Select Highlights: BALTIMORE, Feb. 7 /PRNewswire-FirstCall/ --
Under Armour, Inc. (NASDAQ: UARM) today announced financial results
for the fourth quarter and year ended December 31, 2005. Fourth
quarter net income increased 14% to $7.0 million from $6.2 million
in the same period of 2004. Diluted earnings per share was $0.08
compared to diluted earnings per share of $0.15 in the fourth
quarter of the prior year. Net income in 2005 increased 21% to
$19.7 million from $16.3 million in the prior year. Diluted
earnings per share for 2005 was $0.36 compared to diluted earnings
per share in 2004 of $0.39. As detailed below, the comparability of
earnings per diluted share is affected by the issuance in 2005 of
9.5 million shares of common stock in connection with the Company's
initial public offering and the use of a portion of the offering
proceeds to redeem the Company's outstanding preferred stock. A
table at the end of this release captioned "Reconciliation of GAAP
to Pro Forma EPS" contains the earnings per diluted share for both
the quarter and the year ended December 31, 2005, including the
impact of the items described below: * Fourth quarter and full year
diluted earnings per share in 2005 includes a one-time charge of
$3.5 million associated with the redemption of the Company's Series
A preferred stock in connection with Under Armour's initial public
offering. The impact of this charge on the fully diluted earnings
per share for the fourth quarter and the full year of 2005 is $0.08
and $0.09, respectively. * On November 18, 2005, the Company issued
an additional 9.5 million shares in connection with its initial
public offering, which had the impact of increasing the weighted
average diluted shares outstanding by 4.4 million for the quarter
and 1.1 million for the full year. Since becoming a taxable
corporation in 2002, Under Armour has benefited from certain state
tax credits which reduced its provision for income taxes. In 2005,
the Company's remaining tax credits were fully earned which
resulted in an increased effective tax rate compared to 2004.
Fourth quarter net income includes a provision for income tax
resulting in a 42.1% tax rate versus a 32.6% tax rate for the same
period of 2004. Full year net income includes a provision for
income tax resulting in a 40.2% tax rate versus a 32.3% tax rate
for the same period in 2004. "Our fourth quarter sales and strong
earnings performance topped off an outstanding and eventful year
for Under Armour," stated Kevin A. Plank, Chairman, CEO, and
President of Under Armour, Inc. "The demand for our performance
apparel remains very strong and we are pleased that we have been
able to grow our core men's apparel business while successfully
broadening the product offerings in our women's and youth
categories." Review of Fourth Quarter Operating Results Net
revenues, which consist of net sales and license revenue, increased
25% in the fourth quarter to $87.3 million compared to net revenues
of $69.6 million in the same period of 2004. Fourth quarter net
sales, which consist of Under Armour products sold globally other
than through licensees, increased 24% to $84.4 million from $68.3
million in the same period of 2004. Within net sales, the Company's
Men's category sales increased 15% to $60.1 million for the
quarter. The growth in the Men's category was primarily due to the
introduction of new product offerings as well as sales growth in
core products. Women's category sales rose 59% to $16.7 million for
the quarter. Fourth quarter Youth category sales grew 70% to $5.5
million. Improved sales in Women's and Youth reflect increases in
new and existing product offerings along with door expansion. Sales
of Accessories declined 11% to $2.1 million in the fourth quarter.
The decline for the quarter is due to a shift of certain products
to our licensees which were formerly sold within the Accessories
category. Reflecting strong results from existing licensing
partnerships and the shift to licensees of certain products
formerly in the Accessories category, license revenue increased
111% to $2.9 million from $1.4 million in the fourth quarter of
2004. Gross margin for the quarter increased to 48.7% compared to
48.6% in last year's fourth quarter. Fourth quarter selling,
general and administrative (SG&A) expenses were 34.0% of net
revenues compared to 34.7% in the same period of the prior year.
