Good afternoon, and thank you for attending today's Traeger second quarter earnings call. My name is Jason, and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Nick Bacchus with Traeger. Please go ahead. Good afternoon, everyone. Thank you for joining Traeger's call to discuss its second quarter 2022 results, which were released this afternoon and can be found on our website at investors.traeger.com. With me on the call today are Jeremy Andrus, our Chief Executive Officer, and Dom Blosil, 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 that are based on current expectations but are subject to substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied herein. We encourage you to review our annual report on Form 10-K for the year ended December 31st, 2021, our quarterly report on Form 10-Q for the quarter ended June 30th, 2022, once filed, and our other SEC filings for a discussion of these factors and uncertainties, which are also available on the investor relations portion of our website. You should not take undue reliance on these forward-looking statements. We speak only as of today, and we undertake no obligation to update or revise them for any new information. This call will also contain certain non-GAAP financial measures, which we believe are useful supplemental measures. The most comparable GAAP financial measures and reconciliation of the non-GAAP measures contained herein to such GAAP measures are included in our earnings release, which is available on the investor relations portion of our website at investors.traeger.com. Now I'd like to turn the call over to Jeremy Andrus, Chief Executive Officer of Traeger. Jeremy? Thank you, Nick. Thank you for joining our second quarter earnings call. Today, I will discuss our second quarter results and our near-term strategic priorities. I will then turn the call over to Dom to discuss details on our quarterly financial performance and to provide an update on our fiscal 2022 guidance. During the second quarter, our business was negatively impacted by several macro-related headwinds, which drove materially lower than anticipated top-line results for the quarter. These pressures and other headwinds are negatively impacting our outlook for the balance of the year. Despite a very challenging backdrop, I remain confident in the positioning of the Traeger brand as a disruptor and innovator in the grilling category and in our ability to navigate current challenges. Our long-term business thesis has not changed. We continue to believe the Traeger brand is an incredible one and that we have a large opportunity to meaningfully grow our household penetration. However, we are also fully aware that our near-term trajectory has changed and that it will take us longer to achieve our previous goals. As such, we are taking decisive action with a high level of urgency in order to position the company for future growth, profitability, and to drive long-term shareholder value. On the last two earnings conference calls, I reviewed our progress on each of our four strategic growth pillars. Given the rapidly evolving backdrop and the change in our outlook for the year, I would like to instead focus on our assessment of the near-term dynamics that are pressuring the business and the actions and strategies we have implemented to navigate the environment. I will discuss why I continue to be confident in Traeger's long-term growth opportunity. In the second quarter, our sales were $200 million, down 6% the prior year, with particular weakness in our grill business, which was down 25%. While we expected moderated growth in grills in the quarter, given we were lapping a 40% increase from the prior year, results were lower than anticipated. As we noted earlier in the year, we began to see a deviation from our previously forecasted sell-through starting in March. In order to arrive at our prior full-year sales guidance of $800 million-$850 million, we assumed the continuation of this softer sell-through trend for the balance of the year. However, as we moved through the second quarter, which includes some of our most important retail sales weeks of the year, sell-through trends deviated even more than what guidance assumed. We believe there are a few factors that are contributing to softer sell-through trends. First, we believe that after a two-year period of accelerated spending in home-related and durable goods, the consumer is shifting discretionary expenditures towards experiences. This shift is driving strong growth and demand in sectors such as hospitality and travel at the expense of goods like grills, appliances, and furniture. This shift in consumer behavior is occurring at a time when we were lapping abnormally strong sell-through trends from the second quarter of 2021 when consumer spending greatly benefited from government stimulus. Furthermore, consumer sentiment declined in the quarter to record lows as elevated inflation and talk of a looming recession weighed on consumer psychology. While we understood these factors were likely to continue to pressure our sell-through earlier this year, their impact deepened as we moved through the second quarter. The combination of declining consumer sentiment and the spending shift away from durables in the face of heightened comparisons is driving an unprecedented decline in the grill category. To put this into perspective, during the 2008-2009 Great Financial Recession, the grill category was down in the low double-digit range. We believe the grill category is down in the low 20% range year to date through May on a revenue basis and down in the 30% range on a unit basis. This is the largest decline in the grill category that we have seen in our data sets. In particular, grills under $1,000 are seeing immense pressure industry-wide and are down significantly more than the category average year-to-date. We believe that this likely reflects greater sensitivity to macro pressures and inflation amongst consumers that are shopping at the sub-$1,000 price point. Compounding the issue of lower than planned sell-through are heightened levels of inventory at retail. In an effort to ensure adequate stock, given the volatility in the supply chain environment over the last two years, our retail partners have been replenishing product more aggressively and holding more inventory than is typical. As sell-through of our grills missed forecast in the peak selling season, in-channel inventories increased to levels greater than we target. Higher inventories in combination with a slowing macroeconomic backdrop and the specter of recession have led to a sharp shift in retailers' ordering behavior. Often referred to as a bullwhip effect, our retail partners are now heavy on inventory in our product category, which is negatively impacting our replenishment order activity for the second half of the year. These factors are driving a substantial reduction in our revenue outlook for the balance of the year, and in particular, will pressure third quarter sales, which tends to be a replenishment-based quarter. We are keenly aware that the consumer and the macroeconomic backdrop are in the process of recalibrating after a two-year period of outsized growth. While we hope for stabilization, we are focused on positioning the business for this environment. This includes resizing our cost structure for the current revenue run rate, right sizing inventories, and doubling down on our efforts to drive gross margin. Let me walk through our key tactical priorities as we navigate the near-term environment. Our first near-term priority is to reduce our cost structure. Earlier this year, we discussed strategically reducing and deferring certain non-essential expenses and reprioritizing SG&A to manage the P&L. Given the lower revenue run rate we experienced in the second quarter and in an effort to protect profitability and drive efficiencies in the business, we implemented a broader cost reduction and streamlining plan in late July. We believe these actions will drive operational efficiencies and will allow the organization to focus on initiatives that