Amer Sports(US:AS)2024-03-06 04:26Financial Data and Key Metrics Changes - For Q4 2023, revenue rose 10% to $1.3 billion, while full-year revenue grew 23% [29] - Adjusted gross profit margin increased by 170 basis points to 52.2% in Q4 compared to Q4 2022, driven by growth in high-margin business Arc'teryx [3] - Adjusted diluted EPS fell to a loss of $0.11 in Q4 2023, compared to a profit of $0.12 in Q4 2022 [47] Business Line Data and Key Metrics Changes - Technical Apparel revenue grew 45% in 2023, with DTC growth of 57% [24] - Outdoor Performance revenue increased by 2% in Q4 to $523 million, driven by strong performance in Winter Sports Equipment [25] - Ball & Racket revenues declined by 3% to $242 million in Q4, with growth in EMEA and Great China not offsetting declines in U.S. wholesale [42] Market Data and Key Metrics Changes - Technical Apparel grew 30% in both Great China and America, with over 40% growth in APAC [40] - The U.S. sports equipment market faced challenges due to elevated inventories carried over from 2022 [27] - In Q4, regional growth was led by a 45% increase in Greater China, followed by 22% growth in APAC [74] Company Strategy and Development Direction - The company aims for mid-teens revenue growth for the group in 2024, with over 20% growth in Technical Apparel [4] - The five-year financial algorithm includes low double-digit to mid-teens annual sales growth and 300 basis points of gross margin expansion [11] - The company is focusing on expanding its DTC model and enhancing brand positioning in key markets [9][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of Arc'teryx, citing its strong competitive position and innovative DTC model [23] - The company anticipates a challenging comparison for Q1 2024 due to strong growth in Q1 2023, expecting revenue growth of 6% to 8% [49] - Management noted that while the macro environment remains volatile, the brand's performance in China continues to be strong [121] Other Important Information - The company plans to open around 30 new Arc'teryx stores in 2024, with a focus on larger flagship locations [102] - The company aims to reduce net debt to adjusted EBITDA below 2 times over the next few years [48] - Capital expenditures are expected to increase to approximately $300 million to support new store expansion and logistics investments [80] Q&A Session Summary Question: Can you elaborate on the momentum at Arc'teryx? - Management noted strong sequential strengthening in KPIs and a healthy inventory position, leading to positive guidance for Q1 [55] Question: What are the drivers of the decline in outdoor margin? - Management indicated that significant investments in the first half of the year would impact margins, but they expect improvements later [57] Question: How is the company addressing inventory issues in Wilson? - Management confirmed that they cleared $90 million of undesirable inventory and feel confident about their position moving into 2024 [107] Question: What is the outlook for North America growth? - Management highlighted strong in-season reorders and cautious preorders from retailers, indicating a positive outlook for the region [117] Question: How is the company positioned in China? - Management expressed confidence in the brand's competitive advantage in China, despite macroeconomic challenges [121]