Traeger, Inc. (NYSE:COOK) Q1 2024 Earnings Call Transcript

Megan Alexander: Got it. That’s really helpful. And then maybe asking the gross margin question a different way, again, really impressive. It was above what you did in 1Q ’19 and you did a 43% full-year gross margin in ’19, understanding you have the unique dynamics in the second half with the sunsetting of some products. But is there a way to quantify maybe just what the impact that you expect the sunsetting of the products to be, whether it’s from a top line or margin basis? I know you’ve said, I think it’s accretive from an EBITDA perspective. But any way just to contextualize that?

Dom Blosil: Yeah. So, the sunsetting isn’t really a — it’s not really driving margin erosion by replacing old with new. It’s more a function of the added pressure on Q3 around the fact that, one, Q3 is always our lowest selling period. And two, your sunsetting product, which is adding additional pressure to volumes in that quarter, which in turn is just driving more pronounced deleverage in the quarter, right? So, where we saw some nice expansion in gross margin in Q1, we do expect that to moderate some over the — from a run rate standpoint from Q3 to — from Q2 to Q4, reaffirming our gross margin guide for full year, which means that most of the pressure is coming in Q3 based on the impacts on volume and just how pronounced that deleverage is in relation to the impact on gross margin.

Megan Alexander: Okay. Understood. That makes sense. Thank you.

Operator: We have no further questions at this time. [Operator instructions] There are no further questions.