2025 was a year of rebuilding for the future for many grill companies. At Traeger, they launched their Project Gravity strategy to right-size their business in the face of tariffs and a consumer headwinds.

Much like we heard from large retailers, Traeger sounds like they anticipate 2026 to be about weathering the storm for the future.

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.

Jeremy Andrus, CEO of Traeger

Contrasting what Traeger originally built their brand on, they have seen success lately at the sub-$1,000 grill price point. They are going to lean into that by releasing two new products under $1,000 in Q2.

On a positive, and this just happens to be a nature of where we are in our product development life cycle, we’re 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 2 product platforms that we’re launching this spring, they’re sub-$1,000 products, which are — which is certainly very appropriate for the moment in time. But otherwise, we don’t shift our product strategy relative to the cycles that we’re in.

Jeremy Andrus, CEO of Traeger

I had been waiting to see if we’d get a new Timberline this year. Their highest price point grill is starting to age, and is due for a refresh. Rather than releasing it to a value-seeking consumer where it may struggle, I think we’ll see it in 2027 or even 2028. Traeger also plans to rationalize SKUs over the next year to simplify their line-up.

As we’ve gone deeper into the work, we’ve also identified additional value capture opportunities within Phase 2, 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 million to $12 million 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.

Jeremy Andrus, CEO of Traeger

Replacement Cycle

I think everyone in the outdoor cooking industry is waiting for the replacement cycle. There was a massive demand spike during The Pandemic, which was six years ago at this point. That’s already longer than the average replacement cycle for grills.

When consumers are buying fuel, they’re cooking. And when they’re 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.

Jeremy Andrus, CEO of Traeger

Traeger’s guidance for 2026 doesn’t include getting into the replacement of those Pandemic purchased grills. Jeremy Andrus did offer some thoughts on when he thinks it will happen though.

I will say that we have not forecasted in the guidance that we’ve offered, we have not forecasted a return to a more normalized replacement cycle because it’s hard to know exactly when. We just believe that this is a very durable category and then it will return to those more normalized levels. So, we’re heading to that period at some point in time, certainly over the next 12 to 24 months.

Jeremy Andrus, CEO of Traeger

Debt

Even through the downturn, Traeger has been in a good position with their debt. They either timed it well or got lucky and entered their credit agreement right before grill sales slowed and rates went up. That’s helped them from a liquidity a cash flow perspective.

Their credit agreement is starting to ratchet down though, and will need to be refinanced or amended in the near future. Hopefully, for Traeger’s sake, the economy and outdoor cooking segment pick up before them. With lower EBITDA, growth, and higher interest rates, they may have reduced liquidity and higher interest expense.

While we do not typically provide free cash flow guidance, we currently expect free cash flow of at least $30 million in fiscal ’26, 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’d also note that our covenant calculation includes credit for cost calculations taken over the trailing 12 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 million in the second quarter as part of the amendment executed in ’25. This has no impact on our operations. The remaining $82.5 million of capacity is fully available through December of ’27 and currently undrawn. Our first lien term facility does not mature until June 2028.

Joey Hord, CFO of Traeger

Market Response

Off of Traeger’s earnings, their stock got hit pretty hard. They reported earnings after market close yesterday, and today their stock went down by 30% to $0.61. They hit a new low during the day.

Traeger received another non-compliance notice from NYSE for trading below $1. They had a shareholder vote earlier in the week on a reverse stock split to increase the price per share that was overwhelmingly for it.

The reverse split will be in the range of 1-for-10 to 1-for-50, pending Board approval. I can’t imagine their board wouldn’t approve it, and with where their stock is trading, my guess is they’ll go towards the higher end.