Traeger (COOK) Q1 2026 Earnings Transcript

Image source: The Motley Fool.

Monday, May 11, 2026 at 4:30 p.m. ET

Need a quote from a Motley Fool analyst? Email pr@fool.com

Continue reading

​Image source: The Motley Fool.Monday, May 11, 2026 at 4:30 p.m. ETNeed a quote from a Motley Fool analyst? Email pr@fool.comContinue reading 

Image source: The Motley Fool.

Monday, May 11, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Jeremy Andrus
• Chief Financial Officer — Joey Hord

TAKEAWAYS

• Revenue — $94 million, representing a 34% decline primarily driven by challenging prior-year grill launch comparisons, pulled forward orders, channel optimization efforts, and continued product mix shifts toward lower-priced grills.
• Grill Revenue — $47 million, down 45%, attributed to reduced comparative launch activity, proactive ordering ahead of tariffs, targeted channel adjustments under Project Gravity, and increased sales of lower-priced products.
• Consumables Revenue — $26 million, declining 14%, with the drop attributed mainly to channel mix shifts and the timing of trade spend but partially offset by higher unit sales.
• Accessories Revenue — $21 million, down 22%, attributed to decreased sales of MEATER devices.
• Gross Profit — $43 million, compared to $59 million in the prior year, affected by lower revenue and the timing of promotional spend.
• Gross Margin — 45.7%, an increase of 420 basis points year over year due to a $12.4 million IEEPA tariff refund; excluding this benefit, gross margin was 32.6%, a decrease of 890 basis points.
• Operating Expenses — Down $15 million year over year as a result of Project Gravity-led cost reduction efforts, lower personnel expense, and reduced demand creation costs.
• Net Income — $3 million, up from a net loss of $1 million, with diluted EPS at $1.08 versus a loss of $0.30 in the first quarter of 2025.
• Adjusted EBITDA — $17 million, down from $23 million in the prior year, including a $12.4 million benefit from the IEEPA tariff refund; adjusted EBITDA excluding this item would have been near prior guidance midpoint.
• Inventory — $88 million at quarter end, down 31% year over year, primarily due to timing of shipments, MEATER inventory reduction, and completed channel exits.
• Free Cash Flow — $14.5 million generated, supported by working capital improvements and an $11.6 million employee retention credit.
• Cash and Liquidity — $34 million in cash balances and $184 million total liquidity, with $403 million in total debt and no draws on credit facilities.
• IEEPA Tariff Refund — $12.4 million recognized as a benefit to gross profit and adjusted EBITDA, a $3.2 million reduction in inventory cost, and a $15.6 million receivable recorded; full-year impact expected just under $14 million.
• Raised Guidance — Adjusted EBITDA guidance increased to $57 million to $67 million, gross margin guidance raised to 39.5%-40.5%, both reflecting incorporation of IEEPA refund benefits; revenue guidance held at $465 million-$485 million.
• Project Gravity — Expected to deliver $64 million-$70 million in total run-rate value across both phases through 2027-2028, with $30 million incremental benefit planned for 2026 and $50 million total value capture targeted for the year.
• Sell-Through — Year-to-date retail sell-through is slightly above plan and rising, even when excluding divested DTC and Costco Roadshow channels.
• Retail Partner Momentum — ACE Hardware spring 2026 prebook orders rose nearly 50%, and Home Depot to host at least 7,500 in-store cooking events in the second quarter, nearly double the prior year’s count.
• Westwood Launch — New Westwood grill lineup introduced at a lower price point with connected features and a 7-year warranty, receiving strong early consumer ratings across multiple retail channels.
• Irontop Launch — Introduction of Irontop griddle platform expands Traeger’s category participation and addresses more frequent cooking occasions with improved build and differentiated features.
• Guidance Offsets — EBITDA and gross margin guidance includes explicit offsets for anticipated MEATER competitive pressures, macroeconomic headwinds, transportation cost increases due to rising oil prices, and ongoing tariff uncertainty.
• Free Cash Flow Guidance — Remains at more than $30 million, not yet adjusted for IEEPA tariff receivable which has not converted to cash.