are best positioned to drive the highest return on investment and the best experience for our consumers. As Dom will discuss, we expect to realize meaningful cost savings from these actions. First, we have aggressively reduced certain discretionary expenses across the organization. This includes reductions in travel and entertainment, non-critical professional services, and top-of-funnel marketing. Second, we initiated a reduction in workforce in late July, which impacted approximately 14% of the global full-time salary workforce. While this was a very difficult decision, we believe this was the right thing to do for our business. Our process focused on identifying roles that could be consolidated, reductions in areas of the business that are lower priority, as well as the removal of headcount in the Traeger Provisions business. Over the last several quarters, we have added a significant amount of talent across all departments of the company, and we move forward with an incredibly strong team. We value the dedication of our impacted colleagues, and I would like to thank these team members for their contributions to the business. Finally, we decided to suspend operations of Traeger Provisions. While customers have been delighted with the Provisions offering since its launch in November of last year, the business would have required significant continued investment and internal resources in order to scale. Despite its potential, Provisions was unprofitable, and given the current constraints on the P&L, we believe this is not the appropriate moment for us to be incubating new business, given the large runway of profitable growth in our core business. Our next strategic priority is to right-size inventories, including both our balance sheet inventory as well as in-channel inventories. As we have discussed, over the last several quarters, we have leaned into inventory given supply chain constraints and volatility. Given the lower sales forecast, we are working to aggressively reduce our balance sheet inventories. This includes materially lowering production volumes in our Asian manufacturing facilities as we work through existing inventory. While our grill inventory carries very little obsolescence risk, it is critical that we align working capital with the current revenue picture. As part of this effort to align supply and demand, we also decided to postpone our nearshoring efforts and to halt plans for production in Mexico. While we believe manufacturing closer to our core U.S. market remains a long-term strategic objective, current supply and demand dynamics diminish the benefits of production of what would initially have been only a couple of grill SKUs in Mexico. In terms of channel inventories, we are working in partnership with our retailers to actively manage days on hand, including selectively using promotional efforts to drive sell-through. It is important to note that we will use promotions thoughtfully and strategically with the priority of not compromising the health of the brand. We will continue to collaborate with our retail partners on the goal of right-sizing inventories in channel such that our retailers are positioned to return to a more normalized replenishment cadence versus a current destocking. Finally, we remain focused on driving improvement to gross margin. Our gross margin task force continues to identify and execute on cost savings across the supply chain. Opportunities for cost reductions have been identified in areas including product input costs, packaging, logistics, and warehousing. This cross-functional collaboration is an ongoing effort, and we expect that the team will continue to identify new savings and efficiencies as we move forward. Furthermore, we are seeing favorability in spot container rates as well as in currency. While we expect that these favorable cost dynamics as well as our gross margin initiatives will not materially impact 2022 margins, as we first must work through higher cost inventory, we do see building tailwinds for 2023 and beyond. Overall, I believe we are taking the right steps to position Traeger to best navigate the unprecedented macroeconomic challenges that we face. Despite these challenges, my confidence in the Traeger story remains incredibly strong. Let me walk through some of the factors that are driving my confidence. First, the energy around the Traeger brand remains extremely strong. In May, we held our 5th A nnual Traeger Day, a holiday which is dedicated to bringing the global Traeger community together to cook outdoors and to share wood-fired food with friends and family to kick off the grilling season. Traeger Day 2022 was the highest single day for user-generated content in the history of the brand. Overall, for the second quarter, user-generated content posts and organic video views were both up significantly versus last year, indicating that consumer engagement with the brand on social media is stronger than ever. Moreover, our consumers continue to love using their Traeger and act as evangelists for the brand. Our NPS score leads the industry and remains at an all-time high. We continue to delight consumers with the innovation we are bringing to market with our new Timberline grill having some of the highest NPS scores in our entire assortment. Importantly, awareness of the Traeger brand continues to grow in core markets despite the tough backdrop for grills this year. For example, brand awareness in the West is up over 30% versus last year, despite this geography including some of our most penetrated markets. Increasing awareness is the largest driver of growing our household penetration and remains a meaningful long-term opportunity. Furthermore, our key merchandising efforts at our most important retail partners continue to drive our brand presence and increase penetration and productivity. For example, after resetting 350 stores at The Home Depot earlier this year, we now have nearly 900 The Home Depot locations with a broader and higher-end Traeger grill assortment, including double the number of grill SKUs and an expanded assortment of accessories. In the third quarter, we will be adding over 300 additional The Home Depot doors with high-end fixturing. These fixtures elevate our brand at The Home Depot. They sit above the floor on wooden decking, have prominent signage and brand messaging, and include up to six grill SKUs as well as an assortment of Traeger accessories and consumables. Next, I'm as excited as I have ever been about our product pipeline. The recent launch of our game-changing Timberline has been well-received and has brought significant energy to the brand. This model is a halo product which brings innovation to the market at a much higher than average price point. As we have mentioned, we will look to cascade innovation from this recent launch across our grill assortment in the coming years. While it is too early to discuss details, I'm extremely bullish on our product roadmap for both 2023 and 2024, and I look forward to providing an update on upcoming launches over the next few quarters. Considering the challenging backdrop, I am encouraged by the trends in the consumables side of the product portfolio. Our pellets sell-through is trending close to 2021 levels and maintaining strong growth over 2020. This performance speaks to the resiliency of the pellets business and its recurring revenue nature. Sales of our sauces and rubs benefited in the second quarter from increased distribution and consumer acceptance in the grocery channel subsequent to our rollout at Kroger. We continue to believe our consumables business is a strong complement to our core grill business, which drives recurring revenues and consumer engagement with the Traeger brand. Lastly, I remain confident in the secular growth of the outdoor cooking category. The grill category has proven to be resilient over time, and data shows that Americans love to cook outdoors and are cooking more at home even as the world has normalized after the height of COVID. In fact, our connected cooking data shows that Traeger owners are grilling at