Q4 2019 Earnings Call
Greetings and welcome to be chefs warehouse fourth quarter 2019 earnings conference call.
As a reminder, this conference is being recorded I would now like turn the conference over to your hosts.
Oh, This general counsel corporate Secretary and Chief Government Relations Officer. Please go ahead Sir.
Thank you operator, good afternoon, everyone with me on todays call or Chris Pappas, founder, Chairman and CEO and Jim Leddy, our CFO by now you should have access to our fourth quarter 2019 earnings press release. It can also be found at www dot chefs warehouse dot com under the investor relation.
Section throughout this conference call will be presenting non-GAAP financial measures, including among others historical an estimated EBITDA and adjusted EBITDA as well as both historical and estimated adjusted net income in adjusted earnings per share. These measurements are not calculated in accordance with gap and may be calculated differently and similarly leap.
Title 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 you get our final remarks, I need to remind everyone that part of our discussion today will include forward looking statements including statements regarding.
Our estimate of financial performance.
Such forward looking statements are not guarantees of future performance and therefore, you should not put undue reliance on 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.
Quarterly reports on form 10-Q, which are available on the FCC website.
Hey, we're going to provide a business update go over our fourth quarter results in detail and review our 2020 well. Your guidance then we'll open up the call for questions with that I will turn the call over to Chris Pappas Chris.
Thank you Alex and thank you walk for joining our fourth quarter 2019 earnings call.
Fourth quarter topline growth with solid I, Miss a healthy customer demand environment.
As we have seen throughout the second half 2019.
Products mix shift continue.
To drive lower volume metrics at a higher inflation price component of organic revenue.
Well inflation continued to trend higher throughout the year fourth quarter price environment was particularly challenging with double digit spikes.
And the higher ended and higher end center of the plate categories.
I would like to thank the entire chefs team for delivering a strong finished 2019 and we look forward to continuing our path to future growth in 2020.
If you highlights from the fourth quarter include <unk>.
4.1% organic growth in itself specialty sales were up 5.3% organically over the prior year, which was driven by unique customer growth of approximately 3.8%.
Placement growth of two and a half Stan and specialty case growth of 2.3%.
Organic pounds in center of the play were approximately 2.1% lower than the prior year quarter, primarily due to a tough comparisons to Q4 2018.
Specialty product mix changes continue to drive the changes in unit volume and price somewhat similar to our third quarter reporting on a year over year basis. This represented a shift from higher volume dairy category cases to lower volume higher revenue per case specialty product categories and.
In addition, specialty case growth compares to a strong six and a half the same case growth in the fourth quarter of 2018.
The year over year decline in center of the play pounds compared to approximately 5% pounds growth during the fourth quarter of 2018 and continues to cycle through attrition of some higher volume lower margin placements.
Gross profit margins decreased approximately 71 basis point gross margins, especially category increased 36 basis points as compared to the fourth quarter of 2018, well gross margins in the south of the play category decreased 185 basis points year over year.
Just a reminder, so the play gross margins experienced 135 basis point increase in the fourth quarter 2018.
Gross profit dollars grew approximately 5.3% versus the prior year quarter.
Jim will provide more details on margins in a few moments.
During the quarter operation teams were focused on implementing enhanced picking slotting and loading processes utilizing our inventory scanning platforms initial results and our northeast distribution center have produce reductions in damages the returns.
These process improvements will continue to roll out across our locations throughout 2020.
Our peace system implementation in Southern Jersey, Philadelphia continued during the fourth quarter and we were on pace to go live in the first quarter.
In terms of E. Commerce. So team has been focused on developing a rolling out value added tools aimed at assisting our shop customers with menu design and product selection.
We started this off I introduced or online chocolate was it this past month with additional product line functionality to be added in coming quarters.
As of January 220, 20, we estimate online sales represents approximately 17% of total organic revenue and approximately 21% of all specialty orders were placed on our E commerce platforms.
This includes website mobile in electronic order applications linked directly to certain customer order system.
2019 was a very busy year for the company.
