Company Overview - Traeger (COOK) is expected to report flat earnings of $0.04 per share for the quarter ended March 2025, which represents no change from the year-ago quarter [3] - Revenues are anticipated to be $140.08 million, reflecting a decrease of 3.3% compared to the same quarter last year [3] Earnings Expectations - The consensus EPS estimate has been revised down by 7.69% over the last 30 days, indicating a bearish sentiment among analysts regarding the company's earnings prospects [4][10] - The Earnings ESP (Expected Surprise Prediction) for Traeger is -9.09%, suggesting that the Most Accurate Estimate is lower than the Zacks Consensus Estimate [11] Historical Performance - Traeger has not been able to beat consensus EPS estimates in any of the last four quarters, with the last reported quarter matching expectations at $0.01 per share [12][13] Market Reaction - The stock may experience upward movement if the actual earnings exceed expectations, while a miss could lead to a decline [2] - The management's discussion during the earnings call will play a crucial role in determining the sustainability of any immediate price changes and future earnings expectations [2] Industry Context - Reynolds Consumer Products (REYN), another player in the Zacks Consumer Products - Discretionary industry, is expected to post earnings of $0.23 per share, also indicating no change from the year-ago quarter, with revenues projected at $820.18 million, down 1.5% [17] - Reynolds has an Earnings ESP of 3.23%, but with a Zacks Rank of 4 (Sell), it is difficult to predict a beat on the consensus EPS estimate [18]

Core Insights - Traeger, Inc. has launched the Flatrock 2 Zone Griddle, expanding its griddle lineup with a compact design that maintains high performance similar to the Flatrock 3 Zone [1][2][3] - The Flatrock 2 Zone features a two-zone cooking system and streamlined ignition process, enhancing the outdoor cooking experience by providing versatility and efficiency [2][3] - The product is priced at $699 and will be available on Traeger.com and select retailers in the U.S. and Canada [4] Company Overview - Traeger Grills, based in Salt Lake City, is a leader in the wood pellet grill market, known for its innovative outdoor cooking systems that allow for various cooking methods [5] - The company has recently entered the griddle category, further solidifying its position in the outdoor cooking space with versatile cooking options [5] Product Features - The Flatrock 2 Zone includes two distinct cooking zones for precise heat control, ensuring even cooking without hot or cold spots [6] - It incorporates wind-blocking technology for consistent heat coverage and U-shaped burners for reliable cooking performance [6] - The design features EZ-CLEAN™ grease management for easy cleanup and a slimmed-down size suitable for smaller spaces [6] - Customizable cookspace options are available with the Pop-And-Lock™ accessory rail and folding side shelves [6]

Core Viewpoint - Telsey Advisory Group analyst Joseph Feldman downgraded Traeger, Inc. from Outperform to Market Perform, lowering the price forecast to $2.50 from $4.00 due to challenging performance trends expected in 2025 [1] Group 1: Financial Guidance and Performance - Traeger provided disappointing guidance for 2025, forecasting flat sales at the midpoint of $595 million to $615 million, which is below the FactSet consensus of $628 million [1] - The analyst has lowered the 2025 sales forecast to $605 million from $632 million and expects adjusted EBITDA to be $75 million, down from a previous estimate of $90 million, reflecting a contraction in the adjusted EBITDA margin to 12.3% from 14.2% [5] Group 2: Market Conditions and Risks - Consumer caution due to elevated interest rates and inflation continues to affect spending on big-ticket items, which may impact Traeger's sales [2] - The guidance does not account for potential tariff impacts under the new Trump administration, which could hurt sales as around 50% of products are sourced from China [2] - Macroeconomic challenges are projected to continue affecting demand, with tariffs adding further downside risk [4] Group 3: Management Changes and Strategic Initiatives - Long-time CFO Dominic Blosil will step down at the end of the first quarter of 2025, with Joey Hord, Traeger's SVP of Finance and Strategy, set to replace him [3] - Traeger is introducing innovations like the Woodbridge line and exploring adjacent product categories, aiming to drive recurring revenues through its consumables business and grocery distribution while expanding internationally [4] - The analyst suggests that Traeger may still outperform the industry due to efforts in increasing brand awareness through marketing and customer engagement [3] Group 4: Future Projections - For 2026, the analyst projects 6% sales growth to $642 million and adjusted EBITDA of $90 million [5]

Financial and Operational Restrictions - The First Lien Credit Agreement imposes significant operating and financial restrictions, limiting the company's ability to incur additional debt, make investments, or engage in fundamental changes [216]. - Breaching the covenants of the First Lien Credit Agreement could lead to default, allowing creditors to accelerate debt repayment and potentially resulting in bankruptcy or liquidation [217]. Cybersecurity and Data Privacy - Cybersecurity threats are increasing, and any breach could lead to significant financial penalties, legal liabilities, and damage to the company's reputation [225]. - The company is subject to various data security frameworks and laws, and non-compliance could result in fines and restrictions that adversely affect its business [230]. - Insurance coverage for cybersecurity incidents may be limited, and significant claims could exceed available coverage, impacting financial results [231]. - The company collects and processes personal data, subjecting it to evolving legal obligations related to privacy and security, which could result in liability if not complied