Net Sales Increased 22.1% and Adjusted Net
Sales Increased 19.7%
Net Income Declined 27.6% and Adjusted Net
Income Grew 40.4%
Provides Fiscal Year 2023 Outlook
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, 2023.
Highlights for the Second Quarter 2023 as compared to the
Second Quarter 2022
- Net sales increased 22.1% to $950.3 million and Adjusted net
Sales increased 19.7%, both driven by strong sales of recently
launched products in the outdoor cooking and beauty
categories.
- Gross margin and Adjusted Gross Margin increased 430 and 370
basis points, respectively, as we benefited from cost tailwinds
including inbound freight costs.
- Net income decreased 27.6% to $11.9 million. Adjusted Net
Income increased 40.4% to $65.2 million.
- Adjusted EBITDA increased 40.0% to $113.6 million, or 12.5% of
Adjusted Net Sales.
Mark Barrocas, Chief Executive Officer, commented, “We believe
our strong performance in the second quarter as well as the first
half of the year, highlighted by double-digit sales and EBITDA
growth, demonstrates our ability to execute on our three-pillar
growth strategy. We continue to increase market share in existing
categories, pioneer new categories through innovation, and
globalize our brand. These results build upon a proven track record
of delivering profitable, organic growth through high performance
products that address everyday consumer challenges.”
“Our recent debut as a public company in the US was an important
milestone for us. However, we believe we are only just getting
started. We are committed to creating long-term shareholder value
through continued diversification across categories, channels, and
geographies as we strive to capture additional share of our large
global addressable market.”
Three Months Ended June 30, 2023
Net sales increased 22.1% to $950.3 million, compared to $778.2
million during the same period last year. Adjusted Net Sales
increased 19.7% to $905.6 million, compared to $756.4 million
during the same period last year, or 19.8% on a constant currency
basis. The increase in net sales and Adjusted Net Sales resulted
primarily from strong sales of recently launched products in the
outdoor cooking and beauty categories.
- Cleaning Appliances net sales increased by $2.6 million, or
0.6%, to $413.8 million, compared to $411.2 million in the prior
year quarter, driven by growth in the multi-floorcare sub-category
and by new product innovation. This increase was partially offset
by softness in the North America market, specifically in corded
vacuums as consumers shifted towards cordless.
- Cooking and Beverage Appliances net sales increased by $139.0
million, or 68.1%, to $343.1 million, compared to $204.0 million in
the prior year quarter. This increase was driven by growth in
Europe, specifically in the United Kingdom, where we further
strengthened our leading market position. Our global growth was
also supported by the full quarter of sales of our outdoor grill
that launched in the second half of 2022, which continues to
perform well across the US and European markets.
- Food Preparation Appliances net sales increased by $5.7
million, or 4.1%, to $143.4 million, compared to $137.7 million in
the prior year quarter driven by strong sales from our ice cream
makers.
- Other net sales increased by $24.8 million, or 98.3%, to $50.0
million, compared to $25.3 million in the prior year quarter. This
increase was driven by continued strength of the Shark FlexStyle,
our new product launch in the beauty category at the end of
2022.
Gross profit increased 36.2% to $396.9 million, or 41.8% of net
sales, compared to $291.5 million, or 37.5% of net sales, in the
second quarter of 2022. Adjusted Gross Profit increased 30.7% to
$393.6 million, or 43.5% of Adjusted Net Sales, compared to $301.1
million, or 39.8% of Adjusted Net Sales in the second quarter of
2022. The increase in gross margin and Adjusted Gross Margin of 430
and 370 basis points, respectively, was primarily driven by cost
tailwinds, including lower average inbound freight on major
shipping lanes. We also drove strong sales through our higher
margin direct-to-consumer (“DTC”) channel, particularly in the
beauty category.
Research and development expenses increased 13.0% to $61.0
million, or 6.4% of net sales, compared to $54.0 million, or 6.9%
of net sales, in the prior year quarter. Increased headcount to
support new product categories and new market expansion was the
primary driver of the year-over-year increase in research and
development expense.
