Tattooed Chef, Inc.

Good day and welcome to the Tattooed Chef second quarter 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Rachel Perkins with Investor Relations. Please go ahead.

Thank you. Good afternoon, and welcome to Tattooed Chef's second 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 Financial Officer and Chief Operating 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 investor portion of our website at www.tattoocheck.com. Before I 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 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 is referenced. It is important to note that this is a non-GAAP financial measure that we believe is a useful metric that better reflects the performance of our business on an ongoing basis. A reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure is included in today's press release, which has also been posted on our website. And with that, it's my pleasure to turn the call over to Catchy Chef's President and CEO, Sam Galletti.

Thank you, Rachel, and good afternoon. I'll begin today's discussion with key business highlights new distribution wins, and an update on our recent acquisition of Foods New Mexico. Then Sarah will discuss our marketing and innovation, and Stephanie will provide further detail on financials. Our momentum continued in the second quarter of 2021. Second quarter revenue increased 46% to $50.7 million compared to the second quarter last year driven by our Tattooed Chef branded products and $4.3 million from Foods in New Mexico. Our branded product sales for the second quarter of 2021 were $33.1 million. This is an increase of 62% compared to $20.4 million in the second quarter last year. As a percentage of total revenue, branded products accounted for 65% or 71% excluding foods in New Mexico. I'm proud to say that we are well ahead of plan to reach 75% to 80% branded sales within two to three years. We believe Tattooed Chef is positioned to be the leading plant-based food company for years to come. With fully vertically integrated production, diversified product lines, and ability to win in multiple areas of the grocery stores, not only frozen but refrigerated and ambient too, Tattooed Chef is positioned for long-term success. We are revolutionizing the way people think about plant-based eating by thoughtfully creating foods that feels good. The Tattooed Chef brand is chef-created for every lifestyle and an accessible price point. The Tattooed Chef brand is for everyone, and we attract consumers of all ages and demographics. We also have a range of products to offer from breakfast, lunch, dinner, or snacks so that you can enjoy Tattooed Chef at any occasion. It really resonates with both consumers and retailers, as has been apparent through our sales velocities and product launches to date. We are proud to announce that in less than one year, we have two SKUs among the top 10 veggie entrees ranked, by velocity according to the MULO HWI. As we previously announced, we closed our acquisition of New Mexico Food Distributors Inc. and Karsten Tortilla Factory LLC, collectively referred to as Foods of New Mexico, on May 14th for approximately $37 million in cash. Frozen Mexican food is a $1 billion category, and we are super excited about the growth opportunity. We will also be launching our first ever refrigerated Ambien products early next year, going after the $20 billion Hispanic Southwest food category with alternative tortillas, burritos, enchiladas, and other creations. This acquisition expands our own production capacity and diversifies our manufacturing capabilities to accelerate our expansion throughout the entire store, not just frozen. We plan to extend the Tattooed Chef reach not only within grocery, but to a whole new level of convenience in refrigerated and ambient products to an untapped market of retailers such as airports, convenience stores, and more. In two to three years, between all the innovative ideas we have, we believe Foods in New Mexico can contribute up to $200 million in revenue annually. The focus going forward will continue to be on Tattooed Chef branded plant-based products. We continue to look for similar acquisitions that we are able to add assets in manufacturing in order to develop new products in other categories and create shareholder value. Our growth story so far has been around diversifying Tattoo Chef customers and channels, and we have been incredibly successful. As you may remember, at the end of 2020, our branded products were in nearly 4,300 stores and had 23,000 points of distribution. We have grown this to 8,355 stores at the end of Q2 with 48,070 points of distribution exceeding our previous projections. As you may also recall, our guidance for the full year was 10,000 stores with 65,000 points of distribution. With the additional retailer commitments our sales team has secured, which I will cover in a few moments, I'm proud to announce that by the end of the third quarter, we'll be in over 12,000 stores with 79,402 points of distribution. We continue to broaden our growth as measured by spins. Through July 11th, our TDPs have increased by over 135% since before closing the transaction in October. This is a strong example of the brand's viability and success in traditional retail and mass accounts. Our MULO consumption data, as measured by spins, continues to grow, too. The second quarter of 2021 was our strongest quarter for measured consumption in the history of the company. I'm ecstatic to announce the last 24 weeks ended July 11, 2021. We had four of the top five best performing innovation SKUs in the plant-based frozen entree category, which Sarah will cover in a few moments. Overall, our quarterly consumption has increased by 88% since completing the transaction in October through strong growth in club, mass, and retail expansion. In the club channel, we had another successful MVM in Costco