Raises Fiscal Year 2024 Outlook on Key
Metrics
SharkNinja, Inc. (“SharkNinja” or the “Company”) (NYSE: SN), a
global product design and technology company, today announced its
financial results for the second quarter ended June 30, 2024.
Highlights for the Second Quarter 2024 as compared to the
Second Quarter 2023
- Net sales increased 31.4% to $1,248.7 million and Adjusted Net
Sales increased 37.9% to $1,248.7 million.
- Gross margin and Adjusted Gross Margin increased 630 and 570
basis points, respectively.
- Net income increased 470.1% to $68.0 million. Adjusted Net
Income increased 52.9% to $99.6 million
- Adjusted EBITDA increased 47.6% to $167.7 million, or 13.4% of
Adjusted Net Sales.
Mark Barrocas, Chief Executive Officer, commented: “SharkNinja
fueled excellent organic and profitable growth in the second
quarter. Our diversified portfolio of products and strong revenue
mix drove broad-based, double-digit growth across each of our key
product categories. We are expanding market share, entering new
categories, and growing our global footprint, as we continue to
execute on our proven three-pillar growth strategy. Looking ahead,
we are confident in our ability to deliver high-performance
products that solve consumer problems, even amidst certain
challenges emerging in the global operating environment. Our
relentless focus on execution has consistently yielded exceptional
results, and we are positioned to execute this playbook going
forward.”
Three Months Ended June 30, 2024
Net sales increased 31.4% to $1,248.7 million, compared to
$950.3 million during the same period last year. Adjusted Net Sales
increased 37.9% to $1,248.7 million, compared to $905.6 million
during the same period last year, or 37.6% on a constant currency
basis. The increase in net sales and Adjusted Net Sales resulted
from growth in each of our four major product categories of Food
Preparation Appliances, Cooking and Beverage Appliances, Cleaning
Appliances and Other, which includes beauty and home environment
products.
- Cleaning Appliances net sales increased by $52.3 million, or
12.6%, to $466.1 million, compared to $413.8 million in the prior
year quarter. Adjusted Net Sales of Cleaning Appliances increased
by $78.5 million, or 20.3%, from $387.6 million to $466.1 million,
driven by the carpet extractor and cordless vacuums
sub-categories.
- Cooking and Beverage Appliances net sales increased by $36.2
million, or 10.6%, to $379.3 million, compared to $343.1 million in
the prior year quarter. Adjusted Net Sales of Cooking and Beverage
Appliances increased by $39.7 million, or 11.7%, from $339.6
million to $379.3 million, driven by growth in Europe. Global
growth was supported by the success of the outdoor grill and
outdoor oven across both the US and European markets.
- Food Preparation Appliances net sales increased by $121.5
million, or 84.8%, to $264.9 million, compared to $143.4 million in
the prior year quarter. Adjusted Net Sales of Food Preparation
Appliances increased by $125.9 million, or 90.6%, from $139.0
million to $264.9 million, driven by strong sales of our ice cream
makers and portable blenders.
- Net sales in the Other category increased by $88.3 million, or
176.2%, to $138.4 million, compared to $50.1 million in the prior
year quarter. Adjusted Net Sales in the Other category increased by
$98.9 million, or 251.0%, from $39.4 million to $138.4 million,
primarily driven by strength of haircare products, our FlexBreeze
fans, and air purifiers.
Gross profit increased 51.4% to $600.9 million, or 48.1% of net
sales, compared to $396.9 million, or 41.8% of net sales, in the
second quarter of 2023. Adjusted Gross Profit increased 56.0% to
$614.1 million, or 49.2% of Adjusted Net Sales, compared to $393.6
million, or 43.5% of Adjusted Net Sales in the second quarter of
2023. The increase in gross margin and Adjusted Gross Margin of 630
and 570 basis points, respectively, was derived from optimizations
within our supply chain, sourcing and costing strategy, regional
expansion, and foreign exchange benefit.
Research and development expenses increased 47.6% to $90.1
million, or 7.2% of net sales, compared to $61.0 million, or 6.4%
of net sales, in the prior year quarter. This increase was
primarily driven by incremental personnel-related expenses of $12.0
million to support new product categories and new market expansion,
which includes an increase of $1.4 million in share-based
compensation.
Sales and marketing expenses increased 45.5% to $303.2 million,
or 24.3% of net sales, compared to $208.3 million, or 21.9% of net
sales, in the prior year quarter. This increase was primarily
attributable to increases of $58.9 million in advertising-related
expenses; an increase of $26.7 million in delivery and distribution
costs driven by higher volumes, particularly in our DTC business;
and $10.4 million in personnel-related expenses to support new
product launches and expansion into new markets, which includes an
incremental $1.7 million of share-based compensation.
General and administrative expenses increased 44.3% to $103.8
million, or 8.3% of net sales, compared to $72.0 million, or 7.6%
of net sales, in the prior year quarter. This increase was
primarily driven by an increase in personnel-related expenses of
$16.1 million, primarily due to a $8.6 million increase in
share-based compensation; an increase of $8.0 million in legal
fees; an increase of $7.3 million in professional and consulting
fees; an increase of $6.7 million in technology support costs; an
increase of $3.6 million in product liability and insurance; an
increase of $2.3 million in credit card processing and merchant
fees; offset by a decrease in transaction costs related to the
separation and distribution from JS Global of $15.3 million.