Need a quote from a Motley Fool analyst? Email [email protected]

RISKS

• Guidance reflects continued “competitive pressure from MEATER,” as well as “macro headwinds, including rising transportation costs due to oil prices and broader tariff uncertainty,” identified as material risk offsets by management.
• Management acknowledged ongoing tariff rate and macroeconomic volatility, explicitly noting, “Our tariff rate has bounced around,” and plans to “be prudent in our plan in the out months.”
• Gross margin excluding the IEEPA refund declined by 890 basis points; CFO Hord cited headwinds from “timing of trade spend, lower mix of direct import sales, tariff-related costs and deleverage in MEATER.”
• Accessories revenue decrease primarily due to declining MEATER sales, with CFO Hord mentioning a particular “focus on bringing the MEATER inventory levels down” and upcoming price interventions to manage inventory pressure for this product line.

SUMMARY

Traeger, Inc. (COOK 5.68%) delivered significant operating expense and inventory reductions in the first quarter, driven by Project Gravity initiatives, while navigating a 34% revenue decline stemming from both product mix shifts and planned channel exits. New product launches, including Westwood grills and the Irontop griddle, expanded the brand’s reach into more accessible price points and received positive early consumer feedback. The company recognized a substantial IEEPA tariff refund, boosting gross profit and informing a raised EBITDA and margin outlook, although leadership emphasized that these benefits are partly offset by continued challenges from MEATER competition, rising transportation costs, and ongoing tariff uncertainty. Management reiterated its unchanged annual revenue and free cash flow guidance, while confirming that full receipt of the IEEPA tariff refund could further support cash flows once realized.

• Liquidity metrics improved with first quarter-end cash and equivalents of $34 million and no draws against a $112.5 million revolver, positioning the company conservatively as it moves through a “transition year.”
• Retail sell-through exceeded internal expectations entering peak season, with positive signals seen in both grills and consumables, and ACE Hardware prebook orders jumping nearly 50% at the Spring 2026 show.
• Gross margin guidance was revised upward to 39.5%-40.5%, an increase driven by the IEEPA tariff refund, yet remains subject to offsetting risks, including elevated transportation costs and potential tariff rate changes discussed in detail by management.
• Project Gravity cost-reduction actions included the finalized wind-down of Costco Roadshow and direct-to-consumer (DTC) businesses, supporting the year over year 31% inventory reduction and providing additional working capital flexibility.

INDUSTRY GLOSSARY

• IEEPA Tariff Refund: Refund of tariffs paid under the International Emergency Economic Powers Act, recognized as a benefit to gross profit and EBITDA upon determination and expected to be received in cash following government processing.
• Project Gravity: Traeger’s multi-phase internal efficiency and cost reduction initiative aimed at simplifying operations, optimizing channel strategy, and structurally improving margins and profitability.
• MEATER: Traeger’s smart wireless thermometer product line, both as a revenue contributor and a noted source of current inventory and competitive challenges.
• DI (Direct Import): A sales channel in which retail partners import product directly, substantially affecting Traeger’s tariff exposure and inventory requirements.

Full Conference Call Transcript

Jeremy Andrus: Thanks, Steph, and thank you all for joining our first quarter earnings call. We had a solid start to the year, and I’m encouraged by the signals we’re seeing heading into our peak selling season. Q1 revenue reflects a combination of planned timing, channel decisions and marketplace dynamics we discussed on our last earnings call, and Joey will walk through those details shortly. Before turning to results, I want to note that we recognized a $12 million P&L benefit in Q1 related to an IEEPA tariff refund that was not contemplated in our original outlook, and I’ll address in my guidance commentary.

What I want to focus on today is what we’re seeing in underlying demand because sell-through is the clearest signal of where the business is headed and of a healthy retail environment. On today’s call, I’ll cover the consumer and brand, our product launches and how we’re executing with our key retail partners. I’ll also update you on Project Gravity because the discipline we’re applying in 2026 is foundational to what we’re building for the long term. Then I’ll turn it over to Joey for financials. Let me start with the consumer and the brand. Even in a cautious spending environment, Traeger brand engagement remains strong, and it continues to be a leading indicator of potential demand.

