Cover - USD ($)	12 Months Ended
Cover - USD ($)	Dec. 31, 2021	Mar. 22, 2022	Jun. 30, 2021
Cover [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2021
Current Fiscal Year End Date	--12-31
Document Transition Report	false
Entity File Number	001-40694
Entity Registrant Name	Traeger, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	82-2739741
Entity Address, Address Line One	1215 E Wilmington Ave
Entity Address, Address Line Two	Suite 200
Entity Address, City or Town	Salt Lake City
Entity Address, State or Province	UT
Entity Address, Postal Zip Code	84106
City Area Code	801
Local Phone Number	701-7180
Title of 12(b) Security	Common stock, $0.0001 par value per share
Trading Symbol	COOK
Security Exchange Name	NYSE
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Entity Public Float			$ 0
Entity Common Stock, Shares Outstanding		118,077,546
Documents Incorporated by Reference	Portions of the registrant’s definitive Proxy Statement relating to its 2022 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission no later than 120 days after the end of the registrant’s fiscal year ended December 31, 2021 are incorporated herein by reference in Part III.
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Central Index Key	0001857853

Audit Information	12 Months Ended
Audit Information	Dec. 31, 2021
Audit Information [Abstract]
Auditor Name	Ernst & Young LLP
Auditor Location	Salt Lake City, Utah
Auditor Firm ID	42

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Current Assets
Cash and cash equivalents	$ 16,740	$ 11,556
Accounts receivable, net	92,927	64,840
Inventories	145,038	68,835
Prepaid expenses and other current assets	15,036	13,776
Total current assets	269,741	159,007
Property, plant, and equipment, net	55,477	32,404
Goodwill	297,047	256,838
Intangible assets, net	555,151	539,841
Other long-term assets	3,608	1,491
Total assets	1,181,024	989,581
Current Liabilities
Accounts payable	42,694	21,673
Accrued expenses	69,773	54,697
Line of credit	41,138	0
Current portion of notes payable	0	3,407
Current portion of capital leases	420	296
Current portion of contingent consideration	12,200	0
Total current liabilities	166,225	80,073
Notes payable	379,395	433,605
Capital leases, net of current portion	677	536
Contingent consideration, net of current portion	13,100	0
Deferred tax liability	11,673	0
Other long-term liabilities	434	327
Total liabilities	571,504	514,541
Commitments and contingencies (see Note 14)
Member's and stockholders' equity
0 and 108,724,422 member’s capital common units authorized, issued, and outstanding as of December 31, 2021 and 2020		0
Preferred stock, $0.0001 par value; 25,000,000 shares authorized and no shares issued or outstanding as of December 31, 2021 and 2020	0
Common stock value	12
Member’s capital		571,038
Additional paid-in capital	794,413
Accumulated deficit	(184,819)	(95,998)
Accumulated other comprehensive loss	(86)
Total member's and stockholders' equity	609,520
Total member's and stockholders' equity	609,520	475,040
Total liabilities, member's, and stockholders' equity	$ 1,181,024	$ 989,581

CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares	Dec. 31, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Common unit authorized (in shares)	0	108,724,422
Common unit issued (in shares)	0	108,724,422
Common unit outstanding (in shares)	0	108,724,422
Preferred stock par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock authorized (in shares)	25,000,000	25,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common stock par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock authorized (in shares)	1,000,000,000	1,000,000,000
Common stock issued (in shares)	117,547,916	0
Common stock outstanding (in shares)	117,547,916	0

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Income Statement [Abstract]
Revenue	$ 785,545	$ 545,772	$ 363,319
Cost of revenue	481,834	310,408	207,539
Gross profit	303,711	235,364	155,780
Operating expense:
Sales and marketing	165,180	93,690	66,921
General and administrative	158,555	50,243	45,304
Amortization of intangible assets	34,379	32,533	33,100
Change in fair value of contingent consideration	3,800	0	0
Total operating expense	361,914	176,466	145,325
Income (loss) from operations	(58,203)	58,898	10,455
Other income (expense):
Interest expense	(26,646)	(34,073)	(39,462)
Loss on extinguishment of debt	(5,185)	0	0
Other income (expense)	2,702	7,526	(462)
Total other expense	(29,129)	(26,547)	(39,924)
Income (loss) before provision for income taxes	(87,332)	32,351	(29,469)
Provision for income taxes	1,489	749	124
Net income (loss)	$ (88,821)	$ 31,602	$ (29,593)
Net income (loss) per share - basic (in dollars per share)	$ (0.79)	$ 0.29	$ (0.27)
Net income (loss) per share - diluted (in dollars per share)	$ (0.79)	$ 0.29	$ (0.27)
Weighted average common shares outstanding - basic (in shares)	112,374,669	108,724,387	108,724,387
Weighted average common shares outstanding - diluted (in shares)	112,374,669	108,724,387	108,724,387
Other comprehensive loss:
Foreign currency translation adjustments	$ (86)	$ 0	$ 0
Total other comprehensive loss	(86)	0	0
Comprehensive income (loss)	$ (88,907)	$ 31,602	$ (29,593)

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER’S AND SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	Common Units	Common Stock	Member's Capital	Additional Paid-in Capital	Accumulated Deficit	Accumulated Deficit Cumulative Effect, Period of Adoption, Adjustment	Accumulated Other Comprehensive Loss
Beginning balance (in shares) at Dec. 31, 2018			108,724,422
Beginning balance at Dec. 31, 2018	$ 457,793	$ 406	$ 0		$ 556,206		$ (98,413)	$ 406
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Distributions	(80)				(80)
Equity-based compensation	2,352				2,352
Net income (loss)	(29,593)						(29,593)
Other comprehensive loss	0
Ending balance (in shares) at Dec. 31, 2019			108,724,422
Ending balance at Dec. 31, 2019	430,878		$ 0		558,478		(127,600)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Distributions	(250)				(250)
Equity-based compensation	12,810				12,810
Net income (loss)	31,602						31,602
Other comprehensive loss	$ 0
Ending balance (in shares) at Dec. 31, 2020	108,724,422		108,724,422
Ending balance at Dec. 31, 2020	$ 475,040		$ 0		571,038	$ 0	(95,998)		$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Ending balance (in shares)				0
Ending balance				$ 0
Effect of reorganization transaction (in shares)			(108,724,422)	108,724,387
Effect of reorganization transaction	0			$ 11	(571,038)	571,027
Issuance of common shares in IPO, net of issuance costs (in shares)				8,823,529
Issuance of common shares in IPO, net of issuance costs	142,275			$ 1		142,274
Equity-based compensation	81,112					81,112
Net income (loss)	(88,821)						(88,821)
Other comprehensive loss	$ (86)								(86)
Ending balance (in shares) at Dec. 31, 2021	0		0
Ending balance at Dec. 31, 2021	$ 609,520		$ 0		$ 0	$ 794,413	$ (184,819)		$ (86)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Ending balance (in shares)				117,547,916
Ending balance	$ 609,520			$ 12

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (88,821)	$ 31,602	$ (29,593)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation of property, plant, and equipment	9,150	7,762	6,057
Amortization of intangible assets	38,350	33,206	33,100
Amortization of deferred financing costs	2,523	2,762	2,640
Loss on disposal of property, plant, and equipment	274	186	618
Loss on extinguishment of debt	5,185	0	0
Equity-based compensation expense	81,112	12,810	2,352
Bad debt expense	468	0	206
Unrealized loss (gain) on derivative contracts	4,821	(6,087)	(581)
Change in fair value of contingent consideration	3,800	0	0
Change in operating assets and liabilities:
Accounts receivable	(26,365)	(30,170)	(8,494)
Inventories, net	(70,772)	(29,531)	(4,949)
Prepaid expenses and other current assets	(5,787)	(4,311)	(49)
Other long-term assets	(681)	0	0
Accounts payable and accrued expenses	19,182	28,351	17,052
Deferred rent	(866)	17	127
Net cash provided by (used in) operating activities	(28,427)	46,597	18,486
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment	(22,479)	(14,127)	(7,501)
Capitalization of patent costs	(563)	(511)	(503)
Proceeds from notes receivable	0	21	48
Business combination, net of cash acquired	(56,855)	(12,724)	(1,141)
Net cash used in investing activities	(79,897)	(27,341)	(8,997)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit	118,000	57,000	34,500
Repayments on line of credit	(67,862)	(67,000)	(40,000)
Proceeds from long-term debt	510,000	0	0
Payment of deferred financing costs	(8,601)	(810)	0
Repayments of long-term debt	(579,921)	(3,407)	(3,407)
Principal payments on capital lease obligations	(382)	(310)	(273)
Distribution to members	0	(250)	(80)
Proceeds from initial public offering, net of issuance costs	142,274	0	0
Net cash provided by (used in) financing activities	113,508	(14,777)	(9,260)
Net increase in cash	5,184	4,479	229
Cash at beginning of period	11,556	7,077	6,848
CASH AT END OF PERIOD	16,740	11,556	7,077
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest	23,444	31,327	36,791
Cash paid for income taxes	1,654	76	124
NON-CASH FINANCING AND INVESTING ACTIVITIES
Equipment purchased under capital leases	645	393	350
Property, plant, and equipment included in accounts payable and accrued expenses	8,586	576	318
Unpaid amount for acquisition of subsidiaries included in accrued expenses	$ 0	$ 2,414	$ 0

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION	12 Months Ended
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION	Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION	DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Nature of Operations – Traeger, Inc. and its wholly owned Subsidiaries (collectively “Traeger” or the “Company”) design, source, sell, and support wood pellet fueled barbecue grills sold to retailers, distributors, and direct to consumers. The Company produces and sells the pellets used to fire the grills and also sells Traeger-branded rubs, spices, sauces and premium frozen meal kits, as well as grill accessories (including covers, barbecue tools, trays, liners, MEATER smart thermometers and merchandise). A significant portion of the Company’s sales are generated from customers throughout the United States (“U.S.”), and the Company continues to develop distribution in Canada and Europe. The Company’s headquarters are in Salt Lake City, Utah. In July 2021, the Company effected a forward split of its 10 common units into 108,724,422 common units. All unit, per unit and related information presented in the accompanying consolidated financial statements have been retroactively adjusted, where applicable, to reflect the impact of the split of common units. Immediately prior to the effectiveness of the registration statement pertaining to the Company’s initial public offering (“IPO”) on July 28, 2021, the Company converted from a Delaware limited liability company into a Delaware corporation, and changed its name from TGPX Holdings I LLC to Traeger, Inc. Pursuant to the statutory corporate conversion (the "Corporate Conversion"), all of the outstanding limited liability company interests of TGPX Holdings I LLC were converted into shares of common stock of Traeger, Inc., and TGP Holdings LP (the “Partnership”) became the holder of such shares of common stock of Traeger, Inc. In connection with the Corporate Conversion, the Partnership liquidated and distributed these shares of common stock to the holders of partnership interests in the Partnership in direct proportion to their respective interests in the Partnership based upon the value of Traeger, Inc. at the time of the IPO, with a value implied by the initial public offering price of the shares of common stock sold in the IPO. Based on the IPO price of $18.00 per share, following the Partnership’s liquidation and distribution, including the elimination of any fractional shares resulting therefrom, and the Corporate Conversion, the Company had 108,724,387 shares of common stock outstanding immediately prior to the IPO. Basis of Presentation and Principles of Consolidation – The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates – The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates and assumptions made by management that present the greatest amount of estimation uncertainty include business combination accounting for the fair value of assets acquired, liabilities assumed, and contingent consideration, customer credits and returns, valuation and impairment of intangible assets including goodwill, unrealized positions on foreign currency derivatives and reserves for warranty. Actual results could differ from these estimates.

Cash and Cash Equivalents – The Company considers cash on deposit and short-term investments with remaining maturities at acquisition of three months or less to be cash and cash equivalents.