Operating income increased 86.6% to $103.8 million, or 8.3% of
net sales, compared to $55.6 million, or 5.9% of net sales, during
the prior year quarter. Adjusted Operating Income increased 61.5%
to $143.2 million, or 11.5% of Adjusted Net Sales, compared to
$88.7 million, or 9.8% of Adjusted Net Sales, in the second quarter
of 2023.
Net income increased 470.1% to $68.0 million, or 5.4% of net
sales, compared to $11.9 million, or 1.3% of net sales, in the
prior year quarter. Net income per diluted share increased 433.3%
to $0.48, compared to $0.09 in the prior year quarter.
Adjusted Net Income increased 52.9% to $99.6 million, or 8.0% of
Adjusted Net Sales, compared to $65.2 million, or 7.2% of Adjusted
Net Sales, in the prior year quarter. Adjusted Net Income per
diluted share increased 51.1% to $0.71, compared to $0.47 in the
prior year quarter.
Adjusted EBITDA increased 47.6% to $167.7 million, or 13.4% of
Adjusted Net Sales, compared to $113.6 million, or 12.5% of
Adjusted Net Sales in the prior year quarter.
Six Months Ended June 30, 2024
Net sales increased 28.2% to $2,314.9 million, compared to
$1,805.6 million during the same period last year. Adjusted Net
Sales increased 32.9% to $2,314.9 million, compared to $1,741.2
million during the same period last year, or 32.0% on a constant
currency basis. The increase in net sales and Adjusted Net Sales
resulted from growth in each of our four major product categories
of Food Preparation Appliances, Cooking and Beverage Appliances,
Cleaning Appliances and Other, which includes beauty and home
environment products.
- Cleaning Appliances net sales increased by $59.4 million, or
7.2%, to $888.0 million, compared to $828.7 million during the same
period last year. Adjusted Net Sales of Cleaning Appliances
increased by $101.9 million, or 13.0%, from $786.1 million to
$888.0 million, driven by the carpet extractor, cordless vacuums
and robotics sub-categories.
- Cooking and Beverage Appliances net sales increased by $109.2
million, or 18.2%, to $708.9 million, compared to $599.7 million
during the same period last year. Adjusted Net Sales of Cooking and
Beverage Appliances increased by $114.2 million, or 19.2%, from
$594.8 million to $708.9 million, driven by growth in Europe.
Global growth was supported by the success of the outdoor grill and
outdoor oven across both the US and European markets.
- Food Preparation Appliances net sales increased by $208.7
million, or 79.9%, to $469.9 million, compared to $261.2 million
during the same period last year. Adjusted Net Sales of Food
Preparation Appliances increased by $214.9 million, or 84.2%, from
$255.1 million to $469.9 million, driven by strong sales of our ice
cream makers and compact blenders, specifically our portable
blenders.
- Net sales in the Other category increased by $132.0 million, or
113.8%, to $248.0 million, compared to $116.0 million during the
same period last year. Adjusted Net Sales in the Other category
increased by $142.7 million or 135.5% from $105.3 million to $248.0
million, primarily driven by strength of haircare products, our
FlexBreeze fans, and air purifiers.
Gross profit increased 41.4% to $1,127.5 million, or 48.7% of
net sales, compared to $797.5 million, or 44.2% of net sales, in
the same period last year. Adjusted Gross Profit increased 44.4% to
$1,155.8 million, or 49.9% of Adjusted Net Sales, compared to
$800.4 million, or 46.0% of Adjusted Net Sales in the same period
last year. The increase in gross margin and Adjusted Gross Margin
of 450 and 400 basis points, respectively, was derived from
optimizations within our supply chain, sourcing and costing
strategy, regional expansion, and foreign exchange benefit.
Research and development expenses increased 33.3% to $159.6
million, or 6.9% of net sales, compared to $119.7 million, or 6.6%
of net sales, during the same period last year. This increase was
primarily driven by incremental personnel-related expenses of $20.7
million to support new product categories and new market expansion,
which includes an increase of $4.7 million in share-based
compensation. The remainder of the increase was primarily driven by
an increase of $11.5 million in prototypes and testing costs, an
increase of $8.4 million in professional and consulting fees to
support overall growth in the business and an increase of $2.6
million in travel costs, partially offset by a decrease of $2.4
million in depreciation and amortization expense.
Sales and marketing expenses increased 43.6% to $517.8 million,
or 22.4% of net sales, compared to $360.4 million, or 20.0% of net
sales, during the same period last year. This increase was
primarily attributable to increases of $85.3 million in
advertising-related expenses; an increase of $45.7 million in
delivery and distribution costs driven by higher volumes,
particularly in our DTC business; $24.5 million in
personnel-related expenses to support new product launches and
expansion into new markets, which includes an incremental $4.2
million of share-based compensation; and $3.4 million in
professional services expense.
General and administrative expenses increased 37.6% to $191.3
million, or 8.3% of net sales, compared to $139.0 million, or 7.7%
of net sales, during the same period last year. This increase was
primarily driven by an increase in personnel-related expenses of
$32.0 million, primarily due to a $21.5 million increase in
share-based compensation; an increase of $13.4 million in
professional and consulting fees; an increase of $9.0 million in
technology support costs; an increase of $17.0 million in legal
fees; an increase of $6.1 million in credit card processing and
merchant fees; an increase of $4.2 million in product liability and
insurance; an increase of $3.2 million in depreciation and
amortization; offset by a decrease in transaction costs related to
the separation and distribution from JS Global and secondary
offering of $33.8 million.
