Traeger, Inc. (NYSE:COOK) Q3 2023 Earnings Call Transcript

Jeremy Andrus: So Simeon, good question on the consumer replenishment. I mean this is something that I would say we spent a fair bit of time thinking about speaking with consumers about from a quantitative perspective and sort of thinking about the math behind replenishment. The reality is that replenishment cycle certainly declined during the pandemic as there was pull forward demand. And our expectation is that it will normalize. It’s hard to see exactly how soon that happens. What we’re seeing, and I’d step back and look at just broader big ticket, everything that we see in here across consumer big ticket categories is that replacement is happening more out of necessity than out of upgrade and discretion. And we think that trend continues. In this economy with higher interest rates, consumers’ finances, we think we won’t catch back up to normalized replacement cycle. Hard to know based on the data that we see when that will be.

Dom Blosil: And I guess in terms of the kind of normalization of ASPs with respect to taking price back on most of our products to what we’re really the right kind of pricing architecture across our portfolio pre-pandemic. I think you’ll start to see that normalize over the course of next year where the comparison is more of an apples-to-apples basis. But at the end of the day, I think from a pricing and an ASP standpoint, we’re sort of comfortable with where ASPs are trending and this is really just a function of comping pandemic moves to offset the pressure on gross margin based on those macro factors that were taking shape and not something that would signal anything different than this is the right pricing strategy for how we think about optimizing mix and volume. And correspondingly, we are seeing an uplift in unit volume, which I think is a positive and what you would hope to see as you take some prices back down to what we think are the right levels.

Simeon Siegel: Okay. That’s great. And then lastly, if I could just throw in, maybe can you guys just talk about frequency of use, how that’s changing or if it has at all? And then just as we work through the client that you’re — or the customer you’re referring to with the pellets, how should we think about the reported relationship between Grill and pellets growth going forward? Thank you.

Dom Blosil: Yes. No real changes to usage. And one measure of that is both the attach rate that we measure, as well as sell-through performance for consumables. Consumables sell-through actually comped slightly positive in Q3. And you can see that we delivered some outsized growth relative to our internal expectations in Q3 on consumables as well. So that continues to be a highly resilient component of our business, certainly aligned with our thesis, and it’s proving to be the case even in a more challenging consumer environment. And so I’d say that generally speaking, those KPIs that we measure around attached are positive and specifically around attachment that’s holding to what we view as sort of a pre-pandemic normal attach rate and nothing really to report there. So we’re happy with the performance of consumables and how that fits into the broader question around consumer behaviors and usage of our grills.

Simeon Siegel: Sounds great guys. Thanks. Best of luck for the rest of the year and holiday.

Jeremy Andrus: Thank you.

Operator: Our next question comes from the line of Peter Keith with Piper Sandler. Please go ahead Peter, your line is open.

Peter Keith: Hi, thanks. Good afternoon, everyone. Thanks for taking the questions. Just following up on the ASP dynamics. I guess could you address the sell-through rates kind of by mix? Are you seeing any strength at the high end to the low end? And then on a related note, you took some pricing at the beginning of the year. Do you feel like the pricing is set? Or could you be opportunistic going into next year to maybe take a little bit more and drive more demand.