Q1 2022 Chefs' Warehouse Inc Earnings Call
[music].
Greetings and welcome to the chefs warehouse first quarter 2022 earnings conference call.
A question and answer session will follow the formal presentation.
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As a reminder, this conference is being recorded I would now.
Now I'd like to turn the conference over to your House, Alex Aldous General Counsel Corporate Secretary and Chief Government Relations Officer. 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 2022 earnings press release. It can also be found at www chefs warehouse dot com under the Investor Relations section throughout this conference.
This 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 than 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 undue reliance on them. These statements are subject to numerous risks and uncertainties that could cause.
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.
And 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 first quarter 2022 earnings call.
As expected 2022 started off with seasonally moderate business activity in January which was also slightly impacted by the omicron barrier.
Revenue trends grew steadily in February and March across our markets as consumer demand for dining out continue to show strength.
Modern improving labor markets facilitated new customer openings and increased restaurant capacity.
This combined with milder winter weather in the northeast contributed to weekly sequential sales improvements.
Heading into quarter end.
A few highlights from the first quarter as compared to the first quarter of 2021 include.
62, 9% organic growth in net sales.
Specialty sales were up 73% organically over prior year, which was driven by unique customer growth of approximately 29, 4%.
Placement growth of 41, 6% and specialty case growth of 47, 3%.
Organic pounds in center of the plate were approximately 26% higher than the prior year first quarter.
Gross profit margins increased approximately 191 basis points.
Gross margin in the specialty category increased 213 basis points.
Compared to the first quarter of 2021, while gross margin in the center of the plate category increase.
11 basis points year over year.
Jim will provide more details on gross profit margins in a few moments.
In April our team completed a number of key projects that will contribute to our future growth and profitability in the coming months and years.
On the distribution center front, we completed the retrofit of our new 230000 square foot facility in Southern California.
We have begun the process of moving in and expect to be fully operational in may.
This facility combined specialty and produce operations with meat and seafood processing capability within the same footprint.
New South Florida distribution center will operate with a similar design and we expect to begin operations in the third quarter of this year.
On the technology and digital front, we introduced our new shifts warehouse website mobile app to a select group of customers and we will go live with a full scale rollout over the next few weeks. This digital platform provides an improved online experience for customers as well as enhanced data analytics.
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And tools for our teams focused on driving sales and customer satisfaction.
I would like to thank our team members our customers and our supplier partners are contributing to a successful start to 2022.
All of the shifts stakeholders have been key players in our ability to navigate the fluid dynamics coming out of COVID-19 , including supply chain challenges.
<unk> food inflation in an ever evolving labor environment.
We're able to all the people, who make up chefs warehouse and their ability to add key talent partners and at the same time continue to strengthening our position in the industry. We.
We are proud to announce that we have recently been certified by the renowned independent survey company great place to work there.
They're a global authority on workplace culture, and deploy a rigorous methodology to gather and evaluate employee feedback.
<unk> focus on identifying companies, who have built high trust and high performing culture.
We have never been stronger more focused and more excited about our future.
We look forward to performing as the leading national marketer and distributor.
Specialty food products to the chef driven customer base that continues to grow with chefs warehouse.
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 March 25, 2022 increased approximately 82, 8% to $512 1 million from $280 2 million in the first quarter of 2021.
The growth in net sales was the result of an increase in organic sales of approximately 62, 9% as well as the contribution of sales from acquisitions, which added approximately 19, 9% sales growth for the growth for the quarter.
Net inflation was 21, 7% in the first quarter, consisting of 14, 9% inflation in our specialty category and inflation of 28, 5% in our center of the plate category versus the prior year quarter.
Gross profit increased 99, 4% to $117 5 million for the first quarter of 2022 versus $58 9 million for the first quarter of 2021.
Profit margins increased approximately 191 basis points to 22, 9% year over year inflation was broad based across all specialty and center of the plate categories.
Selling general and administrative expenses increased approximately 37, 2% to $110 1 million for the first quarter of 2022 from $80 2 million for the first quarter of 2021.
I'm Mary drivers of higher expenses were higher compensation and distribution costs associated with year over year volume growth Roe expansion and increased fuel costs.