I'd be wary of last year, we added the Baskin farms team in brands to our portfolio in the San Francisco Bay area, We consolidated processing early on and will create additional synergies and opportunities when we consolidate certain operations and distribution centers over the next two years.
We also made a significant investment in our newest market, Texas. We've completed the build out of a new distribution center in Dallas began to process. The building the team and implemented our ERP system.
We're excited to bring the chefs warehouse array of both specialty inside of the play products and high touch service model, the both new and existing new customers across the long Horn state.
We initiated the process to further expand in Los Angeles, as well with the design and build out process underway on the new 20, 230000 foot distribution center that will co locate specialty produce as well as Sandro the plate and first sea food processing, we're excited to provide our southern Cal.
For your team will be platform to drive continued growth in this dynamic market.
From a financial perspective, we delivered strong results highlighted by 10% topline growth in adjusted EBITDA growth of approximately 15%.
In addition, we strengthened our capital structure and balance sheet by executing the hundred $50 million five year convertible note. This past November.
This transaction help set the stage for further investment in growth for our company in 2020 and beyond.
Finally, we've continued to promote and grow our CW team as well as that key industry talent to dry bulk leadership and execution as we enter the next phase of chefs evolution and growth.
2020 marks the 35th year other chefs warehouse, we started the year off with two acquisitions that we believe will be important pieces to grow our business in new England and that premium brands categories in talent to the chefs warehouse team and family of companies going forward.
Sid weight or in some company is our first major for re enter produce complementing this acquisition in new England with Cambridge packing company provides us a scalable platform to grow the produce category in the northeast as well as expand specialty incentive the played sales across the region.
Our team has never been stronger more focus are excited about our future as a leading national marketer and distributor to the chef driven customer base that continues to grow which chefs warehouse and his family of companies as its partner.
With that I'll turn it over to Jim discussed more detailed financial information Jim.
Thank you, Chris and good afternoon, everyone. Our net sales for the quarter injured ended December 27.
27, 2019 increased approximately 8.2% to 436.5 million from 394.1 million in the fourth quarter of 2018.
The increase in net sales was the result of organic growth of approximately 4.1% as well as the contribution of sales from acquisitions, which added approximately 4.1% to sales growth for the quarter.
Net inflation was 4.1% fourth quarter, consisting of 3.1% inflation in our specialty category and inflation of 5.3% in our center the plate category versus the prior year quarter.
Gross profit increased 5.3% to 107.7 million for the fourth quarter 2019 versus 102.3 million for the fourth quarter 2018.
Gross profit margins decreased approximately 71 basis points to 25.3%.
Especially at the inflation was driven by above average increases in cheese and dairy categories, partially offset by deflation in chocolate in pastry products.
Fourth quarter inflation was broad based across center the plate categories with double digit inflation in certain primal categories, such as prime in choice Tenderloins.
Total operating expenses increased approximately 5.6% to 89.3 million for the fourth quarter 2019 from 84.5 million for the fourth quarter of 2018 on an adjusted basis and as a percentage of net sales operating expenses were 18.6% for the fourth quarter 29.
Team compared to 19.7% for the fourth quarter 2018.
As a percentage of net sales lower benefits and compensation related expense were the primary drivers off of operating expense favorability, partially offset by higher warehouse costs, primarily related to our investment in Texas, and our new distribution center in Los Angeles.
Our team delivered positive fourth quarter year over year gross profit growth to adjusted operating expense growth with contributed.
Which contributed to a full year 2019 positive spread of approximately 120 basis points.
Operating income for the fourth quarter 2019 was 18.4 million compared to 17.8 million for the fourth quarter of 2018. The increase in operating income was driven primarily by increased gross profit offset in part by higher operating expenses as a percentage of net sales operating income was 4.4% in the.
Fourth quarter 2019 versus 4.6% in the fourth quarter 2018.
As Chris mentioned during the fourth quarter, we used 250 million dollar convertible debt notes maturing in December of 2024.
Net of transaction fees total proceeds were approximately 145 million a portion of which we used to repay approximately 43 million of outstanding borrowings on our asset based loan facility.
