Traeger, Inc.: Form 10-Q for the period ended Mar 31, 2026

The following discussion and analysis of financial condition and results of operations should be read together with our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025 (our “Annual Report on Form 10-K”), filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2026. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. As a result of many important factors, such as those set forth in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements. For convenience of presentation, some of the numbers have been rounded in the text below.

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-phase strategic optimization plan designed to simplify our operating model, sharpen our channel strategy, and build a structurally more profitable business.

Phase 1 focused on organizational efficiency and foundational cost actions, including a reduction in force and the centralization of our MEATER business into our Salt Lake City infrastructure. Phase 2 was more strategic in nature and focused on channel optimization and resource reallocation to our highest-return opportunities. Key Phase 2 actions included discontinuation of the Costco roadshow program, exit from our direct-to-consumer (“DTC”) commerce business by redirecting Traeger.com consumers to retail partners, transition to a distributor model in certain European markets, and pellet mill consolidation. We have executed the majority of these actions, with the European distributor transition continuing through fiscal year 2026.

Taken together, these Phase 1 and Phase 2 actions are expected to deliver approximately $58 million of annualized run-rate savings. We have also identified additional value capture opportunities within Phase 2 around SKU rationalization and pricing – including exiting lower-margin SKUs and simplifying our product architecture – which are expected to drive an incremental $6 million to $12 million of run-rate value, with the majority of that benefit realized in fiscal years 2027 and 2028. In total, Project Gravity is expected to deliver approximately $64 million to $70 million of run-rate savings.

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 nine series of grills – Westwood, 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. A growing number 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.

As part of Project Gravity, we largely exited our Traeger-operated DTC business by redirecting consumers from Traeger.com to our retail partners’ websites, aligning our distribution model with our retail-focused strategy. We now sell our grills, consumables and accessories primarily through retail channels, including 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 Walmart, 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. We continue to offer our MEATER smart thermometers accessories through both retail and DTC channels, as this model remains well‑suited to the MEATER brand and its 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, and Texas, 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.

Revenue decreased by 34.3% to $94.1 million for the three months ended March 31, 2026, compared to $143.3 million for the three months ended March 31, 2025. We recorded a net income of $2.9 million for the three months ended March 31, 2026, compared to a net loss of $0.8 million for the three months ended March 31, 2025.

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 our Annual Report on Form 10-K.

Macroeconomic Conditions

Continuing global economic uncertainty, terrorism and conflicts, such as the war in the Middle East, 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 as a result of 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. On April 2, 2026, President Trump signed new Section 232 proclamations restructuring the metals tariffs so that the 50% rate applies to the full customs value of imported steel, aluminum, and copper products (rather than only the metal content), with derivative products subject to a 25% tariff on the full customs value. 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. Section 122 tariffs are subject to a 150-day statutory limit unless extended by Congress and are set to expire on July 24, 2026. Multiple legal challenges to the Section 122 tariffs have been filed, and on May 7, 2026, the U.S. Court of International Trade ruled that the Section 122 tariffs are unlawful; however, the court's injunction applies only to the named plaintiffs, and the tariffs remain in effect for all other importers pending appeal. On March 11, 2026, the Office of the U.S. Trade Representative formally launched 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. However, the May 7 ruling striking down the Section 122 tariffs (if upheld on appeal) and the July 24, 2026 statutory expiration create uncertainty as to whether the administration can maintain current tariff levels in the second half of 2026. On March 4, 2026, the U.S. Court of International Trade ruled that all importers who paid IEEPA tariffs are entitled to refunds. U.S. Customs and Border Protection (“U.S. Customs”) launched its Customs Automated Processing for Entries refund system on April 20, 2026, with refunds expected to be processed within 60 to 90 days. All requests will be reviewed by U.S. Customs to determine validity prior to the issuance of refunds and the administration has indicated it may seek to reduce total refund liability using alternative authorities. We have submitted refund requests through the U.S. Customs portal for all eligible IEEPA tariffs paid, and the majority of our requests have been accepted by U.S. Customs. As a result, the Company recognized a loss recovery of $15.6 million tariff refund within prepaid expenses and other current assets as of March 31, 2026. For the three months ended March 31, 2026, $12.4 million of this tariff refund was recorded within cost of revenue and the remaining $3.2 million was included within inventory. The ultimate timing of cash receipt remains uncertain and subject to further legal and regulatory developments.

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 II, Item 1A. “Risk Factors – United States trade policies, tariffs, antidumping and countervailing duty proceedings, and related uncertainties may have a material adverse effect on our business” included in of this Quarterly Report on Form 10-Q.

