Amer Sports, Inc.

Thank you for standing by. My name is JL and I will be your conference operator today. At this time, I would like to welcome everyone to the AmerSports 1Q24 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask questions during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the conference over to Omar Saad, VP of Finance and Investor Relations. You may begin.

Hello, everyone, and thanks for joining AMR Sports' first quarter 2024 earnings call. Earlier this morning, we announced our financial results for the first quarter of fiscal year 2024. The release can be found on our IR website, investors.amrsports.com. A quick reminder to everyone that today's call will contain certain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements reflect our current expectations and beliefs only, and are subject to certain risks and uncertainties that could cause actual results to differ materially. Please see the Safe Harbor Statement in our earnings release and SEC filings. We will also discuss certain non-IFRS financial measures. Please refer to our earnings release for important information regarding such non-IFRS financial measures, including reconciliation to the most comparable IFRS financial measures. We will begin with prepared remarks from our CEO, James Zeng, and CFO, Andrew Page, followed by a Q&A session until approximately 9 a.m. Eastern. Arc'teryx CEO, Stuart Hazelden, will also join for the Q&A portion of the call. With that, I'll turn the call over to James.

Thanks, Omar. The momentum behind our strong financial performance has continued through the first quarter of 2024, as we delivered sales in the margin above our guidance. Our transformation to our brand direct finish model four years ago continues to fuel Amerisport's profitable growth today and will for years to come. Our high performance technical products are resonating with consumers globally and we are getting share in the premium sports and outdoor market. Our consumers are engaged and our end markets are healthy, giving us confidence that our unique portfolio of brands is well positioned to deliver another great year in 2024. In the first quarter, we generated 12.6% sales growth of plus 14.2% excluding currency impacts, and we achieved an 11% adjusted operating margin above our expectations. We continue to enjoy strong gross margin expansion which reflects the strong pricing power of our brands, as well as the ongoing mixed shift toward our high-margin franchise, Arc'teryx, which continues to generate best-in-class financial performance. And, as Andrew will discuss, we have significantly improved our balance sheet. Five key factors give me confidence for 2024 and beyond. First, we own and operate a unique and valuable portfolio of premium outdoor and sports brands. Each one is fueled by technical innovations and positioned at the pinnacle of its respective segments. Our brands have high engagement, conversion, and satisfaction with consumers everywhere, but are still relatively small players on the global stage with significant room to grow. Second, Acterys is a breakout growth story with unprecedented growth and profitability for the outdoor industry, charting new territory with a disruptive DTC model and a strong competitive position. Filled by Arc'teryx, Amersfoort's highest margin channels, regions, and categories are growing the fastest. Third, Solomon, Wilson, and all of our other brands are also healthy. They have long-standing authentic heritage, premium position, high-performance products, and a leading market share. Although they are earlier in their growth inflection, we are building very strong foundations for future growth for these brands across categories and the geography. Fourth, we believe our deep expertise and the unique scalable operating platform in Great China gives us a significant competitive advantage across the brands in our portfolio in this large and important consumer market. Last but not least is team. All great journeys begin with a great team. And we have assembled an experienced management team with a great track record that's energized and motivated to drive value creation for our stakeholders. Okay. Now, let's review the performance of our brand segments. First, technical apparel. Led by Acterix, technical apparel revenues grow 44% to $510 million in Q1. Excluding FX, technical apparel sales increased 48%. The segment was fueled by 46% DTC growth, including a 36 percent omnicom against a difficult plus 61 compression from last year in the first quarter technical apparel growth in our direct channel was fueled by both new and existing consumers and both strong traffic and the conversion trends in stores and online as a reminder Omnicom incorporates growth from both own retail stores and e-commerce sites that have been open at least 13 months. The Arc'teryx brand continues to experience broad-based trends and is over-delivering across every region, channel, and category. DTC remains the core growth engine, but we also experience trends in the wholesale channel, which grows 40% for the segment. Wholesale growth was driven by existing accounts and doors, not expansion into new accounts or new doors. Wholesale performance was boosted by strong reorders and continued improvement in on-time delivery and inventory availability. Please note that we don't expect technical apparel wholesale to continue growing at this rate in Q2 or for the remainder of the year. Originally, technical apparel grew farthest in Asia Pacific, led by Japan, followed by the Americas and the Great China. In Japan, stores were also left in very low inventory levels from last year. Email growth was driven by activities offset with a decline at peak performance, which faced a difficult growth comparison due to promotional activities in the prior year period. Importantly, Acterys continues to generate outside growth in key opportunity areas, including