Core Viewpoint - Under Armour, Inc. has announced the addition of three new members to its Board of Directors, enhancing its leadership team with diverse expertise in finance, sports management, and investment [1] Group 1: New Board Members - Dawn N. Fitzpatrick brings extensive financial and operational expertise as the CEO and CIO of Soros Fund Management, with a strong background at UBS [2] - Eugene D. Smith has significant experience in intercollegiate sports management, having served as Senior Vice President and Athletic Director at Ohio State University [3] - Robert J. Sweeney has a robust background in consumer and retail investments, previously serving as a partner at Goldman Sachs and currently as President of Sycamore Partners [4] Group 2: Board Composition - The new Board of Directors will include Douglas E. Coltharp, Jerri L. DeVard, Mohamed A. El-Erian, Carolyn N. Everson, Dawn N. Fitzpatrick, David W. Gibbs, Karen W. Katz, Eric T. Olson, Kevin A. Plank, Eugene D. Smith, Robert J. Sweeney, and Patrick W. Whitesell [1]

Group 1 - The article references the iconic Nike commercial featuring Mars Blackmon and Michael Jordan, highlighting the cultural impact of the Air Jordan brand [1] - It emphasizes the belief in the efficiency of financial markets, suggesting that stocks generally reflect their true value [1] - The best investment opportunities are identified as those in less-followed stocks or those that do not accurately represent market opportunities [1]

Revenue Performance - Total net revenues decreased by 5.7% compared to the same period last year[175]. - Wholesale revenue decreased by 1.0%, while direct-to-consumer revenue decreased by 9.1%[175]. - Apparel revenue decreased by 5.0%, footwear revenue decreased by 9.0%, and accessories revenue increased by 5.7%[175]. - Net revenue decreased by 7.8% in North America, increased by 4.9% in EMEA, decreased by 5.1% in Asia-Pacific, and decreased by 15.5% in Latin America[175]. - Net revenues decreased by $85.0 million, or 5.7%, to $1,401.0 million for the three months ended December 31, 2024, compared to $1,486.0 million for the same period in 2023[183]. - Total net revenues for the nine months ended December 31, 2024, decreased by $385.9 million, or 8.8%, to $3,983.7 million from $4,369.7 million in the same period in 2023[183]. - North America net revenues decreased by $71.7 million, or 7.8%, to $843.6 million, driven by declines in both direct-to-consumer and licensing revenues[215]. - EMEA region net revenues increased by $13.8 million, or 4.9%, to $297.9 million, supported by growth in both wholesale and direct-to-consumer channels[215]. - North America net revenues fell by $317.1 million, or 11.6%, to $2,416.2 million, driven by declines in both direct-to-consumer and wholesale channels[220]. - EMEA region net revenues increased by $10.2 million, or 1.3%, to $808.0 million, supported by growth in the direct-to-consumer channel[220]. - Asia-Pacific region net revenues decreased by $55.7 million, or 8.6%, to $590.6 million, impacted by declines in both wholesale and direct-to-consumer channels[220]. Profitability and Expenses - Gross margin increased by 240 basis points to 47.5%[175]. - Selling, general and administrative expenses increased by 6.4%[175]. - Gross profit decreased by $5.5 million to $665.2 million during the three months ended December 31, 2024, while gross margin increased to 47.5% from 45.1%[190]. - Selling, general and administrative expenses increased by $38.5 million, or 6.4%, to $637.7 million for the three months ended December 31, 2024, compared to $599.2 million for the same period in 2023[194]. - Selling, general and administrative expenses as a percentage of net revenues increased to 45.5% during the three months ended December 31, 2024, compared to 40.3% in the same period in 2023[197]. - Operating income decreased by $57.9 million, or 81.1%, to $13.5 million for the three months ended December 31, 2024, compared to $71.4 million for the same period in 2023[216]. - Total operating income (loss) for the nine months ended December 31, 2024, was $(113.1) million, a decrease of $346.4 million compared to $233.3 million in 2023[219]. - Net income decreased significantly to $1.2 million for the three months ended December 31, 2024, compared to $110.8 million for the same period in 2023[182]. Restructuring and Charges - The 2025 restructuring plan is estimated to incur pre-tax charges of approximately $140 million to $160 million during Fiscal 2025 and Fiscal 2026[176]. - Total costs recorded in restructuring charges for the three months ended December 31, 2024, amounted to $17.764 million[176]. - Employee-related costs recorded in restructuring charges were $1.584 million for the three months ended December 31, 2024[176]. - Restructuring charges increased by $13.9 million, or 100.0%, to $13.9 million for the three months ended December 31, 2024, primarily due to