Under Armour (UA) Q4 2025 Earnings Call May 13, 2025 08:30 AM ET Company Participants Lance Allega - Senior Vice President, Finance & Capital MarketsKevin Plank - Founder, Chairman, President & CEODavid E. Bergman - CFOJay Sole - Managing DirectorPeter McGoldrick - Equity Research AssociateKelly Bania - MD - Equity ResearchKrista Zuber - Director Conference Call Participants Simeon Siegel - Managing Director & Senior AnalystSam poser - Equity AnalystLaurent Vasilescu - Managing Director & Senior Equity Anal ...

Under Armour (UA) Q4 2025 Earnings Call May 13, 2025 08:30 AM ET Speaker0 Good day, and welcome to the Fourth Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on each touch tone phone. To withdraw your question, please press star and then 2. Note this event is being recorded. I would now like to turn the conference over to Lance Allaga, Sen ...

UNDER ARMOUR REPORTS FOURTH QUARTER FISCAL 2025 RESULTS; PROVIDES FIRST QUARTER FISCAL 2026 OUTLOOK BALTIMORE, May 13, 2025 – Under Armour, Inc. (NYSE: UAA, UA) announced its unaudited financial results for the fourth quarter and full fiscal year 2025, which ended on March 31, 2025. The company reports its financial performance in accordance with accounting principles generally accepted in the United States ("GAAP"). This press release includes references to "currency neutral" and "adjusted" amounts, which ...

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]