UARM Under Armour

Under Armour, Inc. (NASDAQ: UARM) today announced financial results for the third quarter ended September 30, 2006. Net revenues increased 47.5% in the third quarter to $127.7 million compared to net revenues of $86.6 million in the third quarter of 2005. Apparel revenues for Men�s, Women�s, and Youth increased 41.8% to $116.7 million. Third quarter net income increased 90.4% to $16.0 million compared to $8.4 million in the same period of 2005. Diluted earnings per share were $0.32, on weighted average common shares outstanding of 49.6 million compared to $0.20 per share on weighted average common shares outstanding of 39.3 million in the third quarter of the prior year. The Company received a $2.3 million benefit to net income, or $0.05 per diluted share, as a result of the impact of new state tax credits. �Our growth this quarter reflects the Brand�s momentum both at retail and within the entire athletic landscape,� stated Kevin A. Plank, Chairman and CEO of Under Armour, Inc. �We believe the shift away from standard cotton to performance products at all levels of sport continues to fuel growth in our core categories while also creating a demand for new product lines and tip-of-spear product extensions. We remain committed to serving the needs of the athlete with an innovative and authentic focus.� Apparel revenues grew 41.8% for the quarter due to continued strength in the Men�s, Women�s, and Youth businesses. These businesses benefited from strength in core product categories and an increased presence of the Brand at retail. The training and compression categories were particularly strong and were the primary drivers of revenue growth. Gross margin was 50.6% compared to 49.6% in last year�s third quarter, primarily driven by improved sourcing initiatives. Selling, general and administrative expenses were 33.4% of net revenues in the third quarter of 2006 compared to 32.9% in the same period of the prior year. This increase reflects planned investments in growth initiatives, such as international and footwear, as well as additional costs associated with being a public company. Increasing Outlook for 2006 Based on the strength of the Brand year-to-date, Under Armour is increasing its outlook for 2006. The Company now expects annual net revenues in the range of $410 million to $420 million, a 46% to 49% increase over 2005, and annual net income in the range of $38.5 million to $39.5 million. The Company anticipates an additional $1.0 million benefit from new state tax credits expected to be recognized in the fourth quarter, realizing an effective tax rate of 33.6% for the full year. The Company continues to expect fully diluted weighted average shares outstanding of approximately 50 million for 2006. Preliminary Outlook for 2007 The Company has previously stated its long-term growth targets of 20% - 25% for the top and bottom line. However, based on the continued strength of the Brand and its ability to extend product scope and distribution, the Company believes 2007 net revenues and income from operations will exceed the long-term 20% - 25% growth targets. Mr. Plank concluded, �Under Armour is a growth company. Our focus remains on achieving all of our strategic and financial goals while continuing to assemble and invest in building the Brand globally. We remain diligent about our reinvestment in four areas of concentration: Aggressive research and development of performance products, impactful marketing of our succinct Brand messages, building our international and footwear businesses, and strengthening our operations and systems infrastructure.� Conference Call and Webcast Under Armour will host a conference call and webcast to discuss its financial results today, October 31st, at 8:30 a.m. EST. This call will be webcast live at investor.underarmour.com 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 investor.underarmour.com. The Company's financial results are also available online at investor.underarmour.com. About Under Armour, Inc. Under Armour� (NASDAQ: UARM) is a leading developer, marketer and distributor of branded performance apparel, footwear and accessories. The brand's moisture-wicking synthetic fabrications are engineered in many different designs and styles for wear in nearly every climate to provide a performance alternative to traditional natural fiber products. The Company's products are sold worldwide and worn by professional football, baseball, and soccer players, as well as athletes in major collegiate and Olympic sports. The Under Armour European headquarters is located in Amsterdam�s Olympic Stadium, and its global headquarters is located in Baltimore, MD. For further information, please visit the Company�s website at www.underarmour.