Earnings call transcript: Traeger misses Q2 2025 earnings forecasts

Traeger Inc., the renowned grill manufacturer, reported its financial results for the second quarter of 2025, revealing a significant miss in both earnings and revenue forecasts. The company posted an earnings per share (EPS) of -$0.01, falling short of the expected $0.05, marking a 120% negative surprise. Revenue was reported at $145.5 million, below the forecasted $166.49 million, resulting in a 12.61% shortfall. Following the announcement, Traeger’s stock price remained stable in aftermarket trading, closing at $1.70, representing a 3.03% increase from the previous close. According to InvestingPro analysis, the stock is currently trading below its Fair Value, with high price volatility being a characteristic feature of the stock.

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Key Takeaways

• Traeger’s Q2 revenues fell 14% year-over-year, with grill revenues dropping by 22%.
• The company launched the Woodridge grill, priced at $1,150, receiving strong consumer feedback.
• Traeger implemented Project Gravity, aiming for $30 million in cost savings.
• The company faces challenges with a shift towards lower-priced grills and competitive pressures in the accessories market.

Company Performance

Traeger reported a challenging second quarter, with revenues declining 14% from the previous year. The company’s grill segment, a core revenue driver, saw a substantial 22% decrease. Despite these setbacks, Traeger maintained its market leadership in wood pellet grills and received positive feedback for its new Woodridge grill model. The company is diversifying its manufacturing away from China, aiming to improve its competitive positioning.

Financial Highlights

• Revenue: $145 million, down 14% YoY
• Earnings per share: -$0.01, compared to a forecast of $0.05
• Gross profit: $57 million, down from $72 million YoY
• Gross profit margin: 39.2%, down 380 basis points
• Net loss: $7 million, compared to a $3 million loss last year
• Adjusted EBITDA: $14 million, down from $27 million YoY

Earnings vs. Forecast

Traeger’s actual EPS of -$0.01 fell significantly short of the forecasted $0.05, resulting in a 120% negative surprise. Revenue also missed expectations, coming in at $145.5 million against a forecast of $166.49 million, a 12.61% shortfall. This marks a notable deviation from previous quarters, where the company often met or exceeded forecasts.

Market Reaction

Despite the earnings miss, Traeger’s stock price increased by 3.03% in aftermarket trading, closing at $1.70. This movement suggests that investors may be focusing on the company’s long-term initiatives and product innovations. The stock remains within its 52-week range, with a high of $3.97 and a low of $1.28. Year-to-date, the stock has declined by 29%, though it has shown strong momentum over the past three months according to InvestingPro data.

Outlook & Guidance

For the fiscal year 2025, Traeger has provided revenue guidance of $540-$555 million, indicating an 8-11% decline. The company expects grill revenues to decline in the high single digits but anticipates a gross margin between 40.5% and 41.5%. Adjusted EBITDA is projected to be between $66 million and $73 million. Traeger remains focused on improving profitability and cash flow, with expectations of sequential improvement in Q3.

Executive Commentary

CEO Jeremy Andress highlighted the significance of the Woodridge grill, stating, "Woodridge is the best product this company has built in the nearly forty years that we’ve been in business." He also emphasized the potential of Project Gravity, saying, "We believe Project Gravity will unlock significant long-term shareholder value." CFO Joey Hord noted the company’s strategic focus: "Our largest opportunity long-term is to drive increased household penetration and brand awareness."

Risks and Challenges

• Traeger faces a challenging consumer sentiment environment, with a shift towards lower-priced grills.
• The company is under competitive pressure in the Meater accessories market.
• Ongoing tariff and supply chain issues could impact profitability.
• The normalization of the replacement cycle post-pandemic presents additional challenges.
• Diversifying manufacturing away from China may present operational risks.

Q&A

During the earnings call, analysts inquired about Traeger’s tariff mitigation strategies and pricing increase approach. Executives also addressed the performance of the Woodridge grill and the challenges facing the Meater business. The company emphasized its commitment to product innovation and long-term shareholder value.

Full transcript - Tgpx Holdings I LLC (COOK) Q2 2025:

Alex, Call Coordinator: Hello, and welcome to the Traeger Second Quarter Fiscal twenty twenty five Earnings Conference Call. My name is Alex, and I’ll be coordinating today’s call. I’ll now hand it over to Nick Bacchus to begin. Please go ahead.

Nick Bacchus, Vice President of Investor Relations, Treasury and Capital Markets, Traeger: Good afternoon, everyone. Thank you for joining Traeger’s call to discuss its second quarter twenty twenty five results, which were released this afternoon and can be found on our website at investors.traeger.com. I’m Nick Bacchus, Vice President of Investor Relations, Treasury and Capital Markets at Trigger. With me on the call today are Jeremy Andress, our Chief Executive Officer and Joey Hord, our Chief Financial Officer. Before we get started, I want to remind everyone that management’s remarks on this call may contain forward looking within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

These statements are based on current expectations and views of future events, including, but not limited to, outlook as to our anticipated full year 2025 results. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied herein. I encourage you to review our annual report on Form 10 ks for the year ended 12/31/2024, and our other filings for a discussion of these factors and uncertainties, which are available on the Investor Relations portion of our website. You should not take undue reliance on these forward looking statements, which we speak to only as of today. We undertake no obligation to update or revise them for any new information.

