Q2 2024 SharkNinja Inc Earnings Call

Thanks for watching!

please wait the conferen will begin shortly

Operator: Thank you for standing by. I'd like to welcome everyone to SharkNinja's second quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise.

Speaker Change: she could

Speaker Change: Thank you for standing by. I'd like to welcome everyone to the SharkNinja's 2nd Quarter 2024 Earnings Call.

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

Operator: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star and the number one on your telephone keypad. If you'd like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Arvind Bhatia, Head of Investor Relations. Please go ahead.

Speaker Change: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star and the number 1 on your telephone keypad. If you'd like to withdraw your question, press star 1 again. Thank you.

Speaker Change: I would now like to turn the call over to Arvind Bhatia, Head of Investor Relations. Please go ahead.

Arvind Bhatia: Good morning, and welcome to the SharkNinja second quarter 2024 earnings conference call. Our second 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.

Arvind Bhatia: Good morning and welcome to the SharkNinja second quarter 2024 earnings conference call.

Speaker Change: our second quarter earnings release was issued this morning and can be found on the company's website at ir dot shop mina docom

Speaker Change: And shortly after today's call, a webcast will be available there for replay.

Arvind Bhatia: 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 and the company's most recent SEC filing, 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.

Speaker Change: 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.

Speaker Change: If you refer to the earnings release and the company's most recent SEC filings,

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

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

Arvind Bhatia: During the call, we will make several references to non-GAAP financial measures. We believe these measures provide investors with useful perspective on the underlying growth trends of the business. We have included a full reconciliation of non-GAAP financial measures to the most comparable GAAP measures in our earnings release.

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

Speaker Change: We believe these measures provide investors with useful perspective on the underlying growth trends of the business.

Speaker Change: We have included a full reconciliation of non-GAAP financial measures to the most comparable GAAP measures in our earnings release.

Arvind Bhatia: With me today are our Chief Executive Officer, Mark Barrocas, and Chief Financial Officer, Patraic Reagan. Mark will provide a business update, and Patraic will review our Q2 financial results and discuss our 2024 outlook. Art will then share brief closing remarks, and we will open up the call for your questions. Now, I will turn the call over to Mark.

Speaker Change: With me today are Chief Executive Officer Mark Barrocas and Chief Financial Officer Patraic Reagan.

Speaker Change: Mark will provide a business update. Patraic will review our Q2 financial results and discuss our 2024 outlook.

Speaker Change: Mark will then share brief closing remarks, and we will open up the call for your questions. Now, I will turn the call over to Mark.

Mark Barrocas: Thank you, Arvind. Good morning, everyone.

Mark Barrocas: Thank you, Arvind. Good morning, everyone, and thank you for joining us today.

Mark Barrocas: And thank you for joining us today. Let me begin with a review of our second quarter performance. Our teams once again delivered exceptional performance in the quarter. We grew adjusted net sales by an incredible 38%, this was on top of 20% growth in the year-ago period. And it was all organic and highly profitable growth. On an adjusted basis, EBITDA increased 48%, while earnings per share was up 51%.

Patraic: let me begin with a review of our second quarter performance

Mark Barrocas: our teams once again delivered exceptional performance in the quarter

Speaker Change: we grew adjusted net sales an incredible thirty-eight percent

Speaker Change: this was on top of twenty percent growth in the year ago period and it was all organic and highly profitable growth

Speaker Change: on an adjusted basis ebitda increased forty-eight percent while earnings per share was up fifty -one percent

Mark Barrocas: Our strategic initiatives around supplier diversification, competitive bidding, value engineering, and pricing management drove nearly 600 basis points of adjusted gross margin improvement in the quarter. Adjusted EBITDA margins increased 90 basis points, even as we continue to significantly reinvest in our growth initiatives. Our growth in the quarter was broad-based across product categories and geographies, and our innovation continues to drive market share gains. Each of our four key categories delivered at least double-digit growth.

Speaker Change: our strategic initiatives around supplier diversification competitive bidding value engineering and pricing management drove nearly six hundred basis points of adjusted gross margin improvement in the quarter

Speaker Change: adjusted ebitda margins increased ninety basis points even as we continue to significantly reinvest in our growth initiatives

Speaker Change: our growth in the quarter was broad based across product categories and geographies

Speaker Change: And our innovation continued to drive market share gains.

Speaker Change: Each of our four key categories delivered at least double-digit growth.

Mark Barrocas: Cleaning grew 20%, our strongest performance in this category since COVID. Our overall domestic business accelerated, growing an incredible 35 percent. And this performance was even more remarkable considering the domestic market was relatively flat. The international segment had another very strong quarter. Adjusted net sales increased 46%, with emerging markets like Germany and France delivering triple-digit growth.

Speaker Change: Cleaning group 20% our strongest performance in this category since COVID.

Speaker Change: Our overall domestic business accelerated, growing an incredible 35%, and this performance was even more remarkable considering the domestic market was relatively flat.

Speaker Change: The international segment had another very strong quarter. Adjusted net sales increased 46%, with emerging markets like Germany and France delivering triple-digit growth.

Mark Barrocas: Our performance was also balanced across our three growth pillars, as we continue to increase our share in existing categories, enter new categories, and expand our global footprint. Our first growth pillar, entering new and adjacent categories, remains a key growth driver. With the launch of fans and coolers earlier this year and the recent release of our frozen drink makers, we've already entered three new subcategories in 2024. We're now in 34 subcategories, up from 27 at the end of 2022.

Speaker Change: Our performance was also balanced across our three growth pillars as we continue to increase our share in existing categories, enter new categories, and expand our global footprint.

Speaker Change: Our first growth pillar, entering new and adjacent categories, remains a key growth driver.

Speaker Change: with the launch of fans and coolers earlier this year and the recent release of our frozen drink makers we've already entered into three new subcategories in two thousand and twenty-four

Speaker Change: we're now in thirty-four subcategories up from twenty-seven at the end of two thousand and twenty two

Mark Barrocas: This is testament to our conscious and purposeful strategy to drive growth while diversifying and mitigating risk. With each new category, we're creating new experiences and offering high-quality, innovative products that solve key consumer pain points. Last month, we launched Ninja Slush, professional-grade frozen drink makers. Our research showed that consumers love slush, but enjoying one requires a trip to a convenience store, the movies, or the mall.

Speaker Change: This is testament to our conscious and purposeful strategy to drive growth while diversifying and mitigating risk.

Speaker Change: with each new category we're creating new experiences and offering high-quality innovative products that solve key consumer pain points

Speaker Change: Last month, we launched Ninja Slushy, our professional-grade frozen drink maker.

Speaker Change: Our research showed that consumers love slushies.

Speaker Change: But enjoying one requires a trip to a convenience store, the movies, or the mall.

Mark Barrocas: With Ninja Slushy, consumers can create commercial-quality frozen drinks without stepping out of their home. Our proprietary RapidShow technology eliminates the need for ice and prevents drinks from getting watered down. It's early days, but I'm pleased to share that Ninja Slushy became the fastest selling new product ever during launch week on our direct-to-consumer site, and the initial inventory sold out within a few days

Speaker Change: With Ninja Slushy, consumers can create commercial-quality frozen drinks without stepping out of their homes.

Speaker Change: our proprietary rapid sheield technology eliminates the need for ice and preventents drinks from getting the water down

Speaker Change: It's early days, but I'm pleased to share that Ninja Slushy became the fastest selling new product ever during launch week on our direct-to-consumer site.

Mark Barrocas: Ninja Slushy has already gone viral and is quickly becoming a social media sensation. Our teams are working hard to fill orders on the waitlist and to support broader distribution to our retail partners later this year. Our Ninja Creamy is already the number one ice cream maker in the U.S. And now, with the addition of Ninja Flushie, we're on our way to becoming the leader in frozen treats. Shark Flex Freeze, our indoor-outdoor cooling system, launched earlier this year and continues to outperform initial expectations.

Speaker Change: The initial inventory sold out within a few days.

Speaker Change: nia flushy is earready gone viral and is quickly becoming a social media sensation

Speaker Change: Our teams are working hard to fill orders on the waitlist and to support broader distribution to our retail partners later this year.

Speaker Change: Our Ninja Creamy is already the number one ice cream maker in the U.S., and now with the addition of Ninja Slushy, we're on our way to becoming the leader in frozen treats.

Speaker Change: sharp flex freeze are indoor outdoor cooling system launched earlier this year and continues to outperform initial expectations

Mark Barrocas: Based on the strong response from consumers, as well as our retail partners, we see significant white space for us to capture. We're excited by the upside potential of FlexFreeze and look forward to launching additional SKUs in 2025 and beyond as we build on the initial success and momentum. With Shark Flex Freeze, we're creating a new market, just as we did with Ninja Creamy. On the other hand, with the Ninja Frostbolt cooler, we're disrupting a large category with entrenched competitiveness. Underscoring that we can be successful with both strategies.

Speaker Change: Based on the strong response from consumers, as well as our retail partners, we see significant white space for us to capture.

Speaker Change: We're excited by the upside potential of FlexBreeze and look forward to launching additional SKUs in 2025 and beyond as we build on the initial success and momentum.

Speaker Change: With Shark's Flex Freeze, we're creating a new market just as we did with Ninja Creamy.

Speaker Change: on the other hand with the ningjer frostul cooler wewere' disrupting a large category with ent entrench competitors underscoring we can be successful with both strategies

Mark Barrocas: Frost Fault's technology and innovation are resonating with consumers and driving better than expected performance, including strong results on prime Day. It has also enabled our entry into the sporting goods channel, an important breakthrough for us. We plan to launch additional SKUs and drive broader distribution next year to capture the upside. Our 2023 launches are also delivering strong performance, highlighting the sustainability of our innovation flywheel. In less than a year following launch, we've become a leading player in the deep carpet cleaning market with our shark carpet expert and stain striker products.

Speaker Change: Frost Fault's technology and innovation are resonating with consumers and driving better than expected performance, including strong results on prime day.

Speaker Change: Frost Fault has also enabled our entry into the sporting goods channel, an important breakthrough for us.

Speaker Change: We plan to launch additional SKUs and drive broader distribution next year to capture the upside.

Speaker Change: Our 2023 launches are also delivering strong performance, highlighting the sustainability of our innovation flywheel.

Speaker Change: in lesses than a year following launch we become a leaning player in the deep carpet cleaning market with our short carpet expert and steam striker products

Mark Barrocas: With our outdoor ovens, we continue to successfully expand our global presence in outdoor cooking. We expect momentum to continue with additional innovation next year. Consumers already love our offerings inside the home, and they're increasingly accepting Ninja as an outdoor brand as well.

Speaker Change: With our outdoor ovens, we continue to successfully expand our global presence in outdoor cooking. We expect momentum to continue with additional innovation next year.

Speaker Change: consumers arealready love our offerings inside the home and they're increasingly accepting nia as an outdoor brand as well

Mark Barrocas: With our outdoor cooking products combined with fans, coolers, and portable blenders, we're extending our outdoor portfolio and expanding our global addressable market. Our second growth pillar is gaining share in existing categories. Nothing illustrates this better than the incredible performance of our cleaning cabinet. However, following strong performance during COVID, the broader cleaning market has been a bit soft.

Speaker Change: With our outdoor cooking products combined with fans, coolers, and portable blenders, we're extending our outdoor portfolio and expanding our global addressable market.

Speaker Change: Our second growth pillar is gaining share in existing categories.

Speaker Change: nothing illustrates this better than the incredible performance of our cleaning category

Speaker Change: Following strong performance during COVID, the broader cleaning market has been a bit soft.

Mark Barrocas: Over the last 18 months, our engineering and product development teams have remained laser-focused on bringing innovation to this category, and this is beginning to pay off now, driving additional market share gains for us. As I mentioned earlier, cleaning accounted for more than 40% of our adjusted net sales last year and delivered 20% growth in the quarter. This was an acceleration from 6% growth in the first quarter of this year and a 5% decline for the full year in 2023. Within cleaning, core subcategories such as uprights and cordless stick vacuums perform particularly well.

Speaker Change: over the last eighteen months are engineering and product development teams have remained laser focused on bring innovation to this category

Speaker Change: this is beginning to pay off now driving additional market share gains for us

Speaker Change: As I mentioned earlier, cleaning was more than 40% of our adjusted net sales last year. Delivered 20% growth in the quarter.

Speaker Change: This was an acceleration from 6% growth in the first quarter of this year and a 5% decline for the full year in 2023.

Speaker Change: within cleaning core subcategories such as uprightses and courtwith stick vacuumes per form particularly well

Mark Barrocas: We continue to innovate and recently launched our new PowerDetect Upright Vacuum with our most advanced cleaning technology. In the second half of this year, we're launching several innovative products within the cordless, hard floor, and robot subcategories, which should continue to support strong growth for us. The cooking and beverage category grew 12% in the quarter, on top of nearly 70% growth in the second quarter last year.

Speaker Change: we continue to innovate and recently launched our new power detect upright vacuum with our most advanced cleaning technology

Speaker Change: In the second half of this year, we're launching several innovative products within the cordless, hard floor, and robot subcategories, which should continue to support strong growth for us.

Speaker Change: The cooking and beverage category grew 12% in the quarter, on top of nearly 70% growth in the second quarter last year.

Mark Barrocas: Our base business in this category remains quite healthy. We've expanded our air fryer assortment with the launch of the Ninja Double Stack Air Fryer, which is a vertical air fryer that doubles the performance of a single zone air fryer while requiring only half the counter space.

Speaker Change: Our base business in this category remains quite healthy.

Speaker Change: We've expanded our air fryer assortment with the launch of the Ninja Double Stack Air Fryer. This is a vertical air fryer that doubles the performance of a single-zone air fryer while requiring only half the counter space.

Mark Barrocas: I'm super excited to share that we recently entered the premium coffee and espresso subcategory with our Ninja Luxe Cafe. While coffee isn't a new category for us, we're entering the super premium segment for the first time with a unique and highly differentiated product. This is a big opportunity for us to expand our coffee business in Europe with a product that's designed to appeal to a global coffee and espresso-loving consumer. The Ninja Luxe Café is an all-in-one espresso, drip coffee, and cold brew system that creates café-quality drinks at home. Our consumer insights showed us that espresso machines are a bit intimidating and difficult to use. They're quite expensive and offer limited drink options.

Speaker Change: I'm super excited to share that we recently entered the Premium Coffee and Espresso subcategory with our Ninja Luxe Café.

Speaker Change: While coffee isn't a new category for us, we're entering the super premium segment for the first time with a unique and highly differentiated product.

Speaker Change: This is a big opportunity for us to expand our coffee business in Europe with a product that's designed to appeal to a global coffee and espresso-loving consumer.

Speaker Change: The Ninja Luxe Café is an all-in-one espresso, drip coffee, and cold brew system that creates café-quality drinks at home.

Speaker Change: Our consumer insights showed us espresso machines are a bit intimidating and difficult to use. They're quite expensive and offer limited drink options.

Mark Barrocas: We've created an affordable, multifunctional coffee and espresso machine that's easy to use and has endless drink options for our discerning global consumers. The food prep category delivered outstanding performance with adjusted net sales increasing more than 90% in the quarter. The growth was broad-based across ice cream makers, kitchen systems, traditional and compact blenders.

Speaker Change: We've created an affordable, multifunctional coffee and espresso machine that's easy to use and has endless drink options for our discerning global consumers.

Speaker Change: The food prep category delivered outstanding performance with adjusted net sales increasing more than 90% in the quarter.

Speaker Change: The growth was broad-based across ice cream makers, kitchen systems, traditional and compact blenders.

Mark Barrocas: Our ninja creamy ice cream maker continues to grow rapidly and is becoming a global phenomenon as we launch an additional country. In Q2, CREAMI delivered strong performance globally, especially in Europe. And the Ninja Blast, our portable blender, is driving amazing results and large market share gains in the single-serve blending subcategory.

Speaker Change: Our Ninja Creamy ice cream maker continues to grow rapidly and is becoming a global phenomenon as we launch in additional countries.

Speaker Change: In Q2, CREAMI delivered strong performance globally, especially in Europe .

Speaker Change: And the Ninja Blast, our portable blender, is driving amazing results and large market share gains in the single-serve blending subcategory.

Mark Barrocas: Our other category delivered exceptional results, increasing 250% in the quarter, with strength across beauty, sands, and air purifiers. Beauty, led by FlexStyle Hot Air Stylers, remains strong both in our domestic and international markets. We continue to bring newness and excitement to the category and to find key moments in culture to highlight our brand. For example, at this year's Met Gala, we launched FlexStyle Sparkle with Chris Appleton, Shark Beauty's global brand ambassador.

Speaker Change: or other category delivered exceptional results increasing two hundred and fifty percent in the quarter with strength across beauty sands and here purifiers

Speaker Change: Beauty, led by flex-style hot air stylers, remains strong both in our domestic and international markets.

Speaker Change: We continue to bring newness and excitement to the category and to find key moments in culture to highlight our brand.

Speaker Change: For example, at this year's Met Gala, we launched FlexStyle Sparkle with Chris Appleton, Shark Beauty's global brand ambassador.

Mark Barrocas: And while we won't be announcing details yet, I'm pleased to share that we're on track to launch another very exciting subcategory within beauty in Q4 of this year. Our ability to consistently innovate and refresh existing categories remains the bedrock of our strategy to drive market share. To that end, we're on track to launch 25 new products this year, with more than 80% of the launches in existing categories. Next, I will turn to our third key growth pillar, expansion in international markets.

Speaker Change: And while we won't be announcing details yet, I'm pleased to share that we're on track to launch another very exciting subcategory within beauty in Q4 of this year.

Speaker Change: Our ability to consistently innovate and refresh existing categories remains the bedrock of our strategy to drive market share gains.

Speaker Change: To that end, we're on track to launch 25 new products this year, with more than 80% of the launches in existing categories.

