International Dealer News IDN 143 June/July 2018 - Page 20

Harley Q1 revenue up, but domestic U.S. sales down -12 percent In an announcement that was long on hyperbole, Harley- Davidson’s first quarter 2018 performance disappointed analysts and resulted in immediate share price losses. The good news is that revenue was up as the company’s model mix continued to track higher in mean price-point terms, and that international sales were essentially flat (actually +0.2 percent up) against recent declines. The bad news is that Harley still appears to be underselling a declining domestic U.S. market and seeing an ever greater proportion of its sales dependency migrating away from the kind of price points where market growth is expected to be found in the United States in the next five years. While the M-8s (Softails and Tourers) are continuing to favourably affect the revenue position, there is no evidence that they are enabling Harley to grow new unit sales ahead of market decline. Indeed, the company also announced that it is accelerating its strategy for growth, “anchored by its objective to build the next generation of riders globally” and, in what is a tacit admission that its plans to return to growth have failed so far, the company says that it is “currently refining its plans, and this summer intends to reveal significant additional steps to improve performance and value creation through 2022.” Harley-Davidson international retail motorcycle sales were up +0.2 percent in the first quarter of 2018 compared to 2017, and U.S. retail sales were down - 12.0 percent. Worldwide retail sales decreased -7.2 percent. “We are pleased to deliver revenue growth on the heels of our recent product investments in Softail and Touring. This, plus solid financial services segment performance and strong cash returns during the first quarter, underscores our commitment to drive shareholder value,” said Matt Levatich, President and Chief Executive Officer, Harley-Davidson, Inc. “Our 20 INTERNATIONAL DEALER NEWS - JUNE/JULY 2018 international markets returned to retail sales growth supporting our long-term objective to increase international sales to build the next generation of riders globally.” The company says that during the first quarter it continued progress on its 2027 objectives: to build two million new riders in the U.S., grow its international business to 50 percent of annual volume, launch 100 new high impact motorcycles, and do so profitably and sustainably. The company’s release also stated that, considering the prolonged softness in the U.S. industry, and what the company believes is untapped potential in international markets (and in certain high-growth spaces globally), the company is “crafting strategy accelerants to deliver significant value through 2022” and that it “plans to leverage its core business more fully and expand in new directions to accelerate value creation as it pursues its long-term objectives.” Matt Levatich went on to say that “our view of the highly competitive global motorcycle market is grounded in a realistic assessment of risks, opportunities and capabilities needed to inspire ridership and grow our business. Our data-driven insights compel us to enhance and accelerate our strategies to ensure we deliver on our long-term objectives as we build the next generation of Harley-Davidson riders.” Harley also sees its investment in a “collaborative agreement” with Alta Motors as supporting its commitment to lead in the electrification of the sport of motorcycling to reach new customers in new spaces.” Harley-Davidson’s first quarter market share was 50.4 percent in the U.S. The 601+ cc industry in Europe was down - 7.3 percent in the first quarter compared to 2017. Harley-Davidson’s first quarter market share was up +1.3 percentage points to 10.4 percent in Europe. On a discretionary basis, Harley- Davidson repurchased 1.4 million shares of its common stock during the Harley-Davidson sales revenue and production data… 1st quarter 2018 Income statements in THREE MONTHS ENDED $1,000s (except share) MARCH 2018 MARCH 2017 Net sales revenue $1,363,947 $1,328,711 Gross profit $473,773 $474,823 Operating