COOK earnings call transcript, November 4, 2026

Thank you for joining Traeger's call to discuss its third quarter 2026 results, which were released this afternoon and can be found at our website at invest. Traeger.com. I'm Stephanie Reed, Vice President of Finance, Strategy, and Investor Relations at Traeger. With me on the call today are Jeremy Andrus, our Chief Executive Officer, and Joey Hoard, our Chief Financial Officer. Before we begin, let me remind you that participants on this call will make forward-looking statements based on current expectations, and those statements are subject to certain risks and uncertainties that could cause actual results to differ. These risks and uncertainties are detailed in Traeger's reports filed with the SEC. This call also contains certain non-GAAP financial measures, including adjusted EBITDA, adjusted net income or loss. Adjusted net income or loss per share, free cash flow, and net debt, which we believe are useful supplemental measures. The most comparable GAAP financial measures and reconciliation of the non-GAAP measures can be obtained herein to such GAAP measures are included in our earnings release and investor presentation, which are available on the investor relations portion of our website at investors.traeger.com. Now I'd like to turn the call over to Jeremy Andrus, Chief Executive Officer of Traeger. Jeremy.

the community. Traeger's reach beyond our traditional audience. We've evolved our influencer strategy and increased our investment behind creators who can introduce Traeger and wood fired cooking to new consumers. We're seeing encouraging signs the strategy is working. In Q3, our influencer partners generated more than 284 million impressions, up over 50% year-over-year, with approximately half. ...from creators who are new to Traeger. And approximately 70% of our organic reach came from consumers who don't currently follow Traeger. Reach usually comes at the expense of... ...engagement, but we are growing both. Finally, our Net Promoter Score of 65 is the highest in the category and meaningfully above the next closest competitor. That tells us we're expanding... ...trager's reach while maintaining the consumer advocacy that has always been one of the brand's greatest strengths. Reaching new consumers also requires having the right products to meet their needs. One of the clearest dynamics we've seen this year has been a consumer shift toward more accessible price points with double-digit growth in our year-to-date sell-through on grills below $600 across our... ...strategic accounts. While the shift towards lower price points creates an ASP headwind, our sell-through data shows that consumers purchase more Traeger grill units at our strategic retail partners. ...in the third quarter than they did a year ago. In other words, we're bringing more households into the Traeger brand, even as consumers gravitate towards lower price points. Our strategy is to offer compelling...

...products across our broader price range while preserving the quality, innovation, and experience that differentiates Traeger. And the new Westwood and Iron Top families of products are good examples, bringing Traeger innovation... ...to more accessible price points. And even with that mixed shift, our ASP remains more than twice that of the overall category. In pellets, we're seeing a similar shift toward value with increased competition at lower price points and changes in... ...exclusivity across certain retail channels, creating near-term pressures. We're responding by expanding the availability of Traeger pellets across our retail network and improving retail presentation. ...and visibility. Over time, we believe broader distribution, together with the quality and flavor differentiation of our pellets, will strengthen our position in the category. Each new Traeger house... ... creates a longer-term relationship across pellets, accessories, future grill purchases, and the broader Traeger ecosystem. That's why we view expanding the installed base as an important... ... driver of long-term value, even when the initial entry point is at a lower price. We're also excited about our innovation pipeline. We have new products planned for launch in 2027 that will extend the Traeger experience to even more consumers. And we'll share more as we get closer to launch. Making Traeger more accessible isn't only about product and price. It's also about being where consumers choose to shop. Following our announcement last quarter, we

initiated our national expansion with Lowe's during Q3. Lowe's is one of the largest distribution expansions in Traeger's recent history. Our research tells us the Lowe's shopper is incremental to reach today. That's true by geography in markets where we've been under penetrated. And it's true of the shopper with a strong DIY base and household mix that fits our core consumers. We believe this makes Lowe's another meaningful platform for household acquisition. At the same time, our strategy is not simply about adding doors. The Home Depot and Ace. Remain strategically important partners, and we're continuing to invest behind both relationships. At the Home Depot, we've doubled our return on ad spend by focusing investment on higher performing media and audiences. That's contributing to solid year-to-date sell-through performance. At ACE, we made initial investments in their retail media network this year that drove incremental returns with plans to scale that partnership in 2020. Our objective is to build a stronger marketplace for Traeger across all of our strategic retail partners. That includes better sell-through data and tools so partner orders track more closely to consumer demand. With broader distribution, a more complete product portfolio, and increasingly sophisticated retail execution, we believe we have more ways to reach consumers and convert them into Traeger households.

