Under Armour Reports Record Third Quarter 2006 Results

Under Armour, Inc. (NASDAQ: UARM) today announced financial results for the third quarter ended September 30, 2006. Net revenues increased 47.5% in the third quarter to $127.7 million compared to net revenues of $86.6 million in the third quarter of 2005. Apparel revenues for Men’s, Women’s, and Youth increased 41.8% to $116.7 million. Third quarter net income increased 90.4% to $16.0 million compared to $8.4 million in the same period of 2005. Diluted earnings per share were $0.32, on weighted average common shares outstanding of 49.6 million compared to $0.20 per share on weighted average common shares outstanding of 39.3 million in the third quarter of the prior year. The Company received a $2.3 million benefit to net income, or $0.05 per diluted share, as a result of the impact of new state tax credits. "Our growth this quarter reflects the Brand’s momentum both at retail and within the entire athletic landscape,” stated Kevin A. Plank, Chairman and CEO of Under Armour, Inc. "We believe the shift away from standard cotton to performance products at all levels of sport continues to fuel growth in our core categories while also creating a demand for new product lines and tip-of-spear product extensions. We remain committed to serving the needs of the athlete with an innovative and authentic focus.” Apparel revenues grew 41.8% for the quarter due to continued strength in the Men’s, Women’s, and Youth businesses. These businesses benefited from strength in core product categories and an increased presence of the Brand at retail. The training and compression categories were particularly strong and were the primary drivers of revenue growth. Gross margin was 50.6% compared to 49.6% in last year’s third quarter, primarily driven by improved sourcing initiatives. Selling, general and administrative expenses were 33.4% of net revenues in the third quarter of 2006 compared to 32.9% in the same period of the prior year. This increase reflects planned investments in growth initiatives, such as international and footwear, as well as additional costs associated with being a public company. Increasing Outlook for 2006 Based on the strength of the Brand year-to-date, Under Armour is increasing its outlook for 2006. The Company now expects annual net revenues in the range of $410 million to $420 million, a 46% to 49% increase over 2005, and annual net income in the range of $38.5 million to $39.5 million. The Company anticipates an additional $1.0 million benefit from new state tax credits expected to be recognized in the fourth quarter, realizing an effective tax rate of 33.6% for the full year. The Company continues to expect fully diluted weighted average shares outstanding of approximately 50 million for 2006. Preliminary Outlook for 2007 The Company has previously stated its long-term growth targets of 20% - 25% for the top and bottom line. However, based on the continued strength of the Brand and its ability to extend product scope and distribution, the Company believes 2007 net revenues and income from operations will exceed the long-term 20% - 25% growth targets. Mr. Plank concluded, "Under Armour is a growth company. Our focus remains on achieving all of our strategic and financial goals while continuing to assemble and invest in building the Brand globally. We remain diligent about our reinvestment in four areas of concentration: Aggressive research and development of performance products, impactful marketing of our succinct Brand messages, building our international and footwear businesses, and strengthening our operations and systems infrastructure.” Conference Call and Webcast Under Armour will host a conference call and webcast to discuss its financial results today, October 31st, at 8:30 a.m. EST. This call will be webcast live at investor.underarmour.com and will be archived and available for replay approximately three hours after the live event. Additional supporting materials related to the call will also be available at investor.underarmour.com. The Company's financial results are also available online at investor.underarmour.com. About Under Armour, Inc. Under Armour® (NASDAQ: UARM) is a leading developer, marketer and distributor of branded performance apparel, footwear and accessories. The brand's moisture-wicking synthetic fabrications are engineered in many different designs and styles for wear in nearly every climate to provide a performance alternative to traditional natural fiber products. The Company's products are sold worldwide and worn by professional football, baseball, and soccer players, as well as athletes in major collegiate and Olympic sports. The Under Armour European headquarters is located in Amsterdam’s Olympic Stadium, and its global headquarters is located in Baltimore, MD. For further information, please visit the Company’s website at www.underarmour.com. Forward Looking Statements Some of the statements contained in this press release constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the development and introduction of new products, and the implementation of our marketing and branding strategies. In many cases, you can identify forward-looking statements by terms such as "may,” "will,” "should,” "expects,” "plans,” "anticipates,” "believes,” "estimates,” "predicts,” "outlook,” "potential” or the