Exhibit 99.4
SHARKNINJA GLOBAL SPV, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
As of | ||||||||||||||||
March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | |||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 116,828 | $ | 130,455 | $ | 181,950 | $ | 192,890 | ||||||||
Restricted cash | 17,316 | 17,723 | 17,727 | 25,880 | ||||||||||||
Accounts receivable, net | 730,169 | 579,469 | 672,140 | 766,503 | ||||||||||||
Inventories | 665,104 | 715,873 | 688,550 | 548,588 | ||||||||||||
Prepaid expenses and other current assets | 133,722 | 121,018 | 167,812 | 181,831 | ||||||||||||
Total current assets | 1,663,139 | 1,564,538 | 1,728,179 | 1,715,692 | ||||||||||||
Property and equipment, net | 103,462 | 113,963 | 121,284 | 137,341 | ||||||||||||
Operating lease right-of-use assets | 69,184 | 73,820 | 70,112 | 67,321 | ||||||||||||
Intangible assets, net | 506,555 | 500,900 | 494,246 | 492,709 | ||||||||||||
Goodwill | 840,850 | 840,388 | 839,906 | 840,148 | ||||||||||||
Deferred tax assets, noncurrent | 1 | 1 | 1 | 6,291 | ||||||||||||
Other assets, noncurrent | 46,418 | 51,686 | 43,652 | 35,389 | ||||||||||||
Total assets | $ | 3,229,609 | $ | 3,145,296 | $ | 3,297,380 | $ | 3,294,891 | ||||||||
Liabilities and Shareholders’ Equity | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 346,863 | $ | 362,490 | $ | 349,502 | $ | 328,122 | ||||||||
Accrued expenses and other current liabilities | 362,138 | 362,711 | 419,841 | 552,023 | ||||||||||||
Tax payable | 25,978 | 1,865 | 25,059 | 1,581 | ||||||||||||
Revolving line of credit | 105,000 | 95,000 | 155,000 | — | ||||||||||||
Current portion of long-term debt | 63,087 | 61,940 | 88,037 | 86,972 | ||||||||||||
Total current liabilities | 903,066 | 884,006 | 1,037,439 | 968,698 | ||||||||||||
Long-term debt | 397,486 | 398,845 | 347,913 | 349,169 | ||||||||||||
Operating lease liabilities, noncurrent | 60,420 | 67,200 | 64,283 | 61,779 | ||||||||||||
Deferred tax liabilities, noncurrent | 72,375 | 60,978 | 58,308 | 60,976 | ||||||||||||
Other liabilities, noncurrent | 19,998 | 23,020 | 21,079 | 25,980 | ||||||||||||
Total liabilities | 1,453,345 | 1,434,049 | 1,529,022 | 1,466,602 | ||||||||||||
Shareholders’ equity: | ||||||||||||||||
Ordinary shares | 10 | 10 | 10 | 10 | ||||||||||||
Additional paid-in capital | 957,005 | 943,581 | 944,550 | 941,210 | ||||||||||||
Retained earnings | 814,907 | 778,565 | 850,592 | 896,738 | ||||||||||||
Accumulated other comprehensive income (loss) | 4,342 | (10,909 | ) | (26,794 | ) | (9,669 | ) | |||||||||
Total shareholders’ equity | 1,776,264 | 1,711,247 | 1,768,358 | 1,828,289 | ||||||||||||
Total liabilities and shareholders’ equity | $ | 3,229,609 | $ | 3,145,296 | $ | 3,297,380 | $ | 3,294,891 |
SHARKNINJA GLOBAL SPV, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share data)
(unaudited)
Three Months Ended | ||||||||||||||||
March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | |||||||||||||
Net sales | $ | 809,626 | $ | 778,197 | $ | 946,897 | $ | 1,182,646 | ||||||||
Cost of sales | 457,700 | 486,730 | 603,413 | 759,329 | ||||||||||||
Gross profit | 351,926 | 291,467 | 343,484 | 423,317 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 51,971 | 54,016 | 53,968 | 55,705 | ||||||||||||
Sales and marketing | 125,541 | 146,641 | 133,137 | 216,634 | ||||||||||||
General and administrative | 52,025 | 54,711 | 47,299 | 97,172 | ||||||||||||
Total operating expenses | 229,537 | 255,368 | 234,404 | 369,511 | ||||||||||||
Operating income | 122,389 | 36,099 | 109,080 | 53,806 | ||||||||||||
Interest expense, net | (4,004 | ) | (6,078 | ) | (8,479 | ) | (8,460 | ) | ||||||||
Other (expense) income, net | (3,909 | ) | (6,965 | ) | 2,033 | 16,472 | ||||||||||
Income before income taxes | 114,476 | 23,056 | 102,634 | 61,818 | ||||||||||||
Provision for income taxes | 25,565 | 6,561 | 22,325 | 15,179 | ||||||||||||
Net income | $ | 88,911 | $ | 16,495 | $ | 80,309 | $ | 46,639 | ||||||||
Net income per share, basic and diluted | $ | 0.64 | $ | 0.12 | $ | 0.58 | $ | 0.34 | ||||||||
Weighted-average number of shares used in computing net income per share, basic and diluted | 138,982,872 | 138,982,872 | 138,982,872 | 138,982,872 |
SHARKNINJA GLOBAL SPV, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended | ||||||||||||||||
March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | |||||||||||||
Net cash (used in) provided by operating activities | $ | (101,130 | ) | $ | 87,056 | $ | 53,503 | $ | 165,535 | |||||||
