SharkNinja, Inc.

Greetings and welcome to the Shark Ninja third quarter 2023 conference earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Arvind Bhatia, Head of Investor Relations. Thank you, sir. You may begin.

Good morning, and welcome to Shock Ninja's third quarter 2023 earnings conference call. Joining me on today's call are Mark Barocas, Shock Ninja's chief executive officer, and Larry Flynn, interim chief financial officer and chief accounting officer. Mark will begin by providing a business update, and Larry will then provide a review of our financial results and discuss our updated 2023 outlook. After that, we will open the call for your questions. By now, everyone should have access to the earnings release for our third quarter ended September 30th, 2023, issued this morning. The press release is accessible on the company's website at ir.shotminja.com. And shortly after the conclusion of today's call, a webcast will be archived and available for replay. Before we begin, Let me remind everyone that today's discussion contains forward-looking statements based on the environment as we currently see it, and as such, does include risks and uncertainties. If you defer to Shock Ninja's earnings release, as well as 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 as a result of these forward-looking statements. Please remember the company undertakes no obligation to update or revise these forward-looking statements in the future. During the call, we will make a number of references to non-GAAP financial measures. We believe that these measures provide investors with useful perspective on the underlying growth trends of the business and have included in our earnings release a full reconciliation of non-GAAP financial measures to the most comparable GAAP measures. Now, I will turn the call over to Mark.