a similar pace to last year and imply that our consumers remain highly engaged with our product. In summary, we are not satisfied with our near-term financial results, and we are acting decisively and swiftly to position ourselves for the challenging backdrop and to emerge stronger when the environment normalizes. We are taking proactive steps to put Traeger back on its historic path of growth and profitability and to drive shareholder value. Despite facing challenges, the Traeger brand will continue to disrupt the outdoor cooking sector. With that, I'll turn it over to Dom. Dom? Thanks, Jeremy, and good afternoon, everyone. As Jeremy discussed, we faced macroeconomic headwinds in the second quarter that negatively impacted our top-line performance and will continue to pressure our results for the balance of the year. While the challenging consumer backdrop was built into our thinking when we provided guidance earlier this year. Economic conditions worsened during the second quarter, and the corresponding impact to sales in our peak season was greater than anticipated as consumers shifted spending away from our category. Shifts in consumer behavior and the deteriorating economic conditions have led to higher levels of channel inventories, resulting in a dramatic shift in retail ordering patterns that we anticipate will pressure sales through the second half of 2022. Given pressures on the top line during the second quarter, we accelerated our expense reduction efforts. We are taking swift and aggressive actions to mitigate pressures on the P&L and to drive efficiencies in our business with a focus on positioning Traeger to successfully navigate today's economic crosscurrents. I will outline these actions after reviewing our second quarter results, and then we'll provide an update on our 2022 outlook. Second quarter revenues declined 6% to $200 million due to the decline in grill revenue. Grill revenue declined 25% to $118 million. Grill revenue was impacted by lower unit volumes, partially offset by higher average selling prices, driven by price increases taken in the second half of 2021 and the first quarter of 2022, as well as a mix shift to higher ASP grills. Consumables revenue increased 2% to $42 million, with growth driven by increased distribution in our rubs and sauces business. Finally, accessories revenue increased 157%, driven by incremental revenue from the acquisition of MEATER. Geographically, second quarter North American revenue was pressured by the aforementioned challenges in our U.S. business, along with negative growth in Canada, which is experiencing similar headwinds as in the United States. Our rest of world business was positive year-over-year in the second quarter, driven by incremental revenue from the acquisition of MEATER. We are anticipating pressure in our second half sales internationally, given ongoing macroeconomic challenges impacting the consumer across many of our international markets. Gross profit for the second quarter decreased to $74 million from $83 million last year. Gross profit margin was 36.7%, down 240 basis points to last year. This decline was largely driven by, one, an unfavorable shift in grill mix, which impacted gross margin by 325 basis points. Two, higher inbound freight costs that resulted in 180 basis points of margin pressure. These pressures were offset by 315 basis points of favorability driven by our pricing actions. Second quarter gross margin was modestly better than our expectations, driven by favorability in outbound freight and a higher than forecasted mix of orders fulfilled via our direct import program. Selling and marketing expenses were $44 million compared to $47 million in the second quarter last year. The decrease was driven primarily by a reduction in top funnel marketing and lower professional fees, offset by higher employee expense. During the quarter, we proactively reduced certain selling and marketing expenses given the low revenue run rate. General and administrative expenses were $29 million compared to $25 million in the second quarter of last year. The increase in general and administrative expense was driven primarily by equity-based compensation expense as well as personnel related expenses associated with MEATER, which was not reflected in the comparable period last year. In the second quarter, we recorded a $111 million non-cash impairment charge to our goodwill related to the adverse impacts from macroeconomic conditions as well as the market price of our stock. Please note that this amount is an estimate and will be finalized prior to filing our second quarter 10-Q. As a result of these factors, net loss for the second quarter was $132 million as compared to net loss of $5 million in the second quarter of last year. Net loss per diluted share was $1.12 compared to a loss of $0.05 in the second quarter of last year. Adjusted net income for the quarter was $5 million or $0.04 per diluted share as compared to an adjusted net income of $17 million or $0.15 per diluted share in the same period of last year. Adjusted EBITDA was $18 million in the second quarter as compared to $27 million in the same period of last year. Now turning to the balance sheet. At the end of the second quarter, cash and cash equivalents totaled $14 million compared to $17 million at the end of the previous fiscal year. We ended the quarter with $392 million of long-term debt. Additionally, as of the second quarter, we had drawn down $84 million under our receivables financing agreement and $3 million under our Revolving Credit Facility, resulting in total net debt of $465 million and a net leverage ratio of seven. Inventory at the end of the second quarter was $164 million compared to $86 million at the end of the second quarter of last year. Two factors contributed to the year-over-year growth in inventory. First, the landed cost of grill inventory increased with higher inbound transportation and other material input costs. Second, inventory includes approximately $14 million related to MEATER, which was not in the comparable inventory base last year. Last, lower than anticipated second quarter sales led to sustained higher inventory levels at the end of Q2. It is important to note that our grill inventory carries very little obsolescence risk. We are actively pursuing strategies to reduce our grill inventory levels, which I will describe later. In response to deteriorating macroeconomic conditions and the corresponding pressure on demand, we have implemented measures to manage near term profitability, protect liquidity, and simplify our strategic focus. First, we quickly responded to softening demand in Q2 by reducing planned expenses and by prioritizing initiatives with a predictable return on investment. Second, we identified and subsequently actualized material cost saving measures that included a reduction in workforce, the suspension of operations of Traeger Provisions, and the closure of our Mexico factory. These measures were implemented in July and are expected to result in annualized savings of approximately $20 million. We will continue to evaluate expense levers as we reposition the business for 2023 and beyond. We also remain focused on driving gross margin improvements. Our gross margin task force continues to identify cost improvements that span product sourcing to supply chain optimization. This is a core capability that will catalyze continuous improvements to gross margin independent of macro dynamics. We are seeing improving macro conditions in inbound container rates from Asia, as well as favorability in currency. We don't anticipate these emerging tailwinds to materially impact 2022 margins given expected inventory churns, but we are optimistic that they could benefit our 2023 margins. Finally, we are actively working through excess inventory levels that remain elevated both in channel and on our balance sheet. To rebalance in-channel inventory with current demand trends and correspondingly work down on-hand inventory to normal levels, we are focused on demand and supply levers. First, we are strategically pulsing