Operating income increased 45.2% to $258.8 million, or 11.2% of
net sales, compared to $178.3 million, or 9.9% of net sales, during
the same period last year. Adjusted Operating Income increased
39.3% to $345.4 million, or 14.9% of Adjusted Net Sales, compared
to $248.0 million, or 14.2% of Adjusted Net Sales, in the prior
year period.
Net income increased 79.4% to $177.7 million, or 7.7% of net
sales, compared to $99.0 million, or 5.5% of net sales, during the
same period last year. Net income per diluted share increased 77.5%
to $1.26, compared to $0.71 in the prior year period.
Adjusted Net Income increased 34.8% to $248.2 million, or 10.7%
of Adjusted Net Sales, compared to $184.2 million, or 10.6% of
Adjusted Net Sales, during the same period last year. Adjusted Net
Income per diluted share increased 32.3% to $1.76, compared to
$1.33 in the prior year period.
Adjusted EBITDA increased 36.5% to $398.2 million, or 17.2% of
Adjusted Net Sales, compared to $291.6 million, or 16.7% of
Adjusted Net Sales, in the prior year period.
Balance Sheet and Cash Flow Highlights
Cash and cash equivalents decreased to $138.1 million, compared
to $154.1 million as of December 31, 2023.
Inventories increased 20.1% to $840.5 million, compared to
$699.7 million as of December 31, 2023.
Total debt, excluding unamortized deferred financing costs, was
$909.8 million, compared to $804.9 million as of December 31, 2023.
The existing credit facility provides for a $810.0 million term
loan and a $500.0 million revolving credit facility.
Fiscal 2024 Outlook
For fiscal year 2024, SharkNinja is increasing its outlook on
key metrics and now expects:
- Net sales to increase 20% to 22% compared to the prior
expectation of 10% to 12%.
- Adjusted Net Sales to increase between 22% and 24% compared to
the prior expectation of 12% to 14%.
- Adjusted Net Income per diluted share between $4.05 and $4.21,
reflecting a 26% to 31% increase, compared to the prior expectation
of between $3.66 and $3.82, reflecting a 14% to 19% increase.
- Adjusted EBITDA between $910 million and $940 million,
reflecting a 26% to 31% increase, compared to the prior expectation
of between $840 million and $870 million, reflecting a 17% to 21%
increase.
- A GAAP effective tax rate of approximately 24% to 25%.
- Diluted weighted average shares outstanding of approximately
141 million.
- Capital expenditures of $160 million to $180 million primarily
to support investments in new product launches, technology, and
incremental investments in tooling to support the diversification
of our sourcing outside of China.
Conference Call Details
A conference call to discuss the second quarter 2024 financial
results is scheduled for today, August 8, 2024, at 8:30 a.m.
Eastern Time. A live audio webcast of the conference call will be
available online at http://ir.sharkninja.com. Investors and
analysts interested in participating in the live call are invited
to dial 1-646-968-2525 or 1-888-596-4144 and enter confirmation
code 2950425. The webcast will be archived and available for
replay.
About SharkNinja, Inc.
SharkNinja, Inc. (NYSE: SN) is a global product design and
technology company, with a diversified portfolio of 5-star rated
lifestyle solutions that positively impact people’s lives in homes
around the world. Powered by two trusted, global brands, Shark and
Ninja, the company has a proven track record of bringing disruptive
innovation to market, and developing one consumer product after
another has allowed SharkNinja to enter multiple product
categories, driving significant growth and market share gains.
Headquartered in Needham, Massachusetts with more than 3,000
associates, the company’s products are sold at key retailers,
online and offline, and through distributors around the world. For
more information, please visit SharkNinja.com.
Forward-looking statements
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements reflect our current views
with respect to, among other things, future events and our future
business, financial condition, results of operations and prospects
and Fiscal 2024 outlook. These statements are often, but not
always, made through the use of words or phrases such as “may,”
“should,” “could,” “predict,” “potential,” “believe,” “will likely
result,” “expect,” “continue,” “will,” “anticipate,” “seek,”
“estimate,” “intend,” “plan,” “projection,” “would” and “outlook,”
or the negative version of those words or phrases or other
comparable words or phrases of a future or forward-looking nature.
These forward-looking statements are not statements of historical
fact, and are based on current expectations, estimates and
projections about our industry as well as certain assumptions made
by management, many of which, by their nature, are inherently
uncertain and beyond our control. These forward-looking statements
are subject to a number of known and unknown risks, uncertainties
and assumptions, which you should consider and read carefully,
including but not limited to:
- our ability to maintain and strengthen our brands to generate
and maintain ongoing demand for our products;
- our ability to commercialize a continuing stream of new
products and line extensions that create demand;
- our ability to effectively manage our future growth;
- general economic conditions and the level of discretionary
consumer spending;
- our ability to expand into additional consumer markets;
- our ability to maintain product quality and product performance
at an acceptable cost;
- our ability to compete with existing and new competitors in our
markets;
- problems with, or loss of, our supply chain or suppliers, or an
inability to obtain raw materials;
- the risks associated with doing business globally;
- inflation, changes in the cost or availability of raw
materials, energy, transportation and other necessary supplies and
services;
- our ability to hire, integrate and retain highly skilled
personnel;
- our ability to maintain, protect and enhance our intellectual
property;
- our ability to securely maintain consumer and other third-party
data;
- our ability to comply with ongoing regulatory
requirements;
- the increased expenses associated with being a public
company;
- our status as a “controlled company” within the meaning of the
rules of NYSE;
- our ability to achieve some or all of the anticipated benefits
of the separation; and
- the payment of any declared dividends.
