B Corrected Transcript
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`22-Oct-2015
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`Under Armour, Inc. (um
`
`Q3 2015 Earnings Call
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`FACTSH':callstreet
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`Under Armour, Inc. (UA)
`Q3 2015 Earnings Call
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`_
`
`H Corrected Transcript
`22-Oct-2015
`
`CORPORATE PARTICIPANTS
`
`Thomas D. Shaw
`Director—InI/estor Relations
`
`Kevin A. Plank
`Chairman 6’. Chief Executive Officer
`
`Bradley James Dickerson
`Chief Operating Officer ti Chief Financial Officer
`
`OTHER PARTICIPANTS
`
`Robert F. Ohmes
`Bank of America Merrill Lynch
`
`Camilo R. Lyon
`Canaccord Genuity, me.
`
`Michael Binetti
`UBS Securities LLC
`
`Matthew Robert Boss
`JPMorgan Securities LLC
`
`Omar Saad
`Evemore IS!
`
`MANAGEMENT DISCUSSION SECTION
`
`Operator: Good day, ladies and gentlemen, and welcome to the Under Armour Inc. Third 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,
`today's conference call is being recorded.
`
`I would now like to turn the conference over to Mr. Tom Shaw, Director of Investor Relations. Please go ahead, sir.
`
`Thomas D. Shaw
`Director-investor Relations
`
`Great. Thanks and good morning to everyone joining us for today's third 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 Factors 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.
`
`In addition, as required by Regulation G, we need to make sure you are aware that during the call we will
`reference certain non-GAAP financial information, specifically currency-neutral net revenue growth. We provide a
`reconciliation of this non-GAAP financial information in our earnings release, a copy of which is available on our
`website at uabiz.c0m.
`
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`Under Armour, Inc. (UA)
`Q3 2015 Earnings Call
`
`H Corrected Transcript
`22-Oct-2015
`
`Joining us on today's call will be Kevin Plank, Chairman and CEO; followed by Brad Dickerson, our Chief
`Operating Officer and CFO, who will discuss the company's financial performance for the third quarter, provide
`an update to our 2015 outlook and introduce our preliminary 2016 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.
`
`Kevin A. Plank
`Chairman & Chief Executive Officer
`
`Thank you, Tom, and good morning, everyone. In three weeks, Under Armour will be celebrating our 10-year
`anniversary as a public company. Back in 2005, we were a $281 million company. Compression apparel made up
`two-thirds of our business, the phrase "Connected Fitness" had not yet been coined, the day when we would
`feature a ballerina in a commercial seemed unlikely, and Jordan Spieth had only just begun his journey to
`greatness by taking golf lessons at Brook Hollow Golf Club in Dallas at the tender age of 12, from pro Cameron
`McCormick.
`
`What I knew back then and still believe today is that anything is possible because of the ever-evolving power of
`sports. In just the last few months, I've seen firsthand the value to advertisers who understand that sports is the
`only thing left that viewers insist on watching live. Like the emotion of 80,000 fans filling 'I‘wickenham Stadium,
`including Prince William, Duke of Cambridge, and His Royal Highness, Prince Harry of Wales, on a fall Saturday
`in London to watch England take on Wales in the Rugby World Cup while 4,000 miles away another 80,000 were
`watching Notre Dame football in South Bend. More than 10,000 fans lining up in Manila to get a glimpse of the
`NBA's most—valuable player, Stephen Curry. The power of sports and its ability to transcend generations,
`technologies, and trends is what makes other industries envious of the business that we are in.
`
`The power of sports is the engine that has fueled our growth from day one, and the reason for our confidence in
`the future. It is the foundation behind our doing business in just four countries in 2005, to now more than 60
`countries today. Growing our retail footprint from a single UA website and four domestic Factory House outlet
`stores in 2005 to now 24 global e-commerce sites and more than 300 UA-owned retail destinations and partner
`doors around the world; building our team from around 600 employees in 2005 to more than 11,000 today; going
`from not producing a single shoe in 2005 to approximately 30 million pairs in 2015, recording 22 consecutive
`quarters of 20-plus percent revenue growth and 24 straight quarters of 20-plus percent revenue growth in our
`largest category, apparel; achieving our first $1 billion revenue quarter. Saying confidently, we're going to double
`our revenues to $7.5 billion by 2018 and our stock price appreciating more than 280096 from our IPO price
`compared to roughly 60% for the S&P 500.
