Under Armour, Inc. reported revenues increased 24.0% in the fourth quarter to $222.2 million from $179.3 million a year ago. Earnings improved 83.1% to $15.2 million, or 30 cents a share, from $8.3 million, or 17 cents, a year ago. The company also forecast 10%-12% growth for both revenues and diluted EPS in 2010.
Fourth quarter apparel net revenues increased 26.0% to $192.1 million compared with $152.4 million in the same period of the prior year, driven by growth in Men's, Women's, and Youth apparel. Footwear net revenues were $8.7 million in the fourth quarter of 2009 compared with $9.2 million in the same period of the prior year. Direct-to-Consumer net revenues grew 52.9% year-over-year during the fourth quarter.
Kevin Plank, chairman and CEO of Under Armour, Inc., stated, “2009 was a great testament to the expanding power of the Under Armour Brand with athletes. We reached new consumers across the sports spectrum, while investing in our key growth drivers including Women's, Footwear and Direct-to-Consumer, and took important steps in building a stable foundation for long-term growth.”
For the fourth quarter, operating income grew 17.8% to $26.9 million compared with $22.9 million in the prior year's period. Gross margin for the fourth quarter of 2009 increased to 51.4% compared with 50.7% in the prior year's quarter primarily due to the increased higher margin sales in Direct-to-Consumer. Selling, general and administrative expenses were 39.3% of net revenues in the fourth quarter of 2009 compared with 37.9% of net revenues in the same period of the prior year. The increase was primarily driven by higher personnel costs and continued investments in Direct-to-Consumer. Marketing expense for the fourth quarter of 2009 was 10.8% of net revenues versus 11.0% in the prior year's period.
Plank concluded, “Our strong apparel results in the fourth quarter are great evidence that our Brand is resonating with new consumers. While we continue to meaningfully lead the performance apparel market in innovation, we are also bringing new consumers into the performance category through our expanded presence with our wholesale partners and our own Direct-to-Consumer channel.”
Review of Full Year Operating Results
Net revenues for the full year 2009 increased 18.1% to $856.4 million from $725.2 million in 2008, ahead of the company's previously provided outlook of $830 million to $835 million. Diluted earnings per share for the full year increased 21.1% to $0.92 on weighted average common shares outstanding of 50.7 million compared with $0.76 per share on weighted average common shares outstanding of 50.3 million in 2008, ahead of the company's previously provided outlook of $0.85 to $0.87.
Apparel net revenues increased 12.6% to $651.8 million compared with $578.9 million in the same period of the prior year. Driven by the company's entrance into Running Footwear, footwear net revenues increased 60.6% to $136.2 million in 2009 compared with $84.8 million in 2008. Direct-to-Consumer net revenues increased 49.5% during the full year.
Operating income increased 10.9% for the year and totaled $85.3 million compared with $76.9 million in 2008. Gross margin for 2009 was 48.2% compared with 48.9% in the prior year primarily due to a higher proportion of footwear sales and increased liquidations to third parties. Selling, general and administrative expenses were 38.2% of net revenues in 2009 compared with 38.3% of net revenues in the same period of the prior year. Marketing expenses increased $11.2 million in 2009 and were 12.4% of net revenues compared with 13.1% in 2008.
Balance Sheet Highlights
Cash and cash equivalents increased $85.3 million to $187.3 million at December 31, 2009 compared with $102.0 million at December 31, 2008. The company had no borrowings outstanding under the $200 million revolving credit facility at December 31, 2009. Inventory at year-end decreased 18.5% to $148.5 million compared with $182.2 million at December 31, 2008. Net accounts receivable decreased 2.4% to $79.4 million at December 31, 2009 compared with $81.3 million at December 31, 2008.
