Under Armour, Inc.: Form 10-Q for the period ended Sep 30, 2025

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help readers understand our results of operations and financial condition, and is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the accompanying Notes to our Condensed Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for Fiscal 2025, filed with the Securities Exchange Commission ("SEC") on May 22, 2025, under the captions "Business" and "Risk Factors."

This Quarterly Report on Form 10-Q, including this MD&A, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A of the U.S. Securities Act of 1933, as amended ("the Securities Act"), and is subject to the safe harbors created by those sections. All statements other than statements of historical facts are statements that could be deemed forward-looking statements. See "Forward Looking Statements."

Unless otherwise noted: (i) all dollar and percentage comparisons made herein refer to the three and six months ended September 30, 2025 compared to the three and six months September 30, 2024; and (ii) all tabular data is presented in thousands, except share and per share data.

FORWARD LOOKING STATEMENTS

Some of the statements contained in this Quarterly Report on Form 10-Q, including this MD&A, constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, such as statements regarding our share repurchase program, our future financial condition or results of operations, our prospects and strategies for future growth, potential restructuring efforts, including the scope of these restructuring efforts and the amount of potential charges and costs, the timing of these measures and the anticipated benefits of our restructuring plans, expectations regarding promotional activities, freight, product cost pressures and foreign currency impacts, the impact of global economic conditions including changes in global trade policy and inflation on our results of operations, our liquidity and use of capital resources, the development and introduction of new products, the implementation of our marketing and branding strategies, the future benefits and opportunities from significant investments and the impact of litigation or other proceedings. In many cases, you can identify forward-looking statements by terms such as "may," "will," "could," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "outlook," "potential" or the negative of these terms or other comparable terminology.

The forward-looking statements contained in this Quarterly Report on Form 10-Q reflect our current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by these forward-looking statements, including, but not limited to, those factors described in "Risk Factors" and MD&A herein and in our Annual Report on Form 10-K for Fiscal 2025. These factors include without limitation:

• changes in general economic or market conditions, including increasing inflation and potential impacts of changes and uncertainties related to government fiscal, monetary, tax and trade policies, that could affect overall consumer spending or our industry;
• the impact of global events beyond our control, including military conflicts and the effects of changes in the global trade environment, such as the imposition of new tariffs and countermeasures thereto, on our profitability;
• increased competition causing us to lose market share or reduce the prices of our products or to increase our marketing efforts significantly;
• fluctuations in the costs of raw materials and commodities we use in our products and our supply chain (including labor);
• our ability to successfully execute our long-term strategies;
• our ability to effectively drive operational efficiency in our business;
• changes to the financial health of our customers;
• our ability to effectively develop and launch new, innovative and updated products;
• our ability to accurately forecast consumer shopping and engagement preferences and consumer demand for our products and manage our inventory in response to changing demands;
• our ability to successfully execute any restructuring plans and realize their expected benefits;
• loss of key customers, suppliers or manufacturers;
• our ability to further expand our business globally and to drive brand awareness and consumer acceptance of our products in other countries;
• our ability to manage the increasingly complex operations of our global business;
• our ability to effectively market and maintain a positive brand image;
• our ability to successfully manage or realize expected results from significant transactions and investments;
• our ability to attract key talent and retain the services of our senior management and other key employees;
• our ability to effectively meet regulatory requirements and stakeholder expectations regarding sustainability and social matters;
• the availability, integration and effective operation of information systems and other technology, as well as any potential interruption of such systems or technology;
• any disruptions, delays or deficiencies in the design, implementation or application of our global operating and financial reporting information technology system;
• our ability to access capital and financing required to manage our business on terms acceptable to us;
• our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results;
• risks related to foreign currency exchange rate fluctuations;
• our ability to comply with existing trade and other regulations;
• risks related to data security or privacy breaches;
• the impact of global or regional public health emergencies on our industry and our business, financial condition and results of operations, including impacts on the global supply chain;
• our ability to remediate the material weakness discussed elsewhere in this Quarterly Report on Form 10-Q; and
• our potential exposure to and the financial impact of litigation and other proceedings, including those legal proceedings discussed elsewhere in this Quarterly Report on Form 10-Q.

The forward-looking statements contained in this Quarterly Report on Form 10-Q reflect our views and assumptions only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

OVERVIEW

We are a leading developer, marketer, and distributor of branded performance apparel, footwear, and accessories. Our brand's moisture-wicking fabrications are engineered in various designs and styles for wear in nearly every climate to provide a performance alternative to traditional products. Our products are sold worldwide and worn by athletes at all levels, from youth to professional, on playing fields around the globe and by consumers with active lifestyles.

We remain focused on driving premium brand-right growth and delivering improved profitability. We plan to continue to grow our business over the long term through increased sales of our apparel, footwear and accessories; growth in our direct-to-consumer sales channel; and expansion of our wholesale distribution. Achieving these long-term growth objectives depends, in part, on our ability to successfully execute strategic initiatives across key areas of the business, including within our North America region. In support of these long-term growth objectives, our digital strategy is designed to enhance consumer engagement and strengthen brand connectivity through multiple digital touchpoints.

Quarterly Results

During the three months ended September 30, 2025, challenging market conditions persisted, particularly in North America and Asia-Pacific, driven by lower consumer demand across both our wholesale and direct-to-consumer channels.

Financial highlights for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 include:

• Total net revenues decreased 4.7%.
• Within our distribution channels, wholesale revenue decreased 6.2% and direct-to-consumer revenue decreased 2.2%.
• Within our product categories, apparel revenue decreased 1.1%, footwear revenue decreased 15.7%, and accessories revenue decreased 2.8%.
• Net revenue decreased 8.3% in North America, increased 12.2% in EMEA, decreased 13.7% in Asia-Pacific and increased 14.6% in Latin America.
• Gross margin decreased 250 basis points to 47.3%.
• Selling, general and administrative expenses increased 11.9%.

