Harley-Davidson Revenue, Earnings Post Strong Second-Quarter 2014 Gains - Tucson News Now

Harley-Davidson Revenue, Earnings Post Strong Second-Quarter 2014 Gains

Information contained on this page is provided by an independent third-party content provider. WorldNow and this Station make no warranties or representations in connection therewith. If you have any questions or comments about this page please contact pressreleases@worldnow.com.

SOURCE Harley-Davidson, Inc.

Net Income Rises 30.3 Percent for the Quarter on Consolidated Revenue of $2 Billion

Diluted EPS of $1.62 Grows 33.9 Percent Year-Over-Year

MILWAUKEE, July 22, 2014 /PRNewswire/ -- Harley-Davidson, Inc. (NYSE: HOG) second-quarter 2014 diluted earnings per share of $1.62 grew 33.9 percent on higher motorcycle shipments and continued improvement in operating efficiencies, compared to the year-ago period. Second-quarter net income was $354.2 million on consolidated revenue of $2.00 billion, compared to net income of $271.7 million in the year-ago period on consolidated revenue of $1.79 billion.

Through six months, Harley-Davidson 2014 net income was $620.1 million on consolidated revenue of $3.73 billion, compared to six-month 2013 net income of $495.9 million on consolidated revenue of $3.37 billion. Six-month 2014 diluted earnings per share were $2.82, up 28.2 percent from EPS of $2.20 in the year-ago period.

"Harley-Davidson's second-quarter results reflect the financial strength of the Company and brand, including the benefits of continuous improvement throughout our operation," said Harley-Davidson, Inc. Chairman, President and Chief Executive Officer Keith Wandell. "As a customer-led organization, our employees, dealers in 90 countries and suppliers are focused every day on providing outstanding products and experiences for customers around the world."

Retail Harley-Davidson Motorcycle Sales

Dealers worldwide sold 90,218 new Harley-Davidson® motorcycles in the second quarter of 2014 compared to 90,193 motorcycles in the year-ago quarter. In the U.S., dealers sold 58,225 new Harley-Davidson motorcycles in the quarter, compared to sales of 58,241 motorcycles in the year-ago period. The Company believes second-quarter U.S. retail sales were adversely affected by prolonged poor weather across parts of the U.S. and soft Sportster® motorcycle sales ahead of the highly anticipated arrival of Street motorcycles in dealer showrooms.

In international markets, dealers sold 31,993 new Harley-Davidson motorcycles during the second quarter, compared to 31,952 motorcycles in the year-ago period, with sales up 7.0 percent in the EMEA Region and 1.5 percent in the Asia Pacific Region, and down 10.4 percent in the Latin America Region and 18.0 percent in Canada.

"U.S. retail Harley-Davidson sales fell short of our expectations in the second quarter," said Wandell. "Because we are committed to managing supply in line with demand, we are reducing our full-year shipment plan and now expect shipment growth of approximately 3-1/2 to 5-1/2 percent over last year." The Company previously had forecast full-year shipment growth of approximately 7 to 9 percent.

"We believe the underlying demand fundamentals of the business remain intact," said Wandell. "We continue to see a strong response to the new Rushmore models as well as great interest in the Harley-Davidson Street 750 and 500, which began to hit dealer showrooms in late June."

Through the first six months of 2014, dealers sold 147,633 new Harley-Davidson motorcycles worldwide, compared to 144,447 motorcycles in the year-ago period, with retail unit sales up 1.1 percent in the U.S., 10.1 percent in the Asia Pacific Region and 7.5 percent in the EMEA Region, and down 2.1 percent in the Latin America Region and 13.5 percent in Canada, compared to the year-ago period.

Harley-Davidson Motorcycles and Related Products Segment Results

Second-Quarter Results: Operating income from motorcycles and related products grew 32.3 percent to $473.3 million, compared to operating income of $357.7 million in the year-ago period. Operating income in the quarter benefited from higher motorcycle shipments and higher gross margin compared to the prior-year period.

