Traeger(COOK) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the first quarter of 2025 ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) This section presents the unaudited condensed consolidated financial statements for Traeger, Inc. for the quarterly period ended March 31, 2025, including balance sheets, statements of operations, statements of stockholders' equity, and statements of cash flows Condensed Consolidated Balance Sheets As of March 31, 2025, Traeger's total assets slightly decreased to $825.6 million, while total liabilities also decreased to $546.1 million, resulting in a slight increase in total stockholders' equity to $279.6 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $825,600 | $830,677 | | Cash and cash equivalents | $12,034 | $14,981 | | Inventories | $127,236 | $107,367 | | Total Liabilities | $546,050 | $554,247 | | Line of credit | $25,000 | $5,000 | | Notes payable, net | $398,732 | $398,445 | | Total Stockholders' Equity | $279,550 | $276,430 | Condensed Consolidated Statements of Operations and Comprehensive Loss For Q1 2025, Traeger reported a slight revenue decrease to $143.3 million, but a significant reduction in general and administrative expenses led to a net loss improvement to $0.8 million from $4.7 million in the prior year Q1 2025 vs. Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $143,283 | $144,914 | | Gross Profit | $59,459 | $62,563 | | Income (loss) from operations | $3,412 | $(73) | | Net Loss | $(778) | $(4,683) | | Net Loss Per Share (basic and diluted) | $(0.01) | $(0.04) | Condensed Consolidated Statements of Cash Flows In Q1 2025, net cash used in operating activities increased to $20.8 million due to strategic inventory build, while net cash used in investing activities decreased, and net cash provided by financing activities increased, resulting in a $2.9 million overall decrease in cash and cash equivalents Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(20,837) | $(12,598) | | Net cash used in investing activities | $(1,902) | $(5,752) | | Net cash provided by financing activities | $19,792 | $12,049 | | Net decrease in cash and cash equivalents | $(2,947) | $(6,301) | Notes to Unaudited Condensed Consolidated Financial Statements The notes provide detailed financial disclosures, including revenue disaggregation showing increased grill sales offset by declines in consumables and accessories, significant customer concentration, a $15.0 million product liability settlement, and $1.1 million in incremental stock-based compensation expense from modified awards - The company has significant customer concentration risk. In Q1 2025, three major retail customers (A, B, and C) accounted for 33%, 12%, and 11% of net sales, respectively. This is a shift from Q1 2024 where they accounted for 23%, 19%, and 9%[34] Revenue by Product Category (in thousands) | Product Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Grills | $86,685 | $76,819 | | Consumables | $30,288 | $32,259 | | Accessories | $26,310 | $35,836 | | Total Revenue | $143,283 | $144,914 | - In February 2025, a product liability matter was settled for $15.0 million, which was covered by the company's insurance policies[72] - In March 2025, the company modified outstanding Performance Shares and PSUs, resulting in an incremental stock-based compensation expense of $1.1 million for the quarter[79] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial results, highlighting a 1.1% revenue decrease driven by lower accessories and consumables sales, partially offset by increased grill revenue, and a significant 22.2% reduction in G&A expenses that improved the net loss to $0.8 million Q1 2025 vs. Q1 2024 Key Operational Results (in thousands) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $143,283 | $144,914 | (1.1)% | | Gross Profit | $59,459 | $62,563 | (5.0)% | | General and administrative | $25,019 | $32,138 | (22.2)% | | Net Loss | $(778) | $(4,683) | (83.4)% | - The company is navigating macroeconomic uncertainty, including tariffs and inflation, by using promotional activity and strategic pricing. This led to grill unit volume growth over 40%, offset by an average selling price reduction of over 20% in Q1 2025[100] Results of Operations In Q1 2025, total revenue decreased by 1.1% to $143.3 million, with grill revenue growing 12.8% due to unit volume growth from new products and seasonal sales, while consumables and accessories declined, and gross margin contracted to 41.5% due to product mix and promotions, offset by a 10.5% decrease in operating expenses Revenue Breakdown Q1 2025 vs Q1 2024 (in thousands) | Category | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Grills | $86,685 | $76,819 | $9,866 | 12.8% | | Consumables | $30,288 | $32,259 | $(1,971) | (6.1)% | | Accessories | $26,310 | $35,836 | $(9,526) | (26.6)% | | Total Revenue | $143,283 | $144,914 | $(1,631) | (1.1)% | - Gross margin decreased to 41.5% in Q1 2025 from 43.2% in Q1 2024, primarily due to unfavorable product mix and increased promotional funding[121] - General and administrative expenses decreased by $7.1 million (22.2%), driven by a $4.6 million reduction in stock-based compensation expense and lower legal costs[124] Liquidity and Capital Resources As of March 31, 2025, Traeger had $12.0 million in cash and cash equivalents, supported by a $125.0 million revolving credit facility and a receivables financing agreement with $30.5 million capacity, with management confident in sufficient liquidity for the next twelve months Liquidity Position as of March 31, 2025 (in millions) | Item | Amount | | :--- | :--- | | Cash and cash equivalents | $12.0 | | Revolving Credit Facility Capacity | $125.0 | | Receivables Financing Agreement Capacity | $30.5 | | First Lien Term Loan Outstanding | $403.5 | - The increase in cash used in operating activities in Q1 2025 was primarily due to strategic inventory management ahead of the warmer seasons, partially offset by better accounts receivable collections[130] - The company extended its Receivables Financing Agreement to August 6, 2027[141] Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes to its disclosures regarding exposure to market risk since its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes to the company's market risk disclosures from those described in the Annual Report on Form 10-K[147] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective at the reasonable assurance level[149] - No changes occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[150] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other required disclosures for the reporting period Legal Proceedings The company is subject to various legal proceedings and claims in the ordinary course of business, which management does not expect to have a material adverse effect on the business - The company is involved in various legal proceedings arising in the ordinary course of business, which are not expected to have a material adverse effect. A specific product liability matter was settled in February 2025 (see Note 10)[152][72] Risk Factors There have been no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes have occurred with respect to the risk factors previously disclosed in the Annual Report on Form 10-K[153] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no recent sales of unregistered securities and no purchases of equity securities by the issuer or affiliated purchasers during the period - There were no unregistered sales of equity securities or use of proceeds to report for the period[154][155] Other Information The company reported no material changes to the procedures for security holder nominations to the board, and no director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the first quarter of 2025 - During Q1 2025, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement[159] Exhibits This section lists the exhibits filed with the Form 10-Q, including employment and separation agreements, forms of stock unit agreements, and certification documents from the CEO and CFO