TTCF - Earnings call transcript Q1 2022

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Operator

Greetings, and welcome to Tattooed 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. [Operator Instructions] 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. to over and you, you. Thank

Devin Sullivan

afternoon, Thank Chef's welcome Tattooed and first you. quarter Good XXXX financial to call. everyone, results conference

of On Stephanie Chief Dieckmann, Growth Galletti, Sam Financial Officer. Sarah Officer; today the Chief Chief The call company’s at is Officer, be questions. Williams, for issued and and Officer; available will the Creative available Galletti, President company copy in release, website press a Earlier Chef; its the Tattooed Investors Matt Executive section also Chief www.tattooedchef.com. the of this and which company's afternoon, the are

that to Before achievements could we of begin, everyone cause expressed or achievements future which or are significantly prepared I'd Such such of differences Securities the a many or like remarks statements. factors information, company Important cause other new contribute to could undertakes statements. contain Commission, results, the no number Exchange performance statements outside or as uncertainties, and involve filings events results, such to differ performance by remind forward-looking or otherwise. company's forward-looking whether result as obligation to the a except and the control and law, forward-looking statements or from any by unknown and implied future required of known the in that detailed with company's risks update are herein, the

an turn is company’s A is note on is Galletti. call comparable today's this in over Tattooed Sam directly most has its release, that President With of remarks, believe is to said, in Chef's on ongoing to its included it the ahead. that also now EBITDA CEO, pleasure adjusted metric press reflects that It non-GAAP that been my prepared please to important GAAP non-GAAP and financial release Sam, reconciliation the today's which performance addition, go measure measure better within our posted website. to financial and basis. of useful this earnings In is referenced. financial business a is the we a measure

Sam Galletti

Thank you, Devin.

March, just Given keep reported that our remarks we our in year brief. XXXX we will results full

are act new with delivered footprint public done company. rose distribution just results. net we at outlook retail inflationary quarter increase and adjust Our pressures The global increase our quarter To support and effects, meet be XXXX product as opportunities profile model our continue and undertook investments first $XX in resiliency vertically with scope and and that first product last driven capacity, significant and reflects demand we've To quarterly brand since food our M&A. are that sales plant-based of their must are advance of marketing and XXXX along in model, the points, expand the a of becoming XXXX our we performance the conviction, realities public since integrated ever best in in accordingly operating quarter first to with our introductions. existing inescapable. of and of of our initiatives initiatives The retail XX% for to the elevate We strategies XXXX revenue Branded growing from are we successful, were and a US success consumer volume our yielding year's COVID, mitigate increased our innovation, we plan stores conservatively, activities distribution, strategic by to product, million. becoming sales investing pursuing.

for and products to on our and We retaining brand. are building focused consumers our demand attracting

branded of During to distribution from more than XX quarter the SKUs and XX,XXX of points we the at XXXX, XXXX. added end rose XX first of

US count well stores, SPINS led since in This time MULO by available the doubling as to IRI first continues of our to data measured tripling store working. expand market. and to strategies is count prove continue more Consumption has our of our a the last our are quarter ACV, store XX,XXX We same are the for now than to year. XX%

and fastest-growing plant-based which up In consumption We entrees, health appetizers compete, the vegetables versus breakfast, in XX.X% brand and are our snacks, brewers. year wellness which Loulo in [ph], the and ago. sales frozen include categories are one we

brand example, all and of category, foods, fiscal brands our year leading dollar to to brand we international the remain velocity and plan the XXXX. five health we frozen our category. rank categories in Tattooed category on Amy's Tattooed And margins the the unit logistic grew share. now Frozen growing measured health Kitchen are rebounded and costs, gross for significantly and achieve are is higher XX% the XXXX by fourth to brand Chef and and in velocity wellness only gross For the spins. and from remain domestic and clearly plant-based second as the the momentum have in the the behind retail same quarter of of fastest Chef that breakfast one largest we entree aisle, In market category. number profit target XX% XX% one entrees double XX.X%. dollars remain top taking wellness of in in the annual frozen Despite

