Under Armour's CEO Discusses Q1 2014 Results - Earnings Call Transcript

Apr.24.14 | About: Under Armour, (UA)

Under Armour, Inc. (NYSE:UA)

Q1 2014 Earnings Conference Call

April 24, 2014 08:30 ET

Executives

Tom Shaw - Director, Investor Relations

Kevin Plank - Chairman and Chief Executive Officer

Brad Dickerson - Chief Financial Officer

Analysts

Matt McClintock - Barclays

Michael Binetti - UBS

Sharon Zackfia - William Blair

Omar Saad – ISI Group

Camilo Lyon - Canaccord Genuity

Operator

Good morning, ladies and gentlemen, and welcome to the Under Armour, Inc. First Quarter Earnings Webcast and Conference Call. At this time, all participants are in a listen-only mode. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to your host, Mr. Tom Shaw, Director of Investor Relations. Mr. Shaw, you may begin.

Tom Shaw

Thanks, and good morning to everyone joining us on today’s first quarter conference call. During the course of this call, we will be making projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution that such statements are subject to risks and uncertainties that could cause actual events or results to differ materially. These risks and uncertainties are described in our press release and in the Risk Factors section of our filings with the SEC. The company assumes no obligation to update forward-looking statements to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

Joining on today’s call will be Kevin Plank, Chairman and CEO, followed by Brad Dickerson, our Chief Financial Officer, who will discuss the company’s financial performance for the first quarter, followed by an update to our 2014 outlook. After the prepared remarks, Kevin and Brad will be available for Q&A session that will end at approximately 9:30 AM. Finally, a replay of this teleconference will be available at our website at approximately 11:00 AM Eastern Time today.

And with that, I will turn it over to Kevin Plank.

Kevin Plank

Thanks, Tom and good morning everyone. Our first quarter results are a great example of what happens when we executed a high level. We grew revenues 36% this quarter and the strength was evidence across genders, categories, geographies in both our wholesale and direct distribution channels. Our top line growth exceeded 20% for the 16th consecutive quarter, that’s four straight years. And we saw meaningful acceleration in both our footwear and international businesses.

Our first quarter results also illustrate two key elements of what I would like to discuss today. First, what we are capable of delivering today as a North American based brand and second the boundless opportunities that exist for our brands both here at home and in markets beyond our source.

I want to start today by discussing three product categories that demonstrate both our ability to execute the opportunities that still lies out in front of us. I will hit running first, then cover golf and then outdoor. Of the three categories, running represents the biggest revenue opportunity for us, given the size of both the footwear and apparel components as well as the fact that it’s an important category across all geographies. We have only had a strong earning presence in apparel with our focus on tremendous amount of resources the past few years in cracking the code in footwear. I think it’s safe to say that given the strong loss this past quarter of our SpeedForm Apollo footwear, we are on a trajectory to become a significant player in the global running marketplace. While the number of pairs we sold them was limited, we did a great job of executing the SpeedForm launch and set ourselves up to broaden and deepen the platform for the balance of 2014 and beyond.

So, while we saw the benefits this quarter with the great SpeedForm launch, I think the important takeaway is how well it positions us to benefit from the flow of footwear to apparel product, our team is working on in running. We are unique and that we changed the running category through apparel and are therefore in great position to have successful platforms like SpeedForm help ignite our entire apparel business, be it running, training, or other pieces of our core business.

We believe our opportunity to grow running in an integrated way with footwear, apparel, and accessories combined with what we will bring to market with our connected fitness initiatives truly positions our running business as a key building block of our global growth story for the foreseeable future. Part of that confidence comes from the growing strength of team we are building in running. It’s a team where we made significant investments in human resources, a team that understand the importance of building multiple platforms for all different types of athletes, a team that continues to break the rules about footwear construction as we did with SpeedForm it creates precision feel, fit and comfort consumers have come to expect from our apparel.

The second piece of business that speaks to the scope of our opportunity is cost. I am sure there were a lot of people watching the Masters a couple of weeks ago who said to themselves hey look Under Armour is making golf shirts now. But as most of you know the golf category was one of our first step outside of our core compression apparel. That original insight came from the football filed, when some of our coaches saw how dry our compression was keeping their players and asked us for polo shirts that they could wear on the sideline with a little looser fit but the same performance properties. Then those sideline polos started making their way to the golf course. And we quickly understood the opportunities to authenticate ourselves with that consumer.

We built the UA golf business systematically by doing what we do in every category we enter bringing performance innovation to the consumer and maintaining a premium position wherever we do business. And the business started to change along with Under Armour. When we started out the overwhelming majority of polo sold in golf pro shops were cotton. I think any of you who have been in the pro shop in the last year or two have noticed how that map has absolutely flipped and the overwhelming majority of golf polos are made now from performance materials.

Then last year we signed a 19-year-old kid who we thought was a great fit for the Under Armour brand for one simple reason. He had the talent and drive to be a game changer. What we saw in that first year of our relationship with Jordan Spieth was an athlete with little fear and high confidence in his ability to compete with the world’s best golfers. We talked about that at our Investor Day last year and he went out in July and became the youngest winner on the PGA tour in 82 years. We continue to grow our golf business which approached the $100 million mark in 2013 with an increased focus on fit and style at both our shirts and pants to accompany the technology we build into our golf apparel. And we also thought that Jordan had the opportunity to be something special and make sure we are in position to capitalize on his presence over the long-term. He proved that at the Masters with not only a great finish playing in the final pairing, but in the manner that he comported himself both on and off the course. So again our golf business is a great example of not only our ability to execute today, but to position our self for sustainable growth by partnering with a great table of young golfers like Hunter Mahan, Scott Stallings, Gary Woodland and of course Jordan Spieth.

The third category I would like to discuss today is outdoor. It’s not a category that we talked to you about a lot, but it’s one that has been a critical piece of our growth and brings a new dimension to our brand. You heard us talk consistently about being a premium brand whatever we show up and outdoor is a great example of this. In both the hunt and fish categories we have been an authentic brand with our consumer from day one. We have seen a very strong six months trend across the board and we are seeing great growth across specialty outdoor talent as well as our bigger wholesale products. All driven by great products and innovation like our UA Scent Control and MagZip.

