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EX-99.2 3 exhibit992q324managementsd.htm EX-99.2 Document

譲渡異議申立書 99.2

経営陣による財務状況と業績に関する分析

次の議論と分析は、経営陣が当社の業績と財務状況の評価と理解に関連すると考える情報を提供しています。9月30日の未監査の四半期短縮連結貸借対照表、2024年9月30日と2023年12月31日の未監査の四半期短縮連結損益計算書、包括利益及び株主資本の包括的損益計算書についての次の財務状況および業績の議論と分析を読むべきです。期間の終了時点は、2024年9月30日と2023年9月30日であり、9月30日と12月31日までの9か月が含まれます。未監査の四半期短縮連結貸借対照表、2024年9月30日と2023年9月30日の9か月分の未監査の四半期短縮連結キャッシュ・フロー計算書、およびこの形式6-kの他の所に含まれる未監査の四半期短縮連結財務諸表のノート、および弊社がU.S.証券取引委員会（SEC）に提出した2023年12月31日に終了した年度の監査済みの連結財務諸表、関連する注記およびその他の情報、Form 20-Fで記載されている。 2024年3月1日（「Form 20-F」と呼ばれる）

将来の見通しに関する注記

この書類 6-k に含まれる情報には、1933年証券法修正法第27条および1934年証券取引法修正法第21E条の意味でのフォワードルッキングステートメントが含まれる可能性があります。これらは、将来の出来事、将来のビジネス、財務状況、業績、および見通しに関する私たちの現在の見解を反映しています。これらの声明は、一般的に、「may」「should」「could」「predict」「potential」「believe」「will likely result」「expect」「continue」「will」「anticipate」「seek」「estimate」「intend」「plan」「projection」「would」「outlook」などの言葉やフレーズの使用を通じてなされることがあります。または、これらの言葉やフレーズの負のバージョン、もしくはこれらと類似の将来的およびフォワードルッキングな性質の他の言葉やフレーズによってなされることがあります。これらのフォワードルッキングステートメントは、歴史的事実の陳述ではなく、業界に関する現在の期待、見積り、予測、および管理陣によりなされた一部の仮定に基づいています。これらは、その性質上、本質的に不確実で私たちのコントロールを超える多くの事柄に関するものです。これらのフォワードルッキングステートメントは既知および未知の多くのリスク、不確実性、および仮定に影響を受けており、お客様は十分に注意してお読みください。

•私たちのブランドを維持し強化し、製品への持続的な需要の創出と維持

•新製品やライン拡張の継続的な商品化能力を持つことは需要を生み出す。

•将来の成長を効果的に管理する能力;

•一般的な経済状況と自由に使える消費関連支出水準;

•追加の消費関連市場への拡大能力;

•製品の品質と性能を適切なコストで維持する能力;

•私たちの市場で既存および新しい競合他社と競争する能力;

•当社のサプライチェーンやサプライヤーに問題や損失が発生したり、原材料を入手できない可能性があるかもしれません。

•グローバルでビジネスを行う際に関連するリスク;

•インフレーション、原材料、エネルギー、交通機関およびその他必要な供給品やサービスのコストや入手可能性の変化;

•高度に熟練した人材を採用し、統合し、定着させる能力；

•知的財産の維持、保護、向上能力;

•消費関連やその他の第三者データを安全に維持する能力;

•継続的な規制要件への遵守能力;

•株式会社であることに伴う増加した経費；

•ニューヨーク証券取引所（nyse）の規則の意味において「コントロールされた会社」としての地位

•JSグローバルからの分離による期待される利益の一部またはすべてを達成する能力

•配当が支払われるかどうかについて

•その他のリスクおよび不確実性については、当社の20-Fフォームの「Item 3. Key Information — D. Risk Factors」に記載されています。

この要因のリストは網羅的ではないと解釈されるべきではなく、この書類6-kに含まれるその他の注意書きと併せて読まれるべきです。私たちは非常に競争が激しく急速に変化する環境で活動しています。新たなリスクが時折浮上します。すべてのリスクを予測することはできず、全ての要因がビジネスに与える影響を評価することもできません。また、どの要因や要因の組み合わせが当社の実際の結果を、当社が行う先行きの声明に含まれる結果と著しく異なるように引き起こす可能性があるかについての度合いを評価することもできません。これらのリスク、不確実性、および前提の背景を考えると、この書類6-kで議論されている将来の出来事やトレンド、および私たちの将来の活動と業績が実現されない可能性があり、実際の結果が記載されているものと根本的に異なる可能性があります。そのため、これらの先行きの声明のいずれもを私たちや他者による表明または保証と見なすべきではなく、そのような先行きの声明に過度な依存を置くべきではありません。いかなる先行きの声明も、それがなされた日付を基準にし、新しい情報、将来の展開、その他の理由によるものであれ、法的義務に基づきそれを公に更新または修正する義務を負うものではありません。

さらに、「私たちは信じる」といったステートメントは、当該主題に関する私たちの信念や意見を反映しています。これらの記述は、この書類の日付を基準としています。私たちは、この情報がこれらのステートメントの合理的な根拠を提供していると信じていますが、この情報は限定されている可能性があり、不完全な可能性があります。これらのステートメントは本質的に不確実であり、投資家はこれらのステートメントに過度に依存しないよう注意を喚起されます。私たちは、このセクションおよびこの書類の他の場所で含まれる警告記述によってすべての将来を見据えた記述に修飾します。

概要

SharkNinjaは、世界中の消費者のために革新的な5つ星評価のライフスタイルソリューションを生み出す、グローバルな製品デザインおよびテクノロジー企業です。我々は現在競合する35のサブカテゴリー全体で強力な成長と革新をもたらす20億ドルのブランドを2つ構築しています。我々は、家庭用品カテゴリー全体を破壊することにより市場に参入し、リーダーシップポジションを確立するという実績があり、これには、クリーニング、調理と飲料、食品の準備、その他（室内環境と美容を含む）が含まれます。

私たちの成功は、消費者のニーズを深く理解した上で、先進的なエンジニアリングと革新的な能力を結集していることに中心があります。私たちはシェアを拡大することで、消費者を喜ばせるために魅力的な価値を持つ革新的な家庭電化製品を提供し続けるよう励んでいます。売上の持続的な成長と増加するシェアは、私たちの製品が消費者の成長するニーズや欲求に応えるライフスタイルソリューションを提供していることを示しています。

We drive high brand engagement through our dynamic approach to solutions-driven storytelling in categories that we believe have not been historically known for high engagement. This solutions-driven approach focuses on educating the consumer on our innovative solution to a consumer problem that makes their experience more efficient and more enjoyable. Our differentiated storytelling complements our innovative products across a variety of channels, including in-store, online, on television and across social media. This approach engages current and new consumers, fueling demand for our solutions across a variety of categories. Utilizing this strategy, we have built a global community of passionate brand ambassadors who we believe value our innovation, quality and performance.

