Good day, and welcome to The Chefs' Warehouse first quarter 2023 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Alex Aldous, General Counsel. Please go ahead, sir. Thank you, operator. Good morning, everyone. With me on today's call are Chris Pappas, founder, chairman, and CEO, and Jim Leddy, our CFO. By now, you should have access to our first quarter 2023 earnings press release. It can also be found at www.chefwarehouse.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 both historical and estimated adjusted net income and adjusted earnings per share. These measurements 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. 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 under 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. We will open up the call for questions. With that, I will turn the call over to Chris Pappas. Chris. Thank you, Alex, and thank you all for joining our first quarter 2023 earnings call. Customer demand was strong during the first quarter of 2023, despite several significant weather events, especially in our West Coast markets. Revenue trends improved gradually from January into February and March as dining away from home in the upscale casual to higher-end customer segments continue to grow, both in terms of new customer openings and placements per customer. In addition to our organic growth, we completed several acquisitions in important growth markets such as Texas and California as we continued to enhance our strategy of expanding market share in the regions we serve, category growth to grow relevance with our customers, and driving synergies via facility investments, consolidation, and operational technological improvements. A few highlights from the first quarter as compared to the first quarter of 2022 include 17.1% organic growth in net sales. Specialty sales were up 15.9% organically over the prior year, which was driven by unique customer growth of approximately 21.2%, placement growth of 18.7%, and specialty case growth of 16.8%. Organic pounds in the center of the plate were approximately 14.4% higher than the prior year first quarter. Gross profit margins increased approximately 64 basis points. Gross margin in the specialty category increased 65 basis points as compared to the first quarter of 2022, while gross margin in the center of the plate category decreased 68 basis points year-over-year. Jim will provide more detail on gross profit and margins in a few moments. As previously announced, we closed a number of key acquisitions during the first quarter and in the first few weeks of the second quarter of 2023. In late January, we added Mike Hudson Specialty Foods, located in the Napa Valley region, to our Northern California business. Additionally, during the second quarter, we acquired Greenleaf Produce and Specialty Foods. Greenleaf is located in Brisbane, California, and provides chefs with a robust produce and specialty partner, both complementing and enhancing our presence in the broader Bay Area. The addition of these companies and brands to our portfolio provides us with a great platform for category growth, cross-selling opportunities, and synergies across many of the vibrant markets in the region. In late March, we closed the acquisition of Hardie's Fresh Foods, a premier fresh food distributor with deep local roots in Dallas, Houston, and Austin, Texas. The acquisition also includes Texas Harvest Company, a value-added process division in Houston. The addition of Hardie's comes at a great time in The Chefs' Warehouse growth story in the region. Our specialty broad line facility continues to grow at a fast pace, and we recently opened our brand new state-of-the-art Allen Brothers processing operations located in Dallas. Together, and with a continuous focus on investing in people and facilities, The Chefs' Warehouse, Allen Brothers, and Hardie's will be a triple force of unparalleled quality and uncompromised service, which will benefit our customers in Texas and accelerate growth throughout the region. The decision we made to invest in talent and facility expansion during the challenging years impacted by COVID, combined with strong local leadership, has allowed us to continue accelerating both organic and acquired growth. In a very controlled manner across our platform and markets. During the first quarter, we began the phased move-in process into our new 200,000 sq ft facility in Florida. Our specialty business is operational, and we expect center of the plate processing for both meat and fresh seafood to start operations in the coming months. As part of this move, we are fully consolidating our specialty sales and operations, our protein processing plant located in southern Florida, and portions of our fresh seafood processing operations located in the central region of the state. This new facility will provide ample capacity for category and customer expansion, synergistic growth with our key categories and processing operations in one location with ample room to add fold and acquired growth for years to come. As we are closing on a six months since Chef Middle East joined our family of companies and brands, we are pleased with every aspect of our integration. Our shared culture, vision and go-to-market approach has provided a solid transition, a roadmap to our plan for growth in the region. CME's performance has exceeded our expectation, and the region continues to display significant