Updates Outlook for Full Year 2022

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 September 30, 2022.

Third Quarter FY 22 Highlights

• Total revenues decreased 42.1% to $93.8 million
• Gross profit margin of 27.7% or 29.4% excluding $1.6 million of one-time restructuring costs
• Net loss of $210.4 million, including a non-cash impairment charge of $109.8 million; net loss of $1.75 per share
• Adjusted net loss of $25.7 million; adjusted net loss of $0.21 per share
• Adjusted EBITDA loss of $12.5 million

"During the third quarter, our topline was pressured as macroeconomic uncertainty continued to weigh on the consumer and our retail partners aggressively reduced in-channel inventories. Despite these challenges, we made progress on our near-term strategic priorities and took decisive action to enhance profitability and cash flow and to position the Company for a strong recovery when the macroeconomic environment normalizes. This includes realizing meaningful cost savings resulting from restructuring actions taken early in the third quarter as well as driving sequential improvement of in-channel inventory levels. We believe the macro environment will remain highly dynamic through the end of the year with our retail partners continuing to reduce inventory levels in the fourth quarter and we now expect full year results to be at the low-end or slightly below our prior guidance range. Despite near-term challenges, we continue to grow brand awareness and enhance our merchandising with our most important retail partners, adding to my confidence in the long-term opportunity for Traeger," said Jeremy Andrus, CEO of Traeger.

Operating Results for the Third Quarter

Total revenue decreased by 42.1% to $93.8 million, compared to $162.0 million in the third quarter last year.

• Grills decreased 64.2% to $39.0 million as compared to the third quarter last year. The decrease was primarily driven by lower unit volume due to challenging global macroeconomic conditions, partially offset by a higher average selling price resulting from price increases taken in the second half of 2021 and early 2022, and the introduction of higher average selling priced product in 2022.
• Consumables decreased 10.3% to $25.2 million as compared to the third quarter last year. The decrease was driven by lower unit volume of wood pellets partially offset by higher unit volume of sauces and rubs primarily due to an increase in distribution channels.
• Accessories increased 17.7% to $29.6 million as compared to the third quarter last year. This increase was driven primarily by continued growth of the MEATER smart thermometers business.

North America revenue declined 45.6% in the third quarter compared to the prior year. Rest of World revenues increased 9.8% reflecting growth in MEATER's international markets.

Gross profit decreased to $26.0 million, compared to $54.3 million in the third quarter last year. Gross profit margin was 27.7% in the third quarter, compared to 33.5% in the same period last year. Excluding $1.6 million of costs related to the 2022 restructuring plan, gross margin was 29.4%. The decrease in gross margin was driven primarily by increased logistics and warehousing costs, promotional discounts to reduce inventory levels, and restructuring costs. The decrease was partially offset by higher selling prices of grills and accessories.

Sales and marketing expenses were $25.5 million, compared to $48.5 million in the third quarter last year. The decrease in sales and marketing expense was driven by a reduction of $11.8 million in equity-based compensation, lower professional fees and sales commission expense as revenue declined, and reduced investments in advertising costs for brand awareness, demand, and conversion.

General and administrative expenses were $70.9 million, compared to $75.8 million in the third quarter last year. The decrease in general and administrative expense was driven by lower professional service fees, a reduction in research and development costs, lower bonus expense, and lower employee related expenses. The decrease was partially offset by an increase in equity-based compensation of $6.4 million, due to an accelerated vesting of $40.5 million in connection with the current period modifications related to awards held by the CEO and certain directors compared to equity-based compensation of $36.9 million in connection with the prior period acceleration of vesting of all unvested and outstanding Class B unit awards upon completion of the initial public offering.

Change in fair value of contingent consideration of $2.7 million was primarily driven by an increase in the likelihood of achieving the performance targets in the share purchase agreement for the acquisition of Apption Labs. The change in fair value of contingent consideration is based on a preliminary estimate that will be finalized before the filing of the Company’s third quarter Form 10-Q.

Goodwill impairment charge of $109.8 million was recorded as a result of the Company's sustained decrease in discounted projections of estimated operating results and cash flows as well as decreased valuation multiples compared to publicly traded companies, resulting in the Company's carrying amount exceeding its fair value. The impairment charge is based on a preliminary estimate that will be finalized before the filing of the Company’s third quarter Form 10-Q. The impairment charge does not affect the Company's cash position, cash flow from operating activities, bank debt covenants, and does not have any impact on future operations.

