COOK - Earnings call transcript Q3 2024

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Operator

Hello, and welcome to the Traeger Third Quarter 2024 Earnings Conference Call. My name is Alex, and I'll be coordinating the call today. [Operator Instructions]. I'll now hand it over to your host, Nick Bacchus, Vice President of Investor Relations. Please go ahead. .

Nicholas Bacchus

our you XXXX Traeger's this of results, can found Thank its to afternoon Investor everyone. I'm be Quarter investors.traeger.com. Third which on Relations afternoon, at for Vice call joining discuss and Nick Traeger. Good Bacchus, at President website were released

our Chief me Financial With Andrus, the and Officer; today call Executive on Officer. Dom Jeremy are Chief Blosil, our

meaning management's started, forward-looking of remarks want Litigation everyone the the on statements call get to Securities I we provisions that Before XXXX. harbor contain this may within Private of of safe remind the Act Reform

These or of differ to, statements herein. and on outlook from XXXX actual full year and and for results. consumables expectations limited revenue events, cause results to to categories views for our statements risks results anticipated future are implied to based XXXX are subject as and uncertainties expressed fiscal not quarter including, Such could fourth but that materially accessories current the those

I factors annual December encourage of report and filings are our the discussion Form XX, report once XXXX, quarterly XX, ended you on ended XXXX, Relations which these XX-Q for for XX-K on Investor September other our to of portion filed, year the on and quarter and Form uncertainties our review for available a our the website.

adjusted which believe measures. adjusted income loss loss, net supplemental certain update speak You call also or margin, net should to adjusted not them new as measures, revise only we to we today. and income share forward-looking non-GAAP reliance of undertake on contains which or take information. obligation or usual undue EBITDA, financial for statements, We no these This including are any per adjusted EBITDA

portion included from may definition financial other note measures Relations presented our similarly non-GAAP reconciliation on in website GAAP these by most earnings are measures measures measures @investors.triger.com. differ contained of comparable companies. metrics the that the which Investor release, our herein of available Please to such is The of titled GAAP and

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

Jeremy Andrus

for earnings to Thanks, then provide and third XXXX our quarter This our you call to quarter Dom quarter financial driving I Nick. start Thank reviewing to improvements joining solid internal results XXXX on results the will third our performance over more I'll dedication discuss turn to we team's by our expectations to detail reported the guidance. exceeded demonstrate afternoon, financial business. that our third and our consistent call.

included Our important highlights. Third performance Quarter several

with growth returned year. this prior First, growth we quarter. revenue growth as compared Critically, very performance of strong growth were the driven X%. by category, to the in a to our top line which XX% in

our Second, significantly. profitability improved

improvement margin last third adjusted year. points to EBITDA gross improvement EBITDA million million as expansion basis margin bear of translated $XX quarter significant enhancement Third quarter improvement versus adjusted drove year's strong to basis $X margin gross margin external margin Expense fruit. factors was both our points. in by expanded continue driven as by XXX well XXX along which initiatives, the last and of discipline, gross of This a the with from

adjusted range, leasing and million quarter to last EBITDA on to million $XX million. ] and adjusted Given X% the quarter's EBITDA are top of [ sales performance, by are million in third our we the our increasing expect $XXX guidance of financial At better-than-anticipated now increase XXXX We $XXX of midpoint XX% we of guidance. guidance. fiscal $XX our

the at previous range. performance expectation XX.X% reflects third at gross XX.X%, retail business quarter growth our sell-through to in The and is by up EBITDA the period. guidance to year third quarter during full from strong in driven increase XX.X% margin our to for our be adjusted grille This the being XX.X% our

the soft given Our the this strategy promotion. promotions responded backdrop Day to industry to was Labor successful consumer our and demand year, favorably lead into

sell-through Given consumer sales. our of demand the third coming channel quarter drove in season, and a the peak second out strong retail quarter upside position inventories better-than-anticipated at very our partners replenishment the clean experienced and that we're in

am pleased in behavior. the we the Despite I their discerning demand and demand view with as the stronger-than-anticipated for consumer quarter. the consumer to our remains category, continue in grills performance, this backdrop think mix purchasing we

healthy we outperformance across to are in continue While grille overall we patterns. sell-through which that see priced consumer their below spending remains the grills selective believe assortment, we that saw demonstrates our in $X,XXX,

as to we while as due And see strategy. mix our Grills shift well partially ASP this a did promotional our reduction in

market customers of and brand attachment adjacent contributed traeger new bringing favorably revenue accessories this view are and into share. hood, as the value. pellets a like loyalty high seems lifetime and gaining We We strong we customer are to our

The strength third outlook performance year our full grille is for giving to our increase the in quarter grill's us confidence segment. the

I year. our are pleased challenging goods grills in We positive with environment single-digit home-related assuming our in grow to big am grills an that growth remains now ability purchases. for for revenues and very the ticket low

the for there Our Traeger and is the third quarter strong demonstrates brand. sell-through that in a performance growing appetite

