B Corrected Transcript
`
`30-Jan-2014
`
`Under Armour, Inc. (um
`Q4 2013 Earnings Cafl
`
`F/-\Cl'SET: cailstreet
`1-877-FACTSET www.caI|street.oom
`
`T013’ P391953 22
`Copyright © 2001-2014 Fac1SetCaHStreet, LLC
`
`Patent Owner adidas AG - Exhibit 2030
`Page 1 of 22
`
`

`
`Under Armour, ITIC.
`°4.?9J.3.@‘."9§..9a”
`
`(UA)
`
`B Corrected Transcript
`.39;e1-2914
`
`CORPORATE PARTICIPANTS
`
`Thomas D. Shaw
`DirectorinvestorRelations, Under Armour. inc.
`
`Kevin A. Plank
`Chainman & Chief Executive Officer, Under Armour, inc.
`
`Brad Dickerson
`ChiefFinanciaf Ofiicar, Under /lrrnour, inc.
`
`OTHER PARTICIPANTS
`
`Omar Saad
`Analyst, international Strategy 6. in izestmeni Group LLC
`
`Jim V. Duffy
`Analyst, Siifel, .'\Jicoians & Co, inc.
`
`Robert F. Ohmes
`Anaiysr; Mam‘?! Lynch, Pierce, Farmer & Sfiiilh, inc.
`
`Lindsay Drucker Mann
`Analyst. Goldman Sachs 3. Co.
`
`Camilo R. Lyon
`Analyst, Canaccord Genuiiy, inc.
`
`Eric B. Tracy
`Anaiysi, Janney Montgomery Scott LLC
`
`MANAGEMENT DISCUSSION SECTION
`
`Operator: Good day, ladies and gentlemen, and welcome to the Under Armour Incorporated Fourth Quarter
`Earnings Webcast and Conference Call. At this time all participants are in a listen-only mode. Later we will
`conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a
`reminder, this conference call is being recorded. I would now like to introduce your host for today's conference,
`Tom Shaw. You may begin.
`
`Thomas D. Shaw
`Direoronlnvestor Relations, Under Armour, inc.
`
`Thanks, and good morning to everyone joining us on today's fourth quarter conference call. During the course of
`this call we'll be making projections or other forward~looking statements regarding future events or the future
`financial performance of the company. We wish to caution that such statements are subject to risks and
`uncertainties that could cause actual events or results to differ materially. These risks and uncertainties are
`described in our press release and in the risk factor section of our filings with the SEC. The company assumes no
`obligation to update forward-looking statements to reflect events or circumstances after the date on which the
`statement is made or to reflect the occurrence of unanticipated events.
`
`Joining us on today's call will be Kevin Plank, Chairman and CEO; followed by Brad Dickerson, our Chief
`Financial Officer who will discuss the company's financial performance for the fourth quarter and full-year 2013
`followed by an update to our 2014 outlook. After the prepared remarks, Kevin and Brad will be available for a
`Q&A session that will end at approximately 9:30 a.m. Finally, a replay of this teleconference will be available at
`our website at approximately 11:00 a.m. Eastern Time today.
`
`And with that I'll turn it over to Kevin Plank.
`
`Facréiié-r:caiIi§{E$E{IIII
`1-B77-FACTSET www.ca|lsireet.com
`
`If
`
`Copyright © 2001-2014 Factset Callsireel. LLC
`
`Patent Owner adidas AG - Exhibit 2030
`Page 2 of 22
`
`

`
`Under Armour, Inc. (UA)
`9f*?0‘3.E?E“*'79$C..?" .......
`.
`
`-
`
`,,
`
`.
`
`,,
`
`_
`
`,
`
`E Corrected Transcript
`_ ..
`.
`339'Ja”'?01,4
`
`Kevin A. Plank
`Charnnarr 8. Chas! Executive Officer. Underrtnnour, inc.
`Thanks, Tom. And a good morning to everyone from the brand-new Under Armour office here in New York City
`thatjust opened earlier this month. It's great to have a presence here and lease space in Chelsea, and we're looking
`forward to the opening of our first store in SoHo later this spring.
`
`So Under Armour is a growth company and with growth comes change. We like to say that Under Armour is a
`different company every six months. So we thought we'd start today by listing a few game—changers that took place
`since we last spoke.
