Financial Data and Key Metrics Changes - The company reported a 3% increase in sales to $125 million, driven by growth in grills and consumables categories [5][20] - Adjusted EBITDA rose by 12% year-over-year to $14 million, reflecting successful expense reduction initiatives [5][25] - Gross profit decreased to $49 million from $52 million, with gross profit margin contracting 360 basis points to 38.7% due to tariff impacts [22][25] Business Line Data and Key Metrics Changes - Grill revenues increased by 2%, primarily due to higher average selling prices from pricing increases implemented earlier [21] - Consumables revenues grew by 12% to $25 million, driven by strong sell-through of wood pellets and expanded distribution [18][21] - Accessories revenues decreased by 4% to $24 million, largely due to lower MEATER sales, although Traeger branded accessories saw over 20% growth [19][21] Market Data and Key Metrics Changes - The overall grill market is slightly down, influenced by higher price points and interest rates affecting consumer discretionary spending [51][52] - The company is maintaining its market share despite a challenging environment, with unaided brand awareness increasing by 100 basis points [54] Company Strategy and Development Direction - The company is focused on Project Gravity, aiming for $50 million in cumulative run rate savings by optimizing channels and enhancing operational efficiency [10][26] - The strategy includes exiting unprofitable channels, such as the Costco roadshow, and shifting to a distributor model in European markets [12][14] - The company plans to redirect its website traffic to retail partners to improve consumer experience and profitability [13][30] Management's Comments on Operating Environment and Future Outlook - Management reiterated guidance for fiscal year 2025, expecting revenues between $540 million and $555 million, down 8%-11% [17][28] - The company anticipates continued pressure on unit volumes due to pricing increases but expects growth in consumables [28] - Management expressed confidence in navigating the current environment while laying groundwork for sustainable growth [29][55] Other Important Information - A non-cash impairment charge of $75 million was recorded due to a sustained decrease in stock price, resulting in a net loss of $90 million for the quarter [24][25] - The company has liquidity of $167 million with no outstanding borrowings, indicating a solid financial position [25] Q&A Session Summary Question: Clarification on exiting DTC and redirecting traffic - Management explained that the decision to exit direct-to-consumer (DTC) was based on cost inefficiencies and a desire to improve consumer experience through retail partners [30][31] Question: Revenue loss from phase two distribution strategy - The company expects to walk away from approximately $60 million in revenue but anticipates recapturing this through other channels [39][40] Question: Margin profile of the distributor model in Europe - While there will be a margin impact from the distributor model, the overall cost structure improvements will offset this loss [42] Question: Elasticity response to pricing changes - Management noted that pricing increases led to a decline in unit volumes, but promotional strategies will continue to be employed to manage inventory and profitability [44] Question: Assessment of the overall grill market - The company views the current year as a category growth year despite slight market declines, with expectations for a robust replacement cycle in the future [51][52]