Chefs' Warehouse, Inc.

(Amounts in thousands, except share and per share amounts)

Note 1 -Operations and Basis of Presentation

Description of Business and Basis of Presentation

The Chefs’ Warehouse, Inc. (the “Company”), and its wholly-owned subsidiaries, is a distributor of specialty food and center-of-the-plate products in the United States, the Middle East and Canada. The Company is focused on serving the specific needs of chefs who own and/or operate restaurants, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolateries, cruise lines, casinos and specialty food stores.

The Company’s quarterly periods end on the thirteenth Friday of each quarter. Every six to seven years, the Company will add a fourteenth week to its fourth quarter to more closely align its year-end to the calendar year.

Consolidation

The unaudited condensed consolidated financial statements include all the accounts of the Company and its direct and indirect wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Unaudited Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements and the related interim information contained within the notes to such unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the applicable rules of the Securities and Exchange Commission (“SEC”) for interim information and quarterly reports on Form 10-Q. Accordingly, they do not include all the information and disclosures required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended December 27, 2024 filed as part of the Company’s Annual Report on Form 10-K (the “2024 Form 10-K”).

The unaudited condensed consolidated financial statements appearing in this Form 10-Q have been prepared on the same basis as the audited consolidated financial statements included in the Company’s 2024 Form 10-K, and in the opinion of management, include all normal recurring adjustments that are necessary for the fair statement of the Company’s interim period results. The year-end consolidated balance sheet data was derived from the audited financial statements but does not include all disclosures required by GAAP. Due to seasonal fluctuations and other factors, the results of operations for the thirteen and twenty-six weeks ended June 27, 2025 are not necessarily indicative of the results to be expected for the full year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from management’s estimates.

Note 2 –Summary of Significant Accounting Policies

Revenue Recognition

The following table presents the Company’s net sales disaggregated by principal product category:

The Company determines its product category classification based on how the Company currently markets its products to its customers. The Company’s definition of its principal product categories may differ from the way in which other companies present similar information. Net sales by product category includes estimates of product mix for certain locations that are not yet fully integrated into the Company’s sales reporting system as of the reporting date.

Food Processing Costs

Food processing costs include, but are not limited to, direct labor and benefits, applicable overhead and depreciation of equipment and facilities used in food processing activities. Food processing costs included in cost of sales were $16,537 and $18,277 for the thirteen weeks ended June 27, 2025 and June 28, 2024, respectively, and $34,789 and $37,347 for the twenty-six weeks ended June 27, 2025 and June 28, 2024, respectively.

Share Repurchases

The Company has a share repurchase program that is executed through purchases made from time to time either in the open market or through private market transactions. During fiscal 2025, shares purchased were retired and returned to the status of authorized and unissued shares. During the twenty-six weeks ended June 28, 2024, shares purchased under the program were recorded at cost and held as treasury stock. During the third quarter of fiscal 2024, these shares were retired and returned to the status of authorized and unissued shares.

Recent Accounting Pronouncements

Induced Conversions of Convertible Debt Instruments: In November 2024, the Financial Accounting Standards Board (“FASB”) issued guidance which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The guidance is effective for fiscal years beginning after December 15, 2025, and interim periods within that fiscal year. Early adoption is permitted. The impact of this guidance is dependent on future induced conversions, if any, of the Company’s convertible debt instruments.

Disaggregation of Income Statement Expenses: In November 2024, the FASB issued guidance to require disclosure in the notes to the financial statements of certain categories of expenses that are included on the face of the income statement, including purchases of inventory, employee compensation and depreciation and amortization, as well as additional disclosure about selling expenses. The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods for fiscal years beginning after December 15, 2027 on a prospective basis. Early adoption is permitted. The Company expects to adopt this guidance when effective and is evaluating the impact of adoption on its consolidated financial statements, which is limited to financial statement disclosures.

Improvements to Income Tax Disclosures: In December 2023, the FASB issued guidance designed to improve the transparency and usefulness of income tax disclosures. The amendments include provisions to address the consistency of the income tax rate reconciliation and requirement to disaggregate income taxes paid by jurisdiction. The new disclosure requirements will be effective in the Company's Annual Report on Form 10-K for the fiscal year ending December 26, 2025. The impact of the guidance is limited to financial statement disclosures.

Note 3 –Net Income per Share

Basic net income per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share adjusts basic net income per share for all the potentially dilutive shares outstanding during the period. When the Company’s convertible notes are dilutive, interest on the convertible notes, net of tax, is added back to net income in order to calculate diluted earnings available to common shareholders.

The following table sets forth the computation of basic and diluted net income per common share:

Reconciliation of net income per common share:

Potentially dilutive securities that have been excluded from the calculation of diluted net income per common share because the effect is anti-dilutive are as follows:

Note 4 –Fair Value Measurements

Assets and Liabilities Measured at Fair Value

The Company’s contingent earn-out liabilities are measured at fair value. These liabilities were estimated using Level 3 inputs. The fair value of contingent consideration was predominantly determined based on a probability-based approach which includes projected results, percentage probability of occurrence and the application of a discount rate to present value the payments. A significant change in projected results, discount rate, or probabilities of occurrence could result in a significantly higher or lower fair value measurement. Changes in the fair value of contingent earn-out liabilities are reflected inother operating expenses, net on the condensed consolidated statements of operations.

