Traeger, Inc. reported total revenue for the first quarter decreased by 31.5 percent to $153.2 million, compared to $223.7 million in the first quarter last year.

  • Grills sales decreased 40.3 percent to $89.7 million as compared to the first quarter last year. The decrease was driven by lower unit volume, partially offset by a higher average selling price resulting from the introduction of new product;
  • Consumables sales decreased 24.2 percent to $30.0 million as compared to the first quarter last year. The decrease was driven by a lower unit volume of wood pellets and other consumables; and
  • Accessories sales decreased 0.7 percent to $33.4 million as compared to the first quarter last year. This decrease was driven primarily by a lower unit volume of Traeger-branded accessories, partially offset by increased sales of Meater smart thermometers.

North America revenue declined 33.0 percent in the first quarter compared to the prior year. Rest of World revenues declined 13.1 percent in the first quarter compared to the prior-year quarter.

Gross margin was 36.2 percent of sales in the first quarter, compared to 36.9 percent in the comparable period last year. The decrease in gross margin was driven primarily by the timing of marketplace promotional investments and higher product costs, offset by favorable domestic logistics costs, as well as foreign exchange rates.

Sales and marketing expenses were $22.1 million in the quarter, compared to $34.9 million in the first quarter last year. The decrease in sales and marketing expense was driven by decreases in demand creation costs, employee expenses, professional service fees, and travel and entertainment costs.

General and administrative expenses were $26.7 million in Q1, compared to $40.7 million in the first quarter last year. The decrease in general and administrative expense was driven by lower stock-based compensation expense of $6.4 million, lower professional service fees, and lower employee expenses, partially offset by losses from the sale of property, plant, and equipment.

Net income was $8.0 million in the first quarter, or 7 cents per diluted share, as compared to net loss of $9.0 million in the first quarter of last year, or a loss of 8 cents per diluted share.

Adjusted net income was $5.5 million, or 4 cents per diluted share as compared to adjusted net income of $19.5 million, or 17 cents per diluted share in the first quarter last year.

Adjusted EBITDA was $21.9 million in the first quarter as compared to $30.4 million in the comparable period last year.

“While our sales continued to be pressured by retailer destocking and lower consumer demand in the first quarter, I am pleased with our execution as well as our ability to exceed the high-end of our Adjusted EBITDA guidance range for the quarter,” said Jeremy Andrus CEO of Traeger, Inc. “We are making meaningful inroads on our near-term strategy to navigate the current environment and to position the company for a return to growth in the second half of 2023 and beyond. In particular, we saw substantial improvement in both our balance sheet and channel inventories in the first quarter.”

Cash, cash equivalents and restricted cash at the end of the first quarter totaled $28 million, compared to $52 million at December 31, 2022.

Inventory at end of the first quarter was $132.4 million, compared to $153.5 million at December 31, 2022. The 14 percent sequential decrease in inventory was driven by strategic inventory management, as well as declining transportation and input commodity costs.

Looking ahead, The company is reiterating its prior guidance for Fiscal 2023. The company’s outlook reflects macroeconomic uncertainty and the expected negative impact of the continued normalization of grill channel inventory in the first half of 2023, as well as the benefit of expected growth in gross margin and ongoing expense control.

  • Total revenue is expected to be between $560 million and $590 million;
  • Gross margin is expected to be between 36 percent and 37 percent; and
  • Adjusted EBITDA is expected to be between $45 million and $55 million

A reconciliation of Adjusted EBITDA guidance to Net Income (Loss) and Adjusted EBITDA Margin guidance to Net Income (Loss) Margin on a forward-looking basis cannot be provided without unreasonable efforts, as the company said it is unable to provide reconciling information with respect to provision for income taxes, interest expense, depreciation and amortization, other (income) expense, stock-based compensation, non-routine legal expenses, change in fair value of contingent consideration, and other adjustment items all of which are adjustments to Adjusted EBITDA and Adjusted EBITDA Margin, respectively.

Photo courtesy Traeger