negative of these terms or other comparable terminology. The forward-looking statements contained in this press release reflect our current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to: our ability to manage our growth effectively; our ability to maintain effective internal controls; increased competition causing us to reduce the prices of our products or to increase significantly our marketing efforts in order to avoid losing market share; changes in consumer preferences or the reduction in demand for performance apparel and other products; our ability to accurately forecast consumer demand for our products; reduced demand for sporting goods and apparel generally; failure of our suppliers or manufacturers to produce or deliver our products in a timely or cost-effective manner; our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results; our ability to effectively market and maintain a positive brand image; the availability and effective operation of management information systems and other technology; our ability to attract and maintain the services of our senior management and key employees; and changes in general economic or market conditions, including as a result of political or military unrest or terrorist attacks. The forward-looking statements contained in this press release reflect our views and assumptions only as of the date of this press release. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. Under Armour, Inc. Quarter and Nine Months Ended September 30, 2006 and 2005 (in thousands, except per share amounts)   CONDENSED CONSOLIDATED STATEMENTS OF INCOME   Quarter Ended 9/30/06   % of Net Revenues   Quarter Ended 9/30/05   % of Net Revenues Nine Months Ended 9/30/06   % of Net Revenues   Nine Months Ended 9/30/05   % of Net Revenues   Net revenues $ 127,745  100.0% $ 86,606  100.0% $ 295,406  100.0% $ 193,750  100.0% Cost of goods sold   63,070    49.4%     43,641    50.4%   148,212    50.2%     100,396    51.8% Gross profit 64,675  50.6% 42,965  49.6% 147,194  49.8% 93,354  48.2%   Operating expenses Selling, general and administrative expenses   42,692    33.4%     28,482    32.9%   107,662    36.4%     70,329    36.3%   Income from operations 21,983  17.2% 14,483  16.7% 39,532  13.4% 23,025  11.9%   Other income (expense) Interest income (expense), net   177    0.1%     (836)   (0.9%)   1,058    0.3%     (2,124)   (1.1%)   Income before income taxes 22,160  17.3% 13,647  15.8% 40,590  13.7% 20,901  10.8% Provision for income taxes   6,190    4.8%     5,261    6.1%   13,462    4.5%     8,176    4.2%   Net income   15,970    12.5%     8,386    9.7%   27,128    9.2%     12,725    6.6%   Accretion of and cumulative preferred dividends on Series A Preferred Stock   --    0.0%     599    0.7%   --    0.0%     1,796    1.0%   Net income available to common shareholders $ 15,970    12.5%   $ 7,787    9.0% $ 27,128    9.2%   $ 10,929    5.6%   Net income available per common share Basic $ 0.34  $ 0.21  $ 0.58  $ 0.30  Diluted $ 0.32  $ 0.20  $ 0.55  $ 0.29    Weighted average common shares outstanding Basic 47,164  36,571  46,848  35,871  Diluted 49,599  39,324  49,512  38,064  NET REVENUES BY PRODUCT CATEGORY   Quarter Ended 9/30/06   Quarter Ended 9/30/05   % Change  Nine Months Ended 9/30/06   Nine Months Ended 9/30/05   % Change    Mens $ 79,233  $ 57,476  37.9% $ 173,620  $ 129,545  34.0% Womens 26,513  18,067  46.8% 59,586  36,770  62.1% Youth   10,980      6,783  61.9%   22,095      13,241  66.9% Apparel 116,726  82,326  41.8% 255,301  179,556  42.2% Footwear 2,001  --  --  17,585  --  --  Accessories   3,794      1,050  261.3%   11,481      7,359  56.0% Total net sales 122,521  83,376  47.0% 284,367  186,915  52.1% Licensing revenues   5,224      3,230  61.7%   11,039      6,835  61.5% Total net revenues $ 127,745    $ 86,606  47.5% $ 295,406    $ 193,750  52.5% Under Armour, Inc. As of September 30, 2006, December 31, 2005 and September 30, 2005 (in thousands) CONDENSED CONSOLIDATED BALANCE SHEETS As of 9/30/06   As of 12/31/05   As of 9/30/05 Assets Cash and cash equivalents $ 44,257  $ 62,977  $ 324  Accounts receivable, net 89,667  53,132  58,690  Inventories 74,972  53,607  50,277  Prepaid expenses, income taxes receivable and other current assets 8,105  5,252  4,900  Deferred income taxes   12,774      6,822      8,185    Total current assets 229,775  181,790  122,376    Property and equipment, net 25,804  20,865  20,192  Intangible asset, net 8,250  --  --  Deferred income taxes 192  --  --  Other non-current assets   948      1,032      1,955    Total assets $ 264,969    $ 203,687    $ 144,523    Liabilities, Mandatorily Redeemable Securities and Stockholders’ Equity Revolving credit facility $ --  $ --  $ 23,101  Accounts payable, accrued expenses and income taxes payable 60,941  43,864  44,942  Current maturities of long term debt   3,626      3,808      6,486    Total current liabilities 64,567  47,672  74,529    Long term debt, net of current maturities 3,593  4,583  26,955  Deferred income taxes --  330  586  Other long term liabilities   396      272      215    Total liabilities 68,556  52,857  102,285    Mandatorily Redeemable Series A Preferred Stock --  --  8,488    Total stockholders’ equity   196,413      150,830      33,750    Total liabilities, mandatorily redeemable securities and stockholders’ equity $ 264,969    $ 203,687    $ 144,523