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Operator: Hello, everyone, and welcome to the Traeger Third Quarter Fiscal 2025 Earnings Conference Call. My name is Charlie, and I'll be coordinating the call today. [Operator Instructions] I will now hand over to our host, Nick Bacchus, Vice President of Investor Relations, Treasury and Capital Markets at Traeger to begin. Nick, please go ahead.
Nicholas Bacchus: Good afternoon, everyone. Thank you for joining Traeger's call to discuss its third quarter 2025 results, which were released this afternoon and can be found on our website at investors.traeger.com. I'm Nick Bacchus, Vice President of Investor Relations, Treasury and Capital Markets at Traeger. With me on the call today are Jeremy Andrus, our Chief Executive Officer; and Joey Hord, our Chief Financial Officer. Before we get started, I want to remind everyone that management's remarks on this call may contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and views of future events, including, but not limited to, statements made regarding our organizational focus, our mitigation efforts to offset the direct impact of tariffs, our Project Gravity initiative and its impact on our business and our outlook as to our anticipated full year 2025 results. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied herein. I encourage you to review our annual report on Form 10-K for the year ended December 31, 2024, and our other filings for a discussion of these factors and uncertainties, which are available on the Investor Relations portion of our website. You should not take undue reliance on these forward-looking statements, which we speak to only as of today. We undertake no obligation to update or revise them for any new information. Now I'd like to turn the call over to Jeremy Andrus, Chief Executive Officer of Traeger. Jeremy?
Jeremy Andrus: Thanks, Nick. Thank you for joining our third-quarter earnings call. On today's call, I will provide an update on our third-quarter results. I will also discuss our Project Gravity streamlining effort and review our outlook for fiscal 2025 before turning the call over to Joey. This afternoon, we released third-quarter results that were ahead of expectations. Highlights include a sales increase of 3% to $125 million, driven by growth in our grills and consumables categories. Adjusted EBITDA of $14 million was up 12% over the prior year as our expense reduction initiatives are beginning to flow through the P&L. Third-quarter results reflect our management team's unrelenting focus on navigating a highly dynamic environment. I am pleased with our ability to grow our revenues and adjusted EBITDA in the face of a challenging backdrop. Our results give us the confidence to reiterate our guidance for the fiscal year. In this environment, preserving profitability and enhancing cash flow is our highest near-term priority. As such, we have made significant progress in executing our tariff mitigation strategies. We continue to believe that we are positioned to offset about 80% of the approximate $60 million in unmitigated tariff exposure in fiscal 2025, utilizing 3 main strategies that we have previously discussed. First, we are continuing to focus on driving savings and efficiencies in our supply chain, including successful cost reductions. Further, we are planning for and implementing our strategy to diversify our production away from China. We have had productive discussions with manufacturing partners and remain committed to materially diversifying production out of China by the end of fiscal 2026. We currently have plans in place to produce all new grill SKUs going forward in Vietnam, and we'll continue to work towards shifting production on existing lines of product out of China as we move through the balance of this year and into next year. Next, we took price across our assortment to protect profit in the face of higher costs due to tariffs. As we expected, in the third quarter, we saw an impact on grill sell-through volumes tied to the pricing increase. However, elasticity at the consumer level was largely in line with our expectations. The final strategic pillar of our tariff mitigation strategy is cost management. This includes near-term cost savings measures such as a reduction in travel and entertainment expenses and the deferral of nonessential projects as well as our Project Gravity streamlining initiative. With respect to Project Gravity, I continue to believe this effort will be transformative for our business and a significant driver of long-term value for the company. Last quarter, we discussed the 2 phases of Project Gravity. Phase 1 consists of the organizational structure changes we implemented in the second quarter as well as the integration of our MEATER business into Salt Lake City Infrastructure. In the third quarter, we made significant progress on the MEATER integration, significantly reducing headcount based in the U.K. and shifting most of the key functions