"We delivered our quarter, are holding our full-year revenue outlook, and remain bullish on our brand strength while we navigate the current environment," said
Browne continued, "Moving forward, we are digging in to amplify the strengths of our core strategy while creating additional opportunities for athletes to wear UA throughout their day. I have full confidence in the exceptional capabilities of our global team to deliver more pronounced growth and profitability over the long term."
First Quarter 2023 Review
Updated Fiscal 2023 Outlook
As a reminder,
Share Buyback Update
In
Conference Call and Webcast
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 2023 fiscal year ending
About
Forward-Looking Statements
Some of the statements contained in this press release constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, 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, the impact of the COVID-19 pandemic on our business and results of operations and the operations of our suppliers and logistics providers, expectations regarding promotional activities, freight, product cost pressures, and foreign currency rates, our plans to prioritize investments and reduce our operating expenses, 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 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 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; changes in general economic or market conditions that could affect overall consumer spending or our industry; 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; 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 costs related to our supply chain (including labor); 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 realize expected benefits from restructuring plans; 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; the impact of global events beyond our control, including military conflict; 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 statement's date or to reflect unanticipated events.
|
|||||||
For the Three Months Ended |
|||||||
(Unaudited; in thousands, except per share amounts) |
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||
Three Months Ended |
|||||||
in '000s |
2022 |
% of Net |
2021 |
% of Net |
|||
Net revenues |
$ 1,349,057 |
100.0 % |
$ 1,351,534 |
100.0 % |
|||
Cost of goods sold |
718,860 |
53.3 % |
682,713 |
50.5 % |
|||
Gross profit |
630,197 |
46.7 % |
668,821 |
49.5 % |
|||
Selling, general and administrative expenses |
595,714 |
44.2 % |
545,003 |
40.3 % |
|||
Restructuring and impairment charges |
— |
— % |
2,613 |
0.2 % |
|||
Income (loss) from operations |
34,483 |
2.6 % |
121,205 |
9.0 % |
|||
Interest income (expense), net |
(6,005) |
(0.4) % |
(13,307) |
(1.0) % |
|||
Other income (expense), net |
(14,241) |
(1.1) % |
(38,494) |
(2.8) % |
|||
Income (loss) before income taxes |
14,237 |
1.1 % |
69,404 |
5.1 % |
|||
Income tax expense (benefit) |
5,657 |
0.4 % |
10,027 |
0.7 % |
|||
Income (loss) from equity method investments |
(898) |
(0.1) % |
(170) |
— % |
|||
Net income (loss) |
$ 7,682 |
0.6 % |
$ 59,207 |
4.4 % |
|||
Basic net income (loss) per share of Class A, B and C common stock |
$ 0.02 |
$ 0.13 |
|||||
Diluted net income (loss) per share of Class A, B and C common stock |
$ 0.02 |
$ 0.13 |
|||||
Weighted average common shares outstanding Class A, B and C common stock |
|||||||
Basic |
458,415 |
459,604 |
|||||
Diluted |
468,167 |
462,286 |
|
|||||
For the Three Months Ended |
|||||
(Unaudited; in thousands) |
