Traeger, Inc. Q3 FY2025 Earnings Call

Hello, everyone, and welcome to the Traeger Third Quarter Fiscal 2025 Earnings Conference Call. My name is Charlie, and I'll be coordinating the call today. I will now hand over to our host, Nick Bacchus, Vice President of Investor Relations, Treasury and Capital Markets at Traeger to begin. Nick, please go ahead.

Good afternoon, everyone. Thank you for joining Traeger's call to discuss its third quarter 2025 results, which were released this afternoon and can be found on our website at investors.traeger.com. I'm Nick Bacchus, Vice President of Investor Relations, Treasury and Capital Markets at Traeger. With me on the call today are Jeremy Andrus, our Chief Executive Officer; and Joey Hord, our Chief Financial Officer. Before we get started, I want to remind everyone that management's remarks on this call may contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and views of future events, including, but not limited to, statements made regarding our organizational focus, our mitigation efforts to offset the direct impact of tariffs, our Project Gravity initiative and its impact on our business and our outlook as to our anticipated full year 2025 results. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied herein. I encourage you to review our annual report on Form 10-K for the year ended December 31, 2024, and our other filings for a discussion of these factors and uncertainties, which are available on the Investor Relations portion of our website. You should not take undue reliance on these forward-looking statements, which we speak to only as of today. We undertake no obligation to update or revise them for any new information. Now I'd like to turn the call over to Jeremy Andrus, Chief Executive Officer of Traeger. Jeremy?