United on our largest opportunity accelerate States. prior calls, and to is discussed our awareness penetration brand growth and pillar I've in first As long-term the

that brand place ever. the for is our in and than that health believe elements I stronger remain growth

marketing awareness of during approximately as For by our is meaningfully increased strength brand brand unaided of brand. evidence compared third as investing of The industry Traeger's not of is a XX% quarter growing time the we when in challenging -- of our shows awareness fact example, the and Traeger environment a into been the to research have that funnel top XXXX. aggressively

Net energy our Traeger evidenced activation. other community continued which brand any is being for Promoter Score, higher brand materially The engagement fueled in is hood than also the remains by within and by investment cooking affinity Traeger our outdoor brand. The the industry-leading around

important content of continues Our connection presence with part an strong our consumer hood the to is flywheel. be social and media a of source the Traeger digital

kicked in campaign social GameDay. The August, contest, strategy during features quarter. activation Traeger recipes Traegerhood off this on engaging giveaways, focused content continue all We football the and we In third season. the

some in fantastic, on and YouTube Traeger and of tutorials biggest and their tuning the third Pit Traeger Viewers the their outdoor cooking Traeger is recipes since Traeger strong on series Traeger. seeing feedback growth tricks quarter. we launched YouTube for can of step-by-step weekly in its chefs from names from cooked reception been a are also Kitchen Kitchen tips, get The favorite giving masters the recipes Pro cooking the in hood featuring by has subscribers launch. in. and We

by was accessories reduction quarter, driven our third in In Moving strong our partially growth accessories category, a softness revenues our at the offset on MEATER. the in in by to grills business. business

As attributable its is seen its we we a in which is strategy discussed largely pressure last creation demand on earlier in believe year, change to sales, which this ineffective. quarter, MEATER proved e-commerce

results our period continued in We lower to QX and improvement news sales The pressure implemented have of drive quarter and ended than modestly we the third going on MEATER is good lowest expectations. the meters year volume strategies that are anticipating is forward.

fourth of customers. on is MEATER quarter focused business team the marketing holiday of period, fill prospect selling the potential the a is reaccelerating and funnel to ahead weighted

season. driving conversion are demand innovation the brought a focus X Meters with peak probe to MEATER its MeterPro launch XL, a solution at has in our meters increasing market We with also on of ROAs We healthy that recent MEATER of revamp strategy creation innovation fourth Duo, its Pro new believe its quarter probe and improvement September X recent Meter's in will year. demand in product and into launch drive next the solution. and creation

decline in for a expect in trend, we the we our sequential improvement in planning business are while However, quarter. the fourth accessories

on Moving to consumables.

However, was pacing quarter Our the largely our business. this in consumables revenues a in shift due to third declined pellet revenue

remained both and consumables. and quarter third Underlying was demand trends positive for consumables for food healthy pellets sell-through

we return blend In quarter. consumables relaunched a edition pellets, Driving and to Matt are in revenue category to our in Trader Master growth recurring with consumables fourth third long-term growth offering our the Meat Church Pittman. partnership limited Pit expecting pillar. ambassador, remains positive wood pellet We or a the quarter,

continue pleased category in in have and we gain third our we time and with food pillars. to thus Safeway worked closely Overall, successfully have grateful XXXX, ability demand added distribution drive am team's are our we year navigate for of far whom I grown in adjusted grow. performance our the far our first invest September. long-term a our ability EBITDA have to with to continue RUB quarter to successful execute. we I consumables On Thus in am eager to for to whom while period continuing into the side, a growth consumer our challenging and demonstrated partners with to and retail

the want serving our improvements in for I to and hard Traeger dedication business. their team also continued and driving consumer work our to thank entire

I last continue positioning quarters encouraging ability be growth. in ensured and channel to forward year of The inventories and next confident into year beyond, drive look X and I and this has the As trends healthy and and that sell-through appropriate. extremely remain rest our over the to improvement is Traeger's to

news our beyond. accelerate and is strong XXXX This into as is expected innovation pipeline product great is and to

to in more turn third results now over detail. the call financial I'll discuss to Dom Dom? quarter

Dominic Blosil

. The outlook everyone. quarter fiscal good XXXX. third and Third replenished Today, Grill healthy in sell-through Jeremy, quarter our grew $XX responded Thanks, million. demand consumers following XX% revenues and quarter. discuss favorably the $XXX million. I offering, our revenue year increased better-than-anticipated to and by revenues driven was as to promotional to strength afternoon, partners for second X% performance Grill updated our our will retail review inventories

was quarter, XX% During Consumables sales lower-priced pricing down driven $XX in third in by a volume lower shift last direct higher saw million, a which we of partially import growth mix mix strong Grills, quarter to ASP, by revenues grills, were year. a the third offset to strategic actions.

