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EX-99.2 3 exhibit992q324managementsd.htm EX-99.2 Document

Exhibit 99.2

管理层讨论和分析财务状况和经营业绩

以下讨论和分析提供了管理层认为与评估和了解我们经营业绩和财务状况相关的信息。你应该阅读我们基本报表中截至2024年9月30日和2023年12月31日的未经审计的中期摘要综合资产负债表中我们的财务状况和经营业绩的讨论和分析，并结合我们未经审计的中期摘要综合收益表、综合收益和股东权益表，三个月和九个月的结束时间截至2024年9月30日和2023年9月30日的未经审计的中期摘要的现金流量表中，截至2024年9月30日和2023年9月30日的九个月的现金流量表，以及包含在本6-k表格其他地方的未经审计的中期摘要综合财务报表相关说明，以及我们审计的合并财务报表和附注和其他信息， 2023年12月31日包含在我们向美国证券交易委员会（“SEC”）提交的20-F表格中的年度报告中，我们审计的合并财务报表以及相关附注和其他信息，于2024年3月1日提交的20-F表格。

关于前瞻性声明的警告

本表格6-k中的部分信息可能包含前瞻性陈述（根据1933年修订版证券法第27A条和1934年修订版证券交易法第21E条的含义），反映了我们对未来事件以及未来业务、财务状况、经营业绩和前景的当前看法。这些声明通常借助诸如“可能”、“应该”、“可能”、“预测”、“潜力”、“相信”、“很可能会导致”、“期待”、“继续”、“将会”、“预计”、“寻求”、“估计”、“打算”、“计划”、“预测”、“将”以及“展望”等词语或短语，或这些词语或短语的否定形式或其他可比较的具有未来或前瞻性质的词语或短语的方式进行发表。这些前瞻性陈述不是历史事实陈述，而是基于对我们行业的当前期望、估计和预测以及管理层做出的某些假设。其中许多假设其性质因自身不确定而超出我们的控制力。这些前瞻性陈述受到许多已知和未知风险、不确定性和假设的影响，请您仔细阅读并加以考虑，包括但不限于：

•我们有能力维护和加强我们的品牌，为我们的产品产生并维持持续需求；

•我们有能力推出一系列新产品和产品线延伸，以创造需求；

•我们有效管理未来增长的能力；

•一般经济状况和自由消费者支出水平；

•我们扩展到其他消费市场的能力;

•我们有能力以可接受的成本维持产品质量和产品性能；

•我们在市场上与现有和新竞争对手竞争的能力;

•我们供应链或供应商出现问题或损失，或无法获得原材料；

•在全球开展业务所带来的风险;

•通货膨胀、原材料成本或供应、能源、运输和其他必要物资和服务的变化；

•我们招聘、整合和留住高技能人员的能力；

•我们有能力维护、保护和增强我们的知识产权；

•我们有能力安全地维护消费者和其他第三方数据；

•我们有能力遵守持续的监管要求；

•与成为一家上市公司相关的开支增加;

•我们作为纽约证券交易所（“纽交所”）规则意义下的“受控公司”身份；

•我们能够实现与JS Global分离预期收益的一部分或全部。

•任何已宣布的分红派息的支付；以及

•在我们的20-F表格中的“项目3.关键信息—D.风险因素”下描述的其他风险和不确定性。

此因素列表不应被视为详尽无遗，并应与包含在第6-K表格中的其他警告性陈述一起阅读。我们处于一个竞争激烈且快速变化的环境中。新的风险不时出现。我们无法预测所有风险，也不能评估所有因素对我们业务的影响，以及任何因素或多个因素可能导致实际结果与我们可能提出的前瞻性声明中所包含的结果有重大差异的程度。鉴于这些风险、不确定性和假设，本第6-K表格中所讨论的未来事件和趋势，以及我们未来的活动水平和业绩，可能不会发生，实际结果可能会与前瞻性声明中描述或暗示的结果有重大和不利的差异。因此，您不应将任何这些前瞻性声明视为我们或任何其他人的陈述或担保，并不应对任何此类前瞻性声明寄予过高的依赖。任何前瞻性声明仅在其作出的日期时有效，我们不承担公开更新或修订任何前瞻性声明的义务，除非法律要求。

