Under Armour Reports Fourth Quarter And Full Year Results; Announces Outlook For 2018
"After years of rapid growth and building a globally recognized brand, the dynamic landscape of 2017 was a catalyst for us to begin strategically transforming
Fourth Quarter 2017 Review
- Revenue was up 5 percent to
$1.4 billion (up 4 percent currency neutral). - Revenue to wholesale customers declined 1 percent to
$733 million and direct-to-consumer revenue was up 11 percent to$575 million . Direct-to-consumer represented 42 percent of global revenue in the quarter. - Consistent with previous expectations, revenue in
North America was down 4 percent. Strong international momentum continued with revenue up 47 percent (up 43 percent currency neutral), representing 23 percent of total revenue. Within our international business, revenue in EMEA was up 45 percent (up 37 percent currency neutral), up 56 percent inAsia-Pacific (up 55 percent currency neutral) and up 36 percent inLatin America (up 34 percent currency neutral). - Apparel revenue increased 2 percent to
$952 million , as growth in men's training and global football was tempered by declines in the team sports and outdoor categories. Footwear revenue was up 9 percent to$246 million , driven by strength in running, offset by team sports and basketball. Accessories revenue increased 6 percent to$111 million led by men's training and running. - Gross margin declined 150 basis points to 43.2 percent as benefits from changes in foreign currency rates and product costs were more than offset by pricing and other inventory management initiatives, and channel mix. Adjusted gross margin, which excludes a
$1 million impact from restructuring efforts, was 43.3 percent. - Selling, General and administrative expenses increased 40.7 percent to
$591 million , or 43.3 percent of revenue, primarily due to third to fourth quarter timing shifts in marketing execution and lower incentive compensation in the prior period, as well as continued investments in the direct-to-consumer, footwear and international businesses. - Restructuring and impairment charges were
$36 million . - Operating loss was
$37 million . Adjusted operating income was$0 million - Net loss was
$88 million in the fourth quarter. Excluding both a one-time charge related to theU.S. Tax Act, and the impact of the restructuring plan, adjusted net loss was$1 million . - Diluted earnings per share was negative
$0.20 . Adjusted earnings per share was$0.00 . - Inventory increased 26 percent to
$1.2 billion driven by a mid-teen percentage rate increase inNorth America and nearly 50 percent growth in the international business. - Cash and cash equivalents increased 25 percent to
$312 million .
Full Year 2017 Review
- Revenue was up 3 percent to
$5.0 billion . - Revenue to wholesale customers declined 3 percent to
$3.0 billion and direct-to-consumer revenue was up 14 percent to$1.7 billion . Direct-to-consumer represented 35 percent of global revenue in 2017. North America revenue was down 5 percent. Continued international strength contributed to a 46 percent increase in revenue (up 47 percent currency neutral), representing 22 percent of total revenue. Full year revenue in EMEA was up 42 percent (up 43 percent currency neutral), up 61 percent inAsia-Pacific (up 63 percent currency neutral) and up 28 percent inLatin America (up 26 percent currency neutral).- Apparel revenue increased 2 percent to
$3.3 billion , as strength in men's training and golf was moderated by declines in outdoor and team sports. Footwear revenue was up 3 percent to$1.0 billion , driven by strength in running and men's training mitigated by basketball and youth. Accessories revenue increased 10 percent to$446 million led by strength in men's training. - Gross margin declined 140 basis points to 45.0 percent as inventory management initiatives more than offset favorable channel mix. Adjusted gross margin, which excludes a
$5 million impact from restructuring efforts, was 45.1 percent. - Selling, general, and administrative expenses was up 14 percent to
$2.1 billion , representing 41.9 percent of revenue, an increase driven by continued investments in demand creation, and the direct-to-consumer, footwear and international businesses. - Restructuring and impairment charges were
$124 million in 2017. - Operating income was
$28 million . Adjusted operating income was$157 million . - Net loss was
$48 million in 2017. Excluding both the fourth quarter one-time charge related to theU.S. Tax Act, and the impact of the restructuring plan, adjusted net income was$87 million . - Diluted earnings per share was negative
$0.11 . Adjusted diluted earnings per share was$0.19 .
2017 and 2018 Restructuring Plans
On
After additional review, the company has announced an additional 2018 restructuring plan identifying further opportunities to optimize operations. In conjunction with this plan, approximately
- Up to
$105 million in cash related charges, consisting of up to$55 million in facility and lease terminations and up to$50 million in contract termination and other restructuring charges; and, - Up to
$25 million in non-cash charges comprised of up to$10 million of inventory related charges and up to$15 million of asset related impairments.
