Good day, ladies and gentlemen, and welcome to the Under Armour Third Quarter Earnings Webcast and Conference Call. [Operator Instructions] As a reminder this conference call is being recorded. I would now like to introduce your host, Tom Shaw, Director of Investor Relations. Please go ahead. Thanks, Stephanie. Good morning to everyone joining us on today's conference call. During the course of this conference 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 risk 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 in which the statement is made or to reflect the occurrence of unanticipated events. Joining us in today's call will be Kevin Plank, Chairman, CEO, and President; followed by Brad Dickerson, our Chief Financial Officer, who will discuss the company's financial performance for our third quarter, provide an update to our 2011 outlook, and introduce our preliminary outlook for 2012. I will then close with a tentative date for our fourth quarter 2011 earnings call. Eastern Time today. And with that, I'll turn it over to Kevin Plank. Thanks, Tom, and good morning, everyone. One of the internal mantras that we use here at Under Armour is "focus and finish." Its purpose is to remind ourselves that while the strength of our brand has created abundant prospects for growth, we will be measured on our ability to fully harvest these opportunities in new product categories and geographies. So we look at where we stand at the end of our third quarter, I want to start today with how we are focusing and finishing in our apparel business, and how that is driving us for continued strong results we reported this morning. Our performance in apparel year to date has helped enable us to pass last year's full year revenue number of $1.06 billion in just three quarters this year. In the third quarter, we put up a net revenue increase in excess of 40% for the second consecutive quarter. And not to steal all of Brad's thunder, but third quarter apparel net revenues increased 31%, the fourth consecutive quarter of growth in excess of 30%. So while we continue to lay the foundation for growth in categories like footwear, and new markets like China, we are achieving these strong results by focusing and finishing on the opportunities we see in our core apparel business. Specifically, we're seeing great success in our twofold strategy of innovating to drive better performance product with higher prices in our core, while expanding our reach beyond our core with new products like Charged Cotton. Let me start with our core though, and specifically Armour Fleece, which is exceeding our expectations in helping us drive higher price points at retail. Armour Fleece is our signature synthetic based fleece with a soft brushed inner layer in the inside and a lightweight fast drying outer layer. Armour Fleece is helping Under Armour, again redefine the performance category. Much like we did with the basic T shirt, we have taken the basic hoodie, the go to apparel product for our core consumer, and raised expectations of what that product can be. And it has enabled us to bring new price points to retail as well. With hoodies ranging from $50 to now more than $75. All of this with the consumer who has been accustomed to playing less than half of that for a hoodie in the past. This is a great example of focusing and finishing, as we take our strategy of reinventing the basics and being performance to the garment. Our Charged Cotton Tees are redefining the T shirt category and our Charged Cotton Storm Fleece, which I'll speak to in a moment, is the initial phase of redefining that very large category as well. We believe we are one of the very few brands that continue to bring a true performance message to the athletic consumer and that's enabled us to continue raising our consumers' expectations and driving the performance apparel category, which continues to be a bright spot for the industry. Under Armour remains the market leader performance apparel, especially as we continue to take our average selling price up in an environment where others have chosen not to or have been unable to do so. So while Armour Fleece is driving great volumes and higher price points on its own, we're also bringing the first of our cold weather Charged Cotton Storm product to consumers, and this latest innovation from Under Armour is up to a great start. Storm is really the next generation of protection. We've taken the classic cotton heavyweight sweatshirt with it's heavy weight feel and make it water resistant, so water rolls right off. We're bringing this product to market at price points from $60 to $100 and again, without sounding like a broken record, our consumer has shown a willingness to pay a premium when we can change the way an athlete uses our product. And that's what Charged Cotton Storm does. So we think there's a great opportunity here for us to build another wheelhouse product in Charged Cotton Storm. As we've said before, using cotton opens access to the Under Armour brand to a much broader range of athletes. Instead of competing to have 3 out of the 4 compression garments they may have in their closet, we're now competing for share of the 30 plus garments, many of which are cotton. Or to put it in a more quantifiable measure, we've gone from competing for share in a $3 billion category, just a year ago, to competing for share in a $12 billion category today. And that's why the phrase, focus and finish, is at the heart of what how we see the business at this point in our growth. but we will not pass up the opportunity to create these