Traeger Reports Strong Growth Amid New Product Launches and Collaborations

In the fourth quarter, Traeger saw subscriber growth surpassing 50%, largely driven by engaging culinary content featuring chefs and pitmasters cooking on Traeger grills. Alongside this growth, we strategically partnered with culinary brands as part of our brand activation efforts, notably collaborating with Made In for a limited release enameled cast iron braiser.

Additionally, we joined forces with Bulleit Frontier Whiskey for a holiday initiative that included a two-part video series. This collaboration paired chefs and bartenders to create the perfect holiday menu featuring dishes cooked on the Traeger and cocktails crafted with Bulleit Whiskey. Such partnerships with trending brands like Made In and Bulleit effectively increase Traeger’s visibility with new audiences, generating interest in our brand.

From an innovation standpoint, we launched our latest Woodridge series of wood pellet grills on January 16, just after the end of the year. These grills, which began shipping to our retailers in the fourth quarter, provide cutting-edge technology and enhanced features at accessible price points. They include a user-friendly grease and ash keg that collects drippings and ash and an improved airflow system that enhances smoke generation for richer flavors.

The Woodridge launch represented an unprecedented cross-functional effort across the Traeger organization, with meticulous attention to product testing leading up to the launch. We recorded over 10,000 hours of cooking trials, ensuring a premium user experience. The launch generated buzz, achieving over 1.2 billion impressions and notable engagement on social media platforms. We also focused on retail training for partners like Ace Hardware and Home Depot, emphasizing the importance of store associates being knowledgeable about the Traeger brand and the Woodridge line.

Encouragingly, we experienced a 30% increase in grill revenues compared to the previous year, driven by the successful initial roll-out of the Woodridge line and a positive sell-through at retail locations. The performance exceeded expectations, especially during the holiday sales period. Notably, Black Friday 2024 was one of our largest sell-through days, underscoring strong demand, particularly for our more affordable grill options.

In 2025, we aim to enhance our retail activation strategies to boost consumer education and conversion. Our roadshow program at Costco exemplifies this approach, where Traeger ambassadors conduct product demonstrations to educate members while selling grills on consignment. This initiative has been a significant growth driver and we plan to expand the number of roadshows more than twofold in 2025.

Turning to our consumables business, fourth-quarter growth was robust, increasing 25%. This rise was fueled by replenished stock of our core pellet flavors and seasonal items, particularly turkey blend pellets. Moreover, we established new distribution agreements for our pellets and rubs at select Walmart stores, marking a new retail partner for Traeger. We believe this aligns with consumer preferences, as our research indicates that Walmart shoppers do not overlap much with our current distribution channels for pellets, presenting a valuable market share opportunity.

Now, let’s address our accessories segment. Accessories revenue faced pressure from a decline in MEATER performance. Last quarter, we had anticipated improvement in MEATER’s most crucial quarter, but results fell short. While we did see some recovery in its decline, it was not as significant as expected. Factors contributing to MEATER’s underperformance include earlier reductions in marketing expenditure and tougher market conditions in the meat probe sector, accompanied by competitive pressures.

In response, we have devised strategic plans aimed at revitalizing MEATER’s market presence. These include optimizing our marketing spend relative to return on advertising spend (ROAS), changing leadership in key functions, and revising our long-term product roadmap. We remain committed to expanding retail distribution for MEATER and recently initiated distribution at select Walmart stores, aiming for further opportunities in this channel.

For 2025, we anticipate continued challenges within MEATER’s performance. Progress may take time, but we maintain confidence in MEATER’s position as a leading brand in the wireless meat thermometer market. In terms of the broader fiscal outlook for 2025, Dom will provide detailed guidance, but preliminary estimates indicate revenues between $595 million and $615 million, showing a potential decrease compared to the prior year.

