On Wednesday, Chefs' Warehouse (NASDAQ:CHEF) discussed first-quarter financial results during its earnings call. The full transcript is provided below.

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Summary

Chefs' Warehouse reported strong financial performance with first-quarter net sales increasing by 11.4% year-over-year to $1.059 billion, driven by a 10.4% rise in organic sales and a 1% contribution from acquisitions.

The company maintained double-digit growth expectations for the second quarter, despite challenges from weather events and the Middle East conflict, which minimally impacted first-quarter revenues.

Gross profit margins improved by 53 basis points, with significant gains in both specialty and center-of-the-plate categories, driven by effective management of inflation and product mix.

Management highlighted continued market share growth in North America and emphasized strategic investments in training, technology, and infrastructure as key growth drivers.

The company maintained its full-year guidance for 2026, with net sales projected between $4.35 billion and $4.45 billion, citing uncertainty in the Middle East as a reason for not raising the guidance despite strong performance.

Full Transcript

OPERATOR

Greetings and welcome to the Chefs' Warehouse first quarter 2026 earnings conference call. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Alex Aldiss, General Counsel, Corporate Secretary and Chief Government Relations Officer.. Please go ahead, sir.

Alex Aldiss (General Counsel, Corporate Secretary and Chief Government Relations Officer)

Thank you. Operator. Good morning everyone. With me on today's call are Chris Pappas, founder, chairman and CEO and Jim Letty, our CFO. By now you should have access to our first quarter 2026 earnings press release. It can also be found at www.chefswarehouse.com under the Investor Relations section. Throughout this conference call we will be presenting non-GAAP financial measures including among others, historical and estimated EBITDA and adjusted EBITDA as well as historical adjusted net income, adjusted earnings per share, Adjusted operating expenses, adjusted operating expenses as a percentage of net sales and as a percentage of gross profit, net debt, net debt leverage and free cash flow. These measures are not calculated in accordance with GAAP and may be calculated differently in similarly titled non-GAAP financial measures used by Other Companies. Quantitative reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures appear in today's press release and first quarter 2026 earnings presentation. Before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward looking statements, including statements regarding our estimated financial performance. Such forward looking statements are not guarantees of future performance and therefore you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Some of these risks are mentioned in today's release. Others are discussed in our Annual report on Form 10-K and quarterly reports on Form 10-Q which are available on the SEC website. Today we are going to provide a business update and go over our first quarter results in detail. For a portion of our discussion this morning we will refer to a few slides posted on the Chef's Warehouse website under the Investor relations section titled First Quarter 2026 Earnings Presentation. Please note that these slides are disclosed at this time for illustration purposes only. Then we will open up the calls for questions. With that I will turn the call over to Chris Pappas.

Chris Pappas (Founder, Chairman and CEO)

Chris thank you Alex and thank you all for joining our first quarter 2026 earnings call. First quarter 2026 business activity displayed typical seasonal cadence as revenue trends coming out of January increased steadily into February and March despite some volatility in business due to extreme weather events and the start of the conflict, in the Middle east later in the quarter. Our team's exceptional execution and the strength of our North American business allowed us to continue to grow market share, delivering strong year over year growth in volume, product penetration, unique customer growth, revenue growth and profitability growth. Momentum continued into April and we currently expect double digit top line growth to start the second quarter. Regarding the current situation in the Middle east, our teams and operations in the region the immediate focus has been the safety and security of our people. We have followed safety protocols instituted by governing bodies and are effectively navigating volatility in supply chains customer demand. Our leadership and team members have done an amazing job managing both personally and professionally through the volatility and uncertainty and we hope for a resolution to the conflict soon. Jim will provide more color on the financial impact in a few moments. I would like to thank all of the Chefs' Warehouse from Sales and Operations to all the supporting functions for delivering a great start to 2026. Our regional leadership and their teams continue to execute our strategy to leverage our investments and train the next generation of sales and operational talent. They are accelerating our long term plan as they grow deeper understanding of our customer base and become the ultimate specialty ingredient. Professionals marrying technology with industry know how to become trusted advisors to the best chefs in the world. With that, please refer to slide 3 of the presentation. A few highlights from the first quarter include organic net sales grew 10.4% organic specialty sales were up 6.8% over the prior year which was driven primarily by unique placement growth of 6.2%, specialty case growth of 5.7% price inflation unique customers grew 1.9% year over year. Reported unique customer growth was impacted by the attrition related to our transition out of non core customer business in Texas. We fully lapped this impact starting in the second quarter this year. Excluding this impact, first quarter year over year, unique customer growth was approximately 4.3%. Pounds in center of the plate were approximately 6.2% higher than the prior year. First quarter gross profit margins increased approximately 53 basis points. Gross margin in the specialty category increased approximately 43 basis points as compared to the first quarter of 2025. While gross margin in the center of the plate category increased approximately 110 basis points year over year. Jim will provide more detail on gross profit and margins in a few moments. For an update on certain of our operating metrics including continued improvement in year over year, gross profit per route and adjusted EBITDA per employee, please refer to the slide provided in the appendix of our first quarter 2026 earnings presentation. With that, I'll turn it over to Jim to discuss more detailed financial information for the quarter and an update on our liquidity. Jim thank you Chris and good morning everyone.

