Hello, everyone. Thank you for joining us and welcome to the Traeger Third 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 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Stephanie Read, Vice President of Finance, Strategy, and Investor Relations. Stephanie? Please go ahead.

Good afternoon, everyone. Thank you for joining Traeger's Call to discuss its third quarter 2026 results, which were released this afternoon and can be found at 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. This call also contains certain non-GAAP financial measures, including adjusted EBITDA, adjusted net income or loss, adjusted net income or loss per share, 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.treger.com. Now I'd like to turn the call over to Jeremy Andrus, Chief Executive Officer of Treger. Jeremy?

Thanks, Steph, and thank you all for joining us. As we have said all year, 2026 is a transition year for Traeger. Our third quarter revenue came in at the low end of the pacing we outlined last quarter, with some activity shifting between Q3 and Q4. Joey will walk through the financial results in more detail. More importantly, there has been no change in our conviction in the progress we're making across the business. We are narrowing our revenue and adjusted EBITDA guidance ranges while maintaining the midpoint of each and reiterating our gross margin outlook. We also continue to expect a return to year-over-year revenue and adjusted EBITDA growth in the fourth quarter. Beyond the quarter, the strategic work we've been doing throughout 2026 is increasingly translating into tangible progress. The Traeger brand is reaching new consumers. Our product portfolio is addressing a broader range of price points. Our Lowe's expansion is moving from planning to execution, and Project Gravity has created greater capacity to invest behind the consumer and our strategic retail partners. As we look ahead, I believe those initiatives are positioning Traeger to exit 2026 with improving momentum and enter 2027 with a stronger foundation for sustainable, profitable growth. Let me start with the brand. One of our priorities over the last several quarters has been expanding Traeger's reach beyond our traditional audience. We've evolved our influencer strategy and increased our investment behind creators who can introduce Traeger and wood-fired cooking to new consumers. We're seeing encouraging signs the strategy is working. In Q3, our influencer partners generated more than 284 million impressions, up over 50% year over year, with approximately half coming from creators who are new to Traeger. And approximately 70% of our organic reach came from consumers who don't currently follow Traeger. Reach usually comes at the expense of engagement, but we are growing both. Finally, our net promoter score of 65 is the highest in the category and meaningfully above the next closest competitor. That tells us we're expanding Traeger's reach while maintaining the consumer advocacy that has always been one of the brand's greatest strengths. Reaching new consumers also requires having the right products to meet their needs. One of the clearest dynamics we've seen this year has been a consumer shift toward more accessible price points with double-digit growth in our year-to-date sell-through on grills below $600 across our strategic accounts. While the shift towards lower price points creates an ASP headwind, our sell-through data shows that consumers purchase more Traeger grill units at our strategic retail partners in the third quarter Thank you for joining us. to more accessible price points. And even with that mix shift, our ASP remains more than twice that of the overall category. In pellets, we're seeing a similar shift toward value with increased competition at lower price points and changes in exclusivity across certain retail channels, creating near-term pressures We're responding by expanding the availability of Traeger pellets across our retail network and improving retail presentation and visibility. Over time, we believe broader distribution together with the quality and flavor differentiation of our pellets will strengthen our position in the category. Each new Traeger household creates a longer term relationship across pellets, accessories, Future Grill Purchases, and the broader Traeger ecosystem. That's why we view expanding the installed base as an important driver of long-term value, even when the initial entry point is at a lower price. We're also excited about our innovation pipeline. We have new products planned for launch in 2027 that will extend the Traeger experience to even more consumers and will share more as we get closer to launch. Making Traeger more accessible isn't only about product and price. It's also about being where consumers choose to shop. Following our announcement last quarter, we initiated our national expansion with Lowe's during Q3. Lowe's is one of the largest distribution expansions in Traeger's recent history. Our research tells us the Lowe's shopper is incremental to consumers we reach today. That's true by geography in markets where we've been under-penetrated, and it's true of the shopper with a strong DIY base and household mix that fits our core consumer segments. We believe this makes Lowe's another meaningful platform for household acquisition. At the same time, our strategy is not simply about adding doors. The Home Depot and ACE remain strategically important partners, and we're continuing to invest behind both relationships. At the Home Depot, we've doubled our return on ad spend by focusing investment on higher performing media and audiences. That's contributing to solid year-to-date sell-through performance. At Ace, we made initial investments in their retail media network this year that drove incremental returns with plans to scale that partnership in 2027. Our objective is to build a stronger marketplace for Traeger across all of our strategic retail partners. That includes better sell-through data and tools so partner orders track more closely to consumer demand. With broader distribution, a more complete product portfolio, and increasingly sophisticated retail execution, we believe we have more ways to reach consumers and convert them into Traeger households. Supporting all of this is the work we've done through Project Gravity. When we launched Gravity, we said the objective wasn't simply to reduce costs. It was to simplify Traeger and create the capacity to invest behind the opportunities with the greatest potential to drive profitable growth. We're now beginning to put that capacity to work. We're redirecting investment towards areas that can directly support consumer acquisition and strengthen our retail execution, including expanding our retail sales specialist program, improving merchandising and fixturing, and building our capabilities across retail or media networks. That's an important part of the value of Project Gravity, not simply operating with a lower cost base, but directing our resources behind the opportunities we believe can drive the greatest long-term value. As we look toward the end of 2026, we believe we will be entering 2027 from a stronger strategic position with greater capacity to invest behind growth. as sell-in and sell-through come back into alignment and these investments mature, we believe Traeger is well-positioned to return to profitable growth in 2027. The macro environment remains uncertain, and while the consumer environment has weighed on discretionary spending, we believe the initiatives I've discussed today don't require a dramatically better near-term consumer environment to succeed. They require strong execution, and that's where our focus is. Expanding distribution, meeting consumers across more price points, growing the install base, showing up better at retail, and putting our resources where the returns are greatest. We spent much of 2026 doing the difficult work to reposition the business. As we close the year, our focus increasingly shifts from repositioning to execution. translating that work into more Traeger households, broader distribution, and profitable growth. I'm confident in the strategy and the opportunity ahead. With that, I'll turn the call over to Joey.