We achieving operate XXX,XXX California our includes in our expect in are global Prossedi, establish generate the produce approximately Gasper and $XXX we to with acquired years. of path XXXX. present This sustainable acquired XXXX, goal. manufacturing XXXX, upwards annual facility, is comprised space. marketplace. introducing which capacity this will XXXX, million of key million Ohio, where five $XXX focus feet this our serves Under are May $XXX our revenue and achieve company. New for revenue in Italy, the as automation in food of COO, Today, across capture also a to currently we at much square the operations, We Mexico facility help making to we facilities Leveraging robotics in to December the we driving we confident next We profitability. us we and to which of headquarters, facilities and -- three grow of we long-term which to on these product. million put our are our and to in share plant-based of two Guarrasi, presence leadership necessary the a us on focused scale over continue efficiencies can further Sale growing investments our

Our efficiencies, automation strategy. and robotics lower initiatives allow will to increased increased and capacity, costs, long-term meet improve production our profit us labor and operational ESG operating gross

bringing to committed savings. material control, certain operating vertically also but cost model only in-house. is to are We us capabilities with generate by provides our not This also designed fortifying integrated more

completion laboratory within and inspection our construction we example, the are facility. of California food For near our of in-house safety

goods. raw facility in California, in facility finished April storage cold Our frozen and Bern material goods refrigerated, This turnkey in and ambient XXXX. located house became will operational

last savings realized storage As using quarter we in expected that this approximately be with we quarter's facility -- savings produce discussed estimate current to an third-party will XX% initial annualized on in call, compared to as the cost the quarter. second

and carry mix costs freezer introduces retail shipping broadens space, We to outside not diversifying lower refrigerated frozen the when of This ambient. are our only production products products. also product to also aisle that and compared our shelf but

this Butter commenced facilities Bars Chef of year Quesadillas by of quarter of and of and distribution the XXXX. Mexico of the the New is Burritos quarter the XXXX. snacks first during to Our our salty to refrigerated Oat Tattooed in commence Ohio end Tattooed produce scheduled and second Chef is slated production production

we approach We and we an in we to deliver we optimistic are more with a expansion measured what than ahead. environment operating its with am uncertainty, more mindful share in fair very balancing of than our I material management excited prudent initiatives fiscal ever to economic are we growth, are therefore, ROI. where and of take this take proud Still, have will, designed brand accomplished that about and years can the

to as our and maintain exceptional a We to low and Sarah? leverage operated and business date to marketing to like our I'd high-growth expand for turn Sarah we over have brand. call posture continue innovation initiatives. with that the will discuss company to

Sarah Galletti

satisfy created We to way. foods we to designed a plant-based strong in for introducing feel a made nostalgia side. appeal meals year new These sustainable the slate by favorite started products of plant-based childhood the been have our off delicious to all everybody's healthier

one the alone according flavors. both some is IRI year-over-year XXXX of are This our April map fastest continue be we turning year, Pizza. to Frozen as plant-based experience nostalgic of are are on that expanding Americans to signature our items For and Tattooed business, of put love X% $X SKUs. profiles retail the Chef billion up data. pizzas and example, pizzas plant-based pizza unique the flavor

including Some new Bracken our personal of vegan Rainbow Killer the favorites my wood-fired and are B roll. pizzas, State,

we see vegan are cuisines to innovation and flavors them in the market. in allow pizza, consumers Our a wood-fired different to excited and will delicious XXX% experience

now category ingredient that include plant-based Mole in well is and both it in lagging categories quesadillas dining. all-occasion such need Al than as to it on when of cuisine. a ready traditional incorporate product behind comes Chorizo and American TC Plant plant-based Quesadilla modern a Enchiladas. Plant Egg Burrito, variety handheld Mexican is others true and food frozen believe Our popular Mexican take a a Mexican as new the alternatives the Chicken Based and as Based combinations breakfast Pastor entrees Plant for and and as burritos Based meal unmet more cuisine category We innovation. this is hamburgers for chef see Mexican

