Ua equity report

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Recommendation

BUY

Corporate Summary Under Armour designs, distributes and markets its brand of performance apparel, footwear and accessories. Headquartered in Baltimore, Maryland, Under Armour offers unique and high quality products geared towards men, woman and youth. The firm operates in the clothing and apparel sector. Its two main competitors are Nike (NKE) and Adidas (ADDYY).

Key Statistics

Sector: Consumer Discretionary Industry: Athletic Apparel / Footwear Market Cap: $14.92 B Current P/E: Fwd. P/E:

85.7 57

P/S: EV / EBITDA:

5.17 39.6

Beta:

.92

ROA: ROE:

11.3% 16.6%

Prices as of: 1/28/15

Investment Thesis Major opportunity for international expansion. Sales from overseas currently account for ~8% of total revenue. International sales saw over 50% growth this year to over $200 million ($3 million in total revenue ‘14E). Under Armour will continue to establish brand recognition globally in Asia, EMEA and the Middle East.

In the long-term international sales have the potential to account for close to half of total revenues.

Ability to establish brand loyalty by targeting consumers at a young age. Under Armour penetrated the sports and youth markets first before expanding to Men and Women’s apparel. The firm’s strong foothold in the youth market will continue to benefit Under Armour by establishing brand loyalty for their products. Furthermore, contracts with high school athletics will further install brand loyalty in young consumers. These consumers along with the ability to continue to expand and make innovative clothing and footwear will enable Under Armour to become the next Nike.

Capturing market share from Nike and Adidas as it grows into the leading athletic brand. Nike and Adidas account for ~$45 billion of the revenue in this sector. However, there is little room left for them to grow and their products are losing appeal to Under Armour’s new style and innovative designs and technology. Successful investments in athletes and universities will increase brand popularity and demand. Under Armour has grown into a company that generates enough revenue and cash flow to endorse athletes and universities, which will increase public awareness. Youth athletes always want to mimic their favorite professionals down to the gloves and shoes they wear on game-day. Consumers want to buy the brand of the shoe that Steph Curry wears during a game or the gloves Cam Newton has on while he is throwing touchdown passes. The success of Under Armour endorsees will continue to increase brand recognition and install loyalty and a recurring revenue stream.

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

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Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Product Offerings Apparel

Apparel is Under Amour’s strongest segment and the most competitive product. Different from traditional sports’ clothing, Under Armour’s apparel is intended to enhance comfort and mobility, regulate body temperature and improve performance regardless of weather conditions. The apparel product has three gear-lines. HEATGEAR is designed to wick moisture and perspiration in warm to hot temperatures and keep the wearer dry. COLDGEAR helps the body to keep dry and warm with a single light layer. ALLSEASONGEAR can work in between extreme temperatures and keep the wearer comfortable in both warm and cool temperatures. Each gear-line comes in three primary fit types: compression, fitted, and loose.

Footwear

Under Armour’s footwear is light, breathable and built with performance attributes for athletes. By integrating innovative technologies in the footwear design, Under Armour’s products will maximize the athlete’s comfort and control. The Highlight Cleat (pictured right in black/white) was the #1 selling football cleat and 6th highest sold shoe overall during the fall.

Footwear will be a huge growth driver for Under Armour. The first 10 years of their business has been focused on establishing a brand and a strong apparel segment. In the last 5 years the firm has seen robust growth from this segment and there is plenty of market share for the company to capture with numerous low quality footwear brands saturating the market

Impact of College Partnerships

College football partnerships are one of the most lucrative sports deals for athletic apparel firms, with the right schools of course.

Getting the nations’ best teams to represent the Under Armour brand will be huge going forward. The pictures to the right are the firm’s new uniform designs for the University of Maryland and Northwestern University. These partnerships create brand awareness among younger athletes with aspirations of playing college football. These athletes want to wear the most stylish uniforms when they play.

Under Armour can create brand desire among these young athletes with innovative and creative uniforms. The more young athletes that want to play for a school represented by Under Armour, the more universities will sign with the company. This trend will continually increase as Under Armour’s sales grow. We expect the company to gain contracts with many schools in the Power 5 conferences. This exposure will drive revenue, spur innovation and create a strong brand image because of the extensive market college football reaches.

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

2

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Segment Analysis

80,000 60,000 40,000 20,000 -­‐

This growth will be spurred by collegiate apparel sales, international expansion and innovative products.

2011

2012

2013

2014E 2015E Year

2016E

2017E

2018E

2016E

2017E

2018E

2016E

2017E

2018E

Apparel

Footwear Units Sold

12,000

8,000 Units Sold

This segment will see the highest growth in the investment time horizon of 3-5 years. The average Under Armour shoe costs $100. From 2011 to 2013 the company nearly doubled its units sold in footwear. In the next four years we expect units sold to continue that uptake and increase to over 11,000 units sold, over $800 million in sales.

Apparel Units Sold

100,000

Units Sold

Apparel has dominated sales for Under Armour and spurred growth historically. While we do not expect the uptrend to change, growth will be slower than historically as the firm continues to establish an even greater presence in this market.

The average apparel product costs roughly $50 to purchase. In 2011 the company sold around 20,000 units; by 2013 this segment sold 35,000 units. In 2018 Under Armour will sell 90,000 units, $4.7 million in sales.

4,000

The main key to continue this uptake is to make innovative footwear that is better in both functionality and style than its peers. Furthermore, penetration into the athletic footwear market will drive recurring revenues.

Growth will be driven by unique and stylish accessories to complement their apparel and footwear lines.

2011

2012

2013

2014E 2015E Year

Footwear

Accessories Units Sold

40,000

30,000 Units Sold

Under Armour’s accessories include a multitude of products, ranging from football gloves to basketball socks. This segment has grown with sales in its core segments. Under Armour will sell over 30,000 units by 2018, a little over $500 million in sales. To calculate units sold, an average cost of accessories sold was taken, which equaled $15 (products in this segment range from $5 - $50).

-­‐

20,000

10,000

-­‐

2011

2012

2013

2014E 2015E Year

Accessories

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

3

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Growth Catalysts Product Innovation

Apparel

Under Armour’s product innovation fuels growth. The aesthetic and technical design, coupled with efficient operations, will continue to increase brand loyalty, drive revenue and keep gross margin consistent. Some of the company’s trademarked technologies are: cold/heat gear, UAStorm, ArmourBra and ArmourVent. Growth in apparel will be driven by Under Armour’s ability to penetrate all markets. The firm’s established products within the Men’s segment has been strong since the beginning. The future will be driven by increased revenue from Women’s and youth performance clothing, international sales and direct-to-consumer sales. The “I Will” Campaign has gained huge appeal from women and Under Armour is focused on growing more appeal among women.

