The Chefs' Warehouse Inc.

02/24/2026 | Press release | Distributed by Public on 02/24/2026 10:47

Annual Report for Fiscal Year Ending December 26, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with information included in Item 8 of this report. Unless otherwise indicated, the terms "Company", "Chefs' Warehouse", "we", "us", and "our" refer to The Chefs' Warehouse, Inc. and its subsidiaries. All dollar amounts included in the tables in the following discussion are presented in thousands.
Overview and Recent Developments
Overview
We are a premier distributor of specialty foods in the leading culinary markets in the United States, the Middle East and Canada. We offer more than 90,000 stock-keeping units ("SKUs"), ranging from high-quality specialty foods and ingredients to basic ingredients and staples, produce and center-of-the-plate proteins, such as beef, seafood and poultry. We serve more than 55,000 Core Customer locations, primarily located in our twenty-three geographic markets across the United States, the Middle East and Canada, and the majority of our customers are independent restaurants and fine dining establishments. Our Allen Brothers subsidiary sells certain of our center-of-the-plate products directly to consumers.
We believe several key differentiating factors of our business model have enabled us to execute our strategy consistently and profitably across our expanding customer base. These factors consist of a portfolio of distinctive and hard-to-find specialty food products, an extensive selection of center-of-the-plate proteins, a highly trained and motivated sales force, strong sourcing capabilities, a fully integrated warehouse management system, a highly sophisticated distribution and logistics platform and a focused, seasoned management team.
In recent years, our sales to existing and new customers have increased through the continued growth in demand for specialty food and center-of-the-plate products in general; increased market share driven by our large percentage of sophisticated and experienced sales professionals, our high-quality customer service and our extensive breadth and depth of product offerings, including, as a result of our acquisitions; the expansion of our existing distribution centers; our entry into new distribution centers, including the construction of new distribution centers that serve our markets in Las Vegas, Oman, Denver, Portland, San Francisco, United Arab Emirates, Philadelphia and Miami; and the import and sale of our proprietary brands. Through these efforts, we believe that we have been able to expand our customer base, enhance and diversify our product selections, broaden our geographic penetration and increase our market share.
Recent Acquisition
On October 1, 2025, we entered into an asset purchase agreement to acquire substantially all of the assets of Italco Food Products ("Italco"), a specialty food distributor based in Denver, Colorado. The purchase price was $16.5 million and is subject to customary working capital true-ups. The assets acquired consist primarily of inventory, accounts receivable and goodwill and other intangibles and are not material to our consolidated financial statements.
Our Growth Strategies and Outlook
We continue to invest in our people, facilities and technology in an effort to achieve the following objectives and maintain our premier position within the specialty foodservice distribution market:
•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 consolidation of truck routes and facilities; and
•operating expense reduction through the centralization of general and administrative functions.
Our growth has allowed us to improve upon our organization's infrastructure, open new distribution facilities and pursue selective acquisitions. Over the last several years, we have increased our distribution capacity to approximately 3.1 million square feet in 44 distribution facilities as of December 26, 2025. Over the period from fiscal 2023 through fiscal 2025, we have invested significantly in acquisitions, infrastructure and management.
Key Factors Affecting Our Performance
Due to our focus on menu-driven independent restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolateries, cruise lines, casinos and specialty food stores, our results of operations are materially impacted by the success of the food-away-from-home industry in the United States, Middle East and Canada, which is materially impacted by general economic conditions, weather, discretionary spending levels and consumer confidence. When economic conditions deteriorate, our customers' businesses are negatively impacted as fewer people eat away-from-home and those who do spend less money. As economic conditions improve, our customers' businesses historically have likewise improved, which contributes to improvements in our business. Similarly, the direct-to-consumer business of our Allen Brothers subsidiary is significantly dependent on consumers' discretionary spending habits, and weakness or uncertainty in the economy could lead to consumers buying less from Allen Brothers.
