Increases Midpoint of Guidance Range for
Full Year 2023
Traeger, Inc. ("Traeger" or the "Company") (NYSE: COOK), creator
and category leader of the wood pellet grill, today announced its
financial results for the three months ended September 30,
2023.
Third Quarter FY 23 Highlights
- Total revenues increased 25.5% to $117.7 million
- Gross profit margin of 37.9%, up 1,120 basis points compared to
prior year
- Net loss of $19.3 million compared to net loss of $211.1
million compared to the prior year
- Adjusted EBITDA of $4.7 million, up from a $13.0 million loss
in the prior year
- Increases midpoint of FY 2023 revenue, gross margin and
Adjusted EBITDA guidance
"I am pleased with our third quarter financial results, which
were ahead of our expectations," said Jeremy Andrus, CEO of
Traeger. "Third quarter's performance is the direct result of our
team's unrelenting focus over the last year on positioning Traeger
for improved financial flexibility and profitability. Our efforts
to rightsize channel inventories allowed for more normalized
replenishment rates at retail in the quarter which drove strong
growth in grills compared to last year. Moreover, we are now seeing
greater benefit from lower supply chain costs, which in combination
with expense discipline, drove a meaningful improvement in Adjusted
EBITDA in the third quarter."
Mr. Andrus continued, "Given the better than expected results in
the third quarter, we are increasing the midpoint of our revenue,
gross margin and Adjusted EBITDA outlook for the full year. I
believe we continue to be strongly positioned to execute our
strategy to materially grow penetration and awareness of the
Traeger brand. We recognize that the macroeconomic backdrop remains
volatile and we will manage the business prudently as we look to
create long-term value for our shareholders."
Operating Results for the Third Quarter
Total revenue increased 25.5% to $117.7 million, compared
to $93.8 million in the third quarter last year.
- Grills increased 45.1% to $56.6 million as compared to the
third quarter last year. The increase was primarily driven by an
increase in unit volumes, partially offset by a decrease in average
selling price due to strategic pricing actions.
- Consumables increased 0.9% to $25.4 million as compared to the
third quarter last year. The increase was driven by higher unit
volumes of food consumables, partially offset by lower average
selling prices of wood pellets and food consumables.
- Accessories increased 20.7% to $35.8 million as compared to the
third quarter last year. This increase was driven primarily by
higher sales of MEATER smart thermometers as well as growth of
Traeger branded accessories.
North America revenue increased 23.6% in the third quarter
compared to the prior year. Rest of World revenues increased 40.0%
in the third quarter compared to the prior year.
Gross profit increased to $44.7 million, compared to
$25.1 million in the third quarter last year. Gross profit margin
was 37.9% in the third quarter, compared to 26.7% in the same
period last year. Excluding restructuring costs, gross profit
margin was 28.5% in the third quarter of last year. The increase in
gross margin was driven primarily by favorability from freight and
logistics costs.
Sales and marketing expenses were $25.9 million, compared
to $25.5 million in the third quarter last year. The increase in
sales and marketing expense was driven by higher employee costs and
stock-based compensation expense, largely offset by a reduction in
variable costs.
General and administrative expenses were $24.8 million,
compared to $70.5 million in the third quarter last year. The
decrease in general and administrative expense was driven by a
decrease in stock-based compensation expense of $47.8 million
primarily due to the accelerated vesting in the comparable period
of $40.5 million of modified awards held by the CEO and certain
directors.
Net loss was $19.3 million in the third quarter, or a
loss of $0.16 per diluted share, compared to net loss of $211.1
million in the third quarter of last year, or a loss of $1.76 per
diluted share, which included a non-cash goodwill impairment charge
of $110.8 million.1
Adjusted net loss was $14.3 million, or $0.12 per diluted
share compared to $73.6 million, or $0.61 per diluted share in the
third quarter last year.2
Adjusted EBITDA was $4.7 million in the third quarter
compared to an Adjusted EBITDA loss of $13.0 million in the same
period last year.2
Balance Sheet
Cash and cash equivalents at the end of the third quarter
totaled $11.3 million, compared to $39.1 million at December 31,
2022.
Inventory at the end of the third quarter was $101.9
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 updating its guidance for Fiscal 2023. The
Company's updated outlook reflects better than expected third
quarter performance and expected growth in revenue and Adjusted
EBITDA in the fourth quarter.
