COLUMBIA SPORTSWEAR CO 10-Q

ITEM 1. FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands) September 30, 2024 December 31, 2023 September 30, 2023 ASSETS Current Assets: Cash and cash equivalents $ 306,680 $ 350,319 $ 213,282 Short-term investments 67,244 414,185 1,474 Accounts receivable, net of allowance of $ 6,464 , $ 5,450 and $ 6,659 , respectively 581,738 423,079 686,821 Inventories 798,153 746,288 885,163 Prepaid expenses and other current assets 72,443 80,814 96,016 Total current assets 1,826,258 2,014,685 1,882,756 Property, plant and equipment, net of accumulated depreciation of $ 707,272 , $ 671,930 and $ 653,545 , respectively 284,963 287,281 283,095 Operating lease right-of-use assets 370,844 357,295 339,538 Intangible assets, net 79,221 79,908 80,321 Goodwill 26,694 26,694 51,694 Deferred income taxes 103,757 105,574 89,801 Other non-current assets 69,003 67,576 71,738 Total assets $ 2,760,740 $ 2,939,013 $ 2,798,943 LIABILITIES AND EQUITY Current Liabilities: Accounts payable $ 221,714 $ 235,927 $ 162,222 Accrued liabilities 266,161 272,058 283,799 Operating lease liabilities 72,968 71,086 72,685 Income taxes payable 6,097 17,556 7,254 Total current liabilities 566,940 596,627 525,960 Non-current operating lease liabilities 348,786 336,772 323,508 Income taxes payable 14,607 25,688 24,218 Deferred income taxes 67 66 — Other long-term liabilities 42,868 41,250 29,946 Total liabilities 973,268 1,000,403 903,632 Commitments and contingencies (Note 4) Shareholders' Equity: Preferred stock; 10,000 shares authorized; none issued and outstanding — — — Common stock (no par value); 250,000 shares authorized; 57,261 , 59,996 and 60,526 issued and outstanding, respectively — — — Retained earnings 1,836,910 1,984,446 1,942,709 Accumulated other comprehensive loss ( 49,438 ) ( 45,836 ) ( 47,398 ) Total shareholders' equity 1,787,472 1,938,610 1,895,311 Total liabilities and shareholders' equity $ 2,760,740 $ 2,939,013 $ 2,798,943 See accompanying notes to unaudited condensed consolidated financial statements. COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 1 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except per share amounts) 2024 2023 2024 2023 Net sales $ 931,768 $ 985,683 $ 2,271,994 $ 2,427,209 Cost of sales 464,209 505,486 1,141,457 1,233,467 Gross profit 467,559 480,197 1,130,537 1,193,742 Selling, general and administrative expenses 361,243 351,563 1,013,262 1,011,490 Net licensing income 6,225 5,920 16,145 14,958 Operating income 112,541 134,554 133,420 197,210 Interest income, net 5,364 1,870 22,905 8,659 Other non-operating income (expense), net 1,283 ( 311 ) 2,030 354 Income before income tax 119,188 136,113 158,355 206,223 Income tax expense 29,031 32,605 37,639 48,163 Net income $ 90,157 $ 103,508 $ 120,716 $ 158,060 Earnings per share: Basic $ 1.56 $ 1.70 $ 2.05 $ 2.57 Diluted $ 1.56 $ 1.70 $ 2.04 $ 2.56 Weighted average shares outstanding: Basic 57,785 60,844 58,896 61,575 Diluted 57,936 60,932 59,043 61,775 See accompanying notes to unaudited condensed consolidated financial statements. COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 2 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2024 2023 2024 2023 Net income $ 90,157 $ 103,508 $ 120,716 $ 158,060 Other comprehensive income (loss): Change in available-for-sale securities (net of tax effect of $ 46 ) — — ( 145 ) — Change in derivative transactions (net of tax effects of $ 5,470 , $( 960 ), $ 485 and $ 1,139 , respectively) ( 14,905 ) 3,593 ( 1,071 ) ( 2,554 ) Foreign currency translation adjustments (net of tax effects of $( 390 ), $ 325 , $( 41 ) and $ 282 , respectively) 20,477 ( 9,659 ) ( 2,386 ) ( 14,207 ) Other comprehensive income (loss) 5,572 ( 6,066 ) ( 3,602 ) ( 16,761 ) Comprehensive income $ 95,729 $ 97,442 $ 117,114 $ 141,299 See accompanying notes to unaudited condensed consolidated financial statements. COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 3 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, (in thousands) 2024 2023 Cash flows from operating activities: Net income $ 120,716 $ 158,060 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 42,187 42,290 Non-cash lease expense 56,903 51,075 Provision for uncollectible accounts receivable 3,183 2,010 Deferred income taxes 2,180 4,236 Stock-based compensation 18,478 17,026 Other, net ( 11,278 ) 568 Changes in operating assets and liabilities: Accounts receivable ( 162,252 ) ( 146,139 ) Inventories ( 50,336 ) 135,417 Prepaid expenses and other current assets 5,008 26,809 Other assets ( 195 ) ( 3,106 ) Accounts payable ( 17,044 ) ( 152,168 ) Accrued liabilities ( 7,823 ) ( 42,251 ) Income taxes payable ( 22,439 ) ( 20,434 ) Operating lease assets and liabilities ( 56,557 ) ( 49,322 ) Other liabilities 2,661 ( 1,897 ) Net cash provided by (used in) operating activities ( 76,608 ) 22,174 Cash flows from investing activities: Purchases of short-term investments ( 388,348 ) ( 117,877 ) Sales and maturities of short-term investments 751,232 120,747 Capital expenditures ( 41,736 ) ( 41,355 ) Net cash provided by (used in) investing activities 321,148 ( 38,485 ) Cash flows from financing activities: Proceeds from credit facilities — 837 Repayments on credit facilities — ( 837 ) Proceeds from issuance of common stock related to stock-based compensation 3,955 7,081 Tax