Q1 2024 SharkNinja Inc Earnings Call

Welcome to the Sharks Ninja First Quarter, 2024 Erding Skull.

All lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question and answer session.

Thank you for holding made these have the name of the conference.

If you would like to ask a question during this time, simply press Star followed by the number one on your telephone keypad.

If you would like to redraw your question, again, press the star one. I would now like to turn the conference over to Arvin Batia with Senior Vice President of Investor Relations. Please go ahead, sir.

Hello.

Yeah.

Speaker Change: However, I am unable to hear you. If you can hear me. Please check if your line isn't it.

Speaker Change: Yeah.

Good morning and welcome to the Shark Ninja first quarter 2024 earnings conference call.

Speaker Change: Okay.

Speaker Change: Get the notice bonds I won't know and this guardant he's got us back. Thank you.

Our first quarter earnings release was issued this morning and can be found on the company's website at ir.sharkninja.com. And shortly after today's call, a webcast will be available there for replay.

Let me remind you that today's discussion contains forward-looking statements based on the environment as we currently see it and as such does include risks and uncertainties.

If you defer to the earnings release as well as the company's most recent FEP filings,

you will see a discussion of factors that could cause the company's actual results to differ materially from these forward-looking statements.

The company undertakes no obligation to update or revise these forward-looking statements in the future.

During the call, we will make several references to non- GAAP financial measures.

We believe that these measures provide investors with useful perspective on the underlying growth trends of the business and have included a full reconciliation of non- GAAP financial measures to the most comparable GAAP measures in our earnings release.

With me today, our chief executive officer, Mark Berokas,

[music].

Chief Financial Officer Patrick Reagan

who joined the company on April 22nd.

and Chief Accounting Officer Larry Flynn.

Mark will provide a business update

Larry will review our Q1 financial results and discuss our 2024 Outload.

Mark will share brief closing remarks, and we will then open the call for your questions.

Now, I will turn the call over to Mark.

Thank you, Arvin. Good morning, everyone, and thank you for joining us today. Before we begin, let me take a moment to officially welcome and introduce our new chief financial officer, Patrick Regan.

Over the last several months, we interviewed a number of highly qualified candidates, and Patrick distinguished himself on all of the dimensions that we identified as most important.

He has a robust global experience.

He has helped to drive growth for big brands. He has a proven track record of driving long-term profitability. And he brings the kind of passion, energy, and pace that is a hallmark of the Shark Ninja culture.

Patrick was most recently CFO of the Asia-Pacific and Latin America businesses at Nike and previously held financial leadership roles at powerhouse brand companies such as Coach, Ralph Lauren, and Kraft Foods.

Okay.

Ladies and gentlemen, thank you for standing by my name is desert Ray and I will be your conference operator today at this time I would like to welcome everyone to the shark Ninja first quarter of 'twenty 'twenty four earnings call.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

We are so pleased to have him join our leadership team. And I can tell you from what I've seen these last few weeks, he's hit the ground running.

If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

I also want to thank Larry for his contributions as interim CFO and know that he will be an invaluable member of Patrick's team as our chief accounting officer.

If you would like to withdraw your question again press Star one.

I would now like to turn the conference over to Arvind Bhatia.

Patrick, I know you'd like to say a few words. Thank you, Mark, and nice to meet all of you. It's been an incredible few weeks, and I appreciate the warm welcome from you and the team.

With <unk>, our senior Vice.

This president of Investor Relations. Please go ahead Sir.

Good morning, and welcome to the sharpening, Jeff first quarter 2024 earnings Conference call.

What drew me to Shark Ninja was how unique and truly differentiated this company is from any of its competitors.

Our first quarter earnings release was issued this morning and can be found on the company's website.

the powerful growth strategy, the best in class product development and innovation engine, and of course the culture.

IR Dot shark Ninja Dot com.

And shortly after todays call and webcast will be available there for replay.

The energy in these halls and in every meeting is palpable. I'm looking forward to helping the company continue to execute its proven three-pillar growth strategy while driving long-term profitability and continuing to create strong shareholder value.

Let me remind you that today's discussion contains forward looking statements based on the environment as we currently see it.

And as such does include risks and uncertainties.

If you refer to the earnings release.

Mark?

As well as the Companys most recent SEC filings.

Thanks, Patrick. Let me begin with a review of our first quarter performance.

You will see a discussion of factors that could cause the companys actual results.

Our Q1 results were very strong. Adjusted net sales increased 28%, and we grew adjusted EBITDA by 30%.

Differ materially from these forward looking statements.

The company undertakes no obligation to update or revise these forward looking statements in the future.

Adjusted gross margins improved over 200 basis points.

During the call.

and adjusted EBITDA margins were up 30 basis points, even as we continue to significantly reinvest in selling and marketing to build our brands in emerging international markets and to drive awareness of our new products globally.

We will make several references to non-GAAP financial measures.

We believe that these measures provide investors with useful perspective on the underlying growth trends of the business and have included a full reconciliation of non-GAAP financial measures to the most comparable GAAP measures.

We believe these investments will pay off as we establish our presence in these nascent markets and categories.

Our earnings release.

With me today are Chief Executive Officer, Mark brokers.

We began Q1 with the momentum of a strong holiday season.

<unk> Financial Officer, Patrick Reagan.

Our retail partners in North America ended the fourth quarter with lower weeks of supplies in the prior year and replenished inventory in the early part of the first quarter.

Who joined the company on April 20, <unk> and.

And Chief Accounting Officer, Larry Flynn.

Mark will provide a business update.

Our business performed above expectations throughout the quarter across product categories and across our global markets.

Larry will review, our Q1 financial results and discuss our 2020 for outlook.

Mark will share brief closing remarks, and we will then open the call for your questions.

Our North America business was up 22%. And our international business grew 42% on an adjusted basis.

Now I will turn the call over to Mark.

Thank you Arvind and good morning, everyone and thank you for joining us today.

I'm especially pleased that our performance was so well balanced across all three pillars of our growth strategy.

Before we begin let me take a moment to officially welcome and introduce our new Chief Financial Officer, Patrick Regan.

This strong momentum has continued into the second quarter, and based on Q1 performance and how we're tracking in the second quarter, we're raising our full-year guidance. Larry will provide the details in his prepared remarks.

Over the last several months, we interviewed a number of highly qualified candidates and Patrick distinguished himself on all of the dimensions that we identified as most important.

Let me now provide an update of our three-pillar growth strategy.

He has a robust global experience he has helped to drive growth for big brands.

First, entering new and adjacent categories remains a key area of growth for us.

Speaker Change: He has a proven track record of driving long term profitability and he brings the kind of passion energy and piece that is a hallmark of the shark Ninja culture.

We've entered 18 new subcategories since 2021, including our recent and very exciting launches into two established categories with our disruptive innovation.

Speaker Change: Patrick was most recently CFO of the Asia Pacific and Latin America businesses at Nike and.

Ninja Coolers and Shark Indoor Outdoor Fans.

Patrick: And previously held financial leadership roles at powerhouse brand companies, such as coach Ralph Lauren and Kraft Foods.

With these introductions, we've both increased our presence and diversified our offering to a total of 33 subcategories.

Speaker Change: We are so pleased to have him join our leadership team and I can tell you from what I've seen these last few weeks he's hit the ground running.

which is a larger category footprint than most of our competitors.

This is a strategic and intentional approach to drive growth and mitigate risk by seizing opportunity in many categories while simultaneously reducing exposure in any one subcategory.

Speaker Change: I also want to thank.

Looking at our new subcategories, I'm confident in their performance and future potential. In 2023, we entered four new subcategories, carpet shampooing and wet dry vacuuming with our shark brand, and outdoor ovens and in-home beverage with our ninja brand.

Carpet shampooing and stain cleaning represent a billion dollar total addressable market in North America and the UK combined.

Our shark carpet expert and shark stain striker products had strong launches and a very successful holiday season.

And momentum has continued throughout this year.

According to U.S. industry data during the first quarter, we established double-digit market share, and our products drove most of the growth within the category.

The Shark Messmaster, our entry into the wet-dry vacuum category last year, is performing well and also had double-digit market share in the U.S. during the first quarter.

We're enthusiastic about the growth prospects of Ninja Thirsty, our proprietary home use carbonation system.

We launched Ninja Thirsty in the U.S. late last year and will begin its global rollout later this year.

We also see a recurring high-margin revenue opportunity from our consumable flavored pods and CO2 canisters as we increase the installed base of the system over time.

The introduction of our Ninja Wood Fire Outdoor Oven has helped to expand our market share in outdoor cooking products.

Along with our Ninja Outdoor Grill and the Excel version, which connects to an app for conveniently monitoring and controlling your cooking, we now offer three different skews and price points to attract a wider range of consumers.

Extending our brand presence in outdoor settings, especially within outdoor cooking, holds significant global potential and as an important growth area for us.

Over the past few weeks, we began rolling out the Ninja Frost Vault, our unique offering in the premium cooler segment, and Shark Flex Freeze, our proprietary indoor outdoor cooling system.

With our entry into these $2 billion subcategories that are ripe for disruption, we have further expanded our total addressable market.

As the world's first cooler with cold dry storage, our frost fault not only delivers premium ice retention, but also solves the problems we call the soggy sandwich.

The key consumer insight that led to this game-changing innovation

And Frostfault is priced below other premium coolers, offering consumers an amazing product at extraordinary value.

The Shark Flex Breeze, indoor-outdoor cooling system is truly revolutionary with its power, versatility, portability, and unique misting feature.

We have a holistic go-to-market strategy for both Frost Vault and FlexStrees and see meaningful opportunity to extend our reach in these categories over time.

We expect our 2023 and 24 launches to become important growth drivers, and we have a strong pipeline of additional products to be announced later this year.

Our second key growth pillar is gaining share in existing categories. Each year, we launch around 25 new products, including 20 of those within existing categories.

These expansions within existing categories accelerate the consumer upgrade cycle as we consistently launch new products with additional high-quality features and functionality for increased convenience and efficiency.

A great example is our new Ninja Double Stack XL, the industry's first vertical two-basket air fryer that offers double the performance and requires up to 40% less counter space.

A true best of both worlds options for consumers.

We have leading market share in air friars today, but we continue to rapidly innovate and create an even stronger mode in the category.

By ensuring that our offerings are always fresh and relevant, we stay ahead of the competition, gain additional share of the market, and maintain our ASPs and margins, which is a key differentiator.

During Q1, we continued to gain global market share as we delivered industry-leading top-line growth.

The introduction of our Ninja Wood fire outdoor oven has helped to expand our market share in outdoor cooking products.

While our growth was broad-based, there were a few standouts. For example, we continue to drive strong growth and expansion of the ice cream maker category with our ninja creaming.

