Under Armour Inc.
`2Q15 Preview: Spieth, Vonn, and Curry, Oh My. UA's brand is
`stronger than ever.
`
`Our Call
`UA is our #1 pick for long-term growth investors. UA is poised for revenue CAGR
`of at least ~22% over the next 5 years ($10B by 2020). The core men's domestic
`wholesale business remains strong, but growth will be driven by women's &
`kids' apparel, footwear, DTC and international expansion. Necessary investments
`are and will be made to support the growth. The acquisitions of new digital
`platforms and ongoing innovation will continue to enhance the Under Armour
`brand's relationship with current athletes and soon-to-be athletes. FY15 guidance
`will continue to increase as the year progresses.
`We expect an in-line or better 2Q: We are forecasting 2Q15 EPS of $0.05, in line
`with consensus estimate. We expect revenue growth of 26% ($767M), in line with
`consensus. We expect GM to decrease 50bps, as the negative effect of the strong
`dollar and air freight expenses should offset merchandise margin improvements.
`For FY15, the company expects GM to be flat Y/Y. We expect SG&A to increase
`31% and delever by 200bps, largely due to the dilution from the acquisitions of
`Endomondo and MyFitnessPal. We believe upside to our revenue estimates may
`come from the growth of footwear, with the recent success of Steph Curry, DTC,
`and international businesses. UA reports on July 23 BMO.
`
`We remain comfortable with the growth trajectory of apparel: According
`to SportscanInfo (SSI), UA's 2Q15 apparel sales increased 32%. Historically,
`company reported sales gains have been higher than SSI, as SSI does not account
`for DTC and international sales, which are higher growth. However, 1Q15 was the
`exception, as reported results were hampered by he negative effect of FX and port
`slowdowns (see chart on page 3). Hence, we believe that our 2Q15 forecast for a
`22% increase in apparel sales will likely prove conservative. Based on our checks,
`we have seen that that UA is continuing to expand its apparel categories into areas
`such as casual and licensed Major League Baseball. Apparel sales in 2Q continue
`to be driven by core base layer products. Kids sales continue to outperform, up
`54%, while Men's and Women's increased 30% and 23%, respectively.
`
`Apparel is gaining market share pointing to a sustaining healthy business:
`According to SSI, UA apparel sales in 2Q15 were $516M versus 391M in 2Q14,
`for an increase of 32%, and ASP decline of 2%. For the industry as a whole in
`2Q15, apparel sales increased 4.3% with flat ASPs. UA apparel sales in 1Q15 were
`$514M versus $401M in 1Q14, for an increase of 28% and ASP decline of 4%.
`The ASP decrease was likely the result of mix as kid's sales increased more than
`adult sales. For the industry as a whole in 1Q15, apparel sales increased 2.7% with
`ASPs up 3%. UA's total market share in apparel, within the National Accounts
`channel (where UA is predominantly distributed) increased 483bps to 26.5%. UA
`took share from Adidas and Brand Jordan.
`
`Company Report
`July 14, 2015
`
`Buy
`UA
`Price: Last $88.68
`Price Target $95.00
`
`Footwear & Apparel
`
`Sam Poser
`(212) 763-8226
`sposer@sterneageecrt.com
`Ben Shamsian
`(212) 338-4721
`bshamsian@sterneageecrt.com
`Elizabeth Bean
`(646) 376-5346
`ebean@sterneageecrt.com
`
`Company Data
`Rating
`Price: Last
`Price Target
`52-Week Range
`Market Capitalization (M)
`Shares Outstanding (M)
`Avg. Daily Vol. (000)
`Dividend Yield
`Assets (M)
`
`Buy
`$88.68
`$95.00
`$56.79 - $89.46
`$19,258.2
`179.9
`2,288.0
`0.0%
`$2,095.1
`
`Revenue ($M)
`FY
`
`2014A
`3,084.4
`
`2015E
`3,853.4
`
`2016E
`4,766.3
`
`FYE Dec
`
`2014A
`(Curr)
`
`2015E
`(Curr)
`
`EPS ($)
`0.05A
`0.06
`Q1 (Mar)
`0.05
`0.08
`Q2 (Jun)
`0.46
`0.41
`Q3 (Sept)
`0.54
`0.40
`Q4 (Dec)
`1.09
`0.95
`FY EPS
`81.4x
`93.3x
`P/E
`Source: FactSet and CRT Capital LLC estimates
`
`2016E
`(Curr)
`
`0.12
`0.12
`0.61
`0.68
`1.53
`58.0x
`
`Price Performance
`100
`
`90
`
`80
`
`70
`
`60
`
`Source: FactSet
`Any Important Disclosures regarding Price Target Risks, Valuation Methodology, Regulation Analyst Certification,
`Investment Banking, Ratings Definitions, and any potential conflicts of interest begin on Page I of the Appendix
`Section. Past performance is no guarantee of future results.
