Traeger Inc.
03/06/2026 | Press release | Distributed by Public on 03/06/2026 05:04
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current plans, expectations, and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" and in other parts of this Annual Report on Form 10-K. A discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023 has been reported previously in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 7, 2025, under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations."
Overview
Traeger 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. Our grills are versatile and easy to use, empowering cooks of all skill sets to create delicious meals with a wood-fired flavor that cannot be replicated with gas, charcoal, or electric grills. Grills are at the core of our platform and are complemented by Traeger wood pellets, rubs, sauces, and accessories.
In May 2025, we commenced Project Gravity, a multi-step strategic optimization plan intended to streamline our organizational structure and rebalance our cost base, including a reduction in force, centralization of our MEATER business into our Salt Lake City infrastructure, discontinuation of the Costco roadshow program, exit from the Traeger direct to consumer business by redirecting Traeger.com consumers to retail partners, transition to a distributor model in certain European markets that operate under a direct model, and pellet mill consolidation.
Our marketing strategy has been instrumental in building our brand and driving customer advocacy and revenue. We have disrupted the outdoor cooking market and created a passionate community, the Traegerhood, which includes foodies, pitmasters, backyard heroes, moms and dads, professional athletes, outdoorsmen and outdoorswomen, and world-class chefs. This community, together with our various marketing initiatives, has helped to promote our brand and products to the wider consumer population and supported our efforts to redefine outdoor cooking as an experience accessible to everyone. We have an active online and social media presence and a content-rich website that drives significant customer engagement and brings our Traegerhood together. We also directly engage with our current and target customers by sponsoring and participating in a variety of events, including live shows, outdoor festivals, rodeos, music and film festivals, barbecue competitions, fishing tournaments, and retailer events. We believe the style and authenticity of our customer engagement reinforces our brand and drives new and existing customer interest in our products and community.
Our revenue is primarily generated through the sale of our wood pellet grills, consumables, and accessories. We currently offer eight series of grills - Woodridge, Ironwood, Timberline, Pro (with and without WiFIRE), and Flatrock - as well as a selection of smaller, portable grills within our Portable Series and a special Club Lineup through targeted channels. Our grills are available in a number of different sizes and can be upgraded through a variety of accessories. The majority of our grills feature WiFIRE technology, which allows users to monitor and adjust their grills remotely using our Traeger app. Our consumables include our wood pellets, which are made from natural, virgin hardwood and are available in a variety of flavors, as well as rubs and sauces. Our accessories include MEATER smart thermometers, P.A.L. Pop-And-Lock accessory rails, grill covers, liners, tools, apparel, and other ancillary items.
We sell our grills using an omnichannel distribution strategy that consists primarily of retail and direct to consumer ("DTC") channels. Our retail channel covers brick-and-mortar retailers, e-commerce platforms, and multichannel retailers, who, in turn, sell our grills to their end customers. Our retailers include Ace Hardware, Amazon, Costco, The Home Depot, and Best Buy, among others, as well as a significant number of independent retailers that cater to local communities and specific categories, such as hardware, camping, outdoor, farm, ranch, barbecue, and other categories. Our DTC channel covers sales directly to customers through our website and Traeger app, as well as certain country- and region-specific Traeger or distributor websites. Our consumables and accessories are available through the same channels as our grills. As part of Project Gravity, we are undertaking a broader channel optimization strategy that includes exiting the Traeger-operated DTC business. In connection with this shift, we have begun redirecting consumers from Traeger.com to our retail partners' websites, aligning our distribution model more closely with our retail-focused strategy. However, we will continue to offer our MEATER smart thermometer accessories through the DTC channel, as this model remains well-suited to the MEATER brand and consumer base.
Over the last several years, we have made significant investments in our supply chain and manufacturing operations. Our supply chain includes third-party manufacturers for our grills and accessories and pellet production facilities for our wood pellets that we own or lease. We work closely with our manufacturers to evolve on design, manufacturing process, and product
quality. Our grills are currently manufactured in China and Vietnam, our wood pellets are produced at facilities located in New York, Oregon, Georgia, Virginia, Texas, and Poland, and our MEATER smart thermometer accessories are currently manufactured in Taiwan. We have entered into manufacturing agreements covering the supply of substantially all of our grills and accessories, pursuant to which we make purchases on a purchase order basis. We rely on several third-party suppliers for the components used in our grills, including integrated circuits, processors, and system on chips.
Our revenue decreased by 7.4% to $559.5 million for the year ended December 31, 2025, compared to $604.1 million for the year ended December 31, 2024. We recorded a net loss of $115.2 million for the year ended December 31, 2025, compared to a net loss of $34.0 million for the year ended December 31, 2024.
Key Factors Affecting Our Financial Condition and Results of Operations
We believe that our financial condition and results of operations have been, and will continue to be, affected by a number of factors that present significant opportunities for us but also pose risks and challenges, including those below and in Part I, Item 1A. "Risk Factors" of this Annual Report on Form 10-K.
Macroeconomic Conditions
Continuing global economic uncertainty, terrorism and conflicts, political conditions, and fiscal challenges in the United States and abroad could result in adverse macroeconomic conditions, including inflation, slower growth, or recession. We believe there is significant uncertainty regarding how macroeconomic conditions, including tariffs, sustained high levels of inflation and higher interest rates, will impact consumer demand for durable goods. While some of these conditions have negatively impacted consumer discretionary spending behavior, we continue to see demand for our products.