Volatile food costs may have a direct impact upon our profitability. Prolonged periods of product cost inflation may have a negative impact on our profit margins and results of operations to the extent we are unable to pass on all or a portion of such product cost increases to our customers. In addition, product cost inflation may negatively impact consumer discretionary spending decisions within our customers' establishments, which could adversely impact our sales. Conversely, our profit levels may be negatively impacted during periods of product cost deflation even though our gross profit as a percentage of sales may remain relatively constant. However, some of our products, particularly certain of our center-of-the-plate protein items, are priced on a "cost plus" markup, which helps mitigate the negative impact of deflation.
Given our wide selection of product categories, as well as the continuous introduction of new products, we can experience shifts in product sales mix that have an impact on net sales and gross profit margins. This mix shift is most significantly impacted by the introduction of new product categories in markets that we have more recently entered, the shift in product mix resulting from acquisitions, as well as the continued growth in item penetration on higher velocity items such as dairy products.
The foodservice distribution industry is fragmented but consolidating, and we have supplemented our internal growth through selective strategic acquisitions. We believe that the consolidation trends in the foodservice distribution industry will continue to present acquisition opportunities for us, which may allow us to grow our business at a faster pace than we would otherwise be able to grow the business organically.
Performance Indicators
In assessing the performance of our business, our management team considers a variety of performance and financial measures. The key measures used by our management are discussed below.
•Net sales growth.Our net sales growth is driven principally by changes in volume and, to a lesser degree, changes in price related to the impact of inflation in commodity prices and product mix. In particular, product cost inflation and deflation impacts our results of operations and, depending on the amount of inflation or deflation, such impact may be material. For example, inflation may increase the dollar value of our sales, and deflation may cause the dollar value of our sales to fall despite our unit sales remaining constant or growing.
•Gross profit and gross profit margin.Our gross profit and gross profit as a percentage of net sales, or gross profit margin, are driven principally by changes in volume and fluctuations in food and commodity prices and our ability to pass on any price increases to our customers in an inflationary environment and maintain or increase gross profit margin when our costs decline.
Inflation.The majority of our pricing is set at the time of order and we typically pass cost increases or decreases to our customers. Our ability to fully pass along cost changes and the timing of those changes can cause fluctuations in our gross profit margin. Also, some of our pricing to customers is based on a cost-plus methodology, which impacts gross profit in periods of cost inflation or deflation.
Product Mix.Our gross profit margin is also a function of the product mix of our net sales in any period. Given our wide selection of product categories, as well as the continuous introduction of new products, we can experience shifts in product sales mix that have an impact on net sales and gross profit margins. Product mix is most significantly impacted by the introduction of new product categories in markets that we have more recently entered and from acquisitions, as well as the continued growth in item penetration on higher velocity items such as dairy products.
•Volume Measurements.In assessing our results, we utilize both total and organic growth, which excludes growth from an acquired business until it has been reflected in our results of operations for at least 12 months. We use case count as the volume measurement in our specialty product category and pounds sold as the volume measurement in our center-of-the-plate category.
Case count. Case count represents the volume of specialty products sold to customers during a given time period. Case growth is calculated by dividing the change in case volumes sold by the number of cases sold in the prior period. We define a case as the lowest level of packaged products as received from our suppliers, with one case containing several individually packaged units of the same product. Where individual packaged units are sold separately, case volume is calculated using the case equivalent quantity sold.
Pounds sold. Pounds represent the volume of center-of-the-plate products sold to customers during a given time period. Pounds growth is calculated by dividing the change in pound volumes sold by the number of pounds sold in the prior period.
•Other Performance Indicators.While case count is used for the volume measurement in the specialty category, we also disclose changes in specialty unique customers and specialty placements to provide additional context to our results and to the performance of our business. We define unique customers as the number of customers who purchase product in a given week. Each customer, regardless of the number of deliveries made during the week, is counted only once. Placements is the sum of the unique SKUs sold per customer, also in a given week. Our customer count and placements measures are subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity, and we present these measures for historical periods reflecting these adjustments.