Underlying in pacing healthy in Third was and third trends the sell-through business shifts the remain by consumer in impacted was negatively positive quarter. quarter demand our quarter. consumables revenue

as fourth We driven revenue revenues XX% the accessories. year. lower sales MEATER in the to expect to decline million, a quarter $XX Accessories consumables in decreased Traeger to compared growth well see by as branded at positive prior in

while revenues were to in European product loan Rest XX%. with revenues of of a were were a down World World related MEATER. Rest America XX%, revenues partnership by North pressured reduction sales Geographically, up

on highlight margin, to our profitability in Moving a to gross be continues story. which improvement

the gross margin Third of XXX XXXX. quarter $XX Gross XX.X%, third quarter quarter million of increased third the profit $XX from in basis versus points XXXX. profit was to up million

rates benefit internally external from to lower efforts. both ongoing as margin Our driven margin transportation factors, well optimization continues including as gross the

worth favorability. warranty offset partially one, were of supply XXX chain quarter by credit favorability driven of points from margin transportation other worth to points basis points drove pellet mill onetime points. basis benefits efficiency of XXX favorable basis dilution five, and three, basis items These four, basis XX XX points; a points. XXX costs, of partner; gross was which Third lower a expansion Two, related XXX basis by: favorability

compared of Sales million marketing in XXXX. the expenses and third were $XX.X quarter $XX.X to million

a Administrative points Sales year. sales. As percentage XXX of to of expenses basis marketing XXXX. $XX points as General million third percentage expenses of basis of G&A sales, were expenses in and last third and million the down compared versus the quarter a $XX quarter decreased XX were

compared to diluted our expenses in the of of share as discipline third XXXX. third loss maintain the the of I am net was was quarter leverage in a $XX $XX million pleased positive Net with to our compared Net returned quarter growth ability effectively $X.XX of $X.XX and per third as to in for operating loss the XXXX. financial quarter. million sales to loss to our loss quarter

$X.XX the per compared the to $XX or for compared loss quarter diluted XXXX. million share as $XX in million Adjusted in in $X of of quarter was third loss $X million same XXXX. period $X.XX an or net to share million EBITDA in net diluted was same the adjusted the per Adjusted as period

million. end end debt third million Moving net previous the totaled resulting on short- highlights. $XX fiscal the and the At sheet quarter in third cash of year. million the $XX million to of $XXX $XXX quarter, total and cash compared with balance of to We of equivalents ended the debt, at long-term

Our and we healthy total of with $XXX liquidity third profile million. the liquidity ended quarter remains

balance $XXX was XXXX and of million quarter of third end third fourth levels compared quarter appropriate at the end the sheet to $XX of the million that the current of at are quarter outlook. demand inventory end of for million the believe at $XXX Inventory our XXXX. the We

both coming quarter, the third levels quarters inventory Grilles healthy given of channel of in in better-than-expected and this out of Furthermore, third sell-through the second year. were

levels ship inventory XXXX. positioned with are pleased retail and of are inventory our from We the into channel an partners health in perspective new we product the and as begin believe Grille quarter fourth well to

discuss fiscal year to outlook our like updated I'd for XXXX. Now financial

revenue our $XXX of end $XXX low revenue range the to guidance and to our increasing outlook are We are million. updating million

for reflects our guidance in growth low for MEATER. revenues, by our continued by an for improvement expectation expectation Grill the Grille our from driven outlook accessories approximately guidance revenues. expected single-digit category current an full in flat positive offset Grills partially being for The the revenue year revenue Our prior improved at decline is pressure category,

We're expecting category prior our quarter fourth to in decline the year. accessories revenues the versus

our we of For raising is million a gross increase are The full range outlook. our an $XX to adjusted $XX million margin EBITDA, million, range from million. $XX to increase guidance in year an by improvement our prior of $XX being driven to

XX.X%. up XX.X% year now margin versus and gross are assuming XXX range from XX.X% XXX prior to We last to up of our XX.X% to points full basis year XXXX of

of reflects our as gross increase margin the half expectation. The our prior year second upside in to the compared in outlook

We of Grill fulfilled higher higher margin infrastructure. margin from direct domestic through larger-than-expected carried a our program, certain benefit including mix our which seeing are in from logistics sales import a components a Grills

by Overall, growth I third am growth progress positive highly encouraged returned quarter, led in sales XX% to the In organization Grills. our we to continues by make. the

gross We incredible the the XXX guidance X improvement margin the of XXX our points are the year on organization placed at margin of midpoint last expansion over basis the of years, range X see the has this over an benefit to last and basis is points focus our years. expected seeing and

EBITDA are to well I to drive raise positioned Our we adjusted guidance very execution continue we as is long-term strong value. allowing to shareholder that again. believe look once us our

the any questions. I'll operator over And call Operator? with to turn that, the for

Operator

Instructions] Glaessgen comes [Operator Our from of for first question today Anna B. Riley.

ahead. line Your is Please go open. now

Anna Glaessgen

the of pulling little benefit implied to in touch is which in forward not that beginning there. shift the still the quarter-over-quarter. case? growth And than for understand the sell-in I'd guidance XQ, angle to last expectation trying of really, was flowing to XQ. the to the quarter. Grilles just a spoke help the on XQ earlier we're in First, from XXXX. for bit you a Is to my XX% like quarter, But question I growth fourth prior on growth in the any Obviously, believe

Dominic Blosil

Yes. Good question.

