Tattooed Chef Inc (TTCF) 2023 Q1 法說會逐字稿

Greetings and welcome to the Tattooed Chef first-quarter 2023 financial results conference call. (Operator Instructions) Please note that this conference is being recorded. I will now turn the conference over to our host, Devin Sullivan of The Equity Group. Thank you. You may begin.

歡迎參加紋身廚師 2023 年第一季度財務業績電話會議。 （操作員說明）請注意，本次會議正在錄製中。我現在將會議轉交給我們的東道主、The Equity Group 的德文·沙利文 (Devin Sullivan)。謝謝。你可以開始了。

Thank you, Diego. Good afternoon, everyone, and welcome to Tattooed Chef first-quarter 2023 financial results conference call. On the call today are Sam Galletti, President and Chief Executive Officer; Sarah Galletti, Chief Creative Officer and the Tattooed Chef; and Stephanie Dieckmann, Chief Financial Officer. By now, everyone should have access to the earnings release, which went out yesterday afternoon and is available at the company's website, www.tattooedchef.com.

謝謝你，迭戈。大家下午好，歡迎參加紋身廚師 2023 年第一季度財務業績電話會議。今天參加電話會議的是總裁兼首席執行官 Sam Galletti； Sarah Galletti，首席創意官兼紋身廚師；和首席財務官斯蒂芬妮迪克曼。到目前為止，每個人都應該可以看到昨天下午發布的收益報告，該報告可以在公司網站 www.tattooedchef.com 上獲取。

Before we begin, I'd like to remind everyone that the prepared remarks being given today contain forward-looking statements within the meaning of the Safe Harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such statements involve a number of known and unknown uncertainties, many of which are outside the company's control and can cause future results, performance, or achievements to differ significantly from the results, performance, or achievements expressed or implied by such forward-looking statements.

在我們開始之前，我想提醒大家，今天準備的發言包含 1995 年美國私人證券訴訟改革法案安全港條款含義內的前瞻性陳述。此類陳述涉及許多已知的事實。以及未知的不確定因素，其中許多因素超出了公司的控制範圍，可能導致未來的結果、業績或成就與此類前瞻性陳述明示或暗示的結果、業績或成就存在顯著差異。

Important factors and risks that could cause or contribute to such differences are detailed in the company's filings with the Securities and Exchange Commission. Except as required by law, the company undertakes no obligation to update any forward-looking or other statements herein, whether as a result of new information, future events, or otherwise.

該公司向美國證券交易委員會提交的文件中詳細介紹了可能導致或促成此類差異的重要因素和風險。除法律要求外，公司不承擔更新本文任何前瞻性或其他陳述的義務，無論是由於新信息、未來事件還是其他原因。

In addition, within our earnings release and in today's prepared remarks, adjusted EBITDA is referenced. It is important to note that this is a non-GAAP financial measure, which the company believes is a useful metric that better reflects the performance of our business on an ongoing basis. A reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure is included in the company's press release, which is also available on its website.

此外，在我們的財報發布和今天準備的發言中，提到了調整後的 EBITDA。值得注意的是，這是一項非公認會計準則財務指標，公司認為這是一個有用的指標，可以更好地反映我們持續業務的績效。該非公認會計原則財務指標與其最直接可比的公認會計原則財務指標的調節表包含在該公司的新聞稿中，該新聞稿也可在其網站上找到。

With all that said, it is now my pleasure to turn the call over to Tattooed Chef's President and CEO, Sam Galletti. Sam, please go ahead.

話雖如此，現在我很高興將電話轉給 Tattooed Chef 的總裁兼首席執行官 Sam Galletti。薩姆，請繼續。

Thank you, Devin, and thanks, everyone, for joining us today. It's great to be speaking with you all -- with all of you with our filings up to date and with a little bit of tailwind and progressing towards our goal of switching from growth to profitability. I feel I need to go off script here.

謝謝德文，也謝謝大家今天加入我們。很高興能與你們所有人交談——與你們所有人一起了解我們最新的文件，並有一點順風順水，並朝著我們從增長轉向盈利的目標取得進展。我覺得我需要在這裡脫離劇本。

I want all of you to know we are determined to make this the plant-based company of the future. I want to thank everyone for their continued support of Tattooed Chef. I am encouraged by our results for the first quarter and by the factors that we believe separate Tattooed Chef from our competitors.

