Under Armour, Inc.

Good day and thank you for standing by. Welcome to Under Armour's Q1 2024 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentations, there will be a question and answer session. To enter a question at that time, please press star 11 on your telephone. Please be advised that today's call is being recorded. I will now turn the call over to Lance Olega, Senior Vice President of Investment Relations and Corporate Development. Please go ahead.

Thank you. Good morning and welcome to Under Armour's first quarter fiscal 2024 earnings conference call. Today's event is being recorded for replay. Joining us on today's call will be Under Armour President and CEO Stephanie Linares and CFO Dave Bergman. Our remarks today will include certain forward-looking statements that reflect Under Armour Management's current view of our business as of August 8, 2023. These statements may include projections for our business in the present and future quarters and fiscal years. Forward-looking statements are not guarantees of future business performance. Statements made are subject to risks and other uncertainties detailed this morning's press release and documents filed regularly with the SEC, including our annual report on Form 10-K or quarterly reports on Form 10-Q. Today's discussion may also include the use of non-GAAP references. Fresh Release, and at aboutunderarmor.com. With that, I'll turn the call over to Stephanie.

Thank you, Lance, and welcome to everyone joining today's call. Having finished my first full quarter at Under Armour, I am pleased that our results were broadly in line with our expectations and that we are on track to deliver our fiscal 24 outlook. Digging further into the business and gaining a better understanding of our strengths, strategies, and opportunities for improvement, I am even more inspired about the power of the Under Armour brand and our ability to unlock our full potential over the long term. During the quarter, I met with athletes, customers, and teammates across the US, Italy, France, Spain, Turkey, the Netherlands, and the UK, and I have seen firsthand the enthusiasm and passion for our brand and products. From athletes that thank us for helping them push the boundaries of what is possible in the field of sports, to our retail partners who are energized for what's to come. Our mission to make you better is front and center. On our last earnings call, I laid out our Protective Health 3, or PTH3, strategy, which is centered on delivering three significant initiatives over the next three years. First is driving global brand heat with an emphasis on the U.S. Second is delivering elevated design and products with a focus on footwear, sports style, and women. And third is driving US sales while harnessing momentum in our international business. Although these initiatives will take time to gain traction, with one quarter behind us, I am pleased by the team's increased execution, accountability, and unification around these pillars. Using fiscal 24 as a building here to focus on cost management and profitability, we are making progress across each of the PTH3 priorities. So I'd like to spend a few minutes reviewing some highlights. We'll start with driving global brand T. Crucial to this execution is strong leadership to strike an appropriate balance between top-line growth, improving our strategic capabilities, and maintaining cost discipline to ensure we generate the highest returns possible as we grow the Under Armour brand. In this respect, we're happy to have recently welcomed two new additions to our executive team. First is our Chief Consumer Officer, Jim Dausch, whom I had the pleasure of working with for over 20 years at Marriott International. Jim is a seasoned executive with experience leading transformational strategic initiatives across product, marketing, and sales, and driving significant brand and consumer loyalty improvement. As a crucial operator in our effort to drive global brand heat, He's hit the ground running, and I'm looking forward to the horsepower that I know he can add to our team. Second, we welcome Amanda Miller as Under Armour's Chief Communications Officer. With over 20 years of experience, Amanda joins us from PayPal, where she served as VP of Corporate Affairs, leading the company's multi-tiered global communication strategy. In conjunction with Jim's role in linking all of our commercial elements together, Evolving how we tell our brand and product story to our athletes, consumers, the media, and other stakeholders will be critical to driving global brand heat. Welcome, Jim and Amanda. You have a fantastic team at Under Armour to lean on, and we're excited about the journey ahead. Last month, we also announced that Lisa Collier and Colin Brown are leaving Under Armour to pursue other opportunities. Accordingly, Comprehensive searches for a new chief product officer and a new chief supply chain officer are underway. I want to thank Lisa and Colin for their contributions and leadership throughout their time at Under Armour. Switching gears to marketing, we saw positive results with the return of Protect This House earlier this year