Provides Guidance For 2023
Traeger, Inc. ("Traeger" or the "Company") (NYSE: COOK), creator
and category leader of the wood pellet grill, today announced its
financial results for the fourth quarter and year ended December
31, 2022.
Fourth Quarter Results
- Total revenues decreased 21.0% to $138.1 million
- Gross margin of 34.5% or 34.9% excluding $0.6 million of
non-recurring restructuring costs
- Net loss of $28.9 million; net loss of $0.24 per share
- Adjusted net loss of $8.3 million; adjusted net loss of $0.07
per share
- Adjusted EBITDA of $7.1 million
Full Year 2022 Results
- Total revenues decreased 16.5% to $655.9 million, exceeding
prior guidance of $635 million to $640 million
- Gross margin of 34.9% or 35.2% excluding $2.2 million of
non-recurring restructuring costs
- Net loss of $382.1 million including a non-cash impairment
charge of $222.3 million; net loss of $3.19 per share
- Adjusted net loss of $11.1 million; adjusted net loss of $0.09
per share
- Adjusted EBITDA of $41.5 million, exceeding prior guidance of
$33 million to $35 million
"We delivered fourth quarter results that were ahead of our
expectations, allowing us to exceed our annual guidance for both
sales and Adjusted EBITDA," said Jeremy Andrus, CEO of Traeger. "We
were pleased to see the consumer respond favorably to our efforts
to drive demand during the holiday period. Moreover, we made
demonstrable progress on our key near-term priorities in the
quarter, including driving a material improvement in channel
inventories and realizing the benefits of our cost savings
actions."
Mr. Andrus continued, "Our outlook for 2023 balances our
cautious view on the macroeconomic environment with our expectation
for improved gross margins and continued cost discipline, which we
expect will allow us to deliver Adjusted EBITDA growth for the
year. We look forward to the second half of the year when we expect
to return to topline growth, as channel inventories more fully
normalize and we lap aggressive retailer destocking. Overall,
despite a challenging year in 2022, we move into 2023 as a more
efficient and agile business. As we navigate the near-term
environment, we also remain focused on our long-term opportunity to
grow the Traeger brand. I am confident that the strategies we have
in place will position the Company to drive long-term shareholder
value as we disrupt the outdoor cooking category."
Operating Results for the Fourth Quarter
Total revenues decreased by 21.0% to $138.1 million,
compared to $174.9 million in the fourth quarter last year.
- Grills revenues decreased 52.0% to $48.3 million, compared to
$100.7 million in the fourth quarter last year. The decrease was
driven by lower unit volume, partially offset by a higher average
selling price resulting from the introduction of higher average
selling priced products in 2022.
- Consumables revenues decreased 6.5% to $24.4 million, compared
to $26.1 million in the fourth quarter last year. The decrease was
driven by lower unit volume of wood pellets partially offset by
higher unit volume of sauces and rubs primarily due to an increase
in distribution channels.
- Accessories revenues increased 35.9% to $65.4 million, compared
to $48.1 million in the fourth quarter last year. This increase was
primarily driven by continued growth of the MEATER smart
thermometers business.
North America revenues decreased 21.9% in the fourth quarter
compared to the prior year. Rest of World revenues decreased
14.5%.
Gross profit decreased to $47.6 million, compared to
$64.7 million in the fourth quarter last year. Gross margin was
34.5% in the fourth quarter, compared to 37.0% in the same period
last year. Excluding $0.6 million of costs related to the 2022
restructuring plan, gross margin was 34.9%. The decrease in gross
margin was driven primarily by increased logistics and warehousing
costs and restructuring costs. The decrease was partially offset by
higher average selling prices of grills.
Sales and marketing expenses were $28.3 million, compared
to $38.5 million in the fourth quarter last year. The decrease was
driven primarily by a reduction of $2.6 million in equity-based
compensation, lower professional fees and reduced employee
costs.
General and administrative (“G&A”) expenses were
$24.2 million, compared to $44.4 million in the fourth quarter last
year. The decrease in general and administrative expense was driven
primarily by lower equity-based compensation expense, lower
professional service fees, and reduced employee costs.
Change in fair value of contingent consideration of $6.2
million was primarily driven by the increase in the likelihood of
achieving the performance targets in the second amendment to the
share purchase agreement for the acquisition of Apption Labs.
