Traeger(US:COOK)2024-08-06 23:00Revenue Performance - Revenue for the three and six months ended June 30, 2024, was $168.5 million and $313.4 million, representing a decrease of 1.8% and 3.5% compared to the same periods in 2023[91]. - Revenue decreased by $3.0 million, or 1.8%, to $168.5 million for the three months ended June 30, 2024, compared to $171.5 million for the same period in 2023[110]. - Revenue decreased by $11.3 million, or 3.5%, to $313.4 million for the six months ended June 30, 2024, compared to $324.7 million for the same period in 2023[120]. - Revenue from grills increased by $1.8 million, or 2.0%, to $95.0 million for the three months ended June 30, 2024, driven by higher unit volume[111]. - Revenue from grills decreased by $11.1 million, or 6.1%, to $171.8 million, primarily due to a low-double digit reduction in average selling price[120]. - Revenue from consumables decreased by $1.1 million, or 3.1%, to $33.8 million for the three months ended June 30, 2024, impacted by lower average selling prices[112]. - Revenue from consumables increased by $1.1 million, or 1.8%, to $66.1 million, driven by over 20% increase in unit volume of food consumables[121]. - Revenue from accessories decreased by $3.8 million, or 8.8%, to $39.7 million for the three months ended June 30, 2024, primarily due to lower sales of MEATER smart thermometers[112]. Financial Losses - The company recorded a net loss of $2.6 million and $7.3 million for the three and six months ended June 30, 2024, compared to a net loss of $30.2 million and $41.1 million for the same periods in 2023[92]. - Net loss for the three months ended June 30, 2024, was $2.6 million, a decrease of $27.6 million or 91.5% compared to a net loss of $30.2 million in the same period last year[109]. Cost Management - The company has implemented cost savings initiatives to mitigate the effects of challenging macroeconomic conditions[96]. - General and administrative expenses decreased by $21.9 million, or 41.8%, to $30.5 million for the three months ended June 30, 2024, as a percentage of revenue decreased to 18.1% from 30.5%[116]. - General and administrative expense decreased by $16.4 million, or 20.8%, to $62.6 million, primarily due to lower stock-based compensation expense[125]. - Operating expenses decreased significantly, with total operating expenses at $67.5 million for the three months ended June 30, 2024, down from $90.9 million in the prior year[113]. Macroeconomic Impact - The company expects macroeconomic trends to continue impacting revenue and results of operations throughout fiscal year 2024[94]. - There was a mid-single digit percentage decline in demand for grills, measured by unit volume, for the six months ended June 30, 2024, compared to the prior year period[94]. - Inbound freight container rates increased by a mid-double digit percentage for the six months ended June 30, 2024, primarily due to global transportation factors[95]. Cash and Financing - As of June 30, 2024, cash and cash equivalents were $18.0 million, with $125.0 million borrowing capacity under the Revolving Credit Facility[130]. - The total principal amount outstanding under the First Lien Term Loan Facility was $403.7 million as of June 30, 2024[136]. - The company may seek additional equity or debt financing to support growth or acquisitions, which could be dilutive to existing stockholders[130]. - As of June 30, 2024, the company had drawn down $23.5 million under the Receivables Financing Agreement for general corporate and working capital purposes[143]. - The maximum borrowing capacity under the Receivables Financing Agreement was decreased from $100.0 million to $75.0 million, with seasonal adjustments allowed between $30.0 million and $75.0 million[141]. - The company is required to maintain a First Lien Net Leverage Ratio not to exceed 6.20 to 1.00, and it was in compliance with this covenant as of June 30, 2024[139]. - The fixed interest rate on outstanding cash advances under the Receivables Financing Agreement is approximately 2.6%[143]. - A new liquidity threshold of $42.5 million was implemented, with potential increases in required reserves if liquidity falls below this level[142]. - The expiration of the Receivables Financing Agreement was extended to August 6, 2027, as part of Amendment No. 10[143]. Research and Development - Research and development expenses were $4.8 million and $8.5 million for the three and six months ended June 30, 2024, compared to $3.0 million and $5.2 million for the same periods in 2023[103]. Other Financial Metrics - Gross profit increased by $9.0 million, or 14.2%, to $72.3 million for the three months ended June 30, 2024, with a gross margin of 42.9% compared to 36.9% in the prior year[113]. - Gross profit increased by $16.1 million, or 13.6%, to $134.9 million, with gross margin rising to 43.0% from 36.6%[122]. - Total other expense increased by $5.0 million, or 213.4%, to $7.4 million for the three months ended June 30, 2024, primarily due to decreases in realized and unrealized gains on interest rate swaps[118]. - Total other expense increased by $2.0 million, or 19.8%, to $11.8 million, mainly due to decreases in realized and unrealized gains on interest rate swaps[127]. Compliance and Obligations - The company remains compliant with the covenants under the Credit Facilities as of June 30, 2024[139]. - There have been no material changes to the company's contractual obligations as of June 30, 2024, compared to those disclosed in the Annual Report[144]. - There were no material changes to the company's critical accounting policies and estimates during the six months ended June 30, 2024[146]. - The company is the primary beneficiary of Traeger SPE LLC, consolidating it without significant judgments[140].