BALTIMORE, April 27, 2017
/PRNewswire/ -- Under Armour, Inc. (NYSE: UA, UAA) today
announced financial results for the first quarter ended
March 31, 2017. All per share amounts are on a diluted basis.
This release refers to "currency neutral" revenue, which is a
non-GAAP financial measure described below under the "Non-GAAP
Financial Information" paragraph.
"Our first quarter results were in line with our expectations
and we're off to a solid start in 2017," said Under Armour Chairman
and CEO Kevin Plank. "By proactively
managing our growth to deliver superior innovative product,
continuing to strengthen our connection with consumers and
increasing our focus on operational excellence - we have great
confidence in our ability to drive toward our full year
targets."
First Quarter Income Statement Highlights
- Revenue was up 7 percent to $1.1
billion, driven by a 4 percent increase in wholesale revenue
to $773 million and a 13 percent
increase in direct-to-consumer revenue to $302 million. North American revenue declined 1
percent as new distribution was more than offset by the absence of
business lost to bankruptcies in 2016. International revenue, which
is comprised of our EMEA, Asia-Pacific, and Latin America regions, represented 20 percent
of total revenue in the quarter, and was up 52 percent (up 57
percent currency neutral). By region, revenue was up 55 percent in
EMEA, 60 percent in Asia-Pacific
and 30 percent in Latin America.
Apparel revenue increased 7 percent to $715
million including strength in training, golf, and team
sports. Footwear revenue grew 2 percent to $270 million, against last year's same period
which was up 64 percent due to significant strength in basketball
sales and the timing of liquidations. Accessories revenue increased
12 percent to $89 million with
strength in men's training, running, youth, and global
football.
- Gross margin was down 70 basis points to 45.2 percent as
benefits from channel and product mix were offset by continued
efforts to manage inventories appropriate to market demand.
- Selling, general and administrative expenses increased
12 percent to $498 million, or 44.6
percent of revenue (up 210 basis points), due to continued
investments in the direct-to-consumer, footwear and international
businesses.
- Operating income was $8
million. There was a net loss of $2 million in the first quarter and a
$0.01 loss in diluted earnings per
share.
First Quarter Balance Sheet Highlights
- Cash and cash equivalents increased 10 percent to $172 million.
- Inventory increased 8 percent to $902
million.
- Total debt decreased 8 percent to $861
million.
Fiscal 2017 Outlook
There are no changes to the company's full year 2017 outlook
provided on January 31, 2017:
- Net revenues expected to grow 11 to 12 percent to reach
nearly $5.4 billion, up 12 to 13
percent currency neutral;
- Gross margin expected to be slightly down compared to
46.4% in 2016 with benefits in product costs being offset by
changes in foreign currency and shifts in overall sales mix, as the
footwear and international businesses continue to outpace the
growth of the higher margin apparel and North American
businesses;
- Operating income expected to reach approximately
$320 million;
- Interest expense of approximately $40 million; and,
- An effective tax rate of 32 to 34 percent.
Conference Call and Webcast
Under Armour will hold its first quarter 2017 conference call
and webcast today at approximately 8:30 a.m.
Eastern Time. The call will be webcast live at
http://investor.underarmour.com and will be archived and available
for replay approximately three hours after the live event.
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, Inc. (NYSE: UA, UAA), 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
development and introduction of new products, the implementation of
our marketing and branding strategies, and the future benefits and
opportunities from acquisitions and other significant investments.
In many cases, you can identify forward-looking statements by terms
such as "may," "will," "should," "expects," "plans," "assumes,"
"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 overall
consumer spending or our industry; changes to the financial health
of our customers; our ability to effectively manage our growth and
a more complex global business; our ability to effectively drive
operational efficiency in our business; our ability to comply with
existing trade and other regulations, and the potential impact of
new trade and tax regulations on our profitability; 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; increased competition causing us to lose market
share or reduce the prices of our products or to increase
significantly our marketing efforts; our ability to accurately
forecast consumer demand for our products and manage our inventory
in response to changing demands; 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; 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 key talent 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.
