Under Armour(US:UA)2024-08-08 20:34Revenue Performance - Total net revenues decreased by 10.1% for the three months ended June 30, 2024, compared to the same period in 2023[127]. - Wholesale revenue decreased by 8.3%, while direct-to-consumer revenue decreased by 11.8% during the same period[127]. - Total net revenues decreased by $133.3 million, or 10.1%, to $1,183.7 million for the three months ended June 30, 2024, compared to $1,316.9 million for the same period in 2023[138]. - Net sales decreased by $125.4 million, or 9.8%, to $1,160.7 million, primarily due to lower unit sales across all product categories[140]. - License revenues decreased by $3.4 million, or 13.6%, to $21.7 million, mainly due to lower revenues from licensing partners in North America and Japan[141]. - North America segment revenues decreased by $117.3 million, or 14.2%, to $709.3 million, while Latin America segment revenues increased by $8.7 million, or 15.6%[155]. - Total net revenues for the three months ended June 30, 2024, decreased by $117.3 million, or 14.2%, in North America, driven by declines in both wholesale and direct-to-consumer channels[156]. - EMEA region net revenues increased slightly by $0.3 million, or 0.1%, to $226.9 million, with growth in the direct-to-consumer channel[156]. - Asia-Pacific region net revenues decreased by $20.4 million, or 10.1%, to $181.8 million, impacted by lower revenues in both direct-to-consumer and wholesale channels[156]. - Latin America region net revenues increased by $8.7 million, or 15.6%, to $64.4 million, driven by growth in both wholesale and direct-to-consumer channels[156]. Profitability and Expenses - Gross margin increased by 110 basis points to 47.5%[127]. - Selling, general and administrative expenses increased by 42.1%, primarily due to a $274 million increase in litigation expenses related to a class action settlement[127]. - Selling, general and administrative expenses increased by $248.2 million, or 42.1%, to $837.3 million, driven by higher litigation reserves and transformational charges[145]. - Net income loss for the three months ended June 30, 2024, was $305.4 million, compared to a profit in the same period last year[135]. - Total operating loss for the three months ended June 30, 2024, was $299.7 million, a significant decline of 1,436.7% compared to an operating income of $22.4 million in the same period last year[157]. Restructuring and Charges - The company expects to incur total estimated pre-tax restructuring charges of approximately $70 million to $90 million during Fiscal 2025[129]. - Total costs recorded in restructuring charges for the three months ended June 30, 2024, amounted to $25.1 million[130]. - Restructuring charges amounted to $25.1 million, primarily due to employee-related charges and non-cash impairment charges[146]. Cash Flow and Capital Management - Cash flows from operating activities increased by $159.0 million, primarily due to a $467.0 million increase in working capital[169]. - Capital expenditures for the three months ended June 30, 2024, were $45.7 million, representing approximately 4% of net revenues, an increase of $13.1 million from the previous year[170]. - The company authorized a share repurchase program of up to $500 million through May 2027, with $40.0 million repurchased during the three months ended June 30, 2024[166]. - As of June 30, 2024, the company had approximately $884.6 million in cash and cash equivalents, sufficient to meet liquidity needs for at least the next twelve months[162]. Debt and Credit Facilities - The amended credit agreement provides for an aggregate $1.1 billion of revolving credit commitments, with a $50 million tranche maturing on December 3, 2026, and a $1.05 billion tranche maturing on December 3, 2027[172]. - As of June 30, 2024, there were no amounts outstanding under the revolving credit facility, and $4.2 million of letters of credit were outstanding[172]. - The company repaid $80.9 million of 1.50% convertible senior notes upon maturity, along with $0.6 million of accrued interest, using cash on hand[174]. - The company issued $600.0 million of 3.250% senior unsecured notes due June 15, 2026, with interest payable semi-annually[175]. - The amended credit agreement implemented SOFR as the benchmark interest rate for U.S. dollar borrowings, with applicable margins ranging from 1.00% to 1.75%[172]. - The company entered into an amendment to the credit agreement in July 2024 to exclude certain charges related to the settlement of Class Action Securities litigation from the definition of consolidated EBITDA[172]. - The company is required to maintain a consolidated EBITDA to consolidated interest expense ratio of not less than 3.50 to 1.0 and a consolidated total indebtedness to consolidated EBITDA ratio not greater than 3.25 to 1.0[172]. Market and Economic Factors - The company continues to monitor macroeconomic factors, including inflation and foreign currency fluctuations, that may impact financial results[133]. - The company has no significant changes to its market risk since March 31, 2024[177]. Accounting and Reporting - The company’s financial statements are prepared in accordance with U.S. GAAP, requiring estimates and assumptions that may significantly differ from actual results[176].