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DATE

Thursday, March 5, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Jeremy Andrus
  • Chief Financial Officer — Joey Hord
  • Vice President of Finance, Strategy, and Investor Relations — Stephanie Reed

TAKEAWAYS

  • Full-Year Revenue -- $560 million, exceeding the high end of prior guidance.
  • Adjusted EBITDA (Full Year) -- $70 million, reached the upper half of the guided range.
  • Q4 Revenue -- $145 million, a 14% decline year over year.
  • Q4 Grill Revenue -- $61 million, down 22% due to elasticity, mix shift, and prior-year Woodridge launch load-in.
  • Q4 Consumables Revenue -- $36 million, a 16% increase, driven by higher unit volumes for wood pellets and food consumables.
  • Q4 Accessories Revenue -- $49 million, decreased 18%, attributed to negative sales growth at MEATER.
  • Q4 Gross Margin -- 37.4%, a decline of 350 basis points year over year.
  • Adjusted Gross Margin (Q4) -- 39.5%, down 130 basis points, reflecting tariffs offset by lower promotions and supply chain improvements.
  • Q4 Adjusted EBITDA -- $19 million, up 6% from the prior-year quarter.
  • Q4 Net Loss -- $17 million with a net loss per diluted share of $0.13.
  • Adjusted Net Income (Q4) -- $2 million, or $0.01 per diluted share, flat versus prior year.
  • Full-Year Project Gravity Cost Savings -- $20 million realized, exceeding the original $13 million target.
  • Total Project Gravity Expected Run-Rate Savings -- $64 million to $70 million, with $58 million from phases one and two, and $6 million to $12 million incremental through SKU rationalization and pricing initiatives (majority realized by 2027-2028).
  • 2026 Revenue Guidance -- $465 million to $485 million; Adjusted EBITDA Guidance -- $50 million to $60 million.
  • 2026 Gross Margin Guidance -- 38% to 39%, down 120 to 20 basis points from 2025, reflecting tariff pressure and fixed promotional investment deleverage.
  • Q1 2026 Revenue Guidance -- $92 million to $97 million; Adjusted EBITDA Guidance -- $3 million to $7 million.
  • Free Cash Flow (2026) -- At least $30 million expected, driven primarily by inventory reductions and working capital control.
  • Cash and Cash Equivalents (Year-End 2025) -- $20 million, compared to $15 million the previous year.
  • Net Debt -- $384 million, reduced by $10 million year over year; total debt stands at $403 million.
  • Liquidity Position -- $162 million at year-end.
  • Inventory (Year-End 2025) -- $99 million, down from $107 million in prior year and $115 million at the end of Q3; MEATER inventory remains elevated, with reduction efforts ongoing in 2026.
  • Sell-Through vs. Sell-In -- Early 2026 sell-through trends "exceeding expectations" at largest retail partners; meaningful divergence from sell-in is planned for the year.

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RISKS

  • "Tariffs had a meaningful impact on the category this year, and they drove volatility in ordering behavior across the channel."
  • Q4 gross margin declined 350 basis points year over year, primarily due to tariff-related costs.
  • Management confirmed "continued competitive pressure in MEATER as we reset that business," with elevated inventory cited as a near-term challenge.
  • Accessories revenues decreased 18% in Q4, pressured by negative sales growth at MEATER.

SUMMARY

Management outlined deliberate, strategic actions—including Project Gravity initiatives, tariff mitigation, and channel optimization—that materially shaped 2025 outcomes and are now resetting the company’s financial trajectory. Inventory positions and revenue guidance were recalibrated to proactively address channel normalization and discontinued product sell-through. Management indicated that the majority of 2026’s projected revenue decline reflects purposeful exits from lower-margin channels, full tariff elasticity annualization, and targeted marketplace health actions, not diminished long-term consumer demand. Phase two of Project Gravity includes SKU rationalization and pricing restructuring expected to drive total run-rate savings of $64 million to $70 million, mostly benefiting 2027–2028 financials. Traeger (COOK 2.86%) reported constructive early sell-through trends in 2026 and signaled confidence in longer-term margin expansion and profitability as marketplace capacity is reset and cost actions annualize.