`262 Harbor Drive Stamford, Connecticut 06902 | phone 203.569.6400 | fax 203.569.6499
`CRT Capital Group, LLC is a FINRA Member
`
`50
`Jan-15
`Oct-14
`Jul-14
`Under Armour Inc. ($)
`Morgan Stanley Retail Index (MVRX) ($)
`
`Apr-15
`
`Jul-15
`
`Patent Owner adidas AG
`Exhibit 2009 - Page 1 of 9
`
`

`
`July 14, 2015
`
`Footwear's strength is across the board, with basketball driving the largest growth: We believe
`that UA's strong growth is sustainable. Importantly, revenues in footwear are becoming large and
`ASPs remain healthy. According to SSI, UA footwear sales in 2Q15 were $207M versus 129M in the
`2Q14, for an increase of 60%, and ASP growth of 8%. 2Q15 total sport footwear sales, according to
`SSI increased 7.3% with flat ASPs. UA footwear sales in 1Q15 were $137M versus $72M in 1Q14,
`for an increase of 89% and ASP growth of 9%. For the industry as a whole in 1Q15, footwear sales
`increased 5.3% with ASPs down 1%. Running sales were driven by the Micro G, and sandals sales
`were driven by the Ignite IV. Basketball sales were driven by the Curry 1, Clutch Drive (Steph Curry)
`and the new JET, which is a functional court shoe aimed at kids, priced under $70. UA's total market
`share in footwear, within the National Accounts channel (where UA is predominantly distributed)
`increased 178bps to 5.9% versus 4.1% last year. UA took share from Nike, Adidas, and Asics.
`
`Guidance raise likely: We contend that UA's current 2015 revenue growth guidance of 23% will
`prove conservative. We believe that as more of the substantial orders of 2H are in hand, and factors
`such as FX and port slowdown abate, management will raise guidance. We are maintaining our
`forecast for revenue growth of 24.9% in FY15. UA will hold an investor day in mid-September. At
`that time, management will provide a new long-term plan. UA will likely achieve its $4B revenue
`target (on a trailing 12-month basis) by 1Q16 or 2Q16. At the Investor Day in June 2013, UA set
`a target of achieving $4B in revenue by the end of FY16. We believe that UA will provide a new
`revenue target of $10B by 2020, representing a CAGR of ~22% over the next 5 years.
`
`Page 2
`
`Patent Owner adidas AG
`Exhibit 2009 - Page 2 of 9
`
`

`
`2Q15 Estimates
`
`July 14, 2015
`
`Source: Company Reports and CRT Capital Group LLC estimates (in millions, except per share data)
`
`FY Outlook
`
`
`
`
`
`Page 3
`
`
`
`
`
`Source: Company Reports and CRT Capital Group LLC estimates (in millions, except per share data)
`
`
`Footwear & Apparel Growth by Quarter, Actual vs. Sportscan
`
`Source: Company Reports and CRT Capital Group LLC estimates and SportscanInfo
`
`
`