`
`It has been a great 10 years of public company and we learned a lot during this time. But our focus remains the
`same and that is unlocking the equity we have created to continue to build the world's most important sports and
`fitness brand. To do that we will continue to invest and we will do so in the prudent way that has driven our
`results over these past 10 years. At our Investor Day here in Baltimore last month, we spoke to the diversity of
`these investments. We are focused on three key areas where we are confident the return on our investment will be
`increasingly evident as our business continues to grow globally.
`
`The first area is our core business including sports marketing assets, brand marketing, supply chain and investing
`in inventory to help us meet the unparalleled demand for the Under Armour brand. The second area is our growth
`drivers like International where we grew the business 69% year—to-date and Footwear where we posted a third
`quarter growth rate of 61% and continue to invest in world-class talents. And finally, are the new opportunities
`
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`Under Armour, Inc. (um
`Q3 2015 Earnings Call
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`fl Corrected Transcript
`22-Oct-2015
`
`like local manufacturing, Sportswear and Connected Fitness that may not meaningfully impact our top line results
`in the short term but will bring a new dimension to our model and create new competencies within our
`organization in the years to come.
`
`Starting with our core business, we continue to find assets that are a fit with our brand. The most recent example
`being two weeks ago, we announced a new long-term partnership with the University of Wisconsin. It takes one
`trip to Madison, Wisconsin, on a football Saturday to understand the value of college assets in the marketing
`landscape where more than 80,000 people show up to cheer on the team wearing our brand where one's loyalty is
`literally worn on their sleeve.
`
`Take for example two historic rivals finding common ground through their outfitter and donning the same base
`layer t-shirt for a football game as our two partners, Notre Dame and the United States Naval Academy, did just
`two weeks ago in the name of respect for one another. We are not just clothing athletes, we are telling stories. We
`are tapping into the emotion that is tied to the power of sport and we are giving them an authentic way to display
`their passion.
`
`We also talked at our Investor Day about our ongoing work with SAP. Division here is a single user database that
`combines the traditional consumer purchasing habit information with Under Armour's additional insights gained
`through our Connected Fitness platform. This work can be categorized into two main areas: architecting the
`future to create a business platform that will scale our organization and sustain our global growth and developing
`the consumer insight engine that will use data to drive this business to $7.5 billion and beyond. Our increased
`insights into the consumer will empower us with better information to make better business decisions, to build
`better products while helping athletes make better choices in their own personal health and fitness, and
`ultimately, enriching their lives.
`
`The second big area of investment is in our growth drivers. They are the same five that we've talked about since
`our IPO: Men's Apparel, Women's Apparel, Footwear, International and Direct-to-Consumer. And our strategy,
`which also remains the same today, is simply to make Women's larger than Men's, to make Footwear larger than
`Apparel as a whole, then sell that product country-by-country around the globe. And where we don't find
`appropriate retail distribution, augment that with our own Direct-to-Consumer e-commerce and retail channels.
`And the one thing we will never forget to do and is written on the Whiteboards in my office is don't forget to sell
`shirts and shoes.
`
`So let's start talking about Footwear. The momentum that you see and read about around our Footwear business
`is a result of the investments we've made starting back even before our IPO. But as we often say around here, we
`are just getting started. To give some perspective, we will produce 30 million pairs of shoes this year, compared to
`our competition that produces around a half-a-billion pairs each year. This demonstrates the miles of runway in
`front of us for growth in this one category alone.
`
`We already have seen a return on our investments in Footwear through the 90%-plus sell-throughs for the Curry
`Signature Footwear line. We are incredibly excited for the Curry Two, which comes globally available at retail this
`Saturday and was first unveiled by Stephen Curry during the road show tour of Asia last month. To support this
`launch, Stephen and Jamie Foxx have teamed up once again in a new digital campaign titled Flash, which was
`created by award-winning agency Droga5 and is available now for viewing across all our social platforms.
`
`Additional returns have come from the SpeedForm platform, more than tripling in revenue year-to-date. Our
`Highlight Football Cleats earning the number one spot in the marketplace for the third straight year. And new
`breakthrough innovations like the Fat Tire shoe, which launched in May and continues to disrupt the market and
`earn high praise, including Gear of the Show at the 2015 Winter Outdoor Retailer Trade Show.