Along with our Ninja outdoor grill, and the XL version, which connects to an app for conveniently monitoring and controlling your cooking, we now offer three different skus and price points to attract a wider range of consumers.

Our Shark Flex style, Speed style, and Spoon Style generated a lot of buzz in the hairstyler category and helped us broaden retail partnerships.

Extending our brand presence in outdoor settings, especially within outdoor cooking hold significant global potential and is it.

And our air friars continue to deliver strong double-digit growth and build our global presence.

An important growth area for us.

I will now turn to our third growth pillar, expansion in international markets.

Over the past few weeks, we began rolling out the Ninja Frost vault, our unique offering in the premium cooler segment.

Our domestic business is growing well, but we expect our international business to continue to outpace domestic growth for at least the next several years, given the significant white space we have internationally.

And sharp flex breeze, our proprietary indoor outdoor cooling system.

With our entry into these $2 billion subcategories that are right for disruption we have further expanded our total addressable market.

We expect this global growth to come from a combination of category expansion, geographic expansion, and deepening partnerships with international retailers and distributors.

As the world's first cooler with cold dry storage are froths fault, not only delivers premium ice retention, but also solves the problems we call the soggy sandwich.

In 2023, we launched several new subcategories in international markets.

entered six new countries and added many new retail partners across Amea and Latin America, all of which positions us nicely for growth both in 2024 and beyond.

The key consumer insight that led to this game changing innovation.

And Frost fault is priced below other premium coolers offering consumers, an amazing product at extraordinary value.

We are projecting significant growth in France, Germany, and Latin America this year, and we see tremendous opportunity in the Nordics, Benelux, Poland, Italy, Spain, and the Middle East in the next few years.

The shark Flex Breeze indoor outdoor cooling system is truly revolutionary with its power versatility portability and unique missing feature.

We have a holistic go to market strategy for both Frost vault, and flex freeze and see meaningful opportunity to extend our reach in these categories over time.

The UK, which is our largest international market today, is also growing well. During Q1, our UK business was up 15% on top of a 73% increase in the first quarter of last year.

We expect our 2023 and 2024 launches to become important growth drivers and we have a strong pipeline of additional products to be announced later this year.

Our products continue to resonate with consumers worldwide, and we believe our international business could exceed our U.S. business over the long term.

Our second key growth pillar is gaining share in existing categories.

Our three-pillar growth strategy has been instrumental in achieving sustained and replicable growth.

Each year, we launch around 25, new products, including 20 of those within existing categories.

Moving forward, we remain committed to implementing this affected, tried, and tested strategy.

These expansions within existing categories accelerate the consumer upgrade cycle as we consistently launch new products with additional high quality features and functionality for increased convenience and efficiency.

In terms of supply chain, I want to note that our diversified Google supply chain remains robust and resilient.

Following recent contract negotiations with our carriers, we now have improved visibility on container shipping rates.

A great example is our new Ninja double stack XL the industry's first vertical two basket air Fryer that offers double the performance and requires up to 40% less counter space.

There were no real surprises in our discussions. Our contracted rates are essentially in line with our expectations.

Through best of both worlds options for consumers.

We believe that the strategic relationships that we built with a diverse set of carriers over the last several years enables us to act nimbly and navigate issues like the disruptions in the Red Sea with minimal interruptions to our business.

We have leading market share in air Fryers today, but we continue to rapidly innovate and create an even stronger mode in the category.

By ensuring that our offerings are always fresh and relevant we stay ahead of the competition gain additional share of the market and maintain our asps and margins, which is a key differentiator.

In response to the Red Sea issue, we acted swiftly increasing our weeks of supply to support our strong U.S. and AMEA businesses.

During Q1, we continued to gain global market share as we delivered industry, leading top line growth.

We not only mitigated the potential risk of disruption and delays, but also stayed within our contracted rates in nearly all instances.

While our growth was broad base there were a few standouts for example, we continue to drive strong growth and expansion of the ice cream maker category with our Ninja creamy.

With respect to tariffs, we remain laser-focused in our efforts to diversify and ensure capacity to produce almost all of our U.S. volume outside of China by the end of 2025.

Our short flex style speed style and spoof style generated a lot of buzz in the hair styler category and helped us broaden retail partnerships.

We have increased CAP-X investments in tooling as we accelerate our efforts to tap into additional capacity outside of China.

At our air Fryers continued to deliver strong double digit growth and build our global presence.

Meanwhile, as we mentioned on our last call, we're well prepared for Section 301 tariffs if they're reinstated on June 1st. We expect the financial impact to us to be relatively small and have already built it into our guidance.

I will now turn to our third growth pillar expansion in international markets.

Our domestic business is growing well, but we expect our international business to continue to outpace domestic growth for at least the next several years given the significant white space we have internationally.

The total addressable market for Shark Ninja products continues to expand as we successfully develop and introduce new products and enter subcategories and markets.

We expect this global growth to come from a combination of category expansion geographic expansion and deepening partnerships with international retailers and distributors.

Based on industry data, our global addressable market is close to $120 billion and growing.

And based on our sales of approximately $4.5 billion over the last 12 months, we estimate our market penetration today is less than 4% of this total addressable market.

Speaker Change: In 2023, we launched several new subcategories in international markets entered six new countries and added many new retail partners across EMEA, and Latin America, all of which positions us nicely for growth both in 2024 and beyond.

which is why despite our strong growth and market share gains, you often hear me say that in many ways we're just getting started. And now, Larry will walk you through our first quarter financials and updated 2024 outlook.

Patrick: We are projecting significant growth in France, Germany, and Latin America, this year, and we see tremendous opportunity in the Nordics, Benelux, Poland, Italy, Spain, and the Middle East in the next few years.

Thank you, Mark, and good morning, everyone. I'll begin with a review of our first quarter results and then provide an update on our 2024 guidance before turning it back over to Mark for closing remarks.

Speaker Change: The UK, which is our largest international market today is also growing well.

As Mark said, we opened the year with very strong Q1 results.

Speaker Change: During Q1, our U K business was up 15% on top of a 73% increase in the first quarter of last year.

Net sales increased 25%, and adjusted net sales, which exclude our divested APAC business, were up 28% to $1.1 billion.

Speaker Change: Our products continue to resonate with consumers worldwide and we believe our international business could exceed our U S business over the long term.

We delivered adjusted EBITDA growth of 30% to 231 million, with adjusted EBITDA margins improving 30 basis points year over year.

Speaker Change: Our three pillar growth strategy has been instrumental in achieving sustained and replicable growth.

Focusing on top-line performance by region, net sales in North America were up 22% to 734 million, representing 69% of our sales mix.

Speaker Change: Moving forward, we remain committed to implementing this affected tried and tested strategy.

Speaker Change: In terms of supply chain I want to note that our diversified global supply chain remains robust and resilient.

Adjusted net sales in international markets increased 42% to 332 million, with Germany, France, and Latam markets each delivering triple-digit growth in the quarter.

Speaker Change: Following recent contract negotiations with our carriers, we now have improved visibility on container shipping rates.

UK, which is our largest market outside the US, was up 15% on top of a tough comp of 73% growth in Q1 last year.

Speaker Change: There were no real surprises in our discussions our contracted rates are essentially in line with our expectations.

Next, let me take a minute to provide color on the Q1 performance in our four major product categories, which all saw growth within the quarter.

Speaker Change: We believe that the strategic relationships that we built with a diverse set of carriers over the last several years enables us to act nimbly and navigate issues like the disruptions in the Red sea with minimal interruptions to our business.

Adjusted net sales in the cleaning category, which includes vacuums, carpet extraction, as well as other floor care products such as steam mops and wet and dry cleaning floor products, increased 6% to 422 million from 398 million.

Speaker Change: In response to the Red Sea issue, we acted swiftly.

Speaker Change: <unk>, our weeks of supply to support our strong U S and EMEA businesses.

We were pleased to return to growth in cleaning, driven by strong performance of our carpet extraction and robotic vacuum subcategories.

Speaker Change: We not only mitigated the potential risk of disruption and delays, but also stayed within our contracted rates in nearly all instances.

Adjusted net sales in the cooking and beverage category, which includes air fryers, multi-cookers, outdoor grills and ovens, and carbonation, increased 29% to 330 million compared to 255 million in the prior year.

Speaker Change: With respect to tariffs, we remain laser focused in our efforts to diversify and ensure capacity to produce almost all of our U S volume outside of China by the end of 2025.

This performance was primarily driven by continued strength in Europe , particularly in the UK, as we furthered our leading market share position.

Speaker Change: We have increased capex investments in tooling as we accelerate our efforts to tap into additional capacity outside of China.

Our growth was also supported by the success of outdoor grills and outdoor ovens across both the U.S. and European markets.

Speaker Change: Meanwhile, as we mentioned on our last call.

Speaker Change: Well prepared for section 301 tariffs if they are reinstated on June 1st we expect the financial impact to us to be relatively small and have already built it into our guidance.

Food preparation, which includes blenders, food processors, ice cream makers, and coolers, delivered an excellent quarter and it was our fastest growing category.

Speaker Change: The total addressable market for shark Ninja products continues to expand as we successfully develop and introduce new products and enter subcategories in markets.

Adjusted net sales in this category increased 77% to 205 million compared to 116 million in the prior year.

Growth in food prep was driven by strong sales of our creamy ice cream makers and our compact blenders, particularly our portable blenders.

Speaker Change: Just on industry data, our global addressable market is close to $120 billion in growing.

Speaker Change: And based on our sales of approximately $4 $5 billion over the last 12 months, we estimate our market penetration today is less than 4% of this total addressable market, which is why despite our strong growth and market share gains you often hear me say that in many ways.

And lastly, the other category, which includes beauty products such as hair dryers and stylers, and home environment products such as air purifiers and indoor outdoor fans, continued its strong growth.

Adjusted net sales in this category increased 66% to 110 million compared to 66 million in the prior year.

Speaker Change: We're just getting started.

This growth was powered by the continued strong performance of our hair care products within beauty, increased sales in the air purifier subcategory driven by product innovation, and the successful new product launch of our Flex Breeze indoor outdoor cooling system.

Speaker Change: And now Larry will walk you through our first quarter financials and updated 2020 for outlook.

Larry: Thank you Mark and good morning, everyone.

Larry: I'll begin with a review of our first quarter results and then provide an update on our 2024 guidance before turning it back over to Mark for closing remarks.

Moving down to gross profit, in the first quarter, Gap Gross Profit increased 31% to 527 million or 49.4% of net sales, an expansion of 260 basis points compared to the prior year.

Larry: As Mark said, we opened the year with very strong Q1 results.