Adjusted operating expenses increased 44% versus the prior year first quarter and as a percentage of net sales adjusted operating expenses were 18, 8% for the first quarter of 2022 compared to 24, 4% for the first quarter of 2021.
Operating income for the first quarter of 2022 was $6 3 million compared to an operating loss of 21 of $20 1 million for the first quarter of 2021. The increase in operating income was driven primarily by higher gross profit, partially offset by higher higher operating costs.
Income tax expense was zero point $5 million for the first quarter of 2022 compared to income tax benefit of $7 million for the first quarter of 2021.
Our GAAP net income was $1 4 million or <unk> <unk> income per diluted share for the first quarter of 2022 compared to a net loss of $17 9 million or <unk> 49 loss per diluted share for the first quarter of 2021.
On a non-GAAP basis, we had positive adjusted EBITDA of $21 5 million for the first quarter of 2022 compared to negative adjusted EBITDA of $9 5 million for the prior year first quarter adjust.
Adjusted net income was $3 6 million or <unk> income per diluted share for the first quarter of 2022 compared to adjusted net loss of $17 1 million or 50 cents loss per diluted share for the first 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 $205 6 million comprised of $79 4 million in cash and $126 2 million of availability under our ABL facility as.
As of March 25, 2022, net debt was approximately $319 1 million inclusive of all cash and cash equivalents.
Turning to our guidance for 2022 based on the current trends in the business, we are updating and raising our financial guidance to be as follows we estimate the net sales for the full year of 2022 will be in the range of $2, one 3 billion to $2 $2 3 billion.
Gross profit to be between $500 million and $524 million and adjusted EBITDA to be between $103 million and 112 million.
Our full year estimated diluted share count is approximately $42 5 million shares. We currently 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.
Thank you we will now be conducting a question and answer session.
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You. Please let me yourself to one question and one follow up question one moment. Please while we poll for your questions.
Our first question will come from the line of Alex Slagle with Jefferies. Please proceed with your questions.
Thank you.
<unk>.
Hi, Good morning, I will just add.
Looking at the full year revenue guidance assumes I guess, the remaining three quarters of the year make up 76 or 77% of the total.
At the midpoint seems a little conservative given how demand trended to start the year. So curious if your assumptions consider some choppiness in the back half.
Or if there's anything onetime in nature that elevated the first quarter, which had gotten up to be the case.
No. Thanks for the question Alex.
The guidance raise mainly reflects the strength we saw in the first quarter I think certainly.
Trends right now would be towards the upper end of our guidance.
But I think given given that it's just the first quarter were just a few quarters out of <unk>.
Out of Covid and.
There seems to be some uncertainty in the from a macro perspective in the markets.
And commentary around the economy, we're just adding a little bit on the conservative side I would say that recent trends are consistent with what we saw in February and March.
But so that's really what's reflected in the guidance right now.
Makes sense and on the Labor front, if you could just help us understand where you are in terms of hiring versus where you wanted to be and if there's any measurable level of productivity impact on your margins that you think kind of goes away.
Second quarter or third quarter.
Yes, well I mean.
The labor market.
Continues to be challenging I think our team has done a phenomenal job.
To get us, where we are right now so.
Optimistically I think.
It has gotten better so.
I would think it would continue to slowly get better but.
Uh huh.
We have the team to.
To service our customers and.
We expect.
Like Jim said, the whole macro global.
Issues of the World, we can't control and we can't forecast, but business was very strong.
In March and April continues to be very strong and we continue to hire so I think.
Having the talent officer, and having teams that I've worked with very closely.
The number one focus really is making sure that we're able to hire the best.
Availability of talent out there and I think we've done the team has done a phenomenal job doing that and I would expect it to continue.
Alright. Thanks.
Thank you.
Thank you. Our next question is come from the line of Peter <unk> with <unk>. Please proceed with your question.
Great Thanks, and good morning, and congrats on.
On a great quarter I wanted to ask about the.
Business spending if you guys have any sense on how that's performing kind of year over year.
Maybe I'll just sort of regions that youre seeing along those lines on business spending.
Well when you say business spending Peter you mean.
Businesses out spending in restaurants.
Maybe just more more corporate.
Corporate events.
Paul at conferences and.
