Q4 2023 Traeger Inc Earnings Call

Participants

Nick Bacchus; IR Contact Officer; Traeger Inc

Jeremy Andrus; Chief Executive Officer; Traeger Inc

Dom Blosil; Chief Financial Officer; Traeger Inc

Megan Alexander; Analyst; Morgan Stanley

Brian McNamara; Analyst; Canaccord Genuity LLC.

Justin Kleber; Analyst; Robert W. Baird & Co. Incorporated

Joe Feldman; Analyst; Telsey Advisory Group LLC

Presentation

Nick Bacchus

(technical difficulty) Could cause actual results to differ materially from those expressed or implied here, and we encourage you to review our annual report on Form 10 K for the year ended December 31st, 2023 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, which 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, including adjusted EBITDA, adjusted net loss, adjusted net loss per share, adjusted EBITDA margin, adjusted net loss margin and total net debt, which we believe are useful supplemental measures. The most directly comparable GAAP financial measures and reconciliations of the non-GAAP measures contained herein to such GAAP measures are included in the earnings release, which is available on the Investor Relations portion of our website at investors dot Traeger.com. Please note that our definition of these measures may differ from similarly titled metrics presented by other companies.
Now I'd like to turn the call over to Jeremy Andreas, Chief Executive Officer of Traeger.