  • CEO Andrus emphasized that "The point of Gravity is not just about cost takeout. It is about applying a more disciplined, return-focused lens to how we run the business," with resource concentration on higher-return segments.
  • Management expects anticipated free cash flow in 2026 to support continued net debt reduction and maintain leverage ratios comfortably below covenant levels, with the revolver undrawn and no near-term maturity risks.
  • Outlook commentary clarified that the upcoming year is a "transition year financially," positioning the company for improved profitability and operating leverage as new product architectures align with sell-in and sell-through moving into 2027.
  • Product launches are planned for 2026, focused on sub-$1,000 grills to expand price accessibility and household penetration, with innovation cascaded from premium offerings.

INDUSTRY GLOSSARY

  • Sell-In: Revenue recognized from sales into retail and distribution channels, regardless of final consumer purchase timing.
  • Sell-Through: Actual products sold to end consumers from retailer or distributor inventory, reflecting true consumer demand.
  • SKU Rationalization: Strategic process of reducing the number of stock keeping units (SKUs) in the portfolio to lower inventory, improve manufacturing efficiency, and optimize product focus.
  • Project Gravity: Traeger’s multiyear initiative focused on cost reduction, business simplification, channel strategy enhancement, and structural profitability improvements via phased organizational and product portfolio changes.
  • Tariff Elasticity: The measurable impact on product demand and pricing flexibility driven by changes in tariff-related costs.
  • MEATER: Traeger’s smart thermometer and food accessories business segment.

Full Conference Call Transcript

Stephanie Reed: Good afternoon, everyone. Thank you for joining Traeger, Inc.'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 am Stephanie Reed, Vice President of Finance, Strategy, and Investor Relations at Traeger, Inc. With me on the call today are Jeremy Andrus, our Chief Executive Officer, and Joey Hord, our 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 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 12/31/2025, 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 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.traeger.com. Please note that our definition of these measures may differ from similarly titled metrics presented by other companies. I will now turn the call over to Jeremy Andrus, Chief Executive Officer of Traeger, Inc. Jeremy?

Jeremy Andrus: 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 am 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 $560,000,000, and adjusted EBITDA landed in the upper half of the range at $70,000,000. 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, Inc. 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 is 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 have 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, Inc., and it continues to be rewarded when we execute. A good example of how we are 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, Inc. 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 are cooking, and when they are 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 us 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 managed the impact while still delivering the full-year results I just mentioned. As we have discussed in prior quarters, our approach has been consistent. We focused on three pillars: supply chain, pricing, and cost discipline, and we have worked closely with our partners to protect profitability and maintain inventory health.

We will 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 is a central part of how we are building a stronger Traeger, Inc. Project Gravity is a multiyear 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 MEATER into our Salt Lake City infrastructure. Phase two built 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 have executed most of these actions already, along with additional organizational changes announced in 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 $58,000,000 of run-rate savings, with benefits beginning to materialize in 2025 and continuing as we move through 2026. As we have gone deeper into the work, we have also identified additional value-capture opportunities within phase two, particularly around SKU rationalization and pricing.

These initiatives are focused on simplifying our product portfolio, exiting lower-margin SKUs, 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 $6,000,000 to $12,000,000 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 $64,000,000 to $70,000,000 of total value across both phases. And I want to be clear. The point of Gravity is not just about cost takeout. It is 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 is what enables us to perform through uncertainty and generate operating leverage as the business grows. Before I move to guidance, I want to briefly address MEATER. MEATER continues to face challenging competitive dynamics, and we are working through elevated inventory as we reset the business.