Under Armour,
Inc.
|
For the Quarter Ended
March 31, 2017 and 2016
|
(Unaudited; in
thousands, except per share amounts)
|
CONSOLIDATED
STATEMENTS OF INCOME
|
|
|
|
Quarter Ended March
31,
|
|
|
2017
|
|
% of Net
Revenues
|
|
2016
|
|
% of Net
Revenues
|
Net
revenues
|
|
$
|
1,117,331
|
|
|
100.0
|
%
|
|
$
|
1,047,702
|
|
|
100.0
|
%
|
Cost of goods
sold
|
|
611,908
|
|
|
54.8
|
%
|
|
567,066
|
|
|
54.1
|
%
|
Gross
profit
|
|
505,423
|
|
|
45.2
|
%
|
|
480,636
|
|
|
45.9
|
%
|
Selling, general and
administrative expenses
|
|
497,887
|
|
|
44.6
|
%
|
|
445,753
|
|
|
42.5
|
%
|
Income from operations
|
|
7,536
|
|
|
0.7
|
%
|
|
34,883
|
|
|
3.4
|
%
|
Interest expense,
net
|
|
(7,820)
|
|
|
(0.7)
|
%
|
|
(4,532)
|
|
|
(0.4)
|
%
|
Other expense,
net
|
|
2,570
|
|
|
0.2
|
%
|
|
2,702
|
|
|
0.2
|
%
|
Income before income taxes
|
|
2,286
|
|
|
0.2
|
%
|
|
33,053
|
|
|
3.2
|
%
|
Provision for income
taxes
|
|
4,558
|
|
|
0.4
|
%
|
|
13,873
|
|
|
1.4
|
%
|
Net
income (loss)
|
|
$
|
(2,272)
|
|
|
(0.2)
|
%
|
|
$
|
19,180
|
|
|
1.8
|
%
|
|
|
|
|
|
|
|
|
|
Basic net income
(loss) per share of Class A, B and C common stock
|
|
$
|
(0.01)
|
|
|
|
|
$
|
0.04
|
|
|
|
Diluted net income
(loss) per share of Class A, B and C common stock
|
|
$
|
(0.01)
|
|
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding Class A, B and C common
stock
|
Basic
|
|
439,360
|
|
|
|
|
433,626
|
|
|
|
Diluted
|
|
439,360
|
|
|
|
|
443,260
|
|
|
|
Under Armour,
Inc.
|
For the Quarter Ended
March 31, 2017 and 2016
|
(Unaudited; in
thousands)
|
|
NET REVENUES BY
PRODUCT CATEGORY
|
|
|
|
Quarter Ended March
31,
|
|
|
2017
|
|
2016
|
|
% Change
|
Apparel
|
|
$
|
715,437
|
|
|
$
|
666,571
|
|
|
7.3
|
%
|
Footwear
|
|
269,659
|
|
|
264,246
|
|
|
2.0
|
%
|
Accessories
|
|
89,097
|
|
|
79,701
|
|
|
11.8
|
%
|
Total net
sales
|
|
1,074,193
|
|
|
1,010,518
|
|
|
6.3
|
%
|
Licensing
revenues
|
|
24,205
|
|
|
19,433
|
|
|
24.6
|
%
|
Connected
Fitness
|
|
18,933
|
|
|
18,501
|
|
|
2.3
|
%
|
Intersegment
eliminations
|
|
—
|
|
|
(750)
|
|
|
(100.0)
|
%
|
Total net
revenues
|
|
$
|
1,117,331
|
|
|
$
|
1,047,702
|
|
|
6.6
|
%
|
|
NET REVENUES BY
SEGMENT
|
|
|
|
Quarter Ended March
31,
|
|
|
2017
|
|
2016
|
|
% Change
|
North
America
|
|
$
|
871,271
|
|
|
$
|
880,595
|
|
|
(1.1)
|
%
|
EMEA
|
|
102,855
|
|
|
66,267
|
|
|
55.2
|
%
|
Asia-Pacific
|
|
85,818
|
|
|
53,622
|
|
|
60.0
|
%
|
Latin
America
|
|
38,454
|
|
|
29,467
|
|
|
30.5
|
%
|
Connected
Fitness
|
|
18,933
|
|
|
18,501
|
|
|
2.3
|
%
|
Intersegment
eliminations
|
|
—
|
|
|
(750)
|
|
|
(100.0)
|
%
|
Total net
revenues
|
|
$
|
1,117,331
|
|
|
$
|
1,047,702
|
|
|
6.6
|
%
|
|
OPERATING INCOME
(LOSS) BY SEGMENT
|
|
|
|
Quarter Ended March
31,
|
|
|
2017
|
|
2016
|
|
% Change
|
North
America
|
|
$
|
3,714
|
|
|
$
|
40,095
|
|
|
(90.7)
|
%
|
EMEA
|
|
1,629
|
|
|
2,921
|
|
|
(44.2)
|
%
|
Asia-Pacific
|
|
19,628
|
|
|
17,335
|
|
|
13.2
|
%
|
Latin
America
|
|
(7,859)
|
|
|
(9,007)
|
|
|
12.7
|
%
|
Connected
Fitness
|
|
(9,576)
|
|
|
(16,461)
|
|
|
41.8
|
%
|
Income from
operations
|
|
$
|
7,536
|
|
|
$
|
34,883
|
|
|
(78.4)
|
%
|
Under Armour,
Inc.
