Attached files
| file | filename |
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| EX-99.2 - EXHIBIT 99.2 - Under Armour, Inc. | exhibit9923q15.htm |
| 8-K - FORM 8-K - Under Armour, Inc. | october2220158-k.htm |
Exhibit 99.1
Under Armour, Inc. |  | |
1020 Hull Street | ||
Baltimore, MD 21230 | ||
CONTACTS | ||
Investors: | ||
Tom Shaw, CFA | ||
Under Armour, Inc. | ||
Tel: 410.843.7676 | ||
Media: | ||
Diane Pelkey | ||
Under Armour, Inc. | ||
Tel: 410.246.5927 | ||
FOR IMMEDIATE RELEASE
UNDER ARMOUR REPORTS THIRD QUARTER NET REVENUES GROWTH OF 28%;
RAISES FULL YEAR OUTLOOK
• | Third Quarter Net Revenues Increased 28% to $1.20 Billion, First Billion Dollar Quarter in Company's History |
• | Raises 2015 Net Revenues Outlook to Approximately $3.91 Billion (+27%) |
• | Updates 2015 Operating Income Outlook to Approximately $408 Million (+15%), Inclusive of the Impact of the Connected Fitness Acquisitions |
Baltimore, MD (October 22, 2015) - Under Armour, Inc. (NYSE: UA) today announced financial results for the third quarter ended September 30, 2015. Net revenues increased 28% in the third quarter of 2015 to $1.20 billion compared with net revenues of $938 million in the prior year's period. On a currency neutral basis, net revenues increased 31% compared with the prior year's period. Net income increased 13% in the third quarter of 2015 to $100 million compared with $89 million in the prior year's period and diluted earnings per share for the third quarter of 2015 were $0.45 compared with $0.41 per share in the prior year's period, inclusive of the impacts of the Endomondo and MyFitnessPal acquisitions.
Third quarter apparel net revenues increased 23% to $866 million compared with $705 million in the same period of the prior year, driven primarily by enhanced product offerings in baselayer and the expanded Storm innovation platform. Third quarter footwear net revenues increased 61% to $196 million from $122 million in the prior year's period, primarily reflecting continued product expansion across the running, basketball, and training categories. Third quarter accessories net revenues increased 22% to $104 million from $85 million in the prior year's period, driven primarily by new introductions across the bags category. Direct-to-Consumer net revenues, which represented 26% of total net revenues for the third quarter, grew 28% year-over-year. International net revenues, which represented 11% of total net revenues for the third quarter, grew 52% year-over-year.
Kevin Plank, Chairman and CEO of Under Armour, Inc., stated, "Our scoreboard in the third quarter not only marked our 22nd straight quarter of at least 20% net revenue growth, but also our first $1 billion quarter. Our ongoing success in 2015 has been driven by innovative, head-to-toe product, combined with game-changing performances by our athletes. Leveraging these great successes throughout 2015, our current Rule Yourself global marketing campaign highlights the training and dedication that drives our athletes to be their best on the biggest stages. The campaign features Tom Brady, Misty Copeland, Stephen Curry, and recently named PGA Tour Player of the Year Jordan Spieth. When combined with over 150 million unique registered users across our Connected Fitness community, logging more than 6.5 billion food items and 1.5 billion workouts year-to-date, our brand is resonating with more athletes than ever before and we are investing to not only build deeper relationships with these athletes today, but fulfill our longer term vision to change the way athletes live."
Gross margin for the third quarter of 2015 was 48.8% compared with 49.6% in the prior year's period, primarily reflecting the impacts of foreign exchange rates and sales mix, partially offset by favorable product margins. Selling, general and administrative expenses as a percentage of net revenues were 34.6% in the third quarter of 2015 compared with 34.0% in the prior year's period, primarily reflecting 2015 openings of global Brand House stores and investments to support the Connected Fitness business. Third quarter operating income increased 17% to $171 million compared with $146 million in the prior year's period.
Balance Sheet Highlights
Cash and cash equivalents decreased 36% to $159 million at September 30, 2015 compared with $249 million at September 30, 2014. Inventory at September 30, 2015 increased 36% to $867 million compared with $637 million at September 30, 2014. Total debt increased to $905 million at September 30, 2015 compared with $192 million at September 30, 2014, primarily reflecting borrowing to fund the two Connected Fitness acquisitions.