`
`First, despite starting the season unranked, Auburn University had two of the greatest comebacks in college
`football history on its way to playing in the BCS National Championship games. Then we announced partnerships
`to outfit two of the most prestigious collegiate sports programs in the United States, the University of Notrc Dame
`and the United States Naval Academy. As someone here characterized it, we now have both God and country
`covered. Thirdly, we signed agreements to outfit two leading soccer clubs, Colo—Colo in Chile and Cruz Azul in
`Mexico, as we lay the foundation for growth outside the United States in the world's biggest sport.
`
`Next we signed our first ballerina. I can safely say those are five words I didn't picture myself saying on an
`earnings call when I started the business in 1996. Misty Copeland of the American Ballet Theatre is a great
`illustration of how we will bring new dimensions to the Under Armour brand in 2014 as she helps us redefine
`what it means to be an athletic female. And finally, we made what we believe is compelling first acquisition,
`MapMyFitness, which firmly positions us at the forefront of the exploding connected fitness movement.
`
`So a quarter with major new developments across our categories, geographies and business units, but fortunately
`Q4 had a lot in common with the quarters that preceded it. It was our 15th consecutive quarter with net revenue
`growth of 20%-plus and our 17th consecutive quarter with apparel growth of 20%—plus. As we said on our last call,
`our core North American apparel business is strong and that gives us the fire-power to invest and grow in new
`geographies with new categories and new consumers.
`
`So I just want to spend a minute this morning talking about an outstanding Q4 that capped an exceptional 2013
`because it reinforces our strategy of investing in our growth drivers for the long term. I promised Brad I'd let him
`deliver most of the good news in the quarter, but I want to stress that the 35% top line growth we saw in Q4 was
`driven by strength across the board in all of our businesses. We certainly saw some benefit to our Fleece and
`ColdGear in the quarter from the weather, and Brad can talk to that in a bit, but the sales momentum was evident
`in both our wholesale and direct—to-consumer business with apparel growing 35%, footwear 24%, and accessories
`52%. That continued momentum in our North American apparel business is a great testament to our ability to
`develop large scale platforms around our relentless flow of innovations.
`
`For example, in the third quarter we introduced our latest apparel innovation, ColdGear Infrared, our industry-
`leading technology that provides warmth without
`the weight and enables us to exceed our consumers‘
`expectations around cold weather protection. With a strong launch in 2013 including solid holiday sales across
`men's and women's wearing pieces we will start to see even more meaningful volume for ColdGear Infrared in
`2014.
`
`Our ability to expand platforms is a critical piece of how we are driving growth. In year two, we'll bring the
`ColdGear Infrared into new categories, much as we did with both charged and storm cotton which last year in just
`year three topped $300 million in combined revenues. This category of charged and storm cotton did not even
`exist before 2011, just three years ago.
`
`1-877-FACTSET www.ca%|street.com
`
`3
`Copyright © 2001-2014 Factset Callslreet, LLC
`
`Patent Owner adidas AG - Exhibit 2030
`Page 3 of 22
`
`

`
`Under Armour, Inc. {UA)
`Q4 2013 Earningsgait __
`
`H Corrected Transcript
`30-Jan-2014_
`
`our New York store that opens this spring here in Sol-l
`women's.
`
`One of the reasons we are so bullish on our women's business is that there has been a quiet shift going on where
`women are increasingly wearing "athletic products" outside of the gym. We think the reality is this shift is more
`permanent than some may expect as our female consumer continues to embrace our technology innovation and
`increased focus on style. We are in a great position to continue to grow this business as we build a loyal base of
`athletes and are growing with her as she moves into new categories and end uses for Under Armour product.
`
`We had an extremely strong 2013 in youth, or as we refer to them, Next. Our youth business has exceeded all of
`our expectations and we continue to see momentum across not just apparel, but also footwear and accessories as
`well. For the year, youth doubled the growth rate we saw in our men's and women's apparel businesses. This
`broad-based strength gives us great confidence in our long-term future as we remain laser focused on maintaining
`the strong relationship with our consumer as he and she move into new sports and new wearing opportunities as
`they grow up.
`
`All in all, it was an exceptionally strong year for our apparel business in North America. We created a lot of
`excitement in the market with our Alter Ego and ColdGear Infrared innovations and have unprecedented
`momentum in our core apparel business as we enter 2014.