我想讓大家知道，我們決心將其打造成未來的植物基公司。我要感謝大家對紋身廚師的持續支持。我對第一季度的業績以及我們認為將 Tattooed Chef 與競爭對手區分開來的因素感到鼓舞。

Our products are plant-based. We address a variety of tastes, and our options are expanding. We have invested in our brand, and our manufacturing capabilities provide us with control and opportunity. As promised, we are reducing the cost necessary to operate our business without compromising our quality or commitment to our clients.

我們的產品以植物為基礎。我們滿足各種口味，並且我們的選擇也在不斷擴大。我們對我們的品牌進行了投資，我們的製造能力為我們提供了控制力和機會。正如所承諾的那樣，我們正在降低業務運營所需的成本，同時不會影響我們的質量或對客戶的承諾。

We reduced total operating expenses in Q1 2023 compared to the first quarter of 2022 and narrowed our net losses and adjusted EBITDA losses. We also reduced our cash burn quarter over quarter. We now have greater confidence that we can meet our $40 million expense reduction target by year-end 2023. Our progress is more pronounced when comparing Q1 2023 to the fourth quarter ended December 31, 2022, with a reduction in total operating expenses and a continued narrowing of our losses.

與 2022 年第一季度相比，我們減少了 2023 年第一季度的總運營費用，並縮小了淨虧損和調整後 EBITDA 虧損。我們還逐季減少了現金消耗。現在，我們更有信心能夠在 2023 年底前實現 4000 萬美元的費用削減目標。將 2023 年第一季度與截至 2022 年 12 月 31 日的第四季度相比，我們的進展更加明顯，總運營費用減少，並且持續增長。縮小我們的損失。

Sarah and I have met with our customers, and we appreciate their support. We are continuing to introduce new products and break into new higher-margin categories. We expanded our distribution with Albertsons, Walmart, and CVS, and are reviewing all of our products for profitability and sell-through.

莎拉和我會見了我們的客戶，我們感謝他們的支持。我們將繼續推出新產品並進軍新的高利潤類別。我們擴大了與 Albertsons、沃爾瑪和 CVS 的分銷範圍，並正在審查我們所有產品的盈利能力和銷售情況。

We are also taking actions to drive efficiencies in our operations and fine-tune our trade spend. We compete in the health and wellness category. And for SPINS data for 12 weeks ending 4/23/2023, of the top 20 brands, Tattooed Chef is one of seven brands that continues to show unit sales growth. The health and wellness category is down 10.6% in units, while Tattooed Chef is delivering 12% more units than this time last year and experiencing 4% growth in total MULO.

我們還採取行動提高運營效率並調整貿易支出。我們在健康和保健類別中競爭。對於截至 2023 年 4 月 23 日的 12 週 SPINS 數據，在排名前 20 的品牌中，Tattooed Chef 是繼續顯示單位銷量增長的七個品牌之一。健康和保健類別的單位數量下降了 10.6%，而 Tattooed Chef 的單位數量比去年同期增加了 12%，MULO 總量增長了 4%。

In addition, we have reduced the amount of time that our product spends on promotion in the store by 4.3%, which shows growth in both our base business and continuing brand loyalty. The dynamics of our markets have changed, and so too has our approach.

此外，我們將產品在店內促銷所花費的時間減少了 4.3%，這表明我們的基礎業務和持續的品牌忠誠度都在增長。我們市場的動​​態已經發生了變化，我們的方法也發生了變化。

Make no mistake; the market has changed, and I know how to pivot our direction to profitability. Thank you for your attention, and I'll now turn things over to Sarah.

不犯錯誤;市場已經發生了變化，我知道如何將我們的方向轉向盈利。感謝您的關注，我現在將把事情交給莎拉。

Good afternoon, everyone. Tattooed Chef is a branded food product of the future for vegetarians, flexitarians; in fact, all the tarians. There is something very special about Tattooed Chef products.

大家下午好。 Tattooed Chef 是面向素食者、彈性素食者的未來品牌食品；事實上，所有的塔里安人。紋身廚師產品有一些非常特別的地方。

They are nostalgic comfort foods made from blends of plant-based ingredients that create the delicious taste and texture that lets you eat vegetarian without compromising flavor. Our manufacturing base assures that we work with sustainable growing practices, which results in high-nutrient fruits and vegetables.