promotions to drive incremental sell-through. Second, we are addressing softer demand trends sub-$1,000 with a change to opening price points. Last, we are managing our factories to minimum production levels as we work down excess on-hand inventory. We expect these actions to result in substantially normalized inventory levels by the end of 2022. Turning to our guidance for fiscal year 2022, we are lowering our full-year revenue guidance to $640 million-$660 million and our Adjusted EBITDA guidance to $35 million-$45 million. There are three factors that influence our lower guidance range. First, we are flowing through the lower than projected second quarter results. Second, we are forecasting sustained pressure on demand through the second half of 2022. Last, we are anticipating significant retailer destocking, which will result in lower replenishment orders. These factors will pressure sell-in in the second half of 2022 and will have an outsized impact on our third quarter sales performance, which we are forecasting to be down as much as 50% compared to the third quarter of 2021. In terms of gross margin, we are increasing our outlook to the high end of our prior guidance range of 34%-35%. Consistent with our previous forecast, we are expecting gross margin in the second half of the year to track below first half results. We expect Q3 to represent the low point in the year and to be materially lower than full year guidance. On SG&A, although we initiated certain cost measures in late Q2, the largest operating expense reductions were actualized in late July. As a result, we expect these expense reductions to have the most impact on the fourth quarter. Please note that our guidance for gross margin and EBITDA is exclusive of the $6 million-$7 million of pre-tax charges we expect to incur in conjunction with the cost reduction measures implemented in July. Guidance also excludes the $111 million impairment charge we recorded in the second quarter. Overall, the macroeconomic backdrop is presenting significant near term challenges to our business. However, I believe we have put the right actions in place to position the company to navigate this dynamic environment. While we are expecting a highly challenging second half of the year, I remain confident in the long-term opportunity for Traeger to gain share and penetration. With that, we'll open the call to questions. Operator? If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you'd like to remove that question, please press star followed by two. Again, to ask a question, press star one. Our first question comes from Simeon Siegel with BMO. Your line is now open. Thanks. Hey, everyone. Good afternoon. In light of everything else, the raised full year gross margin expectation is interesting. All things considered, I think you did beat this quarter's gross margin. Can we drill into the comfort in raising that gross margin a bit more? Maybe specifically address the comment about selective promotions you might do, maybe of what you're thinking about freight will be in the back half. Maybe give a little more color on the cadence of 3Q versus 4Q in the rate there. If you can, just what was that shift in grill product mix that you mentioned that impacted this quarter? Thanks a lot. Yeah. Hey, Simeon. How's it going? On the gross margin side, yeah, we're just building confidence in the forecast and some of the predictability that we're seeing in gross margin. You know, we're definitely, you know, fine-tuned in terms of the effort that's placed both into how we forecast gross margin, you know, how we've configured around these initiatives tied to our gross margin task force. As you think about this dynamic, there continue to be macro pressures that we face in gross margin, but they're stabilizing. Fortunately, we're not seeing building headwinds there. I think second, we're starting to actually realize some benefit in cost of goods specific to currency. That's becoming a tailwind, and we're starting to see that materialize in gross margin, and we expect that to be a tailwind through the remainder of the year. You know, the task force continues to unlock savings that, you know, we capture in the run rate economics of the future P&L. That creates a nice foundation as we kind of build our Strategy around how to move inventory and pulsing these promotions accordingly. I think just given some of the tailwinds that are building, improved predictability, the benefit from direct import, which is offsetting some of the, you know, the inbound transportation costs, as well as just some other improvements, you know, whether it be in dilution or other areas of the business, we feel like we can. On top of it, just the fact that the price increases that we've taken over the last three quarters are doing what they were intended to do. We have some cushion within gross margin to pulse these promotions without impacting gross margin. In fact, you know, we have confidence that we can raise to the high end of what we guided to. Those are really the factors that give us confidence that not only can we raise, but we can raise in light of the fact that we will pulse, you know, one or two additional promotions this year. I would just add to that we're not only going to pulse promotions as in an attempt to offset some of the expense tied to those promotions via these levers in gross margin. We're also going to offset any potential flow-through impact down to EBITDA with adjustments to OpEx. One of those adjustments is bringing top-of-funnel marketing down in effect to fund some of these promotions. On balance, we still feel confident in the high end of the range, even with these promotions in place, and believe that that's at least one, you know, positive trend as we forecast gross margin through the remainder of the year. On the mix side, it's really tied to the new offering above $3,000, so the new Timberline grill. You know, that is kind of early stages, low volume. We haven't reached economies to really extract margin out of that product, given it's so new in the market. That is having a dilutive impact on grill mix overall, and that's really what's reflecting in the mix comment. Great. Thanks. Maybe Jeremy, just picking on that, the marketing comment. Recognizing the challenges now, but also noting your comments about the long-term opportunity, how do you want us to think about or how are you thinking about, I guess, pulling back on marketing now, which makes sense with revs versus the notion of brand awareness, which obviously as you think about the Traeger brand going forward. Yeah. I mean, a couple of thoughts. The first is that, you know, as it became clear to us as we came into the spring that consumers were focused elsewhere, notably on sort of travel, leisure, experience-driven spend. That was the first, you know, sort of, strong indication that we should be pulling back. I think also, you know, as we think about the next, let's say 6 to 12 months, until we start investing again more meaningfully in top-of-funnel for customer acquisition, say there are two things that we're focused on. The first is execution at retail. We have a field sales team of 50 individuals, and ensuring that the brand is set well at retail, that we're really training retail associates to capture the captive traffic that is walking into their stores is important. The second is an investment in, I would say, community engagement, which is more sort of mid-funnel. Ensuring that the brand stays strong, the metrics around engagement, cooking, social engagement. You know, the leverage we get on that is not only long-term brand strength, but it's evangelism in the near term. We feel like that's a better and more predictable investment until we feel like we both have investment capacity and a consumer who's more focused on this category. Great. Thanks a lot, guys. Best of luck for the rest of the year. Thanks. Thanks. Our next question comes from John Glass with Morgan Stanley. Your line is now open. Thanks. Good afternoon. First, do you have a sense what is the size of the inventory at the retail