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 centralized our MEATER business into our Salt Lake City infrastructure to reduce overhead and drive organizational efficiency. Additionally, we pursued 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, we believe there can be certain 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. Several factors can impact gross margin, particularly sales channel mix and product mix. 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 grills, 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. 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 favorable anticipated 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 evolving U.S. tariff regime—including the 10% global tariff currently imposed under Section 122 of the Trade Act of 1974 following the U.S. Supreme Court’s February 2026 ruling invalidating the prior IEEPA reciprocal tariffs, the increased Section 232 tariffs on steel, aluminum, and copper and their derivative products, the existing Section 301 tariffs on Chinese goods, and any new Section 301 tariffs that may result from the investigations launched in March 2026—could impact our gross margin, as could any retaliatory tariffs imposed on U.S. goods by other nations. For more information on risks to our business related to tariffs, please see Part II, Item 1A. “United States trade policies, tariffs, antidumping and countervailing duty proceedings, and related uncertainties may have a material adverse effect on our business” included in this Quarterly Report on Form 10-Q.

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, and 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 $2.3 million and $2.9 million for the three months ended March 31, 2026 and 2025, 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. However, as we continue to manage our investments to support our growth and develop new and enhance existing products, we expect to leverage these expenses over time as we grow our revenue. 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, non-compete arrangements and trademark assets that were allocated a considerable portion of the purchase price from the corporate reorganization and acquisition of our business in 2017, as well as the July 2021 acquisition of Apption Labs Limited and its subsidiaries pursuant to a 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.

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 $3.2 million of expenses, primarily related to consulting fees and severance and other personnel costs, within restructuring and other costs in the accompanying consolidated statements of operations and comprehensive loss for the three months ended March 31, 2026.

Total Other Income (Expense)

Total other income (expense) consists of interest expense and other income, net. Interest expense includes interest and other fees associated with our Credit Facilities and Receivables Financing Agreement (each as defined below) as well as the amortization of amounts recorded within accumulated other comprehensive income (loss) prior to the dedesignation of the interest rate swap derivative contracts as a cash flow hedge. Other income, net also consists of the benefit recognized associated with the employee retention tax credit, any unrealized gains (losses) from our interest rate swap derivative contract subsequent to the dedesignation of the swap contract from a cash flow hedge, 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 from 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 unaudited 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.

* Not meaningful

Comparison of the Three Months Ended March 31, 2026 and 2025

Revenue

(dollars in thousands)

Revenue decreased by $49.2 million, or 34.3%, to $94.1 million for the three months ended March 31, 2026 compared to $143.3 million for the three months ended March 31, 2025. The decrease was primarily driven by lower sales of grills, accessories, and consumables.

Revenue from our grills decreased by $39.3 million, or 45.4%, to $47.4 million for the three months ended March 31, 2026 compared to $86.7 million for the three months ended March 31, 2025. The decrease was primarily driven by unit volume reduction in excess of 30% and a high-double digit decrease in average selling price. The reduction in unit volume was driven by the prior year launch of the Woodridge series of grills and retail orders placed in advance of anticipated tariff increases, as well as channel optimization actions taken under Project Gravity. The decline in average selling price was primarily due to mix shift to lower priced grills.

Revenue from our consumables decreased by $4.2 million, or 13.7%, to $26.1 million for the three months ended March 31, 2026 compared to $30.3 million for the three months ended March 31, 2025. The decrease was driven by a low-double digit decline in wood pellet sales and a decline in food consumables sales in excess of 20%. The decline in wood pellet sales was primarily driven by a low-double digit decrease in average selling price due to channel mix shifts and timing of trade spend, partially offset by a mid-single digit unit volume increase driven by channel expansion. The decline in food consumables sales was primarily driven by an average selling price decrease in excess of 20% from lower priced rub offerings and low-single digit decreases in unit volume driven by seasonal ordering shifts.

Revenue from our accessories decreased by $5.7 million, or 21.8%, to $20.6 million for the three months ended March 31, 2026 compared to $26.3 million for the three months ended March 31, 2025. The decrease was driven primarily by a reduction in MEATER smart thermometers sales due to continued competitive pressure. The decline in Traeger branded accessories was primarily driven by a low-double digit decrease in average selling price, partially offset by a mid-single digit increase in unit volumes.

Gross Profit

(dollars in thousands)

Gross profit decreased by $16.4 million, or 27.7%, to $43.0 million for the three months ended March 31, 2026 compared to $59.5 million for the three months ended March 31, 2025. Gross margin increased to 45.7% for the three months ended March 31, 2026 from 41.5% for the three months ended March 31, 2025. The increase in gross margin was driven by the benefit from the IEEPA tariff refund, partially offset by timing of trade spend, lower mix of direct import sales, tariff-related costs, and fixed cost deleverage.