Thanks, Nick. Thank you for joining our third-quarter earnings call. On today's call, I will provide an update on our third-quarter results. I will also discuss our Project Gravity streamlining effort and review our outlook for fiscal 2025 before turning the call over to Joey. This afternoon, we released third-quarter results that were ahead of expectations. Highlights include a sales increase of 3% to $125 million, driven by growth in our grills and consumables categories. Adjusted EBITDA of $14 million was up 12% over the prior year as our expense reduction initiatives are beginning to flow through the P&L. Third-quarter results reflect our management team's unrelenting focus on navigating a highly dynamic environment. I am pleased with our ability to grow our revenues and adjusted EBITDA in the face of a challenging backdrop. Our results give us the confidence to reiterate our guidance for the fiscal year. In this environment, preserving profitability and enhancing cash flow is our highest near-term priority. As such, we have made significant progress in executing our tariff mitigation strategies. We continue to believe that we are positioned to offset about 80% of the approximate $60 million in unmitigated tariff exposure in fiscal 2025, utilizing three main strategies that we have previously discussed. First, we are continuing to focus on driving savings and efficiencies in our supply chain, including successful cost reductions. Further, we are planning for and implementing our strategy to diversify our production away from China. We have had productive discussions with manufacturing partners and remain committed to materially diversifying production out of China by the end of fiscal 2026. We currently have plans in place to produce all new grill SKUs going forward in Vietnam, and we'll continue to work towards shifting production on existing lines of product out of China as we move through the balance of this year and into next year. Next, we took price across our assortment to protect profit in the face of higher costs due to tariffs. As we expected, in the third quarter, we saw an impact on grill sell-through volumes tied to the pricing increase. However, elasticity at the consumer level was largely in line with our expectations. The final strategic pillar of our tariff mitigation strategy is cost management. This includes near-term cost savings measures such as a reduction in travel and entertainment expenses and the deferral of nonessential projects as well as our Project Gravity streamlining initiative. With respect to Project Gravity, I continue to believe this effort will be transformative for our business and a significant driver of long-term value for the company. Last quarter, we discussed the two phases of Project Gravity. Phase 1 consists of the organizational structure changes we implemented in the second quarter as well as the integration of our MEATER business into Salt Lake City infrastructure. In the third quarter, we made significant progress on the MEATER integration, significantly reducing headcount based in the U.K. and shifting most of the key functions of the business into our Utah headquarters and Traeger infrastructure. We believe MEATER's operations are well-positioned to benefit from the significant pool of talent at Traeger. As we look to the future, we believe the integration of MEATER will reshape its P&L and will unlock the ability to focus on its long-term growth drivers, including the expansion of its retail channel penetration and new product development. Overall, we continue to target Project Gravity Phase 1 run rate cost savings of $30 million once fully implemented. Turning to Phase 2 of Project Gravity. The second phase of our transformation effort is being driven by a broad-based review of our business with a focus on increased efficiency, simplification and return on investment. This strategic review is ongoing, and we have retained a global consulting firm to assist with the assessment and implementation of Phase 2 initiatives. We have also established a transformation management office, which will act as a coordinating body during the implementation of Gravity to help ensure consistency, transparency and accountability between the executive team and working teams. Today, we are announcing a run rate cost savings target of $20 million identified in connection with Phase 2 of Project Gravity. These savings are being enabled by channel optimization, supply chain and manufacturing efficiencies and other streamlining and productivity efforts. Phase 2 savings are incremental to the $30 million of run-rate savings tied to Gravity Phase 1 for a cumulative $50 million run-rate savings target. We expect to largely implement Gravity initiatives by the end of 2026. One of the largest drivers tied to Gravity Phase 2 savings is channel optimization. As we review profitability by channel, geography and retail customer, it became evident that there is a meaningful opportunity to streamline distribution and exit certain channels which are not accretive to profit on a fully burdened cost basis. We are making several shifts to our distribution footprint, which we expect will drive increased efficiency and profitability in the years to come. First, we will be exiting the Costco roadshow business. This program was an early driver of Traeger’s brand awareness and growth. However, over time, this business's profitability has been declining, given increasing costs including transportation rates and labor. Costco will remain an