BALTIMORE, July 24, 2014 /PRNewswire/ -- Under
Armour, Inc. (NYSE: UA) today announced financial results for
the second quarter ended June 30, 2014. Net revenues
increased 34% in the second quarter of 2014 to $610 million compared with net revenues of
$455 million in the prior year's
period. Net income in the second quarter of 2014 of
$18 million was unchanged compared
with the prior year's period, largely reflecting the planned timing
of marketing and innovation expenses. Diluted earnings per
share for the second quarter of 2014 were $0.08, unchanged from the prior year's
period.
Second quarter apparel net revenues increased 35% to
$420 million compared with
$310 million in the same period of
the prior year, driven by expanded offerings in categories such as
golf, outdoor, running, training, and women's studio. Second
quarter footwear net revenues increased 34% to $110 million from $82
million in the prior year's period, led by new introductions
in running. Second quarter accessories net revenues increased
18% to $60 million from $51 million in the prior year's period, primarily
driven by headwear. Direct-to-Consumer net revenues, which
represented 31% of total net revenues for the second quarter, grew
38% year-over-year. International net revenues, which
represented 8% of total net revenues for the second quarter, grew
80% year-over-year.
Kevin Plank, Chairman and CEO of
Under Armour, Inc., stated, "The broad-based momentum that we have
been experiencing recently showed no signs of stopping during the
second quarter. While we continued to add more dimension to
our largest growth driver in Apparel, we were particularly
encouraged by the brand response we are seeing in both our Footwear
and International businesses. From our latest pinnacle
football cleat, the Highlight ClutchFit, to the successful
SpeedForm running initiative, our footwear is clearly resonating
with consumers and we are well positioned to expand these platforms
in the seasons ahead. In International, we are executing in
all regions and are proud of key second quarter milestones such as
our initial product launch in Brasil and partnering with key
distributors to open the first Brand
House stores in Panama,
the Philippines and Singapore."
Gross margin for the second quarter of 2014 was 49.2% compared
with 48.3% in the prior year's quarter, primarily driven by
favorable year-over-year sales mix and product margins.
Selling, general and administrative expenses as a percentage of net
revenues were 43.5% in the second quarter of 2014 compared with
41.2% in the prior year's period, primarily driven by the timing of
marketing expenses and investments in product innovation.
Second quarter operating income increased 7% to $35 million compared with $32 million in the prior year's period.
Balance Sheet Highlights
Cash and cash equivalents increased 34% to $300 million at June 30, 2014 compared with
$224 million at June 30, 2013. Long-term debt including
current maturities increased to $197
million at June 30, 2014
compared with $55 million at
June 30, 2013. In May 2014 the Company closed on a $150 million term loan and paid off $100 million drawn on the Company's revolving
credit facility. Inventory at June 30,
2014 increased 35% to $662
million compared with $491
million at June 30, 2013.
Updated 2014 Outlook
The Company had previously anticipated 2014 net revenues in the
range of $2.88 billion to $2.91
billion, representing growth of 24% to 25% over 2013, and
2014 operating income in the range of $331
million to $334 million, representing growth of 25% to 26%
over 2013. Based on current visibility, the Company expects
2014 net revenues in the range of $2.98
billion to $3.0 billion, representing growth of 28% to 29%
over 2013, and 2014 operating income in the range of $343 million to $345 million, representing growth
of 29% to 30% over 2013. The Company currently anticipates an
effective tax rate of approximately 40.5% for the full year,
compared to 37.8% for 2013, and fully diluted weighted average
shares outstanding of approximately 218 million for 2014.
Mr. Plank concluded, "The enhanced visibility and execution of
both our Footwear and International growth engines during the first
half of 2014 gives us greater conviction in achieving our full year
financial targets. At the same time, we are better positioned
to broaden our consumer reach this quarter as we launch new
relationships with the U.S. Naval
Academy, the University of Notre
Dame, as well as the Cruz Azul Fútbol Club in Mexico.
In addition, this month we are launching our second Brand Holiday of 2014, our first global campaign
dedicated to women and one that will reinforce our commitment to
build out this important growth driver. We are also extremely
excited with our progress in Connected Fitness, where we just
surpassed 27 million users and are adding nearly one million new
users each month, as well as forging relationships that will
empower this community in the years ahead."
