Traeger Announces First Quarter Fiscal 2024 Results
Traeger, Inc. (NYSE: COOK) reported its first quarter fiscal 2024 results, with total revenues decreasing slightly, gross margin improving, and adjusted EBITDA increasing. The company reiterated its full year 2024 guidance despite soft grill demand. Traeger remains focused on financial and operational improvement, aiming for long-term growth.
Total revenues were at the higher end of guidance, gross margin improved by 700 basis points, and adjusted EBITDA increased by 11.2% compared to the prior year.
Gross profit margin increased to 43.2% due to favorable freight, logistics, and exchange rates. Rest of World revenues saw a 31.1% increase.
Total revenues decreased by 5.4%, with a decline in grill sales and North America revenue. Net loss was $4.7 million, and inventory increased from the previous year.
General and administrative expenses rose due to higher stock-based compensation and employee expenses.
Insights
Reiterates Outlook for Full Year 2024
First Quarter FY 24 Highlights
-
Total revenues decreased
5.4% to , at the higher-end of guidance of$144.9 million to$140 million $145 million -
Gross margin of
43.2% , up 700 basis points compared to prior year -
Net loss of
; net loss of$4.7 million per share$0.04 -
Adjusted net income of
; adjusted net income of$4.7 million per share$0.04 -
Adjusted EBITDA of
, up$24.4 million 11.2% compared to prior year - Reiterates FY 2024 guidance
"In the first quarter, we executed on our plan and delivered revenue and Adjusted EBITDA results at the high-end of our guidance range," said Jeremy Andrus, Chief Executive Officer of Traeger. "As we anticipated, consumer demand for grills remained soft in the first quarter. Despite facing a challenging demand backdrop for our category, our first quarter results demonstrate our commitment to financial and operational improvement, and we reported our highest quarterly gross margin since being a public company. Our team is highly focused on execution as we head into the peak selling season for the grill category and we remain committed to our long-term strategic goals of driving household penetration and innovation. I continue to believe that we are positioned for strong long-term growth as the demand environment normalizes over time."
Operating Results for the First Quarter
Total revenue decreased by
-
Grills decreased
14.4% to as compared to the first quarter last year. The decrease was driven by a decline in average selling price and a reduction in unit volume.$76.8 million -
Consumables increased
7.4% to as compared to the first quarter last year. The increase was driven by higher unit volume of food consumables and wood pellets, partially offset by a reduction in average selling price of food consumables.$32.3 million -
Accessories increased
7.4% to as compared to the first quarter last year. This increase was driven primarily by higher sales of MEATER smart thermometers.$35.8 million
Gross profit increased to
Sales and marketing expenses were
General and administrative expenses were
Net loss was
Adjusted net income was
Adjusted EBITDA was
Balance Sheet
Cash and cash equivalents at the end of the first quarter totaled
Inventory at end of the first quarter was
Guidance For Full Year Fiscal 2024
The Company is reiterating its prior guidance for Fiscal 2024. The Company's outlook reflects its expectation for continued softness in grill industry demand in 2024, as well as its expectation for significant improvement in gross margin, driven by lower transportation costs and the benefit of margin enhancement initiatives.
-
Total revenue is expected to be between
and$580 million $605 million -
Gross margin is expected to be between
39% and40% -
Adjusted EBITDA is expected to be between
and$62 million $71 million
A reconciliation of Adjusted EBITDA guidance to Net Loss on a forward-looking basis cannot be provided without unreasonable efforts, as the Company 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.
Conference Call Details
A conference call to discuss the Company's first quarter results is scheduled for Wednesday, May 8, 2024, at 4:30 p.m. ET. To participate, please dial (833) 470-1428 or +1 (929) 526-1599 for international callers, conference ID 247499. The conference call will also be webcast live at https://investors.traeger.com. A recording will be available shortly after the conclusion of the call. To access the replay, please dial (866) 813-9403, conference ID 494048. A replay of the webcast will also be available approximately two hours after the conclusion of the call on the Company's website at https://investors.traeger.com. A supplemental presentation has also been posted to the Company's website at https://investors.traeger.com.