channel? Do you have a good either metric, either days, you know, standing or absolute dollar amount that's there? Yeah, we don't. You know, we're not gonna speak to that specifically. We won't share that kind of publicly. I think what I would generally say to answer the question is that, you know, they're much higher than we typically like them to be. You know, we've talked in the past about our collaborative planning process with the supply planners at our largest retail accounts. You know, we typically try to hold inventory levels consistently within a band that we're both comfortable with and that typically aligns with our retail partner strategy as they manage on-hand inventory levels to support, you know, future growth or performance at retail. I think, you know, what ultimately happened is heading into the year, you know, in-channel inventory levels were probably slightly above what they normally are, and that's due to the fact that our retail partners had made a decision coming out of the pandemic in a position of sort of starved inventory and sort of out-of-stock product that they ultimately right-sized and probably overcorrected. You know, Jeremy alluded to this bullwhip effect, which is obviously headline news, and I think we're all familiar with now. That began to grow, you know, over the course of Q1, which typically happens ahead of our peak sell-through season. I think what ultimately took place late in May when we started to pick up some real demand signals that suggested a deviation from expectations is that there was going to be a heavier in-channel inventory problem than we were hoping for. Our team started to react in kind and began partnering with retail to try to figure out, you know, what's going on, what their read is. They were actually even later than we were to react. Ultimately, in kind of like in June, they started to react accordingly and that took the form of kind of a fairly aggressive destocking effort, which we believe will persist through the remainder of the year. They're also actually targeting lower on-hand inventory levels than what they normally target pre-pandemic. That's something that we're working through and ultimately may not be a sustained trend because it doesn't entirely make sense. It's going to be a partnership in terms of how we navigate this challenge, both in-channel as well as on our own balance sheet in order to try to drive these excess or higher in-channel inventory levels down throughout the course of the year. At the end of the day, it's a manageable problem. It's not a problem that we believe needs to persist through, say, the end of 2023, and believe we can, you know, largely correct in-channel inventory levels with our larger accounts by year-end. The only other point that I would add is it's not necessarily a systemic problem across the board. Our specialty retail accounts, for example, don't tend to hold more than, let's say, 30 days of inventory because they just don't have stock rooms to hold that inventory, nor do they have, you know, RDCs to carry excess. That tends to be more of a, you know, replenishment model, more predictable. We're really seeing these bigger in-channel inventory levels sitting with our larger accounts, and that's something that, you know, we're aggressively working on to ensure that we find ourselves in a better spot by year-end. Thanks for that. Can you just. You talked about the leverage ratio, I think it was around seven turns. Can you just talk about, you know, if it's covenant risk or access to incremental liquidity if you need it. I, you know, I assume this was a period you thought you'd be getting cash from reduced inventories that didn't happen. Can you just paint that picture of where you are on that liquidity front, please? Yeah, for sure. Liquidity is our number one focus, and at least through the end of June, we feel comfortable with our liquidity position. We still have nice capacity on our cash flow revolver, little bit of cash on the balance sheet. Most of that liquidity is really tied up in inventory. Again, that's something that is going to take longer to work through, which is why we shifted our viewpoint on cash flow generation this year. On the covenant side, we're proactively managing balance sheet. We always do. One of the things that we initiated in kind of Q2 and then heading into Q3 is an Amendment holiday on our Credit Agreement, which will allow for one an increase to our covenant ratio from 6.2x turns to 8.5x turns. That provides ample relief on the covenant and ample cushion as we manage, you know, TTM EBITDA as defined by that Credit Agreement through year-end. That really checks the box on providing additional flexibility to kind of navigate this higher leverage period of time and provide cushion against that covenant. At the end of the day, our main focus really now is on liquidity and ensuring that, you know, we're making the right actions or taking the right actions to preserve and protect liquidity in a fairly challenging moment. As we sort of work down these excess inventory levels, you know, find ourselves in a much better liquidity position at the start of 2023. I'd say that we're feeling pretty good about some of these efforts and that we've sort of put into motion. You know, we're fortunate in that we have, you know, good partners on the credit side that will allow us to, you know, bridge from now to when the covenant holiday expires, or the Amendment holiday expires, which is at the end of Q2 2023. All right. Thank you. That's helpful. Our next question comes from Kaumil Gajrawala with Credit Suisse. Your line is now open. Hi guys. Could you talk a little bit about kind of inventory in the supply chain versus number of units? You've already talked quite a bit about inventory at, you know, at your retail partners and such, but not that long ago, you had the capacity constraint and the supply chains et cetera. Do you still have a lot of units, I guess, coming over and how do you account for that given the new environment? Yeah, good question. So no, we, you know, we talked a little bit about on our prepared remarks around our strategy to work down these higher inventory levels. It really starts with kind of managing down in-channel, like I referenced earlier. We're doing that through a combination of actions, one of which is pulsing incremental promotions, which we've learned based on sell-through data when we promote that there is a very, you know, a nice lift in sell-through. That's really one to kind of work down those levels. We've actually also lowered or reverted back to our original price points on our entry-level products to stimulate more growth sub $1,000, where we're seeing more sensitivity with consumers that are purchasing below $1,000, and we're seeing a nice lift there. Obviously just working with our retailers to ensure that we're moving product and we're sort of in lockstep as they destock. On the supply side, we have been working with our factories to bring those production levels down to sort of minimum levels, which in turn will allow us to focus primarily on what we have on hand. From an in-transit inventory standpoint, we're gonna manage that down to a very low number. That in turn should accelerate our ability to work down our on-hand inventory levels in conjunction with, you know, improving in-channel, which in turn should ultimately position us at the start of 2023 in a much better spot so that we can rebalance sell-in against sell-through and replenishment and sort of find steady state based on that balance. That's really what, you know, we're focused on and feel confident that we'll get there largely by year-end. Got it. From a demand perspective, have you guys thought about or is there anything maybe you can add on. You know, perhaps what we're seeing right now is just a little bit of demand pull forward and, you know, the replacement cycle, if it was a typical, I think we were using kind of four years or something as a typical replacement cycle, maybe that shrunk coming out of the pandemic and if you were to think of maybe what a run rate would