Reiterates Outlook 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 March 31, 2023.
First Quarter FY 23 Results
- Total revenues decreased 31.5% to $153.2 million
- Gross profit margin of 36.2% down 80 basis points compared to
prior year
- Net income of $8.0 million; net income of $0.07 per share
- Adjusted net income of $5.5 million; adjusted net income of
$0.04 per share
- Adjusted EBITDA of $21.9 million, ahead of guidance of $16
million to $20 million
- Adjusted EBITDA margin of 14.3%, up from 13.6% in the prior
year
- 14% sequential reduction in balance sheet inventory driven by
strategic inventory management
"While our sales continued to be pressured by retailer
destocking and lower consumer demand in the first quarter, I am
pleased with our execution as well as our ability to exceed the
high-end of our Adjusted EBITDA guidance range for the quarter,"
said Jeremy Andrus, CEO of Traeger. "We are making meaningful
inroads on our near-term strategy to navigate the current
environment and to position the company for a return to growth in
the second half of 2023 and beyond. In particular, we saw
substantial improvement in both our balance sheet and channel
inventories in the first quarter."
Mr. Andrus continued, "The first quarter was also a pivotal
period in our product innovation roadmap with the launch of our new
Flatrock and Ironwood grills. These launches cement Traeger’s
positioning as the industry leader in innovation and the strong
response from consumers adds to my confidence in the long-term
prospects of our brand. Against a volatile macro economic backdrop,
we will continue to manage the business prudently with a focus on
agility and efficiency, positioning the Company for long-term
success and value creation."
Operating Results for the First Quarter
Total revenue decreased by 31.5% to $153.2 million,
compared to $223.7 million in the first quarter last year.
- Grills decreased 40.3% to $89.7 million as compared to the
first quarter last year. The decrease was driven by lower unit
volume, partially offset by a higher average selling price
resulting from the introduction of new product.
- Consumables decreased 24.2% to $30.0 million as compared to the
first quarter last year. The decrease was driven by lower unit
volume of wood pellets and other consumables.
- Accessories decreased 0.7% to $33.4 million as compared to the
first quarter last year. This decrease was driven primarily by
lower unit volume of Traeger-branded accessories, partially offset
by increased sales of MEATER smart thermometers.
North America revenue declined 33.0% in the first quarter
compared to the prior year. Rest of World revenues declined 13.1%
in the first quarter compared to the prior year.
Gross profit decreased to $55.4 million, compared to
$82.6 million in the first quarter last year. Gross profit margin
was 36.2% in the first quarter, compared to 36.9% in the same
period last year. The decrease in gross margin was driven primarily
by the timing of marketplace promotional investments and higher
product costs, offset by favorable domestic logistics costs, as
well as foreign exchange rates.
Sales and marketing expenses were $22.1 million, compared
to $34.9 million in the first quarter last year. The decrease in
sales and marketing expense was driven by decreases in demand
creation costs, employee expenses, professional service fees, and
travel and entertainment costs.
General and administrative expenses were $26.7 million,
compared to $40.7 million in the first quarter last year. The
decrease in general and administrative expense was driven by lower
stock-based compensation expense of $6.4 million, lower
professional service fees, and lower employee expenses, partially
offset by losses from the sale of property, plant, and
equipment.
Net income was $8.0 million in the first quarter, or
$0.07 per diluted share, as compared to net loss of $9.0 million in
the first quarter of last year, or a loss of $0.08 per diluted
share.1
Adjusted net income was $5.5 million, or $0.04 per
diluted share as compared to adjusted net income of $19.5 million,
or $0.17 per diluted share in the first quarter last year.2
Adjusted EBITDA was $21.9 million in the first quarter as
compared to $30.4 million in the same period last year.2
Balance Sheet
Cash, cash equivalents and restricted cash at the end of
the first quarter totaled $28 million, compared to $52 million at
December 31, 2022.
Inventory at end of the first quarter was $132.4 million,
compared to $153.5 million at December 31, 2022. The decrease in
inventory was driven by strategic inventory management, as well as
declining transportation and input commodity costs.
Guidance For Full Year Fiscal 2023 The Company is
reiterating its prior guidance for Fiscal 2023. The Company's
outlook reflects macroeconomic uncertainty and the expected
negative impact of the continued normalization of grill channel
inventory in the first half of 2023, as well as the benefit of
expected growth in gross margin and ongoing expense control.