|
As of March 31,
2017, December 31, 2016 and March 31, 2016
|
(Unaudited; in
thousands)
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
As of
3/31/2017
|
|
As of
12/31/2016
|
|
As of
3/31/2016
|
Assets
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
172,128
|
|
|
$
|
250,470
|
|
|
$
|
157,001
|
|
Accounts receivable,
net
|
|
629,235
|
|
|
622,685
|
|
|
566,286
|
|
Inventories
|
|
901,613
|
|
|
917,491
|
|
|
834,287
|
|
Prepaid expenses and
other current assets
|
|
203,052
|
|
|
174,507
|
|
|
211,209
|
|
Total current
assets
|
|
1,906,028
|
|
|
1,965,153
|
|
|
1,768,783
|
|
Property and
equipment, net
|
|
830,539
|
|
|
804,211
|
|
|
601,910
|
|
Goodwill
|
|
571,381
|
|
|
563,591
|
|
|
588,895
|
|
Intangible assets,
net
|
|
61,986
|
|
|
64,310
|
|
|
73,217
|
|
Deferred income
taxes
|
|
121,108
|
|
|
136,862
|
|
|
92,230
|
|
Other long term
assets
|
|
86,118
|
|
|
110,204
|
|
|
93,089
|
|
Total
assets
|
|
$
|
3,577,160
|
|
|
$
|
3,644,331
|
|
|
$
|
3,218,124
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
Revolving credit
facility, current
|
|
$
|
50,000
|
|
|
$
|
—
|
|
|
$
|
140,000
|
|
Accounts
payable
|
|
294,857
|
|
|
409,679
|
|
|
184,243
|
|
Accrued
expenses
|
|
217,310
|
|
|
208,750
|
|
|
224,076
|
|
Current maturities of
long term debt
|
|
27,000
|
|
|
27,000
|
|
|
27,000
|
|
Other current
liabilities
|
|
38,372
|
|
|
40,387
|
|
|
30,581
|
|
Total current
liabilities
|
|
627,539
|
|
|
685,816
|
|
|
605,900
|
|
Long term debt, net
of current maturities
|
|
784,052
|
|
|
790,388
|
|
|
217,525
|
|
Revolving credit
facility, long term
|
|
—
|
|
|
—
|
|
|
550,000
|
|
Other long term
liabilities
|
|
145,536
|
|
|
137,227
|
|
|
103,382
|
|
Total
liabilities
|
|
1,557,127
|
|
|
1,613,431
|
|
|
1,476,807
|
|
Total stockholders'
equity
|
|
2,020,033
|
|
|
2,030,900
|
|
|
1,741,317
|
|
Total liabilities
and stockholders' equity
|
|
$
|
3,577,160
|
|
|
$
|
3,644,331
|
|
|
$
|
3,218,124
|
|
Under Armour,
Inc.
