Ladies and gentlemen, thank you for standing by, and welcome to the Under Armour Inc. Third Quarter Earnings Webcast and Conference Call. At this time, all participant are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Lance Allega, SVP of Investor Relations and Corporate Development. Please go ahead.

Good morning and thank you everyone joining us for Under Armour’s third quarter 2020 earnings conference call. The information being made available today includes forward-looking statements that reflect Under Armour’s view of its current business as of October 30, 2020. Considerations for future events that may impact our business moving forward. Statements made today are subject to risks and uncertainties that are detailed in documents regularly filed with the SEC and the Safe Harbor statement included in this morning’s press release, both of which can be found at our website at about.underarmour.com. It’s important to note that due to on-going uncertainty related to COVID-19 and its potential effect on global markets, we continue to expect material impact on our business results. But considering the duration and extent of the viruses immediate and long-term impact on the global retail environment, content discussed on today’s call could change materially at any time. Accordingly, future results could differ meaningfully from historical practices and results or current descriptions and estimates and suggestions. On today’s call, we may reference non-GAAP financial information, including adjusted and currency-neutral terms, which are defined under SEC rules in this morning’s press release. You may also hear us refer to amounts in accordance with U.S. GAAP. Reconciliations of GAAP to non-GAAP measures can be found in this press release, which identify and quantify all excluded items and provides our view about why we believe this information is useful to investors. Joining us on today’s call will be Under Armour President and CEO, Patrik Frisk; and CFO, Dave Bergman. Following our prepared remarks, we’ll open up the call for questions. And with that, I’ll turn it over to Patrik.

Thank you, Lance. And good morning, everyone, and welcome to our third quarter 2020 conference call. Before we discuss our results, I’d like to pass along Under Armour’s well wishers and the hope that you and your loved ones are staying healthy and safe during the on-going COVID-19 pandemic. For this and many other reasons, 2020 has proven to be a challenging and transformational year for Under Armour. In an uneven global economic environment, we’ve continued to make tough decisions across our business to ensure that our base is stable and we have the agility to return to profitability in the near term. Over the long term we are confident that the actions we’ve taken have created an operating model that we believe can deliver consistent value to our consumer and customers as well as sustainable return to our shareholders. And backed by a stronger foundation, enterprise level disciple and green shoots across many areas of our business, we believe that we are well positioned to compete for premium brand like growth as we work to fufill our mission and vision in 2021 and beyond. In this respect, you’ve heard me speak many times over the past year about our mission, vision and values. These elements unify our global culture that why we are here and what we do, what we do are [Indiscernible] and excitingly as we were to close out this body of work and install the final cornerstone of our re-imagined house we are shifting to become a purpose led organization. In our transitioning from being product driven to purpose led, we didn’t have to go very far to find our purpose. At the end of the section of our distinct strength and then on the intersession with improvement, Under Armour’s purpose is we empower those whose…

Thanks, Patrik. Considering the current uneven economic environment, all-in-all, I'd say we executed well in the third quarter, as we work to meet higher than anticipated demand. Let's take a look at how we did starting with revenue. Third quarter revenue was flat at $1.4 billion compared to the prior year, which came in better than expected due to higher than anticipated demand across our wholesale and DTC channels. From a channel perspective, our wholesale revenue was down 7%. Lower sales in North America or the primary driver of this decline, despite performing better than our previous expectations, due to higher than expected customer demand. Our direct-to-consumer business increased 17% driven by continued strength in our e-commerce business. Relative to our previous plan, we experienced better than expected traffic trends in our e-commerce business. Our licensing business was down 15% driven primarily by our licensed business in North America. By product type, apparel revenue was down 6% driven primarily by declines in our team sports and train categories. Footwear was up 19% driven by considerable strength in our run and train categories. Finally, accessories was up 23% with all the growth being driven by our new sports masks, which would just started selling in the second quarter of this year. From a regional and segment perspective, third quarter revenue in North America was down 5%, driven by lower wholesale revenue due to on-going impacts from COVID-19 and reduced off price sales. These headwinds were partially offset by strong e-commerce growth in our DTC business in the quarter. In EMEA, revenue was up 31%, driven by growth in our wholesale business, as some shipments with distributors shifted from Q2 into Q3 due to the impacts of COVID-19. Additionally, we saw solid growth in our DTC business. Revenue in Asia Pacific was…

Thank you [Operator Instructions] Our first question comes from Edward Yruma with Capital Markets. Your line is now open.