Since the beginning of 2025, President Trump implemented and/or reinstated tariffs and import restrictions on products from various countries. In early 2025, the U.S. imposed tariffs on certain Chinese goods and "reciprocal" tariffs under the International Emergency Economic Powers Act (IEEPA) that escalated to as high as 125%. The U.S. also increased Section 232 tariffs on steel and aluminum to 50% in June 2025 and significantly expanded coverage to derivative products in August 2025. In November 2025, the U.S. and China reached an agreement that reduced certain tariffs on Chinese goods to 10%, with the agreement extended through November 2026. However, on February 20, 2026, the Supreme Court ruled that the President cannot use IEEPA to impose tariffs, invalidating certain tariffs that had been imposed under IEEPA. In response to this ruling, President Trump signed a proclamation imposing a new 10% global tariff under Section 122 of the Trade Act of 1974, effective February 24, 2026, and subsequently increased these tariffs to 15% on February 21, 2026. Section 122 tariffs are subject to a 150-day statutory limit unless extended by Congress. In addition, the Office of the U.S. Trade Representative has announced it will initiate new Section 301 investigations into trading partners' unfair practices, which could result in additional tariffs. The administration has stated that combining Section 122, Section 232, and Section 301 tariffs will result in virtually unchanged tariff revenue in 2026, signaling its intent to maintain similar tariff levels through alternative legal authorities. The Supreme Court's ruling did not address whether importers who paid IEEPA tariffs are entitled to refunds, and that issue remains subject to further litigation before the U.S. Court of International Trade. We cannot predict whether or when any refunds will be available, and the administration has indicated it intends to contest refund claims. These developments, as well as any further changes in tariff rates, product coverage, or non-tariff trade barriers have disrupted and have the potential to further disrupt existing supply chains and impose additional costs on businesses in our industry. The resulting environment of tariffs and trade restrictions has required us to increase prices for our products in the U.S., which could lead to decreased consumer demand for our products and would negatively impact our results of operations, cash flows, and financial condition. For more information on risks to our business related to tariffs, please see Part I, Item 1A. "Risk Factors - United States trade policies that restrict imports or increase import tariffs may have a material adverse effect on our business."
In response to these macroeconomic conditions, we have taken actions to identify and execute on cost savings initiatives, while simultaneously seeking to maintain product quality and reliability across the supply chain. For example, as part of Project Gravity, our previously announced multi-step strategic optimization plan, we have conducted a reduction in force and are centralizing our MEATER business into our Salt Lake City infrastructure to reduce overhead and drive organizational efficiency. Additionally, we are pursuing streamlining and channel optimization initiatives including discontinuing the Costco roadshow program, redirecting Traeger.com consumers to our retail partners' websites as part of an exit from the Traeger direct-to-consumer business, transitioning to a distributor model in European markets that currently operate under a direct model, and pellet mill consolidation. We have also taken proactive steps to mitigate tariff-related risks by increasing product prices and negotiating cost savings with our manufacturers. We expect continued cost savings to improve operating results in the long term, but given the uncertainty of the macroeconomic environment in the near term, including as a result of tariffs, there can be no assurance regarding the outcome of our continuing efforts to help mitigate the effects of these conditions on our business.
We will continue to monitor and, if necessary, take additional action to mitigate the effects of the macroeconomic environment on our business.
Components of Results of Operations
Revenue
We derive substantially all of our revenue from the sale of grills, consumables, and accessories in North America, which includes the United States and Canada. We recognize revenue, net of product returns, for our grills, consumables, and accessories generally at the time of shipment to retailers through our retail channel and to customers through our DTC channel. Estimated product returns are recorded as a reduction of revenue at the time of recognition and are calculated based on product returns history, observable changes in return behavior, and expected returns based on sales volume and mix. We also have certain contractual programs that can give rise to elements of variable consideration, such as volume incentive rebates, with estimated amounts of credits recorded as a reduction to revenue.
Although we experience demand for our products throughout the year, there are seasonal fluctuations in our revenue. We have typically experienced moderately higher levels of sales of our grills in the first and second quarters of the year as our retailers purchase inventory in advance of warmer weather, when demand for outdoor cooking products is the highest across our key markets. Higher sales also coincide with social events and national holidays, which occur during the same warm weather timeframe. Additionally, we have typically experienced higher sales volume of our accessories during the fourth quarter of the year, due in part to seasonal holiday demand.
Gross Profit
Gross profit reflects revenue less cost of revenue. Cost of revenue consists of product costs, including the costs of products from our third-party manufacturers, costs of components, direct and indirect manufacturing costs across all products, packaging, inbound freight and duties, warehousing and fulfillment, warranty costs, product quality testing and inspection costs, excess and obsolete inventory write-downs, cloud-hosting costs for our WiFIRE connected products, depreciation of tooling and manufacturing equipment, amortization of internal use software and patented technology, and certain employee-related expenses.
