COOK - Earnings call transcript Q3 2021

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Operator

Hello and welcome to the Traeger's Third Quarter Fiscal 2021 Earnings Conference Call. My name is Alex, and I will be coordinating your call today. [Operator Instructions] I will now hand over to our host, Tom Burton, General Counsel. Tom, please go ahead when you're ready.

Tom Burton

Good afternoon, everyone. Traeger's released discuss be this our at joining results, third found for website were which afternoon investors.traeger.com. you call its to quarter on Thank and can Traeger; Andrus, Executive Jeremy Financial are call Blosil, Chief the Officer Hosting of and Dom Officer. Chief

targets I Private started, those remind to may Act are XXXX or Securities this financial Litigation involve These management get remarks forward-looking include, uncertainties. within our the results predictions, expectations, based everyone statements and forward-looking that may Reform including contain without we statements management's anticipated estimates, on meaning on want Before that call of expectations. current performance, the could limitations, regarding differ mentioned. also actual and risks materially substantial from These of

may a these cause on the in outside with the SEC. and XX-Q investors.traeger.com. such from available which be also We differ materially portion for on is report statements. control our among our filed encourage actual these discussed our review uncertainties, today, expressed Form and to others, Investor you filings including quarterly factors, these in implied our discussion could those of at are These website filings Some or of to Relations of by results of factors

contain including adjusted acquisitions. comparisons adjusted purposes them believe with for comparison directly past of measures comparable provide as reliance team on income and evaluating may results our income and are in our items similarly potential management performance evaluating core any not net quarterly net our results decision-making, adjusted shown non-GAAP EBITDA of speak these and revise call used performance We our peer of to and which by used operations. from EBITDA consistency income as included assist adjusted, because both both most period-to-period adjusted, loss EBITDA new on and financial income that and in inherent adjusted You today, should to XX-Q measure titled not ability information. take portion margin, help limitations Relations of measures we of comparable are and of our diluted undue investors.traeger.com. identify non-GAAP business as for earnings to also only the indicators other period-to-period including trends website obligation these Adjusted Form Investor of will report or in on generate continuing companies. excluded an managing supplemental or adjusted of metrics and by may EBITDA operating the certain to and measures, as in companies. results net update of at our GAAP the our are additional solely facilitate that of by to Reconciliation of forward-looking not and our earnings, net be are our of definitions comparability statements. the EPS useful measures we no additional expenditures This financial undertake these available be and They which and has release, income Each

Now, the I Executive Chief Jeremy turn would of Trader. Officer like call over to to Andrus,

Jeremy Andrus

us earnings for Thank joining you, call. for you third Tom. our Thank quarter

I entire and Nick couldn't him. Traeger our the an are our I forward and with working financial our for look growth Today, to for our begin, we turn details executing provide chain people navigating share strategies Investor as new Backus, as thank team be the the have want create quarter discuss our as will joining continue to contributions will Dom over we who to excited quarterly Nick would at headwinds. also I of discuss be this performance and welcome remainder like from way more well and to later everyone to team cook XXXX. their Traeger Before to VP long-term in we of I to outlook how call Relations, then highlights results transform I month. to our third the will the empower meals. supply delicious progress of

remain We are the the XXX% highlighting third with our the in increasing Traeger our our demand revenues business ongoing obsessed pleased for across quarter, a sell-through. for basis, growth consumer XX% two-year categories. clearly in was quarter year-over-year. On product strength momentum in with stack with We third

growth space our strong earn to continues retail retailers. at with us floor Our additional

and strategies sales. form We quarter continue awareness. awareness the to XX see saw significant these increased and We during assault demand brand in a in strategies second brand markets double of in results encouraging lift deployed market and from our the

quality seasonal everyone can QX master. our purchase digital our and substantially More to make that technology, become faster focus consumers company to in the leveraging premium continue Traeger's marketing relative experience, markets growth thoughtful wood simple. see entering campaign, funnel By with recognizing innovations a a Following the average. we pit and cooking are

Given in our our markets. these and strategy to in brand new further elevate to market we results, extend assault plan expand XXXX

consumers existing virtually with largest about activation partners, our engage most and our on brands is the experience holiday be we we frequency, momentum in user Home in believe content strong to the enthusiastic as collaborate QX Unlike to categories. category, are Thanksgiving strategies that ongoing have where Traegerhood. experiences, That a business, holidays. contributing We for to exciting look drives accessories of voice. the our a consumables one really forward our and we strategies one College any drive largest allows to GameDay. of attract very This pleased marketing the days. brand our plan and are ESPN can both grills well retail accessible We grilling awareness innovation with and versatility will elevate for We Traeger unique particular, used that of as new will as to with occasion. Depot, cooking In be our user continue active

innovation. product to Turning

with with highlights smoke Texas wood premium-priced our edition wood by brine successfully a preferred new about Thanksgiving pellet two NeaChurch excited pellet We that limited kit offerings. pit launched masters pellet We for limited a the Barbecue edition turkey holiday. flavoring and also are collaboration blend launched

growth One of both outdoor. pillars our and indoor experiences to is cooking disrupt long-term

We and with our since experienced through our on channels. partners have MEATER which plan continued of now is available as we website, currently growth MEATER, via being meat strong acquisition. offered has primarily the to thermometers to do so wireless It increase e-commerce MEATER's distribution retail is

