☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 20-3031526 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
100 East Ridge Road Ridgefield, Connecticut | 06877 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ☐ | Accelerated filer | ☒ | |
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |
Emerging growth company | ☐ |
Page | ||
PART I. FINANCIAL INFORMATION | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II. OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
March 29, 2019 (unaudited) | December 28, 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 17,317 | $ | 42,410 | |||
Accounts receivable, net of allowance of $7,461 in 2019 and $7,460 in 2018 | 152,123 | 161,758 | |||||
Inventories, net | 113,540 | 112,614 | |||||
Prepaid expenses and other current assets | 12,216 | 11,953 | |||||
Total current assets | 295,196 | 328,735 | |||||
Equipment, leasehold improvements and software, net | 88,549 | 85,276 | |||||
Operating lease right-of-use assets | 118,792 | — | |||||
Goodwill | 195,546 | 184,280 | |||||
Intangible assets, net | 145,242 | 130,033 | |||||
Other assets | 3,787 | 4,074 | |||||
Total assets | $ | 847,112 | $ | 732,398 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 78,120 | $ | 87,799 | |||
Accrued liabilities | 22,872 | 24,810 | |||||
Short-term operating lease liabilities | 16,499 | — | |||||
Accrued compensation | 8,536 | 12,872 | |||||
Current portion of long-term debt | 1,804 | 61 | |||||
Total current liabilities | 127,831 | 125,542 | |||||
Long-term debt, net of current portion | 281,675 | 278,169 | |||||
Operating lease liabilities | 111,140 | — | |||||
Deferred taxes, net | 9,952 | 9,601 | |||||
Other liabilities and deferred credits | 8,091 | 10,410 | |||||
Total liabilities | 538,689 | 423,722 | |||||
Commitments and contingencies | — | — | |||||
Stockholders’ equity: | |||||||
Preferred Stock, $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding March 29, 2019 and December 28, 2018 | — | — | |||||
Common Stock, $0.01 par value, 100,000,000 shares authorized, 29,941,184 and 29,968,483 shares issued and outstanding at March 29, 2019 and December 28, 2018, respectively | 300 | 300 | |||||
Additional paid-in capital | 207,911 | 207,326 | |||||
Accumulated other comprehensive loss | (2,166 | ) | (2,221 | ) | |||
Retained earnings | 102,378 | 103,271 | |||||
Stockholders’ equity | 308,423 | 308,676 | |||||
Total liabilities and stockholders’ equity | $ | 847,112 | $ | 732,398 |
Thirteen Weeks Ended | |||||||
March 29, 2019 | March 30, 2018 | ||||||
Net sales | $ | 357,027 | $ | 318,615 | |||
Cost of sales | 266,838 | 239,093 | |||||
Gross profit | 90,189 | 79,522 | |||||
Operating expenses | 84,039 | 73,782 | |||||
Operating income | 6,150 | 5,740 | |||||
Interest expense | 4,551 | 4,979 | |||||
Loss on asset disposal | 34 | — | |||||
Income before income taxes | 1,565 | 761 | |||||
Provision for income tax expense | 431 | 217 | |||||
Net income | $ | 1,134 | $ | 544 | |||
Other comprehensive income (loss): | |||||||
Foreign currency translation adjustments | 55 | (922 | ) | ||||
Comprehensive income (loss) | $ | 1,189 | $ | (378 | ) | ||
Net income per share: | |||||||
Basic | $ | 0.04 | $ | 0.02 | |||
Diluted | $ | 0.04 | $ | 0.02 | |||
Weighted average common shares outstanding: | |||||||
Basic | 29,457,257 | 28,122,723 | |||||
Diluted | 29,840,979 | 28,197,247 |
Common Stock | Additional Paid in Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total | ||||||||||||||||||
Shares | Amount | |||||||||||||||||||||
Balance December 28, 2018 | 29,968,483 | $ | 300 | $ | 207,326 | $ | (2,221 | ) | $ | 103,271 | $ | 308,676 | ||||||||||
Cumulative effect adjustment due to adoption of new accounting standard | — | — | — | — | (2,027 | ) | (2,027 | ) | ||||||||||||||
Net income | — | — | — | — | 1,134 | 1,134 | ||||||||||||||||
Stock compensation | (23,680 | ) | — | 915 | — | — | 915 | |||||||||||||||
Exercise of stock options | 20,383 | — | 412 | — | — | 412 | ||||||||||||||||
Cumulative translation adjustment | — | — | — | 55 | — | 55 | ||||||||||||||||
Shares surrendered to pay withholding taxes | (24,002 | ) | — | (742 | ) | — | — | (742 | ) | |||||||||||||
Balance March 29, 2019 | 29,941,184 | $ | 300 | $ | 207,911 | $ | (2,166 | ) | $ | 102,378 | $ | 308,423 |
Balance December 29, 2017 | 28,442,208 | $ | 284 | $ | 166,997 | $ | (1,549 | ) | $ | 82,869 | $ | 248,601 | ||||||||||
Net income | — | — | — | — | 544 | 544 | ||||||||||||||||
Stock compensation | 284,618 | 3 | 834 | — | — | 837 | ||||||||||||||||
Cumulative translation adjustment | — | — | — | (922 | ) | — | (922 | ) | ||||||||||||||
Shares surrendered to pay withholding taxes | (20,100 | ) | — | (472 | ) | — | — | (472 | ) | |||||||||||||
Balance March 30, 2018 | 28,706,726 | $ | 287 | $ | 167,359 | $ | (2,471 | ) | $ | 83,413 | $ | 248,588 |
Thirteen Weeks Ended | |||||||
March 29, 2019 | March 30, 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 1,134 | $ | 544 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation | 2,881 | 2,316 | |||||
Amortization | 2,877 | 2,903 | |||||
Provision for allowance for doubtful accounts | 851 | 497 | |||||
Non-cash operating lease expense | 537 | 312 | |||||
Deferred taxes | 1,131 | 340 | |||||
Amortization of deferred financing fees | 522 | 549 | |||||
Stock compensation | 915 | 837 | |||||
Change in fair value of contingent earn-out liability | 107 | 124 | |||||
Loss on asset disposal | 34 | — | |||||
Changes in assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | 13,778 | 6,497 | |||||
Inventories | 677 | 754 | |||||
Prepaid expenses and other current assets | (207 | ) | 2,759 | ||||
Accounts payable, accrued liabilities and accrued compensation | (18,010 | ) | (7,324 | ) | |||
Other assets and liabilities | 164 | (568 | ) | ||||
Net cash provided by operating activities | 7,391 | 10,540 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (4,125 | ) | (2,903 | ) | |||
Cash paid for acquisitions, net of cash received | (27,990 | ) | (2,377 | ) | |||
Net cash used in investing activities | (32,115 | ) | (5,280 | ) | |||
Cash flows from financing activities: | |||||||
Payment of debt, finance lease and other financing obligations | (37 | ) | (1,179 | ) | |||
Proceeds from exercise of stock options | 412 | — | |||||
Surrender of shares to pay withholding taxes | (742 | ) | (472 | ) | |||
Net cash used in financing activities | (367 | ) | (1,651 | ) | |||
Effect of foreign currency translation on cash and cash equivalents | (2 | ) | (39 | ) | |||
Net increase (decrease) in cash and cash equivalents | (25,093 | ) | 3,570 | ||||
Cash and cash equivalents-beginning of period | 42,410 | 41,504 | |||||
Cash and cash equivalents-end of period | $ | 17,317 | $ | 45,074 |
• | apply hindsight in determining the lease term of its leases; |
• | not reassess whether any expired or existing contracts are or contain leases; |
• | not reassess the lease classification of any expired or existing leases; and |
• | not reassess initial direct costs for any existing leases. |
Thirteen Weeks Ended | |||||||||||||
March 29, 2019 | March 30, 2018 | ||||||||||||
Center-of-the-Plate | $ | 156,616 | 43.9 | % | $ | 141,743 | 44.5 | % | |||||
Dry Goods | 63,754 | 17.9 | % | 54,673 | 17.2 | % | |||||||
Pastry | 50,205 | 14.1 | % | 43,677 | 13.7 | % | |||||||
Cheese and Charcuterie | 35,355 | 9.9 | % | 32,911 | 10.3 | % | |||||||
Dairy and Eggs | 25,614 | 7.2 | % | 22,768 | 7.1 | % | |||||||
Oils and Vinegar | 18,693 | 5.2 | % | 16,874 | 5.3 | % | |||||||
Kitchen Supplies | 6,790 | 1.8 | % | 5,969 | 1.9 | % | |||||||
Total | $ | 357,027 | 100 | % | $ | 318,615 | 100 | % |
Thirteen Weeks Ended | |||||||
March 29, 2019 | March 30, 2018 | ||||||
Net income per share: | |||||||
Basic | $ | 0.04 | $ | 0.02 | |||
Diluted | $ | 0.04 | $ | 0.02 | |||
Weighted average common shares: | |||||||
Basic | 29,457,257 | 28,122,723 | |||||
Diluted | 29,840,979 | 28,197,247 |
Thirteen Weeks Ended | |||||||