Conference Call and Webcast
The Company will provide additional commentary regarding its
second quarter results as well as its updated 2014 outlook during
its earnings conference call today, July
24, 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), the originator of performance footwear,
apparel and accessories, 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.
Under Armour's wholly owned subsidiary, MapMyFitness, powers one of
the world's largest Connected Fitness communities. 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, 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
lose market share or reduce the prices of our products or to
increase significantly our marketing efforts; 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; our ability
to comply with trade and other regulations; the availability,
integration and effective operation of management information
systems and other technology; our ability to effectively integrate
new businesses and investments into our company; our potential
exposure to litigation and other proceedings; 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 Quarter and
Six Months Ended June 30, 2014 and 2013
|
(Unaudited; in
thousands, except per share amounts)
|
CONSOLIDATED
STATEMENTS OF INCOME
|
|
|
|
Quarter Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2014
|
|
|
% of Net
Revenues
|
|
2013
|
|
|
% of Net
Revenues
|
|
2014
|
|
|
% of Net
Revenues
|
|
2013
|
|
|
% of Net
Revenues
|
Net
revenues
|
|
$
|
609,654
|
|
|
100.0
|
%
|
|
$
|
454,541
|
|
|
100.0
|
%
|
|
$
|
1,251,261
|
|
|
100.0
|
%
|
|
$
|
926,149
|
|
|
100.0
|
%
|
Cost of goods
sold
|
|
309,702
|
|
|
50.8
|
%
|
|
234,910
|
|
|
51.7
|
%
|
|
650,619
|
|
|
52.0
|
%
|
|
489,967
|
|
|
52.9
|
%
|
Gross
profit
|
|
299,952
|
|
|
49.2
|
%
|
|
219,631
|
|
|
48.3
|
%
|
|
600,642
|
|
|
48.0
|
%
|
|
436,182
|
|
|
47.1
|
%
|
Selling, general and
administrative expenses
|
|
265,258
|
|
|
43.5
|
%
|
|
187,321
|
|
|
41.2
|
%
|
|
539,092
|
|
|
43.1
|
%
|
|
390,380
|
|
|
42.2
|
%
|
Income from
operations
|
|
34,694
|
|
|
5.7
|
%
|
|
32,310
|
|
|
7.1
|
%
|
|
61,550
|
|
|
4.9
|
%
|
|
45,802
|
|
|
4.9
|
%
|
Interest expense,
net
|
|
(1,227)
|
|
|
(0.2)%
|
|
|
(711)
|
|
|
(0.1)%
|
|
|
(2,073)
|
|
|
(0.2)%
|
|
|
(1,436)
|
|
|
(0.1)%
|
|
Other income
(expense), net
|
|
247
|
|
|
—
|
%
|
|
(797)
|
|
|
(0.2)%
|
|
|
(627)
|
|
|
—
|
%
|
|
(557)
|
|
|
(0.1)%
|
|
Income before
income taxes
|
|
33,714
|
|
|
5.5
|
%
|
|
30,802
|
|
|
6.8
|
%
|
|
58,850
|
|
|
4.7
|
%
|
|
43,809
|
|
|
4.7
|
%
|
Provision for income
taxes
|
|
16,024
|
|
|
2.6
|
%
|
|
13,236
|
|
|
2.9
|
%
|
|
27,622
|
|
|
2.2
|
%
|
|
18,429
|
|
|
2.0
|
%
|
Net
income
|
|
$
|
17,690
|
|
|
2.9
|
%
|
|
$
|
17,566
|
|
|
3.9
|
%
|
|
$
|
31,228
|
|
|
2.5
|
%
|
|
$
|
25,380
|
|
|
2.7
|
%
|
Net income
available per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.08
|
|
|
|
|
|
$
|
0.08
|
|
|
|
|
|
$
|
0.15
|
|
|
|
|
|
$
|
0.12
|
|
|
|
|
Diluted
|
|
$
|
0.08
|
|
|
|
|
|
$
|
0.08
|
|
|
|
|
|
$
|
0.14
|
|
|
|
|
|
$
|
0.12
|
|
|
|
|
Weighted average
common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
213,188
|
|
|
|
|
|
210,530
|
|
|
|
|
|
212,788
|
|
|
|
|
|
210,162
|
|
|
|
|
Diluted
|
|
217,294
|
|
|
|
|
|
214,834
|
|
|
|
|
|
217,134