Based on the restructuring efforts in 2017 and 2018, the company anticipates a minimum of
Full Year 2018 Outlook
Key points related to
- Net revenue is expected to be up at a low single-digit percentage rate reflecting a mid-single-digit decline in
North America and international growth of greater than 25 percent. - Gross margin is expected to increase approximately 50 basis points to 45.5 percent due to benefits from lower planned promotional activity, product costs, channel mix and changes in foreign currency.
- Operating income is expected to reach
$20 million to$30 million . Excluding the impact of continued restructuring efforts, adjusted operating income is expected to be$130 to$160 million . - Interest and other expense net is planned at approximately
$45 million . - Excluding the impact of the restructuring efforts, adjusted diluted earnings per share is expected to be in the range of
$0.14 to$0.19 ; and, - Capital expenditures are planned at approximately
$225 million compared with$275 million in 2017.
Conference Call and Webcast
The
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 2018 outlook. Currency neutral financial information is calculated to exclude the impact of changes in foreign currency. Management believes this information is useful to investors to facilitate a comparison of the company's results of operations period-over-period. Adjusted operating income, adjusted gross margin, adjusted effective tax rate, adjusted net income and adjusted diluted earnings per share exclude the impact of restructuring and other related charges and the impact of the
About
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, projected annualized savings related to our restructuring plans, 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 effectively manage our growth and a more complex global business; our ability to successfully execute our restructuring plans and realize their expected benefits; our ability to effectively drive operational efficiency in our business; any disruptions, delays or deficiencies in the design or implementation of our new global operating and financial reporting information technology system; 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 successfully manage or realize expected results from acquisitions and other significant investments or capital expenditures; our ability to effectively develop and launch new, innovative and updated products; increased competition causing us to lose market share or reduce the prices of our products or to increase significantly our marketing efforts; our ability to accurately forecast consumer demand for our products and manage our inventory in response to changing demands; 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; 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 in such systems or technology; risks related to data security or privacy breaches; 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.
| ||||||||||||||||||||||||||||
For the Quarter Ended and Year Ended | ||||||||||||||||||||||||||||
(Unaudited; in thousands, except per share amounts) | ||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||||||||||
Quarter Ended |
Year Ended | |||||||||||||||||||||||||||
2017 |
% of Net |
2016 |
% of Net |
2017 |
% of Net |
2016 |
% of Net | |||||||||||||||||||||
Net revenues |
$ |
1,365,361 |
100.0 |
% |
$ |
1,305,277 |
100.0 |
% |
$ |
4,976,553 |
100.0 |
% |
$ |
4,825,335 |
100.0 |
% | ||||||||||||
Cost of goods sold |
775,658 |
56.8 |
% |
721,573 |
55.3 |
% |
