Good morning, ladies and gentlemen, and welcome to the Under Armour, Inc. Second Quarter Earnings Webcast and Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Mr. Tom Shaw, Director of Investor Relations. Mr. Shaw, you may begin.

Thanks, and good morning to everyone joining us on today's second quarter conference call. During the course of this call, we'll 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 risks and -- 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 us 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 second quarter, followed by an update to our 2014 outlook. After the prepared remarks, Kevin and Brad will be available for a Q&A session that will end at approximately 9:30 a.m. Finally, a replay of this teleconference will be available on our website at approximately 11 a.m. Eastern time today. And with that, I'll turn it over to Kevin Plank.

Thank you, Tom, and good morning, everyone. In our press release this morning, we raised our full year revenue guidance for 2014 to a range of $2.98 billion to $3 billion. That represents growth of 28% to 29% for the year, an increase from our prior range of 24% to 25%. That's a great forecast of growth, strongly supported by the 34% revenue increase that we saw in the second quarter. But these numbers are not without precedent. Back in 2007, net revenues grew 41% for the full year, and more recently, in 2011, revenues grew 38% for the full year. As we said previously on these calls, the growth opportunities for the Under Armour brand are abundant. What is, however, unprecedented is the source of our growth, the new dimension these revenue drivers are bringing to our brand, and most importantly, the confidence it provides that our strategy is right and positions us well for sustainable growth. To illustrate the breadth of the growth and help you understand the benefits for our investments, I want to discuss 5 pieces of our business that are bringing diversity to our story: Footwear, Women's, Connected Fitness, Direct-to-Consumer and International. We've been investing in each of these growth drivers to varying degrees over the past several years, empowered by the continued strong growth in our North American Apparel business. With Apparel growing 35% in Q2, our confidence in the strength of our core business is high, with strong revenue growth across both our wholesale and Direct-to-Consumer businesses. But as we reach the midpoint of our fiscal year, we believe we will all look back on 2014 as a pivotal year in our diversification, one where we built solid foundations in these newer businesses. So let me address these 5 growth drivers individually, beginning…

Thanks, Kevin. I'd now like to spend some time discussing our second quarter 2014 financial results, followed by our updated outlook for 2014. Our net revenues for the second quarter of 2014 increased 34% to $610 million. Growth again was balanced across many parts of our business during the North America wholesale, Direct-to-Consumer and International channels, as well as our -- as across our Apparel and Footwear categories. Areas that contributed to upside from our original plan during the quarter included positive trends in our International and Footwear businesses, a desire from our wholesale partners for earlier delivery of back-to-school product and outperformance in both our Factory House and E-Commerce channels. Taking a look at Apparel, we grew this category 35% during the quarter to $420 million compared to $310 million in the prior year. In general, we continue to see success where we drive newness and excitement for the consumer, including innovation stories like ArmourVent, as well as enhanced design elements through products such as Alter Ego, UA Tech and graphic tees. Specifically, in Men's, the first quarter momentum we experienced in Golf and Outdoor continued to drive results during the second quarter. In Women's, we saw strong growth in both the Running and Studio category; and in Youth, Training and Golf were the big stories. Building on our first quarter success, second quarter Footwear net revenues increased 34% to $110 million from $82 million in the prior year, representing approximately 18% of net revenues for the period. We continue to offer more balanced running price points across our sporting goods distribution and remain encouraged by the early success of our SpeedForm platform. Our momentum is also continuing our cleated business where we are increasing market share in both baseball and football this year. Following on the relaunch of…

[Operator Instructions] And our first question is from Pamela Quintiliano with SunTrust.

You gave a lot of info on DTC, and I was hoping you could just talk a little bit more about stores and what type of learnings you have from the newer locations, particularly Soho. I know you mentioned Women's, but anything else there? And does it make you approach any aspects of the store build-out differently? And then just in line with that, the tourism component. I'm sure it's very high. Are you able to collect data there? Is that impacting your future build-out domestically or internationally?