它們是懷舊的舒適食品，由植物成分混合製成，創造出美味的味道和質地，讓您在不影響風味的情況下吃素食。我們的製造基地確保我們採用可持續的種植方式，從而生產出高營養的水果和蔬菜。

Tattooed Chef has a big future in the better-for-you food and the better-for-the-planet space. This message will be driven home on social media, where we are targeting our core consumers. I remain incredibly excited about the future of Tattooed Chef.

紋身廚師在為您提供更好的食物和為地球提供更好的空間方面擁有廣闊的前景。這一信息將在社交媒體上深入人心，我們的目標是我們的核心消費者。我對紋身廚師的未來仍然感到非常興奮。

Thanks for your continued support. I'll now turn the conversation over to Stephanie for discussion of our results. Stephanie?

感謝你一如既往的支持。現在我將把談話轉給斯蒂芬妮來討論我們的結果。斯蒂芬妮？

Good afternoon, everyone. We filed our 10-K for the year ended December 31, 2022, and 10-Q for the three months ended March 31, 2023, yesterday. We are once again a timely filer.

大家下午好。昨天，我們提交了截至2022年12月31日止年度的10-K，以及截至2023年3月31日止三個月的10-Q。我們再次成為及時的申報者。

Our Q1 2023 net revenue declined by $8.6 million or 12.7% to $59.1 million from $67.7 million in last year's first quarter, due primarily to a $7.3 million decrease in Tattooed Chef-branded products with Walmart as previously mentioned during Q3 last year, and higher trade promotion spend that reflects our support of a seasonally higher focus by our customers on healthy eating products during Q1 2023, as compared to the same period in Q1 2022. As Sam mentioned, we are well diversified between [club] retail and private label.

我們 2023 年第一季度的淨收入從去年第一季度的 6770 萬美元下降了 860 萬美元，即 12.7%，降至 5910 萬美元，這主要是由於去年第三季度與沃爾瑪的 Tattooed Chef 品牌產品減少了 730 萬美元，以及貿易額增加促銷支出反映了我們支持客戶在 2023 年第一季度與 2022 年第一季度相比對健康飲食產品的季節性更高關注。正如 Sam 提到的，我們在[俱樂部]零售和自有品牌之間實現了多元化。

Branded sales were $31.7 million, driven by the two promotions that we participate in during Q1, historically, with a club retailer. Private label and other revenues decreased 4.4% to $27.4 million quarter over quarter due to a decision made to discontinue certain foodservice items that were inherited with the New Mexico Food Distributor acquisition in 2021.

品牌銷售額為 3170 萬美元，主要得益於我們在第一季度參與的兩次促銷活動（歷史上是與俱樂部零售商一起進行的）。由於決定停止 2021 年收購新墨西哥州食品分銷商時繼承的某些餐飲服務項目，自有品牌和其他收入環比下降 4.4% 至 2740 萬美元。

Cost of goods sold declined to $63.2 million from $63.6 million in Q1 2022, due primarily to inflationary pressure on raw materials and packaging costs that impacted some of our best-selling products, specifically Açaí Bowls; third-party services; and open capacity at the manufacturing sites. Gross loss was $4.1 million as compared to gross profit of $4.1 million in Q1 2022, which was primarily due to inflationary pressures on raw materials and packaging and the increase in trade spend.

銷售成本從 2022 年第一季度的 6360 萬美元下降至 6320 萬美元，這主要是由於原材料和包裝成本的通脹壓力影響了我們的一些暢銷產品，特別是巴西莓碗；第三方服務；並開放生產基地的產能。毛虧損為 410 萬美元，而 2022 年第一季度的毛利潤為 410 萬美元，這主要是由於原材料和包裝的通脹壓力以及貿易支出的增加。

Operating expenses declined by $8.6 million or 37% to $14.7 million from $23.3 million in Q1 2022, reflecting the initial impact of our cost reduction initiatives, driven by decreases of $6.9 million in marketing and advertising, $0.7 million in outside service expenses, and $0.4 million in stock-based compensation. We also expect to generate savings via enterprise-wide efficiency gains.