Interest expense decreased to 4.4 million for the fourth quarter 2019, compared to 5.7 million for the fourth quarter 2018, due primarily to 1.1 million right off of deferred financing fees. During the fourth quarter 2018 associated with the repricing of our term loan and lower effective interest rates on our outside.
Ending debt.
Income tax expense was 3.2 million for the fourth quarter 2019, compared to 3.1 million with fourth quarter of 2018.
Our GAAP net income was 10.9 million or 36 cents per diluted share for the fourth quarter 2019, compared to net income of 8.9 million or 30 cents per diluted share for the fourth quarter 2018.
On a non-GAAP basis, adjusted EBITDA was 28.2 million for the fourth quarter 2019, compared to 24.6 million for the prior year fourth quarter, but.
Adjusted net income was 12.1 million or 39 cents per diluted share for the fourth quarter 2019, compared to adjusted net income up 9.5 million or 32 cents per diluted share for the prior year fourth quarter.
We ended the fourth quarter 2019, with 140.2 million getting cash and know that and as it as at the end of the fourth quarter net debt to adjusted EBITDA was 4.1 times.
Turning to our guidance for 2020 based on the current trends in the business and inclusive of our recently announced acquisitions, we are updating our financial guidance to be as follows.
We estimate we estimate net sales for the full year of 2020 will be in the range of 1.85 billion to 1.91 billion.
Gross profit to be between 478 million and 492 million.
Net income to be between 26.9 million in 29.8 million.
GAAP net income per diluted share to be between 86 cents 95 cents.
Adjusted EBITDA to be between 102 million in 106 million and adjusted net income per diluted share to be between 91 cents and one dollar.
This guidance based on an effective tax rate of approximately 28%.
2020.
Our full year estimated diluted share count is approximately 33.6 million shares.
We expect our senior unsecured convertible notes to be dilutive 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 will open it up to questions operator.
At this time, we will be conducting any will the conducting a question answer session. If you would like to ask a question that please press star zero and your telephone keypad confirmation tell when King. Your line is and the question Q You May Press Star too if you would like to remove your question from the Q4 participants using speaker equipment, and maybe necessary to pick up your handset before precedents turkeys one moment. Please.
Well for questions.
Our first question is from Nicole Miller Piper Jaffray. Please proceed with your question.
Thank you good afternoon, appreciate but especially on the topline could you talk a little bit about pushes and pulls up maybe revenue from that perspective at the first half <unk>, maybe even a quarterly cadence I'm just thinking about some I think you're lapping and then the new acquisitions of course that are coming on.
Hey, Nicole its Jim are you, referring to the guidance for 2020, yes, Sir.
Oh sure. So you know just as it relates to our going back to our original guidance that we issued in January.
You know we had a we had a mid single digit kind of organic growth with no acquisitions.
And so the adjustment is really just to.
And the addition of the Sid Waner acquisition in the Cambridge Packing company acquisition in terms of what we're lapping a really are the only thing I would call out was a you know just a in in the fourth quarter of of 29 team you know we had.
The we had the shift in the Jewish holidays in the northeast into the fourth quarter and then we had the shortened holiday period, which a you know depressed revenue maybe about 50 basis points, but that's really a that's a really anything I would call out from a cadence perspective.
So it's going to be a strong start like you find out of date and then there's no reason that it's not going to very much I quite huh.
No. The only thing I would add is is that seed waner has a little bit of more of a seasonal business than traditional chefs warehouse businesses.
And not so much from a revenue perspective, but from a profitability perspective.
They have a weaker Q1 and a stronger Q3, given given their seasonality.
Excellent and just the last question that they have level, it's interesting to hear about your ecommerce platform it and they do you see this elsewhere.
I would love to know like when you talk about and then you define and that was something else you had mentioned that prepared commentary, how big shops, but what kind of trying to do you see I'm fairly high 2020 that we should be aware. Thank you.
Oh well in terms of are you asking in terms of E commerce trends.
I think that's I'm, saying just in general on <unk> I don't know that it comes junior E commerce necessarily it could come from any interaction I guess, so just very big picture the shaft that you're working with today, what kind of big picture.
But things are they doing that big picture I mean, we should see moving your out you're not really didn't restaurant industry.
