Traeger (COOK) Q2 2026 earnings call transcript

I will now hand the conference over to Stephanie Reed, Vice President of Finance Strategy and Investor Relations. Stephanie, please go ahead.

Good afternoon everyone. Thank you for joining Truggers Call to discuss its 2nd Quarter 2026 results, which were released this afternoon and can be found on our website at investors. truggers. com. I'm Stephanie Reed, Vice President of Finance Strategy and Investor Relations at Truggers. With me on the call today are Jeremy Andres, our Chief Executive Officer, and Joey Hoard, our Chief Financial Officer.

Before we begin, let me remind you that participants on this call will make forward-looking statements based on current expectations, and those statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in Truggers reports files at the FCC.

This call also contains certain non-gapped financial measures, including adjusted EBITDA, adjusted net income or loss, adjusted net income or loss per share, adjusted gross margin, recash flow and net debt, which we believe are useful supplemental measures. The most comparable gap financial measures and reconciliation of the non-gapped measures contained herein to such gap measures are included in our earnings release and investor presentation, which are available on the Investor Relations portion of our website at investors. truggers. com.

Now I'd like to turn the call over to Jeremy Andres, Chief Executive Officer and Trigger. Jeremy?

Thanks, Deaf. And thank you all for joining our second quarter earnings call. As we've discussed throughout the year, 2026 is a transition period for Traeger. Through Project Gravity, we're simplifying the business and building a stronger, more focused company for the long term. Several of the core themes we've discussed throughout the year remain intact. Consumer engagement remains strong. Key consumer metrics remain healthier than reported revenue trends would suggest, and we're continuing to expand our long-term growth platform, including a significant distribution announcement we're sharing today.

As we enter 2026, we expect it to navigate several revenue headwinds, including meter softness, price elasticity, channel inventory normalization, and deliberate revenue trade-offs associated with Project Gravity. Those dynamics were contemplated in our original outlook. Relative to those assumptions, the primary changes we've seen are greater softness in the meter business, and increased near-term channel dynamics associated with our distribution, expansion strategy, both of which are reflected in our updated revenue outlook. I'll come back to guidance later in the call.

Looking beyond the near-term environment, we're continuing to invest in and advance initiatives that meaningfully strengthen Traeger's long-term growth trajectory. So today I'll cover the strength of the Traeger brand and consumer engagement trends, what we're learning from consumers and how that's shaping our product strategy, a significant new channel partner we will launch nationally in spring of 2027, and how we're balancing long-term investment with financial discipline and our updated guidance.

Then I'll hand the call over to Joey for the financials. Let me turn to the consumer and the brand. We're encouraged by the health of the Traeger brand and the engagement we're seeing across both existing owners and prospective new consumers. Starting with our installed base, engagement remains exceptionally strong. July 4th is our second largest cooking day of the year, and this year we recorded more than 267,000 connected cooks, setting an all-time high.

That level of activity reinforces what we continue to see across the platform. Consumers remain highly engaged with the Traeger ecosystem and are using our products regularly.

We're also making meaningful progress expanding our reach with new consumers. Our influencer strategy is focused on introducing Traeger to new audiences through authentic creators who educate consumers on the benefits of wood-fired cooking. During the quarter, this newer cohort of influencers more than doubled impressions versus last year, helping us reach consumers who may not have previously considered Traeger. We're also partnering closely with our retail partners to convert that awareness into purchase.

By leveraging consumer insights, targeted media, and joint marketing programs, we're seeing encouraging improvements in key performance indicators, including growth in the new to brand customer acquisition rates at several key accounts. Taken together, these signals give us confidence that the brand remains healthy and that we're continuing to attract and engage new consumers.

Let me turn to what we're learning from consumers and how that shape in our product strategy. Innovation remains central to Traeger, but the current environment is reinforcing the importance of delivering compelling innovation across a broader range of offerings as we see demand increasingly shifting to more accessible price points. While that dynamic creates near-term pressure on average selling prices, it is also expanding the Traeger installed base and creating incremental opportunities for fuel, accessories, and future upgrades over time.

It is also exactly why our evolving product architecture matters. Westwood extends Traeger innovation into a more accessible grill platform, while Irontop expands our relevance in griddle occasions and more frequent everyday cooking.

