Amer Sports Reports Second Quarter 2024 Financial Results, Company Raises Full Year Guidance
Amer Sports Inc has announced its financial results for the second quarter of 2024.
- Strong financial performance with sales, adjusted margins and EPS above expectations
- Arc’teryx continues exceptional growth and profitability
- Top-tier performance in Greater China
- Double-digit growth in Salomon soft goods continues, notably footwear
- Wilson returned to growth, with a strong product pipeline for the second half of 2024
CEO James Zheng commented, "I am very pleased by our financial and operational performance in the second quarter of 2024. Our unique portfolio of premium technical brands is taking share in sports and outdoor markets all around the world. Led by our flagship Arc'teryx brand, we well exceeded our own high expectations on all key financial metrics, positioning us to deliver another strong year in 2024."
SECOND QUARTER 2024 RESULTS
For the second quarter of 2024, compared to the second quarter of 2023:
- Revenue increased 16% to $994 million, or increased 18% on a constant currency basis 1. Revenues by segment:
- Technical Apparel increased 34% to $407 million, or increased 38% on a constant currency basis. This reflects an omni-comp 2 growth of 26%
- Outdoor Performance increased 11% to $304 million, or increased 13% on a constant currency basis
- Ball & Racquet Sports increased 1% to 283 million, or increased 2% on a constant currency basis
- Gross margin increased 220 basis points to 55.5%; Adjusted gross margin increased 200 basis points to 55.8%.
- Selling, general and administrative expenses increased 26% to $560 million; Adjusted selling, general and administrative expenses increased 21% to $526 million.
- Operating loss was $9 million compared to operating profit of $8 million for the second quarter 2023. Adjusted operating profit increased 40% to $29 million.
- Operating margin decreased 180 basis points to (0.9)%. Adjusted operating margin increased 50 basis points to 2.9%. Adjusted operating margin by segment:
- Technical Apparel increased 110 basis points to 14.2%.
- Outdoor Performance increased 380 basis points to (2.1)%.
- Ball & Racquet Sports decreased 160 basis points to 1.1%.
- Net loss decreased 98% to $4 million, or $(0.01) diluted loss per share; Adjusted net income increased 129% to $25 million, or $0.05 diluted earnings per share.
Balance sheet . Year-over-year inventories increased 2%, below the 16% revenue growth for the quarter and in a healthy position. Net debt 3 was $1,820 million, and cash and equivalents totaled $256 million at quarter end.
| 1 |
Constant currency revenue is calculated by translating the current period reported amounts using the actual exchange rates in use during the comparative prior period, in place of the exchange rates in use during the current period. |
| 2 |
Omni-comp reflects year over year revenue growth from owned retail stores and e-commerce sites that have been open at least 13 months. |
| 3 |
Net debt is defined as the principal value of loans from financial institutions and other interest-bearing liabilities, less cash and cash equivalents. |
OUTLOOK
CFO Andrew Page said, “Our strong financial performance in Q2 reinforces my confidence in our near- and long-term path forward. Organic revenue growth in the high-teens and significant gross- and operating-margin expansion reflects the combination of great brands, strong management execution, and a disciplined approach to expenses and working capital. These outstanding results give us the confidence to raise our full-year sales and earnings guidance."
FULL-YEAR 2024
Amer Sports is updating guidance for the year ending December 31, 2024 (all guidance figures reference adjusted amounts):
- Reported revenue growth: 15 - 17%
- Gross margin: approximately 54.5%
- Operating margin: toward high-end of 10.5 - 11.0%
- D&A: approximately $250 million, including approximately $110 million of ROU depreciation
- Net finance cost: $200 - $220 million, including approximately $15 million of finance costs in the first quarter 2024 that won’t be recurring
- Effective tax rate: approximately 38%
- Fully diluted share count: 500 million
- Fully diluted EPS: $0.40 - $0.44
- Technical Apparel: greater than 30% revenue growth; segment operating margin slightly above 20%
- Outdoor Performance: mid-to-high-single-digit revenue growth; segment operating margin high-single digit %.
- Ball & Racquet: low-to-mid single-digit revenue growth, and low-to-mid single-digit segment operating margin
Note: In the second quarter, we recognized an incremental tax benefit of $20 million related primarily to the resolution of uncertain tax positions, which benefited Q2 diluted EPS by approximately $0.04 per share. Additionally, approximately $20 million of wholesale orders shipped earlier than anticipated, which benefited Q2 sales growth by approximately 2% and diluted EPS by $0.01 per share. These timing shifts do not impact our full year guidance.
THIRD QUARTER 2024
Amer Sports is providing the following guidance for the third quarter ending September 30, 2024 (all guidance figures reference adjusted amounts):
- Reported revenue growth: 12 - 13%
- Gross margin: approximately 54.0%
- Operating margin: 11.0 - 12.0%
- Net finance cost: $45 - $50 million
- Effective tax rate: 50 - 55%
- Fully diluted share count: 510 million
- Fully diluted EPS: $0.08 - $0.10
Other than with respect to revenue, Amer Sports only provides guidance on a non-IFRS basis. The Company does not provide a reconciliation of forward-looking non-IFRS measures to the most directly comparable IFRS Accounting Standards measures due to the difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations without unreasonable efforts. The Company is unable to address the probable significance of the unavailable reconciling items, which could have a potentially significant impact on its future IFRS financial results. The above outlook reflects the Company’s current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change.