About Traeger
Traeger Grills, headquartered in
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding our anticipated full year fiscal 2024 results. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, our history of operating losses, our ability to manage our future growth effectively, our ability to expand into additional markets, our ability to maintain and strengthen our brand to generate and maintain ongoing demand for our products, our ability to cost-effectively attract new customers and retain our existing customers, our failure to maintain product quality and product performance at an acceptable cost, the impact of product liability and warranty claims and product recalls, the highly competitive market in which we operate, the use of social media and community ambassadors, issues in relation to environmental, social and governance matters, both in relation to our own operations and the operations of our supply chain partners, a decline in sales of our grills, our dependence on three major retailers, risks associated with our international operations, our reliance on a limited number of third-party manufacturers and problems with (or loss of) our suppliers or an inability to obtain raw materials, and the ability of our stockholders to influence corporate matters and the other important factors discussed under the caption "Risk Factors" in our periodic and current reports filed with the Securities and Exchange Commission from time to time, including our Annual Report on Form 10-K for the year ended December 31, 2023. Any such forward-looking statements represent management's estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change.
TRAEGER, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) |
|||||||
|
March 31,
|
|
December 31,
|
||||
|
(unaudited) |
|
|
||||
ASSETS |
|
|
|
||||
Current Assets |
|
|
|
||||
Cash and cash equivalents |
$ |
23,620 |
|
|
$ |
29,921 |
|
Accounts receivable, net |
|
79,049 |
|
|
|
59,938 |
|
Inventories |
|
99,902 |
|
|
|
96,175 |
|
Prepaid expenses and other current assets |
|
27,971 |
|
|
|
30,346 |
|
Total current assets |
|
230,542 |
|
|
|
216,380 |
|
Property, plant, and equipment, net |
|
40,725 |
|
|
|
42,591 |
|
Operating lease right-of-use assets |
|
46,985 |
|
|
|
48,188 |
|
Goodwill |
|
74,725 |
|
|
|
74,725 |
|
Intangible assets, net |
|
460,069 |
|
|
|
470,546 |
|
Other non-current assets |
|
9,040 |
|
|
|
8,329 |
|
Total assets |
$ |
862,086 |
|
|
$ |
860,759 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||||
Current Liabilities |
|
|
|
||||
Accounts payable |
$ |
25,890 |
|
|
$ |
33,280 |
|
Accrued expenses |
|
46,144 |
|
|
|
52,941 |
|
Line of credit |
|
40,635 |
|
|
|
28,400 |
|
Current portion of notes payable |
|
250 |
|
|
|
250 |
|
Current portion of operating lease liabilities |
|
3,594 |
|
|
|
3,608 |
|
Current portion of contingent consideration |
|
15,000 |
|
|
|
15,000 |
|
Other current liabilities |
|
998 |
|
|
|
495 |
|
Total current liabilities |
|
132,511 |
|
|
|
133,974 |
|
Notes payable, net of current portion |
|
397,586 |
|
|
|
397,300 |
|
Operating lease liabilities, net of current portion |
|
28,472 |
|
|
|
29,142 |
|
Deferred tax liability |
|
8,244 |
|
|
|
8,236 |
|
Other non-current liabilities |
|
648 |
|
|
|
759 |
|
Total liabilities |
|
567,461 |
|
|
|
569,411 |
|
Commitments and contingencies—See Note 10 |
|
|
|
||||
Stockholders' equity: |
|
|
|
||||
Preferred stock, |
|
— |
|
|
|
— |
|
Common stock, |
|
|
|
||||
Issued and outstanding shares - 127,946,998 and 125,865,303 as of March 31, 2024 and December 31, 2023 |
|
13 |
|
|
|
13 |
|
Additional paid-in capital |
|
945,370 |
|
|
