Q2 2022 Chefs' Warehouse Inc Earnings Call
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Yeah.
Greetings and welcome to the sheep, we house second quarter of two inch screen to choose earnings conference call.
At this time, all TBD I mean listen 90 magic.
Christian and authorization looks wonderful presentation.
If anyone should have your clients on the operation you're welcome to Bristow and the zero on your telephone keypad.
As a reminder, this conference is being recorded.
I'd now like to hand over to your host.
Uh huh.
Oh gosh.
General Counsel and corporate Secretary of the ship.
Yes.
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 second quarter 2022 earnings press release. It can also be found at www dot chefs warehouse dot.
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.
And 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 actual result.
To differ materially from what we expect some of these risks are mentioned in today's release.
These 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're going to provide a business update and go over our second 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 second quarter 2022 earnings call.
Late first quarter business strength continued into the second quarter as the combination of strong consumer demand.
New customer openings, an increase dining capacity led to consistent growth in revenue trends as we enter the late spring and summer season.
Despite sequential deflation in certain center of the plate category overall pricing remained firm in incremental gains in volume contributed to sales growth during the quarter.
Although not back to pre pandemic levels moderate improvement in hospitality.
Aren't related business was evident as the quarter progressed.
A few highlights from the second quarter as compared to the second quarter of 2021 include.
A 36% organic growth in net sales special.
Specialty sales were up 52, 2% organically over the prior year, which was driven by unique customer growth of approximately 35, 9%.
Placement growth of 54, 6% and specialty case growth of 34, 8% organic.
Organic pounds in the center of the plate business was approximately 14, 2% higher than the prior year's second quarter.
Gross profit margins increased approximately 140 basis points gross profit in the specialty category decreased 70 basis points as compared to the second quarter of 'twenty, one while gross margin in the center of the plate category increased 230 basis points year over year.
Jim will provide more detail on the gross profit margin.
In a few moments.
We are excited to announce the addition of two acquisitions completed during the second quarter and one completed just recently in July University foods as a specialty broad line distribution company located in southern California.
We welcome Dean <unk> and his team into the CDW family and we expect to fold their operation into our new Los Angeles.
Distribution center in the coming weeks.
We are also excited that Alexa specialty foods to our northwest region located in Portland, Oregon, We will combine <unk> with our CW specialty business, serving Portland, and Seattle and look forward to driving significant growth in these key markets going forward.
Florida, We added Master Purveyors, a center of the plate distribution company operating out of the Tampa area to our portfolio of categories and brands in the region.
Matt. This was eventually combined with our seafood processing operation to bolster our growth in the central to northern regions of the state complementing our expanding in high growth specialty and protein business in South Florida.
Each of these acquisitions are important additions for the CW, a portfolio and facilitate growth in key regions and create operating leverage as we grow into our expanding distribution capacity across our footprint.
I would like to express sincere thanks to the entire chefs warehouse team for delivering a great second quarter performance and continuing to provide our customers with the premium product and service they have become accustomed to over 37 years of operations with that ill turn it over to Jim to discuss more detailed financial it.
Information for the quarter and an update on our liquidity Jim Thank.
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 June 24, 2022 increased approximately 53, 2% to $648.
$1 million from $423 million in the second quarter of 2021 the growth in net sales was the result of increase in organic sales of approximately 36% as well as the contribution of sales from acquisitions, which added approximately 17, 2% to sales growth for the quarter.
Net inflation was 13, 6% in the second quarter, consisting of 16, 4% inflation in our specialty category and inflation of 10, 9% and our center of the plate category versus the prior year quarter.
Gross profit increased 62, 7% to $156 million for the second quarter of 2022 versus $95 9 million for the second quarter of 2021.
Gross profit margins increased approximately 140 basis points to 24, 1%.
Year over year inflation was broad based across most specialty and center of the plate categories.
Selling general and administrative expenses increased approximately 37, 8% to $124 5 million for the second quarter of 2022 from $90 4 million for the second quarter of 2021.
Drivers of higher expenses were higher compensation and distribution costs associated with higher year over year volume growth rapid expansion and increased fuel costs.
Adjusted operating expenses increased 47% versus the prior year's second quarter and as a percentage of net sales adjusted operating expenses were 17, 1% for the second quarter of 2022 compared to 18, 7% for the second quarter of 2021.
