“First quarter
First quarter worldwide Harley-Davidson retail motorcycle sales were down 4.2 percent compared to the same period in 2016. In line with the company’s expectations, Harley-Davidson retail motorcycle sales in the
“We recently announced our plan to build the next generation of Harley-Davidson riders globally. We are energized by our focused strategy, and we believe our powerful brand and commitment to excellence will position us to drive demand for our products and grow our sport,” concluded Levatich.
The company’s long-term strategy through 2027 is focused on five objectives to:
- Build two million new Harley-Davidson riders in the
U.S. ; - Grow international business to 50 percent of annual volume;
- Launch 100 new, high-impact motorcycles;
- Deliver superior return on invested capital for
Harley-Davidson Motor Company (S&P 500 top 25%); and - Grow the business without growing its environmental impact.
Harley-Davidson Retail Motorcycle Sales |
|||
1st Quarter |
|||
2017 |
2016 |
Change |
|
|
33,316 |
35,326 |
-5.7% |
|
2,361 |
2,470 |
-4.4% |
|
2,342 |
1,886 |
24.2% |
EMEA |
10,167 |
10,210 |
-0.4% |
|
6,863 |
7,566 |
-9.3% |
International Total |
21,733 |
22,132 |
-1.8% |
Worldwide Total |
55,049 |
57,458 |
-4.2% |
First quarter worldwide retail sales of new Harley-Davidson motorcycles were down driven by lower sales in the
Motorcycles and Related Products Segment Results |
|||
$ in thousands |
1st Quarter |
||
2017 |
2016 |
Change |
|
Motorcycle Shipments (vehicles) |
70,831 |
83,036 |
-14.7% |
Revenue |
|||
Motorcycles |
|
|
-16.5% |
Parts & Accessories |
|
|
-8.0% |
General Merchandise |
|
|
-20.9% |
Gross Margin Percent |
35.9% |
37.4% |
-1.5 pts |
Operating Income |
|
|
-28.2% |
Operating Margin Percent |
18.0% |
21.1% |
-3.1 pts |
In the first quarter, revenue from the Motorcycles and Related Products segment was down versus the first quarter of 2016 on lower shipments.
Financial Services Segment Results |
|||
$ in thousands |
1st Quarter |
||
2017 |
2016 |
Change |
|
Revenue |
|
|
-0.1% |
Operating Income |
|
|
-6.6% |
The Financial Services segment operating income was down 6.6 percent year-over-year due to a higher provision for credit losses.
Income Tax Rate
For the first quarter of 2017, Harley-Davidson’s effective tax rate was flat compared to the prior year at 34.5 percent. The company continues to expect its full-year 2017 effective tax rate will be approximately 34.5 percent.
Other Results
At the end of the first quarter of 2017, cash and marketable securities totaled
Guidance
For 2017, Harley-Davidson continues to anticipate full-year motorcycle shipments to be flat to down modestly in comparison to 2016. In the second quarter of 2017, the company expects to ship approximately 80,000 to 85,000 motorcycles.
Harley-Davidson continues to expect full-year 2017 operating and gross margin as a percent of revenue to be approximately in line with 2016.
The company continues to expect that full-year 2017 capital expenditures will be
Company Background
Conference Call and Webcast Presentation
Harley-Davidson will discuss first quarter results on a Webcast at
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, unfavorably or favorably, 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) manage through changes in general economic and business conditions, including changing capital, credit and retail markets, and the changing political environment, (iii) accurately estimate and adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices, (iv) prevent a cybersecurity breach involving consumer, employee, dealer, supplier, or company data and respond to evolving regulatory requirements regarding data security, (v) drive demand by executing its marketing strategy of appealing to and growing sales to multi-generational and multi-cultural customers worldwide in an increasingly competitive marketplace, (vi) develop and introduce products, services and experiences that are successful in the marketplace, (vii) manage the credit quality, the loan servicing and collection activities, and the recovery rates of HDFS’ loan portfolio, (viii) balance production volumes for its new motorcycles with consumer demand, including in circumstances where competitors may be supplying new motorcycles to the market in excess of demand at reduced prices, (ix) manage the impact that prices for and supply of used motorcycles may have on its business, including on retail sales of new motorcycles, (x) prevent and detect any issues with its motorcycles or any associated manufacturing processes to avoid delays in new model launches, recall campaigns, regulatory agency investigations, increased warranty costs or litigation and adverse effects on its reputation and brand strength, (xi) continue to develop the capabilities of its distributors and dealers and manage the risks that its independent dealers may have difficulty obtaining capital and managing through changing economic conditions and consumer demand, (xii) manage risks that arise through expanding international manufacturing, operations and sales, (xiii) adjust to tax reform, healthcare inflation and reform and pension reform, (xiv) manage through the effects inconsistent and unpredictable weather patterns may have on retail sales of motorcycles, (xv) manage supply chain issues, including quality issues and any unexpected interruptions or price increases caused by raw material shortages or natural disasters, (xvi) implement and manage enterprise-wide information technology systems, including systems at its manufacturing facilities, (xvii) manage changes and prepare for requirements in legislative and regulatory environments for its products, services and operations, (xviii) manage its exposure to product liability claims and commercial or contractual disputes, (xix) execute its flexible production strategy, (xx) retain and attract talented employees, (xxi) successfully access the capital and/or credit markets on terms (including interest rates) that are acceptable to the company and within its expectations, and (xxii) continue to manage the relationships and agreements that the company has with its labor unions to help drive long-term competitiveness.