of the business into our Utah headquarters and Traeger infrastructure. We believe MEATER's operations are well-positioned to benefit from the significant pool of talent at Traeger. As we look to the future, we believe the integration of MEATER will reshape its P&L and will unlock the ability to focus on its long-term growth drivers, including the expansion of its retail channel penetration and new product development. Overall, we continue to target Project Gravity Phase 1 run rate cost savings of $30 million once fully implemented. Turning to Phase 2 of Project Gravity. The second phase of our transformation effort is being driven by a broad-based review of our business with a focus on increased efficiency, simplification and return on investment. This strategic review is ongoing, and we have retained a global consulting firm to assist with the assessment and implementation of Phase 2 initiatives. We have also established a transformation management office, which will act as a coordinating body during the implementation of Gravity to help ensure consistency, transparency and accountability between the executive team and working teams. Today, we are announcing a run rate cost savings target of $20 million identified in connection with Phase 2 of Project Gravity. These savings are being enabled by channel optimization, supply chain and manufacturing efficiencies and other streamlining and productivity efforts. Phase 2 savings are incremental to the $30 million of run-rate savings tied to Gravity Phase 1 for a cumulative $50 million run-rate savings target. We expect to largely implement Gravity initiatives by the end of 2026. One of the largest drivers tied to Gravity Phase 2 savings is channel optimization. As we review profitability by channel, geography and retail customer, it became evident that there is a meaningful opportunity to streamline distribution and exit certain channels, which are not accretive to profit on a fully burdened cost basis. We are making several shifts to our distribution footprint, which we expect will drive increased efficiency and profitability in the years to come. First, we will be exiting the Costco roadshow business. This program was an early driver of Traeger's brand awareness and growth. However, over time, this business' profitability has been declining, given increasing costs, including transportation rates and labor. Costco will remain an important partner to us, and we will continue to sell Traeger products through Costco's traditional in-line business. Next, we are planning to shift our traeger.com website to a content and brand storytelling focus, and we'll be exiting the direct-to-consumer commercial aspect of the website after the fourth quarter. Consumers seeking to buy Traeger products on traeger.com will be redirected to our retail partners' websites. Our website is a critical asset, and it is the first place where many of our consumers go to conduct research on our grills. However, profitability in this channel is not where we would like it to be, and we believe that by redirecting consumer traffic to our retail partners' websites, we can retain a meaningful portion of these sales at a higher incremental margin while reducing overhead and complexity tied to our own DTC business. We will also be partnering with our retailers to optimize the digital media and advertising strategy for Traeger Online in an effort to drive demand and return on advertising spend for these partners. Not only do we believe this shift will drive efficiency to our business, but we also believe the change will result in a better experience for our consumers. Last, we are shifting to a distributor model in our European markets, which are currently operating under a direct model. We believe employing a 100% distributor model in Europe offers a more cost-effective and asset-light approach, which will unlock savings going forward while retaining our presence in this key international market by partnering with experienced local distributors. We are also sunsetting certain unprofitable SKUs in the market as part of this shift. In total, these channel optimization initiatives will drive meaningful simplification and cost savings to our business. We expect that these initiatives, along with other Phase 2 strategies will drive $20 million of run-rate savings once fully implemented. And while we anticipate a loss of revenue tied to channel optimization, this aligns to our strategy of transforming into a leaner, more efficient and more profitable business, albeit with a smaller base of revenues in the short term. It is important to note that while the near-term focus on Project Gravity is to drive significant savings and efficiencies, this streamlining will serve to optimize our cost structure, which will allow for continued focus on our key growth pillars of product, innovation and brand. Driving increased household penetration for the Traeger brand remains core to our strategy, and we expect the transformation