Key Financial Definitions
•Net sales:Net sales consist primarily of sales of specialty products, produce, center-of-the-plate proteins and other food products to independently-owned restaurants and other high-end foodservice customers, which we report net of certain group discounts and customer sales incentives. Net sales also include direct-to-consumer sales on our e-commerce platforms.
•Cost of sales:Cost of sales include the net purchase price paid for products sold, plus the cost of transportation necessary to bring the product to our distribution facilities and food processing costs. Food processing costs include, but are not limited, to direct labor and benefits, applicable overhead and depreciation of equipment and facilities used in food processing activities. Our cost of sales may not be comparable to other similar companies within our industry.
•Selling, general and administrative expenses:Selling, general and administrative expenses include facilities costs, product shipping and handling costs, warehouse costs, and other selling, general and administrative costs.
•Other operating expenses: Other operating expenses includes expenses primarily related to changes in the fair value of our contingent earn-out liabilities, gains and losses on asset disposals, asset impairments, certain third-party deal costs incurred in connection with business acquisitions or financing arrangements and certain other costs.
•Interest expense:Interest expense consists primarily of interest on our outstanding indebtedness and, as applicable, the amortization or write-off of deferred financing fees.
Results of Operations
This discussion focuses on our fiscal 2025 results, compared with fiscal 2024 results. The discussion of our fiscal 2024 results, compared with fiscal 2023 results, can be found in Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 27, 2024.
Fiscal Years Ended
December 26, 2025 December 27, 2024 December 29, 2023
Net sales $ 4,149,537 $ 3,794,212 $ 3,433,763
Cost of sales 3,145,447 2,880,065 2,619,289
Gross profit 1,004,090 914,147 814,474
Selling, general and administrative expenses 849,789 784,852 704,758
Other operating expenses 9,195 1,088 8,773
Operating income 145,106 128,207 100,943
Interest expense 41,564 48,675 45,474
Income before income taxes 103,542 79,532 55,469
Provision for income tax expense 31,181 24,053 20,879
Net income $ 72,361 $ 55,479 $ 34,590
Fiscal Year Ended December 26, 2025 Compared to Fiscal Year Ended December 27, 2024
Net Sales
2025 2024 $ Change % Change
Net sales $ 4,149,537 $ 3,794,212 $ 355,325 9.4 %
Organic growth contributed $345.7 million, or 9.1%, to sales growth and the remaining growth of $9.6 million, or 0.3%, resulted from current year acquisitions. Organic case count increased approximately 3.9% in our specialty category, representing an increase in net sales of $90.4 million. In addition, unique customers and placements in our specialty category increased 2.9% and 6.4%, respectively, compared to the prior year. Organic pounds sold in our center-of-the-plate category decreased 2.2% compared to the prior year, representing a decrease in net sales of $32.5 million, primarily due to our exit from a non-core commodity poultry program in fiscal 2025. Estimated inflation increased sales by $102.2 million, or 4.4% in our specialty category and by $166.7 million, or 11.5% in our center-of-the-plate category compared to fiscal 2024.
Gross Profit
2025 2024 $ Change % Change
Gross profit $ 1,004,090 $ 914,147 $ 89,943 9.8 %
Gross profit margin 24.2 % 24.1 %
Gross profit dollars increased $85.6 million as a result of year-over-year sales growth which includes inflation and acquisitions, with the remainder of the increase primarily due to improved gross profit margin rates. Gross profit margin increased approximately 10 basis points due to improved inventory management and favorable production cost leverage. Gross profit margins increased 43 basis points in our specialty category, or $10.9 million, and decreased 31 basis points in our center-of-the-plate category, or $5.0 million, compared to the prior year.