Operating income for the second quarter of 2022 was $27 6 million compared to $4 7 million for the second quarter of 2021 the.
The increase in operating income was driven primarily by higher gross profit, partially offset by higher operating costs.
Income tax expense was $6 3 million for the second quarter of 2022 compared to income tax benefit of 0.8 million for the second quarter of 2021.
Our GAAP net income was $16 9 million or 42 since income per diluted share for the second quarter of 2022 compared to net income of $1 1 million or <unk> <unk> income per diluted share for the second quarter of 2021.
On a non-GAAP basis, we had adjusted EBITDA of $45 3 million for the second quarter of 2022 compared to $17 2 million for the prior year second quarter. Adjusted net income was $20 9 million or <unk> 51.
Income per diluted share for the second quarter of 2022 compared to $1 5 million or <unk> <unk> income per diluted share for the prior year second quarter.
Turning to the balance sheet and an update on our liquidity at the end of the second quarter, we had total liquidity of $210 8 million.
Comprised of $51 8 million in cash and $159 million of availability under our ABL facility.
As of June 24, 2022, net debt was approximately $341 2 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 full year financial guidance as follows.
We estimate that net sales for the full year of 2022 will be in the range of $2 $3 75 billion to $2 $4 75 billion gross profit to be between $553 million and $576 million and adjusted EBITDA to be between $135 million and 100.
<unk> $45 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 our fully diluted share count.
And at this point, we will open it up to questions operator.
Thank you very much ladies and gentlemen at this time, we will be conducting a question and agitation.
Thank you Tycho asked the question please pay for TV one.
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I would like to remove yourself from the question Ken.
All participants Nikki Keith I'll speak equipment.
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Yeah.
The next question comes from Alex.
Good morning, Paul.
Jefferies.
Thank you.
Congrats.
Hey, Alex.
Question on the guidance typically you earn 40% to 42% of your full year EBITDA in the first half of the year, but I guess, the full year guide the midpoint $140 million.
Closer to 48% this year, so just trying to understand some reflection in some conservatism in the back half just given the unknowns, the macroeconomy or moderating food cost or something you are seeing out there just a reflection of an unusually strong first half.
Perhaps that's a tailwind that you think will be hard to replicate going forward.
No. Thanks for the question Alex the guidance really reflects.
The three acquisitions that we just announced at least.
About five months of those as we completed two of them in late.
Late second quarter, and we completed one.
Just the other day in July .
So the $50 million bump in revenue and the 5 million bump in EBITDA since we last guided in June reflects about a little more than half. The addition, the pro Rata addition of the acquisitions and the rest was just.
Really.
<unk> trending.
That we've seen.
<unk>.
We are starting to return to kind of more normal seasonality than we have in the past two years.
So.
July and August are generally slower.
<unk> months than May and June .
If you look at us historically.
Third quarter is generally a little bit slower than the second quarter. The second quarter is usually our second strongest quarter of the year next to the fourth quarter.
So, it's a little bit turning back to normal seasonality.
And then just adjusting for the acquisitions.
Got it and just following up on your leverage targets. I think you had last said at three six times is the target for the end of 'twenty tailing.
EBITDA moving higher does this change or any thoughts.
Thoughts on leverage targets.
Our net debt leverage we don't have a specific target I think right now we sit a little bit below on a trailing 12 months basis, we sit a little bit below three times, probably two eight times or so.
I think we're very comfortable operating the company with a three or four handle our net debt leverage.
We feel pretty good about the balance sheet right now and we expect to continue to strengthen it as we grow.
Alright, thank you.
Thank you.
The next question comes from Peter.
Of BT Archie.
Great Thanks, and congrats on the quarter.
I wanted to ask if you could just give us a little more color on trends.
For the quarter I mean, I think you guys have raised guidance. This is the third.
Third time, so far this year.
And just I'm just trying to understand if there's any way to tease out how maybe.
How seasonality has come back and maybe I guess third quarter might be a little bit lighter than the second quarter or is there a way to tease out that seasonality and not some broader based slowdown in the economy.
Yes.
The cadence during the quarter. Thanks for the question Peter the cadence during the quarter was really driven by.
Pricing remaining firm, we saw a little bit of a sequential deflation in center of the plate, but we saw a little bit of sequential versus Q1 inflation in our specialty so they kind of evened out meaning that pricing remained firm and.
And then it was really the first quarter that we are back to over 100% of volume from 2019, so incremental volume build.
