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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 24, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission file number: 001-35249
THE CHEFS’ WAREHOUSE, INC.
(Exact name of registrant as specified in its charter)
Delaware 20-3031526
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
100 East Ridge Road
Ridgefield, Connecticut 06877
(Address of principal executive offices)

Registrant’s telephone number, including area code: (203) 894-1345

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01CHEFThe NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      No  
Number of shares of common stock, par value $.01 per share, outstanding at July 25, 2022: 38,260,862
1




THE CHEFS’ WAREHOUSE, INC.
FORM 10-Q
Table of Contents
  Page
PART I. FINANCIAL INFORMATION 
   
Item 1.
   
 
   
 
   
   
 
   
Item 2.
   
Item 3.
   
Item 4.
   
PART II. OTHER INFORMATION 
   
Item 1.
   
Item 1A.
   
Item 2.
   
Item 3.
Defaults Upon Senior Securities
   
Item 4.
   
Item 5.
   
Item 6.
   

 

2




CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Statements in this report regarding the business of The Chefs’ Warehouse, Inc. (the “Company”) 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. Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and/or could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. 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 the COVID-19 pandemic, 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, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, 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 February 22, 2022 and other reports, including this Quarterly Report on Form 10-Q, 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.


3




PART I FINANCIAL INFORMATION

ITEM 1.            CONSOLIDATED FINANCIAL STATEMENTS

THE CHEFS’ WAREHOUSE, INC.
CONSOLIDATED BALANCE SHEETS 
(Amounts in thousands, except share data)
June 24, 2022 (unaudited)December 24, 2021
ASSETS  
Current assets:  
Cash and cash equivalents$51,806 $115,155 
Accounts receivable, net of allowance of $19,798 in 2022 and $20,260 in 2021
208,229 172,540 
Inventories, net181,594 144,491 
Prepaid expenses and other current assets36,323 37,774 
Total current assets477,952 469,960 
Equipment, leasehold improvements and software, net155,564 133,622 
Operating lease right-of-use assets138,591 130,701 
Goodwill237,788 221,775 
Intangible assets, net118,526 104,743 
Deferred taxes, net4,376 9,380 
Other assets4,081 3,614 
Total assets$1,136,878 $1,073,795 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable$144,547 $118,284 
Accrued liabilities44,817 35,390 
Short-term operating lease liabilities17,430 15,882 
Accrued compensation19,292 22,321 
Current portion of long-term debt4,843 5,141 
Total current liabilities230,929 197,018 
Long-term debt, net of current portion392,980 394,160 
Operating lease liabilities134,714 127,296 
Other liabilities and deferred credits4,568 5,110 
Total liabilities763,191 723,584 
Commitments and contingencies
Stockholders’ equity:  
Preferred Stock - $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding at June 24, 2022 and December 24, 2021
  
Common Stock - $0.01 par value, 100,000,000 shares authorized, 38,257,455 and 37,887,675 shares issued and outstanding at June 24, 2022 and December 24, 2021, respectively
383 380 
Additional paid-in capital319,364 314,242 
Accumulated other comprehensive loss(1,971)(2,022)
Retained earnings55,911 37,611 
Total stockholders’ equity373,687 350,211 
Total liabilities and stockholders’ equity$1,136,878 $1,073,795 

See accompanying notes to the consolidated financial statements
4




THE CHEFS’ WAREHOUSE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(Amounts in thousands, except share and per share amounts)
Thirteen Weeks EndedTwenty-Six Weeks Ended
June 24,
2022
June 25,
2021
June 24,
2022
June 25,
2021
Net sales$648,104 $422,968 $1,160,207 $703,185 
Cost of sales492,100 327,094 886,690 548,364 
Gross profit156,004 95,874 273,517 154,821 
Selling, general and administrative expenses124,487 90,358 234,573 170,603 
Other operating expenses (income), net3,883 857 5,046 (313)
Operating income (loss)27,634 4,659 33,898 (15,469)
Interest expense4,465 4,408 8,830 9,171 
Income (loss) before income taxes23,169 251 25,068 (24,640)
Provision for income tax expense (benefit)6,254 (847)6,768 (7,817)
Net income (loss)$16,915 $1,098 $18,300 $(16,823)
Other comprehensive income:  
Foreign currency translation adjustments(74)76 51 157 
Comprehensive income (loss)$16,841 $1,174 $18,351 $(16,666)
Net income (loss) per share:   
Basic$0.46 $0.03 $0.49 $(0.46)
Diluted$0.42 $0.03 $0.47 $(0.46)
Weighted average common shares outstanding:  
Basic37,100,968 36,831,054 37,018,044 36,615,463 
Diluted42,053,453 37,081,186 41,896,379 36,615,463 
 
