Q2 2026 Traeger Inc Earnings Call

August 5, 2026

Operator 3: Yes, welcome to the Traeger Second Quarter 2026 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Stephanie Read, Vice President of Finance, Strategy, and Investor Relations. Stephanie, please go ahead.

Operator: Yes, welcome to the Traeger Second Quarter 2026 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Stephanie Read, Vice President of Finance, Strategy, and Investor Relations. Stephanie, please go ahead.

Speaker #1: If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. I will now hand the conference over to Stephanie Reed, Vice President of Finance, Strategy, and Investor Relations.

Speaker #1: Stephanie, please go ahead.

Speaker #2: Good afternoon, everyone. Thank you for joining Treger's call to discuss its second quarter 2026 results, which were released this afternoon, and can be found on our website, at investors.treger.com.

Stephanie Read: Good afternoon, everyone. Thank you for joining Traeger's call to discuss its Q2 2026 results, which were released this afternoon and can be found on our website at investors.traeger.com. I'm Stephanie Read, Vice President of Finance, Strategy, and Investor Relations at Traeger. With me on the call today are Jeremy Andrus, our Chief Executive Officer, and Joey Hord, our Chief Financial Officer. Before we begin, let me remind you that participants on this call will make forward-looking statements based on current expectations, and those statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in Traeger's reports filed with the SEC.

Speaker #2: I'm Stephanie Reed, Vice President of Finance, Strategy, and Investor Relations at Treger. With me on the call today are Jeremy Andrus, our Chief Executive Officer, and Joey Hord, our Chief Financial Officer.

Speaker #2: forward-looking statements based on current expectations and those statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in Treger's reports filed with the FCC.

Speaker #2: This call also contains certain non-GAAP financial measures, including adjusted EBITDA, adjusted net income or loss, adjusted net income or loss per share, adjusted gross margin, free cash flow, and net debt.

Stephanie Read: This call also contains certain non-GAAP financial measures, including adjusted EBITDA, adjusted net income or loss, adjusted net income or loss per share, adjusted gross margin, free cash flow, and net debt, which we believe are useful supplemental measures. The most comparable GAAP financial measures and reconciliation of the non-GAAP measures contained herein to such GAAP measures are included in our earnings release and investor presentation, which are available on the investor relations portion of our website at investors.traeger.com. I'd like to turn the call over to Jeremy Andrus, Chief Executive Officer of Traeger. Jeremy?

Speaker #2: which we believe are useful supplemental measures. The most comparable GAAP financial measures—and a reconciliation of the non-GAAP measures contained herein to such GAAP measures—are included in our earnings release and investor presentation.

Speaker #2: which are available on the Investor Relations portion of our website at investors.traeger.com. Now, I'd like to turn the call over to Jeremy Andrus, Chief Executive Officer of Traeger.

Speaker #2: Jeremy?

Speaker #3: Thanks, Steph. And thank you all for joining our second quarter earnings call. As we've discussed throughout the year, 2026 is a transition period for Treger.

Jeremy Andrus: Thanks, Steph, and thank you all for joining our Q2 earnings call. As we've discussed throughout the year, 2026 is a transition period for Traeger. Through Project Gravity, we're simplifying the business and building a stronger, more focused company for the long term. Several of the core themes we've discussed throughout the year remain intact. Consumer engagement remains strong. Key consumer metrics remain healthier than reported revenue trends would suggest. We're continuing to expand our long-term growth platform, including a significant distribution announcement we're sharing today. As we enter 2026, we expected to navigate several revenue headwinds, including MEATER softness, price elasticity, channel inventory normalization, and deliberate revenue trade-offs associated with Project Gravity. Those dynamics were contemplated in our original outlook.

Speaker #3: Through project Gravity, we're simplifying the business and building a stronger, more focused company for the long term. Several of the core themes we've discussed throughout the year remain intact.

Speaker #3: Consumer engagement remains strong. Key consumer metrics remain healthier, than reported revenue trends would suggest. And we're continuing to expand our long-term growth platform, including a significant distribution announcement we're sharing today.

Speaker #3: As we enter 2026, we expect it to navigate several revenue headwinds, including meter softness, price elasticity, channel inventory normalization, and deliberate revenue trade-offs, associated with project Gravity.

Speaker #3: Those dynamics were contemplated in our original outlook. Relative to those assumptions, the primary changes we’ve seen are greater softness in the meter business and increased near-term channel dynamics associated with our distribution expansion strategy, both of which are reflected in our updated revenue outlook.

Jeremy Andrus: Relative to those assumptions, the primary changes we've seen are greater softness in the MEATER business and increased near-term channel dynamics associated with our distribution expansion strategy, both of which are reflected in our updated revenue outlook. I'll come back to guidance later in the call. Looking beyond the near-term environment, we're continuing to invest in and advance initiatives that meaningfully strengthen Traeger's long-term growth trajectory. Today I'll cover the strength of the Traeger brand and consumer engagement trends, what we're learning from consumers and how that's shaping our product strategy, a significant new channel partner we will launch nationally in spring of 2027, and how we're balancing long-term investment with financial discipline in our updated guidance. I'll hand the call over to Joey for the financials. Let me turn to the consumer and the brand.

Speaker #3: I'll come back to guidance later in the call. Looking beyond the near-term environment, we're continuing to invest in and advance initiatives that meaningfully strengthen Treger's long-term growth trajectory so today I'll cover: the strength of the Treger brand in consumer engagement trends, what we're learning from consumers and how that's shaping our product strategy, a significant new channel partner, we will launch nationally in spring of 2027, and how we're balancing long-term investment with financial discipline in our updated guidance.

Speaker #3: Then I'll hand the call over to Joey for the financials. Let me turn to the consumer and the brand. We're encouraged by the health of the Traeger brand and the engagement we're seeing across both existing owners and prospective new consumers.

Jeremy Andrus: We're encouraged by the health of the Traeger brand and the engagement we're seeing across both existing owners and prospective new consumers. Starting with our installed base, engagement remains exceptionally strong. July 4th is our second-largest cooking day of the year, and this year we recorded more than 267,000 connected cooks, setting an all-time high. That level of activity reinforces what we continue to see across the platform. Consumers remain highly engaged with the Traeger ecosystem and are using our products regularly. We're also making meaningful progress expanding our reach with new consumers. Our influencer strategy is focused on introducing Traeger to new audiences through authentic creators who educate consumers on the benefits of wood-fired cooking. During the quarter, this newer cohort of influencers more than doubled impressions versus last year, helping us reach consumers who may not have previously considered Traeger.

Speaker #3: Starting with our installed base, engagement remains exceptionally strong. July 4th is our second largest cooking day of the year, and this year we recorded more than 267,000 connected cooks, setting an all-time high.

Speaker #3: That level of activity reinforces what we continue to see across the platform. Consumers remain highly engaged with the Treger ecosystem, and are using our products regularly.

Speaker #3: We're also making meaningful progress expanding our reach with new consumers. Our influencer strategy is focused on introducing Treger to new audiences through authentic creators who educate consumers on the benefits of wood-fired cooking.

Speaker #3: During the quarter, this newer cohort of influencers more than doubled impressions versus last year, helping us reach consumers who may not have previously considered Treger.

Speaker #3: We're also partnering closely with our retail partners to convert that awareness into purchase. By leveraging consumer insights, targeted media, and joint marketing programs, we're seeing encouraging improvements in key performance indicators, including growth in the new to brand customer acquisition rates, at several key accounts.

Jeremy Andrus: We're also partnering closely with our retail partners to convert that awareness into purchase. By leveraging consumer insights, targeted media, and joint marketing programs, we're seeing encouraging improvements in key performance indicators, including growth in the new-to-brand customer acquisition rates at several key accounts. Taken together, these signals give us confidence that the brand remains healthy and that we're continuing to attract and engage new consumers. Let me turn to what we're learning from consumers and how that's shaping our product strategy. Innovation remains central to Traeger, but the current environment is reinforcing the importance of delivering compelling innovation across a broader range of offerings as we see demand increasingly shifting to more accessible price points. While that dynamic creates near-term pressure on average selling prices, it is also expanding the Traeger installed base and creating incremental opportunities for fuel, accessories, and future upgrades over time.

