Description of Business and Basis of Presentation

9 Months Ended

Dec. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Business

Under Armour, Inc. (together with its wholly owned subsidiaries, the "Company") is a developer, marketer and distributor of branded athletic performance apparel, footwear and accessories. The Company creates products engineered to make athletes better with a vision to inspire performance solutions you never knew you needed and can't imagine living without. The Company's products are made, sold and worn worldwide.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements are presented in U.S. Dollars and include the accounts of Under Armour, Inc. and its wholly owned subsidiaries. Certain information in footnote disclosures normally included in annual financial statements were condensed or omitted for the interim periods presented in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC") and accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim consolidated financial statements. In the opinion of management, all adjustments consisting of normal, recurring adjustments considered necessary for a fair statement of the financial position and results of operations were included. Intercompany balances and transactions were eliminated upon consolidation.

The unaudited Condensed Consolidated Balance Sheets as of December 31, 2024 is derived from the audited financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2024 ("Fiscal 2024"), filed with the SEC on May 29, 2024 ("Annual Report on Form 10-K for Fiscal 2024"), which should be read in conjunction with these unaudited Condensed Consolidated Financial Statements. The unaudited results for the three and nine months ended December 31, 2024 are not necessarily indicative of the results to be expected for the fiscal year ending March 31, 2025 ("Fiscal 2025"), or any other portions thereof.

Reclassifications

Certain prior period comparative amounts have been reclassified to conform to the current period presentation. Such reclassifications were not material and did not affect the unaudited Condensed Consolidated Financial Statements.

Equity Method Investment

In November 2024, the Company invested $7.5 million in exchange for 29.5% common stock ownership in ISC Sport (ISC), an Australian custom teamwear company. This investment is accounted for under the equity method, given the Company has the ability to exercise significant influence, but not control, and is included in other long-term assets on the Condensed Consolidated Balance Sheets.

Revisions to previously issued financial statements

As previously disclosed in the Company's Annual Report on Form 10-K for Fiscal 2024, the Company identified and corrected certain accounting errors. Using the guidance in Accounting Standards Codification ("ASC") Topic 250, Accounting Changes and Error Corrections, ASC Topic 250-S99-1, Assessing Materiality, and ASC Topic 250-S99-2, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, the Company evaluated whether its previously issued consolidated financial statements were materially misstated due to these errors. Based upon the evaluation of both quantitative and qualitative factors, the Company concluded that the effects of these errors were not material individually or in the aggregate to any previously reported quarterly or annual period. However, the Company revised its previously issued annual consolidated financial statements to correct these errors. See Note 1 to the Company’s Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for Fiscal 2024, filed with the SEC on May 29, 2024 for additional details.

The following tables set forth the Company’s revisions to the unaudited Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2023 and unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2023. The unaudited Condensed Consolidated Financial Statements and accompanying notes included within this Quarterly Report on Form 10-Q have been revised to reflect these corrections.

Condensed Consolidated Statements of Operations


	Three Months Ended December 31, 2023						Nine Months Ended December 31, 2023
(in thousands)	As Previously Reported		Adjustment		As Revised		As Previously Reported		Adjustment		As Revised
Net revenues	$	1,486,095	$	(52)	$	1,486,043	$	4,369,817	$	(135)	$	4,369,682
Cost of goods sold	814,914		490		815,404		2,338,905		120		2,339,025
Gross profit	671,181		(542)		670,639		2,030,912		(255)		2,030,657
Selling, general and administrative expenses	601,661		(2,431)		599,230		1,794,703		2,649		1,797,352
Income (loss) from operations	69,520		1,889		71,409		236,209		(2,904)		233,305
Interest income (expense), net	(211)		—		(211)		(2,210)		—		(2,210)
Other income (expense), net	49,636		(1,709)		47,927		36,822		(1,059)		35,763
Income (loss) before income taxes	118,945		180		119,125		270,821		(3,963)		266,858
Income tax expense (benefit)	4,999		3,570		8,569		38,464		2,869		41,333
Income (loss) from equity method investments	197		—		197		(51)		—		(51)
Net income (loss)	$	114,143	$	(3,390)	$	110,753	$	232,306	$	(6,832)	$	225,474

Basic net income (loss) per share	$	0.26	$	(0.01)	$	0.25	$	0.53	$	(0.02)	$	0.51
Diluted net income (loss) per share	$	0.26	$	(0.01)	$	0.25	$	0.52	$	(0.02)	$	0.50

Condensed Consolidated Statements of Cash Flows


	Nine Months Ended December 31, 2023
(in thousands)	As Previously Reported		Adjustment		As Revised
Cash flows from operating activities
Net income (loss)	$	232,306	$	(6,832)	$	225,474
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization	106,685		(4,572)		102,113
Unrealized foreign currency exchange rate (gain) loss	(904)		—		(904)
Loss on disposal of property and equipment	746		—		746

Amortization of bond premium and debt issuance costs	1,565		—		1,565
Stock-based compensation	33,163		—		33,163
Deferred income taxes	(24,430)		—		(24,430)
Changes in reserves and allowances	25,085		—		25,085
Changes in operating assets and liabilities:
Accounts receivable	55,912		2,132		58,044
Inventories	71,400		1,178		72,578
Prepaid expenses and other assets	(45,363)		(10,898)		(56,261)
Other non-current assets	42,149		(4,655)		37,494
Accounts payable	31,470		630		32,100
Accrued expenses and other liabilities	(42,630)		3,893		(38,737)
Customer refund liability	80		—		80
Income taxes payable and receivable	5,884		2,869		8,753
Net cash provided by (used in) operating activities	493,118		(16,255)		476,863
Cash flows from investing activities
Purchases of property and equipment	(132,796)		16,255		(116,541)

Sale of MyFitnessPal platform	45,000		—		45,000
Net cash provided by (used in) investing activities	(87,796)		16,255		(71,541)
Cash flows from financing activities





Net cash provided by (used in) financing activities	(74,985)		—		(74,985)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	136		—		136
Net increase (decrease) in cash, cash equivalents and restricted cash	330,473		—		330,473
Cash, cash equivalents and restricted cash
Beginning of period	727,726		(981)		726,745
End of period	$	1,058,199	$	(981)	$	1,057,218

Management Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. These estimates, judgments and assumptions are evaluated on an on-going basis. The Company bases its estimates on historical experience and on various other assumptions that it believes are reasonable at that time; however, actual results could differ from these estimates.

As the impacts of major global events continue to evolve, estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require increased judgment. The extent to which the evolving events impact the Company's financial statements will depend on a number of factors including, but not limited to, any new information that may emerge concerning the severity of these major events and the actions that governments around the world may take in response. While the Company believes it has made appropriate accounting estimates and assumptions based on the facts and circumstances available as of this reporting date, the Company may experience further impacts based on long-term effects on the Company's customers and the countries in which the Company operates. Refer to the risk factors discussed in Part I, Item 1A "Risk Factors" of the Company's Annual Report on Form 10-K for Fiscal 2024.