See accompanying notes to the consolidated financial statements.
5




THE CHEFS’ WAREHOUSE, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
(Amounts in thousands, except share amounts)
 Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
Total
 SharesAmount
Balance December 24, 202137,887,675 $380 $314,242 $(2,022)$37,611 $350,211 
Net income— — — — 1,385 1,385 
Stock compensation433,115 4 3,039 — — 3,043 
Warrants issued for acquisition— — 1,701 — — 1,701 
Cumulative translation adjustment— — — 125 — 125 
Shares surrendered to pay tax withholding(64,329)(1)(2,039)— — (2,040)
Balance March 25, 202238,256,461 $383 $316,943 $(1,897)$38,996 $354,425 
Net income— — — — 16,915 16,915 
Stock compensation16,131 — 2,939 — — 2,939 
Cumulative translation adjustment— — — (74)— (74)
Shares surrendered to pay tax withholding(15,137)— (518)— — (518)
Balance June 24, 202238,257,455 $383 $319,364 $(1,971)$55,911 $373,687 

Balance December 25, 202037,274,768 $373 $303,734 $(2,051)$42,534 $344,590 
Net loss— — — — (17,921)(17,921)
Stock compensation673,430 6 2,452 — — 2,458 
Cumulative translation adjustment— — — 81 — 81 
Shares surrendered to pay tax withholding(38,503)— (1,192)— — (1,192)
Balance March 26, 202137,909,695 $379 $304,994 $(1,970)$24,613 $328,016 
Net income— — — — 1,098 1,098 
Stock compensation69,245 1 3,279 — — 3,280 
Warrants issued for acquisition— — 1,120 — — 1,120 
Cumulative translation adjustment— — — 76 — 76 
Shares surrendered to pay tax withholding(17,077)— (541)— — (541)
Balance June 25, 202137,961,863 $380 $308,852 $(1,894)$25,711 $333,049 

See accompanying notes to the consolidated financial statements.
6




THE CHEFS’ WAREHOUSE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
Twenty-Six Weeks Ended
June 24, 2022June 25, 2021
Cash flows from operating activities:  
Net income (loss)$18,300 $(16,823)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:  
Depreciation and amortization11,755 10,660 
Amortization of intangible assets6,819 6,643 
Benefit for allowance for doubtful accounts1,817 488 
Non-cash operating lease expense1,076 209 
Provision (benefit) for deferred income taxes5,004 (7,755)
Amortization of deferred financing fees1,009 1,364 
Stock compensation5,982 5,738 
Change in fair value of contingent earn-out liabilities3,628 (1,420)
Intangible asset impairment 597 
Loss on asset disposal17 224 
Changes in assets and liabilities, net of acquisitions:  
Accounts receivable(24,659)(37,107)
Inventories(30,569)(39,347)
Prepaid expenses and other current assets106 (101)
Accounts payable, accrued liabilities and accrued compensation19,733 52,541 
Other assets and liabilities(237)167 
Net cash provided by (used in) operating activities19,781 (23,922)
Cash flows from investing activities:  
Capital expenditures(23,490)(9,574)
Cash paid for acquisitions, net of cash received(52,007)(7,165)
Net cash used in investing activities(75,497)(16,739)
Cash flows from financing activities:  
Payment of debt, finance lease and other financing obligations(2,769)(34,372)
Proceeds from debt issuance 51,750 
Payment of deferred financing fees(406)(1,450)
Surrender of shares to pay withholding taxes(2,558)(1,487)
Cash paid for contingent earn-out liability(2,000)(83)
Payments under asset-based loan facility (20,000)
Net cash used in financing activities(7,733)(5,642)
Effect of foreign currency on cash and cash equivalents100 (58)
Net change in cash and cash equivalents(63,349)(46,361)
Cash and cash equivalents-beginning of period115,155 193,281 
Cash and cash equivalents-end of period$51,806 $146,920 