The decrease resulted primarily from a shift in timing of marketing
to the first half of 2005 to support a Women's media campaign,
partially offset by higher selling and payroll costs in support of
the Company's footwear and international initiatives, as well as
increased costs associated with being a public company. Operating
income as a percentage of net revenues for the quarter increased to
14.7% compared to 13.9% in the same period of 2004. "We are
delighted with Under Armour's strong top line growth," stated Wayne
Marino, Chief Financial Officer of Under Armour, Inc. "This sales
strength coupled with a very disciplined approach to running our
business, enabled us to achieve strong operating margins for the
quarter and full year while making important investments in the
business. Further, we continue to make significant improvements in
managing inventory and we ended the year with a very solid balance
sheet. Taken together, this provides a sound foundation on which to
further grow the business in 2006 and beyond." Review of Full Year
Operating Results Net revenues for the year increased 37% to $281.1
million from $205.2 million in 2004. Net sales for the year
increased 35% to $271.3 million from $200.9 million in the prior
year. Within net sales, the Company's Men's category sales
increased 25% to $189.6 million for the year. Women's category
sales rose 87% to $53.5 million for the year. Full year Youth
category sales grew 48% to $18.8 million. Improved sales in Men's,
Women's and Youth reflect the same factors that contributed to
fourth quarter increases. Sales of Accessories grew 25% to $9.4
million for the year. Reflecting strong results from existing
licensing partnerships, license revenue for the year increased 127%
to $9.8 million from $4.3 million in 2004. Gross margin in 2005
increased to 48.3% compared to 46.5% in the prior year. The
improvement reflects leverage on increased volume, improved
sourcing, disciplined inventory management, and increased license
revenue. SG&A in 2005 increased to 35.6% of net revenues
compared to 34.1% in the prior year. The increase resulted from
higher selling and payroll costs in support of the Company's
footwear and international initiatives, as well as increased costs
associated with being a public company. Operating income as a
percentage of net revenues for 2005 increased to 12.7% compared to
12.4% in the prior year. Balance Sheet Highlights Inventory totaled
$53.6 million at December 31, 2005 compared to $48.1 million at the
end of 2004. While net revenues increased 37% for the year,
inventory increased only 12%, due in large part to initiatives
implemented during the year to improve inventory management. At the
end of 2005, cash and cash equivalents were $63.0 million which
includes a portion of the proceeds from the Company's initial
public offering. Cash and cash equivalents, net of debt, were $54.6
million at December 31, 2005. Recent Initial Public Offering On
November 18, 2005, Under Armour completed its initial public
offering of 12,124,000 shares of Class A common stock at a price of
$13.00 per share and the simultaneous close of the underwriters'
over-allotment to purchase an additional 1,818,600 shares of Class
A common stock at the initial public offering price. Of the total
offering, Under Armour sold 9,500,000 shares of Class A common
stock. The remaining 4,442,600 shares of Class A common stock were
sold by certain Under Armour stockholders. Upon closing the
offering, Under Armour received net proceeds, after deducting
underwriting discounts and commissions and offering expenses, of
approximately $112.7 million, of which $12.0 million was used to
redeem the Company's Series A preferred stock held by Rosewood
Capital, a private equity firm, and $37.2 million was used to repay
the Company's senior secured credit facility. The Company intends
to use the remainder of the proceeds for general corporate
purposes. Outlook for 2006 Under Armour management is basing its
outlook for 2006 on the following assumptions: * Net revenue growth
of 20% to 25%. * Seasonality in the business during 2006 mirroring
that which occurred in 2005. * An increase in net income in the
range of 20% to 25%. * An effective tax rate of 41.5%. * Fully
diluted weighted average number of shares outstanding of
approximately 50 million. * Capital expenditures in the range of
$15 million to $16 million. Mr. Plank concluded, "We believe our
results for 2005 reflect not only the overall strength of the Under