March 29, 2019 | March 30, 2018 | ||||||
Numerator: | |||||||
Net income | $ | 1,134 | $ | 544 | |||
Denominator: | |||||||
Weighted average basic common shares outstanding | 29,457,257 | 28,122,723 | |||||
Dilutive effect of unvested common shares | 383,722 | 74,524 | |||||
Weighted average diluted common shares outstanding | 29,840,979 | 28,197,247 |
Thirteen Weeks Ended | |||||
March 29, 2019 | March 30, 2018 | ||||
Restricted share awards (RSAs) | — | 81,218 | |||
Stock options | — | 191,808 | |||
Convertible notes | 91,053 | 1,237,374 |
Fells Point | Bassian | Other Acquisitions | Total | ||||||||||||
Balance December 28, 2018 | $ | 3,649 | $ | — | $ | 1,441 | $ | 5,090 | |||||||
Acquisition | — | 4,080 | — | 4,080 | |||||||||||
Changes in fair value | 79 | — | 28 | 107 | |||||||||||
Balance March 29, 2019 | $ | 3,728 | $ | 4,080 | $ | 1,469 | $ | 9,277 |
March 29, 2019 | ||||||||
Carrying Value | Fair Value | |||||||
Convertible unsecured note | $ | 4,000 | $ | 4,029 |
Bassian | |||
Current assets (includes cash acquired) | $ | 6,659 | |
Customer relationships | 11,984 | ||
Trademarks | 6,071 | ||
Goodwill | 11,247 | ||
Fixed assets | 1,159 | ||
Other assets | 10 | ||
Current liabilities | (1,060 | ) | |
Earn-out liability | (4,080 | ) | |
Total consideration | $ | 31,990 |
Useful Lives | March 29, 2019 | December 28, 2018 | ||||||||
Land | Indefinite | $ | 1,170 | $ | 1,170 | |||||
Buildings | 20 years | 1,292 | 1,292 | |||||||
Machinery and equipment | 5-10 years | 18,467 | 17,837 | |||||||
Computers, data processing and other equipment | 3-7 years | 11,962 | 11,244 | |||||||
Software | 3-7 years | 22,779 | 22,779 | |||||||
Leasehold improvements | 7-22 years | 60,580 | 60,565 | |||||||
Furniture and fixtures | 7 years | 3,277 | 3,268 | |||||||
Vehicles | 5-7 years | 3,227 | 2,769 | |||||||
Other | 7 years | 95 | 95 | |||||||
Construction-in-process | 19,887 | 15,757 | ||||||||
142,736 | 136,776 | |||||||||
Less: accumulated depreciation and amortization | (54,187 | ) | (51,500 | ) | ||||||
Equipment, leasehold improvements and software, net | $ | 88,549 | $ | 85,276 |
Carrying amount as of December 28, 2018 | $ | 184,280 | |
Acquisitions | 11,247 | ||
Foreign currency translation | 19 | ||
Carrying amount as of March 29, 2019 | $ | 195,546 |
March 29, 2019: | Gross Carrying Amount | Accumulated Amortization | Net Amount | ||||||||
Customer relationships | $ | 131,476 | $ | (38,334 | ) | $ | 93,142 | ||||
Non-compete agreements | 7,579 | (7,269 | ) | 310 | |||||||
Trademarks | 65,960 | (14,170 | ) | 51,790 | |||||||
Total | $ | 205,015 | $ | (59,773 | ) | $ | 145,242 |
December 28, 2018: | |||||||||||
Customer relationships | $ | 119,488 | $ | (36,185 | ) | $ | 83,303 | ||||
Non-compete agreements | 7,579 | (7,251 | ) | 328 | |||||||
Trademarks | 59,862 | (13,460 | ) | 46,402 | |||||||
Total | $ | 186,929 | $ | (56,896 | ) | $ | 130,033 |
2019 | $ | 10,394 | |
2020 | 12,230 | ||
2021 | 12,204 | ||
2022 | 11,340 | ||
2023 | 10,380 | ||
Thereafter | 88,694 | ||
Total | $ | 145,242 |
March 29, 2019 | December 28, 2018 | ||||||
Senior secured term loan | $ | 239,745 | $ | 239,745 | |||
Convertible unsecured note | 4,000 | — | |||||
Asset based loan facility | 44,185 | 44,185 | |||||
Finance leases and other financing obligations | 1,021 | 193 | |||||
Deferred finance fees and original issue discount | (5,472 | ) | (5,893 | ) | |||
Total debt obligations | 283,479 | 278,230 | |||||
Less: current installments | (1,804 | ) | (61 | ) | |||
Total debt obligations excluding current installments | $ | 281,675 | $ | 278,169 |
March 29, 2019 | |||
Operating lease cost | $ | 6,632 | |
Finance lease cost | |||
Amortization of right-of-use asset | 43 | ||
Interest expense on lease liabilities | 17 | ||
Total finance lease cost | $ | 60 | |
Short-term lease cost | 411 | ||
Variable lease cost | 651 | ||
Sublease income | (180 | ) | |
Total lease cost, net | $ | 7,574 |
Balance Sheet Location | March 29, 2019 | |||
Short-term finance lease liabilities | Current portion of long-term debt | $ | 179 | |
Long-term finance lease liabilities | Long-term debt, net of current portion | $ | 824 |
Operating Leases | Finance Leases | ||||||||||||||||||
Related Party Real Estate | Third Party Real Estate | Vehicles and Equipment | Total | Vehicles and Equipment | |||||||||||||||
2019 | $ | 388 | $ | 7,489 | $ | 10,048 | $ | 17,925 | $ | 181 | |||||||||
2020 | 365 | 11,172 | 11,621 | 23,158 | 242 | ||||||||||||||
2021 | — | 10,685 | 9,338 | 20,023 | 236 | ||||||||||||||
2022 | — | 10,657 | 7,293 | 17,950 | 227 | ||||||||||||||
2023 | — | 10,120 | 4,797 | 14,917 | 171 | ||||||||||||||
Thereafter | — | 84,439 | 2,354 | 86,793 | 151 | ||||||||||||||
Total | $ | 753 | $ | 134,562 | $ | 45,451 | $ | 180,766 | $ | 1,208 | |||||||||
Less interest | (53,127 | ) | (205 | ) | |||||||||||||||
Present value | $ | 127,639 | $ | 1,003 |
Operating Leases | Finance Leases | |||||||
2019 | $ | 24,666 | $ | 56 | ||||
2020 | 23,047 | 55 | ||||||
2021 | 19,918 | 50 | ||||||
2022 | 17,838 | 42 | ||||||
2023 | 14,876 | 4 | ||||||
Thereafter | 47,330 | — | ||||||
Total minimum lease payments | $ | 147,675 | 207 | |||||
Less interest | (49 | ) | ||||||
Present value of capital lease obligations | $ | 158 |
Shares | Weighted Average Grant Date Fair Value | ||||||
Unvested at December 28, 2018 | 526,730 | $ | 20.60 | ||||
Granted | — | — | |||||
Vested | (67,610 | ) | 19.99 | ||||
Forfeited | (23,680 | ) | 18.30 | ||||
Unvested at March 29, 2019 | 435,440 | $ | 20.81 |
Shares | Weighted Average Exercise Price | Aggregate Intrinsic Value | Weighted-Average Remaining Contractual Term (in years) | |||||||||
Outstanding December 28, 2018 | 191,808 | $ | 20.23 | $ | 2,129 | 7.2 | ||||||
Granted | — | — | ||||||||||
Exercised | (20,383 | ) | 20.23 | |||||||||
Canceled/Forfeited | — | — | ||||||||||
Outstanding and vested at March 29, 2019 | 171,425 | $ | 20.23 | $ | 1,855 | 6.9 | ||||||
Exercisable at March 29, 2019 | 171,425 | $ | 20.23 | $ | 1,855 | 6.9 |
Thirteen Weeks Ended | |||||||
March 29, 2019 | March 30, 2018 | ||||||
Supplemental cash flow disclosures: | |||||||
Cash paid for income taxes, net of cash received | $ | 964 | $ | (585 | ) | ||
Cash paid for interest | $ | 5,271 | $ | 4,035 | |||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||
Operating cash flows from operating expenses | $ | 5,890 | $ | — | |||
Operating cash flows from finance leases | $ | 17 | $ | — | |||
ROU assets obtained in exchange for lease liabilities: | |||||||
Operating leases | $ | 131,819 | $ | — | |||
Finance leases | $ | 854 | $ | — | |||
Other non cash investing and financing activities: | |||||||
Convertible notes issued for acquisitions | $ | 4,000 | $ | — | |||
Contingent earn-out liabilities for acquisitions | $ | 4,080 | $ | — |
• | sales and service territory expansion; |
• | operational excellence and high customer service levels; |
• | expanded purchasing programs and improved buying power; |
• | product innovation and new product category introduction; |
• | operational efficiencies through system enhancements; and |
• | operating expense reduction through the centralization of general and administrative functions. |
Thirteen Weeks Ended | ||||||
March 29, 2019 | March 30, 2018 | |||||
Net sales | 100.0 | % | 100.0 | % | ||
Cost of sales | 74.7 | % | 75.0 | % | ||
Gross profit | 25.3 | % | 25.0 | % | ||
Operating expenses | 23.5 | % | 23.2 | % | ||
Operating income | 1.8 | % | 1.8 | % | ||
Other expense | 1.3 | % | 1.6 | % | ||
Income before income tax expense | 0.5 | % | 0.2 | % | ||
Provision for income taxes | 0.1 | % | 0.1 | % | ||
Net income | 0.4 | % | 0.1 | % |
Total Number of Shares Repurchased(1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs | |||||||||
December 30, 2018 to January 25, 2019 | — | $ | — | — | — | |||||||
January 26, 2019 to February 22, 2019 | — | $ | — | — | — | |||||||
February 23, 2019 to March 29, 2019 | 24,002 | $ | 30.85 | — | — | |||||||