Concentrations – Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash in banks, trade accounts receivable and foreign currency contracts. Credit is extended to customers based on an evaluation of the customer’s financial condition and collateral is not generally required in the Company’s sales transactions. Three customers that accounted for a significant portion of net sales are as follows for the fiscal periods indicated:


	December 31,
	2021		2020		2019
Customer A	20	%	20	%	16	%
Customer B	17	%	18	%	16	%
Customer C	16	%	16	%	22	%

As of December 31, 2021, customers A, B, and C accounted for a significant portion of trade accounts receivable of 45%, 13%, and 13%, compared to 18%, 21%, and 19% as of December 31, 2020. Concentrations of credit risk exist to the extent credit terms are extended with these three large customers. A business failure on the part of any one the three customers could result in a material amount of exposure to the Company. No other single customer accounted for greater than 10% of the Company’s net sales for the years ended December 31, 2021, 2020 and 2019. Additionally, no other single customer accounted for greater than 10% of the Company's trade accounts receivable as of December 31, 2021 and 2020.

The Company’s sales to dealers and distributors located outside the United States are generally denominated in U.S. dollars. The Company does have sales to certain dealers located in the European Union, the United Kingdom and Canada which are denominated in Euros, British Pounds and Canadian Dollars, respectively.

The Company relies on a limited number of suppliers for its contract manufacturing of grills and accessories. A significant disruption in the operations of certain of these manufacturers, or in the transportation of parts and accessories would impact the production of the Company’s products for a substantial period of time, which could have a material adverse effect on the Company’s business, financial condition and results of operations.

Accounts Receivable, Net – The Company reports its accounts receivable based on the amount that is expected to be collected from its sales to customers. The accounts receivable balance is comprised of the amounts invoiced to customers and reduced by an allowance for doubtful accounts, accrued sales discounts and a credit reserve for sales returns and allowances. The Company performs on-going credit evaluations of its customers and in certain instances may deploy third-party collection efforts. Generally, the Company does not require collateral in its transactions with customers. The Company determines its allowance for doubtful accounts and credit reserve for sales returns and allowances based on management’s evaluation of the accounts receivable aging, past credit and collection history, and product returns and discounts history. Adjustments to the allowance for doubtful accounts for amounts related to known credit events that would affect a customer’s ability to pay are charged to bad debt expense, otherwise any adjustment is recorded as a reduction to net sales. Interest is not accrued on outstanding accounts receivable balances.

Inventories – Inventories consist of finished goods, work-in-process and raw materials. Inventories are stated at the lower of cost or net realizable value, with cost for raw materials and finished goods stated as an approximate cost determined on the first-in first-out basis. Net realizable value is defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Assessments to value the inventory at the lower of the average cost to purchase the inventory, or the net realizable value of the inventory, are based upon assumptions about future demand, physical deterioration, changes in price levels and market conditions. As a result of the Company’s assessments, when the net realizable value of inventory is less than the carrying value, the inventory cost is written down to the net realizable value and the write down is recorded as a charge to cost of revenue. Inventories include indirect acquisition and production costs that are incurred to bring the inventories to their present condition and location. Inventories are recorded net of reserves for obsolescence. Once established, the original cost of the inventory less the related inventory reserve represents the new cost basis of such products.

Derivative Instruments – The Company uses derivative contracts (foreign exchange option contracts) for the purpose of economically hedging exposure to changes in currency fluctuations between the U.S. Dollar and the Chinese Renminbi. The Company accounts for these contracts in accordance with FASB ASC 815, Derivatives and Hedging, which requires that all derivatives be recognized at fair value in the consolidated balance sheets, and that corresponding gains and losses are recognized in other income (expense) in the consolidated statements of operations and comprehensive income (loss). The Company does not apply hedge accounting to these instruments.

Property, Plant, and Equipment – Property, plant, and equipment is stated at cost less accumulated depreciation and amortization. Additions and betterments to property, plant, and equipment that improve economic performance, extend the useful life, or improve the quality of units or services produced of the component asset are capitalized.

The Company does not depreciate amounts recorded for land. Depreciation and amortization on individual components of property is computed using the straight-line method over the estimated useful lives of the assets as follows:


			Years
Buildings			15
Machinery and equipment			5-20
Leasehold improvements			Shorter of useful lives or lease term
Office equipment and fixtures			2-10
Vehicles			2-10
Computer hardware and software			3-5

When assets are sold or otherwise disposed of, the cost and related accumulated depreciation or amortization are derecognized from the respective accounts, and any remaining carrying value is included in depreciation expense in the consolidated statements of operations if retired, or if sold, the resulting gain or loss is recognized in other income in the consolidated statements of operations and comprehensive income (loss). The cost of maintenance and repairs are expensed as incurred.

The Company capitalizes costs for internal-use software incurred during the application development stage. Software costs related to preliminary project activities and post implementation activities are expensed as incurred. The Company capitalizes costs incurred for software purchases and certain costs related to website development. Capitalized costs related to internal-use software, software purchases and website development are amortized on a straight-line basis over the estimated useful life of the software, not to exceed three years. Capitalized costs less accumulated amortization are included within property, plant, and equipment, net on the consolidated balance sheets.

In November 2020, the Company entered into a lease agreement to rent an office building consisting of approximately 85,771 square feet in Salt Lake City, UT, which is expected to become the new corporate headquarters. In accordance with Accounting Standards Codification 840 Leases, for build-to-suit lease arrangements where the Company is involved in the construction of structural improvements prior to the commencement of the lease or take some level of construction risk, the Company is considered the owner of the assets and land during the construction period. Accordingly, upon commencement of construction activities, the Company recorded a construction in progress asset and a corresponding financing liability. Once the construction is completed, if the lease meets certain “sale-leaseback” criteria, the asset and related financial obligation will be removed from the balance sheet and the building lease will be treated as an operating lease. If upon completion of construction, the project does not meet the “sale-leaseback” criteria, the leased property will be treated as a capital lease and included in building and building improvements.

For accounting purposes only, the Company is deemed to be the owner of the entire project including the building shell, even though it is not the legal owner. In connection with the Company’s accounting for this transaction, the Company capitalized $4.3 million as a build-to-suit asset recognized in property within property and equipment, net, and a corresponding build-to-suit lease obligation for the same amount recognized in accrued expense in the consolidated balance sheets. Refer to Note 14 – Commitments and Contingencies for the lease agreement terms.

Deferred Financing Costs – Costs incurred in connection with long-term debt financing are deferred and reflected net of notes payable and are amortized to interest expense utilizing the effective-interest method over the term of the related financing. Costs incurred in connection with the refinancing to the delayed draw, revolving credit facility and the amendments to the Receivables Financing Agreement are capitalized and recorded as other assets on the consolidated balance sheets. These costs are being amortized to interest expense on a straight-line basis over the term of each respective credit facility.

Deferred Rent – Deferred rent expense represents the difference between rent paid and the amounts expensed for operating leases as well as certain tenant improvement allowances and incentives provided by landlords. Certain leases have scheduled rent increases, and certain leases include an initial period of free or reduced rent as an inducement to enter into the lease agreement (“rent holidays”). The Company includes these changes in the calculation of recognized rent expense on a straight-line basis over the term of the underlying leases, without regard to when rent payments are made.

Intangible Assets – Finite-lived intangible assets are initially recorded at fair value and presented net of accumulated amortization. Intangible assets are amortized on a straight-line basis over their estimated useful lives. The Company is currently amortizing acquired intangible assets, including customer relationships, distributor relationships, non-compete arrangements, business trademarks and technology, over periods ranging between 2.5 years and 25 years. Amortization related acquired patent technology and capitalized patent costs are recorded as a component of cost of revenue and amortization related to acquired

business trademarks, customer relationships, distributor relationships, and non-compete arrangements are recorded in amortization of intangible assets in the consolidated statement of operations and comprehensive income (loss).

Goodwill – Goodwill represents the excess of consideration transferred over the fair value of tangible and identifiable intangible net assets acquired and the liabilities assumed in a business combination. Substantively all of the Company’s goodwill was recognized in the purchase price allocation when the Company was acquired in 2017, with smaller incremental amounts recognized in subsequent business combinations. Goodwill is not amortized, but is subject to an annual impairment test. In conducting its annual impairment test, the Company first reviews qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If factors indicate that the fair value of the reporting unit is less than its carrying amount, the Company performs a quantitative assessment, analyzing the expected present value of future cash flows to quantify the amount of impairment, if any.

The Company conducts annual goodwill impairment tests in the fourth quarter of each fiscal year or whenever an indicator of impairment exists. For the annual impairment tests conducted in the fourth quarters of 2021 and 2020, the Company performed qualitative assessments of goodwill and determined that it was more likely than not that the fair value of goodwill was greater than its carrying value, therefore the quantitative impairment test was not performed. Therefore, no impairment of goodwill was recorded for the years ended December 31, 2021 and 2020, respectively.

Impairment of Assets – Long-lived assets, including property, plant, and equipment and finite-lived intangible assets subject to amortization, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. An impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the asset or asset group. If impairment exists, the impairment loss is measured and recorded based on discounted estimated future cash flows. In estimating future cash flows, assets are grouped at the lowest levels for which there are identifiable cash flows that are largely independent of cash flows from other asset groups. The Company concluded there were no indicators of impairment identified at December 31, 2021 and 2020.

Fair Value of Financial Instruments – The Company estimates the fair value of its financial assets and liabilities, except for foreign currency option contracts and contingent consideration obligations, based upon existing interest rates related to such assets and liabilities compared to the current market rates of interest for instruments of similar nature and degree of risk. The carrying value reflected in the consolidated balance sheets for such financial assets and liabilities, (such as receivables, payables, and contingent liabilities) approximates fair value.

Cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses, obligations under capital leases, and customer deposits are recorded at cost, which approximates fair value due to the current nature of these items. The fair values of the notes payable are determined using recent trades between private parties which are not observable inputs. The fair values of the foreign currency option contracts are estimated based on quoted market prices and the fair values of the contingent consideration obligations are estimated based on probability assessments with respect to the likelihood of achieving the performance targets and discount rates consistent with the level of risk of achievement.

Based on the underlying inputs, each fair value measurement in its entirety is reported in one of the three levels in the fair value hierarchy, which evaluates the inputs used in measuring fair value. Refer to Note 9 – Fair Value Measurements for definitions of the fair value hierarchy.

Contingent Consideration – The purchase consideration associated with the acquisition of Apption Labs Limited (together with its subsidiaries, "Apption Labs") includes contingent cash consideration payable to the sellers based on achievement of certain revenue thresholds for fiscal years 2021 and 2022. The fair value of contingent consideration obligation is estimated based on the probability assessments with respect to the likelihood of achieving the performance targets and discount rates consistent with the level of risk of achievement. The Company includes the fair value of this contingent obligation in current and long-term contingent consideration in the consolidated balance sheets.

At each reporting period, the Company revalues the contingent consideration obligation to its fair value and records increases and decreases in fair value in the change in fair value of contingent consideration in the consolidated statements of operations and comprehensive income (loss). Changes in the fair value of the contingent consideration obligation results from changes in discount periods and rates, and changes in probability assumptions with respect to the likelihood of achieving the performance targets.

Revenue Recognition and Sales Returns and Allowances – On January 1, 2019, the Company adopted ASU 2014-09 Revenue from Contracts with Customers and all subsequent related amendments to the ASU (collectively “ASC 606”) using the modified retrospective method applied to contracts that were not completed as of January 1, 2020. Under the modified

retrospective method, the company recognized the cumulative effect of initially applying the new revenue standard as a decrease to the opening balance of accumulated deficit.

