Harley-Davidson reported today strong gains in earnings and dealer new motorcycle sales for the first quarter of 2012.
Income from continuing operations during the quarter was up 44 percent to $172 million, or $0.74 per share. Consolidated revenue was up 17 percent to $1.43 billion.
Retail sales of new Harley-Davidson motorcycles grew 20.3 percent worldwide in the quarter compared to the prior-year period, led by a 25.5 percent increase in the U.S.
“We continue to be encouraged by the strong trend at retail and in earnings over the past several quarters. Our first-quarter performance reflects the outstanding appeal of our products, the ongoing results of our transformation strategy, the efforts of our dealers and employees, and improving macroeconomic conditions in the U.S.,” said Keith Wandell, chairman, president and CEO of Harley-Davidson Inc.
“While we are obviously pleased by our strong start to the year, we are more focused than ever on the ongoing implementation of our business strategy and tapping the many opportunities we see globally. Through Harley-Davidson’s transformation to world-class manufacturing, product development and retail capabilities, we are positioning the company to serve our customers even better and help ensure the strength of the business long term,” Wandell said.
Dealers worldwide sold 59,677 new Harley-Davidson motorcycles in the first quarter, a 20.3 percent increase compared to the year-ago period. U.S. dealers sold 39,762 of these units, a 25.5 percent increase. In international markets, dealer unit sales increased 11.2 percent.
Industrywide U.S. heavyweight new motorcycle (651cc-plus) retail unit sales increased 17.5 percent compared to last year’s first quarter.
Harley-Davidson claims that in 2011, for the fourth straight year, it was the U.S. market share leader among young adults ages 18-34, women, African American and Hispanic riders, as well as among its core rider group, across all displacements of on-road motorcycles. More than one-third of new Harley-Davidson motorcycle sales in the U.S. in 2011 were to riders new to the brand.
“Harley-Davidson’s market leadership among its demographic outreach targets we believe demonstrates the powerful and growing appeal of the brand to new generations and diverse groups of riders,” Wandell said. “We also continued to expand the reach of Harley-Davidson to customers around the world.”
First-quarter data are listed in tables found here.
First-quarter operating income from motorcycles and related products grew 66.4 percent to $208 million on higher shipment volume and operating margin improvement, compared to the year-ago period.
Revenue from motorcycles during the first quarter of $996 million was up 19.5 percent. The company shipped 64,263 motorcycles to dealers and distributors worldwide during the quarter, compared to shipments of 53,827 motorcycles in the first quarter of 2011. First-quarter 2012 shipments were higher than the company’s shipment guidance of 58,000 to 63,000 motorcycles for the quarter.
Revenue from motorcycle parts and accessories totaled $199 million during the quarter, up 21.1 percent, and revenue from general merchandise, which includes MotorClothes Apparel and Accessories, was $74.6 million, up 19.2 percent compared to the year-ago period.
Gross margin was 35.9 percent in the first quarter of 2012, compared to 33.1 percent in the first quarter of 2011. First-quarter operating margin from motorcycles and related products was 16.3 percent compared to 11.8 percent in last year’s first quarter.
The Financial Services segment recorded operating income of $67.4 million in the first quarter of 2012, on par with last year. Segment results reflect continued improvement in loan portfolio credit performance and increased net interest margin.
Harley-Davidson is increasing its full-year shipment guidance and expects to ship 245,000 to 250,000 motorcycles to dealers and distributors worldwide in 2012, compared to prior shipment guidance of 240,000 to 245,000 motorcycles. The new shipment guidance reflects consumer demand and the company’s limited ability to produce additional motorcycles in 2012. In the second quarter, the company expects to ship 79,000 to 84,000 motorcycles.
Harley-Davidson continues to expect capital expenditures of between $190 million and $210 million in 2012. While the company is maintaining guidance for overall capital spending, it is increasing the portion of capital expenditures dedicated to support restructuring activities to about $35 million for the full year, compared to the previous estimate of about $25 million.
In the first quarter, Harley-Davidson incurred restructuring charges of $11.5 million. Upon completion, the company continues to expect restructuring activities initiated since 2009 to result in one-time overall costs of $500 million to $520 million through 2013, including costs of $50 million to $60 million in 2012. The company continues to expect cumulative savings of $275 million to $295 million in 2012 from restructuring activities initiated since 2009, rising to cumulative annual ongoing savings of $315 million to $335 million beginning in 2014.
Cash and marketable securities totaled $1.41 billion at the end of the first quarter, compared to $1.05 billion at the end of last year’s first quarter. During the first quarter, Harley-Davidson experienced a cash outflow from operating activities of continuing operations of $73.6 million, compared to an outflow of $104.9 million in the year-ago quarter. Cash flow was affected by a $200 million company contribution to its pension plans in both the first quarter of 2012 and the year-ago period.
Posted by Arlo Redwine, photos courtesy Harley-Davidson
Like Dealernews’ Facebook page: