COOK - Earnings call transcript Q1 2022

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Operator

Good afternoon. Thank you attending today's Traeger First Quarter Fiscal 2022 Earnings Conference Call. My name is Anna and I will be your moderator for today' call. [Operator Instructions] I would now like to pass the conference over to our host Nick Bacchus, Vice President of Investor Relations of Traeger. Please go ahead.

Nick Bacchus

everyone. afternoon, Good joining XXXX for found to its discuss our Thank which Traeger's releases quarter results at be afternoon first website you investors.traeger.com. call and on can Vice Traeger. Bacchus, I'm Relations of at Nick President Investor Chief With me today Officer. and call on Financial Blosil, Chief Executive Andrus, our are Dom Officer; Jeremy the our

substantial may that We want expectations to that statements filings are are portion cause on current on the XXXX encourage started, and implied factors Before a everyone to from annual of herein. management's forward-looking we I XX, differ get uncertainties the remarks those also contain available that are our SEC risks other these subject you actual results which for report for expressed to on but uncertainties Relations XX-K our remind December could to on Investor and this discussion our call ended website. year materially based of review and or

measures. We these new information. You should to we financial of any which revise included for herein not will statements. no The of website GAAP are them useful undertake the Relations release on and update measures Investor our and take to as at reconciliations portion which on believe measures or obligation our This undue forward-looking today comparable supplemental we of contain speak non-GAAP certain also earnings reliance call measures only the such financial in GAAP most investors.traegerr.com. are contained non-GAAP measures is available

I'd Andrus, Traeger. to Chief Jeremy to Executive call of the over Now, Officer like turn

Jeremy Andrus

face on discuss, call growth earnings quarterly an drive and their highlights to incredible challenges, and continued The financial pressures our relentlessly fiscal headwinds, progress and forward quarter first term provide update growth and year-over-year to work strategies. our a results, several an in term we details consumers XXXX tough on will will Traeger guidance. long our deliver the dynamic executing our performance our initiatives. to over including the to Thank near from we then chain I and highly team Thank you experience backdrop, quarter consumer key you, Dom discuss Nick. while joining comparisons. Today, share term supply first In to to for our to long continues turn first inflationary call. quarter,

pleased We execution. are with our

first versus prior with particular Our were business X% in revenues $XXX softness our of quarter sales XX%. down down million with growth year

negatively enhanced aggressively inventory, impacted our First period by stimulus. were channel partners quarter retail by restocking government was was demand consumer year-over-year growth where a and

three of and CAGR quarters year strong since revenue XXXX. experienced XX% first of grows the CAGR gains at Traeger Looking XX% that demonstrates has

outlook. first EBITDA quarterly exceeded relates our to We our pleased and our guidance, full March. provide year three There in touch our of as factors central quarter reiteration XXXX are to are I will sales Despite we which we guidance. have maintaining are on beating guidance, it

we by a to [Indiscernible] our shared First, underlying based demand when our our to change in driven and relative relative growth in not first was quarter of largely timing shipments was on assumptions outlook. the of guidance

Second, the from away tightening consumer the towards continued environment remain conditions, we financial durables on with services. well in spending a cautious macro pressures on shift as consumer as and

the strongest of term Despite therefore, us, selling weeks our outlook. is our near of to the we brand Lastly, it our never has stronger. health are beginning seasonally year at important ahead headwinds, our in retail period, most adjust been with early

to the the our with truly to it's Our changer customers Traeger on The great innovative led disruptive drill, outdoor grow an and and they to above In connected launches is excitement outdoor been our has brand, their the other in Netflix. to we incredible cooking around all product cooking. an we new Super in like with consumers increase our at category. first brands and The in approach force Airbnb game and cooks high friends Moreover, time score summer our Bowl that NPS continues March most our players consumer which passion continuing continue their increase as line family Starbucks, tell now or in and influencers been love grilling launched Traeger at since XX% outdoor engagement Traeger incredible the a the reception as well Traeger Traeger retail Timberline partners in category, and is a cooks cements consumer and build in continue for I've quarter, by with with connected cooking selling status XXXX. company season. momentum

of grilling Similar influencers kicked around and to media Consumers XX, we Traeger meals grill can on made for day summer. weeknight ahead to go season brisket use on friends meal and great On a the $X forward, of family Traeger to addressed the grill and to summer prizes win their share are promotion we head global social party, or opportunity to last the grilling recipe and share the for pound cook or a selling a the one the spread. their day. smoking start versatility, they of with of fast dinner season. year summer. of into outdoors or family ease will together and and as XX optimistic Day this woodfire foods buy annual celebrating our and The based directly is enjoyed off consumable pellets sauces. as community dedicated videos consumers looking off season. with the gift celebrate and our Looking year, ideas bringing pictures Traeger about overnight the $XXX and we fifth using with to May and the be a to grills Whether easy a promotion of plans outdoors Traeger giving was Traeger grills for beginning pellet with wood block our Mother's we off consistency, select be

in years said consumer remain two We discussed strategy. term after call, are quarter brand our growth the in as upside expect dynamic. in of we remains especially highly earnings that potential We our Traeger environment days. near Traeger the enthusiastic virtual on fourth Having growth confident for highly March the enormous about and significant engagement