and continue to build on this momentum with recent activations around the Women's World Cup. The campaign has a digital emphasis and showcases two of Under Armour's top female footballers, Kelly O'Hara from the U.S. and Alex Greenwood from England. Paying respect to music's massive impact on sports culture and the athlete's mindset, their stories and motivations come together to armor up with a common goal to protect this house. Working in Parallel is our premium women's Magnetico Elite 3 soccer boots. Under Armour's first cleat made with a specific last for a woman's foot, an outstanding example of our commitment to serving female athletes from the world's most elite football stage to the local pitch. Further showcasing our female athletes, Under Armour held a series of events coinciding with the WNBA All-Star Weekend in July, including our newest basketball athlete, Diamond Miller, along with Kelsey Plum of the Las Vegas Aces, who hosted a youth basketball camp powered by UA Next, Under Armour's youth-focused sports development camps. We also debuted Kelsey's new Earth, Wind & Fire UA Flow Breakthrough 4 sneaker at the Las Vegas Brand House. UA Next continues to be an excellent connection vehicle with the 16- to 24-year-old varsity athletes. In fact, we wrapped up its eighth iteration in June, the Future 50. where 50 of the best high school American football juniors and seniors gathered for an intense two-day experience. This included training, practice, competition, and mental exercises, along with engagements with Justin Jefferson of the Vikings and Kyle Hamilton of the Ravens. And speaking of football, we also recently announced that we have extended our long-term relationship with Notre Dame, which is a tremendous point of pride for Under Armour. In the decade ahead, we look forward to supporting the next generation of athletes as we co-create customized Fighting Irish uniforms, footwear, and apparel for the university's 26 varsity teams. An essential theme and underlying support of these Brand Heat moments is the importance of social media and an always-on digital presence to connect with young athletes more deeply. I am encouraged by the progress we're making here, with a considerable evolution in our overall social media approach, which has led to increasingly positive results over the past six to eight months. We've also been refining the content on our category-specific social handles, allowing us to target athlete groups better, and increasing efforts to directly connect product marketing and technical attributes to their everyday moments. I am also pleased that we continue to improve the shopping experience for Under Armour products featured in posts on Instagram and TikTok and working towards direct purchase and checkout on their platforms, another step in enhancing our omnichannel capabilities. Of course, driving brand heat must coincide with having innovative and stylish gear that athletes desire, which brings me to our second priority of delivering elevated design and products focusing on footwear, sports style, and women. Over the past three months, we've begun to simplify our product lines around fewer collection groups to optimize our ability to engage and convert consumers as we continue to scale our brand. To enable this, we plan to distort investments towards a strategic handful of specific apparel and footwear collections. that we will activate through improved inspirational storytelling to drive more consistent demand for key franchises. Following a few quarters of pressure in our apparel business, our first quarter performance saw an impact from the persistent promotional environment in the challenging North American retail environment. To combat this, using our key franchise approach, we are launching a substantial update to our original heat-cured compression base layer t-shirt this fall. Featured on the field of play when two UA teams, Notre Dame and Navy, face off during college football's opening weekend in Dublin, Ireland on August 26th, there is no better demonstration of the power that our innovation brings to sport. This fall, we are also introducing an elevated meridian legging collection with improved materials in our stores in Dick's Sporting Goods' new House of Sport concept. So the next round of evolution for one of our best loved women's products. Both Heat Gear and Meridian will be priced to attack better and best level products, helping to advance one of our broader goals, which is to drive higher ASPs to leverage gross margin and P&L productivity better. There is certainly much work to be done, and it will take a few seasons to get to where we want to be. But meanwhile, this team is not standing still. In our footwear business, we continue building momentum with our versatile UA Slip Speed platform. Following the initial training shoe launch in February, we recently dropped Slip Speed Mesh, a highly breathable version for your toughest summer workouts. As one of our highest rated sneakers, Slip Speed features a unique lightweight upper with an isochill padded interior, BOA lacing system, and flow cushioning. along with the quick flip heel that puts you right