to is incorporating taste. consumers. sugar, It butter the of we and We across line a focus powered. of vegan our consumers create familiar. finally, oat on to freezer the aisle first by bar, coming This existing with a cheese significantly with purpose. today are than and with alternatives, feeder are out looking what yet compete also plant-based benefits beyond one in concept passed proprietary anxiety. expanding today in knew portfolios expanding bar our the are a nutritional trends different, adaptogens refrigerated still fuel brain are We to with next several has ingredient butter are bars something we soy including of a to terms not wanted Many that into egg, and our be reducing We is bar. of could pork and filler product or is familiar buy. by oat ingredients that bars better The available Every happens vegan meal what mined of meals. made And into our

between have sugar and soy-free, gluten-free, protein XX Tattooed Our per of bars to are grams Chef bar. no XX contain non-GMO, alcohol vegan,

terms is meet we calls, consumers social TV, in are our as In shared they events. experiential and XXXX, retail In across have previous channels, where our earnings of efforts, marketing to build we are we U.S. and spend marketing our, more to accelerating with consumers. the XXX awareness consumer reaching engagement. a to-date, most than significant In million buy television goal did aggressive QX, doubling

of end as QX. the increase from year-end household saw to-date, we to are at with results at an growing in XX% pleased the XXXX We XX% awareness

continuing to conversation our TV line. addition rolled loyalty I'll campaigns to expand Tattooed programming turn now product brands the Chef of and new results. our evolving spend, over what we community, In social awareness designed our our our Stephanie, and advertising a Stephanie? to for discussion build out for to create

Stephanie Dieckmann

afternoon, Good everyone.

Operator

line and Sarah for Ladies disconnected. gentlemen, the

with connected. Please Dieckmann. So kindly connect we're Stephanie trying stay you. to Thank

So ladies with Ms. please and Dieckmann Dieckmann, us. online Stephanie have we ahead. gentlemen, go

Stephanie Dieckmann

afternoon, increase quarter Revenue first a the private apologize $XX.X in delay. growth We including products Good extent, lesser the Chef factors, during in to to for increased and, everyone. several driven label. branded a everyone XX.X% This by quarter XX.X% growth in million up of the was XXXX. from Tattooed first $XX.X million

of Costco logistic likely increases to Cost inflationary and goods revenue quarter-over-quarter and that increased in revenues relation also million to quarter first not from XXXX. and due XX.X% recur resulted pressures significant million are costs, in $XX.X labor to that First of costs, from quarter benefited XXXX quarter first in the in last of cold sales in expenses storage to sold $XX.X year's $X.X higher later material million in expenses. advertising

compared XXXX first comparable quarter million to and $X.X X% million sales. first for quarter XXXX a of a cost freight percentage there Specifically, $XX was increase legacy as were

first and a reported of quarter to a of While as declined immediately fourth cost this As we significant quarter, dedicated preceding mentioned, expect quarter. our compared QX revenue became year's associated gross the it cold million from $X.X We from storage XX.X% $X.X XXXX savings result, XXXX, gross to the million the Sam in new in profit revenue, realize April facility operational XXXX. profit was or or XX.X% of gross profit was improvement last in

Mexico and We the and be also refrigerated mix positively acquisitions during private transition label manufacturing impacted New as catches XXXX, in our we as expect branded XXXX that space. ambient gross from will products and in into the we both margin the expand Ohio and product co-manufacturers

or marketing million increase million will in a quarter finished decrease million per increase This million share $X.XX $X.X automation expenses, $X.XX goods operating net from manufacturing million loss a to and adjusted QX cold first due in our XXXX by in rose negative lower longer was resulted share. Net to primarily current $X.X was quarter million costs XXXX gross acquired diluted as footprint. $X.X $X.X EBITDA in EBITDA quarters costs us The in the first was a expenses driven capacity, which later XXXX. was in in our term, increase earlier. compared expenses a a $X.X labor expenses increases variance mentioned million Operating expense. during increase $XX.X the that Over to by quarter-over-quarter negative yields in in expenses, production fourth or and Adjusted facilities quarter. allow in in million last million $XX.X from improve increase to of stock the investments $XX.X million offset to increase loss storage the $XX.X in margins, payroll increase as compensation per in were within million our year's compared of loss million $X.X in $X.X professional negative expenses, XXXX, recruiting $X an a substantial of decreased diluted