運營費用從 2022 年第一季度的 2330 萬美元下降 860 萬美元，即 37%，下降至 1470 萬美元，反映了我們成本削減計劃的初步影響，營銷和廣告費用減少了 690 萬美元，外部服務費用減少了 70 萬美元，外部服務費用減少了 40 萬美元。以股票為基礎的薪酬。我們還希望通過企業範圍內的效率提升來節省成本。

We are building more efficient distribution networks and product lines through automation, along with the integration of an ERP system throughout all of our facilities. Net loss narrowed to $19 million or negative $0.23 per share from a net loss of $20.2 million or negative $0.25 per share in Q1 2022. Adjusted EBITDA loss narrowed to $15.3 million from adjusted EBITDA loss of $16 million in Q1 2022.

我們正在通過自動化以及在我們所有設施中集成 ERP 系統來構建更高效的分銷網絡和產品線。淨虧損從 2022 年第一季度的淨虧損 2020 萬美元或每股負 0.25 美元收窄至 1900 萬美元或每股負 0.23 美元。調整後 EBITDA 虧損從 2022 年第一季度調整後 EBITDA 虧損 1600 萬美元收窄至 1530 萬美元。

Moving to our financial position. At December 31, 2022, cash was $3.5 million, and the net amount drawn against our line of credit was approximately $4 million. Net cash used in operating activities for the first quarter of 2023 was $5.7 million, a substantial decline from net cash used in operating activities of $26.4 million at March 31, 2022. The decline was due to several factors, including a reduction in inventory of $18.6 million.

轉向我們的財務狀況。截至 2022 年 12 月 31 日，現金為 350 萬美元，從我們的信用額度中提取的淨額約為 400 萬美元。 2023 年第一季度經營活動使用的現金淨額為 570 萬美元，較截至 2022 年 3 月 31 日的經營活動使用的現金淨額 2640 萬美元大幅下降。下降的原因有多種，其中包括庫存減少 18.6 美元百萬。

Capital expenditures during the first quarter was approximately $500,000 and primarily reflected maintenance expenditures. We made considerable investments last year to complete our automation initiatives for 2023.

第一季度的資本支出約為 50 萬美元，主要反映維護支出。我們去年進行了大量投資，以完成 2023 年的自動化計劃。

We have revised our 2023 outlook and our longer-term outlook to achieving breakeven adjusted EBITDA and cash flow neutrality. We expect sales for the year to be $200 million to $205 million compared to net revenue of $231 million in 2022. This is expected to be the result of several factors including our shift from growth to profitability, which will include the rationalization of certain underperforming SKUs, realignment of operational efficiencies, and gearing towards leaner operations.

我們修改了 2023 年前景和長期前景，以實現盈虧平衡調整後 EBITDA 和現金流中性。我們預計今年的銷售額將為 2 億至 2.05 億美元，而 2022 年的淨收入為 2.31 億美元。這預計是多種因素的結果，包括我們從增長轉向盈利，其中包括對某些表現不佳的 SKU 進行合理化調整，調整運營效率，並朝著更精簡的運營方向邁進。

Gross margin is expected to improve on consecutive quarterly basis throughout 2023. We expect to generate annual cost savings of approximately $40 million and had a good start towards this goal in the first quarter. Further details can be found in our press release from yesterday.

毛利率預計將在 2023 年連續每個季度有所改善。我們預計每年可節省約 4000 萬美元的成本，並在第一季度為實現這一目標開了一個良好的開端。更多詳細信息請參閱我們昨天的新聞稿。

As we have also noted in our press release, we continue to pursue debt or equity capital and have provided disclosures in our filings regarding this subject. I thank you for your attention, and I'll turn the conversation back to Sam.

正如我們在新聞稿中指出的那樣，我們將繼續尋求債務或股權資本，並在我們的文件中披露了有關此主題的信息。感謝您的關注，我會將話題轉回給 Sam。

Thanks, Stephanie. Let's open the call for questions from our analysts.

謝謝，斯蒂芬妮。讓我們開始向分析師提問。

(Operator Instructions) Cody Ross, UBS.