multiple Since Furthermore, becoming of with numerous sell geopolitical guidance. are to and sell line sector have which to ahead backdrop geopolitical the companies consumer pandemic related the with our grill the consumer from headlines deviation note turmoil through very forecasts still consumer a that We a goods is having a coincided category. we from spent call, at and in at durable, highest but which in evident with of at parts the seen across leisure fourth impacting sharp our the our March our year important that confidence. inflation a also volatile, us. towards discussed we remained retail speak the shifting negatively seeing the quarter are home it is when travel, it's less subsides, and impacting trends trends in is pump. with favorable prices and away trending early consumer volume for is as On through expectations XXXX It then, worsening gave retail we provided in weeks sales rise

our expect Labor through now fact, between yearly year, through. retail would we volumes in make and to In sell typical Day XX% up sell a of nearly

discussed our and dynamics, In on previous terms the transportation chain as of to weight the that Traeger sensitive in is have calls, we of cost facing given freight size many companies product increases are and supply especially today.

and our over team time, costs manufacturing. expect increased will some While normalize remains of freight we on focused extent to that out supply do chain driving costs logistics, hyper

this across our gross cost the to margin supply chain. Hardy year, Chief Chain earlier formed Specifically, initiatives task identify led force Officer we the Supply savings Jim execute on and by

the early Critically expenses quality process, of products learnings we team focused the medium leverage committed so by And compromising some by this driving in to the our are driven savings, we is team it expect the to While term. long without cost or is we encouraged efficiencies doing are while wins. on to and our the and better initial over certain increases We long continually consumer the and improving growth consumer re-examining and fueling and product This experience. experience. our structure spend deferring the we're remain environment. year the uncertain align reprioritizing our cost consumer to managing includes expenses. our term investment to to and given committed for current reducing Furthermore, backdrop, cost

stores the in at Depot discipline driving cooking Traeger or penetration awareness the given highly a appropriate that footprint and brand U.S. largest I growth United recurring revenue business is shift disrupting outdoor is is dynamic the our my the we XXX important pillars, States, improving term the our It remains the in consumables strategy. However, brand that innovation, retail In expanded core single opportunity States awareness at roughly and increasing to our through and our of thoughtful Traeger fixturing. accelerating United progress note growth the to Traeger signage to Increasing reset key strategic quarter cost on and driver. products penetration want product globally. through of long Home with growth backdrop. believe assortment discussion and in penetration existing for first is growth brand expanding an the outdoor we

compared noted growth depot in assortment to these sales have Traeger investing more significantly of presence twice a Depot number average the locations locations sales assortment, door. and brand the continuing by Home and allows particularly the drive these by across skews visual future and increasing than with training. merchandising presence, to to doubled for we Traeger larger fixtures stores, which retail product drive As having and products more those home minimal improved brand than with the productivity We're in

to commercials campaign the a marketing our moments new the on funny spots spin. a Wood digital campaign But Traeger would on launched we YouTube I encourage Tales channel. and quarter, ads. TV in with featured Traeger family everyone That watch entertaining these On in to first side focuses brand

in social, into focus TV will our connected digital Going we season and summer channels. media efforts the the

in consumables, apparel continues in business quarter including of to a our of and grilling U.S. the DTC are as joggers to in our Traeger.com both increases run when wear out And with watch customer pallets, transactions that Traeger. channel We several growth branded as gain well trust solid DTC perfect customer launched Lastly, limited that returning the saw edition transactions. Traeger meats new products momentum. chance first new

hours. eight run SWAG limited consumers in to These need bring out types Our sold the idea offerings and creative brand. the of Traeger significant love energy and

occasion the Timberline and growth Excel the March next launch pillar is The product new enormous of Our in was innovation. of history an in the Timberline company.

sauces the Our unparalleled of induction ten fantastic, The have searing. all improve palpable proprietary coverage brings system or enabled simmering with sautéing, probes searing well X.X this that how included grill innovation consistency, Full as for this easy in precision moment launch Sam, steel cleanup. over partners consumers The level first innovative convenience new with allow retail outdoor certified the million launch. who barbecue a heat in to as impressions redesigned A the around excitement temperatures fast in been in ash insulation easy from significant new strong keg has innovations. and is includes Timberline as well influencers XX market, last among post incredible and The new the reception church are and top and wireless billion fixtures our of features system cooking stainless meter has and else excitement delivery week rights. to Timberline a of press advocacy space and which and that for temperature heating versatility. new control, for monitoring doors, hotter internal Timberline was like other as temperature, of an Timberline. grease offering new for WiFi provides minute cook for impressions the from two influencer the driven the first XXXX guy, There new sent nothing controller Timberline the

distribution introductions. we sauces Traeger. being led consumables are product expect added features QX rubs and the and doors rubs will Shifting this of on new newness in our by as remain We years and first and quarter introduced sauces were Traeger the this upgrades In X,XXX the technologies distribution. innovations several driving product we our driven rollout to recurring business, expanded cascade assortment. saw grocery we by through through Traeger Importantly, in power in business growth revenues focused product rest strong and increased of sold the at our

pellets where increasing is are and or also We are doors at XXX consumables business our pellet grocery. added distribution expansion grocery early It sold. additional in

not However, by just they buy where buying to we are week, results consumer continue grill. encouraged the believe their they're early wants and consumables every that shop where to