Revenue from motorcycles grew 16.2 percent to $1.48 billion, compared to revenue of $1.27 billion in the year-ago period. The Company shipped 92,217 motorcycles to dealers and distributors worldwide during the quarter, in line with guidance and a 9.0 percent increase compared to shipments of 84,606 motorcycles in the year-ago period.

Revenue from motorcycle parts and accessories was $271.6 million during the quarter, up 0.7 percent, and revenue from general merchandise, which includes MotorClothes® apparel and accessories, was $76.4 million, down 6.5 percent, compared to the year-ago period.

Gross margin was 39.5 percent in the second quarter of 2014, compared to 36.9 percent in the second quarter of 2013. Second-quarter operating margin from motorcycles and related products was 25.8 percent, compared to operating margin of 21.9 percent in last year's second quarter.

Six-Month Results: Through six months the Company shipped 172,899 motorcycles to dealers and distributors worldwide, an 8.2 percent increase compared to the year-ago period. Six-month revenue from motorcycles grew 14.7 percent to $2.79 billion, revenue from parts and accessories increased 3.5 percent to $469.7 million and revenue from general merchandise decreased 8.7 percent to $140.5 million, compared to the first six months of 2013. Gross margin through six months was 38.6 percent and operating margin was 24.1 percent, compared to 36.8 percent and 20.8 percent respectively in the year-ago period.

Financial Services Segment Results

Operating income from financial services was $74.4 million in the second quarter of 2014, a 0.4 percent increase compared to operating income of $74.2 million in last year's second quarter. Second-quarter financial services results reflect improved net interest income, partially offset by a higher provision for credit losses. Through six months, operating income from financial services was $137.6 million, compared to operating income of $145.7 million through six months of 2013.

Guidance

Harley-Davidson is revising its full-year guidance for new motorcycle shipments, reflecting its commitment to manage supply in line with demand, and now expects to ship 270,000 to 275,000 motorcycles to dealers and distributors worldwide in 2014, an approximate 3-1/2 percent to 5-1/2 percent increase from 2013. The Company previously had provided full-year shipment guidance of 279,000 to 284,000 motorcycles. In the third quarter of 2014, the Company expects to ship 49,000 to 54,000 motorcycles, compared to shipments of 54,025 motorcycles in the year-ago period. The Company continues to expect full-year 2014 operating margin of 17.5 percent to 18.5 percent in the Motorcycles segment.  The Company also continues to expect capital expenditures of $215 million to $235 million in 2014.

Income Tax Rate

Through six months, the Company's effective income tax rate was 35.3 percent compared to 34.8 percent in the year-ago period.  The higher 2014 rate primarily reflects the absence of the Research and Development Tax Credit, which expired at the end of 2013. The Company continues to expect its full-year 2014 effective tax rate to be approximately 35.5 percent.

Cash Flow

Cash and marketable securities totaled $1.06 billion at the end of the second quarter, compared to $1.43 billion at the end of last year's second quarter. During the first six months of 2014, Harley-Davidson generated cash from operating activities of $570.6 million, compared to $389.7 million in the year-ago period. On a discretionary basis, the Company repurchased 1.9 million shares of Harley-Davidson, Inc. common stock during the second quarter of 2014 at a cost of $135.7 million. In the second quarter of 2014, there were approximately 219.2 million weighted-average diluted common shares outstanding. At the end of the second quarter of 2014, 26.6 million shares remained on board-approved share-repurchase authorizations.

Company Background

Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company and Harley-Davidson Financial Services. Harley-Davidson Motor Company produces custom, cruiser and touring motorcycles and offers a complete line of Harley-Davidson motorcycle parts, accessories, riding gear and apparel, and general merchandise. Harley-Davidson Financial Services provides wholesale and retail financing, insurance, extended service and other protection plans and credit card programs to Harley-Davidson dealers and riders in the U.S., Canada and other select international markets. For more information, visit Harley-Davidson's Web site at www.harley-davidson.com.

