This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk03: Thank you for standing by. This is the conference operator. Welcome to the Tattooed Chef fourth quarter 2020 earnings call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity for you to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Rachel Perkins, Investor Relations. Please go ahead.
spk04: Thank you. Good afternoon, and welcome to Tattooed Chef's fourth quarter and full year 2020 earnings conference call. On the call today are Sam Galletti, President and Chief Executive Officer, Sarah Galletti, Chief Creative Officer, and the Tattooed Chef, and Chuck Cargile, Chief Financial Officer. Stephanie Dykeman, Chief Operating Officer, and Matt Williams, Chief Growth Officer, will also be available for questions. By now, everyone should have access to the earnings release, which went out at approximately 4.05 p.m. Eastern Time today, March 10, 2021. If you've not had a chance to review the release, it's available on the investors portion of our website at www.tattooedchef.com. Before we begin, I'd like to remind everyone that the prepared remarks contain forward-looking statements. Such statements involve a number of known and unknown uncertainties, many of which are outside the company's control and can cause future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors and risks that could cause or contribute to such differences are detailed in the company's filing with the Securities and Exchange Commission. Except as required by law, the company undertakes no obligation to update any forward-looking or other statements herein, whether as a result of new information, future events, or otherwise. In addition, within our earnings release and in today's prepared remarks, adjusted EBITDA and adjusted EBITDA margin are referenced. It is important to note that these are non-GAAP financial measures that we believe are useful metrics that better reflect the performance on our business on an ongoing basis. A reconciliation of these non-GAAP financial measures, their most directly comparable GAAP financial measures, are included in today's press release, which has also been posted on our website. And with that, it is my pleasure to turn the call over to Tattooed Chefs President and CEO, Sam Galletti.
spk01: Thank you, Rachel, and good afternoon. We appreciate everyone taking the time to join us on today's call. I'll begin today's discussion with key business highlights, including an update on our new distribution WINS, Sarah will discuss our marketing and innovation, and then Chuck will provide greater detail on the financials. First, our fourth quarter revenue highlights. We are pleased to report revenue increased 48% to $39.6 million compared to the fourth quarter last year, driven by our Tattoo Chef branded products. Our branded product sales for the quarter were a record $23.9 million, an increase of 172% compared to $8.8 million in the fourth quarter last year. Branded sales accounted for 60% of the total revenue in the fourth quarter of 2020. For the full year, revenue was $148.5 million, a 75% increase year over year. Branded sales increased 363% to $84.6 million last year. or 57% of the total revenue for 2020 compared to 22% in 2019. This is the first year in the company's history that branded exceeded private label sales, and we expect that split to reach as high as 75% to 80% branded within the next two to three years. We believe we are still in the early innings of the Tattooed Chef growth as a brand and as a company. We formed Tattooed Chef in 2017 after Sarah recognized the lack of readily available, high-quality, clean label, ready-to-cook, plant-based products in the market. Fast forward, we ended fiscal 2020 with 38 branded SKUs. Our products are sold in all 50 states, and we took the company public. The Tattoo Chef brand is for every lifestyle, and we attract consumers of all ages and demographics. We believe our historic and continued success with clubs across an array of Tattooed Chef branded products indicates that the Tattooed Chef brand resonates with consumers and will be attractive to conventional retail grocery customers. Coupled with the fact that we have spent little money on increasing brand awareness since we were historically focused on private label, we believe there is an untapped potential. We participate in the $55 billion U.S. frozen food category, a $380 billion market globally, and we are aligned with many major food trends. We have the innovative products and the vertically integrated supply chain and manufacturing capabilities to compete across multiple categories within frozen food, and little brand recognition or household penetration today. As we announced in December, we hired the national marketing firm, Nitro C, to implement a comprehensive brand marketing campaign this year, which Sarah will touch on in a few minutes. Our growth strategy is focused on expanding and increasing distribution of Tattooed Chef branded products with new and existing customers. We continue to set the foundation for broad market expansion. At the end of 2020, our Tattooed Chef branded products were nearly 4,300 stores and had 23,000 points of distribution. We have made significant progress in gaining new retail distribution at the start of 2021. Based on our new retailer partners that have committed in Q1, Tattooed Chef will be available in an additional 1,765 chain stores with 8,000 new points of distribution. This is a 41% increase in stores and a 35% increase in points of distribution over where we finished 2020 versus what we expect for the first quarter of 2021. We will further discuss the positive momentum as we expand our channel performance. Starting with the club channel, we launched our first MVM with Costco in March. With this program, Tattooed Chef's six-pack organic acibos will be available in every Costco nationwide for the entire month. This program will continue to allow us to introduce Tattooed Chef to more consumers through the Costco members. In Sam's Clubs, we continue to demonstrate our leadership position as a plant-based frozen food partner. In addition to our four tattooed chef items that are sold on an everyday basis nationally, we have had four limited time offers in Q1. Three of our limited time offers were new items, tempura cauliflower wings with buffalo and sweet chili sauce, cauliflower