continue rub we Me rub growth, distribution Gold Liquid the to Perfect we sauces, to expand the launched two and and addition our new and innovation. anything In new February new pork consumables two In rubs, Honey. assortment Show

team below and pillar, saw time quarter Moving a loadings. did international up to international negatively in business Similar no XX. Europe. In direct Russia macro fiscal we Ukraine job we Based Canada growth business in Traeger or of we in final more with we would exposure conservatively and our impacted The our retailers global know our in a the believe total and our and deceleration sales. well and the markets, from growth geographies as our international benefited to on makes international for full been healthy product brand Ukraine. quarter to had consumer a globally, backdrop, great inflation. the have expanding to And both sentiment strong through war strong in by first market And found the our X% season early European quarter on first U.S. sell delivering we has the distributors. pre-book our

continues continue opportunity drive to continues team meaningful to strategy, which the in of retail execute the a near value launched growth in positioned puts challenges multiyear on company's we see we significant first facing growth competition. outdoor history, sets the most the which our Despite brand strongly the term long believe long globally. as be disruptor us shareholders, summary, for sector. for significantly We product for the we stage cooking In Traeger and our Traeger term In will term partners. innovation the grow innovative consumers and cycle believe a to ahead our quarter, to a Traeger

to that, over entire I'd for like Before executing Dom, their I together a world. turn thank Traeger to on Dom. create it bring pass I'll the people with to it to work vision Dom? more flavorful over our hard and and team to passion And

Dom Blosil

Thanks Jeremy and good afternoon everyone.

headwinds and inflationary Despite of first execution materially in our in continued retail strongest inventories seasonal These we consumer sell which margins. into environment year and we the quarter, channel first rates period. and last lapping pressures several driven uncertain with our year-over-year as restock faced load discussed As against sell chains. first our headwinds, quarter as demand the are the quarter these retailers the on move our comparing stimulus and pleased include supply Jeremy growth when negatively we impacted pressures outpaced period through

environment an highly can I on balance then as XXXX we'll and quarter While reviewing we fluid, focused provide remains first update the term results, things by on long the and will term outlook. near appropriate short are that control we well an our investment. start maintaining term as our of

as of a revenues second as quarter to of well offset driven by quarter to revenues higher increases with XXXX. prices, Grills primarily average declined X% the decline taken XX% volumes first First XXXX, grill selling million, by lower in in partially million impacted $XXX $XXX driven revenue half price unit by declined revenues. by the

unit stimulus. declined of decline as grill through acceleration in the increase that retailers and restocking business. our consumables unit first quarter first of With quarter from of were the in XX% offset X% X% anniversary million, sell revenue fourth sauces by lapping decline. by We a in our and revenues volumes pellet reflecting year, comparisons first the quarter's XX% the year. in of Consumables the strong business rubs the difficult inventories quarter growth impacted note somewhat decline quarter were consumables in represents to last from our benefited last government $XX First

and of and continued by incremental accessories from Traeger growth strong Finally, the driven revenues acquisition meter accessories. revenue XXX% increased

$XX Timberline while our headwinds. in guidance upside on largely by new given domestic aforementioned strong the the was Geographically of beat optimistic for the triggered quarter, orders impacted world and loading The earlier earlier was million. shipments timing saw grow our high revenues U.S. to quarter constraints we by long continued globally. driven sales the as March, highly well relative growth Canada term to end We as certain capacity, in rest to as about and growth we in ensure expected in than grills to by carrier guided of opportunity certain accounts. the time of accounts our remain plans be of released First and first XL in of delivery

contributed our to to continue year. planning $XXX from Higher margin XXX conservatively driven Amortization import $XX related for business pricing on largest favorability, profit margin year. diluted the basis to of that higher the as however, meter given Gross intangible points many of this markets. of inbound by more our via pressures last margin and pressure first fulfilled of are customer down by and in international mix as last driven March our direct gross growing million year offsetting XXX of We pressures our favorability also our macroeconomic decreased impact. program. basis well points facing international points freight to basis in orders was quarter negative profits these costs be the was XX.X%, XXX the assets a margin million acquisition actions, as consumers Gross

million meter marketing First inbound better margin to our last quarter million, expense of stock of in last increase the The expense higher the increase compared Sales first expenses slightly under by by XXXX $X quarter also not issued primarily driven the year. of General the component $XX based higher expenses which The $XX primarily plan. administrative and $XX professional forecast. higher million the expense award incentive is compared The first ward to comparable under by in $XX lower equity by period. gross compared units compensation was plan, stock million in personnel units related restricted Traeger the and to restricted expectations increased year. the our administrative than of were driven freight instead based due quarter driven modestly issued was and XXXX the was to and to costs Traeger was million, costs increase due general of services. to driven equity a advertising expense related were compensation XXXX

quarter a the the to as share $X.XX the $XX loss quarter compared $X.XX to in adjusted million compared diluted $X.XX X.XX last for per of of to the income the $ factors, $XX compared quarter last year. Adjusted million net per million Net of diluted diluted year. in first year. as EBITDA share of compared As quarter income these first per was same to quarter in million was in Adjusted net for period income as diluted cents period result million per or of was year. million same in the was net income $XX net first first share $XX $XX net loss or the of share last $X last

