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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 September 23, 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 October 24, 2022: 38,270,107
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 the Secured Overnight Financing Rate (“SOFR”); 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)
September 23, 2022 (unaudited)December 24, 2021
ASSETS  
Current assets:  
Cash and cash equivalents$145,425 $115,155 
Accounts receivable, net of allowance of $21,147 in 2022 and $20,260 in 2021
208,939 172,540 
Inventories, net190,668 144,491 
Prepaid expenses and other current assets46,464 37,774 
Total current assets591,496 469,960 
Property, plant and equipment, net158,569 133,622 
Operating lease right-of-use assets135,286 130,701 
Goodwill245,428 221,775 
Intangible assets, net116,112 104,743 
Deferred taxes, net2,259 9,380 
Other assets3,609 3,614 
Total assets$1,252,759 $1,073,795 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable$142,963 $118,284 
Accrued liabilities48,751 35,390 
Short-term operating lease liabilities17,180 15,882 
Accrued compensation21,929 22,321 
Current portion of long-term debt6,067 5,141 
Total current liabilities236,890 197,018 
Long-term debt, net of current portion493,148 394,160 
Operating lease liabilities131,910 127,296 
Other liabilities and deferred credits5,862 5,110 
Total liabilities867,810 723,584 
Commitments and contingencies
Stockholders’ equity:  
Preferred Stock - $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding at September 23, 2022 and December 24, 2021
  
Common Stock - $0.01 par value, 100,000,000 shares authorized, 38,270,107 and 37,887,675 shares issued and outstanding at September 23, 2022 and December 24, 2021, respectively
383 380 
Additional paid-in capital322,505 314,242 
Accumulated other comprehensive loss(2,127)(2,022)
Retained earnings64,188 37,611 
Total stockholders’ equity384,949 350,211 
Total liabilities and stockholders’ equity$1,252,759 $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 EndedThirty-Nine Weeks Ended
September 23,
2022
September 24,
2021
September 23,
2022
September 24,
2021
Net sales$661,856 $484,321 $1,822,063 $1,187,506 
Cost of sales504,068 374,346 1,390,758 922,710 
Gross profit157,788 109,975 431,305 264,796 
Selling, general and administrative expenses130,255 99,431 364,828 270,034 
Other operating expenses (income), net5,458 105 10,504 (208)
Operating income (loss)22,075 10,439 55,973 (5,030)
Interest expense10,737 4,191 19,567 13,362 
Income (loss) before income taxes11,338 6,248 36,406 (18,392)
Provision for income tax expense (benefit)3,061 2,792 9,829 (5,025)
Net income (loss)$8,277 $3,456 $26,577 $(13,367)
Other comprehensive (loss) income:  
Foreign currency translation adjustments(156)(90)(105)67 
Comprehensive income (loss)$8,121 $3,366 $26,472 $(13,300)
Net income (loss) per share:   
Basic$0.22 $0.09 $0.72 $(0.36)
Diluted$0.21 $0.09 $0.68 $(0.36)
Weighted average common shares outstanding:  
Basic37,120,926 36,875,784 37,047,653 36,701,927 
Diluted42,044,053 37,105,746 41,942,676 36,701,927 
 
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 
Net income— — — — 8,277 8,277 
Stock compensation9,986 — 3,099 — — 3,099 
Exercise of stock options3,407 — 69 — — 69 
Cumulative translation adjustment— — — (156)— (156)
Shares surrendered to pay tax withholding(741)— (27)— — (27)
Balance September 23, 202238,270,107 $383 $322,505 $(2,127)$64,188 $384,949 

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 
Net income— — — — 3,456 3,456 
Stock compensation(75,597)— 2,710 — — 2,710 
Cumulative translation adjustment— — — (90)— (90)
Shares surrendered to pay tax withholding(2,017)— (59)— — (59)
Balance September 24, 202137,884,249 $380 $311,503 $(1,984)$29,167 $339,066 