The steps we have taken, including closing the U.K. operation, integrating MEATER 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 road map and retail channel over time. Near term, we are 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 disciplined 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 full-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 MEATER 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 $465,000,000 to $485,000,000 and adjusted EBITDA of $50,000,000 to $60,000,000. Importantly, our expectations for sell-through in 2026 are significantly higher than what our sell-in 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 the broader operating environment. We believe we are taking the right actions on efficiency, product strategy, and inventory management to position Traeger, Inc. 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 strengthen Traeger, Inc. for the long term. We are approaching 2026 with strategic discipline to set the foundation for our long-term growth strategy. We are prioritizing inventory health and continue to invest behind the product and brand with a focus on extending our consumer reach. And we believe the work we have done through Project Gravity sets up a stronger foundation for operating leverage as we look beyond 2026. I will now turn the call over to Joey.

Joey Hord: Thanks, Jeremy, and good afternoon, everyone. I will walk through our fourth quarter and full-year financial results in more detail, then discuss our balance sheet, cash flow, and our outlook for fiscal 2026. Starting with the fourth quarter and the full year, we are pleased with how the business performed financially in a dynamic operating environment. In the fourth quarter, we exceeded the top end of our revenue guidance and delivered adjusted EBITDA in the upper half of our full-year range, despite continued elasticity following tariff-related pricing actions and ongoing pressure in MEATER. For the full year, we delivered adjusted EBITDA of $70,000,000 while executing through these pressures and making deliberate decisions to simplify the business.

There are three financial takeaways from fiscal 2025 worth highlighting. First, we successfully managed tariff exposure and protected profitability through disciplined pricing, supply chain actions, and cost control. Second, consumables, including pellets, continue to be a source of strength and stability, reinforcing the durability of the recurring fuel model even in the cautious consumer environment. And third, we made meaningful progress on Project Gravity, delivering $20,000,000 of cost savings in fiscal 2025. This exceeded our original expectation of $13,000,000 and represents an important step towards a structurally improved cost base and stronger cash generation profile. Turning to fourth quarter results, fourth quarter revenues decreased by 14% to $145,000,000.

Grill revenues were $61,000,000, down 22% compared to the fourth quarter of last year. Declines in our grill category were driven primarily by elasticity, an unfavorable mix shift, as well as a difficult comparison related to the Woodridge load-in ahead of launch in the prior-year quarter. Consumables revenues were $36,000,000, up 16% from the prior year. Consumables growth was driven by higher unit volumes across both wood pellets and food consumables. Accessories revenues were $49,000,000, down 18% versus 2024. Revenues were pressured by negative sales growth at MEATER. Fourth quarter gross margin was 37.4%, down 350 basis points versus the prior year.

Excluding $3,000,000 in costs related to Project Gravity, adjusted gross margin was 39.5%, down 130 basis points, driven primarily by tariff-related costs, offset by lower promotional activity and supply chain efficiencies. Sales and marketing expenses were $23,000,000, compared to $34,000,000 in 2024. The decrease was driven by the reduced MEATER investment and Project Gravity savings. General and administrative expenses were $22,000,000, compared to $27,000,000 in 2024. The decrease is primarily driven by lower stock-based compensation expense, as well as lower professional fees and employee-related costs as a result of Project Gravity. Net loss for the fourth quarter was $17,000,000, as compared to net loss of $7,000,000 in 2024.

Net loss per diluted share was $0.13, compared to a loss of $0.05 in 2024. Adjusted net income for the quarter was $2,000,000, or $0.01 per diluted share, as compared to $2,000,000, or $0.01 per diluted share, in the same period in 2024. Adjusted EBITDA increased 6% to $19,000,000 in the fourth quarter, as compared to $18,000,000 in the same period of 2024, demonstrating operating leverage in the model, even at lower revenue levels. Turning to the balance sheet, we exited the year in a solid financial position after making the balance sheet health a leading priority throughout 2025. Cash and cash equivalents were $20,000,000 compared to $15,000,000 at the end of 2024.

We had $403,000,000 of short-term and long-term debt, resulting in total net debt of $384,000,000. Net debt declined by $10,000,000 in fiscal 2025 compared to the end of fiscal 2024. Cash flow from operations was $16,000,000 in the fourth quarter, driven by disciplined working capital management and Project Gravity cost savings. From a liquidity perspective, we ended the fourth quarter with ample liquidity of $162,000,000. Inventory at the end of the fourth quarter was $99,000,000, down from $107,000,000 in the fourth quarter last year, and down from $115,000,000 at the end of the third quarter. While we have elevated MEATER inventory that we expect to work through in 2026, we are pleased with the positioning of our Traeger, Inc.-branded inventory.