Hey, good morning, and thanks for taking the question guys. So Patrik, as you start to, you clearly rebase the business have built a healthier base of business and are now kind of seemingly orienting toward growth long term. Are there particular categories that you think are well suited for this focus performer where we should start to expect some outside growth? And then also, as you introduce this new cushioning technology, is this a product that will be at scale next year or is this a Pinnacle product that will take a while to work through the lineup? Thank you.

Good morning. Yes, as it relates to the categories that we are looking to be our growth drivers so to speak going forward, we still believe that there is a tremendous amount of opportunity for us in our some of our core team sports and men's training categories. But what we've seen this year is that we're very excited about is, is the energy in our, in our women's business. We have a number of different products, both in apparel and footwear that are working very well for us now. Infinity bra, Fly-Buy shorts and Meridian pants, Meridian Infuse, the Machina shoe for women, the Phantom 2, etcetera, etcetera. So, so we see definitely women's continuing to be a big part of our growth and footwear. Footwear is going to continue to help, drive the growth going forward. And as you talked about the platforms, we now have four platforms in the marketplace, and they all play a role. And in terms of how we think about the positioning of the brand. And one of the things that we're very proud over the last three years to have accomplished is really the ability to start to build franchises. And you've seen that through our hub or franchise flow will be another franchise that sits on top of HOVR at the most Pinnacle expression on the brand.

Thank you.

Thank you. Our next question comes from Randy Konik with Jefferies. Your line is now open.

Yes, thanks a lot. So Dave, you gave us some good perspective on reducing the wholesale doors, I guess by 10,000 by 2022. So just a medium term, what does the -- what should we be thinking about, again, from a mix perspective on revenue by wholesale versus e-com, versus, your directly owned stores? How do we think about that? And how do you think about that impacting obviously it should be a positive margin shift, but the how significant can we expect that to be over the medium term?

Yes. I mean, we're not at a point where we're going to give a lot of details as we go into 2021. We're just trying to stay high level. We still got a lot of work to do to fine tune next year. But, we are looking at a company to lead more from a DTC approach, focused on consumer centricity to drive best experiences, unlock potential full price, retail, leverage factory house for inventory, management, etcetera and definitely invest in digital across, own and wholesale partners. I think the one thing that's a little bit tricky for us though, to remember is, even though we're going to be focusing a lot on DTC, the mono-branded stores in APAC are mainly partner owned, and that runs through our wholesale revenue. So from my mix of DTC to wholesale, you may not see a significant change in the coming years, but the actual mono branded stores and kind of full view of the brand in those stores will increase as well.

Got it? Can I ask one more question? It sounds like Patrik, you're being -- being much more bullish on the winds that you're seeing lately in the women's business. What's kind of been the breakthrough there has it been more marketing or just noticing on the product? And then just relatedly, just separately, I should say, on the mask side, as an owner of kind of these masks, are you seeing isn't masked, also helping to drive attachment within the e-commerce business where you saw a lot of growth in the quarter and how we should be thinking about the mask, at least for the foreseeable few quarters, helping to drive, other channels of distribution and attachment going forward? Thanks.

Okay. Thanks. Thanks, Randy. So I'll start with the women's and then I'll switch over into the masks. With women's, it's the result of what we've done starting at the beginning of this year. Remember, again, 2020 was the first year that we were able to fully deploy our go-to-market strategy across you know, all categories of the brand. But more importantly, with a very strong singular message that we knew was going to resonate with both men and women. On the back of that, we also knew that we had better product that was delivered on time and with the right marketing. So this is really what you're seeing is our go-to-market and really starting to fire and as it relates to women. We have been, as I said before, successful across many different products. So it isn't just one product here or there. It's the entire head to toe approach. And ultimately it is execution through our go-to-market that you're starting to see play up. And it's been consistent through the year so it isn't something that's just started lately it's, it was there in spring, is there in summer, it's now there in fall and we believe it’s going to continue into next year. And, I think for us, women's is definitely one of the growth engines. But it's really nice to see how our brand is now resonating across, both genders. The mask, is an interesting one for us, because we decided very early on that the mask was going to be something that we made for athletes. So our approach to go with the mask and make it a sports mask and actually market it as some as a tool that you use when you're working out has been the differentiator for us. It's a high quality product, that is with high functionality, great fit, and now also with a number of different colors. And the last one that we just released with “The Rock” has been really successful as well, which is more kind of an upscale version if you like the mask. So for us, we're going to be looking at that as a segment in itself -- if you'd like inside of accessories, where we have more products coming out around that. And in terms of whether you're able to convert the people that are coming onto our platforms to buy just the mask, that's one of the things that we are working to do, based on the new e-commerce platform that we have and the capabilities we're building with CRM and loyalty. So big opportunity there for us going forward.