cash $X.X a cash debt maintain reflecting primarily XX, used was million and XXXX. down position. reflected XXXX. $XX.X increase March in during which new XXXX, of million. to million, was operating equipment were million $XX.X QX made activities payments continue long-term strong and We expenditures receivable, Capital was in on significantly was At financial $X.X Net attributable in million to automation for sales higher an $XX.X accounts

the we environment believe Our which and outlook appropriate persistent is for given XXXX unchanged, of is backdrop constraints. supply inflationary chain

million revenue to $XX margin capital robotics. turn XXXX $XX million expenditures of your to of million and expect Thank of back $XXX all XX% you automation $XXX and $XX to I'll million, primarily and attention, marketing million, We expenses annual XX%; on of for gross conversation to the focused Sam.

Sam Galletti

Stephanie. Thanks,

questions our call from analysts. Let's open for the

Operator

Instructions] Thank Holland you. ahead. Please the and The go Co. Brian [Operator line first Cowen comes question from of with

Brian Holland

I Came around if start around of Yeah. right could. gross with came Good Thanks. everyone. year evening, midpoint the I -- the margin, the guidance. will full in

that gross helpful. XQ the balance your quarter of latest your As would that look the the over the we out around be of the lowest year, Just on cadence it is be margin expectation year? would thoughts

Stephanie Dieckmann

regarding the are thoughts margin will cadence line. for this quarter Our in gross fall

same that facility to pickup We and due expect next quarter will the be we've some the the in with cold storage operations that of robotics in that put discussed roughly in plus space. automation the QX we QX place,

Brian Holland

Okay. Perfect.

the OpEx on line. Just

you we number I internal appreciate looks of higher in is sure of of to came year. not looks drivers I'm line-by-line Stephanie, increase. that what walking as that the like relative XX% So or that about I the here than what that like through balance a plan. baseline the over modeled. But the project right that kind that for

would get which through of those some items we on to year? of gross just be question a similar So on go sort Do helpful those stay? OpEx of numbers any maybe kind it the of around off, wear perspective margin, So side. focus the as

Stephanie Dieckmann

and important advertising to big million be during operations and in of we for Expo it participated audit to to was later And presence one we Chef the XXXX. Tattooed had within in additional couple in us expenses, them restatement that is fees and so legal that occurred QX at that a of show. really really recur mentioned then also as So, due that had things West, happened doesn't that XXXX. We expenses $X.X that And the a XXXX. I

to there were way. and really so expenses spectacular to the Chef that And show Tattooed floor to bring spent were up Expo a West really in

Brian Holland

Should this year watermark be come for for the gross -- QX low high -- we is watermark be the number I if what gradually roughly of Is it quarter? margin consistent down, should about the whether over saw could ask thinking with XXXX. that or sort would OpEx QX we and OpEx

Stephanie Dieckmann

to year, really the in for year, I expect next QX, that see stabilization we'll this market down in and and QX QX, High it come quarter.

Brian Holland

then is Okay. was burn, would that maybe margin if Appreciate than just faster one, cash helps OpEx what obviously, I forecasting down, of bit. And in last stable that. comes a little look kind gross QX just and two questions. But

a given that the and that kind to is made I'm in I holds? an marketing hearing Can I'm years. investments thoughts you talked what sheet examples to curious couple for past carry next about to backdrop balance automation, trying about technology the couple right where in some guess year. this prudent. think, this sort we've the unprecedented sufficient and of of spend year, just seen, with are be Sam, Stephanie, obviously said you've whether acquisitions kind unprecedented obviously there's last then still just nimble And two, a being jump of over I of now of the quarter, essentially be in navigate plan CPG? about you us give some with inflation you maybe you would