Yes. Thanks very much, Pam. I think as we look at the opportunity, we've built an incredible learning center for us. Number one, getting close to the consumer and the things we found out. We've had a great relationship, and I want to reiterate. We are very much a wholesale distributor and have incredible partners. And so our business there is very strong, very healthy and something that we continue to see additional growth. As we learned though from retail, 2 real key learnings: number one is probably Women's; and number two is Footwear. The layout and -- it's difficult because I don't want all those to sort of lead to the store that we have in Soho, but we've learned a lot of things from that. Number one, when you walk in there, I think you're probably overwhelmed with the breadth of Women's products, the amount of color, the size, the diversity, probably sophistication that people -- a lot of people didn't expect from us with our brand. And it's really allowed us to elevate ourselves and take it to a place and reinforce the theory that we had that we can be a viable Women's business and that someday, Women's can be as large, if not bigger, than our Men’s business. As you take or look at the -- what that's meant for us, it's taken us to a different place. And secondly, our sales there are in front of any place they are across our wholesale distribution or any other aspect of our business. But when we present it the right way, we know we've got the right product and then we think with doubling down on, for instance, the Women's campaign, I'll talk about that a little bit later, we think there's a bigger opportunity there.…

And then if I could just have one quick follow-up. With your wholesale partnerships, are they also taking the learnings from the Soho location and other DTC and the way they're presenting products? Or is it changing their approach in dealing with you?

Yes. Well, I think everyone is unique in their own situation, without question, and the goal that we have, when we built the first Brand House here in Baltimore, 8,000 square feet, was having our partners walk in and say, "I want this in our store. And why doesn't our Women's selection look like it does here with the breadth of color, style, design?" And really, the reach, to ability to go outside of sporting goods. Because a lot of times, particularly in, take a category like Women's, it's -- you're branded by your buyers, you're branded by your partners and they say things like, "We'll buy you for a compression short and a sport ball." But that's the way that we see you and there's a lot more to it, and I think that our Women's team and the creative that we've been driving there, our Women's design center in New York, for instance, and what that's been, I think bringing to us, it's coming through with products the way it's hitting the floor, and it is absolutely educating everyone up and down through our distribution channels, beginning with our sales in our Direct-to-Consumer channel and as well as informing in a big way our wholesale partners. So it will create a lot of expectation for them. It's the way that we see how we can be presented, and frankly, we're looking for that to be reflected in all of our wholesale partner stores in some way, shape or form.

And our next question is from Faye Landes with Cowen and Company.

Can you just talk about your thinking on spending going forward? I mean, this is a tremendous -- you have a tremendous revenue growth period, and you're spending to support it. When should we start thinking about [indiscernible]? How do you think about it? How should we think about it?

Yes, Faye, we've talked a lot about this around our spending and our strategy around spending going forward here and with all the opportunities, especially what Kevin kind of laid out in his script, all the opportunities around things like Women's, Connected Fitness, International, DTC. We see so many opportunities after this. It's really, really important for us to make sure that we balance the need to maintain operating margins, maybe even slightly, slightly improve operating margins a little bit year by year, but balance that with the absolute need to invest in our businesses. And Kevin made a great point in his script around the investments we made in 2010 or why we're seeing success in things like Footwear and International and Women's today in 2014. So the theory there being that if we keep investing and balance this need to invest in 2014, you'll continue to see those benefits in future years to come like 2015 through '17 and so forth. So we said pretty consistently that our focus on operating margin is to slightly improve it year-over-year. It's kind of the case you've seen from us the previous years, but more importantly, make sure we're putting the right investments in the right places to drive shorter-term and longer-term growth down the road. So we've even talked about the possibility of this. We overdrive our current year revenue or have some upside in gross margins like the back half of this year. Potentially, if we have some of those things and we have some extra dollars, we would absolutely look to spend those extra dollars in areas like International or Connected Fitness or Women's basically, as we talked about earlier. So continue to see us spend and balance that spend to drive short-term and long-term growth and continue to see us focus on maintaining and slightly improving operating margins, but balancing that with investments.

Okay. And just one other quick question. On the Women's thing, I mean, can you just put a little texture or context on what we're supposed to see and when is like -- when do we go somewhere other than Soho [indiscernible] it has and expect to see the full Women's line, the full -- the new Women's line?

