Harley-Davidson delivers strong second quarter financial results
"I'm pleased with the pace of improvements and with the strong quarter that we have delivered," said
Second Quarter 2021 Highlights and Results, and Recent Announcements
- Delivered Q2 GAAP diluted EPS of
$1.33 , up$1.93 over Q2 2020 Q2 H-D, Inc. total revenue up 77 percent over Q2 2020North America Q2 retail sales up 43% over Q2 2020 and up 5% over Q2 2019- Delivered strong Motorcycles and Related Products (Motorcycles) segment gross margin and operating margin driven by the Rewire product portfolio adjustments
Delivered Financial Services segment Q2 2021 operating income growth of$90 million over Q2 2020 driven by a lower provision for credit losses- Launched LiveWire as a standalone brand and introduced LiveWire ONE™ - the electric motorcycle built for the urban experience, with the power and range to take you beyond
- Revealed Sportster® S, the all-new Sportster motorcycle built on the Revolution Max platform
- Launched H-D1™ Marketplace today, the ultimate online destination for pre-owned Harley-Davidson motorcycles in
North America .
Second Quarter 2021 Results
|
nm – not meaningful |
|||||
$ in millions (except EPS) |
2nd quarter |
6 months |
||||
2021 |
2020 |
Change |
2021 |
2020 |
Change |
|
Revenue |
|
|
77% |
|
|
37% |
Net Income (Loss) |
|
( |
nm |
|
( |
nm |
GAAP Diluted EPS |
|
( |
nm |
|
( |
nm |
Adjusted Diluted EPS |
|
( |
nm |
|
|
nm |
Q2 consolidated revenue was up 77 percent versus Q2 2020 driven by strong growth in the Motorcycles and Related Products segment. Bottom-line results reflect significant operating income improvement with strong results in both the Motorcycles and the Financial Services segments.
Harley-Davidson Retail Motorcycle Sales |
||||||
Motorcycles (thousands) |
2nd quarter |
6 months |
||||
2021 |
2020 |
Change |
2021 |
2020 |
Change |
|
|
48.2 |
33.6 |
43% |
81.0 |
58.8 |
38% |
EMEA |
10.2 |
11.0 |
(7)% |
15.2 |
18.7 |
(19)% |
|
6.0 |
6.9 |
(13)% |
11.8 |
12.6 |
(7)% |
|
0.9 |
1.2 |
(31)% |
1.6 |
3.0 |
(47)% |
Worldwide Total |
65.3 |
52.7 |
24% |
109.5 |
93.2 |
18% |
Global retail motorcycle sales in the second quarter were up 24 percent, driven by a strong
Motorcycles and Related Products Segment Results |
||||||
$ in millions |
2nd quarter |
6 months |
||||
2021 |
2020 |
Change |
2021 |
2020 |
Change |
|
Motorcycle Shipments (thousands) |
56.7 |
28.4 |
100% |
111.5 |
81.3 |
37% |
Revenue |
|
|
99% |
|
|
45% |
Motorcycles |
|
|
131% |
|
|
52% |
Parts & Accessories |
|
|
32% |
|
|
23% |
General Merchandise |
|
|
47% |
|
|
22% |
Gross Margin |
30.6% |
16.1% |
14.5 pts. |
32.3% |
24.1% |
8.2 pts. |
Operating Income (Loss) |
|
( |
nm |
|
( |
nm |
Operating Margin |
14.0% |
(18.1%) |
32.0 pts. |
16.1% |
(2.1%) |
18.2 pts. |
Revenue from the Motorcycles and Related Products segment was up significantly during the second quarter primarily driven by a 100 percent increase in wholesale shipments as the company lapped last year's COVID-19 related shutdown.
Parts and Accessories second quarter revenue was up 32 percent while General Merchandise was up 47 percent over Q2 2020.
Second quarter gross margin was up 14.5 percentage points to Q2 prior year while second quarter operating margin finished up 32 percentage points over Q2 prior year due to volume gains behind lapping last year's COVID-19 related shutdown, improved motorcycle unit mix and lower restructuring expense.
Financial Services Segment Results |
||||||
$ in millions |
2nd quarter |
6 months |
||||
2021 |
2020 |
Change |
2021 |
2020 |
Change |
|
Revenue |
|
|
2% |
|
|
(1)% |
Operating Income |
|
|
nm |
|
|
nm |
Financial Services segment operating income was up significantly over prior year in the second quarter, primarily driven by a lower provision for credit losses.
Other Results
Harley-Davidson generated
Tax Rate - The company's second quarter effective tax rate was 25 percent.
Dividends - The company paid cash dividends of
As a result of its Q2 performance, for the full-year 2021, the company now expects:
- Financial Services segment operating income growth of 75 to 85 percent, an increase from the previously communicated range of 50 to 60 percent.
