Amer Sports, Inc.

Thank you for standing by. At this time, I would like to welcome everyone to today's Amherst Sports fourth quarter full year 2024 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 a question during this time, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw your question, simply press star one again. Thank you. I'd now like to turn the call over to Omar Saad, SVP, Capital Markets and Investor Relations. Omar, please go ahead.

Hello, everyone. Thanks for joining AMR Sports Earnings Call for the fourth quarter of fiscal year 2024. Earlier this morning, we announced our financial results for the quarter and year ended December 31st, 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 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 statements 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, then Andrew will provide a financial review at both the group and segment level, and also walk through our guidance for the first quarter and full year 2025. Our TARIC CEO, Stuart Hazelden, will join for the Q&A session. With that, I'll turn the call over to James.

Thanks, Omar. Fourth quarter was a very strong finish to a remarkable year for Emirates Sports. And we continue to enjoy strong momentum across all brands and geographies. Led by Acterix, our unique portfolio of premium technical brands continues to create white space and take market share and still has significant room for growth. In the fourth quarter, Amerisports Group delivered sales, adjusted margin, and EPS above expectations. We generated 23% sales growth and more than 300 base points of adjusted operating margin expansion led by strong growth and profitability in both the technical apparel and outdoor performance segments. For the year, we generated 18% revenue growth to $5.2 billion and 130 base points of adjusted operation margin expansion to 11.1%, both new records for the company. In Q4, all three of our big brands, Acterys, Salomon, and Wilson saw accelerating momentum. Originally, Great China and APEC continued to deliver strong growth, while both email and North America accelerated. Looking forward, we believe Amerisports is a very uniquely positioned company within the global sports and outdoor space. And several factors give me confidence for 2025 and beyond. First, we own and operate a unique portfolio of premium outdoor and sports brands. Each one is fueled by technical innovation and is positioned at the pinnacle of its segment. Our brands have high conversion and satisfaction, but are still small players with room to grow. Second, Octelix is a breakout growth story with great growth and profitability for the outdoor industry driven by its disruptive direct-to-consumer model and a unique competitive position. The brand is still very under-penetrated globally with a tremendous long-term growth path ahead. Third, we believe that Salomon sneakers have a unique performance position and design within the global sneaker market, but still very low market share and a close potential ahead, especially at this time when consumers are open to trying new sneaker brands. Fourth, Wharton and our winter sports equipment brands have authentic heritage, premium position, high-performance products, and the leading market positions. These high-market share franchises will deliver lower long-term growth in their core equipment business, but they still have large soft goods potential, especially the Wilson's Tennis 360. And fifth, we believe we have a very strong differentiated platform in Great China, where we continue to deliver best-in-class performance with strong momentum across all three brands. Before I turn over to Andrew, allow me to briefly recap key highlights from our three segments. Starting with technical apparel, which is led by our fastest growing and the largest brand, Acterix. Acterix achieved over $2 billion of sales in 2024. and delivered another great result in Q4, with strong growth across all regions, channels, and categories, especially footwear and women, which grow faster than the brand overall. We were encouraged to see the brand momentum in technical apparel, which generated a strong 29% Omnicom in Q4. Our differentiated stores continue to be at the heart of Acterys growth strategy and are critical to how we engage with consumers and the community. Acterys opened the next eight new retail stores in Q4, bringing the total net new store opening in 2024 to 33. Key new locations increased six openings in China, an alpha store in Japan, and our new store in Salt Lake City. Arcteryx store expansion strategy includes a mix of different formats, ranging from multi-layer large-scale ultra flagship stores to small format mountain town stores. For 2025, we plan to keep a similar opening pace with 25 to 30 net new stores. This includes a similar level of growth brainstorm openings as 2024, and closing certain outlets and other suboptimal locations. In Q4, we opened a four-level alpha store in Shinjuku, Tokyo, which is located in the heart of the city with an estimated 3.5 million people walking by daily. The store features the full range of characteristics and and our first ever beta launch in the country, offering a unique concierge service. And the top level has a rebirth service center, our platform for repair, trading, and upcycle gear. In New York City, our Soho Alpha store continues to exceed expectations since its opening in September. Notably, guests are responding very well to the largest Arc'teryx hourware offering in the city, as well as the store's unique rebirth service center. Rebirth continues to be an important strategy for Arc'teryx, driving strong guest engagement and elevating their in-store experience. Globally, in 2024, we opened 11 new rebirth service centers. And in January, We opened our first European mountain town shop in Chamonix, France, and we are very excited by the initial results there. Chamonix is one of the largest mountain resorts in the Alps and attracts a range of visitors from all over the world, from mountain enthusiasts to hardcore mountain athletes. This store comes after 13 years of engaging with European mountain athletes at our Appling Academy in Chamonix every summer, which allowed the brand to build a significant recognition and appreciation with local and global consumers. Shifting to product, footwear continues to be Acterys 5's growing category in Q4, as consumers continue to respond strongly to what we believe is the best line of technical performance footwear designed for mountains. Beyond the breakout success of the project, we are excited that our Syrian running shoe won best trail shoe award from Runners World UK and the Women's Running. Looking forward, we believe Arc'teryx has an even more exciting pipeline for shoe launch in 2025. We believe