Net cash (used in) provided by investing activities | $ | (11,134 | ) | $ | (27,531 | ) | $ | (24,773 | ) | $ | 11,054 | |||||
Net cash provided by (used in) financing activities | $ | 8,026 | $ | (40,050 | ) | $ | 26,895 | $ | (155,041 | ) |
Non-GAAP Financial Measures
We define Adjusted Net Sales as net sales as adjusted to exclude certain items that we do not consider indicative of our ongoing operating performance following the separation, including net sales from our Divestitures. We believe that Adjusted Net Sales is an appropriate measure of our performance because it eliminates the impact of our Divestitures that do not relate to the ongoing performance of our business.
The following table reconciles Adjusted Net Sales to the most comparable GAAP measure, net sales, for the periods presented:
Three Months Ended | ||||||||||||||||
($ in thousands, except %) | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | ||||||||||||
Net sales | $ | 809,626 | $ | 778,197 | $ | 946,897 | $ | 1,182,646 | ||||||||
Divested subsidiary adjustment(1) | (20,080 | ) | (21,790 | ) | (24,003 | ) | (31,561 | ) | ||||||||
Adjusted Net Sales | $ | 789,546 | $ | 756,407 | $ | 922,894 | $ | 1,151,085 |
(1) | Adjusted for net sales of $14.0 million, $14.1 million, $14.6 million, and $21.3 million from SharkNinja Co., Ltd. (“SNJP”) for the three months ended March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022, respectively; $6.1 million, $7.7 million, $9.4 million, and $10.3 million from the APAC distribution channels for the three months ended March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022, respectively, as if such Divestitures occurred on January 1, 2022. |
We define Adjusted Gross Profit as gross profit as adjusted to exclude certain items that we do not consider indicative of our ongoing operating performance following the separation, including the net sales and cost of sales from our Divestitures and the cost of sales from the Product Procurement Adjustment. We define Adjusted Gross Margin as Adjusted Gross Profit divided by Adjusted Net Sales. We believe that Adjusted Gross Profit and Adjusted Gross Margin are appropriate measures of our operating performance because each eliminates the impact our Divestitures and certain other adjustments that do not relate to the ongoing performance of our business.
The following table reconciles Adjusted Gross Profit and Adjusted Gross Margin to the most comparable GAAP measure, gross profit and gross margin, respectively, for the periods presented:
Three Months Ended | ||||||||||||||||
($ in thousands, except %) | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | ||||||||||||
Net sales | $ | 809,626 | $ | 778,197 | $ | 946,897 | $ | 1,182,646 | ||||||||
Cost of sales | (457,700 | ) | (486,730 | ) | (603,413 | ) | (759,329 | ) | ||||||||
Gross profit | 351,926 | 291,467 | 343,484 | 423,317 | ||||||||||||
Gross margin % | 43.5 | % | 37.5 | % | 36.3 | % | 35.8 | % | ||||||||
Divested subsidiary net sales adjustment(1) | (20,080 | ) | (21,790 | ) | (24,003 | ) | (31,561 | ) | ||||||||
Divested subsidiary cost of sales adjustment(2) | 11,945 | 13,991 | 15,387 | 23,183 | ||||||||||||
Product Procurement Adjustment(3) | 15,419 | 17,471 | 18,341 | 19,064 | ||||||||||||
Adjusted Gross Profit | $ | 359,210 | $ | 301,139 | $ | 353,209 | $ | 434,003 | ||||||||
Adjusted Net Sales | $ | 789,546 | $ | 756,407 | $ | 922,894 | $ | 1,151,085 | ||||||||
Adjusted Gross Margin | 45.5 | % | 39.8 | % | 38.3 | % | 37.7 | % |
(1) | Adjusted for net sales of $14.0 million, $14.1 million, $14.6 million, and $21.3 million from SharkNinja Co., Ltd. (“SNJP”) for the three months ended March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022, respectively; $6.1 million, $7.7 million, $9.4 million, and $10.3 million from the APAC distribution channels for the three months ended March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022, respectively, as if such Divestitures occurred on January 1, 2022. |
(2) | Adjusted for cost of sales of $7.3 million, $8.0 million, $8.2 million, and $15.5 million from SNJP for the three months ended March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022, respectively; $4.6 million, $6.0 million, $7.2 million, and $7.7 million from the APAC distribution channels for the three months ended respectively, as if such Divestitures occurred on January 1, 2022. |