Thank you.

Thank you. Our next question comes from Simeon Siegel with BMO Capital Markets. Your line is now open.

Thanks. Good morning, guys. Really nice progress. Great job. Patrik, as, as you as you guys continue to elevate the brand, can you speak to how you're thinking about where your opportunity from here, it doesn't have to be next quarter, but just as you're thinking about where that opportunity lies. And then Dave, along those lines, any help on taking a step back and thinking through the longer term EBIT margin recapture opportunity. Thank you.

In terms of -- in terms of one of the things that we're very proud of this year is that we'll be able to grow our margins in a year where we're taking a lot of revenue out of the top line. And to be able to do that you've got to be able to command a price for your product. And, we're clearly able to do that with less discounting, more premium pricing, more premium positioning. In some of the areas that you're seeing that especially I would say, is in our footwear. This year we've launched it, we started by launching the Mark early in the year, which was a big success for us, our highest price running shoe ever at $150. We actually then came in with two more $150 shoes, the Phantom 2 and the PR 3 Rock Training Shoe, all of them selling through really well. So for us, being able to now compete at that premium level, also in footwear, and in combination with less discounting and more premium across the board is going to help drive everything up for us. And the most important bellwether there, of course, is the margin, something we're very proud of. Maybe you want to add some color on that Dave?

Yes. And I think relative to longer term EBIT, we're excited about kind of returning to that long term profitable growth journey next year. And we're going to keep marching that forward. There's, there's a fair amount of opportunities across all fronts, as we think about gross margin, with the business going forward, relative to DTC mix relative to running a much healthier percentage of off-price channel sales. And overall, just continuing to execute so much more cleanly than we may have done in prior years. And then as far as wrapping up this restructuring plan, we're very excited about how deeply we've been able to go, and how well we've been able to transform our operations to be more effective and efficient, and be able to draft off of that more next year and into the next year, a few years after that. So from gross margin percentage to SG&A percentage to revenue, there's opportunities across the board there. So longer term, our absolute plan is, to March that up to 10% plus, which year we hit that is something we'll get to at our next investor day. But we're excited about the progress we're making and stepping into next year.

Great, thanks a lot. Nice job and best of luck for the rest of the year.

Thank you.

Thank you. Our next question comes from Alexandra Walvis with Goldman Sachs. Your line is now open.

Good morning, and thanks for taking my question. I had another question on the plan to pull out of 2000 to 3000 undifferentiated wholesale doors. And I wonder if you could share with us what percentage of North America revenues those represent and what the profile of those doors? Are they predominantly small chains or larger chains. department stores, what do those look like?

Sure. Hi, Alex. This is Patrik. So for the next couple of three years, we will be it will be work in progress. And it will be across every size of customer, I would say, part of it is larger customers, some of it is the tail that you're cutting. Ultimately, for us, it's important that our brand shows up the right way. And that we're able to drive the brand, the way that we feel as the brand should be driven. And that will be the approach that we take.

That's very clear. And then my second question is related to e-commerce. You've continued to see strong growth in that channel, it continues to be a priority. I wonder if you could update us on where we are in terms of profitability of that channel, and what further investments need to be made in the offer there?