growth, both demographically and economically. We are currently in the design phase of our planned facility expansion in Dubai, and we look forward to continued success and growth to come. I would like to thank each and every one of our 4,000+ team members for their dedication and commitment to excellence that drive The Chefs' Warehouse high quality and high touch service model, providing an ever-evolving platform for growth for The Chefs' Warehouse, our customers, and our supplier partners. We are beyond excited to be certified by Great Place To Work for the 2nd year in a row. This is the result of continuous efforts to place our talent at the epicenter of our operation and at the heart of who we are as a company. Whether it is in actions around our workplace environment, our employee benefits, talent development and training, and investing in our team members' career path, we aim to excel and surpass expectations as a true employer of choice. 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. Good morning, everyone. I'll now provide a comparison of our current quarter operating results versus the prior year quarter and provide an update on our balance sheet and liquidity. Our net sales for the quarter ended March 31, 2023, increased approximately 40.5% to $719.6 million from $512.1 million in the first quarter of 2022. The growth in net sales was the result of an increase in organic sales of approximately 17.1%, as well as the contribution of sales from acquisitions, which added approximately 23.4% to sales growth for the quarter. Net inflation was 4.4% in the first quarter, consisting of 5.5% inflation in our specialty category and inflation of 3.2% in our center of the plate category versus the prior year quarter. Gross profit increased 44.4% to $169.7 million for the first quarter of 2023 versus $117.5 million for the prior year quarter. Gross profit margins increased approximately 64 basis points to 23.6%. As price inflation in aggregate has continued to moderate, we remain focused on driving gross profit dollar growth, which allows us to improve operating leverage as we grow and scale Chefs Warehouse. Selling, general and administrative expenses increased approximately 41.8% to $156.1 million for the first quarter of 2023, from $110.1 million for the first quarter of 2022. The primary driver of higher expenses were higher compensation and benefit costs, facility costs, and distribution costs associated with higher year-over-year volume growth. On an adjusted basis, operating expenses increased 42.6% versus the prior year first quarter, and as a percentage of net sales, adjusted operating expenses were 19% for the first quarter of 2023, compared to 18.8% for the first quarter of 2022. Operating income for the first quarter of 2023 was $11.9 million, compared to $6.3 million for the first quarter of 2022. The increase in operating income was driven primarily by higher gross profit, partially offset by higher operating costs. Income tax expense was $0.5 million for the first quarter of 2023, relatively unchanged versus the first quarter of 2022. Our GAAP net income was $1.4 million or $0.04 per diluted share for the first quarter of 2023, unchanged compared to net income of $1.4 million or $0.04 per diluted share for the first quarter of 2022. On a non-GAAP basis, we had adjusted EBITDA of $32.8 million for the first quarter of 2023 compared to $21 and a half million for the first quarter of the prior year. Adjusted net income was $4.6 million or $0.12 per diluted share for the first quarter of 2023, compared to $3.6 million or $0.10 per diluted share for the prior year first quarter. Turning to the balance sheet and an update on our liquidity. At the end of the first quarter, we had total liquidity of $227.5 million, comprised of $91.7 million in cash and $135.8 million of availability under our ABL facility. As of March 31, 2023, net debt was approximately $576 million, inclusive of all cash and cash equivalents. Turning to our full year guidance for 2023. Based on the current trends in the business, we are providing our full year guidance as follows. We estimate that net sales for the full year of 2023 will be in the range of $3.2 billion-$3.3 billion. Gross profit to be between $768 million and $792 million, and adjusted EBITDA to be between $199 million and $207 million. Regarding our updated guidance, please make note of the following for modeling purposes. We currently expect interest expense for the remaining three quarters of 2023 to be approximately $11 million per quarter on average. Similarly, we expect depreciation and amortization to average approximately $11.8 million per quarter over the same period. While we do not provide guidance by quarter, please note that due to the uneven nature of the build back of demand in 2022, combined with the non-core self-insurance related expenses recorded in the fourth quarter of 2022, we currently expect our 2023 second quarter and fourth quarter adjusted EBITDA margin performance to return to a pattern more consistent with pre-pandemic years. Our full year estimated diluted share count is approximately 45.7 million shares. For reporting purposes, we currently expect our senior unsecured convertible notes to be diluted for the full year, and accordingly, those shares that could be issued upon conversion of the notes are included in the fully diluted share count for the full year. Thank you. At this