Thanks, Jeremy, and good afternoon, everyone. Third quarter results reflected three revenue pressures we've discussed throughout the year, channel optimization under Project Gravity, competitive pressure in meter, and our actions to improve marketplace health. The year-over-year comparison was particularly pronounced this quarter because we lapped approximately $20 million of elevated retailer inventory purchases in Q3 of last year in an uncertain tariff environment. Separately, Q3 revenue came in at the low end of the pacing we outlined last quarter due primarily to timing. Certain shipments and promotional activity shifted from Q3 into Q4, including delays from container constraints that were amplified by a typhoon in Asia. We've already realized that revenue in October, and it is reflected in our full-year outlook. On our last call, we said we expected substantially all of our remaining adjusted EBITDA to come in Q4. Our Q3 adjusted EBITDA loss of 3 million reflects that timing. Before I walk through the numbers in more depth, I want to reinforce three points that provide important context for our confidence in the business. First, the divergence between sell-in and sell-through this year primarily reflects channel inventory normalization and strategic channel divestment to drive profitability. We continue to expect roughly flat 26 sell-through across our strategic accounts, which we believe indicates that underlying consumer demand is considerably healthier than reported revenue alone would suggest. Second, underlying unit trends remain healthy. We continue to expect full-year grill unit sell-in to be at least flat year-over-year, driven by a large fourth quarter that includes our initial Lowe's load-in and reflects the consumer shift toward more accessible price points that Jeremy discussed. And third, Project Gravity continues to deliver meaningful benefits across our cost structure, working capital, and cash generation, as demonstrated by our year-to-date results. Taken together, these factors, along with our entry in the lows, support our expectation to return to revenue and adjusted EBITDA growth in the fourth quarter and position us to return to profitable growth in 27. With that context, let me walk through the quarter and our outlook. Third quarter revenues decreased 40% year over year to $75 million. Looking at category performance, growth revenues decreased 48% to $40 million in the third quarter, reflecting the marketplace health and channel optimization actions I mentioned earlier, as well as the mixed shift towards more accessible price points that Jeremy discussed. Consumables revenues declined 23% to $19 million, primarily driven by lower wood pellet sales related to seasonal order timing and changes in retail channel dynamics. Accessories revenues decreased 34% to 16 million, primarily from lower sales of meter smart thermometers. Gross profit for the third quarter decreased to 25 million from 49 million in the third quarter of 25. Gross profit margin for the third quarter contracted 520 basis points year-over-year to 33.5%, driven primarily by the timing of trade spend, the leverage of fixed warehousing expenses on lower revenue, and continued margin pressure in our meter business, partially offset by an IEPA tariff refund benefit. Sales and marketing expense declined to $14 million in the third quarter, down $6 million year over year, while general administrative expenses declined $2 million year over year to $20 million, primarily reflecting lower employee related expenses and actions taken under Project Gravity. Net loss was $29 million, or $10.33 per diluted share, compared to $90 million, or $33.46 per diluted share in the prior year period. The year-over-year improvement primarily reflects the anniversary of a $75 million non-cash goodwill impairment recorded last year. Adjusted net loss was $19 million, or $6.77 per diluted share, compared to $22 million, or $8.31 per diluted share last year. Adjusted EBITDA was a loss of $3 million, down from income of $14 