Yes, I’ll start then I'll hand over to Dave. One of the great things that we were able to accomplish in this quarter I'm very proud of this, we were able to switch over from our aging, very aging, something that we actually put into the market in the early 2000s, our old, homegrown platform onto our new e-commerce platform that we had already been running for a few years in Europe. We did that in July, without missing a heartbeat. And I’m very proud of the ramp down, ramp up to only seven days. The team did a phenomenal job. The benefit of that is that we're now more or less on one platform around the world apart from China. And the second benefit to it is that we'll be able to benefit from, of course best practices across the world, but also an ability to merchandise and ultimately drive our new CRM and loyalty programs on to that platform as well, which is the added benefit. That is something that will start to happen throughout 2021. And we'll ramp as we get into the back half of the year. Dave, do you want to add something?

Yes, I'll just add a little bit. I mean, we were super excited with how well the new platform is performing. And globally, having growth over 50% in e-com and Q3 is a great testament to that. So the team's done just a phenomenal job cross functionally, on standing that up and around the world driving forward on that platform. And we expect that to continue to be a strong growth area for us in Q4, as well and as we move into 2021. And to Patrik's point, I think the key investment areas that we've been really, really diving into a little bit last year, a lot this year, and continuing in the next year is on the CRM front, the personalization front, the loyalty program front where we're going to be rolling out various pilots around the world and then expanding it globally. And then also, overall, just really expanding our omni-channel capabilities as well and leveraging income through that also. So a lot of fronts that we're investing there. Digital is a massive area of opportunity for us. So we're excited about it.

Splendid, thanks for the color.

Thank you. Our next question comes from Matthew Boss with JPMorgan. Your line is now open.

Great, thanks, and congrats on the progress.

Thank you, Matt.

Thank you, Matt.

Patrik, maybe to circle back on North America and not to beat a dead horse here. On the 20% door count cut that you guys are making and maybe to size it up relative to the $3.6 billion revenue base in 2019. Is it best to think of that revenue base in North America now as a peak? Or how best to think about the market size you're targeting by the end of 2022? I guess really the question is about the sales transfer, you see, as you cut these doors relative to direct-to-consumer growth?

Yes, I think, first of all, I just want to make it very clear, we're going to grow North America. I think that's incredibly important to state. I think the composition of that growth is going to change over time. The exact measurement of what grows and what goes back, we're not prepared, of course, to talk about here today. But we believe that we're going to be able to execute growth with a different mix going forward.

And I think, we quoted 2000 or 3000 doors coming down, but and I know you're equating that to a percentage of total doors that we may have at this point in North America. But I wouldn't translate that to a same correlation relative to revenue because there is a big piece of that is that it's kind of a tale of a smaller partner. So -- we’ll give more color on that at our next call as well.

Exactly. And I think I would say the other thing is, of course, everybody on the call here, there is this overhanging hedge for all of us right around COVID. What we're talking about here is, pending any massive flat flare ups of COVID around the world, right. So that's of course, that's of course not known at this point.

Great. And then just a follow up on the SG&A front. So you've guided 40 million to 60 million cost savings this year from restructuring. As we look to next year, you've said, expect multi-year cost savings. I guess how should we think about SG&A next year, in terms of flow through versus reinvestment with SG&A dollars next year, be down year-over-year?

At this point, we're not ready to get ready to give a lot of color on next year. I mean, we led in here with a little bit of tidbits just on top line to be able to frame things up for you. But as far as you know, more detail down below on the line items. We want to be careful there, it's still early. To your point, we are looking to invest in certain areas on the digital front, on the innovation front, etcetera also with international growth. But the amount of cost savings we're driving out of restructuring plan will be significantly higher next year than the 40 million to 60 million that we're quoting this year. So we will absolutely see, a pretty nice development there as far as SG&A to revenue next year. But whether or not it's going to be flat or grow a little bit or go backwards a little bit we'll leave that for the next call.

That's great color. Congrats again.

Thank you.

Thank you. And next question comes from Erinn Murphy with Piper Sandler. Your line is now open.

Great, thanks. Good morning. I just had a question following up on e-com growth up over 50%? Could you just share how that breaks down by region? And then where do you see the digital mix by the end of the year?

Yes. I mean, the e-com growth is really broken down pretty well across all of the regions. I think that, we're seeing pretty healthy growth in every single region. There's not -- there's not one region that's really struggling at all, from an e-com perspective, especially in this current environment with COVID. So we're pretty excited about the investments that we've made there and how well we're moving forward.