white pizza, and our plant-based sausage breakfast bowl. Our fourth LTO with the veggie hemp oil, which has performed so well that it will be brought back on rotation later this year. We were also able to continue to share the Tattooed Chef brand message with Sam's Club's member in Q1. Tattooed Chef was featured in two Sam's Club in-store booklets on the front page in both January and March. The January ISB focused on plant-based foods and featured the Tattooed Chef portfolio. And on the March ISB featured Sarah Galletti for Women's History Month. With a circulation of 18 million, we were honored to be part of both programs. We continue to see this momentum translate in our business performance. For the 52 weeks ended 12-27-2020, as reported in SPINS, Tattooed Chef is up 376% in Sam's Club, which is significantly outpacing the frozen categories in which we compete. Tattooed Chef is the number three brand in the combined frozen categories in which we compete, which includes frozen breakfasts, entrees, and fruits and vegetables. More specifically, in the frozen fruits and vegetables category, Tattooed Chef is the number one selling brand in both total dollar sales and dollar growth in Sam's Clubs. We are confident that our strong business performance as well as pipeline and innovation will allow us to build on this strong foundation in the future We have achieved this category leadership position in only one year of sales. Tattooed Chef's momentum in mass channel continues with 33% growth for the 52 weeks ending 12-27-2020. According to spins, Tattooed Chef grew three times faster than the category in 2020. Our ACV in mass is 59.8, which is up 300% year-over-year. TDPs, or total distribution points, are up 285%. We are also excited to share we've expanded our partnership with Target. As we announced this morning, six new SKUs will be available nationally starting next week. These new SKUs, plus our current smoothie bowl line, will now give the Target guests the opportunity to enjoy Tattooed Chef for breakfast, lunch, and dinner. In grocery natural, Tattoo Chef is currently offering 38 unique SKUs across five different frozen categories. By the end of Q1, we will have retailer and distributors selling 24 of these SKUs. We are starting to see the results of the work we did in the fourth quarter to develop our retail program to start materializing the market. Tattoo Chef products will be on shelf by the end of Q1 in key retailers across the country, such as Stop and Shop, Southeastern Grocers, and Ingles. These retailers will feature a variety of product categories including pizza, entree bowls, vegetables, and smoothie bowls. In addition to the retailer commitments that will start selling Tattooed Chef in Q1, we also have additional retailer commitments including Whole Foods, Meijer, Lowe's Foods, and United Supermarket, a division of Albertsons. Our new distributor relationships with UNFI, KE, and LaPari are showing promise as well. Tattooed Chef products are now available at these distributors' warehouses across the country, and we are encouraged by the progress that sales teams are making to introduce the full line of Tattooed Chef to local and regional grocery and natural accounts. Between the new distribution in MAP and the grocery natural commitments, along with other retailer negotiations that are underway, we are now confident that we will achieve our 2021 objective of 10,000 stores and 65,000 distribution points for Tattooed Chef at year-end. Just to recap, all the new stores that are expanding their Tattooed Chef line and carrying products for the first time are Target, Stop and Shop, Southeastern Grocers, Ingalls, Bristol Farms, Whole Foods, Meyers, Lowe's Foods, and United Supermarkets. We have also started working with Thrive Market, and we'll have product available on their online marketplace starting next week. We look forward to announcing our second quarter wins to you soon. With our retail expansion well underway, our next sales channel focus will be food service. With COVID-19 restrictions expecting to mitigate and students and employees return to campus and the workplace, we think the time is right to introduce Tattooed Chef to the business, industry, and education channel. With our existing entree and smoothie bowl portfolio, distribution network, and a new food service broker partner, we are excited about what the future holds for us in food service. We will share our progress in these channels throughout the year. We expect our growth to continue, giving the different channels for growth, including grocery, club, mass, as well as our innovation pipeline. As we outlined in our analyst day in December, we believe that given the white space within the frozen food aisle, we can achieve $300 million in revenue primarily from product expansion in current and existing retailers, new platforms like desserts and family meals, and increasing our SKU count to over 200 through innovation. We see a path to $500 million in sales as we look to expand beyond the frozen food section and into the grocery aisle with shelf-stable products, and we will consider strategic M&A to accelerate our growth in certain areas. We have approximately $200 million in cash and will invest in the business and capitalize on opportunities that we think will create long-term shareholder value. One of our key competitive advantages is that we are vertically integrated. By being the manufacturers of our own product, we can take a new idea from concept to production to shelf in as little as three months. We have two facilities today, one in the US and one in Italy. In the US facility, we have doubled our capacity in 2020 and added additional production square footage. For example, on one of the lines, we're able to manufacture around 15,000 bowls per shift. And today, through investment in equipment, we're able to manufacture over 35,000 bowls per shift on the same line using the same number of people. The Italian facility also increased production of rice cauliflower from 110,000 pounds per day to 200,000 pounds per day. And in August, we expect this increase to 400,000 pounds per day. We'll continue to increase capacity during 2021 to keep up with the expanded growth and demand of tattoo chef products. And now I'd like to turn the call over to Sarah to discuss our innovation and our marketing efforts.
