Under Armour, Inc.

Thank you for standing by and welcome to the Under Armour Inc. Q1 2023 earnings webcast and 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 your question has been answered or you'd like to withdraw your question, again press the star one. We ask that you limit yourself to one question and one follow-up to allow everyone an opportunity. Thank you. I would now like to turn the conference over to Lance Olega, SVP, IR, and Corporate Development. Mr. Olega, please go ahead.

Thank you, and good morning, everyone. Thanks for joining us on Under Armour's first quarter fiscal 2023 earnings 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 August 3rd, 2022. Statements made are subject to risks and uncertainties that are detailed in documents regularly filed with the SEC, and a safe harbor statement included in this morning's press release, both of which can be found on our website at about.underarmour.com. It's important to note that the ongoing uncertainty related to COVID-19 and its potential effects on global retail environment could continue to impact our business results moving forward. 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 GAAP 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 Executive Chairman and Branch Chief Kevin Plank. Interim President and CEO Colin Brown, and CFO David Bergman.

Kevin? Thanks, Lance, and good morning, everyone. It's my great privilege to be with you on the call today, joining Colin and Dave, who will walk through our results and provide some context as we're thinking about the year. I'm going to kick us off, though, here at the top and cover some of the broader aspects of where we are with the brand right now and the opportunities and potential that we see for Under Armour. Following my comments, I'll be hopping off the call and let Colin and Dave get to their scripts and handle Q&A. So, throughout the pandemic and general uncertainty that the last several years have brought us, we've become quite adept at working through incredibly dynamic environments. And during this time, we've strengthened our strategic, operational, and financial foundations. But along the way, we've never wavered in putting the Under Armour brand and our relationship with athletes first. The parts of our business and strategy that made us successful, we will, of course, focus on reclaiming. But we are not trying to recreate the success we've had in the past. We're a better business today with a stronger balance sheet, wiser leadership, and have been tested. We have no delusions of, quote-unquote, getting back to any previous chapter in our past. We are both looking and moving forward. So with change as a constant backdrop, the ability to pivot and evolve is critical to ensuring future success. And we have exercised and strengthened this adept-to-change muscle that any eternal brand requires. In this respect, let me begin with an update on our search for UA's next CEO. The board and I are focused on our search for a permanent CEO, a proven leader capable of amplifying our existing strategy, and a now large and mature public company, a professional who can technically do the job while simplifying the definition of success in that job. The fundamentals are essential, but so is our inspiration. Our next chapter will be met with the simplicity of understanding that our role is to inspire our athletes, teammates, customers, and all stakeholders to love UA. We believe this will drive more robust top-line growth and increased profitability over the long term. Take care of the brand. Optimize the assets we already have, as there are so many, from partnerships to athlete relationships to being opportunistic where it makes sense. Drive love for the UA brand, and the rest will follow. That's the message for our next CEO. And to be clear, Under Armour is not standing still, nor without leadership. In fact, in his first 60 days, Colin Brown, our interim president and CEO, has done an outstanding job stepping in to manage our business, and the team is 17,000 strong here at Under Armour. The board is running a formal process led by Karen Katz, an active search for the terrific queue of proven leaders and high potentials across various industries. The pool we have to choose from is thorough and robust, including Colin, and we'll make a terrific choice for the next CEO of Under Armour before year's end. I'd now like to lay out where we are. Proprioception is a word that was used to describe compression when I first began researching the idea of UA back in 1996, and its meaning still sits with me today. In essence, it describes how compression, when worn on the body, can create a greater sense of knowing where the body is in space. Well, today at UA, our proprioception is on, and we're fully aware of where UA stands and the opportunities that come with it. Understanding the incredible resources we now have, that to even try to replicate UA would require a fortune of dollars, decades of time, and a relationship with consumers to create a brand feeling that you are not just buying apparel, footwear, and accessories, but real science and innovation that, as our mission statement reads, will make you better. We are a brand that has 1,400 global UA stores across partners and owned stores around the world, 10,000 points of retail distribution in the United States, an authenticity that is undeniable. From this brand being born on a football field at the University of Maryland, we bleed authentic. The team and league relationships we have in the U.S. alone include more than 450 outfitting contracts with colleges. more than 2,000 contracts with high schools, and nearly 1,000 club and travel teams, the overwhelming majority of which pay to have UA on their uniforms. Our aided brand awareness metrics where we compete are a stunning 92% in the United States, confirmed by more than 600,000 consumers that our insights team has spoken to in the last several years. Breaking that out into the biggest global markets means solid consumer awareness from Germany and the U.K. to China and Japan. And while the metrics may vary, there's a consistency in who UA is and what we do for athletes. It means building