Footwear

Under Armour saw its highest growth from its footwear segment this year. This trend is expected to continue as the firm focuses on penetrating this market. Currently footwear accounts for ~13% of total sales. With the breadth of footwear that Under Armour offers consumers, it has the potential to account for ~18% of sales by 2018 as they take sales from lower quality shoe brands like Skechers, New Balance and Reebok. SpeedForm technology footwear saw a high volume of sales last football season. Next year Under Armour is ramping up production and coming out with the SpeedForm Gemini (retail $130) and the SpeedForm Vent (retail $100). Another growth driver for this segment is the is the ClutchFit Drive (retail $130) that Steph Curry wore during the Olympics.

Ray Lewis (below), a future hall of famer; was one of the first athletes to be sponsored by Under Armour.

Direct-To-Consumer Sales

Under Armour has lowered its exposure to the sustainability of sporting goods stores by increasing its direct-to-consumer sales. It now accounts for ~30% of sales, whereas the sporting goods stores Dick’s and The Sports Authority account for 22%. Furthermore, Under Armour strategically positions its specialty retail stores in only high income areas where their buildings can freely represent the brand and image properly.

Map My Fitness

Under Armour made this acquisition in December 2013, which facilitates innovation in the brand.

Map-My-Fitness is one of the leading connected fitness platforms with over 22 million registered users. Since being acquired by Under Armour this platform gained 8 million additional users. Staying aware of the newest trends in the athletic apparel industry is essential to growth and brand recognition. A competent management will recognize the trends to take advantage of and the trends that are a fad and a waste of resources.

Brand Loyalty

Strategic Partnerships

When Nike was a young company, it gained recognition with strategic partnerships with well recognized athletes like Michael Jordan. Under Armour has been implementing the same strategy with athletes such as Steph Curry (NBA) and Cam Newton (NFL) as well as with universities such as Notre Dame, U.S. Naval Academy and St. John’s. These partnerships help the athletes perform better and generate more sales for Under Armour.

Under Armour apparel being worn by Jamie Foxx while having a conversation with Al Pacino in ‘Any Given Sunday’. This marked the first time Under Armour products were featured in a movie.

Youths

The second key to establishing brand loyalty in the performance apparel industry is to attract consumers at a young age. This will create an emotional attachment and belief in the Under Armour brand and products. Under Armour’s youth products are all uniquely designed and utilize their partnerships with star athletes to create products that youths desire and want to wear while they are doing any activity.

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

4

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Growth Catalysts International Expansion

With a strong domestic footprint, the firm is now focusing on growing its international presence. The firm is working hard to ramp up sales in mainly Europe and China first and foremost. Top management’s strategy is to attract the best people in the athletic apparel industry to assist in growing Under Armour globally.

They are stealing away top and middle executives that have worked for years with Nike or Adidas and other firms. This experience brings strong knowledge and understanding of the fundamentals of growing a brand globally. Furthermore, it is an accomplishment in itself that Under Armour is able to attract these prestigious talents.

Europe

Under Armour began its Europe segment back in 2006. The firm initially faced challenges reaching scale. The firm then realigned upper management.

Since those difficulties, operations have been more efficient and the firm amassed over $100 million in sales this year. Chris Bate is now in full control of Europe operations. He has 20+ Years of experience working for Nike’s international division (15 years) and Puma’s (8 years). His experience in understanding how to globally position an athletic apparel brand will provide Under Armour with a strong international strategy to increase sales.

China / Hong Kong

Under Armour has begun the process of establishing the firm’s culture and brand in China and Hong Kong. Sales have been strong in this region and aid the high growth in international sales this year.

Furthermore, the China branch will be aided by Erick Haskell, who worked for ~5 years for Adidas growing its China branch.

Under Armour has a smaller presence in China than in Europe as the graphs above and below show. The Hong Kong / China region will bring strong sales numbers to the firm in the coming years.

Under Armour is seeing robust growth internationally as foreigners flock to the new and innovative apparel from Under Armour over the stale Nike and Adidas.

Furthermore, the firm can increase its footprint in soccer. The firm recently landed a partnership with the Tottenham Hotspurs, an international football team. This is an area where the firm will see strong future growth. The top dog in the soccer apparel market is Adidas. Under Armour will be able to steal market share from Adidas as it increases its international footprint in soccer.

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

5

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Risks & Mitigants Economic Downturn in the economy would decrease consumer purchases of discretionary items, which could hurt Under Armour’s earning potential. In economic downturns consumer purchases of discretionary items decreases. However, out of all discretionary items athletic apparel is becoming a necessity among the millennial and youths for their sporting activities. Footwear can also be considered as a necessary purchase as shoes need to be replaced after one year because of wear-and-tear.

A loss of one or more key customers could adversely affect growth strategy. Last year roughly 22% of sales stemmed from sales to distributors, the two biggest customers were The Sports Authority and Dick’s Sporting Goods. Since the firm does not engage in long-term sales contracts they rely on the relationships with these customers and their position in the marketplace. We do not see this happening in the foreseeable future as Under Armour has established itself as the next big brand in athletic apparel.

Furthermore, these two stores will not refuse to stock Under Armour gear as they continue to see high sales numbers for the companies.

Rapid growth that Under Armour will see in the future will lead to operating deficiencies. All growth companies deal with this situation. The firm outgrows its manufacturing capacity and is unable to meet demand. This will be offset by a competent upper management as well as one of the best CEO’s in retail, Kevin Plank (owner and founder of Under Armour). Management has continually proven to meet expectations and has a solid plan and vision for where Under Armour will be in the future. The high expectations management has for the firm will enable the firm to be well prepared to handle high demand and increase inventory as necessary.

The large size and abundance of resources of Nike and Adidas could be difficult for Under Armour to compete with. The performance apparel, footwear and accessories market is highly competitive. The firm not only faces competition from the two major players, but also from small private apparel companies, outdoor apparel firms, which could make it more difficult for Under Armour to gain a greater presence in retail stores. As the firm grows, so will its brand recognition and consumer preference. As consumers prefer the Under Armour brand over other companies’ product lines, retailers will have to stock more the firm products to meet increasing demand.

1 of 80 Under Armour retail stores.

Each storefront is designed with the same innovation and style that the firm puts into its apparel and footwear. This creates a powerful brand and installs brand loyalty among its consumers by offering a one-of-a-kind shopping experience.

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

6

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Competitive Analysis Nike is a mature company with a wide range of product lines from clothing to footwear.

It has the largest market share in the performance industry. Nike dominated the athletic apparel industry in the 90’s and early 2000’s. Part of this was driven by its long standing partnership with Michael Jordan (Jordan footwear still leads its footwear sales). But Michael Jordan has long been retired and a second Jordan is not likely to happen or be as beneficial for the firm. Nike is the brand of the last generation; the next sports apparel brand in this market is Under Armour. Their fresh products and innovation will spur future domestic and international growth.

Adidas has grown into the second leading apparel and footwear industry. Its biggest source of revenue stems from their partnerships with soccer and established brands overseas. However, the firm struggles to grow its presence in North America as Under Armour and Nike dominate domestic sales. Furthermore, the acquisition and integration of the Reebok brand will have a negative impact on sales and bottom line growth.

Reebok is a dying brand and future consumers will prefer the more stylish designs of Under Armour’s products over Adidas products.

