Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SharkNinja Inc (SN, Financial) reported a strong third quarter with adjusted net sales growth of 35% and adjusted EBITDA growth of 26%.
- The company achieved a 160 basis point increase in adjusted gross margins to 49.4%, despite the impact of section 301 tariffs.
- International sales accelerated with a 62% increase in adjusted net sales, driven by strong performance in Europe and Latin America.
- SharkNinja Inc (SN) successfully launched new products in four new subcategories, including coolers, fans, frozen drink makers, and skincare, exceeding their annual goal.
- The company raised its full-year 2024 guidance, expecting adjusted net sales to increase between 27% and 28% and adjusted EBITDA to grow by 29% to 31% year over year.
Negative Points
- The impact of section 301 tariffs negatively affected gross margins, although mitigated by other factors.
- The company anticipates inventory constraints for some hit products like Slushy, Crispy, and Cafe Lux, which may limit capturing full demand in Q4.
- SharkNinja Inc (SN) is experiencing a temporary impact on sales in Mexico due to a transition to a direct model.
- The company is making significant investments in supply chain diversification outside of China, which may impact short-term margins.
- There is uncertainty in the macroeconomic environment, including geopolitical unrest and the upcoming U.S. elections, which could affect consumer sentiment and spending.
Q & A Highlights
Q: Can you elaborate on your reinvestment priorities for the fourth quarter and early 2025, and discuss the rate of potential revenue growth and margin expansion?
A: Mark Barrocas, CEO: We've had a strong year with significant top-line growth, and we're investing heavily in R&D to sustain this momentum into 2025. We're also expanding into new markets, which requires upfront investment. On the supply chain side, we're accelerating our move outside of China to capture capacity and mitigate risks. Additionally, we're investing in a new e-commerce platform to enhance our direct-to-consumer experience. These investments are crucial for long-term sustainable growth.
Q: How are your channel partnerships evolving, and what is the outlook for distribution in beauty, grocery, and sporting goods channels?
A: Mark Barrocas, CEO: We've seen increased placement with key partners like Walmart, Costco, and Amazon, driven by our innovative products. In beauty, we're expanding placements in stores like Ulta and Sephora. For grocery, our Ninja Slushy product is opening opportunities for partnerships with beverage brands. In sporting goods, we're preparing for a stronger presence in 2025 with more inventory and support.
Q: What are you seeing in terms of Q4 consumption, and how are inventory levels positioned for the holiday season?
A: Mark Barrocas, CEO: We're seeing solid demand in Q4, with strong performance during Amazon's second Prime Day. However, some hit products like Slushy and Crispy are inventory constrained. Our ship and POS levels are stable, and inventory levels are healthy, aligning with our expectations. We're well-positioned for the holiday season.
Q: Can you provide context on the margin trajectory for 2025, considering your investments in supply chain and international growth?
A: Mark Barrocas, CEO: We're making significant investments now to set up for long-term success, particularly in supply chain diversification and international market expansion. While some expenses are accelerated into 2024, these investments are crucial for supporting growth in 2025 and beyond. We're focused on ensuring our business is well-prepared for future opportunities.
Q: How quickly can you catch up on supply chain constraints, and how does this impact your innovation pace?
A: Mark Barrocas, CEO: We expect to catch up on some products by Q1 and others by Q2. Our innovation pace remains strong, with a high hit rate on new products. We're focusing on improving supply chain flexibility and getting earlier signals on product demand to better manage future launches.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
