HARLEY-DAVIDSON, INC. 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(R)/
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
====== ======
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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
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.