See accompanying notes to the consolidated financial statements.
7




THE CHEFS’ WAREHOUSE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share amounts)

Note 1 - Operations and Basis of Presentation
 
Description of Business and Basis of Presentation
 
The financial statements include the consolidated accounts of The Chefs’ Warehouse, Inc. (the “Company”), and its wholly-owned subsidiaries. The Company’s quarterly periods end on the thirteenth Friday of each quarter. Fiscal 2022 will include a fourteenth week in the fourth quarter. Every six to seven years, the Company will add a fourteenth week to its fourth quarter to more closely align its year-end to the calendar year. The Company’s business consists of three operating segments: East Coast, Midwest and West Coast that aggregate into one reportable segment, foodservice distribution, which is concentrated primarily in the United States. The Company’s customer base consists primarily of menu-driven independent restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolateries, cruise lines, casinos, specialty food stores, grocers and warehouse clubs.

Consolidation

The consolidated financial statements include all the accounts of the Company and its direct and indirect wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Unaudited Interim Financial Statements

The accompanying unaudited consolidated financial statements and the related interim information contained within the notes to such unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the applicable rules of the Securities and Exchange Commission (“SEC”) for interim information and quarterly reports on Form 10-Q. Accordingly, they do not include all the information and disclosures required by GAAP for complete financial statements. These unaudited consolidated financial statements and related notes should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended December 24, 2021 filed as part of the Company’s Annual Report on Form 10-K, as filed with the SEC on February 22, 2022.

The unaudited consolidated financial statements appearing in this Form 10-Q have been prepared on the same basis as the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K, as filed with the SEC on February 22, 2022, and in the opinion of management, include all normal recurring adjustments that are necessary for the fair statement of the Company’s interim period results. The year-end consolidated balance sheet data was derived from the audited financial statements but does not include all disclosures required by GAAP. Due to seasonal fluctuations, the COVID-19 pandemic and other factors, the results of operations for the thirteen and twenty-six weeks ended June 24, 2022 are not necessarily indicative of the results to be expected for the full year.

The preparation of financial statements in conformity with GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from management’s estimates.













8





Note 2 – Summary of Significant Accounting Policies

Revenue Recognition
 
Revenues from product sales are recognized at the point at which control of each product is transferred to the customer. The Company’s contracts contain performance obligations which are satisfied when customers have physical possession of each product. The majority of customer orders are fulfilled within a day and customer payment terms are typically 14 to 60 days from delivery. Shipping and handling activities are costs to fulfill the Company’s performance obligations. These costs are expensed as incurred and presented within selling, general and administrative expenses on the consolidated statements of operations. The Company offers certain sales incentives to customers in the form of rebates or discounts. These sales incentives are accounted as variable consideration. The Company estimates these amounts based on the expected amount to be provided to customers and records a corresponding reduction in revenue. The Company does not expect a significant reversal in the amount of cumulative revenue recognized. Sales tax billed to customers is not included in revenue but rather recorded as a liability owed to the respective taxing authorities at the time the sale is recognized.

The following table presents the Company’s net sales disaggregated by principal product category:
Thirteen Weeks EndedTwenty-Six Weeks Ended
June 24, 2022June 25, 2021June 24, 2022June 25, 2021
Center-of-the-Plate$284,286 43.9 %$215,089 50.9 %$523,062 45.1 %$354,934 50.5 %
Dry Goods103,597 16.0 %57,117 13.5 %182,112 15.7 %96,897 13.8 %
Pastry76,320 11.8 %41,312 9.8 %134,071 11.6 %70,110 10.0 %
Cheese and Charcuterie59,109 9.1 %34,303 8.1 %102,597 8.8 %57,402 8.2 %
Produce37,214 5.7 %30,558 7.2 %65,111 5.6 %51,149 7.3 %
Dairy and Eggs39,846 6.1 %18,902 4.5 %69,266 6.0 %31,483 4.5 %
Oils and Vinegars31,517 4.9 %16,881 4.0 %55,604 4.8 %26,355 3.7 %
Kitchen Supplies16,215 2.5 %8,806 2.0 %28,384 2.4 %14,855 2.0 %
Total$648,104 100 %$422,968 100 %$1,160,207 100 %$703,185 100 %

The Company determines its product category classification based on how the Company currently markets its products to its customers. The Company’s definition of its principal product categories may differ from the way in which other companies present similar information.