Speaker #3: Taken together, these signals give us confidence that the brand remains healthy and that we're continuing to attract and engage new consumers. Let me turn to what we're learning from consumers and how that's shaping our product strategy.

Speaker #3: Innovation remains central to Treger with the current environment as reinforcing the importance of delivering compelling innovation across a broader range of offerings, as we see demand increasingly shifting to more accessible price points.

Speaker #3: While that dynamic creates near-term pressure on average selling prices, it is also expanding the Treger installed base and creating incremental opportunities for fuel, accessories, and future upgrades over time.

Speaker #3: It is also exactly why our evolving product architecture matters. Westwood extends Treger innovation into a more accessible grill platform, while Irontop expands our relevance in griddle occasions and more frequent everyday cooking.

Jeremy Andrus: It is also exactly why our evolving product architecture matters. Westwood extends Traeger innovation into a more accessible grill platform, while Irontop expands our relevance in griddle occasions and more frequent everyday cooking. In the doors where these products were available, sales exceeded our expectations, and both product lines are generating 4.8 to 5-star reviews across traeger.com, The Home Depot, and Ace Hardware. Those early results reinforce our belief that Westwood and Irontop are meeting important consumer needs, expanding our addressable market, and creating new pathways into the Traeger brand. Having the right products is critical, but so is making sure consumers can find them where they shop. That's why I'm excited to announce that Traeger will expand distribution into Lowe's nationally with initial load-in activity beginning in Q4 of this year and a full launch of grills, griddles, accessories, and consumables planned for spring 2027.

Speaker #3: In the doors where these products were available, sell-through exceeded our expectations, and both product lines are generating 4.8- to 5-star reviews across traeger.com, The Home Depot, and Ace Hardware.

Speaker #3: Those early results reinforce our belief that Westwood and Irontop are meeting important consumer needs, expanding our addressable market, and creating new pathways into the Traeger brand.

Speaker #3: Having the right products is critical, but so is making sure consumers can find them where they shop. That's why I'm excited to announce that Traeger will expand distribution into Lowe's nationally, with initial load-in activity beginning in Q4 of this year, and a full launch of grills, griddles, accessories, and consumables planned for spring 2027.

Speaker #3: This is one of the most meaningful distribution expansions in Treger's recent history, and broadens access to the brand, strengthens our presence in under-penetrated markets, and creates a powerful new platform for household acquisition and long-term growth.

Jeremy Andrus: This is one of the most meaningful distribution expansions in Traeger's recent history and broadens access to the brand, strengthens our presence in under-penetrated markets, and creates a powerful new platform for household acquisition and long-term growth. While the Lowe's load-in contributes to 2026 revenue, we also expect offsets within our existing partners as certain exclusive arrangements evolve. These offsets were anticipated as part of the transition and do not change the strategic importance of our longstanding retail relationships. Importantly, broader distribution increases our ability to invest behind the Traeger brand across the marketplace. As we scale the business, we can support more retail media, merchandising, and consumer activation programs that strengthen our retail partnerships and improve the consumer experience. This quarter alone at The Home Depot, we expanded pellet racks, invested in 3-day displays, and supported more than 9,000 in-store event days through our RSS program.

Speaker #3: While the Lowe's load-in contributes to 2026 revenue, we also expect offsets within our existing partners as certain exclusive arrangements evolve. These offsets were anticipated as part of the transition and do not change the strategic importance of our long-standing retail relationships.

Speaker #3: Importantly, broader distribution increases our ability to invest behind the Traeger brand across the marketplace. As we scale the business, we can support more retail media, merchandising, and consumer activation programs that strengthen our retail partnerships and improve the consumer experience.

Speaker #3: This quarter alone at The Home Depot, we expanded pellet racks, invested in three-bay displays, and supported more than 9,000 in-store event days through our RSS program.

Speaker #3: At Ace Hardware, we launched an exclusive knee-jerk collaboration and will continue to invest across the marketplace to fuel premium retail experiences for our consumers wherever they purchase.

Jeremy Andrus: At Ace Hardware, we launched an exclusive Meat Church collaboration and will continue to invest across the marketplace to fuel premium retail experiences for our consumers wherever they purchase. Over time, we expect this expansion to become an increasingly meaningful contributor to household acquisition and growth. Turning to guidance, as I mentioned earlier, the primary change versus our original expectations has been continued softness in the MEATER business. We are also seeing greater near-term channel impacts associated with our distribution expansion strategy. As a result, we're updating our full-year revenue outlook to $435 to $465 million compared to our original outlook of $465 to $485 million. While these distribution-related dynamics are consistent with our long-term strategy and support a much larger growth opportunity ahead, they are contributing to our revised revenue outlook and creating additional timing variability, which is reflected in the wider guidance range for 2026.

Speaker #3: Over time, we expect this expansion to become an increasingly meaningful contributor to household acquisition and growth. Turning to guidance, as I mentioned earlier, the primary change versus our original expectations has been continued softness in the meter business.

Speaker #3: We are also seeing greater near-term channel impacts associated with our distribution expansion strategy. As a result, we're updating our full-year revenue outlook to 435 to 465 million dollars compared to our original outlook of 465 to 485 million dollars.

Speaker #3: While these distribution-related dynamics are consistent with our long-term strategy and support a much larger growth opportunity ahead, they are contributing to our revised revenue outlook and creating additional timing variability, which is reflected in the wider guidance range for 2026.

Speaker #3: Despite the reduction in our revenue guidance, we're maintaining our adjusted EBITDA guidance of 57 million to 67 million dollars. Importantly, nothing about our updated outlook changes the strategic priorities we're pursuing or our confidence in the long-term opportunity.

Jeremy Andrus: Despite the reduction in our revenue guidance, we're maintaining our adjusted EBITDA guidance of $57 million to $67 million. Importantly, nothing about an updated outlook changes the strategic priorities we're pursuing or our confidence in the long-term opportunity. Through Project Gravity, we're improving the operating model and creating capacity to invest behind the initiatives that matter most: brand strength, product innovation, retail excellence, and channel expansion. We're also investing in how we educate consumers on product differentiation and the value of our premium offerings through more targeted consumer segmentation, content, and retail partner marketing programs. We believe those efforts will help improve product mix over time while continuing to bring new consumers into the category. At the same time, we're broadening access to the brand through new platforms like Westwood and Irontop and through meaningful distribution expansion with Lowe's.

Speaker #3: Through project Gravity, we're improving the operating model and creating capacity to invest behind the initiatives that matter most: brand strength, product innovation, retail excellence, and channel expansion.

Speaker #3: We're also investing in how we educate consumers on product differentiation and the value of our premium offerings through more targeted consumer segmentation, content, and retail partner marketing programs.

Speaker #3: We believe those efforts will help improve product mix over time, while continuing to bring new consumers into the category. At the same time, we're broadening access to the brand through new platforms like Westwood and Irontop, and through meaningful distribution expansion with Lowe's.

Speaker #3: Taken together, these efforts are expanding our addressable market, strengthening our competitive position, and creating a credible path to sustainable growth. As we enter 2027, we'll benefit from a larger installed base broader distribution, a more complete product architecture, and a simpler operating model.

Jeremy Andrus: Taken together, these efforts are expanding our addressable market, strengthening our competitive position, and creating a credible path to sustainable growth. As we enter 2027, we'll benefit from a larger installed base, broader distribution, a more complete product architecture, and a simpler operating model. As sell-in and sell-through normalize and these investments mature, I'm confident Traeger is well positioned to resume profitable growth in 2027 and beyond. With that, I'll turn the call over to Joey. Joey?

Speaker #3: As selling and sell-through normalize and these investments mature, I'm confident Treger is well positioned to resume profitable growth in 2027 and beyond. And with that, I'll turn the call over to Joey.

Speaker #3: Joey.

Speaker #2: Thanks, Jeremy. And good afternoon, everyone. Before I walk through the numbers, I'd like to highlight three themes from the quarter that reinforce our confidence in the business and the progress we're making through this transition year.

