NEWS & EVENTS

Harley-Davidson Third-Quarter Retail Motorcycle Sales Rise

10/21/2014
Dealer New Motorcycle Sales Grow 3.8 Percent Worldwide, 3.4 Percent in U.S. on Strength of August Launch of 2015 Motorcycles
EPS Rises 20.1 Percent through Nine Months

MILWAUKEE, Oct. 21, 2014 /PRNewswire/ -- Harley-Davidson, Inc. (NYSE: HOG) dealer new motorcycle sales grew worldwide and in the U.S. in the third quarter of 2014, topping a strong prior-year quarter. The Company's diluted earnings per share were $0.69 for the quarter, net income was $150.1 million and consolidated revenue was $1.30 billion compared to diluted EPS of $0.73, net income of $162.7 million and revenue of $1.34 billion in the year-ago period. Third-quarter results reflect lower motorcycle shipments, as planned, compared to last year's third quarter.

Through nine months, Harley-Davidson 2014 consolidated revenue grew 6.8 percent, net income increased 16.9 percent and diluted EPS rose 20.1 percent to $3.52 compared to the year-ago period.

"Harley-Davidson's third-quarter financial results were in line with our expectations, and we are on track for a year of growth and strong financial performance in 2014," said Harley-Davidson, Inc. Chairman, President and Chief Executive Officer Keith Wandell. "We continue to see the success of our product, manufacturing and retail strategies, which are delivering an outstanding customer experience, driving bottom-line improvement and expanding the reach of the brand."

Retail Harley-Davidson Motorcycle Sales

Dealers worldwide sold 73,217 new Harley-Davidson® motorcycles in the third quarter of 2014 compared to 70,517 motorcycles in the year-ago quarter.

"With the successful launch of the 2015 motorcycles in late August, including the return of the Road Glide models, and the outstanding efforts of our dealers, third-quarter retail Harley-Davidson motorcycle sales topped the strong growth of the year-ago quarter. A rebound in Sportster motorcycle sales from this year's second quarter and increased availability of the Street 750 and Street 500 motorcycles also contributed to these positive results," said Wandell.

In last year's third quarter, the Company launched its game-changing Project Rushmore line of touring motorcycles, which spurred year-over-year retail sales growth of 20.1 percent in the U.S. and 15.5 percent worldwide, giving the third quarter of 2013 one of the strongest single-quarter retail increases in recent years for Harley-Davidson.

This year, U.S. dealers sold 50,167 new Harley-Davidson motorcycles in the third quarter, up 3.4 percent compared to sales of 48,529 motorcycles in the year-ago period.

In international markets, dealers sold 23,050 new Harley-Davidson motorcycles in the third quarter compared to 21,988 motorcycles in the year-ago period, with sales up 12.8 percent in the Asia Pacific Region, 1.7 percent in the EMEA Region and 7.0 percent in the Latin America Region and down 5.8 percent in Canada.

Through the first nine months of 2014, dealers sold 220,850 new Harley-Davidson motorcycles worldwide compared to 214,964 motorcycles in the year-ago period, with retail unit sales up 1.9 percent in the U.S., 11.0 percent in the Asia Pacific Region, 5.9 percent in the EMEA Region and 1.2 percent in the Latin America Region and down 11.4 percent in Canada compared to the year-ago period.

Harley-Davidson Motorcycles and Related Products Segment Results

Third-Quarter Results: Operating income from motorcycles and related products was $146.3 million compared to operating income of $175.5 million in the year-ago period. The 16.6 percent decrease in third-quarter operating income resulted primarily from a decline in revenue driven by the planned reduction in motorcycle shipments.

Revenue from motorcycles was $815.4 million compared to revenue of $857.0 million in the year-ago period, a 4.9 percent decrease. The Company shipped 50,670 motorcycles to dealers and distributors worldwide during the quarter, in line with guidance and a 6.2 percent decrease compared to shipments of 54,025 motorcycles in the year-ago period.

Revenue from motorcycle parts and accessories was $239.7 million during the quarter, down 4.2 percent, and revenue from general merchandise, which includes MotorClothes® apparel and accessories, was $69.3 million, up 4.8 percent compared to the year-ago period.

Gross margin was 34.9 percent in the third quarter of 2014, compared to 35.3 percent in the third quarter of 2013. Third-quarter operating margin from motorcycles and related products was 12.9 percent, compared to operating margin of 14.9 percent in last year's third quarter.