|
935,272 |
|
Accumulated deficit |
|
(659,560 |
) |
|
|
(654,877 |
) |
Accumulated other comprehensive income |
|
8,802 |
|
|
|
10,940 |
|
Total stockholders' equity |
|
294,625 |
|
|
|
291,348 |
|
Total liabilities and stockholders' equity |
$ |
862,086 |
|
|
$ |
860,759 |
|
TRAEGER, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited) (in thousands, except share and per share amounts) |
|||||||
|
Three Months Ended March 31, |
||||||
|
|
2024 |
|
|
|
2023 |
|
Revenue |
$ |
144,914 |
|
|
$ |
153,161 |
|
Cost of revenue |
|
82,351 |
|
|
|
97,738 |
|
Gross profit |
|
62,563 |
|
|
|
55,423 |
|
Operating expenses: |
|
|
|
||||
Sales and marketing |
|
21,679 |
|
|
|
22,075 |
|
General and administrative |
|
32,138 |
|
|
|
26,679 |
|
Amortization of intangible assets |
|
8,819 |
|
|
|
8,889 |
|
Change in fair value of contingent consideration |
|
— |
|
|
|
1,043 |
|
Total operating expense |
|
62,636 |
|
|
|
58,686 |
|
Loss from operations |
|
(73 |
) |
|
|
(3,263 |
) |
Other income (expense): |
|
|
|
||||
Interest expense |
|
(8,096 |
) |
|
|
(8,081 |
) |
Other income, net |
|
3,676 |
|
|
|
578 |
|
Total other expense |
|
(4,420 |
) |
|
|
(7,503 |
) |
Loss before provision for income taxes |
|
(4,493 |
) |
|
|
(10,766 |
) |
Provision for income taxes |
|
190 |
|
|
|
164 |
|
Net loss |
$ |
(4,683 |
) |
|
$ |
(10,930 |
) |
Net loss per share, basic and diluted |
$ |
(0.04 |
) |
|
$ |
(0.09 |
) |
Weighted average common shares outstanding, basic and diluted |
|
125,196,934 |
|
|
|
122,699,114 |
|
Other comprehensive income (loss): |
|
|
|
||||
Foreign currency translation adjustments |
$ |
87 |
|
|
$ |
(32 |
) |
Change in cash flow hedge |
|
— |
|
|
|
(2,088 |
) |
Amortization of dedesignated cash flow hedge |
|
(2,225 |
) |
|
|
(2,373 |
) |
Total other comprehensive loss |
|
(2,138 |
) |
|
|
(4,493 |
) |
Comprehensive loss |
$ |
(6,821 |
) |
|
$ |
(15,423 |
) |
TRAEGER, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) |
|||||||
|
Three Months Ended March 31, |
||||||
|
|
2024 |
|
|
|
2023 |
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|||||
Net loss |
$ |
(4,683 |
) |
|
$ |
(10,930 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
||||
Depreciation of property, plant and equipment |
|
3,619 |
|
|
|
3,564 |
|
Amortization of intangible assets |
|
10,629 |
|
|
|
10,638 |
|
Amortization of deferred financing costs |
|
504 |
|
|
|
534 |
|
Loss on disposal of property, plant and equipment |
|
407 |
|
|
|
1,870 |
|
Stock-based compensation expense |
|
10,098 |
|
|
|
7,943 |
|
Unrealized loss (gain) on derivative contracts |
|
(1,124 |
) |
|
|
1,698 |
|
Amortization of dedesignated cash flow hedge |
|
(2,225 |
) |
|
|
(2,373 |
) |
Change in fair value of contingent consideration |
|
— |
|
|
|
1,043 |
|
Other non-cash adjustments |
|
557 |
|
|
|
45 |
|
Change in operating assets and liabilities: |
|
|
|
||||
Accounts receivable |
|
(19,110 |
) |
|
|
(57,145 |
) |
Inventories |
|
(3,727 |
) |
|
|
21,090 |
|
Prepaid expenses and other current assets |
|
3,071 |
|
|
|
(1,214 |
) |
Other non-current assets |
|
37 |
|
|
|
18 |
|
Accounts payable and accrued expenses |
|
(10,651 |
) |
|
|
(73 |
) |
Other non-current liabilities |
|
— |
|
|
|
(298 |
) |
Net cash used in operating activities |
|
(12,598 |
) |
|
|
(23,590 |
) |
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
||||
Purchase of property, plant, and equipment |
|
(5,683 |
) |
|
|
(2,082 |
) |
Capitalization of patent costs |
|
(152 |
) |
|
|
(123 |
) |
Proceeds from sale of property, plant, and equipment |
|
83 |
|
|
|
2,450 |
|
Net cash provided by (used in) investing activities |
|
(5,752 |
) |
|
|
245 |