We calculate gross margin as gross profit divided by revenue. Several factors can impact gross margin, particularly sales channel mix and product mix. For instance, gross margin on sales through our direct import program with certain retail partners is generally higher than that of our core retail channels. If our direct import program grows or its sales outpace those of our core retail channels, and if we are able to realize greater economies of scale and freight cost savings, we would expect a favorable impact to overall gross margin over time. Additionally, gross margin on sales of certain of our products is higher than for others. If revenue from sales of wood pellets increased as a percentage of total revenue, we would expect to see an increase in overall gross margin. These potentially favorable gross margin impacts may not be realized, or may be offset by other unfavorable gross margin factors. Additionally, any new products that we develop, or external factors beyond our control, such as duties and tariffs and costs of doing business in certain geographies, may also impact gross margin. For example, the recently implemented or announced and, in some cases, temporarily paused pending negotiations, tariffs on foreign goods, including a baseline 10% tariff on product imports from almost all countries and individualized higher tariffs on other countries, 50% tariff on steel and aluminum imports from nations other than the United Kingdom, which remains at 25% currently, and the announcement of a retaliatory tariff on certain U.S. goods by other nations could impact our gross margin. For more information on risks to our business related to tariffs, please see Part I, Item 1A. "Risk Factors - United States trade policies that restrict imports or increase import tariffs may have a material adverse effect on our business."
Sales and Marketing
Sales and marketing expense consists primarily of the costs associated with advertising and marketing of our products and employee-related expenses, including salaries, benefits, and stock-based compensation expense, as well as sales incentives and professional services. These costs can include print, internet, and television advertising, travel-related expenses, direct customer acquisition costs, costs related to conferences and events, and broker commissions. We anticipate that sales and marketing expense as a percentage of revenue will fluctuate from period to period based on revenue for such period and the timing of the expansion of our sales and marketing functions, as these activities may vary in scope and scale over future periods.
General and Administrative
General and administrative expense consists primarily of employee-related expenses and facilities for our executive, finance, accounting, legal, human resources, information technology, and other administrative functions. General and administrative expense also includes fees for professional services, such as external legal, accounting, information and technology services, and insurance.
In addition, general and administrative expense includes research and development expenses incurred to develop and improve our future products and processes, which primarily consist of employee- and facilities-related expenses, including salaries, benefits, and stock-based compensation expense, as well as fees for professional services, costs related to prototype tooling and materials, and software platform costs. Research and development expense was $12.4 million, $15.2 million, and $11.5 million for the year ended December 31, 2025, 2024, and 2023, respectively.
We continue to expect our general and administrative expenses, including our research and development expenses and external legal and accounting expenses, to vary as a percentage of revenue from period to period. As we continue to manage our investments to support our innovation and enhance our product offerings, we expect to leverage these expenses over time to achieve profitability and expand revenue opportunities. In addition, as a result of the cost-reduction actions implemented under Project Gravity, we anticipate a reduction in overall operating expenditures, including a decrease in general and administrative expenses.
Amortization of Intangible Assets
Amortization of intangible assets primarily consists of amortization of identified finite-lived customer relationships, distributor relationships, and trademark assets that were allocated a considerable portion of the purchase price from the corporate reorganization and acquisition of our Company in 2017, as well as the July 2021 acquisition of Apption Labs pursuant to the share purchase agreement (the "Share Purchase Agreement"). These costs are amortized on a straight-line basis over 5 to 25 year useful lives and, as a result, amortization expense on these assets is expected to remain stable over the coming years. Future business acquisitions may result in incremental amortization of intangible assets acquired in any such transactions.
Goodwill Impairment
Goodwill represents the excess of consideration transferred over the fair value of tangible and identifiable intangible net assets acquired and the liabilities assumed in a business combination. Substantially all of our goodwill was recognized in the purchase price allocations when our Company was acquired in 2017 and when Apption Labs was acquired in July 2021, with smaller incremental amounts recognized in subsequent business combinations. Goodwill is not amortized, but is tested for impairment at the reporting unit level annually or more frequently if events or changes in circumstances indicate that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. In conducting the impairment test, we first review qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. We currently operate as a single reporting unit under the guidance in Topic 350, Intangibles - Goodwill and Other.
When testing goodwill for impairment, we have the option of first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If we elect to bypass the qualitative assessment, or if a qualitative assessment indicates it is more likely than not that carrying value exceeds its fair value, we perform a quantitative goodwill impairment test. Under the quantitative goodwill impairment test, if our reporting unit's carrying amount exceeds its fair value, we will record an impairment charge based on that difference.
During the third quarter of 2025, we identified a potential indicator of impairment due to the sustained decrease of our stock price and market capitalization which led to the conclusion that a triggering event had occurred and therefore we performed a quantitative test for the single reporting unit. Based on the quantitative impairment test of goodwill, we determined that the carrying value of the reporting unit was in excess of its fair value after considering a control premium and recorded a non-cash impairment charge of $74.7 million. For details associated with our interim goodwill impairment, see Note 2 - Summary of Significant Accounting Policies to the accompanying consolidated financial statements included in this Annual Report on Form 10-K.
Restructuring and Other Costs
On May 15, 2025, the Board of Directors of the Company approved a comprehensive enterprise initiative designed to streamline our organizational structure and rebalance its cost base to achieve profitability and cash flow generation. As part of this initiative, we have identified potential opportunities to deliver cost savings and efficiencies. These savings are expected to
be achieved through Project Gravity, which includes a reduction in force and the centralization and streamlining of our operations.