Yeah, well I think that the trends that.
I have been have been driving the business is you know.
The competition is forcing.
The competition plus all the Oh.
Ability to to watch the TV shows and everything that's out.
Out there on you know people have become more and more foodies around the whole country not just a the coast. So we're seeing a push for quality, we're seeing a a lot of prompt the table still so we've contracted with many many local suppliers in each of.
Our markets were up we're being asked for cleaner ingredients are we launched a Ah hey, a monterrey, a very high rated Monterrey.
Indoor salmon, a which we're just getting started with a strategic relationship with a producer which is going to produce probably you know at least you know 15, 20% of all a farm salmon, we think consumed in this country. So.
We have so many different initiatives from sustainability or two clearly clearly called clean products do you smoke free products more organic products. So I think those trends are continuing you know we've seen the gluten free and we've seen a somebody trends come and go now it's the plant base.
Trend that's part of the reason that we bought a said waner.
The beginning of this year, we think that we would like that more and more fresh.
Fresh green.
As we say it I don't know where the whole you know plant based or Burger and plant based chicken scarring, but people are definitely going to need a more and more healthy produce and we want to be a company that can deliver that with our cleaner proteins and all the specialty and broadline products. We have so we think we're positioning ourselves to know what diverse.
Portfolio of products to eventually become a one stop shop or more and more of our customers.
Thank you.
Our next question is from Kelly Bania BMO capital. Please proceed with your question.
Hi, Kelly thing.
Good evening, Thanks for taking my questions.
I guess.
Just a question on on the guidance so it sounds like the change in guidance really reflects that the acquisitions.
Adding about 200 million or so and about 7 million in EBITDA also.
Getting about at just over 3% EBITDA margin so.
Is that accurate or any other moving parts, maybe just help us understand the margin profile of these companies as they were holding these in here.
Yeah sure. So the center plate business. We bought is a you know right around our average EBITDA margin, but as you're probably aware produce companies tend to be a a lower average.
EBITDA margin, then specialty or center the play company. So Sid Waner comes in which is the preponderance of the revenue at comes in at a lower margin I'm. So what you'll see is you know versus last year about 30 basis point increase.
In full year gross profit margin as produces higher gross profit margin average then specialty incentive for the plate and then a higher opex average given a their business models. So.
As you look out a you know or we have a two to four year.
Plan to generate a you know five to 8 million in synergies and over that timeframe. We will will bring that average EBITDA margin up to two at or above our average EBITDA margin.
Okay can you expand on the synergies and where where that comes from I think that's a little atypical for first sure typical compared to your typical acquisitions, yeah, well. Yeah. This acquisition was very strategic value. So are you know we've been trying to get into new England for awhile. So you know a the way the.
Stars lined up we you know we did two in one week a that we've been working on for very long time. So it gives us a prototype proto strategy gives us a protein strategy and we've already entered that market with our specialty broad line. So it's really it's tragedy that goes all the way up to Maine and down to Virginia, how we're going to.
Sorry to sell a more and more specialty produce okay to our customers and sell more and more specialty proteins and our giant portfolio products throughout new England, Vermont, Western Massachusetts, Northern Connecticut.
And how to bring down their expertise into our Metro New York, New Jersey markets and all the way down in through the mid Atlantic. So the there's the synergies I mean, we have struck term synergies you know we have duplication in certain areas duplicate routes that are we're hoping to rationalize so that's part of.
The short term Uh huh.
Then we have the mid term when we figure out the buildings and how we're going to Ah you know integrate both sales forces and hyper charge growth okay into their markets. Once there people are you know get all our portfolio products. So it's kind of what we've done in Ohio, and other markets, where we said we're going to start.
Hybrid so.
But this is a tremendous opportunity for us really to integrate to three great companies now throughout.
Okay very large territory now so we are bells in Baltimore as well for protein. So as we look at you know retrofitting, our new buildings and possibly building Newbuildings, it's really leveraging now the the intelligence and the expertise of pro to specialty produce specialty proteins.
And the specialty abroad liner and really give us continued growth.
