Document

EX-99.2 3 exhibit992q324managementsd.htm EX-99.2 Document

Exhibit 99.2

管理層討論和分析財務狀況和經營業績

以下討論和分析提供了管理層認爲與評估和了解我們經營業績和財務狀況相關的信息。你應該閱讀我們基本報表中截至2024年9月30日和2023年12月31日的未經審計的中期摘要綜合資產負債表中我們的財務狀況和經營業績的討論和分析，並結合我們未經審計的中期摘要綜合收益表、綜合收益和股東權益表，三個月和九個月的結束時間截至2024年9月30日和2023年9月30日的未經審計的中期摘要的現金流量表中，截至2024年9月30日和2023年9月30日的九個月的現金流量表，以及包含在本6-k表格其他地方的未經審計的中期摘要綜合財務報表相關說明，以及我們審計的合併財務報表和附註和其他信息， 2023年12月31日包含在我們向美國證券交易委員會（「SEC」）提交的20-F表格中的年度報告中，我們審計的合併財務報表以及相關附註和其他信息，於2024年3月1日提交的20-F表格。

關於前瞻性聲明的警告

本表格6-k中的部分信息可能包含前瞻性陳述（根據1933年修訂版證券法第27A條和1934年修訂版證券交易法第21E條的含義），反映了我們對未來事件以及未來業務、財務狀況、經營業績和前景的當前看法。這些聲明通常藉助諸如「可能」、「應該」、「可能」、「預測」、「潛力」、「相信」、「很可能會導致」、「期待」、「繼續」、「將會」、「預計」、「尋求」、「估計」、「打算」、「計劃」、「預測」、「將」以及「展望」等詞語或短語，或這些詞語或短語的否定形式或其他可比較的具有未來或前瞻性質的詞語或短語的方式進行發表。這些前瞻性陳述不是歷史事實陳述，而是基於對我們行業的當前期望、估計和預測以及管理層做出的某些假設。其中許多假設其性質因自身不確定而超出我們的控制力。這些前瞻性陳述受到許多已知和未知風險、不確定性和假設的影響，請您仔細閱讀並加以考慮，包括但不限於：

•我們有能力維護和加強我們的品牌，爲我們的產品產生並維持持續需求；

•我們有能力推出一系列新產品和產品線延伸，以創造需求；

•我們有效管理未來增長的能力；

•一般經濟狀況和自由消費者支出水平；

•我們擴展到其他消費市場的能力;

•我們有能力以可接受的成本維持產品質量和產品性能；

•我們在市場上與現有和新競爭對手競爭的能力;

•我們供應鏈或供應商出現問題或損失，或無法獲得原材料；

•在全球開展業務所帶來的風險;

•通貨膨脹、原材料成本或供應、能源、運輸和其他必要物資和服務的變化；

•我們招聘、整合和留住高技能人員的能力；

•我們有能力維護、保護和增強我們的知識產權；

•我們有能力安全地維護消費者和其他第三方數據；

•我們有能力遵守持續的監管要求；

•與成爲一家上市公司相關的開支增加;

•我們作爲紐約證券交易所（「紐交所」）規則意義下的「受控公司」身份；

•我們能夠實現與JS Global分離預期收益的一部分或全部。

•任何已宣佈的分紅派息的支付；以及

•在我們的20-F表格中的「項目3.關鍵信息—D.風險因素」下描述的其他風險和不確定性。

此因素列表不應被視爲詳盡無遺，並應與包含在第6-K表格中的其他警告性陳述一起閱讀。我們處於一個競爭激烈且快速變化的環境中。新的風險不時出現。我們無法預測所有風險，也不能評估所有因素對我們業務的影響，以及任何因素或多個因素可能導致實際結果與我們可能提出的前瞻性聲明中所包含的結果有重大差異的程度。鑑於這些風險、不確定性和假設，本第6-K表格中所討論的未來事件和趨勢，以及我們未來的活動水平和業績，可能不會發生，實際結果可能會與前瞻性聲明中描述或暗示的結果有重大和不利的差異。因此，您不應將任何這些前瞻性聲明視爲我們或任何其他人的陳述或擔保，並不應對任何此類前瞻性聲明寄予過高的依賴。任何前瞻性聲明僅在其作出的日期時有效，我們不承擔公開更新或修訂任何前瞻性聲明的義務，除非法律要求。

此外，包含"我們相信"等類似表述的聲明反映了我們對相關主題的信念和觀點。這些聲明基於我們在此Form 6-k提交日期之前可獲得的信息。雖然我們認爲這些信息爲這些聲明提供了合理的依據，但這些信息可能受限或不完整。這些聲明本質上是不確定的，投資者應該謹慎不要過度依賴這些聲明。我們通過本部分和此Form 6-k中其他地方包含的警告性聲明對我們所有的前瞻性聲明進行限制。