As a result of these initiatives, we have recorded $21.8 million of expenses within restructuring and other costs in the accompanying consolidated statements of operations and comprehensive loss for the year ended December 31, 2025. Of these total costs, $13.9 million, $7.2 million and $0.8 million are related to consulting fees, severance and other personnel costs, and other restructuring related costs for the year ended December 31, 2025, respectively.
Total Other Expense
Total other expense consists of interest expense and other income, net. Interest expense includes interest and other fees associated with our Credit Facilities, Receivables Financing Agreement (each as defined below) as well as the amortization of amounts recorded within accumulated other comprehensive income prior to the dedesignation of the interest rate swap derivative contracts as a cash flow hedge. Other income, net consists of any realized and unrealized gains (losses) from our interest rate swap derivative contract subsequent to the dedesignation of the swap contract from a cash flow hedge, the benefit recognized associated with the employee retention tax credit, foreign currency realized and unrealized gains and losses resulting from exchange rate fluctuations on transactions denominated in a currency other than the U.S. Dollar and the foreign currency contracts that we use to manage our exposure to foreign currency exchange rate risk related to our purchases and international operations.
Results of Operations
The following tables summarize key components of our results of operations for the periods presented (dollars in thousands). The period-to-period comparisons of our historical results are not necessarily indicative of the results that may be expected in the future.
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Year-ended December 31, |
Change | ||||||||||||||||||||||
| 2025 | 2024 | Amount | % | ||||||||||||||||||||
| Revenue | $ | 559,520 | $ | 604,072 | $ | (44,552) | (7.4) | % | |||||||||||||||
| Cost of revenue | 340,174 | 348,603 | (8,429) | (2.4) | % | ||||||||||||||||||
| Gross profit | 219,346 | 255,469 | (36,123) | (14.1) | % | ||||||||||||||||||
| Operating expense: | |||||||||||||||||||||||
| Sales and marketing | 90,217 | 109,656 | (19,439) | (17.7) | % | ||||||||||||||||||
| General and administrative | 95,031 | 113,483 | (18,452) | (16.3) | % | ||||||||||||||||||
| Amortization of intangible assets | 35,260 | 35,274 | (14) | - | % | ||||||||||||||||||
| Goodwill impairment | 74,725 | - | 74,725 | * | |||||||||||||||||||
| Restructuring and other costs | 21,840 | - | 21,840 | * | |||||||||||||||||||
| Total operating expense | 317,073 | 258,413 | 58,660 | 22.7 | % | ||||||||||||||||||
| Loss from operations | (97,727) | (2,944) | 94,783 | 3219.5 | % | ||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest expense | (31,350) | (33,500) | (2,150) | (6.4) | % | ||||||||||||||||||
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Other income, net
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9,755 | 480 | 9,275 | 1932.3 | % | ||||||||||||||||||
| Total other expense | (21,595) | (33,020) | (11,425) | (34.6) | % | ||||||||||||||||||
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Loss before benefit from income taxes
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(119,322) | (35,964) | 83,358 | 231.8 | % | ||||||||||||||||||
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Benefit from income taxes
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(4,141) | (1,956) | (2,185) | 111.7 | % | ||||||||||||||||||
| Net loss | $ | (115,181) | $ | (34,008) | $ | 81,173 | 238.7 | % | |||||||||||||||
* Not meaningful
Comparison of the Year Ended December 31, 2025 and 2024
Revenue
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Year-ended December 31, |
Change | ||||||||||||||||||||||
| 2025 | 2024 | Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Grills | $ | 298,026 | $ | 324,702 | $ | (26,676) | (8.2) | % | |||||||||||||||
| Consumables | 127,474 | 119,299 | 8,175 | 6.9 | % | ||||||||||||||||||
| Accessories | 134,020 | 160,071 | (26,051) | (16.3) | % | ||||||||||||||||||
| Total Revenue | $ | 559,520 | $ | 604,072 | $ | (44,552) | (7.4) | % | |||||||||||||||
Revenue decreased by $44.6 million, or 7.4%, to $559.5 million for the year ended December 31, 2025 compared to $604.1 million for the year ended December 31, 2024. This decrease was primarily driven by lower sales from our grills and accessories, partially offset by higher sales from our consumables.
Revenue from our grills decreased by $26.7 million, or 8.2%, to $298.0 million for the year ended December 31, 2025 compared to $324.7 million for the year ended December 31, 2024. The decrease was primarily driven by a mid-single digit decline in average selling price and mid-single digit reduction in unit volume. The lower average selling price ("ASP") reflected a mix shift to lower priced grills, while the decrease in unit volume was driven by the impact of pricing actions on demand, partially offset by higher orders of lower ASP grills.
Revenue from our consumables increased by $8.2 million, or 6.9%, to $127.5 million for the year ended December 31, 2025 compared to $119.3 million for the year ended December 31, 2024. The increase was primarily driven by a high-single digit increase in wood pellet and food consumable sales. The wood pellet sales were driven by high-single digit increase in average selling price from our strategic alignment with certain wholesale partners. The food consumables increase in sales was primarily due to expansion in distribution.