Larry: Net sales increased 25% and adjusted net sales, which exclude our divested APAC business were up 28% to $1 1 billion.

Adjusted gross profit increased 33% to 542 million or 50.8% of adjusted net sales, representing expansion of 210 basis points over the prior year.

Larry: We delivered adjusted EBITDA growth of 30% to $231 million with adjusted EBITDA margins, improving 30 basis points year over year.

Larry: Focusing on top line performance by region net sales in North America were up 22% to $734 million, representing 69% of our sales mix.

This margin expansion was primarily driven by continued supply chain tailwinds and cost optimization efforts.

Turning now to operating expenses in the quarter. R&D expenses increased 19% to 70 million compared to 59 million in Q1 last year.

Larry: Adjusted net sales in international markets increased 42% to $332 million with Germany, France, and Latam markets, each delivering triple digit growth in the quarter.

We continue to invest in research and development, primarily in headcount, to support new product categories and new market expansion.

Larry: U K, which is our largest market outside the U S was up 15% on top of a tough comp of 73% growth in Q1 last year.

As a percentage of sales, R&D was 6.5% of net sales compared to 6.9% last year as we leveraged our strong top line growth.

Larry: Next let me take a minute to provide color on our Q1 performance and our four major product categories, which all saw growth within the quarter.

Sales and marketing expenses increased 41% to 21 million or 20.1% of sales compared to 152 million or 17.8% of sales in the year ago period.

Larry: Adjusted net sales in the cleaning category, which includes vacuums carpet extraction as well as other floor care products, such as steam months, and wet and dry cleaning floor products increased 6% to $422 million from $398 million.

This increase was mainly due to our continued reinvestment of some gross margin dollars back into the business via advertising and personnel-related expenses to support our new product launches and expansion in existing and new markets and subcategories.

Larry: We were pleased to return to growth in cleaning driven by strong performance of our carpet extraction and robotic vacuum subcategories.

Like previous quarters, a portion of the increase in sales and marketing dollars also resulted from increased delivery and distribution costs driven by higher volumes, particularly in our direct-to-consumer business.

Larry: Adjusted net sales in cooking and beverage category, which includes air fryers, multi cookers outdoor growth and ovens and carbonation increased 29% to $330 million compared to $255 million in the prior year.

General and administrative expenses increased to 88 million compared to 67 million in the prior year, primarily due to incremental share-based compensation associated with new RSU grants, as well as increased legal and other professional fees.

Larry: This performance was primarily driven by continued strength in Europe, particularly in the UK as we furthered our leading market share position.

Larry: Our growth was also supported by the success of outdoor grills and outdoor ovens across both the U S and European markets.

partially offset by lower transaction costs related to the separation and secondary offering.

Larry: Food preparation, which includes blenders food processors ice cream makers in coolers delivered an excellent quarter and it was our fastest growing category.

Our gap effective tax rate was 23.6% in the first quarter compared to 21.8% in the prior year. This higher gap effective tax rate is primarily related to the impact of limitations on deductible executive compensation.

Larry: Adjusted net sales in this category increased 77% to $205 million compared to $116 million in the prior year.

Gap net income for the quarter was 110 million compared to 87 million in the prior year.

Larry: Growth in food prep was driven by strong sales of our premium ice cream makers, and our compact blenders, particularly our portable blenders.

Adjusted net income was $149 million or $1.6 per share compared to $119 million or $0.86 per share in the prior year, reflecting growth of 23% on a per share basis.

Larry: And lastly, the other category, which includes beauty products, such as hair, dryers, and Stylers and home environment products, such as air Purifiers and indoor outdoor fans continued its strong growth.

Adjusted EBITS off of the quarter increased 30% to 231 million or 21.6% of adjusted net sales.

compared to 178 million or 21.3% of adjusted net sales in the prior year, reflecting strong gross margin expansion, partially offset by increased investments in advertising and personnel to support our brand building and growth initiatives.

Turning to the balance sheet, as at the end of the first quarter, we had cash of 132 million, total debt outstanding of 800 million, and a net leverage ratio of 0.9 times.

We had inventory of 750 million at quarter end, up 47% compared to Q1 of last year.

While inventory growth was ahead of sales growth, we believe our inventory level and mix is healthy. There were four key factors that drove the significant year-over-year increase.

Larry: Can you supply chain tailwinds and cost optimization efforts.

First, we ended Q1 last year below our target inventory level. Second, we increased inventory levels this year to support strong consumer demand in Q2.

Larry: Turning now to operating expenses in the quarter.

Larry: R&D expenses increased 19% to $70 million compared to $59 million in Q1 last year.

Third, we proactively increased our weeks of supply to mitigate shipment delays due to the Red Sea situation. And fourth, we pre-built inventory in anticipation of Section 301 tariff exemptions expiring at the end of May.

Larry: We continue to invest in research and development, primarily and head count to support new product categories and new market expansion as.

Larry: As a percentage of sales R&D was 6.5% of net sales compared to $6, 9% last year as we've leveraged our strong top line growth.

Relative to the first quarter of 2022, our inventory balance increased 13% compared to net sales growth of 32% over that same period.

Larry: Sales and marketing expenses increased 41% to $215 million or 21% of sales compare.

With that, let me now turn to our outlook for 2024.

Given our strong performance in the first quarter and our improved visibility into the second quarter, we are raising our fiscal year 2024 guidance.

Larry: Compared to $152 million or 17.8% of sales and the year ago period.

Larry: This increase was mainly due to our continued reinvestment of some gross margin dollars back into the business via advertising and personnel related expenses to support our new product launches an expansion, an existing and new markets and sub categories.

For the full year, we now expect adjusted net sales to increase between 12 and 14 percent above our prior guidance of between a 7 and 9 percent increase.

We expect adjusted EPS to be in the range of $3.66 to $3.82.

Larry: Like previous quarters, a portion of the increase in sales and marketing dollars also resulted from increased delivery and distribution costs driven by higher volumes, particularly in our direct to consumer business.

an increase of 14 to 19% year over year compared to our prior guidance of $3.45 to $3.65 per share, or a 7 to 12% increase.

Larry: General and administrative expenses increased to $88 million compared to $67 million in the prior year.

Adjusted EBITDA is now expected to be in the range of 840 to 870 million, representing growth of 17% to 21% year over year.

Larry: Primarily due to incremental share based compensation associated with new RSC grants as well as increased legal and other professional fees harsher.

Larry: Partially offset by lower transaction costs related to the separation and secondary offerings.

compared to our prior expectation of 800 to 830 million or 11 to 15% growth.

Larry: Our gap effective tax rate was 23.6% in the first quarter compared to 21.8% in the prior year. This.

Consistent with our previous guidance, we continue to expect net interest expense of approximately 65 million for the year and a gap effective tax rate of approximately 24 to 25%.

Larry: This higher gap effective tax rate is primarily related to the impact of limitations on deductible executive compensation.

We now expect capital expenditures to be between 160 and 180 million for the year, up from our previous expectation of 120 to 140 million.

Larry: GAAP net income for the quarter was 110 million compared to $87 million in the prior year.

Larry: Ah just did net income was $149 million or one dollar and six cents per share compared to $119 million or 86 cents per share in the prior year.

The increase is driven primarily by incremental investments in tooling as we accelerate the diversification of our sourcing outside of China.

Larry: Reflecting growth of 23% on a per share basis.

To close, we are excited by our performance in the first quarter and continued momentum in the second quarter, reflecting the effectiveness of our three-pillar growth strategy and our industry-leading margin profile.

Larry: Adjusted EBITDA for the quarter increased 30% to $231 million or 21.6% of adjusted net sales compared to $178 million or 21.3% of adjusted net sales in the prior year, reflecting.

We were also pleased to see broad-based growth across our key categories and markets.

Larry: Reflecting strong gross margin expansion, partially offset by increased investments and advertising and personnel to support our brand building and growth initiatives.

We will continue to strategically reinvest throughout our business, and we remain confident in our ability to drive strong top and bottom-line growth for the remainder of the year and beyond.

Larry: Turning to the balance sheet as of the end of the first quarter, we have cash of $132 million total debt outstanding of $800 million and a net leverage ratio a 0.9 times.

Finally, I would also like to welcome Patrick to Shark Ninja.

I'm truly excited to have him aboard and look forward to working closely with him to deliver strong, profitable growth and significant shareholder value for years to come.

Larry: We had inventory of $750 million at quarter end up 47% compared to Q1 of last year well.

With that, I will hand it back to Mark.

Thanks, Larry. I'm proud of what our incredible team of 3,000 Shark Ninja Associates has accomplished.

Larry: While inventory growth was ahead of sales growth, we believe our inventory level and mix is healthy.

Larry: There were four key factors that drove the significant year over year increase.

and believe that our success comes from a powerful and difficult to replicate combination of factors.

Larry: First we ended Q1 last year below our target inventory level second.

Our proprietary consumer insights generate both factual inputs and creative inspiration for us to develop products that deliver genuinely disruptive innovations.

Larry: Second we increased inventory levels this year to support strong consumer demand and Q2.

Larry: Third we proactively increased our weeks of supply to mitigate shipment delays due to the red sea situations and fourth we prebuilt inventory in anticipation of section 301 tariff exemptions expiring at the end of May.

Our high-quality, agile, and scalable supply chain allows us to deliver amazing products at extraordinary value to consumers.

Larry: Relative to the first quarter of 2022, our inventory balance increased 13% compared to net sales growth of 32% over that same period.

Our 360-degree marketing approach generates demand by reaching the right audiences with the right message at the right time.

Speaker Change: With that let me now turn to our outlook for 2024.

And our dominant Omnichannel strategy makes it convenient for our consumers to shop our products wherever and whenever they choose.

Speaker Change: Given our strong performance in the first quarter and are approved visibility into the second quarter, we're raising our fiscal year 2024 guidance for.

Each of these is an essential element of the Shark Ninja game plan. And together, the whole is even greater than the sum of the parts.

Speaker Change: For the full year, we now expect adjusted net sales to increase between 12 and 14% above.

But what really brings it all together and is extremely difficult to replicate is our unique Shark Ninja mindset.

Speaker Change: Above our prior guidance of between a seven and 9% increase.

Together with our leadership team, I've invested a great deal of time and energy over the last several years, creating the Shark Ninja success drivers and leadership principles.

Speaker Change: We expect adjusted EPS to be in the range of $3.66 to $3.82.

Speaker Change: An increase of 14% to 19% year over year <unk>.

Our associates embrace and demonstrate these every day as they set out to solve consumer problems and positively impact consumer lives.

Speaker Change: Compared to our prior guidance of $3 45 to $3 and 61 per share or a 7% to 12% increase.

Speaker Change: Adjusted EBITDA is now expected to be in the range of $840 million to $870 million representing growth of 17% to 21% year over year <unk>.

