Financial Data and Key Metrics Changes - For the full year 2025, revenue reached $560 million, exceeding guidance, while adjusted EBITDA was $70 million, landing in the upper half of the range [5][19] - Fourth quarter revenues decreased by 14% to $145 million, with grill revenues down 22% to $61 million, primarily due to elasticity and unfavorable mix shifts [21][22] - Adjusted EBITDA for the fourth quarter increased 6% to $19 million compared to $18 million in the same period of 2024, demonstrating operating leverage despite lower revenue levels [23] Business Line Data and Key Metrics Changes - Consumables revenues grew by 16% to $36 million, driven by higher unit volumes across wood pellets and food consumables [22] - Accessories revenues fell by 18% to $49 million, pressured by negative sales growth at MEATER [22] - The pellets business performed well, indicating strong consumer engagement and supporting long-term health and replacement outlook [9] Market Data and Key Metrics Changes - The outdoor grilling market has been relatively steady since 2022, reflecting only modest declines, with the company holding market share despite a sluggish category backdrop [7][9] - Connected cooks increased by 11% year-over-year during the holiday season, indicating strong brand engagement [7] Company Strategy and Development Direction - The company is focused on Project Gravity, a multi-year initiative aimed at reshaping the business, simplifying operations, and improving profitability [11][14] - The strategy includes exiting lower return revenue streams, optimizing channel strategy, and reallocating resources to high-return opportunities [11][12] - The company plans to launch two additional products in 2026 at more accessible price points to expand household penetration [8] Management's Comments on Operating Environment and Future Outlook - Management noted that tariffs had a significant impact on the category, driving volatility in ordering behavior, but they managed to protect profitability through disciplined pricing and cost control [10][20] - For fiscal year 2026, the company is guiding revenue of $465 million-$485 million and adjusted EBITDA of $50 million-$60 million, reflecting a transition year with a focus on long-term growth [17][29] - Management expressed confidence in the brand's strength and the potential for market recovery, although they have not forecasted a return to normalized replacement cycles [36][37] Other Important Information - The company exited fiscal year 2025 with cash and cash equivalents of $20 million and total net debt of $384 million, a decrease of $10 million from the previous year [24] - Project Gravity is expected to deliver approximately $64 million-$70 million of total value across both phases, with benefits beginning to materialize in 2025 and continuing into 2026 [14] Q&A Session Summary Question: Where did the grill market finish in 2025 relative to 2019 levels in terms of industry volumes? - Management indicated that the market has been modestly down in recent years, with expectations for recovery as consumers approach replacement cycles [35][36] Question: What is the expected revenue impact from the DTC exit? - The revenue impact from exiting DTC and other initiatives is around $70 million, with margin rate pressure due to tariffs and promotional deleverage [39][40] Question: Can you elaborate on SKU rationalization efforts? - The company aims to streamline the product portfolio to create efficiencies in manufacturing and inventory while enhancing consumer decision-making clarity [44][45] Question: How is the company addressing ongoing MEATER pressure? - Management is centralizing MEATER operations and leveraging fixed cost infrastructure to drive ongoing growth while managing inventory health [58][59] Question: What is the reason for the similar decremental margin despite Project Gravity? - The decremental margin remains similar due to full-year tariff impacts and promotional deleverage, which are expected to improve as revenue normalizes [63][64]