`
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`Under Armour, Inc. (UA)
`Q3 2015 Earnings Call
`
`H Corrected Transcript
`22-Oct-2015
`
`Looking ahead to 2016, we plan to leverage our relationship with Jordan Spieth, the recently crowned PGA Tour
`Player of the Year, by introducing our golf Footwear brand, much like we did with our basketball Footwear brand
`through NBA MVP Stephen Curry. You also will see a much deeper, concerted effort to put resources into
`Women's Footwear as we have brought in a depth of talent to help support this growing area of our business.
`
`As I said earlier, the third area of investment for us, to unlock the power of sports in new parts of our business,
`like Local Manufacturing, Sportswear and Connected Fitness. We unveiled our plans for Project Glory, our local-
`for-local manufacturing, at Investor Day. But let me refresh you on how this investment will change the game for
`us and for the world. State-of-the-art footwear and apparel manufacturing facilities haven't modernized like other
`industries. With end-to-end upwards of 150 people being needed to build a single product, like a shoe, we know
`there's a better way. And through our SpeedForm Footwear platform and the innovative manufacturing approach
`that we took there, we have been able to reduce the number of human touches up to 30%, and we believe there is
`plenty of runway left. So we see an opportunity to innovate the process, increasing our speed to market by
`introducing local-for-local manufacturing that will produce better product globally, product as great as our brand,
`in the most efficient way possible.
`
`In 2016, we'll open our physical space for Project Glory, which we will call our Lighthouse. The Lighthouse will be
`an advanced manufacturing innovation hub located right here in Baltimore. It will commercialize new enabling
`technologies and processes that will first be integrated into our existing supply chain by our current partners
`before ultimately being rolled out by those same partners in new facilities around the world, changing the
`dynamics of speed to market, pricing, costing and labor. Made in the U.S. for the U.S. market, made in Brazil for
`the Brazilian market, and so on. Being an innovative company means not only bringing innovation into everything
`we make but also into how we create better product more efficiently.
`
`Also at Investor Day, we revealed our plans for a new category for Under Armour, Sportswear. We will answer the
`call from our consumer for product that can be worn outside of the gym, court, pitch or field, delivering the same
`promise of functionality in form, fit and performance that they have come to expect from Under Armour. This
`category expands our vision of empowering all athletes on and off the sporting field. Our gateway to an engaged
`consumer, which will allow us to enter into new categories such as Sportswear, is Connected Fitness.
`
`As we move from changing the way athletes dress to changing the way they live, we are becoming part of the
`athletes life 24/7. From sleep and activity to fitness and nutrition, we are directly interacting with our consumer,
`turning their data into a call to action in support of our mission to make all athletes better. This type of insight we
`have come to rely on in other areas of our lives, such as our personal finances or the performances of our cars, is
`now finally available for our own health. I look forward to sharing with you more on how we will leverage this
`opportunity with some very exciting announcements to come at CES in early Januaxy 2016.
`
`We believe Connected Fitness will enrich the lives of our consumer and we also believe it will help inform us to
`make better decisions on behalf of our consumer. The information derived from our Connected Fitness platform
`delivers deep algorithmic capabilities that create a highly interactive relationship with our consumers, making it
`possible to engage with them in a more personal and relevant way as individuals.
`
`World-renowned advisor and best-selling author Ram Charan believes companies with these mathematical
`capabilities for personalization, companies he calls math houses, possess a huge advantage over companies that
`don't have these capabilities, even if they have been highly successful in the past. Companies that will experience
`difficulty keeping up with a math house are referred to as a legacy company. A legacy company still lives in the era
`of mass production and mass markets with a customer experience and delivered second- or third-hand. A math
`house uses data to shorten the distance between a brand and the consumer.
`
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`Under Armour, Inc. (UA)
`Q3 2015 Earnings Call
`
`B Corrected Transcript
`22-OCT-2015
`
`I
`
`Today the information we gain through the more than 150 million Connected Fitness registered users, including
`now, updated from Investor Day, 6.5 billion foods logged and over 1.5 billion workouts logged just year-to—date
`across our four platforms, combined with the global point of sale, e-commerce and transactional data from our
`partners has firmly secured our status as the math house of the health, fitness and nutrition industry.
`
`And we believe, as Ram has said, any organization that is not a math house now or is unable to become one soon is
`already a legacy company. The hidden benefit in entering these new spaces like Connected Fitness and Sportswear
`are the organizational competencies that we gain as we build up these businesses. We are a team that adapts well,
`whether it's moving from U.S. to Global, Apparel to Footwear, Men's to Women's or Wholesale to Direct-To-
`Consumer.
