Under Armour(US:UA)2025-08-08 13:06PART I - FINANCIAL INFORMATION Financial Statements The company reported a net loss of $2.6 million for Q1 FY2026, a substantial improvement from the prior year, with total assets increasing to $4.87 billion and positive operating cash flow of $48.9 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total Current Assets | $2,902,858 | $2,329,097 | | Cash and cash equivalents | $910,985 | $501,361 | | Inventories | $1,141,829 | $945,836 | | Total Assets | $4,865,191 | $4,300,871 | | Total Current Liabilities | $1,895,375 | $1,109,143 | | Current maturities of long-term debt | $599,757 | $— | | Total Liabilities | $2,990,762 | $2,410,593 | | Total Stockholders' Equity | $1,874,429 | $1,890,278 | Condensed Consolidated Statement of Operations Highlights (in thousands) | Account | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net revenues | $1,134,068 | $1,183,665 | | Gross profit | $546,496 | $562,675 | | Income (loss) from operations | $3,323 | $(299,728) | | Net income (loss) | $(2,612) | $(305,426) | | Diluted EPS | $(0.01) | $(0.70) | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Activity | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $48,852 | $152,975 | | Net cash used in investing activities | $(35,362) | $4,319 | | Net cash provided by (used in) financing activities | $387,303 | $(128,220) | | Net increase in cash | $410,107 | $26,244 | Notes to the Condensed Consolidated Financial Statements Disclosures detail the 2025 restructuring plan incurring $12.8 million in charges, a $400 million new senior note issuance, and an $8.9 million litigation settlement payment - The company issued $400.0 million in 7.25% senior unsecured notes due 2030, with proceeds intended to redeem or discharge the $600.0 million 3.25% senior notes due 2026 during the second quarter of Fiscal 2026575859 - A settlement was reached in the Derivative Actions, including the company implementing various corporate governance measures for three years and receiving a payment of $8.9 million, funded by insurance proceeds, on behalf of the defendants73 2025 Restructuring Plan Charges (in thousands) | Charge Category | Three Months Ended June 30, 2025 | Estimated Charges Remaining | | :--- | :--- | :--- | | Costs in restructuring charges | $12,828 | $30,203 | | Costs in SG&A expenses | $8,259 | $19,548 | | Total restructuring & related charges | $21,087 | $49,751 | Net Revenues by Product Category (in thousands) | Product Category | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Apparel | $746,592 | $757,792 | | Footwear | $265,855 | $310,389 | | Accessories | $100,078 | $92,545 | | Total Net Sales | $1,112,525 | $1,160,726 | Management's Discussion and Analysis of Financial Condition and Results of Operations Quarterly revenue declined 4.2% due to market challenges, yet gross margin improved to 48.2% and SG&A decreased 36.7%, with $911 million in cash bolstering liquidity Overview and Quarterly Results Total net revenues decreased 4.2% due to challenging market conditions, with Footwear revenue down 14.3%, while gross margin improved 70 basis points to 48.2% - Key financial highlights for the quarter ended June 30, 2025 compared to the prior year include: total net revenues decreased 4.2%, wholesale revenue decreased 4.6%, direct-to-consumer revenue decreased 3.5%, Footwear revenue decreased 14.3%, and gross margin increased 70 basis points to 48.2%156 Results of Operations Net revenues decreased 4.2% to $1.13 billion, primarily from a 14.3% drop in Footwear, while gross margin improved to 48.2% and SG&A expenses fell 36.7% Revenue Breakdown and Change (in thousands) | Category | Q1 FY2026 | Q1 FY2025 | Change (%) | | :--- | :--- | :--- | :--- | | By Product | | | | | Apparel | $746,592 | $757,792 | (1.5)% | | Footwear | $265,855 | $310,389 | (14.3)% | | Accessories | $100,078 | $92,545 | 8.1% | | By Channel | | | | | Wholesale | $649,050 | $680,513 | (4.6)% | | Direct-to-consumer | $463,475 | $480,213 | (3.5)% | - Gross margin increased by 70 basis points, driven by favorable foreign exchange (+55 bps), product mix (+30 