This call also contains certain non GAAP financial measures, including adjusted EBITDA, adjusted net income or loss, adjusted net income or loss per share, adjusted EBITDA margin and net debt, which we believe are useful supplemental measures. The most comparable GAAP financial measures and reconciliation of the non GAAP measures contained herein to such GAAP measures are included in our earnings release and our investor presentation, which are available on the Investor Relations portion of our website at investors.trager.com. Please note that our definition of these measures may differ from similarly titled metrics presented by other companies. Now I’d like to turn the call over to Jeremy Andrus, Chief Executive Officer of Traeger. Jeremy?

Jeremy Andress, Chief Executive Officer, Traeger: Thanks, Nick, and thank you for joining our second quarter earnings call. During today’s call, I will provide an update on key trends in our business, review second quarter results, ensure our outlook for fiscal year twenty twenty five. I will also provide an overview of Project Gravity, a major streamlining effort aimed at driving efficiencies and improving margins in our business. You’ll then be hearing from Joey Hoard, who is joining for his first quarterly call since stepping into the CFO role. As we entered the second quarter, uncertainty around the macroeconomic environment and trade policy was high.

The rapidly changing tariff landscape and the potential downstream impacts on the consumer created challenges to our business. Amid that backdrop, we executed on two major imperatives. First, executing successfully at retail and driving healthy consumer sell through in our peak season. And second, executing on our tariff mitigation strategies with the goal of preserving profitability and enhancing cash flow. Despite pressure on our results for the quarter, I am pleased with our team’s efforts on these two critical fronts.

I’ll start by providing you with more detail around our tariff mitigation efforts. Overall, based on the current tariff regime, we expect the unmitigated impact of tariffs to be approximately $60,000,000 in fiscal twenty twenty five. We believe that our mitigation efforts will allow us to offset approximately 80% of this impact during the fiscal year. Given the magnitude of the exposure, I am pleased with our expectation for mitigation of the substantial majority of the impact to adjusted EBITDA. Our tariff mitigation efforts are centered around three main pillars.

First, supply chain efforts, which include identifying savings and efficiencies across the supply chain and cost negotiations with our contract manufacturers. We are also diversifying our manufacturing mix away from China over time and expect a meaningful reduction in the portion of our production in China by the 2026. Our second tariff mitigation strategy was pricing. As we discussed on our last call, we were extremely thoughtful when analyzing price changes, looking at features and product positioning on a SKU by SKU basis. We continue to believe that we have pricing power given the quality and innovation we bring to the market as well as our premium positioning.

And we expect that many of our competitors in the outdoor cooking industry have or will be increasing price. While our outlook does prudently assume a negative impact to grill volumes based on the price increases, we believe protecting our profitability is paramount. Last, we have implemented near term cost savings measures such as reduction in travel and entertainment expenses and the deferral of nonessential projects as well as meaningful cost savings expected to be derived from Project Gravity. Moving on to our Project Gravity efficiency and margin improvement initiative. We believe that there is a meaningful opportunity to drive strategic transformation and to simplify processes and functions across our business.

Project Gravity will elevate our entire company’s focus on return on investment. And over time, this initiative will open up capacity to invest into the core long term growth drivers of our business, including product innovation and brand. I firmly believe that Project Gravity will unlock significant long term shareholder value. There are two phases to Project Gravity. The first phase consists of actions already taken or underway.

This includes the very difficult decision to implement a reduction in force in the second quarter. Parting ways with many very talented and dedicated team members was not taken lightly. However, it was the right thing to do for our business. Next, we are centralizing METER’s operations into our trader infrastructure. This integration consists of closing METER’s headquarters in Leicester, United Kingdom and substantially reducing METER personnel based in The UK.

Meter will continue to be an important part of our product portfolio and we will leverage our strong expertise in marketing and brand management at Traeger to stabilize revenues and return the business to growth. Simultaneously, we will reshape the P and L and drive profitability via cost savings related to our integration efforts. Overall, the first phase of Project Gravity is expected to drive approximately $30,000,000 run rate cost savings. Phase two of Project Gravity is a broad based review of our business with a goal of driving efficiency, simplification and margin enhancement. While it is too early to discuss details today as this review is ongoing, larger picture, we believe there’s a meaningful opportunity to realize significant structural improvements that can result in material cost efficiencies over time.

Our review is comprehensive, and we will be evaluating everything from SKU level productivity to corporate overhead broadly. We expect that initiatives for phase two of Project Gravity will be implemented over the next eighteen months. More to come on this front. Now let me touch on our outlook. Today, are reinstating guidance for fiscal year twenty twenty five.

Our guidance for fiscal year twenty twenty five includes revenues of $540,000,000 to $555,000,000 or down 8% to 11% versus prior year. Our revenue outlook for the year is being impacted by our assumption of pressure on drill volumes driven by the price increases we implemented to offset the cost of tariffs as well as the assumption of continued softness in accessories revenue due to meter. In terms of adjusted EBITDA, we are guiding to 66,000,000 to $73,000,000 Joey will provide more detail here. However, while our guidance does imply a reduction in year over year adjusted EBITDA in fiscal twenty twenty five, our actions to mitigate the large majority of the tariff exposure as well as our Phase one Project Gravity cost savings are allowing us to successfully navigate the near term environment while positioning us for significant improvement in 2026 and beyond. Turning to our second quarter results and highlights.

Second quarter revenues were down 14% versus prior year in the quarter and adjusted EBITDA was $14,000,000 Second quarter results were impacted by a number of factors. First, revenues were pressured by pacing shifts out of the quarter into both the first quarter and the third quarter. Much of these revenue pacing shifts were tied to tariff related dynamics, including certain of our retail partners temporarily shifting to domestic fulfillment away from direct import or DI fulfillment. This shift impacts the timing of sales as we recognize the revenue when the retailer takes ownership of the product abroad versus after we transport and import the product in the domestic model. Lower mix of DI also impacts gross margin as DI carries a higher margin rate.

