Traeger, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Fourth Quarter Performance: Fourth quarter revenues grew 3% to $169 million. Adjusted EBITDA was $18 million, up 41% from the fourth quarter of 2023, exceeding the high end of annual adjusted EBITDA guidance.
• 2024 Year-End: Despite macroeconomic challenges, 2024 was a strong year with grill revenues up 8%, gross margin improving 540 basis points, and progress on strategic initiatives like brand activation, Woodridge series launch, and Meater improvements.
• Brand Engagement: Leveraged social media, brand ambassadors, and influencers; launched Traeger Kitchen on YouTube for subscriber growth; partnered with brands like Made In and Bulleit Frontier Whiskey for brand activation.
• Meater Challenges: Meater faced issues with marketing spend efficiency, competition, and market slowdown, but has strategic plans including retail expansion and product roadmap reconfiguration

Segment Performance

• Grills: Fourth quarter grill revenues were $78 million, up 30% year over year. For the full year, grill revenues were up 8%. Revenue contribution from grills was significant, driven by strong sell-through during holiday periods and the launch of the Woodridge series.
• Consumables: Fourth quarter consumables revenues increased 25% to $31 million. This growth was supported by strong replenishment and new distribution at Walmart.
• Accessories: Fourth quarter accessories revenues declined 24% to $60 million, primarily due to underperformance at Meater, though partially offset by increased sales of Traeger-branded accessories

Guidance

• Fiscal 2025: Revenue guidance is $595 to $615 million (±2% change) and adjusted EBITDA guidance is $75 to $85 million.
• Segment Outlook: Expect low single-digit growth in grill revenues, consumables growth, but accessories (Meater) to remain soft. Q1 2025 is anticipated to have year-over-year declines in revenues and adjusted EBITDA.
• Tariffs: Current guidance does not account for tariff impacts due to uncertainty in trade policy evolution

Risks

• Trade Tariffs: Uncertainty around tariffs impacting revenue recognition, pricing, and supply chain dynamics.
• Meater Underperformance: Challenges with Meater including heightened competition, lower marketing efficiency, and market slowdown in the meat thermometer category despite strategic improvement plans.
• Macro-Economic Backdrop: Consumer demand affected by broader macro-economic conditions

Question and Answer

• Q: About whether there would be an inflection in Meater's performance in 2025 and upside to guidance A: Dom mentioned conservatism in guidance, confidence in Meater's brand and disruptive product, and retail expansion opportunities as potential levers for improvement but noted prudence in current guidance due to observed trends
• Q: Advertising spend around the election in Q4 and return on ad spend A: Dom stated Q1 proof points for Meater are not indicative of future as Meater gets 50% or more of revenues in Q4, and insights from Q1 may not proxy Q4 performance
• Q: Reasons for Q1 revenue decline A: Jeremy noted it's reflective of multiple segments, with tariff impact on revenue recognition pacing contributing to the decline
• Q: Grill market outlook in 2025 A: Jeremy said the industry appears to have bottomed, expected modest growth, Traeger gained share in 2024, and anticipates industry growth to catch pre-pandemic levels over 12-36 months
• Q: Attacking lower price points in 2025 after ProSeries 22 success A: Jeremy mentioned Woodridge is in a premium but accessible price point, learned from ProSeries 22 promotions, and expects to continue capitalizing on sub-$500 price point demand
• Q: Inventory build ahead of tariffs A: Dom said inventory up in Q4 was due to Woodridge launch, not related to inauguration, and inventory levels are well balanced
• Q: Q1 revenue guide context and recent weakness A: Dom explained pacing issues due to tariff timing affecting revenue recognition, making quarter-to-quarter precision difficult
• Q: International performance and Meater A: Dom stated rest of the world revenue declined 39% primarily due to Meater's softness
• Q: Tough compares in guidance A: Dom said it's due to lapping 2024 promotions and Woodridge load-in creating a tougher comp
• Q: Direct import orders and tariff impact A: Dom explained fluid tariff environment makes quarter-to-quarter pacing uncertain, and full-year guidance is based on core business ex-tariffs