into recovery mode. This fall, we have two launches to look forward to, a Slip Speed collection in collaboration with Justin Jefferson, and then on Halloween, we'll do a limited launch of our new UA Slip Speed running shoe with a Valentine's Day 2024 launch, which mirrors last year's Slip Speed rollout. From the next chapter of Slip Speed to the next chapter of our best-in-class basketball shoes, The launch of Curry 11 is also expected in October. With a new futuristic design language that translates to an elevated aesthetic and vibrant color palette, this is the first time you'll see dual density UA flow cushioning for even more comfort and traction, along with an improved upper chassis for better step-in comfort. Hands down, the 11 is the most innovative standout shoe thus far in the Curry portfolio. and we are so excited to get it to market. In addition, we are continuing to amplify the Curry brand platform more meaningfully with new footwear, apparel, and accessories across basketball, golf, and sports style in the works. This expansion will also unlock new distribution opportunities at our existing retail partners and provide better consideration into places who are not well-represented. Activating this part of Under Armour's business is a key unlock to driving future growth. Another apparel example is in our sports style business, where this fall we are elevating our fleece offerings with premium products that amplify style and performance. Our unstoppable and essential fleece warm-ups aren't just about being comfy before the big game, though it's easily the plushest fleece you've ever felt. It's about lightweight, world-class temperature management that performs above your expectations. These products will be highlighted on Justin Jefferson in North America's upcoming back-to-school Protect This House campaign and will be available in our direct-to-consumer channels and premium wholesale locations. This brings me to our third strategic priority, which is to drive U.S. sales. Over the long run, we are confident that driving brand heat and delivering better design and products will reinvigorate growth in our home market. Athletes are at the center of everything we do, and they are asking for better access to Under Armour products wherever and whenever they shop. That said, we're focused on determining where the best expansion opportunities exist across our wholesale and direct-to-consumer channels. while at the same time assessing ways to optimize SKU productivity with improved segmentation to drive meaningful ASP expansion as we grow our better-level products. Despite a tempered U.S. wholesale environment, we are focused on strengthening our retail partner relationships across our sports specialty business and being deliberate in the opportunities we pursue across malls and department stores. As we work into spring-summer 24, we have plans to open new doors across these channels, so much of that work in relationship building is underway. Back to our PTH3 strategy. When we execute well on the first two priorities of driving global brand heat and delivering better products, we expect to enable growth in our U.S. business. Shifting to our direct-to-consumer business, we're happy to report that we launched our U.S. loyalty program, UA Rewards, on July 31st. Early points on the board that draws from my experience driving higher revenue per customer, repeat business, increased direct channel engagement, and brand love and loyalty. This diverse program extends our brand experience, providing consumers with early access to product drops, wellness content, and athlete experiences. including one lucky sweepstake winner who will meet Stephen Curry this month in Baltimore. Initially launched on our digital platforms, we expect to roll this out more broadly into our retail stores this fall. This is a fantastic step forward for us, and I am confident UA Rewards will be an excellent asset in deepening connection with athletes and inspiring better sales conversion as we scale the program. As our most profitable region, we have to win in our home market of North America. Growing faster here means more future dollars to invest in products, marketing, and our international business, as well as increasing returns to shareholders. Now, to be sure, we're not taking our eyes off our international business and are encouraged by the positive momentum we continue to see in the EMEA and Asia Pacific businesses, which each saw a double-digit revenue growth during the first quarter. So balance is key in the near term as we set up for the long term. In closing, we're making initial progress on our PTH3 priorities, and I'm encouraged by the team's efforts in these early days. From leadership changes and amplifying our storytelling to driving global brand heat and optimizing our product engine to deliver groundbreaking innovations that athletes covet, I am confident that we will continue to methodically place ourselves into a stronger position to achieve the improved growth and profitability that I know Under Armour is capable of. Now, I will hand the call over to Dave to go into more detail about our first quarter results.