|
|
|
|
|
|
214,512
|
|
|
|
|
NET REVENUES BY
PRODUCT CATEGORY
|
|
|
|
Quarter Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2014
|
|
|
2013
|
|
|
% Change
|
|
2014
|
|
|
2013
|
|
|
% Change
|
Apparel
|
|
$
|
420,028
|
|
|
$
|
310,221
|
|
|
35.4
|
%
|
|
$
|
879,277
|
|
|
$
|
655,747
|
|
|
34.1
|
%
|
Footwear
|
|
109,536
|
|
|
81,651
|
|
|
34.2
|
%
|
|
223,580
|
|
|
162,434
|
|
|
37.6
|
%
|
Accessories
|
|
59,932
|
|
|
51,024
|
|
|
17.5
|
%
|
|
111,485
|
|
|
87,106
|
|
|
28.0
|
%
|
Total net
sales
|
|
589,496
|
|
|
442,896
|
|
|
33.1
|
%
|
|
1,214,342
|
|
|
905,287
|
|
|
34.1
|
%
|
Licensing and other
revenues
|
|
20,158
|
|
|
11,645
|
|
|
73.1
|
%
|
|
36,919
|
|
|
20,862
|
|
|
77.0
|
%
|
Total net
revenues
|
|
$
|
609,654
|
|
|
$
|
454,541
|
|
|
34.1
|
%
|
|
$
|
1,251,261
|
|
|
$
|
926,149
|
|
|
35.1
|
%
|
NET REVENUES BY
SEGMENT
|
|
|
|
Quarter Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2014
|
|
|
2013
|
|
|
% Change
|
|
2014
|
|
|
2013
|
|
|
% Change
|
North
America
|
|
$
|
558,041
|
|
|
$
|
428,859
|
|
|
30.1
|
%
|
|
$
|
1,140,593
|
|
|
$
|
869,727
|
|
|
31.1
|
%
|
Other foreign
countries and businesses
|
|
51,613
|
|
|
25,682
|
|
|
101.0
|
%
|
|
110,668
|
|
|
56,422
|
|
|
96.1
|
%
|
Total net
revenues
|
|
$
|
609,654
|
|
|
$
|
454,541
|
|
|
34.1
|
%
|
|
$
|
1,251,261
|
|
|
$
|
926,149
|
|
|
35.1
|
%
|
Under Armour,
Inc.
|
As of June 30, 2014,
December 31, 2013 and June 30, 2013
|
(Unaudited; in
thousands)
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
As of
6/30/14
|
|
As of
12/31/13
|
|
As of
6/30/13
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
300,434
|
|
|
$
|
347,489
|
|
|
$
|
223,842
|
|
Accounts receivable,
net
|
|
269,133
|
|
|
209,952
|
|
|
212,836
|
|
Inventories
|
|
662,388
|
|
|
469,006
|
|
|
490,943
|
|
Prepaid expenses and
other current assets
|
|
97,190
|
|
|
63,987
|
|
|
52,291
|
|
Deferred income
taxes
|
|
39,174
|
|
|
38,377
|
|
|
32,043
|
|
Total current
assets
|
|
1,368,319
|
|
|
1,128,811
|
|
|
1,011,955
|
|
Property and
equipment, net
|
|
255,018
|
|
|
223,952
|
|
|
190,924
|
|
Goodwill
|
|
123,395
|
|
|
122,244
|
|
|
—
|
|
Intangible assets,
net
|
|
30,776
|
|
|
24,097
|
|
|
3,798
|
|
Deferred income
taxes
|
|
37,706
|
|
|
31,094
|
|
|
26,642
|
|
Other long term
assets
|
|
48,731
|
|
|
47,543
|
|
|
42,069
|
|
Total
assets
|
|
$
|
1,863,945
|
|
|
$
|
1,577,741
|
|
|
$
|
1,275,388
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
Revolving credit
facility
|
|
$
|
—
|
|
|
$
|
100,000
|
|
|
$
|
—
|
|
Accounts
payable
|
|
334,001
|
|
|
165,456
|
|
|
217,925
|
|
Accrued
expenses
|
|
110,649
|
|
|
133,729
|
|
|
77,935
|
|
Current maturities of
long term debt
|
|
19,650
|
|
|
4,972
|
|
|
5,112
|
|
Other current
liabilities
|
|
15,945
|
|
|
22,473
|
|
|
2,923
|
|
Total current
liabilities
|
|
480,245
|
|
|
426,630
|
|
|
303,895
|
|
Long term debt, net
of current maturities
|
|
176,987
|
|
|
47,951
|
|
|
50,387
|
|
Other long term
liabilities
|
|
65,954
|
|
|
49,806
|
|
|
44,099
|
|
Total
liabilities
|
|
723,186
|
|
|
524,387
|
|
|
398,381
|
|
Total stockholders'
equity
|
|
1,140,759
|
|
|
1,053,354
|
|
|
877,007
|
|
Total liabilities
and stockholders' equity
|
|
$
|
1,863,945
|
|
|
$
|
1,577,741
|
|
|
$
|
1,275,388
|
|
Under Armour,
Inc.