We will continue to grow this category from a comp perspective as well as with our new categories like outerwear and boots. That has enabled us to reach more athletes off the playing field and expand our presence in their closets with products that is more lifestyle based. Our outdoor business is another great example of Under Armour authenticating itself with our consumer, earning their thrust and expanding our share of their closets. There are three big categories of business for us running, golf and outdoor, all of which are helping to drive our business today and where we are setting ourselves up to be major players on a global level.

To better understand the scope of opportunity we have outside North America has been a focus of our organization for at least the past 24 months. We talked at our Investor Day last year about how we would ensure building our brand globally in the same authentic manner we did here in the United States. Since then we progressed against several of our key global initiatives including transitioning our distributor in Mexico to a wholly owned subsidiary, launching our brand in Brazil and Chile and signing several sports marketing agreements in global football.

Two of those teams Toluca in Mexico and Colo-Colo in Chile have had outstanding runs. With Colo-Colo winning their first Chilean premier division title in five years and in just the first year of wearing Under Armour kits. Toluca played in the CONCACAF Champions league final last night at home against fellow Mexican league team Cruz Azul for a spot in prestigious FIFA world cup in December against (indiscernible) world’s best 12 teams and while Toluca did not advance Under Armour will still be represented in the tournament as we just signed an agreement to outfit Cruz Azul starting later this year. Our strong 79% increase in international revenues this quarter is a positive sign that these new initiatives are off to a strong start and that the story of our brand continues to play well as we expand into new markets outside North America.

And the strength this quarter internationally is really across all regions including and especially Europe where the Under Armour brand continues to gain traction. In key markets like Germany and France, our brand awareness doubles year-over-year and in UK where we are in the second year of outfitting Tottenham Hotspur English Premier League, it grew three times as we continue to bring new consumers into our brand through global football.

One last area that I want to touch on is the opening today of our first new store in New York City, which will highlight the largest presentation of the Under Armour brand anywhere in the world. When we opened our first grand house here in Baltimore, we talked about how the deeper presentation of footwear and women would help our wholesale partners get a better understanding of the opportunity we see in these key categories. This morning when we open the doors in our (indiscernible) store that breadth of product will be on display in full force and the timing will be particularly good for our womens business as we activate our next brand holiday later this summer.

It will be our first holiday focused exclusively on women and we believe it will help call attention, tell Under Armour is constantly involving the meet the needs of both the female athletes and the athletic female. In summary, when we look at the 16 consecutive quarters of revenues up 20 plus percent, it’s clear that we are executing well during a period of tremendous growth. There is going to be variability in any given quarter and this consistent growth can map inefficiencies in our business where we can improve. We are becoming better merchandisers. And what you see in our New York store today should be the standard for how we want our brand to look around the world in all channels of distribution.

Within our supply chain, we are confidently looking to improve our inventory turns while balancing consistently high demand for our products. We are a growth company and as a part of that growth story we will not only make the perfect decisions, but we promise that when that happens it will be done full speed, we will never make the same ones twice. So whether its categories like running, golf and outdoor key growth drivers like women’s and footwear, early stage businesses like basketball and connected fitness or new markets like Brazil and China, it’s equally clear that the opportunities for the Under Armour brand are abundant and our philosophy around growth is unchanged.

Our North American growth and cash creation will be the engine that speeds and fuels our global ambition. We still have tremendous run rate here in North American market that will fuel our business and enable us to invest early and often to capitalize on the opportunities that will drive our growth in the years to come.

And with that, I will turn it over to Brad.

Brad Dickerson

Thanks, Kevin. I would now like to spend some time discussing our first quarter 2014 financial results, followed by our updated outlook for 2014. Our net revenues for the first quarter of 2014 increased 36% to $642 million. As expected, we experienced the strong rate of growth during the quarter given sustained momentum in apparels, broader range of product in running footwear, and international market expansion. This quarter marks the first time since the third quarter of 2011, where each of these key growth drivers surpassed 30% growth.

Taking a look at apparel, we grew this category 33% during the quarter to $459 million compared to $346 million in the prior year. This represents the 18th straight quarter of at least 20% growth for our largest product category. Overall, we saw strong apparel growth from our training, golf, hunting and fishing lines. In women’s, our Studio line remains a standout, while Youth registered notable gains in trainings and baseball during the period. Taking a look at some of our product programs, we experienced broad-based strength in Fleece, UA Tech, and Baselayer, while also offering new innovations with ColdGear Infrared and ArmourVent.

First quarter footwear net revenues increased 41% to $114 million from $81 million in the prior year representing approximately 18% of net revenues for the period. We were encouraged by the strong sell-through rates of our SpeedForm Apollo running shoe while also offering a broader running assortment at key price points, including the Assert, Engage and Spine Evo styles. We are also seeing success in baseball as our cleated business taking market share despite a somewhat slower start to the season given adverse weather conditions.

Our accessories net revenues during the first quarter increased 43% to $52 million from $36 million in the prior period, primarily driven by our headwear lines. Our direct-to-consumer net revenues increased 33% for the quarter representing approximately 26% of net revenues. During the quarter, we opened our first of what we expect to be 7 new Factory House stores for the year. Our first quarter ending store count in North America totaled 118 locations compared to 103 a year ago. We also expanded two existing locations during the quarter as part of our current full year plan to expand 12 locations.

Looking at our full-priced brand house stores, we are excited to open our third location in Soho following our 2013 openings at Harbor East in Baltimore and Tysons Corner near D.C. These three brand house locations will provide valuable learnings as our full-priced retail strategy continues to evolve. In E-Commerce, we continue to see strong results driven primarily by traffic gains. Our efforts throughout the duration of 2014 will include the enhanced mobile experience, improved consumer market segmentation efforts and increased engagement in connected fitness.

International net revenues increased 79% to $55 million in the first quarter and represented 9% of total net revenues. We experienced broad-based geographic strength during the quarter. In Europe, we are starting to see the combined benefits of higher brand awareness and a more focused in-country strategy around our three key markets of the UK, Germany and France. In Asia, we are starting to accelerate our franchise for our model in China and driving growth through E-Commerce and expanded distributor relationships. Finally, in Latin America, our growth was primarily driven by the conversion of our Mexican distributor to an Under Armour subsidiary at the beginning of the year.

