Tattooed Chef, Inc.

Chef first quarter 2022 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. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Devin Sullivan, Senior Vice President, Equity Group. Thank you, and over to you.

Thank you. Good afternoon, everyone, and welcome to Tattooed Chef's 2022 First Quarter Financial Results 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 Dyckman, Chief Financial Officer. Matt Williams, the company's Chief Growth Officer, will also be available for questions. Earlier this afternoon, the company issued its press release, a copy of which is available in the investor section of the company's website at www.tattooedchef.com. Before we begin, I'd like to remind everyone that the prepared remarks contained 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 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 released 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 on the company's website. With that said, it is my pleasure to now turn the call over to Tattooed Chef's President and CEO, Sam Galletti. Sam, please go ahead.

Thank you, Devin. Given that we just reported our full year 2021 results in March, we will keep our remarks brief. Our first quarter performance and 2022 outlook reflect the resiliency of our model, the success of our investments, and initiatives to meet growing consumer demand for plant-based food and the scope of the opportunities that we are pursuing. The realities of COVID, along with global inflationary pressures, are inescapable. To mitigate their effects, we are investing in activities that support a vertically integrated operating model and advance our strategies of product, innovation, distribution, marketing, and strategic M&A. To be successful, we must continue to plan conservatively, adjust accordingly, and act with conviction, just as we've done since becoming a public company. The initiatives we undertook in 2021 to increase our capacity, elevate our brand profile, and expand our retail footprint are yielding results. We delivered our best ever quarterly revenue since coming public in 2020, with 2022 first quarter net sales of $72 million. Branded product sales rose 21% from last year's first quarter, and were driven by a significant increase in U.S. distribution points, increased volume at existing retail stores, and new product introductions. We are focused on building demand for our products and attracting and retaining consumers to our brand. During the first quarter of 2022, we added more than 10,000 points of distribution and branded SKUs rose to 90 from 78 at the end of 2021. We continue to expand our store count and now are available in more than 16,000 stores, tripling our store count since the same time last year. This has led to a doubling of our ACV as well to 54% of the U.S. MURO market. Consumption data for the first quarter is measured by SPIN's IRI continues to prove our strategies are working. We are the fastest growing health and wellness brand in the categories in which we compete which include frozen appetizers and snacks, breakfast, entrees, vegetables, and plant-based brewers. In Mulo, our consumption sales are up 49.6% versus one year ago. For example, in frozen breakfast foods, we grew retail dollars 32% and remain the number one health and wellness brand as measured by spins. In the frozen plant-based entree category, Tattooed Chef is now the second ranked health and wellness brand only behind amy's kitchen and growing the fastest of all the top five brands in the category tattooed chef dollar velocity and unit velocity in the same category are double that of the leading brand in the category frozen entrees remain one of the largest categories in the aisle and we clearly have momentum and are taking market share despite significantly higher domestic and international logistic costs our gross margins rebounded from 2021 fourth quarter to 11.3 percent and we remain on plan to achieve our annual gross profit targets of 10 to 12 percent for fiscal year 2022. we are confident we can continue to capture share and further establish our presence in the growing and global plant-based food marketplace dale will help us achieve this goal we currently operate five facilities comprised of approximately 315,000 square feet of manufacturing space. This includes our California facility, which also serves as our headquarters, our New Mexico operations, which we acquired in May 2021, Ohio, which we acquired in December 2021, and our facility in Presetti, Italy, where we grow much of products. Today, we expect these facilities to generate 280 to 285 million of revenue in 2022 with the capacity at present to produce upwards of 600 million in annual revenue over the next two to three years. Leveraging this scale is a key focus for 2022. We are focused on driving efficiencies and making the investments necessary to put us on a path to achieving long-term sustainable profitability. Under the leadership of our COO, Gaspar Guarasi, we are introducing automation and robotics across our company. Our automation and robotics initiatives will allow us to improve operational efficiencies, increase production capacity, lower operating and labor costs, increase gross profit, and meet our long-term ESG strategy. We are also committed to fortifying our vertically integrated operating model by bringing certain capabilities in-house. This not only provides us with more control, but is also designed to generate material cost savings. For example, we are near completion of the construction of our in-house food and safety inspection laboratory within our California facility. Our turnkey raw material and finished goods cold storage facility located in Vernon, California, became operational in April 2022. This facility will house refrigerated, frozen, and ambient goods. As we discussed on last quarter's call, we estimate that this facility will produce an approximately 50% annualized cost savings as compared to using third-party storage with initial savings expected to be realized in the current second quarter. We are also diversifying our product mix outside of the freezer aisle to refrigerated and ambient. This not only broadens our retail shelf space, but also introduces products that carry lower production and shipping costs when compared to frozen products. Our New Mexico facilities commenced the production of Tattooed Chef burritos and quesadillas during the first quarter of this year and is slated to produce salty snacks by the end of 2022. Ohio is scheduled to commence production and distribution of our refrigerated Tattooed Chef oat butter bars in the second quarter of 2022. We are very proud of what we have accomplished, and I am more excited and optimistic than ever about where we can take this brand in the years ahead. Still, we are mindful that we are operating in an environment with more than its fair share of economic uncertainty. We will therefore take a measured approach to our growth, balancing expansion with prudent fiscal management and initiatives designed to deliver material ROI. We have to date operated with exceptional low leverage for a high growth company and we'll maintain that posture as we continue to expand our business and brand. I'd like to turn over the call to Sarah to discuss our innovation and marketing initiatives. Sarah?