`Revenue
`Gross Margin
`SG&A % of Sales
`SG&A $s
`Operating Margin
`EBITDA
`GAAP EPS
`
`Segment
`Apparel
`Footwear
`Accessories
`License
`
`2Q15E
`766.7M
`48.70%
`45.50%
`348.8M
`3.20%
`45.8M
`$0.05
`
`512.4M
`153.4M
`75.5M
`25.4M
`
`2Q14A
`609.7M
`49.20%
`43.51%
`265.3M
`5.69%
`51.7M
`$0.08
`
`420.0M
`109.5M
`59.9M
`20.2M
`
`Variance
`25.8%
` (50)bps
`199bps
`31.5%
` (249)bps
`(11.4%)
`(42.6%)
`
`22.0%
`40.0%
`26.0%
`26.0%
`
`Revenue
`Gross Margin
`SG&A % of Sales
`Operating Margin
`EBITDA
`GAAP EPS
`
`Segment
`Apparel
`Footwear
`Accessories
`License
`
`2015
`Estimate
`3,853.4M
`49.07%
`38.05%
`11.02%
`480.4M
`$1.09
`
`2797.8M
`604.7M
`339.5M
`103.0M
`
`2016
`Estimate
`4,766.3M
`49.47%
`37.59%
`11.87%
`663.8M
`$1.53
`
`3413.4M
`816.3M
`413.1M
`123.6M
`
`2Q15
`4Q14
`3Q14
`2Q14
`1Q14
`1Q15
`SSI
`Estimate
`Actual
`SSI Actual
`Actual
`Actual
`SSI
`SSI
`SSI Actual
`SSI
`41.2% 1.2% 34.2% 25.1% 50.1% 36.1% 55.0% 64.1% 41.1% 89.0% 40.0% 60.0%
`32.9% 29.8% 35.4% 20.6% 25.6% 11.6% 29.7% 15.1% 20.9% 28.0% 22.0% 32.0%
`
`Footwear
`Apparel
`
`Patent Owner adidas AG
`Exhibit 2009 - Page 3 of 9
`
`

`
`July 14, 2015
`
`Valuation and Risks
`
`
`Over the past 3 years, UA has traded at an average multiple of 45x FY2, and EPS estimates.
`On a PEG ratio basis, UA has traded at an average of 1.5x FY2 estimates.
`
`UA’s multiple is most highly correlated with FY2 sales growth (~85%), which we anticipate
`will continue as the Direct-to Consumer channel further strengthens, footwear, continues its
`double digit growth, and the expansion of product lines and growth overseas ramp up. We
`regard it as likely that UA will be afforded a considerable premium to the S&P given the long
`term viability of the brand and the remaining white space for the company.
`
`Our $95 price target reflects a P/E multiple of 62X our 2016 EPS estimate, and a price/sales
`of 4.4x. We view UA as momentum stock and expect to see multiple expansion as growth in
`footwear, retail and international markets accelerates. We also believe that consensus EPS
`estimates will prove conservative.
`
`Risks:
`Risks include declining growth rate in apparel due to weather or changing customer
`fashion/taste, inability to gain traction in footwear, and increased competition from larger and
`more established global competitors.
`
`
`Other companies mentioned:
`Nike (NKE – $112.35– Neutral)
`Adidas (ADS.DE-€69.51-NR)
`
`
`
`Page 4
`
`Patent Owner adidas AG
`Exhibit 2009 - Page 4 of 9
`
`

`
`Quarterly Income Statement
`
`July 14, 2015
`
`Source: Company Reports and CRT Capital Group LLC estimates (in millions, except per share data)
`
`
`
`Page 5
`
`c
`
`Revenue
`
`Cost of Sales