Year Over Year Growth (%)

Revenue Growth vs Compe7tors 60% 40% 20% 0% -­‐20% 2006

2007

Nike

2008

2009

2010 Year

UA

2011

2012

2013

2014

ADDY

As Nike & Adidas have grown into mega firms, their retail stores are not as eye catching as the fresh new look Under Armour brings.

Under Armour’s competitive advantage over Nike and Adidas lies in its concentration on high quality shirts that wick the perspiration off the skin and work with the athlete’s body to regulate temperature and enhance performance.

While Nike and Adidas are mature internationally recognized brands, Under Armour, focusing on the U.S., has the growth potential to further penetrate the domestic and international market. A comparison of Under Armour’s revenue growth vs its peers since 2006 is on the left and shows how Under Armour has far exceeded its peers in year-over-year growth.

A preview of the future: The firm plans to strategically grow its store count over the next 3 years, all uniquely designed like the one depicted above.

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

7

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Macro Economic Outlook Consumer Confidence Year-­‐over-­‐Year Change 40% Percent Chane (y-­‐o-­‐y)

With the exception of 2011 and 2012 Merchant Wholesale trade has been closely tied to consumer confidence. Consumer confidence will increase in the short-term because oil prices will remain low. This may not correlate to increased spending as recent data has shown more consumers are not spending the extra pennies they are saving at the pump. Current deflation as a result of a weaker global economy has also improved sentiment and apparel sales.

20% 0% -­‐20% -­‐40% 2004

2005

CPI

2006

2007

2008

2009 Year

2010

Merchant Wholesalers: Apparel Sales

2011

2012

2013

2014

Consumer SenDment

The graph to the right shows the relationship among Under Armour, Nike and Adidas and retail trade (clothing & accessories) and merchant wholesalers (apparel & goods sales). During economic downturns consumers are more willing to buy Nike than Under Armour. This shows that Under Armour is more expensive with greater future pricing power.

The picture on the right is a prototype helmet and footwear design.

These innovative and flashy designs help the firm gain contracts and distribution rights for universities such as Maryland, Notre Dame, South Carolina and South Florida.

Disposable Personal Income Year-­‐over-­‐Year Change 60% Percent Change (y-­‐o-­‐y)

Under Armour sales are benefiting from an increase in consumers’ disposable income. Nike sales have seen higher growth during times when consumers have less income to spend. This shows Under Armour’s pricing power compared to its peers. During times when disposable income is high, more consumers spend more of their money on Under Armour products. This trend will continue and is another measure that indicates the potential of the firm’s ability to overtake Nike as the leading apparel brand in the long-term.

40% 20% 0% -­‐20% 2006

2007

ADDYY

2008

UA

2009

2010 Year

NKE

2011

2012

2013

2014

Disposable Personal Income

To the right are the Under Armour uniforms featured in the High-School All American Game. This features some of the top prospects entering college football the next year. This exposure is key to gaining a larger presence in college football.

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

8

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Brand Recognition A key driver for the future success and dominance of Under Armour in the athletic apparel and footwear market is to establish brand recognition and loyalty with consumers. The firm is involved with numerous partnerships to establish Under Armour as a well recognized brand.

However, the firm does not focus on the athlete as the centerpiece. Instead Under Armour creates its own image of its brand and uses the athletes as facilitators, essentially models to wear and show off the brand’s new and innovative products.

The picture to the right is of “The Rock” wearing an Under Armour HeatGear T-shirt in the movie ‘Fast and Furious 6.’ The shirt is specially designed to keep the body cool during intense heat.

Dick’s Sporting Goods store is a major distributor of Under Armour and accounts for over 10% of revenue annually. The picture to the left is management’s plan for strategic growth for Dick’s. One of the key brands that will boost future revenue is Under Armour. Nike, Adidas, New Balance and Reebok are not on Dick’s plan to grow out revenue. This supports the thesis that Nike & Adidas products are growing stale among consumers.

These consumers are now purchasing Under Armour gear over the two conglomerates.

Many consumers do not buy a brand’s clothes simply because a certain athlete is endorsed by that firm. However, among youths and younger ages, one athlete’s product line can be a very lucrative revenue stream for the brand.

Nike has a special segment just for the Jordan product line. Now Under Armour has its own group of young talented superstars who will represent the brand for many years and attract consumers of all ages. Steph Curry (pictured to the right) is a young point guard for the Golden State Warriors and could potentially win the MVP award this year. This would be a major win for Under Armour especially since the runner up would likely be LeBron James (a Nike sponsored player).

The firm also sponsors Bryce Harper, an MLB Outfielder for the Washington Nationals, and the quarterback for the Carolina Panthers, Cam Newton, among other athletes in a variety of sports.

In addition to partnerships with individual athletes, Under Armour partners with other firms or schools. The firm has a strong presence in college football athletics, partnering with Notre Dame, Auburn, South Carolina and Maryland. The firm has recently made a bid for a partnership with the University of Miami, which would be a major win for the company.

The partnerships with these athletes and their successful careers and relationships with Under Armour will establish strong brand loyalty and enable Under Armour to continue to steal market share.

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

9

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Valuation - Intrinsic Value

Free Cash Flows to Equity Model

EPS Deprc / Sh Cap Ex / Sh NWC / Sh FCFE PV of FCFE Intrinsic Value Price % to fair value

2014 2015 2016 2017 2018 Term Val $0.94 $1.21 $1.44 $1.72 $2.05 $105.86 $0.31 $0.37 $0.44 $0.53 $0.63 (0.58) (0.69) (0.80) (0.88) (0.96) (0.19) (0.44) (0.80) (0.68) (0.70) $0.48 $0.45 $0.29 $0.69 $1.02 $0.48 $0.42 $0.25 $0.55 $78.56 $80.26 Discount Rate 71.96 shares out 11.5% 213,700 Beta 1 MRP 6.17% 10 Yr (RFR) 1.83% CAPM 8.00%

To find the value of Under Armour today, a Free Cash Flow to Equity Model was conducted. Future cash flows will be driven by robust revenue growth and the firm’s ability to hold operating margin at 11%. This model yields an intrinsic value of $80. At its current price the firm is 12% undervalued. Using the Capital Asset Pricing Model a discount rate of 8% was used. Under Armour’s 36-month historical beta was .15, where as its 12-month was .92. We project Under Armour to have a beta of 1 going forward.

A sensitivity analysis was also applied to the Terminal Value and Discount Rate of the FCFE model. The bull case shows that the company is 16% undervalued [$83]; while the bear case implies the stock is 7% undervalued.