In Q1, social engagement was up over 30% year-over-year with 65% of our organic impressions coming from nonfollowers. That matters because expanding household penetration remains one of our largest long-term opportunities and reaching new consumers is the first step to earning their purchase. Our brand ambassador roster, including Matt Pittman and Bennie Kendrick, generated 170 million impressions across more than 3,000 posts in the quarter, part of a program that delivers over 1 billion impressions annually. Authentic content that demonstrates the benefits of wood-fired cooking remains one of our most effective demand creation tools. As we head into Q2, we’re expanding that effort with new creators who we believe will reach new consumer demographics.

Innovation has always been core to Traeger, and it continues to be rewarded when we execute with focus. In April, we launched Westwood, a new grill lineup designed to cascade Traeger innovation into a more accessible segment of the market, bringing the Traeger experience to more households at a lower entry price while keeping the connected capabilities, performance and 7-year warranty that define the platform. We believe the Westwood launch is an early proof point of brand momentum. We shifted to a platform-specific customized content model, generating over 60% more impressions across earned and organic channels when compared to our Woodbridge product launch in 2025.

We saw coverage across outlets ranging from CNET to Gear Patrol and one thing was consistent. Reviewers specifically called out the combination of Traeger performance and the accessible price point. The product also launched into retail with consumer ratings of 4.8 to 5 stars already live across traeger.com, the Home Depot and Ace Hardware. That kind of credibility at the moment of purchase matters. It’s early. We have only a few weeks of data, but what we’re seeing so far is encouraging. Later this month, we’ll also begin landing Irontop, our new griddle lineup in retail. And strategically, this is an important expansion for Traeger.

Irontop brings Traeger innovation into a more accessible griddle price tier where we have not historically competed, unlocking a larger segment of the category and broadening our reach to new consumers. It’s a direct response to consumer feedback, better build quality, more even heat and more reliable results with 2- and 4-burner options across key price points and clear feature differentiation. Strategically, Irontop broadens Traeger’s relevance beyond the traditional grill replacement cycle and into more frequent everyday cooking occasions, which we believe will support greater household reach and longer-term category participation.

Across both Westwood and Irontop, we’re pairing product innovation with disciplined execution, including targeted marketing, retail readiness and training to help support these launches where it matters most at the shelf and at the point of sale. Turning to the marketplace. The signal we’re watching most closely as we head into peak season is sell-through. We view sell-through as the clearest measure of underlying consumer demand, and we believe healthy sell-through supports a healthy marketplace for both Traeger and our strategic retail partners. Year-to-date, early season demand is encouraging. Sell-through is tracking slightly above our expectations and excluding strategic channel divestments from our DTC and Costco roadshow businesses is slightly up year-over-year.

While we’re always careful about drawing conclusions from short periods, at this point, we have not seen indications thus far for a broad-based slowdown tied to the macro environment. At the Home Depot, our success with this key strategic partner has been amplified by our retail sales specialist program, a dedicated field team that trains store associates and facilitates in-store product demonstrations featuring food cooked on a Traeger. We believe the ability for consumers to see the product in action and taste the flavor is a meaningful driver of conversion. We know this model has worked for us. Last year, stores supported by our retail sales specialists converted at meaningfully higher rates than those without.

We’re expanding that playbook this year, targeting at least 7,500 cooking events in Q2, which is almost twice the number we did in the same quarter of 2024 as we support both Westwood and Irontop through peak season. At ACE, we’re investing in approximately 1,000 elevated doors to support these launches, including enhanced store positioning, window signage and floor stands. This is the first time we’ve brought a new grill platform and a new griddle platform to market simultaneously, giving consumers more compelling and accessible options at the point of decision. And we’re seeing momentum. At ACE’s Spring 2026 show, prebook orders were up nearly 50% over last year, reinforcing our confidence in the partnership for the long term.