2025 Restructuring Plan

During Fiscal 2025, our Board of Directors approved a restructuring plan designed to strengthen and support the Company's financial and operational efficiencies. The 2025 restructuring plan is expected to include up to $160 million of pre-tax restructuring and related charges, consisting of up to $90 million in cash-related charges, including approximately $30 million in employee severance and benefits costs and $60 million related to various transformational initiatives; and up to $70 million in non-cash charges, including approximately $7 million in employee severance and benefits costs and $63 million in facility, software, and other asset-related charges and impairments. The 2025 restructuring plan is expected to be substantially complete by the end of Fiscal 2026.

Restructuring and related charges recorded during the three and six months ended September 30, 2025 and September 30, 2024 were primarily North America related and are included within Corporate Other. The following table summarizes the costs recorded during the periods indicated, as well as the current estimate of remaining charges expected to be incurred in connection with the 2025 restructuring plan:

Costs recorded in restructuring charges:

(1) Estimated restructuring and related charges reflect the high-end of the range of the total estimated charges expected to be incurred in connection with the 2025 restructuring plan.

(2) Facility-related costs for the three and six months ended September 30, 2025 includes an impairment charge of $15.9 million relating to the previously disclosed decision to exit the Company's distribution facility in Rialto, California.

Restructuring charges and recoveries require us to make certain judgments and estimates regarding the amount and timing as to when these charges or recoveries occur. The estimated liability could change subsequent to its recognition, requiring adjustments to the expense and the liability recorded. On a quarterly basis, we conduct an evaluation of the related liabilities and expenses and revise our assumptions and estimates as appropriate, as new or updated information becomes available.

Macroeconomic Factors and Other Global Events

We are actively monitoring the evolving global trade environment, including recent changes in global trade policy, as well as indirect effects on consumer discretionary spending. We continue to assess the implications for our business and are actively implementing mitigation strategies. However, based on information that is currently available, these changes will have a material impact on our Fiscal 2026 results of operations, including revenue, gross profit and operating income. We currently anticipate a negative impact of approximately $100 million to our cost of goods sold in Fiscal 2026 attributable to increased tariffs, which is expected to impact gross profit by approximately 200 basis points.

Other macroeconomic factors, such as inflationary pressures and fluctuations in foreign currency exchange rates, have and may continue to impact our business. We continue to monitor these factors and the potential impacts they may have on our financial results, including product input costs, freight costs and consumer discretionary spending and therefore consumer demand for our products. We also continue to monitor the broader impacts of conflicts around the world on the economy, including their effect on inflationary pressures and the price of oil globally.

See "Risk Factors—Economic and Industry Risks—Our business depends on consumer purchases of discretionary items, which can be negatively impacted during an economic downturn or periods of inflation. This could materially impact our sales, profitability, results of operations and financial condition"; "—Fluctuations in the cost of raw materials and commodities we use in our products and costs related to our supply chain could negatively affect our operating results"; "—Our financial results and ability to grow our business may be negatively impacted by global events beyond our control"; and "—Financial Risks—Our financial results could be adversely impacted by currency exchange rate fluctuations" included in Item 1A of our Annual Report on Form 10-K for Fiscal 2025.

RESULTS OF OPERATIONS

The following tables set forth key components of our results of operations for the periods indicated, both in dollars and as a percentage of net revenues:

Revenues

Net revenues consist of net sales and license revenues. Net sales consist of sales from apparel, footwear and accessories products. Our license revenues primarily consist of fees paid to us by licensees in exchange for the use of our trademarks on their products. The following tables summarize net revenues by product category and distribution channel for the periods indicated:

(1) Corporate Other primarily includes foreign currency hedge gains and losses related to revenues generated by entities within our operating segments but managed through our central foreign exchange risk management program.

Net Sales

Net sales decreased by $63.1 million, or 4.6%, to $1.3 billion during the three months ended September 30, 2025, from $1.4 billion during the three months ended September 30, 2024. Apparel decreased primarily due to unfavorable channel mix and lower average selling prices. Footwear decreased primarily due to lower unit sales and lower average selling prices, partially offset by a favorable channel mix. Accessories decreased primarily due to unfavorable channel mix, partially offset by higher unit sales and higher average selling prices. From a channel perspective, the decrease in net sales was due to a decrease in both wholesale and direct-to-consumer.

Net sales decreased by $111.3 million, or 4.4%, to $2.4 billion during the six months ended September 30, 2025, from $2.5 billion during the six months ended September 30, 2024. Apparel decreased primarily due to lower average selling prices and unfavorable channel mix, partially offset by higher units sold. Footwear decreased primarily due to lower unit sales, lower average selling prices and unfavorable channel mix. Accessories increased primarily due to higher unit sales, partially offset by unfavorable channel mix. From a channel perspective, the decrease in net sales was due to a decrease in both wholesale and direct-to-consumer.

License Revenues

License revenues increased by $4.2 million or 16.9%, to $29.0 million during three months ended September 30, 2025, from $24.8 million during three months ended September 30, 2024. This was primarily due to higher revenues from our international licensing partners.

License revenues increased by $6.9 million or 14.8%, to $53.3 million during six months ended September 30, 2025, from $46.5 million during six months ended September 30, 2024. This was primarily due to higher revenues from our licensing partners in North America and from our international licensing partners.

Gross Profit

Cost of goods sold consists primarily of product costs, tariffs, inbound freight and duty costs, outbound freight costs, handling costs to make products floor-ready to customer specifications, royalty payments to endorsers based on a predetermined percentage of sales of selected products and write downs for inventory obsolescence. In general, as a percentage of net revenues, we expect cost of goods sold associated with our apparel and accessories to be lower than that of our footwear. No cost of goods sold is associated with our license revenues.