- GAAP Motorcycles segment operating income margin of 6 to 8 percent given the recent EU's decision to keep the current tariff at 31 percent while tariff negotiations occur. If the company is successful in materially mitigating the additional EU tariffs in 2021, the company expects the operating income margin would be 7 to 9 percent.
Additionally, for the full-year 2021, the company continues to expect:
- Motorcycles segment revenue growth to be 30 to 35 percent.
- Capital expenditures of $190 million to
$225 million .
Cash allocation priorities remain to first fund growth through The
Company Background
Webcast
Harley-Davidson will discuss its financial results and outlook on an audio webcast at 8:00 a.m. CT today. The webcast login and supporting slides can be accessed at http://investor.harley-davidson.com/news-and-events/events-and-presentations. The audio replay will be available by approximately
Non-GAAP Disclosure
This press release includes financial measures that have not been calculated in accordance with
The non-GAAP measures included in this press release are adjusted net income (loss) and adjusted diluted EPS. These non-GAAP measures exclude restructuring plan costs and the impact of
Cautionary Note Regarding Forward-Looking Statements
The company intends that certain matters discussed in this press 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," "may," "will," "estimates," "targets," "intend," "is on-track" or words of similar meaning. Similarly, statements that describe or refer to future expectations, future plans, strategies, objectives, outlooks, targets, guidance, commitments 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, unfavorably or favorably, from those anticipated as of the date of this press 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 are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this press release are only made as of the date of this press release, and the company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
Important factors that could affect future results and cause those results to differ materially from those expressed in the forward-looking statements include, among others, the following: (i) the COVID-19 pandemic, including the length and severity of the pandemic across the globe and the pace of recovery following the pandemic; and (ii) the company's ability to: (A) execute its business plans and strategies, including The
The company's operations, demand for its products, and its liquidity could be adversely impacted by work stoppages, facility closures, strikes, natural causes, widespread infectious disease, terrorism, or other factors. Other factors are described in risk factors that the company has disclosed in documents previously filed with the
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 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, the impact of COVID-19, or other factors.
In recent years, HDFS has experienced historically low levels of retail credit losses, but there is no assurance that this will continue. The company believes that HDFS' retail credit losses may increase over time due to changing consumer credit behavior and HDFS' efforts to increase prudently structured loan approvals to sub-prime borrowers, as well as actions that the company has taken and could take that impact motorcycle values. Refer to "Risk Factors" under Item 1A of the company's Annual Report on Form 10-K for the year ended
### (HOG-F)
|
||||||||
Condensed Consolidated Statements of Operations |
||||||||
(In thousands, except per share amounts) |
||||||||
(Unaudited) |
||||||||
Three months ended |
Six months ended |
|||||||
|
|
|
|
|||||
2021 |
2020 |
2021 |
2020 |
|||||
Motorcycles and Related Products revenue |
|
$ 669,274 |
$ 2,563,607 |
$ 1,769,062 |
||||
Gross profit |
407,051 |
107,628 |
827,536 |
426,548 |
||||
Selling, administrative and engineering expense |
220,422 |
187,647 |
413,968 |
422,000 |
||||
Restructuring expense |
807 |
41,005 |
214 |
41,005 |
||||
Operating income (loss) from Motorcycles and Related Products |
185,822 |
(121,024) |
413,354 |
(36,457) |
||||
Financial Services revenue |
200,558 |
195,953 |
390,958 |
394,409 |
||||
Financial Services expense |
105,909 |
190,084 |