In the doors where these products were available, Southwood seeded our expectations, and both product lines are generating 4.8 to 5-star reviews across Traeger. com, the Home Depot, and Ace Hardware.

Those early results reinforce our belief that Westwood and Irontop are meeting important consumer needs, expanding our addressable market, and creating new pathways into the Traeger brand.

Having the right products is critical, but so is making sure consumers can find them where they shop. That's why I'm excited to announce that Traeger will expand distribution into those nationally, with initial load-in activity beginning in Q4 of this year and a full launch of griddles, griddles, accessories, and consumables planned for Spring 2027. This is one of the most meaningful distribution expansions in Traeger's recent history, and broadens access to the brand, strengthens our presence in under-penetrated markets and creates a powerful new platform for household acquisition and long-term growth. While the load-in contributes to 2026 revenue, we also expect offsets within our existing partners as certain exclusive arrangements evolve.

These offsets were anticipated as part of the transition that do not change the strategic importance of our long-standing retail relationships. Importantly, broader distribution increases our ability to invest behind the Traeger brand across the marketplace. As we scale the business, we can support more retail media, merchandising, and consumer activation programs that strengthen our retail partnerships and improve the consumer experience.

This quarter alone at the Home Depot, we expanded pellet racks, invested in three-day displays, and supported more than 9,000 in-store event days through our RSS program. At Ace Hardware, we launch an exclusive knee-church collaboration and will continue to invest across the marketplace to fuel premium retail experiences for our consumers wherever they purchase. Over time, we expect this expansion to become an increasingly meaningful contributor to household acquisition and growth.

Turning to guidance, as I mentioned earlier, the primary change versus our original expectations has been continued softness in the meter business. We are also seeing greater near-term channel impacts associated with our distribution expansion strategy. As a result, we're updating our full-year revenue outlook to $435 to $465 million, compared to our original outlook of $465 to $485 million.

While these distribution-related dynamics are consistent with our long-term strategy to support a much larger growth opportunity ahead, they are contributing to our revised revenue outlook and creating additional timing variability, which is reflected in the wider guidance range for 2026. Despite the reduction in our revenue guidance, we're maintaining our adjusted EBITDA guidance of $57 million to $67 million.

Importantly, nothing about an updated outlook changes the strategic priorities we're pursuing or our confidence in the long-term opportunity. Through project gravity, we're improving the operating model and creating capacity to invest behind the initiatives that matter most, brand strength, product innovation, retail excellence, and channel expansion.

We're also investing in how we educate consumers on product differentiation and the value of our premium offerings through more targeted consumer segmentation, content, and retail partner marketing programs. We believe those efforts will help improve product mix-over time while continuing to bring new consumers into the category. At the same time, we're broadening access to the brand through new platforms like Westwood and Irontop and through meaningful distribution expansion with Lowe's. Taken together, these efforts are expanding our addressable market, strengthening our competitive position, and creating a credible path to sustainable growth.

As we enter 2027, we'll benefit from a larger install base, broader distribution, and more complete product architecture, and a simpler operating model. As selling and selling through normalized, and these investments mature, I'm confident trade was well positioned to resume profitable growth in 2027 and beyond. And with that, I'll turn the call over to Joey. Joey?

Thanks, Jeremy, and good afternoon, everyone. Before I walk through the numbers, I'd like to highlight three themes from the quarter that reinforce our confidence in the business and the progress we're making through this transition year.

First, many of the retail and consumer indicators we monitor remain more stable than reported revenue trends alone would suggest. Year-to-date sell-through is performing largely as we expected, coming into the year, with flattest sell-through across our four largest retail partners.

Second, our revenue outlook assumes grill, sell, and unit volumes remain approximately flat, year-to-year, indicating continued momentum in household penetration at lower average selling prices. We're reaching more consumers, growing our install base and creating a larger foundation for future fuel accessories and upgrade opportunities.

And finally, project gravity continues to deliver. We're seeing the benefits across our financial results through cost discipline, cash generation, and our ability to deliver on commitments. Combined with the progress Jeremy discussed around product innovation, distribution expansion, and brand engagement, we believe we're entering 2027 from a position of strength.

With that context, let me walk through the quarter and then discuss our updated outlook. Second quarter revenues were 120 million, down 17% compared to the prior year. Roll revenues decreased 17% to 62 million, as growth in unit volume was more than offset by lower average selling prices.

