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Tattooed Chef Reports Third Quarter 2020 Financial Results

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Record Revenue of $41.0 Million for Third Quarter Fiscal 2020

PARAMOUNT, Calif., Nov. 09, 2020 (GLOBE NEWSWIRE) -- Tattooed Chef, Inc. (Nasdaq: TTCF, TTCFW) (“Tattooed Chef” or the “Company”), a leading plant-based frozen food company with a broad portfolio of innovative products, today announced financial results for the three and nine months ended September 30, 2020.

Third quarter 2020 financial results for Tattooed Chef reflect the three months ended September 30, 2020, prior to the closing of the recent business combination (the “Business Combination”) between Ittella International and Forum Merger II Corporation (FMCI) which occurred on October 15, 2020. In connection with the closing of the Business Combination, the Company changed its name to Tattooed Chef, Inc.

Sam Galletti, President and CEO of Tattooed Chef said, “Our third quarter revenue marks the highest level in company history. We are pleased to achieve such a milestone in our last quarter as a private company. 2020 has been a monumental year for us, most notably with the completion of our merger with FMCI and Tattooed Chef becoming a public company. We expect to continue to drive top-line growth based on the ongoing success with our key club customers, expansion in new and existing retail customers, and our direct-to-consumer e-commerce site. We are pleased to have completed the merger and are more determined than ever to capitalize on the tremendous growth opportunities we have.”

Sarah Galletti, Creative Director and “The Tattooed Chef”, added, “There is so much to be excited about at the Tattooed Chef. Our branded product sales increased to a record $22.6 million in the third quarter and surpassed private label sales for the third consecutive quarter. Since launching our e-commerce site two weeks ago, the reaction in the marketplace has been overwhelmingly positive and we are thrilled with the initial success. Our brand awareness is growing, our distribution is expanding, our innovation pipeline is robust, and we are confident that we can and will continue to build off the excellent foundation we have established and drive significant growth in the years to come.”

Financial Highlights for the Third Quarter of 2020 Compared to Third Quarter of 2019

  • Revenue was a record $41.0 million, a 65% increase compared to $24.8 million in the prior year period; Tattooed Chef branded product revenue was a record $22.6 million, an increase of 288% compared to $5.8 million in the prior year period;

  • Net loss attributable to common stockholders was $3.3 million compared to a net income of $1.8 million in the prior year period due to $4.6 million of non-recurring transaction costs; and

  • Adjusted EBITDA was $1.5 million, or 3.6% of net revenue, compared to $2.3 million, or 9.4% of net revenue, in the prior year period.

Financial Highlights for First Nine Months of 2020 Compared to First Nine Months of 2019

  • Revenue was $108.9 million, an 87% increase compared to $58.1 million in the prior year period;

  • Net income attributable to common stockholders was $3.9 million compared to $3.4 million in the prior year period; and

  • Adjusted EBITDA was $10.6 million, or 9.7% of net revenue, compared to $4.7 million, or 8.2% of net revenue, in the prior year period.

Third Quarter 2020 Results

Revenue increased by $16.2 million, or 65.3%, to $41.0 million for the three months ended September 30, 2020 compared to $24.8 million for the three months ended September 30, 2019. The revenue increase was primarily driven by a $16.8 million increase in revenue of “Tattooed Chef” branded products, offset by a $0.1 million decrease in revenue of private label products and a $0.5 million decrease in legacy fish and commodity vegetable products for select private label retailers. The increase in Tattooed Chef branded products resulted from expansion in the number of U.S. distribution points, as well as increased volume at existing retail customers with our current portfolio of products and new product introductions including acai bowls, spring vegetable blends, buffalo cauliflower, and other value-added riced cauliflower meals.

Gross profit was $3.8 million for the three months ended September 30, 2020 compared to $4.5 million for the three months ended September 30, 2019. Gross margin in the three months ended September 30, 2020 was 9.2% compared to 18.2% in the three months ended September 30, 2019. The decline in both gross profit and gross margin was primarily due to a $1.4 million program with one of our top club customers to promote our Organic Acai Bowls. No such program occurred in the prior year period. This successful promotion gave the Tattooed Chef brand exposure in 450 stores for an eight-week period across the entire U.S. and resulted in increased sales and brand awareness.