million in the prior year. A lower revenue pressured profitability in the quarter, the savings generated through Project Gravity meaningfully mitigated the impact and continued to support our full-year adjusted EBITDA outlook. Let me now discuss the balance sheet. We generated $8 million of free cash flow in the third quarter, bringing year-to-date free cash flow to $49 million, including $16 million related to the IEPA refund and $12 million related to an employee retention credit discussed on prior earnings calls. At the end of the third quarter, cash and cash equivalents totaled $68 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 $335 million. We ended the third quarter with a healthy liquidity position of $167 million. Our credit facilities remain completely undrawn, and combined with $68 million of cash, we believe we have ample liquidity to support the business. Inventory at the quarter was $79 million, down from $99 million at year end, primarily reflecting lower meter inventory and skew rationalization and business simplification associated with Project Gravity. Combined with our free cash flow performance, is tangible evidence of the improvements we've made in working capital efficiency. Now turn to our fiscal 26 outlook. As we approach the end of the year and have greater visibility into our expected results, we are narrowing our revenue guidance range to $440 million to $460 million, from $435 million to $465 million previously, while maintaining the same midpoint. We continue to expect gross margin of 40% to 41%. are also narrowing our adjusted EBITDA guidance range to $59 million to $65 million, adjusted from $57 million to $67 million previously, while also maintaining the same midpoint. Our outlook continues to imply a return to year-over-year revenue growth in the fourth quarter driven by two primary factors, the recovery of shipments that shifted out of Q3 and the rampant initial load-ins associated with our loads expansion. Together, these factors support both our full-year revenue outlook and our expectation for year-over-year growth in Q4. We also expect gross margin to improve sequentially in Q4, supported by higher revenue-driving warehousing and trade spend leverage, as well as higher direct import mix, which supports our full-year gross margin outlook of 40% to 41%. We are reiterating our free cash flow guidance of at least $30 million on a year-to-date free cash flow generation of $49 million. We remain on track to deliver an incremental $30 million of value capture for Project Gravity within fiscal 26, which is consistent with prior expectations and brings the total value capture to $50 million. Importantly, we believe the impact extends beyond the $50 million. Gravity has fundamentally improved how we operate with a leaner cost structure, lower inventory, and stronger cash generation. These improvements are durable and leave us with a structurally stronger financial model as we return to growth. I want to close with how we're thinking about 27. Importantly, our expectations do not depend on the significant improvement in the consumer macroeconomic environment. We expect to enter 27 with broader distribution, a leaner cost structure, lower inventory, and a more efficient operating model, giving us multiple levers to drive improved financial performance, even against a still challenging consumer backdrop. While we're not providing 27 guides today, we believe the actions we have taken position us to return to profitable growth in 27. And we intend to maintain the same discipline around working capital, cash generation, and capital allocation that we've demonstrated this year. So while Q3 was challenging from a reported revenue and earning standpoint, we believe the underlying financial trajectory of the business is improving. We remain on track against our full year objectives and the actions we've taken this year position us for stronger growth, profitability, and cash generation over time. With that, we'll turn the call over to the operator for questions.