spk06: Thank you and good afternoon, everyone. I'm excited to be here to provide a little more insight on our innovation and marketing initiatives. We are disrupting the frozen aisle in retailers nationwide with our plant-based foods. Our ability to spot trends quickly and constantly innovate is what resonates with consumers and retailers alike. We were the first to go to the mass market with cauliflower crust pizza and acai bowls and have a pipeline of over 150 additional plant-based ideas. We make food that we want to eat, and we make it easy for consumers to enjoy with little to no prep. 2020 was a big innovation year for Tattooed Chef. We released 17 new branded SKUs during the year, bringing our total to 38 SKUs as of December 31, 2020. We've been happy with the performance of these new items, and it has prompted more discussion with retailers around future innovation. We have 24 new SKUs planned for 2021, 13 of which will be launching in the first half of 2021 at Club and conventional retailers nationally. We are especially excited about the launch of our 100% certified plant-based pizzas. We have five SKUs, a two cheese, vegetable, meat lovers, pepperoni, and a white pizza. The meat lovers in pepperoni have meat alternatives using a clean ingredient deck, and we believe our vegan cheese is superior to any others in the market today. These new pieces are one of the only to have a plant-based certified stamp, which was important for us to have on our packaging. The meat alternative space continues to be attractive to enhance our value-added meals. We are developing more products not only in the meat alternative space, but also things alternative whether that be rice, pasta, and desserts. We continue to push the limits of what is possible in creating new food concepts and are making a stamp in multiple spaces indoors. We are continually bringing new ideas to the marketplace, given what Sam spoke about earlier with new retail distribution. There is excitement bringing tattooed chefs into the food aisles. Our food resonates with consumers and we're encouraged to see the retailer reception to our product portfolio has been so positive. We provide delicious, approachable, and innovative products not only to the growing group of consumers who seek a plant-based lifestyle, but also to the mainstream market. Our broad portfolio of products can satisfy all use occasions, whether that be a meal, snack, or side dish, making us a go-to supplier for retailers seeking to offer a complete plant-based portfolio. As we discussed at our analyst day, we have hired the national marketing firm Nitro-C to help increase our brand awareness as we grow our distribution. We will be investing $15 million across digital video, connected TV, digital display, social media, and search engine marketing. Since bringing them on board at the start of the year, we have successfully deployed an initial test campaign with Banner Ads in the Los Angeles and Atlanta markets. Starting mid-March, we will be moving into Phase 2 with innovative 6- and 15-second video campaign commercials and expanding into additional markets across the country. We will prioritize investment in markets and zip codes with the highest density of distribution and concentration of our target plant-based intenders, and will dynamically adjust to drive demand with each new retailer, SKU, and door. In key areas, we will explore a how high is high approach with broad-based media, including TV, to understand the dynamics of demand beyond the core plant-based and tender consumer. Through our investment approach, we are building a system that will grow as we grow and plant the seed for inclusive national movement to revolutionize plant-based eating. We are still in the early days of collecting marketing data points, but we are confident in our strategy. I can't wait to share more with you in the months to come. Now I'll turn it over to Chuck to walk through our financials.