This reflects the load-in of Westwood and Irontop, which are part of a strategic shift to extend trigger innovation into more accessible price points and intentional actions under project gravity focused on improving profitability and simplifying the business.

Some symbols revenues were 33 million, down 10% driven by seasonal ordering shifts in wood pellets and a comparison against prior year new channel load-in for food consumables.

Accessories revenues decreased 26% to 26 million, largely driven by lower sales and meter. Gross profit for the second quarter decreased to 47 million from 57 million in the second quarter of 25. Gross profit margin was 39.5% of 30 basis points from the prior year. Gross margin benefited from the IAPA tariff refund, timing of trade spend discussed on our first quarter call and higher mix of direct import sales, partially offset by product mix.

Sales and marketing expenses were 17 million, compared to 25 million in the second quarter of 25, driven by a decrease in demand creation and employee related expenses largely tied to project gravity actions.

General and administrative expenses were 22 million, compared to 26 million, in the second quarter of 25. The decrease in GNA expense was largely from lower employee expenses tied to project gravity actions.

Net loss for the second quarter was 9 million, as compared to a net loss of 7 million in the second quarter of 25. Net loss per diluted share was $3.12, compared to a loss of $2.77 in the second quarter of 25.

Adjusted net income for the quarter was 1 million, or 53 cents per diluted share, as compared to adjusted net loss of 2 million, or 73 cents per diluted share in the same period of 25. Adjusted EBITDA increased to 17 million in the second quarter from 14 million in the prior year period, despite lower revenue, reflecting the benefit of project gravity actions, discipline expense management, and continued focus on profitability.

Let me now discuss the balance sheet. We drew up 26 million, a free cash generation in the second quarter, of which 16 million was attributable to the IIPA refund discussed on our Q1 earnings call.

At the end of the second quarter, fashion cash and global funds totaled 60 million, compared to 20 million at the end of the previous fiscal year. The end of the quarter with 403 million of total debt, resulting in total net debt of 344 million. From a liquidity perspective, the end of the second quarter with a healthy liquidity position of 188 million, which reflects a slight increase from Q1, despite the cash flow revolver capacity, reducing this quarter by 30 million to 82.5 million.

Our credit facilities remain completely under on, providing additional flexibility beyond our cash position. Inventory at the end of the second quarter with 76 million, compared to 99 million at the end of the fourth quarter of 25, and 116 million at the end of the second quarter of 25. This large reduction in inventory is primarily driven by ski rationalization and business simplification associated with project gravity, as well as lower meter inventory levels.

This reduction reflects continued progress towards improving working capital efficiency. Now, turning to our guidance for fiscal 26. As Jeremy mentioned, we are lowering our revenue guidance to a range of 435 million and 465 million from a prior range of 465 million to 485 million. The largest driver is additional softness in our meter business, largely from promo performance below expectations.

We are also incorporating the expected effects of our distribution expansion, including the transition away from certain exclusive retail arrangements.

While these impacts were anticipated, we now expect greater near-term revenue pressure and timing variability than contemplated in our original outlook, contributing to both the reduction in our revenue guidance and the wider range.

Meanwhile, we are maintaining our adjusted e-bitty guidance range of 57 million to 67 million. The impact of lower revenue is being substantially offset by profitability initiatives and lower tariff costs within the meter business. We are also raising our gross margin guidance to 40% to 41%, reflecting lower tariff impact on meter products and anticipated when reaffirmed guidance in Q1.

I'd like to comment briefly on quarterly pacing for the balance of the year. In the third quarter, we'll be laughing a large order timing shift from a strategic partner in Q3 of 25.

As a result, we expect approximately two thirds of our remaining 26 revenue and substantially all of our remaining adjusted e-bitty generation to occur in the fourth quarter. Driven by initial load and activity and normalized seasonal demand patterns. We are reiterating our free cash flow guidance of at least 30 million on a year-to-date free cash flow generation of 41 million.

As we stand up large channel expansion, balance of year cash generation will be impacted by an increase in Q4 receivables that will convert to cash in early 2027. While we remain on track to deliver 50 million of value capture for project gravity within fiscal 26, consistent with prior expectations. As mentioned earlier, we are pleased with the benefit project gravity is delivering through lower inventory, stronger cash generation, and a more efficient operating model.