Mark Barrocas: We grew our international business 46% in the quarter, on top of adjusted sales growth of 66% in Q2 last year. The UK, which is our largest international market, grew nearly 7% in the quarter and is up 10% in the first half of this year, in line with our expectations. While growth has moderated compared to 70% growth in the first half of last year, our UK business is more diversified, more profitable, and overall healthier than ever before. Within continental Europe, we drove triple-digit growth in Germany and France, where the overall markets were relatively stagnant.

Speaker Change: Next, I will turn to our third key growth pillar, expansion in international markets.

Speaker Change: we grew our international business forty-six percent in the quarter on top of adjusted sales growth of sixty-six percent in q two last year

Speaker Change: UK, which is our largest international market, grew nearly 7% in the quarter and is up 10% in the first half of this year, in line with our expectations.

Speaker Change: While growth has moderated compared to 70% growth in the first half of last year, our UK business is more diversified, more profitable, and overall healthier than ever before.

Speaker Change: within continental europe we drove triple-digit growth in germany in france where the overall markets were relatively stagnant

Mark Barrocas: Our footprint and brand awareness in these countries is increasing, and our business is more diversified. From just an idea a few years ago, these two markets have come a long way and are approaching meaningful scale. We also see tremendous growth opportunities in markets like Nordics, Benelux, Poland, Italy, Spain, and the Middle East. Our Mexico business grew strongly double digits in the quarter.

Speaker Change: our footprint and brand awareness in these countries is increasing and our business is more diversified

Speaker Change: From just an idea a few years ago, these two markets have come a long way and are approaching meaningful scale.

Speaker Change: We also see tremendous growth opportunities in markets like Nordics, Benelux, Poland, Italy, Spain, and the Middle East.

Speaker Change: Our Mexico business grew strong double digits in the quarter.

Mark Barrocas: We are well-positioned in the market and expect robust performance in the coming years, especially as we switch to a direct model at the beginning of next year. We are also looking forward to launching in Brazil in Q4 this year and exploring other Latin American markets for launch in the future. Next, I want to take a moment to highlight our always-on 360 marketing strategy, which remains highly effective. Our full-funnel approach is driving increased brand awareness as well as consumer demand for our products in emerging markets like Germany, France, and Mexico.

Speaker Change: we are well positioned in the market and expect robust performance in the coming years especially as we switched to a direct model at the beginning of next year

Speaker Change: We are also looking forward to launching in Brazil in Q4 this year and exploring other Latin American markets for launch in the future.

Speaker Change: Next, I want to take a moment to highlight our always on 360 marketing strategy.

Speaker Change: which remains highly effective.

Speaker Change: Our full-funnel approach is driving increased brand awareness, as well as consumer demand for our products in emerging markets like Germany, France, and Mexico.

Mark Barrocas: We're investing in TV, digital, social media, and other relevant channels. We're leveraging our strategic brand partnerships with David Beckham, global brand ambassador for Ninja, and Chris Appleton, our global brand ambassador for Shark Beauty. Shark Beauty was the official hair sponsor of the Girls Aloud 2024 UK and Ireland tour this year.

Speaker Change: We're investing in TV, digital, social media, and other relevant channels.

Speaker Change: we're leveraging our strategic brand partnerships with david beckcom global brand ambassador forninia and chris appleton our global brand ambassador for short beauty

Speaker Change: sharort beauty with the official hair sponsor of the girls allowed two thousand and twenty-four uk in ireland tour this year

Mark Barrocas: Ahead of this summer's key sporting events, the EuroCup and Olympics, we launched a summer of sports advertising campaign in partnership with elite European soccer players with a reach of nearly 40 million people. We're also investing in additional in-store retail displays to drive POS and build greater brand awareness. Across our EMEA markets, we're targeting 3,000 branded retail displays by the end of the year, including stores and stores within Curry's, Boulanger, Expert, and Sharaf DG.

Speaker Change: ahead of this summer's key sporting events the eurocup and olympics we launched a summer of sports ad campaign in partnership with a ite european soccer players with reach of nearly forty million people

Speaker Change: we're also investing in additional in-store retail displays to drive poss and build greater brand awareness

Speaker Change: across our mea markets were targeting three thousand brandsed retail displays by the end of the year including shops and shops with incuriries throughonj expert and shar dg

Mark Barrocas: We're already seeing a strong payoff from our marketing investment, as evidenced by our incredible top line and margin performance, and it's setting us up for success in 2025 and beyond. Our ability to invest significantly in marketing remains a key competitive advantage for us. We also know that these investments take time to pay off, as we're a new entry into many of these markets, and we need to grow our business one great consumer experience at a time.

Speaker Change: We're already seeing a strong payoff from our marketing investment as evidenced by our incredible top line and margin performance, and it's setting us up for success in 2025 and beyond.

Speaker Change: Our ability to invest significantly in marketing remains a key competitive advantage for us.

Speaker Change: We also know that these investments take time to pay off, as we're a new entrance into many of these markets, and we need to grow our business one great consumer experience at a time.

Mark Barrocas: As we look forward, we're cognizant of the continued challenges in the macroeconomic environment and do not take our success for granted. We're addressing these challenges head on. We've doubled down on our consumer insights-driven innovation with seven new and exciting subcategories added to our portfolio since the end of 2022. We've leaned on our marketing strategies to drive consumer demand and build brand awareness. We're leveraging our agile supply chain and long-standing relationships to maneuver macro challenges. We're putting our foot on the gas and ramping up production even faster outside of China. And we're always asking ourselves, what can we do better? What consumer problems can we solve?

Speaker Change: As we look forward, we're cognizant of the continued challenges in the macroeconomic environment and do not take our success for granted.

Speaker Change: We're addressing these challenges head-on. We've doubled down on our consumer insights-driven innovation, with seven new and exciting subcategories added to our portfolio since the end of 2022.

Speaker Change: we've leaned in our momarketing strategies to drive consumer demand and build brand awareness

Speaker Change: We're leveraging our agile supply chain and long-standing relationships to maneuver macro challenges.

Speaker Change: We're putting our foot on the gas and ramping up production even faster outside of China.

Speaker Change: and we're always asking ourselves what can we do better what consumer problems can we solve

Mark Barrocas: This relentless focus on execution has enabled our teams to navigate the environment and consistently deliver strong performance. I'm confident in our ability to execute the same playbook going forward. To that end, business momentum has remained strong in the third quarter in both our domestic and international markets. In July, we had a highly successful Prime Day globally, with SharkNinja recognized as two of the top brands in the home and kitchen category in North America and the UK.

Speaker Change: This relentless focus on execution has enabled our teams to navigate the environment and consistently deliver strong performance.

Speaker Change: I'm confident in our ability to execute the same playbook going forward.

Speaker Change: To that end, business momentum has remained strong in the third quarter in both our domestic and international markets.

Speaker Change: in july we had a highghtly successful prime day globally with sharken injure recognized as two of the top brands in the home and kitchen category in north america and uk

Mark Barrocas: With better-than-expected year-to-day performance and a good line of sight into the rest of the year, we're significantly increasing our full-year guidance on key metrics. Patraic will share the details in his prepared remarks. I'm more confident than ever that we are on the right path for the long term. We have a $120 billion total addressable market that continues to grow as we add more subcategories. This gives us significant runway for growth. And now, Patraic will walk you through our second quarter financials and updated 2024 outlook.

Speaker Change: With better-than-expected year-to-day performance and good line-of-sight into the rest of the year, we're significantly increasing our full-year guidance on key metrics.

Speaker Change: Patraic will share the details in his prepared remarks.

Patraic Reagan: i'm more confident than ever that we are on the right path for the long term we have one hundred twenty billion dollars total addressable market that continues to grow as we add more subcategories

Patraic Reagan: This gives us significant runway for growth.

Patraic Reagan: And now, Patraic will walk you through our second quarter financials and updated 2024 outlooks.

Patraic Reagan: Thank you, Mark, and good morning, everyone. I'll begin with a review of our second quarter results and then provide an update on our 2020 forward guidance, before turning it back over to Mark for closing. As you have already heard, our second quarter results were very strong, driven by our three-pillar growth strategy. Net sales increased 31%, and adjusted net sales, which exclude our divested APAC business, were up 38% to nearly $1.25 billion.

Patraic Reagan: Thank you, Mark, and good morning, everyone. I'll begin with a review of our second quarter results and then provide an update on our 2020 forward guidance before turning it back over to Mark for closing.

Patraic Reagan: We delivered adjusted EBITDA growth of 48% to $168 million, with adjusted EBITDA margins improving nearly 90 basis points year over year. Focusing on performance by region, net sales in North America were up 35% to $869 million, representing 70% of our sales mix with broad-based strength across our key categories. Adjusted net sales in international markets were up 46% to $379 million, driven by additional expansion into EMEA and robust results in Germany and France.

Patraic Reagan: as you have already heard our second quarter results were very strong driven by our three pillar growth strategy

Patraic Reagan: Our Latin American markets also delivered strong growth, driven by Mexico. We're in the beginning stages of our expansion into Latin America and are very bullish about our future there. Next, let me take a minute to provide color on the Q2 performance in our four major product categories, which all saw growth in the quarter. Adjusted net sales in the cleaning category, which includes vacuums, carpet extraction, as well as floor care products such as steam mops and wet and dry cleaning products, accelerated, delivering growth of 20% to $466 million from $388 million. We saw broad-based strength in the category, including strong performance in cordless and upright models, as well as carpet extraction, which is a newer subcategory for us.

Speaker Change: net sales increased thirty-one percent in adjusted net sales which excluded our diested aac business were up thirty-eight percent can nearly one point two five billion

Patraic Reagan: We delivered adjusted EBITDA growth of 48% to $168 million, with adjusted EBITDA margins improving nearly 90 basis points year-over-year.

Patraic Reagan: Focusing on performance by region, net sales in North America were up 35% to $869 million, representing 70% of our sales mix, with broad-based strength across our key categories.

Operator: Please wait, the conference will begin shortly The conference will begin shortly, the conference will begin shortly Thank you for standing by, I'd like to welcome everyone to the SharkNinja's second quarter of 2024 earnings call All lines have been placed on mute to prevent any background noise After the speakers be marked, there will be a question and answer session If you'd like to ask a question during this time, simply press star and the number one on your telephone keypad If you'd like to withdraw your question, press star one again Thank you I would now like to turn the call over to Arvind Bhatia, Head of Investor Relations Please go ahead Good morning and welcome to the SharkNinja's second quarter of 2024 earnings conference call Our second 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 you currently see it and as such, it does include risks and uncertainties If you refer to the earnings release and the company's most recent SEC 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-gap financial measures We believe these measures provide investors with useful perspective on the underlying growth trends of the business We have included a full reconciliation of non-gap financial measures to the most comparable gap measures in our earnings release With me today, our Chief Executive Officer Mark Brokus and Chief Financial Officer Patrick Riggins Mark will provide a business update Patrick will review our Q2 financial results and discuss our 2024 outlook Mark will then share brief closing remarks and we will open up the call for your questions Now I will turn the call over to Mark Thank you, Arvin.

Speaker Change: adjusted net sales and international markets were up forty-six percent to three hundred and seventy-nine million driven by additional expansion into ammea and robust results in germany in france

Speaker Change: Our Latin American markets also delivered strong growth driven by Mexico.

Patraic Reagan: We're in the beginning stages of our expansion into Latin America and are very bullish about our future here.

Speaker Change: next let me take a minute to provide color on the q two performance in our four major product categories which all saw growth in the quarter

Speaker Change: Adjusted net sales in the cleaning category, which includes vacuums, carpet extraction, as well as floor care products such as steam mops and wet and dry cleaning products, accelerated delivering growth of 20% to $466 million from $388 million.

Speaker Change: we saw a broad-based strength in the category including strong performance in colessen uprightateses as well as carpet extraction which is a newer subcategory for us

Patraic Reagan: Adjusted net sales in the cooking and beverage category, which includes air fryers, multi-cookers, outdoor grills and ovens, and carbonation, increased 12% to $379 million, compared to $340 million in the prior year. This performance was primarily driven by continued strength in Europe, particularly in Germany and France. However, outdoor grills and ovens also delivered strong performance globally.

Speaker Change: Adjusted net sales in the cooking and beverage category, which includes air fryers, multi-cookers,

Speaker Change: Outdoor Grills and Ovens, and Carbonation increased 12% to $379 million compared to $340 million in the prior year. This performance was primarily driven by continued strength in Europe , particularly in Germany and France.

Speaker Change: Outdoor grills and ovens also delivered strong performance globally.

Patraic Reagan: Food preparation, which includes blenders, food processors, ice cream makers, and coolers, delivered another strong quarter. Adjusted net sales in this category increased 91% to $265 million compared to $139 million in the prior year. Strong performances from our creamy ice cream makers, kitchen systems, traditional and portable blenders contributed to the robust growth in this category. Finally, 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, had an excellent quarter and was our fastest growing category.

Speaker Change: Food preparation, which includes blenders, food processors, ice cream makers, and coolers, delivered another strong quarter.

Speaker Change: Adjusted net sales in this category increased 91% to $265 million compared to $139 million in the prior year.

Speaker Change: Strong performances from our creamy ice cream makers, kitchen systems, traditional and portable blenders contributed to the robust growth in this category.

Speaker Change: Finally, the Other Category.

Speaker Change: which includes beauty products such as hair ders and stylers and home environment products such as air purifiers in indoor outdoor fans had excellent quarter and was our fastest growing category

Patraic Reagan: Adjusted net sales in this category were up 251% to $138 million, compared to $39 million in the prior year. Beauty was particularly strong as we continued to increase our global market share in the subcategory. In addition, our recently launched FlexBreeze indoor-outdoor cooling system is responding well with consumers and continues to exceed our expectations.

Speaker Change: adjusted net sales in this category were up two hundred fifty -one percent to one hundred and thirty eight million compared to thirty-nine million in the prior year beauty was particularly strong as we continue to increase our global market share in the subcategory

Speaker Change: In addition, our recently launched FlexBreeze Indoor-Outdoor cooling system is resonating well with consumers and continues to exceed our expectations.

Patraic Reagan: Moving to gross profit. In the second quarter, GAAP gross profit increased 51% to $601 million, or 48.1% of net sales. Adjusted gross profit increased 56% to $614 million, or 49.2% of adjusted net sales. We drove 570 basis points of adjusted gross margin expansion over the prior year while absorbing the impact of the Red Sea disruption. Gross margin expansion was primarily driven by our continued cost optimization efforts combined with a mix in foreign exchange favorability. Over the last 18 months, our cross-functional teams have been working very hard to drive sustainable gross margin improvement. Our cost optimization initiatives are driving manufacturing costs down while enhancing product performance and functionality.

Speaker Change: Moving to gross profit, in the second quarter, DAP gross profit increased 51% to 601 million, or 48.1% of net sales.

Speaker Change: adjusted gross profit increased fifty-six percent to six hundred and fourteen million or forty-nine point two percent of adjusted net sales

Speaker Change: we drove five hundred and seventy basis points of adjusted gross margin expansion over the prior year while absorbing the impact of red sea disruption

Speaker Change: Gross margin expansion was primarily driven by our continued cost optimization efforts combined with mix in foreign exchange favorability.

Mark Barrocas: Good morning everyone and thank you for joining us today Perry.

Speaker Change: Over the last 18 months, our cross-functional teams have been working very hard to drive sustainable gross margin improvements.

Mark Barrocas: Let me begin with a review of our second quarter performance. Our teams once again delivered exceptional performance in the quarter. We grew adjusted net sales in incredible 38%. This was on top of 20% growth in the year ago period, and it was all organic and highly profitable growth. On an adjusted basis, EBITDA increased 48% while earnings per share was up 51%. Our strategic initiatives around supplier diversification, competitive bidding, value engineering, and pricing management drove nearly 600 basis points of adjusted growth margin improvement in the quarter.

Speaker Change: Our cost optimization initiatives are driving manufacturing costs down while enhancing product performance and functionality. And our continued focus on assortment and promotional mix management is helping us maintain healthy pricing.

Patraic Reagan: And our continued focus on assortment and promotional mix management is helping us maintain healthy prices. Our strong gross margin remains a key competitive advantage for us. With respect to operating expenses in the quarter, we continue to reinvest a significant portion of our gross margin upside in product innovation, brand awareness, and global infrastructure to strengthen our competitive moat and drive future growth. R&D expenses increased 48% to $90 million compared to $61 million in Q2 last year.

Speaker Change: Our strong gross margin remains a key competitive advantage for us.

Speaker Change: With respect to operating expenses in the quarter, we continue to reinvest a significant portion of our gross margin upside in product innovation, brand awareness, and global infrastructure to strengthen our competitive moat and drive future growth.

Speaker Change: rnd expenses increased forty-eight percent in ninety million compared to sixty-one million in q two last year

Patraic Reagan: We continue to invest primarily in headcount to support new product categories and new market expansion. In addition, during the second quarter, we incurred professional fees and additional prototype costs to support future growth. As a percentage of sales, R&D was 7.2% of net sales compared to 6.4% last year.

Mark Barrocas: Adjusted EBITDA margins increased 90 basis points even as we continue to significantly reinvest in our growth initiatives. Our growth in the quarter was broad-based across product categories and geographies, and our innovation continued to drive market share games. Each of our four key categories delivered at least double-digit growth. Cleaning group 20% are strongest performance in this category since COVID. Our overall domestic business accelerated growing in incredible 35%. And this performance was even more remarkable considering that domestic market was relatively flat.

Speaker Change: We continue to invest, primarily in headcount, to support new product categories and new market expansion.

Speaker Change: in addition during the second quarter we improved professional fees in additional prototype cost to support future growth

Speaker Change: As a percentage of sales, R&D was 7.2% of net sales compared to 6.4% last year.

Patraic Reagan: Sales and marketing expenses increased 46% to $303 million, or 24.3% of net sales, compared to $208 million, or 21.9% of net sales in the year-ago period. This increase was driven by our continued reinvestment in advertising and personnel-related expenses to support our new product launches and expansion in existing and new markets and 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.