177,440 |
365,594 |
||||
Financial Services restructuring expense |
111 |
944 |
338 |
944 |
||||
Operating income from Financial Services |
94,538 |
4,925 |
213,180 |
27,871 |
||||
Operating income (loss) |
280,360 |
(116,099) |
626,534 |
(8,586) |
||||
Non-operating expense, net |
(4,301) |
(1,856) |
(10,330) |
(14,803) |
||||
Income (loss) before income taxes |
276,059 |
(117,955) |
616,204 |
(23,389) |
||||
Income tax provision (benefit) |
69,719 |
(25,738) |
150,720 |
(867) |
||||
Net income (loss) |
$ 206,340 |
$ (92,217) |
$ 465,484 |
$ (22,522) |
||||
Earnings (net loss) per share: |
||||||||
Basic |
$ 1.34 |
$ (0.60) |
$ 3.03 |
$ (0.15) |
||||
Diluted |
$ 1.33 |
$ (0.60) |
$ 3.01 |
$ (0.15) |
||||
Weighted-average shares: |
||||||||
Basic |
153,748 |
153,199 |
153,616 |
153,103 |
||||
Diluted |
155,093 |
153,199 |
154,794 |
153,103 |
||||
Cash dividends per share: |
$ 0.15 |
$ 0.02 |
$ 0.30 |
$ 0.40 |
|
||||||||
Reconciliation of GAAP Amounts to Non-GAAP Amounts |
||||||||
(In thousands, except per share amounts) |
||||||||
(Unaudited) |
||||||||
Three months ended |
Six months ended |
|||||||
|
|
|
|
|||||
2021 |
2020 |
2021 |
2020 |
|||||
Net income (loss) excluding restructuring plan costs and the impact of EU tariffs |
||||||||
Net income (loss) (GAAP) |
$ 206,340 |
$ (92,217) |
$ 465,484 |
$ (22,522) |
||||
Restructuring plan costs |
918 |
41,949 |
552 |
41,949 |
||||
Impact of EU tariffs |
15,758 |
5,677 |
18,719 |
15,907 |
||||
Tax effect of adjustments(a) |
(3,956) |
(13,197) |
(4,563) |
(15,242) |
||||
Adjustments net of tax |
12,720 |
34,429 |
14,708 |
42,614 |
||||
Adjusted net income (loss) (non-GAAP) |
$ 219,060 |
$ (57,788) |
$ 480,192 |
$ 20,092 |
||||
Diluted EPS excluding restructuring plan costs and the impact of EU tariffs |
||||||||
Diluted EPS (GAAP) |
$ 1.33 |
$ (0.60) |
$ 3.01 |
$ (0.15) |
||||
Adjustments net of tax, per share |
0.08 |
0.22 |
0.10 |
0.28 |
||||
Adjusted diluted EPS (non-GAAP) |
$ 1.41 |
$ (0.38) |
$ 3.11 |
$ 0.13 |
||||
(a) The income tax effect has been computed using the estimated income tax rate for these adjustments |
|
||||||||
Condensed Consolidated Balance Sheets |
||||||||
(In thousands) |
||||||||
(Unaudited) |
(Unaudited) |
|||||||
|
|
|
||||||
2021 |
2020 |
2020 |
||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ 1,741,968 |
$ 3,257,203 |
$ 3,856,597 |
|||||
Accounts receivable, net |
263,453 |
143,082 |
271,431 |
|||||
Finance receivables, net |
1,629,636 |
1,509,539 |
1,901,620 |
|||||
Inventories, net |
457,648 |
523,497 |
429,339 |
|||||
Restricted cash |
152,411 |
131,642 |
189,712 |
|||||
Other current assets |
224,488 |
280,470 |
163,135 |
|||||
4,469,604 |
5,845,433 |
6,811,834 |
||||||
Finance receivables, net |
5,259,318 |
4,933,469 |
5,078,371 |
|||||
Other long-term assets |
1,180,304 |
1,231,699 |
1,265,947 |
|||||
|
$ 12,010,601 |
|
||||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued liabilities |
$ 1,018,616 |
$ 848,118 |
$ 921,672 |
|||||
Short-term deposits |
101,672 |
79,965 |
- |
|||||
Short-term debt |
749,037 |
1,014,274 |
1,547,388 |
|||||
Current portion of long-term debt, net |
1,581,826 |
2,039,597 |
2,186,037 |
|||||
3,451,151 |
3,981,954 |
4,655,097 |
||||||
Long-term debt, net |
4,745,024 |
5,932,933 |
6,488,499 |
|||||
Other long-term liabilities |
528,779 |
372,929 |
388,851 |
|||||
Shareholders' equity |
2,184,272 |
1,722,785 |
1,623,705 |
|||||
|
$ 12,010,601 |
|
|
||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||
(In thousands) |
||||||||
(Unaudited) |
||||||||
Six months ended |
||||||||
|
|
|||||||
2021 |
2020 |
|||||||
Net cash provided by operating activities |
$ 644,300 |
$ 610,203 |
||||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
(37,568) |
(67,026) |
||||||
Finance receivables, net |
(350,136) |
(83,871) |
||||||
Other investing activities |
2,425 |
(381) |
||||||
Net cash used by investing activities |
(385,279) |
(151,278) |
||||||
Cash flows from financing activities: |
||||||||
Proceeds from issuance of medium-term notes |
- |
1,396,602 |
||||||
Repayments of medium-term notes |
(1,400,000) |
(1,400,000) |
||||||
Proceeds from securitization debt |
597,411 |
2,064,450 |
||||||
Repayments of securitization debt |
(664,685) |
(369,613) |
||||||