Armour brand, but also our dedication to innovating the category of
performance, evolving our product lines, and educating consumers by
translating complex technology into a very simple marketing
message. Most impressive, we accomplished this while laying the
groundwork for continued growth, marked by our investments in the
business, our entrance into the European market, the ramp up for
our launch of footwear, and the recruitment of several key members
to our senior management team. We look forward to bringing our
business to new levels of success as Under Armour continues to
grow." Conference Call and Webcast Under Armour will host a
conference call and webcast to discuss its financial results today,
February 7th, at 8:30 a.m. EST. This call will be webcast live at
http://investor.underarmour.com/ and will be archived and available
for replay approximately three hours after the live event. The
Company's financial results are also available online at
http://investor.underarmour.com/. About Under Armour, Inc. Under
Armour(R) (NASDAQ:UARM) is a leading developer, marketer and
distributor of branded performance products for men, women and
youth. The brand's moisture-wicking synthetic fabrications are
engineered in many different designs and styles for wear in nearly
every climate to provide a performance alternative to traditional
natural fiber products. The Company is an official licensee of the
National Hockey League and an official supplier to the U.S. Ski
Team, USA Rugby, the National Lacrosse League, and Major League
Lacrosse; and the Company's products are worn by professional
football, baseball, and soccer players, as well as athletes in
major collegiate and Olympic sports. The Company's products are
currently sold in the United States, Canada, Japan and the United
Kingdom. The Company's global headquarters is located in Baltimore,
MD. For further information, please visit the Company's website at
http://www.underarmour.com/. Forward Looking Statements Some of the
statements contained in this press release constitute forward-
looking statements. Forward-looking statements relate to
expectations, beliefs, projections, future plans and strategies,
anticipated events or trends and similar expressions concerning
matters that are not historical facts, such as statements regarding
our future financial condition or results of operations, our
prospects and strategies for future growth, the development and
introduction of new products, and the implementation of our
marketing and branding strategies. In many cases, you can identify
forward-looking statements by terms such as "may," "will,"
"should," "expects," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential" or the negative of these terms
or other comparable terminology. The forward-looking statements
contained in this press release reflect our current views about
future events and are subject to risks, uncertainties, assumptions
and changes in circumstances that may cause events or our actual
activities or results to differ significantly from those expressed
in any forward-looking statement. Although we believe that the
expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future events, results, actions,
levels of activity, performance or achievements. Readers are
cautioned not to place undue reliance on these forward-looking
statements. A number of important factors could cause actual
results to differ materially from those indicated by the
forward-looking statements, including, but not limited to: our
ability to manage our growth effectively; our ability to maintain
effective internal controls; increased competition causing us to
reduce the prices of our products or to increase significantly our
marketing efforts in order to avoid losing market share; changes in
consumer preferences or the reduction in demand for performance
apparel and other products; our ability to accurately forecast
consumer demand for our products; reduced demand for sporting goods
and apparel generally; failure of our suppliers or manufacturers to
produce or deliver our products in a timely or cost-effective
manner; our ability to accurately anticipate and respond to
seasonal or quarterly fluctuations in our operating results; our
ability to effectively market and maintain a positive brand image;
the availability and effective operation of management information
systems and other technology; our ability to attract and maintain
the services of our senior management and key employees; and