Total | 24,002 | $ | 30.85 | — | — |
(1) | During the thirteen weeks ended March 29, 2019, we withheld 24,002 shares to satisfy tax withholding requirements upon the vesting of restricted shares of our common stock awarded to our officers and key employees. |
Exhibit No. | Description | ||
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||
101.INS | XBRL Instance Document | ||
101.SCH | XBRL Taxonomy Extension Schema Document | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
THE CHEFS’ WAREHOUSE, INC. | |||
(Registrant) | |||
Date: May 1, 2019 | /s/ James Leddy | ||
James Leddy | |||
Chief Financial Officer | |||
(Principal Financial Officer) | |||
Date: May 1, 2019 | /s/ Timothy McCauley | ||
Timothy McCauley | |||
Chief Accounting Officer | |||
(Principal Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of The Chefs’ Warehouse, Inc.; |
2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and Rule 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: May 1, 2019 | /s/ Christopher Pappas | |
By: | Christopher Pappas | |
Chairman, President and Chief Executive Officer | ||
(Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of The Chefs’ Warehouse, Inc.; |
2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and Rule 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: May 1, 2019 | /s/ James Leddy | |
By: | James Leddy | |
Chief Financial Officer | ||
(Principal Financial Officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 1, 2019 | By: | /s/ Christopher Pappas |
Christopher Pappas | ||
Chairman, President and Chief Executive Officer | ||
(Principal Executive Officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 1, 2019 | By: | /s/ James Leddy |
James Leddy | ||
Chief Financial Officer | ||
(Principal Financial Officer) |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 29, 2019 |
Apr. 29, 2019 |
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Document And Entity Information [Abstract] | ||
Entity Registrant Name | Chefs' Warehouse, Inc. | |
Entity Central Index Key | 0001517175 | |
Document Type | 10-Q | |
Trading Symbol | CHEF | |
Document Period End Date | Mar. 29, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-28 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 29,937,683 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2019 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Mar. 29, 2019 |
Dec. 28, 2018 |
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Statement of Financial Position [Abstract] | ||
Allowance for accounts receivable | $ 7,461 | $ 7,460 |
Preferred Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred Stock, authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred Stock, issued (in shares) | 0 | 0 |
Preferred Stock, outstanding (in shares) | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Common Stock, issued (in shares) | 29,941,184 | 29,968,483 |
Common Stock, outstanding (in shares) | 29,941,184 | 29,968,483 |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 29, 2019 |
Mar. 30, 2018 |
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Income Statement [Abstract] | ||
Net sales | $ 357,027 | $ 318,615 |
Cost of sales | 266,838 | 239,093 |
Gross profit | 90,189 | 79,522 |
Operating expenses | 84,039 | 73,782 |
Operating income | 6,150 | 5,740 |
Interest expense | 4,551 | 4,979 |
Loss on asset disposal | 34 | 0 |
Income before income taxes | 1,565 | 761 |
Provision for income tax expense | 431 | 217 |
Net income | 1,134 | 544 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | 55 | (922) |
Comprehensive income (loss) | $ 1,189 | $ (378) |
Net income per share: | ||
Basic (in dollars per share) | $ 0.04 | $ 0.02 |
Diluted (in dollars per share) | $ 0.04 | $ 0.02 |
Weighted average common shares outstanding: | ||
Basic (in shares) | 29,457,257 | 28,122,723 |
Diluted (in shares) | 29,840,979 | 28,197,247 |
Operations and Basis of Presentation |
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Mar. 29, 2019 | |||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||
Operations and Basis of Presentation | Operations and Basis of Presentation Description of Business and Basis of Presentation The financial statements include the consolidated accounts of The Chefs’ Warehouse, Inc. (the “Company”), and its wholly-owned subsidiaries. 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. The Company operates in one reportable segment, foodservice distribution, which is concentrated primarily in the United States. The Company’s customer base consists primarily of menu-driven independent restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolatiers, cruise lines, casinos and specialty food stores. Consolidation The 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 consolidated financial statements and the related interim information contained within the notes to such unaudited 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 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 28, 2018 filed as part of the Company’s Annual Report on Form 10-K, as filed with the SEC on March 1, 2019. The unaudited 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 Annual Report on Form 10-K, as filed with the SEC on March 1, 2019, 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 weeks ended March 29, 2019 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 significant 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. Guidance Adopted in 2019 Leases: In February 2016, the Financial Accounting Standard Board (“FASB”) issued guidance (“ASC 842”) to increase the transparency and comparability among organizations by recognizing right-of-use assets (“ROU assets”) and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The Company adopted ASC 842 on December 29, 2018, using an optional transition method that allows entities to initially apply the new lease standard at the adoption date. Under this approach, comparative periods are not restated. The Company adopted a package of practical expedients that allowed the Company to:
The use of hindsight in assessing lease term resulted in a $2,027 cumulative effect adjustment to opening retained earnings. Adoption had a material impact on the Company’s consolidated balance sheet as a result of recognizing ROU assets and lease liabilities for its operating leases of $118,031 and $126,309, respectively, but it did not materially impact the Company’s consolidated statements of operations or debt covenants. There has been no significant change to the accounting of finance leases. Comprehensive Income: In February 2018, the FASB issued guidance that permits a Company to reclassify the stranded tax effects in accumulated other comprehensive income resulting from the enactment of H.R. 1, originally known as the Tax Cuts and Jobs Act (the “Tax Act”), to retained earnings. The Company elected to not reclassify such amounts to retained earnings. The Company releases disproportionate tax effects from accumulated other comprehensive income as individual items are liquidated. The Company adopted this guidance on December 29, 2018 and adoption did not have a material impact on the Company’s consolidated financial statements. Implementation Costs Incurred in a Cloud Computing Arrangement Service Contract: In August 2018, the FASB issued guidance that aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement service contract with the requirements for capitalizing implementation costs incurred to obtain or develop internal-use software. The Company adopted this guidance prospectively on December 29, 2018 and adoption did not have a material impact on the Company’s consolidated financial statements. Guidance Not Yet Adopted Measurement of Credit Losses on Financial Instruments: In June 2016 and as further amended in November 2018, the FASB issued guidance which requires entities to use a forward-looking expected loss model to estimate credit losses. It also requires additional disclosure related to credit quality of trade and other receivables, including information related to management’s estimate of credit allowances. The guidance is effective for fiscal years beginning after December 15, 2019. The Company expects to adopt this guidance when effective and adoption is not expected to have a material effect on the Company’s consolidated financial statements. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Revenue Recognition Revenues from product sales are recognized at the point at which control of each product is transferred to the customer. The Company’s contracts contain performance obligations which are satisfied when customers have physical possession of each product. The majority of customer orders are fulfilled within a day and customer payment terms are typically 20 to 60 days from delivery. Shipping and handling activities are costs to fulfill the Company’s performance obligations. These costs are expensed as incurred and presented within operating expenses on the consolidated statements of operations. The Company offers certain sales incentives to customers in the form of rebates or discounts. These sales incentives are accounted as variable consideration. The Company estimates these amounts based on the expected amount to be provided to customers and records a corresponding reduction in revenue. The Company does not expect a significant reversal in the amount of cumulative revenue recognized. Sales tax billed to customers is not included in revenue but rather recorded as a liability owed to the respective taxing authorities at the time the sale is recognized. 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. Deferred Revenue Certain customer arrangements in the Company’s direct-to-consumer business, prepaid gift plans and gift card purchases, result in deferred revenues when cash payments are received in advance of performance. The Company recognizes revenue on its prepaid gift plans when control of each product is transferred to the customer. Performance obligations under the Company’s prepaid gift plans are satisfied within a period of twelve months or less. Gift cards issued by the Company do not have expiration dates. The Company records a liability for unredeemed gift cards at the time gift cards are sold and the liability is reduced when the card is redeemed, the value of the card is escheated to the appropriate government agency, or through breakage. Gift card breakage is estimated based on the Company’s historical redemption experience and expected trends in redemption patterns. Amounts recognized through breakage represent the portion of the gift card liability that is not subject to unclaimed property laws and for which the likelihood of redemption is remote. The Company recorded deferred revenues, reflected as accrued liabilities on the Company’s consolidated balance sheets, of $1,362 and $1,496 as of March 29, 2019 and December 28, 2018, respectively. Right of Return The Company’s standard terms and conditions provide customers with a right of return if the goods received are not merchantable. Customers are either issued a replacement order at no cost, or are issued a credit for the returned goods. The Company recorded a refund liability of $288 as of March 29, 2019. Refund liabilities are reflected as accrued liabilities on the consolidated balance sheets. The Company recognized a corresponding asset of $181 as of March 29, 2019 for its right to recover products from customers on settling its refund liabilities. This asset is reflected as inventories, net on the consolidated balance sheets. Contract Costs Sales commissions are expensed when incurred because the amortization period is one year or less. These costs are presented within operating expenses on the Company’s consolidated statements of operations. Leases The Company leases various distribution centers, office facilities, vehicles and equipment. The Company determines if an arrangement contains a lease at contract inception. An arrangement is or contains a lease if the agreement identifies an asset, implicitly or explicitly, that the Company has the right to use over a period of time. If an arrangement contains a lease, the Company classifies the lease as either an operating lease or as a finance lease based on the five criteria defined in ASC 842. Lease liabilities are recognized at commencement date based on the present value of the remaining lease payments over the lease term. The corresponding ROU asset is recognized for the same amount as the lease liability adjusted for any payments made at or before the commencement date, any lease incentives received, and any initial direct costs. The Company’s lease agreements may include options to renew, extend or terminate the lease. These clauses are included in the initial measurement of the lease liability when at lease commencement the Company is reasonably certain that it will exercise such options. The discount rate used is based on the Company’s incremental borrowing rate since the implicit rate in the Company’s leases is not readily determinable. Operating lease expense is recognized on a straight-line basis over the lease term and presented within operating expenses on the Company’s consolidated statements of operations. Finance lease right-of-use assets are amortized on a straight-line basis over the shorter of the useful life of the asset or the lease term. Interest expense on the finance lease liability is recognized using the effective interest rate method and is presented within interest expense on the Company’s consolidated statements of operations. Variable rent payments related to both operating and finance leases are expensed as incurred. The Company’s variable lease payments primarily consists of real estate taxes, maintenance and usage charges. The Company made an accounting policy election to combine lease and non-lease components (maintenance, taxes and insurance) when measuring lease liabilities for vehicle and equipment leases. The Company has elected to exclude short-term leases from the recognition requirements of ASC 842. A lease is short-term if, at the commencement date, it has a term of less than or equal to one year. Lease expense related to short-term leases is recognized on a straight-line basis over the lease term. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share The following table sets forth the computation of basic and diluted net income per share:
Reconciliation of net income per common share:
The following table presents potentially dilutive securities that have been excluded from the calculation of diluted net income per common share because the effect is anti-dilutive:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | 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. Long-term earn-out liabilities were $5,960 and $2,792 as of March 29, 2019 and December 28, 2018, respectively, and are reflected as other liabilities and deferred credits on the consolidated balance sheets. The remaining short-term earn-out liabilities are reflected as accrued liabilities on the consolidated balance sheets. The fair value of contingent consideration was 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 in operating expenses on the consolidated statements of operations. The following table presents the changes in Level 3 contingent earn-out liabilities:
Fair Value of Financial Instruments The following table presents the carrying value and fair value of the Company’s convertible unsecured note. In estimating the fair value of the Note, the Company utilized Level 3 inputs including prevailing market interest rates to estimate the debt portion of the instrument and a Black Scholes valuation model to estimate the fair value of the conversion option. The Black Scholes model utilizes the market price of the Company’s common stock, estimates of the stock’s volatility and the prevailing risk-free interest rate in calculating the fair value estimate.