Joey Hord: Thanks, Jeremy. Good afternoon, everyone. Before I walk through the numbers, I'd like to highlight three themes from the quarter that reinforce our confidence in the business and the progress we're making through this transition year. First, many of the retail and consumer indicators we monitor remain more stable than reported revenue trends alone would suggest. Year-to-date sell-through is performing largely as we expected coming into the year, with flattish sell-through across our four largest retail partners. Second, our revenue outlook assumes grill sell-in unit volumes remain approximately flat year-over-year, indicating continued momentum in household penetration at lower average selling prices. We're reaching more consumers, growing our installed base, and creating a larger foundation for future fuel accessories and upgrade opportunities. Finally, Project Gravity continues to deliver.

Speaker #2: First, many of the retail and consumer indicators we monitor remain more stable than reported revenue trends alone would suggest. Year-to-date sell-through is performing largely as we expected, coming into the year with flatter sell-through across our four largest retail partners.

Speaker #2: Second, our revenue outlook assumes grill selling unit volumes remain approximately flat year over year, indicating continued momentum in household penetration at lower average selling prices.

Speaker #2: We're reaching more consumers, growing our installed base, and creating a larger foundation for future fuel accessories and upgrade opportunities. And finally, project Gravity continues to deliver.

Speaker #2: We're seeing the benefits across our financial results through cost discipline, cash generation, and our ability to deliver on commitments. Combined with the progress Jeremy discussed around product innovation, distribution expansion, and brand engagement, we believe we're entering 2027 from a position of strength.

Joey Hord: We're seeing the benefits across our financial results through cost discipline, cash generation, and our ability to deliver on commitments. Combined with the progress Jeremy discussed around product innovation, distribution expansion, and brand engagement, we believe we're entering 2027 from a position of strength. With that context, let me walk through the quarter and then discuss our updated outlook. Q2 revenues were $120 million, down 17% compared to the prior year. Grill revenues decreased 17% to $62 million as growth in unit volume was more than offset by lower average selling prices. This reflects the load-in of Westwood and Irontop, which are part of a strategic shift to extend Traeger innovation into more accessible price points and intentional actions under Project Gravity focused on improving profitability and simplifying the business.

Speaker #2: With that context, let me walk through the quarter and then discuss our updated outlook. Second quarter revenues were $120 million, down 17% compared to the prior year.

Speaker #2: Grill revenues decreased 17% to 62 million as growth in unit volume was more than offset by lower average selling prices. This reflects the load-in of Westwood and Irontop, which are part of a strategic shift to extend Treger innovation into more accessible price points, and intentional actions under project Gravity focused on improving profitability and simplifying the business.

Speaker #2: Consumables revenues were 33 million, down 10% driven by seasonal ordering shifts in wood pellets and a comparison against prior year new channel load-in for food consumables.

Joey Hord: Consumables revenues were $33 million, down 10% driven by seasonal ordering shifts in wood pellets and a comparison against prior year new channel load-in for food consumables. Accessories revenues decreased 26% to $26 million, largely driven by lower sales in MEATER. Gross profit for the Q2 decreased to $47 million from $57 million in the Q2 2025. Gross profit margin was 39.5%, up 30 basis points from the prior year. Gross margin benefit from the IEEPA tariff refund, timing of trade spend discussed on our Q1 call, and higher mix of direct import sales, partially offset by product mix. Sales and marketing expenses were $17 million compared to $25 million in the Q2 2025, driven by a decrease in demand creation and employee-related expenses largely tied to Project Gravity actions.

Speaker #2: Accessories revenues decreased 26% to 26 million. Largely driven by lower sales and meter. Gross profit for the second quarter decreased to 47 million, from 57 million in the second quarter of '25.

Speaker #2: Gross profit margin was 39.5%, up 30 basis points from the prior year. Gross margin benefited from the IPA tariff refund, timing of trade spend discussed on our first quarter call, and higher mix of direct import sales, partially offset by product mix.

Speaker #2: Sales and marketing expenses were 17 million, compared to 25 million in the second quarter of '25, driven by a decrease in demand creation and employee-related expenses largely tied to project Gravity actions.

Speaker #2: General and administrative expenses were 22 million, compared to 26 million in the second quarter of '25. The decrease in G&A expense was largely from lower employee expenses tied to project Gravity actions.

Joey Hord: General and administrative expenses were $22 million compared to $26 million in the Q2 2025. The decrease in G&A expense was largely from lower employee expenses tied to Project Gravity actions. Net loss for the Q2 was $9 million as compared to a net loss of $7 million in the Q2 2025. Net loss per diluted share was $3.12 compared to a loss of $2.77 in the Q2 2025. Adjusted net income for the quarter was $1 million or $0.53 per diluted share as compared to adjusted net loss of $2 million or $0.73 per diluted share in the same period in 2025. Adjusted EBITDA increased to $17 million in the Q2 from $14 million in the prior year period, despite lower revenue, reflecting the benefit of Project Gravity actions, disciplined expense management, and continued focus on profitability.

Speaker #2: Net loss for the second quarter was 9 million, as compared to a net loss of 7 million in the second quarter of '25. Net loss per diluted share was $3.12, compared to a loss of $2.77 in the second quarter of '25.

Speaker #2: Adjusted net income for the quarter was 1 million, or 53 cents per diluted share, as compared to adjusted net loss of 2 million, or 73 cents per diluted share, in the same period in '25.

Speaker #2: Adjusted EBITDA increased to 17 million in the second quarter, from 14 million in the prior year period. Despite lower revenue, reflecting the benefit of project Gravity actions, discipline expense management, and continued focus on profitability.

Speaker #2: Let me now discuss the balance sheet. We drove 26 million of free cash generation in the second quarter, of which 16 million was attributable to the IPA refund discussed on our Q1 earnings call.

Joey Hord: Let me now discuss the balance sheet. We drew up $26 million of free cash generation in the Q2, of which $16 million was attributable to the IEEPA refund discussed on our Q1 earnings call. At the end of the Q2, cash and cash equivalents totaled $60 million, compared to $20 million at the end of the previous fiscal year. We ended the quarter with $403 million of total debt, resulting in total net debt of $344 million. From a liquidity perspective, we ended the Q2 with a healthy liquidity position of $188 million, which reflects a slight increase from Q1 despite the cash flow revolver capacity reducing this quarter by $30 million to $82.5 million. Our credit facilities remain completely undrawn, providing additional flexibility beyond our cash position.

Speaker #2: At the end of the second quarter, cash and cash equivalents totaled 60 million, compared to 20 million at the end of the previous fiscal year.

Speaker #2: We ended the quarter with $403 million of total debt, resulting in total net debt of $344 million. From a liquidity perspective, we ended the second quarter with a healthy liquidity position of $188 million, which reflects a slight increase from Q1, despite the cash flow revolver capacity reducing this quarter by $30 million, to $82.5 million.

Speaker #2: Our credit facilities remain completely undrawn, providing additional flexibility beyond our cash position. Inventory at the end of the second quarter was 76 million, compared to 99 million at the end of the fourth quarter of '25, and 116 million at the end of the second quarter of '25.

Joey Hord: Inventory at the end of Q2 was $76 million, compared to $99 million at the end of Q4 of 2025 and $116 million at the end of Q2 of 2025. This large reduction in inventory is primarily driven by SKU rationalization and business simplification associated with Project Gravity, as well as lower MEATER inventory levels. This reduction reflects continued progress towards improving working capital efficiency. Now turning to our guidance for fiscal 2026. As Jeremy mentioned, we are lowering our revenue guidance to a range of $435 million to $465 million from a prior range of $465 million to $485 million. The largest driver is additional softness in our MEATER business, largely from promo performance below expectations. We are also incorporating the expected effects of our distribution expansion, including the transition away from certain exclusive retail arrangements.

Speaker #2: This large reduction in inventory is primarily driven by skew rationalization and business simplification, associated with project Gravity as well as lower meter inventory levels.