You guys have any sense on how that's been performing we unexpected that can really start to kick into gear, especially into March.
Yeah, I think it.
It's obviously contributing to our good quarter, but I still think it's in the first inning.
What we're hearing from customers is that people are starting to book.
Places I know you can't you can't get a wedding on a weekend.
Until 2024 so.
That's a great sign I mean, I think when.
A few months independent, but we thought that there'd be a cure that'd be an end date and then it would be the biggest party ever and that Unfortunately didn't happen. This thing keeps dragging on and you get waves. So.
I think people feel comfortable right now with <unk>.
Comparable as you can right with all the therapeutics.
Hospitals and doctors are learning how to deal with this.
Hopefully we don't get a.
More serious varian and it seems like life is normalizing here.
We're seeing is from our country clubs in our caterers.
People aren't back in the office full time, but it's starting to get there we are anywhere from 30% to 50%.
So.
We're extremely optimistic cautiously optimistic, though I mean I think that's.
Part of the Conundrum right now is that we see strong demand we see.
A lot of customers coming back our customer count is going up.
The weakest sector is probably still.
On the corporate side.
Business of theaters.
But not back in the office full time, so that business, but I think a lot of that is transferring out to a local restaurant so well.
We're benefiting from that so.
I think we're prepared for it.
Dining to come back and events to come back.
And.
Think slower is all better, allowing labor to come back as well. So we are real positive signs from Vegas.
Places like Miami that slowed down but never close.
We see the hotels, they're extremely busy.
So it seems like it's just picking up steam and hopefully.
Nothing derails it.
Great and then.
Tim on your prepared remarks, you had mentioned maybe.
Maybe a modest improvement in labor in some youre seeing more restaurant openings can you elaborate on that maybe where are you seeing some of these restaurant openings as this kind of broad based is it more regional.
Maybe the magnitude would be helpful. Thank you.
Sure.
It is broad based I think.
Many restaurants, depending on where they were in the type of restaurants really never open. So finally, we're starting to see many of those restaurants starting to open.
From March of 2020.
And tremendous amount of green shoots.
I think I said over a year or so ago.
Any good location is going to be taken by a good operator, especially if they can get a deal where they don't have to build a whole infrastructure of restaurants, mainly cosmetic. So we're starting to see a lot of those leases turn a lot of those restaurants start to open and just the the book of openings coming from.
<unk>.
The customers that we have.
It just shows optimism it shows that they expect business to continue to improve and I think it's spread out Peter I mean, I think the places that are still probably the slowest to come back as the Midtown is of some of the major cities, where they still don't have the volume but.
Thank God for New York the theater.
Industry pulse, so many people and we're hearing about tourists coming back again.
Our clients in the theater district are doing record numbers more than 2019, which shows you kind of.
The demand is there for people to get back and start enjoying themselves in the city. So I think it's pretty I think it's pretty spread out.
Great. Thank you very much I'll pass it along.
Thank you.
Thank you. Our next question does come from the line of Andrew Wolf with CLK. Please proceed with your question.
Thanks, and good morning as well.
Can we talk about some of the inflation trends out there both in terms of product cost maybe you can talk about it by your two major divisions and also labor.
Any signs of normalization, maybe even sequentially like it looks like maybe the beef market sequentially stopped inflating.
Just how you're feeling about.
Jim as you alluded to with a slightly conservative guidance, how you're feeling about those trends.
You create guidance and think about the business.
Yes, sure so we mentioned when.
When we reported in February Thanks for the question Andy.
We kind of built in on average moderate deflation versus the.
Third quarter and fourth quarter price environment that we saw in 2021 sequentially. What we saw in the first quarter was kind of what we expected on the center of the plate prices they were sequentially down about 4% versus the fourth quarter, but specialty and purchase prices were.
At least in our markets sequentially up 4%.
No.
Ended up with a very similar price environment and inflation environment in Q1 that we had seen in Q3 and Q4 and then we still.
We still expect that.
Prices will remain elevated.
And that's how we built our guidance, but given given the second half of the year potential for moderate deflation still exists.
If it doesn't play out that way I think we will.
Fine in terms of continuing to generate the gross profit dollar growth that we need to do.
To operate the business and generate the results that we've been generating.
So really our guidance change reflects the.