employee-related charges of $1.6 million, facility-related charges of $5.7 million, and other restructuring charges of $6.7 million[199]. Cash Flow and Liquidity - As of December 31, 2024, the company had approximately $726.9 million in cash and cash equivalents, sufficient to meet liquidity needs for at least the next twelve months[224]. - Net cash provided by operating activities decreased by $334.0 million to $142.9 million for the nine months ended December 31, 2024, compared to $476.9 million in 2023[233]. - Cash flows used in investing activities increased by $27.7 million to $(99.2) million, primarily due to higher capital expenditures and acquisitions[235]. - Cash flows used in financing activities increased by $79.5 million to $(154.5) million, including an $80.9 million repayment of Convertible Senior Notes and $65.0 million for share repurchases[237]. Capital Expenditures and Financing - Total capital expenditures for the nine months ended December 31, 2024, were $139.9 million, representing approximately 4% of net revenues, an increase of $23.3 million from $116.5 million in 2023[236]. - The company has a revolving credit facility of $1.1 billion, with no amounts outstanding as of December 31, 2024[238]. - The company authorized a share repurchase program of up to $500 million, with $65 million repurchased as of December 31, 2024[229][232]. - The company issued $600.0 million of 3.25% senior unsecured notes due June 15, 2026, with interest payable semi-annually[247]. - The amended credit agreement requires a consolidated EBITDA to consolidated interest expense ratio of not less than 3.50 to 1.0[243]. Other Financial Metrics - Other expense, net increased by $50.5 million to $2.6 million during the three months ended December 31, 2024, primarily due to an earn-out related to the sale of the MyFitnessPal platform[206]. - Income tax expense decreased by $2.3 million to $6.3 million for the three months ended December 31, 2024, with an effective tax rate of 83.3% compared to 7.2% in the prior year[208]. - Marketing costs decreased by $31.1 million, or 7.1%, but as a percentage of net revenues, they increased to 10.2% from 10.0%[202]. - Other costs increased by $228.6 million, or 16.8%, primarily due to higher litigation expenses and an impairment charge of $28.4 million[202]. - Interest expense, net increased by $3.2 million to $3.4 million during the three months ended December 31, 2024, primarily due to a decrease in interest income[203].

Core Insights - Under Armour has intentionally reduced sales volume to re-establish brand prominence after a period of dilution over its 25+ years in the financial/investment industry [1] Company Summary - Under Armour is currently viewed as a conundrum for investors and Wall Street analysts due to its strategic decision to decline sales volume [1] - The company aims to regain its brand strength and market position following a significant period of brand dilution [1]

Revenue Performance - Revenue for Q3 Fiscal 2025 decreased by 6% to $1.4 billion, with North America revenue down 8% to $844 million and international revenue down 1% to $558 million[3]. - Net revenues for the three months ended December 31, 2024, were $1,401,039, a decrease of 5.7% compared to $1,486,043 in the same period of 2023[20]. - North America segment revenues decreased by 7.8% to $843,620 for the three months ended December 31, 2024, from $915,335 in 2023[20]. - Under Armour's total net revenue growth for the nine months ended December 31, 2024, was a decline of 8.8% according to GAAP, with a currency-neutral net revenue growth of -8.7%[33]. Profitability Metrics - Gross margin increased by 240 basis points to 47.5%, attributed to reduced direct-to-consumer discounting and lower product and freight costs[3]. - Operating income was reported at $14 million, with adjusted operating income at $60 million after excluding certain charges[3]. - Net income for the quarter was $1 million, while adjusted net income stood at $35 million[3]. - Gross profit for the three months ended December 31, 2024, was $665,155, representing a gross margin of 47.5%, compared to $670,639 and 45.1% in 2023[20]. - The company reported a net income of $1,234 for the three months ended December 31, 2024, compared to a net income of $110,753 in 2023[20]. - For the nine months ended December 31, 2024, Under Armour reported a net loss of $133.81 million compared to a net income of $225.47 million for the same period in 2023[30]. - The adjusted diluted earnings per share for the nine months ended December 31, 2024, was $0.39, while the GAAP diluted net loss per share was $(0.31)[43]. Expenses and Charges - Selling, general, and administrative expenses rose by 6% to $638 million, primarily due to increased marketing investments[3]. - Selling, general and administrative expenses increased to $637,701, accounting for 45.5% of net revenues, up from 40.3% in the prior