RIDGEFIELD, Conn., July 29, 2020 (GLOBE NEWSWIRE) -- The Chefs’ Warehouse, Inc. (NASDAQ: CHEF), a premier distributor of specialty food products in the United States and Canada, today reported financial results for its second quarter ended June 26, 2020.

Financial highlights for the second quarter of 2020 compared to the second quarter of 2019:

• Net sales decreased 51.3% to $200.5 million for the second quarter of 2020 from $411.4 million for the second quarter of 2019.
• GAAP net loss was $20.3 million, or $(0.57) per diluted share, for the second quarter of 2020 compared to net income of $7.7 million, or $0.26 per diluted share, in the second quarter of 2019.
• Adjusted EPS¹ was $(0.52) for the second quarter of 2020 compared to $0.33 for the second quarter of 2019.
• Adjusted EBITDA¹ was $(13.7) million for the second quarter of 2020 compared to $26.0 million for the second quarter of 2019.
• The Company had approximately $210.0 million of cash on the balance sheet and $31.8 million of availability on its asset-based loan facility as of July 24, 2020.

“The second quarter was one of the most challenging quarters in our company’s history,” said Chris Pappas, Chairman and Chief Executive Officer of the Company. “Our company focus was centered on the safety of our teams and supporting our customer and supplier partners during the gradual transition by restaurants to limited service, take-out and curbside operations. In addition, we continued developing and enhancing our emerging direct-to-consumer “Shop Like a Chef” platform. Despite our largest markets being closed for in-room dining, we saw gradual improvement from April activity averaging approximately 40% of prior-year revenue to June averaging approximately 60% of prior-year revenue. In addition to the impacts of COVID-19, expected openings in certain key markets were further delayed due to the widespread social protest activity across our network. During the quarter, we took a number of important steps to strengthen our balance sheet and right-size our cost structure to ensure Chefs’ will eventually be back on the path to growth and improving profitability that we were on prior to this period of volatility and uncertainty driven by COVID-19.”

Second Quarter Fiscal 2020 Results

Net sales for the quarter ended June 26, 2020 decreased 51.3% to $200.5 million from $411.4 million for the quarter ended June 28, 2019. Organic revenue declined $237.6 million, or 57.8% versus the prior year quarter. Sales growth of $26.7 million, or 6.5%, resulted from acquisitions. Organic case count declined approximately 68.3% in the Company’s specialty category with unique customers and placements declines at 56.3% and 69.1%, respectively, compared to the prior year quarter. Pounds sold in the Company’s center-of-the-plate category decreased approximately 51.3% compared to the prior year quarter. Estimated inflation was 0.2% in the Company’s specialty categories and was 6.7% in the center-of-the-plate categories compared to the prior year quarter.

Gross profit decreased approximately 55.4% to $47.4 million for the second quarter of 2020 from $106.5 million for the second quarter of 2019. Gross profit margin decreased approximately 222 basis points to 23.7% from 25.9%. Gross margins in the Company’s specialty category decreased 641 basis points and gross margins increased 212 basis points in the Company’s center-of-the-plate category compared to the prior year quarter. Total gross profit results include an increase in valuation adjustments of approximately $5.5 million related to estimated inventory losses due to the expected extended impact of COVID-19 on certain markets and customer openings.

Total operating expenses decreased by approximately 19.9% to $72.8 million for the second quarter of 2020 from $90.9 million for the second quarter of 2019. As a percentage of net sales, operating expenses were 36.3% in the second quarter of 2020 compared to 22.1% in the second quarter of 2019. Lower costs associated with compensation and benefits and lower distribution related costs were the primary drivers of the decrease in operating expenses in the quarter.

Operating loss for the second quarter of 2020 was $25.4 million compared to operating income of $15.5 million for the second quarter of 2019. The decrease in operating income was driven primarily by lower gross profit, offset in part by lower operating expenses, as discussed above. As a percentage of net sales, operating loss was 12.6% in the second quarter of 2020 as compared to operating income of 3.8% in the second quarter of 2019.

Total interest expense increased to $5.8 million for the second quarter of 2020 compared to $4.8 million for the second quarter of 2019. The increase was primarily due to $1.2 million in one-time third-party costs incurred during the second quarter of 2020 in connection with the extension of a majority of the Company’s senior secured term loans.

Net loss for the second quarter of 2020 was $20.3 million, or $(0.57) per diluted share, compared to net income of $7.7 million, or $0.26 per diluted share, for the second quarter of 2019.

Adjusted EBITDA¹ was $(13.7) million for the second quarter of 2020 compared to $26.0 million for the second quarter of 2019. For the second quarter of 2020, adjusted net loss¹ was $18.7 million, or $(0.52) per diluted share compared to adjusted net income of $9.8 million, or $0.33 per diluted share for the second quarter of 2019.

As of July 24, 2020, the Company had approximately $241.8 million of available liquidity comprised of $210.0 million in cash and $31.8 million of availability under the Company’s ABL Credit Facility. Net debt as of July 24 2020 was approximately $193.3 million, inclusive of cash and cash equivalents.

Full Year 2020 Guidance

Due to the continued uncertainty regarding the pace of economic recovery and the lifting of in-dining restrictions across our markets, the Company will not be providing guidance for 2020. The Company will look to provide guidance as it gains more clarity on the expected length of the economic downturn and the outlook for customer re-openings.

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

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, chocolateries, 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.