Tattooed Chef, Inc.

Good day and welcome to the Tattooed Chef, Inc. Third 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. Please note this event is being recorded. I would now like to turn the conference over to Rachel Perkins Olsh, Investor Relations. Please go ahead. Thank you.

Good afternoon and welcome to Tattooed Chef's third quarter 2021 earnings conference call. On the call today are Sam Zoletti, President and Chief Executive Officer, Sarah Zoletti, 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 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 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 is my pleasure to turn the call over to Catchy Chef's President and CEO, Sam Gleddy.

Thank you, Rachel, and good afternoon. On today's call, I'll briefly review the key business highlights for the third quarter and discuss our recent announcement on the acquisition of Belmont Confections. Then Sarah will discuss our marketing and innovation, and Stephanie will provide further detail on the financials. Our third quarter results demonstrate strong momentum, with record quarterly revenue of $58.8 million, a 44% increase year over year. This growth was primarily driven by 56% growth of our Tattooed Chef branded products, with revenue of $35.3 million in the third quarter, representing 60% of our total revenue. At the end of last year, our branded products were in 4,300 stores, and we set a goal to more than double our distribution to 10,000 stores. I am proud to say that thanks to all the hard work the team has done, our product can now be found in over 13,000 stores, more than tripling our store count while also diversifying our channel and customer mix. While we had national distribution before, we are now much broader and deeper with the addition of mass and grocery store. We are firing on all cylinders, broadening our sales mix, diversifying our sales channel, innovating our product portfolio, gaining market share, and have some of the highest velocities in frozen food. That being said, we are lowering our revenue guidance for the year. As a high growth business, it is difficult to forecast new distribution wins and timing of retail rollouts. I own that. For fiscal 2021, we now expect revenue between $210 and $215 million, which implies year-over-year growth of 41% to 45%, and I am very proud of that. This is still only the beginning. We believe Tattooed Chef is positioned to be the leading plant-based food company for years to come. With full vertically integrated production, diversified product lines, and the ability to win in multiple areas of grocery stores, Tattooed Chef is positioned for long-term success. In May, we announced the acquisition of Foods of New Mexico to expand our production capacity and diversify our capabilities outside of frozen foods. We are in the process of selling our new branded products to retailers, starting with frozen Mexican products in the first half of next year. The Carson facility is set to open at the end of the first quarter, 2022. And we expect to start selling ambient products. Our October 26th, we announced our agreement to acquire Belmont Confections, a private label co-manufacturer of nutrition bars and snacks for approximately $18 million in cash and stock. We expect the transaction to close by the end of the year. Similar to Foods of New Mexico, this acquisition opens up more capacity and capabilities and will transform a co-packing business into a branded manufacturer with higher margins. The 47,000 square foot production facility in Youngstown, Ohio contains equipment to produce a variety of bars and snacks. We're really excited to enter the $10 billion global plant-based bar category with Tattoo Chef branded items. This also aligns with our growth strategy to develop more ambient and refrigerated products, unlocking more shelf space and expand our channel penetration beyond retail and club, allowing consumers to enjoy Tacky Chef products at home and on the go. Between these two acquisitions, we believe they can contribute up to an additional $300 million in annual revenue in the next two to three years. The focus going forward will be to continue growing the Tattooed Chef branded plant-based product portfolio. We look for similar acquisitions that we are able to add assets and manufacturing in order to develop new products in other categories and create shareholder value. We continue to broaden our growth as measured by spins. In the last 52 weeks ended October 3rd, 2021, Our TDPs have increased by over 315%, and our measured consumption has increased 239% through strong growth in club, mass, and grocery. Additionally, we have seen very strong consumption increases versus prior quarter, highlighting the continued traction we are having in measured channels. In the third quarter, we saw our consumption sales increase by 49% versus Q2. Additionally, when comparing our total U.S. MULO consumption sales for the latest 12-week ended October 3rd, 2021 versus our health and wellness branded peers as defined by SPINS, Tattoo Chef is now the fourth largest brand in total in the categories in which we compete. More specifically, in our core category, frozen vegetable entrees, Tattooed Chef is the number two ranked health and wellness brand as measured by spins. We consider this a tremendous testament to the strength of the brand and our team's ability to execute. Our innovation is working. In the last 52 weeks ended October 3rd, 2021, We had four of the top 10 best performing single serve new innovation SKUs in the frozen vegetable entree category in total dollars and five of the top 10 performing SKUs when comparing velocity. This success is also now translating to the pizza category. In the latest 52 weeks, Tattooed Chef has the third best performing new pizza SKU launch in the health and wellness category as measured by SPINs. And it is the number one skew in terms of velocity. In club, we had three limited time offers, including our Huevos Rancheros breakfast bowl, cheeseburger bowl, and pad thai fried rice. According to spins in the club channel for the latest 12 weeks ended October 3rd, 2021, Tattooed Chef is up over 64%. Where the 52 weeks ended October 3rd, 2021, Tattoo Chef was up nearly 26%, and remains one of the fastest growing brands in the frozen category. In the mass channel, latest 12 weeks ended October 3rd, 2021. According to Mulo, we have grown 2,163%, and we continue to see tremendous momentum. In October, at Target, we also increased the number of categories offering tattooed chefs adding assortments in the pizza, breakfast, vegetable categories, increasing our SKU count to 25 total. In the grocery channel, we continue to win distribution with both national and regional retailers in the U.S. because of our innovative product portfolio and case studies in existing retailers. As a reminder, we launched our food channel program at the start of 2021, and we are very encouraged by the results. In our core category frozen entrees for the latest 12 weeks ended October 3rd, 2021, we are now a top 10 selling health and wellness brand, and by far the fastest growing in the category. In the third quarter, we began distribution at Kroger, Sprouts Farmer's Market, multiple Albertsons divisions, including Southwest, SoCal, NorCal, Intermountain, Seattle. Also, HEB and Price Chopper. As we previously announced, in the fourth quarter, we launched six SKUs in public, as well as one new distribution in Giant, Weiss, and Hy-Vee. We also expanded our total average SKU count per store from 5.8 to the end of Q2 to 6.5 today. Our internal goal is to get to 30 frozen SKUs per store across retail, and we are well on our way to achieve this with many retailers. We also believe we have even more upside when we launch into ambient products. We have multiple avenues of growth 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. From an operational standpoint, we're on track to increase our production capacity nearly fourfold in 2021. With the addition of Belmont, we will have over 315,000 square feet of manufacturing space to make everything from pizza to bowls to bars, snacks, and more to control our own destiny. Tattooed Chef has the ability to be a generational brand. It resonates with Gen Z and millennial consumers who are looking to connect with brands and food. What we are most focused on now is building brand awareness to drive more sales because we know our products are far more superior to others in the market today. And now I'd like to turn over the call to Sarah to discuss our innovation and our marketing efforts.