point, we will open it up to questions. Operator? We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. The first question will come from Alex Slagle with Jefferies. Please go ahead. Hey, good morning. Congratulations. Thanks. Wanted to ask on the acquisitions. I wonder if you could talk a bit more on the synergies and how these acquisitions fit into your growth strategy. I mean, from the outside, these look like really great opportunities, very good fit for Chef. Just curious on the background, how these transactions came about. You know, separately- Sure If you could provide any thoughts on how much of the increase in the sales and EBITDA guide, these contributed versus maybe the 1Q upside and 2Q quarter to date, trends. Yeah, sure. We'll, we'll break it up. I'll take the beginning of that one. You know, Greenleaf in San Francisco, we know this company for over 14 years. They've kinda been growing side by side with us, more on the produce side, they eventually got into selling more specialty. You know, ironically, you know, we tried to buy them, I think it was 14 years ago, when they first traded to this group. You know, they've done a marvelous job. Their reputation is, you know, as the high-end, best produce in the San Francisco region. We've always admired them and, you know, the opportunity to have them join the, you know, the Chefs' group, you know, as we build out the whole Bay Area, which is a, you know, a very big business for us between our Allen Brothers steak and seafood business there, that's over $200 plus million in our Chefs' Warehouse business. You know, our reach, we go all the way to Tahoe, to Sacramento. We do the whole Bay Area, you know, you know, San Francisco, you know, downtown still really hasn't come back, so that's taking time. We've been, you know, our management team's done a great job really reaching where the people are, you know, everywhere from Silicon Valley and like I said, all the way out to Tahoe, down to San Luis Obispo, Monterey. You know, now being able to start to synergize with the Greenleaf, we really think we can help grow their produce. We think that, you know, the customers that don't overlap, we could start to sell them a lot of our proteins and a lot of our specialty items. You know, long term, we love the brand. We could see extending the brand down into Arizona, I mean, Arizona, L.A., and Las Vegas, like we're doing with a lot of our other category expansions. It creates a very dynamic selling environment, and it's similar to what we're doing in other markets. Jim, I mean, I don't know how much more information. Did you want to comment on Hardie's at all? Yeah. Why don't you do San Francisco, and I'll go back to Hardie's. Sure. Yes. Overall, the combination of Hardie's and Greenleaf and the other kind of small tuck-ins that we completed in the first quarter, the incremental revenue added about 12% to our year-over-year top-line growth. I think, you know, our prior guidance was 13%-14% year-over-year top-line growth. It's now 25%-26%. About 10% of that is M&A and an additional 2% of organic growth. You know, on a full year basis now, of that 25% and 26% growth, 18% is combination of M&A wrap from last year and the incremental adds from Q1 and the recent Q2 M&A and about 2% of incremental organic growth. Going from 6% to 7% or 8% organic growth for the year. In terms of adjusted EBITDA contribution, it's about 70/30. The incremental adjusted EBITDA from our prior guidance to our updated guidance, about 70% of that contribution is from M&A, and about 30% is the incremental is from additional organic growth. That includes the strength we saw in Q1 and then some adjustment up for the remainder of the year. Yeah. Switching to Texas. You know, the Hardie's acquisition is something, again, we've been looking at for quite a while, a few years now. You know, we've built our CW, you know, our major hub is Dallas right now. That business has been growing, you know, faster than our expectations. The team there is doing a phenomenal job. We think that, you know, Texas is one of our biggest opportunities to really have massive growth over the next 10 years for many reasons. Obviously, they have population growth, a lot of companies have moved there, people are moving there's a lot of wealth. There really isn't anybody like Chefs' Warehouse. We opened our Allen Brothers facility, where, you know, we're now cutting steaks and we think that business is gonna grow exponentially. We were looking for something a little, a bigger platform to accelerate our growth because we need to put another facility in Houston and we're looking at obviously Austin and San Antonio, and Hardie's kind of gave us that reach. You know, they touch every market with size. I always say, you know, the most important thing I'm looking for is people and routes, and they gave us a lot of that. With, you know, with their introductions into all the major cities and major accounts, we think we can accelerate the growth of selling more specialty in Allen Brothers. I think it's gonna work out really great for for our expansion plan. We're really excited to have the Hardie's team. They give us another element of growth too. They do process, so they do have a very a boutique type of business that we think we continue to grow, especially in today's environment where, you know, a lot of hospitality is challenged on labor. You know, having more solutions, you