Good day, and welcome to the Under Armour Q2 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Lance Allega, Senior Vice President of Finance and Capital Markets. Please go ahead.

Good morning, and welcome to Under Armour's Fiscal 2026 Second Quarter Earnings Call. Today's call is being recorded, and a replay will be available on our investor website shortly after it ends. Joining us this morning are Kevin Plank, Under Armour's President and CEO; and Dave Bergman, our CFO. Before we begin, please note that certain statements made on today's call are forward-looking as defined under federal securities laws. These statements reflect management's current expectations as of November 6, 2025, and are subject to risks and uncertainties that could cause actual results to differ materially. For a detailed discussion of these factors, please refer to this morning's press release, filings with the SEC, including our most recent Form 10-K and Form 10-Q and other public disclosures. In today's call, we may reference non-GAAP financial measures. We believe these metrics offer additional insights into the underlying trends of our business when considered alongside our GAAP results. Reconciliations of these measures to the most comparable GAAP metrics are included in today's press release and can be found on our investor website at about.underarmour.com. With that, thank you for being here and for your interest in Under Armour, and I'll now turn the call over to Kevin.

Thanks, Lance, and thank you all for joining us this morning. Before we get started, I want to take a moment to reflect on some important news we shared this morning regarding a leadership transition. To express my deep gratitude to Dave Bergman for more than 2 decades of extraordinary service to Under Armour. For 21 years, Dave has been so much more than our teammate, finance expert and CFO. He's been a true partner, a steady hand and a trusted voice. His discipline, integrity and unwavering commitment to doing what's right for our brand, our teammates and our shareholders have shaped who we are today. His impact can be felt in every corner of the company from the strength of our business to the culture that defines us. His leadership has built a foundation that will support Under Armour for years to come. As Dave transitions from his role and continues with us through the first quarter of fiscal '27 to ensure a seamless handoff, I want to sincerely thank him and not just for what he's accomplished, but for the person he's been to all of us. His legacy here will be lasting and deeply felt. Thank you, Dave. Now at the same time, we're excited to welcome Reza Taleghani as our next Executive Vice President and Chief Financial Officer, who will join in February of 2026. Reza brings more than 25 years of global finance leadership across corporate, operational and investment banking roles. He joins Under Armour from Samsonite Group, where he served as EVP and CFO since 2018, leading financial and operational transformations that significantly improve profitability and efficiency. His prior experience includes senior roles at Brightstar Corp., JPMorgan and Sterling Airlines. I have every confidence that Reza's extensive experience and strategic mindset will help drive…

Thanks, Kevin. Before I get into the financials, I want to take a moment to share some thoughts about my upcoming transition. After 21 incredible years at Under Armour and nearly 9 as CFO, it feels like the right time for something new, new for me and new for Under Armour. Kevin and I have been discussing this for some time now, and we agreed that if we could identify and secure a great next CFO for Under Armour, I'd step down and pass the baton in a well-planned and thoughtful way. With Reza joining the team, we're now ready to do just that. And to be clear, I absolutely believe in this brand and its future. I'm proud to be Under Armour's second largest internal shareholder. But more than that, I'm proud of the people and the purpose that make this company so special. My main focus now is helping UA and my team onboard Reza and get them fully up to speed to ensure UA can continue to thrive for years to come. Now let's get into our second quarter fiscal '26 results, where we again delivered a quarter that met or exceeded our outlook on every item as we continue to execute our turnaround. Revenue declined 5% to $1.3 billion, slightly better than the outlook we shared in August. This result includes a 1 point benefit from timing shifts that moved some shipments from Q3 into Q2, which will normalize in the back half of the year. Regional results were as follows: North America revenue decreased 8%, primarily due to a decline in our full-price wholesale business and lower e-commerce sales. In EMEA, revenue increased 12% or 7% on a currency-neutral basis, continuing the healthy growth trend in the region, driven primarily by our full-price wholesale business,…

[Operator Instructions] The first question comes from Jay Sole from UBS.

Kevin, a lot of great information and insight in the prepared remarks. I want to ask you about North America. What makes you confident that North America will see stabilization before the end of fiscal '27? And what is your definition of stabilized for North America?

