Under Armour IPO Should Net Company $73 Million…

Under Armour's IPO is expected to raise between $90 million and $114 million, according to an amended S-1 filed late last week. The company will offer 9.5 million shares of Class A common stock and certain shareholders are selling an additional 2.5 million shares. The estimated offering price is $7.50 to $9.50 per share.

Under Armour, which has proposed the symbol UARM for its shares listed on the Nasdaq exchange, will not receive any proceeds from the sale of shareholder shares. The company estimates that the net proceeds available to them from the offering will be approximately $72.7 million at the mid-point of the offering price range.

Trailing twelve-month revenues through the end of the third quarter were $263.4 million.

Under Armour posted a 32.4% increase in sales to $86.6 million in the third quarter ended September 30, compared to $65.4 million in the year-ago period. Net sales increased 30.3% to $83.4 million in the period from $64.0 million in Q3 last year, while licensing revenues rose 33.1% to $3.2 million for the 2005 quarter.

The women’s business was the growth driver in the quarter, jumping 114% to $18.1 million in Q3 from $8.4 million in the year-ago period. Sales of men’s product rose 18.7% to $57.4 million in Q3 from $48.4 million in Q3 last year. Youth and accessories rose 9.7% to $7.8 million in the third quarter.

Based on the growth figures for the period, women’s made up nearly 22% of the Under Armour business in Q3, compared to just over 13% in third quarter last year. The men’s share of the business was nearly 69% in Q3 last year versus over 75% of the business last year.

Gross margins improved 400 basis points to 49.6% of sales, while SG&A expenses rose 310 basis points to 32.9% of sales, compared to 29.8% of sales in Q3 last year. Operating profit grew 40.0% to $14.5 million in Q3 from $10.3 million in third quarter last year. Net income increased 23.5% to $8.4 million for the quarter, compared to $6.8 million in the year-ago period.

Following the IPO, Under Armour, Inc. will have two classes of authorized common stock, Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to 10 votes per share and is convertible into one share of Class A common stock upon the occurrence of certain events. All of the Class B common stock will be beneficially owned by Kevin A. Plank, Under Armour's founder and Chief Executive Officer. Accordingly, following this offering, Mr. Plank will control common stock representing 83% of the total voting power of the company's common stock.

There will be 31.2 million Class A shares and 15.2 million Class B shares outstanding after the offering.

UARM said it intends to use $12.0 million of the net proceeds from this offering to redeem its Series A preferred stock, and approximately $25.0 million to repay amounts outstanding under the term loan portion, and another $23.1 million to repay amounts outstanding under the revolving facility portion, of its senior secured credit facility. They plan to use the remainder of the net proceeds of the offering for “general corporate purposes, including capital expenditures and working capital.”