Sales and marketing expenses increased 42.1% to $208.3 million,
or 21.9% of net sales, compared to $146.6 million, or 18.8% of net
sales, in the second quarter of 2022. The increase was primarily
attributable to $27.0 million in higher advertising-related
expenses to support our launch into new markets and new
sub-categories, a $14.9 million increase in fulfillment expenses to
support our sales growth, and a $9.0 million increase in
personnel-related expenses driven by additional increased headcount
to support the overall growth in the business and new market
expansion.
General and administrative expenses increased 31.5% to $72.0
million, or 7.6% of net sales, compared to $54.7 million, or 7.0%
of net sales in the prior year quarter. Included in general and
administrative expenses in the second quarter of 2023 is $16.6
million of costs related to the separation and distribution from JS
Global.
Operating income increased 54.1% to $55.6 million, or 5.9% of
net sales, compared to $36.1 million, or 4.8% of net sales, during
the prior year quarter. Adjusted Operating Income increased 39.3%
to $88.7 million, or 9.8% of Adjusted Net Sales, compared to $63.6
million, or 8.4% of Adjusted Net Sales, in the second quarter of
2022.
Net income decreased 27.6% to $11.9 million, or 1.3% of net
sales, compared to $16.5 million, or 2.1% of net sales, in the
prior year quarter. Net income per diluted share decreased 27.6% to
$0.09, compared to $0.12 in the prior year quarter.
Adjusted Net Income increased 40.4% to $65.2 million, or 7.2% of
Adjusted Net Sales, compared to $46.4 million, or 6.1% of Adjusted
Net Sales, in the prior year quarter. Adjusted Net Income per
diluted share increased 40.4% to $0.47, compared to $0.33 in the
prior year quarter.
Adjusted EBITDA increased 40.0% to $113.6 million, or 12.5% of
Adjusted Net Sales, compared to $81.2 million, or 10.7% of Adjusted
Net Sales in the prior year quarter.
Six Months Ended June 30, 2023
Net sales increased 13.7% to $1,805.6 million, compared to
$1,587.8 million during the same period last year. Adjusted Net
Sales increased 12.6% to $1,741.2 million, compared to $1,546.0
million during the same period last year, or 14.2% on a constant
currency-basis. The increase in net sales and Adjusted Net Sales
resulted primarily from strong sales of recently launched products
in the outdoor cooking and beauty categories.
- Cleaning Appliances net sales decreased by $19.5 million, or
2.3%, to $828.7 million, compared to $848.2 million during the same
period last year driven by softness in the North America market,
specifically in corded vacuums as consumers shifted towards
cordless. This sales decline was partially offset by growth in the
multi-floorcare sub-category driven by new product innovation.
- Cooking and Beverage Appliances net sales increased by $163.6
million, or 37.5%, to $599.7 million, compared to $436.1 million
during the same period last year. This increase was driven by
growth in Europe, specifically in the United Kingdom where we
strengthened our leading market position, partially offset by
modest declines in North America. Our global growth was further
supported by the full six months of sales of our outdoor grill that
launched in the second half of 2022, which continues to perform
well across the US and European markets.
- Food Preparation Appliances net sales decreased by $4.9
million, or 1.9%, to $261.2 million, compared to $266.2 million
during the same period last year driven by strong sales from our
ice cream makers.
- Other net sales increased by $78.6 million, or 210.6%, to
$116.0 million, compared to $37.3 million during the same period
last year. This increase was primarily a result of strong sales of
our new product launch in the beauty category, the Shark FlexStyle,
at the end of 2022.
Gross profit increased 23.9% to $797.5 million, or 44.2% of net
sales, compared to $643.4 million, or 40.5% of net sales, in the
same period last year. Adjusted Gross Profit increased 21.2% to
$800.4 million, or 46.0% of Adjusted Net Sales, compared to $660.4
million, or 42.7% of Adjusted Net Sales. The increase in gross
margin and Adjusted Gross Margin of 370 and 330 basis points,
respectively, was primarily driven by cost tailwinds, including
lower average inbound freight on major shipping lanes. We also
drove strong sales through our higher margin DTC channel,
specifically in the beauty category.
Research and development expenses increased 13.0% to $119.7
million, or 6.6% of net sales, compared to $106.0 million, or 6.7%
of net sales during the same period last year. This increase was
primarily attributable to an increase of $8.3 million in
personnel-related expenses driven by increased headcount to support
new product categories and new market expansion and an increase of
$2.7 million in depreciation and amortization expenses.