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 development and introduction of new products, and the implementation of our marketing and branding strategies. 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: our ability to manage our growth effectively; our ability to maintain effective internal controls; increased competition causing us to reduce the prices of our products or to increase significantly our marketing efforts in order to avoid losing market share; changes in consumer preferences or the reduction in demand for performance apparel and other products; our ability to accurately forecast consumer demand for our products; reduced demand for sporting goods and apparel generally; failure of our suppliers or manufacturers to produce or deliver our products in a timely or cost-effective manner; our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results; our ability to effectively market and maintain a positive brand image; the availability and effective operation of management information systems and other technology; our ability to attract and maintain the services of our senior management and key employees; and changes in general economic or market conditions, including as a result of political or military unrest or terrorist attacks. 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. Under Armour, Inc. Quarter and Nine Months Ended September 30, 2006 and 2005 (in thousands, except per share amounts) � CONDENSED CONSOLIDATED STATEMENTS OF INCOME � Quarter Ended 9/30/06 � % of Net Revenues � Quarter Ended 9/30/05 � % of Net Revenues Nine Months Ended 9/30/06 � % of Net Revenues � Nine Months Ended 9/30/05 � % of Net Revenues � Net revenues $ 127,745� 100.0% $ 86,606� 100.0% $ 295,406� 100.0% $ 193,750� 100.0% Cost of goods sold � 63,070� � 49.4% � � 43,641� � 50.4% � 148,212� � 50.2% � � 100,396� � 51.8% Gross profit 64,675� 50.6% 42,965� 49.6% 147,194� 49.8% 93,354� 48.2% � Operating expenses Selling, general and administrative expenses � 42,692� � 33.4% � � 28,482� � 32.9% � 107,662� � 36.4% � � 70,329� � 36.3% � Income from operations 21,983� 17.2% 14,483� 16.7% 39,532� 13.4% 23,025� 11.9% � Other income (expense) Interest income (expense), net � 177� � 0.1% � � (836) � (0.9%) � 1,058� � 0.3% � � (2,124) � (1.1%) � Income before income taxes 22,160� 17.3% 13,647� 15.8% 40,590� 13.7% 20,901� 10.8% Provision for income taxes � 6,190� � 4.8% � � 5,261� � 6.1% � 13,462� � 4.5% � � 8,176� � 4.2% � Net income � 15,970� � 12.5% � � 8,386� � 9.7% � 27,128� � 9.2% � � 12,725� � 6.6% � Accretion of and cumulative preferred dividends on Series A Preferred Stock � --� � 0.0% � � 599� � 0.7% � --� � 0.0% � � 1,796� � 1.0% � Net income available to common shareholders $ 15,970� � 12.5% � $ 7,787� � 9.0% $ 27,128� � 9.2% � $ 10,929� � 5.6% � Net income available per common share Basic $ 0.34� $ 0.21� $ 0.58� $ 0.30� Diluted $ 0.32� $ 0.20� $ 0.55� $ 0.29� � Weighted average common shares outstanding Basic 47,164� 36,571� 46,848� 35,871� Diluted 49,599� 39,324� 49,512� 38,064� NET REVENUES BY PRODUCT CATEGORY � Quarter Ended 9/30/06 � Quarter Ended 9/30/05 � % Change� Nine Months Ended 9/30/06 � Nine Months Ended 9/30/05 � % Change� � Mens $ 79,233� $ 57,476� 37.9% $ 173,620� $ 129,545� 34.0% Womens 26,513� 18,067� 46.8% 59,586� 36,770� 62.1% Youth � 10,980� � � 6,783� 61.9% � 22,095� � � 13,241� 66.9% Apparel 116,726� 82,326� 41.8% 255,301� 179,556� 42.2% Footwear 2,001� --� --� 17,585� --� --� Accessories � 3,794� � � 1,050� 261.3% � 11,481� � � 7,359� 56.0% Total net sales 122,521� 83,376� 47.0% 284,367� 186,915� 52.1% Licensing revenues � 5,224� � � 3,230� 61.7% � 11,039� � � 6,835� 61.5% Total net revenues $ 127,745� � $ 86,606� 47.5% $ 295,406� � $ 193,750� 