Speaker #2: This reduction reflects continued progress toward improving working capital efficiency. Now, turning to our guidance for fiscal '26. As Jeremy mentioned, we are lowering our revenue guidance to a range of $435 million to $465 million, from a prior range of $465 million to $485 million.

Speaker #2: The largest driver is additional softness in our meter business, largely from promo performance below expectations. We are also incorporating the expected effects of our distribution expansion including the transition away from certain exclusive retail arrangements.

Speaker #2: While these impacts were anticipated, we now expect greater near-term revenue pressure and timing variability than contemplated in our original outlook, contributing to both the reduction in our revenue guidance and the wider range.

Joey Hord: While these impacts were anticipated, we now expect greater near-term revenue pressure and timing variability than contemplated in our original outlook, contributing to both the reduction in our revenue guidance and the wider range. Meanwhile, we are maintaining our adjusted EBITDA guidance range of $57 million to $67 million. The impact of lower revenue is being substantially offset by profitability initiatives and lower tariff costs within the MEATER business. We are also raising our gross margin guidance to 40% to 41%, reflecting lower tariff impact on MEATER products than anticipated when we affirmed guidance in Q1. I'd like to comment briefly on quarterly pacing for the balance of the year. In Q3, we'll be lapping a large order timing shift from a strategic partner in Q3 of 2025.

Speaker #2: Meanwhile, we are maintaining our adjusted EBITDA guidance range of 57 million to 67 million. The impact of lower revenue is being substantially offset by profitability initiatives and lower tariff costs within the meter business.

Speaker #2: We are also raising our gross margin guidance to 40% to 41%, reflecting lower tariff impact on meter products than anticipated when reaffirmed guidance in Q1.

Speaker #2: I'd like to comment briefly on quarterly pacing for the balance of the year. In the third quarter, we'll be lapping a large order timing shift from a strategic partner in Q3 of '25.

Speaker #2: As a result, we expect approximately two-thirds of our remaining 2026 revenue and substantially all of our remaining adjusted EBITDA generation to occur in the fourth quarter, driven by initial lows load-in activity and normalized seasonal demand patterns.

Joey Hord: As a result, we expect approximately two-thirds of our remaining 2026 revenue and substantially all of our remaining adjusted EBITDA generation to occur in Q4, driven by initial Lowe's load-in activity and normalized seasonal demand patterns. We are reiterating our free cash flow guidance of at least $30 million on a year-to-date free cash flow generation of $41 million. As we stand up large channel expansion, balance-of-year cash generation will be impacted by an increase in Q4 receivables that will convert to cash in early 2027. While we remain on track to deliver $50 million of value captured from Project Gravity within fiscal 2026, consistent with prior expectations. As mentioned earlier, we are pleased with the benefit Project Gravity is delivering through lower inventory, stronger cash generation, and a more efficient operating model.

Speaker #2: We are reiterating our free cash flow guidance of at least 30 million on a year-to-date free cash flow generation of 41 million. As we stand up large channel expansion, balance of year cash generation will be impacted by an increase in Q4 receivables that will convert to cash in early 2027.

Speaker #2: While we remain on track to deliver $50 million of value captured from Project Gravity within fiscal '26, consistent with prior expectations as mentioned earlier, we are pleased with the benefits Project Gravity is delivering through lower inventory, stronger cash generation, and a more efficient operating model.

Speaker #2: Before I close, I'd note that while our revenue outlook has changed, this does not reflect a change in the health of the core Traeger thesis.

Joey Hord: Before I close, I'd note that while our revenue outlook has changed, this does not reflect a change in the health of the core Traeger business or our long-term thesis. We are exiting 2026 with a significantly improved inventory position, a stronger liquidity profile, a more efficient cost structure, and incremental distribution with Lowe's beginning in Q4, all of which strengthen our foundation for growth in 2027 and beyond. I'll now turn the call over to the operator for questions.

Speaker #2: We are exiting '26 with a significantly improved inventory position, a stronger liquidity profile, a more efficient cost structure, and incremental distribution with lows beginning in the fourth quarter, all of which strengthen our foundation for growth in 2027 and beyond.

Speaker #2: I'll now turn the call over to the operator for questions.

Speaker #1: Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand.

Operator 3: Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question, and if you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Randy Konik from Jefferies. Please go ahead.

Operator: Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question, and if you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Randy Konik from Jefferies. Please go ahead.

Speaker #1: To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question, and if you're muted locally, please remember to unmute your device.

Speaker #1: Please stand by while we compile the Q&A roster. Your first question comes from the line of Randy Konick from Jefferies. Please go ahead.

Speaker #3: Oh, hey, guys. Thanks for taking my question. I guess Jeremy would be really helpful to understand where you think we are in the broader grill cycle.

Randy Konik: Oh, hey, guys. Thanks for taking my question. I guess, Jeremy, it would be really helpful to understand where you think we are in the broader grill cycle. That'd be super helpful to get your thoughts there. When you think about the revenue guide for the balance of the year, I think you said Lowe's starts to load in in the Q4. How much of a benefit is that on Just trying to get a sense of the core business ex Lowe's, how that's kind of trending. Lastly, it was really interesting to me to see that despite the lowered revenue guide, you kind of held the EBITDA dollar guidance and range the same, which shows continued cost discipline, and Project Gravity really taking hold.

Randal Konik: Oh, hey, guys. Thanks for taking my question. I guess, Jeremy, it would be really helpful to understand where you think we are in the broader grill cycle. That'd be super helpful to get your thoughts there. When you think about the revenue guide for the balance of the year, I think you said Lowe's starts to load in in the Q4. How much of a benefit is that on Just trying to get a sense of the core business ex Lowe's, how that's kind of trending. Lastly, it was really interesting to me to see that despite the lowered revenue guide, you kind of held the EBITDA dollar guidance and range the same, which shows continued cost discipline, and Project Gravity really taking hold.

Speaker #3: That would be super helpful to get your thoughts there. And then, when you think about the revenue guide for the balance of the year, I think you said Lowe's starts to load in in the fourth quarter.

Speaker #3: So how much of a benefit is that? So just trying to get a sense of the core business ex-lows, how that's kind of trending.

Speaker #3: And then lastly, I mean, it was really interesting to me to see that despite the lowered revenue guide, you kind of held the EBITDA dollar guidance and range the same, which shows continued cost discipline and Project Gravity really taking hold.

Speaker #3: So I guess what I want to understand is when you think about that project Gravity and the benefits of the cost side into 2027, just maybe give us some high-level thought, maybe qualitative, not quantitative, on how you think about sustainability of these EBITDA dollars or margins, if you will, as we potentially have revenue improve if the grill cycle improves into 2027.

Randy Konik: I guess what I want to understand is when you think about that Project Gravity and the benefits of the cost side into 2027, just maybe give us some high-level thoughts, maybe qualitative, not quantitative, on how you think about sustainability of these, the EBITDA dollars or margins, if you will, as we potentially have revenue improve if the grill cycle improves into 2027. Thanks, guys.

Randal Konik: I guess what I want to understand is when you think about that Project Gravity and the benefits of the cost side into 2027, just maybe give us some high-level thoughts, maybe qualitative, not quantitative, on how you think about sustainability of these, the EBITDA dollars or margins, if you will, as we potentially have revenue improve if the grill cycle improves into 2027. Thanks, guys.

Speaker #3: Thanks, guys.

Speaker #4: Hey, thanks, Randy. Appreciate your questions. Let me start just from a macro perspective. Where are we in the grill industry life cycle, in terms of normalization relative to some of the volatility that we've seen over the last handful of years?

Joey Hord: Thanks, Randy. Appreciate your questions. Let me start just from a macro perspective, where are we in the grill industry life cycle in terms of normalization relative to some of the volatility that we've seen over the last handful of years. First of all, the industry according to the data, industry data that we see is roughly flat. I think, and fair to say that Traeger is in line with that from a sell-through perspective.

Jeremy Andrus: Thanks, Randy. Appreciate your questions. Let me start just from a macro perspective, where are we in the grill industry life cycle in terms of normalization relative to some of the volatility that we've seen over the last handful of years. First of all, the industry according to the data, industry data that we see is roughly flat. I think, and fair to say that Traeger is in line with that from a sell-through perspective.

