8-K
Traeger, Inc. (COOK)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 8, 2024
TRAEGER, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-40694 | 82-2739741 | |||
|---|---|---|---|---|---|
| (State or other jurisdiction<br><br>of incorporation) | (Commission<br><br>File Number) | (I.R.S. Employer<br><br>Identification No.) | 533 South 400 West, | ||
| --- | --- | ||||
| Salt Lake City, Utah | 84101 | ||||
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, include area code) (801) 701-7180
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br><br>Symbol(s) | Name of each exchange<br><br>on which registered |
|---|---|---|
| Common Stock, par value $0.0001 per share | COOK | The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On May 8, 2024, Traeger, Inc. issued a press release announcing financial results for the quarter ended March 31, 2024. A copy of the press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information contained in this Current Report on Form 8-K (including Exhibit 99.1 hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release, dated May8, 2024 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Traeger, Inc. | ||
|---|---|---|
| Date: May 8, 2024 | By: | /s/ Dominic Blosil |
| Dominic Blosil | ||
| Chief Financial Officer |
Document
TRAEGER ANNOUNCES FIRST QUARTER FISCAL 2024 RESULTS
REITERATES OUTLOOK FOR FULL YEAR 2024
SALT LAKE CITY, Ut., May 8, 2024 (BUSINESS WIRE) -- 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 March 31, 2024.
First Quarter FY 24 Highlights
•Total revenues decreased 5.4% to $144.9 million, at the higher-end of guidance of $140 million to $145 million
•Gross margin of 43.2%, up 700 basis points compared to prior year
•Net loss of $4.7 million; net loss of $0.04 per share
•Adjusted net income of $4.7 million; adjusted net income of $0.04 per share
•Adjusted EBITDA of $24.4 million, up 11.2% compared to prior year
•Reiterates FY 2024 guidance
"In the first quarter, we executed on our plan and delivered revenue and Adjusted EBITDA results at the high-end of our guidance range," said Jeremy Andrus, Chief Executive Officer of Traeger. "As we anticipated, consumer demand for grills remained soft in the first quarter. Despite facing a challenging demand backdrop for our category, our first quarter results demonstrate our commitment to financial and operational improvement, and we reported our highest quarterly gross margin since being a public company. Our team is highly focused on execution as we head into the peak selling season for the grill category and we remain committed to our long-term strategic goals of driving household penetration and innovation. I continue to believe that we are positioned for strong long-term growth as the demand environment normalizes over time."
Operating Results for the First Quarter
Total revenue decreased by 5.4% to $144.9 million, compared to $153.2 million in the first quarter last year.
•Grills decreased 14.4% to $76.8 million as compared to the first quarter last year. The decrease was driven by a decline in average selling price and a reduction in unit volume.
•Consumables increased 7.4% to $32.3 million as compared to the first quarter last year. The increase was driven by higher unit volume of food consumables and wood pellets, partially offset by a reduction in average selling price of food consumables.
•Accessories increased 7.4% to $35.8 million as compared to the first quarter last year. This increase was driven primarily by higher sales of MEATER smart thermometers.
North America revenue declined 9.1% in the first quarter compared to the prior year. Rest of World revenues increased 31.1% in the first quarter compared to the prior year.
Gross profit increased to $62.6 million, compared to $55.4 million in the first quarter last year. Gross profit margin was 43.2% in the first quarter, compared to 36.2% in the same period last year. The increase in gross margin was driven primarily by favorability from freight and logistics, pellet mill capacity optimization, and favorable foreign exchange rates.
Sales and marketing expenses were $21.7 million, compared to $22.1 million in the first quarter last year. The decrease in sales and marketing expense was driven by decreases in demand creation costs, partially offset by increased employee expenses.
General and administrative expenses were $32.1 million, compared to $26.7 million in the first quarter last year. The increase in general and administrative expense was driven by higher stock-based compensation expense, higher employee expenses, and higher occupancy expenses, partially offset by expenses relating to the disposal of pellet mill assets in the comparable period.
Net loss was $4.7 million in the first quarter, or $0.04 per diluted share, as compared to net loss of $10.9 million in the first quarter of last year, or $0.09 per diluted share.1
Adjusted net income was $4.7 million, or $0.04 per diluted share as compared to adjusted net income of $1.2 million, or $0.01 per diluted share in the first quarter last year.2
Adjusted EBITDA was $24.4 million in the first quarter as compared to $21.9 million in the same period last year.2
1 There were no dilutive securities outstanding as of March 31, 2024 and 2023.
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 first quarter totaled $23.6 million, compared to $29.9 million at December 31, 2023.
Inventory at end of the first quarter was $99.9 million, compared to $96.2 million at December 31, 2023 and $132.4 million at March 31, 2023.
Guidance For Full Year Fiscal 2024
The Company is reiterating its prior guidance for Fiscal 2024. The Company's outlook reflects its expectation for continued softness in grill industry demand in 2024, as well as its expectation for significant improvement in gross margin, driven by lower transportation costs and the benefit of margin enhancement initiatives.
