Greetings, and welcome to the Chefs' Warehouse third quarter 2023 earnings conference call. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Alex Aldous, General Counsel, Corporate Secretary, and Chief Government Relations Officer. Please go ahead. 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 third 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 discussions 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 third quarter results in detail. Then 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 third quarter 2023 earnings call. The third quarter business activity improved sequentially within the quarter, following a softer than expected July and August, primarily due to the placement of the Fourth of July holiday, observed higher than anticipated overseas travel. Coming out of the summer season, the demand and pricing environment improved as more typical seasonal trends emerged. As we moved into September, we saw a significant sequential improvement in gross profit margins across our markets, and we expect this trend to continue as we move into the fourth quarter and new year. I would like to thank our teams across Chefs' Warehouse for delivering strong growth in customer acquisition, placement growth, and volume growth during the quarter. We remain focused on providing our customers with the highest quality products and high-touch service as we continue to grow categories, integrate our recent acquisitions, and drive organic growth across domestic and international markets. A few highlights from the third quarter as compared to the third quarter of 2022 include 7.1% organic growth in net sales. Specialty sales were up 8.2% organically over the prior year, which was driven by unique customer growth of approximately 10.8%, placement growth of 14.2%, and specialty case growth of 9.1%. Organic pounds in center of the plate were approximately 6.6% higher than the prior year third quarter. Gross profit margins decreased approximately 29 basis points. Gross margins in the specialty category decreased 84 basis points as compared to the third quarter of 2022, while gross margins in the center-of-the-plate category decreased 104 basis points year-over-year. Jim will provide more detail on gross profit margins in a few moments. During our second quarter call, we highlighted the near-term growth-related operating cost increases associated with the significant investments we have made in infrastructure capacity to facilitate future organic growth, as well as the elevated level of acquisitions we have made over the last few years. These expenses relate primarily to operating costs associated with facility expansion, higher acquisition-related transition costs, and insurance expense associated with our significant growth over the past 12 months. Our expenses related to our core warehouse, distribution, and sales operation, excluding these growth-related investment costs, remain in line with our expectations and historical trends. We expect the impact of the near term elevated expense to lessen as we move into 2024 and 2025. While not a complete list of cost reduction and operational efficiency related efforts currently underway, I would like to highlight a few of the more impactful projects and work streams aimed at contributing to expected operating leverage in 2024 and 2025. These include our anticipated opening and consolidation of multiple protein processing plants into the Northern California facility we expect to open in the first half of 2024. We expect to consolidate trucks, routes, and operating more efficient operations utilizing an optimized labor force and technology platform with increased capacity for future growth. We expect to continue to grow our digital capabilities and have recently added our processed protein products to our online ordering platform. This adds to improving efficiencies in our customer support and sales operations. We expect to reduce acquired growth transition and integration costs going forward, and we expect to begin to see the organic growth leveraging our recently added capacity in Southern California, and Florida, Philadelphia, and other fast-growing regions where we have recently expanded distribution capability. Our overall strategy for growth going forward has not changed, rooted in the three primary pillars of our unique growth model, which includes the integration of recently acquired companies, cross-category and cross-platform selling, and driving future operating leverage through the capacity investments we have made as we grow and scale. As we target to average 4%-6% organic growth over the next few years, we are adapting our capital allocation models as follows: We expect to gradually reduce capital expenditures to approximately 1% of revenue over the next two years to facilitate higher free cash flow conversion. We are targeting 2.5 x-3 x net debt leverage by year-end 2025, and our board of directors has authorized a two-year share repurchase program up to $100 million of shares. We are targeting $25 million-$100 million share repurchase by year-end 2025. The ultimate total repurchase, if any, will depend on our success in expanding our ability to allocate cash towards repurchase via amendment to our term loan maturing in 2029, which is currently underway, market conditions and free cash flow generation over the timeframe. In terms of acquired growth going forward, we expect to take advantage of potential accretive opportunities that may present themselves within this two-year targeted capital allocation framework. 