Another one of Harley's "boring" earnings reports.
Only beat expectations by $.01 vs $.02 last quarter.
Gross margins 2q 35.0% vs 1q 33.9%
Prior Year Gross Margins 2q 34.3% ; 1q 32.1%
Increased Harley target units by 4000 and dropped Buell by 300 over prior estimates.
Targets are now at 5000 for January estimates for Harley and 200 for Buell.
Monday July 12, 6:20 pm Eastern Time
Company Press Release
SOURCE: Harley-Davidson, Inc.
Harley-Davidson, Inc. Reports Record Second Quarter Sales and Earnings
MILWAUKEE, Wis., July 12 /PRNewswire/ -- Harley-Davidson, Inc. (NYSE: HDI - news) today announced record sales and earnings for its second quarter ended June 27, 1999. The Company's second quarter sales were $608.7 million, an increase of 17.7 percent over the second quarter last year. Earnings per share for the second quarter were 44 cents, a 22.9 percent increase compared to last year. ``This is shaping up to be another record year,' said Jeffrey L. Bleustein, chairman and chief executive officer of Harley-Davidson, Inc.
``The worldwide heavyweight motorcycle market is in the midst of its eighth consecutive year of growth,' said Jeffrey L. Bleustein, chairman and chief executive officer of Harley-Davidson, Inc. ``Retail registration data through May shows the worldwide (651cc+) motorcycle market grew 13.9 percent relative to 1998, while registrations of Harley-Davidson© and Buell© motorcycles grew 30.6 percent during the same period. In fact, our U.S., Europe and Asia-Pacific markets are each experiencing double-digit retail registration growth.
``Based on the market's growth and our manufacturing capabilities, we have increased our production target for Harley-Davidson motorcycles for 1999 from 168,000 to 172,000 units. However, even with this planned production increase, it is unlikely that the Company will be able to sustain a thirty-plus percent rate of retail registration growth during the second half of the year.'
Motorcycles and Related Products Segment
Second quarter sales of Harley-Davidson motorcycles were $468.6 million, an increase of 16.9 percent over the second quarter last year. Shipments of Harley-Davidson motorcycles in the second quarter totaled 44,771 units, up 7,018 units or 18.6 percent over last year. With the increase in the Company's 1999 production target, the third quarter production target is 42,000 units.
Buell motorcycle sales for the second quarter totaled $12.5 million on shipments of 1,512 units, compared to $13.4 million on shipments of 1,497 units last year. During the second quarter, Buell motorcycle production was interrupted for five weeks until the parts associated with its recall campaign could be supplied to the market. As a result, Buell's motorcycle production target for 1999 has been reduced by 300 units to 7,700.
Second quarter sales of Parts and Accessories (P&A), which consist of Genuine Motor Parts(TM) and Genuine Motor Accessories(TM), totaled $99.7 million, a 25.7 percent increase from the year-ago quarter. General Merchandise second quarter sales, which consist of MotorClothes© apparel and collectibles, totaled $27.3 million, up 21.2 percent over the same period last year. The Company's long term P&A and General Merchandise sales growth target continues to approximate the Harley-Davidson motorcycle unit growth target.
Second quarter gross margin was 35.0 percent of revenue, up from 34.3 percent of revenue last year. The increase in gross margin was due to a higher mix of domestic motorcycle shipments and higher P&A growth, but partially offset by a higher Sportster motorcycle mix.
Second quarter operating margin for the Motorcycles and Related Products Segment was 16.5 percent of revenue, compared to 16.1 percent of revenue for the same period last year. Operating expenses are planned to increase in the second half of 1999 as the Company invests in new products and marketing programs intended to enhance the Harley-Davidson and Buell motorcycle ownership experiences. The Company's goal is to maintain operating margins during the second half of 1999 comparable to the record levels achieved in the second half of 1998.
Financial Services Segment
Eaglemark Financial Services, Inc. (Eaglemark), a subsidiary of Harley-Davidson, Inc., reported second quarter operating income of $9.1 million, up 43.5 percent compared to the year-ago quarter. Eaglemark is benefiting from the increase in U.S. motorcycle retail sales as well as increased market share of motorcycle retail installment lending, which grew from 18.7 percent to 21.9 percent, year to date. The Company's goal is to sustain Eaglemark's first half operating income growth rate of approximately 30 percent through the end of 1999.
Share Repurchase
During the second quarter, Harley-Davidson repurchased approximately 1.0 million shares of its common stock, under the Company's authorization to repurchase shares to offset dilution caused by the exercise of stock options.
Six Month Results
For the six month period, sales totaled $1,167 million, an 18.7 percent increase over the year-ago period. Diluted earnings per share were 82 cents, an increase of 26.5 percent compared to the first six months last year.
Through the first six months of this year, Harley-Davidson motorcycle revenue was $905.1 million, an 18.7 percent increase while Buell motorcycle revenue was $28.6 million, an 11.3 percent increase, compared with the same period in 1998.
For the first six months of 1999, P&A revenue totaled $174.7 million, a 22.5 percent increase while General Merchandise revenue totaled $56.7 million, a 9.7 percent increase compared with the same period in 1998.
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