look like. Can you maybe just give some context on is some of this just demand pull forward as opposed to, you know, some of these bigger macro things that, you know, we're worried about across a whole series of industries? Yes. Boy, it's a great question. It is not easy to really pull apart all of the factors driving demand. There certainly has been a fair bit of noise that we've felt since March. I think it's clear that there was some pull forward. You know, this is a fairly steady category, the outdoor cooking category, that was growing low single digits, grew mid high teens in 2021. Although there may have been some nominal incremental penetration in the U.S. households, there was probably some pull forward of replacement cycles. Hard to know how much of what we're feeling now is a function of that pull forward, but certainly some of it, relative to general consumer weakness and sort of consumer reprioritizing discretionary spend towards travel. You know, it is something that we're monitoring closely at a category level. I would just say one of the other trends that we're seeing in the category that's notable is that there is, you know, more softness in opening price points. I think that probably speaks a little bit more to at least that trend towards consumer weakness. I think it's a combination of the three things. I would add though that, you know, with some of that pull forward, I mean, the benefit of this business model is when you accelerate the installed base of grills, that in turn, I think drives, you know, improvements or growth across, you know, our consumables business and even accessories. When you look at both sell-in as reported in Q2 as well as sell-through trends across our consumables and accessories categories, you're just not seeing the same impact, right? On a two- and a three-year stack, even year-over-year when you look at sell-through trends across pellets, accessories and other consumables, the decline is fairly muted, and somewhat, you know, comparable to what we reported in our GAAP financials. I think at the end of the day, that really helps sort of stabilize some of the pain we're feeling with maybe some of that pull forward and how that impacts future growth or at least growth in year around the grill category. I think that's a stabilizing factor that we really always want to lean into. I think the behavior of our consumers and how they interact with the product as measured by our IoT data sort of attach rates on pellets, they're holding at levels that both make sense and haven't really deviated from normal trends. Those are all really positive signals pre a rebound in grill growth, which we're really taking advantage of and believe that the strength of the broader portfolio is something that's sustainable and durable long term. We just so happen to be dealing with, you know, a more challenging environment right now with our higher priced products, you know, meaning our grill category. Okay, great. That's useful. Thank you, guys. Our next question comes from Peter Benedict with Baird. Your line is now open. Oh, hey, guys. Couple questions. Dom, can you maybe give us some help here? What level of inventory or dollar inventory on the balance sheet would align with this normalization of goal that you have? Then how are you thinking about free cash flow this year or, you know, CapEx spend? Just trying to understand given the dynamics you've got here laid out for the back half of the year, where does it put you on those metrics by the end of the year? Yeah. Happy to. As we think about kind of our general guidelines as we manage inventory, and I guess to just unpack the Q2 inventory levels a little bit further, I spoke on the call to the fact that, you know, about $14 million of that is MEATER, which wasn't in the baseline, so you have to remove that. If you normalize Q2 for, you know, pre-pandemic days and inventory, and you account for the fact that our inventory is burdened with excess cost between inbound transportation, the inflationary pressures on raw materials, as well as what was historically some negative impact on currency, which is now improving. You look at the excess inventory component of sort of the build and total inventory for Q2 as you bridge from Q2 to Q2 of 2021. I would say that, you know, the split between outside of MEATER, the split between the higher burden and the excess inventory probably weighs more in favor with excess. That delta is probably a mix of kind of, you know, 30%-50% on excess, and then the remainder being just the higher cost of inventory. Just by nature, inventory is going to sort of sit at higher levels because it's more expensive to carry right now, and that should improve over time as these macro factors, you know, improve and we can capture that in future purchases out of Asia. As you sort of push that then forward, what we're really focused on is the excess inventory component. You know, MEATER has the inventory that they need. The burden on inventory carrying costs is what it is until that sort of improves from a macro standpoint. The remainder is what we're sort of in control of from an excess inventory standpoint. The general guardrails, to answer your question, are we typically try to manage to roughly 90 days of forward forecasted revenue. That will obviously be, you know, will sort of deviate from 90 days when you measure days in inventory on a trailing basis. By year-end, if you think about a business that's targeting sort of 90 days of forward inventory and, you know, we may not fully get there, we're probably thinking 110 days, that would in turn translate to, you know, a days in inventory level that's probably much higher than we would expect in sort of a more steady state environment. It's probably, you know, sitting above sort of at or slightly above the days in inventory that we're reporting for Q2, but in a much better position as we head into peak season. We believe a more normalized level because we're going to have inventory that quickly moves when we start to ship product in Q1 of 2023. In turn will dramatically accelerate that DII target so that by kind of the end of Q1, we're in a much better spot and it's more in line with how we wanna manage these targets going forward, if that makes sense. As you sort of measure it on a TTM basis, it's going to look much higher than, you know, what we believe will ultimately be a healthy inventory position ahead of what is going to be a much larger seasonal period for the business relative to what's ultimately informing a higher DII at the end of the year, which is accounting for, you know, lower inventory or lower sales levels in Q3 and Q4. I would anticipate days and inventory to hold fairly consistently through year-end, but know that there's a... We're much better positioned heading into peak season to bring that down on a TTM measure. Okay. That's helpful. Anything on CapEx or free cash flow as you think about the full year? Free cash flow? Yeah. We expect free cash flow negative by year-end. Okay. How about just given the CapEx spend- Just given the cash tied up in inventory. Say it again? Yep. No, understood. Just the level of CapEx spend you're expecting for the year, and if that's been adjusted at all. Yeah. We're adjusting that down. We have a few commitments that, you know, we're locked into, but, you know, we're probably targeting between $4 million - $6 million a quarter through year-end. Okay, great. As you think about. Some of that's tied to capitalized. Go ahead. Yep. No, that's great. How are we thinking about just grow revenue, I guess, over the back half of the year, 3Q versus 4Q? What are you guys seeing in terms of market share? I mean, obviously there's not a lot of demand in the segment right now, but are there any reads on market share that you guys can share with us? Yeah. I think market share is holding consistently, at least for Traeger, our market share is held through, you know, on a year to date basis. We are seeing, you know, share decline among some of our competitors. I think that's a positive signal in that the category is down and