Under Armour(UAA) - 2026 Q1 - Quarterly Results

Executive Summary & Strategic Overview Company Overview & Strategic Direction Under Armour is executing a strategic transformation to enhance brand credibility, innovation, and operational discipline - Under Armour is undergoing a bold transformation to sharpen its brand, emphasizing sports credibility, innovation, style, and operational discipline[2] - Strategic focus includes strengthening brand positioning with premium products, increasing average selling prices through innovative offerings, optimizing top-volume programs, and creating a more compelling full price-to-value proposition[2] First Quarter Fiscal 2026 Financial Review Consolidated Financial Performance The company's Q1 FY26 revenue declined while gross margin improved, resulting in a significantly reduced net loss compared to the prior year Q1 Fiscal 2026 Key Financial Highlights | Metric | Q1 FY26 (2025) | Q1 FY25 (2024) | Change (YoY) | | :-------------------------------- | :------------- | :------------- | :----------- | | Revenue | $1.1 billion | $1.18 billion | -4% (-4% currency neutral) | | Gross Margin | 48.2% | 47.5% | +70 bps | | Operating Income (GAAP) | $3 million | $(299.7) million | N/A | | Net Loss (GAAP) | $3 million | $(305.4) million | N/A | | Adjusted Net Income | $9 million | $3.7 million | N/A | | Diluted Loss Per Share (GAAP) | $(0.01) | $(0.70) | N/A | | Adjusted Diluted Earnings Per Share | $0.02 | $0.01 | N/A | - Gross margin increase was primarily due to favorable foreign exchange, pricing, and product mix, partially offset by an unfavorable channel mix and higher supply chain costs[3] Revenue Breakdown Q1 FY26 revenue declined across most segments and channels, with footwear showing the most significant drop Revenue by Geographic Segment North America and Asia-Pacific revenues declined, while the EMEA region was the only segment to report growth Q1 Fiscal 2026 Revenue by Geographic Segment | Segment | Revenue (2025, in millions) | % Change (YoY) | Currency Neutral % Change (YoY) | | :-------------- | :-------------------------- | :-------------- | :------------------------------ | | North America | $670 | -5% | -5.3% | | International | $467 | -1% | -2.2% | | EMEA | $248.6 | +10% | +6.0% | | Asia-Pacific | $163.4 | -10% | -10.3% | | Latin America | $54.6 | -15% | -7.7% | Revenue by Distribution Channel Both wholesale and direct-to-consumer channels experienced revenue declines, with a notable drop in eCommerce sales Q1 Fiscal 2026 Revenue by Distribution Channel | Channel | Revenue (2025, in millions) | % Change (YoY) | | :---------------- | :-------------------------- | :-------------- | | Wholesale | $649 | -5% | | Direct-to-consumer | $463 | -3% | | Owned & Operated Stores | N/A | +1% | | eCommerce | N/A | -12% | - eCommerce revenue accounted for 31% of the total direct-to-consumer business for the quarter[3] Revenue by Product Category Footwear revenue declined significantly and apparel saw a slight decrease, while accessories revenue grew Q1 Fiscal 2026 Revenue by Product Category | Product Category | Revenue (2025, in millions) | % Change (YoY) | | :--------------- | :-------------------------- | :-------------- | | Apparel | $747 | -1% | | Footwear | $266 | -14% | | Accessories | $100 | +8% | Operating Income by Segment Operating income decreased in North America and Latin America but improved in the EMEA and Asia-Pacific segments Q1 Fiscal 2026 Operating Income by Segment | Segment | Operating Income (2025, in thousands) | % of Net Revenues (2025) | Operating Income (2024, in thousands) | % of Net Revenues (2024) | | :-------------- | :------------------------------------ | :----------------------- | :------------------------------------ | :----------------------- | | North America | $121,437 | 18.1% | $147,889 | 20.9% | | EMEA | $39,643 | 15.9% | $20,456 | 9.0% | | Asia-Pacific | $14,703 | 9.0% | $9,935 | 5.5% | | Latin America | $6,606 | 12.1% | $15,171 | 23.6% | Non-GAAP Adjustments & Reconciliations (Q1 FY26) Adjusted financial measures for Q1 FY26 exclude restructuring charges and litigation reserves to clarify core operational performance Q1 Fiscal 2026 Adjusted Financial Metrics | Metric | GAAP (2025, in thousands) | Adjusted (2025, in thousands) | GAAP (2024, in thousands) | Adjusted (2024, in thousands) | | :-------------------------------------- | :------------------------ | :-------------------------- | :------------------------ | :-------------------------- | | Selling, General & Administrative Expenses | $530,345 | $522,086 | $837,317 | $554,660 | | Operating Income (Loss) | $3,323 | $24,410 | $(299,728) | $8,015 | | Net Income (Loss) | $(2,612) | $8,568 | $(305,426) | $3,656 | | Diluted EPS | $(0.01) | $0.02 | $(0.70) | $0.01 | Fiscal 2025 Restructuring Plan Restructuring Plan Details The company initiated a restructuring plan to improve efficiencies, with total estimated costs between $140 million and $160 million - Restructuring plan announced in May 2024 aims to improve financial and operational efficiencies[4] - Estimated total cost of the plan is between $140 million and $160 million, with up to $90 million cash-related and $70 million non-cash charges[4] - As of Q1 FY26, $110 million in charges have been recorded, with $65 million cash-related and $45 million non-cash-related[4] - Remaining charges are anticipated to be recognized by the end of fiscal 2026[4] Second Quarter Fiscal 2026 Outlook Financial Projections The Q2 FY26 outlook projects a revenue decline and significant gross margin compression, leading to a potential operating loss - Revenue is expected to decline 6-7% in Q2 FY26[6] - North America revenue is anticipated