I will think in speaking, right QX, the see that growth we you're moderate down. sequentially directionally that strong don't in QX expect we to in Grille hold

well moderated the we we prior out in is we're Labor really as driven that related pleased as think, QX, all expect growth with, QX replenishment And expect And in benefit do our coming in line some think with in I QX.. largely sell-through in obviously, marginal outside just the I Grills. of our by in sell-through . fact to this QX then QX view, promotion. part generally but the although that in is QX speaking, predicated on Day

Anna Glaessgen

same still And encroachment you peers? see Are quarter. from discounting it. in seeing private label POS Got consumables, landscape shifting the current the competitive to or pellet. Can then you from in of degree the Nice speak to the positive competitive to

Jeremy Andrus

we've shift pellets, otherwise impact couple competition into We of ago our the the about that of pellet years private both X seeing category base Traeger Traeger we the landscape and and the in meaningfully. retailers, label I or a as with built a a seen installed felt on X started ago larger introduction that. X years of greater of was talked Grills don't out We there Yes. know and

landscape see know pellets. we And meaningfully So I brands go. seeing don't we're that and come shift on the

is Traeger We a that our suggest brand. loyal believe trigger tend that the would to in owner to research

marketing the in how around pellet, tell the outcome. around to cooking the we the it of the a is process and pellets of One we attempt things quality as influences product story do invest that

and notably Traegers important we so control little think is vertically drills and I parts we pellets, do it's integrated that every process pellets tune our can to different. around we and a our that in pellet bit that the

product plenty There could this lease competitor from landscape and well perspective. the we're that There's a to from in space mill not but the shift. years, certainly of are positioned of many seeing build and case we're brand enter for sort low-quality category that's low to a And a that believe been so a barriers we a manufacturer, meaningfully pullet.

Operator

Our Megan comes next Stanley. question Morgan from of

Megan Christine Alexander

start second category, little Anna's quarter. on seeing, to improvement. maybe wanted the about to question you sell-through in you the did back bit a about just are I in seeing the POS sequential first you Grille I think talk positive And talked

in bit a the quarter. still So saw category But around you I were balanced. your maybe are, POS think positive you're subdued, guess, that comments third the you implying

just your about to you're the but maybe bit for season And the to want corner? is about Are category to you can playing that, enough thinking kind on a in related category? early words turned thinking mouth, the don't you say ordering into I you're seeing little the from you're retailers talk the hearing spring how of we've how selling XXXX. what how into about put

Jeremy Andrus

Yes.

down So and category correct mid-single the believe of in be sort for mid X.X%, low single year. in digits, up see first Grills all, third -- forecasting we digits we sell-through we're is year-to-date of the and X% positive drills the low quarter the did to

is answer outperforming category. category we So the are the

are some share. We taking

and on are all, data. focused look we we're we seeing bit it's who's beyond resilient consumer focused forward, certainly I goods. exaggerated little pandemic. -- this a cycle life the less right that in consumer would I ticket category this the industry a And we're durables, -- about that to on pull weakened high and As I where less think of home with a what think forward colliding sort move decades as now getting is of very would We recovery, step is we say, at is back characterize a haven't of first

is just there's is of just trajectory It's is is pandemic timing looking the prior think found at that a a of I know recovery. we of the think, trajectory certainly and belief What normalized category the the then and look question trough that unclear. -- think category, I sell-through the between it's the in immediately it's to And unit found will like, growth. that -- what -- decades our the and prior bottom. is, we trough lot we What the

believe will we that 'XX category housing catalysts this believe We the than homes. more as rates from the the a for But of some start to feels see be found the come lower down. current interest motivate in more will more seeing these attractive interest like And in it that the year further that investment we and better are to bottom, 'XX. given housing category become in just certainly, driving rates And pandemic, we we're We in transaction, get category. growth like category.

So X in the look, we intersecting really the and category our tees years. this look very next to successful macro investments and with and business at we think this the a the -- dynamics and certainly X initiatives up

Megan Christine Alexander

-- for really And follow-up a maybe just that helpful. Dom. That's to

the OpEx this kind than do we and think better of good in also you in the but recovery see top been come quarter, about margins? should your I still maybe when have maybe leveraging bit -- a normalized gross margins expectations. a sales controlling EBITDA the we marketing of incremental in On at guys things, side really think how line,

that of when a you I of the you Just might than year, to do a more there's reinvest maybe to back how until backdrop? kind meaningful know . of could to the you've in into pretty think flow-through later? think some funnel wait we about inflection next upside to but of do a been about maybe that candid should top of get you that marketing? how to rather normalized want trying sooner look So sense category, in that

Dominic Blosil

Jeremy finding lean standpoint, lot a about is It's to bottom. top predicated category talked a a great into growth mean of signals on question. I it right? we that line from So want

long-term we about in model financial important. is want that part where based think think top fire certainly much and ensure return is that I about to order to that timing so on we a the growth, in to se we mean, the want know So said, per our which when upside defined that guardrails That we've invest and capacity there increased sort investing in line as I to of capacity. fuel investment via will increased don't

kind know what would don't that beyond the profitability dictate flow I guardrails we and through. in lean around But of

to we EBITDA clearly, both drive unlock it expansion. invest, So kind growth, would return continuing in wouldn't that do we beyond to advance and would of guardrails we're we post those but ensure if to incremental capacity, of which this

beneficial that's certainly, focused gross initiatives with line has predictability improve And as that's been on of that just in margin well picture. expectations the been in to macro the margin gross performed around we've relation as terms the the how in

probably However, think us thought news. would great initiatives be where we those I do of which ahead that today, got we is

probably on a is continuing a the with profitable, increasing to for we growth which we on sustainable as about about we discipline OpEx component, we to profitability, to plan future, and/or an layer, line. right? needs how level and second more as we'll how found margin, ultimately be about well we where the manage manageable about we're as ensuring smart important both And investments think but a top how focus important discipline that that think clearly, accelerate to an gross future to on a that to is continue think maybe we're down focus That's that doubling X pillar growth,