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consumers, many and one indicated in market billion. We whom XX% expressed more four the per pleased more in be Following year. of with strong U.S. extremely opportunity purchased the to to response that XX% our we markets, or provisions a are estimate from again, $XX boxes four purchase total test We intent than have box. found participants interest six-month of

costs the able loyalty time scale in over entrenched this the believe to we addition, customer we lower business are given In with acquisition Traegerhood. brand

across highlighted Turning has next challenges, on the control, our the am unprecedented challenges supply to to a of the the proud second supply can persistent of of last responded focus Despite and I mind team that year. would what been chain we many we industries. we strain chain. half quarter across during top the face topic We that how has global continue to

has meet We Our best position all it and service hit our of been is was ability our outstanding. during quarter two in years. inventory to agreements, demand the the level

competition. production inventory performance the has provide off, us but chain and to customers China and fulfillment and higher at a is that our am warehouse global that our that inventory to details than will demand. in U.S. consistently on impacts, of in level strategy increase I have Our available we supply more tell the paid pleased meet Dom our

mitigation in costs. significant instituted have freight inbound strategies the to increases counter We

for full quarter Our several swing. second production closed quarter that of is third in weeks the back in Vietnam the early was during the and facility end

expect are be pillars China intact. new growth that potential on our a working we with expect North be we yet to long-term addition, began has working remain In American to Stepping best bit, a that and our in back facility the manufacturing XXXX. manufacturing in operational I

category brand continues we to superior growth. The We and driving overall pellet ahead as industry opportunity experience to than grow remain grill have the traditional leaders penetration awareness unaided low. us due wood to are category tremendous faster cooking and overall grills, our that of household

continue the will initial essential included as be drive consumer's advertising in awareness through to We consideration to for us top-funnel brand it set. is

We increase our to have customer existing significant base. with penetration retail runway

partners in fixtures, shop-in-shops, improved elevate locations including enhanced opportunities work associate to to training. build-outs our We our and continue custom merchandising retail with trade through presence floor select in-store

assortment and base in doors our increasing addition, In and more with we assortments. improving are higher-end grill additional

As floor our be increases, to strong awareness will significantly able grill markets capture such the we brand more in particularly space, Southeast. as

underpenetrated growth is and meaningful channel DTC opportunity. another Our represents

channel, We with to its pleased we growth. our performance in that and invest will in are continue

category through This new To experiences. As and products be previously will offering Platform leads further into we in strengthen highlighted, and that end, our a New that excited to innovation, introducing will as the position with about category. the Traeger marketplace we Grill new game-changing continue Innovation are will XXXX. drive and leader the we in

innovation digital opportunities across remain other including the ahead also accessories about excited in is only, itself growth grills of on focus not to and consumables, us manifests Our confined We but consumables. experiences. categories,

to our see and in Traegerhood. by offerings provide sauces, our We increase new we an and into sauces have the including continue distribution, grocery. strong rubs expanding and resonate to limited within opportunity accessibility will pellet We of with rubs edition new great that introductions collaborations product

brand Germany U.K. enthusiastic brand We results our we about strengthen globally. and had in in geographies and to like are Finally, in Canada, other exporting the strong continues the

Our journey is just global beginning.

to us, detail. continue to to of performance our turn Dom? significant future. about our Dom extremely in positive the be have will ahead space call third greater over discuss I We white now and financial we quarter

Dom Blosil

the excited and extremely third results Thank you are share an across and comparison, brand quarter for us. strong we drive generated Thank outlook our to to everyone. are of for start, awareness. you, pleased Lapping the well we Traeger. investments future our good channels third and XXXX from To business our about returns performed afternoon, our quarter geographies, joining Jeremy, and

investments our a are to we with key innovation, latest for Provisions, and are excited in Jeremy you. our As Traeger share Traeger, differentiator discussed, innovation

with happy back performance. Looking and at revenue third we're quarter, EBITDA the our strong

selling million, For to price, higher driven partially to increased attributable the increased million compared in $XXX third a unit average and to last accessories. to lower XX% $XXX quarter, third by the X% volumes. revenue year, offset Grills growth revenue grills quarter by

given a XX% of last a of an against pleased our the category return in we revenue to normal extremely XXXX revenue seasonal XX% compared $XX products. in are up performance comping our third over XXXX, the reflecting to quarter rate grew We by of Consumables were We're of for on third extraordinary further consumables third grill quarter illustrating growth grill year, against the by year, that quarter shifts demand the million our patterns. business. the to comparison during seasonal which driven unusually ordering retail impact prior revenue the pandemic's tough declined XX%

$XX in accessories strong revenue Traeger Lastly, accessories. XXX% of from million, the driven to acquisition growth the incremental revenue the MEATER by increased and

market. our at Looking performance by

the Gross to was the million same Gross of last of stages World. the basis our $XX year. as third We expansion XX% to $XX U.S. of outside remain continue as in decreasing year. Traeger's revenue compared well brand million are decreased in in quarter, for quarter the the Rest encouraged Canada highly over growth period international in demand profit to momentum consumer the see early and We by U.S. approximately the exceptional quarter great X,XXX momentum in points last in third profit margin

highlighted to relative appreciation costs, rates the during gross product freight call, quarter's logistics the renminbi in to last combination acquired assets. dollar, costs other Chinese increased intangible due we of was of the amortization decrease increased As margin U.S. and and commodity and of a

steps XXXX, the is have costs to implementation increased have the While as well been and price through through and persist the increases mitigate of inbound to taken rise as through we freight freight costs unprecedented surcharges. expected

