Good day, ladies and gentlemen and welcome to the Under Armour, Inc. Third Quarter Earnings Webcast and Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the conference over to Mr. Tom Shaw, Director of Investor Relations. Sir, you may begin.

Thanks and good morning to everyone joining us in today's third 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 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 third quarter, provide an update to our 2014 outlook and introduce our preliminary 2015 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 at our website at approximately 11 a.m. Eastern Time today. And with that, I'll turn it over to Kevin Plank.

Thanks, Tom and good morning everyone. On our last earnings call in July, I spoke to the diversity of Under Armour, the diversity in having our revenues spread more evenly across product categories and geographies, the diversity in whom our brand is now reaching and the diversity in how we reach both our existing and new consumers across the globe. With revenues up 30%, Q3 marks our fourth consecutive quarter of total revenue growth of 30% or higher and our 18th consecutive quarter with revenue growth in excess of 20%. This consistent outperformance speaks to the continued strength of the athletic cycle that we have significantly helped drive over the past few years. But more importantly, it illustrates the Under Armour brand's ability to thrive beyond our core North American Apparel business and help feed our diversification. The best evidence of that is in the performance of our Footwear and International businesses over the first 9 months of 2014. We've detailed how we've continually invested in both of these growth drivers over the past few years, building the infrastructure needed to grow and adding talent to supplement the team. So we provided some detail that confirms return on the investments we've made in these 2 key growth drivers. Let's begin with Footwear. As we said in our release earlier this morning, our Footwear business grew 50% in Q3, while our International business was up 94%. In terms of the contribution to the overall revenue growth, Footwear and International have added nearly $200 million to our growth through the first 9 months of this year and together accounted for 35% of our total growth year-to-date. What's more encouraging than the actual numbers is the strength of the platforms we are building in these businesses that will lay the foundation for sustainable…

Thanks, Kevin. I would now like to spend some time discussing our third quarter 2014 financial results, followed by our updated outlook for 2014 and our preliminary thoughts on 2015. Our net revenues for the third quarter of 2014 increased 30% to $938 million. Similar to last quarter, we saw tremendous traction during the third quarter in areas such as Direct-to-Consumer, International and Footwear. Looking at the details of the third quarter. We grew the Apparel category 26% to $705 million compared to $561 million in the prior year's quarter. This marks the 20th consecutive quarter of at least 20% year-over-year growth for our largest product category. One of the keys to our Apparel growth in recent quarters comes from our ability to develop platform innovations and expand the reach of those -- these innovations across product categories. This has driven sustained growth in our 2 large platforms launched in 2011, Charged Cotton and Storm, and it is evident in ColdGear Infrared, which was launched just last year and has expanded within Apparel to areas like golf and running. Within Apparel, our Men’s business was led by continued strength in Golf and Outdoor. In Women's, we saw solid gains in studio, sports bras and outdoor. And in Youth, we experienced broad-based strength across both training and sports-specific categories. Third quarter Footwear net revenues increased 50% to $122 million from $81 million in the prior year, representing approximately 13% of net revenues for the period. Expanded running silhouettes were the primary growth driver as we continued our focus on more balanced price points across our sporting goods distribution, while also beginning to broaden offerings across our SpeedForm platform. While off a small base, we also experienced strong growth in our basketball business during the quarter, led by the new ClutchFit Drive.…

[Operator Instructions] And our first question comes from the line of Robbie Ohmes of Bank of America Merrill Lynch.

Kevin, I actually just have one question. I was hoping -- you guys touched I think even more than ever on International and you mentioned being in Hong Kong and everything. Could you just sort of lay out for us which markets are the greatest focus for Under Armour right now and, say, over the next 3 years? Is it China that's the biggest opportunity or is it still LatAm? Or is Europe coming on stronger? And could you move beyond those 3 key European markets you mentioned? Maybe if you could just sort of give us a big picture how we should be thinking about International for Under Armour over the next 3 years.

Yes, great. So let me take a minute and actually go a little bit deeper here. And I think it's that important and obviously wanted to make a statement with, was actually trying to balance my travel schedule with this call and just thinking, it's part of what we're doing as a company, so we might as well just embrace the office that we've had for a number of years. So I think there's 3 real components, the first of which is leadership. Since bringing Charlie Maurath on the team, he's really done a terrific job, I think, driving for Under Armour. Number one, laying out our strategy with -- most importantly, the ability to implement behind it, but also, just as importantly, is building out our team. As we mentioned in my script, I spoke about the addition of Chris Bate, who's now in full control and running our European business. And again, with the trajectory there of that business heading over $100 million, very important for us. Our new Head of China, Erick Haskell, who's actually going to start for us probably around the second quarter of 2015, with the transition will take place in China. But again, bringing in an industry pro with over 20 years experience that can really hit the ground running for us and building off of the momentum that was built by Kevin there prior to his landing. And then thirdly, the addition of a guy named Fernando Pina, who joins us, again, with a 20-year experience in growing and building out a European fleet of stores as well within our industry. So we're really bringing, I think, the talent together. And ending with Fernando, I think it's a good way just to talk about the stores that we have coming up. So…

Kevin, that sounds great. A group of us are going to be visiting that Causeway Bay store in a few weeks.