Operator

from comes Capital Siegel Markets. next Our BMO of Simeon

Unknown Analyst

It's a [ ask is MEATER. bit Simeon. on I on for ] Dan Stroller wanted to

lag for trigger The before still of owner base percent sort on just first a transition owns is of if the given a is you've if addressed And ever to installed or think you marketing sales working inflect? second currently the a that's if probe. Grill and you're in fully through of the bit what that, timing just you've color

Jeremy Andrus

this and been first of So transition marketing of investment have strategy. into all, certainly deep we sort

meaningful and to of call that sell-through we sort prospect fourth to to improvements. the nominal Fourth share the hard really we of the it's quarter We get effort hard until do we seeing some of But an early to marketing performance. business. -- quarter, investment in like are some fourth a of we're quarter. some signals return through seeing drive around It's was

we're that a some I it's gets immediately, don't progress. flip making think switched I that know but

independent found percentage the have of at the perspective the that front on In an of time. cook opportunity a MEATER still a installed say can that you base there's I Traeger lot MEATER mid-single currently terms MEATER installed we small co-market, the integration -- is we percentage to We limited opportunities we brand from have while owns I in as us. digits. that a of a it's Traeger is this look collaborate base, of of and Grill. probe, tell -- point. MEATER brand low would we we something we've of at think given It's Traeger. we MEATER -- have That's And the there owners small between What over will built very as increase -- sort and a

so think real something than to And in there's front a more to on. that would But say that's progress we focused And of us brands. date. we're cross-pollinate both opportunity opportunity certainly I

Operator

comes Peter question Sandler. Keith, from Piper next Our

Unknown Analyst

China. recently, And Peter do But and any seems on are My exposure. able first China you most to mitigate to Morgan manufactured then is tariffs in that? that do question growth most what X/X like This you of Alexia of on to update said the accessories have Keith. It tariff risk? for and are you is

Jeremy Andrus

topic and number Yes, X that about definitely about of talking we've that started a we've talking a years for hot now. been

we state So some XX% risk. first manufacture about of of XX% we China, in play are terms Grills in all, About where may just manufactured of where general let on have information in manufactured me provide and of are Vietnam.

terms Grill on from Pellet the is -- included in not import of tariffs. code Wood Currently,

although and has of to large assessed we not we've that in time. of a some diversification So manufacturing meaningfully. tariffs our Again, adding period partner have -- the were China, ability for been Vietnam although about thinking our only on the produced scale exposure have said, that accessories Vietnam, we in very Grills. been we're in XX% process With new on to

a is backward-looking on based have. number XX% certainly we'll that capacity and the so the number And a not forward-looking

produced manufactured go accessories, are the entirely in are is on beyond they right now. There's nonmeter and of those. lot on chatter U.S. you MEATER our a tariffs said here largely China. tariff in the in Taiwan currently If accessories Grills, assessed We're produced consumables

And -- I think building going I out optionality looking Asia. little new the other to a on been Vietnam. options that time to But just our model. of it's strategy take of would magnitude we have administration not tariffs. exactly at timing, say sourcing manufacturing in We're diversified, bit in tariffs, We've those sort in around been closely

of were as the source a the with optionality or bit building. long-term like they in partnerships we Mexico feel We of either on dynamics working been manufacturing to in a of viable given we have fair We've a number have the of in the geography category. a the which built manufacture. And although U.S. place that is process not

how and react think efficiently evolve. have to And with that quickly tariffs to the optionality, we ability reasonably we reasonably

And we business. to make thing We've been positioned the think best accordingly. well very proactive won't in decisions we We do understand we're process. will this for the landscape, so reactive. I the And be shifting as

in sourcing And are geographic with the mitigate tariffs tariffs. when suspect to figure And look And out course, we most assessed we of To lever. price same. an can and a tariffs do that those that pervasive work to manufacturers to share that efficient. where more across to will leading would downside they those of the our become broad-based the And extent is how that locations, tariffs, brands environment always are closely pricing and I be are assessed. to will we also

Unknown Analyst

what's margin then X over continue math gross have then have like cause the X Can you gross if drivers first just Do expansion to below And gross good. on year break it . the like looks guidance really XX so, It down implies gross there the QX And that rate? Okay. so looks quarters. look margin months. that? we I full next of more margin. the margin And or