quarter Now $XX and sheet, debt. turning fiscal We balance of cash million, the $XXX with of first equivalents the to $XX quarter of compared the million million at long the year. the cash end to at end previous term total ended the

of company the the of end there leverage note quarter receivable of down is seasonal the million, million the agreement, first Inventory selling net total capital our It's million. our end X.X. first had million needs compared peak on $XXX resulting to debt year. leverage level elevated financing And quarter, of quarter first was to important its that that strongest historically point, $XXX drawn facility down the of $XX ahead million with after. last Additionally, typically period coming our of first the of at and $XX $XX as given working its of at the end credit net quarter under revolving in ratio

in increase have factors. we three the by driven As inventory was discussed previously,

given constraints. chain First, supply

believe Shanghai. the evidenced as chain recent supply. inventory to ensure into to one supply have warehouse is the down highly given adequate leaned intentionally have imports remains environment we We right this strategy We fluid, by shut

and costs. Second, inventory year last by costs increased driven are higher versus freight input

year. of increase meter, the which was inventory our comparable is not Finally, comfortable We to inventory about levels. due last with inventory base million in $XX remain the

the managing of our landscape environment. We chain safety based we'll the over the year. level are balance closely stock And monitoring the be of on evolves supply how

XXXX, EBIT upside year our Turning of to revenue our year guidance to given $XX adjusted in was not quarter we're first on are its the million. $XXX for uncertain our revenues in impact our remain outlook. fiscal and timing, we full guidance Even consumer on falling million at macro cautious year Furthermore, $XX $XXX guidance full million million behavior reiterating competence. to environment based the largely through we the to and of beat

As shifting durable consumer towards patterns from spending away well goods. discretionary and and services as

be time of second normalized. call and to half a as revenues continue double On trends that for March down grill seen guidance. relative and our in the the expectations forecast, embedded are discussed earnings into half in growth year. We expect the line we grill first the through of comparisons through but the year with sell improvement the having the our digits fourth full in relative to sell that in With to sequential deviation declining volatile, first quarter generally revenue since year to remain our half

spoke representing in Jeremy our trends and retail. to of key and We're be that business through with is yearly it's through we'll early reacting nearly fairly season, at reading our selling during of to As next summer. sales XX the seasonal note half sell the therefore our typically to weeks sell important

gross expected the it reiterating are to of XX% of prior supply gross to fluid better maintain terms gross full remains Despite and our chain margin, is we our we first XX%. In prior year believe quarter guidance margin, margin than highly environment margins for outlook. modestly prudent

margin the to of first expect higher We year. XXXX continue the be than half to full gross

like to drivers. gross an on Next, update our margin I'd give

to $XX,XXX put will rates. gross margin XXXX, which continue will on rates attract to pressure container to continue We expect that inbound above

pressures. be these offset to to continue We working focused cost on

margins we and costs. evaluating supply in Jeremy with and which task design, higher product is formed have manufacturing force charged mentioned, lower As a chain processes changes drive to

begin XXXX. these we will We to areas, in the team's savings are initial by and realize expect findings that in encouraged

top will and of our size In to near structure to line headwinds. continue right expense term offset margin us help G&A gross terms we

certain have been quantifiable will backdrop, the return Given delay the approach that nimble our less current profile to in be P&L. managing and macro will further near we investments in

Our acknowledging macro and focus growth behind investing environment. the is to profitability while balance uncertain protecting

opportunity the feel optimistic cooking We extremely by long evidenced growth by remain new launch continue call will to gain industry Furthermore, from market Please that, about proceed. outdoor within disrupt to And the Instructions] penetration share successful of the of increasing term we US. long as open encouraged the Operator? by BMO. Traeger's to product [Operator questions. with is as term the high Siegel the innovation. our we with The line I Simeon first question

Simeon Siegel

Thanks guys. afternoon. Good

you're to Jeremy, anything you maybe to can speak get seeing those? around but that with And when that how help what uplift any seeing some are return expanded, you and getting And are the sell about for growth? you're you with thinking XXX versus Home color should then there? so on Depot's just guys consumables just So early the maybe sales it's about dynamics Thank Basically, sell how thinking through you. pellets?

Jeremy Andrus

we look, track I by been grow time every see I weekly. mean, merchandising, sell by way We've sell the we those So been seeing the mean, XXX seeing lift and door, we're no seeing improve customer, region and And, lift through. by assortment, doors we years. in we've we for cut by we through we've this a in this. question

that's fixtures Home formula the stores year, we to that saw, with seeing in and branded strategy. drive continued would investment well of one will now rollout there testing drive year. terms That Depot end really increasing in our think as addition a predictable of traffic much conversion to a I return and as traffic opportunity market capturing Depot. now strategy a lift in it's in the Depot, lift sort of walk continue growth. both are sales of assortment the been to XXX brand I by about, of talked XXX there's building of speak retail Home opportunity. in in We fairly the in liked terms to will sort the because so say on mean that our XX has such it really and to And And into the that our be it's couple about of it's are things and I investment has But to last fortunately that in foundational of those marked we within in there's foot retail. we presence store fixtures. to tested Home and a is store So return

follow In do Dom of, terms question? hit to you on want the up

Dom Blosil

with we in side, would of half is addition revenue across terms first consumables, that to nice speak momentum challenging we're say I the - different on Yes year where a have I'll seeing say of comp accessory acquire this our meter. categories, in the