that will occur as a result of gravity will enable our long-term revenue growth. Let me now briefly discuss our outlook for fiscal year 2025. Today, we are reiterating our prior guidance of revenues of $540 million to $555 million or down 8% to 11% and adjusted EBITDA of $66 million to $73 million. I am pleased with our ability to reiterate guidance today, and we are planning the balance of the year prudently. Now let me briefly touch on some highlights from the third quarter. In terms of our grill business, we saw 2% growth in revenues versus prior year. Growth in grills was driven by strong shipments of sub-$1,000 grill units where we continue to see outperformance. The quarter also benefited from a resumption of direct import fulfillment with our larger retail partners, which was mostly paused in the second quarter. Direct import fulfillment allows for an optimization for both Traeger's and our retail partners' supply chains, creating value for both parties. Reinstating this process in a heavily tariff environment demonstrates our resilience and represents a significant win for the team. On the consumables front, we achieved 12% revenue growth in the third quarter. We are pleased with our consumables performance, which was driven by positive sell-through of pellets, and we continue to see this part of our portfolio as a stable and recurring revenue. New distribution, including our launch into Walmart late last year, remains a growth driver for consumables, and we are seeing expanded distribution of consumables hitting the shelves across several of our largest grocery partners. In terms of consumables innovation, in August, we launched our first-ever sauce collaboration with our long-standing partner and world-famous Pitmaster, Matt Pittman of Meat Church BBQ and also brought back the fan favorite Meat Church Pellets. Both launches have seen a favorable reaction from consumers with the partnership's Holy Cola BBQ Sauce quickly becoming one of our top-selling sauces. Last, our accessories business was down 4%, driven by a decline in MEATER revenues. We expect to see continued short-term pressure on MEATER revenues. However, we believe that the integration and P&L reshaping strategy in motion through Project Gravity will drive growth and expand profitability in the long term. Notably, Traeger-branded accessories demonstrated strong double-digit growth in the third quarter as our significant installed base of grills drove these attachment sales. In summary, the entire Traeger team is highly focused on navigating the current dynamic backdrop and executing against our plan to transform the business and reshape the P&L via our Project Gravity initiatives. I am pleased with the progress we have made thus far with respect to Gravity and believe the $50 million in run-rate savings targeted thus far will meaningfully unlock significant value for our shareholders. And with that, I'll turn the call over to Joey. Joey?
Joey Hord: Thanks, Jeremy, and good afternoon, everyone. Today, I'll walk through our third quarter financial performance and provide some additional context on our results and guidance for fiscal '25. We are pleased with our third-quarter results and our ability to drive growth in both revenues and adjusted EBITDA. These results, along with additional efforts we are announcing on Project Gravity, demonstrate our ability to successfully navigate a dynamic environment. As a reminder, enhancing profitability and cash flow in the current environment remains our top priority. Third quarter revenues increased 3% year-over-year to $125 million. Growth was led by double-digit gains in our consumables business as well as a modest increase in our growth business. Looking at category performance, Grill revenues increased 2% in the third quarter. This was primarily driven by an increase in average selling prices tied to the pricing increase implemented earlier this year as part of our tariff mitigation efforts, which more than offset the decline in unit volumes. Third-quarter grill revenues also benefited from a pacing shift out of the fourth quarter. Consumables revenues grew 12% to $25 million with wood pellets seeing healthy replenishment and distribution gains contributing to growth. Accessories revenues decreased 4% to $24 million due to lower MEATER sales. We are pleased with our Traeger-branded accessories business in the quarter, which saw growth in excess of 20%. Gross profit for the third quarter decreased to $49 million from $52 million in the third quarter of '24. Gross profit margin for the third quarter contracted 360 basis points year-over-year to 38.7%, reflecting the impact of tariffs and other supply chain pressures. The reduction in gross margin was driven by tariff costs totaling $8 million and generating 670 basis points of unfavorability. This cost was partially offset by: one, pricing actions worth 170 basis points; two, supply chain efficiencies worth 90 basis points; three, improved pellet margins worth 30 