Stepping back, 2026 is a year of disciplined execution and Project Gravity is central to that work. Gravity is a multiyear effort to reshape this business, not just take out costs but to simplify how we operate, sharpen where we compete and build a more durable profit model. Just as importantly, it creates a capacity to invest in the things that matter the most, product innovation, brand and retail execution. As a reminder, we’ve executed the majority of our Phase 1 and Phase 2 actions, including organizational changes, MEATER centralization, exiting the Costco roadshow and winding down DTC commerce.

And within Phase 2, we’ve identified additional value capture around SKU rationalization and pricing that we believe will yield a simpler product architecture and a structurally higher-margin business as we move through 2027 and 2028. Taken together, Project Gravity is expected to deliver approximately $64 million to $70 million of total run rate value across both phases. We believe our disciplined strategy is working, and it’s what allows us to invest with confidence behind the brand and product while delivering on our financial commitments. Put simply, Gravity is about applying a disciplined return-focused lens to how we run the business, improving margins, cash generation and long-term earnings power. Before I close, I want to flag one item.

We recognized a $12 million benefit in Q1 related to an IEEPA tariff refund that was not contemplated in our original guidance, a welcome development. We are flowing that benefit through to our full year adjusted EBITDA guidance, which we are raising to a range of $57 million to $67 million, while holding our revenue guidance unchanged. At the same time, we are holding an offset within our guidance to account for continued competitive pressure from MEATER, ongoing macro headwinds, including rising transportation costs due to oil prices and broader tariff uncertainty. We’ll reassess those factors on our Q2 call as we gain greater visibility into how these dynamics are evolving.

Our core Traeger business is strong, and our priorities are clear: drive brand momentum, convert demand through excellent retail execution, expand household reach with the right product at the right price points and continue running the business with the discipline that Project Gravity instills. We’re entering peak season with a strong brand, strong partners and a team that is executing well. I’m encouraged by what I’m seeing. And with that, I’ll turn the call over to Joey Hord. Joey?

Joey Hord: Thanks, Jeremy, and good afternoon, everyone. Before I walk through the numbers, I want to anchor on something important. We are doing what we said we would do and Project Gravity is working. In the first quarter, we delivered $15 million of year-over-year operating expense reduction, reduced inventory by 31% versus the prior year and generated $14.5 million of free cash flow. Those results reflect disciplined execution against our commitments and reinforce that financial health remains our top priority. Against that backdrop of improved financial discipline, it is also important to touch briefly on demand. As Jeremy discussed, underlying demand remains intact with first quarter sell-through tracking slightly above our expectations as we head into the peak selling season.

With that as context, a quick reminder that our first quarter guidance contemplated challenging year-over-year comparables and timing shifts that would weigh on revenue as well as lower margins on the back of mix shifts and promotional timing. The quarter developed largely as we expected. I also want to briefly frame the IEEPA tariff refund Jeremy referenced as it is material to the quarter’s results. In Q1, we recognized a $12.4 million benefit to gross profit and adjusted EBITDA, a $3.2 million reduction in inventory carrying cost and recorded a $15.6 million receivable, all related to the refund of duties paid under IEEPA. Where relevant, I’ll call out the impact of this item alongside our underlying results.

Excluding this refund, our adjusted EBITDA would have been near the midpoint of the guidance range for the first quarter. First quarter revenues declined 34% to $94 million. Grills revenues decreased 45% to $47 million, driven primarily by four key drivers: one, difficult prior year launch comparisons; two, pull forward ordering ahead of tariffs last year; three, deliberate channel optimization under Project Gravity; and four, continued mix shift toward lower-priced grills. Consumables revenues decreased 14% to $26 million, primarily from wood pellet channel mix shifts and timing of trade spend, partially offset by an increase in units. Accessories revenues decreased 22% to $21 million, primarily due to lower sales of MEATER.

Gross profit for the first quarter decreased to $43 million from $59 million in the first quarter of ’25. Gross margin was 45.7%, up 420 basis points versus the first quarter of ’25, which includes a $12.4 million benefit from the IEEPA tariff refund. Excluding this item, gross margin was 32.6%, down 890 basis points, reflecting timing of trade spend, lower mix of direct import sales, tariff-related costs and deleverage in MEATER. Sales and marketing expenses were $13 million compared to $22 million in the first quarter of ’25.