Jeremy Andrus

Thank you, Nick, and good afternoon, everyone. On today's call, I will discuss our fourth quarter results and give an update on our execution against our strategic pillars and will also provide some perspective on our outlook for 2024 and will then turn the call over to Tom to discuss our quarterly financial performance and to provide more details on our 2024 financial guidance.
2023 was an important year for Draeger against a challenging backdrop of soft consumer demand for high ticket goods. Our organization executed against our strategic plan to navigate the current environment, putting the Company in what we believe is a substantially improved position to drive our long-term strategy to increase household penetration.
I am pleased with our fourth quarter results with our sales up 18% versus the same period last year, exceeding our expectations and allowing us to surpass the high end of our full year revenue and adjusted EBITDA guidance. Overall for fiscal 2023, adjusted EBITDA grew 47% versus 2022 and we exceeded the midpoint of our initial revenue and adjusted EBITDA guidance ranges by approximately 5% and 22%, respectively. These better than expected results were enabled by our organizational focus on driving progress against the near term strategic priorities we first laid out in mid 2022.
At that time, it became evident that post pandemic, consumer spending has shifted dramatically and that this shift, along with gross margin degradation would put pressure on our financial results. Given these pressures, we communicated three tactical priorities to ensure financial flexibility and to improve profitability, first, reduce costs, second, right-size inventories in channel and on our balance sheet, and third, drive gross margins. We made significant progress on all three of these strategic priorities in 2023 following the implementation of our cost savings plan in mid 2022, which reduced run rate expenses by more than $20 million. Our operating expenses were tightly controlled in 2023.
In terms of inventories, we ended 2023 with our fourth quarter balance sheet inventories appropriately position and down $57 million versus the fourth quarter of 2022 channel inventories were in line with our targeted ranges at the end of the year, a substantial improvement compared to the end of 2022 when retailers had too much of our product.
Finally, in fiscal year 2023, we grew gross margin by 200 basis points, and we implemented a number of margin-enhancing initiatives, which we expect to contribute to gross margin expansion in 2024 and beyond.
Despite making significant progress on our initiatives to drive profitability, improved financial flexibility, we faced a difficult industry backdrop throughout 2023. Fourth quarter sell through for our core grill business remain below prior year. We believe the U.S. grill industry was down in the high single digit range for 2023 at retail as consumers continue to shift their spending to services and leisure and away from the high ticket durable goods they over-indexed on during the pandemic.
Stepping back We firmly believe that the grill industry will return to its historical trend of consistent growth. Americans love to cook outdoors in the pandemic accelerated a trend that was already in place cooking at home and enjoying a meal outdoors with one's family and friends. We believe our brand superior cooking experience, innovative product and engaged community uniquely positioned Traeger to be the favorite outdoor cooking solution for consumers and to ultimately benefit from an improved drill market is also important to remember that we have a portfolio of products with our consumables and accessories businesses representing north of 50% of revenues in fiscal 2023.
Our strategy to sell our consumer's entire cooking solution, including the wood pellets to fuel the grill sauces in rugs to flavor, the protein trigger accessories and meter SmartFilter monitors creates diversity in our revenue streams. In the fourth quarter, our consumables business was slightly positive, and our accessories business outperformed our internal expectations.
Meter in particular had a very successful holiday season with strong growth versus the prior year, a very successful launch of its new year to place. While we have been focused on near term strategies to navigate the environment. We continue to execute on our long-term plans to drive product innovation and to stoke engagement and passion for the Traeger brand. The key points of our story remain in place. We have an evangelical community of consumers in the Traeger hood with a Grille, industry-leading NPS score that is materially higher than our largest competitors, our user base from these highly engaged with our brand, and we ended 2023 with nearly 2.6 million followers across social channels, also leading the drilling industry in that 15% from 2022.
In terms of our products, we continue to innovate and launch new grills. In addition to new year's highly successful meter two plus launch we also entered into the griddle category in 2023 and last are highly innovative, Ironwood excel.
Lastly, our company's culture remains a key competitive advantage. Traeger was recently certified as a Great Place to Work for the 3rd year in a row. The award is based entirely on what Tony employees say about their experience working at Trader and the results speak to our unique culture and reinforce our ability to retain and attract the best talent in our industry.
Turning to our fiscal year 2024 outlook, our 2024 sales guidance of 580 to $605 million represents a year-over-year decline of 4% at the low end to approximately flat growth at the high end 2024 adjusted EBITDA guidance of 62 to 71 million represents growth of 1% to 16%. Our guidance for 2020 for balances, our favorable view of gross margins with our near term caution on grill industry demand. Our outlook assumes that the grill industry will continue to experience headwinds in 2024. Specifically, we expect that this shift in consumer share of wallet from big ticket home related products such as grills towards experiences, Services & Leisure will continue into 2024.
From a profitability perspective, I'm pleased with our ability to project growth in adjusted EBITDA and adjusted EBITDA margins in 2024, driven by an expected improvement in gross margins.
Next, I'd like to provide an update on our progress on our four strategic growth pillars in the fourth quarter as well as to provide some color on our 2024 plans.
Our first strategic growth pillars driving brand awareness and penetration in the United States. We ended 2023 with estimated U.S. household penetration of 3.5%. This remains well below our most penetrated markets and we continue to believe there is substantial potential to increase this number in the fourth quarter. Our content and brand activation focused on triggering for the holidays during Thanksgiving, our network of social media influencers was extremely active sharing recipes and techniques for an incredible trade or smoke Thanksgiving, Turkey. Many of these post went viral, including many candidates, Juicy, Turkey and frac style Turkey post total impressions from influencers in Q4 nearly doubled compared to the same period in 2022.