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
||||
Proceeds on line of credit |
|
21,000 |
|
|
|
62,200 |
|
Repayments on line of credit |
|
(8,765 |
) |
|
|
(62,500 |
) |
Repayments of long-term debt |
|
(63 |
) |
|
|
(51 |
) |
Principal payments on finance lease obligations |
|
(123 |
) |
|
|
(127 |
) |
Net cash provided by (used in) financing activities |
|
12,049 |
|
|
|
(478 |
) |
Net decrease in cash, cash equivalents and restricted cash |
|
(6,301 |
) |
|
|
(23,823 |
) |
Cash, cash equivalents and restricted cash at beginning of period |
|
29,921 |
|
|
|
51,555 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD |
$ |
23,620 |
|
|
$ |
27,732 |
|
TRAEGER, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) |
||||||
(Continued) |
Three Months Ended March 31, |
|||||
|
|
2024 |
|
|
|
2023 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
|
|
|
|||
Cash paid during the period for interest |
$ |
9,659 |
|
|
$ |
4,718 |
Income taxes paid (received), net of refunds |
$ |
(516 |
) |
|
$ |
470 |
NON-CASH FINANCING AND INVESTING ACTIVITIES |
|
|
|
|||
Equipment purchased under finance leases |
$ |
12 |
|
|
$ |
72 |
Property, plant, and equipment included in accounts payable and accrued expenses |
$ |
523 |
|
|
$ |
2,568 |
TRAEGER, INC.
RECONCILIATIONS OF AND OTHER INFORMATION REGARDING NON-GAAP FINANCIAL MEASURES
(unaudited)
In addition to our results and measures of performance determined in accordance with
Each of Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per share, Adjusted EBITDA Margin, and Adjusted Net Income Margin are key performance measures that our management uses to assess our financial performance and is also used for internal planning and forecasting purposes. We believe that these non-GAAP financial measures are useful to investors and other interested parties in analyzing our financial performance because it provides a comparable overview of our operations across historical periods. In addition, we believe that providing each of Adjusted EBITDA and Adjusted Net Income, together with a reconciliation of Net Loss to each such measure, and providing Adjusted Net Income per share, together with a reconciliation of Net Loss per share to such measure, and Adjusted EBITDA Margin and Adjusted Net Income Margin, together with a reconciliation of Net Loss Margin to such measures, helps investors make comparisons between our company and other companies that may have different capital structures, different tax rates, and/or different forms of employee compensation. For example, due to finite-lived intangible assets included on our balance sheet following our corporate reorganization in 2017, we have significant non-cash amortization expense attributable to the nature of our capital structure.
Each of Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per share are used by our management team as an additional measure of our performance for purposes of business decision-making, including managing expenditures, and evaluating potential acquisitions. Period-to-period comparisons of Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per share help our management identify additional trends in our financial results that may not be shown solely by period-to-period comparisons of Net Loss or Loss from Operations or Net Loss per share. In addition, we may use Adjusted EBITDA in the incentive compensation programs applicable to some of our employees. Each of Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per share has inherent limitations because of the excluded items, and may not be directly comparable to similarly titled metrics used by other companies.