We also incurred tariff expenses of more than $3,000,000 in the quarter further pressuring gross margin. The good news is that we are expecting a return to a more normalized mix of direct import fulfillment in the second half of the year as we have worked with our retail partners to reduce overall tariff exposure and that our tariff mitigation and cost reduction efforts will more meaningfully benefit second half results. The second quarter is our peak selling season and despite Grill revenues being down 22 we saw better than expected consumer demand of Grills at retail with positive unit sell through growth. In particular consumers reacted favorably during our Memorial Day promotion period which kicks off the grilling season and during the Father’s Day promotional period. One trend we continue to experience is strength in our lower price point grill offering with substantial outperformance of grills sub $1,000 versus north of $1,000 We continue to see this shift as strong evidence of meaningful consumer appetite for Traeger grills at attainable price points.

During the quarter, sell through was aided by our boots on the ground activation strategy. Our team of retail sales specialists were out in full force during peak grilling season, and we conducted thousands of weekend selling events where we train and educate retail associates and demo Trader Grills to drive awareness of the brand. We also continue to leverage brand partnerships to engage new consumers and broaden our brand reach. Notably, we launched a partnership with Bud Light and Budweiser, two of America’s best selling beer brands with extremely large audiences. Bud’s Grill Like a Pro campaign partnership with Traeger features content integration, retail displays, and cross merchandising efforts.

We also established a partnership with Pepsi Frito Lay, which highlights outdoor cooking and features Traeger products. This campaign includes significant retail displays, a large media campaign, and product sweepstakes. Partnering with brands like Bud and Pepsi allows Traeger to reach a huge global audience in a cost effective manner. On the consumables front, we achieved 7% revenue growth in the second quarter. We saw healthy replenishment of pellets across our retail channels.

We also continue to benefit from expanded distribution in our consumables business with a launch at Walmart late last year and additional distribution gains in the grocery channel. Finally, our accessories business continues to be pressured by declines at meter and was down 12% year over year. Having said that, the revenue declines at meter sequentially improved versus the first quarter. Our goal for Meter in the next six months will be a successful integration of the business into our Salt Lake City infrastructure and strong execution in the critical holiday period. This will ultimately allow Meer to return to growth and importantly will allow for significantly improved profitability.

Overall, while there are a number of plus currents from a macroeconomic and trade policy perspective, our brand remains extremely strong and consumer appetite for our grills was healthy in our peak season. Moreover, our team has executed well on an aggressive strategy to mitigate tariffs that will allow us to navigate the current environment. Finally, we believe Project Gravity will act as a powerful catalyst for transformation and efficiency and believe it will drive meaningful long term value at Traeger. Before I finish, I’d like to thank the entire Traeger team for their hard work and commitment. And with that, I’ll hand the call over to Joey.

Joey?

Joey Hord, Chief Financial Officer, Traeger: Thanks, Jeremy, and good afternoon, everyone. Today, I will review our second quarter performance, discuss our updated outlook for fiscal twenty twenty five and share our thoughts on Project Gravity. Second quarter revenues declined 14% to 145,000,000 Grilled revenues decreased 22% to $74,000,000 Grilled revenues were negatively impacted by revenue pace and shifts out of the second quarter. These timing shifts were largely tied to tariffs as retailers ordered product ahead of tariff implementation in the first quarter, and revenues were pushed into the third quarter as our retail partners shifted to domestic fulfillment from direct import. We also saw lower unit volumes of higher priced grills during the second quarter.

With respect to consumer demand, as Jeremy discussed, we saw better than planned sell through in grills, and we’re generally pleased with peak season performance at retail. Consumables revenues were $36,000,000 up 7% to second quarter last year. Gross in consumables was driven by an increase in wood pellet revenues as we saw a strong sell through and benefited from increased distribution. Pallet revenues also benefited from revenue pacing out of the first quarter. Strength in pellets was partially offset by a decline in food consumables.

Overall, we were pleased with consumables performance in the second quarter. Accessories revenues decreased 12% to $35,000,000 largely driven by lower sales in meter. Geographically, North America revenues were down 12%, while rest of world revenues were down 32%. Gross profit for the second quarter decreased to $57,000,000 from $72,000,000 in the 2024. Gross profit margin was 39.2%, down three eighty basis points versus 2024.

Our gross margin was negatively impacted by several factors, including the impact of tariffs, and we expect our mitigation efforts will drive sequential improvement in gross margin performance in the second half. Drivers of the decline include: one, the shift from direct import to domestic fulfillment, which negatively impacted margin by two ten basis points two, tariff costs worth 190 basis points three, promotional investment of 40 basis points. These were offset by one, improved pellet margins of 30 basis points and two, other margin positives of 40 basis points. Sales and marketing expenses were $25,000,000 compared to $28,000,000 in the 2024. Lower sales and marketing expense in the quarter was driven by a decrease in demand creation and employee expense.

General and administrative expenses were $26,000,000 compared to $30,000,000 in the 2024. The decrease in G and A expense was driven by lower stock based compensation expense and lower costs related to legal matters, partially offset by higher employee costs. Net loss for the second quarter was $7,000,000 as compared to a net loss of $3,000,000 in the 2024. Net loss per diluted share was $06 compared to a loss of $02 in the 2024. Adjusted net loss for the quarter was $2,000,000 or $01 per diluted share as compared to adjusted net income of $7,000,000 or $06 per diluted share in the same period in 2024.

