Under Armour Reports Fourth Quarter Net Revenues Growth of 25% and Fourth Quarter EPS Growth of 51%

BALTIMORE, Jan. 31, 2013 /PRNewswire/ --

  • Fourth Quarter Net Revenues Increased 25% to $506 Million; Full Year Net Revenues Increased 25% to $1.835 Billion
  • Fourth Quarter Diluted EPS Increased 51% to $0.47 from $0.31; Full Year Diluted EPS Increased 31% to $1.21 from $0.92
  • Company Updates 2013 Net Revenues Outlook to a Range of $2.20 Billion to $2.22 Billion (+20% to +21%)
  • Company Updates 2013 Operating Income Outlook to a Range of $255 Million to $257 Million (+22% to +23%)

Under Armour, Inc. (NYSE: UA) today announced financial results for the fourth quarter ended December 31, 2012.  Net revenues increased 25% in the fourth quarter of 2012 to $506 million compared with net revenues of $403 million in the prior year's period.  Net income increased 54% in the fourth quarter of 2012 to $50 million compared with $33 million in the prior year's period.  Diluted earnings per share for the fourth quarter of 2012 were $0.47 on weighted average common shares outstanding of 107 million compared with $0.31 per share on weighted average common shares outstanding of 105 million in the prior year's period.    

(Logo: http://photos.prnewswire.com/prnh/20110127/NE37387LOGO )

Fourth quarter apparel net revenues increased 25% to $405 million compared with $323 million in the same period of the prior year, driven primarily by Fleece, which included a broader expansion of the Storm platform across the category.  Fourth quarter footwear net revenues increased 43% to $45 million from $31 million in the prior year's period, primarily driven by new 2012 running styles, including UA Spine, and strong sell-in of new 2013 baseball cleats.  Fourth quarter accessories net revenues increased 16% to $43 million from $37 million in the prior year's period.  Direct-to-Consumer net revenues, which represented 39% of total net revenues for the fourth quarter, grew 29% year-over-year. 

Kevin Plank, Chairman and CEO of Under Armour, Inc., stated, "We closed 2012 strongly, delivering net revenue growth of at least 20% for the eleventh consecutive quarter in Q4 by building upon key apparel technology platforms like Storm Fleece and Charged Cotton.  Our ability to bring practical innovation to our consumer across a broad range of product drove our 25% net revenue growth in 2012 and positions us well for 2013 and beyond.  With these strong results in hand, we are well on our way toward delivering on the goal established at our June 2011 Investor Day to more than double our net revenues from 2010 to 2013."

Gross margin for the fourth quarter of 2012 was 50.3% compared with 51.6% in the prior year's quarter, primarily reflecting less favorable sales mix and higher air freight costs.  Selling, general and administrative expenses as a percentage of net revenues were 34.2% in the fourth quarter of 2012 compared with 37.9% in the prior year's period, largely reflecting leverage of corporate services and marketing expenses.  Marketing expenses for the fourth quarter of 2012 were 9.7% of net revenues compared with 10.9% in the prior year's quarter.  Fourth quarter operating income grew 48% to $82 million compared with $55 million in the prior year's period. 

Review of Full Year Operating Results 
For the full year 2012, net revenues increased 25% to $1.835 billion compared with $1.473 billion in the prior year and compared with the Company's prior outlook of $1.82 billion.  Diluted earnings per share for the full year increased 31% to $1.21 per share on weighted average common shares outstanding of 106 million compared with $0.92 per share on weighted average common shares outstanding of 105 million in the prior year.

Apparel net revenues increased 23% to $1.385 billion compared with $1.122 billion in the prior year, led by the Training category which included the expansions of both the Charged Cotton and Storm platforms.  Footwear net revenues increased 32% to $239 million during 2012 compared to $182 million in 2011, reflecting the debut of new running styles, including UA Spine, and strength across our cleated businesses.  Accessories net revenues increased 25% to $166 million during 2012 compared to $132 million in 2011, primarily driven by headwear and bags.  Direct-to-Consumer net revenues, which represented 29% of total net revenues for the year compared to 27% in 2011, grew 34% over the prior year.

Gross margin for 2012 was 47.9% compared with 48.4% in 2011, largely reflecting less favorable sales mix and higher air freight costs.  Selling, general and administrative expenses as a percentage of net revenues were 36.5% for 2012 compared with 37.3% for 2011, reflecting leverage of corporate services and marketing expenses.  Marketing expense for 2012 was 11.2% of net revenues compared with 11.4% in the prior year.  Operating income grew 28% to $209 million in 2012 compared with $163 million in the prior year and compared with the Company's prior outlook of $207 million.

