Traeger’s 2026 Q2 Earnings Call: Lowe’s Revenue Claims, Tariff Refund Modeling, and Refund Timeline Clash

Date of Call: Aug 5, 2026

Financials Results

• Revenue: $120 million, down 17% compared to the prior year
• EPS: Net loss per diluted share $3.12 compared to a loss of $2.77 in the prior year; Adjusted net income $0.53 per diluted share compared to adjusted net loss of $0.73 per diluted share in the prior year
• Gross Margin: 39.5%, down 30 basis points from the prior year

Guidance:

• Full-year revenue outlook updated to $435 to $465 million from prior range of $465 to $485 million, primarily due to greater softness in the meter business and increased near-term channel dynamics from distribution expansion.
• Adjusted EBITDA guidance maintained at $57 million to $67 million.
• Gross margin guidance raised to 40% to 41%, reflecting lower tariff impact on meter products than anticipated.
• Approximately two-thirds of remaining 2026 revenue and substantially all adjusted EBITDA expected in Q4.
• Free cash flow guidance reiterated for at least $30 million year-to-date; year-to-date free cash flow generation is $41 million.
• Project Gravity value capture on track for $50 million within fiscal 2026.

Business Commentary:

Revenue and Market Dynamics:

• Traeger's second quarter revenue was $120 million, down 17% compared to the prior year.
• The decline was driven by continued softness in the meter business and intentional actions under Project Gravity focused on improving profitability and simplifying the business.

Product Strategy and Innovation:

• Traeger introduced new product lines, Westwood and Irontop, which are generating 4.8 to 5-star reviews across multiple platforms.
• These products are part of a strategic shift to extend Traeger innovation into more accessible price points, expanding the addressable market.

Distribution Expansion and Channel Dynamics:

• Traeger announced a significant distribution expansion into Lowe's, with initial load-in activity beginning in Q4 of this year.
• This expansion is anticipated to contribute to 2026 revenue but also involves offsets within existing partners, impacting near-term revenue dynamics.

Financial Performance and Guidance:

• Traeger maintained its adjusted EBITDA guidance of $57 million to $67 million despite lowering its full-year revenue outlook to $435 to $465 million.
• The reduction in revenue guidance is due to greater softness in the meter business and distribution-related dynamics.

Cost Management and Project Gravity:

• Traeger's adjusted EBITDA increased to $17 million in the second quarter from $14 million in the prior year period.
• This improvement reflects benefits from Project Gravity actions, discipline in expense management, and a focus on profitability.

Sentiment Analysis:

Overall Tone: Neutral

• Management acknowledges near-term revenue headwinds, lowering the revenue outlook, but expresses confidence in the long-term strategy and brand health. Quotes: 'we're exiting 26 with a significantly improved inventory position, a stronger liquidity profile, a more efficient cost structure and incremental distribution with Lowe's beginning in the fourth quarter all of which strengthen our foundation for growth in 2027 and beyond.' and 'I'm confident Traeger is well-positioned to resume profitable growth in 2027 and beyond.'

Q&A:

• Question from Randy Connick (Jefferies): Where are we in the broader grill cycle? How much benefit is Lowe's load-in in Q4? What are high-level thoughts on sustainability of EBITDA dollars/margins into 2027?
  Response: Industry sell-through is roughly flat; replacement cycle volatility is a factor. Lowe's load-in is meaningful and profitable but long-term; near-term revenue impact is being felt. Project Gravity is delivering cost synergies; long-term value capture is $64-70 million, and growth is expected to be profitable.

• Question from Philip Lee (William Blair): What are the key drivers for the increased gross margin guide? How are you faring against rising transportation/input costs and tariff headwinds? Any directional guidance for Lowe's partnership incrementality in 2027?
  Response: Increased gross margin guidance driven by tariff refund timing and lower-than-expected input cost impacts. Tariff rates are approximately flat; pricing remains at current levels. Lowe's is a long-term growth opportunity; near-term revenue impact is balanced by strategic investment and scale, but not a step-function growth driver.

• Question from Peter Benedict (Baird): When might ASPs in grills stabilize or normalize? Thoughts on cash position and leverage/debt pay down?
  Response: Macro consumer pressure and product architecture shifts are drivers; Westwood product aims to stabilize ASPs over next 12 months. Cash position is healthy; debt pay down is evaluated, but comfortable with current net debt; Q4 working capital investments will increase AR with cash conversion in Q1.