Adjusted EBITDA was $14,000,000 in the second quarter as compared to $27,000,000 in the same period of 2024. Let me now discuss the balance sheet. At the end of the second quarter, cash and cash equivalents totaled $10,000,000 compared to $15,000,000 at the end of the previous fiscal year. We ended the quarter with $412,000,000 of short and long term debt, resulting in total net debt of $4.00 $2,000,000 From a liquidity perspective, we ended the second quarter with a very healthy liquidity position of 180,000,000 Inventory at the end of the second quarter was $116,000,000 compared to $107,000,000 at the end of the 2024 and $91,000,000 at the end of the 2024. We are comfortable with our inventory levels and believe we are appropriately positioned.

When looking at the second quarter’s inventory balance, it is important to note that increased costs driven by tariffs account for approximately 30% of the

Nick Bacchus, Vice President of Investor Relations, Treasury and Capital Markets, Traeger: year over year increase. Furthermore,

Joey Hord, Chief Financial Officer, Traeger: the shift from direct import to domestic fulfillment is contributing to the increase as we carry the inventory related to domestic fulfillment sales on our balance sheet. Moving on to Project Gravity. Larger picture, as a newly appointed CFO at Trigger, I am extremely excited about the significant opportunity we have to drive meaningful efficiencies and savings in our business with this effort. I believe the Traeger brand is the best in the grill industry, and the company’s largest opportunity long term is to drive increased household penetration and brand awareness. In order to achieve this, we need to optimize the business and the shape of the P and L by sharpening our focus on return on investment.

I believe that Project Gravity will allow us to unlock value and will position us to continue to invest in our long term growth drivers. As Jeremy discussed, Phase one Gravity actions include a headcount reduction implemented in the second quarter and the integration of METR into our Trigger infrastructure. We expect these actions will result in $30,000,000 of run rate cost savings once fully implemented. Full implementation of Phase one actions will continue through the 2026, and we expect to realize as much as $13,000,000 of these savings in fiscal twenty twenty five. Phase two of GRAVITY will consist of initiatives identified as part of an ongoing analysis of our operations with the goal of driving efficiency and simplification.

We will provide updates as the strategic plan further develops in the coming quarters. Overall, I believe the review will bring to light a significant opportunity to unlock value at Trigger. Now turning to our outlook for fiscal twenty twenty five. Today, we are issuing guidance for fiscal year twenty twenty five. For revenues, we are guiding to $540,000,000 to $555,000,000 or a decline of 8% to 11%.

Our revenue is being impacted by several factors. First, we expect a decline in the high single digit percentage range for Grow revenues. The expected decline in Grow revenues is being driven by our assumption of pressure on Grow volumes due to the price increases we implemented to offset increased costs related to tariffs. It’s important to remind everyone that the guiding principle of this year has been to enhance profitability and cash flow in the face of a challenging backdrop. Our efforts to mitigate tariffs with price increases are driving an expectation of lower grill volumes in the second half of the year.

However, this is allowing us to offset a substantial majority of the tariff impact. Additionally, we are facing a challenging comparison in the fourth quarter of last year when we had a large load in of our new Woodbridge grill. For consumables, we’re expecting positive growth in FY 2025 and continue to believe in the reoccurring revenue nature of our wood pellet business. Accessories are expected to decline due to an anticipated decrease in meter sales. On gross margin, we are assuming 40.5% to 41.5, which implies a decline of 80 to 180 basis points.

This pressure on gross margin is being driven by the impact of tariffs as well as the mix shift out of DI to domestic fulfillment. For adjusted EBITDA, we are guiding to a range of 66,000,000 to $73,000,000 While this implies a reduction in adjusted EBITDA versus fiscal twenty twenty four, given that we faced a $60,000,000 tariff headwind, I believe we are demonstrating our strong ability to control what we can and manage the P and L effectively in a difficult environment. I’d like to comment briefly on quarterly pacing for the balance of the year. In third quarter, we expect a modest sequential improvement in year over year sales relative to the second quarter given the revenue timing dynamic we’ve discussed from Q2 into Q3. However, we are still expecting a decline in revenues for the quarter.

We are forecasting a decline in adjusted EBITDA as compared to the third quarter of last year. For the fourth quarter, we are assuming that we will have a larger sales decline as we are lapping the load in of Woodridge from the prior year. Despite this, we expect that adjusted EBITDA will improve versus prior year as we are anticipating the benefit from growth in gross margin as well as to more fully benefit from cost savings actions. Overall, I believe our organizational focus on protecting profitability and cash flow in the current year will allow us to successfully navigate the current environment. Moreover, we are positioning the business for significant improvement going forward as we seek to drive efficiency and reshape the P and L.

Our Project Gravity initiatives can drive meaningful value and ultimately will allow us to reignite both top and bottom line growth. I’ll now turn the call over to the operator for questions. Operator?

Alex, Call Coordinator: Thank you. Our first question for today comes from Philip Lee of William Blair. Your line is now open. Please go ahead.

Philip Lee, Analyst, William Blair: Hi, afternoon guys. Thanks for taking the question. Can you talk a little bit more about the color or just color around the reaction to the price increases, particularly in the wholesale channel? You mentioned that sell through was positive. So just trying to get a read through on on the reaction to price and then maybe, any differences between that consumer and then what you saw in the direct channel.

