24/10/2014

Under Armour Reports Third Quarter Net Revenues Growth Of 30%; Raises Full Year 2014 Net Revenues And Operating Income Outlook

- Third Quarter Net Revenues Increased 30% to $938 Million

- Third Quarter Footwear Net Revenues Increased 50%; Third Quarter International Net Revenues Increased 94%

- Raises 2014 Net Revenues Outlook to Approximately $3.03 Billion (+30%)

- Raises 2014 Operating Income Outlook to Approximately $348 Million (+31%)

BALTIMORE, Oct. 23, 2014 -- Under Armour, Inc. (NYSE: UA) today announced financial results for the third quarter ended September 30, 2014. Net revenues increased 30% in the third quarter of 2014 to $938 million compared with net revenues of $723 million in the prior year's period.

Net income increased 22% in the third quarter of 2014 to $89 million compared with $73 million in the prior year's period. Diluted earnings per share for the third quarter of 2014 were $0.41 compared with $0.34 per share in the prior year's period.

Third quarter apparel net revenues increased 26% to $705 million compared with $561 million in the same period of the prior year, driven primarily by expanded offerings and platform innovations across training, golf, and outdoor. Third quarter footwear net revenues increased 50% to $122 million from $81 million in the prior year's period, led by new introductions in running and basketball.

Third quarter accessories net revenues increased 32% to $85 million from $64 million in the prior year's period, primarily driven by expanded offerings in headwear, bags, and gloves. Direct-to-Consumer net revenues, which represented 26% of total net revenues for the third quarter, grew 35% year-over-year. International net revenues, which represented 9% of total net revenues for the third quarter, grew 94% year-over-year.

Kevin Plank, Chairman and CEO of Under Armour, Inc., stated, "Our strong third quarter results demonstrate the power of the UA brand. The momentum and growing confidence we outlined last quarter in Footwear and International were on full display in the third quarter with growth rates accelerating to 50% and 94%, respectively. Our Direct-to-Consumer business continues to drive our vision to Empower Athletes Everywhere with the debut of local E-Commerce sites in the United Kingdom, Germany, and France, as well as optimizing all global sites for mobile to stay ahead of where our consumers are going.

And we were particularly excited about our I WILL WHAT I WANT™ global women's campaign, featuring Misty Copeland and Gisele Bundchen, which ignited a powerful new dialogue with our female consumer as we begin to bridge the gap between female athletes and athletic females."

Gross margin for the third quarter of 2014 was 49.6% compared with 48.4% in the prior year's quarter, primarily driven by higher import duties in the prior year's period and favorable year-over-year sales mix. Selling, general and administrative expenses as a percentage of net revenues were 34.0% in the third quarter of 2014 compared with 31.7% in the prior year's period, reflecting broad-based investments to support global growth initiatives as well as higher incentive compensation expenses. Third quarter operating income increased 21% to $146 million compared with $121 million in the prior year's period.

Balance Sheet Highlights

Cash and cash equivalents increased 34% to $249 million at September 30, 2014 compared with $186 million at September 30, 2013. Long-term debt including current maturities increased to $192 million at September 30, 2014 compared with $54 million at September 30, 2013. Inventory at September 30, 2014 increased 28% to $637 million compared with $497 million at September 30, 2013.

Updated 2014 Outlook

The Company had previously anticipated 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. Based on current visibility, the Company expects 2014 net revenues of approximately $3.03 billion, representing growth of 30% over 2013, and 2014 operating income of approximately $348 million, representing growth of 31% over 2013. The Company anticipates an effective tax rate of approximately 40.0% 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, "Our plans of crossing $3 billion in net revenues and achieving 30% growth this year represent significant milestones for the Brand, but we believe we are just getting started. We are delivering consistent top line results while making the right investments to support both the near- and long-term opportunities of the Brand. This includes investments to build world-class design and innovation capabilities for all of our products, accelerate our international footprint, and expand our 30 million users under our Connected Fitness platform. We believe this balanced approach will continue to drive our global ambitions and long-term value for our shareholders. We are proud of what we have built and continue to see ourselves as a much larger brand than the $3 billion in revenues we are projecting for 2014."

Conference Call and Webcast

The Company will provide additional commentary regarding its third quarter results as well as its updated 2014 outlook during its earnings conference call today, October 23, 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, as well as any potential interruption or security lapse in such systems or 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.

Under Armour, Inc.

For the Quarter and Nine Months Ended September 30, 2014 and 2013


(Unaudited; in thousands, except per share amounts)







CONSOLIDATED STATEMENTS OF INCOME









Quarter Ended
September 30,

Nine Months Ended
September 30,


2014


% of Net
Revenues

2013


% of Net
Revenues

2014


% of Net
Revenues

2013


% of Net
Revenues
Net revenues

$
937,908


100.0
%

$
723,146


100.0
%

$
2,189,169


100.0
%

$
1,649,295


100.0
%
Cost of goods sold

472,608


50.4
%

373,011


51.6
%

1,123,227


51.3
%

862,978


52.3
%
Gross profit

465,300


49.6
%

350,135


48.4
%

1,065,942


48.7
%

786,317


47.7
%
Selling, general and administrative expenses

319,194


34.0
%

229,306


31.7
%

858,286


39.2
%

619,686


37.6
%
Income from operations

146,106


15.6
%

120,829


16.7
%

207,656


9.5
%

166,631


10.1
%
Interest expense, net

(1,535)


(0.2)%


(691)


(0.1)%


(3,608)


(0.2)%


(2,127)


(0.2)%

Other expense, net

(3,355)


(0.3)%


(113)


%

(3,982)


(0.2)%


(670)


