Under Armour Reports First Quarter Net Revenues Growth Of 30%; Raises Full Year Net Revenues Outlook To $5.0 Billion

BALTIMORE, April 21, 2016 /PRNewswire/ -- Under Armour, Inc. (NYSE: UA, UA.C) today announced financial results for the first quarter ended March 31, 2016.  Net revenues increased 30% in the first quarter of 2016 to $1.05 billion compared with net revenues of $805 million in the prior year's period.  On a currency neutral basis, net revenues increased 32% compared with the prior year's period.  Operating income increased 26% in the first quarter of 2016 to $35 million compared with $28 million in the prior year's period.  Net income increased 63% in the first quarter of 2016 to $19 million compared with $12 million in the prior year's period and diluted earnings per share for the first quarter of 2016 were $0.04 compared with $0.03 per share in the prior year's period.  Diluted earnings per share calculations for both periods reflect the Company's Class C Stock Dividend effective April 7, 2016, which has the same effect as a two-for-one stock split.

During the first quarter, wholesale net revenues grew 28% year-over-year to $744 million compared to $579 million in the prior year's period, while Direct-to-Consumer net revenues grew 33% year-over-year to $266 million compared to $200 million in the prior year's period.  North America net revenues for the first quarter grew 26% year-over-year, or 27% on a currency neutral basis.  International net revenues, which represented 14% of total net revenues for the first quarter, grew 56% year-over-year, or 65% on a currency neutral basis.

Within product categories, apparel net revenues increased 20% to $667 million compared with $555 million in the same period of the prior year, led by growth in training and golf.  Footwear net revenues increased 64% to $264 million from $161 million in the prior year's period, primarily reflecting the ongoing success of the Curry signature basketball line and expanded running offerings.  Accessories net revenues increased 26% to $80 million from $63 million in the prior year's period, driven primarily by growth in headwear and bags.

Kevin Plank, Chairman and CEO of Under Armour, Inc., stated, "For the past 24 consecutive quarters or six years, we have driven net revenue growth above 20% and we are incredibly proud of our start to 2016 with first quarter net revenue growth of 30%.  The strong results posted this quarter truly demonstrate the balanced growth of our brand across product categories, channels and geographies.  It also showcases our heightened focus on providing better service across our distribution channels, ensuring that our consumer consistently finds the newest, most premium product from us wherever they shop.  In footwear, this includes the remarkable success of the Stephen Curry signature basketball line, as well as the exciting launches of our first smart running shoe and our new line of Jordan Spieth inspired golf shoes.  Combined with the introductions of premium apparel technologies like Microthread and CoolSwitch, we will continue to drive elevated innovation and excitement to the athlete throughout the remainder of 2016."

Gross margin for the first quarter of 2016 was 45.9% compared with 46.9% in the prior year's period, primarily reflecting negative impacts of approximately 100 basis points from higher liquidations and approximately 70 basis points from foreign currency exchange rates, partially offset by approximately 60 basis points from improved product cost margins.  Selling, general and administrative expenses grew 27% to $446 million compared with $350 million in the prior year's period, primarily driven by investments in Direct-to-Consumer and overall headcount to support the Company's strategic initiatives. 

Balance Sheet HighlightsCash and cash equivalents decreased 30% to $157 million at March 31, 2016 compared with $225 million at March 31, 2015.  Inventory at March 31, 2016 increased 44% to $834 million compared with $578 million at March 31, 2015, primarily driven by the Company's ongoing strategy to drive higher service levels to customers, resulting in meaningful improvements in fill rates.  Total debt increased 38% to $935 million at March 31, 2016 compared with $677 million at March 31, 2015.

Updated 2016 OutlookBased on current visibility, the Company expects 2016 net revenues of approximately $5.0 billion, representing growth of 26% over 2015 and 2016 operating income in the range of $503 million to $507 million, representing growth of 23% to 24% over 2015.  Below the operating line, the Company expects interest expense of approximately $35 million, an effective full year tax rate of approximately 38.5%, and fully diluted weighted average shares outstanding of approximately 446 million for 2016 reflective of the Class C Stock Dividend.

Mr. Plank concluded, "This year marks our 20th year in business, which is a great milestone for our company.  Our robust growth this quarter demonstrates the power of our brand with growth coming from every part of our business.  Our ability to adapt in a rapidly changing environment has been a critical part of our success and fuels our inspiration to create game-changing products that solve problems and enrich consumers' lives.  With this unrelenting consumer focus and ongoing investment, we are setting the foundation for our growth story over the next 20 years."

Conference Call and WebcastThe Company will provide additional commentary regarding its first quarter as well as its updated 2016 outlook during its earnings conference call today, April 21, 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.

Non-GAAP Financial InformationThe Company reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP").  However, this press release refers to certain "currency neutral" financial information, which is a non-GAAP financial measure.  The Company provides a reconciliation of this non-GAAP measure to the most directly comparable financial measure calculated in accordance with GAAP.  See the end of this press release for this reconciliation.

Currency neutral financial information is calculated to exclude foreign exchange impact.  Management believes this information is useful to investors to facilitate a comparison of the Company's results of operations period-over-period.  This non-GAAP financial measure 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, UA.C), 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 StatementsSome 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 product, 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," "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; the financial health of our customers; our ability to effectively manage our growth and a more complex global business; 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; increased competition causing us to lose market share or reduce the prices of our products or to increase significantly our marketing efforts; 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 trade and other regulations; 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 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.

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SOURCE Under Armour, Inc.