Moving on to margins, first quarter gross margins expanded 100 basis points to 46.9% compared with 45.9% in the prior year’s quarter. The following factors contributed to this improvement. First, our sales mix remained favorable due primarily to a lower mix of excess inventories sold our Factory House outlet stores contributing approximately 40 basis points of gross margin improvement. Second, improvements in our supply chain drove lower airfreight expenses year-over-year contributing approximately 30 basis points of gross margin improvement. Finally, we experienced lower product input cost, primarily in our accessories business contributing approximately 20 basis points of gross margin improvement.

Selling, general and administrative expenses as a percentage of net revenues leveraged 40 basis points to 42.7% in the first quarter of 2014 from 43.1% in the prior year’s period. Details around our four SG&A buckets are as follows. First, marketing cost increased 13.7% of net revenues for the quarter from 13.3% in the prior year period primarily driven by the launch of our first Brand Holiday in 2014 and international marketing efforts. Second, selling costs increased slightly to 10.8% of net revenues for the quarter from 10.7% in the prior year period as our direct-to-consumer business grew roughly in line with our overall business combined with increased investments around our brand house store strategy. Third, product innovation and supply chain costs decreased to 10.4% of net revenues for the quarter from 10.5% in the prior year period as costs tied to our connected fitness efforts will offset by lapping prior year costs tied to startup of expanded West Coast distribution facility. Finally, corporate services declined to 7.8% of net revenues for the quarter from 8.6% in the prior year period primarily reflecting lower incentive compensation expenses.

Operating income for the first quarter increased 99% to $27million compared with $13 million in the prior year period. Operating margin expanded 130 basis points during the quarter to 4.2% compared to 2.9% in the prior year period. Our first quarter tax rate of 46.1% was unfavorable to the 39.9% rate last year primarily due to an R&D tax credit recorded in the first quarter of 2013 as well as higher international investments primarily associated with the 2014 market entries in Brazil and Chile.

Our net income in the first quarter increased 73% to $14 million compared with $8 million in the prior year period. First quarter diluted earnings per share increased 71% to $0.06 compared to $0.04 last year. The EPS calculations for both periods reflect the 2-for-1 stock split, which was effective April 14.

On the balance sheet, total cash and cash equivalents for the quarter decreased 30% to $180 million compared with $256 million at March 31, 2013. We continue to utilize $100 million of our $300 million revolving credit facility, which was used to fund a portion of our $150 million purchase of MapMyFitness in December. Inventory at quarter end increased 46% to $472 million compared to $324 million at March 31, 2013. Our investment in capital expenditures was approximately $31 million for the first quarter compared with $11 million in the prior year period. We continue to plan 2014 capital expenditures in the range of $140 million to $150 million primarily driven by incremental investments to support our direct-to-consumer and international business and further develop expand our global office footprint.

Now, moving on to our updated outlook for 2014. Based on current visibility, we expect 2014 net revenues of $2.88 billion to $2.91 billion representing growth of 24% to 25% and 2014 operating income of $331 million to $334 million representing growth of 25% to 26%, both expected growth rates are outpacing the long-term growth rates laid out at our Investor Day last June. Below operating results, we continue to anticipate higher interest expense in 2014 given the financing of the MapMyFitness acquisition. We now expect the full year effective tax rate of approximately 40% ahead of our prior guidance of approximately 39% giving additional investments toward our international expansion. Adjusted for the 2-for-1 stock split fully diluted weighted average shares outstanding are now expected to be approximately $219 million.

Given these updated full year parameters, we would like to provide a few more details on how we currently see the quarterly cadence playing out. Looking at net revenues, we currently anticipate our growth rate for the remainder of the year to be roughly in line with our long-term Investor Day compounded annual growth targets of 22%. We currently have planned a growth rate for the second quarter slightly higher than this target and for the fourth quarter slightly lower than this target.

Relative to the fourth quarter, we grew 35% last year given favorable weather, our improved year-over-year ability to better service demand, a strong new innovation story around ColdGear Infrared and better than expected direct-to-consumer performance. Thus, we are taking a more balanced approach in planning the business for the fourth quarter, particularly around weather expectations and our direct-to-consumer business, which represented approximately 40% of our total business during the fourth quarter of last year.

Next on gross margins, we will be continuing to expect modest overall gain for the full year following the 48.7% level achieved in 2013. From a cadence standpoint we currently expect year-over-year rates to be relatively flat during the second quarter, up strongly during the third quarter and down in the fourth quarter. Looking at the second quarter we do not expect that three primary drivers of our positive performance during the first quarter to carry forward into the current period. This includes the normalization of our factory house product mix, a more consistent comparison on our supply chain performance year-over-year and the lapping of our bags relaunch which carried higher margins commencing in the second quarter of last year. During the third quarter the primary consideration is higher U.S. imports duty which negatively impacted the year ago period by 90 basis points. In the fourth quarter our forecasted plus the higher mix of our lower margin international business as well as our approach to planning direct-to-consumer business considering the prior factors I previously mentioned.

Moving on to SG&A, as we indicated in January we plan to allocate more dollars to marketing, international and connected fitness throughout 2014 areas that we believe are key to our long-term global success. The timing of these investments this year is currently planned to create substantial deleverage of our SG&A rate in both the second and third quarters. The magnitude of this deleverage is expected to be greatest in the second quarter as higher marketing and product innovation and supply chain investments contribute to approximately 250 basis points of total expense rate deleverage year-over-year. We expect overall deleverage of estimates to ease somewhat during the third quarter before showing significant leverage during the fourth quarter. As a reminder, the fourth quarter of last year included significantly higher incentive compensation expenses and MapMyFitness deal related costs. Overall we continue to expect modest SG&A deleverage for the full year inclusive of a marketing expense rate of approximately 11% of net revenues. To reiterate our focus will remain on driving operating income dollar growth balanced with making the live investments to drive our long-term global success. Below operating results we expect the elevated effective tax rate from the first quarter will persist during the second quarter before trending more in line with our full year guidance during the second half of the year.

And finally a quick update on our inventory position for the balance of the year. As we outlined last call, we expect the inventory growth rate to return to more in line levels with our revenue growth rate during the balance of the year.

We would now like to open the call for your questions. We ask that you limit your questions to two per person so that we can get through as many of you as possible. Operator?