Sales and marketing expenses increased 32.4% to $360.4 million,
or 20.0% of net sales, compared to $272.2 million, or 17.1% of net
sales during the same period last year. This increase was primarily
attributable to an increase of $37.1 million in advertising-related
expenses to support our launch into new markets and new
sub-categories, an increase of $21.3 million in fulfillment
expenses to support increased sales, an increase of $13.1 million
in personnel-related expenses driven by increased headcount to
support the overall growth in the business and new market
expansion, an increase of $4.3 million in professional services
related to third-party consulting fees and an increase of $3.2
million in depreciation and amortization expenses.
General and administrative expenses increased 30.3% to $139.0
million, or 7.7% of net sales, compared to $106.7 million, or 6.7%
of net sales during the same period last year. Included in general
and administrative expenses in 2023 is $35.1 million of costs
related to the separation and distribution from JS Global.
Operating income increased 12.5% to $178.3 million, or 9.9% of
net sales, compared to $158.5 million, or 10.0% of net sales,
during the same period last year. Adjusted Operating Income
increased 20.1% to $248.0 million, or 14.2% of Adjusted Net Sales,
compared to $206.5 million, or 13.4% of Adjusted Net Sales, during
the same period last year.
Net income decreased 6.0% to $99.0 million, or 5.5% of net
sales, compared to $105.4 million, or 6.6% of net sales, during the
same period last year. Net income per diluted share decreased 6.0%
to $0.71, compared to $0.76 in the prior year period.
Adjusted Net Income increased 18.3% to $184.2 million, or 10.6%
of Adjusted Net Sales, compared to $155.7 million, or 10.1% of
Adjusted Net Sales in the prior year period. Adjusted Net Income
per diluted share increased 18.3% to $1.33, compared to $1.12 in
the prior year period.
Adjusted EBITDA increased 21.3% to $291.6 million, or 16.7% of
Adjusted Net Sales, compared to $240.4 million, or 15.6% of
Adjusted Net Sales in the prior year period.
Balance Sheet and Cash Flow Highlights
Cash and cash equivalents increased to $256.4 million, compared
to $192.9 million as of December 31, 2022.
Inventories decreased 2.0% to $537.7 million, compared to $548.6
million as of December 31, 2022.
Total debt, excluding unamortized deferred financing costs, was
$400.0 million, compared to $437.5 million as of December 31, 2022.
In July 2023, we entered into a new credit facility to replace our
existing term loan and revolving credit agreement. The new credit
facility provides for a $810.0 million term loan and a $500.0
million revolving credit facility.
Fiscal 2023 Outlook
For fiscal year 2023, SharkNinja expects:
- Net sales to increase 9% to 11% and Adjusted Net Sales to
increase between 10% and 12% compared to the prior year.
- Adjusted Net Income per diluted share between $2.85 and $3.02,
reflecting a 20% to 27% increase compared to the prior year.
- Adjusted EBITDA between $650 million and $680 million,
reflecting a 25% to 31% increase compared to the prior year.
- A GAAP effective tax rate of approximately 35% to 36%,
inclusive of approximately 10 to 11 percentage points of impact
related to withholding taxes and non-deductible costs associated
with the separation and distribution from JS Global.
- Diluted weighted average shares outstanding of approximately
139.3 million.
- Capital expenditures of $120 million to $140 million primarily
to support investments in new product launches and technology.
Conference Call Details
A conference call to discuss the second quarter 2023 financial
results is scheduled for today, August 24, 2023, at 8:00 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 1-877-407-4018 or 1-201-689-8471. The webcast will be
archived and available for replay.
About SharkNinja, Inc.
SharkNinja is a diversified, global product design and
technology company that creates 5-star rated lifestyle solutions
through innovative products for consumers around the world. The
Company seeks to leverage its global, agile and cross-functional
engineering know-how, product development and manufacturing
expertise along with solutions-driven marketing to increase the
efficiency, convenience and enjoyment of consumers’ daily tasks and
improve everyday lives. Powered by two trusted, global brands,
Shark and Ninja, the Company has a proven track record of bringing
disruptive products to market, and developing one consumer solution
after another has allowed SharkNinja to enter multiple product
categories, driving significant growth and market share gains. The
Company’s products are sold at key retailers, online and offline,
and through distributors around the world. For more information,
please visit ir.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 2023 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; and
- our ability to achieve some or all of the anticipated benefits
of the separation.