Jim Letty (Chief Financial Officer)

I'll now provide a comparison of our current quarter operating results versus the first quarter of 2025. prior year quarter and provide an update on our balance sheet and liquidity. Please refer to Slide 4. Our net sales for the first quarter of 2025. quarter ended March 27, 2026 increased approximately 11.4% to 1.059 billion from 950.7 million in the first quarter of 2025. first quarter of 2025. The growth in net sales was a result of an increase in organic sales of approximately 10.4% as well as the contribution of sales from acquisitions which added approximately 1% to sales growth for the quarter. Given the start of the conflict in Iran occurred in the last month of the first quarter, the impact to our first quarter aggregate year over year revenue growth was not material. We estimate it reduced overall organic growth by approximately 50 basis points. Prior to the start of the conflict, our Middle East business grew approximately 11% in January and February versus the prior year. While there remains variability in demand and customer buying patterns week to week these past few weeks our business located in the region had been operating at approximately 75% of prior year. The primary impact has come from low occupancy in hotels and resorts. Our operations in Qatar and Oman are performing much closer to plan in prior year as they are less reliant on tourism than Dubai and Abu Dhabi. As I just discussed, our North American operations, which represent over 90% of the chef's Warehouse, continues to grow well above our guidance while generating operating leverage and compelling year over year adjusted EBITDA growth. As the situation in the Middle East currently remains uncertain, we have run multiple scenarios of performance, in fact in a range of possibilities as it relates to our forward guidance. At this time we are keeping our full year guidance unchanged with the potential for upward revision should the situation in the region normalize. Net inflation was 4.1% in the first quarter, consisting of 1.5% inflation in our Specialty category and 8.2% inflation in our center of the Plate category versus the prior year quarter. center of the Plate inflation, when adjusted for the impact of the Texas attrition was approximately 4.5% versus the prior year. Quarter gross profit increased 13.9% to 257.4 million for the first quarter of 2026 versus 226 million for the first quarter of 2025. Gross profit margins increased approximately 53 basis points to 24.3% selling general and administrative expenses increased approximately 10.5% to 224.1 million for the first quarter of 2027 from 202.8 million for the first quarter of 2025. The increase was primarily due to higher costs associated with compensation and benefits to support sales growth, higher deprec driven by facility and fleet investments, and higher self insurance related costs. Adjusted operating expenses increased 10.5% versus the prior year first quarter and as a percentage of net sales. Adjusted operating expenses were 18.6% for the first quarter of 2026. Operating income for the first quarter of 2026 was $33.1 million compared to $22.7 million for the first quarter of 2025. The increase in operating income was driven primarily by higher gross profit partially offset by higher selling general and administrative expenses. Our GAAP net income was 17.4 million or $0.40 per diluted share for the first quarter of 2026 compared to net income of 10.3 million or $0.25 per diluted share for the first quarter Of 2025. On a non GAAP basis, we had adjusted EBITDA of 60.1 million for the first quarter of 2026 compared to 47.5 million for the prior year. First quarter adjusted net income was 17.2 million or $0.40 per diluted share for the first quarter of 2026 compared to 10.2 million or $0.25 per diluted share for the prior year first quarter. Turning to the balance sheet and an update on our liquidity, please Refer to Slide 5. At the end of the first quarter we had total liquidity of 278.3 million comprised of $122.7 million in cash and $155.6 million of availability under our ABL facility. During the first quarter, we made prepayments of $5 million on our term loan maturing in 2029 and purchased 10 million equivalent shares under our share repurchase program. As of March 27, 2026, total net debt was approximately $522 million inclusive of all cash and cash equivalents and net debt to adjusted EBITDA was approximately 1.9x. As noted earlier, we maintain our previously provided full year guidance for 2026 as follows. We estimate that net sales for the full year 2026 will be in the range of $4.35 billion to $4.45 billion, gross profit to be between $1.053 billion and 1.076 billion and adjusted EBITDA to be between 276 million and 286 million. Please note, for the full year 2026, we expect the convertible notes maturing in 2028 to be dilutive, and therefore we expect the fully dilutive share count to be between approximately 46 and 46.7 million shares. Thank you. And at this point we'll open it up to questions. Operator.

