Traeger(COOK) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the company's unaudited financial statements and management's discussion for the quarter Financial Statements (Unaudited) Presents unaudited condensed consolidated financial statements for Q1 2022, including balance sheets, operations, equity, and cash flows Condensed Consolidated Balance Sheets This section provides a summary of the company's financial position as of March 31, 2022, and December 31, 2021 Balance Sheet Summary (in thousands) | Balance Sheet Items | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Assets | $1,268,544 | $1,181,024 | | Total Current Assets | $351,188 | $269,741 | | Inventories | $164,127 | $145,038 | | Goodwill | $297,047 | $297,047 | | Total Liabilities | $645,387 | $571,504 | | Total Current Liabilities | $200,311 | $166,225 | | Notes Payable | $417,734 | $379,395 | | Total Stockholders' Equity | $623,157 | $609,520 | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) This section details the company's financial performance, including revenue, gross profit, and net income (loss) for the three months ended March 31, 2022 and 2021 Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Revenue | $223,710 | $235,573 | | Gross Profit | $83,565 | $100,631 | | Income (Loss) from Operations | $(2,987) | $47,923 | | Net Income (Loss) | $(8,432) | $38,929 | | Net Income (Loss) per Share | $(0.07) | $0.36 | Condensed Consolidated Statements of Cash Flows This section outlines the cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2022 and 2021 Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(46,911) | $(26,544) | | Net cash used in investing activities | $(4,648) | $(4,975) | | Net cash provided by financing activities | $45,917 | $37,064 | | Net (decrease) increase in cash | $(5,642) | $5,545 | Notes to Unaudited Condensed Consolidated Financial Statements Detailed notes explain financial statements, covering accounting policies, revenue, business combinations, debt, and equity compensation - Three major retail customers accounted for 17%, 23%, and 14% of net sales for the three months ended March 31, 2022[40] Revenue by Product Category (in thousands) | Product Category | Q1 2022 Revenue | Q1 2021 Revenue | | :--- | :--- | :--- | | Grills | $150,431 | $178,655 | | Consumables | $39,651 | $40,813 | | Accessories | $33,628 | $16,105 | - The company acquired Apption Labs (MEATER smart thermometer) on July 1, 2021, for a total purchase consideration of approximately $78.3 million, which included a contingent consideration obligation[48][49] - As of March 31, 2022, the company had $379.2 million outstanding on its First Lien Term Loan Facility, had drawn $47.0 million on its Revolving Credit Facility, and $49.2 million on its Accounts Receivable Credit Facility[81][82][87] - Equity-based compensation expense increased significantly to $15.5 million in Q1 2022 from $1.0 million in Q1 2021, following the IPO and related RSU/PSU grants[96][155] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's financial performance, liquidity, and capital resources for Q1 2022 Results of Operations Analyzes revenue, gross profit, operating expenses, and net income (loss) for Q1 2022 compared to the prior year Key Performance Metrics Comparison | Metric | Q1 2022 | Q1 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $223.7M | $235.6M | (5.0)% | | Gross Profit | $83.6M | $100.6M | (17.0)% | | Gross Margin | 37.4% | 42.7% | (530 bps) | | Operating Income (Loss) | $(3.0)M | $47.9M | (106.2)% | | Net Income (Loss) | $(8.4)M | $38.9M | (121.7)% | - The decrease in revenue was driven by lower unit volume for grills (-15.8%) and consumables (-2.8%), partially offset by a 108.8% increase in accessories revenue, which benefited from the Apption Labs acquisition[148][149][151] - General and administrative expenses surged by 216.2% to $42.9 million, primarily due to a $13.6 million increase in equity-based compensation expense and higher personnel-related costs[155] Liquidity and Capital Resources This section discusses the company's cash position, available credit facilities, and ability to fund operations - As of March 31, 2022, the company had cash and cash equivalents of $11.1 million[161] - The company has access to a $125.0 million Revolving Credit Facility and a Receivables Financing Agreement with a capacity of up to $100.0 million to support liquidity[173][180] - Net cash used in operating activities for the quarter was $46.9 million, an increase from the $26.5 million used in the prior-year period, driven by a net loss and changes in working capital, particularly an increase in accounts receivable[164][165] Quantitative and Qualitative Disclosures About Market Risk No material changes to market risk disclosures since the Annual Report on Form 10-K - There have been no material changes to the company's market risk disclosures from those in its Annual Report on Form 10-K[186] Controls and Procedures Management concluded disclosure controls were effective as of March 31, 2022, with no material changes to internal controls - Management concluded that as of March 31, 2022, the company's disclosure controls and procedures were effective at a reasonable assurance level[189] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[190] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, and other miscellaneous information Legal Proceedings The company faces various legal proceedings but expects no material adverse effects on operations or financial position - The company states that the ultimate resolution of current legal matters is not expected to have a material adverse effect on its business, financial condition, or operating results[192] Risk Factors The company reports no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K[193] [Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECU RITIES%20AND%20USE%20OF%20PROCEEDS) No unregistered equity sales reported; IPO proceeds primarily used for debt prepayment - The company completed its IPO on August 2, 2021, raising net proceeds of $138.5 million after deducting underwriter discounts and other expenses[195] - Approximately $130.8 million of the IPO proceeds were used to prepay debt under the First Lien Term Loan Facility, with the remainder used for general corporate and working capital purposes[196] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[197] Mine Safety Disclosures This item is not applicable to the company - Not applicable[204] Other Information The company reports no other information for this item - None[205] Exhibits This section lists the exhibits filed with the report, including CEO and CFO certifications and XBRL data files - Lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL documents[201][202][203]