believe quarter believe will the during actions for to we such, the we sequential gross that pricing year. the represent marketing this our drive As and will continue Sales quarter, improvements floor third compared margin increase IPO. acceleration fourth the to to million The million quarter million last with our equity-based was in third $XX due associated increased primarily expenses by compensation of $XX XX% year. to of $XX expense and

an spend Excluding million or the to and expenses marketing marketing along advertising higher increased million million million personnel-related drive administrative with awareness non-routine attributed personnel-related XX%, third year. of expenses the last across sales XXX% growth. of due of professional with Provisions brand to functions. our The increase compensation, in to to was in Traeger increased expenses compared quarter support increase equity-based and $XX expense associated $XX primarily to services General costs $XX sales to acceleration equity-based $XX and increased $XX conversion, higher by expenses infrastructure build connection in and our the IPO, compensation future and start-up to with current reflecting million and

million share the EBITDA compared quarter to share net to of per to in quarter quarter performance. of for EBITDA measure a Adjusted share in $X.XX per the $X.XX last income in previously compared income per was to financial Adjusted Adjusted use period was year. diluted the was The result million as third million year. the loss factors, $XX million compared the diluted net net as loss the $X.XX decline of that million or share same key income to a $X $X third diluted third in $X.XX due last same mentioned. $X Net year. million per net in last was the loss the was adjusted quarter factors these as quarter in diluted our EBITDA third As is compared performance net to for $XX last we year. period adjusted or $XX assess of

the the leverage with the in and resulting of year. sheet. the At to the end quarter, totaled of compared million previous Now million X.X. million cash fiscal quarter cash of of to debt, We $XXX equivalents a the at ratio third $XX net balance ended end $XX turning

driven working million. we quarter, at the corporate of last million addition, Inventory we capital was third of and $XXX factors: The drawn into the earlier. two I million has due receivables general a borrowing and second, we capacity $XX inventory to year. had levels; at pressures increase deliberate decision $XXX In by inventory At quarter, up have increased increased amended that for was quarter higher down the the first, end net the this purposes. of cost million in inventory fiscal under our certain referenced to financing the facility end lean the the agreement third compared to macro of previous end to $XX made

work of into pandemic. product invest continue we response to higher stock inventory chain to to the represents challenges to We to continue maintain and that related balance an meet expected in levels right the safety demand, to the supply mix

quality upcoming meet comfortable are the to during our demand level with holiday inventory We the and of period.

guidance. Turning to our

reaffirming our million be expected $XXX of We are and $XXX million. XXXX $XXX million revenue in adjusted range to the of range to expected $XXX year fiscal to million EBITDA

our profitability by inbound I earlier, the land-side pressures freight been negatively the year-to-date renminbi pressures costs, U.S. XXXX on supply As macroeconomic exogenous chain, relative of dollar inflationary commodity impacted has noted logistics spanned global to on Chinese appreciation and rates, higher prices. which

higher are that to grills. the the We inbound the elevated We through sensitive particularly large XXXX. our freight likely transitory, will persist of but size rates freight believe rates inbound given are

early to our effort increase by estimate between unfavorable we in gross an $XX these a In QX. freight late to freight pressures, profit in be that and we a inbound implemented and XXXX. of adjusted addition million EBITDA to in context, year rates the impact will For increase followed fiscal year-over-year the QX, due the the for mitigate $XX cost our million price surcharge

partially for expected freight of headwind XXXX. in and inbound the should actions offset the XXXX pricing remainder Our

investment our the by higher year-end operate and company. mitigation pressures, product gross outlook XXXX to EBITDA and adjusted offset public a costs strategies fiscal continued sales and ongoing as includes innovation, Our margin in partially marketing reflects

challenges supply that XXXX, on these we through global the chain persist strategies macro navigate While we and mitigate to both remain hyper-focused risks. believe

is revenue into time inventory on-hand first current managing land by: meet which priority production leaning by and in warehousing Asia protect long securing to components levels, also demand higher Our side low-cost to and lead and two, leveraging and finished one, by goods. to continuity navigate bottlenecks; future current by helps Asia

container premium the is our higher strategically contracted volatility mix and rates the by and priority spot between second container controlling to Our container rates. manage lower rate

believe we which investments and line branch Moving configure represent total billion XXXX the scale to of Traeger U.S. $XX the about in are the Jeremy Year-to-date, as discussed, Provisions we in a expectations. we have made very beyond Traeger launch excited addressable market are and Provisions, with our for

We a approach disciplined the scale and developing costs are in to beyond. of deliberate Traeger to XXXX and pacing Provisions further these

However, job sourcing XXXX ramp an capabilities, long-term experience and has a investment our the team sustainable, to fantastic will fine-tune as unlock investment to and In of our done continue year managing customer be customer our in expand profitable growth, we important fulfillment conclusion, acquisition. the increase questions. we open We global as remain the the expand macro With supply now Operator? call awareness brand new disrupt continue we Traegerhood, chain for growing innovation, excited and future to growing product with that, Traeger our will the challenges. about globally. industry

Operator

for open. from line first you your Konik Thank is Our now comes from today Jefferies. Q&A. Randy [Operator Instructions] our question Randy,

Randy Konik

thanks Yes, lot. a

coming guess American online I I Jeremy, guess, you about, XXXX. first, in production So talked North

that capacity in you then, of that you years? b) long-term the supply if going of of procuring? few think on, you or do I'm of I do And live? exactly for building how kind forward how correct a) some manufacturing Mexico, building facility and whatever facilities, next when down goes me nodes in about color you there XXXX wrong. kind that your Thanks. you're can much Can out just – think give how or And think us more it's