- Total revenue is expected to be between $590 million and
$600 million
- Gross Margin is expected to be between 36.5% and
37%
- Adjusted EBITDA is expected to be between $57 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 (benefit) for income taxes,
interest expense, depreciation and amortization, other (income)
expense, stock-based compensation, goodwill impairment,
restructuring costs, non-routine legal expenses, change in fair
value of contingent consideration, and other adjustment items all
of which are adjustments to Adjusted EBITDA.
Conference Call Details
A conference call to discuss the Company's third quarter results
is scheduled for Wednesday, November 8, 2023, at 4:30 p.m. ET. To
participate, please dial (833) 470-1428 or +1 (646) 904-5544 for
international callers, conference ID 511836. The conference call
will also be webcast live at https://investors.traeger.com. A
recording will be available shortly after the conclusion of the
call. To access the replay, please dial (866) 813-9403 or +44 (204)
525-0658 for international callers, conference ID 527862. A replay
of the webcast will also be available approximately two hours after
the conclusion of the call on the Company's website at
https://investors.traeger.com. A supplemental presentation has also
been posted to the Company's website at
https://investors.traeger.com.
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 September 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)
September 30,
2023
December 31,
2022
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents
$
11,280
$
39,055
Restricted cash
—
12,500
Accounts receivable, net
50,996
42,050
Inventories
101,891
153,471
Prepaid expenses and other current
assets
35,051
27,162
Total current assets
199,218
274,238
Property, plant, and equipment, net
55,232
55,510
Operating lease right-of-use assets
11,922
13,854
Goodwill
74,725
74,725
Intangible assets, net
481,155
512,858
Other non-current assets
14,468
15,530
Total assets
$
836,720
$
946,715
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable
$
26,028
$
29,841
Accrued expenses
40,682
52,295
Line of credit
25,000
11,709
Current portion of notes payable
250
250
Current portion of operating lease
liabilities
3,772
5,185
Current portion of contingent
consideration
10,810
12,157
Other current liabilities
1,726
1,470
Total current liabilities
108,268
112,907
Notes payable, net of current portion
397,009
468,108
Operating leases liabilities, net of
current portion
8,418
9,001
Contingent consideration, net of current
portion
—
10,590
Deferred tax liability
10,373
10,370
Other non-current liabilities
879
870
Total liabilities
524,947
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 September 30, 2023 and December 31, 2022
—
—
Common stock, $0.0001 par value;
1,000,000,000 shares authorized
Issued and outstanding shares -
125,658,970 and 122,624,414 as of September 30, 2023 and December
31, 2022
13
12
Additional paid-in capital
929,249
882,069
Accumulated deficit
(630,832
)
(570,475
)
Accumulated other comprehensive income
13,343
23,263
Total stockholders' equity
311,773
334,869
Total liabilities and stockholders'
equity
$
836,720
$
946,715
TRAEGER, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited) (in thousands, except share and per share
amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenue
$
117,730
$
93,788
$
442,403
$
517,768
Cost of revenue
73,064
68,710
278,983
336,605
Gross profit
44,666
25,078
163,420
181,163
Operating expenses:
Sales and marketing
25,913
25,496
75,903
102,401
General and administrative
24,823
70,485
103,873
142,637
Amortization of intangible assets
8,889
8,889
26,666
26,666
Change in fair value of contingent
consideration
(2,300
)
1,820
508
3,775
Restructuring costs
225
8,036
225
8,036
Goodwill impairment
—
110,837
—
222,322
Total operating expense
57,550
225,563
207,175
505,837
Loss from operations
(12,884
)
(200,485
)
(43,755
)
(324,674
)
Other income (expense):
Interest expense
(7,517
)
(7,337
)
(23,408
)
(20,238
)
Other income (expense), net
1,992
(3,545
)
8,020
(8,351
)
Total other expense
(5,525
)
(10,882
)
(15,388
)
(28,589
)
Loss before provision (benefit) for income
taxes
(18,409
)
(211,367
)
(59,143
)
(353,263
)
Provision (benefit) for income taxes
852
(225
)
1,214
(27
)
Net loss
$
(19,261
)
$
(211,142
)
$
(60,357
)
$
(353,236
)
Net loss per share, basic and diluted
$
(0.16
)
$
(1.76
)
$
(0.49
)
$
(2.98
)
Weighted average common shares
outstanding, basic and diluted
124,053,643
119,924,371
