Traeger reported their Q4 and 2024 earnings today, and they beat their guidance for the year. Some trends that continued from Q3 are that grill sales are up, but MEATER sales are way down.

Grill Sales

Traeger’s grill sales have continued to be a bright spot. They were up 30% in Q4 of 2024 compared to Q4 2023. Consumers are still buying two things in the grill market, value and innovation. Traeger offered both of those with increased promotion, their value price Pro 22 model, and load-in from their new Woodridge pellet grill.

Grill performance was better than expected, and underlying sell-through of grills was positive in the quarter. We saw particular strength during our holiday promotional period. In fact, Black Friday 2024 was one of the biggest sell-through days in our history. As we have noted on prior calls, we are seeing outperformance in our lower price point grills. We believe this confirms that there is a significant demand for Traeger product at approachable price points.

Jeremy Andrus, CEO of Traeger

The Traeger Pro 22 is a low priced model that’s relatively low tech, with a manual controller. It’s a good entry point for consumers into pellet grilling and the Traeger brand. In the current environment, it’s been selling at a high volume.

So Woodridge, it certainly hits a price point, a premium but accessible price point. We think it’s very well-positioned in the market from a value perspective. We did — we learned a lot about price point and access to a broader segment of consumers as we promoted the Pro 22 three times last year at $389. We had just an incredible response. It was a supply chain feat between our team and our retail partners to keep up with demand.

But no question, the sub-$500, the appetite for our brand beneath $500 was meaningful. And we have the ability to not only anniversary that this year but to ensure that we are fully in stock with our retailers. And we feel good about — I think it really spoke to not only the demand for the brand, but it spoke to the position of the brand where we promoted sub-$500. And there was a clear step-function in volume that price point. So we feel good about the learnings, and we expect to continue that this year. And in the meantime, we also — I think if you compare the Pro 22 to the Woodridge, I think it allows us to access different customers, very, very clear step-up or step-up story or trade-up story between the Pro 22 at $499 and the Woodridge, which is currently priced between $799 and $1,599.

Jeremy Andrus, CEO of Traeger

The Woodridge was officially released on January 16th. Ahead of that though, Traeger had load-in to get the Woodridge to their network of retailers. Sell through of the Woodridge wouldn’t be reflected in the quarter, but Jeremy Andrus did note that the Woodridge is selling above expectations.

So I don’t know if we can quantify specifically what the load-in was. What I can say is that it’s not just Woodridge load-in. We did build in some of this coming out of Q4, knowing that we would be delivering on our Woodridge load-in in Q4. It did exceed expectation. But some of that capacity was unlocked due to the fact that our core line of grills and market exceeded expectations from a sell-through standpoint on the back of what continues to be a very high-performing promotion.

So again, I think, there’s a balance between the two. Certainly, there’s an uplift because of load-in. That’s just normal, again, as part of the ebbs and flows of innovation cycles. But I think the underlying theme, and I think a key underpinning to the performance, is certainly around sell-through as well and the fact that also contributes to added replenishment.

Dom Blosil, CFO of Traeger

Sales Down at MEATER

It’s interesting how grill sales and accessory sales have flip flopped through the Pandemic and recovery. MEATER was doing extremely well for Traeger once grill sales fell off, and now the opposite is happening.

Sales of MEATER were also down in Q3, and Traeger believed it was because they weren’t targeting the right part of the marketing funnel to drive sales. They’ve since adjusted their view to be that sales are down from the increased competition in the wireless thermometer space.

Our accessories revenue in the fourth quarter were pressured by a decline at MEATER. Last quarter, we discussed MEATER’s underperformance and our expectations for sequential improvement in the fourth quarter, which is MEATER’s most important quarter. While we did see some level of improvement in the rate of decline as compared to the third quarter, fourth quarter results were lower than expected. We believe there are several drivers of the underperformance at MEATER.

As we spoke to on our last call, after having made a decision to pull back on marketing spend at MEATER earlier in 2024, we reaccelerated marketing spend in the fourth quarter. Ultimately, we didn’t experience a lift in demand we were expecting from the incremental marketing spend in Q4, and return on advertising spend was lower than expected.

We believe that the reduced efficiency of our demand creation was driven by heightened competition in the meat probe space, as well as higher cost in the fourth quarter related to the election. We also believe that growth in the meat thermometer category slowed in 2024 after seeing several years of strong gains contributing to a tougher demand backdrop for MEATER.