概述

SharkNinja是一家全球產品設計和科技公司，爲全球消費者創造創新的5 科創板評級的生活解決方案。我們已經打造了兩個市值達十億美元的品牌，在我們今天競爭的35個子類別中推動強勁增長和創新。我們以進入並建立領導地位的成功案例爲證，通過打破市場規則在家用產品類別中包括清潔、烹飪和飲料、食品製備和其他，這包括家居環境和美容。

我們的成功源於我們的先進工程和創新能力，以及對消費者需求的深刻理解。我們不懈努力提供具有吸引力價值的創新家電，以讓消費者感到愉悅。我們持續增長的銷售額和不斷增加的市場份額表明我們的產品提供符合消費者不斷變化的需求和慾望的生活解決方案。

透過我們對解決方案驅動故事的動態方法，我們實現了高度品牌參與度，這些品類在過去通常並不以高參與度而聞名。這種解決方案驅動的方法著重於向消費者教育我們對消費者問題的創新解決方案，使其體驗更高效、更愉快。我們獨特的故事講述方式配合我們在各種渠道上的創新產品，包括店內、線上、電視和社交媒體。這種方法吸引了現有和新消費者，推動對我們各種品類解決方案的需求。藉著運用這個策略，我們已經建立了一個全球熱情的品牌大使社區，我們相信他們重視我們的創新、品質和性能。

我們使用涵蓋主要包括零售和直接面向消費者（“DTC”）渠道的全通路分銷策略來銷售我們的產品。我們的零售渠道涵蓋實體零售商、電子商務平台和多通路零售商，這些零售商又將我們的產品賣給最終消費者。我們銷售的一些最大零售商包括沃爾瑪、亞馬遜、Target和百思買，以及許多獨立零售商。我們的直接面向消費者渠道包括通過我們的網站直接向消費者銷售。我們全通路分銷策略的目標是成為我們的消費者選擇購物地點時最突出和相關的品牌。

我們隨著時間建立了一個敏捷高效的供應鏈，並且進行了重大投資來優化製造和採購。我們的供應鏈製造業利用三個不同iating因素：(i)久負盛名的工廠合作夥伴關係，使我們能夠迅速開發和生產我們的產品，(ii)具有靈活性的工廠，使我們能夠在生產過程的任何階段納入見解並適應，(iii)我們的規模和與關鍵船公司的長期戰略合作夥伴關係，使我們能夠在市場緊張時獲得具競爭力的入站貨運費率。我們還在當地才華上進行了重大投資，以幫助監督生產過程，並確保我們製造商的產品符合我們嚴苛的質量標準。

影響我們表現的關鍵因素

我們相信，我們的業績和營運結果已經受到並且將繼續受到許多因素的影響，包括下文所述以及包含在我們的20-F表格中的“項目3.關鍵訊息- D.風險因素”中的因素。

持續在現有類別和新相鄰類別中進行產品創新

我們未來的增長部分取決於我們在現有類別中引入新的和增強產品的能力，並進入相鄰的類別。我們新產品的成功取決於許多因素，包括尋找消費問題的創新解決方案，區別我們的產品與競爭對手的產品，取得對我們智慧財產的保護以及預測消費者趨勢。通過引入新產品，我們吸引了更廣泛範圍的消費者，擴大了使用案例，並增加了我們在未受服務或未利用市場的存在。為了繼續保持快速創新的步伐，我們將需要繼續投資於研究和發展（"R&D"）以增強我們的產品供應。我們相信我們的消費者洞察力和實力雄厚的內部研發團隊，擁有遍布全球的專業的工程和開發專家，使我們能夠保持數年的產品管道。我們不懈地致力於保持在產品類別的最前沿，同時通過持續創新和不斷發展的消費者洞察力進入新的相鄰類別。

吸引和保留消費者，增加消費者參與度能力

我們相信在各個市場，我們仍處於成長的早期階段，並且我們可以大幅增加我們的消費群體和每戶的產品數量。我們的表現將取決於我們繼續保留現有的消費者，並吸引新的消費者購買我們投資組合中的產品，這取決於我們保持消費者的忠誠與滿意度。消費者與我們品牌的互動對於我們業務的持續增長和成功至關重要。我們已經做出了戰略性投資，並將繼續投資，大量的時間和資源用於我們的市場營銷倡議，包括長形式廣告到最新的社交媒體平台，這些倡議教育消費者，突顯我們的品質和價值，啟發消費者在線上和線下轉化。我們還投資並預期將繼續投資，於我們從各種來源中獲取消費者洞察的能力，包括直接和間接與消費者的互動以及消費者對我們產品的評論。我們相信與消費者的持續互動讓我們能夠了解他們的需求和慾望，增強我們的產品故事，並激發購買。

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.