Rutgers Newark Under Armour Reports Fourth Quarter and Full Year Results Discussion need to answer 31 question to Under Armour Reports Fourth Quarter and F

Rutgers Newark Under Armour Reports Fourth Quarter and Full Year Results Discussion need to answer 31 question to Under Armour Reports Fourth Quarter and Full Year Results; Announces Outlook for 2017, have the report. need the questions complete by 8:30 am EST tomorrow 9-20-2019 , Its not difficult accounting problems as well as question within the report. January 31, 2017
Under Armour Reports Fourth Quarter and Full Year Results; Announces Outlook for 2017
– 2016 revenues increased 22 percent to $4.8 billion (up 23 percent currency neutral).
– 2016 footwear and women’s businesses both hit $1 billion mark.
– 2016 operating income up 3 percent to $420 million.
– 2017 revenue expected to increase 11 to 12 percent to nearly $5.4 billion.
BALTIMORE, Jan. 31, 2017 /PRNewswire/ — Under Armour, Inc. (NYSE: UA, UAA) today announced financial results for
the fourth quarter and full year ended December 31, 2016. All per share amounts are on a diluted basis. This release refers
to “currency neutral” amounts which is a non-GAAP financial measure described below under the “Non-GAAP Financial
Information” paragraph.
“We are incredibly proud that in 2016, we once again posted record revenue and earnings, however, numerous challenges
and disruptions in North American retail tempered our fourth quarter results,” said Kevin Plank, Under Armour Chairman and
CEO. “The strength of our Brand, an unparalleled connection with our consumers and the continuation of investments in our
fastest growing businesses — footwear, international and direct-to-consumer — give us great confidence in our ability to
navigate the current retail environment, execute against our long-term growth strategy and create value to our
shareholders.”
Fourth Quarter 2016 Review
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Revenues were up 12 percent to $1.3 billion, driven by a 5 percent increase in wholesale revenues to $742 million
and a 23 percent increase in direct-to-consumer revenues to $518 million. North American revenues grew 6 percent.
International revenues, which represented 16 percent of total revenues in the quarter, were up 55 percent (up 60
percent currency neutral) driven by significant growth in the U.K., Germany, China and Australia. Apparel revenues
increased 7 percent to $929 million including strength in golf and basketball. Footwear revenues increased 36
percent to $228 million driven by accelerated growth in running and basketball. Accessories revenues increased 7
percent to $104 million with strength in bags and headwear.
Gross margin was 44.8 percent compared with 48 percent in the prior year’s period, as benefits from more favorable
product costs were offset by aggressive efforts to manage inventory, changes in foreign currency and the
outperformance of footwear and international businesses in the overall mix, which carry lower margins than our
apparel and North American businesses.
Selling, general and administrative expenses grew 9 percent to $420 million, or 32.1 percent of sales (down 70
basis points), due to continued investments in the company’s highest growth businesses: footwear, international, and
direct-to-consumer.
Operating income declined 6 percent to $167 million. Net income decreased 1 percent to $105 million and diluted
earnings per share for the fourth quarter of 2016 were $0.23 compared with $0.24 in the prior year’s period.
Full Year 2016 Review
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Š
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Revenues increased 22 percent to $4.8 billion (up 23 percent currency neutral) including a 19 percent increase in
wholesale revenues to $3.1 billion and a 27 percent increase in direct-to-consumer revenues which reached $1.5
billion. Direct-to-consumer revenues reached 31 percent of total revenues compared with 30 percent in 2015. North
American revenues grew 16 percent and international revenues grew 63 percent (up 69 percent currency neutral).
For the full year, international revenues represented 15 percent of total revenues, compared with 11 percent in 2015.
Apparel revenues increased 15 percent to $3.2 billion led by growth in golf, basketball and training. Footwear
revenues grew 50 percent to reach $1 billion driven by balanced growth across all categories with particular strength
in running and basketball. Accessories revenues increased 17 percent to $407 million with strength in bags and
headwear and Connected Fitness increased 51 percent to $80 million.
Gross margin was 46.5 percent compared with 48.1 percent as benefits from more favorable product costs were
offset by efforts to manage inventory, changes in foreign currency and the outperformance of the footwear and
international businesses in the overall mix, which carry lower margins than the apparel and North American
businesses.
