Baltimore, MD (January 26, 2012) - Under Armour, Inc. (NYSE: UA) today announced financial results for the fourth quarter ended December 31, 2011. Net revenues increased 34% in the fourth quarter of 2011 to $403 million compared with net revenues of $301 million in the prior year's period. Net income increased 42% in the fourth quarter of 2011 to $33 million compared with $23 million in the prior year's period. Diluted earnings per share for the fourth quarter of 2011 were $0.62 on weighted average common shares outstanding of 52.7 million compared with $0.44 per share on weighted average common shares outstanding of 52.0 million in the prior year's period.
Fourth quarter apparel net revenues increased 27% 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% of total net revenues for the fourth quarter, grew 50% year-over-year. Fourth quarter footwear net revenues increased 43% 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% 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% compared with 51.7% 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% in the fourth quarter of 2011 compared with 40.0% in the prior year's period, largely reflecting leverage of corporate services. Marketing expenses for the fourth quarter of 2011 were 10.9% of net revenues compared with 11.1% in the prior year's quarter. Fourth quarter operating income grew 57% 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%, 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% 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% 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% 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% of total net revenues for the year compared to 23% in 2010, grew 62% over the prior year. Footwear net revenues increased 43% 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% compared with 49.9% 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% for 2011 compared with 39.3% for 2010, reflecting leverage of corporate services and marketing expenses. Marketing expense for 2011 was 11.4% of net revenues compared with 12.0% in the prior year. Operating income grew 45% 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% 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% 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% to 25% long-term growth target. The Company expects 2012 net revenues growth at the low end of its 20% to 25% long-term growth target, compared to the prior guidance at the higher end of its 20% to 25% long-term growth target. The Company expects an effective tax rate of 37.5% to 38.0% for the full year, compared to an effective tax rate of 38.2% for 2011. The Company anticipates fully diluted weighted average shares outstanding of approximately 53.2 million to 53.4 million for 2012.
Mr. 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."
Conference Call and Webcast
The Company will provide additional commentary regarding its fourth quarter results as well as its updated 2012 outlook during its earnings conference call today, January 26th, at 8:30 a.m. ET. The call will be webcast live at http://investor.underarmour.com/events.cfm and will be archived and available for replay approximately three hours after the live event. Additional supporting materials related to the call will also be available at http://investor.underarmour.com. The Company's financial results are also available online at http://investor.underarmour.com/results.cfm.
About Under Armour, Inc.
Under Armour® (NYSE: UA) is a leading developer, marketer, and distributor of branded performance apparel, footwear, and accessories. The brand's moisture-wicking fabrications are engineered in many different designs and styles for wear in nearly every climate to provide a performance alternative to traditional products. The Company's products are sold worldwide and worn by athletes at all levels, from youth to professional, on playing fields around the globe. The Under Armour global headquarters is in Baltimore, Maryland, with European headquarters in Amsterdam's Olympic Stadium, and additional offices in Denver, Hong Kong, Toronto, and Guangzhou, China. For further information, please visit the Company's website at www.ua.com.
Forward Looking Statements
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