`
`pect from our apparel. And when the March issue of
`Runner's World Magazine hits next week, the SpeedForm Apollo will be recognized by their editors as Best Debut
`in a Spring Shoe Guide. The TV campaign starts February 22, but available on YouTube this afternoon and we're
`incredibly excited to bring the level of innovation we've already brought to cleated to the running community
`starting with the SpeedForm Apollo.
`
`That focus on exceeding our consumers’ expectations was part ofthe driving force behind our decision to purchase
`MapMyFitness in December. We have a very simple mission here at Under Armour and it's to make all athletes
`better. The amount of information now available to athletes to help them achieve that has never been greater and
`also never more complex.
`
`With our acquisition of MapMyFitness and the leadership of its founder, Robin Thurston, we are now in great
`position to design open, digital products for the athlete of tomorrow and provide solutions that will help people
`across the world lead healthier lifestyles. Because we think connected fitness is about more than a bracelet that
`enables you to tell your social media friends that you walked 1.2 miles today, it's about the opportunity to innovate
`technology in a seamless way that empowers the athlete to individually benefit from the wealth of information
`that is going to be available to them. It's about waking up and knowing that even though you're thinking of
`FAcrser§'E3”i'ié§}éé£
`4
`‘I-877-FACTSET www.calJstreet.com
`Copyright © 2001-2014 FactSet Callstreet, LLC
`
`Patent Owner adidas AG - Exhibit 2030
`Page 4 of 22
`
`

`
`H Corrected Transcript
`Under Armour, Inc. {UA)
`M 73O:lan-_2014
`Q4'20__1_3Earningswgallm
`running three miles this morning, your quality of sleep and other biometric measures suggest you'd get more
`benefit from running four.
`
`We know that this world is still in a very early stage of development and we believe the addition of Robin and his
`team of more than 60-plus engineers and developers meaningfully accelerates our profile in the digital space. We
`have been learning every single day since the acquisition in December. I don't want to get into the operational
`details at this point, but I can tell you the integration between our team in Baltimore and the MapMyFitness team
`in Austin has been rapid and productive and each day brings new ideas and possibilities to what connected fitness
`will mean to Under Armour.
`
`So let me give you some scope on the size of the opportunity. MapMyFitness has built a community of over 2:
`million registered users, and during just the first week of January we added more than 400,000 new users from
`January 1 to January 7. Equally important is that this acquisition immediately brings us the talent we need to
`leapfrog into a leadership position in the world of connected fitness. We're incredibly excited to join forces with
`Robin and his team and believe we will drive the future performance innovation for the world's athletes.
`
`So what to watch for from Under Armour in 2014, because, like I said at the top, we are a different company every
`six months? In the short term, you'll continue to find us on the world stage of sport. For example, in golf this past
`weekend at the Farmers Insurance Open in Torrey Pines, there were three different leaders at the end of round
`two, three, and four and each of them, Jordan Spieth, Gary Woodland and Scott Stallings were outfitting in Under
`Armour.
`
`And next week when the Olympics open in Sochi we'll unveil the culmination of our partnership with Lockheed
`Martin, the world's fastest speed skating suit that will be worn by Shani Davis and other members of the US.
`speed skating team. We will also be on stage outfitting U.S. bobsled and the Canadian snowboard team amongst
`others.
`
`In the longer term, our goal is to continue doing what we do; investing to ensure we are building the foundation
`for long—term growth while delivering results now. MapMyFitness, Notre Dame and Navy, and partnerships with
`companies like Lockheed Martin are all part of that plan.
`
`We are well on track to meet the goals we set out at Investor Day in June 2013. But our ambition extends well
`beyond $4 billion in revenue by 2016. And our ambition is fueled by investments; some large and immediately
`relevant like Notre Dame, and others that are small now but could potentially ignite our business down the road,
`because for every Notre Dame or Navy deal there's a much smaller investment we're making somewhere else in
`the business. It may be a logistics tool that you'll never hear about, a retail store in Mexico or an up-and-coming
`athlete who may one day become the next Stephen Curry or Tom Brady.
`
`When we invest well, we win. We believe our 2013 results are a great reflection of sound investments and solid
`execution. We are a growth company, one that's focused on our future but delivering results right now.
`
`With that I'll turn it over to Brad. Brad?
`
`Brad Dickerson
`Chief Frnancfal Officer, Unciemrmour. Inc.
`
`Thanks, Kevin. I would now like to spend some time discussing our fourth quarter and full-year 2013 financial
`results followed by our updated outlook for 2014.