As Chris mentioned in our prepared remarks.
<unk> firm pricing good morning margin management.
By our teams.
Then if you look back at us historically.
Q3 is always seasonally a little weaker than Q2, that's just the normal.
Cadence of the industry and of the business. So that's not to be unexpected.
Great and then just and you can imagine.
Right.
Yeah.
Holding.
At the same time.
Is that you're starting to see at least.
Sure.
Deflation and some items.
Long do you think that pricing can hold.
And what's the magnitude of the deflation that you guys are seeing do you think that continues into the back end of the year.
Yeah.
We anticipated center of the plate pricing, having some moderate deflation coming into the year, it's kind of played out that way.
It's just being offset by specialty and produce another prices kind of being a little more firm.
I wouldn't I wouldn't say that we have.
General expectation that there's going to be considerable significant deflation given I think the dynamics that we're seeing in the in the markets.
But I mean as you as you are aware that.
The environment is a little more volatile than it has been in the past so it's a little more.
Difficult to forecast.
We might we might have been a little bit ahead of ourselves on beef deflation I mean, we got a little bit of it.
But what we're seeing now with obviously all the news about drought crops.
And.
The cost of.
Keeping these cattle fed.
The cost of fuel.
You could see an uptick again, depending on demand it really goes back to if the demand remains strong.
It could keep prices up so.
Just amazing watching the news every day and Youre looking at the overall economy.
<unk>.
I think people really do forget that we are still coming out of the pandemic. There is still a lot of.
Demand for travel and we're starting to see that.
The industry a lot of our customers last year, who are probably did better in the summer because nobody was traveling in this year I think it's more normalized.
People are traveling.
A tremendous amount of people.
Have the means are going to Europe or going on trips that were postponed for a year or so Jim says.
We're starting to see more normalization and then at the same time, we're starting to see.
Events being planned we're starting to see a lot of meetings put back on the board.
And I think we are.
We should continue to benefit.
From the reopening of the world and people getting back into.
The meeting mode in business travel and.
Weddings.
Happening left and right so.
We obviously have been waiting for this for two years and I think we're finally starting to see it.
Okay.
Thank you very much and congrats I'll pass it along.
Thanks Peter.
The next question comes from Andrew Wolf.
Okay.
Good morning.
Follow up on the deflation.
Can you say, which categories I assume it's in beef, but.
Hi.
Not in poultry, which I think you know because of avian flu still going up and just how do you view that I mean, I think Chris you had been saying or other than maybe others too much beef inflation, just you know at some point.
Isn't good for the menu prices. So I mean is it.
I think a lot of people hear deflation and they think it's a negative but.
How do you view it let me just put it that way.
I mean, you know continuing to go much higher from here I think.
We all start to rethink.
What the Crystal ball is going to say how to how to restaurants deal with it.
Again Andy.
We've been talking about this for over 11 years restaurant tours are our entrepreneurial right to survive. It is a very tough business you know labor and.
Rent and everything else coming at him in.
They're going to figure out how to except for maybe steakhouses and even the <unk>.
They will figure out you know.
More six ounce versus eight ounce fillet.
Instead of a 16 are 22 ounce steak.
You'll start to see more 14 ounce.
Obviously, you're seeing tons of skirt steak.
Chicken chicken for our clientele, obviously are lower casual it hurts because there's only a certain price point I guess.
Think that their customers will will pay before this see a slowdown but.
When you go to a regular CW restaurant that chicken is 20 to $37 on the menu.
A dollar a dollar a play cost.
They will figure out a way how to.
How to earn that back whether it's on sides or drinks or.
That's their business.
To make a profit right every.
So.
What I'm, saying is that theyre getting more creative they're figuring out how to recreate venues with less people.
And our good customers a thriving so.
After after almost two years of of what we saw in close Downs. This is really exciting to see business back.
Great. Thanks for that color and I wanted to just follow on also on the three acquisitions you talked about.
How would they kind of fit in strategically between standalone versus kind of fold in.
Yeah, well I mean, I think you've been hearing me now for years, saying that.
Especially during the pandemic.
Made the decision to keep investing in people so.
We went out and got the best talent possible. So we can continue to.
To be able to do acquisitions right.
You've got to remember you need some unique talent to run these businesses right. So.
We built.
The new building finally.
We've moved in mostly in southern California. So.