Thanks, Arvind. I really appreciate everyone taking the time to join us this morning. We're excited to report another strong quarter. This is our second one as a public company, and we are optimistic about the rest of the year. Since our listing on the New York Stock Exchange a few months ago, people have been pleasantly surprised by our scale and diversification. We're on track to exceed $4 billion in net sales. and achieved close to $700 million in adjusted EBITDA this year. This will make us one of the largest and most profitable companies in our industry. We're also highly diversified. We're now in 31 subcategories. We sell our products in 26 countries. We partner with more than 150 brick and mortar and online retailers. and have a rapidly growing direct-to-consumer business. The investment community has been asking me, what's Shark Ninja's secret sauce? I always have to pause before responding because it's not just one thing. It's a combination of so many different things that make us unique and different. Our disruptive innovation engine continues to deliver amazing products at accessible price points. Our marketing and communications approach has created strong consumer demand for our products. Our omnichannel strategy allows us to be channel agnostic. Our products are available wherever our consumers want to shop for them. We have a nimble, efficient, and scalable supply chain that helps us drive industry-leading margins. But it really comes down to the Shark Ninja mindset and culture. This is really what differentiates us and is hard to replicate. Everyone here has a desire to win and to exceed expectations. This approach permeates throughout the company and drives our success. Turning to third quarter results. We grew adjusted net sales by nearly 15%. That's strong double-digit growth and increased our market share across both the Shark and Ninja brands. Adjusted EBITDA grew more than 38%, continuing the strong trend from the second quarter. We delivered more than 300 basis points of adjusted EBITDA margin expansion and including 950 basis points of adjusted gross margin improvement. The team did a great job. Q3 gross margins were ahead of expectations and reflected a few things, continued supply chain tailwinds, cost optimization efforts, and a favorable pricing and promotional mix. Earlier this year, we set out a long-term target to get back to pre-COVID gross margin levels of 45%. That's up from 40% in 2022. We're currently on pace to hit that target this year, well ahead of plan. We took a portion of the gross margin upside in the quarter and invested it back in the business. Our awareness in new markets and new categories continues to grow. Q4 is off to a great start. While the macroeconomic environment remains uncertain, we have good visibility for demand through the end of the year. We're raising our full-year guidance and now expect adjusted net sales growth of 12.5 to 13.5 percent, up from 10 to 12 percent that was previously provided. Adjusted EBITDA is expected to be in the range of $690 to $705 million, or growth of 33% to 36%, compared to our prior guidance of $650 to $680 million. Our team has set us up to be in a great position both this year and as we head into 2024. We believe our three-pillar growth strategy has enabled us to drive market share, growing share in existing categories, entering new and adjacent categories, and international expansion. Our results demonstrate how we remain focused on all three growth pillars. Our new and adjacent subcategories have great momentum and have been important contributors to our growth. Subcategories like beauty and outdoor cooking that we launched in the last 12 to 18 months continue to perform well. Shark Speed Style and Shark Smooth Style are two new innovative products that recently launched to help expand our beauty portfolio. We partnered with Chris Appleton, celebrity hairstylist to Kim Kardashian and Jennifer Lopez to as our Shark Beauty brand ambassador. This is our first beauty partnership. I could have never imagined a few years ago that more than 200 influencers would stand in line in Soho, New York during Fashion Week to check out the latest Shark Beauty products. But that's exactly what happened. We believe there is this natural synergy between beauty and the right celebrity that works. and we're just getting started. Outdoor cooking continues to deliver strong results and great consumer feedback. The Ninja Woodfire Outdoor Grill, which launched last year, is seeing strong sell-through and satisfaction among consumers both in North America and Europe. Consumers loved it so much that they told us they wanted something even bigger. Because of the flexibility and speed of our team to adapt, I'm thrilled to share that we recently launched the Ninja Woodfire XL Grill, expanding our offering in this segment. I'm also excited about the new subcategories we have entered in 2023. We launched four new subcategories of products in 2023 that have runway for expansion moving forward. In the Ninja brand, we launched our first outdoor wood fire oven, which is performing well. During Q3, we entered the in-home beverage category with our carbonation drink system, the Ninja Thirsty. Consumers now have the ability to dispense a single drink for a wide variety of offering, making it fun, convenient, and exciting for the entire family. The Thirsty has started to see strong social engagement on TikTok and Instagram. We're pleased with the initial response from consumers and plan to launch the Ninja Thirsty internationally in 2024. On the Shark side, we entered the carpet extractor segment, a large definable market with two innovative products, the Shark Carpet Expert and the Shark Sane Striker. We believe these products will help consumers to maintain and brighten their carpets and give them the power to remove stubborn spills and stains in a way that hasn't been done before. Sharks saw a need to help consumers vacuum the unvacuumable, launching our brand-new Shark Mess Master. Whether it's glass, pet messes, or a day in the workshop, the Messmaster is designed to pick up virtually anything. Shark was already the number one selling floor care brand in the U.S. in 2022. But with these differentiated products and our built-in equity with floor care consumers, we expect to drive additional market share over time. These are all great examples of how we can get into new categories and by staying focused on identifying and solving consumer problems that others either don't see or are unable to solve. We believe we are offering great performance and extraordinary value. This is the hallmark of Shark Ninja products. Our innovation continues within existing categories. We recently launched a new series of robotic and cordless vacuums using our proprietary Detect Pro technology. These are smarter, stronger, and more convenient for consumers. In the home environment segment, the Shark Never Change air purifiers recently launched, which don't require filter replacement for five years and are getting strong consumer reviews. In the Ninja brand, we've introduced the Ninja Combi, our next generation of multi-cookers. And in food prep, we've reinvigorated the blender and kitchen system with improved features and functionality through the launch of Ninja Detect Pro. These new products keep our offerings fresh and our consumers excited. Shark Ninja's strategy is to maintain and grow market share in our existing categories through a relentless focus on new innovation to keep the consumer excited for what's next. International was again the strongest growth driver in Q3, as adjusted net sales were up a staggering 80%. This was driven by continued success in the UK and the rest of Europe. In Italy, Spain, and Latin America, we're in the early stages of establishing our presence. Those markets all have great potential for growth. We have a large opportunity outside of North America. We're working hard to capitalize on that as we globalize our brand. About 80% of the products that we develop today are for a global consumer. This has been a game changer for us over the last few years. It's helped us to enter new markets using the same playbook that has worked well in the U.S. and U.K. The market opportunity outside the U.S. is large, and we expect international to remain a key growth driver for us. Our three pillars of organic growth strategy continue to deliver industry-leading growth We leverage our disruptive and best-in-class innovation engine, our proven go-to-market strategy, and our agile and scalable supply chain. Our approach to consumer problem-solving and designing products is centered around delivering market-leading performance, multifunctionality, high quality, and extraordinary value. We're on track to deliver more than 25 new SKUs this year within new and existing categories. We have clear line of sight to our planned 2024 product lineup, and our 2025 product roadmap is also beginning to take shape. We're attracting world-class engineering and design talent across software, electronics, app, IoT, mechatronics, and other fields. We're growing our talent base in our key R&D centers in Boston, London, and China. But bringing amazing products to the market is not enough. We continue to create demand and drive market share by leveraging our proven go-to-market strategy. During the quarter, we reinvested gross margin dollars into media and advertising to increase awareness of within our international markets and to support new category launches. Providing strong media support to our nascent markets and newer categories is a key part of our organic growth strategy. Our newer categories are helping us drive increased shelf space, not only at existing retailers, but also at retailers new to us, ranging from Sephora and Ulta to Cabela's, Bass Pro Shops, Ace Hardware, and others. Our consumer demographics are expanding and reaching new audiences, from teenagers that are raving about our hair care products on social media to male consumers who can't wait to show off their cooking skills on our outdoor grills and ovens. On a personal note, my two daughters and their friends are big fans of the Shark Flex style and now think I'm a cool dad for the very first time. Social media is a major focus of our advertising efforts. We're seeing extraordinary organic user-generated content across TikTok and Instagram grow for both the Shark and Ninja brands. As an example, the Ninja Creamy is fast approaching 1 billion views on TikTok. Our strength lies in our ability to launch and market products that consumers love. However, today's discussions would not be complete without highlighting our best-in-class supply chain. We believe this is a competitive advantage for us. We're seeing the benefits of many years of investments in our supply chain and the longstanding partnerships we have built with suppliers in Asia. We expect to have great momentum as we head into 2024 by tapping into our in-depth understanding of what consumers want and our engineering expertise. We plan to keep blazing a trail with groundbreaking innovations that are reshaping the industry. Our sights are set on entering into new markets and making our presence felt in every household while driving growth and profitability. Our commitment to innovation and international expansion, backed by our compelling financial profile, sets us apart from our competitors. I'm confident we're on the right track to fulfill our mission of positively impacting people's lives every day in every home around the world and to deliver substantial value to our stakeholders. Larry will now walk you through our third quarter financials and updated outlook in more detail. Larry?