We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. 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 Philip Blee with William Blair. Please go ahead.

Hey, guys. Thanks for the question. Jeremy, you've spoken a bit about kind of the efforts and some of the early successes you've seen in reaching a new subset of consumers. So how do you think about your ability to then convert some of those newer cohorts? What's your strategy there? And then how quickly do you think you can start to see some of those benefits flow through the P&L?

Hi, Philip. Thanks for your question. So a couple of thoughts on that. The first is that We've worked hard to get down to some lower price points, believing that we have the ability to still at a premium price relative to industry attract a new consumer. If you look at where gas products are priced, they tend to be lower price points on balance. And in hitting as low as a $389 price point during promotion season. We feel like we're attracting a consumer who's paying up and willing to try the solution as we reach more accessible price points. So we believe that pricing has been incremental to our customer acquisition. We are seeing growth in unit volume. We saw that, as I mentioned in my pre-prepared remarks, in the third quarter. We also believe that our ability to attract a new consumer is partly dependent upon channel. It's one of the reasons why we are expanding channel next year. And we feel like that gives us access to both new geography, in some cases new consumers, and then the rest of it's back to a traditional playbook in consumer products, which is really understand the consumer, have a thoughtful segmentation and know how to speak to each of those consumers with a different narrative and in an effort to ensure that we are speaking to their needs as consumers. So it's a variety of things. I would say the two pieces that are driving are both price and new channel. Okay, great. Super helpful. And then I know it's still early.

but maybe can you help us think about how meaningful the Lowe's partnership could be, whether or not then we should think about any net impact from any fallout with existing partners that we're looking for more exclusivity, and then just how we should think about the general ramp here. Is this a 2027 story or is this more of a 2028 story in terms of a bigger incremental top line lift? Thank you, guys.

Yeah, sure. The rollout in Lowe's is tracking to plan. Lowe's.com was launched on November 2nd, launched this week. Pellets begin to reach stores ahead of Black Friday. The main launch really is the spring of 27. Somewhere between February and March, we will roll out fixtures in a subset of Lowe's doors. We're proud of how we're merchandising the brand there. And we feel good about a long-term strategic partner that we're building with Lowe's as it gives us the ability to get to an incremental consumer. We feel like there will be multiple years of growth. We do have a nice load-in of Lowe's in the fourth quarter of this year. that's just their seasonal loading cycle and ensuring that retail gets set in the first quarter of 2027. And we expect it to be a nice grower over many years. In terms of the impact on other accounts, notably where exclusivity was an important part of partnership, we're doubling down our efforts to ensure we are their best partners, that we're bringing the right product, The Right Differentiation, that we are focused on investments both in-store, on the ground with our retail sales specialist program, and driving demand by investing in their retail media networks. There has been some near-term impact that we've discussed, and we knew that that was going to be part of the result of the decisions that we've made but we really believe that if we build the brand and the product experience the right way for our end consumer and we show up as great partners that we can earn that business back. We really do believe that on balance this is an opportunity to get to more consumers. We know that we need to continue to service all of our current channel as effectively as we can, and we will be making incremental investments in those channels because of scale and because we're adding new channels. So we feel over time it's net positive. There are certainly some near-term bumps that we'd anticipated and which are inherent in our guidance, but we continue to believe it's the right thing for us. and that it's the right thing for our channels as it gives us the scale to invest in product innovation brand and the overall go-to-market experience.

Great. Super helpful. Thank you, guys. Best of luck. Thanks.

Your next question comes from Joe Feldman with TAG. Please go ahead.

Yeah, thanks for taking the question, guys. Wanted to just clarify, with regard to the and the pricing and adjustments you've made, is that across the line of products or is it really just the more entry-priced product that you have there in the stores?

Yeah, Joe, so we have been really trying to get to lower price points and doing that by finding efficiencies of scale and efficiencies in the supply chain through Avenue, such as direct import, so that we can really take cost out and offer a better price and more value to the consumer. The intent of our product line is to create trade up stories across the line and compelling reasons for a consumer to buy in the price range and in the feature set that they're looking for. And so as we step back and think about the line, getting to opening price point serves a very specific purpose, and that purpose is to acquire an incremental consumer. As we build the features and the benefits across the line, the intent is to meet a consumer where they are to ensure that we're offering as much innovation, quality, and value at a price point. and then it's on us to be good at product marketing, to really articulate to a consumer why they should spend more to have a better product experience. Our strategy is always to build innovation at premium price points and then cascade that innovation downstream over the course of many product launches. Westwood is a product that we began to launch mid last year. We've got a lot of work to do to take it to channel in this upcoming year. It hits an accessible price point at $700 and $800 between Westwood Base and Westwood XL. It has innovation. It's a connected grill. It's got new features and benefits. And we believe there's a compelling reason to trade up from the opening price point, our first generation pro, up into the Westwood. and it's with that mindset that we're always building our product strategy. So as we bring old technology at scale down to lower price points, it gives us the ability to introduce better experiences at higher price points.