此外，包含"我们相信"等类似表述的声明反映了我们对相关主题的信念和观点。这些声明基于我们在此Form 6-k提交日期之前可获得的信息。虽然我们认为这些信息为这些声明提供了合理的依据，但这些信息可能受限或不完整。这些声明本质上是不确定的，投资者应该谨慎不要过度依赖这些声明。我们通过本部分和此Form 6-k中其他地方包含的警告性声明对我们所有的前瞻性声明进行限制。

概述

SharkNinja是一家全球产品设计和科技公司，为全球消费者创造创新的5 科创板评级的生活解决方案。我们已经打造了两个市值达十亿美元的品牌，在我们今天竞争的35个子类别中推动强劲增长和创新。我们以进入并建立领导地位的成功案例为证，通过打破市场规则在家用产品类别中包括清洁、烹饪和饮料、食品制备和其他，这包括家居环境和美容。

我们的成功源于我们的先进工程和创新能力，以及对消费者需求的深刻理解。我们不懈努力提供具有吸引力价值的创新家电，以让消费者感到愉悦。我们持续增长的销售额和不断增加的市场份额表明我们的产品提供符合消费者不断变化的需求和欲望的生活解决方案。

透过我们对解决方案驱动故事的动态方法，我们实现了高度品牌参与度，这些品类在过去通常并不以高参与度而闻名。这种解决方案驱动的方法著重于向消费者教育我们对消费者问题的创新解决方案，使其体验更高效、更愉快。我们独特的故事讲述方式配合我们在各种渠道上的创新产品，包括店内、线上、电视和社交媒体。这种方法吸引了现有和新消费者，推动对我们各种品类解决方案的需求。藉著运用这个策略，我们已经建立了一个全球热情的品牌大使社区，我们相信他们重视我们的创新、品质和性能。

我们使用涵盖主要包括零售和直接面向消费者（“DTC”）渠道的全通路分销策略来销售我们的产品。我们的零售渠道涵盖实体零售商、电子商务平台和多通路零售商，这些零售商又将我们的产品卖给最终消费者。我们销售的一些最大零售商包括沃尔玛、亚马逊、Target和百思买，以及许多独立零售商。我们的直接面向消费者渠道包括通过我们的网站直接向消费者销售。我们全通路分销策略的目标是成为我们的消费者选择购物地点时最突出和相关的品牌。

我们随著时间建立了一个敏捷高效的供应链，并且进行了重大投资来优化制造和采购。我们的供应链制造业利用三个不同iating因素：(i)久负盛名的工厂合作伙伴关系，使我们能够迅速开发和生产我们的产品，(ii)具有灵活性的工厂，使我们能够在生产过程的任何阶段纳入见解并适应，(iii)我们的规模和与关键船公司的长期战略合作伙伴关系，使我们能够在市场紧张时获得具竞争力的入站货运费率。我们还在当地才华上进行了重大投资，以帮助监督生产过程，并确保我们制造商的产品符合我们严苛的质量标准。

影响我们表现的关键因素

我们相信，我们的业绩和营运结果已经受到并且将继续受到许多因素的影响，包括下文所述以及包含在我们的20-F表格中的“项目3.关键讯息- D.风险因素”中的因素。

持续在现有类别和新相邻类别中进行产品创新

我们未来的增长部分取决于我们在现有类别中引入新的和增强产品的能力，并进入相邻的类别。我们新产品的成功取决于许多因素，包括寻找消费问题的创新解决方案，区别我们的产品与竞争对手的产品，取得对我们智慧财产的保护以及预测消费者趋势。通过引入新产品，我们吸引了更广泛范围的消费者，扩大了使用案例，并增加了我们在未受服务或未利用市场的存在。为了继续保持快速创新的步伐，我们将需要继续投资于研究和发展（"R&D"）以增强我们的产品供应。我们相信我们的消费者洞察力和实力雄厚的内部研发团队，拥有遍布全球的专业的工程和开发专家，使我们能够保持数年的产品管道。我们不懈地致力于保持在产品类别的最前沿，同时通过持续创新和不断发展的消费者洞察力进入新的相邻类别。

