Amer Sports Down 8% After Q1 Results - What's Going On?

Amer Sports, Inc. AS shares are trading lower after the company reported first-quarter results.

The company reported first-quarter adjusted earnings per share of 8 cents, beating the analyst consensus of 3 cents. 

Quarterly revenues of $1.183 billion beat the street view of $1.131 billion.

Revenue increased 13% year over year, led by a 44% increase in the Technical Apparel segment. Amer Sports said that Technical Apparel growth was driven by Arc’teryx, which is generating double-digit new store growth while also delivering exceptional omni-comp growth against difficult comparisons from the first quarter of 2023. 

The brand generated broad-based growth across regions, led by Asia Pacific and the Americas, followed by Greater China and Europe, the Middle East and Africa.

Adjusted gross profit margin rose 110 basis points to 54.3% compared to 53.2% for the first quarter 2023, primarily driven by favorable segment revenue mix.

Adjusted operating margin decreased 240 bps from 13.4% in the first quarter of 2023 to 11.0%.

Year-over-year inventories were up 6%. Net debt was $1.7 billion, and cash and equivalents totaled $337 million at quarter end.

“As increased demand materializes, we are well positioned to service the elevated demand,” CFO Andrew Page said.

Outlook: Amer Sports expects FY24 EPS toward the high end of the previous guidance range of $0.30 to $0.40 (estimate: $0.41), including a $0.03 – $0.04 negative impact to EPS from non-recurring finance costs in 1Q24. Previously, the company anticipated a negative impact of $0.08 – $0.09 on EPS.

The company projects Technical Apparel revenues of above 25% revenue growth (prior view: above 20%), with segment operating margin slightly above 20%.

Amer Sports expects a second-quarter EPS loss of $0.04-$0.08 versus the $0.05 loss estimate.

Price Action: AS shares are trading lower by 7.8% to $14.78 at last check Tuesday. 

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