Company Also Announced a New $500 Million Share Repurchase Program BALTIMORE, May 16, 2024 /PRNewswire/ -- Under Armour, Inc. (NYSE:UA, UAA)) announced unaudited financial results for its fourth quarter and full-year fiscal 2024, which ended March 31, 2024. The company reports its financial performance following 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. "Amid a challenging retail environment in fiscal 2024 that included high inventories and a consistent drumbeat of promotions – we demonstrated disciplined expense control and delivered results that were aligned with our previous outlook," said Under Armour President and CEO Kevin Plank. "We also maintained a strong balance sheet, closing the year with a solid cash position and healthy inventory levels." Fourth Quarter Fiscal 2024 Review Revenue was down 5 percent to $1.3 billion (down 5 percent currency neutral). North America revenue decreased 10 percent to $772 million, and international revenue increased 7 percent to $561 million (up 6 percent currency neutral). In the international business, revenue increased 10 percent in EMEA (up 7 percent currency neutral), 1 percent in Asia-Pacific (up 5 percent currency neutral), and 20 percent in Latin America (up 12 percent currency neutral). Wholesale revenue decreased 7 percent to $850 million, and direct-to-consumer revenue was flat at $455 million. Owned and operated store revenue increased 7 percent, and eCommerce revenue decreased 8 percent, representing 43 percent of the total direct-to-consumer business for the quarter. Apparel revenue decreased 1 percent to $877 million. Footwear revenue was down 11 percent to $338 million. Accessories revenue was down 7 percent to $89 million. Gross margin increased 170 basis points to 45.0 percent, driven primarily by supply chain benefits related to lower product and freight costs. This was partially offset by unfavorable foreign currency impacts and proactive inventory management actions, including increased promotional activities in our direct-to-consumer business. Selling, general & administrative expenses were up 5 percent to $603 million. Excluding a $58 million litigation reserve expense, adjusted selling, general & administrative expenses were down 5 percent to $546 million. Operating loss was $4 million. Adjusted operating income was $54 million. Net Income was $7 million. Adjusted net income was $49 million. Diluted earnings per share was $0.02. Adjusted diluted earnings per share was $0.11. Inventory was down 19 percent to $958 million. At the end of the quarter, Cash and Cash Equivalents were $859 million, and no borrowings were outstanding under the company's $1.1 billion revolving credit facility. Full Year Fiscal 2024 Review Revenue was down 3 percent to $5.7 billion (down 4 percent currency neutral). North America revenue decreased 8 percent to $3.5 billion, and international revenue increased 8 percent to $2.2 billion (up 7 percent currency neutral). Within the international business, revenue increased 9 percent in EMEA (up 6 percent currency neutral), 6 percent in Asia-Pacific (up 9 percent currency neutral), and 8 percent in Latin America (down 1 percent currency neutral). Wholesale revenue decreased 7 percent to $3.2 billion, and direct-to-consumer revenue increased 3 percent to $2.3 billion due to a 5 percent increase in owned and operated store revenue and a 1 percent increase in eCommerce revenue, which represented 41 percent of the total direct-to-consumer business for the year. Apparel revenue decreased 2 percent to $3.8 billion, footwear revenue decreased 5 percent to $1.4 billion, and accessories revenue declined 1 percent to $406 million. Gross margin increased 130 basis points to 46.1 percent, driven primarily by supply chain benefits related to lower freight and product costs. This was partially offset by proactive inventory management actions, including increased promotional activities in our direct-to-consumer business. Selling, general & administrative expenses were up 1 percent to $2.4 billion. Excluding an $80 million litigation reserve expense, adjusted selling, general & administrative expenses were down 2 percent to $2.3 billion. Operating income was $230 million. Excluding the company's litigation reserve expense, adjusted operating income was $310 million. Net Income was $232 million. Excluding a $50 million earn-out benefit in connection with the sale of the MyFitnessPal platform, the litigation reserve expense, and related tax impacts, adjusted net income was $245 million. Diluted earnings per share was $0.52. Adjusted diluted earnings per share was $0.54. Fiscal 2025 Restructuring Plan To strengthen and support the company's financial and operational efficiencies, Under Armour's Board of Directors has approved a restructuring plan. In conjunction with this plan, the company expects to incur total estimated pre-tax restructuring and related charges of approximately $70 to $90 million, including:  Up to $50 million in cash-related charges, consisting of approximately $15 million in employee severance and benefits costs, and $35 million related to various transformational initiatives, and Up to $40 million in non-cash charges comprised of approximately $7 million in employee severance and benefits costs and $33 million in facility, software and other asset-related charges and impairments. Fiscal 2025 Outlook "Due to a confluence of factors, including lower wholesale channel demand and inconsistent execution across our business, we are seizing this critical moment to make proactive decisions to build a premium positioning for our brand, which will pressure our top and bottom line in the near term," Plank continued. "Over the next 18 months, there is a significant opportunity to reconstitute Under Armour's brand strength through achieving more, by doing less and focusing on our core fundamentals: driving demand through better products and storytelling, running smarter plays like simplifying our operating model and elevating our consumer experience. In parallel, we're focused on cost management and implementing the strategies necessary to grow our brand and improve shareholder value as we move forward." Key points related to Under Armour's fiscal 2025 outlook include: Revenue is expected to be down at a low-double-digit percentage rate. This includes an expected 15 to 17 percent decline in North America as the company works to meaningfully reset this business following years of heightened promotional activities, particularly in its DTC business and a low-single-digit percent decline in its international business due to more conservative macro consumer trends and actions to protect the brand strength it has built. Gross margin is expected to be up 75 to 100 basis points compared to the prior year, driven by a material reduction in promotional and discounting activities in the company's direct-to-consumer business and product costing benefits. Selling, general, and administrative expenses are expected to be down 2 to 4 percent. Operating income is expected