The Company recognizes revenue at the amount to which it expects to be entitled when a contract exists with a customer that specifies the goods and services to be provided at an agreed upon sales price and when the performance obligation is satisfied. The performance obligation for most of the Company’s sales transactions is considered complete when control transfers, which is determined when products are shipped or delivered to the customer depending on the terms of the contract. Sales are made on normal and customary short-term credit terms or upon delivery of point-of-sale transactions.

Shipping charges billed to customers are included in net sales and related shipping costs are included in cost of sales. The company has elected to account for shipping and handling activities performed after control has been transferred to the customer as a fulfillment cost.

The Company enters into contractual arrangements with customers in the form of individual customer orders which specify the goods, quantity, pricing, and associated order terms. The Company does not have long-term contracts that are satisfied over time. Due to the nature of the contracts, no significant judgment exists in relation to the identification of the customer contract or satisfaction of the performance obligation. The Company expenses incremental costs of obtaining a contract due to the short-term nature of the contracts.

The Company has certain contractual programs and practices with customers that can give rise to elements of variable consideration such as customer cooperative advertising and volume incentive rebates. The company estimates the variable consideration using the most likely amount method based on sales and contractual rates with each customer and records the estimated amount of credits for these programs as a reduction to net sales.

The Company has entered into contracts with some customers that allow for credits to be claimed for certain matters of operational compliance or for returns to the retail customer from end consumers. Credits that will be issued associated with these items are estimated using the expected value method and are based on actual historical experience and are recorded as a reduction of revenue at the time of recognition or when circumstances change resulting in a change in estimated returns. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities.

The Company also offers assurance-type warranties relating to its products sold to end customers that are accounted for under ASC Topic 460, Guarantees. See Warranty Costs below.

Cost of Revenue – Cost of revenue consists of product costs, including costs of components, costs of products from third-party contract manufacturers of grills, consumables, and accessories, direct and indirect manufacturing costs of wood pellet production, packaging, inbound freight and duties, warehousing and fulfillment, warranty costs, product quality testing and inspection costs, excess and obsolete inventory write-downs, cloud-hosting costs for connected devices, depreciation of tooling and manufacturing equipment, amortization of internal use software and patented technology, and certain employee related expenses.

Warranty Costs – The Company generally provides its customers with a three-year limited warranty on residential model pellet grills and a one-year warranty on accessories for defects in material and workmanship under normal use and maintenance. Warranty liabilities are recorded on the basis of grills and accessories sold and reflect management’s estimate of warranty related costs expected to be incurred during the respective unexpired warranty periods. Management’s estimates of warranty costs are based on historical as well as current product replacement and related delivery costs incurred and warranty policies.

Warranty claims expense is included in cost of revenue on the accompanying consolidated statements of operations and comprehensive income (loss).

Sales and Marketing – Sales and marketing expenses consist primarily of the advertising and marketing of its products and personnel-related expenses, including salaries, benefits and equity-based compensation expense, as well as sales incentives and professional services. These costs are included in selling and marketing expenses within operating expenses in the consolidated statements of operations and comprehensive income (loss).

Advertising Costs – The Company incurs non-direct response advertising costs which are expensed as incurred. Advertising expense was $58.4 million and $30.3 million for the years ended December 31, 2021 and 2020, respectively, and is included in selling and marketing expense on the accompanying consolidated statements of operations and comprehensive income (loss).

General and Administrative – General and administrative expense consist primarily of personnel-related expenses, including salaries, benefits and equity based compensation and facilities for executive, finance, accounting, legal, human resources, and

information technology functions. General and administrative expense also includes fees for professional services principally comprised of legal, audit, tax and accounting services, and insurance. These costs are included in general and administrative expenses within operating expenses in the consolidated statements of operations and comprehensive income (loss).

Research and Development – Research and development expenses consist primarily of personnel-related expenses, including salaries, benefits and equity-based compensation expense, as well as professional services, prototype materials and software platform costs. Research and development expense was $18.8 million and $6.8 million for the years ended December 31, 2021 and 2020, respectively, and is included in general and administrative expenses on the accompanying consolidated statements of operations and comprehensive income (loss).

Income Taxes – The Company accounts for income taxes using the asset and liability method. The asset and liability method requires recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between tax bases and financial reporting bases of the Company’s assets and liabilities. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established on deferred tax assets if it is determined by management that it is more-likely-than-not that such deferred tax assets will not be realized.

Income and loss for tax purposes may differ from the financial statement amounts and may be allocated to the members on a different basis for tax purposes than for financial statement purposes.

The preparation of consolidated financial statements in conformity with ASC 740, Income Taxes, requires the Company to report information regarding its exposure to various tax positions taken by the Company. The Company has determined whether any tax positions have met the recognition threshold and has measured the Company’s exposure to those tax positions. Management believes that the Company has adequately addressed all relevant tax positions and that there are no uncertain tax positions that would require adjustment to the consolidated financial statements to comply with the provisions of the guidance. The Company has elected to record any interest and penalties related to uncertain tax positions within interest expense on the accompanying consolidated statements of operations. No interest and penalties related to uncertain tax positions were recorded for either the year-ended December 31, 2021 or 2020, respectively.

The Company has recorded research and development tax credits that are available for developing new or improved or innovative products, processes, software or inventions.

Equity-Based Compensation – The Company recorded equity-based compensation expense related to Class B incentive units awards issued by TGP Holdings LP consistent with the compensation expense associated with the holder of the incentive units. The units granted by TGP Holdings LP have been issued for services performed on behalf of the Company. Therefore, the expense associated with these awards is pushed down to the Company.

The incentive unit grants are measured for expensing purposes at the grant date based on the fair value of the award. The incentive unit grants consisted of time-based vesting units, ordinary performance vesting units, and extraordinary performance vesting units. In connection with the completion of the Company’s IPO, the Company recorded equity-based compensation as a result of the acceleration of vesting of all unvested and outstanding Class B Units.

In addition, the Company awards equity-based compensation to employees and directors under the Traeger, Inc. 2021 Incentive Award Plan (the “2021 Plan”), which is described in Note 17 – Equity Based Compensation. The Company measures compensation expense for time-based and performance-based restricted stock unit ("RSU") awards on a straight-line basis over the vesting schedule and on an accelerated attribution basis over the tranche's requisite service period, respectively. In addition, the Company recognizes forfeitures as they occur, however, when an award is forfeited prior to the vesting date, the Company will recognize an adjustment for the previously recognized expense in the period of the forfeiture, with the exception of performance-based awards for which the requisite service period has been provided.

The Company uses the Monte Carlo pricing model to estimate the fair value of its performance-based RSU awards as of the grant date, and uses various simulations of future stock prices through the Stochastic model to estimate the fair value over the remaining term of the performance period as of the grant date.

Comprehensive Income (Loss) – The Company's comprehensive income (loss) is determined based on net income adjusted for gains and losses on foreign currency translation adjustments.

Foreign Currency – The Company has foreign subsidiaries for which the net sales generated, as well as most of the related expenses directly incurred from those operations, are denominated in local functional currencies. The functional currency of these foreign subsidiaries that either operate or support these operations are generally the same as the local currency. Results of operations for the Company’s consolidated foreign subsidiaries are remeasured from the local currency to the U.S. dollar using average exchange rates during the period, while monetary assets and liabilities are remeasured at the exchange rate in effect at the reporting date. Non-monetary assets and liabilities and equity accounts of consolidated foreign subsidiaries are carried at historical values. Resulting gains or losses from remeasuring foreign currency financial statements are recorded in other income (expense) in the accompanying consolidated statements of operations and comprehensive income (loss).

Foreign currency transaction gains and losses resulting from exchange rate fluctuations on transactions denominated in a currency other than the U.S. Dollar are included in other income expense in the accompanying consolidated statements of operations and comprehensive income (loss). The Company recorded a net foreign exchange loss of $1.4 million and $0.2 million for the years ended December 31, 2021 and 2020, respectively.

Recently Issued Accounting Standards

As an “emerging growth company,” the Jumpstart Our Business Startups Act (“JOBS Act”), allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act. The adoption dates discussed below reflect this election.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) and the FASB has also certain subsequent related ASUs that supplement and amend Topic 842. The guidance in Topic 842 replaces the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize right of use assets related to the leases and lease liabilities on the balance sheet. For leases with terms of 12 months or less, the lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2021 and for interim periods within fiscal years beginning after December 15, 2022.

The Company has adopted this guidance effective January 1, 2022 and will present the impact of the new guidance in its annual statements as of December 31, 2022 and its interim statements thereafter. Management is currently in the process of evaluating its existing portfolio of operating leases for right of use assets and lease liabilities that would need be recognized upon implementation and the impact of this guidance on its consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which modifies the measurement of expected credit losses of certain financial instruments requiring entities to estimate an expected lifetime credit loss on financial assets. The guidance is effective for fiscal years and interim periods for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company does not believe the adoption of ASU 2016-13 will have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350). The guidance simplifies the accounting for impairment by eliminating the requirement to calculate the implied fair value of goodwill. An entity will still be able to perform today’s optional qualitative goodwill impairment assessment before determining whether to proceed to Step 1.

The guidance is effective for annual impairment tests beginning after December 15, 2021; however early adoption is permitted. The Company elected to early adopt this guidance on January 1, 2020 with no significant impact to the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. The guidance requires customers in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASU 350-40 to determine which implementation costs to defer and recognize as an asset. The guidance is effective for annual periods beginning after December 15, 2020, and all interim periods beginning after December 15, 2021. The Company adopted this ASU effective January 1, 2021, using the prospective approach. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

REVENUE

12 Months Ended

Dec. 31, 2021

Revenue from Contract with Customer [Abstract]

REVENUE

The following table disaggregates revenue by product category, geography, and sales channel for the fiscal periods indicated (in thousands):


	Year-ended December 31,
Revenue by product category	2021		2020		2019
Grills	$	544,200	$	391,047	$	268,227
Consumables	136,216		120,247		72,118
Accessories	105,129		34,478		22,974
Total revenue	$	785,545	$	545,772	$	363,319


	Year-ended December 31,
Revenue by geography	2021		2020		2019
North America	$	737,402	$	529,983	$	354,660
Rest of world	48,143		15,789		8,659
Total revenue	$	785,545	$	545,772	$	363,319


	Year-ended December 31,
Revenue by sales channel	2021		2020		2019
Retail	$	689,437	$	506,786	$	330,245
Direct to consumer	96,108		38,986		33,074
Total revenue	$	785,545	$	545,772	$	363,319

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

+ Details

BUSINESS COMBINATION

12 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

BUSINESS COMBINATION

On July 1, 2021 (the "Acquisition Date"), pursuant to a share purchase agreement (the "Share Purchase Agreement"), the Company acquired all outstanding shares of Apption Labs, a technology company that specializes in the manufacture and design of innovative hardware and software related to small kitchen appliances, including the MEATER smart thermometer and related technology. The total purchase consideration was approximately $78.3 million, net of cash acquired, which is comprised of cash paid, contingent consideration, net working capital adjustments, and escrow consideration. The acquisition of Apption Labs will help facilitate the Company's entry into the adjacent accessories markets with a highly complementary product that the Company believes will bolster our existing portfolio, create efficiencies for consumers and expose the Company to new growth channels.

The purchase consideration includes contingent cash consideration payable to the sellers based on achievement of certain revenue thresholds for fiscal years 2021 and 2022 as detailed in the Share Purchase Agreement. The acquisition date fair value of contingent consideration obligation of $21.5 million is estimated based on the probability assessments with respect to the likelihood of achieving the performance targets and discount rates consistent with the level of risk of achievement. The range of the undiscounted amounts the Company may be required to pay under the contingent consideration arrangement is between approximately $10 million and $40 million. The Company updated the contingent cash consideration payable range as the likelihood of achieving the performance targets improved based upon the fiscal year 2021 revenue results. See Note 9 – Fair Value Measurement for subsequent measurements of this contingent liability.