We include outbound freight costs associated with shipping goods to customers as cost of goods sold; however, we include the majority of outbound handling costs as a component of selling, general and administrative expenses. As a result, our gross profit may not be comparable to that of other companies that include outbound handling costs in their cost of goods sold. Outbound handling costs include costs associated with preparing goods to ship to customers and certain costs to operate our distribution facilities. These costs were $20.4 million and $39.9 million for the three and six months ended September 30, 2025, respectively (three and six months ended September 30, 2024: $20.8 million and $38.3 million, respectively).

Gross profit decreased by $65.5 million to $630.6 million during three months ended September 30, 2025, as compared to $696.1 million during three months ended September 30, 2024. Gross profit as a percentage of net revenues, or gross margin, decreased to 47.3% from 49.8%. This decrease in gross margin of approximately 250 basis points was primarily driven by unfavorable impacts of 275 basis points from supply chain, primarily due to the impact of tariffs, and 100 basis points from channel and regional mix. These were partially offset by favorable impacts of 50 basis points from changes in foreign currency, 50 basis points from pricing benefits and 25 basis points from product mix.

Gross profit decreased by $81.7 million to $1.2 billion during six months ended September 30, 2025, as compared to $1.3 billion during six months ended September 30, 2024. Gross profit as a percentage of net revenues, or gross margin, decreased to 47.7% from 48.7%. This decrease in gross margin of approximately 100 basis points was primarily driven by unfavorable impacts of 160 basis points from supply chain, including the impact of tariffs, and 65 basis points from channel and regional mix. These were partially offset by favorable impacts of 60 basis points from pricing benefits, 30 basis points from changes in foreign currency and 25 basis points from product mix.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses consist of costs related to marketing and advertising, selling, product innovation and supply chain, and corporate services. We consolidate our selling, general and administrative expenses into two primary categories: "marketing and advertising" and "other." The other category is the sum of our selling, product innovation and supply chain, and corporate services categories. The marketing and advertising category consists primarily of sports and brand marketing, media, and retail presentation. Sports and brand marketing includes professional, club and collegiate sponsorship agreements, individual athlete and influencer agreements, and providing and selling products directly to teams and individual athletes. Media includes digital, broadcast, and print media outlets, including social and mobile media. Retail presentation includes sales displays and concept shops and depreciation expense specific to our in-store fixture programs. Our marketing and advertising costs are an important driver of our growth.

Selling, general and administrative expenses increased by $61.8 million, or 11.9%, during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. Within selling, general and administrative expenses:

• Marketing and advertising costs increased $28.4 million or 22.6%. This was primarily due to the timing of marketing spend in the prior year, which was higher during the second half of Fiscal 2025. As a percentage of net revenues, marketing and advertising costs increased to 11.5% from 9.0%.
• Other costs increased $33.4 million or 8.5%, primarily due to a recovery of insurance proceeds in the prior year relating to the settlement of the Company's Consolidated Securities Action litigation (refer to Note 10 of the Consolidated Financial Statements in Part II, Item 8 of the Company's Annual Report on Form 10-K for Fiscal 2025). As a percentage of net revenues, other costs increased to 32.1% from 28.2%.

As a percentage of net revenues, selling, general and administrative expenses increased to 43.6% during the three months ended September 30, 2025 as compared to 37.2% during the three months ended September 30, 2024.

Selling, general and administrative expenses decreased by $245.2 million, or 18.1%, during the six months ended September 30, 2025 as compared to the six months ended September 30, 2024. Within selling, general and administrative expenses:

• Marketing and advertising costs increased $17.8 million or 7.2%. This was primarily due to the timing of marketing spend in the prior year, which was higher during the second half of Fiscal 2025. As a percentage of net revenues, marketing and advertising costs increased to 10.7% from 9.6%.
• Other costs decreased $263.0 million or 23.7%, primarily due to lower litigation reserve expense. Other costs in the prior year included litigation reserve expense relating to the settlement of the Company's Consolidated Securities Action litigation in Fiscal 2025 (refer to Note 10 of the Consolidated Financial Statements in Part II, Item 8 of the Company's Annual Report on Form 10-K for Fiscal 2025). As a percentage of net revenues, other costs decreased to 34.3% from 43.0%.

As a percentage of net revenues, selling, general and administrative expenses decreased to 45.1% during the six months ended September 30, 2025 as compared to 52.5% during the six months ended September 30, 2024.

Restructuring Charges

Restructuring charges within our operating expenses primarily consist of employee severance and benefit costs, various transformational initiatives and facility, software and other asset-related charges and impairments. Refer to Note 11 of our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details.

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Restructuring charges increased by $28.7 million during the three months ended September 30, 2025 compared to the three months ended September 30, 2024. This was primarily due to higher facility-related charges resulting from an impairment charge of $15.9 million relating to the previously disclosed decision to exit the Company's distribution facility in Rialto, California. Additionally, other restructuring costs increased resulting from a net gain of $5.3 million recognized during the prior year relating to the sale of the MapMyFitness platform and higher employee related costs.

Restructuring charges increased by $16.4 million during the six months ended September 30, 2025 compared to the six months ended September 30, 2024 primarily due to higher facility-related charges resulting from an impairment charge of $15.9 million relating to the previously disclosed decision to exit the Company's distribution facility in Rialto, California.

Interest Income (Expense), net

Interest income (expense), net includes interest income earned on our cash and cash equivalents and restricted investments, amortization of deferred financing costs, bank fees, capitalized interest for long term property and equipment projects and interest expense under the credit and other long-term debt facilities. Refer to Note 7 of our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details.

Interest expense, net increased by $6.9 million to $8.6 million during the three months ended September 30, 2025 compared to interest expense, net of $1.7 million during the three months ended September 30, 2024. This was primarily due to an increase in interest expense resulting from the issuance of the Senior Notes due 2030, partially offset by interest income earned on the restricted investments held to satisfy and discharge the Senior Notes due 2026.