The decrease was driven by lower employee-related expense, reductions in discretionary operating overhead as well as lower demand creation costs and professional service fees, reflecting cost reduction actions associated with Project Gravity. General and administrative expenses decreased to $19 million compared to $25 million in the first quarter of ’25. The decrease was driven by a reduction in stock-based compensation expense as well as employee-related costs. Net income for the first quarter was $3 million as compared to a net loss of $1 million in the first quarter of ’25. Net income per diluted share was $1.08 compared to a loss of $0.30 in the first quarter of ’25.

Adjusted net income for the quarter was $4 million or $1.49 per diluted share as compared to the adjusted net income of $7 million or $2.54 per diluted share in the same period of ’25. Adjusted EBITDA was $17 million in the first quarter as compared to $23 million in the same period of ’25. This includes a benefit of $12.4 million from the IEEPA tariff refund. Moving on to the balance sheet. At the end of the first quarter, cash and cash equivalents totaled $34 million compared to $20 million at the end of the previous fiscal year.

We ended the quarter with $403 million in total debt and nothing drawn on our credit facilities, resulting in total net debt of $370 million. From a liquidity perspective, we increased our first quarter total liquidity to $184 million. Inventory at the end of the first quarter was $88 million compared to $99 million at the end of the fourth quarter of ’25 and $127 million at the end of the first quarter of ’25. Lower year-over-year inventory was primarily driven by in-transit timing, MEATER inventory reductions and strategic reductions associated with Project Gravity. Despite the revenue and margin headwinds in the quarter, we continue to focus on disciplined execution.

We finalized several Project Gravity initiatives, including the wind-down of Costco roadshow and our DTC business, which contributed to a meaningful operating expense reduction and a 31% year-over-year reduction in inventory. That discipline helped drive $14.5 million in free cash flow in the quarter, including benefits from working capital improvements and an $11.6 million employee retention credit. This represents meaningful progress toward our full year goal of at least $30 million. As I just mentioned, we maintain ample liquidity with healthy leverage metrics that we expect to sustain through ’26. Turning to guidance. We are reiterating our full year outlook for revenue between $465 million and $485 million.

We are increasing our adjusted EBITDA guidance to between $57 million and $67 million, reflecting the flow-through of the IEEPA tariff refund benefit recognized in Q1 with an offset held within our guidance to account for continued MEATER competitive pressure, macro headwinds, including rising transportation costs due to oil prices and broader tariff uncertainty. We are also increasing our gross margin outlook to 39.5% to 40.5%, incorporating that same benefit and offset, along with the same structural factors we discussed last quarter, including tariff pressure, promotional deleverage and continued benefit from Project Gravity. We will reassess these dynamics on our Q2 call as visibility improves.

Free cash flow guidance remains unchanged at greater than $30 million and does not reflect the tariff refund as the $15.6 million IEEPA receivable has not yet converted to cash. We will update our free cash flow outlook once that conversion occurs. The underlying drivers we discussed last quarter remain unchanged. Benefits from Project Gravity, offset by price elasticity, marketplace inventory headwinds and MEATER challenges. We still expect first half seasonality to be broadly consistent with historical patterns. Finally, our full year guidance continues to reflect approximately $50 million of Project Gravity value capture, including roughly $30 million of incremental benefit in ’26, reinforcing continued progress against our cost and margin objectives.

As we navigate this transition year, we continue to believe that we have robust liquidity. We are currently undrawn on our $112.5 million revolver. And based on our current expectations, we do not anticipate using our revolver this year. In summary, the underlying strength of our core Traeger business gives us confidence as we manage through this 2026 transition. We are seeing the tangible benefit in our results of Project Gravity reshaping our cost structure and cash generation. Category demand remains intact with sell-through slightly above our plan year-to-date. We believe the actions we’re taking position the business for improved profitability and operating leverage beyond ’26. And with that, I’ll turn the call over to the operator. Operator?

Operator: [Operator Instructions] Your first question comes from the line of Peter Benedict from Baird.