Speaker #4: First of all, the industry, according to the data—industry data that we see—is roughly flat. And I think it's fair to say that Traeger is in line with that from a sell-through perspective.

Speaker #4: In the retailers that we're in, that we track, we certainly as we get further removed from the pandemic and the substantial pull forward in demand, that we experienced in 2020 and '21, and the subsequent reduction one of the things that we think a lot about and track, just from a from an industry perspective and a consumer perspective, is the replacement cycle.

Jeremy Andrus: In the retailers that we're in, that we track. We certainly, as we get further removed from the pandemic and the substantial pull forward in demand that we experienced in 2020 and 2021, and the subsequent reduction, one of the things that we think a lot about and track just from an industry perspective and a consumer perspective is the replacement cycle. Our expectation, generally based on our consumer research, is that a Traeger grill has roughly a 5-year life that a consumer replaces or upgrades at that period of time. For a gas grill, it's a little bit longer. It's closer to 7 years. I would say, given the trade volatility that we experienced last year, whereas we would've expected to see that replacement cycle start to normalize, really didn't see it. Prices went up in the industry meaningfully, of course, corresponding elasticity unit volume fell.

Speaker #4: Our expectation generally based on our consumer research is that a Traeger grill has roughly a five-year life that a consumer replaces or upgrades at that period of time.

Speaker #4: And for a gas grill, it's a little bit longer—it's closer to seven years. I would say, given the trade volatility that we experienced last year, where we would have expected to see that replacement cycle start to normalize, we really didn't see it.

Speaker #4: Prices went up in the industry meaningfully, and, of course, corresponding elasticity—unit volume—fell. And so, it's hard to really handicap when we start to see the pandemic demand start to come back around from a replacement perspective.

Jeremy Andrus: It's hard to really handicap when do we start to see the pandemic demand start to come back around from a replacement perspective. We're not seeing it yet. I would say all of the engagement trends that we see, at least in our brand, from a cooking perspective, from a pellet attach perspective, would suggest that our consumer base, and I think that represents the broader base of the sort of 75 million American homes that cook outdoors, that have a grill on their back patio, that engagement remains. It's a resilient category, and we expect over time that that will translate back into a more normalized cycle. Right now, sell-through trends on a dollar basis are relatively flat year over year. Hey, Joey, do you want to hit the Lowe's load-in and EBITDA question?

Speaker #4: We're not seeing it yet. But I would say all of the engagement all of the engagement trends that we see at least in our brand from a cooking perspective, from a pellet attach perspective, would suggest that our consumer base and I think that represents the broader base of the sort of 70, 5 million American homes that cook outdoors, that have a grill in their back patio, that engagement remains.

Speaker #4: It's a resilient category, and we expect over time that that will translate back into a more normalized cycle. But right now, sell-through trends on a dollar basis are relatively flat year over year.

Speaker #4: Joey, do you want to hit the Lowe's load-in and EBITDA question?

Speaker #3: Yeah, sure. Hey, Randy. So keep in mind the low shift is a long-term strategic strategy that we're putting into execution. These shifts have been in plan for a couple of years now.

Joey Hord: Yeah, sure. Hey, Randy. Keep in mind, the Lowe's shift is a long-term strategic strategy that we're putting into execution. These shifts have been in plan for a couple of years now. We're not giving specifics on the load-in amount per se. However, at the same time, it is meaningful, it is accretive, it is profitable. There are some load-in dynamics around timing and just overall channel dynamics that we're working through, which is why we're lowering guidance along with MEATER. Keep in mind, this is long-term in nature, and overall, we're seeing this as a net positive and accretive to the long-term thesis of the business. To talk about Project Gravity and cost, I think your first part of the question was how are we navigating lowering guidance on top line and managing and reiterating guidance on bottom line.

Speaker #3: We're not giving specifics on the load-in amount per se. However, at the same time, it is meaningful. It is a creative. It is profitable.

Speaker #3: There are some load-in dynamics around timing and just overall challenge dynamics that we're working through, which is why we're lowering guidance along with meter. But keep in mind, this is long-term in nature, and overall we're seeing this as a net positive and accretive to the long-term thesis of the business.

Speaker #3: To talk about project Gravity and cost, I think your first part of the question was how are we navigating lowering guidance on top line and managing and reiterating guidance on bottom line.

Speaker #3: And really, that's focused on cost management on meter. We're repositioning meter to really focus on profitability this year within the portfolio. And so we're able to take cost out of the P&L and really just focus on high ROI attached cost.

Joey Hord: Really, that's focused on cost management on MEATER. We're repositioning MEATER to really focus on profitability this year within the portfolio. We're able to take cost out of the P&L, and really just focus on high ROI attached cost. We've centralized the operation from the UK here in Salt Lake City. We're seeing significant fixed cost synergies, leveraging our fixed cost infrastructure here in Salt Lake. As far as long-term on Gravity, we have stated very clearly that we have $50 million of total value capture, which is around channel shifts, margin capture, and cost savings within FY26. Long term, we have said that our range is between $64 million and $70 million. Keep in mind, that is a long term. Project Gravity is a multi-year transformation.

Speaker #3: We've centralized the operation from the UK here in Salt Lake City. We're seeing significant fixed cost synergies leveraging our fixed cost infrastructure here in Salt Lake.

Speaker #3: As far as long-term on Gravity, we have stated very clearly that we have 50 million dollars of total value capture, which is around channel shifts, margin capture, and then cost savings within FY '26.

Speaker #3: And then long-term, we have said that our range is between 64 and 70 million. But keep in mind that is a long-term project Gravity is a multi-year transformation.

Speaker #3: We have conviction, though, that as we grow, it will be profitable and we'll have EBITDA expansion.

Joey Hord: We have conviction, though, that as we grow, it will be profitable and we'll have EBITDA expansion.

Speaker #2: That was super helpful. Thanks, guys.

Randy Konik: That was super helpful. Thanks, guys.

Randal Konik: That was super helpful. Thanks, guys.

Speaker #1: You're next question comes in the line of Philip Blee from William Blair. Please go ahead.

Operator 3: Your next question comes in the line of Phillip Blee from William Blair. Please go ahead.

Operator: Your next question comes in the line of Phillip Blee from William Blair. Please go ahead.

Speaker #5: Jeremy, Joey, thanks for the question. You guys increased your gross margin guide for the full year. Can you just talk about the key drivers or puts and takes there and maybe phasing for the remainder of the year?

Phillip Blee: Jeremy, Joey, thanks for the question. You guys increased your gross margin guide for the full year. I guess, can you just talk about the key drivers or puts and takes there and maybe phasing for the remainder of the year? Maybe some color on how you're faring against rising transportation and various input costs, and then whether you're comfortable at the current price levels for your product to mitigate those current headwinds as we start looking at 2027, when maybe we won't have the same sort of tariff fund or tariff refund related tailwinds. Thank you.

Speaker #5: Maybe some color on how you're faring against rising transportation and various input costs. And then whether you're comfortable with the current price levels for your product to mitigate those current headwinds as we start looking at 2027 when maybe we won't have the same sort of tariff fund or tariff refund-related tailwinds.

Speaker #5: Thank you.

Speaker #2: Yeah. Hey, Philip. So as far as I'll start with transportation. So we do have increased just input costs regarding transportation costs, input increased costs.

Joey Hord: Yeah. Hey, Phillip. I'll start with transportation. We do have increased just input costs regarding transportation costs, input increase costs, which we've spoken about in the last call. Those are reflected in our outlook. Our margin rate overall is being impacted this quarter, and over the next two quarters by the IEEPA tariff refund. We've collected now $16 million in cash. We booked $12 million in change in Q1, $1.5 million in Q2, and we're planning on $2 million in H2, which really is around $16 million FY. That is impacting our overall margin rate. Do you want to take the pricing question?

Speaker #2: Which we've spoken about on the last call, those are reflected in our outlook. Our margin rate overall is being impacted this quarter and over the next two quarters by the IEPA tariff refund.