important partner to us, and we will continue to sell Traeger products through Costco's traditional in-line business. Next, we are planning to shift our traeger.com website to a content and brand storytelling focus, and we'll be exiting the direct-to-consumer commercial aspect of the website after the fourth quarter. Consumers seeking to buy Traeger products on traeger.com will be redirected to our retail partners' websites. Our website is a critical asset, and it is the first place where many of our consumers go to conduct research on our grills. However, profitability in this channel is not where we would like it to be, and we believe that by redirecting consumer traffic to our retail partners' websites, we can retain a meaningful portion of these sales at a higher incremental margin while reducing overhead and complexity tied to our own DTC business. We will also be partnering with our retailers to optimize the digital media and advertising strategy for Traeger Online in an effort to drive demand and return on advertising spend for these partners. Not only do we believe this shift will drive efficiency to our business, but we also believe the change will result in a better experience for our consumers. Last, we are shifting to a distributor model in our European markets, which are currently operating under a direct model. We believe employing a 100% distributor model in Europe offers a more cost-effective and asset-light approach, which will unlock savings going forward while retaining our presence in this key international market by partnering with experienced local distributors. We are also sunsetting certain unprofitable SKUs in the market as part of this shift. In total, these channel optimization initiatives will drive meaningful simplification and cost savings to our business. We expect that these initiatives, along with other Phase 2 strategies will drive $20 million of run-rate savings once fully implemented. And while we anticipate a loss of revenue tied to channel optimization, this aligns to our strategy of transforming into a leaner, more efficient and more profitable business, albeit with a smaller base of revenues in the short term. It is important to note that while the near-term focus on Project Gravity is to drive significant savings and efficiencies, this streamlining will serve to optimize our cost structure, which will allow for continued focus on our key growth pillars of product, innovation and brand. Driving increased household penetration for the Traeger brand remains core to our strategy, and we expect the transformation that will occur as a result of Gravity will enable our long-term revenue growth. Let me now briefly discuss our outlook for fiscal year 2025. Today, we are reiterating our prior guidance of revenues of $540 million to $555 million or down 8% to 11% and adjusted EBITDA of $66 million to $73 million. I am pleased with our ability to reiterate guidance today, and we are planning the balance of the year prudently. Now let me briefly touch on some highlights from the third quarter. In terms of our grill business, we saw 2% growth in revenues versus prior year. Growth in grills was driven by strong shipments of sub-$1,000 grill units where we continue to see outperformance. The quarter also benefited from a resumption of direct import fulfillment with our larger retail partners, which was mostly paused in the second quarter. Direct import fulfillment allows for an optimization for both Traeger's and our retail partners' supply chains, creating value for both parties. Reinstating this process in a heavily tariff environment demonstrates our resilience and represents a significant win for the team. On the consumables front, we achieved 12% revenue growth in the third quarter. We are pleased with our consumables performance, which was driven by positive sell-through of pellets, and we continue to see this part of our portfolio as a stable and recurring revenue. New distribution, including our launch into Walmart late last year, remains a growth driver for consumables, and we are seeing expanded distribution of consumables hitting the shelves across several of our largest grocery partners. In terms of consumables innovation, in August, we launched our first-ever sauce collaboration with our long-standing partner and world-famous Pitmaster, Matt Pittman of Meat Church BBQ and also brought back the fan favorite Meat Church Pellets. Both launches have seen a favorable reaction from consumers with the partnership's Holy Cola BBQ Sauce quickly becoming one of our top-selling sauces. Last, our accessories business was down 4%, driven by a decline in MEATER revenues. We expect to see continued short-term pressure on MEATER revenues. However, we believe that the integration and P&L reshaping strategy in motion through Project Gravity will drive growth and expand profitability in the long term. Notably, Traeger-branded accessories demonstrated strong double-digit growth in the third quarter as our significant installed base of grills drove these attachment sales. In summary, the entire Traeger team is highly focused on navigating the current dynamic backdrop and executing against our plan to transform the business and reshape the P&L via our Project Gravity initiatives. I am pleased with the progress we have made thus far with respect to Gravity and believe the $50 million in run-rate savings targeted thus far will meaningfully unlock significant value for our shareholders. And with that, I'll turn the call over to Joey. Joey?