The Company recognized $1.8 million of acquisition-related costs that were expensed as incurred during the year-ended December 31, 2021. These costs are recorded in general and administrative expense in the consolidated statements of operations and comprehensive income (loss).

The operating results of Apption Labs have been included in the Company's consolidated statements of operations and comprehensive income (loss) since the acquisition date. Actual and pro forma revenue and results of operations for the acquisition have not been presented because they do not have a material impact to the consolidated revenue and results of operations, either individually or in the aggregate.

Determination and allocation of the consideration transferred to net tangible and intangible assets is based upon preliminary estimates. These preliminary estimates and assumptions could change significantly during the measurement period as the Company finalizes the valuations of the net tangible and intangible assets acquired and liabilities assumed. Balances subject to adjustments include, but are not limited to, the valuation of contingent consideration, net working capital adjustments, fair value

of acquired inventory, net, fair value of identified intangible assets, goodwill, and the associated deferred tax implications. During the measurement period, the Company may record adjustments to the provisional amounts recognized in the Company’s initial accounting for the acquisition. The Company expects the allocation of the consideration transferred to be final within the measurement period (up to one year from the acquisition date). Any change could result in variances between our future financial results and the amounts recognized in the financial information presented below, including variances in fair values recorded, as well as expenses associated with these items.

The acquisition was accounted for under the acquisition method in accordance with ASC 805. The following table summarizes the preliminary estimated fair values of the consideration transferred, assets acquired and liabilities assumed as of the date of the Apption Labs acquisition (in thousands):


Consideration Transferred	Fair Value
Cash paid, net of cash acquired	$	36,957
Contingent consideration	21,500
Other closing consideration	19,890
Total purchase consideration, net of cash acquired	$	78,347
Assets acquired
Accounts receivable, net	$	2,190
Inventory, net	5,431
Prepaid and other current assets	293
Property and equipment	1,357
Intangible Assets	53,100
Goodwill	40,200
Total assets acquired	102,571
Liabilities assumed
Accounts payable and accrued liabilities	8,474
Deferred tax liability	12,646
Other current liabilities	344
Other non-current liabilities	2,760
Total liabilities assumed	24,224
Total net assets, net of cash acquired	$	78,347

The excess purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill, none of which is expected to be deductible for tax purposes. The goodwill generated from these transactions is attributable to the expected synergies to be achieved upon consummation of the business combinations and the assembled workforce values.

The following table details the identifiable intangible assets acquired at their fair value and their corresponding useful lives at the Acquisition Date (amounts in thousands):


Identifiable Intangible Assets	Fair Value		Estimated Useful Life (in years)
Technology	$	32,300	5
Trademarks	17,700		10
Distributor relationships	2,400		8
Non-compete arrangements	700		2.5
	$	53,100

Identifiable intangible assets acquired include technology, trademarks, distributor relationship, and non-compete arrangements. The fair value of technology acquired in the acquisition was determined using the excess earnings model, the trademarks acquired was determined using a relief from royalty model, the distributor relationships acquired was determined using the distributor model, and the non-compete arrangements acquired were determined using the with and without model. These models utilize certain unobservable inputs, including discounted cash flows, historical and projected financial information, royalty rates, distributor attrition rates, and technology obsolescence rates, classified as Level 3 measurements as defined by Fair Value Measurement (Topic 820). Amortization of technology is recorded in cost of revenue and amortization of

trademarks, distributor relationships and non-compete arrangements are recorded in amortization of intangible assets in the consolidated statements of operations and comprehensive income (loss).

ACCOUNTS RECEIVABLES, NET

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ACCOUNTS RECEIVABLES, NET

Accounts receivables, net consists of the following (in thousands):


	December 31,
	2021		2020
Trade accounts receivable	$	108,620	$	77,574
Allowance for doubtful accounts	(1,090)		(652)
Reserve for returns, discounts and allowances	(14,603)		(12,082)
Total accounts receivable, net	$	92,927	$	64,840

INVENTORIES

12 Months Ended

Dec. 31, 2021

Inventory Disclosure [Abstract]

INVENTORIES

Inventories consisted of the following (in thousands):


	December 31,
	2021		2020
Raw materials	$	3,106	$	1,161
Work in process	11,523		6,087
Finished goods	130,409		61,587
Inventories	$	145,038	$	68,835

Included within inventories are adjustments of $0.7 million and $0.8 million for the years-ended December 31, 2021 and 2020, respectively, to record inventory to net realizable value.

ACCRUED EXPENSES

12 Months Ended

Dec. 31, 2021

Payables and Accruals [Abstract]

ACCRUED EXPENSES

Accrued expenses consisted of the following (in thousands):


	December 31,
	2021		2020
Accrual for inventories in-transit	$	28,536	$	27,012
Warranty accrual	8,326		6,728
Accrued compensation and bonus	7,025		6,179
Other	25,886		14,778
Accrued expenses	$	69,773	$	54,697

The changes in the Company’s warranty accrual, included in accrued expenses on the accompanying consolidated balance sheets, were as follows for the fiscal periods indicated (in thousands):


	December 31,
	2021		2020		2019
Warranty accrual, beginning of period	$	6,728	$	4,798	$	3,279
Warranty claims	(7,693)		(6,773)		(5,730)
Warranty costs accrued	9,291		8,703		7,249
Warranty accrual, end of period	$	8,326	$	6,728	$	4,798

DERIVATIVES

12 Months Ended

Dec. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES

DERIVATIVESThe Company is exposed to foreign currency exchange rate risk related to its purchases and international operations. The Company utilizes foreign currency contracts to manage foreign currency risk in purchasing inventory and capital equipment, and future settlement of foreign denominated assets and liabilities. The volume of the Company’s foreign currency contract

activity is limited by the amount of transaction exposure in each foreign currency and the Company’s election as to whether to hedge the transactions. There are no derivative instruments entered into for speculative purposes.

The Company had outstanding foreign currency contracts as of December 31, 2021 and 2020. The Company did not elect hedge accounting for any of these contracts. All outstanding contracts are with the same counterparty and thus the fair market value of the contracts in an asset position are offset by the fair market value of the contracts in a liability position to reach a net position. For periods where the net position is an asset balance, the balance is recorded within prepaid expenses and other current assets on the consolidated balance sheets and for periods where the net position is a liability balance, the balance is recorded within derivative liabilities on the consolidated balance sheets. Changes in the net fair value of contracts are recorded in other expense, net in the consolidated statements of operations.

The Company’s only derivative transactions were foreign currency contracts. Gross and net balances from foreign currency contract positions were as follows (in thousands):


	December 31,
	2021		2020
Gross Asset Fair Value	$	1,439	$	6,259
Gross Liability Fair Value	—		—
Net Asset Fair Value	$	1,439	$	6,259

Gains (losses) from foreign currency contracts were recorded in other income (expense), net within the accompanying consolidated statements of operations and comprehensive income (loss) as follows for the fiscal periods indicated (in thousands):


	December 31,
	2021		2020		2019
Realized gain (loss)	$	8,199	$	1,512	$	(484)
Unrealized gain (loss)	(4,821)		6,087		581
Total gains	$	3,378	$	7,599	$	97

FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

Financial assets and liabilities valued using Level 1 inputs are based on unadjusted quoted market prices within active markets. Financial assets and liabilities valued using Level 2 inputs are based primarily on observable trades and/or prices for similar assets or liabilities in active or inactive markets. Financial assets and liabilities valued using Level 3 inputs are primarily valued using management’s assumptions about the assumptions market participants would utilize in pricing the asset or liability.

The following table presents information about the fair value measurement of the Company’s financial instruments (in thousands):


		As of December 31,
Financial Instruments Recorded at Fair Value on a Recurring Basis:	Fair Value Measurement Level	2021		2020
Assets:
Derivative assets—foreign currency contracts (1)	2	$	1,439	$	6,259
Total assets		$	1,439	$	6,259

Liabilities:
Contingent consideration—earn out (2)	3	$	25,300	$	—
Total liabilities		$	25,300	$	—

(1)Included in prepaid expenses and other current assets in the consolidated balance sheets

(2)Included in current and long-term contingent consideration in the consolidated balance sheets

Transfers of assets and liabilities among Level 1, Level 2 and Level 3 are recorded as of the actual date of the events or change in circumstances that caused the transfer. For the years ended December 31, 2021 and 2020, there were no transfers between levels of the fair value hierarchy of the Company’s assets or liabilities measured at fair value.

The fair value of the Company’s derivative assets through its foreign currency contracts is based upon observable market-based inputs that reflect the present values of the differences between estimated future foreign currency rates versus fixed future settlement prices per the contracts, and therefore, are classified within Level 2.

The fair values of the Company's contingent consideration earn out obligation associated with the Apption Labs business combination is estimated using a Monte Carlo model. Key assumptions used in these estimates include probability assessments with respect to the likelihood of achieving the performance targets and discount rates of 8.02% and 8.27% for each respective earn out period, consistent with the level of risk of achievement. As these are significant unobservable inputs, the contingent consideration earn out obligation is included in Level 3 inputs.

At each reporting date, the Company revalues the contingent consideration obligation to its fair value and records increases and decreases in fair value in the change in fair value of contingent consideration in our accompanying consolidated statements of operations and comprehensive income (loss). Changes in the fair value of the contingent consideration obligation results from changes in discount periods and rates, and changes in probability assumptions with respect to the likelihood of achieving the performance targets.

The following table presents the fair value contingent consideration (in thousands):


Balance at December 31, 2020	$	—
Fair value of contingent consideration recognized at Acquisition Date	21,500
Payments of contingent consideration	—
Adjustments to fair value of contingent consideration	3,800
Balance at December 31, 2021	$	25,300

The following financial instruments are recorded at their carrying amount (in thousands):


	As of December 31, 2021				As of December 31, 2020
Financial Instruments Recorded at Carrying Amount:	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Liabilities:
Debt—First Lien (1)	$	388,195	$	386,139	$	—	$	—
Debt—First Lien and Second Lien (2)	—		—		446,355		439,253
Total liabilities	$	388,195	$	386,139	$	446,355	$	439,253

(1)Included in notes payable in the consolidated balance sheets. Due to the unobservable nature of the inputs these financial instruments are considered to be Level 3 instruments in the fair value hierarchy

(2)The First Lien and Second Lien were refinanced and repaid on June 29, 2021

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

PROPERTY, PLANT AND EQUIPMENT

12 Months Ended

Dec. 31, 2021

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment consisted of the following (in thousands):


	December 31,
	2021		2020
Land and buildings	$	1,472	$	1,472
Machinery and equipment	19,227		15,433
Leasehold improvements	7,891		6,050
Office equipment and fixtures	9,400		7,592
Vehicles	2,876		1,889
Computer software and hardware	13,473		9,295
	54,339		41,731
Plus construction in progress	27,359		8,205
Less accumulated depreciation	(26,221)		(17,532)
Property, plant, and equipment, net	$	55,477	$	32,404

The Company leases fleet vehicles, forklifts, and office equipment that are accounted for as capital leases and are included in property, plant, and equipment and accumulated depreciation. The total carrying amount of capital leases was $1.1 million and $0.8 million as of December 31, 2021 and 2020, respectively.

Depreciation expense related to property, plant, and equipment recorded in cost of sales was $4.0 million and $3.4 million for the years ended December 31, 2021 and 2020, respectively. Depreciation expense related to property, plant, and equipment recorded in general and administrative expense was $5.2 million and $4.4 million for the years ended December 31, 2021 and 2020, respectively.

GOODWILL AND INTANGIBLES

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLES

Goodwill was $297.0 million and $256.8 million as of December 31, 2021 and 2020, respectively. The amount of goodwill is primarily attributable to the allocation of the purchase price from the Transaction on September 25, 2017. Incremental additions to goodwill arising from recent business combinations are disclosed in Note 4 – Business Combination.