become a much better partner to a lot of the major customers, and we think that division will grow exponentially as well. That's very helpful. Thank you. Just a follow-up. If you could talk about some of the trends you saw through the quarter and what it looked like into April. It sounds like it was a pretty gradual build through March from the commentary. Any thoughts on how it trended into April, underlying traffic trends across your customer base, if anything's changed? Yeah. you know, the first quarter was kind of as expected, maybe a little bit stronger than expected. I think January and February were good months for January and February. Obviously, you're coming out of the fourth quarter, your strongest month in December, and, you know, you kinda fall off a cliff into January, and that's normal. We had a little bit of higher strength, but it was a very gradual build, as we expected. We did have some, I think in late February and early March, pretty significant weather events in the Northwest and in our Northern California markets. There were certain days where, to certain regions we couldn't actually deliver. That really didn't impact us materially in terms of the overall business and the strength of customer demand. April has been a good month. It continued to build seasonally. There was some noise around the calendar with Easter being a different week and the school vacations being a different week. Other than that, April seemed to be a pretty decent month. Thank you. The next question will come from Peter Saleh with BTIG. Please go ahead. Great. Good morning, and congrats on another great quarter. You know, given the news this morning of Darden buying Ruth's, I was just curious if you guys care to comment if you guys do any business with Ruth's and what your relationship is with the fine dining division over at Darden? Yeah. I'm sorry, who did Darden buy today? Ruth's Hospitality. Ruth's Chris. Oh, they bought Ruth's Chris? Didn't hear about that. Yeah, we didn't hear that. Yeah. Yeah. We didn't hear that this morning. Oh, yeah. That was just before you guys came on. I mean, I don't know if you guys care to comment. If not, we can just move on to something else. Yeah. You know, again, well, we really don't do much with Ruth's. I mean, you know, great business, but, you know, our focus is again, more the thousands of independent restaurants and smaller groups around North America. You know Darden, you know, we do business with Darden. You know, by accident, we do business probably with everybody. Again, it's not our, not our real focus, not the growth market that we really target. You know, we'll do business. Again, our focus is, you know, with over 1,000 people in sales, we're knocking on doors and doing what we do best. Understood. Okay. Just I noticed that, you know, inflation has moderated a little bit here, 4.4% for the quarter. Any thoughts on inflation on a go-forward basis for the rest of the year? Just if you could just remind us again how that impacts your overall gross margin. I think there's still some concern among investors that moderating inflation and/or potentially deflation can have an impact on your margins. Just any thoughts there would be helpful. Thank you. Yeah, sure, Peter. Yeah. I think inflation has played out kind of the way that we expected, and I think a lot of the industry expected. You know, obviously moderating from 20% last year throughout 2022, and then down to kind of low to mid-single digits this quarter. You know, we expect the base effect of 2022 to continue to drive the year-over-years. We expect continued moderation. We saw some sequential deflation on specialty prices from Q4 into Q1, but that's normal seasonality. Center of the plate prices were fairly flat sequentially. I just think that we're returning to more normal inflation dynamics, and, you know, we'll see how it plays out the rest of the year. In terms of how it affects our margins, you know, there's many impacts to our gross profit margins. There's product mix. There's, you know, the inflation and deflation and seasonality. You know, once again, going back to our prepared remarks, we focus on growing gross profit dollars above adjusted OpEx. You have to look at us on a full year basis, especially given our comments regarding the cadence of 2022. On a full year basis, our guidance implies that we have a nice growth rate gap with gross profit dollars and managing our OpEx efficiently and effectively. Great. Thank you very much. The next question will come from Kelly Bania with BMO Capital Markets. Please go ahead. Good morning. Good morning, Chris and Jim. Thanks for taking our questions. Hey, Kelly. Jim, I just wanted to go back to that comment about the focus on the gross profit dollar growth that we're just talking about here. I think you made a similar comment several months ago about how maybe the industry shifted a little bit away from percentage towards focusing on gross profit dollars, particularly as this inflation moderates. I was just curious if there's any process or procedures that you've changed that maybe support that the whole organization kind of focusing on the dollars, anything on pricing or compensation that you've changed, or is this just consistent with how you've always kind of managed the business? Yeah. A good question, Kelly. I mean, it's pretty consistent. You know, I think as you go up and down, first of all, we've never