Traeger, Inc. · NYSE:COOK
Traeger — Q2 2022 Earnings Presentation
38 slides from Traeger's earnings presentation, Nov 6, 2022
Slide 1: Investor Presentation Second Quarter 2022
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this presentation that do not relate to matters of historical fact should be considered forward-looking statements, incl
Slide 3: Forbes coverage of Traeger Timberline
= Forbes Subseribe Sign In F CONSUMER TI Traeger’s All-New Timberline Provides The Ultimate Outdoor Cooking Experience HOW ARSON LED TO A CULTURE & REBOOT AT TRAEGER, WITH CEO JEREMY ANDRUS TECH & SCIENCE » Review: New Traeger Timberline Gril 3 Makes Cooking and Cleaning Excit
Slide 4: CEO Commentary
CEO COMMENTARY "In the second quarter, macroeconomic conditions that are pressuring the consumer and changes in spending behavior negatively impacted results. While we had previously considered these factors in our outlook for the year, their impact deepened as we moved through some of our most impo
Slide 5: Traeger 2nd Quarter at a Glance
AN TRAEGER 2°4 QUARTER AT A GLANCE Revenue Mix S$200MM 36.7% Revenue Gross Margin SIBMM 8.9% Adj. EBITDA © Adj. EBITDA Margin 's_™ Consumables oh TRAEGER
Slide 6: Key Near-Term Strategic Priorities
KEY NEAR-TERM STRATEGIC PRIORITIES Drive Gross Margin Reduce Rightsize Cost Structure Inventories an Proactively Managing the Business to Navigate Near-Term Environment Ih TRAEGER 6
Slide 7: Reshaping the P&L and Rightsizing Working Capital
RESHAPING THE P&L AND RIGHTSIZING WORKING CAPITAL Proactively aligning costs with lower demand forecast Reduction in workforce in July 2022 Reducing discretionary SG&A Suspension of operations of Traeger Provi Ih TRAEGER Working to aggressively reduce balance sheet inventories Curtailing production
Slide 8: Driving Financial Flexibility
DRIVING FINANCIAL FLEXIBILITY Lowered Exposure to Rising Rates Entered into floating-to-fixed interest rate swap agreement on First Lien Term Loan in February 2022 Agreement provides for a notional amount of $379.2 million, hedging nearly 80% of our outstanding debt as of 2Q 2022, out to February 20
Slide 9: Growth Pillars: Quarterly Highlights
GROWTH PILLARS: QUARTERLY HIGHLIGHTS Accelerate Brand Awareness + Traeger Day in May 2022 was the largest single day for User Generated Content in the brand’s history * Experienced meaningful growth in User Generated Content posts in 2Q 2022 over 2021, which was a record year * Leaned into new video
Slide 10: Financials
FINANCIALS
Slide 11: 2Q 2022 Revenue Highlights
2Q 2022 REVENUE HIGHLIGHTS TOTAL REVENUE SMM oa $200 Q2 2021 Q2 2022 GRILL REVENUE CONSUMABLES REVENUE ACCESSORIES REVENUE SMM SMM SMM @ « @Q@ =. $40 Sus SI6 Q2 2021 Q2 2022 Q2 2021 Q2 2022 Q2 2021 Q2 2022 Ih TRAEGER Note: 202022 Total Revenue and Accessories Revenue includes MEATER
Slide 12: 2nd Quarter Multi-Year Revenue Results
2°? QUARTER MULTI-YEAR REVENUE RESULTS TOTAL REVENUE SMM SiS Q2 2019 Q2 2020 Q2 2021 Q2 2022 GRILL REVENUE CONSUMABLES REVENUE ACCESSORIES REVENUE SMM SMM SMM $40 8.9% $4l $42 CE S156 $32 1g aa Sut $s $21 @22019 @22020 @22021 a22022 Q2 2019 @22020 @22021 Q22022 Q2 2019 @22020 @22021 a2 2022 Ih TRAEG
Slide 13: 2Q 2022 Profitability Highlights
2Q 2022 PROFITABILITY HIGHLIGHTS GROSS MARGIN C 39.1% ) SMM a @® Gross Margin Q2 2021 ADJUSTED EBITDA © SMM @® Adjusted EBITDA Margin © $27 Q2 2021 ADJUSTED NET INCOME MM i Si7 Q2 2021 oh TRAEGER Note: 202022 results include MEATER, $74 Q2 2022 $4 Q2 2022