吸引和保留消费者，增加消费者参与度能力

我们相信在各个市场，我们仍处于成长的早期阶段，并且我们可以大幅增加我们的消费群体和每户的产品数量。我们的表现将取决于我们继续保留现有的消费者，并吸引新的消费者购买我们投资组合中的产品，这取决于我们保持消费者的忠诚与满意度。消费者与我们品牌的互动对于我们业务的持续增长和成功至关重要。我们已经做出了战略性投资，并将继续投资，大量的时间和资源用于我们的市场营销倡议，包括长形式广告到最新的社交媒体平台，这些倡议教育消费者，突显我们的品质和价值，启发消费者在线上和线下转化。我们还投资并预期将继续投资，于我们从各种来源中获取消费者洞察的能力，包括直接和间接与消费者的互动以及消费者对我们产品的评论。我们相信与消费者的持续互动让我们能够了解他们的需求和欲望，增强我们的产品故事，并激发购买。

在现有及新的国际市场中持续拓展地理范围

我们相信我们在现有国际市场扩张以及进入新的国际市场的能力将继续在未来的增长中发挥重要作用。多年来，我们在国际市场树立了存在，积累了经验和本地资源，同时与关键零售商建立了长期、深入的合作关系。我们在新的国际市场发展业务的能力将取决于诸如我们的营销工作、持续消费者对我们产品的满意度以及了解不同市场消费者偏好等因素。国际扩张可能需要我们投资于销售与市场营销、制造行业以及人员。随着我们在新市场的扩张，我们预计我们将利用与关键国际零售合作伙伴的现有关系，并与新零售商建立合作关系。

管理成本和库存的能力

我们的运营结果受到我们有效管理制造和供应成本的能力的影响。我们的产品成本根据类别、技术创新水平和复杂性、以及与制造合作伙伴的安排以及他们所面临的投入成本而变化。随着我们进入新的类别和地理区域，我们不断扩大供应商基础。我们努力确保对高成交量产品进行多元化采购，以确保充足的产品供应。我们的供应链依然高度灵活，通过竞争性投标来确保获得有利价格，从而为消费者提供更大的价值。此外，我们通常与关键供应商保持长期合作关系，巩固了我们的供应链基础设施，使我们能够有效地采购产品。

持续执行我们的全渠道策略

自成立以来，我们始终专注于满足消费者的购物需求。随着消费者购物习惯的发展，我们的全渠道策略也在不断演变。我们通过主要零售渠道建立了可信度，在领先零售商处建立了多年的信任，并在我们的DTC渠道取得了成功，使我们能够获得更深入的消费者洞察。我们也进行了投资，并计划继续投资，扩大我们的销售团队规模，以跟上不断增长的消费者需求，拓展与实体店和在线零售商的关系。我们执行这一策略的能力将取决于各种因素，如零售商对产品销售和盈利的满意度，我们继续创新的能力，以及我们维护和扩大在重要零售商处作为类别领袖的类别数量的能力。

经济状况与季节性

我们产品的需求受到各种经济因素的影响，这些因素影响着我们的消费者，比如消费者信心、人口趋势、就业水平、通货膨胀和其他经济因素。这些因素可能会影响消费者购买小家电的程度。我们认为，小家电，如我们的产品，通常比大型家电更不受周期性波动的影响，因为大型家电通常更昂贵，消费者购买的频率也较低。我们还认为，消费者被我们的产品吸引，是因为它们具有节省资金的潜力；例如，购买Ninja咖啡机或Foodi烤箱可以使消费者减少在外购买咖啡和食物的消费。此外，我们认为我们的净销售额中包含一个季节性因素。我们预计我们的净销售额将在第三和第四季度达到最高，因为零售商会提前采购产品以备假日季节，而我们的在线零售和直销（DTC）销售在假日季节特别增加。我们预计这种季节性仍将是我们运营业绩的一个因素。

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.