Traeger(COOK)2023-05-13 13:20Financial Data and Key Metrics Changes - First quarter revenues were $153 million, a decline of 32% year-over-year, but came in towards the higher end of guidance [10][22] - Adjusted EBITDA for the quarter was $22 million, exceeding the high end of guidance by $2 million [10][44] - Net income for the first quarter was $8 million, compared to a net loss of $9 million in the same period last year [43] - Gross profit decreased to $55 million from $83 million year-over-year, with a gross profit margin of 36.2%, down 80 basis points [31][32] Business Line Data and Key Metrics Changes - Grill revenues declined 40% to $90 million, impacted by lower unit volumes due to retailer destocking [22] - Consumables revenues were $30 million, down 24% year-over-year, affected by lower pellet volumes and loss of a customer [22][28] - Accessories revenue decreased 1% to $33 million due to lower unit volumes of Traeger branded accessories [31] Market Data and Key Metrics Changes - North American revenues were down 33%, while revenues from the Rest of World decreased by 13% [31] - Sell-through of grills remained negative compared to the first quarter last year, but was in line with forecasts [12][22] Company Strategy and Development Direction - The company aims to increase household penetration from 3.5% by enhancing brand awareness and improving distribution network productivity [23] - Product innovation is a key focus, with successful launches of the new Ironwood and Flatrock griddle [20][24] - The company is optimizing its pellet manufacturing footprint by consolidating mills to improve efficiency and reduce costs [15][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year guidance despite current challenges, reiterating revenue expectations between $560 million and $590 million [11][47] - The company anticipates a return to growth in the second half of 2023 as inventory levels normalize and sales trends improve [34][30] - Management noted that the macroeconomic environment remains volatile, but they are prepared to adapt [48] Other Important Information - The company achieved annualized cost savings exceeding $20 million due to restructuring efforts [16][43] - Social media engagement increased, with a 19% growth in followers and a 16% increase in user-generated content [17][18] Q&A Session Summary Question: Can you elaborate on the pellet mills consolidation and its impact? - The consolidation of two pellet mills is part of a broader strategy to optimize costs and improve unit economics for pellets [39][50] Question: How is the engagement and demand for pellets being affected? - Engagement is tracking back to pre-pandemic levels, with consistent usage rates among different consumer cohorts [51][62] Question: What are the expectations for gross margin improvement throughout the year? - Gross margin is expected to improve in the second half of the year as higher-cost inventory is cleared and transportation costs decrease [56][65] Question: How are channel inventories performing relative to expectations? - Channel inventories have improved ahead of plan, positioning the company well for the peak selling season [99][100] Question: What is the strategy for brand awareness and retail partnerships? - The company continues to invest in retail partnerships and community engagement to drive brand awareness and sales [71][92]