Traeger, Inc. ("Traeger" or the "Company") (NYSE: COOK), creator
and category leader of the wood pellet grill, today announced
corrections to its press release issued August 2, 2023, announcing
the Company’s unaudited financial results for the second quarter
ended June 30, 2023. The corrections to the financials presented in
the press release are non-cash, and do not change the Company's
revenues, Adjusted net income, or Adjusted EBITDA. The corrections
do not change the Company’s 2023 revenue or Adjusted EBITDA
guidance, and the Company reiterates the guidance it provided in
its second quarter earnings release issued on August 2, 2023.
The corrections relate to accounting treatment for the Company’s
dedesignation of its interest rate swap which occurred in the first
quarter of 2023, in which the Company discontinued cash flow hedge
accounting, and result in a decrease in net loss to $30.2 million
for the three months ended June 30, 2023 and an increase in net
loss to $41.1 million for the six months ended June 30, 2023.
The corrected press release reads:
TRAEGER ANNOUNCES SECOND QUARTER FISCAL 2023
RESULTS
Second Quarter FY 23 Results
- Total revenues decreased 14.4% to $171.5 million
- Gross profit margin of 36.9%, up 25 basis points compared to
prior year
- Net loss of $30.2 million compared to net loss of $133.1
million compared to the prior year
- Adjusted EBITDA of $21.5 million, up from $17.0 million in the
prior year
- 26% sequential reduction in balance sheet inventory driven by
strategic inventory management
- Raises FY 2023 revenue and Adjusted EBITDA guidance
Operating Results for the Second Quarter
Total revenue decreased by 14.4% to $171.5 million,
compared to $200.3 million in the second quarter last year.
- Grills decreased 20.9% to $93.1 million as compared to the
second quarter last year. The decrease was primarily driven by
lower average selling prices in addition to decreased unit
volumes.
- Consumables decreased 17.1% to $34.9 million as compared to the
second quarter last year. The decrease was driven by lower unit
volumes in addition to decreased average selling prices.
- Accessories increased 7.4% to $43.5 million as compared to the
second quarter last year. This increase was driven primarily by
increased average selling prices for Traeger branded accessories
and increased revenue due to sales of MEATER smart
thermometers.
North America revenue declined 15.6% in the second quarter
compared to the prior year. Rest of World revenues increased 3.0%
in the second quarter compared to the prior year.
Gross profit decreased to $63.3 million, compared to
$73.4 million in the second quarter last year. Gross profit margin
was 36.9% in the second quarter, compared to 36.7% in the same
period last year. The increase in gross margin was driven primarily
by favorability from freight costs and foreign exchange rates,
offset by increased dilution.
Sales and marketing expenses were $27.9 million, compared
to $42.1 million in the second quarter last year. The decrease in
sales and marketing expense was driven by reduced investments in
advertising costs and lower costs for commissions and travel
related expenses.
General and administrative expenses were $52.4 million,
compared to $31.4 million in the second quarter last year. The
increase in general and administrative expense was driven by higher
equity-based compensation expense of $32.1 million primarily due to
the cancellation of the unearned CEO and initial public offering
performance-based restricted stock units, as well as higher costs
for professional fees. The increases were partially offset by lower
employee related costs.
Net loss was $30.2 million in the second quarter, or a
loss of $0.25 per diluted share, as compared to net loss of $133.1
million in the second quarter of last year, or a loss of $1.13 per
diluted share.1
Adjusted net income was $4.3 million, or $0.04 per
diluted share as compared to adjusted net income of $3.9 million,
or $0.03 per diluted share in the second quarter last year.2
Adjusted EBITDA was $21.5 million in the second quarter
as compared to $17.0 million in the same period last year.2
1 There were no potentially dilutive securities outstanding as
of June 30, 2023 and 2022.
2 Reconciliations of GAAP to non-GAAP financial measures, as
well as definitions for the non-GAAP financial measures included in
this press release and the reasons for their use, are presented
below.