income $236,417 $289,182 Net income $174,763 $186,369 Diluted earnings per common share $1.03 $1.05 NET SALES REVENUE Figures are shown THREE MONTHS ENDED in $1,000s MARCH 2018 MARCH 2017 Motorcycles $1,121,673 $1,083,639 Parts & Accessories $169,075 $168,023 General Merchandise $56,601 $55,836 Total $1,363,947 $1,328,711 MOTORCYCLE SHIPMENT DATA United States 38,797 45,784 Exports 25,147 25,047 Total H-D 63,944 70,831 PRODUCT MIX MARCH 2018 MARCH 2017 Touring 30,857 29,068 Custom 21,554 25,154 Sportster 11,533 16,609 Total 63,944 70,831 RETAIL SALES OF H-D MOTORCYCLES: MARCH 2018 MARCH 2017 United States 29,309 33,316 Canada 2,080 2,361 Europe 10,862 10,167 Asia Pacific Region 6,329 6,863 Latin America Region 2,506 2,342 Total 51,086 55,049 first quarter for $65.1 million. During the quarter, there were approximately 169.2 million weighted-average diluted common shares outstanding. At the end of the quarter, 24.2 million shares remained on board-approved share NOTE: H-D MOTORCYLE SHIPMENT DATA IS NOT THE SAME AS RETAIL REGISTRATIONS repurchase authorisations. Harley forecasts motorcycle shipments to be approximately 231,000 to 236,000 motorcycles in 2018; approximately 67,500 to 72,500 in the second quarter. Harley Q1 revenue up, but domestic U.S. sales down -12 percent In an announcement that was long on hyperbole, Harley- Davidson’s first quarter 2018 performance disappointed analysts and resulted in immediate share price losses. The good news is that revenue was up as the company’s model mix continued to track higher in mean price-point terms, and that international sales were essentially flat (actually +0.2 percent up) against recent declines. The bad news is that Harley still appears to be underselling a declining domestic U.S. market and seeing an ever greater proportion of its sales dependency migrating away from the kind of price points where market growth is expected to be found in the United States in the next five years. While the M-8s (Softails and Tourers) are continuing to favourably affect the revenue position, there is no evidence that they are enabling Harley to grow new unit sales ahead of market decline. Indeed, the company also announced that it is accelerating its strategy for growth, “anchored by its objective to build the next generation of riders globally” and, in what is a tacit admission that its plans to return to growth have failed so far, the company says that it is “currently refining its plans, and this summer intends to reveal significant additional steps to improve performance and value creation through 2022.” Harley-Davidson international retail motorcycle sales were up +0.2 percent in the first quarter of 2018 compared to 2017, and U.S. retail sales were down - 12.0 percent. Worldwide retail sales decreased -7.2 percent. “We are pleased to deliver revenue growth on the heels of our recent product investments in Softail and Touring. This, plus solid financial services segment performance and strong cash returns during the first quarter, underscores our commitment to drive shareholder value,” said Matt Levatich, President and Chief Executive Officer, Harley-Davidson, Inc. “Our 20 international markets returned to retail sales growth supporting our long-term objective to increase internation ͅ)ѼեѡЁɅѥɥ)今t)Q́ͅѡЁɥѡ)ՅѕȁЁѥՕɽɕ́(܁ѥٕѼեݼ)܁ɥ́ѡTLɽ܁)ѕɹѥͥ́ѼɍЁ)Յٽյչ܁)Ёѽɍ危̰ͼɽх)х)Qéɕ͔ͼхѕѡа)ͥɥѡɽͽѹ́)ѡTL䰁ݡЁѡ)ٕ́́չхѕѥ)ѕɹѥɭ̀х)ɽѠ́䤰ѡ)䁥̃qɅѥɅѕ)Ʌ́ѼٕȁͥЁمՔ)ѡɽ՝ˊtѡЁЃq́Ѽ)ٕɅ́ɔͥ́ɔձ䁅)܁ɕѥ́ѼɅє)مՔɕѥ́ЁՕ́́ѕɴ)ѥٕ̻t)5Ё1مѥݕЁѼͅѡЃq)٥܁ѡ䁍ѥѥٔ)ѽɍ危ɭЁ́ɽչ)ɕѥ͕͵Ёɥ̰ͭ)չѥ́ѥ́Ѽ)ɔɥ͡ɽ܁ȁ̸ͥ)=ȁфɥٕͥ́́Ѽ)ɅєȁɅѕ́Ѽ)ɔݔٕȁȁѕɴ)ѥٕ́́ݔեѡ)Ʌѥ!ɱ٥ͽɥ̻t)!ɱ䁅ͼ͕ٕ́́ѵЁ+qɅѥٔɕӊtݥѠф)5ѽ́́ѥ́ѵЁѼ)ѡɥѥѡЁ)ѽɍ危Ѽɕ܁ѽ́)܁̻t)!ɱ٥ͽéЁՅѕȁɭ)͡ɔ݅̀ЁɍЁѡTLQ(Ĭ䁥ɽ݅́ݸ(ܸ́ɍЁѡЁՅѕȁɕ)Ѽܸ!ɱ٥ͽéЁՅѕ)ɭЁ͡ɔ݅́ĸ́ɍх)́ѼЁɍЁɽ)=͍ɕѥ䁉̰ͥ!ɱ)٥ͽɕɍ͕ĸЁ)͡ɕ́́ѽɥѡ)%9QI9Q%=901H9]L)U9)U1d)!ɱ٥ͽ́ͅɕٕՔɽՍѥч(ЁՅѕȀ)%хѕ́(İ̀ፕЁ͡ɔ)9Ё́ͅɕٕՔ)ɽ́ɽ)=Ʌѥ)9Ё)ѕɹ́)͡ɔ)9PM1LIY9U)ɕ́ɔ͡ݸ)İ)5ѽɍ危)Àͽɥ)Ʌ5ɍ͔)Qх)Q!I5=9Q!L9)5I 5I (Ḭ̇(̰(ذ(а̀İ(а((ذ(ĸ̀ĸ)Q!I5=9Q!L9)5I 5I (İİ((ذ(Ḭ̇(Ḭ̇((԰(İ)9=Q 5=Q=I e1M!%A59PQ%L9=P)5=Q=I e 1M!%A59PQQ!)M5LIQ%0I%MQIQ%=9L)UѕMхѕ))Qх (԰(̰Ѐ԰(԰()AI=U P5%`5I 5I ((İ(İ(̰Ѐ(԰(ذ()5I 5I ((Ȱ((ذ(Ȱ(İ؀̰(Ȱ((ذ(Ȱ(԰)Qɥ) ѽ)Mѕ)Qх)IQ%0M1L= 5=Q=I e 1L)UѕMхѕ) )ɽ)ͥAI)1ѥɥI)Qх)ЁՅѕȁȀԸāɥѡ)ՅѕȰѡɔݕɔɽ᥵ѕ(ȁݕѕٕɅѕ)͡ɕ́хЁѡ)ѡՅѕȰиȁ͡ɕ)ɕɐɽٕ͡ɔ)ɕɍ͔ѡɥͅѥ̸)!ɱ䁙ɕ́ѽɍ危͡)Ѽɽ᥵ѕİѼ(ذѽɍ危́)ɽ᥵ѕܰѼȰѡ)͕Յѕȸ