`
`1-87T—FACTSET wvvw.cai|slreet.com
`
`. . , .
`
`. __. ..
`
`5
`Copyright © 2001-2014 Faclset Callstreet, LLC
`
`Patent Owner adidas AG - Exhibit 2030
`Page 5 of 22
`
`

`
`Under Armour, Inc. (um
`Q4 2013 Earnings Call
`
`E Corrected Transcript
`_3EJ:3.”'?91i
`
`Our net revenues for the fourth quarter of 2013 increased 35% to $683 million, representing our fastest growth
`rate in the past nine quarters. For the full year net revenues increased 27% to $2.33 billion, which compares to our
`most recent full-year guidance of $2.26 billion.
`
`Apparel grew 35% to $546 million during the quarter from $405 million in the prior year, representing the 17th
`straight quarter of at least 20% growth of our largest product category. As a reminder, we grew apparel 25% in the
`fourth quarter of 2012 despite facing the headwinds of warm seasonal weather and poor service levels in key areas
`like Fleece. This year we came into the quarter with a compelling line-up of products, including expanded Fleece
`and UA Tech offering as weli as our new ColdGear Infrared technology. This new product positioning combined
`with the tailwinds of cold weather and our ability to better service the business with higher fill rates allowed us to
`more fully capitalize on the strong demand from our consumers.
`
`From a product category standpoint, training continues to drive much of our overall apparel dollar growth. We
`also saw strong growth during the period in our running, hunting, and mountain categories, in our Women's
`Studio line and across our youth business.
`
`Our direct-to-consumer net revenues increased 36% for the quarter, representing approximately 39% of net
`revenues, which was the same mix as the prior-year period. In our retail business we opened five new Factory
`House doors during the fourth quarter, increasing our North American Factory House store base to 117, up 15%
`from 102 locations at the end of last year's fourth quarter. In addition, we expanded nine of our existing locations
`during the year, in part to offer a broader product assortment in areas such as footwear and women's.
`
`Looking at our full—price Brand House stores, we opened our second location at Tyson's Corner near Washington,
`DC. in November. In e-commerce we believe many of the same factors that contributed to our strong apparel
`growth also drove better—than—planned results in this channel.
`
`Fourth quarter footwear net revenues increased 24% to $55 million from $45 million in the prior year,
`representing approximately 8% of net revenues for the period. Results for the quarter include the timing of
`footwear liquidation, which were higher than planned. Given this action we believe we are entering 2014 better
`positioned in the market for our new product offering this spring.
`
`Our accessories net revenue during the fourth quarter increased 52% to $65 million from $43 million in the prior-
`year period, primarily driven by headwear and gloves. International net revenues increased 9% to $37 million in
`the fourth quarter and represented 5% of total net revenues.
`
`Moving on to margin, fourth quarter gross margins expanded approximately 100 basis points to 51.3% compared
`to 50.3% in the prior-year's quarter. We previously guided fourth quarter gross margin to decline year—over—year.
`On the positive side we expected lower airfreight and a lower mix of excess at our Factory House channel. We
`expected these to be more than offset by the negative impacts of re-sourcing fleece, higher Canadian duties, and
`currency impacts on our Japanese business. As the quarter concluded, we experienced minimal impact from both
`re-sourcing and Canadian duties. In addition, we drove improved profitability through higher service levels and
`better-than-planned performance across our direct-to-consumer channels.
`
`Looking at the year-over—year gross margin picture, the following factors contributed to the improvement during
`the quarter. First, our sales mix was favorable, partially offset by the higher footwear liquidations in the quarter.
`These factors contributed to approximately 90 basis points of gross margin improvement. Second, the favorable
`airfreight expenses benefited gross margins by approximately 60 basis points. Partially offsetting these gains, the
`impact of foreign currency exchange rates negatively impacted gross margins by approximately 20 basis points.
`
`calrstgget
`1-877'-FACTSET www.ca||streat.com
`
`if
`"
`'
`Copyright© 2001-2014 Factset Callstreet, LLC
`
`Patent Owner adidas AG - Exhibit 2030
`Page 6 of 22
`
`

`
`Under Armour, inc. (um
`Q4 ?°‘? Ea’“iU9=‘ C..?.F_'
`.