Traeger's maintaining share. In terms of kind of our lead through the remainder of the year, we don't really have a specific number to share, but I think at least through Q2, we're holding our market share, and I think that's a good brand signal. Okay. Last question I would just have is around gross margin. You're eyeing around 35% for this year. You talked about some benefits from direct import program, obviously the container rate dynamics, which could end up playing out next year. How do you think about that longer term? I I mean, there are a lot of factors that hit you this year. If you just think about things not necessarily getting any better than where they are today, but the container rates start to come in, I mean, how much of a benefit could that be next year? Is that 100 basis points? Is it 200? Is it 50? Just how would this frame that potential benefit in 2023 to your gross margin? Yeah. It's a little too early to speak to that right now. What I would say is that, you know, as you look at spot container rates to the East and the West Coast, compared to like peak levels in the back half of last year, they're off about 50%, and I would say they're off probably 20%-25% relative to the H2 2021 average. That's a meaningful improvement, right? It's not getting anywhere near what we were paying, you know, pre-pandemic levels. If you think about a dynamic where inbound transportation's sort of hovering, you know, kind of 20%-25% below those averages last year, and that trend seems to be improving from here through the end of the year. The fact that, you know, at least year to date, inbound transportation is p robably driving, you know, 200-300 basis points of margin compression, it was much larger in the back half of last year. It could be a substantial tailwind to gross margin. Something that we're watching and believe that will be a tailwind for 2023, but a little bit too early to speak specifically to what that could mean. Our next question comes from Sharon Zackfia with William Blair. Please limit yourself to asking one question and one follow-up, please. Thank you. Your line is now open. Hey, guys. This is Alex on for Sharon. We're wondering if you could maybe talk through the $20 million of annualized savings. How much of that is in SG&A versus cost of sales? Do you guys have any plans to reinvest part of those savings into sales driving initiatives going forward? Yeah, good question. To answer your first question, it's mostly SG&A. Just to reiterate, it is a run rate number, right? That's not what we anticipate capturing in our run rate economics through the remainder of the year. That's sort of the annualized component or the extended annualized savings based on those initiatives. They're largely, if not a majority of those savings, will be in SG&A. In terms of, you know, to answer your second question, I think right now the focus is more on profitability than on growth. We are, you know, pulling levers to drive and stimulate growth to the extent that, you know, we can, where we have controls. You know, one of those is pulsing of promotions, as I had mentioned earlier, and obviously adjusting price at entry, at opening price points for the brand, as well as a host of other initiatives that our sales team is constantly focused on. As of right now, I think we need to really prioritize profitability, which in turn prioritizes liquidity, and we aren't planning to take those savings and reinvest them anywhere else. We want those to flow through, down to profitability. Okay, great. Thanks for that. Just one other quick one, if I could squeeze this in. You guys talked about the impact to the sub-$1,000 grills that some consumers are slowing purchases there. Could you maybe talk to the higher priced grills and just qualitatively what you're seeing on sales momentum on that side? You touched on the Traeger Timberline XL having a bit, just not having economics there, but just what you're seeing on the qualitative side of the higher priced grills. Yeah. I think below $1,000, we're seeing, you know, declines in growth. That's partially offset by, collectively, some growth above $1,000, and that is being buoyed up by the new Timberline grills. But we aren't seeing the same pressures above $1,000 and, you know, on sort of a collective basis, some growth above $1,000 relative to a fairly substantial decline below $1,000, which is sort of adding up to the decline in our grill category for the quarter. Those trends are both consistent from a sell-in standpoint as well as a sell-through standpoint. Okay, great. Thanks for that. I'll pass it on. Our next question comes from Peter Keith with Piper Sandler. Your line is now open. Hey, thanks. Good afternoon, everyone. Yeah, I wanted to circle back on some of the balance sheet questions and the debt leverage. I'm just doing real simple math, but if you're carrying the $465 million of debt right now and you're gonna do $40 million of EBITDA for the year as a midpoint of the guide, that gets you to 11.5x leverage. That would be well above that, I think, the 8.5x leverage holiday that you're getting. And Dom, at the same time, you're saying free cash flow is probably gonna be negative for the year. How do you not land above that covenant limit as we look to the back half of the year? Yeah, no, it's a good question and definitely worth clarifying. Our Credit Agreement defines EBITDA differently. What we report in our financial information, say in the 10-Q or our 10-K is a different definition of EBITDA. It doesn't take advantage of certain add backs that are permitted in the Credit Agreement. It's also measured based on a different quantum of debt. We're able to exclude the AR facility as part of the first lien net leverage ratio test. That 8.5x covenant is based on first lien net debt exclusive of the AR facility and consolidated EBITDA, which is the definition in our Credit Agreement that allows for incremental add backs that are fairly material and sort of define a consolidated EBITDA number on a pro forma basis that's substantially larger than what we report in our financials. Based on that measure, as we look at kind of where we landed in Q2, you know, we probably had, you know, a little bit of cushion against what was originally the covenant of 6.2x. As we kind of factor in the Amendment holiday and the 8.5x covenant, we actually have substantially more cushion as measured by that pro forma or consolidated EBITDA definition. It provides for far more flexibility in terms of how we manage leverage with our creditors. I think that ample cushion translates into a nice bridge for Traeger to really focus more on execution, navigating these business challenges without having to worry about, you know, where our leverage is headed, because we can manage through that based on, you know, this Amendment, as well as just how we sort of manage EBITDA differently from a credit standpoint. That in turn adds more cushion to the covenant and allows us to, again, just focus on executing and running the business versus having to aggressively, you know, manage against a covenant and focus more on liquidity. That's really kind of the nuance there is it's not a function of, you know, the EBITDA that we report. It's actually a different definition of EBITDA that translates into far more cushion against that 8.5x leverage ratio or covenants that we have to track against from quarter to quarter. Okay, that's helpful, Dom. Maybe to pivot a question to Jeremy. There's obviously some pullback on expenses and a little bit on advertising, but some of your key growth initiatives around the retail and merchandising efforts and product innovation, product launches, are those remaining on plan and on track, so you'll have, you know, more of these things rolling out in 2023 or those areas of pullback as well? It's a great question. I would start broadly by saying that, you know, in a moment where investment capacity is constrained, it is a great forcing mechanism of prioritization and discipline. We've spent a lot of time thinking about where do we get the highest return from our