OPERATOR

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. The first question is from Alex Slagel from Jefferies. Please go ahead.

Alex Slagel (Equity Analyst)

Hey, good morning. Congrats and thanks for the color on the call so far. Good morning, Alex. Yeah, I know like the Middle East is always it's hard for us to figure out everything that's going on. So appreciate everything you provided. I guess kind of curious on you gave some color on the top line. What else can you tell us about sort of the profitability implications for the Middle East business specifically and kind of what's baked into the outlook, I guess sizing it up also, I guess it sounds like the top line is less than 10% and I'm not sure on the EBITDA. side if you could provide some color.

Jim Letty (Chief Financial Officer)

Yeah, we don't necessarily disclose the percent of EBITDA. that they contribute, but just to go back to what we said, it's less than 10% of our overall business. It's a very profitable company. We've made some pretty significant investments and we feel really good about the medium to long term prospects of the market and our business there. Obviously there's a little bit of a short term bump in the road right now, but as I mentioned in our prepared remarks, we haven't adjusted our top line or our adjusted EBITDA. guidance as a result. So like I said, we've modeled in a bunch of different scenarios. You know, we generally don't change guidance after the first quarter, but the first quarter was so strong and the trends are, you know, continuing that. Obviously if the Middle East thing wasn't happening, I believe we would have adjusted our guidance this quarter. But I think given the uncertainty, we're just going to wait a little longer and see how things play out.

Alex Slagel (Equity Analyst)

Okay. In terms of the Scenario, does it sort of assume recent trends continue through the rest of the year or, you know, several months or what's the kind of rough time frame? I'm sorry. Basically, we would adjust guidance as things materialize, but I think the key point that we made in our prepared remarks was that over 90% of our business is more than making up for the minimal impact that we're seeing so far from the the Middle East. Okay, thanks. And just a second question on expectations for the summer and maybe potential for more domestic travel. I don't know, maybe that'll be a positive tailwind for Chef and sort of how you're looking at that important time period as we get up to some of the celebration holidays and then the travel.

Chris Pappas (Founder, Chairman and CEO)

I mean, Alex, it looks really strong. You know, again, I mean, we didn't really see the war coming, but, you know, things start settling down in the the Middle East. I mean, I think all our investments, you know, for the last 15 years are starting to bear fruit. And we're getting that acceleration of sales and, and leverage with the massive investments we've made to build this thing. And a little up or down with travel or more people going out, but we just see a very, very strong field ahead of us. And I think we're taking market share and we're just continuing to mature as obviously the small public company and food service dominating, really the good, better, best part of it. So we don't see a slowdown.

Alex Slagel (Equity Analyst)

All right, thanks. Thanks for the color. Thanks.

OPERATOR

The next question is from Mark Cardin from ubs. Please go ahead.

Mark Cardin (Equity Analyst)

Good morning. Thanks so much for taking the questions to start. Just another follow up in the the Middle East.. Glad to hear your team is holding up okay out there for the 75% number. It sounds like that's stabilized over the course of the past few weeks, is that correct? And then just as you think about the course of March, that build in a meaningful acceleration post ceasefire.