Traeger Reports Solid 2024 Financials Amid Challenges and Strategic Transition

Traeger, a leader in outdoor cooking solutions, has released its financial outlook for fiscal year 2025, projecting revenues between $595 million and $615 million. This equates to a potential decline of 2% to a modest increase of 2% compared to fiscal year 2024. The adjusted EBITDA is anticipated to fall within the range of $75 million to $85 million.

Sales Forecast Amid Variable Categories

The company believes its growth in the grills and consumables categories will outweigh declines projected in accessories, notably due to expected challenges with MEATER products. Notably, the guidance does not account for the impact or countermeasures regarding recently activated tariffs or future trade policy changes. This omission stems from the unpredictable nature of trade policies and their respective effects on the industry and U.S. consumers.

Preparedness for Tariff Impacts

With around 50% of sales reliant on imports from China, Traeger is actively adapting to ongoing developments in trade policy. The organization has crafted strategies to mitigate the impact of tariffs, which include enhancing supply chain efficiencies, negotiating with contract manufacturers, and considering potential price increases. As circumstances evolve, the company’s approach to mitigating tariff impacts will also continue to adjust.

It’s worth mentioning that nearly all Traeger’s consumables are produced in the United States, and most accessories are sourced from outside China. With a proficient team across various functions, strong vendor relationships, and supportive retail partnerships, Traeger feels well-equipped to navigate uncertain market conditions. Despite these challenges, confidence in Traeger’s brand remains robust, bolstered by growing market share and consumer demand for its grills.

2024 Financial Performance Highlights

In his remarks, Jeremy Andrus, CEO of Traeger, highlighted a strong foundation for future growth. The consumer response drove grill sales above company expectations, maintaining the brand’s leading Net Promoter Score (NPS) and fostering an enthusiastic customer base. Investments in product development continue to promote innovation and cost efficiencies, positioning Traeger to thrive when industry demand rebounds.

Contributing to a smooth leadership transition, Dom Blosil announced his departure as Chief Financial Officer, effective after the first quarter 10-Q filing. Blosil’s tenure spanned 11 years and will culminate with Joey Hord, the current Senior Vice President of finance and strategy, stepping into this critical role.

Fourth Quarter Financial Results Analysis

Highlighting the fourth quarter of fiscal year 2024, Traeger achieved revenues of $169 million, a 3% increase. Grill sales surged 30% year-over-year to $78 million, aided by strong performance over the holiday season and the introduction of the new Woodridge series. Meanwhile, consumables revenues jumped 25% to $31 million, attributable to bolstered replenishment and enhanced distribution, particularly at Walmart. However, accessories sales faced a decline of 24% to $60 million, with MEATER’s struggles offsetting gains in Traeger-branded accessories.

Geographically, North America reported an 11% revenue increase, contrasting with a 39% drop in the rest of the world. Gross margins for the fourth quarter reached 40.9%, reflecting a year-over-year rise of 410 basis points. Margin enhancements stemmed from supply chain efficiencies, improved warranty expenses, and better cost dilution, despite challenges such as an unfavorable product mix.

Expense and Profitability Insights

Sales and marketing expenses climbed to $34 million from $33 million in Q4 2023, largely due to increased workforce costs. General and administrative expenses also rose to $27 million from $26 million the previous year, attributed to higher professional service fees, somewhat mitigated by decreased stock-based compensation. The quarter closed with a net loss of $7 million, a notable improvement from the $24 million loss recorded in Q4 2023. Adjusted net income stood at $2 million, or $0.01 per diluted share, recovering from an adjusted net loss of $9 million, or $0.08 per diluted share, in the same quarter a year ago.

Adjusted EBITDA improved by 41% to $18 million, growing from $13 million in Q4 2023. Ending the fiscal year, Traeger reported $15 million in cash and cash equivalents, down from $30 million at the close of 2023, alongside total debt of $409 million. Yearly total net debt decreased by $9 million to $394 million, underlining strong operational cash flow, which totaled $24 million, incorporating an impact from the contingent consideration related to the MEATER acquisition.

