Tattooed Chef, Inc.

Thank you for standing by. This is the conference operator. Welcome to Tattooed Chef's first quarter 2021 earnings conference 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 to ask questions. To join the question queue, you may press star then one 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.

Thank you. Good afternoon and welcome to Tattooed Chef's first quarter 2021 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 Stephanie Dykeman, Chief Operating Officer and Chief Financial Officer. Matt Williams, Tattooed Chef's 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. 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 filings 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 of our business on an ongoing basis. The reconciliation of these non-GAAP financial measures to 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 Chef's President and CEO, Sam Glady.

Thank you, Rachel, and good afternoon. We appreciate everyone taking the time to join us on today's call. It's an exciting time at Tattooed Chef. I'll begin today's discussion with key business highlights. new distribution wins, and our recent acquisition of Foods of New Mexico. Then Sarah will discuss our marketing and innovation, and Stephanie will provide further detail on the financials. We are off to a great start to 2021. First quarter revenue increased 59% to $53 million compared to the first quarter last year, driven by our Tattooed Chef branded products. Our branded sales product sales for the first quarter of 2021 were a record $36 million or 69% of total revenue. That's an increase of 105% compared to $18 million in the first quarter last year. We had originally anticipated it would take two to three years to reach 75% to 80% branded sales, and we are proud that we are nearing that goal within six months of being public. When we launched the brand in 2017, we recognized an opportunity to revolutionize the way consumers think about plant-based food. The Tattooed Chef brand is for everyone, and we attract consumers of all ages and demographics. It really resonates with both consumers and retailers, and that has been apparent through our sales velocities and product launches to date. The club channel requires much higher volume to stay on shelf compared to conventional retail, and we continue to exceed retailer expectation. This gives us confidence as we enter new channels like grocery and meet the sales thresholds. Our portfolio of products from single-serve bowls to vegetable blends to plant-based pizzas offers retailers a variety of breakfast, lunch, dinner, or snacking products. With our acquisition of New Mexico Food Distributors, Inc., and Karsten Tortilla Factory LLC, collectively referred to as Foods in New Mexico, we plan to expand further into the $20 billion Hispanic Southwest food sector and beyond. We acquired Foods in New Mexico for $35 million in cash and are incredibly excited about the growth opportunity. We'll be immediately addressing the $1 billion frozen Mexican food category and we'll also be launching our first-ever refrigerated and ambient products. We believe the Mexican food space is lacking alternative plant-based options, and this is exactly the type of acquisition we were looking for. The two facilities total 118,000 square feet, allowing us not only to expand production capacity, but also diversify our manufacturing capabilities and grow our product portfolio at an accelerated rate. The Karsten facility is brand new with extensive tortilla manufacturing capabilities. And since it was never completed, we now have the ability to customize and tailor the existing footprint to our needs. Given our business is vertically integrated already, we're very comfortable manufacturing and plan to introduce more innovative products like alternative tortillas and plant-based items. In two to three years, we believe Foods in New Mexico can contribute up to $200 million in revenue annually The focus going forward will continue to be on Tattoo Chef branded plant-based products. We continue to successfully execute on our growth strategy to grow the Tattoo Chef brand in the categories in which we compete. At the end of 2020, branded products were nearly in 4,300 stores and had 23,000 points of distribution. And at the end of Q1, we were at 6,065 stores with 31,000 points of distribution. By the end of Q2, we expect to be an additional 1,162 stores with 8,000 new points of distribution, including a number of larger grocery chains, which we'll expand upon in a moment. Our new total store count by the end of the second quarter is 7,477 stores and 40,275 points of distribution. Based on where we are today and additional retailer commitments that we will realize in the back half of 2021, we are confident we can achieve our 2021 objective of 10,000 stores and 65,000 points of distribution for Tattooed Chef by year end. In the Club channel, we saw exceptional growth. Our Costco MVM in March with Acai Bowls was very successful. The acai bowl was featured on the end cap and placed in their ad that is mailed to each member for a four-week promotion. This gives the Tattooed Chef brand exposure to over 105 million Costco members across the country. In Sam's Club, we had four limited-time offers in Q1 in addition to our four everyday items. In Q2, we have limited-time offers including tempura green beans with vegan wasabi ranch and our rice cauliflower burrito blend. According to SPNS, for the latest 12 weeks ending March 21, 2021, Tattoo Chef continues to experience double-digit growth of 10.8% in Sam's Clubs, significantly outpacing the frozen categories we compete in. For the 52 weeks ending March 21, 2021, Tattoo Chef was up 128% and is one of the fastest-growing brands in the frozen category. In the MAPS channel, latest 12 weeks through March 21, 2021, we saw a 477% growth primarily driven by our launch of six new bulls at target in mid-March. Our average ACB in the channel is 57.1 and has grown five times since the same time last year. We continue to see TDPs increase in the mass channel, which are up over 800% versus the same time last year. Our launching target exceeded both ours and target's expectations. We saw extraordinary demand for the Tattoo Chef Entree Bowl line and beat our launch plan velocity expectations. Since launch, the Tattoo Chef Entree Bowl line is averaging over $32 per SKU per store. Target said it was the most successful frozen food launch in the history of Target, and collectively we have exciting plans to continue to drive trial and sales with the Target guests. Last 52 weeks, we have grown 149% in mass channel, and we expect this momentum to continue as our products are introduced to consumers throughout the year. In the grocery and natural channels, we continue to gain distribution with both national and regional retailers in the U.S. In addition to our distribution wins in Q1, we announced in March by the end of Q2, Tattooed Shelf products will be on shelf at Whole Foods, Harris Teeter, Juul, Smart & Final, and Nugget Markets in NorCal, as well as a growing list of independent retailers. And in Q3, we already have commitments from multiple Albertsons divisions, including Southwest, SoCal, NorCal, and Intermountain, as well as HEB, Price Shopper, and Sprouts Farmers Market. Additionally, we are also seeing our early retailers expand our line into additional categories based on the success of the brand, which will increase the breadth of our distribution. We have strong momentum and expect our growth to continue given the wide space opportunities with new and existing customers in grocery, club, mass, as well as our innovation pipeline and recent acquisition. In 2021, we expect revenue between $235 to $242 million, which Stephanie will expand upon in a few minutes. In 2022, we now expect at least $300 million in revenue based on our distribution success in grocery this year and our innovation pipeline, including the launch of our first Ambien products, which we expect at the end of this year or early next year. We are building Tattooed Chef to be a generational brand. It is important we invest back into the business now to lay the foundation for future success. As we previously announced, we have partnered with Nitro-C, a national marketing agency, and are spending $15 million this year to increase tattoo chip brand awareness. Sarah will provide more details momentarily, but we are pleased with our early success and launch of our first commercial last month. Regarding production capacity, we are wrapping up production and increasing capacity in both our facilities in California and Italy in order to meet our guidance and sales volumes. The acquisition of Foods in New Mexico now adds another two facilities, giving us a total of over 275,000 square feet. And now I'd like to turn the call over to Sarah to discuss our innovation and our marketing efforts.