This list of factors should not be construed as exhaustive and
should be read in conjunction with those described in our Annual
Report on Form 20-F filed with the SEC under “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and other filings we make with the SEC. We
operate in a very competitive and rapidly changing environment. New
risks emerge from time to time. It is not possible for us to
predict all risks, nor can we assess the impact of all factors on
our business or the extent to which any factor or combination of
factors may cause actual results to differ materially from those
contained in any forward-looking statements we may make. In light
of these risks, uncertainties and assumptions, the future events
and trends discussed in this press release, and our future levels
of activity and performance, may not occur and actual results could
differ materially and adversely from those described or implied in
the forward-looking statements. As a result, you should not regard
any of these forward-looking statements as a representation or
warranty by us or any other person or place undue reliance on any
such forward-looking statements. Any forward-looking statement
speaks only as of the date on which it is made, and we do not
undertake any obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as required by law. In
addition, statements that contain “we believe” and similar
statements reflect our beliefs and opinions on the relevant
subject. These statements are based on information available to us
as of the date of this press release. While we believe that this
information provides a reasonable basis for these statements, this
information may be limited or incomplete. These statements are
inherently uncertain, and investors are cautioned not to unduly
rely on these statements. We qualify all of our forward-looking
statements by the cautionary statements contained in this press
release.
SHARKNINJA, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
and per share data)
(unaudited)
As of
June 30, 2024
December 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
138,138
$
154,061
Accounts receivable, net
1,080,091
985,172
Inventories
840,545
699,740
Prepaid expenses and other current
assets
103,638
58,311
Total current assets
2,162,412
1,897,284
Property and equipment, net
177,449
166,252
Operating lease right-of-use assets
143,090
63,333
Intangible assets, net
470,457
477,816
Goodwill
834,001
834,203
Deferred tax assets
6,762
12
Other assets, noncurrent
57,269
48,170
Total assets
$
3,851,440
$
3,487,070
Liabilities and Shareholders’
Equity
Current liabilities:
Accounts payable
$
504,751
$
459,651
Accrued expenses and other current
liabilities
602,361
620,333
Tax payable
11,143
20,991
Debt, current
149,282
24,157
Total current liabilities
1,267,537
1,125,132
Debt, noncurrent
755,811
775,483
Operating lease liabilities,
noncurrent
145,517
63,043
Deferred tax liabilities
5,780
16,500
Other liabilities, noncurrent
30,752
28,019
Total liabilities
2,205,397
2,008,177
Shareholders’ equity:
Ordinary shares, $0.0001 par value per
share, 1,000,000,000 shares authorized; 139,936,246 and 139,083,369
shares issued and outstanding as of June 30, 2024 and December 31,
2023, respectively
14
14
Additional paid-in capital
1,002,931
1,009,590
Retained earnings
647,979
470,319
Accumulated other comprehensive loss
(4,881
)
(1,030
)
Total shareholders’ equity
1,646,043
1,478,893
Total liabilities and shareholders’
equity
$
3,851,440
$
3,487,070
SHARKNINJA, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(in thousands, except share
and per share data)
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net sales(1)
$
1,248,658
$
950,312
$
2,314,886
$
1,805,594
Cost of sales
647,759
553,391
1,187,370
1,008,130
Gross profit
600,899
396,921
1,127,516
797,464
Operating expenses:
Research and development
90,053
61,014
159,649
119,739
Sales and marketing
303,185
208,316
517,753
360,436
General and administrative
103,825
71,959
191,336
139,027
Total operating expenses
497,063
341,289
868,738
619,202
Operating income
103,836
55,632
258,778
178,262
Interest expense, net
(14,844
)
(7,031
)
(29,566
)
(15,520
)
Other income (expense), net
689
(32,670
)
3,937
(35,450
)
Income before income taxes
89,681
15,931
233,149
127,292
Provision for income taxes
21,633
3,995
55,489
28,260
Net income
$
68,048
$
11,936
$
177,660
$
99,032
Net income per share, basic
$
0.49
$
0.09
$
1.27
$
0.71
Net income per share, diluted
$
0.48
$
0.09
$
1.26
$
0.71
Weighted-average number of shares used in
computing net income per share, basic
139,888,497
138,982,872
139,668,527
138,982,872
Weighted-average number of shares used in
computing net income per share, diluted
140,924,298
138,982,872
140,813,662
138,982,872
(1)
Net sales in our product categories were
as follows:
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousands)
2024
2023
2024
2023
Cleaning Appliances
$
466,115
$
413,797
$
888,035
$
828,667
Cooking and Beverage Appliances
379,277
343,050
708,918
599,732
Food Preparation Appliances
264,911
143,376
469,948
261,224
Other
138,355
50,089
247,985
115,971
Total net sales
$
1,248,658
$
950,312
$
2,314,886
$
1,805,594
SHARKNINJA, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended June
30,
2024
2023
Cash flows from operating
activities:
Net income
$
177,660
$
99,032
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization
57,042
51,795
Share-based compensation
33,556
3,165
Provision for credit losses
2,525
1,218
Non-cash lease expense
9,210
6,383
Deferred income taxes, net
(17,469
)