Looking Ahead to 2025

As outlined earlier, Traeger’s revenue outlook for 2025 does not factor in effects from any newly implemented or proposed tariffs. The company anticipates low single-digit growth in grill revenues, buoyed by strong brand presence and innovation, even as macroeconomic uncertainties cast a shadow. Consumables are expected to continue their growth trend supported by expanded distribution channels, while accessories revenue may face headwinds due to the performance of MEATER.

The company projects a gross margin between 42.2% to 42.8%, accounting for potential shifts from operational improvements and a trend towards lower-margin grills. As Traeger adapts to the evolving market, careful strategies should enable resilience against external pressures.

Traeger Anticipates Employee Compensation Shift Impacting 2025 Financials

From a financial standpoint, Traeger expects a rise in employee-related cash compensation of about $7 million for fiscal year 2025. This increase is due to a change in the company’s compensation structure, which reallocates a larger portion of incentive compensation from equity-based rewards to cash performance bonuses for certain employees. Although the total compensation expense remains largely stable, this adjustment will adversely affect adjusted EBITDA. The company believes this shift is in line with market practices and will enhance team incentives. While specific guidance for the first quarter is not provided, a decline in revenues and adjusted EBITDA year-over-year is anticipated for that period.

In summary, Traeger made significant strides in 2024, showcasing a positive inflection in grill revenues, improved gross margins, and solid adjusted EBITDA growth. Despite an uncertain economic climate heading into 2025, the company feels well-positioned for long-term, profitable, and sustainable growth. The core drivers of value generation are intact, reinforcing their strategic outlook. Now, I will hand the call over to the operator.

Operator?

Questions & Answers

Operator

[Operator instructions] The first question is from Anna Glaessgen with B. Riley. You may proceed.

Anna Glaessgen – Analyst

Good afternoon. Thank you for taking my questions. I want to begin with the accessories business, noting that you have mentioned some expected softness in 2025.

Could you provide insights on whether you foresee any potential inflection during the year, or should we anticipate downward guidance? Any thoughts would be appreciated.

Dom Blosil – Chief Financial Officer

It’s an important question. At this stage, we are not offering detailed quarterly guidance, nor are we providing specifics on a category basis. Generally, we are conservatively forecasting MEATER based on its performance in Q4, historically their strongest quarter.

Our confidence in the brand remains strong, supported by the innovative product they offer and their leadership position in the market. We believe we can adapt and course-correct to address the current challenges. Additionally, there are untapped opportunities for growth, such as expanding our retail presence, which could transition a largely B2C business model toward retail. However, we feel it is prudent to manage our guidance with caution due to the trends currently impacting MEATER.

Anna Glaessgen – Analyst

Understood. You mentioned that increased advertising costs related to the election impacted Q4. Have you noticed any normalization in the return on ad spend as we progressed into Q1?

Dom Blosil – Chief Financial Officer

From a macro perspective, that is correct. However, any indicators from Q1 for MEATER may not be the best predictor for future performance since they typically earn over 50% of their revenues in Q4. So while we will analyze Q1’s advertising spend and return on ad spend, these insights might not accurately reflect trends for Q4. It’s still early to draw conclusions beyond our current business strategy.

Anna Glaessgen – Analyst

Thank you. Lastly, regarding your Q1 commentary, is the anticipated decline mainly due to MEATER, or is it a reflection of challenges in other segments as well?

Dom Blosil – Chief Financial Officer

The decline relates to multiple segments, primarily due to various external factors like tariff implications and their sequencing effects on revenue recognition, which create challenges in our quarterly predictions. Thus, we believe it’s prudent to expect declines in Q1 for both top-line revenue and adjusted EBITDA; we cannot yet disclose how the quarters will form throughout the year given these uncertainties.

Anna Glaessgen – Analyst

Thank you.

Dom Blosil – Chief Financial Officer

Thank you.