Nine-Month Results: Through nine months the Company shipped 223,569 motorcycles to dealers and distributors worldwide, a 4.5 percent increase compared to the year-ago period. Nine-month revenue from motorcycles grew 9.6 percent to $3.60 billion, revenue from parts and accessories increased 0.8 percent to $709.4 million and revenue from general merchandise decreased 4.6 percent to $209.8 million compared to the first nine months of 2013. Gross margin through nine months was 37.7 percent and operating margin was 21.3 percent, compared to 36.4 percent and 19.2 percent respectively in the year-ago period.

Financial Services Segment Results

Operating income from financial services was $77.8 million in the third quarter of 2014, a 2.2 percent increase compared to operating income of $76.1 million in last year's third quarter. Third-quarter financial services results reflect favorable net interest income and a higher provision for credit losses. Through nine months, operating income from financial services was $215.4 million, compared to operating income of $221.8 million in the year-ago period.

Guidance

Harley-Davidson continues to expect 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 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 nine months, the Company's effective income tax rate was 34.9 percent compared to 34.3 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 now expects its full-year 2014 effective tax rate to be approximately 35.0 percent, down a half percentage point from prior guidance due to a higher projected benefit from the U.S. manufacturing deduction. 

Cash Flow

Cash and marketable securities totaled $1.04 billion at the end of the third quarter compared to $1.15 billion at the end of last year's third quarter. During the first nine months of 2014, Harley-Davidson generated cash from operating activities of $966.9 million compared to $825.1 million in the year-ago period. On a discretionary basis, the Company repurchased 2.6 million shares of Harley-Davidson, Inc. common stock during the third quarter of 2014 at a cost of $169.6 million. In the third quarter of 2014, there were approximately 216.9 million weighted-average diluted common shares outstanding. At the end of the third quarter of 2014, 24.0 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 third-quarter results on a Webcast at 8:00 a.m. CT today. The supporting slides 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 Nov. 4, 2014 by calling 404-537-3406 or toll-free in the U.S. at 855-859-2056, pin number 8150664#.

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


Nine months ended



September 28,


September 29,


September 28,


September 29,



2014


2013


2014


2013










Motorcycles and related products revenue


$    1,130,558


$    1,180,284


$    4,536,531


$    4,225,998

Gross profit


394,600


416,315


1,710,870


1,537,627

Selling, administrative and engineering expense


248,286


240,198


743,608


729,443

Restructuring expense


-


646


-


(1,713)

  Operating income from motorcycles & related products


146,314


175,471


967,262


809,897










Financial services revenue


171,046


163,434


491,820


483,240

Financial services expense


93,287


87,366


276,432


261,471

  Operating income from financial services


77,759


76,068


215,388


221,769










Operating income


224,073


251,539


1,182,650


1,031,666

Investment income


1,509


1,161


4,940


4,546

Interest expense


77


11,369


4,147


33,998

Income before income taxes


225,505


241,331


1,183,443


1,002,214

Provision for income taxes


75,439


78,615


413,307


343,630

Net income


$      150,066


$      162,716


$      770,136


$      658,584










Earnings per common share:









  Basic


$           0.70


$           0.73


$           3.54


$           2.95

  Diluted


$           0.69


$           0.73


$           3.52


$           2.93










Weighted-average common shares:









  Basic


215,572


221,936


217,429


223,134

  Diluted


216,893


223,486


218,838


224,696










Cash dividends per common share


$         0.275


$          0.210


$          0.825


$          0.630






Harley-Davidson, Inc.

Condensed Consolidated Balance Sheets

(In thousands)










(Unaudited)




(Unaudited)



September 28,


December 31,


September 29,



2014


2013


2013








ASSETS







Current assets:







    Cash and cash equivalents


$      979,866


$    1,066,612


$    1,029,955

    Marketable securities


57,579


99,009


122,234

    Accounts receivable, net


286,256


261,065


290,158

    Finance receivables, net


2,012,466


1,773,686


1,829,612

    Inventories


460,958


424,507


401,199

    Restricted cash


142,286


144,807


194,329

    Other current assets


263,067


219,117


225,188

Total current assets


4,202,478


3,988,803


4,092,675








Finance receivables, net


4,653,034


4,225,877


4,355,278

Prepaid pension costs


261,983


244,871


-

Other long-term assets


908,011


945,489


1,036,055



$  10,025,506


$    9,405,040


$    9,484,008








LIABILITIES AND SHAREHOLDERS' EQUITY







Current liabilities:







    Accounts payable & accrued liabilities


$      836,294


$      667,129


$      865,940

    Short-term debt


352,430


666,317


394,460

    Current portion of long-term debt


1,518,320


1,176,140


721,316

Total current liabilities


2,707,044


2,509,586


1,981,716








Long-term debt


3,573,118


3,416,713


4,067,733

Pension and postretirement healthcare liabilities


243,484


252,536


412,482

Other long-term liabilities


217,497


216,719


140,230








Total shareholders' equity


3,284,363


3,009,486


2,881,847



$  10,025,506


$    9,405,040


$    9,484,008

















Harley-Davidson, Inc.

