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Traeger Announces Second Quarter Fiscal 2024 Results

COOK

Increases Outlook for Full Year 2024

Traeger, Inc. ("Traeger" or the "Company") (NYSE: COOK), creator and category leader of the wood pellet grill, today announced its financial results for the three months ended June 30, 2024.

Second Quarter FY 24 Highlights

  • Total revenues decreased 1.8% to $168.5 million
  • Grill revenues increased 2.0% to $95.0 million
  • Gross margin of 42.9%, up 600 basis points compared to prior year
  • Net loss decreased 91.5% to $2.6 million
  • Adjusted EBITDA increased 24.9% to $26.8 million
  • Increases FY 2024 total revenue, gross margin and Adjusted EBITDA guidance

"Our second quarter results reflect our strong efforts over the last two years to drive increased efficiencies in our business and demonstrate our team's ability to execute in a dynamic environment," said Jeremy Andrus, CEO of Traeger. "During the quarter, consumer demand for our grills exceeded expectations, driving growth in grill revenues and leaving channel inventories in a healthy position as we head into the second half of the year. Moreover, we once again delivered outstanding gross margin expansion during the quarter which contributed to a significant increase in Adjusted EBITDA versus the prior year. I am pleased with our ability to increase our financial outlook for the year and continue to be extremely positive about Traeger's long-term opportunity."

Operating Results for the Second Quarter

Total revenue decreased by 1.8% to $168.5 million, compared to $171.5 million in the second quarter last year.

  • Grills increased 2.0% to $95.0 million as compared to the second quarter last year. The increase was primarily driven by increases in volume partially offset by decreases in average selling price. Higher unit volume was driven by effective promotional activity and strategic pricing actions on select grills. The decrease in average selling price was primarily due to mix shift to lower priced grills, strategic pricing action on select grills, and higher mix of direct import sales.
  • Consumables decreased 3.1% to $33.8 million as compared to the second quarter last year. The decrease was driven by a reduction in wood pellet average selling price and volume in addition to decreases in food consumables average selling price, partially offset by an increase in volume of food consumables.
  • Accessories decreased 8.8% to $39.7 million as compared to the second quarter last year. This decrease was driven primarily by lower sales of MEATER smart thermometers.

North America revenue declined 4.6% in the second quarter compared to the prior year. Rest of World revenues increased 31.9% in the second quarter compared to the prior year.

Gross profit increased to $72.3 million, compared to $63.3 million in the second quarter last year. Gross profit margin was 42.9% in the second quarter, compared to 36.9% in the same period last year. The increase in gross margin was driven primarily by favorability from freight and logistics costs, optimization of operations, and favorable foreign exchange rates.

Sales and marketing expenses were $28.2 million, compared to $27.9 million in the second quarter last year. The increase in sales and marketing expense was driven by increased investment in brand awareness and increased employee related costs partially offset by reduced professional fees.

General and administrative expenses were $30.5 million, compared to $52.4 million in the second quarter last year. The decrease in general and administrative expense was driven by lower stock-based compensation expense of $25.9 million primarily due to the cancellation of the unearned CEO PSUs and IPO PSUs in the comparable prior year period. The decreases were partially offset by higher costs related to legal matters.

Net loss was $2.6 million in the second quarter, or $0.02 per diluted share, as compared to net loss of $30.2 million in the second quarter of last year, or $0.25 per diluted share.1

Adjusted net income was $7.3 million, or $0.06 per diluted share as compared to adjusted net loss of $4.5 million, or $0.04 per diluted share in the second quarter last year.2

Adjusted EBITDA was $26.8 million in the second quarter as compared to $21.5 million in the same period last year.2

Balance Sheet

Cash and cash equivalents at the end of the second quarter totaled $18.0 million, compared to $29.9 million at December 31, 2023.

Inventory at the end of the second quarter was $91.0 million, compared to $96.2 million at December 31, 2023.

____________________

1 There were no potentially dilutive securities outstanding as of June 30, 2024 and 2023.

2 Reconciliations of GAAP to non-GAAP financial measures, as well as definitions for the non-GAAP financial measures included in this press release and the reasons for their use, are presented below.

Guidance For Full Year Fiscal 2024

Based on year to date performance and its outlook for the rest of the year, the Company is updating its total revenue, gross margin and Adjusted EBITDA guidance for Fiscal 2024.

  • Total revenue is expected to be between $590 million and $605 million
  • Gross Margin is expected to be between 40.5% and 41.5%
  • Adjusted EBITDA is expected to be between $74 million and $79 million

A reconciliation of Adjusted EBITDA guidance to Net Loss on a forward-looking basis cannot be provided without unreasonable efforts, as the Company is unable to provide reconciling information with respect to provision (benefit) for income taxes, interest expense, depreciation and amortization, other income, stock-based compensation, non-routine legal expenses, and other adjustment items all of which are adjustments to Adjusted EBITDA.