Stephanie Dieckmann

me Brian, I'll think incredibly hit is I cash first then cash turn to it important, Sam. and let because that over Hey

burn, burn. cash look So, at we the on cash

our that are start when keep kind talk million that in burn with about marketing nearly think that to the prepaid, some marketing, just you cash then that the when mind And growth expenses $X.X and expenditures, sit XXXX. QX, that capital on as is cash, $X.X down in adding away, revenue significant. payments in goes the not that to think over came of to I other need we we there's QX as we compared I combine that accounts up million in with that $XX that really in receivable in million

we're $X.X pretty cash for the longer certainly good -- we whether without probably long-term like XX that being months concerns. in company than be or not everybody out to I'd any expenditures. Also, million our there acquisitions next our far our a had remind it purchases, as debt. pretty that's still we're is as been that and We're So, concerned, there financing capital

take safety with question? as through and banks as as into made there that future. go working would are be a the facility and on next year do a sense, this the you want year it credit to we other We our and Sam, net

Sam Galletti

how Brian, Hey doing? Sure. are you

Brian Holland

Good Sam.

Sam Galletti

So, have we've this Chef guidance like -- started to we was projections pretty here we're made the today be Stephanie we that already that -- going do was like the in at But it's we've infrastructure that sales in these place be a million. is we Tattooed all overhead made, since way $XXX -- investment $XXX of mentioned, this our are. what this with acquisitions out, million to now we within million $XXX where could to now built where

in we a here to we overspend privately with to from held acquisitions made So trying Sara's ramp all have up had to we're now went to fact, small these publicly we then company. company up traded that that catch just But this and we've be innovation.

the So feel we're we're distribution our any in tremendous except Mexican that going, Mexican not that, any for great I really we not line with in plant-based we've not and is we're some -- but and we we're a launched still even and some. got mean, Kroger, and we opportunity Quesadilla selling and selling food. started chips, Burritos food bars,

for minimal do we're infrastructure million million more this we very and that now revenue. with have that to of within every now on so all day cost, a we guidance much So could additional at paying infrastructure of $XXX $XXX

with And so be we continue it yes, so got be smooth, issues, this and so here nothing more it more of team we I an if mean would inflationary built this now infrastructure to these build -- we I much weren't mean, ride. we've So interesting platform. much but this out would

looking of now and doing while this a costs $XXX way bit little will we're million it's thing is increase at -- could minimally. the a sales -- million, our there's now in So our we $XXX I'm but increases headwind,

we increasing sales here have be in gross So position yet. costs to do a margins excellent I really forward even not to that discussing really here. and we're really going the driving really down, right so believe going But opportunity we're that we're meet

Brian Holland

Appreciate. in of I'll queue. Thanks. Best hop luck. back the

Sam Galletti

Thank you.

Operator

the go Please line you. next question Dickerson from of Thank The Jefferies. ahead. Rob with comes

Rob Dickerson

on Great. Thank you had so revenue question the side. much. I a

of guide think a revenue heard I I does doing in for of of kind the current prepared think, then implies Thanks. And have Costco kind some right, repeat I'll year, Right, be of of just might you. bit include from QX, you, that the did guessing include kind you revenue the what is that up the the what of QX? kind year. the of essentially it. if on? back I or part guide of side, per does then kind include? like the second that anything what similar That's the the comes for little business, that products include as the cost terms the maybe And on quarter then have in kind remainder of think of, I does in in that Mexican-based So, latter first remarks or in bars not the piece? Costco rate year. a what Current QX, kind of the is on kind does with that in was innovation or the products, of, around of That's kind side coming what is about maybe I'm only run more there piece that visibility but it less ask question was