Thanks, Jeremy, and good afternoon, everyone. Today, I'll walk through our third quarter financial performance and provide some additional context on our results and guidance for fiscal '25. We are pleased with our third-quarter results and our ability to drive growth in both revenues and adjusted EBITDA. These results, along with additional efforts we are announcing on Project Gravity, demonstrate our ability to successfully navigate a dynamic environment. As a reminder, enhancing profitability and cash flow in the current environment remains our top priority. Third quarter revenues increased 3% year-over-year to $125 million. Growth was led by double-digit gains in our consumables business as well as a modest increase in our growth business. Looking at category performance, grill revenues increased 2% in the third quarter. This was primarily driven by an increase in average selling prices tied to the pricing increase implemented earlier this year as part of our tariff mitigation efforts, which more than offset the decline in unit volumes. Third-quarter grill revenues also benefited from a pacing shift out of the fourth quarter. Consumables revenues grew 12% to $25 million with wood pellets seeing healthy replenishment and distribution gains contributing to growth. Accessories revenues decreased 4% to $24 million due to lower MEATER sales. We are pleased with our Traeger-branded accessories business in the quarter, which saw growth in excess of 20%. Gross profit for the third quarter decreased to $49 million from $52 million in the third quarter of '24. Gross profit margin for the third quarter contracted 360 basis points year-over-year to 38.7%, reflecting the impact of tariffs and other supply chain pressures. The reduction in gross margin was driven by tariff costs totaling $8 million and generating 670 basis points of unfavorability. This cost was partially offset by: one, pricing actions worth 170 basis points; two, supply chain efficiencies worth 90 basis points; three, improved pellet margins worth 30 basis points; and four, other margin positives of 20 basis points. In the third quarter, we showed strong expense discipline with our cost reduction and streamlining efforts beginning to flow through, as demonstrated by our ability to drive adjusted EBITDA growth. Sales and marketing expenses declined to $20 million, down $6 million year-over-year, representing a 550-basis point improvement as a percentage of sales. General and administrative expenses were $22 million, down $2 million or 8% year-over-year with a 210-basis point improvement as a percentage of sales. In the third quarter, we recorded a $75 million noncash impairment charge to our goodwill related to a sustained decrease in our stock price and market capitalization. As a result of these factors, net loss for the third quarter was $90 million as compared to a net loss of $20 million in the third quarter of '24. Net loss per diluted share was $0.67 compared to a loss of $0.15 in the third quarter of '24. Adjusted net loss for the quarter was $22 million or $0.17 per diluted share as compared to $7 million or $0.06 per diluted share in the same period in '24. Adjusted EBITDA grew to $14 million, up from $12 million in the prior year, demonstrating our ability to drive profitability even in a challenging macro environment. Looking at the balance sheet, we remain in a solid position with liquidity of $167 million with no outstanding borrowings under our revolver or receivables facilities at the end of the third quarter. Inventory at the quarter end was $115 million, up from $107 million at year-end. Increased inventory costs tied to tariffs represented the majority of the growth versus prior year. We are comfortable with our inventory position going into the end of the year. As Jeremy spoke to, we continue to make progress on Project Gravity, our comprehensive strategic initiative to drive operational efficiency and long-term profitability. We previously discussed Phase 1 actions, including headcount reductions and the integration of MEATER into our headquarters, which are still expected to deliver $30 million in run-rate cost savings with approximately $13 million of realized cost savings anticipated in FY '25. Today, we are announcing an incremental cost savings target tied to Gravity Phase 2 of $20 million once fully implemented. The drivers of Phase 2 savings include channel optimization, supply chain efficiencies, and other general productivity measures. Phase 2 implementation will occur through the end of fiscal year '26, and we expect these initiatives to more fully materialize in our results in fiscal '27. The strategic review for Project Gravity is ongoing, and we will provide further updates as the plan evolves. It is important to note that Project Gravity is a transformation exercise that will drive a meaningful reshaping of our P&L. Gravity initiatives are expected to drive material improvements to our cost structure once fully implemented. The key pillars of Gravity are: one, to drive efficiencies and profitability in our business; two, to enhance return on investment; and three, to open up capacity and resources for investment into our highest growth opportunities. Some of these actions will intentionally reduce our revenue base as we exit unprofitable areas of the business, enabling a smaller but more profitable business and opening up investment capacity to drive our long-term growth. Given year-to-date performance, we are reaffirming our full-year guidance. Revenue is expected to be between $540 million and $555 million or down 8% to 11%. Gross margin is expected to be between 40.5% and 41.5%. For adjusted EBITDA, we are reiterating our guidance of $66 million to $73 million. We continue to expect grill revenues to be down high single digits for the year with expected pressure on unit volumes driven by elasticity following pricing increases taken earlier this year to mitigate tariffs and protect profitability. For consumables, we are expecting growth for the year. In terms of the fourth quarter, recall that we are facing a difficult comparison from the prior year when we had a large load-in of our new Woodridge line. We also benefited from a revenue pacing shift in the third quarter of '25, which will pressure fourth-quarter revenues. Second half of '25 performance is expected to be in line with our prior view. In closing, I want to thank our team for their dedication. We're encouraged by our third-quarter performance and remain confident in our ability to navigate the current environment while laying the groundwork for sustainable growth.