（操作員說明）Cody Ross，UBS。

Good morning -- or good afternoon, I should say. Thank you for taking our questions. First question, I saw a note in your press release just about a vendor disruption, and that's going to impact your 2Q results. Can you just expand here on possibly the magnitude and exactly what is the nature of the vendor disruption?

我應該說早上好——或者下午好。感謝您接受我們的提問。第一個問題，我在你們的新聞稿中看到了一條關於供應商中斷的說明，這將影響你們第二季度的業績。您能否在此詳細說明供應商中斷的可能程度以及其本質是什麼？

We use a cold storage facility that is nationwide, and we are in several locations. And they have experienced an outage in their system. And basically, we have been unable to ship products now for a couple of weeks. We are waiting to hear back from that supplier, I guess, you could call them, as to when their system will be back up and running. But we do expect it to affect Q2.

我們使用全國范圍內的冷藏設施，並且分佈在多個地點。他們的系統出現過中斷。基本上，我們已經有幾周無法發貨了。我想，我們正在等待該供應商的回复，您可以打電話給他們，了解他們的系統何時恢復並運行。但我們確實預計它會影響第二季度。

We don't have the exact dollar amount yet. Our hope is that they will be back up and running this week. And everyone across the country who does business with this vendor is being affected. They are a well-known cold storage facility, and we are hanging in there with them. And I believe that they will have solutions for us in the next week or two. And once we can quantify that difference, we would be happy to remark on that.

我們還沒有確切的美元金額。我們希望他們本週能夠恢復並運行。全國各地與該供應商有業務往來的每個人都受到了影響。他們是一個著名的冷藏設施，我們和他們一起呆在那裡。我相信他們會在接下來的一兩週內為我們提供解決方案。一旦我們能夠量化這種差異，我們將很樂意對此發表評論。

Thank you. I appreciate that. And I understand the sensitive nature. So I just have one last question on this topic, and then I have another question.

謝謝。我很感激。我理解敏感的本質。所以我只有關於這個話題的最後一個問題，然後我還有另一個問題。

Just can you share with us the timeline of the disruption? Has this been going on for two weeks, three weeks, four weeks? Just to help -- try to help frame it for ourselves.

您能與我們分享一下中斷的時間表嗎？這種情況已經持續兩週、三週、四個星期了嗎？只是為了提供幫助——嘗試幫助我們自己構建它。

It's been about 2.5 weeks. And it doesn't affect all of our customers, but it does affect Walmart. It does affect the West Coast Kroger. It does affect all the -- and Whole Foods as well.

已經過去了大約2.5週。它不會影響我們所有的客戶，但它確實影響了沃爾瑪。它確實影響了西海岸克羅格。它確實影響了所有食品和全食超市。

That is super helpful. Thank you for that. And then just pivoting here. You're on a journey towards profit and positive cash flow. You're still investing in new products and retail expansion. Do you think you could achieve your financial goals if you hit the pause button on innovation and retail expansion?

這非常有幫助。謝謝你。然後就在這裡旋轉。您正踏上盈利和正現金流的旅程。您仍在投資新產品和零售擴張。您認為如果您按下創新和零售擴張的暫停按鈕，您可以實現財務目標嗎？

Absolutely. We -- so the way that our products are -- we already have them all already vetted out. And our margins on these other items are -- all the new innovation that we have rolling out is 2.5 times what our typical frozen margins are.

絕對地。我們——所以我們的產品的方式——我們已經對它們進行了全部審查。我們在這些其他項目上的利潤是——我們推出的所有新創新都是我們典型的凍結利潤的 2.5 倍。

So we are able to be a little bit more aggressive and flexible with our innovation. As you know, frozen has just the lowest margins in the whole -- in our host -- in the stores that we sell. So yes, we believe that -- we feel good that we're going to be able to meet our guidance that we're showing and hopefully, beat it.

因此，我們的創新能夠更加積極和靈活。如您所知，冷凍食品的利潤率在我們的東道國和我們銷售的商店中是最低的。所以，是的，我們相信——我們感覺很好，我們將能夠達到我們所展示的指導，並希望能夠超越它。

In addition, I'd like to add that because we're manufacturers, the cost of research and development on the new items has not been a costly item for us. Our research and development costs are not a large item on our profit and loss statement.

