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TI

Traeger, Inc. (COOK)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 revenue was $168.5M (-1.8% YoY), with gross margin expanding 600bps to 42.9% and adjusted EBITDA rising 24.9% to $26.8M; GAAP EPS was -$0.02 and adjusted EPS was $0.06 .
  • Management raised FY24 guidance: total revenue to $590–$605M (from $580–$605M), gross margin to 40.5–41.5% (from 39–40%), and adjusted EBITDA to $74–$79M (from $62–$71M) .
  • Grills revenue grew 2% YoY to $95.0M on stronger sell-through driven by longer promotions and focus on lower price points; accessories fell 8.8% YoY on MEATER softness; consumables declined 3.1% YoY .
  • Near-term catalysts: replenishment in Q3 following Q2 sell-through strength and initial load-in of new product in Q4 ahead of 2025 launches; management expects Q3 gross margin to trough, with sequential improvement in Q4 despite planned holiday promotions .

What Went Well and What Went Wrong

What Went Well

  • Promotions and ground game turned sell-through positive, with strong demand at lower price points; “When great brands go on sale, consumers react” — CEO Jeremy Andrus .
  • Gross margin reached 42.9% (+600bps YoY), driven by lower freight/logistics (320bps), operations optimization (170bps), FX tailwind (70bps), and other items (90bps) .
  • Guidance raised across revenue, margin, and adjusted EBITDA; improved Grills outlook from a prior decline to approximately flat YoY on better Q2 performance and replenishment visibility .

What Went Wrong

  • MEATER underperformed in e-commerce due to an ineffective demand-creation shift; the team is reverting to prior prospecting strategy and relaunching wholesale with improved packaging/fixtures ahead of holiday .
  • Grills ASP declined mid-double digits as mix shifted to lower price points and promotional intensity increased, offsetting high-double-digit unit growth .
  • International sell-through was softer in Europe and Canada’s specialty channel (> $1,500 grills), with distributors still working down inventories; macro backdrop remains challenging .

Financial Results

MetricQ2 2023Q1 2024Q2 2024
Revenue ($USD Millions)$171.512 $144.914 $168.471
GAAP EPS ($USD)-$0.25 -$0.04 -$0.02
Adjusted EPS ($USD)-$0.04 $0.04 $0.06
Gross Margin %36.9% 43.2% 42.9%
Gross Profit ($USD Millions)$63.331 $62.563 $72.328
Adjusted EBITDA ($USD Millions)$21.475 $24.414 $26.822
Adjusted EBITDA Margin %12.5% 16.8% 15.9%

Segment breakdown (Q2 2024):

SegmentQ2 2024 Revenue ($USD Millions)YoY Change (%)
Grills$95.0 +2.0%
Consumables$33.8 -3.1%
Accessories$39.7 -8.8%

Geography (Q2 2024):

RegionYoY Change (%)
North America-4.6%
Rest of World+31.9%

KPIs and Operating Metrics:

KPIQ2 2024 Value
Gross Margin %42.9%
Cash And Equivalents ($USD Millions)$18.025
Inventory ($USD Millions)$91.035
Total Debt ($USD Millions)$427
Net Debt ($USD Millions)$409
Liquidity ($USD Millions)$175
Sales & Marketing Expense ($USD Millions)$28.224
G&A Expense ($USD Millions)$30.491

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Millions)FY 2024$580–$605 $590–$605 Raised (narrowed low end)
Gross Margin %FY 202439–40 40.5–41.5 Raised
Adjusted EBITDA ($USD Millions)FY 2024$62–$71 $74–$79 Raised

Management also noted Q3 gross margin as the trough given deleverage on lower volume, and continued promotions in Q4 around “Cyber Five” baked into outlook .

