Under Armour Reports Third Quarter Net Revenues Growth Of 24%; Updates Full Year Net Revenues And Operating Income Outlook To High End Of Prior Ranges

BALTIMORE, Oct. 25, 2012 /PRNewswire/ --

  • Third Quarter Net Revenues Increased 24% to $575 Million
  • Third Quarter Diluted EPS Increased 23% to $0.54
  • Company Updates 2012 Net Revenues Outlook to Approximately $1.82 Billion (+24%)
  • Company Updates 2012 Operating Income Outlook to Approximately $207 Million (+27%)

Under Armour, Inc. (NYSE: UA) today announced financial results for the third quarter ended September 30, 2012.  Net revenues increased 24% in the third quarter of 2012 to $575 million compared with net revenues of $466 million in the prior year's period.  Net income increased 25% in the third quarter of 2012 to $57 million compared with $46 million in the prior year's period.  Diluted earnings per share for the third quarter of 2012 were $0.54 on weighted average common shares outstanding of 107 million compared with $0.44 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 )

Third quarter Apparel net revenues increased 22% to $445 million compared with $363 million in the same period of the prior year, driven by strength across Men's, Women's, and Youth apparel businesses.  Third quarter Footwear net revenues increased 21% to $63 million from $52 million in the prior year's period, primarily driven by new 2012 running styles, including UA Spine.  Third quarter Accessories net revenues increased 37% to $54 million from $40 million in the prior year's period, primarily led by headwear.  Direct-to-Consumer net revenues, which represented 24% of total net revenues for the third quarter, grew 31% year-over-year. 

Kevin Plank, Chairman, CEO, and President of Under Armour, Inc., stated, "The third quarter marks our twelfth consecutive quarter with apparel growth in excess of 20% and our tenth consecutive quarter of net revenues growth surpassing 20%.  This growth reflects our core belief that when we innovate and add value for the athlete, we win.  Our recent expansion of the UA Storm platform is a great example of our unwavering pursuit of innovation.  The Women's category remains a major focus and huge opportunity for us as a brand and the strong sell-throughs we are seeing in new products such as Studio and ArmourBra give us confidence that we are resonating with our consumers.  Our success in innovation extended to Footwear with the successful launch this past quarter of UA Spine running footwear and will continue with our upcoming UA Spine extension into basketball and our December introduction of the UA Cam Highlight trainer."   

Gross margin for the third quarter of 2012 was 48.7% compared with 48.4% in the prior year's quarter, primarily reflecting more favorable North American apparel product margins.  Selling, general and administrative expenses as a percentage of net revenues were 32.9% in the third quarter of 2012 compared with 32.3% in the prior year's period, primarily reflecting the timing of marketing expenses.  Marketing expenses for the third quarter of 2012 were 11.4% of net revenues compared with 10.4% in the prior year's quarter.  Third quarter operating income grew 21% to $91 million compared with $75 million in the prior year's period. 

Balance Sheet Highlights  
Cash and cash equivalents increased to $157 million at September 30, 2012 compared with $68 million at September 30, 2011.  The Company had no borrowings outstanding under its $300 million revolving credit facility at September 30, 2012.  Inventory at September 30, 2012 decreased 2% to $312 million compared with $319 million at September 30, 2011.  Long-term debt, including current maturities, decreased to $72 million at September 30, 2012 from $80 million at September 30, 2011. 

Updated 2012 Outlook   
The Company had previously anticipated 2012 net revenues in the range of $1.80 billion to $1.82 billion, representing growth of 22% to 24% over 2011, and 2012 operating income in the range of $205 million to $207 million, representing growth of 26% to 27% over 2011.  Based on current visibility, the Company now expects 2012 net revenues of approximately $1.82 billion, representing growth of 24% over 2011, and 2012 operating income of approximately $207 million, representing growth of 27% over 2011.  The Company now expects an effective tax rate of approximately 37.0%, compared to an effective tax rate of 38.2% for 2011.  The Company continues to anticipate fully diluted weighted average shares outstanding of approximately 106 million to 107 million for 2012.