Jim Letty (Chief Financial Officer)

Yeah, I think the best way to put it, Mark, is. Yeah, we mentioned that the last few weeks our business has been trending at about 75% of prior year. We factored that into, you know, multiple scenarios going forward, different levels of percentage should, should the bombing start to re-escalate and they're sending drones into Dubai. You know, we understand that there might be a downward impact, there could be an upward impact if things settle down. So I think we've modeled that in and decided to leave the guidance unchanged. That's probably the best way to think about it. Got it. That's helpful. And then any shifts to how you're thinking about inflation over the course of the next few quarters, just in the back of some of the recent commodity price fluctuations and then of course, changes in the price of oil? I think our teams have done an incredible job really the last couple of years. But especially, you know, with our team maturing and the collaboration between our sales and operations, procurement and pricing, the work that we've done with our, you know, diverse portfolio of suppliers and as Chris mentioned, a lot of that is just that maturity and training and experience is all coming to fruition and they become very good at managing through inflationary and deflationary, environments. And I'll just go back to the diversity of our product portfolio. When you have 90,000 products flowing through your distribution centers for a company our size and our customer base that demands quality and diversity of product sourced from all around the world, you become very good at managing through, you know, dairy is deflationary, year over year, but sequentially the prices in dairy and eggs and other dairy products have been within a range. That's very manageable that you can provide your customer with high quality products at a good value and still manage the gross profit dollars to what we need to meet our targets. So I think it's just. I'll go back to what Chris said. The investments that we've made in talent, systems, technology and infrastructure are all continuing to pay off and allowing us to manage through those type of price environments.

Mark Cardin (Equity Analyst)

Appreciate the color. Thanks so much. Good luck, guys.

OPERATOR

Thank you. The next question is from Kelly Benia from BMO Capital Markets. Please go ahead.

Kelly Benia (Equity Analyst)

Good morning. Thanks for taking our questions. Just to follow up a little bit on the Middle East business, if I'm just doing the math right here, you said it was a 50 basis point drag on top line for Q1 and if I'm doing the math right, I think it's around a 2 to 300 basis point dragon, you know, into April so far. But for your sales tool to be tracking at double digit, I'm not sure if they've accelerated or stayed kind of steady in total. Obviously your North America business is kind of more than offsetting that. Can you just clarify that math for us? Just trying to make sure we're thinking about that right so far.

Jim Letty (Chief Financial Officer)

Thanks Kelly. Yeah, look, I think we're growing well above our guidance and, and actually double digits with the impact of in the first quarter, both the two storm events as well as the one month impact of the Middle East. Those three things combined cost us about 150 basis points on the quarter. So you know, you look at our organic growth at 10.5%, you have the 1% RAP of mainly Italco. You could add 150 basis points to that if we didn't have those three events in the quarter. So I don't know where you got to 200 or 300 basis points. That's not what is happening right now. I think about it, if they continue to operate at 75% as we mentioned in April, we're still growing double digits with the impact of the Middle East. Obviously we didn't have any storms that hit us in April, but so I think you can just get from that that our North American business is so strong. The team is executing at a very high level. I think the, you know, you look at the Amex data that comes out, the high end consumer is still spending. So what's happening in the Middle East. overcoming. But obviously we're hoping that the conflict is resolved soon and they can get back to some sort of normality.

Kelly Benia (Equity Analyst)

Okay, very helpful. Jim, can you also just elaborate a little bit more color on kind of your different markets, your more mature markets and some of the earlier stage growth markets and if anything is changing on how they're contributing to the really strong North America top line, whether it be Florida or Texas or New York or California, just any color on kind of how that split is contributing to this strong North America growth.

Jim Letty (Chief Financial Officer)

I think Kelly, we've been kind of consistent with our observations that all our markets are growing and I think the obvious are growing even faster. You know, new markets like Florida, which you know, still we're pretty, you know, we're not new new here but you know, we built our new facility, I think it's three years ago and you know, that has been, you know, over 20 plus percent growth and we expect that to continue for many years to come. You know, as we continue to add salespeople and you know, expand throughout all of Florida and become more of a specialty broadliner, it'll start to mimic, you know, our classic business model, which is New York. You know, the west coast continues to mature towards that New York model. We still think that it's going to double even though we're getting to a pretty good size out there. You know, Texas we think is going to be a top three that's starting to have great growth, you know, becoming more of a chef warehouse, the same in New England. So you know, the smaller markets, even though you know they can grow 20, 30, 40% a year, they're still smaller markets and the big Markets are still going to drive, you know, our march towards, you know, you know, our next goal is, is 10 billion. And we see a lot of that coming from the major, major markets. You know, Texas, California, you know, all of New York, New England, Florida, you know, where the density of, obviously the populations are.