•Total revenue is expected to be between $580 million and $605 million
•Gross margin is expected to be between 39% and 40%
•Adjusted EBITDA is expected to be between $62 million and $71 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, 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 first quarter results is scheduled for Wednesday, May 8, 2024, at 4:30 p.m. ET. To participate, please dial (833) 470-1428 or +1 (929) 526-1599 for international callers, conference ID 247499. 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, conference ID 494048. 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 Grills, 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 2024 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, issues in relation to environmental, social and governance matters, both in relation to our own operations and the operations of our supply chain partners, 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, 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.
CONTACT:
Investors:
Nick Bacchus
Traeger, Inc.
investor@traeger.com
Media: The Brand Amp Traeger@thebrandamp.com
TRAEGER, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
| December 31,<br>2023 | |||
|---|---|---|---|
| ASSETS | |||
| Current Assets | |||
| Cash and cash equivalents | 23,620 | $ | 29,921 |
| Accounts receivable, net | 59,938 | ||
| Inventories | 96,175 | ||
| Prepaid expenses and other current assets | 30,346 | ||
| Total current assets | 216,380 | ||
| Property, plant, and equipment, net | 42,591 | ||
| Operating lease right-of-use assets | 48,188 | ||
| Goodwill | 74,725 | ||
| Intangible assets, net | 470,546 | ||
| Other non-current assets | 8,329 | ||
| Total assets | 862,086 | $ | 860,759 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||
| Current Liabilities | |||
| Accounts payable | 25,890 | $ | 33,280 |
| Accrued expenses | 52,941 | ||
| Line of credit | 28,400 | ||
| Current portion of notes payable | 250 | ||
| Current portion of operating lease liabilities | 3,608 | ||
| Current portion of contingent consideration | 15,000 | ||
| Other current liabilities | 495 | ||
| Total current liabilities | 133,974 | ||
| Notes payable, net of current portion | 397,300 | ||
| Operating lease liabilities, net of current portion | 29,142 | ||
| Deferred tax liability | 8,236 | ||
| Other non-current liabilities | 759 | ||
| Total liabilities | 569,411 | ||
| 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 March 31, 2024 and December 31, 2023 | — | ||
| Common stock, 0.0001 par value; 1,000,000,000 shares authorized | |||
| Issued and outstanding shares - 127,946,998 and 125,865,303 as of March 31, 2024 and December 31, 2023 | 13 | ||
| Additional paid-in capital | 935,272 | ||
| Accumulated deficit | (654,877) | ||
| Accumulated other comprehensive income | 10,940 | ||
| Total stockholders' equity | 291,348 | ||
| Total liabilities and stockholders' equity | 862,086 | $ | 860,759 |
All values are in US Dollars.
TRAEGER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
(in thousands, except share and per share amounts)
| Three Months Ended March 31, | ||||
|---|---|---|---|---|
| 2024 | 2023 | |||
| Revenue | $ | 144,914 | $ | 153,161 |
| Cost of revenue | 82,351 | 97,738 | ||
| Gross profit | 62,563 | 55,423 | ||
| Operating expenses: | ||||
| Sales and marketing | 21,679 | 22,075 | ||
| General and administrative | 32,138 | 26,679 | ||
| Amortization of intangible assets | 8,819 | 8,889 | ||
| Change in fair value of contingent consideration | — | 1,043 | ||
| Total operating expense | 62,636 | 58,686 | ||
| Loss from operations | (73) | (3,263) | ||
| Other income (expense): | ||||
| Interest expense | (8,096) | (8,081) | ||
| Other income, net | 3,676 | 578 | ||
| Total other expense | (4,420) | (7,503) | ||
| Loss before provision for income taxes | (4,493) | (10,766) | ||
| Provision for income taxes | 190 | 164 | ||
| Net loss | $ | (4,683) | $ | (10,930) |
| Net loss per share, basic and diluted | $ | (0.04) | $ | (0.09) |
| Weighted average common shares outstanding, basic and diluted | 125,196,934 | 122,699,114 | ||
| Other comprehensive income (loss): | ||||
| Foreign currency translation adjustments | $ | 87 | $ | (32) |
| Change in cash flow hedge | — | (2,088) | ||
| Amortization of dedesignated cash flow hedge | (2,225) | (2,373) | ||
| Total other comprehensive loss | (2,138) | (4,493) | ||
| Comprehensive loss | $ | (6,821) | $ | (15,423) |
TRAEGER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
| Three Months Ended March 31, | ||||
|---|---|---|---|---|
| 2024 | 2023 | |||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||
| Net loss | $ | (4,683) | $ | (10,930) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||
| Depreciation of property, plant and equipment | 3,619 | 3,564 | ||
| Amortization of intangible assets | 10,629 | 10,638 | ||
| Amortization of deferred financing costs | 504 | 534 | ||
| Loss on disposal of property, plant and equipment | 407 | 1,870 | ||
| Stock-based compensation expense | 10,098 | 7,943 | ||
