Traeger(COOK) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - First quarter revenues declined by 1% to $143 million compared to the same period in 2024, with adjusted EBITDA of $23 million, down from $24 million year-over-year [6][24][27] - Net loss for the first quarter was $1 million, an improvement from a net loss of $5 million in the first quarter of 2024 [27] - Adjusted net income increased to $7 million or $0.05 per diluted share, compared to $5 million or $0.04 per diluted share in the same period last year [27] Business Line Data and Key Metrics Changes - Grill sales increased by 13% year-over-year, benefiting from the launch of the new Woodridge series [15][24] - Consumables revenues decreased by 6% to $30 million, in line with expectations, due to a reduction in wood pellet and soup consumables [21][24] - Accessories revenue fell by 27% to $26 million, primarily due to challenges faced by Meter in the smart thermometer category [22][24] Market Data and Key Metrics Changes - North American revenues rose by 6%, while revenues from the rest of the world dropped by 47%, largely due to Meter's performance [25] - The first quarter typically experiences slower sales in the outdoor cooking industry, but sell-through for grills remained healthy into the second quarter [16][24] Company Strategy and Development Direction - The company is focused on mitigating tariff impacts through cost reductions, sourcing diversification, and strategic pricing increases [10][12][14] - Plans to reduce production in China significantly by 2026 while enhancing relationships with manufacturing partners [11][12] - The company has suspended forward guidance for fiscal 2025 due to uncertainties in the macroeconomic environment and consumer demand [14][31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by tariffs and declining consumer sentiment, emphasizing the importance of navigating the current macroeconomic climate [7][8] - The company is optimistic about its ability to offset tariff impacts through various mitigation strategies, although consumer demand remains a significant unknown [10][29] - Management expressed confidence in the long-term value of the Meter brand despite short-term pressures [42][44] Other Important Information - The Woodridge series received strong consumer reception, achieving an average rating of 4.8 stars across various platforms [19][20] - The company is actively managing inventory levels and has reduced purchase orders to avoid overstocking amid uncertain demand [32][53] Q&A Session Summary Question: Can you provide insights on strategic price increases across your product portfolio? - Management indicated that pricing decisions were made based on historical sell-through data and product elasticity, with a focus on premium positioning [35][36] Question: How is the Meter segment performing and what are the capital allocation plans? - Management acknowledged short-term challenges for Meter but emphasized a long-term strategy focused on wholesale channels and cost structure optimization [42][43] Question: Has there been a shift in retailer willingness to take on inventory? - Management noted no significant reluctance from retailers but mentioned a shift towards domestic fulfillment due to tariff implications [48][49] Question: Can you clarify the tariff situation for products sourced from China? - Management confirmed that grills from China are subject to a total tariff of 45%, while accessories vary based on sourcing [57][64] Question: What is the current status of the Walmart pellet rollout? - Management expressed excitement about the partnership with Walmart, noting it meets consumer demand for convenience [68][69]