52.5% Under Armour, Inc. As of September 30, 2006, December 31, 2005 and September 30, 2005 (in thousands) CONDENSED CONSOLIDATED BALANCE SHEETS As of 9/30/06 � As of 12/31/05 � As of 9/30/05 Assets Cash and cash equivalents $ 44,257� $ 62,977� $ 324� Accounts receivable, net 89,667� 53,132� 58,690� Inventories 74,972� 53,607� 50,277� Prepaid expenses, income taxes receivable and other current assets 8,105� 5,252� 4,900� Deferred income taxes � 12,774� � � 6,822� � � 8,185� � Total current assets 229,775� 181,790� 122,376� � Property and equipment, net 25,804� 20,865� 20,192� Intangible asset, net 8,250� --� --� Deferred income taxes 192� --� --� Other non-current assets � 948� � � 1,032� � � 1,955� � Total assets $ 264,969� � $ 203,687� � $ 144,523� � Liabilities, Mandatorily Redeemable Securities and Stockholders� Equity Revolving credit facility $ --� $ --� $ 23,101� Accounts payable, accrued expenses and income taxes payable 60,941� 43,864� 44,942� Current maturities of long term debt � 3,626� � � 3,808� � � 6,486� � Total current liabilities 64,567� 47,672� 74,529� � Long term debt, net of current maturities 3,593� 4,583� 26,955� Deferred income taxes --� 330� 586� Other long term liabilities � 396� � � 272� � � 215� � Total liabilities 68,556� 52,857� 102,285� � Mandatorily Redeemable Series A Preferred Stock --� --� 8,488� � Total stockholders� equity � 196,413� � � 150,830� � � 33,750� � Total liabilities, mandatorily redeemable securities and stockholders� equity $ 264,969� � $ 203,687� � $ 144,523� Under Armour, Inc. (NASDAQ: UARM) today announced financial results for the third quarter ended September 30, 2006. Net revenues increased 47.5% in the third quarter to $127.7 million compared to net revenues of $86.6 million in the third quarter of 2005. Apparel revenues for Men's, Women's, and Youth increased 41.8% to $116.7 million. Third quarter net income increased 90.4% to $16.0 million compared to $8.4 million in the same period of 2005. Diluted earnings per share were $0.32, on weighted average common shares outstanding of 49.6 million compared to $0.20 per share on weighted average common shares outstanding of 39.3 million in the third quarter of the prior year. The Company received a $2.3 million benefit to net income, or $0.05 per diluted share, as a result of the impact of new state tax credits. "Our growth this quarter reflects the Brand's momentum both at retail and within the entire athletic landscape," stated Kevin A. Plank, Chairman and CEO of Under Armour, Inc. "We believe the shift away from standard cotton to performance products at all levels of sport continues to fuel growth in our core categories while also creating a demand for new product lines and tip-of-spear product extensions. We remain committed to serving the needs of the athlete with an innovative and authentic focus." Apparel revenues grew 41.8% for the quarter due to continued strength in the Men's, Women's, and Youth businesses. These businesses benefited from strength in core product categories and an increased presence of the Brand at retail. The training and compression categories were particularly strong and were the primary drivers of revenue growth. Gross margin was 50.6% compared to 49.6% in last year's third quarter, primarily driven by improved sourcing initiatives. Selling, general and administrative expenses were 33.4% of net revenues in the third quarter of 2006 compared to 32.9% in the same period of the prior year. This increase reflects planned investments in growth initiatives, such as international and footwear, as well as additional costs associated with being a public company. Increasing Outlook for 2006 Based on the strength of the Brand year-to-date, Under Armour is increasing its outlook for 2006. The Company now expects annual net revenues in the range of $410 million to $420 million, a 46% to 49% increase over 2005, and annual net income in the range of $38.5 million to $39.5 million. The Company anticipates an additional $1.0 million benefit from new state tax credits expected to be recognized in the fourth quarter, realizing an effective tax rate of 33.6% for the full year. The Company continues to expect fully diluted weighted average shares outstanding of approximately 50 