This list of factors should not be construed as exhaustive and
should be read in conjunction with the other cautionary statements
that are included in this press release. 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. Our statements should not be read to
indicate that we have conducted an exhaustive inquiry into, or
review of, all relevant information. 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 GLOBAL SPV,
LTD.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
and per share data)
(unaudited)
As of
June 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
256,379
$
192,890
Restricted cash
23,207
25,880
Accounts receivable, net
922,290
766,503
Inventories
537,676
548,588
Prepaid expenses and other current
assets
96,790
181,831
Total current assets
1,836,342
1,715,692
Property and equipment, net
143,178
137,341
Operating lease right-of-use assets
68,883
67,321
Intangible assets, net
485,196
492,709
Goodwill
839,753
840,148
Deferred tax assets, noncurrent
4,047
6,291
Other assets, noncurrent
44,038
35,389
Total assets
$
3,421,437
$
3,294,891
Liabilities and Shareholders’
Equity
Current liabilities:
Accounts payable
$
371,391
$
328,122
Accrued expenses and other current
liabilities
638,955
552,023
Tax payable
151
1,581
Current portion of long-term debt
99,503
86,972
Total current liabilities
1,110,000
968,698
Long-term debt
299,529
349,169
Operating lease liabilities,
noncurrent
65,292
61,779
Deferred tax liabilities, noncurrent
52,362
60,976
Other liabilities, noncurrent
27,744
25,980
Total liabilities
1,554,927
1,466,602
Commitments and contingencies
Shareholders’ equity:
Ordinary shares, $0.20 par value per
share, 250,000 shares authorized, 50,000 shares issued and
outstanding as of June 30, 2023 and December 31, 2022
10
10
Additional paid-in capital
941,210
941,210
Retained earnings
935,487
896,738
Accumulated other comprehensive loss
(10,197
)
(9,669
)
Total shareholders’ equity
1,866,510
1,828,289
Total liabilities and shareholders’
equity
$
3,421,437
$
3,294,891
SHARKNINJA GLOBAL SPV,
LTD.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(in thousands, except share
and per share data)
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net sales(1)
$
950,312
$
778,197
$
1,805,594
$
1,587,823
Cost of sales
553,391
486,730
1,008,130
944,430
Gross profit
396,921
291,467
797,464
643,393
Operating expenses:
Research and development
61,014
54,016
119,739
105,987
Sales and marketing
208,316
146,641
360,436
272,182
General and administrative
71,959
54,711
139,027
106,736
Total operating expenses
341,289
255,368
619,202
484,905
Operating income
55,632
36,099
178,262
158,488
Interest expense, net
(7,031
)
(6,078
)
(15,520
)
(10,082
)
Other expense, net
(32,670
)
(6,965
)
(35,450
)
(10,874
)
Income before income taxes
15,931
23,056
127,292
137,532
Provision for income taxes
3,995
6,561
28,260
32,126
Net income
$
11,936
$
16,495
$
99,032
$
105,406
Net income per share, basic and
diluted
$
0.09
$
0.12
$
0.71
$
0.76
Weighted-average number of shares used in
computing net income per share, basic and diluted(2)
138,982,872
138,982,872
138,982,872
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)
2023
2022
2023
2022
Cleaning Appliances
$
413,797
$
411,227
$
828,667
$
848,187
Cooking and Beverage Appliances
343,050
204,028
599,732
436,131
Food Preparation Appliances
143,376
137,687
261,224
266,166
Other
50,089
25,255
115,971
37,339
Total net sales
$
950,312
$
778,197
$
1,805,594
$
1,587,823
(2) The number of shares transferred in the separation and
distribution from JS Global were used as the denominator in
calculating net income per share.