Restructuring costs of $1.3 million were recorded in
connection with the 2022 restructuring plan as part of the
Company's efforts to reduce costs and drive long-term operational
efficiencies due to challenging macroeconomic pressures. The
restructuring costs were primarily related to postponed nearshoring
efforts to manufacture product in Mexico and other non-recurring
costs.
Net loss was $28.9 million, or $0.24 per diluted share,
as compared to a net loss of $34.4 million, or $0.29 per diluted
share,1 in the fourth quarter of last year.
Adjusted net loss was $8.3 million, or $0.07 per diluted
share as compared to adjusted net income of $2.9 million, or $0.02
per diluted share in the fourth quarter last year.2
Adjusted EBITDA was $7.1 million compared to $13.1
million in the fourth quarter last year.2
____________________ 1 There were no potentially dilutive
securities outstanding as of December 31, 2022 and December 31,
2021. 2 Reconciliations of GAAP to non-GAAP financial measures, as
well as definitions for the non-GAAP financial measures included in
this press release and the reasons for their use, are presented
below.
Operating Results for the Full Year ended December 31,
2022
Total revenues decreased by 16.5% to $655.9 million,
compared to $785.5 million last year.
- Grills revenues decreased 34.7% to $355.4 million, compared to
$544.2 million last year. The decrease was driven by lower unit
volume, partially offset by a higher average selling price
resulting from the introduction of higher priced products, price
increases taken in the second half of 2021 and early 2022, and
channel mix shift.
- Consumables revenues decreased 3.6% to $131.3 million, compared
to $136.2 million last year. The decrease was driven by lower unit
volume of wood pellets partially offset by increased volume of
sauces and rubs and higher average selling prices of wood pellets
and other consumables.
- Accessories revenues increased 60.9% to $169.1 million,
compared to $105.1 million last year. This increase was primarily
driven by incremental revenue in the first half of 2022 due to
sales of MEATER smart thermometers following the July 2021
acquisition of Apption Labs combined with increased volume of
MEATER products in the second half of 2022 compared to the second
half of 2021.
North America revenues decreased 18.8% compared to the prior
year. Rest of World revenues increased 18.5% reflecting growth in
MEATER's international business.
Gross profit decreased to $228.8 million, compared to
$300.8 million last year. Gross profit margin was 34.9%, compared
to 38.3% last year. Excluding $2.2 million of costs related to the
2022 restructuring plan, gross margin was 35.2%. The decrease in
gross margin was primarily driven by increased logistics and
warehousing costs and restructuring costs. The decrease was
partially offset by higher average selling prices of grills and
accessories as well as favorability in foreign exchange rates.
Sales and marketing expenses were $130.7 million,
compared to $165.2 million last year. The decrease was primarily
due to a reduction in equity-based compensation primarily due to
the prior period accelerated vesting of $10.2 million in connection
with the unvested and outstanding Class B unit awards upon
completion of the initial public offering, a decrease in
professional services fees, a decrease in advertising costs, and a
decrease in commissions.
General and administrative (“G&A”) expenses were
$166.8 million, compared to $158.6 million last year. The increase
in G&A expenses was driven primarily by higher equity-based
compensation due to an accelerated vesting in connection with the
current year modifications related to awards held by the CEO and
certain directors, combined with higher personnel-related expenses.
The increase was partially offset by lower professional service
fees primarily due to the suspension of the Traeger Provisions
business and one-time costs related to the initial public
offering.
Change in fair value of contingent consideration of $10.0
million was primarily driven by the increase in the likelihood of
achieving the performance targets in the second amendment to the
share purchase agreement for the acquisition of Apption Labs.
Goodwill impairment charge of $222.3 million was recorded
as a result of the Company's sustained decrease in discounted
projections of estimated operating results and cash flows, the
sustained decrease in our publicly quoted share price and market
capitalization, as well as decreased valuation multiples of
comparable publicly traded companies, resulting in the Company's
carrying amount exceeding its fair value. The impairment charge
does not affect the Company's cash position, cash flow from
operating activities, bank debt covenants, and does not have any
impact on future operations.
Restructuring costs of $9.3 million were recorded in
connection with the 2022 restructuring plan as part of the
Company's efforts to reduce costs and drive long-term operational
efficiencies due to challenging macroeconomic pressures. The
restructuring costs were primarily related to a reduction in force,
suspended operations of Traeger Provisions, and postponed
nearshoring efforts to manufacture product in Mexico.