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Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions Bassian On February 25, 2019, pursuant to an asset purchase agreement, the Company acquired substantially all of the assets of Bassian Farms, Inc. and certain affiliated entities (“Bassian”), a specialty protein manufacturer and distributor based in northern California. The aggregate purchase price for the transaction at acquisition date was approximately $31,990 and is subject to a customary working capital true-up. The acquisition was funded with $27,990 in cash and the issuance of a $4,000 unsecured convertible note. The Company will also pay additional contingent consideration, if earned, in the form of an earn-out amount which could total $9,000 over a four year period. The payment of the earn-out liability is subject to the successful achievement of certain gross profit targets. At March 29, 2019 and February 25, 2019, the Company estimated the fair value of this contingent earn-out liability to be $4,080. The Company is in the process of finalizing a valuation of the earn-out liability, and tangible and intangible assets of Bassian as of the acquisition date. These assets will be valued at fair value using Level 3 inputs. Goodwill for the Bassian acquisition will be amortized over 15 years for tax purposes. The goodwill recorded primarily reflects the value of acquiring an established meat processor to grow the Company's protein business in the West Coast region, as well as any intangible assets that do not qualify for separate recognition. The Company recognized professional fees of $178 in operating expenses related to the Bassian acquisition. For the thirteen weeks ended March 29, 2019, the Company reflected net sales of $5,527 for Bassian in its consolidated statement of operations. The Company has determined that separate disclosure of Bassian earnings is impracticable due to the commencement of integration of the Bassian business into the Company's operations in the San Francisco market. The table below sets forth the purchase price allocation of the Bassian acquisition:
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Inventories |
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Mar. 29, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist primarily of finished product. Our different entities record inventories using a mixture of first-in, first-out and average cost, which we believe approximates first-in, first-out. Inventories are reflected net of adjustments for shrinkage, excess and obsolescence totaling $2,044 and $1,921 at March 29, 2019 and December 28, 2018, respectively. |
Equipment and Leasehold Improvements |
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Equipment, Leasehold Improvements and Software | Equipment, Leasehold Improvements and Software Equipment, leasehold improvements and software as of March 29, 2019 and December 28, 2018 consisted of the following:
Construction-in-process at March 29, 2019 and December 28, 2018 related primarily to the implementation of the Company’s ERP system and the buildout of the Company’s headquarters in Ridgefield, CT and distribution center in Dallas, TX. The buildout of the Company’s headquarters and distribution center is expected to be completed during fiscal 2019. The rollout of its ERP system will continue through fiscal 2020. The net book value of equipment financed under finance leases at March 29, 2019 and December 28, 2018 was $910 and $52, respectively. The Company recorded depreciation of $43 and $16 on these assets during the thirteen weeks ended March 29, 2019 and March 30, 2018, respectively. Depreciation expense, excluding finance leases, was $1,930 and $1,827 for the thirteen weeks ended March 29, 2019 and March 30, 2018, respectively. Amortization expense on software was $908 and $473 for the thirteen weeks ended March 29, 2019 and March 30, 2018, respectively. |
Goodwill and Other Intangible Assets |
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Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The changes in the carrying amount of goodwill are presented as follows:
Other intangible assets consist of customer relationships being amortized over a period ranging from four to twenty years, trademarks being amortized over a period of one to forty years, and non-compete agreements being amortized over a period of two to six years. Other intangible assets as of March 29, 2019 and December 28, 2018 consisted of the following:
Amortization expense for other intangibles was $2,877 and $2,903 for the thirteen weeks ended March 29, 2019 and March 30, 2018, respectively. Estimated amortization expense for other intangibles for the remainder of the fiscal year ending December 27, 2019 and each of the next four fiscal years and thereafter is as follows:
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Debt Obligations |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Obligations | Debt Obligations Debt obligations as of March 29, 2019 and December 28, 2018 consisted of the following:
Convertible Unsecured Note On February 25, 2019, the Company issued a $4,000 convertible unsecured note (the “Note”), maturing on June 29, 2023, to Bassian Farms, Inc. (the “Holder”) as partial consideration in the Bassian acquisition. The interest rate charged on the Note is 4.5% per annum and increases to 5.0% after the two-year anniversary of the closing date. The Company may, in certain instances beginning eighteen months after issuance of the Note, redeem the Note in whole or in part for cash or convert the Note into shares of the Company’s common stock at the conversion price of $43.93 per share. After the two-year anniversary of the closing date, the Holder may convert the Note into shares of the Company’s common stock at the conversion price. Upon a change of control event, the Holder may convert the Note into shares of the Company’s common stock at the conversion price or redeem the Note for cash. As of March 29, 2019, the Company was in compliance with all debt covenants and the Company had reserved $15,800 of the asset based loan facility (“ABL Facility”) for the issuance of letters of credit. As of March 29, 2019, funds totaling $90,015 were available for borrowing under the ABL Facility. The interest rates on the Company’s senior secured term loan and ABL Facility were 6.0% and 4.0%, respectively, at March 29, 2019. |
Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The components of net lease cost were as follows:
Supplemental balance sheet information related to finance leases was as follows:
The maturities of the Company’s operating and finance lease liabilities for the remainder of the fiscal year ending December 27, 2019 and each of the next four fiscal years and thereafter were as follows:
At March 29, 2019, the weighted-average lease term for operating and finance leases was 10.4 years and 5.3 years, respectively. At March 29, 2019, the weighted-average discount rate for operating and finance leases was 6.6% and 5.7%, respectively. As of March 29, 2019, the Company is contractually obligated to make payments of approximately $23,500, related to a lease for a distribution center and for several vehicle and equipment leases that have not commenced. Accordingly, the Company has not recognized ROU assets or lease liabilities associated with these leases. The Company’s future minimum lease payments as of December 28, 2018, in accordance with legacy lease accounting standards, under non-cancelable operating and finance lease agreements were as follows:
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Leases | Leases The components of net lease cost were as follows:
Supplemental balance sheet information related to finance leases was as follows:
The maturities of the Company’s operating and finance lease liabilities for the remainder of the fiscal year ending December 27, 2019 and each of the next four fiscal years and thereafter were as follows:
At March 29, 2019, the weighted-average lease term for operating and finance leases was 10.4 years and 5.3 years, respectively. At March 29, 2019, the weighted-average discount rate for operating and finance leases was 6.6% and 5.7%, respectively. As of March 29, 2019, the Company is contractually obligated to make payments of approximately $23,500, related to a lease for a distribution center and for several vehicle and equipment leases that have not commenced. Accordingly, the Company has not recognized ROU assets or lease liabilities associated with these leases. The Company’s future minimum lease payments as of December 28, 2018, in accordance with legacy lease accounting standards, under non-cancelable operating and finance lease agreements were as follows:
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Stockholders' Equity |
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Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity The following table reflects the activity of RSAs during the thirteen weeks ended March 29, 2019:
The Company recognized expense totaling $801 and $687 on its RSAs during the thirteen weeks ended March 29, 2019 and March 30, 2018, respectively. At March 29, 2019, the total unrecognized compensation cost for unvested RSAs was $3,993 and the weighted-average remaining useful life was approximately 1.8 years. Of this total, $2,059 related to RSAs with time-based vesting provisions and $1,934 related to RSAs with performance-based vesting provisions. At March 29, 2019, the weighted-average remaining useful lives for time-based vesting and performance-based vesting RSAs were approximately 1.9 years and 1.7 years, respectively. The following table summarizes stock option activity during the thirteen weeks ended March 29, 2019:
The Company recognized expense of $114 and $150 on stock options during the thirteen weeks ended March 29, 2019 and March 30, 2018, respectively. As of March 29, 2019, there were 266,937 shares available for grant under the Company’s 2011 Omnibus Equity Incentive Plan. No share-based compensation expense has been capitalized. |
Related Parties |
3 Months Ended |
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Mar. 29, 2019 | |
Related Party Transactions [Abstract] | |
Related Parties | Related Parties The Chefs’ Warehouse Mid-Atlantic, LLC, a subsidiary of the Company, leases a distribution facility that is 100% owned by entities controlled by Christopher Pappas, the Company’s chairman, president and chief executive officer, and John Pappas, the Company’s vice chairman and one of its directors, and are deemed to be affiliates of these individuals. Expense related to this facility totaled $108 and $133 during the thirteen weeks ended March 29, 2019 and March 30, 2018. This lease was amended during the first quarter of fiscal 2019 and expires on September 30, 2020. Christopher Pappas’s brother, John Pappas, is one of the Company’s employees and a member of the Company’s Board of Directors. The Company paid John Pappas approximately $436 and $427 in total compensation for the thirteen weeks ended March 29, 2019 and March 30, 2018, respectively. John Pappas did not receive any compensation during the thirteen weeks ended March 29, 2019 or March 30, 2018 for his service on the Company’s Board of Directors. |
Supplemental Disclosures of Cash Flow Information |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Disclosures of Cash Flow Information | Supplemental Disclosures of Cash Flow Information