(3) | Represents cost of sales of $15.4 million, $17.5 million, $18.3 million, and $19.1 million for the three months ended respectively, related to the Product Procurement Adjustment. As a result of the separation, we intend to purchase 100% of our inventory from one of our subsidiaries, SharkNinja (Hong Kong) Company Limited (“SNHK”), and will no longer purchase inventory from a purchasing office wholly owned by JS Global. Thus, the markup on all inventory purchased subsequent to the separation will be completely eliminated in consolidation. |
We define Adjusted Operating Income as operating income excluding (i) share-based compensation, (ii) certain litigation costs, (iii) amortization of certain acquired intangible assets, (iv) certain separation and distribution costs and (v) certain items that we do not consider indicative of our ongoing operating performance following the separation, including operating income from our Divestitures and cost of sales from our Product Procurement Adjustment.
The following table reconciles Adjusted Operating Income to the most comparable GAAP measure, operating income, for the periods presented:
Three Months Ended | ||||||||||||||||
($ in thousands) | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | ||||||||||||
Operating income | $ | 122,389 | $ | 36,099 | $ | 109,080 | $ | 53,806 | ||||||||
Share-based compensation(1) | 2,570 | 1,876 | 969 | 94 | ||||||||||||
Litigation costs(2) | 161 | 3,844 | 19 | 489 | ||||||||||||
Amortization of acquired intangible assets(3) | 4,897 | 4,897 | 4,897 | 4,896 | ||||||||||||
Separation and distribution related costs(4) | – | – | 275 | 2,621 | ||||||||||||
Executive Bonus (5) | – | – | – | 34,000 | ||||||||||||
Product Procurement Adjustment(6) | 15,419 | 17,471 | 18,341 | 19,064 | ||||||||||||
Divested subsidiary operating income adjustment(7) | (2,597 | ) | (546 | ) | (1,668 | ) | (282 | ) | ||||||||
Adjusted Operating Income | $ | 142,839 | $ | 63,641 | $ | 131,913 | $ | 114,688 |
(1) | Represents non-cash expense related to restricted stock unit awards issued from JS Global’s equity incentive plans. |
(2) | Represents litigation costs incurred for iRobot Corporation’s (“iRobot”) patent infringement claims and false advertising claims against us. |
(3) | Represents amortization of acquired intangible assets that we do not consider normal recurring operating expenses, as the intangible assets relate to JS Global’s acquisition of our business. We exclude amortization charges for these acquisition-related intangible assets for purposes of calculated Adjusted Net Income, although revenue is generated, in part, by these intangible assets, to eliminate the impact of these non-cash charges that are significantly impacted by the timing and valuation of JS Global’s acquisition of our business, as well as the inherent subjective nature of purchase price allocations. |
(4) | Represents certain costs incurred related to the separation and distribution from JS Global. |
(5) | Represents a one-time discretionary bonus. |
(6) | Represents cost of sales of $15.4 million, $17.5 million, $18.3 million, and $19.1 million for the three months ended respectively, related to the Product Procurement Adjustment. As a result of the separation, we intend to purchase 100% of our inventory from one of our subsidiaries, SNHK, and will no longer purchase inventory from a purchasing office wholly owned by JS Global. Thus, the markup on all inventory purchased subsequent to the separation will be completely eliminated in consolidation. |
(7) | Adjusted for operating income of $1.5 million, $(0.8) million, $(0.1) million, and $(1.8) million from SNJP for the three months ended March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022, respectively; $1.1 million, $1.3 million, $1.7 million, and $2.1 million from the APAC distribution channels for the three months ended March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022, respectively, as if the Divestitures occurred on January 1, 2022. |
We define Adjusted Net Income as net income excluding (i) share-based compensation, (ii) certain litigation costs, (iii) foreign currency gains and losses, net (iv) amortization of certain acquired intangible assets, (v) certain separation and distribution costs, (vi) certain items that we do not consider indicative of our ongoing operating performance following the separation, including net income from our Divestitures and cost of sales from our Product Procurement Adjustment and (vii) the tax impact of the adjusted items.