Jeremy Andrus

for couple thanks things. Hi, I would question. the say of a Randy,

objective diversify risk of portfolio our from been looking add a of perspective, First our all, always just manufacturing to manufacturers. it's to – base a from high-quality

where prepared we XXXX, of concentration, as perspective partnership looking operations the in partnered manufacturing of we've It's remarks, As but that But sometime a to a increase we're would that facility seen. from online that opportunistic. in as we in terms was with I my in was said China year. someone the I part not bring think had middle when we in turnkey

to wouldn't as Second, manufacturing for a quarter. third quarter say with that a Clearly, on which typical also of as there's turning to we'll inventory. The about many is to that as size the now. level – boy, quarter, over with late start line this think disproportionately our sometime a is years. other happens get SKU. we year transportation very, – I be process even optimize North working from automation. quality, closer in other a the probably at We We our easy likely. manage the to Frankly, And strategy course bring maybe the quality painful second Asia on sort to of say, options safe But of from been and is – long is a now. customer that the optimization to America. third partnership, partner but and of of We facility. very as process, weight it's inbound for to of looking manufacturing early single all manufacturing We've I suffer with base, our brands given bring

but having when support a could there clearly large value point so costs time think don't manufacturing source. we there at opportunities also enough those in stay well. I in that diversified are And Europe we see there, some as is that there's believe to some

to around So given quality our strategy. feasible of weight of base as our is production, ability of is sort of close as innovate economically and partners inventory context and size to customers the

Randy Konik

idea strategically. and just And my unpack question interesting is and get to wanted Provision. helpful. Seems I a then around more color Super guess I really Traeger good like last

how maybe flavor how were like test of what And on you or run takeaways you to made us And out kind – anything lot key you of strategy us guess, can ground. just Thanks. that? of this from consumers with of us. just country, behavior Kind that for you what give some think profile or set markets and level X business some investments perspective you in. the So – that may anything that of roll a give those? out perspective share give learned margin look of off us said you some to of the a give some perspective a nature I I perspective of the from then across on kind now repeat get can how us you ordering, the was can had that purchase

Jeremy Andrus

Yes.

let I'm go me – So different order. of to little going bit a in

you The they cuts not people. not good unique of fun a effort ingredients available sides, to lot cuts work. of takes usually it of to and preparing recipe it's is the why it the a in or is our makes better innovate, concept. X, from time. create – all, sources, sides, heavy-lifting protein, the connected the of fun. Cooking is that of those homes. will grill. amount of unique mission people's the business we – in that's The innovated this time often of It's – First – to think to better. many removes continue And more only friction led to in It's which create markets. lot journey cooking experiences actually creating in purchase and have for better the about culinary number of And that are with content. started if that experience X cooking the X, cooking to and is makes has protein to not a great that And takes the cloud the We experience make part that grill that procuring of

spend social on a And was consistently media, much very as we can't "I with launched, Traeger media. service not I really this. otherwise. I comments think time thought so our comments said, they read learned it any so social this makes Did interesting consumers value. they This to was read of believe that thousands we When on comments of and would sense." we read

a owner makes sense. at than is There But the competitive Traeger restaurant offering. – of quality price. value told restaurant a It's us And what restaurant is so takes. in in concept a of a cook the it's sort of of bit that but it not themselves. the process And they it to get little There's there's things all preparation. bit little the cooking, better

They of part able from. your that what the unboxing bringing the into all of like they where enjoyed. really being thoughtful they details which to it. and talk component it, about home really process, was came of behind inspired, So where someone they it you the like the And of really, storytelling made, appreciated protein

And that X more that. improve so the and to purchase it's Promoter think for the opportunities experience reaction Net for is are again. participants We XXs. us, ordering, launch since from for was date very indicated the serving. to unboxing, service cooking the positive. And in Score full of But to there XX% paid found year. boxes expressed we in intent XX% product who price this per interest or

meals But per and that value some does very that to that sell to – very to a suddenly, goes think is grilling it. multiplies what retail solution value more average proud premium about an a price are of of sauces. rubs or $XXX consumer four climbing of we We six sell And five you average with year, pellets customer, fact bags the value lifetime it consumer selling – to couple of a per it about consistently. think to priced of a and AOV to or was an still so customers of Thanksgiving what What really of of meaningfully you meal, year at if an hundred we AOV purchasing at if very lifetime so well. does has know is, but at food dollars, the $XXX, we're that which sold early a Traeger given that that and exactly

universally the in a is concept don't nice sense. this are It's feedback The see And so large to innovation. revenue and very makes about We anytime so business a as part we soon. that thoughtful I would thoughtfully. it profit say build the or And positive. driving it's going space,

when innovate you don't You need revenue.

but You we that was to to way. very better. And gets really I think is experience intend in and a is is that innovate how Traeger a do to to be with able it frozen. impeccable the it's reemphasizing long That's scrappy do chain, scale worth There always runway built. work ensure supply customer to this

through it's are It chain not terms remarkably that be of nights moment fresh our your seven a us, than ingredients been model is takes is and chain." think convenient And actually And We the experience. experience. a higher-quality consumers "fresh not Traeger something supply serving harvest week. fresher is the thaw It's telling is cook protein think are we of it. we're that complicated so frozen it's in in we on what building frankly, not meant is – a it a flash to when supply the A or our frozen at that's model. you

Randy Konik

helpful. was That very Thank and thorough very you.