We sell our products using an omnichannel distribution strategy that consists primarily of retail and direct-to-consumer (“DTC”) channels. Our retail channel covers brick-and-mortar retailers, e-commerce platforms and multichannel retailers, which, in turn, sell our products to the end consumers. Some of the largest retailers we sell to include Walmart, Amazon, Target and Best Buy, as well as a significant number of independent retailers. Our DTC channel covers sales directly to consumers through our websites. The goal of our omnichannel distribution strategy is to be the most prominent and relevant brand wherever our consumers choose to shop.

We have built an agile and efficient supply chain over time and have made significant investments to optimize manufacturing and sourcing. Our supply chain infrastructure harnesses three differentiating factors: (i) long-standing factory partnerships that allow us to rapidly develop and produce our products, (ii) factory flexibility that allows us to incorporate insights and adapt at any stage of the production process and (iii) our volumes and long-term strategic partnerships with key shippers allow us to attain competitive inbound freight rates, even when the market is constrained. We have also made significant investments in local talent to help oversee the production process and ensure that our manufacturers’ products meet our strenuous quality standards.

Key Factors Affecting Our Performance

We believe that our performance and results of operations have been and will continue to be, affected by a number of factors, including those described below and in “Item 3. Key Information — D. Risk Factors” included in our Form 20-F.

Continued Product Innovation in Existing Categories and New Adjacent Categories

Our future growth depends, in part, on our ability to introduce new and enhanced products in our existing categories and enter adjacent categories. The success of our new products depends on many factors, including finding innovative solutions to consumer problems, differentiating our products from those of our competitors, obtaining protection for our intellectual property and anticipating consumer trends. By introducing new products, we appeal to a broader range of consumers, which expands our use cases and increases our presence in underserved or untapped markets. To continue with our rapid pace of innovation, we will need to continue to invest in Research and Development ("R&D") to enhance our product offerings. We believe that our consumer insight capabilities and robust in-house R&D teams, with dedicated engineering and development experts around the globe, enables us to maintain a product pipeline several years into the future. We are relentlessly focused on staying at the forefront of our product categories while entering new adjacent categories through our continuous innovation and ever-evolving consumer insights.

Ability to Attract and Retain Consumers and Increase Consumer Engagement

We believe that we are still in the early stages of growth across our markets and that we can significantly grow our consumer base and the number of our products per household. Our performance will depend on our continued ability to retain existing consumers and attract new consumers to purchase products across our portfolio, which is reliant on us maintaining consumer loyalty and satisfaction. Consumer engagement with our brands is integral to the continued growth and success of our business. We have strategically invested and will continue to invest, significant time and resources towards our marketing initiatives, including long-form advertising to the latest social media platforms, that educate consumers, highlight our quality and value, inspire conversion in-store and online. We have also invested and expect to continue to invest, in our ability to glean consumer insights from a variety of sources, including direct and indirect interactions with consumers and consumer reviews of our products. We believe that continued interactions with consumers allow us to understand their needs and desires, enhancing our product storytelling and inspiring purchases.

Continued Geographic Expansion Within Existing and New International Markets

We believe our ability to expand within existing international markets and enter new international markets will continue to play an integral role in our future growth. We have cultivated our presence in international markets for years, accumulating experience and local resources while building long-term, in-depth cooperation with key retailers. Our ability to grow our business in new international markets will depend on factors such as our marketing efforts, continued consumer satisfaction with our products and understanding consumer preferences in different markets. International expansion may require us to invest in sales and marketing, infrastructure and personnel. As we scale in new markets, we anticipate that we will leverage our existing relationships with key international retail partners and build partnerships with new retailers.

Ability to Manage Costs and Inventory

Our results of operations are affected by our ability to manage our manufacturing and supply costs effectively. Our product costs vary based on the category, level of technological innovation and complexity, as well as the arrangements with our manufacturing partners and the input costs they face. We have continued to expand our supplier base as we have expanded into new categories and geographies. We strive to ensure that we are multi-sourced across high-volume products to ensure sufficient product supply. Our supply chain remains highly agile with competitive bidding to secure favorable pricing, allowing us to offer greater value to our consumers. Further, we generally have long-standing relationships with our key suppliers that have solidified our supply chain infrastructure and enabled us to source our products effectively.

Continued Execution of Our Omni-Channel Strategy

Since our inception, we have relentlessly focused on meeting our consumers where they shop. Our omnichannel strategy has continued to evolve as consumer shopping habits have evolved. We have established credibility through key retail channels, built numerous years’ worth of trust with leading retailers and have had success in our DTC channel, allowing us to gain deeper consumer insights. We have also invested and expect to continue to invest in growing our teams of sales representatives to keep pace with increasing consumer demand and expand our relationships with both brick-and-mortar and online retailers. Our ability to execute this strategy will depend on various factors such as retailer satisfaction with the sales and profitability of our products, our ability to continue to innovate and our ability to maintain and expand the number of categories in which we are a category captain at key retailers.

Economic Conditions and Seasonality

Demand for our products is impacted by various economic factors that affect our consumers, such as consumer confidence, demographic trends, employment levels, inflation and other economic factors. These factors may influence the extent to which consumers purchase small household appliances. We believe that small appliances, such as our product offerings, are less cyclical than large appliances, which are typically more expensive and involve less frequent purchases by consumers. We also believe that consumers are attracted to our products because of the potential to save money; for instance, purchasing a Ninja Coffee Maker or Foodi Oven enables consumers to reduce spend on coffee and food away from home. In addition, we believe that our net sales include a seasonal component. We expect our net sales to be highest in our third and fourth quarters as retailers are buying products in advance of the holiday season and our online retail and DTC sales, in particular, increase during the holiday season. We expect this seasonality to continue to be a factor in our results of operations.