`
`The theme of my presentation at Investor Day was based around a piece of advice given to me by former Navy
`SEAL and Under Armour Director Admiral Eric Olson. His advice was simply that when the map differs from the
`terrain, I would always tell my soldiers to go with the terrain. Led by our world-class leadership team, we continue
`to demonstrate our deep expertise in going with the terrain, to evolve with the upwards and downwards trends we
`will inevitably see through any business cycle.
`
`Our 10 years now of both 30% top-line and equally 30% bottom-line growth established since our IPO and our
`healthy, strong Shirts and Shoes business gives us great confidence for the future, and our Connected Fitness
`math house, which will empower us to understand the consumer at a higher level to help shape our cultural
`approach to continue to innovate and tap into the power of sports for the next 10 years and beyond.
`
`We are just getting started. Brad?
`
`Bradley James Dickerson
`Chief Operating Omcer & Chieffinanciai Officer
`
`Thanks, Kevin. I'd now like to spend some time reviewing our third quarter results followed by our updated
`outlook for 2015 and our preliminary thoughts on 2016. Our net revenues for the third quarter of 2015 increased
`28% to $1.2 billion. On a currency-neutral basis, net revenues increased 31% for the period.
`
`Within our product categories we grew Apparel net revenues 23% to $866 million compared to $705 million in
`the prior—year's quarter. From a product perspective, our new Armour baselayer and expanded innovation
`platforms like Storm and Co1dGear Infrared were key stories during the third quarter while in sport categories we
`saw significant growth in Golf and Outdoor.
`
`Third quarter Footwear net revenues increased 61% to $196 million from $122 million in the prior-year. Our
`strengthened Footwear remains broad-based including our largest categories of Running and Basketball and
`extending to some of our newer categories such as Hiking and Global Football. Key products included our latest
`addition to the SpeedFor1n platform with the SpeedForm Fortis running shoe as well as additional Curry One
`basketball styles ahead of the Curry Two launch this weekend.
`
`Our Accessories net revenues during the third quarter increased 22% to $104 million from $85 million last year,
`primarily driven by strong consumer demand for our line of bags.
`
`Our global Direct-To-Consumer net revenues increased 28% for the quarter representing approximately 26% of
`net revenues. We continue to be encouraged by the success we are seeing with our 2015 Brand House openings.
`
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`Under Armour, Inc. (UA)
`Q3 2015 Earnings Call
`
`B Corrected Transcript
`22-Oct-2015
`
`From a global standpoint we ended the third quarter with 173 owned stores including 144 Factory House stores
`and 29 Brand House stores.
`
`In e-commerce we launched six new country websites during the quarter bringing our total to 24 global sites. We
`continue to utilize more targeted effective communication to our consumers and traffic remains strong benefiting
`from the remarkable 2015 success of our sports marketing assets. While very early in this evolution, we are also
`encouraged by some of our efforts to generate traffic to our e-commerce sites from our Connected Fitness
`community.
`
`Looking at our regions, North America net revenues increased 25% to $1.1 billion in the third quarter compared to
`$848 million in the prior-year's quarter. On a currency—neutral basis, North America net revenues increased 26%
`based primarily on the drivers Ijust highlighted. International net revenues increased 52% to $130 million in the
`third quarter and represented 11% of total net revenues. On a currency-neutral basis, international net revenues
`increased 68% for the period. In the EMEA region we remained focused on core markets with our largest two
`countries, the U.K. and Germany, contributing the strongest growth during the period. Our e-commerce strategy
`has also played a key role in broadening our reach and awareness in the region as we've launched nine new local
`sites year-to-date.
`
`In Asia—Pacific, the growth of our own DTC combined with partner store expansion continues to drive our
`business. The recent Stephen Curry tour and opening of our largest international Brand House in Shanghai have
`helped drive strong demand for our brand. And in Latin America, we continue to see balanced growth throughout
`the region following our market entry into many of these countries during 2014.
`
`Moving on to margins. Third-quarter gross margins contracted 80 basis points to 48.8%, compared to 49.6% in
`the prior-year's period. The following factors were the primary drivers during the quarter.
`
`First, the continued strength of the U.S. dollar negatively impacted gross margins by approximately 90 basis
`points versus the prior year. Second, sales mix negatively impacted gross margin by approximately 50 basis points
`in the third quarter versus the prior year, primarily driven by the continued strong performance of our Footwear
`business.