Sales and Marketing

(dollars in thousands)

Sales and marketing expense decreased by $9.6 million, or 43.1%, to $12.6 million for the three months ended March 31, 2026 compared to $22.2 million for the three months ended March 31, 2025. As a percentage of revenue, sales and marketing expense decreased to 13.4% for the three months ended March 31, 2026 from 15.5% for the three months ended March 31, 2025. The decrease in sales and marketing expense was primarily driven by lower employee-related costs, including travel and entertainment, as well as lower demand creation costs and professional service fees, in each case reflecting cost reduction actions associated with Project Gravity.

General and Administrative

(dollars in thousands)

General and administrative expense decreased by $5.6 million, or 22.4%, to $19.4 million for the three months ended March 31, 2026 compared to $25.0 million for the three months ended March 31, 2025. As a percentage of revenue, general and administrative expense increased to 20.6% for the three months ended March 31, 2026 from 17.5% for the three months ended March 31, 2025. The decrease in general and administrative expense was primarily driven by a decrease in stock-based compensation expense of $3.4 million, as well as lower employee-related costs, including travel and entertainment, as a result of Project Gravity.

Restructuring and Other Costs

(dollars in thousands)

* Not meaningful

Restructuring and other costs were $3.2 million for the three months ended March 31, 2026 with no such costs incurred during the three months ended March 31, 2025. These costs are related to Project Gravity which primarily consist of consulting fees associated with execution of initiatives under this project, as well as severance and other personnel costs.

Total Other Income (Expense)

(dollars in thousands)

Total other income increased by $9.5 million, or 163.5%, to $3.7 million for the three months ended March 31, 2026 compared to total other expense of $5.8 million for the three months ended March 31, 2025. This change was primarily due to $11.6 million of total benefit recognized from the employee retention tax credit, partially offset by unfavorable impacts from foreign currency exchange rates and foreign currency contracts, and lower realized gains on our interest rate swaps, which matured on February 28, 2026.

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 March 31, 2026, we had cash and cash equivalents of $33.7 million, $112.5 million borrowing capacity under our Revolving Credit Facility (as defined below) and $38.2 million borrowing capacity under our Receivables Financing Agreement (as defined below). As of March 31, 2026, we had no outstanding loan amounts under the Revolving Credit Facility or the Receivables Financing Agreement. As of March 31, 2026, 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 Quarterly Report on Form 10-Q. 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. See Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K.

Cash Flows

The following table sets forth cash flow data for the periods indicated therein (in thousands):

Cash Flow from Operating Activities

Cash flows related to operating activities are dependent on net income (loss), non-cash adjustments to net income (loss), and changes in working capital. The increase in cash provided by operating activities during the three months ended March 31, 2026 compared to cash used in operating activities during the three months ended March 31, 2025 is primarily due to changes in net working capital, partially offset by an increase in net income, adjusted for non-cash items, as compared to the prior year period. The current period change in working capital was primarily driven by a decrease in accounts receivable, reflecting the collection of prior period balances against a lower volume of new sales activity following the Company's exit from direct-to-consumer business and the Costco roadshow programs under Project Gravity. Working capital benefited from decreases in accrued expenses, reflecting lower operating cost levels resulting from cost savings actions taken under Project Gravity, and a decrease in inventories, reflecting deliberate rightsizing of inventory levels in support of the Company's strategic realignment under Project Gravity, partially offset by an increase in prepaid and other current assets related to the IEEPA tariff refunds.

Cash Flow from Investing Activities

The increase in cash used in investing activities during the three months ended March 31, 2026 was primarily related to the increased purchasing of fixtures as compared to the prior year period.

Cash Flow from Financing Activities

The change in cash flow from financing activities during the three months ended March 31, 2026 was driven by our improved liquidity position resulting from disciplined cost management actions taken under Project Gravity, which eliminated the need to borrow under the Receivables Financing Agreement (as defined below), compared to net borrowings of $20.0 million in the prior year period for 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. The First Lien Credit Agreement provides for a senior secured term loan facility (the “First Lien Term Loan Facility”), which originally included a delayed draw term loan, and a revolving credit facility (the “Revolving Credit Facility” and, together with the First Lien Term Loan Facility, the “Credit Facilities”).