2,737,830 |
55.0 |
% |
2,584,724 |
53.6 |
% | ||||||||||||||||
Gross Profit |
589,703 |
43.2 |
% |
583,704 |
44.7 |
% |
2,238,723 |
45.0 |
% |
2,240,611 |
46.4 |
% | ||||||||||||||||
Selling, general and administrative |
590,839 |
43.3 |
% |
419,804 |
32.2 |
% |
2,086,831 |
41.9 |
% |
1,823,140 |
37.8 |
% | ||||||||||||||||
Restructuring and impairment charges |
35,952 |
2.6 |
% |
— |
— |
% |
124,049 |
2.5 |
% |
— |
— |
% | ||||||||||||||||
Income (loss) from operations |
(37,088) |
(2.7) |
% |
163,900 |
12.6 |
% |
27,843 |
0.6 |
% |
417,471 |
8.6 |
% | ||||||||||||||||
Interest expense, net |
(9,301) |
(0.7) |
% |
(7,958) |
(0.6) |
% |
(34,538) |
(0.7) |
% |
(26,434) |
(0.5) |
% | ||||||||||||||||
Other expense, net |
(2,231) |
(0.2) |
% |
(1,731) |
(0.1) |
% |
(3,614) |
(0.1) |
% |
(2,755) |
(0.1) |
% | ||||||||||||||||
Income (loss) before income taxes |
(48,620) |
(3.6) |
% |
154,211 |
11.8 |
% |
(10,309) |
(0.2) |
% |
388,282 |
8.0 |
% | ||||||||||||||||
Income tax expense |
39,300 |
2.9 |
% |
50,981 |
3.9 |
% |
37,951 |
0.8 |
% |
131,303 |
2.7 |
% | ||||||||||||||||
Net income (loss) |
(87,920) |
(6.4) |
% |
103,230 |
7.9 |
% |
(48,260) |
(1.0) |
% |
256,979 |
5.3 |
% | ||||||||||||||||
Adjustment payment to Class C capital stockholders |
— |
— |
% |
— |
— |
% |
— |
— |
% |
59,000 |
1.2 |
% | ||||||||||||||||
Net income (loss) available to all stockholders |
$ |
(87,920) |
(6.4) |
% |
$ |
103,230 |
7.9 |
% |
$ |
(48,260) |
(1.0) |
% |
$ |
197,979 |
4.1 |
% | ||||||||||||
Basic net income (loss) per share of Class A and B common stock |
$ |
(0.20) |
$ |
0.24 |
$ |
(0.11) |
$ |
0.45 |
||||||||||||||||||||
Basic net income (loss) per share of Class C common stock |
$ |
(0.20) |
$ |
0.24 |
$ |
(0.11) |
$ |
0.72 |
||||||||||||||||||||
Diluted net income (loss) per |
$ |
(0.20) |
$ |
0.23 |
$ |
(0.11) |
$ |
0.45 |
||||||||||||||||||||
Diluted net income (loss) per share of Class C common stock |
$ |
(0.20) |
$ |
0.23 |
$ |
(0.11) |
$ |
0.71 |
||||||||||||||||||||
Weighted average common shares outstanding Class A and B common stock |
||||||||||||||||||||||||||||
Basic |
219,637 |
218,220 |
219,254 |
217,707 |
||||||||||||||||||||||||
Diluted |
219,637 |
222,802 |
219,254 |
221,944 |
||||||||||||||||||||||||
Weighted average common shares outstanding Class C common stock | ||||||||||||||||||||||||||||
Basic |
222,189 |
220,040 |
221,475 |
218,623 |
||||||||||||||||||||||||
Diluted |
222,189 |
224,777 |
221,475 |
222,904 |
| ||||||||||||||||||||||
For the Quarter Ended and Year Ended | ||||||||||||||||||||||
(Unaudited; in thousands) | ||||||||||||||||||||||
NET REVENUES BY PRODUCT CATEGORY | ||||||||||||||||||||||
Quarter Ended |
Year Ended | |||||||||||||||||||||
2017 |
2016 |
% Change |
2017 |
2016 |
% Change | |||||||||||||||||
Apparel |
$ |
951,666 |
$ |
928,546 |
2.5 |
% |
$ |
3,287,121 |
$ |
3,229,142 |
1.8 |
% | ||||||||||
Footwear |
246,204 |
224,850 |
9.5 |
% |
1,037,840 |
1,010,693 |
2.7 |
% | ||||||||||||||
Accessories |
110,666 |
104,348 |
6.1 |
% |
445,838 |
406,614 |
9.6 |
% | ||||||||||||||
Total net sales |
1,308,536 |
1,257,744 |
4.0 |
% |
4,770,799 |
4,646,449 |
2.7 |
% | ||||||||||||||
Licensing revenues |
32,936 |
29,926 |
10.1 |
% |
116,575 |
99,849 |
16.8 |
% | ||||||||||||||
|
23,889 |
18,267 |
30.8 |
% |
89,179 |
80,447 |
10.9 |
% | ||||||||||||||
Intersegment eliminations |
— |
(660) |
(100.0) |
% |
— |
(1,410) |
(100.0) |
% | ||||||||||||||
Total net revenues |
$ |
1,365,361 |
$ |
1,305,277 |
4.6 |
% |
$ |
4,976,553 |
$ |
4,825,335 |
3.1 |