Balance Sheet
Cash and cash equivalents at the end of the second
quarter totaled $14.5 million, compared to $39.1 million at
December 31, 2022.
Inventory at the end of the second quarter was $97.8
million, compared to $153.5 million at December 31, 2022. The
decrease in inventory was driven primarily by strategic inventory
management.
Guidance For Full Year Fiscal 2023
The Company is increasing its total revenue and Adjusted EBITDA
guidance for Fiscal 2023. The Company's updated outlook reflects
better than anticipated results in the first half of the year and
expected growth in revenue and EBITDA in the second half of the
year.
- Total revenue is expected to be between $585 million and
$600 million
- Gross Margin is expected to be between 36% and 37%
- Adjusted EBITDA is expected to be between $55 million
and $59 million
A reconciliation of Adjusted EBITDA guidance to Net Loss on a
forward-looking basis cannot be provided without unreasonable
efforts, as the Company is unable to provide reconciling
information with respect to provision for income taxes, interest
expense, depreciation and amortization, other (income) expense,
stock-based compensation, goodwill impairment, non-routine legal
expenses, change in fair value of contingent consideration, and
other adjustment items all of which are adjustments to Adjusted
EBITDA.
About Traeger
Traeger, headquartered in Salt Lake City, is the creator and
category leader of the wood pellet grill, an outdoor cooking system
that ignites all-natural hardwoods to grill, smoke, bake, roast,
braise, and barbecue. In 2023, Traeger entered the griddle
category, further establishing its leadership position in the
outdoor cooking space. Traeger grills are versatile and easy to
use, empowering cooks of all skill sets to create delicious meals
with flavor that cannot be replicated. Grills are at the core of
our platform and are complemented by Traeger wood pellets, rubs,
sauces, accessories, and MEATER smart thermometers.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements contained in this press release that do not
relate to matters of historical fact should be considered
forward-looking statements, including, without limitation,
statements regarding our anticipated full year fiscal 2023 results.
These statements are neither promises nor guarantees, but involve
known and unknown risks, uncertainties and other important factors
that may cause our actual results, performance or achievements to
be materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements, including, but not limited to, our history of operating
losses, our ability to manage our future growth effectively, our
ability to expand into additional markets, our ability to maintain
and strengthen our brand to generate and maintain ongoing demand
for our products, our ability to cost-effectively attract new
customers and retain our existing customers, our failure to
maintain product quality and product performance at an acceptable
cost, the impact of product liability and warranty claims and
product recalls, the highly competitive market in which we operate,
the use of social media and community ambassadors, a decline in
sales of our grills, our dependence on three major retailers, risks
associated with our international operations, our reliance on a
limited number of third-party manufacturers and problems with (or
loss of) our suppliers or an inability to obtain raw materials, and
the ability of our stockholders to influence corporate matters and
the other important factors discussed under the caption "Risk
Factors" in our periodic and current reports filed with the
Securities and Exchange Commission from time to time, including our
Annual Report on Form 10-K for the year ended December 31, 2022, as
updated by Part II, Item 1A. "Risk Factors" our Quarterly Report on
Form 10-Q for the period ended June 30, 2023. Any such
forward-looking statements represent management's estimates as of
the date of this press release. While we may elect to update such
forward-looking statements at some point in the future, we disclaim
any obligation to do so, even if subsequent events cause our views
to change.