And just on the digital mix by the end of the year.

We're not actually giving a full kind of digital mix at this point.

Okay. Got it, understood. And then…

But it would be higher.

Okay. And then in the fourth quarter, it was helpful context. I know, there's a lot of moving parts that you gave, but I'm curious if you can contextualize a little bit more on your comment on the demand improvements, quarter-to-date, particularly given the recent lock downs in Europe. Thank you.

Sure. A couple different things there. I think that when we had our last call, we got to remember back in July, we were still getting our arms around the COVID uncertainties. And therefore we were very conservative in that previous planning. We ultimately saw much better demand than expected, as did our wholesale partners. So it was both, on the wholesale front, and on our own direct to consumer front. So we had the better sell in, better sell through. We were able to use some of the Q2 2020 unfulfilled inventory from the store closures at that point. And also, this actually ended up translating to less than expected cancellations on the wholesale orders. You know even when product was in certain circumstances slightly delayed due to COVID they weren't canceling those orders, which we had anticipated, maybe they would. And that was because again, the sell-in and sell-through that was going well. And we also did so at meaningfully, less discounts and promotions than we originally anticipated. From a regional perspective, the majority of the upside in Q3 came from North America, which we mentioned, but also better momentum than expected an EMEA as well. So all told, as a result, we have also increased our Q4 expectation from what was originally the down 20% to 25% to now down till 18%. So really excited about the momentum there.

Thank you.

Thank you. Our next question comes from Jay Sole with UBS. Your line is now open.

Great, thanks so much. I want to ask about the comment that off-price is going to be down to 4% of sales. Can you tell us what off-price was at the peak of whether it was whether 2015, 16 like what percent of sales at off-price represent at the peak?

Yes, Jay, this is Dave. We won't give the exact percentage. But, it was it never exceeded 10% in any of those years. So it was below 10. But certainly it wasn't all the way down to the four that we're estimating to land this year.

And you think that number 4% can go lower as we get into 2021 and beyond?

I think there's a probably a little bit more opportunity there. I think we're getting into a healthy spot here this year. Can we can we push it a little bit further next year? I think we probably could. That 3% to 4% range is a pretty comfortable range as we leverage our outlet stores the right way. But make sure we have the right mix of newer products in the outlet stores as well just to have a good, good merchandising experience for our customers. So we don't want to overly rely on the off-price channel. So we think that 3% to 4% range is a pretty healthy spot.

And I would say just add on the back of Dave's. So if you think about that volume from the brand, like Under Armour compared to other people that's a pretty healthy mix we think. It's hard to, to not have some of it, of course, as long as you have a wholesale business. And we think that that 3% to 4% is probably the right, right number for us.

Got it. Thank you so much.

Thank you. Our next question comes from Michael Binetti with Credit Suisse. Your line is now open.

Hey, guys. Morning, thanks for taking my questions and great job on the quarter. David, I guess just high level as we as we look -- you did over 200 million of EBIT last year. It sounds like you've got a meaningful quality sales initiative here that you've got, the line of sight on. We've seen the impact that can have on margins around the sector. Based on the early planning, you're doing, do you have line of sight back to that level of of 200 million plus of EBIT in the planning period? Or you referenced the 2022?

So definitely appreciate the question. We're excited about the future, too. But look, it's early. We typically don't even speak to 2021 on this call, and we wanted to give some color. So we got to be careful there. There's a lot of work still to do. We're absolutely planning to grow in 2021. We're absolutely planning to grow in North America in 2021 and continue to move forward relative to EBITDA dollars and rate. I think we do need to just keep in mind too, as we think about next year, at least, what some of those revenue headwinds would be as we work to drive premium brand like growth. The exits of the undifferentiated retail we talked about, we talked about also less promotional activity on the DTC front. And then don't forget the sale of my fitness platform. So that means that assuming that that's executed late in this quarter, closes late in this quarter, that revenue essentially goes away completely next year. So we got to keep all those things in mind as you size up 2021 growth expectations. But we're excited to have in line of sight to slightly positive EPS and being back on the path to, to long term brand right profitable growth. And we'll give you more details on the next call. And then longer term, at the next investor day.

