Under Armour : Transcirpt

Corrected Transcript

08-Aug-2023

Under Armour, Inc. (UA)

Q1 2024 Earnings Call

	Total Pages: 23
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Under Armour, Inc. (UA)	Corrected Transcript
Q1 2024 Earnings Call	08-Aug-2023

CORPORATE PARTICIPANTS

Lance Allega	David Eric Bergman
Senior Vice President-Investor Relations & Corporate Development,	Chief Financial Officer, Under Armour, Inc.
Under Armour, Inc.
Stephanie C. Linnartz
President, Chief Executive Officer & Director, Under Armour, Inc.

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OTHER PARTICIPANTS

Simeon Siegel	Geoff Lowery
Analyst, BMO Capital Markets Corp.	Analyst, Redburn (Europe) Ltd.
Jay Sole	Brian Nagel
Analyst, UBS Securities LLC	Analyst, Oppenheimer & Co., Inc.
Robert Drbul	Samuel Poser
Analyst, Guggenheim Securities LLC	Analyst, Williams Trading LLC
Xian Siew	Matthew R. Boss
Analyst, BNP Paribas Exane	Analyst, JPMorgan Securities LLC
Sharon Zackfia
Analyst, William Blair & Co. LLC

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Under Armour, Inc. (UA)	Corrected Transcript
Q1 2024 Earnings Call	08-Aug-2023

MANAGEMENT DISCUSSION SECTION

Operator: Good day and thank you for standing by. Welcome to Under Armour's Q1 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's call is being recorded.

I will now turn the call over to Lance Allega, Senior Vice President of Investor Relations and Corporate Development. Please go ahead.

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Lance Allega

Senior Vice President-Investor Relations & Corporate Development, Under Armour, Inc.

Thank you. Good morning, and welcome to Under Armour's first quarter of fiscal 2024 earnings conference call. Today's event is being recorded for replay.

Joining us on today's call will be Under Armour President and CEO, Stephanie Linnartz; and CFO, Dave Bergman.

Our remarks today will include certain forward-looking statements that reflect Under Armour management's current view of our business as of August 8, 2023. These statements may include projections for our business at the present and future quarters and fiscal years. Forward-looking statements are not guarantees of future business performance, and our actual results may differ materially from those expressed or implied in the views provided today.

Statements made are subject to risks and other uncertainties detailed in the select press release and in documents filed regularly filed with the SEC, including our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q.

Today's discussion may also include the use of non-GAAP references. Under Armour believes these measures provide investors with a helpful perspective on underlying business trends. When applicable, these measures are reconciled to the most appropriate US GAAP measures, reconciliations of which along with other pertinent information can be found in this morning's press release and at about.underarmour.com.

With that, I'll turn the call over to Stephanie.

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Stephanie C. Linnartz

President, Chief Executive Officer & Director, Under Armour, Inc.

Thank you, Lance, and welcome to everyone joining today's call. Having finished my first full quarter at Under Armour, I am pleased that our results were broadly in line with our expectations and that we are on track to deliver our fiscal 2024 outlook.

Digging further into the business and gaining a better understanding of our strengths, strategies, and opportunities for improvement, I am even more inspired about the power of the Under Armour brand and our ability to unlock our full potential over the long-term.

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Under Armour, Inc. (UA)	Corrected Transcript
Q1 2024 Earnings Call	08-Aug-2023

During the quarter, I met with athletes, customers, and teammates across the US, Italy, France, Spain, Turkey, the Netherlands, and the UK, and I have seen first-hand the enthusiasm and passion for our brand and products. From athletes that thank us for helping them push the boundaries of what is possible in the field of sports to our retail partners who are energized for what's to come, our mission to make you better is front and center.

On our last earnings call, I laid out our Protect This House 3, or PTH3, strategy which is centered on delivering three significant initiatives over the next three years: first is driving global brand heat with an emphasis on the US; second is delivering elevated design and products with a focus on footwear, Sportstyle, and women; and third is driving US sales while harnessing momentum in our international business.

Although these initiatives will take time to gain traction, with one quarter behind us, I am pleased by the team's increased execution, accountability, and unification around these pillars. Using fiscal 2024 as a building year to focus on cost management and profitability, we are making progress across each of the PTH3 priorities, so I'd like to spend a few minutes reviewing some highlights.

We'll start with driving global brand heat. Crucial to this execution is strong leadership to strike an appropriate balance between top-line growth, improving our strategic capabilities, and maintaining cost discipline to ensure we generate the highest returns possible as we grow the Under Armour brand.