`
`FY13
`
`2332.1
`
`1195.4
`
`1Q14
`
`641.6
`
`340.9
`
`2Q14
`
`609.7
`
`309.7
`
`3Q14
`
`937.9
`
`472.6
`
`4Q14
`
`895.2
`
`448.9
`
`FY14
`
`3084.4
`
`1572.2
`
`1Q15
`
`2Q15E
`
`3Q15E
`
`4Q15E
`
`FY15E
`
`1Q16E
`
`2Q16E
`
`3Q16E
`
`4Q16E
`
`FY16E
`
`804.9
`
`427.3
`
`766.7
`
`393.3
`
`373.4
`
`1180.2
`
`1101.5
`
`3853.4
`
`600.6
`
`579.6
`
`541.4
`
`560.1
`
`1962.6
`
`1890.8
`
`991.1
`
`522.1
`
`469.0
`
`957.1
`
`487.1
`
`469.9
`
`1459.3
`
`1358.9
`
`4766.3
`
`736.8
`
`722.5
`
`662.5
`
`696.5
`
`2408.5
`
`2357.8
`
`Gross Profit
`
`SG&A
`
`EBIT
`
`Other Expense (Income)
`
`1136.7
`
`871.6
`
`265.1
`
`4.1
`
`300.7
`
`273.8
`
`26.9
`
`1.7
`
`300.0
`
`265.3
`
`34.7
`
`1.0
`
`465.3
`
`319.2
`
`146.1
`
`4.9
`
`446.3
`
`300.0
`
`146.3
`
`4.2
`
`1512.2
`
`1158.3
`
`354.0
`
`11.7
`
`377.7
`
`350.0
`
`27.7
`
`4.1
`
`348.8
`
`24.5
`
`4.0
`
`408.4
`
`171.3
`
`4.0
`
`359.1
`
`201.0
`
`4.0
`
`1466.3
`
`421.2
`
`423.0
`
`424.5
`
`16.1
`
`47.8
`
`4.0
`
`46.9
`
`4.0
`
`500.5
`
`222.0
`
`4.0
`
`447.1
`
`249.4
`
`4.0
`
`1791.8
`
`566.0
`
`16.0
`
`550.0
`
`EBT
`
`Income taxes
`
`GAAP Earnings
`
`261.0
`
`98.7
`
`162.3
`
`25.1
`
`11.6
`
`13.5
`
`33.7
`
`16.0
`
`17.7
`
`141.2
`
`142.1
`
`52.1
`
`89.1
`
`54.4
`
`87.7
`
`342.2
`
`134.2
`
`208.0
`
`23.6
`
`11.9
`
`11.7
`
`0.0
`
`20.5
`
`10.3
`
`10.3
`
`0.0
`
`167.3
`
`66.9
`
`100.4
`
`197.0
`
`78.8
`
`118.2
`
`408.4
`
`167.9
`
`240.6
`
`0.0
`
`0.0
`
`0.0
`
`43.8
`
`16.6
`
`27.1
`
`0.0
`
`42.9
`
`16.3
`
`26.6
`
`0.0
`
`218.0
`
`82.8
`
`135.1
`
`245.4
`
`93.2
`
`152.1
`
`209.0
`
`341.0
`
`0.0
`
`0.0
`
`0.0
`
`Non Recurring Items
`
`Normalized
`
`EBITDA
`
`Wtd. avg. dil. shares out.
`
`0.0
`
`162.3
`
`315.6
`
`215.3
`
`0.0
`
`13.5
`
`0.0
`
`17.7
`
`0.0
`
`89.1
`
`0.0
`
`87.7
`
`44.2
`
`51.7
`
`216.9
`
`217.3
`
`164.2
`
`218.0
`
`166.0
`
`219.7
`
`0.0
`
`208.0
`
`426.0
`
`218.0
`
`11.7
`
`10.3
`
`100.4
`
`118.2
`
`240.6
`
`27.1
`
`26.6
`
`135.1
`
`152.1
`
`341.0
`
`27.7
`
`45.8
`
`219.6
`
`219.8
`
`188.1
`
`220.1
`
`218.7
`
`220.2
`
`480.4
`
`219.9
`
`72.5
`
`70.8
`
`220.9
`
`221.5
`
`243.9
`
`222.5
`
`276.6
`
`223.0
`
`663.8
`
`222.0
`
`$1.53
`
`GAAP EPS
`
`Recurring EPS
`
`Margin Analysis
`
`$0.75
`
`$0.75
`
`$0.06
`
`$0.06
`
`$0.08
`
`$0.08
`
`$0.41
`
`$0.41
`
`$0.40
`
`$0.40
`
`$0.95
`
`$0.95
`
`$0.05
`
`$0.05
`
`$0.05
`
`$0.05
`
`$0.46
`
`$0.46
`
`$0.54
`
`$0.54
`
`$1.09
`
`$1.09
`
`$0.12
`
`$0.12
`
`$0.12
`
`$0.12
`
`$0.61
`
`$0.61
`
`$0.68
`
`$0.68
`
`$1.53
`
`Gross
`
`48.7%
`
`46.87%
`
`49.20%
`
`49.61%
`
`49.85%
`
`49.0%
`
`46.92%
`
`48.70%
`
`49.11%
`
`50.85%
`
`49.1%
`
`47.32%
`
`49.10%
`
`49.51%
`
`51.25%
`
`49.5%
`
`45.50%
`
`34.60%
`
`32.60%
`
`38.05%
`
`42.50%