TRAEGER, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
and per share amounts)
June 30, 2023
December 31,
2022
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents
$
14,496
$
39,055
Restricted cash
—
12,500
Accounts receivable, net
83,290
42,050
Inventories
97,803
153,471
Prepaid expenses and other current
assets
29,842
27,162
Total current assets
225,431
274,238
Property, plant, and equipment, net
52,274
55,510
Operating lease right-of-use assets
11,284
13,854
Goodwill
74,725
74,725
Intangible assets, net
491,700
512,858
Other non-current assets
14,231
15,530
Total assets
$
869,645
$
946,715
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable
$
18,563
$
29,841
Accrued expenses
49,094
52,295
Line of credit
40,000
11,709
Current portion of notes payable
250
250
Current portion of operating lease
liabilities
4,109
5,185
Current portion of contingent
consideration
13,110
12,157
Other current liabilities
2,143
1,470
Total current liabilities
127,269
112,907
Notes payable, net of current portion
396,722
468,108
Operating leases liabilities, net of
current portion
7,470
9,001
Contingent consideration, net of current
portion
—
10,590
Deferred tax liability
10,378
10,370
Other non-current liabilities
281
870
Total liabilities
542,120
611,846
Commitments and contingencies—See Note
10
Stockholders' equity:
Preferred stock, $0.0001 par value;
25,000,000 shares authorized and no shares issued or outstanding as
of June 30, 2023 and December 31, 2022
—
—
Common stock, $0.0001 par value;
1,000,000,000 shares authorized
Issued and outstanding shares -
123,960,782 and 122,624,414 as of June 30, 2023 and December 31,
2022
12
12
Additional paid-in capital
923,048
882,069
Accumulated deficit
(611,571
)
(570,475
)
Accumulated other comprehensive income
16,036
23,263
Total stockholders' equity
327,525
334,869
Total liabilities and stockholders'
equity
$
869,645
$
946,715
TRAEGER, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
(in thousands, except share
and per share amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenue
$
171,512
$
200,270
$
324,673
$
423,980
Cost of revenue
108,181
126,829
205,919
267,895
Gross profit
63,331
73,441
118,754
156,085
Operating expenses:
Sales and marketing
27,915
42,051
49,990
76,905
General and administrative
52,371
31,436
79,050
72,152
Amortization of intangible assets
8,888
8,888
17,777
17,777
Change in fair value of contingent
consideration
1,765
255
2,808
1,955
Goodwill impairment
—
111,485
—
111,485
Total operating expense
90,939
194,115
149,625
280,274
Loss from operations
(27,608
)
(120,674
)
(30,871
)
(124,189
)
Other income (expense):
Interest expense
(7,810
)
(7,064
)
(15,891
)
(12,901
)
Other income (expense), net
5,450
(5,350
)
6,028
(4,806
)
Total other expense
(2,360
)
(12,414
)
(9,863
)
(17,707
)
Loss before provision for income taxes
(29,968
)
(133,088
)
(40,734
)
(141,896
)
Provision for income taxes
198
46
362
198
Net loss
$
(30,166
)
$
(133,134
)
$
(41,096
)
$
(142,094
)
Net loss per share, basic and diluted
$
(0.25
)
$
(1.13
)
$
(0.33
)
$
(1.20
)
Weighted average common shares
outstanding, basic and diluted
123,027,759
118,211,168
122,864,345
118,051,090
Other comprehensive income (loss):
Foreign currency translation
adjustments
$
35
$
12
$
3
$
9
Change in cash flow hedge
—
5,735
(2,088
)
12,324
Amortization of dedesignated cash flow
(2,769
)
—
(5,142
)
—
Total other comprehensive income
(loss)
(2,734
)
5,747
(7,227
)
12,333
Comprehensive loss
$
(32,900
)
$
(127,387
)
$
(48,323
)
$
(129,761
)
TRAEGER, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Six Months Ended June
30,
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
$
(41,096
)
$
(142,094
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation of property, plant and
equipment
7,462
6,023
Amortization of intangible assets
21,378
21,337
Amortization of deferred financing
costs
1,026
979
Loss on disposal of property, plant and
equipment
1,689
1,176
Stock-based compensation expense
40,979
27,434
Bad debt expense
189
(127
)
Unrealized loss (gain) on derivative
contracts
(2,066
)
2,864
Amortization of dedesignated cash flow
hedge
(5,142
)
—
Change in fair value of contingent
consideration
2,588
(1,325
)
Goodwill impairment
—
111,485
Other non-cash adjustments
(17
)
—
Change in operating assets and
liabilities:
Accounts receivable
(40,979
)
(18,709
)
Inventories, net