Our network of influencers and community ambassadors remains an important part of our social media presence in the millions of impressions and generate drive awareness and energy to our brand. In December, we posted our six tips for the ultimate prime rib, providing a guide to make incredible holiday rib roast cooked on a Traeger post-war environment with 2.1 million views on Instagram alone. Traeger is certainly not just a summer grilling device and our strong community engagement that amazing content in the fourth quarter demonstrates that trader is viewed by consumers as a year-round outdoor cooking solution, driving awareness and penetration of Traeger by elevating the experience at retail is core to our strategy.
Fourth quarter capped a momentous year for triggers positioning at the Home Depot. In Q4, we added another 275 Traeger islands at the Home Depot ending the year with more than 1,100 Traeger islands and Home Depot locations across the U.S., more than doubling the number of our elevated merchandising fixtures versus 2022. Home Depot locations with Craig or Ireland continued to outperform the balance of the chain. We expect to have another year of meaningful enhancements of our merchandising at the Home Depot in 2024 with anticipated growth in Traeger islands, complemented by many other merchandising initiatives in 2020 for driving improved selling and execution of Creator products and retail floors will be a key initiative, one that we internally refer to as upgrading the ground game.
This includes expanding the team of retail sales specialists. The specialists are Traeger experts who visit retail locations, drive, improved merchandising, trigger product coach and educate store associates and d.e.m.o. Traeger grills. We believe that investing in the maximization of our selling experience at retail is one of our highest returning activities. And then our in-store merchandising and service-oriented upgrades will be key factors in increasing market share and awareness over time.
Near term, we are highly focused on retail execution and customer experience in the field, particularly as we enter peak grilling season over the next several months.
For second growth pillar is disrupting outdoor cooking with product innovation on November sixth, 2023. We launched the meter to place in time for the holiday season meter two plus bring significant innovation to the meat thermometer market. And we believe it's the best wireless unit probably available to consumers today, meter two plus a strong launch and performed well over the holiday period.
We launched meter two plus with a dual channel digital strategy with distribution on either.com and Amazon.com, and we have plans to expand distribution to retail locations on the trader side in the fourth quarter, we continue to build out our product development function. We recently rolled out a new product organization structure under our new EVP of Engineering, including standing up our previously discussed platform R&D team, our product team remains highly focused on new product development, sustaining engineering for cost down opportunities and innovation to drive our future product roadmap. Investing behind our product development engine is a key area of focus in 2024 and is critical to our long-term success as a disruptor and innovator in the outdoor cooking industry.
In 2023, our product team nearly doubled in size, underscoring our commitment to long-term innovation.
Next, I'll provide an update on our third strategic pillar, driving recurring revenues through our consumables business. At the consumer level, our pellets business remained healthy in the fourth quarter. In fact, two of our largest retail partners had their highest pellet volume weeks ever during the Thanksgiving holiday week. From a distribution perspective, we continue to expand the footprint of grocery stores selling trader pellets.
Overall, for 2023, we added pellet distribution to more than 300 grocery doors, continuing to make progress against our goal of selling pellets where the consumer shops every week, not just where they bought the Grille. We recently gained distribution with KG. United Natural and Paris, three of the largest grocery distributors in the U.S., we together service more than 45,000 independent grocery stores. We expect these distribution relationships to have meaningful upside over time as we look to drive sales into the independent grocery channel.
On the food consumables side, we introduced our new and improved barbecue sauces, which we relaunched earlier this year. At the Home Depot, we expect to see additional distribution in retail outlets in 2024. Consumer reaction to the improved packaging, more competitive pricing and the easy new squeeze bottle has been positive thus far, our fourth and final strategic growth pillar is to expand globally in the fourth quarter. Our international business showed sequential improvement in Canada. We saw improved holiday sales during the fourth quarter at the Home Depot and RONA as well as improved e-commerce sales during Canadian Thanksgiving in October and Black Friday in Europe, we saw solid growth in Germany and the UK, which are direct markets in the region, both market share improved holiday sell-through and with leaner channel inventories.
Replenishment activity was healthy for our distributor markets in the EU, Australia and New Zealand were negatively impacted by continued destocking activity resulting in selling pressure. We expect distributor inventories in our international markets to normalize in 2024 as they continue to clear excess inventories on the meter side, fourth quarter had very strong international growth driven by meters, B2B distribution initiatives, which includes meters partnership with more work work as a German manufacturer and distributor of the server mix, multi cooker and meters, providing a digital smart thermometer add onto this derma mix, multi-quarter that both integrates into the guided cooking app and enhances of thermal mix, cooking experience overall, we have made significant progress on our key strategic initiatives in 2023 and ended the year exceeding our revised guidance in the fourth quarter.
We have realigned our cost structure rightsized inventories and are demonstrating progress on recapturing gross margin. While we expect the consumer shift in share of wallet from big ticket goods will likely continue to create headwinds for the outdoor cooking industry. In the near term, we are focused on the factors we can control in order to drive growth in adjusted EBITDA while investing behind our key long-term pillars as we head into the peak selling season for 2024. My confidence in the long-term potential of our brand remains as high as ever. I'd like to thank the Traeger team for their enormous efforts in executing our plan in 2023.
And with that, I'll turn the call over to Dan.

