | Fiscal Year Ended | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net Income | $ | 9,142 | $ | 6,655 | $ | 3,023 | $ | 16,209 | ||||||||
Interest expense (2) | 6,361 | 3,673 | 41,632 | 12,984 | ||||||||||||
Depreciation | 2,116 | 1,741 | 7,082 | 5,960 | ||||||||||||
Amortization | 2,729 | 2,699 | 11,433 | 9,453 | ||||||||||||
Provision for income tax expense | 7,013 | 4,701 | 2,653 | 11,502 | ||||||||||||
EBITDA (1) | 27,361 | 19,469 | 65,823 | 56,108 | ||||||||||||
Adjustments: | ||||||||||||||||
Stock compensation (3) | 670 | 670 | 2,579 | 1,889 | ||||||||||||
Duplicate rent (4) | 196 | 125 | 824 | 972 | ||||||||||||
Integration and deal costs/third party transaction costs (5) | - | 70 | 424 | 4,546 | ||||||||||||
Change in fair value of earn-out obligation (6) | (8,431) | 251 | (10,031) | 558 | ||||||||||||
Moving expenses (7) | 127 | 172 | 638 | 567 | ||||||||||||
Adjusted EBITDA (1) | $ | 19,923 | $ | 20,757 | $ | 60,257 | $ | 64,640 | ||||||||
1. We are presenting EBITDA and Adjusted EBITDA, which are not measurements determined in | ||||||||||||||||
accordance with the | ||||||||||||||||
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. Interest expense includes the write-off of deferred financing fees for the refinancing of our term loan and | ||||||||||||||||
revolving credit facility and the prepayment penalties for the early extinguishment of our senior secured notes. | ||||||||||||||||
3. 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. | ||||||||||||||||
4. Represents duplicate rent expense for our | ||||||||||||||||
5. Represents transaction related costs incurred to complete and integrate acquisitions, including due | ||||||||||||||||
diligence, legal, integration and cash and non-cash stock transaction bonuses. | ||||||||||||||||
6. Represents the non-cash change in fair value of contingent earn-out liabilities related to our acquisitions. | ||||||||||||||||
7. Represents moving expenses for the consolidation of our | ||||||||||||||||
THE | ||||||||||||||||
RECONCILIATION OF MODIFIED PRO FORMA NET INCOME TO NET INCOME | ||||||||||||||||
FISCAL QUARTERS AND YEARS ENDED | ||||||||||||||||
(unaudited; in thousands except share amounts and per share data) | ||||||||||||||||
Fiscal Quarter Ended | Fiscal Year Ended | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net Income | $ | 9,142 | $ | 6,655 | $ | 3,023 | $ | 16,209 | ||||||||
Adjustments to Reconcile Net Income to Modified Pro Forma Net Income (1): | ||||||||||||||||
Duplicate rent (2) | 196 | 125 | 824 | 972 | ||||||||||||
Integration and deal costs/third party transaction costs (3) | - | 70 | 424 | 4,546 | ||||||||||||
Moving expenses (4) | 127 | 172 | 638 | 567 | ||||||||||||
Change in fair value of earnout obligation (5) | (8,431) | 251 | (10,031) | 558 | ||||||||||||
Debt refinance costs (6) | - | - | 22,310 | - | ||||||||||||
Tax effect of adjustments (7) | 3,665 | (256) | (5,601) | (2,757) | ||||||||||||
Total Adjustments | (4,443) | 362 | 8,564 | 3,886 | ||||||||||||
Modified Pro Forma Net Income | $ | 4,699 | $ | 7,017 | $ | 11,587 | $ | 20,095 | ||||||||
Diluted Earnings per Share - Modified Pro Forma | $ | 0.18 | $ | 0.26 | $ | 0.44 | $ | 0.77 | ||||||||
Diluted Shares Outstanding - Modified Pro Forma | 27,249,659 | 27,169,323 | 27,266,983 | 26,508,994 | ||||||||||||
1. We are presenting modified pro forma net income and modified pro forma | ||||||||||||||||
EPS, which are not measurements determined in accordance with | ||||||||||||||||
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 modified pro forma net income available to common stockholders and modified pro forma | ||||||||||||||||
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 modified pro forma net income available to common stockholders | ||||||||||||||||
and modified pro forma 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 expense for our | ||||||||||||||||
3. Represents transaction related costs incurred to complete and integrate acquisitions, including due | ||||||||||||||||
diligence, legal, integration and cash and non-cash stock transaction bonuses. | ||||||||||||||||
4. Represents moving
expenses for the consolidation of our | ||||||||||||||||
5. Represents the non-cash change in fair value of contingent earn-out liabilities related to our acquisitions. | ||||||||||||||||
6. Represents write-off of deferred financing fees for the refinancing of our term loan and revolving credit facility | ||||||||||||||||
and the prepayment penalties for settlement of our senior secured notes. | ||||||||||||||||
7. Represents the tax effect of items 2 through 6 above. | ||||||||||||||||
THE | ||||||||
RECONCILIATION OF ADJUSTED EBITDA GUIDANCE FOR FISCAL 2017 | ||||||||
(unaudited; in thousands) | ||||||||
Low-End Guidance | High-End Guidance | |||||||
Net Income | $ | 9,000 | $ | 10,500 | ||||
Provision for income tax expense | 6,500 | 7,500 | ||||||
Depreciation & amortization | 21,000 | 21,500 | ||||||
Interest expense | 22,000 | 22,500 | ||||||
EBITDA (1) | 58,500 | 62,000 | ||||||
Adjustments: | ||||||||
Stock compensation (2) | 3,400 | 3,700 | ||||||
Duplicate occupancy and moving costs (3) | 100 | 300 | ||||||
Adjusted EBITDA (1) | $ | 62,000 | $ | 66,000 | ||||
1. We are presenting estimated EBITDA and Adjusted EBITDA, which are not measurements determined in accordance | ||||||||
with the | ||||||||
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 expected to be associated with awards of restricted shares | ||||||||
of our common stock to our key employees and our independent directors. | ||||||||
3. Represents occupancy costs, including rent, utilities and insurance, and moving costs expected to be incurred in | ||||||||
connection with the Company's facility consolidations while we are unable to use those facilities. | ||||||||
THE | |||||||
2017 FULLY DILUTED EPS GUIDANCE RECONCILIATION TO 2017 MODIFIED | |||||||
PRO FORMA FULLY DILUTED EPS GUIDANCE (1)(2) | |||||||
Low-End Guidance | High-End Guidance | ||||||
Net income per diluted share | $ | 0.34 | $ | 0.40 | |||
Duplicate occupancy and moving costs (3) | - | 0.01 | |||||
Modified pro forma net income per diluted share | $ | 0.34 | $ | 0.41 | |||
1. We are presenting estimated modified pro forma EPS, which is not a measurement determined in | |||||||
accordance with | |||||||
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 modified pro forma 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 modified pro forma 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 41.5% to 42.0% and an estimated fully | |||||||
diluted share count of approximately 26.5 million shares. | |||||||
3. Represents occupancy costs, including rent, utilities and insurance, and moving costs expected to be | |||||||
incurred in connection with the Company's facility consolidations while we are unable to use those facilities. | |||||||
Contact: Investor RelationsSource: TheJohn Austin , (718) 684-8415
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