Under Armour(US:UA)2019-02-12 19:06Financial Data and Key Metrics Changes - Total revenue for 2018 grew 4% to $5.2 billion, with wholesale and direct-to-consumer (DTC) businesses up 3% and 4% respectively [11][12] - North American revenue decreased by 2%, while international revenue increased by 23% [12] - Reported gross margin remained unchanged at 45.1%, with adjusted gross margin increasing by 30 basis points to 45.5% [12][34] - Operating loss for the year was $25 million, with adjusted operating income of $179 million [14][35] - Cash and cash equivalents increased by 78% to $557 million, and total debt decreased by 21% to $729 million [36] Business Line Data and Key Metrics Changes - Apparel revenue increased by 5%, footwear revenue rose by 2%, while accessories revenue declined by 5% for the full year [12] - In Q4 2018, apparel revenue increased by 2% to $970 million, footwear revenue decreased by 4% to $235 million, and accessories revenue fell by 2% to $108 million [30][31] - DTC revenue represented 35% of total revenue for the full year, with Q4 DTC revenue flat at $577 million [11][30] Market Data and Key Metrics Changes - North American revenue in Q4 decreased by 6%, while EMEA revenue increased by 32% and Asia-Pacific revenue rose by 35% [32] - Latin America revenue decreased by 15% due to a business model change in Brazil [33] Company Strategy and Development Direction - The company is focused on a five-year strategy aimed at driving growth and profitability through a clearly defined consumer approach and enhanced operational capabilities [10][11] - The strategy includes optimizing operations, building stronger customer relationships, and delivering sustainable, profitable growth [16][27] - The company aims to protect its premium brand positioning while expanding its international presence [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term strategic plan and highlighted the importance of brand integrity and operational excellence [17][41] - The company anticipates revenue growth of approximately 3% to 4% in 2019, with expectations of flat results in North America and low double-digit growth internationally [37][39] - Management acknowledged the challenges faced in 2018 but emphasized the progress made in stabilizing the business and improving operational efficiency [9][15] Other Important Information - The company incurred approximately $204 million in restructuring charges in 2018, with no new restructuring plans anticipated for 2019 [29] - A new reportable segment called "corporate other" will be introduced to provide better visibility into international operations and global corporate overhead costs [40] Q&A Session Summary Question: Can you provide more context on the first quarter and regional performance? - Management indicated that Q1 is expected to be flat to slightly down, with a mid single-digit decline in North America and low double-digit growth internationally [44] Question: What signs of traction are expected from new product initiatives in 2019? - Management noted that the launch of new HOVR styles has received positive reception, and they are excited about the performance of these products [48][49] Question: What changes were made in the restructuring plan, and what are the long-term implications? - Management clarified that the restructuring charges came in lower than expected due to favorable negotiations, with no impact on future benefits [54] Question: How will the company articulate its performance heritage to consumers? - Management emphasized a commitment to performance and innovation, ensuring that all products have performance attributes rooted in the brand's heritage [56][58] Question: What are the expected benefits from process redesign in 2019? - Management highlighted ongoing efforts to optimize SG&A expenses and improve operational processes, with more significant benefits expected in 2020 and beyond [62]