Dom Blosil

Thanks, Jeremy, and good afternoon, everyone. I am pleased with the progress we made in 2023, particularly given the difficult industry backdrop that we faced during the year despite lower sales compared to 2022, our adjusted EBITDA grew 47% year over year with our adjusted EBITDA margin up 380 basis points. Our inventories ended the year down 37% versus the prior year and we believe that both our balance sheet, inventories and channel inventories are appropriately positioned for the current demand outlook.
In 2023, we executed on several gross margin enhancing initiatives which we expect will position us for margin growth going forward.
Last, we generated $64 million in cash flow from operations in 2023, driven by improved EBITDA and working capital efficiencies.
Keeping now to fourth-quarter results. Fourth-quarter revenues increased 18% to $163 million. Grill revenue increased 24% to $60 million. Grill revenue benefited from higher unit volumes as we lapped aggressive retailer destocking from the prior year, offset by lower average selling prices. Consumables revenues were $25 million, up 1% to the prior year.
Our fourth quarter consumables performance represented a material improvement compared to the first half of the year as we have fully lapped the declines driven by the introduction of a private label pellet offering by a large customer in 2020 to accessories, revenue increased 21% to $79 million, driven by strong meter growth. Fourth quarter revenues were modestly ahead of our expectations and exceeded the high end of our full year revenue guidance range by $6 million, with the majority of the upside driven by stronger than expected revenue growth at meter. Geographically, North American revenues increased 13%, while our rest of world business was up 59% versus the prior year, driven by strong growth in meters wholesale revenues. Internationally, gross profit for the fourth quarter increased to $60 million from $48 million last year.
Gross profit margin was 36.8% compared to 34.5% in the prior year or 34.9% when excluding restructuring costs incurred in the fourth quarter of last year. Please note that our fourth quarter 2023 gross margin was negatively impacted by 100 basis points related to the voluntary recall of our Flat Rock griddle in December. The increase in gross margin was driven by one lower supply chain costs, which benefited gross margin by 410 basis points to improved pellet margins that we achieved through the optimization of our pellet mill capacity, which drove 150 basis points in margin, three, a higher mix of direct import business, which contributed 50 basis points to margin for lapping restructuring costs from the fourth quarter of the prior year, which benefited margin by 40 basis points and five other positive factors were 40 basis points.
These margin drivers were offset by one inventory obsolescence of 150 basis points to grill mix, which negatively impacted margin by 110 basis points, three fuel pricing, which negatively impacted margin by 100 basis points. And for costs related to the recall of Flat Rock, which negatively impacted margin by 100 basis points. Sales and marketing expenses were $33 million compared to $28 million in the fourth quarter last year.
The increase was driven by higher variable costs and increased demand creation expense of meter, general and administrative expenses were $26 million compared to $24 million in the fourth quarter of last year. The increase was driven by higher professional service fees and employee expense, offset by lower stock-based compensation expense. As a result of these factors, net loss for the fourth quarter was $24 million as compared to net loss of $29 million in the fourth quarter of last year.
Net loss per diluted share was $0.19 compared to a loss of $0.24 in the fourth quarter of last year. Adjusted net loss for the quarter was $9 million, or $0.08 per diluted share as compared to adjusted net loss of $13 million, or $0.11 per diluted share in the same period last year. Adjusted EBITDA was $13 million in the fourth quarter as compared to $7 million in the same period last year. Fourth quarter adjusted EBITDA was modestly ahead of our expectations, allowing us to exceed the high end of our full year guidance by approximately $2 million.
Moving onto the balance sheet, at the end of the fourth quarter, cash and cash equivalents were $30 million compared to $39 million at the end of the previous fiscal year. We ended the fourth quarter with $404 million of long-term debt. As of the end of the quarter, the Company had drawn down $28 million under our receivables financing agreement, resulting in total net debt of $402 million. We ended the year with total liquidity of $157 million up materially relative to the end of last year when we had $95 million in liquidity. Inventory at the end of the fourth quarter was $96 million compared to $153 million at the end of the fourth quarter last year and $102 million at the end of the third quarter. I am pleased with the significant progress we made in 2023 to rightsize our balance sheet inventories and believe inventory levels are appropriately aligned with demand.
In terms of channel inventories, our retail partners are in a substantially improved position relative to a year ago and ended the fourth quarter with weeks of inventory on hand at targeted levels.
Next, let me discuss our full year 2024 guidance and provide some context around our operating assumptions for the year, we are guiding to revenue of $580 million to $605 million or down 4% to approximately flat compared to 2023. Our top line outlook is generally informed by the following themes. First, we expect that the consumer shift away from big ticket. Home related expenditures will continue in 2024 and are planning that grill industry growth remains negative.
Second, in the first half of 2024 we are lapping the load-in of our new Ironwood Grilles in our Flat Rock griddle, which will create some pressure on our year-over-year sales comparison. Additionally, in the second half, we expect to some steady number of Grilles ahead of our expected product launches in 2025, which will also be a negative contributor to revenue growth.
Finally, we are anticipating declines in grill average selling prices, partially driven by the expansion of our direct import program, which result in lower wholesale selling prices, but higher gross margins that result from lower transportation costs. These factors are driving our expectation for a high single to low double digit decline in our drill revenue. In full year 2024, we are expecting gross margins of 39% to 40% for full year 2024, up 210 to 310 basis points compared to full year 2023. I am pleased with our ability to meaningfully grow gross margin in 2024, which is being driven by both macro factors as well as internal initiatives in terms of external drivers, inbound transportation costs have moderated substantially since their peak in 2022, while transportation rates decline in 2023, higher-cost inventory was still flowing through our cost of goods for much of the year.
As we move into 2024, we will have largely worked through the higher cost inventory, thus creating a material tailwind to gross margin. Additionally, we expect to see gross margin expansion from initiatives we implemented in the last 18 months. For example, we are expecting improved gross margins in our pellet business, driven by the rationalization of pellet mill capacity in early 2023, as well as improved margin related to the expansion of our direct import program, which leverages the scale of certain retail customer supply chains, thus reducing our transportation costs.
From a timing perspective, we expect stronger year-over-year gross margin gains in the first half of the year compared to the back half. We expect full year 2024 adjusted EBITDA of $62 million to $71 million. This represents an adjusted EBITDA margin of 10.7% to 11.7% or up 60 to 170 basis points versus 2023. We expect that growth in adjusted EBITDA margin will be driven by the anticipated gain in gross margin, offset by some expected expense deleverage as we annualized certain investments from 2023.
And as we invest behind key strategic pillars in 2024 for the first quarter of 2024, we are anticipating revenue of $140 million to $145 million, which represents a decline of 5% to 9% versus Q1 of 2023. We are anticipating first quarter adjusted EBITDA of $21 million to $24 million. First quarter sales are expected to be negatively impacted by a shift in the timing of shipments into the second quarter.
Overall, I am pleased with our execution against our plan in 2023 with the year ending substantially better than we had originally guided to an adjusted EBITDA growing by 47% versus 2022. While we are planning 2020 for top line cautiously, given the expected continued pressure on big ticket spend, we are entering the year with healthy inventories on balance sheet and in channel and are positioned to have significant gains in gross margins going forward. We expect this will allow us to invest into our growth initiatives while making gains in our adjusted EBITDA. I believe our strategy positions us extremely well to drive long-term value, and I remain highly confident in the thesis for trader and with that.
I'll turn the call over to the operator. Operator, we will now begin the Q&A session.