|
For the Six Months
Ended June 30, 2014 and 2013
|
(Unaudited; in
thousands)
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
Six Months Ended June
30,
|
|
|
2014
|
|
|
2013
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
Net income
|
|
$
|
31,228
|
|
|
$
|
25,380
|
|
Adjustments to
reconcile net income to net cash used in operating
activities
|
|
|
|
|
|
|
Depreciation and amortization
|
|
34,347
|
|
|
23,618
|
|
Unrealized foreign
currency exchange rate (gains) losses
|
|
(100)
|
|
|
1,617
|
|
Loss on disposal of
property and equipment
|
|
73
|
|
|
466
|
|
Stock-based
compensation
|
|
23,860
|
|
|
18,878
|
|
Deferred income
taxes
|
|
(7,388)
|
|
|
(13,228)
|
|
Changes in reserves
and allowances
|
|
1
|
|
|
932
|
|
Changes in operating
assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
|
Accounts
receivable
|
|
(53,090)
|
|
|
(37,594)
|
|
Inventories
|
|
(195,406)
|
|
|
(175,549)
|
|
Prepaid expenses and
other assets
|
|
(16,514)
|
|
|
(4,066)
|
|
Accounts
payable
|
|
175,674
|
|
|
77,644
|
|
Accrued expenses and
other liabilities
|
|
(14,286)
|
|
|
2,812
|
|
Income taxes payable
and receivable
|
|
(24,065)
|
|
|
(11,386)
|
|
Net cash used in
operating activities
|
|
(45,666)
|
|
|
(90,476)
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
Purchases of property
and equipment
|
|
(68,901)
|
|
|
(39,696)
|
|
Purchase of
business
|
|
(10,924)
|
|
|
—
|
|
Purchases of other
assets
|
|
(260)
|
|
|
(475)
|
|
Change in loans
receivable
|
|
—
|
|
|
(1,700)
|
|
Net cash used in
investing activities
|
|
(80,085)
|
|
|
(41,871)
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
Payments on revolving
credit facility
|
|
(100,000)
|
|
|
—
|
|
Proceeds from term
loan
|
|
150,000
|
|
|
—
|
|
Payments on long term
debt
|
|
(6,286)
|
|
|
(2,895)
|
|
Excess tax benefits
from stock-based compensation arrangements
|
|
26,301
|
|
|
9,455
|
|
Proceeds from
exercise of stock options and other stock issuances
|
|
10,196
|
|
|
9,738
|
|
Payments of debt
financing costs
|
|
(1,714)
|
|
|
—
|
|
Net cash provided by
financing activities
|
|
78,497
|
|
|
16,298
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
199
|
|
|
(1,950)
|
|
Net decrease in cash
and cash equivalents
|
|
(47,055)
|
|
|
(117,999)
|
|
Cash and cash
equivalents
|
|
|
|
|
|
|
Beginning of
period
|
|
347,489
|
|
|
341,841
|
|
End of
period
|
|
$
|
300,434
|
|
|
$
|
223,842
|
|
|
|
|
|
|
|
|
Non-cash investing
and financing activities
|
|
|
|
|
|
|
Decrease in accrual
for property and equipment
|
|
$
|
(9,100)
|
|
|
$
|
(7,200)
|
|
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SOURCE Under Armour, Inc.