SHARKNINJA GLOBAL SPV,
LTD.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended June
30,
2023
2022
Cash flows from operating
activities:
Net income
$
99,032
$
105,406
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization
51,795
40,165
Share-based compensation
3,165
4,446
Provision for credit losses
1,218
947
Non-cash lease expense
6,383
8,478
Amortization of debt discount
392
430
Deferred income taxes, net
(5,864
)
(8,025
)
Loss from equity method investment
—
360
Changes in operating assets and
liabilities:
Accounts receivable
(143,549
)
261,056
Inventories
16,008
(113,391
)
Prepaid expenses and other assets
78,613
(85,286
)
Accounts payable
33,605
(80,872
)
Tax payable
(1,326
)
(4,886
)
Operating lease liabilities
(10,165
)
(7,665
)
Accrued expenses and other liabilities
71,078
(135,237
)
Net cash provided by (used in) operating
activities
200,385
(14,074
)
Cash flows from investing
activities:
Purchase of property and equipment
(46,273
)
(32,687
)
Purchase of intangible asset
(1,120
)
(2,799
)
Capitalized internal-use software
development
(123
)
(2,519
)
Investment in equity method investment
—
(360
)
Other investing activities, net
(300
)
(300
)
Net cash used in investing activities
(47,816
)
(38,665
)
Cash flows from financing
activities:
Proceeds from issuance of debt, net of
issuance cost
—
200,000
Repayment of debt
(37,501
)
(130,000
)
Intercompany note to Parent
—
(41,286
)
Distribution paid to Parent
(60,283
)
(45,438
)
Recharge from Parent for share-based
compensation
—
(15,300
)
Net cash used in financing activities
(97,784
)
(32,024
)
Effect of exchange rates changes on
cash
6,031
(7,656
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
60,816
(92,419
)
Cash, cash equivalents, and restricted
cash at beginning of period
218,770
240,597
Cash, cash equivalents, and restricted
cash at end of period
$
279,586
$
148,178
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, 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., and our
Asia Pacific Region and Greater China 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 inventory
markups that were eliminated as a result of transitioning certain
product procurement functions from a subsidiary of JS Global to
SharkNinja concurrently with the separation (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 because
such reconciliations are not available without unreasonable
efforts. The is due to the inherent difficulty in forecasting with
reasonable certainty certain amount that are necessary for such
reconciliation, 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 and
Adjusted EBITDA. 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 %)
2023
2022
2023
2022
Net sales
$
950,312
$
778,197
$
1,805,594
$
1,587,823
Divested subsidiary adjustment(1)
(44,700
)
(21,790
)
(64,349
)
(41,870
)
Adjusted Net Sales
$
905,612
$
756,407
$
1,741,245
$
1,545,953
(1)
Adjusted for net sales of $22.2 million
and $14.1 million from SharkNinja Co., Ltd. (“SNJP”) for the three
months ended June 30, 2023 and 2022, respectively; $22.5 million
and $7.7 million from the APAC distribution channels for the three
months ended June 30, 2023 and 2022, respectively; $37.2 million
and $28.1 million from SNJP for the six months ended June 30, 2023
and 2022, respectively; and $27.2 million and $13.8 million from
the APAC distribution channels for the six months ended June 30,
2023 and 2022, respectively, as if such Divestitures occurred on
January 1, 2022.
We define Adjusted Gross Profit as gross profit as adjusted to
exclude certain items that we do not consider indicative of our
ongoing operating performance following the separation, including
the net sales and cost of sales from our Divestitures and the cost
of sales from the Product Procurement Adjustment. We define
Adjusted Gross Margin as Adjusted Gross Profit divided by Adjusted
Net Sales. We believe that Adjusted Gross Profit and Adjusted Gross
Margin are appropriate measures of our operating performance
because each eliminates the impact our Divestitures and certain
other adjustments that do not relate to the ongoing performance of
our business.
