) posted a 13.1% rise in earnings to $1.21 per share in the
second quarter of 2013 from $1.07 in the same quarter of prior
year. Earnings topped the Zacks Consensus Estimate by 4 cents.
Net income increased 9.9% to $271.7 million from $247.3 million a
year ago. Consolidated revenues improved 3.5% to $1.79 billion,
exceeding the Zacks Consensus Estimate of $1.63 billion.
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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
10.3% to $431.8 million from $391.5 million in the second quarter
Motorcycles and Related Products
Motorcycles and Related Products
improved 4% to $1.63 billion driven by healthy improvement in
motorcycle shipments. Revenues from Harley-Davidson motorcycles
increased 4.2% to $1.27 billion. Operating income from
Motorcycles and Related Products rose 15.5% to $357.7 million
from $309.6 million year ago. The year-over-year improvement is
driven by higher motorcycle shipments, higher gross margin and
lower restructuring costs compared with the first quarter of
Harley shipped 84,606 motorcycles to dealers and distributors
worldwide during the quarter, which was in line with its
guidance. Shipments in the quarter increased 1.3% from 83,502
motorcycles in the second quarter of 2012.
Harley's worldwide dealer retail sales of new motorcycles scaled
up 5.2% to 90,193 units. In the U.S., shipments went up 4.4% to
58,241 units from the year-ago quarter.
In international markets, shipments went up by 6.7% to 31,952
motorcycles. Shipments rose 12.3% in the Asia Pacific region,
39.2% in the Latin America region and 1% in the EMEA region and
3.6% in Canada.
Revenues from Parts and Accessories edged up 1.5% to $269.6
million, while revenues from General Merchandise - which includes
MotorClothes apparel - increased 8.7% to $81.7 million.
Harley-Davidson Financial Services (HDFS)
Revenues in the Financial Services segment improved 1.4% to
$162.8 million in the quarter. However, operating income
decreased 9.5% to $74.2 million from $82.0 million in the
2012-quarter. Operating income had favorable impacts from higher
net interest income on favorable cost of funds and lower
In the quarter, Harley-Davidson enjoyed a restructuring benefit
of $5.3 million compared with restructuring expenses of $6.2
million in the year-ago period. Upon the completion of
restructuring activities in 2013, the company expects them to
result in one-time overall costs of roughly $485 million,
including approximately $3 million in 2013.
Harley anticipates savings of approximately $305 million in 2013
from the activities initiated in 2009, leading to annual savings
of approximately $320 million beginning in 2014.
Harley had cash and cash equivalents of $1.3 billion as of Jun
30, 2013, up from $1.1 billion as of Jul 1, 2012. Total debt
increased to $5.5 billion from $5.3 billion as of Jul 1, 2012.
Consequently, long-term debt to capitalization ratio declined to
66.2% from 66.6% as of Jul 1, 2012.
In the first half of 2013, Harley's operating cash outflow
improved to $389.7 million from $288.2 million in the prior-year
quarter. Capital expenditures increased to $66.6 million from
$60.1 million in the first half of 2012.
For 2013, Harley reiterated its shipment guidance of 259,000 to
264,000 motorcycles to dealers and distributors worldwide. For
the third quarter of 2013, the company expects to ship 51,000 to
56,000 motorcycles compared with 52,793 motorcycles shipped a
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% share of the U.S. market,
providing scale advantages over most competitors. Furthermore,
the company maintains an extremely strong franchise.
Currently, the company retains a Zacks Rank #4 (Sell). In the
Ford Motor Co.
Tesla Motors, Inc.
), each carrying a Zacks Rank # 2 (Buy), are worth a look at the