SharkNinja(SN) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics - Adjusted net sales increased 28% to $1 1 billion in Q1 2024 [40] - Adjusted EBITDA grew 30% to$ 231 million with margins improving 30 basis points [40] - Adjusted gross profit increased 33% to $542 million with margins expanding 210 basis points [43] - Adjusted EPS grew 23% to$ 1 06 per share [45] - Inventory increased 47% YoY to $750 million driven by strong demand and supply chain mitigation efforts [77] Business Line Performance - Cleaning category sales grew 6% to$ 422 million driven by carpet extraction and robotic vacuums [41] - Food Preparation category sales surged 77% to $205 million led by CREAMi ice cream makers [42] - Cooking and Beverage category sales increased 29% to$ 330 million with strong outdoor cooking performance [21] - Other category sales jumped 66% to $110 million powered by haircare and FlexBreeze cooling system [22] Market Performance - North America sales grew 22% to$ 734 million representing 69% of total sales [20] - International sales increased 42% to $332 million with triple-digit growth in Germany France and LatAm [20] - UK sales grew 15% on top of 73% growth in Q1 2023 [16] - EMEA and LatAm markets showing strong momentum with expanded retail partnerships [35] Strategy and Competition - Three-pillar growth strategy focuses on new categories existing category share gains and international expansion [31][57][58] - Entered 18 new subcategories since 2021 expanding to 33 total subcategories [31] - Ninja FrostVault and Shark FlexBreeze launched in$ 2 billion addressable markets [33] - Air fryer category leadership maintained through continuous innovation [34] - Global addressable market estimated at $120 billion with less than 4% penetration [18] Management Commentary - Strong Q1 performance driven by balanced growth across all three pillars [54] - International business expected to outpace domestic growth in coming years [58] - Supply chain remains robust with improved visibility on shipping rates [36] - Tariff mitigation efforts on track to diversify production outside China by 2025 [37] - 2024 guidance raised with adjusted sales growth expected at 12-14% [79] Other Key Information - R&D expenses increased 19% to$ 70 million supporting new product development [23] - Sales and marketing expenses grew 41% to $215 million for brand building [44] - New CFO Patraic Reagan brings extensive global experience from Nike and other major brands [8][51] - Inventory build reflects strong demand supply chain mitigation and tariff preparations [77][78] Q&A Summary Randy Konik - Jefferies - Asked about additional category expansion opportunities beyond current success in beauty [69] - Management highlighted outdoor cooking and cooling as key growth areas with potential for new categories annually [70][71] Andrea Teixeira - JPMorgan - Inquired about inventory dynamics and guidance phasing [92] - Company explained Q1 inventory build was strategic to support demand and mitigate supply chain risks [93][95] Brooke Roach - Goldman Sachs - Questioned inventory growth outlook and promotional environment in North America [96] - Management noted industry challenges but emphasized SharkNinja's differentiated position through innovation and marketing [97][98] Steven Forbes - Guggenheim - Asked to unpack Q1 US segment outperformance [102] - Company attributed growth to strong base business new product impact retail expansion and inventory replenishment [125][126] Phillip Blee - William Blair - Inquired about international category expansion plans [128] - Management highlighted UK diversification and significant runway in less mature markets like Germany France and LatAm [129][130] Brian McNamara - Canaccord Genuity - Asked about IPO philosophy and expectations management [110] - Company emphasized consistent execution of long-term growth strategy [135] Rennie Pan - UBS - Questioned Cleaning category outlook and gross margin sustainability [136][154] - Management expressed confidence in category acceleration and discussed balancing innovation with value [113][155] Megan Alexander - Morgan Stanley - Sought clarification on restocking dynamics and weeks of supply [140] - Company explained US-specific inventory trends and guidance approach [141][142]