Harley-Davidson Inc. ( HOG ) posted a 33.8%
rise in earnings to 99 cents per share in the first quarter of 2013
from 74 cents in the same quarter of prior year, topping the Zacks
Consensus Estimate by a couple of cents. Net income increased 30.3%
to $224.1 million from $172.0 million a year ago while consolidated
revenues improved 9.8% to $1.57 billion, exceeding the Zacks
Consensus Estimate of $1.46 billion.DENSO CORP (DNZOY): Get Free ReportHARLEY-DAVIDSON (HOG): Free Stock Analysis
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The increase in sales and earnings during the quarter were
attributable to higher motorcycle shipments and continued
improvement in operating efficiencies. Operating income rose 26.4%
to $348.3 million from $275.5 million in the first quarter of
Motorcycles and Related Products
Revenues from Motorcycles and Related Products grew 11.1% to $1.41
billion driven by higher shipments. Revenues from Harley-Davidson
motorcycles increased 15.9% to $1.15 billion. Operating income from
Motorcycles and Related Products soared 33.0% to $276.8 million
driven by higher motorcycle shipments, higher gross margin and
lower restructuring costs compared to the first quarter of
Harley shipped 75,222 motorcycles to dealers and distributors
worldwide during the quarter, which was in line with its guidance,
Shipments in the quarter increased 17.1% from 64,263 motorcycles in
the first quarter of 2012.
However, Harley's worldwide dealer retail sales of new motorcycles
dipped 9.1% to 54,254 units. In the U.S., shipments went down 12.7%
to 34,706 units as the year-ago quarter benefited from accelerated
sales due to abnormally warm early spring weather.
In international markets, shipments fell marginally by 1.8% to
19,548 motorcycles. However, shipments rose 11.5% in the Asia
Pacific region and 6.2% in the Latin America region but went down
10.8% in the EMEA region and 0.4% in Canada.
Revenues from Parts and Accessories ebbed 7.5% to $184.0 million
while revenues from General Merchandise - which includes
MotorClothes apparel - slid 3.3% to $72.1 million.
Harley-Davidson Financial Services (HDFS)
Revenues in the Financial Services segment improved marginally to
$157.0 million in the quarter. Operating income increased 6.1% to
$71.5 million from $67.4 million in the 2012-quarter. The
improvement was driven by higher net interest income on favorable
cost of funds, partially offset by slightly higher provision for
In the quarter, Harley-Davidson incurred lower restructuring
charges of $2.9 million compared with $11.5 million in the year-ago
period. Upon the completion in 2013, the company expects
restructuring activities to result in one-time overall costs of
roughly $495 million, including approximately $13 million in
Harley anticipates savings of approximately $305 million in 2013
from the activities initiated since 2009, giving rise to annual
ongoing savings of approximately $320 million beginning in
Harley had cash and cash equivalents of $1.02 billion as of Mar
31, 2013, down from $1.28 billion as of Apr 1, 2012. Total debt
decreased to $5.30 billion from $5.57 billion as of Apr 1, 2012.
Consequently, long-term debt to capitalization ratio declined to
66.6% from 68.4% as of Apr 1, 2012.
In the quarter, Harley's operating cash outflow deteriorated to
$108.5 million from $73.6 million in the prior year quarter.
Capital expenditures decreased to $22.3 million from $24.7 million
in the first quarter of 2012.
In 2013, Harley reiterated its shipment guidance of 259,000 to
264,000 motorcycles to dealers and distributors worldwide,
reflecting roughly 4.5%-6.5% increase from 2012. In the second
quarter of 2013, the company expects to ship 80,000 to 85,000
Harley continues to expect gross margin between 35.25% and 36.25 %
and capital expenditures between $200 million and $220 million for
the full year.
Harley-Davidson commands roughly 50% of the U.S. market, providing
scale advantages over most competitors. Furthermore, the company
maintains an extremely strong franchise. The company retains a
Zacks Rank #3 on its stock, which translates to a Hold rating for
the short term (1 to 3 months).
Few stocks that are performing well in the industry where Harley
operates include Visteon Corp. ( VC ), Denso
Corp. ( DNZOY ) and
Gentherm Incorporated ( THRM ). They carry a
Zacks Rank #1 (Strong Buy).