Our track record of consistent, strong, top and bottom line growth, as well as steadily increasing market share over the past 16 years is evidence of the power of our scalable platform.

Speaker Change: Compared to our prior expectation of $800 million to $830 million or 11% to 15% growth.

As I look ahead, I'm confident in our ability to deliver sustainable long-term growth and to mitigate risk through continued diversification across product categories, geographies, distribution channels, and sourcing partners.

Speaker Change: Consistent with our previous guidance, we continue to expect net interest expense of approximately $65 million for the year and a gap effective tax rate of approximately 24% to 25%.

This concludes our prepared remarks, and I'll now turn it over to the operator to kick off Q&A. Operator?

Speaker Change: We now expect capital expenditures to be between 160 and $180 million for the year up from our previous expectation of $120 million to $140 million.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press Star 1 on your telephone keypad to raise your hand and join you.

Speaker Change: The increase is driven primarily by incremental investments and tooling as we accelerate the diversification of our sourcing outside of China.

If you would like to redraw your questions, simply press star 1 again.

Speaker Change: To close we are excited by our performance in the first quarter and continued momentum in the second quarter, reflecting the effectiveness of our three pillar growth strategy in our industry leading margin profile.

If you are called upon to ask your question and are listening via speaker phone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press the star one to join the queue.

Speaker Change: We were also pleased to see broad based growth across our key categories and markets.

Your first question comes from the line of Randy Koenick with Jeffries. Your line is open.

Speaker Change: We will continue to strategically reinvest throughout our business and we remain confident in our ability to drive strong top and bottom line growth for the remainder of the year and beyond.

Hey, good morning everybody and thanks for inventing the double-pack air fryer I ordered it the other day, so I really appreciate it. I guess my first question, we probably have a lot of new people that are getting up to speed on the story. So, you know, Mark, what might be helpful is to give us your perspective on, you know, additional areas of category expansion you think about going forward. Obviously, you guys own the kitchen, you own the cleaning of a house.

Speaker Change: Finally, I would also like to welcome Patrick to shock Ninja.

Patrick: I'm truly excited to have him aboard and look forward to working closely with him to deliver strong profitable growth and significant shareholder value for years to come.

Patrick: With that I will hand, it back tomorrow.

Tom: Thanks, Larry.

Tom: I'm proud of what our incredible team of 3000 Shark Ninja Associates has accomplished.

You've entered the bathroom. So maybe give us your added thoughts on, you know, with the success you're seeing in, let's say, Flex style, for example, in the beauty category. Just give us your thoughts on where you see, you know, incremental opportunity for growth on the product category front. Thanks.

Tom: And believe that our success comes from a powerful and difficult to replicate combination of factors.

Tom: Our proprietary consumer insights generate both factual inputs and creative inspiration for us to develop products that deliver genuinely disruptive innovation.

Yeah, thanks, Randy.

So, look, I'll start off by saying that in the quarter,

You know, we're really excited about the two new category launches that we've gone into. The Ninja Frost Vault is our first launch in the cooler category. That product launched just a couple of weeks ago and has actually been a complete sellout. We're out of inventory completely right now on that product.

Tom: Our high quality agile and scalable supply chain allows us to deliver amazing products at extraordinary value to consumers.

Tom: R 360 degree marketing approach generate demand by reaching the right audiences with the right message at the right time.

Um,

So we'll talk a little bit more about outdoor. And then secondly, was the shark flex breeze fan.

Tom: And our dominant omnichannel strategy makes it convenient for consumers to shop, our products wherever and whenever they choose.

which has been a really nice success for us in just a short few weeks, and especially as the weather is warming up in most of the country right now. I think the linkage between the two of those, Randy, is we think there's a tremendous opportunity and a lot of white space for us outside the home.

Tom: Each of these is an essential element of the shark Ninja game plan and.

Tom: And together the whole was even greater than the sum of the parts.

Tom: But what really brings it all together and is extremely difficult to replicate is our unique shark Ninja mindset.

Tom: Together with our leadership team I've invested a great deal of time and energy over the last several years, creating the sharply into success drivers and leadership principles.

I think if you thought about Shark Ninja a year or two years ago,

He would think about us, as you said, in the kitchen, in the home, cleaning, home environment.

Tom: Our associates embrace and demonstrate these every day as they set out to solve consumer problems positively impact consumer lives.

I think with our expansion into outdoor cooking, you know, our grill business, our oven business is strong, the expansion into this indoor, outdoor cooling system with flex breeze, our coolers, we're gaining a lot of

Tom: Our track record of consistent strong top and bottom line growth as well as steadily increasing market share over the past 16 years is evidence of the power of are scalable platform.

consumer insights and knowledge about the consumer outside the home and what they're looking for and

both as it relates to on their patios, but also as they're in RVs or campers or boats or tailgates or places like that. So I think you should expect kind of more innovation coming from us in the outdoor space.

Tom: As I look ahead, I'm confident in our ability to deliver sustainable long term growth.

Tom: To mitigate risk through continued diversification across product categories, Geography's distribution channels and sourcing partners.

segment.

I think secondly, as you mentioned in beauty,

Speaker Change: This concludes our prepared remarks, and I'll now turn it over to the operator to kick off Q&A.

I've said that we expect to expand outside of beauty, outside of just hair care. And I think there's a lot of other categories within beauty for us to be able to expand into. We're expanding our distribution in Sephora, we're expanding our distribution in ALTA. I think we've created kind of real beauty credibility over the last two years with what we've done in the hair space.

Speaker Change: Operator.

Speaker Change: Q, we will now begin the question and answer session. If you have dialed in and would like to ask a question. Please press star one on your telephone keypad Theresa hand Q.

Operator: If you would like to be dry your questions simply quest star one again.

Operator: If you are called upon to ask that question in our listening the speaker phone on your device.

And I'm excited about additional categories within beauty that we'll be expanding into shortly.

Operator: Pick up your handset to ensure that your phone is not unless I'm asking a question.

And then, you know, lastly, I would just say that, you know, we publicly stated that we believe that the shark brand and the Ninja brand will each launch into at least one new product category a year.

Operator: Again press the start one to trying to cure.

Speaker Change: Okay. Our first question comes from the line of <unk>. Your line is open.

as we move forward. And I think you'll see more than that, you know, as we continue the rollout in 24 of 25 new products that will ultimately come to market.

<unk>: Hey, good morning, everybody and thanks for inventing the double stack Air Fryer I ordered it the other day, so I really appreciate it.

Speaker Change: <unk> I guess my first question would probably have a lot of new people that are getting up to speed on the story. So yo Mark what might be helpful is to give us your perspective on.

Super helpful. Last question would be you gave us good perspective on the success, let's say around Europe , in particular the UK. You talked about some other countries.

Mark: Additional areas of of category expansion, you think about going forward. Obviously, you guys on the kitchen, you own the cleaning of a house you've entered the bathroom. So maybe give us your your added thoughts on with the success you're seeing in let's say flex style for example, and the beauty category.

of opportunity. Maybe just give us your perspective on just on the capabilities you're building, infrastructure, you know, to kind of support that growth, you know, I don't sell teams and whatnot being put in over there to build relationships, further relationships with the different retailers in different countries. Just give us the lay of the land on how you're building up your capabilities

Mark: Give us your thoughts on where you see incremental opportunity for for growth on the product category front. Thanks.

to execute and scale across the different international markets. Thanks. Yes, so Randy, I actually just came back two weeks ago. I spent a week in London, Frankfurt, and Paris, and I think first and foremost, it's about building up

Speaker Change: Yep. Thanks, Ramsey Uhm, so I'll look I'll start off by saying that in mcwhorter.

Speaker Change: We're really excited about the two new category launches that we've gone into the Ninja Frost fault as our first launch in the cooler category.

the team. You know, right now, I mean, although we have grown the team tremendously with offices in the UK, in Frankfurt, and in Paris,

Speaker Change: Product launch just a couple of weeks ago and has actually been a complete sell out we're out of inventory completely right now on that product.

Speaker Change: So we'll talk a little bit more about outdoor and then secondly was the sharp flex <unk> span.

Sitting here today, we have a significant amount of open positions to build the capabilities, not just in sales and marketing, but operations and finance and IT and so on and so forth.

Speaker Change: Which has been really nice success for us in just a short few weeks and especially as the weather is warming up and most of the country right now I think the linkage between the two of those Randy as we think there is a tremendous opportunity and a lot of white space for us outside the home.

We've also expanded quite a bit of our in-store demonstrator group. In many of the retailers in Europe , they give us an opportunity to be able to have demonstrators in store. And so we've expanded that considerably in both Germany as well as in the UK and are starting it now in France.

Speaker Change: If you thought about shark Ninja, a year or two years ago.

Speaker Change: You would think about us as you said in the kitchen in the home cleaning.

You know, I think that what you'll see is

Speaker Change: Home environment, I think with our expansion into outdoor cooking, you know our grill business or oven business is strong.

you know, continued GNA investment, you know, although we have leverage, you know, we expect to leverage GNA on a full year basis,

I think in the first half of this year, you're gonna see some G&A investment that is gonna be directly attributable to AMEA expansion, Latin America expansion, and building the team in those markets.

Speaker Change: The expansion into this indoor or outdoor cooling system with flex breeze.

Speaker Change: <unk> we.

Speaker Change: We're gaining a lot of <unk>.

Speaker Change: Consumer insights and knowledge about the consumer outside the home and what they're looking for both as it relates to on their patios, but also is there in rv's or campers or boots, or tailgates or places like that so I I think you should expect kind of more innovation coming from us in the outdoor.

I also met with some retailers while I was over there, and those retailers are very, very excited about the innovation that we're bringing, the marketing and advertising that we're investing in those markets.

the social media excitement.

Speaker Change: Segment I think secondly, as you mentioned in beauty you know I've said that we expect to expand outside of beauty outside of just care care and I think there's a lot of other categories within beauty for us to be able to expand into where.

You know, products like our Ninja Creamy just last week, you know, our Ninja Creamy, you know, in one key European market did over a million dollars just in the week.

So I think they're starting to really see what a lot of the North American and the UK retailers have seen over the last number of years, that if you take Shark Ninja's combination of, you know, consumer-driven product innovation.

Speaker Change: We're expanding our distribution and <unk>, we're expanding our distribution and alter.

Speaker Change: I think we've created kind of real beauty credibility over the last two years with what we've done in the aerospace and I'm excited about additional categories within beauty that we'll be expanding into shortly.

connected with a strong investment in creating consumer demand.

and you tie that together with a dominant omni channel strategy, both brick and mortar, online, and direct to consumer, that that playbook is very powerful in these European markets, as well as these Latin American markets.