Operating expenses increased $4.8 million to $7.2 million for the three months ended September 30, 2020 compared to $2.4 million for the three months ended September 30, 2019. The increase in operating expenses was primarily due to $4.6 million in nonrecurring expenses related to the merger with FMCI, as well as a $0.6 million increase in sales and marketing expenses resulting from a shift in focus to building the Tattooed Chef brand and initiatives to accelerate sales to retail grocery store outlets. As a percentage of revenue, total operating expenses were 17.5% for the three months ended September 30, 2020, compared to 9.5% for the prior year period. Excluding the $4.6 million of transaction expenses, operating expenses for the three months ended September 30, 2020 would have been $2.6 million, slightly higher than the prior year period, or 6.3% of sales.

Adjusted EBITDA of $1.5 million, or 3.6% of net revenue, for the three months ended September 30, 2020 decreased $0.9 million compared to $2.3 million, or 9.4% of net revenue, in the three months ended September 30, 2019. The decrease in Adjusted EBITDA was primarily due to the lower gross profit from the promotional program explained above. Adjusted EBITDA for the third quarter of 2020 was also lower sequentially, compared to $2.0 million in the second quarter of 2020 due to increased growth in sales from the products manufactured by our facilities in Italy and timing of delivery to key customers. Adjusted EBITDA is a non-GAAP financial measure defined under “Non-GAAP Measures. Please see “Adjusted EBITDA Reconciliation” at the end of this press release.

First Nine Months 2020 Results

Revenue increased by $50.8 million, or 87.4%, to $108.9 million for the nine months ended September 30, 2020 compared to $58.1 million for the nine months ended September 30, 2019. The revenue increase was primarily driven by a $51.1 million increase in sales of Tattooed Chef branded products and a $1.4 million increase in sales of private label products. The increase in Tattooed Chef branded products resulted from expansion in the number of U.S. distribution points, as well as increased volume at existing retail customers of our current portfolio of products and new product introductions including acai bowls, spring vegetable blends, buffalo cauliflower, and other value-added riced cauliflower meals. This increase was partially offset by a $1.7 million decline in legacy fish and commodity vegetable products for select private label retailers.

Gross profit increased $6.9 million to $16.8 million for the nine months ended September 30, 2020 compared to $9.9 million for the nine months ended September 30, 2019. Gross margin in the nine months ended September 30, 2020 was 15.4% compared to 17.0% in the nine months ended September 30, 2019. The decline in gross margin was primarily due to the promotional program with the key club customer which did not occur in the prior year period and increased shipping and storage costs in the current year versus the prior year.

Operating expenses increased $6.1 million to $11.6 million for the nine months ended September 30, 2020 compared to $5.6 million for the nine months ended September 30, 2019, primarily due to a $4.8 million in nonrecurring expenses related to the merger with FMCI, as well as a $2.1 million increase in sales and marketing expenses resulting from a shift in focus to building the Tattooed Chef brand and initiatives to accelerate sales to retail grocery store outlets. As a percentage of revenue, total operating expenses were 10.7% for the nine months ended September 30, 2020 compared to 9.6% for the prior year period. Excluding the $4.8 million of transaction expenses, operating expenses for the nine months ended September 30, 2020 would have been $6.9 million or 6.3% of sales. We expect our operating expenses to increase in future periods as we transition to being a public company, increase expenses to effectively manage our growth, and continue our shift in emphasis to Tattooed Chef branded products.

Adjusted EBITDA was $10.6 million, or 9.7% of revenue, for the nine months ended September 30, 2020 compared to $4.7 million, or 8.2% of revenue, for the nine months ended September 30, 2019. The improvement in Adjusted EBITDA was primarily the result of the increase in revenues, gross profit and operating expense leverage compared to the prior year period.

Balance Sheet and Cash Flow
As of September 30, 2020, Tattooed Chef had cash and cash equivalents of $3.2 million and an outstanding balance on the line of credit of $19.7 million. Following the completion of the Business Combination on October 15, 2020, the Company had cash and cash equivalents of approximately $95 million and an outstanding balance on the line of credit of approximately $5 million.

Conference Call and Webcast
The Company will host a conference call and webcast to discuss the results today at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). Investors interested in participating in the live call can dial 855-327-6837 from the U.S. and 631-891-4304 internationally. A telephone replay will be available approximately two hours after the call concludes through Monday, November 23, 2020, and can be accessed by dialing 844-512-2921 from the U.S., or 412-317-6671 internationally, and entering conference ID 10011746. The webcast will be available on the Investors section of the Company’s website at www.tattooedchef.com and archived for 30 days.

