Under Armour, Inc.

Good morning, everyone. Thank you for standing by, and welcome to the transition quarter-ended March 31st conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. And to ask a question during the session, you will need to press star 1 on your telephone. And please be advised that today's conference is being recorded. And if you require any further assistance, you may press star 0. I would now like to hand the conference over to your speaker today, Mr. Lance Olega, Senior Vice President, Investor Relations and Corporate Development.

Good morning, and thank you to everyone for joining us for Under Armour's transition quarter ended March 31, 2022 earnings conference call. The information provided on today's call will include forward-looking statements that reflect Under Armour's view of its current business as of May 6, 2022. Statements made are subject to risks and uncertainties detailed in documents regularly filed with the SEC, and the safe harbor statement included in this morning's press release, both of which can be found on our website at about.underarmor.com. It is important to note that the ongoing uncertainty related to COVID-19 and its potential impact on the global retail environment could continue to impact our business results. We may reference non-GAAP financial information on today's call, including adjusted and currency neutral terms, which are defined under SEC rules in this morning's press release, You may also hear us refer to amounts under U.S. GAAP. Reconciliations of GAAP to non-GAAP measures can also be found in our press release, which identify and quantify all excluded items and provides our view about why we believe this information is helpful to investors. Joining us on today's call will be Under Armour President and CEO Patrick Frisk and CFO David Bergman. Go ahead, Patrick.

