Traeger (COOK) 6 Aug 24 2024 Q2 Earnings call transcript

Traeger Grills, a leading outdoor cooking company, reported a robust second quarter performance, with sales of $168 million, a 2% decline compared to the previous year. However, the company's Grills business saw a significant improvement, with a 2% year-over-year growth. The strong second quarter gross margin of 42.9%, up 600 basis points compared to the prior year, was a major highlight, driving an adjusted EBITDA of $27 million, a 25% improvement from the second quarter last year.

Key Themes and Trends

Traeger's second quarter performance underscores the company's ability to execute in a challenging consumer environment, with a focus on increasing efficiencies and executing strategic promotions. The company's Grills business was up 2% year-over-year, signaling a turnaround from the 14% decline seen in the first quarter. This improvement was driven by a strategic lean into promotions, which saw consumers respond positively, leading to a marked inflection point in sell-through trends. The company's gross margin also improved significantly, demonstrating the company's focus on operational efficiencies and cost savings.

Investor Interactions

During the earnings call, key shareholders and investors raised questions about the company's marketing strategy for its new products and concerns about competition. Traeger's management team addressed these concerns, providing insights into the company's plans for expanding its brand awareness and differentiating itself in the market. This interaction provided valuable insights into the market's perception of the company's products and its competitive positioning.

Sectoral Trends

Traeger's earnings call transcript revealed a trend within the outdoor cooking sector towards digital marketing and consumer engagement strategies. The company's focus on driving excitement and engagement with consumers in collaboration with retail partners, including completing over 4,000 weekend selling events at retail partner locations, highlights the importance of in-store product demonstrations and consumer experience in driving sales. This trend is expected to continue, with a focus on improving brand awareness, penetration, and leveraging e-commerce channels for sales growth.

Future Outlook and Challenges

Traeger updated its fiscal year 2024 revenue guidance to a range of $590 million to $605 million, reflecting the company's optimism for the remainder of the year. The company's improved outlook is driven by a better-than-expected performance in the second quarter and an improved outlook for the second half. However, challenges remain, particularly in the form of reduced expectations for accessories revenues, driven by the MEATER business. The company is addressing these challenges by adjusting its demand creation strategy and focusing on new product innovation in the second half of the year.

Overall, Traeger's second quarter performance and outlook for 2024 demonstrate the company's resilience and strategic focus in a challenging consumer environment. The company's ability to execute on strategic promotions, drive operational efficiencies, and focus on consumer engagement strategies positions it well for future growth. As the company navigates the challenges of a dynamic market and competitive landscape, its commitment to innovation and brand expansion will be crucial in driving long-term success.