payments related to stock-based compensation ( 4,806 ) ( 4,620 ) Repurchase of common stock ( 230,864 ) ( 144,633 ) Cash dividends paid ( 52,860 ) ( 55,379 ) Net cash used in financing activities ( 284,575 ) ( 197,551 ) Net effect of exchange rate changes on cash ( 3,604 ) ( 3,097 ) Net decrease in cash and cash equivalents ( 43,639 ) ( 216,959 ) Cash and cash equivalents, beginning of period 350,319 430,241 Cash and cash equivalents, end of period $ 306,680 $ 213,282 Supplemental disclosures of cash flow information: Cash paid during the period for income taxes $ 63,650 $ 66,580 Supplemental disclosures of non-cash investing and financing activities: Property, plant and equipment acquired through increase in liabilities $ 12,224 $ 5,389 See accompanying notes to unaudited condensed consolidated financial statements. COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 4 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) (in thousands, except per share amounts) Common Stock Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shares Outstanding Amount Balance, June 30, 2024 58,752 $ — $ 1,878,972 $ ( 55,010 ) $ 1,823,962 Net income — — 90,157 — 90,157 Other comprehensive income — — — 5,572 5,572 Cash dividends ($ 0.30 per share) — — ( 17,232 ) — ( 17,232 ) Issuance of common stock related to stock-based compensation, net 12 ( 137 ) — — ( 137 ) Stock-based compensation expense — 6,470 — — 6,470 Repurchase of common stock ( 1,503 ) ( 5,145 ) ( 114,987 ) — ( 120,132 ) Excise taxes related to repurchase of common stock — ( 1,188 ) — — ( 1,188 ) Balance, September 30, 2024 57,261 $ — $ 1,836,910 $ ( 49,438 ) $ 1,787,472 (in thousands, except per share amounts) Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total Shares Outstanding Amount Balance, June 30, 2023 61,358 $ — $ 1,915,990 $ ( 41,332 ) $ 1,874,658 Net income — — 103,508 — 103,508 Other comprehensive loss — — — ( 6,066 ) ( 6,066 ) Cash dividends ($ 0.30 per share) — — ( 18,280 ) — ( 18,280 ) Issuance of common stock related to stock-based compensation, net 55 2,237 — — 2,237 Stock-based compensation expense — 5,818 — — 5,818 Repurchase of common stock ( 887 ) ( 7,435 ) ( 58,509 ) — ( 65,944 ) Excise taxes related to repurchase of common stock — ( 620 ) — — ( 620 ) Balance, September 30, 2023 60,526 $ — $ 1,942,709 $ ( 47,398 ) $ 1,895,311 (in thousands, except per share amounts) Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total Shares Outstanding Amount Balance, December 31, 2023 59,996 $ — $ 1,984,446 $ ( 45,836 ) $ 1,938,610 Net income — — 120,716 — 120,716 Other comprehensive loss — — — ( 3,602 ) ( 3,602 ) Cash dividends ($ 0.90 per share) — — ( 52,860 ) — ( 52,860 ) Issuance of common stock related to stock-based compensation, net 182 ( 851 ) — — ( 851 ) Stock-based compensation expense — 18,478 — — 18,478 Repurchase of common stock ( 2,917 ) ( 15,472 ) ( 215,392 ) — ( 230,864 ) Excise taxes related to repurchase of common stock — ( 2,155 ) — — ( 2,155 ) Balance, September 30, 2024 57,261 $ — $ 1,836,910 $ ( 49,438 ) $ 1,787,472 COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 5 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements (in thousands, except per share amounts) Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total Shares Outstanding Amount Balance, December 31, 2022 62,139 $ 12,692 $ 1,953,734 $ ( 30,637 ) $ 1,935,789 Net income — — 158,060 — 158,060 Other comprehensive loss — — — ( 16,761 ) ( 16,761 ) Cash dividends ($ 0.90 per share) — — ( 55,379 ) — ( 55,379 ) Issuance of common stock related to stock-based compensation, net 228 2,461 — — 2,461 Stock-based compensation expense — 17,026 — — 17,026 Repurchase of common stock ( 1,841 ) ( 30,928 ) ( 113,706 ) — ( 144,634 ) Excise taxes related to repurchase of common stock — ( 1,251 ) — — ( 1,251 ) Balance, September 30, 2023 60,526 $ — $ 1,942,709 $ ( 47,398 ) $ 1,895,311 See accompanying notes to unaudited condensed consolidated financial statements. COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 6 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE PAGE Note 1 Basis of Presentation and Organization 8 Note 2 Revenues 9 Note 3 Intangible Assets, Net and Goodwill 11 Note 4 Commitments and Contingencies 11 Note 5 Shareholders' Equity 12 Note 6 Stock-Based Compensation 12 Note 7 Earnings Per Share 13 Note 8 Accumulated Other Comprehensive Income (Loss) 14 Note 9 Segment Information 15 Note 10 Financial Instruments and Risk Management 16 Note 11 Fair Value Measures 18 Note 12 Supply Chain Financing 20 COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 7 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements NOTE 1 — BASIS OF PRESENTATION AND ORGANIZATION The accompanying unaudited condensed consolidated financial statements have been prepared by the management of Columbia Sportswear Company (together with its wholly owned subsidiaries, the "Company") and, in the opinion of management, include all normal recurring material adjustments necessary to present fairly the Company's financial position as of September 30, 2024, December 31, 2023 and September 30, 2023, the results of operations for the three and nine months ended September 30, 2024 and 2023, and cash flows for the nine months ended September 30, 2024 and 2023. The December 31, 2023 financial information was derived from the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. A significant part of the Company's business is of a seasonal nature; therefore, results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of results to be expected for other quarterly periods or for the full year. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The Company, however, believes that the disclosures contained in this report comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, for a Quarterly Report on Form 10-Q and are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. PRINCIPLES OF CONSOLIDATION The unaudited condensed consolidated financial statements include the accounts of the Company. All significant intercompany balances and transactions have been eliminated in consolidation. ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates and assumptions. The Company's significant estimates relate to sales reserves, allowance for uncollectible accounts receivable, excess, close-out and slow-moving inventory, impairment of long-lived assets, impairment of indefinite-lived intangible assets and goodwill, and income taxes. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS None. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update ("ASU") No. 2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments will require public entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker and included within the reported measure of segment profit or loss, among other disclosure requirements. ASU 2023-07 is effective for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024, with early adoption permitted, and should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the ASU to determine the impact on the Company's disclosures. In December 2023, the FASB issued ASU No. 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through disaggregation of specific rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for annual periods beginning after December 15, 2024, with early adoption permitted, and may be applied prospectively or retrospectively. The Company is currently evaluating the ASU to determine the impact on the Company’s disclosures. COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 8 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements In November 2024, the FASB issued ASU No. 2024-03 ("ASU 2024-03"), Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to improve disclosures about a public business entity's expenses, primarily through additional disaggregation of income statement expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The amendments in ASU 2024-03 should be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the ASU to determine the impact on the Company's disclosures. RECLASSIFICATIONS Certain amounts in the prior-period financial statements have been reclassified to conform to the current period presentation. Non-cash lease expense is now presented on its own line in the Company's unaudited Condensed Consolidated Statements of Cash Flows instead of combined with depreciation and amortization. Additionally, Loss on disposal or impairment of property, plant and equipment is now included in Other, net in the Company's unaudited Condensed Consolidated Statements of Cash Flows. NOTE 2 — REVENUES DISAGGREGATED REVENUE As disclosed below in Note 9, the Company has four geographic reportable segments: United States ("U.S."), Latin America and Asia Pacific ("LAAP"), Europe, Middle East and Africa ("EMEA") and Canada. The following tables disaggregate the Company's reportable segment Net sales by product category and channel, which the Company believes provides a meaningful depiction of how the nature, timing and uncertainty of Net sales are affected by economic factors: Three Months Ended September 30, 2024 (in thousands) U.S. LAAP EMEA Canada Total Product category net sales Apparel, Accessories and Equipment $ 472,324 $ 109,251 $ 93,027 $ 60,754 $ 735,356 Footwear 98,982 25,734 48,758 22,938 196,412 Total $ 571,306 $ 134,985 $ 141,785 $ 83,692 $ 931,768 Channel net sales Wholesale $ 331,141 $ 93,482 $ 115,880 $ 64,714 $ 605,217 Direct-to-consumer 240,165 41,503 25,905 18,978 326,551 Total $ 571,306 $ 134,985 $ 141,785 $ 83,692 $ 931,768 Three Months Ended September 30, 2023 (in thousands) U.S. LAAP EMEA Canada Total Product category net sales Apparel, Accessories and Equipment $ 487,596 $ 88,362 $ 85,051 $ 70,656 $ 731,665 Footwear 147,817 26,995 44,300 34,906 254,018 Total $ 635,413 $ 115,357 $ 129,351 $ 105,562 $ 985,683 Channel net sales Wholesale $ 391,892 $ 75,814 $ 110,608 $ 86,046 $ 664,360 Direct-to-consumer 243,521 39,543 18,743 19,516 321,323 Total $ 635,413 $ 115,357 $ 129,351 $ 105,562 $ 985,683 COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 9 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements Nine Months Ended September 30, 2024 (in thousands) U.S. LAAP EMEA Canada Total Product category net sales Apparel, Accessories and Equipment $ 1,162,165 $ 290,752 $ 242,159 $ 123,274 $ 1,818,350 Footwear 223,775 82,363 108,068 39,438 453,644 Total $ 1,385,940 $ 373,115 $ 350,227 $ 162,712 $ 2,271,994 Channel net sales Wholesale $ 680,669 $ 207,927 $ 278,383 $ 107,519 $ 1,274,498 Direct-to-consumer 705,271 165,188 71,844 55,193 997,496 Total $ 1,385,940 $ 373,115 $ 350,227 $ 162,712 $ 2,271,994 Nine Months Ended September 