Traeger, Inc. Q4 FY2025 earnings call

• Jeremy Andrus noted fiscal 2025 ended with strong execution, revenue above high end of guidance, adjusted EBITDA in upper half. Traeger brand strong, community engagement leading indicator of demand, Woodbridge platform launched in 2025 with good consumer response. Plan to launch 2 additional products in 2026 at more accessible price points. Pellets business performed well supported by fuel category expansion. Tariffs impacted category in 2025, managed impact through supply chain, pricing and cost discipline. Project Gravity is multiyear effort, Phase 1 focused on organizational efficiency, Phase 2 on simplifying business, sharpening channel strategy, reallocating resources. - Joey Hord walked through financial results, noted fourth quarter financial performance, balance sheet position, and outlook for 2026 including drivers of revenue outlook, margin guidance, and first quarter guidance.

For 2025, revenue was $560 million, adjusted EBITDA was $70 million. In Q4, revenues decreased by 14% to $145 million. Grills revenues were $61 million (down 22% Y/Y), consumables revenues were $36 million (up 16% Y/Y), accessories revenues were $49 million (down 18% Y/Y). Fourth quarter gross margin was 37.4%, down 350 basis points Y/Y. For 2026, guidance is revenue $465M - $485M, adjusted EBITDA $50M - $60M. Q1 2026 guidance is revenue $92M - $97M, adjusted EBITDA $3M - $7M. Grills brand strength held market share despite category backdrop, pellets business performed well, Woodbridge platform launched in 2025 has strong consumer reception, Project Gravity driving cost savings and business simplification.

• Fiscal 2026 guidance: revenue $465M - $485M, adjusted EBITDA $50M - $60M. - Q1 2026 guidance: revenue $92M - $97M, adjusted EBITDA $3M - $7M. - Expectations for sell-through in 2026 higher than sell-in plan, view as normalization of channel behavior. Project Gravity actions, tariff impacts, and accessories business pressure driving guidance. - Full year annualization of tariff-related elasticity impacts, channel actions under Project Gravity reducing revenue, accessories business pressure.

• Tariffs had meaningful impact on category in 2025, driving volatility in ordering behavior. - Elevated MEATER inventory and ongoing MEA reset putting pressure on accessories business. - Specific identifiable actions and timing dynamics driving revenue and margin impacts in 2026, not a change in underlying consumer demand but specific actions.

Q: Where did the grill market finish in 2025 relative to 2019 levels in terms of industry volumes? And what is the company's expectation for grill market growth in '26?

A: Jeremy Andrus said market was modestly down last year, units still down meaningfully, expected market to recover but not forecasted return to normalized cycle in guidance, brand engagement consistent with strong pellet attach.

Q: How big is the expected revenue impact from the DTC exit? And what is the underlying assumption for sales recapture with your retail partners? And in addition to that, why wouldn't we see a bigger margin boost there?

A: Joey Hord said overall between full year pricing elasticity and Project Gravity, shift there is around $70M of total revenue impact, margin rate pressure driven by full year tariffs and promo deleverage.

Q: Just curious if you could share more about the SKU rationalization efforts there, maybe which items or categories you plan to address? And then on pricing, Jeremy, you mentioned annualizing some elasticity impacts from your last round, which I believe was last spring. Could you just share more details around that dynamic and maybe how the consumer response to pricing actions is influencing your innovation plans for both this year and beyond?

A: Jeremy Andrus said SKU rationalization to streamline product portfolio for efficiencies in manufacturing and inventory, consumer benefit with clear line and step-up story, will sunset certain SKUs over 2 - 3 years. Pricing forecasting was challenging, learning promotional windows have greater elasticity, tariffs shifted giving ability to allocate savings, product strategy not changed much as product development takes time, launching new products in second quarter sub - $1,000.

Q: So just trying to understand the revenue decline and maybe how you're thinking about general demand trends. So I'm going to kind of interpret what you've told us, which was some good detail. So we've got an $85 million revenue decline at the midpoint for the year. It sounds like $70 million of that is from exiting the Costco roadshows, DTC and then some demand elasticity impact from pricing. So there's sort of a $15 million delta that I'm trying to get my arms around. Is that a sort of a lack of sell-in because of the orders last year? Is that demand declines? Kind of how should we think about that other chunk of revenue decline?

A: Joey Hord said there's a divergence between sell-through and sell-in in 2026, current sell-through trends exceeding expectations. Remaining $15M driven by ongoing MEATER pressure and marketplace health initiatives with specific inventory pockets.

Q: And so then my last question, and I think you partially addressed this in your last answer, but we're looking at the decremental margin on the revenue declines, it's around 30% this year, pretty similar to last year. And I guess with Project Gravity, one would think that maybe the decremental margins would be coming down this year. So why is it a similar level of 30% decremental on the EBITDA margin with the revenue decline?

A: Joey Hord said overall gross margin impacted full year of tariffs and promo funded deleverage, tariffs announced with higher burden, promo fixed number eroding margin with revenue decline, margin expansion in out years as revenue normalizes