In line with revenue growth, full year selling, general and administrative expenses grew 22 percent and reached
$1.8 billion, or 37.8 percent of revenues.
Operating income increased 3 percent to $420 million and net income grew 11 percent to $259 million. Diluted
earnings per share for full year 2016 were $0.45 per share for Class A and B shares and $0.71 per share for Class
C shares, reflecting the impact of a $59 million stock dividend paid to Class C shareholders during the second
quarter. If the Class C stock dividend had not been paid, non-GAAP diluted earnings per share for all classes for
2016 would have been $0.58 per share. This compares with diluted earnings per share of $0.53 for all classes in
2015.
Balance Sheet Highlights – As of December 31, 2016
Compared with December 31, 2015:
Š
Cash and cash equivalents increased 93 percent to $250 million.
Š
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Inventory increased 17 percent to $917 million.
Total debt increased 22 percent to $817 million.
2017 Outlook
“Looking forward, our successful track record of re-defining performance gives us great confidence that the opportunities
for long-term growth at Under Armour have never been greater,” said Plank. “The current environment represents an
inflection point to maximize our unique strengths by staying on offense — investing smartly in innovation, deepening our
Brand connection with consumers and amplifying our focus on operational excellence — positioning Under Armour as a
stronger company.”
Key points related to Under Armour’s full year 2017 outlook include:
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Š
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Net revenues are expected to grow 11 to 12 percent to reach nearly $5.4 billion, up 12 to 13 percent currency
neutral.
Gross margin is expected to be slightly down compared to the prior year with benefits in product costs being offset
by continued pressure from changes in foreign currency and sales mix, as the footwear and international businesses
continue to outpace the growth of the higher margin apparel and North American businesses.
Tempered top line results coupled with strategic investments in the company’s fastest growing businesses are
expected to cause a decline in operating income to approximately $320 million.
Other full year assumptions include interest expense of approximately $40 million and an effective tax rate of 32
to 34 percent.
Management Changes
The Company’s Chief Financial Officer, Chip Molloy, has decided to leave the company due to personal reasons. Effective
February 3, David Bergman, Senior Vice President, Corporate Finance, and a seasoned member of Under Armour’s
accounting and finance organization, will serve as acting CFO. Mr. Molloy will remain with the company in an advisory
capacity to assist with the transition.
Mr. Bergman joined Under Armour in 2005 and is currently responsible for leading all major finance functions including
financial planning and analysis, treasury and tax. Prior to this position, he served as Corporate Controller along with several
senior management roles within the Company’s accounting and finance organization. Both Mr. Molloy and Mr. Bergman will
participate in Under Armour’s fourth quarter call and webcast today.
Conference Call and Webcast
Under Armour will hold its 2016 fourth quarter conference call and webcast today at approximately 8:30 a.m. Eastern Time.
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. Financial results and additional supporting materials related to the call can
be found at http://investor.underarmour.com.
Non-GAAP Financial Information
The Company reports its financial results in accordance with accounting principles generally accepted in the United States
(“GAAP”). However, this press release refers to “non-GAAP diluted earnings per share” and certain “currency neutral”
financial information, which are non-GAAP financial measures. The Company provides a reconciliation of these non-GAAP
measures to the most directly comparable financial measure calculated in accordance with GAAP. See the end of this press
release for this reconciliation.
Non-GAAP diluted earnings per share is calculated to exclude the one-time dividend to our Class C stockholders discussed
above. Management believes this presentation provides a useful metric to investors because it excludes the effect of this
one-time event allowing investors to compare the Company’s results over multiple periods. Currency neutral financial
information is calculated to exclude foreign exchange impact. Management uses this information internally to assess sales
performance and believes this information is useful both internally and to investors to facilitate a comparison of the
Company’s results of operations period-over-period. These non-GAAP financial measures should not be considered in
isolation and should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in
accordance with GAAP. In addition, the Company’s non-GAAP financial information may not be comparable to similarly titled
measures reported by other companies.
About Under Armour, Inc.