Before I close, I'd note that while revenue outlook has changed, this does not reflect a change in the health of the core tracker business or a long-term thesis. We are exiting 26 with a significantly improved inventory position, a stronger liquidity profile, a more efficient cost structure, and incremental distribution with lows beginning in the fourth quarter, all of which strengthen our foundation for growth in 2027 and beyond.

Thanks, Randy. Appreciate your questions. Let me start just from a macro perspective. Where are we in the grille industry life cycle in terms of normalization relative to some of the volatility that we've seen over the last handful of years. First of all, the industry, according to the data industry data that we see, is roughly flat.

And I think, and for to say that Prager is in line with that from a self-re perspective in the retailers that we're in, that we track. You know, we certainly, as we get further removed from the pandemic and the substantial pull forward demand that we experience in 2020 and 2021 and the subsequent reduction. One of the things that we seek a lot about and track just from a, from an industry perspective and a consumer perspective is the replacement cycle. Our expectation, generally based on our consumer research, is that a Traeger grille has roughly a five year life that a consumer replaces or upgrades at that period of time.

And, and for gas growth a little bit longer, it's closer to seven years. I would say, given the trade volatility that we experienced last year, whereas we would have expected to see that, that replacement cycle start to normalize, really didn't see it, prices, prices went up in the industry, meaningfully, and of course corresponding elasticity unit volume fell.

And so, you know, it's, it's hard to really handicap. When do we start to see the pandemic demand start to come back around from a replacement perspective? We're not seeing it yet, but I would say all of the engagement, all of the engagement trends that we see, at least in our brand, from a cooking perspective, from a pellet attached perspective, would suggest that our consumer base, and I think that represents the, the broader base of the sort of 75 million American homes that, that, that cookout doors that have an eight-year-old in their back patio, that engagement remains. It's a, it's a resilient category, and we expect over time that that will translate back into a more normal, more normalized cycle.

But right now, sell through trends on a dollar basis, are relatively flat here over here.

Hey, Joe, do you want to hit the lows, load in, and leave your discussion? Yeah, sure. Hey, Randy. So keep in mind, the low shift is a long-term strategic strategy that we're putting into execution. These shifts have been, you know, in plan for a couple of years now. We're not giving specifics on the load-in amount per se, however, at the same time. It is meaningful.

It is a creative. It is profitable. There are some load-in dynamics around timing and just overall channel dynamics that we're, that we're working through, which is why we're lowering guidance along with meter. But keep in mind, this is long-term in nature. And overall, we're seeing this as a net positive and a creative to the long-term thesis of the business.

Talk about project gravity and cost. I think your first part of the question was how are we, how are we navigating lowering guidance on top line and managing and reiterating guidance on bottom line. And really that's focused on cost management on meter. We're repositioning meter to really focus on profitability this year within the portfolio. And so we're able to take cost out of the P&L and really just focus on high ROI attach cost. We've centralized the operation from the UK here in Salt Lake City. We're seeing significant fixed cost energies leveraging our fixed cost infrastructure here in Salt Lake.

As far as long-term on gravity, we have stated very clearly that we have $50 million of total value capture, which is around channel shifts, margin capture, and then cost savings within FY26. And then long-term, we have said that we are ranges between 64 and 70 million. But keep in mind, that is a long-term project gravity, the multi-year transformation.

We have conviction though that as we grow, it will be profitable and will have even expansion.

Yeah, hey, Philip. So as far as I'll start with transportation. So we do have increased just input costs regarding transportation costs, input, input increase costs, which we've spoken out in the last call. Those are reflected in our outlook. Our margin rate overall is being impacted this quarter and over the next two quarters by the area of the tariff refund.

We've collected now $16 million in cash. We booked $12 million in change in Q1, one and a half in Q2, and we're planning on $2 million in the second half, which really is around $16 million full year.

So that is impacting overall margin rate. And then do you want to take the pricing conversation or question? Yeah, so clearly the tariff stroke higher prices in our portfolio, that is sort of low double digits, low teens in terms of retail price points. One of the things that we clearly try to balance is understanding elasticity at various price points and trying to really find the optimal intersection between unit volume revenue and profit.