Our first question of the day comes from Brian McNamara of Canaccord Genuity.

I just wanted to drill in on your decision to kind of exit DTC and kind of redirect traeger.com traffic to retail partners' websites. Is that certain types of retailers? Or just any clarity there would be helpful.

Thank you for the question, Brian. I have a few points to share. Firstly, while many consumer businesses benefit from the direct channel, our situation differs due to the logistics involved, particularly the expense associated with last-mile delivery and how it can negatively impact the consumer experience. Upon evaluating the economics, the necessary bandwidth, and costs involved in supporting that channel—ranging from technology infrastructure to customer acquisition efforts via advertising—it became evident that pursuing this channel was not ideal for us. Therefore, as we move forward, we are collaborating with retail partners to provide options for our customers. We are focusing on enhancing the consumer experience by integrating with inventory levels and ensuring retailers can respond quickly and effectively. We aim to explore capabilities like assembly and delivery, which offer a superior experience compared to traditional last-mile delivery methods. We are defining our retail partnerships and have selected appropriate technology to support this strategy. We are optimistic that this approach will lead to increased revenue with higher margins and an improved consumer experience. We are committed to maximizing revenue through this channel while minimizing any disruptions in the process, and we truly believe this strategy will benefit us in the long run.

Great. That's helpful. And then just on your retail partners' attitudes towards inventories in the current market. We've heard from other players, obviously, smaller price points that several large retailers kind of are being tight on inventory, shifting their business from direct import to domestic fulfillment. I was just curious like what are you guys seeing, obviously, given a much higher price point?

Well, I would say there have been some meaningful shifts over the last couple of quarters. As the tariff landscape shifted, it didn't make sense for a period of time for retailers to direct import the inventory largely because the tariff exposure was so much higher on the wholesale cost than on our cost of goods. And so a lot of our partners did shift towards a domestic fulfillment model. Fortunately, we've worked very closely with them to implement a first sale process, which is an efficient way to direct import without driving higher aggregate tariff costs. And so that's actually one of the things that drove some of the some of the shift into the third quarter, we were fulfilling domestically, some of the revenue shift, I should clarify. We are filling domestically, but we've shifted the largest retail partners back to direct import. In terms of their behavior or their point of view around inventory in general, we're not really seeing that change. We're not seeing any change to the allocation of space at retail to the assortments. And we're not seeing a different strategy with regards to inventory than we were seeing pre-tariffs.

Great. And then finally, I'm just curious, it seems like that sub-$1,000 price point grill continues to outperform just probably 3 years running now. I'm just curious your thoughts on how that maybe changes or affects your overall pricing strategy? Clearly, you have a premium brand status, but does that change how you think about things? You launched a relatively upmarket grill earlier this year. Just curious your thoughts there.

We frequently discuss our pricing strategy in relation to our brand position. We remain confident that Traeger is well-placed regarding the product experience and brand perception as an accessible premium brand, and we believe this will persist. Our positioning and strategic product roadmap play a significant role in this. Our consumer research and pricing studies indicate that introducing lower price points has expanded Traeger's audience. This strategy motivates consumers who typically spend around $325 on grills to consider upgrading from their propane grills to Traeger. We find that when these consumers join the Traeger community, they appreciate the benefits of using Traeger grills and tend to remain loyal. Not only do they continue to use wood pellets and accessories, but we also see them upgrade with subsequent purchases as they become more committed to the brand. Therefore, we view this as a strategic opportunity to grow our market size without hindering our brand positioning or growth. It is important to note that we are navigating a challenging consumer environment for high-ticket durable goods, influenced by high interest rates, leading consumers to favor lower price points. We believe this is a temporary trend, and we are focused on increasing our average selling prices in the future while still benefiting from the strategy of refining our entry price point to attract additional consumers.

Our next question comes from Peter Benedict of Baird.

First, could you provide an estimate of the revenue loss you anticipate from the Phase 2 distribution strategy plans? I’m curious if you could also share the timing of when we might expect to see this impact. That's my first question.

Thanks for the call, Peter. I'll address that question. Overall, we're estimating a loss of about $60 million in revenue, but we believe that this revenue can be recaptured in either the existing channels, such as Costco, or other channels we are involved in. The timing of these changes will begin in January and continue into February. We anticipate that the recapture and value of this will occur sequentially in the first half of FY '26 and extend into the second half and into 2027. This represents a significant structural shift, and we want to be cautious about making commitments for next year. However, this strategy is definitely aimed at capturing $20 million in value.

Let me just add to that, if I may. As we take a step back and reflect on our current goals, we recognize an opportunity that was initially influenced by tariffs and a need to reduce costs to maintain our profitability and financial health. However, as we transitioned into the late second quarter and early third quarter, we became fully dedicated to this approach due to the long-term advantages it presents for our business. Project Gravity is essentially a transformational initiative that will initially enhance profit, improve cash flow, and reduce our debt levels. Ultimately, it aims to streamline our operations and increase our capacity for investment, allowing us to reinvest in growth. Although we expect a decline in revenues in the short term, we are confident that we will boost profitability and create the necessary capacity to enhance the consumer experience, which includes better product offerings, improved interactions with our brand, and enriched content. These elements will enhance the retail experience for consumers. It has certainly been a challenging few years coming out of the pandemic. Through our budget processes, we've felt limited in our ability to fund what we believe is crucial for our consumers. We view this as an opportunity to fundamentally reshape our profit and loss structure and refocus our long-term strategy for the brand. We are genuinely excited about this process. As both Joey and I have mentioned, there will be some revenue decline, but it will serve as a catalyst for medium- to long-term growth.

