Traeger, Inc.

Hello and welcome to the Traeger third quarter fiscal 2021 earnings conference call. My name is Elliot and I will be coordinating your call today. If you would like to register a question during the presentation, you may do so by pressing star followed by one on your telephone keypad. I want to hand over to our host, Tom Burton, General Counsel. Tom, please go ahead when you're ready.

Good afternoon, everyone. Thank you for joining Traeger's call to discuss its third quarter results, which were released this afternoon and can be found on our website at investors.traeger.com. Hosting the call are Jeremy Andrus, Chief Executive Officer of Traeger, and Don Blossel, Chief Financial Officer. Before we get started, I want to remind everyone that management's remarks on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. that are based on current management expectations. These may include, without limitations, predictions, expectations, targets, or estimates, including regarding our anticipated financial performance. And actual results could differ materially from those mentioned. These forward-looking statements also involve substantial risks and uncertainties. Some of these may be outside of our control and could cause actual results to differ materially from those expressed in or implied by such statements. These factors and uncertainties, among others, are discussed in our filings with the SEC. We encourage you to review these filings for a discussion of these factors, including our quarterly report on Form 10-Q filed today, which is also available on the Investor Relations portion of our website at investors.traeger.com. You should not place undue reliance on these forward-looking statements. We speak only as of today, and we undertake no obligation to update or revise them for any new information. This call will also contain certain non-GAAP financial measures, including net income as adjusted, diluted EPS as adjusted, adjusted EBITDA, and adjusted EBITDA margin, which we believe are useful supplemental measures that assist in evaluating our ability to generate earnings, provide consistency and comparability with our past performance, and facilitate period-to-period comparison of our core operating results and the results of peer companies. Adjusted EBITDA and adjusted net income and loss are both used by our management team as an additional measure of our performance for purposes of business decision-making, including managing expenditures and evaluating potential acquisitions. They help to identify additional trends in our financial results that may not be shown solely by period-to-period comparisons of net income or income from continuing operations. Each of adjusted EBITDA and adjusted net income has inherent limitations because of the excluded items and may not be directly comparable to similarly titled metrics used by other companies. Reconciliation of these non-GAAP measures to the most comparable GAAP measures and definitions of these indicators are included in our quarterly report on Form 10Q and in our earnings release, both of which are available on the investor relations portion of our website at investors.trader.com. Now I would like to turn the call over to Jeremy Andrus, Chief Executive Officer of Trader.