had, like, 25% inflation, you know, overnight. You know, we are in uncharted territory. You know, I mean, you gotta respect competition, and you gotta respect, you know, how much. I mean, we all wanna make more money, but, you know, there's a lot of pain when you're passing on that type of inflation to your customers. I mean, it's really, you know, if you were making 30% on a, on a $30 box and, you know, now that box is $60, you don't really need to make 30% to make, you know, more gross profit dollars and get a leverage on your overhead. You know, each of our managers, you know, every city we do business with is a little different. The mix is a little different. We're very margin-focused. You're correct, you know, we look at the way we incentivize our sales teams, and, it's a mix of margin. It's a mix of gross profit dollars. It's a mix of gross profit dollars per drop, right? I mean, the costliest part of the business is making deliveries, right? Those trucks and all the people involved in loading and delivering. You know, we do it on a daily basis. You know, we have teams that are just constantly looking at the business and the drop size and the mix. We're continuously trying to align, you know, the focus of our sales team with the focus of the company and meeting our goals. If you start to see deflation, you know, which we have started to see in certain categories, the shift could be more on gross profit margins again, right? You know, if prices are coming down and dollars are starting to come down, you know, the key is not to give it all back. As prices start to come down, you could grab a few points more in margin. The focus goes a little bit more on margin than when it's on the way up, and you're just saying, you know, the focus is more on gross profit dollars. I think it's, you know, it's a constant, you know, captain at the wheel, you know, in these departments, managing to, you know, to get the kind of bottom line that we need to run the business and at the same time, not allow too much competition to sneak into your business because maybe you're speeding a little bit too much. Okay, that's very helpful. I guess also, can you touch on Florida and the expansion there and what might be any of the near-term costs associated with making the transition versus kinda some of the longer-term savings as you build out that new facility in Florida? Sure. Well, again, we are consolidating. Right now we have multiple small facilities. You know, we ran out of space a long time ago, and the building has been delayed, you know, I would say maybe close to one year. We've been operating very inefficiently for a very long time. Right now we're gonna consolidate, you know, most of our northern processing of seafood, you know, in that Orlando area down into the major new facility in Miami. We're gonna consolidate the meat processing that we are doing in Pompano into that facility in Miami. We're gonna consolidate chefs and our overstock warehouses into that facility. I think Jim could give you more precise numbers, but we're going to eliminate a lot of the inefficiencies. You know, we'll have a higher occupancy course to start with. The massive amount of opportunity to really grow even faster and more efficiently, I think it's we're gonna quickly eat up a lot of that cost, and it's gonna really accelerate growth. Yeah. Kelly, just on the short-term costs, as Chris mentioned, you know, we've modeled the incremental rent and operating costs into our full year guidance. From a guidance perspective, there's really, it's already in there. It was already in there in our original guidance. You know, we're, this is one of our first facilities in, you know, along with L.A., that we're building a full center of the plate cut shop for fish and meat, as well as produce capability and specialty all in the same building. It's a long-term investment, and we expect to drive a lot of operating leverage, you know, in the next couple of years as we build the business. Wonderful. Then maybe just had one more. Chris, yeah, I think you mentioned in the release this, the impact of new customer openings. Just thoughts on what you are hearing from your restaurant customers and your relationships about how new openings might evolve in a, what might be a tighter credit environment here. I still think that's like a wait and see. We have so many openings. I mean, there's so many, you know, core customers opening up more restaurants, so I think they're well-funded. I think where you might see a little slowdown is maybe in some of the, you know, the new real estate projects where maybe their funding is on hold, and that could slow some of the. You know, most of these new buildings are putting a lot of restaurants into them as well as more of a draw to get people into the offices. Actually, it's something very interesting, you know, that's been happening for the last year or two, is, you know, we're seeing more business. I think what's driving a lot of our success is the increase in more customers spread out, especially in Texas and Florida, but, you know, as well in New York and California and all our major markets. You know, restaurants are opening where the people are, right? Unfortunately, you know, some of our core city markets where, you know, they depend on people coming to the office every day, you know, those businesses unfortunately are still, you know, underwater to a certain degree. You