Interest expense, net increased by $13.3 million to $12.7 million during the six months ended September 30, 2025 compared to interest income, net of $0.6 million during the six months ended September 30, 2024. This was primarily due to an increase in interest expense resulting from the issuance of the Senior Notes due 2030, partially offset by interest income earned on the restricted investments held to satisfy and discharge the Senior Notes due 2026.

Other Income (Expense), net

Other income (expense), net generally consists of unrealized and realized gains and losses on our foreign currency derivative financial instruments, and unrealized and realized gains and losses on adjustments that arise from fluctuations in foreign currency exchange rates relating to transactions generated by our international subsidiaries. Other income (expense), net also includes rent expense and associated sublease income relating to lease assets held solely for sublet purposes.

Other expense, net decreased by $2.5 million to $0.9 million during the three months ended September 30, 2025 compared to $3.4 million during the three months ended September 30, 2024. This was primarily due an increase in sublease income, partially offset by net losses from foreign currency hedges.

Other expense, net decreased by $0.5 million to $5.6 million during the six months ended September 30, 2025 compared to $6.2 million during the six months ended September 30, 2024. This was primarily due an increase in sublease income, offset by net losses from foreign currency hedges.

Income Tax Expense (Benefit)

Income tax expense increased by $28.1 million to $25.9 million during the three months ended September 30, 2025 from income tax benefit of $2.1 million during the three months ended September 30, 2024. For three months ended September 30, 2025, our effective tax rate was 345.9% compared to (1.3)% for the three months ended September 30, 2024. The increase in our effective tax rate was primarily driven by year over year changes in actual and forecasted pre-tax earnings, the impact of U.S. taxation of foreign earnings, increased global minimum taxes and valuation allowances on increased U.S. interest expense carryforwards.

Income tax expense increased by $20.3 million to $23.3 million during the six months ended September 30, 2025 from income tax expense of $3.0 million during the six months ended September 30, 2024. For six months ended September 30, 2025, our effective tax rate was 1,121.3% compared to (2.3)% for the six months ended September 30, 2024. The increase in our effective tax rate was primarily driven by year over year changes in actual and forecasted pre-tax earnings, the impact of U.S. taxation of foreign earnings, increased global minimum taxes and valuation allowances on increased U.S. interest expense carryforwards.

SEGMENT RESULTS OF OPERATIONS

Our operating segments are based on how our Chief Operating Decision Maker ("CODM") makes decisions about allocating resources and assessing performance. Our segments are defined by geographic regions, including North America, EMEA, Asia-Pacific and Latin America.

We exclude certain corporate items from our segment profitability measures. We report these items within Corporate Other, which is designed to provide increased transparency and comparability of our operating segments' performance. Corporate Other consists primarily of (i) general and administrative expenses not allocated to an operating segment, including expenses associated with centrally managed departments such as global marketing, global information technology, global supply chain and innovation, and other corporate support functions; (ii) restructuring and restructuring related charges, if any; and (iii) certain foreign currency hedge gains and losses.

The net revenues and operating income (loss) associated with our segments are summarized in the following tables.

Net Revenues

(1) Corporate Other primarily includes foreign currency hedge gains and losses related to revenues generated by entities within our operating segments but managed through our central foreign exchange risk management program.

North America

Net revenues in our North America region decreased by $71.8 million, or 8.3% during the three months ended September 30, 2025. This was driven by a decrease in both our wholesale and direct-to-consumer channels, partially offset by an increase in license revenues. Within our direct-to-consumer channel, net revenues decreased in both e-commerce and owned and operated retail stores.

Net revenues in our North America region decreased by $110.8 million, or 7.0% during the six months ended September 30, 2025. This was driven by a decrease in both our wholesale and direct-to-consumer channels, partially offset by an increase in license revenues. Within our direct-to-consumer channel, net revenues decreased in both e-commerce and owned and operated retail stores.

EMEA

Net revenues in our EMEA region increased by $34.5 million, or 12.2% during the three months ended September 30, 2025. This was driven by an increase in both our wholesale and direct-to-consumer channels. Within our direct-to-consumer channel, net revenues increased in both owned and operated retail stores and in e-commerce. Net revenues in our EMEA region were also positively impacted by changes in foreign exchange rates.

Net revenues in our EMEA region increased by $56.2 million, or 11.0% during the six months ended September 30, 2025. This was driven by an increase in both our wholesale and direct-to-consumer channels. Within our direct-to-consumer channel, net revenues increased in owned and operated retail stores, partially offset by a decrease in e-commerce. Net revenues in our EMEA region were also positively impacted by changes in foreign exchange rates.

Asia-Pacific

Net revenues in our Asia-Pacific region decreased by $28.5 million, or 13.7% during the three months ended September 30, 2025. This was driven by a decrease in both our wholesale and direct-to-consumer channels, partially offset by an increase in license revenues. Within our direct-to-consumer channel, net revenues decreased in both owned and operated retail stores and in e-commerce.

Net revenues in our Asia-Pacific region decreased by $46.9 million, or 12.1% during the six months ended September 30, 2025. This was driven by a decrease in both our wholesale and direct-to-consumer channels, partially offset by an increase in license revenues. Within our direct-to-consumer channel, net revenues decreased in both e-commerce and in owned and operated retail stores.

Latin America

Net revenues in our Latin America region increased by $6.9 million, or 14.6% during the three months ended September 30, 2025. This was driven by an increase in both our wholesale and direct-to-consumer channels, partially offset by a decrease in license revenues. Within our direct-to-consumer channel, net revenues increased in owned and operated retail stores and was flat in e-commerce.