Now turning to our outlook. As Jeremy outlined, fiscal 2026 is a foundational year. From a financial perspective, it is a year of disciplined execution as we continue to focus the business on our highest return opportunities. For fiscal 2026, we are guiding to revenues of $465,000,000 to $485,000,000 and adjusted EBITDA of $50,000,000 to $60,000,000. As Jeremy mentioned, we expect a divergence between sell-through and sell-in 2026. Importantly, the year-over-year revenue decline implied by our guidance is driven by a small number of specific, identifiable factors, not a deterioration in the underlying consumer demand. There are four primary drivers shaping our 2026 revenue outlook.

First, Project Gravity actions reflect deliberate decisions to exit or reshape lower-return revenue streams, including the Costco roadshow, direct-to-consumer commerce, and certain international markets, as we prioritize profitability and cash generation. Second, the annualization of tariff-related elasticity reflects pricing actions taken primarily in 2025 to offset tariff costs. Because those actions were not fully in effect for the full year, we continue to see their impact carry into 2026. Together, these two drivers are continuations of strategic actions taken in fiscal 2025 and account for approximately $70,000,000 of the year-over-year decline, with over half coming from Project Gravity actions, net of recapture. Next, our outlook reflects deliberate actions to optimize marketplace health.

We exited fiscal 2025 with select pockets of elevated inventory, and we are proactively matching these positions to reduce weeks of supply. That inventory dynamic was driven by two largely timing-related factors in fiscal 2025: first, advance orders placed to mitigate anticipated tariff exposure and support country-of-origin transitions; and second, higher order volumes following a strong spring selling season before the full impact of pricing elasticity became evident. Finally, we are planning for continued competitive pressure in MEATER as we reset that business. Taken together, these factors explain the expected revenue decline in 2026 and, importantly, reflect deliberate actions and timing dynamics rather than a change in the long-term demand profile of the Traeger, Inc. brand.

From a margin perspective, we are guiding to gross margin of 38% to 39%, down 120 basis points to down 20 basis points versus fiscal 2025. Margin guidance reflects pressure from tariffs and deleverage on fixed promotional investments, partially offset by the benefits of Project Gravity. On operating expenses, we expect meaningful improvement in 2026 as we realize the full-year benefit of actions taken in 2025 and continue executing phase two. In total, we expect Project Gravity to deliver approximately $50,000,000 of adjusted EBITDA benefit in fiscal 2026, reflecting roughly $30,000,000 of incremental benefit on top of approximately $20,000,000 realized in fiscal 2025. Taken together, adjusted EBITDA for fiscal year 2026 is expected to be $50,000,000 to $60,000,000.

Despite the year-over-year decline in adjusted EBITDA, we continue to expect strong free cash flow generation. While we do not typically provide free cash flow guidance, we currently expect free cash flow of at least $30,000,000 in fiscal 2026, driven primarily by inventory reductions and working capital management. This expected free cash flow will support continued net debt reduction, as we expect our leverage ratio to remain comfortably below covenant levels throughout the year. I would also note that our covenant calculation includes forecast calculations taken over the trailing twelve months, resulting in a lower leverage ratio than what you would calculate using published EBITDA alone.

As a reminder, our revolver capacity will step down by $30,000,000 in the second quarter, as part of the amendment executed in 2025. This has no impact on our operations. The remaining $82,500,000 of capacity is fully available through December 2027 and currently undrawn. Our first lien term facility does not mature until June 2028. Turning to the first quarter, we are seeing some meaningful timing shifts from Q1 into Q2, so I want to provide explicit guidance for the quarter. Importantly, we expect first-half seasonality to be broadly consistent with historical patterns, with 2026 impacted by new product load-ins occurring in Q2 rather than Q1.