Dominic Blosil

QX that. the math is couple your quarter being factors of on One lowest right of Yes, is to really year. of There's mix the product dynamic. a kind a

freight QX, Second, based are the part play. Traeger. we could factors QX I implicitly gross I that promotional QX from mean, credit at X the a normal sequentially promotional of force. out QX main some as period probably of explain those you task would our also as margin in away model to call on to decline sequential we are for you received

on both but won't there realized was to we which QX. obviously past, in on operational of in XXX QX, also based benefits credit that and some points future tune efficiencies, repeat a the onetime the have focus been able to basis uncover We

maybe or based offset that sequential some So does decline how of you the model on QX. mitigate

quarter the think I around really just as drivers mix dynamics at as holiday But some play main that product specifically. are well in promotion around

In longer-term view, on we think won't terms about specifics margin how next of for year. I obviously, we gross getting mean, be into

sort progress. of talked have how we've margin on of initial jumped plans ahead about We gross

so, macro dug really well as with assist of margin in tracked. on in really kind to impact the incremental term a short the stability for both and expansion there's as how long-term focused have future. view, a a Clearly, we're whether be gross from, initiatives that has just driving level things outcome, been the of benefit new we phenomenal and/or it the but and been more It's really happy team

next ready we're And Obviously, that where about of gross on comfortable, our dynamic. beyond in optimism so to of where feel it's but future. margin viewpoint provide I within would the would realm that we say year. a sort terms I speak aren't And

Operator

from Peter comes Benedict of question next Our Baird.

line ahead. . now Please is open. go Your

Peter Benedict

Just number. that driver that within . just didn't margin of year headwind kind do of the day the not gross Was the of promotions, hit XXX if that was Was a there. points basis year. promotions? ago, in that the you kind curious the this I'm -- them did you quarter. that labor having was

Dominic Blosil

That's promotional tied activity, . right. to it's Yes, yes, yes.

Peter Benedict

if to going how you for and those How you you, forward, track, thinking clearly as the the lot pricing . mean, a you I about think to So view just new what's innovation on companies, from XXXX? mean, promotional about on we XQ? in do your promotions, I bring you start stance items? from are promotion -- respond not of as consumers And

Dominic Blosil

Yes.

think promotion did Day run I promotion. or QX, incremental Labor we an for

there past new peak sort MEATER was quarter. as of fact promotional demand, is especially the certainly element kind we're price consistent of It's there's at points. their is success lower with promotion the plus that pent-up our So seeing a season. kind in What that just with activity promotions. is QX in years. our uncovered normal It's of they're holiday

that these we And reported attribute terms large I think see sell-through could fact significant in as where probably of volume at demand. part past that's more unit due promotion you as leaned One than basis. well in on the into a where sub-X,XXX where increases, years to both there's both a level that products, so to pent-up and

meaningful there's where certainly, volume. And

the are margin of But an way use check valuable kind as standpoint. clearly, stray that long brand restrained how a to lever of spike, and think brand an learning to time. an future. the promotion it and that sort want has we interesting opportunity market there's both been the spike a about we think seasons to for we health, in may a of right growth from in in the unlock et outside peak demand been I stimulate as important won't gains can so how we inform continue cetera. the terms period And lever brand, although certainly share of of think we we clearly, box the and guardrails of kind in to on when about to So that's the believe continuing

Peter Benedict

I'm I first? years, maybe dig here adopters? bottom folks. there awareness with kind as markets no, the it -- markets don't real for improvement call-outs think -- were there come Jeremy, to is within for maybe then -- be those of then couple in there? last might of the encouraging interest brand the growth off coming an And are environment Grills, would certainly Those you those in make I the know. regional out that for anything thinking mind are heritage your to that number? of any signs front just behind think about for Oregon, sense of And of Anything Utah, watching in where maybe of that

looking we're of not for bottom, come in terms to think trying just what signs off that about to Just starting . you're the bottom

Jeremy Andrus

new on pleased Yes. point with say things. certainly would were data it's really that We X to awareness. And I a -- it's testament

There's There's way story to more marketing stretch consumer, to with They're about to the it dollar trend. way credible no The first further. the they is tell a a than evangelical. brand a a brand are passionate our consumers share share. and

that investments consumers front every a the our with in or we terms been brand leading not of on social think funnel marketing although is we of work into day brand, new in in media of second have presence puts the top I influencers. where invest

get points by sale increased Our accounts that in investment seen of high-traffic in consumers.

low everyday to media. lot of retail and of at front investment, be And but lives a of top so their funnel in opportunities consumers social still in on

might seeing our growth funnel we that invest of grow. are fairly terms and see increased markets category say of we noted to lower. seeing top we're In the They're in is how awareness more more of I broad-based. where the would and sort we're start where household means speculate penetration what where as

we a top of have lean to in as funnel foundation category the recover always And funnel in uptick from the future. product into of sales I opportunity building an perspective a have some new We seen to Atlanta the some small all brand. drive the would who get to to brand base a consumers marketing, of growth of really And in saw say DMA, the that's demand with nice and optionality And the function of see front think just the we of we of begin a marketing where and we really we're top in I investments. made strategies. tested in greater as percentage a investments not that

brand product of that put create that investments products about we consumer things our base. building experience. the to we've that we've our to capacity bring talked team other and in our make And investments to we to baseline in around saying more can a part as on better to this a made receptive the product building the see simply our consumer we only proud end things the new market, would so a by because as do category. product fire development I'm then certain these hard fuel to start there are every there moat day of business that's are new I to really not And team helped in is innovation. actually for driving engaging

launching And we're But really products our and at the launching to organization. product on product in the dollar spend in addition so to dollar sales that products. tend a marketing far we've isn't to make a going good where to launch gotten and new side, sales marketing we stretch development

more investments to going happen, focused probably the think it's lean That's I consumer in resource recovers a making on category see couple we we its this in we'll accelerating over products are think whether So the returning or very the high be the new to of bring years category as to we've little We environment category more on been these a that as but market. the replacement last not. growth going more to very way, reactive bit be

