Tattooed Chef Completes Acquisition of New Mexico Food Distributors, Inc. and Karsten Tortilla Factory, LLC; Reclassifies Cer...
May 18 2021 - 6:00AM
Tattooed Chef, Inc. (Nasdaq: TTCF) (“Tattooed Chef” or the
“Company”), a leader in plant-based foods, today announced that on
May 14, 2021, it completed the acquisition of New Mexico Food
Distributors, Inc. and Karsten Tortilla Factory, LLC (collectively
referred to as “Foods of New Mexico”) for approximately $37.0
million in cash, subject to a customary adjustment based on
inventory at closing.
Foods of New Mexico produces ready-to-eat Mexican food items for
both retail and food service. This acquisition diversifies Tattooed
Chef’s manufacturing capabilities, expands production capacity, and
accelerates the Company’s expansion outside frozen food and into
ambient products. Foods of New Mexico’s facility in Albuquerque
currently produces Mexican foods including quesadillas, burritos,
and other handheld items, as well as sauces. The second facility in
Karsten is brand new and will enable the Company to have extensive
tortilla manufacturing capabilities as well as be able to customize
the existing footprint.
Reclassification of ExpensesOn May 12, 2021,
the Company issued a press release announcing results for the first
quarter of 2021. Subsequent to issuance of the press release, the
Company determined that it should reclassify fulfillment costs from
operating expenses to cost of goods sold during the first quarter.
This adjustment does not impact the trajectory of the brand, or the
reported revenue, net income, adjusted EBITDA or cash balances. The
net effect is an increase of $6.9 million to cost of goods sold
(from $39.0 million to $45.9 million) and a reduction of both
operating expenses (from $20.7 million to $13.8 million) and gross
profit (from $13.7 million to $6.8 million) by that same amount.
Gross margin was also reduced from 26.0% to 12.9% in the first
quarter. The reclassification will be reflected in the Form 10-Q
filed today.
The Company is in the process of preparing a preferability study
to change the accounting methods being used to classify these
expenses and with the help of its advisors hopes to complete that
process in the second quarter. If approved, this would move
fulfillment costs back into operating expenses, which the Company
believes is in-line with industry standards for accounting for such
costs and will permit a more direct comparison of the Company’s
financial performance to that of its nearest competitors. The
Company continues to expect full year 2021 revenue in the range of
$235 million to $242 million, an increase of 58% to 63% compared to
2020, and adjusted EBITDA in the range of $2 million to $4 million.
The Company’s previous guidance for full year 2021 gross margin
should not be relied upon and the Company will seek to update the
market when the preferability matter is resolved.
ABOUT TATTOOED CHEF Tattooed Chef is a leading
plant-based food company offering a broad portfolio of innovative
and sustainably sourced plant-based foods. 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, a commitment to innovation, and self-manufacturing
allows Tattooed Chef to continuously introduce new products.
Tattooed Chef provides approachable, great tasting and chef-created
products to the growing group of plant-based consumers as well as
the mainstream marketplace. For more information, please visit
www.tattooedchef.com.
ABOUT NEW MEXICO FOOD DISTRIBUTORS, INC.Founded
in 1987, Foods of New Mexico is a prepared food production company
that produces ready-to-eat New Mexican food items both for retail
and food service. Foods of New Mexico’s line of products continues
to provide the recipes that have been handed down through
generations of families. Foods of New Mexico products are complete
farm crop-to-package integration and nationwide distribution
network allows them to consistently deliver the highest quality
foods with the greatest reliability standards in the food
industry.
Forward Looking StatementsCertain 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,” “expansion,” “new,” “leverage,” “continues,”
“opportunities,” “next,” “increase,” “beyond,” “potential,”
“growth,” “pipeline,” “guidance” 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; continued acceptance of Tattooed Chef branded products by
new retail customers; Tattooed Chef’s ability to increase in-store
count and points of distribution; the outcome of any legal
proceedings that may be instituted against Tattooed Chef; Tattooed
Chef’s ability to effectively and efficiently integrate the Foods
of New Mexico acquisition and any other businesses it acquires;
Tattooed Chef’s success in completing its preferability study and
having it accepted; 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 but unpredictable increased costs
associated with our transition to a public company; and other risks
and uncertainties indicated from time to time in our annual report
on Form 10-K for the year ended December 31, 2020 filed with the
Securities and Exchange Commission (the “SEC”), 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.
FOR MEDIA INQUIRIES:Julia
Fasanotattooedchef@praytellagency.com
FOR INVESTOR INQUIRIES: Rachel
Perkins-Ulshrachel@ulshir.com
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