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.
|
||||
Condensed Consolidated Statements of Income |
||||
(In thousands, except per share amounts) |
||||
(Unaudited) |
(Unaudited) |
|||
Three months ended |
||||
|
|
|||
2017 |
2016 |
|||
Motorcycles and related products revenue |
$ 1,328,711 |
$ 1,576,610 |
||
Gross profit |
477,485 |
590,280 |
||
Selling, administrative and engineering expense |
238,643 |
257,823 |
||
Operating income from motorcycles & related products |
238,842 |
332,457 |
||
Financial services revenue |
173,221 |
173,358 |
||
Financial services expense |
120,585 |
116,987 |
||
Operating income from financial services |
52,636 |
56,371 |
||
Operating income |
291,478 |
388,828 |
||
Investment income |
879 |
766 |
||
Interest expense |
7,673 |
7,168 |
||
Income before income taxes |
284,684 |
382,426 |
||
Provision for income taxes |
98,315 |
131,937 |
||
Net income |
$ 186,369 |
$ 250,489 |
||
Earnings per common share: |
||||
Basic |
$ 1.06 |
$ 1.37 |
||
Diluted |
$ 1.05 |
$ 1.36 |
||
Weighted-average common shares: |
||||
Basic |
176,001 |
183,429 |
||
Diluted |
177,070 |
184,204 |
||
Cash dividends per common share |
$ 0.365 |
$ 0.350 |
|
||||||
Condensed Consolidated Balance Sheets |
||||||
(In thousands) |
||||||
(Unaudited) |
(Unaudited) |
|||||
|
|
|
||||
2017 |
2016 |
2016 |
||||
ASSETS |
||||||
Current assets: |
||||||
Cash and cash equivalents |
$ 839,700 |
$ 759,984 |
$ 694,013 |
|||
Marketable securities |
5,004 |
5,519 |
45,122 |
|||
Accounts receivable, net |
335,578 |
285,106 |
311,960 |
|||
Finance receivables, net |
2,354,095 |
2,076,261 |
2,564,608 |
|||
Inventories |
485,476 |
499,917 |
553,750 |
|||
Restricted cash |
75,705 |
52,574 |
93,192 |
|||
Other current assets |
142,362 |
174,491 |
229,105 |
|||
Total current assets |
4,237,920 |
3,853,852 |
4,491,750 |
|||
Finance receivables, net |
4,792,027 |
4,759,197 |
4,811,958 |
|||
Other long-term assets |
1,251,908 |
1,277,191 |
1,163,963 |
|||
$ 10,281,855 |
$ 9,890,240 |
$ 10,467,671 |
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||
Current liabilities: |
||||||
Accounts payable & accrued liabilities |
$ 906,321 |
$ 721,970 |
$ 935,793 |
|||
Short-term debt |
953,357 |
1,055,708 |
870,073 |
|||
Current portion of long-term debt, net |
697,061 |
1,084,884 |
782,140 |
|||
Total current liabilities |
2,556,739 |
2,862,562 |
2,588,006 |
|||
Long-term debt, net |
5,320,797 |
4,666,975 |
5,460,553 |
|||
Pension and postretirement healthcare liabilities |
223,702 |
257,709 |
326,383 |
|||
Other long-term liabilities |
187,208 |
182,836 |
199,909 |
|||
Total shareholders’ equity |
1,993,409 |
1,920,158 |
1,892,820 |
|||
$ 10,281,855 |
$ 9,890,240 |
$ 10,467,671 |
|
||||
Condensed Consolidated Statements of Cash Flows |
||||
(In thousands) |
||||
(Unaudited) |
(Unaudited) |
|||
Three months ended |
||||
|
|
|||
2017 |
2016 |
|||
Net cash provided by operating activities |
$ 159,939 |
$ 41,131 |
||
Cash flows from investing activities: |
||||
Capital expenditures |
(23,967) |
(39,011) |
||
Finance receivables, net |
(63,538) |
(43,787) |
||
Other |
52 |
95 |
||