See accompanying notes to the consolidated financial statements.
6




THE CHEFS’ WAREHOUSE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
Thirty-Nine Weeks Ended
September 23, 2022September 24, 2021
Cash flows from operating activities:  
Net income (loss)$26,577 $(13,367)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:  
Depreciation and amortization17,667 16,270 
Amortization of intangible assets10,289 9,778 
Provision (benefit) for allowance for doubtful accounts3,138 (744)
Non-cash operating lease expense1,329 505 
Provision (benefit) for deferred income taxes7,121 (4,855)
Amortization of deferred financing fees1,621 1,832 
Loss on debt extinguishment142  
Stock compensation9,081 8,448 
Change in fair value of contingent earn-out liabilities8,358 (1,359)
Intangible asset impairment 597 
Loss on asset disposal17 257 
Changes in assets and liabilities, net of acquisitions:  
Accounts receivable(25,402)(51,582)
Inventories(40,519)(49,148)
Prepaid expenses and other current assets(9,848)(3,304)
Accounts payable, accrued liabilities and accrued compensation21,938 60,443 
Other assets and liabilities238 (101)
Net cash provided by (used in) operating activities31,747 (26,330)
Cash flows from investing activities:  
Capital expenditures(31,666)(17,872)
Cash paid for acquisitions, net of cash received(62,007)(7,280)
Net cash used in investing activities(93,673)(25,152)
Cash flows from financing activities:  
Payment of debt, finance lease and other financing obligations(171,434)(35,918)
Proceeds from debt issuance300,000 51,750 
Payment of deferred financing fees(11,258)(1,450)
Proceeds from exercise of stock options69  
Surrender of shares to pay withholding taxes(2,584)(1,792)
Cash paid for contingent earn-out liability(2,538)(83)
Payments under asset-based loan facility(20,000)(20,000)
Net cash provided by (used in) financing activities92,255 (7,493)
Effect of foreign currency on cash and cash equivalents(59)(89)
Net change in cash and cash equivalents30,270 (59,064)
Cash and cash equivalents-beginning of period115,155 193,281 
Cash and cash equivalents-end of period$145,425 $134,217 

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. 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. Fiscal 2022 will include a fourteenth week in the fourth quarter. 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 thirty-nine weeks ended September 23, 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.

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
8




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 EndedThirty-Nine Weeks Ended
September 23, 2022September 24, 2021September 23, 2022September 24, 2021
Center-of-the-Plate$280,272 42.3 %$238,783 49.3 %$803,334 44.1 %$593,717 50.0 %
Dry Goods108,908 16.5 %66,455 13.7 %291,020 16.0 %163,352 13.8 %
Pastry79,899 12.1 %48,842 10.1 %213,970 11.7 %118,952 10.0 %
Cheese and Charcuterie61,123 9.2 %40,403 8.3 %163,720 9.0 %97,805 8.2 %
Produce39,302 5.9 %35,900 7.4 %104,413 5.7 %87,049 7.3 %
Dairy and Eggs41,780 6.3 %21,922 4.5 %111,046 6.1 %53,405 4.5 %
Oils and Vinegars33,437 5.1 %21,855 4.5 %89,041 4.9 %48,210 4.1 %
Kitchen Supplies17,135 2.6 %10,161 2.2 %45,519 2.5 %25,016 2.1 %
Total$661,856 100 %$484,321 100 %$1,822,063 100 %$1,187,506 100 %

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 $10,089 and $7,524 for the thirteen weeks ended September 23, 2022 and September 24, 2021, respectively, and $28,523 and $19,599 for the thirty-nine weeks ended September 23, 2022 and September 24, 2021, respectively.

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 EndedThirty-Nine Weeks Ended
 September 23, 2022September 24, 2021September 23, 2022September 24, 2021
Net income (loss) per share:   
Basic$0.22 $0.09 $0.72 $(0.36)
Diluted$0.21 $0.09 $0.68 $(0.36)
Weighted average common shares:   
Basic37,120,926 36,875,784 37,047,653 36,701,927 
Diluted42,044,053 37,105,746 41,942,676 36,701,927 













9




Reconciliation of net income (loss) per common share:
 Thirteen Weeks EndedThirty-Nine Weeks Ended
 September 23, 2022September 24, 2021September 23, 2022September 24, 2021
Numerator:   
Net income (loss)$8,277 $3,456 $26,577 $(13,367)
Add effect of dilutive securities   
Interest on convertible notes, net of tax683  2,048  
Net income (loss) available to common shareholders$8,960 $3,456 $28,625 $(13,367)
Denominator:   
Weighted average basic common shares outstanding37,120,926 36,875,784 37,047,653 36,701,927 
Dilutive effect of unvested common shares316,358 229,962 304,391  
Dilutive effect of stock options and warrants81,789  65,652  
Dilutive effect of convertible notes4,524,980  4,524,980  
Weighted average diluted common shares outstanding42,044,053 37,105,746 41,942,676 36,701,927 
 