spacesuits that can travel into the atmosphere for Virgin Galactic, soccer boots for Trent Alexander Arnold of Liverpool in the English Premiership, as well as building the best football uniforms on the planet for the likes of Notre Dame, Auburn, and Wisconsin, as well as cleats and gloves for the greatest football player the planet has ever seen in Tom Brady, who actually turns 45 today, so happy birthday, Tom. It means proving that we're a basketball brand and expect a challenge in this space with the benefit of 29 UA outfitted teams wearing our uniforms and basketball shoes to the NCAA men's and women's tournaments this past March, including the women's national champion South Carolina Gamecocks, as well as having the NBA scoring champion and perennial all-star Joel Embiid wearing UA deep into the playoffs. And oh yeah, having Stephen Curry. the reigning greatest basketball player in the world, wearing UA footwear in partnership with building the Curry brand. To be clear, Under Armour basketball footwear can play. It's about Major League Baseball from Bryce Harper's 2021 MVP season to Juan Soto and Julio Rodriguez facing off with dueling UA gloves and cleats in a spectacular home run derby leading into the MLB All-Star Game a few weeks ago. and all the while doing it with strong brand advocates like Lindsey Vonn and Dwayne the Rock Johnson through our Project Rock collaboration, who know what the UA brand is cooking. And as the fuel for these, and all UA assets, we have a big budget to work with, including more than 600 million marketing dollars. And we do not feel as if we've optimized this, and we'll continue to reposition and reallocate those dollars to drive brand growth. This may seem very U.S.-centric, Yet our brand presence and athlete stable cover more than 100 countries where UA does business today. But this point underscores how heavily focused we are on ensuring that we win here in North America and have every confidence that we have the tools to do so. Our cupboard today is full, and there is so much to choose from and to build onto. That is why we continue to use the word amplify to describe our go-forward strategy. Not a departure from where we've been, but simply amplifying our existing strategy. Building growth for you a where we started in 1996 was hard building growth for you in 2022 is a whole different ballgame with a suite of assets partners relationships and history with our consumers to pull from. i'm proud of what we've accomplished growing from a single item into a head to toe global authentic on field sports brand that's unique. We are in this fight and will fight for every fixture, brand location, or moment of mind-share with young athletes to assure them that we are thinking on their behalf, always problem-solving and providing solutions they never knew they needed and once they've tried them, cannot imagine living without. It's that same problem-solving that led to Under Armour's founding, answering the question with a solution of why we would accept sweat-soaked cotton t-shirts beneath our uniforms when a better and, frankly, simpler solution should exist. We will be the preeminent innovation company at the intersection of performance and style. We have the resources of established products and relationships with athletes that we will tap into and give them the most innovative solutions in the world with the great that we have yet to unleash on our behalf. Under Armour is on its front foot and playing offense. We've spent the last several years building our strong foundation and defense, but sometimes the best defense is to score another touchdown. We will do both. Our product teams are hard at work with industry experts that I wouldn't trade with any brand, building the best products and curating the best ideas we find throughout our network, providing the world with one brand destination in UA that they know is aggregating the best ideas in apparel, footwear, and accessory innovation into one place, under one roof, in our house. But this will, of course, mean our own inline innovation first and foremost, and our product pipeline is full. And to that end, this fall, we will be launching a new footwear platform we discovered through a very simple athlete insight, one we believe can change the athletic footwear landscape. We will introduce a new technology franchise in a training shoe that we feel can become a signature item for our current $1.5 billion footwear business. We then plan to take this technology to additional footwear categories where we compete. Opening the aperture, first and foremost, means being the most credible and authentic uniform and workout provider of gear, but also includes wearing occasions for our consumers when our athletes are beyond the fields, courts, and gyms, and ensuring that they can choose from their closet across performance and, yes, sportswear, and even from time to time collaborations with brands that make sense. Having our core team sport athlete choose from the lot with ease and having it happen to all BUA. This best describes what we mean when we say the amplification of our strategy. Meeting our consumers where they are and giving them the ability to love UA in multiple wearing occasions. This is more than a vision. This is actionable. Something we can go after and what the 92% of Americans who know the Under Armour brand expect from us. All of this leads to our relentless belief that the UA brand has more than earned the right to exist and that we're perfectly positioned as a challenger once again. to both those larger and smaller than UA, as we will focus on punching much higher above our weight. So to close out, Under Armour is moving forward. We're well tested and disciplined, and have the inspirational fire and freedom to dream bigger, and that's exactly what we will do. The board and I have complete trust in the depth of our management team, our solid business foundation, and our ability to push ourselves towards a future of more pronounced, profitable growth. We are in the fight and believe we have all the tools that we need to win. And with that, I'm going to jump off the call, turn it over to Colin and Dave. Thank you all very much.