The Chefs' Warehouse, reported financial results for its first quarter ended March 25, 2016.
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Net sales for the quarter ended March 25, 2016 increased 32.6% to $262.4 million from $197.9 million for the quarter ended March 27, 2015.
The increase in net sales was primarily the result of organic growth and the acquisition of Del Monte in April 2015, which accounted for approximately $52.1 million of net sales growth for the quarter. Organic growth contributed approximately $12.4 million, or 6.3%, to quarter-over-quarter growth.
Compared to the first quarter of 2015, The Chefs' Warehouse's case count grew approximately 7.5%, while the number of unique customers and placements grew 5.1% and 6.1%, respectively, in the core specialty business in the first quarter of 2015.
Inflation was approximately 0.7% during the quarter, driven largely by inflation in the dairy, chocolate and baking categories offset in part by deflation in proteins.
Gross profit increased approximately 32.6% to $66.0 million for the first quarter of 2016 from $49.8 million for the first quarter of 2015. Gross profit margins were flat at 25.1% for both the first quarter of 2016 and the first quarter of 2015.
Gross profit margins decreased approximately 52 basis points in The Chefs' Warehouse's specialty division compared to very strong margins in the first quarter of the prior year.
Gross profit margins increased approximately 417 basis points in the protein division due to improved performance of The Chefs' Warehouse's Allen Brothers subsidiary and the mix contribution from Del Monte.
Total operating expenses increased by approximately 30.0% to $60.6 million for the first quarter of 2016 from $46.6 million for the first quarter of 2015. As a percentage of net sales, operating expenses were 23.1% in the first quarter of 2016 compared to 23.6% in the first quarter of 2015.
The decrease in The Chefs' Warehouse's operating expense ratio is largely attributable to favorable transportation related costs and prior year transaction costs related to The Chefs' Warehouse's acquisition of Del Monte, offset in part by higher occupancy related costs associated with the new warehouse facilities and higher amortization expense related to the Del Monte acquisition.
Operating income for the first quarter of 2016 was $5.4 million compared to $3.1 million for the first quarter of 2015. As a percentage of net sales, operating income was 2.0% in the first quarter of 2016 compared to 1.6% in the prior year's first quarter.
The increase in operating income as a percentage of net sales was driven primarily from the improvement in operating expense leverage discussed above.
Net income was $1.0 million, or $0.04 per diluted share, for the first quarter of 2016 compared to $967,000, or $0.04 per diluted share, for the first quarter of 2015.
The first quarter of 2015 included a $204,000 after-tax gain on the sale of assets.
The diluted earnings per share for the first quarter of 2016 does not include the dilutive effect of the subordinated convertible notes issued as part of the Del Monte acquisition in April 2015 since they were anti-dilutive in the first quarter of 2016.
On a non-GAAP basis, adjusted EBITDA1 was $10.4 million for the first quarter of 2016 compared to $7.6 million for the first quarter of 2015.
For the first quarter of 2016, modified pro forma net income was $1.3 million and modified pro forma EPS was $0.05 compared to modified pro forma net income of $1.9 million and modified pro forma EPS of $0.08 for the first quarter of 2015.
The modified pro forma EPS for the first quarter of 2016 does not include the dilutive effect of the subordinated convertible notes issued as part of the Del Monte acquisition in April 2015 since they were anti-dilutive in the first quarter of 2016. ■