| Unrealized loss (gain) on derivative contracts | (1,124) | 1,698 | ||
| Amortization of dedesignated cash flow hedge | (2,225) | (2,373) | ||
| Change in fair value of contingent consideration | — | 1,043 | ||
| Other non-cash adjustments | 557 | 45 | ||
| Change in operating assets and liabilities: | ||||
| Accounts receivable | (19,110) | (57,145) | ||
| Inventories | (3,727) | 21,090 | ||
| Prepaid expenses and other current assets | 3,071 | (1,214) | ||
| Other non-current assets | 37 | 18 | ||
| Accounts payable and accrued expenses | (10,651) | (73) | ||
| Other non-current liabilities | — | (298) | ||
| Net cash used in operating activities | (12,598) | (23,590) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||
| Purchase of property, plant, and equipment | (5,683) | (2,082) | ||
| Capitalization of patent costs | (152) | (123) | ||
| Proceeds from sale of property, plant, and equipment | 83 | 2,450 | ||
| Net cash provided by (used in) investing activities | (5,752) | 245 | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||
| Proceeds on line of credit | 21,000 | 62,200 | ||
| Repayments on line of credit | (8,765) | (62,500) | ||
| Repayments of long-term debt | (63) | (51) | ||
| Principal payments on finance lease obligations | (123) | (127) | ||
| Net cash provided by (used in) financing activities | 12,049 | (478) | ||
| Net decrease in cash, cash equivalents and restricted cash | (6,301) | (23,823) | ||
| Cash, cash equivalents and restricted cash at beginning of period | 29,921 | 51,555 | ||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $ | 23,620 | $ | 27,732 |
TRAEGER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
| (Continued) | Three Months Ended March 31, | |||
|---|---|---|---|---|
| 2024 | 2023 | |||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||
| Cash paid during the period for interest | $ | 9,659 | $ | 4,718 |
| Income taxes paid (received), net of refunds | $ | (516) | $ | 470 |
| NON-CASH FINANCING AND INVESTING ACTIVITIES | ||||
| Equipment purchased under finance leases | $ | 12 | $ | 72 |
| Property, plant, and equipment included in accounts payable and accrued expenses | $ | 523 | $ | 2,568 |
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 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, Loss from Operations, Net Loss Margin, Loss from Operations 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 condensed consolidated basis.
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||
| (dollars in thousands, except share and per share amounts) | ||||||
| Net loss | $ | (4,683) | $ | (10,930) | ||
| Adjustments: | ||||||
| Other income (1) | (5,862) | (1,359) | ||||
| Stock-based compensation | 10,098 | 7,943 | ||||
| Non-routine legal expenses (2) | 103 | 233 | ||||
| Amortization of acquisition intangibles (3) | 8,255 | 8,253 | ||||
| Change in fair value of contingent consideration | — | 1,043 | ||||
| Other adjustment items (4) | — | 143 | ||||
| Tax impact of adjusting items (5) | (3,227) | (4,094) | ||||
| Adjusted net income | $ | 4,684 | $ | 1,232 | ||
| Net loss | $ | (4,683) | $ | (10,930) | ||
| Adjustments: | ||||||
| Provision for income taxes | 190 | 164 | ||||
| Interest expense | 8,096 | 8,081 | ||||
| Depreciation and amortization | 14,247 | 14,255 | ||||
| Other (income) expense (6) | (3,637) | 1,014 | ||||
| Stock-based compensation | 10,098 | 7,943 | ||||
| Non-routine legal expenses (2) | 103 | 233 | ||||
| Change in fair value of contingent consideration | — | 1,043 | ||||
| Other adjustment items (4) | — | 143 | ||||
| Adjusted EBITDA | $ | 24,414 | $ | 21,946 | ||
| Revenue | $ | 144,914 | $ | 153,161 | ||
| Net loss margin | (3.2) | % | (7.1) | % | ||
| Adjusted net income margin | 3.2 | % | 0.8 | % | ||
| Adjusted EBITDA margin | 16.8 | % | 14.3 | % | ||
| Net loss per diluted share | $ | (0.04) | $ | (0.09) | ||
| Adjusted net income per diluted share | $ | 0.04 | $ | 0.01 | ||
| Weighted average common shares outstanding - diluted | 125,196,934 | 122,699,114 |
(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 external legal expenses incurred in connection with the defense of a class action lawsuit and intellectual property litigation.
(3)Represents amortization of acquisition intangibles includes amortization expense associated with intangible assets recorded in connection with the 2017 acquisition of Traeger Pellet Grills Holdings LLC.
(4)Represents non-routine operational wind-down costs.
(5)Represents the tax effect of non-GAAP adjustments calculated at an estimated blended statutory tax rate of 25.6% and 25.2% for the three months three months ended March 31, 2024 and 2023, respectively. The amounts for the three months ended March 31, 2023 have been adjusted to reflect the application of the estimated blended statutory tax rates, as opposed to effective income tax rates that was used in the prior period, in order to include the current and deferred income tax expenses that are commensurate with the non-GAAP measure of profitability.
(6)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.
11