Conference Call Details

A conference call to discuss the Company's second quarter results is scheduled for Tuesday, August 6, 2024, at 4:30 p.m. ET. To participate, please dial (833) 470-1428 or +1 (929) 526-1599 for international callers, conference ID 801709. The conference call will also be webcast live at https://investors.traeger.com. A recording will be available shortly after the conclusion of the call. To access the replay, please dial (866) 813-9403, conference ID 352708. A replay of the webcast will also be available approximately two hours after the conclusion of the call on the Company's website at https://investors.traeger.com. A supplemental presentation has also been posted to the Company's website at https://investors.traeger.com.

About Traeger

Traeger Grills, headquartered in Salt Lake City, is the creator and category leader of the wood pellet grill, an outdoor cooking system that ignites all-natural hardwoods to grill, smoke, bake, roast, braise, and barbecue. In 2023, Traeger entered the griddle category, further establishing its leadership position in the outdoor cooking space. Traeger grills are versatile and easy to use, empowering cooks of all skill sets to create delicious meals with flavor that cannot be replicated. Grills are at the core of our platform and are complemented by Traeger wood pellets, rubs, sauces, accessories, and MEATER smart thermometers.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding our anticipated full year fiscal 2024 results. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, our history of operating losses, our ability to manage our future growth effectively, our ability to expand into additional markets, our ability to maintain and strengthen our brand to generate and maintain ongoing demand for our products, our ability to cost-effectively attract new customers and retain our existing customers, our failure to maintain product quality and product performance at an acceptable cost, the impact of product liability and warranty claims and product recalls, the highly competitive market in which we operate, the use of social media and community ambassadors, issues in relation to environmental, social and governance matters, both in relation to our own operations and the operations of our supply chain partners, a decline in sales of our grills, our dependence on three major retailers, risks associated with our international operations, our reliance on a limited number of third-party manufacturers and problems with (or loss of) our suppliers or an inability to obtain raw materials, and the ability of our stockholders to influence corporate matters and the other important factors discussed under the caption "Risk Factors" in our periodic and current reports filed with the Securities and Exchange Commission from time to time, including our Annual Report on Form 10-K for the year ended December 31, 2023. Any such forward-looking statements represent management's estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change.

TRAEGER, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

June 30,
2024

December 31,
2023

(unaudited)

ASSETS

Current Assets

Cash and cash equivalents

$

18,025

$

29,921

Accounts receivable, net

89,230

59,938

Inventories

91,035

96,175

Prepaid expenses and other current assets

26,340

30,346

Total current assets

224,630

216,380

Property, plant, and equipment, net

39,807

42,591

Operating lease right-of-use assets

46,513

48,188

Goodwill

74,725

74,725

Intangible assets, net

449,471

470,546

Other non-current assets

7,260

8,329

Total assets

$

842,406

$

860,759

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities

Accounts payable

$

33,661

$

33,280

Accrued expenses

48,070

52,941

Line of credit

23,500

28,400

Current portion of notes payable

250

250

Current portion of operating lease liabilities

3,660

3,608

Current portion of contingent consideration

15,000

Other current liabilities

816

495

Total current liabilities

109,957

133,974

Notes payable, net of current portion

397,873

397,300

Operating leases liabilities, net of current portion

28,352

29,142

Deferred tax liability

8,247

8,236

Other non-current liabilities

691

759

Total liabilities

545,120

569,411

Commitments and contingencies—See Note 10

Stockholders’ equity:

Preferred stock, $0.0001 par value; 25,000,000 shares authorized and no shares issued or outstanding as of June 30, 2024 and December 31, 2023

Common stock, $0.0001 par value; 1,000,000,000 shares authorized

Issued and outstanding shares - 129,110,864 and 125,865,303 as of June 30, 2024 and December 31, 2023

13

13

Additional paid-in capital

952,435

935,272

Accumulated deficit

(662,138

)

(654,877

)

Accumulated other comprehensive income

6,976

10,940

Total stockholders’ equity

297,286

291,348

Total liabilities and stockholders’ equity

$

842,406

$

860,759

TRAEGER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

(in thousands, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Revenue

$

168,471

$

171,512

$

313,385

$

324,673

Cost of revenue

96,143

108,181

178,494

205,919

Gross profit

72,328

63,331

134,891

118,754

Operating expenses:

Sales and marketing

28,224

27,915

49,903

49,990

General and administrative

30,491

52,371

62,629

79,050

Amortization of intangible assets

8,818

8,888

17,637

17,777

Change in fair value of contingent consideration

1,765

2,808

Total operating expense

67,533

90,939

130,169

149,625

Income (loss) from operations

4,795

(27,608

)