We are still anniversary at least in the second quarter, the higher price points relative to last year. And as we get into the third quarter, we start to lap the higher price points. And I think have a little bit more visibility or insight into demand patterns at various price points relative to the higher prices.

The tariff dynamic, I would say, seems to have settled to some extent, but not entirely. And so, you know, we continue to leave our grilled product line price where it is. You know, we have, we've seen some tariffs such as AIPA and the 122 lead off and then others such as the 232 and some new 301 tariffs come into the space and on balance, our current forecasted tariff rate is approximately flat to sort of where we've been and what we had forecasted.

And so our expectation is that, you know, the consumer over time will begin to expect the higher price points. You know, sort of medium to long term, our expectation is that unit volumes will continue to support the resilience of the category relative to the number of U. S. households that cook on grills. And we will, of course, build our product strategy and margin profile around this new cost structure, which includes tariffs.

As we look forward to, you know, the back half of this year, you know, some of the trends that we have seen will continue in terms of higher price point grills, those above $1,000 showing some softness, those below $1,000 showing resilience. We think that is, we think that's a function of higher prices, but also, you know, just an insight into where the consumer is right now.

Yes. Yeah, let me let me jump in on the first part and then I'll have Joey on the second part of that question. I would say, you know, first of all, I think it's important to think about the addition of Lowe's as a long term growth opportunity. If you look at our other channel partnerships, they really do develop over many years.

And this will be the same. There is, you know, the motivation behind it really was to gain access to a greater TAM. We have incredible retail partners who we appreciate and we will continue to invest in. In fact, this new partnership will give us some scale and greater ability to invest in those partners and in the marketplace to drive demand. And we're very excited about the partnership with Lowe's.

It gives us access to some incremental to an incremental consumer. Both in terms of geography, where there's a strong footprint will focus in those geographies, but also in terms of, you know, just the shop room Lowe's, we believe. To some degree being incremental relative to other channels that we're in. In terms of incrementality of the business, while we are, you know, we're certainly not guiding to future years, I would say there are puts and takes.

You know, there were certain elements of partnership and place around exclusivity, where there was, you know, mutual investment in those retailers and back into the trigger brand.

Set some of those which will, which will continue and others, which will no longer be benefits that we receive. We certainly expected this in, you know, as we built out the channel strategy and our expectations at long term. It's a meaningful growth driver to the business that allows to leverage our platform to access new consumers. But I wouldn't see it as a as a near term step function from a business growth perspective. It's an opportunity to invest over the course of many years to really get to those new consumers while maintaining very strong channel partnerships with our existing partners.

I think the the underlying sort of tenant of our channel strategy is to really ensure that we are disciplined in terms of number of points of distribution and how we invest in each of those points of distribution. We have a brand in a category that requires a meaningful amount of retail space to a sort the brand the right way. We're still selling what is considered to be an innovation to most outdoor grillers. It's a wood pellet grill and has different features and benefits.

There's still a lot of work to bring that to life at retail. And so it really does require investment in every point of sale, which is why we do this as an opportunity to create a long term building process. With lows and inside by side or other channel partnerships with a belief that it's a rising tide for all over time.

Cool. Very helpful.

And I'll take the second part of the question just on overall investment. So I'll just reiterate this is highly a creative to overall business. That's why we're making the shift. We are going to be making some investments into just what I would call overall enablements fixtures. We've we're investing in mills for increased pellet capacity. This is going to unlock a significant amount of investment capacity to reinvest back in our business just to drive just to drive that virtuous cycle on the flywheel.

There's a couple other areas we'll invest into human capital in the field some employees here at headquarters to really unlock the potential. There is a CAPX investment into fixtures and also that the mills and to create that pellet capacity. So there could be a cash impact, which we've modeled now, but it's it's highly a creative and the high ROI attached.

They'll be down again this year. It looks like. And we understand the reasons. My question though is like, when do you think that that could start to stabilize or stabilize or normalize whether that be what you're bringing into the market in terms of innovation and price points?

You know, is there a level at which you're kind of like, hey, it's kind of all in there right now and we can start to stabilizing the ASP trending grills.

Yeah, thanks Peter. So, so first of all, there's there's clearly a macro driver in this. As we have seen, you know, consumer sentiment soft and it really has been over the last 18 months.