Question-and-Answer Session

Operator

Thank you very much. (Operator Instructions) And our first question is from Matt McClintock with Barclays. Your line is open.

Matt McClintock - Barclays

Hello, yes. Good morning, can you hear me.

Kevin Plank

Yes, Matt how are you doing.

Matt McClintock - Barclays

Thank you. Good morning, great quarter. Kevin you talked a little bit about the women’s business and you had good success with the studio line and you talked about the brand holiday. I was just wondering if you can maybe go into some more detail on the product that’s coming off this year that gets you excited. And maybe some of the innovation that’s you plan to launch throughout the year or where into the year surrounding the brand holiday? Thank you.

Kevin Plank

So a few things, no one is (indiscernible) anytime we talk about women’s that people give us the perspective of congratulations on launching women’s. We forget sometimes we have a $500 million wholesale business of women’s today. So we are certainly not in launch mode, we are in perfecting mode. And I think we are incredibly proud of the team and that always begins with leadership. (Leone) who joined our company a little less than two years ago, her first season will be hitting floors this fall and partner with I think the outstanding leadership that we already had here of really understanding what the female athlete wanted and transitioning I think evolving with our consumer into what the athletic female wants. We have – we want to make sure is well we never lose that athletic credibility. We want 16 year old girls that are playing hockey and volleyball and basketball and soccer and La Crosse.

We want them to feel like Under Armour is their brand and we just want to demonstrate that we got additional chapters in two and three and four that we can grow up and we can grow overall as well. I think the one thing you must see and I think the innovation is second is the commitment that we have as being successful in this space. You won’t see that any more clearly articulated and what we are going to be doing with our second holiday that we will be hitting as I mentioned in my comments later in the summer. And holiday seems to work with 100% committed and without limits. Brands are about points of yield and I think we are incredibly excited about the credit that we have in the state and publicity making about Under Armour’s commitment to get space and I think more importantly our thought leadership in the space. The campaign is going to be that increasing awareness and the breadth of the line and frankly the first case of where we really see taking this consumer to. If when you think about innovation Under Armour we have been coined and I think we haven’t shied away from positioning ourselves with innovation company and we take no exception that with what we are doing with women’s.

Whether it’s something as core and basic and is important to the female athlete or the athletic female as the sports and things like armor brought. But taking it from being a really great functional to making get exceptionally and beautiful and ensuring that she has useful wearing it beyond the athletic field. So I think you will see us take that. And to be honest with you I know a lot of people on the call are dialing from New York I can emphasize enough if you want to see versus our normal women’s look like take a walk down to our new brand house in Soho is that you will see great breathe frankly this is the inspiration that we are hoping to bring all of our partners at every channel of distribution. Now Under Armour presented in this way. So beyond just the authentic and things really for that athletic female I think you are going to see a beautiful presentation of Under Armour products that we are really proud of and then backing that off with some great story telling coming later this year of driving home Under Armour to be successful in this space.

Matt McClintock - Barclays

Thanks for that Kevin. We will make sure to break it down everyday.

Kevin Plank

Thanks.

Operator

Thank you. Our next question is from Michael Binetti with UBS. Your line is open.

Michael Binetti - UBS

Hey guys. Thanks and congrats on a great quarter.

Kevin Plank

Thank you. Brad one quick question for you. Can you discuss a little bit in case I missed it, how much the improvement in the fulfillment rates you guys had which obviously continued in the first quarter from the fourth quarter, is there anyway you can help us estimate how much that contributed in the first quarter and then is that completely go away is an opportunity in the second quarter? And then I have a quick follow-up.

Brad Dickerson

The fill rates, the metrics from the fill rates are relatively comparable year-over-year that change though I think is the way we got there relative to achieving those fill rates. So fill rates by request date and fill rates by cancel date. The fill rates by request date were around 70 and the fill rates by cancel date were kind of in the mid-90s. The difference being last year took some more unnatural ways to get there relative to air freight product and to get there on time. But this year that product flow is a little more naturally so that (bust) the call out of the benefit in margin because air freight expense. So as we get forward into the rest of the year, we started to see in Q2, Q3 and Q4 so we started a comp better supply chain performance last year. So we are going to see less of that benefit in Q2, Q3 and Q4 especially in the back half of the year where we needed to started to improve that supply chain performance in the back half of last year. So we are still seeing some cost benefit in Q1 here that we will start to say in the Q2 and become less so in Q3 and Q4.

Michael Binetti - UBS

Okay, great. And then Kevin if I could ask you just a bigger picture question since you guys announced your acquisition there has been a lot of media coverage on what’s going on the digital part of the athletic industry, you guys obviously acquired MapMyFitness recently you have seen headlines that Nike has been moving away from at least from the hardware side of their Fuel business, could you give us the state of the union on how the integration is going and maybe how you see the industry moving forward with digital investments like this and how it fits in your longer term thinking?

Kevin Plank

Yes, thanks very much Mike. It’s a great question. I think it’s an opportunity that everyone looks at and I was wondering where is this category going and what does it means. So let me start by saying that proactive health was reached – coined the term connected fitness. We believe it’s a massive opportunity. I think as a company we are positioning ourselves to put ourselves in a position to really look as this being one of the next major industry. Proactive health means not waiting for your shift to go the hospital, but how you are being prevented with that. And things like predicted analytics and the science and the technology that are out there are things that just aren’t being applied to your own body and think about it for a second.

People know more about their car today than they knew about their own body. You know how fast you are going, you know how much gas is in the car, you know how much oil is in there, you know the tire pressure, yet you don’t have an idea yourself when you think about your own health you go to the doctor every 12, 18 or 24 months. He pulls out a manila folder and he starts with the subjective question of how do you feel. And your thinking, my gosh there is got to be more data and more analytics available to the world than that. So we have been positioning ourselves for quite some time around this base of biometric measurement and understanding the best way that Under Armour can play there.

Where we did and in fact we are going back to last year we made the decision of looking at things like the wearables and the hardware, but that wasn’t really where the future was. And the reason for that is because there has yet to be a single market leader has stepped forward. And we think about listening to some of the really exciting launches that are coming up with the wearable community. But secondly there is always going to be new and additional exciting launches coming up. If someone trumping someone else and the idea of that affluent sense of business of sitting on a piece of hardware versus us sitting back and maybe saying who is the best player in the world.