Slide 14: FY 2022 Guidance
FY 2022 GUIDANCE THREE CENTRAL DRIVERS OF GUIDANCE REDUCTION: |. FLOWING THROUGH LOWER THAN ANTICIPATED 2Q RESULTS 2. MATERIALLY LOWER REPLENISHMENT SALES DRIVEN BY RETAILERS DESTOCKING 3. ANTICIPATING CONTINUED PRESSURE ON THE CONSUMER IN H2 METRIC CURRENT OUTLOOK PRIOR OUTLOOK Total Revenue $640MM
Slide 15: Gross Margin Bridge: FY 2019 vs. FY 2021 vs. FY 2022
GROSS MARGIN BRIDGE: FY 2019 VS. FY 2021 VS. FY 2022 GUIDANCE GROSS MARGIN % 42.9% ws 7 = 3% FY 19 Actual Grill Price Grill Cost & Mix FX Freight & Other FY 21 Actual Grill Price Grill Cost & Mix Freight & Other FY 22 Guidance Logistics Logistics FACTORS IMPACTING FY 22 GROSS MARGIN GUIDANCE * SIGNI
Slide 16: Section 1: Brand, Product and Industry
BRAND, PRODUCT AND INDUSTRY
Slide 17: Investment Highlights
INVESTMENT HIGHLIGHTS 6. . AUTHENTIC AND INVITING onan . EARLY STAGES OF U.S. GROWTH at 3.5% aia 5 DISRUPTOR IN THE OUTDOOR COPKING CATEGORY as the market leader in the share-gaining Wood Pellet Grill segment diverse community of advocates: THE. RECURRING REVENUE MODEL érives ff sauces and rubs busi
Slide 18: Traeger at a Glance
ee || TRAEGER AT A GLANCE IH 2022 Revenue Mix © 3.5% US Household Penetration © 1.2Bn New Timberline Launch Press Coverage Impressions "Grills "Accessories = Consumables Grills Installed Base (MM) IlLOMM 25 Cooks in 2021 a 1.7MM Instagram & Facebook Followers FY2019 FY2020 Fy2021 Ah TRAEGER
Slide 19: Traeger's U.S. Market Opportunity
TRAEGER’S U.S. MARKET OPPORTUNITY TRAEGER =e —a TOTAL U.S. HOUSEHOLDS Current Penetration 2% TRAEGER U.S. TAM Total U.S. Households that own a grill as of 2021 Current Penetration 3.5% TRAEGER U.S. SAM Total U.S. Households that value Traeger’s differentiated quality, technology and convenience, acc
Slide 20: Our Market Opportunity
OUR MARKET OPPORTUNITY total U.S. spend on food at home in 2021 of consumers plan to spend the same or more on their next grill purchase U.S. households own a grill, with second grill purchases rising in popularity grill replacement rate, on average Sources: US Census Bureau (2021), US Bureau of Eco
Slide 21: Wood Pellet Grills Are Disrupting the Market
WOOD PELLET GRILLS ARE DISRUPTING THE MARKET WITH TRAEGER AS THE CATEGORY LEADER Barbecue Grill - Dollar Share by Fuel Type 80% GAS GRILLS 70% GAS GRILL MARKET HAS Cex BEEN IN LONG-TERM DECLINE 50% 40% 30% CHARCOAL GRILLS 20% WOOD PELLET GRILL 10% CATEGORY DOUBLED SHARE SINCE 2017 PELLET GRILLS 0% 2
Slide 22: The Traegerhood
THE TRAEGERHOOD 47 number of cooks for the average owner on their Traeger in 2021 5 number of people the average Traeger owner recommends the brand to, as compared to 2 people for non-wood pellet grills 75% estimated percent of Traeger owners that believe the brand reflects who they are as people PI
Slide 23: The Largest Social Media Community of Any Grilling Brand
THE LARGEST SOCIAL MEDIA COMMUNITY OF ANY GRILLING BRAND TRAEGER 1.7 MILLION FOLLOWERS ACROSS FACEBOOK AND INSTAGRAM IN 2021, OUR FACEBOOK AND INSTAGRAM FOLLOWING GREW 20%, AND ORGANIC IMPRESSIONS GREW 29% 400 THOUSAND POSTS RECORD USER GENERATED CONTENT IN 2021 23
Slide 24: Our Secret Sauce: Organic and Authentic Brand Position
OUR SECRET SAUCE: WE HAVE AN ORGANIC AND AUTHENTIC BRAND POSITION a | , ae COMMUNITY RETAIL COMMUNITY SOCIARM IBIS: AMBASSADORS CONTENT Ah TRAEGER
Slide 25: Section 2: Growth Thesis