Speaker Change: Sales and marketing expenses increased 46% to $303 million, or 24.3% of net sales, compared to $208 million, or 21.9% of net sales in the year-ago period.

Speaker Change: this increase was driven by our continued reinvestment in advertising and personnel -related expenses to support our new product launches and expansion in existing in new markets in subcategories

Mark Barrocas: The international segment had another very strong quarter. Adjusted net sales increased 46% with emerging markets like Germany and France delivering triple-digit growth. Our performance was also balanced across our three growth pillars as we continue to increase our share in existing categories, enter new categories, and expand our global footprint. Our first growth pillar, entering new and adjacent categories, remains a key growth driver. With the launch of fans and coolers earlier this year and the recent release of our frozen drink makers, we've already entered into three new subcategories in 2024.

Speaker Change: 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.

Patraic Reagan: General and administrative expenses increased to $104 million, or 8.3% of net sales, compared to $72 million, or 7.6% of net sales in the prior year, primarily due to increased legal and other professional fees, including public company expenses, incremental share-based compensation, and information technology and facility investment. Our GAAP effective tax rate was 24.1% in the second quarter, down slightly compared to 25.1% in the prior year and in line with our expectations. Gap net income for the quarter was $68 million, compared to $12 million in the prior year.

Speaker Change: General and administrative expenses increased to $104 million, or 8.3% of net sales, compared to $72 million, or 7.6% of net sales in the prior year.

Speaker Change: primarily due to increased legal and other professional fees including public company expenses, incremental share based compensation, and information technology and facility investments.

Speaker Change: Our GAAP effective tax rate was 24.1% in the second quarter, down slightly compared to 25.1% in the prior year and in line with our expectations.

Mark Barrocas: We're now in 34 subcategories up from 27 at the end of 2022. This is testament to our conscious and purposeful strategy to drive growth while diversifying and mitigating risk. With each new category, we're creating new experiences and offering high-quality, innovative products that solve key consumer pain points. Last month, we launched Ninja Slushy, our professional grade frozen drink maker. Our research showed that consumers love slushies, but enjoying one requires a trip to a convenience store, the movies, or the mall.

Speaker Change: Gap net income for the quarter was $68 million compared to $12 million in the prior year.

Patraic Reagan: Adjusted net income was $100,000,000 or $0.71 per share compared to $65,000,000 or $0.47 per share in the prior year, reflecting growth of 51% on a per share basis. Adjusted EBITDA for the quarter increased 48% to $168 million, or 13.4% of adjusted net sales compared to $114 million, or 12.5% of adjusted net sales in the prior year, reflecting strong adjusted gross margin expansion of 570 basis points in the quarter, partially offset by continued investments in growth initiatives. Now we move to the balance sheet. As of the end of the second quarter, we had cash of $138 million, total debt outstanding of $910 million, and a net leverage ratio of 0.9 times.

Speaker Change: Adjusted net income was $100,000,000 or $0.71 per share compared to $65,000,000 or $0.47 per share in the prior year, reflecting growth of 51% on a per share basis.

Mark Barrocas: With Ninja Slushy, consumers can create commercial quality frozen drinks without stepping out of their home. Williams. Our proprietary rapid-shell technology eliminates the need for ice and prevents drinks from getting watered down. It's early days, but I'm pleased to share that Ninja Slushy became the fastest selling new product ever during launch week on our direct to consumer site. The initial inventory sold out within a few days. Ninja Slushy is early gone viral and is quickly becoming a social media sensation.

Speaker Change: adjusted ebitda for the quarter increased forty eight percent to one hundred and sixty eight million or thirteen point four percent of adjusted net sales

Speaker Change: compared to $114 million, or 12.5% of adjusted net sales in the prior year, reflecting strong adjusted gross margin expansion of 570 basis points in the quarter, partially offset by continued investments in growth initiatives.

Speaker Change: Now we move to the balance sheet. As of the end of the second quarter, we had cash of $138 million, total debt outstanding of $910 million, and a net leverage ratio of 0.9 times.

Patraic Reagan: We had inventory of $841 million at quarter end, up 56% compared to Q2 of last year. While our inventory growth outpaced sales growth, we believe our inventory levels and mix remain healthy. Consistent with what we discussed in the first quarter, there were four key factors that contributed to the year-over-year increase. First, inventory levels at the end of the second quarter of 2023 were below our internal target, declining 25% year-over-year as retailers remain cautious with their inventory levels.

Speaker Change: We had inventory of $841 million at quarter end, up 56% compared to Q2 of last year.

Speaker Change: While our inventory growth outpaced sales growth, we believe our inventory levels and mix remain healthy.

Mark Barrocas: Our teams are working hard to fill orders on the waitlist and to support broader distribution to our retail partners later this year. Our Ninja Creamy is already the number one ice cream maker in the U.S, and now with the addition of Ninja Slushy, we're on our way to becoming the leader in frozen treats. Shark Flex Breeze, our indoor outdoor cooling system, launched earlier this year and continues to outperform initial expectations. Based on the strong response from consumers as well as our retail partners, we see significant white space for us to capture.

Speaker Change: Consistent with what we discussed in the first quarter, there were four key factors that contributed to the year-over-year increase.

Speaker Change: First, inventory levels at the end of second quarter of 2023 were below our internal targets, declining 25% year-over-year as retailers remained cautious with their inventory levels.

Patraic Reagan: Given this data point, when we compare current inventory to the second quarter of 2022, our inventory is up 17% while our net sales are up 60% over the same period. Second, we increased inventory levels this year to support strong anticipated consumer demand in Q3, including for Prime Day, which, as Mark mentioned, was a huge success. I also want to note that our inventory in the channel is very clean and healthy, exiting the second quarter, and our retail partners have slightly lower weeks of supply year over year. Third, we pre-built inventory in anticipation of Section 301 tariff exemptions, which expired at the end of May.

Speaker Change: Given this data point, when we compare current inventory to the second quarter of 2022, our inventory is up 17% while our net sales are up 60% over the same period.

Speaker Change: Second, we increased inventory levels this year to support a strong anticipated consumer demand in Q3, including for Prime Day, which, as Mark mentioned, was a huge success.

Mark Barrocas: We're excited by the upside potential of Flex Breeze and look forward to launching additional SKUs in 2025 and beyond as we build on the initial success and momentum. With Shark Flex Breeze, we're creating a new market just as we did with Ninja Creamy. On the other hand, with the Ninja Frostholt cooler, we're disrupting a large category with entrenched competitors. Underscoring, we can be successful with both strategies. Frostholt technology and innovation are resonating with consumers and driving better than expected performance, including strong results on Prime Day.

Mark Barrocas: I also want to note that our inventory in the channel is very clean and healthy exiting the second quarter and our retail partners have slightly lower weeks of supply year over year.

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

Patraic Reagan: And fourth, we proactively increased our weeks of supply to mitigate potential shipment delays in Europe due to the Red Sea situation. Next, I will touch on two key topics that are likely mine for everyone, rising freight costs and potential escalation in Chinese tariffs next year. The global ocean freight situation remains fluid following the recent upswing in container spot rates driven by current constraints reducing capacity. Our supply chain teams have been working tirelessly to ensure we are able to support our rapid growth globally. We've acted decisively and navigated the Red Sea disruption with minimal interruptions to our business.

Speaker Change: next i will touch on two key topics that are likely to commine for everyone rising freight costs and potential escalation in china tariffs next year

Mark Barrocas: Frostholt has also enabled our entry into the Sporting Goods channel. An important breakthrough for us. We plan to launch additional SKUs and drive broader distribution next year to capture the upside. Our 2023 launches are also delivering strong performance, highlighting the sustainability of our innovation flywheel. In less than a year following launch, we become a leading player in the deep carpet cleaning market with our Shark carpet expert and Stainstriker products. With our outdoor ovens, we continue to successfully expand our global presence in outdoor cooking.

Mark Barrocas: The global ocean freight situation remains fluid following the recent upswing in container spot rates driven by current constraints reducing capacity. Our supply chain teams have been working tirelessly to ensure we are able to support our rapid growth globally.

Mark Barrocas: We've acted decisively and navigated the Red Sea disruption with minimal interruptions to our business.

Patraic Reagan: Overall, we are confident in our approach. Our increased 2024 guidance does assume some cost impact from the ongoing disruption, but we expect the impact to be immaterial. In terms of tariffs, we continue to make excellent progress in our efforts to diversify outside of China and mitigate tariff risks. Our teams are highly proactive and super focused in their approach. And we remain on track to have the capacity to move almost all of our U.S. volume outside of China by the end of 2025.

Mark Barrocas: Overall, we are confident in our approach.

Mark Barrocas: Our increased 2024 guidance does assume some cost impact from the ongoing disruption, but we expect the impact to be immaterial.

Mark Barrocas: In terms of tariffs, we continue to make excellent progress in our efforts to diversify outside of China and mitigate tariff risk.

Mark Barrocas: We expect momentum to continue with additional innovation next year. Consumers already love our offerings inside the home, and they're increasingly accepting Ninja as an outdoor brand as well. With our outdoor cookie products combined with fans, coolers, and portable blenders, we're extending our outdoor portfolio and expanding our global addressable market. Our second growth pillar is gaining share in existing categories. Nothing illustrates this better than the incredible performance of our cleaning category. Following strong performance during COVID, the broader cleaning market has been a bit Post.

Mark Barrocas: Our teams are highly proactive and super focused in their approach, and we remain on track to have the capacity to move almost all of our U.S. volume outside of China by the end of 2025.

Patraic Reagan: We are working closely with our manufacturing partners in Southeast Asia. We have increased our investment in tooling to move even faster, and we continue to explore additional partnerships in the region. As for Section 301 tariffs, as expected, they were reinstated on June 1st this year.

Mark Barrocas: We are working closely with our manufacturing partners in Southeast Asia, we have increased our investment in tooling to move even faster, and we continue to explore additional partnerships in the region.

Mark Barrocas: With respect to Section 301 tariffs, as expected, they were reinstated on June 1st this year. The financial impact of these tariffs is small for SharkNinja and was already baked into our full year guidance.

Patraic Reagan: The financial impact of these tariffs is small for SharkNinja and was already baked into our four-year guidance. With that in mind, let me now turn to our outlook for 2024. Given the better-than-expected results in Q2 and the momentum we have heading into the second half of the year, we are raising our fiscal year 2024 guidance. For the full year, we now expect adjusted net sales to increase between 22% and 24%, above our prior guidance of a 12-14% increase.

Patraic Reagan: We expect adjusted EPS to be in the range of $4.05 to $4.21, an increase of 26% to 31% year over year. This compares to our prior guidance of $3.66 to $3.82 per share, or a 14 to 19% increase. Adjusted EBITDA is now expected to be in the range of $910 to $940 million, representing growth of 26% to 31% year-over-year, compared to our prior expectation of $840 million to $870 million, or 17% to 21% growth.

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

Mark Barrocas: Over the last 18 months, our engineering and product development teams have remained laser focused on bringing innovation to this category. This is beginning to pay off now, driving additional market share gains for us. As I mentioned earlier, cleaning was more than 40% of our adjusted net sales last year. Delivered 20% growth in the quarter. This was an acceleration from 6% growth in the first quarter of this year, and a 5% decline for the full year in 2023.

Mark Barrocas: Given the better-than-expected results in Q2 and momentum we have heading into the second half of the year, we are raising our fiscal year 2024 guidance.

Mark Barrocas: For the full year, we now expect Adjusted Net Sales to increase between 22% and 24%, above our prior guidance of a 12-14% increase.

Mark Barrocas: We expect adjusted EPS to be in the range of $4.05 to $4.21, an increase of 26% to 31% year-over-year.

Speaker Change: this compareds to our prior guidance of three dollars in sixty six cents to three dollars in eighty two cents per share or a fourteen to nineteen percent increase

Mark Barrocas: Within cleaning, core subcategories such as uprights and cordless stick vacuums perform particularly well. We continue to innovate and recently launched our new power detect upright vacuum with our most advanced cleaning technology. In the second half of this year, we're launching several innovative products within the cordless, hard floor and robot subcategories which should continue to support strong growth for us. The cooking and beverage category can 12% in the quarter. On top of nearly 70% growth in the second quarter last year, our face business in this category remains quite healthy.

Speaker Change: adjusted ebita is now expected to be in the range of nine hundred ten to nine hundred and forty million

Mark Barrocas: representing growth of twenty-six percent to thirty-one percent year-over-year compared to our prior expectation of eight hundred and forty million to eight hundred and seventy million for seventeen percent to twenty-one percent growth

Patraic Reagan: Consistent with our previous guidance, we continue to expect net interest expense of approximately $65 million for the year, a gap effective tax rate of approximately 24 to 25 percent, and capital expenditures to be between $160 million and $180 million for the year. In closing, we feel very good about our performance in the first half of 2024. As we continue to execute our three-pillar growth strategy, reinvest thoughtfully and strategically across the business, and continue to solve everyday consumer problems, we are confident we can deliver strong revenue and profit growth in 2024 and beyond. With that, I'll hand it back to Mark. Thanks, Patraic.

Mark Barrocas: Consistent with our previous guidance, we continue to expect net interest expense of approximately $65 million for the year.

Mark Barrocas: the GAAP effective tax rate of approximately 24 to 25 percent and capital expenditures to be between $160 million and $180 million for the year.

Mark Barrocas: In closing our financial recap, we feel very good about our performance in the first half of 2024.

Mark Barrocas: We've expanded our air fryer resortment with the launch of the Ninja double stack air fryer. This is a vertical air fryer that doubles the performance of a single zone air fryer while requiring only half the counter space. I'm super excited to share that we recently entered the premium coffee and espresso subcategory with our Ninja Lux Cafe. While coffee is in a new category for us, we're entering the super premium segment for the first time with a unique and highly differentiated product.

Mark Barrocas: As we continue to execute our three-pillar growth strategy, reinvest thoughtfully and strategically across the business, and continue to solve everyday consumer problems, we are confident we can deliver strong revenue and profit growth in 2024 and beyond.

Mark Barrocas: This is a big opportunity for us to expand our coffee business in Europe with a product that's designed to appeal to a global coffee and espresso loving consumer. The Ninja Lux Cafe is an all-in-one espresso, drip coffee and cold brew system that creates cafe quality drinks at home. Our consumer insight showed us espresso machines are a bit intimidating and difficult to use. They're quite expensive and offer limited drink options. We've created an affordable multi-functional coffee and espresso machine that's easy to use and has endless drink options for our discerning global consumers.

Mark Barrocas: With that, I'll hand it back to Mark.

Mark Barrocas: Thanks, Patraic. Our second quarter results were a testament to the hard work and dedication of our incredible global team of SharkNinja associates. We once again delivered profitable, organic growth and offered high-performance products that solve consumer problems, fueled by our best-in-class innovation engine. As I reflect on the progress we've made, I'm even more excited looking forward to the future and the tremendous opportunity we have in front of us. Our global addressable market is $120 billion and growing.

Mark Barrocas: Thanks, Patraic. Our second quarter results were a testament to the hard work and dedication of our incredible global team of SharkNinja associates.

Mark Barrocas: We once again delivered profitable, organic growth and offered high-performance products that solve consumer problems, fueled by our best-in-class innovation engine.

Mark Barrocas: As I reflect on the progress we've made, I'm even more excited looking forward to the future and the tremendous opportunity we have in front of us.

Mark Barrocas: Our global addressable market is $120 billion and growing.

Mark Barrocas: We expect our market share will continue to grow as we keep rolling out new innovative products, entering new categories both in and outside the home, and expanding our brand presence worldwide. Our expertise in consumer insight-driven R&D will help us lead the way and set the industry standard with game-changing innovation. We will continue to lean into our always-on 360 marketing strategy to increase brand awareness and create consumer demand globally, and we'll continue to leverage our high quality, agile, and scalable supply chain to drive success. I'm more confident than ever in our ability to deliver sustainable long-term growth. This concludes our prepared remarks, and I will now turn it over to the operator to kick off the Q&A. Operator?

Mark Barrocas: we expect our market share will continue to grow as we keep rolling out new innovative products entering new categories both in and outside the home and expanding our brand presence worldwide

Mark Barrocas: Our expertise in consumer insight-driven R&D will help us lead the way and set the industry standard with game-changing innovation.

Mark Barrocas: The food prep category delivered outstanding performance with adjusted net sales increasing more than 90% in the quarter. The growth was broad-based across ice cream makers, kitchen systems, traditional and compact lenders. Our Ninja Creamy ice cream maker continues to grow rapidly and is becoming a global phenomenon as we launch in additional countries. In Q2, Creamy delivered strong performance globally, especially in Europe, and the Ninja Blast are portable blender is driving amazing results and large market share gains in the single serve blending subcategory.

Mark Barrocas: We will continue to lean into our always-on 360 marketing strategy to increase brand awareness and create consumer demand globally.

Mark Barrocas: And we'll continue to leverage our high-quality, agile, and scalable supply chain to drive success.

Mark Barrocas: I'm more confident than ever in our ability to deliver sustainable long-term growth.

Speaker Change: This concludes our prepared remarks and I will now turn it over to the operator to kick off Q&A. Operator?

Operator: If you'd like to ask a question, please press star and the number 1 on your telephone keypad. We will begin the question and answer session. Your first question comes from the line of Andrea Teixeira from JPMorgan Chase. Mine's open. Ah, thank you, Oprah.

Mark Barrocas: Our other category delivered exceptional results, increasing 250% in the quarter, with strength across beauty, fans and air purifiers. Beauty, led by flex style hot air stylers, remains strong both in our domestic and international markets. We continue to bring newness and excitement to the category and to find key moments in culture to highlight our brand. For example, at this year's Met Gala, we launched flex style sparkle with Chris Appleton, Shark Beauty's global brand ambassador.

Speaker Change: Thank you.

Speaker Change: As a reminder, if you'd like to ask a question, please press Star and the number 1 on your telephone keypad.

Speaker Change: We will begin the question and answer session.

Speaker Change: Your first question comes from the line of Andrea Teixeira from JPMorgan Chase.