Jeremy Andrus

Sure.

Operator

next question from Stanley. please Morgan Glass from go John John, comes ahead. Our

John Glass

Thanks much. to up Jeremy, just follow want first, on that. did I very

is you Or said profitability it to want long the or somehow that. a be there ultimately it not it's that going And is small scale, to does accretive something it similar to a that so the be going understand is just to First, scale just the be – context near and clear, Is of revenue- I it the margin if see that's you profit-accretive does ramp? term. think from a won't we do standpoint business model over this when business term? different revenue? and base on to

Dom Blosil

of we're This defining In terms of I question, we're and P&L Yes. mean I in. Provisions. a mean certainly is it's an the statement. that's the the term, for Thanks good in jump shape short accurate specific how one. I to early can Dom.

over and as nimbleness chain, network, we to thereby, sourcing and grow we us as which sourcing the network, point. allow margins As the into to steady-state scale is of build key building develop of a focuses one drive out expansion time, that would we supply our

is there units, there today. sourcing think annual worth what in on. is more different that that cost different part will seeing than our makeup is guidance. to that's a you're plan I be year next and Traeger's core something that the be XXXX begin as we around it of scale share we'll core upfront over business it noting so to But of P&L And more amortize the will from business, shape start infrastructure, as and Traeger's to But we'll

how we And and the be scratch think it and could community delivering the I leverage the size scales we cost believe that two, product. we the and provide think how from right as to today. that through one, through scale to the that without that in margin to where top I about some core could profitable number listening advantage the big we're we're acquisition about the certainly, that we AOV to as we think premium the compared than making about customer at think effectively start bigger having how in the that's flexibility fifth; model, relation to in over acquisition we which continue large also to value and investments versus customer line But we we supplier leverage or and be or business fourth addressable for value through unfair more does we're of strong about purchase the warehousing Traeger's the time customer total costs getting have will product logistics a a business. captive the versus fairly audience This upfront sort and believe scale structure of provide the from to wanting is as other we're network, and of sale And fulfillment smart experience; offerings program see we'll or think the flow is, be first and we're in about pricing as our ensure third-party how getting the space. market. in the a

really year specific with well certainly, on the and we'll more as to that's details our how XXXX in about follow that provisions head into more full share today. think And up guidance as about thinking so as we we at it point And time.

John Glass

for down. just talk a maybe that. third into grill quarter? business more Volumes were Thanks in you here And and little bit the about now. the back Can

helped pieces it I maybe this quarter. were Can think on that how it business And that ASPs a to or mix was up. expectations? just basis And you grill or – could or better both? a Is were quantify the just the moving quarter you mix Thanks. in worse? you versus was what where do unpack volume pricing offset if you

Dom Blosil

Sure. Yes.

business than that about in we that's pandemic comp the sell-through seasonality seeing, return were we QX. made a standpoint that were there like indicators expected. an down, we a terms in earlier had for volumes were begins the components think, that better units think interesting how that in originally of with from normalize and say patterns. as were the are to to So normal retail ordering I'd of unit Clearly, in We're our something I year. still line planning expectations the

you a the point, volume things mix with that's a growth as ASP, we shift of normalize, surprises where largely unit sizable volume the shifted. really a And XXX up. And price driven emerge so did effectively Pro all mentioned. for in We as no standpoint. fairly via in come saw That's these see really, the starting mix. and shift by our from had And

effectively the our And from result in the growth a standpoint, so grew as that, that's drove what ASPs that grill of standpoint and a from quarter.

John Glass

the benefit, therefore, fourth than the quarter come are and in pricing the would quarter freight the come and And those late surcharges Okay. on in fourth quarter. more taken third would

Dom Blosil

That's right. Exactly.

John Glass

Thank you. Okay.

Operator

next from is Gajrawala Kaumil Suisse. now from Credit comes line your open. Our Kaumil, question

Kaumil Gajrawala

things of XQ price all on series just I terms questions a you why confident that, a Thanks. would across here? of amount about increase GM number? from a and I'm just on if what you're of on you supply, start in the observing the what sorry GM that of everybody. the but the in missed better other this maybe Good there's being specifically guess to And get seeing the of Obviously, Can couple evening of margins gross you're you increase, floor. mentioned. of course, that we're price suggest talk I feel industries seeing bottlenecks, different also cost terms comments

Dom Blosil

Yes.

– year. So answer I we first question, QX for guess your that floor as I really yes, to would the view say the number

I gross QX a over see from and should sequential improvement the think price surcharge, on we the that increase based margin standpoint.

