Under Armour Reports Fourth Quarter Net Revenues Growth of 25% and Fourth Quarter EPS Growth of 51% PR Newswire BALTIMORE, Jan. 31, 2013 BALTIMORE, Jan. 31, 2013 /PRNewswire/ -- oFourth Quarter Net Revenues Increased 25% to $506 Million; Full Year Net Revenues Increased 25% to $1.835 Billion oFourth Quarter Diluted EPS Increased 51% to $0.47 from $0.31; Full Year Diluted EPS Increased 31% to $1.21 from $0.92 oCompany Updates 2013 Net Revenues Outlook to a Range of $2.20 Billion to $2.22 Billion (+20% to +21%) oCompany Updates 2013 Operating Income Outlook to a Range of $255 Million to $257 Million (+22% to +23%) Under Armour, Inc. (NYSE: UA) today announced financial results for the fourth quarter ended December 31, 2012. Net revenues increased 25% in the fourth quarter of 2012 to $506 million compared with net revenues of $403 million in the prior year's period. Net income increased 54% in the fourth quarter of 2012 to $50 million compared with $33 million in the prior year's period. Diluted earnings per share for the fourth quarter of 2012 were $0.47 on weighted average common shares outstanding of 107 million compared with $0.31 per share on weighted average common shares outstanding of 105 million in the prior year's period. (Logo: http://photos.prnewswire.com/prnh/20110127/NE37387LOGO ) Fourth quarter apparel net revenues increased 25% to $405 million compared with $323 million in the same period of the prior year, driven primarily by Fleece, which included a broader expansion of the Storm platform across the category. Fourth quarter footwear net revenues increased 43% to $45 million from $31 million in the prior year's period, primarily driven by new 2012 running styles, including UA Spine, and strong sell-in of new 2013 baseball cleats. Fourth quarter accessories net revenues increased 16% to $43 million from $37 million in the prior year's period. Direct-to-Consumer net revenues, which represented 39% of total net revenues for the fourth quarter, grew 29% year-over-year. Kevin Plank, Chairman and CEO of Under Armour, Inc., stated, "We closed 2012 strongly, delivering net revenue growth of at least 20% for the eleventh consecutive quarter in Q4 by building upon key apparel technology platforms like Storm Fleece and Charged Cotton. Our ability to bring practical innovation to our consumer across a broad range of product drove our 25% net revenue growth in 2012 and positions us well for 2013 and beyond. With these strong results in hand, we are well on our way toward delivering on the goal established at our June 2011 Investor Day to more than double our net revenues from 2010 to 2013." Gross margin for the fourth quarter of 2012 was 50.3% compared with 51.6% in the prior year's quarter, primarily reflecting less favorable sales mix and higher air freight costs. Selling, general and administrative expenses as a percentage of net revenues were 34.2% in the fourth quarter of 2012 compared with 37.9% in the prior year's period, largely reflecting leverage of corporate services and marketing expenses. Marketing expenses for the fourth quarter of 2012 were 9.7% of net revenues compared with 10.9% in the prior year's quarter. Fourth quarter operating income grew 48% to $82 million compared with $55 million in the prior year's period. Review of Full Year Operating Results For the full year 2012, net revenues increased 25% to $1.835 billion compared with $1.473 billion in the prior year and compared with the Company's prior outlook of $1.82 billion. Diluted earnings per share for the full year increased 31% to $1.21 per share on weighted average common shares outstanding of 106 million compared with $0.92 per share on weighted average common shares outstanding of 105 million in the prior year. Apparel net revenues increased 23% to $1.385 billion compared with $1.122 billion in the prior year, led by the Training category which included the expansions of both the Charged Cotton and Storm platforms. Footwear net revenues increased 32% to $239 million during 2012 compared to $182 million in 2011, reflecting the debut of new running styles, including UA Spine, and strength across our cleated businesses. Accessories net revenues increased 25% to $166 million during 2012 compared to $132 million in 2011, primarily driven by headwear and bags. Direct-to-Consumer net revenues, which represented 29% of total net revenues for the year compared to 27% in 2011, grew 34% over the prior year. Gross margin for 2012 was 47.9% compared with 48.4% in 2011, largely reflecting less favorable sales mix and higher air freight costs. Selling, general and administrative expenses as a percentage of net revenues were 36.5% for 2012 compared with 37.3% for 2011, reflecting leverage