From a margin perspective, we also expect some timing impacts between the first and second quarters driven by promotional activity and direct import mix, which we believe will pressure gross margin rate in Q1 and benefit later quarters. For the first quarter, we are guiding revenue of $92,000,000 to $97,000,000 and adjusted EBITDA of $3,000,000 to $7,000,000. As it relates to tariffs, our guidance is based on the tariff framework that was in effect through mid-February and does not incorporate the recently announced changes. Depending on market conditions, any incremental benefit could flow through a combination of improved gross margin, dealer margin support, or pricing actions for consumers.

Before I close, I want to step back and talk about how we see the business positioned beyond 2026. As we move into 2027, we believe several factors create a constructive setup for improved profitability. These include the continued realization of Project Gravity value, beyond what is reflected in our 2026 guidance, including the incremental $6,000,000 to $12,000,000 of value capture announced today, as well as the potential for a more favorable tariff environment and improved alignment between sell-in and sell-through. As these dynamics come together, we would expect the business to begin to benefit from meaningful operating leverage as revenue returns to growth with a structurally improved margin profile and cost base.

As a result, these factors support our view that fiscal 2026 represents a transition year financially, and that the business is positioned to deliver higher profitability and improve its adjusted EBITDA performance as we move into 2027 and beyond. I will now turn it over to the operator. Operator?

Operator: Thank you. If you would like to ask a question, please press star, followed by one on your telephone keypad. If, for any reason, you would like to remove your question, please press star, followed by two. Again, to ask a question, please press star 1. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here to allow questions to register. And the first question will go to the line of Brian McNamara with Canaccord. Brian, your line is open.

Brian McNamara: Hey, good afternoon, guys. Thanks for taking the questions. First, I am curious, where did the grill market finish in 2025 relative to 2019 levels, in terms of industry volumes? And what is the company's expectation for grill market growth in 2026, if any?

Jeremy Andrus: Hey. Thanks, Brian. So a couple of thoughts. First of all, after, of course, a very meaningful decline in unit volume between 2021 and 2022, the market has been modestly down the last handful of years. Last year, down, probably, sort of mid-single digits or so on a revenue basis. I do not have the exact numbers in front of me on unit volumes between last year and 2019. What I can tell you is that units are still down meaningfully. You know, of course, we spend a lot of time thinking about, in addition to our strategy from a macro perspective, what are the catalysts to really get the outdoor cooking category to return to more normalized replacement levels.

You know, mathematically, we should be heading into that window. We did not see that last year, and that was probably in part driven by the fact that tariffs really hit in the spring. And we saw this corresponding very, very material drop in consumer confidence. But we are now six years removed from the beginning of the pandemic, and that should be when consumers generally begin to think about replacing other grills or a Traeger, Inc. grill, in terms of the ownership life cycle that we observe. I will say, this has been historically a remarkably steady category, and what we have seen, of course, is unusual since the pandemic. But our expectation is that the market will recover.

There are just as many, in fact, slightly more outdoor cooks than there were pre-pandemic, and so this is more around the replacement cycle. I will say that we have not forecasted, in the guidance that we have offered, a return to a more normalized replacement cycle, because it is hard to know exactly when. We just believe that this is a very durable category and that it will return to this more normalized level. So we are to that period at some point in time, certainly over the next twelve to twenty-four months.

The other thing that I would add that I think is relevant as we think about brand position and engagement as the category improves is that this is a brand that has been very consistent in terms of the consumer engagement. We observed, for example, in the fourth quarter, 11%. We continue to see strong pellet attach, which, of course, is another important measure of engagement for us. So we are very focused on the things that we can control, not forecasting the next cycle, but we believe that we are getting closer to it.

Brian McNamara: Great. You actually answered my second question, so good on you there. My next question is, how big is the expected revenue impact from the DTC exit, and what is the underlying assumption for sales recapture with your retail partners? And, in addition to that, I guess, why would we not see a bigger margin boost there? It sounds like Project Gravity is accounting for kind of $50,000,000 of the $50,000,000 to $60,000,000 EBITDA guidance, if I heard that correctly?

