ZU Continuing global economic uncertainty, terrorism and conflicts, political conditions and fiscal challenges in the United States and abroad could result in adverse macroeconomic conditions, including inflation, slower growth or recession. While our revenue increased in the three months ended September 30, 2023, as compared to the prior year period, we believe these challenging macroeconomic pressures and uncertainties have resulted in decreased discretionary consumer spending, particularly for durable go ...

PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=6&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) Unaudited H1 2023 financial statements show narrowed net losses and decreased assets due to no goodwill impairment and lower operating expenses [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and liabilities decreased as of June 30, 2023, primarily from reduced cash, inventories, and notes payable, with stable equity Condensed Consolidated Balance Sheet Data (in thousands) | Account | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $14,496 | $39,055 | | Inventories | $97,803 | $153,471 | | Total current assets | $225,431 | $274,238 | | Total assets | $869,645 | $946,715 | | **Liabilities & Equity** | | | | Total current liabilities | $127,269 | $112,907 | | Notes payable, net | $396,722 | $468,108 | | Total liabilities | $542,120 | $611,846 | | Total stockholders' equity | $327,525 | $334,869 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Revenue declined in Q2 and H1 2023, but net loss significantly narrowed due to the absence of a prior-year goodwill impairment charge Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $171,512 | $200,270 | $324,673 | $423,980 | | Gross Profit | $63,331 | $73,441 | $118,754 | $156,085 | | Loss from operations | $(27,608) | $(120,674) | $(30,871) | $(124,189) | | Goodwill impairment | $0 | $111,485 | $0 | $111,485 | | Net loss | $(30,166) | $(133,134) | $(41,096) | $(142,094) | | Net loss per share | $(0.25) | $(1.13) | $(0.33) | $(1.20) | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Total stockholders' equity decreased in H1 2023 due to net loss, partially offset by stock-based compensation - The accumulated deficit increased to **$611.6 million** as of June 30, 2023, from **$570.5 million** at the end of 2022, reflecting the net loss for the period[55](index=55&type=chunk) - Stock-based compensation added **$33.0 million** and **$41.0 million** to additional paid-in capital for the three and six months ended June 30, 2023, respectively[20](index=20&type=chunk)[55](index=55&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow significantly improved in H1 2023 due to decreased inventories, though overall cash and equivalents still declined Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2022 (in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $25,856 | $(30,050) | | Net cash used in investing activities | $(6,627) | $(12,727) | | Net cash provided by (used in) financing activities | $(56,288) | $39,640 | | Net decrease in cash | $(37,059) | $(3,137) | - A significant source of operating cash flow was a **$55.7 million** decrease in inventories, compared to a **$17.8 million** increase in the prior year period[60](index=60&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail significant customer concentration, varied product revenue trends, debt facilities, and increased stock-based compensation from PSU cancellations - The company has significant customer concentration risk. For the six months ended June 30, 2023, three customers (A, B, and C) accounted for **20%**, **18%**, and **13%** of net sales, respectively[80](index=80&type=chunk) Revenue by Product Category (in thousands) | Product Category | Six Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2022 (in thousands) | | :--- | :--- | :--- | | Grills | $182,871 | $268,111 | | Consumables | $64,945 | $81,748 | | Accessories | $76,857 | $74,121 | | **Total revenue** | **$324,673** | **$423,980** | - In April 2023, the Board approved the cancellation of unearned CEO and IPO PSUs, resulting in the recognition of **$27.5 million** of stock-based compensation expense. A new award of **1,037,728** performance-based restricted shares was granted to the CEO[139](index=139&type=chunk)[140](index=140&type=chunk) - In July 2022, the company initiated a restructuring plan, eliminating approximately **14%** of its global headcount and suspending its Traeger Provisions business to reduce costs[159](index=159&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management attributes H1 2023 revenue decline to macroeconomic conditions, highlights reduced operating expenses from no goodwill impairment, and confirms sufficient liquidity [Results of Operations](index=31&type=section&id=Results%20of%20Operations) H1 2023 saw revenue and gross profit decline, but operating loss significantly improved due to no goodwill impairment, despite increased G&A expenses Revenue Comparison (Six Months Ended June 30) | Category | 2023 (in millions) | 2022 (in millions) | Change (%) | | :--- | :--- | :--- | :--- | | Grills | $182.9 | $268.1 | (31.8)% | | Consumables | $64.9 | $81.7 | (20.6)% | | Accessories | $76.9 | $74.1 | 3.7% | | **Total** | **$324.7** | **$424.0** | **(23.4)%** | - Gross margin for the first six months of 2023 was **36.6%**, a slight decrease from **36.8%** in the prior year period. The decrease was driven by lower average selling prices, partially offset by lower freight costs[217](index=217&type=chunk) - General and administrative expense for the first six months of 2023 increased by **$6.9 million** to **$79.1 million**, primarily due to higher stock-based compensation expense related to the cancellation of unearned CEO and IPO PSUs[220](index=220&type=chunk) - The company recorded no goodwill impairment in the first half of 2023, compared to a **$111.5 million** charge in the same period of 2022. This was the primary driver for the significant reduction in the operating loss[223](index=223&type=chunk)[229](index=229&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2023, the company had $14.5 million cash and $140.2 million available credit, deemed sufficient for future liquidity needs - The company's primary sources of liquidity are cash from operations, cash on hand, and borrowings under its credit facilities[232](index=232&type=chunk) Liquidity Position as of June 30, 2023 (in millions) | Item | Amount (in millions) | | :--- | :--- | | Cash and cash equivalents | $14.5 | | Revolving Credit Facility Capacity | $125.0 | | Receivables Financing Agreement Capacity | $15.2 | | First Lien Term Loan Outstanding | $403.9 | - In June 2023, the company amended its First Lien Credit Agreement to change the reference rate from Eurocurrency Base Rate to the Secured Overnight Financing Rate (SOFR)[252](index=252&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) No material changes to market risk disclosures were reported compared to the prior Annual Report on Form 10-K - There have been no material changes to the company's market risk exposure as disclosed in the most recent Annual Report on Form 10-K[30](index=30&type=chunk) [Controls and Procedures](index=39&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Disclosure controls and procedures were ineffective as of June 30, 2023, due to an un-remediated material weakness in derivative accounting - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were not effective as of June 30, 2023[32](index=32&type=chunk) - A material weakness was identified in internal controls related to the accounting and reporting of transactions under **ASC 815**, Derivatives and Hedging[36](index=36&type=chunk)[43](index=43&type=chunk) - Management's remediation plan includes enhancing control design over the preparation of other comprehensive income (loss) and providing additional training. The material weakness cannot be considered remediated until the new controls operate effectively for a sufficient period[37](index=37&type=chunk)[48](index=48&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=40&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in ordinary course legal proceedings not expected to materially impact operations or financial position - The company is not currently involved in any legal proceedings that are expected to have a material adverse effect on its business[40](index=40&type=chunk) [Risk Factors](index=40&type=section&id=ITEM%201A.%20RISK%20FACTORS) A new risk factor highlights the material weakness in internal control over financial reporting, which could adversely affect the company if not remediated - A material weakness in internal control over financial reporting has been identified, specifically related to the accounting for derivatives and hedging (**ASC 815**)[42](index=42&type=chunk)[43](index=43&type=chunk) - If the material weakness is not remediated, it could result in a material misstatement of future financial statements and adversely affect the company's ability to report financial information accurately and on time[47](index=47&type=chunk)[50](index=50&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=41&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%2C%20USE%20OF%20PROCEEDS%2C%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) No unregistered sales of equity securities or issuer purchases were reported during the period - The company reported no recent sales of unregistered securities or purchases of its equity securities[50](index=50&type=chunk) [Defaults Upon Senior Securities](index=41&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) No defaults upon senior securities occurred during the period - None[51](index=51&type=chunk) [Mine Safety Disclosures](index=41&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Not applicable[52](index=52&type=chunk) [Other Information](index=41&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No other information to report for this period - None[53](index=53&type=chunk) [Exhibits](index=41&type=section&id=ITEM%206.%20EXHIBITS) The report lists exhibits filed, including credit agreement amendments, CEO/CFO certifications, and XBRL data files - Key exhibits filed include Amendment No. 3 to the First Lien Credit Agreement and certifications by the CEO and CFO pursuant to SEC rules[271](index=271&type=chunk) [Signatures](index=43&type=section&id=SIGNATURES) The report was signed by the CEO and CFO on August 7, 2023 - The Form 10-Q was signed by the company's Principal Executive Officer and Principal Financial Officer on August 7, 2023[276](index=276&type=chunk)