with organic rice cauliflower stir fry. We continue to partner and innovate with Costco with new items going into selected regions across the U.S., In Sam's Clubs, we have three limited-time offers in Q2, tempura green beans with vegan wasabi ranch, rice cauliflower burrito blend, and our cauliflower pizza with plant-based pepperoni, in addition to our four everyday items. In Q3, we will have three limited-time offers, including our huevos rancheros breakfast bowl, cheeseburger bowl, and a pad thai fried rice. According to spins in the club channel for the last 12 weeks ended July 11th, 2021 tattooed chef is up over 60%. For the 52 weeks ended July 11th, 2021 tattooed chef was up nearly 27% and remains one of the fastest growing brands in the frozen category. In the Mass Channel, latest 12 weeks through July 11, 2021, according to Mulo, we saw explosive growth from $119,000 last year to $4.2 million this year, primarily driven by store expansion and the new innovation within the Tattooed Chef brand. We continue to be excited by the results of the retailers that were early adopters of the brand. The combination of strong shelf presence and broad category assortment has led to very successful results that we believe can be scaled across the marketplace. In one specific mass retailer for the latest four weeks through July 11th, as measured by SPIN, Tattooed Chef has been number one and number two selling SKU in the frozen vegetable entree meals category in total dollar sales. Additionally, in the same category, the Tattoo Chef has the highest total sales per point of distribution of all brands being sold. These results support our growth strategy for expanded retail distribution and increased skew count. We have more than doubled our ACV since the same time last year, and now we're in over half Walmarts in the U.S. and in almost every Target store. We continue to see TDP's increase in the mass channel. In the latest 52 weeks, we have grown our business in the mass channel from 651,000 last year to 7.9 million this year, and we expect this momentum to continue throughout the year. In the grocery and national channel, we continue to win distribution with both national and regional retailers in the U.S. Our products are resonating with retailers and consumers, and it is a flywheel effect once retailers see our case studies. In Q2, we went on shelf at Whole Foods, Harris Teeter, Juul, Smart and Final, Nuggets Markets in NorCal, and a variety of independent retailers. In Q3, we have begun distribution at Sprouts Farmers Market, Kroger, multiple Albertsons divisions, including the Southwest, SoCal, NorCal, Intermountain, Seattle, also HEB, Price Shoppers, and have additional commitments for later this quarter. We are pleased to also announce our most recent distribution win. Tattooed Chef products will be available in Publix beginning in the fourth quarter. We are seeing our early retail wins expand their Tattoo Chef offerings into additional categories, which will increase the breadth of our distribution. We have set an internal goal of achieving 30 frozen SKUs per store across retail and are confident that we have the portfolio to execute that. We expect our incredible double-digit total company growth to continue, driven by our branded products in the back half of the year. We have multiple avenues for growth near term with expanding product offerings in existing retailers, gaining more distribution with new retailers, including grocery and convenience stores, developing our food service business, as well as licensing and international opportunities. In 2021, we are reiterating our revenue guidance of $235 to $242 million, which Stephanie will expand upon in a few minutes. We are thrilled with our retail wins and how products have been performing. These distribution wins were already included in our original forecast for this year. And given the timing of the equipment we are putting into our Foods in New Mexico facilities in the fourth quarter, as well as selling cycle on what we will like to call the COVID hangover, we will not see the full benefits of these items until fiscal 2022. In 2022, we continue to 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 refrigerated and ambient products. We'll provide full guidance for fiscal 2022 on our fourth quarter earnings call next February. One of our key differentiators is our vertical integration and production capacity and capabilities. We have the ability to go to market in as little as three months, which gives us the ability constantly innovate and stay on trend. We are on track to quadruple our production capacity in 2021 and have approximately 275,000 square feet of manufacturing space today. Between our four manufacturing facilities, we believe we have the capacity available to achieve over 500 million in revenue. Our new capabilities in 2021 include gluten-free, soy-free, plant-based meat production, And with the Fousey New Mexico acquisition, we can now produce alternative tortillas, snacks, burritos, handhelds, quesadillas, enchiladas, and more. Since launching the Tattoo Chef brand in 2017, we have seen the brand and our innovative products resonate and appeal to a broad range of consumers. And in 2021, we have demonstrated the strength of the brand with the acceptance at retail. We have done what we said we would do from the beginning. And we firmly believe Tattooed Chef has the power to be a generational brand and a leader in plant-based food for years to come. Now is the time to invest in our business and lay the foundation for future growth and success. Plant-based food is here to stay. Every category in the supermarket will be disrupted by a plant-based alternative. And Tattooed Chef is positioned to be the disruptor. We are already doing it and it is just the beginning. And now I'd like to turn the call over to Sarah to discuss our innovation and our marketing efforts.