Operator

The next question comes from Brian McNamara with Canaccord Genuity. You may proceed.

Brian McNamara – Analyst

Good afternoon. Thanks for the chance to ask questions. To start, I’d like your perspective on the overall grill market for 2025.

The last three years have seen significant declines. What is your forecast for the industry this year? You’ve gained market share recently; could you remind us where we currently stand in relation to 2019 levels? I believe we’re around 20% below, but please clarify.

Jeremy Andrus – Chief Executive Officer

Hi Brian. Over the past three years, the grill market has indeed faced declining trends, hitting a bottom in 2022 with mid-to-high teens declines, and a slight improvement or stability in ’23. Our forecast for this year is modest growth in the grill market, with expectations of about flat to 1%-2% growth. However, many factors, including the impact of tariffs, will take time to assess.

That said, we believe that we are entering a normalized replacement cycle for grills following the boost of buy-in rates during the pandemic. This should contribute to modest growth heading forward. We remain vigilant as we navigate this dynamic environment, and I can confirm that Traeger gained market share in 2024 as demonstrated by a significant surge in unit volume, especially during the recent promotional period. In fact, Black Friday marked one of our highest-volume sales days in company history. Relative to 2019, we acknowledge we’re still meaningfully below those levels, but we expect the market to gradually recover over the next 12 to 36 months, influenced by broader economic conditions.

Brian McNamara – Analyst

Thanks for that clarity. I’m also interested in your success with the Pro Series 22 last year, particularly in the under $400 price range…

Company Leaders Discuss Future Pricing Strategy and Financial Outlook

Jeremy Andrus — Chief Executive Officer

In response to a question about price strategy moving into 2025, Andrus acknowledged that Woodridge is positioned as a premium yet accessible product. He stated, “We believe it holds a strong place in the market from a value perspective.” Reflecting on their past promotional efforts, he shared insights from promoting the Pro 22 three times last year at $389, which received an exceptional consumer response. He noted, “It was a significant supply chain effort with our retail partners to meet the increased demand. The interest in our brand below the $500 threshold was substantial.”

He added that as they approached the new year, the company was ready to keep up the momentum. “We can not only celebrate this year’s achievements but ensure our retailers are fully stocked,” Andrus mentioned. He emphasized that the sub-$500 price point resulted in a clear increase in unit volume, confirming the effectiveness of their strategy. The Pro 22 at $499 and Woodridge, which ranges from $799 to $1599, cater to different customer segments, allowing for targeted marketing strategies.

Brian McNamara — Analyst

Shifting focus, McNamara inquired about inventory management in relation to tariff anticipation as the inauguration approached. He asked, “Did you build any inventory considering your exposure to China sourcing?”

Dom Blosil — Chief Financial Officer

Blosil clarified that in Q1, their strategy was to gather as much inventory as possible in anticipation of tariffs. He explained, “The inventory increase at the end of the year primarily connects to the Woodridge launch and ongoing stock-up before the peak season. This is part of our usual seasonal inventory shifts.” He reassured analysts, stating, “Inventory levels on our balance sheet and distribution channels remain well-balanced, which boosts our confidence.” The normal working capital cycle is now back in place, allowing for an appropriate investment-drawdown dynamic.

Brian McNamara — Analyst

Following up, McNamara sought additional insights regarding the inventory load-in for Woodridge and its impact on Q4 revenues. He noted the sustained strength seen during holiday sales over the past quarters and asked about long-term promotional strategies moving forward.

Dom Blosil — Chief Financial Officer

Blosil discussed the difficulties in quantifying the specific revenue impact from the Woodridge load-in. “What I can convey is that the load-in generated was indeed positive, and it wasn’t limited to Woodridge alone. Our main grill line also exceeded expectations,” he noted. The promotional momentum played a pivotal role in overall performance, contributing to stock replenishment.

Unknown speaker — — Analyst

The conversation continued with an inquiry about the company’s long-term deleveraging goals and the outlook for free cash flow in 2025 compared to 2024.