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Operations and Basis of Presentation (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||
Fiscal Period | 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. |
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Consolidation | The 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. |
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Unaudited Interim Financial Statements | The accompanying unaudited consolidated financial statements and the related interim information contained within the notes to such unaudited 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 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 28, 2018 filed as part of the Company’s Annual Report on Form 10-K, as filed with the SEC on March 1, 2019. The unaudited 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 Annual Report on Form 10-K, as filed with the SEC on March 1, 2019, 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 weeks ended March 29, 2019 are not necessarily indicative of the results to be expected for the full year. |
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Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make significant 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. |
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Guidance Adopted in 2018 and Guidance Not Yet Adopted | Guidance Adopted in 2019 Leases: In February 2016, the Financial Accounting Standard Board (“FASB”) issued guidance (“ASC 842”) to increase the transparency and comparability among organizations by recognizing right-of-use assets (“ROU assets”) and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The Company adopted ASC 842 on December 29, 2018, using an optional transition method that allows entities to initially apply the new lease standard at the adoption date. Under this approach, comparative periods are not restated. The Company adopted a package of practical expedients that allowed the Company to:
The use of hindsight in assessing lease term resulted in a $2,027 cumulative effect adjustment to opening retained earnings. Adoption had a material impact on the Company’s consolidated balance sheet as a result of recognizing ROU assets and lease liabilities for its operating leases of $118,031 and $126,309, respectively, but it did not materially impact the Company’s consolidated statements of operations or debt covenants. There has been no significant change to the accounting of finance leases. Comprehensive Income: In February 2018, the FASB issued guidance that permits a Company to reclassify the stranded tax effects in accumulated other comprehensive income resulting from the enactment of H.R. 1, originally known as the Tax Cuts and Jobs Act (the “Tax Act”), to retained earnings. The Company elected to not reclassify such amounts to retained earnings. The Company releases disproportionate tax effects from accumulated other comprehensive income as individual items are liquidated. The Company adopted this guidance on December 29, 2018 and adoption did not have a material impact on the Company’s consolidated financial statements. Implementation Costs Incurred in a Cloud Computing Arrangement Service Contract: In August 2018, the FASB issued guidance that aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement service contract with the requirements for capitalizing implementation costs incurred to obtain or develop internal-use software. The Company adopted this guidance prospectively on December 29, 2018 and adoption did not have a material impact on the Company’s consolidated financial statements. Guidance Not Yet Adopted Measurement of Credit Losses on Financial Instruments: In June 2016 and as further amended in November 2018, the FASB issued guidance which requires entities to use a forward-looking expected loss model to estimate credit losses. It also requires additional disclosure related to credit quality of trade and other receivables, including information related to management’s estimate of credit allowances. The guidance is effective for fiscal years beginning after December 15, 2019. The Company expects to adopt this guidance when effective and adoption is not expected to have a material effect on the Company’s consolidated financial statements. |
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Revenue Recognition, Deferred Revenue, Right of Return | The Company’s standard terms and conditions provide customers with a right of return if the goods received are not merchantable. Customers are either issued a replacement order at no cost, or are issued a credit for the returned goods. Revenues from product sales are recognized at the point at which control of each product is transferred to the customer. The Company’s contracts contain performance obligations which are satisfied when customers have physical possession of each product. The majority of customer orders are fulfilled within a day and customer payment terms are typically 20 to 60 days from delivery. Shipping and handling activities are costs to fulfill the Company’s performance obligations. These costs are expensed as incurred and presented within operating expenses on the consolidated statements of operations. The Company offers certain sales incentives to customers in the form of rebates or discounts. These sales incentives are accounted as variable consideration. The Company estimates these amounts based on the expected amount to be provided to customers and records a corresponding reduction in revenue. The Company does not expect a significant reversal in the amount of cumulative revenue recognized. Sales tax billed to customers is not included in revenue but rather recorded as a liability owed to the respective taxing authorities at the time the sale is recognized. 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. Deferred Revenue Certain customer arrangements in the Company’s direct-to-consumer business, prepaid gift plans and gift card purchases, result in deferred revenues when cash payments are received in advance of performance. The Company recognizes revenue on its prepaid gift plans when control of each product is transferred to the customer. Performance obligations under the Company’s prepaid gift plans are satisfied within a period of twelve months or less. Gift cards issued by the Company do not have expiration dates. The Company records a liability for unredeemed gift cards at the time gift cards are sold and the liability is reduced when the card is redeemed, the value of the card is escheated to the appropriate government agency, or through breakage. Gift card breakage is estimated based on the Company’s historical redemption experience and expected trends in redemption patterns. Amounts recognized through breakage represent the portion of the gift card liability that is not subject to unclaimed property laws and for which the likelihood of redemption is remote. |
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Contract Costs | Sales commissions are expensed when incurred because the amortization period is one year or less. These costs are presented within operating expenses on the Company’s consolidated statements of operations. |
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Leases | The Company leases various distribution centers, office facilities, vehicles and equipment. The Company determines if an arrangement contains a lease at contract inception. An arrangement is or contains a lease if the agreement identifies an asset, implicitly or explicitly, that the Company has the right to use over a period of time. If an arrangement contains a lease, the Company classifies the lease as either an operating lease or as a finance lease based on the five criteria defined in ASC 842. Lease liabilities are recognized at commencement date based on the present value of the remaining lease payments over the lease term. The corresponding ROU asset is recognized for the same amount as the lease liability adjusted for any payments made at or before the commencement date, any lease incentives received, and any initial direct costs. The Company’s lease agreements may include options to renew, extend or terminate the lease. These clauses are included in the initial measurement of the lease liability when at lease commencement the Company is reasonably certain that it will exercise such options. The discount rate used is based on the Company’s incremental borrowing rate since the implicit rate in the Company’s leases is not readily determinable. Operating lease expense is recognized on a straight-line basis over the lease term and presented within operating expenses on the Company’s consolidated statements of operations. Finance lease right-of-use assets are amortized on a straight-line basis over the shorter of the useful life of the asset or the lease term. Interest expense on the finance lease liability is recognized using the effective interest rate method and is presented within interest expense on the Company’s consolidated statements of operations. Variable rent payments related to both operating and finance leases are expensed as incurred. The Company’s variable lease payments primarily consists of real estate taxes, maintenance and usage charges. The Company made an accounting policy election to combine lease and non-lease components (maintenance, taxes and insurance) when measuring lease liabilities for vehicle and equipment leases. The Company has elected to exclude short-term leases from the recognition requirements of ASC 842. A lease is short-term if, at the commencement date, it has a term of less than or equal to one year. Lease expense related to short-term leases is recognized on a straight-line basis over the lease term. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregation of Revenue | The following table presents the Company’s net sales disaggregated by principal product category:
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of computation of basic and diluted net (loss) income per share | The following table sets forth the computation of basic and diluted net income per share:
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Schedule of reconciliation of earnings per share | Reconciliation of net income per common share:
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Schedule of anti-dilutive securities excluded from diluted net income (loss) per common share | The following table presents potentially dilutive securities that have been excluded from the calculation of diluted net income per common share because the effect is anti-dilutive:
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in Level 3 contingent consideration liability | The following table presents the changes in Level 3 contingent earn-out liabilities:
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Schedule of carrying value and fair value of the company's convertible subordinated notes | The following table presents the carrying value and fair value of the Company’s convertible unsecured note. In estimating the fair value of the Note, the Company utilized Level 3 inputs including prevailing market interest rates to estimate the debt portion of the instrument and a Black Scholes valuation model to estimate the fair value of the conversion option. The Black Scholes model utilizes the market price of the Company’s common stock, estimates of the stock’s volatility and the prevailing risk-free interest rate in calculating the fair value estimate.