Net cash used by investing activities |
(87,453) |
(82,703) |
||
Cash flows from financing activities: |
||||
Proceeds from issuance of medium-term notes |
497,406 |
1,193,396 |
||
Repayments of medium-term notes |
(400,000) |
(450,000) |
||
Repayments of securitization debt |
(111,359) |
(173,363) |
||
Net decrease in credit facilities and unsecured commercial paper |
(101,702) |
(331,090) |
||
Borrowings of asset-backed commercial paper |
305,209 |
5,814 |
||
Repayments of asset-backed commercial paper |
(29,383) |
(15,740) |
||
Net change in restricted cash |
(23,132) |
(4,282) |
||
Dividends paid |
(64,611) |
(64,457) |
||
Purchase of common stock for treasury |
(79,753) |
(150,369) |
||
Excess tax benefits from share-based payments |
– |
110 |
||
Issuance of common stock under employee stock option plans |
7,336 |
276 |
||
Net cash provided by financing activities |
11 |
10,295 |
||
Effect of exchange rate changes on cash and cash equivalents |
7,219 |
3,081 |
||
Net increase (decrease) in cash and cash equivalents |
$ 79,716 |
$ (28,196) |
||
Cash and cash equivalents: |
||||
Cash and cash equivalents – beginning of period |
$ 759,984 |
$ 722,209 |
||
Net increase (decrease) in cash and cash equivalents |
79,716 |
(28,196) |
||
Cash and cash equivalents – end of period |
$ 839,700 |
$ 694,013 |
Motorcycles and Related Products Revenue and |
||||
Motorcycle Shipment Data |
||||
(Unaudited) |
(Unaudited) |
|||
Three months ended |
||||
|
|
|||
2017 |
2016 |
|||
MOTORCYCLES AND RELATED PRODUCTS REVENUE (in thousands) |
||||
Motorcycles |
$ 1,099,702 |
$ 1,317,578 |
||
Parts & Accessories |
169,025 |
183,705 |
||
General Merchandise |
55,836 |
70,618 |
||
Other |
4,148 |
4,709 |
||
$ 1,328,711 |
$ 1,576,610 |
|||
MOTORCYCLE SHIPMENTS: |
||||
|
45,784 |
57,635 |
||
International |
25,047 |
25,401 |
||
Total |
70,831 |
83,036 |
||
MOTORCYCLE PRODUCT MIX: |
||||
Touring |
29,068 |
38,497 |
||
Cruiser |
25,154 |
26,929 |
||
Sportster®/ Street |
16,609 |
17,610 |
||
Total |
70,831 |
83,036 |
Worldwide Retail Sales of Harley-Davidson Motorcycles(1) |
||||
Three months ended |
||||
|
|
|||
2017 |
2016 |
|||
|
33,316 |
35,326 |
||
|
8,984 |
8,846 |
||
EMEA – Other |
1,183 |
1,364 |
||
Total EMEA |
10,167 |
10,210 |
||
|
1,986 |
2,106 |
||
|
4,877 |
5,460 |
||
Total Asia Pacific |
6,863 |
7,566 |
||
|
2,342 |
1,886 |
||
|
2,361 |
2,470 |
||
Total International Retail Sales |
21,733 |
22,132 |
||
Total Worldwide Retail Sales |
55,049 |
57,458 |
(1) 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. The EMEA Europe total for |
||||
(2) Europe data includes |
Motorcycle Registration Data(1) |
||||
Three months ended |
||||
|
|
|||
2017 |
2016 |
|||
|
64,250 |
68,305 |
||
Two months ended |
||||
|
|
|||
2017 |
2016 |
|||
|
36,456 |
39,828 |
(1) Data includes on-road 601+cc models. On-road 601+cc models include dual purpose models, three-wheeled motorcycles and autocycles. |
||||
(2) |
||||
(3) |
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/harley-davidson-releases-first-quarter-2017-results-300440600.html
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