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Third quarter apparel net revenues increased 7.1% to $215.4 million compared with $201.1 million in the same period of the prior year, driven by growth in the Men's, Women's, and Youth apparel businesses. Footwear net revenues in the third quarter of 2009 increased to $33.0 million from $13.1 million in the third quarter of 2008. Direct-to-consumer net revenues, which represented 15% of total net revenues for the quarter, grew 62% year-over-year during the third quarter.
Kevin Plank, Chairman and CEO of Under Armour, Inc., stated, "The strength and diversity of our growth platform enabled us to deliver meaningful top line growth during the quarter with all product categories up for the period. Continuing to lead in product innovation and aggressively communicating our authentic position in sports will help ensure that the Under Armour Brand continues to resonate with the athletes of this generation."
For the third quarter, operating income rose to $47.1 million compared with $46.5 million in the prior year's period. Gross margin for the third quarter of 2009 was 49.7% compared with 51.0% in the prior year's quarter. Selling, general and administrative expenses were $87.0 million in the third quarter of 2009 compared with $71.8 million in the third quarter of 2008. The increase in selling, general and administrative expenses was primarily driven by the continued expansion of the Company's factory house outlet stores as well as higher personnel costs.
For the first nine months of 2009, net revenues increased 16.2% to $634.2 million compared with $546.0 million in the prior year. Net income for the first nine months of 2009 increased to $31.6 million compared with $29.9 million in the same period of 2008. Diluted earnings per share for the first nine months of 2009 was $0.62 compared with $0.59 per share in the prior year's period.
Balance Sheet Highlights
Cash and cash equivalents increased $53.2 million to $93.4 million at September 30, 2009 compared with $40.2 million at September 30, 2008. The Company had no borrowings outstanding under its $200 million revolving credit facility at September 30, 2009. Net accounts receivable decreased 4.0% to $145.0 million at September 30, 2009 compared with $151.1 million at September 30, 2008. Inventory at quarter-end decreased 6.6% to $152.8 million compared with $163.6 million at September 30, 2008.
Outlook for 2009
For 2009, the Company had previously estimated annual net revenues of approximately $810 million and diluted earnings per share in the range of $0.80 to $0.82. However, based on its performance year-to-date, the Company is increasing its outlook for 2009.
The Company now anticipates full year net revenues of $830 million to $835 million. Based on higher personnel costs, including increased funding of the Company's performance incentive plan, selling, general, and administrative expenses for 2009 are now expected to grow in the mid-teens on a percentage basis year-over-year, above the Company's previous outlook for growth in the low-teens. Diluted earnings per share for the year is anticipated to be $0.85 to $0.87.
Brad Dickerson, Chief Financial Officer of Under Armour, concluded, "We remain focused on achieving our financial and strategic goals for 2009 while laying the groundwork for 2010 and beyond. Our business model is built on a foundation of profitable growth. We will continue to leverage our brand equity with athletes to capture market share as we align our growing team and resources to achieve greater operational efficiency."
Conference Call and Webcast
The Company will provide additional commentary regarding its third quarter results and 2009 outlook as well as provide a preliminary view on its 2010 outlook during its earnings conference call today, October 27th, at 8:30 a.m. ET. The call will be webcast live at http://investor.underarmour.com/events.cfm and will be archived and available for replay approximately three hours after the live event. Additional supporting materials related to the call will also be available at http://investor.underarmour.com. The Company's financial results are also available online at http://investor.underarmour.com/results.cfm.
About Under Armour, Inc.
Under Armour((R)) (NYSE: UA | Quote | Chart | News | PowerRating) is a leading developer, marketer, and distributor of branded performance apparel, footwear, and accessories. The brand's moisture-wicking synthetic fabrications are engineered in many different designs and styles for wear in nearly every climate to provide a performance alternative to traditional natural fiber products. The Company's products are sold worldwide and worn by athletes at all levels, from youth to professional, on playing fields around the globe. The Under Armour global headquarters is in Baltimore, Maryland, with European headquarters in Amsterdam's Olympic Stadium, and additional offices in Denver, Hong Kong, Toronto, and Guangzhou, China. For further information, please visit the Company's website at www.underarmour.com.
Forward Looking Statements
Some of the statements contained in this press release constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the development and introduction of new products, and the implementation of our marketing and branding strategies. In many cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "outlook," "potential" or the negative of these terms or other comparable terminology. The forward-looking statements contained in this press release reflect our current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to: changes in general economic or market conditions that could affect consumer spending and the financial health of our retail customers; our ability to forecast and manage our growth effectively; our ability to effectively develop and launch new or updated products; our ability to accurately forecast consumer demand for our products; our ability to obtain the financing required to grow our business, particularly when credit and capital markets are unstable; increased competition causing us to reduce the prices of our products or to increase significantly our marketing efforts in order to avoid losing market share; loss of key suppliers or manufacturers or failure of our suppliers or manufacturers to produce or deliver our products in a timely or cost-effective manner; changes in consumer preferences or the reduction in demand for performance apparel and other products; reduced demand for sporting goods and apparel generally; our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results; our ability to effectively market and maintain a positive brand image; the availability, integration and effective operation of management information systems and other technology; and our ability to attract and maintain the services of our senior management and key employees. The forward-looking statements contained in this press release reflect our views and assumptions only as of the date of this press release. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
(Tables Follow)
Under Armour, Inc.