Conference Call and Webcast Presentation

Harley-Davidson will discuss second-quarter results on a Webcast at 8:00 a.m. CT today. The Webcast presentation will be posted prior to the call and can be accessed at http://investor.harley-davidson.com/. Click "Events and Presentations" under "Resources." The audio portion of today's call will also be posted at harley-davidson.com beginning approximately two hours after the conclusion of the call for one year. The audio may also be accessed through Aug. 5, 2014 by calling 404-537-3406 or toll-free in the U.S. at 855-859-2056, pin number 64897481 #. 

Forward-Looking Statements

The Company intends that certain matters discussed in this release are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as the Company "believes," "anticipates," "expects," "plans," or "estimates" or words of similar meaning. Similarly, statements that describe future plans, objectives, outlooks, targets, guidance or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this release. Certain of such risks and uncertainties are described below. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this release are only made as of the date of this release, and the Company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

The Company's ability to meet the targets and expectations noted depends upon, among other factors, the Company's ability to (i) execute its business strategy, (ii) adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices,  (iii) manage through inconsistent economic conditions, including changing capital, credit and retail markets, (iv) manage through the effects inconsistent and unpredictable weather patterns may have on retail sales of motorcycles,  (v) manage supply chain issues, including any unexpected interruptions or price increases caused by raw material shortages or natural disasters, (vi) manage changes and prepare for requirements in legislative and regulatory environments for its products, services and operations, (vii) develop and implement sales and marketing plans that retain existing retail customers and attract new retail customers in an increasingly competitive marketplace, (viii) implement and manage enterprise-wide information technology solutions, including solutions at its manufacturing facilities, and secure data contained in those systems, (ix) anticipate the level of consumer confidence in the economy, (x) continue to realize production efficiencies at its production facilities and manage operating costs including materials, labor and overhead, (xi) manage production capacity and production changes,  (xii) provide products, services and experiences that are successful in the marketplace, (xiii) manage risks that arise through expanding international manufacturing, operations and sales, (xiv) manage the credit quality, the loan servicing and collection activities, and the recovery rates of HDFS' loan portfolio, (xv) continue to manage the relationships and agreements that it has with its labor unions to help drive long-term competitiveness, (xvi) adjust to healthcare inflation and reform, pension reform and tax changes, (xvii) retain and attract talented employees, (xviii) manage the risks that our independent dealers may have difficulty obtaining capital and managing through changing economic conditions and consumer demand, (xix) continue to have access to reliable sources of capital funding and adjust to fluctuations in the cost of capital, (xx) continue to develop the capabilities of its distributor and dealer network, and (xxi) detect any issues with our motorcycles or manufacturing processes to avoid delays in new model launches, recall campaigns, increased warranty costs or litigation. 

In addition, the Company could experience delays or disruptions in its operations as a result of work stoppages, strikes, natural causes, terrorism or other factors. Other factors are described in risk factors that the Company has disclosed in documents previously filed with the Securities and Exchange Commission.

The Company's ability to sell its motorcycles and related products and services and to meet its financial expectations also depends on the ability of the Company's independent dealers to sell its motorcycles and related products and services to retail customers. The Company depends on the capability and financial capacity of its independent dealers and distributors to develop and implement effective retail sales plans to create demand for the motorcycles and related products and services they purchase from the Company. In addition, the Company's independent dealers and distributors may experience difficulties in operating their businesses and selling Harley-Davidson motorcycles and related products and services as a result of weather, economic conditions or other factors.