Intangible assets consisted of the following at the dates indicated below (amounts in thousands):


	December 31, 2021
	Weighted Average Life (in years)	Gross Carrying Amount		Accumulated Amortization		Net Book Value
Customer relationships	17	$	378,394	$	(94,251)	$	284,143
Trademark	24	281,700		(45,941)		235,759
Technology	5	36,300		(5,668)		30,632
Distributor relationships	8	2,400		(150)		2,250
Non-compete arrangements	2.5	700		(140)		560
Favorable lease position	8	51		(29)		22
Other intangible assets	11	2,089		(304)		1,785
Total		$	701,634	$	(146,483)	$	555,151


	December 31, 2020
	Weighted Average Life (in years)	Gross Carrying Amount		Accumulated Amortization		Net Book Value
Customer relationships	17	$	378,394	$	(71,645)	$	306,748
Trademark	25	264,000		(34,496)		229,504
Technology	7	4,000		(1,867)		2,133


Favorable lease position	8	51		(22)		29
Other intangible assets	12	1,635		(209)		1,427
Total		$	648,080	$	(108,239)	$	539,841

The preponderance of the customer relationships and trademark were pushed down from the purchase accounting in the Transaction in 2017 disclosed in Note 1 – Description of Business and Basis of Presentation.

Estimated annual amortization expense for the next five years and thereafter for the years ending December 31, (in thousands):


2022	$	42,705
2023	42,694
2024	42,251
2025	41,795
2026	38,549
Thereafter	346,496
	$	554,490

Amortization expense related to intangible assets recorded in cost of sales was $4.0 million and $0.7 million for the years ended December 31, 2021 and 2020, respectively. Amortization expense related to intangible assets recorded in amortization of intangible assets was $34.4 million and $32.5 million for the years ended December 31, 2021 and 2020, respectively.

NOTES PAYABLE

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

NOTES PAYABLE

Notes payable refers to the corporate level debt facilities that were refinanced on June 29, 2021. The Company’s corporate debt is incurred and guaranteed by certain of its operating subsidiaries, but it is not guaranteed by the Company or any parent entities above the borrower and guarantors in the ownership structure.

The Company’s corporate level consolidated outstanding debt is as follows (in thousands except for rates):


	December 31,				Interest rate as of December 31, 2021
	2021		2020
First lien credit agreements:
New first lien term loan facility, matures June 2028	$	379,195	$	—	4.0	%
First lien term loans, matures September 2025	—		331,355		—	%
New revolving credit facility, matures June 2026	9,000		—		3.5	%
Total first lien notes payable	388,195		331,355
Second lien credit agreement:
Second lien term loan, matures September 2026	—		115,000		—	%
Total notes payable	388,195		446,355
Less: unamortized deferred financing costs	(8,800)		(9,343)
Less: current maturities	—		(3,407)
Notes payable, net of current portion	$	379,395	$	433,605

New First Lien Credit Agreement

On June 29, 2021 the Company refinanced its existing credit facilities and entered into a new First Lien Credit Agreement, as borrower, with Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent, and other lenders party thereto as joint lead arrangers and joint bookrunners (the "New First Lien Credit Agreement"). The New First Lien Credit Agreement provides for (i) a $560.0 million senior secured term loan facility (the "New First Lien Term Loan Facility"), which includes a $50.0 million delayed draw term loan and (ii) a $125.0 million revolving credit facility (the "New Revolving Credit Facility" and, together with the New First Lien Term Loan Facility, the "New Credit Facilities").

The New First Lien Term Loan Facility accrues interest at a rate per annum that considers both fixed and floating components. Following the completion of the Company's IPO in July 2021, the fixed component ranges from 3.00% to 3.25% per annum based on the Company's Public Debt Rating (as defined in the New First Lien Credit Agreement). The floating component is based on the Eurocurrency Base Rate (as defined in the New First Lien Credit Agreement) for the relevant interest period. The New First Lien Term Loan Facility requires quarterly principal payments from December 2021 through June 2028, with any remaining unpaid principal and any accrued and unpaid interest due on the maturity date of June 29, 2028. The delayed draw term loan includes a variable commitment fee, which is based on the fixed interest rate and ranges from 0% to the Applicable Rate (as defined in the New First Lien Credit Agreement).

Loans under the New Revolving Credit Facility, accrue interest at a rate per annum that considers both fixed and floating components. Following the completion of the Company's IPO in July 2021, the fixed component ranges from 2.75% to 3.25% per annum based on the Company's most recently determined First Lien Net Leverage Ratio (as defined in the New First Lien Credit Agreement). The floating component is based on the Eurocurrency Base Rate for the relevant interest period. The New Revolving Credit Facility also has a variable commitment fee, which is based on the Company's most recently determined First Lien Net Leverage Ratio and ranges from 0.25% to 0.50% per annum on undrawn amounts. Letters of credit may be issued under the New Revolving Credit Facility in an amount not to exceed $15.0 million which, when issued, lower the overall borrowing capacity of the facility. The New Revolving Credit Facility expires on June 29, 2026, and no principal payments are due before such date.

The Company performed an analysis on a creditor-by-creditor basis for debt modifications and extinguishments to determine if repurchased debt was substantially different than debt issued to determine the appropriate accounting treatment of associated

issuance costs. In connection with the refinancing, the Company recorded a $2.0 million loss from early extinguishment of debt in the accompanying consolidated statements of operations and comprehensive income (loss).

In connection with the New First Lien Credit Agreement, the Company paid financing costs totaling $8.4 million, of which $6.7 million related to the New First Lien Term Loan Facility and $1.7 million related to the New Revolving Credit Facility. The total financing costs included an original issue discount of $2.8 million. Costs incurred in connection with New First Lien Term Loan Facility were deferred and reflected net of notes payable and are amortized to interest expense utilizing the effective-interest method over the term of the loan. Costs incurred in connection with the delayed draw term loan and the New Revolving Credit Facility were deferred and recorded as other assets. These costs are being amortized to interest expense on a straight-line basis over the term of respective credit facility.

On August 11, 2021 the Company utilized net proceeds received in connection with the IPO and made a voluntary prepayment of $130.8 million of its outstanding principle under the New First Lien Term Loan. In connection with the voluntary prepayment, the Company expensed $3.2 million of previously unamortized deferred financing costs as a loss on extinguishment of debt in the accompanying consolidated statements of operations and comprehensive income (loss).

Except as noted below, the New Credit Facilities are collateralized by substantially all of the assets of TGP Holdings III LLC, TGPX Holdings II LLC, Traeger Pellet Grills Holdings LLC and certain subsidiaries of Traeger Pellet Grills Holdings LLC, including intellectual property, mortgages and the equity interest of each of these respective entities. The assets of Traeger SPE LLC, substantially consisting of the Company's accounts receivable, collateralize the receivables financing agreement discussed below and do not collateralize the New Credit Facilities. There are no guarantees from parent entities above Traeger, Inc.

The New First Lien Credit Agreement contains certain affirmative and negative covenants that limit the Company's ability to, among other things, incur additional indebtedness or liens (with certain exceptions), make certain investments, engage in fundamental changes or transactions including changes of control, transfer or dispose of certain assets, make restricted payments (including dividends), engage in new lines of business, make certain prepayments and engage in certain affiliate transactions. In addition, the Company is subject to a financial covenant and is required to maintain a First Lien Net Leverage Ratio (as defined in the New First Lien Credit Agreement) not to exceed 6.20 to 1.00. The Company was in compliance with the covenants under the New Credit Facilities as of December 31, 2021.

Future maturities of the notes payable are as follows as of December 31, (in thousands):


2022	$	—
2023	—
2024	—
2025	—
2026	9,000
Thereafter	379,195
	$	388,195

RECEIVABLES FINANCING AGREEMENT	12 Months Ended
RECEIVABLES FINANCING AGREEMENT	Dec. 31, 2021
Debt Disclosure [Abstract]
RECEIVABLES FINANCING AGREEMENT	RECEIVABLES FINANCING AGREEMENT On November 2, 2020, the Company entered into a receivables financing agreement (the “Receivables Financing Agreement”). Through the Receivables Financing Agreement, the Company participates in a trade receivables securitization program administered on its behalf by MUFG Bank Ltd. ("MUFG") Through this arrangement, the Company has secured short-term capital requirements financing using outstanding accounts receivable balances as collateral, which have been contributed by the Company to a wholly owned subsidiary, Traeger SPE LLC. As a special purpose entity (the “SPE”), Traeger SPE LLC has been structured so that its assets (substantively the accounts receivable contributed by the Company to the SPE) are outside the reach of other creditors, including the lenders under the Company's New First Lien Credit Agreement. While the Company provides services to the SPE through continuing involvement in the aspects of collection and cash application of the receivables, the receivables are owned by the SPE once contributed to it by the Company. The Company is the primary beneficiary and holds all equity interests of the SPE, thus the Company consolidates the SPE without any significant judgments. On June 29, 2021, the Company entered into Amendment No. 1 to the Receivables Financing Agreement (the "Amended Receivables Financing Agreement") and increased the net borrowing capacity from the prior range of $30.0 million to $45.0 million up to $100.0 million. Absent any cash advances that exceed the SPE’s available cash, the SPE collects proceeds from the receivables and transfers available cash to the Company on a regular basis. The Company is required to pay an annual upfront fee for the facility, along with interest on outstanding cash advances of approximately 1.7%, and an unused capacity charge that ranges from 0.25% to 0.50%. The facility is set to terminate on June 29, 2024. The Company was not in compliance with the covenants under the Receivables Financing Agreement as of December 31, 2021 due to aged accounts receivable that resulted from a new payment program implemented by one of the Company's large customers. Such non-compliance did not result in the acceleration or increase of a direct financial obligation or an obligation under an off-balance sheet arrangement. The Company obtained a waiver for the breach of compliance to the covenants for December 31, 2021 and amended the covenants under the Receivables Financing Agreement with MUFG for the month of January 2022. By February 1, 2022, the Company had collected the majority of the aged accounts receivable balance and was in compliance with the covenants under the Receivables Financing Agreement. As of December 31, 2021, the Company has drawn down on its accounts receivable facility in the amount of $41.1 million for general corporate and working capital purposes.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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+ Details

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

Leases

The Company leases various real property and equipment under operating lease agreements with various expiration dates through July 2037.

Several of the real property leases include escalations and options to extend, ranging from one to five additional years. Rental expense is reflected in general and administrative expense and selling and marketing expense. Total rent expense for the years ended December 31, 2021 and 2020 was $3.6 million and $2.9 million, respectively.

The Company leases fleet vehicles, and office equipment that are accounted for as capital leases and are included in property, plant, and equipment. Furthermore, capitalized lease amortization is included with property, plant, and equipment depreciation.

Future minimum rental payments under non-cancelable leases are as follows as of December 31, (in thousands):


	Operating Leases		Capital Leases
2022	$	7,225	$	474
2023	5,541		340
2024	4,505		229
2025	4,120		156
2026	3,117		—
Thereafter	33,256		—
Total minimum lease payments	$	57,765	$	1,199
Less: amount representing interest			(117)
Net minimum lease payments			$	1,081

In November 2020, the Company entered into a lease agreement to rent an office building consisting of approximately 85,771 square feet in Salt Lake City, UT, which is expected to become the new corporate headquarters. The Company expects to move into the building in late 2022 or early 2023. The term of the lease continues for 16 years and 6 months following the commencement date. The landlord has granted 100% rent abatement for the first 6 months following commencement date and 50% abatement on rent for the 7-18 months following commencement date. The Company will then pay scheduled basic annual rent in monthly installments afterwards. The minimum payments associated with this lease are included in the table above.