The key to the acquisition we made last year of MapMyFitness was the idea of they are being agnostic. They are being opened and acceptable to over 400 different devices that work within their community. When you look and you think about the community what we purchased last December was the community of MapMyFitness of 20 million registered users. And as you think about just in the last five months, as of today as I spoke with Robin Thurston, the CEO and Cofounder of MMF and now the head of digital Under Armour. And as of this morning around 11 o’clock, we are going to pass 24 million users. On Monday, we signed up within 46,000 people in a single day to the MMF platform.

Now, if you think about that size and scale on our prediction hazards will be over 30 million users by year end. And as we sit here and we dream and we play out how big can this community be, it’s tens of millions and frankly we believe it can be hundreds of millions some day. So the big question is what’s the product that we are selling them and what’s the role that we play in that space? And you think about 30 million people by the end of the year, that’s the size of Canada. So we are definitely having an input and I think an impact. And again, this world mis-phrased connected fitness of what it means. So the way we are thinking about is not building individual products, but more importantly building a platform with our own community the one day we envision to have that huge, huge scale and size.

As I said and I started this category is incredibly large. We are working on product and we are continuing to operate the MMF platform today as it certainly existed prior to our acquisition and Rob and his team are driving towards that because it’s a great product there, but we also understand what the engineering and frankly the vision of one of the founders of this industry and Rob and his partner are gathering that we feel we are incredibly well-positioned to see where this market is going, because as we know, our competition is not stepping away from this any side. Everyone is getting involved and sort of try to get into the game, but figuring out what is the game, I think is the next big question.

And so we are anticipating additional announcements of large partnerships that our competition will be stepping up with, but frankly, we feel we are in the lead that we have got the largest community and that were the ones that are dictated in the space. And so we are not making predictions about perfection as I mentioned in my comments before, but we like where we are and we think that you have got the best insight into being an important place for the athletes to turn to as they are thinking about how is my body doing. And frankly expanding the definition of exactly who is an athlete as we think about how big this opportunity could potentially be for our company of (indiscernible).

Michael Binetti - UBS

Thanks a lot again. Congrats.

Kevin Plank

Thank you very much.

Operator

Thank you. And our next question is from Sharon Zackfia with William Blair. Your line is open.

Sharon Zackfia - William Blair

Hi, good morning and congratulations on a really great quarter. Question on the international side, so as we think about international longer term and the way you grow internationally, could you talk about direct-to-consumer and the role it will play in the international growth, I am assuming and maybe incorrectly that direct-to-consumer will be a bigger driver of how you grow overseas given the distribution, but would love some perspective on that?

Kevin Plank

Sure. Let me grab that and I have been doing a good job of giving long answers, so this one isn’t going to get short, the world’s is a big place. I have spent a lot of time on the road in the last couple of years and beyond Investor Day, but just as we made that commitment to being a truly global company which our definition of that is some day more than half of our revenues will come from outside of our home country. I am standing here today we are less than 10% of our revenue will be coming from outside North America. That’s an incredibly large statement to make. Last year, I did over 230,000 miles of travel. This year, I am on pace to break that. Just in the first quarter alone into Latin America to launch our brand in Brazil, visited a couple of our other markets down there. I have been to Europe in our headquarters in Amsterdam as well as to London and see Tottenham Hotspur play in London where they won. The Middle East to meet with, select our future distribution partners there and heading to Asia in just a few weeks here.

So we are without question focused on global. And I love that statement that we claimed of what is the role of global there and the one we have got these forced in North America. And as we say we believe that our North American growth and cash creation are going to the engine that feeds our global ambition. That means we need to continue to win in the U.S. And so I want to be really clear that we are giving and providing resources to the U.S. to be successful. But ultimately it gives us the ability to support resources outside the United States and North America in front of some of the real revenue, but we believe that real revenue is there and it’s coming.

For instance, this year – this quarter we posted 79% growth on the international business, but we haven’t even started selling products in Brazil yet. The products that we have been selling in Colo-Colo, in Chile for instance has just in Colo-Colo kits, they haven’t got our full in line sporting goods. So as we look at it, we extrapolate the numbers we think that there is incredible opportunity. Now, (indiscernible) is coming off a relatively small base, but frankly all these things come back to leadership and Charlie has been in the chair now for coming up on two years and has been doing just an excellent job building out of team of leaders around the globe.

So Under Armour today is doing business in 51 countries and I think we have got 31 different MDs that are managing that in offices all over the world. And we are doing good job. So let me give you quick rundown just how the world looks for us. So Latin America, I mentioned it briefly, but one of the things we said we are going to do is we completed the transition of our distributor in Mexico to now being wholly-owned subsidiary of our brand. The signings that we did at CONCACAF Cup last night final that Toluca wearing our kits and Cruz Azul who will begin to outfit at the end of this year or in July. So we will have a winter that will be in the Latin American club championships down there.

In Brazil, great feedback with the launch that we did in both Rio and Sao Paulo and the event turnout I think is really exciting. I think Under Armour is bringing a different energy and a different point of view to the brand that they don’t have anyone like us today. The fashion role that other brands are playing is not the performance bench that Under Armour can bring still the products that looks great. We are going to have 70 shop-in-shop that will be going up as I mentioned by the end of this week when we start selling products there and it’s a big idea. Chile, the first year in five years Colo-Colo has one, the CONCACAF title and our first year outfit and do that and so we are getting our brand awareness out there in a big way.

So speaking of brand awareness, Europe is something that it’s been since 2006, we are proud to say this is the first year Europe will break $100 million for us in the company. And I believe we are taking control in driving alignment across all of our European markets and countries. The one thing what that is, aided and unaided awareness and so there are a lot of things that we are spending lot more moneys from the marketing standpoint deploying resources there. The addition of cotton of Tottenham Hotspur which has been critical I think from a brand awareness standpoint and being on the pitch in an authentic way within the EPO is massive. And then getting to the point you make is more impactful direct consumer.

Our ecommerce there is making – is doing a better job. We have used some third party partners to distribute our products via the web in Europe. And we are bringing that in-house and with the addition of Henry and Jason Rhodes here in North America figuring out how we can be better from the supply chain standpoint to have more and a broader way of our products available online. And that in the past, it’s been pretty limited what you are able to get in other markets and we have really added and talked to them. So we are happy to able to make much more that as we understand and become better from a distribution, supply chain, logistics and frankly knowing how to get product to market.