That's a really helpful explanation. Thank you. And then just if I could follow up with one more. Can you talk a little bit about what you're seeing in terms of fuel and transportation costs and the impact there? We're hearing about that from so many companies these days. And, you know, I know you guys obviously have a lot, you know, large, heavy equipment that you're shipping across the ocean. So maybe you could talk a little bit about that impact. Thanks.

Yeah. Hey, Joe. It's Joey. So we are absolutely subject to increase in fuel costs, et cetera. We, on our previous call, I believe we referenced sort of a $1 million headwind. Keep in mind that that's materially not changing as fuel rates have fluctuated over the past few months. Keep in mind that most of our of Freight is long-term in nature from a contract standpoint. So we do believe that there is going to be a headwind as we enter 27. We've planned for it, but as of right now, we're appropriately building our freight rates and our increased freight rates into our guidance for a full year.

That's helpful. Thanks, Joey. And good luck this quarter, guys.

Thanks.

Your next question comes from Brian McNamara with Canaccord Genuity. Please go ahead.

Hi, this is Madison Callanan for Brian. Thanks for taking your question. Acknowledging timing impacts, optically this looks like another top-line miss. What gives you confidence that Q4 and then 2027 will be the return of growth that the market has been anticipating for some time now? Thanks.

Yeah, I'll take that one. So thanks for the question. So first off, I think Q3, what we're experiencing is just a tough comp year over year. So if you go back to FY25, there was some pacing dynamics driven by the tariff environment where Q2 revenue paced into Q3 and Q4 paced into Q3 as well. And then we did have that one-time order in Q3 as well, which buoyed the results. So overall, the comparison was tough. Q3 and FY25 was the only quarter we grew. As far as its confidence in the year, we have had revenue slip from Q3 and Q4. That was driven by a one-time event regarding shipping container availability, via which I prepared my opening remarks, via a typhoon. That revenue has already shipped in October. and then additionally just what gives us confidence is the addition of Lowe's. Most of our revenue in Q4 is event driven regarding orders for our load-in behind Lowe's and that's why really we've tightened the range top line and bottom line.

Thank you. Your next question comes from Peter Benedict with Baird. Please go ahead.

Hey, guys. Thanks for taking the questions. Joey, I don't know if you could, if you'd be willing to kind of put a number on maybe the shift in sales from the, I guess, the Typhoon shipment issue, 3Q to 4Q, and even on the lows selling, just so we get a sense for just the magnitudes there. And then as we think about the growth next year, the profit growth, So you're saying that you think you guys can grow your pot. You're even down next year, even as you're cycling kind of the tariff refunds that you're getting this year. I just want to clarify that that's what you're saying. And then can you give us a sense of maybe what that tariff refund was in this quarter? I know it wasn't huge, but just curious what that number was. Thank you.

Okay.

So the timing shift, I mean, you could probably, you know, just do the strap math on it and figure out, you know, based on where we landed and the fact we're reiterating, guys, what this timing shift was on that. It was material. And, you know, we did not guide to Q3, but we did speak about the shaping of the P&L. As far as the load size, it is material for us. There is a meaningful load in in Q4. It's event-driven, and it is driving what we're considering a return to growth. We've referred to this as a trough year. We do believe that Q4, just implied in the guidance, is going to be a return to growth and profitable growth, and that's really going to be the start of quarter-over-quarter growth within FY27. We're obviously not guiding to that yet, but we are excited about the partnership. We're excited about the product innovation we're offering at more accessible price points, and we do think that's going to be a nice tailwind as we deliver growth and profitable growth in Q4. As far as the tariff refund, we have talked about the $16.5 approximately IEPA tariff refund. We've collected nearly 100% of it. It's currently in our guidance. So that does create a headwind when we think about FY27. and copying that versus FY26. At the same time, we are deliberately talking about a return to growth and expansion of EBITDA next year, meaning that we do believe even with the tough comparison when you normalize for the tariff refund, we are going to be driving both top line and bottom line growth.

Great. Thank you.

As a reminder, if you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.