Speaker #2: We've collected now 16 million dollars in cash. We booked 12 million dollars in change in Q1, one and a half in Q2. And we're planning on 2 million dollars in the second half, which really is around 16 million dollars full year.

Speaker #2: So that is impacting overall margin rate. And then do you want to take the pricing conversation or question?

Jeremy Andrus: Sure. Yeah. Clearly, the tariffs drove higher prices. In our portfolio that is sort of low double digits, low teens in terms of retail price points. One of the things that we clearly try to balance is understanding elasticity at various price points and trying to really find the optimal intersection between unit volume, revenue, and profit. We are still anniversarying, at least in Q2, the higher price points relative to last year. As we get into Q3, we start to lap the higher price points, and I think have a little bit more visibility or insight into demand patterns at various price points relative to the higher prices. The tariff dynamic, I would say, seems to have settled to some extent, but not entirely. We continue to leave our grill product line price where it is.

Speaker #5: Sure.

Speaker #4: Yeah. So clearly, the tariffs drove higher prices. In our portfolio, that is sort of low double digits, low teens in terms of retail price points.

Speaker #4: One of the things that we clearly try to balance is understanding elasticity at various price points and trying to really find the optimal intersection between unit volume revenue and profit.

Speaker #4: We are still anniversarying, at least in the second quarter, the higher price points relative to last year. And as we get into the third quarter, we start to lap the higher price points.

Speaker #4: And I think have a little bit more visibility or insight into demand patterns at various price points relative to the higher prices. The tariff dynamic I would say has seems to have settled.

Speaker #4: To some extent, but not entirely. And so we continue to leave our grilled product line price where it is. We have seen some tariffs such as IEPA in the 122 bleed off.

Jeremy Andrus: We've seen some tariffs, such as IEEPA in Section 122 bleed off, others, such as Section 232 and some new Section 301 tariffs, come into the space. On balance, our current forecasted tariff rate is approximately flat to sort of where we've been and what we had forecasted. Our expectation is that the consumer, over time, will begin to expect the higher price points. Sort of medium to long term, our expectation is that unit volumes will continue to support the resilience of the category relative to the number of U.S. households that cook on grills. We will, of course, build our product strategy and our margin profile around this new cost structure, which includes tariffs.

Speaker #4: And then others such as the 232 and some new 301 tariffs come into the space. And on balance, our current forecasted tariff rate is approximately flat to sort of where we've been and what we had forecasted.

Speaker #4: And so our expectation is that the consumer over time will begin to expect a higher price points. Sort of medium to long-term, our expectation is that unit volumes will continue to support the resilience of the category relative to the number of US households that cook on grills.

Speaker #4: And we will, of course, build our product strategy and our margin profile around this new cost structure, which includes tariffs. As we look forward to the back half of this year, some of the trends that we have seen will continue in terms of higher price point grills, those above $1,000, showing some softness.

Jeremy Andrus: As we look forward to H2 of this year, some of the trends that we have seen will continue in terms of higher price point grills, those above $1,000, showing some softness. Those below $1,000 showing resilience. We think that's a function of higher prices, but also just an insight into where the consumer is right now.

Speaker #4: Those below $1,000 showing resilience. We think that is we think that's a function of higher prices, but also just a an insight into where the consumer is right now.

Speaker #5: Okay. Very, very helpful. And then just building on prior question, you called out the new partnership with Lowe's which is great. Can you maybe provide a bit more directional guidance for the incrementality of that partnership for next year?

Phillip Blee: Okay. Very helpful. Then just building on the prior question, you called out the new partnership with Lowe's, which is great. Can you maybe provide a bit more directional guidance for the incrementality of that partnership for next year? Just assuming the offsets at existing retail partners won't be one for one, then anything that we should really be embedding from either a merchandise margin or kind of one-time expense standpoint as we start to forecast 2027. Thanks.

Speaker #5: Just assuming the offsets at existing retail partners won't be one-for-one, and then anything that we should really be embedding from either a merchandise margin or kind of one-time expense standpoint as we start to forecast '27.

Speaker #5: Thanks.

Speaker #4: Yes. Yeah. Let me jump in on the first part and then I'll have Joey on the second part of that question. I would say first of all, I think it's important to think about the addition of Lowe's as a as a long-term growth opportunity.

Jeremy Andrus: Yes. Let me jump in on the first part, then I'll have Joey on the second part of that question. I would say, first of all, I think it's important to think about the addition of Lowe's as a long-term growth opportunity. If you're to look at our other channel partnerships, they really do develop over many years. This will be the same. The motivation behind it really was to gain access to a greater TAM. We have incredible retail partners whom we appreciate and we will continue to invest in. In fact, this new partnership will give us some scale and greater ability to invest in those partners and in the marketplace to drive demand. We're very excited about the partnership with Lowe's.

Speaker #4: If you're to look at our other channel partnerships, they really do develop over many years. And this will be the same. There is the motivation behind it really was to gain access to a greater TAM we have incredible retail partners whom we appreciate and we will continue to invest in.

Speaker #4: In fact, this new partnership will give us some scale and greater ability to invest in those partners and in the marketplace to drive demand.

Speaker #4: And we're very excited about the partnership with Lowe's. It gives us access to some incremental to an incremental consumer. Both in terms of geography where there's a strong footprint and we'll focus in those geographies, but also in terms of just the shop room Lowe's we believe to some degree being incremental relative to other channels that we're in.

Jeremy Andrus: It gives us access to an incremental consumer, both in terms of geography, where there's a strong footprint, we'll focus in those geographies, but also in terms of just the shopper in Lowe's, we believe to some degree be an incremental relative to other channels that we're in. In terms of incrementality of the business, while we're certainly not guiding to future years, I would say there are puts and takes. There were certain elements of partnership in place around exclusivity, where there was mutual investment in those retailers and back into the Traeger brand. Some of those which will continue, others which will no longer be benefits that we receive. We certainly expected this as we built out the channel strategy and our expectations that long term, it's a meaningful growth driver to the business. It will allow us to leverage our platform to access new consumers.

Speaker #4: In terms of incrementality of the business, while we are well, we're certainly not guiding to future years, I would say there are puts and takes there were certain elements of partnership in place around exclusivity, where there was mutual investment in those retailers and back into the Traeger brand.

Speaker #4: Some of those which will continue and others which will no longer be benefits that we receive. We certainly expected this in as we built out the channel strategy and our expectations that long-term it's a meaningful growth driver to the business.

Speaker #4: So allow us to leverage our platform to access new consumers. But I wouldn't see it as a near-term step function from a business growth perspective.

Jeremy Andrus: I wouldn't see it as a near-term step function from a business growth perspective. It's an opportunity to invest over the course of many years to really get to those new consumers while maintaining very strong channel partnerships with our existing partners. I think the underlying sort of tenet of our channel strategy is to really ensure that we are disciplined in terms of number of points of distribution and how we invest in each of those points of distribution. We have a brand in a category that requires a meaningful amount of retail space to assort the brand the right way. We're still selling what is considered to be an innovation to most outdoor grillers. It's a wood pellet grill. It has different features and benefits. There's still a lot of work to bring that to life at retail.

Speaker #4: It's an opportunity to invest over the course of many years to really get to those new consumers, while maintaining very strong channel partnerships with our existing partners.

Speaker #4: I think the underlying sort of tenet of our channel strategy is to really ensure that we are disciplined in terms of number of points of distribution, and how we invest in each of those points of distribution.

Speaker #4: We have a brand in a category that requires a to assort the brand the right way. We're still selling what is considered to be an innovation to most outdoor grillers.

Speaker #4: It's a wood pellet grill. It has different features and benefits. There's still a lot of work to bring that to life at retail. And so it really does require investment in every point of sale which is why we view this as an opportunity to create a long-term building process with Lowe's and side-by-side or other channel partnerships with a belief that it's a rising tide for all over time.

Jeremy Andrus: It really does require investment in every point of sale, which is why we view this as an opportunity to create a long-term building process, with Lowe's and side-by-side or other channel partnerships with the belief that it's a rising tide for all over time.