About Tattooed Chef
Tattooed Chef is a leading plant-based food company offering a broad portfolio of innovative plant-based food products that taste great and are sustainably sourced. Tattooed Chef’s signature products include ready-to-cook bowls, zucchini spirals, riced cauliflower, acai and smoothie bowls, and cauliflower pizza crusts, which are available in the frozen food sections of leading national retail food stores across the United States as well as on Tattooed Chef’s e-commerce site. Understanding consumer lifestyle and food trends, and a commitment to innovation, allows Tattooed Chef to continuously introduce new products. Tattooed Chef provides great-tasting, approachable, and innovative products not only to the growing group of consumers who seek to adopt a plant-based lifestyle, but to any of the “People Who Give a CropTM”. For more information, please visit www.tattooedchef.com​.

Forward Looking Statements
Certain statements made in this release are “forward looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this release, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose,” “trend,” “accelerate,” “continues,” “opportunities,” “next” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside Tattooed Chef's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include: uncertainty surrounding the ultimate success of Tattooed Chef’s e-commerce platform; the need to prove Tattooed Chef’s ability to build brand awareness and continue to launch innovative products; the outcome of any legal proceedings that may be instituted against Tattooed Chef; competition and the ability of the business to grow and manage growth profitably; the ability to meet Nasdaq’s listing requirements; costs related to our recent business combination; anticipated increased costs associated with our transition to a public company; and other risks and uncertainties indicated from time to time in the definitive proxy statement filed with the Securities and Exchange Commission (the “SEC”) in connection with our recent business combination, including those under “Risk Factors” therein, and other factors identified in past and future filings with the SEC, available at www.sec.gov. Some of these risks and uncertainties may be amplified by the COVID-19 outbreak. Tattooed Chef undertakes any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Non-GAAP Measures

The Company seeks to achieve profitable, long term growth by monitoring and analyzing key operating metrics, including Adjusted EBITDA. The Company’s management uses this non-GAAP financial metric and related computations to evaluate and manage the business and to plan and make near and long-term operating and strategic decisions. The management team believes this non-GAAP financial metric is useful to investors to provide supplemental information in addition to the GAAP financial results. Management reviews the use of its primary key operating metrics from time-to-time. Adjusted EBITDA is not intended to be a substitute for any GAAP financial measure and as calculated, may not be comparable to similarly titled measures of performance of other companies in other industries or within the same industry. The Company’s management team believes it is useful to provide investors with the same financial information that it uses internally to make comparisons of historical operating results, identify trends in underlying operating results, and evaluate its business.

CONTACTS

INVESTORS
Rachel Perkins
rachel@ulshir.com

MEDIA
Devynne Honsa
devynne@blndpr.com
310-616-3049

MYJOJO, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (unaudited)

(in thousands, except per share information)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

REVENUE

$

40,962

$

24,786

$

108,896

$

58,117

COST OF GOODS SOLD

37,180

20,276

92,126

48,263

GROSS PROFIT

3,782

4,510

16,770

9,854

Sales and marketing expenses

894

243

2,673

552

General and administrative expenses

6,293

2,111

8,972

5,040

TOTAL OPERATING EXPENSES

7,187

2,354

11,645

5,592

INCOME (LOSS) FROM OPERATIONS

(3,405

)

2,156

5,125

4,262

Interest expense

(188

)

(155

)

(569

)

(493

)

Other income

825

-

1,113

-

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES

(2,768

)

2,001

5,669

3,769

PROVISION FOR INCOME TAXES

492

162

1,775

346

NET INCOME (LOSS)

(3,260

)

1,839

3,894

3,423

LESS: INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS

(160

)

352

1,201

532

NET INCOME (LOSS) ATTRIBUTABLE TO MYJOJO, INC.

$

(3,100

)

$

1,487

$

2,693

$

2,891

NET INCOME (LOSS) PER UNIT

Basic and diluted

$

(376.68

)

$

180.72

$

326.87

$

351.30

WEIGHTED AVERAGE COMMON UNITS

Basic and diluted

8,230

8,230

8,230

8,230

OTHER COMPREHENSIVE (LOSS), NET OF TAX

Foreign currency translation adjustments

(584

)

(192

)

(201

)

(212

)

Total other comprehensive (loss), net of tax

(584

)

(192

)

(201

)

(212

)

Comprehensive income (loss)

(3,844

)

1,647

3,693

3,211

Less: income (loss) attributable to the noncontrolling interest

57

(4

)

91

1

Comprehensive income (loss) attributable to Myjojo, Inc. shareholder

(3,901

)