Got it. That's a helpful perspective. My second question is around maybe you can give us a sense of the margin profile of going with the distributor model in Europe, kind of how that compares maybe to what you would see as going 1. Just kind of curious what the margin was on the distributor side of things.

Yes. When we change to the distributor model, it will have an effect on our overall margins because the third party we work with also needs to be profitable. However, the costs we are eliminating from the business will more than offset the loss in margins. As Jeremy mentioned, while we will be smaller, we will be more profitable, and this situation exemplifies that. We are confident that we can meet the needs of consumers in Europe just as we did with the direct model, but in a more profitable manner.

Got it. That makes sense. Can you expand on the elasticity response? You've noticed prices increased and units decreased, which was expected. I'm curious how that impacts your promotional plan for the fourth quarter and into next spring. This is just an open-ended question.

Yes, that's a valid question. Regarding pricing elasticity, we implemented price increases in the low double digits. Overall, we are satisfied with how sell-through is performing. There is a noticeable difference in performance between products priced above $1,000 and those below that threshold. When it comes to promotions, consumers do respond positively when we run them, and we consider this in our inventory management and profitability for quarter-to-quarter operations. We remain committed to utilizing promotions. It’s important to note that promotional costs are shared with our channel partners, making it an effective strategy to connect grills with consumers, and we intend to maintain our promotional efforts in the long run.

Our next question comes from Joe Feldman of Telsey Advisory Group.

I wanted to clarify something. You mentioned the grill pacing shift that benefited the third quarter but possibly shifted out of the fourth. Can you explain that a bit more? Was that due to the end market trying to get ahead of tariffs and purchasing more goods early? What essentially drove the shift?

We had about $8 million in revenue that moved from Q4 to Q3, which is simply an organic timing shift. There were some grills that we planned to ship at the start of Q4, but they ended up shipping in Q3 instead. That's really all there is to it. We have also adjusted our expectations for Q4 and are confirming our guidance.

Got it. Yes, that's fair. I know it's a bit early to discuss 2026, but you had a lot of new products and innovations this year. I'm curious about your plans for next year in relation to that. You have a significant amount of work ahead with Project Gravity and restructuring the P&L, but from a product perspective and the efforts to drive revenue, how do you plan to follow up on the Woodridge and Flatrock launches?

We have a strong belief in a product strategy that is centered around consumers and driven by innovation, which remains consistent over time. We don't change our perspective based on macroeconomic conditions that we might not be able to predict in the future. Over the last three years, we have focused on building the infrastructure, team, and internal processes necessary to reliably introduce new products to the market. Our goal is to maintain this approach. If you look back at the strategy we outlined a few years ago, we introduced products at premium pricing while gradually bringing innovation to more accessible offerings. This year, we launched the Timberline XL, a $4,000 grill, and followed it with the Ironwood, which incorporated technology elements from the Timberline. We also introduced the Woodridge, showing similar trends. Our primary focus will always be on enhancing the wood pellet grill experience, which we believe is what resonates most with our consumers and community. We've invested in accessories to improve that experience, and we've explored adjacent categories with our Flatrock 3-zone and 2-zone products. However, the wood pellet grill remains central to our brand. We'll continue to bring value through our established process and, as is typical in product development, we will eventually return to launching new innovations and passing them down the line. We are confident that, in time, consumers will view Traeger as a constant innovator with a fresh product lineup, which is essential to our business foundation.

Our next question comes from Peter Keith of Piper Sandler. The wood pellet grill is the center of our universe, and we will continue to bring value downstream. As part of the cycle of life and product development, we will then go back upstream, launch new innovations, and bring them downstream. We are committed to this process, and we believe that over time, consumers will view Traeger as an innovator with a consistently fresh product portfolio, which is a crucial foundation for our business.