Speaker #5: Cool. Very helpful. Thank you.

Joey Hord: Cool.

Phillip Blee: Cool. Great. Very helpful. Thank you.

Phillip Blee: Great. Very helpful. Thank you.

Joey Hord: I'll take the second part. Yeah, I'll take the second part of the question, just on overall investment. I'll just reiterate, this is highly accretive to our overall business. That's why we're making the shift. We are going to be making some investments into just what I would call overall enablements, fixtures. We're investing in mills for increased pellet capacity. This is going to unlock a significant amount of investment capacity to reinvest back into our business just to drive that virtuous cycle and the flywheel. There's a couple other areas we'll invest into, human capital in the field, some employees here at headquarters to really unlock the potential. There is a CapEx investment in the fixtures, and also the mills and to create that pellet capacity. There could be a cash impact, which we've modeled out, but it's highly accretive and with a high ROI attached.

Speaker #2: And I'll take a second. Yeah. I'll take the second part of the question just on overall investment. So I'll just reiterate this is highly accretive to our overall business.

Speaker #2: That's why we're making the shift. We are going to be making some investments into what I would call overall enablements—fixtures. We're investing in mills for increased pellet capacity.

Speaker #2: This is going to unlock a significant amount of investment capacity to reinvest back in our business, just to drive that virtuous cycle in the flywheel.

Speaker #2: There's a couple other areas we'll invest into: human capital in the field, some employees here at headquarters to really unlock the potential. There is a capex investment into fixtures and also the mills and to create that pellet capacity.

Speaker #2: So there could be a cash impact which we've modeled out, but it's highly accretive and with a high ROI attached.

Speaker #5: Very helpful color. Thank you guys.

Phillip Blee: Very helpful color. Thank you, guys.

Speaker #1: Your next question comes from the line of Peter Benedict from Baird. Please go ahead.

Operator 3: Your next question comes from the line of Peter Benedict from Baird. Please go ahead.

Operator: Your next question comes from the line of Peter Benedict from Baird. Please go ahead.

Speaker #6: Hi guys, thanks for taking questions. So, one is just on kind of the thinking about ASPs in the grill area. Down the last three years, they're down again this year.

Peter Benedict: Hey, guys. Thanks for taking the question. Well, one's just on kind of the ASPs in the grill area. They've been down the last three years. They'll be down again this year it looks like, and we understand the reasons. My question though is, when do you think that that could start to stabilize or normalize, whether that be what you're bringing into the market in terms of innovation and price points? Is there a level at which you're kind of like, Hey, it's kind of all in there right now, and we can start maybe stabilizing the ASP trend in grills.

Speaker #6: They'll be down again this year it looks like. And we understand the reasons but my question though is when do you think that that could start to stabilize or normalize?

Speaker #6: Whether that be what you're bringing into the market in terms of innovation and price points, is there a level at which you're kind of like, "Hey, it's kind of all in there right now and we can start maybe stabilizing the ASP trend in grills"?

Speaker #4: Yeah. Thanks, Peter. So first of all, there's clearly a macro driver in this. As we have seen consumer sentiment soft and it really has been over the last 18 months and as we while we see consumer spending robust when you look at where consumers are spending, a higher proportion of that is in it's in living costs it's in food, transportation, necessities in a smaller component of that in discretionary.

Jeremy Andrus: Yeah. Thanks, Peter. First of all, there's clearly a macro driver in this, as we have seen consumer sentiment soft, and it really has been over the last 18 months. While we see consumer spending robust, when you look at where consumers are spending, a higher proportion of that is in living costs. It's in food, transportation, necessities, and a smaller component of that in discretionary. That is a clear driver of consumers to lower price point in a high-ticket durable, which is non-essential in nature. There's a macro component driving it. There's also a sort of a business and a product line architecture piece that certainly influences that. We've been working really to drive innovation at higher price points and cascade that innovation downstream. There are some key gaps that we are filling that we think will help stabilize and reverse this trend.

Speaker #4: And so that is a clear driver of consumer to lower price point in a high ticket durable which is non-essential in nature. And so there's a macro component driving it.

Speaker #4: There's also a sort of a business and a product line architecture piece that's certainly influences that. We have been working really to drive innovation at higher price points and cascade that innovation downstream and there are some key gaps that we are filling that we think will help stabilize and reverse this trend.

Jeremy Andrus: I think this year the most prominent example is the Westwood product that we've launched. We've seen very nice volumes in our opening price point, which is the Pro Gen One, as we call it, Pro 22 and Pro 34. We launched the Westwood into market this year, and frankly, it's really only starting to hit our retailers. That hits a $699 to 799 price point. I think importantly, it brings some of the elements of innovation around the connected cooking experience, and other elements of innovation that we launch at higher price points into lower price points. I think what that will do is create an opportunity for those who have been buying into opening price points, potentially seeing a gap between the opening price points and the mid-price points to find something in between that has innovation.

Speaker #4: I think this year the most prominent example is the Westwood product that we've launched. The we've seen very, very nice volumes in our opening price point which is the Pro Gen 1 as we call it, Pro 22 and Pro 34.

Speaker #4: We launched the Westwood into the market this year. And frankly, it's really only starting to hit our retailers that hits a $699 and a $799 price point.

Speaker #4: But I think importantly it brings some of the elements of innovation around the connected cooking experience and other elements of innovation that we launch at higher price points into lower price points.

Speaker #4: I think what that will do is create an opportunity for those who have been buying into opening price points potentially seeing a gap between the opening price points and the mid price points to find something in between that has innovation.

Speaker #4: So to the extent that there are things that we're doing from a product line architecture standpoint to really not just drive ASP but really to meet the consumer where they are in terms of creating the right product for the right consumer in the right moment.

Jeremy Andrus: To the extent that there are things that we're doing from a product line architecture standpoint to really, not just drive ASP, but really to meet the consumer where they are in terms of creating the right product for the right consumer in the right moment, and also creating very obvious step-up stories. Some of these things will naturally happen with product launches. Others will be a function of the macro. I think we'll see over the next 12 months that Westwood will do a nice job of creating a higher price point, but still a highly accessible price point below $1,000 with innovation.

Speaker #4: And also creating very obvious step-up stories. Some of these things will naturally happen with product launches. Others will be a function of the macro.

Speaker #4: But I think we'll see over the next 12 months that Westwood will do a nice job of creating a higher price point but still a highly accessible price point below $1,000 with innovation.

Speaker #6: No, that's super helpful, Jeremy. Go ahead,

Peter Benedict: No, that's super helpful, Jeremy. Go ahead, Joey.

Speaker #2: Yeah. Hey, Peter. Peter, Joey. I'll add to that and just say there has been a divergence in just sell through above 1,000, below 1,000.

Joey Hord: Yeah. Hey, Peter. Peter, Joey. I'll add to that and just say there has been a divergence in just sell through above 1,000, below 1,000. We've talked about that. It's a long-term trend, and that's really the thesis behind Westwood and Irontop at lower price points, more accessible price points, and really cascading that innovation down. One thing I can say is the full year expectation is that unit volumes on the selling standpoint are going to be flat year-over-year. Even though we have revenue pressure, we are flat year-over-year on units.

Speaker #2: We've talked about that. That's a long-term trend. And that's really the thesis behind Westwood and Iron Top at lower price points more accessible price points and really cascading that innovation down.

Speaker #2: One thing I can say is we are the fullier expectation is that unit volumes on the selling standpoint are going to be flat year over year.

Speaker #2: So even though revenue we have revenue pressure, we are attached there are we are flat year over year on units. The other thing I just like to call out which I know you know is just when you sell a grill at a lower ASP, the assumption on attach rate in terms of pellets and accessories and consumables remains the same whether the grill is at higher price point or lower price point.

Joey Hord: The other thing I'd just like to call out, which I know you know, is just when you sell a grill at a lower ASP, the assumption on attach rate in terms of pellets and accessories and consumables remains the same, whether the grill is at higher price point or lower price point. It does bring a consumer into our flywheel.