Key Components of Results of Operations

Net Sales

We offer a broad range of products that span 35 sub-categories primarily within small household appliances. We generate net sales from product sales to retailers, both brick-and-mortar and online, as well as through DTC sales and distributors. We recognize sales upon transfer of control of products to retailers, consumers and distributors, net of returns, discounts and allowances provided to retailers and funding provided to retailers for promotions and advertising of our products. Control is generally transferred upon shipment or delivery of the products, depending on shipping terms. Net sales are impacted by the effect of foreign exchange rates, competition, consumer spending habits and general economic conditions.

We disaggregate the net sales of our products across four categories:

•Cleaning Appliances, which includes corded and cordless vacuums, including handheld and robotic vacuums, as well as other floorcare products including steam mops, wet/dry cleaning floor products and carpet extraction;

•Cooking and Beverage Appliances, which includes air fryers, multi-cookers, outdoor and countertop grills and ovens, coffee systems, carbonation, cookware, cutlery, kettles, toasters and bakeware;

•Food Preparation Appliances, which includes blenders, food processors, ice cream makers, juicers, frozen drink appliances and coolers; and

•Other, which includes beauty appliances such as hair dryers and stylers, home environment products, such as air purifiers and fans.

Gross Profit and Gross Margin

Gross profit reflects net sales less the cost of sales. Cost of sales primarily consists of the purchase cost of our products from third-party manufacturers, inbound freight costs, tariffs, product quality testing and inspection costs, the costs associated with receiving inventory into our warehouses, depreciation on molds and tooling that we own, warranty costs, damages, obsolescence and shrinkage costs and allocated overhead, including the service fee paid to JS Global for supply chain services.

We calculate gross margin as gross profit divided by net sales. Gross margin is generally impacted by changes in channel mix since our DTC sales usually generate a higher gross margin than sales to retailers and distributors. Additionally, gross margin is also impacted by product category mix, changes in foreign currency fluctuations, changes in tariff policies, fluctuations in inbound freight costs and fluctuations in commodity and component costs.

Operating Expenses

Our operating expenses consist of research and development, sales and marketing and general and administrative expenses. Advertising expenses are the most significant component of our operating expenses and consist of television advertising as well as digital advertising. Personnel-related expenses are the second most significant component of operating expenses and consist of salaries and bonuses, share-based compensation and employee benefit costs. Our operating expenses also include allocated overhead. Overhead costs that are not substantially dedicated for use by a specific functional group are allocated based on headcount. Allocated overhead costs include shared costs associated with facilities, including rent and utilities, information technology and related personnel and depreciation of property and equipment. We expect our operating expenses to increase on an absolute dollar basis for the foreseeable future as we continue to increase investments to support our growth including through increasing staff levels, expanding research and development and greater marketing activities. We also anticipate increased administrative and compliance costs as a result of becoming a public company.

Research and Development

Research and development costs primarily consist of personnel-related costs for our engineering and product development personnel responsible for the design, development and testing of our products, contractors and consulting expenses, the cost of components and test equipment used for product, tooling and prototype development, prototype expenses, overhead cost and amortization of intangible assets related to patents and amortization expenses related to capitalized development software.

Sales and Marketing

Sales and marketing expenses primarily consist of advertising, marketing and other brand-building costs, salaries and associated expenses for sales and marketing teams, shipping and fulfillment costs, including costs for third-party delivery services and shipping materials, overhead cost, amortization expenses of intangible assets related to customer relationships and depreciation expenses.

General and Administrative

General and administrative expenses primarily consist of personnel-related costs for finance, legal, human resources, information technology and administrative functions, third-party professional service fees for external legal, accounting and other consulting services, depreciation expenses, overhead costs and expenses associated with operating as a public company, including expenses to comply with the rules and regulations of the SEC and the listing rules of NYSE, as well as expenses for corporate insurance, director and officer insurance, and investor relations.

Interest Expense, Net

Interest expense, net of any interest earned on our cash and cash equivalents, primarily consists of interest on our borrowings, including our term loan facility. See “—Liquidity and Capital Resources—Indebtedness.”

Other Income (Expense), Net

Other income (expense), net primarily consists of gains and losses on foreign currency transactions, foreign currency forward contracts and other income and expenses that are not part of our normal operating activities. See “—Quantitative and Qualitative Disclosures About Market Risk—Foreign Currency Exchange Risk.”

Provision for Income Taxes

Provision for income taxes consists primarily of income taxes in the United States and other foreign jurisdictions in which we conduct our business.

Results of Operations

The following table sets forth our selected condensed consolidated statements of income information for each of the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2024		2023		2024		2023
Net sales	$	1,426,566	$	1,070,617	$	3,741,452	$	2,876,211
Cost of sales	731,559		583,124		1,918,929		1,591,254
Gross profit	695,007		487,493		1,822,523		1,284,957
Operating expenses:
Research and development(1)	94,808		60,691		254,457		180,430
Sales and marketing(1)	300,841		207,599		818,594		568,035
General and administrative(1)	119,096		124,655		310,432		263,682
Total operating expenses	514,745		392,945		1,383,483		1,012,147
Operating income	180,262		94,548		439,040		272,810
Interest expense, net	(16,916)		(13,003)		(46,482)		(28,523)
Other income (expense), net	11,031		(5,865)		14,968		(41,315)
Income before income taxes	174,377		75,680		407,526		202,972
Provision for income taxes	42,048		56,958		97,537		85,218
Net income	$	132,329	$	18,722	$	309,989	$	117,754

(1)     Includes share-based compensation as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2024		2023		2024		2023
Research and development	$	2,030	$	3,160	$	7,815	$	4,229
Sales and marketing	2,778		1,920		7,485		2,432
General and administrative	8,977		16,257		32,041		17,841
Total share-based compensation	$	13,785	$	21,337	$	47,341	$	24,502