|||||
NET REVENUES BY PRODUCT CATEGORY |
|||||
Three Months Ended |
|||||
in '000s |
2022 |
2021 |
% Change |
||
Apparel |
$ 868,428 |
$ 874,193 |
(0.7) % |
||
Footwear |
347,251 |
342,641 |
1.3 % |
||
Accessories |
96,831 |
111,503 |
(13.2) % |
||
Total net sales |
1,312,510 |
1,328,337 |
(1.2) % |
||
Licensing revenues |
28,135 |
23,261 |
21.0 % |
||
Corporate Other (1) |
8,412 |
(64) |
NM |
||
Total net revenues |
$ 1,349,057 |
$ 1,351,534 |
(0.2) % |
||
NET REVENUES BY DISTRIBUTION CHANNEL |
|||||
Three Months Ended |
|||||
in '000s |
2022 |
2021 |
% Change |
||
Wholesale |
$ 791,686 |
$ 767,611 |
3.1 % |
||
Direct-to-consumer |
520,824 |
560,726 |
(7.1) % |
||
|
1,312,510 |
1,328,337 |
(1.2) % |
||
License revenues |
28,135 |
23,261 |
21.0 % |
||
Corporate Other (1) |
8,412 |
(64) |
NM |
||
Total net revenues |
$ 1,349,057 |
$ 1,351,534 |
(0.2) % |
||
NET REVENUES BY SEGMENT |
|||||
Three Months Ended |
|||||
in '000s |
2022 |
2021 |
% Change |
||
|
$ 909,356 |
$ 905,493 |
0.4 % |
||
EMEA |
205,181 |
207,224 |
(1.0) % |
||
|
176,665 |
192,369 |
(8.2) % |
||
|
49,443 |
46,512 |
6.3 % |
||
Corporate Other (1) |
8,412 |
(64) |
NM |
||
Total net revenues |
$ 1,349,057 |
$ 1,351,534 |
(0.2) % |
|
|||||
For the Three Months Ended |
|||||
(Unaudited; in thousands) |
|||||
INCOME (LOSS) FROM OPERATIONS |
|||||
Three Months Ended |
|||||
in '000s |
2022 |
% of Net |
2021 |
% of Net |
|
|
$ 189,924 |
20.9 % |
$ 225,769 |
24.9 % |
|
EMEA |
18,181 |
8.9 % |
39,892 |
19.3 % |
|
|
19,945 |
11.3 % |
24,046 |
12.5 % |
|
|
6,234 |
12.6 % |
6,001 |
12.9 % |
|
Corporate Other (1) |
(199,801) |
NM |
(174,503) |
NM |
|
Income (loss) from operations |
$ 34,483 |
2.6 % |
$ 121,205 |
9.0 % |
(1) Corporate Other primarily includes net revenues from foreign currency hedge gains and losses generated by entities within the Company's operating segments but managed through the Company's central foreign exchange risk management program, as well as subscription revenues from the Company's MapMyRun and MapMyRide platforms (collectively "MMR") and revenue from other digital business opportunities. Corporate Other also includes expenses related to the Company's central supporting functions. |
(2) The percentage of operating income (loss) is calculated based on total segment net revenues. The operating income (loss) percentage for Corporate Other is not presented as a meaningful metric (NM). |
|
||||
As of |
||||
(Unaudited; in thousands) |
||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||
in '000s |
|
|
||
Assets |
||||
Current assets |
||||
Cash and cash equivalents |
$ 1,049,413 |
$ 1,009,139 |
||
Accounts receivable, net |
693,636 |
702,197 |
||
Inventories |
954,394 |
824,455 |
||
Prepaid expenses and other current assets, net |
302,644 |
297,034 |
||
Total current assets |
3,000,087 |
2,832,825 |
||
Property and equipment, net |
609,923 |
601,365 |
||
Operating lease right-of-use assets |
408,753 |
420,397 |
||
|
479,521 |
491,508 |
||
Intangible assets, net |
9,910 |
10,580 |
||
Deferred income taxes |
19,444 |
20,141 |
||
Other long-term assets |
78,162 |
76,016 |
||
Total assets |
$ 4,605,800 |
$ 4,452,832 |
||
Liabilities and Stockholders' Equity |
||||
Accounts payable |
669,203 |
560,331 |
||
Accrued expenses |
373,045 |
317,963 |
||
Customer refund liabilities |
157,487 |
159,628 |
||
Operating lease liabilities |
131,438 |
134,833 |
||
Other current liabilities |
127,507 |
125,840 |
||
Total current liabilities |
1,458,680 |