Speaker #2: So it does bring a consumer into our flywheel.

Speaker #6: Yep. No, no, no. That makes total sense. And then, Jeremy, one other one for you. Just 60 million cash, positive cash flow. Just thoughts on leverage, debt paydown, voluntary debt paydown?

Peter Benedict: Yep. No, that makes total sense. Joey, maybe one other one for you, just $60 million in cash, positive free cash flow. Just thoughts on leverage, debt pay down, voluntary debt pay down. Do you need this money to invest more in the distribution growth? How should we think about leverage from here?

Speaker #6: Do you have you need this money to invest more in the distribution growth? How should we think about leverage from here?

Speaker #2: Yeah. I mean, the goal and this is the underpinning of Gravity is to not just drive profitability but also financial discipline around cash and cash generation.

Joey Hord: Yeah, the goal, this is the underpinning of Gravity, is to not just drive profitability, but also financial discipline around cash and cash generation. We are always evaluating a debt pay down strategy. I'm comfortable right now with our cash position and our overall net debt. At the same time, we are making some investments into working capital in Q4, which will cascade into increased AR, then that cash collection will come in in Q1.

Speaker #2: We are always evaluating a debt paydown strategy. I'm comfortable right now with our cash position and our overall net debt. At the same time, we are making some investments in the working capital in Q4 which will cascade into increase AR and then that cash collection will come in in Q1.

Speaker #6: Got it. Okay. Thank you.

Peter Benedict: Got it. Okay. Thank you.

Speaker #2: Yep.

Joey Hord: Yep.

Speaker #3: Your next question comes from the line of Joe Feldman from Kelsey Advisory Group. Please go ahead.

Operator 3: Your next question comes from the line of Joe Feldman from Telsey Advisory Group. Please go ahead.

Operator: Your next question comes from the line of Joe Feldman from Telsey Advisory Group. Please go ahead.

Speaker #7: Yeah. Thanks for taking the questions, guys. I wanted to go back to some of the pressure that you guys saw in the quarter. Can you explain for me your comment about the distribution expansion pressure?

Joe Feldman: Thanks for taking the questions, guys. I wanted to go back to some of the pressure that you guys saw in the quarter. Can you explain for me your comment about the distribution expansion pressure? I think you said near term channel impact associated with distribution expansion. Does that mean the Costco road shows that went away, or are we talking related to the Lowe's rollout, some retail partners got word of that and changed their behavior?

Speaker #7: I think you said near-term channel impact associated with distribution expansion. Does that mean the Costco Roadshows that went away or are we talking related to the Lowe's rollout?

Speaker #7: Some retail partners got word of that and changed their behavior.

Speaker #4: Yeah. So Joe, referring to the latter, there is a balancing act between the number of retail partners and points of distribution, and sort of shared commitment and what that means in terms of assortment that we receive on-floor investments that our retail partners make in our brand, whether they be fixtures, marketing benefits, things like that.

Jeremy Andrus: Joe, referring to the latter, there's a balancing act between number of retail partners and points of distribution and sort of shared commitment and what that means in terms of assortment that we receive on floor, investments that our retail partners make in our brand, whether they be fixtures, marketing benefits, things like that. With the expansion of retail, I think it motivates some retailers to also expand their offering and to take some of those investments that they would have otherwise put behind the Traeger brand to spread them across other brands. Really referring to that, we have notified our largest channel partners, and in some cases, they chose to take that as an opportunity to think slightly differently about their assortment and their investment in our brand. Again, that's natural as part of a channel strategy.

Speaker #4: And with the expansion of retail, that I think it motivates some retailers to also expand their offering and to take some of those investments that they would have otherwise put behind the brand to spread them across other brands.

Speaker #4: And so really referring to that, we have we have notified our largest channel partners and in some cases they chose to take that as an opportunity to think slightly differently about their assortment and their investment in our brand and again, that's natural as part of a channel strategy.

Speaker #4: I think the onus is on us to prove to our channel partners that the right incremental distribution should be additive to the overall Träger brand and our ability to invest to drive really to drive effective activation at retail not just new channel but existing partners but no question that it changes the dynamics slightly and so there is the assortment changes and that change in assortment and retail space also leads to some impact to revenue in those current partners.

Jeremy Andrus: I think the onus is on us to prove to our channel partners that the right incremental distribution should be additive to the overall Traeger brand and our ability to invest, really to drive effective activation at retail, not just new channel, but existing partners. No question that it changes the dynamic slightly, and so the assortment changes, and that change in assortment and retail space also leads to some impact to revenue in those current partners.

Speaker #6: Got it. Okay. Thank you.

Joe Feldman: Got it. Okay. Thank you.

Speaker #2: Yeah. Thank you. I'll just yeah. I'll add to that. In terms of just the Q2, we did have pressure on the P&L just regarding meter.

Joey Hord: Yeah, thank you.

Joe Feldman: Yeah.

Joey Hord: Yeah, I'll add to that. In terms of just the Q2, we did have pressure on the P&L just regarding MEATER, and that was the main driver of our revenue miss. We were able to performance manage overall cost, and there was some timing and pacing on the cost side, which was why we had a strong quarter from a profitability perspective.

Speaker #2: And that was the main driver of our revenue miss. And then we were able to performance manage overall cost and there was some timing and pacing on the cost side which was why we had a strong quarter from a profitability perspective.

Speaker #6: Got it. That's helpful. Thank you. And then with regard to the benefit you guys are seeing from IEPA tariffs, is that I know it's a risk of giving I know you're not going to give guidance for 2027, but are we should we think about those as one time well, I know they're kind of one time, but my point is do we have to back those out as we think about 2027 EBITDA?

Joe Feldman: Got it. That's helpful. Thank you. With regard to the benefit you guys are seeing from IEEPA tariffs, I know, at the risk of giving, I know you're not giving guidance for 2027, but should we think about those as one time? Well, I know they're kind of one time, my point is, do we have to back those out as we think about 2027 EBITDA? Does $16 million have to come out as we model next year? I don't want all of us to get out over our skis with EBITDA forecasts that maybe aren't going to be the right spot for you guys.

Speaker #6: Is 16 million have to come out as we model next year? Because I don't want all of us to get out over our skis with EBITDA forecast that maybe aren't going to be the right spot for you guys.

Speaker #2: Yeah. No. Listen, I think it's a good question. So like I mentioned, we have 16 million that we've now built into the guidance. Of that 16 million, 2 million is going to be recognized in the second half, but 7 million is sales-related or FY26 sales-related, meaning we're essentially have a lower tariff rate or an implied tariff rate.

Joey Hord: No, listen, I think it's a good question. Like I mentioned, we have $16 million that we've now built into the guidance. Of that $16 million, $2 million is going to be recognized in the H2, $7 million is FY26 sales related, meaning we essentially have a lower tariff rate or an implied tariff rate. Our tariff rate right now is around 25%, in terms of a one time, I would plan for our full guide, the midpoint of $62 million. You could say there is a $16 million benefit, $7 million of it's FY26 driven.

Speaker #2: Our tariff rate right now is around 25%. But in terms of a one-time, I would not plan I would plan for our full guide the midpoint of '62.

Speaker #2: You could say there is a 16 million benefit, but 7 million of it's FY26 driven.

Speaker #6: That's very helpful. Thank you. Appreciate that. And good luck with this quarter. Thank you.

Joe Feldman: That's very helpful. Thank you. Appreciate that. Good luck with this quarter. Thank you.

Speaker #2: Sure.

Speaker #3: A reminder, if you would like to ask a question, please press star one on your telephone keypad. At this time, there are no further questions.

Joey Hord: Sure.

Joey Hord: A reminder, if you would like to ask a question, please press star one on your telephone keypad. At this time, there are no further questions. This concludes today's call. Thank you all for attending. You may now disconnect.

Speaker #3: This concludes today's call. Thank you all for attending. You may now disconnect.

Operator 1: This event has now concluded. Thank you for joining Traeger's Q2 2026 earnings conference call. The line will disconnect automatically.

Q2 2026 Traeger Inc Earnings Call

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