Net revenues in our Latin America region decreased by $3.0 million, or 2.7% during the six months ended September 30, 2025. This was driven by a decrease in both our wholesale and direct-to-consumer channels, and a decrease in license revenues. Within our direct-to-consumer channel, net revenues decreased in e-commerce, partially offset by an increase in owned and operated retail stores.

Corporate Other

Net revenues in Corporate Other decreased by $6.7 million during the three months ended September 30, 2025. This was primarily driven by foreign currency hedge losses related to revenues generated by entities within our operating segments.

Net revenues in Corporate Other decreased by $10.8 million during the six months ended September 30, 2025. This was primarily driven by foreign currency hedge losses related to revenues generated by entities within our operating segments.

Operating Income (Loss)

(1) Corporate Other primarily includes foreign currency hedge gains and losses related to revenues generated by entities within our operating segments but managed through our central foreign exchange risk management program. Corporate Other also includes expenses related to our central supporting functions.

North America

Operating income in our North America region decreased by $79.3 million, or 36.5% during the three months ended September 30, 2025. This was primarily due to a decrease in gross profit, driven by lower net revenues, as discussed above, and higher product input costs resulting from increased tariffs as well as higher marketing and advertising costs. These were partially offset by lower facility-related expenses.

Operating income in our North America region decreased by $105.8 million, or 29.0% during the six months ended September 30, 2025. This was primarily due to a decrease in gross profit, higher marketing and advertising costs and higher selling and distribution expenses, partially offset by lower facility-related expenses. The decrease in gross profit was primarily driven by lower net revenues as discussed above, and higher product costs resulting from increased tariffs, partially offset by lower freight costs.

EMEA

Operating income in our EMEA region increased by $1.0 million, or 1.9% during the three months ended September 30, 2025. This was primarily due to an increase in gross profit driven by higher net revenues, as discussed above, partially offset by higher product input costs and an increase in marketing and advertising costs.

Operating income in our EMEA region increased by $20.2 million, or 28.0% during the six months ended September 30, 2025. This was primarily due to an increase in gross profit and lower facility-related expenses, partially offset by higher compensation expenses and selling and distribution expenses. The increase in gross profit was driven by higher net revenues, as discussed above, partially offset by higher product input costs.

Asia-Pacific

Operating income in our Asia-Pacific region decreased by $6.1 million, or 17.9% during the three months ended September 30, 2025. This was primarily due to a decrease in gross profit, partially offset by lower marketing and advertising costs. The decrease in gross profit was driven by lower net revenues as discussed above, partially offset by lower product input costs.

Operating income in our Asia-Pacific region decreased by $1.4 million, or 3.1% during the six months ended September 30, 2025. This was primarily due to a decrease in gross profit, partially offset by lower marketing and advertising costs. The decrease in gross profit was driven by lower net revenues as discussed above, partially offset by lower product input costs.

Latin America

Operating income in our Latin America region decreased by $7.6 million, or 62.2% during the three months ended September 30, 2025. This was primarily due to a decrease in gross profit and an increase in marketing and advertising costs. The decrease in gross profit was primarily driven by higher product input costs, partially offset by an increase net revenues as discussed above.

Operating income in our Latin America region decreased by $16.1 million, or 59.0% during the six months ended September 30, 2025. This was primarily due to a decrease in gross profit and an increase in marketing and advertising costs. The decrease in gross profit was primarily driven by higher product input costs and lower net revenues as discussed above.

Corporate Other

Operating loss in Corporate Other increased by $64.0 million, or 45.0% during the three months ended September 30, 2025. This was primarily due to a recovery of insurance proceeds in the prior year related to the settlement of the Company's Consolidated Securities Action litigation (refer to Note 10 of the Consolidated Financial Statements in Part II, Item 8 of the Company's Annual Report on Form 10-K for Fiscal 2025) and higher restructuring charges under the 2025 restructuring plan as discussed above.

Operating loss in Corporate Other decreased by $250.1 million, or 39.4% during the six months ended September 30, 2025. This was primarily driven by higher net litigation expense in the prior year related to the settlement of the Company's Consolidated Securities Action litigation (refer to Note 10 of the Consolidated Financial Statements in Part II, Item 8 of the Company's Annual Report on Form 10-K for Fiscal 2025), partially offset by higher restructuring charges under the 2025 restructuring plan as discussed above.

LIQUIDITY AND CAPITAL RESOURCES

Our cash requirements have principally been for working capital and capital expenditures. We fund our working capital, primarily inventory, and capital investments from cash flows from operating activities, cash and cash equivalents on hand, and borrowings available under our credit and long-term debt facilities. Our working capital requirements generally reflect the seasonality in our business as we historically recognize the majority of our net revenues in the last two quarters of the calendar year. Our capital investments have generally included expanding our in-store fixture and branded concept shop program, improvements and expansion of our distribution and corporate facilities, including construction of our new global headquarters, leasehold improvements to our Brand and Factory House stores, and investment and improvements in information technology systems. Our inventory strategy is focused on continuing to meet consumer demand while improving our inventory efficiency over the long term by putting systems and processes in place to improve our inventory management. These systems and processes are designed to improve our forecasting and supply planning capabilities. In addition, we strive to enhance our inventory performance by focusing on adding discipline around product purchasing, reducing production lead time and improving planning and execution for selling excess inventory through our Factory House stores and other liquidation channels.