spk07: Thank you, Sarah, and good afternoon, everyone. In the fourth quarter of 2020, we continued on our growth trajectory. Revenue increased by almost 50% to $39.6 million compared to $26.8 million for the prior year fourth quarter. As Sam mentioned, the revenue increase was driven by a $15.1 million increase in revenue of Tattooed Chef branded products. which now account for almost 60% of our total revenue. Our gross profit was 6.9 million or 17.4% of revenue compared to 3.9 million or 14.4% for the comparable quarter of 2019. The improvement in gross profit and gross margin was primarily due to production efficiencies and the cost of goods sold being spread over greater revenue. We anticipate continued gross margin expansion as we increase our volume. Operating expenses increased to $7.9 million for the three months ended December 31, 2020, compared to $1.9 million for the three months ended December 31, 2019. The increase in operating expenses was primarily due to $3.4 million of stock compensation resulting from equity grants made subsequent to the merger with FMCI in October of 2020. also increases in spending to support the growth of the Tattooed Chef branded products, and to support the cost of being a public company since October 15, 2020. We expect operating expenses to increase in 2021 to accommodate the growth, invest in the brand, and incur a full year of public company costs. Net income was $41.5 million in the three months ended December 31, 2020, compared to 2.2 million in the prior year period. We recorded a tax benefit of 41.9 million in the fourth quarter compared to a benefit of 0.2 million in the prior year period. In October 2020, the restructuring in anticipation of the merger with FMCI caused a step up in the tax basis of intangible assets of approximately 140.5 million. and the tax status of the company to change from an S-Corp to a C-Corp. The tax effect of these changes created a deferred tax asset and income tax benefit of $39.3 million. For the full year, revenue increased by $63.6 million, or 74.9%, to $148.5 million. The increase was driven by the exceptional growth of Tattooed Chef branded products. In 2020, our branded product growth resulted from expansion in the number of U.S. distribution points, as well as increased volume and existing club channel customers of our current portfolio of products and new product introductions, including smoothie bowls, vegetable blends, buffalo cauliflower, and other value-added rice cauliflower meals. Gross profit increased $10 million to $23.7 million for the year ended December 31, 2020, compared to $13.7 million for the year ended December 31, 2019. Gross margin for the full year 2020 was 15.9%, slightly lower than 16.1% in the year ended December 31, 2019. The gross profit increase was primarily due to the higher revenue levels for the current year. The gross margin declined slightly due to higher costs for raw materials and other variable manufacturing costs in the current year. Operating expenses increased $12 million to $19.5 million for 2020 compared to $7.5 million for 2019, primarily due to increases in costs resulting from higher headcount and wages to manage the increase in revenue and public company costs which did not exist in the prior year. We also had $3.4 million of stock compensation expense and $0.6 million in non-recurring bonus payments for the merger with FMCI. Net income was $45.4 million in the full year of 2020 compared to $5.6 million in the prior year. The net income for the year ended December 31 includes the same 39.3 million income tax benefit I described a minute ago. Adjusted EBITDA was 9.6 million or 6.4% of revenue for the year ended December 31, 2020 compared to 6.9 million or 8.1% of revenue for 2019. The improvement in adjusted EBITDA was primarily the result of the increase in revenues and gross profit compared to the prior year period. Our quarterly split of adjusted EBITDA was impacted by transaction costs which were expensed prior to the merger closing in the fourth quarter. Once the transaction closed, in accordance with accounting rules, these costs were credited to income in the fourth quarter and no longer an add-back for adjusted EBITDA. I recognize that there's a lot of unusual activity in our fourth quarter financial statements, due to the complex accounting for the reverse merger, the non-recurring transaction costs, and the large tax benefit. But irrespective of the one-time activities, we're pleased to post strong profit while managing through significant growth and dramatic organization changes during 2020. As of December 31, we had cash and cash equivalents of $131.6 million. As previously announced, including the cash proceeds from the exercising of public warrants as of February 22nd, the company's total cash balance was approximately $200 million. Lastly, I'll mention that we've been fortunate that the COVID-19 pandemic had a minimal impact to our business in 2020. As a food manufacturer, our operations are deemed essential, and all of our facilities are currently open and operating, both in the US and Italy. Since the start of the year, we have experienced some shipping delays, particularly in ports that are continuing to closely monitor the situation. At this time, we don't expect the delays to materially impact our first quarter results. Now turning to our outlook, we are reaffirming our 2021 annual guidance provided at our analyst day in December, which includes continued growth in revenue. We anticipate following up on this year's 75% revenue growth with an additional 50% growth in 2021 or approximately $222 million of revenue. The growth will yet again come from tattooed chef products. We expect expansion of our gross margin into the range of 20% to 25% of revenue. And we expect adjusted EBITDA for the year to be in the range of $8 million to $10 million as we continue to invest in driving the growth, invest in our brand, and add the cost required to be a public company. And we expect net income to be in the range of $2.5 million to $5 million. With that, we're now available to take your questions. Operator?