basis points; and four, other margin positives of 20 basis points. In the third quarter, we showed strong expense discipline with our cost reduction and streamlining efforts beginning to flow through, as demonstrated by our ability to drive adjusted EBITDA growth. Sales and marketing expenses declined to $20 million, down $6 million year-over-year, representing a 550-basis point improvement as a percent of sales. General and administrative expenses were $22 million, down $2 million or 8% year-over-year with a 210-basis point improvement as a percentage of sales. In the third quarter, we recorded a $75 million noncash impairment charge to our goodwill related to a sustained decrease in our stock price and market capitalization. As a result of these factors, net loss for the third quarter was $90 million as compared to a net loss of $20 million in the third quarter of '24. Net loss per diluted share was $0.67 compared to a loss of $0.15 in the third quarter of '24. Adjusted net loss for the quarter was $22 million or $0.17 per diluted share as compared to $7 million or $0.06 per diluted share in the same period in '24. Adjusted EBITDA grew to $14 million, up from $12 million in the prior year, demonstrating our ability to drive profitability even in a challenging macro environment. Looking at the balance sheet, we remain in a solid position with liquidity of $167 million with no outstanding borrowings under our revolver or receivables facilities at the end of the third quarter. Inventory at the quarter end was $115 million, up from $107 million at year-end. Increased inventory costs tied to tariffs represented the majority of the growth versus prior year. We are comfortable with our inventory position going into the end of the year. As Jeremy spoke to, we continue to make progress on Project Gravity, our comprehensive strategic initiative to drive operational efficiency and long-term profitability. We previously discussed Phase 1 actions, including headcount reductions and the integration of MEATER into our headquarters, which are still expected to deliver $30 million in run-rate cost savings with approximately $13 million of realized cost savings anticipated in FY '25. Today, we are announcing an incremental cost savings target tied to Gravity Phase 2 of $20 million once fully implemented. The drivers of Phase 2 savings include channel optimization, supply chain efficiencies and other general productivity measures. Phase 2 implementation will occur through the end of fiscal year '26, and we expect these initiatives to more fully materialize in our results in fiscal '27. The strategic review for Project Gravity is ongoing, and we will provide further updates as the plan evolves. It is important to note that Project Gravity is a transformation exercise that will drive a meaningful reshaping of our P&L. Gravity initiatives are expected to drive material improvements to our cost structure once fully implemented. The key pillars of Gravity are: one, to drive efficiencies and profitability in our business; two, to enhance return on investment; and three, to open up capacity and resources for investment into our highest growth opportunities. Some of these actions were intentionally reduce our revenue base as we exit unprofitable areas of the business, enabling a smaller but more profitable business and opening up investment capacity to drive our long-term growth. Given year-to-date performance, we are reaffirming our full year guidance. Revenue is expected to be between $540 million and $555 million or down 8% to 11%. Gross margin is expected to be between 40.5% and 41.5%. For adjusted EBITDA, we are reiterating our guidance of $66 million to $73 million. We continue to expect grill revenues to be down high single digits for the year with expected pressure on unit volumes driven by elasticity following pricing increases taken earlier this year to mitigate tariffs and protect profitability. For consumables, we are expecting growth for the year. In terms of the fourth quarter, recall that we are facing a difficult comparison from the prior year when we had a large load-in of our new Woodridge line. We also benefited from a revenue pacing shift in the third quarter of '25, which will pressure fourth-quarter revenues. Second half of '25 performance is expected to be in line with our prior view. In closing, I want to thank our team for their dedication. We're encouraged by our third-quarter performance and remain confident in our ability to navigate the current environment while laying the groundwork for sustainable growth. With that, I'll turn the call back to the operator for questions. Operator?
Operator: [Operator Instructions] Our first question of the day comes from Brian McNamara of Canaccord Genuity.
Brian McNamara: I just wanted to drill in on your decision to kind of exit DTC and kind of redirect traeger.com traffic to retail partners' websites. Is that certain types of retailers? Or just any clarity there would be helpful.