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 EndedThirty-Nine Weeks Ended
 September 23, 2022September 24, 2021September 23, 2022September 24, 2021
Restricted share awards (“RSAs”)80,844 50,412 68,784 297,978 
Stock options and warrants 126,359  122,956 
Convertible notes91,053 4,616,033 91,053 4,341,664 

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 $4,130 and $3,252 as of September 23, 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. 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(2,538)
Changes in fair value8,358 
Balance September 23, 2022$13,897 


10




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.
 September 23, 2022December 24, 2021
Carrying ValueFair ValueCarrying ValueFair Value
Convertible Senior Notes$200,000 $204,340 $200,000 $206,182 
Convertible Unsecured Note$4,000 $4,221 $4,000 $4,102 
 
Note 5 – Acquisitions
 
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.

Other Acquisitions

During the thirty-nine weeks ended September 23, 2022 , the Company completed three other acquisitions for an aggregate purchase price of approximately $32,500, 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 $16,252 will be amortized over 15 years for tax purposes.

The Company reflected net sales and income before income taxes in its consolidated statement of operations related to the acquisitions follows:
 Thirteen Weeks EndedThirty-Nine Weeks Ended
 September 23, 2022September 23, 2022
Net sales$58,466 $135,260 
Income before income taxes$4,970 $8,892 

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.

11




 Thirteen Weeks Ended
Thirty-Nine Weeks Ended
 September 23, 2022September 24, 2021September 23, 2022September 24, 2021
Net sales$698,650 $544,562 $1,871,994 $1,357,312 
Income (loss) before income taxes$11,699 $7,875 $37,152 $(16,040)

The table below sets forth the preliminary purchase price allocation for these acquisitions:
Capital SeaboardOther Acquisitions
Current assets$10,130 $11,498 
Customer relationships7,250 11,100 
Trademarks2,280 1,000 
Goodwill8,334 16,252 
Fixed assets9,552 633 
Other assets122 18 
Current liabilities(6,632)(6,801)
Earn-out liability (1,200)
Total consideration$31,036 $32,500 
The Company recognized professional fees of $728 and $1,747 in operating expenses related to acquisition related activities during the thirteen and thirty-nine weeks ended September 23, 2022, respectively.

Note 6 – Inventories
 
Inventories consist primarily of finished product and are reflected net of adjustments for shrinkage, excess and obsolescence totaling $9,616 and $8,312 at September 23, 2022 and December 24, 2021, respectively.

Note 7 – Property, Plant and Equipment
 
Equipment, leasehold improvements and software as of September 23, 2022 and December 24, 2021 consisted of the following:
 Useful LivesSeptember 23, 2022December 24, 2021
LandIndefinite$5,542 $5,020 
Buildings20 years23,552 18,406 
Machinery and equipment
5 - 10 years
30,845 28,099 
Computers, data processing and other equipment
3 - 7 years
16,986 15,480 
Software
3 - 7 years
42,399 39,799 
Leasehold improvements
1 - 40 years
92,517 69,105 
Furniture and fixtures7 years3,671 3,582 
Vehicles
5 - 10 years
28,395 29,632 
Construction-in-process 27,870 24,355 
  271,777 233,478 
Less: accumulated depreciation and amortization (113,208)(99,856)
Equipment, leasehold improvements and software, net $158,569 $133,622 

Construction-in-process at September 23, 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 September 23, 2022 and December 24, 2021 was $9,302 and $10,874, respectively.



12




The components of depreciation and amortization expense were as follows:
 Thirteen Weeks EndedThirty-Nine Weeks Ended
 September 23, 2022September 24, 2021September 23, 2022September 24, 2021
Depreciation expense$4,455 $3,903 $13,255 $11,679 
Software amortization$1,457 $1,707 $4,412 $4,591 
$5,912 $5,610 $17,667 $16,270 

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)