Traeger, Inc. Earnings Call: Mixed Sentiments and Strategic Shifts

Traeger, Inc. ((COOK)) has held its Q3 earnings call. Read on for the main highlights of the call.

In a recent earnings call, Traeger, Inc. presented a mixed sentiment with notable growth in sales and EBITDA, alongside significant challenges such as a substantial net loss and gross margin decline. The company has successfully implemented cost-saving initiatives and tariff mitigation strategies, yet faces expected revenue losses due to channel optimization efforts.

Sales Increase and EBITDA Growth

Traeger reported a 3% increase in sales, reaching $125 million, primarily driven by growth in grills and consumables. The adjusted EBITDA saw a notable rise of 12%, amounting to $14 million, reflecting the company’s efforts to enhance operational efficiency.

Project Gravity Cost Savings

The company introduced Project Gravity, which is anticipated to generate $50 million in run-rate savings through efficiency improvements and channel optimizations. This initiative is a strategic move to streamline operations and enhance profitability.

Growth in Consumables

Consumables revenue experienced a 12% increase, fueled by a positive sell-through of pellets and expanded distribution. This growth highlights the strong demand for Traeger’s consumable products.

Successful Tariff Mitigation Strategies

Traeger’s tariff mitigation efforts are expected to offset 80% of a $60 million tariff exposure. The strategies include enhancing supply chain efficiencies and diversifying production, showcasing the company’s proactive approach to managing external cost pressures.

Gross Margin Decline

Despite the positive sales growth, Traeger faced a gross margin contraction of 360 basis points to 38.7%, primarily due to $8 million in tariff costs. This decline underscores the challenges posed by external economic factors.

Net Loss Increase

The company reported a significant net loss of $90 million for the third quarter, a stark increase from the $20 million net loss in the same period of the previous year. This highlights the financial challenges Traeger is currently navigating.

Accessories Revenue Decline

Revenue from accessories decreased by 4%, attributed to a decline in MEATER revenues. This indicates a need for strategic adjustments in the accessories segment to revitalize growth.

Revenue Loss from Channel Optimization

Traeger’s decision to exit certain channels, including the Costco roadshow business and direct-to-consumer (DTC) sales, is expected to result in a $60 million revenue loss. However, this move is part of a broader strategy to optimize channels for long-term profitability.

Forward-Looking Guidance

Looking ahead, Traeger reiterated its full-year 2025 revenue guidance of $540 million to $555 million, reflecting an 8% to 11% decrease year-over-year. The company maintains its adjusted EBITDA target of $66 million to $73 million. Project Gravity is projected to yield $50 million in cost savings by the end of 2026, with a focus on channel optimization and supply chain efficiencies. Despite expected revenue decreases from strategic shifts, these actions aim to bolster long-term profitability and investment capacity.

In conclusion, Traeger, Inc.’s earnings call revealed a mixed sentiment with both achievements and challenges. While the company has demonstrated growth in sales and EBITDA, it faces significant hurdles such as a substantial net loss and gross margin decline. The strategic initiatives, including Project Gravity and tariff mitigation efforts, reflect Traeger’s commitment to enhancing long-term profitability amidst a challenging economic landscape.