Traeger, Inc. (COOK) Q1 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals a mixed performance with some positive aspects, such as increased grills revenue and improved net loss, but also significant challenges including a decline in accessories revenue, particularly MEATER, and no share repurchase plan. The Q&A highlights management's avoidance of clear answers on crucial issues like tariffs and gross margin, adding uncertainty. The guidance suspension and anticipated revenue decline suggest a cautious outlook. These factors, combined with aggressive cost management and inventory concerns, indicate a negative sentiment likely to lead to a stock price decrease of -2% to -8%.
Key Financial Performance
Revenue $143 million, down 1% year-over-year; decline attributed to a decrease in accessories business, particularly MEATER, offset by a 13% increase in Grills sales.
Adjusted EBITDA $23 million, down from $24 million year-over-year; decline largely driven by a decrease in MEATER sales.
Grills Revenue $87 million, up 13% year-over-year; growth driven by strong consumer demand and the launch of the new Woodridge series.
Consumables Revenue $30 million, down 6% year-over-year; decline attributed to a reduction in wood pellet and food consumables, partially due to a timing shift.
Accessories Revenue $26 million, down 27% year-over-year; decline driven by continued challenges in MEATER and lapping of a sales load-in related to a European product partnership.
Gross Profit $59 million, down from $63 million year-over-year; impacted by unfavorable mix shift, increased marketplace investment, and MEATER performance.
Net Loss $1 million, improved from a net loss of $5 million year-over-year; reflects better cost management and reduced expenses.
Adjusted Net Income $7 million or $0.05 per diluted share, up from $5 million or $0.04 per diluted share year-over-year; improvement due to better cost management.
Cash and Cash Equivalents $12 million, down from $15 million at the end of the previous fiscal year; reflects cash management amid economic uncertainty.
Long-term Debt $404 million; reflects the company's leverage position.
Total Net Debt $416 million; includes drawn down $25 million under receivables financing agreement.
Inventory $127 million, up from $100 million year-over-year; increase reflects conservative planning amid economic uncertainty.
Total Liquidity $168 million; indicates the company's ability to navigate current economic challenges.
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Operating Highlights
New Product Launches: Launched Woodridge, a new wood pellet grill, in January with strong consumer reception and high product reviews (average rating of 4.8 stars). Introduced Flatrock 2 Zone, a compact griddle offering premium performance at a lower price point.
Market Expansion: Increased number of roadshows at Costco by nearly 50% compared to the previous year to enhance brand awareness and drive sales.
Operational Efficiencies: Implemented cost reduction measures, including a substantial reduction in hiring and deferral of nonessential expenditures. Pursuing sourcing diversification to migrate production away from China to reduce tariff exposure.
Strategic Shifts: Withdrew prior financial guidance for fiscal 2025 due to uncertainties in consumer demand and trade policy. Implemented strategic pricing increases to offset tariff impacts.
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Risk or Challenges
Tariff Exposure: Traeger faces significant tariff exposure, particularly with 80% of its grills produced in China, subject to a 25% Section 232 steel tariff and a 20% IEEPA tariff, totaling 45%. Accessories sourced from Taiwan are subject to a 10% reciprocal tariff.
Consumer Demand Uncertainty: The company is experiencing uncertainty in consumer demand due to declining consumer sentiment and inflationary pressures, which complicates forecasting and planning.
Supply Chain Challenges: Traeger is navigating supply chain hyperinflation and is actively working on cost reduction strategies, including negotiating with manufacturers and diversifying sourcing to mitigate tariff impacts.
Economic Environment: The broader economic environment is characterized by volatility, with the company withdrawing its financial guidance for fiscal 2025 due to uncertainties surrounding trade policy and consumer behavior.
Competition in Accessories: The accessories business, particularly MEATER, is facing heightened competition and a slowing market, leading to a 27% revenue decline in this segment.
Cost Management: Traeger is implementing aggressive cost management strategies, including reducing nonessential expenses and hiring, to navigate the volatile environment.
Inventory Management: The company is conservatively managing inventory levels and has reduced purchase orders until there is better visibility on consumer demand and trade policy.
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Guidance & Outlook
Tariff Mitigation Strategies: Traeger is implementing several strategies to mitigate the impact of tariffs, including cost reductions in the supply chain, sourcing diversification away from China, and strategic pricing increases.
Product Innovation: Traeger launched the Woodridge series of wood pellet grills and the Flatrock 2 Zone griddle, which have received strong consumer reception and positive reviews.
Retail Partnerships: The company is enhancing retail partnerships through increased product demonstrations and training for retail associates to drive sales.
Cost Management: Traeger is aggressively managing expenses, including reducing nonessential costs and hiring, while still investing in key growth areas.
Financial Guidance: Traeger has withdrawn its prior financial guidance for fiscal 2025 due to uncertainties related to tariffs and consumer demand.
Revenue Expectations: The company expects to have better visibility into consumer demand after the peak retail season, but has not provided specific revenue projections.
