Amer Sports(AS) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Amer Sports achieved 23% sales growth in Q4 and 18% revenue growth for the full year, reaching $5.2 billion, with adjusted operating margin expanding by 130 basis points to 11.1$90 million, compared to an adjusted net loss of $31 million in the prior year, with adjusted diluted earnings per share of$0.17 compared to a loss per share of $0.08 last year [49][50] - Adjusted gross margin increased by 370 basis points to 56.4$745 million, led by Arc'teryx, with a 44% DTC expansion and a 29% omni-comp [50][52] - Outdoor Performance segment revenues grew 13% to 594 million, primarily driven by strong performance in Salomon footwear and apparel [53][57] - Ball & Racquet segment revenue increased 22% to 296 million, driven by strong trends in racquet sports and softgoods [58][61] Market Data and Key Metrics Changes - Greater China and APAC regions delivered strong growth, with Greater China increasing by 54% and APAC by 52% in Q4 [42][43] - The Americas accelerated to 15% growth, while EMEA grew by 8% in Q4 [42][43] - Direct-to-consumer (DTC) sales grew by 46%, led by Arc'teryx and Salomon footwear [41] Company Strategy and Development Direction - The company is focused on expanding its unique portfolio of premium outdoor and sports brands, with significant growth potential in Arc'teryx and Salomon [9][10] - Arc'teryx is pursuing a direct-to-consumer model and plans to open 25 to 30 new stores in 2025, with a strong emphasis on footwear and women's segments [15][20][23] - The company aims to leverage its strong brand positions in the premium sports and outdoor market, particularly in China, where it sees significant growth opportunities [44][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning within the global sports and outdoor space, anticipating continued strong growth in 2025 [9][38] - The company expects reported group revenue growth between 13% and 15% for 2025, with a focus on maintaining strong margins despite potential FX headwinds [65][66] - Management highlighted the importance of inventory discipline and the potential impact of new tariffs on sourcing, particularly for the Ball & Racquet segment [63][64] Other Important Information - The company paid down its entire $1.2 billion term loans before year-end, ending the quarter with$600 million of net debt [61][62] - The company plans to invest approximately $300 million in CapEx for new store expansion and logistics improvements in 2025 [69] Q&A Session Summary Question: Update on long-term store targets for Arc'teryx - Management indicated plans for 25 to 30 new stores in 2025, with potential for around 200 stores in North America and 150 to 200 in Mainland China [74][75] Question: Drivers of comp acceleration at Arc'teryx - Management noted broad-based strength in traffic and conversion, with strong e-commerce results and a clean inventory position heading into 2025 [80][83] Question: Investments in SG&A for sustaining revenue growth - Management emphasized investments in new store build-out, consumer connection, and infrastructure improvements, expecting SG&A to remain relatively flat in 2025 [89][90] Question: Growth expectations for footwear and women's segments - Management highlighted significant growth in footwear and women's segments, with plans to expand distribution and improve in-stocks for footwear in 2025 [95][99] Question: Regional performance expectations for 2025 - Management expects continued positive growth across all regions, with a solid plan to enhance softgoods and footwear penetration in EMEA [106][107] Question: Opportunities to reduce finance costs and tax rate - Management indicated a focus on further debt pay-down and driving the effective tax rate towards the statutory rate of close to 27% [111][112] Question: Gross margin expansion drivers - Management attributed gross margin expansion primarily to the growth of Arc'teryx and a favorable mix shift towards higher-margin products [125][127]