Under Armour (NYSE: UA, UAA), the originator of performance footwear, apparel and equipment, revolutionized how
athletes across the world dress. Designed to make all athletes better, the brand’s innovative products are sold worldwide to
athletes at all levels. The Under Armour Connected Fitness™ platform powers the world’s largest digital health and fitness
community through a suite of applications: UA Record, MapMyFitness, Endomondo and MyFitnessPal. The Under Armour
global headquarters is in Baltimore, Maryland. For further information, please visit the Company’s website at
www.uabiz.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, the
implementation of our marketing and branding strategies, and the future benefits and opportunities from acquisitions. In
many cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,”
“assumes,” “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 overall consumer spending or our industry; the financial health of our customers; our ability to effectively
manage our growth and a more complex global business; increased competition causing us to lose market share or reduce
the prices of our products or to increase significantly our marketing efforts, which can impact our profitability and growth;
our ability to successfully manage or realize expected results from acquisitions and other significant investments or capital
expenditures; our ability to effectively develop and launch new, innovative and updated products; our ability to accurately
forecast consumer demand for our products and manage our inventory in response to changing demands; fluctuations in
the costs of our products; 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, including due to port disruptions; our ability to further expand our
business globally and to drive brand awareness and consumer acceptance of our products in other countries; our ability to
accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results; risks related to foreign
currency exchange rate fluctuations; our ability to effectively market and maintain a positive brand image; our ability to
comply with existing trade and other regulations, and the potential impact of new trade and tax regulations on our
profitability; the availability, integration and effective operation of information systems and other technology, as well as any
potential interruption in such systems or technology; risks related to data security or privacy breaches; our ability to raise
additional capital required to grow our business on terms acceptable to us; our potential exposure to litigation and other
proceedings; and our ability to attract and retain the services of our senior management and key employees. The forwardlooking 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.
Under Armour, Inc.
For the Quarter and Year Ended December 31, 2016 and 2015
(Unaudited; in thousands, except per share amounts)
CONSOLIDATED STATEMENTS OF INCOME
Quarter Ended December 31,
Net revenues
$
Cost of goods sold
Gross profit
Selling, general and
administrative expenses
Income from
operations
Interest expense, net
Other expense, net
Income before income
taxes
Provision for income taxes
Net income
Adjustment
payment to Class C
capital stockholders
Net income available
to all stockholders
Basic net income per share
of Class A and B common
stock
Basic net income per share
of Class C common stock
Diluted net income per
share of Class A and B
common stock
Diluted net income per
share of Class C common
stock
$
2016
1,308,128
721,574
% of Net
Revenues
100.0 %
55.2 %
$
Year Ended December 31,
2015
1,170,686
609,016
% of Net
Revenues
100.0 %
52.0 %
$
2016
4,828,186
2,584,724
% of Net
Revenues
100.0 %
53.5 %
$
2015
3,963,313
2,057,766
% of Net
Revenues
100.0 %
51.9 %
586,554
44.8
%
561,670
48.0
%
2,243,462
46.5
%
1,905,547
48.1
%
419,804
32.1
%
384,088
32.8
%
1,823,140
37.8
%
1,497,000
37.8
%
166,750
(7,958)
(1,731)
12.7
(0.6)
(0.1)
%
%
%
177,582
(4,056)
(2,196)
15.2
(0.4)
(0.2)
%
%
%
420,322
(26,434)
(2,755)
8.7
(0.5)
(0.1)
%
%
%
408,547
(14,628)
(7,234)
10.3
(0.4)
(0.2)
%
%
%
157,061
52,151
12.0
4.0
%
%
171,330
65,727
14.6
5.6
%
%
391,133
132,473
8.1
2.7
%
%
386,685
154,112
9.7
3.8
%
%
104,910
8.0
%
105,603
9.0
%
258,660
5.4
%
232,573
5.9
%
$
$
$
—
—
59,000
—
104,910
105,603
199,660
232,573
$
0.24
$
0.24
$
0.46
$
0.54
$
0.24
$
0.24
$
0.73
$
0.54
$
0.23
$
0.24
$
0.45
$
0.53
$
0.23
$
0.24
$
0.71
$
0.53
Weighted average common shares outstanding Class A and B common stock
Basic
218,220
215,948
Diluted
222,802
221,307
217,707
221,983
215,498
220,868
Weighted average common shares outstanding Class C common stock
Basic
220,040
215,948
Diluted
224,777
221,307
218,623
222,922
215,498
220,868
Under Armour, Inc.