In this respect, we're happy to have recently welcomed two new additions to our executive team. First is our Chief Consumer Officer, Jim Dausch, whom I had the pleasure of working with for over 20 years at Marriott International. Jim is a seasoned executive with experienced leading transformational strategic initiatives across product, marketing, and sales and driving significant brand and consumer loyalty improvement. As a crucial operator in our effort to drive global brand heat, he's hit the ground running, and I'm looking forward to the horsepower that I know he can add to our team.

Second, we welcomed Amanda Miller as Under Armour's Chief Communications Officer. With over 20 years of experience, Amanda joins us from PayPal where she served as VP of Corporate Affairs leading the company's multi-tiered global communications strategy. In conjunction with Jim's role and linking all of our commercial elements together, evolving how we tell our brand and product story to our athletes, consumers, the media, and other stakeholders will be critical to driving global brand heat.

Welcome Jim and Amanda. You have a fantastic team at Under Armour to lean on, and we're excited about the journey ahead.

Last month, we also announced that Lisa Collier and Colin Browne are leaving Under Armour to pursue other opportunities. Accordingly, comprehensive searches for a new Chief Product Officer and a new Chief Supply Chain Officer are underway. I want to thank Lisa and Colin for their contributions and leadership throughout their time at Under Armour.

Switching gears to marketing, we saw positive results with the return of Protect This House earlier this year and continued to build on this momentum with recent activations around the Women's World Cup. The campaign has a digital emphasis and showcases two of Under Armour's top female footballers, Kelley O'Hara from the US, and Alex Greenwood for England.

Paying respect to music's massive impact on sports, culture and the athlete's mindset, their stories and motivations come together to Armour Up, with a common goal to Protect This House. Working in parallel is our premium Women's Magnetico Elite 3 Soccer boot. Under Armour's first cleat made with a specific clasp for a

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Under Armour, Inc. (UA)	Corrected Transcript
Q1 2024 Earnings Call	08-Aug-2023

women's foot, an outstanding example of our commitment to serving female athletes from the world's most elite football stage to the local pitch.

Further showcasing our female athletes, Under Armour held a series of events coinciding with the WNBA All-Star Weekend in July, including our newest basketball athlete, Diamond Miller, along with Kelsey Plum of the Las Vegas Aces who hosted a youth basketball camp powered by UA Next, Under Armour's youth-focused sports development camps. We also debuted Kelsey's new Earth Wind and Fire UA Flow Breakthru 4 sneaker at the Las Vegas Brand House.

UA Next continues to be an excellent connection vehicle with the 16 to 24-year-old varsity athletes. In fact, we wrapped up its 8th iteration in June, The Future 50, where 50 of the best high school American football juniors and seniors gathered for an intense two-day experience. This included training, practice, competition and mental exercises along with engagements with Justin Jefferson of the Vikings and Kyle Hamilton of the Ravens.

And speaking of football, we also recently announced that we have extended our long-term relationship with Notre Dame, which is a tremendous point of pride for Under Armour. In the decade ahead, we look forward to supporting the next generation of athletes as we co-create customized Fighting Irish uniforms, footwear and apparel for the university's 26 varsity teams.

An essential theme that underlines support of these brand heat moments is the importance of social media and an always-on digital presence to connect with young athletes more deeply. I am encouraged by the progress we're making here with the considerable evolution in our overall social media approach which has led to increasingly positive results over the past six to eight months.

We've also been refining the content on our category-specific social handles, allowing us to target athlete groups better and increasing efforts to directly connect product marketing and technical attributes to their everyday moments.

I am also pleased that we continue to improve the shopping experience for Under Armour products featured in posts on Instagram and TikTok and working towards direct purchase and checkout on their platforms, another step in enhancing our omni-channel capabilities.

Of course, driving brand heat must coincide with having innovative and stylish gear that athlete's desire, which brings me to our second priority of delivering elevated design and products, focusing on footwear, Sportstyle and women.

Over the past three months, we've begun to simplify our product lines around fewer collection groups to optimize our ability to engage and convert consumers as we continue to scale our brand. To enable this, we plan to distort investments towards a strategic handful of specific apparel and footwear collections that we will activate through improved inspirational storytelling to drive more consistent demand for key franchises.

Following the few quarters of pressure in our apparel business, our first quarter performance saw an impact from the persistent promotional environment in the challenging North American retail environment. To combat this, using our key franchise approach, we're launching a substantial update to our original HeatGear Compression base layer T-shirt this fall.

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