Under Armour(UA) - 2020 Q2 - Quarterly Report

Revenue Performance - Net revenues decreased by $13.5 million, or 0.9$1,429.5 million for the three months ended September 30, 2019, compared to $1,443.0 million in the same period in 2018[99]. - Wholesale revenue decreased by 2.5$1,429,456 thousand, a decrease of $13,520 thousand or 0.9$43.6 million in North America to $1,015.9 million for Q3 2019, primarily due to a decrease in off-price sales and direct-to-consumer channel[109]. - EMEA segment net revenues increased by$13.3 million to $161.0 million for Q3 2019, driven by growth in the wholesale channel[109]. - Asia-Pacific segment net revenues rose by$5.5 million to $154.9 million for Q3 2019, mainly due to growth in the direct-to-consumer channel[109]. - Net revenues for the nine months ended September 30, 2019, increased by$22,700 thousand, or 0.6%, to $3,825,907 thousand compared to$3,803,205 thousand in the same period in 2018[104]. - Total net revenues for the nine months ended September 30, 2019, increased by $22.7 million to$3,825.9 million, a 0.6% increase compared to the same period in 2018[112]. Profitability - Gross margin increased by 220 basis points, reflecting improvements from the previous year[91]. - Gross profit for the three months ended September 30, 2019, increased by $24,700 thousand to$689,900 thousand, with a gross margin of 48.3%, up 220 basis points from 46.1% in the same period in 2018[102]. - Gross profit for the nine months ended September 30, 2019, increased by $73,800 thousand to$1,789,000 thousand, with a gross margin of 46.8%, up 170 basis points from 45.1% in the same period in 2018[106]. - Net income for the three months ended September 30, 2019, was $102.3 million, compared to$75.3 million in the same period in 2018[97]. - Income from operations increased to $138.9 million for the three months ended September 30, 2019, compared to$119.0 million in the prior year[97]. - Total operating income increased by $19.9 million to$138.9 million for Q3 2019, a 16.8% increase compared to the same period in 2018[110]. - North America operating income decreased by $16.5 million to$237.2 million for Q3 2019, primarily due to decreases in net revenues[110]. - EMEA operating income increased by $5.3 million to$22.0 million for Q3 2019, driven by increased net revenues[111]. - Income from operations for the nine months ended September 30, 2019, increased by $177,300 thousand to$162,700 thousand, compared to a loss of $14,600 thousand in the same period in 2018[107]. - Total operating income for the nine months ended September 30, 2019, increased by$177.3 million to $162.7 million, a significant improvement compared to the prior year[115]. Expenses and Investments - Selling, general and administrative expenses increased by 4.4$23,300 thousand, or 4.4%, to $551,000 thousand for the three months ended September 30, 2019[102]. - Cash provided by operating activities decreased by$16.3 million to $102.5 million for the nine months ended September 30, 2019, compared to the same period in 2018[118]. - Cash used in investing activities decreased by$47.2 million to $107.0 million for the nine months ended September 30, 2019, compared to$154.2 million for the same period in 2018[119]. - Capital expenditures for the full year 2019 are expected to be approximately $180.0 million, primarily for investments in retail stores, global wholesale fixtures, corporate offices, and digital initiatives[119]. - Cash used in financing activities increased by$32.0 million to $138.7 million for the nine months ended September 30, 2019, from$106.7 million during the same period in 2018[119]. Financial Position and Debt - Interest expense, net decreased by $10,400 thousand to$15,900 thousand for the nine months ended September 30, 2019, primarily due to the prepayment of a term loan[107]. - The effective tax rate for the nine months ended September 30, 2019, was 21.9%, compared to (1.4)% for the same period in 2018, reflecting a shift from pre-tax losses to pre-tax income[107]. - The credit agreement provides revolving credit commitments for up to $1.25 billion of borrowings, maturing in March 2024, with no amounts outstanding as of September 30, 2019[120]. - As of September 30, 2019, the company was in compliance with the required consolidated EBITDA to consolidated interest expense ratio of not less than 3.50 to 1.00[120]. - The weighted average interest rate under the revolving credit facility borrowings was 3.6$15.9 million for the nine months ended September 30, 2019, compared to $26.3 million for the same period in 2018[122]. - The company issued$600.0 million aggregate principal amount of 3.250% senior unsecured notes due June 15, 2026, with interest payable semi-annually[121]. - There were $5.1 million of letters of credit outstanding as of September 30, 2019, with up to$50.0 million of the facility available for such issuances[120]. - There have been no significant changes to market risk since December 31, 2018[127]. Strategic Initiatives - The company plans to continue investing in growth while improving operational efficiencies[91]. - Connected Fitness revenue increased by $7,186 thousand, or 22.3$39,346 thousand for the three months ended September 30, 2019, driven by new subscription revenue and a one-time development fee[108]. - Connected Fitness revenue for the nine months ended September 30, 2019, increased by $11,300 thousand, or 12.5$101,385 thousand, primarily due to new subscription revenue[106].