`
`44.20%
`
`34.30%
`
`32.90%
`
`37.59%
`
`SG&A
`
`EBIT
`
`EBITDA
`Tax Rate
`Adj Net
`
`Growth Analysis
`
`37.37%
`
`42.68%
`
`43.51%
`
`34.03%
`
`33.51%
`
`37.55%
`
`43.48%
`
`11.37%
`
`13.54%
`37.80%
`6.96%
`
`4.19%
`
`5.69%
`
`15.58%
`
`16.34%
`
`11.48%
`
`3.44%
`
`3.20%
`
`14.51%
`
`18.25%
`
`11.02%
`
`4.82%
`
`4.90%
`
`15.21%
`
`18.35%
`
`11.87%
`
`6.89%
`46.14%
`1.98%
`
`8.48%
`47.53%
`1.71%
`
`17.50%
`36.90%
`9.71%
`
`18.54%
`38.30%
`6.84%
`
`13.81%
`39.21%
`6.75%
`
`3.44%
`50.34%
`1.98%
`
`5.98%
`50.00%
`1.71%
`
`15.94%
`40.00%
`9.71%
`
`19.86%
`40.00%
`6.84%
`
`12.47%
`41.10%
`6.24%
`
`7.32%
`38.00%
`1.98%
`
`7.40%
`38.00%
`1.71%
`
`16.71%
`38.00%
`9.71%
`
`20.35%
`38.00%
`6.84%
`
`13.93%
`38.00%
`7.15%
`
`Revenue
`
`27.1%
`
`36.0%
`
`34.1%
`
`29.7%
`
`31.1%
`
`32.3%
`
`25.5%
`
`25.8%
`
`25.8%
`
`23.0%
`
`24.9%
`
`23.1%
`
`24.8%
`
`23.6%
`
`23.4%
`
`23.7%
`
`Gross Profit
`
`SG&A
`
`EBIT
`
`29.3%
`
`30.0%
`
`27.0%
`
`38.9%
`
`34.9%
`
`99.1%
`
`36.6%
`
`41.6%
`
`7.4%
`
`32.9%
`
`27.4%
`
`39.2%
`
`19.1%
`
`20.9%
`
`48.6%
`
`33.0%
`
`32.9%
`
`33.5%
`
`25.6%
`
`27.8%
`
`24.5%
`
`31.5%
`
`24.6%
`
`25.5%
`
`27.9%
`
`19.7%
`
`3.0%
`
` (29.3%)
`
`17.2%
`
`37.4%
`
` (11.4%)
`
`14.6%
`
`31.8%
`
`25.0%
`
`26.6%
`
`19.9%
`
`12.8%
`
`24.2%
`
`20.3%
`
`72.6%
`
`25.9%
`
`21.3%
`
`91.1%
`
`24.7%
`
`24.3%
`
`22.6%
`
`24.5%
`
`29.6%
`
`24.0%
`
`162.1%
`
`54.5%
`
`29.6%
`
`26.4%
`
`24.7%
`
`22.2%
`
`33.3%
`
`38.2%
`
`EBITDA
`
`Recurring EPS
`
`25.4%
`
`24.7%
`
`74.4%
`
`17.3%
`
`23.2%
`
`47.0%
`
`71.1%
`
` (0.4%)
`
`21.1%
`
`34.8%
`
`35.0%
`
`26.5%
`
` (37.4%)
`
` (14.4%)
`
` (42.6%)
`
`11.5%
`
`34.5%
`
`14.8%
`
`129.9%
`
`157.0%
`
`33.2%
`
`27.1%
`
`40.2%
`
`Effeciency Analysis
`GM y/y
`2 Yr GM
`SG&A y/y
`EBIT y/y
`
`EBITDA y/y
`
`82
`34
`83
`(1)
`
`(19)
`
`95
`129
`(38)
`132
`
`151
`
`88
`333
`230
`(142)
`
`(122)
`
`119
`86
`232
`(113)
`
`(93)
`
`(146)
`(41)
`(338)
`192
`
`200
`
`29
`111
`18
`11
`
`28
`
`5
`100
`80
`(75)
`
`(345)
`
`(50)
`38
`199
`(249)
`
`(250)
`
`(50)
`69
`57
`(107)
`
`(156)
`
`100
`(46)
`(91)
`191
`
`131
`
`4
`33
`50
`(46)
`
`(135)
`
`40
`45
`(98)
`138
`
`388
`
`40
`(10)
`(130)
`170
`
`142
`
`40
`(10)
`(30)
`70
`
`77
`
`40
`140
`30
`10
`
`49
`
`40
`44
`(46)
`86
`
`146
`
`Patent Owner adidas AG
`Exhibit 2009 - Page 5 of 9
`
`

`
`July 14, 2015
`
`Glossary_____________________________________________________________________________________
` Acronym Explanation ____________________
`Acronym Explanation
`1H
`First half
`NSP
`New Store Productivity
`2H
`Second half
`NT
`Near term
`AMC
`After Market Close
`NTM
`Next Twelve Months
`ASSG
`Athletic Specialty & Sporting Goods
`P/E
`Price to Earnings ratio