First Lien Credit Agreement

The First Lien Credit Agreement provides 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 Term SOFR plus a fixed spread ranging from 3.00% to 3.25% per annum based on our Public Debt Rating (as defined in the First Lien Credit Agreement). The First Lien Term Loan Facility requires quarterly principal payments from December 2021 through June 2028, with any remaining unpaid principal and accrued interest due on the maturity date of June 29, 2028. As of March 31, 2026 and December 31, 2025, the total principal amount outstanding on the First Lien Term Loan Facility was $403.3 million.

On August 5, 2025, we amended the First Lien Credit Agreement (the “Amendment”) to reduce the overall size of the Revolving Credit Facility from $125.0 million to $112.5 million and split it 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”). Loans under the Extended Revolving Credit Facility accrue interest at Term SOFR plus a fixed spread ranging from 2.75% to 3.25% per annum, with a commitment fee of 0.25% to 0.50% per annum on undrawn amounts, each based on the Company's First Lien Net Leverage Ratio (as defined in the First Lien Credit Agreement). Letters of credit may be issued under the Extended Revolving Credit Facility in an amount not to exceed $11.4 million which, when issued, lower the overall borrowing capacity of the facility. No payment of outstanding principal amounts under either tranche is due prior to the respective expiration date of each tranche. As of March 31, 2026 and December 31, 2025, the Company had no outstanding loan amounts under the Extended 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, TCP 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 (the “SPE”), 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 any entities above TGPX Holdings II LLC, including 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. 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 the Company’s utilization of the Revolving Credit Facility in excess of a threshold set forth in the First Lien Credit Agreement. Pursuant to the Amendment, we agreed to certain additional negative covenant restrictions for the benefit of the lenders under the Extended Revolving Facility. 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 lower 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 March 31, 2026, 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. 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 were 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 March 31, 2026.

As of March 31, 2026 and December 31, 2025, we had no outstanding loan amounts under the Receivables Financing Agreement.

Contractual Obligations

There have been no material changes to our contractual obligations as of March 31, 2026 from those disclosed in our Annual Report on Form 10-K. Refer to the heading “Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” included in our Annual Report on Form 10-K for a discussion of our debt and operating lease obligations, respectively.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“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.

Our critical accounting policies and estimates are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K, the notes to the consolidated financial statements included therein and Note 2 – Summary of Significant Accounting Policies to the accompanying unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q. During the three months ended March 31, 2026, there were no material changes to our critical accounting policies and estimates from those discussed in our Annual Report on Form 10-K.

Recent Accounting Pronouncements

For information regarding recent accounting pronouncements, see Note 2 – Summary of Significant Accounting Policies to the accompanying unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

Interest Rate Risk

We had cash and cash equivalents of $33.7 million and $19.6 million as of March 31, 2026 and December 31, 2025, respectively. We hold cash and cash equivalents for working capital purposes. We do not have material exposure to market risk with respect to investments. We had $403.3 million of outstanding debt as of both March 31, 2026 and December 31, 2025. Certain amounts under our Credit Facilities accrue interest at a floating interest rate. Based on the outstanding balance of the Credit Facilities as of March 31, 2026, for every 100 basis point increase in interest rates, we would incur approximately $4.0 million of additional annual interest expense. In February 2022, we entered into a floating-to-fixed interest rate swap contract to hedge fluctuations on a portion of our variable rate debt, which matured on February 28, 2026. As a result of this maturity, we now have unhedged floating rate exposure on our outstanding term loan balance, which increases our sensitivity to interest rate movements compared to prior periods when a portion of our debt was hedged. We may in the future use caps, collars, structured collars, or other common derivative financial instruments to reduce interest rate risk. It is difficult to predict the effect that future hedging activities would have on our operating results.

Other than the foregoing quantitative and qualitative disclosure, there have been no material changes to our disclosures regarding our exposure to market risk as described in Part II, Item 7A. “Quantitative and Qualitative Disclosures about Market Risk” of our Annual Report on Form 10-K.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2026, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

United States trade policies, tariffs, antidumping and countervailing duty proceedings, and related uncertainties may have a material adverse effect on our business.