That gave us the ability to acquire somebody like University.
Foods, who will be folding in hopefully shortly.
<unk>.
There's nothing I like better than a good folden because.
They are the most accretive because we were able to eliminate a lot of the overhead and hopefully keep the sales and synergize the trucks and the sales teams and usually that's a.
A great return for us so.
University is one <unk> is another one it's a competitor up in.
And the Portland, Seattle area, It's a company that you know, it's a great business.
Competes with us so besides eliminated a competitor.
One.
Eventually move into one building and we will get all the synergies there.
Okay.
The latest one masters in.
Call It Northern Florida.
Really gives us a great business to leverage our plan we already have.
And Allen brothers seafood in Orlando So.
We're already starting to look for sites to put a facility up that we can combine the two and create a powerhouse Allen brothers meat and seafood.
Ho Tampa Orlando area going all the way down to.
Eventually probably the cutoff this Naples, where we split off with our other facility coming out of a.
Opa-locka in Miami. So these are all great.
I'm, hoping to do many many more of these strategic bolt ins, besides doing new categories and new markets, but these are really important for us.
Terrific. Thank you for that answer and I'll yield to the next time a person.
Thanks, Andrew.
The next question comes from Kelly Bania of BMO capital.
Hi, good morning, and congrats on a great quarter.
Thanks Kelly.
Just wanted to follow up on a little bit of the seasonality topic. Your Q4 EBITDA margin is typically the highest.
Quarter obviously.
Seven I mean is there any reason to think that Q4.
It shouldnt be seven plus or just maybe help us understand some of the puts and takes of the margin dynamics in the back half.
I think.
I think with the normal seasonality coming back.
And if trends continue the way they are that we're seeing them right now I don't think there is any reason that.
We should expect anything different than we've seen in the past the only thing I would I would say is that.
Given some of the uncertainty around the macroeconomic environment, it's a little it's a little harder to have the visibility into the fourth quarter that we would normally have at this time of the year, but.
But other than that assuming the trends continue the way. They are right now no I wouldn't I wouldn't expect that it would be much different.
Okay.
That's very helpful.
And then obviously this year has just come into strong and and maybe there is some.
Uncertainty on the macro front, but as you think about growth drivers next year, you mentioned to keep volumes over.
Back over.
2019 levels, but maybe hospitality still has some room to recover can you just help us understand the magnitude of what that might look like.
If and when it fully recovers.
Yeah.
Yeah, well again in a perfect world we'd get.
We stay at the pace that we're seeing are people coming back to <unk>.
Dining out.
And we would start to get really the.
The piece that's missing right.
More city business more.
More business lunch more events.
More specially.
In the fourth quarter right, where.
Usually our busiest quarter.
A combination of everything you know youre going to get tourist and youre going to get a lot of business meetings and holiday parties.
So.
When I look at where the business is coming from.
That piece is still missing you know, we still don't have that great tourism, and a say in Midtown Manhattan or Chicago.
All of Asia really if you go I just came back from a big swing around the country.
I think a lot of our businesses.
You see casinos really busy but you still don't see a lot of the Asian tourists.
We normally see.
In my travels so I think Theres a few airlines are limited they don't have I guess the seats. So the planes.
To bring more people so optimistic that eventually they will figure that out.
The cruise line business is coming back.
So I think it's we're still we're still at least a year away from any sorts of normality.
For travel and figuring out really you know if you catch Covid is it five days away you know is it two days and.
In the future staying away from work so.
The Crystal ball says that there is a lot of upside still to come so.
When I look at the Crystal ball I'm like well, there's a lot of upside to come and maybe you get a little slowdown.
And and spending and you're still it could be a net positive.
You've heard me say Kelly.
I don't know how many years that.
Our I think our strength is our laser focus on the customer sectors that we sell to.
We really stay on or Matt you know, we focus on the top the top restaurants, the top upscale casual restaurants and hotels.
I have found.
The past 40 years that that customer that customer our customers customer always.
It always seems to.
Go out to dinner or to have meetings are.
Parties.
It's a it's been a great it's been a great customer base for us and I think that's why we said we wanted to dominate that customer base nationally. We just start to grow at a Metro New York So.
You always see a slowdown in our catastrophe like the financial collapse or.
Obviously, COVID-19, but other than other than something of that magnitude.
Our sector seems to always do better than.
The rest of the hospitality sector. So.
