Amer Sports, Inc. — 2023 Form 20-F Summary
Business context and reporting period
Amer Sports is a Cayman Islands holding company whose principal brands include Arc’teryx, Salomon, Wilson, Atomic and Peak Performance. It operates through Technical Apparel, Outdoor Performance, and Ball & Racquet Sports. Products are sold through wholesale and direct-to-consumer channels, including owned retail stores and e-commerce.
The filing is an annual report for the year ended December 31, 2023, prepared under IFRS. It does not provide a separate standalone fourth-quarter income statement, although fourth-quarter revenue represented 30% of full-year 2023 revenue. Amer Sports began trading on the NYSE under “AS” on February 1, 2024.
Financial performance and key metrics
| USD millions, except percentages | 2023 | 2022 | Change |
|---|---|---|---|
| Revenue | 4,368.4 | 3,548.8 | +23.1% |
| Gross profit | 2,276.2 | 1,763.6 | +29.1% |
| Gross margin | 52.1% | 49.7% | +240 bps |
| Operating profit | 302.5 | 50.6 | +497.7% |
| Net finance cost | (407.0) | (233.2) | Higher cost |
| Loss before tax | (104.6) | (182.6) | Improved |
| Net loss | (208.8) | (252.7) | Improved |
| Net loss margin | (4.8%) | (7.1%) | +230 bps |
| Adjusted EBITDA | 610.7 | 453.0 | +34.8% |
| Adjusted EBITDA margin | 14.0% | 12.8% | +120 bps |
| Operating cash flow | 199.0 | (91.7) | Improved by 290.7 |
| Capital expenditures | 136.3 | 109.8 | +24.1% |
Revenue growth was led by Technical Apparel, Outdoor Performance and the Greater China recovery following 2022 COVID-19 restrictions. DTC revenue increased 49.0% to $1,558.8 million, representing 35.7% of revenue versus 29.5% in 2022. E-commerce revenue increased 39.8% to $718.4 million. Wholesale revenue increased 12.3% to $2,809.6 million.
- Technical Apparel: revenue of $1,592.8 million, up 45.4%; segment adjusted operating profit of $314.4 million, up 83.5%.
- Outdoor Performance: revenue of $1,667.8 million, up 17.7%; segment adjusted operating profit of $151.3 million, up 28.6%.
- Ball & Racquet Sports: revenue of $1,107.8 million, up 6.9%; segment adjusted operating profit fell 49.7% to $30.6 million.
As of December 31, 2023, cash and cash equivalents were $483.4 million, compared with $402.0 million in 2022. Inventories increased to $1,099.6 million from $912.5 million. Total shareholders’ deficit was $156.8 million. Reported interest-bearing liabilities, including related-party loans and lease liabilities, totaled approximately $6.66 billion, and reported net debt was $6.18 billion.
Material changes versus the prior comparable period
- Revenue increased 23.1%, with constant-currency revenue up 24.1%, reflecting strong DTC growth, new store openings, supply-chain normalization and Greater China recovery.
- Gross margin improved because of favorable channel and geographic mix and lower logistics costs, partly offset by higher raw-material and labor costs and increased discounting.
- Operating profit benefited substantially from the absence of the $198.1 million of 2022 impairment losses, principally the $179.0 million Peak Performance goodwill impairment and $19.1 million trademark impairment.
- Finance cost increased 74.8% to $413.4 million, primarily because of higher interest rates and interest on related-party and other debt.
- Ball & Racquet Sports margins weakened because operating expenses grew faster than revenue, market conditions were difficult and promotional activity was required to clear excess inventory.
- Operating cash flow turned positive, but inventory remained a significant use of working capital.
Liquidity, debt and subsequent refinancing
Management stated that cash, operating cash flow and available credit facilities were sufficient for at least the next 12 months. The 2024 capital expenditure budget was approximately $300 million, principally supporting retail expansion, SAP ERP upgrades and warehouse expansion.
After year-end, the company completed an IPO and refinancing. It sold 120.875 million shares at $13.00 per share and reported approximately $5.1875 billion of gross IPO proceeds in the filing, with net proceeds used to repay shareholder loans. The audited financial statement subsequent-event note describes gross IPO proceeds of approximately $1.37 billion plus $204.8 million from overallotment exercises; investors should reconcile this apparent presentation discrepancy to the final offering documents.
- $800 million of 6.750% senior secured notes due February 2031.
- $500 million seven-year USD term loan.
- €700 million seven-year term loan.
- $710 million five-year revolving credit facility.
- Old senior facilities were repaid and terminated on February 16, 2024.
- The new facilities are secured by substantially all assets of the company and certain subsidiaries.
- The revolving facility includes a maximum first-lien net leverage covenant of 5.00:1.00 and minimum interest coverage of 2.00:1.00, increasing to 2.25:1.00 in December 2025 and 2.50:1.00 in December 2026.
Guidance, outlook, management commentary and risks
The filing emphasizes long-term growth through product innovation, geographic expansion, increased DTC penetration, brand awareness and channel optimization. No specific 2024 revenue or earnings guidance is provided in the filing text.
- Management expects continued investment in owned retail, e-commerce, marketing, product innovation, SAP infrastructure and distribution capacity.
- Growth opportunities are identified in North America, Europe, Greater China, Salomon footwear and Sportstyle, Arc’teryx, Wilson soft goods, padel and pickleball.
- Key risks include discretionary consumer demand, inflation, foreign-exchange volatility, interest-rate increases, inventory forecasting, supply-chain disruption, tariffs, trade restrictions, geopolitical tensions and dependence on third-party suppliers.
- China is material: 18.2% of 2023 revenue came from the PRC, and approximately 29.5% of third-party-sourced products were manufactured there.
- The company identified a material weakness in internal control over financial reporting involving accounting processes, review and supervision controls, segregation of duties, and insufficient SEC-reporting and technical-accounting resources. Management is implementing remediation measures.
- The company reported no cybersecurity incident in 2023 that materially affected or was reasonably likely to materially affect the business, but it does not maintain cybersecurity insurance.
- Goodwill and trademark impairment testing remains sensitive to revenue growth and discount-rate assumptions. The filing identifies Winter Sports Equipment and Peak Performance as particularly sensitive cash-generating units.
- The company does not anticipate paying cash dividends in the foreseeable future.
Most important facts for investors to verify
- Reconcile the IPO proceeds and share-count presentation between the Form 20-F, audited subsequent-event note and final IPO prospectus.
- Verify post-refinancing gross debt, net debt, interest expense, debt maturities and compliance with the new leverage and interest-coverage covenants.
- Assess whether strong Arc’teryx and Greater China growth can offset weaker Ball & Racquet Sports performance and promotional pressure.
- Monitor inventory growth, valuation reserves, markdowns and cash conversion.
- Track remediation of the material weakness and the company’s first required management and auditor assessments under Section 404.
- Evaluate sensitivity of goodwill and trademark balances to changes in growth, margins, discount rates and consumer demand.
- Review related-party arrangements with ANTA Sports, including distribution, sourcing, shared services and board nomination rights.
- Consider exposure to China-related regulatory, supply-chain, geopolitical, foreign-exchange and data-privacy risks.