Financial Data and Key Metrics Changes - The company reported a second quarter revenue decline of 14% to $172 million, with grill revenues down 21% to $93 million [20][51] - Consumables revenues were $35 million, down 17% year-over-year, primarily due to lower sales of pellets [21] - Adjusted EBITDA increased to $21 million from $17 million in the prior year, reflecting better-than-expected grill and consumable sales [12][51] - The net loss for the second quarter was $33 million, an improvement from a net loss of $133 million in the same period last year [51] - The company increased its full-year sales guidance to a range of $585 million to $600 million, up from $560 million to $590 million [13][53] Business Line Data and Key Metrics Changes - Grill revenue was negatively impacted by lower unit volumes and a lower average selling price due to pricing adjustments on end-of-life models [48] - Accessories revenues increased by 7% to $43 million, driven by growth in Traeger accessories and MEATER [49] - Consumables sales, excluding a specific customer that introduced a private label offering, showed healthy sell-through trends [21][8] Market Data and Key Metrics Changes - North American revenues declined by 16%, while revenues from the Rest of the World increased by 3% [49] - The company noted that dealer inventories ended the quarter in a substantially more balanced position, allowing for normalized replenishment activity in the second half of the year [46][40] Company Strategy and Development Direction - The company is focused on accelerating brand awareness and penetration in the U.S., with a current household penetration of 3.5% in grill-only households [41] - Product innovation remains a key strategic pillar, with the launch of new grills and consumables aimed at enhancing customer experience [43][18] - The company is expanding its international presence, with efforts to drive productivity and awareness through in-store marketing and product demonstrations [46][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the fluid macroeconomic environment but expressed cautious optimism for a return to growth in the second half of the year [5][47] - The company expects to see the largest year-over-year gain in gross margin in the third quarter, driven by improved fixed cost leverage [54] - Management emphasized the importance of managing expenses and inventory levels to navigate the current environment effectively [69][102] Other Important Information - The company reported a significant increase in user-generated content and media impressions, indicating strong brand engagement [6][7] - The launch of new products, such as the Ironwood grill and Flatrock griddle, received positive consumer reception and media attention [16][44] Q&A Session Summary Question: Can you elaborate on the lower Grill ASP and consumables ASP? - Management indicated that aggressive pricing adjustments were made during the pandemic, and current pricing is being normalized to stimulate volume [27][28] Question: How should we think about inventory levels moving forward? - Management noted that channel inventories are now healthy and aligned with expectations, with a moderate drawdown expected in Q4 [35][68] Question: What is the outlook for the second half of the year? - Management remains cautious but optimistic, expecting a rebound in growth driven by normalized replenishment rates [33][85] Question: How is the Flatrock product performing? - The Flatrock has exceeded expectations, with strong demand leading to plans for increased production [74][94] Question: What is the strategy for consumables in the next 6 to 12 months? - The company is focusing on grocery channel growth for consumables, with positive early indications from recent rollouts [92][71]

Financial Data and Key Metrics Changes - First quarter revenues were $153 million, a decline of 32% year-over-year, but came in towards the higher end of guidance [10][22] - Adjusted EBITDA for the quarter was $22 million, exceeding the high end of guidance by $2 million [10][44] - Net income for the first quarter was $8 million, compared to a net loss of $9 million in the same period last year [43] - Gross profit decreased to $55 million from $83 million year-over-year, with a gross profit margin of 36.2%, down 80 basis points [31][32] Business Line Data and Key Metrics Changes - Grill revenues declined 40% to $90 million, impacted by lower unit volumes due to retailer destocking [22] - Consumables revenues were $30 million, down 24% year-over-year, affected