Yes. Thank you, Jay. We spent a lot of time thinking about this and the outlook that we provided. So stabilization for us, first of all, it means we see getting the business to where it's a plus 1 or 2 or plus or minus 1 or 2. So in that healthy version. So we're pointing toward that. The way we think about what makes that reality is there's 5 basic points, and I'll start with structural, which is having the right team, the right operating model, business plan and go-to-market in place. It's time for us to let those things cook and let it really play out. And I think that's where our 20 years of public company experience really will begin to shine through. From a product standpoint, I think there has been an incredible overall elevation that we've had in design and the deliverable innovation, meaning innovation that we can actually monetize and drive volume with. It means we've used this term driving pricing power for us. And that means first started by leaning on the winners, the heat and cold gears, Unstoppable pant collection, Vanish and the products that you've heard of. It's also the 2-part approach that we said to premiumize in this brand, which is our Trojan horse new innovations and things like the Velociti Elite 3, the credibility that gives us from Sharon Lokedi just hitting another podium in that shoe. It really opens the door there as well as innovation like a $45 hat or $140 backpack. We're demonstrating that the consumer is open for innovation. More importantly, they're open for innovation and higher price points from Under Armour when we deliver that. At the same time, we've got a lot of legacy programs and things like our top 10 volume drivers…

Got it. Well, I mean that's super helpful. I mean it's pretty clear that the North America brand heat is increasing. There's a lot of great things happening, product storytelling. I'll pass it on, but I just want to ask one quick one. You mentioned NEOLAST, and it was just a quick mention. But it sounds like you're excited about what you have and what you have coming. Can you just tell us a little bit what it is, what makes it special? I know it's a little bit obscure, but I want to just ask that question before I pass it on.

Yes. Thank you. NEOLAST is a fiber we spent more than 5 years in partnership with NC State, Celanese and Under Armour. And the 3-way partnerships are not easy to do. From it, we've built a 3-story machine that from the output of that is a fiber that is completely sustainable that effectively replaces Lycra. So it gives us Lycra stretch, which is a great product, but we've built something that's actually better than it. So it's not just sustainable, but it's actually a better product. And we're showcasing that with some of our upcoming HeatGear Elite and OG, and you'll see us start incorporating NEOLAST as we get the fiber up and running throughout the majority of Under Armour products, and that's going to take a little bit of time. But meanwhile, we'll put it in our compression gear, which, as we all know, to the broader population, probably 5% or 6% or 7% people can walk down the street in a compression T-shirt. But as I mentioned, we also are going to be showing this some products that we think can be incredibly beautiful, including a product a shirt that we have coming out in the spring that will feature NEOLAST and I think really be important for the consumer. So we're excited about what this innovation means.

The next question comes from Sam Poser from Williams Trading.

I have 2. One, I've been hearing a lot of really good things about what's going on, what you guys are doing in track and field, and some of that seems to be manifesting itself in running in the results in New York Marathon and so on. But you're not -- you talk a lot about football, but I would think the track and field/running is a much bigger addressable market. And I'm just wondering when you're increasing your voice, what you're going to do there because from what I understand, you're one of the few brands out there that sort of covers off every sport in track and field. And I would think that the number of long-term athletes more are doing that abundance of those various sports going up than are playing football, while I understand football is in your DNA. So wondering what you're doing there to sort of have the voice match or exceed the products that appear to be out there?

Sure, Sam. I think it's a great unlock for us. Run as a category, we talk about the progression that we try to get through in footwear and running is certainly a category that we can win. There's nothing like having the credibility of a Sharon Lokedi, who is a former New York City Marathon winner, the reigning champion of the Boston Marathon and then just pulling another podium in New York this past weekend. The Velociti Elite 3 is something that gives us enormous credibility in running. And again, when we say running, there's a $250 expressions like we have in the Velociti 3. But if you go to the website as well on Investor Relations, you'll see as we've been driving the story is that it's not just the $250, but we've taken that design aesthetic, and we're taking it all the way down to $160, $130, $100 and $75 price points. And so yes, we believe that it drives our credibility. And with the 430 colleges that Under Armour outfits here in the United States, the nearly 3,000 high schools, it's certainly an opportunity for our track-specific product. But all this is about leveraging us into using this as a marketing vehicle to tell the story that when you wear Under Armour, there's a superpower included inside and will allow you to maybe someday if you dream to win the Boston Marathon. But I don't know, it might be a fallen ambition for some of us.