Quarter and Nine Months Ended September 30, 2009 and 2008
(Unaudited; in thousands, except per share amounts)
CONSOLIDATED STATEMENTS OF INCOME
Quarter % of Quarter % of
Ended Net Ended Net
9/30/09 Revenues 9/30/08 Revenues
------- -------- ------- --------
Net revenues $269,546 100.0% $231,946 100.0%
Cost of goods sold 135,491 50.3% 113,679 49.0%
------- ---- ------- ----
Gross profit 134,055 49.7% 118,267 51.0%
Operating expenses
Selling, general and
administrative expenses 86,992 32.2% 71,788 31.0%
------ ---- ------ ----
Income from operations 47,063 17.5% 46,479 20.0%
Interest expense, net (466) (0.2%) (111) (0.0%)
Other income (expense), net 96 (0.0%) (1,625) (0.7%)
-- ----- ------- -----
Income before income taxes 46,693 17.3% 44,743 19.3%
Provision for income taxes 20,511 7.6% 19,080 8.2%
------ --- ------ ---
Net income $26,182 9.7% $25,663 11.1%
======= === ======= ====
Net income available per common
share
Basic $0.52 $0.52
Diluted $0.52 $0.51
Weighted average common shares
outstanding
Basic 50,046 49,217
Diluted 50,749 50,435
Nine Nine
Months % of Months % of
Ended Net Ended Net
9/30/09 Revenues 9/30/08 Revenues
------- -------- ------- --------
Net revenues $634,194 100.0% $545,965 100.0%
Cost of goods sold 335,310 52.9% 281,959 51.6%
------- ---- ------- ----
Gross profit 298,884 47.1% 264,006 48.4%
Operating expenses
Selling, general and
administrative expenses 240,544 37.9% 209,954 38.5%
------- ---- ------- ----
Income from operations 58,340 9.2% 54,052 9.9%
Interest expense, net (1,909) (0.3%) (498) (0.1%)
Other income (expense), net (253) (0.0%) (1,514) (0.3%)
---- ----- ------- -----
Income before income taxes 56,178 8.9% 52,040 9.5%
Provision for income taxes 24,595 3.9% 22,132 4.0%
------ --- ------ ---
Net income $31,583 5.0% $29,908 5.5%
======= === ======= ===
Net income available per common
share
Basic $0.64 $0.61
Diluted $0.62 $0.59
Weighted average common shares
outstanding
Basic 49,731 49,016
Diluted 50,585 50,321
NET REVENUES BY PRODUCT CATEGORY
Nine Nine
Quarter Quarter Months Months
Ended Ended % Ended Ended %
9/30/09 9/30/08 Change 9/30/09 9/30/08 Change
Apparel $215,427 $201,085 7.1% $459,706 $426,480 7.8%
Footwear 33,048 13,065 153.0% 127,475 75,629 68.6%
Accessories 10,760 8,896 21.0% 23,548 22,264 5.8%
------ ----- ------ ------
Total net sales 259,235 223,046 16.2% 610,729 524,373 16.5%
Licensing revenues 10,311 8,900 15.9% 23,465 21,592 8.7%
------ ----- ------ ------
Total net revenues $269,546 $231,946 16.2% $634,194 $545,965 16.2%
======== ======== ======== ========
Under Armour, Inc.
As of September 30, 2009, December 31, 2008 and September 30, 2008
(Unaudited; in thousands)
CONDENSED CONSOLIDATED BALANCE SHEETS
As of As of As of
9/30/09 12/31/08 9/30/08
------- -------- -------
Assets
Cash and cash equivalents $93,376 $102,042 $40,152
Accounts receivable, net 145,043 81,302 151,086
Inventories 152,753 182,232 163,612
Prepaid expenses and other
current assets 16,041 18,023 19,571
Deferred income taxes 12,178 12,824 13,364
------ ------ ------
Total current assets 419,391 396,423 387,785
Property and equipment, net 73,557 73,548 70,645
Intangible assets, net 6,203 5,470 5,877
Deferred income taxes 12,078 8,687 6,703
Other long term assets 4,839 3,427 3,876
----- ----- -----
Total assets $516,068 $487,555 $474,886
======== ======== ========
Liabilities and Stockholders'
Equity
Revolving credit facility $- $25,000 $15,000
Accounts payable and accrued
expenses 101,206 98,340 96,466
Current maturities of long term
debt 8,292 7,433 7,602
Other current liabilities 5,852 2,337 10,656
----- ----- ------
Total current liabilities 115,350 133,110 129,724
Long term debt, net of current
maturities 9,985 13,158 14,962
Other long term liabilities 13,219 10,190 10,425
------ ------ ------
Total liabilities 138,554 156,458 155,111
Total stockholders' equity 377,514 331,097 319,775
------- ------- -------
Total liabilities and
stockholders' equity $516,068 $487,555 $474,886
======== ======== ========
SOURCE Under Armour, Inc.
http://www.underarmour.com
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