Updated 2015 Outlook
The Company had previously anticipated 2015 net revenues of approximately $3.84 billion, representing growth of 25% over 2014, and 2015 operating income in the range of $405 million to $408 million, representing growth of 14% to 15% over 2014. Based on current visibility, the Company expects 2015 net revenues of approximately $3.91 billion, representing growth of 27% over 2014 and 2015 operating income of approximately $408 million, representing growth of 15% over 2014. The 2015 guidance continues to reflect the net dilutive impact from the Connected Fitness acquisitions, as well as the impact of the strong dollar negatively affecting our operating margin within our international businesses.
Mr. Plank concluded, "We are experiencing powerful brand momentum in 2015 and we continue to invest to capitalize on our success in the near-term while establishing the foundation for sustainable growth in the future. We are confident that the building blocks to reach our Investor Day target of $7.5 billion in net revenues by 2018 are firmly in place. As we think bigger about the opportunity of our brand, an ongoing focus on investing in key areas like footwear, international, Connected Fitness and manufacturing capability will position us for the long runway of growth beyond just the next three years. Still, with all the success we have seen to date, we firmly believe that we are just getting started."
Conference Call and Webcast
The Company will provide additional commentary regarding its third quarter results as well as its updated 2015 outlook during its earnings conference call today, October 22nd, at 8:30 a.m. ET. The call will be webcast live at http://investor.underarmour.com/events.cfm and will be archived and available for replay approximately three hours after the live event. Additional supporting materials related to the call will also be available at http://investor.underarmour.com. The Company's financial results are also available online at http://investor.underarmour.com/results.cfm.
Non-GAAP Financial Information
The Company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”). However, this press release refers to certain “currency neutral” financial information, which is a non-GAAP financial measure. The Company provides a reconciliation of this non-GAAP measure to the most directly comparable financial measure calculated in accordance with GAAP. See the end of this press release for this reconciliation.
Currency neutral financial information is calculated to exclude foreign exchange impact. Management believes this information is useful to investors to facilitate a comparison of the Company's results of operations period-over-period. This non-GAAP financial measure should not be considered in isolation and should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP. In addition, the Company's non-GAAP financial information may not be comparable to similarly titled measures reported by other companies.
About Under Armour, Inc.
Under Armour (NYSE: UA), the originator of performance footwear, apparel and equipment, revolutionized how athletes across the world dress. Designed to make all athletes better, the brand's innovative products are sold worldwide to athletes at all levels. The Under Armour Connected Fitness™ platform powers the world’s largest digital health and fitness community through a suite of applications: UA Record, MapMyFitness, Endomondo and MyFitnessPal. The Under Armour global headquarters is in Baltimore, Maryland. For further information, please visit the Company's website at www.uabiz.com.
Forward Looking Statements
Some of the statements contained in this press release constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the implementation of our marketing and branding strategies, and the future benefits and opportunities from acquisitions. In many cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “outlook,” “potential” or the negative of these terms or other comparable terminology. The forward-looking statements contained in this press release reflect our current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to: changes in general economic or market conditions that could affect consumer spending and the financial health of our retail customers; our ability to effectively manage our growth and a more complex global business; our ability to successfully manage or realize expected results from acquisitions and other significant investments or capital expenditures; our ability to effectively develop and launch new, innovative and updated products; our ability to accurately forecast consumer demand for our products and manage our inventory in response to changing demands; increased competition causing us to lose market share or reduce the prices of our products or to increase significantly our marketing efforts; fluctuations in the costs of our products; loss of key suppliers or manufacturers or failure of our suppliers or manufacturers to produce or deliver our products in a timely or cost-effective manner, including due to port disruptions; our ability to further expand our business globally and to drive brand awareness and consumer acceptance of our products in other countries; our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results; risks related to foreign currency exchange rate fluctuations; our ability to effectively market and maintain a positive brand image; our ability to comply with trade and other regulations; the availability, integration and effective operation of information systems and other technology, as well as any potential interruption in such systems or technology; risks related to data security or privacy breaches; our ability to raise additional capital required to grow our business on terms acceptable to us; our potential exposure to litigation and other proceedings; and our ability to attract and retain the services of our senior management and key employees. The forward-looking statements contained in this press release reflect our views and assumptions only as of the date of this press release. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
(Tables Follow)
Under Armour, Inc.