GROWTH THESIS
Slide 26: Growth Pillars
GROWTH PILLARS 1) Accelerate Brand Awareness and Penetration e Disrupt Outdoor Cooking with Product Innovation 6 Drive Recurring Revenue 4 ) Expand Traeger Brand Globally Ih TRAEGER
Slide 27: Accelerate Brand Awareness and Penetration
@ ACCELERATE BRAND AWARENESS... Traeger Household Penetration by State Business has Utah’s household penetration, which is the highest for the brand, more than doubled from in 2018 to 16% in 2021 © => 10% @ = 5%10% @ =2%5% @ = 0%-2% Source: Company Estimates Note: Traeger household penetration as of
Slide 28: Invest to Maximize Retail Productivity
AND PENETRATION Invest to Maximize Retail Productivity Premium Merchandising at The Home Depot Proves Out Thesis * Partner with retailers willing to invest in Traeger footprint * Investing alongside retail partners into premium merchandise and expansive product assortment * Deliver authentic in-stor
Slide 29: Disrupt Outdoor Cooking with New Innovations
DISRUPT OUTDOOR COOKING WITH NEW INNOVATIONS Pt Induction CO! Pop & Lock (PAL) y | oo FORRES Access} Accessory Rail gpper Bs: diSspout Grease & Ash Collection Front Close Cabinet Doors” cooking hal Ih TRAEGER 29
Slide 30: Drive Recurring Revenue Through Consumables Business
e DRIVE RECURRING REVENUE THROUGH CONSUMABLES BUSINESS TRAEGER Driving consumables revenue through expanded distribution and new product launches Traeger rubs and sauces continue to see strong growth in Grocery since adding 2,200 Kroger doors in QI of this year Pellets are gaining 600 additional gro
Slide 31: Expand Internationally
© EXPAND INTERNATIONALLY Revenue from Rest of World International busines over year in FY 202 2% FY 2019 FY 2020 Note: Rest of World excludes North America IN TRAEGER FY 2021
Slide 32: Section 3: Channels and Supply Chain
CHANNELS AND SUPPLY CHAIN
Slide 33: Our Omnichannel Sales Strategy Creates an Authentic Experience
OUR OMNICHANNEL SALES STRATEGY CREATES AN AUTHENTIC EXPERIENCE FOR NEW CUSTOMERS AND THE TRAEGERHOOD CHANNEL BREAKDOWN FY 2021 4 TRAEGER.com E-Commerce, 8% DTC, 10% Retail, 82% Note: Channel breakdown based on % of revenue AN TRAEGER WE METHODICALLY BUILD RELATIONSHIPS WITH OUR DISTRIBUTION PARTNERS
Slide 34: Diverse Grill Supply Chain
DIVERSE GRILL SUPPLY CHAIN ¢ Diversifying supply chain over the last several years * Long-term, continue to evaluate opportunities to bring manufacturing closer to the US ¢ Internal task force driving cost savings, exploring each stage of the supply chain to enhance margin ¢ Product team maximizing
Slide 35: Appendix
APPENDIX TRAEGER
Slide 36: Footnotes
FOOTNOTES |. Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures. See the appendix to this presentation for a presentation of, and a reconciliation of these measures to, the nearest comparable GAAP measures, including Net Income (Loss) and Net Income (Loss) Margin, respectively. A recon
Slide 37: Information Regarding Non-GAAP Financial Measures
INFORMATION REGARDING NON-GAAP FINANCIAL MEASURES 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 period
Slide 38: Non-GAAP Reconciliation Notes
Notes: 1. Represents gains (losses) on disposal of property, plant, and equipment, impairments of long-term assets, and unrealized gains (losses) from derivatives 5. Represents start-up costs for investments in Traeger Provisions 2. Represents external legal expenses for litigation, patent and trade