year[20]. - The company recognized $42 million in restructuring and impairment charges, with total incurred charges thus far amounting to $57 million[5]. - The company experienced a significant increase in restructuring charges, totaling $13,945 for the three months ended December 31, 2024[20]. Cash Flow and Assets - Cash and cash equivalents decreased to $726,877 as of December 31, 2024, from $858,691 as of March 31, 2024[28]. - The company's cash flows from operating activities for the nine months ended December 31, 2024, were $142.88 million, a decrease from $476.86 million in the prior year[30]. - Under Armour's cash, cash equivalents, and restricted cash decreased from $1.06 billion at the end of December 2023 to $745.17 million at the end of December 2024[30]. - Total assets decreased to $4,630,965 as of December 31, 2024, down from $4,760,734 as of March 31, 2024[28]. - The company reported a significant increase in accounts receivable, totaling $136.66 million for the nine months ended December 31, 2024, compared to $58.04 million in the previous year[30]. Future Outlook - The updated fiscal 2025 outlook anticipates a revenue decline of approximately 10%, with a gross margin increase of about 160 basis points expected[7]. - Operating loss is projected to be between $179 million and $189 million, with adjusted operating income expected to be between $185 million and $195 million[7]. - Capital expenditures are forecasted to be between $170 million and $180 million, a decrease from previous estimates[12]. - The company plans for a GAAP loss from operations in the fiscal year ending March 31, 2025, to be between $179 million and $189 million, with adjusted income from operations estimated between $185 million and $195 million[47]. Share Repurchase - Under Armour repurchased $25 million of its Class C common stock, retiring 2.8 million shares during Q3[4]. - The company repurchased $65 million in common shares during the nine months ended December 31, 2024, compared to $75 million in the same period of the previous year[30]. Store Operations - Under Armour's total company-owned and operated doors decreased from 440 in December 2023 to 448 in December 2024, with North America total doors decreasing from 200 to 196[50].

Earnings Release and Conference Call - Under Armour Inc plans to release its third-quarter fiscal 2025 results for the period ended December 31 2024 on February 6 2025 [1] - The company will hold a conference call at approximately 8:30 am ET on February 6 2025 to discuss the results following the news release at around 6:55 am ET [1] - The conference call will be webcast live and archived on the company's investor relations website [1] Company Overview - Under Armour Inc is headquartered in Baltimore Maryland [2] - The company is a leading inventor marketer and distributor of branded athletic performance apparel footwear and accessories [2] - Under Armour's products and experiences are designed to empower human performance and make athletes better [2]

Group 1 - Under Armour, Inc. reported Q2 2025 results that exceeded both their guidance and market expectations despite poor year-over-year topline and bottom-line results [1] - The market reacted positively to the earnings beat and the optimistic tone of the report [1] Group 2 - The investment approach focuses on operational aspects and long-term earnings potential rather than market-driven dynamics [1] - The strategy emphasizes holding companies for the long term, with a preference for a small fraction of companies being considered for buy recommendations [1]

Revenue Performance - Total net revenues decreased by 10.7% for the three months ended September 30, 2024, compared to the same period in 2023[124] - Wholesale revenue decreased by 12.1%, while direct-to-consumer revenue decreased by 7.6% during the same period[124] - Net revenues decreased by $167.7 million, or 10.7%, to $1,399.0 million for the three months ended September 30, 2024, compared to $1,566.7 million for the same period in 2023[134] - Total net revenues for the six months ended September 30, 2024, decreased by $300.9 million, or 10.4%, to $2,582.7 million compared to $2,883.6 million in 2023[134] - Net revenues in North America decreased by $128.0 million, or 12.9%, driven by declines in both wholesale and direct-to-consumer channels[154] - Net revenues in the Asia-Pacific region decreased by $24.4 million, or 10.5%, primarily due to decreases in both direct-to-consumer and wholesale channels[154] - North America net revenues fell by $245.4 million, or 13.5%, to $1.57 billion, impacted by declines in both wholesale and direct-to-consumer channels[158] - EMEA net revenues decreased by $3.7 million, or 0.7%, to $510.1 million, with a decline in wholesale offset by growth in direct-to-consumer[158] - Asia-Pacific net revenues dropped by $44.8 million, or 10.3%, to $389.5 million, affected by lower revenues in both