Stephanie Dieckmann

here. it's Rob, Stephanie Hey,

for the I million that expense mentioned $X.X recur. was Costco actually that So advertising won't

that, growth at in down. the some come like and QX operating we're biggest What with Costco with on it's last always talk in and of business that when new QX with So advantage Costco I'm QX year in SKUs at that we and not down sure and can sequentially QX But to generated Matt actually is, and is did which remember retailers QX, the Costco. that, year to But XXXX. looking we QX, come in that full our year, our that building will expenses. this we things the in about quarter we not this QX, get add and and and

we four are so sites got for are that up There in. And some built that have coming up in. built as vision we've things and the But have it's to There's will out this really for part, you existing Matt, business. that? nothing panning add goals This year. happen revenue maybe our want that there we that could or most to happen. to do

Matt Williams

Yes. built Obviously, into the latter part hit have obviously yet. we the commitments not market year have that of the

in So obviously, Clearly, -- innovation bars. shipping, very included with that we've in we QX as again, that working some that Sam like the that pipeline Mexican then obviously for guidance. QX the well -- we're QX of the getting that commitments have the towards end and we're we're filling as ready are mentioned, entrees also

of for as being of early chips of plan So timing, we've and don't We numbers on reads as do we into as that bars be part well well. in as point a already some our but built the to QX lot just due our distributors some QX from expect started as our at to to customer right now built gain revenue well. have commitments

Sam Galletti

I'd to just like add…

Rob Dickerson

Okay. Perfect.

Sam Galletti

just to like just one. add I'd

Rob Dickerson

Go ahead, Sam.

Sam Galletti

us hey, came that out when there focus this Rob, , just club lot States. a able what will stores, much earnings the from Rob. It's I XX,XXX our just X,XXX that what's The really we it's one was so it's retailers is diversify we United stores. -- to Chef on, very not the be club And is last we be skewed the additional company is thing of it people happened. said dependent was Tattooed towards it's first and was Costco were were -- business, people fleeting. one be different looking the what that's all from to into really stability thing, and now and retail, -- customer, that in year, volume be is and and so -- on are retail report, in conventional across one really launch were at when we like it's -- we're mean to could and at we like

so what that. exactly at with So be accomplished just what that's we've that's people we're last year, the to that much very were proud club, is of in and and looking

Rob Dickerson

the to much All right. there's We like doors. SKUs have off on to your Obviously, of with the there new very I'm expand you SKUs back conversation your that take that's you better it able new freezer. points in on to tone so look, the innovation. retailer that sounds retailers SKUs, Super. obviously retailer now day, the be a points look, push expanded other then is sure Obviously, kind bringing conversations to We distribution you we've in some your with And than basic far? take kind kind that of I while other new sound the question, guess there's -- shelf, do reception some distribution? total is of now, but doesn't could. done holding right, every want the there's is, if within what It Is this occurring you're depending looking new, the just are XX innovation, it ground SKUs of by side. might not

Sam Galletti

Rob, Well,

Matt Williams

-- is yes. this oh, Rob,

Sam Galletti

You go. go you No, ahead. go but Matt, ahead, you

Matt Williams

to mean, I them -- No. Tattooed think, accept about mean I Rob, I it's is it SKUs. obviously is think Chef’s the I wanting don't Not only that just strategy.

the we're think innovation. I plant-based it's in ripe doors also SKUs are bringing for that of kind that

what proving out line where for. are distribution distribution brand with think consumers looking bringing I the gained we're not or gaining are where we've we but that historically, that's is just it's also innovation So, in also itself to --

of our Line favor. emphasizing like really for I push innovation categories mean in are things are, breakfast. are very we're of to as brand. think and these said, So as working is well those the the really now ripe where I the that two I we're We of Mexican Obviously, continuing stores. be seeing plant-based of X,XXX part review a bullish that. early on with of a X SKUs had acceptance the kind take out Kroger They're as gate lot in right the

to velocities, categories, kind we're Our burrito these Amy's market the any off of we at punching have breakfast And in that and we leader. enter right case, category, usually obviously new it share that or terms was when in velocity. of of in benchmark that level

country in now runway But and is XX the already have terms lows per right, really retailers we distribution XX of but a closing now that SKUs mean as the that the as lot target I that up customers, we distribution is that the that here about gaps there. we're now of over mean, and right right assortment of SKU it's different chain. of there, SKUs. parts So, of I model. And in have with Northeast reaching in well four are entity. hampered carrying is still

obviously So and -- the the to aisle. freezer us strategy, to plant-based innovation bringing continuing it's bring that's