Well, okay. I have one more, but I want to follow up on this. I'm really talking about the marketing voice. I know you're doing a lot of stuff, but like you're not running that big We Are Football campaign against that. You're doing -- so how do you let this broader base know? You talked about increasing your voice. So that's number one. And number two, you talked about the improvement in the U.S. business or the North American business. Can you talk a little bit about the sell-through rates and the velocity that you're seeing at full price, let's say, compared to a year ago now, I understand so more on a rate basis where -- and how that's -- why that's giving you confidence or some specific data to that confidence?

Yes. So first of all, as we said, our global strategy is clear. It's training, it's running, it's sportswear, but they're authenticated in each market where it gets local. So a recent deal we did here in the U.S., for instance, with BSN Sports, which has more than 1,400 road reps that are covering high schools and things. That's something that allows us to sell, as you say, our full complement we have for track and field from discuss to spike to weight lifting, we do a good job covering that gamut. And again, we want to be authentic there, but the volume is for us is getting to specialty run, authenticating ourselves there and allow that to be the pull that puts us into sporting goods and specialty mall retail as well. So that's the way we're thinking about it in an organized way. The growth that we see is -- let me move to sell-throughs. I think that the great news we have now and why we're pushing people until we don't have orders in hand, and we're saying we're pointing towards stabilization the way that we see fiscal '27. We'll be a lot smarter in February. But meanwhile, we're having really good success at retail right now. And again, that's not showcased in the numbers. We get what that means. But what I mean is we're beating our plans. And in certain categories, we're seeing replenishment orders coming in and a lot more driving from -- a lot more confidence from our key retail partners. The good news about that is that they're thinking about writing their fall '26 orders. They're seeing some of the success we're having in fall '25. So everything that we're just having, unfortunately, to say to you, they get to see that in a little more of a realistic way. So we're driving better gross margins with our accounts. We're not taking as many returns or at all. And we just -- we like the trajectory of the business. So there's nothing hopeful or wishful, I think, about our tone today. I think it's very pragmatic, very thoughtful and something that just gives us great confidence in how we're thinking about the next chapter.

The next question comes from Bob Drbul from BTIG.

And Dave, congratulations, and thanks for all the help over the last 20 years. Best of luck to you.

Thanks, Bob.

And 2 questions really. I think the first one is, in terms of the sports marketing portfolio, you got a really good portfolio. You've made some changes to it. Can you just expand a bit just how that can work better in your storytelling approach? And then the second question is just a bit more general. But when you look at the footwear business overall, some of the challenges that you're seeing, can you just expand a bit more how you're approaching the changes that you need to make in that category?

Yes. Let me jump on there, Bob. First of all, you're right, is that our sports marketing stable is something that should always be dynamic, and we're constantly evaluating and reevaluating. Today's day of NIL and sort of the hyper focus that we have with even high school NIL kids. I think we did a good job in our campaign that's out and is still running, and we're not even a little more than half of the way through this campaign that you'll continue to see and hear from us. But we didn't just put Justin Jefferson or recording artist Gunna in there is that we had 5 NIL athletes. 3 of them are 5 stars, the #1 player in the country, the #1 quarterback in the country. So we're thinking about how we can access talent like that as well as being thoughtful about the way that we approach anybody in our portfolio. And that's the balance between is it about an athlete? Is it about a team? Is it about a league? So I'd say it's constantly moving. I like our portfolio right now. I think there's always work to be done, and we'll always make sure we're being thoughtful. Let me address footwear because I do. I look at this number, and I realize that the Street is staring at minus 16%. And I want everybody -- I want to make sure we put this in perspective and context is that Under Armour is a footwear brand. We are committed to it. We are incredibly disappointed about where it sits right now, but -- and we find the results unacceptable. But we're moving as a business, I guess, is part of our redirect. We're moving of going from selling just foot coverings below $100 to a forward…

The next question comes from Laurent Vasilescu from BNP Paribas.