The sequential impact from Q4 into Q1, and then really not much of a change in our assumptions on the back half of the year.
Alright, thank you.
The labor, let a little bit to that.
I'll add a little bit to that Andy as well.
We were.
We anticipated some moderate deflation and.
Obviously, that's a crystal ball.
Jim said, some we have gotten some relief on.
Certain proteins threat.
I'm starting to be more.
More in the camp that I don't think we're going to get much even though logistically I think you might get.
Some some relief and trucking.
I think between the war.
Other factors in the world.
Trying to think maybe that unfortunately.
We will have.
Gonna have inflation.
We're not going to get much of a break.
Like Jim said.
Our team is geared up to deal with whatever comes at US the way we price in all of our algorithms and every team.
As on full alert to try to continue to deal with it and pass on the inflation.
On the labor front.
I think it's market by market some markets are worse than others.
Some markets were doing really well.
Bringing people back to work in and getting really good employees and.
And then other markets are seem to be tougher for for various reasons. So.
It's over driving right now you are competing with.
<unk> seen more people, thank god come back into the marketplace, but it's still a headwind.
Okay.
Great. Thank you.
Thank you.
Thank you. Our next question is coming from the line of Fred Wightman with Wolfe Research. Please proceed with your question.
Hey, guys, maybe just to follow up on that inflation.
Commentary from a second ago.
Are you concerned about pushback either from restaurant operators or consumer so I understand that there is a little bit of relief on the protein side, but some of that specialty inflation is continuing Chris. It also seems like youre not expecting that to go away. So do you think or are you seeing or feeling any pushback I guess ultimately from the consumer about those prices yeah.
I hate to say, where the frog boiling water I mean, I down at dine out every day so.
I monitor sometimes I'm amazed.
When I get the check.
But again our customers they are very resourceful.
We're still not back to full menu as you know a lot of it is because they don't have the labor law.
Lot of it is the supply chains.
And a lot of it is because of the massive inflation. So.
Restaurant tours again are very creative to survive so.
Youre seeing more pasta as youre seeing more students.
Where you might see three different cuts of meat.
On a menu you might see one or two maybe with a hamburger.
Maybe you won't see a stripping the ribeye were very expensive things.
We're seeing different dishes with maybe it's pasta with different types of.
Clams, and scallops and products that are available so.
It's definitely influencing venues and.
Our restaurants are trying to seek to be competitive and.
Keep prices.
Where they think are affordable to keep the traffic in and then we have our our high Ed in one of the reasons I've always loved this business for almost 40 years is that I always felt that where consumers that we're willing to spend whether it's busy.
Business business people or affluent.
Business people are consumers of travelers or celebratory meals and.
That market seems to be really strong in.
They're passing on the prices and it doesn't seem like there's a lot of pushback because you can't get a seat and one of the great restaurants still so.
I'm pleasantly.
I don't want to say surprised because we've been doing this so long but.
It gives me it gives me a little more a little more shut eye at night knowing that.
Those consumers are out there and have been for almost 40 years and people.
People that were still willing to pay for a great experience and a great meal and demand for great ingredients is as high as ever.
Makes sense and just.
Maybe a follow up on your labor and staffing comments I mean, if we think about some of the onetime costs in hiring inefficiencies that the industry has been dealing with given sort of that tightness is.
Labor continues to improve in that pool continues to widen do you think that some of those inefficiencies go away or do you think that something is sort of strange changed structurally from an onboarding perspective.
I think it was challenging before the pandemic.
Now, it's just exasperated I mean.
These are hard jobs right, whether it's at the restaurant in the kitchen or whether it's in our side driving trucks and working night shifts they've always been tough jobs.
We are all paying more.
For the same jobs. So I think that's helped.
No.
I think it's becoming more like other parts of the world, where it's not a temporary job that people used to think that.
We're working as a waiter or they're working the night shifts and that's just temporary.
And I think we realize that that's people's full time jobs and they need to be able to make a certain amount of money and have certain benefits too.
She has to be able to live, especially in the city. So I'm.
I'm hopeful that this.
Increase that has happened.
We're seeing it I hope it I hope it's forever that.
With the raises have come people that are not quitting and are showing up.
