Tattooed Chef to acquire Mexican foods maker

PARAMOUNT, CALIF. — Plant-based foods maker Tattooed Chef, Inc. has entered into agreements to acquire New Mexico Food Distributors, Inc. and Karsten Tortilla Factory, LLC (collectively referred to as Foods of New Mexico) for approximately $35 million in cash.

Founded in 1987 and headquartered in Albuquerque, NM, Foods of New Mexico is a prepared food company that manufactures ready-to-eat Mexican food items for both retail and foodservice. The company’s facility in Albuquerque produces quesadillas, burritos and other handheld items, as well as sauces. The company’s facility in Karsten, NM, is a brand new facility that will expand the company’s tortilla manufacturing capabilities. Combined, the two facilities account for approximately 118,000 square feet of production space.

“We are thrilled to announce the acquisition of Foods of New Mexico,” said Sam Galletti, president and chief executive officer of Tattooed Chef. “We have seen tremendous growth in the Tattooed Chef brand, and these two facilities will allow us to diversify our product lines and significantly increase our manufacturing capabilities to capitalize on the $20 billion Hispanic/Southwest food sector and beyond. We will be immediately addressing the $1 billion frozen Mexican food category once the transactions close. At full capacity, we believe Foods of New Mexico can contribute up to $200 million annually in revenue in the next two to three years and create significant value for all our stakeholders.”

Sarah Galletti, chief creative officer at the Tattooed Chef, added, “Foods of New Mexico has many of the qualities we were looking for in the next potential target: capacity, expanding product portfolio capabilities, and entering new categories. We see an opportunity to introduce nostalgic innovation into the plant-based food space, and we believe we can leverage Foods of New Mexico’s manufacturing capabilities to do so. We are confident in creating new products, pushing past our existing product line and into new spaces, and we are comfortable producing food in any category. We have a pipeline of different and innovative ideas we can’t wait to share in the coming months such as alternative tortillas using plant-based ingredients. We also plan to introduce innovative meals and snacks, in both frozen and ambient. Get ready; this is an exciting time at Tattooed Chef, and we are just getting started.”

Following announcement of the acquisition, Tattooed Chef updated its guidance and said it now expects revenue in the range of $235 million to $242 million, up 58% to 63% from 2020. The expected gain does not include any contribution from the Karsten facility, which is currently not operational. Adjusted EBITDA is forecast in a range of $2 million to $4 million, while gross margin is projected in a range of 20% to 25%.

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 national retail food stores as well as on Tattooed Chef’s e-commerce site.

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