around guidance. I would the we won't go As we detail year. normalizing But ahead, start look of half I things. guess you I think to some into say see comps back two from the And

some or attachment to back as consumer in First, the of half see pellets, year. consumption the we of measure of expect normalization we

the of some lapping of behaviors, world just elevated to comps. given think well discretionary as are patch, as little to a around two continue bit is normal discretionary to We where spend, put will moving But their pressure years services. those normalize. time the consumers shift will as on pandemic of We more we that back and again, dynamics cooking a that think half, the in the

within and just consumable be is the the of penetration our specifically the the course On and of grocery over think through our the the of strategy, growing which to course side, retail will food that tailwind year. the more Traeger see one year expect we business I consumable

Operator

Please Simeon. next with Mr. Morgan is Glass you, of Stanley. from John The question Thank line the proceed.

John Glass

Thanks very much.

consumption we stimulate if grills slippage have what volatile you do react environment you're guess to think demand talked needed? reading but start some of you if again, to see to what You levers is whether or in activity in minds, have consumer your reexamining trend, it's you points, what promotional mean? in about generally those levers to the still I going price the react on are

Jeremy Andrus

some to course And challenging around obviously, on SG&A over kind of that middle in which more requires on side. years. we I and this we and we've of when on lapping in continues we investments, I'll last mean, kind we dynamic opportunity. the the necessarily rebuild growth some a your of acceleration base And that I the That's ensure we're we strategy like shift funnel manage our But We'll on high P&L manage demand basis in The there's the funnel renewed long that look degree term. impart fee funnel thesis. make just talked strategy. specifically, require some how be think a will changed, how will think excess measure it's about a to the business we of think creation to changing within I in ultimately, over in growth thesis within sort extent experienced some P&L highly comps where stepping the grill side. not the grills. focus about, the And Yes, the still confident term we we given seen a and to call and/or hasn't that's the really on your the the household investments a unit have the thesis, you of we'll year. installed bottom build signal continue a long of the acceleration that last quarterly for penetration correlates of And of two to the something capacity top competence high of reinforce and back, top

how we where turn, historical can then internally, marketing, year, ultimately, term, conversion. the as on is strategy and based profits, one of will We more that Price what would mix impact the evaluate. I performance and your see fairly something could made, in we've sophisticated on always in products, so simulate we in price how high be focused our based across pricing is demand as generally. and we strategy the a than one moves, our increases, configured that And to slightly impacts different in will impacts where longer well that really turn, be that shift products, say profits kind theory on both how

we'll returns is lever marketing, on well down in-year the as highest sort there. price. to of overseeing we doubling say And I'd as evaluate shifts really then performance how so always And then

feel good of call we something price we'll continue configured the to at on consumer. we've more to the, But year. think How price. we pressure maybe spoke pretty on to I our the kind that about last this look

where the elasticity. more $X,XXX in we versus So above, have probably

ultimately, some guide So the it's something potential long lever. out And that coming I will as we'll it's our But to continue think focus evaluate of of strategy. term that the execute algorithm of that formula on reconfigure and sort funnel aligns will top long to funnel challenges build we our term. that ultimately the our continue and to growth works of believe strategy in-year

John Glass

you Thank that. up. And for quick follow just a

benefit the You that a which just quarter. of a first versus what that that what time Was shipments, mentioned the amount timing? was guidance do shift the that? how overage Was to your or was the, you in your quantify

Jeremy Andrus

that orders said, two becomes And QX late in Yes. which the cusp among that's overage. sort dates it's right. tied of available. quarters. that to as QX of to driver. effort QX shift and carriers It's the That It's was we Yep, of a move had it really an QX effectively as of we ensure early we're that's advantage our on ship capacity, were constrained chose kind the primary were to that they taking and really between is the

John Glass

you. Thank

Operator

next Glass. Thank Sandler. Please is of the The Piper line from question Keith proceed. with you, Peter Mr.

Peter Keith

Hey, thanks. Good afternoon, everyone.

It go of things XX levels. lot work the a with curious. well, inventory their business to you on weeks, just retailers there's some don't be next understanding done got So if I've how

have big lot you is enforce map you and of levels simply it pricing? just stop let just if some box down into Do marked with any excess grilles, shipments inventory kind a down just holiday is players viewed of Or of the season? there risk? So bleed your the

Jeremy Andrus

core periods, to planning not to range of our we've one holds we're that biggest uncomfortable not four in evolved inventory certain so promotional with process that in levels true. that kind is our configured with. exceed we our That drives a as why term, don't healthy long which brand we're channel to Yes think been very promotional and going that it's deviate and that. to year, between periods two per of be to of from internally, we've retail is disciplined We our principles collaborative lockstep which work ensure promotional partners

don't in always And another. channel where the and to ourselves that of and position quarter goal ensure on sacrifice too so find at for a us we inventory we're the heavy is one

over last been more that's retailer the heavier has that Now, of historically. as also we comfortable which And by look driven our see lean inventory, than, etc. through within collaborative inventory, sell positions, planning are they challenging we're found in at of the trends with channel into in given that fact inventory we the we're years, data that well some you important, comes with, few strategy, our but what themselves lack out a process, as and band - to as