Selling, General and Administrative Expenses
2025 2024 $ Change % Change
Selling, general and administrative expenses $ 849,789 $ 784,852 $ 64,937 8.3 %
Percentage of net sales 20.5 % 20.7 %
The increase in selling, general and administrative expenses was primarily due to higher costs associated with compensation and benefits to support sales growth, higher depreciation expense driven by facility and fleet investments and higher self-insurance expense. Our ratio of selling, general and administrative expenses to net sales decreased 20 basis points due to sales growth combined with certain benefits derived from our investments in our facility and distribution operations.
Other Operating Expenses, Net
2025 2024 $ Change % Change
Other operating expenses $ 9,195 $ 1,088 $ 8,107 NM
NM - Not meaningful
Other operating expenses, net in fiscal 2025 includes an impairment charge on customer relationship intangible assets of $8.0 million, related to the loss of non-core customers, post acquisition. Other operating expenses, net in fiscal 2024 included charges associated with employee severance, partially offset by non-cash credits of $3.3 million for changes in the fair value of our contingent earn-out liabilities.
Interest Expense
2025 2024 $ Change % Change
Interest expense $ 41,564 $ 48,675 $ (7,111) (14.6) %
Interest expense decreased primarily due to lower aggregate principal amounts of debt outstanding (excluding finance leases), lower interest rates and lower losses on debt extinguishment in the current year compared to the prior year.
Provision for Income Tax Expense
2025 2024 $ Change % Change
Provision for income tax expense $ 31,181 $ 24,053 $ 7,128 29.6 %
Effective tax rate 30.1 % 30.2 %
The increase in the provision for income tax expense for fiscal 2025 was primarily driven by the higher income before income taxes, with the effective tax rates remaining consistent year-over-year.
Liquidity and Capital Resources
We finance our day-to-day operations and growth primarily with cash flows from operations, borrowings under our senior secured credit facilities and other indebtedness, operating and finance leases, trade payables and equity financing.
Indebtedness
The following table presents selected financial information on our indebtedness:
December 26, 2025 December 27, 2024 December 29, 2023
Senior secured term loan $ 252,000 $ 260,000 $ 276,250
Convertible senior notes 287,500 287,500 327,184
Borrowings outstanding on asset-based loan facility 100,000 120,000 100,000
Finance leases and other financing obligations 119,451 52,673 31,892
As of December 26, 2025, we have various floating- and fixed-rate debt instruments with varying maturities for an aggregate principal amount of $650.5 million. We had outstanding letters of credit of approximately $41.0 million and $34.4 million at December 26, 2025 and December 27, 2024, respectively. Substantially all of our assets are pledged as collateral to secure our borrowings under our credit facilities. See Note 9 "Debt Obligations" to our consolidated financial statements for a full description of our debt instruments.
Significant Financing Transactions
In October 2025, we issued an $11.0 million unsecured note at an original issue discount of $0.3 million in connection with the acquisition of substantially all of the assets of Italco (the "Italco Note"). We also paid $5.5 million cash at closing. The Italco Note is presented at December 26, 2025 under the caption "Finance leases and other financing obligations" in the table above.
In August 2025, we entered into an amendment to our asset-based loan (the "ABL") credit agreement, which extended the maturity date to August 20, 2030, eliminated the credit spread adjustment to the interest rate charged on borrowings and increased the aggregate letters of credit. There were no changes to the aggregate commitments of $300 million. The amendment to the ABL was accounted for as a debt modification. We incurred transaction costs of $0.7 million, which were capitalized as deferred financing fees to be amortized over the term of the ABL, and are presented in other non-current assetsin our consolidated balance sheet.
In fiscal 2025 and 2024, we amended our senior secured term loan agreement to reduce the interest rate spread on our senior secured term loan facility. Additionally, during fiscal 2025 and 2024, we made voluntary principal prepayments of $5.0 million and $14.0 million, respectively, towards the senior secured term loan. In January 2026, we further amended our senior secured term loan agreement to reduce the interest rate spread on our senior secured term loan facility, as well as made voluntary principal prepayments of $5.0 million.