Jeremy Andress, Chief Executive Officer, Traeger: Yeah. Sure. Happy to. So, let let me start with wholesale, first, Philip. I’d say, first of all, stepping back, it’s important to delineate between sell in and sell through just given given the pacing dynamics of of revenue being pulled into the first quarter as retailers tried to sort of get ahead of, tariff pricing.

And, the shift from direct import to a domestic model, which which effectively pushed revenue into, into the third quarter as we get back onto a, a a direct import model. And so, so so certainly some pacing pieces that don’t tell the story around the consumer from a health, in in sort of a a brand perspective. As we said, sell through was, I would say, robust relative to our expectation. You know, certainly didn’t know how to think about the consumer or the environment post liberation day. And and so, certainly, certainly beat our expectation.

We really do. We myopically track sell through wherever we get direct data feeds from our retailers, which is probably two thirds of our business. Sell through unit growth was was modestly positive, and sell through to in in terms of revenue dollars in the second quarter was modestly negative. And and I I think that points to, you know, for for first of all, health of the consumer that that’s continuing to buy. I think it speaks to strength of the brand that in an environment like this, we’re driving positive, unit sales through our retail.

I also think it speaks to a trend that we began to feel, you know, probably twelve, eighteen months ago as as there was we’ve seen some modest shift, to lower price points just given the environment around consumer financing and the nature of a, a a nonessential durable. But but on balance, you know, we we feel good. We saw, you know, fair fairly broad based success at retail from a sell through perspective. And that’s what that’s most of our business. So that that tells the story.

In terms of the direct channel, you know, the the direct channel fell off more than retail in in in candidly, that’s because we changed price early in the quarter. You know, it’s it it we certainly you know, given that we sell through large retailers and there’s a process for changing price and then there’s execution at retail, we felt like, number one, a brand perspective, we wanted to lead the industry in in in in in get to higher prices as soon as possible in effort to protect profitability, but also recognize if we’re asking our retailers to raise price that we need to to lead on our own website. So hard hard to compare the two. I would say, you know, when when when retail prices were by and large consistent with our website, we saw consistent, consistent level of performance.

Philip Lee, Analyst, William Blair: Okay. Great. That’s super helpful. And then you mentioned that your plans were to significantly reduce your exposure to China by the 2026. Can you provide a bit more color maybe around the progress you expect to make this year?

And then as some of those tariff costs begin to fall off, should we think about those mitigation savings as as more variable along with that, or would they be kind of fixed and, permanently embedded in the model? Thank you.

Jeremy Andress, Chief Executive Officer, Traeger: Yeah. Great. Let me let let why don’t I take the, the first part of that, and then, Joey can jump in on on the second piece. So, you know, we we actually started to diversify away from China a couple of years ago. And with the consumer durable that where tools have to be moved, rebuilt, supply chain has to follow, lines have to be perfected, It just it just takes a bit of time, to to diversify or or or or to move manufacturing low geographies.

No question. This year, we have been accelerating something that that that we started with. We’ve we’ve indicated in the past that, that that at steady state, let let’s say 2024, our mix of China to Vietnam sourcing has been about eight in terms of grills, has been about 80% sourced in China and about 20% sourced in Vietnam. We’ve made a lot of progress this year. And and my expectation is, as opposed to speaking to this year, I would speak to 2026 because that’s sort of when when when we’re able to substantially bring this across the finish line.

By the ’26, we will be, almost almost entirely diversified outside of China, and and I would say, you know, pretty steadily through, through the year, to get to that point. Just just as, you know, we we bleed down inventory and we bring in other inventory, I think it’ll be a a steady transition over the course of the next, next twelve to twelve to eighteen months. In in terms of you know, and and I’ll just say from a tariff perspective, you know, China is actually not radically different from from Vietnam. Vietnam seems to have found sort of settled in on a number from a tariff perspective. China, may or may not it was probably going to be volatile.

So we’re gonna continue to drive that transition, as quickly as we can.

Joey Hord, Chief Financial Officer, Traeger: Got it. I’ll add in on the, if they’re permanent or structural. They’re permanent in nature. The three mitigating actions around our our, tariffs are supply chain efficiencies, bomb savings, just negotiation with our factories, pricing, which we’ve spoken about in opening remarks, and then overall cost reductions. And that leads into project gravity and the $30,000,000 run rate, which we’re, which we’re called out.

So long term in nature. The the actions that we’re taking, we want to be long term in nature and structural, which will yield through, you know, for quarters and years to come.

Philip Lee, Analyst, William Blair: Excellent. Very helpful. Best of luck. Thanks, guys.

Jeremy Andress, Chief Executive Officer, Traeger: Thank you.

Alex, Call Coordinator: Thank you. Our next question comes from Brian McNamara of Canaccord. Your line is now open. Please go ahead.

Brian McNamara, Analyst, Canaccord: Hey, good afternoon, guys. Thanks for taking the questions. First on grilled, I know we’re coming off a few years of a rough grill market. So why do you think the market was so tough in Q2? A smaller competitor mentioned this morning its grilled business was on a growth trajectory at the beginning of the season before having, quote, unquote, the full force of the tariffs.

But why would tariffs matter much as significant price increases really weren’t visible in the marketplace, at least for the important Memorial Day weekend period? And I believe even Traeger went back to pre tariff pricing promotion there. So why do you think consumers just didn’t come out during peak season this year?

Jeremy Andress, Chief Executive Officer, Traeger: Brett Brett, good question.