As of September 30, 2025, we had approximately $396 million of cash and cash equivalents. As described below, in June 2025, we issued $400 million in aggregate principal amount of Senior Notes due 2030 (as defined below) and, during August 2025, we used the net proceeds from this offering, together with borrowings under our amended credit agreement and cash on hand, to satisfy and discharge the Senior Notes due 2026 (as defined below). In connection with the satisfaction and discharge, we deposited with Wilmington Trust, National Association as trustee, all amounts necessary to satisfy and discharge our obligations under the Senior Notes due 2026 through maturity. We believe our cash and cash equivalents on hand, cash from operations, our ability to reduce our expenditures as needed, borrowings available to us under our amended credit agreement, our ability to access the capital markets, and other financing alternatives are adequate to meet our liquidity needs and capital expenditure requirements for at least the next twelve months. In addition, from time to time, based on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors and subject to compliance with applicable laws and regulations, we may seek to utilize cash on hand, borrowings or raise capital to retire, repurchase or redeem our debt securities, repay debt, repurchase shares of our common stock or otherwise enter into similar transactions to support our capital structure and business or utilize excess cash flow on a strategic basis. For example, as further described below, in May 2024, our Board of Directors authorized a share repurchase program pursuant to which we are authorized to repurchase a total of $500 million of our Class C Common Stock through May 2027. As of September 30, 2025, we have repurchased a total of $115 million Class C Common Stock under this program.

If there are unexpected material impacts to our business in future periods from significant global events, such as an economic recession or changes in global trade policy, that have a significant adverse effect on our profitability, including increased costs to create and sell our products, we may consider additional alternatives to preserve our liquidity. These alternatives may include further reducing our expenditures, changing our investment strategies, reducing compensation costs, and limiting certain marketing and capital expenditures. In addition, we may seek alternative sources of liquidity, including but not limited to, accessing capital markets, sale-leaseback transactions or other sales of assets or other alternative financing measures. However, instability in, or tightening of the capital markets, could adversely affect our ability to access the capital markets on terms acceptable to us or at all. Although we believe we have adequate sources of liquidity over the long term, a prolonged or more severe economic recession, inflationary pressure, or a slow recovery could adversely affect our business and liquidity and could require us to take certain of the liquidity preserving actions described above.

Our Annual Report on Form 10-K for Fiscal 2025 noted that a portion of our foreign earnings were no longer indefinitely reinvested. During the second quarter of Fiscal 2026, we continued to re-evaluate our assertion related to the reinvestment of our non-U.S. subsidiaries’ cumulative and current undistributed earnings and repatriated additional undistributed foreign earnings. As a result, approximately $650 million of additional current and prior foreign earnings, inclusive of a $250 million cash dividend repatriated in Fiscal 2026, are no longer indefinitely reinvested. The remainder of our prior and current year undistributed foreign earnings will continue to be indefinitely reinvested to fund international growth and operations. As the majority of such foreign earnings have been previously subject to U.S. federal tax, additional taxes including currency gains or losses, capital gains, foreign withholding taxes and U.S. state taxes are not expected to be material.

Refer to our "Risk Factors" section included in Part I, Item 1A of our Annual Report on Form 10-K for Fiscal 2025.

Share Repurchase Program

On May 15, 2024, our Board of Directors authorized us to repurchase up to $500 million (exclusive of fees and commissions) of outstanding shares of our Class C Common Stock through May 31, 2027. The Class C Common Stock may be repurchased from time to time at prevailing prices in the open market, through plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, via private purchases through forward, derivative, accelerated share repurchase transactions or otherwise, subject to applicable regulatory restrictions on volume, pricing and timing. The timing and amount of any repurchases will depend on market conditions, our financial condition, results of operations, liquidity and other factors.

During the three months ended September 30, 2025, under the above authorization, we repurchased $25 million of Class C Common Stock and received a total of 5.2 million shares, which were immediately retired. The shares of Class C Common Stock were repurchased in the open market at prevailing market prices under a plan designed to comply with Rule 10b5-1 and Rule 10b-18 under the Securities and Exchange Act of 1934, as amended, with the timing and actual number of shares repurchased depending upon market conditions and other factors. As a result, $25.0 million was recorded to retained earnings to reflect the difference between the market price of the Class C Common Stock repurchased and its par value. No shares were repurchased under the share repurchase program during the three months ended June 30, 2025.

During the six months ended September 30, 2024, under the above authorization, we repurchased $40 million of Class C Common Stock through accelerated share repurchase transactions and received a total of 5.9 million shares, which were immediately retired. As a result, $40.9 million was recorded to retained earnings to reflect the difference between the market price of the Class C Common Stock repurchased and its par value. No shares were repurchased under the share repurchase program during the three months ended September 30, 2024.

As of the date of this Quarterly Report on Form 10-Q, we repurchased a total of $115 million or 18.0 million outstanding shares of its Class C Common Stock, leaving approximately $385 million remaining under our current share repurchase program.

Cash Flows

The following table presents the major components of our cash flows provided by and used in operating, investing and financing activities for the periods presented:

Operating Activities

Cash flows used in operating activities decreased by $147.4 million, as compared to the six months ended September 30, 2024, primarily driven by an increase from changes in working capital of $16.2 million and an increase in net income before the impact of non-cash items of $131.2 million.

The changes in working capital were due to the following inflows:

• $77.7 million from changes in accrued expenses and other liabilities;
• $57.6 million from changes in inventories; and
• $39.5 million from changes in income taxes payable and receivable, net.

These inflows were partially offset by the following working capital outflows:

• $49.5 million from changes in prepaid expenses and other current assets;
• $46.7 million from changes in accounts receivable;
• $30.2 million from changes in other non-current assets;
• $16.5 million from changes in customer refund liabilities; and
• $15.7 million from changes in accounts payable.

Investing Activities

Cash flows used in investing activities increased by $614.3 million, as compared to the six months ended September 30, 2024. During the three months ended September 30, 2025, we deposited $601.2 million into a restricted investment in connection with the satisfaction and discharge of the Senior Notes due 2026 (as defined and discussed below). During the six months ended September 30, 2024, we collected a $50 million earn-out in connection with the sale of the MyFitnessPal platform.