1,651

3,602

3,210

MYJOJO, INC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands, except per share information)

September 30,

December 31,

2020

2019

ASSETS

CURRENT ASSETS

Cash

$

3,182

$

4,537

Accounts receivable

17,142

9,440

Inventory

27,894

17,960

Prepaid expenses and other current assets

4,385

3,013

TOTAL CURRENT ASSETS

52,603

34,950

Property, plant and equipment, net

13,822

8,238

Deferred taxes

189

227

Other assets

104

481

TOTAL ASSETS

$

66,718

$

43,896

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST

AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

Accounts payable

$

30,783

$

17,037

Accrued expenses

2,354

724

Distribution payable

2,485

1,868

Line of credit

19,745

10,054

Notes payable to related parties, current portion

188

357

Notes payable, current portion

514

610

Other current liabilities

481

65

TOTAL CURRENT LIABILITIES

56,550

30,715

Notes payable to related parties, net of current portion

-

443

Notes payable, net of current portion

2,274

2,662

TOTAL LIABILITIES

58,824

33,820

COMMITMENTS AND CONTINGENCIES (See Note 15)

REDEEMABLE NONCONTROLLING INTEREST (See Note 3)

$

43,900

$

6,930

STOCKHOLDERS' EQUITY (DEFICIT)

Common units

1

1

Additional paid in capital

-

2,316

Accumulated other comprehensive loss

(984

)

(692

)

Retained earnings (deficit)

(36,675

)

1,265

Total equity (deficit) attributable to Myjojo, Inc.

(37,658

)

2,890

Noncontrolling interest

1,652

256

TOTAL STOCKHOLDER'S EQUITY (DEFICIT)

(36,006

)

3,146

TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST

AND STOCKHOLDERS' EQUITY (DEFICIT)

$

66,718

$

43,896


MYJOJO, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands)

Nine Months Ended

Sept 30,

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$

3,894

$

3,423

Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization

693

477

Bad debt expense

-

(1

)

Realized forward contract (gain)

-

-

Accretion of debt financing costs

34

34

Unrealized forward contract losses (gains)

(728

)

-

Changes in operating assets and liabilities:

Accounts receivable

(7,702

)

(2,871

)

Inventory

(9,934

)

(4,018

)

Prepaid expenses and other current assets

(228

)

(468

)

Accounts payable

13,745

384

Accrued expenses

1,630

438

Other current liabilities

416

25

Net cash provided (used) in operating activities

1,820

(2,577

)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property, plant and equipment

(5,957

)

(2,176

)

Proceeds from the sale of property, plant and equipment

36

14

Net cash used in investing activities

(5,921

)

(2,162

)

CASH FLOWS FROM FINANCING ACTIVITIES

Borrowings of line of credit

9,657

1,778

Borrowings of notes payable to related parties

32

329

Repayments of notes payable to related parties

(644

)

(210

)

Borrowings of notes payable

28

763

Repayments of notes payable

(512

)

(538

)

Capital contributions

355

6,001

Payment of distribution

(5,613

)

-

Net cash provided by financing activities

3,303

8,123

NET INCREASE IN CASH

(798

)

3,385

EFFECT OF EXCHANGE RATE ON CASH

(557

)

(173

)

CASH AT BEGINNING OF YEAR

$

4,537

$

336

CASH AT END OF NINE MONTHS

$

3,182

$

3,548

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the six months for:

Interest

$

237

$

152

Income taxes

$

16

$

-

Noncash financing activities

Distributions

$

617

$

1,192


MYJOJO INC. AND SUBSIDIARIES
Adjusted EBITDA Reconciliation

Unaudited

Nine Months Ended

Three Months Ended

September 30,

September 30,

(in thousands)

2020

2019

2020

2019

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Net income (loss)

$

3,894

$

3,423

$

(3,260

)

$

1,839

Interest

$

569

$

493

$

188

$

155

Taxes

$

1,775

$

346

$

492

$

162

Depreciation & amortization

$

693

$

477

$

222

$

176

EBITDA

$

6,931

$

4,739

$

(2,358

)

$

2,332

Adjustments

Gain on foreign currency forward contracts

$

(1,113

)

$

-

$

(825

)

$

-

Non-recurring (transaction expenses)

$

4,770

$

-

$

4,646

$

-

Total Adjustments

$

(3,657

)

$

-

$

(3,821

)

$

-

Adjusted EBITDA

$

10,588

$

4,739

$

1,463

$

2,332