When rumors began circulating that Weber was looking at a buyout because they didn’t have cash to make it through the winter, we knew the grill market was bad. Traeger just released earnings, and the market is not just bad, it’s really bad.
Sales
Looking at Traeger’s sales for the quarter, they were down 42.1% overall compared to last year to $93.8 million, with the bulk of it in grills. Grill sales decreased a shocking 64.2% on the quarter to $39.0 million. Things would have been even worse if they didn’t take price increases on their grills and introduce the higher price point Timberline earlier this year.
Consumables were also down on the quarter by 10.3% because of a lower volume of wood pellets. They made up for some of that by expanding their rubs and sauces into more retailers, which gave them higher volume.
The lone bright spot for the quarter was accessories. Sales of their recently acquired MEATER thermometer business helped them increase accessory sales by 17.7%.
To put the grill sales decrease in perspective, they sold $15.8 million more in consumables and accessories than they did in grills for the quarter.
Earnings and Working Capital
The lower sales flowed down to a adjusted loss of $25.7 million for the quarter, backing out one time and non-cash expenses. This year they’re down $8.4 million in cash to having only $8.3 million left in the business, ignoring their $78 million credit facility. Inventory levels haven’t moved much since last quarter, only coming down by about $2 million to $161.8 million.
Guidance
The operating environment is worse than Traeger expected. They believe in their restructuring efforts in the long-term, but in the short-term they’re not going to hit their numbers.
We believe the macro environment will remain highly dynamic through the end of the year with our retail partners continuing to reduce inventory levels in the fourth quarter and we now expect full year results to be at the low-end or slightly below our prior guidance range.
Jeremy Andrus, CEO of Traeger
Their new guidance for 2022 is revenue between $635 million and $640 million, with adjusted EBITDA of $33 million to $35 million. This compares to their previous guidance of $640 million to $660 million in revenue and adjusted EBITDA of $35 million to $45 million.