Balance Sheet Highlights 
Cash and cash equivalents increased 95% to $342 million at December 31, 2012 compared with $175 million at December 31, 2011.  The Company had no borrowings outstanding under its $300 million revolving credit facility at December 31, 2012.  Inventory at December 31, 2012 decreased 2% to $319 million compared with $324 million at December 31, 2011.  Long-term debt decreased to $62 million at December 31, 2012 from $78 million at December 31, 2011. 

Updated 2013 Outlook 
Based on current visibility, the Company expects 2013 net revenues in the range of $2.20 billion to $2.22 billion, representing growth of 20% to 21% over 2012, and 2013 operating income in the range of $255 million to $257 million, representing growth of 22% to 23% over 2012.  The Company expects an effective tax rate of 39.0% to 39.5% for the full year, compared to an effective tax rate of 36.7% for 2012.  The Company anticipates fully diluted weighted average shares outstanding of approximately 108 million to 109 million for 2013.

Mr. Plank concluded, "In the year ahead, we will drive growth by re-invigorating core categories like Baselayer, continuing to expand our consumer base in Women's and Youth, and introducing the next wave of Under Armour innovation through product such as Armour39 that will debut in the next month.  We will open the next generation of Under Armour specialty retail in mid-February in our home city of Baltimore, while we are prioritizing our growth strategies in key markets in Europe, Asia, and Latin America.  We will also continue to invest in the right talent, infrastructure, and processes to ensure that we deliver balanced financial results well into the future."

Conference Call and Webcast 
The Company will provide additional commentary regarding its fourth quarter results as well as its updated 2013 outlook during its earnings conference call today, January 31st, 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.

About Under Armour, Inc. 
Under Armour® (NYSE: UA) is a leading developer, marketer, and distributor of branded performance apparel, footwear, and accessories.  The brand's moisture-wicking fabrications are engineered in many different designs and styles for wear in nearly every climate to provide a performance alternative to traditional products.  The Company's products are sold worldwide and worn by athletes at all levels, from youth to professional, on playing fields around the globe.  The Under Armour global headquarters is in Baltimore, Maryland, with European headquarters in Amsterdam's Olympic Stadium, and additional offices in Denver, Hong Kong, Toronto, and Guangzhou, China.  For further information, please visit the Company's website at www.ua.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: 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 business; 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 reduce the prices of our products or to increase significantly our marketing efforts in order to avoid losing market share; 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; changes in consumer preferences or the reduction in demand for performance apparel, footwear and other products; 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, integration and effective operation of management information systems and other technology; and our ability to attract and maintain 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 Year Ended December 31, 2012 and 2011

(Unaudited; in thousands, except per share amounts)

 

CONSOLIDATED STATEMENTS OF INCOME

 


Quarter Ended

December 31,


Year Ended

December 31,


2012

% of Net

Revenues


2011

% of Net

Revenues


2012

% of Net

Revenues


2011

% of Net

Revenues













Net revenues

$   505,863

100.0%


$   403,126

100.0%


$1,834,921

100.0%


$1,472,684

100.0%

Cost of goods sold

251,628

49.7%


195,221

48.4%


955,624

52.1%


759,848

51.6%

       Gross profit

254,235

50.3%


207,905

51.6%


879,297

47.9%


712,836

48.4%













Selling, general and

  administrative expenses

172,643

34.2%


152,603

37.9%


670,602

36.5%


550,069

37.3%













       Income from operations

81,592

16.1%


55,302

13.7%


208,695

11.4%


162,767

11.1%













    Interest expense, net

(1,205)

(0.2%)


(1,413)

(0.3%)


(5,183)

(0.3%)


(3,841)

(0.3%)

   Other income (expense), net      

(634)

(0.1%)


1

0.0%


(73)

0.0%


(2,064)

(0.1%)













       Income before income taxes

79,753

15.8%


53,890

13.4%


203,439

11.1%


156,862

10.7%

Provision for income taxes

29,621

5.9%


21,338

5.3%


74,661

4.1%


59,943

4.1%













       Net income

$     50,132

9.9%


$     32,552

8.1%


$   128,778

7.0%


$     96,919

6.6%













Net income available per common share











Basic

$        0.48



$        0.31



$         1.23



$         0.94


Diluted

$        0.47



$        0.31



$         1.21



$         0.92
























Basic

104,687



103,385



104,343



103,140


Diluted

107,121



105,348



106,380



105,052


 

NET REVENUES BY PRODUCT CATEGORY

 