Net loss was $382.1 million, or a loss of $3.19 per
diluted share, as compared to net loss of $91.8 million, or $0.82
per diluted share in the same period last year.
Adjusted net loss was $11.1 million, or $0.09 per diluted
share, as compared to adjusted net income of $63.9 million, or
$0.57 per diluted share in the same period last year.2
Adjusted EBITDA was $41.5 million compared to $106.1
million in the same period last year.2
Balance Sheet
Cash and cash equivalents at December 31, 2022 totaled
$39.1 million, compared to $16.7 million at December 31, 2021.
Inventory at December 31, 2022 was $153.5 million,
compared to $141.5 million at December 31, 2021. Inventory growth
was driven by elevated levels of grill units, increased costs
associated with grills and other products, and increased inventory
related to MEATER products.
Guidance
The company's outlook reflects macroeconomic uncertainty and the
expected negative impact of the continued normalization of grill
channel inventory in the first half of 2023, as well as the benefit
of expected growth in gross margin and ongoing expense control.
Guidance For Full Year Fiscal 2023
- Total revenue is expected to be between $560 million and
$590 million
- Gross margin is expected to be between 36% and 37%
- Adjusted EBITDA is expected to be between $45 million
and $55 million
Guidance For First Quarter 2023
- Total revenue is expected to be between $145 million and
$155 million
- Adjusted EBITDA is expected to be between $16 million
and $20 million
A reconciliation of Adjusted EBITDA guidance to Net Loss and
Adjusted EBITDA Margin guidance to Net Loss Margin on a
forward-looking basis cannot be provided without unreasonable
efforts, as the Company is unable to provide reconciling
information with respect to provision for income taxes, interest
expense, depreciation and amortization, other (income) expense,
goodwill impairment, restructuring costs, equity-based
compensation, non-routine legal expenses, change in fair value of
contingent consideration, offering related expenses, non-routine
start-up costs, non-routine acquisition costs, non-routine
refinancing expenses, and other adjustment items all of which are
adjustments to Adjusted EBITDA and Adjusted EBITDA Margin,
respectively.
Conference Call Details
A conference call to discuss the Company's fourth quarter and
full year 2022 results is scheduled for March 16, 2023, at 4:30
p.m. ET. To participate, please dial (844) 200-6205 or (929)
526-1599 for international callers, conference ID 873475. The
conference call will also be webcast live at https://investors.traeger.com. A recording will be
available shortly after the conclusion of the call. To access the
replay, please dial (866) 813-9403 or +44 (204) 525-0658 for
international callers, conference ID 104084. A replay of the
webcast will also be available approximately two hours after the
conclusion of the call on the Company's website at https://investors.traeger.com.
About Traeger
Traeger Grills, headquartered in Salt Lake City, is the creator
and category leader of the wood pellet grill, an outdoor cooking
system that ignites all-natural hardwoods to grill, smoke, bake,
roast, braise, and barbecue. In 2023, Traeger entered the griddle
category, further establishing its leadership position in the
outdoor cooking space. Traeger grills are versatile and easy to
use, empowering cooks of all skill sets to create delicious meals
with flavor that cannot be replicated. Grills are at the core of
our platform and are complemented by Traeger wood pellets, rubs,
sauces, and accessories.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements contained in this press release that do not
relate to matters of historical fact should be considered
forward-looking statements, including, without limitation,
statements regarding our anticipated first quarter and full year
fiscal 2023 results. These statements are neither promises nor
guarantees, but involve known and unknown risks, uncertainties and
other important factors that may cause our actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking statements, including, but not limited to, our
history of operating losses; the sustainability of our growth
rates; our ability to manage or future growth effectively; our
growth depending in part on our continued penetration and expansion
into additional markets; our dependence on maintaining and
strengthening our brand to generate and maintain ongoing demand for
our products; our ability to cost-effectively attract new customers
or retain our existing customers; our failure to maintain product
quality and product performance at an acceptable cost; product
liability and warrant claims and product calls; the highly
competitive market in which we operate; use of social media and
community ambassadors affecting our reputation or subjecting us to
fines or other penalties; any decline in sales of our grills, which
would negatively affect our future revenue and results; any decline
in demand from certain retailers; our ability to anticipate
customer preferences; our ability to maximize short-term financial
results; the COVID-19 pandemic; our ability to manage our credit
arrangements; and the other factors discussed under the caption
"Risk Factors" in our periodic and current reports filed with the
Securities and Exchange Commission from time to time, including our
Annual Report on Form 10-K for the year ended December 31, 2022.