For the Quarter and Nine Months Ended September 30, 2015 and 2014
(Unaudited; in thousands, except per share amounts)
CONSOLIDATED STATEMENTS OF INCOME
Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||
2015 | % of Net Revenues | 2014 | % of Net Revenues | 2015 | % of Net Revenues | 2014 | % of Net Revenues | |||||||||||||||||||||
Net revenues | $ | 1,204,109 | 100.0 | % | $ | 937,908 | 100.0 | % | $ | 2,792,627 | 100.0 | % | $ | 2,189,169 | 100.0 | % | ||||||||||||
Cost of goods sold | 616,949 | 51.2 | % | 472,608 | 50.4 | % | 1,448,750 | 51.9 | % | 1,123,227 | 51.3 | % | ||||||||||||||||
Gross profit | 587,160 | 48.8 | % | 465,300 | 49.6 | % | 1,343,877 | 48.1 | % | 1,065,942 | 48.7 | % | ||||||||||||||||
Selling, general and administrative expenses | 415,763 | 34.6 | % | 319,194 | 34.0 | % | 1,112,912 | 39.8 | % | 858,286 | 39.2 | % | ||||||||||||||||
Income from operations | 171,397 | 14.2 | % | 146,106 | 15.6 | % | 230,965 | 8.3 | % | 207,656 | 9.5 | % | ||||||||||||||||
Interest expense, net | (4,100 | ) | (0.3 | )% | (1,535 | ) | (0.2 | )% | (10,572 | ) | (0.4 | )% | (3,608 | ) | (0.2 | )% | ||||||||||||
Other expense, net | (3,239 | ) | (0.3 | )% | (3,355 | ) | (0.3 | )% | (5,038 | ) | (0.2 | )% | (3,982 | ) | (0.2 | )% | ||||||||||||
Income before income taxes | 164,058 | 13.6 | % | 141,216 | 15.1 | % | 215,355 | 7.7 | % | 200,066 | 9.1 | % | ||||||||||||||||
Provision for income taxes | 63,581 | 5.3 | % | 52,111 | 5.6 | % | 88,384 | 3.2 | % | 79,733 | 3.6 | % | ||||||||||||||||
Net income | $ | 100,477 | 8.3 | % | $ | 89,105 | 9.5 | % | $ | 126,971 | 4.5 | % | $ | 120,333 | 5.5 | % | ||||||||||||
Net income available per common share | ||||||||||||||||||||||||||||
Basic | $ | 0.47 | $ | 0.42 | $ | 0.59 | $ | 0.56 | ||||||||||||||||||||
Diluted | $ | 0.45 | $ | 0.41 | $ | 0.58 | $ | 0.55 | ||||||||||||||||||||
Weighted average common shares outstanding | ||||||||||||||||||||||||||||
Basic | 215,743 | 213,522 | 215,347 | 213,035 | ||||||||||||||||||||||||
Diluted | 221,053 | 217,982 | 220,708 | 217,601 | ||||||||||||||||||||||||
Under Armour, Inc.
For the Quarter and Nine Months Ended September 30, 2015 and 2014
(Unaudited; in thousands)
NET REVENUES BY PRODUCT CATEGORY
Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
2015 | 2014 | % Change | 2015 | 2014 | % Change | |||||||||||||||||
Apparel | $ | 865,514 | $ | 704,557 | 22.8 | % | $ | 1,936,221 | $ | 1,583,834 | 22.2 | % | ||||||||||
Footwear | 196,279 | 121,597 | 61.4 | % | 510,864 | 345,177 | 48.0 | % | ||||||||||||||
Accessories | 103,564 | 84,949 | 21.9 | % | 249,755 | 196,419 | 27.2 | % | ||||||||||||||
Total net sales | 1,165,357 | 911,103 | 27.9 | % | 2,696,840 | 2,125,430 | 26.9 | % | ||||||||||||||
Licensing revenues | 24,313 | 22,307 | 9.0 | % | 59,355 | 49,800 | 19.2 | % | ||||||||||||||
Connected Fitness | 14,439 | 4,498 | 221.0 | % | 36,432 | 13,939 | 161.4 | % | ||||||||||||||
Total net revenues | $ | 1,204,109 | $ | 937,908 | 28.4 | % | $ | 2,792,627 | $ | 2,189,169 | 27.6 | % | ||||||||||
NET REVENUES BY SEGMENT
Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
2015 | 2014 | % Change | 2015 | 2014 | % Change | |||||||||||||||||
North America | $ | 1,059,440 | $ | 847,563 | 25.0 | % | $ | 2,440,728 | $ | 1,988,141 | 22.8 | % | ||||||||||
Other foreign countries | 130,230 | 85,847 | 51.7 | % | 315,467 | 187,089 | 68.6 | % | ||||||||||||||
Connected Fitness | 14,439 | 4,498 | 221.0 | % | 36,432 | 13,939 | 161.4 | % | ||||||||||||||
Total net revenues | $ | 1,204,109 | $ | 937,908 | 28.4 | % | $ | 2,792,627 | $ | 2,189,169 | 27.6 | % | ||||||||||
OPERATING INCOME BY SEGMENT
Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
2015 | 2014 | % Change | 2015 | 2014 | % Change | |||||||||||||||||
North America | $ | 181,822 | $ | 147,509 | 23.3 | % | $ | 272,543 | $ | 227,045 | 20.0 | % | ||||||||||
Other foreign countries | 6,180 | 3,817 | 61.9 | % | 6,126 | (3,910 | ) | 256.7 | % | |||||||||||||
Connected Fitness | (16,605 | ) | (5,220 | ) | (218.1 | )% | (47,704 | ) | (15,479 | ) | (208.2 | )% | ||||||||||
Total operating income | $ | 171,397 | $ | 146,106 | 17.3 | % | $ | 230,965 | $ | 207,656 | 11.2 | % | ||||||||||
Under Armour, Inc.
As of September 30, 2015, December 31, 2014 and September 30, 2014
(Unaudited; in thousands)
CONDENSED CONSOLIDATED BALANCE SHEETS
As of 9/30/15 | As of 12/31/14 | As of 9/30/14 | ||||||||||
Assets | ||||||||||||
Cash and cash equivalents | $ | 159,398 | $ | 593,175 | $ | 249,469 | ||||||
Accounts receivable, net | 551,188 | 279,835 | 449,221 | |||||||||
Inventories | 867,082 | 536,714 | 637,459 | |||||||||
Prepaid expenses and other current assets | 136,936 | 87,177 | 86,914 | |||||||||
Deferred income taxes | 60,692 | 52,498 | 40,840 | |||||||||
Total current assets | 1,775,296 | 1,549,399 | 1,463,903 | |||||||||
Property and equipment, net | 478,418 | 305,564 | 264,629 | |||||||||
Goodwill | 591,872 | 123,256 | 123,356 | |||||||||
Intangible assets, net | 79,692 | 26,230 | 28,850 | |||||||||
Deferred income taxes | 42,866 | 33,570 | 47,602 | |||||||||
Other long term assets | 67,358 | 57,064 | 49,770 | |||||||||
Total assets | $ | 3,035,502 | $ | 2,095,083 | $ | 1,978,110 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||||
Revolving credit facility, current | $ | 300,000 | $ | — | $ | — | ||||||
Accounts payable | 274,285 | 210,432 | 273,687 | |||||||||
Accrued expenses | 188,266 | 147,681 | 143,299 | |||||||||
Current maturities of long term debt | 42,124 | 28,951 | 19,524 | |||||||||
Other current liabilities | 43,929 | 34,563 | 53,969 | |||||||||
Total current liabilities | 848,604 | 421,627 | 490,479 | |||||||||
Long term debt, net of current maturities | 362,550 | 255,250 | 172,124 | |||||||||
Revolving credit facility, long term | 200,000 | — | — | |||||||||
Other long term liabilities | 89,094 | 67,906 | 61,366 | |||||||||
Total liabilities | 1,500,248 | 744,783 | 723,969 | |||||||||
Total stockholders’ equity | 1,535,254 | 1,350,300 | 1,254,141 | |||||||||
Total liabilities and stockholders’ equity | $ | 3,035,502 | $ | 2,095,083 | $ | 1,978,110 | ||||||
Under Armour, Inc.