30, 2023 (in thousands) U.S. LAAP EMEA Canada Total Product category net sales Apparel, Accessories and Equipment $ 1,229,049 $ 257,445 $ 229,279 $ 137,459 $ 1,853,232 Footwear 322,948 87,654 109,215 54,160 573,977 Total $ 1,551,997 $ 345,099 $ 338,494 $ 191,619 $ 2,427,209 Channel net sales Wholesale $ 836,594 $ 188,639 $ 282,820 $ 137,077 $ 1,445,130 Direct-to-consumer 715,403 156,460 55,674 54,542 982,079 Total $ 1,551,997 $ 345,099 $ 338,494 $ 191,619 $ 2,427,209 PERFORMANCE OBLIGATIONS For the three and nine months ended September 30, 2024 and 2023, Net sales recognized from performance obligations related to prior periods were not material. Net sales expected to be recognized in any future period related to remaining performance obligations is not material. CONTRACT BALANCES As of September 30, 2024, December 31, 2023 and September 30, 2023, the Company did not have contract assets and had an immaterial amount of contract liabilities included in Accrued liabilities on the unaudited Condensed Consolidated Balance Sheets. COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 10 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements NOTE 3 — INTANGIBLE ASSETS, NET AND GOODWILL INTANGIBLE ASSETS, NET Intangible assets, net consisted of the following: (in thousands) September 30, 2024 December 31, 2023 September 30, 2023 Intangible assets with definite lives: Patents and purchased technology $ 14,198 $ 14,198 $ 14,198 Customer relationships 23,000 23,000 23,000 Gross carrying amount 37,198 37,198 37,198 Accumulated amortization: Patents and purchased technology ( 14,198 ) ( 14,198 ) ( 14,198 ) Customer relationships ( 23,000 ) ( 22,313 ) ( 21,900 ) Accumulated amortization ( 37,198 ) ( 36,511 ) ( 36,098 ) Net carrying amount — 687 1,100 Intangible assets with indefinite lives 79,221 79,221 79,221 Intangible assets, net $ 79,221 $ 79,908 $ 80,321 Amortization expense for intangible assets subject to amortization was $ 0.0 million and $ 0.4 million for the three months ended September 30, 2024 and 2023, respectively, and was $ 0.7 million and $1.2 million for the nine months ended September 30, 2024 and 2023, respectively. GOODWILL There have been no changes to the Company's goodwill as described in Note 6 in Part II, Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023. NOTE 4 — COMMITMENTS AND CONTINGENCIES LITIGATION The Company is involved in litigation and various legal matters arising in the normal course of business, including matters related to employment, retail, intellectual property, contractual agreements, and various regulatory compliance activities. Management has considered facts related to legal and regulatory matters and opinions of counsel handling these matters, and does not believe the ultimate resolution of these proceedings will have a material adverse effect on the Company's financial position, results of operations or cash flows. COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 11 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements NOTE 5 — SHAREHOLDERS' EQUITY Since the inception of the Company's stock repurchase plan in 2004 through September 30, 2024, the Company's Board of Directors has authorized the repurchase of $ 2.0 billion of the Company's common stock, excluding excise tax. Shares of the Company's common stock may be purchased in the open market or through privately negotiated transactions, subject to market conditions, and generally settle subsequent to the trade date. The repurchase program does not obligate the Company to acquire any specific number of shares or to acquire shares over any specified period of time. Under this program as of September 30, 2024, the Company had repurchased 37.0 million shares at an aggregate purchase price of $ 1,885.5 million and had $ 114.5 million remaining available, excluding excise tax. During the three and nine months ended September 30, 2024, the Company repurchased an aggregate of $ 120.1 million and $ 230.9 million, respectively, of common stock under this program, excluding excise tax. In October 2024, the Company's Board of Directors approved a $ 600.0 million increase to the Company's share repurchase authorization, which does not obligate the Company to acquire any specific number of shares or to acquire shares over any specified period of time. NOTE 6 — STOCK-BASED COMPENSATION The Company's Stock Incentive Plan allows for grants of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units, and other stock-based or cash-based awards. The Company uses original issuance shares to satisfy share-based payments. STOCK-BASED COMPENSATION EXPENSE Stock-based compensation expense consisted of the following: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2024 2023 2024 2023 Stock options $ 1,570 $ 2,083 $ 4,777 $ 6,019 Restricted stock units 4,900 3,735 13,701 11,007 Total $ 6,470 $ 5,818 $ 18,478 $ 17,026 STOCK OPTIONS During the nine months ended September 30, 2024, the Company granted a total of 156,277 stock options at a weighted average grant date fair value of $ 20.86 per option. As of September 30, 2024, unrecognized costs related to outstanding stock options totaled $ 10.4 million, before any related tax benefit. These unrecognized costs related to stock options are expected to be recognized over a weighted average remaining period of 2.14 