Any such forward-looking statements represent management's
estimates as of the date of this press release. While we may elect
to update such forward-looking statements at some point in the
future, we disclaim any obligation to do so, even if subsequent
events cause our views to change.
TRAEGER, INC.
CONSOLIDATED BALANCE
SHEETS
(unaudited)
(in thousands, except share
and per share amounts)
December 31,
2022
2021
(as corrected) (1)
ASSETS
Current Assets
Cash and cash equivalents
$
39,055
$
16,740
Restricted cash
12,500
—
Accounts receivable, net
42,050
92,927
Inventories
153,471
141,540
Prepaid expenses and other current
assets
27,162
15,036
Total current assets
274,238
266,243
Property, plant, and equipment, net
55,510
55,477
Operating lease right-of-use assets
13,854
—
Goodwill
74,725
297,047
Intangible assets, net
512,858
555,151
Other long-term assets
15,530
3,608
Total assets
$
946,715
$
1,177,526
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable
$
29,841
$
42,694
Accrued expenses
52,295
69,773
Line of credit
11,709
41,138
Current portion of notes payable
250
—
Current portion of operating lease
liabilities
5,185
—
Current portion of contingent
consideration
12,157
12,200
Other current liabilities
1,470
420
Total current liabilities
112,907
166,225
Notes payable, net of current portion
468,108
379,395
Operating lease liabilities, net of
current portion
9,001
—
Contingent consideration, net of current
portion
10,590
13,100
Deferred tax liability
10,370
11,673
Other non-current liabilities
870
1,111
Total liabilities
611,846
571,504
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.0001 par value;
25,000,000 shares authorized and no shares issued or outstanding as
of December 31, 2022 and 2021
—
—
Common stock, $0.0001 par value;
1,000,000,000 shares authorized
Issued and outstanding shares -
122,624,414 and 117,547,916 as of December 31, 2022 and 2021
12
12
Additional paid-in capital
882,069
794,413
Accumulated deficit
(570,475
)
(188,317
)
Accumulated other comprehensive income
(loss)
23,263
(86
)
Total stockholders' equity
334,869
606,022
Total liabilities and stockholders'
equity
$
946,715
$
1,177,526
(1)
During 2022 and in previous
annual and quarterly periods, certain immaterial errors existed in
previously reported amounts of inventory and cost of revenue.
Accordingly, the Company has reflected the corrections in the
results for prior periods in these consolidated balance sheets and
in the Annual Report on Form 10-K for the year ended December 31,
2022.
TRAEGER, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
(in thousands, except share
and per share amounts)
Three Months Ended December
31,
Year-ended December
31,
2022
2021
2022
2021
(as corrected) (1)
(as corrected) (1)
Revenue
$
138,133
$
174,932
$
655,901
$
785,545
Cost of revenue
90,524
110,218
427,129
484,780
Gross profit
47,609
64,714
228,772
300,765
Operating expense:
Sales and marketing
28,287
38,541
130,688
165,180
General and administrative
24,187
44,373
166,824
158,555
Amortization of intangible assets
8,888
8,888
35,554
34,379
Change in fair value of contingent
consideration
6,227
900
10,002
3,800
Goodwill impairment
—
—
222,322
—
Restructuring costs
1,288
—
9,324
—
Total operating expense
68,877
92,702
574,714
361,914
Loss from operations
(21,268
)
(27,988
)
(345,942
)
(61,149
)
Other income (expense):
Interest expense
(7,647
)
(5,253
)
(27,885
)
(26,646
)
Loss on extinguishment of debt
—
—
—
(5,185
)
Other income (expense)
1,224
1,590
(7,127
)
2,702
Total other expense
(6,423
)
(3,663
)
(35,012
)
(29,129
)
Loss before provision for income taxes
(27,691
)
(31,651
)
(380,954
)
(90,278
)
Provision for income taxes
1,213
2,744
1,186
1,489
Net loss
$
(28,904
)
$
(34,395
)
$
(382,140
)
$
(91,767
)
Net loss per share, basic and diluted
$
(0.24
)
$
(0.29
)
$
(3.19
)
$
(0.82
)
Weighted-average common shares
outstanding, basic and diluted
122,670,793
117,547,916
119,698,776
112,374,669
Other comprehensive income (loss):
Foreign currency translation
adjustments
$
(3
)
$
(97
)
$
(61
)
$
(86
)
Change in cash flow hedge
(1,199
)
—
23,410
—
Total other comprehensive income
(loss)
(1,202
)
(97
)
23,349
(86
)
Comprehensive loss
$
(30,106
)
$
(34,492
)
$
(358,791
)
$
(91,853
)
(1)
During 2022 and in previous
annual and quarterly periods, certain immaterial errors existed in
previously reported amounts of inventory and cost of revenue.