We remain cautiously optimistic and bullish and with these we did.
Opportunities to have tuck ins into our our facilities, especially our new facilities. It really gives us a very optimistic roadmap.
Okay very helpful.
And just another follow up on the acquisition.
Just curious as you look at the how many of those acquisitions really bringing net new customers that you werent, serving where are you serving some of those customers and now you are able to expand York your.
Line items, but those customers that just help us understand a little bit more about what youre seeing there.
Yes sure.
Again as always if you need a good reason to write a check so.
We look for.
A company that either has a customer base that we don't have that gives us access now.
I would say that the <unk>.
Great thing about <unk> is there's nobody like us the bad thing is there's no one exactly like us to go buy would make my job much easier so.
Buying in say Masters right now in Northern Florida gives us a company with a history of.
Lots of loyal customers up and down the Gulf coast that not one of our strengths. So.
<unk>.
The plan as usual is to keep those customers happy and expand leverage that sales force and continued to add to it.
That gives us hundreds of customers now that we can go sell.
Our thousands of items that they don't carry so.
The other acquisitions, one is synergistic up in Portland, They also give us.
Many many customers that we could sell our giant portfolio of products too and I think thats, what youre seeing.
The many years that we've been putting.
I call it more of a national chef warehouse together.
As I think we've been able to get that hybrid growth that even before the pandemic, where the industry might've been growing 1%.
We were able to grow 567, I think because we've been putting together such a great businesses that.
Their portfolios coincide together and we're getting that uptick in the hybrid cell.
And that's really what.
Our plan is to continue doing that as now we're adding more produce and we're adding more seafood.
Sure.
As long as we continue we have 600 plus.
Our sales department.
Highly trained and we continue to train and add too.
Given them the knowledge to be able to talk to customers <unk> consultants I know every distributor says that but it's extremely hard to do.
And I think that you know or many many years.
First thing in our test kitchens, and our training kitchens, and our trainers and our expertise.
I think youre starting to see the payback for all those investments.
Super Helpful. And then maybe I can just ask one more on <unk>.
Ladies and deflation.
Obviously, a big topic, but I guess.
If you think about what's ideal for chefs warehouse going forward on the inflation deflation front, what would what would that be.
Do you think investors worry about.
So the more deflation or could that be a positive for Seth just help us think through kind of the puts and takes given how how much inflation. We've had over the last few years.
Yeah.
What I am seeing talking to many many customers that I think you have obviously different.
Different types of clientele, so I think on the on the high end.
I see them, just passing along carefully a lot of the cost.
And the menu and then I see it.
Huge amount of customers that are changing the way they do business in.
<unk> their menu so they're not as not as courageous to continue to raise a lot of their menu costs, though again, there maybe cutting portions there may be changing.
Accoutrement.
On their entrees or different types of specials. So.
They're really smart restaurant tours are going to try to lead the customer right like any other business. So.
Theyre going to mix it up so.
I would say on a on a seafood platter you might see a lobster is really expensive you might see a smaller portion and youll see maybe more shrimp or scallops or whatever it is more affordable right. This way they can make their GP.
On a dish.
Seeing much more creative drinks.
I'm seeing all different types of I always see more potato as prices go up.
Potatoes fill you up and.
No matter, what it's a lot less expensive than a.
Our prime steak so.
Again, our customer base is extremely entrepreneurial and they know their customer base and I think.
If you would add as much as maybe you start to really see.
It's a 38 out of 38 dollar entre.
They think that's the <unk>.
The spot that are as high as they can go and then you have a $75 stake on our menu on other places I've been eating and you can't get a reservation.
Thursday Friday Saturday so.
It's I think they are very creative and they're figuring out how to keep their establishment is busy.
Thank you.
<unk> come from Todd Brooks of the benchmark company.
Hey, good morning, guys. Congrats on the results from the quarter here.
They talk to two questions Chris.
Three acquisitions closing in relatively short order here I know you've talked about.
The environment for M&A being frothy for a long time here and maybe even cross here coming out of the pandemic paint.
Hey, some closures do you see that picking up either a due to getting to more of a normalization in the recovery here or maybe <unk>.
The opening of a new facility in the West coast there have been some things in the Hopper now.
Fold ins, particularly that now that that facility is up and running.
It is getting these deals across the finish line.
So you say quest.
As the pace of us being able to close deals.