by lower pellet volumes and loss of a customer [22][28] - Accessories revenue decreased 1% to $33 million due to lower unit volumes of Traeger branded accessories [31] Market Data and Key Metrics Changes - North American revenues were down 33%, while revenues from the Rest of World decreased by 13% [31] - Sell-through of grills remained negative compared to the first quarter last year, but was in line with forecasts [12][22] Company Strategy and Development Direction - The company aims to increase household penetration from 3.5% by enhancing brand awareness and improving distribution network productivity [23] - Product innovation is a key focus, with successful launches of the new Ironwood and Flatrock griddle [20][24] - The company is optimizing its pellet manufacturing footprint by consolidating mills to improve efficiency and reduce costs [15][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year guidance despite current challenges, reiterating revenue expectations between $560 million and $590 million [11][47] - The company anticipates a return to growth in the second half of 2023 as inventory levels normalize and sales trends improve [34][30] - Management noted that the macroeconomic environment remains volatile, but they are prepared to adapt [48] Other Important Information - The company achieved annualized cost savings exceeding $20 million due to restructuring efforts [16][43] - Social media engagement increased, with a 19% growth in followers and a 16% increase in user-generated content [17][18] Q&A Session Summary Question: Can you elaborate on the pellet mills consolidation and its impact? - The consolidation of two pellet mills is part of a broader strategy to optimize costs and improve unit economics for pellets [39][50] Question: How is the engagement and demand for pellets being affected? - Engagement is tracking back to pre-pandemic levels, with consistent usage rates among different consumer cohorts [51][62] Question: What are the expectations for gross margin improvement throughout the year? - Gross margin is expected to improve in the second half of the year as higher-cost inventory is cleared and transportation costs decrease [56][65] Question: How are channel inventories performing relative to expectations? - Channel inventories have improved ahead of plan, positioning the company well for the peak selling season [99][100] Question: What is the strategy for brand awareness and retail partnerships? - The company continues to invest in retail partnerships and community engagement to drive brand awareness and sales [71][92]

[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=6&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) Q1 2023 net income of **$8.0 million** reversed a **$9.0 million** loss in Q1 2022, despite a **31.5%** revenue drop, primarily due to reclassified swap gains Condensed Consolidated Statements of Operations (Q1 2023 vs Q1 2022) | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | | :--- | :--- | :--- | | **Revenue** | $153,161 | $223,710 | | **Gross Profit** | $55,423 | $82,644 | | **Loss from Operations** | $(3,263) | $(3,515) | | **Net Income (Loss)** | $8,018 | $(8,960) | | **Net Income (Loss) per Share** | $0.07 | $(0.08) | Condensed Consolidated Balance Sheet Highlights | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $287,738 | $274,238 | | **Total Assets** | $937,997 | $946,715 | | **Total Current Liabilities** | $141,383 | $112,907 | | **Total Liabilities** | $610,608 | $611,846 | | **Total Stockholders' Equity** | $327,389 | $334,869 | Condensed Consolidated Statements of Cash Flows (Q1 2023 vs Q1 2022) | Cash Flow Activity | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | | :--- | :--- | :--- | | **Net Cash Used in Operating Activities** | $(23,590) | $(46,911) | | **Net Cash Provided by (Used in) Investing Activities** | $245 | $(4,648) | | **Net Cash Provided by (Used in) Financing Activities** | $(478) | $45,917 | | **Net Decrease in Cash** | $(23,823) | $(5,642) | [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, revenue concentration with three major customers, and the **$23.4 million** gain reclassified from an interest rate swap dedesignation - The company is an '**emerging growth company**' under the JOBS Act, allowing it to use an extended transition period for adopting new accounting standards, which may affect comparability with other public companies[1](index=1&type=chunk) - Three major retail customers (A, B, and C) accounted for **17%**, **22%**, and **12%** of net sales, respectively, for the three months ended March 31, 2023, indicating significant customer concentration[132](index=132&type=chunk)[221](index=221&type=chunk) Revenue by Product Category (in thousands) | Product Category | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Grills | $89,738 | $150,431 | | Consumables | $30,045 | $39,651 | | Accessories | $33,378 | $33,628 | | **Total Revenue** | **$153,161** | **$223,710** | - In January 2023, the company changed the interest reset period on its term