Andrea Teixeira: Thank you, operator, and good morning, everyone. So, congratulations on your performance. I have a question about guidance, and then a follow-up on Brazil. My question is how to think about the guidance raised. Is that similar to what happened last quarter, where you raised guidance only due to the beat, but kept most of the second-half estimates intact?

Speaker Change: Mine's open.

Andrea Teixeira: Thank you operator and good morning everyone. So congrats on your performance. I have a question on guidance and then a follow-up on Brazil.

Speaker Change: My question is how to think about the guidance raised. Is that similar to what happened last quarter that you raised only due to the BEAT but kept most of the second half estimates intact?

Mark Barrocas: You sounded very strong momentum in your words in the recent trends. So, perhaps, you know, if you could elaborate on whether we should be thinking about high teens or low 20s growth in Q3, and then a way to see if the trends hold into the fourth quarter and react to that in the next earnings call. And then on entry to Brazil, when are you expecting to start shipping and what categories, given the country's import tariffs, as far as I've been very aware, being Brazilian myself? Are you planning to have local third-party manufacturing or sourcing there? And what is the TAM or the categories you're looking to sell there? Thank you very much.

Speaker Change: You sounded a very strong momentum to your words in the Princeton Trans, so perhaps, you know, if you can elaborate if we should be thinking about high teens or low 20s.

Mark Barrocas: And while we won't be announcing details yet, I'm pleased to share that we're on track to launch another very exciting subcategory within beauty in Q4 of this year. Our ability to consistently innovate and refresh existing categories remains the bedrock of our strategy to drive market share gains. To that end, we're on track to launch 25 new products this year with more than 80% of the launches in existing categories. Next, I will turn to our third key growth pillar, expansion in international markets.

Speaker Change: growth in Q3 and then wait to see if the trends hold into the fourth quarter and react to that.

Speaker Change: And then on the entry to Brazil, when are you expecting to start shipping and what categories given the country import tariffs as far as I've been very abreast being Brazilian myself.

Speaker Change: Are you planning to have local third-party manufacturing or sourcing there? And what is the TAM or the categories you're looking to sell there? Thank you very much.

Mark Barrocas: We grew our international business 46% in the quarter on top of adjusted sales growth of 66% in Q2 last year. UK, which is our largest international market, grew nearly 7% in the quarter and is up 10% in the first half of this year in line with our expectations. While growth is moderated compared to 70% growth in the first half of last year, our UK business is more diversified, more profitable, and overall healthier than ever before.

Mark Barrocas: question. As you said, Brazil is a challenging market from a manufacturing standpoint. We are launching into the market in Q4 of this year. We're using a third-party distributor partner, but we are directing and taking over the advertising and marketing.

Speaker Change: question. As you said, Brazil is a challenging market from a manufacturing standpoint. We are launching into the market in Q4 of this year.

Speaker Change: we're using a third party distributor partner but we are directing and taking over the advertising and marketing i mean we believe that we want to control that aspect of

Mark Barrocas: I mean, we believe that we want to control that aspect of how our brand gets communicated to Brazilian consumers. We're starting with beauty and with motorized kitchen appliances. Those are the two main categories we'll be starting with in Q4 of this year. We're exploring local manufacturing, but to start off with, we are importing that product from outside. So, in Q4, there'll be kind of a small launch with beauty and motorized, and it'll ramp up further as we get into 2025.

Speaker Change: how our brand gets communicated, you know, to the Brazilian consumers.

Speaker Change: We're starting with beauty and with motorized kitchen appliances. Those are the two main categories we'll be starting with in Q4 of this year.

Mark Barrocas: Within continental Europe, we drove triple digit growth in Germany and France, where the overall markets were relatively stagnant. Our footprint and brand awareness in these countries is increasing and our business is more diversified. From just an idea a few years ago, these two markets have come a long way and are approaching meaningful scale. We also see tremendous growth opportunities in markets like Nordics, Benelox, Poland, Italy, Spain, and the Middle East. Our Mexico business grew strong double digits in the quarter.

Speaker Change: We're exploring local manufacturing, but to start off with, we are importing that product from the outside.

Speaker Change: So Q4, there'll be kind of a small launch with beauty and motorized and it'll ramp up further.

Mark Barrocas: We think it's a big addressable market, and it just goes along with our strategy of seeing growth in Argentina, and we're seeing growth in Chile. I mean, we think South America is a strong potential market for us. We're also taking back our distributor in Mexico starting January 1st. So, it's all part of our kind of broader Latin American strategy. As it relates to the guidance question, I'll turn it over to Patraic. All right.

Speaker Change: as we get into 2025.

Speaker Change: We think it's a big addressable market and it just goes along with our strategy of we're seeing growth in Argentina, we're seeing growth in Chile, I mean we think South America is a strong potential market for us.

Mark Barrocas: We are well positioned in the market and expect robust performance in the coming years, especially as we switched to a direct model at the beginning of next year. We are also looking forward to launching in Brazil in Q4 this year and exploring other Latin American markets for launch in the future. Next, I want to take a moment to highlight our always on 360 marketing strategy. Energy, which remains highly effective. Our full funnel approach is driving increased brand awareness, as well as consumer demands for our products in emerging markets like Germany, France, and Mexico.

Speaker Change: We're also taking back our distributor in Mexico starting January 1st, so it's all part of our kind of broader Latin American strategy. As it relates to the guidance question, I'll turn it over to Patraic.

Patraic Reagan: Thanks, Andrea. I appreciate the question.

Patraic Reagan: Thanks, Andrea. I appreciate the question. So, if you recall back in our first quarter call, we effectively raised

Patraic Reagan: And then we said that we would revisit second half guidance in this call.

Patraic Reagan: So, if you recall back in our first quarter call, we effectively raised, and then we said that we would revisit second-half guidance on this call. And so what you're seeing in terms of the raise and beat that we've communicated to you all is that we're increasing our second-half guidance in addition to taking the beat from Q2. So, how you can think about it, and I'll just kind of center around the revenue side of this, is that from a second-half standpoint, roughly, we're in what I would call kind of the mid-to-high-mid-teens growth over Q3 and Q4.

Patraic Reagan: And so what you're seeing in terms of the raise and beat that we've communicated to you all.

Speaker Change: is that we're increasing our second half guidance in addition to taking the beat from

Speaker Change: Q2. So how you can think about it, you know, I'll just kind of center around the revenue side of this, is that from a second half standpoint,

Mark Barrocas: We're investing in TV, digital, social media, and other relevant channels. We're leveraging our strategic brand partnerships with David Beckham, global brand ambassador for Ninja, and Chris Appleton, our global brand ambassador for Shark Beauty. Shark Beauty with the official hair sponsor of the Girls Allowed 2024 UK and Ireland tour this year. A head of this summer's key sporting events, the Euro Cup and Olympics, we launched the Summer of Sports ad campaign in partnership with elite European soccer players with reach of nearly 40 million people.

Speaker Change: Roughly, we're in what I would call kind of the mid.

Patraic Reagan: We're not providing guidance from a Q3, Q4 specific point of view at this point in time, but you can think about that from a second-half perspective. As we get into the balance of the year and when we come back for the Q3 earnings call, we'll, of course, update the balance of the year at that point in time. So, I hope that helps you think about it.

Speaker Change: to high-mid teens growth over Q3 and Q4. We're not providing guidance from a Q3, Q4-specific point of view at this point in time, but you can think about that from a second-half perspective.

Speaker Change: As we get into the balance of the year and when we come back for Q3 earnings call, we'll of course update the balance of the year at that point in time, so I hope that helps you think about it.

Andrea Teixeira: Yeah, and then I can just squeeze one quick one in terms of what you lost in terms of the categories that you were not able to fulfill. Of course, similar to what happened with CREAMI, you didn't know what you didn't know, right? The demand for slushy and for different categories is coming up with new innovation. How should we be thinking of what is probably the lost sale and how fast can you actually fulfill your wait list?

Speaker Change: And then if I can just squeeze one quick one in terms of what you lost in terms of the categories that you were not able to fulfill, of course, similar to what has happened with

Mark Barrocas: We're also investing in additional in-store retail displays to drive POS and build greater brand awareness. Across our media markets, we're targeting 3,000 branded retail displays by the end of the year, including shops and shops with increased inquiries, blue lingerie, expert, and sheriff DG. We're already seeing a strong pay off from our marketing investment as evidence by our incredible top line and margin performance, and it's setting us up for success in 2025 and beyond.

Speaker Change: with CREAMI. You didn't know what you didn't know, right? The demand for slushy and for different categories and coming up with new innovation.

Speaker Change: How we should be thinking of what is probably the lost sale and how fast can you actually fulfill your wait list?

Mark Barrocas: Yeah. So, Andrea, I think we never kind of assume from an inventory perspective that we're going to launch and have a blowout success. So, we always take a somewhat conservative approach, and we chase it.

Mark Barrocas: Yeah.

Speaker Change: Yeah, so Andrea, I think we we never kind of assume from an inventory perspective that we're going to launch and have a blowout success. So we always take a somewhat conservative approach and we chase it. And I don't necessarily think it's lost.

Mark Barrocas: Our ability to invest significantly in marketing remains a key competitive advantage for us. We also know that these investments take time to pay off as we're new entrants into many of these markets and we need to grow our business one great consumer experience at a time.

Mark Barrocas: And I don't necessarily think it's lost forever. I think it's kind of temporarily moved. So, you know, the demand that we can fulfill for slushy, for example, in Q3, we have a wait list of 100,000 units for that product right now. I think as that product comes in, because it's so unique and it's a category of one for SharkNinja, we'll fulfill that demand. And it may be that it pushes into Q4, into Q1 of next year.

Speaker Change: I think it's kind of temporarily moved. So, you know, the demand that we can fulfill for slushy, for example, in Q3, you know, we right now have a wait list of 100,000 units.

Speaker Change: on that product. I think as that product comes in, because it's so unique and it's a category of one to Shark Ninja, will fulfill that demand. And it may be that it pushes into Q4, into Q1 of next year. In terms of the time for ramp-up,

Mark Barrocas: As we look forward, we're cognizant of the continued challenges in the macroeconomic environment and do not take our success for granted. We're addressing these challenges head on. We've doubled down on our consumer insights driven innovation with seven new and exciting subcategories and added to our portfolio since the end of 2022. We leaned in our marketing strategies to drive consumer demands and build brand awareness. We're leveraging our agile supply chain and long-standing relationships to maneuver macro challenges.

Mark Barrocas: In terms of the time for ramping up, Generally speaking, you know, we will chase for the next 90 to 120 days. I would anticipate that for a product like Slushy, we won't be able to catch up by the end of this calendar year, but we will as we get into kind of Q1 of next year. So, you know, I think it's something that, by design, we recognize that, you know, if we have a runaway success, and we're seeing great success from our Ninja Cafe Luxe product that has just launched, we know that we're going to be chasing that for some period of time.

Speaker Change: Generally speaking, you know, we will chase for the next...

Speaker Change: 90 to 120 days.

Speaker Change: I would anticipate in a product like Slushie...

Speaker Change: We won't be able to catch up by the end of this calendar year, but we will as we get into Q1 of next year.

Speaker Change: Thank you.

Speaker Change: You know, I think it's something that by design, we recognize that, you know, if we have a runaway success, and we're seeing also great success from our Ninja Cafe Luxe product that has just launched, we know that we're going to be chasing that for some period of time.

Mark Barrocas: We're putting our foot on the gas and ramping up production even faster outside of China. We're always asking ourselves, what can we do better? What consumer problems can we solve? This relentless focus on execution has enabled our teams to navigate the environment and consistently deliver strong performance. I'm confident in our ability to execute the same playbook going forward. To that end, business momentum has remained strong in the third quarter in both our domestic and international markets.

Andrea Teixeira: Okay, that's great. Thank you so much. Congratulations again. Thank you.

Speaker Change: Okay, that's great. Thank you so much. Congrats again. Thank you.

Steven Forbes: Thank you. The next question comes from the line of Steven Forbes of Guggenheim Securities.

Speaker Change: Thank you. The next question comes from the line of Steven Forbes of Guggenheim Securities.

Mark Barrocas: Mark, I was hoping to maybe just take a step back and maybe you could help us reframe how you're thinking about the U.S. opportunity, right? Just given the year-to-date outperformance and..., the magnitude of growth, right? Like any sort of way to think through maybe what are more secular versus transient drivers of growth? I mean, as you look out the next year, is there anything that we should be considering that you may have to cycle from a one-time benefit? Or what is the right sort of way to baseline how the US segment should progress given the product pipeline and the success you're seeing right from a distribution point standpoint?

Speaker Change: The line is open.

Steven Forbes: Good morning.

Mark Barrocas: Mark, I was hoping to maybe just take a step back and maybe you could help us reframe how you're thinking about the U.S. opportunity, right, just given the year-to-date outperformance and...

Mark Barrocas: In July, we had a highly successful prime day globally, which Shark and Ninja recognized as two of the top brands in the home and kitchen category in North America and UK, with better than expected year-to-day performance and good line of sight into the rest of the year, we're significantly increasing our full-year guidance on key metrics. Patrick will share the details in his prepared remarks. I'm more confident than ever that we are on the right path for the long term. We have a $120 billion total addressable market that continues to grow as we add more subcategories. This gives us significant runway for growth.

Speaker Change: the magnitude of growth, right, like any sort of way to think through maybe what are more secular versus transient drivers of growth. I mean as you look out to next year's

Speaker Change: Is there anything that we should be considering that you may have to cycle from a one-time benefit? Or what is the right sort of way to baseline how the U.S. segment should progress given the product pipeline and the success you're seeing right from a distribution point standpoint?

Mark Barrocas: Yeah, sure. So, Steve, look, I think it's important to point out that, you know, the U.S. market declined considerably in 2022 and 2023. You know, so from a market perspective, I mean, the market overall has kind of firmed up a little bit. I mean, we're seeing kind of low single-digit to kind of flat market performance in the U.S. Our core base categories are performing very well. I mean, our corded vacuum cleaner business is up in the U.S., our cordless business is up, and our motorized business is up. So I think we've got a solid base business that we're continuing to gain market share in. And so that's kind of one piece to the puzzle.

Speaker Change: Yeah, sure.

Speaker Change: So, Steve, look, I think it's important to point out that...

Speaker Change: You know, the U.S. market declined considerably in 2022 and 2023.

Speaker Change: So from a market perspective, I mean, the market overall has kind of firmed up a little bit. I mean, we're seeing kind of low single digit to kind of flat market performance in the U.S.

Patrick Riggins: And now, Patrick will walk you through our second quarter financials and updated 2024 outlooks. Thank you, Mark, and good morning, everyone. I'll begin with a review of our second quarter results and then provide an update on our 2024 guidance before turning it back over to Mark for closing. You have already heard our second quarter results were very strong driven by our three-pillar growth strategy. Net sales increased 31% in adjusted net sales, which excluded our divested APAC business, were up 38% to nearly 1.25 billion.

Speaker Change: Our core base categories are performing.

Steven Forbes: very well. I mean, our corded vacuum cleaner business is up in the U.S., our cordless business is up, our motorized business is up.

Speaker Change: so i think we've got a solid base business that we're continuing to gain market share in and so that's kind of one pie to the puz

Mark Barrocas: I think secondly, we're entering into new categories. I mean, just in the quarter, extractors and spot cleaners added a significant amount of revenue to our cleaning category. And our SharkFlex breeze added a significant amount of revenue to our other categories. So the entrance into new categories is really delivering some scale to the business. So that, I would say, is kind of point number two.

Speaker Change: I think second is...

Steven Forbes: You know, we're entering into new categories, I mean, just in the quarter.

Steven Forbes: extractors and spot cleaners added a significant amount of revenue in our cleaning category. Our shark flex breeze added a significant amount of revenue in our other category. So the entrance into new categories.

Patrick Riggins: We delivered adjusted EBITDA growth of 48% to 168 million with adjusted EBITDA margins improving nearly 90 basis points year over year. Focusing on performance by region, net sales in North America were up 35% to 869 million representing 70% of our sales mix with broad-based strength across our key categories. Adjusted net sales in international markets were up 46% to 379 million driven by additional expansion into AMEA and robust results in Germany and France. Our Latin American markets also delivered strong growth driven by Mexico. We're in the beginning stages of our expansion into Latin America and are very bullish about our future here.

Steven Forbes: is really delivering some scale to the business. So that I would say is kind of point number two. Number three is, you know, we're expanding into new retailers.

Mark Barrocas: Number three is, you know, we're expanding into new retailers. We're starting to mature now and get into a full-chain perspective on Alta and Sephora, but we're really just starting out when it comes to the sporting goods channels. We're just starting out when it comes to a lot of the grocery channels. There's still a lot of growth to come in the beauty channels, you know, as we expand and get more SKU placement.

Steven Forbes: You know, we're starting to mature now.

Steven Forbes: and get into a full chain perspective on Alta and Sephora. But we're really just starting out when it comes to the sporting good channels. We're just starting out when it's coming to a lot of the grocery channels. There's still a lot of growth to come in the beauty channels, you know, as we expand and get more SKU placement.

Mark Barrocas: So I think you're seeing a firming up and gaining market share in the base. And I think you're seeing new categories driving real scale. I think you're seeing new retailers, and I wouldn't necessarily say there's kind of one time. I mean, because you would expect that we would be launching new products and new categories as we enter into 2025. And we've demonstrated that, you know, over the course of every year previously.

Steven Forbes: So I think you're seeing a firming up and a gaining market share in the base.

Steven Forbes: I think you're seeing new categories driving real scale. I think you're seeing new retailers. And I wouldn't necessarily say there's kind of one time. I mean, because you would expect that we would be launching new products and new categories as we enter into 2025.

Patrick Riggins: Next, let me take a minute to provide color on the Q2 performance in our four major product categories, which all saw growth in the quarter. Adjusted net sales in the cleaning category, which includes vacuums, carpet extraction, as well as floor care products, such as steam offs and wet and dry cleaning products, accelerated delivering growth of 20% to 466 million from 388 million. We saw broad-based strength in the category, including strong performance in cordless and uprights, as well as carpet extraction, which is a newer subcategory for us.