For the Quarter and Year Ended December 31, 2016 and 2015
(Unaudited; in thousands)
NET REVENUES BY PRODUCT CATEGORY
Quarter Ended December 31,
Apparel
Footwear
Accessories
2016
928,546
227,701
104,348
$
Total net sales
Licensing revenues
Connected Fitness
Intersegment eliminations
Total net revenues
$
1,260,595
29,926
18,267
(660)
$
1,308,128
$
Year Ended December 31,
2015
864,841
166,880
97,130
% Change
7.4 %
36.4 %
7.4 %
1,128,851
24,852
16,983
—
11.7
20.4
7.6
(100.0)
%
%
%
%
1,170,686
11.7
%
$
2016
3,229,142
1,013,544
406,614
$
4,649,300
99,849
80,447
(1,410)
$
4,828,186
$
2015
2,801,062
677,744
346,885
% Change
15.3 %
49.5 %
17.2 %
3,825,691
84,207
53,415
—
21.5
18.6
50.6
(100.0)
%
%
%
%
3,963,313
21.8
%
NET REVENUES BY SEGMENT
Quarter Ended December 31,
North America
International
Connected Fitness
Intersegment eliminations
$
Total net revenues
$
2016
1,075,251
215,270
18,267
(660)
1,308,128
$
$
Year Ended December 31,
2015
1,015,009
138,694
16,983
—
% Change
5.9 %
55.2 %
7.6 %
(100.0) %
1,170,686
11.7
$
%
$
2016
4,008,165
740,984
80,447
(1,410)
$
4,828,186
$
2015
3,455,737
454,161
53,415
—
% Change
16.0 %
63.2 %
50.6 %
(100.0) %
3,963,313
21.8
OPERATING INCOME (LOSS) BY SEGMENT
Quarter Ended December 31,
North America
International
Connected Fitness
$
2016
160,191
10,870
(4,311)
$
166,750
$
Income from operations
$
2015
188,418
2,761
(13,597)
$
177,582
$
Year Ended December 31,
% Change
(15.0) %
293.7 %
68.3 %
(6.1)
%
Under Armour, Inc.
As of December 31, 2016 and December 31, 2015
(Unaudited; in thousands)
CONDENSED CONSOLIDATED BALANCE SHEETS
As of
12/31/16
Assets
Cash and cash equivalents
Accounts receivable, net
Inventories
Prepaid expenses and other current assets
$
Total current assets
Property and equipment, net
Goodwill
Intangible assets, net
Deferred income taxes
Other long term assets
Total assets
250,470
625,536
917,491
183,393
As of
12/31/15
$
1,976,890
804,211
563,591
64,310
135,692
110,204
$
3,654,898
129,852
433,638
783,031
152,242
1,498,763
538,531
585,181
75,686
92,157
78,582
$
2,868,900
Liabilities and Stockholders’ Equity
Accounts payable
Accrued expenses
Current maturities of long term debt
Other current liabilities
418,565
208,750
27,000
40,387
200,460
192,935
42,000
43,415
Total current liabilities
Long term debt, net of current maturities
Other long term liabilities
Total liabilities
Total stockholders’ equity
694,702
790,388
137,227
1,622,317
2,032,581
478,810
627,000
94,868
1,200,678
1,668,222
Total liabilities and stockholders’ equity
$
3,654,898
$
2,868,900
$
2016
411,275
45,867
(36,820)
$
420,322
$
$
2015
460,961
8,887
(61,301)
$
408,547
$
% Change
(10.8) %
416.1 %
39.9 %
2.9
%
%
Under Armour, Inc.
For the Year Ended December 31, 2016 and 2015
(Unaudited; in thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
2016
2015
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation and amortization
Unrealized foreign currency exchange rate losses
Loss on disposal of property and equipment
Stock-based compensation
Deferred income taxes
Changes in reserves and allowances
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable
Inventories
Prepaid expenses and other assets
Accounts payable
Accrued expenses and other liabilities
Income taxes payable and receivable
$
258,660
$
232,573
144,770
12,627
1,580
46,149
(41,834)
67,337
100,940
33,359
549
60,376
(4,426)
40,391
(249,853)
(148,055)
(34,170)
211,332
52,656
(16,712)
(191,876)
(278,524)
(76,476)
(22,583)
64,126
(2,533)
304,487
(44,104)
(316,45…
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