Terminal Value

$93.86 $97.86 $101.86 $105.86 $109.86 $113.86 $117.86

% to intrinsic value

Free Cash Flow to Equity Model Sensitivity Analysis Discount Rate 10.1% 9.4% 8.7% 8.0% 8.7% $66.22 $67.90 $69.64 $71.44 $69.64 $68.94 $70.69 $72.51 $74.38 $72.51 $71.66 $73.49 $75.37 $77.32 $75.37 $74.38 $76.28 $78.24 $80.26 $78.24 $77.11 $79.07 $81.10 $83.20 $81.10 $79.83 $81.86 $83.97 $86.14 $83.97 $82.55 $84.66 $86.83 $89.08 $86.83 base bull bear 7.4% 11.5% 15.6%

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

9.4% $67.90 $70.69 $73.49 $76.28 $79.07 $81.86 $84.66

10.1% $66.22 $68.94 $71.66 $74.38 $77.11 $79.83 $82.55

10

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Valuation - Price Target - P/E Model To establish a price target for 2018 multiple valuation methods were used to arrive at a consensus value.

The chart to the right shows the historical Price / Earnings Multiple for the last 10 years. In the investment time horizon the firm’s P/E will contract to its historical average of 50 times earnings.

Under Armour will continue to trade at a premium compared to its peers. This is for good reason though.

The firm is seeing superior growth and will continue to earn high double digit growth, which is why in 2018 the multiple will still trade above Nike or the industry average (currently trades 25 times earnings).

In the base case scenario, the P/E contraction model, on the right, yielded an annual return of 10% and a $104 price target in 2018.

A sensitivity analysis was also conducted to reflect what the firm’s price target could be at different multiples for the year 2018. The bear case assumes the P/E contracts to 45 as Under Armour only earns an EPS of $1.95; a 7% annualized return. The bull case assumes that Under Armour sees over 20% top-line growth every year to yield an annualized return of 24%. The base case yields an annual return of 13%.

43 45 Price / 48 Earnings Multiple 50 53 55 58 Expected Return Total Return Annualized Return

Price -­‐ Earnings Contraction Model 2014 2015 2016 2017 2018 EPS $0.94 $1.21 $1.44 $1.72 $2.05 P/E 76.5 65.0 59.8 55.0 50.6 Stock Price $71.96 $78.44 $86.12 $94.57 $103.89 Exp Ret 9.0% 9.8% 9.8% 9.9%

P/E 2018 Price Target Sensitivity Analysis EPS 1.90 1.95 2.00 2.05 2.10 81 83 85 87 89 86 88 90 92 95 90 93 95 97 100 95 98 100 103 105 100 102 105 108 110 105 107 110 113 116 109 112 115 118 121 base bull bear 22.0% 42.6% 95.9% 6.8% 12.41% 24.8%

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

2.15 91 97 102 108 113 118 124

2.20 94 99 105 110 116 121 127

11

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Valuation - Price Target - EV/EBITDA Model

Revenue by Segment Apparel growth Footwear growth Accessories growth Licensing / Other Rev growth Total Revenue growth Operating Income margin Depreciation EBITDA EV / EBITDA Multiple Enterprise Value less: debt plus: cash Market Cap Shares Out Equity Value / Share

2014 base

Enterprise Value -­‐ EBITDA Multiple Analysis 2016 bear base bull

bear

2015 base

bull

2,290,795

30.0% 421,343 41.0% 278,766 29.0% 81,367 48.0% 3,072,272

31.7% 337950 11.0% 66,594 404,544

2,634,414

15.0% 484,545 15.0% 320,581 15.0% 84,622 4.00% 3,524,163

14.7% 370037 10.5% 79648 449,685

2,748,954

20.0% 505,612 20.0% 334,520 20.0% 85,436 5.0% 3,674,521

19.6% 404197 11.0% 79648 483,845

2,863,494

25.0% 526,679 25.0% 348,458 25.0% 86,249 6.00% 3,824,880

24.5% 439861 11.5% 79648 519,509

3,161,297

15.0% 581,454 15.0% 367,972 10.0% 88,853 4.00% 4,199,576

14.3% 440955 10.5% 94937 535,893

3,298,745

20.0% 606,734 20.0% 384,698 15.0% 89,708 5.0% 4,379,884

19.2% 481787 11.0% 94937 576,725

38

33.0

35.0

37.0

31.0

33.0

bear

2017 base

bull

bear

2018 base

bull

3,436,193

25.0% 632,015 25.0% 401,424 20.0% 90,562 6.00% 4,560,193

24.1% 524422 11.5% 94937 619,360

3,793,557

15.0% 697,744 15.0% 423,167 10.0% 93,296 4.00% 5,007,764

14.3% 525815 10.5% 113216 639,031

3,958,494

20.0% 728,081 20.0% 442,402 15.0% 94,193 5.0% 5,223,170

19.3% 574549 11.0% 113216 687,765

4,123,431

25.0% 758,418 25.0% 461,637 20.0% 95,090 6.00% 5,438,576

24.2% 625436 11.5% 113216 738,652

4,552,268

15.0% 837,293 15.0% 486,643 10.0% 97,961 4.00% 5,974,164

14.4% 627287 10.5% 135074 762,361

4,750,193

20.0% 873,697 20.0% 508,763 15.0% 98,903 5.0% 6,231,555

19.3% 685471 11.0% 135074 820,545

4,948,117

25.0% 910,101 25.0% 530,883 20.0% 99,845 6.00% 6,488,946

24.2% 746229 11.5% 135074 881,303

35.0

29.0

31

33.0

28.0

30

32.0

15,372,664 14,839,610 16,934,590 19,221,845 16,612,677 19,031,913 21,677,584 18,531,913 21,320,714 24,375,532 21,346,108 24,616,345 28,201,681 192 192 192 192 192 192 192 192 192 192 192 192 192 458 548 548 548 653 653 653 778 778 778 929 929 929 15,372,930 14,839,966 16,934,946 19,222,201 16,613,138 19,032,374 21,678,045 18,532,500 21,321,300 24,376,119 21,346,845 24,617,081 28,202,418 213,700

213,700

213,700

213,700

213,700

213,700

213,700

213,700

213,700

213,700

213,700

213,700

213,700

$71.94

$69.44

$79.25

$89.95

$77.74

$89.06

$101.44

$86.72

$99.77

$114.07

$99.89

$115.19

$131.97

An Enterprise Value / EBITDA Model was also conducted to help obtain a target price for the firm. Under Armour currently trades at an EV/EBITDA Multiple well above the industry average. The 10 year historical average for the EV / EBITDA multiple is 30 times. We contracted the multiple over the investment horizon as the stock will deviate to the average multiple. At 30 times EBITDA, Under Armour will have a market cap of over $24 billion and an equity value per share of $115.

A sensitivity analysis was performed to determine the various prices Under Armour could be worth at different multiples. A bear case assumes an economic downturn or loss of a key customer and partnerships; which yields an annualized return of 8%. The bull case assumes robust international and women’s apparel sales as well as dominating footwear sales. This scenario yields an annualized return of 25%.