Thank you, Tom. Thank you for joining us for our third quarter earnings call. Before we begin, I want to welcome our new VP of Investor Relations, Nick Backus, who will be joining our team later this month. I couldn't be more excited to have Nick at Traeger and look forward to working with him. I would also like to thank the entire Traeger team, for their contributions as we continue to transform the way people cook and empower everyone to create delicious meals. Today, I will discuss highlights from our quarterly results and share our progress in executing our long-term growth strategies, as well as how we are navigating the supply chain headwinds. I will then turn the call over to Dom to discuss details of our third quarter financial performance and provide an outlet for the remainder of 2021. We are pleased with the momentum in our business for the third quarter, with revenues increasing 12% year over year. On a two-year stack basis, our growth was 110% in the third quarter, clearly highlighting ongoing strength in consumer demand for Traeger across our product categories. We remain obsessed with sell-through. Our strong growth at retail continues to earn us additional floor space with our retailers. We continue to see encouraging results from our market assault strategies in the form of increased demand and brand awareness. We deployed these strategies in 14 markets during the second quarter and saw brand awareness double and a significant lift in sales. Following our Q2 seasonal marketing campaign, we continue to see substantially faster growth in our focus markets relative to the company average. More consumers are entering the purchase funnel and recognizing that Traeger's innovations make cooking with wood simple. By leveraging technology, premium quality, and a thoughtful digital experience, everyone can become a pit master. Given these results, we plan to expand our market assault strategy in 2022 to further extend and elevate our brand in new markets. We are enthusiastic about Q4 activation strategies as we look forward to the holidays. Unlike most brands in our category, we have a really strong holiday business, and Thanksgiving is one of our largest grilling days. We plan to be very active with innovation and unique marketing strategies that will continue to drive brand awareness and elevate our voice. This will both attract new consumers as well as engage the existing Traegerhood. In particular, we are pleased to collaborate with one of our largest retail partners, Home Depot, with exciting content on ESPN College Game Day. We believe that the versatility of our grills allows for accessible user experiences where a Traeger can be used for virtually any cooking occasion. That user experience drives frequency, contributing to the ongoing momentum in our consumables and accessories categories. Turning to product innovation, we are excited about our two new premium price limited edition wood pellet offerings. We successfully launched a pellet collaboration with Meat Church Barbecue that highlights smoke flavoring preferred by Texas pit masters and also launched a limited edition turkey blend wood pellet with brine kit for the Thanksgiving holiday. One of our long-term growth pillars is to disrupt cooking experiences both indoor and outdoor. We have continued to do so with Meater, which has experienced strong growth since the acquisition. It is now being offered on our website, and we plan to increase distribution of METR's wireless meat thermometers through our retail partners, as METR is currently available primarily via e-commerce channels. We have already begun to roll out METR to our best retail locations, and we'll see meaningful distribution expansion in 2022. We take great pride in providing an incredible cooking experience for our customers. and we believe there are significant opportunities to offer holistic solutions where consumer demand is strong but innovation is lacking. To that end, on November 2nd, we launched a business concept we've been working on for the past year called Traeger Provisions. We're offering premium meal kits consisting of high-quality proteins, and partially prepared sides with easy-to-follow instructions all delivered directly to your doorstep. The idea was born from consumer feedback around the difficulty and time it takes to purchase high-quality proteins and ingredients and the desire to have a simplified, complete meal experience. That feedback taught us that Traeger has permission to play in more spaces throughout the consumer cooking journey. This product offering is perfect for so many of our community members because it provides everything you need to create an amazing meal on your Traeger. We've done the work to elevate and simplify the consumer experience. Meals are developed and curated by our culinary team to deliver our favorite Traeger recipes as well as facilitate consumer discovery of new offerings. We're sourcing high-quality ingredients including Wagyu and Heritage Brie proteins smokehouse-style sides, rubs, sauces, and extras, as well as dedicated instructions to prepare, cook, and serve an unforgettable meal, which all seamlessly integrates into the existing trader experience. These premium boxes, which are shipped frozen, are designed to be served for any occasion, making cooking easy and efficient and at a value, with prices ranging from $16 to $30 per person based on protein selection and box size. We believe that this complete solution elevates the Traeger cooking experience beyond the grill and disrupts what is currently being offered in the marketplace. Put simply, it's working. Following a six-month test in four markets, we are extremely pleased with the strong response from our consumers, many of whom have purchased more than one provisions box. We found that 92% of participants expressed intent to purchase again, and 58% indicated interest in four or more boxes per year. We estimate the total U.S. market opportunity to be $20 billion today. In addition, we believe we are able to scale this business over time with lower customer acquisition costs given the entrenched brand loyalty in the Traeger hood. Turning next to a topic that has been top of mind across many industries, we highlighted last quarter the supply chain challenges that we would face during the second half of the year. Despite persistent challenges, we continue to focus on what we can control, and I am proud of how our team has responded to the unprecedented strain across the global supply chain. Our ability to meet demand during the quarter was outstanding. We hit all of our service level agreements, and our inventory position is the best it has been in two years. Our strategy to increase production and warehouse inventory in China and in the U.S. has paid off, and our customers consistently tell us that our fulfillment performance is at a higher level than that of our competition. Don will provide more details on the supply chain impacts, but I am pleased that we have inventory available to meet global demand. We have instituted mitigation strategies to counter the significant increases in inbound freight costs. Our Vietnam production facility that was closed for several weeks during the end of the second quarter and early in the third quarter is back in full swing. In addition, we began working with a new manufacturing facility in China that I expect has the potential to be our best yet and are working on North American manufacturing that we expect to be operational in 2022. Stepping back a bit, our long-term growth pillars remain intact. We have tremendous opportunity ahead of us as our household penetration and unaided brand awareness remain low. The wood pellet category continues to grow faster than the overall grill category due to superior overall cooking experience to traditional grills, and we are industry leaders driving that growth. We will continue to drive brand awareness through top-of-the-funnel advertising, as it is essential for us to be included in the consumer's initial consideration set. We have significant runway to increase penetration with our existing retail customer base. We continue to work with our trade partners to elevate our floor presence through enhanced merchandising opportunities, including fixtures, shopping shops, custom build-outs in select retail locations, and improved in-store associate training. In addition, we are improving and increasing our assortment in more doors with additional bays and higher-end grill assortments. As our brand awareness increases, we will be able to capture significantly more floor space, particularly in strong grill markets such as the Southeast. Our DTC channel is underpenetrated and represents another meaningful growth opportunity. We are pleased with our performance in that channel, and we will continue to invest in its growth. As previously highlighted, Traeger leads through innovation, and we will continue to drive the category with new, game-changing products and experiences. To that end, we are excited about new grille and platform innovation that we will be introducing into the marketplace in 2022. This new offering will further strengthen our position as a leader in the category. Our focus on innovation is not confined to grills only, but also manifests itself across other categories, including consumables, accessories, and digital experiences. We remain excited about the growth opportunities ahead of us in consumables. We have great new product introductions in rubs and sauces, and we will continue to provide strong, limited-edition collaborations within our pellet offerings that resonate with our traderhood. We see an opportunity to increase the accessibility of sauces and rubs by expanding into new distribution, including grocery. Finally, we are enthusiastic about exporting our brand globally. We have strong results in Canada, and the brand continues to strengthen in Germany and in other geographies like the UK. Our global journey is just beginning. We have significant white space ahead of us, and we continue to be extremely positive about our future. And we'll now turn the call over to Dom to discuss our third quarter financial performance in greater detail. Dom?