Additionally, total capital expenditures during the six months ended September 30, 2025 were $55.9 million, or approximately 2% of net revenues, representing a $35.7 million decrease from $91.5 million during the six months ended September 30, 2024. Our long-term operating principle for capital expenditures is to spend between 2% and 4% of annual net revenues as we invest in our global direct-to-consumer and e-commerce businesses, information technology systems, distribution centers and our global offices.

Financing Activities

Cash flows provided by financing activities increased by $689.9 million, as compared to the six months ended September 30, 2024, primarily due to the issuance of $400 million of Senior Notes due 2030 (as defined below) and $200 million of borrowings under the revolving credit facility during the six months ended September 30, 2025. Additionally, during the six months ended September 30, 2024, we repaid the $80.9 million aggregate principal amount of the 1.50% Convertible Senior Notes due 2024 using cash on hand. We also repurchased $25 million of our Class C Common Stock during the six months ended September 30, 2025 as compared to $40 million repurchased during the six months ended September 30, 2024.

Capital Resources

Credit Facility

On March 8, 2019, we entered into an amended and restated credit agreement by and among us, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders and arrangers party thereto (the "credit agreement"). In July 2025, we entered into the eighth amendment to the credit agreement (the credit agreement as amended, the "amended credit agreement" or the "revolving credit facility"). The amended credit agreement provides for an aggregate $1.1 billion of revolving credit commitments that has a term that ends on June 16, 2030, with permitted extensions under certain circumstances and subject to a springing maturity of 91 days prior to June 16, 2030 if, on such date, the Senior Notes due 2030 (as defined below) have not been refinanced.

During the three months ended September 30, 2025, we borrowed $200.0 million under the revolving credit facility, to fund, in part, the satisfaction and discharge of the Senior Notes due 2026, as discussed below. As of September 30, 2025, there was a total of $200.0 million outstanding under the revolving credit facility. There were no amounts outstanding under the revolving credit facility as of March 31, 2025.

At our request and a lender's consent, commitments under the amended credit agreement may be increased by up to an amount equal to (x) the greater of (i) $400.0 million and (ii) 100% of consolidated EBITDA plus (y) an unlimited amount so long as, after giving effect to the relevant increase, the secured leverage ratio (calculated as set forth in the amended credit agreement) does not exceed 2.5 to 1.00 in aggregate, subject to certain conditions as set forth in the amended credit agreement. Incremental borrowings are uncommitted and the availability thereof will depend on market conditions at the time we seek to incur such borrowings.

Up to $50.0 million of the facility may be used for the issuance of letters of credit. As of September 30, 2025, $45.6 million of letters of credit were outstanding (March 31, 2025: $45.7 million).

Our obligations under the amended credit agreement are guaranteed by certain domestic significant subsidiaries of Under Armour, Inc., subject to customary exceptions (the "subsidiary guarantors") and primarily secured by a first-priority security interest in substantially all of the assets of Under Armour, Inc. and the subsidiary guarantors, excluding real property, capital stock in and debt of subsidiaries of Under Armour, Inc. holding certain real property and other customary exceptions. The amended credit agreement provides for the permanent fall away of guarantees and collateral upon our achievement of investment grade rating from two rating agencies.

The amended credit agreement contains negative covenants that, subject to significant exceptions, limit our ability to, among other things: incur additional secured and unsecured indebtedness; pledge the assets as security; make investments, loans, advances, guarantees and acquisitions (including investments in and loans to non-guarantor subsidiaries); undergo fundamental changes; sell assets outside the ordinary course of business; enter into transactions with affiliates; and make restricted payments.

We are also required to maintain a ratio of consolidated EBITDA, to consolidated interest expense of not less than 3.50 to 1.0 (the "interest coverage covenant") and we are not permitted to allow the ratio of consolidated total indebtedness to consolidated EBITDA to be greater than 3.25 to 1.0, or, at our election during a fiscal quarter in which a permitted acquisition with a cash purchase price exceeding $100,000,000 is consummated, 3.75 to 1.00 (the "leverage covenant"), as described in more detail in the amended credit agreement. In July 2025, we entered into the eighth amendment to the credit agreement to exclude from the definition of indebtedness any indebtedness that has been defeased, satisfied and discharged and/or redeemed and to adjust the amount of interest expense included in the interest coverage covenant to exclude interest accruing on defeased debt. As such, the Senior Notes due 2026, including related interest, have been excluded. As of September 30, 2025, we were in compliance with the applicable covenants.

In addition, the amended credit agreement contains events of default that are customary for a facility of this nature, and includes a cross default provision whereby an event of default under other material indebtedness, as defined in the amended credit agreement, will be considered an event of default under the amended credit agreement.

Borrowings under the amended credit agreement bear interest at a rate per annum equal to, at our option, either (a) an alternate base rate (for borrowings in U.S. dollars), (b) a term rate (for borrowings in U.S. dollars, Euro or Japanese Yen) or (c) a "risk free" rate (for borrowings in U.S. dollars or Pounds Sterling), plus in each case an applicable margin. The applicable margin for loans will be adjusted by reference to a grid (the "pricing grid") based on the leverage ratio of consolidated total indebtedness to consolidated EBITDA and ranges between 1.00% to 1.75% (or, in the case of alternate base loans 0.00% to 0.75%). We will also pay a commitment fee determined in accordance with the pricing grid on the average daily unused amount of the revolving credit facility and certain fees with respect to letters of credit. As of September 30, 2025, the commitment fee was 17.5 basis points.

3.25% Senior Notes

In June 2016, we issued $600.0 million in aggregate principal amount of 3.25% senior unsecured notes due June 15, 2026 (the "Senior Notes due 2026"). The Senior Notes due 2026 bear interest at a fixed rate of 3.25% per annum, payable semi-annually on June 15 and December 15 beginning on December 15, 2016.