of corporate services and marketing expenses. Marketing expense for 2012 was 11.2% of net revenues compared with 11.4% in the prior year. Operating income grew 28% to $209 million in 2012 compared with $163 million in the prior year and compared with the Company's prior outlook of $207 million. Balance Sheet Highlights Cash and cash equivalents increased 95% to $342 million at December 31, 2012 compared with $175 million at December 31, 2011. The Company had no borrowings outstanding under its $300 million revolving credit facility at December 31, 2012. Inventory at December 31, 2012 decreased 2% to $319 million compared with $324 million at December 31, 2011. Long-term debt decreased to $62 million at December 31, 2012 from $78 million at December 31, 2011. Updated 2013 Outlook Based on current visibility, the Company expects 2013 net revenues in the range of $2.20 billion to $2.22 billion, representing growth of 20% to 21% over 2012, and 2013 operating income in the range of $255 million to $257 million, representing growth of 22% to 23% over 2012. The Company expects an effective tax rate of 39.0% to 39.5% for the full year, compared to an effective tax rate of 36.7% for 2012. The Company anticipates fully diluted weighted average shares outstanding of approximately 108 million to 109 million for 2013. Mr. Plank concluded, "In the year ahead, we will drive growth by re-invigorating core categories like Baselayer, continuing to expand our consumer base in Women's and Youth, and introducing the next wave of Under Armour innovation through product such as Armour39 that will debut in the next month. We will open the next generation of Under Armour specialty retail in mid-February in our home city of Baltimore, while we are prioritizing our growth strategies in key markets in Europe, Asia, and Latin America. We will also continue to invest in the right talent, infrastructure, and processes to ensure that we deliver balanced financial results well into the future." Conference Call and Webcast The Company will provide additional commentary regarding its fourth quarter results as well as its updated 2013 outlook during its earnings conference call today, January 31^st, 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) is a leading developer, marketer, and distributor of branded performance apparel, footwear, and accessories. The brand's moisture-wicking fabrications are engineered in many different designs and styles for wear in nearly every climate to provide a performance alternative to traditional products. The Company's products are sold worldwide and worn by athletes at all levels, from youth to professional, on playing fields around the globe. The Under Armour global headquarters is in Baltimore, Maryland, with European headquarters in Amsterdam's Olympic Stadium, and additional offices in Denver, Hong Kong, Toronto, and Guangzhou, China. For further information, please visit the Company's website at www.ua.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 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 reduce the prices of our products or to increase significantly our marketing efforts in order to avoid losing market share; 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; changes in consumer preferences or the reduction in demand for performance apparel, footwear and other products; 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; the availability, integration and effective operation of management information systems and other technology; and our ability to attract and maintain 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 Year Ended December 31, 2012 and 2011 (Unaudited; in thousands, except per share amounts) CONSOLIDATED STATEMENTS OF INCOME Quarter Ended Year Ended December 31, December 31, % of Net % of Net % of Net % of Net 2012 2011 2012 2011 Revenues Revenues Revenues Revenues Net revenues $ 100.0% $ 100.0% $1,834,921 100.0% $1,472,684 100.0% 505,863 403,126 Cost of goods 251,628 49.7% 195,221 48.4% 955,624 52.1% 759,848 51.6% sold Gross 254,235 50.3% 207,905 51.6% 879,297 47.9% 712,836 48.4% profit Selling, general and 172,643 34.2% 152,603 37.9% 670,602 36.5% 550,069 37.3% administrative expenses Income from 81,592 16.1% 55,302 13.7% 208,695 11.4% 162,767 11.1% operations Interest (1,205) (0.2%) (1,413) (0.3%) (5,183) (0.3%) (3,841) (0.3%) expense, net Other income (634) (0.1%) 1 0.0% (73) 0.0% (2,064) (0.1%) (expense), net Income before income 79,753 15.8% 53,890 13.4% 203,439 11.1% 156,862 10.7% taxes Provision for 29,621 5.9% 21,338 5.3% 74,661 4.1% 59,943 4.1% income taxes Net $ 9.9% $ 8.1% $ 7.0% $ 6.6% income 50,132 32,552 128,778 96,919 Net income available per common share Basic $ $ $ $ 0.48 0.31 1.23 