Traeger, Inc. Earnings Call: Mixed Sentiments and Strategic Moves

Traeger, Inc. ((COOK)) has held its Q2 earnings call. Read on for the main highlights of the call.

The recent earnings call for Traeger, Inc. presented a mixed sentiment, reflecting both positive and negative aspects of the company’s current financial standing. While the company showcased effective strategies in tariff mitigation and cost savings, as well as strong consumer demand and strategic brand partnerships, these were counterbalanced by significant revenue and margin declines, particularly in the MEATER segment, leading to a cautious outlook.

Tariff Mitigation Efforts

Traeger is proactively addressing the $60 million tariff impact expected in fiscal 2025. The company plans to offset approximately 80% of this impact through a combination of supply chain efficiencies, strategic pricing, and cost-saving measures. This approach is aimed at alleviating the financial strain imposed by tariffs.

Project Gravity Cost Savings

Phase 1 of Project Gravity is a significant initiative for Traeger, projected to generate around $30 million in run-rate cost savings. Of this, $13 million is anticipated to be realized in fiscal 2025, underscoring the company’s commitment to enhancing operational efficiency.

Consumer Demand During Peak Season

Despite a decline in grill revenues, Traeger experienced better-than-expected consumer demand during key promotional periods such as Memorial Day and Father’s Day. This was reflected in positive unit sell-through growth, indicating a resilient consumer interest in Traeger’s products.

Consumables Revenue Growth

Traeger’s consumables segment reported a 7% revenue growth in the second quarter, primarily driven by pellet sales and expanded distribution channels, including a new launch at Walmart. This growth highlights the strength of Traeger’s consumables business.

Strategic Brand Partnerships

The company has enhanced its brand reach and consumer engagement through strategic partnerships with major brands like Bud Light, Budweiser, and Pepsi Frito-Lay. These collaborations are expected to bolster Traeger’s market presence.

Revenue Decline

Traeger faced a 14% year-over-year decline in second-quarter revenues, with grill revenues falling by 22%. This decline was attributed to pacing shifts and tariff-related dynamics, presenting a challenge for the company.

Gross Margin Pressure

The gross profit margin decreased by 380 basis points to 39.2%, influenced by tariffs, a shift from direct import to domestic fulfillment, and promotional investments. This margin pressure reflects the ongoing financial challenges Traeger is navigating.

MEATER Sales Decline

The MEATER segment, part of Traeger’s accessories business, saw a 12% year-over-year decline in sales. This was due to increased competitive intensity and high pricing, impacting the segment’s performance.

Net Loss Increase

Traeger reported a net loss of $7 million for the second quarter, compared to a $3 million net loss in the same period of 2024. This increase in net loss highlights the financial hurdles the company is currently facing.

Forward-Looking Guidance

Looking ahead, Traeger projects fiscal year 2025 revenues to range between $540 million and $555 million, marking an 8% to 11% decrease from the previous year. Adjusted EBITDA is expected to be between $66 million and $73 million. The company remains focused on long-term growth and efficiency improvements, with Project Gravity expected to deliver significant cost savings. Despite the challenges, Traeger is committed to navigating the macroeconomic environment effectively.

In summary, Traeger’s earnings call painted a picture of a company balancing strategic initiatives with financial challenges. While effective strategies in tariff mitigation and cost savings are promising, significant revenue declines and margin pressures present ongoing hurdles. The company’s forward-looking guidance reflects a cautious yet determined approach to achieving long-term growth and efficiency.