Rob Dickerson

if All sneak right. kind of for just Stephanie. one I And simple one can

Just expect piece out, still it. working is post QX, we at as in thinking be maybe -- that terms shift, you your receivable we that of account I like say, are of QX But assume the when revenues let's a to kind number kind of there cap. that That's level, as same be Thanks. for within the should reverses $XX visibility million revenues build. changes of the as in there timing they it timing would or that as is

Stephanie Dieckmann

with when these Costco, which on promotions comes Club things, Sam's you. to organic runs that see like and runs Costco receivable, QX. it in It always for do really participate we at will So some that in receivable remember had of down we things healthy more come timing to accounts accounts

QX very it's tapering really holiday be of foods, QX, just anything. During plant-based be It happens a the out with everybody off in wonderful in season. to coming particularly of not to time a

being in these starting But receivable than it some down in revenue we're the level QX not that will if then at see accounts we'll start end receivable that but at to in come So stabilize said, this QX accounts XXXX, balance. QX, do in QX. to QX, be numbers, QX will and accounts was of higher receivable

Rob Dickerson

you. Thank sense. Make Okay.

Operator

Thank question go Kelly you. Partners. Please from with Capital comes George The of the ahead. line ROTH next

George Kelly

Can me? everybody. Hi, you hear

Sarah Galletti

We can, George.

George Kelly

Great. Okay.

question first Stephanie. So for

cadence of question it earlier and was to gross back about to operating of margin kind Just expenses. -- go an the the

those -- I both and breakeven if I throughout you question just margin the sounds they kind coming with So for the like through EBITDA -- go gross of year. reaching operating should helping down be provide expenses sounded you year? numbers, expectations your EBITDA maybe improvement around any and is, this it like Could it the And any timing there chance of is guess quarters a that? run

Stephanie Dieckmann

operating We Our were what that that in of don't and in to be there start XXXX, adjusted of expectations loss believe we half the EBITDA positive end remain see XXXX. significant we which feel back the a unchanged will at from breakeven in they we adjusted we see aren't come EBITDA on is expenses to QX, expenses just that there to our down due about. there during already start will occurred costs QX. talked But because as some QX of front-loaded that those some

And we to we'll in breakeven household normal still be Chef important is we we our in in are it at Chef and to make QX time, does Chef a have spend would help EBITDA. our growth shelf not on on so ramp-up continue at see And to possibly think awareness able to put distribution, time. marketing chain build George. this that adjusted that with and Tattooed that in take in improvement supply that and Tattooed during into get issues the this the it that can than today sure everywhere QX, positive have QX, to more a XXXX. we more just still holding Tattooed feel hands year money will inventory that moment and our would it's which We get don't

George Kelly

Okay.

then… And Great. Okay.

Sam Galletti

to This I wanted jump Sam. just here, George. in is

have just a to we wouldn't to from buy really potentially and equipment the by we able it's to be raising price to levers robotics. pull own gross our be were fix be to to our and that to CapEx a not getting many pricing We think get the money. margins able wouldn't able to storages save I out. wouldn't so unique typical increase the ourselves being manufacturer. was it's brand cold the We is -- company co-packed, and that about all be able we If a

on many in -- to all think we really bars, year than have between We opportunity we pull of have end much do by so next increasing we're be more this and levers we the the that higher more past, of with many different margins all to -- profitable going command so things the going company the that and gross the our a as chips, sales on in because then the discussed are also. they so frozen

this profitable that many in company. so ways that we in -- there's believe could the we be So

George Kelly

Okay.