Mr. Plank concluded, "I am proud of what our team has accomplished so far this year and we are well positioned for growth in 2013 and beyond.  I emphasize 'team,' as we continue to make great strides with the additions of seasoned leadership in Supply Chain, Women's, and International.  These investments illustrate our commitment to realizing our long-term vision of one day having our Women's business larger than Men's, Footwear larger than Apparel, and our International business larger than our U.S. business."

Conference Call and Webcast 
The Company will provide additional commentary regarding its third quarter results as well as its updated 2012 outlook during its earnings conference call today, October 25th, 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, global 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; 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; 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 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 Three and Nine Months Ended September 30, 2012 and 2011

(Unaudited; in thousands, except per share amounts)


CONSOLIDATED STATEMENTS OF INCOME






Three Months Ended

September 30,


Nine Months Ended

September 30,


2012

% of Net Revenues


2011

% of Net Revenues


2012

% of Net Revenues


2011

% of Net Revenues













Net revenues

$  575,196

100.0%


$  465,523

100.0%


$1,329,058

100.0%


$1,069,558

100.0%

Cost of goods sold

294,805

51.3%


240,422

51.6%


703,996

53.0%


564,627

52.8%

       Gross profit

280,391

48.7%


225,101

48.4%


625,062

47.0%


504,931

47.2%













Selling, general and

  administrative expenses

189,411

32.9%


150,136

32.3%


497,959

37.4%


397,466

37.2%













       Income from operations

90,980

15.8%


74,965

16.1%


127,103

9.6%


107,465

10.0%













    Interest expense, net

(1,303)

(0.2%)


(1,552)

(0.3%)


(3,978)

(0.3%)


(2,428)

(0.2%)

   Other income (expense), net      

(31)

0.0%


(1,193)

(0.3%)


561

0.0%


(2,065)

(0.2%)













       Income before income taxes

89,646

15.6%


72,220

15.5%


123,686

9.3%


102,972

9.6%

Provision for income taxes

32,329

5.6%


26,233

5.6%


45,040

3.4%


38,605

3.6%













       Net income

$     57,317

10.0%


$     45,987

9.9%


$    78,646

5.9%


$    64,367

6.0%













Net income available per common share











Basic

$       0.55



$        0.45



$        0.75



$        0.62


Diluted

$       0.54



$        0.44



$        0.74



$        0.61














Weighted average common shares outstanding










Basic

104,515



103,116



104,228



103,058


Diluted

106,795



105,055



106,157



104,954


 

NET REVENUES BY PRODUCT CATEGORY








Three Months Ended

September 30,


Nine Months Ended

September 30,



2012

2011

% Change


2012

2011

% Change










Apparel


$    444,643

$    363,383

22.4%


$    980,823

$    798,646

22.8%

Footwear


63,153

52,034

21.4%


194,241

150,355

29.2%

Accessories


54,379

39,672

37.1%


123,234

95,602

28.9%

     Total net sales


562,175

455,089

23.5%


1,298,298

1,044,603

24.3%

Licensing revenues


13,021

10,434

24.8%


30,760

24,955

23.3%

     Total net revenues


$    575,196

$    465,523

23.6%


$ 1,329,058

$ 1,069,558

24.3%

 

NET REVENUES BY GEOGRAPHIC SEGMENT








Three Months Ended

September 30,


Nine Months Ended

September 30,



2012

2011

% Change


2012

2011

% Change










North America


$    543,089

$    433,646

25.2%


$ 1,254,508

$  1,006,194

24.7%

Other foreign countries


32,107

31,877

0.7%


74,550

63,364

17.7%

     Total net revenues


$    575,196

$    465,523

23.6%


$ 1,329,058

$ 1,069,558

24.3%

 

Under Armour, Inc.