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. 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 September 29th, 2023, increased approximately 33.2% to $881.8 million, from $661.9 million in the third quarter of 2022. The growth in net sales was the result of an increase in organic sales of approximately 7.1%, as well as the contribution of sales from acquisitions, which added approximately 26.1% to sales growth for the quarter. Net inflation was 2.3% in the third quarter, consisting of 1.6% inflation in our specialty category and inflation of 3.1% in our center of the plate category versus the prior year quarter. Gross profit increased 31.6% to $207.7 million for the third quarter of 2023, versus $157.8 million for the third quarter of 2022. Gross profit margins decreased approximately 29 basis points to 23.6%. Gross profit dollar growth and margin during the quarter were primarily impacted by the weaker than expected summer season as compared to a strong summer season in 2022. As Chris mentioned, margins improved as we moved through the quarter, and our September gross profit margins were the highest month year to date in 2023. Selling, general and administrative expenses increased approximately 37.9% to $179.6 million for the third quarter of 2023, from $130.3 million for the third quarter of 2022. The primary drivers of higher expenses were higher depreciation and amortization, primarily driven by acquisitions and higher compensation and benefits costs, facility and distribution costs associated with higher year-over-year volume growth and the impact of certain acquisitions. On an adjusted basis, operating expenses increased 34.8% versus the prior year third quarter, and as a percentage of net sales, adjusted operating expenses were 17.9% for the third quarter of 2023, compared to 17.6% for the third quarter of 2022. Operating income for the third quarter of 2023 was $25.5 million, compared to $22.1 million for the third quarter of 2022. The increase in operating income was driven primarily by higher gross profit and lower other operating expenses, partially offset by higher selling general and administration expenses versus the prior year quarter. Income tax expense was $6.8 million for the third quarter of 2023, compared to $3.1 million expense for the third quarter of 2022. The higher effective tax rate in the third quarter of 2023 was primarily driven by a $2.1 million charge in the current period for return to provision adjustments related to prior year tax returns. Our GAAP net income was $7.3 million, or $0.19 per diluted share for the third quarter of 2023, compared to net income of $8.3 million, or $0.21 per diluted share for the third quarter of 2022. On a non-GAAP basis, we had Adjusted EBITDA of $50.3 million for the third quarter of 2023, compared to $41 million for the prior year third quarter.... Adjusted net income was $13.7 million, or $0.33 per diluted share for the third quarter of 2023, compared to $16.4 million, or $0.41 per diluted share for the prior year, third quarter. Turning to the balance sheet and an update on our liquidity. At the end of the third quarter, we had total liquidity of $182.9 million, comprised of $33.1 million in cash and $149.8 million of availability under our ABL facility. During the quarter, we prepaid $20 million on our term loan, maturing in 2029. The remaining balance as of September 29, 2023, was $277 million, and total net debt was approximately $668.1 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 financial guidance as follows: We estimate net sales for the full year of 2023 will be in the range of $3.35 billion-$3.425 billion. Gross profit to be between $797 million and $812 million, and Adjusted EBITDA to be between $188 million and $196 million. 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. Thank you, and at this point, we'll open it up to questions. Operator? Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press Star and then one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star and then 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 pull for questions. The first question we have is from Alex Slagle of Jefferies. Please go ahead. Thanks. Good morning. Question on the guidance. Just curious how much of the EBITDA guide change was from the August dynamics versus the change in the 4Q outlook? It sounds like when we last spoke at the beginning of August, the gross profit trends were under some pressure still from the shifts in seasonality and volatility in certain proteins, and this continued a little longer, I guess, through August before getting better in September and October. And I guess, was this the source of the reduction in the EBITDA guide? Yeah, thanks, Alex, for the question. It's a little bit of both. Definitely, as you mentioned and as we mentioned, July and August were weaker than expected. We didn't get the benefit really of the price inflation as product mix, essentially offset that. So we didn't get the gross profit dollar growth we expected to offset, you know, to generate the expense leverage on expenses. And the second piece is really the impact of our insurance renewals. You know, we're building in Florida, California, and those rates have gone up exponentially. We had our insurance renewals during the third quarter, and so we flowed through the elevated growth-related expenses that we talked about in our prepared remarks. So it was about, you know, 10-12 basis points on the impact of the summer, and then another 10-12 basis points on the impact of the elevated growth expenses. That's basically the adjustment to the guidance. Got it. With the shift in your capital allocation outlook, is now providing room for buyback and more modest leverage targets versus historical levels and perhaps some other options out there with the converts. I mean, how does this impact your longer-term view on sales growth, which I think previously incorporated 5%-10% growth from M&A, and if there's any implications on the longer-term sales and EBITDA views that you provided, earlier in the year? Yeah. I think we've always said, Alex, that, you know, we're pretty optimistic. You know, the game has kind of shifted now with rates going so high. You know, we bought a lot, you know, over the past 12 months, especially that, you know, we're taking a... I would say, a little pause to, you know, better integrate. We have all these new buildings. We have some buildings that were unexpected, that kind of fell in our lap, that were opportunistic. So, we have so much right now that, you know, unless there was an overwhelming, you know, deal that was transformative or, you know, something that just made so much sense, you know, there's always ways to finance those. We thought that a better, better application of capital right now is to, you know, focus more on organic growth. You know, continue to improve our systems, integrate the companies that, that we have bought, and really drive, you know, really drive the bottom line until rates become more attractive again. ... Makes sense. Thank you. Thanks, Alex. The next question we have is from Mark Carden of UBS. Please go ahead. Good morning. Thanks so much for taking the questions. Why don't you just start off with inflation, get your take on how the cadence played out, and if there's any lingering issues with any particular categories this quarter? Thanks for the question, Mark. You know, inflation has kind of played out throughout the year as we kind of expected, more driven by the base effect. I think we've said before, we've seen some deflation in certain categories versus the crazy prices you saw last year. But overall, it's been a story of disinflation as we've gone through the year. We've gone from, you know, 4% or 5% in the first quarter to, you know, really 2%, 2.5% this quarter, and we kind of expect that trend to continue. Obviously, we have 55,000 products in our warehouses, so there's products that are inflation-- slightly inflationary, deflationary, but on an aggregate basis, inflation has really been disinflation this year, but with deflation in certain categories that, you know, were obviously overshot last year. Okay, great. And then just given the current economic backdrop, are you expecting to see more of your growth over the next few quarters take place from expanding penetration of your existing accounts or from adding new business? I think it's, I think it's both. I mean, we've seen a very healthy pipeline of new business. You know, restauranteurs open restaurants, that's what they do, right? So, you know, our really good customers are continuing to open restaurants. So, that, that drives, you know, the replacement. You know, we average about 7%-10% of attrition through just natural, you know, leases, you know, coming up or, all sorts of different reasons. So, we always need those new openings. But yes, there's a major focus, you know, with the, the businesses that we've been developing. You know, we're in the produce business now. We're heavily into the protein business. I think the reason that we're outperforming, really, the market, you know, in our growth, I think we do have industry-leading growth, is because, the way we do go to the market, that we are cross-selling and introducing all our new categories into markets that we didn't have those categories. And, I'm pretty confident that's gonna, that's gonna continue, and really, that's our business plan, you know, to continue that cross-selling, continue to grow all the markets that we've entered. And, you know, eventually, we think there'll be a, a tailwind, and that's where we really get that, that big pop, and that's kind of our history for almost 40 years. Got it. Thank you so much, and