Under Armour(UA) - 2021 Q1 - Quarterly Report

Revenue Performance - Net revenues decreased by 40.6% in Q2 2020 compared to the prior year period[103] - Wholesale revenue decreased by 57.7%, while direct-to-consumer revenue decreased by 13.0%[103] - Revenue from apparel, footwear, and accessories decreased by 42.4%, 34.8%, and 47.2% respectively[104] - Revenue in North America, Asia-Pacific, Latin America, and EMEA segments decreased by 44.9%, 20.0%, 71.9%, and 38.7% respectively[104] - Net revenues decreased by $484.1 million, or 40.6$707.6 million for the three months ended June 30, 2020, compared to $1,191.7 million for the same period in 2019[115] - Net revenues for the six months ended June 30, 2020 decreased by$758.6 million, or 31.7%, to $1,637.9 million from$2,396.5 million during the same period in 2019[118] - Net revenues in the EMEA segment decreased by $56.2 million, or 38.7$89.1 million for the three months ended June 30, 2020, from $145.3 million for the same period in 2019[125] - North America segment's net revenues decreased by$600.8 million to $1.1 billion for the six months ended June 30, 2020, a decline of 36.2$1.7 billion in 2019[129] - Asia-Pacific segment reported a decrease in net revenues of $79.4 million, totaling$219.0 million for the six months ended June 30, 2020, down 26.6% from $298.4 million in 2019[129] - Latin America segment's net revenues decreased by$24.7 million to $64.2 million for the six months ended June 30, 2020, reflecting a decline of 27.8$38.9 million for Q2 2020[104] - The company recorded $340.0 million of restructuring and related impairment charges for the six months ended June 30, 2020[106] - Total costs recorded in restructuring and related impairment charges amounted to$38.9 million for the three months ended June 30, 2020, and $340.0 million for the six months ended June 30, 2020[107] - The company recognized$83.8 million of long-lived asset impairment charges for the six months ended June 30, 2020, with $43.4 million recorded in North America and$25.5 million in Asia-Pacific[109] - Goodwill impairment charges of $51.6 million were recognized for the six months ended June 30, 2020, with$15.4 million in North America and $36.2 million in Latin America[110] - Loss from operations increased by$158.2 million to $169.7 million for the three months ended June 30, 2020, compared to a loss of$11.5 million for the same period in 2019[118] - Net income loss was $182.9 million for the three months ended June 30, 2020, compared to a loss of$17.3 million for the same period in 2019[116] - Total operating loss for the six months ended June 30, 2020, was $727.9 million, a significant increase of$751.6 million compared to an operating income of $23.8 million in the same period in 2019, reflecting a change of 3,161.2$328.7 million to $663.4 million for the six months ended June 30, 2020, compared to$334.7 million for the same period in 2019[132] Cost Management - Gross margin increased by 280 basis points[104] - Selling, general and administrative expenses decreased by 15.2%[104] - Selling, general and administrative expenses decreased by $85.9 million, or 15.2$479.9 million for the three months ended June 30, 2020[117] - Selling, general and administrative expenses decreased by $42.6 million, or 4.0$1,032.6 million for the six months ended June 30, 2020, from $1,075.3 million for the same period in 2019[121] - The company expects to achieve approximately$40 million to $60 million in pre-tax savings from the restructuring plan in 2020[105] Cash Flow and Financing - Cash used in operating activities increased by$422.1 million to $(309.4) million for the six months ended June 30, 2020, compared to$112.7 million for the same period in 2019[136] - Cash used in investing activities increased by $11.0 million to$89.1 million for the six months ended June 30, 2020, primarily due to the acquisition of Triple, a distributor in Southeast Asia[137] - Cash provided by financing activities increased by $825.4 million to$686.2 million for the six months ended June 30, 2020, primarily due to the issuance of Convertible Senior Notes[138] - The company borrowed $700 million under its revolving credit facility as a precautionary measure to increase cash position and preserve liquidity due to COVID-19[134] - The amended credit agreement provides revolving credit commitments of up to$1.1 billion, with $250 million outstanding as of June 30, 2020[139] - The company issued$500.0 million aggregate principal amount of 1.50% convertible senior notes due 2024, with net proceeds of $488.8 million[143] - The initial conversion rate for the Convertible Senior Notes is 101.8589 shares per$1,000 principal amount, equivalent to an initial conversion price of approximately $9.82 per share[143] Interest and Taxation - Interest expense, net increased by$5.3 million to $11.3 million for the three months ended June 30, 2020[118] - Interest expense for Q2 2020 was$11.3 million, up from $6.0 million in Q2 2019, representing an increase of 88.3$17.3 million, compared to $10.2 million in the same period of 2019, indicating a 69.6$32.9 million in cash on March 2, 2020, consolidating its results from that date[111] - The company recorded a ROU asset impairment of $290.8 million related to its New York City flagship store for the six months ended June 30, 2020[109] - The lease term for the New York City flagship store commenced on March 1, 2020, with an operating lease ROU asset and liability of$344.8 million recorded[107] Market and Risk Management - The company’s financial statements are prepared in accordance with U.S. GAAP, requiring estimates that could significantly differ from actual results[148] - No significant changes to critical accounting policies were reported during the first half of 2020[149] - There have been no significant changes to market risk exposure since December 31, 2019[151]