55,668
(17,781
)
Prepaid expenses and other current
assets
(1,074
)
(2,394
)
Other non-current assets
(13
)
23
Accounts payable and accrued expenses
(14,154
)
(18,954
)
Other non-current liabilities
(582
)
13
Net cash provided by (used in) operating
activities
25,856
(30,050
)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and
equipment
(8,854
)
(12,422
)
Capitalization of patent costs
(223
)
(305
)
Proceeds from sale of property, plant, and
equipment
2,450
—
Net cash used in investing activities
(6,627
)
(12,727
)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit
86,500
110,600
Repayments on line of credit
(130,209
)
(73,927
)
Proceeds from long-term debt
—
12,500
Repayments of long-term debt
(103
)
—
Principal payments on capital lease
obligations
(251
)
(217
)
Payment of acquisition related contingent
consideration
(12,225
)
(9,275
)
Taxes paid related to net share settlement
of equity awards
—
(41
)
Net cash provided by (used in) financing
activities
(56,288
)
39,640
Net decrease in cash, cash equivalents and
restricted cash
(37,059
)
(3,137
)
Cash, cash equivalents and restricted cash
at beginning of period
51,555
16,740
CASH AND CASH EQUIVALENTS AT END OF
PERIOD
$
14,496
$
13,603
TRAEGER, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
(Continued)
Six Months Ended June
30,
2023
2022
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for
interest
$
20,487
$
11,781
Cash paid for income taxes
$
1,576
$
1,988
NON-CASH FINANCING AND INVESTING
ACTIVITIES
Equipment purchased under finance
leases
$
383
$
344
Property, plant, and equipment included in
accounts payable and accrued expenses
$
1,813
$
8,736
TRAEGER, INC.
RECONCILIATIONS OF AND OTHER INFORMATION
REGARDING NON-GAAP FINANCIAL MEASURES
(unaudited)
In addition to our results and measures of performance
determined in accordance with U.S. GAAP, we believe that certain
non-GAAP financial measures are useful in evaluating and comparing
our financial and operational performance over multiple periods,
identifying trends affecting our business, formulating business
plans and making strategic decisions.
Each of Adjusted EBITDA, Adjusted Net Income, Adjusted Net
Income per share, Adjusted EBITDA Margin, and Adjusted Net Income
Margin are key performance measures that our management uses to
assess our financial performance and is also used for internal
planning and forecasting purposes. We believe that these non-GAAP
financial measures are useful to investors and other interested
parties in analyzing our financial performance because it provides
a comparable overview of our operations across historical periods.
In addition, we believe that providing each of Adjusted EBITDA and
Adjusted Net Income, together with a reconciliation of Net Loss to
each such measure, and providing Adjusted Net Income per share,
together with a reconciliation of Net Loss per share to such
measure, and Adjusted EBITDA Margin and Adjusted Net Income Margin,
together with a reconciliation of Net Loss Margin to such measures,
helps investors make comparisons between our company and other
companies that may have different capital structures, different tax
rates, and/or different forms of employee compensation. For
example, due to finite-lived intangible assets included on our
balance sheet following our corporate reorganization in 2017, we
have significant non-cash amortization expense attributable to the
nature of our capital structure.
Each of Adjusted EBITDA, Adjusted Net Income, and Adjusted Net
Income per share are used by our management team as an additional
measure of our performance for purposes of business
decision-making, including managing expenditures, and evaluating
potential acquisitions. Period-to-period comparisons of Adjusted
EBITDA, Adjusted Net Income, and Adjusted Net Income per share help
our management identify additional trends in our financial results
that may not be shown solely by period-to-period comparisons of Net
Loss or Loss from Continuing Operations or Net Loss per share. In
addition, we may use Adjusted EBITDA in the incentive compensation
programs applicable to some of our employees. Each of Adjusted
EBITDA, Adjusted Net Income, and Adjusted Net Income per share has
inherent limitations because of the excluded items, and may not be
directly comparable to similarly titled metrics used by other
companies.