Contingent earn-out liabilities of $750 as of June 27, 2025 and December 27, 2024 are reflected asaccrued liabilities on the Company’s condensed consolidated balance sheets. Contingent earn-out liability payments in excess of the acquisition date fair value of the underlying contingent earn-out liability are classified as operating activities on the Company’s condensed consolidated statements of cash flows and all other such payments are classified as financing activities.

Fair Value of Financial Instruments

The carrying amounts reported in the Company’s condensed consolidated balance sheets for accounts receivable and accounts payable approximate fair value due to their immediate to short-term nature. The fair values of the asset-based loan facility and term loan approximated their book values as of June 27, 2025 and December 27, 2024, as these instruments had variable interest rates that reflected current market rates available to the Company and are classified as Level 2 fair value measurements.

The following table presents the carrying value and fair value of the Company’s convertible notes and its unsecured note issued in connection with the acquisition of Oakville Produce Partners, LLC (“GreenLeaf”) in fiscal 2023 (“GreenLeaf Note”). The fair value of the Company’s 2028 Convertible Senior Notes was based on bid/ask quotes as of or near the balance sheet date. The fair value of the GreenLeaf Note as of December 27, 2024 was determined based upon observable market prices of similar debt instruments.

Note 5 –Inventories

Inventories consist primarily of finished product and are reflected net of adjustments for shrinkage, excess and obsolescence to approximate their net realizable value totaling $9,919 and $11,579 at June 27, 2025 and December 27, 2024, respectively.

Note 6 –Property and Equipment

Property and equipment is net of accumulated depreciation and amortization of $162,272 and $147,902 at June 27, 2025 and December 27, 2024, respectively.

Note 7 –Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill are presented as follows:

Other intangible assets are net of accumulated amortization of $169,135 and $157,032 as of June 27, 2025 and December 27, 2024, respectively. Amortization expense for other intangibles was $6,009 and $6,171 for the thirteen weeks ended June 27, 2025 and June 28, 2024, respectively, and $12,103 and $12,342 for the twenty-six weeks ended June 27, 2025 and June 28, 2024, respectively.

Note 8 –Debt Obligations

Debt obligations as of June 27, 2025 and December 27, 2024 consisted of the following:

Senior Secured Term Loan Credit Facility

In June 2025, the Company entered into an amendment (“Thirteenth Amendment”) to its senior secured term loan agreement, which reduced the interest rate spread on its senior secured term loan facility. Arrangement fees of $525 and third-party transaction costs of $49 were expensed as incurred during the thirteen and twenty-six weeks ended June 27, 2025 and included ininterest expense andother operating expenses, respectively, within the Company’s condensed consolidated statements of operations.

In March 2024, the Company entered into an amendment (“Eleventh Amendment”) to its senior secured term loan agreement, which reduced the interest rate spread on its senior secured term loan facility. As a result of this amendment, the Company incurred a loss on debt extinguishment of $50 during the twenty-six weeks ended June 28, 2024, which represents the portion of unamortized deferred financing fees attributable to the lender that exited the loan syndicate. Arrangement fees of $775 and third-party transaction costs of $91 were expensed as incurred during the twenty-six weeks ended June 28, 2024 and included ininterest expense andother operating expenses, respectively, within the Company’s condensed consolidated statements of operations.

Additionally, during the twenty-six weeks ended June 27, 2025 and June 28, 2024, the Company made voluntary principal prepayments totaling $5,000 and $8,000, respectively, towards the senior secured term loan. In connection with the prepayments, the Company wrote-off unamortized deferred financing fees of $150 during the thirteen and twenty-six weeks ended June 27, 2025 and $77 and $316 during the thirteen and twenty-six weeks ended June 28, 2024, respectively, which were included ininterest expense within the Company’s condensed consolidated statements of operations.

GreenLeaf Unsecured Note

The GreenLeaf Note matured on April 20, 2025, and the Company made the final principal payment of $5,000 during the twenty-six weeks ended June 27, 2025. Previously, the Company made a scheduled principal payment of $5,000 towards the GreenLeaf Note during the twenty-six weeks ended June 28, 2024. The GreenLeaf Note is presented at December 27, 2024 under the caption “Finance leases and other financing obligations” in the table above.

Convertible Notes

The net carrying value of the Company’s 2028 convertible senior notes as of June 27, 2025 and December 27, 2024 was:

The components of interest expense on the Company’s convertible notes were as follows:

As of June 27, 2025, the Company had reserved $36,612 of its asset-based loan facility for the issuance of letters of credit and funds totaling $163,388 were available for borrowing.