- Total revenue is expected to be between $560 million and
$590 million
- Gross margin is expected to be between 36% and 37%
- Adjusted EBITDA is expected to be between $45 million
and $55 million
A reconciliation of Adjusted EBITDA guidance to Net Income
(Loss) and Adjusted EBITDA Margin guidance to Net Income (Loss)
Margin 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
and Adjusted EBITDA Margin, respectively.
Conference Call Details A conference call to discuss the
Company's first quarter results is scheduled for Wednesday, May 10,
2023, at 4:30 p.m. ET. To participate, please dial (833) 470-1428
or +44 (208) 068-2558 for international callers, conference ID
336351. 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 706980. 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 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. 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.
_______________________ 1 There were no dilutive securities
outstanding as of March 31, 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.
TRAEGER, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share and per share
amounts)
March 31, 2023
December 31,
2022
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents
$
15,232
$
39,055
Restricted cash
12,500
12,500
Accounts receivable, net
99,591
42,050
Inventories
132,381
153,471
Prepaid expenses and other current
assets
28,034
27,162
Total current assets
287,738
274,238
Property, plant, and equipment, net
49,775
55,510
Operating lease right-of-use assets
12,221
13,854
Goodwill
74,725
74,725
Intangible assets, net
502,290
512,858
Other non-current assets
11,248
15,530
Total assets
$
937,997
$
946,715
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable
$
26,244
$
29,841
Accrued expenses
56,286
52,295
Line of credit
40,909
11,709
Current portion of notes payable
250
250
Current portion of operating lease
liabilities
4,491
5,185
Current portion of contingent
consideration
12,400
12,157
Other current liabilities
803
1,470
Total current liabilities
141,383
112,907
Notes payable, net of current portion
438,936
468,108
Operating lease liabilities, net of
current portion
8,045
9,001
Contingent consideration, net of current
portion
11,390
10,590
Deferred tax liability
10,375
10,370
Other non-current liabilities
479
870
Total liabilities
610,608
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 March 31, 2023 and December 31, 2022
—
—
Common stock, $0.0001 par value;
1,000,000,000 shares authorized
Issued and outstanding shares -
122,642,599 and 122,624,414 as of March 31, 2023 and December 31,
2022
12
12
Additional paid-in capital
890,012
882,069
Accumulated deficit
(562,457
)
(570,475
)
Accumulated other comprehensive income
(loss)
(178
)
23,263
Total stockholders' equity
327,389
334,869
Total liabilities and stockholders'
equity
$
937,997
$
946,715
TRAEGER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(unaudited)
(in thousands, except share and per share
amounts)
Three Months Ended March
31,
2023
2022
Revenue
$
153,161
$
223,710
Cost of revenue
97,738
141,066
Gross profit
55,423
82,644
Operating expenses:
Sales and marketing
22,075
34,854
General and administrative
26,679
40,716
Amortization of intangible assets
8,889
8,889
Change in fair value of contingent
consideration
1,043
1,700
Total operating expense
58,686
86,159
Loss from operations
(3,263
)
(3,515
)
Other income (expense):
Interest expense
(10,454
)
(5,837
)
Other income, net
21,899
544
Total other income (expense)
11,445
(5,293
)
Income (loss) before provision for income
taxes
8,182
(8,808
)
Provision for income taxes
164
152
Net income (loss)
$
8,018
$
(8,960
)
Net income (loss) per share, basic and
diluted
$
0.07
$
(0.08
)
Weighted average common shares
outstanding, basic and diluted
122,699,114
117,889,233
Other comprehensive income (loss):
Foreign currency translation
adjustments
$
(32
)
$
(3
)
Change in cash flow hedge
—
6,589
Total other comprehensive income
(loss)
(32
)
6,586
Comprehensive income (loss)
$
7,986
$
(2,374
)
TRAEGER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(unaudited)
(in thousands)
Three Months Ended March
31,
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)
$
8,018
$
(8,960
)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation of property, plant and
equipment
3,564
2,481
Amortization of intangible assets
10,638
10,645
Amortization of deferred financing
costs
534
495
Loss on disposal of property, plant and
equipment
1,870
152
Stock-based compensation expense
7,943
15,483
Bad debt expense
56
72
Unrealized loss (gain) on derivative
contracts
(19,623
)
570
Change in fair value of contingent
consideration
1,043
1,700
