Traeger, Inc.

Good afternoon. Thank you for attending today's Triggers fourth quarter and full year 2025 earnings conference call. My name is Megan and I'll be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question during that time, simply press star one on your telephone keypad. I would now like to pass the conference over to Stephanie Reed, Vice President of Finance, Strategy, and Investor Relations. Stephanie, you may proceed.

Good afternoon, everyone. Thank you for joining Traeger's call to discuss its fourth quarter and full year 2025 results, which were released this afternoon and can be found on our website at investors.traeger.com. I'm Stephanie Reed, 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 Hoard, our Chief Financial Officer. Before we get started, I want to remind everyone but management's remarks on this call may contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and views of future events, including, but not limited to, statements made regarding our organizational focus and strategy, our mitigation efforts to offset the direct impact of tariffs, our Project Gravity initiative and its impact on our business, our expected product launches, and our outlook as to our anticipated first quarter 2026 and full year 2026 results. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied herein. I encourage you to review our annual report on Form 10-K for the year ended December 31st, 2025, once filed, and our other filings for a discussion of these factors and uncertainties which are available on the investor relations portion of our website. You should not take undue reliance on these forward-looking statements which we speak to only as of today. We undertake no obligation to update or revise them for any new information. 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 flows, 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.trekker.com. Please note that our definition of these measures may differ from similarly titled metrics presented by other companies. Now I'd like to turn the call over to Jeremy Andrus, Chief Executive Officer of Charter. Jeremy.