`ASP
`Average Selling Price
`PEG
`Price to earnings ratio divided by growth rate
`AUR
`Average Unit Retail
`P&L
`Profit & Loss
`BTS
`Back to School
`POS Point of sale
`BMO
`Before Market Open
`PT
`Price Target
`B
`Billion
`Q
`Quarter
`B&M
`Brick & Mortar
`QTD
`Quarter to date
`BOGO
`Buy One Get One
`ROIC Return on invested capital
`Bps
`Basis Points
`SA
`Sterne Agee
`CAGR
`Compound Annual Growth Rate
`SG&A
`Selling, General, & Administrative expenses
`Cap-Ex
`Capital Expenditures
`SKU
`Stock Keeping Unit
`CT
`Central Time
`SPSF
`Sales per square foot
`CEO
`Chief Executive Officer
`SSS
`Same-store sales
`CFO
`Chief Financial Officer
`ST
`Short Term
`CMO
`Chief Merchandising Officer
`TY
`This year
`COGS
`Cost of Goods Sold
`TFW
`Trailing Four Weeks
`COO
`Chief Operating Officer
`UPC
`Universal Product Code
`CRM
`Customer Relationship Management
`YE
`Year end
`CY
`Calendar year
`YOY
`Year over year
`D&A
`Depreciation & Amortization
`YTD
`Year to date
`DC
`Distribution Center
`DTC
`Direct to Consumer
`DD
`Double Digits
`EBIT
`Earnings before Interest & Taxes
`EBITDA
`Earnings before Interest, Taxes, Depreciation, &
`
`Amortization
`EPS
`Earnings per Share
`Est.
`Estimate
`ET
`Eastern time
`EV
`Enterprise value
`EMEA
`Europe, Middle East and Africa
`EVP
`Executive Vice President
`EUR
`Euro
`FF
`Family Footwear
`FC
`First Call
`FCF
`Free Cash Flow
`FX
`Foreign Exchange
`FY
`Fiscal Year
`G&A
`General & Administrative expenses
`GAAP
`Generally Accepted Accounting Principles
`GMM
`General Merchandise Manager
`GM
`Gross Margin
`HSD
`High Single Digits
`IR
`Investor Relations
`IT
`Information Technology
`JPY
`Japanese Yen
`JV
`Joint Venture
`K Thousands
`LIBOR London Interbank Offered Rate
`L4W
`Last 4 Weeks
`LSD
`Low single digits
`LDD
`Low double digits
`L-MSD
`Low to mid-single digits
`LT
`Long term
`LY
`Last year
`MTDS
`Mid-tier department stores
`M-HSD
`Mid to high single digits
`MSA
`Metropolitan Statistical Area
`MSD
`Mid-single digits
`ND
`Net Debt
`NE
`Northeast
`
`Page 6
`
`Patent Owner adidas AG
`Exhibit 2009 - Page 6 of 9
`
`

`
`July 14, 2015
`
`APPENDIX SECTION
`
`Company Description:
`Under Armour designs, markets, and distributes performance apparel, footwear, and accessories for men, women, and youth. The
`company has historically marketed apparel and footwear that utilize synthetic fibers designed to regulate body temperature, wick away
`perspiration, and hence improve performance. The company distributes its product primarily through sporting goods and specialty retail
`stores in the United States. The product is also distributed in Europe through subsidiaries and in Japan via a licensee.
