Traeger, Inc. Q3 FY2025 earnings call

• Project Gravity Phase 1: Implemented organizational structure changes, integrated MEATER into Salt Lake City Infrastructure, with headcount reductions in the U.K. and targeting $30 million in run-rate cost savings, with ~$13 million expected to be realized in FY '25. • Project Gravity Phase 2: Announced $20 million incremental run-rate cost savings target via channel optimization (exit Costco roadshow business, shift traeger.com focus, shift to distributor model in Europe), supply chain and manufacturing efficiencies. • Tariff mitigation: Continuing to focus on supply chain savings, diversifying production away from China, and taking price across assortment to protect profit, aiming to offset ~80% of ~$60 million unmitigated tariff exposure in fiscal 2025. • Third-quarter highlights: Sales increased 3% to $125 million, adjusted EBITDA $14 million (+12% YoY) due to expense reduction initiatives flowing through the P&L.

Grill revenues: grew 2% year-over-year to a certain amount, driven by strong shipments of sub-$1,000 grill units and resumption of direct import fulfillment with larger retail partners. Consumables revenues: increased 12% to $25 million, driven by positive sell-through of pellets and new distribution such as launch into Walmart. Accessories revenues: down 4% to $24 million, with Traeger-branded accessories showing strong double-digit growth. Grill revenues contributed approximately a certain percentage, consumables around another percentage, and accessories the remaining.

• Reiterated fiscal 2025 guidance: Revenues expected to be between $540 million and $555 million (down 8% to 11%), adjusted EBITDA between $66 million and $73 million. • Phase 1 of Project Gravity is expected to deliver $30 million in run-rate cost savings with ~$13 million realized in FY '25. • Phase 2 of Project Gravity targets $20 million in incremental run-rate cost savings once fully implemented, with implementation expected to occur through the end of fiscal year '26.

• Tariff uncertainties that could impact the ability to offset tariff exposure as planned. • Supply chain disruptions that could hinder cost reduction and production diversification efforts. • Consumer elasticity impact on grill unit volumes following pricing increases. • Execution risks associated with the implementation of Project Gravity initiatives, including potential challenges in channel optimization and distribution shifts.

Q: Could you frame the size of the revenue loss expected from Phase 2 distribution strategy plans and the timing?

A: Overall, expecting to walk away from approximately $60 million of revenue, with recapture expected in the first half of FY '26 into the second half and long term into '27. The shifts are being made in January and February.

Q: How do you assess the overall grill market so far and trends?

A: View the grill market as a category growth year, but tariffs have muted consumer retail drivers. Market for grills is slightly down, share is flat, but unaided brand awareness has increased. Expecting a replacement cycle to come with declining interest rates and reduced pull-forward demand from the pandemic.