(5,864
)
Other
989
392
Changes in operating assets and
liabilities:
Accounts receivable
(100,560
)
(143,549
)
Inventories
(142,310
)
16,008
Prepaid expenses and other assets
(53,040
)
78,613
Accounts payable
47,026
33,605
Tax payable
(9,848
)
(1,326
)
Operating lease liabilities
(3,236
)
(10,165
)
Accrued expenses and other liabilities
(21,476
)
71,078
Net cash (used in) provided by operating
activities
(19,931
)
200,385
Cash flows from investing
activities:
Purchase of property and equipment
(53,801
)
(46,273
)
Purchase of intangible asset
(4,761
)
(1,120
)
Capitalized internal-use software
development
(654
)
(123
)
Other investing activities, net
—
(300
)
Net cash used in investing activities
(59,216
)
(47,816
)
Cash flows from financing
activities:
Repayment of debt
(10,125
)
(37,501
)
Proceeds from borrowings under revolving
credit facility
115,000
—
Distribution paid to Former Parent
—
(60,283
)
Net ordinary shares withheld for taxes
upon issuance of restricted stock units
(40,215
)
—
Net cash provided by (used in) financing
activities
64,660
(97,784
)
Effect of exchange rates changes on
cash
(1,436
)
6,031
Net decrease in cash, cash equivalents,
and restricted cash
(15,923
)
60,816
Cash, cash equivalents, and restricted
cash at beginning of period
154,061
218,770
Cash, cash equivalents, and restricted
cash at end of period
$
138,138
$
279,586
Non-GAAP Financial Measures
In addition to the measures presented in our consolidated
financial statements, we regularly review other financial measures,
defined as non-GAAP financial measures by the SEC, to evaluate our
business, measure our performance, identify trends, prepare
financial forecasts, and make strategic decisions.
The key non-GAAP financial measures we consider are Adjusted Net
Sales, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted
Operating Income, Adjusted Net Income, Adjusted Net Income Per
Share, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, and
Adjusted Net Sales growth on a constant currency basis. These
non-GAAP financial measures are used by both management and our
Board, together with comparable GAAP information, in evaluating our
current performance and planning our future business activities.
These non-GAAP financial measures provide supplemental information
regarding our operating performance on a non-GAAP basis that
excludes certain gains, losses and charges of a non-cash nature or
which occur relatively infrequently and/or which management
considers to be unrelated to our core operations and excludes the
financial results from our former Japanese subsidiary, SharkNinja
Co., Ltd. (“SNJP”), and our Asia Pacific Region and Greater China
("APAC") distribution channels, both of which were transferred to
JS Global Lifestyle Company Limited (“JS Global”) concurrently with
the separation (the “Divestitures”), as well as the cost of sales
from (i) inventory markups that were eliminated as a result of the
transition of certain product procurement functions from a
subsidiary of JS Global to SharkNinja concurrently with the
separation and (ii) costs related to the transitional Sourcing
Services Agreement with JS Global that was entered into in
connection with the separation (collectively, the “Product
Procurement Adjustment”). Management believes that tracking and
presenting these non-GAAP financial measures provides management
and the investment community with valuable insight into our ongoing
core operations, our ability to generate cash and the underlying
business trends that are affecting our performance. We believe that
these non-GAAP measures, when used in conjunction with our GAAP
financial information, also allow investors to better evaluate our
financial performance in comparison to other periods and to other
companies in our industry and to better understand and interpret
the results of the ongoing business following the separation and
distribution. These non-GAAP financial measures should not be
viewed as a substitute for our financial results calculated in
accordance with GAAP and you are cautioned that other companies may
define these non-GAAP financial measures differently.
SharkNinja does not provide a reconciliation of forward-looking
Adjusted Net Income and Adjusted EBITDA to GAAP net income or of
Adjusted Net Income Per Share to net income per share, diluted
because such reconciliations are not available without unreasonable
efforts. This is due to the inherent difficulty in forecasting with
reasonable certainty certain amounts that are necessary for such
reconciliations, including, in particular, the realized and
unrealized foreign currency gains or losses reported within other
expense. For the same reasons, we are unable to forecast with
reasonable certainty all deductions and additions needed in order
to provide forward-looking GAAP net income at this time. The amount
of these deductions and additions may be material, and, therefore,
could result in forward-looking GAAP net income being materially
different or less than forward-looking Adjusted Net Income,
Adjusted EBITDA, and Adjusted Net Income Per Share. See
“Forward-looking statements” above.
We define Adjusted Net Sales as net sales as adjusted to exclude
certain items that we do not consider indicative of our ongoing
operating performance following the separation, including net sales
from our Divestitures. We believe that Adjusted Net Sales is an
appropriate measure of our performance because it eliminates the
impact of our Divestitures that do not relate to the ongoing
performance of our business.