loan, causing its interest rate swap to no longer qualify for hedge accounting. This resulted in the reclassification of **$23.4 million** from accumulated other comprehensive income (AOCI) to other income[10](index=10&type=chunk)[198](index=198&type=chunk) - In April 2023, the Board approved the cancellation of unearned CEO and IPO Performance Stock Units (PSUs), which is expected to result in the recognition of approximately **$27.5 million** of stock-based compensation expense in the second quarter of 2023[67](index=67&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=25&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) MD&A details a **31.5%** revenue decline due to lower volumes, stable gross margin, reduced operating expenses, and a significant shift to **$11.4 million** in other income from a swap dedesignation [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Q1 2023 revenue declined **31.5%** to **$153.2 million**, driven by lower grill sales, while operating expenses decreased significantly, and other income surged due to a swap gain Key Operating Results (Q1 2023 vs Q1 2022, in thousands) | Metric | Q1 2023 | Q1 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $153,161 | $223,710 | $(70,549) | (31.5)% | | **Gross Profit** | $55,423 | $82,644 | $(27,221) | (32.9)% | | **Sales and Marketing** | $22,075 | $34,854 | $(12,779) | (36.7)% | | **General and Administrative** | $26,679 | $40,716 | $(14,037) | (34.5)% | | **Total Other Income (Expense)** | $11,445 | $(5,293) | $16,738 | 316.2% | - The decrease in revenue was driven by lower unit volume for grills (down **40.3%**) and consumables (down **24.2%**), partially offset by higher average selling prices for grills due to new product introductions[83](index=83&type=chunk)[304](index=304&type=chunk)[271](index=271&type=chunk) - The decrease in G&A expense was primarily driven by lower stock-based compensation expense of **$6.4 million**, lower professional service fees, and lower employee expenses[106](index=106&type=chunk) - The significant increase in total other income was primarily due to the hedge dedesignation of the interest rate swap, which resulted in a reclassification of gains to other income[108](index=108&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained **$15.2 million** cash and **$82.6 million** borrowing capacity as of March 31, 2023, with improved operating cash flow and compliance with amended debt covenants - As of March 31, 2023, the company had cash and cash equivalents of **$15.2 million**, restricted cash of **$12.5 million**, and total available borrowing capacity of approximately **$82.6 million** across its credit facilities[309](index=309&type=chunk) - Net cash used in operating activities was **$23.6 million** for Q1 2023, an improvement from **$46.9 million** used in Q1 2022. The change was primarily due to a smaller increase in accounts receivable ($57.1M in 2023 vs $70.4M in 2022) and a decrease in inventories in 2023 versus an increase in 2022[90](index=90&type=chunk)[311](index=311&type=chunk)[328](index=328&type=chunk) - The company amended its First Lien Credit Agreement to increase the First Lien Net Leverage Ratio covenant from **6.20:1.00** to **8.50:1.00** for a 'Covenant Amendment Period' ending no later than June 30, 2023. The company was in compliance with these amended covenants as of March 31, 2023[21](index=21&type=chunk)[95](index=95&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) No material changes occurred in the company's market risk disclosures compared to its Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes to the company's market risk disclosures as presented in the Annual Report on Form 10-K[337](index=337&type=chunk) [Controls and Procedures](index=36&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2023, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[320](index=320&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the quarter ended March 31, 2023[321](index=321&type=chunk) [PART II. OTHER INFORMATION](index=36&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=36&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company does not expect current legal proceedings to materially adversely affect its operations or financial position - The company does not expect any currently pending litigation to have a material adverse effect on its operations or financial position[23](index=23&type=chunk)[339](index=339&type=chunk) [Risk Factors](index=36&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes occurred in the company's risk factors compared to its Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K[340](index=340&type=chunk)

UPROXX | --- | --- | --- | --- | --- | --- | --- | |-------------------------|-------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------|-------|-------| | | | | | | | | | Live Like Tyrese Gibson | | | | | | | | | | | | | | | | | | | engadget Traeger's redesigned Ironwood grills pack touchscreen controls and more efficiency The new models have many of the same features ...