Great. Thank you, Robbie.

And our next question comes from the line of Eric Tracy of Janney Capital Markets.

Kevin, if I could for you, just to follow up on International, maybe a little bit switching gears to Footwear, and it seems to be inflecting really nicely here. You finally got permission from both retailers and the consumer to grow that business. Talk me through -- do you feel like you've got the supply chain, the infrastructure in place to really scale kind of materially here? Are there still kind of significant investments that need to be made? And then maybe talk a little bit more just about the pipeline refresh as you look into '15. You mentioned some of the SpeedForm, but maybe highlight some other things that we should be thinking about.

Sure. Well, first of all, I mean, we're 10 years in making footwear, we're 8 years having sold footwear. And when you look at -- I mean, just take that long road. So like everything, it begins with leadership. So my original partner in the business, Kip Fulks, who's been driving Footwear for us and doing an excellent job. And as we say that, we've been adding talent really across the organization. One of the highlights we announced most recently was Fritz Taylor joining the organization, heading up Running for us. So we're continuing to build there, and frankly, we are. The goal is not for Kip to be running Footwear 2 years from now and where he reports in the org. But we are in the market looking for that Global Head of Footwear. But the good news is that we've got great leadership in place today that's running and doing a great job for us. That's an open call as we continue to look and let the world know that we're out looking for that next head. Secondly is from a product standpoint. We began in 2006 with football cleats. And the one thing I like to remind people is that '06 was football cleats, '07 baseball, '08 was training, '09 running and '10 was basketball. And it's taken us really 8 years to get to the leadership position, I believe, that we're seeing in cleated. And we anticipate, in time, we'll reach that leadership position in every category we're doing business. But as we sit here, I mentioned the Highlight Cleat, the $130 Highlight Cleat, that in 2013 was $110 shoe for us. This year, it was $130 cleat. And so not only was it the #1 football cleat in the market this season, but it was…

And our next question comes from the line of Erinn Murphy of Piper Jaffray.

I would like if you could just speak a little bit more about the Women's opportunity. I mean, you've obviously had some great campaigns this fall. Any further detail, first, from a near-term perspective, what was the Women's apparel growth rate in the quarter? And then as we think about it longer term, how are you thinking really about the distribution matrix for Women's? Are there new wholesale opportunities you can kind of think about on the horizon that will really maybe perhaps over-index to the more female shopper?

Yes. Thank you, Erinn, great question, and obviously something top of mind with us coming off of the campaign we just went through. So first and foremost, it's really become sort of the topic of the day is getting behind this huge athletic trend that's going on. And frankly, we've been positioning ourselves here to lead that market momentum, and frankly, we see ourselves as one of the ones really driving that momentum. We've been making Women's products since 2003 that we don't get a tremendous amount of credit for. But it really is a testament to the team that we've built, putting a $500 million core business together that in the past had really spoke to -- we've been speaking on these calls about going from both that athletic women and women who are athletes, that they have evolving needs and are going to play a huge part in creating beautiful products, performance products for each and every one of them. The Holiday 2 that we launched was something that I think really spoke and ignited an awareness and conversation with our whole I WILL WHAT I WANT campaign. To the point where we're not just making the calls anymore, but the calls are really coming in from us from a distribution standpoint, for instance. I'll speak more on that in just a moment. It was obviously one of our largest campaigns. It was only 1 of 3 Brand Holidays we do for the year. And committing that, frankly, in back-to-school/football season was something, I think, probably took a lot of people by surprise. But I think it really underscores the commitment that we have and the belief that we have in our ability to be successful in this category. As I mention always, it comes down to leadership,…

And Erinn, this is Brad. Just to add on to the growth rate question you asked. All the categories in Apparel grew at a very healthy rate in the quarter, so we don't really break out the different -- the genders and so forth. Obviously, Apparel grew 26% in the quarter and again, all Men's, Women's and Youth were very strong. It's been pretty consistent over the last few quarters. Youth kind of leads the way from a growth rate perspective and that's been consistent here in Q3. But Men's and Women's were also very, very strong.

And our next question comes from the line of Omar Saad of ISI Group.