direct-to-consumer and wholesale channels[158] Sales Breakdown - Apparel revenue decreased by 11.5%, footwear revenue decreased by 10.9%, and accessories revenue increased by 2.1%[124] - Apparel sales decreased by $123.2 million, or 11.5%, to $947.2 million during the three months ended September 30, 2024[134] - Footwear sales decreased by $38.4 million, or 10.9%, to $312.8 million during the three months ended September 30, 2024[134] - Direct-to-consumer sales decreased by $45.5 million, or 7.6%, during the three months ended September 30, 2024[135] - License revenues decreased by $3.9 million, or 13.4%, to $24.8 million during the three months ended September 30, 2024, compared to $28.6 million in 2023[137] Profitability and Margins - Gross margin increased by 200 basis points to 49.8%[124] - Gross profit decreased by $52.4 million to $696.1 million during the three months ended September 30, 2024, with a gross margin increase to 49.8% from 47.8%[138] - Net income for the three months ended September 30, 2024, was $170.4 million, compared to $104.7 million in the same period in 2023[132] - Net income increased to 12.2% of net revenues for the three months ended September 30, 2024, compared to 6.7% in the same period of 2023[133] - Total operating income increased by $33.6 million, or 24.1%, to $173.1 million for the three months ended September 30, 2024, compared to the same period in 2023[155] Expenses and Cost Management - Selling, general and administrative expenses decreased by 14.6%[124] - Selling, general and administrative expenses as a percentage of net revenues decreased to 37.2% for the three months ended September 30, 2024, from 38.9% in the same period of 2023[133] - Marketing costs decreased by $29.2 million or 18.8%, as a percentage of net revenues, marketing costs decreased to 9.0% from 9.9%[141] - Other costs decreased by $60.1 million or 13.2%, primarily due to higher recovery of insurance proceeds and lower salaries expense[141] - Restructuring charges increased by $3.2 million during the three months ended September 30, 2024, primarily due to $1.4 million of employee-related charges[143] Restructuring and Future Plans - The 2025 restructuring plan was approved with an estimated cost of $140 million to $160 million, including up to $75 million in cash-related charges[125] - Total costs recorded in restructuring charges for the three months ended September 30, 2024, amounted to $3.2 million[126] - The company is focused on long-term growth through increased sales in apparel, footwear, and accessories, as well as expansion in direct-to-consumer channels[122] - The company expects trends in gross margin improvements to continue through the remainder of Fiscal 2025, albeit to a lesser extent[138] Cash Flow and Financing - Cash flows from operating activities decreased by $223.9 million, primarily due to a decrease in net income before non-cash items of $292.2 million[167] - Cash flows used in financing activities increased by $78.9 million compared to the previous year, including $40 million for share repurchases[169] - The company repaid $80.9 million of Convertible Senior Notes using cash on hand during the six months ended September 30, 2024[169] - As of September 30, 2024, the company had approximately $530.7 million in cash and cash equivalents, with plans for a $500 million share repurchase program authorized by the Board of Directors[162] - The Board of Directors authorized a share repurchase program of up to $500 million for Class C Common Stock, effective until May 31, 2027[165] Debt and Capital Expenditures - Total capital expenditures for the six months ended September 30, 2024, were $91.5 million, representing approximately 4% of net revenues, an increase of $16.1 million from the previous year[168] - The company incurred $64.9 million in capital expenditures related to the construction of its new global headquarters during the six months ended September 30, 2024[168] - The company’s 3.25% Senior Notes have an aggregate principal amount of $600 million, due June 15, 2026, with interest payable semi-annually[174] - The amended credit agreement requires a consolidated EBITDA to consolidated interest expense ratio of not less than 3.50 to 1.0, and the company was in compliance as of September 30, 2024[172] - As of September 30, 2024, the company had no amounts outstanding under its $1.1 billion revolving credit facility[170]