Brad Dickerson, Chief Financial Officer of Under Armour, Inc., stated, “2009 was a year of substantive improvement in our ability to manage our business, specifically around our balance sheet. We increased our cash position by 84 percent and improved inventory turns while making the capital and operational investments in systems and people to drive long-term growth. Growing our annual earnings 22 percent on an 18 percent increase in revenues illustrates the organizational discipline we have developed to leverage the abundant opportunities that exist for the company.”
Outlook for 2010
The company had previously anticipated 2010 net revenues and EPS to grow in the high-single to low-double-digits. The company now expects 2010 annual net revenues in the range of $945 million to $960 million, an increase of 10% to 12% over 2009. The company expects 2010 diluted earnings per share for the full year to grow in line with net revenue growth. Further, the company expects an effective tax rate of approximately 42.7% for the full year. The company anticipates fully diluted weighted average shares outstanding of approximately 51.1 million to 51.3 million for 2010.
Under Armour, Inc.
Quarter and Year Ended December 31, 2009 and 2008
(Unaudited; in thousands, except per share amounts)
CONSOLIDATED STATEMENTS OF INCOME
Quarter % of Quarter % of
Ended Net Ended Net
12/31/09 Revenues 12/31/08 Revenues
——– ——– ——– ——–
Net revenues $222,217 100.0% $179,279 100.0%
Cost of goods sold 108,076 48.6% 88,337 49.3%
——- —- —— —-
Gross profit 114,141 51.4% 90,942 50.7%
Operating expenses
Selling, general and
administrative expenses 87,208 39.3% 68,069 37.9%
—— —- —— —-
Income from operations 26,933 12.1% 22,873 12.8%
Interest expense, net (435) (0.2%) (352) (0.2%)
Other expense, net (258) (0.1%) (4,661) (2.6%)
—– —— —— ——
Income before income taxes 26,240 11.8% 17,860 10.0%
Provision for income taxes 11,038 5.0% 9,539 5.4%
—— — —– —
Net income $15,202 6.8% $8,321 4.6%
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Net income available per common share
Basic $0.30 $0.17
Diluted $0.30 $0.17
Weighted average common shares outstanding
Basic 50,199 49,295
Diluted 50,846 50,407
Year % of Year % of
Ended Net Ended Net
12/31/09 Revenues 12/31/08 Revenues
——– ——– ——– ——–
Net revenues $856,411 100.0% $725,244 100.0%
Cost of goods sold 443,386 51.8% 370,296 51.1%
——- —- ——- —-
Gross profit 413,025 48.2% 354,948 48.9%
Operating expenses
Selling, general and
administrative expenses 327,752 38.2% 278,023 38.3%
——- —- ——- —-
Income from operations 85,273 10.0% 76,925 10.6%
Interest expense, net (2,344) (0.3%) (850) (0.1%)
Other expense, net (511) (0.1%) (6,175) (0.9%)
—- —— —— ——
Income before income taxes 82,418 9.6% 69,900 9.6%
Provision for income taxes 35,633 4.1% 31,671 4.3%
—— — —— —
Net income $46,785 5.5% $38,229 5.3%
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Net income available per common share
Basic $0.94 $0.78
Diluted $0.92 $0.76
Weighted average common shares outstanding
Basic 49,848 49,086
Diluted 50,650 50,342
NET REVENUES BY PRODUCT CATEGORY
Quarter Quarter Year Year
Ended Ended Ended Ended
12/31/09 12/31/08 % Change 12/31/09 12/31/08 % Change
Apparel $192,073 $152,407 26.0% $651,779 $578,887 12.6%
Footwear 8,749 9,219 (5.1%) 136,224 84,848 60.6%
Accessories 11,529 9,283 24.2% 35,077 31,547 11.2%
—— —– —— ——
Total net
sales 212,351 170,909 24.2% 823,080 695,282 18.4%
Licensing
revenues 9,866 8,370 17.9% 33,331 29,962 11.2%
—– —– —— ——
Total net
revenues $222,217 $179,279 24.0% $856,411 $725,244 18.1%
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