% | ||||||||||
NET REVENUES BY SEGMENT | ||||||||||||||||||||||
Quarter Ended |
Year Ended | |||||||||||||||||||||
2017 |
2016 |
% Change |
2017 |
2016 |
% Change | |||||||||||||||||
|
$ |
1,024,241 |
$ |
1,072,400 |
(4.5) |
% |
$ |
3,802,406 |
$ |
4,005,314 |
(5.1) |
% | ||||||||||
EMEA |
135,314 |
93,025 |
45.5 |
% |
469,997 |
330,584 |
42.2 |
% | ||||||||||||||
|
123,935 |
79,622 |
55.7 |
% |
433,647 |
268,607 |
61.4 |
% | ||||||||||||||
|
57,982 |
42,623 |
36.0 |
% |
181,324 |
141,793 |
27.9 |
% | ||||||||||||||
|
23,889 |
18,267 |
30.8 |
% |
89,179 |
80,447 |
10.9 |
% | ||||||||||||||
Intersegment eliminations |
— |
(660) |
100.0 |
% |
— |
(1,410) |
100.0 |
% | ||||||||||||||
Total net revenues |
$ |
1,365,361 |
$ |
1,305,277 |
4.6 |
% |
$ |
4,976,553 |
$ |
4,825,335 |
3.1 |
% | ||||||||||
OPERATING INCOME (LOSS) BY SEGMENT | ||||||||||||||||||||||
Quarter Ended |
Year Ended | |||||||||||||||||||||
2017 |
2016 |
% Change |
2017 |
2016 |
% Change | |||||||||||||||||
|
$ |
(43,945) |
$ |
157,341 |
(127.9) |
% |
$ |
20,179 |
$ |
408,424 |
(95.1) |
% | ||||||||||
EMEA |
3,986 |
3,070 |
29.8 |
% |
17,976 |
11,420 |
57.4 |
% | ||||||||||||||
|
12,989 |
13,941 |
(6.8) |
% |
82,039 |
68,338 |
20.0 |
% | ||||||||||||||
|
(10,910) |
(6,141) |
(77.7) |
% |
(37,085) |
(33,891) |
(9.4) |
% | ||||||||||||||
|
792 |
(4,311) |
118.4 |
% |
(55,266) |
(36,820) |
(50.1) |
% | ||||||||||||||
Income (loss) from operations |
$ |
(37,088) |
$ |
163,900 |
(122.6) |
% |
$ |
27,843 |
$ |
417,471 |
(93.3) |
% |
| ||||||||
As of | ||||||||
(Unaudited; in thousands) | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
|
| |||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ |
312,483 |
$ |
250,470 |
||||
Accounts receivable, net |
609,670 |
622,685 |
||||||
Inventories |
1,158,548 |
917,491 |
||||||
Prepaid expenses and other current assets |
256,978 |
174,507 |
||||||
Total current assets |
2,337,679 |
1,965,153 |
||||||
Property and equipment, net |
885,774 |
804,211 |
||||||
|
555,674 |
563,591 |
||||||
Intangible assets, net |
46,995 |
64,310 |
||||||
Deferred income taxes |
82,801 |
136,862 |
||||||
Other long term assets |
97,444 |
110,204 |
||||||
Total assets |
$ |
4,006,367 |
$ |
3,644,331 |
||||
Liabilities and Stockholders' Equity |
||||||||
Revolving credit facility, current |
$ |
125,000 |
$ |
— |
||||
Accounts payable |
561,108 |
409,679 |
||||||
Accrued expenses |
296,841 |
208,750 |
||||||
Current maturities of long term debt |
27,000 |
27,000 |
||||||
Other current liabilities |
50,426 |
40,387 |
||||||
Total current liabilities |
1,060,375 |
685,816 |
||||||
Long term debt, net of current maturities |
765,046 |
790,388 |
||||||
Other long term liabilities |
162,304 |
137,227 |
||||||
Total liabilities |
1,987,725 |
1,613,431 |
||||||
Total stockholders' equity |
2,018,642 |
2,030,900 |
||||||
Total liabilities and stockholders' equity |
$ |
4,006,367 |
$ |
3,644,331 |
| |||
For the Quarter Ended | |||
(Unaudited) | |||
The table below presents the reconciliation of net revenue growth calculated in accordance with GAAP to currency neutral net revenue which is a non-GAAP measure. See "Non-GAAP Financial Information" above for further information regarding the Company's use of non-GAAP financial measures. | |||
CURRENCY NEUTRAL NET REVENUE GROWTH/(DECLINE) RECONCILIATION | |||
Quarter Ended | |||
Total Net Revenue |
|||
Net revenue growth - GAAP |
4.6 |
% | |
Foreign exchange impact |
(1.0) |
% | |
Currency neutral net revenue growth - Non-GAAP |
3.6 |
% | |
|
|||