Kelly Benia (Equity Analyst)

Very helpful. And can I just add one more on just the gross margin? You touched on it a little bit, but I guess the center of the plate margin seemed quite strong in light of the magnitude of inflation. Maybe you can just help us understand what drove that, how you're thinking about that going forward and just inflation overall, how your customers are handling that sounds like the sales force is managing that very well. But just any color that you're getting from your customers. Yeah, you know, look, I don't think I'll just go back to what I said to an earlier question that the diversity of our product portfolio, the expertise of and maturity of our teams that are, you know, collaborating to manage through that, they've done an amazing job. I mean, you know, center of the plate, year over year, you know, had some inflationary, but during the first quarter, the sequential changes in prices are actually deflationary coming out of December, you know, into January, February and March. It's just a seasonal impact that happens every year. So that played out and is actually a little more pronounced. So I think, you know, the improvement in margin was really our teams really managing very effectively through that environment, through that sequential pricing environment. And it's just a testament to how they've been managing their business. And Kelly, it's a little confusing just to look at margin. You get some deflation. We expect margin to go up just because of the volatility. Usually when, you know, prices really shoot up. You know, we're managing towards gross profit dollars versus margin because really, you know, our basic overhead is kind of fixed. So it's really the gross profit dollars we take to the bank and the mix starts to change. And you know, this is why, you know, the way the protein team manages again, is towards figuring out how they can hit the gross profit dollars they need to run their businesses and profitability that we need. So it gets a little fuzzy because the mix starts to change a lot when you have a lot of inflation. You know, we always say people start to eat more premium hamburgers than steaks. Maybe at, you know, the non-steakhouse kind of dining out. You know, you sell more chicken, you sell more sausage. So it's a big mix of products. But again, you know, the demand for the premium products that we sell, you Know, even to, you know, I don't want to say to my surprise, but it kind of plays into what we're seeing with, you know, the higher end consumers are not going to not order a great steak because it's $5 more. So I've always thought that, you know, that consumer base, I think it's my 41st year, I have not seen that trend change. Right. So, you know, gas prices going up, you know, 30, 40, 50 cents a gallon doesn't change a lot of that behavior. And I think we're just consistently seeing that. Thank you. Thank you.

OPERATOR

The next question is from Peter Salleh from btig. Please go ahead.

Peter Salleh (Equity Analyst)

Great. Congrats on a great quarter. I did want to come back to the conversation around margin. Your EBITDA. margin this quarter was exceptionally high and much higher than what we were modeling, highest on record. I know you guys have talked about maybe 20 basis points or so of EBITDA. margin expansion every year, but if you flow through these numbers for the year, you kind of get there without any more expansion. Can you help us out a little bit in terms of do you think that 20 basis point number is still the good number going forward or have we hit kind of an inflection point where we should start to see a little bit more EBITDA. margin flow through to the bottom line? Thank you.

Jim Letty (Chief Financial Officer)

Yeah, thanks for the question, Peter. Yeah, look, I'll go back to what I said. If we didn't have the uncertainty in the Middle East. right now, you know, I think we would, you know, we usually don't this early in the year update our guidance. But I think we would have if, you know, if we had some sort of certainty around what's going to happen in the Middle East.. Once again, it's, it's less than 10% of our business. But, you know, we don't know how it could play out the rest of the year if it, you know, if it stays where it is or gets better. I would imagine we would be adjusting up and, you know, 25 over 24. We delivered more than, you know, 20 or 25 basis points of EBITDA margin improvement. And I think, you know, to what Chris mentioned earlier, we're really starting to see the operating leverage from all the investments that we've made. So there's certainly a really strong possibility that we can deliver more. It's just early in the year and the uncertainty around the Middle East. is preventing us from adjusting that up right now.

Peter Salleh (Equity Analyst)

Yeah. And then can I just ask on the capital structure and share repurchase you guys repurchased 10 million in the first quarter. Your leverage is just naturally delevering. Should we expect more share repurchases as we go through the year? I mean, how do we think about that for the balance of 2026? Thanks.

