Traeger(COOK) - 2025 Q2 - Quarterly Report

FORM 10-Q Filing Information Details Traeger, Inc.'s Quarterly Report on Form 10-Q filing for the period ended June 30, 2025 Filing Details Traeger, Inc. filed its Q2 2025 Form 10-Q, reporting 135.9 million shares outstanding as of August 1, 2025 - Traeger, Inc. filed a Quarterly Report on Form 10-Q for the period ended June 30, 2025[2] Filer Status | Filer Status | Status | | :------------- | :----- | | Accelerated filer | ☒ | | Smaller reporting company | ☒ | | Emerging growth company | ☒ | - As of August 1, 2025, 135,886,236 shares of common stock were outstanding[7] Cautionary Note Regarding Forward-Looking Statements This section highlights forward-looking statements, subject to risks and uncertainties that could cause actual results to differ materially Forward-Looking Statements Disclosure This report contains forward-looking statements about future operations and strategy, subject to known and unknown risks and uncertainties - The report contains forward-looking statements regarding future results, financial position, macroeconomic trends, business strategy, and market growth[11] - These statements are predictions based on current expectations and projections, subject to known and unknown risks and uncertainties[12] - Key risks include operating losses, ability to manage growth, market expansion, brand strength, customer retention, product quality, trade policies, and competitive market[12] PART I. FINANCIAL INFORMATION Presents Traeger, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) Presents Traeger, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, operations, equity, cash flows, and notes Condensed Consolidated Balance Sheets Details Traeger, Inc.'s financial position, including assets, liabilities, and equity, as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheet Highlights (in thousands): | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total assets | $780,620 | $830,677 | | Total current assets | $220,305 | $243,123 | | Cash and cash equivalents | $10,301 | $14,981 | | Inventories | $115,795 | $107,367 | | Total liabilities | $506,374 | $554,247 | | Total current liabilities | $75,561 | $122,241 | | Total stockholders' equity | $274,246 | $276,430 | - Total assets decreased by $50.06 million from December 31, 2024, to June 30, 2025[16] - Total liabilities decreased by $47.87 million, and total stockholders' equity decreased by $2.18 million over the same period[16] Condensed Consolidated Statements of Operations and Comprehensive Loss Presents Traeger, Inc.'s financial performance, including revenue, gross profit, and net loss for Q2 and H1 2025 and 2024 Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands): | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $145,483 | $168,471 | $288,766 | $313,385 | | Gross profit | $57,000 | $72,328 | $116,459 | $134,891 | | Income (loss) from operations | $(6,095) | $4,795 | $(2,683) | $4,722 | | Net loss | $(7,384) | $(2,578) | $(8,162) | $(7,261) | | Net loss per share, basic and diluted | $(0.06) | $(0.02) | $(0.06) | $(0.06) | - Revenue decreased by 13.6% for the three months ended June 30, 2025, and by 7.9% for the six months ended June 30, 2025, compared to the prior year periods[18] - The company reported an increased net loss for both the three-month and six-month periods ended June 30, 2025, compared to the same periods in 2024[18] Condensed Consolidated Statements of Stockholders' Equity Details changes in Traeger, Inc.'s stockholders' equity, including accumulated deficit and additional paid-in capital, for the periods presented Changes in Stockholders' Equity (in thousands): | Item | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Total Stockholders' Equity (3M) | $274,246 | $297,286 | | Total Stockholders' Equity (6M) | $274,246 | $297,286 | | Accumulated Deficit (3M) | $(697,047) | $(662,138) | | Accumulated Deficit (6M) | $(697,047) | $(662,138) | | Additional Paid-in Capital (3M) | $969,038 | $952,435 | | Additional Paid-in Capital (6M) | $969,038 | $952,435 | | Common Stock Shares Outstanding (3M) | 135,873,828 | 129,110,864 | | Common Stock Shares Outstanding (6M) | 135,873,828 | 129,110,864 | - Total stockholders' equity decreased from $276.43 million at December 31, 2024, to $274.25 million at June 30, 2025[16] - The accumulated deficit increased significantly, reflecting the net losses incurred during the periods[20][21] Condensed Consolidated Statements of Cash Flows Outlines Traeger, Inc.'s cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows (in thousands): | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $(2,545) | $1,269 | | Net cash used in investing activities | $(4,650) | $(7,890) | | Net cash provided by (used in) financing activities | $2,515 | $(5,275) | | Net decrease in cash and cash equivalents | $(4,680) | $(11,896) | | Cash and cash equivalents at end of period | $10,301 | $18,025 | - Operating activities shifted from providing $1.27 million in cash in H1 2024 to using $2.55 million in H1 2025[24] - Cash used in investing activities decreased, while financing activities provided cash in H1 2025 compared to using cash in H1 2024[24] Notes to Unaudited Condensed Consolidated Financial Statements Provides detailed explanations and disclosures for the unaudited condensed consolidated financial statements, covering business, accounting policies, and specific accounts 1 – Description of Business and Basis of Presentation Traeger, Inc. designs, sells, and supports wood pellet grills and consumables, primarily in the U.S., with financial statements prepared under U.S. GAAP - Traeger, Inc. specializes in wood pellet fueled barbecue grills, consumables, and accessories, with primary sales in the U.S. and expanding distribution in Canada and Europe[29] - The company is an 'emerging growth company' and has elected to use the extended transition period for new accounting standards[36] 2 – Summary of Significant Accounting Policies Outlines Traeger's significant accounting policies, including estimates, credit risk, revenue recognition, goodwill impairment, and adoption of new accounting pronouncements - The company's financial statements rely on significant estimates for customer credits, inventory reserves, and intangible asset valuation[37] Customer Sales Concentration (Percentage of Net Sales): | Customer | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Customer A | 20 % | 22 % | 27 % | 22 % | | Customer B | 18 % | 18 % | 15 % | 18 % | | Customer C | 10 % | 11 % | 11 % | 10 % | - Despite a sustained decrease in stock price triggering a goodwill impairment test, the fair value of the reporting unit exceeded its carrying value as of June 30, 2025, with no impairment recorded[49][51] - The company adopted ASU 2023-07, Segment Reporting, effective January 1, 2024, retrospectively[54] - In Q2 2025, the Company received $5.1 million from the IRS for Employee Retention Tax Credits, including $1.1 million in interest, recorded as other income[53] 3 – Revenue Traeger's revenue is disaggregated by product category, geography, and sales channel, primarily from North America retail Revenue by Product Category (in thousands): | Product Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Grills | $74,184 | $94,971 | $160,868 | $171,790 | | Consumables | $36,357 | $33,831 | $66,645 | $66,090 | | Accessories | $34,943 | $39,669 | $61,253 | $75,505 | | Total revenue | $145,483 | $168,471 | $288,766 | $313,385 | Revenue by Geography (in thousands): | Geography | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | North America | $133,570 | $150,939 | $266,879 | $277,205 | | Rest of world | $11,913 | $17,532 | $21,887 | $36,180 | | Total revenue | $145,483 | $168,471 | $288,766 | $313,385 | Revenue by Sales Channel (in thousands): | Sales Channel | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Retail | $123,635 | $142,425 | $251,237 | $267,500 | | Direct to consumer | $21,848 | $26,046 | $37,529 | $45,885 | | Total revenue | $145,483 | $168,471 | $288,766 | $313,385 | 4 – Accounts Receivables, Net Accounts receivable, net, decreased to $76.1 million as of June 30, 2025, due to reduced trade accounts receivable and increased sales reserves Accounts Receivable, Net (in thousands): | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Trade accounts receivable | $101,406 | $104,138 | | Allowance for expected credit losses | $(385) | $(449) | | Sales reserves, discounts and allowances | $(24,880) | $(18,358) | | Total accounts receivable, net | $76,141 | $85,331 | - Accounts receivable, net, decreased by $9.19 million from December 31, 2024, to June 30, 2025[58] 5 – Inventories Total inventories increased to $115.8 million as of June 30, 2025, driven by finished goods, partially offset by raw materials Inventories (in thousands): | Item | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | Raw materials | $4,313 | $4,975 | | Work in process | $5,544 | $6,526 | | Finished goods | $105,938 | $95,866 | | Inventories | $115,795 | $107,367 | - Finished goods inventory increased by $10.07 million, while raw materials and work in process decreased[59] 6 – Accrued Expenses Accrued expenses decreased to $48.2 million as of June 30, 2025, due to a $15.0 million legal matter payment and reduced inventory in-transit accruals Accrued Expenses (in thousands): | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Accrual for inventories in-transit | $4,357 | $13,013 | | Warranty accrual | $6,396 | $6,239 | | Accrued compensation and bonus | $9,261 | $8,483 | | Accrual for legal matter | $— | $15,000 | | Other | $28,140 | $39,408 | | Accrued expenses | $48,154 | $82,143 | - Accrued expenses decreased by $33.99 million, largely due to the settlement of a $15.0 million legal matter and a reduction in inventory in-transit accruals[61][86] 7 – Derivatives Traeger uses an interest rate swap to hedge variable rate debt and foreign currency contracts to manage exchange rate risk, with $2.3 million remaining in AOCI from the swap - An interest rate swap, with a notional amount of $379.2 million and a fixed rate of 2.08%, was dedesignated as a cash flow hedge in January 2023[62][63] - As of June 30, 2025, $2.3 million remained in Accumulated Other Comprehensive Income (AOCI) from the dedesignated cash flow hedge, to be amortized into earnings[63] Foreign Currency Contract Positions (in thousands): | Item | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Gross Asset Fair Value | $— | $— | | Gross Liability Fair Value | $255 | $2,871 | | Net Fair Value | $255 | $2,871 | Gains (Losses) from Foreign Currency Contracts (in thousands): | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Realized loss | $(567) | $(376) | $(2,120) | $(537) | | Unrealized gain (loss) | $622 | $205 | $2,616 | $(375) | | Total gain (loss) | $55 | $(171) | $496 | $(912) | 8 – Fair Value Measurements The company measures financial instruments at fair value, classifying derivatives as Level 2 and the First Lien Term Loan Facility as Level 3 Fair Value Measurement of Financial Instruments (in thousands): | Item | Level | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :---- | :------------ | :---------------- | | Derivative assets—interest rate swap contract | 2 | $5,175 | $9,223 | | Derivative liabilities—foreign currency contracts | 2 | $255 | $2,871 | - The fair value of the First Lien Term Loan Facility was $357.05 million as of June 30, 2025, compared to its carrying amount of $403.45 million, classified as a Level 3 instrument[73] 9 – Debt and Financing Arrangements Traeger's debt includes a First Lien Term Loan, an amended Revolving Credit Facility, and a Receivables Financing Agreement, with all covenants met - The First Lien Term Loan Facility had $403.5 million outstanding as of June 30, 2025, with a maturity date of June 29, 2028[77] - An amendment on August 5, 2025, reduced the Revolving Credit Facility to $112.5 million, split into two tranches expiring in June 2026 ($30.0 million) and December 2027 ($82.5 million)[79] - The Receivables Financing Agreement, with a borrowing capacity of $30.0-$75.0 million, was extended to August 6, 2027. $9.0 million was drawn as of June 30, 2025[82][83][84] - The company was in compliance with all covenants under its Credit Facilities and Receivables Financing Agreement as of June 30, 2025[80][83] 10 – Commitments and Contingencies Traeger is involved in legal proceedings, including a product liability matter settled for $15.0 million through insurance policies - A product liability matter was settled for $15.0 million in February 2025 and paid in March 2025 through insurance policies[86] 11 – Stock-Based Compensation The 2021 Incentive Award Plan allows for various equity grants, with stock-based compensation expense decreasing to $9.1 million for H1 2025 - The 2021 Incentive Award Plan allows for grants of stock options, restricted stock units (RSUs), restricted stock awards (RSAs), performance shares, and performance stock units (PSUs)[87][88] Stock-Based Compensation Expense (in thousands): | Classification | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of revenue | $13 | $24 | $25 | $43 | | Sales and marketing | $623 | $896 | $915 | $1,545 | | General and administrative | $3,333 | $6,145 | $8,205 | $15,575 | | Total stock-based compensation | $3,969 | $7,065 | $9,145 | $17,163 | - As of June 30, 2025, unrecognized stock-based compensation expense was $17.6 million for RSUs/RSAs (2.00 years weighted-average period) and $4.6 million for Performance Shares/PSUs (2.81 years weighted-average period)[91][94] 12 – Income Taxes Traeger recorded an income tax benefit, maintains a valuation allowance against U.S. deferred tax assets, and is evaluating new tax law changes Provision (Benefit) for Income Taxes (in thousands): | Period | 2025 | 2024 | | :------------------------------- | :----- | :----- | | Three Months Ended June 30, | $(391) | $(24) | | Six Months Ended June 30, | $(1,991) | $166 | - The company maintains a valuation allowance against substantially all U.S. deferred tax assets due to cumulative losses[96] - The U.S. government enacted The One Big Beautiful Bill Act on July 4, 2025, which includes changes to corporate income tax, and the company is evaluating its future impact[97] 13 – Related Party Transactions Traeger outsources customer service to an affiliated third party, with related expenses decreasing for Q2 and H1 2025 Related Party Expenses (in millions): | Period | 2025 | 2024 | | :------------------------------- | :----- | :----- | | Three Months Ended June 30, | $0.9 | $1.3 | | Six Months Ended June 30, | $2.0 | $2.5 | 14 – Net Loss Per Share Traeger reported a basic and diluted net loss per share of $(0.06) for Q2 and H1 2025, with potential common shares excluded as anti-dilutive Net Loss Per Share (Basic and Diluted): | Period | 2025 | 2024 | | :------------------------------- | :----- | :----- | | Three Months Ended June 30, | $(0.06) | $(0.02) | | Six Months Ended June 30, | $(0.06) | $(0.06) | Weighted-Average Common Shares Outstanding (Basic and Diluted): | Period | 2025 | 2024 | | :------------------------------- | :----------- | :----------- | | Three Months Ended June 30, | 133,289,523 | 127,138,825 | | Six Months Ended June 30, | 131,311,862 | 126,175,888 | - 15,661,805 potential common shares were excluded from diluted EPS calculations for the six months ended June 30, 2025, as their effect was anti-dilutive[101] 15 – Restructuring Plan Traeger's Board approved a restructuring plan on May 15, 2025, to streamline operations and rebalance costs, incurring $3.5 million in related expenses - Traeger approved a restructuring plan on May 15, 2025, to streamline operations, reduce costs, and improve profitability[102] - The plan includes a reduction in force and operational centralization[102] - $3.5 million in restructuring costs, primarily severance and personnel costs, were recorded for the three and six months ended June 30, 2025[103] 16 – Segment Information Traeger operates as a single operating and reportable segment, with the CEO reviewing consolidated financial information to manage the business - Traeger operates as a single operating and reportable segment[104] - The CEO, as the chief operating decision maker (CODM), reviews consolidated revenue, gross margin, demand creation costs, and net loss to manage the business[105] Segment Information (in thousands): | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $145,483 | $168,471 | $288,766 | $313,385 | | Gross profit | $57,000 | $72,328 | $116,459 | $134,891 | | Demand creation | $8,804 | $11,237 | $14,565 | $17,679 | | Other operating expenses | $54,291 | $56,296 | $104,577 | $112,490 | | Other segment items | $1,289 | $7,373 | $5,479 | $11,983 | | Net loss | $(7,384) | $(2,578) | $(8,162) | $(7,261) | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Provides management's perspective on Traeger's financial condition and results, highlighting decreased revenue, increased net loss, and strategic initiatives - Revenue decreased by 13.6% and 7.9% for the three and six months ended June 30, 2025, respectively[116] - Net loss increased to $7.4 million (3 months) and $8.2 million (6 months) for the periods ended June 30, 2025[118] - The company is implementing cost savings initiatives and monitoring macroeconomic conditions, including tariffs, which could impact consumer demand and operating results[120][121][122] Overview Traeger is the category leader in wood pellet grills, offering versatile outdoor cooking systems and consumables, distributed through an omnichannel strategy - Traeger is the creator and category leader of wood pellet grills, offering versatile outdoor cooking systems complemented by wood pellets, rubs, sauces, and accessories[111] - The company employs an omnichannel distribution strategy, selling through brick-and-mortar retailers, e-commerce platforms, and direct-to-consumer channels via its website and app[114] - Grills are manufactured in China and Vietnam, wood pellets in the U.S., and MEATER