That isn’t any different in Asia either and quickly on the direct consumer side in China specifically. We have got nearly 20 stores in China by the end of April that will be growing to over 50 stores by the end of 2014. Now most of this is going to be utilized in the franchise store model. But we are expanding from two cities to 10 cities and we are seeing incrediblly strong results of ecommerce. And we are also going to be launching our brand on the ecommerce front in Hong Kong and a few other markets throughout Southeast Asia as well. And again all this when you talk about Asia for us it’s anchored by our partners in Japan, up more than 50% in the quarter growth in that’s not a real number. They continue to grow of course to be anchor in Asia with brand appropriate retail stores driving off destiny with the athlete, building going incredibly strong under Under Armour culture in fact the personality. And I can’t point over and over that it all comes back to leadership and we have got a great leader (indiscernible) running that business for us in Japan.

And one thing that we found when you look at it and I don’t know if I have given you enough detail on the ecommerce side of it, the world isn’t quite as caught up as we are going to stay – some markets are in front of us and some markets are lagging a little bit. But one thing we have recognized is we don’t have to go at these new markets the way that our competitors are going with them in the past. I don’t know if that model is perfected by anyone yet. But we are keeping enough flexibility. We are putting enough resources behind it to give ourselves the ability to make the best decision and not just the decision with someone else have done. So we expect to write the book and again not unlike MapMyFitness we expect to be dictating the tempo as to how we enter these markets and the good news the world is a big place and we found that the Under Armour brand translates and we have got a big opportunity.

Sharon Zackfia - William Blair

That’s super helpful. Thank you.

Operator

Thank you. Our next question is Omar Saad with ISI Group. Your line is open.

Omar Saad – ISI Group

Thanks guys.

Kevin Plank

Hi Omar.

Omar Saad – ISI Group

I wanted to ask a question about your philosophical approach to SG&A so to speak, you had this kind of sales acceleration in the last couple of quarters. You talked about boundless opportunities for the brand. It’s still a very early stage growth company in so many ways. How do you think about pouring money back into the business to take advantage of this and perhaps expanding a higher kind of growth rate curve looking out over a longer period of time versus kind of providing upside in the number, I think you even had some – a little bit of SG&A leverage this quarter because the top line number was so strong that what is your philosophy around investing, reinvesting back in the business?

Brad Dickerson

Omar, I had a couple of things on that I think one there is always going to be some nuances in timing quarter-by-quarter, so we tend to look more on an annual basis of how we want to invest in our business and the timing of how we want to invest in our business to best and while we are trying to do initiatives, we are trying to do during the course of the year and the timing of that. So you will see some nuances. And we are calling those out relative to marketing spend and so forth. And we have had some incentive compensation, nuances also last year and this year as far as timing also. But as far as the level of investment how we approach that. We really have consistently kind of looked at investing in our current growth drivers that are performing for us at the highest level by also balancing that with some mid-term and longer term needs of our business.

So as an example of that investing in our direct to consumer business in the near-term around expanding square footage in our factory held stores, building brand house out and putting money into our ecommerce business here in North America is a return that we tend to get by the way in our business. So we tend to put more of our SG&A investments in this kind of short-term as the return is parts of our business. That doesn’t mean that we are going norm some of the longer term successes we need. And Kevin just talked about international. And yes, absolutely international is in a deep investment mode right now relative to not only growing our existing business in Europe, starting our business up in Asia in the last two years, but obviously getting into some of these markets in Latin America. So we definitely want to make sure we balance our investment kind of in the near-term and over the next couple of years and a lot of that investment going to short-term gain relative to getting ROI out of it right away, sprinkle with some mid-term and long-term investments that we know are going to pay off down the road later, but are much, much needed investments today.

As far as how we look at, how we go with how things go during the course of the year, we have talked a lot about this over the course of the last probably 12 to 18 months that we see a lot of opportunities in our brand across all of our growth drivers near-term and long-term. And we will definitely use benefits that we have in top line or the margins and the benefits of how that drops through in SG&A and we will take advantage of that and accelerate and that’s the way SG&A investment to do one of the few things. One that would gives us an insurance policy on the execution of near-term initiatives especially around things like launching international markets and getting into markets for the first time in Latin America and Asia and so forth. Or two, accelerating investments that would pull forward and maybe hopefully by a year or two some benefits we might have in some of our growth drivers that are in investment mode. So we have talked about focusing on operating income dollar growth and really taking any benefit we have in top line and margins to reinvest in our business to give us in that insurance policy will deliver and execute on our initiatives while continuing to drive growth going forward.

Kevin Plank

Let me jump on the back end of that too. We have got a couple of deals that and agreements that we keep with one another. And number one first of all when we talk to the street we are committed I think for the operating line that we have committed to and the ability that we see in our business to maintain and at times show leverage and drove that. At the same time with the top line growing in the way that it is it means the dollar investment in Under Armour is – has the benefit of the top line growth that we are enjoying.

Here based on our latest outlook as we see the year we will be adding roughly $600 million in revenues what we did in 2013 and 2014. So it’s just south of $3 billion for the year. And within 11% roughly commitment to marketing we have got $330 million of standard marketing. When we look at the largest post marketing assets out there in the world it really doesn’t put us out of the game for anything. We could theoretically build by anything we wanted to do. But we don’t have to hold the money in the world and we just have to be really thoughtful and we have to pick the right deals. I have two great examples of doing that. Number one, I mentioned in my script regarding Jordan Spieth hopefully we use a phrase here at Under Armour humble and hungry. We placed a bet on Jordan really ahead of the curve when he was still at sophomore at the University of Texas in making the decision to turn pro that we would get behind and sponsor endorsement. So we are incredibly proud of finding someone like Jordan and like he didn’t come out of nowhere, but he was certainly a bet that our company took in a really large way. And he has done everything that he said he would do and more and hope that our company is delivering on that way and more as well. And so we want to remain opportunistic about staying close enough to the athlete and the consumer to find those Jordan’s pieces out there. And as you know they are incredibly rare and you can beat your chest a little bit once you do find them. But I promise that’s what we are trying to do is find out that before they are really out in the open and the market really has a chance to understand what we are doing.