However, of trends see index container of course we we're recognize our those given over which we're some a if fairly sensitive impacting seeing gross you tail when we're are these those most look for longer expenses containers. at business QX, kind rates to has the macro that of margin, where of that world rates you aggressive a purchasing relative to ramp in when a

will So that's flow That's one. through that kind of to continue number something the P&L.

say those around So I weeks, $XX,XXX, couple last you $X,XXX. over down of we've where peaked kind I'd think, the container seeing index sustain. of two, rates it, call just those rigs to, the look at taper $XX,XXX, seen that current as environment we're

I favorable. head they're at so in tailwind there end of a And levels. slight the as QX that that create and is there will ultimately, peak really that, indication sitting the of And But improvement has still through the will clearly, couple some weeks over think into is been well. trend an as continue last QX, we

However, that consensus I tapering general we in likely accelerate think half may of that they'll see those rates, is the first year. next where or rebound some the of

and the we why increases, transitory, by So end ultimately given we'll confidence these or crystal container and which the a is fact We that closely. gross price two increased gives the improvement critical some increase. see in that rates $X,XXX price in something provide sequential of margins. the is over our so business ball, increase from QX prior us hopefully, probably a over will clearly in ability what we itself watch the some the average year sequential have to something it's be which for have rates And is it's XXXX, should implemented think which the improvement for most don't of that but fairly of QX, terms dramatic over

Kaumil Gajrawala

to inventory mentioned you then kind to course like I it's of sounds just the But on you better. was any the – the And your ability with I quarter, were and supply the of wanted confirm left were you're Or out money condition Great. table? stock? pleased Okay. fulfill. of Was quite know over to you get that – by? able

Dom Blosil

were get we able Yes, by. to

or in especially leaned of in wait climbing the able there's feeling seeing sitting we're of ability to that's out before seasonally Port like process last complexity quarter. we've as procure secure the vessels higher in XX the I than be water. position. our record being about yard. into just its by containers days We're to normally been chain, supply that where at within some vessels seeing, the roughly XX and good been, inventory pretty talked inventory about containers think the which bottlenecks through given of deliberately design. today, number the It's own the we're both over the as current L.A., also We've you're the vessels certainly Asia It's to

are clearly supply which fulfill chains demand, we've challenging very these so to can inventory. investing been And why that strategically complicate more it bottlenecks and make is in

the as we end we've missed that retail in-channel spot year. good don't product today of one, number believe a the demand of turns comfortable through fill But well. there. three, watch. to in do And so inventory inventory the stock job levels a are ultimately it's And pretty really with the feel the feel on keeping with continue core at level fairly website done any end then the good and we'll to like Two, our something we've day, we of in of

be decent us think we'll things fairly give year-end confidence to a coming I new able so into spot combined three year. those demand that the meet in And through

Kaumil Gajrawala

All right.

Okay, great. Thank you.

Operator

Zackfia Sharon, from next ahead. Our please go question William comes Sharon Blair. from

Sharon Zackfia

good response has a been the customer Hi, on grill increases? I afternoon. price question What increases. price guess to the the

Dom Blosil

about I increases. with that mean, it. I were retail our you're if price they've implement think partners, partnered they And to Traeger talking expecting ultimately, those

it. seen you retailers the think right through now. come to to say raising lens have deviation haven't on consumer, great rate via we believe if coming this would We're partnerships. it main And an I'd brand price up change prices performance I the expect think so meaningful we year point signal the that impact volume to to about outlier not we prior only that October, And run data really sell-through compared the of ultimately, is any increases. our based of And kind point to those I have or indicators. have really through a

confident data more volumes. didn't through clearly December. we're have to price that feeling flow as continue impact and see and that's quarter-to-date the through a we and But we'll we'll increase into least QX, something on that November pretty And at watch, head dramatic so

Sharon Zackfia

have lock in point? on freight that call, that still you at freight the possibility I on there really component. next That's I Or last there about year seen your remember mentioned guess I the steel. And the too, helpful. And side, is to looking over? some elevated? conversation rolled Is you a roll know for container inbound the of was

Dom Blosil

Yes.

I changes question, I The that that in we'll last we'll stable, steel. and through first and the don't they've point, that material fairly Traeger that no QX, know on any that's So rolled something to believe quarter. every watch this At real to was seen in price been increase something for that continue watch. trend But we've movement it's there.

of inbound about the in kind container side, think or allocation as we lock rates, our fixed On April. typically you every floating fixed

the that on in seeing something some will and industry And indicate we fixed is we're take shape may higher that some contract rates. that the of in XXXX that dynamics research based that that's indication spot we There so rates may do. have some momentum

approach locking that there's advantage And a fixed allocation clearly, we'll an something to as high possible. that's as carefully. in So

call which it, has this the year, for one XX% example, an we're Traeger. our were lock can't able challenges in in, And that is have to you honored real of been We a advantage lock that, partners facing As XX%. to XXX%.

kind we that when in can until unknown our to fixed. allocation April is extent premium that spot to that well so we position it's to kind the what the lock and into head something rates contract frame we can that we're as more renegotiating But again, are in. to fixed that bookings manage rates, of extent And an versus the of better time we're as tied

Sharon Zackfia

Okay, thank you.

Operator

from next Peter, your comes Baird. from Benedict line open. Our now question Peter is

Peter Benedict

of Dom, quarter on that isolate don't the frame kind or size XXXX, impact. guys and maybe know, how the you. right then that sellable just year here curious you you've could versus got kind about inventory. maybe more how outlook you increase are my your view where relative just maybe not My if – relative lot All I'm to to question, a think its to of revenue fourth were nine quarter the years you I'm much full guys. you of price Thank ago. of have of kind first question. impact about first thinking revenue about just will That's maybe on curious days is But inventory the fourth just here. way like XQ looks I XX It kind on ago. sure

Dom Blosil

Yes.