`
`R Corrected Transcript
`30-Jan-2014
`
`Selling, general and administrative expenses as a percentage of net revenue deleveraged 270 basis points to 36.9%
`in the fourth quarter of 2013 from 34.2% in the prior-year's period. With our strong results in the quarter, we had
`higher-than-planned incentive compensation expenses. This includes approximately $11 million in equity
`incentive compensation, which we had forecasted in 2014. These higher incentive compensation expenses were a
`significant driver of the overall SG&A deleverage for the quarter.
`
`Further details around our four SG&A buckets are as follows: first, marketing costs decreased to 8.9% of net
`revenues for the quarter from 9.7% in the prior—year period, primarily driven by overall expense leverage given
`our strong top line performance. Second, selling cost increased to 11.6% of net revenues for the quarter from
`10.7% in the prior-year period, primarily driven by the growth in our Direct-To-Consumer business. Third,
`product innovation and supply chain costs increased to 8.9% of net revenues for the quarter from 7.6% in the
`prior~year period, primarily driven by higher incentive compensation expenses and innovation investments.
`Finally, corporate services decreased to 7.5% of net revenues for the quarter from 6.2% in the prior—year period,
`primarily driven by higher incentive compensation expenses and approximately $2.5 million in closing costs for
`the MapMyFitness acquisition.
`
`Operating income for the fourth quarter increased 21% to $98 million compared with $82 million in the prior-
`year period. For the full year operating income increased 27% to $265 million compared to our most recent full-
`year guidance of $260 miilion. Operating margin contracted 170 basis points during the quarter to 14.4%, while
`holding flat for the full year at 11.4%.
`
`Our fourth quarter tax rate of 34% was favorable to the 37.1% rate last year, primarily driven by the tightening of
`state tax credits which were received in the fourth quarter of 2013 compared to the first quarter of 2012. Our full-
`year effective tax rate of 37.8% was higher than the 36.7% effective rate for 2012 primarily due to increased
`international investments driving reduced profitability overseas.
`
`Our net income in the fourth quarter increased 28% to $64 million compared with $50 million in the prior—year
`period. Fourth quarter diluted earnings per share increased 27% to $0.59 compared to $0.47 last year. Full year
`diluted earnings per share increased 24% to $1.50 compared to $1.21 in 2012.
`
`Now moving over to the balance sheet, total cash and cash equivalents at yearend increased 2% to $347 million
`compared with $342 million at December 31, 2012. We funded the $150 million purchase of MapMyFitness in the
`fourth quarter with $50 million of cash, a $100 million draw from our $300 million revolving credit facility. The
`inventory at year end increased 47% to $469 million compared to $319 million at December 31, 2012 reflecting
`the same factors we outlined during our third quarter conference call related to comparisons to our prior-year
`supply chain delivery challenges.
`
`Our investment in capital expenditures was approximately $36 million for the fourth quarter and approximately
`$92 million for 2013. We are currently planning 2014 capital expenditures in the range of $140 million to $150
`million, primarily driven by incremental
`investment to support our Direct-To—C0nsumer and International
`businesses iph] that we've invested in (21:29) to further develop and expand our global office footprint.
`
`Now moving on to our updated outlook for 2014, based on current visibility, we expect 2014 net revenues of $2.84
`billion to $2.87 billion, representing growth of 22% to 23%, and 2014 operating income of $326 million to $329
`million, representing growth of 23% to 24%. This expected growth is in line with our long-term growth rates laid
`out at our Investor Day last June. Below operating results we anticipate higher interest expense in 2014 given the
`financing of MapMyFitness acquisition, a full-year effective tax rate of approximately 39%, and fully diluted
`weighted average shares outstanding in the range of 109 million to 110 million.
`
`1—B7T—FACTSET www.caI|street.com
`
`.
`
`.
`
`.
`
`.
`
`.
`
`. ,, . - .
`
`.
`
`.
`
`.
`
`.
`
`7
`._
`. _.
`Copyright © 2001-2014 FactSel Callstreet, LLC
`
`Patent Owner adidas AG - Exhibit 2030
`Page 7 of 22
`
`

`
`Under Armour, Inc. rum
`Earnings Qall
`
`H Corrected Transcript
`30-Jan-2m/_J/.