There have been significant changes and proposed changes in recent years to U.S. trade policies, tariffs, and treaties affecting imports. For example, the U.S. has announced and implemented additional tariffs on certain imports from China under multiple authorities. On February 20, 2026, the Supreme Court ruled that the President cannot use the International Emergency Economic Powers Act (IEEPA) to impose tariffs, invalidating certain tariffs that had been imposed under IEEPA. In response to this ruling, the President signed a proclamation imposing a new 10% global tariff under Section 122 of the Trade Act of 1974, effective February 24, 2026. Section 122 tariffs are subject to a 150-day statutory limit (currently set to expire on July 24, 2026) unless extended by Congress. The legality of the Section 122 tariffs is itself the subject of ongoing litigation; on March 5, 2026, twenty-four states filed a lawsuit in the U.S. Court of International Trade challenging the President's authority to impose global tariffs under Section 122, and a separate legal challenge was filed by impacted businesses on March 9, 2026. On May 7, 2026, the U.S. Court of International Trade ruled that the Section 122 tariffs are unlawful. The court's injunction currently applies only to the specific plaintiffs, and the tariffs remain in effect for all other importers while the administration pursues an appeal. In addition, the Office of the U.S. Trade Representative has initiated new Section 301 investigations targeting structural excess capacity in manufacturing sectors and forced labor practices. These investigations could result in additional country-specific tariffs similar in scope to those previously imposed under IEEPA. Section 301 tariffs on Chinese goods also remain in effect.

The U.S. also continues to maintain tariffs on steel and aluminum, as well as increased tariffs and import restrictions on products imported from various other countries. These tariffs on aluminum and steel include derivative tariffs that have impacted and will continue to impact a broad range of downstream products, which have and may continue to adversely impact our business.

In addition, our products and the components and materials used in their manufacture currently are or may in the future be subject to antidumping or countervailing duties. The U.S. Department of Commerce and the U.S. International Trade Commission continue to initiate and conduct antidumping and countervailing duty investigations covering a wide range of products imported from countries in which we source goods. The application of these orders to products we import, or on raw materials and components used in their manufacture, could result in the assessment of special antidumping or countervailing duty rates that may be substantial. These duties are assessed retroactively and final duty rates may increase significantly from the estimated rates deposited at the time of entry. For example, in April 2026, U.S. Customs and Border Protection issued us a notice of action asserting that certain drip tray and bucket liners sourced from China fall within the scope of certain antidumping and countervailing orders. We disputed this determination and are pursuing formal proceedings before the U.S. Department of Commerce. While we do not currently believe that the outcome of this matter will have a material effect on our condensed consolidated financial position, results of operations or cash flows, the ultimate outcome remains uncertain, and an adverse resolution of this or similar future proceedings could result in the retroactive assessment of substantial duties.

On March 4, 2026, the U.S. Court of International Trade ruled that all importers who paid IEEPA tariffs are entitled to refunds. U.S. Customs and Border Protection launched its Customs Automated Processing for Entries (CAPE) refund system on April 20, 2026, with refunds expected to be processed within 60 to 90 days. All requests will be reviewed by U.S. Customs and Border Protection to determine validity prior to the issuance of refunds, and the administration has indicated it may seek to reduce total refund liability using alternative authorities. Accordingly, the timing and ultimate amount of any refunds we receive remain uncertain.

In response to the tariffs announced by the U.S., China and other countries have imposed or proposed additional tariffs on certain exports from the United States. There is substantial uncertainty about the future relationship between the United States and other countries with respect to trade policies, taxes, government regulations, and tariffs. This uncertainty has been heightened by the February 2026 Supreme Court ruling invalidating IEEPA tariffs and the May 2026 U.S. Court of International Trade ruling striking down the Section 122 tariffs, which together have resulted in changes to the tariff structure and cast doubt on the administration's current legal authority to maintain broad-based global 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. However, the Section 122 tariffs are set to expire on July 24, 2026 (unless extended by Congress), and the new Section 301 investigations may not conclude in time to replace them, creating additional uncertainty as to the tariff rates that will apply to our imports in the second half of 2026 and beyond. We cannot predict whether, and to what extent, U.S. trade policies will change in the future. A significant proportion of our products, including our grills, are manufactured in China, Vietnam, Taiwan, and other regions outside of the United States. Approximately 80% of our grills are manufactured in China. Accordingly, such U.S. policy changes have made it and may continue to make it difficult or more expensive for us to obtain certain downstream products manufactured outside the United States, which could affect our revenue and profitability. Any of these factors could depress economic activity and restrict our access to suppliers or customers, and could have a material adverse effect on our business, financial condition, and results of operations and affect our strategy in China, Vietnam, Taiwan, and elsewhere around the world.

In response to recent tariff actions and related macro uncertainty, we have initiated measures to streamline operations and reduce costs, including negotiating savings with manufacturers and adjusting our channel and geographic models; if these measures are insufficient or delayed, tariffs, antidumping or countervailing duties, and related supply chain pressures could still materially adversely affect our results.

Other than the foregoing, there have been no material changes with respect to the risk factors disclosed in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K.