that, increase, So impact improvement. we basis XXX kind of price of it's as of we think sequential evaluated the on the probably to that points XXX

a that's that obviously, so of period something just on half given larger the volumes that have year the higher will impact drive that, And first of we in time. next

kind share So that's estimated we an quarter. to the as update through impact certainly generally can on of we we've what the be proceed something the that of and increases price

repeat Sorry, second your question? you can

Peter Benedict

the got fourth Yes. I guys about we And lot you're hand got you you've held few not a but year like know in were it's thinking months. than full XX view to on here more days just just of where you opportunity were maybe expecting revenue balance on ago. helpful. revenue much that inventory, sure of – the how in general I'm maybe sheet again, is quarter then if guidance, is That's changed higher, inventory but way inventory the last in kind you've how the of the number relative its But your quarter sellable or as here. the fourth looks

Dom Blosil

I Yes. anything, think, performance reaffirmed the in just QX. our QX if No, confidence

or the guidance reaffirmed so year. effectively range the full for we And same held

cushion of an of we deviations in real say more have. than on the From than our inventory because sitting protected what water we're full that that year warehouse again, that higher in there. been via into I'd we're control standpoint, no So is chain last in, bringing ensuring fairly containers inventory and securing have building deliberate we supply levels. in inventory or our

the of that's burden in that the fact inventory As increase of that's gets comments to we're of the my is more. part that that in with inventory today. inventory I associated purchasing And the because of due costs earlier, part is – mentioned inbound freight

it it. And like normally supply probably end that of to tied of again, good fashion that at kind going seasonal than inventory. built emerge we have sort bigger feel probably unit-adjusted freight, we're burden looks we any actually chain. number position right? component a sort so say of I'd where within really But that to we're don't sell it's trends not ahead like inventory, Obviously, about And inventory constant challenges day, normal all could on from holding inventory, just obsolete to days basis. the the with but given from that normally or we're under be But the We XX future the of fact ahead an it's standpoint. potential so through risks inbound levels of And would good that. of of anything for the

don't to believe so the if And inventory on moving front, order able accordingly. have we'll supply to chain. things of subside adjust that to on plan we moving luxury and in point inventory at just some in that we some And seeing and have inventory into that the being of obviously we begin actually heavier higher the inventory, supply slightly offset balances or time, any macro in the risks our challenges we're we're in chain

Peter Benedict

do the gross margin. fourth is parts, XXXX quarter moving tall there's you in to And I stab in divot Provisions. just of here think that quarter? maybe third opportunity Okay. this XXXX gross a sequential the a the question, can And That's just including at at way you seen claw you're helpful. sizing an expecting back a from then margin take point? at lot a order my on improvement Any perspective? has point, the you've next the But understand versus Or this

Dom Blosil

that in QX? specifically question, QX? In your Is

Peter Benedict

XQ QX XXXX I – a. XQ from QX it's was just in the as then not to sequential for and yes, think guess, change I

Dom Blosil

a basis claw I a XXX-plus going the mean improvement referenced, other I right, sequential to sort we won't back are I on volume-adjusted mean to be or There amortization like dramatic. improvement. – could good But that components not levels. at as such of normal MEATER. points first said, it we've the of in question. it's We're look of increase, the margin basis, acquired XXX, the gross price from as be that you half impact

slightly so there showing are margin to gross in really a improved over you that And of what normalize we're that, aspects couple QX. if

we For example, of basis the margin. acquired amortization like that XXX points

a there's But of noise so And little XXX sequentially, should the add there. XXX bit to basis increase price in points say, I'd improvement. of

Peter Benedict

Got it.

Okay, thanks so much.

Dom Blosil

welcome. You're

Operator

from comes Our Keith your Peter from Peter, question open. Piper Sandler. line next is now

Peter Keith

Yes, thanks so much guys.

just I You attempts in the are had specific you bit made. the around with maybe after? you've talked what that markets XX of And script earlier then little market gone strategy some unpack your even that if the of was could marketing specific assault hitting curious some a markets. you've

Jeremy Andrus

Yes.

to take question. happy So that

geographies. of is saying align by marketing start assault me into and discretionary sales to strategy Let the of all intent incremental the and market our resources narrow

in in investment is market meaningful television, the advanced And incremental broadcast so TV, investment There the of there boots top-of-funnel digital is media, in digital, a terms investment. ground. on

– associates understand lot at works, drives have are it. helping salespeople improvements lot education and level. energy of We a think manager, retail brand, activation training very we that at with local account merchandising time around a how We spend to a and of it We how the retail. sell meaningful

– make point meaningful we at those we really And components talk radio, the investments that so radio, XX merchandising, sale. of and saw number POP lift, local sports the fixturing, In radio and addition, then markets, of are a across a there around

focused as consideration There – is in of of location. intent a across geography we done to we've markets And Traeger. Oregon, should range Intermountain have to smaller opposed markets, markets Spokane, points DMAs. the into in broad Colorado is like So they size XX say, think geographic that organized the to some Utah number some really a region. for as narrowly are I touch be very Those spreading buying one; required range example. we part dollars Portland, one; and been has of phase are the a around

markets winning. and Southeast. additional and we year next markets. a into heading expect we're these We've We'll market XX got there, will still And markets, the very that where six those XX we our we'll three spend on customer Midwest is we base, we add in the a likely or that seven will edit couple But again, would And on time Rustbelt region. focus invest to to cooking the we an have continue will in some that return add that markets remarkably and that are we and over will expectation we based – invest of we'll to believe I the focus keep penetration intent we we're in of the add continue markets performing to the markets slowly and in markets simply additional markets getting, well. on and add in that is maintain focus Our think traditional a will that markets. is outdoor low. in

