Traeger (COOK) risk factors, FY2024 10-K

Risks Related to Our Business and Industry

1. 01We have incurred operating losses in the past, may incur operating losses in the future, and may not achieve or maintain profitability in the future
2. 02Our historical growth rates may not be sustainable or indicative of future growth and we expect our growth rate to slow
3. 03We may be unable to manage our future growth effectively, which could make it difficult to execute our business strategy
4. 04Our growth depends, in part, on our continued penetration and expansion into additional markets, and we may not be successful in doing so
5. 05Our business depends on maintaining and strengthening our brand to generate and maintain ongoing demand for our products, and a significant reduction in such demand could harm our results of operations
6. 06If we fail to cost-effectively attract new customers or retain our existing customers, we may not be able to increase sales
7. 07United States trade policies that restrict imports or increase import tariffs may have a material adverse effect on our business
8. 08Our business could be adversely affected if we fail to maintain product quality and product performance at an acceptable cost
9. 09We operate in a highly competitive market, and we may be unable to compete successfully against existing and future competitors
10. 10In July 2021, we acquired Apption Labs Limited and its subsidiaries and began selling the MEATER smart thermometer. We compete in this space with brands such as ThermoPro, Chef iQ, and Typhur, among others
11. 11Use of social media and community ambassadors may materially and adversely affect our reputation or subject us to fines or other penalties
12. 12Upon the expiration of contracts, retailers may decide not to recontract on terms as favorable to us as our current contracts, or at all. For example, our current customers may acquire wood pellet grills from other providers that offer more competitive pricing
13. 13We have in the past recognized impairment charges for goodwill and we may need to recognize further impairments in the future, which could materially adversely impact our financial condition and results of operations
14. 14If we are unable to anticipate customer preferences and successfully develop new, innovative, and updated products, services, and features, or if we fail to effectively manage the introduction of new products, services, and features, our business will suffer
15. 15Our passion and focus on delivering a high-quality and engaging experience for our customers may not maximize short-term financial results, which may yield results that conflict with the market’s expectations and could result in our stock price being negatively affected
16. 16The market for wood pellet grills is still in the early stages of growth and if it does not continue to grow, grows more slowly than we expect, or fails to grow as large as we expect, our business may be adversely affected
17. 17Our estimated addressable market is subject to inherent challenges and uncertainties. If we have overestimated the size of our addressable market, our future growth opportunities may be limited
18. 18Competitors have imitated and attempted to imitate, and will likely continue to imitate or attempt to imitate our products and technology. If we are unable to protect or preserve our brand image, intellectual property, and proprietary rights, our business may be harmed
19. 19Our revenue and profits depend on the level of customer spending for discretionary items, which is sensitive to general economic conditions and other factors
20. 20Our results of operations may suffer if we do not accurately forecast demand for our products or successfully manage our inventory to match customer demand
21. 21Our business may fluctuate as a result of seasonality and changes in weather conditions
22. 22If our plan to increase sales through our direct to customer channel is not successful, our business and results of operations could be harmed
23. 23We have significant international operations and are exposed to risks associated with doing business globally
24. 24We are subject to governmental export and import controls, customs, and economic and trade sanctions laws that could subject us to liability and impair our ability to compete in international markets
25. 25Failure to comply with anti-corruption laws, including the FCPA and similar laws associated with our activities outside of the United States, could subject us to penalties and other adverse consequences
26. 26We are subject to payment-related risks that may result in higher operating costs or the inability to process payments, either of which could harm our business, financial condition, and results of operations
27. 27Our revenue could decline due to changes in credit markets and decisions made by credit providers
28. 28We are subject to risks related to sustainability and ESG issues
29. 29claims due to a variety of perceived deficiencies in actions, statements, or methodologies, including as stakeholder perceptions of sustainability continue to evolve
30. 30Significant increases in the cost of raw materials for our wood pellet facilities or our suppliers suffering from operating or financial difficulties could adversely impact revenue and our ability to satisfy customer demand
31. 31customer demand and thereby could have a material adverse effect on our brand, reputation, business, financial condition, and results of operations
32. 32Failure to implement effective quality control systems at our wood pellet facilities could have a material adverse effect on our business and operations
33. 33An increase in the price or a significant interruption in the supply of electricity could have a material adverse effect on our results of operations
34. 34Increases in labor costs, potential labor disputes, and work stoppages, or an inability to hire skilled manufacturing, sales, and other personnel, could adversely affect our business
35. 35Our wood pellet production operations are subject to operational hazards and downtimes or interruptions, which may have a material adverse effect on our business and results of operations
36. 36Our wood pellet production operations are subject to stringent environmental and occupational health and safety laws and regulations that may expose us to significant costs and liabilities
37. 37Climate change legislation, regulatory initiatives, and litigation could result in increased operating costs or, in some instances, adversely impact demand for our products
38. 38Regulatory authorities in the United States, European Union, and elsewhere are increasingly regulating hazardous materials and other substances, and those regulations could affect sales of our products
39. 39Regulation of certain perfluoroalkyl and polyfluoroalkyl substances in the United States and internationally may affect our product lines

