Amer Sports, Inc.

Thank you for standing by and welcome to the armor sports second quarter fiscal 2024 earnings conference 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 a question during this time simply press star followed by the number one on your telephone keypad if you would like to withdraw your question again press the star one Thank you. I'd now like to turn the call over to Omar Saad, Vice President of Finance and Investor Relations. You may begin.

Hello, everyone. Thanks for joining AMR Sports Earnings Call for the second quarter of fiscal year 2024. Earlier this morning, we announced our financial results for the quarter ended June 30, 2024, and the release can be found on our IR website, investors.amrsports.com. A quick reminder to everyone that today's call will contain 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 reconciliations to the most comparable IFRS financial measures. We'll begin with prepared remarks from our CEO, James Zhang, and CFO, Andrew Page, followed by a Q&A session until approximately 9 a.m. Eastern. James will cover key operational and brand highlights, and Andrew will provide a financial review at both the group and segment level, and also walk through our updated guidance. Our Tarek CEO, Stuart Hazelden, will join for the Q&A session. With that, I'll turn the call over to James.

Thanks, Omar. We are pleased to announce strong second quarter results. with sales margin and the EPS ahead of our guidance. The momentum behind our unique portfolio of premium sports and outdoor brands continues, and we are generating top-tier growth and the margin expansion within our industry. Our global end markets are healthy and growing, and we are taking market shares, positioning us to deliver another record year in 2024. We generate 16% sales growth in Q2, or plus 18% on our constant currency basis led by our flagship brand, Arc'teryx. Although we benefit from a two-point shift of wholesale shipments from 3Q into 2Q, our underlying growth momentum is clear. We achieved an area of 3% adjusted operation margin, also well above our expectations. as we continue to enjoy strong gross margin expansion driven by the pricing power of our brands and a healthy mix shift toward our highest margin franchise, Acterys. Looking forward, several facts give me confidence for the rest of 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 innovation and the position 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, Octelix is a breakout growth story with unprecedented growth and profitability for the outdoor industry. and it is charting new territory with its disruptive DTC model and a strong competitive position. Acterys' world-class products plus the authentic and deep connection with consumers is allowing us to have strong success in large new categories, such as footwear and women's, and also incredible momentum across all major geographies. Third, Solomon Wilson, and all of our other brands are also healthy. They have longstanding authentic heritage, premium positioning, and high performance products. Both Salomon and Wilson have leading market share within their heritage equipment business, but still have very small soft goods franchises with large growth opportunities ahead, especially in Salomon forward. And fourth, where other consumer companies are having challenges in Great China. We generally more than 50% growth there, and we continue to well outperform the market. Importantly, we are seeing strong momentum across all of our three big brands. A few reasons I'd like to highlight why we are doing so well in China. Number one, our brands compete in one The health and the fast-growing consumer segments in China, the premium sports and outdoor markets, the outdoor trend in China is very strong. Even beyond the traditional male consumer, the outdoor category is attracting younger consumers, female consumers, and we also see more luxury shoppers spending in our categories. The China consumer landscape today has evolved into a market of winners and losers, with some brands doing extremely well and others underperforming. Our few small specialized brands with deep expertise and high quality and performance resonate strongly with Chinese shoppers. Thirdly, and the most important, we believe we have the best team in China. Our deep expertise and unique Scalable operating platform gives us a significant competitive advantage across portfolio. Before Andrew's financial discussion, I'd like to share some key highlights from our segments in Q2. Starting with Technic Apparel, which is led by our fastest-growing and now largest brand, Acterys. Acterys delivered another very strong quarter with healthy growth across all regions, channels, and categories, especially footwear, women's, and high-shirt jackets. Acterys' brand momentum was most evident in the very strong Omnicom performance against a very difficult growth comparison from last year. Globally, Acterys is well executing its retail expansion plan. opening 17 net new brand stores in one edge, including 13 net new locations in 2Q. Bringing the total owned brand store count to 125. Key new locations this quarter included Broad Street in Toronto, as well as the La Marais and the La Marienne in Paris, which have emerged as standout locations with high engagement from local consumers in France. We also opened three stores in Great China and the one Los Angeles stores in Brentwood. All of these new stores have performed exceptionally well. We are also excited to open our New York Soho flagship store this week with grand opening set for early September. This new alpha store will feature our most pinnacle expression of rebirth yet. including shop ball re-gear installed for the first time, a large reverse service center facility for care and repair, and much more. Shifting to products, recall that Acterys recently launched its first footwear line that was designed, developed, and sourced by our in-house footwear team. We continue to be extremely pleased with the reception to what we believe is the best line of technical performance footwear designed for the mountain athletes. Since the launch, penetration of footwear to Acterys total revenues has jumped from 6% to 10%, often selling out of our most popular styles, especially the crack. Because of the unique position of Acterys footwear in the market, the strong sales in our DTC channel and the increased interest from wholesale accounts Our confidence is growing that footwear will become a very sizable and profitable growth avenue for the brand, both in home stores and the