Okay. next And question. then

acquired New any? we and number the was think, about branded Was half that this it -- how questions material you I you're quarter. annualized, the contribution at branded? a how branded quantify Can will million, for contribution that. for should $XX $XXX branded in from there those I about the running business once be they businesses, start if the now so XXXX? question in Foods is in should Mexico million year them second mean, So Belmont line? the two selling you from expect more second meaningful And number of a quickly Can

Stephanie Dieckmann

the So George, Mexico as did out hard. of Mexican of his New that still are Mexico. plant-based Tattooed and into remember XXXX, facilities Mexico Quesadillas are back branded in now, by things were continued the talk New this Cheeze the first But Tattooed Chef And Matt I the little about Ohio very and in the Westmont see facility. brand. for entrée you month over those lines Ohio made Chef, and during the come come and team overall foods converting we those please of right are year that more there that the out of We're will certainly and can process half out QX working Kroger in to play of New Burritos so that that. promise bowl our to the products of

George Kelly

I'm now? sounds for getting contributor have want And from retailers one detail of I put sort how quickly quickly is be time, I it to years, good about If mean, but any you're it, early they I this and guess, you to more distribution, of more and serious should don't a running, what a are right going can brand. up reception just how try like you good guess it but or within once they in fill like time, just to going to look and broader these does products. But couple I

Stephanie Dieckmann

that course, I food this And next and would facility. snacks really both and we've contributor think that's, the quarter. Karsten a should running that Mexico and the in will serious say later about salty up distributor by year, talked facility New sure, XXXX. of Mexico, where of But nature. for Karsten that's be in that things New be I more

bars, say, QX, annual this into much at haven't As that Matt for as I to the our bars to mentioned baked as end we the this meaningful call, the plant-based we'll much have be of overall them ready don't make XXXX to where but we I revenue quarter. real And really earlier guidance hey, on and want in is will that XXXX, see think, how know those contribution. we'll

where should branded that remainder idea between we about being label. to to it were different of product the truly private want me and Tattooed we what have I brand private ask think think be you individually, to see XX% I a that But is with XX% if mix overall, Chef between label.

George Kelly

Okay. much patterns you your is much then part are taken place the that behavior of like sort second in currently based where you've Curious prices is now. seen question in And if then shifting set. -- And for on just me. or And do you buying now feel good consumer price? have pricing last a of

Stephanie Dieckmann

math So steps. of and the then pricing I'll some to going take private other I'm show the over on label

taken and we've some selectively business. on pricing existing existing very So label co-manufacturing private some

so can that while we role our you on for. Chef that the future automation really evaluate our demographics account the into to at and we do improve and to structure our robotics want come our look side to can -- to looking buyers continue margins needs consumer and putting pricing that taking what do Tattooed We is and play also in our and Matt, determine what where price what talk can we're the through. about

Matt Williams

Yes.

take in pricing. first, that, we think of obviously, seen share our space, George, leaders some I the have market

that our point and mitigate at kind price. We and have to a this price in Clearly, of drive promoted area very way as is been an order as to to to it overall how up our geographically. we're a obviously, that wholesale in close focused price to of very them, our monitoring stack trade category on we effectiveness relates terms increase

had have that is seen would we've history where period the consumption sit of positive. really And that move our in as We that's expect, as that as share you very we we today. the so do to of QX. our today. is been higher-priced brands see pricing Obviously, focusing will pricing one of obviously north, that because kind market move obviously continue does we northward company's within best benefit that, And space expect where we're gaining. us our we But

George Kelly

Thank Okay. helpful. you. That’s

Sam Galletti

you. Thank

Operator

to turn Thank have the we you. remarks. session. reached of Ladies would end question-and-answer Sam for gentlemen, like And I call closing and the back Galletti to

Sam Galletti

for everyone, today. you, your Thank participation

including there. Have events see a to and of story telling hope look our of Oppenheimer next sponsored number month, event some We you these everyone. forward & scheduled at and the by We Company, Jefferies. over appearances day, have great Cowen conference a to

Operator

This concludes conference. Thank today's you.

may time lines at thank you You disconnect this your for and your participation.

Tattooed Chef (TTCFQ) 9 May 222022 Q1 Earnings call transcript