Operator

comes Group. Joe Telsey question of next from Our Advisory Feldman

Joseph Feldman

maybe was correctly, positive. I reconcile down or consumables you misunderstood sales, XX%, kind if guess said was I regard heard guys you -- -- you could with the just sell-through you it's something I hoping of for which I me. were to And

can that going that up? here? ASPs Is square way what's mean around So down? you Or

Dominic Blosil

clarify. good a That's Yes, question. happy to I'm

it's low a point I standpoint So a foremost, the kind and from first think, volume of for year.

and what was a sensitivity another a sell-in in or in there's turn, from orders of took the it number just standpoint, between QX timing kind and/or So place reported otherwise, any pacing will, to standpoint differences QX, of magnification some QX, put in really QX. way from of benefit which that

So from case, this sell-in which, performed standpoint, QX, obviously, of that issues, we a is the orders, subject which we're in how there's with what really, but of sale pacing not between sell-through fact it's that based timing at in of kind landing relative of the largely therefore, sometimes number dealing to point to reported, consumable the which brand percentage. magnifying kind that disconnect, magnified of changes pacing, was are base, and again, on that's lower up a kind in by a a is

installed the sell-in would handful that with But standpoint, we of consistent that a And the Attach base usage see expect all that growth to of all underpinning consumables of intact, I in of to do be data QX. remain right? -- remain health pinnings evaluate. of product the collect, a return reported a add we KPIs kind rates and levels. kind connected previous consistency of across we shows from

timing health between and this function the and of QX QX?. really there, So is a that's is just happening kind .

Joseph Feldman

just Got follow-up. then maybe it. a And quick

Because China inventory question asked point. broad-based it's beyond out potentially again but a are accelerating to for thinking at Given actual be come? that to avoid about just also you asked like further thinking the guys was seems how of and been to inventory the you it's in the And it when consider guys quarter? would earlier, different the tariffs strength, fourth just sort way, going this tariff

in not he's office but that guess, I be... So will yet,

Dominic Blosil

we'll matters I on of it's think is terms et timing, watch Yes. everything hyper-focused level table, this. important closely. said, list, And what Certainly, and products is but implementation cetera. Jeremy And the something think, be of we'll I tariff, on on obviously, in

we about long-term I place as the think in that a have term good short we need how as well the both think efforts. we to react plan mitigation in extent to

it to would don't lever. a going to to just using of I terms that know overcome face you're ever In the sufficient as eventually, tariffs and news. be inventory have

a I So time. don't believe maybe a in that bit be little the lever pull. just of But we term, buys short you that will that, it

everything But I table, guess. so on never, the is say never I

for is ramp takeaway that, relation the that to want I inventory managed about SKU QX that launch planning down of terms are the forecast of I how channel new that is call levels QX the think healthy. the set don't demand well. we outside referenced to I potentially mean, I we mean, you tailwind is I inventory, we're a if know in and in how Balance revenue to question, think think as well quarter. in In of level sheet we remain broad inventory inventory on to levels product as healthy clarify as But prior in

We wouldn't have from a that and deviation . working see answers clean question. QX, if capital your that in

Joseph Feldman

how manage was trying No, planning like the I Yes. and sounds to it's get it you'll for you're clean, whether a the sense quarter. of just it It to demand.

So that . sense. makes

Operator

Our next Canaccord. Brian question of McNamara comes from

Brian McNamara

you what Grills. year it I remember you call, is for market And you expect tailwinds another whether grow? to a cycle expect new the QX X expected category expectation Do off, guys Grill on you said year you purchases some grows last from potential or pandemic next for early like year? years ago? have down seems not, do to for innovation, the your a replacement First like grow XXXX? It

Jeremy Andrus

Yes, Brian.

consumers end houses, normalized of more more their as lower with transact perspective, we're invest growth to and pull-forward interest to in category category first addition certainly in we this So I just said, cycles replacement rates. some from off, demand houses catalysts think the in there's a drive getting the that macro as

And found category -- the think bottom. it's we is or finding so think we

the Category spend year-to-date is last the down about of over decline X.X%, X% years. in that rate X slowest