另外，我想補充一點，因為我們是製造商，新產品的研發成本對我們來說並不是一個昂貴的項目。我們的研發成本在我們的損益表中並不是一個大項目。

That was actually really helpful. That's where I was going with this. And Sam, it sounds like these new products will actually enhance your ability to get to profit and positive cash flow. Any idea of stopping this would actually hinder your ability to hit it. Is that fair?

這實際上非常有幫助。這就是我的目的。山姆，聽起來這些新產品實際上會增強您獲得利潤和正現金流的能力。任何阻止這種情況的想法實際上都會阻礙你擊中它的能力。這公平嗎？

It is so -- it is spot on. It is exactly one of the ways that we're going to be increasing our gross margins and being able -- so it'll hit that pivot point that -- the point to where we're reducing our expenses, and we're increasing all of our new innovation. All has -- all these ambient items command such a higher margin.

正是如此——恰到好處。這正是我們提高毛利率並能夠達到關鍵點的方法之一，即我們正在減少開支，並且我們正在增加毛利率。我們所有的新創新。所有這些環境物品都有如此高的利潤。

So with both of these things happening at the same time, we're very optimistic that we'll be able to hit profitability. And we're just -- we're trying to be conservative because it's been very interesting how our whole market, the -- our competitors, our peers in the same market -- they've just continuously hit -- missed guidance so badly for two years now. And so I just think that we needed to take a step back and be a lot more realistic and really just now start building from a base to where we're very confident and comfortable with what we're doing.

因此，隨著這兩件事同時發生，我們非常樂觀地認為我們將能夠實現盈利。我們只是 - 我們試圖保持保守，因為非常有趣的是我們的整個市場，我們的競爭對手，我們在同一市場的同行 - 他們不斷地打擊 - 如此嚴重地錯過了指導已經兩年了。所以我認為我們需要退一步，更加現實，現在才開始從一個基礎開始建設，我們對我們正在做的事情非常有信心和舒適。

Got you. That is helpful. And then one last question from me, and I'll pass it on so I don't hog it here. You mentioned the potential for raising additional capital. You have about $3.5 million of cash on hand. You're still burning cash and will likely for the remainder of the year.

明白你了。這很有幫助。然後是我的最後一個問題，我會將其轉達，這樣我就不會在這裡霸占它。您提到了籌集額外資金的潛力。您手頭大約有 350 萬美元現金。你仍在燒錢，而且可能會持續到今年剩餘時間。

Can you just remind us how much borrowing flexibility you currently have and the potential avenues you would go to raise capital? Because I imagine the costs would be fairly high, given the current interest rate environment. Thank you.

您能否提醒我們您目前的借貸靈活性以及您籌集資金的潛在途徑？因為我認為考慮到當前的利率環境，成本會相當高。謝謝。

So what we're looking at right now is we still have a good relationship with UMB that remains unchanged, as far as the status of our relationship. We have some things in the works that we're not quite ready to talk about yet. We've looked at every type of transaction there is out there. As you are aware, Cody, as I'm sure the market is aware, it's a much different world than it was a year ago or two years ago.

因此，我們現在關注的是，就我們的關係狀況而言，我們與 UMB 仍然保持著良好的關係，這種關係沒有改變。我們正在進行一些工作，但還沒有準備好談論。我們研究了現有的每種類型的交易。正如你所知，科迪，我相信市場也知道，現在的世界與一年前或兩年前有很大不同。

And so it's taken us a little bit longer than we originally planned. But as soon as we're ready to announce, as soon as we make sure that we've got everything lined up, press release will be first, and then the analyst phone calls will be second.

因此，我們花費的時間比最初計劃的要長一些。但一旦我們準備好宣布，一旦我們確保一切都準備就緒，新聞稿將是第一位的，然後是分析師的電話。

Thank you. I'll pass it on.

謝謝。我會把它傳遞下去。

(Operator Instructions) JP Wollam, ROTH MKM Capital Partners.

（操作員指示）JP Wollam，ROTH MKM Capital Partners。

Hi, everyone. Good afternoon and thanks for taking my questions. If we could maybe just start on the revenue line and thinking about guidance for the year, it looks like, if we think sequentially, we saw some strength in Q1. Maybe that was a function of some of the club promotion.

