BALTIMORE, Sept. 20, 2018 /PRNewswire/ -- Under Armour,
Inc. (NYSE: UA, UAA) today announced an update to its 2018
restructuring plan based on an organizational and process redesign
intended to optimize the company's strategic growth initiatives and
overall business performance.
Previously, the company expected to incur total estimated
pre-tax restructuring and related charges of approximately
$190 million to $210 million in connection with its 2018
restructuring plan. Following further evaluation, the company has
identified approximately $10 million
of cash severance charges related to an approximate 3 percent
reduction in its global workforce. Accordingly, it now expects
approximately $200 million to
$220 million of pre-tax restructuring
and related charges to be incurred in 2018. The reduction in
workforce is expected to be completed by March 31, 2019 and represents the final component
and update to the company's 2018 restructuring plan.
"In our relentless pursuit of running a more operationally
excellent company, we continue to make difficult decisions to
ensure we are best positioned to succeed," said Under Armour Chief
Financial Officer David Bergman.
"This redesign will help simplify the organization for smarter,
faster execution, capture additional cost efficiencies, and shift
resources to drive greater operating leverage as we move into 2019
and beyond."
Updated Fiscal 2018 Outlook
Based on the operational efficiencies driven by this action, the
company updated the following expectations for its full year 2018
outlook:
- Operating loss is now expected to be approximately $60 million versus the previous range of
$50 million to $60 million. Excluding the impact of the
restructuring plan, adjusted operating income is now expected to be
$140 million to $160 million versus the prior expectation of
$130 million to $160 million.
- Excluding the impact of the restructuring efforts,
adjusted diluted earnings per share is now expected to be in the
range of $0.16 to $0.19 versus the previously expected range of
$0.14 to $0.19.
Non-GAAP Financial Information
This press release refers to "adjusted" forward looking
estimates of the company's fiscal 2018 outlook, which are non-GAAP
financial measures. Reconciliations of non-GAAP amounts to the most
directly comparable financial measure calculated in accordance with
generally accepted accounting principles ("GAAP") in the United States are presented in
supplemental financial information furnished with this release.
Adjusted operating income and adjusted diluted earnings per share
exclude the impact of restructuring and other related charges and
the impact of the U.S. Tax Act, as applicable. Management believes
this information is useful to investors because it provides
enhanced visibility into the company's expected underlying results
excluding the impact of its restructuring plans and recent
significant changes in U.S. tax laws. These non-GAAP financial
measures 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. Additionally,
the company's non-GAAP financial information may not be comparable
to similarly titled measures reported by other companies.
U.S. Tax Act
The U.S. Tax Act was enacted into law on December 22, 2017. The legislation contained
several key tax provisions that affect Under Armour and, as
required, the company included reasonable estimates of the income
tax effects of the changes in tax law and tax rate in the company's
2017 financial results. These changes included a one-time mandatory
transition tax on accumulated foreign earnings and a re-measuring
of deferred tax assets which impacted our fourth quarter and full
year of 2017. Since the U.S. Tax Act was passed late in the fourth
quarter of 2017, and ongoing guidance and additional accounting
interpretations are expected over the following 12 months, the
company considers the accounting of the transition tax, deferred
tax re-measurements, and other items to be provisional. The company
expects to finalize its one-time estimates related to the U.S. Tax
Act within the one-year measurement period allowed by the SEC.
About Under Armour, Inc.
Under Armour, Inc., headquartered in Baltimore, Maryland is a leading inventor,
marketer and distributor of branded performance athletic apparel,
footwear and accessories. Designed to make all athletes better, the
brand's innovative products are sold worldwide to consumers with
active lifestyles. The company's Connected Fitness™
platform powers the world's largest digitally
connected health and fitness community. For further
information, please visit 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, our
anticipated charges and restructuring costs and the timing of these
measures, the impact of recent tax reform legislation on our
results of operations, 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," "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 successfully
execute our long-term strategies; our ability to successfully
execute any restructuring plans and realize expected benefits; our
ability to effectively drive operational efficiency in our
business; our ability to manage the increasingly complex operations
of our global 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 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; any
disruptions, delays or deficiencies in the design, implementation
or application of our new global operating and financial reporting
information technology system; 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, 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; our ability to successfully manage or realize
expected results from acquisitions and other significant
investments or capital expenditures; 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 of such
systems or technology; risks related to data security or privacy
breaches, including the 2018 data security issue related to our
Connected Fitness business; 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.
Outlook for the Year Ending December 31,
2018
The table below presents the reconciliation of
the company's fiscal 2018 outlook for income from operations
calculated in accordance with GAAP to adjusted operating income.
This adjusted amount is a non-GAAP financial measure. See "Non-GAAP
Financial Information" above for further information regarding the
company's use of non-GAAP financial measures.
ADJUSTED OPERATING INCOME RECONCILIATION
(in
millions)
|
Year Ending December
31, 2018
|
Loss from
operations
|
$
(60)
|
Add: Estimated impact
of restructuring (1)
|
$
200
|
Adjusted operating
income
|
$
140
|
|
|
(1)
|
The estimated
impact of the restructuring presented above assumes the low end of
the company's estimated range of 2018 restructuring and related
charges.
|
The company is not able to provide a reconciliation of the
non-GAAP adjusted effective tax rate or adjusted diluted earnings
per share to the GAAP effective tax rate or diluted earnings per
share for its 2018 outlook. As a result of the 2018 restructuring
plan, the company's GAAP net income for fiscal year 2018 is
expected to be a net loss, and therefore the GAAP effective tax
rate is subject to significant variability. Given this variability,
the company cannot provide a meaningful outlook of the GAAP
effective tax rate or diluted loss per share without unreasonable
effort. These non-GAAP measures exclude the impact of the 2018
restructuring plan.
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SOURCE Under Armour, Inc.