Steven Forbes: And we've demonstrated that, you know, over the course of every year previously.

Steven Forbes: And then just a quick follow-up on that, right? Given the step change in sort of the base and in the firming up that you're referencing, it looks like advertising expenses are one of the things you're leaning into clearly, but how would you sort of frame your current thinking around reinvestment of this outperformance, right? Just to further strengthen the business for the next year. Any other sort of highlights you want to talk through as you think about sort of just reinvesting from a position of strength?

Speaker Change: And then just a quick follow up on that given the step change in sort of the base and the firming up that youre referencing.

Speaker Change: It looks like advertising expenses is one of the things you are leaning into clearly, but how would you sort of frame your current thinking around reinvestment.

Speaker Change: This outperformance right just to further strengthen the business for the out year any other any other sort of highlights you want to talk through.

Patrick Riggins: Adjusted net sales in the cooking and beverage category, which includes air friars, multi-cookers, outdoor grills and ovens, and carbonation increased 12% to 379 million compared to 340 million in the prior year. This performance was primarily driven by continued strength in Europe, particularly in Germany and France. Outdoor grills and ovens also delivered strong performance globally. Food preparation, which includes blenders, food processors, ice cream makers and coolers, delivered another strong quarter. Adjusted net sales in this category increased 91% to 265 million compared to 139 million in the prior year.

Speaker Change: As it thinks about as you think about sort of just reinvesting from a position of strength.

Mark Barrocas: Yeah. I mean, look, Steve. I think there's two pieces from a reinvestment standpoint. I think one is on the R&D side. I mean, this year, we'll hire 150 more engineers across the business globally. On the R&D side, you know, we spent nearly 7% of sales on R&D in the second quarter. So product, I mean, really stepping on the gas from a product innovation standpoint, I think it's so critical.

Speaker Change: Yeah.

Speaker Change: Look it's Steve I think Theres two pieces from a reinvestment standpoint, I think one is on the R&D side I mean.

Steve: We're hiring this year, we'll hire 150 more engineers across the business globally.

Speaker Change: On the R&D side, we spent nearly 7% of sales on R&D in the second quarter.

Speaker Change: So product I mean really stepping on the gas from a product innovation standpoint.

Mark Barrocas: I mean, not resting on our laurels that we've launched a great product, but kind of what's next and what's next. So I would first say that R&D investment is critical. The second, as you said, is advertising.

Speaker Change: I think it's so critical I mean, not resting on our laurels of we've launched a great product, but kind of whats next and whats next so so I would first say kind of R&D investment is critical.

Speaker Change: As he said is advertising.

Patrick Riggins: Strong performances from our creamy ice cream makers, kitchen systems, traditional and portable blenders contributed to the robust growth in this category. Finally, the other category, which includes beauty products such as hairdryers and stylers in home environment products such as air purifiers and indoor outdoor fans, had an excellent core and was our fastest growing category. Adjusted net sales in this category were up 251% to 138 million compared to 39 million in the prior year.

Speaker Change: There's two aspects of the advertising piece, there's advertising into new categories.

Mark Barrocas: And there are two aspects of the advertising piece. There's advertising into new categories. You know, we're simply, you know, are still very young in our journey in the beauty space. You know, we're still very young in our journey in the outdoor space.

Speaker Change: We simply are still very young in our journey in the beauty space.

Speaker Change: We are still very young in our journey in the outdoor space, we're still launching into lots of new categories that the shark Ninja brands have never been in before and then there is the geographic expansion I mean, we're driving real starting to drive some real scale, particularly in Germany, and France, both of those markets grew triple digits in the.

Mark Barrocas: We're still launching into lots of new categories that the shark and ninja brands have never been in before. And then there's the geographic expansion. I mean, you know, we're driving real scale, starting to drive some real scale, particularly in Germany and France. I mean, both of those markets grew triple digits in the quarter. I think by the time we get to the end of the year, you'll see those markets become real contributors to the business.

Speaker Change: <unk>.

Speaker Change: I think by the time, we get to the end of the year.

Patrick Riggins: Beauty was particularly strong as we continued to increase our global market share in the sub-category. In addition, our recently launched Flex Breeze indoor outdoor cooling system is resonating well with consumers and continues to exceed our expectations. Moving to gross profit, in the second quarter, gap gross profit increased 51% to 601 million or 48.1% of net sales. Adjusted gross profit increased 56% to 614 million or 49.2% of adjusted net sales. We drove 570 basis points of adjusted gross margin expansion over the prior year while absorbing the impact of red-sea disruption.

Speaker Change: Youre going to see those markets be real contributors to the business, but there's other places in Europe as well I mean, the Nordics, Benelux, Italy, and Spain are showing nice growth, Mexico is showing nice growth and that investment today.

Mark Barrocas: But there are other places in Europe as well. I mean, the Nordics, Benelux, Italy, and Spain are showing nice growth. Mexico is showing nice growth, and that investment today likely won't pay off until next year or two years from now, as our brands continue to become stronger and stronger. I mean, let's keep in mind that, you know, we didn't sell the first product to a German consumer three years ago.

Speaker Change: We likely won't pay off until next year or two years from now as our brands continue to become stronger and stronger.

Speaker Change: Let's keep in mind that we didn't sell the first product to a German consumer three years ago.

Mark Barrocas: So we're still trying to drive much more brand awareness. We're still trying to kind of diversify into more categories, and I think you'll continue to keep seeing more investment that we make in these new international markets. Steve, if I could just add to that, I think you really hit it in your...

Speaker Change: We're still trying to drive much more brand awareness, we're still trying to kind of diversify into more categories and I think youll continue to keep seeing more investment that we make it needs in these new international markets.

Patrick Riggins: Gross margin expansion was primarily driven by our continued cost optimization efforts combined with mixed and foreign exchange favorability. Over the last 18 months, across functional teams have been working very hard to drive sustainable gross margin improvements. Our cost optimization initiatives are driving manufacturing costs down while enhancing product performance and functionality. And our continued focus on assortment and promotional mix management is helping us maintain healthy pricing. Our strong gross margin remains a key competitive advantage for us.

Patraic Reagan: And Steve, if I could just add to that, I think you really hit the nail on the head in your question when you said, you know, from a position of strength. And so that's where we see ourselves right now and in the near term. So what you see happening from a reinvestment standpoint is we're playing from that position of strength. We've got a lot of category innovation that we're putting into the marketplace. We've got a lot of communication that we've got to get out in front of consumers. And so the mindset here is that we're really specific and intentional in terms of how we're investing today to help drive future growth. So hopefully, that gives you a little bit more context.

Speaker Change: And Steve if I could just add to that I think you really hit it in your question when you said.

Speaker Change: From a position of strength and so thats, where we see ourselves right now and in the near term. So what you see happening from a reinvestment standpoint is we're playing from that position of strength was that a lot of category innovation that we're putting into the marketplace. We've got a lot of communication that we've got to get out in front of consumers and so the.

Speaker Change: <unk> here.

Speaker Change: We're really specific and intentional in terms of how we are investing today to help drive future growth. So hopefully that gives you a little bit more context.

Patrick Riggins: With respect to operating expenses in the quarter, we continue to reinvest the significant portion of our gross margin upside in product innovation, brand awareness and global infrastructure to strengthen our competitive mode and drive future growth. R&D expenses increased 48% to 90 million compared to 61 million in Q2 last year. We continue to invest primarily in headcount to support new product categories and new market expansion. In addition, during the second quarter, we incur professional fees and additional prototype costs to support future growth.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Thank you.

Randal Konik: Our next question comes from the line of Randy Konik of Jefferies.

Speaker Change: Our next question comes from the line of Randy <unk>.

Speaker Change: Jefferies.

Speaker Change: Your line is open yes. Thanks.

Randal Konik: Yeah, thanks. Yeah, thanks a lot.

Speaker Change: Yes, Thanks, a lot and good morning, everybody I guess Mark May have some continued new people on the call investors. So maybe it will be Super helpful. Is you remind us on how you kind of think about framing up the different regions internationally and maybe some country specific commentary on how you think that those <unk>.

Speaker Change: It can unfold from a size perspective.

Patrick Riggins: As a percentage of sales, R&D was 7.2% of net sales compared to 6.4% last year. Sales and marketing expenses increased 46% to 303 million or 24.3% of net sales compared to 208 million or 21.9% of net sales in the year ago period. This increase was driven by our continued reinvestment in advertising and personnel related expenses to support our new product launches and expansion in existing and new markets in 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 consumer business.

Speaker Change: Going forward over the next next few years that'd be super helpful.

Speaker Change: Yes sure.

Speaker Change: Well Randy look are our international business grew 46% overall and that's on top of very significant growth that we're comping last year.

Speaker Change: And that 46% is on real scale.

Mark Barrocas: And good morning, everybody. I guess Mark may have some new people on the call, investors. So maybe what would be super helpful is you remind us how you kind of think about framing up, you know, the different regions internationally, and maybe some country-specific commentary on, you know, how you think that those markets can unfold from a size perspective going forward over the next, you know, next few years. That'd be super helpful.

Speaker Change: I'll start with the UK, which is our largest international market.

Speaker Change: That.

Speaker Change: Market grew 7% in the quarter.

Mark Barrocas: Sure. Well, Randy, look, our international business grew 46% overall, and that's on top of very significant growth that we experienced last year. And that 46% is on a real scale. I'll start with the UK, which is our largest international market. That market grew 7% in the quarter. That was on top of a 70% growth last Q2.

Speaker Change: On top of a 70% growth last Q2, and I think it's important to kind of recognize in the UK that we.

Mark Barrocas: And I think it's important to kind of recognize in the UK that we had a lot of growth last year, particularly in the air fryer category. The business this year, as I said in my remarks, is more diversified, and highly profitable. You know, we're expanding into lots of new retailers. I think we've got a much, much healthier business in the UK than we did a year ago. We grew 15% in the first quarter, so we're up double digits. And, you know, we think that business will continue to grow at double digits as we move forward through the rest of the year. I would say, secondly, I'll point to Germany and France.

Speaker Change: We had a lot of growth last year, particularly in the air Fryer category the.

Speaker Change: The business this year as I said in my remarks.

Patrick Riggins: Justice. General and administrative expenses increased to 104 million or 8.3% of net sales compared to 72 million or 7.6% of net sales in the prior year. Primarily due to increased lethal and other professional fees including public company expenses, incremental share-based compensation and information technology and facility investments. Our gap effective tax rate was 24.1% in the second quarter down slightly compared to 25.1% in the prior year and in line with our expectations.

Speaker Change: Is more diversified.

Speaker Change: He is highly profitable.

Speaker Change: We're scaling into lots of new retailers I think we've got a much much more healthier business in the UK than we did a year ago. We grew 15% in the first quarter. So we're up double digits and we think that business will continue to grow at double digits.

Speaker Change: As we move forward the rest of the year.

Speaker Change: I would say secondly, I'll point to Germany, and France are.

Speaker Change: Our business in the UK this year will be over $1 billion. The market in Germany is slightly bigger than the UK the market in France is slightly smaller than the U K.

Mark Barrocas: Our business in the UK this year will be over a billion dollars. The market in Germany is slightly bigger than the UK. The market in France is slightly smaller than the UK.

Speaker Change: We believe that the German market could be over $1 billion, we believe the French market would be slightly under that.

Mark Barrocas: We believe that the German market could be over a billion dollars. We believe the French market, you know, would be slightly under that. In both of those markets, we're driving significant growth. We're driving significant share. We're getting into more and more retailers, and retailers are giving us more and more space. And as I said, those markets grew at triple digits in the first quarter and then, you know, followed that up with triple digit growth in the second quarter as well.

Patrick Riggins: Gap net income for the quarter was 68 million compared to 12 million in the prior year. Adjusted net income was 100 million or 71 cents per share compared to 65 million or 47 cents per share in the prior year reflecting growth of 51% on a per share basis. Adjusted EBITDA for the quarter increased 48% to 168 million or 13.4% of adjusted net sales compared to 114 million or 12.5% of adjusted net sales in the prior year reflecting strong adjusted gross margin expansion of 570 basis points in the quarter partially offset by continued investments in growth initiatives.

Speaker Change: Both of those markets, we're driving significant growth, we are driving significant share, we're getting into more and more retailers.

Speaker Change: Retailers are giving us more and more placement and as I said those markets grew at triple digits in the first quarter, and then followed that up with triple digit growth in the second quarter as well.

Speaker Change: Sure.

Speaker Change: Third I would say are kind of other major markets in Europe, where the European retailers are pushing us to enter into faster. So for example, you take a retailer like Juran X. They are the largest electronics retailer in Poland. In addition to being the largest electronics retailer in Germany.

Mark Barrocas: You know, third, I would say, are kind of other major markets in Europe where the European retailers are pushing us to enter faster. So, for example, you take a retailer like Uranix. They're the largest electronics retailer in Poland. In addition to being the largest electronics retailer in Germany, they're pushing us to enter Poland faster. And so, we'll be doing that in the second half of this year.

Patrick Riggins: Now we moved to the balance sheet. As of the end of the second quarter we had cash of 138 million total debt outstanding of 910 million and a net leverage ratio of 0.9 times. We had inventory of 841 million at quarter end of 56% compared to Q2 of last year. While our inventory growth outpaced sales growth we believe our inventory levels in mixed remaining healthy.

Speaker Change: They are pushing us to enter Poland faster and so we will be doing that in the second half of this year are curious as one of our largest retailers in the U K also owns Elk chop in the Nordics.

Mark Barrocas: Curry's, one of our largest retailers in the UK, also owns Elkjop in the Nordics. You know, we will be expanding our business in the Nordics significantly in the second half of the year. So, you know, unlike in the U.S., where we might be talking about a retailer like Walmart or Costco, I mean, lots of these retailers in Europe are cross-border, which is driving our expansion faster than we anticipated into other markets in Europe. And then, I would say, lastly, Latin America.

Speaker Change: We will be expanding our business in the nordics significantly in the second half of the year. So.

Speaker Change: Unlike in the U S, where we might be talking about a retailer like a walmart or Costco I mean lots of these retailers in Europe are cross border.

Patrick Riggins: Consistent with what we discussed in the first quarter there were 4 key factors that contributed to the year-over-year increase. First inventory levels at the end of second quarter of 2023 were below our internal targets declining 25% year-over-year as retailers remain cautious with their inventory levels. Given this data point when we compare current inventory to the second quarter of 2022 our inventory is up 17% while our net sales are up 60% over the same period.

Speaker Change: Which is driving our expansion faster than we anticipated into other markets in Europe.

Speaker Change: And then I would say lastly would be Latin America.

Speaker Change: I mentioned earlier that we are taking back our distributor ship in Mexico.

Mark Barrocas: I mentioned earlier that we are taking back our distributorship in Mexico. We see a lot of growth potential for us in Mexico. Our business in Mexico is growing quite a bit, both the shark and the ninja side of the business. That'll take place on January 1st of next year.

Speaker Change: See a lot of growth potential for us in Mexico, our business in Mexico is growing quite a bit both the shark amine ninja side of the business that will take place January one of next year, we are growing in many other markets in Latin America as well so.

Randal Konik: We're growing in many other markets in Latin America as well. I think sitting here today versus a year ago, a year ago, really amazing growth out of the UK, really starting to plant lots of seeds around the world. I think sitting here today that 46% growth, a lot of that growth, the majority of that growth was driven outside of the UK and shows much more diversification and much more balance of the overall international business.

Speaker Change: <unk>.

Patrick Riggins: Second we increased inventory levels this year to support a strong anticipated consumer demand in Q3 including for prime day which as Mark mentioned was a huge success. I also want to note that our inventory in the channel is very clean and healthy exiting the second quarter and our retail partners had slightly lower weeks of supply year-over-year. Third we pre-built inventory in anticipation of section 301 tariff exemptions which expired at the end of May and fourth we proactively increased our weeks of supply to mitigate potential shipment delays in Europe due to the Red Sea situation.

Speaker Change: I think sitting here today versus a year ago, a year ago really amazing growth out of the UK really starting to plant lots of seeds around the world I think sitting here today that 46% growth a lot of that growth. The majority of that growth was driven by outside of the U K.

Speaker Change: And shows much more diversification and much more balance of the overall international business.

Speaker Change: Super helpful, But I guess my last question.

Mark Barrocas: Super helpful. I guess my last question, when you think about the evolution of the brand, 16 years ago, maybe the consumer perception was one of great products and great value. And then all these years later, with the rise in the breadth of the assortment and the quality that the consumer perceives of the product, it's interesting to me that you're launching or have launched this super premium-type product in coffee, and it almost feels like there's an opportunity to kind of further produce some premium-type products or expand the breadth further from a price point perspective in other product categories.

Speaker Change: When you think about the evolution of the brand.

Speaker Change: 16 years ago, maybe.

Speaker Change: The consumer perception was one of great products great value.

Patrick Riggins: Next I will touch on two key topics that are likely to combine for everyone. Rising freight costs in potential escalation in China tariff next year. The global ocean-free situation remains fluid following the recent upswing in container spot rates driven by current constraints reducing capacity. Our supply chain teams have been working tirelessly to ensure we are able to support our rapid growth globally. We've acted decisively and navigated the Red Sea disruption with minimal interruptions to our business.

Speaker Change: And then all these years later with the rise of the breadth of the assortment and the quality that the consumer perceives of the products.

Speaker Change: It's interesting to me that Youre launching.

Speaker Change: Or have launched this super premium type product and coffee and it almost feels.

Speaker Change: There is an opportunity to come.

Speaker Change: <unk> produced some premium.

Speaker Change: Type of products or expand the breath further from a price point perspective.

Speaker Change: In other product categories. So can you kind of touch on that.

Mark Barrocas: So can you kind of touch on that opportunity or, you know, potential focus or not over the coming years in not just coffee but other areas of potential opportunity for a more discerning customer that would want even more premium products of the great products you guys already produce?