Accordingly, the Company has reflected the corrections in the
results for prior periods in these consolidated statements of
operations and comprehensive loss and in the Annual Report on Form
10-K for the year ended December 31, 2022.
TRAEGER, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited)
(in thousands)
Year-ended December
31,
2022
2021
2020
(as corrected) (1)
(as corrected) (1)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)
$
(382,140
)
$
(91,767
)
$
31,050
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation of property, plant, and
equipment
13,821
9,150
7,762
Amortization of intangible assets
42,726
38,350
33,206
Amortization of deferred financing
costs
1,957
2,523
2,762
Loss on disposal of property, plant, and
equipment
1,140
274
186
Loss on extinguishment of debt
—
5,185
—
Equity-based compensation expense
87,697
81,112
12,810
Bad debt expense
(175
)
468
—
Unrealized loss (gain) on derivative
contracts
2,440
4,821
(6,087
)
Change in fair value of contingent
consideration
6,722
3,800
—
Goodwill impairment
222,322
—
—
Restructuring costs
2,046
—
—
Other non-cash adjustments
334
—
—
Change in operating assets and
liabilities:
Accounts receivable
51,052
(26,365
)
(30,170
)
Inventories
(11,931
)
(67,826
)
(28,979
)
Prepaid expenses and other current
assets
(3,046
)
(5,787
)
(4,311
)
Other non-current assets
78
(681
)
—
Accounts payable and accrued expenses
(28,211
)
19,182
28,351
Other non-current liabilities
(1,738
)
(866
)
17
Net cash provided by (used in) operating
activities
5,094
(28,427
)
46,597
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and
equipment
(18,398
)
(22,479
)
(14,127
)
Capitalization of patent costs
(506
)
(563
)
(511
)
Proceeds from notes receivable
—
—
21
Business combination, net of cash
acquired
—
(56,855
)
(12,724
)
Net cash used in investing activities
(18,904
)
(79,897
)
(27,341
)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit
179,000
118,000
57,000
Repayments on line of credit
(145,429
)
(67,862
)
(67,000
)
Proceeds from long-term debt
25,000
510,000
—
Payment of deferred financing costs
—
(8,601
)
(810
)
Repayments of long-term debt
(125
)
(579,921
)
(3,407
)
Principal payments on finance lease
liabilities
(505
)
(382
)
(310
)
Payment of acquisition related contingent
consideration
(9,275
)
—
—
Taxes paid related to net share settlement
of equity awards
(41
)
—
—
Proceeds from initial public offering, net
of issuance costs
—
142,274
—
Distribution to members
—
—
(250
)
Net cash provided by (used in) financing
activities
48,625
113,508
(14,777
)
Net increase in cash, cash equivalents,
and restricted cash
34,815
5,184
4,479
Cash, cash equivalents, and restricted
cash at beginning of period
16,740
11,556
7,077
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH AT END OF PERIOD
$
51,555
$
16,740
$
11,556
(1)
During 2022 and in previous
annual and quarterly periods, certain immaterial errors existed in
previously reported amounts of inventory and cost of revenue.
Accordingly, the Company has reflected the corrections in the
results for prior periods in these consolidated cash flows and in
the Annual Report on Form 10-K for the year ended December 31,
2022.