Peter Keith

there the follow prepared important great. in on the maybe the investment the then want to talking remarks ramp will little some end of directly recent up – be year. drive or very but reads to were the growth? early if closing you an any change about months that a with remarks, Provisions. excellent investments XXXX future know Traeger of Okay, to I bit, don't opening And you been Has that's That's up at summary. an –

Jeremy Andrus

tail a I strategy. a in both run the any – will mean meaningful course, efficiently. investing And investment started losses state. The a And that brand with there's revenue, to significant. profit tightly don't we'll has and it to. as but but was these of believe certainly manage No. in XXXX investment as say we change Provisions able steady change on I to any infrastructure the more there investments, carefully. wouldn't from long investment in the year. very in that with of believe not business along manage that We goes that some in that We'll made associated was make innovation, generate we're there's investing of it yet, I and any be it

the you year. level so in terms And or in we change make won't investments see next any meaningful of of the types business that

Peter Keith

so for luck good Thanks season. holiday much the and Okay.

Jeremy Andrus

you. Thank

Operator

final Feldman question Joe Advisory comes is line your today Joe, Our now Telsey from open. Group. from

Joe Feldman

my guys. H, Thanks questions. for Yes. taking

– that it's expecting for? this pressure remind you $XX it Because the million I think we how the second Dom, Just about I'm two half Or Can I'm that was wondering think hearing so quick it companies just to many about trying of year. and a months ones. longer. more thing, million last you're annualizing With that pressure headwind mentioned really it of is some to last a think that like seems should year? year. like regard We're freight to from seeing, longer you're you us that $XX next could bit how next does

think from on it that was to I accrual, trying like a why monthly about that's speak. standpoint, so So to

Dom Blosil

– It's year. rates last mean the I we've inbound to – question. we good it's of – started No, Right. QX seen really, freight back see change course in

And took surprised is then that kind $X,XXX. they look were of were they through container really sort at year. $X,XXX first in half really kind slightly of rates, levels. have it, freight QX those seeing QX, index so upwards an And and dramatically. of kind there's And double I steady that's you really really maybe or of sustained mean, we in a then fairly rates off us average last half the inbound container year, $X,XXX this starting back in if call higher, at increase what of of rates kind this the of what been going of accelerated were And of rate $X,XXX, they world in from,

going for with or rates $X,XXX these $XX,XXX, on $X,XXX it, containers seen from, you've go call $XX,XXX certain so And average $XX,XXX-plus. to

sort the these in normalize And what it's And we or where extent will so year. on definitely depending rates really that see dictate move XXXX feel to back-weighted of in burden. we

And weighted XXXX, the bigger so $XX million $XX million half of that to into as toward of number could million. extrapolate largely of you the is basis, rates levels, QX, think look about year, that than sort million to that QX if $XX at sustain impact, the you sort which on the if these an annualized $XX back

will seeing Now and $X,XXX offset – to of to they our surcharge go share that we half offset with rates will extent better but price compared increase component back other than And our will that. kind to show back improvement freight this will they're the maybe we're I that say. to brands. year, plus of And taper of a the to $X,XXX, what hard that today, some but think that sentiment

see XXXX reading and something shift the on what read, preparing a – for that of – kind a boots-on-the-ground on this and and we're we in – it's meaningfully based into we're of Just tailwind dynamic kind of catalyst something accordingly. kind that just are watching would don't

Jeremy Andrus

perspective. may And fairly like in just meaningful we brands, of And ability do be more And mitigate, be may to meaningfully all it is well levels, cost, would down a that has consumer good strong net like brands, case don't that to believe, with I it but And us twice. I the and transportation that be, a whatever have brand, add but raise to think responded flow-through challenging will once come us, a transportation news we they for costs of that and levels most we the from how moment these they but a will a that. to back whenever terms the gave we are transitory. increased responding when price the beneficiary not Look, that consumers be normalized when our increase. our

Joe Feldman

they number nicely, like Thanks for maybe I they it. one, revenue Got I really quick Dom. the am up How know XXXX, clarifying though, last grill Presumably, third down that That's much the to the one, Or was? compare units mistaken? me. year-over-year. pretty did And a were quarter? then were helpful. that for

Dom Blosil

at standpoint, from we Yes. growth No, saw stack. they a were nice right, least Yes, that's two-year yes a a – on

Joe Feldman

great. that's Okay,

Operator

any questions. now closing team for further no back hand have We remarks. I'll management the to

Jeremy Andrus

brand, this It's the brand. it's been about positioned. questions. thoughtful a in – is the say business unique time the feel we good that I moment really for appreciate would Look, we how And

investing we about. believe our that are care areas in consumers We

We share, of grow was there so depleted, been year seasonality. when channel lot sell-through That's levels load quarter we're a And was of in and remarkable. XXXX, an and we and over inventory and think, there that's it was to the a robust doing load – are is it unprecedented. environment third where were was taking a

we're obsessing to for a us good believe And how have that very are we term spend components do very winning difficult our doing and perspective. think better, challenging term, feel team the some consumer as makes and with proud we strong are mind, doing. do to of our to service well. we the these chain, of consumer like how look mitigate we We supply experience and we we formula. and future has, I'm it environment. that about will that they positioned. anything always we can of that's so over we're long time Long Anything responded our And position can our where in I to we consumer, that the a from

for appreciate look and to the and in the forward question, quarters. connected staying – over I So thanks we interest, coming the

Operator

concludes call. today's This

now may You your you we joining. thank for lines, disconnect and

Traeger (COOK) 16 Nov 212021 Q3 Earnings call transcript