Food Processing Costs

Food processing costs include but are not limited to direct labor and benefits, applicable overhead and depreciation of equipment and facilities used in food processing activities. Food processing costs included in cost of sales were $9,398 and $6,679 for the thirteen weeks ended June 24, 2022 and June 25, 2021, respectively, and $18,434 and $12,075 for the twenty-six weeks ended June 24, 2022 and June 25, 2021, respectively.
















9





Note 3 – Net Income (Loss) per Share
 
The following table sets forth the computation of basic and diluted net income (loss) per common share:
 Thirteen Weeks EndedTwenty-Six Weeks Ended
 June 24, 2022June 25, 2021June 24, 2022June 25, 2021
Net income (loss) per share:   
Basic$0.46 $0.03 $0.49 $(0.46)
Diluted$0.42 $0.03 $0.47 $(0.46)
Weighted average common shares:   
Basic37,100,968 36,831,054 37,018,044 36,615,463 
Diluted42,053,453 37,081,186 41,896,379 36,615,463 

Reconciliation of net income (loss) per common share:
 Thirteen Weeks EndedTwenty-Six Weeks Ended
 June 24, 2022June 25, 2021June 24, 2022June 25, 2021
Numerator:   
Net income (loss)$16,915 $1,098 $18,300 $(16,823)
Add effect of dilutive securities   
Interest on convertible notes, net of tax719  1,365  
Net income (loss) available to common shareholders$17,634 $1,098 $19,665 $(16,823)
Denominator:   
Weighted average basic common shares outstanding37,100,968 36,831,054 37,018,044 36,615,463 
Dilutive effect of unvested common shares263,071 250,132 296,538  
Dilutive effect of stock options and warrants73,381  56,817  
Dilutive effect of convertible notes4,616,033  4,524,980  
Weighted average diluted common shares outstanding42,053,453 37,081,186 41,896,379 36,615,463 
 
Potentially dilutive securities that have been excluded from the calculation of diluted net income (loss) per common share because the effect is anti-dilutive are as follows:
 Thirteen Weeks EndedTwenty-Six Weeks Ended
 June 24, 2022June 25, 2021June 24, 2022June 25, 2021
Restricted share awards (“RSAs”)106,571  83,001 349,389 
Stock options and warrants 103,226  91,779 
Convertible notes 4,616,033 91,053 4,205,246 

Note 4 – Fair Value Measurements
 
Assets and Liabilities Measured at Fair Value
 
The Company’s contingent earn-out liabilities are measured at fair value. These liabilities were estimated using Level 3 inputs. Long-term earn-out liabilities were $2,793 and $3,252 as of June 24, 2022 and December 24, 2021, respectively, and are reflected as other liabilities and deferred credits on the consolidated balance sheets. The remaining short-term earn-out liabilities are reflected as accrued liabilities on the consolidated balance sheets. The fair value of contingent consideration was determined based on a probability-based approach which includes projected results, percentage probability of occurrence and the application of a discount rate to present value the payments. A significant change in projected results, discount rate, or probabilities of occurrence could result in a significantly higher or lower fair value measurement.
10




Changes in the fair value of contingent earn-out liabilities are reflected in other operating expenses (income), net on the consolidated statements of operations.