The following table sets forth our selected condensed consolidated statements of income information as a percentage of our total net sales for each of the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales	51.3		54.5		51.3		55.3
Gross profit	48.7		45.5		48.7		44.7
Operating expenses:
Research and development	6.6		5.7		6.8		6.3
Sales and marketing	21.1		19.4		21.9		19.7
General and administrative	8.3		11.6		8.3		9.2
Total operating expenses	36.0		36.7		37.0		35.2
Operating income	12.7		8.8		11.7		9.5
Interest expense, net	(1.3)		(1.2)		(1.3)		(1.0)
Other (expense) income, net	0.8		(0.6)		0.4		(1.4)
Income before income taxes	12.2		7.0		10.8		7.1
Provision for income taxes	2.9		5.3		2.6		3.0
Net income	9.3	%	1.7	%	8.2	%	4.1	%

Comparison of the Three Months Ended September 30, 2024 and 2023

Net Sales


	Three Months Ended September 30,
($ in thousands, except %)	2024		2023		$ Change		% Change
Net sales	$	1,426,566	$	1,070,617	$	355,949	33.2	%

Our net sales increased by $355.9 million, or 33.2%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase in 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.

Net sales in our product categories were as follows:


	Three Months Ended September 30,
($ in thousands, except %)	2024		2023		$ Change		% Change
Cleaning Appliances	$	527,453	$	449,319	$	78,134	17.4	%
Cooking and Beverage Appliances	411,453		339,328		72,125		21.3
Food Preparation Appliances	366,834		211,461		155,373		73.5
Other	120,826		70,509		50,317		71.4
Total net sales	$	1,426,566	$	1,070,617	$	355,949	33.2	%

•Cleaning Appliances net sales increased by $78.1 million, or 17.4%, to $527.5 million in the three months ended September 30, 2024, compared to $449.3 million for the three months ended

September 30, 2023. This increase was driven by the carpet extractor and cordless vacuums sub-categories.

•Cooking and Beverage Appliances net sales increased by $72.1 million, or 21.3%, to $411.5 million in the three months ended September 30, 2024, compared to $339.3 million for the three months ended September 30, 2023. This increase was driven by growth in Europe and the continued momentum within heated cooking.

•Food Preparation Appliances net sales increased by $155.4 million, or 73.5%, to $366.8 million in the three months ended September 30, 2024, compared to $211.5 million for the three months ended September 30, 2023 driven by strong sales of our ice cream makers and the launch of frozen drink appliances.

•Other net sales increased by $50.3 million, or 71.4%, to $120.8 million in the three months ended September 30, 2024, compared to $70.5 million for the three months ended September 30, 2023. This increase was driven by strength of haircare products and air purifiers.

Gross Profit and Gross Margin


	Three Months Ended September 30,
($ in thousands, except %)	2024			2023			$ Change		% Change
Gross profit	$	695,007		$	487,493		$	207,514	42.6	%
Gross margin	48.7		%	45.5		%

Our gross profit increased by $207.5 million, or 42.6%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

Our gross margin increased by 320 basis points for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase in gross margin was derived from optimizations within our supply chain, sourcing and costing strategy and foreign exchange benefit, as well as a reduction in the contractual sourcing service fee paid to JS Global for supply chain services. This was partially offset by the impact of tariffs.

Operating Expenses


	Three Months Ended September 30,
($ in thousands, except %)	2024			2023			$ Change		% Change
Research and development	$	94,808		$	60,691		$	34,117	56.2	%
Percentage of net sales	6.6		%	5.7		%
Selling and marketing	$	300,841		$	207,599		$	93,242	44.9	%
Percentage of net sales	21.1		%	19.4		%
General and administration	$	119,096		$	124,655		$	(5,559)	(4.5)	%
Percentage of net sales	8.3		%	11.6		%
Total operating expenses	$	514,745		$	392,945		$	121,800	31.0	%
Percentage of net sales	36.0		%	36.7		%

Research and Development

Research and development expenses increased by $34.1 million, or 56.2%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. This increase was primarily driven by incremental personnel-related expenses of $12.7 million to support new product categories and new market expansion. The overall increase was also driven by an increase of $8.8 million in prototype and testing costs, an

increase of $4.5 million in professional and consulting fees, an increase of $4.5 million in depreciation and amortization expense and an increase of $2.1 million in consumer insight initiatives.

Sales and Marketing

Sales and marketing expenses increased by $93.2 million, or 44.9%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. This increase was primarily attributable to increases of $42.1 million in advertising-related expenses; an increase of $33.4 million in delivery and distribution costs driven by higher volumes, particularly in our DTC business; $14.5 million in personnel-related expenses to support new product launches and expansion into new markets; an increase of $5.4 million in professional and consulting fees; offset by a decrease in depreciation and amortization expense of $4.4 million.

General and Administrative

General and administrative expenses decreased by $5.6 million, or 4.5%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. This decrease was primarily driven by a decrease in transaction costs related to the separation and distribution from JS Global of $41.5 million. The decrease was offset by an increase of $27.9 million in legal fees, including a $13.5 million legal settlement reserve related to certain patent infringement claims; an increase of $3.9 million in professional and consulting fees; an increase of $2.8 million in technology support costs and an increase of $2.2 million in credit card processing and merchant fees.

Interest Expense, Net


	Three Months Ended September 30,
($ in thousands, except %)	2024			2023			$ Change		% Change
Interest expense, net	$	16,916		$	13,003		$	3,913	30.1	%
Percentage of net sales	1.3		%	1.2		%

Interest expense, net increased by $3.9 million, or 30.1%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. This increase was primarily due to a $2.7 million increase in interest expense on our term loans, which was driven by higher principal and interest on the new debt entered into on July 20, 2023 and a $1.0 million increase in interest expense on our revolving credit facility.

Other Income (Expense), Net


	Three Months Ended September 30,
($ in thousands, except %)	2024			2023			$ Change		% Change
Other income (expense), net	$	11,031		$	(5,865)		$	16,896	288.1	%
Percentage of net sales	0.8		%	(0.6)		%

Other income (expense), net increased by $16.9 million, or 288.1%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The difference was primarily attributable to changes in foreign currency year over year, primarily driven by the strengthening of the British Pound.