Speaker Change: And then lastly, I would just say that we publicly stated that we believe that the sharp brand of Ninja brand will each launch into at least one new product category year as we move forward and I think you'll see more than that as we continue the rollout in 24.

Very helpful. Thanks. Thanks so much.

Again, if you would like to ask a question, press star 1, press star then the number 1 on your telephone keypad.

Speaker Change: Of 25, new products that will ultimately come to market.

Speaker Change: Super Helpful. Last question would be you gave us a good perspective on the success, let's say around Europe in particular, the UK you talk about some other countries of opportunity maybe just give us your perspective on just on on the capabilities you're building infrastructure.

Would you request for today's session, that you please limit to one question only?

Thank you.

Our next question comes from the line of Andrea Tixiera from J.P. Morgan. Your line is open.

Speaker Change: Support that growth.

Congrats on your results overall. Mark, you mentioned the continuum momentum in the second quarter. Can you comment on consumption against shipments on your three divisions?

Speaker Change: I don't sell teams and whatnot being put put in over there to build relationships further relationships with a different retailers uhm in different countries just give us the lay of the land on how you're building up your capabilities.

And you also included inventory replenishment for a very low base last year that you called out. So how much you would think it helped your 28% sales growth in the quarter?

Speaker Change: Cute and scale across the different international markets. Thanks, Yes, Sir So Ramsey I actually just came back two weeks ago I spent a week in London, Frankfurt, and Paris, and I think first and foremost it's about building up the team.

And conversely, as you quoted out, like some of your new products are sold out, but wondering how investors should think about inventory levels at the trade and the phasing of your guidance, even as you raised your guidance substantially. Just wondering how we go from

Speaker Change: Right now I mean, although we have grown the team tremendously with offices in the UK in Frankfurt and Paris.

28 to finish in high single digit and low double. Thank you.

Speaker Change: Sitting here today, we have a significant amount of open positions to build the capabilities not just in sales and marketing, but operations and finance and iced tea and and so on and so forth. We've also expanded quite a bit or of our in store demonstrator group in many of the retailers in you.

Yeah, Andrea, so I guess I'll start with, you know, as you said, we ended 2023 with lower weeks of supply at our retailers as a result of strong sell through in the holiday season.

Speaker Change: Europe.

Speaker Change: Give us an opportunity to be able to have demonstrators in store and so we've expanded that considerably in both Germany as well as in the UK are starting it now in France.

You know, our POS out the door was very strong in the first quarter. I mean, we've been chasing shipments in, you know, throughout Europe and our international business. I mean, our POS and our shipments, our POS is actually lagging.

Speaker Change:

Speaker Change: I I think that what you'll see is.

Speaker Change: Continue G&A investment, although we have leverage we expect to leverage G&A on a full year basis I think in the first half of this year, you're going to see some G&A investment that is gonna be directly attributable to.

is actually a little bit faster pace than our shipments. And so we're trying to keep up with inventory levels to service the international markets.

are

POS in North America.

was a little bit less than our shipments number.

Speaker Change: Amir expansion Latin America expansion.

And that's mainly as a result of we entered

Speaker Change: And building the team in those markets.

the first quarter, you know, very depleted in inventory. And so although you would, you know, historically, we've been talking about this idea of de-stocking and restocking,

Speaker Change: I also met with some retailers, while I was over there and those retailers are very very excited about the innovation that we're bringing the marketing and advertising that we're investing in those markets.

And I wouldn't say that we actually restocked with inventory in the U.S. retailers

Speaker Change: The social media excitement.

We actually are down at the end of the first quarter in weeks of supply year on year.

Speaker Change: Products like our our Ninja creamy.

Speaker Change: Just last week or Ninja creamy in one key European markets. It over a million dollars just in the week. So I think they're starting to really see what a lot of the north American in the UK retailers are seen over the last number of years.

So, you know, we replenished some inventory in Q1. We had very strong sell through. You know, we're chasing inventory on certain products that as I mentioned that were sold out in, you know, beyond just our coolers.

Now, as it relates to second quarter demand and demand in the second half of the year,

Speaker Change: If you take sharp pain just combination of.

Speaker Change: Schumer driven product innovation can.

We didn't, you know, touch our guidance significantly for the second half of the year. You know, we'll update our guidance in the second quarter as it relates to the second half of the year. We're taking a conservative position. We're coming into a

Speaker Change: Connected with a strong investment in creating consumer demand and you tie that together with a dominant omnichannel strategy, both brick and mortar online and direct to consumer that that way book is is very powerful in these European markets as well as these Latin American markets.

you know, an environment of

you know, the consumer, you know, continuing, we think, to be challenged.

Speaker Change: Very helpful. Thanks, Thanks, so much.

We're coming into a presidential election year, but we think that our combination of, you know, again, performance, quality, and value is a strong recipe playbook for what the consumer is looking for today. And I think that, you know, we expect, you know, our new products and our new innovation that's going to be coming out through the year to continue to excite consumers.

Speaker Change: Again, if you would like to ask a question <unk>.

Speaker Change: <unk> the number one on your telephone keypad.

Speaker Change: <unk> one question.

Speaker Change: Thank you.

Speaker Change: And the next question comes from the line of Android that the Sheriff.

That's great to hear you're raising as you're seen demand and not with the hopes of the new products. So you raised based on the success you had and how much replenishment and how much fulfillment you can get through. Is that the way we should be thinking?

Android: Martin and your line is open.

Android: Congrats on your results of I'll Mark you mention the continue momentum in the second quarter can you comment on consumption against shipments on your three divisions.

Android: And you also coded inventory replenishment farm very low base lashes.

You know, again, as the quarter goes on and as we close out the second quarter and as we get kind of more and more visibility to kind of retailer sentiment and just market sentiment in the second half of the year, you know, we'll update that guidance, you know, at the end of the second quarter.

Speaker Change: That call that you call about.

Speaker Change: How much you'd think it helped your 28 per cent sales growth and a quarter.

Speaker Change: And Conversely, as you put it out like some of your new products I filled out the wondering how investors should think about inventory levels at the train and facing.

That's great to hear. Congrats again. I'll pass it on.

Speaker Change: Your guidance you can as you raised your guidance substantially just wondering how we go from 28 to finish.

Our next question comes from the line of Brooke Roach with Goldman Sachs. Your line is open.

Good morning and thank you for taking our question.

Speaker Change: Hi, sandwiches and both of them. Thank you.

I was hoping you could provide an update on your outlook for industry-level growth in the North America market for each of the core categories where you play. What are you seeing in the competitive and promotional environment broadly, and how are your retail partner conversations indicating for trends for the remainder of the year?

Speaker Change: Yeah, Andrea so.

Speaker Change: I guess I'll start with as you said, we ended 2023 with lower weeks is supply at our retailers as a result of strong sell through in the holiday season.

Speaker Change: R. P O S out the door was very strong in the first quarter I mean, we've been chasing shipment in throughout Europe, and our international business.

Thank you.

Yeah.

Yeah, Brooke, so look,

Listen, I think you're seeing a lot of the industry trends and market trends as well. I mean, I think the market is tough. You know, I think the market is...

Speaker Change: R. P O S in our shipments or pass is actually lagging is actually a little bit faster pace than our shipments and so we're we're trying to keep up with inventory levels to service the international markets.

you know, down low single digits.

I think the low end of the market is quite promotional.

I think that, you know, when you look at our gross margins, when you look at our

Speaker Change: R. P O S in North America.

sell-through that we've had. You know, that's not a market, you know, those are not areas of the market that we're participating in. I mean, we've invested very heavily in sales and marketing. You know, we think that's the better way for us to drive demand than, you know, bigger promo pricing. I mean, there's obviously certain cases, of course, that we go on promo and there's certain periods of a year. For example, right now before Mother's Day.

Speaker Change: With a little bit less than our shipments number and that's mainly as a result of we entered the first quarter very depleted inventory and so although you would historically we've been talking about this idea of Destocking and restocking and I wouldn't say that we actually re.

Speaker Change: Stocked with inventory in the U S retailers, we actually are.

Speaker Change: <unk> down at the end of the first quarter and weeks of supply year on year. So we.

But I think that

You know, what Shark Ninja is experiencing is definitely, you know, bucking the trend of the industry. Our outlook is that we think the industry will get back to flat in the second half of the year.

Speaker Change: We replenish some inventory in Q1, we have very strong sell through we're chasing inventory on certain products that as I mentioned that were sold out and you know beyond just our coolers now.

you know, after a down year in 2022 and 2023. But our forecast and expectation, you know, don't have the industry growing in the second half of the year, but roughly have the industry at about flat in the second half of the year.

Speaker Change: Now as it relates to your second quarter demand and demand in the second half of the year.

Speaker Change: We didn't touch our guidance significantly for the second half of the year will update our guidance in the second quarter.

I'll just point out in the conversations, as you say, to retailers, I think if you walked retail stores and you saw the placement that Shark Ninja has.

Speaker Change: As it relates to the second half of the year.

Speaker Change: Taking a conservative position, we're coming into a an environment of the.

I think retailers are betting on us.

Speaker Change: The consumer continuing we think to be challenged we're coming into a presidential election year, but we think that our combination of.

I think they're supporting us with incremental skew placements and stackouts and additional locations.

I think they're counting on us for the innovation that we're bringing to market and the demand that we're creating.

Speaker Change: <unk> performance quality and value.

Speaker Change: Is a strong recipe playbook for what the consumer is looking for today and I I think that we expect <unk>.

So I think that those conversations that they're having with us might be slightly different than maybe what they're having with others in the industry.

Speaker Change: New products in our new innovation, that's going to be coming out through the year to continue to excite consumers.

Great, thank you. And then just a follow-up. As you think about outperforming your initial guide, how do you think about flow-through of that outperformance to the bottom line in driving better margin expansion versus reinvesting that for additional pull forward of growth?

Speaker Change: That's great to hear your raising as as you have seen demand and not and not with the hope that the new products. So you raise based on the success you had and how much replenishment and how much fulfillment you can get through is that the way we should be thinking.

Speaker Change: It is it is and look I think that.

So I think, Brooke, we're

focused on driving, you know, profitable sales. So let's start off with that. I mean, our gross margin improved in the quarter.

Speaker Change:

Speaker Change: Again as the quarter goes on and as we close out the second quarter and as we get kind of more and more visibility to kind of retailer sentiment in just market sentiment in the second half of the year.

our gross margin rate improved in the quarter. But as it relates to flowing that all the way through, I mean, I think we've talked a lot about the fact that there's a lot of organic growth

Speaker Change: We'll update that guidance at the end of the second quarter.

Speaker Change: That's great to hear congrats again <unk>.

areas of the business for us to invest in.