The following table presents the changes in Level 3 contingent earn-out liabilities:
Total
Balance December 24, 2021$6,877 
Acquisition value1,200 
Cash payments(2,000)
Changes in fair value3,628 
Balance June 24, 2022$9,705 

Fair Value of Financial Instruments

The following table presents the carrying value and fair value of the Company’s convertible notes. In estimating the fair value of the convertible notes, the Company utilized Level 3 inputs including prevailing market interest rates to estimate the debt portion of the instrument and a Black Scholes valuation model to estimate the fair value of the conversion option. The Black Scholes model utilizes the market price of the Company’s common stock, estimates of the stock’s volatility and the prevailing risk-free interest rate in calculating the fair value estimate.
 June 24, 2022December 24, 2021
Carrying ValueFair ValueCarrying ValueFair Value
Convertible Senior Notes$200,000 $223,854 $200,000 $206,182 
Convertible Unsecured Note$4,000 $4,474 $4,000 $4,102 
 
Note 5 – Acquisitions
 
During the second quarter of fiscal 2022, the Company completed two acquisitions for an aggregate purchase price of approximately $22,500, paid in cash, subject to customary working capital adjustments. The Company will also pay additional contingent consideration, if earned, in the form of earn-out amounts which could total $2,000 in the aggregate. The Company is in the process of finalizing a valuation of the tangible and intangible assets as of the acquisition date. When applicable, these valuations require the use of Level 3 inputs. Goodwill of $3,947 will be amortized over 15 years for tax purposes.

Capital Seaboard

On December 28, 2021, pursuant to an asset purchase agreement, the Company acquired substantially all of the assets of CGC Holdings, Inc. (“Capital Seaboard”), a specialty seafood and produce distributor in Maryland. The purchase price was approximately $31,036, consisting of $28,000 paid in cash at closing, common stock warrants valued at $1,701, and $1,335 paid upon settlement of a net working capital true-up. The Company is in the process of finalizing a valuation of tangible and intangible assets of Capital Seaboard as of the acquisition date. When applicable, these valuations require the use of Level 3 inputs. Goodwill for the Capital Seaboard acquisition will be amortized over 15 years for tax purposes. The goodwill recorded primarily reflects the value of acquiring an established specialty seafood and produce distributor to leverage the Company’s existing products in the markets served by Capital Seaboard, to supply Capital Seaboard’s product offerings to our East Coast markets and any intangible assets that do not qualify for separate recognition.

The Company reflected net sales and income before taxes in its consolidated statement of operations related to the Capital Seaboard acquisition as follows:
 Thirteen Weeks EndedTwenty-Six Weeks Ended
 June 24, 2022June 24, 2022
Net sales$38,671 $70,353 
Income before income taxes$1,759 $2,892 




11




The table below presents unaudited pro forma consolidated income statement information of the Company as if the acquisitions had occurred on December 26, 2020. The pro forma results were prepared from financial information obtained from the sellers of the business, as well as information obtained during the due diligence process associated with the acquisitions. The pro forma information is not necessarily indicative of the Company’s results of operations had the acquisitions been completed on the above date, nor is it necessarily indicative of the Company’s future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisitions, any incremental costs for transitioning to become a public company, and also does not reflect additional revenue opportunities following the acquisitions. The pro forma information reflects amortization and depreciation of the acquisitions at their respective fair values.

 Thirteen Weeks EndedTwenty-Six Weeks Ended
 June 24, 2022June 25, 2021June 24, 2022June 25, 2021
Net sales$667,413 $477,733 $1,179,516 $801,188 
Income (loss) before income taxes$23,169 $1,077 $25,068 $(24,450)

The table below sets forth the preliminary purchase price allocation for these acquisitions:
Capital SeaboardOther Acquisitions
Current assets$10,130 $8,834 
Customer relationships7,250 10,410 
Trademarks2,280 620 
Goodwill8,334 8,537 
Fixed assets9,552 197 
Other assets122 17 
Current liabilities(6,632)(4,915)
Earn-out liability (1,200)
Issuance of warrants(1,701) 
Total cash consideration$29,335 $22,500 
The Company recognized professional fees of $1,019 in operating expenses related to acquisition related activities in the second quarter of fiscal 2022.

Note 6 – Inventories
 
Inventories consist primarily of finished product and are reflected net of adjustments for shrinkage, excess and obsolescence totaling $9,315 and $8,312 at June 24, 2022 and December 24, 2021, respectively.