And within watch and that even something but is so no on manageable an hand the this manage, we're believe we our a ahead by XXXX if would season. In persist. expectations. it peak that we're really from within of specific QX, bit something trend appropriate it's we linger of heavy, versus still position issue that And deviates channel it's band a also selling means can sort or to a weeks of closely,

Peter Keith

the still term that that's Has to any over the been did above give you helpful. costs comment factoring level? $XX,XXX of pivoting container costs? that so seeing with you're you freight, late Maybe Are for relief? what container you running above year, near as in are there Okay, your

Jeremy Andrus

problem month, but year effectively bit we're locked tailwinds holding we may some hold built, gross volatility extent likely expect worse. sort No but we're and the that to guidance to see a and start near captured term where of week, XXXX XXXX. becoming believe in beyond isn't side, we're It's on full but us but of kind that will stabilization, to to term contractually, through these stabilized, the I to confidence margin not in locked little which we near trend from where in week of on is are building tailwinds the into but of year, which because month rates, is this elevated kind think the to one, building it that leads be holding we container relief, see some

year, there's stabilization for the And lead of some some gross transportation within benefit additional in the necessarily based inflationary on good particular. provides incremental today. some news but to know pressures us is predictability minimum there's would what within we the that nothing margin to So that and at believe just that

Peter Keith

Okay, good much, Thanks so and good. luck. sounds

Operator

Blair. the Sharon of with The Mr. proceed. from question you, Keith. William Zackfia line Thank next Please is

Unidentified Analyst

is for this Alex guys, Hey, on Sharon. Yes.

one a me. Just quick for

the category? on that based qualify now you're So guys of with seen you you the out coming sell any Have are just could through improved? any that seeing that anything seeing that sub XXXX you of maybe that's improvements

Dom Blosil

care would a from the as in discussed points And I mixed, self we Look, we're early data still remain the season. say the call. on last perspective earnings

front Our no sell that's still of call, reported last we've through the predominantly deviated is we clear from what this. provided. in that within guidance of But the on direction still range

Unidentified Analyst

Okay, got Thanks. it.

I'll So helpful. pass that's it on.

Operator

Jefferies. [Indiscernible] the Thank line Please you. question is of with from proceed. The next

Unidentified Analyst

side the on Could of give and some rubs for color and Thanks seeing afternoon. attach consumable I the in pellets rate. you your segment as you're attach good on behavior taking the repurchase terms on guess Hi, what sauces of color questions. appreciate the well?

Jeremy Andrus

I feeling the our real of that mean, and for are rollout within kind growing is consumable this grocery of Traeger of There a we days, appetite And more consumables. think food say as for but products kind food those confident branded it's is business. early tailwind consumables, I in We especially for kind food know, a really doors. strategy. would we expand

exciting long will strategy the on that execute an mature should of which terms is configured, So and this beginning of strategy we to be we of part strategy the ultimately our is is growth, strategy think drive particular. I in standpoint from component how of our believe and algorithm of how early term kind days this to continue growth we're that in ultimately

Unidentified Analyst

channel, sense. and see potentially the Makes what count us outside? where is average queue remind And grocery could the in door you that the can

Jeremy Andrus

skews have strategy foot, in linear of evolve then highest moving and from strategy sort we it based I we'll the things set of feet data of seasonal whether time offerings over specific Yes, makes adding within be it the or that. front updating will kind like don't build our us. of ultimately, think the probably important But most sense there linear where on square retail, kind where

turns particular, is grocery the on time portfolio. that the across in success and would established, within where evolve we So, say will that I over and measured course we based how see

Unidentified Analyst

Thanks. it. Got

Operator

proceed. The Credit next of question Thank the from you. Please Gajrawala Kaumil Suisse. is line with

Kaumil Gajrawala

what us volumes or replenishing year through comp to about sell having through because kind doing for sell think versus guys kind retailers but way was are were Thanks of you Is an have what basis. a of I normalize on. you you a there indication Are this last me through through? on I'm of some you grills? able give sell for to talked difficult sell for

Dom Blosil

what though sell you by sell So through? mean versus do

Kaumil Gajrawala

year. this Replenishing comp at the year part for of and difficult inventory that's last retail

Jeremy Andrus

seriously sell right? question. versus you That's in comparing try through Are going you're to Right, that to counter your sell that? so

Kaumil Gajrawala

them. trying just Yes, to clean I'm

Jeremy Andrus

it. in right, of Got think financials. would terms I about ultimately, within that I it I mean, seasonality kind Yes. our GAAP think of

an tends massive there's quarters, lowest. fairly our course have versus, over then in seasonality have curve to QX and from the QX, of And fairly QX. QX, the This in see brands So, in year, nice, of brand then a or you early the consistent benefits consistently. kind our a year, largest maybe other be load uptick their seasonal drops

year, biggest replenishment. is of a because meaningful standpoint, QX. ahead we're our our for mostly right? season, as we is point So our and nice as usage is So, is loading we from seasonal driven equally which peak to QX by meaningfully QX loading in that's a benefit season, quarters, across the well which from, one but it's see replenishment high of your