For many of my plan right now is it's a tenure plant. So I think we will we will get short term synergies will get short term or integration and hybrid selling.
But really the best.
It's the come over the next you know what a 10 years.
Thank you. That's that's very helpful. I guess, what's what's produce since that is.
Well take a big change just how does that.
Being able to offer that changed the relationship but to your your customers and you as you mentioned I didn't mean to Virginia is that an expansion of the territory that you can service from a specialty Proteus.
Perspective, or are you planning to expand.
At the geography that that you currently is covered by.
Hi that company, especially right yeah.
Yeah, well right now they touch a very large territory.
And Oh are our plan really is to access there a giant customer base.
And sell them more products. So you know that's I think you know that that's the plan for the next four or five years, you really trying to get the building right because they're building is set up as a as a as they produce hubs. So.
We're actually meeting a today trying to see how we're going to executing the short term to get them access to our products. We've developed really good technology on the cross docking and being able to do it in other markets. The second stage really is keeping the keeping the integrity of their protess business.
So we want part of it to stay as they produce business. So there are certain customers just like we do in protein.
And seafood that want to want to buy from a or a particular company. So we think that there is a I pretty large group of customers that are going to want that produce delivery, maybe it's a six seven day a week delivery that they provide now that you wouldn't want to put into a.
A much larger a chef warehouse truck, but we also know that through experience through other markets. A we do sell some produce in other markets as well that you know offering produce not as a protest company, but part of the specialty broad liner to thousands of customers that we already have.
ER should give us really good extra growth to our numbers over the next five years.
Okay, Great very helpful and just on on the gross margin sounds like it was a challenging prime market.
Spikes.
How do how did you perform how did you perform relative to your expectations in that category and just maybe what are you seeing so far into the new year.
So you know overall based on the guidance that we updated when we reported in Q3.
For the full year, we came in a kind of right right down the fairway. So the quarter. We overall performed as we expected, but the in the puts and takes there was definitely a headwind from the.
Spike in probably no. It started to dissipate as you went into the you know the last month of the quarter, obviously prices started to come down but from a year over year perspective, they were still 50% higher than the prior year in some of the primal categories. So it was definitely a headwind, but we had done we had strong margin performance on the spec.
Will decide.
Really executing in a in a high inflation market, we continued to see the year over year impact of a product mix.
And so overall, we were happy with the performance in the quarter although.
It could have been better if we didn't have as such the spike in prime in terms of.
You know what we've said before is that we tend to get it get get a little bit back on the on the downside prices have come down.
But that's pretty much all we can say about the quarter, yeah, they've come down thank God I mean.
They hit record highs and decide you know right before December so yeah. The problem was that you had to have inventory, we sell a very premium product that does take time to age. So you already have the product and its aging. So I'm was bought a very high price so when the markets.
It's coming off it there is a lag time before you know you could start to get some of that that margin back that Jim was referring to so give you a.
A market a view I'm tend to lines prime tend to lines I think went to $20 a pound and there are $10 a pound today. So it was an incredible a headwind or the team did a incredible job of of trying to get through it and ER talk customers through it.
It's not the first time, we've seen it but I think we're getting better and better and every time, we do see some of these markets are we are able to form a lot better you know even coming into this year, we have a much better view of how to handle.
Hey, a I call it a hurricane like we saw in the Prime time, Hawaii market. So I'm I'm very excited as I say our team is getting deeper you know we have been hiring talent and a exactly for that reason is we bring on more and more expertise the kind of handle you know particular products like prime So we do.
Get better and better as we continue to grow those categories.
Thanks, and I'll, usually just ask one more just on sure access and how how that market is ramping from a top and bottom line perspective.
To your expectations and what you have baked in in near 2020 guidance from that market.
If you can go that says that so.
So in terms of what we baked in for guidance as I think as I've said before.
Well, we said before or Texas has been a a headwind in in 2019, a it will not be breakeven in 2020. So we have a we have baked in improvement, but it will still not be breakeven and we anticipate breakeven you know in 2020 120.
22 timeframe.
Yeah, so with <unk> and investment mode or exactly kind of reminds me of San Francisco and Oh, Yeah. Most markets that we entered where we had to make the investment first you know kind of field of dreams build it and they will come so I think right now, it's a hiring and training hiring and training.