Jeremy Andrus: Yes, Brian, thanks for the question. I'd say a couple of things. First of all, while in many consumer businesses, the direct channel is the margin monster, that's not the case in our business just due to the supply chain, the size and weight of shipments and dropping them on it's the last mile that's expensive. Frankly, it's the last mile that also suboptimizes the consumer experience. And so as we looked at both the economics, the bandwidth and cost needed to drive that channel from technology infrastructure through advertising to acquire customers. And then we looked at the end consumer experience. It was clear to us that this was not the right channel for us to be driving. And so as we think about what that will look like, I would say, first of all, we will -- we're working with retail partners so that we can offer choice to our end consumers. We're being thoughtful to the consumer experience that they can provide. First of all, ensuring that we can connect into inventory levels, send a transaction to a retailer that they can quickly service and that they can service in a high-quality way. We'll look at capabilities like assembly and delivery, which is clearly a better experience than the last-mile outsourced truck or van sort of dropping off a grilled box in someone's back porch. We think we can partner with retailers that improve this experience. And so we're in the process of defining exactly who that will be. And we've got technology selected. And we're confident that this will be an opportunity to continue to drive revenues, but at higher margins at better experience to the consumer. We're certainly going to be attentive to ensuring that we drive as much of that revenue there as we can. We want to make sure that there's minimal breakage in the process. But long-term, we really believe in this approach.
Brian McNamara: Great. That's helpful. And then just on your retail partners' attitudes towards inventories in the current market. We've heard from other players, obviously, smaller price points that several large retailers kind of are being tight on inventory, shifting their business from direct import to domestic fulfillment. I was just curious like what are you guys seeing, obviously, given a much higher price point?
Jeremy Andrus: Well, I would say there have been some meaningful shifts over the last couple of quarters. As the tariff landscape shifted, it didn't make sense for a period of time for retailers to direct import the inventory largely because the tariff exposure was so much higher on the wholesale cost than on our cost of goods. And so a lot of our partners did shift towards a domestic fulfillment model. Fortunately, we've worked very closely with them to implement a first sale process, which is an efficient way to direct import without driving higher aggregate tariff costs. And so that's actually one of the things that drove some of the some of the shift into the third quarter, we were fulfilling domestically, some of the revenue shift, I should clarify. We are filling domestically, but we've shifted the largest retail partners back to direct import. In terms of their behavior or their point of view around inventory in general, we're not really seeing that change. We're not seeing any change to the allocation of space at retail to the assortments. And we're not seeing a different strategy with regards to inventory than we were seeing pre-tariffs.
Brian McNamara: Great. And then finally, I'm just curious, it seems like that sub-$1,000 price point grill continues to outperform just probably 3 years running now. I'm just curious your thoughts on how that maybe changes or affects your overall pricing strategy? Clearly, you have a premium brand status, but does that change how you think about things? You launched a relatively upmarket grill earlier this year. Just curious your thoughts there.
Jeremy Andrus: So we talk a lot about pricing strategy vis-à-vis our brand position. And we continue to believe that Traeger is well-positioned in terms of the product experience, the brand, the perception of the brand to be an accessible premium brand. And we believe that will continue. And it will continue in part by how we position it, but also in part by how we think about our product road map strategically. What we learned in our consumer research and in our pricing studies is that the lower price points, getting to a sharper opening price point expanded the addressable audience for Traeger. I think it does a couple of things. Number one, it inspires a consumer who is spending closer to the average of a grill in the U.S., which is -- it's around $325 at retail. We're able to migrate them north, a consumer who is probably buying a propane grill before, but has been looking at Traeger is willing to step up a little bit. So we clearly have -- are reaching a new consumer. But I would also say that when we've reached that consumer and they come into the Traeger community, they start to appreciate the benefits and just the experience of cooking on a Traeger grill, a wood pellet grill, we believe that they stay. They stay not only to cook with the wood pellets, the accessories, the lifetime value of that consumer is meaningful. But I would say equally importantly, they tend to upgrade as later on their second purchase as they become committed to the brand and the solution. So we see it as a strategic opportunity to enhance the size of the market. We don't think it constrains our ability to position the brand or to grow. I do think there's -- one of the things that is clearly happening, not only expanding the audience of addressable consumers, but this has been -- it's been a tough consumer environment for high-ticket discretionary durable products. And I think in light of that, high interest rates, we've seen the consumer shift to lower price points. We think that is a temporary phenomenon, and we continue to position to drive higher ASPs going forward. But we like the strategy of getting a little bit sharper on that opening price point because we do think it brings in an incremental consumer.