1,298,595 |
||
Long-term debt, net of current maturities |
672,834 |
672,286 |
||
Operating lease liabilities, non-current |
650,833 |
668,983 |
||
Other long-term liabilities |
94,378 |
84,014 |
||
Total liabilities |
2,876,725 |
2,723,878 |
||
Total stockholders' equity |
1,729,075 |
1,728,954 |
||
Total liabilities and stockholders' equity |
$ 4,605,800 |
$ 4,452,832 |
|
|||
For the Three Months Ended |
|||
(Unaudited; in thousands) |
|||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||
Three Months Ended |
|||
in '000s |
2022 |
2021 |
|
Cash flows from operating activities |
|||
Net income (loss) |
$ 7,682 |
$ 59,207 |
|
Adjustments to reconcile net income (loss) to net cash used in operating activities |
|||
Depreciation and amortization |
34,321 |
35,147 |
|
Unrealized foreign currency exchange rate (gain) loss |
7,856 |
(2,478) |
|
Loss on extinguishment of senior convertible notes |
— |
34,728 |
|
Loss on disposal of property and equipment |
322 |
820 |
|
Non-cash restructuring and impairment charges |
— |
(13) |
|
Amortization of bond premium and debt issuance costs |
548 |
11,064 |
|
Stock-based compensation |
11,375 |
11,533 |
|
Deferred income taxes |
(1,125) |
(999) |
|
Changes in reserves and allowances |
194 |
(9,167) |
|
Changes in operating assets and liabilities: |
|||
Accounts receivable |
8,586 |
64,803 |
|
Inventories |
(134,210) |
(26,862) |
|
Prepaid expenses and other assets |
(8,113) |
(18,937) |
|
Other non-current assets |
19,796 |
19,463 |
|
Accounts payable |
96,319 |
107,332 |
|
Accrued expenses and other liabilities |
43,524 |
(23,647) |
|
Customer refund liabilities |
(2,528) |
(13,481) |
|
Income taxes payable and receivable |
2,949 |
4,310 |
|
Net cash provided by (used in) operating activities |
87,496 |
252,823 |
|
Cash flows from investing activities |
|||
Purchases of property and equipment |
(35,747) |
(19,668) |
|
Sale of property and equipment |
— |
485 |
|
Earn-out from the sale of the MyFitnessPal platform |
35,000 |
— |
|
Net cash used in investing activities |
(747) |
(19,183) |
|
Cash flows from financing activities |
|||
Common Shares Repurchased |
(25,000) |
— |
|
Employee taxes paid for shares withheld for income taxes |
352 |
(209) |
|
Proceeds from exercise of stock options and other stock issuances |
993 |
89 |
|
Payments on long-term debt and revolving credit facility |
— |
(300,001) |
|
Proceeds from capped call |
— |
53,000 |
|
Net cash provided by (used in) financing activities |
(24,359) |
(247,121) |
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
(21,454) |
15,681 |
|
Net increase in (decrease in) cash, cash equivalents and restricted cash |
40,936 |
2,200 |
|
Cash, cash equivalents and restricted cash |
|||
Beginning of period |
1,022,126 |
1,359,680 |
|
End of period |
$ 1,063,062 |
$ 1,361,880 |
|
|
For the Three months ended |
|
(Unaudited) |
|
The table below presents the reconciliation of net revenue growth (decline) calculated according to GAAP |
|
CURRENCY NEUTRAL NET REVENUE GROWTH (DECLINE) RECONCILIATION |
|
Three months ended |
|
Total Net Revenue |
|
Net revenue growth - GAAP |
(0.2) % |
Foreign exchange impact |
1.8 % |
Currency neutral net revenue growth - Non-GAAP |
1.6 % |
|
|
Net revenue growth - GAAP |
0.4 % |
Foreign exchange impact |
0.3 % |
Currency neutral net revenue growth - Non-GAAP |
0.7 % |
EMEA |
|
Net revenue growth - GAAP |
(1.0) % |
Foreign exchange impact |
7.0 % |
Currency neutral net revenue growth - Non-GAAP |
6.0 % |