Adjusted EBITDA: Adjusted EBITDA for Q1 2025 was $23 million, down from $24 million in Q1 2024, with expectations to preserve EBITDA amidst economic challenges.
Inventory Management: Traeger is conservatively managing inventory and has reduced purchase orders until there is clarity on consumer demand and trade policy.
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Shareholder Return Plan
Share Repurchase Program: None
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Key Q&A
Q:Can you provide some color around some of the strategic price increases across your product portfolio and how we can expect this to increase?
A:We are sophisticated in understanding elasticity at a product and price level. Price increases are not even across the board; we consider where we have permission to move prices based on historical data. We anticipate competition will also raise prices around the same time.
Q:Can you talk about how the team is thinking about the MEATER segment and capital allocation going forward?
A:We are focused on navigating short-term pain with MEATER. We believe in its long-term potential and are shifting from online sales to wholesale channels where we have competitive strength.
Q:Have you sensed a shift in retailer willingness to take on inventory in light of the current uncertainty?
A:We haven't sensed a reluctance from retailers to take on inventory, but there has been a shift from direct import back to domestic fulfillment due to tariffs.
Q:If retail stays consistent, how long would you be able to fulfill demand with current inventory?
A:Our inventory on hand may provide short-term relief, but we are risk-adjusting based on an unknown future and pulling back on POs from Asia.
Q:Can you clarify the tariff situation regarding products coming from China?
A:Yes, products from China face a 45% tariff, which includes the 25% Section 232 tariff and additional IEEPA tariffs.
Q:Can you give us an idea of how much of your COGS are exposed to tariffs?
A:We can't break down the composition of COGS, but product cost is a majority. 80% of grills are manufactured in China, and 75% of accessories are sourced outside of China.
Q:Are all your grills produced in both China and Vietnam?
A:Not all SKUs have redundant sourcing outside of China, but we are focused on building capacity for high-volume SKUs outside of China.
Q:Can you provide any color on gross margin, maybe ex tariffs?
A:We can't provide any color on gross margin as we have suspended guidance.
Q:How are you approaching marketing this year?
A:We are focusing on sales activation activities and have reduced top-of-funnel marketing due to the uncertain environment.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on gross margin and the exact impact of tariffs on COGS, stating they cannot break down the composition of COGS. Additionally, they suspended guidance on future performance.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Costco
Dom
Flatrock Zone
Grills
SKU
action
activity
awareness brand
brand ambassador
burner
center
consumer expense
consumer sentiment
cost reduction
decline MEATER
demand month
expectation product
flavor
introduction
line expectation
lineup
majority tariff
mitigation effort
opportunity efficiency
pricing increase
priority
product demo
production China
rating
result line
rub
tariff mitigation
trade policy
visibility consumer
whiskey
COOK Transcript
Traeger, Inc. (COOK) Q3 2025 Earnings Call Transcript
Unknown11-5
The earnings call reveals several negative factors: declining revenue guidance, increased net loss due to a noncash impairment, and a strategic exit from DTC sales. Despite cost-saving initiatives, the market strategy adjustments (e.g., exiting direct-to-consumer) and high inventory levels indicate potential challenges. The Q&A section highlighted concerns about revenue loss and lower margins from the European distributor model. These elements, combined with a weak grill market, suggest a negative outlook. However, optimistic guidance on future recovery and innovation prevents a strong negative rating.
Traeger, Inc. (COOK) Q2 2025 Earnings Call Transcript
Unknown8-7
The earnings call reveals several concerns: withdrawal of financial guidance, reliance on China for sourcing, and declining EBITDA. The Q&A highlights uncertainties in tariff impacts, competitive pressures, and unclear management responses on strategic initiatives. Despite positive feedback on new products, higher price points and competitive pressures pose challenges. The lack of specific financial guidance and continued reliance on China, coupled with competitive pressures and tariff-related price hikes, suggest a negative sentiment overall.
Traeger, Inc. (COOK) Q1 2025 Earnings Call Transcript
Unknown5-2
The earnings call reveals a mixed performance with some positive aspects, such as increased grills revenue and improved net loss, but also significant challenges including a decline in accessories revenue, particularly MEATER, and no share repurchase plan. The Q&A highlights management's avoidance of clear answers on crucial issues like tariffs and gross margin, adding uncertainty. The guidance suspension and anticipated revenue decline suggest a cautious outlook. These factors, combined with aggressive cost management and inventory concerns, indicate a negative sentiment likely to lead to a stock price decrease of -2% to -8%.
Traeger, Inc. (NYSE:COOK) Q4 2024 Earnings Call Transcript
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Despite positive growth in grill and consumables revenues, the underperformance of the Meater line and lack of detailed guidance suggest caution. Improved margins and EBITDA are positives, but the lack of share repurchase and high net debt are concerns. The Q&A reveals uncertainty in Meater performance and cautious forecasts, contributing to a neutral sentiment. The absence of new partnerships or significant shareholder returns further supports a neutral outlook.
COOK Report
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