And that's cutting down the turnover, which is extremely expensive right to train people.
It's a big factor in our overall expense so.
I'm cautiously optimistic that.
People are coming back to these jobs because they are they're better paying.
But at the same time.
You know, we're traveling the world looking for products that.
Our high quality that need less labor.
As I said, even before 2020, when the pandemic hit.
Labor was an issue when we were looking for Super high quality products that meet the standards of our of our chef driven restaurants that.
Required less labor.
Theyre high value, they're profitable for us and.
We're going to continue to to make sure. We we humped out and get our manufacturers producers to give us those items for our for our customers.
Makes sense thanks, guys.
Thank you.
Thank you. Our next question is coming from the line of Ben <unk> with Lake Street Capital. Please proceed with your questions.
Alright, Thanks for taking my questions and congratulations on another really good quarter here.
One question for me about kind of how you're assessing the M&A landscape today, and especially how it's evolved over the past.
A few quarters here as inflation has increased and maybe the.
Higher quality available businesses have been have been.
Wired.
Can you talk about how the quality of the business is available to you on the M&A World has evolved and then also how multiples have maybe.
Maybe a volunteer as inflation has.
It has become a more material event.
Being offset here by the opportunities.
The world kind of returning back to normal.
Sure Great.
Great question.
The pipeline was frothy going into the pandemic. So I think now it's even frothy here because there was such a backup not a lot of deals got done obviously in 'twenty.
We did a bunch.
Think in 'twenty, one going into 'twenty two.
<unk> I think it's going to continue to be frothy.
Multiples.
We're pretty disciplined I mean.
We're not trying to be the biggest.
We've always said.
Has to be a cultural fit.
We're pretty disciplined in the multiples that we paid historically.
Would be pay more for a great business, that's growing and has something special.
Yes.
But a lot of what we buy.
Are things that need to be.
Modernize either they need facilities or they need new systems.
They're either a little tired or they've reached the maturity point there is no.
There's a lot of family businesses, where there's no nobody really wants to go into the business. So.
We passed on many many deals we think that just too expensive.
I think theres plenty of money out there chasing deals so.
It does get competitive on some of the deals and you know our philosophy really is we don't we really don't see anything at this point, we have built such a great foundation to grow organically.
Right.
Think you territory, we'd like to acquire somebody because it really speeds up going into a territory.
Category is also strengthening our offerings and allow us to grow more in what we call a hybrid model, which we've been doing it very successfully with adding all these protein.
Divisions now in produce so.
We're in a great position, because we're not forced to do any deals, but I think that.
It is the wild west for the next few years I think you'll see tremendous amount of deals getting done.
And I think we will do a lot of good smart deals, we'll do we'll do fold ins with the new facilities. We have that gives us the capacity those are highly accretive. So I think you'll see us very active in that market and I think theres, some new territories that give us great opportunities.
We've been looking at and Optimistically I think we will get deals done there, but we are remaining.
We're making very very disciplined in how we go about it.
Got it that's all all interesting color. Thank you for that that does it for me again.
Excuse me congratulations on a great quarter, and we will get back in queue. Thank you.
Thank you Ben.
Thank you. Our next question is coming from the line of Kelly Bania with BMO capital markets. Please proceed with your question.
Hi, good morning, Thanks for taking our questions.
Chris and Jim just curious.
We're sitting here today, how you think about that.
Expectation can you get back to 2019 volume levels I think the plan was.
By Q4, just curious if that has accelerated a little bit here or you still want to keep that.
Timeline for Keith for volume to get back to 19 levels.
Yes. Thanks for the question Kelly, Yes, we're definitely on the path to meet and exceed it I think as I mentioned earlier.
We're trending towards the higher end of our guidance, while we're being a little conservative.
And our update.
I think currently.
We are around 95% of 2019 pro forma for the acquisitions in terms of aggregate volume. Obviously some markets are higher some markets are lower but it's averaging out to that and then when you add in the inflation versus 2019 as you can get a sense of how we are trending overall.
I'd say that we are we are slight.
A slightly accelerated pace versus our original estimate to get there by the end of the year.
Perfect that makes a lot of sense.
Lot of questions about labor, but I guess just another question there when you speak to your core customers.
Do you have a sense.