Dom Blosil — Chief Financial Officer

Blosil confirmed that the target is to operate at or below three turns of leverage. “We feel comfortable with a range of two to three turns,” he stated, underscoring the progress made in recent years while acknowledging that more work is still needed to achieve the ideal levels. Regarding free cash flow, he indicated that 2025 is expected to be similar to or slightly lower than in 2024 due to necessary working capital investments. He added that fluctuations in cash flow would largely depend on inventory management changes throughout the year.

Further, he explained the outlook for capital expenditures, forecasting that it would likely remain flat or slightly decline, maintaining guidance similar to previous profit levers. “Overall, free cash flow should mirror 2024,” he summarized while emphasizing debt repayment as a priority in conjunction with planned EBITDA growth.

Unknown speaker — — Analyst

As the dialogue wrapped up, McNamara pivoted back to Andrus, seeking updates on the pursuit of a large manufacturing partner in Vietnam discussed in the previous quarter.

Company Progresses with Manufacturing Diversification and Revenue Outlook

Just curious where those efforts stand today and maybe any insight into the timing there? Thanks, guys.

Jeremy Andrus — Chief Executive Officer

Sure. First, I want to mention that we have been manufacturing in Vietnam for several years. This is our second global manufacturing partner with a solid presence in Vietnam. I visited the site about six weeks ago, and I’m pleased to report that we’re progressing well.

We have focused on diversifying our sourcing base beyond China for a few years now. As a result, we have partners prepared to scale effectively. While supply chains do not shift rapidly, we have been making steady progress. We anticipate being in mass production with that partner in this quarter. We have several options developing, and we are committed to balancing a rapidly changing environment while making sound decisions. It’s essential to ensure that the shifting sands have stabilized before reacting impulsively. We’re focused on both adaptation and strategic planning.

Fortunately, around 25% of our production growth has been in Vietnam, and we have the capacity to increase that further.

Unknown speaker — Analyst

Awesome. Thanks. I’ll pass it on.

Operator

The next question is from Peter Keith with Piper Sandler. You may proceed.

Peter Keith — Analyst

Hi. Thanks. Good afternoon, Dom; it’s been great working with you. I wish you nothing but the best.

Now, regarding Q1, I know the consumer environment has been very dynamic. Could you provide some context on what you’re experiencing so far this quarter, especially with the negative revenue outlook? Have you noticed any recent weakness, or is there something category-specific that warrants mention?

Dom Blosil — Chief Financial Officer

Absolutely. What I want to highlight is pacing. We’ve discussed before the shift to direct imports. Factors affecting the value chain, particularly due to tariff news, influence our revenue recognition timing. Therefore, it’s challenging to forecast quarter-to-quarter pacing confidently.

We have a solid perspective on our full-year expectations outside of tariffs, and that’s what we’ve communicated. However, it’s difficult to ground ourselves in expectations for a quarter, considering the potential fluctuations in how orders are processed and recognized. This is crucial to understanding our commentary about Q1.

Peter Keith — Analyst

That’s an essential distinction. So, in interpreting that, have you seen shifts in sell-through trends? Are they relatively steady, or is it more about timing?

Dom Blosil — Chief Financial Officer

As a policy, we don’t typically comment on intra-quarter sell-through data, even directionally. I would leave it at my previous comments. Thanks for your question.

Peter Keith — Analyst

Fair enough. Let’s move on to international performance. The rest of the world was down 39%. You previously mentioned MEATER as a factor. Can you update us on the international landscape? There appears to be potential there, yet the numbers suggest otherwise.

Dom Blosil — Chief Financial Officer

That’s correct. MEATER significantly impacts the “rest of world” figures. The downturn we’re seeing is primarily related to MEATER’s performance, which is dragging down the overall consolidated view in that region.

Peter Keith — Analyst

Understood. Thank you for the clarification.