`
`Given these full year parameters, we'd like to provide a few more details on how we currently see the quarterly
`cadence playing out. First with net revenues; we currently anticipate the growth rate for the first half of the year to
`be above our expected full-year growth rate. Factors driving this include our expected ability to continue servicing
`our business with higher fill rates as well as accelerated footwear growth. For the second half of the year we will
`start to comp the improved service levels experienced in the second half of 2013. In addition, over the next few
`months we will gain more visibility on fall/winter orders and our ability to execute on the planned International
`growth in the back half of the year. We will provide updates on our progress on future calls.
`
`Next on gross margins where we expect modest gains throughout each quarter in 2014, inclusive of lapping one-
`time factors in 2013 such as the third quarter import duty impact. While we've seen numerous puts and takes in
`individual quarters, four factors are expected to be the common themes during the year. First, we expect ongoing
`supply chain efficiencies will be the primary driver to higher gross margin. Second, we expect minimum margin
`impact from our Direct—To—Consumer business given the level of factory house square footage growth year~over—
`year as well as a similar mix of made—for product in our factory house stores year-over-year. Third, our sales mix
`will be adversely impacted by our expected international growth, which includes a mix of lower-margin distributor
`businesses. Finally, footwear growth is expected to have a minimal impact toconsolidated gross margins as the
`expected sales mix impact is now planned to be offset by improved footwear product margins.
`
`Shifting to SGSLA, as we mentioned we recognized approximately $11 million in incentive compensation expense
`during the fourth quarter of 2013 that was originally forecasted in 2014. As a result, we are reallocating
`investments in three primary areas for 2014: marketing, international and MapMyFitness. In marketing we expect
`to deleverage expenditures to approximately 11% of net revenues for the full year, given some of the initiatives
`Kevin laid out before. From a timing perspective, we expect over 100 basis points of deleverage in the first quarter,
`primarily given our overall plans around activating our first brand holiday of the year. The marketing expense rate
`is planned to remain elevated in the second quarter before normalizing from a rate perspective during the second
`half of the year.
`
`International remains an important opportunity and priority and we will continue to make the right level of
`investments to help realize our global potential, especially in Latin American markets that we are entering in
`2014. MapMyFitness will also be a tiered investment as we look to build and further engage this community. As
`we have been emphasizing, our bottom line focus will remain on driving operating income dollar growth balanced
`with making the right investments to drive our long-term global success.
`
`Finally, some additional color on our inventory positioning; we expect the inventory growth rate to remain above
`the net revenues growth rate at the end of first quarter given some of the same factors we outlined during this past
`quarter and including our positioning for elevated first half growth expectations. We do expect the spread between
`the inventory growth rate and the net revenues growth rate to narrow somewhat during the first quarter before
`returning to more inline levels during the duration of the year. We remain encouraged with some of the early
`traction we are seeing from the recent investments across our supply chain organization.
`
`In conclusion, we had a great finish to 2014 with strong signs of continued brand momentum, improving supply
`chain efforts to better service this demand, and improved foundations to support long-term global success. These
`factors gives us the confidence in raising our 2014 top line outlook by over $100 million from our preliminary
`outlook last quarter, while also raising our 2014 operating income outlook by over $10 million.
`
`We'd now like to open the call to your questions. We ask that you limit your questions to two per person, so we can
`get to as many of you as possible. Operator?
`
`1-877-FACTSET www,ca||street.com
`
`4'
`
`if 4'
`Copyright©2001-2014 FactSetCat|Street, LLC
`
`Patent Owner adidas AG - Exhibit 2030
`Page 8 of 22
`
`

`
`Under Armour, lflC. {UA)
`Q429l3E§'”'”95C?.ll.
`
`.,
`
`....
`
`-
`
`H Corrected Transcript
`:l0'J,?".'?m‘l
`
`.
`
`QUESTION AND ANSWER SECTION
`
`Operator: Thank you. [Operator Instructions] Our first question comes from the line of Omar Saad of [S1 Group.
`Your line is now open.
`
`Omar Saad
`Arrafyse‘.
`.1r'iJ&"ri&i'.’Or'3af Strategy & Frrr«'esrme.r.t Group LLC
`
`Thanks, guys. Greatjob this quarter.
`
`Kevin A. Pfank
`Criairnzara all Chief Execufr-we Officer. Unrier.rJrrnour. inc.
`
`Hi, Omar.
`
`Omar Saad
`r‘.rrai'y:~:t. fr,rerr7ar.for.>a,' Strategy 6‘.