to be $50 to $70 million. Excluding the mid-point of anticipated restructuring charges, adjusted operating income is expected to be $130 to $150 million. Diluted earnings per share is expected to be between $0.02 and $0.05. Adjusted diluted earnings per share is expected to be between $0.18 and $0.21. Capital expenditures are expected to be between $200 to $220 million. Share Buyback Program The company also announced that its Board of Directors has authorized the repurchase of up to $500 million of Under Armour's outstanding Class C common stock. Repurchases under this program may be made over the next three years through various methods, including accelerated share repurchase, open market, or privately negotiated transactions. Conference Call and Webcast Under Armour will hold its fourth quarter fiscal 2024 conference call 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 2025 fiscal year ending March 31, 2025. Management believes this information is helpful to investors in comparing 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 changes in foreign currency exchange rates. References to adjusted financial measures exclude the effect of the company's litigation reserve expense, any gain or loss in connection with the sale of the MyFitnessPal platform, and the impact of the company's fiscal year 2025 restructuring plan and related charges 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. They should be contemplated in addition to, and not as an alternative to, 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 share repurchase program, our future financial condition or results of operations, our prospects and strategies for future growth, potential restructuring efforts, including the scope of these restructuring efforts and the amount of potential charges and costs, the timing of these measures and the anticipated benefits of our restructuring plans, expectations regarding promotional activities, freight, product cost pressures, and foreign currency impacts, the impact of global economic conditions and inflation on our results of operations, our liquidity and use of capital resources, the development and introduction of new products, the implementation of our marketing and branding strategies, the future benefits and opportunities from significant investments, and the impact of litigation or other proceedings. In many cases, you can identify forward-looking statements by terms such as "may," "will," "could," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "outlook," "potential" or the negative of these terms or other comparable terminology. The forward-looking statements in this press release reflect our current views about future events. They 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 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: changes in general economic or market conditions, including increasing inflation, 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 (including labor); our ability to successfully execute our long-term strategies; our ability to effectively drive operational efficiency in our business; changes to the financial health of our customers; 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; our ability to successfully execute any potential restructuring plans and realize their expected benefits; 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; the impact of global events beyond our control, including military conflicts; the impact of global or regional public health emergencies on our industry and our business, financial condition and results of operations, including impacts on the global supply chain; 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 attract key talent and retain the services of our senior management and other key employees; our ability to effectively meet regulatory requirements and stakeholder expectations with respect to sustainability and social matters; 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 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 and the financial impact of litigation and other proceedings. The forward-looking statements here 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 unanticipated events.   The Company revised its prior period financial statements for accounting corrections to the Company's Consolidated Statements of Operations primarily related to cost of goods sold and selling, general and administrative expenses, as well as corresponding impacts to the Company's other Consolidated Financial Statements. The impacts of these revisions were not material to the Company's previously filed financial statements. These revisions relate to a number of immaterial corrections that were identified by management and when accumulated, required a correction to the Company's previously filed financial statements. Information presented in the tables below as of March 31, 2023, for the three months ended March 31, 2023 and for the year ended March 31, 2023 has been revised to reflect these corrections. See Note 1 to the Company's Consolidated Financial Statements included in Part II, Item 8 of the Company's Annual Report on Form 10-K for the year ended March 31, 2024, to be filed with the Securities and Exchange Commission. As a result of these corrections, the Company is currently assessing the nature of deficiencies in its internal control over financial reporting.   Under Armour, Inc. For the Three Months and Year Ended March 31, 2024, and 2023 (Unaudited; in thousands, except per share amounts)   CONSOLIDATED STATEMENTS OF OPERATION Three Months Ended March 31, Year Ended March 31, in '000s 2024 % of NetRevenues 2023 % of NetRevenues 2024 % of NetRevenues 2023 % of NetRevenues Net revenues $  1,332,197 100.0 % $  1,398,605 100.0 % $  5,701,879 100.0 % $  5,903,165 100.0 % Cost of goods sold 732,601 55.0 % 793,112 56.7 % 3,071,626 53.9 % 3,259,334 55.2 % Gross profit 599,596 45.0 % 605,493 43.3 % 2,630,253 46.1 % 2,643,831 44.8 % Selling, general and administrative expenses 603,150 45.3 % 575,931 41.2 % 2,400,502 42.1 % 2,380,245 40.3 % Income (loss) from operations (3,554) (0.3) % 29,562 2.1 % 229,751 4.0 % 263,586 4.5 % Interest income (expense), net 2,478 0.2 % (1,651) (0.1) % 268 — % (12,826) (0.2) % Other income (expense), net (3,708) (0.3) % (10,204) (0.7) % 32,055 0.6 % 17,096 0.3 % Income (loss) before income taxes (4,784) (0.4) % 17,707 1.3 % 262,074 4.6 % 267,856 4.5 % Income tax expense (benefit) (11,327) (0.9) % (153,171) (11.0) % 30,006 0.5 % (108,645) (1.8) % Income (loss) from equity method investments 25 — % (308) — % (26) — % (2,042) — % Net income (loss) $        6,568 0.5 % $     170,570 12.2 % $     232,042 4.1 % $     374,459 6.3 % Basic net income (loss) per share of Class A, B and C common stock $          0.02 $          0.38 $          0.53 $          0.83 Diluted net income (loss) per share of Class A, B and Ccommon stock $          0.02 $          0.38 $          0.52 $          0.81 Weighted average common shares outstanding Class A, B and C common stock Basic 435,582 444,052 440,324