that will become a sizable and profitable growth avenue for activities both in own retail and certain brand-relevant wholesale accounts. Women also continue to perform extremely well in Q4 with double-digit growth across all regions, outpacing men's and brand growth in total. Soft turns, feminine, and neutral colors were popular with female consumers. Ski and snow products were especially strong with women, as we are seeing significantly improving brand awareness and affinity with women in both the U.S. and Europe. Innovation is at the heart of Arcade's DNA, and it's ranged from cutting-edge products such as our new electric avalanche airbag and award-winning mogul hiking pants to small evolutions of existing product lines such as our insulated version of the crack, which was a hit this winter season. This year, we also further strengthened the leadership team at Arcaris. We announced Matt Bolt as our new chief merchandising officer, an industry veteran with nearly two decades at Nike. We are also building an all-star team to develop our valence brands. which today accounts for 5% of Carrick's revenues, but we think has significant room for growth. This includes our new Valence GM, Marisa Padini, from Vance and the Valence Creative Director, Vance Stubbington, who joined from Lululemon and Ceri previously. We believe the addition of Marisa and Ben to our Valence team marks a pivotal moment in our journey to broaden the reach of our unique valence offering. Lastly, in technical apparel, we recently announced that Stefano Seccom will join April 1st as president of the Peak Performance brand. Stefano has worked at a variety of global sports, fashion, and outdoor brands, including most recently as CEO of the Warwich brand. Moving to the outdoor performance segment, which delivered a great quarter led by Salomon Footwear and Apparel, partially offset by softer trends in winter sports equipment. Salomon Footwear and Apparel now represent two-thirds of the outdoor performance segment, up significantly from 54% in 2022. Salomon's NIC surpassed $1 billion of sales in 2024. but it's still tiny relative to the $180 billion global sneaker market. We believe Salomon sneakers have an authentic and a unique market position with technical features designed for the mountain, but also great for everyday use. Our unique style and the technical attributes are resonating with consumers at a time when they are more receptive than ever to wearing new sneaker brands. Long-term, we expect Salomon softwares to grow double-digit annually. In Q4, Salomon footwear and apparel accelerate in every region led by Great China, APAC, and EMEA. Direct-to-consumer remains the strongest growth channel for the brand, and the sports style offering continued lead to footwear growth. Salomon apparel, bags, and socks are also experiencing great momentum. Originally, Salomon soft goods are experiencing great sales through in Europe, and we have noticed two new important trends in Europe worth calling out. Number one, Salomon performance sneakers are experiencing a demand recovery in Europe. And number two, Salomon pre-orders have shifted to solid positive growth after negative trends during the last couple years. when retailers were relying on advanced orders to chase demand. We are increasingly seeing Salomon sneakers sell through very well at retail, which is translating to stronger order books. We also opened two new Salomon stores in the quarter in European epicenters, London and Milano. In Asia, direct-to-consumer continues to be the critical growth channel for Salomon. Our Salomon compact shop format developed in China is working very well, and we believe these stores generate significant higher sales per square foot versus industry average. We are continuing to expand Salomon shops in Great China, opening 31 net new Salomon shops in Q4, including both owned stores and partner stores, bringing our total count to 196 in Great China. We believe Salomon has the opportunity to grow to several hundred locations over time in just Taiwan and the two cities. And in 2025, we expect to open about 100 new Salomon shops in Guichina, including Panadol's. Our new Salomon flagship in Shanghai is performing very well in the first few months. This store represents pinnacle expression of the brand in China. which combines footwear and apparel in a comprehensive offering and a highly immersed brand experience. In the U.S., the world's largest sneaker market, we continue to lay the groundwork for Salomon's footwear long-term opportunity. Our first U.S. store, a pop-up shop in New York City, continues to perform very well. We are seeing strong early brand buzz with key sneaker retailers across New York City And we expect to open at least one more Salomon shop in New York this year. The wholesale channel will be important to unlock Salomon potential in the U.S. And we are beginning to successfully leverage Salomon brand heat to expand our presence with top tier existing customers, such as Nord Stream and KISS, as well as new retailers, including shoe patterns and the shears. In winter sports equipment, we continue to win with both leisure skiers and the world-class professionals. Atomics had great momentum at the World Championships in Australia this month. Atomic athletes Michaela Shuffrin and Breezy Johnson won gold on our iconic wrestler skis. Moving on to ball and racket highlights. We are pleased that ball and racket growth trends continue to improve in Q4, with growth accelerating to 22%, driven by strong trends in racket sports and also lapping inventory queries at the end of last year. Our Tennis 360 continues to resonate very strongly with consumers, from performance rackets to our apparel and footwear offerings. In 2024, Wilson returned to the number one U.S. market share in performance records, led by the recent break in the larger federal record launch. And in January, we launched Crash V3, which is also off to a strong start. Also, Wilson's software continues excellent growth, doubling in 2024. Apparel and footwear now represent 10% of fall and racket segment sales. As I mentioned, we are seeing strong reception to our Western tennis apparel and footwear offering, especially in the US and China. In Q4, we opened the next six new Western brand shops in China, bringing the total owned and partner store count in the region to 43. In 2025, We plan to open approximately 50 Wilson tennis 360 shops in China, between owned and partner laws. In North America, we opened a tennis 360 concept store in the Dallas North Park Mall in Q4, which has been performing very well. And we also will begin testing tennis apparel in approximately 56 sporting goods locations this year. including a tennis 360 shopping shop in Miami. With that, I will turn it over to Andrew.