Speaker Change: Our next question comes from the line of Brook Broach with Goldman Sachs. Your line is open.

Europe , you know, we're having a lot of great success in Europe and, you know, we expect to continue to put our foot on the gas when it comes to advertising investment. We're entering into new categories. Those new categories require advertising.

Brooke Siler Roach: Good morning, and thank you for taking our question I.

Brooke Siler Roach: I was hoping you could provide an update on your outlet for industry level growth and then North America market for each of the core categories, where you play what are you seeing in the competitive and promotional environment broadly and how old are your retail partner conversations indicating for transfer the remainder of the year. Thank you.

I think the way you should think about operating expense on a full year basis is

You know, a little bit of leverage on the R&D side. You know, a little bit of leverage, you know, on the G&A side as we get into the second half of the year.

Speaker Change: Yep Yep Brooks.

Speaker Change: Alright, listen I think you're seeing a lot of the industry trends and market trends as well I mean, I I think the market is tough you know.

But I think you should expect sales and marketing to continue to de-leverage and be quite strong.

Speaker Change: I think the market is down.

We just think that there are lots of areas for us to invest, lots of new markets, lots of new geographies, and we think it's prudent at this point for us to continue to keep investing in those.

Brooks: Down low single digits.

Brooks: I think the low end of the market is quite promotional.

Brooks: I think that you know.

Brooks: When you look at our gross margins when you look at our sell through that we've had.

Great, thanks so much. I'll pass it on.

Brooks:

Brooks: That's not a market those are not areas of the market that were participating in I mean, we've invested very heavily in sales and marketing.

Bye.

Next question comes from the line of Stephen Forbes with Guggenheim. Your line is open.

Brooks: We think that's the better way for us to drive demand then bigger promo pricing I mean, there's obviously certain cases of course that we we go on promo and there are certain periods of the year for example, right now before mother's day.

Good morning, Mark, Patrick Larry. Congrats on the great quarter.

Mark, I was hoping maybe to follow up on some previous questions. We look at the first quarter net sales performance in the U.S. segment.

at 22%. I mean, that's

Brooks: But I think that.

that's significantly outperformed, you know, sort of where we were, and I think

Brooks: What's sharpening just experiencing is definitely.

where the baseline expectation is for that segment on a go-forward basis. So is there any way to unpack the various contributing factors to the

Brooks: Bucking the trend of of the industry. Our outlook is that we think the industry will get back to flat in the second half of the year after.

to the quarter, whether it be the 2023, 24 products, whether it be replenishing inventory or you think about points of distribution, like any way to contextualize the contributions to growth.

Brooks: After it down here in 2022 in 2023.

Brooks: But our forecasts an expectation.

Brooks: Don't have the industry growing in the second half of the year, but roughly of the industry at about flat in the second half of the year.

Yeah, absolutely. I mean,

Brooks: I'll I'll just point out in the conversation did you say to retailers.

Well, look, I would say first and foremost, I think we generated kind of strong base business. I mean, I think our core base business,

Speaker Change: I think if you walked retail stores and you saw the placement the shark Ninja has.

Brooks: I think yeah retailers are betting on us.

was healthy in the quarter. I mean, our core vacuum business, our core blender business, you know, our core cooking business in North America. And so, you know, you're, you're helping, I mean, if you think about last year at this time, that market was declining,

Brooks: I think they're supporting us with incremental skew placements and stack outs an additional locations.

Brooks: I think they're counting on us for the innovation that we're bringing to market and the demand that we're creating.

high single digits, even low double digits, market came down to kind of declining, low single digits. So we've got a firmed up core base of our business.

Brooks: So I I think that those conversations that they're having with us.

Brooks: It might be slightly different than maybe what they're having with others in the industry.

Then, secondly, I would say you layer on top of that, you know, expansion of new categories and new products that we launched in both 22 and 23. I mean, you know, we had a very strong outdoor cooking season. You know, our beauty business continues to be quite strong. The new products that we launched in 2023 are having a big impact in 2024. I mean, I'll identify, you know, our cleaning business groups. 6%. I mean, we're seeing really nice growth out of this expansion into where the carpet extractor business and the spot and stain cleaner business.

Speaker Change: Great. Thank you and then just a follow up.

Speaker Change: You think about outperforming your initial guide how do you think about flow thrill of that upper format to the bottom line and driving better margin expansion versus reinvesting that for additional Paul far enough grass.

Speaker Change: So I think.

Speaker Change: We're focused on.

Speaker Change: Driving.

Speaker Change: Profitable sale, so let's start off with that I mean, our our gross margin improved in the quarter.

Speaker Change: Gross margin rate improved in the quarter.

Speaker Change: But as it relates to flowing that all the way through I mean, I think we've talked a lot about the fact that.

You know, it's been strong for us.

So I think, you know, number two is you're just seeing, you know, new product and new category growth, you know, coming from, you know, the compounding effect of 22 and 23 that's having a positive impact on 24.

Speaker Change: There's a lot of organic growth.

Speaker Change: Areas of the business for us to invest in.

Speaker Change: Europe, you know we were having a lot of great success in Europe, and we expect to continue to put our foot on the gas when it comes to advertising investments.

I think three, you know, you have to look at expansion of retailers. I mean, last year at this time in Q1, we weren't in Sephora, we weren't in Alta, we weren't in VASP pro shop.

Speaker Change: We're entering into new categories, there's new categories require advertising I.

Speaker Change: I think the way you should think about operating expense on a full year basis is.

You know, we have in the quarter, you know, launched into Dick's sporting goods online.

Speaker Change: Little bit of leverage on the R&D side, you know a little bit of leverage on the G&A side as we get into the second half of the year, but I think you should expect sales and marketing.

So we're in more retail doors as well. And then lastly, is the replenishment from the strong Q4 numbers that we talked about. So I think when you kind of combine all four of those things,

Speaker Change: To continue to deleverage and be quite strong. We just think that there are lots of areas for us to invest lots of new markets lots of new geographies.

It really propelled us into nice growth in the first quarter in North America.

Speaker Change: And we we think it's prudent at this point for us to continue to keep investing in those.

Thank you. I'll pass over.

Speaker Change: Alright, thanks, so much I'll pass it on.

Our next question comes from the line of Philip Lee with William Blair. Your line is open.

Speaker Change: Okay.

Speaker Change: Next question comes from the line of Stephen for Smith doesn't hang your line is open.

Good morning, Patrick, welcome. Thanks for taking my question. There's obviously a pretty long runway to continue to expand here internationally. Can you provide some color on where you are at in terms of the number of product categories offered in some of these more nascent markets versus what's available domestically and then what your plans are for expansion this year and what kind of lift we can expect that to provide? Thanks.

Stephen: Good morning, Mark Patrick Larry Congrats on a great quarter.

Stephen: Mark I was hoping maybe to follow up on some previous questions Alright, we we look at the first quarter net sales performance in the in the U S segment.

Stephen: At 22% I mean, that's that's significantly outperformed sort of where we were and I think we're the baseline expectation is for that segment on a go forward basis. So is is there any way to unpacked like I'm packed of the various contributing factors to the to the.

Sure.

Well, look, so I would say first and foremost,

you know, we were comping a massive Q1, 2023 in the UK. And so, you know, we're excited to see that, you know, our UK business continues to grow, which is our largest market outside of North America.

Stephen: To the quarter and whether it be 2023, 24 products, whether it be replenishing inventory or you know you think about points of distribution like any way to contextualize because.

The business in the UK is getting more diversified across more product categories.

Stephen: The contributions to growth.

Speaker Change: Yeah, absolutely I mean.

We're generating real scale in new categories that we've expanded into. You know, we're the number one electric grill in the UK. Our creamy business, you know, is starting to grow really nicely. Our spot and stain cleaner, our hard floor cleaner business is growing in the UK. So when you look at the UK, first and foremost, you know, we're in about 20 of our 33 categories, you know, today that are in the UK. And that business is becoming, you know, we think, more. healthier, more diversified

Speaker Change: I would say first and foremost I think we generated kind of strong base business I mean, I think our core base business.

Speaker Change: Was healthy in the quarter I mean, our our core vacuum business, our core blender business, our core cooking business in in North America, and so you're.

Speaker Change: Nothing I mean, if you think about last year at this time, we add market with declining high single digits.

Stephen: Even low double digits.

In Germany and France, you know, we experience triple-digit growth in the quarter. You know, we expect, you know, similar triple-digit type growth in the second quarter in Germany and France.

Stephen: Market came down to kind of declining.

Stephen: Low single digit so we've got a firm that core base of our business then.

Stephen: Then secondly, I would say you layer on top of that <unk>.

Stephen: Expansion of new categories, and new products that we launched in both 22 and 23 I mean, we had a very strong outdoor cooking season.

And those markets, you know, for the most part, are really selling about 10 product categories. So we've got a long runway of

new products to be able to expand into Germany and France.

Stephen: Our beauty business continues to be quite strong the new products that we launched in 2023 or having a big impact in 2024, I mean I'll identify your cleaning business grew 6% I mean, we're seeing really nice growth out of this expansion into the carpet extractor business and.

You know, we're seeing great support from the Euronics and the media arts and the Fennac d'Artees and the Boulinjais in Germany and France. So we're getting really strong retailer support. You look at a market like Latin America, I mean, our beauty business,

you know, is extremely strong in Latin America and we're expanding more and more our Ninja brand into that market.

Stephen: Spot in steam cleaner business, it's been strong for us.

In the second half of the year, you'll see a much bigger launch into the Middle East.

Stephen: So I think number two is you're just seeing.

Stephen: New products and new category growth coming from the compounding effect of 22 and 23, that's having a positive impact on 24.

That'll start contributing to our growth as we get into the third and fourth quarter. So I would say, you know, at the most mature area being UK, you know, we're still seeing opportunities for category expansion. And then you look at, you know, some of these other, you know, less mature markets. There's a, you know, multi-year runway of products for us to be able to continue to expand in those markets.

Stephen: I think three you know you have to look at expansion of retailers I mean last year at this time in Q1, we weren't insofar we weren't in all Sir we weren't in bass pro shop.

Stephen: We have in the quarter launched into Dick's sporting goods online.

Good, great, very helpful. And then just a quick one. You spoke about the opportunity for recurring revenue with CO2 canisters and flavored pods for Thurcy. Can you talk about where you are now in terms of adoption there and then what are the opportunities to kind of expand some of these ancillary recurring purchases and existing or maybe plan new categories? Thanks a lot.

Stephen: So we're in more retail stores as well.

Stephen: And then lastly is the replenishment from a strong Q4 numbers that we talked about so I think when you kind of combine all four of those things.

Stephen: Really propelled us into nice growth in the first quarter in North America.