The following table reconciles Adjusted Gross Profit and
Adjusted Gross Margin to the most comparable GAAP measure, gross
profit and gross margin, respectively, for the periods
presented:
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousands, except %)
2023
2022
2023
2022
Net sales
$
950,312
$
778,197
$
1,805,594
$
1,587,823
Cost of sales
(553,391
)
(486,730
)
(1,008,130
)
(944,430
)
Gross profit
396,921
291,467
797,464
643,393
Gross margin %
41.8
%
37.5
%
44.2
%
40.5
%
Divested subsidiary net sales
adjustment(1)
(44,700
)
(21,790
)
(64,349
)
(41,870
)
Divested subsidiary cost of sales
adjustment(2)
24,460
13,991
37,487
25,936
Product Procurement Adjustment(3)
16,923
17,471
29,794
32,890
Adjusted Gross Profit
$
393,604
$
301,139
$
800,396
$
660,349
Adjusted Net Sales
$
905,612
$
756,407
$
1,741,245
$
1,545,953
Adjusted Gross Margin
43.5
%
39.8
%
46.0
%
42.7
%
(1)
Adjusted for net sales of $22.2 million
and $14.1 million from SNJP for the three months ended June 30,
2023 and 2022, respectively; $22.5 million and $7.7 million from
the APAC distribution channels for the three months ended June 30,
2023 and 2022, respectively; $37.2 million and $28.1 million from
SNJP for the six months ended June 30, 2023 and 2022, respectively;
and $27.2 million and $13.8 million from the APAC distribution
channels for the six months ended June 30, 2023 and 2022,
respectively, as if such Divestitures occurred on January 1,
2022.
(2)
Adjusted for cost of sales of $10.4
million and $8.0 million from SNJP for the three months ended June
30, 2023 and 2022, respectively; $14.1 million and $6.0 million
from the APAC distribution channels for the three months ended June
30, 2023 and 2022, respectively; $19.7 million and $15.3 million
from SNJP for the six months ended June 30, 2023 and 2022,
respectively; and $17.8 million and $10.6 million from the APAC
distribution channels for the six months ended June 30, 2023 and
2022, respectively, as if such Divestitures occurred on January 1,
2022.
(3)
Represents cost of sales of $16.9 million
and $17.5 million for the three months ended June 30, 2023 and
2022, respectively, and $29.8 million and $32.9 million for the six
months ended June 30, 2023 and 2022, respectively, related to the
Product Procurement Adjustment. As a result of the separation, we
intend to purchase 100% of our inventory from one of our
subsidiaries, SharkNinja (Hong Kong) Company Limited (“SNHK”), and
will no longer purchase inventory from a purchasing office wholly
owned by JS Global. Thus, the markup on all inventory purchased
subsequent to the separation will be completely eliminated in
consolidation.
We define Adjusted Operating Income as operating income
excluding (i) share-based compensation, (ii) certain litigation
costs, (iii) amortization of certain acquired intangible assets,
(iv) certain separation and distribution costs and (v) certain
items that we do not consider indicative of our ongoing operating
performance following the separation, including operating income
from our Divestitures and cost of sales from our Product
Procurement Adjustment.
The following table reconciles Adjusted Operating Income to the
most comparable GAAP measure, operating income, for the periods
presented:
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousands)
2023
2022
2023
2022
Operating income
$
55,632
$
36,099
$
178,262
$
158,488
Share-based compensation(1)
2,317
1,876
3,165
4,446
Litigation costs(2)
461
3,844
635
4,005
Amortization of acquired intangible
assets(3)
4,897
4,897
9,794
9,794
Separation and distribution related
costs(4)
16,625
–
35,093
–
Product Procurement Adjustment(5)
16,923
17,471
29,794
32,890
Divested subsidiary operating income
adjustment(6)
(8,190
)
(546
)
(8,743
)
(3,143
)
Adjusted Operating Income
$
88,665
$
63,641
$
248,000
$
206,480
(1)
Represents non-cash expense related to
restricted stock unit awards issued from JS Global’s equity
incentive plans.
(2)
Represents litigation costs
incurred for iRobot Corporation’s (“iRobot”) 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
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.
(4)
Represents certain costs incurred related
to the separation and distribution from JS Global.
(5)
Represents cost of sales of $16.9 million
and $17.5 million for the three months ended June 30, 2023 and
2022, respectively, and $29.8 million and $32.9 million for the six
months ended June 30, 2023 and 2022, respectively, related to the
Product Procurement Adjustment. As a result of the separation, we
intend to purchase 100% of our inventory from one of our
subsidiaries, SNHK, and will no longer purchase inventory from a
purchasing office wholly owned by JS Global. Thus, the markup on
all inventory purchased subsequent to the separation will be
completely eliminated in consolidation.