TABLES FOLLOW

 

Harley-Davidson, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)




(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)



Three months ended


Six months ended



June 29,


June 30,


June 29,


June 30,



2014


2013


2014


2013










Motorcycles and related products revenue


$  1,834,285


$   1,631,466


$ 3,405,973


$ 3,045,714

Gross profit


724,139


601,870


1,316,270


1,121,312

Selling, administrative and engineering expense


250,883


249,502


495,322


489,245

Restructuring expense


-


(5,297)


-


(2,359)

  Operating income from motorcycles & related products


473,256


357,665


820,948


634,426










Financial services revenue


166,414


162,841


320,774


319,806

Financial services expense


91,975


88,685


183,145


174,105

  Operating income from financial services


74,439


74,156


137,629


145,701










Operating income


547,695


431,821


958,577


780,127

Investment income


1,772


1,770


3,431


3,385

Interest expense


393


11,238


4,070


22,629

Income before income taxes


549,074


422,353


957,938


760,883

Provision for income taxes


194,921


150,614


337,868


265,015

Net income


$     354,153


$      271,739


$   620,070


$   495,868










Earnings per common share:









  Basic


$          1.63


$           1.22


$        2.84


$        2.22

  Diluted


$          1.62


$           1.21


$        2.82


$        2.20










Weighted-average common shares:









  Basic


217,762


223,052


218,367


223,737

  Diluted


219,161


224,470


219,820


225,306










Cash dividends per common share


$        0.275


$         0.210


$      0.550


$      0.420

 

Harley-Davidson, Inc.

Condensed Consolidated Balance Sheets

(In thousands)










(Unaudited)




(Unaudited)



June 29,


December 31,


June 30,



2014


2013


2013








ASSETS







Current assets:







    Cash and cash equivalents


$     999,346


$   1,066,612


$ 1,300,690

    Marketable securities


57,814


99,009


133,631

    Accounts receivable, net


289,940


261,065


253,819

    Finance receivables, net


2,281,512


1,773,686


2,010,974

    Inventories


371,597


424,507


307,717

    Restricted cash


154,681


144,807


212,004

    Other current assets


218,808


219,117


235,636

Total current assets


4,373,698


3,988,803


4,454,471








Finance receivables, net


4,537,405


4,225,877


4,214,612

Prepaid pension costs


256,279


244,871


-

Other long-term assets


908,914


945,489


1,038,115



$ 10,076,296


$   9,405,040


$ 9,707,198








LIABILITIES AND SHAREHOLDERS' EQUITY







Current liabilities:







    Accounts payable & accrued liabilities


$     889,111


$      667,129


$   794,670

    Short-term debt


619,622


666,317


525,745

    Current portion of long-term debt


944,915


1,176,140


776,274

Total current liabilities


2,453,648


2,509,586


2,096,689








Long-term debt


3,794,396


3,416,713


4,234,352

Pension and postretirement healthcare liabilities


247,486


252,536


420,096

Other long-term liabilities


214,506


216,719


134,822








Total shareholders' equity


3,366,260


3,009,486


2,821,239



$ 10,076,296


$   9,405,040


$ 9,707,198

 

Harley-Davidson, Inc.

Condensed Consolidated Statements of Cash Flows

 (In thousands)




(Unaudited)


(Unaudited)



Six months ended



June 29,


June 30,



2014


2013






Net cash provided by operating activities


$     570,592


$      389,677






Cash flows from investing activities:





  Capital expenditures


(74,523)


(66,589)

  Finance receivables, net


(386,391)


(230,544)

  Net change in marketable securities


41,010


1,005

  Other


145


6,667

Net cash used by investing activities


(419,759)


(289,461)






Cash flows from financing activities:





  Repayment of senior unsecured notes


(303,000)


-

  Repayments of medium-term notes


(7,220)


(27,858)

  Proceeds from securitization debt


847,126


647,516

  Repayments of securitization debt


(393,655)


(423,455)

  Net (decrease) increase in credit facilities and unsecured commercial paper


(48,134)


230,761

  Borrowings of asset-backed commercial paper


36,800


47,061

  Repayments of asset-backed commercial paper


(37,317)


(37,642)

  Net change in restricted cash


(9,874)


(23,996)