Question and Answer Session

Operator

(Operator Instructions) Megan Alexander, Morgan Stanley.

Megan Alexander

Hey, good afternoon. Thanks for taking our question. Was hoping you could just start with gross demand and maybe you can give us some context for how sell-through trended during the holiday season relative to your expectations? And then what you're seeing now is you get into the spring selling season and maybe with that shift Tom, you just talked about into the second quarter. Is that more related to doing more direct import or is there what change and how retailers are taking on inventory?

Jeremy Andrus

Yes, thanks, for the question, Megan. So I'd say that sell-through generally met our expectations in the quarter, if not were slightly above what we were expecting. So we're happy with how sell-throughs really have stabilized, even though they're still tracking roughly in line with prior year on as you as measured by 2023.
I think our forecast for 2024 really forms a key underpinning of how we grow. I measure and forecast demand in 24. And I think the key takeaway here really is the fact that we still expect pressure on high ticket items, right? So that really a fundamental underpinning of how we're forecasting demand over the course of the year. And although there may be some some shifts in terms of the negative decline in grills from quarter to quarter. We do expect each quarter to be down over the course of the year.
I think there's some nuances to that, Tom, with respect to which quarters maybe see a larger decline and or maybe splitting it up between first half second half. And I think you have the dynamic at play in addition to a a negative forecast on sell through is the fact that we have a unique company, H1H2.
So in each one, we're comping the load-in of some new product that we launched last year and then in each two were forecasting a bleed down of end-of-life skews ahead of inventory build and ultimately sales of new product that we plan to launch in 2025. So there are two kind of nuances that contribute to what is ultimately a greater decline in grill sales as reported compared to what we're forecasting and sell through. So I is good news on these are just sort of onetime items that we have to address now and again, based on comp dynamics.
And then the third piece is really around ASP. So where we're seeing better performance in unit volumes relative to dollar volumes, those volumes are being pressured by ASP., which in part is connected to a deliberate change to our pricing strategy where we brought prices across portfolio of grills back to pre-pandemic levels. Additionally, we've been talking a lot about operational excellence and how we unlock profit pools across our supply chain to optimize gross margin, one of which is direct import business. And as that business grows, it does take some ASP. investment that's just how these contracts are structured. And correspondingly, we see an uplift in gross margin. So in essence, we're sharing in this profit pool that we can unlock via the scale of our retailers' supply chain in turn, it does come at the cost of some ESP., but it it's a lift in gross margins. So that's really the dynamic at play.