Joey Hord: Sure. Hey, Brian, it is Joey. As far as what we are speaking to right now, we spoke originally around a $60,000,000 impact in terms of the overall shift out of DTC, Costco roadshow, and international. That was on a rear-looking number. On the go-forward number, it is a little bit smaller. What we can say is overall, between the full-year pricing elasticity and Project Gravity, the shift there is around $70,000,000 of the total revenue impact. And if you are doing the math on the P&L flow-through, you have margin rate pressure, and that is driven by full-year tariffs and promo deleverage. And that is probably, if you are doing the math, why there is not as much flow-through.

Brian McNamara: Great. Thank you. I will pass it on.

Operator: Thank you, Brian. Our next question will go to the line of Peter Benedict with Baird. Peter, your line is open.

Zach Beck: Hey, guys. This is Zach Beck on for Peter. Thanks for taking our questions. Nice to see the additional savings from Gravity. Just curious if you could share more about the SKU rationalization efforts there, maybe which items or categories you plan to address? And then on pricing, Jeremy mentioned annualizing some elasticity impacts from your last round, which I believe was last spring. Can you share more details around that dynamic and maybe how the consumer response to pricing is influencing your innovation plans for both this year and beyond?

Jeremy Andrus: Yeah, of course. So let me start with the SKU rationalization, and then I will lead into some of the thoughts on pricing and how it impacts our product line or how we think about product strategy going forward. The intent of SKU rationalization was twofold. First of all, we wanted to streamline the product portfolio so that we create efficiencies in manufacturing and inventory. There are certainly opportunities to, in a modular way, ensure that we are just driving more volume in assembly and subcomponents, and fewer SKUs, of course, leads to lower inventory levels. That is thought number one. Thought number two is that the rationalization also has consumer benefit.

Our ability to create a clearer line with a clear step-up story and real clarity for the consumer decision process also was an underlying motivation of the rationalization. These things take time. Of course, we are in a consumer durable. We are looking years out from a product line perspective. And we will sunset certain SKUs beginning this year, but over the next two to three years. And so, as you saw from some of the increased value capture of Gravity, some of these things extend out into 2027 and into 2028. But we believe in that. We think it is going to make us a better, more focused business, and we have begun this process.

The pricing is—I will say, really forecasting price elasticity last year was challenging, not only because our prices were moving around, but it was a very dynamic environment not knowing how competition was going to price. Being a high-ticket discretionary durable, how decision-making on the consumer part, relative not only to this category but thinking about other discretionary purchases that they will make. We are getting sharper on elasticity. I would say that one of the learnings is that during promotional windows, there is greater elasticity. But I would say, on balance, we are feeling pretty good about how we have priced our products, and it has given us confidence where we are going forward.

We will continue to evaluate this. There have been, over the last week or so, some shifts in tariffs. We have not forecasted any of that in our guidance, but there is some decline in our tariff rate, which will give us the ability to step back and think about how we allocate those savings. Where will we get value in reducing MSRP versus value in allocating some of that to our dealers, where there is some additional margin need? And, of course, to the extent that some of it gets allocated back to Traeger, Inc., how do we think about that from a business reinvestment perspective?

As it pertains to our product strategy relative to what we have learned about elasticity, I would say that it really does not change how we think about the future. It takes thirty to thirty-six months to bring a durable like this—which is a highly engineered product with firmware, software, industrial and mechanical design—from concept to consumer launch. And so it is hard to really build a product line around macro environment trends.

But I think what we have learned is that, although there has been a little bit of pressure on price point as consumers have tightened their belt, notably last year as we saw consumer sentiment decline meaningfully, what we believe and what we have seen in cycles over time is that the consumer will return to price points in better times where they are comfortable, but also where there is a reason to purchase. So those features and those innovations that may be slightly discounted in a down period, we believe the consumer will continue to value. So we think about our product line going forward in a very similar way.

Of course, we are always learning from the consumer, and we are always thinking about how our brand should be positioned long term. On a positive—and this just happens to be the nature of where we are in our product development life cycle—we are launching a couple of new products this year, in the second quarter. As is our strategy, we really launch innovation at more premium price points, and we cascade that innovation downstream as we understand consumer value of certain products and features and as we understand how we get scale from a product manufacturing perspective.