Restructuring costs of $8.0 million were recorded in connection with the 2022 restructuring plan as part of the Company's efforts to reduce costs and drive long-term operational efficiencies due to challenging macroeconomic pressures. The restructuring costs were primarily related to a reduction in force, suspended operations of Traeger Provisions, and postponed nearshoring efforts to manufacture product in Mexico.

Net loss was $210.4 million in the third quarter, or $1.75 per diluted share, as compared to net loss of $89.2 million in the third quarter of last year, or $0.78 per diluted share.¹

Adjusted net loss was $25.7 million, or $0.21 per diluted share as compared to adjusted net loss of $6.5 million, or $0.06 per diluted share in the third quarter last year.²

Adjusted EBITDA loss was $12.5 million in the third quarter as compared to adjusted EBITDA of $4.1 million in the same period last year.²

Balance Sheet

Cash and cash equivalents at the end of the third quarter totaled $8.3 million, compared to $16.7 million at December 31, 2021.

Inventory at end of the third quarter was $161.8 million, compared to $145.0 million at December 31, 2021. Inventory growth was driven by increased input costs primarily due to macroeconomic factors, including increased freight rates, logistics costs, commodity prices and other product costs, as well as elevated levels of grill units.

Guidance for Full Year Fiscal 2022

The company is updating its full year guidance. Updated guidance reflects continued pressure on replenishment order activity as our retail partners reduce in-channel inventories.

• Total revenue is expected to be between $635 million and $640 million
• Adjusted EBITDA is expected to be between $33 million and $35 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 benefit for income taxes, interest expense, depreciation and amortization, other expense, goodwill impairment, restructuring costs, equity-based compensation, non-routine legal expenses, change in fair value of contingent consideration, offering related expenses, non-routine start-up costs, non-routine acquisition costs, non-routine refinancing expenses, and other adjustment items all of which are adjustments to Adjusted EBITDA.

Conference Call Details

A conference call to discuss the Company's third quarter results is scheduled for November 9, 2022, at 4:30 p.m. ET. To participate, please dial (844) 200-6205 or +1 (929) 526-1599 for international callers, conference ID 153347. 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. To access the replay, please dial (866) 813-9403 or +44 (204) 525-0658 for international callers, conference ID 830113. 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.

About Traeger

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. 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.

Forward-Looking Statements

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 2022 results, our expected annualized savings from our cost optimization initiatives, our ability to rightsize inventory levels and expected timing for doing so, and our ability to realize benefits from our gross margin initiatives and our expected timing for doing so. 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, the impact of the COVID-19 pandemic on certain aspects of our business, 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, 2021 and, once filed, our Quarterly Report on Form 10-Q for the period ended September 30, 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.

TRAEGER, INC.

RECONCILIATIONS OF AND OTHER INFORMATION REGARDING NON-GAAP FINANCIAL MEASURES

(unaudited)

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 (Loss), Adjusted Net Income (Loss) per share, and Adjusted Gross 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 (Loss), together with a reconciliation of Net Loss to each such measure, and providing Adjusted Net Income (Loss) per share, together with a reconciliation of Net Loss per share to such measure, and Adjusted Gross Margin together with a reconciliation of Gross Margin to such measure, 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 (Loss), Adjusted Net Income (Loss) per share, and Adjusted Gross Margin 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 (Loss), Adjusted Net Income (Loss) per share, and Adjusted Gross Margin 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 (Loss), Adjusted Net Income (Loss) per share, and Adjusted Gross Margin 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 Gross Margin, the most directly comparable financial measure calculated in accordance with U.S. GAAP, to Adjusted Gross Margin on a consolidated basis. A reconciliation of Adjusted Gross Margin guidance to Gross Margin on a forward-looking basis cannot be provided without unreasonable efforts, as the Company is unable to provide reconciling information with respect to the impact of restructuring costs recorded in cost of revenue which is an adjustment to Adjusted Gross Margin.

The following table presents a reconciliation of Net Loss and Net Loss per share, the most directly comparable financial measures calculated in accordance with U.S. GAAP, to Adjusted Net Income (Loss) and Adjusted EBITDA, and Adjusted Net Income (Loss) per share, respectively, on a consolidated basis.

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