know, they're very busy three days a week, maybe four, but they're not back to where they were. The people that are not going in are eating where they're working or traveling or living and that's driving a lot of new volume to, you know, to The Chefs' Warehouse companies. I think the restaurateurs continue to open restaurants 'cause that's what they do. We're as of now, we have not seen that slow down, so it would be interesting to see, you know, a year from now, you know, the tightening of credit, if that's going to affect our customer base. As of now, we're really not seeing it. Thank you. The next question will come from Andrew Wolf with C.L. King. Please go ahead. Thank you. Good morning. Chris, on Hardie's, kinda wanna just ask you to revisit the value-added business they bought in Houston. To find kind of intriguing that, you know, the high-end food service world, you know, is, you know, asking for and accepting value-added ideas. Which really tells you something. I mean, given that's part of their differentiation is, right, you know, chefs doing their own work. Could you just tell us a little about that business and where you think that's gonna trend, that kind of, you know, outsourcing at least of some of the, what, I guess, food preparation or some other kind of value-added service? Yeah. Again, you know, when we say a lot of value added, it's, you know, their business is, it has a broader customer base. So just think of maybe more airline hubs, you know, where they're preparing food. Think about more of the high-end retailers who are looking for, you know, grab-and-go products to sell that are put together. And, you know, it's a sale that, you know, if you're going to a market and you're looking for, something to serve at home that's quick. So I think, you know, it's not 100% towards your restaurant customer. You know, A lot of it is the hotels and caterers that, you know, everyone today is challenged, with the workforce, so it's more processing, right? It's cutting more, you know, fruits and vegetables and products that are faster, you know, peeling onions, chopping, you know, putting them in an environment where obviously they're fresh and it saves a lot of time and it allows them to get by without labor. I think that trend's been coming for a long time, and it's really been of course accelerated during the pandemic where, you know, hospitality was hit the hardest, and we lost the most people in the workforce, you know. I think everyone could say that it's better than it was, but it's still challenging, and it was challenging before the pandemic, so I don't think that's gonna change much. Just the same way that, you know, we're cutting tons of steaks for restaurants, hotels, steakhouses. Number one, I think we do a better job at it 'cause that's all our processing units do, right? You know, we're producing, you know, high-end hamburgers, and we're cutting steaks, and we're experts at it. Most, you know, most establishments don't have that kind of expertise, right? You don't have, you know, a lot of trained butchers. You don't have band saws. I just think it's a gradual evolving industry, and it was going that way anyway, and now it's accelerating, you know, because of the labor shortages. You know, Hardie's has a great footprint throughout all of Texas. I mean, that's what's really exciting to us. It's a great organization. It's been around for a long time, great people, very well run. You know, the thing that takes us the most time when we're entering a new market is, you know, making friends. It's a relationship business, so, you know, you need to build that trust. You need to build the credit history. Having someone like Hardie's join Chefs' in a, you know, maybe the biggest market that we're entering and for food service that we're not in, that in Florida, gives us access to thousands of customers and, you know, we're starting to build a specialty department to be able to visit all the Hardie's customers and give them support to their existing sales staff. I think we're gonna have tremendous success over the next 5, 10 years. Thanks, Chris. That was actually a segue to my follow-up question, which is, you know, as you know, the strategy behind Hardie's and some of these other acquisitions, which are more, you know, customer focused. Can you tell us, you know, in general broad strokes or citing examples, how well is the synergy, the sales synergy between, you know, protein, let's say Allen Brothers and specialty, both in, you know, cross-selling and in, you know, consolidating the delivery and getting that delivery synergy where you alluded to already? It's so, you know, it's an expensive part of the process. I'd love to hear, you know, what the future is. Well, where, you know, where things are going. I know obviously you're building facilities to accommodate that. There must be something in the field, you know, telling you this is working. I'd love to hear about it. Sure. Yeah. A great question, Andy. It's a balancing act, right? Every market is a little bit unique. You know, our major cities are more unique than, you know, distributing in the suburbs, or more into, you know, little cities. I think if you go back, even, you know, if you look at some of the questions I've received over the past, you know, 10 years, 11 years, it's always been about, you know, what makes Chef, right? Delivering into major cities, they, you know, most restaurants do