smart thermometers in Taiwan, with reliance on a limited number of third-party manufacturers[115] Key Factors Affecting Our Financial Condition and Results of Operations Discusses macroeconomic conditions, tariffs, and the components of Traeger's financial results, including revenue, gross profit, and operating expenses Macroeconomic Conditions Global economic uncertainty, inflation, and tariffs impact consumer spending, prompting Traeger to pursue cost savings and operational efficiencies - Global economic uncertainty, inflation, and higher interest rates are impacting consumer demand for durable goods[120] - Tariffs implemented by President Trump could disrupt supply chains, increase costs, and decrease consumer demand[121] - Traeger is executing cost savings initiatives, including direct import programs, long-term transportation contracts, and pellet mill efficiencies, to mitigate macroeconomic impacts[122] Components of Results of Operations Details the components of Traeger's financial results, including revenue, gross profit, operating expenses, amortization, restructuring costs, and total other expense Revenue Revenue is primarily from grills, consumables, and accessories in North America, recognized net of returns, with seasonal fluctuations impacting sales - Revenue is primarily from grills, consumables, and accessories in North America, recognized net of returns upon shipment or delivery[123] - Sales of grills are typically higher in Q1 and Q2 due to warmer weather and holidays, while accessories see higher demand in Q4 due to holiday season[124] Gross Profit Gross profit is influenced by product costs, manufacturing, freight, warehousing, warranty, depreciation, product mix, direct import programs, and tariffs - Cost of revenue includes product costs, manufacturing, freight, warehousing, warranty, and depreciation[126] - Gross margin can be favorably impacted by growth in direct import programs and increased sales of wood pellets, but is subject to tariffs and other external factors[127] Sales and Marketing Sales and marketing expenses cover advertising, employee-related costs, sales incentives, and professional services, fluctuating with expansion timing and scope - Sales and marketing expenses cover advertising, marketing, employee-related costs, sales incentives, and professional services[128] - These expenses are expected to fluctuate as a percentage of revenue based on expansion timing and scope[128] General and Administrative General and administrative expenses include employee costs, facilities, professional services, and R&D expenses, contributing to overall operational overhead - General and administrative expenses include employee costs, facilities, professional services, and R&D expenses[129][130] - R&D expenses were $3.4 million (3 months) and $6.3 million (6 months) for the periods ended June 30, 2025[130] Amortization of Intangible Assets Amortization primarily relates to finite-lived customer relationships and trademark assets from past acquisitions, expected to remain stable - Amortization primarily relates to finite-lived customer relationships, distributor relationships, non-compete arrangements, and trademark assets from past acquisitions[132] - Amortization expense is expected to remain stable over the coming years[133] Restructuring Costs A comprehensive enterprise initiative approved on May 15, 2025, aims to streamline operations and rebalance costs, incurring $3.5 million in severance and personnel costs - A comprehensive enterprise initiative approved on May 15, 2025, aims to streamline the organizational structure and rebalance the cost base[134] - $3.5 million in severance and personnel costs were recorded as restructuring costs for the three and six months ended June 30, 2025[135] Total Other Expense Total other expense includes interest expense, interest income from ERTC, amortization of dedesignated interest rate swap amounts, and gains/losses from derivatives - Total other expense includes interest expense from credit facilities, interest income from ERTC, and amortization of dedesignated interest rate swap amounts[136] - It also includes realized and unrealized gains/losses from interest rate swaps and foreign currency contracts[136] Results of Operations Provides a detailed comparison of Traeger's financial performance for Q2 and H1 2025 and 2024, across key income statement items Comparison of the Three Months Ended June 30, 2025 and 2024 For Q2 2025, Traeger experienced a 13.6% revenue decrease and 