Joey Hord, Chief Financial Officer, Traeger: So so there there are a couple of things

Jeremy Andress, Chief Executive Officer, Traeger: that I would hit. First of all, from a from a timing perspective, although, you know, I I we would say the consumer held in there better than better than expected. If you look at consumer sentiment in April and May, it it was it was pretty devastating. You know? In in fact, I it may may hit an all time low since the early fifties when they started measuring consumer sentiment.

So the the the the the the timing of the volatility post, post Liberation Day, you know, it it it was heading right into our peak season. So we think that had some impact. You know, in terms of, you know, where the where the grill industry is in in this sort of life cycle of, coming out of the pandemic and that pull forward demand, as as we do consumer research and, and and run the numbers on the replacement cycle, it it really did feel like this was a year that that started to normalize for the first time post pandemic. And, and and we believe the result would have been different had, had the second quarter not been impacted by, by by, all all of the tariff activity. We we think that we think that certainly had some impact.

In terms of the, in terms of the promotions, we actually weren’t at, pre pandemic levels. We were on a couple of SKUs. We were very intentional in in our pricing strategy in terms of being as sharp as, as sharp as we could have been on the opening price point. We thought that was, that was a hedge against the against the sentiment. We think that was the right thing to do.

But if you look at our other, our other products, we were you you know, first of all, if you were to compare year over year, we launched the Woodbridge at higher price points. So if you went back to a year ago, we had, you know, pro seven eighty, and and pro five seven five, discounted by a 150 to $200. We launched replacement products, but but they were priced higher. So the Woodbridge Pro, for example, replaced the seven eighty, but it but it’s $1,149 against $9.99 at full price. When we promoted that, we promoted it down to $9.99, which is 25% higher than the product that that replaced.

So so pricing was higher, in in in in in was higher on promotion. We just tried to be as strategic as we could be, around the price points. And then but it but I’ll say that, you know, we are the further we get from, the the the the pull forward of the pandemic, the more optimistic we get that industry growth is coming as consumers, start a more normalized replacement window and and notably those who bought in 2021. If it’s a, you know, five, six year replacement window, we’re we’re we’re kinda there. So it gives us optimism, especially as we get out of the noise of of of of the tariff environment.

Brian McNamara, Analyst, Canaccord: That’s helpful. Thank you very much. Secondly, on meter, what what’s going on there? We’re we have five straight quarters of pretty significant year over year declines. Are prices there just too high?

Is it simply a competitive intensity increasing? Is it a combination of both? Is it something else?

Jeremy Andress, Chief Executive Officer, Traeger: Well, look. I I think prices being too high and the competitive dynamic are those are almost one almost one and the same. There’s no question the the industry has evolved a lot since we bought the business. You know, we are still by far the share leader. And, but what we’ve seen is a lot of low low price entrance.

And, you know, this happens in categories like this that they get crowded, highly fragmented at at, know, sort of the opening price points. And we we think this is you know, over time, we will see, we’ll see attrition. You know, everyone who entered probably didn’t anticipate all of the other competitors coming in. So there’s no doubt this has created a a challenging challenging environment from a from a competitive perspective. We’re battling a lot of low cost competition.

It certainly motivated us to think more strategically around our product road map and our pricing strategy, having the right brand, but needing to get a little bit sharper, in the category over time. And and so we continue to feel the pressure now. We we also saw stabilization. The the rate of decline is has certainly, come down quite a bit. And so we feel like, we’re we’re sort of, near bottom from a revenue perspective.

And then we chose to to approach it from a, you know, from from from a cost, and and and integration perspective. So, as as we shared in our opening remarks, we were in the process of closing down our Lester office. That that has been the headquarter for meters. We’re integrating most of the functions into our our Traeger Salt Lake City office. We think there are not only some tremendous cost advantages there, but we also have some real capability around sales, marketing, brand building, that I think the meter brand will benefit from being integrated into this organization.

I think it’s important to note that as we go through this, meter will continue to be an important part of our business. We believe in the category long term. We’ve had to reshape the p and l and find a more efficient way to build it, but but we’re also very motivated to ensure that our capability at retail, which represents sort of 90 plus percent of our business for Trader, gets leveraged and the and that meter can really start to grow in a more a a more sustainable way that’s less susceptible to the low cost entrants that are almost entirely ecommerce based.

Brian McNamara, Analyst, Canaccord: Got it. And then one quick one. Finally, Jeremy, I admire the fact that you’re regularly out in the open market kind of eating your own cooking, buying back stock. You bought back stock you bought stock in June at a level similar to where the stock is trading at after hours. What would be your message to current and prospective shareholders on the investment merits here?

Is is the worst behind us, including kind of your your your view on the back half here?

Jeremy Andress, Chief Executive Officer, Traeger: Brian, it’s a good question. So so let let let me let let me take that from a from from a few different angles. First of all, you know, I I joined this business almost twelve years ago, and we saw very methodical, very consistent growth for many years. The pandemic sort of treated us all well and and dropped us all back to Earth, and and it’s been, you know, it’s been a challenge since 2022. I tend to believe that from a macro perspective, there are more tailwinds and headwinds in front of us just given what we’ve gone through and and and and sort of, like, deeply believing that this category is is robust over time.

And although it cycles, the cycle that that we’re coming through has been has been extreme because the, you know, the the pandemic was was extreme to the upside. So so we certainly believe in that, the tariff environment. Let let’s hope this is a this is a moment in time. Feels like it’s starting to settle down, and that will give us the ability to make longer term decisions around pricing, product strategy, sourcing strategy. And so believe in the long term of the category and and believe that if you just look at the history, there’s there there’s there’s more upside than downside just in terms of the the sort of the external events that that have that have had impact on this category.