Revenue from our accessories decreased by $26.1 million, or 16.3%, to $134.0 million for the year ended December 31, 2025 compared to $160.1 million for the year ended December 31, 2024. This decrease was driven primarily by lower sales of MEATER smart thermometers, partially offset by low-double digit increases in average selling prices and unit volumes in Traeger branded accessories.
Gross Profit
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Year-ended December 31, |
Change | ||||||||||||||||||||||
| 2025 | 2024 | Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Gross profit | $ | 219,346 | $ | 255,469 | $ | (36,123) | (14.1) | % | |||||||||||||||
| Gross margin (Gross profit as a percentage of revenue) | 39.2 | % | 42.3 | % | |||||||||||||||||||
Gross profit decreased by $36.1 million, or 14.1%, to $219.3 million for the year ended December 31, 2025 compared to $255.5 million for the year ended December 31, 2024. Gross profit as a percentage of revenue decreased to 39.2% for the year ended December 31, 2025 from 42.3% for the year ended December 31, 2024. The decrease in gross margin was primarily driven by tariff related costs and obsolescence adjustments, partially offset by supply chain efficiencies.
Sales and Marketing
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Year-ended December 31, |
Change | ||||||||||||||||||||||
| 2025 | 2024 | Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Sales and marketing | $ | 90,217 | $ | 109,656 | $ | (19,439) | (17.7) | % | |||||||||||||||
| As a percentage of revenue | 16.1 | % | 18.2 | % | |||||||||||||||||||
Sales and marketing expense decreased by $19.4 million, or 17.7%, to $90.2 million for the year ended December 31, 2025 compared to $109.7 million for the year ended December 31, 2024. As a percentage of revenue, sales and marketing expense decreased to 16.1% for the year ended December 31, 2025 from 18.2% for the year ended December 31, 2024. The decrease in sales and marketing expense was primarily driven by lower demand creation spending, as well as reductions in employee-related costs and professional fees as a result of Project Gravity.
General and Administrative
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Year-ended December 31, |
Change | ||||||||||||||||||||||
| 2025 | 2024 | Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| General and administrative | $ | 95,031 | $ | 113,483 | $ | (18,452) | (16.3) | % | |||||||||||||||
| As a percentage of revenue | 17.0 | % | 18.8 | % | |||||||||||||||||||
General and administrative expense decreased by $18.5 million, or 16.3%, to $95.0 million for the year ended December 31, 2025 compared to $113.5 million for the year ended December 31, 2024. As a percentage of revenue, general and administrative expense decreased to 17.0% for the year ended December 31, 2025 from 18.8% for the year ended December 31, 2024. The decrease in general and administrative expense was primarily driven by a reduction of $11.2 million in stock-based compensation expense following a change in compensation structure from equity awards to cash bonuses, lower legal costs, as well as decreases in professional fees and employee-related costs as a result of Project Gravity.
Goodwill Impairment
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Year-ended December 31, |
Change | ||||||||||||||||||||||
| 2025 | 2024 | Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
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Goodwill impairment
|
$ | 74,725 | $ | - | $ | 74,725 | * | ||||||||||||||||
| As a percentage of revenue | 13.4 | % | - | % | |||||||||||||||||||
* Not meaningful
We recorded non-cash goodwill impairment of $74.7 million during the year ended December 31, 2025, whereas no goodwill impairment was recorded for the year ended December 31, 2024. The goodwill impairment resulted from a quantitative impairment assessment in which the estimated fair value of our single reporting unit was determined to be below its carrying amount.
Restructuring and Other Costs
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Year-ended December 31, |
Change | ||||||||||||||||||||||
| 2025 | 2024 | Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
|
Restructuring and other costs
|
$ | 21,840 | $ | - | $ | 21,840 | * | ||||||||||||||||
| As a percentage of revenue | 3.9 | % | - | % | |||||||||||||||||||
* Not meaningful
We recorded $21.8 million of restructuring and other costs for the year ended December 31, 2025 whereas there were no restructuring costs for the year ended December 31, 2024. These costs are related to Project Gravity which primarily related to
consulting fees associated with the execution of these initiatives, as well as severance and other personnel costs and other restructuring related costs.
Total Other Expense
|
Year-ended December 31, |
Change | ||||||||||||||||||||||
| 2025 | 2024 | Amount | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Interest expense | $ | (31,350) | $ | (33,500) | $ | (2,150) | (6.4) | % | |||||||||||||||
|
Other income, net
|
9,755 | 480 | 9,275 | 1,932.3 | % | ||||||||||||||||||
| Total other expense | $ | (21,595) | $ | (33,020) | $ | (11,425) | (34.6) | % | |||||||||||||||
| As a percentage of revenue | (3.9) | % | (5.5) | % | |||||||||||||||||||
Total other expense decreased by $11.4 million, or 34.6%, to $21.6 million for the year ended December 31, 2025 compared to $33.0 million for the year ended December 31, 2024. This decrease was primarily due to the benefit recognized from the employee retention tax credit and favorable impacts from foreign currency exchange rates and related contracts, partially offset by lower realized gains on our interest rate swap.
Liquidity and Capital Resources
Historically, our cash requirements have principally been for working capital purposes, capital expenditures, and debt service payments. We have funded our operations through cash flows from operating activities, cash on hand, and borrowings under our credit facilities and receivables financing agreement. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect our business and financial position.