Speaker Change: <unk> opportunity or potential focus or not over the coming years, and not just coffee, but other areas of potential opportunity for <unk>.

Patrick Riggins: Overall, we are confident in our approach. Our increased 2024 guidance does assume some cost impact from the ongoing disruption, but we expect the impact to be in material. In terms of tariffs, we continue to make excellent progress in our efforts to diversify outside of China and mitigate tariff risk. Our teams are highly proactive and super focused in their approach, and we remain on track to have the capacity to move almost all of our U.S, volume outside of China by the end of 2025.

Speaker Change: The more discerning customer that would want even more premium products.

Speaker Change: Right products, you guys already produce.

Mark Barrocas: Yeah, so look, I think, Randy, that, listen, it starts with identifying a known or unknown consumer problem and trying to solve that problem. And we want to deliver market-leading performance. We want to deliver high-quality, reliable products. And we want to do it at extraordinary value.

Ramsey: Yes, so look I think ramsey that with and it starts with identifying a known or unknown consumer problem and trying to solve that problem and we wanted to deliver market leading performance, we want to deliver high quality reliable products and we want to do it at an extraordinary value.

Patrick Riggins: We are working closely with our manufacturing partners in Southeast Asia. We have increased our investment in tooling to move even faster, and we continue to explore additional partnerships in the region. With respect to Section 301, tariffs, as expected, they were reinstated on June 1st this year. The financial impact of these tariffs is small for SharkNinja and was already baked into our four-year guidance.

Mark Barrocas: You point out the Ninja Cafe Luxe, which we launched at $499. I think if you read a lot of the consumer reviews on that product and even the press reviews, what they're going to highlight is, you know, the performance of it, the versatility of it, the fact that it, you know, enables the consumer to do so much. But they're also going to point out the fact that even at $499, it's a great value. And to be honest with you, I don't ever want to lose that.

Speaker Change: You point out.

Speaker Change: Ninja Cafe locks, which we launched at $499 I think if you read a lot of the consumer reviews on that product and even the press reviews, what theyre going to highlight is.

Speaker Change: The performance of it the versatility of it the fact that.

Speaker Change: It enables the consumer to do so much but they're also going to point out the fact that even if $499. It's a great value.

Patrick Riggins: With that, let me now turn to our outlook for 2024. Given the better than expected results in Q2, in momentum we have heading into the second half of the year, we are raising our fiscal year 2024 guidance. For the full year, we now expect adjusted net sales to increase between 22% and 24%, above our prior guidance of a 12-14% increase. We expect adjusted EPS to be in the range of $4.5 to $4.21, an increase of 26% to 31% year over year.

Speaker Change: And to be honest with you I don't ever want to lose that.

Randal Konik: I don't fully understand, you know, per se, that we're pushing price points up because, you know, we want to push price points up, or are we pushing price points up because we think there's an area of the market that we can penetrate, but still give the consumer extraordinary value. So I don't want to deviate from that. Now, that doesn't mean that, you know, we're going to be launching some robot products here in Q3 that are going to be pushing price points up.

Speaker Change: Fully understand per se that like.

Speaker Change: Are we pushing price points up because we want to push price points up where you're pushing price points up because we think there is an area of the market that we can penetrate.

Speaker Change: Still give the consumer extraordinary value. So I don't want to deviate from that now that doesn't mean that.

Speaker Change: We're going to be launching some robot products here in Q3 that are going to be pushing price points up we're going to be launching some other categories of products that are going to be pushing price points up in the beauty space.

Randal Konik: You know, we're going to be launching some other categories of products that are going to be pushing price points up in the beauty space. But I think what comes along with pushing those price points up is the consumer still feels like they're getting extraordinary value with what it is that we're delivering. That's a quotient that I don't want to move away from. Very helpful. Thanks, guys.

Patrick Riggins: This compares to our prior guidance of $3.66 to $3.82 per share, or a 14 to 19% increase. Adjusted EBITDA is now expected to be in the range of 910 to 940 million, representing growth of 26% to 31% year over year, compared to our prior expectation of 840 million to 870 million, or 17% to 21% growth. Consistent with our previous guidance, we continue to expect net interest expense of approximately 65 million for the year, the gap effective tax rate of approximately 24 to 25%, and capital expenditures to be between 160 million and 180 million for the year.

Speaker Change: I think what comes along with pushing those price points up is the consumer still feels like theyre getting extraordinary value with what it is that we're delivering that.

Speaker Change: That is a quotient that I don't.

Speaker Change: Want to move away from.

Speaker Change: Very helpful.

Speaker Change: Thanks, guys.

Speaker Change: Yeah.

Speaker Change: Thank you.

Brooke Roach: Our next question comes from the line of Brooke Roach of Goldman Sachs.

Speaker Change: Our next question comes from the line of Brooke Roach of Goldman Sachs.

Speaker Change: Your line is open.

Mark Barrocas: Good morning, and thank you for taking our question. Mark, I'm hoping to get your updated thoughts on SharkNinja's approach to portfolio management in the U.S., including the pace of scaling in new categories relative to history. How are you thinking about balancing the tailwinds from new category entrance and distribution expansion with the mandate for long-term sustainable growth? And beyond 24, how are you thinking about the pace and impact of additional new category expansion?

Brooke Roach: Good morning, and thank you for taking our question Mark I was hoping to get your updated thoughts on Shukman Joseph approach to portfolio management in the U S, including the piece of scaling and new categories relative to history.

Mark Barrocas: How are you thinking about balancing the tailwind from new category entrants and distribution expansion with the mandate for long term sustainable growth and beyond 24, how are you thinking about the pace and impact of additional new category expansion.

Patrick Riggins: In closing our financial recap, we feel very good about our performance in the first half of 2024. As we continue to execute our three-pillar growth strategy, we invest thoughtfully and strategically across the business, and continue to solve everyday consumer problems. We are confident we can deliver strong revenue and profit growth in 2024 and beyond.

Mark Barrocas: Yeah, sure, Brooke. Well, look, I would say first and foremost, you know, it's about having a healthy stable base. And I think if you look kind of underlying in our business, there's a core healthy base business, and we're innovating into the base. I mean, I think a great example of that is, we have tremendous market share in things like air fryers, but we just went out and launched the Ninja stackable air fryer, which is a completely new innovation in that category.

Mark Barrocas: Yeah sure.

Mark Barrocas: Look I would say first and foremost.

Brooke Roach: It's about having a.

Brooke Roach: Healthy stable base business.

Mark Barrocas: With that, I'll hand it back to Mark.

Brooke Roach: And I think if you look kind of underlying in our business.

Mark Barrocas: Thanks, Patrick. Our second quarter results were a testament to the hard work and dedication of our incredible global team of sharp ninjas. Patriots. We once again delivered profitable organic growth and offered high-performance products that solve consumer problems fueled by our best-in-class innovation engine.

Brooke Roach: There is a core healthy base business and we're innovating into the base I mean, I think a great example of that is we have tremendous market share in things like air Fryers, but we just went and launched in the first half of this year. The Ninja Stackable Air Fryer, which is a completely new innovation in that category.

Mark Barrocas: And it's become our number one selling air fryer product just after being in the market for a very short period of time. So I think, let's start with, there's a really stable base, and we're driving innovation into that stable base. We're not milking it. We're not driving average sale price down. I mean, we just launched a brand new upright vacuum cleaner called the Shark Power Detect. It's $4

Speaker Change: And it's become our number one selling air Fryer product just after being in the market for a very short period of time. So I think let's start with Theres, a really stable base and we're driving innovation into that stable base, we're not milking it.

Mark Barrocas: As I reflect on the progress we've made, I'm even more excited looking forward to the future and the tremendous opportunity we have in front of us. Our global addressable market is $120 billion in growing. We expect our market share will continue to grow as we keep rolling out new innovative products, entering new categories both in and outside the home and expanding our brand presence worldwide. Our expertise and consumer insight driven R&D will help us lead the way and set the industry standard with game-changing innovation.

Speaker Change: We're not.

Speaker Change: Driving average sell price down I mean, we just launched a brand new upright vacuum cleaner called the sharp powered to detect.

Speaker Change: It's $499.

Speaker Change: It's got amazing technology. It is going to continue to help us not just maintain and grow market share in the quarter up right business, but it's also going to help us drive up average sell price. It's also going to help us.

Mark Barrocas: It's got amazing technology. It's going to continue to help us not just maintain and grow market share in the corded upright business, but it's also going to help us drive up average sale price. It's also going to help us promote less. So, there's this core healthy, stable base that it starts with. I think secondly, there are a lot of new categories that we still feel like there are to enter into. You see what we did this year.

Speaker Change: Promote less so.

Mark Barrocas: We will continue to lean into our always-on 360-marketing strategy to increase brand awareness and create consumer demand globally and will continue to leverage our high-quality agile and scalable supply chain to drive success. I'm more confident than ever in our ability to deliver sustainable long-term growth.

Speaker Change: This core healthy stable base that it starts with I think secondly, there is a lot of new categories.

Speaker Change: We still feel like there are to enter into.

Speaker Change: You see what we've done this year I mean, there is still more new categories that will be entering into as we get into the second half of next year.

Mark Barrocas: There are still more new categories that we'll be entering into as we get into the second half of next year. I think there are a lot of new categories that we feel like we need to enter into. You know, I've publicly stated that we'll launch at least one new product category in the Shark brand and one new product category in the Ninja brand each year moving forward. But I think history would show you that we've been able to do better than that.

Speaker Change: I have publicly stated that we'll launch at least one new product category and the sharp brand and one new product category in the Ninja brand each year moving forward, but I think history would show you that we've been able to even do better than that and I think our our roadmap has lots of additional categories.

Operator: This concludes our prepared remarks and I will now turn it over to the operator to kick off Q&A. Operator? Thank you. As a reminder, if you'd like to ask a question, please press star and the number one on your telephone keypad. We will begin the question and answer session.

Mark Barrocas: And I think our roadmap has lots of additional categories for us to be able to expand into. When it comes to some of the retail partners, again, we've got another couple of years of distribution expansion, even in places like North America, let alone multi-years of expansion in some of these international markets, where we have anywhere from six to 10 of our categories in our 34 overall categories. So I think it's about our three-pillar growth strategy, Brooke.

Speaker Change: For us to be able to expand into.

Speaker Change: When it comes to some of the retail partners again.

Speaker Change: We've got another couple of years of distribution expansion, even in places like North America, let alone multi years of expansion in some of these international markets, where we have anywhere from six to 10 of our categories of our 34 overall category. So.

Andrea Teixeira: Your first question comes from the line of Andrea Tashir from JP Morgan Chase. Line's open. Thank you operator. Good morning everyone. I'm so congrats on your performance. I have a question on guidance and then I follow up on Brazil. My question is how to think about the guidance phase is as similar to what happened last quarter that you raised only due to the beat but kept most of the second half-astimate intact. You found that a very strong momentum to your words in the Winston trend.

Speaker Change: I think it's about Brooke our three pillar growth strategy.

Speaker Change: Driving share in the existing categories, it's continuing to expand into these new categories that we believe that theres more of and its continued international expansion, that's going to ebb and flow in different markets around the world.

Mark Barrocas: It's driving share in the existing categories. It's continuing to expand into these new categories that we believe that there are more of. And it's continued international expansion that's going to ebb and flow in different markets around the world as we move forward over the next couple of years.

Andrea Teixeira: So perhaps, you know, if you can elaborate if we should be thinking about high chains or low-20s, growth in Q3 and then a way to see if the trends hold into fourth quarter and react to that in the next one is called.

Speaker Change: As we move forward over the next couple of years.

Brooke Roach: Thanks, Mark. As a follow-up, we've heard a lot of discussion about a potential slowdown in the macro in recent months in the U.S., as well as some increased competition and promotional activity. Are you seeing any change in retail posture with regard to SharkNinja products as you move into the holiday season, beyond your core innovation market share gains?

Speaker Change: Thanks, Mark as a follow up we've heard a lot of discussion about a potential slowdown in the macro in recent months in the U S. As well as some increased competition in <unk> are you seeing any change in retail posture with regard to sharpen your products as you move into the holiday season beyond your core innovation market share gains.

Andrea Teixeira: And then on the entry to Brazil, when are you expecting to start shipping and what categories given the country import tariffs as far as I've been very abreast to being Brazilian myself? Are you planning to have local third party manufacturing or sourcing there? And what is the the tan or the categories you're looking to sell there?

Mark Barrocas: Yeah, well, look, I mean, clearly, the consumer has been under tremendous inflationary pressure, and, you know, we're empathetic to the challenges that they face. Consumers are more discerning and are continuing to expect more for their hard-earned dollars that they invest. And our mission of positively impacting people's lives and our approach to affordable, accessible innovation, we think is kind of a winning recipe right now in today's consumer environment.

Speaker Change: Yes, well look I mean, clearly the consumer has been under tremendous inflationary pressure and yes, we're empathetic of the challenges that they face.

Mark Barrocas: Thank you very much. As you said, Brazil is a challenging market from a manufacturing standpoint. We are launching into the market in Q4 of this year. We're using a third party distributor partner, but we are directing and taking over the advertising and marketing. I mean, we believe that we want to control that aspect of how our brand gets communicated, you know, to the Brazilian consumers. We're starting with beauty and with motorized kitchen appliances.

Speaker Change: Consumers are more discerning and are continuing to expect more for their hard earned dollars that they invest in our mission of positively impacting people's lives in our approach to affordable accessible innovation.

Speaker Change: We think it's kind of a winning recipe right now in today's consumer environment.

Patraic Reagan: Retailers are cautious, but I think retailers have also recognized that SharkNinja is driving growth in their business. I think retailers realize that in the fourth quarter of last year, they were out of stock on a lot of our products as we got to early December. I'm not necessarily seeing any slowdown right now, Brooke. I am seeing cautiousness, but I'm also seeing excitement that the retailers have for the products that we plan to bring to market and the investments in media and advertising that we've shared with them that we're planning to make over the coming months.

Speaker Change: Retailers.

Speaker Change: Our cautious, but I think also retailers have recognized that shark ninja is driving growth in their business.

Speaker Change: I think retailers recognize that in the fourth quarter of last year. They were out of stock and a lot of our products as we got to early December so I'm not necessarily right now broke seeing any slowdown I mean, I am seeing cautiousness.

Mark Barrocas: Those are the two main categories we'll be starting with in Q4 of this year. We're exploring local manufacturing, but to start off with we are importing that product from the outside. So Q4, they'll be kind of a small launch with beauty and motorized and it'll ramp up further as we get into 2025. We think it's a big addressable market and it just goes along with our strategy of we're seeing growth in Argentina, we're seeing growth in Chile. I mean, we think South America is a strong potential market for us. We're also taking back our distributor in Mexico starting January 1st. So it's all part of our kind of broader Latin American strategy.

Speaker Change: But I'm also seeing excitement that the retailers have for the products that we plan to bring to market and the investment.

Speaker Change: Investments in media and advertising that we've shared with them that we're planning to make over the coming months.

Brooke Roach: And, Brooke, the other thing I would add to that is that, of course, we're very concerned about the macros, of course we are, but we continue to believe that we will win through the innovation pipeline with consumers. And so, you know, as Mark spoke about earlier, it's like we continue to innovate both from a new and also an existing standpoint. And so, yes, we feel like the consumer will be under pressure, but we also feel like the consumer will continue to vote with his or her wallet in terms of great innovation coming into the home.

Speaker Change: And Brook, the other thing I would add and that is that of course, we're very.

Speaker Change: Concerned about the macros of course, we are.

Brook: But we continue to believe that we will win through the innovation pipeline with consumer and so as Mark spoke about earlier, it's like we continue to innovate both from a new and also an existing standpoint, and so yes, we feel like the consumer will be under pressure, but we also feel like the consumer will continue to vote with his or her wallet in terms of gray.

Patrick Riggins: As it relates to the guidance question, I'll turn it over to Patrick. Thanks, Andrea. Appreciate the question.

Speaker Change: Innovation coming into the home. So we think fundamentally that that the companies that are going to win the companies and the brands that are going to win over the.

Brooke Roach: So, you know, fundamentally, we think the companies that are going to win, the companies and the brands that are going to win over the, you know, potential economic cycle that we're starting to hear about are going to be the ones that have got strong brands, and they are going to be the companies that have got strong innovation. And so that's our proposition to the consumer. Great. Thanks so much.

Patrick Riggins: So if you recall back in our first quarter call, we effectively raised and then we said that we would revisit second half guidance in this call. And so what you're seeing in terms of the raise and beat that we've communicated to you all is that we're increasing our second half guidance in addition to taking the beat from Q2. So how you can think about it, I'll just kind of center around the revenue side of this is that from a second half standpoint, roughly we're in what I would call kind of the mid to high mid teens growth over Q3 and Q4. We're not providing guidance from Q3, Q4 specific point of view at this point in time, but you can think about that from a second half perspective.

Speaker Change: Potential.

Speaker Change: Economic cycle that we're starting to hear about are there going to be the ones that have got strong strong brands going to be the companies that have got strong innovation and so that's our proposition to the consumer.

Brooke Roach: Great, thanks so much. I'll pass it on. Thank you.

Speaker Change: Great. Thanks, so much I'll pass it on.

Speaker Change: Thank you.

Speaker Change: Thank you.

Megan Alexander: The next question comes from the line of Megan Alexander from Morgan Stanley.

Speaker Change: The next question comes from the line of Megan Alexander from Morgan Stanley.

Speaker Change: Your line is open.

Mark Barrocas: Hi, thanks so much for taking our question. And good morning. Apologies if I missed this; I was just curious whether you could speak to sell through trends, you know, particularly in North America, in the quarter. Obviously, the overall, you know, kind of shipment growth rate accelerated, but would be curious if you could talk to what that sell through looked like relative to, I think you spoke about mid teens in one queue. Thanks.

