BALTIMORE, Feb. 11, 2022 /PRNewswire/ -- Under Armour, Inc. (NYSE: UA, UAA) today announced unaudited financial results for the fourth quarter and fiscal year ended December 31, 2021. The company reports its financial performance in accordance with accounting principles generally accepted in the United States of America ("GAAP"). This press release refers to "currency neutral" and "adjusted" amounts, which are non-GAAP financial measures described below under the "Non-GAAP Financial Information" paragraph.

"The final quarter of 2021 demonstrated the power and consistency of Under Armour's strategic playbook, which allowed us to capitalize on improving brand strength and consumer demand," said Under Armour President and CEO Patrik Frisk. "By staying hyper-focused on operational excellence and serving the needs of athletes, we were able to deliver record revenue and earnings results for the full year."

"Amid a dynamic environment with ongoing COVID-19 impacts and resultant supply chain headwinds, I am proud of how consistently our global teams continue to execute our plan," Frisk continued. "As we navigate ongoing uncertainty in the marketplace, we remain focused on delivering industry-leading innovations, premium experiences, and empowering those who strive for more. Going forward, I am confident that we are running a stronger company – one that is able to deliver sustainable, profitable growth and value creation for our shareholders over the long term."

Fourth Quarter 2021 Review

• Revenue was up 9 percent to $1.5 billion (up 8 percent currency neutral) compared to the prior year.
• Wholesale revenue increased 16 percent to $768 million and direct-to-consumer revenue increased 10 percent to $720 million, driven by solid performance in our owned and operated stores and 4 percent growth in eCommerce, which represented 42 percent of the total direct-to-consumer business during the quarter.
• North America revenue increased 15 percent to $1.1 billion and international revenue increased 3 percent to $461 million (up 2 percent currency neutral). Within the international business, revenue increased 24 percent in EMEA (up 23 percent currency neutral), decreased 6 percent in Asia-Pacific (down 7 percent currency neutral), and decreased 22 percent in Latin America (down 23 percent currency neutral).
• Apparel revenue increased 18 percent to $1.1 billion. Footwear revenue increased 17 percent to $283 million. Accessories revenue decreased 27 percent to $107 million.
• Gross margin increased 130 basis points to 50.7 percent compared to the prior year, driven by benefits from pricing and restructuring charges in the prior year, offset by elevated freight expenses, the absence of MyFitnessPal, and an unfavorable product mix.
• Selling, general & administrative expenses increased 15 percent to $676 million.
• Restructuring and impairment charges were $14 million.
• Operating income was $86 million. Adjusted operating income was $100 million.
• Net income was $110 million. Adjusted net income was $67 million.
• Diluted earnings per share was $0.23. Adjusted diluted earnings per share was $0.14.
• Inventory was down 9 percent to $811 million.
• Cash and Cash Equivalents were $1.7 billion at the end of the quarter, and no borrowings were outstanding under the company's $1.1 billion revolving credit facility.

Full Year 2021 Review

• Revenue was up 27 percent to $5.7 billion (up 25 percent currency neutral) compared to the prior year.
• Wholesale revenue increased 36 percent to $3.2 billion, and direct-to-consumer revenue increased 26 percent to $2.3 billion, driven by strong performance in our owned and operated stores and a 4 percent increase in eCommerce, which represented 39 percent of the total direct-to-consumer business in 2021.
• North America revenue increased 29 percent to $3.8 billion and international revenue increased 34 percent to $1.9 billion (up 28 percent currency neutral). Within the international business, revenue increased 41 percent in EMEA (up 35 percent currency neutral), increased 32 percent in Asia-Pacific (up 26 percent currency neutral), and increased 18 percent in Latin America (up 14 percent currency neutral).
• Apparel revenue increased 33 percent to $3.8 billion. Footwear revenue increased 35 percent to $1.3 billion. Accessories revenue increased 12 percent to $462 million.
• Gross margin increased 210 basis points to 50.3 percent compared to the prior year. Excluding restructuring efforts of approximately $1 million, adjusted gross margin increased 180 basis points to 50.4 percent, driven by benefits from pricing and favorable changes in foreign currency, partially offset by the absence of MyFitnessPal, elevated freight expenses, and unfavorable channel mix.
• Selling, general & administrative expenses increased 7 percent to $2.3 billion.
• Restructuring and impairment charges were $41 million.
• Operating income was $486 million. Adjusted operating income was $527 million.
• Net income was $360 million. Adjusted net income was $397 million.
• Diluted earnings per share was $0.77. Adjusted diluted earnings per share was $0.85.

Fiscal Year End Change

As announced in February 2021, Under Armour is changing its fiscal year from December 31 to March 31. Following a three-month transition period (January 1 – March 31, 2022), Under Armour's fiscal year 2023 will run from April 1, 2022, through March 31, 2023. Consequently, there will be no fiscal year 2022.

Outlook For Transition Quarter Ending March 31, 2022

Under Armour's outlook for the transition quarter ending March 31, 2022, when compared to the same calendar period of fiscal 2021, includes the following:

• Revenue is expected to increase at a mid-single-digit rate compared to the previous expectation of a low single-digit rate increase. This expectation includes approximately 10 percentage points of headwinds related to reductions in our spring-summer 2022 order book from supply constraints associated with ongoing COVID-19 pandemic impacts.
• Gross margin is expected to be down 200 basis points compared to the prior year period's adjusted gross margin. This expectation includes approximately 240 basis points of negative impact due to higher freight expenses resulting from ongoing COVID-19 supply chain challenges in addition to unfavorable sales mix, partially offset by pricing benefits.
• Operating income is expected to reach approximately $30 million to $35 million.
• Diluted earnings per share are expected to be $0.02 to $0.03.