Provision for Income Taxes


	Three Months Ended September 30,
($ in thousands, except %)	2024			2023			$ Change		% Change
Provision of income taxes	$	42,048		$	56,958		$	(14,910)	(26.2)	%
Percentage of income before income taxes	24.1		%	75.3		%

Provision for income taxes decreased by $14.9 million, or 26.2%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. Our effective tax rate (“ETR”) was 24.1% and 75.3% of our income before income taxes for the three months ended September 30, 2024 and 2023, respectively. This decrease in the ETR was primarily related to the impacts of the separation and distribution and refinancing, such as withholding taxes and transaction costs, in the prior year.

Comparison of the Nine Months Ended September 30, 2024 and 2023

Net Sales


	Nine Months Ended September 30,
($ in thousands, except %)	2024		2023		$ Change		% Change
Net sales	$	3,741,452	$	2,876,211	$	865,241	30.1	%

Our net sales increased by $865.2 million, or 30.1%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The increase in 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.

Net sales in our product categories were as follows:


	Nine Months Ended September 30,
($ in thousands, except %)	2024		2023		$ Change		% Change
Cleaning Appliances	$	1,415,488	$	1,277,986	$	137,502	10.8	%
Cooking and Beverage Appliances	1,120,371		939,060		181,311		19.3
Food Preparation Appliances	836,782		472,685		364,097		77.0
Other	368,811		186,480		182,331		97.8
Total net sales	$	3,741,452	$	2,876,211	$	865,241	30.1	%

•Cleaning Appliances net sales increased by $137.5 million, or 10.8%, to $1,415.5 million in the nine months ended September 30, 2024, compared to $1,278.0 million for the nine months ended September 30, 2023. This increase was driven by the carpet extractor and robotics sub-categories.

•Cooking and Beverage Appliances net sales increased by $181.3 million, or 19.3%, to $1,120.4 million in the nine months ended September 30, 2024, compared to $939.1 million for the nine months ended September 30, 2023. This increase was 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 $364.1 million, or 77.0%, to $836.8 million in the nine months ended September 30, 2024, compared to $472.7 million for the nine months ended September 30, 2023 driven by strong sales of our ice cream makers and compact blenders, specifically our portable blenders.

•Other net sales increased by $182.3 million, or 97.8%, to $368.8 million in the nine months ended September 30, 2024, compared to $186.5 million for the nine months ended September 30, 2023. This increase was driven by strength of haircare products, our FlexBreeze fans, and air purifiers.

Gross Profit and Gross Margin


	Nine Months Ended September 30,
($ in thousands, except %)	2024			2023			$ Change		% Change
Gross profit	$	1,822,523		$	1,284,957		$	537,566	41.8	%
Gross margin	48.7		%	44.7		%

Our gross profit increased by $537.6 million, or 41.8%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

Our gross margin increased by 400 basis points for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The increase in gross margin was derived from optimizations within our supply chain, sourcing and costing strategy, regional expansion, and foreign exchange benefit, as well as a reduction in the contractual sourcing service fee paid to JS Global for supply chain services.

Operating Expenses


	Nine Months Ended September 30,
($ in thousands, except %)	2024			2023			$ Change		% Change
Research and development	$	254,457		$	180,430		$	74,027	41.0	%
Percentage of net sales	6.8		%	6.3		%
Selling and marketing	$	818,594		$	568,035		$	250,559	44.1	%
Percentage of net sales	21.9		%	19.7		%
General and administration	$	310,432		$	263,682		$	46,750	17.7	%
Percentage of net sales	8.3		%	9.2		%
Total operating expenses	$	1,383,483		$	1,012,147		$	371,336	36.7	%
Percentage of net sales	37.0		%	35.2		%

Research and Development

Research and development expenses increased by $74.0 million, or 41.0%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. This increase was primarily driven by incremental personnel-related expenses of $33.4 million driven by increased headcount to support new product categories and new market expansion, and includes an increase of $3.6 million in share-based compensation. The overall increase was also driven by an increase of $20.4 million in prototypes and testing costs, an increase of $12.9 million in professional and consulting fees, an increase of $3.2 million in travel costs and an increase of $3.0 million in consumer insight initiatives and an increase $2.1 million in depreciation and amortization expense.

Sales and Marketing

Sales and marketing expenses increased by $250.6 million, or 44.1%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. This increase was primarily attributable to increases of $127.5 million in advertising-related expenses; an increase of $79.1 million in delivery and distribution costs driven by higher volumes, particularly in our DTC business; $38.9 million in personnel-related expenses to support new product launches and expansion into new markets, which includes an incremental $5.1 million of share-based compensation; $4.0 million in travel costs; $8.9 million in professional and consulting fees; offset by a decrease in depreciation and amortization expense of $7.5 million.

General and Administrative

General and administrative expenses increased by $46.8 million, or 17.7%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. This increase was primarily driven by an increase of $44.9 million in legal fees, including a $13.5 million legal settlement reserve related to certain patent infringement claims; an increase in personnel-related expenses of $32.5 million, including a $14.2 million increase in share-based compensation; an increase of $17.3 million in professional and consulting fees; an increase of $11.9 million in technology support costs; an increase of $9.0 million in credit card processing and merchant fees; an increase of $4.8 million in product liability and insurance; an increase of $3.4 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 $76.5 million.

Interest Expense, Net


	Nine Months Ended September 30,
($ in thousands, except %)	2024			2023			$ Change		% Change
Interest expense, net	$	46,482		$	28,523		$	17,959	63.0	%
Percentage of net sales	1.3		%	1.0		%

Interest expense, net increased by $18.0 million, or 63.0%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. This increase was primarily due to a $18.8 million increase in interest expense on our term loans, which was driven by higher principal and interest on the new debt entered into on July 20, 2023.

Other Income (Expense), Net


	Nine Months Ended September 30,
($ in thousands, except %)	2024			2023			$ Change		% Change
Other income (expense), net	$	14,968		$	(41,315)		$	56,283	136.2	%
Percentage of net sales	0.4		%	(1.4)		%

Other income (expense), net increased by $56.3 million, or 136.2%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The increase was primarily attributable to changes in foreign currency year over year, primarily related to derivatives that were not designated as hedging instruments in the prior year, as well as a $5.0 million gain upon a settlement that was reached with a supplier.