Megan Alexander

Okay. Got it. That's really helpful. And then I guess, you know, maybe bigger picture, just trying to understand how you're thinking about managing the business. You've been somewhat constrained been candid in terms of your top top of funnel marketing, just given the challenges and the industry. So if the category does end up being better than you expect, how should we think about whether you'd look to take that upside and reinvested back into the business into some top-of-funnel marketing and go after share first, maybe letting it flow through to the bottom line and allowing you to deleverage your question?

Dom Blosil

I'll let Jeremy that probably walk and follow.

Jeremy Andrus

Okay. Yes, you want to hit that.

Dom Blosil

As you can see, our first of all, over the last couple of years as working capital has been scarce. There are things that we've continued to invest in the business that we think are really important to keep a long-term thesis intact, which is around growth and disruption. We've continued to invest meaningfully in product development, feel good about that pipeline.
That's a longer longer lead time investment in terms of of marketing and thinking about reinvestment. We continue to invest in brand as we see industry headwinds start to turn to tailwinds. We will slowly leaning into top-of-funnel marketing as we think about the opportunity that we have with a low unaided brand awareness in most markets where we have high high unaided awareness, we have high high penetration household penetration in this market.
So we are I would say we are not in a hurry to reinvest in top of funnel marketing because we don't know that the return is sufficient at this moment in time. But it's something that we have the ability to turn on fairly quickly. And to the extent that we believe we get, we get returns on our investment in a fairly fairly near term period of time, then we can we can fairly quickly pivot into that into that changing environment.

Megan Alexander

Alright. Super helpful. Thank you.

Operator

Brian McNamara, Canaccord.

Brian McNamara

And good afternoon, guys. Can you can you provide a little more color on this bleed down of the older SKUs ahead of your new product launches in 2025. Is this typical in particular, what is being phased out? And what should investors be getting excited for 2025?

Jeremy Andrus

Yes, it's typical within the context of our product life cycle strategy. And so typically, if it's an incremental skew skew that we're launching, you wouldn't see a corresponding bleed down of product in certain situations. If there's an adjustment to our product strategy and or we're sort of introducing new innovations at similar price points, we will bleed down the old skew fairly fairly methodically with the goal to sort of strike a balance between not starving demand but also ensuring we don't we're not left with too much inventory when we launch the new product and this is a part of our strategy.
We've been doing this since the beginning of time, and we're pretty good at sort of managing and kind of balancing those two dynamics. And so yes, we'll start to kind of bleed down, obviously managing in-channel inventories to protect demand and channel while we ramp up production for the new product. And then when we launch that product. Ideally, we're at a point where we have minimal to no inventory left on that. So for those for those SKUs that are end-of-life.

Brian McNamara

Yes, I guess the question I expect to get at is your grills were Dockers sales were down 16% last year and you're expecting to be down high singles, low doubles this year. You are a growth company so I feel like the expectation is you would see kind of flat to up kind of growth this year. So could you kind of quantify your expectation for the Grille market declines in 2024 will come on at what's embedded in your outlook and how that's maybe influence your annual revenue tons? Thanks.