Unconditional purchase commitments

The Company has unconditional purchase commitments for cloud-hosting costs, software licenses, and other professional fees. Future minimum payments under these unconditional purchase commitments are as follows as of December 31, (in thousands):


2022	$	3,972
2023	2,784
2024	366
2025	—
2026	—
Thereafter	—
Total future minimum payments	$	7,122

Legal Matters

The Company is subject to various claims, complaints and legal actions in the normal course of business. The Company does not believe it has any currently pending litigation of which the outcome will have a material adverse effect on its operations or financial position.

RETIREMENT PLAN	12 Months Ended
RETIREMENT PLAN	Dec. 31, 2021
Retirement Benefits [Abstract]
RETIREMENT PLAN	RETIREMENT PLANThe Company maintains a defined contribution retirement plan (“401(k) plan”) for all full-time employees in the United States. This 401(k) plan allows employees to contribute a portion of their eligible compensation up to the certain maximum dollar limits set by the Internal Revenue Service. The Company made matching contributions to the 401(k) plan of $1.6 million and $1.2 million for the years ended December 31, 2021 and 2020, respectively. The expenses are recorded consistent with the payroll expense associated to each individual employee to whom the matching contributions pertains.

- Definition

The entire disclosure for retirement benefits.

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+ Details

CAPITAL STOCK	12 Months Ended
CAPITAL STOCK	Dec. 31, 2021
Equity [Abstract]
CAPITAL STOCK	CAPITAL STOCK On August 2, 2021, the Company completed an IPO in which the Company issued and sold 8,823,529 shares of common stock at a public offering price of $18.00 per share, generating aggregate gross proceeds of $158.8 million before underwriter discounts and commissions, fees and expenses totaling $20.3 million, of which the Company recorded $3.7 million in general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income (loss). Additionally, certain selling stockholders sold an aggregate of 18,235,293 shares (including 3,529,411 shares pursuant to the underwriters’ exercise of their option to purchase additional shares). Immediately prior to the completion of the IPO, the Company converted to a Delaware corporation, from a limited liability company. The Company’s certificate of incorporation provides for one class of common stock and authorizes shares of undesignated preferred stock, the rights, preferences and privileges of which may be designated from time to time by the board of directors. The Company is authorized to issue up to 1,000,000,000 authorized shares of common stock with a par value of $0.0001 per share and 25,000,000 shares of preferred stock with a par value of $0.0001 per share. Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders, do not have cumulative voting rights and are entitled to receive proportionately any dividends as may be declared by our board of directors, subject to any preferential dividend rights of any series of preferred stock that we may designate and issue in the future. The Company’s common stock is traded on the New York Stock Exchange under the symbol “COOK.” In conjunction with the Corporate Conversion and prior to the closing of the IPO, the Company effected a forward split of its 10 common units into 108,724,422 common units. Concurrently with the Corporate Conversion, the units were converted to an aggregate of 108,724,387 shares of common stock, including the elimination of any fractional shares resulting therefrom. In addition, the Partnership liquidated and distributed these shares of common stock to the holders of partnership interests in the Partnership in direct proportion to their respective interests in the Partnership based upon the value of Traeger, Inc. at the time of IPO, with a value implied by the initial public offering price of the shares of common stock sold in the IPO. At December 31, 2021, the amount of issued and outstanding common stock was 117,547,916. The Company has not issued any shares of preferred stock.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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+ Details

EQUITY-BASED COMPENSATION

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

EQUITY-BASED COMPENSATION

Incentive Units

On September 25, 2017, AEA Investors LP, TCP Traeger Holdings SPV LLC, Ontario Limited, and other management and limited partners purchased a 100% equity stake (the “Transaction”) in Traeger Pellet Grills Holdings LLC through a merger

agreement in which TGP Holdings LP was formed. In connection with the Transaction, TGP Holdings LP established a management incentive equity pool, authorizing a maximum of 99,389 total units, or 15% of the total authorized units, for purposes of issuing compensatory awards to employees and certain directors of the Company, and its subsidiaries. Pursuant to the Amended and Restated Limited Partnership Agreement of TGP Holdings LP, dated as of September 25, 2017, eligible management employees and directors were granted a certain number of Class B Units of TGP Holdings LP which were intended to be treated as profit interests for tax purposes. The participation threshold of the Class B Units was historically established for each grant based on the fair market value of TGP Holdings LP membership units at the date of the grant.

The Class B unit grants are measured at the grant date based on the fair value of the awards. The estimated grant date fair values of the incentive units granted during 2021 and 2020, were derived using option pricing models.

The range of assumptions used in estimating the grant date fair value of the units awarded were as follows:


	For the year-ended December 31,
	2021	2020
Volatility	65.0%	50.3% - 69.0%
Risk-free rate	0.4%	0.2% - 0.7%
Dividend yield	None	None
Marketability discount	7.1%	18.6% - 23.9%
Expected term	3	3

The expected volatility has been estimated based on the volatilities using a weighted peer group of companies that are deemed to be similar to the Company. The risk-free rate has been determined on yields for U.S. Treasury securities for a period approximating the expected term. The dividend yield is zero as the Company has never declared or paid cash dividends and has no current plans to do so in the foreseeable future. The Finnerty model and the Asian Protective Put Model methods were used to estimate the discount for lack of marketability inherent to the awards. For the expected term, due to a lack of historical information, the estimate is developed based on the investment time horizon expectation of the investors.

On July 12, 2021, the board of directors of TGP Holdings GP Corp, a Delaware corporation and the then-general partner of TGP Holdings LP, approved the acceleration of vesting of all unvested and outstanding Class B Units, subject to the successful completion of the Company's IPO. The approval for the acceleration of vesting was determined to be a modification. As a result, the Company evaluated each of the modified awards to determine the necessary accounting. At the time of the IPO, awards where vesting was probable prior to and after the modification, resulted in an acceleration of the remaining expense based on the original grant date fair value and awards where vesting was not probable, resulted in recognition of the fair value of the modified awards as of the modification date.

In connection with the completion of the Company’s IPO, Class B Units that were outstanding and vested were, as part of the Corporate Conversion, converted into shares of common stock of the Company. The Company recorded equity compensation expense of approximately $47.4 million as a result of the acceleration of vesting of the unvested Class B Units based on the IPO price of $18.00. Given the proximity of the modification to the IPO, the expense recorded by the Company was based on the actual conversion of the Class B Unit into common stock and the valuation of the Company at time of the IPO.

The following table summarizes the Class B unit activity for the years ended December 31, 2021 and 2020:


	Number of Units	Aggregate Intrinsic Value
Outstanding balance at December 31, 2019	89,024
Granted	8,589
Redeemed	(1,002)
Forfeited or cancelled	(2,752)
Outstanding balance at December 31, 2020	93,859
Granted	1,603
Redeemed	—
Forfeited or cancelled	—
Converted to common shares on August 2, 2021	(95,462)
Outstanding balance at December 31, 2021	—	$	—
Vested balance at December 31, 2021	—	$	—

The number and weighted-average grant date fair value for unvested Class B units are as follows:


	Number of Unvested Units	Weighted-Average Fair Value of Units
Balance at December 31, 2019	72,271	$	235.86
Granted	8,589	508.01
(Vested)	(36,663)	296.43
(Forfeited)	(2,752)	230.76
Balance at December 31, 2020	41,445	$	240.53
Granted	1,603	1,087.36
(Vested)	(43,048)	272.11
(Forfeited)	—	0.00
Converted to common shares on August 2, 2021	—	—
Balance at December 31, 2021	—	$	—

Restricted Stock Unit Awards

The 2021 Plan, became effective as of July 28, 2021, the day prior to the first public trading date of our common stock. The 2021 Plan provides for the grant of stock options, including incentive stock options, and nonqualified stock options, restricted stock, dividend equivalents, restricted stock units, stock appreciation rights, and other stock or cash awards to the Company’s employees and consultants and directors of the Company and its subsidiaries. Subject to the adjustment described in the following sentence, the initial number of shares of our common stock available for issuance under awards granted pursuant to the 2021 Plan is equal to 14,105,750 shares, which shares may be authorized but unissued shares, treasury shares, or shares purchased in the open market. Notwithstanding anything to the contrary in the 2021 Plan, no more than 100,000,000 shares of our common stock may be issued pursuant to the exercise of incentive stock options under the 2021 Plan.

On July 20, 2021, the board of directors approved grants of restricted stock units (“RSUs”) covering 12,163,242 shares of common stock that became effective in connection with the completion of the Company’s IPO, which include RSUs covering 7,782,957 shares granted to the Company's Chief Executive Officer ("CEO") and RSUs covering 4,380,285 shares granted to other employees, directors, and certain non-employees.

CEO Awards

The awards include a combination of time-based and performance-based awards. Specifically, time-based RSUs covering 2,594,319 shares ("RSU CEO Award") and performance-based RSUs ("PSUs") covering 5,188,638 shares ("PSU CEO Award") were granted to the CEO.

RSU CEO Award

The RSU CEO Award will vest as to 20% of the underlying shares on each of the first, second, third, fourth and fifth anniversaries of the closing of the IPO, subject to continued service with the Company as its CEO or executive chairman of its board of directors.

Upon a termination of the CEO’s service by the Company without cause, by the CEO for good reason, or due to the CEO’s disability (each as defined in his award agreement) or due to his death (each, a “CEO Qualifying Termination”), then, subject to the CEO’s (or his estate’s) timely execution and non-revocation of a general release of claims and continued compliance with the restrictive covenants to which the CEO is bound through the effective date of the general release of claims, any unvested portion of the RSU CEO Award will vest. To the extent any of the RSU CEO Award vests, the CEO must hold the vested and settled shares for two years following their vesting date, subject to certain exceptions set forth in the award agreement.

PSU CEO Award

The PSU CEO Awards will become earned based on the achievement of stock price goals (measured as a volume-weighted stock price over 60 consecutive trading days) at any time until the tenth anniversary of the closing of the IPO. The PSU CEO Award is divided into five tranches, with the first tranche having a stock price goal of 125% of the IPO price, and each of the next four stock prices goals equal to 125% of the immediately preceding stock price goal. As of December 31, 2021, the first vesting tranche of the PSU CEO Award has been earned based upon achievement of the applicable stock price goal and will vest based on the table below. The PSU CEO Award will vest on the applicable vesting date described in the following table or, if later, the date on which the applicable stock price goal is achieved, subject to the CEO's continued service as our CEO or executive chairman of our board of directors:


Earned PSUs’ Vesting Tranche						Vesting Date
First Vesting Tranche						50% on the first anniversary and 50% on the second anniversary of the closing of the IPO
Second Vesting Tranche						50% on the second anniversary and 50% on the third anniversary of the closing of the IPO
Third Vesting Tranche						50% on the third anniversary and 50% on the fourth anniversary of the closing of the IPO
Fourth Vesting Tranche						50% on the fourth anniversary and 50% on the fifth anniversary of the closing of the IPO
Fifth Vesting Tranche						50% on the fifth anniversary and 50% on the sixth anniversary of the closing of the IPO

Upon a CEO Qualifying Termination, then, subject to the CEO’s (or his estate’s) timely execution and non-revocation of a general release of claims and continued compliance with the restrictive covenants to which the CEO is bound, any previously earned PSUs subject to the CEO PSU Award will vest, and any remaining PSUs that were not previously earned will be forfeited and terminated without consideration. To the extent any of the PSUs subject to the CEO PSU Award vest, the CEO must hold such vested shares for two years following their vesting date, subject to certain exceptions set forth in the award agreement. If the CEO experiences a termination of service other than a CEO Qualifying Termination, all PSUs (including earned PSUs) subject to the PSU CEO Award which have not become vested will be automatically forfeited and terminated as of the termination date without consideration.

In the event the Company incurs a change in control, then any previously-earned PSUs will vest and any remaining PSUs will vest based on the price per share received by or payable with respect to the common stockholders in connection with the transaction, pro-rated to reflect a price per share that falls between two stock price goals.

PSUs that remain unvested as of the expiration date automatically will be forfeited and terminated without consideration.