Operator: Our next question comes from Peter Benedict of Baird.
Peter Benedict: First, I don't know if you could maybe frame the size of the revenue loss that you're expecting to incur from the Phase 2 distribution strategy plans. They make sense. Just kind of curious if you frame the size of that for us, maybe the timing on when that might -- we should expect that to play out? That's my first question.
Joey Hord: Thanks for the call, Peter. I'll take that question. So overall, we're essentially walking away from approximately $60 million of revenue, but we do believe there's going to be a recapture of that revenue in either the channels that they're in, i.e., Costco inline or the other channels that we operate in. With that said, the timing of this, this is -- we're making the shifts in January and into February. And then the recapture and the value of this is going to be sequentially within the first half of FY '26 into -- sorry, the first half of '26 into the second half and then long term into '27. These are -- this is a structural shift in nature, and we just don't want to overcommit for next year. At the same time, this is absolutely a value capture of $20 million.
Jeremy Andrus: Let me just add to that, if I may. It was -- as we step back and think about what are we trying to get done right now, we're seeing an opportunity that I would say was originally driven by tariffs and a need to cut costs so that we could preserve profitability and financial health at the moment. But as we sort of moved into the late second quarter, early third quarter, we were very committed to doing this because we see a long-term benefit from -- for the business. This Project Gravity is fundamentally a transformation exercise, which early innings will drive profit. It will drive cash flow. It will delever our balance sheet. But ultimately, what it does is it streamlines the business and it opens up investment capacity so that we can reinvest back in growth. And so to the extent that revenues decline in the near term, we're going to be driving higher profitability, and we're going to be creating capacity to make sure that what the consumer cares about, which is a better product experience, it's a better interaction with the brand, the recipe content, all of the content that improves that experience that we can fund these things, that we can fund the experience at retail that a consumer has when they walk in there. It's been an interesting -- maybe challenging is a better word. It's been a challenging few years coming out of the pandemic. And as we've gone through these budget cycles and feel like we're not -- we don't have the investment capacity to adequately fund what we believe is really important to the consumer. We really saw this as an opportunity to shift to completely reshape the P&L and to shift how we go after to shift structurally so that we can really do the right thing for the brand long term. So we're actually really excited about the process that we're going through. There will be some decline in revenue as both Joey and I have said, but it will be really an enabler to medium-to longer-term growth.
Peter Benedict: Got it. That's a helpful perspective. My second question is around maybe you can give us a sense of the margin profile of going with the distributor model in Europe, kind of how that compares maybe to what you would see as going 1. Just kind of curious what the margin was on the distributor side of things.
Joey Hord: Yes. So margins -- when you shift the distributor model, there's obviously an impact to margin overall because that's -- the third party we're going to work with has to drive a profit or deliver a profit as well. At the same time, if you look below margin, the cost structure that we're taking out of the business is going to make up for more than the margin loss. And so back to what Jeremy said in being smaller but more profitable, this is a perfect example. And then we're not -- we believe we can serve the consumer in Europe in the same way that we were serving them in the direct model, but just in a much more profitable way.
Peter Benedict: Got it. Makes sense. Last one is just -- can you maybe expand on the elasticity response? You've seen obviously price up, you saw units come down. Certainly, that was expected. I just I'm curious how that maybe informs your promotional plan for the fourth quarter and into next spring. Just kind of an open-ended question there.
