The Chefs’ Warehouse, Inc. CHEF reported third-quarter 2026 results, with both earnings and sales surpassing the Zacks Consensus Estimate and increasing from the year-ago quarter.
Adjusted earnings of 66 cents per share beat the consensus estimate of 59 cents and rose 32% year over year. Net sales increased 11.2% to $1,135.4 million, exceeding the consensus estimate of $1,127 million. Results benefited from strong organic sales growth, higher volumes and improved gross margins. Organic sales advanced year over year, supported by increased specialty product placements and center-of-the-plate volumes.
The Chefs' Warehouse, Inc. Price, Consensus and EPS Surprise
The Chefs' Warehouse, Inc. price-consensus-eps-surprise-chart | The Chefs' Warehouse, Inc. Quote
CHEF's Quarterly Performance: Key Insights
Organic sales increased $105.4 million, or 10.3%, from the prior-year quarter. Acquisitions contributed $8.7 million, representing additional growth of 0.9%. Net inflation was 4.1%, comprising 2.6% in specialty products and 6.6% in center-of-the-plate products.
Organic specialty sales grew 8.4% year over year, supported by higher product penetration and customer activity. Specialty case volumes increased 6.1%, while unique product placements advanced 7.2%. Unique customers rose 4.4%, reflecting continued expansion across the customer base.
Organic pounds sold in the center-of-the-plate category increased approximately 6.6% year over year. Management attributed the sustained growth to market-share gains, expansion into new territories and product categories, and effective regional execution.
The Middle East operations continued to operate amid regional challenges. Recent revenues were approximately 100% of prior-year levels, supported by returning expatriates and local food-away-from-home demand. Excluding the estimated impact of the Middle East conflict, unique customer growth was approximately 5.7%.
Chefs' Warehouse Benefits From Higher Gross Margins
Gross profit advanced 15% year over year to $284.3 million from $247.2 million, benefiting from higher sales volumes, price inflation and acquisitions. Gross margin expanded approximately 84 basis points to 25%.
The specialty-category gross margin improved 63 basis points, while the center-of-the-plate category registered a 137-basis-point increase. Management highlighted favorable product mix, improved procurement efficiency and effective pricing as key contributors.
The company also benefited from its growing distribution scale and digital investments. Management noted that technology-driven pricing tools, increased sales of higher-margin products and greater purchasing efficiencies supported profitability across its operating businesses.
CHEF's Operating Costs & Profitability
Selling, general and administrative expenses increased 12.1% year over year to $233.4 million from $208.1 million. Higher compensation and benefits, facilities and distribution expenses, fuel costs and depreciation associated with facility and fleet investments contributed to the increase.
SG&A expenses represented 20.6% of net sales compared with 20.4% in the prior-year quarter. Adjusted operating expenses increased 11% and accounted for 17.8% of sales. Management indicated that elevated fuel costs affected operating expense leverage, although much of the increase was recovered through pricing.
Operating income climbed to $51.5 million from $38.9 million a year ago, reflecting higher gross profit, partially offset by increased operating expenses.
Adjusted EBITDA increased 26.3% year over year to $82.2 million from $65.1 million. Net income rose to $29.6 million or 67 cents per share compared with $19.1 million or 44 cents per share in the year-ago quarter.
Chefs' Warehouse's Financial Snapshot
CHEF ended the third quarter with cash and cash equivalents of $164.7 million, long-term debt excluding the current portion of $696.8 million and stockholders' equity of $686.6 million. Total liquidity stood at $348.1 million, including $183.4 million available under its asset-based lending facility.
For the first nine months of 2026, net cash provided by operating activities reached $141.1 million compared with $55.4 million a year earlier. Capital expenditures totaled $25.4 million, resulting in free cash flow of $115.7 million.
The company closed a new $675-million term loan on Oct. 15, 2026, to refinance existing obligations, including its 2028 convertible notes and 2029 term loan. Net debt leverage stood at 1.4 times at the third-quarter end.
CHEF Raises 2026 Financial Guidance
Management raised its full-year 2026 outlook, supported by sustained organic growth and improving profitability. Net sales are now projected between $4.56 billion and $4.61 billion, up from the previous range of $4.5-$4.6 billion.
Gross profit is expected between $1.13 billion and $1.14 billion compared with the earlier projection of $1.102-$1.125 billion. Adjusted EBITDA guidance increased to $317-$321 million from $305-$315 million.
Management expects fourth-quarter interest expenses between $15.5 million and $17.5 million, including approximately $2.7 million in one-time refinancing costs. The company anticipates year-end net debt of $550-$600 million, with net debt leverage between 1.7 and 2 times.
CHEF Stock Past Six-Month Performance
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Shares of this Zacks Rank #2 (Buy) company have risen 38.4% over the past six months compared with the industry’s 1.1% growth.
Other Stocks to Consider
Lamb Weston Holdings, Inc. LW is a leading global manufacturer, marketer and distributor of value-added frozen potato products, particularly French fries. At present, Lamb Weston sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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The Zacks Consensus Estimate for The J. M. Smucker’s current fiscal-year sales and earnings implies a 1.4% decline and 17.1% growth, respectively, from the year-ago figures.
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