TRAEGER, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited)
(in thousands)
(Continued)
Year-ended December
31,
2022
2021
2020
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for
interest
$
25,138
$
23,444
$
31,327
Cash paid for income taxes
$
2,844
$
1,654
$
76
NON-CASH FINANCING AND INVESTING
ACTIVITIES
Equipment purchased under finance
leases
$
1,116
$
645
$
393
Property, plant, and equipment included in
accounts payable and accrued expenses
$
2,134
$
8,586
$
576
Unpaid amount for acquisition of
subsidiaries included in accrued expenses
$
—
$
—
$
2,414
TRAEGER, INC. RECONCILIATIONS OF AND
OTHER INFORMATION REGARDING NON-GAAP FINANCIAL MEASURES
(unaudited)
In addition to our results and measures of performance
determined in accordance with U.S. GAAP, we believe that certain
non-GAAP financial measures are useful in evaluating and comparing
our financial and operational performance over multiple periods,
identifying trends affecting our business, formulating business
plans and making strategic decisions.
Each of Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted
Net Income (Loss) per share, Adjusted EBITDA Margin, Adjusted Net
Income (Loss) Margin, and Adjusted Gross Margin are key performance
measures that our management uses to assess our financial
performance and is also used for internal planning and forecasting
purposes. We believe that these non-GAAP financial measures are
useful to investors and other interested parties in analyzing our
financial performance because it provides a comparable overview of
our operations across historical periods. In addition, we believe
that providing each of Adjusted EBITDA and Adjusted Net Income
(Loss), together with a reconciliation of Net Loss to each such
measure, and providing Adjusted Net Income (Loss) per share,
together with a reconciliation of Net Loss per share to such
measure, and Adjusted EBITDA Margin, Adjusted Net Income (Loss)
Margin, and Adjusted Gross Margin together with a reconciliation of
Net Loss Margin and Gross Margin to such measures, helps investors
make comparisons between our company and other companies that may
have different capital structures, different tax rates, and/or
different forms of employee compensation. For example, due to
finite-lived intangible assets included on our balance sheet
following our corporate reorganization in 2017, we have significant
non-cash amortization expense attributable to the nature of our
capital structure.
Each of Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted
Net Income (Loss) per share, and Adjusted Gross Margin are 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.
Period-to-period comparisons of Adjusted EBITDA, Adjusted Net
Income (Loss), Adjusted Net Income (Loss) per share, and Adjusted
Gross Margin help our management identify additional trends in our
financial results that may not be shown solely by period-to-period
comparisons of Net Loss or Loss from Continuing Operations or Net
Loss per share. In addition, we may use Adjusted EBITDA in the
incentive compensation programs applicable to some of our
employees. Each of Adjusted EBITDA, Adjusted Net Income (Loss),
Adjusted Net Income (Loss) per share, and Adjusted Gross Margin has
inherent limitations because of the excluded items, and may not be
directly comparable to similarly titled metrics used by other
companies.
The following table presents a reconciliation of Gross Margin,
the most directly comparable financial measure calculated in
accordance with U.S. GAAP, to Adjusted Gross Margin on a
consolidated basis. A reconciliation of Adjusted Gross Margin
guidance to Gross Margin on a forward-looking basis cannot be
provided without unreasonable efforts, as the Company is unable to
provide reconciling information with respect to the impact of
restructuring costs recorded in cost of revenue which is an
adjustment to Adjusted Gross Margin.
Three Months Ended
December 31,
2022
Year-ended
December 31,
2022
Gross margin
34.5
%
34.9
%
Add: Impact of restructuring costs
recorded in cost of revenue
0.4
%
0.3
%
Adjusted gross margin
34.9
%
35.2
%
The following table presents a reconciliation of Net Loss,
Operating Loss, Net Loss Margin, Operating Loss Margin, and Net
Loss per share, the most directly comparable financial measures
calculated in accordance with U.S. GAAP, to Adjusted Net Income
(Loss), Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net
Income (Loss) Margin and Adjusted Net Income (Loss) per share,
respectively, on a consolidated basis.
