Amer Sports Inc. reported that second-quarter revenue increased 16 percent to $994 million and 18 percent year-over-year on a constant currency (cc) basis. Based on the strong quarter and solid results from all major brands, the company raised its guidance for the full year 2024.

Amer Sports (NYSE: AS) shares were up in the mid-single digits in pre-market trading on Tuesday, July 20, after increasing 7.8 percent on Monday, July 19.

Segment Summary

Technical Apparel, which primarily includes the Arc’teryx brand business, increased 34 percent (+38 percent cc) to $407 million in the second quarter, reflecting an omni-comp growth of 26 percent on top of the 80 percent omni-comp growth in Q2 last year. Omni-comp trends reflect the year-over-year revenue growth from owned retail stores and e-commerce sites open for at least 13 months.

For more details on the Technical Apparel segment and the very strong performance from Arc’Teryx for the quarter, go here for more SGB Media coverage.

Outdoor Performance, primarily comprised of Salomon brand sales, increased 11 percent (+13 percent cc) to $304 million in Q2. Outdoor Performance omni-comp was up 32 percent in Q2, on top of the 36 percent increase in Q2 2023. The company said double-digit growth in Salomon softgoods continues, notably in its footwear business.

For more details on strong performance from Salomon and the Outdoor Performance segment for the quarter, go here for more SGB Media coverage.

Ball & Racquet Sports, primarily comprised of the Wilson Sports business, increased 1 percent (+2 percent cc) to $283 million, reportedly returning to growth in the second quarter, with a strong product pipeline expected for the second half of 2024. Ball & Racquet Sports omni-comp was up 1 percent in Q2, on top of the 18 percent increase in Q2 last year.

The segment had 26 owned-retail stores at quarter-end, compared to 12 stores at the end of Q2 2023.

Segment operating margin decreased 160 basis points to 1.1 percent of sales in Q2.

Income Statement Summary

  • Gross margin increased 220 basis points to 55.5 percent. Adjusted gross margin increased 200 basis points to 55.8 percent.
  • Selling, general and administrative (SG&A) expenses increased 26 percent to $560 million in Q2, with Adjusted SG&A expenses rising 21 percent to $526 million for the period.
  • Operating loss for the quarter was $9 million compared to operating profit of $8 million for the second quarter 2023. Adjusted operating profit increased 40 percent to $29 million for the Q2 period.
  • Operating margin decreased 180 basis points to negative 0.9 percent, with expansion in the Arc’teryx business offsetting weakness in the Salomon and Wilson Sports businesses. Adjusted operating margin increased 50 basis points to 2.9 percent of sales for the quarter.
  • In the quarter, the company’s net loss decreased 98 percent to $4 million, or a loss of one cent per diluted share. Adjusted net income increased 129 percent to $25 million, or 5 cents diluted earnings per share, in Q2, compared to a net loss in Q2 2023.

In the second quarter, Amer Sports recognized an incremental tax benefit of $20 million related primarily to the resolution of uncertain tax positions, which benefited Q2 diluted EPS by approximately 4 cents per share. Additionally, approximately $20 million in wholesale orders shipped earlier than the company forecasted, benefitting growth in Q2 sales by roughly 2 percent and diluted EPS by 1 cent per share. These timing shifts do not impact the company’s full-year guidance.

Balance Sheet Summary
Year-over-year inventories increased 2 percent, below the 16 percent revenue growth for the quarter, and reported to be in a healthy position. Net debt was $1.820 billion at quarter-end, and Cash and equivalents totaled $256 million at June 30, 2024.

Outlook
CFO Andrew Page said, “Our strong financial performance in Q2 reinforces my confidence in our near- and long-term path forward. Organic revenue growth in the high teens and significant gross and operating margin expansion reflects the combination of great brands, strong management execution, and a disciplined approach to expenses and working capital. These outstanding results give us the confidence to raise our full-year sales and earnings guidance.”

Full Year 2024
Amer Sports updated guidance for the year ending December 31, 2024 (all guidance figures reference adjusted amounts):

  • Reported revenue growth: 15 percent to 17 percent
  • Gross margin: approximately 54.5 percent
  • Operating margin: toward the high end of 10.5 percent to 11.0 percent
  • D&A: approximately $250 million, including roughly $110 million of ROU depreciation
  • Net finance cost: $200 million to $220 million, including approximately $15 million of finance costs in the first quarter 2024 that will not be recurring
  • Effective tax rate: approximately 38 percent
  • Fully diluted share count: 500 million
  • Fully diluted EPS: 40 cents to 44 cents per share

Full-Year Segment Outlook

  • Technical Apparel: greater than 30 percent revenue growth; segment operating margin slightly above 20 percent.
  • Outdoor Performance: mid- to high-single-digit revenue growth; segment operating margin high-single-digit percent.
  • Ball & Racquet: low- to mid-single-digit revenue growth and low-to mid-single-digit segment operating margin.

Third Quarter 2024 Outlook
Amer Sports is providing the following guidance for the third quarter ending September 30, 2024 (all guidance figures reference adjusted amounts):

  • Reported revenue growth: 12 percent to 13 percent
  • Gross margin: approximately 54.0 percent
  • Operating margin: 11.0 percent to 12.0 percent
  • Net finance cost: $45 million to $50 million
  • Effective tax rate: 50 percent to 55 percent
  • Fully diluted share count: 510 million
  • Fully diluted EPS: 8 cents to 10 cents per share

Image courtesy Salomon

See below for for more details on the strong performances from Arc’teryx and Salomon and their respective segments, as well as Wilson Sports, for the quarter:

EXEC: Arc’Teryx Was Still Firing on All Cylinders in Q2 as DTC Led the Way

EXEC: Salomon Sees North America Q2 Wholesale Cut into 55 Percent Jump in Global DTC

EXEC: Wilson Sports Returns to Growth in Q2, but Sees Bigger Gains Ahead