Jeremy, I was wondering if you could provide an assessment of the overall grill market, both for Q3 and year-to-date. How is the grill industry trending in terms of sales and units? Are we beginning to see a rebound in demand at this point?

Yes, as we enter 2025 and consider the ownership life cycle of a grill along with the demand that surged during the pandemic, we see this year as one of growth for the category. We are aligning our investments not only in products but also in channels and branding to support this growth. The tariff situation has certainly impacted the market. When consumers shop for a grill and find that prices have increased by 10% to 15%, they are likely to keep their current grill for an additional season if it's still functional. This tendency has somewhat dampened consumer retail activity due to the tariff effect. We believe the grill market is experiencing a slight decline, influenced by various factors such as elevated price points and high interest rates, which affect consumer discretionary spending. Additionally, housing relocations are at historic lows. However, we are optimistic that we are entering a phase of declining interest rates, which should positively impact housing transactions and consumer borrowing. As time passes since the pandemic's demand surge, we are increasingly confident that we will soon enter a strong replacement cycle, although that hasn't materialized this year. Currently, the market is slightly down, and our market share remains relatively stable.

Okay. And then I think right at the end there, you're mentioning another topic I wanted to ask about, which was the sort of elusive replacement cycle. Given you can track Traeger customer usage quite closely, are you seeing any green shoots around replacements from some of those 2020 or 2021 purchases?

Let me step back and first say all of the data that we see on consumer engagement is robust. I think that we see that in the cook data that we get from our connected grills. And we also see it in the consumables business, which grew in the third quarter, both on a revenue and a sell-through basis. But I wouldn't say that we are seeing data suggesting the pandemic buyer is rebuying at this point in time. The word that you use is elusive. It is elusive. We've done the math 100 different ways, and we would have expected that absent some of the macro headwinds that have come that this year, we would have entered a sort of 2- to 3-year period of higher demand just based on the pandemic consumer rebuying. The one thing that I'll say that we view as a positive in our business is as we look at the market down, we're holding share on what I would consider to be relatively low demand creation investment. And in fact, we've actually seen our unaided brand awareness increase. We do a semiannual contract at a semiannual unaided brand awareness survey, and we saw that increase by about 100 basis points over the prior six months. So we continue to feel bullish on our brand position on the products that we're bringing to market. And boy, this elusive replacement cycle it's coming. And so on balance, we look at the next two to three years and say, we like our position, we like the market. And we feel like this project gravity is really positioning us not only to drive greater profitability but to invest back strategically in the areas that will help us take advantage of this replacement cycle when it comes.

Okay. Maybe lastly, just with advertising, it's good to hear the unaided brand awareness is going up. But do you feel like your advertising is somewhat constrained today? And interesting on the discontinuation of the Costco roadshow, which in itself is a big marketing vehicle, would you look to sort of maybe some cost savings, but also reallocate those dollars to other, perhaps more effective media streams?

Yes, I can address that. The core of Project Gravity is really about thriving in the tariff environment. We didn't want tariffs to financially hinder the business. Therefore, unlocking investment capacity and reinvesting is something we're beginning to consider as we move from '25 into '26. So the short answer is yes.

And let me just add specifically on Costco roadshow since you mentioned it. I think that's a really good example of how we're stepping back and really assessing why we do what we do, how we do it, what the most profitable, scalable way to run this business is. And the Costco roadshow, I think, it's a great example of a program that's been great for our business. We're more than a decade doing Costco roadshows. And it was profitable. Supply chain costs increased, T&E costs increased, labor costs increased. It was neutral. And then we started to think about just the cost or the value of the impressions that we gained. And I would say that the tariffs were the last sort of the last piece of economics that really just made it not work anymore. With that said, it's been foundational. We now get an opportunity to redirect or redeploy the savings from that program into more scalable ways to drive awareness and conversion. So I'm actually really proud of the team for digging deep and deeply assessing elements of our business that were important and that have been sacred but being willing to really think about what is the better way to drive the business going forward.

Thank you. At this time, we have no further questions. So therefore, this concludes today's call. Thank you for joining. You may now disconnect your lines.