4,722

(30,871

)

Other income (expense):

Interest expense

(8,678

)

(7,810

)

(16,774

)

(15,891

)

Other income, net

1,281

5,450

4,957

6,028

Total other expense

(7,397

)

(2,360

)

(11,817

)

(9,863

)

Loss before provision (benefit) for income taxes

(2,602

)

(29,968

)

(7,095

)

(40,734

)

Provision (benefit) for income taxes

(24

)

198

166

362

Net loss

$

(2,578

)

$

(30,166

)

$

(7,261

)

$

(41,096

)

Net loss per share, basic and diluted

$

(0.02

)

$

(0.25

)

$

(0.06

)

$

(0.33

)

Weighted average common shares outstanding, basic and diluted

127,138,825

123,027,759

126,175,888

122,864,345

Other comprehensive income (loss):

Foreign currency translation adjustments

$

(1

)

$

35

$

86

$

3

Change in cash flow hedge

(2,088

)

Amortization of dedesignated cash flow hedge

(1,825

)

(2,769

)

(4,050

)

(5,142

)

Total other comprehensive loss

(1,826

)

(2,734

)

(3,964

)

(7,227

)

Comprehensive loss

$

(4,404

)

$

(32,900

)

$

(11,225

)

$

(48,323

)

TRAEGER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

Six Months Ended June 30,

2024

2023

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

$

(7,261

)

$

(41,096

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation of property, plant and equipment

6,879

7,462

Amortization of intangible assets

21,313

21,378

Amortization of deferred financing costs

1,008

1,026

Loss on disposal of property, plant and equipment

410

1,689

Stock-based compensation expense

17,163

40,979

Unrealized loss (gain) on derivative contracts

175

(2,066

)

Amortization of dedesignated cash flow hedge

(4,050

)

(5,142

)

Change in contingent consideration

(15,000

)

2,588

Other non-cash adjustments

1,011

180

Change in operating assets and liabilities:

Accounts receivable

(29,295

)

(40,979

)

Inventories

5,140

55,668

Prepaid expenses and other current assets

4,756

(1,074

)

Other non-current assets

74

(13

)

Accounts payable and accrued expenses

(1,054

)

(14,154

)

Other non-current liabilities

(590

)

Net cash provided by operating activities

1,269

25,856

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant, and equipment

(7,734

)

(8,854

)

Capitalization of patent costs

(239

)

(223

)

Proceeds from sale of property, plant, and equipment

83

2,450

Net cash used in investing activities

(7,890

)

(6,627

)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from line of credit

42,000

86,500

Repayments on line of credit

(46,900

)

(130,209

)

Repayments of long-term debt

(125

)

(103

)

Principal payments on finance lease obligations

(250

)

(251

)

Payment of acquisition related contingent consideration

(12,225

)

Net cash used in financing activities

(5,275

)

(56,288

)

Net decrease in cash, cash equivalents and restricted cash

(11,896

)

(37,059

)

Cash, cash equivalents and restricted cash at beginning of period

29,921

51,555

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

18,025

$

14,496

TRAEGER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

(Continued)

Six Months Ended June 30,

2024

2023

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the period for interest

$

19,783

$

20,487

Income taxes paid, net of refunds

$

363

$

1,576

NON-CASH FINANCING AND INVESTING ACTIVITIES

Equipment purchased under finance leases

$

204

$

383

Property, plant, and equipment included in accounts payable and accrued expenses

$

626

$

1,813

TRAEGER, INC.
RECONCILIATIONS OF AND OTHER INFORMATION REGARDING NON-GAAP FINANCIAL MEASURES
(unaudited)

In addition to our results and measures of performance determined in accordance with U.S. GAAP, we believe that certain non-GAAP financial measures are useful in evaluating and comparing our financial and operational performance over multiple periods, identifying trends affecting our business, formulating business plans and making strategic decisions.

Each of Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per share, Adjusted EBITDA Margin, and Adjusted Net Income (Loss) Margin are key performance measures that our management uses to assess our financial performance and is also used for internal planning and forecasting purposes. We believe that these non-GAAP financial measures are useful to investors and other interested parties in analyzing our financial performance because it provides a comparable overview of our operations across historical periods. In addition, we believe that providing each of Adjusted EBITDA and Adjusted Net Income (Loss), together with a reconciliation of Net Loss to each such measure, and providing Adjusted Net Income (Loss) per share, together with a reconciliation of Net Loss per share to such measure, and Adjusted EBITDA Margin and Adjusted Net Income (Loss) Margin, together with a reconciliation of Net Loss Margin to such measures, helps investors make comparisons between our company and other companies that may have different capital structures, different tax rates, and/or different forms of employee compensation. For example, due to finite-lived intangible assets included on our balance sheet following our corporate reorganization in 2017, we have significant non-cash amortization expense attributable to the nature of our capital structure.

