Under Armour Reports Third Quarter 2021 Results; Raises Full Year Outlook

BALTIMORE, Nov. 2, 2021 /PRNewswire/ -- Under Armour, Inc. (NYSE: UA, UAA) today announced unaudited financial results for the third quarter ended Sept. 30, 2021. The company reports its financial performance in accordance with accounting principles generally accepted in the United States of America ("GAAP"). This press release refers to "currency neutral" and "adjusted" amounts, which are non-GAAP financial measures described below under the "Non-GAAP Financial Information" paragraph.

"Our third-quarter results were driven by strong demand for the Under Armour brand and our ability to execute quickly to meet the needs of our consumers and customers," said Under Armour President and CEO Patrik Frisk. "With industry-leading innovations, increased marketing efforts to deepen our connection with Focused Performers, and consistent operational discipline – we're building greater brand affinity and are on track to deliver record revenue and earnings results in 2021."

Third Quarter 2021 Review

• Revenue was up 8 percent to $1.5 billion (up 6 percent currency neutral) compared to the prior year.
• Wholesale revenue increased 10 percent to $911 million and direct-to-consumer revenue increased 12 percent to $604 million, driven by a strong performance in owned and operated stores offset by a 4 percent decline in eCommerce, which represented 33 percent of the total direct-to-consumer business.
• North America revenue increased 8 percent to $1.0 billion and international revenue increased 18 percent to $510 million (up 13 percent currency neutral). Within the international business, revenue increased 19 percent in Asia-Pacific (up 13 percent currency neutral), increased 15 percent in EMEA (up 11 percent currency neutral), and increased 27 percent in Latin America (up 20 percent currency neutral).
• Apparel revenue increased 14 percent to $1.1 billion. Footwear revenue increased 10 percent to $330 million. Accessories revenue decreased 13 percent to $126 million.
• Gross margin increased 310 basis points to 51.0 percent, driven by benefits from pricing and channel mix, offset by the absence of MyFitnessPal and supply chain headwinds.
• Sales, general & administrative expenses increased 8 percent to $599 million.
• Restructuring charges were $17 million.
• Operating income was $172 million. Adjusted operating income was $189 million.
• Net income was $113 million. Adjusted net income was $145 million.
• Diluted earnings per share was $0.24. Adjusted diluted earnings per share was $0.31.
• Inventory was down 21 percent to $838 million.
• Cash and Cash Equivalents were $1.3 billion at the end of the quarter, and no borrowings were outstanding under the company's $1.1 billion revolving credit facility.

Updated 2021 Outlook

Key points related to Under Armour's full-year 2021 outlook include:

• Revenue is expected to be up approximately 25 percent compared to the previous expectation of a low-twenties percentage increase, reflecting a high-twenties percentage growth rate in North America and a mid-thirties percentage growth rate in the international business.
• Gross margin is expected to increase approximately 130 basis points compared to the previous expectation of an approximate 50 to 70 basis point improvement versus the prior year adjusted gross margin of 48.6 percent with expected benefits from pricing and changes in foreign currency partially offset by the sale of the MyFitnessPal platform and expected higher freight expenses.
• Operating income is expected to reach approximately $425 million compared to the previous range of $215 million to $225 million. Excluding the impact of restructuring efforts, adjusted operating income is expected to reach approximately $475 million compared to the previous expectation of $340 million to $350 million.
• Diluted earnings per share is expected to reach approximately $0.55 compared to the previous expectation of diluted earnings per share of $0.14 to $0.16. Adjusted diluted earnings per share is expected to reach approximately $0.74 compared to the previously expected range of $0.50 to $0.52 per share.

2020 Restructuring Plan

In April 2020, Under Armour announced a $550 million to $600 million restructuring plan to rebalance its cost base to improve profitability and cash flow. The company now expects to recognize $525 million to $575 million in charges related to this plan and has recognized $500 million of pre-tax charges, including $17 million in the third quarter of 2021 or $26 million year-to-date. Of the $500 million recognized in charges, $140 million are cash-related, and $360 million are non-cash-related. The company currently expects to recognize any remaining charges related to this plan by the first calendar quarter of 2022.