QX and about of you're normalizes weighted shape in in And necessarily the those same of because of kind so And think we're see point we're salary through you you're that not typically to ultimately seeing from going ultimately the during whereas and course QX in so year, kind seasonal of over heavily so take more to pattern, the measure but of the loading in sell higher products, in marrying, versus sell QX seasonality. standpoint when a sell peak season velocity standpoint. is the been QX replenishing or what summer definitely of at have sell through sale, happens through, from XX% a remainder periods, you where

Kaumil Gajrawala

it. got Okay,

up of inflated what like follow have me Let the the your to units able you at trying you sure the how are actual to on figures how moment? inventory inventory the volume feel volume but about Because or I’m inventory freight looks do about properly much understanding talk obviously, like? the amount, make dollar

Jeremy Andrus

the which Yes. increase given inventory we're good we've also inflationary inventory, position. acquisition there's action inventory, that in see, there's historically, I a decent obviously higher the definitely the based pressures leaning inventory to have facing in component the about add QX of capitalizing cost into a higher of would meaningful environment, transportation. added just would about past than we're what a and for I on component labs action, inventory growth. the you also typically higher in the mean, cost We purchase our feel talked given the

would down in you kind would, of kind how normalized, the QX of you you the the for inflationary later kind meter piece. need we then second break stock safety kind of to as normally in leaned What pressures. we've build and what or for as of into, account inventory we So of account excess

with three last standpoint. compared if a of are turn components from kinds to really those line normalized basis, not on in year So slightly better, a inventory

A as strategy, we're whether extent If that reduced it'd reason the not chain, risk. position, And that end. it's have value point out to environment, of right down will of all inventory to to approved deliberate kind of of in it's but effort macro a fluid good now, by point be the and maintain don't pretty continue a cost so of of stabilization, begin risk point right year. I'd the improving say those year about And course chain. cash, inventory does that from for this feeling Asia, our put within we the But across some trends, the those product to happen, least our the see to and obsolescence to that at we an we in, move inventory get more a just work value levels to B just at inventory some can balance really our to work place of the then levels through to goal that seeing some down higher as to comes remainder unknown we liquidity, throughout the is the navigate resources are begin at we

Operator

Thank you.

Next question Telsey is Joe from the Advisory line proceed. Please with of Feldman Group.

Joe Feldman

taking Thanks Yes. good for guys. afternoon the questions. Hey,

that those you both, if deferments would the some could. what share I that I mentioned it, or difference apologize but of are you of spending, some if had You of missed, defer investment could to you're or the some of going maybe amount

Jeremy Andrus

just can't share strategy. our I'll I'll not really provide kind but give amount, with you the we you, Right, of we're and

marketing a to second thesis, the and as our growth product principles the that product with going and long with term And protect want R&D etc, that's R&D. want engine starts critical that by cutting long growth starts the development, as core our and creation, are we at term at demand something protect. it to well growth of first, long term to business. sacrifice, the We don't really what deep and and into that's So prioritize business core the we're to too to

the immediate a shift as tail tends will oriented prospecting, that the to where awareness of where of of brand market performance return higher of a funnel measurable build long are it's longer the top we However to be based funnel And toward our of core strategy, marketing top funnel to term, there's value that more and higher return, a so top sort more you're building. return. results

fixed the our now us in growth, either I of QX competence third, investments. or our line the it have those of flip begin that a and peak and if So investments, line cautious on predictable, of we back nicely really second of in highly middle decisions are the But XXXX. ahead an excess guidance as say course real lot that to the better of that model pause pace funnel fixed just I'd we throughout we've in QX up otherwise, have kind of learn and half we we kind like in investing invest of kind well nice, with into that's these said, the nice of the coming redirecting investment we side, slowed until or see where as, that those year, of layer, to of being the we And because funnel we're we're top on is on of bottom where ensure hitting very investments. really sight we're make season, will out set of and

Joe Feldman

seen ask, anything helpful. sure a but we Got standpoint out And you've it. new than for then some from the there seeing of are Memorial you other I are, such, that's there's are players I'm Day to you. one deeper in typical with past sales seen wanted Thank No and anything the the the than other different in me, competitive past. the you

Jeremy Andrus

strategy last XX no some over in see, not months. and pricing general deeper visibility discounting the not shifts product new generally We're increases price that seen the from or seen innovation other than of a we've into perspective, what

Joe Feldman

it. this Got guys. Thank you. Good luck Thanks, with quarter.

Operator

proceed. Duffy Stifel, Jim the Thank from The of line you. next question is with please

Jim Duffy

an simply meaningfully cash quarter that Good afternoon. function facility you've on to And late opportunity me AR and here? receivables. an flow working of I in used the Dom is the for factor shipments. questions Two past, Thank from the capital believe some a DSOs Is management? of you.

Dom Blosil

of first it, about year-over-year. on call XX they're question as Ultimately, are up your actually DSOs healthy. are incredibly per our our QX over up but Yes, DSOs measurements, is so measure down days AR our XX

sheets, ultimately, of cash comfortable expect than generation We it's to collect just QX course the then And in on ability meaningful revenue, and see QX to over clear, are an with the strong of with make strong through sure and partners DSOs into the rate grow your retail QX. landscape a I'd payments, where where have some want issue cash two, certainly we're we've and the you'll we – part growth with never of to in with a little had AR distribution our on expect QX. say question, did to time and hen bit higher But that's strong balance accordance we tends that

Jim Duffy

mistaken. I Am

Dom Blosil

ahead. Go

Jim Duffy

You were answering question. a Go ahead.