The -- I wanted to ask a question about the Apparel business, maybe has a little bit slower growth than we expected, although still a great number. And we kind of heard you, Kevin, in your prepared remarks talk about -- sounded like some incremental focus on the wholesale channel next year. Can you talk about -- give us some more color around that, what's going on in that business, changes going on there, where you think the opportunities are? Are there areas where you think you can improve in the kind of wholesale apparel piece?

Thanks, Omar. That's -- it's a good lead-in. But let me begin with -- first of all, we're not going to apologize for 26% growth in our Apparel revenues and marking our 20th consecutive quarter of 20-plus percent revenue growth in Apparel. So like anything, there's ebbs and flows in any business, but I think we're incredibly proud of the number and what our team has put forth. At the same time, though, I think it speaks to the overall environment that's happening out there, the trends that you're seeing, particularly in some of the specialty retail shops in general, where it's not an easy marketplace. And while we were hesitant to quote or comment about the broader market, we're absolutely -- consider ourselves expert in talking about what we're seeing. So I've mentioned in my last comment about sort of this huge athletic trend and the fact that we are a driving force within that trend. We're seeing a lot of good things out in the market, but frankly, to your point, there's plenty of places where we can do better. Women's is a great place for us to start. On the heels of that second Brand Holiday featuring Misty and then Gisele, we still have ample opportunity to be hyper-focused on delivering the best product to our wholesale partners and wherever she shops. Today, I think we're proud of that incredible marketing story we put out there. And I think it sets the bar for the level that our product team needs to deliver as well. And we recognize we've got good competitors in this space and this is not a one-horse race by any stretch, so we've got to earn it each and every day. And I think what you'll see from us is continuing to tell…

Can I ask a quick follow-up on the DTC channel plans, how the new Brand Houses are doing and plans maybe to open new stores over the next few quarters?

Yes. I went through it in depth, I think, from a global basis, but we've made the announcement of our upcoming flagship in Chicago. And I think you'll see a couple more here in the United States. But again, one thing I didn't mention is that the most recent store that we're actually opening this week is actually our own lab store in Baltimore. Our sales meeting is coming up in 10 days, and we're bringing in all of our partners from all over the globe and really to have the ability to start standardizing our processes. I mean, that's one thing where -- continuity is a very important word in business, and I think that we're finally really getting to the ability to find stride with the businesses that we build in building that continuity and building an expectation that there's a consistent message in the store, there's consistent merchandising in store. We went through periods where we were launching our product for international markets 6 months, 1 year behind we were launching here in the states. So same thing with marketing. So getting to being a truly global company is something very important. And we talk about new retail stores that we do here. Frankly, it really -- we're not looking to cannibalize any of the great partners we have here in the States. But where we don't have great opportunities for distribution partners outside the U.S., it really allows us to galvanize our team here and articulate a point of view of how we expect to show up everywhere consistently around the globe. So we'll continue to do that more and more and get better and better at it.

And our next question comes from the line of Michael Binetti of UBS.

So if I reflect back on the Analyst Day last year, you pointed to 12% operating margins over 3 years as a target with -- and laid out a lot of the investment opportunities ahead. Your guidance for 2015 implies the margins will be flat next year. That seems to imply that margins will begin to expand pretty rapidly after 2015. Can we just talk for a minute about your longer-term thinking on those targets, given the updates you helped us with today?

Yes, Michael. Our June 13 Investor Day guidance really was a dollar amount, so we were looking at a $4 billion revenue guidance and a $480 million operating income guidance. Obviously, that implies a 12% operating margin, but I think the more important number was the operating income number. And that's really the way we've been talking about our business over the last couple of years and obviously, as we're guiding too, is that we're really focused on making the right investments to continue to sustain this great top line growth rate going forward. And we're less focused on the operating margin percentage as we are making sure that we're having a good, healthy growth rate in operating income dollars. So that's something we wanted to point out is that the Investor Day guidance really was a dollar number, not necessarily a rate that a lot of people are implying. So as we look forward, again, guidance was a flat operating margin. It's a consistent theory, same story of we have to make sure that we balance the desire for us to continue to grow our top and bottom lines, but also balance that with the investments we need to sustain our growth. So there's things like International, Connected Fitness and Retail that we're talking about continuing to invest more in. It's important for us to continue to sustain that growth through those investments. We've also talked about if results come in better than we planned, either the fourth quarter of this year or in 2015, that we'll be opportunistic in areas of SG&A and look to invest more to either give us more confidence in our near-term growth or help us in longer-term growth potentially also. So I would be less focused on the operating margin percentage than the growth rate. Obviously, the growth rate in operating income is a much bigger percentage for us than the operating margin percentage and that's what we're focused on.