`
`ir.w'°s.‘rrr;~‘n€ Groirn LLC
`
`Good morning. Two questions. Firstly real quick, do you guys have a sense for how much the cold weather
`contributed to that really big sales acceleration in the fourth quarter? And then I have a follow-up on DTC.
`
`Brad Dickerson
`(Inlet Fmancrai Officer. Urarfer Armour, inc.
`
`Sure, Omar. On the cold weather question, we had talked last year, last year we had a warm winter in the fourth
`quarter and we still grew 25%; and we've been talking about that the impact of weather is less and less in our
`organization as our product line evolves. So, five, six, seven years ago cold weather would have had a significant
`impact, either upside or downside, in our business, but our product has evolved so much and it's much more
`diversified now, especially with our Fleece offerings, that cold weather has a little bit less of an impact than it did
`six, seven years ago.
`
`So just as a warm winter in Q4 last year didn't have a huge downside to us, because we grew 25%, it didn't have a
`huge upside to us in our 35% either. That being the case, though, we definitely realize that there's some tailwind of
`weather and it makes our results a little bit better across our channels, wholesale and DTC, so there was definitely
`an upside. Quantifying the upside in the fourth quarter is a little tough to do when you're growing 35%, but you
`could easily say maybe a couple percentage points of that was due to cold weather.
`
`Omar Saad
`Analyst, international Strategy & investment Group Li. C
`
`r"'“‘;g
`l\..‘é3.
`
`Thanks, Brad. That's really helpful. And then, Kevin, DTC looks like it approached 40% of the business in the
`fourth quarter. That's pretty amazing from where you were five, six years ago. Can you talk about what you're
`learning maybe from the Tyson's Corner store or the Baltimore store? You're in New York. You're coming into the
`New York downtown. Is the product different than what you're offering at wholesale? Is it more premium? And
`the way you're flowing product to generate more newness and innovation, can you maybe talk about some of the
`strategies around the new full-price stores?
`
`Kevin A. Plank
`Cirarrman ti Cirie?Execurrve Officer. Underiilrnzow, inc.
`
`1-877-FACTSET www.cai|sireei.corn
`
`Copyright © 2001-2014 Faciset Callsireet, LLC
`
`Patent Owner adidas AG - Exhibit 2030
`Page 9 of 22
`
`

`
`Under Armour, Inc. {UA)
`94 2913 Ea'""1.9§.9‘?".
`
`R Corrected Transcript
`3°.‘.'.".l'.'.?.'_'.l.‘.'..
`
`Yes. Well, we're celebrating our one—year anniversary of opening the Brand House in Baltimore and we opened it
`in a place that wasn't exactly a retail destination. And just to see what we could learn. I think the learnings over
`the last 12 months have told us a few things; number one, that we've got a premium brand; that there's a position
`that the consumer is looking for; there's a product that we offer in the brand that maybe they haven't found on an
`easier basis at retail.
`I think the number one goal that we had with this was making it a more compelling
`experience for our customer base and having our wholesale distribution as well recognized; that we could be much
`bigger and broader than maybe they positioned us and sort of putting us in a bit of a box in some of the retail that
`we've had before.
`
`Great example of that I think is the way we've really been able to obviously expand men's, but Women's is
`probably the biggest thing, the openness of color. Things like our StudioLux line is where customers are coming
`from all over the country and frankly all over the world and seeing why this is a full—line brand versus maybe just
`seeing a few items, which is I think we've gotten pinned into that in the past. So Tyson's is something where we
`then said it is just something in our backyard. We expanded at Tyson's. We're seeing similar results there. We're
`outpacing the way that we pro forma the stores, and so it's doing incredibly well.
`
`And we're going to learn a lot when we come up to New York City, and I think it'll be refreshing because there's a
`lot of people in this market that I don't believe have gotten a great Under Armour experience walking into some of
`our stores here. So I say that as a challenge to our wholesale partners and also as an opportunity for ourselves.
`And so having retail gives us the ability to be strategic and be thoughtful and I think we're learning.
`
`There's no plan in place right now to say we're looking to roll out 25 or 50 or 100 units. I think we're going to take
`them one store at a time. We're going to look for key markets where we can be strategic, places that we want to
`enter, and we're going to continue to learn. So I think we have the ability to change the model as to how people
`have done it in the past with, A, not being just a retailer, not just being a Wholesaler, but as a great balance in the
`middle and ideally we're inspiring our wholesale distribution to take on more co