Adjusted Net Income Per Share is defined as Adjusted Net Income divided by the diluted weighted average number of ordinary shares.
The following table reconciles Adjusted Net Income and Adjusted Net Income Per Share to the most comparable GAAP measures, net income and net income per share, diluted, respectively, for the periods presented:
Three Months Ended | ||||||||||||||||
($ in thousands, except share and per share amounts) | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | ||||||||||||
Net income | $ | 88,911 | $ | 16,495 | $ | 80,309 | $ | 46,639 | ||||||||
Share-based compensation(1) | 2,570 | 1,876 | 969 | 94 | ||||||||||||
Litigation costs(2) | 161 | 3,844 | 19 | 489 | ||||||||||||
Foreign currency losses, net(3) | 4,720 | 7,902 | (839 | ) | (21,058 | ) | ||||||||||
Amortization of acquired intangible assets(4) | 4,897 | 4,897 | 4,897 | 4,896 | ||||||||||||
Separation and distribution related costs(5) | – | – | 275 | 2,621 | ||||||||||||
Executive Bonus (6) | – | – | – | 34,000 | ||||||||||||
Product Procurement Adjustment(7) | 15,419 | 17,471 | 18,341 | 19,064 | ||||||||||||
Tax impact of adjusting items(8) | (6,109 | ) | (7,918 | ) | (5,206 | ) | (8,823 | ) | ||||||||
Divested subsidiary net income adjustment(9) | (1,289 | ) | 1,865 | 479 | (2,513 | ) | ||||||||||
Adjusted Net Income | $ | 109,280 | $ | 46,432 | $ | 99,244 | $ | 75,409 | ||||||||
Net income per share, diluted | $ | 0.64 | $ | 0.12 | $ | 0.58 | $ | 0.34 | ||||||||
Adjusted Net Income Per Share | $ | 0.79 | $ | 0.33 | $ | 0.71 | $ | 0.54 | ||||||||
Diluted weighted-average number of shares used in computing net income per share and Adjusted Net Income Per Share(10) | 138,982,872 | 138,982,872 | 138,982,872 | 138,982,872 |
(1) | Represents non-cash expense related to restricted stock unit awards issued from JS Global’s equity incentive plans. |
(2) | Represents litigation costs incurred for iRobot’s patent infringement claims and false advertising claims against us. |
(3) | Represents foreign currency transaction gains and losses recognized from the remeasurement of transactions that were not denominated in the local functional currency, including gains and losses related to foreign currency derivatives not designated as hedging instruments. The total net (loss) gain recognized on our derivative instruments related to forward contracts outstanding not designated as hedging instruments included in the total of foreign currency losses, net, was $1.9 million, 0.2 million $3.8 million, and $22.7 million for the three months ended March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022, respectively. |
(4) | Represents amortization of acquired intangible assets that we do not consider normal recurring operating expenses, as the intangible assets relate to JS Global’s acquisition of our business. We exclude amortization charges for these acquisition-related intangible assets for purposes of calculated Adjusted Net Income, although revenue is generated, in part, by these intangible assets, to eliminate the impact of these non-cash charges that are significantly impacted by the timing and valuation of JS Global’s acquisition of our business, as well as the inherent subjective nature of purchase price allocations. |
(5) | Represents certain costs incurred related to the separation and distribution from JS Global. |
(6) | Represents a one-time discretionary bonus. |
(7) | Represents cost of sales of $15.4 million, $17.5 million, $18.3 million, and $19.1 million for the three months ended respectively, related to the Product Procurement Adjustment. As a result of the separation, we intend to purchase 100% of our inventory from one of our subsidiaries, SNHK, and will no longer purchase inventory from a purchasing office wholly owned by JS Global. Thus, the markup on all inventory purchased subsequent to the separation will be completely eliminated in consolidation. |
(8) | Represents the income tax effects of the adjustments included in the reconciliation of net income to Adjusted Net Income determined using the tax rate of 22.0%, which approximates our effective tax rate, excluding the divested subsidiary net income adjustment described in footnote (9). |
(9) | Adjusted for net income (loss) of $0.4 million, $(2.9) million, $(1.8) million, and $0.9 from SNJP for the three months ended March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022, respectively; $0.9 million, $1.0 million, $1.3 million, and $1.6 million from the APAC distribution channels for the three months ended respectively, as if the Divestitures occurred on January 1, 2022. |
(10) | In calculating net income per share and Adjusted Net Income Per Share, the Company has used the number of shares transferred in the separation and distribution for the denominator. |
We define EBITDA as net income excluding: (i) interest expense, net, (ii) provision for income taxes and (iii) depreciation and amortization. We define Adjusted EBITDA as EBITDA excluding (i) share-based compensation cost, (ii) certain litigation costs, (iii) foreign currency gains and losses, net, (iv) certain separation and distribution costs and (v) certain items that we do not consider indicative of our ongoing operating performance following the separation, including net income from our Divestitures and cost of sales from our Product Procurement Adjustment. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by Adjusted Net Sales. We believe EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are appropriate measures because they facilitate a comparison of our operating performance on a consistent basis from period to period that, when viewed in combination with our results according to GAAP, we believe provide a more complete understanding of the factors and trends affecting our business than GAAP measures alone.