The following table presents a reconciliation of Net Loss, Loss from Operations, Net Loss Margin, Loss from Operations Margin, and Net Loss per share, the most directly comparable financial measures calculated in accordance with
|
Three Months Ended March 31, |
||||||
|
|
2024 |
|
|
|
2023 |
|
|
(dollars in thousands, except share and per share amounts) |
||||||
Net loss |
$ |
(4,683 |
) |
|
$ |
(10,930 |
) |
Adjustments: |
|
|
|
||||
Other income (1) |
|
(5,862 |
) |
|
|
(1,359 |
) |
Stock-based compensation |
|
10,098 |
|
|
|
7,943 |
|
Non-routine legal expenses (2) |
|
103 |
|
|
|
233 |
|
Amortization of acquisition intangibles (3) |
|
8,255 |
|
|
|
8,253 |
|
Change in fair value of contingent consideration |
|
— |
|
|
|
1,043 |
|
Other adjustment items (4) |
|
— |
|
|
|
143 |
|
Tax impact of adjusting items (5) |
|
(3,227 |
) |
|
|
(4,094 |
) |
Adjusted net income |
$ |
4,684 |
|
|
$ |
1,232 |
|
|
|
|
|
||||
Net loss |
$ |
(4,683 |
) |
|
$ |
(10,930 |
) |
Adjustments: |
|
|
|
||||
Provision for income taxes |
|
190 |
|
|
|
164 |
|
Interest expense |
|
8,096 |
|
|
|
8,081 |
|
Depreciation and amortization |
|
14,247 |
|
|
|
14,255 |
|
Other (income) expense (6) |
|
(3,637 |
) |
|
|
1,014 |
|
Stock-based compensation |
|
10,098 |
|
|
|
7,943 |
|
Non-routine legal expenses (2) |
|
103 |
|
|
|
233 |
|
Change in fair value of contingent consideration |
|
— |
|
|
|
1,043 |
|
Other adjustment items (4) |
|
— |
|
|
|
143 |
|
Adjusted EBITDA |
$ |
24,414 |
|
|
$ |
21,946 |
|
|
|
|
|
||||
Revenue |
$ |
144,914 |
|
|
$ |
153,161 |
|
Net loss margin |
|
(3.2 |
)% |
|
|
(7.1 |
)% |
Adjusted net income margin |
|
3.2 |
% |
|
|
0.8 |
% |
Adjusted EBITDA margin |
|
16.8 |
% |
|
|
14.3 |
% |
|
|
|
|
||||
Net loss per diluted share |
$ |
(0.04 |
) |
|
$ |
(0.09 |
) |
Adjusted net income per diluted share |
$ |
0.04 |
|
|
$ |
0.01 |
|
Weighted average common shares outstanding - diluted |
|
125,196,934 |
|
|
|
122,699,114 |
|
(1) |
Represents realized and unrealized gains on the interest rate swap, including amortization of dedesignated cash flow hedge, losses on the disposal of property, plant, and equipment, and unrealized gains (losses) from foreign currency transactions and derivatives. |
|
(2) |
Represents external legal expenses incurred in connection with the defense of a class action lawsuit and intellectual property litigation. |
|
(3) |
Represents amortization of acquisition intangibles includes amortization expense associated with intangible assets recorded in connection with the 2017 acquisition of Traeger Pellet Grills Holdings LLC. |
|
(4) |
Represents non-routine operational wind-down costs. |
|
(5) |
Represents the tax effect of non-GAAP adjustments calculated at an estimated blended statutory tax rate of |
|
(6) |
Represents realized and unrealized gains on the interest rate swap, losses on the disposal of property, plant, and equipment, and unrealized gains (losses) from foreign currency transactions and derivatives. |
______________________________
1 There were no dilutive securities outstanding as of March 31, 2024 and 2023.
2 Reconciliations of GAAP to non-GAAP financial measures, as well as definitions for the non-GAAP financial measures included in this press release and the reasons for their use, are presented below.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240508468906/en/
Investors:
Nick Bacchus
Traeger, Inc.
investor@traeger.com
Media:
The Brand Amp
Traeger@thebrandamp.com
Source: Traeger, Inc.
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