Provision for Income Taxes


	Nine Months Ended September 30,
($ in thousands, except %)	2024			2023			$ Change		% Change
Provision of income taxes	$	97,537		$	85,218		$	12,319	14.5	%
Percentage of income before income taxes	23.9		%	42.0		%

Provision for income taxes increased by $12.3 million, or 14.5%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. Our ETR was 23.9% and 42.0% of our income before income taxes for the nine months ended September 30, 2024 and 2023, respectively. This decrease in the ETR was primarily related to the impacts of the separation and distribution and refinancing, such as withholding taxes and transaction costs, in the prior year.

Non-GAAP Financial Measures

In addition to the measures presented in our condensed 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 and Adjusted EBITDA Margin. 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 APAC distribution channels, both of which were be transferred to JS Global concurrently with the separation (the “Divestitures”), as well as the cost of sales from (i) inventory markups that will be 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.

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 September 30,				Nine Months Ended September 30,
($ in thousands)	2024		2023		2024		2023
Net sales	$	1,426,566	$	1,070,617	$	3,741,452	$	2,876,211
Divested subsidiary adjustment(1)	—		(13,196)		—		(77,544)
Adjusted Net Sales	$	1,426,566	$	1,057,421	$	3,741,452	$	2,798,667

(1)Adjusted for net sales from SharkNinja Co., Ltd. (“SNJP”) and the APAC distribution channels for the three and nine months ended September 30, 2023, as if such Divestitures occurred on January 1, 2023.

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 September 30,						Nine Months Ended September 30,
($ in thousands, except %)	2024			2023			2024			2023
Net sales	$	1,426,566		$	1,070,617		$	3,741,452		$	2,876,211
Cost of sales	(731,559)			(583,124)			(1,918,929)			(1,591,254)
Gross profit	695,007			487,493			1,822,523			1,284,957
Gross margin	48.7		%	45.5		%	48.7		%	44.7		%
Divested subsidiary net sales adjustment(1)	—			(13,196)			—			(77,544)
Divested subsidiary cost of sales adjustment(2)	—			7,628			—			45,116
Product Procurement Adjustment(3)	9,571			23,574			37,876			53,369
Adjusted Gross Profit	$	704,578		$	505,499		$	1,860,399		$	1,305,898
Adjusted Net Sales	$	1,426,566		$	1,057,421		$	3,741,452		$	2,798,667
Adjusted Gross Margin	49.4		%	47.8		%	49.7		%	46.7		%

(1)Adjusted for net sales from SNJP and the APAC distribution channels for the three and nine months ended September 30, 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 nine months ended September 30, 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 September 30,				Nine Months Ended September 30,
($ in thousands)	2024		2023		2024		2023
Operating income	$	180,262	$	94,548	$	439,040	$	272,810
Share-based compensation(1)	13,785		21,337		47,341		24,502
Litigation costs(2)	29,035		3,965		42,691		4,600
Amortization of acquired intangible assets(3)	4,896		4,897		14,690		14,690
Transaction-related costs(4)	—		41,455		1,342		76,549
Product Procurement Adjustment(5)	9,571		23,574		37,876		53,369
Divested subsidiary operating income adjustment(6)	—		287		—		(8,456)
Adjusted Operating Income	$	237,549	$	190,063	$	582,980	$	438,064

(1)Represents non-cash expense related to awards issued from the SharkNinja and JS Global equity incentive plans.

(2)Represents litigation costs incurred and related settlements for certain patent infringement claims, false advertising claims, and any related settlement costs, which were recorded in general and administrative expenses.

(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. Of the amortization of acquired intangible assets, $0.9 million for the three months ended September 30, 2024 and 2023, and $2.8 million for the nine months ended September 30, 2024 and 2023, was recorded to research and development expenses, and $4.0 million for the three months ended September 30, 2024 and 2023, and $11.9 million for the nine months ended September 30, 2024 and 2023, was recorded to sales and marketing expenses.

(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 nine months ended September 30, 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, (vii) the tax impact of the adjusted items and (viii) certain withholding taxes.

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 September 30,				Nine Months Ended September 30,
($ in thousands, except share and per share amounts)	2024		2023		2024		2023
Net income	$	132,329	$	18,722	$	309,989	$	117,754
Share-based compensation(1)	13,785		21,337		47,341		24,502
Litigation costs(2)	29,035		3,965		42,691		4,600
Foreign currency (gains) losses, net(3)	(11,156)		3,862		(9,569)		43,479
Amortization of acquired intangible assets(4)	4,896		4,897		14,690		14,690
Transaction-related costs(5)	—		41,455		1,342		76,549
Product Procurement Adjustment(6)	9,571		23,574		37,876		53,369
Tax impact of adjusting items(7)	(7,996)		(4,704)		(25,711)		(30,686)
Tax withholding adjustment(8)	—		19,474		—		19,474
Divested subsidiary net income adjustment(9)	—		394		—		(6,586)
Adjusted Net Income	$	170,464	$	132,976	$	418,649	$	317,145
Net income per share, diluted	$	0.94	$	0.13	$	2.20	$	0.85
Adjusted Net Income Per Share	$	1.21	$	0.95	$	2.97	$	2.28
Diluted weighted-average number of shares used in computing net income per share and Adjusted Net Income Per Share(10)	141,305,999		139,430,805		140,974,062		139,179,724

(1)Represents non-cash expense related to awards issued from the SharkNinja and JS Global equity incentive plans.

(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. Of the amortization of acquired intangible assets, $0.9 million for the three months ended September 30, 2024 and 2023, and $2.8 million for the nine months ended September 30, 2024 and 2023, was recorded to research and development expenses, and $4.0 million for the three months ended September 30, 2024 and 2023, and $11.9 million for the nine months ended September 30, 2024 and 2023, was recorded to sales and marketing expenses.

(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%, which approximates our effective tax rate, excluding (i) divested subsidiary net income adjustment described in footnote (9), and (ii) certain share-based compensation costs and separation and distribution-related costs that are not tax deductible.

(8)Represents withholding taxes associated with the cash dividend paid to JS Global in connection with the separation and related refinancing.