As of September 30, 2012, December 31, 2011 and September 30, 2011

(Unaudited; in thousands)


CONDENSED CONSOLIDATED BALANCE SHEETS








 

As of

9/30/12

 

As of

12/31/11

 

As of

9/30/11

Assets





Cash and cash equivalents


$        157,047

$        175,384

$         67,859

Accounts receivable, net


311,001

134,043

235,907

Inventories


312,158

324,409

318,888

Prepaid expenses and other current assets


42,726

39,643

31,163

Deferred income taxes


19,370

16,184

18,187






     Total current assets


842,302

689,663

672,004






Property and equipment, net


170,157

159,135

163,256

Intangible assets, net


4,815

5,535

2,916

Deferred income taxes


20,544

15,885

21,268

Other long term assets


40,821

48,992

40,694






     Total assets


$     1,078,639

$        919,210

$       900,138






Liabilities and Stockholders' Equity





Revolving credit facility


$                    -

$                    -

$         30,000

Accounts payable


112,187

100,527

103,343

Accrued expenses


81,802

69,285

54,008

Current maturities of long term debt


41,552

6,882

6,046

Other current liabilities


18,300

6,913

15,967






     Total current liabilities


253,841

183,607

209,364






Long term debt, net of current maturities


30,682

70,842

73,470

Other long term liabilities


35,736

28,329

25,239






     Total liabilities


320,259

282,778

308,073






     Total stockholders' equity


758,380

636,432

592,065






     Total liabilities and stockholders' equity


$     1,078,639

$        919,210

$      900,138

 

Under Armour, Inc.

For the Nine Months Ended September 30, 2012 and 2011

(Unaudited; in thousands)













Nine

Months
Ended
9/30/12

Nine

Months
Ended

9/30/11

Cash flows from operating activities




Net income


$          78,646

$          64,367

Adjustments to reconcile net income to net cash used in

   operating activities





Depreciation and amortization


31,755

25,968


Unrealized foreign currency exchange rate (gains) losses


(2,405)

3,638


Stock-based compensation


15,155

13,592


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


-

(3,300)


Loss on disposal of property and equipment


485

19


Deferred income taxes


(7,509)

(2,933)


Changes in reserves and allowances


3,861

2,934


Changes in operating assets and liabilities:






Accounts receivable


(180,065)

(135,405)



Inventories


12,593

(106,849)



Prepaid expenses and other assets


2,461

(23,358)



Accounts payable


10,205

18,848



Accrued expenses and other liabilities


17,611

2,770



Income taxes payable and receivable


11,195

13,625




Net cash used in operating activities


(6,012)

(126,084)





Cash flows from investing activities




Purchase of property and equipment


(37,550)

(45,281)

Purchase of corporate headquarters and related expenditures


-

(22,852)

Purchase of other long term assets


-

(1,153)

Purchase of long term investment


-

(3,700)

Change in restricted cash


(166)

(4,887)


Net cash used in investing activities


(37,716)

(77,873)








Cash flows from financing activities




Proceeds from revolving credit facility


-

30,000

Proceeds from term loan


-

25,000

Proceeds from long term debt


-

5,644

Payments on long term debt


(5,490)

(5,626)

Excess tax benefits from stock-based compensation arrangements


16,219

6,957

Payments of deferred financing costs


-

(2,324)

Proceeds from exercise of stock options and other stock issuances


13,193

10,320




Net cash provided by financing activities


23,922

69,971

Effect of exchange rate changes on cash and cash equivalents


1,469

(2,025)




Net decrease in cash and cash equivalents


(18,337)

(136,011)





Cash and cash equivalents




Beginning of period


175,384

203,870

End of period


$        157,047

$          67,859





Non-cash investing and financing activities




Debt assumed in connection with purchase of corporate headquarters


$                    -

$          38,556

 

SOURCE Under Armour, Inc.



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