Earnings Call Themes & Trends

TopicQ4 2023 (Two Quarters Ago)Q1 2024 (Prior Quarter)Q2 2024 (Current)Trend
Promotions & PricingReturn to traditional cadence; industry more promotional Plan to lean into promotions within guardrails, prices back to pre-pandemic levels Longer Q2 promotion; strong sell-through; opening price points emphasized Promotions more targeted; price-mix down but volume up
Gross Margin Trajectory+200bps in FY23; tailwinds from supply chain and DI program Record 43.2% in Q1; strongest gains in H1; Q3 deleverage expected 42.9% in Q2; drivers: freight/logistics, ops optimization, FX Sustained high-30s/low-40s with seasonal variability
MEATER PerformanceStrong holiday launch of MEATER 2 Plus Accessories up 7%; MEATER strength MEATER e-comm underperformed; strategy pivot and wholesale relaunch Near-term reset; rebuilding trajectory
Direct Import ProgramMargin lift via DI scale Expanding DI; ASP trade-off for margin Higher DI mix contributing to lower ASP/margin improvements Continued DI expansion
InternationalDistributors destocking; Canada/UK/Germany improving Canada big box improving; EU distributors normalizing later 2024 Canada big box strong; EU softer; focus on ground game Mixed; gradual normalization
Supply Chain/FreightTailwinds from inbound transportation normalization H1 benefits strongest; fixed contracts bleed down 320bps margin tailwind from freight/logistics Tailwinds persisting in 2024
Tariffs/China SourcingN/AActive effort to diversify from China; contingency for tariff risk N/ADiversification ongoing
Macro/ConsumerBig-ticket demand pressured; category down HSD in 2023 Price sensitivity; sell-through below prior year; cautious top-of-funnel Positive Q2 sell-through with promos; macro dynamic remains Cautious; pricing/promo responsive

Management Commentary

  • “Our second quarter sales of $168 million represents a 2% decline versus last year… we delivered a very strong second quarter gross margin of 42.9%, up 600 basis points… adjusted EBITDA of $27 million” — CEO Jeremy Andrus .
  • “The increase in gross margin was driven by lower freight and logistics costs (320bps), optimization of operations (170bps), FX favorability (70bps), and other favorable items (90bps), partially offset by increased dilution of 50bps related to promotional activity” — CFO Dominic Blosil .
  • “We are updating our fiscal year 2024 revenue guidance to $590 million to $605 million… increasing our adjusted EBITDA guidance to $74 million to $79 million… increasing our gross margin outlook to 40.5% to 41.5%” — CEO Jeremy Andrus .
  • “We now expect Grill revenues to be approximately flat versus our prior outlook for a high-single to low-double-digit percentage decline” — CEO/CFO .

Q&A Highlights

  • Sell-through turned positive in Q2 due to promotions; management emphasized price sensitivity and success at opening price points .
  • Grills unit volumes rose high-double digits, ASPs fell mid-double digits; premium price points (> $1,000) under pressure .
  • H2 catalysts: Q3 replenishment and Q4 initial load-in for 2025 product; cautious on extrapolating Q2 sell-through into back half .
  • Gross margin sustainability: Q3 trough from deleverage; structural improvements and macro tailwinds support margin durability with sensitivity to FX/transport rates .
  • MEATER strategy: revert to more prospecting ahead of key seasons; expand wholesale with packaging/fixtures; majority of MEATER revenue in H2 .

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 2024 EPS and revenue was unavailable at time of retrieval due to data limits; therefore estimate comparisons cannot be provided. Values were intended to be retrieved from S&P Global.

Key Takeaways for Investors

  • Margin story intact: Q2 gross margin 42.9% (+600bps YoY) with clear drivers (freight/logistics, ops optimization, FX); FY24 margin raised to 40.5–41.5% .
  • Grills outlook improved to approximately flat for FY24 on stronger Q2 sell-through and replenishment visibility; Q3 replenishment and Q4 load-in are key near-term catalysts .
  • Mix shift to lower price points drove unit volume gains but pressured ASPs; promotions are effective without abandoning premium positioning (opening price points still above industry ASP) .
  • Accessories risk: MEATER weakness in Q2 weighs on accessories; management pivoting demand creation and wholesale relaunch ahead of holiday supports recovery potential in H2 .
  • Liquidity and leverage improved: liquidity $175M, net debt $409M; inventories clean in channel and on balance sheet, supporting replenishment and H2 load-in execution .
  • International mixed: Canada big box strong; Europe softer with distributor inventory work-down; continued ground game and merchandising activation aimed at awareness and conversion .
  • Trading setup: Near-term stock drivers include evidence of Q3 replenishment, Q4 load-in scale, and holiday promotion efficacy; monitor MEATER re-acceleration and gross margin resilience amidst Q3 deleverage .