Three Months Ended December
31,
Year-ended December
31,
2022
2021
2022
2021
(dollars in thousands, except
share and per share amounts)
Net loss
$
(28,904
)
$
(34,395
)
$
(382,140
)
$
(91,767
)
Adjustments:
Other (income) expense (1)
(1,629
)
473
2,466
10,518
Goodwill impairment
—
—
222,322
—
Restructuring costs (2)
1,898
—
11,542
—
Equity-based compensation
7,010
19,401
87,697
81,112
Non-routine legal expenses (3)
(745
)
2,275
3,012
6,343
Amortization of acquisition intangibles
(4)
8,253
8,253
33,014
33,014
Change in fair value of contingent
consideration
6,227
900
10,002
3,800
Offering related expenses (5)
—
83
—
3,725
Non-routine start-up costs (6)
—
3,038
—
8,901
Non-routine acquisition costs (7)
—
—
—
2,624
Non-routine refinancing expenses (8)
—
—
—
3,895
Other adjustment items (9)
(417
)
304
938
1,276
Tax impact of adjusting items (10)
46
2,555
46
477
Adjusted net income (loss)
$
(8,261
)
$
2,887
$
(11,101
)
$
63,918
Net loss
$
(28,904
)
$
(34,395
)
$
(382,140
)
$
(91,767
)
Adjustments:
Provision for income taxes
1,213
2,744
1,186
1,489
Interest expense
7,647
5,253
27,885
26,646
Depreciation and amortization
14,816
12,984
56,617
47,499
Other (income) expense (1)
(1,629
)
473
2,466
10,518
Goodwill impairment
—
—
222,322
—
Restructuring costs (2)
1,898
—
11,542
—
Equity-based compensation
7,010
19,401
87,697
81,112
Non-routine legal expenses (3)
(745
)
2,275
3,012
6,343
Change in fair value of contingent
consideration
6,227
900
10,002
3,800
Offering related expenses (5)
—
83
—
3,725
Non-routine start-up costs (6)
—
3,038
—
8,901
Non-routine acquisition costs (7)
—
—
—
2,624
Non-routine refinancing expenses (8)
—
—
—
3,895
Other adjustment items (9)
(417
)
304
938
1,276
Adjusted EBITDA
$
7,116
$
13,060
$
41,527
$
106,061
Revenue
$
138,133
$
174,932
$
655,901
$
785,545
Net loss margin
(20.9
)%
(19.7
)%
(58.3
)%
(11.7
)%
Adjusted net income (loss) margin
(6.0
)%
1.7
%
(1.7
)%
8.1
%
Adjusted EBITDA margin
5.2
%
7.5
%
6.3
%
13.5
%
Net loss per diluted share
$
(0.24
)
$
(0.29
)
$
(3.19
)
$
(0.82
)
Adjusted net income (loss) per diluted
share
$
(0.07
)
$
0.02
$
(0.09
)
$
0.57
Weighted average common shares outstanding
- diluted
122,670,793
117,547,916
119,698,776
112,374,669
(1)
Represents gains (losses) on
disposal of property, plant, and equipment, impairments of
long-term assets, and unrealized gains (losses) from foreign
currency transactions and derivatives.
(2)
Represents costs in connection
with the 2022 restructuring plan, including $0.6 million and $2.2
million of costs recorded in cost of revenue within the condensed
consolidated statements of operations and comprehensive loss for
the three months and year ended December 31, 2022 respectively.
(3)
Represents external legal
expenses for litigation, patent and trademark defense.
(4)
Represents the amortization
expense associated with intangible assets recorded in connection
with the 2017 acquisition of Traeger Pellet Grills Holdings
LLC.
(5)
Represents expenses for legal and
consulting costs incurred in connection with our IPO process.
(6)
Represents start-up costs for
investments in Traeger Provisions.
(7)
Represents consulting and legal
costs incurred in connection with the 2021 acquisition of Apption
Labs
(8)
Represents expenses primarily for
consulting and legal costs incurred to refinance our credit
facilities.
(9)
Represents restoration costs at
our wood pellet production facility due to flood damage sustained
as a result of a tropical storm, non-cash ground lease expense
associated with our build-to-suit lease, payroll tax expense
related to the vesting of one-time equity awards in connection with
our IPO, and implementation costs related to public company SOX
compliance.
(10)
Represents an adjusted tax rate
equal to our annual estimated tax rate on Adjusted Net Income
(Loss). This rate is based on our estimated annual GAAP loss tax
rate forecast, adjusted to account for items excluded from GAAP
loss in calculating the non-GAAP financial measures presented
above. Due to the differences in the tax treatment of items
excluded from non-GAAP earnings, as well as the methodology applied
to our estimated annual tax rates, our estimated tax rate on
Adjusted Net Income (Loss) may differ from our GAAP tax rate and
from our actual tax liabilities.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230316005650/en/
Investors: Nick Bacchus Traeger, Inc. investor@traeger.com
Media: The Brand Amp Traeger@thebrandamp.com
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