Under Armour, Inc. revenues in the fourth quarter increased 34 percent
to $403 million from $301 million in the prior year’s period. Net
income increased 42 percent to $33 million, or 62 cents a share, from
$23 million, or 44 cents, a year ago. The company also reiterated its 2012 operating income outlook at the higher end of its 20 percent to 25 percent long-term growth target and updates 2012 revenues outlook to the low end of its 20 percent to 25 percent long-term growth target.

Fourth quarter apparel net revenues increased 27 percent to $323 million compared with $254 million in the same period of the prior year, driven by continued strength in Fleece and the expanded Charged Cotton platform.  Direct-to-Consumer net revenues, which represented 38 percent of total net revenues for the fourth quarter, grew 50 percent year-over-year.  Fourth quarter footwear net revenues increased 43 percent to $31 million from $22 million in the prior year’s period, primarily reflecting new 2011 introductions in running footwear.  Fourth quarter accessories net revenues increased 149 percent to $37 million from $15 million in the prior year’s period, primarily driven by the in-house transition of the company’s previously licensed hats and bags business which commenced in January 2011.

Gross margin for the fourth quarter of 2011 was 51.6 percent compared with 51.7 percent in the prior year’s quarter reflecting less favorable North American wholesale apparel product margins along with the ongoing impact of the hats and bags transition in 2011.  Selling, general and administrative expenses as a percentage of net revenues were 37.9 percent in the fourth quarter of 2011 compared with 40.0 percent in the prior year’s period, largely reflecting leverage of corporate services.  Marketing expenses for the fourth quarter of 2011 were 10.9 percent of net revenues compared with 11.1 percent in the prior year’s quarter.  Fourth quarter operating income grew 57 percent to $55 million compared with $35 million in the prior year’s period.  

Kevin Plank, chairman, CEO, and president of Under Armour, Inc., stated, “We completed a very successful 2011, growing net revenues 38 percent, the highest overall growth rate since 2007.  Our apparel business surpassed the $1 billion mark and we demonstrated our ability to broaden the addressable market for the Brand with the introduction of our premium cotton platform.  The strength we continue to see in our apparel and Direct-to-Consumer businesses affords us the ability to continue to make strategic investments in other long-term growth drivers like footwear and international.”

Review of Full Year Operating Results

For the full year 2011, net revenues increased 38 percent to $1.473 billion compared with $1.064 billion in the prior year and compared with the company’s prior outlook of $1.46 billion to $1.47 billion.  Diluted earnings per share for the full year increased 38 percent to $1.85 per share on weighted average common shares outstanding of 52.5 million compared with $1.34 per share on weighted average common shares outstanding of 51.3 million in the prior year.

Apparel net revenues increased 31 percent to $1.122 billion compared with $853 million in the prior year, led by the Training category which included the 2011 introduction of Charged Cotton and strength in our Fleece products across Men’s, Women’s, and Youth.  Direct-to-Consumer net revenues, which represented 27 percent of total net revenues for the year compared to 23 percent in 2010, grew 62 percent over the prior year.  Footwear net revenues increased 43 percent to $182 million during 2011 compared to $127 million in 2010.  Accessories net revenues tripled to $132 million during 2011 compared to $44 million in 2010.

Gross margin for 2011 was 48.4 percent compared with 49.9 percent in 2010 primarily due to less favorable North American wholesale apparel product margins and the impact of the hats and bags transition in 2011.  Selling, general and administrative expenses as a percentage of net revenues were 37.3 percent for 2011 compared with 39.3 percent for 2010, reflecting leverage of corporate services and marketing expenses.  Marketing expense for 2011 was 11.4 percent of net revenues compared with 12.0 percent in the prior year.  Operating income grew 45 percent to $163 million in 2011 compared with $112 million in the prior year and compared with the company’s prior outlook of $159 million to $162 million.

Balance Sheet Highlights

Cash and cash equivalents decreased 14 percent to $175 million at December 31, 2011 compared with $204 million at December 31, 2010.  The company had no borrowings outstanding under its $300 million revolving credit facility at December 31, 2011.  Inventory at December 31, 2011 increased 51 percent to $324 million compared with $215 million at December 31, 2010.  Long-term debt increased to $78 million at December 31, 2011 from $16 million at December 31, 2010, primarily driven by the acquisition of the company’s corporate headquarters in July.  

Updated 2012 Outlook

The company continues to expect 2012 operating income growth at the higher end of its 20 percent to 25 percent long-term growth target.  The company expects 2012 net revenues growth at the low end of its 20 percent to 25 percent long-term growth target, compared to the prior guidance at the higher end of its 20 percent to 25 percent long-term growth target.  The company expects an effective tax rate of 37.5 percent to 38.0 percent for the full year, compared to an effective tax rate of 38.2 percent for 2011.  The company anticipates fully diluted weighted average shares outstanding of approximately 53.2 million to 53.4 million for 2012.

Plank concluded, “With the credibility we have built with our consumer, we upheld our premium positioning in the marketplace in 2011 by delivering compelling innovation through programs like Charged Cotton and our Charge RC running shoes.   We remain focused on long-term profitable growth.  This means continuing to target distribution where our consumer is looking for us and that is appropriate for our Brand.  It also means balancing new, relevant innovation stories such as our ColdBlack apparel technology with re-invigorated product in our heritage baselayer programs.  Finally, the operational discipline we continue to add across our organization will help maximize these drivers to our bottom line.”

For the Quarter and Year Ended December 31, 2011 and 2010

(Unaudited; in thousands, except per share amounts)


CONSOLIDATED STATEMENTS OF INCOME




Quarter Ended

December 31,


Year Ended

December 31,



2011

% of Net Revenues


2010

% of Net Revenues


2011

% of Net Revenues


2010

% of Net Revenues















Net revenues

$   403,126

100.0%


$   301,166

100.0%


$ 1,472,684

100.0%


$  1,063,927

100.0%


Cost of goods sold

195,221

48.4%


145,588

48.3%


759,848

51.6%


533,420

50.1%


      Gross profit

207,905

51.6%


155,578

51.7%


712,836

48.4%


530,507

49.9%















Selling, general and

 administrative expenses

152,603

37.9%


120,388

40.0%


550,069

37.3%


418,152

39.3%






=






=



      Income from operations

55,302

13.7%


35,190

11.7%


162,767

11.1%


112,355

10.6%















Interest expense, net

(1,413)

(0.3%)


(590)

(0.2%)


(3,841)

(0.3%)


(2,258)

(0.3%)


Other income (expense), net

1

0.0%


(142)

(0.1%)


(2,064)

(0.1%)


(1,178)

(0.1%)















      Income before income taxes

53,890

13.4%


34,458

11.4%


156,862

10.7%


108,919

10.2%


Provision for income taxes

21,338

5.3%


11,510

3.8%


59,943

4.1%


40,442

3.8%















      Net income

$     32,552

8.1%


$     22,948

7.6%


$     96,919

6.6%


$       68,477

6.4%















Net income available per common share











Basic

$       0.63



$        0.45



$        1.88



$        1.35



Diluted

$       0.62



$        0.44



$        1.85



$        1.34