new building blocks in our core while the same time bringing the Under Armour brand to new consumers. And we will continue to consistently flow UA innovations to consumers, with next generation technologies like Coal Black, that reflects heat and UV rays before they get to you. Imagine staying 10 degrees cooler in the summertime because of the effect of the material on your body. That is Coal Black and it's an innovation coming to the market next spring. I said before that Under Armour remains the market leader in performance apparel. Equally important is that with technologies like Charged Cotton and Coal Black, we remain the thought leader of performance apparel and believe the continued strength in our apparel business is the true indicator of our relentless focus on innovation and what's next. One of the benefits of our success in apparel is that our core sporting goods distribution continues to allocate more space to the Under Armour brand. We launched the first of our All American shops at Dick's Sporting Goods this quarter. And it's really the pinnacle of presentation for our brand within sporting goods. As you can imagine, we have a much more richer story to tell our consumer at retail these days, and these shops enable us to present the brand in a much more powerful way. Beyond sporting goods, our brand is having an impact within the department store channel. As our initiatives in women's, youth, and underwear extend the reach of the Under Armour brand. First, within Nordstrom, our women's assortment has seeing very strong sell through's and our footprint continues to expand. Secondly, our licensee of product for infants and toddlers is outperforming, as we get traction in the department store channel. We'll grow our department store presence in youth going into 2012, not only as that younger license business grows, but as we add new doors with our own youth product for older kids. And third, we see the expansion and relaunch of our underwear program, in 2012, as a key driver for our department store channel as we will offer a differentiated assortment and widen the distribution within this channel where consumers shop for their underwear already. In footwear, the arrows continue to point up as our third quarter business grew 97% to over $50 million. Through September, we have already surpassed what we did in all of 2010, and our sell through's over the past 6 months give us the confidence that our footwear is resonating with consumers. That confidence in running has come through great product at tiered price points, starting this past Spring with the Assert at $70, then the summer with the Split at $90. And just this past month, with our strong introduction of the Charge RC at $120. Just as we are expanding our reach within department stores with new women's, youth, and underwear programs, the traction we are getting in footwear brings us to new consumers through key mall partners such as Foot Locker, and the Finish Line. As we've said before, it's about getting the product to look and feel like Under Armour and running shoes, like the Split, Charge RC, and some of our upcoming basketball footwear definitely capture our DNA. By focusing and finishing on the needs of the athlete, our footwear team has shifted the conversation on footwear from if to when. And this quarter's results reflect the progress our team has made. Behind only the Olympics, World Cup, and the European soccer Championships. The Welsh Rugby team made their way to the semis outfitted in their Under Armour, Armour Grip Kits, putting the Under Armour brand in front of hundreds of millions of new consumers. In China, we're very pleased with the results from the small sample we've seen since opening our first store in Shanghai, our brand position there is firmly rooted in performance and we believe that our longterm opportunity in China will be grounded in sport, just as it will be anywhere we take the Under Armour brand. On the team front, you hear me consistently talk about building the foundation for growth. We made 2 key appointments that we believe are important steps in assembling that right team for this next phase of our growth. First, Kip Fulks, who has been with Under Armour since the beginning and has the most complete knowledge of our products and processes, has taken over as COO. He'll continue to oversee design and development of all product and has added oversight of our sourcing information technology areas. As today's results illustrate, product development has been an Under Armour strength, and Kip has helped lead these efforts. We believe this operational knowledge and insight will help us build the right team for an improved supply chain that is aligned with the strength of our product and brand. On the brand front, we are officially announcing today that Stewart Redford [ph] has joined Under Armour as Senior Vice President of Global Brand. Stewart brings a wealth of global brand management experience, most recently at Sony Electronics where he served as Senior Vice President of Corporate Marketing. That global knowledge will be critical as we continue leveraging the Under Armour brand into categories and geographies. As we look to harvest these new opportunities for our brand, we'll remain focused on what drove our success. We will continue to do more with less. Whether it's with the next generation of great athletes like Cam Newton or bringing innovation to the college football uniform. Under Armour will continue to grow by speaking with a disruptive voice across broadcast and social media. We will focus and