大家好。下午好，感謝您提出我的問題。如果我們可以從收入線開始考慮今年的指導，那麼看起來，如果我們按順序思考，我們會在第一季度看到一些實力。也許這是俱樂部促銷活動的一部分。

But I'm just curious to get your perspective on really what gives you confidence in that guidance figure and the -- it sounds like Q2 might be affected a little bit. But on that run rate sales number going forward, what really gives you confidence that we've found the right level?

但我只是想知道您對到底是什麼讓您對指導數字充滿信心，並且聽起來第二季度可能會受到一點影響。但就未來的運行率銷售數字而言，是什麼真正讓您相信我們已經找到了正確的水平？

Sure, JP. So the confidence we get from our numbers is that, first of all, as we stated in our earnings, this company is really kind of divided into three categories. There's a private label piece of it. There's a branded with club piece of it. And then there's our conventional retail business, which is a piece of it.

當然，JP。因此，我們從數據中獲得的信心是，首先，正如我們在收益中所述，這家公司實際上分為三類。其中有一個自有品牌。其中有一個帶有俱樂部標誌的部件。然後是我們的傳統零售業務，它是其中的一部分。

So it's like -- if somebody asked me the question and we were 100% in conventional retail, I would not be sure. But because we have the confidence from this company is really a very older -- it's a 20-year-old company. And we have great relations and history with our club business and our private label business that gives us the security -- the confidence that then when we take these guidance numbers -- and like we said, $200 million to $205 million this year -- we're not depending on such a -- the growth that -- because we're still -- when it comes to the products that we're just -- we're still just launching products into the market. So this is so fresh still.

所以，如果有人問我這個問題，而我們 100% 從事傳統零售業，我就不確定。但因為我們對這家公司充滿信心，它確實是一家非常古老的公司——它已經有 20 年的歷史了。我們與我們的俱樂部業務和自有品牌業務有著良好的關係和歷史，這給了我們安全感——當我們獲得這些指導數字時的信心——就像我們說的，今年 2 億至 2.05 億美元——我們不依賴於這樣的增長，因為我們仍然，當談到我們的產品時，我們仍然只是向市場推出產品。所以這仍然很新鮮。

So what we wanted to do is we wanted to be conservative, but we wanted to be realistic. Because as we know, the market in general in our categories are declining. I believe that our numbers this year are spot on. And then going forward, our upside could be very -- more aggressive than we are, but we want to take it a step at a time.

所以我們想要做的是我們想要保守，但我們想要現實。因為據我們所知，我們類別的市場總體正在下降。我相信我們今年的數字是準確的。然後展望未來，我們的優勢可能會比我們更加積極，但我們希望一次邁出一步。

I hope I answered your question. Stephanie?

我希望我回答了你的問題。斯蒂芬妮？

So what I want to take the time to remind everyone, JP, is when we do these promotions with Costco. And we've talked about it openly before in which we participate in two MBMs for -- one is for the Organic Riced Cauliflower Stir Fry, and the other is for Organic Açai Bowl.

所以我想花時間提醒大家，JP，我們什麼時候和 Costco 一起做這些促銷活動。我們之前公開討論過，我們參加了兩項 MBM——一項是有機米飯花椰菜炒菜，另一項是有機巴西莓碗。

We have a large contra revenue item that comes with this. And when we restated our financials for 2022, we stated that it was over $5 million. So whereas it does help us drive some revenue, and it does help us with products that, historically, are profitable and good-selling products.

我們有一個巨大的與之相伴的收入項目。當我們重申 2022 年的財務數據時，我們表示該數字超過 500 萬美元。因此，雖然它確實幫助我們增加了一些收入，而且它確實幫助我們開發了歷史上有利可圖且暢銷的產品。

For (technical difficulty) it's more about the marketing experience that we have by having Tattooed Chef in all eight regions of Costco at the same time for a two-month period. But there is a whole $5 million contra revenue that affects profitability just because it reduces revenue. So it's not quite the spike or the addition into the margin, not to mention that there was still a drop in OpEx, which has nothing to do with that. And that's what gives us confidence in being able to further expand upon our pathway to profitability.