not have a lot of space. Space is so expensive that, you know, their storage areas, you walk into a $14 million buildout restaurant with 300, 400 seats upstairs, and when you go downstairs into their storage area, it's like two closets. That's really, you know, how we built our original model at The Chefs' Warehouse, knowing that they needed, you know, daily deliveries or four or five times a week deliveries. We had to figure out the logistics and the ability to take orders late and get it there so they could prepare for lunch. That's kind of the way the name evolved, you know, over time. As The Chefs' Warehouse, we realized we were their warehouse, right? you know, fast-forward today, you know, as we're combining a lot of these categories, We realize that the cost of delivery, the cost of everything today is, you know, astronomical. you know, with inflation is, and all the cost of labor, you have to get more efficient. What customers would not accept maybe 14 years ago, you know, they wanted everything separated. I don't think that that thought process exists today, you know. Where it does kind of our new facilities that we're building, you know, it is a hybrid. I mean, it allows, obviously, if it's a big market like New York or L.A. or San Francisco, where, you know, you have a concentration of many, many clients in a close proximity, we run those trucks separately, right? You know, if you have a $2,000, $3,000, $5,000 delivery of just protein or produce, it could go on a separate truck. My belief is, especially over the next X amount of years, is that you have to figure out a way to lower the cost of your delivery and pass it on to the customer. To do that, it's with drop size, and especially servicing so many 100-seat independent restaurants, who don't buy, you know, on a daily basis, especially, you know, they'll buy a few hundred dollars of maybe groceries and a few hundred dollars of produce. Combining it or finding a way to get efficient, you know, logistically, it lowers our cost of delivery, and it allows us to pass on a lot of the savings to our customers. It's a win-win. You ask, you know, is the cross-selling working? I mean, if you look at our growth, I mean, even before the pandemic, an industry that was growing organically, you know, food away from home, I think it maybe was 1% overall, if you back out all the M&A from all the big food distributors. We were growing, you know, mid to high single digits in years before the pandemic. Obviously, now it's been accelerated. It's all coming because we've successfully figured out how to cross-sell. It's not easy. It's taking us a very long time. You know, we believe that's one of our moats, you know, our ability to be a lot more flexible. Obviously, we're not as nimble as the really little independents who still exist because they don't have all the protocols and food safety and everything that, you know, we stress is really important, you know, to our business and the safety of our people and in delivering food in the best manner. I think our roots, you know, of being owner-operators and a lot of the companies that have joined us were owner-operators, and keeping that flexibility and that entrepreneurial spirit in the businesses of figuring out how to get it done is really driving our accelerated growth compared to most of our competitors. Chris, thank you for that color. I'll jump back into the queue. Thank you. Thanks, Andy. The next question will come from Todd Brooks with The Benchmark Company. Please go ahead. Hey, thanks. Good morning, guys. Hi, Todd. Two quick questions for you. One, I don't know what you're looking to disclose here, but on the acquisitions announced, is there any discussion or color you can give us on maybe multiples or deal structure as far as cash up front versus earn-outs or equity, and then just generally funding this level of acquisition activity? Yeah. Thanks, Todd. So the purchase price and everything will be disclosed in our 10-Q, which we'll file, you know, over the next week or so. Just at a high level that both acquisitions were structured with, you know, cash up front, one with an earn-out, the other with a note. That'll be disclosed in our 10-Q. The multiples were right in kind of our sweet spot of, you know, kind of six to eight times with a portion of that in earn-out or some other form of deferred payment. I'm sorry, what was the second part of your question? Just if this can be funded out of existing availability or if you'll have to access additional avenues. Sure. of liquidity. Yeah. If you recall, we upsized our convertible security in December, and we put about $120 million of cash on the balance sheet, and that was targeted really specifically towards these two larger acquisitions, Hardie's and Greenleaf. We funded the purchase price out of that cash, and we did an incremental moderate draw on our ABL just to bolster our cash position in the second quarter. That's great, Jim. For either of you, was very pleased with the update to forward guidance and the fact that you're folding in a decent amount of acquired revenue, and it really isn't impacting the margin structure that you had guided to at either the gross level or the EBITDA level. I know historically, a lot of times we'll acquire a property, or a company and Chef needs to really work to get those acquired properties to corporate average margins. Here, there was no change to that guidance. Does it