Under Armour (UA) is an American sports apparel manufacturer. A former University of Maryland football player, Kevin Plank, started with a simple plan to develop an exclusive T-shirt. This style of T-shirt was to help keep perspiration off your skin rather than absorb it. A T-shirt that functioned alongside your body to control ones temperature and enhance performance. Under Armour was founded in 1996 and went public on November 17, 2005. Their mission is to “Make all athletes better through passion, science and the relentless pursuit of innovation”.
As of 2014, according to the company their assessment of their key strengths is that they have proven steady progression for the last five years, one of the principal positives in the firm’s growth story. Additional key strengths are the creation and introduction of up-to-date products and an increasing product selection. This holds the UA brand viable and noticeable in the marketplace. The company has also promoted highly noticeable marketing promotions, top-profile support, and publicity blitzes, all of which keeps the brand in the limelight.
Publicly contending with the likes of NIKE, Columbia Sportswear and Adidas creates recognition in the public eye. While UA lost out on bids with Nike and Adidas, the efforts signal that the brand is prepared to play with the larger players on a global scale. The assessment of their key weaknesses as of 2014, UA has yet to prove itself around the globe. North America made up over 90% of revenues for 2013 according to UA. UA also does not manufacture its own products. This leaves the company susceptible to troubles in its supply chain that may or may not be under its control. UA is susceptible to business cycles.
In 2008, the recession took a beating on UA’s earnings. UA’s products are classified as consumer discretionary items. UA’s line of products are incline to do well when the economy is expanding and employment and wages are increasing. Presently, the US economy is in an increase mode. Rising employment and an increasing economy present a chance for the company to increase sales in its most important market, the US. 2 Industry The increasing need for active wear, the stylish fashion for both the gym and the streets, has boosted sales for manufacturers of the clothing and the retailers that sell it.
The evidence is in the industry’s sales outcomes. What’s motivating this trend? Active wear is suddenly chic. Americans are paying attention. People are wearing yoga pants, running gear and basketball shoes not just to-and-from the gym, but almost everywhere. Athletic gear is comfy after all, and we say the attention manufacturers are making to fabrics and new colors and styles have helped to broaden the classes appeal. The industry’s prospects aren’t just reduced to attaining more balanced sales between the genders, there is international growth.
Competition Under Armour has demonstrated to be a tough competitor, building up its growth at a strong speed and making substantial inroads in a number of areas in which few expected it to achieve success. A sampling of the competitive landscape is below: 3 In 2014 Under Armour overtook Adidas in combined apparel and footwear sales to become the second biggest sports brand in the United States. As of July 2015, Nike was the most successful and recognizable sports brand in the world. It was said that Nike sealed a deal worth about $1 billion to become the authorized uniform and apparel supplier for the NBA.
IMPORTANT FINANCIAL & OTHER FACTS The Offering At the time of the IPO filing and according to the Rule 424(b)(1), UA offered shares through Goldman Sachs which led the underwriting group. 9,500,000 shares were offered to be sold with an additional 2,624,000shares offered from the selling stockholders. The proceeds from the additional shares will not go to Under Armour, Inc. After the sale of this offering, Class A common stock and Class B common stock will be the two classes of authorized stock that Under Armour, Inc. has.
Voting and conversion are the only two exceptions for the holders of Class A and Class B. One share of Class A common stock is allowed one vote. One share of Class B common stock is allowed 10 votes and is convertible into one share of Class A common stock with the happening of certain events. Kevin Plank, the founder and CEO will beneficially own all of the Class B common stock. Also following this offering, the CEO will control common stock denoting 83% of the total voting power of the common stock. ”4 Company Financial Performance The company had been operating for approximately 10 years prior to the IPO. Under Armour’s gross profit has been climbing each year from 530. 5M in 2010 to 1. 91B in 2015.
The net income from that same period rose from 68. 47M to 232. 57M, respectfully. As of December 31, 2015, their performance was as the chart shows below: Income Statement for year ending 2015 Period Ending 31-Dec-15 Total Revenue 3,963,313 Cost of Revenue 2,057,766 Gross Profit 1,905,547 Selling General and Administrative 1,497,000 Operating Income or Loss 408,547 Total Other Income/Expenses Net -7,234 Earnings Before Interest And Taxes 401,313 Interest Expense 14,628 Income Before Tax 386,685 Income Tax Expense 154,112 Net Income From Continuing Ops 232,573 Net Income 232,573 5 IPO Performance Making its mark in 2005 as the first U. S. based initial public offering in five years to climb at least 100% during their first day of trading was Under Armour.
“The Baltimore-based maker of synthetic T-shirts that wick perspiration away from the skin worked Wall Street into a sweat in its stock market debut, with shares opening at $31, more than double its $13 price. ( Under Armour IPO Performance)
Under Amour raised $157 million in the IPO, offering 12. 1 million shares through an underwriting group led by Goldman Sachs. 6 Stock Performance Graph The stock performance graph below compares cumulative total return on Under Armour, Inc. Class A Common Stock to the cumulative total return of the S&P 500 Index and S&P 500 Apparel, Accessories and Luxury Goods Index from December 31, 2009 through December 31, 2014. The graph assumes an initial investment of $100 in Under Armour and each index as of December 31, 2009 and reinvestment of any dividends.
The performance shown on the graph below is not intended to forecast or be indicative of possible future performance of our common stock. 7 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 12/31/2014 Under Armour, Inc. $ 100. 00 $ 201. 03 $ 263. 20 $ 355. 87 $ 640. 03 $ 995. 60 S&P 500 $ 100. 00 $ 115. 06 $ 117. 49 $ 136. 30 $ 180. 44 $ 205. 14 S&P 500 Apparel, Accessories & Luxury Goods $ 100. 00 $ 141. 20 $ 175. 60 $ 180. 13 $ 225. 03 $ 227. 25 PERFORMANCE SINCE THE IPO The charts below shows cash flow and debt from the Google finance site as to get a look of the story of UA.
Cash Flow Balance Sheet Income Statement RECENT NEWS As of March 3, 2016, Under Armour has been nearly unstoppable. With luminary commendations from megastars UA has been advertised as a practicable competitor to Nike. Based on current visibility, the Company continues to expect 2016 net revenues of approximately $4. 95 billion, representing growth of 25% over 2015, and 2016 operating income of approximately $503 million, representing growth of 23% over 2015, in line with the financial targets outlined in the Company’s recent earnings release issued on January 28, 2016.
CONCLUSION Spring is finally in the air — and perhaps, our wallets know it. With a trend of more people getting outside during this season and all seasons, outdoor clothing manufacturers are thriving. Maryland-based Under Armour’s advancement into outdoor apparel means more prospects for revenue and spreading its brand, making it more competitive. It’s a clever attempt, because there is only so much compression clothing a company can sell.