Jeremy Andrus, CEO of Traeger

Traeger has a strategy in place to turn around the decline at MEATER. It involves many areas of the MEATER business.

We have strategic plans in place to improve MEATER. This includes optimizing the balance of demand creation spend in ROAS, changing leadership of several key functions at the organization and reconfiguring our long-term product road map. Furthermore, we continue to view retail distribution as a large opportunity for MEATER and have put resources behind our efforts to expand this channel.

Jeremy Andrus, CEO of Traeger

The move into retail from DTC is something that we’re seeing across the outdoor cooking space in a variety of products. It also takes us to our next takeaway from Traeger’s earnings call.

Partnership with Walmart

Traeger hasn’t sold at Walmart previously, but that’s something that changed in Q4. They began selling their pellets and other consumables at the large retailer in December.

Critically, our consumer research indicates that the Walmart shopper has little overlap with our existing distribution channels with respect to their pellet purchases, and therefore, we think this is an incremental market share opportunity.

Jeremy Andrus, CEO of Traeger

Building on that partnership, Traeger has begun selling MEATER products at select Walmart stores.

Tariffs

The details around tariffs continue to be highly dynamic, even day to day. Traeger is getting ahead of possible tariffs on products from China in different ways.

With approximately 50% of our sales driven by goods imported to the US from China, our organization has been analyzing news on trade policy and has been working aggressively on strategies to offset the potential impact of tariffs for some time. Our ongoing mitigation strategies include supply chain efficiencies and savings, negotiations with our contract manufacturers and potential price increases. We are taking a proactive approach to mitigating tariffs, and our strategies will continue to evolve as there is more clarity in this fast-changing environment.

Jeremy Andrus, CEO of Traeger

On the supply chain front, Traeger has been working to expand their production capabilities in Vietnam. They will begin increasing production there this quarter, with capacity to add more.

So I would say, first of all, we’ve been manufacturing in Vietnam for a number of years now. And this is our second — global manufacturing partner who has a footprint in Vietnam going well. I was there about six weeks ago.

And look, this is — fortunately, we have been working on some diversification of our sourcing base outside of China for a few years. We have some partners who have the ability to scale nicely. Supply chain doesn’t move quickly, but we’ve been working on that. And we’ll be in production — mass production with that partner in this quarter. And so we have options and we continue to develop those options. And I think we’re trying to be really balance a dynamic environment that is changing day by day, with making good decisions and acknowledging that ensuring that the sort of shifting sands have settled before we make reactive decisions. So we’re sort of focused on both those things. But fortunately, we do have about 25% of our growth production has been in Vietnam, and we have the ability to scale that up.

Jeremy Andrus, CEO of Traeger

Another way they’re getting ahead of tariffs is through buying more product ahead of any potential tariffs. It’s the time of year that they increase inventory anyways, but this year they’re buying more.

I mean what I would say is in Q1 we’ve been focused on bringing in as much inventory as possible ahead of anticipatory tariffs.

Dom Blosil, CFO of Traeger

Grill Market

Traeger also gave their view on the overall grill market. They noted that they believe they have 3.6% household penetration, which presents quite a bit of opportunity for them. They also believe that they’ve been taking market share.

So first of all, as we think about the last three years, pace of decline from 2022 until last year, it certainly appears that we have found bottom. 2022 was an aggressive sort of mid-high teens decline, high single digits in 2023. And then last year, we believe that the industry was flat to slightly up.

Our expectation for this year has been that that grills will grow modestly flat to up 1% to 2%. And of course, that was a — that forecast is many days old now. And so there are — it’s going to take some time to understand the impact of tariffs on this industry. Our expectation is that we will see price increases. And I think whereas we should be getting into a more normalized replacement cycle for grills just given the massive replacement since the pandemic and the units that were pulled forward, we would expect to see some modest growth. We’ll, of course, we’re doing business in highly dynamic environment, and we’re tracking it.

I think it’s important to note that Traeger did gain share in 2024. We had a nice acceleration, notably from a unit volume perspective during the promotional period. But I’d say, especially in the fourth quarter, I highlighted in my comments that Black Friday was one of the highest volume sales days in the Traeger brand history. And so in terms of relative to 2019, we still believe we’re down somewhat meaningfully from 2019. And we believe over the next 12 to 36 months that the industry grows, begins to catch up with pre-pandemic levels. And, of course, there’s a macro backdrop that we’re also being sensitive to as well.

Jeremy Andrus, CEO of Traeger