(6)
Adjusted for operating income of $0.9
million and $(0.8) million from SNJP for the three months ended
June 30, 2023 and 2022, respectively; $7.3 million and $1.3 million
from the APAC distribution channels for the three months ended June
30, 2023 and 2022, respectively; $0.7 million from SNJP for the six
months ended June 30, 2023 and 2022, respectively; and $8.0 million
and $2.4 million from the APAC distribution channels for the six
months ended June 30, 2023 and 2022, respectively, as if the
Divestitures occurred on January 1, 2022.
We define Adjusted Net Income as net income excluding (i)
share-based compensation, (ii) certain litigation costs, (iii)
foreign currency gains and losses, net (iv) amortization of certain
acquired intangible assets, (v) certain separation and distribution
costs, (vi) certain items that we do not consider indicative of our
ongoing operating performance following the separation, including
net income from our Divestitures and cost of sales from our Product
Procurement Adjustment and (vii) the tax impact of the adjusted
items.
Adjusted Net Income Per Share is defined as Adjusted Net Income
divided by the diluted weighted average number of ordinary
shares.
The following table reconciles Adjusted Net Income and Adjusted
Net Income Per Share to the most comparable GAAP measures, net
income and net income per share, diluted, respectively, for the
periods presented:
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousands, except share and per
share amounts)
2023
2022
2023
2022
Net income
$
11,936
$
16,495
$
99,032
$
105,406
Share-based compensation(1)
2,317
1,876
3,165
4,446
Litigation costs(2)
461
3,844
635
4,005
Foreign currency losses, net(3)
35,468
7,902
39,617
12,622
Amortization of acquired intangible
assets(4)
4,897
4,897
9,794
9,794
Separation and distribution related
costs(5)
16,625
–
35,093
–
Product Procurement Adjustment(6)
16,923
17,471
29,794
32,890
Tax impact of adjusting items(7)
(16,872
)
(7,918
)
(25,982
)
(14,027
)
Divested subsidiary net income
adjustment(8)
(6,585
)
1,865
(6,980
)
576
Adjusted Net Income
$
65,170
$
46,432
$
184,168
$
155,712
Net income per share, diluted
$
0.09
$
0.12
$
0.71
$
0.76
Adjusted Net Income Per Share
$
0.47
$
0.33
$
1.33
$
1.12
Diluted weighted-average number of shares
used in computing net income per share and Adjusted Net Income Per
Share(9)
138,982,872
138,982,872
138,982,872
138,982,872
(1)
Represents non-cash expense related to
restricted stock unit awards issued from JS Global’s equity
incentive plans.
(2)
Represents litigation costs incurred for
iRobot’s 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. The total net (loss) gain
recognized on our derivative instruments related to forward
contracts outstanding not designated as hedging instruments
included in the total of foreign currency losses, net, was $(27.5)
million and $2.1 million for the three months ended June 30, 2023
and 2022, respectively, and $(25.7) million and $2.1 million for
the six months ended June 30, 2023 and 2022, respectively.
(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.
(6)
Represents cost of sales of $16.9 million
and $17.5 million for the three months ended June 30, 2023 and
2022, respectively, and $29.8 million and $32.9 million for the six
months ended June 30, 2023 and 2022, respectively, related to the
Product Procurement Adjustment. As a result of the separation, we
intend to purchase 100% of our inventory from one of our
subsidiaries, SNHK, and will no longer purchase inventory from a
purchasing office wholly owned by JS Global. Thus, the markup on
all inventory purchased subsequent to the separation will be
completely eliminated in consolidation.
(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 the divested
subsidiary net income adjustment described in footnote (8).
(8)
Adjusted for net income (loss) of $0.8
million and $(2.9) million from SNJP for the three months ended
June 30, 2023 and 2022, respectively; $5.7 million and $1.0 million
from the APAC distribution channels for the three months ended June
30, 2023 and 2022, respectively; $0.7 million and $(2.5) million
from SNJP for the six months ended June 30, 2023 and 2022,
respectively; and $6.3 million and $1.9 million from the APAC
distribution channels for the six months ended June 30, 2023 and
2022, respectively, as if the Divestitures occurred on January 1,
2022.