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Revenue Performance - Revenue for Q2 fiscal 2025 decreased by 11% to $1.4 billion, with North America down 13% to $863 million and international revenue down 6% to $538 million[4] - For the three months ended September 30, 2024, Under Armour reported net revenues of $1,399,023, a decrease of 10.7% compared to $1,566,674 in the same period of 2023[14] - Under Armour's total net revenues for the six months ended September 30, 2024, were $2,582,688, down 10.4% from $2,883,639 in the same period last year[14] - The company's total net revenue growth for the six months ended September 30, 2024, was a decline of 10.4% on a GAAP basis, with currency-neutral net revenue growth also declining by 10.1%[21] Profitability Metrics - Net income for the quarter was $170 million, while adjusted net income was $131 million[4] - Under Armour's net income for the three months ended September 30, 2024, was $170,382, or $0.39 per diluted share, compared to a net income of $104,711, or $0.23 per diluted share, in the prior year[13] - For the six months ended September 30, 2024, Under Armour reported a net loss of $135,044, compared to a net income of $114,721 for the same period in 2023[19] - Adjusted net income for the six months ended September 30, 2024, was $134,770, compared to a loss of $135,044 on a GAAP basis[25] Cost Management - Gross margin increased by 200 basis points to 49.8%, driven by lower product and freight costs and reduced discounting levels[4] - Selling, general, and administrative expenses decreased by 15% to $520 million, with adjusted expenses down 13% to $530 million[4] - Gross profit for the three months ended September 30, 2024, was $696,132, representing a gross margin of 49.8%, up from 47.8% in the prior year[13] - The company incurred selling, general, and administrative expenses of $519,840, which accounted for 37.2% of net revenues, compared to 38.9% in the same period last year[13] Future Outlook - The company expects a low double-digit percentage decline in revenue for fiscal 2025, including a 14-16% decline in North America[7] - Gross margin is projected to increase by 125 to 150 basis points, up from a previous expectation of 75 to 100 basis points[7] - Operating loss is anticipated to be between $176 million and $196 million, an improvement from prior expectations of $220 million to $240 million[7] - Under Armour's outlook for the year ending March 31, 2025, includes an estimated adjusted income from operations ranging from $165 million to $185 million[28] Restructuring Efforts - The restructuring plan's total charges are expected to range from $140 million to $160 million, with $28 million recognized in restructuring and impairment charges to date[6] - The company plans to incur restructuring charges under its 2025 restructuring plan, estimated between $140 million and $160 million[29] - The estimated impact of charges under the 2025 restructuring plan is $33 million for the quarter ending December 31, 2024[31] - The company continues to focus on restructuring efforts to improve operational efficiency and financial performance[31] Asset and Liability Management - As of September 30, 2024, Under Armour's total assets decreased to $4,494,593, down from $4,760,734 as of March 31, 2024, representing a decline of approximately 5.6%[18] - Under Armour's total liabilities decreased to $2,509,392 as of September 30, 2024, from $2,607,448 as of March 31, 2024, a decrease of approximately 3.8%[18] - Under Armour's cash and cash equivalents decreased to $530,701 as of September 30, 2024, from $858,691 as of March 31, 2024, a decrease of approximately 38%[18] - The company experienced a significant increase in inventories, which rose to $1,105,884 as of September 30, 2024, compared to $958,495 as of March 31, 2024, an increase of about 15.4%[18] Shareholder Metrics - Diluted earnings per share was $0.39, with adjusted diluted earnings per share at $0.30[5] - For the three months ended September 30, 2024, the GAAP diluted net income per share was $0.39, while the adjusted diluted net income per share was $0.30[26] - The GAAP diluted net income per share is projected to be between $(0.07) and $(0.05) for the quarter ending December 31, 2024[32] - The adjusted diluted net income per share is projected to be between $0.02 and $0.04 for the same quarter[32] Operational Metrics - North America segment revenues decreased by 12.9% to $863,345 for the three months ended September 30, 2024, from $991,357 in 2023[14] - The EMEA region saw a slight decline of 1.4% in revenues, totaling $283,178 for the three months ended September 30, 2024, compared to $287,091 in the same period last year[14] - Direct-to-consumer sales decreased by 7.6% to $550,336 for the three months ended September 30, 2024, from $595,811 in the prior year[15] - Apparel sales decreased by 11.5% to $947,188 for the three months ended September 30, 2024, compared to $1,070,401 in the same period of 2023[16] Store Operations - As of September 30, 2024, Under Armour operates 196 total doors in North America, a slight decrease from 197 doors in 2023[33] - The total international doors decreased from 253 in 2023 to 250 in 2024[33] - The total number of doors operated by Under Armour is 446, down from 450 in the previous year[33] - The company has seen a decrease in the number of Brand House locations in North America from 19 in 2023 to 16 in 2024[33]