23 25 EV / 28 EBITDA Multiple 30 33 35 38 Expected Return Total Return Annualized Return

EV / EBITDA Multiple Price Target 2018 Analysis EBITDA 760,545 780,545 800,545 820,545 840,545 80 82 84 86 89 89 91 94 96 98 98 100 103 106 108 107 110 112 115 118 116 119 122 125 128 125 128 131 134 138 133 137 140 144 148 base bull bear 27% 60% 96% 8% 17% 25%

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

860,545 91 101 111 121 131 141 151

880,545 93 103 113 124 134 144 155

12

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Valuation - Price Target - Price / Sales Model Price / Sales -­‐ Segment Analysis Revenue by Segment Apparel

growth

Rev / Sh P/S Multp Price Footwear

growth

Rev / Sh P/S Multp Price Accessories

growth

Rev / Sh P/S Multp Price Licensing / Other Rev growth Rev / Sh P/S Multp Price Total Revenue growth Rev / Sh P/S Multp Price

2014 base

bear

2015 base

bull

bear

2016 base

bull

bear

2017 base

bull

bear

2018 base

bull

2290795 2691684 2748954 2806224 3230021 3298745 3367469 3876025 3958494 4040962 4651230 4750193 4849155 30.0% 17.5% 20% 22.5% 17.5% 20% 22.5% 17.5% 20% 22.5% 17.5% 20% 22.5% 10.72 12.60 12.86 13.13 15.11 15.44 15.76 18.14 18.52 18.91 21.77 22.23 22.69 5.3 4.25 4.75 5.25 3.75 4.25 4.75 3.25 3.75 4.25 3 3.5 4 $56.81 $53.53 $61.10 $68.94 $56.68 $65.60 $74.85 $58.95 $69.46 $80.37 $65.30 $77.80 $90.77 421343 41.0% 1.97 5.3 $10.45

495078 17.5% 2.32 4 $9.27

505612 20% 2.37 4.5 $10.65

516145 22.5% 2.42 5 $12.08

594094 17.5% 2.78 3.5 $9.73

606734 20% 2.84 4 $11.36

619375 22.5% 2.90 4.5 $13.04

712913 17.5% 3.34 3 $10.01

728081 20% 3.41 3.5 $11.92

743249 22.5% 3.48 4 $13.91

855495 17.5% 4.00 2.8 $11.21

873697 20% 4.09 3.3 $13.49

891899 22.5% 4.17 3.8 $15.86

278766 29.0% 1.30 3.5 $4.57

327551 17.5% 1.53 2.9 $4.45

334520 20% 1.57 3.4 $5.32

341489 22.5% 1.60 3.9 $6.23

393061 17.5% 1.84 2.5 $4.60

401424 20% 1.88 3 $5.64

409787 22.5% 1.92 3.5 $6.71

471673 17.5% 2.21 2 $4.41

481708 20% 2.25 2.5 $5.64

491744 22.5% 2.30 3 $6.90

566007 17.5% 2.65 1.5 $3.97

578050 20% 2.70 2 $5.41

590093 22.5% 2.76 2.5 $6.90

81367 48.0% 0.38 2 $0.76

83402 2.5% 0.39 1.5 $0.59

85436 5% 0.40 2 $0.80

87470 7.5% 0.41 2.5 $1.02

87572 2.5% 0.41 1.5 $0.61

89708 5% 0.42 2 $0.84

91843 7.5% 0.43 2.5 $1.07

91950 2.5% 0.43 1.5 $0.65

94193 5% 0.44 2 $0.88

96436 7.5% 0.45 2.5 $1.13

96548 2.5% 0.45 1.5 $0.68

98903 5% 0.46 2 $0.93

101257 7.5% 0.47 2.5 $1.18

3,072,272 3,597,715 3,674,521 3,751,328 4,304,747 4,396,610 4,488,473 5,152,561 5,262,476 5,372,392 6,169,281 6,300,843 6,432,404 31.7% 54.3% 57.6% 60.9% 84.6% 88.5% 92.5% 120.9% 125.7% 130.4% 164.5% 170.2% 175.8% 14.38 16.84 17.19 17.55 20.14 20.57 21.00 24.11 24.63 25.14 28.87 29.48 30.10 5.05 4.03 4.53 5.03 3.56 4.06 4.56 3.07 3.57 4.07 2.81 3.31 3.81 $72.59 $67.83 $77.87 $88.27 $71.62 $83.44 $95.68 $74.02 $87.90 $102.31 $81.16 $97.63 $114.71

A price / sales model is the final valuation used in establishing a price target for Under Armour. This model was used to assess the value in the core segments that Under Armour operates in. Currently Under Armour has a high P/S multiple relative to the industry, similar to its P/E and EV/EBITDA. In the investment horizon the firm’s price/sale multiple will contract its 10 - year historical multiple of 3.3.

This model assumes that the pricing power will decrease as it becomes a conglomerate similar to Adidas and Nike and will trade closer to a p/s multiple of 2.5. Under Armour has the highest pricing power and value from its apparel segment. The firm’s ability to reach youths, women and men along with offering unique design and special technologies such as heat and cold gear will allow the apparel segment to trade at a premium compared to its peers.

Footwear currently has a high multiple because of the growth stemming from this segment as well as the high sale price of athletic footwear (football cleats, basketball shoes, soccer cleats, etc...). Under Armour has a huge opportunity to penetrate this market as only Nike dominates the athletic footwear segment. This trend will slowly change as Under Armour continues to improve and grow their footwear segment.

13 Analysts: Haomin Chen, Matt Errico & Aaron Mederos

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Valuation - Price Target - Price / Sales Model (Cont.)

2 2.5 3 3.5 4 4.5 5

Price / Sales Multiple

1.8 2.3 2.8 3.3 3.8 4.3 4.8

Price / Sales Multiple

Price / Sales Multiple

1.55 1.7 1.85 2 2.15 2.3 2.45

Apparel Price -­‐ Sales Multiple Price Target 2018 Analysis Revenue ($) 4,525,193 4,600,193 4,675,193 4,750,193 4,825,193 4,900,193 4,975,193 $42.35 $43.05 $43.75 $44.46 $45.16 $45.86 $46.56 $52.94 $53.82 $54.69 $55.57 $56.45 $57.33 $58.20 $63.53 $64.58 $65.63 $66.68 $67.74 $68.79 $69.84 $74.11 $75.34 $76.57 $77.80 $79.03 $80.26 $81.48 $84.70 $86.11 $87.51 $88.91 $90.32 $91.72 $93.12 $95.29 $96.87 $98.45 $100.03 $101.61 $103.19 $104.77 $105.88 $107.63 $109.39 $111.14 $112.90 $114.65 $116.41

Footwear Price -­‐ Sales Multiple Price Target 2018 Analysis Revenue ($) 723,697 773,697 823,697 873,697 923,697 $6.10 $6.52 $6.94 $7.36 $7.78 $7.79 $8.33 $8.87 $9.40 $9.94 $9.48 $10.14 $10.79 $11.45 $12.10 $11.18 $11.95 $12.72 $13.49 $14.26 $12.87 $13.76 $14.65 $15.54 $16.43 $14.56 $15.57 $16.57 $17.58 $18.59 $16.26 $17.38 $18.50 $19.62 $20.75

