Under Armour Inc. reported net revenues increased 30 percent in the third quarter ended Sept. 30, 2014 to $938 million compared with net revenues of $723 million in the prior year’s period.  

Net income increased 22 percent in the third quarter of 2014 to $89 million compared with $73 million in the prior year’s period.  Diluted earnings per share for the third quarter of 2014 were $0.41 compared with $0.34 per share in the prior year’s period.  

Third quarter apparel net revenues increased 26 percent to $705 million compared with $561 million in the same period of the prior year, driven primarily by expanded offerings and platform innovations across training, golf, and outdoor.  Third quarter footwear net revenues increased 50 percent to $122 million from $81 million in the prior year’s period, led by new introductions in running and basketball.  Third quarter accessories net revenues increased 32 percent to $85 million from $64 million in the prior year’s period, primarily driven by expanded offerings in headwear, bags, and gloves.  Direct-to-Consumer net revenues, which represented 26 percent of total net revenues for the third quarter, grew 35 percent year-over-year.  International net revenues, which represented 9 percent of total net revenues for the third quarter, grew 94 percent year-over-year.

“Our strong third quarter results demonstrate the power of the UA brand,” said Under Armour Chairman and CEO of Kevin Plank. ” The momentum and growing confidence we outlined last quarter in Footwear and International were on full display in the third quarter with growth rates accelerating to 50 percent and 94 percent, respectively.  Our Direct-to-Consumer business continues to drive our vision to Empower Athletes Everywhere with the debut of local E-Commerce sites in the United Kingdom, Germany, and France, as well as optimizing all global sites for mobile to stay ahead of where our consumers are going.  And we were particularly excited about our I WILL WHAT I WANT global women’s campaign, featuring Misty Copeland and Gisele Bundchen, which ignited a powerful new dialogue with our female consumer as we begin to bridge the gap between female athletes and athletic females.”

Gross margin for the third quarter of 2014 was 49.6 percent compared with 48.4 percent in the prior year’s quarter, primarily driven by higher import duties in the prior year’s period and favorable year-over-year sales mix.  Selling, general and administrative expenses as a percentage of net revenues were 34.0 percent in the third quarter of 2014 compared with 31.7 percent in the prior year’s period, reflecting broad-based investments to support global growth initiatives as well as higher incentive compensation expenses.  Third quarter operating income increased 21 percent to $146 million compared with $121 million in the prior year’s period. 

Balance Sheet Highlights
Cash and cash equivalents increased 34 percent to $249 million at Sept. 30, 2014 compared with $186 million at Sept. 30, 2013.  Long-term debt including current maturities increased to $192 million at Sept. 30, 2014 compared with $54 million at Sept. 30, 2013. Inventory at Sept. 30, 2014 increased 28 percent to $637 million compared with $497 million at Sept. 30, 2013.

Updated 2014 Outlook
The Company had previously anticipated 2014 net revenues in the range of $2.98 billion to $3.0 billion, representing growth of 28 percent to 29 percent over 2013, and 2014 operating income in the range of $343 million to $345 million, representing growth of 29 percent to 30 percent over 2013.  Based on current visibility, the Company expects 2014 net revenues of approximately $3.03 billion, representing growth of 30 percent over 2013, and 2014 operating income of approximately $348 million, representing growth of 31 percent over 2013.  The Company anticipates an effective tax rate of approximately 40.0 percent for the full year, compared to 37.8 percent for 2013, and fully diluted weighted average shares outstanding of approximately 218 million for 2014.

“Our plans of crossing $3 billion in net revenues and achieving 30 percent growth this year represent significant milestones for the Brand, but we believe we are just getting started,” said Plank.  “We are delivering consistent top line results while making the right investments to support both the near- and long-term opportunities of the Brand.  This includes investments to build world-class design and innovation capabilities for all of our products, accelerate our international footprint, and expand our 30 million users under our Connected Fitness platform.  We believe this balanced approach will continue to drive our global ambitions and long-term value for our shareholders. We are proud of what we have built and continue to see ourselves as a much larger brand than the $3 billion in revenues we are projecting for 2014.”

Under Armour, Inc.

For the Quarter and Nine Months Ended September 30, 2014 and 2013

(Unaudited; in thousands, except per share amounts)






CONSOLIDATED STATEMENTS OF INCOME








Quarter Ended
Sept. 30

Nine Months Ended
Sept. 30


2014

% of Net
Revenues

2013

% of Net
Revenues

2014

% of Net
Revenues

2013

% of Net
Revenues

Net revenues

$

937,908

100.0

%

$

723,146

100.0

%

$

2,189,169

100.0

%

$

1,649,295

100.0

%

Cost of goods sold

472,608

50.4

%

373,011

51.6

%

1,123,227

51.3

%

862,978

52.3

%

Gross profit

465,300

49.6

%

350,135

48.4

%

1,065,942

48.7

%

786,317

47.7

%

Selling, general and administrative expenses

319,194

34.0

%

229,306

31.7

%

858,286

39.2

%

619,686

37.6

%

Income from operations

146,106

15.6

%

120,829

16.7

%

207,656

9.5

%

166,631

10.1

%

Interest expense, net

(1,535)

(0.2)%

(691)

(0.1)%

(3,608)

(0.2)%

(2,127)

(0.2)%

Other expense, net

(3,355)

(0.3)%

(113)

–

%

(3,982)

(0.2)%

(670)

–

%

Income before income taxes

141,216

15.1

%

120,025

16.6

%

200,066

9.1

%

163,834

9.9

%

Provision for income taxes

52,111

5.6

%

47,241

6.5

%

79,733

3.6

%

65,670

3.9

%

Net income

$

89,105

9.5

%

$

72,784

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