Let me follow that. On the fourth quarter gross margin guidance, obviously very smart to remain as conservative as you can given what's going on. But with third quarter much better than you feared? I'm curious, where you see the pressure, as you look at the quarter. I know some brands said that, I'm sure you see you're doing some of this too. But I think you some brands have said they're taking some actions to start showing the customer, some holiday type initiatives early in October. Are you seeing promotions in the marketplace ramp at all in your categories?

Yes, we certainly are. And as we look forward to closing out this quarter, we do think that the promotional environment is going to be pretty heavy this quarter. A fair amount heavier than it was in Q3, so bigger pressure in Q4 than Q3 year-over-year. We also think that even though we're decreasing off-price sales in Q4, year-over-year, we think the pricing on that off-sells, off-price sales could be challenged based on so many other brands trying to push into that channel. So that's probably a little bit of a headwind and Q4 gross margin as well. Plus on the revenue side, I mentioned licensing, potentially being down 50% year-over-year in Q4. They've done lower MRGs, and some true ups that were in Q4 of last year that we're comping. And that's obviously an extremely high, gross margin piece of business. So those three are kind of the bigger headwinds for Q4 with the promotional environment being the biggest. We'll get a little bit of tailwind from channel mix with DTC and also the lower mix of off-price sales, but also continued product costing benefits that the supply chain has been driving. So, a couple favorable items there, but they're going to be definitely more than offset by the negatives I mentioned, especially the promotional environment as far as our current view.

Okay, that's really helpful. Thanks a lot for everything.

Thank you. And next question comes from Kimberly Greenberger with Morgan Stanley. Your line is now open.

Great, thank you so much. Good morning. I was wondering if you can think about team sports, potentially coming back in 2021. Is there any way for us to understand that the potential revenue benefit that that might carry for you? And then secondarily, I wanted to just ask a little bit about the inventory. I think you mentioned you cut fall inventories by around 30%, or second half inventory by around 30%. And I'm, I'm looking at the inventory balance here at the end of third quarter add up 10%. Is that leftover Spring Summer product? And what's the strategy or the plan with any sort of prior season merchandise that you might have on balance sheet? Thanks.

Thanks, Kimberly, I'll start this off. And we'll tag him a little bit here with Dave. In terms of team sports, it's been a -- it's been a really emotional roller coaster, I think for Under Armour there in terms of the support that we've been trying to give to our athletes and teams out there. It's been really, really rough for the athlete going through this whole pandemic, and a lot of the kids out there that are not able to do their sport or weren't able to do their sport. So the whole back-to-school kind of normal, normal team sports. And seasonality of our business has really been thrown off this year. I would say though, that some of it has come back a little bit as we've seen the back half of Q3 and into Q4, but of course and in totality for a season of this back half, and also through a large extent the spring, team sports been really in flux. We are trying, of course to understand what that means for next year. But I think the reality is, nobody really knows. I mean, that teams are still making decisions as we speak around winter sports. And I think it's going to be the same situation when they talk about spring sports later on. So it's something that we're going to be trying to dial in. And we're going to dial it in a little bit later than normal simply because we don't know, how the seasonality of things are going to play out. And I think in terms of inventory, I would just say that the quality of inventory that we have today is good. And I'll let Dave, fill in the blanks.

Yes, from inventory perspective, we finished this quarter at 17% up, which is a little bit better than we anticipated, because we obviously had a lot bigger selling and sell through than we anticipated. There is a larger portion that's tied to spring summer product that we couldn't affect in time from the pandemic that was still coming in. And in Q2, we were able to use some of that to fuel the Q3 overdrive, which was nice. We are comfortable, though, with the mix of inventory, with demand versus excess and our ability to utilize the off-price channel to a lower degree. And also, definitely leverage our factory houses for a more brand right approach to dealing with that. There's still a lot of uncertainty out there right now. But we do believe that we'll end the year around 10% growth with inventory. That decision to reduce back half inventory purchases certainly will benefit us as we progress through the quarter. But we feel very comfortable with where we're going to land and being able to address that remaining inventory and a healthy way throughout next year.

Thank you.

Thank you. Our next question comes from Omar Saad with Evercore. Your line is open.