Accessories Price -­‐ Sales Multiple Price Target 2018 Analysis Revenue ($) 548,050 558,050 568,050 578,050 588,050 598,050 $3.98 $4.05 $4.12 $4.19 $4.27 $4.34 $4.36 $4.44 $4.52 $4.60 $4.68 $4.76 $4.74 $4.83 $4.92 $5.00 $5.09 $5.18 $5.13 $5.22 $5.32 $5.41 $5.50 $5.60 $5.51 $5.61 $5.72 $5.82 $5.92 $6.02 $5.90 $6.01 $6.11 $6.22 $6.33 $6.44 $6.28 $6.40 $6.51 $6.63 $6.74 $6.86

1.93 2.39 Price / 2.85 Sales Multiple 3.31 3.77 4.23 4.69 Expected Return Total Return Annualized Return

608,050 $4.41 $4.84 $5.26 $5.69 $6.12 $6.54 $6.97

Price / Sales Multiple

973,697 1,023,697 $8.20 $8.62 $10.48 $11.02 $12.76 $13.41 $15.04 $15.81 $17.31 $18.20 $19.59 $20.60 $21.87 $22.99

To account for variability between the possibilities of multiples Under Armour could trade at in the future; a sensitivity analysis was conducted for each segment of their revenues.

The main source of their revenue is generated from Apparel and Footwear; these multiples will take longer to contract as those products will continue to see high sales domestically and internationally.

License / Other Revenue Price -­‐ Sales Multiple Price Target 2018 Analysis Revenue ($) 98,903 95,903 96,903 97,903 99,903 100,903 1.85 $0.83 $0.84 $0.85 $0.86 $0.86 $0.87 1.9 $0.85 $0.86 $0.87 $0.88 $0.89 $0.90 1.95 $0.88 $0.88 $0.89 $0.90 $0.91 $0.92 2 $0.90 $0.91 $0.92 $0.93 $0.93 $0.94 2.05 $0.92 $0.93 $0.94 $0.95 $0.96 $0.97 2.1 $0.94 $0.95 $0.96 $0.97 $0.98 $0.99 2.15 $0.96 $0.97 $0.98 $1.00 $1.01 $1.02

Under Armour Price -­‐ Sales Multiple Price Target 2018 Analysis Revenue ($) 5,892,843 6,028,843 6,164,843 6,300,843 6,436,843 6,572,843 $53.25 $54.46 $55.66 $56.86 $58.07 $59.27 $65.94 $67.44 $68.95 $70.45 $71.96 $73.46 $78.63 $80.43 $82.24 $84.04 $85.84 $87.65 $91.32 $93.42 $95.52 $97.63 $99.73 $101.83 $104.00 $106.41 $108.81 $111.21 $113.62 $116.02 $116.69 $119.40 $122.10 $124.80 $127.50 $130.21 $129.38 $132.38 $135.39 $138.39 $141.39 $144.39 base bull bear 14.3% 35.7% 80.9% 4.5% 10.59% 21.6%

6,708,843 $60.48 $74.96 $89.45 $103.94 $118.42 $132.91 $147.40

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

101,903 $0.88 $0.91 $0.93 $0.95 $0.98 $1.00 $1.03

Summing up the values of all of its segments, Under Armour will trade at a price of $97 on a 3.3 P/S multiple in 2018; an annual return of 11%. The bull case yields an annual return of 22% if Under Armour traded at a 4.2 P/S multiple.

The bear case yields a 4% return with Under Armour trading at a 2.8 multiple.

14

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Appendices

Income Statement ($ in thousands) UNDER ARMOUR Revenue by Segment 2011 2012 2013 2014 2015 2016 2017 2018 Apparel 1,122,031 1,385,350 1,762,150 2,290,795 2,748,954 3,298,745 3,958,494 4,750,193 Footwear 181,684 238,955 298,825 421,343 505,612 606,734 728,081 873,697 Accessories 132,400 165,835 216,098 334,520 334,520 384,698 442,402 508,763 Licensing / Other Rev 36,569 44,781 54,978 81,367 85,436 89,708 94,193 98,903 $1,472,684 $1,834,921 $2,332,051 $3,072,272 $3,674,521 $4,379,884 $5,223,170 $6,231,555 Net revenues 759,848 955,624 1,195,381 1597581 Cost of goods sold 1883515 2245075 2677334 3194219 Gross profit 712,836 879,297 1,136,670 1474691 1791006 2134809 2545837 3037336 550,069 670,602 871,572 1148219 Selling, Gen / Admin Expenses 1373302 1636922 1952088 2328958 EBIT 162,767 208,695 265,098 326471 417705 497887 593749 708378 Interest expense, net -­‐3,841 -­‐5,183 -­‐2,933 -­‐2,933 -­‐2,933 -­‐2,933 -­‐2,933 -­‐2,933 Other expense, net -­‐2,064 -­‐73 -­‐1,172 -­‐1544 -­‐1847 -­‐2201 -­‐2625 -­‐3132 EBT 156,862 203,439 260,993 321994 412925 492753 588191 702313 59,943 74,661 98,663 Provision for income taxes 120980 155144 185138 220995 263874 Net income $96,919 $128,778 $162,330 $201,014 $257,780 $307,616 $367,195 $438,439 $0.92 $1.21 $1.50 Diluted EPS $0.94 $1.21 $1.44 $1.72 $2.05 Diluted Shares Out 105,052 106,380 107,979 213,700 213,700 213,700 213,700 213,700

Common Size Income Statement Apparel -­‐ Growth Footwear -­‐ Growth Accessories -­‐ Growth Licensing / Other Rev -­‐ Growth Net revenues -­‐ Growth Cost of goods sold Gross profit Selling, Gen / Admin Expenses EBIT Interest expense, net Other expense, net EBT Provision for income taxes Net income EPS -­‐ Growth

51.6% 48.4% 37.4% 11.1% -­‐0.3% -­‐0.1% 10.7% 38.2% 6.6%

23.5% 31.5% 25.3% 22.5% 24.6% 52.1% 47.9% 36.5% 11.4% -­‐0.3% 0.0% 11.1% 36.7% 7.0% 31.5%

UNDER ARMOUR 27.2% 30.0% 20.0% 25.1% 41.0% 20.0% 30.3% 54.8% 0.0% 22.8% 48.0% 5.0% 27.1% 31.7% 19.6% 51.3% 52.0% 51.3% 48.7% 48.0% 48.7% 37.4% 37.4% 37.4% 11.4% 10.6% 11.4% -­‐0.1% -­‐0.1% -­‐0.1% -­‐0.1% -­‐0.1% -­‐0.1% 11.2% 10.5% 11.2% 37.8% 37.6% 37.6% 7.0% 6.5% 7.0% 24.0% -­‐37.3% 28.2%

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

20.0% 20.0% 15.0% 5.0% 19.2% 51.3% 48.7% 37.4% 11.4% -­‐0.1% -­‐0.1% 11.3% 37.6% 7.0% 19.3%

20.0% 20.0% 15.0% 5.0% 19.3% 51.3% 48.7% 37.4% 11.4% -­‐0.1% -­‐0.1% 11.3% 37.6% 7.0% 19.4%

