Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Traeger Inc (COOK, Financial) reported a strong second quarter gross margin of 42.9%, up 600 basis points compared to the prior year.
- The company increased its adjusted EBITDA guidance for fiscal year 2024 to $74 million to $79 million, reflecting a 15% increase at the midpoint compared to prior guidance.
- Grill revenues increased by 2% year-over-year, driven by successful promotional strategies that improved sell-through.
- Traeger Inc (COOK) saw a significant improvement in consumer demand for its grills during the second quarter, exceeding expectations.
- The company is expanding its distribution of consumables into the grocery channel, which is expected to drive convenience and growth.
Negative Points
- Second quarter sales declined by 2% compared to the previous year, with overall revenues at $168 million.
- MEATER, a part of Traeger Inc (COOK)'s accessories segment, experienced lower-than-anticipated sales, impacting overall accessories revenue.
- The international market, particularly in Europe, faced challenges with softer sell-through and excess inventories.
- Despite improved trends, the company remains cautious about consumer demand in slower seasonal periods due to the dynamic economic backdrop.
- The company experienced a decline in average selling prices (ASPs) due to a shift towards lower price point grills.
Q & A Highlights
Q: Did you see positive sell-through during the promotions, or was it just a sequential improvement?
A: Jeremy Andrus, CEO: Yes, we saw positive sell-through. The consumer price sensitivity trend led us to lean into promotions, which was well received. This indicates meaningful demand for the Traeger brand.
Q: Can you expand on the demand creation issues with MEATER and what changes are being made?
A: Jeremy Andrus, CEO: MEATER is primarily an online business. We initially focused on lower funnel conversion, which didn't yield expected results. We are reverting to a strategy that includes more prospecting ahead of key selling seasons.
Q: How are new grill customers versus replenishment purchases trending, and what are the usage patterns?
A: Dominic Blosil, CFO: Most new grill sales are to new consumers, which is positive for brand loyalty. Consumer engagement is consistent, with connected cooks growing and consumable attach rates aligning with pre-pandemic levels.
Q: What were the units and ASPs for grills in the quarter, and is the flat grill outlook driven by volumes?
A: Dominic Blosil, CFO: Grill sales grew 2%, with volumes increasing in high-double digits, offset by a mid-double-digit decline in ASPs. The strategy focused on lower price point grills, which drove volume growth.
Q: How do you plan to maintain a premium position while promoting lower price points?
A: Jeremy Andrus, CEO: We maintain a premium position with a traditional promotional calendar. Our opening price point is still higher than the industry average, and we strategically promote end-of-life products to reset for new innovations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