The following table reconciles Adjusted Net Sales to the most
comparable GAAP measure, net sales, for the periods presented:
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousands, except %)
2024
2023
2024
2023
Net sales
$
1,248,658
$
950,312
$
2,314,886
$
1,805,594
Divested subsidiary net sales
adjustment(1)
—
(44,700
)
—
(64,349
)
Adjusted Net Sales(2)
$
1,248,658
$
905,612
$
2,314,886
$
1,741,245
(1)
Adjusted for net sales from SNJP and the
APAC distribution channels for the three and six months ended June
30, 2024 and 2023, as if such Divestitures occurred on January 1,
2023.
(2)
The following tables reconcile Adjusted
Net Sales to net sales per product category, for the periods
presented:
Three Months Ended June 30,
2024
Three Months Ended June 30,
2023
($ in thousands, except %)
Net sales
Divested subsidiary
adjustment
Adjusted Net Sales
Net sales
Divested subsidiary
adjustment
Adjusted Net Sales
Cleaning Appliances
$
466,115
$
—
$
466,115
$
413,797
$
(26,177
)
$
387,620
Cooking and Beverage Appliances
379,277
—
379,277
343,050
(3,486
)
339,564
Food Preparation Appliances
264,911
—
264,911
143,376
(4,369
)
139,007
Other
138,355
—
138,355
50,089
(10,668
)
39,421
Total net sales
$
1,248,658
$
—
$
1,248,658
$
950,312
$
(44,700
)
$
905,612
Six Months Ended June 30,
2024
Six Months Ended June 30,
2023
($ in thousands, except %)
Net sales
Divested subsidiary
adjustment
Adjusted Net Sales
Net sales
Divested subsidiary
adjustment
Adjusted Net Sales
Cleaning Appliances
$
888,035
$
—
$
888,035
$
828,667
$
(42,554
)
$
786,113
Cooking and Beverage Appliances
708,918
—
708,918
599,732
(4,971
)
594,761
Food Preparation Appliances
469,948
—
469,948
261,224
(6,156
)
255,068
Other
247,985
—
247,985
115,971
(10,668
)
105,303
Total net sales
$
2,314,886
$
—
$
2,314,886
$
1,805,594
$
(64,349
)
$
1,741,245
We define Adjusted Gross Profit as gross profit as adjusted to
exclude certain items that we do not consider indicative of our
ongoing operating performance following the separation, including
the net sales and cost of sales from our Divestitures and the cost
of sales from the Product Procurement Adjustment. We define
Adjusted Gross Margin as Adjusted Gross Profit divided by Adjusted
Net Sales. We believe that Adjusted Gross Profit and Adjusted Gross
Margin are appropriate measures of our operating performance
because each eliminates the impact our Divestitures and certain
other adjustments that do not relate to the ongoing performance of
our business.
The following table reconciles Adjusted Gross Profit and
Adjusted Gross Margin to the most comparable GAAP measure, gross
profit and gross margin, respectively, for the periods
presented:
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousands, except %)
2024
2023
2024
2023
Net sales
$
1,248,658
$
950,312
$
2,314,886
$
1,805,594
Cost of sales
(647,759
)
(553,391
)
(1,187,370
)
(1,008,130
)
Gross profit
600,899
396,921
1,127,516
797,464
Gross margin
48.1
%
41.8
%
48.7
%
44.2
%
Divested subsidiary net sales
adjustment(1)
—
(44,700
)
—
(64,349
)
Divested subsidiary cost of sales
adjustment(2)
—
24,460
—
37,487
Product Procurement Adjustment(3)
13,207
16,923
28,305
29,794
Adjusted Gross Profit
$
614,106
$
393,604
$
1,155,821
$
800,396
Adjusted Net Sales
$
1,248,658
$
905,612
$
2,314,886
$
1,741,245
Adjusted Gross Margin
49.2
%
43.5
%
49.9
%
46.0
%
(1)
Adjusted for net sales from SNJP and the APAC distribution
channels for the three and six months ended June 30, 2024 and 2023,
as if such Divestitures occurred on January 1, 2023.
(2)
Adjusted for cost of sales from SNJP and
the APAC distribution channels for the three and six months ended
June 30, 2024 and 2023, as if such Divestitures occurred on January
1, 2023.
(3)
Represents cost of sales incurred related to the Product
Procurement Adjustment. As a result of the separation, we purchase
100% of our inventory from one of our subsidiaries, SharkNinja
(Hong Kong) Company Limited (“SNHK”), and no longer purchase
inventory from a purchasing office wholly owned by JS Global. Thus,
the markup on all inventory purchased subsequent to the separation
is completely eliminated in consolidation. As a result of the
separation, we pay JS Global a sourcing service fee to provide
value-added sourcing services on a transitional basis under a
Sourcing Services Agreement.
We define Adjusted Operating Income as operating income
excluding (i) share-based compensation, (ii) certain litigation
costs, (iii) amortization of certain acquired intangible assets,
(iv) certain transaction-related costs and (v) certain items that
we do not consider indicative of our ongoing operating performance
following the separation, including operating income from our
Divestitures and cost of sales from our Product Procurement
Adjustment.