Other IPO Awards

The RSUs granted to other employees, directors, and certain non-employees, included 3,635,287 time-based RSUs ("IPO RSUs") and 744,998 performance-based RSUs ("IPO PSUs") granted to certain senior-level executives of the Company.

IPO RSUs

The IPO RSUs vest based on certain time-based conditions set forth in the applicable award agreement. IPO RSUs granted to certain senior executives of the Company vest as to 50% of the underlying shares on each of the third and fourth anniversaries of the closing of the IPO, subject to continued employment with the Company or one of its subsidiaries.

IPO PSUs

The IPO PSUs consist of two equal tranches, with the first tranche having a stock price goal of 200% of the IPO price and the second tranche having a stock price goal of 300% of the IPO price. Once earned, the applicable IPO PSU will vest as to (i) 50% of the earned PSUs upon the later of the first anniversary of the closing of the IPO or the achievement of the applicable stock price goal and (ii) 50% of the earned PSUs upon the later of the second anniversary of the closing of the IPO or the first anniversary of when the respective stock price goal is achieved with respect to the applicable vesting tranche, in each case, subject to continued employment with the Company or one of its subsidiaries.

Upon a termination of employment due to an executive’s disability (each defined in the applicable award agreement) or due to his or her death, then, subject to such executive’s (or his or her estate’s) timely execution and non-revocation of a general release of claims and continued compliance with the restrictive covenants to which such executive is bound, any previously earned PSUs subject to the IPO PSUs will vest, and any remaining PSUs subject to the IPO PSU award that were not previously earned will be automatically forfeited and terminated as of the termination date without consideration.

In the event the Company incurs a change in control, then any previously-earned PSUs will vest and any remaining PSUs will vest based on the price per share received by or payable with respect to the common stockholders in connection with the transaction, pro-rated to reflect a price per share that falls between two stock price goals.

PSUs that remain unvested as of the expiration date automatically will be forfeited and terminated without consideration.

For RSUs and PSUs, the compensation expense is recognized on a straight-line basis over the vesting schedule and on an accelerated basis over the tranche's requisite service period, respectively. In addition, when an award is forfeited prior to the vesting date, the Company will recognize an adjustment for the previously recognized expense in the period of the forfeiture, with the exception of performance-based awards for which the requisite service period has been provided.

The Company uses the Monte Carlo pricing model to estimate the fair value of its PSUs as of the grant date, and uses various simulations of future stock prices through the Stochastic model to estimate the fair value over the remaining term of the performance period as of the grant date.

A summary of the time-based restricted stock unit activity for the year-ended December 31, 2021 was as follows:


	Units	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2020	—	$	—
Granted at fair value	6,463,688	18.08
Vested	—	—
Forfeited	(188,828)	18.00
Outstanding at December 31, 2021	6,274,860	$	18.08

As of December 31, 2021, the Company had $94.2 million of unrecognized equity-based compensation expense related to unvested time-based restricted stock units that is expected to be recognized over a weighted-average period of 3.98 years.

A summary of the performance-based restricted stock unit activity during the year-ended December 31, 2021 was as follows:


	Units	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2020	—	$	—
Granted at fair value	5,933,636	13.25
Vested	—	—
Forfeited	—	—
Outstanding at December 31, 2021	5,933,636	$	13.25

As of December 31, 2021, the Company had $66.8 million of unrecognized equity-based compensation expense related to unvested performance-based units that is expected to be recognized over a weighted-average period of 3.64 years.

Summary of Equity-Based Compensation

The Company's equity-based compensation was classified as follows in the accompanying consolidated statements of operations and comprehensive income (loss) for the fiscal periods indicated (in thousands):


	Year-ended December 31,
	2021		2020		2019
Cost of revenue	$	947	$	88	$	18
Sales and marketing	16,401		2,575		316
General and administrative	63,764		10,147		2,018
Total equity-based compensation	$	81,112	$	12,810	$	2,352

INCOME TAXES

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

The components of income (loss) before income taxes were as follows for the fiscal periods indicated (in thousands):


	Year-ended December 31,
	2021		2020		2019
Domestic	$	(80,226)	$	31,440	$	(29,469)
Foreign	(7,106)		911		—
Income (loss) before provision for income taxes	$	(87,332)	$	32,351	$	(29,469)

Provision for income taxes consisted of the following components for the fiscal periods indicated (in thousands):


	Year-ended December 31,
	2021		2020		2019
Current:
Federal	$	124	$	—	$	—
State	208		678		124
Foreign	2,095		121		—
Total current tax expense	$	2,427	$	799	$	124
Deferred expense:
Federal	$	1	$	—	$	—
State	—		—		—
Foreign	(939)		(50)		—
Total deferred tax benefit	$	(938)	$	(50)	$	—
Provision for income taxes	$	1,489	$	749	$	124

Reconciliations of the differences between the effective and statutory income tax rates are as follows for the fiscal periods indicated:


	Year-ended December 31,
	2021		2020		2019
Federal statutory rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal benefit	3.7		3.3		3.3
Foreign rate differential	(2.0)		0.2		—
Equity-based compensation	(14.3)		9.9		(1.9)
Global intangible low-taxed income	(1.6)		—		—
Non-deductible items	(1.1)		0.5		(1.2)
Research and development credits	0.6		(0.7)		0.9
Change in partnership investment	(3.0)		—		—
Changes in valuation allowance	(5.4)		(33.9)		(26.7)
Changes in tax rates	(0.7)		(0.5)		(0.3)
Other	1.0		2.6		4.5
	(1.7)	%	2.4	%	(0.4)	%

The differences between the U.S. statutory rate and the Company’s effective tax rate for the years ended December 31, 2021, 2020, and 2019 are primarily due to the changes in valuation allowance, state taxes, and equity-based compensation.

The amounts that comprised deferred income tax assets, net are as follows for the fiscal periods indicated (in thousands):


	Year-ended December 31,
	2021		2020		2019
Deferred tax assets:
Net operating loss carryforwards	$	19,483	$	16,807	$	17,583
Sec. 163(j) interest	3,342		2,998		10,503
Tax credits	1,206		725		568
Equity-based compensation	68		—		—
Deferred compensation	722		—		—
Other	340		34		2,381
Less: valuation allowance	(25,092)		(20,384)		(31,035)
Total deferred tax assets	$	69	$	180	$	—
Deferred tax liabilities:
Property and equipment	$	(229)	$	—	$	—
Intangible assets	(11,513)		—		—
Investments	—		(146)		—
Total deferred tax liabilities	$	(11,742)	$	(146)	$	—
Net deferred tax asset (liability)	$	(11,673)	$	34	$	—

As of December 31, 2021, the Company has net operating loss carryforwards of approximately $79.4 million for federal income tax purposes, which will be available to offset future taxable income. Due to recent tax legislation, approximately $53.4 million of these net operating losses are eligible for indefinite carryforward, limited by certain taxable income limitations. The Company is not aware of any restrictions or limitations on use of the net operating losses under Internal Revenue Code Section 382. Due to cumulative losses, the Company has recorded a full valuation allowance against its net deferred tax assets as of December 31, 2021 and 2020 respectively.

The Company also had federal research and development tax credit carryforwards for tax return purposes of $1.5 million, which begin to expire in 2038 if not utilized.

On December 22, 2017, tax reform legislation referred to as the Tax Cuts and Jobs Act (the “Tax Act”) was enacted in the United States. The Tax Act significantly revised U.S. federal income tax law, including by lowering the corporate income tax rate to 21%, limiting the deductibility of interest expense, implementing a modified territorial tax system and imposing a one-time repatriation tax on deemed repatriated untaxed earnings and profits of U.S.-owned foreign subsidiaries. The Tax Act also enacted provisions for the taxation of Global Intangible Low-Taxed Income (“GILTI”). In 2018, the Company adopted an accounting policy to recognize GILTI as an expense in the period incurred. As such, the Company will not provide for any deferred tax assets or liabilities related to GILTI.

The Company annually conducts an analysis of its tax positions and does not recognize certain tax benefits from uncertain tax positions within the provision for income taxes. A tax benefit is recognized only if it is more likely than not that the tax position will be sustained on examination by taxing authorities based on the technical merits of the position. For such positions, the largest benefit that has a greater than 50% likelihood of being realized upon settlement is recognized in the financial statements.

The following summarizes activity related to unrecognized tax benefits for the fiscal periods indicated (in thousands):


	Year-ended December 31,
	2021		2020		2019
Unrecognized benefit—beginning of the year	$	—	$	—	$	—
Gross increases—current period positions	908		—		—
Unrecognized benefit—end of the year	$	908	$	—	$	—

The Company does not expect any significant change in its unrecognized tax benefits within the next 12 months. At December 31, 2021, the Company had $0.9 million of total unrecognized tax benefits recorded against research and development tax credit carryforwards, all of which would impact the effective tax rate if recognized.

The Company has elected to recognize interest and penalties related to uncertain tax positions as a component of interest expense from continuing operations in the accompanying consolidated statements of operations and comprehensive income (loss). No interest or penalties have been recorded through the year ended December 31, 2021.

The Company files tax returns in the United States and in various foreign and state jurisdictions. All of the Company's tax years remain open to examination by major taxing jurisdictions to which the Company is subject, as carryforward attributes generated in past years may still be adjusted upon examination by the Internal Revenue Service or state and foreign tax authorities if they have or will be used in future periods. The Company is not under examination by any jurisdiction as of December 31, 2021. With few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations by tax authorities for years before 2018.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

RELATED PARTY TRANSACTIONS	12 Months Ended
RELATED PARTY TRANSACTIONS	Dec. 31, 2021
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	RELATED PARTY TRANSACTIONSThe Company outsources a portion of its customer service and support through a third party who is an affiliate of the Company through common ownership. The total amount of expenses the Company recorded associated with such services totaled $10.1 million and $6.5 million for the years ended December 31, 2021 and 2020, respectively. Amounts payable to the third party at December 31, 2021 and 2020 was $1.2 million and $0.7 million, respectively.

SEGMENT INFORMATION	12 Months Ended
SEGMENT INFORMATION	Dec. 31, 2021
Segment Reporting [Abstract]
SEGMENT INFORMATION	SEGMENT INFORMATION The Company concluded that its business is a single reportable segment. The Company operates solely as a consumer products business. This is supported by the Company’s operational structure, which includes sales, design, operations, marketing, and administrative functions focused on the entire product suite rather than individual product categories. The Company’s chief operating decision maker does not regularly review financial information below a level of consolidated Company results to determine resource allocation or to assess performance. Revenue related to customers outside the United States represents less than 10% of the Company’s consolidated revenue. Assets outside of the United States were also less than 10% of the Company’s consolidated assets as of December 31, 2021 and 2020.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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+ Details

EARNINGS (LOSS) PER SHARE

12 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

EARNINGS (LOSS) PER SHARE

The Company computes basic earnings (loss) per share ("EPS") attributable to common stockholders by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted EPS is calculated by adjusting weighted average shares outstanding for the dilutive effect of potential common shares, determined using the treasury-stock method. For purposes of the diluted EPS calculation, restricted stock units are considered to be potential common shares.

The following table sets forth the computation of the Company’s basic and diluted EPS attributable to common stockholders for the fiscal periods indicated (in thousands, except share and per share amounts):


	Year-ended December 31,
	2021		2020		2019
Net income (loss)	$	(88,821)	$	31,602	$	(29,593)

Weighted-average common shares outstanding—basic (1)	112,374,669		108,724,387		108,724,387
Effect of dilutive securities:
Restricted stock units	—		—		—
Weighted-average common shares outstanding—diluted (1)	112,374,669		108,724,387		108,724,387

Earnings (loss) per share
Basic	$	(0.79)	$	0.29	$	(0.27)
Diluted	$	(0.79)	$	0.29	$	(0.27)

(1)For the years ended December 31, 2020 and 2019, the Company retrospectively applied shares of common stock outstanding upon the Corporate Conversion, immediately prior to the IPO. Refer to Note 1 – Description of Business and Basis of Presentation for a description of the Corporate Conversion.