good luck, guys. Thank you. The next question we have is from Peter Sala of BTIG. Please go ahead. Great, thanks for taking the question. I was hoping you'd give us a little bit of an update on some of the larger acquisitions and the integration of those acquisitions, maybe Greenleaf and Hardie's that you made earlier this year. Can you just give us an update on where you stand with those acquisitions? And then, more specifically, with the Chef Middle East, my understanding is when you acquired that brand, it was in need of additional capital for expansion. With your updated guidance on CapEx, can you just kinda square for us how that looks and how much capital you can put into that brand going forward? Thank you. Sure, Peter. I think we'll start. I'll start backwards, and then I'll let Jim opine a little bit on that. But yeah, when we bought Chef Middle East, you know, we knew that they were gonna be constrained on space. That was part of, you know, how we assessed the value. And it's a great company. It throws off great free cash flow, and the plan was to use that, you know, part of that money to fund the expansion. So I think that's business as usual, and you know, that addition is already being built, so you know, we expect them to continue to grow and that business to continue to prosper. You know, Greenleaf, much different a kind of acquisition, a company that, we've known for, you know, over 15 years, great brand in San Francisco. It complements, the way we go to market in San Francisco. Probably our second-largest market right now, when you combine all the businesses, that we own, in Northern California. And, that's kind of, you know, they run a great business, and, we're just letting them continue, to run it, you know, with Chefs', with Chef integrating slowly. So again, we can get that crossover sell. You know, they have a lot of clients that, the other Chef companies don't have, so we're introducing more and more products to, to those customers and, and vice versa. That's kind of more of a steady eddy and hopefully continue to grow over the next 10 years, as a great, as a great business. You know, Hardie's was an entry into Texas, where we had a very small footprint. Another great company, a huge footprint throughout almost all of Texas. And that one, I'd say we're still in the first inning, you know? We're still, you know, getting to know each other. We're starting to integrate slowly, management teams, accessing their customer base, customer base. We opened up Allen Brothers Texas over the past year, so that plant is finally open, and glad to say that, it's doing better than expected. It's starting to sell more and more premium Allen Brothers types proteins to the chef, to the CW customers, as well as the Hardie's customers. And the CW business, which is pretty small compared to our other markets, is starting to get lots of traction, opening up customers, you know, every single day and starting to penetrate more and more of the Hardie's customers. So it goes back to, you know, why we bought Hardie's, right? To access Texas, you know, faster. It's such a big state, and we're very excited about the long-term growth of Texas. And, Pete, I'll just add on the CapEx question and the guidance. So the project is underway. We're already spending money on it. We're funding it out of the cash flow that CME generates. It's the CapEx is in our current 2023 CapEx guidance and is also in the capital allocation plan that we announced earlier. And so just wanted to comment on that. Great. And then just a follow-up. We've heard some evidence that, you know, maybe the higher end consumer or the higher income consumer is starting to trade down a little bit and manage their check to a certain degree with, you know, maybe cheaper entrees and cheaper alcohol. Are you guys seeing any evidence of that in your numbers? I mean, your sales numbers are pretty good. Just trying to see if there was any evidence that consumers are actually trading down. Yeah. I mean, we're not in the alcohol business, so, you know, I don't think we can really comment on that. You know, what I've seen over the past almost 40 years is usually when the economy slows down some. Yeah, people usually, I'd say the overall mass market probably drinks a little bit less expensively, right? But that's why, you know, from the food side, historically, you know, we could see a little bit. I mean, we probably saw a little bit over the summer. You know, I think this summer was, you know, very different than most summers. There's so much, I'd say, travel. You know, our customer's customer. You know, what we kept hearing was our customer is in Europe, right? So, you know, we're busy. We're not as busy as we'd like. You know, we had the smoke from Canada, you know, which shut down a lot of the outdoor cafes, which hurt us during the summer. It was a thousand different things that were going on. You know, we had lots of rain, and then we had heat, and then... So it was a really funky summer. And as we started coming into September, we started to see more, I would say, normalization