Net revenue decline - GAAP |
(4.5) |
% | |
Foreign exchange impact |
(0.3) |
% | |
Currency neutral net revenue decline - Non-GAAP |
(4.8) |
% | |
EMEA |
|||
Net revenue growth - GAAP |
45.5 |
% | |
Foreign exchange impact |
(8.5) |
% | |
Currency neutral net revenue growth - Non-GAAP |
37.0 |
% | |
|
|||
Net revenue growth - GAAP |
55.7 |
% | |
Foreign exchange impact |
(1.1) |
% | |
Currency neutral net revenue growth - Non-GAAP |
54.6 |
% | |
|
|||
Net revenue growth - GAAP |
36.0 |
% | |
Foreign exchange impact |
(2.2) |
% | |
Currency neutral net revenue growth - Non-GAAP |
33.8 |
% | |
|
|||
Net revenue growth - GAAP |
47.4 |
% | |
Foreign exchange impact |
(4.5) |
% | |
Currency neutral net revenue growth - Non-GAAP |
42.9 |
% |
| |||
For the Year Ended | |||
(Unaudited) | |||
The table below presents the reconciliation of net revenue growth calculated in accordance with GAAP to currency neutral net revenue which is a non-GAAP measure. See "Non-GAAP Financial Information" above for further information regarding the Company's use of non-GAAP financial measures. | |||
CURRENCY NEUTRAL NET REVENUE GROWTH/(DECLINE) RECONCILIATION | |||
Year Ended | |||
Total Net Revenue |
|||
Net revenue growth - GAAP |
3.1 |
% | |
Foreign exchange impact |
— |
% | |
Currency neutral net revenue growth - Non-GAAP |
3.1 |
% | |
|
|||
Net revenue decline - GAAP |
(5.1) |
% | |
Foreign exchange impact |
(0.1) |
% | |
Currency neutral net revenue decline - Non-GAAP |
(5.2) |
% | |
EMEA |
|||
Net revenue growth - GAAP |
42.2 |
% | |
Foreign exchange impact |
0.3 |
% | |
Currency neutral net revenue growth - Non-GAAP |
42.5 |
% | |
|
|||
Net revenue growth - GAAP |
61.4 |
% | |
Foreign exchange impact |
1.6 |
% | |
Currency neutral net revenue growth - Non-GAAP |
63.0 |
% | |
|
|||
Net revenue growth - GAAP |
27.9 |
% | |
Foreign exchange impact |
(1.8) |
% | |
Currency neutral net revenue growth - Non-GAAP |
26.1 |
% | |
|
|||
Net revenue growth - GAAP |
46.4 |
% | |
Foreign exchange impact |
0.4 |
% | |
Currency neutral net revenue growth - Non-GAAP |
46.8 |
% |
| ||||||||||||||||
For the Quarter Ended | ||||||||||||||||
(Unaudited) | ||||||||||||||||
The table below presents the reconciliation of the Company's consolidated statement of operations presented in accordance with GAAP to certain adjusted non-GAAP financial measures discussed in this press release. See "Non-GAAP Financial Information" above for further information regarding the Company's use of non-GAAP financial measures. | ||||||||||||||||
Quarter Ended | ||||||||||||||||
GAAP |
Impact of Restructuring Plan |
Impact of |
Adjusted (Non-GAAP) | |||||||||||||
Net revenues |
$ |
1,365,361 |
$ |
— |
$ |
— |
$ |
1,365,361 |
||||||||
Cost of goods sold |
775,658 |
(1,480) |
— |
774,178 |
||||||||||||
Gross Profit |
589,703 |
1,480 |
— |
591,183 |
||||||||||||
Gross Margin |
43.2 |
% |
0.1 |
% |
— |
% |
43.3 |
% | ||||||||
Selling, general and administrative |
590,839 |
— |
— |
590,839 |
||||||||||||
Restructuring and impairment charges |
35,952 |
(35,952) |
— |
— |
||||||||||||
Income (loss) from operations |
(37,088) |
37,432 |
— |
344 |
||||||||||||
Interest expense, net |
(9,301) |
— |
— |
(9,301) |
||||||||||||
Other expense, net |
(2,231) |
— |
— |
(2,231) |
||||||||||||
Income (loss) before income taxes |
(48,620) |
37,432 |
— |
(11,188) |
||||||||||||
Income tax expense (benefit) |
39,300 |
(11,076) |
(a) |
(38,833) |
(10,609) |
|||||||||||
Effective Income Tax Rate |
(80.8) |
% |
(171.5) |
% |
347.1 |
% |
94.8 |
% | ||||||||