with [232]. - The California Consumer Privacy Act (CCPA) requires companies to provide disclosures to California consumers and allows them to opt-out of certain data disclosures, with civil penalties for violations [234]. - The General Data Protection Regulation (GDPR) imposes fines of up to €20 million or £17.5 million, or up to 4% of annual global revenue for non-compliance, whichever is greater [237]. - China's Cybersecurity Law mandates that personal information of Chinese citizens must be collected based on legitimacy, justification, and necessity, with fines up to RMB 100,000 for non-compliance [239]. - The Personal Information Protection Law (PIPL) in China can impose fines of up to RMB 50 million or 5% of the previous year's total annual revenue for violations [243]. - The Data Security Law requires important data to be stored locally in China and imposes penalties for non-compliance, including fines up to RMB 50 million [240]. - The California Privacy Rights Act (CPRA) significantly modifies the CCPA and expands consumer rights regarding sensitive personal data [236]. - The enactment of the CCPA has led to similar privacy statutes being enforced in thirteen states, with more expected to follow, increasing compliance complexity [236]. - Companies must maintain adequate security measures to comply with varying state laws on data breaches, requiring significant resource investments [236]. - The introduction of new foreign privacy laws may restrict marketing and personalization activities, adversely impacting business operations [238]. - Regulatory investigations and enforcement actions may arise from perceived failures in data privacy practices, potentially harming the company's reputation and financial condition [246]. Corporate Governance and Ownership Structure - As of March 3, 2025, funds or entities affiliated with AEA Fund, OTPP, and TCP owned approximately 60% of the voting power of the company's common stock [257]. - Certain actions by the company or its subsidiaries will require prior written consent from AEA Fund, OTPP, and TCP if they collectively own at least 30% of the outstanding shares, including transactions exceeding $250 million [257]. - The company has opted out of Section 203 of the Delaware General Corporation Law, which may affect takeover attempts and management changes [255]. - The concentration of ownership among a limited number of stockholders may conflict with the interests of other stockholders and affect market price [259]. - The company's stock price may be volatile due to various factors, including anticipated fluctuations in operating results and significant sales by existing stockholders [253]. - Future sales of shares by existing stockholders could lead to a decline in the company's stock price [261]. - The company's certificate of incorporation allows for the issuance of shares of undesignated preferred stock without further action by stockholders [260]. - The doctrine of "corporate opportunity" does not apply to certain stockholders, potentially leading to competition for beneficial opportunities [265]. - The company is classified as a "controlled company," which may limit stockholder protections and result in a board lacking a majority of independent directors [275]. - The company is an "emerging growth company," allowing it to take advantage of reduced disclosure requirements, which may affect the attractiveness of its common stock to investors [276][277]. Financial Performance and Reporting - The company has incurred approximately $40.5 million in accelerated stock-based compensation expense for the year ended December 31, 2022, and $27.5 million for the year ended December 31, 2023, due to modifications and cancellations of stock awards [273][274]. - The company is currently implementing a new product lifecycle management (PLM) system to enhance data compilation and analysis related to product lifecycles, which may incur significant costs and require substantial employee attention [272]. - The company intends to retain future earnings for business operations and expansion, with no plans to declare or pay dividends in the foreseeable future [279]. - The company has made strategic acquisitions, including the purchase of Apption Labs on July 1, 2021, which may involve unforeseen operational difficulties and additional liabilities [281]. - The company has a legal obligation to maintain effective internal controls over financial reporting, with potential implications for financial statement accuracy and investor confidence [267][271]. - The company may face increased legal and financial compliance costs due to reporting requirements under the Sarbanes-Oxley Act and the Dodd-Frank Act [267]. - The company may experience a decline in share price and trading volume if analysts downgrade its shares or cease coverage [278]. - The company may incur additional costs and operational disruptions if it fails to implement necessary systems and procedures effectively [272]. Cash and Debt Management - The company had cash and cash equivalents of $15.0 million and $29.9 million as of December 31, 2024 and 2023, respectively [395]. - The outstanding debt was $403.6 million and $403.8 million as of December 31, 2024 and 2023, respectively [395]. - For every 100 basis point increase in interest rates, the company would incur approximately $4.0 million of additional annual interest expense [395]. Market and Economic Risks - The company is exposed to commodity price fluctuations, particularly in steel, which is a primary raw material for manufacturing [399]. - A 25% tariff on all steel imports will become effective on March 12, 2025, which may impact costs [399]. - The company may face adverse effects from sustained high inflation rates if selling prices do not increase accordingly [401]. - The company utilizes hedging strategies to manage currency transaction risks but cannot guarantee effectiveness [286]. - The company is subject to various legal proceedings that could materially harm its business and financial condition [283].