`
`IMPORTANT DISCLOSURES:
`Regulation Analyst Certification:
`I, Sam Poser, Ben Shamsian and Elizabeth Bean, hereby certify the views expressed in this research report accurately reflect my personal
`views about the subject security(ies) or issuer(s). I further certify that no part of my compensation was, is, or will be, directly or indirectly,
`related to the specific recommendations or views expressed by me in this report.
`
`Price Target Risks & Related Risk Factors:
`Investment risks associated with the achievement of the price target include, but are not limited to, a company's failure to achieve CRT
`Capital Group LLC earnings and revenue estimates; unforeseen macroeconomic and/or industry events that adversely affect demand for a
`company's products or services; product obsolescence; changes in investor sentiment regarding the specific company or industry; intense
`and rapidly changing competitive pressures; the continuing development of industry standards; the company's ability to recruit and retain
`competent personnel; and adverse market conditions. For a complete discussion of the risk factors that could affect the market price of
`a company's shares, refer to the most recent Form 10-Q or 10-K that a company has filed with the Securities Exchange Commission.
`
`Company Specific Risks:
`Risks include declining growth rate in apparel due to weather or changing customer fashion/taste, inability to gain traction in footwear,
`and increased competition from larger and more established global competitors.
`
`Valuation Methodology:
`Methodology for assigning ratings and target prices includes qualitative and quantitative factors including an assessment of industry
`size, structure, business trends and overall attractiveness; management effectiveness; competition; visibility; financial condition; and
`expected total return, among other factors. These factors are subject to change depending on overall economic conditions or industry
`or company-specific occurrences. CRT Capital Group LLC., analysts base valuations on a combination of forward looking earnings
`multiples, price-to-revenue multiples, and enterprise-value-to-revenue ratios. CRT Capital Group LLC believes this accurately reflects
`the strong absolute value of earnings, the strong earnings growth rate, the inherent profitability, and adjusted balance sheet factors.
`Additional company-specific valuation methodology is available through CRT Capital Group LLC.
`
`Company Specific Valuation:
`Our $95 price target reflects a P/E multiple of 62x our 2016 EPS estimate and a price/sales of 4.4x.
`
`Definition of Investment Ratings:
`BUY: We expect this stock to outperform the industry over the next 12 months.
`NEUTRAL: We expect this stock to perform in line with the industry over the next 12 months.
`UNDERPERFORM: We expect this stock to underperform the industry over the next 12 months.
`RESTRICTED: Restricted list requirements preclude comment.
`
`Ratings Distribution:
`
`Rating Category
`Buy
`Neutral
`Underperform*
`
`Count
`186
`140
`6
`
`Percent
`56.02%
`42.17%
`1.81%
`
`Count
`14
`7
`0
`
`IB Serv./ Past 12Mos.
`Percent
`7.53%
`5.00%
`0.00%
`
`*FINRA Rule 2711 (H)(5)(A)- Regardless of the rating system that a member employs, a member must disclose in each research report
`the percentage of all securities rated by the member to which the member would assign a "buy,""hold/neutral," or "sell" rating. For
`purposes of this Rule, Underperform would be assigned as "sell".
`
`Appendix Section, Page I
`
`Patent Owner adidas AG
`Exhibit 2009 - Page 7 of 9
`
`

`
`July 14, 2015
`
`ADDITIONAL INFORMATION AVAILABLE UPON REQUEST: Contact Robert Hoehn at 1-212-338-4731.
`
`Other Disclosures:
`
`Opinions expressed are our present opinions only. This material is based upon information that we consider reliable, but we do not
`represent that it is accurate or complete, and it should not be relied upon as such. Past performance is no guarantee of future results.
`
`For UK Professional Clients
`
`This research report is disseminated in the UK by CRT Capital (UK) Limited which is authorized and regulated by the Financial Conduct
`Authority. This research report is intended for distribution in the UK only to, and should be relied upon only by, persons who or may be
`classified as eligible counterparties or professional clients pursuant to the FCA's rules or who are investment professionals as defined in
`Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005.
`
`Copyright © 2015 CRT Capital Group, LLC. All Rights Reserved.
`
`To receive price charts or other disclosures on the companies mentioned in this report that are not the subject of this report which CRT
`Capital Group continues to cover, please visit our website at https://sterneagee.bluematrix.com/sellside/disclosures.action contact CRT
`Capital Group LLC (203) 569-6400.