Joey Hord: Yes. It's a prudent question. So as far as elasticity in pricing, we took pricing in the low double digits. Generally speaking, we're very happy with our -- with the way sell-through is tracking. There is a divergence of above 1,000, below $1,000 in terms of performance. Speaking about promo overall, though, the consumer reacts when we promo. And it's something that we use to think about our inventory management, our profitability in your quarter-to-quarter management. And so we're going to -- we continue to be committed to promo. Keep in mind as well, promo is funded. We split promo costs with our channel partners. So it's a really great -- it's a good way to get grills into the hands of consumers, and we're committed to continue promo long term.
Operator: [Operator Instructions] Our next question comes from Joe Feldman of Telsey Advisory Group.
Joseph Feldman: I wanted to clarify something. You mentioned this grill pacing shift that helped the third quarter, but maybe shifts out of the fourth. Can you explain that a little more? Like was that your -- the end market trying to get ahead of tariffs or -- and purchasing more goods early? Or what drove the shift basically?
Joey Hord: Yes. So very simply put, we had around $8 million paced from Q4 into Q3, and it's just candidly an organic pacing shift. There was some revenue or grills that we were going to ship at the end of Q3 -- or sorry, in the beginning of Q4, and they shipped in Q3. There's not a lot more to it than that. At the same time, we have adjusted Q4, and we are reiterating guidance.
Joseph Feldman: Got it. Right. Yes. No, that's fair. And then maybe -- I know it's maybe a little early for 2026, but you guys had a lot of newness and innovation this year. And I'm wondering how you guys were thinking about next year in terms of lapping that. Obviously, you've got a lot of work ahead with this Project Gravity and reshaping the P&L, but -- and so maybe that's going to be the answer. But I was just curious, from a product standpoint and the flow to drive the top line, how do you lap Woodridge and Flatrock launches?
Jeremy Andrus: So a couple of thoughts on that, Joe. The first is we really believe that a good product strategy that has -- that is consumer-centric, that has innovation at its core, it continues in a very consistent, steady fashion. And we don't think differently in some -- in one macroeconomic moment versus another. just because 2, 3 years out, we can't anticipate what that moment will look like. And so one of the things that we've really invested in over the last 3 years is the infrastructure from a team perspective and the process and tools internally so that we can predictably and consistently bring new products to market. So that's our intention. We'll continue to do that. If you look at the strategy that we laid out a few years ago in introducing products at a premium price point and bringing innovation downstream, you've seen us launch the Timberline XL, which is a $4,000 grill this year -- the year after that, we launched the Ironwood, which had elements of technology that were inspired by the Timberline. And then we saw a similar movement downstream in Woodridge. And so we will continue to do that. The focus will always be on our core wood pellet grill experience. We think that's really what drives our consumer and the community, and we've done some -- we've invested in accessories to enable that to make that experience better. We have done a little bit of work in adjacent categories with the Flatrock 3-zone and 2-zone products. But the wood pellet grill is the center of our universe. -- and we will continue that process to bring value downstream. And then as is, I think, the circle of life and product development, we'll then go back upstream, launch new innovation and bring it downstream. So we're going to continue that process. And we believe that over time, the consumer will see Traeger as the innovator as always being fresh in its portfolio, product portfolio, and that is an important foundation to our business.
Operator: [Operator Instructions] Our next question comes from Peter Keith of Piper Sandler.
Peter Keith: Jeremy, I was wondering if you had an assessment of the overall grill market so far, whether it was Q3 or year-to-date, maybe how grills -- the grill industry is trending on a sales basis or unit basis? Are we starting to see some rebound in demand at this point?