`
`Also, on our ongoing focus to better flow-of—practice service our business resulted in higher freight expenses,
`which negatively impacted gross margin by approximately 20 basis points in the quarter versus the prior year.
`Partially offsetting these margin pressures, we continue to see favorable product margins in both our North
`America and International businesses, which benefited gross margin by approximately 90 basis points in the third
`quarter.
`
`Selling, general and administrative expenses as a percentage of net revenues deleveraged 60 basis points to 34.6%
`in the third quarter of 2015, from 34% in the prior year's period. SG&A details for the third quarter are as follows.
`Marketing costs increased to 10.7% of net revenues for the quarter, from 10.6% in the prior year period, reflecting
`higher marketing associated with our Connected Fitness business and our most recent global marketing
`campaigns for training and global football. Other SG&A costs increased to 23.9% of net revenues for the quarter,
`from 23.4% in the prior year, driven primarily by our Connected Fitness business and investments in our global
`Brand House strategz.
`
`Operating income for the third quarter increased 17% to $171 million compared with $146 million in the prior year
`period. Interest and other expense for the third quarter increased to $7 million compared with $5 million in the
`prior year period, primarily reflecting increased interest expense associated with the financing of our Connected
`Fitness acquisitions.
`
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`Under Armour, Inc. (UA)
`Q3 2015 Earnings Call
`
`E Corrected Transcript
`22-Oct-2015
`
`Our third quarter tax rate of 38.8% was unfavorable to the 36.9% rate last year, primarily driven by non-
`deductible costs associated with our Connected Fitness acquisitions as well as increased losses in our newer Latin
`American businesses, partially driven by the strengthening of the U.S. dollar.
`
`Our third quarter net income increased 13% to $100 million, compared to $89 million in the prior year period,
`while our diluted earnings per share increased to $0.45 from $0.41 in the prior year's period. On the balance
`sheet, total cash and cash equivalents for the quarter decreased 36% to $159 million compared to $249 million at
`September 30, 2014. Inventory for the quarter increased 36% to $867 million compared to $637 million at
`September 30, 2014. Total debt increased to $905 million as compared to $192 million at September 30, 2014,
`primarily reflecting the financing of our Connected Fitness acquisitions.
`
`Looking at our cash flows, our investment and capital expenditures was $71 million for the third quarter
`compared to $26 million in the prior-year's period driven primarily by our investments in our global headquarters
`in Baltimore and our global retail strategy.
`
`Now moving on to our updated 2015 guidance. Based on current visibility, we expect 2015 net revenues of
`approximately $3.91 billion representing growth of 27% and 2015 operating income of approximately $408
`million representing growth of 15%. As we have highlighted in our last earnings call in July and during our recent
`Investor Day, we believe the decisions we make on where, when and how much we invest are a key driver of our
`success to date and it is our job to deliver both near and long—terrn value while simultaneously investing in our
`growth .
`
`In a year we have seen unprecedented success from our athletes on a global scale, we believe the investments we
`are making today will help fuel our growth for years to come. As Kevin mentioned earlier, we have abundant
`opportunities that we are investing in to drive our long-term top line growth. With so many areas that require
`investment we continue to be focused on driving operating income dollars and not necessarily operating margin.
`
`This is why we have now raised our 2015 net revenues guidance by a cumulative $150 million since January while
`at the same time maintaining the high end of our operating income target at $408 million. We are committed to a
`certain level of investment back into our business and we will continue to be opportunistic, if and when possible,
`during the fourth quarter.
`
`As a reminder, our operating income guidance continues to include a dilutive impact of the Connected Fitness
`acquisitions consisting of one-time transaction costs in the first quarter, operating losses from these business and
`noncash amortization charges of the intangible assets generated from the acquisitions. Below operating results we
`continue to expect the full year effective tax rate of approximately 41% compared to 39.2% in the prior-year
`primarily given the strengthening of the U.S. dollar which continues to negatively impact our international
`profitability.
`
`Now I'd like to add some additional color on several items pertaining to the fourth quarter. Starting with revenues,
`we believe we are well positioned to execute heading into the holidays as our investments in service are paying off
`in fresher, cleaner assortments across our distribution. As we expand our innovation stories like ColdGear
`Infrared and Storm across our sports categories, we also believe we are more diversified in our solutions for the
`athlete. Supported by the launch of Curry Two basketball shoes, we expect Footwear growth will continue to
`outpace the growth rate for our overall business during the fourth quarter.