123,265,134
118,682,379
Other comprehensive income (loss):
Foreign currency translation
adjustments
$
(27
)
$
(67
)
$
(24
)
$
(58
)
Change in cash flow hedge
—
12,285
(2,088
)
24,609
Amortization of dedesignated cash flow
hedge
(2,666
)
—
(7,808
)
—
Total other comprehensive income
(loss)
(2,693
)
12,218
(9,920
)
24,551
Comprehensive loss
$
(21,954
)
$
(198,924
)
$
(70,277
)
$
(328,685
)
TRAEGER, INC. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited) (in
thousands)
Nine Months Ended September
30,
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
$
(60,357
)
$
(353,236
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation of property, plant and
equipment
11,204
9,703
Amortization of intangible assets
32,074
32,025
Amortization of deferred financing
costs
1,519
1,468
Loss on disposal of property, plant and
equipment
2,262
707
Stock-based compensation expense
47,180
80,687
Bad debt expense
153
(317
)
Unrealized loss (gain) on derivative
contracts
(2,689
)
4,567
Amortization of dedesignated cash flow
hedge
(7,808
)
—
Change in fair value of contingent
consideration
288
495
Goodwill impairment
—
222,322
Restructuring costs
—
1,419
Other non-cash adjustments
(15
)
—
Change in operating assets and
liabilities:
Accounts receivable, net
(9,099
)
58,874
Inventories
51,580
(14,845
)
Prepaid expenses and other current
assets
(6,077
)
(7,118
)
Other non-current assets
(393
)
64
Accounts payable and accrued expenses
(15,467
)
(42,838
)
Other non-current liabilities
4
22
Net cash provided by (used in) operating
activities
44,359
(6,001
)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and
equipment
(15,678
)
(15,128
)
Capitalization of patent costs
(373
)
(403
)
Proceeds from sale of property, plant, and
equipment
2,925
—
Net cash used in investing activities
(13,126
)
(15,531
)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit
103,100
166,978
Repayments on line of credit
(161,809
)
(156,666
)
Proceeds from long-term debt
—
12,500
Repayments of long-term debt
(188
)
—
Principal payments on finance lease
obligations
(386
)
(355
)
Payments 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
(71,508
)
13,141
Net decrease in cash, cash equivalents and
restricted cash
(40,275
)
(8,391
)
Cash, cash equivalents and restricted cash
at beginning of period
51,555
16,740
CASH AND CASH EQUIVALENTS AT END OF
PERIOD
$
11,280
$
8,349
TRAEGER, INC. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited) (in
thousands)
(Continued)
Nine Months Ended September
30,
2023
2022
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for
interest
$
30,243
$
18,403
Cash paid for income taxes
$
2,449
$
2,250
NON-CASH FINANCING AND INVESTING
ACTIVITIES
Equipment purchased under finance
leases
$
451
$
952
Property, plant, and equipment included in
accounts payable and accrued expenses
$
2,152
$
15,512
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 Loss, Adjusted Net Loss
per share, Adjusted EBITDA Margin, Adjusted Net Loss Margin, and
Adjusted Gross 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 Loss, together with a
reconciliation of Net Loss to each such measure, and providing
Adjusted Net Loss per share, together with a reconciliation of Net
Loss per share to such measure, and Adjusted EBITDA Margin and
Adjusted Net Loss Margin, together with a reconciliation of Net
Loss Margin to such measures, and Adjusted Gross Margin together
with a reconciliation of Gross Margin to such measure, 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 Loss, Adjusted Net Loss
per share, and Adjusted Gross Margin 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 Loss, Adjusted Net Loss per share,
and Adjusted Gross Margin 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 or Gross Margin. In addition, we
may use Adjusted EBITDA in the incentive compensation programs
applicable to some of our employees. Each of Adjusted EBITDA,
Adjusted Net Loss, Adjusted Net Loss per share, and Adjusted Gross
Margin 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 Gross Margin,
the most directly comparable financial measure calculated in
accordance with U.S. GAAP, to Adjusted Gross Margin on a
consolidated basis. A reconciliation of Adjusted Gross Margin
guidance to Gross Margin on a forward-looking basis cannot be
provided without unreasonable efforts, as the Company is unable to
provide reconciling information with respect to the impact of
restructuring costs recorded in cost of revenue which is an
adjustment to Adjusted Gross Margin.