The second would be another game, in the last, I guess it was within this quarter, where we announced our new partnership with Notre Dame, it was announced as a largest sports marketing deal at the collegiate level in the country. And as we see that and just underpinning the size of it is that we have the ability to go buy the best deals and the best assets. But we have to I think remain true to philosophy we have about the operating line, because one thing I am incredibly emphatic about is that winning is a culture and winning is a habit. I saw some people who talked about SoHo and there has been some commentary about it, it’s just a flagship which is more about marketing than it is about profitability.

Let me be clear. Every activity that we involve ourselves in has a line of sight profitability in winning. We don’t do anything that we see as being just did for the brand, just for marketing, everything must have a return. And that commitment is something that I think is cultural and I think it plays to what do the Under Armour brand is. It doesn’t mean we win all the time, but we don’t go into things thinking that we are going to lose. And so when we sign athletes and athletes and when we did that deal with Norte Dame, it’s because we put a business model behind this and say that we are really focused on this, we can make this a profitable business for us, which will make more money for Norte Dame which will give them the resources that they need to compete at the highest level. And everybody basically wins. It just means are getting really good at what we do. So one of that’s Norte Danne, Jordan Spieth, Colo-Colo or any of the assets Tottenham Hotspur or anyone that we have signed, it’s about having the resources behind the initial investment to make sure that we make those resources valuable. So within that, we haven’t had an instance, where we believe we have to change anything about the way that we are growing, we think we can deliver growth with the outlook that you provided on our Investor Day last June. And we expect to deliver on that going forward. But I don’t think that we are doing anything because of the commitments that we have to growth and frankly with that growth the commitment that we have to profitability.

Omar Saad – ISI Group

Thanks guys. That’s really helpful. Actually, I wanted to ask one quick follow-up on your speed skating business, I am just kidding – I know it’s such a big business for you, the quick question on ASPs, it seems like there is a premiumization trend going on in the marketplace in the whole kind of athletic active lifestyle space. Are you guys seeing that in your business or feeling that in the marketplace? That’s my last question.

Brad Dickerson

Yes. ASPs, they have been trending kind of in that mid single-digit range for us over the course of the last couple of quarters or so. I mean, they are little below that to mid range. Again, that does back to what you are talking about Omar, a lot of our new innovations coming at higher price points and so forth. So we are definitely seeing some of that kind of in that 3% to 5% range over the course of the last few quarters.

Kevin Plank

But one thing we are seeing too Omar is that discountings is not – we have talked to some of our partners about that the way it works to the market, I mean, go back to last holiday season. And there was a tremendous amount of discounting happening in the marketplace. And frankly, we didn’t participate. And I think we are really proud of the 35% growth that we put up in the fourth quarter and look whether it makes this all a lot smarter, but it wasn’t a consumer coming in and just choosing price is that, there is a consumer that needs and take a decision based on price, but there is a bit of a barbell effect that continues to take place and Under Armour continues to differentiate itself as the premium player in any market.

So as long as we are delivering newness in innovation and whether that newness is SpeedForm, whether it’s (indiscernible) our ColdGear Infrared which is an incredible product we haven’t tried it when it’s cold outside, whether it’s our new MagZip we are going to be introducing on 400,000 pieces of jackets in other words end of this year what is effectively is that differ that is has a magnetic life on the bottom of it that allows you to zip your jacket with one hand. And if things like that we need to make sure we continue to do in the market and not relying on playing the (indiscernible) plenty of people doing that. So Under Armour stands for innovation, we are going to stand for newness on the floor. We will continue to give our partners reasons for their consumers, all of our consumers and customers to walk into their stores and find what’s next and what’s latest and greatest at Under Armour.

Omar Saad – ISI Group

Thanks guys. Very helpful to us.

Kevin Plank

Thanks very much Omer.

Operator

Alright, thank you. And our last question is from Camilo Lyon with Canaccord Genuity.

Camilo Lyon - Canaccord Genuity

Thanks. Good morning guys, also great quarter. So Kevin you talked – you started the conversation talking about running and the momentum you are seeing on the products side, but you also mentioned capital and I think about a month ago or so you made a pretty significant hire of Fritz Taylor, I was wondering if you could just shed some light on what you think you will bring to the category to the business, what you can do and where do you think you can take the business to?

Kevin Plank

Well, first of all it’s great that we have industry veterans and Camilo is referring to Fritz Taylor who is our new head of running Under Armour in 25 plus years that as you know Brooks 90 and he is someone who brings a really strong point of view of what the consumer is looking for. I think we are really proud specifically of footwear business overall, but running is probably the most easiest way for us to find where are we and where are we going. So our company has started as an apparel company I think he has taken us in – as we are in our 8th year in the footwear business as a whole to really find our stride as to what is the product that really comes through from Under Armour. Again not unlike our Women’s business in 2013 we finished our footwear is just under $300 million in revenue. This year we are north of a $400 million business for footwear in 2014.

Now we have got a long way to go. We are beginning to create some scale and that will allow us to grow much faster in the future. SpeedForm for us was something again. This happened prior to Fritz being here. Most difficult thing about the footwear business is the long lead time, the long time it takes to get people on board. The good news is as excited we are about, just this is not one person. I know I think we have got 3 or 4 people coming up in nuance piece at the end of this month are going to be joining our offices both here and Baltimore as well as in Portland. Every month it’s like that, people are coming off of non-compete and we are lucky to have put ourselves in a position where we are looking for who is somebody we can hire right now getting to the ability to take the long view and saying we are going to be in this business for a long time, $300 million business is going to turn to about $400 million business to be a $500 million business with a line-of-sight to $1 dollars. And I would like to say it over and over again we believe that the footwear has the potential to be larger than apparel’s list.

So within that this is factory relationship, this is supply chain, this is seen like design count on board. This is really having I think the ability to develop a point of view, both our product as well as from the distribution standpoint and beyond things like SpeedForm, this is again we are working with a largest number of pairs, but it certainly articulates the point of view of our company in running of what Under Armour at $100 of a running shoe looks and feels like. So within that we have also got a $70 (indiscernible), $80 Engage and $90 Spine Evo that are products that we have in the market that we believe in. And these are price points that work within our largest distribution today which is sporting goods.