of sales, and then going into October, you know, it came in strong. So, from where we sit, we think business is pretty good. You know, we think, you know, most of our customers are doing pretty well. We think the pipeline going into the fourth quarter looks well, looks good. You know, we're hearing about lots of parties, lots of bookings. So are people cutting back a little bit? Wouldn't be so surprised, but I would say overall, our customers are doing pretty well. Thank you. The next question we have is from Todd Brooks of Benchmark Company. Please go ahead. Hey, thanks for taking my questions. First, just Chris or Jim, on the growth algorithm for the next couple of years. Part of getting the efficiencies out of these new facilities that you've added, you've talked about tuck-in acquisitions and how valuable they can be, kind of building volume through this new capacity that you've added. If we think about that 4%-6% organic growth, and I think historically, 5%-10% from acquisition, does the new plan imply that we're at the 5% end of growth through acquisition, or do you see a period of digestion here where we may even be a little bit lower than 5% growth from acquisition? Yeah, you know, that's a tough one. As we know, you know, things can change. So, I would say, again, in this kind of environment, you know, we're talking about today, we're much more focused on digesting all the acquisitions that we've done the past, say, 24 months, and driving, you know, driving more revenue to the same customers and continuing to open customers and start to push volume into the new warehouses we built. Doesn't mean we can't do, you know, some really smart fold-ins that, you know, the volume adds to lowering our overhead into these new facilities and driving greater EBITDA to the bottom line, you know? I think, I think the message is more right now, you know, our job is to allocate capital, and probably the best allocation of capital right now is to grow more organically. Unless there's a phenomenal, you know, phenomenal deal that makes unbelievable sense for us and our shareholders, we would rather, you know, put the capital to work, hiring more salespeople and really pushing the organic growth, which we're really good at, to drive, you know, mid to maybe high single-digit growth, you know, organically. So I think we're gonna play the ball where it lies right now. ...That's helpful. Thanks. And then, Jim, you talked about working to drive leverage through the business and really focus on digestion. If we're not diluting EBITDA margins with acquisitions for the next couple of years, I guess, how would you want us to think about the pace of EBITDA margin improvement as you're really working towards integration and digestion of what's been acquired over the last two years? Yeah. I think, you know, the kind of 2-3-year and 5-6-year plan that we laid out, we reiterated on the Q2 call. I think that's still in play, you know, with a target of, you know, mid-sixes towards seven over the next five years. You know, adding Hardie's, which is a big revenue produce company with a lower EBITDA margin, diluted us on a full year basis by, you know, 10 or 20 basis points this year. So if you exclude that, based on the midpoint of our guidance, you know, our core business is back towards 6%. And I think, you know, as Chris mentioned, we're gonna focus on improving and integrating the significant amount of acquisitions that we've done. So I think, you know, definitely the $4 billion target of top line and 6%+ EBITDA, Adjusted EBITDA margins are, you know... I think between the organic growth, the capital allocation plan that we've laid out, we've made the significant investments in M&A and infrastructure. We're gonna continue to grow. We're gonna continue to build some facilities, but at a more moderate pace. And our most profitable growth is organic growth into the capacity that we've invested in. So I think, I don't think it's materially changed, and as Chris mentioned, we'll take advantage of accretive M&A opportunities that work within the capital allocation framework that we've laid out. So I think the fact that we're at kind of our peak investment cycle, and we're gonna start mining those investments, aligns well with generating more free cash flow, strengthening the balance sheet over the next couple of years, and potentially, market conditions allowing, allocating some more of our cash, our capital to returning some value to shareholders, depending on market conditions, et cetera. That's very helpful. Thank you both. Thanks, Scott. The next question we have is from Andrew Wolf of CL King. Please go ahead. Hi, good morning, thanks. Jim, that last answer on Hardie's was kind of where I was gonna ask you, but I still want to kind of, you know, you're kind of getting us to the 35 basis points or so lower EBITDA margin guide for the year, and, you know, it's obviously a little more than that for the fourth quarter. But, you know, I mean, these—I appreciate the bridge, but could you kind of frame it in terms of expectations? I assume the summer, you