對於（技術難度）來說，更多的是我們在 Costco 的所有八個地區同時擁有紋身廚師兩個月的營銷經驗。但有整整 500 萬美元的對銷收入會影響盈利能力，因為它減少了收入。因此，這並不完全是峰值或利潤增加，更不用說運營支出仍然下降，這與此無關。這讓我們有信心能夠進一步拓展我們的盈利之路。

Okay, understood. And then maybe just -- maybe just thinking about gross margin. Can you just help us think about what you are expecting to see each quarter that should drive that incremental margin expansion through the remainder of the year? Anything concrete you can point to?

好的，明白了。然後也許只是——也許只是考慮毛利率。您能否幫助我們考慮一下您期望每個季度看到什麼，這將推動今年剩餘時間的利潤率增量擴張？有什麼具體的可以指點一下嗎？

You.

你。

Okay. So the first point is this: we've reduced our staff. We've turned around and looked at leaner operations, meaning, taking out some of the middle management and things of that nature within the plant and manufacturing itself, along with the automation, the SKU rationalization; gearing towards higher-margin products, some outside of the frozen section; and going through and really taking a product-by-product [stand] as to how to move to actually ship in the right direction while focused on having quality products that taste good, but also generating revenue, and where we can cut that, whether it be overhead in the plant itself or if it's actually looking at the product line and looking at how it's manufactured and what we can do to increase the margin on a per SKU basis.

好的。所以第一點是：我們減少了人員。我們已經轉而考慮更精簡的運營，也就是說，取消工廠和製造本身內的一些中層管理人員和類似性質的事物，以及自動化、SKU 合理化；面向利潤率較高的產品，其中一些不在冷凍部分；仔細研究並真正採取逐個產品的立場，以了解如何真正朝正確的方向發貨，同時專注於擁有味道不錯的優質產品，同時還能產生收入，以及我們可以在哪些方面削減這一點，是否它是工廠本身的管理費用，或者實際上是在查看產品線並查看其製造方式以及我們可以採取哪些措施來增加每個 SKU 的利潤。

JP, I agree with Stephanie. It's spot on. You have to remember that I've been in this industry for 40 years, and it always used to just be about -- every product stands on its own. It needs to be that product needs to be profitable.

JP，我同意斯蒂芬妮的觀點。這是正確的。你必須記住，我已經在這個行業工作了 40 年，過去它一直都是這樣的——每種產品都是獨立的。產品必須能夠盈利。

And that's how I've always built my businesses, sold my businesses when we went public. And we had this complete new venture of building a brand as quickly as you can and just trying to get as much market share at any cost. It's a completely different game.

這就是我一直以來建立我的企業、在我們上市時出售我的企業的方式。我們進行了全新的冒險，以盡可能快的速度打造品牌，並不惜一切代價爭取盡可能多的市場份額。這是一個完全不同的遊戲。

And obviously, when the market changed from a liquidity standpoint, we had to change. And so -- but if anybody knows how to get to that profitability, it's been my life history. So I know how to do it. It's in the works. It's in the process. It's hard to flip $100 million overnight, but it's going to happen.

顯然，當市場從流動性的角度來看發生變化時，我們就必須做出改變。所以——但如果有人知道如何獲得這種盈利能力，那就是我的人生經歷。所以我知道該怎麼做。它正在製作中。它正在過程中。一夜之間變現 1 億美元很難，但它將會發生。

Okay. Yeah, that's great. Very helpful. And I'll pass it along. Thank you, guys, for the time. I appreciate it.

好的。是的，那太好了。很有幫助。我會把它傳遞下去。謝謝你們，伙計們，花時間。我很感激。

Thank you.

謝謝。

Thanks, JP.

謝謝，JP。

Thank you. There are no further questions at this time. I'll hand the floor back to Sam Galletti for closing remarks.

謝謝。目前沒有其他問題。我將把發言權交還給薩姆·加萊蒂（Sam Galletti）致閉幕詞。

Thanks so much, everybody, for joining us today. We really appreciate it. We appreciate all the support for Tattooed Chef, and we look forward to hearing from you in the future. Have a great day.

非常感謝大家今天加入我們。我們真的很感激。我們感謝所有對紋身廚師的支持，並期待將來收到您的來信。祝你有美好的一天。

Thank you. This concludes today's call. All parties may disconnect.

謝謝。今天的電話會議到此結束。所有各方都可以斷開連接。