Thanks, Steph, and thank you all for joining our fourth quarter earnings call. We closed fiscal 2025 with strong execution and meaningful strategic progress, and I'm proud of how this team performed in a dynamic environment. For the full year, revenue came in above the high end of our guidance at $560 million and adjusted EBITDA landed in the upper half of the range at $70 million. More importantly, we delivered on what we said we would do. We navigated tariffs, took actions to protect profitability, and made hard decisions that simplify the business and strengthen our foundation for the long term. Before I get into 2026, I want to step back and talk about what we saw in 2025 and why we remain confident in the long-term value of this business. Even with more cautious consumer spending, the Traeger brand remains as strong as ever, and our community engagement continues to be a leading indicator of demand. Over the holiday season, we leaned into seasonal cooks and ambassador content, and the community showed up in a big way. On Thanksgiving alone, we had 315,000 connected cooks, up 11% year-over-year, which we believe is a powerful signal of engagement across our installed base. What's important is that this brand strength is translating into business performance. In 2025, we held market share across outdoor grilling, including fuels, despite a sluggish category backdrop. That performance was supported in part by strong consumer response at price points below $1,000, where we've seen traction without sacrificing brand or performance. And with household penetration still low, we believe this brand strength positions us well as replacement cycles normalize over time. Innovation has always been core to Traeger, and it continues to be rewarded when we execute. A good example of how we're meeting consumers where they are is the Woodridge platform launched earlier this year. Woodridge combines thoughtful innovation like the easy clean grease and ash keg, increased cooking space, and our free flow fire pot that delivers better smoke with approachable price points. That balance of performance and value has driven strong consumer reception, and we believe Woodridge is well positioned to be a meaningful contributor to our grills business in 2026 as consumers continue to prioritize value without compromising quality. Looking ahead, we plan to launch two additional products in 2026 that we expect will deliver Traeger innovation at more accessible price points and with a broader reach. That matters because expanding household penetration remains one of our largest long-term opportunities and the ability to deliver great product at price points that meet consumers where they are is a key part of our strategy. Our pellets business performed well this year, supported by the continued fuel category expansion of wood pellets overall. Pellet performance remains an important indicator for the broader category. when consumers are buying fuel they're cooking and when they're cooking it supports the long-term health and replacement outlook historically parts of this category have been tied to housing cycles and broader consumer confidence the outdoor grilling market including fuels has been relatively steady since 2022 reflecting only modest declines We believe replacement cycles have been extended beyond historical norms due to elasticity following tariff pricing actions and other macro factors. Now, let's talk about what defined the operating environment in 2025. Tariffs had a meaningful impact on the category this year, and they drove volatility in ordering behavior across the channel. But through discipline and execution, we manage the impact while still delivering the four-year results I just mentioned. As we've discussed in prior quarters, our approach has been consistent. We focused on three pillars, supply chain, pricing, and cost discipline, and we've worked closely with our partners to protect profitability and maintain inventory health. We'll continue to take a disciplined approach, managing pricing on a portfolio basis as policy evolves. Meanwhile, our current guidance remains based on the framework in place earlier this year. Next, I want to provide an update on Project Gravity because it's a central part of how we're building a stronger Traeger. Project Gravity is a multi-year effort to reshape the business, not just to reduce costs, but to simplify how we operate, sharpen where we compete, and improve the durability of our profit model. Just as importantly, it allows us to focus and invest in the areas that matter most, including product innovation and brand. Phase one focused on organizational efficiency and foundational cost actions, including changes to our operating structure and the integration of meter into our Salt Lake City infrastructure. Phase two builds on that foundation and is more strategic in nature. It is focused on simplifying the business, sharpening our channel strategy, reallocating resources to our highest return opportunities, and driving sustainable profitability improvements. A key component of phase two has been channel optimization, including exiting the Costco Roadshow, winding down direct-to-consumer commerce, and transitioning to a distributor model in Europe. We've executed most of these actions already, along with additional organizational changes announced to the fourth quarter, and we expect continued progress on the distributor transition as we move through 2026. Taken together, these previously announced phase one and phase two savings are expected to deliver approximately $58 million of run rate savings, with benefits beginning to materialize in 2025 and continuing as we move through 2026. As we've gone deeper into the work, we've also identified additional value capture opportunities within phase two, particularly around skewed rationalization and pricing. These initiatives are focused on simplifying our product portfolio, exiting lower margin skews, and taking a more strategic approach to pricing, which results in a simpler product architecture and a structurally higher margin business mix. We expect these actions to drive an incremental $6 million to $12 million of run rate value with the majority of that benefit realized in 2027 and 2028 as the portfolio fully resets and end-of-life activity rolls off. Taken together, Project Gravity is now expected to deliver approximately $64 million to $70 million of total value across both phases. And I want to be clear, the point of Gravity isn't just about cost takeout. It's about applying a more disciplined, return-focused lens to how we run the business. Gravity is helping us simplify the model, concentrate resources where returns are highest, and make deliberate trade-offs that improve margins, cash generation, and long-term earnings power. That's what enables us to perform through uncertainty and generate operating leverage as the business grows. Before I move the guidance, I want to briefly address METR. METR continues to face challenging competitive dynamics, and we're working through elevated inventory as we reset the business. The steps we've taken, including closing the UK operation, integrating METR into our Salt Lake City infrastructure as part of phase one of Project Gravity, and optimizing demand creation investments, are designed to improve the profitability profile of the business and give us more flexibility to invest in the product roadmap and retail channel over time. Near term, we're prioritizing inventory health and margin discipline. Longer term, we remain focused on product and retail execution to stabilize and improve performance. Now turning to guidance. 2026 is a year of discipline execution as we focus the business on our highest return opportunities for long-term growth. After a period of tariff-driven disruption and ordering volatility in 2025, we are focused on normalizing channel inventory and working through discontinued product in the marketplace as we enter the year. In addition, our outlook reflects the four-year annualization of price elasticity impacts from prior pricing actions taken in response to tariffs. At the same time, our channel actions under Project Gravity, particularly exiting the Costco Roadshow and winding down DTC Commerce, will reduce revenue, but these are deliberate choices that simplify the business and improve profitability over time. Finally, our accessories business will continue to see pressure in 2026, primarily driven by the ongoing meter reset. To be clear, these impacts are driven by specific, identifiable actions and timing dynamics, not a change in underlying consumer demand. For fiscal 2026, we are guiding to revenue of $465 to $485 million and adjusted EBITDA of $50 to $60 million. Importantly, our expectations for sell-through 2026 are significantly higher than what our selling plan reflects. We view this as a normalization of channel behavior rather than a change in underlying consumer demand, and we expect closer alignment in sell-through and sell-in as we move into 2027. As a result, we expect to exit 2026 with owned and channel inventory aligned to our new grill product architecture, a lineup that delivers clear price value for consumers and supports a healthier marketplace as we move into 2027. Encouragingly, we are seeing early sell-through trends exceed expectations, particularly with our largest retail partners. That said, we are taking a prudent approach to extrapolating those trends across the full year, given promotion timing and broader operating environment. We believe we're taking the right actions on efficiency, product strategy, and inventory management to position Traeger for sustainable long-term growth and profitability. To wrap up, fiscal 2025 was a year where the team executed through uncertainty. We delivered on our commitments, managed meaningful tariff pressure, and drove structural changes that strengthened Traeger for the long term. We're approaching 2026 with strategic discipline to set the foundation for a long-term growth strategy. We are prioritizing inventory health and continue to invest behind the product and brand, but they focus on extending our consumer reach. And we believe the work we've done through Project Gravity sets up a stronger foundation for operating leverage as we look beyond 2026. And with that, I'll turn the call over to Joey. Joey?