And history, usually repeats itself will you know optimistically, we'll get a good tuck in which will kind of speed. It all up UBS again, Texas, there's really three different markets and itself Dallas, you know that San Antonio Austin market and in Houston, So I mean, it's huge stay.
Huge opportunity, we're trying to bite off one piece at a time.
We we kind of jumped in early because of the opportunity that existed to take over that small company, but I think that's a you know we go quarter to quarter with that keep investing and looked at the opportunistic fold and really to really hyper charge, our our growth eat up our overhead and try to profitable sooner.
Then a later.
Great. Thank you I'll.
[laughter].
Okay.
Next question from Christopher Mannville Jefferies. Please proceed with your question.
Yeah, Hi, guys first off I apologize finances redundant and my line got dropped make call. So.
I.
I guess I'm I'm interested or Chris.
The acquisitions boasted winter, Cambridge, taking place and if I could be similar markets I was that just coincidental or or was there something that maybe compound. These two.
ER to ultimately sell themselves, maybe even some perspective, just with respect to.
How does your line in margins have been trending over the last two three years.
Yeah is the two companies we've had a lot of respect for for years. So I think I said before a lot of the acquisitions you see us doing now we've been you know.
Maybe talking for 10 years or it's just timing of when you know companies are ready or is there a is there a next plan is there a is their family coming into the business. So its just the way the stars aligned we've been trying to get to into new England for a very long time Oh, we.
Entered it through a greenfield through our own you know depot coming out in New York, which we know was not efficient so.
It was just a tremendous opportunity.
That came at the same time, so we got a world class a protest company said when it's one of the most respected brands in the country 100 years old a.
Tremendous integrity and.
Following and people have a in the Protess industry, you don't have a lot of respect for there or what they've done with their hassett programs and specialty selection one of the first companies really to bring in you know specialty bringing farmers to grow stuff for them and import specialty produce and then combined specialty items as well with it so.
And Cambridge, you know a boutique or custom cut or what's your of or of a new England. You know some of the top top customers throughout new England. You know, we've known them for years and we've wanted them to become part of our protein team with Allen brothers and Michaels.
Our other great brands. So now we have or you know access to their clients. How you know the plans already being a drawn up to see how we can best cross sell the trick about new England really is it's very spread out you know Boston itself is not a giant city, it's not New York So.
Now we have access to Nantucket, a martha's vineyard and Cape Cod, and all the Western Massachusetts, and lots of Vermont, and Portland up in May which is a great restaurants pound and a even you know better access to northern Connecticut, and Oh, Rhode Island Newport's, So it's a very exciting.
Opportunity for us for them to join shop and to bring more of that expertise down into a metro New York as well. So now we have another facility besides bells and Baltimore to be New York with a custom cuts. So we help travels going back and forth everyday so we could do much more just in time programs.
It's a it's gonna give us that you know 123 kind of attack that we've been looking for to.
To help the already existing plan, we've had poor rather northeast.
Okay.
And then just in terms of I guess that cross selling opportunity more so into your existing customer base.
How long will it necessarily take for you to be able to start incorporating produce.
What type of investment is required to stand up.
A more robust supply chain and cold chain and how much did not really add in terms of complexity to the model.
Sure.
The good part is that we're already doing it so well New York already has a boutique Protess department and we're already selling proteins coming out of Chicago and Baltimore, So we've already.
Started to Oh, the job of of getting.
The specialty produce a strategy of of waner to integrate with Jeff and see how we can help them or grow faster or the buildings are always or the complex complex parts. So where we're in the first thing now we're really looking at our buildings and so.
And how we can reconfigured them to make them more efficient. So I think for the next year or two I think what you can expect is we will we will give both companies good growth into the New York market.
And then really you know after your three four and beyond is how we reconfigure our Ah you know either additions to the buildings retrofit the buildings or add additional a warehouse space. So we can accommodate or the growth that I see coming for the next 10 years and those two departments.