Megan Alexander: Alright. Thanks, so much for taking my question and good morning, I apologize if I missed this I was just curious whether you could speak to sell through trends, particularly in North America in the quarter. Obviously, the the overall kind of shipment growth rate accelerated but would be curious if you could talk to what that sell through looks like relative.

Patrick Riggins: As we get into the balance of the year and when we come back for Q3 earnings call will of course update the balance of year at that point in time. So I hope that helps you think about it.

Speaker Change: So I think you spoke about mid teens in one queue. Thanks.

Andrea Teixeira: Yeah, and then if I can't just squeeze one quick one in terms of what you lost in terms of the categories that you were not able to fulfill, of course, similar to what has happened with creamy, you didn't know what you didn't know, right, the demand for as well she and for different categories and coming up with new innovation. How we should be thinking of like what is probably the lost sale and how fast can you can you can you actually fulfill your weightless.

Mark Barrocas: Yeah, so if we just isolate out US retail shipments, US retail shipments grew about 30%. And our POS out the door grew about 20%. Retailer weeks of supply are down year-on-year; they were 9.8 weeks of supply at the end of Q2-23, and they're 8.6 weeks of supply at the end of 24. The POS number was very strong at 20% growth.

Speaker Change: Yeah.

Speaker Change: So if we just isolate out.

Speaker Change: <unk> retail shipments U.

Speaker Change: U S retail shipments grew about 30% at our pass out the door grew about 20%.

Speaker Change: Retailer weeks of supply are down year on year. They were nine eight weeks of supply at the end of Q2 'twenty three in their eight six weeks of supply at the end of 'twenty four.

Speaker Change: The difference between the POS number was very strong at 20% growth the difference between the Pos and the shipments.

Andrea Teixeira: Yeah, so Andrea, I think we we never kind of assume from an inventory perspective that we're going to launch and have a blowout success so we always take a somewhat conservative approach and we chase it and I don't necessarily think it's lost forever. I think it's kind of temporarily moved. So, you know, the demand that we can fulfill for slushy, for example, in Q3, you know, we right now have a weight list of 100,000 units on that product.

Mark Barrocas: The difference between the POS and the shipments is really an anticipated strong build and result from Amazon Prime Day. Amazon ships in June, and the POS comes through in July, so you'll see that in our third quarter POS numbers. In addition to that, Amazon did build up base business inventory in advance of significant traffic that would be coming through on our brands in even non-Prime Day deals. We saw that as well from retailers that were running competitive deals around similar times with Amazon.

Speaker Change: Really an anticipated strong build and result from Amazon Prime day Amazon ships.

Speaker Change: <unk> in June and the POS comes through in July So youll see that in our.

Speaker Change: Third quarter Pos numbers.

Speaker Change: In addition to that.

Speaker Change: Amazon.

Speaker Change: Good buildup base business inventory in advance of significant traffic that would be coming through on our brands.

Andrea Teixeira: I think as that product comes in because it's so unique and it's a category of one to SharkNinja, we'll fulfill that demand and it may be that it pushes into Q4 and to Q1 of next year. In terms of the time for ramp up, generally speaking, you know, we will chase for the next 90 to 120 days. I would anticipate in a product like slushy, you know, we won't be able to catch up by the end of this calendar year, you know, but we will as we get into kind of Q1 of next year.

Speaker Change: Even non prime day deals and we saw that as well from retailers that were running competitive deals around similar time.

Speaker Change: With Amazon so.

Mark Barrocas: So, I think all in all, our guidance for the balance of the year assumes that POS and shipments are going to be flat. There's always kind of changes quarter to quarter, where there might be a ship in in September and a sell through in October, November, you know, for the holiday season. But in general, you know, we feel good about a strong 20% sell-through at US retailers.

Speaker Change: I think all in all our guidance for the balance of the year assumes that Pos and shipments are going to be flat.

Speaker Change: There is always kind of changes quarter to quarter, where there might be.

Speaker Change: Ship in in September and our sell through in in October and November for the holiday season, but in general we feel good about our strong 20% sell through at the U S retailers.

Andrea Teixeira: So, you know, I think it's something that by design, we recognize that, you know, if we have a runaway success and we're seeing also great success from our Ninja Cafe Luxe product that is just launched. We know that we're going to be chasing that for some period of time.

Megan Alexander: Awesome, that's helpful. Thanks, Mark.

Patrick: Awesome. That's helpful. Thanks, Marc and then Patrick maybe just a follow up on the gross margin expectation for the back half I think prior to.

Andrea Teixeira: Okay, that's great. Thank you so much. Congrats again.

Operator: Thank you.

Patraic Reagan: And then, you know, Patraic, maybe just a follow-up on the gross margin expectation for the back half. I think, you know, prior to today, you had been talking about maybe gross margin looking flattish in the back half. It does seem like the guide implies some margin expansion in the back half. Is that due to a better gross margin outlook, or is that just leverage on G&A? If you could just kind of unpack the margin expectation too, that would be helpful.

Speaker Change: Today, you had been talking about maybe gross margin looking flattish in the back half. It does seem like the guide implies some margin expansion in the back half is that.

Steven Forbes: The next question comes from the line of Stephen Forbes, Google Times, securities.

Speaker Change: Due to a better gross margin outlook or is that just leverage on G&A. If you could just kind of unpack the margin expectation to that would be helpful.

Steven Forbes: The line is open. Good morning.

Mark Barrocas: Mark, I was hoping to maybe just take a step back and maybe you could help us reframe how you're thinking about the US opportunity, right? Just given the year-to-day outperformance and the magnitude of growth, right? Like any sort of way to think through maybe what are more secular versus transient drivers of growth? I mean, as you look out to next year, is there anything that we should be considering that you may have to cycle from one time benefit or, you know, what is the right sort of way to baseline?

Megan Alexander: Yeah, Megan, I think you hit it spot on. So, you know, we continue through the first half of the year to see strength in gross margin. And so, you know, as we updated our guidance for the second half, that was absolutely, you know, part of what we raised through the totality of the P&L. So, you can kind of think about for the full year now; we're calling out roughly 175 to 200 basis points of expansion on a full year basis.

Speaker Change: Yes, I mean again I think I think you hit it spot on so we continue through the first half of the year see strengthen in gross margin and so.

Speaker Change: We updated our guidance for second half that was absolutely.

Speaker Change: Part of what we what we raised through that.

Speaker Change: Totality of the P&L. So you can kind of think about for full year now, we're calling out roughly about 175 million to 200 basis points of <unk>.

Patraic Reagan: And so, you know, how that breaks down is we obviously saw outsized margin accretion in the first couple of quarters of this year. We see that continuing to expand, but expanding at a slower rate as we, you know, now start to lap in the second half, some increased margin expansion versus the prior year. But, you know, we continue to see strength in margin. We're bullish about it, and we feel good about where we are. And it also kind of ties back into your question earlier on sell-through.

Speaker Change: Spansion on a full year basis, and so how that breaks down is we obviously saw outsized.

Mark Barrocas: How the US segment should progress given the product pipeline and the success you're seeing right from a distribution point standpoint? Yeah, sure. So Steve, look, I think it's important to point out that, you know, the US market decline considerably in 2022 and 2023. So from a market perspective, I mean, the market overall has kind of firmed up a little bit. I mean, we're seeing kind of low single digits to kind of flat market performance in the US.

Speaker Change: Margin accretion in the first couple of quarters of this year, we see that continuing to expand but expanding at a slower rate as we now start to lap in the second half.

Speaker Change: Some some increased margin expansion versus prior year, but we continue to see strengthened and margin we're bullish about it and we feel good about where we are and it also kind of ties back into your.

Speaker Change: A question earlier on sell through inventory, we feel exceptionally good at right. Now. So you heard my prepared remarks that we've been very intentional in terms of where we've invested from an inventory standpoint to give us advantages, we turn into the second half and so you see that come.

Mark Barrocas: Our core base categories are performing very well. I mean, our courted vacuum cleaner business is up in the US, our cordless business is up or motorized business is up. So, so I think we've got a solid base business that we're continuing to gain market share in and so that's kind of one piece to the puzzle. I think second is, you know, we're entering into new categories. I mean, just in the quarter, you know, extractors and spot cleaners added a significant amount of revenue in our cleaning category, our sharp flex breeze added a significant amount of revenue and our other category.

Megan Alexander: You know, inventory, we feel exceptionally good about right now. So, you heard my prepared remarks that we've been very intentional in terms of where we've invested from an inventory standpoint to give us an advantage as we turn into the second half. And so, you see that come through in terms of both our guidance and the inventory levels that we're currently sitting at. So, we feel we're in a great position.

Speaker Change: Through in terms of both our guidance and the inventory levels that we're currently sitting at so we feel we're in a great position.

Mark Barrocas: So the entrance into new categories is really delivering some scale to the business. So that, I would say it's kind of point number two. Number three is, you know, we're expanding into new retailers. You know, we're starting to mature now and get into a full chain perspective on Alta and Sephora, but we're really just starting out when it comes to the sporting good channels. We're just starting out when it's coming to a lot of the grocery channels.

Megan Alexander: Great. Thank you so much.

Speaker Change: Great. Thank you so much.

Speaker Change: Thanks.

Speaker Change: Thank you.

Alex Perry: Our next question comes from the line of Alex Perry from Bank of America.

Speaker Change: Our next question comes from the line of Alex Perry from Bank of America.

Speaker Change: Your line is open.

Mark Barrocas: Hi, thanks for taking my questions here and congrats on a strong quarter. Just first, I wanted to ask, can you talk about how much of the sales growth was driven by new product contribution versus existing products, both during the quarter and sort of how you're thinking about that for the back half? And then, within the new products that you called out, which do you expect to provide the highest uplift if we think about sort of Frost Vault versus Flushy versus, you know, the new beauty category in the fourth quarter? Thanks.

Alex Perry: Hi, Thanks for taking my questions here and congrats on a strong quarter.

Alex Perry: Just first I wanted to ask can you talk about how much of the sales growth was driven by new product contribution versus existing products, both during the quarter and sort of how youre thinking about that for the back half and then within the new products that you called out which you expect to provide the highest uplift if we think about sort of cross fault versus slushy versus.

Speaker Change: The new beauty category in the fourth quarter. Thanks.

Mark Barrocas: There's still a lot of growth to come in the beauty channels, you know, as we expand and get more skew placement. So I think you're seeing a firming up and a gaining market share in the base. I think you're seeing new categories driving real scale. I think you're seeing new retailers and I wouldn't necessarily say there's kind of one time. I mean, because you would expect that we would be launching new products and new categories as we enter into 2025. And we've demonstrated that, you know, over the course of every year, previous life.

Alex Perry: Yeah. So, Alex, look, I mean, obviously, the lion's share of the revenue was driven by existing products. I mean, you know, new products that we launched this year are generating, you know, rather small amounts of revenue. But this year, you know, they'll continue to build as we go through the year. I have referenced on previous calls, for example, that Shark FlexBreeze would deliver about $40 million in revenue for us this year. But, I think that number will probably be more like $50 million.

Alex Perry: Yes, so Alex.

Alex: Look I mean, obviously the lions share of the revenue was driven by existing products.

Mark Barrocas: And then just a quick follow up on that, given the step change in sort of the base and in the firming up that you're referencing, it looks like advertising expenses is one of the things you're leaning into clearly, but how would you sort of frame your current thinking around reinvestment of this outperformance, right, just to further strengthen the business for the out-ear, any other sort of highlights you want to talk through as you think about that sort of just reinvesting from a position of strength? Yeah, I mean look, Steve, I think there's two pieces from a reinvestment standpoint.

Speaker Change: New products that we launched this year.

Speaker Change: We are generating.

Speaker Change: Small amounts of revenue.

Speaker Change: This year, we will continue to build as we go through the year.

Speaker Change: I had referenced on previous calls for example, there are sharp flex breeze.

Speaker Change: This year, we delivered about $40 million in revenue for us.

Speaker Change: I think that number of how even more like $50 million. So.

Mark Barrocas: So, you know, that kind of gives you a sense of, you know, there was a good new product launch, expanded for us, you know, about $50 million in sales in the first half of this year. In terms of what do we expect moving forward? Look, we think the slushie business is going to be great. We're super excited about that. We're only launching that in the U.S. in 2024.

Speaker Change: That kind of gives you a sense of there was a good new product launch.

Speaker Change: Expanded for us about $50 million in sales and.

Speaker Change: And the first half of this year.

Speaker Change: In terms of what do we expect moving forward.

Speaker Change: Look we think the slushy business is going to be great. I mean, we're super excited about that we're only launching that in the U S. In 2024 that will launch globally in the first quarter of 2025.

Mark Barrocas: That will launch globally in the first quarter of 2025. Cafe Lux will launch globally in the second half of this year. So, that will not just be the U.S.; we'll launch that in Germany, in France, in the U.K., in Canada. We are very excited about that. You know, the super premium coffee espresso market in Europe is a very, very large, defined market. And we feel like we've got a really disruptive product there.

Speaker Change: Cafe locks.

Mark Barrocas: I think one is on the R&D side, I mean, we're hiring, you know, this year, you know, we'll hire 150 more engineers across the business globally. On the R&D side, you know, we spent nearly 7% of sales on R&D in the second quarter. So product, I mean, really stepping on the gas from a product innovation standpoint, I think it's so critical. I mean, not resting on our laurels of we've launched a great product, but kind of what's next and what's next.

Speaker Change: We will launch globally in the second half of this year. So that will not just be the U S. We will launch that in Germany, and France, and the UK and Canada.

Speaker Change: We are very excited about that that super premium coffee espresso market in Europe is very very large definable market and.

Speaker Change: And we feel like we've got a really disruptive product there. So I am exceptionally excited about cafe locks.

Mark Barrocas: So, you know, I'm exceptionally excited about Cafe Lux. We just launched our SpeedStyle Pro Flex hair dryer a couple of days ago. And, you know, that's one of a couple of beauty products that we're going to launch over the next few months. So, I think beauty will be a nice growth and uplift for us. But I'll still point back to, you know, we're driving a lot of growth from our new products that we launched in 2022 and 2023. And it's that compounding effect of, you know, a solid-based business, you know, coupled with, you know, new products that, you know, continue to keep compounding on themselves over the last five years.

Speaker Change: We just launched our speeds style pro flex hair dryer.

Mark Barrocas: So I was first say kind of R&D investment is critical. The second, as you said, is advertising and there's two aspects of the advertising piece. There's advertising into new categories. You know, we simply, you know, are still very young in our journey in the beauty space. You know, we're still very young in our journey in the outdoor space. We're still launching into lots of new categories that the shark and ninja brands have never been in before.

Speaker Change: A couple of days ago, and that's one of a couple of beauty products that are going to launch over the next few months. So I think I think beauty will be a nice growth in uplift for us, but I'll still point back to.

Speaker Change: We're driving a lot of growth from our new products that we launched in 2022, and 2023 and it's that compounding effect of.

Speaker Change: Our strong base business, coupled with new products that continue to keep compounding on themselves over the last five years.

Mark Barrocas: And then there's the geographic expansion. I mean, you know, we're driving real, starting to drive some real scale, particularly in Germany and France. I mean, both of those markets from triple digits in the quarter, I think by the time we get to the end of the year, you're going to see those markets be real contributors to the business. But there's other places in Europe as well. I mean, the Nordics, Benelux, Italy and Spain are showing nice growth.

Alex Perry: Incredibly helpful. And then just my follow-up was sort of a similar question about wholesale. You know, are you seeing strong growth as a result of, you know, new wholesale distribution, if you think of, you know, sporting goods, for instance, and are there any plans for new wholesale distribution in terms of, you know, new retailers, both within, you know, like sporting goods, for instance, or, you know, maybe expanding into new channels? Thanks.

Speaker Change: Incredibly helpful. And then just my follow up was sort of a similar question about wholesale.

Speaker Change: Are you seeing strong growth as a result of new wholesale distribution. If you think of like sporting goods for instance, and are there any plans for new wholesale distribution in terms of new retailers both within.

Mark Barrocas: Mexico is showing nice growth. And that investment today, you know, likely won't pay off until next year or two years from now. You know, as our brands continue to become stronger and stronger, I mean, let's keep in mind that, you know, we didn't sell the first product to a German consumer, you know, three years ago. So we're still trying to drive much more brand awareness. We're still trying to kind of diversify into more categories. And I think you'll continue to keep seeing more investment that we make in these new international markets.

Speaker Change: Like a sporting goods for instance, or maybe expanding into new channels.

Mark Barrocas: Yeah, well, look, Alex, I mean, it's funny, like, we've talked about sporting goods, right? But we only, you know, in the quarter shipped to one retailer, Dick's, for a very small amount, you know, because we were mostly out of stock in the quarter.

Speaker Change: Yes, well look Alex I mean, it's running like we've talked about sporting goods right, but we we only in the quarter shift one retailer Dick's at a very small amount because we were mostly out of stock in the quarter. So.

Alex Perry: So, you know, I would say that the expansion into sporting goods potentially hasn't even started. I mean, Academy won't ship until Q3, and Shields won't ship until, likely, Q4. So that whole market of sporting goods, you really won't see any kind of meaningful revenue impact until we get into 2025, you know, or even beyond. In Europe, you know, in Latin America, we're in lots of retailers for the very first time, you know, retailers like Expert and Euronics and Fnac Darty and Boulanger and, you know, Corte Ingles in Spain.

Speaker Change: I would say that the expansion into sporting goods essentially hasnt, even started I mean academy won't ship until Q3 shields won't ship until likely Q4, so that whole market of sporting goods, you really won't see any kind of meaningful revenue.

Patrick Riggins: And Steve, if I could just add to that, I think you really hit it in your question when you said, you know, from a position of strength. And so that's where we see ourselves right now and in the near term. So what you see happening from a reinvestment standpoint is we're playing from that position of strength. We've got a lot of category innovation that we're putting into the marketplace. We've got a lot of communication that we've got to get out in front of consumers. And so the mindset here is that we're really specific and intentional in terms of how we're investing today to help drive future growth. So hopefully that gives you a little bit more context.