Yeah. So, Philip, you know, I think the consumable conversation, you know, is much broader than just thirsty. I mean, you know, we're getting a very, very high attach rate in our carpet cleaners and stain cleaners with our proprietary chemicals that go into those products.

Speaker Change: Thank you that's all.

Speaker Change: Alright next question comes from the line of physically with William Blair. Your line is open.

Our hard floor cleaners like the Hydrovac are getting high attach rates with chemicals on those products. So, you know, our accessories business and outdoor cooking and our pellet business, you know, is quite strong in those categories of consumers coming back and buying a cover or a griddle or some other accessory for our outdoor cooking business. So, you know, there's lots of aspects of our business that are becoming more either accessory, aftermarking. market accessory driven.

William Blair: Good morning, Patrick welcome. Thanks for taking my question, there's obviously, a pretty long runway to continue to expand to your internationally can you provide some color on where you are out in terms of the number of product categories offered in some of these more Nathan markets versus what's available domestically and then what are your plans are for expansion this year.

William Blair: And what kind of what we can expect that to provide thanks.

William Blair: Sure.

Speaker Change: Well look so I would say first and foremost.

Patrick: We were Comping, a massive Q1 2023 in the UK and so we're excited to see that our UK business continues to grow which is our largest market outside of North America.

or more consumable driven.

You know, I think the most

exciting one, you know, clearly is thirsty and we're learning a tremendous amount about thirsty. I mean, you know, we've had a nice installed base as we get into Q1. You know, we're starting to see replenishment on which flavors are resonating, which drink types are resonating, which are not resonating, and how do we start to need to retool kind of a flavor development? You know, we brought on a number of outside consultants that come from the ready-to-drink beverage space. that are working with us on, you know, drink development, recipe development. You know, we're going to launch our thirsty product into the UK late in the second half of the year. We're working on drink development for that market.

William Blair: The business in the UK is getting more diversified.

William Blair: Across more product categories, we're generating real scale in new categories that we've expanded into with the number one electric grill in the UK are creamy business, we're starting to grow really nicely.

William Blair: Our spot and stained queen are hard for cleaner business is growing in the UK. So when you look at the UK first and foremost worried about 20 of our 33 categories today that are in the U K and that.

William Blair: Business is becoming you know, we think more healthier more diversified.

CO2 is kind of another area of replenishment. So look, I would say that, you know, we're learning a lot. You know, we're tweaking as we go, you know, to try to figure out how to get the formula right and try to really figure out how do we give consumers what they want and what they're looking for.

William Blair: In in Germany, and France, we.

William Blair: We experienced triple digit growth in the quarter.

William Blair: We expect similar triple digit type growth in the second quarter in Germany, and France, and those markets for the most part are really selling about 10 product categories. So we've got a long runway of new products to be able to expand into into Germany, and France and.

And I think as we go quarter over quarter, you know, we're going to continue to get much, much smarter about how we're approaching that thirsty business and how do we take those learnings and apply to other potential consumable categories that we have in the pipeline.

William Blair: We're seeing great support from the <unk> in the media marts in the <unk> in the <unk> in.

William Blair: Many in France. So so we're getting really strong retailers support you look at a market like Latin America, I mean, our beauty business.

Great, thanks again. Congratulations on Good Corps.

Next question comes from the line of Brian McNamara with Kanakar, Janity. The line is open.

William Blair: You know it was extremely strong in Latin America, and we're expanding more and more are ninja brand into that market.

Good morning, guys. Thanks for taking the questions. Congrats on the very good results. Mark, I think you could all consumer companies that are looking to go public at the take the Shark Ninja Playbook giving your guys a success in arguably a very tough category. The company has obviously been very successful since you debuted last July . I'm curious, what is your philosophy in terms of expectations management when you went public? And does anything change now with a permanent CFO and Patrick in place? Thanks.

William Blair: In the second half of the year, you'll see a much bigger launch and into the middle East Battlestar.

William Blair: Contributing.

William Blair: To our growth as we get into the third and fourth quarter. So I would say at the <unk>.

William Blair: Most mature area being UK, we're still seeing opportunities for category expansion.

William Blair: And then you look at some of these other <unk>.

William Blair: Less mature markets. There is a multi year runway of products for us to be able to continue to expand in those markets.

Yeah, look, Brian , I mean,

Speaker Change: Okay, Great very helpful. And then just a quick one you spoke about the opportunity for recurring revenue with C. O two canisters and flavor pause for Thursday can you talk about where you are now in terms of adoption mayor and then what are the opportunities to kind of expand some of these ancillary recurring purchases and.

We're just playing the playbook we've done for the last 16 years. I mean, you know, this company has had

you know, different chapters. I mean, you know, it had a long chapter of, you know, Mark and I owning the business, you know, and that chapter of us.

William Blair: And your maybe plan new categories. Thanks, a lot.

you know, with investors that a chapter of us in Hong Kong and, you know, going public last July , you know, it's just kind of the next chapter of the business. I mean, the underlying kind of operating of the business,

William Blair: So so Philip I, you know I I think the consumable conversation.

William Blair: Is much broader than just thirsty.

William Blair: We're getting a very very high attach right in our carpet cleaners, and staying cleaners with our proprietary chemicals that go into those products.

You know, those are the same, you know, same mission, same pillars that we worked on for the last 16 years. I mean, the business is about positively impacting people's lives every day and every home around the world.

William Blair: Our hearts floor cleaners, like the hydrovac or getting high attach rates with chemicals on those products. So.

We do that through taking these proprietary insights that we have and turning them into disruptive innovation that solves consumer problems.

William Blair: Our our accessories business, an outdoor cooking and our pellet business is quite strong in those categories of consumers coming back and buying a cover or a griddle or some other accessory for outdoor cooking business. So.

You know, we've continued to keep working on driving efficiency in our global supply chain.

We think that our ability to story tell and to get the consumer to really understand the problems that we're solving and create consumer demand through social media and TV and experiential events, we're really connecting and engaging with our consumers.

William Blair: Lots of aspects of our business that are becoming more either accessories aftermarket accessories driven.

William Blair: Or more <unk>.

William Blair: Consumable driven you know I think the most exciting one clearly as thirsty and we're learning a tremendous amount about thirsty I mean, we've had a nice installed base as we get into Q1, we're starting to see replenishment on which flavors are resonating, which drink types of <unk>.

And we think that, you know, we've created a really dominant omni-channel strategy of, you know, brick and mortar and, you know, dot com and direct the consumer to enable the consumer to buy our products whenever or wherever they want.

William Blair: <unk>, which are not resonating and how do we start the need to retool kind of a flavor development.

I mean, all of that is the same. And I think if we just...

keep playing that same playbook and we keep getting better and better at it as a leadership team and as a company overall You know, hopefully, you know, the consumer responds by You know, buying more products from us and buying across brands and buying across categories and expanding it into more markets and

William Blair: We brought on a number of outside consultants that come from the ready to drink beverage space that are working with us on <unk>.

William Blair: Drink development recipe development.

William Blair: We're going to launch our thirsty product into the U K wait in the second half of the year, we're working on drink development for that market Uhm C. O. Two is kind of another area of Replenishments. So look I would say that you know we're learning a lot.

And we'll kind of let the market decide how that all rolls up from a stock performance perspective.

Thanks very much. I'll leave it there. Best of luck.

William Blair: We're tweaking as we go.

William Blair: To figure out how to get the formula right and try to really figure out how do we give consumers what they what they want and what they're looking for and I think as we go quarter over quarter, we're going to continue to get much much smarter about.

Bye.

Next question comes from the line of Rennepan with UBS. Your line is open.

Hi, congrats on the strong result. This is Rennie from UBS. My question is on your cleaning appliances segment. It has accelerated and then positive in this quarter. But if we exclude the extractor and the robotic categories, the regular vacuum cleaner still generate positive growth. And since this is a core category, I would like understand your

William Blair: About how we're approaching that thirsty business and how do we take those learnings and apply it to other potential consumable categories that we have in the pipeline.

Speaker Change: Great. Thanks again, congrats on your door.

Speaker Change: Next question comes from the line, Brian Mcnamara Panic on charity per line is open.

Brian McNamara: Good morning, guys. Thanks for taking my questions. Congrats on the very good results Mark I think you could all consumer company that I'm looking to go public at take the shark Ninja playbook, giving you guys a success and arguably a very tough category. The company has obviously been very successful since you debuted last July I'm <unk>.

your views on the category outlook for four year 24.

Yeah.

So, so, Rennie,

You know, if you strip out kind of the impact of extractor and you kind of look at our total global vacuum business, it was up a few percent.

William Blair: Curious what was your philosophy in terms of expectations manager. When you went public and has anything changed now with a permanent C. A fallen Patrick in place.

So, you know, we've seen positive growth in a market that is down. So we believe we've continued to take share in that category.

Speaker Change: Yeah, I I look Brian I mean.

Speaker Change: We're just playing the playbook, we've done to the last 16 years I mean, you know this company had diff.

I think as we look at the full year outlook, I think we will continue to accelerate the cleaning category. We've got a lot of new products that are launching in cleaning over the course of the next couple of months.

Speaker Change: Different chapters I mean.

Speaker Change: It had a long chapter of Mark and I owning the business.

Speaker Change: With investors without a chapter of us in Hong Kong and.

you know, as we continue to keep penetrating more into, you know, certain global markets and getting more retailer placement in places like

Speaker Change: Going public last July it's just kind of a next chapter.

Speaker Change: The business I mean, the underlying kind of operating of the business those are the same.

you know, Germany and France and other European countries. You know, I think that, you know, that will continue to help the cleaning category.

Speaker Change: Same mission Saint pillars that we worked on for the last 16 years I mean, the business is about positively impacting People's lives every day and every home around the world.

You know, overall I'm, you know, bullish that, you know, we'll continue to see some acceleration as we go through the year in the overall cleaning category.

Speaker Change: We do that through you know.

Speaker Change: Taking these proprietary insights that we have and turning them into disruptive.

Speaker Change: Nation that solves consumer problems we've.

Thank you. And also, I would like to understand your views on the growth margin. It's been very strong this quarter. Do you're comfortable with that and since there's some, you know, the very promotional environment.

Speaker Change: We've continued to keep working on driving efficiency in our global supply chain, we think that our ability to <unk> and to get the consumer to really understand the problems that we're solving and create consumer demand.

And what's your view into the like second quarter or into the second half of this year? Thank you.

Speaker Change: Through social media and television and experiential events were really connecting and engaging with our consumers.