bps), and pricing benefits (+30 bps), partially offset by unfavorable channel mix (-30 bps) and supply chain costs (-15 bps)169 - SG&A expenses decreased by $307.0 million (36.7%), primarily due to lower litigation reserve expense compared to the prior year, which included costs for settling the Consolidated Securities Action litigation171172 Segment Results of Operations North America revenue declined 5.5%, while EMEA revenue grew 9.6% with operating income surging 93.8%, and Corporate Other's operating loss significantly narrowed Net Revenues by Geographic Segment (in thousands) | Region | Q1 FY2026 | Q1 FY2025 | Change (%) | | :--- | :--- | :--- | :--- | | North America | $670,319 | $709,260 | (5.5)% | | EMEA | $248,607 | $226,892 | 9.6% | | Asia-Pacific | $163,386 | $181,836 | (10.1)% | | Latin America | $54,575 | $64,409 | (15.3)% | Operating Income (Loss) by Geographic Segment (in thousands) | Region | Q1 FY2026 | Q1 FY2025 | Change (%) | | :--- | :--- | :--- | :--- | | North America | $121,437 | $147,889 | (17.9)% | | EMEA | $39,643 | $20,456 | 93.8% | | Asia-Pacific | $14,703 | $9,935 | 48.0% | | Latin America | $6,606 | $15,171 | (56.5)% | | Corporate Other | $(179,066) | $(493,179) | 63.7% | Liquidity and Capital Resources The company holds $911 million in cash, with operating cash flow at $48.9 million, and issued $400 million in new senior notes while retaining $410 million for share repurchases - The company had approximately $911 million of cash and cash equivalents as of June 30, 2025188 - On June 23, 2025, the company issued $400 million in aggregate principal amount of 7.25% senior unsecured notes due 2030196207 - No shares were repurchased during the three months ended June 30, 2025, with approximately $410 million remaining under the current share repurchase program192224 Quantitative and Qualitative Disclosures About Market Risk No significant changes to market risk have occurred since March 31, 2025, with further details available in the Fiscal 2025 Annual Report - There have been no significant changes to the company's market risk since March 31, 2025214 Controls and Procedures Disclosure controls and procedures were deemed ineffective due to a material weakness in balance sheet account reconciliations, with remediation efforts ongoing through Fiscal 2026 - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting215 - The material weakness relates to the company not designing and maintaining effective controls over the review and execution of certain balance sheet account reconciliations216 - Remediation efforts are underway, including implementing a new account reconciliation policy, enhancing controls, and training process owners, with these efforts expected to continue throughout Fiscal 2026217219 PART II - OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings, with specific details on certain matters referenced in Note 8 of the financial statements - The company refers to Note 8 of the Condensed Consolidated Financial Statements for information on certain legal proceedings221 Risk Factors No new risk factors are disclosed in this report, with comprehensive details available in the Fiscal 2025 Annual Report on Form 10-K - The company refers readers to the risk factors discussed in Part I, Item 1A of its Annual Report on Form 10-K for Fiscal 2025222 Unregistered Sales of Equity Securities and Use of Proceeds No shares of Class C Common Stock were repurchased during the quarter, leaving approximately $410.0 million available under the repurchase program Issuer Purchases of Equity Securities (Q1 FY2026) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approx. Dollar Value Remaining Under Program (in millions) | | :--- | :--- | :--- | :--- | | April 2025 | — | $— | $410.0 | | May 2025 | — | $— | $410.0 | | June 2025 | — | $— | $410.0 | Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter - No director or officer of the Company adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter225 Exhibits This section lists exhibits filed with the Form 10-Q, including indentures, credit agreement amendments, and officer certifications