Traeger, Inc. reported sales declined 14.4 percent in the second quarter that ended June 30 due to inventory destocking in the marketplace and lower demand, but it raised its outlook for the year as results topped expectations. The grill maker narrowed its loss in the period.

“In the second quarter, we delivered results that were ahead of our expectations and grew adjusted EBITDA, even as our sales were pressured by retailer destocking and lower consumer demand,” said Jeremy Andrus, CEO of Traeger. “I am pleased with the significant progress we have made in improving our financial positioning over the last several quarters. Specifically, our efforts to rightsize both our balance sheet and channel inventories have allowed us to enter the second half of the year in a substantially more balanced position. Given our better than anticipated results for the first half of the year, today we are increasing our revenue and Adjusted EBITDA guidance for Fiscal 2023.”

Andrus continued, “During our peak selling season in the second quarter, the energy around the Traeger brand remained very strong, bolstering my confidence in our long-term opportunity to disrupt the outdoor cooking industry and to materially grow our household penetration. We look forward to an expected return to growth in the second half of the year and believe we are well-positioned to both navigate the current environment and drive long-term growth.”

Operating Results for the Second Quarter

  • Total revenue decreased by 14.4 percent to $171.5 million, compared to $200.3 million in the second quarter of last year;
  • Grills decreased 20.9 percent to $93.1 million compared to last year’s second quarter. Lower average selling prices primarily drove the decrease in addition to reduced unit volumes;
  • Consumables decreased 17.1 percent to $34.9 million compared to the second quarter of last year. Lower unit volumes drove the decrease in addition to reduced average selling prices;
  • Accessories increased 7.4 percent to $43.5 million compared to last year’s second quarter. This increase was driven primarily by increased average selling prices for Traeger branded accessories and increased revenue due to sales of Meater smart thermometers;
  • North America’s revenue declined 15.6 percent in the second quarter compared to the prior year. Rest of World revenues increased by 3.0 percent in the second quarter compared to the preceding year;
  • Gross profit decreased to $63.3 million, compared to $73.4 million in the second quarter of last year. The gross profit margin was 36.9 percent in the second quarter, compared to 36.7 percent in the same period the previous year. The increase in gross margin was driven primarily by favorability from freight costs and foreign exchange rates, offset by increased dilution;
  • Sales and marketing expenses were $27.9 million, compared to $42.1 million in the second quarter of last year. Reduced investments in advertising costs and lower costs for commissions and travel-related expenses drove the decrease in sales and marketing expenses;
  • General and administrative expenses were $52.4 million, compared to $31.4 million in the second quarter of last year. The increase in general and administrative costs was driven by higher equity-based compensation expenses of $32.1 million primarily due to the cancellation of the unearned CEO, the initial public offering of performance-based restricted stock units, and higher costs for professional fees. Lower employee-related costs partially offset the increases;
  • Net loss was $32.9 million in the second quarter, or a loss of $0.27 per diluted share, compared to net loss of $133.1 million in the second quarter of last year, or a loss of $1.13 per diluted share;
  • Adjusted net income was $4.3 million, or $0.04 per diluted share, compared to adjusted net income of $3.9 million, or $0.03 per diluted share, in the second quarter last year; and
  • Adjusted EBITDA was $21.5 million in the second quarter, compared to $17.0 million in the same period last year.

Balance Sheet

  • Cash and cash equivalents at the end of the second quarter totaled $14.5 million, compared to $39.1 million at December 31, 2022; and
  • Inventory at the end of the second quarter was $97.8 million, compared to $153.5 million at December 31, 2022. The decrease in inventory was driven primarily by strategic inventory management.

Guidance For Full Year Fiscal 2023
The company increased its total revenue and Adjusted EBITDA guidance for Fiscal 2023. The company’s updated outlook reflects better-than-anticipated results in the first half of the year and expected growth in revenue and EBITDA in the second half of the year.

  • Total revenue is expected to be between $585 million and $600 million ($560 million and $590 million previously);
  • Gross Margin continues to be expected to be between 36 percent and 37 percent; and
  • Adjusted EBITDA is expected to be between $55 million and $59 million (between $45 million and $55 million previously).

Photo courtesy Traeger