INCREASES REVENUE AND ADJUSTED EBITDA OUTLOOK FOR FULL YEAR 2023

SALT LAKE CITY, Ut., August 2, 2023 (BUSINESS WIRE) -- Traeger, Inc. ("Traeger" or the "Company") (NYSE: COOK), creator and category leader of the wood pellet grill, today announced its financial results for the three months ended June 30, 2023.

•Total revenues decreased 14.4% to $171.5 million

•Gross profit margin of 36.9%, up 25 basis points compared to prior year

•Net loss of $32.9 million compared to a loss of $133.1 million in the prior year

•Adjusted EBITDA of $21.5 million, up from $17.0 million in the prior year

•26% sequential reduction in balance sheet inventory driven by strategic inventory management

•Raises FY 2023 revenue and Adjusted EBITDA guidance

"In the second quarter, we delivered results that were ahead of our expectations and grew adjusted EBITDA, even as our sales were pressured by retailer destocking and lower consumer demand," said Jeremy Andrus, CEO of Traeger. "I am pleased with the significant progress we have made in improving our financial positioning over the last several quarters. Specifically, our efforts to rightsize both balance sheet and channel inventories have allowed us to enter the second half of the year in a substantially more balanced position. Given our better than anticipated results for the first half of the year, today we are increasing our revenue and Adjusted EBITDA guidance for Fiscal 2023."

Mr. Andrus continued, "During our peak selling season in the second quarter, the energy around the Traeger brand remained very strong, bolstering my confidence in our long-term opportunity to disrupt the outdoor cooking industry and to materially grow our household penetration. We look forward to an expected return to growth in the second half of the year and believe we are well-positioned to both navigate the current environment and to drive long-term growth." Total revenue decreased by 14.4% to $171.5 million, compared to $200.3 million in the second quarter last year.

•Grills decreased 20.9% to $93.1 million as compared to the second quarter last year. The decrease was primarily driven by lower average selling prices in addition to decreased unit volumes.

•Consumables decreased 17.1% to $34.9 million as compared to the second quarter last year. The decrease was driven by lower unit volumes in addition to decreased average selling prices.

•Accessories increased 7.4% to $43.5 million as compared to the second quarter last year. This increase was driven primarily by increased average selling prices for Traeger branded accessories and increased revenue due to sales of MEATER smart thermometers.

North America revenue declined 15.6% in the second quarter compared to the prior year. Rest of World revenues increased 3.0% in the second quarter compared to the prior year.

Gross profit decreased to $63.3 million, compared to $73.4 million in the second quarter last year. Gross profit margin was 36.9% in the second quarter, compared to 36.7% in the same period last year. The increase in gross margin was driven primarily by favorability from freight costs and foreign exchange rates, offset by increased dilution.

Sales and marketing expenses were $27.9 million, compared to $42.1 million in the second quarter last year. The decrease in sales and marketing expense was driven by reduced investments in advertising costs and lower costs for commissions and travel related expenses.

General and administrative expenses were $52.4 million, compared to $31.4 million in the second quarter last year. The increase in general and administrative expense was driven by higher equity-based compensation expense of $32.1 million primarily due to the cancellation of the unearned CEO and initial public offering performance-based restricted stock units, as well as higher costs for professional fees. The increases were partially offset by lower employee related costs.

Net loss was $32.9 million in the second quarter, or a loss of $0.27 per diluted share, as compared to net loss of $133.1 million in the second quarter of last year, or a loss of $1.13 per diluted share.1

Adjusted net income was $4.3 million, or $0.04 per diluted share as compared to adjusted net income of $3.9 million, or $0.03 per diluted share in the second quarter last year.2

Adjusted EBITDA was $21.5 million in the second quarter as compared to $17.0 million in the same period last year.2

1 There were no potentially dilutive securities outstanding as of June 30, 2023 and 2022.

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.