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Acquisitions (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets acquired and liabilities assumed | The table below sets forth the purchase price allocation of the Bassian acquisition:
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Equipment, Leasehold Improvements and Software (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of equipment, leasehold improvements and software | Equipment, leasehold improvements and software as of March 29, 2019 and December 28, 2018 consisted of the following:
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Goodwill and Other Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in the carrying amount of goodwill | The changes in the carrying amount of goodwill are presented as follows:
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other intangible assets | Other intangible assets as of March 29, 2019 and December 28, 2018 consisted of the following:
|
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Schedule of estimated future amortization expense | Estimated amortization expense for other intangibles for the remainder of the fiscal year ending December 27, 2019 and each of the next four fiscal years and thereafter is as follows:
|
Debt Obligations (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt obligations | Debt obligations as of March 29, 2019 and December 28, 2018 consisted of the following:
|
Leases (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Lease Expense | The components of net lease cost were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Balance Sheet Information | Supplemental balance sheet information related to finance leases was as follows:
|
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Maturities of Lease Liabilities, Operating Leases | The maturities of the Company’s operating and finance lease liabilities for the remainder of the fiscal year ending December 27, 2019 and each of the next four fiscal years and thereafter were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maturities of Lease Liabilities, Finance Leases | The maturities of the Company’s operating and finance lease liabilities for the remainder of the fiscal year ending December 27, 2019 and each of the next four fiscal years and thereafter were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Minimum Lease Payments, Operating Leases | The Company’s future minimum lease payments as of December 28, 2018, in accordance with legacy lease accounting standards, under non-cancelable operating and finance lease agreements were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Minimum Lease Payments, Capital Leases | The Company’s future minimum lease payments as of December 28, 2018, in accordance with legacy lease accounting standards, under non-cancelable operating and finance lease agreements were as follows:
|
Stockholders' Equity (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 29, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of restricted stock awards activity | The following table reflects the activity of RSAs during the thirteen weeks ended March 29, 2019:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock option activity | The following table summarizes stock option activity during the thirteen weeks ended March 29, 2019:
|
Supplemental Disclosures of Cash Flow Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of supplemental disclosures of cash flow information |
|
Operations and Basis of Presentation - Narrative (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 29, 2019
USD ($)
segment
|
Jan. 01, 2019
USD ($)
|
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of reportable segments | segment | 1 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect adjustment due to adoption of new accounting standard | $ (2,027) | |
Operating lease, ROU assets | $ 118,792 | |
Lease liabilities | $ 127,639 | |
Accounting Standards Update 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect adjustment due to adoption of new accounting standard | (2,027) | |
Operating lease, ROU assets | 118,031 | |
Lease liabilities | $ 126,309 |
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 29, 2019 |
Dec. 28, 2018 |
|
Disaggregation of Revenue [Line Items] | ||
Deferred revenues | $ 1,362 | $ 1,496 |
Refund liability | 288 | |
Right to recover product | $ 181 | |
Maximum amortization period, capitalized contract costs | 1 year | |
Minimum | ||
Disaggregation of Revenue [Line Items] | ||
Payment term for contracts with customers | 20 days | |
Maximum | ||
Disaggregation of Revenue [Line Items] | ||
Payment term for contracts with customers | 60 days |
Earnings Per Share - Computation of Basic and Diluted Net Income Per Share (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 29, 2019 |
Mar. 30, 2018 |
|
Net income per share: | ||
Basic (in dollars per share) | $ 0.04 | $ 0.02 |
Diluted (in dollars per share) | $ 0.04 | $ 0.02 |
Weighted average common shares: | ||
Basic (in shares) | 29,457,257 | 28,122,723 |
Diluted (in shares) | 29,840,979 | 28,197,247 |
Earnings Per Share - Reconciliation of Net Income Per Common Share (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 29, 2019 |
Mar. 30, 2018 |
|
Numerator: | ||
Net income | $ 1,134 | $ 544 |
Denominator: | ||
Weighted average basic common shares outstanding (in shares) | 29,457,257 | 28,122,723 |
Dilutive effect of unvested common shares (in shares) | 383,722 | 74,524 |
Weighted average diluted common shares outstanding (in shares) | 29,840,979 | 28,197,247 |
Earnings Per Share - Potentially Dilutive Securities (Details) - shares |
3 Months Ended | |
---|---|---|
Mar. 29, 2019 |
Mar. 30, 2018 |
|
Restricted share awards (RSAs) | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities excluded from computation of earnings per share (in shares) | 0 | 81,218 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities excluded from computation of earnings per share (in shares) | 0 | 191,808 |
Convertible notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities excluded from computation of earnings per share (in shares) | 91,053 | 1,237,374 |
Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands |
Mar. 29, 2019 |
Dec. 28, 2018 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Liability fair value | $ 5,960 | $ 2,792 |
Fair Value Measurements - Summary of the Carrying Value and Fair Value of Convertible Subordinated Notes (Details) - Level 3 $ in Thousands |
Mar. 29, 2019
USD ($)
|
---|---|
Carrying Value | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Convertible unsecured note | $ 4,000 |
Fair Value | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Convertible unsecured note | $ 4,029 |
Acquisitions - Narrative (Details) - Bassian - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Feb. 25, 2019 |
Mar. 29, 2019 |
|
Business Acquisition [Line Items] | ||
Aggregate purchase price | $ 31,990 | |
Cash amount paid to former owners | 27,990 | |
Issuance of common shares | 4,000 | |
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High | $ 9,000 | |
Business Combination, Contingent Consideration, Liability, Term | 4 years | |
Business Combination, Contingent Consideration, Liability | $ 4,080 | |
Goodwill amortization period for income tax purposes | 15 years | |
Business Combination, Acquisition Related Costs | $ 178 | |
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual | $ 5,527 |
Acquisitions - Summary of Cash Price for Acquisition (Details) - USD ($) $ in Thousands |
Mar. 29, 2019 |
Feb. 25, 2019 |
Dec. 28, 2018 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 195,546 | $ 184,280 | |
Bassian | |||
Business Acquisition [Line Items] | |||
Current assets (includes cash acquired) | $ 6,659 | ||
Goodwill | 11,247 | ||
Fixed assets | 1,159 | ||
Other assets | 10 | ||
Current liabilities | (1,060) | ||
Earn-out liability | (4,080) | ||
Total consideration | 31,990 | ||
Bassian | Customer relationships | |||
Business Acquisition [Line Items] | |||
Finite-lived intangible assets | 11,984 | ||
Bassian | Trademarks | |||
Business Acquisition [Line Items] | |||
Finite-lived intangible assets | $ 6,071 |
Inventories - Narrative (Details) - USD ($) $ in Thousands |
