Tattooed Chef, Inc. (Nasdaq: TTCF) (“Tattooed Chef” or the “Company”), a leader in plant-based foods, today announced financial results for the three and twelve months ended December 31, 2020.

“We are pleased with our solid financial results for the fourth quarter and full year 2020 driven by record sales of our Tattooed Chef branded products,” said Sam Galletti, President and CEO of Tattooed Chef. “We are successfully executing on our growth strategy and have kept the momentum going with a strong start to 2021. Based on current retailer commitments, we will increase store count by 41% and points of distribution of Tattooed Chef branded products by 35% by the end of the first quarter. We have a long runway for growth, particularly in conventional food retailers and are thrilled with our early success.”

Sarah Galletti, Chief Creative Officer and “The Tattooed Chef”, added, “The success of our brand is attributable to our ability to connect with consumers through our food. We are revolutionizing the way people think about plant-based food and disrupting the frozen aisle with a differentiated offering. We ended 2020 with 38 branded SKUs and have a pipeline of 150 more plant-based ideas we can’t wait to share with the world.”

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

• Revenue was $39.6 million, a 48% increase compared to $26.8 million in the prior year period; Tattooed Chef branded product revenue was a record $23.9 million, an increase of 172% compared to $8.8 million in the prior year period.
• Net income was $41.5 million compared to net income of $2.2 million in the prior year period. The current period net income included a one-time tax benefit resulting from the Company’s change from an S-corporation to a C-corporation at the time of the reverse merger in October 2020. The restructuring in anticipation of the merger caused a step-up in the tax basis of intangible assets creating a deferred tax asset and a tax benefit of $39.3 million.
• Adjusted EBITDA was $3.7 million, or 9% of revenue, compared to $2.2 million, or 8% of revenue, in the prior year period.  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.

Financial Highlights for Full Year 2020 Compared to Full Year 2019

• Revenue was $148.5 million, a 75% increase compared to $84.9 million in the prior year; Tattooed Chef branded product revenue was a record $84.6 million, a 363% increase compared to $18.3 million in the prior year.
• Net income was $45.4 million compared to $5.6 million in the prior year. The tax benefit noted for the fourth quarter had the same impact on the full year net income.
• Adjusted EBITDA was $9.6 million, or 6% of revenue, compared to $6.9 million, or 8% of revenue, in the prior year.

Fourth Quarter 2020 Results

Revenue increased by $12.8 million, or 48%, to $39.6 million in the three months ended December 31,  2020 compared to $26.8 million in the three months ended December 31, 2019. The revenue increase was primarily driven by a $15.1 million increase in “Tattooed Chef” branded products, offset by a $2.3 million decrease in private label products and legacy 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 smoothie bowls, vegetable blends, buffalo cauliflower, and other value-added riced cauliflower meals.

Gross profit was $6.9 million in the three months ended December 31,  2020 compared to $3.9 million in the three months ended December 31, 2019. Gross margin in the three months ended December 31,  2020 was 17.4% compared to 14.4% in the three months ended December 31, 2019. Gross profit and gross margin in the three months ended December 31, 2020 improved compared to the prior year period primarily due to production efficiencies and to cost of goods sold being spread over greater revenue.

Operating expenses increased $6.0 million to $7.9 million in the three months ended December 31, 2019 compared to $1.9 million in the three months ended December 31, 2019. The increase in operating expenses was primarily due to $3.4 million of stock compensation expense resulting from equity grants made subsequent to the merger with Forum Merger II Corporation (FMCI) in October of 2020; increases in spending to support the growth of the Tattooed Chef branded products; and to support the costs of being a public company since October 15, 2020.

Net income was $41.5 million in the three months ended December 31, 2020 compared to $2.2 million in the prior year period. The Company recorded a tax benefit of $41.9 million in the fourth quarter compared to a benefit of $0.2 million in the prior year period. In October 2020, the restructuring in anticipation of the merger with FMCI caused a step-up in the tax basis of intangibles assets of approximately $140.5 million, and the tax status of the Company to change from an S-corporation to a C-corporation. The tax effect of these changes created a deferred tax asset and income tax benefit of $39.3 million.

Adjusted EBITDA was $3.7 million, or 9% of net revenue, in the three months ended December 31, 2020, an increase of $1.5 million compared to $2.2 million, or 8% of net revenue, in the three months ended December 31, 2019. The increase in Adjusted EBITDA was primarily due to the higher revenue and gross profit amounts resulting from the increase in Tattooed Chef branded products.