Financial Data and Key Metrics Changes - The company reported a 3% revenue growth in Q4 2024, with adjusted EBITDA of $18 million, up 41% from Q4 2023 [10][11][48] - Gross margin improved by 410 basis points year-over-year, reaching 40.9% in Q4 2024 [10][46] - For the full year 2024, adjusted EBITDA grew by 34%, and gross margin expanded by 540 basis points [12][43] Business Line Data and Key Metrics Changes - Grill revenues increased by 30% year-over-year to $78 million in Q4 2024, driven by strong sell-through during the holiday season and the launch of the Woodridge series [44][23] - Consumables revenue grew by 25% to $31 million, supported by increased replenishment and new distribution at Walmart [27][44] - Accessories revenue declined by 24% to $60 million, primarily due to underperformance at Meater [30][44] Market Data and Key Metrics Changes - North America revenues increased by 11%, while revenues from the rest of the world declined by 39%, largely influenced by Meater's performance [45][109] - The company noted that the grill market is expected to grow modestly by 1% to 2% in 2025, following three years of decline [70][71] Company Strategy and Development Direction - The company aims to increase brand awareness and market share, with household penetration currently at 3.6% [14][39] - Strategic initiatives include enhancing social media engagement and partnerships with culinary brands to drive brand activation [15][17] - The company plans to focus on boots-on-the-ground sales activation efforts in 2025, including a roadshow program at Costco [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the brand's health and consumer demand for grills, despite an uncertain macroeconomic environment [38][39] - The company is guiding for revenues of $595 to $615 million in 2025, reflecting a potential decline of 2% to growth of 2% compared to 2024 [35][51] - Management acknowledged challenges related to tariffs and their impact on the business, emphasizing proactive strategies to mitigate potential effects [36][37] Other Important Information - Dom Blosil, the CFO, announced his transition out of the role, with Joey Hord set to take over [40][41] - The company ended 2024 with $15 million in cash and cash equivalents and $409 million in total debt [48][49] Q&A Session Summary Question: Expectations for the accessories business in 2025 - Management is conservatively forecasting Meater's performance and believes there are opportunities for improvement through retail expansion [60] Question: Impact of advertising spend on Meater's performance - Management noted that Q1 insights may not be indicative of future performance due to the seasonal nature of Meater's business [62] Question: Overall grill market outlook for 2025 - Management expects modest growth in the grill market, with Traeger gaining market share in 2024 [70][72] Question: Strategy for lower price point grills - The company plans to continue leveraging successful promotions at lower price points while introducing the Woodridge series at a premium price [76] Question: Inventory levels and tariff anticipation - The increase in inventory was primarily tied to the Woodridge launch rather than anticipatory tariffs [79] Question: Long-term leverage goals - The company aims to maintain leverage at or below three turns, with a focus on debt paydown and EBITDA growth [90][93] Question: Update on manufacturing partners in Vietnam - The company is progressing with its second global manufacturing partner in Vietnam and expects to be in mass production soon [97][98] Question: Recent trends in international sales - The decline in international sales is largely due to Meater's performance, which significantly impacts the overall numbers [109]

Core Insights - Traeger reported revenue of $168.64 million for the quarter ended December 2024, reflecting a year-over-year increase of 3.2% and surpassing the Zacks Consensus Estimate of $164.62 million by 2.44% [1] - The company's EPS was $0.01, a significant improvement from -$0.08 in the same quarter last year, although it matched the consensus EPS estimate [1] Revenue Breakdown - Net sales from Grills reached $78 million, exceeding the three-analyst average estimate of $62.12 million, marking a year-over-year increase of 30.2% [4] - Net sales from Consumables were $30.70 million, surpassing the average estimate of $26.97 million, representing a year-over-year growth of 24.8% [4] - Net sales from Accessories totaled $60 million, falling short of the estimated $75.76 million, indicating a decline