On August 18, 2025, using the net proceeds from the Senior Notes due 2030 (as defined below), together with borrowings under the amended credit agreement and cash on hand, we satisfied and discharged the Senior Notes due 2026 by irrevocably depositing funds in an amount sufficient to satisfy all remaining principal and interest payments. These funds were deposited with Wilmington Trust, National Association as trustee under the indenture dated as of June 13, 2016, as supplemented by First Supplemental Indenture dated as of June 13, 2016 (the "Indenture"). As a result of the satisfaction and discharge, we were released from the remaining obligations under the Senior Notes due 2026 and the Indenture, except those obligations in the Indenture that expressly survive the satisfaction and discharge.

Holders of the Senior Notes due 2026 will receive payment of principal on the scheduled maturity date and payment of interest at the per annum rate on the dates set forth in the Indenture. Accordingly, the satisfaction and discharge represents an in-substance defeasance (as defined under ASC Topic 405 "Liabilities"). Therefore, the Senior Notes due 2026 remain on our Condensed Consolidated Balance Sheets as of September 30, 2025 and will continue to accrete to their par value over the period until maturity in June 2026. Additionally, the related trust assets are included in Restricted investments on our Condensed Consolidated Balance Sheets as of September 30, 2025.

7.25% Senior Notes

On June 23, 2025, we issued $400.0 million in aggregate principal amount of 7.25% senior unsecured notes due July 15, 2030 (the "Senior Notes due 2030"). The Senior Notes due 2030 are guaranteed on a senior unsecured basis by our subsidiary guarantors that provide guarantees under the amended credit agreement. The Senior Notes due 2030 bear interest at a fixed rate of 7.25% per annum, payable semi-annually in arrears on January 15 and July 15 beginning on January 15, 2026. We may redeem some or all of the Senior Notes due 2030 at any time, or from time to time, at the redemption prices described in the indenture governing the Senior Notes due 2030.

The indenture governing the Senior Notes due 2030 contains negative covenants that limit us and certain of our subsidiaries' ability to engage in certain transactions and are subject to material exceptions described in the indenture governing the Senior Notes due 2030.

CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS

Our Condensed Consolidated Financial Statements have been prepared in accordance with U.S. GAAP. To prepare these financial statements, we must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosures of contingent assets and liabilities. Our estimates are often based on complex judgments, probabilities and assumptions that management believes to be reasonable, but that are inherently uncertain and unpredictable. It is also possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts. Actual results could be significantly different from these estimates.

Refer to Note 2 of our Consolidated Financial Statements, included in Part II, Item 8 of our Annual Report on Form 10-K for Fiscal 2025, for a summary of our significant accounting policies and our assessment of recently issued accounting standards.

There have been no significant changes to our market risk since March 31, 2025. For a discussion of our exposure to market risk, refer to Part II, Item 7A of our Annual Report on Form 10-K for Fiscal 2025.

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2025. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective, due to the material weakness in our internal control over financial reporting described below.

Material Weakness in Internal Control Over Financial Reporting

As previously reported in the Company's Annual Report on Form 10-K for Fiscal 2025, we identified a material weakness in our internal control over financial reporting, as we did not design and maintain effective controls over the review and execution of certain balance sheet account reconciliations. Although this material weakness did not result in a material misstatement of our consolidated financial statements, it resulted in immaterial errors in our consolidated interim and annual financial statements for Fiscal 2025, our fiscal year beginning on April 1, 2023 and ended March 31, 2024 ("Fiscal 2024"), our fiscal year beginning on April 1, 2022 and ended March 31, 2023 ("Fiscal 2023"), the period beginning January 1, 2022 and ended March 31, 2022 ("Transition Period") and our fiscal year beginning on January 1, 2021 and ended December 31, 2021 ("Fiscal 2021"). Additionally, until we remediate this material weakness, it could result in material misstatements to our interim or annual consolidated financial statements that would not be prevented or detected on a timely basis.

Remediation Efforts and Status of Remaining Material Weakness

During the quarter ended September 30, 2025, with the oversight of the Audit Committee of the Board of Directors, management has been executing on and remains committed to implementing measures designed to ensure that the control deficiencies that contributed to the material weakness are remediated. As it specifically relates to actions taken during the quarter ended September 30, 2025, we implemented changes in governance and oversight, as well as developed and implemented controls as part of our second quarter close process and will continue to enhance or modify these controls in future periods if needed. Although our remediation measures are ongoing, we believe the actions taken during the second quarter, as well as the cumulative actions taken to date, described below, will contribute towards the remediation of the previously identified material weakness:

• We prepared a remediation plan for the material weakness and performed training with process owners to improve documentation that supports effective control activities, including evidence of the completeness and accuracy of information produced by the entity;
• We developed and deployed a new global balance sheet account reconciliation policy and approval process, which provides additional oversight, monitoring and account reconciliation governance;
• We have redesigned and implemented new controls that evaluate process adoption and monitor results; and
• We engaged third party consultants to advise management in connection with the remediation of the material weakness.

While our remediation efforts are expected to continue throughout Fiscal 2026, we believe the measures described above will contribute toward the remediation of the control deficiencies we have identified and strengthen our internal control over financial reporting. We are committed to improving our internal control over financial reporting and will continue to review, optimize and enhance our controls and procedures. As we evaluate and work to improve our internal control over financial reporting, we may take additional measures to address control deficiencies, or we may modify certain remediation measures described above. This material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls operate effectively. We expect that the material weakness will be remediated by the end of Fiscal 2026.

Changes in Internal Control Over Financial Reporting

As described above, there were changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our results of operations and financial condition could be adversely affected by numerous risks. In addition to the other information in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for Fiscal 2025. These are not the only risks and uncertainties facing us. Additional risks not currently known to us or that we currently believe are immaterial may also negatively impact our business, financial condition, results of operations and future prospects.