Under Armour Reports First Quarter Net Revenues Growth of 25%; 20 Straight Quarters Above 20% Net Revenue Growth
- First Quarter Net Revenues Increased 25% to $805 Million, Up 27% on a Currency Neutral Basis
- Raises 2015 Net Revenues Outlook to Approximately $3.78 Billion (+23%)
- Raises 2015 Operating Income Outlook to a Range of $400 Million to $408 Million (+13% to +15%), Inclusive of the Impact of the Connected Fitness Acquisitions
Baltimore, MD (April 21, 2015) - Under Armour, Inc. (NYSE: UA) today announced financial results for the first quarter ended March 31, 2015. Net revenues increased 25% in the first quarter of 2015 to $805 million compared with net revenues of $642 million in the prior year's period. On a currency neutral basis, net revenues increased 27% compared with the prior year's period. Net income decreased 13% in the first quarter of 2015 to $12 million compared with $14 million in the prior year's period, inclusive of costs related to the previously announced acquisitions of Endomondo and MyFitnessPal during the first quarter. Diluted earnings per share for the first quarter of 2015 were $0.05 compared with $0.06 per share in the prior year's period.
First quarter apparel net revenues increased 21% to $555 million compared with $459 million in the same period of the prior year, driven primarily by new product introductions in baselayer and training. First quarter footwear net revenues increased 41% to $161 million from $114 million in the prior year's period, highlighted by expanded SpeedForm running offerings as well as the introduction of the Curry One basketball shoe. First quarter accessories net revenues increased 23% to $63 million from $52 million in the prior year's period. Direct-to-Consumer net revenues, which represented 25% of total net revenues for the first quarter, grew 21% year-over-year. International net revenues, which represented 12% of total net revenues for the first quarter, grew 74% year-over-year.
Kevin Plank, Chairman and CEO of Under Armour, Inc., stated, "We reached an important milestone to start 2015 with our 20th straight quarter above 20% net revenue growth. This represents five years of consistently exceeding the demands of our athletes and just as importantly, anticipating what those demands will be next. While the 25% growth achieved in the first quarter was a great start to the year, we are even more excited with the foundation we are establishing for future growth. Within our Connected Fitness platform, we closed our two acquisitions of Endomondo and MyFitnessPal to create the world's largest digital health and fitness community. We have already added over 10 million unique registered users to our platform since our initial February announcement, bringing the total Connected Fitness community to over 130 million unique registered users. We opened a 30,000 square foot Brand House store on the Magnificent Mile in Chicago, while also debuting our first stores in Brazil and the Middle East which contributed to the 74% international growth for the quarter. We experienced tremendous demand for our new SpeedForm Gemini running shoe and the Curry One basketball shoe with even bigger things to come in these categories. And in our largest product category, Apparel, we crossed 20% growth for the 22nd consecutive quarter. These are powerful engines that will help ensure the Brand remains firmly entrenched as the leading growth company in our industry."
Gross margin for the first quarter of 2015 was unchanged at 46.9%, primarily reflecting favorable product margins in apparel and footwear offset by the impacts of higher air freight and foreign exchange rates. Selling, general and administrative expenses as a percentage of net revenues were 43.5% in the first quarter of 2015 compared with 42.7% in the prior year's period, primarily reflecting costs associated with the two acquisitions, including $6.3 million of one-time deal-related costs. First quarter operating income increased 3% to $28 million compared with $27 million in the prior year's period.
Balance Sheet Highlights
Cash and cash equivalents increased 29% to $232 million at March 31, 2015 compared with $180 million at March 31, 2014. Inventory at March 31, 2015 increased 22% to $578 million compared with $472 million at March 31, 2014. Total debt increased to $677 million at March 31, 2015 compared with $152 million at March 31, 2014, primarily reflecting borrowing to fund the two Connected Fitness acquisitions.
Updated 2015 Outlook
The Company had previously anticipated 2015 net revenues of approximately $3.76 billion, representing growth of 22% over 2014, and 2015 operating income in the range of $397 million to $407 million, representing growth of 12% to 15% over 2014. Based on current visibility, the Company expects 2015 net revenues of approximately $3.78 billion, representing growth of 23% over 2014 and 2015 operating income in the range of $400 million to $408 million, representing growth of 13% to 15% over 2014. The 2015 guidance continues to reflect the net dilutive impact from the Connected Fitness acquisitions, including one-time deal-related costs, as well as the impact of the strong dollar negatively impacting our operating margin within our international businesses.
Mr. Plank concluded, "We are off to a great start in 2015 and have several powerful stories unfolding in the current quarter. We are incredibly proud that Under Armour athlete Jordan Spieth captured the Green Jacket in record-setting fashion at The Masters last week. At just 21, Jordan is already firmly entrenched on the global sports stage and we look to support Jordan throughout his career winning major championships as he adds to his legacy. Following our 2014 expansion into Brazil and the recent opening of our first Brand House store in-country, we look to accelerate our positioning in this important market with our signing of one of the most popular and successful clubs in Brazil, São Paulo Futebol Clube. Building off the success of our SpeedForm platform, we are currently debuting cleated models in both American and global football, including a boot worn by one of our newest athletes, Memphis Depay, who has proven to be one of the most exciting young football players in the world and at only 21 years old has the potential to become one of the most exciting players in the beautiful game. These are big wins for the Brand and we will continue to leverage our innovative product and targeted marketing investments to attack the vast opportunities ahead."
Conference Call and Webcast
The Company will provide additional commentary regarding its first quarter results as well as its updated 2015 outlook during its earnings conference call today, April 21st, 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.
Non-GAAP Financial Information
The Company reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). However, this press release refers to certain "currency neutral" financial information, which is a non-GAAP financial measure. The Company provides a reconciliation of this non-GAAP measure to the most directly comparable financial measure calculated in accordance with GAAP. See the end of this press release for this reconciliation.
Currency neutral financial information is calculated to exclude foreign exchange impact. Management believes this information is useful to investors to facilitate a comparison of the Company's results of operations period-over-period. This non-GAAP financial measure 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. In addition, 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 (NYSE: UA), the originator of performance footwear, apparel and equipment, 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. The Under Armour Connected Fitness™ platform powers the world's largest digital health and fitness community through a suite of applications: UA Record, MapMyFitness, Endomondo and MyFitnessPal. 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
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