Okay. And if I could just ask one quick follow-up, Brad. Could you clarify that -- for 2015, you're thinking that gross margins, will it be flat year-over-year or the gross margin improvement will be similar to 2014? And then if you could just talk about some of the push and pull on that number for the next year. We've heard some competitors talk about input costs, material costs lower. You've got a number of pricing and mix initiatives, but a lot of noise around the business mix with the structures internationally, maybe just a few of the broad brush strokes we can think about for the model next year.

Sure, sure. So this is a little tough when you're at this time of the year because we're guiding to 5 quarters out basically right now. We have some good visibility to the front half of the year. We still have a lot of work to do in gaining visibility in the back half of the year. But in general, we think that the full year gross margin rate for '15 will improve over '14, similar to the improvement we're seeing in '14 over '13. At a very high level, the puts and takes of gross margin, similar story. I think what you're hearing is that there's going to be definitely some favorability just in general margins overall through our supply chain efforts, through whatever might -- help that might be out there in input costs. But we'll also have some things working against us. FX has been starting to work against us a little bit here as we move to the back half of the year, and we expect that might work against us a little bit next year, too. Although not a huge factor in working against us, it definitely is a factor relative to our size of our business overseas. We also have the International business, which will continue to grow at a healthy rate next year. And again, a lot of that being distributor-type businesses, comes at a little bit of a less gross margin than the wholesale business. So that will have a little bit of a negative impact, too. Those are probably the big broad-based strokes. But again, that overall improvement in '15 should look similar to the improvement you've seen year-over-year in '14.

And our final question comes from the line of Sam Poser of Sterne Agee. Sam Poser - Sterne Agee & Leach Inc., Research Division: I just have a couple of questions about 2015. Given what I would expect to be the continued growth in your International business, accelerated growth there, how do you view that 22% from -- as for North America versus International? And how should we think about the tax rate next year?

Sam, on the growth rate. So a couple of things to consider here and again, going back to my comment from Michael's question on we're guiding out 5 quarters here. So as we get further out in that guidance, the visibility is still a little tougher. But when you look at the growth rate of 22% next year, a couple of things to take into consideration. On the International piece, obviously, we're still going to have a very, very healthy growth rate next year. But comparing that growth rate to 2014's growth rate, you got to take into account the fact that we launched a lot of markets this year in 2014, some distributors in places like Hong Kong, Taiwan, Australia, New Zealand, Singapore, along with bringing our Mexico distributor in-house to a wholly-owned subsidiary and obviously, also launching markets like Brazil and Chile. So we'll be obviously comparing against those launches in 2015 versus '14. But to your point, we are absolutely planning it to be a very, very healthy growth rate in International, just not quite at the growth rate of 2014. Also, when you take into consideration -- the other piece, I think, to take into consideration, I would say, is probably more the North America DTC business, a little bit of the wholesale business too, but more of the DTC business. And again, this goes back to the fact that a very, very important data point for us in Q4 2015, especially in our DTC business, is how we do in Q4 '14, and we're not through the quarter yet this year. So we talked about our approach to how we're planning 2014's fourth quarter relative to coming off of the weather help last year and the supply chain improvements last year also. So when we look at that, let's see how we get through the fourth quarter of this year, get to the January earnings call, that will be a really big important data point that will help us determine how we think Q4 '15 looks. So I think those are the 2 areas that if you ask what are probably the most -- the biggest questions around what's changing in your growth model in 2015, those will be the 2 areas I'd point to the most and also probably the 2 areas that I'd point to relative to, if things can work in our favor, could you see upside, those would be the areas that I would expect if we did see upside, we'd probably see them in those 2 areas, more or less. Sam Poser - Sterne Agee & Leach Inc., Research Division: And the ta -- are you considering to stick with the 40% tax rate? Or I mean, would it be a little bit less just because the International business is going to grow -- outpace the growth of the U.S. business?

Yes. Yes, you're right. I think what you'll start to see as we move forward here is some of these international markets, in places like Europe and in China, we expect to be closer to breakeven as we head into 2015. We'll still be having some losses in some of the newer markets like Latin America. But the benefit of starting to get towards profitability and achieve profitability in these markets will help our tax rate absolutely. So we're still, again, trying to roll up the numbers for next year but the anticipation would be, because of that International business and improving on the bottom line of the International business, that you would expect the tax rate to come down. Don't have the exact number yet, but you should expect it to come down from 40%.

All right. Thanks everyone for joining us on our call today. We look forward to reporting our fourth quarter 2014 results, which tentatively had been scheduled for Thursday, January 29, at 8:30 a.m. Eastern Time. Thanks again. Goodbye.