In December 2024, our 1.875% Convertible Senior Notes ( the "2024 Convertible Notes") matured and we issued 858,360 shares of our common stock, in accordance with the exercise of conversion rights provisions of the 2024 Convertible Notes, and paid approximately $2.1 million, which included accrued interest on the 2024 Convertible Notes.
In April 2025, the unsecured note issued in connection with our acquisition of Oakville Produce Partners, LLC ("GreenLeaf") in fiscal 2023 (the "GreenLeaf Note") matured and we made the final principal payment of $5.0 million. Previously, we made a scheduled principal payment of $5.0 million towards the GreenLeaf Note during fiscal 2024. The GreenLeaf Note is presented at December 27, 2024 under the caption "Finance leases and other financing obligations" in the table above.
In November 2023, we announced a two-year share repurchase program in an amount up to $100.0 million, targeting $25.0 million to $100.0 million of share repurchases by the end of fiscal 2025. During fiscal 2025, we repurchased and retired 241,198 shares of our common stock at an average purchase price of $62.19 per share. The share repurchases were funded by our available cash. The share repurchase program ended in December 2025 with a total of 667,433 shares of our common stock repurchased for $32.4 million.
Liquidity
The following table presents selected financial information on liquidity:
December 26, 2025 December 27, 2024 December 29, 2023
Cash and cash equivalents $ 120,982 $ 114,655 $ 49,878
Working capital,(1) excluding cash and cash equivalents
375,448 327,992 295,288
Availability under asset-based loan facility 159,516 146,674 172,030
(1) We define working capital as current assets less current liabilities.
We believe our existing balances of cash and cash equivalents, working capital and the availability under our asset-based loan facility, are sufficient to satisfy our working capital needs, capital expenditures, debt service and other liquidity requirements associated with our current operations over the next twelve months.
Our capital expenditures, excluding cash paid for acquisitions, were approximately $41.4 million for fiscal 2025. We believe our capital expenditures, excluding cash paid for acquisitions, for fiscal 2026 will be approximately $45.0 million to $55.0 million.
Our long-term cash requirements include:
•Debt obligations:See Note 9 "Debt Obligations" to our consolidated financial statements for a full description of our debt instruments and the timing of expected future payments.
•Leases:See Note 11 "Leases" to our consolidated financial statements for details on our various lease arrangements and the timing of expected future payments.
•Self-insurance liabilities: We are self-insured for medical, auto and workers' compensation claims. Claims in excess of certain levels are insured by external parties. See Note 16 "Commitments and Contingencies" to our consolidated financial statements for further detail.
•Contingent earn-out liabilities:Certain acquisitions involve contingent consideration, typically payable if certain financial performance targets are obtained. See Note 4 "Fair Value Measurements" to our consolidated financial statements for details on our contingent earn-out liabilities outstanding as of December 26, 2025.
Cash Flows
Fiscal Years Ended
December 26, 2025 December 27, 2024 December 29, 2023
Net cash provided by operating activities $ 129,219 $ 153,061 $ 61,639
Net cash used in investing activities (46,759) (49,821) (179,311)
Net cash (used in) provided by financing activities (76,222) (38,482) 9,010
Our cash provided by operating activities is predominately driven by net sales to our customers. Our cash used in operating activities is primarily driven by our payments to suppliers for our inventory, employee compensation, payments to support our facilities, our distribution network, interest on our indebtedness, payments to tax authorities and other general corporate expenditures. Net cash provided by operations was $129.2 million for the fiscal year ended December 26, 2025 compared to $153.1 million for the fiscal year ended December 27, 2024. The decrease in cash provided by operating activities was primarily due to timing of payments and a strategic pull-forward of certain inventory purchases, partially offset by sales growth.
Net cash used in investing activities was $46.8 million in fiscal 2025 driven by capital expenditures.
