Traeger (COOK) Q2 FY26 earnings call: guidance and Q&A

Where are we in the broader grill cycle, and how much will the Lowe's load-in benefit revenue, especially for the core business ex-Lowe's? Also, how will Project Gravity's cost benefits sustain into 2027?

The grill industry is roughly flat, with Traeger's sell-through in line. The replacement cycle, typically 5 years for Traeger, hasn't normalized post-pandemic due to price volatility. Lowe's expansion is a long-term strategic move, accretive and profitable, but with near-term timing and channel dynamics. Project Gravity's cost management allowed maintaining EBITDA guidance despite lower revenue, with $50M value capture in FY26 and a long-term target of $64M-$70M, ensuring profitable growth.

“We're not giving specifics on the load-in amount per se. However, at the same time, it is meaningful. It is accretive. It is profitable. There is some load-in dynamics around timing and just overall channel dynamics that we're working through, which is why we're lowering guidance along with MEATER.”

asked by Randal Konik · answered by Joey Hord

What are the key drivers for the increased gross margin guide, especially regarding transportation and input costs? Are current price levels sustainable for 2027 without tariff tailwinds?

Gross margin benefits from the IEEPA tariff refund ($16M total, $1.5M in Q2) and higher direct import sales, partially offset by product mix and increased transportation costs. The company balances elasticity at various price points. While tariffs have shifted (some bled off, new ones emerged), the current forecasted tariff rate is approximately flat. They expect consumers to adapt to higher price points, and the product strategy will build around this new cost structure.

“Our margin rate overall is being impacted this quarter and over the next 2 quarters by the IEEPA tariff refund. We've collected now $16 million in cash. We booked $12 million in change in Q1, $1.5 million in Q2, and we're planning on $2 million in the second half, which really is around $16 million full year.”

asked by Phillip Blee · answered by Joey Hord

Can you provide directional guidance on the incrementality of the Lowe's partnership for next year, assuming offsets at existing partners won't be one-for-one? What about merchandise margin or one-time expenses for 2027?

Lowe's is a long-term growth opportunity to access a greater TAM, not a near-term step function. While some exclusive arrangements with existing partners will evolve, the new partnership provides scale to invest across the marketplace. It's expected to be highly accretive, requiring investments in fixtures, pellet capacity (mills), and human capital, with a CapEx impact that has been modeled for high ROI.

“It's an opportunity to invest over the course of many years to really get to those new consumers while maintaining very strong channel partnerships with our existing partners. I think the underlying sort of tenet of our channel strategy is to really ensure that we are disciplined in terms of number of points of distribution and how we invest in each of those points of distribution.”

asked by Phillip Blee · answered by Jeremy Andrus

ASPs in the grill area have been declining. When do you expect them to stabilize or normalize, considering innovation and price points?

ASP decline is driven by macro factors (consumer shift to lower price points in discretionary items) and product architecture. Innovation like Westwood ($699-$799 price point) brings connected cooking features to more accessible price points, aiming to fill gaps and create a clear step-up story. This product strategy, combined with potential macro improvements, is expected to help stabilize and reverse the ASP trend over the next 12 months. Unit volumes for sell-in are expected to be flat year-over-year, indicating continued household penetration at lower ASPs.

“I think this year, the most prominent example is the Westwood product that we've launched. We've seen very, very nice volumes in our opening price point, which is the Pro Gen 1, as we call it, Pro 22 and Pro 34. We launched the Westwood into market this year. And frankly, it's really only starting to hit our retailers, that hits a $699 to $799 price point.”

asked by Peter Benedict · answered by Jeremy Andrus

Can you clarify the 'near-term channel impact associated with distribution expansion'? Does it relate to Costco roadshows or existing retail partners changing behavior due to the Lowe's rollout?

The pressure refers to existing retail partners adjusting their assortment and investment in Traeger. When notified of the Lowe's expansion, some retailers chose to re-evaluate their commitment, spreading investments across other brands. This is a natural part of channel strategy, and while it changes dynamics and impacts revenue in current partners, the onus is on Traeger to prove that incremental distribution is additive long-term.

“So Joe, referring to the latter, there's a balancing act between number of retail partners and points of distribution and sort of shared commitment and what that means in terms of assortment that we receive on floor, investments that our retail partners make in our brand, whether they be fixtures, marketing benefits, things like that.”

asked by Joseph Feldman · answered by Jeremy Andrus

Should the IEEPA tariff refund be considered a one-time benefit that needs to be backed out when modeling 2027 EBITDA?

Of the $16 million IEEPA tariff refund, $7 million is sales-related for FY26, meaning it contributes to a lower implied tariff rate for the current year. The remaining portion is more one-time. While it's a benefit, the company advises planning for the full FY26 EBITDA guide at the midpoint ($62 million) and considering the $7 million as FY26 driven, rather than a direct $16 million deduction for 2027.

“Of that $16 million, $2 million is going to be recognized in the second half, but $7 million is sales related or FY '26 sales related meaning we essentially have a lower tariff rate or an implied tariff rate. Our tariff rate right now is around 25%. But in terms of a onetime, I would not plan. I would plan for our full guide at the midpoint of $62 million. You could say there is a $60 million benefit, but $7 million of it is FY '26 driven.”

asked by Joseph Feldman · answered by Joey Hord