Each of Adjusted EBITDA, Adjusted Net Income (Loss), and Adjusted Net Income (Loss) per share are used by our management team as an additional measure of our performance for purposes of business decision-making, including managing expenditures, and evaluating potential acquisitions. Period-to-period comparisons of Adjusted EBITDA, Adjusted Net Income (Loss), and Adjusted Net Income (Loss) per share help our management identify additional trends in our financial results that may not be shown solely by period-to-period comparisons of Net Loss or Income (Loss) from Continuing Operations or Net Loss per share. In addition, we may use Adjusted EBITDA in the incentive compensation programs applicable to some of our employees. Each of Adjusted EBITDA, Adjusted Net Income (Loss), and Adjusted Net Income (Loss) per share has inherent limitations because of the excluded items, and may not be directly comparable to similarly titled metrics used by other companies.

The following table presents a reconciliation of Net Loss, Net Loss Margin and Net Loss per share, the most directly comparable financial measures calculated in accordance with U.S. GAAP, to Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income (Loss), Adjusted Net Income (Loss) Margin and Adjusted Net Income (Loss) per share, respectively, on a consolidated basis.

Three Months Ended

June 30,

Six Months Ended

June 30,

2024

2023

2024

2023

(dollars in thousands, except share and per share amounts)

Net loss

$

(2,578

)

$

(30,166

)

$

(7,261

)

$

(41,096

)

Adjustments:

Other income (1)

(3,688

)

(9,298

)

(9,550

)

(10,658

)

Stock-based compensation

7,065

33,036

17,163

40,979

Non-routine legal expenses (2)

1,600

248

1,702

481

Amortization of acquisition intangibles (3)

8,255

8,253

16,510

16,507

Change in fair value of contingent consideration

1,765

2,808

Other adjustment items (4)

526

669

Tax impact of adjusting items (5)

(3,385

)

(8,828

)

(6,612

)

(12,922

)

Adjusted net income (loss)

$

7,269

$

(4,464

)

$

11,952

$

(3,232

)

Net loss

$

(2,578

)

$

(30,166

)

$

(7,261

)

$

(41,096

)

Adjustments:

Provision (benefit) for income taxes

(24

)

198

166

362

Interest expense

8,678

7,810

16,774

15,891

Depreciation and amortization

13,944

14,587

28,191

28,841

Other income (6)

(1,863

)

(6,529

)

(5,500

)

(5,516

)

Stock-based compensation

7,065

33,036

17,163

40,979

Non-routine legal expenses (2)

1,600

248

1,702

481

Change in fair value of contingent consideration

1,765

2,808

Other adjustment items (4)

526

669

Adjusted EBITDA

$

26,822

$

21,475

$

51,235

$

43,419

Revenue

$

168,471

$

171,512

$

313,385

$

324,673

Net loss margin

(1.5

)%

(17.6

)%

(2.3

)%

(12.7

)%

Adjusted net income (loss) margin

4.3

%

(2.6

)%

3.8

%

(1.0

)%

Adjusted EBITDA margin

15.9

%

12.5

%

16.3

%

13.4

%

Net loss per diluted share

$

(0.02

)

$

(0.25

)

$

(0.06

)

$

(0.33

)

Adjusted net income (loss) per diluted share

$

0.06

$

(0.04

)

$

0.09

$

(0.03

)

Weighted average common shares outstanding - diluted

127,138,825

123,027,759

126,175,888

122,864,345

(1)

Represents realized and unrealized gains (losses) on the interest rate swap, including amortization of dedesignated cash flow hedge, losses on the disposal of property, plant, and equipment, and unrealized gains (losses) from foreign currency transactions and derivatives.

(2)

Represents the loss contingency and external legal costs incurred in connection with the settlement and defense of a class action lawsuit and intellectual property litigation.

(3)

Represents the amortization expense associated with intangible assets recorded in connection with the 2017 acquisition of Traeger Pellet Grills Holdings LLC.

(4)

Represents non-routine operational wind-down costs.

(5)

Represents the tax effect of non-GAAP adjustments calculated at an estimated blended statutory tax rate of 25.6% and 25.2% for the three and six months ended June 30, 2024, respectively, and 25.6% and 25.4% for the three and six months ended June 30, 2023, respectively. The amounts for the three and six months ended June 30, 2023 have been adjusted to reflect the application of the estimated blended statutory tax rates, as opposed to effective income tax rates that was used in the prior period, in order to include the current and deferred income tax expenses that are commensurate with the non-GAAP measure of profitability.

(6)

Represents realized and unrealized gains (losses) on the interest rate swap, losses on the disposal of property, plant, and equipment, and unrealized gains (losses) from foreign currency transactions and derivatives.