know, you didn't have a crystal ball in the summer, and, I would assume also the insurance maybe was a surprise. So, but what about, you know, Hardie's and the acquisitions in general? You know, are they, you know, could you frame whether they were a little sort of as a group or individually, maybe Hardie's, just a little more diluted than anticipated? And maybe for Chris, you know, if that is the case, you know, I would assume this is nothing like what you went through many years ago with the protein business, but, you know, any qualitative view on where, how you expect the produce to become, you know, not just strategically helpful for cross-selling, but, you know, a pretty profitable part of the business? Thank you. Yeah. Yeah. I'll shoot first, Andy. I think business, it's pretty much tracking, you know, except for the funky summer. I think it's tracking, you know, to expectation. You know, most of our businesses, I mean, business is fine, you know? We had the headwind with some of the costs. We took on an extra building, you know, 'cause we got a good opportunity down in South Jersey to really consolidate. We were desperate for space for that Pennsylvania, New Jersey market, take pressure off of New York and our Maryland facilities. So, you know, when we bought Hardie's, I mean, it's not up to the EBITDA producing level of what Chefs', what we expect from our Chefs' businesses, but we kind a knew that, and it was kind a built into the price, you know, when we bought it. So, you know, nothing unexpected there. I think to explain, you know, why we're not gonna hit maybe the, you know, we had really high expectations this year is, like Jim said, more headwind with the expenses, you know? So yes, a little bit of funkiness during the summer, then September came back, you know, strong. October is coming in pretty strong. So, overall, our customer is doing fine. You know, we've been talking for years and years, and, you know, I believe in, you know, our higher end customer base. He usually does better, you know, than most other sectors of food away from home, and we're extremely diversified. I mean, people think that we're, you know, they know us for, you know, selling super high-end products, but, we sell, you know, what we call upscale casual, which is doing really well, and I think our mix and our diversified customer base has proven to be really resistant. So I think it's like a little Goldilocks. I think it's a little bit more than expected on the expenses due to the new buildings that we've taken on. We've never bought 12 companies in a year, so we had a lot of integration. I think that we underestimated the integration cost of those businesses. But you know, I'm blessed to say that, you know, we're tracking pretty much to expectation with a little headwind on the expense side and a little funkiness of the summer. Yeah, Andy, I'll just add in terms of your your question as it relates to Chris articulated it well, but the guidance. Chef Middle East and Greenleaf are, and you know, even Hardie's is performing pretty much as we expected. We did report the you know, the non-core customer that Hardie's lost. We took an impairment for that in when we reported in the second quarter. So that impacted us a little bit, but it was not the material driver of the change to guidance. It's really been as we articulated the higher level of integration and transition costs, and primarily the higher cost of insurance risk in places like Florida and California, where insurance companies literally don't want to insure you. And that has come in higher than expected. We don't expect that level of expense increases to continue in 2024 and 2025, so that's why we're highlighting them as growth expenses that have, you know, impacted our guidance this year. Great. Thank you both. And one follow-up, Jim. Did you say, I just wanna make sure I heard you right, that September had the best gross margin rate for the year? Is that- Yeah, it was our highest gross profit margin month of the year. Yeah. Is that sort of a seasonal expectation, or is that something we can kind of bake into the models, that gross margins are kind of snap back? You know, as you move into the fourth quarter, gross profit margins historically have gone higher. That's primarily driven by the holiday season. But I think, you know, coming out of the summer, our teams just did a great job of focusing on gross profit dollar growth. And, you know, the market seemed to kind of normalize, as Chris mentioned. And as we mentioned in our prepared remarks, we've seen that trend continue into October. So, obviously, we can't predict the future, but it did feel much better coming out of August and into September. Got it. Thank you. Appreciate it. Sure. The next question we have is from Kelly Bania of BMO Capital Markets. Please go ahead. Good morning. Thanks for taking our questions. I was wondering if we could just go back to the sales outlook here, because we're talking about a little bit of a weaker than expected summer, but we're raising the sales outlook. So can you just help us understand