Supporting all of this is the work we've done through Project Gravity. When we launched Gravity, we said the objective wasn't simply to reduce costs. It was to simplify Traeger and create the... ...capacity to invest behind the opportunities with the greatest potential to drive profitable growth. We're now beginning to put that capacity to work. We're redirecting investment towards areas that can directly... ...support consumer acquisition and strengthen our retail execution, including expanding our retail sales specialist program, improving merchandising and fixturing, and building our capabilities across... ...retail or media networks. That's an important part of the value of Project Gravity, not simply operating with a lower cost base, but directing our resources behind the opportunities we believe can drive the greatest... ...long-term value. As we look toward the end of 2026, we believe we will be entering 2027 from a stronger strategic position with greater capacity to invest behind growth. As sell-in and sell-through come back into alignment and these investments mature, we believe Traeger is well-positioned to return to profitable growth in 2027. The macro environment... And while the consumer environment has weighed on discretionary spending, we believe the initiatives I've discussed today don't require a dramatically better near-term consumer environment to succeed. They require...

Strong execution. And that's where our focus is. Expanding distribution. Meeting consumers across more price points. Growing the install base. Showing up better at retail. And putting our resources. Where the returns are greatest. We spent much of 2026 doing the difficult work. To reposition the business. As we close the year. Our focus increasingly shifts from repositioning that. Execution. Translating that work into more Traeger households. Rotter distribution and profitable growth. I'm confident in the strategy and the opportunity ahead. With that I'll turn the call over to Joey.

Good afternoon everyone. Third quarter results reflected three revenue pressures we've discussed throughout the year. Channel optimization under project gravity, competitive pressure and meter, and our actions to improve marketplace health. The year-over-year comparison was particularly pronounced this quarter because we lapped approximately 20 million dollars of elevated retailer inventory purchases in Q3 of last year in an uncertain tariff environment. Separately, Q3 revenue came in at the low end of the pacing we outlined last quarter. Due primarily to timing certain shipments and promotional activity shifted from Q3 into Q4, including delays from container constraints that were amplified by a typhoon in Asia. We've already realized that revenue in October, and it is reflect. It in our full year outlook. On our last call, we said we expected substantially all of our remaining adjusted EBITDA to come in Q4. Our Q3 adjusted EBITDA loss of 3 million reflects that timing. For our walk through the numbers in more depth, we want to reinforce three points that provide important context for our confidence in the business. First, the divergence between sell-in and sell-through this year primarily reflects channel inventory normalization and strategic channel divestment to drive profitability. We continue to expect roughly flat 26 sell-through across our strategic accounts, which we believe indicates that underlying consumer demand is considerably healthier than reported revenue one would suggest.

Second, underlying unit trends remain healthy. We continue to expect full-year grill unit sell-in to be at least flat year over year, driven by a large fourth quarter that includes our initial Lowe's load-in and reflects the consumer's shift toward more accessible price points that Jeremy discussed. And third, Project Gravity continues to deliver meaningful benefits across our cost structure, working capital, and cash generation, as demonstrated by our year-to-date results. Together, these factors, along with our entry to Lowe's, support our expectation to return to revenue and adjusted EBITDA growth in the fourth quarter and position us to return to profitable growth in 27. With that context, let me walk through the quarter and our outlook. Third quarter revenues decreased 40% year over year to $75 million. Looking at category performance, grow revenues decreased 48% to $40 million in the third quarter, reflecting the marketplace health and channel optimization actions I mentioned earlier, as well as the mixed shift towards more accessible price points that Jeremy discussed. Consumables revenues declined 23% to $19 million, primarily driven by lower wood pellet sales related to seasonal order timing. and changes in retail channel dynamics. Accessories revenues decreased 34% to $16 million, primarily from lower sales and meter smart thermometers. Gross profit for the third quarter decreased to $25 million from