years. RESTRICTED STOCK UNITS During the nine months ended September 30, 2024, the Company granted 426,499 restricted stock units at a weighted average grant date fair value of $ 78.82 per restricted stock unit. As of September 30, 2024, unrecognized costs related to outstanding restricted stock units totaled $ 38.2 million, before any related tax benefit. These unrecognized costs related to restricted stock units are expected to be recognized over a weighted average remaining period of 2.60 years. COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 12 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements NOTE 7 — EARNINGS PER SHARE Earnings per share ("EPS") is presented on both a basic and diluted basis. Basic EPS is based on the weighted average number of common shares outstanding. Diluted EPS reflects the potential dilution that could occur if outstanding securities or other contracts to issue common stock were exercised or converted into common stock. A reconciliation of the common shares used in the denominator for computing basic and diluted EPS is as follows: Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except per share amounts) 2024 2023 2024 2023 Weighted average common shares outstanding, used in computing basic earnings per share 57,785 60,844 58,896 61,575 Effect of dilutive stock options and restricted stock units 151 88 147 200 Weighted average common shares outstanding, used in computing diluted earnings per share 57,936 60,932 59,043 61,775 Earnings per share: Basic $ 1.56 $ 1.70 $ 2.05 $ 2.57 Diluted $ 1.56 $ 1.70 $ 2.04 $ 2.56 Weighted average common shares excluded (1) 1,957 2,266 2,005 1,989 (1) Common stock related to stock options, service-based restricted stock units, and performance-based restricted stock units were outstanding but were excluded from the computation of diluted EPS because their effect would be anti-dilutive under the treasury stock method or because the shares were subject to performance conditions that had not been met. COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 13 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements NOTE 8 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Accumulated other comprehensive income (loss) on the unaudited Condensed Consolidated Balance Sheets is net of applicable taxes, and consists of unrealized gains and losses on available-for-sale securities, unrealized gains and losses on certain derivative transactions and foreign currency translation adjustments. The following tables set forth the changes in Accumulated other comprehensive income (loss) : (in thousands) Derivative transactions Foreign currency translation adjustments Total Balance as of June 30, 2024 $ 17,523 $ ( 72,533 ) $ ( 55,010 ) Other comprehensive income (loss) before reclassifications ( 9,895 ) 20,477 10,582 Amounts reclassified from accumulated other comprehensive loss (1) ( 5,010 ) — ( 5,010 ) Net other comprehensive income (loss) during the period ( 14,905 ) 20,477 5,572 Balance as of September 30, 2024 $ 2,618 $ ( 52,056 ) $ ( 49,438 ) (1) Amounts reclassified are recorded in Net sales, Cost of sales, or Other non-operating income (expense), net on the unaudited Condensed Consolidated Statements of Operations. Refer to Note 10 for further information regarding reclassifications. (in thousands) Derivative transactions Foreign currency translation adjustments Total Balance as of June 30, 2023 $ 15,643 $ ( 56,975 ) $ ( 41,332 ) Other comprehensive income (loss) before reclassifications 9,876 ( 9,659 ) 217 Amounts reclassified from accumulated other comprehensive loss (1) ( 6,283 ) — ( 6,283 ) Net other comprehensive income (loss) during the period 3,593 ( 9,659 ) ( 6,066 ) Balance as of September 30, 2023 $ 19,236 $ ( 66,634 ) $ ( 47,398 ) (1) Amounts reclassified are recorded in Net sales, Cost of sales, or Other non-operating income (expense), net on the unaudited Condensed Consolidated Statements of Operations. Refer to Note 10 for further information regarding reclassifications. (in thousands) Available-for- sale securities Derivative transactions Foreign currency translation adjustments Total Balance as of December 31, 2023 $ 145 $ 3,689 $ ( 49,670 ) $ ( 45,836 ) Other comprehensive income (loss) before reclassifications — 7,283 ( 2,386 ) 4,897 Amounts reclassified from accumulated other comprehensive loss (1) ( 145 ) ( 8,354 ) — ( 8,499 ) Net other comprehensive loss during the period ( 145 ) ( 1,071 ) ( 2,386 ) ( 3,602 ) Balance as of September 30, 2024 $ — $ 2,618 $ ( 52,056 ) $ ( 49,438 ) (1) Amounts reclassified are recorded in Net sales , Cost of sales , or Other non-operating income (expense), net on the unaudited Condensed Consolidated Statements of Operations. Refer to Note 10 for further information regarding reclassifications . COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 14 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements (in thousands) Derivative transactions Foreign currency translation adjustments Total Balance as of December 31, 2022 $ 21,790 $ ( 52,427 ) $ ( 30,637 ) Other comprehensive income (loss) before reclassifications 10,602 ( 14,207 ) ( 3,605 ) Amounts reclassified from accumulated other comprehensive loss (1) ( 13,156 ) — ( 13,156 ) Net other comprehensive loss during the period ( 2,554 ) ( 14,207 ) ( 16,761 ) Balance as