PART III 68 Item 10. Directors, Executive Officers and Corporate Governance 68 Item 11. Executive Compensation 70 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 70 Item 13. Certain Relationships and Related Transactions, and Director Independence 70 Item 14. Principal Accountant Fees and Services 71 PART IV 72 Item 15. Exhibits and Financial Statement Schedules 72 Item 16. Form 10-K Summary 75 PART II 50 Item 5. Market for Registrant's Common Equity, ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from to | --- | |-------------------------------------------------------------| | | | | | Commission File Number 001-40694 | | Traeger, Inc. | | (Exact name ...

Financial Data and Key Metrics Changes - The company experienced a 42% decline in third quarter sales, with grill sales down 64% compared to the previous year [6][31] - Gross profit decreased to $26 million from $54 million last year, with a gross profit margin of 27.7%, down 580 basis points year-over-year [34] - Net loss for the third quarter was $210 million, compared to a net loss of $89 million in the same period last year, resulting in a net loss per diluted share of $1.75 [38] Business Line Data and Key Metrics Changes - Consumables revenue decreased 10% to $25 million, while accessories revenue increased 18% to $30 million, driven by strong growth at MEATER [32][33] - Grill revenue decline was attributed to lower unit volumes as retailers reduced replenishment orders, partially offset by higher average selling prices [31] Market Data and Key Metrics Changes - North American revenue faced challenges due to a decline in the U.S. business and negative growth in Canada, while the rest of the world business grew 10% [33] - The company noted that more than two-thirds of the anticipated decline in grill sales in the second half of the year was due to retailer destocking rather than lower consumer demand [11] Company Strategy and Development Direction - The company is focused on reducing costs, rightsizing inventories, and driving improvements in gross margin as part of its near-term strategic priorities [14][18] - The company aims to enhance brand awareness, with unaided brand awareness hitting an all-time high, improving by 15% year-to-date [20] - Product innovation remains a key growth pillar, with plans to launch two new grills in 2023 and a collaboration with WhistlePig for new consumables [23][24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging operating environment due to high inflation and geopolitical uncertainty, impacting consumer sentiment and retailer ordering behavior [6][10] - The company expects full-year sales to be at or slightly below the low end of prior guidance, anticipating continued pressure from retailer destocking into the first half of 2023 [10][44] - Management remains optimistic about long-term growth, emphasizing the resilience of the outdoor cooking category and the commitment of retail partners to the Traeger brand [12][29] Other Important Information - The company recorded a $110 million noncash impairment charge to goodwill due to adverse macroeconomic conditions [38] - Cash and cash equivalents totaled $8 million at the end of the third quarter, with total net debt of $444 million and a net leverage ratio of 8.9% [39] Q&A Session Summary Question: How does the company assess supply versus demand dynamics? - Management indicated that while there is softness in demand, sell-through trends have shown stability, and promotional activities have helped improve sell-through [51][52] Question: What is the current state of channel inventory? - Management confirmed good visibility into channel inventory levels, noting sequential improvements and the need for time to work through excess inventory [58] Question: How significant is the impact of a large retailer's private label pellet business? - Management acknowledged the retailer's importance but expressed confidence in the stability of Traeger pellet sales, excluding the impact of the private label [60][62] Question: What are the plans for capital expenditures and deleveraging? - Management plans to keep capital expenditures minimal and focus on improving liquidity and profitability to aid in deleveraging efforts [66][85]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from to | --- | --- | |-------------------------------------------------------|----------------| | | | | | | | Commission File Number 001-40694 | | | Traeger, In ...