(9)
In calculating net income per share and
Adjusted Net Income Per Share, the Company has used the number of
shares transferred in the separation and distribution for the
denominator.
We define EBITDA as net income excluding: (i) interest expense,
net, (ii) provision for income taxes and (iii) depreciation and
amortization. We define Adjusted EBITDA as EBITDA excluding (i)
share-based compensation cost, (ii) certain litigation costs, (iii)
foreign currency gains and losses, net, (iv) certain separation and
distribution costs and (v) certain items that we do not consider
indicative of our ongoing operating performance following the
separation, including net income from our Divestitures and cost of
sales from our Product Procurement Adjustment. We define Adjusted
EBITDA Margin as Adjusted EBITDA divided by Adjusted Net Sales. We
believe EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are
appropriate measures because they facilitate a comparison of our
operating performance on a consistent basis from period to period
that, when viewed in combination with our results according to
GAAP, we believe provide a more complete understanding of the
factors and trends affecting our business than GAAP measures
alone.
The following table reconciles EBITDA, Adjusted EBITDA and
Adjusted EBITDA Margin to the most comparable GAAP measure, net
income, for the periods presented:
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousands, except %)
2023
2022
2023
2022
Net income
$
11,936
$
16,495
$
99,032
$
105,406
Interest expense, net
7,031
6,078
15,520
10,082
Provision for income taxes
3,995
6,561
28,260
32,126
Depreciation and amortization
29,038
19,961
51,792
40,165
EBITDA
$
52,000
$
49,095
$
194,604
$
187,779
Share-Based compensation(1)
2,317
1,876
3,165
4,446
Litigation costs(2)
461
3,844
635
4,005
Foreign currency losses, net(3)
35,468
7,902
39,617
12,622
Separation and distribution related
costs(4)
16,625
–
35,093
–
Product Procurement Adjustment(5)
16,923
17,471
29,794
32,890
Divested subsidiary Adjusted EBITDA
adjustment(6)
(10,187
)
978
(11,285
)
(1,341
)
Adjusted EBITDA
$
113,607
$
81,166
$
291,623
$
240,401
Adjusted Net Sales
$
905,612
$
756,407
$
1,741,245
$
1,545,953
Adjusted EBITDA Margin
12.5
%
10.7
%
16.7
%
15.6
%
(1)
Represents non-cash expense related to
restricted stock unit awards issued from JS Global’s equity
incentive plans.
(2)
Represents litigation costs incurred for
iRobot’s 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. The total net (loss) gain
recognized on our derivative instruments related to forward
contracts outstanding not designated as hedging instruments
included in the total of foreign currency losses, net, was $(27.5)
million and $2.1 million for the three months ended June 30, 2023
and 2022, respectively, and $(25.7) million and $2.1 million for
the six months ended June 30, 2023 and 2022, respectively.
(4)
Represents certain costs incurred related
to the separation and distribution from JS Global.
(5)
Represents cost of sales of $16.9 million
and $17.5 million for the three months ended June 30, 2023 and
2022, respectively, and $29.8 million and $32.9 million for the six
months ended June 30, 2023 and 2022, respectively, related to the
Product Procurement Adjustment. As a result of the separation, we
intend to purchase 100% of our inventory from one of our
subsidiaries, SNHK, and will no longer purchase inventory from a
purchasing office wholly owned by JS Global. Thus, the markup on
all inventory purchased subsequent to the separation will be
completely eliminated in consolidation.
(6)
Adjusted for Adjusted EBITDA of $2.9
million and $(2.3) million from SNJP for the three months ended
June 30, 2023 and 2022, respectively; and $7.3 million and $1.3
million from the APAC distribution channels for the three months
ended June 30, 2023 and 2022, respectively; $3.2 million and $(1.1)
million from SNJP for the six months ended June 30, 2023 and 2022,
respectively; and $8.0 million and $2.4 million from the APAC
distribution channels for the six months ended June 30, 2023 and
2022, respectively, as if the Divestitures occurred on January 1,
2022. 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/20230824928906/en/
Investor Relations: Arvind Bhatia, CFA VP, 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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