Three Months Ended September
30,
2023
2022
Gross margin
37.9
%
26.7
%
Add: Impact of restructuring costs
recorded in cost of revenue
—
%
1.7
%
Adjusted gross margin
37.9
%
28.5
%
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
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
(dollars in thousands, except
share and per share amounts)
Net loss
$
(19,261
)
$
(211,142
)
$
(60,357
)
$
(353,236
)
Adjustments:
Other (income) expense (1)
(5,644
)
21
(16,302
)
4,095
Goodwill impairment
—
110,837
—
222,322
Restructuring costs (2)
225
9,644
225
9,644
Stock-based compensation
6,201
53,253
47,180
80,687
Non-routine legal expenses (3)
—
788
481
3,757
Amortization of acquisition intangibles
(4)
8,253
8,253
24,762
24,760
Change in fair value of contingent
consideration
(2,300
)
1,820
508
3,775
Other adjustment items (5)
—
274
669
1,355
Tax impact of adjusting items (6)
(1,765
)
(47,349
)
(14,686
)
(89,732
)
Adjusted net loss
$
(14,291
)
$
(73,601
)
$
(17,520
)
$
(92,573
)
Net loss
$
(19,261
)
$
(211,142
)
$
(60,357
)
$
(353,236
)
Adjustments:
Provision (benefit) for income taxes
852
(225
)
1,214
(27
)
Interest expense
7,517
7,337
23,408
20,238
Depreciation and amortization
14,433
14,382
43,275
41,801
Other (income) expense (7)
(2,978
)
21
(8,494
)
4,095
Goodwill impairment
—
110,837
—
222,322
Restructuring costs (2)
225
9,644
225
9,644
Stock-based compensation
6,201
53,253
47,180
80,687
Non-routine legal expenses (3)
—
788
481
3,757
Change in fair value of contingent
consideration
(2,300
)
1,820
508
3,775
Other adjustment items (5)
—
274
669
1,355
Adjusted EBITDA
$
4,689
$
(13,011
)
$
48,109
$
34,411
Revenue
$
117,730
$
93,788
$
442,403
$
517,768
Net loss margin
(16.4
)%
(225.1
)%
(13.6
)%
(68.2
)%
Adjusted net loss margin
(12.1
)%
(78.5
)%
(4.0
)%
(17.9
)%
Adjusted EBITDA margin
4.0
%
(13.9
)%
10.9
%
6.6
%
Net loss per diluted share
$
(0.16
)
$
(1.76
)
$
(0.49
)
$
(2.98
)
Adjusted net loss per diluted share
$
(0.12
)
$
(0.61
)
$
(0.14
)
$
(0.78
)
Weighted average common shares outstanding
- diluted
124,053,643
119,924,371
123,265,134
118,682,379
(1)
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.
(2)
Represents costs in connection
with the 2022 restructuring plan, including $1.6 million of costs
recorded in cost of revenue within the three and nine months ended
September 30, 2022 condensed consolidated statements of
operations and comprehensive loss.
(3)
Represents external legal
expenses incurred in connection with the defense of a class action
lawsuit and intellectual property litigation.
(4)
Represents the amortization
expense associated with intangible assets recorded in connection
with the 2017 acquisition of Traeger Pellet Grills Holdings
LLC.
(5)
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.
(6)
Represents the tax effect of
non-GAAP adjustments calculated at an estimated blended statutory
tax rate of 26.2% and 25.5% for the three and nine months ended
September 30, 2023, respectively and 25.6% for both the three
and nine months ended September 30, 2022. The amounts for the
three and nine months ended September 30, 2022 have been
adjusted to reflect the application of the estimated blended
statutory tax rates, as opposed to effective income tax rates that
were used in prior periods, in order to include the current and
deferred income tax expenses that are commensurate with the
non-GAAP measure of profitability.
(7)
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.
______________________________ 1 There were no potentially
dilutive securities outstanding as of September 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108023693/en/
Investors: Nick Bacchus Traeger, Inc. investor@traeger.com
Media: The Brand Amp Traeger@thebrandamp.com
Traeger (NYSE:COOK)
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Traeger (NYSE:COOK)
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