Dave, thank you again for all your help over the years, and that leads us to the questions here. I think on the first question here is around pricing elasticity. How do we -- how should we think about pricing for spring/summer 2026 product? Should we assume something like mid-single digits to offset the tariff impact? And what are you seeing in terms of elasticity of demand for your consumers right now? And then the second question, I think, Dave, you were very helpful in parsing out the tariff impact for 2Q. I think you mentioned 275 basis points. Any way we should think about that number for 3Q and for the full year?

Yes, Laurent, this is Dave. Relative to pricing, it is one of the different mitigation strategies that we're driving through relative to the tariff implications. So in the short term, this year, we're really focused a lot more on kind of managing the SG&A and protecting the bottom line that way. There's a little bit of vendor cost sharing we can drive through where reasonable, also working on some production shifts where reasonable. Those can't be done overnight, though. And to your point, we are pursuing some selected price increases. They're partially dependent, though, on competitor actions and consumer sentiment as well based on where we stand. And we're definitely going to be strategic in those. We don't expect much of that to be real visible until fiscal '27 and beyond, to your point, but it will definitely help us as we offset more of a full year impact next year on the tariff side. I don't think it's going to come across as dramatic, and I don't know that we're in a position to be able to go dramatic relative to what other brands might be doing. So -- but we're going to be in there, and we think there's a lot of great product that have the right price to value that could warrant some of those increases, but we're going to be very prudent and strategic in how we do that. But then there's also a couple of other things that we're driving through to help offset as well, being a lot smarter and more data-driven in how we look at SKU by SKU profitability and make tougher decisions about what SKUs we're going to get behind versus what ones we might wane back a little bit based on the profitability of that SKU and just some more diligence around that to be careful as we try and navigate some of those cost pressures. But longer term, I think we're going to be in a really good spot there. Relative to Q3 and Q4, yes, Q3, we're seeing down 310, 330 basis points, and that is almost entirely driven by tariffs. That number in the tariff range is probably around 300, 330 basis points. So there's other minor puts and takes that are going on within that, but that's really the lion's share for Q3. Q4, just based on the mix of product and the sourcing countries that it's coming through, the tariff impact will be a little bit less in Q4, but it's still going to be the primary driver of the Q4 headwind as well.

The next question comes from Peter McGoldrick from Stifel.

I was curious on the shape of the guidance. Previously, the commentary pointed to the second quarter as the deepest declines of the year. I recognize there's a 1 percentage point shift. But now with the outlook for the fiscal third quarter, that looks like that could be the deepest decline. And I was curious about the progression. What has changed over the last 90 days? And how should we think of the pathway towards the stabilization in fiscal '27?

Yes. I mean, to be honest, there's not a lot of big developments from 90 days back. There is maybe $10 million to $15 million of movement relative to Q2 and Q3. These are mainly wholesale shipments in North America and EMEA that were originally planned to go out in early Q3, and we actually had the product and the customer wanted it, and we were able to get it out in late Q2. So that was a little bit of a change versus our expectation. But outside of that, no real big changes. I think when you think about Q4, we do see that the Q4 decline will be less versus Q3. And if you look at the math in our outlook, it does back into a pretty broad range for Q4. And one of the points within that range is flat and that stabilization that we've been talking about. So if you drill down into that, we continue to see solid growth in EMEA, which is awesome. APAC is likely to actually be up a little bit with Q4, but that's mainly, to be honest, relative to comping a really challenged Q4 of last fiscal year in APAC. So that's something to keep in mind. And then all the points that Kevin went through on North America coming to fruition and, therefore, less pressure on North America in Q4 than previous quarters. So again, it's the focus on stabilizing and resetting APAC, stabilizing and turning around North America and continuing to fuel the growth in EMEA, and that's what we're driving against.

Appreciate that. And perhaps just a follow-up on the pricing. You pointed to embedded assumptions for the higher engineered pricing on your largest products. I was curious if you could talk about the -- your approach to the balance of your product portfolio and how you're planning pricing there.

Yes. I mean we are looking at it in a lot of different ways. There are some very specific new launches that we're going to be addressing pricing on a couple of the resets, but then also even on some of our core, we do feel there's an opportunity on the kind of better and best product a little bit more than the good level product. We want to be a little bit more careful with that consumer. But as Kevin can probably touch on, there's also a lot of exciting stuff we're doing relative to some of the new product launches that are in that good and better, best level that could have better prices associated with them.