The following table reconciles Adjusted Operating Income to the
most comparable GAAP measure, operating income, for the periods
presented:
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousands)
2024
2023
2024
2023
Operating income
$
103,836
$
55,632
$
258,778
$
178,262
Share-based compensation(1)
14,130
2,317
33,556
3,165
Litigation costs(2)
7,165
461
13,656
635
Amortization of acquired intangible
assets(3)
4,897
4,897
9,794
9,794
Transaction-related costs(4)
—
16,625
1,342
35,093
Product Procurement Adjustment(5)
13,207
16,923
28,305
29,794
Divested subsidiary operating income
adjustment(6)
—
(8,190
)
—
(8,743
)
Adjusted Operating Income
$
143,235
$
88,665
$
345,431
$
248,000
(1)
Represents non-cash expense related to restricted stock unit
awards issued from the SharkNinja and JS Global equity incentive
plans.
(2)
Represents litigation costs incurred for
certain patent infringement claims and false advertising claims
against us.
(3)
Represents amortization of acquired
intangible assets that we do not consider normal recurring
operating expenses, as the intangible assets relate to JS Global’s
acquisition of our business. We exclude amortization charges for
these acquisition-related intangible assets for purposes of
calculating Adjusted Operating Income, although revenue is
generated, in part, by these intangible assets, to eliminate the
impact of these non-cash charges that are significantly impacted by
the timing and valuation of JS Global’s acquisition of our
business, as well as the inherent subjective nature of purchase
price allocations.
(4)
Represents certain costs incurred related
to the separation and distribution from JS Global and the secondary
offering transactions.
(5)
Represents cost of sales incurred related
to the Product Procurement Adjustment. As a result of the
separation, we purchase 100% of our inventory from one of our
subsidiaries, SNHK, and no longer purchase inventory from a
purchasing office wholly owned by JS Global. Thus, the markup on
all inventory purchased subsequent to the separation is completely
eliminated in consolidation. As a result of the separation, we pay
JS Global a sourcing service fee to provide value-added sourcing
services on a transitional basis under a Sourcing Services
Agreement.
(6)
Adjusted for operating income from SNJP
and the APAC distribution channels for the three and six months
ended June 30, 2024 and 2023, as if such Divestitures occurred on
January 1, 2023.
We define Adjusted Net Income as net income excluding (i)
share-based compensation, (ii) certain litigation costs, (iii)
foreign currency gains and losses, net, (iv) amortization of
certain acquired intangible assets, (v) certain transaction-related
costs, (vi) certain items that we do not consider indicative of our
ongoing operating performance following the separation, including
net income from our Divestitures and cost of sales from our Product
Procurement Adjustment and (vii) the tax impact of the adjusted
items.
Adjusted Net Income Per Share is defined as Adjusted Net Income
divided by the diluted weighted average number of ordinary
shares.
The following table reconciles Adjusted Net Income and Adjusted
Net Income Per Share to the most comparable GAAP measures, net
income and net income per share, diluted, respectively, for the
periods presented:
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousands, except share and per
share amounts)
2024
2023
2024
2023
Net income
$
68,048
$
11,936
$
177,660
$
99,032
Share-based compensation(1)
14,130
2,317
33,556
3,165
Litigation costs(2)
7,165
461
13,656
635
Foreign currency (gains) losses,
net(3)
(580
)
35,468
1,587
39,617
Amortization of acquired intangible
assets(4)
4,897
4,897
9,794
9,794
Transaction-related costs(5)
—
16,625
1,342
35,093
Product Procurement Adjustment(6)
13,207
16,923
28,305
29,794
Tax impact of adjusting items(7)
(7,239
)
(16,872
)
(17,715
)
(25,982
)
Divested subsidiary net income
adjustment(8)
—
(6,585
)
—
(6,980
)
Adjusted Net Income
$
99,628
$
65,170
$
248,185
$
184,168
Net income per share, diluted
$
0.48
$
0.09
$
1.26
$
0.71
Adjusted Net Income Per Share
$
0.71
$
0.47
$
1.76
$
1.33
Diluted weighted-average number of shares
used in computing net income per share and Adjusted Net Income Per
Share(9)
140,924,298
138,982,872
140,813,662
138,982,872
(1)
Represents non-cash expense related to restricted stock unit
awards issued from the SharkNinja and JS Global equity incentive
plans.
(2)
Represents litigation costs incurred for
certain patent infringement claims and false advertising claims
against us.
(3)
Represents foreign currency transaction
gains and losses recognized from the remeasurement of transactions
that were not denominated in the local functional currency,
including gains and losses related to foreign currency derivatives
not designated as hedging instruments.
(4)
Represents amortization of acquired
intangible assets that we do not consider normal recurring
operating expenses, as the intangible assets relate to JS Global’s
acquisition of our business. We exclude amortization charges for
these acquisition-related intangible assets for purposes of
calculated Adjusted Net Income, although revenue is generated, in
part, by these intangible assets, to eliminate the impact of these
non-cash charges that are significantly impacted by the timing and
valuation of JS Global’s acquisition of our business, as well as
the inherent subjective nature of purchase price allocations.
(5)
Represents certain costs incurred related
to the separation and distribution from JS Global and the secondary
offering transactions.