For the Nine Months Ended September 30, 2015 and 2014
(Unaudited; in thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, | ||||||||
2015 | 2014 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 126,971 | $ | 120,333 | ||||
Adjustments to reconcile net income to net cash used in operating activities | ||||||||
Depreciation and amortization | 72,211 | 52,391 | ||||||
Unrealized foreign currency exchange rate losses | 24,677 | 4,881 | ||||||
Loss on disposal of property and equipment | 434 | 78 | ||||||
Stock-based compensation | 44,800 | 38,965 | ||||||
Deferred income taxes | (15,266 | ) | (19,783 | ) | ||||
Changes in reserves and allowances | 19,577 | 10,794 | ||||||
Changes in operating assets and liabilities, net of effects of acquisitions: | ||||||||
Accounts receivable | (288,687 | ) | (248,256 | ) | ||||
Inventories | (357,874 | ) | (176,770 | ) | ||||
Prepaid expenses and other assets | (52,629 | ) | (20,282 | ) | ||||
Accounts payable | 58,155 | 118,236 | ||||||
Accrued expenses and other liabilities | 44,863 | 20,180 | ||||||
Income taxes payable and receivable | 9,320 | 26,737 | ||||||
Net cash used in operating activities | (313,448 | ) | (72,496 | ) | ||||
Cash flows from investing activities | ||||||||
Purchases of property and equipment | (226,733 | ) | (96,596 | ) | ||||
Purchase of businesses, net of cash acquired | (539,460 | ) | (10,924 | ) | ||||
Purchases of available-for-sale securities | (80,272 | ) | — | |||||
Sales of available-for-sale securities | 68,314 | — | ||||||
Purchases of other assets | (2,670 | ) | (724 | ) | ||||
Net cash used in investing activities | (780,821 | ) | (108,244 | ) | ||||
Cash flows from financing activities | ||||||||
Proceeds from revolving credit facility | 500,000 | — | ||||||
Payments on revolving credit facility | — | (100,000 | ) | |||||
Proceeds from term loan | 150,000 | 150,000 | ||||||
Payments on long term debt | (29,527 | ) | (11,275 | ) | ||||
Excess tax benefits from stock-based compensation arrangements | 40,768 | 33,056 | ||||||
Proceeds from exercise of stock options and other stock issuances | 7,527 | 14,060 | ||||||
Payments of debt financing costs | (947 | ) | (1,714 | ) | ||||
Net cash provided by financing activities | 667,821 | 84,127 | ||||||
Effect of exchange rate changes on cash and cash equivalents | (7,329 | ) | (1,407 | ) | ||||
Net decrease in cash and cash equivalents | (433,777 | ) | (98,020 | ) | ||||
Cash and cash equivalents | ||||||||
Beginning of period | 593,175 | 347,489 | ||||||
End of period | $ | 159,398 | $ | 249,469 | ||||
Non-cash investing and financing activities | ||||||||
Increase (decrease) in accrual for property and equipment | $ | 4,800 | $ | (10,601 | ) | |||
Property and equipment acquired under build-to-suit leases | 5,631 | — | ||||||
Non-cash acquisition of business | — | 11,233 | ||||||
Under Armour, Inc.
(Unaudited)
The table below presents the reconciliation of non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP. See "Non-GAAP Financial Information" above for further information regarding the Company's use of non-GAAP financial measures.
CURRENCY NEUTRAL NET REVENUE GROWTH RECONCILIATION
September 30, 2015 | ||||||
Total Net Revenue | Quarter Ended | Nine Months Ended | ||||
Currency neutral net revenue growth - Non-GAAP | 31.1 | % | 29.9 | % | ||
Foreign exchange impact | (2.7 | )% | (2.3 | )% | ||
Net revenue growth - GAAP | 28.4 | % | 27.6 | % | ||
North America | ||||||
Currency neutral net revenue growth - Non-GAAP | 26.3 | % | 23.9 | % | ||
Foreign exchange impact | (1.3 | )% | (1.1 | )% | ||
Net revenue growth - GAAP | 25.0 | % | 22.8 | % | ||
Other foreign countries | ||||||
Currency neutral net revenue growth - Non-GAAP | 67.8 | % | 84.0 | % | ||
Foreign exchange impact | (16.1 | )% | (15.4 | )% | ||
Net revenue growth - GAAP | 51.7 | % | 68.6 | % | ||
BRAND HOUSE AND FACTORY HOUSE DOOR COUNT
As of September 30, | ||||
2015 | 2014 | |||
Factory House | 137 | 121 | ||
Brand House | 10 | 5 | ||
North America total doors | 147 | 126 | ||
Factory House | 7 | 3 | ||
Brand House | 19 | 8 | ||
Other foreign countries total doors | 26 | 11 | ||
Factory House | 144 | 124 | ||
Brand House | 29 | 13 | ||
Total doors | 173 | 137 | ||