The following table presents a reconciliation of Net Loss, Net
Loss Margin and Net Loss per share, the most directly comparable
financial measures calculated in accordance with U.S. GAAP, to
Adjusted Net Income, Adjusted EBITDA, Adjusted EBITDA Margin,
Adjusted Net Income Margin and Adjusted Net Income per share,
respectively, on a consolidated basis.
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
(dollars in thousands, except
share and per share amounts)
Net loss
$
(30,166
)
$
(133,134
)
$
(41,096
)
$
(142,094
)
Adjustments:
Other (income) expense (1)
(9,298
)
3,401
(10,658
)
4,075
Goodwill impairment
—
111,485
—
111,485
Stock-based compensation
33,036
11,951
40,979
27,434
Non-routine legal expenses (2)
248
1,051
481
2,969
Amortization of acquisition intangibles
(3)
8,253
8,253
16,507
16,507
Change in fair value of contingent
consideration
1,765
255
2,808
1,955
Other adjustment items (4)
526
668
669
1,081
Tax impact of adjusting items (5)
(46
)
—
106
—
Adjusted net income
$
4,318
$
3,930
$
9,796
$
23,412
Net loss
$
(30,166
)
$
(133,134
)
$
(41,096
)
$
(142,094
)
Adjustments:
Provision for income taxes
198
46
362
198
Interest expense
7,810
7,064
15,891
12,901
Depreciation and amortization
14,587
14,242
28,841
27,419
Other (income) expense (6)
(6,529
)
3,401
(5,516
)
4,075
Goodwill impairment
—
111,485
—
111,485
Stock-based compensation
33,036
11,951
40,979
27,434
Non-routine legal expenses (2)
248
1,051
481
2,969
Change in fair value of contingent
consideration
1,765
255
2,808
1,955
Other adjustment items (4)
526
668
669
1,081
Adjusted EBITDA
$
21,475
$
17,029
$
43,419
$
47,423
Revenue
$
171,512
$
200,270
$
324,673
$
423,980
Net loss margin
(17.6
)%
(66.5
)%
(12.7
)%
(33.5
)%
Adjusted net income margin
2.5
%
2.0
%
3.0
%
5.5
%
Adjusted EBITDA margin
12.5
%
8.5
%
13.4
%
11.2
%
Net loss per diluted share
$
(0.25
)
$
(1.13
)
$
(0.33
)
$
(1.20
)
Adjusted net income per diluted share
$
0.04
$
0.03
$
0.08
$
0.20
Weighted average common shares outstanding
- diluted
123,027,759
118,211,168
122,864,345
118,051,090
- Represents realized and unrealized gains on the interest rate
swap, including amortization of dedesignated cash flow hedge,
losses on the disposal of property, plant, and equipment, and
unrealized gains (losses) from foreign currency transactions and
derivatives.
- Represents external legal expenses for litigation, patent and
trademark defense.
- Represents the amortization expense associated with intangible
assets recorded in connection with the 2017 acquisition of Traeger
Pellet Grills Holdings LLC.
- Represents non-routine operational wind-down costs, non-cash
ground lease expense associated with a build-to-suit lease in 2022,
as well as write-offs and restoration costs at our wood pellet
production facility due to flood damage sustained as a result of a
tropical storm.
- Represents an adjusted tax rate equal to our annual estimated
tax rate on Adjusted Net Income. This rate is based on our
estimated annual GAAP income (loss) tax rate forecast, adjusted to
account for items excluded from GAAP income (loss) in calculating
the non-GAAP financial measures presented above. Due to the
differences in the tax treatment of items excluded from non-GAAP
earnings, as well as the methodology applied to our estimated
annual tax rates, our estimated tax rate on Adjusted Net Income may
differ from our GAAP tax rate and from our actual tax
liabilities.
- Represents realized and unrealized gains on the interest rate
swap, losses on the disposal of property, plant, and equipment, and
unrealized gains (losses) from foreign currency transactions and
derivatives.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230802925468/en/
Investors: Nick Bacchus Traeger, Inc. investor@traeger.com
Media: The Brand Amp Traeger@thebrandamp.com
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