(6)
Represents cost of sales incurred related
to the Product Procurement Adjustment. As a result of the
separation, we purchase 100% of our inventory from one of our
subsidiaries, SNHK, and no longer purchase inventory from a
purchasing office wholly owned by JS Global. Thus, the markup on
all inventory purchased subsequent to the separation is completely
eliminated in consolidation. As a result of the separation, we pay
JS Global a sourcing service fee to provide value-added sourcing
services on a transitional basis under a Sourcing Services
Agreement.
(7)
Represents the income tax effects of the
adjustments included in the reconciliation of net income to
Adjusted Net Income determined using the tax rate of 22.0%, which
approximates our effective tax rate, excluding (i) divested
subsidiary net income adjustment described in footnote (8), and
(ii) certain share-based compensation costs and separation and
distribution-related costs that are not tax deductible.
(8)
Adjusted for net income (loss) from SNJP
and the APAC distribution channels for the three and six months
ended June 30, 2024 and 2023, as if such Divestitures occurred on
January 1, 2023.
(9)
In calculating net income per share and
Adjusted Net Income Per Share, we used the number of shares
transferred in the separation and distribution for the denominator
for all periods prior to completion of the separation and
distribution on July 31, 2023.
We define EBITDA as net income excluding: (i) interest expense,
net, (ii) provision for income taxes and (iii) depreciation and
amortization. We define Adjusted EBITDA as EBITDA excluding (i)
share-based compensation cost, (ii) certain litigation costs, (iii)
foreign currency gains and losses, net, (iv) certain
transaction-related costs and (v) certain items that we do not
consider indicative of our ongoing operating performance following
the separation, including Adjusted EBITDA from our Divestitures and
cost of sales from our Product Procurement Adjustment. We define
Adjusted EBITDA Margin as Adjusted EBITDA divided by Adjusted Net
Sales. We believe EBITDA, Adjusted EBITDA and Adjusted EBITDA
Margin are appropriate measures because they facilitate a
comparison of our operating performance on a consistent basis from
period to period that, when viewed in combination with our results
according to GAAP, we believe provide a more complete understanding
of the factors and trends affecting our business than GAAP measures
alone.
The following table reconciles EBITDA, Adjusted EBITDA and
Adjusted EBITDA Margin to the most comparable GAAP measure, net
income, for the periods presented:
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousands, except %)
2024
2023
2024
2023
Net income
$
68,048
$
11,936
$
177,660
$
99,032
Interest expense, net
14,844
7,031
29,566
15,520
Provision for income taxes
21,633
3,995
55,489
28,260
Depreciation and amortization
29,225
29,038
57,042
51,792
EBITDA
133,750
52,000
319,757
194,604
Share-based compensation(1)
14,130
2,317
33,556
3,165
Litigation costs(2)
7,165
461
13,656
635
Foreign currency losses (gains),
net(3)
(580
)
35,468
1,587
39,617
Transaction-related costs(4)
—
16,625
1,342
35,093
Product Procurement Adjustment(5)
13,207
16,923
28,305
29,794
Divested subsidiary Adjusted EBITDA
adjustment(6)
—
(10,187
)
—
(11,285
)
Adjusted EBITDA
$
167,672
$
113,607
$
398,203
$
291,623
Adjusted Net Sales
$
1,248,658
$
905,612
$
2,314,886
$
1,741,245
Adjusted EBITDA Margin
13.4
%
12.5
%
17.2
%
16.7
%
(1)
Represents non-cash expense related to restricted stock unit
awards issued from the SharkNinja and JS Global equity incentive
plans.
(2)
Represents litigation costs incurred for
certain patent infringement claims and false advertising claims
against us.
(3)
Represents foreign currency transaction
gains and losses recognized from the remeasurement of transactions
that were not denominated in the local functional currency,
including gains and losses related to foreign currency derivatives
not designated as hedging instruments.
(4)
Represents certain costs incurred related
to the separation and distribution from JS Global and the secondary
offering transactions.
(5)
Represents cost of sales incurred related
to the Product Procurement Adjustment. As a result of the
separation, we purchase 100% of our inventory from one of our
subsidiaries, SNHK, and no longer purchase inventory from a
purchasing office wholly owned by JS Global. Thus, the markup on
all inventory purchased subsequent to the separation is completely
eliminated in consolidation. As a result of the separation, we pay
JS Global a sourcing service fee to provide value-added sourcing
services on a transitional basis under a Sourcing Services
Agreement.
(6)
Adjusted for Adjusted EBITDA from SNJP and
the APAC distribution channels for the three and six months ended
June 30, 2024 and 2023, as if such Divestitures occurred on January
1, 2023. The divested subsidiary Adjusted EBITDA adjustment
represents net (loss) income from our Divestitures excluding
interest expense, income tax expense, depreciation and amortization
expense and foreign currency gains and losses recorded at the
subsidiary level.
We refer to growth rates in Adjusted Net Sales on a constant
currency basis so that results can be viewed without the impact of
fluctuations in foreign currency exchange rates. These amounts are
calculated by translating current year results at prior year
average exchange rates. We believe elimination of the foreign
currency translation impact provides useful information in
understanding and evaluating trends in our operating results.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240808296908/en/
Investor Relations: Arvind Bhatia, CFA SVP, Investor Relations
IR@sharkninja.com
Anna Kate Heller ICR SharkNinja@icrinc.com
Media Relations: Sarah McKinney VP, Corporate Communications
PR@sharkninja.com
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