Net (decrease) increase in unsecured commercial paper |
(262,452) |
831,354 |
||||||
Net increase in credit facilitites |
84 |
150,000 |
||||||
Borrowings of asset-backed commercial paper |
- |
225,187 |
||||||
Repayments of asset-backed commercial paper |
(143,256) |
(143,306) |
||||||
Proceeds from deposits |
179,329 |
17,995 |
||||||
Dividends paid |
(46,209) |
(61,917) |
||||||
Repurchase of common stock |
(10,911) |
(7,156) |
||||||
Issuance of common stock under employee stock option plans |
4,324 |
41 |
||||||
Net cash (used) provided by financing activities |
(1,746,365) |
2,703,637 |
||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
(6,878) |
(382) |
||||||
Net (decrease) increase in cash, cash equivalents and restricted cash |
$ (1,494,222) |
$ 3,162,180 |
||||||
Cash, cash equivalents and restricted cash: |
||||||||
Cash, cash equivalents and restricted cash, beginning of period |
$ 3,409,168 |
$ 905,366 |
||||||
Net (decrease) increase in cash, cash equivalents and restricted cash |
(1,494,222) |
3,162,180 |
||||||
Cash, cash equivalents and restricted cash, end of period |
$ 1,914,946 |
$ 4,067,546 |
||||||
Reconciliation of cash, cash equivalents and restricted cash on the Consolidated balance sheets to the Consolidated statements of cash flows: |
||||||||
Cash and cash equivalents |
$ 1,741,968 |
$ 3,856,597 |
||||||
Restricted cash |
152,411 |
189,712 |
||||||
Restricted cash included in Other long-term assets |
20,567 |
21,237 |
||||||
Cash, cash equivalents and restricted cash per the Consolidated statements of cash flows |
$ 1,914,946 |
$ 4,067,546 |
Motorcycles and Related Products Revenue and Motorcycle Shipment Data |
||||||||
(Unaudited) |
||||||||
Three months ended |
Six months ended |
|||||||
|
|
|
|
|||||
2021 |
2020 |
2021 |
2020 |
|||||
MOTORCYCLES AND RELATED PRODUCTS REVENUE (in thousands) |
||||||||
Motorcycles |
|
$ 446,738 |
$ 2,046,043 |
$ 1,346,103 |
||||
Parts & accessories |
222,670 |
168,708 |
372,529 |
303,393 |
||||
General merchandise |
55,631 |
37,805 |
105,954 |
86,965 |
||||
Licensing |
8,872 |
4,903 |
14,384 |
12,932 |
||||
Other |
14,618 |
11,120 |
24,697 |
19,669 |
||||
|
$ 669,274 |
$ 2,563,607 |
$ 1,769,062 |
|||||
|
36,118 |
11,051 |
76,271 |
44,075 |
||||
WORLDWIDE MOTORCYCLE SHIPMENTS |
||||||||
Touring |
24,333 |
9,709 |
51,649 |
31,306 |
||||
Cruiser(a) |
20,966 |
11,874 |
41,434 |
32,005 |
||||
Adventure Touring |
4,048 |
- |
4,048 |
- |
||||
Sportster®/ Street |
7,321 |
6,786 |
14,347 |
18,031 |
||||
56,668 |
28,369 |
111,478 |
81,342 |
|||||
(a) Includes Softail®, CVO™, and LiveWire™ |
||||||||
Motorcycles and Related Products Gross Profit |
||||||||
(Unaudited) |
||||||||
The estimated impact of significant factors affecting the comparability of gross profit from 2020 to 2021 were as follows (in millions): |
||||||||
Three months ended |
Six month ended |
|||||||
2020 gross profit |
$ 108 |
$ 427 |
||||||
Volume |
161 |
170 |
||||||
Price and sales incentives, net of related costs |
7 |
23 |
||||||
Foreign currency exchange rates and hedging |
17 |
25 |
||||||
Shipment mix |
68 |
125 |
||||||
Raw material prices |
(20) |
(21) |
||||||
Manufacturing and other costs |
66 |
79 |
||||||
299 |
401 |
|||||||
2021 gross profit |
$ 407 |
$ 828 |
Worldwide Retail Sales of Harley-Davidson Motorcycles(a) |
||||||||
(Unaudited) |
||||||||
Three months ended |
Six months ended |
|||||||
|
|
|
|
|||||
2021 |
2020 |
2021 |
2020 |
|||||
|
44,739 |
31,340 |
75,722 |
55,072 |
||||
|
3,446 |
2,287 |
5,245 |
3,753 |
||||
|
48,185 |
33,627 |
80,967 |
58,825 |
||||
EMEA |
10,248 |
10,964 |
15,191 |
18,694 |
||||
|
5,986 |
6,888 |
11,779 |
12,640 |
||||
|
855 |
1,233 |
1,572 |
2,992 |
||||
Total worldwide retail sales |
65,274 |
52,712 |
109,509 |
93,151 |
(a) 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 the company does not regularly verify the information that its dealers supply. This information is subject to revision. |
View original content to download multimedia:https://www.prnewswire.com/news-releases/harley-davidson-delivers-strong-second-quarter-financial-results-301338244.html
SOURCE
Media, Jenni Coats, jenni.coats@Harley-Davidson.com, 414.343.7902; Financial, Shannon Burns, shannon.burns@Harley-Davidson.com, 414.343.8002