SharkNinja(SN) - 2024 Q3 - Quarterly Report

Condensed Consolidated Financial Statements This section presents the company's condensed consolidated financial statements, detailing its financial position, performance, and cash flows Condensed Consolidated Balance Sheets As of September 30, 2024, total assets increased to $4.24 billion, liabilities to $2.44 billion, and equity to $1.79 billion Balance Sheet Highlights (as of Sep 30, 2024 vs. Dec 31, 2023) | Account | Sep 30, 2024 ($ thousands) | Dec 31, 2023 ($ thousands) | Change | | :--- | :--- | :--- | :--- | | Total Current Assets | 2,516,325 | 1,897,284 | ▲ 32.6% | | Inventories | 1,076,246 | 699,740 | ▲ 53.8% | | Accounts receivable, net | 1,190,410 | 985,172 | ▲ 20.8% | | Total Assets | 4,237,325 | 3,487,070 | ▲ 21.5% | | Total Current Liabilities | 1,510,166 | 1,125,132 | ▲ 34.2% | | Debt, current | 214,344 | 24,157 | ▲ 787.3% | | Total Liabilities | 2,442,786 | 2,008,177 | ▲ 21.6% | | Total Shareholders' Equity | 1,794,539 | 1,478,893 | ▲ 21.3% | Condensed Consolidated Statements of Income For the nine months ended September 30, 2024, net sales grew 30.1% to $3.74 billion, with net income more than doubling Income Statement Performance (Nine Months Ended Sep 30) | Metric | 2024 ($ thousands) | 2023 ($ thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Net Sales | 3,741,452 | 2,876,211 | ▲ 30.1% | | Gross Profit | 1,822,523 | 1,284,957 | ▲ 41.8% | | Operating Income | 439,040 | 272,810 | ▲ 60.9% | | Net Income | 309,989 | 117,754 | ▲ 163.2% | | Diluted EPS | $2.20 | $0.85 | ▲ 158.8% | Income Statement Performance (Three Months Ended Sep 30) | Metric | 2024 ($ thousands) | 2023 ($ thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Net Sales | 1,426,566 | 1,070,617 | ▲ 33.2% | | Gross Profit | 695,007 | 487,493 | ▲ 42.6% | | Operating Income | 180,262 | 94,548 | ▲ 90.7% | | Net Income | 132,329 | 18,722 | ▲ 606.8% | | Diluted EPS | $0.94 | $0.13 | ▲ 623.1% | Condensed Consolidated Statements of Comprehensive Income For the nine months ended September 30, 2024, comprehensive income significantly increased to $312.8 million from $119.3 million Comprehensive Income Summary (Nine Months Ended Sep 30) | Component | 2024 ($ thousands) | 2023 ($ thousands) | | :--- | :--- | :--- | | Net Income | 309,989 | 117,754 | | Foreign currency translation adjustments | 21,229 | (3,967) | | Unrealized (loss) gain on derivative instruments, net | (18,389) | 5,545 | | Comprehensive Income | 312,829 | 119,332 | Condensed Consolidated Statements of Shareholders' Equity Total shareholders' equity increased to $1.79 billion as of September 30, 2024, primarily driven by $310.0 million in net income Changes in Shareholders' Equity (Nine Months Ended Sep 30, 2024) | Description | Amount ($ thousands) | | :--- | :--- | | Balance as of Dec 31, 2023 | 1,478,893 | | Net Income | 309,989 | | Share-based compensation | 47,341 | | Vesting of RSUs, net of shares withheld for taxes | (50,011) | | Shares issued under ESPP | 5,487 | | Other comprehensive income, net of tax | 2,840 | | Balance as of Sep 30, 2024 | 1,794,539 | Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2024, operating activities had a net cash outflow of $43.0 million, reversing prior year inflows Cash Flow Summary (Nine Months Ended Sep 30) | Cash Flow Category | 2024 ($ thousands) | 2023 ($ thousands) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | (43,049) | 95,780 | | Net cash used in investing activities | (102,903) | (64,363) | | Net cash provided by (used in) financing activities | 115,288 | (75,042) | | Net decrease in cash | (26,113) | (48,393) | | Cash at beginning of period | 154,061 | 218,770 | | Cash at end of period | 127,948 | 170,377 | Notes to Condensed Consolidated Financial Statements The notes detail accounting policies, financial components, and key events, including separation from JS Global, revenue disaggregation, and debt Note 1. Organization and Description of Business SharkNinja, Inc. designs and sells home lifestyle appliances under the 'Shark' and 'Ninja' brands, becoming publicly traded on the NYSE in July 2023 - The company designs and creates lifestyle products in categories like Cleaning, Cooking, and Food Preparation Appliances under the 'Shark' and 'Ninja' brands[20] - SharkNinja, Inc. was separated from its former parent, JS Global, and began trading on the NYSE on July 31, 2023[23] Note 2. Summary of Significant Accounting Policies Financial statements under U.S. GAAP involve significant estimates and show customer concentration risk, with two customers accounting for 37.5% of receivables Customer Concentration of Accounts Receivable, Net | Customer | Sep 30, 2024 % | Dec 31, 2023 % | | :--- | :--- | :--- | | Customer A | 25.5% | 22.4% | | Customer B | 12.0% | 16.7% | Customer Concentration of Net Sales (Nine Months Ended Sep 30) | Customer | 2024 % | 2023 % | | :--- | :--- | :--- | | Customer A | 20.1% | 18.9% | | Customer C | 11.7% | 15.0% | - The company operates as a single reportable segment, with performance assessed at the consolidated level by the CEO[46] Disaggregation of Net Sales For the nine months ended September 30, 2024, domestic sales were 69.7% of net sales, with Ninja contributing 52.3% Net Sales by Region (Nine Months Ended Sep 30, 2024) | Region | Amount ($ thousands) | % of Net Sales | | :--- | :--- | :--- | | Domestic | 2,609,152 | 69.7% | | International | 1,132,300 | 30.3% | | Total | 3,741,452 | 100.0% | Net Sales by Brand (Nine Months Ended Sep 30, 2024) | Brand | Amount ($ thousands) | % of Net Sales | | :--- | :--- | :--- | | Shark | 1,784,299 | 47.7% | | Ninja | 1,957,153 | 52.3% | | Total | 3,741,452 | 100.0% | Net Sales by Product Category (Nine Months Ended Sep 30, 2024) | Category | Amount ($ thousands) | % of Net Sales | | :--- | :--- | :--- | | Cleaning Appliances | 1,415,488 | 37.8% | | Cooking and Beverage Appliances | 1,120,371 | 29.9% | | Food Preparation Appliances | 836,782 | 22.4% | | Other | 368,811 | 9.9% | | Total | 3,741,452 | 100.0% | Note 9. Debt In July 2023, the company secured an $810.0 million term loan and a $500.0 million revolving credit facility, with significant outstanding balances as of September 30, 2024 - The company entered into a new credit agreement in July 2023, which includes an $810.0 million term loan and a $500.0 million revolving credit facility, both maturing in July 2028[66] Debt Composition (as of Sep 30, 2024) | Debt Component | Amount ($ thousands) | | :--- | :--- | | 2023 Term Loans | 789,750 | | 2023 Revolving Facility | 175,000 | | Less: deferred financing costs | (4,431) | | Total debt, net | 960,319 | - As of September 30, 2024, $175.0 million was outstanding on the revolving credit facility, with an available balance of $315.9 million[68] Note 10. Commitments and Contingencies As of September 30, 2024, the company had $28.7 million in purchase obligations and settled a patent infringement claim for $13.5 million in Q3 2024 - As of September 30, 2024, the company has remaining non-cancelable purchase obligations of $28.7 million[73] - A patent infringement claim was settled in Q3 2024, resulting in a recognized liability of $13.5 million[76] Note 11. Shareholders' Equity and Equity Incentive Plan The 2023 Equity Incentive Plan has 13.9 million shares available, with 2.1 million unvested RSUs and $38.3 million in unrecognized compensation - The 2023 Equity Incentive Plan initially made 13,898,287 ordinary shares available for future grants[78] RSU Activity (Nine Months Ended Sep 30, 2024) | Activity | Number of Shares | | :--- | :--- | | Unvested as of Dec 31, 2023 | 3,857,986 | | Granted | 212,750 | | Vested | (1,862,980) | | Cancelled/Forfeited | (98,295) | | Unvested as of Sep 30, 2024 | 2,109,461 | - As of September 30, 2024, unrecognized share-based compensation cost related to RSUs was $38.3 million, to be recognized over a weighted average of 1.3 years[82] Note 12. Income Taxes The effective tax rate for the nine months ended September 30, 2024, significantly decreased to 23.9% from 42.0% due to prior-year separation impacts Effective Tax Rate (ETR) Comparison | Period | 2024 ETR | 2023 ETR | | :--- | :--- | :--- | | Three Months Ended Sep 30 | 24.1% | 75.3% | | Nine Months Ended Sep 30 | 23.9% | 42.0% | - The decrease in the ETR was primarily due to prior-year impacts from the separation, distribution, and refinancing, such as withholding taxes and transaction costs[85] Note 13. Net Income Per Share For the nine months ended September 30, 2024, basic EPS was $2.22 and diluted EPS was $2.20, significantly up from $0.85 in the prior year Net Income Per Share Calculation (Nine Months Ended Sep 30) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Net Income ($ thousands) | 309,989 | 117,754 | | Weighted-average shares, basic | 139,818,196 | 139,059,206 | | Weighted-average shares, diluted | 140,974,062 | 139,179,724 | | Net income per share, basic | $2.22 | $0.85 | | Net income per share, diluted | $2.20 | $0.85 | Note 14. Related Party Transactions The company maintains significant related-party transactions with former parent JS Global, with finished goods purchases decreasing to $156.2 million - Following the separation, JS Global remains a related party due to a common majority shareholder[88] Key Transactions with JS Global (Nine Months Ended Sep 30) | Transaction Type | 2024 ($ thousands) | 2023 ($ thousands) | | :--- | :--- | :--- | | Finished goods purchased from JS Global | 156,200 | 952,000 | | Sourcing service fees paid to JS Global | 32,900 | 19,000 | | Royalty income earned from JS Global | 6,962 | 607 | - As of September 30, 2024, accounts payable to related parties was $52.7 million, down from $101.5 million at year-end 2023[96]