And it so happens that, where we are in that life cycle, the two product platforms that we are launching this spring—they are sub-$1,000 products, which is certainly very appropriate for the moment in time. But otherwise, we do not shift our product strategy relative to the cycles that we are in.

Zach Beck: Great. Thank you for the color. I will pass it on.

Operator: Thank you, Zach. Before we take the next question, if you would like to ask a question, please press star followed by one on your telephone keypad. Our next question will go to the line of Peter Keith with Piper Sandler. Peter, your line is open.

Peter Keith: Hey. Thanks. Good afternoon, everyone. So just trying to understand the revenue decline and maybe how you are thinking about general demand trends. So I am going to kind of reinterpret what you have told us, which was some good detail. So we have got an $85,000,000 revenue decline at the midpoint for the year. It sounds like $70,000,000 of that is from exiting the Costco roadshows, DTC, and then some of the demand elasticity impact and pricing. So there is a sort of a $15,000,000 delta that I am trying to get my arms around. Is that a sort of a lack of sell-in because of the orders last year? Is that demand declines?

How should we think about that other chunk of revenue decline?

Joey Hord: Sure. Thanks for the question. So just to be clear, we are planning on sell-through—there is a divergence between sell-through and sell-in 2026. And sell-through, we are planning to—current sell-through trends in the beginning of the year are exceeding our expectations. We are planning on sell-through to be in line with the overall category, and that is sort of flattish. So keep in mind there is a divergence there. As far as the remaining $15,000,000, there are two factors driving that. One is ongoing MEATER pressure. And the other is what we are calling marketplace health initiatives.

We have, as Jeremy mentioned, specific inventory pockets in a specific retailer that have higher inventory in market than we would like, and we are going to right-size the inventory. And keep in mind, pricing elasticity, Project Gravity reduction in revenue, and marketplace health initiatives are strategic in nature. MEATER—we are addressing MEATER through the centralization of the MEATER office here in Salt Lake, leveraging the fixed cost infrastructure. We are resourcing the plan and the business to drive ongoing growth. So if you are doing the math on that, it is really focused on the marketplace health initiatives and MEATER.

Peter Keith: Okay. Yep. That is the detail I was looking for. And just to follow up on that, that marketplace pressure—that is just with one retailer where you are trying to rebalance inventory, or is that across a variety of retailers?

Joey Hord: Generally speaking, yes, it is a distinct pocket of inventory. And keep in mind, it is high-volume inventory, it is high flow-through, and that also puts pressure on overall margin. And the other point I will make on this is, as we right-size the marketplace—this is the marketplace health initiative—there is going to be a low in FY 2026, but this will create capacity in 2027 and beyond, and we will be able to fill that capacity. And that is why we are confident in the future growth algorithm.

Peter Keith: Yeah. That makes sense. Okay. And so then my last question—I know I think you partially addressed this in your last answer—but we are looking at the decremental margin on the revenue declines. It is around 30% this year, pretty similar to last year. And I guess Project Gravity, one would think that maybe the decremental margins would be coming down this year. So why is this a similar level of 30% decremental on the EBITDA margin with the revenue decline?

Joey Hord: Yeah. I think we need to focus on overall gross margin, and gross margin is being impacted by full-year tariffs. So last year, tariffs were announced—they were announced in February, but they were relatively low in the first quarter. Labor Day, I believe, was in early April, and then we had a much higher tariff burden. They have sort of settled throughout the year. So we have a full year of tariff impact, and that is driving some margin degradation. The other is what we are calling promo-funded deleverage. So we invest a fixed promo number into our P&L every year, and with the overall revenue coming down, it is eroding margin.

That is also going to drive margin expansion in the out years as well, as we get to more normalized revenue numbers.

Peter Keith: Okay. Thank you very much for that.

Operator: Thank you, Peter. With no additional questions waiting in queue, we will conclude both the Q&A session as well as today's earnings call. Thank you for your participation, and enjoy the rest of your day.