Traeger(COOK) - 2024 Q3 - Quarterly Report

Revenue Performance - Revenue for the three months ended September 30, 2024, was $122.1 million, a 3.7% increase from$ 117.7 million in the same period of 2023[107]. - Revenue for the nine months ended September 30, 2024, was $435.4 million, a decrease of 1.6% from$ 442.4 million in the same period of 2023[108]. - Revenue increased by $4.3 million, or 3.7%, to$ 122.1 million for the three months ended September 30, 2024, compared to $117.7 million for the same period in 2023[126]. - Total revenue decreased by$ 7.0 million, or 1.6%, to $435.4 million for the nine months ended September 30, 2024, compared to$ 442.4 million for the same period in 2023[138]. Profitability and Margins - The company recorded a net loss of $19.8 million for the three months ended September 30, 2024, compared to a net loss of$ 19.3 million in the same period of 2023[108]. - Gross margin increased to 42.8% for the nine months ended September 30, 2024, up from 36.9% in the same period of 2023[111]. - Gross profit increased by $23.2 million, or 14.2%, to$ 186.6 million, with gross margin rising to 42.8% from 36.9%[142]. - Gross profit increased by $7.0 million, or 15.7%, to$ 51.7 million, with gross margin rising to 42.3% from 37.9%[130]. Expenses - Research and development expenses were $3.3 million for the three months ended September 30, 2024, compared to$ 2.8 million in the same period of 2023[118]. - Research and development expenses for the nine months ended September 30, 2024, were $11.8 million, up from$ 8.0 million in the same period of 2023[118]. - Total operating expenses increased by $1.6 million, or 2.7%, to$ 59.1 million for the three months ended September 30, 2024[130]. - General and administrative expenses decreased by $0.7 million, or 2.8%, to$ 24.1 million, as a percentage of revenue decreased to 19.8%[133]. - General and administrative expenses decreased by $17.1 million, or 16.5%, to$ 86.8 million, as a percentage of revenue decreased to 19.9%[145]. Revenue Breakdown - Revenue from grills increased by $7.3 million to$ 246.7 million for the nine months ended September 30, 2024, compared to the prior year period[110]. - Revenue from grills increased by $18.4 million, or 32.5%, to$ 74.9 million, driven by unit volume growth in excess of 80%[127]. - Revenue from consumables decreased by $2.9 million, or 11.2%, to$ 22.5 million, primarily due to seasonal ordering shifts[128]. - Revenue from accessories decreased by $11.2 million, or 31.3%, to$ 24.6 million, driven by lower sales of MEATER smart thermometers[129]. - Revenue from consumables decreased by $1.7 million, or 1.9%, to$ 88.6 million, primarily due to a low-single digit reduction in wood pellet unit volume[140]. - Revenue from accessories decreased by $12.5 million, or 11.1%, to$ 100.1 million, mainly due to lower sales of MEATER smart thermometers[141]. Financial Position and Liquidity - As of September 30, 2024, cash and cash equivalents were $16.9 million, with a borrowing capacity of$ 125.0 million under the Revolving Credit Facility[150]. - Net cash provided by operating activities was $16.4 million, a decrease from$ 44.4 million in the prior year[151]. - The First Lien Term Loan Facility totals $560.0 million, including a$ 50.0 million delayed draw term loan[156]. - As of September 30, 2024, the total principal amount outstanding on the First Lien Term Loan Facility was $403.6 million[157]. - The fixed interest rate on the Revolving Credit Facility ranges from 2.75% to 3.25% per annum, with no outstanding loan amounts as of September 30, 2024[158]. - The maximum borrowing capacity under the Receivables Financing Agreement was decreased from$ 100.0 million to $75.0 million as of November 8, 2023[162]. - As of September 30, 2024, the company had drawn down$ 12.0 million under the Receivables Financing Agreement for general corporate and working capital purposes[165]. - The company is required to maintain a First Lien Net Leverage Ratio not to exceed 6.20 to 1.00, and was in compliance with this covenant as of September 30, 2024[160]. - The Revolving Credit Facility expires on June 29, 2026, with no principal payments due before that date[158]. - The fixed interest rate on outstanding cash advances under the Receivables Financing Agreement is approximately 2.6%[164]. - The company entered into Amendment No. 10 to the Receivables Financing Agreement to extend the expiration of the facility to August 6, 2027[164]. - The company is subject to a new liquidity threshold of $42.5 million under the Receivables Financing Agreement[163]. - There have been no material changes to the company's contractual obligations as of September 30, 2024[166]. Strategic Initiatives - The company has seen unit volume growth in excess of 80%, despite a high-double digit reduction in average selling price due to strategic pricing actions[110]. - The company continues to monitor macroeconomic conditions and has implemented cost savings initiatives to maintain product quality and reliability[111]. - The company expects general and administrative expenses to normalize as it manages investments to support growth and product development[119]. Other Expenses - Interest expense increased by$ 1.0 million, or 13.5%, to $8.5 million for the three months ended September 30, 2024[135]. - Total other expense increased by$ 7.0 million, or 126.2%, to $12.5 million, primarily due to unrealized losses from interest rate swaps[135]. - Total other expense increased by$ 8.9 million, or 58.0%, to $24.3 million, primarily due to unrealized losses from interest rate swaps[147]. - Change in fair value of contingent consideration increased by$ 2.3 million, attributed to the revalued earn-out obligation associated with the Apption Labs business combination[134].