21.2% gross profit decline, leading to an increased net loss despite other income benefits Key Financials (Three Months Ended June 30, in thousands): | Item | 2025 | 2024 | Change Amount | Change % | | :-------------------------- | :----- | :----- | :------------ | :------- | | Revenue | $145,483 | $168,471 | $(22,988) | (13.6)% | | Gross profit | $57,000 | $72,328 | $(15,328) | (21.2)% | | Sales and marketing | $24,779 | $28,224 | $(3,445) | (12.2)% | | General and administrative | $26,032 | $30,491 | $(4,459) | (14.6)% | | Total other expense | $(1,680) | $(7,397) | $(5,717) | (77.3)% | | Net loss | $(7,384) | $(2,578) | $4,806 | 186.4 % | Revenue Total revenue decreased by $23.0 million (13.6%) due to lower grill and accessory sales, partially offset by increased consumables - Total revenue decreased by $23.0 million (13.6%) to $145.5 million[140] - Grill revenue decreased by $20.8 million (21.9%) due to unit volume reduction, partially offset by high-single digit average selling price increase[141] - Consumables revenue increased by $2.5 million (7.5%) driven by low-double digit increase in wood pellet sales[142] - Accessories revenue decreased by $4.7 million (11.9%) primarily due to lower sales of MEATER smart thermometers[143] Gross Profit Gross profit decreased by $15.3 million (21.2%), with gross margin declining to 39.2% due to mix shifts, tariffs, and increased promotional activities - Gross profit decreased by $15.3 million (21.2%) to $57.0 million[144] - Gross margin decreased to 39.2% from 42.9%, driven by mix of direct import shipments, tariff costs, and increased promotional activities[144] Sales and Marketing Sales and marketing expense decreased by $3.4 million (12.2%), though as a percentage of revenue, it slightly increased to 17.0% - Sales and marketing expense decreased by $3.4 million (12.2%) to $24.8 million[146] - As a percentage of revenue, sales and marketing expense slightly increased to 17.0% from 16.8%[146] General and Administrative General and administrative expense decreased by $4.5 million (14.6%), driven by lower stock-based compensation and reduced legal costs - General and administrative expense decreased by $4.5 million (14.6%) to $26.0 million[147] - The decrease was driven by lower stock-based compensation ($2.8 million) and reduced legal costs, partially offset by higher employee costs[147] Total Other Expense Total other expense decreased by $5.7 million (77.3%), primarily due to the employee retention tax credit benefit and favorable foreign currency rates - Total other expense decreased by $5.7 million (77.3%) to $1.7 million[148] - This decrease was primarily due to the employee retention tax credit benefit and favorable foreign currency rates, partially offset by lower gains on interest rate swaps[148] Comparison of the Six Months Ended June 30, 2025 and 2024 For H1 2025, Traeger's revenue decreased by 7.9%, and gross profit fell by 13.7%, resulting in an increased net loss despite other income benefits Key Financials (Six Months Ended June 30, in thousands): | Item | 2025 | 2024 | Change Amount | Change % | | :-------------------------- | :----- | :----- | :------------ | :------- | | Revenue | $288,766 | $313,385 | $(24,619) | (7.9)% | | Gross profit | $116,459 | $134,891 | $(18,432) | (13.7)% | | Sales and marketing | $46,989 | $49,903 | $(2,914) | (5.8)% | | General and administrative | $51,051 | $62,629 | $(11,578) | (18.5)% | | Total other expense | $(7,470) | $(11,817) | $(4,347) | (36.8)% | | Net loss | $(8,162) | $(7,261) | $901 | 12.4 % | Revenue Total revenue decreased by $24.6 million (7.9%) due to lower accessory and grill sales, with a slight increase in consumables - Total revenue decreased by $24.6 million (7.9%) to $288.8 million[150] - Grill revenue decreased by $10.9 million (6.4%) due to a low double-digit reduction in average selling price, partially offset by a mid-single digit increase in unit volume[151] - Consumables revenue increased by $0.6 million (0.8%) driven by a low double-digit increase in wood pellet sales[152] - Accessories revenue decreased by $14.3 million (18.9%) primarily due to lower sales of MEATER smart thermometers[153] Gross Profit Gross profit decreased by $18.4 million (13.7%), with gross margin declining to 40.3% due to lower direct import mix and tariff-related costs - Gross profit decreased by $18.4 million (13.7%) to $116.5 million[154] - Gross margin decreased to 40.3% from 43.0%, driven by lower mix of direct import shipments and tariff-related