BALTIMORE, Feb. 8, 2023 /PRNewswire/ -- Under Armour, Inc. (NYSE: UA, UAA) today announced unaudited financial results for its third quarter of fiscal 2023 ended December 31, 2022. 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.

"We are pleased to have delivered solid third-quarter results and remain on track to achieve our full-year operational and financial goals," said Under Armour Interim President and CEO Colin Browne. "Moving forward, I'm excited to partner with Stephanie Linnartz to advance our strategic consumer and product refinements further – leveraging Under Armour's strong brand to drive sustainable, profitable growth."

Third Quarter 2023 Review

• Revenue was up 3 percent to $1.6 billion (up 7 percent currency neutral) compared to the prior year.
• Wholesale revenue increased 7 percent to $820 million, and direct-to-consumer revenue decreased 1 percent to $715 million due to a 6 percent decline in owned and operated store revenue partially offset by a 7 percent increase in eCommerce revenue, which represented 45 percent of the total direct-to-consumer business during the quarter.
• North America revenue was down 2 percent compared to the prior year at $1 billion, and international revenue increased 14 percent to $527 million (up 24 percent currency neutral). Within the international business, revenue increased 32 percent in EMEA (up 46 percent currency neutral), decreased 9 percent in Asia-Pacific (up 1 percent currency neutral), and increased 45 percent in Latin America (up 41 percent currency neutral).
• Apparel revenue decreased 2 percent to $1 billion. Footwear revenue increased 25 percent to $354 million. Accessories revenue declined 2 percent to $105 million.
• Gross margin declined 650 basis points to 44.2 percent compared to the prior year, driven primarily by higher promotions, mix impacts related to higher distributor and footwear revenue, and the adverse effects of changes in foreign currency.
• Selling, general & administrative expenses decreased 11 percent to $604 million.
• Operating income was $95 million.
• Net Income was $122 million. Excluding a $45 million earn-out benefit in connection with the sale of the MyFitnessPal platform and a $2 million benefit from a tax valuation allowance release related to prior-period restructuring, adjusted net income was $76 million.
• Diluted earnings per share was $0.27. Adjusted diluted earnings per share was $0.16.
• Inventory was up 50 percent to $1.2 billion.
• Cash and Cash Equivalents were $850 million at the end of the quarter, and no borrowings were outstanding under the company's $1.1 billion revolving credit facility.

Share Buyback Update

Under Armour entered accelerated share repurchase (ASR) transactions during the third quarter to buy back $75 million of its Class C common stock. As of the date of this release, 8.8 million shares were retired under these ASR transactions. In total, 35 million shares for $425 million have now been repurchased under the company's two-year, $500 million program, which the Board of Directors approved in February 2022.

Updated Fiscal 2023 Outlook

As a reminder, Under Armour began its new fiscal year 2023 on April 1, 2022. Accordingly, the comparable baseline period is April 1, 2021, through March 31, 2022. Key points related to Under Armour's fiscal year 2023 outlook include:

• Revenue growth is unchanged from the previous expectation of a low single-digit percentage rate increase on a reported basis, up at a mid-single-digit percentage rate on a currency-neutral basis.
• Gross margin is expected to decline at the higher end of the previously provided 375 to 425 basis point range.
• Selling, general & administrative expenses are now expected to be down at a low single-digit percentage rate against the prior year versus the previous expectation of "down slightly."
• Operating income remains unchanged from the previous outlook and is expected to reach $270 to $290 million. Excluding the company's litigation reserve, adjusted operating income is expected to reach $290 to $310 million.
• Diluted earnings per share is expected to be $0.71 to $0.75. This includes a $0.27 benefit related to a tax valuation allowance release expected to be realized during the fiscal year. Of this $0.27 benefit, $0.15 is related to prior restructuring. Additionally, there is an $0.08 after-tax benefit from our second-year earn-out in connection with the sale of the MyFitnessPal platform and a $0.04 negative impact from our litigation reserve. Excluding these net positive impacts of $0.19 and including more favorable foreign currency developments and a slightly lower tax rate, adjusted diluted earnings per share is now expected to be $0.52 to $0.56 versus the previously expected range of $0.44 to $0.48.
• Capital expenditures are now expected to be approximately $200 million, down from the previous expectation of approximately $225 million.

Conference Call and Webcast

Under Armour will hold its third quarter fiscal 2023 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 2023 fiscal year ending March 31, 2023. Management believes this information is helpful 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 changes in foreign currency exchange rates. References to adjusted financial measures exclude the effect of the company's litigation reserve, the company's 2020 restructuring plan, and related impairment charges, including 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 associated earn-outs and expenses) 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. In addition, in connection with its change in fiscal year-end from December 31 to March 31, Under Armour is presenting select non-GAAP financial measures for the twelve months beginning on April 1, 2021, and ending March 31, 2022, to provide comparable reference periods against the company's new fiscal 2023 year, which began April 1, 2022, and ends on March 31, 2023. 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, 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, 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, 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 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: changes in general economic or market conditions, including inflation, that could affect overall consumer spending or our industry; 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, manufacturers or logistics providers 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 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 statement's date or to reflect unanticipated events.

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SOURCE Under Armour, Inc.

Lance Allega, SVP, Investor Relations & Corporate Development, (410) 246-6810; Jessica Graves, VP, Global Corporate Communications & Community Impact, (570) 202-6995