Jim Letty (Chief Financial Officer)

Yeah, I think we haven't really changed our outlook. We want to remain, you know, with some dry powder to take advantage of some potential acquired growth that may present itself that could be strategic and accretive, important for, you know, our growth plan. We want to continue to repurchase some shares opportunistically and we may continue to, you know, very gradually pay down some debt. So I think we're going to continue kind of the way that we've been operating the last year or two. Don't see a major change, but we certainly could allocate more towards share repurchase should the opportunity present itself.

Peter Salleh (Equity Analyst)

Great. Thank you very much. Thank you.

OPERATOR

The next question is from Brian harbor from Morgan Stanley. Please go ahead.

Hilary Leon

Hi, this is Hilary Leon for Bryant Harbor. Congrats on the Quarter, guys. Just wondering, outside of the Middle east improving, do you guys see any other potential tailwinds for the consumer?

Chris Pappas (Founder, Chairman and CEO)

You know, we're really happy with what we're seeing. What we're seeing at this point. I think a real possibility uptick right now is what we're hearing with the World Cup, right. Being in the United States and a lot of our major markets, you know, we don't build, you know, we don't build these things in. But I think with, I forget how many, you know, millions of people coming in for the cup in our major cities, I think it's going to be really good for our customers. So we think our, you know, we think the consumer of, you know, the restaurants and hotels that we supply, you know, the spending, what we see is strong and we have not heard of anything really changing. We think bookings are strong and our customers are optimistic. So, you know, we like the way, you know, the year is. Besides the Middle East., we're really enjoying, you know, what we have set up to supply for the next X amount of years really lining up in our favor.

Hilary Leon

Got it. And kind of just to follow up on that, like, have you guys ever seen or are you able to quantify any impact that you've seen from any other major events like the Olympics a couple years ago?

Chris Pappas (Founder, Chairman and CEO)

We don't really quantify it. Obviously, when there are events, whether it's F1 or, you know, something like the World Cup. or the Olympics or other types of events, we do, we do see a temporary bump, but it's not something we model in for the long term.

Hilary Leon

All right, thanks guys.

OPERATOR

Congrats on the quarter again. Thank you. The next question is from Todd Brooks from Benchmark Company. Please go ahead.

Todd Brooks (Equity Analyst)

Hey, good morning. Thanks for taking my questions. Obviously, Strong results in Q1 in the US and Chris, you talked to the typical seasonal acceleration. Jim, you pointed to kind of normalizing, maybe kind of 12% organic growth if you take out weather. And Middle East, you talked about double digits in April. I know we're also going into a strong period here with graduations, Mother's Day, return of outdoor dining. And then you just pointed out the World Cup Are we still accelerating as we go into Q2? And Chris, when you're talking to clients, just what's their outlook on kind of how the table's being set for them for the next couple of quarters here?

Chris Pappas (Founder, Chairman and CEO)

Cautiously, very mystic, very cautiously optimistic, Todd. You know, I mean, the business is really strong, you know, Middle East. obviously was, you know, not in our plans, you know, because I mean the business is really strong, you know, business, the business is really strong, you know, business is really strong, you know, you know, nobody has a crystal ball. But you know, we don't really see a change in behavior. I think that, you know, we've invested for more market, you know, to take more market share and be the business is really strong, you know, premier high end partner for the business is really strong, you know, world's greatest chefs. And the business is really strong, you know,re's been a shift and

Todd Brooks (Equity Analyst)

I don't see that shift of consumers willing to give other things up except for their extremely affluent, that nothing really is going to change their behavior as far as dining out and travel. I just think it's the acceleration is, I think more consumers are choosing to, you know, for the experience, you know, for the travel, for the dining out, you know, for those sports experiences versus other things in the past, maybe things they would have bought or spent more money on. So I, I don't see that changing. And I think our customers are benefiting for it. You know, we see a consistent investment in more restaurants, more hotels opening more, you know, more parties, you know, lots of catering and you know, more people visiting the United States on the high end obviously plays in our favor. That's great. And then Jim, just a question for you. And Peter was asking the question about the EBITDA margin expansion and the profitability of the business. How much of this now is kind of related to the existing facilities that you've stood up, just putting more volume through those facilities versus how much is due to the investments that you've made around technology and process and people that you guys highlighted at the investor day. If you were attributing the gains that we're seeing in EBITDA margin. How would you kind of parse it between the two?

