Tattooed Chef: Reports Q1-2022 Financial Results

Paramount / CA. (ttcf) Tattooed Chef Inc., a leader in plant based foods, announced financial results for the first quarter ended March 31, 2022. The Company also reiterated its financial guidance for full year 2022.

First Quarter 2022 Financial Overview Compared to Q1-2021

  • Revenue rose 37.3 percent to USD 72.1 million
  • Tattooed Chef branded product revenue increased 21.2 percent to USD 43.5 million, or 60 percent of total revenue
  • Adjusted Ebitda was negative USD 13.4 million
  • Net loss was USD 17.6 million

First Quarter 2022 Operational Highlights

  • Branded SKUs rose to 90 as of March 31, 2022 from 78 as of December 31, 2021
  • Added more than 10,000 new points of distribution
  • Commenced production of frozen, ready-to-eat Mexican food items
  • Enterprise-wide automation initiative underway and expected to be completed by the end of 2022

Additional Operational Highlights

  • Branded oat butter bars set to commence production in Q2 2022
  • Cold storage facility operational April 2022

«After a record 2021, our growth continued during the 2022 first quarter and we reported our highest ever quarterly revenue of approximately USD 72 million,» said Sam Galletti, President and CEO. «We are continuing to scale our business, and during the first quarter we saw increased contributions from the facilities acquired as part of the New Mexico Food Distributors, Inc. and Karsten Tortilla Factory, LLC transactions.»

Galletti continued, «We are advancing initiatives designed to leverage our increased manufacturing capacity and demand profile to drive efficiencies, reduce costs, expand margins, and enhance our competitive profile. These include increasing our retail footprint and product count in existing retailers; expanding our presence outside of the freezer aisle to include refrigerated and ambient products; and integrating automation across our operations. We commenced operations at our dedicated cold storage facility in April 2022 and expect to generate significant savings this year by bringing this capability in-house. I am extremely proud of our team as they continue to deliver growth and maintain the highest levels of quality and client service while navigating multiple macroeconomic challenges.»

Sarah Galletti, the Tattooed Chef, Founder and Chief Creative Officer added, «We believe everybody has a plant-based side, and the introduction of a broad range new product SKUs during the 2022 first quarter reflects our ability to craft delicious plant-based food for a wide range of eating occasions, flavor profiles, and nutritional needs. Through our nostalgic innovation approach, we continue to create meals that people know and love, now made healthier. We are particularly enthusiastic about our expansion into new frozen product categories: burritos, quesadillas and Mexican entrees that include a variety of tasty plant-based meat alternatives and ingredient combinations, such as the Plant Based Chorizo and Egg Burrito, the Plant Based Al Pastor Quesadilla, and Plant Based Chicken Mole Enchiladas. In addition, we are significantly expanding our vegan line by incorporating vegan eggs and proprietary meat alternatives, including plant-based pork into our meals. Finally, we are on plan to commence production of Tattooed Chef branded oat butter bars during the second quarter of 2022, expanding the brand out of the freezer aisle.»

First Quarter 2022 Results

Revenue increased 37.3 percent to USD 72.1 million during the first quarter of 2022 («Q1 2022») from USD 52.5 million in the first quarter of 2021 («Q1 2021»), primarily the result of a 21.2 percent increase in «Tattooed Chef» branded products, as well as continued increases in both private label and foodservice sales that carried over from the acquisitions made in 2021. Higher branded product sales were driven by a significant increase in U.S. distribution points that started in late 2020 and continued through 2021, increased volume at existing retail stores, and new product introductions.

Cost of goods sold increased 41.1 percent to USD 63.9 million in Q1 2022 from USD 45.3 million in Q1 2021, due to higher revenue, and inflationary pressures that resulted in significant quarter-over-quarter increases in freight costs (inbound and outbound), cold storage expenses (which are expected to be mitigated due to the commencement of operations at the Company’s dedicated cold storage facility in April 2022), and labor costs.

Gross profit was USD 8.2 million in Q1 2022, or 11.3 percent of revenue, compared to USD 7.2 million, or 13.7 percent of revenue, in Q1 2021. The decline in gross profit margin was due to a greater increase in cost of goods sold than the increase in revenues as a result of inflationary pressures.
Net loss was USD 17.6 million, or USD (0.22) per diluted share, as compared to a net loss of USD 8.2 million, or USD (0.11) per diluted share, in Q1 2021.
Adjusted Ebitda was negative USD 13.4 million in Q1 2022 compared to Adjusted Ebitda of negative USD 3.4 million in Q1 2021. The quarter-over-quarter difference was due to the increases in costs of goods sold previously mentioned above.

Financial Condition

At March 31, 2022, cash and cash equivalents were USD 57.4 million and long-term debt was approximately USD 0.6 million. Net cash used in operating activities was USD 26.4 million, USD 21.4 million of which was attributable to an increase in accounts receivable reflecting significantly higher sales in Q1 2022. Capital expenditures during Q1 2022 were USD 8.8 million and primarily reflected down payments made on new equipment for automation during 2022.

Full Year 2022 Outlook

The Company reiterated its outlook for 2022:

  • Revenue of USD 280-USD 285 million, driven by a combination of new product introductions, an increase in retail distribution via new relationships and penetrating existing accounts compared to 2021, and contributions from acquisitions consummated in 2021.
  • Gross margin of 10-12 percent
  • Marketing expenses of USD 27- USD 32 million
  • Capital expenditures of approximately USD 20 million, with investments focused on automation and robotics at our manufacturing facilities.