Operator

Your next question is from the line of Megan Clapp with Morgan Stanley. You may proceed.

Megan Alexander Clapp — Analyst

Hi. Good evening, and thank you. I have a couple of follow-up questions.

First, Dom, I believe you mentioned guiding for low-single-digit revenue growth, and you highlighted some challenges, including difficult comps. Can you explain if that refers to shipments or point-of-sale (POS) difficulties?

Dom Blosil — Chief Financial Officer

In the guidance, correct?

Megan Alexander Clapp — Analyst

Yes.

Dom Blosil — Chief Financial Officer

That was your question?

Megan Alexander Clapp — Analyst

Yes.

Dom Blosil — Chief Financial Officer

Alright. There are two main factors here. First, we are lapping increased promotional activities, especially concerning grills during 2024, which created some favorable growth outcomes. Lapping those promotions will lead to slightly tougher comparisons. Second, there was the Woodridge load-in, which is more of a one-time occurrence and will impact the normal sell-through and replenishment cycles moving forward. This creates a challenging comparison for Q4.

Therefore, those are the two significant points to consider.

Megan Alexander Clapp — Analyst

That makes perfect sense. Now, regarding the direct import comments, without revisiting Q1, can you clarify what you’re observing? Are you seeing fewer direct import orders from retailers than in previous years? Given the volatility of the tariff environment, one might assume more orders would be coming, especially with the peak season approaching.

Dom Blosil — Chief Financial Officer

It’s not necessarily about a reduction in direct import orders. Instead, the situation revolves around tariff timing and the pricing dynamics we are navigating with that context in mind. It’s less about current knowledge and more about ensuring we do not get committed to decisions that could change quickly in such a fluid environment. All parties in the entire value chain, including our partners, are responding to these shifts as well.

For now, we are focused on sharing our full-year guidance, as we believe we have a solid framework in place for the future.

Company Insights: Navigating Uncertainty in Order Timing Amid Tariff Concerns

Understanding the complexities of ex-tariffs is crucial for gauging our core business performance. It is important to note that establishing precise forecasts from quarter to quarter can be challenging due to various factors. One significant element is the timing of Direct Import (DI) orders. When DI orders accumulate towards the end of a quarter, any dramatic shifts in order timing can significantly impact a particular quarter’s results.

Thus, fluctuations in order timing introduce an element of unpredictability into our revenue recognition model. Our planning occurs early in the year, as we budget for a combination of direct imports and collaborate closely with our retail partners. These strategies may lead to different pacing for orders, creating variable outcomes. Therefore, our discussion underscores uncertainty surrounding revenue recognition and the timing of orders affected by tariff complexities.

As it stands, we cannot provide more clarity or precision regarding these uncertainties.

Megan Alexander Clapp — Analyst

Thank you for that explanation. It’s clear and informative.

Dom Blosil — Chief Financial Officer

Thank you.

Operator

There are currently no questions registered. [Operator instructions] Since there are no additional questions at this time, I will hand the conference back to the management team for any final comments. We are experiencing a technical issue and have lost connection. Please hold while we reconnect. We appreciate your patience.

Unfortunately, due to this disconnection, we will conclude today’s call. [Operator signoff]

Duration: 0 minutes

Call Participants:

Nick Bacchus — Vice President, Investor Relations

Jeremy Andrus — Chief Executive Officer

Dom Blosil — Chief Financial Officer

Anna Glaessgen — Analyst

Brian McNamara — Analyst

Unknown Speaker — Analyst

Peter Keith — Analyst

Megan Alexander Clapp — Analyst

Megan Clapp — Analyst

For more insights, visit earnings call transcripts.

This article is a transcript produced for The Motley Fool. We strive for accuracy, but please be aware of possible errors or omissions. The Motley Fool does not take responsibility for your use of this content; we encourage you to conduct your own research, including listening to the call and viewing the company’s SEC filings. Please see our Terms and Conditions for more information, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool holds no positions in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.