of September 30, 2023 $ 19,236 $ ( 66,634 ) $ ( 47,398 ) (1) Amounts reclassified are recorded in Net sales , Cost of sales , or Other non-operating income (expense), net on the unaudited Condensed Consolidated Statements of Operations. Refer to Note 10 for further information regarding reclassifications. NOTE 9 — SEGMENT INFORMATION The Company has four reportable geographic segments: U.S., LAAP, EMEA, and Canada, which are reflective of the Company's internal organization, management and oversight structure. Each geographic segment operates predominantly in one industry: the design, development, marketing, and distribution of outdoor, active and lifestyle products, including apparel, footwear, accessories, and equipment. Intersegment net sales and intersegment profits, which are recorded at a negotiated mark-up and eliminated in consolidation, are not material. Unallocated corporate expenses consist of expenses incurred by centrally-managed departmental functions, including information technology, certain supply chain functions, finance, human resources and legal, as well as executive compensation, unallocated benefit program expense, and other miscellaneous costs. The following tables present financial information for the Company's reportable segments: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2024 2023 2024 2023 Net sales to unrelated entities: U.S. $ 571,306 $ 635,413 $ 1,385,940 $ 1,551,997 LAAP 134,985 115,357 373,115 345,099 EMEA 141,785 129,351 350,227 338,494 Canada 83,692 105,562 162,712 191,619 $ 931,768 $ 985,683 $ 2,271,994 $ 2,427,209 Segment operating income: U.S. $ 115,356 $ 131,602 $ 211,815 $ 268,260 LAAP 20,435 14,509 48,340 36,932 EMEA 33,238 34,241 66,802 69,636 Canada 22,369 30,150 33,515 41,065 Total segment operating income 191,398 210,502 360,472 415,893 Unallocated corporate expenses ( 78,857 ) ( 75,948 ) ( 227,052 ) ( 218,683 ) Interest income, net 5,364 1,870 22,905 8,659 Other non-operating income (expense), net 1,283 ( 311 ) 2,030 354 Income before income tax $ 119,188 $ 136,113 $ 158,355 $ 206,223 CONCENTRATIONS The Company had one customer that accounted for approximately 11.9 %, 19.8 % and 11.6 % of Accounts receivable, net as of September 30, 2024, December 31, 2023 and September 30, 2023, respectively. The Company did not have any customers that accounted for 10% or more of Net sales for the three and nine months ended September 30, 2024 and 2023. COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 15 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements NOTE 10 — FINANCIAL INSTRUMENTS AND RISK MANAGEMENT In the normal course of business, the Company's financial position, results of operations and cash flows are routinely subject to a variety of risks. These risks include risks associated with financial markets, primarily currency exchange rate risk and, to a lesser extent, interest rate risk and equity market risk. The Company regularly assesses these risks and has established policies and business practices designed to mitigate them. The Company does not engage in speculative trading in any financial market. The Company actively manages the risk of changes in functional currency equivalent cash flows resulting from anticipated non-functional currency denominated purchases and sales. Subsidiaries that use European euros, Canadian dollars, Japanese yen, Chinese renminbi, or Korean won as their functional currency are primarily exposed to changes in functional currency equivalent cash flows from anticipated United States dollar inventory purchases. Subsidiaries that use United States dollars and euros as their functional currency also have non-functional currency denominated sales for which the Company hedges the Canadian dollar and British pound sterling. The Company seeks to manage these risks by using currency forward contracts formally designated and effective as cash flow hedges. Hedge effectiveness is generally determined by evaluating the ability of a hedging instrument's cumulative change in fair value to offset the cumulative change in the present value of expected cash flows on the underlying exposures. Time value components ("forward points") for forward contracts are included in the fair value of the cash flow hedge. These costs or benefits are included in Accumulated other comprehensive income (loss) until the underlying hedge transaction is recognized in either Net sales or Cost of sales , at which time, the forward points will also be recognized as a component of Net income . The Company also uses currency forward contracts not formally designated as hedges to manage the consolidated currency exchange rate risk associated with the remeasurement of non-functional currency denominated monetary assets and liabilities by subsidiaries that use United States dollars, euros, Canadian dollars, yen, renminbi, or won as their functional currency. Non-functional currency denominated monetary assets and liabilities consists of cash and cash equivalents, short-term investments, receivables, payables, deferred income taxes, and intercompany loans and dividends. The gains and losses generated on these currency forward contracts not formally designated as hedges are expected to be largely offset in Other non-operating income (expense), net by the gains and losses generated from the remeasurement of