Jeremy Andrus

Yes, we are forecasting the category to be down in 2024 and in excess of that dynamic in the first half, where we're comping product load-in from last year, which is showing some excess declines in grills above the demand or the category forecast it's built into our model. And then the second half Nuance where we're bleeding down inventory, which which puts some pressure on sell in or sort of two nuances to the year that are there ultimately creating a larger decline in our forecast from a grill sales standpoint than what's built into our forecast from a sell through slash catagory modeling standpoint.

Brian McNamara

Thank you.

Operator

Justin Kleber, Baird.

Justin Kleber

Good afternoon. Everyone. Thanks for taking the questions. I first just wanted to trying to assess market share trends. You mentioned grill industry was down high singles at retail and '23. Just curious how that compared it yourself grew?

Jeremy Andrus

Yes. So we believe based on the industry reports that the work that we've done that, that for some trader is relatively flat in terms of share and on this is some this is something that we track on a on a quarterly basis. And as we think about what drives growth in share and how we think about this year and years. Going forward, our expectation is that our share will remain relatively flat as we lean back in the top of funnel and launch some of the products that are in pipeline. But the combination of these two factors will drive growth in share as they have during many years pre-pandemic before we pulled back on top of top-of-funnel marketing expense.

Justin Kleber

Got it. Thanks for that, Jeremy. And then just a kind of a multipart question on promotions. I was hoping you could talk about maybe your promotional plans as we approach the peak grilling season this year relative to last year, should we expect less promotional intensity just given inventories in a much better shape? And then bigger picture, given the promotional activity across the broader industry the past few years. Do you guys think the ability to kind of sell drills at full price has sort of structural changes to that at all versus kind of how the industry operated prior to the pandemic?

Jeremy Andrus

It's a good question. I mean, the industry certainly has been more promotional over the last couple of years. Our belief is that promotions for a for a premium brand like traders can be used. But but but but sparingly, we have typically had three promotional periods during the year and we deviated from that from that from that cadence once in 2022, as we were as we were working on channel level, inventories, getting them healthy again, our inventories and channel, our healthy balance sheet inventories are healthy. And so on 2023, we returned to our more traditional promotional cadence. And that's our that's our intent on 2024 as well.

Justin Kleber

Very helpful. Thank you, guys. Best of luck.

Operator

Joe Feldman, Telsey Advisory Group.

Joe Feldman

Yes, hi, guys. Good afternoon. Thanks for the question on I wanted to ask how should we think about accessories in 2024 and the meters had some really strong, Ron, as of late and with the new product. And I'm just wondering, should we expect that same kind of double digit type growth again in 24? Maybe you could share some thoughts there.

Jeremy Andrus

Look, I would say we're not we're not we're not guiding specifically to accessories on that. But as Dom and I both alluded to in our comments, our accessory business, accessories and consumable business businesses have been robust meter meter has been a strong grower. As I mentioned, we launched on the meter two plus, which was a very successful launch. But it is there's a lot of innovation in that product, something that we've been working on for many years, even even pre-acquisition. So accessories are an important part of our business and we continue to invest in them. Lean into them from a product mix perspective and believe that not only provides diversification, but it's a nice opportunity to drive margin over time.

Joe Feldman

And that's helpful. Thank you. And then anything to note on the Yum for those customers that are shopping and buying growth from you guys and anything to note with regard to what they're buying, are they still gravitating towards the newer product or the product with the more fully featured items?

Dom Blosil

Yes, I can jump in on the I have no other adherence. Well, yes. So just from what kind of we're seeing directionally, there's been a little bit more pressure on premium price points above $1,000 than we normally seen, which is consistent with our comments earlier on just the continued pressure on big ticket items. And that said, I mean, we are still continuing to see appetite for our key innovations. And I think that the reception for these innovations has been strong. And as we kind of watch the mix between connected grills and unconnected grills evolve over time, I think our installed base is now over-indexing to the connected grill. We're embedding more innovation. And certainly that's the case on a quarter to quarter basis. And so I think there's a growing appetite for innovations. We continue to see strong reception there, but there has been as of late, some pressure above $1,000. Just again, aligned to I think what we're seeing come in kind of the broader consumer around big ticket items.

Joe Feldman

Okay. Thanks, guys. Good luck with this quarter.

Jeremy Andrus

Thank you.

Operator

Thank you. (Operator Instructions) There are no additional questions at this time. That concludes today's conference call. Thank you. You may now disconnect your lines.