Chris Pappas (Founder, Chairman and CEO)

Thanks, Goldilocks. Todd. We don't necessarily put a dollar amount or percent of our accretion of either adjusted EBITDA dollars or margin to a particular bucket. But what I would. I'll just go back to kind of what Chris has talked about in his prepared remarks and also what we talked about earlier in the call and that is all of these things coming together. I think the investment in training in our salespeople, especially in the nascent high growth markets that we've put infrastructure in to give them capacity and folded in acquisitions and then you start off with a young maturing sales force and as they grow, you know, with the leadership team that we have regionally very experienced leaders that have run distribution businesses, food distribution businesses themselves before joining us, and know every area of the business from sales operations to procurement to pricing, they benefit from that. And as Chris mentioned, just marrying technology with, with knowing our customers better, that together with, you know, the infrastructure investments and just the experience and growth of our teams that are managing pricing and procurement and operations, it's all coming together. It's all, it's all. There's not one thing that we would point out that says this is driving our EBITDA margin higher. So I would, I would say that I'd ask Chris to add anything that he might want to add. Yeah, I think, Todd, when I look back, I think it's. What are we? It's a 15th year being public. I thought it would be easier at that point, but I think lessons learned is that to build something like Chefs' Warehouse, it just doesn't get built overnight. You could have all the technology in the world and of course it really helps, but it's just so much more complicated. As you just said, it takes the buildings, it takes the maturity. It takes years to develop a team to win the Super Bowl. It's not put up overnight. Even though you might have the talent. It just takes that long. So I think it's really. Todd,, have I ever wrote a book? It takes a lot longer. You know, when, you know, every time we go on a new path to build a new territory, it always takes a lot longer to master a new category. It takes a lot longer. So I think what we're seeing, obviously the consumer is, you know, our customers, customer is able to spend, you know, for the better things in life. You know, that we sell, you know, we sell good, better Best, Right. So I think people are really appreciating, you know, the mastery of these great restaurants and their talented chefs that are putting the food together. And I think it's like an orchestra, right. Has to learn how to play together and just get better and better. And I think, you know, the chef's warehouse, you know, complete business. You know, whether it's produce, whether it's groceries, whether it's dairy, protein, I think it's just getting better and better, and I think we're seeing the results.

Todd Brooks (Equity Analyst)

Thanks and congrats to you both and the whole team. Thank you, Todd.

OPERATOR

As a reminder to ask a question, please press star one. The next question is from Margaret May Binstock from Wolf Research. Please go ahead.

Margaret May Binstock

Hi, guys. Thanks for taking my question. I just wanted to ask, on the placement growth,, the 6.2% you guys saw seems to be accelerating. I guess which lever is doing the most work here from your sales force, new hires or digital penetration?

Chris Pappas (Founder, Chairman and CEO)

I think, again, it's all the levers that are contributing. So I think it's a little bit of everything getting leverage on the new facilities. The more volume, more product, profitable volume. We pump in, you know, you get a bigger bottom line,. The technology adding placements is giving us an uptick, you know, growing into facilities in new territories. We're getting leveraged. So it's a little bit from a lot of different parts of the business that is giving us that, you know, bigger bottom line, at the end of the day.

Margaret May Binstock

Super helpful. And then I just wanted to ask, on the M and A environment, you know, given what we were seeing with the macro and some volatility, you know, has that changed valuations that you guys are seeing out there at all, or the pipeline, Are sellers more motivated?

Chris Pappas (Founder, Chairman and CEO)

You know, the pipeline is frothy, but again, years ago, we. We had to do more M&A to get into the M&Arkets faster to build a national business, and now an international business. So we're just. We're not in need of a lot of M&A, so we're just very patient. And, you know, we've seen some multiples come down in some deals that have hit our table, but we think that at a certain point, we'll have some good M&A to add to what we're building, but we're just very, very patient at this point.

Margaret May Binstock

Awesome. Thanks, Chris. Thank you.

OPERATOR

There are no further questions at this time. I would like to turn the floor back over to Chris Pappas for closing comments.

Chris Pappas (Founder, Chairman and CEO)

We'd like to thank everybody who joined the call today and take time to learn a little bit more about Chefs' Warehouse. And we're really proud of the last quarter and what the team was able to accomplish. And we remain very optimistic about the future. And hopefully this conflict in the Middle east settles down and we look forward for everybody joining our next earnings call. Thank you.

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