what component of sales you're raising? Is this just M&A, or other factors, maybe? Can you just elaborate on that? Yeah, I think, look, I think the summer, I think, you know, as we've talked about it, it didn't fall off a cliff. It just felt, as Chris used the word, you know, a little funky. It was softer than we'd expected, but overall, our organic growth has been, you know, very solid. The main issue for us in the near term has been on the expense line related to the growth-related expenses. So, you know, raising our revenue guidance is a combination of the strong organic growth that we've seen. We've reported, you know, 9% case growth, double digit, you know, new customer and placement growth. So we've been... Organic growth hasn't been our issue, it's really been the gross profit margin headwind that we had during those short couple of months in the summer, as well as the expenses. Okay. And can you, Jim, can you help maybe quantify some of these expenses here, whether it's, I heard you call out, really, facility expansion, integration, insurance. Maybe just give us some, some dollar amounts to work with in terms of how much that is pressuring this year, how much of those continue into next year, when we should start to see those cycle. Can you help us kind a work through this, the math here on that? Yeah. I mean, on the full year update, on a full year basis, you know, it's pretty much the impact of the summer is about, you know, as I mentioned, 10 or 12 basis points, and the impact of the growth-related expense is about the same, about 10 or 12 basis points. So, and then you had Hardie's dilution, being about, you know, 10 or 15 basis points. You know, that'll take you from 6.1% down to 5.7%, which is the midpoint of our guide. You know, Chris mentioned a number of, you know, just highlighted a few of the work streams and projects that we have that'll come to fruition over the next two years. A lot of it is related to consolidating facilities, in the Northeast, in the Northwest. We've already consolidated two facilities the past two months into our new facility in Florida. ... So we have a number of projects underway that the investments we're making in our digital platform will create more efficiencies. So we'll have some additional rent coming online next year, but we anticipate that those work streams and projects will more than offset that, and so we don't expect to have that level. Obviously, the back half of next year will be more of a leverage opportunity than the first half, just given what we've seen in the back half of this year. Yeah. I think to frame it a little bit more, Kelly, you know, we're talking about $a few million, right? So, you can imagine, with, I think we had 12, 12 companies to integrate, in, in a very short period of time, and, I think we, you know, maybe just underestimated the amount of, like, travel, you know. You know, every team has to travel there. We have to set up, we're doing computer integrations. You have the IT team, you have the ops team, we have sales training. So, a lot of that is, is a one-time, you know, headwind. You know, some of the insurance costs is, is gonna linger, you know, but again, as we, as we start to grow into those buildings. So we opened up Florida, which was a tremendous undertaking. You know, it's our most modern building. We can't wait to show it off. You know, that cost a-- was delayed, and then it caused other expenses, so you could say those are one time. You know, I think they might be one time, but the accountants might argue a little differently. So, we had a lot of headwinds on the expense side, you know, integrating all those companies, opening those buildings. We did not expect to open another building, you know, between Maryland and New York, so we kind of got lucky finding one. You know, commercial warehousing is a tight market, so if you find something that fits your filters, you kind of had to grab it. So, that was a big expense that we didn't see coming, but we're very lucky we got the building. You know, we're getting closer to opening up our Richmond building in Northern California. Due to COVID, that building was heavily delayed. Once that's open, we're consolidating multiple plants. You know, we're taking out, you know, a big amount of duplicate overhead. It's gonna allow us to really, you know, you know, continue to be the leader in that market. So I hate to say we kind of have good problems, because we are growing, you know, continuing to grow so fast. You know, you see the organic growth is extremely healthy, so I don't really worry when I have so much new business coming in and customers are choosing us, you know, to supply them. Could handle a little expense, headwind, and, I'm glad summer's over. I love summer, but, it was a very strange summer, you know? All we kept hearing from, you know, our better customers were, you know, their customers were in Europe. It was still that revenge travel, I think. You know, you look at all the airlines and everything that was happening at the airports with the unbelievable exodus of Americans going