As of December 31, 2025, we had cash and cash equivalents of $19.6 million, $112.5 million borrowing capacity under our Revolving Credit Facility (as defined below), and up to $30.0 million borrowing capacity under our Receivables Financing Agreement (as defined below). As of December 31, 2025, we had no outstanding loan amounts under the Revolving Credit Facility and the Receivables Financing Agreement. As of December 31, 2025, the total principal amount outstanding under our First Lien Term Loan Facility (as defined below) was $403.3 million. Based on our current business plan and revenue prospects, we continue to believe that our existing cash and cash equivalents, availability under our Revolving Credit Facility and Receivables Financing Agreement, and our anticipated cash flows from operating activities will be sufficient to meet our working capital and operating resource expenditure requirements for at least the next twelve months from the date of this Annual Report on Form 10-K. However, our future working capital requirements will depend on many factors, including our rate of revenue growth and ability to achieve profitability, the timing and size of future acquisitions, and the timing of introductions of new products and investments in our supply chain and implementation of technologies.
We may from time to time seek to raise additional equity or debt financing to support our growth or in connection with the acquisition of complementary businesses. Any equity financing we may undertake could be dilutive to our existing stockholders, and any additional debt financing we may undertake could require debt service and financial and operational requirements that could adversely affect our business. There is no assurance we would be able to obtain future financing on acceptable terms or at all.
Cash Flows
The following table sets forth cash flow data for the periods indicated therein (in thousands):
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Year-ended December 31, |
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| 2025 | 2024 | |||||||||||||
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Net cash provided by operating activities
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$ | 20,520 | $ | 23,888 | ||||||||||
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Net cash used in investing activities
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(7,332) | (12,331) | ||||||||||||
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Net cash used in financing activities
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(8,545) | (26,497) | ||||||||||||
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Net increase (decrease) in cash and cash equivalents
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$ | 4,643 | $ | (14,940) | ||||||||||
Cash Flow from Operating Activities
Cash flows related to operating activities are dependent on net loss, non-cash adjustments to net loss, and changes in working capital. The decrease in cash provided by operating activities during the year ended December 31, 2025 compared to the year ended December 31, 2024 is primarily due to the cash payments related to Project Gravity initiatives and tariff related costs, along with the increase in net loss, increase in non-cash adjustments, and changes in net working capital.
Cash Flow from Investing Activities
The decrease in cash used in investing activities during the year ended December 31, 2025 was primarily related to lower expenditures on internal-use software, reduced purchases of tooling equipment, and lower costs associated with wood pellet production machinery and equipment.
Cash Flow from Financing Activities
The decrease in cash used in financing activities during the year ended December 31, 2025 was primarily attributable to lower net borrowings under our Receivables Financing Agreement as compared to the prior year. These funds were used to support general corporate and working capital purposes.
Credit Facilities
On June 29, 2021, we refinanced our existing credit facilities and entered into a new first lien credit agreement, as borrower, with Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent, and other lenders party thereto as joint lead arrangers and joint bookrunners (as amended from time to time, the "First Lien Credit Agreement"). The First Lien Credit Agreement provides for a senior secured term loan facility (the "First Lien Term Loan Facility"), and a revolving credit facility (the "Revolving Credit Facility" and, together with the First Lien Term Loan Facility, the "Credit Facilities"). We entered into an agency transfer agreement on April 30, 2024, pursuant to which Morgan Stanley Senior Funding, Inc. succeeded Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent for the Credit Facilities. Our obligations under the First Lien Credit Agreement are substantively unchanged.
On August 5, 2025, we entered into an amendment to our First Lien Credit Agreement (the "Amendment") to, among other things, extend the maturity date of a portion of the Revolving Credit Facility, reduce the size of the Revolving Credit Facility by 10% and modify other provisions of the Revolving Credit Facility, as described below.
First Lien Credit Agreement
The First Lien Credit Agreement originally provided for a $560.0 million First Lien Term Loan Facility (including a $50.0 million delayed draw term loan) and a $125.0 million Revolving Credit Facility.
The First Lien Term Loan Facility accrues interest at a rate per annum that incorporates both fixed and floating components. The fixed component ranges from 3.00% to 3.25% per annum based on our Public Debt Rating (as defined in the First Lien Credit Agreement). The floating component is based on the Term SOFR (as defined in the First Lien Credit Agreement) for the relevant interest period. The First Lien Term Loan Facility requires periodic principal payments from December 2021 through June 2028, with any remaining unpaid principal and any accrued and unpaid interest due on the maturity date of June 29, 2028. As of December 31, 2025, the total principal amount outstanding on the First Lien Term Loan Facility was $403.3 million.
Loans under the Revolving Credit Facility accrue interest at a rate per annum that considers both fixed and floating components. The fixed component ranges from 2.75% to 3.25% per annum based on our most recently determined First Lien Net Leverage Ratio (as defined in the First Lien Credit Agreement). The floating component is based on the Term SOFR for the relevant interest period. The Revolving Credit Facility also has a variable commitment fee, which is based on our most recently determined First Lien Net Leverage Ratio and ranges from 0.25% to 0.50% per annum on undrawn amounts. Letters of credit may be issued under the Revolving Credit Facility in an amount not to exceed $15.0 million which, when issued, lower the overall borrowing capacity of the facility.