(9)Adjusted for net income (loss) from SNJP and the APAC distribution channels for the three and nine months ended September 30, 2023, as if such Divestitures occurred on January 1, 2023.

(10)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 September 30,						Nine Months Ended September 30,
($ in thousands, except %)	2024			2023			2024			2023
Net income	$	132,329		$	18,722		$	309,989		$	117,754
Interest expense, net	16,916			13,003			46,482			28,523
Provision for income taxes	42,048			56,958			97,537			85,218
Depreciation and amortization	29,828			25,602			86,870			77,394
EBITDA	221,121			114,285			540,878			308,889
Share-based compensation (1)	13,785			21,337			47,341			24,502
Litigation costs (2)	29,035			3,965			42,691			4,600
Foreign currency losses (gains), net(3)	(11,156)			3,862			(9,569)			43,479
Transaction-related costs(4)	—			41,455			1,342			76,549
Product Procurement Adjustment(5)	9,571			23,574			37,876			53,369
Divested subsidiary Adjusted EBITDA adjustment(6)	—			264			—			(11,020)
Adjusted EBITDA	$	262,356		$	208,742		$	660,559		$	500,368
Adjusted Net Sales	$	1,426,566		$	1,057,421		$	3,741,452		$	2,798,667
Adjusted EBITDA Margin	18.4		%	19.7		%	17.7		%	17.9		%

(1)Represents non-cash expense related to awards issued from the SharkNinja and JS Global equity incentive plans.

(4)Represents certain costs incurred related to the separation and distribution from JS Global and the secondary offering transactions.

(6)Adjusted for Adjusted EBITDA from SNJP and the APAC distribution channels for the three and nine months ended September 30, 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.

Liquidity and Capital Resources

Our principal sources of liquidity are our cash and cash equivalents, cash generated from operations and our revolving credit facility (“2023 Revolving Facility”). Our principal uses of cash in recent periods have been investing in international expansion, new product development, working capital, capital expenditures, and repayment of debt. As of September 30, 2024, our principal sources of liquidity were cash and cash equivalents of $127.9 million and our available balance of $315.9 million under our 2023 Revolving Facility. Our cash and cash equivalents consist primarily of cash on deposits with banks.

We believe that our existing cash and cash equivalents together with cash provided by operations and the availability under our 2023 Revolving Facility will be sufficient to meet our needs for at least the next 12 months from the date of the filing of this Form 6-K. We plan to use our current cash on hand, cash generated by operations and our 2023 Revolving Facility to support our core business operations and strategic plan to accelerate our go-to-market strategy, invest in new product development and enhance our global distribution. We may be required to seek additional equity or debt financing to fund our activities. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, the results of operations and financial conditions of the business would be materially and adversely affected.

We have lease obligations and other contractual obligations and commitments as part of our ordinary course of business. We did not have during the periods presented and we do not currently have, any off-balance sheet arrangements involving commitments or obligations, including contingent obligations, arising from arrangements with unconsolidated entities or persons that have or are reasonably likely to have a material current or future effect on our business, financial condition, results of operations, liquidity, cash requirements or capital resources.

Indebtedness

In July 2023, we entered into a credit agreement (“2023 Credit Agreement”) with Bank of America, N.A., as administrative agent, and certain banks and financial institutions party thereto as lenders and issuing banks. The 2023 Credit Agreement provides for an $810.0 million term loan facility (the “2023 Term Loans”) and a $500.0 million 2023 Revolving Facility. The 2023 Term Loans and 2023 Revolving Facility mature in July 2028, and both facilities bear interest at the Secured Overnight Financing Rate (“SOFR”) plus 1.750%. We may request increases to the 2023 Term Loans or 2023 Revolving Facility in a maximum aggregate amount not to exceed the greater of $520.0 million or 100% of adjusted earnings before interest, taxes, depreciation, and amortization, as defined in the 2023 Credit Agreement, for the most recently completed fiscal year. As of September 30, 2024, we had $964.8 million debt outstanding under the 2023 Credit Agreement.

No amounts were outstanding on the 2023 Revolving Facility as of December 31, 2023. During the nine months ended September 30, 2024, there were $210.0 million in draw downs on the 2023 Revolving Facility, of which $35.0 million has been repaid and $175.0 million remained outstanding as of September 30, 2024. As of September 30, 2024, $9.1 million of letters of credit were outstanding, resulting in an available balance of $315.9 million under the 2023 Revolving Facility.

The Company is required to meet certain financial covenants customary with this type of agreement, including, but not limited to, maintaining a maximum ratio of indebtedness and a minimum specified interest coverage ratio. As of September 30, 2024, the Company was in compliance with the covenants under the 2023 Credit Agreement.

Cash Flows

The following table summarizes our cash flows for the periods presented:


	Nine Months Ended September 30,
($ in thousands)	2024		2023
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)

Operating Activities

Net cash used in operating activities for the nine months ended September 30, 2024 of $43.0 million was primarily related to our net income of $310.0 million, adjusted for non-cash charges of $123.1 million and net cash outflows of $476.1 million from changes in our operating assets and liabilities. Non-cash charges primarily consisted of depreciation and amortization of $86.9 million, share-based compensation of $47.3 million, non-cash lease expenses of $16.0 million, provision for credit losses of $3.7 million and other non-cash adjustments of $1.6 million, offset by deferred income tax of $32.4 million. The main drivers of the net cash outflows derived from the changes in operating assets and liabilities were related to an increase in inventories of $357.1 million, an increase in accounts receivable of $193.1 million, an increase in prepaid expenses and other assets of $69.5 million, a decrease in accrued expenses and other liabilities of $12.0 million, a decrease in operating lease liabilities of $7.4 million and a decrease in tax payable of $1.0 million, partially offset by an increase in accounts payable of $162.0 million.