Yeah, look, I mean, we need to, you know, deliver, you know, let's go back to me, we need to deliver, you know, compelling, disruptive innovation with great quality, and we need to do it at an extraordinary value to the consumer. And so we always got to keep that quotient in mind as we're thinking about pricing and we're thinking about gross margin. And I think we're working hard to kind of find that right balance and make sure that consumers really feel that they're getting great value. when they buy a shark or ninja product.

Speaker Change: And we think that you know we've created a really dominant omnichannel strategy of brick.

Speaker Change: Brick and mortar N N dot com and direct to consumer to enable the consumer to buy our products whenever or wherever they want and so I mean all of that is the same and I think if we just keep playing that same playbook, and we keep getting better and better at it as a as a leadership team in as a company overall.

Speaker Change: You know hopefully you know the consumer responds by buying more products from us and buying across brands and buying across categories and expanding it into more markets.

As you said, I mean, you know, the market is promotional, but I think when you look at a business that's investing, you know, over 6% of sales in R&D and over 9% of sales in marketing, I think we're creating, you know, unique products.

Speaker Change: And what kind of let the let the market decide.

Speaker Change: How that all roads up from a from a stock performance perspective.

then, and I think we're creating lots of great demands for those products. I mean, I think our cooler is a great example of that, the Ninja Frost Vault. I mean, I think we found a real consumer problem, and we developed a really disruptive product to solve that problem.

Speaker Change: Thanks, very much only with their best of luck.

Speaker Change: [noise] next question comes from the line of <unk> with you B S. Your line is open.

<unk>: [noise] hi, congrats on the on the Strawberry Foundation 25, Yes. My question is Sander on your Clingy appliance is settlement. It has X thyroid and then some positive English clutter and if we if we exclude the extractor and the robot.

I think the marketing and the social media that we put out there really connected and engaged and resonated with consumers as they started seeing it. I think that, you know, the business really drove through our direct-to-consumer channels and through some of our retail partners.

And I think that when consumers got the product in home, they felt that it was really priced right and it was at a good value, you know, maybe versus other, you know, premium competitive cooler companies in the market.

B S: Categories is that the the regular vacuum cleaner still on January positive growth and it seems suspicious a core category like to understand that your.

B S: <unk> on the on the calculate I'll look for it for 24 year 24.

I think if we get all of those quotients right, you know, of innovation and compelling message and Omni-Channel, and we do it at the right price, I think we'll kind of find that right balance from a gross margin standpoint.

Speaker Change: Yeah, so so ready.

Speaker Change: If you if you strip out kind of the impact of extractor and you kind of look at our total global vacuum business. It was up a few percent.

Thank you. That's very helpful.

Speaker Change: So we've seen positive growth in a market that is down.

And we do have our last question comes from the line of Megan Alexander with Morgan Stanley . Your line is open.

Speaker Change: So we believe we've continued to take share in that category.

Speaker Change: I think as we look at the full year outlook I think we will continue to accelerate the cleaning category. We've got a lot of new products that are launching in cleaning over the course of the next couple of months you know as we continue to keep penetrating more into.

Hi, good morning, thanks for squeezing me in. I wanted to just come back to the restocking conversation. I think it's a little bit confusing and you know everyone's just trying to understand the dynamics not just for your categories but a lot of categories that saw this so maybe just a clarification then a question. To clarify it does seem like the fact you shipped ahead of POS and one Q was

Speaker Change: Certain global markets and getting more retailer placement in places like <unk>.

really more a function of where you ended the year and seeing kind of repunishment carryover and

Speaker Change: Germany, and France, and other European countries, I think that that will continue to help the cleaning category. So.

into one queue from the holiday season as opposed to kind of lapping over an easy compare on the de-stocking last year. So I guess, you know, clarification would be, is that fair? And then, you know, the question would just be, is the better way to think about it, perhaps where your weeks of supply at retail sit today versus maybe what is normal? Just trying to understand whether as we get to the back half and you're going to be lapping, you know, a pretty large gap in POS and shipments if

Speaker Change: Her all I'm bullish.

<unk>: Bullish that you will continue to see some acceleration as we go through the year and the overall cleaning category.

Speaker Change: Thank you and also would like to understand you have used on the on the gross margin.

Speaker Change: Very strong this clutter.

Speaker Change: You're comfortable with that and <unk>.

Speaker Change: That would promotion of environment and what's your view into the second quarter or into the second half of this year. Thank you.

the easy compare, if it is an easy compare, or it's really more about, you know, kind of how you're weak to supply look and not so much a year-over-year conversation. Hopefully that makes sense. Thank you.

Speaker Change: Yeah, well look I I mean, we need to do.

Speaker Change: Deliver.

Sure, Megan. So again, let's start by focusing on the fact that like this restocking, de-stocking situation is a U.S. only phenomenon and doesn't exist outside or hasn't existed outside of the U.S.

Speaker Change: Let's go back to I mean, we need to deliver <unk>.

Speaker Change: Compelling disruptive innovation with great quality, and we need to do it at an extraordinary value to the consumer and so.

Speaker Change: So we always gotta keep that quotient and mine is we're thinking about pricing and we're thinking about gross margin and I think we're working hard to kind of find that right balance and make sure that consumers really feel that they're getting great value in the buyer sharper ninja product.

To help make this more clear for you, at the end of Q1, 2022, retailers had 11 weeks of supply.

At the end of Q1.23, they had nine weeks of supply. And at the end of Q1.24, they have eight weeks of supply.

Speaker Change: As you said I mean, the market is promotional but.

Speaker Change: I think when you look at a business it's investing.

Speaker Change: 6% of sales and R&D in over 9% of sales in marketing.

So we are, on your question, on a weeks of supply basis, we're down three weeks of supply versus 22, and we're down one week of supply versus 23.

Speaker Change: I think we're creating unique products.

Speaker Change: And I think we're creating lots of great demand for those products. I mean, I think are are cooler is a great example of at the Ninja Frost fault I mean, I think we found a real consumer problem and we developed a really disruptive product to solve that problem I think the marketing and the social media that we put out there.

As we said, we ended 23 with significantly lower weeks of supply and inventory levels than we did at the end of 22.

And so you had some pipeline fill, you know, to replenish that back. But even after replenishing that back,

Speaker Change: They're really connected and engaged in resonated with consumers uhm as they started seeing it I think that you know the business really drove through our direct to consumer channels and through some of our retail partners.

you know, our POS in the U.S. grew 14, 15%, you know, our shipments in North America, you know, grew 22%. So there's a little kind of apples and oranges there because you've got to include Canada as well and in that number. But in general, we're ending...

Speaker Change: And I think that when consumers got the product and home they felt that.

Speaker Change: Really priced right and it was at a a good value maybe versus other.

Q1 with one less weeks of supply versus last year and three less weeks of supply versus two years ago and

Speaker Change: Premium can Scott.

Speaker Change: Premium competitive cooler companies in the market so.

I you know again we're going to continue to guide that

Speaker Change: I think if we get all of those quotients right, you know of innovation and compelling message and Omnichannel.

shipments and POS will match each other as we go out through the remaining three quarters and we'll just have to see whether retailers continue or are willing to increase their weeks of supply you know relative to what we saw prior year.

Speaker Change: We do it at the right price.

Speaker Change: I think we'll kind of find that right balance from a gross margin standpoint.

Speaker Change: Thank you that's very helpful.

We're happy to, you know, have any follow-up on that. No, that makes a lot of sense. I think that's really helpful. So thank you so much.

Speaker Change: And we do have our at our last question comes from the last Megan Alexander like Morgan Stanley. Your line is open.

Right.

Megan Alexander: Hi, good morning, Thank just with them in I wanted to just come back to the restocking conversation is I think it's a little that can be.

Megan Alexander: Everyone's just trying to understand the dynamics not just for your categories, but a lot of categories that <unk>. So maybe just a clarification than a question just to clarify it does seem like the the fact is shipped ahead of <unk> really more a function of where you ended the ear and seeing kind of.

That concludes our question and answer session. Mr. Mark Barocas, I turn the call back over to you.

Great. Well, thank you all for joining us on our first quarter call. We're excited by the strong start to 2024, and we appreciate your engagement and continued interest in the Shark Ninja story. We look forward to speaking with you again next quarter. Thanks so much.

Megan Alexander: Punishment carry over into one Q from the holiday season, as opposed to kind of lapping over and easy compare on the Destocking last year. So I guess you know clarification would be is that fair and then you know the the question would just be is the better way to think about it perhaps wearing or weeks of supply.

Ladies and gentlemen, this concludes today's conference call. You may now.

Megan Alexander: At <unk> today versus maybe what is normal and just just trying to understand whether as we get to the back half and you're gonna be lapping Ah.

Megan Alexander: Pretty large gap and and <unk> and shipment that's the easy compare if it has anything compare or it's really more about you know kind of higher weeks of supply lock and not so much a year over year conversation hopefully that makes sense. Thank you.

Speaker Change: Sure Megan.

Speaker Change: So again, let's start by.

Megan Alexander: Focusing on the fact that like this restocking destocking situation is a U S only phenomenon and doesn't exist outside or hasn't existed outside of the U S.

Megan Alexander: To help make this more clear for you at the end of Q1 2022 retailers had 11 weeks of supply.

Megan Alexander: At the end of Q1 23, they had nine weeks of supply and at the end of Q1 24 may have eight weeks to supply. So we are on our on your question on a week's supply basis, we're down three weeks of supply versus 22, when we're down one week of supply.

Megan Alexander: <unk> 23.

Megan Alexander: As we said we ended twenty-three with.

Megan Alexander: With significantly low four weeks to supply an inventory levels than we did at the end of the 22 and so you had some pipelines fell to replenish that back, but even after replenishing that back.

Megan Alexander: P O S. In the U S grew 14, 15%.

Megan Alexander: Our shipments in North America grew 22%, so it's a little kind of apples and oranges, there because you've got to include Canada, as well and and that number but in general we're ending Q1 with one last week to supply versus last year, and three sweeteners supply versus two years ago.

Megan Alexander: Uhm.

Megan Alexander: You know again, we're going to continue to guide that shipments and pass will match each other as we go out through the remaining three quarters.

Megan Alexander: And we will just have to see whether retailers continue or are willing to increase their we used to supply.

Megan Alexander: As to what we saw prior year.

Megan Alexander: Perhaps.

Speaker Change: Have any follow up on on that.

Speaker Change: That makes a lotta sense I think that's really helpful. So thank you so much.

Speaker Change: Right.

Speaker Change: That includes have a question and answer session.

Speaker Change: <unk> I turned to call back over to you.

Speaker Change: Great well. Thank you all for joining us on our first quarter call. We're excited by the strong start to 2024 and we appreciate your engagement and continued interest in the short term interest story, we look forward to speaking with you again next quarter. Thanks, so much.

Speaker Change: You can check how long. This concludes today's conference call Skinny now disconnect.