Note 9 –Stockholders’ Equity

Equity Awards

The following table reflects the activity of RSAs and RSUs during the twenty-six weeks ended June 27, 2025:

The Company granted 985,072 RSAs and RSUs to its employees and directors at a weighted average grant date fair value of $63.07 during the twenty-six weeks ended June 27, 2025. These awards are a mix of time-, market- and performance-based grants that generally vest over a range of periods up tofive years. The Company recognized expense on its RSAs and RSUs totaling $4,223 and $3,946 during the thirteen weeks ended June 27, 2025 and June 28, 2024, respectively, and $8,344 and $7,536 during the twenty-six weeks ended June 27, 2025 and June 28, 2024, respectively. No share-based compensation expense has been capitalized.

At June 27, 2025, the total unrecognized compensation cost for unvested RSAs and RSUs was $33,100 and the weighted-average remaining period was approximately 1.9 years. Of this total, $19,669 related to awards with time-based vesting provisions and $13,431 related to awards with performance- and market-based vesting provisions. At June 27, 2025, the weighted-average remaining period for time-based vesting and performance-based vesting RSAs and RSUs were approximately 1.8 years and 2.1 years, respectively.

Performance-Based Restricted Share Units

In February 2025, the Company’s Board of Directors approved a grant of a total of 541,375 performance-based restricted share units (“PSUs”) to certain of the Company’s officers and employees under the Company’s 2019 Omnibus Equity Incentive Plan. The PSUs, which have afour-year term from the date of grant, are subject to service and performance conditions and will only become vested and payable to the extent that a qualifying change in control occurs during thefour-year period. The fair value of these awards was $22,235, which was determined using a Monte Carlo simulation in order to model a range of possible future stock prices for the Company’s common stock. No share-based compensation expense has been recorded in fiscal 2025 for these PSUs.

Share Repurchase Program

In November 2023, the Company announced atwo-year share repurchase program in an amount up to $100,000. The remaining share purchase authorization was $72,617 at June 27, 2025. The Company is not obligated to repurchase any specific number of shares and may suspend or discontinue the program at any time.

Note 10 –Income Taxes

The Company’s effective tax rate was 28.0% and 30.0% for the thirteen weeks ended June 27, 2025 and June 28, 2024, respectively, and 24.9% and 30.0% for the twenty-six weeks ended June 27, 2025 and June 28, 2024, respectively. The effective tax rate for the twenty-six weeks ended June 27, 2025 reflects the annual effective tax rate estimated for the full fiscal year, adjusted for a discrete item related to a tax benefit from the vesting of stock awards during the period. The effective tax rate otherwise varies from the 21% statutory rate primarily due to state taxes and permanent adjustments.

As a result of a five year carryback allowed under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), the Company carried back its 2020 federal income tax loss, which resulted in a income tax refund receivable of $26,537 as of June 27, 2025. The receivable is reflected inprepaid expenses and other current assets on the Company’s condensed consolidated balance sheet.

Subsequent to the end of the second quarter of fiscal 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted on July 4, 2025. The Company is in the process of assessing the impact of this legislation on its financial statements. The current expectation is that OBBBA will not have a material impact on the Company’s estimated annual effective tax rate in 2025, but will impact the split between current taxes payable and deferred taxes.

The Organization for Economic Co-operation and Development (the “OECD”) introduced a framework under Pillar Two which includes a global corporate minimum tax rate of 15%. Some jurisdictions in which the Company operates have started to enact laws implementing Pillar Two, including Canada which enacted the rule in June 2024. The Company is monitoring these developments and currently does not believe the rules effective in fiscal 2025 will have a material impact on its consolidated financial statements.

Note 11 –Segment Information

The Company’s business consists ofthree operating segments: East, Midwest and West that aggregate intoone reportable segment, foodservice distribution, which is concentrated primarily in the United States.

The accounting policies of the foodservice distribution segment are the same as those for the consolidated company. The Company’s chief operating decision maker, who is the Company’s chief executive officer, uses gross profit as the measure of profit or loss to assess segment performance and allocate resources.

Consolidated gross profit, reported on the statement of operations and comprehensive income, is used to evaluate whether to reinvest profits into the foodservice distribution segment or into other parts of the entity, such as for acquisitions or to repurchase its common shares. Additionally, gross profit is used to monitor budget versus actual results and in competitive analysis by benchmarking to the Company’s competitors. Consolidated total assets, reported on the balance sheet, is the measure of segment assets.

The following table presents information about the Company’s foodservice distribution segment:

(1)Non-production costs represent the net purchase price paid for products sold, plus the cost of transportation necessary to bring the product to the Company’s distribution facilities. Non-production costs include purchase incentives and product purchase credits from certain vendors.

(2)Food processing costs include but are not limited to, direct labor and benefits, applicable overhead and depreciation of equipment and facilities used in food processing activities.

(3)Food processing costs included $257 and $326 of depreciation expense for the thirteen weeks ended June 27, 2025 and June 28, 2024, respectively and $518 and $662 for the twenty-six weeks ended June 27, 2025 and June 28, 2024, respectively.

Note 12 –Supplemental Disclosures of Cash Flow Information