Net income (loss) |
$ |
(87,920) |
$ |
48,508 |
$ |
38,833 |
$ |
(579) |
||||||||
Diluted net income (loss) per share of Class A and B common stock |
$ |
(0.20) |
$ |
0.11 |
$ |
0.09 |
$ |
— |
||||||||
Diluted net income (loss) per share of Class C common stock |
$ |
(0.20) |
$ |
0.11 |
$ |
0.09 |
$ |
— |
||||||||
(a) - The adjustment to fourth quarter income tax expense (benefit) includes true-ups to prior quarters' income tax expense (benefit) as a result of changes in the estimated annual effective tax rate. |
| ||||||||||||||||
For the Year Ended | ||||||||||||||||
(Unaudited) | ||||||||||||||||
The table below presents the reconciliation of the Company's consolidated statement of operations presented in accordance with GAAP to certain adjusted non-GAAP financial measures discussed in this press release. See "Non-GAAP Financial Information" above for further information regarding the Company's use of non-GAAP financial measures. | ||||||||||||||||
Year Ended | ||||||||||||||||
GAAP |
Impact of Restructuring Plan |
Impact of |
Adjusted (Non-GAAP) | |||||||||||||
Net revenues |
$ |
4,976,553 |
$ |
— |
$ |
— |
$ |
4,976,553 |
||||||||
Cost of goods sold |
2,737,830 |
(5,077) |
— |
2,732,753 |
||||||||||||
Gross Profit |
2,238,723 |
5,077 |
— |
2,243,800 |
||||||||||||
Gross Margin |
45.0 |
% |
0.1 |
% |
— |
% |
45.1 |
% | ||||||||
Selling, general and administrative |
2,086,831 |
— |
— |
2,086,831 |
||||||||||||
Restructuring and impairment charges |
124,049 |
(124,049) |
— |
— |
||||||||||||
Income (loss) from operations |
27,843 |
129,126 |
— |
156,969 |
||||||||||||
Interest expense, net |
(34,538) |
— |
— |
(34,538) |
||||||||||||
Other expense, net |
(3,614) |
— |
— |
(3,614) |
||||||||||||
Income (loss) before income taxes |
(10,309) |
129,126 |
— |
118,817 |
||||||||||||
Income tax expense (benefit) |
37,951 |
32,572 |
(38,833) |
31,690 |
||||||||||||
Effective Income Tax Rate |
(368.1) |
% |
427.5 |
% |
(32.7) |
% |
26.70 |
% | ||||||||
Net income (loss) |
$ |
(48,260) |
$ |
96,554 |
$ |
38,833 |
$ |
87,127 |
||||||||
Diluted net income (loss) per share of Class A and B common stock |
$ |
(0.11) |
$ |
0.21 |
$ |
0.09 |
$ |
0.19 |
||||||||
Diluted net income (loss) per share of Class C common stock |
$ |
(0.11) |
$ |
0.21 |
$ |
0.09 |
$ |
0.19 |
| ||||||||
Outlook For the Year Ended | ||||||||
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, which 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 | ||||||||
Year Ended | ||||||||
(in millions) |
Low End |
High End | ||||||
Income from operations |
$ |
20 |
$ |
30 |
||||
Add: Estimated impact of restructuring(1) |
110 |
110 |
||||||
Adjusted operating income |
$ |
130 |
$ |
140 |
||||
(1) The estimated impact of restructuring plan 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 insignificant, and therefore the GAAP effective tax rate is subject to a significant variability. Given this variability, the company cannot provide a meaningful outlook of the GAAP effective tax rate or diluted earnings per share without unreasonable effort. These non-GAAP measures exclude the impact of the 2018 restructuring plan.
BRAND HOUSE AND FACTORY HOUSE DOOR COUNT | ||||
As of | ||||
2017 |
2016 | |||
Factory House |
162 |
151 | ||
Brand House |
19 |
18 | ||
|
181 |
169 | ||
Factory House |
57 |
37 | ||
Brand House |
57 |
35 | ||
International total doors |
114 |
72 | ||
Factory House |
219 |
188 | ||
Brand House |
76 |
53 | ||
Total doors |
295 |
241 |
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