Given the transition to a new fiscal year-end, the company will provide its initial fiscal 2023 financial outlook in conjunction with the announcement of its transition quarter results in early May.

2020 Restructuring Plan

Last quarter, Under Armour reduced its 2020 restructuring plan range to $525 million to $575 million from the prior $550 million to $600 million range estimate. The company now expects to recognize $525 million to $550 million in charges related to this plan and has recognized $514 million of pre-tax charges to date, including $14 million in the fourth quarter of 2021. Of the $514 million recognized in charges, $138 million are cash-related, and $376 million are non-cash-related. The company currently expects to recognize any remaining charges related to this plan by the end of the first quarter of its fiscal year 2023.

COVID-19 Update

Under Armour remains focused on protecting teammate and consumer health and safety while working with its suppliers, partners, and customers to navigate potential disruptions. Given continued uncertainty related to COVID-19, particularly the ongoing and evolving impact of supply chain constraints on its suppliers and logistics providers, the company currently expects material impacts for its spring-summer 2022 season. There could be further material impacts on Under Armour's results in future periods.

Conference Call and Webcast

Under Armour will hold its fourth quarter and full-year conference call and webcast today at approximately 8:30 a.m. Eastern Time. The call will be webcast live at https://about.underarmour.com/investor-relations/financials and will be archived and available for replay about three hours after the live event.

Non-GAAP Financial Information

This press release refers to "currency neutral" and "adjusted" results, as well as "adjusted" forward-looking estimates of the company's results for its transition quarter ending March 31, 2022. Management believes this information is useful to investors to compare the company's results of operations period-over-period because it enhances visibility into its actual underlying results, excluding these impacts. Currency-neutral financial information is calculated to exclude the effect of changes in foreign currency exchange rates. References to adjusted financial measures exclude the impact of the company's 2020 restructuring plan, related impairment charges, including those related to goodwill and related tax effects. Where applicable, adjusted net income (loss) and adjusted diluted income (loss) per share exclude the non-cash amortization of debt discount on the company's convertible senior notes, any gain or loss on extinguishing the company's convertible senior notes and related tax effects, and any gain or loss from divestitures (including earn-outs) and related tax effects. Management believes these adjustments are not core to the company's operations. The reconciliation of non-GAAP amounts to the most directly comparable financial measure calculated according to GAAP is presented in supplemental financial information furnished with this release. All per share amounts are reported on a diluted basis. These supplemental non-GAAP financial measures should not be considered in isolation and should be contemplated in addition to, and not as an alternative for, the company's reported results prepared per GAAP. Additionally, 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, Inc., headquartered in Baltimore, Maryland, is a leading inventor, marketer and distributor of branded athletic performance apparel, footwear, and accessories. Designed to empower human performance, Under Armour's innovative products and experiences are engineered to make athletes better. For further information, please visit http://about.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 impact of the COVID-19 pandemic on our business and results of operations and the operations of our suppliers and logistics providers, our plans to reduce our operating expenses, anticipated charges and restructuring costs, projected savings related to our restructuring plans and the timing thereof, the development and introduction of new products, the implementation of our marketing and branding strategies, and the future benefits and opportunities from significant investments. In many cases, you can identify forward-looking statements by terms such as "may," "will," "should," "could," "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, activity levels, 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 these forward-looking statements, including, but not limited to: the impact of the COVID-19 pandemic on our industry and our business, financial condition and results of operations, including recent impacts on the global supply chain; failure of our suppliers or manufacturers to produce or deliver our products in a timely or cost-effective manner; labor or other disruptions at ports or our suppliers or manufacturers; changes in general economic or market conditions that could affect overall consumer spending or our industry; increased competition causing us to lose market share or reduce the prices of our products or to increase our marketing efforts significantly; fluctuations in the costs of raw materials and commodities we use in our products and our supply chain; changes to the financial health of our customers; our ability to successfully execute our long-term strategies; our ability to effectively drive operational efficiency in our business and successfully execute any restructuring plans and realize their expected benefits; our ability to effectively develop and launch new, innovative and updated products; our ability to accurately forecast consumer shopping and engagement preferences and consumer demand for our products and manage our inventory in response to changing demands; loss of key customers, suppliers or manufacturers; 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 manage the increasingly complex operations of our global business; our ability to successfully manage or realize expected results from significant transactions and investments; our ability to effectively market and maintain a positive brand image; our ability to effectively meet the expectations of our stakeholders with respect to environmental, social and governance practices; the availability, integration and effective operation of information systems and other technology, as well as any potential interruption of such systems or technology; any disruptions, delays or deficiencies in the design, implementation or application of our global operating and financial reporting information technology system; our ability to attract key talent and retain the services of our senior management and other key employees; our ability to access capital and financing required to manage our business on terms acceptable to us; 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 comply with existing trade and other regulations, and the potential impact of new trade, tariff and tax regulations on our profitability; risks related to data security or privacy breaches; and our potential exposure to litigation and other proceedings. 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.