Cash and cash equivalents at the end of the second quarter totaled $14.5 million, compared to $39.1 million at December 31, 2022.

Inventory at the end of the second quarter was $97.8 million, compared to $153.5 million at December 31, 2022. The decrease in inventory was driven primarily by strategic inventory management.

The Company is increasing its total revenue and Adjusted EBITDA guidance for Fiscal 2023. The Company's updated outlook reflects better than anticipated results in the first half of the year and expected growth in revenue and EBITDA in the second half of the year.

•Total revenue is expected to be between $585 million and $600 million

•Gross Margin is expected to be between 36% and 37%

•Adjusted EBITDA is expected to be between $55 million and $59 million

A reconciliation of Adjusted EBITDA guidance to Net Loss 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, stock-based compensation, goodwill impairment, non-routine legal expenses, change in fair value of contingent consideration, and other adjustment items all of which are adjustments to Adjusted EBITDA.

A conference call to discuss the Company's second quarter results is scheduled for Wednesday, August 2, 2023, at 4:30 p.m. ET. To participate, please dial (833) 470-1428 or +1 (404) 975-4839 for international callers, conference ID 583097. 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 until Wednesday, August 16, 2023. To access the replay, please dial (866) 813-9403 or +1 (929) 458-6194 for international callers, conference ID 475764. 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. A supplemental presentation has also been posted to the Company's website at https://investors.traeger.com.

Traeger, 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, accessories, and MEATER smart thermometers.

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 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, our ability to manage our future growth effectively, our ability to expand into additional markets, our ability to maintain and strengthen our brand to generate and maintain ongoing demand for our products, our ability to cost-effectively attract new customers and retain our existing customers, our failure to maintain product quality and product performance at an acceptable cost, the impact of product liability and warranty claims and product recalls, the highly competitive market in which we operate, the use of social media and community ambassadors, a decline in sales of our grills, our dependence on three major retailers, risks associated with our international operations, our reliance on a limited number of third-party manufacturers and problems with (or loss of) our suppliers or an inability to obtain raw materials, and the ability of our stockholders to influence corporate matters and the other important 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.

Investors:

Nick Bacchus

Traeger, Inc.

investor@traeger.com

Media:
The Brand Amp
Traeger@thebrandamp.com

TRAEGER, INC.

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, Adjusted Net Income per share, Adjusted EBITDA Margin, and Adjusted Net Income 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, together with a reconciliation of Net Loss to each such measure, and providing Adjusted Net Income per share, together with a reconciliation of Net Loss per share to such measure, and Adjusted EBITDA Margin and Adjusted Net Income Margin, together with a reconciliation of Net Loss 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, and Adjusted Net Income per share 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, and Adjusted Net Income per share 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, and Adjusted Net Income per share 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 Net Loss, Net Loss Margin and Net Loss per share, the most directly comparable financial measures calculated in accordance with U.S. GAAP, to Adjusted Net Income, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Net Income per share, respectively, on a consolidated basis.

(1)Represents realized and unrealized gains on the interest rate swap, including gains associated with the hedge dedesignation, losses on the disposal of property, plant, and equipment, and unrealized gains (losses) from foreign currency transactions and derivatives.

(2)Represents external legal expenses for litigation, patent and trademark defense.

(3)Represents the amortization expense associated with intangible assets recorded in connection with the 2017 acquisition of Traeger Pellet Grills Holdings LLC.

(4)Represents non-routine operational wind-down costs, non-cash ground lease expense associated with a build-to-suit lease in 2022, as well as write-offs and restoration costs at our wood pellet production facility due to flood damage sustained as a result of a tropical storm.

(5)Represents an adjusted tax rate equal to our annual estimated tax rate on Adjusted Net Income. This rate is based on our estimated annual GAAP income (loss) tax rate forecast, adjusted to account for items excluded from GAAP income (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 may differ from our GAAP tax rate and from our actual tax liabilities.