costs[154] Sales and Marketing Sales and marketing expense decreased by $2.9 million (5.8%), though as a percentage of revenue, it increased to 16.3% - Sales and marketing expense decreased by $2.9 million (5.8%) to $47.0 million[155] - As a percentage of revenue, sales and marketing expense increased to 16.3% from 15.9%[155] General and Administrative General and administrative expense decreased by $11.6 million (18.5%), driven by lower stock-based compensation and reduced legal costs - General and administrative expense decreased by $11.6 million (18.5%) to $51.1 million[157] - The decrease was driven by lower stock-based compensation ($7.4 million) and reduced legal costs, partially offset by higher employee-related costs[157] Total Other Expense Total other expense decreased by $4.3 million (36.8%), primarily due to the employee retention tax credit benefit and favorable foreign currency rates - Total other expense decreased by $4.3 million (36.8%) to $7.5 million[158] - This decrease was primarily due to the employee retention tax credit benefit, favorable foreign currency rates, and net gains from foreign currency contracts[158] Liquidity and Capital Resources Traeger's liquidity is supported by cash on hand, credit facilities, and receivables financing, which management believes are sufficient for the next twelve months - As of June 30, 2025, cash and cash equivalents were $10.3 million[160] - The company had $125.0 million borrowing capacity under its Revolving Credit Facility (no outstanding loans) and $44.6 million under its Receivables Financing Agreement ($9.0 million drawn)[160] - Management believes existing liquidity and anticipated cash flows will be sufficient for the next twelve months[160] Cash Flows Operating activities used $2.5 million in cash for H1 2025, a shift from providing cash, while financing activities provided cash Cash Flow Data (Six Months Ended June 30, in thousands): | Cash Flow Activity | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Net cash provided by (used in) operating activities | $(2,545) | $1,269 | | Net cash used in investing activities | $(4,650) | $(7,890) | | Net cash provided by (used in) financing activities | $2,515 | $(5,275) | | Net decrease in cash and cash equivalents | $(4,680) | $(11,896) | - Operating cash flow shifted from positive to negative, primarily due to increased working capital usage (decreased accounts payable and accrued expenses)[163] - Financing activities provided cash, driven by increased net borrowing on the Receivables Financing Agreement[165] Credit Facilities Traeger's Credit Facilities include a First Lien Term Loan Facility and a Revolving Credit Facility (recently amended), with the company in compliance with all covenants - The First Lien Term Loan Facility had $403.5 million outstanding as of June 30, 2025, maturing on June 29, 2028[170] - The Revolving Credit Facility was reduced to $112.5 million via an August 5, 2025 amendment, split into a $30.0 million tranche (expiring June 29, 2026) and an $82.5 million Extended Revolving Facility (expiring December 29, 2027)[172] - The Credit Facilities are collateralized by substantially all assets of TGP Holdings III LLC, TGPX Holdings II LLC, TPC Traeger Blocker, LP, Traeger Pellet Grills Holdings LLC and certain subsidiaries, excluding accounts receivable[173] - The company was in compliance with all covenants, including a First Lien Net Leverage Ratio test and a minimum liquidity covenant for the Extended Revolving Facility[174] Accounts Receivable Credit Facility Traeger utilizes a Receivables Financing Agreement, extended to August 6, 2027, with a maximum borrowing capacity of $30.0 million to $75.0 million - The Receivables Financing Agreement, extended to August 6, 2027, has a maximum borrowing capacity of $30.0 million to $75.0 million[176][177] - As of June 30, 2025, $9.0 million was drawn under this facility for general corporate and working capital purposes[178] - The company was in compliance with the covenants, including a liquidity threshold of $42.5 million, as of June 30, 2025[176][178] Contractual Obligations No material changes to Traeger's contractual obligations as of June 30, 2025, from those disclosed in its Annual Report on Form 10-K - No material changes to contractual obligations as of June 30, 2025, compared to the Annual Report on Form 10-K[179] Critical Accounting Policies and Estimates No material changes to critical accounting policies and estimates during H1 2025, except for goodwill and