Okay and then just the last one for me Jim If I heard you correctly, you mentioned that did Wayne years going to add roughly 30 basis points to the gross margin on a full year basis and it is that right or is that.
I guess I'm just curious if that.
Yeah, Matt, Cambridge, or if that's <unk> said.
And then not.
Including Cambridge.
No sorry, so that's that's both Chris and that's compared to the full year of 2019, it from our original guidance.
I think the mid the midpoint of our original guidance that we we gave for 2020 or was 25.7, the new guidance. The midpoint is 25.8, so about 10 basis points above.
Our original 20 to 2020 guidance, but 30 basis points to the full year gross profit margin for two.
2019.
Okay perfect. Thanks, guys.
Thanks, Thanks, Chris.
As a reminder, we're now conducting a question answer session. If you would like to ask a question press star one on your telephone keypad.
Participants using computer equipment, and maybe that's sort of pick up your heads that before it presents turkeys one on these lollipop questions.
Our next question is from Todd Brooks C.L. King and Associates. Please proceed with your question.
Hey, good evening everybody.
Hey, Doug.
Quick question on Oh, the winner in Cambridge, I guess any is there any specifics from the acquisition details that you can share with us prior to actually might be in the end of the are filing.
I'm just trying to get that.
Remaining firepower from the.
Converting she wants if any after those two deals.
Sure. So good Todd you'll you'll see a the details into 10-K, but just to give you some color.
The cash purchase price for.
Both businesses.
For the businesses themselves was it was about six in half times and then there's about a one time earn out.
For both come both combined.
And then we did purchase some real estate so when you see the cash outlay.
That's six enough times <unk>. In addition to that there was cash related to the real estate purchase for the Sid Wiener acquisition. So that's how you that's how it breaks out and you'll see the details when we released the 10-K.
Okay, Great and then from a.
A more capability standpoint, just I know these are long lead time deals that takes awhile for things to go through the.
Our acquisition pipeline and Chris I'd, just love to get your thoughts on.
You work on deals for years, you get two big ones like that's at the start up 2020, you talked about.
The strategic tuck in in Texas, making sense, but do you try to slow the pipeline to digest. These two deals and the initial your or what are your thoughts about the existing fields in the pipeline if something came to fruition.
Sure so.
So we've been planning you know the I. I called the a the takeover of quality food throughout the United States for Awhile.
Todd so.
We've been building.
Looking at my comments for the past six months, saying that I'm just trying to get ahead I kind of poor saw a very busy next few years coming because the pipeline is kind of backed up.
So we've been adding talent and ER and every department or so when the opportunities do come you know, we can take advantage of them and and execute on sleep at night. So yes, we have great teams on the West coast mid West to East Coast. So I think each of our.
<unk>, even easier more management teams now is prepared to do acquisitions. You know, we don't have to integrate them. All at once so you know as a the I.T. departments goes from one to the other you know some might be standalones.
Tuck ins get tucked in some over the weekend. So those are really easy to do.
So and you see a strategically building new buildings in adding capacity you can envision that those buildings will do tuck ins and we'll do acquisitions and the local teams really are in charge of executing so we give them support from corporate you know with ice tea and HR.
Our legal and finance, but so I think we were at that point now where we built really strong teams strategically around the country.
To be able to do multiple acquisitions or by territory by the teams are with our guidance of course and support and you're right. These these deals do take times I mean, some take 10 12 years, so not a surprise it or you know are finally, we can get to terms and agreement.
And a lot of Mark family businesses, when we get the dynamics to work and.
It's opportunistic you know there's others, maybe 2030 deals that I really want to do.
Besides the many that we look at so when those opportunities come we do need to you know taking advantage of them and execute.
Okay, great. Thanks.
Thanks, Doug.
We have reached the end of the question answer session that one now pass the call back over to Chris Pappas for closing remarks.
Yeah.
We thank everybody again for joining us on our earnings call a very very very proud of our team.
As a great 2019, and ER I think the team has never been stronger and we're really looking forward to a a great 2020 and beyond.
And look forward for everyone joining us on our next earnings call. Thank you very much. Thank you.
This concludes todays conference you may disconnect your lines at this time. Thank you for your participation.