Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Traeger Inc (COOK, Financial) reported a 4% revenue growth in the third quarter, driven by a 32% increase in the grills category.
- The company achieved a significant improvement in profitability, with gross margin expanding by 440 basis points.
- Traeger Inc (COOK) raised its fiscal 2024 financial guidance, expecting sales between $595 million to $605 million and adjusted EBITDA of $78 million to $81 million.
- The company experienced strong consumer demand during the Labor Day promotion, leading to better-than-expected sell-through and replenishment sales.
- Traeger Inc (COOK) reported a 20% increase in unaided brand awareness compared to 2022, indicating strong brand health and consumer engagement.
Negative Points
- The accessories category experienced a decline, with revenues decreasing by 31%, primarily due to lower sales at Meter.
- Consumables revenues declined by 11% in the third quarter, attributed to a shift in revenue pacing.
- The company faces challenges in the consumer demand backdrop, which remains mixed, particularly for big-ticket and home-related goods purchases.
- Traeger Inc (COOK) noted a reduction in average selling prices for grills, partially due to a mix shift towards lower-priced products.
- The company anticipates continued pressure on Meter's e-commerce sales, impacting the accessories category in the fourth quarter.
Q & A Highlights
Q: Can you provide clarity on the implied guidance for grills in the fourth quarter and the shift in growth from Q3 to Q4?
A: Dominic Blosil, CFO, explained that while Q3 saw strong grill growth, this is not expected to hold sequentially into Q4. The growth will moderate, but they still expect some marginal growth in grills. This is largely due to strong sell-through in Q2 and Q3, partly driven by a successful Labor Day promotion.
Q: How is the competitive landscape in the pellet market, and are you seeing any shifts?
A: Dominic Blosil noted that while competition in pellets has been present for years, there hasn't been a significant shift in the landscape. Traeger believes their brand loyalty and the quality of their pellets, which are vertically integrated, provide a competitive edge.
Q: What are your thoughts on the grill category's recovery and the outlook for 2025?
A: Dominic Blosil mentioned that the grill category is down slightly year-to-date but believes it has found the bottom. They expect 2025 to be a better year for the category, driven by factors like lower interest rates and increased housing transactions, which could stimulate demand.
Q: How are you planning to manage gross margins and potential reinvestment in marketing as the market recovers?
A: Dominic Blosil stated that while they are seeing improvements in gross margins, they plan to reinvest in marketing based on long-term financial models and guardrails. They aim to ensure profitability and sustainable growth without exceeding these guardrails.
Q: Can you discuss the impact of tariffs on your supply chain and any mitigation strategies?
A: Dominic Blosil explained that while 80% of grills are manufactured in China, tariffs currently only affect accessories. They are diversifying manufacturing to Vietnam and exploring other options in Asia and Mexico to mitigate tariff risks. They have built optionality into their sourcing model to react efficiently to changes in tariffs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