Peter Benedict: A couple here. So I guess, first, do you have a — when do you expect the tariff refund to be paid out? How much visibility do you have into the timing of that? And then secondly, can you talk a little more about the fuel cost assumptions that are in the forecast now, kind of where they sit, maybe what that impact was relative to what was in there 90 days ago?

Joey Hord: Yes. Peter, it’s Joey. Thanks for the question. So overall, we have the ability to book this in Q1. We were given that leeway. So we, broadly speaking, took it to the P&L. We do have some additional potential on the balance sheet right now in terms of total refund. As far as when we expect the cash, we do expect it to be paid within 60 to 90 days, but this is widely thought through in terms of other CFOs I’ve spoken to. With that said, I do think at the same time, we need to be prudent in our plan this year. Overall, I do believe that our AR balance right now is appropriately reflecting our refund.

The other thing I want to say about this, Peter, is around fuel cost. We have around $1 million of increased fuel costs this year regarding macro. We also want to be prudent in our planning around just the ongoing tariff exposure we have. Our tariff rate has bounced around, but we also want to be prudent in our plan in the out months.

Peter Benedict: Okay. No, that’s helpful, Joey. And I guess my follow-up would be just around the improved sell-through. Obviously, good to hear that. I’m curious if you guys — and I know it’s only been a little bit here in the peak selling season, but what you think might be driving that? Do you think it’s kind of the whole grill category is starting to pick up a little bit? Is there anything maybe unique within wood pellet that’s taking share or Traeger taking share? Again, maybe not trying to be too nuanced. And then related to that, just the promotional tone that’s out there, what role do you think that is playing in the improved sell-through?

What your thoughts are there?

Jeremy Andrus: Yes, Peter, happy to take that. Let me start first with sort of the macro. It continues to be a challenging macro, and we’ve certainly seen some high-ticket sort of appliance brands report challenges related to replacement cycles and continued pressure on — with interest rates on housing relocation and whatnot. And of course, consumer sentiment was an all-time low in April. I think with that backdrop, we feel pretty good about the sell-through results that we’re seeing. And I think it is — it speaks to the health of the brand and our ability to perform in an environment like this.

It also might begin to speak to the broader category, which has been meaningfully down post pandemic and even down relative to pre-pandemic unit sell-through numbers. And so as we track replacement cycle, we may be seeing a little bit there. In terms of the broader grilling category, we believe outdoor cooking is slightly down. And as we evaluate our sell-through, excluding the channels of which we have divested, notably Costco Roadshow and DTC, we think our share is slightly up. So I don’t know that there are any sort of strong macro or category trends. I think our brand and our team is executing well in a challenging environment.

And it’s — although we certainly like to see positive signals to this point in the year. Of course, there’s a lot that happens in the second quarter, and we’re cautiously optimistic.

Operator: Your next question comes from the line of Anna Glaessgen from B. Riley.

Anna Glaessgen: I guess I’d like to start on a follow-up on the IEEPA tariff assumptions. Is the $12 million reflecting the full amount you’ve paid thus far while like that rule was in place? And so are you assuming essentially a full recovery?

Joey Hord: Yes. Anna, Overall, we have just around $15.5 million of total IEEPA tariff refund that we feel we’re due. We’ve taken the $12.4 million in Q1, which is reflected. The way that we account for this going forward is as we sell in inventory that has been impacted by tariffs, we’ll continuously book that in the P&L. So we do feel there’s going to be around $1.5 million this fiscal year. So our total FY ’26 expected impact is just off of $14 million.

Anna Glaessgen: Got it. And turning to consumables. Wondering if you could unpack the decline a bit more that we saw in the quarter. And do you expect that this dynamic would persist into subsequent quarters? Or are you expecting an inflection embedded in the guidance for the full year at some point in the year?

Joey Hord: Yes. I mean consumables is largely consistent with the rest of our portfolio regarding just the timing shifts year-over-year. There’s really a few main drivers of revenue declines broadly speaking. First is just prior year tariff — or sorry, elasticity built into our pricing, just some of the gravity channel shifts. We’ve divested of the Costco roadshows and our DTC channel. That’s impacting, broadly speaking, all of our portfolio and consumables is not immune to that. And then the other is just attach. So that’s on the consumables side.