speak to Either A, the quality of these companies that you're buying here, that they've already matured, they're already at Chef type margins, or B, does it speak to something within the specialty produce vertical that that's a higher EBITDA margin business than core distribution? Thanks. Actually, just I'll let Chris comment, but it's slightly dilutive to our original guidance, probably by about five or 10 basis points, and that's just because on a combined basis, they're slightly below our average adjusted EBITDA margin, not much. There was a little bit of dilution. Because they're highly produced, they tend to be on the higher gross profit margin side and higher OpEx side. On an EBITDA margin perspective, not much off of our average. Yeah. Todd, I mean, again, I mean, we acquire businesses to grow them, right? I mean, we really don't get much credit, you know, for the buy. You know, our planning when we're looking at, you know, what companies will join Chef, they are long-term propositions. I mean, there's a lot of work to get the synergies and get the bottom line margins that we're accustomed to. These are great companies and, you know, their margins are good and their bottom lines are healthy. Over time, obviously, we expect our management teams to integrate, create cross-selling, get efficiencies in facilities, the back office synergies, and make them more profitable than they are today. I think you're absolutely right the way you're looking at it, that, you know, the core Chef business is higher margin, or I would say more money to the bottom line, right, higher EBITDA businesses. These businesses do bring us backwards, and we're able to make it up because we continue to get synergies and continue to improve in all our core businesses to be able to acquire these businesses and buy time to really get them up to what we call the Chef level. You know, we're back in the first innings in these businesses, but I think our, you know, the momentum, and I call it the machine of Chef, you know, is able to carry us and to keep producing the numbers that you're seeing. Over time, these businesses will just get better and better. Okay, great. Thank you both, and congrats again. Thank you. Thanks, Todd. Again, if you have a question, please press star then one. Our next question will come from Ben Klieve with Lake Street. Please go ahead. All right. Thank you for taking my question, and yeah, great quarter, guys. Just one for me in the context of these initiations. You guys have been quite public, I think, for a while about your intention to expand geographically into the locations that these acquisitions are and by category. I'm curious now, you know, with these in hand, as you look at your portfolio, do you still see kinda California, Texas, and Florida to be underserved with your current capabilities, you know, and produce as well being underserved? Do you think that these acquisitions really shore that up and as such you're maybe looking elsewhere for future expansion? Yeah. I mean, I think we're always opportunistic. Again, we're not your typical, you know, food service company. We're not your typical food service expansion type of book where, you know, you align, you know, you go into the market and annex the market next to you, which is the most efficient. We always say the great thing about Chef is nobody like us. The hard part is, you know, there's nobody like us really to acquire. We have to take a business that, you know, gets us into the clientele we're looking for and expand over that, and that usually takes some time. If there was another great business in Texas that fit into Chef, you know, we're going to look at it. You know, in California, you know, we do have a big footprint. We have a large new facility in Southern California that has plenty of room for organic growth. It also has plenty of room to do more tuck-ins. You know, we know how, you know, we know what great synergies we get when we are able to tuck in a business into our existing facility. It's, you know, it's the most accretive immediately to our bottom line. We're gonna remain, I think, interested in seeing businesses that fit in, but we do have a great platform right now. You know, Texas, you know, I look at Texas as a $1 billion market for Chef, so plenty of room to grow organically and plenty of room to be opportunistic. California, again, California is a, you know, over a $1 billion market probably at this point. In each region, I think that the business will double and triple, you know, when you look at Southern California. Southern California could be a $1 billion business for Chef. We're still relatively small compared to the market size. Got it. Got it. That's very helpful. very good. Congrats again on a very good quarter. I'll get back in line. Thank you. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Mr. Christopher Pappas for any closing remarks. Please go ahead, sir. Yeah. Well, we thank everybody for joining our call today. We're thankful for the questions. It was a great quarter. I congratulate the team at Chefs'. They put up a lot of hard work, and it was a very, very busy quarter of acquisitions and moving into new facilities. I think the numbers speak for themselves, that they've done a tremendous job, and we're really thankful to have such a great team. We look forward to everybody joining us for our next call. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.