When it comes to Traeger, one of the things that I I I and we have always believed deeply in our position as a brand, We we are disruptive from a product perspective in terms of the innovation that we’re bringing to market. We continue to see in our net promoter scores as as they are robust and and continue to meaningfully exceed the industry’s scores, we believe that we get rewarded for that long term. We’ve been investing deeply in product over the last couple of years even when resources have been thin, And we think that’s that that’s a great it’s a great moat long term. And we have a very passionate base of consumers. So all of these things, you know, none of them have fixed the moment because, you know, the, the the storm that that we’ve been sailing through has been so dramatic, but our commitment is to continue to make the right decisions for the long term for this business, like, brick by brick.

Just make sure that that we’re building something that that that can last. You know, as as you go through these moments, like, ’22 and 2025, what I love about them as as I’m able to have more perspective is you see you see the how iron sharpens iron. You see you see the team step up and respond to going through different difficult times, and we’re not responding by, you know, sort of navigating this with the status quo. And we’re not we’re not responding by making short term decisions. I think as as we’ve highlighted, you know, we got aggressive around operating expenses in April, and and, admittedly, some of those were reactive not knowing where this where this economy would settle out.

But as we got into it, I think there’s I saw a very strong commitment on the part of the team to continue to reinvent, to continue to get more efficient. And and and this just gives us the wherewithal, the investment capacity to further amplify what we think is special about this brand. So, you know, I I I I I I own my my family owns a lot of stock in this business. And, from a diversification perspective, it probably doesn’t make sense to buy whenever I can. But, you know, I believe in the business.

And and when I see the stock, the levels that it trades at, I I don’t have enough discipline to not buy it.

Brian McNamara, Analyst, Canaccord: I appreciate the color. Thanks very much. I’ll pass it on.

Alex, Call Coordinator: Thank you. Our next question comes from Joe Feldman of Telsey Advisory Group. Your line is now open. Please go ahead.

Joe Feldman, Analyst, Telsey Advisory Group: Great. Thanks, guys. I wanted to touch base on some of the new products like the Flat Rock and the Woodbridge. Like how have those been performing? Maybe the answer is the sub a thousand dollars is working, but but I know you’ve said that a few times about the girls.

But can you talk about those two new lines and and the reception you’re seeing?

Jeremy Andress, Chief Executive Officer, Traeger: Yeah. Sure, Joe. Let let me let let let me focus mostly on Woodridge because wood pellet grills are are are core to, you know, it it’s the core of our business. And and then I’ll I’ll I’ll take a take a minute on Flat Rock as well. Woodridge is the best product this company has built in, in the in the nearly forty years that we’ve been in business.

And one of the things that that I’m very proud of is as I look at the performance of our of our product and operations teams is the ability to, build more cost effectively and with more value at higher quality product that really resonates with our consumer. And we we we launched you know, we we we had our big Woodridge product launch event in the April, which was a bit of a tumultuous moment in time. The response has been phenomenal to Woodridge. You know, it’s it’s unfortunate there’s that there’s so much noise in the category around tariffs in this category. If you think about just just generally where it’s sourced out of China and Southeast Asia and and the consumption of non US steel, we’re we’re highly exposed to tariffs.

But the response to Woodbridge has been it’s it’s it’s been remarkable. You know, as as we’ve tracked product reviews online, they’ve been they’ve been very strong out of the gate. We have a hypercare program where at launch, we’re really, really obsessed. We’re we’re obsessed around everything that we can learn around that product, how to improve it, how to ensure that it’s meeting the needs of our consumer. And we feel really good about this platform that that will have, you know, five years of life.

We’re we’re, you know, we’re a hundred plus days into it, but we like we like the we we like what we’re seeing. No doubt, we are, I would say, feeling some pressure at higher price points. You know, the Woodridge Pro, which launched at $999, for tariff reasons, had to move up to, $1,150, and that that is not only a $150 higher, but breaks a pretty key psychological price point from a consumer perspective. But I’ll tell you, it’s it’s been pretty interesting to see the mix between that and the Woodbridge base model given that given how much more expensive it is. So, feel really good about Woodbridge.

It’s a phenomenal product. All of the consumer feedback would suggest, you know, we sometimes get questions how we think about our product strategy relative to these consumers or economic cycles that we go through. And what I’ll say is, you know, these are very high price points relative to the industry, but but they’re very acceptable price points for the position of our brand. And we feel like, we’ve launched something that’s gonna perform very well over the next two to three years. You know, flat Flat Rock, we are still building we’re still building our brand in griddle cooking.

This is expensive. You know, this is a this was a $900 product. It’s now a thousand dollar product post terrorist. And the average selling price of the largest competitor in the space is, you know, it’s $250. So we’re multiples higher from a from a price perspective.

So I would say slowly gaining traction, but but certainly, as you online read reviews, again, we’ve nailed it from a product market fit perspective. The innovation is exactly what it should do at the price point.

Joe Feldman, Analyst, Telsey Advisory Group: Okay. Thank you. And then just a a a follow-up. With regard to the price increases you guys have made, you made a comment a couple of times that you’re assuming some unit decline with it. Obviously, it makes sense with the elasticities.

But do you guys have a framework that you could share with us? Like, I don’t know if it’s a 10% price increase, units are gonna go down 10% or down 15%, or how how are you guys thinking about it from that standpoint?