Quarter Ended

December 31,


Year Ended

December 31,



2012

2011

% Change


2012

2011

% Change










Apparel


$    404,527

$    323,385

25.1%


$ 1,385,350

$   1,122,031

23.5%

Footwear


44,714

31,329

42.7%


238,955

181,684

31.5%

Accessories


42,601

36,798

15.8%


165,835

132,400

25.3%

     Total net sales


491,842

391,512

25.6%


1,790,140

1,436,115

24.7%

Licensing revenues


14,021

11,614

20.7%


44,781

36,569

22.5%

     Total net revenues


$    505,863

$    403,126

25.5%


$ 1,834,921

$ 1,472,684

24.6%

 

NET REVENUES BY GEOGRAPHIC SEGMENT



Quarter Ended

December 31,


Year Ended

December 31,



2012

2011

% Change


2012

2011

% Change










North America


$     472,225

$    377,152

25.2%


$ 1,726,733

$ 1,383,346

24.8%

Other foreign countries


33,638

25,974

29.5%


108,188

89,338

21.1%

     Total net revenues


$     505,863

$    403,126

25.5%


$ 1,834,921

$ 1,472,684

24.6%

 

Under Armour, Inc.

As of December 31, 2012 and December 31, 2011

(Unaudited; in thousands)

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 



 

As of

12/31/12

 

As of

12/31/11

Assets




Cash and cash equivalents


$        341,841

$        175,384

Accounts receivable, net


175,524

134,043

Inventories


319,286

324,409

Prepaid expenses and other current assets


43,896

39,643

Deferred income taxes


23,051

16,184





     Total current assets


903,598

689,663





Property and equipment, net


180,850

159,135

Intangible assets, net


4,483

5,535

Deferred income taxes


22,606

15,885

Other long term assets


45,546

48,992





     Total assets


$     1,157,083

$        919,210





Liabilities and Stockholders' Equity




Accounts payable


$        143,689

$     100,527

Accrued expenses


85,077

69,285

Current maturities of long term debt


9,132

6,882

Other current liabilities


14,330

6,913





     Total current liabilities


252,228

183,607





Long term debt, net of current maturities


52,757

70,842

Other long term liabilities


35,176

28,329





     Total liabilities


340,161

282,778





     Total stockholders' equity


816,922

636,432





     Total liabilities and stockholders' equity


$     1,157,083

$        919,210

 

 

Under Armour, Inc.

For the Year Ended December 31, 2012 and 2011

(Unaudited; in thousands)

 






Year Ended 12/31/12

Year Ended 12/31/11

Cash flows from operating activities




Net income


$        128,778

$          96,919

Adjustments to reconcile net income to net cash used in

   operating activities





Depreciation and amortization


43,082

36,301


Unrealized foreign currency exchange rate (gains) losses


(2,464)

4,027


Loss on disposal of property and equipment


524

36


Stock-based compensation


19,845

18,063


Gain on bargain purchase of corporate headquarters (excludes transaction costs of $1.9 million)


-

(3,300)


Deferred income taxes


(12,973)

3,620


Changes in reserves and allowances


13,916

5,536


Changes in operating assets and liabilities:






Accounts receivable


(53,433)

(33,923)



Inventories


4,699

(114,646)



Prepaid expenses and other assets


(4,060)

(42,633)



Accounts payable


35,370

17,209



Accrued expenses and other liabilities


21,966

23,442



Income taxes payable and receivable


4,511

4,567




Net cash provided by operating activities


199,761

15,218





Cash flows from investing activities




Purchase of property and equipment


(50,650)

(56,228)

Purchase of corporate headquarters and related expenditures


-

(23,164)

Purchase of long term investment


-

(3,862)

Purchase of other assets


(1,310)

(1,153)

Change in restricted cash


5,029

(5,029)


Net cash used in investing activities


(46,931)

(89,436)








Cash flows from financing activities




Proceeds from revolving credit facility


-

30,000

Payments on revolving credit facility


-

(30,000)

Proceeds from term loan


-

25,000

Payments on term loan


(25,000)

-

Proceeds from long term debt


50,000

5,644

Payments on long term debt


(44,330)

(7,418)

Excess tax benefits from stock-based compensation arrangements


17,868

10,260

Proceeds from exercise of stock options and other stock issuances


14,776

14,645

Payments of debt financing costs


(1,017)

(2,324)




Net cash provided by financing activities


12,297

45,807

Effect of exchange rate changes on cash and cash equivalents


1,330

(75)




Net increase (decrease) in cash and cash equivalents


166,457

(28,486)





Cash and cash equivalents




Beginning of period


175,384

203,870

End of period


$        341,841

$        175,384





Non-cash investing and financing activities




Debt assumed and property and equipment acquired in connection with purchase of corporate headquarters


$                   -

$          38,556

Acquisition of property and equipment through certain obligations


15,216

3,079

 

SOURCE Under Armour, Inc.



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