For the extent to which labor is still a constraint on their volume.
And how you see that.
Progressing.
Yeah.
I think it's again you got a lot of mix.
Answers.
I speak to.
Sometimes a few hundred customers a month.
I here not a problem we're firing on all cylinders, we got labor and we're going back to full capacity.
Seven days and everything we've done and then.
Depending on other parts of the country.
We hear that they are only opening for lunch. So many days to get staff.
Break because theyre going full tilt at night, and just too many hours and they don't want to have.
That's not proper for that restaurant so.
I still think it's mixed but.
Again, a high volume.
High volume restaurants seem to be.
Be able to attract labor in and doing big numbers again, so I think it's a little bit all over the place Kelley.
Okay.
That's helpful and just.
This question is on fuel, obviously a lot of questions.
Several weeks ago, just about DC.
Diesel costs can you just remind us how thats impacting you.
What youre planning for the rest of the year.
Hi.
The extent to which you're passing that out here to your customers.
Yes sure.
So we went into it.
When we were planning and building our guidance for 'twenty, two we had already factored in a pretty decent increase as we do every year just from an assumption perspective.
Diesel prices, obviously, what's played out has been has exceeded that.
But.
Part of it is mitigated just by the fact that we built a pretty good portion into our guidance and then ill.
Our focus our operating teams our commercial teams are focused on generating the appropriate gross profit dollar growth.
To offset the input cost impacts that we see obviously, a very short term kind of violent spike like we saw in a couple over a couple of weeks you can't completely mitigate but but what you can do is adapt.
Pricing your delivery model.
In each specific region to mitigate the next the next piece of that increase and then really what we do is we focus on the medium term and the long term.
And that is making sure that we plan appropriately.
And also.
As we retire our trucks and we retire a pretty decent amount of our <unk>.
Trucks coming off of leases or own trucks that we're retiring.
And we're replacing them with with new more fuel efficient trucks to the extent of 25% to 30% more fuel efficient and obviously thats a more medium to long term.
<unk>, but.
It can definitely make an impact over a couple of months and even over a couple of years.
Okay, that's helpful and just.
Lastly in terms of the southern California facility can you just elaborate a little bit more on.
The savings you expect there.
Maybe how many more facilities over the next several years.
Look like.
The format of the southern California structure.
Well, yes as far as.
I'll let.
Yes, I'll, let Jim opine about savings, but really I mean this is you know.
Quadruple our business in southern California. So.
We've been highly restrained.
We're getting by because we have room in our Vegas facility, where we can store products.
We had the trucks going back and forth every day, so it really helped us.
Get through this period of being out of space.
So I mean these facilities.
And open these two.
Another one can open probably next year in northern California, but that's really as you know for consolidating our processing.
For protein, but Kelly I mean, I've always wanted to build facilities like this and finally now we got two coming on almost at the same time.
And we'll measure the savings.
Sharing the trucks right. So we have all our categories.
New building so.
Is that.
We will cut down on our trucking expense will need less trucks right, one truck being able to go into a lot of customers with more of the more of the categories. So we can start eliminating some of those trucks that.
Some customers, we have poor trucks going to a J.
Sharing management.
I think that's going to be a big savings right. So you don't need.
The facility managers.
Right now in some markets we have five facilities. So I think that's really where the savings comes as is and cut down on fuel cutting down on truck expense cutting down on manpower and cutting down on an on high higher paid management that you would have in multiple facilities. So that's really the exciting part of this.
And also being able to satisfy customers.
Obviously more dollars to the truck, which should be much more profitable model.
Yes, Kelly I will just add that to.
To Chris's point, it's really.
And growth, our Florida facility.
San Francisco eventually, we'll do something in new England, and the mid Atlantic, but it also gives us the capacity to do fold in acquisitions as we create that capacity in key markets like L. A and in southern Florida, We have a lot more room to do fold in acquisitions and create synergistic profitability.
Thank you.
Thanks.
Thank you. Our next question is come from the line of Todd Brooks with the Benchmark Company. Please proceed with your question.
Hey, good morning, guys, congrats on a really excellent quarter.
Thanks, Todd and thank you for that.
Two quick questions for you one and this follows up on the M&A discussion earlier Chris.