brand-relevant wholesale accounts. Women's continues to perform extremely well, growing faster than the brand overall. Women's outperforms is driven by soft share and the wind share, particularly downer and squamish franchises. Women's Shares of Sales is already more than 20% of the business, and we see great upside in the category as we add more colorways, models, and style options that resonate with her. In May, Arc'teryx also recently opened a cutting-edge creation center in Tokyo. This design space will serve as an innovation hub reflecting local creativity, culture, and outdoor community. A quick update on our new EPE product, which comprise with the ban on PFAS, forever chemicals traditionally used in waterproof materials. Sales of our iconic better jacket have accelerated since switching to compliant material. Our customers love the look, feel, and the performance of the new material. Acterys also continues to execute cutting-edge community engagement programs. This summer, Acterys launched gym residence in climbing gyms from New York to Paris to San Francisco as part of the brand Summer of Climb. Investments in brand awareness and activations that fit of the global excitement and the popularity of climbing is driven awareness and the position of Acterys, which is at the heart of this phenomenon. Moving to the outdoor performance segment, which also delivers upside to our expectation led by Solomon Fulwell, partially offset by softer trends in winter sports equipment. A quick reminder that the outdoor performance is comprised of two business that operate in unique environment. First, winter sports equipment, which includes ski, snowboard, and snow sports equipment across the Solomon, Atomic, and Amara brands. These are long-standing winter sports equipment franchise that already have high market share, a very strong competitive position, and the industry leading scale and the profitability, although less growth runway ahead given the already high market shares. Then we also have the and apparel franchise, which is a higher margin, faster-growing business. but still with very low market share of the global sneaker market. Today, it represents approximately 66% of outdoor performance segment sales, up significantly from 54% in 2022. We believe Salomon sneakers have an authentic and unique market position with technical features designed for the mountain, but also great for everyday use. Salomon shoes offer consumers unique styles and technical attributes at a time when consumers are more receptive than ever to wearing new sneaker brands. Looking forward, we expect Salomon soft gears to grow double-digit annually over the long term. In the second quarter, Salomon footwear showed especially strong traction in Great China and in APEC. where consumers love our sports style offering that combines a distinct trendy look with high technical features. In China, we have created an entire new category called Outdoor Sneakers, which especially resonates with young consumers. We opened 27 salami shops in Q2, including both owned stores and licensed stores. In Great China, bringing our total count to 136. We expect to end 2024 with about 200 owned and licensed Salomon stores in China, with the opportunity to grow several hundred locations just in Tier 1 and Tier 2 cities. In 2Q, we also opened a new shop in Osaka, Japan, which has become one of highest productivity shops, well received by both local consumers and the tourists. In the brand's home market of France, ahead of the recent Paris Olympics. We opened our Salomon flagship store on the Champs-Élysées in addition to our recent store opening in Les Marais. Both new stores have performed extremely well in the first month and they represent the highest amount of consumers have to engage with the Salomon brand in its own environment. The Champs-Élysées store has created a landmark presence to showcase the breadth and the depth for Salomon's unique offering in its home market, while Le Marais Shoppe is a footwear-only concept store, which has proven to be a particularly successful model that we will replicate across EMEA with three more stores in Paris, two in London and two in Milan. We are also excited to share that we will open in October a pop-up store in New York City in Soho, which will see the market with our first brand store in the city ahead of our plan to open one to two permanent New York stores in 2025. As you know, we are undergoing a measurement transition at Salomon, and I'm operating as interim brand CEO where we perform a comprehensive search for the next brand leaders over the next 12 months. Over four months in the low, I'm confident in the Salomon brand and our team as we continue to optimize the go-to-market strategy and the sales structure to maximize potential of our Salomon forward business. Moving on to ball and racket highlights. We will pre-select ball and racket return to growth in 2Q as we expect driven by improving selling to the retail channel. Still in its early stage, our 10360 strategy is proving to be a key driver for the Werson franchise led by apparel and footwear growth, accelerating expansion of Werson 10360 shops in China and a key new product launch. We are particularly excited that Roger Fisher is back and active with the Werson brand again. Roger will have his own line of premium performance rackets, bags, and accessories at Wilson called RF, which launched on his birthday, August 8. As you know, Roger is a living legend in tennis, and this new product line has been met with a very enthusiastic response from the market. Wilson is also launching the first tennis shoe designed explicitly for female tennis players called the Intrigue. This shoe combines the comfort and the support of modern form technology without losing any of the side-to-side stability required for tennis. Our 360 tennis athlete, Marta Kostjak, will wear it for the first time in the U.S. Open later this month. Western tennis and the Western China had a big moment recently during the Summer Olympics when Qingwen Zheng won gold in playing with her Wersen racquet. This feat didn't go unnoticed in her home countries as sales of Wersen racquets rose 20 times that day. There are 19 million tennis participants in Guichina. Last but not least, Catherine Clark is also elevating brand heat as the face of Wersen Festival. Her signature basketball collection sold exclusively online so far, sold out in record time. And we expect our catering club franchise to accelerate in H2 with the launch in select wholesale accounts. With that, I will turn it over to Andrew.