• Revenue Growth: 23% sales growth in Q4; 18% revenue growth for 2024 to $5.2 billion.
• Adjusted Operating Margin: Expanded by more than 300 basis points in Q4; 130 basis points expansion for the year to 11.1%.
• Adjusted Gross Margin: Increased 370 basis points to 56.4% in Q4.
• Adjusted Net Income: $90 million in Q4, compared to an adjusted net loss of $31 million in the prior year period.
• Adjusted Diluted EPS: $0.17 in Q4, compared to an adjusted diluted loss per share of $0.08 last year.
• Technical Apparel Revenue: Increased 33% to $745 million in Q4.
• Outdoor Performance Revenue: Increased 13% to $594 million in Q4.
• Ball & Racquet Revenue: Increased 22% to $296 million in Q4.
• Free Cash Flow: Approximately $150 million for 2024.
• Net Debt: Reduced to $600 million at the end of Q4 from $2.0 billion at the end of Q3.
• Store Openings: Arc'teryx opened net eight new retail stores in Q4; Salomon opened 31 net new shops in Greater China in Q4.

• Warning! GuruFocus has detected 4 Warning Sign with AS.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Amer Sports Inc (NYSE:AS) reported a strong fourth quarter with sales, adjusted margins, and EPS exceeding expectations.
• The company achieved 23% sales growth and over 300 basis points of adjusted operating margin expansion in Q4.
• Arc'teryx, Salomon, and Wilson brands showed accelerating momentum, contributing to the company's overall growth.
• Greater China and APAC regions delivered strong growth, with EMEA and North America also accelerating.
• The company reduced its leverage significantly, ending the quarter with $600 million of net debt, down from $2.0 billion at the end of Q3.

Negative Points

• Expected FX headwinds are anticipated to slightly weigh on the 2025 reported financial results.
• Winter sports equipment segment faced challenges due to soft reorders in Europe and poor snow conditions.
• The ball & racquet segment, despite strong growth, is expected to grow only low-to-mid single digits long term.
• The company faces potential impacts from new tariffs on imports from China, Canada, Mexico, and Vietnam.
• Adjusted SG&A expenses as a percentage of revenues deleveraged by 20 basis points, indicating increased investments to support growth.

Q & A Highlights

Q: Can you update us on the longer-term store targets for Arc'teryx? A: Stuart Haselden, CEO of Arc'teryx, stated that they plan to continue opening a similar number of stores each year, with 33 net new stores in 2024 and a target of 25-30 for 2025. They see potential for around 200 stores in North America, 75-100 in Europe, 75-100 in APAC outside of China, and 150-200 in Mainland China, with a more bullish outlook for China.

Q: Could you elaborate on drivers of the comp acceleration to nearly 30% at Arc'teryx in the fourth quarter? A: Stuart Haselden explained that the biggest factor was increased traffic, both in-store and online, with healthy conversions and increases in average order value and selling prices. Post-holiday demand has remained strong, and they have improved inventory planning for 2025, particularly in footwear.

Q: Can you elaborate on the investments in SG&A throughout the year? A: Andrew Page, CFO, mentioned that investments are focused on new store build-outs, increasing consumer connection online and in-store, and infrastructure improvements like ERP systems and logistics. They expect SG&A to be relatively flat in 2025 as previous investments start to scale.

Q: How are you thinking about growth in footwear and women's segments within Arc'teryx? A: Stuart Haselden noted that footwear grew over 60% in 2024, reaching nearly 10% of sales, with potential to exceed 20% in the coming years. The women's segment grew faster than men's, approaching 40% of sales in Q4, with a goal to achieve a balanced gender mix in apparel.

Q: Can you unpack the gross margin expansion and its drivers? A: Andrew Page highlighted that Arc'teryx, as the highest-margin and fastest-growing business, is the main driver of gross margin expansion. Other factors include mix shift within segments, such as higher-margin footwear in outdoor performance and Tennis 360 in ball & racquet. Stuart Haselden added that lower transportation costs, markdowns, and higher product margins also contributed.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.