MILWAUKEE, April 18, 2017 /PRNewswire/
-- Harley-Davidson, Inc. (NYSE:HOG) first quarter 2017
diluted EPS decreased 22.8 percent to $1.05 compared to $1.36 in the same period of 2016. First quarter
net income was $186.4 million on
consolidated revenue of $1.50 billion
versus net income of $250.5 million
on consolidated revenue of $1.75
billion in the first quarter of last year.
"First quarter U.S. retail sales were in line with our
projections and we remain confident in our full-year plan despite
international retail sales being down in the first quarter," said
Matt Levatich, CEO, Harley-Davidson.
"We are very pleased with our continued growth in U.S. market share
and the progress our U.S. dealers made in reducing their inventory
of 2016 motorcycles in the 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 U.S. were down 5.7 percent compared to the year-ago
quarter, with the overall U.S. industry down for the same period.
Harley-Davidson's U.S. market share for the quarter was 51.3
percent in the 601cc-plus segment, up compared to the first quarter
in 2016. Harley-Davidson's international retail sales decreased 1.8
percent compared to the same quarter in 2016.
"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
|
U.S.
|
33,316
|
35,326
|
-5.7%
|
Canada
|
2,361
|
2,470
|
-4.4%
|
Latin
America
|
2,342
|
1,886
|
24.2%
|
EMEA
|
10,167
|
10,210
|
-0.4%
|
Asia
Pacific
|
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 U.S. As we
expected, U.S. sales were adversely impacted by soft industry sales
and the company's decision to reduce shipments of model year 2017
motorcycles. This decision helped dealers focus on selling down
their model year 2016 retail inventory. International retail sales
were down behind weak sales in Asia
Pacific, partially offset by strong growth in Latin America. Retail sales in EMEA and
Canada were both down as they
compared against strong prior year growth of 8.8 percent and 16.3
percent, respectively.
Motorcycles and
Related Products Segment Results
|
$ in
thousands
|
1st
Quarter
|
2017
|
2016
|
Change
|
Motorcycle Shipments
(vehicles)
|
70,831
|
83,036
|
-14.7%
|
Revenue
|
|
|
|
Motorcycles
|
$1,099,702
|
$1,317,578
|
-16.5%
|
Parts &
Accessories
|
$169,025
|
$183,705
|
-8.0%
|
General
Merchandise
|
$55,836
|
$70,618
|
-20.9%
|
Gross Margin
Percent
|
35.9%
|
37.4%
|
-1.5 pts
|
Operating
Income
|
$238,842
|
$332,457
|
-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
|
$173,221
|
$173,358
|
-0.1%
|
Operating
Income
|
$52,636
|
$56,371
|
-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 $844.7 million, compared to $739.1 million
in 2016. Harley-Davidson generated $159.9 million of cash
from operating activities in the first quarter of 2017 compared
to $41.1 million in the same period of 2016. The company paid
a cash dividend of $0.365 per share
for the first quarter of 2017, an increase of 4.3 percent compared
to the first quarter of 2016. On a discretionary basis, the company
repurchased 1.2 million shares of its common stock during the
first quarter of 2017 for $70.9
million. There were approximately 177.1 million
weighted-average diluted common shares outstanding in the first
quarter of 2017, compared to 184.2 million shares in the first
quarter of 2016. At the end of the first quarter, 18.0 million
shares remained on a board-approved share repurchase
authorization.
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 $200 million to $220
million.
Company Background
Harley-Davidson, Inc. is the parent
company of Harley-Davidson Motor Company and Harley-Davidson
Financial Services. Since 1903, Harley-Davidson Motor Company has
fulfilled dreams of personal freedom with custom, cruiser and
touring motorcycles, riding experiences and events and a complete
line of Harley-Davidson motorcycle parts, accessories, general
merchandise, riding gear and apparel. 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 first 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 under the
Events and Presentations section. The audio portion of today's call
will also be posted approximately two hours after the call
concludes.
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.
Harley-Davidson,
Inc.
|
Condensed
Consolidated Statements of Income
|
(In thousands, except
per share amounts)
|
|
|
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
Three months
ended
|
|
|
March 26,
|
|
March 27,
|
|
|
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
|
Harley-Davidson,
Inc.
|
Condensed
Consolidated Balance Sheets
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
|
March 26,
|
|
December
31,
|
|
March 27,
|
|
|
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
|
Harley-Davidson,
Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(In
thousands)
|
|
|
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
Three months
ended
|
|
|
March 26,
|
|
March 27,
|
|
|
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
|
|
|
March 26,
|
|
March 27,
|
|
|
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:
|
|
|
|
|
United States
|
|
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
|
|
|
March 31,
|
|
March 31,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
United
States
|
|
33,316
|
|
35,326
|
|
|
|
|
|
Europe(2)
|
|
8,984
|
|
8,846
|
EMEA -
Other
|
|
1,183
|
|
1,364
|
Total
EMEA
|
|
10,167
|
|
10,210
|
|
|
|
|
|
Japan
|
|
1,986
|
|
2,106
|
Asia Pacific -
Other
|
|
4,877
|
|
5,460
|
Total Asia
Pacific
|
|
6,863
|
|
7,566
|
|
|
|
|
|
Latin
America
|
|
2,342
|
|
1,886
|
Canada
|
|
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 March 31, 2016 includes 251
units originally reported in the EMEA - Other total.
|
|
|
|
|
|
(2)
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)
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
March 31,
|
|
March 31,
|
|
|
2017
|
|
2016
|
United
States(2)
|
|
64,250
|
|
68,305
|
|
|
|
|
|
|
|
Two months
ended
|
|
|
February
28,
|
|
February
29,
|
|
|
2017
|
|
2016
|
Europe(3)
|
|
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) 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-releases-first-quarter-2017-results-300440600.html
SOURCE Harley-Davidson, Inc.