finish, and continue to drive innovation for our consumers, and value for our shareholders. And with that it, I'll throw it over to Brad Dickerson, our CFO, and then we'll be back later to take your questions. Brad? Thanks, Kevin. I would now like to spend some time discussing our third quarter and year to date financial results, followed by our updated 2011 guidance. I will conclude with our early read on 2012. Our net revenues for the third quarter of 2011 increased 42% to $466 million. Year to date net revenues are up 40% to $1.07 billion. Apparel grew 31% to $363 million during the quarter and is up 33% year to date. We continue to experience strength across each of our men's, women's and youth categories. Our Men's business was driven in part by growth in training category, including Armour Fleece and Storm Fleece, while both graphics and hunting easy outpaced overall growth during the quarter. In Women's, Armour Fleece continued to be a standout, and we also saw strong growth in running led by our skate program of both tops and bottoms. Our direct to consumer net revenues increased 73% for the quarter, representing approximately 22% of net revenues compared to 18% in the prior year period. The growth rates for both the retail and e commerce business were strong during the quarter. On the retail side, we opened 4 new Factory House stores during the third quarter increasing our Factory House store base to 76, up over 50% from 50 locations at the end of last year's third quarter. We plan to open 4 additional Factory House stores in the fourth quarter, bringing our total Factory House store count by year end to 80. Our e commerce growth remains robust as we continue to drive both higher traffic and conversion rate year over year. In addition, we expect our new Web platform to go live over the next few weeks, with enhanced features and functionality added during 2012. Footwear net revenues during the third quarter increased 97% to $52 million from $26 million last year, representing 11% of net revenues. We had solid results with our back to school running product led by the Split and strong consumer response to our New Line of outdoor boots. From a timing standpoint we shipped the bulk of our basketball footwear during the third quarter this year, compared to our initial product last year, which launched in the fourth quarter. In addition we continue to introduce footwear to our Japanese consumer through our licensee Dome by shipping nearly $5 million of product to Dome during the quarter. Accessories net revenues during the third quarter increased 211% to $40 million from $13 million last year, reflecting the addition of our hats and bags business, which we brought in house in January, and has received strong consumer acceptance. We are on track for our hats and bags business to contribute $65 million to $70 million to net revenue for the full year 2011. International net revenues increased 53% to $33 million in the third quarter, and represent approximately 7% of total net revenues. The footwear sales to Dome that I had previously mentioned also played a significant part in the growth rate of our International business during the quarter. Licensing net revenues declined 18% to $10 million in the third quarter driven, as expected, by the transition of our hats and bags business in house. Third quarter gross margins contracted 250 basis points to 48.4% compared with 50.9% in the prior year's quarter. Results were largely in line with our prior guidance and primarily reflect 3 factors. First, in North American apparel, less favorable product mix and higher input costs negatively impacted margins by 140 basis points. Second, a lower mix of licensing net revenues negatively impacted margins by approximately 70 basis points. And finally, an unfavorable year over year impact of inventory reserves, net of benefits and discounts in sales allowances negatively impacted margins by 40 basis points. It is important to note that the prior year period margins benefited from a reversal of inventory reserves. Selling, general, and administrative expenses as a percentage of net revenues leveraged 130 basis points to 32.3% in the third quarter of 2011, from 33.6% in the prior year's period. Details around our 4 SG buckets are as follows: First, marketing cost declined to 10.4% net revenues for the quarter, from 10.9% in the prior year period. Once again, our strong top line allowed us to leverage marketing cost which increased 35% during the period. Second, selling costs increased to 7.9% of net revenues for the quarter, from 7.1% in the prior year period. Primarily driven by the continued expansion of our Factory House stores and investments in our e commerce business. Third, product innovation and supply chain cost held steady year over year at 7.7% of net revenues as we continue to invest in these areas to support our long term growth. And finally, corporate services decreased to 6.3% of net revenues, compared to 7.9% in the prior year period as we leveraged corporate personnel, facility expenses, and IT. Operating income during the third quarter grew 32% to $75 million compared with $57 million the prior year. Operating margin contracted 120 basis points to 16.1% from 17.3% in the prior year quarter. Below the operating line, other expenses increased to $2.7 million from $700,000 in the prior year's period. Two factors drove this increase. First, given the sharp decline in the Canadian dollar and Euro late in the quarter, we had a little over $1 million of net foreign currency exposure during the period. Second, we