of 24.1% compared to the previous year [4] Stock Performance - Traeger's shares have declined by 7.1% over the past month, while the Zacks S&P 500 composite has decreased by 3.5% during the same period [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Viewpoint - Traeger reported quarterly earnings of $0.01 per share, matching the Zacks Consensus Estimate, and showing improvement from a loss of $0.08 per share a year ago [1] - The company achieved revenues of $168.64 million for the quarter ended December 2024, exceeding the Zacks Consensus Estimate by 2.44% and up from $163.48 million year-over-year [2] Financial Performance - Traeger has not surpassed consensus EPS estimates over the last four quarters, with the latest quarter reflecting a loss of $0.06 per share as expected [1] - The company has topped consensus revenue estimates four times in the last four quarters [2] Stock Performance - Traeger shares have declined approximately 6.3% since the beginning of the year, contrasting with the S&P 500's decline of 0.7% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.07 on revenues of $150.24 million, and for the current fiscal year, it is $0.18 on revenues of $624.28 million [7] - The trend of estimate revisions for Traeger is mixed, which may change following the recent earnings report [6] Industry Context - The Consumer Products - Discretionary industry, to which Traeger belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, which may impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that industry outlook can materially affect stock performance [5][8]

Financial Data and Key Metrics Changes - The company reported a 3% revenue growth in Q4 2024, with adjusted EBITDA of $18 million, up 41% from Q4 2023 [10][11][48] - Gross margin improved by 410 basis points year-over-year, reaching 40.9% [10][46] - For the full year 2024, adjusted EBITDA grew by 34%, and gross margin expanded by 540 basis points [12][44] Business Line Data and Key Metrics Changes - Grill revenues increased by 30% year-over-year to $78 million in Q4, driven by strong sell-through during the holiday season and the launch of the Woodridge series [23][44] - Consumables revenue grew by 25% to $31 million, supported by increased replenishment and new distribution at Walmart [27][44] - Accessories revenue declined by 24% to $60 million, primarily due to underperformance at Meater [30][44] Market Data and Key Metrics Changes - North America revenues increased by 11%, while revenues from the rest of the world declined by 39%, largely influenced by Meater's performance [45][109] - The company noted a significant demand for lower-priced grills, confirming the strategy to focus on accessible price points [24][76] Company Strategy and Development Direction - The company aims to increase brand awareness, with household penetration at only 3.6%, indicating a significant long-term growth opportunity [14] - Strategic partnerships and brand activation efforts, including collaborations with culinary brands, are part of the growth strategy [17][26] - The company plans to double its roadshow program at Costco in 2025 to enhance consumer education and brand awareness [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the brand's health despite macroeconomic uncertainties, with expectations for modest growth in the grill market in 2025 [38][70] - The company is preparing for potential impacts from tariffs, with ongoing strategies to mitigate risks [36][37] - For fiscal year 2025, the company is guiding revenues of $595 to $615 million, reflecting a potential decline or slight growth compared to 2024 [35][51] Other Important Information - Dom Blosil, the CFO, announced his transition out of the role, with Joey Hord set to take over [40][41] - The company ended 2024 with $15 million in cash and cash equivalents and $409 million in total debt [48][49] Q&A Session Summary Question: Expectations for the accessories business in 2025 - Management is conservatively forecasting Meater's performance and believes there are opportunities for improvement through retail expansion [60] Question: Impact of advertising spend on Meater's performance - Management noted that Q1 insights may not be indicative of future performance due to Meater's revenue concentration in Q4 [62] Question: Overall grill market expectations for 2025 - Management expects modest growth in the grill market, with a potential increase in prices and a return to a more normalized replacement cycle [70][71] Question: Strategy for lower price point grills - The company plans to continue leveraging the success of lower-priced models while introducing the Woodridge series at a premium price point [76] Question: Inventory levels and tariff anticipation - The increase in inventory was primarily due to the Woodridge launch, not specifically for tariff anticipation [79] Question: Long-term leverage goals and free cash flow expectations - The long-term goal is to maintain leverage at or below three turns, with free cash flow expected to be similar to 2024 [90][91]