Mar. 29, 2019 |
Dec. 28, 2018 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Reserves for shrinkage and obsolescence | $ 2,044 | $ 1,921 |
Equipment, Leasehold Improvements and Software - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 29, 2019 |
Mar. 30, 2018 |
Dec. 28, 2018 |
|
Property, Plant and Equipment [Line Items] | |||
Equipment and vehicles financed by leases | $ 88,549 | $ 85,276 | |
Assets held under finance leases | |||
Property, Plant and Equipment [Line Items] | |||
Equipment and vehicles financed by leases | 910 | ||
Depreciation | 43 | ||
Assets held under capital leases | |||
Property, Plant and Equipment [Line Items] | |||
Assets financed by capital lease | $ 52 | ||
Depreciation | $ 16 | ||
Excluding assets held under finance leases | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation | 1,930 | ||
Excluding assets held under capital leases | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation | 1,827 | ||
Software | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation | $ 908 | $ 473 |
Goodwill and Other Intangible Assets - Schedule of Changes in the Carrying Amount of Goodwill (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 29, 2019
USD ($)
| |
Goodwill [Roll Forward] | |
Carrying amount as of December 29, 2018 | $ 184,280 |
Acquisitions | 11,247 |
Foreign currency translation | 19 |
Carrying amount as of March 29, 2019 | $ 195,546 |
Goodwill and Other Intangible Assets - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 29, 2019 |
Mar. 30, 2018 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | $ 2,877 | $ 2,903 |
Customer relationships | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful life | 4 years | |
Customer relationships | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful life | 20 years | |
Trademarks | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful life | 1 year | |
Trademarks | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful life | 40 years | |
Non-compete agreements | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful life | 2 years | |
Non-compete agreements | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful life | 6 years |
Goodwill and Other Intangible Assets - Summary of Other Intangible Assets (Details) - USD ($) $ in Thousands |
Mar. 29, 2019 |
Dec. 28, 2018 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 205,015 | $ 186,929 |
Accumulated Amortization | (59,773) | (56,896) |
Net Amount | 145,242 | 130,033 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 131,476 | 119,488 |
Accumulated Amortization | (38,334) | (36,185) |
Net Amount | 93,142 | 83,303 |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 7,579 | 7,579 |
Accumulated Amortization | (7,269) | (7,251) |
Net Amount | 310 | 328 |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 65,960 | 59,862 |
Accumulated Amortization | (14,170) | (13,460) |
Net Amount | $ 51,790 | $ 46,402 |
Goodwill and Other Intangible Assets - Estimated Amortization Expense for Other Intangibles (Details) $ in Thousands |
Mar. 29, 2019
USD ($)
|
---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
2019 | $ 10,394 |
2020 | 12,230 |
2021 | 12,204 |
2022 | 11,340 |
2023 | 10,380 |
Thereafter | 88,694 |
Total | $ 145,242 |
Debt Obligations - Summary of Debt Obligations (Details) - USD ($) $ in Thousands |
Mar. 29, 2019 |
Dec. 28, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Finance leases and other financing obligations | $ 1,021 | $ 193 |
Deferred finance fees and original issue discount | (5,472) | (5,893) |
Total debt obligations | 283,479 | 278,230 |
Less: current installments | (1,804) | (61) |
Total debt obligations excluding current installments | 281,675 | 278,169 |
Senior secured term loan | ||
Debt Instrument [Line Items] | ||
Long-term debt | 239,745 | 239,745 |
Convertible unsecured note | ||
Debt Instrument [Line Items] | ||
Long-term debt | 4,000 | 0 |
Asset based loan facility | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 44,185 | $ 44,185 |
Debt Obligations - Convertible Unsecured Notes (Details) - USD ($) |
Feb. 25, 2019 |
Mar. 29, 2019 |
---|---|---|
Convertible Unsecured Note maturing on June 29, 2023 | Convertible Note | ||
Debt Instrument [Line Items] | ||
Maximum aggregate amount | $ 4,000,000 | |
Interest rate | 4.50% | |
Interest rate, after two-year anniversary | 5.00% | |
Debt conversion price (in usd per share) | $ 43.93 | |
Debt conversion term | 2 years | |
ABL Facility | Credit Facility | ||
Debt Instrument [Line Items] | ||
Amounts reserved for issuance of letters of credit | $ 15,800,000 | |
Line of credit facility, current borrowing capacity | $ 90,015,000 | |
Effective interest rate | 4.00% | |
Senior Secured Term Loan | Credit Facility | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 6.00% |
Leases - Components of Lease Expense (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 29, 2019
USD ($)
| |
Leases [Abstract] | |
Operating lease cost | $ 6,632 |
Finance lease cost | |
Amortization of right-of-use asset | 43 |
Interest expense on lease liabilities | 17 |
Total finance lease cost | 60 |
Short-term lease cost | 411 |
Variable lease cost | 651 |
Sublease income | (180) |
Total lease cost, net | $ 7,574 |
Leases - Supplemental Balance Sheet Information Related to Leases (Details) $ in Thousands |
Mar. 29, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
Short-term finance lease liabilities | $ 179 |
Long-term finance lease liabilities | $ 824 |
Leases - Additional Information (Details) $ in Thousands |
Mar. 29, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
Operating leases, weighted-average lease term | 10 years 4 months 19 days |
Finace leases, weighted-average lease term | 5 years 3 months 25 days |
Operating leases, weighted-average discount rate | 6.60% |
Finance leases, weighted-average discount rate | 5.70% |
Lease not yet commenced, contractually obligated payments | $ 23,500 |
Stockholders' Equity - Schedule of Restricted Stock Awards (Details) - Restricted Stock |
3 Months Ended |
---|---|
Mar. 29, 2019
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Unvested at December 29, 2018 (in shares) | shares | 526,730 |
Granted (in shares) | shares | 0 |
Vested (in shares) | shares | (67,610) |
Forfeited (in shares) | shares | (23,680) |
Unvested at March 31, 2019 (in shares) | shares | 435,440 |
Weighted Average Grant Date Fair Value | |
Unvested at December 29, 2018 (in usd per shares) | $ / shares | $ 20.60 |
Granted (in usd per share) | $ / shares | 0.00 |
Vested (in usd per share) | $ / shares | 19.99 |
Forfeited (in usd per share) | $ / shares | 18.30 |
Unvested at March 31, 2019 (in usd per shares) | $ / shares | $ 20.81 |
Related Parties - Narrative (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 29, 2019 |
Mar. 30, 2018 |
|
Related Party Transaction [Line Items] | ||
Ownership interest in facilities owned by entities controlled by company's stockholders | 100.00% | |
Expenses related to transactions with related parties | $ 108,000 | $ 133,000 |
Vice President | ||
Related Party Transaction [Line Items] | ||
Compensation to related parties | 436,000 | 427,000 |
Board of Directors Chairman | John Pappas | ||
Related Party Transaction [Line Items] | ||
Compensation to related parties | $ 0 | $ 0 |
Supplemental Disclosures of Cash Flow Information - Summary of Supplemental Cash Flow Disclosures (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 29, 2019 |
Mar. 30, 2018 |
|
Supplemental cash flow disclosures: | ||
Cash paid for income taxes, net of cash received | $ 964 | $ (585) |
Cash paid for interest | 5,271 | 4,035 |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating expenses | 5,890 | |
Operating cash flows from finance leases | 17 | |
ROU assets obtained in exchange for lease liabilities: | ||
Operating leases | 131,819 | |
Finance leases | 854 | |
Other non cash investing and financing activities: | ||
Convertible notes issued for acquisitions | 4,000 | 0 |
Contingent earn-out liabilities for acquisitions | $ 4,080 | $ 0 |
Label | Element | Value |
---|---|---|
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (2,027,000) |
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