Under Armour, Inc. Founder, President, and CEO Kevin Plank sounded like an old pro in his inaugural quarterly conference call with investors and analysts last week, but the company’s outlook for 2006 may have been the catalyst that saw investors pull back on the stock last week, sending UARM shares down nearly 23% for the week to close at $29.93 on Friday.

At issue may be the fact that the company is forecasting sales and earnings growth in the 20% to 25% range. Analysts were looking for 2006 earnings in the 51 cents per share neighborhood, a bit more aggressive than the company’s 47 cents to 49 cents projection. Investments in the cleated footwear launch could eat into otherwise healthy apparel margins.

Still, fourth quarter results beat the Street expectations by a penny, as UARM posted net income of $7.0 million, or 8 cents per diluted share, compared to $6.2 million, or 15 cents per diluted share, in the year-ago period. The fourth quarter and year results include a one-time charge, equal to eights cents for Q4 and nine cents for the year, related to the redemption of stock associated with the company’s IPO. Gross margin was up 10 basis points to 48.7% of sales, while SG&A improved 70 basis points to 33.9% of sales.

Under Armour sales were up 23.6% to $84.4 million in the fourth quarter from $68.3 million in Q4 last year. Licensing revenues jumped 111.2% to $2.9 million, pushing total revenues up 25.4% for the quarter to $87.3 million, compared to $69.6 million in the year-ago quarter.

Men's category sales increased 15.2% to $60.1 million for the quarter from $52.1 million in Q4 last year, due to the introduction of new product offerings as well as sales growth in core products. Women's category sales rose 58.5% to $16.7 million from $10.6 million and Youth category sales jumped 70.0% to $5.5 million from $3.3 million in the year-ago period. Sales of Accessories declined 11% to $2.1 million in the fourth quarter.

Plank said the company shipped more than $6 million in military product above their normal product flow in the fourth quarter, due to anticipated troop movement.

Women’s made up 19.8% of sales in the fourth quarter, compared to 15.5% of sales in Q4 last year. The Youth business made up 6.6% of sales in the period, compared to 4.8% last year. The Men’s business was 71.2% of total sales, compared to 76.4% of sales in the fourth period last year. Plank said Men’s product is sold in over 7,000 doors in the U.S. and another 1,700 doors though its Japan licensee. Women’s is now in 3,500 doors in the U.S. and the Youth line is in 5,000 doors.

Marketing expenses for 2005 were pegged at 10.8% of sales, within the company’s targeted expanse range of 10% to 12% of sales. UARM will step up its marketing efforts on the women’s side this year, commencing with a new campaign around the Academy Awards.

UARM opened three outlet stores in 2005 for a total of five stores open at year-end. They are planning to open another three stores in 2006.

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Under Armour, Inc.
Full-Year Results
(in $ millions) 2005 2004 Change
Revenues $281.1 $205.2 37.0%
Total Sales $271.3 $200.9 35.1%
Licensing $9.8 $4.3 127%
Men’s $189.6 $152.0 24.8%
Women’s $53.5 $28.7 86.7%
Youth/Access $18.8 $12.7 47.8%
Accessories $9.4 $7.5 24.7%
Gross Margin 48.3% 46.5% +180 bps
SG&A % 35.6% 34.1% +140 bps
Net Income $19.7  $16.3  +20.8%
Diluted EPS 36¢  39¢  -7.7%
Inventory* $53.6  $48.1  +11.6%
*at year end