12




Note 7 – Equipment, Leasehold Improvements and Software
 
Equipment, leasehold improvements and software as of June 24, 2022 and December 24, 2021 consisted of the following:
 Useful LivesJune 24, 2022December 24, 2021
LandIndefinite$5,542 $5,020 
Buildings20 years23,443 18,406 
Machinery and equipment
5 - 10 years
30,067 28,099 
Computers, data processing and other equipment
3 - 7 years
16,386 15,480 
Software
3 - 7 years
40,098 39,799 
Leasehold improvements
1 - 40 years
92,552 69,105 
Furniture and fixtures7 years3,671 3,582 
Vehicles
5 - 10 years
28,007 29,632 
Construction-in-process 23,870 24,355 
  263,636 233,478 
Less: accumulated depreciation and amortization (108,072)(99,856)
Equipment, leasehold improvements and software, net $155,564 $133,622 

Construction-in-process at June 24, 2022 related primarily to the implementation of the Company’s Enterprise Resource Planning (“ERP”) system and the build-out of the Company’s Miami distribution facility and at December 24, 2021 related primarily to the build-outs of the Company’s Miami and Los Angeles distribution facilities. The net book value of equipment financed under finance leases at June 24, 2022 and December 24, 2021 was $9,774 and $10,874, respectively.

The components of depreciation and amortization expense were as follows:
 Thirteen Weeks EndedTwenty-Six Weeks Ended
 June 24, 2022June 25, 2021June 24, 2022June 25, 2021
Depreciation expense$4,385 $3,841 $8,800 $7,776 
Software amortization$1,481 $1,712 $2,955 $2,884 
$5,866 $5,553 $11,755 $10,660 

Note 8 – Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill are presented as follows:
Carrying amount as of December 24, 2021$221,775 
Goodwill adjustments (1)
(792)
Acquisitions16,871 
Foreign currency translation(66)
Carrying amount as of June 24, 2022$237,788 
(1) The goodwill adjustments represent measurement period adjustments related to certain acquisitions completed in the prior year.

Other intangible assets as of June 24, 2022 and December 24, 2021 consisted of the following:

June 24, 2022Weighted-Average
Remaining
Amortization Period
Gross Carrying AmountAccumulated AmortizationNet Amount
Customer relationships120 months$173,387 $(79,952)$93,435 
Non-compete agreements20 months8,579 (8,151)428 
Trademarks163 months39,407 (14,744)24,663 
Total$221,373 $(102,847)$118,526 
13




December 24, 2021Weighted-Average
Remaining
Amortization Period
Gross Carrying AmountAccumulated AmortizationNet Amount
Customer relationships120 months$155,678 $(74,644)$81,034 
Non-compete agreements26 months8,579 (8,018)561 
Trademarks179 months36,514 (13,366)23,148 
Total$200,771 $(96,028)$104,743 

Amortization expense for other intangibles was $3,463 and $3,104 for the thirteen weeks ended June 24, 2022 and June 25, 2021, respectively, and $6,819 and $6,643 for the twenty-six weeks ended June 24, 2022 and June 25, 2021, respectively.

Estimated amortization expense for other intangible assets for the remainder of the fiscal year ending December 30, 2022 and each of the next four fiscal years and thereafter is as follows:
2022$6,784 
202313,058 
202412,200 
202511,784 
202611,784 
Thereafter62,916 
Total$118,526 

Note 9 – Debt Obligations
 
Debt obligations as of June 24, 2022 and December 24, 2021 consisted of the following:
June 24, 2022December 24, 2021
Senior secured term loans$167,819 $168,675 
Convertible senior notes200,000 200,000 
Asset-based loan facility20,000 20,000 
Finance lease and other financing obligations10,201 11,602 
Convertible unsecured note4,000 4,000 
Deferred finance fees and original issue premium (discount)(4,197)(4,976)
Total debt obligations397,823 399,301 
Less: current installments(4,843)(5,141)
Total debt obligations excluding current installments$392,980 $394,160 

On March 11, 2022, the Company entered into a third amendment to its asset-based loan facility (“ABL Facility”) which increased the aggregate commitments from $150,000 to $200,000. The interest rate charged on borrowings under the ABL Facility is equal to a spread plus, at the Company’s option, either the Base Rate (as defined in the ABL Credit Agreement) or a forward-looking term rate based on the secured overnight financing rate term (except for swingline loans) for one-, three-, or six-month interest periods chosen by the Company. The ABL Facility matures on March 11, 2027 subject to a springing maturity date of March 24, 2025 should the Company’s term loan not have been extende