Traeger, Inc. Q1 FY2026 earnings call

Brand & Consumer Engagement

• Brand engagement remains strong even amid a cautious consumer spending environment, with Q1 social engagement up over 30% year-over-year, 65% of organic impressions coming from non-followers to support household penetration growth
• The brand ambassador program generated 170 million impressions in Q1, contributing to over 1 billion annual impressions, with authentic content demonstrating wood-fired cooking as a core demand creation tool; new creators will be added in Q2 to reach new consumer demographics

Product Innovation & Launches

• Launched Westwood, a new accessible grill line, in April 2026: priced at a lower entry point ($599, the lowest ever for a Traeger connected grill) while retaining core Traeger features and a 7-year warranty, bringing the brand experience to more households
• Westwood generated over 60% more impressions across earned/inorganic channels than the 2025 Woodbridge launch, earning positive reviews for its performance and price point, with 4.8-5 star consumer ratings across all launch retail channels (Traeger.com, Home Depot, Ace Hardware)
• The new Irontop griddle line will launch in retail later in May 2026: it enters the accessible griddle price tier that Traeger has not competed in historically, responding to consumer demand for better build quality, more even heat, and reliable performance. It expands Traeger's relevance beyond traditional grill replacement cycles to everyday cooking, supporting broader household reach

Retail Partnerships & Execution

• Early peak season sell-through (the core metric management tracks for underlying demand) is slightly above expectations, and up slightly year-over-year when excluding divested channels (DTC and Costco Roadshow); no broad macro-driven slowdown has been observed to date
• At Home Depot, the Retail Sales Specialist Program (dedicated in-store training, demonstrations, and tasting events) drove meaningfully higher conversion rates in 2025; it will be expanded in Q2 2026 to at least 7,500 cooking events, nearly double Q2 2025 volumes, to support new product launches
• At Ace Hardware, the company is investing in ~1,000 elevated in-store displays to support the simultaneous Westwood and Irontop launches; pre-book orders at Ace's Spring 2026 show were up nearly 50% year-over-year

Project Gravity Cost Transformation

• Project Gravity is a multi-year initiative to simplify operations, focus competitive positioning, and build a more durable profit model, while freeing capacity to invest in innovation, brand, and retail execution
• Phase 1 and 2 actions (organizational changes, meter centralization, exiting Costco Roadshow, winding down legacy DTC commerce) are mostly complete; additional SKU rationalization and pricing actions are expected to simplify the product portfolio and structurally increase margins through 2027-2028
• Total run-rate value from Project Gravity across all phases is expected to be $64 million to $70 million; $50 million of total value capture is expected in full-year 2026, including $30 million of incremental benefit in 2026
• In Q1 2026, Project Gravity delivered $15 million of year-over-year operating expense reduction, 31% year-over-year inventory reduction, and $14.5 million of free cash flow, putting the company on track to hit the full-year free cash flow target of at least $30 million

Q1 2026 Financial Highlights

• Total Q1 revenue was $94 million, a 34% year-over-year decline, in line with management expectations that included planned headwinds from timing shifts and channel exits
• A $12.4 million one-time gross profit and adjusted EBITDA benefit from an IEPA tariff refund was recognized in Q1, not included in original guidance; excluding this benefit, adjusted EBITDA was near the midpoint of the original guidance range
• Gross margin was 45.7% (up 420 bps YoY) including the tariff benefit; excluding the benefit, gross margin was 32.6% (down 890 bps YoY) due to trade spend timing, lower direct import sales mix, tariff costs, and meter deleverage
• Net income was $3 million ($1.08 per diluted share) compared to a $1 million net loss (-$0.30 per diluted share) in Q1 2025; adjusted EBITDA was $17 million compared to $23 million in Q1 2025
• Inventory fell 31% YoY to $88 million, driven by transit timing, meter inventory reductions, and Project Gravity strategic cuts; total liquidity increased to $184 million, with no draws on the company's credit facility

Grills: Revenue decreased 45% year-over-year to $47 million, representing 50% of total Q1 2026 revenue. The decline was driven by difficult prior year launch comparisons, pull-forward ordering ahead of 2025 tariffs, deliberate channel optimization under Project Gravity, and continued mix shift toward lower price grills. Consumables: Revenue decreased 14% year-over-year to $26 million, representing 27.7% of total Q1 2026 revenue. The decline stemmed from wood pellet channel mix shifts and trade spend timing, partially offset by higher unit sales. Underlying sell-through of consumables (mostly pellets) is tracking in line with or above management expectations. Accessories: Revenue decreased 22% year-over-year to $21 million, representing 22.3% of total Q1 2026 revenue. The decline was primarily driven by lower meter sales.