Other non-cash adjustments
(16
)
—
Change in operating assets and
liabilities:
Accounts receivable
(57,145
)
(70,383
)
Inventories
21,090
(18,561
)
Prepaid expenses and other current
assets
(1,214
)
1,741
Other non-current assets
18
4
Accounts payable and accrued expenses
(73
)
17,638
Other non-current liabilities
(293
)
12
Net cash used in operating activities
(23,590
)
(46,911
)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and
equipment
(2,082
)
(4,524
)
Capitalization of patent costs
(123
)
(124
)
Proceeds from sale of property, plant, and
equipment
2,450
—
Net cash provided by (used in) investing
activities
245
(4,648
)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds on line of credit
62,200
46,100
Repayments on line of credit
(62,500
)
(78
)
Repayments of long-term debt
(51
)
—
Principal payments on finance lease
obligations
(127
)
(105
)
Net cash provided by (used in) financing
activities
(478
)
45,917
Net decrease in cash, cash equivalents and
restricted cash
(23,823
)
(5,642
)
Cash, cash equivalents and restricted cash
at beginning of period
51,555
16,740
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
AT END OF PERIOD
$
27,732
$
11,098
TRAEGER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(unaudited)
(in thousands)
(Continued)
Three Months Ended March
31,
2023
2022
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for
interest
$
4,718
$
4,897
Cash paid for income taxes
$
470
$
654
NON-CASH FINANCING AND INVESTING
ACTIVITIES
Equipment purchased under finance
leases
$
72
$
56
Property, plant, and equipment included in
accounts payable and accrued expenses
$
2,568
$
7,226
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 Income
(Loss) to each such measure, and providing Adjusted Net Income per
share, together with a reconciliation of Net Income (Loss) per
share to such measure, and Adjusted EBITDA Margin and Adjusted Net
Income Margin, together with a reconciliation of Net Income (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
Income (Loss) or Loss from Continuing Operations or Net Income
(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 Income
(Loss), Operating Loss, Net Income (Loss) Margin, Operating Loss
Margin, and Net Income (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 March
31,
2023
2022
(dollars in thousands, except
share and per share amounts)
Net income (loss)
$
8,018
$
(8,960
)
Adjustments:
Other (income) expense (1)
(20,307
)
674
Stock-based compensation
7,943
15,483
Non-routine legal expenses (2)
233
1,919
Amortization of acquisition intangibles
(3)
8,253
8,253
Change in fair value of contingent
consideration
1,043
1,700
Other adjustment items (4)
143
412
Tax impact of adjusting items (5)
152
—
Adjusted net income
$
5,478
$
19,481
Net income (loss)
$
8,018
$
(8,960
)
Adjustments:
Provision for income taxes
164
152
Interest expense
10,454
5,837
Depreciation and amortization
14,255
13,177
Other (income) expense (1)
(20,307
)
674
Stock-based compensation
7,943
15,483
Non-routine legal expenses (2)
233
1,919
Change in fair value of contingent
consideration
1,043
1,700
Other adjustment items (4)
143
412
Adjusted EBITDA
$
21,946
$
30,394
Revenue
$
153,161
$
223,710
Net income (loss) margin
5.2
%
(4.0
) %
Adjusted net income margin
3.6
%
8.7
%
Adjusted EBITDA margin
14.3
%
13.6
%
Net income (loss) per diluted share
$
0.07
$
(0.08
)
Adjusted net income per diluted share
$
0.04
$
0.17
Weighted average common shares outstanding
- diluted
122,699,114
117,889,233
(1)
Represents unrealized gain from the hedge
dedesignation on the interest rate swap, losses on the disposal of
property, plant, and equipment, and unrealized gains (losses) from
foreign currency transactions and derivatives.
(2)
Represents external legal expenses for
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, 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.
(5)
Represents an adjusted tax rate equal to
our annual estimated tax rate on Adjusted Net Income. This rate is
based on our estimated annual GAAP income tax rate forecast,
adjusted to account for items excluded from GAAP income in
calculating the non-GAAP financial measures presented above. Due to
the differences in the tax treatment of items excluded from
non-GAAP earnings, as well as the methodology applied to our
estimated annual tax rates, our estimated tax rate on Adjusted Net
Income may differ from our GAAP tax rate and from our actual tax
liabilities.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230510005892/en/
Investors: Nick Bacchus Traeger, Inc. investor@traeger.com
Media: The Brand Amp Traeger@thebrandamp.com
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