to decrease by a low-double-digit percentage, while EMEA is projected to grow at a high-single-digit rate, and Asia-Pacific to decline by a low-teens percentage[6] - Gross margin is expected to decline 340-360 basis points, mainly due to supply chain headwinds and unfavorable channel mix[6] - Operating income is expected to range from a $10 million loss to $0 million, with adjusted operating income forecasted between $30 million and $40 million[6] - Diluted loss per share is expected to range from $0.07 to $0.08, with adjusted diluted earnings per share anticipated between $0.01 and $0.02[6] Non-GAAP Adjustments & Reconciliations (Q2 FY26 Outlook) The Q2 FY26 outlook is adjusted for restructuring charges to provide a clearer view of expected core operating performance Q2 Fiscal 2026 Adjusted Outlook | Metric | GAAP Low Estimate | GAAP High Estimate | Adjusted Low Estimate | Adjusted High Estimate | | :-------------------------- | :---------------- | :----------------- | :-------------------- | :--------------------- | | Operating Income (Loss) | $(10) million | $0 million | $30 million | $40 million | | Diluted Loss Per Share | $(0.08) | $(0.07) | $0.01 | $0.02 | Financial Statements Condensed Consolidated Statements of Operations The Q1 FY26 statement of operations shows a significantly narrowed net loss compared to the prior year, driven by lower SG&A expenses Condensed Consolidated Statements of Operations (Unaudited; in thousands) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net revenues | $1,134,068 | $1,183,665 | | Cost of goods sold | $587,572 | $620,990 | | Gross profit | $546,496 | $562,675 | | Selling, general and administrative expenses | $530,345 | $837,317 | | Restructuring charges | $12,828 | $25,086 | | Income (loss) from operations | $3,323 | $(299,728) | | Net income (loss) | $(2,612) | $(305,426) | | Diluted net income (loss) per share | $(0.01) | $(0.70) | Condensed Consolidated Balance Sheets Total assets and liabilities increased as of June 30, 2025, primarily due to higher cash, inventories, and new debt maturities Condensed Consolidated Balance Sheets (Unaudited; in thousands) | Metric | June 30, 2025 | March 31, 2025 | | :-------------------------- | :------------ | :------------- | | Total assets | $4,865,191 | $4,300,871 | | Cash and cash equivalents | $910,985 | $501,361 | | Inventories | $1,141,829 | $945,836 | | Total liabilities | $2,990,762 | $2,410,593 | | Current maturities of long-term debt | $599,757 | $0 | | Total stockholders' equity | $1,874,429 | $1,890,278 | Condensed Consolidated Statements of Cash Flows Cash from operations decreased, but a significant inflow from financing activities led to a substantial increase in total cash Condensed Consolidated Statements of Cash Flows (Unaudited; in thousands) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | | Net cash provided by (used in) operating activities | $48,852 | $152,975 | | Net cash provided by (used in) investing activities | $(35,362) | $4,319 | | Net cash provided by (used in) financing activities | $387,303 | $(128,220) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $410,107 | $26,244 | | Cash, cash equivalents and restricted cash (End of period) | $925,158 | $903,161 | - Proceeds from long-term debt and revolving credit facility totaled $400 million in Q1 FY26[26] Supplemental Information Non-GAAP Financial Information (General Explanation) The company utilizes non-GAAP measures to exclude currency fluctuations and restructuring charges for a clearer view of operational performance - Non-GAAP measures like 'currency-neutral' and 'adjusted' results are used to provide valuable information for comparing operational results across different periods[8] - Currency-neutral data eliminates fluctuations in foreign currency exchange rates, while adjusted measures exclude effects of the fiscal year 2025 restructuring plan and associated charges[8] Forward-Looking Statements & Risk Factors The report's forward-looking statements are subject to risks including economic conditions, competition, and supply chain issues - Forward-looking statements relate to expectations, beliefs, projections, plans, and strategies concerning matters that are not historical facts[10] - Actual activities or results may differ significantly due to risks, uncertainties, assumptions, and changes in circumstances[10] - Important factors that could cause material differences include changes in economic/market conditions, global events, trade environment, increased competition, fluctuations in raw material costs, ability to execute strategies, and impacts from litigation[11] Company-Owned & Operated Door Count The total number of company-owned and operated doors remained stable year-over-year at 442 globally Company-Owned & Operated Door Count | Region/Type | June 30, 2025 | June 30, 2024 | | :------------------ | :------------ | :------------ | | North America total | 195 | 200 | | International total | 247 | 241 | | Total doors | 442 | 441 | Conference Call and Webcast A conference call and webcast were held on August 8, 2025, to discuss the first quarter fiscal 2026 results - The conference call for Q1 FY26 results was held on August 8, 2025, at approximately 8:30 a.m. Eastern Time[7] - The call was streamed live and is available for replay on the company's investor relations website: https://about.underarmour.com/investor-relations/financials[7](index=7&type=chunk) Contact Information Contact details for investor relations inquiries are provided - Contact for Finance & Capital Markets: Lance Allega, Senior Vice President[12] - Contact Phone: (410) 246-6810[12] - Contact Email: LAllega@underarmour.com[12]