Under Armour(US:UA)2024-11-07 21:51Revenue 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]