Dom Blosil

factor we we receivables, So have facility. AR an credit don't

in And the the on receivables that our and/or ultimately facility. base, And borrowing so growth moves AR the based effectively our AR. of it's dictates kind and it availability contraction

the a course really have of it's evolves to, like it, kind year. revolver So how on the or of based an facility asset base that and based that access borrowing it we over

our So its And nice, season. course needs obviously to set cost working of as peak have it's down then the we support comes we what AR over capital down. and lower hire revolver. up it's that year the pay really, than And

so what capital. we And lean into working for let that's typically tend to

Jim Duffy

working seasonal capital The up you peak anything want a strategy are on inventory make uncertainty. to Okay, that manage a long management the does sales for case you your are in working What use thanks a is capitalist I'm down. offense. fall I I'm comments if curious here. to short, then bring is of it sales that And there's capital your comments leverage know and can to doing dynamic curious, clarification. seem contingency And follow at I furthers lot environment, just you're We're working on worse? strategies. in like offsets get still just

Dom Blosil

point through where really levels. safety probably inventory to mean, be will a that of We're it We'll at we're They're extent kind in working built to the inventory component begin season our but stock, definitely. offsets capital I higher we levels the most reduce we've maintain QX. up of some won't

So some of expect some end. given on still levels coming capital. tapping bit, little source a throughout either continue we as signals of watch we of more worse. now inventory we're if the to that down. growing get those But better, lower we pumping for Asia learn capital, extent be thereby, I But right out be the that may really worse, some And if position get from the to in then we're year a cash something we brakes, particular, things on we by those as bringing aggressively bringing inventory, think may driving we'll reason focus down they from we working bleed we're down And for to the to cash way, sort are gets confidence, in focused brakes year. probably a working reason

Operator

next The Justin is proceed. Baird, of from line you. Thank question with Kleber please

Justin Kleber

the question. And Hey, Yes. you does thank was your materially I take Mexico to just taking that then sourcing its live. Justin Kleber, guys, girls? it how production facility for to mix that change an on get for when long for facility goes your update hoping

Jeremy Andrus

question, we we great off a fourth it, in from we'll of in get have the come process to how can scale timeframe. can a a function It's third, terms Look start quarter perspective. efficiency production of how fast line quickly to it's

business we that Our should will impact a to the and impact beyond. that more positive in some expect nominal 'XX belief much is have it meaningful, to 'XX

Justin Kleber

dramatically you a that's get the look few learnings am guys force such discussed early so change reasonable like environment do gross that related, then, XXXX, to assumption? you. I or that in in cost think to margins, the gross range? out the mean, past somewhat is for years, over next that you're if It's from that low understand we can years reasonable thanks few initiative. the margin has levels Okay, seeing the XXXX task trying not the you that I XX% back and you Thank I Jeremy, and wins mean, just

Dom Blosil

the say still we the a think gross Yes, would in that's 'XX XX, that pinpoint it's would that can't the rebound, in of we we're margin which I equation, But rebound. provision of of make Yes. 'XX business, terms that that side meter include is sense whether levels targeting, or really days. and something that's which pre-pandemic independent reasonable assumption core business, early I no, an

manufacturability, well design we do think efficiencies, certain internal and toward that back things we of can requires on ensure to built elevated from initiatives we We as internally think to margin as things for knowing which we that the don't margin supply in things levers well, execute least gross to chain, that of removing doing back product above how place I few control, as tie about progress the as some operational it have drive touches and continuing as which the think container sort includes making we're doing, at efficiently levels. strategic and revert manufacturability how team going gross tailwinds Jim a that really it's you can the just force, to unlock how is one a are experience we're to to our to exogenous that design transport targets just margin, levels. either pre-pandemic it's those margin to to greater and that the we about we around as a we think task work about. that The for extent, will that, more pre-pandemic necessarily are through assortment product, rates, gross

we improvement container an with down, unlock, unlock FX, future and end. an manufacturing rates future. we're how are tail actually also currently And independent how just somewhat, costs provide addition we think diversification we expansion. tailwind would the sourcing, rely those macro thought global about nice trends, which on degree I that a hope, for nice go. But so have in come also kind of kind we to important But hopefully levers, of would gross a XXXX container in to that a consistent be improving where that's seeing bases whether And of which create continuous across our of margin meaningful

of we do just on those macro a degree initiatives we of environment have the a and back high uncontrollables. controllables, as get the as as believe with question really can It's TBD. to controllables levels. But it's of some combination summary, do the the come so they the just a when take to together. these And in we pre-pandemic well internally And confidence, mature kind time uncontrollables how based of

Justin Kleber

guys Dom. Okay, great year. rest of color. that And best of Thanks for luck, the

Operator

That you. session. answer the question and Thank concludes

over remarks. the closing will call to Jeremy I Andrus So for turn

Jeremy Andrus

the participating for and your Great, We conversation. call for robust us. thanks today's in appreciate trust

hard have Thanks. to We continue and a work to day. business build great a great

Operator

your concludes Thank for call. That today's participation. you

lines. your You disconnect may now

Traeger (COOK) 12 May 222022 Q1 Earnings call transcript