If you go back to what the historical kind of algae.
Algorithm was for sure. So it was kind of mid single digit growth from organic operations mid single digit growth from acquisitions to get to that double digit top line.
With where we stand in the recovery and the opportunity to take I would imagine a solid amount of share coming out of the recovery.
If you look at kind of that algorithm acquisitions, I know are long tailed and when you get them to the finish line to make central to that but what do you feel like that organic growth piece looks like for the next couple of years, given just emerging from the pandemic and and your place in it and how much stronger you are as an operator versus your peers.
Yeah.
Good question tough question Todd.
Yeah.
It's a it's still so early.
Coming out of this.
But.
Yeah. The plan was always to have mid to high single digit.
Ganic growth I mean, if we can continue that.
I think that's really healthy growth.
You know, especially.
With so much in place and now it's really we're looking for case growth piece grows pound growth.
And.
The combination.
You heard me speak the last five years 10 years as the industry is going to consolidate for many many reasons and I think the pandemic is actually going to push that.
To go even faster.
So I.
I think that's why we've been you know.
I've been talking about the talent that we've been adding even during the pandemic. We continue to hire talent because we know we're going to need people to help manage these businesses and to help grow them and I think that's really the big key is getting the talent the talent trained.
I think the opportunity is bigger than I, even imagined years ago.
When I was looking to start to grow much more nationally.
I think that the pandemic has actually reset it to where are they.
There'll be even more consolidations for various reasons.
And place them in health care and labor.
An industry that was consolidating as kind of consolidate more I mean, you'll have green sprouts of maybe boutique little businesses with high margins, but.
In this competitive.
Landscape.
And you can put the fight for labor and real estate getting extremely expensive on the warehouse side, we called out the Amazon effect.
I think it's going to really push so.
Organically it could accelerate the organic growth as well because we're gonna be consolidate in categories and we'll get that done.
Category.
The category push that we've seen over the last few years, we started selling more proteins to our existing customers and vice versa. I think that's what was that's why we had.
<unk> industry, leading organic growth because it was being fueled by that hybrid itself. So I think the next five years is going to be really interesting.
Hopefully this war ends soon and some of the <unk>.
Trucking issues and container issues start to.
Dissipate and.
It's gonna be a really exciting four or five years.
That's great and then my follow up Chris I know you are.
Your.
Plugged in with a lot of the industry groups.
I know it looks like there's kind of one last shot at getting some support in the Congress.
Around the RF and just actually getting the funding approved.
For the I think it's almost 180 pounds from restaurants that got shut out of the first iteration of the fund do you think do you think it gets done with where we are in the recovery on the off chance that it gets approved in the Senate.
What does that mean for <unk>.
Your customer base and those that were shut out if they suddenly an influx of claims.
Support when they've kind of fought their way through and they're on the front end of the recovery as well.
Yeah, I mean, great question.
Again food away from home when they when they say restaurants, I mean, it sets up that field of operator.
Okay.
Yeah, I can honestly say that we're just not seeing a severe problem from our our restaurant.
The 50000 plus customers that we have.
I'm sure. So many had been hurt obviously, many close but ones that are operating right now.
We can tell by our receivables as well it just doesn't seem like there's a.
There is an issue so don't want to jinx myself, but.
It seems like it seems like they're back on their feet, obviously, hurting with with labor being tough and it.
It was a tough business to begin with but.
I'm, just not sure really where that money is going to go because the rest of them it might be a completely different subsection of clientele than the ones that we serve.
Yes, I was just wondering if it might go into actually accelerating second locations and things like that more often as well theyre opening like crazy Todd So.
I see so many openings.
So you got a lot of openings coming.
Okay, perfect. Thanks, guys and congrats again.
Thank you.
Yeah.
Thank you there are no further questions at this time I would now like to turn the call back over to management for any closing comments.
Sure well, thank you for everyone joining.
Our earnings call.
The team put up a great quarter was not easy, but it just shows you the hard work and dedicated team of chess.
What they can do.
Less more with more with less so thank you for joining the call and we look forward to our next earnings call. Thank you very much.
Thank you. This does conclude today's teleconference. We appreciate your participation you may disconnect. Your lines at this time and enjoy the rest of your day.
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