Net cash provided by operating activities for the nine months ended September 30, 2023 of $95.8 million was primarily related to our net income of $117.8 million, adjusted for non-cash charges of $119.4 million and net cash outflows of $141.4 million from changes in our operating assets and liabilities. Non-cash charges primarily consisted of depreciation and amortization of $77.4 million, share-based compensation of $24.5 million, non-cash lease expenses of $9.7 million, deferred income tax of $3.9 million, provision for credit losses of $2.2 million and other non-cash adjustments of $1.7 million. The main drivers of the net cash outflows derived from the changes in operating assets and liabilities were related to an increase in inventories of $259.0 million, an increase in accounts receivable of $192.2 million, a decrease in accrued expenses and other liabilities of $90.9 million and a decrease in operating lease liabilities of $9.3 million, partially offset by an increase in accounts payable of $343.6 million, a decrease in prepaid expenses and other assets of $65.5 million and an increase in tax payable of $0.9 million.

Investing Activities

Investing activities consist primarily of purchases of property and equipment and intangible assets.

Cash used in investing activities for the nine months ended September 30, 2024 of $102.9 million consisted of purchases of property and equipment of $95.2 million, purchases of intangible assets of $6.6 million and capitalized software development costs of $1.1 million.

Cash used in investing activities for the nine months ended September 30, 2023 of $64.4 million consisted of purchases of property and equipment of $70.5 million, purchases of intangible assets of $6.9 million, capitalized software development costs of $0.7 million, and other investing activities, net of $3.1 million, which was partially offset by cash receipts on beneficial interest in sold receivables of $16.8 million.

Financing Activities

Financing activities consist primarily of debt repayments and the taxes paid for shares withheld upon vesting of restricted stock units.

Cash provided by financing activities for the nine months ended September 30, 2024 of $115.3 million consisted of net proceeds from borrowings under the revolving credit facility of $175.0 million and proceeds from employee stock purchase plan contributions of $5.5 million, offset by net ordinary shares withheld for taxes of $50.0 million and repayment of debt on the 2023 Term Loans of $15.1 million.

Cash used in financing activities for the nine months ended September 30, 2023 of $75.0 million consisted of repayment of the principal balance on the 2020 Term Loans of $437.5 million, distributions paid to JS Global of $435.3 million and a recharge from JS Global for share-based compensation of $3.1 million, which was offset by the net proceeds from the issuance of the 2023 Term Loans of $800.9 million.

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is principally the result of fluctuations in interest rates and foreign currency exchange rates.

Interest Rate Risk

Our exposure to interest rate risk relates to the interest income generated by cash and cash equivalents and interest expense on our debt. Our interest rate sensitivity is affected by changes in the general level of U.S. interest rates, particularly because our cash equivalents are in the form of checking accounts, government money market funds and money market deposit accounts in the United States. Interest income is sensitive to changes in the general level of interest rates. However, due to the short-term maturities of our cash equivalents, we believe a hypothetical 100 basis point increase or decrease in interest rates during any of the periods presented would not have had a material impact on our unaudited interim condensed consolidated financial statements.

During the nine months ended September 30, 2024 and 2023, average debt borrowings, excluding the impact of debt issuance costs, totaled $859.1 million and $512.0 million, respectively, with interest rates tied to LIBOR through July 20, 2023, and to SOFR thereafter. A hypothetical 100 basis point fluctuation to interest rates would have increased or decreased interest expense by $8.6 million and $5.1 million for the nine months ended September 30, 2024 and 2023, respectively.

Foreign Currency Exchange Risk

Our international net sales, cost of sales and operating expenses are denominated in multiple currencies, including British Pounds (“GBP”), Canadian Dollars, Chinese Renminbi, and Euros. As such, we have exposure to adverse changes in exchange rates associated with the net sales and operating expenses of our foreign operations. Any fluctuations in other currencies will have minimal direct impact on our international net sales.

The functional currency of our non-U.S. subsidiaries is generally the respective local currency, although there are some subsidiaries whose functional currency is not their respective local currency. Asset and liability balances denominated in non-U.S. Dollar currencies are translated into U.S. Dollars using period-end exchange rates, while translation of net sales, cost of sales and operating expenses is based on average monthly rates. Translation adjustments are recorded as a component of accumulated other comprehensive income (loss) and transaction gains and losses are recorded in other income (expense), net in our condensed consolidated statements of income.

Our primary foreign currency exchange risk relates to the purchase of inventory from manufacturers located in China. Although our inventory purchases are denominated in U.S. Dollars, as the foreign exchange rate between the Chinese Renminbi and the U.S. Dollar fluctuates, the amount paid to suppliers for our inventory will generally fluctuate accordingly based on our contractual terms. Our subsidiaries in Europe conduct business in their local currencies but are exposed to fluctuations between their functional currency and the U.S. Dollar, in particular due to their inventory purchases being denominated in U.S. Dollars. We regularly monitor the forecast of non-U.S. Dollar expense and the level of non-U.S. Dollar monetary asset and liability balances to determine if any actions,

including possibly entering into foreign currency contracts, should be taken to minimize the impact of fluctuating exchange rates on our results of operations.

We currently utilize foreign currency forward contracts, with financial institutions to protect against a portion of foreign exchange risks, mainly the exposure to changes in the exchange rate of the GBP against the U.S. Dollar that are associated with future cash flows denominated in GBP. These contracts do not subject us to material balance sheet risk due to exchange rate movements because gains and losses on these derivatives are intended to offset gains and losses on the related GBP denominated cash flows. The fair value of outstanding derivative instruments and associated disclosure are presented within “Note 5 - Fair Value Measurements” to our unaudited interim condensed consolidated financial statements included elsewhere in our Form 6-K. We may in the future enter into other derivative financial instruments if it is determined that such hedging activities are appropriate to further reduce our foreign currency exchange risk.

The estimated translation impact to our unaudited interim condensed consolidated financial statements of a hypothetical 1,000 basis points change in foreign currency exchange rates would amount to $0.8 million, $3.4 million, $9.5 million, and $9.2 million for the three months ended September 30, 2024 and 2023 and nine months ended September 30, 2024 and 2023, respectively. During the three months ended September 30, 2024 and 2023, and nine months ended September 30, 2024 and 2023, approximately 27.9%, 22.6%, 28.4%, and 25.6%, respectively, of our net sales and approximately 34.3%, 27.1%, 32.9%, and 28.6%, respectively, of our operating expenses were denominated in non-U.S. Dollar currencies.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and accounting estimates as compared to those disclosed in the Form 20-F.