`
`Now gross margin rate is now expected to decline approximately 100 basis points during the fourth quarter. Some
`of the same themes impacting our business the past few quarters will extend into the fourth quarter including
`
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`Under Al'|’T'|0U|',
`Q3 2015 Earnings Call
`
`lf'|C. (UA)
`
`H Corrected Transcript
`22-Oct-2015
`
`pressure from the continued strength of the U.S. dollar, higher freight costs and a higher mix of Footwear
`revenues. While higher than planned, the latter two factors are also key in our increased top line guidance for the
`year. In addition to these factors driven by the recent higher growth rates in our Footwear business, we are now
`planning higher excess Footwear liquidation sales as part of our normal inventory management process which will
`negatively impact gross margins in the fourth quarter. Partially offsetting these factors we anticipate that we will
`continue to see improvements in our product margins.
`
`In SG&A, we expect a lower rate of spend for the fourth quarter due to the timing of marketing spend while other
`SG&A is expected to grow approximately in line with our net revenues growth as we continue with our planned
`investments in areas just for our long—term growth including Connected Fitness, International and Footwear. Also
`as I mentioned earlier, we will remain opportunistic in investing incremental dollars during the fourth quarter in
`the event of more favorable unplanned net revenues or gross margin rate.
`
`Switching over to inventory. As we outlined at our Investor Day, over the next few quarters we are focused on
`delivering our products to our consumers more timely, specifically on key seasonal floor set dates. We anticipate
`this will result in elevated inventory growth rates over this period to flow product earlier.
`
`Finally on capital expenditures, based on our current visibility we are now planning capital expenditures in the
`range of $350 million to $360 million for 2015 including approximately $140 million allocated across three areas
`to support long-term growth with our new domestic distribution center, the expansion of our corporate
`headquarters in Baltimore and initial investments in our new and expanded SAP platform. In addition, we have
`accelerated investments in key areas to drive revenue growth including the rollout of our global retail strategy and
`new e—commerce sites.
`
`Before we turn it over to Q&A, I would also like to provide you with our preliminary outlook for 2016. Based on
`our current visibility we are planning 2016 net revenues to grow at approximately 25% and 2016 operating income
`to grow at approximately 23%. Both of these measures are in line with our long-term growth targets we
`established at our Investor Day last month.
`
`I'll provide further color on 2016 during our earnings call in January. With that let's turn it over to questions.
`Operator?
`
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`Patent Owner adidas AG - Exhibit 2037
`Page 9 of 22
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`

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`Under Armour, Inc. (um
`Q3 2015 Earnings Call
`
`_
`
`B Corrected Transcript
`22-Oct-2015
`
`QUESTION AND ANSWER SECTION
`
`Operator: Thank you. [Operator Instructions] And our first question comes from Robby Ohmes, of Bank of
`America, Menill Lynch. Your line is now open.
`
`Robert F. Ohmes
`Bank of America Merrill Lynch
`
`Good morning. Great qua.rter, guys.
`
`Kevin A. Plank
`Chairman & Chief Executive Officer
`
`Thanks, Robby.
`
`Robert F. Ohmes
`Bank of America Merrill Lynch
`
`Thanks. Kevin, actually, two questions. The first, can you talk a little bit more on the International side,
`specifically about China and was China a big contributor this quarter? And is it expected to be big this year? Or is
`it, maybe some help on the timing of when China could really ramp up as a market for you. And the second
`question, I know on your Investor Day and today again, you mentioned the Sportswear opportunity. Could you
`just give us a little more color on how Under Armour thinks about that huge opportunity in terms of partners and
`product categories? Or any insight you could give us.
`
`Kevin A. Plank
`Chairman & Chief Executive Officer
`
`Great. So first of all, internationally, we're really excited. We've crossed 11% of the total mix for the company,
`which is a big deal for us. It's been along time coming. And becoming global is something you can't just say it, you
`actually have to act on it. I think it was really 2006 we launched our first office in Europe. 2010, we opened our
`first Brand House with a 1,000-square-foot store in Shanghai. And it has been a lot of learnings and a lot of
`adjustment. It's not as easy as just opening stores. But it's into the product, it's into the localized fits and the
`localized merchandising, it's into the execution, the distribution, the manufacturing. So there are a lot of