Net cash used in financing activities was $76.2 million for fiscal 2025 driven primarily by $20.0 million of payments under our asset-based loan and revolving credit facilities, $15.6 million of finance lease payments, $15.0 million used to repurchase our common stock, $13.0 million of payments of debt and other financing obligations and $12.0 million paid for shares surrendered to pay tax withholding related to the vesting of equity incentive plan awards.
Off-Balance Sheet Arrangements
As of December 26, 2025, we did not have any off-balance sheet arrangements.
Critical Accounting Estimates
The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The SEC has defined critical accounting policies as those that are both most important to the portrayal of our financial condition and results and require our most difficult, complex or subjective judgments or estimates. Based on this definition, we believe our critical accounting policies include the following: (i) determining our allowance for credit losses, (ii) business combinations, (iii) valuing goodwill and intangible assets and (iv) accounting for income taxes. For all financial statement periods presented, there have been no material modifications to the application of these critical accounting policies.
Allowance for Credit Losses
We analyze customer creditworthiness, accounts receivable balances, payment history, payment terms and historical bad debt levels when evaluating the adequacy of our allowance for credit losses. In instances where a reserve has been recorded for a particular customer, future sales to the customer are either conducted using cash-on-delivery terms or the account is closely monitored so that agreed-upon payments are received prior to orders being released. A failure to pay results in held or cancelled orders. We also estimate receivables that will ultimately be uncollectible based upon historical write-off experience. Management incorporates current macro-economic factors in existence as of the balance sheet date that may impact the food-away-from-home industry and/or its customers. We may be required to increase or decrease our allowance for credit losses due to various factors, including the overall economic environment and particular circumstances of individual customers. Our accounts receivable balance was $392.4 million and $366.3 million, net of the allowance for credit losses of $27.0 million and $22.3 million, as of December 26, 2025 and December 27, 2024, respectively.
Business Combinations
We account for acquisitions in accordance with Accounting Standards Codification Topic 805 "Business Combinations." Assets acquired and liabilities assumed are recorded at their estimated fair values, as of the acquisition date. The judgments made in determining the estimated fair value of assets acquired and liabilities assumed, including estimated useful life, may have a material impact on our consolidated balance sheet and may materially impact the amount of depreciation and amortization expense recognized in periods subsequent to the acquisition. We determine the fair value of intangible assets using an income approach and, when appropriate, we engage a third-party valuation firm. Generally, we utilize the multi-period excess earnings method to determine the fair value of customer relationships and the relief from royalty method to determine the fair value of trade names. These valuation methods contain significant assumptions and estimates including forecasts of expected future cash flows and discount rates. Determining the useful life of an intangible asset also requires judgment, as different types of intangible assets will have different useful lives. The excess of the purchase price over the fair values of identifiable assets and liabilities is recorded as goodwill.
We account for contingent consideration relating to business combinations as a liability and an increase to goodwill at the date of the acquisition and continually remeasure the liability at each balance sheet date by recording changes in the fair value through our consolidated statements of operations. We determine the fair value of contingent consideration based on future operating projections under various potential scenarios, including the use of Monte Carlo simulation models, and weight the probability of these outcomes. The ultimate settlement of contingent earn-out liabilities relating to business combinations may be for amounts which are materially different from the amounts initially recorded and may cause volatility in our results of operations.
Valuation of Goodwill and Intangible Assets
We are required to test goodwill for impairment at each of our reporting units annually, or more frequently when circumstances indicate an impairment may have occurred. We have elected to perform our annual tests for indications of goodwill impairment during the fourth quarter of each fiscal year.
Goodwill is tested at the reporting unit level, which is an operating segment or a component of an operating segment. When analyzing whether to aggregate components into single reporting units, management considers whether each component has similar economic characteristics. We have evaluated the economic characteristics of our different geographic markets, including our recently acquired businesses, along with the similarity of the operations and margins, nature of the products, type of customer and methods of distribution of products and the regulatory environment in which we operate. As of December 26, 2025, we maintain four reporting units.