0.94 Diluted $ $ $ $ 0.47 0.31 1.21 0.92 Basic 104,687 103,385 104,343 103,140 Diluted 107,121 105,348 106,380 105,052 NET REVENUES BY PRODUCT CATEGORY Quarter Ended Year Ended December 31, December 31, 2012 2011 % Change 2012 2011 % Change Apparel $ $ 25.1% $ 1,385,350 $ 23.5% 404,527 323,385 1,122,031 Footwear 44,714 31,329 42.7% 238,955 181,684 31.5% Accessories 42,601 36,798 15.8% 165,835 132,400 25.3% Total net sales 491,842 391,512 25.6% 1,790,140 1,436,115 24.7% Licensing revenues 14,021 11,614 20.7% 44,781 36,569 22.5% Total net $ $ 25.5% $ 1,834,921 $ 24.6% revenues 505,863 403,126 1,472,684 NET REVENUES BY GEOGRAPHIC SEGMENT Quarter Ended Year Ended December 31, December 31, 2012 2011 % 2012 2011 % Change Change North America $ $ 25.2% $ 1,726,733 $ 1,383,346 24.8% 472,225 377,152 Other foreign 33,638 25,974 29.5% 108,188 89,338 21.1% countries Total net $ $ 25.5% $ 1,834,921 $ 1,472,684 24.6% revenues 505,863 403,126 Under Armour, Inc. As of December 31, 2012 and December 31, 2011 (Unaudited; in thousands) CONDENSED CONSOLIDATED BALANCE SHEETS As of As of 12/31/12 12/31/11 Assets Cash and cash equivalents $ 341,841 $ 175,384 Accounts receivable, net 175,524 134,043 Inventories 319,286 324,409 Prepaid expenses and other current assets 43,896 39,643 Deferred income taxes 23,051 16,184 Total current assets 903,598 689,663 Property and equipment, net 180,850 159,135 Intangible assets, net 4,483 5,535 Deferred income taxes 22,606 15,885 Other long term assets 45,546 48,992 Total assets $ 1,157,083 $ 919,210 Liabilities and Stockholders' Equity Accounts payable $ 143,689 $ 100,527 Accrued expenses 85,077 69,285 Current maturities of long term debt 9,132 6,882 Other current liabilities 14,330 6,913 Total current liabilities 252,228 183,607 Long term debt, net of current maturities 52,757 70,842 Other long term liabilities 35,176 28,329 Total liabilities 340,161 282,778 Total stockholders' equity 816,922 636,432 Total liabilities and stockholders' $ 1,157,083 $ 919,210 equity Under Armour, Inc. For the Year Ended December 31, 2012 and 2011 (Unaudited; in thousands) Year Ended Year Ended 12/31/12 12/31/11 Cash flows from operating activities Net income $ 128,778 $ 96,919 Adjustments to reconcile net income to net cash used in operating activities Depreciation and amortization 43,082 36,301 Unrealized foreign currency exchange rate (2,464) 4,027 (gains) losses Loss on disposal of property and equipment 524 36 Stock-based compensation 19,845 18,063 Gain on bargain purchase of corporate headquarters (excludes transaction costs of - (3,300) $1.9 million) Deferred income taxes (12,973) 3,620 Changes in reserves and allowances 13,916 5,536 Changes in operating assets and liabilities: Accounts receivable (53,433) (33,923) Inventories 4,699 (114,646) Prepaid expenses and other assets (4,060) (42,633) Accounts payable 35,370 17,209 Accrued expenses and other liabilities 21,966 23,442 Income taxes payable and receivable 4,511 4,567 Net cash provided by operating 199,761 15,218 activities Cash flows from investing activities Purchase of property and equipment (50,650) (56,228) Purchase of corporate headquarters and related - (23,164) expenditures Purchase of long term investment - (3,862) Purchase of other assets (1,310) (1,153) Change in restricted cash 5,029 (5,029) Net cash used in investing (46,931) (89,436) activities Cash flows from financing activities Proceeds from revolving credit facility - 30,000 Payments on revolving credit facility - (30,000) Proceeds from term loan - 25,000 Payments on term loan (25,000) - Proceeds from long term debt 50,000 5,644 Payments on long term debt (44,330) (7,418) Excess tax benefits from stock-based compensation 17,868 10,260 arrangements Proceeds from exercise of stock options and other 14,776 14,645 stock issuances Payments of debt financing costs (1,017) (2,324) Net cash provided by financing 12,297 45,807 activities Effect of exchange rate changes on cash and cash 1,330 (75) equivalents Net increase (decrease) in cash and 166,457 (28,486) cash equivalents Cash and cash equivalents Beginning of period 175,384 203,870 End of period $ 341,841 $ 175,384 Non-cash investing and financing activities Debt assumed and property and equipment acquired $ $ in connection with purchase of corporate - 38,556 headquarters Acquisition of property and equipment through 15,216 3,079 certain obligations SOURCE Under Armour, Inc. Website: http://www.ua.com Contact: Investors: Tom Shaw, CFA, Under Armour, Inc., +1-410-843-7676, or Media: Erin Wendell, Under Armour, Inc., +1-410-454-6570
Under Armour Reports Fourth Quarter Net Revenues Growth of 25% and Fourth Quarter EPS Growth of 51%
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