changes in general economic or market conditions, including as a
result of political or military unrest or terrorist attacks. The
forward- looking statements contained in this press release reflect
our views and assumptions only as of the date of this press
release. We undertake no obligation to update any forward-looking
statement to reflect events or circumstances after the date on
which the statement is made or to reflect the occurrence of
unanticipated events. Under Armour, Inc. Quarter Ended and Year
Ended December 31 (Amounts in thousands, except per share data)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME Quarter Quarter Year
Year Ended % of Ended % of Ended % of Ended % of 12/31/ Net 12/31/
Net 12/31/ Net 12/31/ Net 05 Revenue 04 Revenue 05 Revenue 04
Revenue Net revenue $87,303 100.0% $69,645 100.0% $281,053 100.0%
$205,181 100.0% Cost of goods sold 44,807 51.3% 35,828 51.4%
145,203 51.7% 109,748 53.5% Gross profit 42,496 48.7% 33,817 48.6%
135,850 48.3% 95,433 46.5% Operating Expenses: Selling, general and
administrative expenses 29,632 34.0% 24,149 34.7% 99,961 35.6%
70,053 34.1% Income from operations 12,864 14.7% 9,668 13.9% 35,889
12.7% 25,380 12.4% Other Expenses: Interest expense, net 791 0.9%
534 0.8% 2,915 1.0% 1,284 0.6% Income before income taxes 12,073
13.8% 9,134 13.1% 32,974 11.7% 24,096 11.8% Provision for income
taxes 5,079 5.8% 2,974 4.3% 13,255 4.7% 7,774 3.8% Net income 6,994
8.0% 6,160 8.8% 19,719 7.0% 16,322 8.0% Accretion of and cumulative
preferred dividends on Series A Preferred Stock 3,511 4.0% 498 0.7%
5,307 1.9% 1,994 1.0% Net income available to common shareholders
$3,483 4.0% $5,662 8.1% $14,412 5.1% $14,328 7.0% Basic earnings
per share $0.08 $0.16 $0.39 $0.41 Diluted earnings per share $0.08
$0.15 $0.36 $0.39 Average basic shares 41,079 35,277 37,199 35,124
Average diluted shares 44,083 37,197 39,686 36,774 RECONCILIATION
OF GAAP TO PRO FORMA DILUTED EPS Quarter Quarter Year Year Ended
Ended Ended Ended 12/31/2005 12/31/2004 12/31/2005 12/31/2004
Diluted EPS as reported $0.08 $0.15 $0.36 $0.39 Impact of one-time
dividend charge $0.08 $- $0.09 $- Impact of Additional Shares
$(0.01) $(0.01) Pro Forma diluted EPS $0.16 $0.14 $0.45 $0.38 Under
Armour, Inc. Quarter Ended and Year Ended December 31 (Amounts in
thousands) NET REVENUE BY PRODUCT CATEGORY Quarter Quarter Year
Year Ended Ended % Ended Ended % 12/31/05 12/31/04 Change 12/31/05
12/31/04 Change Mens $ 60,051 $52,134 15.2% $189,596 $151,962 24.8%
Womens 16,730 10,555 58.5% 53,500 28,659 86.7% Youth 5,543 3,261
70.0% 18,784 12,705 47.8% Accessories 2,050 2,308 (11.2%) 9,409
7,548 24.7% Net sales 84,374 68,258 23.6% 271,289 200,874 35.1%
Licensing revenue 2,929 1,387 111.2% 9,764 4,307 126.7% Net revenue
$ 87,303 $69,645 25.4% $281,053 $205,181 37.0% NET REVENUE BY
PRODUCT CATEGORY BY QUARTER 2005 1st 2nd 3rd 4th Total Mens $39,842
$32,227 $57,476 $60,051 $189,596 Womens 9,893 8,810 18,067 16,730
53,500 Youth 3,204 3,254 6,783 5,543 18,784 Accessories 3,821 2,488
1,050 2,050 9,409 Net sales 56,760 46,779 83,376 84,374 271,289
Licensing revenue 1,427 2,178 3,230 2,929 9,764 Net revenue $58,187
$48,957 $86,606 $87,303 $281,053 Under Armour, Inc. Year Ended
December 31 (Amounts in thousands) CONDENSED CONSOLIDATED BALANCE
SHEETS Year Ended Year Ended 12/31/05 12/31/04 Assets Cash and cash
equivalents $ 62,977 $1,085 Accounts receivable, net 53,132 38,506
Inventory 53,607 48,055 Other receivables and current assets 5,252
2,370 Deferred income taxes 6,822 6,447 Total current assets
181,790 96,463 Property and equipment, net 20,865 14,211 Other
non-current assets 1,032 303 Total $203,687 $110,977 Liabilities,
Mandatorily Redeemable Securities and Stockholders' Equity
Revolving credit facility $- $ 38,748 Accounts payable, accrued
expenses and income taxes payable 43,864 37,428 Current maturities
of long term debt 3,808 3,597 Total current liabilities 47,672
79,773 Long term debt, net of current maturities 4,583 2,788
Deferred income taxes 330 289 Other long term liabilities 272 198
Total liabilities 52,857 83,048 Mandatorily Redeemable Series A
Preferred Stock - 6,692 Stockholders' equity 150,830 21,237 Total
$203,687 $110,977 DATASOURCE: Under Armour, Inc. CONTACT:
Investors: Rick Anguilla, +1-410-468-2512; Media: Cara O'Brien,
+1-212-850-5669, or Leigh Parrish, +1-212-850-5651, both of
Financial Dynamics, for Under Armour, Inc. Web site:
http://www.underarmour.com/
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