  Dividends paid


(120,631)


(94,213)

  Purchase of common stock for treasury


(223,736)


(208,699)

  Excess tax benefits from share-based payments


8,652


16,338

  Issuance of common stock under employee stock option plans


27,907


24,677

Net cash (used by) provided by financing activities


(223,082)


150,490






Effect of exchange rate changes on cash and cash equivalents


4,983


(18,154)






Net (decrease) increase in cash and cash equivalents


$     (67,266)


$      232,552






Cash and cash equivalents:





  Cash and cash equivalents - beginning of period


$  1,066,612


$   1,068,138

  Net (decrease) increase in cash and cash equivalents


(67,266)


232,552

  Cash and cash equivalents - end of period


$     999,346


$   1,300,690

 

Motorcycles and Related Products Revenue and

 Motorcycle Shipment Data

(Unaudited)












Three months ended


Six months ended



June 29,


June 30,


June 29,


June 30,



2014


2013


2014


2013

MOTORCYCLES AND RELATED PRODUCTS REVENUE (in thousands)









  Motorcycles


$  1,480,914


$   1,274,882


$ 2,785,953


$ 2,428,709

  Parts & Accessories


271,572


269,588


469,707


453,626

  General Merchandise


76,386


81,700


140,500


153,844

  Other


5,413


5,296


9,813


9,535



$  1,834,285


$   1,631,466


$ 3,405,973


$ 3,045,714










MOTORCYCLE SHIPMENTS:









    United States


63,043


57,070


117,334


107,753

    International


29,174


27,536


55,565


52,075

      Total 


92,217


84,606


172,899


159,828










MOTORCYCLE PRODUCT MIX:









    Touring


41,095


32,384


77,273


63,716

    Custom


32,231


35,315


61,380


65,617

    Sportster® / Street


18,891


16,907


34,246


30,495

      Total


92,217


84,606


172,899


159,828

 


Worldwide Retail Sales of Harley-Davidson Motorcycles












Three months ended


Six months ended



June 30,


June 30,


June 30,


June 30,



2014


2013


2014


2013

North America Region









  United States


58,225


58,241


93,955


92,947

  Canada


4,146


5,058


6,155


7,117

    Total North America Region


62,371


63,299


100,110


100,064










Europe, Middle East and Africa  Region (EMEA)









  Europe*


15,542


14,669


23,916


22,369

  Other


2,222


1,929


3,788


3,412

    Total EMEA Region


17,764


16,598


27,704


25,781










Asia Pacific Region









  Japan


2,510


3,174


5,403


5,347

  Other


4,792


4,019


9,077


7,804

    Total Asia Pacific Region


7,302


7,193


14,480


13,151










Latin America Region


2,781


3,103


5,339


5,451










    Total Worldwide Retail Sales


90,218


90,193


147,633


144,447

    Total International Retail Sales


31,993


31,952


53,678


51,500










Data Source

Data source for retail sales figures shown above is new sales warranty and registration information provided by Harley-Davidson dealers and compiled by the Company.  The Company must rely on information that its dealers supply concerning new retail sales, and this information is subject to revision.


* Europe data includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.

 

 


Motorcycle Registration Data(1)








Six months ended



June 30,


June 30,



2014


2013

United States(2) 


173,960


170,733








Six months ended



June 30,


June 30,



2014


2013

Europe(3)


209,218


182,965






1 - Data includes on-road 601+cc models.  On-road 601+cc models include on-highway, dual purpose models and three-wheeled vehicles. 


2 - United States data is derived from information provided by Motorcycle Industry Council (MIC).  This third party data is subject to revision and update.  


3 - Europe data includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.  Industry retail motorcycle registration data includes 601+cc models derived from information provided by Association des Constructeurs Europeens de Motocycles (ACEM), an independent agency.  This third-party data is subject to revision and update. 

 

 

 

©2012 PR Newswire. All Rights Reserved.

Powered by WorldNow