acquired intangible assets valuation - No material changes to critical accounting policies and estimates during the six months ended June 30, 2025, except for goodwill and acquired intangible assets valuation[181] Valuation of Goodwill and Acquired Intangible Assets A goodwill impairment test was performed for Q2 2025 due to a stock price decrease, with fair value exceeding carrying value by 5%, thus no impairment - A goodwill impairment test was conducted for the three months ended June 30, 2025, due to a sustained decrease in stock price[182] - The fair value of the reporting unit exceeded its carrying value by approximately 5%, and no impairment was recorded[184] - Future declines in stock price or adverse events could lead to goodwill impairment[184] Recent Accounting Pronouncements For information regarding recent accounting pronouncements, refer to Note 2 – Summary of Significant Accounting Policies - Refer to Note 2 for information on recent accounting pronouncements[185] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK No material changes to Traeger's disclosures regarding its exposure to market risk as described in its Annual Report on Form 10-K - No material changes to market risk disclosures since the Annual Report on Form 10-K[187] ITEM 4. CONTROLS AND PROCEDURES Management evaluated Traeger's disclosure controls and procedures as effective at a reasonable assurance level, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated as effective at the reasonable assurance level as of June 30, 2025[189] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[190] Limitations on Effectiveness of Controls and Procedures Management acknowledges that controls and procedures provide only reasonable assurance due to inherent limitations and resource constraints - Management acknowledges that controls and procedures provide only reasonable assurance due to inherent limitations and resource constraints[188] Evaluation of Disclosure Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025 - The CEO and CFO concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[189] Changes in Internal Control over Financial Reporting No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025 - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[190] PART II. OTHER INFORMATION Covers other information not included in the financial statements, such as legal proceedings, risk factors, and exhibit listings ITEM 1. LEGAL PROCEEDINGS Traeger is subject to various legal proceedings, but management believes their ultimate resolution will not materially adversely affect the business - The company is involved in various legal proceedings, claims, and investigations in the ordinary course of business[192] - Management believes the ultimate resolution of these matters will not materially adversely affect the business[192] ITEM 1A. RISK FACTORS No material changes to the risk factors disclosed in the Annual Report on Form 10-K - No material changes to risk factors disclosed in the Annual Report on Form 10-K[193] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS No unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[194][195] ITEM 3. DEFAULTS UPON SENIOR SECURITIES No defaults upon senior securities to report for the period - No defaults upon senior securities to report[196] ITEM 4. MINE SAFETY DISCLOSURES Mine safety disclosures are not applicable to Traeger, Inc - Mine safety disclosures are not applicable[197] ITEM 5. OTHER INFORMATION Confirms no disclosures in lieu of Form 8-K, no material changes to board nominee procedures, and no Rule 10b5-1 trading arrangements by directors or officers - No disclosures in lieu of reporting on a Current Report on Form 8-K[198] - No material changes to procedures for recommending board nominees[199] - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the quarter[200] ITEM 6. EXHIBITS Lists all exhibits filed with the Form 10-Q, including organizational documents, credit agreements, stock award plans, and certifications from the CEO and CFO - The exhibits include organizational documents (Certificate of Incorporation, Bylaws), credit agreements, stock award plans, and certifications from the CEO and CFO[201] SIGNATURES Contains the official signatures for the Quarterly Report on Form 10-Q Report Signatures The Quarterly Report on Form 10-Q was signed on August 6, 2025, by the Chief Executive Officer and Chief Financial Officer - The report was signed on August 6, 2025, by Jeremy Andrus (CEO) and Michael J. Hord (CFO)[204]