At the same time, take a look and just go from what we are doing there. Under Armour today as you look and think about is 6th or 7th running brand I guess when you look at the chart, but with the number two running brand, with a number two youth brand in footwear period. Running, training, basketball, kids love our products and so we have a consumer who is demanding us and who we are willing to grow old with. And frankly as they are nine today, we have six years to deal with them until they are 15 and 16 years old and continue to improve and enhance the product and enhance the team. And within that what we are doing I think the way that we are showing up on field, our baseball business, our football business, the oldest business the longest footwear business that we have been in are continuing to do well, continue to bring innovation like highlight, continue to bring things like Alter Ego, Eclipse we have got Captain America, The Superman, The Flash, and some of our footwear that we have. I know you take something from a little more serious standpoint is like sort of basketball which we have been pinned on since we entered basketball in 2011 and believing that we have an incredible opportunity there. We found a game changer in Stephen Curry and some of that we believe can really be a difference maker for our brand.

And we are seeing that through little small things like exclusive color rates that we are doing it with some of our key partners like Foot Locker and Finish Line, where they are blowing out and these are several hundred units. But they are blowing out in a matter of minutes, selling online and other things to be exclusive. So we are finding and we are doing the work to figure out how to crack the code, but we believe that we have got a lot of momentum going in the right direction. And I want the world to know that we are becoming great in running the things the SpeedForm platform leading the way, continue to find the sweet spot within our existing wholesale sporting distribution. And then finally the relative mix that we have to make ourselves important in our key mall partners, we are down this road, we are on it everyday. We have got great people that we are not making the calls or having to make the calls. People coming to us and say I want to be a part of what’s being built at Under Armour. So I think the energy, the heat the momentum is there, just a matter of our execution and I feel pretty good about the team that we have in place to make that happen.

Camilo Lyon - Canaccord Genuity

Great. And just my final question for Brad, Brad just on the guidance and how to think about the clearly the sellers and that you are talking about here in Q2 and Q3, could you just help us understand why the strength that we have been seeing in Q4 on the top line now in Q1 should not continue into Q2 and Q3? And then just finally on the fourth quarter, could you remind us what you think the benefit from weather was in the fourth quarter of ‘13 and really because that seems to be the tougher comparison of the business. If you could just provide some color on that, that will be great?

Kevin Plank

Sure. As far as the flow from the first quarter to second quarter, there is a couple of things going on there. One there was, there is just some timing in the quarters on the seasonal basis front half of the year in some of our business. So footwear and international we were seeing stronger growth in Q1 versus Q2 and it’s just the timing issue in the season both business obviously are going to have strong growth rates for the full year, but a little more escalated in Q1 versus Q2. So that’s part of it. Also in the second quarter, if you recall, last year we kind of re-launched our bags business with better margin product in the second quarter of last year. So that will be the first quarter that we are comping that over the last four quarters. So we had a little bit of a benefit there in Q1 of comping bag business where we are kind of pulling back last year in anticipation of our re-launch in Q2.

In the supply chain performance which I talked about earlier, Q1 is probably the last quarter of some pretty decent year-over-year comparisons just the performance of how we are getting product to the retail floor. By the time you get to the second quarter, we start to see little bit tougher comps against that as we started doing much better than that last year in the second quarter. So those three things are why you are seeing some of the growth from Q1 to Q2 changes in Q2. As far as the back half of the year, specifically around Q4, a couple of things in Q4, you mentioned the weather that was definitely one thing if we are taking into consideration. I believe on our last earnings call at the end of January, we talked about Q4 and the impact of weather in our strong growth rate in Q4 last year. It’s really tough to say how that impacts your business. We (indiscernible) had an impact of a couple of percentage points possibly of the growth rate in Q4 last year by having a cold winter in Q4.

Also I think when you look at the fourth quarter, it’s important to note how we are looking and how we are approaching and planning in our direct-to-consumer business, 40% of our direct-to-consumer business for the whole year was sitting in the fourth quarter of last year. So DTC is huge in the fourth quarter for us. Obviously, weather played a part in that last year in the fourth quarter, but we do have some nuances there also as you look to the fourth quarter this year versus last year. We know in Q2 and Q3 we are actually we have a positive comp on two new stores in Q2 and Q3 with New York opening today and Tysons Corner being opened where it wasn’t opened last year as we get to the fourth quarter, we just have a positive one store comp there with New York in the fourth quarter, because Tysons resulted by then.

We also have just square footage growth in Factory House as talked about the door count growth going down and we start to focus more on square footage growth. The reality in total when you look at new doors and square footage growth last year in the back half of the year we were up in the upper 20s as far as square footage growth. In Factory House for this year will kind of be more down in the low teens. So that’s obviously impacting especially in fourth quarter where a lot of our DTC business sits. So our approach to the fourth quarter right now for this year is we don’t want to approach it like the weather will be a tailwind like it was for us last year. We don’t want to approach it that the strength we saw in DTC last year will necessarily be duplicated this year. That doesn’t mean that we are not putting ourselves in a position. It does few things turning to tailwinds for us that we can deliver on it. We are definitely putting ourselves in institution. We can deliver things work in our favor, but as far as how we are approaching the plan right now in our guidance we are not assuming much of that in our current guidance.

Camilo Lyon - Canaccord Genuity

So to be clear you will have the ability to change product and go after more sales if those headwinds that you are planning for become tailwinds?

Brad Dickerson

Yes, we are putting ourselves in a position if weather is called again in this fourth quarter we are putting ourselves in a position to be able to deliver and we are also putting ourselves in a position if DTC over drives like it did last year. We are putting ourselves in a position to be able to deliver but we want to be very careful obviously how we approach that relative to our guidance and our expectations.

Camilo Lyon - Canaccord Genuity

It sounds great and thanks a lot and good luck for the rest of the year guys.

Brad Dickerson

Thanks Camilo.

Kevin Plank

Thanks Camilo. Alright, thank you for joining us on the call today. We look forward to reporting you our second quarter 2014 results which has been scheduled for Thursday, July 24 at 8:30 AM Eastern Time. Thanks again and good luck.

Operator

Thank you. Ladies and gentlemen, this does conclude the program. Thank you for participating in today’s conference. Everyone have a great day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!