the non-functional currency denominated monetary assets and liabilities. The following table presents the gross notional amount of outstanding derivative instruments: (in thousands) September 30, 2024 December 31, 2023 September 30, 2023 Derivative instruments designated as cash flow hedges: Currency forward contracts $ 581,848 $ 634,676 $ 548,424 Derivative instruments not designated as hedges: Currency forward contracts $ 471,927 $ 342,532 $ 477,843 As of September 30, 2024 , $ 5.4 million of deferred net gains on both outstanding and matured derivatives recorded in Accumulated other comprehensive income (loss) are expected to be reclassified to Net income during the next twelve months as a result of underlying hedged transactions also being recorded in Net sales or Cost of sales in the unaudited Condensed Consolidated Statements of Operations. When outstanding derivative contracts mature, actual amounts ultimately reclassified to Net sales or Cost of sales in the unaudited Condensed Consolidated Statements of Operations are dependent on United States dollar exchange rates in effect against the euro, pound sterling, renminbi, Canadian dollar, won, and yen as well as the euro exchange rate in effect against the pound sterling. As of September 30, 2024, the Company's derivative contracts had a remaining maturity of less than 3 years. The maximum net exposure to any single counterparty, which is generally limited to the aggregate unrealized gain of all contracts with that counterparty, was $ 1.9 million as of September 30, 2024. All of the Company's derivative counterparties have credit ratings that are investment grade or higher. The Company is a party to master netting arrangements that contain features that allow counterparties to net settle amounts arising from multiple separate derivative transactions or net settle in the case of certain triggering events such as a bankruptcy or major default of one of the counterparties to the transaction. The Company has not pledged assets or posted collateral as a requirement for entering into or maintaining derivative positions. COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 16 The following table presents the balance sheet classification and fair value of derivative instruments: (in thousands) Balance Sheet Classification September 30, 2024 December 31, 2023 September 30, 2023 Derivative instruments designated as cash flow hedges: Derivative instruments in asset positions: Currency forward contracts Prepaid expenses and other current assets $ 3,311 $ 7,367 $ 17,121 Currency forward contracts Other non-current assets 817 961 6,511 Derivative instruments in liability positions: Currency forward contracts Accrued liabilities 3,657 4,121 972 Currency forward contracts Other long-term liabilities 1,264 2,629 104 Derivative instruments not designated as cash flow hedges: Derivative instruments in asset positions: Currency forward contracts Prepaid expenses and other current assets 1,443 2,833 4,485 Derivative instruments in liability positions: Currency forward contracts Accrued liabilities 1,441 2,269 1,389 The following table presents the statement of operations effect and classification of derivative instruments: Statement Of Operations Classification Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2024 2023 2024 2023 Currency forward contracts: Derivative instruments designated as cash flow hedges: Gain (loss) recognized in other comprehensive income, net of tax — $ ( 9,895 ) $ 9,876 $ 7,283 $ 10,602 Gain (loss) reclassified from accumulated other comprehensive income to income for the effective portion Net sales ( 480 ) ( 236 ) ( 822 ) 10 Gain reclassified from accumulated other comprehensive income to income for the effective portion Cost of sales 7,265 8,874 12,241 18,149 Gain (loss) reclassified from accumulated other comprehensive income to income as a result of cash flow hedge discontinuance Other non-operating income (expense), net 62 — 130 ( 2 ) Derivative instruments not designated as cash flow hedges: Gain (loss) recognized in income Other non-operating income (expense), net ( 4,369 ) 3,313 160 2,033 COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 17 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements NOTE 11 — FAIR VALUE MEASURES Certain assets and liabilities are reported at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants, under a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows: Level 1 — observable inputs such as quoted prices for identical assets or liabilities in active liquid markets; Level 2 — inputs, other than the quoted market prices in active markets, that are observable, either directly or indirectly; or observable market prices in markets with insufficient volume or infrequent transactions; and Level 3 — unobservable inputs for which there is little or no market data available, that require the reporting entity to develop its own assumptions. The Company's assets and liabilities measured at fair value are categorized as Level 1 or Level 2 instruments. Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument valuations are obtained from inputs, other than quoted market prices in active markets, that are directly or indirectly observable in the marketplace and quoted prices in markets with limited volume or infrequent transactions. Assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 are as follows: (in thousands) Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 50,149 $ — $ — $ 50,149 Time deposits (1) — 33,422 — 33,422 Short-term investments: Available-for-sale short-term investments: (2) U.S. Government treasury bills — 64,975 — 64,975 Other short-term investments: Money market funds 253 — — 253 Mutual fund shares 2,016 — — 2,016 Prepaid expenses and other current assets: Derivative financial instruments — 4,754 — 4,754 Other non-current assets: Money market funds 1,122 — — 1,122 Mutual fund shares 29,014 — — 29,014 Derivative financial instruments — 817 — 817 Total assets measured at fair value $ 82,554 $ 103,968 $ — $ 186,522 Liabilities: Accrued liabilities: Derivative financial instruments $ — $ 5,098 $ — $ 5,098 Other long-term liabilities: Derivative financial instruments — 1,264 — 1,264 Total liabilities measured at fair value $ — $ 6,362 $ — $ 6,362 (1) Time deposits are carried at amortized cost on the unaudited Condensed Consolidated Balance Sheets, which reasonably approximates fair value. (2) Available-for-sale short-term investments have remaining maturities of less than one year. COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 18 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements Assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 are as follows: (in thousands) Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 75,758 $ — $ — $ 75,758 U.S. Government treasury bills — 9,977 — 9,977 Time deposits (1) — 40,876 — 40,876 Short-term investments: Available-for-sale short-term investments: (2) U.S. Government treasury bills — 412,987 — 412,987 Other short-term investments: Money market funds 314 — — 314 Mutual fund shares 884 — — 884 Prepaid expenses and other current assets: Derivative financial instruments — 10,200 — 10,200 Other non-current assets: Money market funds 1,796 — — 1,796 Mutual fund shares 24,808 — — 24,808 Derivative financial instruments — 961 — 961 Total assets measured at fair value $ 103,560 $ 475,001 $ — $ 578,561 Liabilities: Accrued liabilities: Derivative financial instruments $ — $ 6,390 $ — $ 6,390 Other long-term liabilities: Derivative financial instruments — 2,629 — 2,629 Total liabilities measured at fair value $ — $ 9,019 $ — $ 9,019 (1) Time deposits are carried at amortized cost on the unaudited Condensed Consolidated Balance Sheets, which reasonably approximates fair value. (2) Available-for-sale short-term investments have remaining maturities of less than one year. COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 19 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements Assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 are as follows: (in thousands) Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 60,120 $ — $ — $ 60,120 Time deposits (1) — 19,412 — 19,412 Short-term investments: Money market funds 302 — — 302 Mutual fund shares 1,172 — — 1,172 Prepaid expenses and other current assets: Derivative financial instruments — 21,606 — 21,606 Other non-current assets: Money market funds 1,699 — — 1,699 Mutual fund shares 21,879 — — 21,879 Derivative financial instruments — 6,511 — 6,511 Total assets measured at fair value $ 85,172 $ 47,529 $ — $ 132,701 Liabilities: Accrued liabilities: Derivative financial instruments $ — $ 2,361 $ — $ 2,361 Other long-term liabilities: Derivative financial instruments — 104 — 104 Total liabilities measured at fair value $ — $ 2,465 $ — $ 2,465 (1) Time deposits are carried at amortized cost on the unaudited condensed Consolidated Balance Sheets, which reasonably approximates fair value. NON-RECURRING FAIR VALUE MEASUREMENTS The Company measured the fair value of certain trademark indefinite-lived intangible assets and goodwill as part of impairment testing for the year ended December 31, 2023. The inputs used to measure the fair value of these assets are primarily significant unobservable inputs and, as such, considered Level 3 fair value measurements. Refer to Note 6 in Part II, Item 8 in the Annual Report on Form 10-K for further discussion. NOTE 12 — SUPPLY CHAIN FINANCING In the third quarter of 2024, the Company began to offer a voluntary supply chain financing (“SCF”) program facilitated through a third-party service provider. Under the program, participating suppliers may, at their sole discretion, elect to receive payment from a select number of third-party financial institutions for one or more of the Company’s valid payment obligations prior to their scheduled due dates. The Company is not a party to the agreements between the participating financial institutions and the suppliers in connection with the program. The Company’s payment terms, including the timing and amount of payments, are based on the original supplier invoices, irrespective of whether a supplier participates in the program. The Company does not have an economic interest in a supplier’s decision to participate in the program and has not pledged any assets as security or provided any guarantees as part of the program. The Company’s outstanding payables under the SCF program were $ 27.2 million as of September 30, 2024, and were recorded within Accounts payable on the unaudited Condensed Consolidated Balance Sheets. COLUMBIA SPORTSWEAR COMPANY | Q3 2024 FORM 10-Q | 20 Table of Contents