• Full-year 2026 revenue guidance is maintained at $465 million to $485 million, unchanged from prior outlook • Adjusted EBITDA guidance is increased from the prior range to $57 million to $67 million, reflecting the full flow-through of the Q1 IEPA tariff refund benefit offset by prudence for continued competitive pressure on meters, macro headwinds including rising transportation costs from higher oil prices, and broader tariff uncertainty • Full-year gross margin guidance is increased to 39.5% to 40.5%, incorporating the tariff refund benefit and the aforementioned offset for headwinds, while retaining existing projections for Project Gravity margin benefits, ongoing tariff pressure, and promotional deleverage • Free cash flow guidance is maintained at greater than $30 million, unchanged; the $15.6 million tariff refund receivable has not yet converted to cash, so it is not included in current guidance, which will be updated once cash is received • Management expects Q1 2026 to represent a trough in full-year gross margin, with margin rebounding in Q2 2026 followed by normal seasonal cyclicality in Q3 and Q4 2026 • First half 2026 seasonality is still expected to be broadly consistent with historical patterns • Management does not anticipate drawing on the company's $112.5 million revolver in 2026, based on current projections • Management will reassess the impact of competitive, macro, and tariff dynamics on the Q2 2026 earnings call once greater visibility is available

• Ongoing macroeconomic headwinds: cautious consumer spending on big-ticket goods, pressure from high interest rates and housing relocation activity, and low consumer sentiment pose risks to demand • Competitive pressure on the meter business, which has negatively impacted current revenue, margins, and inventory levels; management is working to reduce meter inventory and will revisit pricing to address this, but it remains a near-term drag on results • Tariff uncertainty: fluctuating tariff rates for imported goods and ongoing regulatory changes create cost visibility challenges; the April 2026 Section 232 tariff revision returned rates to the original planned level after a brief temporary reduction, but future shifts could impact costs • Rising fuel and transportation costs driven by higher oil prices increase operating costs, with management building in a $1 million increase in fuel costs in current guidance, but further price hikes could create additional pressure • Sharing of IEPA tariff refund benefits with direct import supplier partners is an ongoing conversation that could result in additional sharing of the benefit not currently accounted for in guidance • Early peak season sell-through signals are positive, but a large portion of peak season sales occur in Q2, so positive trends are not guaranteed to persist

Q: When do you expect the IEPA tariff refund to be paid out, and what is the current impact of higher fuel costs on your full-year forecast relative to 90 days ago? / A: Management expects the cash from the $15.6 million total refund to be paid within 60 to 90 days of Q1 end. The company has booked the $12.4 million portion to Q1 P&L, with remaining amounts to be booked as inventory impacted by the tariffs is sold, for a total full-year impact of $14 million. Higher fuel prices are expected to add $1 million in additional costs for the full year, and management is being prudent with planning to account for ongoing tariff and fuel volatility.\n\nQ: Is the $12 million Q1 tariff benefit the full amount of the refund Traeger expects? Are you expecting any additional amounts in FY26? / A: Traeger's total expected eligible IEPA refund is approximately $15.5 million. The company recognized $12.4 million of that in Q1, and expects to recognize an additional ~$1.5 million over the remainder of FY26, bringing the total full-year impact to $14 million. Additional amounts are recognized as tariff-impacted inventory is sold.\n\nQ: How do you think about sharing the IEPA tariff refund with suppliers and retailers, given you previously built higher tariffs into pricing? / A: The amount Traeger has booked is the portion of the refund that Traeger directly paid in duties. Traeger's direct import partners also pay IEPA tariffs on their own imports, and the company has been in communication with these partners about their ability to recoup their own eligible refunds. Any sharing of the refund Traeger received will be discussed with partners on a case-by-case basis, with no final agreements in place yet.\n\nQ: What is driving the better-than-expected sell-through so far in peak season, and what role is promotion and category trends playing? Is Traeger gaining share? / A: In a still challenging macro environment with weak consumer sentiment and pressure on big-ticket appliances, Traeger's better-than-expected performance reflects the strength of the brand and strong execution. The broader outdoor cooking category is still slightly down, but after meaningful post-pandemic declines, there are early signs of stabilization in replacement cycles. Excluding divested channels, Traeger's sell-through is slightly up year-over-year, and the company estimates it has gained a small amount of share in the category, though management remains cautiously optimistic as peak season is still early.\n\nQ: Do you still plan to move most production out of China by the end of 2026, and how did the April 2026 Section 232 tariff revision impact your business? / A: Originally, the company planned to materially diversify production out of China by end-2026 due to much higher tariff rates on Chinese goods. Tariff rates have since fallen to parity with other origin countries, so the company is continuing its diversification strategy but moving more slowly and strategically. The April 2026 Section 232 revision only temporarily lowered tariff rates for a few weeks before returning to the original 25% rate that was already built into full-year guidance, so there is no material change to Traeger's planned tariff rate for 2026.