million for 2006. Preliminary Outlook for 2007 The Company has previously stated its long-term growth targets of 20% - 25% for the top and bottom line. However, based on the continued strength of the Brand and its ability to extend product scope and distribution, the Company believes 2007 net revenues and income from operations will exceed the long-term 20% - 25% growth targets. Mr. Plank concluded, "Under Armour is a growth company. Our focus remains on achieving all of our strategic and financial goals while continuing to assemble and invest in building the Brand globally. We remain diligent about our reinvestment in four areas of concentration: Aggressive research and development of performance products, impactful marketing of our succinct Brand messages, building our international and footwear businesses, and strengthening our operations and systems infrastructure." Conference Call and Webcast Under Armour will host a conference call and webcast to discuss its financial results today, October 31st, at 8:30 a.m. EST. This call will be webcast live at investor.underarmour.com 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 investor.underarmour.com. The Company's financial results are also available online at investor.underarmour.com. About Under Armour, Inc. Under Armour(R) (NASDAQ: UARM) is a leading developer, marketer and distributor of branded performance apparel, footwear and accessories. The brand's moisture-wicking synthetic fabrications are engineered in many different designs and styles for wear in nearly every climate to provide a performance alternative to traditional natural fiber products. The Company's products are sold worldwide and worn by professional football, baseball, and soccer players, as well as athletes in major collegiate and Olympic sports. The Under Armour European headquarters is located in Amsterdam's Olympic Stadium, and its global headquarters is located in Baltimore, MD. For further information, please visit the Company's website at www.underarmour.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 development and introduction of new products, and the implementation of our marketing and branding strategies. 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: our ability to manage our growth effectively; our ability to maintain effective internal controls; increased competition causing us to reduce the prices of our products or to increase significantly our marketing efforts in order to avoid losing market share; changes in consumer preferences or the reduction in demand for performance apparel and other products; our ability to accurately forecast consumer demand for our products; reduced demand for sporting goods and apparel generally; failure of our suppliers or manufacturers to produce or deliver our products in a timely or cost-effective manner; our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results; our ability to effectively market and maintain a positive brand image; the availability and effective operation of management information systems and other technology; our ability to attract and maintain the services of our senior management and key employees; and changes in general economic or market conditions, including as a result of political or military unrest or terrorist attacks. 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. -0- *T Under Armour, Inc. Quarter and Nine Months Ended September 30, 2006 and 2005 (in thousands, except per share amounts) CONDENSED CONSOLIDATED STATEMENTS OF INCOME Quarter Quarter Ended % of Net Ended % of Net 9/30/06 Revenues 9/30/05 Revenues -------------------------------------- Net revenues $127,745 100.0% $86,606 100.0% Cost of goods sold 63,070 49.4% 43,641 50.4% -------------------------------------- Gross profit 64,675 50.6% 42,965 49.6% Operating expenses Selling, general and administrative expenses 42,692 33.4% 28,482 32.9% -------------------------------------- Income from operations 21,983 17.2% 14,483 16.7% Other income (expense) Interest income (expense), net 177 0.1% (836) (0.9%) -------------------------------------- Income before income taxes 22,160 17.3% 13,647 15.8% Provision for income taxes 6,190 4.8% 5,261 6.1% -------------------------------------- Net income 15,970 