The Amendment made several material modifications to the Revolving Credit Facility. The overall size of the Revolving Credit Facility has been reduced by 10% to $112.5 million, and has been split into two tranches: a $30.0 million tranche expiring on June 29, 2026 and a $82.5 million tranche expiring on December 29, 2027 (the "Extended Revolving Facility"). No payment of outstanding principal amounts under either tranche is due prior to the respective expiration date of each tranche. As of December 31, 2025, we had no outstanding loan amounts under the Revolving Credit Facility.
Except as noted below, the Credit Facilities are collateralized by substantially all of the assets of TGP Holdings III LLC, TGPX Holdings II LLC, TPC Traeger Blocker, LP, Traeger Pellet Grills Holdings LLC and certain subsidiaries of Traeger Pellet Grills Holdings LLC, including intellectual property, mortgages and the equity interest of each of these respective entities. The assets of Traeger SPE LLC, substantively consisting of our accounts receivable, collateralize the receivables financing agreement discussed below and do not collateralize the Credit Facilities. There are no guarantees from parent entities above Traeger, Inc.
The First Lien Credit Agreement contains certain affirmative and negative covenants that limit our ability to, among other things, incur additional indebtedness or liens (with certain exceptions), make certain investments, engage in fundamental changes or transactions including changes of control, transfer or dispose of certain assets, make restricted payments (including dividends), engage in new lines of business, make certain prepayments and engage in certain affiliate transactions. Pursuant to the Amendment, we have agreed to certain additional negative covenant restrictions for the benefit of the lenders under the Extended Revolving Facility. All lenders under the Revolving Credit Facility are the beneficiaries of a First Lien Net Leverage Ratio (as defined in the First Lien Credit Agreement) test of 6.20 to 1.00, which is only applicable if our utilization of the Revolving Credit Facility in excess of a threshold set forth in the First Lien Credit Agreement. The lenders under the Extended Revolving Facility are the beneficiaries of a 6.20 to 1.00 First Lien Net Leverage Ratio covenant with a reduced trigger threshold for testing, as set forth in the Amendment, and a minimum liquidity covenant requiring the maintenance of liquidity of at least $15.0 million, which is tested monthly. As of December 31, 2025, we were in compliance with the covenants under the Credit Facilities.
Accounts Receivable Credit Facility
On November 2, 2020, we entered into a receivables financing agreement (as amended, the "Receivables Financing Agreement"). Through the Receivables Financing Agreement, we participate in a trade receivables securitization program, administered on our behalf by MUFG Bank Ltd., using outstanding accounts receivables balances as collateral, which have been contributed by us to our wholly owned subsidiary, Traeger SPE LLC (the "SPE"). While we provide operational services to the SPE, the receivables are owned by the SPE once contributed to it by us. We are the primary beneficiary and hold all equity interests of the SPE, thus we consolidate the SPE without any significant judgments.
The maximum borrowing capacity under the Receivables Financing Agreement is between $30.0 million and $75.0 million. The Receivables Financing Agreement allows for seasonal adjustments to the maximum borrowing capacity and further adjustments can be made up to two times annually at our discretion (with consent of the lenders under the Receivables Financing Agreement). We are required to pay fixed interest on outstanding cash advances of 2.5%, a floating interest based on the CP Rate or Adjusted Term SOFR (each as defined in the Receivables Financing Agreement), and an unused capacity charge that ranges from 0.25% to 0.5%. The Receivables Financing Agreement also includes a liquidity threshold of $42.5 million and if our liquidity falls below this threshold, it may result in an increase in the required level of reserves, which would result in a reduction of the borrowing base under the Receivables Financing Agreement during such a liquidity shortfall.
On August 6, 2024, we entered into Amendment No. 10 to the Receivables Financing Agreement in order to extend the expiration of the facility to August 6, 2027. As part of the amendment, we are required to pay an upfront fee for the facility, along with a fixed interest rate on outstanding cash advances of approximately 2.6% and a floating interest rate based on the CP Rate or Adjusted Term SOFR (each as defined in the Receivables Financing Agreement). We were in compliance with the covenants under the Receivables Financing Agreement as of December 31, 2025.
As of December 31, 2025, we had no outstanding loan amounts under the Receivables Financing Agreement.
Contractual Obligations
As of December 31, 2025, we had $403.3 million of principal borrowings and $72.8 million of projected interest associated with its outstanding debt obligations. Any remaining unpaid principal and any accrued or unpaid interest will become due on the maturity date of June 29, 2028. The projected interest costs on variable rate instruments are based on market rates as of December 31, 2025. See Note 12 - Notes Payableto the accompanying consolidated financial statements for additional information regarding our Credit Facilities.
We have various lease agreements related to office space, warehouses, vehicles, and office equipment that expire at various dates through 2037. As of December 31, 2025, the future minimum rental payments under non-cancelable operating leases were $39.3 million. See Note 4 - Leasesto the accompanying consolidated financial statements for additional information regarding our non-cancellable operating leases.
