Harley-Davidson, Inc. Reports Record Q1 Sales and Earnings
13 April 1999
Harley-Davidson, Inc. Reports Record First Quarter Sales and Earnings
MILWAUKEE, April 12 -- Harley-Davidson, Inc.
today announced record sales and earnings for its first quarter ended March
28, 1999. The Company's first quarter sales were $558.6 million, an increase
of 19.7 percent over the first quarter last year. Earnings per share for the
first quarter were 38 cents, a 30.8 percent increase compared to last year.
"We achieved a strong start to 1999 with another record quarter of
double-digit growth," said Jeffrey L. Bleustein, chairman and chief executive
officer of Harley-Davidson, Inc. "We continue to increase our production
capacity to meet the growing worldwide demand for Harley-Davidson motorcycles.
Our dealers are expanding their capabilities and service capacity and we
believe our new products currently in development will continue to fulfill the
dreams of our existing customers and attract new customers into the
Harley-Davidson family. All of this should position us for long-term
sustainable growth."
Motorcycles and Related Products Segment
First quarter sales of Harley-Davidson(R) motorcycles were $436.5 million,
an increase of 20.8 percent over the first quarter last year. Shipments of
Harley-Davidson motorcycles in the first quarter totaled 41,181 units, up
6,699 units or 19.4 percent over last year. Based on the results of the first
quarter, Harley-Davidson's motorcycle production target for 1999 has been
increased to 168,000 units, and the second quarter production target is 43,500
units.
Buell(R) motorcycle sales for the first quarter totaled $16.0 million on
shipments of 2,013 units, compared to $12.3 million on shipments of 1,350
units last year. Buell's motorcycle production target for 1999 has been
increased to 8,000 units.
Available year-end 1998 worldwide retail registration data show the
heavyweight (651cc+) motorcycle market grew 13.8 percent over 1997. Worldwide
retail registrations for Harley-Davidson and Buell motorcycles grew
15.8 percent in 1998 increasing the Company's worldwide market share to
25.2 percent. Complete worldwide retail registration data for the first
quarter is not yet available.
First quarter sales of Parts and Accessories (P&A), which consist of
Genuine Motor Parts(TM) and Genuine Motor Accessories(TM), totaled
$75.0 million, an 18.6 percent increase from the year-ago quarter. General
Merchandise first quarter sales, which consist of MotorClothes(R) apparel and
collectibles, totaled $29.5 million, up slightly over the same period last
year. General Merchandise sales grew slower than the Company's long-term
target due primarily to the timing of new product introductions in 1999
compared to 1998. The Company's long-term P&A and General Merchandise sales
growth target is similar to its motorcycle unit growth target.
First quarter gross margin was 33.9 percent of revenue, up from 32.1
percent of revenue last year. The increase in gross margin was due in part to
a favorable product and market mix. In addition, last year's gross margin was
negatively impacted by the costs associated with the ramp-up of two new
manufacturing plants.
First quarter operating margin for the Motorcycles and Related Products
Segment was 16.4 percent of revenue, compared to 15.2 percent of revenue for
the same period last year. The increase in gross margin more than offset the
increase in operating expenses.
Financial Services Segment
Eaglemark Financial Services, Inc. (Eaglemark), a subsidiary of
Harley-Davidson, Inc., reported first quarter operating income of $2.6
million, slightly higher than the year-ago quarter. As expected, Eaglemark's
first quarter operating income grew slower than it has historically due to
increased investment in systems and staffing to accommodate continued growth.
The Company still expects Eaglemark operating income to grow faster than the
motorcycle business for 1999.
Harley-Davidson, Inc. is the parent company for Harley-Davidson Motor
Company, Buell Motorcycle Company and Eaglemark Financial Services, Inc.
Harley-Davidson Motor Company, the only major U.S.-based motorcycle
manufacturer, produces heavyweight motorcycles and offers a complete line of
motorcycle parts, accessories, apparel, and general merchandise. Buell
Motorcycle Company produces sport and sport-touring motorcycles. Eaglemark
Financial Services, Inc. provides wholesale and retail financing, insurance
and credit card programs to Harley-Davidson dealers and customers.
Harley-Davidson, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
Mar. 28, Mar. 29,
1999 1998
Net sales $558,567 $466,527
Gross profit 189,134 149,875
Operating income:
Motorcycles and Related Products 91,477 71,051
Financial Services 2,642 2,585
Corporate expenses (2,802) (2,829)
Total operating income 91,317 70,807
Interest income, net 1,489 774
Other income (expense), net 178 (1,189)
Income before provision for income taxes 92,984 70,392
Provision for income taxes 33,940 25,694
Net income $59,044 $44,698
Earnings per common share:
Basic $.39 $.29
Diluted $.38 $.29
Weighted average common shares:
Basic 153,046 151,834
Diluted 155,686 154,201
Harley-Davidson, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
Mar. 28, Dec. 31, Mar. 29,
1999 1998 1998
ASSETS
Current assets:
Cash and cash equivalents $145,238 $165,170 $ 95,236
Accounts receivable, net 139,633 113,417 124,974
Finance receivables, net 401,746 360,341 320,107
Inventories 154,127 155,616 128,869
Other current assets 46,909 50,419 41,219
Total current assets 887,653 844,963 710,405
Finance receivables, net 427,076 319,427 334,916
Other long-term assets 753,391 755,819 649,033
Total assets $2,068,120 $1,920,209 $1,694,354
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Other current liabilities $324,551 $321,773 $272,239
Current portion of finance debt 238,288 146,742 152,586
Total current liabilities 562,839 468,515 424,825
Finance debt 280,000 280,000 280,000
Other long-term liabilities 59,351 69,700 62,595
Postretirement health care benefits 73,152 72,083 69,264
Total shareholders' equity 1,092,778 1,029,911 857,670
Total liabilities and
shareholders' equity $2,068,120 $1,920,209 $1,694,354
Harley-Davidson, Inc.
Net Sales and Motorcycle
Shipment Data
Three Months Ended
Mar. 28, Mar. 29,
1999 1998
NET SALES (in thousands)
Harley-Davidson(R) motorcycles $436,524 $361,328
Buell(R) motorcycles 16,047 12,279
Parts & Accessories 75,035 63,283
General Merchandise 29,451 29,206
Other 1,510 431
Total net sales $558,567 $466,527
HARLEY-DAVIDSON UNITS
Motorcycle shipments:
United States 30,135 23,882
Export 11,046 10,600
Total 41,181 34,482
Motorcycle product mix:
Touring 26.8% 24.3%
Custom 50.4 51.9
Sportster(R) 22.8 23.8
Total 100.0% 100.0%
BUELL UNITS
Motorcycle shipments 2,013 1,350
651cc+ Motorcycle Retail Registrations (Units)
1998 1997 % change
UNITED STATES 227,132 190,949 18.9%
HDI 112,349 95,403 17.8
CANADA 19,082 14,458 32.0
HDI 7,094 5,807 22.2
EUROPE 270,212 250,293 8.0
HDI 17,250 16,057 7.4
JAPAN/AUSTRALIA 69,222 58,880 17.6
HDI 10,805 10,112 6.9
TOTAL 585,648 514,580 13.8
HDI 147,498 127,379 15.8%
HDI includes both Harley-Davidson and Buell motorcycles
Sources: Motorcycle Industry Council, Giral S.A., JAMA, ABS