12.5% 8,386 9.7% -------------------------------------- Accretion of and cumulative preferred dividends on Series A Preferred Stock -- 0.0% 599 0.7% -------------------------------------- Net income available to common shareholders $ 15,970 12.5% $ 7,787 9.0% ====================================== Net income available per common share Basic $ 0.34 $ 0.21 Diluted $ 0.32 $ 0.20 Weighted average common shares outstanding Basic 47,164 36,571 Diluted 49,599 39,324 Nine Nine Months Months Ended % of Net Ended % of Net 9/30/06 Revenues 9/30/05 Revenues --------------------------------------- Net revenues $295,406 100.0% $193,750 100.0% Cost of goods sold 148,212 50.2% 100,396 51.8% --------------------------------------- Gross profit 147,194 49.8% 93,354 48.2% Operating expenses Selling, general and administrative expenses 107,662 36.4% 70,329 36.3% --------------------------------------- Income from operations 39,532 13.4% 23,025 11.9% Other income (expense) Interest income (expense), net 1,058 0.3% (2,124) (1.1%) --------------------------------------- Income before income taxes 40,590 13.7% 20,901 10.8% Provision for income taxes 13,462 4.5% 8,176 4.2% --------------------------------------- Net income 27,128 9.2% 12,725 6.6% --------------------------------------- Accretion of and cumulative preferred dividends on Series A Preferred Stock -- 0.0% 1,796 1.0% --------------------------------------- Net income available to common shareholders $ 27,128 9.2% $ 10,929 5.6% ======================================= Net income available per common share Basic $ 0.58 $ 0.30 Diluted $ 0.55 $ 0.29 Weighted average common shares outstanding Basic 46,848 35,871 Diluted 49,512 38,064 *T -0- *T NET REVENUES BY PRODUCT CATEGORY Nine Nine Quarter Quarter Months Months Ended Ended Ended Ended 9/30/06 9/30/05 % Change 9/30/06 9/30/05 % Change ---------------------------- ----------------------------- Mens $ 79,233 $57,476 37.9% $173,620 $129,545 34.0% Womens 26,513 18,067 46.8% 59,586 36,770 62.1% Youth 10,980 6,783 61.9% 22,095 13,241 66.9% ------------------ ------------------- Apparel 116,726 82,326 41.8% 255,301 179,556 42.2% Footwear 2,001 -- -- 17,585 -- -- Accessories 3,794 1,050 261.3% 11,481 7,359 56.0% ------------------ ------------------- Total net sales 122,521 83,376 47.0% 284,367 186,915 52.1% Licensing revenues 5,224 3,230 61.7% 11,039 6,835 61.5% ------------------ ------------------- Total net revenues $127,745 $86,606 47.5% $295,406 $193,750 52.5% ================== =================== *T -0- *T Under Armour, Inc. As of September 30, 2006, December 31, 2005 and September 30, 2005 (in thousands) CONDENSED CONSOLIDATED BALANCE SHEETS As of 9/30/06 As of 12/31/05 As of 9/30/05 ------------------------------------------ Assets Cash and cash equivalents $ 44,257 $ 62,977 $ 324 Accounts receivable, net 89,667 53,132 58,690 Inventories 74,972 53,607 50,277 Prepaid expenses, income taxes receivable and other current assets 8,105 5,252 4,900 Deferred income taxes 12,774 6,822 8,185 ------------------------------------------ Total current assets 229,775 181,790 122,376 Property and equipment, net 25,804 20,865 20,192 Intangible asset, net 8,250 -- -- Deferred income taxes 192 -- -- Other non-current assets 948 1,032 1,955 ------------------------------------------ Total assets $ 264,969 $ 203,687 $ 144,523 ========================================== Liabilities, Mandatorily Redeemable Securities and Stockholders' Equity Revolving credit facility $ -- $ -- $ 23,101 Accounts payable, accrued expenses and income taxes payable 60,941 43,864 44,942 Current maturities of long term debt 3,626 3,808 6,486 ------------------------------------------ Total current liabilities 64,567 47,672 74,529 Long term debt, net of current maturities 3,593 4,583 26,955 Deferred income taxes -- 330 586 Other long term liabilities 396 272 215 ------------------------------------------ Total liabilities 68,556 52,857 102,285 Mandatorily Redeemable Series A Preferred Stock -- -- 8,488 Total stockholders' equity 196,413 150,830 33,750 ------------------------------------------ Total liabilities, mandatorily redeemable securities and stockholders' equity $ 264,969 $ 203,687 $ 144,523 ========================================== *T