And as we while we see consumer spending robust, when you look at where consumers are spending, a higher proportion of that is in, you know, it's in it's in living costs. It's in food, transportation, necessities, and a smaller component of that in discretionary. And so, you know, that is a clear driver of consumer of consumer to lower price point in a high ticket durable, which is, which is not essential in nature.

And so there's a macro component driving it. There's also a sort of a business and a product line architecture piece that certainly influences that we have been. We've been we've been working really to drive innovation at higher price points and cascade that innovation downstream. And there are some key gaps that we are filling that we think will help stabilizing reverse this trend.

I think this year, the most prominent example is the Westwood product that we've launched. We've seen very, very nice volumes in our opening price point, which is the pro gen one, as we call it pro 22 and pro 34. We launched the Westwood into market this year. And frankly, it's really only starting to hit the hit our retailers.

That hits a 699 to $799 price point. But I think importantly, it brings some of the elements of innovation around the connected cooking experience and other elements of innovation that we've launched at higher price points into lower price points. I think what that will do is create an opportunity for those who have been buying into opening price points, potentially seeing a gap between the opening price points and the mid price points to find something in between that has innovation.

So to the extent that there are things that we're doing from a product line architecture standpoint to really not just drive ASP, but really to meet the consumer where they are in terms of creating the right product for the right consumer in the right moment. And also creating very obvious step up stories. Some of these things will naturally happen with product launches. Others would be a function of the macro.

But I think we'll see over the next 12 months that Westwood will do a nice job of creating a higher price point, but still a highly accessible price point below $1000 with innovation.

I'll add to that.

I'll add to that in just say there has been a divergence in just fell through above $1000 below $1000. We've talked about that. That's a long term trend. And that's really the thesis behind Westwood and iron top at lower price points, more accessible price points and really cascading that innovation down. One thing I can say is we are the full your expectation is that unit volume on the selling standpoint are going to be flat your rear. So even though revenue price, we have revenue pressure, we are attached there are we are flat you over your own units. The other thing I just like to call out, which I know you know is just there when you sell a girl at a lower ASP, the assumption on a tax rate in terms of pellets and accessories and consumables remains the same whether the girls at higher price point or lower price point.

So it does bring a consumer nor a flywheel.

Just thoughts on leverage debt pay down a voluntary debt pay down. Do you have any this money to invest more in the distribution growth? What should we think about leverage from here?

Yeah, I mean, the goal and this is the underpinning of gravity is to not just drive profitability, but also financial discipline around cash and cash generation. We are always evaluating a debt pay down strategy. I'm comfortable right now with our cash position and our overall net debt. At the same time, we are making some investments into working capital in Q4, which will cascade into increase AR and then that cash collection will come in in Q1.

Or brand to spread them across other brands. And so really, really referring to that, we have, you know, we have notified our largest, our largest channel partners. And in some cases, they chose to take that as an opportunity to think slightly differently about their assortment and their investment in our brand. And again, that's natural as part of the channel strategy.

You know, I think the, the onus is on us to prove to our channel partners that the right incremental distribution should be additive to the overall Traeger brand and our ability to invest to drive really to drive effective activation at retail, not just new channel, but, but, but existing partners. But, but, but no question that it changes the dynamics lightly and, and so there is, you know, the assortment changes and that change in assortment retail space also leads to some impact to revenue in those current partners.

Yeah.

I'll just. Yeah. Oh, yeah. I'll add to that in terms of the queue to we did have pressure on the P and L just regarding meter. And that was the main driver of our revenue mess. And then we were able to perform its manage overall cost and there was some timing and pacing on the cost side, which was why we had a strong quarter from a profitability perspective.

Well, I know they're kind of one time, but my point is, do we have to back those out as we think about 2027. It's like 16 million have to come out as we model next year because I don't want all of us to get out over our skis with the forecast that maybe aren't going to be the right spot for you guys.

No, I think it's a good question. So, like I mentioned, we have 16 million that we've built into the guidance of that 16 million, 2 million is going to be recognized in the second half, but 7 million is sales related. Or FY26 sales related, meaning we're essentially have a lower tariff rate or we an implied tariff rate. Our tariff rate right now is around 25%. But in terms of a one time, I would not plan, I would plan for our full guide, the midpoint of 62.

You could say there was the 16 million benefit, but 7 million of its FY26 driven.