Jeremy Andrus: Yes, Peter, boy, as we came into 2025 and as we think about the ownership life cycle of a grill and the pull-forward demand that happened in the pandemic, we really view this as a category growth year, and we were positioning our investments, not just in product, but in channel and in brand to drive growth consistent with what we thought was likely coming. Tariffs definitely shifted the landscape. I think it's -- a consumer goes to buy a grill. And if it's not broken, they see a grill at 10%, 15% higher. They will use what they have for another season or so. And so that driver that moment of a consumer retail, we generally believe has been muted just by the tariff environment. We think the market for grills is down slightly. There are a number of factors that we think contribute to that, including the higher price points, but the higher interest rates of -- where Americans heavily finance, their consumer discretionary purchases, housing relocations continue to be at all-time lows. But fortunately, as we think about some of these catalysts going forward, we seem to be entering a period of declining interest rates. We think that will be a positive from a house transaction perspective. certainly from a consumer borrowing perspective. And the further that we get from the pull forward of the pandemic, the more our conviction grows that we're entering into a robust replacement cycle, but it hasn't happened this year. The market is slightly down and our share in the market is about flat right now.
Peter Keith: Okay. And then I think right at the end there, you're mentioning another topic I wanted to ask about, which was the sort of elusive replacement cycle. Given you can track Traeger customer usage quite closely, are you seeing any green shoots around replacements from some of those 2020 or 2021 purchases?
Jeremy Andrus: Let me step back and first say all of the data that we see on consumer engagement is robust. I think that we see that in the cook data that we get from our connected grills. And we also see it in the consumables business, which grew in the third quarter, both on a revenue and a sell-through basis. But I wouldn't say that we are seeing data suggesting the pandemic buyer is rebuying at this point in time. The word that you use is elusive. It is elusive. We've done the math 100 different ways, and we would have expected that absent some of the macro headwinds that have come that this year, we would have entered a sort of 2- to 3-year period of higher demand just based on the pandemic consumer rebuying. The one thing that I'll say that we view as a positive in our business is as we look at the market down, we're holding share on what I would consider to be relatively low demand creation investment. And in fact, we've actually seen our unaided brand awareness increase. We do a semiannual contract at a semiannual unaided brand awareness survey, and we saw that increase by about 100 basis points over the prior 6 months. So we continue to feel bullish on our brand position on the products that we're bringing to market. And boy, this elusive replacement cycle it's coming. And so on balance, we look at the next 2 to 3 years and say, we like our position, we like the market. And we feel like this project gravity is really positioning us not only to be -- to drive greater profitability, but to invest back strategically in the areas that will help us take advantage of this replacement cycle when it comes.
Peter Keith: Okay. Maybe lastly, just with advertising, it's good to hear the unaided brand awareness is going up. But do you feel like your advertising is somewhat constrained today? And interesting on the discontinuation of the Costco roadshow, which in itself is a big marketing vehicle, would you look to sort of maybe some cost savings, but also reallocate those dollars to other, perhaps more effective media streams?
Joey Hord: Yes, I can take that one. The underpinning of Project Gravity is really what you're speaking about is unlocking -- it's really thriving in the tariff environment. And we didn't want tariffs to suffocate the business just financially. So, unlocking investment capacity, reinvesting, and that's going to be -- that's something we're starting to think around about as we exit '25 into '26. So the short answer is yes.
Jeremy Andrus: And let me just add specifically on Costco roadshow since you mentioned it. I think that's a really good example of how we're stepping back and really assessing why we do what we do, how we do it, what the most profitable, scalable way to run this business is. And the Costco roadshow, I think, it's a great example of a program that's been great for our business. We're more than a decade doing Costco roadshows. And it was profitable. Supply chain costs increased, T&E costs increased, labor costs increased. It was neutral. And then we started to think about just the cost or the value of the impressions that we gained. And I would say that the tariffs were the last sort of the last piece of economics that really just made it not work anymore. With that said, it's been foundational. We now get an opportunity to redirect or redeploy the savings from that program into more scalable ways to drive awareness and conversion. So I'm actually really proud of the team for digging deep and deeply assessing elements of our business that were important and that have been sacred but being willing to really think about what is the better way to drive the business going forward.
Operator: Thank you. At this time, we have no further questions. So therefore, this concludes today's call. Thank you for joining. You may now disconnect your lines.