Tattooed Chef, Inc.

Greetings. Welcome to the Tattooed Chef, Inc. Second Quarter 2022 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 your host, Devin Sullivan. You may begin.

Thank you. Good afternoon, everyone, and welcome to Tattooed Chef's 2022 Second 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. Gaspar Guarasi, Chief Operating Officer, and Matt Williams, 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 our website at www.tattooedchef.com. Before we begin, I'd like to remind everyone that these 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 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 my pleasure to turn the call over to Tattooed Chef's President and CEO, Sam Galletti. Sam, please go ahead.

Thank you, Devin, and thanks everyone for joining us today. We reported another strong period of growth with second quarter revenue increasing 15.6% and six-month revenues rising by nearly 27%. We believe that this reflects our success at expanding our retail presence, elevating our profile, and investing in all aspects of the Tattooed Chef brand. We are uniquely positioned as a fully integrated value added plant-based food company. We grow what we sell. We offer options that fit every phase of a consumer's plant-based side, and we make food that tastes great. As a result, we believe that we are well positioned to achieve scale, drive revenue growth, and capture additional market share. While we are continuing to attract consumers to the frozen aisle, we have taken important steps to broaden our presence by introducing products that gain us entry into the refrigerated and ambient food spaces with the recent soft launches of our oat butter bars and grain and dairy-free tortilla chips. I'll let Sarah discuss these new products in more detail, but suffice to say that the initial reception has been very encouraging. We continue to execute our strategy of diversifying our channel mix, broadening the breadth of distribution of our existing portfolio. and expanding Tattooed Chef into new categories that are right for plant-based innovation. We have made progress in Q2 in all three of these key areas. We continue to add new distribution. We added more than 35,000 new points of distribution during the second quarter. We continue to add new stores. We have expanded our retail presence to approximately 17,200 retail locations across the country. This is a 240% increase in store count since the start of 2021. PatuChef brand consumption as measured by spin IRI in Q2 was 23.3 million and grew 140% versus the prior year quarter. Further, our diversification momentum in the grocery and mass channels continued with PatuChef consumption sales more than tripling in total dollars versus the prior year quarter. In Q2, our Tattooed Chef consumption and sales in new categories such as plant-based burritos, quesadillas, breakfast began to gain traction and market share. Year to date, our ACV is 52.4% in U.S. muro, which has grown 45.9% versus prior year. Tattooed Chef total distribution points, or TDP, sold at retail for the 13-week period ending June 12, 2022 has grown 131.2%, making Tattooed Chef the fastest frozen brand to gain distribution in the first half of 2022. Recently, we were recognized by SPNS as being the fastest growing brand in the conventional food channel year-to-date in the grocery, frozen, and refrigerated categories. This demonstrates our ability to execute our strategy of channel and category diversification. Consumption data for the second quarter as measured by SPIN's IRI reflects our continual growth, channel diversifications, and category expansion. In our core category, plant-based entrees, we remain the number two health and wellness brand behind Amy's, and now selling brands such as Healthy Choice, Sweet Earth, and Evolve. This remains extremely encouraging considering Capture Chef is available in fewer total stores than the other top five selling brands. In this key category, our dollar velocity remained strong, outperforming all of the previously mentioned brands. In another core category for Tattooed Shelf Health and Wellness Pizza, our Q2 performance was also strong. On a percentage basis, we are the fastest growing plant-based pizza brand in total dollars with growth of 105.4%. Additionally, compared to the other leading plant-based pizza brands, Caulipal and Daiya, Tattooed Chef has a higher unit velocity, dollar velocity, and average retail price per store selling. This too remains extremely encouraging considering Tattooed Chef ACV is less than half of the two comparative brands. We are continuing to gain new distribution in frozen appetizers, snacks, and burrito categories and are encouraged by retailers' willingness to add a plant-based product to their healthy offering. Our units per store selling in dollar velocities are in line with many of the top selling Better For You brands while being premium priced in the category. We achieved a significant milestone as a brand at the end of the second quarter. Less than 20% of the health and wellness brands generate more than $100 million in annual consumption sales. The latest 52-week shows that Tattoo Chef generated over $100 million in consumption sales and categories in which we compete, placing us in an exclusive class of brands. Considering our timing in the market, we are all very proud of this accomplishment and the support we've received from our partners. We continue to fortify the vertically integrated nature of our operating model, which we believe provides us with a strong and sustainable competitive advantage while enhancing margins, improving efficiencies, and driving profits. To that end, the pursuit of growth opportunities in plant-based space has created some operational inefficiencies and higher cash burn. To address this problem head on, we have put initiatives in motion such as automation and robotics, streamlining of our facilities, and leasing a dedicated cold storage space. These initiatives are expected to be completed by the end of the second quarter in 2023. As noted earlier, we completed the initial production run of our refrigerated oat butter bars at our facility in Ohio. We expect that these bars will begin to hit shelves in Q4 2022 and early 2023. As a reminder, these bars will mark our entry into the refrigerated space, which broadens product availability. Additionally, our goal is to hit shelves in Q1 2023 with our dairy and grain-free chips, which will be our initial entry into the ambient space. We are excited to be expanding into these new grocery aisles and expect that these new products will generate a higher gross margin than our frozen offerings. We certainly experienced some challenges during the first half of the year. Across the board, inflationary pressures impacted our operations, especially our gross profit, which includes domestic and international freight costs that have risen dramatically. Although it is difficult for us to predict the trajectory of these inflationary trends, the initiatives that we are undertaking with respect to driving revenue growth, building skew counts, integrating automation, and in-source ingredients that had previously been outsourced should mitigate the effect of these trends. I also want to note that 100% of our growth to date has been unit-driven, that is, we have not implemented any pricing increases. We do expect to implement our pricing strategy in the later part of 2022, but along with our productivity efforts should help to counter inflationary cost pressures and advance us toward our goal of positive adjusted EBITDA by late 2023. We remain confident in our ability to continue to grow sales and capture additional market share. The fundamentals of our business are strong and getting stronger as we continue to deploy our portfolio of productivity and sales growth initiatives to combat near-term inflationary and margin pressures. We will continue to invest in our brand, our people, and our processes, and are committed to delivering long-term value to our shareholders. Thank you for your attention. And I'll now turn things over to Sarah to discuss our innovation and our marketing initiatives. Sarah?