SharkNinja, Inc. Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Strong Q3 Performance: Adjusted net sales grew 35%, adjusted EBITDA rose 26%, and adjusted gross margins increased 160 basis points to 49.4%.
• New Subcategories: Entered 4 new subcategories in 2024, including coolers, fans, frozen drink makers, and skin care. Launched Shark CryoGlow in skin care and Ninja SLUSHi frozen drink maker.
• International Growth: International adjusted net sales grew 62%, with Germany, France, and Mexico showing strong double-digit growth.
• Innovation: Continued to innovate in cleaning (e.g., Shark PowerDetect franchise), cooking (e.g., Ninja CRISPi), and beauty (e.g., Shark FlexFusion).
• Supply Chain Diversification: Progressed in diversifying production outside China to mitigate tariff risks.

Segment Performance

• Cleaning: Adjusted net sales grew 19% to $527 million, representing 37.7% of total adjusted net sales.
• Cooking and Beverage: Adjusted net sales increased nearly 22% to $411 million, accounting for 29.4% of total.
• Food Preparation: Adjusted net sales jumped 75% to $367 million, making up 26.2% of total.
• Other: Adjusted net sales rose 79% to $121 million, or 8.7% of total.
• Region: North America net sales grew 26% to over $1 billion, representing 70% of sales. International adjusted net sales surged 62% to $421 million.

Guidance

• Raised 2024 adjusted net sales guidance to 27%-28% increase, up from prior 22%-24%.
• Adjusted net income per diluted share expected to be $4.13-$4.24, a 28%-32% year-over-year increase.
• Adjusted EBITDA expected to be $925M-$945M, a 29%-31% year-over-year growth.
• 2025 planning underway, with detailed guidance to be provided in February 2025 earnings.

Risks

• Tariff Risks: Impact of Section 301 tariffs, though efforts to diversify supply chain are ongoing.
• Macroeconomic Uncertainties: Cautious consumer spending due to uncertain macroenvironment, U.S. elections, and shortened holiday season.
• Geopolitical Unrest: Potential impact on global operations and supply chains.

Question and Answer Q: Elaborate on reinvestment priorities, margin in international/new products/DTC, and supply chain investments.

A: Mark discussed heavy R&D investment for future growth, Patraic explained international margin structure with distributor partnerships.

Q: Evolution of channel partnerships and distribution in beauty, grocery, sporting goods.

A: Mark noted strong support from retailers like Walmart, Costco, Amazon, and discussed expansion in beauty (CryoGlow), grocery (Ninja SLUSHi), and sporting goods (coolers).

Q: Q4 consumption, inventory levels, and impact of shifts in Mexico/UK.

A: Mark and Patraic noted solid Q4 demand, healthy inventory levels, and temporary impact from Mexico direct model shift.

Q: Margin trajectory in 2025, supply chain catch-up, and innovation impact.

A: Mark and Patraic explained long-term investment focus, supply chain investments to support future growth, and innovation hit rate improvement.