COVID-19 Update

Under Armour remains focused on protecting teammate and consumer health and safety while navigating the ongoing and wide-ranging disruptions resulting from the pandemic. The company continues to work with its suppliers, partners, and customers to navigate these disruptions. However, given continued uncertainty related to COVID-19, particularly the ongoing and evolving impact on the company's suppliers and logistics providers, there could be further material impacts on Under Armour's full-year business results in 2021, as well as future periods.  

Conference Call and Webcast

Under Armour will hold its third-quarter conference call and webcast today at approximately 8:30 a.m. Eastern Time. The call will be webcast live at https://about.underarmour.com/investor-relations/financials and will be archived and available for replay about three hours after the live event.

Non-GAAP Financial Information

This press release refers to "currency neutral" and "adjusted" results, as well as "adjusted" forward-looking estimates of the company's fiscal 2021 outlook. Management believes this information is useful to investors to compare the company's results of operations period-over-period because it enhances visibility into its actual underlying results, excluding these impacts. Currency-neutral financial information is calculated to exclude the effect of changes in foreign currency exchange rates. References to adjusted financial measures exclude the impact of the company's 2020 restructuring plan and related impairment charges and impairments associated with certain long-lived assets and goodwill and related tax effects. Where applicable, adjusted net income (loss) and adjusted diluted income (loss) per share exclude the non-cash amortization of debt discount on the company's convertible senior notes, any gain or loss on extinguishing the company's convertible senior notes and related tax effects, and any gain or loss from divestitures. Management believes these adjustments are not core to the company's operations. The reconciliation of non-GAAP amounts to the most directly comparable financial measure calculated according to GAAP is presented in supplemental financial information furnished with this release. All per share amounts are reported on a diluted basis. These supplemental non-GAAP financial measures should not be considered in isolation and should be contemplated in addition to, and not as an alternative for, the company's reported results prepared per GAAP. Additionally, 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., headquartered in Baltimore, Maryland, is a leading inventor, marketer and distributor of branded athletic performance apparel, footwear and accessories. Designed to empower human performance, Under Armour's innovative products and experiences are engineered to make athletes better. For further information, please visit http://about.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 impact of the COVID-19 pandemic on our business and results of operations and the operations of our suppliers and logistics providers, our plans to reduce our operating expenses, anticipated charges and restructuring costs, projected savings related to our restructuring plans and the timing thereof, the development and introduction of new products, the implementation of our marketing and branding strategies, and the future benefits and opportunities from significant investments. 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, activity levels, 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: the impact of the COVID-19 pandemic on our industry and our business, financial condition and results of operations, including recent impacts on global supply chains and logistics; failure of our suppliers or manufacturers to produce or deliver our products in a timely or cost-effective manner; changes in general economic or market conditions that could affect overall consumer spending or our industry; 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 raw materials and commodities we use in our products and our supply chain; changes to the financial health of our customers; our ability to successfully execute our long-term strategies; our ability to effectively drive operational efficiency in our business and successfully execute any restructuring plans and realize their expected benefits; our ability to effectively develop and launch new, innovative and updated products; our ability to accurately forecast consumer shopping preferences and consumer demand for our products and manage our inventory in response to changing demands; loss of key customers, suppliers or manufacturers; 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 manage the increasingly complex operations of our global business; our ability to successfully manage or realize expected results from significant transactions and investments; 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 of such systems or technology; any disruptions, delays or deficiencies in the design, implementation or application of our global operating and financial reporting information technology system; our ability to attract key talent and retain the services of our senior management and key employees; our ability to access capital and financing required to manage our business on terms acceptable to us; 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 comply with existing trade and other regulations, and the potential impact of new trade, tariff and tax regulations on our profitability; risks related to data security or privacy breaches; and our potential exposure to litigation and other proceedings. 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.

SOURCE Under Armour, Inc.