We also have purchase obligations consisting of agreements to purchase goods and services entered into in the ordinary course of business. As of December 31, 2025, the future minimum value of our non-cancellable unconditional purchase obligations was $5.0 million. See Note 14 - Commitments and Contingenciesto the accompanying consolidated financial statements for additional information regarding our purchase obligations.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of our financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.
While our significant accounting policies are described in further detail in Note 2 - Summary of Significant Accounting Policiesto the accompanying consolidated financial statements included in this Annual Report on Form 10-K, we believe that the following critical accounting policies reflect our more significant judgments and estimates used that management believes are particularly important in the preparation of our consolidated financial statements and that require the use of estimates, assumptions, and judgments to determine matters that are inherently uncertain.
Revenue Recognition
We derive substantially all of our revenue from the sale of grills, consumables, and accessories as well as associated shipping charges billed to customers. We recognize revenue at the amount to which we expect to be entitled when a contract exists with a customer that specifies the goods and services to be provided at an agreed upon sales price and when the performance obligation is satisfied. The performance obligation for most of our sales transactions are considered complete when control transfers, which is determined when products are shipped or delivered to the customer depending on the terms of the contract. Sales are made on normal and customary short-term credit terms or upon delivery for point-of-sale transactions.
Shipping charges billed to customers are included in net sales and related shipping costs are included in cost of sales. We elected to account for shipping and handling activities performed after control has been transferred to the customer as a fulfillment cost.
We enter into contractual arrangements with customers in the form of individual customer orders which specify the goods, quantity, pricing, and associated order terms. We do not have long-term contracts that are satisfied over time. Due to the nature of the contracts, no significant judgment exists in relation to the identification of the customer contract or satisfaction of the performance obligation. We expense incremental costs of obtaining a contract due to the short-term nature of the contracts.
We have various contractual programs and practices with customers that give rise to elements of variable consideration such as customer cooperative advertising and volume incentive rebates. We estimate the variable consideration using the most likely amount method based on sales and contractual rates with each customer and record the estimated amount of credits for these programs as a reduction to revenue. Actual credits and their impact on reported revenue could differ from our estimates and could materially affect our results of operations.
We have entered into contracts with some customers that allow for credits to be claimed for certain matters of operational compliance or for returns to the retail customer from its end consumers. Credits that will be issued associated with these items are estimated using the expected value method and are based on actual historical experience and are recorded as a reduction of revenue at the time of recognition or when circumstances change resulting in a change in estimated returns. Actual credits and their respective impacts on reported revenue could differ from our estimates and could materially affect our results of operations.
Valuation of Goodwill
Goodwill represents the excess of consideration transferred over the fair value of tangible and identifiable intangible net assets acquired and the liabilities assumed in a business combination. Substantially all of our goodwill was recognized in the purchase price allocations when we were acquired in 2017 and when Apption Labs Limited (together with its subsidiaries, "Apption Labs") was acquired in July 2021, with smaller incremental amounts recognized in subsequent business combinations. Goodwill is not amortized, but is tested for impairment at the reporting unit level annually or more frequently if events or changes in circumstances indicate that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. In conducting the impairment test, we first reviews qualitative factors to determine whether it is more likely
than not that the fair value of the reporting unit is less than its carrying amount. The Company currently operates as a single reporting unit under the guidance in Topic 350, Intangibles - Goodwill and Other.
When testing goodwill for impairment, we have the option of first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If we elect to bypass the qualitative assessment, or if a qualitative assessment indicates it is more likely than not that carrying value exceeds its fair value, we will perform a quantitative goodwill impairment test. Under the quantitative goodwill impairment test, if the reporting unit's carrying amount exceeds its fair value, it will record an impairment charge based on that difference.
We conduct annual goodwill impairment tests in the fourth quarter of each fiscal year or whenever an indicator of impairment exists. For the annual impairment test conducted in the fourth quarter of 2024, we performed a qualitative assessment of goodwill and determined that it was more likely than not that the fair value of goodwill was greater than its carrying value. Therefore the quantitative impairment test was not performed and no impairment of goodwill was recorded in connection with the annual impairment test.
However, as part of the June 30, 2025 and September 30, 2025 interim goodwill impairment test, we identified a potential indicator of impairment due to the sustained decrease of the Company's stock price which led to the conclusion that a triggering event had occurred and therefore we performed a quantitative test for the single reporting unit.
To estimate the reporting unit fair value as part of the quantitative impairment test, we applied a weighted valuation analysis using both an income approach and a market-based approach. The income approach utilizes a discounted cash flow analysis, and the market-based approach utilizes comparable public company information, key valuation multiples, and considers a market control premium associated with cost synergies and other cash flow benefits that arise from obtaining control over a reporting unit, and guideline transactions, when applicable. The significant assumptions used in these approaches include revenue growth rates, profit margins, and discount rates under the income approach as well as valuation multiples derived from comparable public companies under the market approach.
Based on the June 30, 2025 interim impairment test of goodwill, the Company determined there was no goodwill impairment. Based on the September 30, 2025 interim impairment test of goodwill, we determined the carrying value of the reporting unit was in excess of its fair value after consideration of a control premium and recorded a non-cash impairment charge of $74.7 million. Significant negative industry or economic trends, disruptions to our businesses, significant unexpected or planned changes in use of the assets, divestitures, and market capitalization declines may result in impairments to the carrying value of our long-lived assets.
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