experienced a $1 million increase in interest expense related to the debt assumed for our acquisition of our corporate headquarters. Our third quarter tax rate of 36.3% was favorable to the 37.7% rate in the prior year period and our previous 40% guidance. The lower tax rate during the quarter was a function of favorable developments in our ongoing tax planning strategies including a benefit of $1.8 million during the quarter. As a reminder, during the third quarter of last year, we benefited from the receipt of state and federal tax credits. Our resulting net income in the third quarter increased 32% to $46 million compared with $35 million in the prior year period. Third quarter diluted earnings per share increased 29% to $0.88 compared with $0.68 in the prior year. Results include the aforementioned tax planning strategies which benefited EPS by approximately $0.04. Switching over to the balance sheet. Total cash and cash equivalents at quarter end declined to $68 million compared with $134 million at September 30, 2010. From a funding perspective we borrowed $30 million from our $300 million revolving credit facility. Given the level of cash flow we typically generate in the fourth quarter, we expect to fully pay down these borrowings during the fourth quarter. Long term debt also increased to $80 million from $19 million in the prior year's period, reflecting the acquisition of our corporate headquarters. As we outlined last quarter, this debt consist of a $25 million term loan and a $38 million assumption of debt at cash to the property. Inventory at quarter end increased 63% year over year to $319 million compared to $196 million at September 30, 2010. Although still exceeding our net revenue growth rate of 42%, our inventory growth rate has moved more in line compared to the second quarter inventory and net revenue growth rate of 74% and 42%, respectively. Two factors to consider in the third quarter inventory growth are transition of our hat and bags business in house, and higher input cost. Excluding these 2 factors, inventory would have increased approximately 52%. Our investment in capital expenditures was approximately $13 million for the third quarter and approximately $45 million year to date, excluding capital expenditures related to our acquisition of our corporate headquarters. We are now planning capital expenditures for 2011 in the range of $50 million to $53 million compared to our prior indication of the high end of the $45 million to $50 million range. In addition to our normal operating capital expenditure plan, we have approximately $63 million in total investments for 2011, related to the purchase of our corporate headquarters and other investments an Green Glow 4s ,Playoffs 8s Varsity Red 6s Air Jordan 10 Powder Blue 2014 Air Jordan 3 Retro Black Flip Air Jordan 5 Fire Red Black Tongue 2013 Legend Blue 11s Black Toe 1s Air Jordan 8 Bugs Bunny 2013 Black Toe 14s Although primarily intended for western style riding women's western boots have grown in popularity and have become highly fashionable among country folk and city dwellers alike. One of the reasons for this growth in popularity is the astonishing variety of colors, styles and patterns offered by great brands like Ariat and Durango. Colorful stitch patterns along with beautiful welts and stunning exotic leathers give women a great opportunity to show off their unique sense of style while connecting with a unique part of American heritage. For traditional western styling check out our selection of cowgirl boots. Cowgirl boots are usually pull on and the most authentic styles have a somewhat tall heel and a pointed toe. Many contemporary interpretations are available on the market today and give you the option of various toe shapes and shaft heights so you can get the feel and look that's right for you. For a more comfortable fit try a style with a rounded toe to give you a little more wiggle room or check out some roper styles which typically have a square toe and a lower shaft. The Ariat Fatbaby collection offers some truly unique fashions as does the Durango Flirt collection. Our selection of women's boots exemplifies our commitment to both fashion and comfort. We offer boots for women that range from short to tall and dressy to causal. Whether you need an insulated winter boot, a riding boot, or a tall dress boot we have what you are looking for. In the past women had to choose between comfort, fashion or performance. We strive to bring you styles that offer all three at the same time. Brands like Blondo, Santana, and UGG offer fantastic selections of boots that are highly fashionable yet have the features you need to stay warm and cozy. But boots aren't just for winter anymore. We have styles you will want to wear all year round. Fitting for boots can be a little tricky and we are proud to offer a number of brands that manufacture boots in different calf sizes. Various heel heights and shapes ensure you can find the right boot for the occasion whether it is a dressy kitten heel or a sturdy western heel you need. We also offer a great selection of styles that provide fashionable looks with a more casual fit and lower heel. While we have many boots crafted to meet your everyday needs we also have your specialty needs covered. For motorcycle enthusiasts we have legendary Harley Davidson riding boots or for our equestrian lovers we have both English and Western riding boots from top brands like Ariat and Durango. We have boots for outdoor enthusiasts of all kinds including hunters, hikers and backpackers. Still don't see