The following table reconciles EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to the most comparable GAAP measure, net income, for the periods presented:
Three Months Ended | ||||||||||||||||
($ in thousands, except %) | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | ||||||||||||
Net income | $ | 88,911 | $ | 16,495 | $ | 80,309 | $ | 46,639 | ||||||||
Interest expense, net | 4,004 | 6,078 | 8,479 | 8,460 | ||||||||||||
Provision for income taxes | 25,565 | 6,561 | 22,325 | 15,179 | ||||||||||||
Depreciation and amortization | 20,204 | 19,961 | 21,395 | 25,148 | ||||||||||||
EBITDA | $ | 138,684 | $ | 49,095 | $ | 132,508 | $ | 95,426 | ||||||||
Share-Based compensation(1) | 2,570 | 1,876 | 969 | 94 | ||||||||||||
Litigation costs(2) | 161 | 3,844 | 19 | 489 | ||||||||||||
Foreign currency losses, net(3) | 4,720 | 7,902 | (839 | ) | (21,058 | ) | ||||||||||
Separation and distribution related costs(4) | – | – | 275 | 2,621 | ||||||||||||
Executive Bonus (5) | – | – | – | 34,000 | ||||||||||||
Product Procurement Adjustment(6) | 15,419 | 17,471 | 18,341 | 19,064 | ||||||||||||
Divested subsidiary Adjusted EBITDA adjustment(7) | (2,319 | ) | 978 | (459 | ) | (2,237 | ) | |||||||||
Adjusted EBITDA | $ | 159,235 | $ | 81,166 | $ | 150,814 | $ | 128,399 | ||||||||
Adjusted Net Sales | $ | 789,546 | $ | 756,407 | $ | 922,894 | $ | 1,151,085 | ||||||||
Adjusted EBITDA Margin | 20.2 | % | 10.7 | % | 16.3 | % | 11.2 | % |
(1) | Represents non-cash expense related to restricted stock unit awards issued from JS Global’s equity incentive plans. |
(2) | Represents litigation costs incurred for iRobot’s patent infringement claims and false advertising claims against us. |
(3) | Represents foreign currency transaction gains and losses recognized from the remeasurement of transactions that were not denominated in the local functional currency, including gains and losses related to foreign currency derivatives not designated as hedging instruments. The total net (loss) gain recognized on our derivative instruments related to forward contracts outstanding not designated as hedging instruments included in the total of foreign currency losses, net, was $1.9 million, 0.2 million $3.8 million, and $22.7 million for the three months ended March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022, respectively. |
(4) | Represents certain costs incurred related to the separation and distribution from JS Global. |
(5) | Represents a one-time discretionary bonus. |
(6) | Represents cost of sales of $15.4 million, $17.5 million, $18.3 million, and $19.1 million for the three months ended respectively, related to the Product Procurement Adjustment. As a result of the separation, we intend to purchase 100% of our inventory from one of our subsidiaries, SharkNinja (Hong Kong) Company Limited (“SNHK”), and will no longer purchase inventory from a purchasing office wholly owned by JS Global. Thus, the markup on all inventory purchased subsequent to the separation will be completely eliminated in consolidation. |
(7) | Adjusted for Adjusted EBITDA of $1.2 million, $(2.3) million, $(1.3) million, and $0.2 million from SNJP for the three months ended respectively; and $1.1 million, $1.3 million, $1.7 million, and $2.1 million, from the APAC distribution channels for the three months ended respectively, as if the Divestitures occurred on January 1, 2022. The divested subsidiary Adjusted EBITDA adjustment represents net (loss) income from our Divestitures excluding interest expense, income tax expense, depreciation and amortization expense and foreign currency gains and losses recorded at the subsidiary level. |