Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Q2 Earnings: Three Answers From Under Armour Inc (UA)

Under Armour Inc (NYSE:UA)Shares of Under Armour Inc (NYSE:UA) are currently up more than 12% today after the apparel specialist announced its second-quarter earnings results.

Coincidentally, just a few days ago I posed three questions for Under Armour going into the report, so here’s what it had to say:

On making it to lucky 13
First, considering Q1 marked Under Armour Inc (NYSE:UA)’s 12th consecutive quarter of achieving at least 20% top-line growth, I wondered whether Under Armour would be able to keep up the pace to hit lucky number 13.

Sure enough, Under Armour made it look easy as net revenue rose a respectable 23% in the second quarter to $455 million.

In fact, growth in each of Under Armour Inc (NYSE:UA)’s business segments exceeded 20% last quarter, including a 21% increase in footwear to $82 million, 30% growth in accessories to $51 million, and apparel net revenue growth of 23% to $310 million, thanks largely to expansion of the company’s Storm and Charged Cotton product lines. Meanwhile, higher-margin direct-to-consumer net revenue made up 30% of total sales last quarter after growing 29%.

As a result, net income increased a whopping 163% to $18 million, while diluted earnings per share nearly tripled to $0.16 from $0.06 per share in the same year-ago period.

On keeping inventory in check
Next, remembering Under Armour Inc (NYSE:UA)’s growing pains in years’ past have resulted in uncomfortably high inventory levels, I wanted to know whether Under Armour has managed not only to continue keeping its inventory in check but also maintain a healthy balance sheet.

Once again, Under Armour increased its cash and equivalents by an impressive 57% year over year to $224 million, while at the same time decreasing its debt to $55 million — that’s down from $60 million last quarter and $74 million in the same year-ago period.

Curiously enough, Under Armour Inc (NYSE:UA) boosted its inventory by 29% year over year to $491 million this time around. However, this increase is perfectly acceptable given Under Armour’s sustained growth.

What’s more, given their current visibility, management also raised the company’s full-year guidance by telling investors they now expect sales in the range of $2.23 to $2.25 billion, representing growth of 22% to 23% over 2012, and 2013 operating income between $258 million to $260 million, good for growth of 24% to 25% over last year.

For those of you keeping track, remember Under Armour’s previous guidance called for sales of $2.21 to $2.23 billion and operating income between $256 to $258 million.

On international growth
Finally, given the fact domestic sales comprised 93% of Under Armour’s business last quarter, I wanted to know whether the rest of the world is beginning to embrace Under Armour Inc (NYSE:UA) as the company increasingly pushes its global ambitions.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.