Faye, let me just give you some color and context around Women's as a whole and make sure we get the whole picture out there because, obviously, it's a huge story for the brand as we've been preaching about for a long time, but it's actually coming up in the next 7 days with the big launch that we're doing next week in New York around breaking our spot. There's an incredible amount of excitement. So I just used the word launch, but it's probably absolutely the wrong phrase to use. It's not a launch when you already have a $500 million business in Women's and growing at a rate north of 20% consistently for a very long time, but we do think it's great timing for this campaign. Our Women's business is healthy. There's still areas that we see that we need to communicate and continue to have a conversation with the consumer. We're pleased and proud of the 26% growth for Women's this past quarter, but we think that there's obviously a lot more upside and a lot more opportunity there. We believe there's this quiet shift that's going on where women are increasingly wearing more athletic product outside of the gym, obviously. We think that Under Armour is in the best position to continue to grow the business as we felt this loyal base of athletes, and we're growing with her as she moves in a new category, grows up, and frankly, new end uses for Under Armour. So as a brand, brand shops will have a point of view. And the Brand Holiday that we're launching, our Holiday 2 -- remember, this is back-to-school, this is the middle of football season, sweating and soccers breaking, and all your fall sports and Under Armour, big tough Under…

And our next question is from Omar Saad with ISI Group.

Wanted to ask you about this simultaneous sales and gross margin acceleration that seems to have begun about 3 quarters ago. I mean, look, those are the 2 kind of financial -- healthy financial indicators of brand strength, especially when you get them moving together. Do you think the 2 are related? Is the key driver Direct-to-Consumer or mix shift to more premium products? Are you taking pricing, all 3? Just help me think about this simultaneous sales acceleration and gross margin, and over the long term, how you think about the 2?

Yes. Omar, I think I'll look at both of them a little bit differently and then kind of bring it together at the end here. But on the sales side, obviously, we've had strong quarters in the last few quarters, and there's been some things that have been tailwinds first that we talked and then some of those tailwinds actually, if they get to the back half of the year, start to be a little bit tougher comps for us within the back half of this year. But we talked about things like supply chain and the fact that we, in previous years, have had some challenges on deliveries in the supply chain. As we got to the back half of last year, started to correct those, and that gave us a little bit of a tailwind, especially as we got into Q4 and early part of this year in comping some tougher supply chain deliveries in the prior year. So that favorable comp does start to go away from us a little bit as we get in the back half of this year, when we started improving them last year. So that's part of the revenue piece. It's also part of the margin piece, too, where things like air freight and so forth that we needed in previous years, we needed a lot less in the current year and as we get into the back half of this year, too. So that's been a, call it, the tailwind on the revenue side and the margin side. Obviously, we talked about weather last year, in the fourth quarter, a lot as being a good tailwind for us, especially around our DTC business where we can react very quickly to weather changes and so forth. So those are kind of some…

That's really helpful. And at the analyst meeting, you guys talked, I think, about long-term 2025 revenue targets. You've been above that. Are you ready to sign up, given the gaining confidence and some of these new -- or newer areas of growth to an elevated growth rate long term? Or is it premature at this point?

You know what, we'll probably speak to our last year investor day guidance for now, and we'll do investor days every once in a while and give longer-term guidance. So we looked at last year talking about our revenues through 2016 hitting $4 billion. Obviously, as we wrapped up 2013 and as we get into '14 here, we're outpacing that trend right now. So we're not going to sit here and commit to a number today for 2015 or '16. We'll definitely give some more insight to 2015 at the end of October, on our next call. But obviously, I think just in general, the trend being that what's changed from our last Investor Day last year to this year, I go back to the 2 big changes. I'd say there's 3 big changes: one, being our acquisition of Connected Fitness; two and three, being our, again, improved confidence in International and Footwear, which, as we start to look at 2015 and beyond, obviously, would be probably the biggest change from our viewpoint that we had at Investor Day last year.

And our next question is from Randy Konik with Jefferies.

I guess, Kevin, the way we're approaching the stock is talking about the brand for the next generation. And I guess what's different when I see adults, you -- they'll have pieces of Nike and pieces of Under Armour in the gym. But you look at like a 5-year-old or a 10-year-old or a 15-year-old, they're decked out from Footwear to the whole Apparel assortment in Under Armour. So you don't really talk about the kids part a lot. What are you seeing there? And what are some of the initiatives in that part of your world to kind of build to the future when these kids become adults? And then in Footwear, I guess my question there is, how do you think about -- you've had success with SpeedForm and Spine, how do you think about platforming over the years ahead? Should we expect like 1 or 2 platforms per year? And then should we expect additional -- more SKUs or colorways to complement those platforms? And then lastly, in International, do you assume that -- do you think that International becomes half the company over time? And what is the biggest opportunity internationally?