Condensed Consolidated Statements of Cash Flows

 (In thousands)




(Unaudited)


(Unaudited)



Nine months ended



September 28,


September 29,



2014


2013






Net cash provided by operating activities


$      966,868


$      825,103






Cash flows from investing activities:





  Capital expenditures


(120,316)


(111,690)

  Finance receivables, net


(610,644)


(446,181)

  Net change in marketable securities


41,010


12,107

  Other


275


6,721

Net cash used by investing activities


(689,675)


(539,043)






Cash flows from financing activities:





  Repayment of senior unsecured notes


(303,000)


-

  Proceeds from issuance of medium-term notes


594,431


-

  Repayments of medium-term notes


(7,220)


(27,858)

  Proceeds from securitization debt


847,126


647,516

  Repayments of securitization debt


(631,302)


(650,424)

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


(315,278)


99,416

  Borrowings of asset-backed commercial paper


57,669


69,555

  Repayments of asset-backed commercial paper


(58,717)


(58,990)

  Net change in restricted cash


2,521


(6,321)

  Dividends paid


(179,860)


(140,772)

  Purchase of common stock for treasury


(393,459)


(302,196)

  Excess tax benefits from share-based payments


8,873


18,444

  Issuance of common stock under employee stock option plans


28,850


39,145

Net cash used by financing activities


(349,366)


(312,485)






Effect of exchange rate changes on cash and cash equivalents


(14,573)


(11,758)






Net decrease in cash and cash equivalents


$      (86,746)


$       (38,183)






Cash and cash equivalents:





  Cash and cash equivalents - beginning of period


$    1,066,612


$    1,068,138

  Net decrease in cash and cash equivalents


(86,746)


(38,183)

  Cash and cash equivalents - end of period


$      979,866


$    1,029,955












Motorcycles and Related Products Revenue and

 Motorcycle Shipment Data

(Unaudited)












Three months ended


Nine months ended



September 28,


September 29,


September 28,


September 29,



2014


2013


2014


2013

MOTORCYCLES AND RELATED PRODUCTS REVENUE (in thousands)









  Motorcycles


$      815,375


$      857,029


$    3,601,328


$    3,285,738

  Parts & Accessories


239,731


250,153


709,438


703,779

  General Merchandise


69,282


66,134


209,782


219,978

  Other


6,170


6,968


15,983


16,503



$    1,130,558


$    1,180,284


$    4,536,531


$    4,225,998










MOTORCYCLE SHIPMENTS:









    United States


28,106


32,061


145,440


139,814

    International


22,564


21,964


78,129


74,039

      Total 


50,670


54,025


223,569


213,853










MOTORCYCLE PRODUCT MIX:









    Touring


22,844


23,011


100,117


86,727

    Custom


14,722


19,111


76,102


84,728

    Sportster® / Street


13,104


11,903


47,350


42,398

      Total


50,670


54,025


223,569


213,853

 










Worldwide Retail Sales of Harley-Davidson Motorcycles












Three months ended


Nine months ended



September 30,


September 30,


September 30,


September 30,



2014


2013


2014


2013

North America Region









  United States


50,167


48,529


144,122


141,476

  Canada


2,598


2,759


8,753


9,876

    Total North America Region


52,765


51,288


152,875


151,352










Europe, Middle East and Africa  Region (EMEA)









  Europe*


8,255


8,071


32,376


30,440

  Other


1,541


1,558


5,124


4,970

    Total EMEA Region


9,796


9,629


37,500


35,410










Asia Pacific Region









  Japan


2,621


2,821


8,024


8,168

  Other


4,852


3,805


13,929


11,609

    Total Asia Pacific Region


7,473


6,626


21,953


19,777










Latin America Region


3,183


2,974


8,522


8,425










    Total Worldwide Retail Sales


73,217


70,517


220,850


214,964

    Total International Retail Sales


23,050


21,988


76,728


73,488










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)
















Nine months ended







September 30,


September 30,







2014


2013





United States(2) 


261,851


256,476
















Nine months ended







September 30,


September 30,







2014


2013





Europe(3)


284,382


251,280














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. 

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/harley-davidson-third-quarter-retail-motorcycle-sales-rise-467192993.html

SOURCE Harley-Davidson, Inc.

Media Contact: Bob Klein, (414) 343-8664, Financial Contact: Amy Giuffre, (414) 343-8002