$49 million in the third quarter of 25. Gross profit margin for the third quarter contracted 520 basis points year over year to 33.5%, driven primarily by the timing of trade spend, the leverage of fixed warehousing. Expenses on lower revenue and continued margin pressure in our meter business, partially offset by an IEPA tariff refund benefit. Sales and marketing expense declined to $14 million in the third quarter, down $6 million year over year. While general administrative expenses declined $2 million year over year to $20 million. Primarily reflecting lower employee related expenses and actions taken under Project Gravity. Net loss is $29 million or $10.33. per diluted share compared to $90 million or $33.46 per diluted share in the prior year period. The year over year improvement primarily reflects the anniversary of a $75 million non-cash goodwill impairment. compared to last year. Adjusted net loss was $19 million or $6.77 per diluted share compared to $22 million or $8.31 per diluted share last year. Adjusted EBITDA with a loss of $3 million, down from income of $14 million in the prior year. The lower revenue pressured profitability in the quarter. The savings generated through Project Gravity meaningfully mitigated the impact and continued to support our full year adjusted. The outlook. Let me now discuss the balance sheet. We generated $8 million of free cash flow in the third quarter, bringing year-to-date free cash flow to $49 million, including $16 million related to the IEPA refund and $12 million.

Related to an employee retention credit discussed on prior earnings calls. At the end of the third quarter, cash and cash equivalents totaled $68 million, compared to $20 million at the end of the previous fiscal year. The end of the quarter was $403 million. of total debt resulting in total net debt of $335 million. We ended the third quarter with a healthy liquidity position of $167 million. Our credit facilities remain completely undrawn and combined with $60 million. $68 million of cash. We believe we have ample liquidity to support the business. Inventory at the quarter was $79 million, down from $99 million at year end, primarily reflecting lower meter inventory and skew rationalization. Business simplification associated with project gravity. Combined with our free cash flow performance, this is tangible evidence of the improvements we've made in working capital efficiency. Now turn to our fiscal 26 outlook. As we approach the end of the year and have greater visibility into our expected results, we are narrowing our revenue guidance range to 440 million to 460 million from 435 million to 465 million previously. Maintaining the same midpoint. We continue to expect gross margin of 40% to 41%. We are also narrowing our adjusted EBITDA guidance range to 59 million to 65 million, adjusted from 57 million to 67 million previously, while also maintaining the same midpoint. Our outlook continues to imply a return to year-over-year revenue growth in the fourth quarter, driven by two primary factors, the recovery of shipments that shifted out of Q3 and the rampant initial load-ins associated with Q3.

with our load expansion. Together, these factors support both our full-year revenue outlook and our expectation for year-over-year growth in Q4. We also expect gross margin to improve sequentially in Q4, supported by higher revenue driving warehousing and trade spend leverage, as well as higher direct import mix, which supports our full-year gross margin outlook of 40% to 41%. We are reiterating our free cash flow guidance of at least $30 million on a year-to-date. free cash flow generation of $49 million. We remain on track to deliver an incremental $30 million of value capture for Project Gravity within fiscal 26, which is consistent with prior expectations and brings the total value capture to $50 million. Importantly, we believe the impact extends beyond the $50 million. Gravity has fundamentally improved how we operate with a leaner cost structure, lower inventory, and stronger cash generation. These improvements are durable and leave us with a structurally of the $50 million. stronger financial model as we return to growth. I want to close with how we're thinking about 27. Importantly, our expectations do not depend on the significant improvement in the consumer macroeconomic environment. We expect to enter 27 with broader distribution, a leaner cost structure, lower inventory, and a more efficient operating model, giving us multiple levers to drive improved financial performance, even against a still challenging consumer backdrop.

While we're not providing 27 guidance today, we believe the actions we have taken position us to return to profitable growth in 27, and we intend to maintain the same discipline around working capital, cash generation, and capital allocation that we've demonstrated. this year. So while Q3 was challenging from a reported revenue and earnings standpoint, we believe the underlying financial trajectory of the business is improving. We remain on track against our full year objectives and the actions we've taken this year.

Your first question comes from Philip Blee with William Blair.

This concludes today's call.