All right, we got 10 minutes left. I'm closing this call out with this question. So let's begin with number one, we haven't figured how to get a 5-year-old a credit card yet, so we still have to work through the older brother and mom for that, and the good news is it typically does come from there. So without question, I think grandparents grew up wearing one brand from Europe. Parents grew up wearing a brand from the West Coast, and we're very happy to see the youth of today are growing up wearing Under Armour. And we see that, that trend is happening. And there's a lot of things that we have to do. It's certainly not God-given to us, but we're pretty proud of the way that we're executing right now in order to deliver on that opportunity that we have. So Youth for us, you're right, it's massive. And the growth we're seeing, happily -- I said along that our Youth business was obviously outpacing the general growth of the business, both Men's, Women's, Footwear, everything. So we're seeing Youth in the 60% and 70% type of growth opportunities we have there. And frankly, the new thing, when we typically talk about Youth in the past, we would be referring to boys, and what we're seeing right now is that our Girls' business is, frankly, "on fire." So we're very pleased with the balance that, that's presenting for us. And that demonstrated -- I think giving her a voice and giving her a brand that she can wear in a very big and balanced way with something that she has much confidence with Under Armour, we're very excited to be able to bring her up, take her through athletics, take her through her school years, take…

That was great. So the third one is International.

Got you, got you, got you. All right. So we've had a lot of -- I spend a lot of time on the road. Our company is spending more and more time on the road, Charlie Maurath and our team on the global side. Going from being a North American wholesale apparel compression company into evolving into a global true athletic brand that we expect to be, and frankly, we believe we're in the process of becoming, it just takes time and it takes seeing a lot of different things. So just give you a little bit of my calendar, which is indicative of what's happening across our team across the world. This year already, so halfway through the year, I've already been to Asia, I think once, maybe twice; the Middle East, once; Europe, 2 times; Latin America, 3 times, including a couple of weeks ago at the World Cup, which was awesome, I've got to say. We are definitely committed to being a global brand, and it's not something that's going to happen overnight, and it's not going to happen from people doing North American jobs. They're spending a little bit of time helping us become international. So building that out. And one of the previous questions about things like investments and how we're seeing leverage come on to company. There is an entirely different company that needs to be built in order for us to be a global brand. And so we're proud of the fact that we're able to continue to deliver for our shareholders, both top line and especially bottom line, and doing it all the while, while posting the numbers that we are and building out the infrastructure that will allow us to take advantage of the investments that we're seeing now in the…

It's very helpful, very helpful.

I wasn't done yet, I think, on Asia. Hold on a sec [indiscernible] this call yet.

Stocks working so...

I haven't seen that. Last thing I just want to say is leave Asia. Our partners in Japan are amazing, growing the brand, growing the business. Last and most importantly, it's just a couple of store openings that we had. I was down for a store opening in Panama recently, but also in Asia, we recently opened Singapore and the Philippines. And I got to tell you, of all the travels I've done, I've never been to the Philippines, yet we delivered -- for our store opening there, we had 700 people waiting outside in line to get into a 2,500 square foot store. And it's the kind of thing that had you scratch your head and say, "I think this brand has real legs and real opportunity, and I think we have a chance of doing something incredibly special." So there's a lot of energy, a lot of heat, a lot of excitement and something that we're incredibly proud of. And I guess, thank you, but the last thing I want to say before we do close the call is I'm very pleased that our CFO, Brad Dickerson, was here. He has a due date with a baby coming in the next 24 hours and we thought that I was going to have to answer the financial questions. So I'm very glad to report that you guys would hear directly from Brad. So with that, thank you very much for the last question, Randy, and thank you all for your time.

As promised, Kevin took us through the end of the call here. So thanks again for everyone joining us today, and we look forward to reporting to you our third quarter 2014 results, which we tentatively scheduled for Thursday, October 23, at 8:30 a.m. Eastern Time. Thanks again. Goodbye.

Brad said he's going to name the baby Armour.

Thanks.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.