Anna Glaessgen: Got it. I guess as a follow-up, could you share maybe sell-through on consumables in a similar way that you gave grills just to get a sense of the underlying demand?

Joey Hord: Sorry, can you repeat that?

Anna Glaessgen: Sorry, could you share POS on consumables or pellets so we have a better idea of underlying demand similar to how you gave grills kind of stripping out the channel exits?

Joey Hord: Yes. Sell-through is actually going according, if not above our plans. We’re really happy with sell-through on consumables, largely pellets. It’s an indication of engagement with our brand and our overarching product. So consumable sell-through is strong, like I said, going according, if not above plan. As we’ve spoken about in previous calls, we have a sell-through, sell-in dynamic here, which is reflected in net revenue. But overall sell-through tracking according to plan.

Operator: Your next question comes from the line of Joe Feldman from Telsey Advisory Group.

Joseph Feldman: I’m going to go to another one on IEEPA refund. How are you sharing that with suppliers? Because it seems like you guys are booking it all for yourself. And my assumption would be that suppliers and then even the retailers may want some portion of that because of price increases and such. And we’ve heard a lot of other retailers talk about having to kind of balance that out. So I’m curious how you guys are thinking about that as kind of first question.

Joey Hord: Yes. I’ll start and then Jeremy can jump in on this one. So the figures I’ve quoted are what we’re due based on tariffs that we have been burdened by. As you know, we have a material amount of our business is direct import — our partners that do direct import are paying IEEPA tariffs as well. And we have been in communication with those partners around just their ability to recapture that as well. Do you want to add anything to that?

Jeremy Andrus: Yes. Look, I mean it’s — the reality is that where we do a meaningful direct import business, we, of course, built wholesale pricing with a tariff payment in mind paid by the importer, which is our partner. And that, of course, is a larger number than the figures that Joey is sharing. Of course, we felt some volume reduction due to elasticity with the higher prices and certainly felt some margin. And so sharing of that — of those tariff refunds is a conversation that we’ll have with our direct import partners, and we’ll see where that goes.

Joseph Feldman: Got you. And maybe just a quick follow-up. Inventory should — it’s quite low, as you mentioned, you gave a few reasons as to why, Joey. I’m curious if that should bubble back up closer to like $100 million through as the year progresses? Or how we should think about that going forward? What level you kind of want to be at?

Joey Hord: Yes. I’m actually really happy with our progress related just to overall inventory management. As we’ve spoken about, Project Gravity is really about driving profitability and efficiency throughout the P&L, but also within just efficiency of the balance sheet. The teams — we’ve invested heavily around demand planning capabilities focused on marketplace health, demand supply match, et cetera. And so overall inventory, we’ve worked it down to what I consider a healthy level. So I’m really happy around our inventory levels on the Traeger side. The other is, as we shifted to DI — back to DI, it has taken pressure off of the Traeger inventory.

As you recall, there was a pause on DI when the tariffs were announced in prior year. So significant focus on overall inventory. The one soft spot we do have in our overall inventory is MEATER, which we’ve spoken about before. There’s a focus on bringing the MEATER inventory levels down. We’re going to be revisiting pricing on MEATER, et cetera, and that will alleviate pressure on inventory for MEATER specifically.

Operator: Your next question comes from the line of Phillip Blee from William Blair.

Phillip Blee: How should we think about the phasing of gross margin this year? There are a lot of moving pieces between changes in tariffs, higher transportation costs, now the IEEPA refund. So any color there would be helpful. And then does your guide embed the lower tariff rates? I believe current average rates are about 5%-ish lower than what was in your original guide. Is that still the case here?

Joey Hord: Yes. So it is challenging to plan margin just in terms of year-over-year comps and the activity that happened within FY ’25 as the base year given the pause of DI and tariffs, et cetera, pricing shifts. Regarding overall margin, we have spoken around the shaping of the P&L first half and second half. We do have a — what we’re considering a trough in our margin rate in Q1. We believe that there’s going to be a rebound of margin in Q2 and then more normal cyclicality around our margin for Q3 and Q4. As far as our overall margin rate, it’s captured in our guidance, which we’ve adjusted for the IEEPA refund.