to Europe and everywhere else they were going. We felt it was just still a rebalancing from COVID, what we felt we saw during the summer. As we started getting into September, we saw a big normalization again of, you know, what kind of forecast we had, and it continued into October, and hopefully it continues for the rest of the year, and it's gonna be a pretty strong season. Kelly, we lose you? I'm here. Can I just ask one more- Okay. Sorry, the fourth quarter. Your gross margin guidance seems to imply a pretty wide range, with the low end kind of implying a pretty significant deceleration in the gross margin, if I'm doing this math correctly. So is that a possibility? It sounds like what you're seeing on the gross margin line is very encouraging at this point, but maybe just walk us through how much conservatism is in there, if there's any, you know, factor that could impact gross margins or just trying to leave some cushion there. I think it's more just getting to the full year guidance. I mean, there's probably, what, a 10 or 20 basis point gap there, so I don't think there's anything significant there. I would say, you know, we generally have a little bit stronger gross profit margins versus the prior three quarters in the fourth quarter. I don't think there's much different. I think if you look at our implied guidance, our full year-- what we expect right now, our full year gross profit margins will be very similar to last year, and last year was a very strong year for us, especially the back half of the year. So I don't think there's anything specific to call out there. Thank you. Thank you. Thank you. The next question we have is from Ben Klieve of Lake Street Capital. Please go ahead. All right. Thanks for taking my questions. I have a couple on your capital allocation outlook. First, regarding CapEx, I'm wondering if you can characterize some of the CapEx-related projects that you were considering that may no longer be on the table given the lower targeted spend? You know, I don't think it's a matter of we removed projects from the future spend. It's a combination of- ... we're kind of at the peak of the recent spend. The projects that are coming online next year, we're already spending money on, are in our current guidance. We expect to have, obviously, higher revenue. And so as a percent of revenue, we feel pretty good about, you know, I think this year we're probably gonna come in somewhere around 1.5% of revenue. We had originally forecast closer to 2%. So we expect to just kind of gradually bring that down towards 1% and then maybe even slightly lower than 1%, beyond that in 2025 and 2026. And that'll help us, you know, level up free cash flow conversion, so we can allocate more cash towards the balance sheet and potential share repurchase. Gotcha. Gotcha, that makes sense. Perfect. And, and, one other, you know, you talked about classy problems. You know, one of your classy problems historically has been investment into working capital to fund the, you know, just the exceptional growth rates you've had. I'm wondering, you know, as you consider the various levers to boost your free cash flow, do you think there's any kind of material operational changes that can be made to extract cash out of your working capital balance, or, or are you running that about as lean as you can at this point? I think there's always opportunity. I mean, our teams always work on reducing shrink and inventory management. That's a continual process, and that we've added some talent in the organization to really help us with that. Obviously, we've, you know, we've brought our DSOs down from pre-pandemic levels. You know, we're kind of in the low thirties, and so we continue to work on that. I would say the working capital, you know, will be driven by our growth, and so you know, we don't expect to grow 30% in 2024 and 2025, like we're gonna grow this year over 2022, or an average of 25% since the pandemic. You know, that's kind of above average growth, and even what we've guided to long term is nowhere near that. So, you know, obviously, our working capital was a tailwind during the pandemic, and it's been a headwind since we've grown significantly coming out of the pandemic. But we expect that to normalize as we go forward, and that's part of the, the free cash flow conversion bump that we'll expect over the next 2 years. Gotcha. That makes sense as well. Very good. Well, I appreciate you guys taking my questions. I'll get back in queue. Thanks, Ben. There are no further questions at this time. I would like to turn the floor back over to Chris Pappas for closing comments. Yes. Well, we thank everybody for joining us on our earnings call. I think the Chefs' team did a phenomenal job managing through, you know, through the summertime and into the fall. We don't expect less, so we do thank everybody for all their hard efforts, and we thank everybody for listening in, and we look forward to our next earnings call. Thank you. Have a great day. This concludes today's teleconference. Thank you for joining us. You may now disconnect your lines.