Operator: Thank you.

Speaker Change: Packed until we get into 2025.

Speaker Change: Or even beyond.

Speaker Change: In Europe, and Latin America were in lots of retailers for the very first time.

Speaker Change: Retailers like expert and your on X and <unk> Boulanger.

Speaker Change: CT in glad as in Spain, and so on.

Alex Perry: So, you know, I would say that all of those are very much kind of in their new and infancy stages. And then you go into grocery, you know, a similar situation. We're just starting, you know, to get products placed in the grocery channel. So, small impact on a lot of these things in 24 hours and really just setting ourselves up more for, you know, 2025, 2026.

Speaker Change: I would say that all of those are very much kind of in there are new in their infancy stages and then you go into grocery.

Speaker Change: Similar situation I mean, we're just starting to get products placed into into the grocery channel. So.

Randy Konik: Our next question comes from the line of Randy Konik, Jeffries. The line is open. Yeah, thanks a lot and good morning everybody.

Speaker Change: Small impact to a lot of these things in 'twenty, four and really just setting ourselves up more for 2025 2026.

Alex Perry: Incredibly helpful. Best of luck going forward.

Randy Konik: I guess Mark may have some continued new people on the call investors, so maybe we'll be super helpful as you remind us on how you kind of think about framing up the different regions internationally and maybe some country-specific commentary on how you think that those markets can unfold from a side perspective going forward over the next few years. I think super helpful. Yeah, sure, what Randy look at our international business grew 46% overall, and that's on top of very significant growth that we're comping last year.

Speaker Change: Incredibly helpful Best of luck going forward.

Speaker Change: Thanks.

Operator: Thank you. And that concludes our question and answer session. I will now turn the call over to Mark Barrocas for closing remarks. Yeah, well, thank you.

Speaker Change: Thank you.

Speaker Change: And that concludes our question and answer session.

Mark <unk>: I'll now turn the call over to Mark <unk> for closing remarks.

Mark Barrocas: Yeah, well, thank you for joining us, and we look forward to speaking with you again soon. Have a great day, everyone.

Mark <unk>: Yes. Thank you for joining us and we look forward to speaking with you again soon have a great day everyone.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining us. You may now disconnect.

Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.

Randy Konik: And that 46% is on real scale. I'll start with the UK, which is our largest international market. That market grew 7% in the quarter. That was on top of a 70% growth last Q2. And I think it's important to kind of recognize in the UK that we had a lot of growth last year, particularly in the air fryer category. The business this year, as I said in my remarks, is more diversified, is highly profitable.

Speaker Change: Please wait the conference will begin shortly.

Mark <unk>: Yes.

Mark <unk>: Sure.

Mark <unk>: [music].

Mark <unk>: Okay.

Mark <unk>: Sure.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Sure.

Randy Konik: You know, we're scaling into lots of new retailers. I think we've got a much, much more healthier business in the UK than we did a year ago. We grew 15% in the first quarter, so we're up double digits. And you know, we think that business will continue to grow at double digits as we move forward the rest of the year. I would say secondly, I'll point to Germany and France. Our business in the UK this year will be over a billion dollars.

Speaker Change: [music].

Randy Konik: The market in Germany is slightly bigger than the UK. The market in France is slightly smaller than the UK. We believe that the German market could be over a billion dollars. We believe the French market, you know, would be slightly under that. Both of those markets, we're driving significant growth. We're driving significant share. We're getting into more and more retailers. Retailers are giving us more and more placement. And as I said, those markets grew with triple digits in the first quarter, and then follow that up with triple digit growth in the second quarter as well.

Randy Konik: Third, I would say our kind of other major markets in Europe where the European retailers are pushing us to enter into faster. So for example, you take a retailer like Uranix. They're the largest electronics retailer in Poland. In addition to being the largest electronics retailer in Germany, they're pushing us to enter Poland faster. And so we'll be doing that in the second half of this year. Curry is one of our largest retailers in the UK also owns Elkjob in the Nordics.

Randy Konik: You know, we will be expanding our business in the Nordics significantly in the second half of the year. So, you know, unlike in the US, where we might be talking about a retailer like a Walmart or a Costco, I mean lots of these retailers in Europe are cross border, which is driving our expansion faster than we anticipated into other markets in Europe.

Mark Barrocas: And then I would say lastly would be Latin America. I mentioned earlier that we are taking back our distributorship in Mexico. We see a lot of growth potential for us in Mexico. Our business in Mexico is growing quite a bit both the shark and the ninja side of the business. That'll take place January 1 of next year. We're growing in many other markets in Latin America as well. So, I think sitting here today versus a year ago, a year ago, you know, really amazing growth out of the UK, really starting to plant lots of seeds around the world.

Mark Barrocas: I think sitting here today, you know, that's 46% growth. A lot of that growth, the majority of that growth was driven by outside of the UK and shows much more diversification and much more balance of the overall international business. Thank you. Super helpful.

Randy Konik: I guess my last question. When you think about the evolution of the brand, you know, 16 years ago, maybe the consumer perception was one of great products, great value. And then, all these years later, you know, with the rise of the breadth of the assortment and the quality that the consumer perceives of the products. It's interesting to me that you're launching or have launched this super premium type product in coffee. And it almost feels as an opportunity to kind of further produce premium type of products or expand the breadth further from a price point perspective in other product categories.

Randy Konik: So, can you kind of touch on that opportunity or, you know, potential focus or not over the coming years and not just coffee but other areas of potential opportunity for more discern and customer that would want even more premium products of the great products you guys already produce. Yeah, so look, I think Randy that within it starts with identifying a known or unknown consumer problem and trying to solve that problem. And we wanted to deliver market leading performance.

Randy Konik: We wanted to deliver high quality, reliable products and we want to do it at an extraordinary value. You point out, you know, the ninja cafe looks, you know, which we launched at $499. I think if you read a lot of the consumer reviews on that product and even the press reviews, what they're going to highlight is, you know, the performance of it, the versatility of it, you know, the fact that, you know, it, you know, enables the consumer to do so much, but they're also going to point out the fact that even at $499, it's a great value.

Randy Konik: And to be honest with you, I don't ever want to lose that. I don't fully understand, you know, per se that like, you know, are we pushing price points up because, you know, we want to push price points up, are we pushing price points up because we think there's an area of the market that we can penetrate but still give the consumer extraordinary value. So I don't want to deviate from that.

Randy Konik: Now that doesn't mean that, you know, we're going to be launching some robot products here in Q3 that are going to be pushing price points up, you know, we're going to be launching some other categories of products that are going to be pushing price points up in the beauty space. But I think what comes along with pushing those price points up is the consumer still feels like they're getting extraordinary value with what it is that we're delivering. And that's the quotient that I don't want to move away from. Very helpful. Thanks, guys. Thank you.

Brooke Roach: Our next question comes from the line of Brooke Roach of Goldman Sachs. Line is open. Good morning, and thank you for taking our question.

Brooke Roach: Mark, I'm hoping to get your updated thoughts on Shark Ninja's approach to portfolio management in the US, including the pace of scaling and new categories relative to history. How are you thinking about balancing the tailwinds from new category entrance and distribution expansion with the mandate for long term sustainable growth? And beyond 24, how are you thinking about the pace and impact of additional new categories? expansion? Yeah, sure, Brooke. Well, look, I would say first and foremost, you know, it's about having a healthy, stable, base business.

Brooke Roach: And I think if you look kind of underlying in our business, you know, there's a core, healthy, base business, and we're innovating into the base. I mean, I think a great example of that is, you know, we have tremendous market share in things like air fryers, but we just went and launched in the first half of this year, the Ninja stackable air fryer, which is a completely new, you know, innovation in that category.

Brooke Roach: And it's become our number one selling air fryer product, you know, just after being in the market for a very short period of time. So I think, you know, let's start with, there's a really stable base, and we're driving innovation into that stable base. We're not milking it. We're not, you know, driving average sell price down. I mean, we just launched a brand new upright vacuum cleaner called the Shark Power Detect.

Brooke Roach: It's $499. You know, it's got amazing technology. It's going to continue to help us not just maintain and grow market share in the quartered upright business, but it's also going to help us drive up average sell price. It's also going to help us, you know, promote less. So, you know, there's this core healthy stable base that it starts with. I think secondly, there's a lot of new categories, you know, that we still feel like there are to enter into.

Brooke Roach: You know, we, you see what we've done this year. I mean, there's still more new categories that we'll be entering into as we get into the second half of next year. I've publicly stated that we'll launch at least one new product category in the Shark brand and one new product category in the Ninja brand each year moving forward. But I think history would show you that we've been able to even do better than that.

Brooke Roach: And I think our roadmap has lots of additional categories for us to be able to expand into. When it comes to some of the retail partners, again, you know, we've got another couple of years of distribution expansion, even in places like North America, let alone, you know, multi years of expansion in some of these international markets where we have, you know, anywhere from, you know, six to ten of our categories of our 34 overall categories.

Brooke Roach: So, I think it's about for our three-pillar growth strategy, you know, it's driving share in the existing categories. It's continuing to expand into these new categories that we believe that there's more of and it's continued international expansion that's going to ebb and flow in different markets around the world as we move forward over the next couple of years. Thanks, Mark.

Mark Barrocas: As a follow-up, we've heard a lot of discussion about a potential slowdown in the macro in recent months in the U.S., as well as some increased competition and promotionality. Are you seeing any change in retail posture with regard to shark ninja products as you move into the holiday season, beyond your core innovation, market your gains? Yeah, well, look, I mean, clearly the consumers have been under tremendous inflationary pressure, and you know, we're empathetic of the challenges that they face.

Mark Barrocas: You know, consumers are more discerning and are continuing to expect more for their harder and dollars that they invest, and our mission of positively impacting people's lives and our approach to affordable, accessible innovation. We think it's kind of a winning recipe right now in today's consumer environment. You know, retailers, you know, are cautious, but I think also retailers have recognized that shark ninja is driving growth in their business. I think retailers recognize that in the fourth quarter of last year, they were out of stock, and a lot of our products, you know, as we got to early December.

Mark Barrocas: So I'm not necessarily right now brook seeing any slowdown. I mean, I am seeing cautiousness, but I'm also seeing excitement that the retailers have for the products that we plan to bring to market and the investment, you know, investments in media and advertising that we've shared with them that we're planning to make over the coming months. Williams. And Brooke, the other thing I would add in that is that, of course, we're very concerned about the macros.

Mark Barrocas: Of course, we are. But we continue to believe that we will win through the innovation pipeline with consumer. And so, as Mark spoke about earlier, it's like we continue to innovate both from a new and also an existing standpoint. And so, yes, we feel like the consumer will be under pressure, but we also feel like the consumer will continue to vote with his or her wallet in terms of great innovation coming into the home.

Mark Barrocas: So, we think fundamentally that the companies that are going to win, the companies that are going to win over the potential economic cycle that we're starting to hear about are going to be the ones that have got strong brands, going to be the companies that have got strong innovation. And so, that's our proposition to the consumer.

Patrick Riggins: Great. Thanks so much. I'll pass it on. Thank you.

Megan Alexander: The next question comes from the line of Megan Alexander from Morgan Stanley. The line is open. Hi. Thanks so much for taking our question and good morning. Apologies if I missed this. I was just curious whether you could speak to sell through trends, you know, particularly in North America, in the quarter, obviously the overall, you know, kind of shipment growth rate accelerated, but would be curious if you could talk to what that sell through looked like relative to I think you spoke about mid teens in one queue.

Megan Alexander: Thanks. Yeah. So, if we just isolate out US retail shipments, US retail shipments grew about 30% and our POS out the door grew about 20%. Retailer weeks of supply are down year on year. They were 9.8 weeks of supply at the end of Q2 23 and they're 8.6 weeks of supply at the end of 24. The difference between the, I mean, the POS number was was very strong at 20% growth. The difference between the POS and the shipments is really an anticipated strong build and result from Amazon Prime Day.

Megan Alexander: Amazon, you know, ships in June and the POS comes through in July. So you'll see that in our third quarter POS numbers. In addition to that, Amazon, you know, did build up base business inventory in advance of significant traffic that would be coming through on our brands in even non prime day deals. And we saw that as well from retailers that were running competitive deals around similar time, you know, with Amazon.

Megan Alexander: So, you know, I think all in all our guidance for the balance of the year assumes that POS and shipments are going to be flat. There's always kind of changes quarter to quarter where there might be, you know, ship in in September and a sell through in, you know, October and November, you know, for the holiday season. But in general, you know, we feel good about a strong 20% sell through at the US retailers.

Megan Alexander: Awesome. That's helpful. Thanks, Mark. And then, you know, Patrick, maybe just a follow up on the gross margin expectation for the back half. I think, you know, prior to today, you had been talking about maybe gross margin looking flatish in the back half. It does seem like the guy implies some margin expansion in the back half is that, you know, due to a better gross margin outlook or is that just leverage on on GNA.

Megan Alexander: If you could just kind of unpack the margin expectation too, that would be helpful. Yeah, Megan, I think you had a spot on. So, you know, we continued through the first half of the year to see strength in gross margin. And so, you know, as we updated our guidance for second half, that was absolutely, you know, part of what we raised through the totality of the PNL. So, you can kind of think about for four year now, we're calling out roughly about 175 to 200 basis points of expansion on a four year basis.

Megan Alexander: And so, you know, how that breaks down is we obviously saw outsize margin accretion in the first couple of quarters of this year. We see that continuing to expand, but expanding at a slower rate is we, you know, now start to lap in the second half, you know, some some increased margin expansion versus first prior year. But, you know, we continue to see strength in margin. We'll bullish about it and we'll feel good about where we are.

Megan Alexander: And it also kind of ties back into your question earlier on sell through, you know, inventory, we feel exceptionally good at right now. So you've heard my prepared remarks that we've been very intentional in terms of where we've invested from an inventory standpoint to give us a advantage as we turn into the second half. And so you see that comes through in terms of both our guidance and the inventory levels that we're currently sitting at. So we feel we're in a great position. Great. Thank you so much. Thank you.

Megan Alexander: Our next question comes from the line of Alex Perry from Bank of America. Line is open. Hi, thanks for taking my question here and congrats on a strong quarter.

Mark Barrocas: Just first, I wanted to ask, can you talk about how much of the sales growth was driven by new product contribution versus existing products both during the quarter and sort of how you're thinking about that for the back half. And then within the new products that you called out, which you expect to provide the highest uplift if we think about sort of frostball versus flashy versus, you know, the new beauty category in the fourth quarter.

Mark Barrocas: Thanks. Yeah, so Alex, look, I mean, obviously the line share of the revenue was driven by existing products. I mean, you know, new products that we launched this year. We're, you know, we're generating, you know, rather small amounts of revenue. This year, you know, they'll continue to build as we go through the year. I had referenced on previous calls, for example, there are shark flex breeze, you know, this year would deliver about $40 million in revenue for us.

Mark Barrocas: You know, I think that number will probably be more like $50 million. So, you know, that kind of gives you a sense of, you know, there was a good new product launch, you know, expanded for us, you know, about $50 million in sales in the first half of this year.

Mark Barrocas: In terms of what do we expect moving forward? Look, we think the flashy business is going to be great. I mean, we're super excited about that. We're only launching that in the US in 2024 that will launch globally in the first quarter of 2025. Cafe Lux will launch globally in the second half of this year. So that will not just be the US will launch that in Germany and France and the UK and Canada.

Mark Barrocas: We are very excited about that, you know, that super premium coffee espresso market in Europe is very, very large, you know, definable market. And we feel like we've got a really disruptive product there. So, you know, I'm exceptionally excited about Cafe Lux. We just launched our speed style pro flex hairdryer a couple of days ago and, you know, that's one of a couple of beauty products that are going to launch over the next few months.

Mark Barrocas: So I think I think beauty, you know, will be a nice, you know, growth and uplift for us. But I'll still point back to, you know, we're driving a lot of growth from our new products that we launched in 2022 and 2023. And it's that compounding effect of, you know, a strong based business, you know, coupled with, you know, new products that, you know, continue to keep compounding on themselves, you know, over the last five years.

Megan Alexander: I think it was kind of helpful.

Mark Barrocas: And then just when I follow up was sort of a similar question about wholesale, you know, are you seeing strong growth as a result of, you know, new wholesale distribution, if you think I'm like, you know, sporting goods, for instance, and are there any plans for new wholesale distribution in terms of, you know, new retailers, both within, you know, like a sporting goods, for instance, or, you know, maybe expanding into new channels. Yeah, we'll look at it.

Mark Barrocas: It's funny like we've talked about sporting goods, right, but we, we only, you know, in the quarter shift one retail or dicks at a very small amount, you know, because we were mostly out of stock in the quarter. So, I, you know, I would say that the expansion into sporting goods, you know, potentially hasn't even started. I mean, academy won't ship until Q3, shields won't ship until likely Q4. So that whole market of sporting goods.

Mark Barrocas: You really won't see any kind of meaningful revenue, you know, impact until we get into 2025, you know, or even beyond. In Europe, you know, in Latin America, you know, we're in lots of retailers for the very first time, you know, retailers like expert and urenex and finact already and blue lingerie and, you know, court and glas in Spain. And so, you know, I would say that, you know, all of those are very much kind of in their new and their infancy stages.

Mark Barrocas: And then you go into grocery, you know, similar situation. I mean, we're just starting, you know, to get products placed into the grocery channel. So small impact to a lot of these things in 24 and really just setting ourselves up more for, you know, 2025, 20, 26.

Mark Barrocas: Incredibly helpful. Best of luck going forward. Thanks. Thank you.

Operator: And that concludes our question and answer session.

Mark Barrocas: I will now turn the call over to Mark Baroque for closing remarks. Well, thank you for joining us. And we look forward to speaking with you again soon. Have a great day, everyone.

Operator: Ladies and gentlemen, that concludes today's call.

Operator: Thank you all for joining.

Operator: You may now disconnect. Please wait. The conference will begin shortly. Thank you.