Thanks, Lance, and good morning to everyone. On today's call, we'll review results from our transition quarter that ended March 31st, 2022, and provide our initial outlook for fiscal 23. Having successfully executed a multi-year transformation after delivering the best year in Under Armour's history in 2021, results for our transition period came in lighter than we had expected due to ongoing supply challenges and emergent COVID-19 impacts on our Asia Pacific business. These trends, which we believe to be temporary, are also expected to impact how fiscal 23 is shaping up. Dave will discuss these elements later in our call. Yet, despite these near-term headwinds, I'd underscore the confidence we have in our long-term growth potential. Over the past few years, following the completion of a multi-year transformation, including work to recenter our strategy, operations, and financial discipline, we've strengthened our brand, delivered higher quality revenue, and are managing our business for improved profitability, including improved margins, cash flow, and return on capital. The engine that makes this model work most efficiently is profitable top line growth. This is my number one priority as CEO. We believe our direct consumer footwear women's and international businesses will drive this growth over the long term. Across these drivers, our growth strategy is anchored in five platforms engineered to accelerate our ability to scale and grow the Under Armour brand. First is consumer centricity, which lies at the core of our reason for being. To activate our purpose of empowering those who strive for more, we are committed to having a deep understanding of our athletes, their functional and emotional needs, and their behaviors and preferences as they complete their journey from discovery to purchase to advocacy. By incorporating insights, data, and analytics, we work to ensure we evolve as consumers evolve, creating repeatable connection points. Our second platform, Product Engine, is the creation of industry-leading innovations. These inventions wrapped in art enable athletes to train, compete, and recover at the highest level possible. Leveraging consumer insight ensures our product is optimized for performance, style, and cultural relevance. Through our train, compete, and recover architecture, our constant focus is on delivering tangible performance advantages to drive loyalty, always ensuring we deliver products that athletes didn't know they needed and now can't imagine living without. Third is our go-to-market platform, which is how we manage the marketplace, balancing product creation, storytelling, and experiences, with strong commercial relationships among our wholesale partners. We've made considerable progress here by optimizing our work process calendar, delivering increasingly better segmentation, and ultimately ensuring that wherever and whenever we show up, consumers are engaging with us in a brand-right premium way. Fourth is end-to-end planning, which is another Under Armour innovating product platform. As we work to solve complexity among our product creation and lifecycle management, sustainability, logistics, and financial forecasting, We're collaborating on ways to bring supply chain discipline, company functions, suppliers, and customers in sync to create the most optimal ecosystem possible. Having completed work on many of the individual components of this effort, we are now focused on connecting them to get even sharper and more efficient as we grow. Finally, it's omnichannel excellence, which targets delivering a seamless premium experience across all brand touchpoints. By establishing a voice of the consumer capability, we're utilizing a channel agnostic approach to map an athlete's purchase journey, identifying and reducing friction points along the way. Furthermore, harnessing the power of our e-commerce platform to improve performance and speed, along with endless aisle, buy online and pick up in store, and flex payment capabilities, we're driving a more enjoyable digital experience. Adding even more horsepower to this effort and taking lessons learned from a successful program implemented in China over the past year, We plan to launch a loyalty test pilot in North America by the end of 2022. This program will engage consumers more deeply with all facets of our human performance system by our content, events, rewards, and community-based interactions, all to make the focused performer better. Additionally, we continue to evolve our brand house and factory house store concepts, strengthening our ability to deliver an efficient and well-balanced multi-channel experience. When combined, these platforms activate a powerful ecosystem of how we show up to empower and deliver performance for Under Armour athletes. At the short point of connectivity and inspiration, we lead with team sports and our incredible roster of sports assets. And so far in 2022, we've seen incredible examples of Under Armour making this happen. Starting in basketball, we were thrilled to see 29 Under Armour NCAA teams qualify for this year's Men's and Women's March Madness Tournament. and they left it all on the court, playing with the hunger, grit, and swagger that our athletes are known for. By starting and ending the season in first place and playing in a women's specific flow break through two shoes, the South Carolina women's basketball team brought their second national championship home to Columbia. Built and designed for women, the breakthrough through two is optimized anatomically for the best fit, support, and grip on the court. Looking to this fall, we're excited to add number three to this highly coveted franchise. In the NBA, Stephen Curry hit a record 16 three-pointers on his way to 50 points to win MVP in his eighth consecutive All-Star Game appearance in February, wearing his signature Curry 9 basketball shoe. Steph's impact off the court is equally impressive, and Under Armour is proud to stand with him, having donated to the Cleveland Metro School District to support their basketball programming. In the other conference, Joel Embiid is having his best year ever, becoming the first international player in history to to win the NBA scoring title and is in the running for overall MVP for the current season. We are also honored that our partner Dow and Under Armour won gold at the 2022 Edison Awards in the performance-based design category. The rubberless unit sole technology used in our UA Flow lightweight basketball and running shoes was designed to bring energy return, shock absorption, and traction to enhance field, cushion, and speed without sacrificing durability. We are proud of the work we've done together with Dow to bring this innovative technology to market that serves our purpose of making athletes better while improving manufacturing efficiency and reducing material usage. From a global football perspective, we recently announced our partnership with Aston Villa center back and captain Tyrone Mings. In addition to our training product and his boot of choice, the UA clone magnetical, Mings cited our values as a significant factors in signing with us. which is well aligned with his plan for community givebacks and empowering access to sport. This is an outstanding example of how Under Armour being purpose-led is attracting the talent we believe exemplifies the balance necessary to build an eternal brand. Next up, Major League Baseball is well underway, and we're excited to watch our athletes build on their momentum from last season. From Bryce Harper's 2021 National MVP and his signature UA Harper 6 cleat that delivers speed, traction, and power, To Freddie Freeman, building off last year's World Series performance, there's another fantastic season of baseball ahead of us. And we'd be remiss not to call out Jordan Speed for taking home his 13th PGA Tour victory with his RBC Heritage Triumph in Hilton Head, pulling out a win following a sudden death playoff. Building on the excitement of this win, we're also incredibly proud to share that our 10-year partnership with Jordan has been extended by another four years through 2029. These are just a few examples of how we drive brand affinity utilizing the best athletes on the planet, a halo that manifests itself through our run, train, and recover products. And in the second half of 2022, we have several exciting innovations coming. In our run business, we are driving loyalty through our innovation franchises, a strategy that hits two of our long-term growth drivers, footwear and women's. Translating success from our basketball business We are excited to launch our first ever women's Pacific running footwear with the UA flow synchronicity expected this fall. With the midsole optimized for ground feel and geometry engineered around her anatomical differences, we see this as a game changer in how Under Armour makes her better. Also launching this fall are reimagined versions of two of our most popular Hover franchises, The UA Hover Phantom 3 delivers improved step-in comfort with newly developed knit advancement and, for the very first time, a 100% full hover platform for even more advanced cushioning. The UA Hover Infinite 4, a long-distance running shoe, features less rubber underfoot for a more flexible sensation, balanced by a firmer carrier for a more efficient footplant as the miles fly by. We are equally excited about upcoming apparel launches as well. A few highlights in our train business include expanding our high-performance UA Rush technology this fall. Rush is designed with mineraline fabrics to return infrared energy to your body, helping you work harder and recover. Combined with our seamless and smart form technologies, we're redefining fit, form, and function across performance tops, bottoms, and bras. And finally, when athletes recover consistently, they're able to push themselves to become better, enabling higher performance levels than ever thought possible. In this respect, it's time we reinvented a classic, and we're doing just that. This fall, we are launching our next evolution of fleas across all collections. This new, incredibly warm and lightweight material will be featured in one of Under Armour's most popular franchises, Armour Fleas, with an improved athletic fit, premium finishing details, just the right amount of stretch. Additionally, this falls flee to use over 80% sustainable recycled fibers on our way to targeting 100% recycled materials in 2023. Another highlight and in line with our core value of acting sustainably are our investments in amplifying our sustainability efforts, including building a new global headquarter here in Baltimore. This new brand center will help fuel our next chapter of growth and our goal of using 80% renewable energy by 2025 and a 30% reduction in greenhouse gas emissions by 2030. Within sustainability, we are focused on three main areas. First, from a materials perspective, we are working to redefine yarns to include fabrics that have improved stretch, dry faster, perform better, and most importantly, are 100% recyclable. Second, from a chemistry standpoint, we are leveraging solutions and high-efficiency dyeing processes that yield improved colors while reducing water usage and improving wastewater quality. And finally, from a process viewpoint, as we continue to utilize even more recycled material in our own manufacturing methods, we are working hard to establish a circularity model to ensure we're leaving our home field cleaner and less depleted than before. More will come on this when we release our 2022 sustainability report, which is expected this fall. Turning to our longer-term view, I'd like to emphasize my confidence in the balance we've struck among our strategic operational and financial principles to fuel sustainable profitable growth. And while we work done to grow the brand over the past few years has come to fruition, growth for the company, at least in fiscal 23, will be tempered compared to how we see the trajectory developing in the years that follow. I close by underscoring that Under Armour is a growth company with an incredible opportunity ahead of us. Our fundamentals are strong, our underlying brand strength is improving, and our confidence remain unchanged. That said, it's essential to look past near-term pressures and focus on the long-standing influences. The price of freight, supply chain challenges, and COVID-19 are not as powerful as the global passion for sport. I'm confident that we are well-positioned to deliver on our promise of growth as we work through 2023 and beyond. And now, I'll turn it over to Dave.