%
Income before income taxes

141,216


15.1
%

120,025


16.6
%

200,066


9.1
%

163,834


9.9
%
Provision for income taxes

52,111


5.6
%

47,241


6.5
%

79,733


3.6
%

65,670


3.9
%
Net income

$
89,105


9.5
%

$
72,784


10.1
%

$
120,333


5.5
%

$
98,164


6.0
%
Net income available per common share


















Basic

$
0.42





$
0.34





$
0.56





$
0.47




Diluted

$
0.41





$
0.34





$
0.55





$
0.46




Weighted average common shares outstanding


















Basic

213,522





211,054





213,035





210,458




Diluted

217,982





215,536





217,601





214,852






NET REVENUES BY PRODUCT CATEGORY







Quarter Ended
September 30,

Nine Months Ended
September 30,


2014


2013


% Change

2014


2013


% Change
Apparel

$
704,557


$
560,899


25.6
%

$
1,583,834


$
1,216,645


30.2
%
Footwear

121,597


81,024


50.1
%

345,177


243,458


41.8
%
Accessories

84,949


64,373


32.0
%

196,434


151,480


29.7
%
Total net sales

911,103


706,296


29.0
%

2,125,445


1,611,583


31.9
%
Licensing and other revenues

26,805


16,850


59.1
%

63,724


37,712


69.0
%
Total net revenues

$
937,908


$
723,146


29.7
%

$
2,189,169


$
1,649,295


32.7
%


NET REVENUES BY SEGMENT







Quarter Ended
September 30,

Nine Months Ended
September 30,


2014


2013


% Change

2014


2013


% Change
North America

$
847,563


$
678,894


24.8
%

$
1,988,156


$
1,548,621


28.4
%
Other foreign countries and businesses

90,345


44,252


104.2
%

201,013


100,674


99.7
%
Total net revenues

$
937,908


$
723,146


29.7
%

$
2,189,169


$
1,649,295


32.7
%



Under Armour, Inc.
As of September 30, 2014, December 31, 2013 and September 30, 2013
(Unaudited; in thousands)

CONDENSED CONSOLIDATED BALANCE SHEETS
















As of
9/30/14

As of
12/31/13

As of
9/30/13
Assets









Cash and cash equivalents

$
249,469


$
347,489


$
186,377

Accounts receivable, net

449,221


209,952


353,257

Inventories

637,459


469,006


497,406

Prepaid expenses and other current assets

86,914


63,987


56,064

Deferred income taxes

40,840


38,377


29,811

Total current assets

1,463,903


1,128,811


1,122,915

Property and equipment, net

264,629


223,952


201,603

Goodwill

123,356


122,244



Intangible assets, net

28,850


24,097


3,721

Deferred income taxes

47,602


31,094


26,766

Other long term assets

49,770


47,543


41,985

Total assets

$
1,978,110


$
1,577,741


$
1,396,990

Liabilities and Stockholders' Equity









Revolving credit facility

$


$
100,000


$

Accounts payable

273,687


165,456


184,405

Accrued expenses

143,299


133,729


109,344

Current maturities of long term debt

19,524


4,972


5,034

Other current liabilities

53,969


22,473


34,201

Total current liabilities

490,479


426,630


332,984

Long term debt, net of current maturities

172,124


47,951


49,148

Other long term liabilities

61,366


49,806


48,403

Total liabilities

723,969


524,387


430,535

Total stockholders' equity

1,254,141


1,053,354


966,455

Total liabilities and stockholders' equity

$
1,978,110


$
1,577,741


$
1,396,990



Under Armour, Inc.
For the Nine Months Ended September 30, 2014 and 2013
(Unaudited; in thousands)

CONSOLIDATED STATEMENTS OF CASH FLOWS





Nine Months Ended
September 30,


2014


2013

Cash flows from operating activities






Net income

$
120,333


$
98,164

Adjustments to reconcile net income to net cash used in operating activities






Depreciation and amortization

52,391


36,052

Unrealized foreign currency exchange rate losses

4,881


1,021

Loss on disposal of property and equipment

78


598

Stock-based compensation

38,965


25,586

Deferred income taxes

(19,783)


(10,691)

Changes in reserves and allowances

10,794


12,007

Changes in operating assets and liabilities, net of effects of acquisitions:






Accounts receivable

(248,256)


(181,100)

Inventories

(176,770)


(186,276)

Prepaid expenses and other assets

(20,282)


(7,027)

Accounts payable

118,236


42,344

Accrued expenses and other liabilities

20,180


37,404

Income taxes payable and receivable

26,737


19,577

Net cash used in operating activities

(72,496)


(112,341)

Cash flows from investing activities






Purchases of property and equipment

(96,596)


(62,058)

Purchase of business

(10,924)



Purchases of other assets

(724)


(475)

Change in loans receivable



(1,700)

Net cash used in investing activities

(108,244)


(64,233)

Cash flows from financing activities






Payments on revolving credit facility

(100,000)



Proceeds from term loan

150,000



Payments on long term debt

(11,275)


(4,212)

Excess tax benefits from stock-based compensation arrangements

33,056


13,770

Proceeds from exercise of stock options and other stock issuances

14,060


12,727

Payments of debt financing costs

(1,714)



Net cash provided by financing activities

84,127


22,285

Effect of exchange rate changes on cash and cash equivalents

(1,407)


(1,175)

Net decrease in cash and cash equivalents

(98,020)


(155,464)

Cash and cash equivalents






Beginning of period

347,489


341,841

End of period

$
249,469


$
186,377








Non-cash investing and financing activities






Decrease in accrual for property and equipment

$
(10,601)


$
(6,289)




SOURCE Under Armour, Inc. through PRNewswire by press release ©
http://www.underarmour.com


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