Tattooed Chef, Inc.

Greetings. Welcome to Tattooed Chef Incorporated fourth quarter fiscal 2021 financial results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Devin Sullivan, Senior Vice President of the Equity Group. Thank you. You may begin.

Thank you, Sherry. Good morning, everyone, and welcome to Tattooed Chef's fourth quarter and full year 2021 financial results conference call. On the call this morning are Sam Galletti, President and Chief Executive Officer, Sarah Galletti, Chief Creative Officer and the Tattooed Chef, and Stephanie Dyckman, the company's Chief Financial Officer. Matt Williams, Tattooed Chef's Chief Growth Officer, will also be available for questions. Earlier today, the company issued its press release, a copy of which is available in the investor section of its website, 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 could 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 the 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 the company believes is a useful metric that better reflects the performance of its 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 to the company's website. With that said, it is now my pleasure to turn the call over to Tattooed Chef's President and CEO, Sam Galletti. Sam, please go ahead.

Thank you, Devin. 2021 was an exceptional year for Tattooed Chef, highlighted by record revenue, an increased manufacturing footprint, a broadened distribution base, and an expanded and innovative product line. We achieved our revenue guidance that have entered 2022 with a great sense of optimism. Briefly, fourth quarter revenue of 52.3 million helped us generate full year revenue of 213.4 million, up 43.7% from 2020, and driven by 56.7% increase in branded product sales to $132.5 million or 63% of total 2021 revenue. I am very proud of our team and the results that we were able to deliver in a challenging environment of supply chain constraints and inflationary pressures. Although our gross margin was impacted by significantly higher freight and container costs, we believe that our vertically integrated operating model specifically that much of which we manufacture, we grow, has helped us weather some of the more severe consequences of this unprecedented operating environment while providing us with important and sustainable competitive advantages. Rather than focus on what we can't control, we have devoted our resources to managing those things that we can. By adhering to the principles of product innovation, distribution, marketing, and strategic M&A, along with a long-term focus of mixed diversification from private label to branded and frozen to ambient, we are confident in our ability to generate continued growth, expand our margins, elevate our brand profile, and deliver value to our shareholders. We ended the year with a much more diversified base of customers. Tactured Chef is now available nationally at the club, mass and grocery, and establishing a presence in the food service industry. We brought in our product distribution and diversified our channel mix to include 160 retailers covering approximately 14,000 locations, including new blue chip names like Target, Kroger, Publix, HEB, Albertson Safeway, among others. It's important to remember that our success in establishing a presence in these locations is not an end in and of itself, but an important incremental step towards capturing a significant sales growth opportunity. While the breadth of our national footprint is important, it is the depth of our presence, represented by the introduction of new SKUs into existing national distribution points that will help drive our growth. At the end of 2021, we expanded our total doors to over 14,000, our total distribution points to over 100,000. We view this as a significant accomplishment when considering we exited 2020 with just over 4,000 stores and 23,000 points of distribution. We are continuing to pursue the significant organic growth opportunity and have a long-term goal of having 30 frozen SKUs in each retail location. The channel diversification and broadening distribution is manifesting itself in the consumption data as measured by SPIN's IRI. Tattooed Chef's year-to-date growth performance through 12-26-2021 in MULO is extremely encouraging. We are the fastest growing health and wellness brand in the categories in which we compete, which include frozen appetizers and snacks, breakfast, entrees, and vegetables. For example, In frozen breakfast, we grew retail dollars 496% and are the number one health and wellness brand as measured by spins and the fastest growing. In the frozen entree category, Tattooed Chef is now number seven ranked health and wellness brand and growing the fastest of the top 30 brands in the category. Frozen entrees is by far one of the largest categories in the aisle and we clearly have momentum in our taking market share. We also view innovation through the lens of expanding product accessibility, which is why we are so enthusiastic about our upcoming entrance into ambient and refrigerated plant-based products to complement our growing position in the freezer aisle. In that regard, I am pleased that the integration of the acquisitions we completed in 2021, Foods in New Mexico and Belmont Confections is proceeding on track and provides us with substantial capacity to introduce new products. We believe that our investment thus far to upgrade the facilities, increase automation, will allow us to dramatically increase throughput and meet anticipated demand for these products. This will support our efforts to unlock greater shelf space and expand our channel penetration beyond retail and club. With respect to foods in New Mexico, the Karsten facility is scheduled to open during the beginning of the second quarter with an initial focus on manufacturing a variety of salty snacks. The Albuquerque facility, which produces Mexican foods including quesadillas, burritos, and other handheld items and sauces, has commenced manufacturing Tattooed Chef branded products These products began shipping to Kroger earlier this month, and we expect further distribution throughout this year. Belmont Confections, which we acquired in December 2021, has even more capacity, allows us to produce a variety of bars. We are currently co-packing out of that facility and will begin transitioning to Tattooed Chef branded bars beginning later this quarter. Our inaugural entry is a first-of-its-kind brain fuel oat butter bar powered with adaptogens that help to reduce stress, promote mental balance, and provide long-lasting focus. This product was featured at Expo West, and samples were shown to attendees, including buyers at the show. We are expecting shipments to be ready during Q2, and I want to emphasize that our branded products will carry higher margins than our current Copac products. The addition of these facilities and associated capital project investments has increased our total manufacturing capacity to more than 315,000 square feet, a four-fold increase from 2020. They're also expected to support up to an additional $300 million in annual revenue in the next two to three years. We are also investing in cold storage solutions to further strengthen our process and production to reduce associated costs. We have contracted a lease for cold storage in April and expect to begin raw material storage in the coming weeks with full product storage and pickup opportunity. This is a beautiful turnkey facility. We estimate that these initiatives will produce an approximate 50% annualized cost savings as compared to using third-party storage units for the refrigerated and frozen goods. As a point of reference, in 2021 we spent more than $5.8 million on cold storage. Perhaps most importantly, we expanded our team of professionals to help support our growth this year and beyond. We welcomed Gaspar Verrassi as Chief Operating Officer in late 2021 to lead our global operations and production, with a current emphasis on robotics and automation. We have also added a Director of SEC Compliance and Technical Accounting. Director of SOX Compliance. vice president of sales and support logistics, and vice presidents for all of the manufacturing facilities in the United States. It's been an exciting and productive full year as a public company, and I want to thank each of you for your continued interest and support. We have accomplished a lot, and we have learned a lot. And although our story has many chapters to be written, I am confident that we are well positioned to achieve our objectives and deliver shareholder value. I'd like to turn over the call to Sarah to discuss our innovations and marketing initiatives. Sarah?