20.0% 20.0% 15.0% 5.0% 19.3% 51.3% 48.7% 37.4% 11.4% 0.0% -­‐0.1% 11.3% 37.6% 7.0% 19.4%

15

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Appendices Balance Sheet ($ in thousands) Assets Excess Cash Cash and cash equivalents Accounts receivable, net Inventories Prepaid expenses & other current assets Deferred income taxes Total Current Assets Property and equipment, net Goodwill Intangible assets, net Deferred income taxes Other long term assets Total Assets Liabilities and Stockholders Equity Revolving credit facility Accounts payable Accrued expenses Current maturities of long term debt Other current liabilities Total Current Liabilities Long term debt, net current maturities Other long term liabilities Total Liabilities Commitments and contingencies Stockholders Equity Additional paid-­‐in capital Retained earnings Accumulated other comprehensive income Total Stockholders Equity Total Liabilities & Stockholders Equity

2012

2013

2014

73,392 $341,841 $347,489 457,769 175,524 209,952 215,059 319,286 469,006 559,154 43,896 63,987 63,987 23,051 38,377 40,840 903,598 1,128,811 1,410,200 180,850 223,952 307,227 0 122,244 122,244 4,483 24,097 28,850 22,606 31,094 46,084 45,546 47,543 62,634 1,157,083 1,577,741 1,977,239 0 143,689 85,077 9,132 14,330 252,228 52,757 35,176 340,161

2015

2016

2017

2018

179,329 547,504 257,216 630,978 63,987 40,840 1,719,854 325,195 122,244 28,850 73,490 74,912 2,344,545

164,390 652,603 306,592 740,875 63,987 40,840 1,969,287 427,039 122,244 28,850 109,497 89,292 2,746,208

266,612 778,252 339,506 870,133 63,987 40,840 2,359,331 469,563 122,244 28,850 156,695 120,133 3,256,816

236,283 928,502 405,051 990,208 63,987 40,840 2,664,871 598,229 122,244 28,850 311,578 155,789 3,881,561

100,000 165,456 133,729 4,972 22,473 426,630 47,951 49,806 524,387

0 244,430 207,686 4,972 33,549 490,637 191,650 49,806 732,093

0 263,692 291,945 4,972 39,554 600,163 191,650 49,806 841,619

0 334,516 307,575 4,972 47,147 694,210 191,650 49,806 935,666

0 401,600 374,827 4,972 56,224 837,623 191,650 49,806 1,079,079

0 463,162 488,716 4,972 67,079 1,023,928 191,650 49,806 1,265,384

321,338 397,283 493,181 653,842 2,368 2,194 816,922 1,053,354 1,157,083 1,577,741

397,283 854,856 -­‐6,993 1,245,146 1,977,239

397,283 1,112,637 -­‐6,993 1,502,927 2,344,545

397,283 1,420,252 -­‐6,993 1,810,542 2,746,208

397,283 1,787,447 -­‐6,993 2,177,737 3,256,816

397,283 2,225,887 -­‐6,993 2,616,177 3,881,561

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

16

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Appendices Cash Flows ($ in thousands) 2012

Cash flows from Operating Activities Net income Net Income to net cash provided by operating activities Depreciation and amortization Unrealized foreign currency exchange rate (gains) losses Loss on disposal of property and equipment Stock-­‐based compensation Gain on purchase of corporate headquarters Deferred income taxes Changes in reserves and allowances Changes in Operating Assets & liabilities Accounts receivable Inventories Prepaid expenses and other assets Accounts payable Accrued expenses and other liabilities Income taxes payable and receivable Net cash provided by operating activities Cash flows from Investing Activities Purchases of property and equipment Purchases of businesses, net of cash acquired Purchases of other assets Purchase of long term investment Change in loans receivable Change in restricted cash Net cash used in investing activities Cash flows from Financing Activities Proceeds from revolving credit facility Payments on revolving credit facility Proceeds from term loan Payments on term loan Proceeds from long term debt Payments on long term debt Excess tax benefits from stock-­‐based compensation arrangements Proceeds from exercise of stock options and other stock issuances Payments of debt financing costs Net cash provided by financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents Cash and cash equivalents Beginning of period End of period

2013

$128,778 $162,330 43,082 -­‐2,464 524 19,845 0 -­‐12,973 13,916

50,549 1,905 332 43,184 0 -­‐18,832 13,945

2014

2015

2016

2017

2018

201,014

257,780

307,616

367,195

438,439

66,594 1,905 78 38,965

79,648 1,905 78 38,965

94,937 1,905 78 38,965

113,216 1,905 78 38,965

135,074 1,905 78 38,965

-­‐19,783 10,794

-­‐19,783 10,794

-­‐19,783 10,794

-­‐19,783 10,794

-­‐19,783 10,794

-­‐53,433 -­‐35,960 -­‐5,107 -­‐42,157 -­‐49,375 -­‐32,914 -­‐65,545 4,699 -­‐156,900 -­‐90,148 -­‐71,824 -­‐109,897 -­‐129,258 -­‐120,075 -­‐4,060 -­‐19,049 0 0 0 0 0 35,370 14,642 78,974 19,262 70,824 67,084 61,562 21,966 56,481 73,957 84,259 15,631 67,251 113,889 4,511 7,443 7,443 7,443 7,443 7,443 7,443 199,761 120,070 $364,686 $366,370 $369,137 $491,976 $602,746 -­‐50,650 -­‐87,830 -­‐122891 -­‐146981 -­‐170815 -­‐188034 -­‐205641 0 -­‐148,097 -­‐10,924 0 0 0 0 -­‐1,310 -­‐475 0 0 0 0 0 0 0 0 0 0 0 0 0 -­‐1,700 0 0 0 0 0 5,029 0 0 0 0 0 0 -­‐46,931 -­‐238,102 -­‐ 133,815

-­‐ 146,981

-­‐ 170,815

-­‐ 188,034

-­‐ 205,641

0 0 0 -­‐25,000 50,000 -­‐44,330

100,000 0 0 0 0 -­‐5,471

0 -­‐100,000 0 0 0 -­‐11,275

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

17,868

17,167

0

0

0

0

0

14,776 -­‐1,017 12,297 1,330 166,457

15,099 0 126,795 -­‐3,115 5,648

0 0 -­‐111,275 -­‐3,115 -­‐227,893

0 0 -­‐3,115 99,793

0 0 -­‐3,115 -­‐21,068

0 0 -­‐3,115 105,620

0 0 -­‐3,115 93,163

175,384 341,841

341,841 347,489 119,596 219,390 198,321 303,942 347,489 $119,596 $219,390 $198,321 $303,942 $397,105

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

17

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Appendices Management At the end of 2014, the company made some management team changes in which multiple managers were moved to different divisions to bring their experience and expertise to different areas of the company. This evolution of the leadership structure ensure that Under Armour is maximizing opportunities for global growth and success.