|
|
Net revenue growth - GAAP |
(8.2) % |
Foreign exchange impact |
3.8 % |
Currency neutral net revenue growth - Non-GAAP |
(4.4) % |
|
|
Net revenue growth - GAAP |
6.3 % |
Foreign exchange impact |
(0.7) % |
Currency neutral net revenue growth - Non-GAAP |
5.6 % |
|
|
Net revenue growth - GAAP |
(3.3) % |
Foreign exchange impact |
4.8 % |
Currency neutral net revenue growth - Non-GAAP |
1.5 % |
|
||
For the Three months ended |
||
(Unaudited; in thousands, except per share amounts) |
||
The tables below present the reconciliation of the Company's condensed consolidated statement of |
||
ADJUSTED OPERATING INCOME (LOSS) RECONCILIATION |
||
in '000s |
Three months ended |
|
GAAP Income from operations |
$ 34,483 |
|
Add: Impact of legal expenses relating to litigation matters |
$ 10,000 |
|
Adjusted income from operations |
$ 44,483 |
|
ADJUSTED NET INCOME (LOSS) RECONCILIATION |
||
in '000s |
Three months ended |
|
GAAP net income |
$ 7,682 |
|
Add: Impact of legal expenses relating to litigation matters |
10,000 |
|
Add: Impact of commission expense in connection with the sale of the MyFitnessPal platform |
490 |
|
Add: Impact of provision for income taxes |
(3,313) |
|
Adjusted net income |
$ 14,859 |
|
ADJUSTED DILUTED EARNINGS (LOSS) PER SHARE RECONCILIATION |
||
Three months ended |
||
GAAP diluted net income per share |
$ 0.02 |
|
Add: Impact of legal expenses relating to litigation matters |
0.02 |
|
Add: Impact of commission expense in connection with the sale of the MyFitnessPal platform |
— |
|
Add: Impact of provision for income taxes |
(0.01) |
|
Adjusted diluted net income per share |
$ 0.03 |
|
|||
Outlook for the Year Ended |
|||
(Unaudited; in millions, except per share amounts) |
|||
The table below presents the reconciliation of the Company's fiscal 2023 outlook presented in accordance |
|||
CURRENCY NEUTRAL NET REVENUE GROWTH (DECLINE) RECONCILIATION |
|||
(in millions) |
Year Ended |
||
Low end of estimate |
High end of estimate |
||
Total Net Revenue |
|||
Net revenue growth - GAAP |
5 % |
7 % |
|
Foreign exchange impact |
2 % |
2 % |
|
Currency neutral net revenue growth - Non-GAAP |
7 % |
9 % |
|
ADJUSTED OPERATING INCOME RECONCILIATION |
|||
(in millions) |
Year Ended |
||
Low end of estimate |
High end of estimate |
||
GAAP income from operations |
$ 300 |
$ 325 |
|
Add: Impact of legal expenses relating to litigation matters |
10 |
10 |
|
Adjusted income from operations |
$ 310 |
$ 335 |
|
ADJUSTED DILUTED (LOSS) EARNINGS PER SHARE RECONCILIATION |
|||
(in millions) |
Year Ended |
||
Low end of estimate |
High end of estimate |
||
GAAP diluted net income per share (1) |
$ 0.61 |
$ 0.67 |
|
Add: Impact of legal expenses relating to litigation matters |
0.02 |
0.02 |
|
Add: Impact of provision for income taxes |
(0.16) |
(0.16) |
|
Adjusted diluted net income per share |
$ 0.47 |
$ 0.53 |
(1) GAAP diluted net income (loss) per share excludes any potential earn-out related to the sale of the MyFitnessPal platform. |
|
||||
As of |
||||
COMPANY-OWNED & OPERATED DOOR COUNT |
||||
|
||||
2022 |
2021 |
|||
Factory House |
179 |
178 |
||
Brand House |
18 |
17 |
||
|
197 |
195 |
||
Factory House |
156 |
137 |
||
Brand House |
87 |
95 |
||
International total doors |
243 |
232 |
||
Factory House |
335 |
315 |
||
Brand House |
105 |
112 |
||
Total doors |
440 |
427 |
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SOURCE
Lance Allega, SVP, Investor Relations & Corporate Development, (410) 246-6810