investments. There is no question that the two that you have named are at the top of that list for sales and marketing investment that is available. Merchandising, we have believed from the very first day before we had a marketing department, that showcasing the brand effectively at retail is good investment, being there to speak to and communicate with captive consumers. We will continue in those investments. We will obviously think carefully about which retailers, which retail locations, and what quantum of investment in point of sale merchandising. Those that are at the top of the list will absolutely get funded across channels. We've spoken specifically about our investment in upgrading brand presence in The Home Depot. Those will continue. We had a plan in the back half of the year, and we're gonna continue to execute on that plan. On the product side, I would say I would make a similar comment, which is product is the lifeblood of our future. We know that with a strong brand and community and great channel partners, that when we put good product into that engine, we get a great return. We're continuing our product investments. Again, on the product side, there's a lot going on behind the scenes, and it certainly forces us to determine where do we get the highest return and to prioritize that. I will say, the level of discipline and thinking and resourcefulness that I'm seeing this year is unlike any other year that I've seen in the business. As much as, you know, these are challenging moments to go through, I'm very convinced that this will make us better as a team. I like the investments that we're making in product. Feel really good about the future there. We are, you know, we're investing less, but we're also doing less. I think we are sufficiently resourcing the future of product. Okay. All right. Thanks for the feedback, and good luck with the back half. Thanks. Our next question comes from Joe Feldman with Telsey Advisory Group. Your line is now open. Yeah, thanks guys, for taking the question. With regard to the gross margin, Dom, I know you mentioned once or twice that you feel like you have a good cushion to do some promotions and even with pulsing promotions, you have this cushion. I guess what is the cushion coming from? Is it because you're seeing supply chain costs come down, or is it because the mix shift to higher margin consumable and accessory goods? Is that what the cushion is that you're talking about? Yeah, good question. Like I said, I think year to date, our gross margin's tracking ahead of our internal plan, not considerably, but it is tracking above, and we're starting to see some tailwind actually materialize in our financials. On the promotion side, we're still going to be disciplined. If you think historically about how we managed promotions, we don't like this brand to be on sale. We've typically aligned to roughly three promotional periods a year. The plan this year was around four, and we'll probably add one to maybe three additional promotions when it makes sense. That's kind of number one. We're not talking about being on promotion for most of the year. These are strategic promotions where we believe that we're fishing when the fish are eating and believe that, you know, the benefit to that is that there may come with some margin impact, but the gross profit dollars that flow through more than offset it. I'd say two, we don't fully fund these promotions. They're in partnership with our retail partners, and they help fund these promotions. It's not a full sort of, you know, it doesn't fully flow through Traeger's P&L. I think the third piece is we raise price three times, which does give some flexibility and permission to, you know, add a few promotions because, you know, we're obviously promoting off of much higher price points, which have offset much of the gross margin impacts that we're facing from a macro standpoint. Those three factors really allow us to use these promotions in a way such that they won't be highly dilutive to gross margin as it relates to our guidance for full year. Like I said earlier, in addition to those factors that are baked into gross margin, we're also funding these promotions via lower marketing spend and top- of- funnel because we believe in this environment, promoting has more influence over demand than top- of- funnel demand creation, which tends to be more of a prospecting effort and has a longer tail to generating a return. That's really kind of in combination how we'll manage through this year with pulsing a few incremental promotions while avoiding a situation where they become dilutive beyond what we're guiding to at the high end of our range. Got it. Understood. Okay. Thanks for explaining that. It's funny, my follow-up actually was about the top- of- funnel marketing. Can you clarify for me top- of- funnel versus promotion? I mean, either way, aren't you trying to bring in new people to buy the grill? Yeah, you are. I would think you want to promote that or. Yeah, sorry, go ahead. No, it's a great question. Like, our top- of- funnel marketing strategy is still core. It's a core component of how we think about the long term. We're just really focused this year and kind of on the short term. In this environment, we have to prioritize resources in areas where the return or the way we measure return is far more predictable, right? In the case of in-channel, you know, in-channel inventory levels, promotions are far more influential on our ability to move through those than top- of- funnel. As we think about the mix of marketing this year in particular, and this may extend into 2023, we're going to deprioritize top- of- funnel, which for Traeger is more about building the marketing funnel in a more robust way. Because as we've spoken to earlier, that initial consideration set, which is highly correlated to brand awareness, is largely influenced by our strategy to attack top- of- funnel, which is more scalable and sort of more influencing of brand awareness, which in turn over time can drive more conversion off of a larger funnel. In this environment, because that's more of a prospecting effort and has a longer tail to a return, we're instead focused on kind of middle lower funnel from a marketing and demand creation standpoint. These have a more kind of one-to-one relationship between spend and return on that spend. It's a more immediate conversion of a consumer. Likewise, promotions are similar, right? In an environment where consumers may be more focused on spending discretionary dollars on experiences or travel or things outside of the home, promotions are an opportunity to stimulate more immediate growth at retail, which in this year is more important than investments in prospecting, which will take effect over a longer time horizon. That was the final question, so I'll pass the call back over to the management team for additional remarks. Thanks. Appreciate the thoughtful questions. There's no doubt this is a challenging moment from the macro perspective. You know, as we play in the category of outdoor cooking and wade through an unprecedented period in terms of decline in the category. I would say that this is also a moment or the type of moment that defines teams. You know, willingness to make hard decisions, desire to be better, to be smarter. A careful balance between the near-term realities that we're playing in, that we live in and a medium to long-term offensive. This is a brand that is it's built to grow. It is built to disrupt. That hasn't changed. I think what you'll see in the near term is a level of grit. Actually, what I will commit to you in the near term is a level of grit, level of resourcefulness, a level of discipline, so that as we move through this moment, we are positioned to be even better as we reinvest back into the business in a way that you have for many years. That's a commitment. I feel nothing but confidence in the future, in the team, and we'll slog through the environment that we're in. Thanks. That concludes the conference call. Thank you for your participation. You may now disconnect your lines.