01—Abstract
Summary
Summary of the 20-F filed March 1, 2024. Cited figures are marked; the original filing is the authoritative source.
SharkNinja, Inc. (NYSE: SN) filed its annual report on Form 20-F for the fiscal year ended December 31, 2023, following its separation from JS Global Lifestyle Company Limited, which completed on July 30, 2023.
Net sales rose 14.4% to $4.25 billiona in 2023 from $3.72 billion in 2022, driven by Cooking and Beverage Appliances (up 33.7%), Food Preparation Appliances (up 10.7%) and Other (up 190.8%, mainly beauty and air purifiers), partly offset by a 5.8% decline in Cleaning Appliances. Gross margin rose to 44.9% from 37.9%, but net income fell to $167.1 million from $232.4 million, and diluted EPS was $1.20 versus $1.67. Operating income increased to $373.6 million from $321.4 million, while sales and marketing expense grew 44.3% and general and administrative expense grew 54.2%, the latter including $79.4 million of separation and secondary offering costs.
Non-GAAP Adjusted EBITDA was $719.7 millionb, or a 17.2% Adjusted EBITDA margin, compared with $519.6 million in 2022. The balance sheet shows $154.1 million of cash and cash equivalents and $804.9 million of debt outstanding under a July 2023 credit agreement, with $490.2 million available under the $500.0 million revolving facility. Operating cash flow was $280.6 million, and capital expenditures were $122.7 million.
The company paid a $1.08c per share special dividend totaling $150.2 million in December 2023. Chairperson CJ Xuning Wang controls approximately 54.6% of voting power. Management disclosed a material weakness in internal control over financial reporting related to the financial statement close process, including IT general controls, which remained unremediated at year end.
02—Key points
Key Highlights
- Net sales of $4,253.7 million, up 14.4% from $3,717.4 million in 2022, led by Cooking and Beverage Appliances (up 33.7% to $1,441.6 million) and Other (up 190.8% to $339.0 million).
- Gross margin of 44.9% versus 37.9% in 2022; gross profit rose 35.3% to $1,907.9 million.
- Net income declined to $167.1 million from $232.4 million, with diluted EPS of $1.20 versus $1.67, reflecting a 43.0% effective tax rate and higher operating expenses.
- Adjusted EBITDA of $719.7 million (17.2% margin) versus $519.6 million (14.4% margin) in 2022, a non-GAAP measure reconciled to net income in the filing.
- Total debt of $804.9 million under the July 2023 credit agreement; $154.1 million cash and $490.2 million revolver availability at December 31, 2023.
- Material weakness in internal control over financial reporting related to the financial statement close process remains unremediated at December 31, 2023.
- Controlled company status: Mr. Wang controls approximately 54.6% of voting power, and the company is a foreign private issuer filing on Form 20-F.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, SharkNinja kept $0.04.
- Revenue$4.25B100.0%
- Cost of revenue−$2.35B55.1%
- Gross profit$1.91B44.9%
- Operating costs−$1.53B36.1%
- Operating income$373.6M8.8%
- Interest, other & tax−$206.5M4.9%
- Net income$167.1M3.9%
Where FY2023 revenue went
$4.25B- Cost of revenue: $2.35B, 55% of revenue
- Other operating costs: $1.28B, 30% of revenue
- Net income: $167.1M, 3.9% of revenue
- R&D: $249.4M, 5.9% of revenue
- Interest, other & tax: $206.5M, 4.9% of revenue
Kept 3.9% as net incomeNet income $167.1M · 3.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed March 1, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $4.25B$3.72B | +14.4% |
| Cost of Revenue | $2.35B$2.31B | +1.7% |
| Gross Profit | $1.91B$1.41B | +35.3% |
| R&D Expenses | $249.39M$215.66M | +15.6% |
| Operating Expenses | $1.53B$1.09B | +40.9% |
| Operating Income | $373.56M$321.37M | +16.2% |
| Net Income | $167.10M$232.35M | −28.1% |
| EPS (Basic) | $1.20$1.67 | −28.1% |
| EPS (Diluted) | $1.20$1.67 | −28.1% |
| Shares Outstanding (Basic) | 139.03M138.98M | 0.0% |
| Shares Outstanding (Diluted) | 139.42M138.98M | +0.3% |
05—Questions
Frequently Asked Questions
What drove the increase in SharkNinja's net sales in 2023?
Net sales increased $536.3 million, or 14.4%, primarily from growth in Cooking and Beverage Appliances, driven by air fryers in the United Kingdom and a full year of outdoor grill sales, and in Food Preparation Appliances, driven by ice cream makers and portable blenders. Other net sales rose 190.8%, mainly from haircare and air purifiers. Cleaning Appliances declined 5.8%, reflecting softness in North America for corded and cordless vacuums and the transfer of the APAC business to JS Global.
Why did net income fall even though operating income and gross margin improved?
Operating income rose to $373.6 million from $321.4 million, but other expense swung to $35.4 million from other income of $7.6 million, mainly due to foreign currency losses including on forward contracts. Interest expense, net increased to $44.9 million from $27.0 million, and the effective tax rate rose to 43.0% from 23.1%, driven by non-deductible executive compensation, separation-related withholding taxes and non-deductible transaction costs.
What is the material weakness, and has it been fixed?
The company identified material weaknesses in 2023 related to non-routine and complex transactions and the financial statement close process. Management believes it remediated the non-routine transactions weakness in 2023, but operational deficiencies in the financial statement close process, including IT general controls over logical access and change management, remain and aggregate into a material weakness at December 31, 2023. Full remediation will require these controls to operate effectively for a sufficient period.
How much debt does SharkNinja carry and what are the key terms?
At December 31, 2023, the company had $804.9 million of debt outstanding under a credit agreement dated July 20, 2023 with Bank of America, N.A. It includes an $810.0 million term loan and a $500.0 million revolving facility, both maturing in July 2028 and bearing interest at SOFR plus 1.875%. The proceeds repaid the 2020 facilities and funded a $375.0 million dividend to JS Global. No revolver borrowings were outstanding at year end, and $9.8 million of letters of credit reduced availability to $490.2 million.
Who controls SharkNinja and what does that mean for minority shareholders?
CJ Xuning Wang, Chairperson of the Board, controlled approximately 54.6% of the voting power as of February 15, 2024. This gives him the ability to control board composition, significant corporate transactions and amendments to the articles of association. The company has elected not to use controlled-company exemptions from NYSE governance requirements for now, but may do so in the future.
06—Continue