Yes. I think just the overall elevation for the brand, this comes back with aesthetic. This comes from -- just because it's an opening price point doesn't mean it can't be designed beautifully and perform for the consumer. So that's when we talk about things like our tech program and how we're looking to enhance that with a $25 opening price point, and we'll be moving some price there. But more importantly, we're introducing a $35 improved version that we think we'll be able to take some of that volume and walk the consumer up a bit. But innovation is the answer and the way that we're going to win with the athlete. So that perception needs to come across in everything Under Armour does.

The next question comes from Brooke Roach from Goldman Sachs.

Kevin, Dave, I was hoping to dive a little bit deeper into the trends that you're seeing in the APAC business and the drivers and cadence of the path that you see ahead to drive some stabilization there.

Yes. Thank you. I know this is a head turner when you look at it and say, what does it mean in the minus 14. It's difficult for us to read. Again, we do not accept it, and I feel like I've said that too many times today, but we're in the midst of turnaround, and this is what it looks like. And so we like where we're going. As I said, I've had the ability to spend 8 days in the market visiting stores and meeting with our teams, franchisees, distributors, manufacturers and doing town halls and getting our point of view and then sitting down one by one and doing an hour with each of the key stakeholders we had, sharing our forward strategy and spending time with our team. Simon Pestridge, who's been awesome, who joined about a year ago, and we named him to this job about 3 or 4 months ago. So we're new in that process. Simon also announced a new head to run specifically China for us, who is a veteran pro who used to run Converse in the region as well in running China. So he is building out a rock-solid team. But not unlike the U.S., we don't believe that we have a brand problem. Under Armour is effectively known as a professional brand in China. It's -- once again, it's a story issue. And this is just where we haven't done a great job of just tying together, a, personifying the product and then just storytelling at retail when it's a T-shirt just standing next to a price tag that says $24 or $30 or whatever the local currency is, it's not very compelling. And that's when you're just relying on brand heat. And so as that has slowed, we…

Our last question will come from Paul Lejuez at Citi.

This is Kelly on for Paul. I just wanted to follow up on some of the North America wholesale commentary. I guess if you're seeing improving sell-through rates this fall, do you have opportunity to potentially see upside from stronger reorder demand in the holiday quarter? And then just in terms of the order book, you're pointing to more of a stabilization in wholesale in North America in the fourth quarter. Is that reflected in your order books? And then should we think about -- given you've seen improved sell-through this fall that maybe the hope at least is that for fall 2026, you'd see order books up? Any just color there would be great.

Thank you. We say stronger demand. So we're coming from -- we haven't had the strongest hand, so we're basically stabilizing. I think probably the best way for me to qualify this is that we now -- we have a stable order book. Where in the past, we've seen a lot more returns. We've seen a lot more cancellations. We're not seeing that right now. This isn't just cold weather either. It's some of the brand heat, I believe, that we've been driving here in the U.S. specifically. The brand inconsistency, I think, is one thing is that we hadn't really come with a story, and that's why I believe the most important thing is the key relationships that we have with the key partners is they're seeing a more consistent Under Armour. They're seeing us now tying story to it. They're seeing us personify product and the premiumization that we're taking at UA is something that is resonating with them. The -- call it success, but I'll say the beating plan the beating plan that we have in fall '25. And again, understanding that we're not thrilled about this math, but it definitely sets us up. And one thing we think we want the core message to be is that the key business that we have today, the $5 billion business we have today, we can see line of sight to the ability for us to stabilize and hold this business and begin to move forward. And that's not just building more good level product. We like the amount of good level product, but we want to focus on better and best. And that's what will help us premiumize the brand and help us, frankly, drive some of the more of the sell-through at all 3 levels wherever the consumer sees us.

And Kelly, I think just pointing out too, that Q3 is a very high mix of direct-to-consumer. It's a little bit lower mix of wholesale. So even though we are seeing some favorability on replenishment orders, which is great and really points towards the future, it doesn't necessarily create a significant upside potential for Q3 or Q4. But obviously, we're going to keep driving and fueling, and we're excited about where those conversations are heading.

This concludes our question-and-answer session, and the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.