what you're looking for? As always, our customer service representatives are happy to assist you. Green Glow 4s,When in 2006 I celebrated my 20th anniversary at The Baltimore Sun, my wife, Kathleen Capcara, made a magnificent cake for the copy desk and wrote on it, "20 to life." I did not anticipate then an early parole. Yesterday, the grim economics of the newspaper business made April 28 my last day at the paper. It was, as they say in theatrical circles, a good run. I had more than two decades of the company of some of the smartest and funniest people I have ever known, working for supportive editors of the paper, and in all that time we struggled day after day to make The Sun a formidable newspaper. We succeeded more often than we failed, and no man has been more fortunate in his colleagues than I have. I expect to continue blogging elsewhere, but you will no longer find me at my post here. In addition to colleagues who have been great fun, I have had the good fortune to collect a remarkable corps of loyal readers, and I salute you all with gratitude and affection. You have enriched my life. I can't believe this. As with an earlier poster, I would never have guessed that a blog about copy editing would be one of the two or three things I saved to read during lunch when I could savor it. The video jokes and pronunciation guides (my favorite) are outstanding. My wife started referring to John as my "new best friend" because I kept bringing up things I had read on the blog in conversation. It ain't right. All the best to John during this transition and I too will eagerly await the new blog (which I hope will be as similar as possible to this one). I have appreciated everyone's support at The Sun since you hired me, but none more so than yourself. Your advice, guidance and support made my time at the paper enjoyable even in the face of continued cuts. I never imagined you would become part of those cuts, and it's a sad day. The Sun has just lost a great journalist and a great mentor. I am left wondering when the realization will hit that this was a terrible, terrible move. I hope some day I'll be able to continue reading your blog; I am reluctant to remove the link from my bookmarks bar without a suitable replacement on hand because of the depressing void it will leave. I'm sorry to hear this news for a couple of reasons. First, I'm sorry you got undeservedly canned. Second, I'm sorry that economic pressures are causing newspapers to lower quality while increasing the price a cycle that must end in extinction. Nevertheless, I have faith that you will end up someplace more satisfying. Not only because of "karma, man, everything works out for the best," but because we need people like you, and that need will somehow express itself for you with another path. When you do re emerge as a blogger, please let me know. You have my e mail. One more thing: After seeing the list of casualties over at The Daily Muck, it's quite evident that they let go whom they did for budgetary reasons. I also have been the victim of a layoff where HR instructed departments to get rid of long timers with high salaries and replace them with contractors, with no benefits offered, or with fresh college grads whose entry salaries could have been half mine. If it's any consolation, John, Ann LoLordo, and the other long timers get a small, if Pyrrhic, victory that way. He is The Sun's night content production manager and former head of its copy desk. He also teaches editing at Loyola University Maryland. A former president of the American Copy Editors Society, a native of Kentucky, a graduate of Michigan State and Syracuse, and a moderate prescriptivist, he writes about language, journalism, and arbitrarily chosen topics.
Authentic Green Glow 4s,Air Jordan 5 Retro Tokyo23 With spring and summer clothing filling the racks, it's a great time to get tips on how to spice up that white outfit. That is exactly what you are going to find here. Every female should own a solid white summer dress. They are easy to dress up for that spring time wedding and even easier to dress down for a night at the movies. If a dressier look is what you are aiming for, adding simple jewelry can add a beautiful touch to any outfit. Simple jewelry is anything from a single strand of pastel pearls, stud earrings, small hoop earrings or a few thin bangles to dress up the wrist. Don't forget about adding a nice and simple clutch. If you are having trouble finding shoes that would be appropriate, just add a strappy sandal. Try to choose a color that would most compliment the jewelry you decide to wear. For example if you choose to wear lighter colors, such as pastels and baby shades go for a silver shoe or something with a light color. Remember if you plan on carrying your purse or clutch most of the night, that should be included as a part of the outfit. If you have trouble finding a bag to carry, follow the shoe rule above. Adding a bright purse to a light and airy outfit will cause the eye to notice the bright color more than the carefully put together outfit. To dress down the white dress, make it more casual. For example; don't be afraid to wear those flip flops! Light weight wooden jewelry is a nice inexpensive touch to add. You can find light weight wood bangles can be found in almost any store. Just remember to keep it casual. Another white on white outfit that is super popular right now is the white jeans and white blouse. This can be a fun outfit to wear that could transform into lots of different looks. 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