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Traeger Q1 Takeaways – Flatrock is a Hit, Lower Freight is Helping Margin

Traeger reported Q1 2023 earnings after the market closed yesterday, and exceeded their guidance. I feel like we’ve beaten inventory to death, but their update was the same as everybody else, they’re working through it and expect normalization in the second half.

Innovative Products

To much fanfare, Traeger released a new Ironwood and their flattop grill, the Flatrock in Q1. They said on their earnings call that the social media response was much greater than their expectations, with associated sell-through.

Well, we’re early. We’re early in May. But I would say the energy that we felt on social, in early innings, we’re seeing correlated with sell-through.

Jeremy Andrus, Traeger CEO

The odds were good that the Ironwood would perform well, given that it’s an upgrade of an existing popular model. The Flatrock griddle was more of a risk, given that it was a whole new product category for Traeger. They had limited distribution of the Flatrock, but feel there’s opportunity to increase it through the year.

In terms of Flatrock contributing to upside to the year, we believe that the disciplined approach was to launch it narrowly at retail, and sell-through’s exceeded our expectation. wE’ll be relatively constrained for the next six — sort of six to eight months on inventory. There are long lead time components there but we really do believe head into ’24 that this has the potential to be a meaningful grower for us.

Jeremy Andrus, Traeger CEO

The early success is good news for Traeger in trying out something different. For consumers that are thinking about buying a Flatrock, it might not be a bad idea to pull the trigger on the purchase in case there are any shortages.

Market Share

Traeger gave a couple data points regarding pellet grill market share and their penetration. On an interview with Yahoo Finance, Jeremy Andrus had the following to say about Traeger’s growth and that of the market.

And I’d say, first of all, we’ve been a share taker for 10 of the 10 years that I’ve been here. And so if you were to rewind back to 2013, Traeger and wood pellet grills did not register from a market share perspective. We’re now about 12%, just north of 12% of the dollar’s share of the outdoor cooking market.

Jeremy Andrus, Traeger CEO

We’re comparing to different datasets here, but a 12% share for Traeger would show decent growth from previous data we’ve seen. It also would be a large share of the pellet grill market, which was projected to be 20% of the overall grill market.

On Traeger’s earning call Jeremy Andrus noted that their current household penetration is 3.5%. They previously estimated their penetration at 3% back when they did their IPO, with a total addressable market of 75 million households. That would represent growth of approximately 375,000 households.

Freight Tailwind

A bright spot that’s helping the outdoor cooking industry as a whole is in-bound freight costs. They were wild during the pandemic, but they’ve since normalized and are a tailwind.

We expect that lower transportation costs will be the largest driver of gross margin improvement for the year due to the decline in inbound freight rates.

Dom Blosil, Traeger CFO


Traeger decreased their number of pellet plants in the quarter from 7 to 5. They identified plants that were operating inefficiently, but made up for the capacity in their other plants.

Consumables revenues were $30 million, down 24% to first quarter of last year, driven by lower volume of pellets. Our consumables business was negatively impacted by the loss of volume with a customer who introduced a private label pellet last year, as well as lapping the large load-in of food consumables into the grocery channel in the first quarter of last year.

Dom Blosil, Traeger CFO

Not only were there efficiencies to be had with scaling down their pellet operations, their current capacity at their other plants is enough to accommodate growth over the next few years.

Traeger has continued to add distribution to their consumables business with pellets added to nearly 450 new grocery doors across Albertsons, SpartanNash, and Raley’s. They also began selling their value sized 30 lb bags of pellets at over 1,600 Kroger doors.

Expansion continued for their rubs and sauces as well. They secured distribution in over 250 Meijer doors.

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