• Question from Joe Feldman (Telsey Advisory Group): Can you explain the 'distribution expansion pressure'? Is the IEPA tariff benefit a one-time item for 2027 modeling?
  Response: Distribution expansion prompted some existing retail partners to alter assortment/investment allocations, impacting revenue. IEPA tariff refund is $16 million total; $7 million is sales-related and tied to FY26, while $9 million is a one-time benefit to be considered in 2027 modeling.

Contradiction Point 1

Near-Term Revenue Impact of the Lowe's Partnership

Contradictory statements on whether the Lowe's partnership is expected to drive near-term revenue growth or is purely a long-term strategic benefit.

Randy Connick (Jefferies) - Randy Connick (Jefferies)

2026Q2: The Lowe's partnership is a long-term strategic opportunity, not a near-term revenue step-function. - Jeremy Andrus(CEO)

How does the current stage of the broader grill cycle impact the revenue benefit from the Lowe's load-in for the remainder of the year? - Philip Lee (William Blair)

2026Q2: Near-term revenue impact is expected due to changes in retail partner assortment and investment allocations. - Jeremy Andrus(CEO)

Contradiction Point 2

IEPA Tariff Refund Forward Modeling for 2027

Contradiction on whether the tariff refund benefit is embedded in the FY26 run-rate for forward modeling.

Joe Feldman (Telsey Advisory Group) - Joe Feldman (Telsey Advisory Group)

2026Q2: The $16M IEPA refund is fully reflected in FY26 guidance... For modeling FY27 EBITDA, the $7M sales-related portion is considered embedded in the FY26 run-rate, while the full $16M should be viewed as a one-time item for FY26. - Joey Hoard(CFO)

Should the $16M IEPA tariff benefit be excluded from 2027 EBITDA modeling? - Joe Feldman (Telsey Advisory Group)

2026Q2: The midpoint guide of $62M EBITDA for 2027 already factors this [full $16M] in. - Joey Hord(CFO)

Contradiction Point 3

IEPA Tariff Refund Timeline and Certainty

Conflicting statements on the expected timing and receipt of the full tariff refund.

"What did Philip Lee discuss in William Blair's earnings call?" - Philip Lee (William Blair)

2026Q2: The full-year IEPA tariff refund is now $16M (vs. prior expectations), with $12M already booked, $2M in Q2, and $2M expected in the second half. - Joey Hoard(CFO)

"What are the key drivers behind the increased gross margin guidance, and how are rising transportation and input costs being managed?" - Peter Benedict (Baird)

2026Q1: The $12 million tariff refund was recognized in Q1. The full refund (including balance sheet amount) is expected to be received within 60-90 days. - Joey Hord(CFO)

Contradiction Point 4

Grill Market Trends and Outlook

Differing assessments of the overall grill market's current state and near-term recovery.

Randy Connick (Jefferies) - Randy Connick (Jefferies)

2026Q2: The overall grill industry is roughly flat year-over-year. Traeger's sell-through aligns with this trend. - Jeremy Andrus(CEO)

Can you provide an update on the current phase of the broader grill cycle, the expected revenue impact from the Lowe's load-in for the remainder of the year, and your outlook on the sustainability of EBITDA dollars/margins through 2027 as revenue potentially grows? - Brian McNamara (Canaccord)

20260306-2025 Q4: The outdoor grill market has been modestly down the last handful of years, with revenue down mid-single digits in 2025. Unit volumes are still down meaningfully compared to 2019. - Jeremy Andrus(CEO)

Contradiction Point 5

Tariff Impact on Gross Margin and Financials

Contradictory statements on the magnitude and financial impact of tariffs.

Philip Lee (William Blair) - Philip Lee (William Blair)

2026Q2: The raised gross margin guidance (40-41%) is primarily due to lower-than-anticipated tariff impacts on meter products. - Joey Hoard(CFO)

What are the key drivers behind the increased gross margin guidance, how are rising transportation/input costs being managed, and are current product prices sufficient to mitigate headwinds into 2027 without tariff refunds as a tailwind? - Peter Keith (Piper Sandler)

20260306-2025 Q4: The similar decremental margin is due to two primary factors: 1) Full-year tariff impact on gross margin, as tariffs settled to higher rates throughout 2025... - Joey Hord(CFO)