Good morning. Thanks for taking my question. Nice quarter guys. I wanted to ask, I wanted to ask about the divestiture of the digital assets. Maybe Patrik you can put it in context, how the organization's view of how to use digital technology and how to use data has evolved over the last several years and where the focus is now. And I also would love for you to touch on the new flow cushioning platform maybe give us a little bit more detail. I think it said it didn't need a rubber outsole maybe a little bit more detail around that platform? Thanks.

Sure. Hi, Omar. So first of all the sale of MyFitnessPal is of course something that that we considered a great length, and the whole idea is really that as we get more and more focused and we get dialed in to the focus performer it was clear to us that actually the consumer that was on the MyFitnessPal didn't skew necessarily as strongly towards the consumer that we're targeting. And as our other apps did, and I'm talking about now MapMyFitness and the success we've had there with connected fitness and connected shoe. So the decision was hard, but it's the right thing to do because it also enables MyFitnessPal to get a great home and for that team to be able to grow their business without having to be under Under Armour, so to speak. So, for the, for that team for that business, I think it's a great decision. For Under Armour, it's also a great decision because we can now focus on what we've been intent on doing the whole time, which is building one ecosystem for Under Armour. So for us, that my MapMyFitness will be at the very core of that. And I was just talking earlier about the fact that we just had our 1 million shoe connected. And we continue to see, especially through this pandemic, an incredible gravitation to do that app, and the work that that team has done has been phenomenal. And we think that all the things that we've learned, while we've owned these apps over the last four or five years, has led us to this decision where we now feel that we can accelerate that part of the business and integration to do a better job for the consumer, ultimately, to connect and engage.

One thing I'd also clarify an MFP is just that, we anticipate closing that deal late in Q4. So the outlook that we're giving today for Q4 does include a full quarter of full connected fitness revenue. So it is definitely comparable to Q4 2019 just if there was any questions on that. And then Patrik, I think there's a question on flow.

Yes, there is. I would say that with Flow we're very excited. It's right, it's not a traditional shoe, because we don't actually have a rubber outsole on the shoe. So it is actually one unit. That gives us a lot of advantages in terms of weight, but also the performance of the shoe both in terms of cushioning, and we would like to call separation ability is going to be like no other shoe out there. So there's a lot of advantages that we have in weight and flexibility. And in traction that goes beyond anything that we've built before and we think it's going to be a real advantage in certain sports, especially in basketball as you think about separation ability. So, we're very excited about it. Curry's very excited about it. We're going to be starting that product in basketball, as we said, and then we're going to flow it into running in early 2021. And that's also very exciting for us because it gives us a pinnacle technology and running. Not that HOVR isn't doing a phenomenal job for us, but this is really a shoe that will give you superpowers. So we're very, very excited about it.

Thanks for the color, best wishes.

Thank you. Our next question comes from John Kernan with Cowen. Your line is now open.

Hey good morning and thanks for taking my question. Congrats on the quarter. Wanted to touch on international, hasn't come up as much. And it was a source of upside surprise for sure this quarter. And peers were gaining some share in EMEA in both AsiaPac or some of your bigger competitors. Wanted to -- wondering, just talked to the demand sensing you're seeing there. I know there was a shift in EMEA that benefited the quarter. But even with that feels like you had a pretty good quarter internationally versus your own expectations, and certainly versus your peers. So how should we think about international in the fourth quarter? And then as we head into 2021?

Yes. Hi, John. This is Patrik. So I'm very proud of the work that the teams have done. I think this strategy is the same, right? So there's a more premium approach for us both in APAC, and EMEA. And it's a very strong focus around the focus performer based on all the work that we've done over the last three years. We're deploying that now into the market with the go-to-market in 2020. And what's really, very good is the fact that the same products that we're marketing across the world are working. So for example, the Machina, it worked across the world. The Phantom 2 worked across the world. The women's Infinity and Meridian pants they worked across the world. So the product teams have done a phenomenal job, making sure that our key stories are really resonating across the world. We've also spent the last few years cleaning up the market in Europe. And the team there has done a really good job, repositioning the brand, doing it from a premium perspective, doing it from a focus performer, head-to-toe perspective in both men and women. And we're seeing now also success in our run category, not just in EMEA but an APAC. So having said all that positive stuff, I would I would say that in APAC, in the back half of the year, we have been conservative in terms of opening partners doors, simply to make sure that we're doing what's right for the brand in this pandemic. So even though we had a great performance, we believe that there is very good prospects for continued growth in the APAC region as it relates to mono branded stores as well as e-commerce of course. But really what you're seeing play out now is a coordinated, orchestrated play with innovation and go-to-market playing to our strengths across the world, and really validating our focus and our approach at a more premium level. So I'm -- what I'm especially excited about, actually across the world is the quality of sales. And that's, really important to us right now. Dave, do you want to add something?