In testing goodwill for impairment, we may elect to perform a qualitative assessment to evaluate whether it is more likely than not that the fair value of each reporting unit is less than its carrying amount. The qualitative analysis considers various factors including macroeconomic conditions, market conditions, industry trends, cost factors and financial performance, among others. If our qualitative assessment indicates that goodwill impairment is more likely than not, we proceed to perform a quantitative assessment to determine the fair value of the reporting unit.
When a quantitative analysis is performed, we estimate the fair value of our reporting units using a combination of income and market approaches. The income approach incorporates the use of a discounted cash flow model that involves many management assumptions that are based upon future growth projections. Assumptions include estimates of future revenue based upon budget projections and growth rates. We develop estimates of future levels of gross and operating profits and projected capital expenditures. This methodology includes the use of estimated discount rates based upon industry and competitor analysis as well as other factors. The market approach of determining fair value, which includes the guideline public company method, is based on comparable market multiples for companies engaged in similar businesses. A goodwill impairment loss, if any, would be recognized for the amount by which a reporting unit's carrying value exceeds its fair value.
For the fiscal year ended December 26, 2025, we assessed the recoverability of goodwill using a qualitative analysis and determined that it is more likely than not that the fair value of our reporting units exceeded their respective carry values. For the fiscal year ended December 27, 2024, we assessed the recoverability of goodwill using a quantitative analysis and determined that the fair value of our reporting units substantially exceeded their respective carry values. As a result, no goodwill impairments were identified for those periods. Total goodwill as of December 26, 2025 and December 27, 2024 was $362.7 million and $356.3 million, respectively.
Intangible assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Cash flows expected to be generated by the related assets are estimated over the assets useful lives based on updated projections. If the evaluation indicates that the carrying amount of the asset may not be recoverable, the potential impairment is measured based on a projected discounted cash flow model.
During fiscal 2025 and 2023, we incurred customer relationships intangible asset impairment charges of $8.0 million and $1.8 million, respectively, related to the loss of non-core customers, post acquisition. We did not incur any such impairment charges in fiscal 2024. There have been no other events or changes in circumstances during fiscal 2025 or 2024 indicating that the carrying value of our finite-lived intangible assets are not recoverable. Total finite-lived intangible assets as of December 26, 2025 and December 27, 2024 were $137.3 million and $160.4 million, respectively.
The assessment of the recoverability of goodwill and intangible assets contain uncertainties requiring management to make assumptions and to apply judgment to estimate economic factors and the profitability of future operations. Actual results could differ from these assumptions and projections, resulting in us revising our assumptions and, if required, recognizing an impairment loss.
Income Taxes
The determination of our provision for income taxes requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. Our provision for income taxes primarily reflects a combination of income earned and taxed in the various U.S. federal, state, and Middle East jurisdictions. Jurisdictional tax law changes, increases or decreases in permanent differences between book and tax items, accruals or adjustments of accruals for unrecognized tax benefits, and our change in the mix of earnings from these taxing jurisdictions all affect the overall effective tax rate.
We estimate our ability to recover deferred tax assets within the jurisdiction from which they arise. This evaluation considers several factors, including recent results of operations, scheduled reversal of deferred tax liabilities, future taxable income and tax planning strategies. As of December 26, 2025 and December 27, 2024, we did not have a valuation allowance.
Management has discussed the development and selection of these critical accounting policies with our board of directors, and the board of directors has reviewed the above disclosure. Our consolidated financial statements contain other items that require estimation, but are not as critical as those discussed above. These other items include our calculations for inventory valuation, bonus accruals, depreciation and amortization. Changes in estimates and assumptions used in these and other items could have an effect on our consolidated financial statements.
Recent Accounting Pronouncements
See Note 1 "Operations and Basis of Presentation" to our consolidated financial statements for a full description of recent accounting pronouncements including the respective expected dates of adoption and expected effects on our consolidated financial statements.
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