footwear, women's, and haggis, and accessories. Acterys did a great job executing its commercial expansion strategy in Q1. With several brand developments I would like to highlight. This was the first full quarter for our new Shanghai flagship, which we call The Music. This four-story, one-of-a-kind, highly experiential store in Wheelock Square represents the pinnacle expression of the Arc'teryx brand at retail and has created incredible buzz for us in the market. We expect this store to generate sales well over $20 million in its first year. Globally, we execute well our retail expansion plans. opening nine new Akerix locations in total in Q1, including Pasadena, Nanjing, China, Kobe Garden, London, and in Paris, a shop-in-shop in Plaza Martin department store. Second, Akerix launched its first footwear line that was designed, developed, and sourced by the in-house footwear team in Portland, Oregon. Arcteryx started its footwear journey seven years ago, leveraging Salomon's existing platform. And three years ago, Arcteryx began building in-house footwear capabilities. This launch represents the first model designed by the Arcteryx team. We are very pleased with the market reception to what we believe is the best line of technical performance footwear designed for the mountain asset. Since the launch, The penetration of footwear to Akari's total revenue has jumped from 6% to 10%, and the craft has emerged as our breakout style. Based on the enthusiastic response from consumers and the key wholesale accounts, we are gaining early confidence that footwear can become a meaningful, profitable growth avenue for the brand. Lastly, I'd like to address the upcoming 2025 change in regulation against PFAS for aerochemicals. These new regulations are not expected to have an adverse impact on our business. We have been at the forefront of the industry, developing alternative waterproof materials with our key partners for a number of years. And the early reads from the consumer are very encouraging. The Acclex team has already started selling the new PFAS-compliant materials in our most popular model with no negative impact on sales trends. The consumer isn't reacting to any difference in the look, feel, or performance of the new materials. Across the rest of the portfolio, our other brands have much lower exposure and are already well down the path of transition to PFAS-free inventory by next year. Turning to the outdoor performance segment, where revenue increased 6% to $400 million, above our guidance for fresh sales. Excluding FX, outdoor performance sales increased 6%. The upside was driven by strong top-line performance in Solomon DTC and the soft goods. particularly footwear in Asia Pacific and Great China. This stress was partially affected by softness in our winter sports equipment franchises, which were negatively impacted by warm weather late in the ski season, 2022 delivery shifts, and the elevated inventory levels in the market. Although winter sports equipment sales declined in Q1, When we look at the performance of that phase over the entire winter ski season, which starts with wholesale shipment in the third quarter, our portfolio of brands had a strong season overall and a top market share. The industry is healthy with solid annual bookings and the traffic in the big skiing epicenter in Europe and the Americas. In the DTC channel, Outdoor performance grew 42% in Q1, driven by strong results in both e-commerce and stores fueled by increased traffic and conversion. Wholesale declined 3% and was negatively impacted by challenging trends in the outdoor sporting goods channels in the Americas. Regionally, Great China more than doubled. while Asia-Pacific growth double-digit driven by an overachievement in footwear, especially Salomon's four-star category. The growth in Asia was partially offset by our decline in the Americas, as the North America business has been affected by soft pre-orders from key retailers, who are relying more on refreshment orders as they order stock closer to need. Email single-digit growth was led by softwares, partially offset by winter sports equipment softwares. As you know, we are undergoing a minimum transition at Solomon, and I'm operating as interim brand CEO, where we perform a comprehensive search for the next brand leader. Now six weeks into my interim role, I'm even more confident in the Solomon brand, our team. Salomon is a strong and unique brand with a sizable opportunity to grow its footwear franchise globally. We believe the global sneaker market is at a unique crossroads. More than ever before, consumers are open to new brands, styles, and products. And we believe Salomon's authentic mountain sports heritage and unique performance technology will allow us to become one of the most impactful upcoming new brands. I see three key strategic priorities for the Salomon brand as we look to accelerate footwear growth globally, particularly in EMEA and North America. Number one, the new customer acquisition. Number two, amplifying leadership in footwear. And number three, elevating the accessibility and the visibility of Salomon's products. I believe it's very important for the brand to win its home market of Europe, and we are focused on leveraging both the Paris Olympics this summer and the 2026 Milano-Cortina Olympic Games, where Salomon is an official partner. These high-profile events will elevate the profile and the reach of Salomon across Europe. To support our commercial strategy in email and to build upon our brand seed along these events, we are opening a settlement flagship on the Champs-Élysées in addition to our recent store opening lemonade. I'm confident in the brand and our team headquarters in Annecy, France, to deliver continued profitable growth in the near and the long term. With that, I will turn it over to Andrew to discuss Ball and Racket as well as the group result and the outlook. Thanks, James.