Strategy of the management team: o Continue with the innovation o Penetrating globally o Looking forward to grow both in region and in product lines Kevin A. Plank Chief Executive Officer, Chairman of the Board & Founder Mr. Plank, then special teams captain of the University of Maryland football team generated the idea of developing a next generation shirt that would remain drier and lighter. He created a new category of sporting apparel called performance apparel, and built the company into one of the leaders in the industry. He still remains the CEO of Under Armour and will lead the company into a global performance apparel leader.

Karl-Heinz (Charlie) Maurath President, International Karl-Heinz (Charlie) Maurath has been President of International since September 2012. Prior to joining our Company, he served for 22 years in various leadership positions with Adidas, including Senior Vice President, Adidas Group Latin America, from 2003 to 2012 with overall responsibility for Latin America including the Reebok and Taylor Made businesses and Vice President, Adidas Nordic, from 2000 to 2003 responsible for its business in the Nordic region and the Baltic states.

Matthew C. Mirchin President of North America He has been President of North America since December 2014. Prior to that, he served as Executive Vice President, Global Marketing from October 2013 to November 2014, Senior Vice President, Global Brand and Sports Marketing from March 2012 to September 2013 and Senior Vice President of Sports Marketing from January 2010 to February 2012. He also held various senior management positions in Sales from May 2005 to December 2009. Prior to joining our Company, Mr. Mirchin served as President of Retail and Team Sports from 2002 to 2005 and President of Team Sports from 2001 to 2002 for Russell Athletic.

Chris Bates VP and Managing Director Europe Before coming to Under Armour in June, 2014, Mr. Bate had eight years of sales experience in Puma and 14 years of sales experience in Nike. He worked in Nike as Various Sales and Business Roles for Canada, UK and EMEA from 1996 to 2007, the fast growing stage of Nike. His 22 years of combined marketing experience in Under Armour’s competitors is going to facilitate the relatively new company in the industry to grow smoothly.

Erick Haskell Managing Director of China Mr. Haskell has a five year experience with Adidas China from 2007 to 2012 before he moved to the India division in November 2012. He is an industry pro with over 20 years’ experience that can lead the team and the company to succeed in the Chinese market.

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

18

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Appendices

Financial Ratio Analysis Liquidity Current Ratio Quick Ratio Cash Ratio Asset Utilization Recievables Turnover Avg Collection Per Inventory Turn Days in Inventory Payables Turnover Avg Payables Pmt Per Fixed Asset Turn Total Asset Turn Equity Turn Leverage Ratios D/E Ratio D/A Ratio Int Coverage Fin Leverage Rat Profitability Ratios ROA ROE DuPont Analysis Net Income Sales Profit Margin Sales Avg Tot Assets Asset Turnover Avg Tot Assets Avg Equity Equity Multiplier ROE

2011

2012

2013

2014

2015

2016

2017

2018

3.76 1.69 0.96

3.58 2.05 1.36

2.65 1.31 0.81

2.87 1.37 0.93

2.87 1.34 0.91

2.84 1.38 0.94

2.82 1.33 0.93

2.60 1.30 0.91

12.48 29.26 2.82 129.64 8.21 44.48 12.52 1.85 2.60

11.85 30.79 2.97 122.93 7.83 46.64 10.79 1.77 2.53

12.10 30.17 3.03 120.35 7.73 47.20 11.52 1.71 2.49

14.46 25.25 3.11 117.45 7.80 46.82 11.57 1.73 2.67

15.56 23.46 3.17 115.32 7.41 49.23 11.62 1.70 2.67

15.54 23.49 3.27 111.52 7.51 48.63 11.65 1.72 2.64

16.17 22.57 3.32 109.81 7.27 50.18 11.65 1.74 2.62

16.74 21.81 3.43 106.29 7.39 49.41 11.67 1.75 2.60

0.12 0.08 42.4 1.44

0.08 0.05 40.3 1.42

0.05 0.03 90.4 1.50

0.16 0.10 111.3 1.59

0.13 0.08 142.4 1.56

0.11 0.07 169.8 1.52

0.09 0.06 202.4 1.50

0.08 0.05 241.5 1.48

12.2% 17.1%

12.4% 17.7%

11.9% 17.4%

11.3% 17.5%

11.9% 18.8%

12.1% 18.6%

12.2% 18.4%

12.3% 18.3%

96,919 1,472,684

6.58% 1,472,684

797,294 1.85 797,294 566,699 1.41 17.10%

128,778

1,834,921

7.02% 1,834,921

1,038,147

1.77 1,038,147

726,677 1.43 17.72%

162,330

2,332,051

6.96% 2,332,051

1,367,412

1.71 1,367,412

935,138 1.46 17.36%

201,014

3,072,272

6.54% 3,072,272

1,777,490

1.73 1,777,490

1,149,250

1.55 17.49%

257,780

3,674,521

7.02% 3,674,521

2,160,892

1.70 2,160,892

1,374,036

1.57 18.76%

307,616

4,379,884

7.02% 4,379,884

2,545,377

1.72 2,545,377

1,656,734

1.54 18.57%

367,195

5,223,170

7.03% 5,223,170

3,001,512

1.74 3,001,512

1,994,140

1.51 18.41%

438,439

6,231,555

7.04% 6,231,555

3,569,188

1.75 3,569,188

2,396,957

1.49 18.29%

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

19

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Appendices

P/E Sensitivity P/S Sensitivity P/S Segment EV/EBITDA PE Expansion Model GeoMean / Probability Expected Return Total Return Annualized Return Footwear p/s fwd p/e ev/ ebitda

UA 5.17 57.7 39.8

Apparel p/s fwd p/e ev/ ebitda

UA 5.17 57.7 39.8

bear $95 $82 $81 $103 $102 $92 bear 35% 10%

skechers 1.35 16.31 11.3

Price Target Probability Matrix base bull % prob $103 $110 20% $98 $114 10% $98 $115 10% $115 $128 30% $104 $133 30% $103 $120 100% base bull 47% 71% 14% 19%

WWW 1.07 16.97 12.03

NKE APP 2.78 0.23 23.28 n/a 17.32 42.22

DECK 1.71 13.99 11.19 GIL 3 19.82 15.4

SHOO 1.63 16.98 9.84 DLA 0.16 8.6 16.95

VFC 2.6 20.44 15.99 EBF 0.62 11.17 6.16

bear $19 $8 $8 $31 $31 $97

base $21 $10 $10 $35 $31 $106

NKE ADDYY 2.78 n/a 23.28 18.6 17.32 10.75 HBI 2.22 17.77 16.5

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

bull $22 $11 $11 $38 $40 $123

AVG 2.33 23.03 16.03

LB ADDYY 2.19 n/a 22.39 18.6 12.55 10.75

AVG 2.05 22.42 19.74

20

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Appendices

2014 Distribu-on of Sales 3% 30%

Direct-­‐To-­‐ Consumer Wholesale

67%

License / Other

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

21

Under Armour | NYSE: UA | Price: $71.96 | Date: 1/29/15 Intrinsic Value: $80 | Target Price: $106 | Return: 14%

Appendices

Analysts: Haomin Chen, Matt Errico & Aaron Mederos

22