Plant-based food company Tattooed Chef Inc. (TTCF) provides a range of frozen foods; via retail outlets, as well as an ecommerce platform. Let’s take a look at its latest Q2 financials as well as what has changed in its key risk factors that investors should be aware of.
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On the back of 62.3% growth in branded product sales, TTCF’s Q2 revenue jumped 45.9% year-over-year to $50.7 million, but missed consensus of $54.1 million.
Improved production capacity and economies of scale helped TTCF expand its gross margin to 15.7%, versus 10.8% a year ago. An increase in operating expenses outpaced this gross profit growth, however.
A one-time, non-cash expense of $46 million related to deferred tax assets contributed to TTCF’s net loss per share of $0.08. (See Tattooed Chef stock charts on TipRanks)
The company expects a decrease in operating expenses as a percentage of revenue over time, as relatively fixed expenses will be spread over a higher topline.
Sam Galletti, president, and CEO of TTCF remarked, “We are firing on all cylinders, winning distribution in leading national retailers like Kroger, Publix, and Albertsons, and our velocities are outperforming the competition.
“By the end of the third quarter, we expect our branded Tattooed Chef products will be in over 12,000 retail stores, exceeding our previous goal of 10,000 stores.”
For full-year 2021, the company estimates revenue to be between $235 million and $242 million. It sees adjusted EBITDA landing between a loss of $14 million and $17 million.
On August 12, Jefferies analyst Robert Dickerson assigned the stock a Hold rating with a price target of $19 implying an 18.9% potential upside.
Dickerson commented on the outlook, “Sales guidance was held for the year, while gross margin and EBITDA guidance was lowered, suggesting 2H consensus likely ~6mn too high on gross profit and ~$10-12mn on EBITDA. Stock potentially pressured given profitability hit this year.”
Now, let’s have a look at what’s changed in the company’s key risk factors profile.
According to the new TipRanks Risk Factors tool, TTCF’s main risk categories are Finance & Corporate and Macro & Political, accounting for 50% and 31% respectively, of the total 16 risks identified. Since June, the company has added one key risk factor.
Under the Macro & Political risk category, TTCF has highlighted its susceptibility to inflationary pressures. The majority of its products are manufactured and sold in the U.S., increasing TTCF’s exposure to domestic inflation and future price increases. If inflation is prolonged, and if the company fails to pass on higher costs to consumers through price increases, then its profitability could suffer.
Compared to a sector average Macro & Political risk factor of 14%, TTCF’s is at 31%. Shares are down 33% so far this year.
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