As far as full year, I’ll just say the following is we do believe we have a lot of conviction on guidance overall. And — yes, I’ll just stop there.

Phillip Blee: Okay. Great. And then maybe can you talk a bit about demand by price tier? I think now you have the Irontop and Westwood series that are new and so leaning into these lower entry-level price points. Do you think there’s any room or I guess, need for you to go any lower? Or is this kind of at your sort of ideal entry point and then you’ll look to keep moving up from there?

Jeremy Andrus: Yes, happy to take that. So first of all, this is a more price-sensitive environment, and it has been. We have flagged a movement towards lower price points over the last 12 months or so on our earnings calls. I certainly believe the timing is right for the 2 product platforms that we just launched, both of which are hitting opening price points for our brand, the Irontop in terms of getting a griddle SKU to market with very high-quality innovation at $499 that although it was concepted well before we saw the shift to lower price points. That is — the timing works well.

I would say the same thing for the Westwood, which really is a multiyear process of launching innovation at higher price points and then cascading innovation downstream that — both that consumers value, but also that we can affordably deliver at those price points. And so the Westwood is a $599 price point, which is the lowest price point in which we’ve ever offered a connected grill product. So we feel good about that. Overall, Traeger continues to meaningfully over-index relative to the category from an ASP perspective, which again speaks to brand strength, but certainly not immune from some of the pressures that the consumer is feeling, and we have felt a bit of that mix shift downward.

With that said, we’re seeing some nice green shoots from a price perspective. One analog I would share is the Woodridge Pro, which was originally concepted to be a $999 product, a price point that our brand has historically sold well. It launched just as tariffs were hitting, and that is now an $1,149 product. And we’re seeing really nice sell-through dynamics at a very high price point relative to the industry. So we will continue to build a product line that is thoughtfully concepted and motivates a consumer to trade up to the extent that they can both afford it and value those trade-up features and benefits.

And over time, that will work in our favor as the consumer strengthens and some of the macro dynamics improve.

Operator: [Operator Instructions] Your next question comes from the line of Craig Remsen from Wells Fargo.

Craig Remsen: Just 2 quick ones here. I know in the Q3 call and I think Q1, you kind of mentioned you had a goal of being all your production out of China by year-end ’26. And I know tariffs are moving all over the place. But kind of where do we stand on that? And is that still your intention to try to move production to Vietnam? Or are you kind of standing pat until you get more clarity on that? And then also, if you could touch on the April 2026 Section 232 tariff revision where it became more of a finished product tax, if that affects you in any way, shape or form?

And if it has, if you could just kind of expand on that, that would be great.

Joey Hord: As far as our diversification efforts, when tariffs were announced, the overall tariff rate coming out of China was much higher than other countries of origin. So we spoke about materially diversifying out of China by the end of FY ’26, and we were underway. Subsequently, tariff rates have obviously shifted materially. Our overall tariff rate has come down. And now we see parity between our countries of origin. So what that’s allowed us to do is be long-term thoughtful and strategic in our diversification strategy. To be clear, our goal is to continue to diversify outside of China. With that said, we’re being more long term and strategic about it.

As far as our tariff rates go, our tariff rates have bounced around. And the latest announcement, we have a 25% tariff on the Section 232 steel tariff. With that said, our tariff rate currently is how we plan the year. So we’ve had no material change in our tariff rate from our last call.

Craig Remsen: Okay. So basically, the April finished product that really had no — it was still — it was 25% and continues to be. So no real change there.

Joey Hord: Yes. There was a reduction for a few weeks in our tariff rate, but then it came back to the original tariff rate that we had planned at the start of the year.

Operator: At this time, there are no further questions. I will now turn the call back to Jeremy for closing remarks.

Jeremy Andrus: Thanks. We appreciate the conversation and look forward to being in touch.

Operator: This concludes today’s call. Thank you all for attending. You may now disconnect.