Jeremy Andress, Chief Executive Officer, Traeger: You know, so so I’m gonna say for cup couple of things. First of let me let me step back and say, we were very thoughtful around our pricing strategy. It was not across the board price increases, and it and it actually wasn’t even relative to the tariffs at each SKU. We focused on elasticity and consumer at a price point in an effort to to to optimize the the the portfolio. This was a really we did some pricing, some some pricing research in the second quarter, and, and and we had some outside, consulting help as well.

And and and what I’ll say is it was a very noisy time to do a pricing study with all of the the, tariff activity. And so I don’t know that we we still have a lot to learn around elasticity in unit volumes. We, we we began to raise price in May, but I would say the price points in the market really weren’t at, they they they really weren’t, at at the new levels across the board until till probably the June, and we were on promotion. So we’ve got some things to learn. We’ll have more impact of the price increases in the back half of the year.

But to be clear, we we we that is inherent to our guidance. And, you know, where where there’s uncertainty, we tend to take a conservative approach. And, but but I would say, no. It’s not unfortunately, a, an opening price point consumer behaves very differently than, you know, a $1,500 consumer. We tried to look at all of the historical data and take that into account as as as we built The US to see model.

Joe Feldman, Analyst, Telsey Advisory Group: Got it. Got it. That makes sense. So so at this point, you all the price increases you think for this year are baked in at this point, right, related to tariffs? Correct.

Peter Benedict, Analyst, Baird: Yep. Yep.

Joe Feldman, Analyst, Telsey Advisory Group: Got it. Thanks. I’ll pass it on. Thanks, guys.

Jeremy Andress, Chief Executive Officer, Traeger: You. Thanks, Joe.

Alex, Call Coordinator: Thank you. Our next question comes from Peter Benedict of Baird. Your line is now open. Please go ahead.

Peter Benedict, Analyst, Baird: Hi, guys. Thanks for taking the question. So first, just back on the replacement cycle. You kind of alluded to it a couple of times. I mean all your grills are connected, so you guys have kind of a unique way to see are you seeing any of the Woodridge buyers being those who are basically turning off an older grill that maybe was purchased in 2020 or 2021?

I know it’s early, but just curious if you’re seeing any of that.

Jeremy Andress, Chief Executive Officer, Traeger: Yeah. It’s a good question. And and we do have access to that and and access to to to cooking engagement as well. You know, I I I haven’t looked at that data recently, but but I’ll say that as as we tracked it early in the launch of Woodridge, we actually saw more new buyers coming in, than, than replacement buyers. And part of that, I think, is is is a function of what happened in the pandemic.

There was there there were so many that upgrade and replace that, you know, by definition, where we’re picking up, where we’re selling, a new innovation, oftentimes, it will be to a new buyer. We had a lot of, demand that was created that we think helped helped grow drive some new buyers in the brand. Over time, we certainly believe that someone who purchased, you know, a a first generation pro early in the pandemic, or or even a second generation will will look at the price point of Woodbridge and see a lot more value. So over time, we believe that Woodbridge will be highly leveraged as as as an upgrade to current buyers, but I would say a fairly fairly even mix, to date at least as far as the last, look at that data.

Peter Benedict, Analyst, Baird: That’s helpful. Thanks, Jeremy. Then maybe Joey, one for you. Just any sense for kind of the CapEx spending plans for this year, free cash flow, the kind of latest view on that? And and maybe where you would see kind of cash landing, at the end of the year given given what, you guys have put in place here.

Joey Hord, Chief Financial Officer, Traeger: Yeah. So, thanks for the question. So first off, we’re we’re prioritizing financial health profitability, hence our pricing shifts, Jeremy spoke to. We’re gonna be cash flow positive, and that’s something that we were focused on this year. It’s just overall, financial health.

As far as CapEx, there’s no really deviation versus prior year in CapEx. We’re CapEx like business. A little, you know, little CapEx investments around fixtures, some mill some mill investments, but no significant CapEx that or I shifts from prior year.

Peter Benedict, Analyst, Baird: That makes sense. And then just, I guess, one last one. Just beyond the, when we think about the the 30,000,000 in in phase one savings, the 13,000,000 are evident in this in this year’s numbers. Do we just get the full balance in ’26? Do do you reinvest some of that?

Just trying to how we should be thinking about about that. And then any early sense for the size of phase two? I mean, to say phase two is something that could be larger than phase one, should we not be expecting it to be larger? Just any any kind of high level comments around that would be helpful. Thanks so much.

Joey Hord, Chief Financial Officer, Traeger: Yeah. Sure. So the 13,000,000, is what we’re publishing around and building our guidance around in year savings that were that’s built appropriately in our guidance. As far as the ongoing, the 30,000,000, that’s gonna be, in the ’25 into ’26. And, it’s obviously surrounded around the centralization of the meter offense here or the meter business here and, leveraging the fixed cost infrastructure.

That takes time. So I think we’d see sequential improvement, throughout ’26, and that 30,000,000 will will materialize within, throughout f y twenty six. The second part of your question was on gravity second part of gravity. It’s it’s too early to talk about quantification of that investment or that, initiative. At the same time, we think there’s a we feel that they significant amount of value to unlock mostly through streamlining and efficiency, which, there we’ll we’ll provide more color and detail to come, as as the project progresses.

Peter Benedict, Analyst, Baird: Yeah. Alright. Fair enough. Good luck, guys. Thank you.

Joey Hord, Chief Financial Officer, Traeger: Thanks, Peter.

Alex, Call Coordinator: Thank you. At this time, we’ll currently take no further questions. Therefore, this concludes today’s conference call. Thank you all for joining. You may now disconnect your lines.

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