Is that correct.
Correct.
Yes, I think absolutely I mean.
These deals take time very few are.
One month.
Then you close so somewhere in the some had been talks per year as summer in talks for six.
Six months so.
Like like.
You just mentioned.
The pipeline is extremely frothy.
<unk>.
Where we're really diligent.
Choosing who joined shifts I would say that.
To close one we look at 'twenty.
These days.
But the industry again was consolidating before COVID-19 so.
Lack of being able to do deals.
A few deals got done during COVID-19 so.
Youre seeing a back up you're seeing a lot of the p/e backed.
Roll ups starting to come to market.
But we kind of I mean, there is always a surprise, there's always somebody new but.
One of the advantages of <unk>.
And the industry for so long as you kind of know where all the pieces are that really makes sense.
I think we are focused on are the companies that really.
Again, giving you a roadmap from the Crystal ball I continue to see us doing fold ins which are.
Unbelievably synergistic.
I continue to see us finding.
Companies in territories that were still not strong in.
To continue to grow CW as a national platform and I continue to see new categories, and some surprises coming up for sale.
Fit into fit into what we do so.
After <unk>.
Two years.
The COVID-19 closures and openings and.
Starting to finally see that we have light at the end of the tunnel and you could start to forecast and I think that's why a lot of these companies are coming to market now because I think they have enough.
Enough of a run rate to show that what their real business looks like even though you have a lot of inflation in and that's where the tricky part comes out figuring out what it looks like in a in a more normalized.
World, but Jim reminds me every day I don't think labor is coming down. So you know that cost is there I don't know if gas will ever be two bucks a gallon again so.
And that input as their real estate costs for facilities.
Facilities.
That's way up so I think you do have a built in.
The uptick in the cost.
And so products products will always be more expensive than they were I think pre COVID-19 overall I mean now you've got a crazy war. So that's not helping so that's really the tricky part trying to.
Take a look at a business that's coming up for sale and say well what does it look like and in a more normalized timing what is the new norm.
But.
The pipeline the pipeline I think is going to remain extremely frothy.
You just have to be careful and diligent.
Do the deals that make the most sense.
Okay, great. Thanks, Chris My follow up.
Chris you talked about this earlier.
<unk> continued to invest during the pandemic and made the operation stronger I know you brought a lot of sales talent.
Onboard during the pandemic from competitors and kind of ramp them into the operation.
Are we starting to see the fruit of it I mean, you talked to US one of the big drivers in the quarter new customer wins.
That investment how is it how does it manifesting itself the organic growth was really strong in the quarter is this kind of your your return on spending that money during the pandemic starting to bear real fruit for the model both in revenues and margins.
Yeah.
So.
Besides sales I mean, it's really operations that.
Has really stepped up.
In a brutally difficult environment for labor.
And it's really carrying us through and allowing us now to get the.
Get the profit that falls to the bottom line by.
Figuring out how to operate better and get the efficiencies.
The crew.
Doing more.
With less so.
The investments in operations and people and leadership combined with that sales talent.
We've been able to acquire and I still think we're really in the maybe third inning.
Really seeing the benefits of all the investments that we're making in talent and now the investments in facilities will start to pay fruit over the next four years. So as we are able to grow in Florida, where.
Where we're going to have two new facilities.
Obviously, southern California, you know that building, we can quadruple our business or more.
We have a new one coming up in San Francisco that we're going to consolidate makes San Francisco I can keep going on and on around the country.
I think our knowledge of the business the expertise of the team and they are continuing.
Recruiting we created the office of the talent officer.
I think just at the right time, because we obviously as a growing company, we continue to need that talent, so that focus of <unk>.
Really looking for the best of the best I think is going to pay lots of dividends over the next four or five years.
And then just one final quick follow up what's the timing on the new.
Florida facility coming on later this year.
Six months ago.
[laughter].
We expect to move in in the back half of the year.
Okay, great. Thanks, guys.
Thank you.
Ladies and gentlemen, we have reached the end of the question and answer session.
The conference over to Chris.
Okay.
Yep.
We thank everybody for joining our call today couldnt be prouder of the.
The CW team.
A great quarter all of their hard work.
It's showing up in the numbers.
We look forward to sharing our next quarter and for you joining us again, so thank you very much.
Thank you ladies and gentlemen. This concludes today's conference. Thank you for your participation you may now disconnect your lines.
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