Risks Related to Our Reliance on Third Parties

1. 40We rely on a limited number of third-party manufacturers, and problems with, or loss of, our suppliers or an inability to obtain raw materials could harm our business and results of operations
2. 41If we fail to timely and effectively obtain shipments of products from our manufacturers and deliver products to our customers, including our retailers, our business, and results of operations could be harmed
3. 42Fluctuations in the cost and availability as well as delays of raw materials, equipment, labor, and transportation could cause manufacturing delays or increase our costs
4. 43Many of our products are manufactured by third parties outside of the United States, and our business may be harmed by legal, regulatory, economic, political, and public health risks associated with international trade and those markets
5. 44We depend on our retailers to display and present our products to customers, and our failure to maintain and further develop our relationships with our retailers could harm our business
6. 45Insolvency, credit problems, or other financial difficulties that could confront our retailers or distributors could expose us to financial risk
7. 46If our independent suppliers and manufacturers do not comply with ethical business practices or with applicable laws and regulations, our reputation, business, and results of operations could be harmed

Risks Related to our Capital Structure, Indebtedness, and Capital Requirements

1. 47We depend on cash generated from our operations to support our growth, and we may need to raise additional capital, which may not be available on terms acceptable to us or at all
2. 48Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited
3. 49Changes in our effective tax rate or exposure to additional income tax liabilities could adversely affect our financial results
4. 50Our international operations may give rise to potentially adverse tax consequences
5. 51Changes in tax laws or regulations in the various tax jurisdictions we are subject to that are applied adversely to us or our customers could increase the costs of our products and harm our business
6. 52Our substantial indebtedness could materially adversely affect our financial condition, and our capital may not be available on acceptable terms or at all in the future
7. 53The terms of our First Lien Credit Agreement may restrict our current and future operations, including our ability to respond to changes or to take certain actions

Risks Related to Intellectual Property, Information Technology, and Data Privacy

1. 54Recent changes to patent laws in the United States and in foreign jurisdictions may limit our ability to obtain, defend, and/or enforce our patents
2. 55If our trademarks and trade names are not adequately protected, we may not be able to build name recognition in our markets of interest
3. 56Our success depends in part on our ability to operate without infringing, misappropriating or otherwise violating the intellectual property and proprietary rights of others, and if we are unable to do so we may be liable for damages
4. 57We rely significantly on information technology, and any failure, inadequacy, or interruption of that technology could materially harm our ability to effectively operate our business and financial condition
5. 58If we or our third-party providers fail to protect confidential information and/or experience data security incidents, there may be damage to our brand and reputation, material financial penalties, and legal liability, which could materially adversely affect our business, results of operations, and financial condition
6. 59reputation. In addition, an incident or attack could cause us to incur significant costs, including significant incident response, system restoration, or remediation and future compliance costs
7. 60sensitive personal data. The CPRA also creates a new state agency vested with authority to implement and enforce the CCPA and the CPRA
8. 61We may integrate AI solutions into our business operations, and the challenges associated with effectively managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our business and results of operations

Risks Related to Our Common Stock

1. 62Our stock price may be volatile or may decline regardless of our operating performance, resulting in substantial losses for investors
2. 63Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management, and limit the market price of our common stock
3. 64A limited number of stockholders hold a substantial portion of our outstanding common stock, and their interests may conflict with our interests and the interests of other stockholders
4. 65Future sales of shares by existing stockholders, including our principal stockholders, officers, or directors, could cause our stock price to decline
5. 66Our certificate of incorporation provides that the doctrine of “corporate opportunity” does not apply with respect to certain parties to our Stockholders Agreements and any director or stockholder who is not employed by us or our subsidiaries
6. 67The provision of our certificate of incorporation requiring exclusive forum in certain courts in the State of Delaware or the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers
7. 68We are an “emerging growth company” and are availing ourselves of reduced disclosure requirements applicable to emerging growth companies, which could make our common stock less attractive to investors
8. 69If securities or industry analysts do not publish research or reports about our business, or they publish negative reports about our business, our share price and trading volume could decline
9. 70We do not intend to pay dividends for the foreseeable future

General Risks

1. 71We may engage in merger and acquisition activities, which could require significant management attention, disrupt our business, dilute stockholder value, and adversely affect our results of operations
2. 72From time to time, we may be subject to legal proceedings, regulatory disputes, and governmental inquiries that could cause us to incur significant expenses, divert our management’s attention, and materially harm our business, financial condition, and results of operations
3. 73Our financial results and future growth could be harmed by currency exchange rate fluctuations
4. 74Our future success depends on the continuing efforts of our management and key employees and on our ability to attract and retain highly skilled personnel and senior management
5. 75If our estimates or judgments relating to our critical accounting policies prove to be incorrect or change significantly, our results of operations could be harmed
6. 76Our business is subject to the risk of earthquakes, fires, explosions, power outages, floods, forest fires, and other catastrophic events, and to interruption by problems such as terrorism, public health crises, cyberattacks, or failure of key information technology systems
7. 77We are subject to many hazards and operational risks that can disrupt our business, some of which may not be insured or fully covered by insurance