`
`Appendix Section, Page II
`
`Patent Owner adidas AG
`Exhibit 2009 - Page 8 of 9
`
`

`
` 
`William Jump
`Jon Schenk
`
` 
`
`Dir of Equity Sales, Trading & Research
`Director of Institutional Equity Sales
`
` 
`
`EQUITY CAPITAL MARKETS
`
`Robert Hoehn
`
`
`(404) 814-3960
`(212) 763-8221
`
`
`Director of Equity Research
`
`
`
`(212) 338-4731
`
`
`
`
`INDUSTRIALS
`Aerospace & Defense
`Peter Arment
`Josh W. Sullivan
`Asher Carey
`
`(646) 376-5336
`(646) 376-5337
`(646) 218-4825
`
` 
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` 
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` 
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` 
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`
`Auto, Auto Parts and Auto Retailers
`Michael P. Ward, CFA
`(646) 376-5375
`Ali Faghri
`(646) 376-5304
`
`Automotive
`Kirk Ludtke
`
`(203) 569-4361
`
`Coal, Metals & Mining, Engineering & Construction
`Michael S. Dudas, CFA
`(646) 376-5329
`Satyadeep Jain, CFA
`(646) 376-5357
`Patrick Uotila, CPA
`(646) 376-5358
`
`Construction Materials & Diversified Industrials
`Todd Vencil, CFA
`(804) 282-7385
`Teresa Nguyen, CFA
`(804) 916-1568
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`Homebuilding
`Jay McCanless
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`(615) 760-1475
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`Water and Flow Control
`Kevin Bennett, CFA
`Ed Riley
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`(804) 282-4506
`(804) 344-3811
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`TECHNOLOGY
`Data Networking and Storage
`Alex Kurtz
`(415) 762-4881
`Amelia Harris
`(415) 762-4880
`
`Interactive Entertainment / Internet
`Arvind Bhatia, CFA
`(214) 702-4001
`Brett Strauser
`(214) 702-4009
`
`Internet
`Robert Coolbrith
`
`(415) 762-4890
`
`(203) 569-4354
`(203) 569-4378
`
` 
`TRANSPORTATION, SERVICES & EQUIPMENT
`Airlines
`Michael Derchin
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`
`CONSUMER
`Broadlines / Health & Wellness Retailing
`Charles Grom, CFA
`(646) 376-5373
`Renato Basanta, CFA
`(646) 376-5317
`John Parke
`(646) 376-5315
`
`Discretionary/Retail
`Lee J. Giordano, CFA
`Michael Gunther
`
`Footwear & Apparel
`Sam Poser
`Ben Shamsian
`Elizabeth Bean
`
`(203) 569-4350
`(203) 569-4322
`
`(212) 763-8226
`(212) 338-4721
`(646) 376-5346
`
`Leisure & Entertainment
`David Bain
`
`(949) 721-6651
`
`Restaurants
`Lynne Collier
`
`Media
`Lance Vitanza, CFA
`
`(214) 702-4045
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`(203) 569-4337
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`ENERGY
`Exploration & Production
`Tim Rezvan, CFA
`Truman Hobbs
`
`(212) 338-4736
`(212) 338-4767
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`Oilfield Services & Equipment
`Stephen D. Gengaro
`(646) 376-5331
`Ivan Suleiman
`(212) 338-4723
`
`FINANCIAL SERVICES
`Specialty/Real Estate Finance
`Henry J. Coffey, Jr., CFA
`(615) 760-1472
`Jason P. Weaver, CFA
`(615) 760-1479
`
`HEALTHCARE
`Healthcare Services
`Brian Wright
`
`Medical Technology
`Gregory P. Chodaczek
`Caitlin Howard
`
`Medical Technology
`Shagun Singh Chadha
`
`(646) 376-5350
`
`(610) 260-9560
`(610) 260-9552
`
`(203) 569-4345
`
` 
`
` 
`
` 
`
` 
`
` 
`
` 
`
` 
`
` 
`
` 
`
` 
`
` 
`
` 
`
` 
`
`             
`
`email addresses are first initial + last name @sterneageecrt.com – Example: jsmith@sterneageecrt.com
`
`Patent Owner adidas AG
`Exhibit 2009 - Page 9 of 9