spk03: Thank you. We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. We will pause for a moment as callers join the queue. The first question comes from George Kelly with Ross Capital Partners. Please go ahead.
spk02: Hey, everybody. Thanks for taking my question. Thank you. I just have a couple. And then I have a couple and then I'll hop back in the queue. But maybe if you could start, Sam, you listed a lot of new partners that you're launching with new grocers in the first quarter and I think first half of the year. So I guess the question is, are you surprised how quickly you're bringing on additional distribution points? And is there one or two things that as you're sort of pitching these folks, are there one or two things that they're most focused on and attracted to your brand? How is it happening so quickly?
spk01: Thanks, George. I don't think that it's... We've been on such an aggressive path the past few years. It's just when we started offering products to Sam's and Costco, the brand just connected right away with them and so we've been on just this great momentum and so I really did feel that when our team started going to retail that we were going to continue this momentum that we had and it is happening and it's very exciting and so am I surprised at it? I'm not surprised, I'm very pleasantly pleased though because I know that there was a lot of people questioning about the conversion from club to retail, and I was never concerned with it, and obviously it's proving out that the retail consumer is just as hungry for plant-based tattoo chef branded products. So I'm really excited about what I see happening right now.
spk02: Okay, great. And then There was a discussion in the prepared remarks. I may have missed part of it, but I think you talked about the advertising strategy. And I was wondering if you've turned that on much so far in 2021 and what has been the response? What are the learnings with what you've seen thus far?
spk01: I'm going to turn that over to Sarah.
spk06: Hello. So, you know, with Tattoo Chef, we've had no marketing until 2021. January and in our first phase we were really focusing on banner ads and just gathering the data that we need to pivot and be strategic with where we allocate our dollars for marketing we're going to be pitching and launching in March our commercials which will be going digitally and connected and to connected TV, but right now we're just still gathering data because we want to really be specific and strategic in where we allocate our dollars.
spk02: Okay, okay, gotcha. And then maybe last couple questions just related to guidance, 2021 guidance. Can you, I guess, first just, Chuck, you mentioned that there were some shipping delays and some port issues. What will growth, can you help at all with kind of the sequential growth just throughout the year? Will we see the fastest growth towards the back half and anything we should think about quarterly?
spk05: I'm actually going to take that one, George. This is Stephanie. When we start to look at what the growth in revenue is going to do throughout the year, we brought up the port delays and things like that so that the information is out there. We have not experienced any delays in our shipment and our product at this time. But we want to be completely transparent. As far as revenue goes, we have some great promotions for first quarter. As you guys heard Sam say, in which we have the Costco MVMs. We have some great promotions next quarter. We have some great product rotations. And we're building up the retail chain. And so we expect Tattooed Chef to continue to grow. I have not released the guidance for each quarter, but Tattooed Chef is where it's going. And we are going to continue to open up distribution points and new retailers across the country.
spk02: Okay, great. Thank you. I'll hop back into queue. Congrats on a nice quarter.
spk03: Thank you. The next question comes from Rob Dickerson with Jefferies. Please go ahead.
spk08: Okay, great. Thank you so much. Excuse me. So I guess just to go back to the guidance for a minute, you know, there is a decent part of the call, right, is highlighting It's a tremendous amount of positives, right? I mean, it sounds like things, frankly, are going great or even ahead of plan or maybe expected, right, in the conversion into grocery. You know, you called out, you know, success in Costco, doing very well in Sam's. I know there was a press release this morning about, you know, the six SKUs nationally in Target. And then you called out what, you know, stop and shop Meijer. I know there are others maybe getting to Thrive. When I put all that together and then I see that the guidance was reiterated, my knee-jerk reaction is to think, well, there's got to be upside to that guidance if this is all coming through because I thought the guide originally was based upon visibility maybe from some of the prior increased distribution gains at Walmart, but maybe not including some of the new business. I'm just trying to right size, you know, essentially the held guidance for the year, you know, kind of in relation to what seems to be new business wins, if that makes sense. That's it. That's my first question.