|
For the Quarter Ended
March 31, 2017 and 2016
|
(Unaudited; in
thousands)
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
Quarter Ended March
31,
|
|
2017
|
|
2016
|
Cash flows from
operating activities
|
|
|
|
Net income
(loss)
|
$
|
(2,272)
|
|
|
$
|
19,180
|
|
Adjustments to
reconcile net income (loss) to net cash used in operating
activities
|
|
|
|
Depreciation and
amortization
|
41,013
|
|
|
32,021
|
|
Unrealized foreign
currency exchange rate losses
|
(8,313)
|
|
|
(11,248)
|
|
Loss on disposal of
property and equipment
|
556
|
|
|
384
|
|
Amortization of bond
premium
|
63
|
|
|
—
|
|
Stock-based
compensation
|
12,082
|
|
|
14,403
|
|
Excess tax benefit
(deficiency) from stock-based compensation
arrangements
|
(1,258)
|
|
|
27,058
|
|
Deferred income
taxes
|
15,905
|
|
|
2,724
|
|
Changes in reserves
and allowances
|
(21,187)
|
|
|
12,657
|
|
Changes in operating
assets and liabilities, net of effects of acquisitions:
|
|
|
|
Accounts
receivable
|
21,261
|
|
|
(136,990)
|
|
Inventories
|
19,084
|
|
|
(45,958)
|
|
Prepaid expenses and
other assets
|
(7,598)
|
|
|
(15,351)
|
|
Accounts
payable
|
(90,982)
|
|
|
(976)
|
|
Accrued expenses and
other liabilities
|
7,253
|
|
|
22,312
|
|
Income taxes payable
and receivable
|
(19,169)
|
|
|
(47,748)
|
|
Net cash used in
operating activities
|
(33,562)
|
|
|
(127,532)
|
|
Purchases of property
and equipment
|
(91,790)
|
|
|
(104,573)
|
|
Purchases of
available-for-sale securities
|
—
|
|
|
(19,997)
|
|
Sales of
available-for-sale securities
|
—
|
|
|
21,414
|
|
Net cash used in
investing activities
|
(91,790)
|
|
|
(103,156)
|
|
Cash flows from
financing activities
|
|
|
|
Proceeds from long
term debt and revolving credit facility
|
200,000
|
|
|
415,000
|
|
Payments on long term
debt and revolving credit facility
|
(156,750)
|
|
|
(145,500)
|
|
Employee taxes paid
for shares withheld for income taxes
|
(2,474)
|
|
|
(13,685)
|
|
Proceeds from
exercise of stock options and other stock issuances
|
2,782
|
|
|
3,954
|
|
Payments of debt
financing costs
|
—
|
|
|
(1,258)
|
|
Net cash provided by
financing activities
|
43,558
|
|
|
258,511
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
3,452
|
|
|
(674)
|
|
Net increase
(decrease) in cash and cash equivalents
|
(78,342)
|
|
|
27,149
|
|
Cash and cash
equivalents
|
|
|
|
Beginning of
period
|
250,470
|
|
|
129,852
|
|
End of
period
|
$
|
172,128
|
|
|
$
|
157,001
|
|
Under Armour,
Inc.
|
For the Quarter Ended
March 31, 2017 and 2016
|
(Unaudited)
|
|
The tables below
present 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
|
|
|
Quarter Ended
March 31, 2017
|
Total Net
Revenue
|
|
Net revenue growth -
GAAP
|
|
|
6.6 %
|
Foreign exchange
impact
|
|
|
0.5 %
|
Currency neutral net
revenue growth - Non-GAAP
|
|
|
7.1 %
|
|
|
North
America
|
|
Net revenue growth -
GAAP
|
|
|
(1.1) %
|
Foreign exchange
impact
|
|
|
(0.2) %
|
Currency neutral net
revenue growth - Non-GAAP
|
|
|
(1.3) %
|
|
|
International
|
|
Net revenue growth -
GAAP
|
|
|
52.1 %
|
Foreign exchange
impact
|
|
|
4.6 %
|
Currency neutral net
revenue growth - Non-GAAP
|
|
|
56.7 %
|
|
|
Connected
Fitness
|
|
Net revenue growth -
GAAP
|
|
|
2.3 %
|
Foreign exchange
impact
|
|
|
— %
|
Currency neutral net
revenue growth - Non-GAAP
|
|
|
2.3 %
|
|
|
BRAND HOUSE AND
FACTORY HOUSE DOOR COUNT
|
|
|
Quarter Ended March
31,
|
|
2017
|
|
2016
|
Factory
House
|
150
|
|
144
|
Brand
House
|
18
|
|
12
|
North
America total doors
|
168
|
|
156
|
|
|
|
|
Factory
House
|
38
|
|
18
|
Brand
House
|
39
|
|
24
|
International total doors
|
77
|
|
42
|
|
|
|
|
Factory
House
|
188
|
|
162
|
Brand
House
|
57
|
|
36
|
Total
doors
|
245
|
|
198
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/under-armour-reports-first-quarter-results-300446868.html
SOURCE Under Armour, Inc.