So positively to category is. speaks that we the where think

other hard year, growth pull-forward we're or of think do next we're We next In there the call to that trajectory on we recovery. terms think the feel like growth. towards category getting year, some demand, back side category we hard than some growth be forecasted of category of heading timing to do will and

as making growth keep investing been and investments product notably, we've stewards in we've in new that things engaged. look, development, to been our the we investments brand will And drive to believe good in continue future, in community

in we're growth. good that investments back the about this just guiding we so but seeing category of we're And the year this time, point getting feel and getting making resilience not business to in certainly like certainly at we're to feel the next closer to

Brian McNamara

helpful. That's

you direction. to freight risk? for Can X that spot margins in how remind been year, really is for plan wrong guys? us but guess, have impressive you the contract I versus you this Secondly, is mitigate potential Gross percent Dom. . And moving do what

Dominic Blosil

volatility So we've year more of mean, understanding back I spike maybe saw in year. think of guess And from and spot not think come I the around the down. our this prices seen little I'm We the the a spot middle continues this they've above I to bit year. It is what more kind obvious I risk. fact starting tailwind is of July, next spot. fully contract market lessen say I'd with kind to off the fixed dramatic be standpoint, a lap spot over time tailwind more a tailwind, in maybe the rolling as a that we we that's contract improvements longer-term market. do that the was well a rates have

for communicate than an tailwind, will we fixed of kind I what historically. of basis. than think on this would that be we something And call say mix a other do that fixed isn't the smaller So that contracts enter into on would we've I annual spot seen albeit

the of high and in more fact spot out at I want mix the contracts we the design, tailwind think last a fixed probably given locking volatility there just that was capacity. and terms naked over we've a by fixed that months, by greater between been XX, miss on of XX growing into the didn't to degree

chain of get the X but said, to leveraging a for there's business. that X. procure margin I nice has add relative been between also would little predictability throughout tailwind that new norm. how touches we -- we next a component gross kind how a year and direct we're pricing within clearly, think remove the a import more component the of a about think about of this I and And we bit a finding just hopefully broadly picture a is I we're growing -- So into or continues to I to the to what that of begin to growing think think and settling the mix plan Like it's year been think be supply a volatility we as nice partnerships best I

Operator

Phillip from Blair. comes question William . next Our Blee of

Phillip Blee

and margin your think gross flows line. half the guidance are in the really and impressive, outlook uptick of for Gains assumes year EBITDA bottom full that gross margin to I about through

So on those potentially investments maybe differential what's and the could upside to can about lead driving line. talk top just you the whether then there

Dominic Blosil

don't I totally . I understood that question. that? your restate I'm know sorry. Could you

Phillip Blee

points is half wondering XXX of are It EBITDA that an growth? what on margin. it's what your improvement like looks . guide -- kind differential expenses gross and there, kind that was Or just further -- the the in where margin Yes. investments of in guide differential it basis about if was like driving the year, looks margin about full

Dominic Blosil

about I half heavily weighted very a sales it. quarter, QX Yes. of is got so MEATER it. their in of favor much and Well, revenue. it's Got the They direct-to-consumer/digital do business. in

in digital business to around of variable seasonality. and DXC the And lean it's into MEATER more offset by to really, do expenses the growth creation operating more heavily in increase investments quarter, . the and drive an mainly marketing tied a in that's probably for demand dot-com so we given and weighting function so their that and to largely margin more variable -- investments those of and banking upside gross tied

Phillip Blee

you a year focusing upside next That expect Can around refreshed. pipeline the quarters timing, a And color And really some just of . to and bit the more spoken makes maybe then lot much you're you've us of assortment now expected we the about then little categories for give over sense. should be of past how a on? couple newness there. maybe what

Jeremy Andrus

Yes.

calls, interestingly, grow. more we in we in to recovery. years invest more don't all, of We to our lean began to on first out So important so that do of category to as time simply And markets in around recession, 'XX moved moat development. in the really And we we've it's an or that the growth this invest said would as it we that as product positioned and 'XX believe really prior business. market came we be new

we will we Timberline We consistently. technology see in more spring. cascade $X,XXX to a the launched will in Grill going Ironwood, And so Spring be called launched our that's is at $X,XXX. an more of when to from and our Timberline be Ironwood 'XX, we platform there XXXX innovation newness sells model down I newness, which the in think what

is 'XX. continue will And -- into into that process our expectation 'XX that and

X really we understanding And through in, been think sort of management of execution. product mastering capabilities process thoughtful I going but not and have investing that that strategy, greatest the product market. net process the product of the engineering, all only and to the the of is in manufacturing consumer way

year. coming confidence on operations got gives next have is seeing also satisfaction multiple the I've our me most product offers things step more capability deliver that is time, the years really quality me and to more And There's so our pipeline. of up product and into the X the on visibility year And cost. a and that lot teams coming product on of after. of there's

They take time. overnight. developed get don't that capabilities are these so And

to capability moment those the us I of invest in getting that from And began we're that say would I harvest growth see we that capabilities to come. we in to when positive is continue to some see years And drive more what's investments, close. to we these will think start

and certainly Grills So the consumables. the it's have coming years which visibility focus I will -- a there's accessories lot or new X be in on of in next and X

Operator

today. will questions no further take for We

Thank So that conference today's you joining. call. all concludes for

now may disconnect your lines. You

Traeger (COOK) 6 Nov 242024 Q3 Earnings call transcript