Yes, John, I'll just give a little more quantitative color to your Q4 question. When you think about what we mentioned, on the spring 2021 products shipping more in early 2021 versus late 2020. That does impact wholesale in a pretty big way, as we mentioned. And so when you think about international businesses, for us, EMEA in Latin America have a bigger percentage of true wholesale. So they're definitely going to have a bigger negative impact in Q4, whereas Asia Pacific, even though it has a big mix of wholesale, that that wholesale is really more mono-branded stores. So they technically wouldn't have as big of an impact on that spring, summer 2021 timing shift. So just to give you a little bit of color, you probably see more favorable Q4 APAC and more challenged EMEA in Latin America just because of that flow change, as we move through the balance of Q4.

All right, great. Best of luck into your end. Thanks.

Thank you.

Thank you. And our last question will be from Jim Duffy with Stifel. Your line is now open.

Good morning, guys. Nice one.

Thank you, Jim. A couple of questions for me. Now first, I'm hoping you can find more color on where do you stand with realigning the cost structure? Seems like there's more to coming in 2021? How much of that Dave is just elimination of the MyFitness talent and [Indiscernible] associated expenses versus incremental? And then Dave, I'm particularly interested in your comments looking forward to 2021 about the greater agility on the expense structure. Can you elaborate on what you mean by that?

Yes Jim, I guess a couple things. One, I commented that relative to our restructuring plan, we expect to be able to execute through the majority of that, and most of those charges in 2020. However, there probably will be a little bit of spill over of that into Q1, and maybe a tiny bit into Q2, of next year. So that's part of it, and how well we execute and the timing of that does impact the ultimate savings of those activities. But then across the board, we're really, really digging deep here. And understanding each of the details of our cost structure. We've been benchmarking it against three different providers to be able to really triangulate what would be the best goal for us to go after in each of our different spend areas. And we're going to continue to leverage that in the discipline into next year. So no, I'm not necessarily saying you'll see SG&A go backwards significantly next year. But you will see us continue to prioritize where we spend, and really understand the return on those spends. And be very, very diligent in where that goes to be investing in the areas for long term profitable growth. And that's, that's really what we're excited about. And I think when we, when we talk about the agility for next year, it's really just stepping back and understanding that, we have done so much transformational work over the last few years. And we're finally getting to the place, where those final pieces are coming together. And we can start to leverage that operating model in a really solid way going forward. And that's what we're really excited about. And so that that does speak to the SG&A and improving significantly from an SG&A percentage of revenue next year. But also, as far as gross margin, we continue to see the benefits of what the incredible supply chain team has been doing, relative to working with our vendors. And with volumes increasing, being able to drive better costing there, better visibility, the skew rationalization work that we've talked about over the last year or so is continuing to come to fruition and in better costing, and then continued DTC mix. And then also, we still feel longer term, APAC is going to be one of our higher growth regions. And APAC has a higher gross margin and a higher operating or EBIT rate region for us as well. So a couple different things going on there. But we think that we're going to be able to be more nimble, more agile, agile, and we've done a ton also to solidify the balance sheet and be able to drive through there. So we've got a lot going for us as we step into 2021.

Just one more quick question on the balance sheet. Can you speak about plans for use of proceeds from the MyFitnessPal disaster and cash flows and how are you thinking about reducing debt balances?

So we're, we're going to hold back on that until till the next call. We've got a lot of different things that we're working through, but at a high level obviously, we were planning to end the year in a very favorable position from both a cash on the balance sheet perspective, and zero continuing to be outstanding on our 1.1 billion revolver, and then how we move forward relative to that cash and use of that cash. We're going to wait and discuss more on the next call.

Thank you guys for the update.

Thank you, Jim.

Thank you, Jim.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.