The following table includes the number of units that may be dilutive common shares in the future, and were not included in the computation of diluted earnings (loss) per share because the effect was anti-dilutive for the fiscal periods indicated:


	Year-ended December 31,
	2021	2020	2019
Restricted stock units	12,208,496	—	—

SUBSEQUENT EVENTS	12 Months Ended
SUBSEQUENT EVENTS	Dec. 31, 2021
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	Subsequent EventsIn February 2022, the Company entered into a $379.2 million notional amount interest rate swap agreement to hedge or otherwise protect against Eurodollar interest rate fluctuations on a portion of our variable rate debt. The agreement provides for a fixed rate of 2.08% and a term through March 29, 2026. This agreement was designated as a cash flow hedge on the exposure of the variability of future cash flows subject to the variable quarterly interest rates on $379.2 million of the term loan portion of the New First Lien Term Loan Facility.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates and assumptions made by management that present the greatest amount of estimation uncertainty include business combination accounting for the fair value of assets acquired, liabilities assumed, and contingent consideration, customer credits and returns, valuation and impairment of intangible assets including goodwill, unrealized positions on foreign currency derivatives and reserves for warranty. Actual results could differ from these estimates.

Cash and Cash Equivalents

The Company considers cash on deposit and short-term investments with remaining maturities at acquisition of three months or less to be cash and cash equivalents.

Concentrations

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash in banks, trade accounts receivable and foreign currency contracts. Credit is extended to customers based on an evaluation of the customer’s financial condition and collateral is not generally required in the Company’s sales transactions.

Accounts Receivable, Net

The Company reports its accounts receivable based on the amount that is expected to be collected from its sales to customers. The accounts receivable balance is comprised of the amounts invoiced to customers and reduced by an allowance for doubtful accounts, accrued sales discounts and a credit reserve for sales returns and allowances. The Company performs on-going credit evaluations of its customers and in certain instances may deploy third-party collection efforts. Generally, the Company does not require collateral in its transactions with customers. The Company determines its allowance for doubtful accounts and credit reserve for sales returns and allowances based on management’s evaluation of the accounts receivable aging, past credit and collection history, and product returns and discounts history. Adjustments to the allowance for doubtful accounts for amounts related to known credit events that would affect a customer’s ability to pay are charged to bad debt expense, otherwise any adjustment is recorded as a reduction to net sales. Interest is not accrued on outstanding accounts receivable balances.

Inventories

Inventories consist of finished goods, work-in-process and raw materials. Inventories are stated at the lower of cost or net realizable value, with cost for raw materials and finished goods stated as an approximate cost determined on the first-in first-out basis. Net realizable value is defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Assessments to value the inventory at the lower of the average cost to purchase the inventory, or the net realizable value of the inventory, are based upon assumptions about future demand, physical deterioration, changes in price levels and market conditions. As a result of the Company’s assessments, when the net realizable value of inventory is less than the carrying value, the inventory cost is written down to the net realizable value and the write down is recorded as a charge to cost of revenue. Inventories include indirect acquisition and production costs that are incurred to bring the inventories to their present condition and location. Inventories are recorded net of reserves for obsolescence. Once established, the original cost of the inventory less the related inventory reserve represents the new cost basis of such products.

Derivative Instruments

The Company uses derivative contracts (foreign exchange option contracts) for the purpose of economically hedging exposure to changes in currency fluctuations between the U.S. Dollar and the Chinese Renminbi. The Company accounts for these contracts in accordance with FASB ASC 815, Derivatives and Hedging, which requires that all derivatives be recognized at fair value in the consolidated balance sheets, and that corresponding gains and losses are recognized in other income (expense) in the consolidated statements of operations and comprehensive income (loss). The Company does not apply hedge accounting to these instruments.

Property, Plant, and Equipment

Property, plant, and equipment is stated at cost less accumulated depreciation and amortization. Additions and betterments to property, plant, and equipment that improve economic performance, extend the useful life, or improve the quality of units or services produced of the component asset are capitalized.

The Company does not depreciate amounts recorded for land. Depreciation and amortization on individual components of property is computed using the straight-line method over the estimated useful lives of the assets as follows:


			Years
Buildings			15
Machinery and equipment			5-20
Leasehold improvements			Shorter of useful lives or lease term
Office equipment and fixtures			2-10
Vehicles			2-10
Computer hardware and software			3-5

When assets are sold or otherwise disposed of, the cost and related accumulated depreciation or amortization are derecognized from the respective accounts, and any remaining carrying value is included in depreciation expense in the consolidated statements of operations if retired, or if sold, the resulting gain or loss is recognized in other income in the consolidated statements of operations and comprehensive income (loss). The cost of maintenance and repairs are expensed as incurred.

The Company capitalizes costs for internal-use software incurred during the application development stage. Software costs related to preliminary project activities and post implementation activities are expensed as incurred. The Company capitalizes costs incurred for software purchases and certain costs related to website development. Capitalized costs related to internal-use software, software purchases and website development are amortized on a straight-line basis over the estimated useful life of the software, not to exceed three years. Capitalized costs less accumulated amortization are included within property, plant, and equipment, net on the consolidated balance sheets.

In November 2020, the Company entered into a lease agreement to rent an office building consisting of approximately 85,771 square feet in Salt Lake City, UT, which is expected to become the new corporate headquarters. In accordance with Accounting Standards Codification 840 Leases, for build-to-suit lease arrangements where the Company is involved in the construction of structural improvements prior to the commencement of the lease or take some level of construction risk, the Company is considered the owner of the assets and land during the construction period. Accordingly, upon commencement of construction activities, the Company recorded a construction in progress asset and a corresponding financing liability. Once the construction is completed, if the lease meets certain “sale-leaseback” criteria, the asset and related financial obligation will be removed from the balance sheet and the building lease will be treated as an operating lease. If upon completion of construction, the project does not meet the “sale-leaseback” criteria, the leased property will be treated as a capital lease and included in building and building improvements.

For accounting purposes only, the Company is deemed to be the owner of the entire project including the building shell, even though it is not the legal owner. In connection with the Company’s accounting for this transaction, the Company capitalized $4.3 million as a build-to-suit asset recognized in property within property and equipment, net, and a corresponding build-to-suit lease obligation for the same amount recognized in accrued expense in the consolidated balance sheets. Refer to Note 14 – Commitments and Contingencies for the lease agreement terms.

Deferred Financing Costs

Costs incurred in connection with long-term debt financing are deferred and reflected net of notes payable and are amortized to interest expense utilizing the effective-interest method over the term of the related financing. Costs incurred in connection with the refinancing to the delayed draw, revolving credit facility and the amendments to the Receivables Financing Agreement are capitalized and recorded as other assets on the consolidated balance sheets. These costs are being amortized to interest expense on a straight-line basis over the term of each respective credit facility.

Deferred Rent

Deferred rent expense represents the difference between rent paid and the amounts expensed for operating leases as well as certain tenant improvement allowances and incentives provided by landlords. Certain leases have scheduled rent increases, and certain leases include an initial period of free or reduced rent as an inducement to enter into the lease agreement (“rent holidays”). The Company includes these changes in the calculation of recognized rent expense on a straight-line basis over the term of the underlying leases, without regard to when rent payments are made.

Intangible Assets

Finite-lived intangible assets are initially recorded at fair value and presented net of accumulated amortization. Intangible assets are amortized on a straight-line basis over their estimated useful lives. The Company is currently amortizing acquired intangible assets, including customer relationships, distributor relationships, non-compete arrangements, business trademarks and technology, over periods ranging between 2.5 years and 25 years. Amortization related acquired patent technology and capitalized patent costs are recorded as a component of cost of revenue and amortization related to acquired business trademarks, customer relationships, distributor relationships, and non-compete arrangements are recorded in amortization of intangible assets in the consolidated statement of operations and comprehensive income (loss).

Goodwill

Goodwill represents the excess of consideration transferred over the fair value of tangible and identifiable intangible net assets acquired and the liabilities assumed in a business combination. Substantively all of the Company’s goodwill was recognized in the purchase price allocation when the Company was acquired in 2017, with smaller incremental amounts recognized in subsequent business combinations. Goodwill is not amortized, but is subject to an annual impairment test. In conducting its annual impairment test, the Company first reviews qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If factors indicate that the fair value of the reporting unit is less than its carrying amount, the Company performs a quantitative assessment, analyzing the expected present value of future cash flows to quantify the amount of impairment, if any.The Company conducts annual goodwill impairment tests in the fourth quarter of each fiscal year or whenever an indicator of impairment exists. For the annual impairment tests conducted in the fourth quarters of 2021 and 2020, the Company performed qualitative assessments of goodwill and determined that it was more likely than not that the fair value of goodwill was greater than its carrying value, therefore the quantitative impairment test was not performed.

Impairment of Assets

Long-lived assets, including property, plant, and equipment and finite-lived intangible assets subject to amortization, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. An impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the asset or asset group. If impairment exists, the impairment loss is measured and recorded based on discounted estimated future cash flows. In estimating future cash flows, assets are grouped at the lowest levels for which there are identifiable cash flows that are largely independent of cash flows from other asset groups.

Fair Value of Financial Instruments

The Company estimates the fair value of its financial assets and liabilities, except for foreign currency option contracts and contingent consideration obligations, based upon existing interest rates related to such assets and liabilities compared to the current market rates of interest for instruments of similar nature and degree of risk. The carrying value reflected in the consolidated balance sheets for such financial assets and liabilities, (such as receivables, payables, and contingent liabilities) approximates fair value.Cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses, obligations under capital leases, and customer deposits are recorded at cost, which approximates fair value due to the current nature of these items. The fair values of the notes payable are determined using recent trades between private parties which are not observable inputs. The fair values of the foreign currency option contracts are estimated based on quoted market prices and the fair values of the contingent consideration obligations are estimated based on probability assessments with respect to the likelihood of achieving the performance targets and discount rates consistent with the level of risk of achievement.Based on the underlying inputs, each fair value measurement in its entirety is reported in one of the three levels in the fair value hierarchy, which evaluates the inputs used in measuring fair value.Financial assets and liabilities valued using Level 1 inputs are based on unadjusted quoted market prices within active markets. Financial assets and liabilities valued using Level 2 inputs are based primarily on observable trades and/or prices for similar assets or liabilities in active or inactive markets. Financial assets and liabilities valued using Level 3 inputs are primarily valued using management’s assumptions about the assumptions market participants would utilize in pricing the asset or liability.

Contingent Consideration

The purchase consideration associated with the acquisition of Apption Labs Limited (together with its subsidiaries, "Apption Labs") includes contingent cash consideration payable to the sellers based on achievement of certain revenue thresholds for fiscal years 2021 and 2022. The fair value of contingent consideration obligation is estimated based on the probability assessments with respect to the likelihood of achieving the performance targets and discount rates consistent with the level of risk of achievement. The Company includes the fair value of this contingent obligation in current and long-term contingent consideration in the consolidated balance sheets.At each reporting period, the Company revalues the contingent consideration obligation to its fair value and records increases and decreases in fair value in the change in fair value of contingent consideration in the consolidated statements of operations and comprehensive income (loss). Changes in the fair value of the contingent consideration obligation results from changes in discount periods and rates, and changes in probability assumptions with respect to the likelihood of achieving the performance targets.

Revenue Recognition and Sales Returns and Allowances

On January 1, 2019, the Company adopted ASU 2014-09 Revenue from Contracts with Customers and all subsequent related amendments to the ASU (collectively “ASC 606”) using the modified retrospective method applied to contracts that were not completed as of January 1, 2020. Under the modified