Financial Performance - Total revenue for Fiscal Year 2024 was $604 million, a slight decrease of 0.3% compared to $606 million in FY 2023[30] - Gross margin for FY 2024 increased to 42.3%, compared to 36.9% in FY 2023[33] - Adjusted EBITDA for FY 2024 was $81.9 million, representing 13.6% of revenue, compared to $61 million, or 10.1% of revenue, in FY 2023[33] - For the fourth quarter of 2024, total revenue increased by 3.2% to $169 million from $163 million in 4Q 2023[24] - Gross profit margin for the fourth quarter of 2024 increased to 40.9% from 36.8% in 4Q 2023[27] - Adjusted EBITDA for the fourth quarter of 2024 was $18 million, or 10.9% of revenue, compared to $13 million, or 7.9% of revenue, in 4Q 2023[27] Revenue Breakdown - Grill revenue for FY 2024 remained consistent at $299 million[30] - Consumables revenue for FY 2024 increased by 8.5% to $192 million[30] - Accessories revenue for FY 2024 decreased by 3.8% to $115 million[30] - In the fourth quarter of 2024, grill revenue increased by 30.2% to $78 million[24] - Consumables revenue for the fourth quarter of 2024 decreased by 24.1% to $25 million[24] - Accessories revenue for the fourth quarter of 2024 remained consistent at $60 million[24] 2025 Guidance - The company expects total revenue to be between $595 million and $615 million for fiscal year 2025[36] - Gross margin is expected to be between 42.2% and 42.8% for fiscal year 2025[36] - Adjusted EBITDA is projected to be between $75 million and $85 million for fiscal year 2025[36]

Revenue Performance - Total revenues increased 3.2% to $168.6 million in Q4 2024, compared to $163.5 million in Q4 2023[4] - Grill revenues surged 30.2% to $78.0 million in Q4 2024, driven by higher unit volumes[8] - Full year 2024 total revenues decreased 0.3% to $604.1 million, compared to $605.9 million in 2023[9] - North America revenues increased 11.2% in Q4 2024, while Rest of World revenues decreased 38.6%[5] - The company expects total revenue for Fiscal Year 2025 to be between $595 million and $615 million[18] Profitability Metrics - Gross margin improved to 40.9%, up 410 basis points from 36.8% in the prior year[6] - Adjusted EBITDA for Q4 2024 was $18.4 million, up from $13.0 million in Q4 2023[8] - Full year 2024 adjusted EBITDA increased 34.1% to $81.9 million from $61.1 million in 2023[12] - Gross profit for Q4 2024 increased to $68,890,000, up 14.0% from $60,137,000 in Q4 2023[23] - Adjusted EBITDA for Q4 2024 increased to $18,361,000, compared to $12,982,000 in Q4 2023, reflecting a margin improvement from 7.9% to 10.9%[32] Net Loss and Expenses - Net loss narrowed to $7.0 million in Q4 2024, compared to a net loss of $24.0 million in Q4 2023[8] - Net loss for the year ended December 31, 2024 was $34,008,000, a significant improvement compared to a net loss of $84,402,000 in 2023[25] - Total other expense for Q4 2024 was $8,705,000, a decrease from $11,582,000 in Q4 2023[23] - The company reported a comprehensive loss of $40,612,000 for the year ended December 31, 2024, compared to $96,725,000 in 2023[23] - Stock-based compensation expenses decreased to $4,837,000 in Q4 2024 from $6,023,000 in Q4 2023[32] Cash Flow and Operating Activities - Cash provided by operating activities for the year was $23,888,000, down from $64,042,000 in 2023[25] - Cash, cash equivalents, and restricted cash at the end of the period was $14,981,000, down from $29,921,000 at the end of 2023[25] Interest and Shares - The company incurred interest expense of $33,500,000 for the year ended December 31, 2024, compared to $31,275,000 in 2023[25] - Interest expense increased to $8,192,000 in Q4 2024 from $7,867,000 in Q4 2023[32] - Weighted average diluted shares outstanding increased to 129,174,440 in Q4 2024 from 125,094,571 in Q4 2023[32] Earnings Per Share - The company reported a basic and diluted net loss per share of $0.05 for Q4 2024, compared to $0.19 in Q4 2023[23] - The company reported a net loss per diluted share of $0.05 in Q4 2024, improving from a loss of $0.19 per diluted share in Q4 2023[32]