spk00: So, Rob, this is Matt. Good afternoon. So, you know, obviously the new distribution is, we're super excited about it. You know, again, we are building traction and we have a great story. But again, as you know, you know, we're distributing our product across a lot of different categories. We've got 38 SKUs that we're selling. We sell different categories, obviously, that are under different reset timing throughout the year. And so because of that, when the customers actually come on and when we start realizing revenue this year, you're going to see that some of that revenue growth is obviously going to be factored into Q2 and then obviously mid Q3 and Q4. But the real impact is obviously on our 2022 guidance, which we're obviously enforcing. And that's where we see the full year benefit come in. It just staggers in. It comes in in a staggered way, and we're super encouraged by it, and we think it's obviously a great demonstration of the health of the brand, if that makes sense.
spk08: Yeah. I mean, I hate to push on it. It kind of makes sense because I do feel like if you get the new business wins, some of which are coming in in Q1, maybe in Q2, Um, like does that, is that more trial basis or it doesn't sound like you're able to, you're not booking that revenue or maybe you are right. You're just kind of leaving yourself some leeway because obviously you're still in early innings and high growth mode. I'm just, again, I'm just trying to figure out like if their new business wins, that's awesome. Um, I've just tried to figure out how, how we're supposed to be modeling that in terms of revenue. the new doors, new distribution points, new SKUs, et cetera.
spk01: Hey, Rob, this is Sam. How are you doing? I think that, hey, when we came out with the 222 budget for 21, we were building in 10% to 15% of business that we projected just based on conversations. We have to wait so long before these These customers will allow us to say, to communicate that we win this business. It's like we did put, you know, we do project 10% to 15% of that 21 budget was on assumptions that we make based on the conversations that we already had with these retailers. So I'm pretty, again, you know, to have a 49%, 50%, you know, growth organically year over year with our frozen product line, we're just super excited about it.
spk08: Yeah, no, I really appreciate the clarification. That makes complete sense. So that's just trying to always figure it out. But great answer. And then I guess just in terms of the vertical integration being a benefit, we've heard from almost every food company, not always in produce-related areas or in frozen, but we've heard a lot about cost inflation. Is that cost inflation impacting you or potentially could impact you? Or because of the contracts you have with the farmers and some sourcing coming from Italy, maybe it doesn't impact you as much. Maybe that could actually be a benefit. Just trying to figure out, again, the cost environment overall relative to the price.
spk05: As we strategically source our raw materials, and you're correct, with a lot of our produce coming from Italy, we're not as concerned about some of that pricing and costs that are coming into play for other manufacturers, but also being vertically integrated helps us reduce that additional cost that other companies can see and experience. But we also work hard to source from around the world to ensure that we are protected from some of these cost increases that come through. Added with the vertical integration and the ability to manufacture more products and pick up some of those things within our own manufacturing, it allows us to be better protected.
spk08: Okay. That's good to know. And then I guess just lastly, just a question on the warrants that sometimes get complicated. It sounds like you said cash balance at the end of the year around $200 million, which is partially driven, I guess, by some of the cash coming in from the warrants. So just to clarify again, it sounds like as that cash comes in, you can actually keep that cash and redeploy into other strategic areas value-creating opportunities versus necessarily having to go back out into the market and buy back stock. It's a nice cash-generating vehicle as long as they exist. I just wanted to understand, as cash comes in on the warrants, is that something you then can redeploy, whether it's CapEx, supply chain, what have you, maybe acquisitions, versus having to buy back stock? That's all I have. Thank you.
spk07: You're welcome. I think two points, Rob, to answer your question. One is just a clarification. We had $131 million on the books at the end of the year. That's what you'll see in the published financial statements. Subsequent to that, there was another $70 million that came in from the warrants. That's what got us to $200 million. And there's no restrictions on that. That $200 million is in our coffers. It's ours to spend strategically. And the other important point is that the 20 million warrants are now fully exercised, so there's no more dilution coming from those warrants. So we have the cash, we can use the cash, and there's no more pending dilution.
spk08: Okay, great. Thank you so much. Great job. Appreciate it.
spk01: Thank you, Rob. Thank you.
spk03: This concludes the question and answer session. I would like to turn the conference back over to Sam Galletti for any closing remarks.
spk01: Thank you for joining us today from Italy to California. I'd like to thank my dedicated team that has worked so hard to be able to make these strong results possible. We believe there is a significant growth opportunity for the Tattooed Chef brand with new and existing customers in food retail as well as other areas like food service. We are off to a strong start in 2021, increasing distribution, launching exciting innovative products, and increasing our brand awareness. We look forward to speaking to you again at upcoming investor conferences on our first quarter earnings call in early May. Have a great day.
spk03: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
Disclaimer