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Harley-Davidson (HOG) Q2 Earnings Beat, Revenues in Line
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Harley-Davidson, Inc. (HOG - Free Report) reported earnings of $1.55 per share in the second quarter of 2016, which were higher than $1.44 recorded in the year-ago quarter. Further, earnings surpassed the Zacks Consensus Estimate of $1.53. Net income decreased to $280.4 million from $299.8 million a year ago.
Consolidated revenues rose to $1.86 billion from $1.82 billion in the second quarter of 2015. Operating income declined to $412.3 million from $462.5 million in the year-ago period.
Motorcycles and Related Products
Revenues from Motorcycles and Related Products improved to $1.67 billion in second-quarter 2016 from $1.65 billion in the year-ago quarter. Further, the figure was in line with the Zacks Consensus Estimate. The improvement was driven by higher motorcycle shipments.
Operating income from Motorcycles and Related Products decreased significantly to $322.7 million from $380.6 million a year ago.
Revenues from Harley-Davidson motorcycles rose 1.7% to $1.33 billion. The company shipped 88,160 motorcycles to dealers and distributors worldwide during the second quarter of 2016, compared with 85,172 shipments in second-quarter 2015.
Harley-Davidson’s worldwide dealer retail sales of new motorcycles dropped 1.9% to 87,266 units from 88,931 motorcycles sold in the year-ago quarter. The decline was due to weak U.S. industry sales. Sales in the U.S. fell 5.2% to 54,786 motorcycles. International sales went up 4.3% to 32,480 motorcycles from 31,141 motorcycles sold in the prior-year quarter. An improvement of 0.8% in sales in the Asia-Pacific region, 8.2% in the Europe, Middle East, and Africa (“EMEA”) region, and 2% in Canada was partially offset by a 5% decline in the Latin America region.
Revenues from Parts and Accessories improved 0.5% to $258.2 million, while revenues from General Merchandise – which includes MotorClothes apparel and accessories – fell 2.3% to $75.8 million.
Harley-Davidson Financial Services (HDFS)
Revenues in the Financial Services segment rose 10% to $190.96 million in second-quarter 2016. Operating income improved 9.4% to $89.6 million from $81.9 million in the year-ago quarter due to gains generated from a full securitization.
Financial Position
Harley-Davidson had cash and cash equivalents of $864.7 million as of Jun 26, 2016, compared with $1.25 billion as of Jun 28, 2015. Total debt increased to $7.06 billion from $6.21 billion as of Jun 28, 2015.
In the first half of 2016, Harley-Davidson’s operating cash flow declined to $456.3 million from $613.9 million in the first half of 2015. Capital expenditures increased to $107.5 million from $85.2 million in the first half of 2015.
Share Repurchases
Harley-Davidson spent $118.9 million to repurchase 2.6 million shares in the reported quarter. As of Jun 30, 2016, Harley-Davidson had remaining authorization to buy back nearly 23 million shares.
Looking Forward
In the third quarter of 2016, Harley-Davidson expects to ship 48,500−53,500 motorcycles, compared with 53,472 motorcycles shipped in the year-ago period.
Harley-Davidson reduced its guidance for motorcycle shipments in 2016 to 264,000–269,000 units from the prior range of 269,000–274,000 units. This implies that the year-over-year change in shipments will vary between a decline of 1% and a rise of 1%. The lower guidance is due to softness in the U.S. market, high competition and global economic uncertainty.
The company also reduced its guidance for operating margin from the Motorcycle segment to 15%–16% from the prior range of 16%–17%. It expects capital expenditures of $255–$275 million this year.
Currently, Harley-Davidson carries a Zacks Rank #3 (Hold). Some better-ranked automobile stocks include Spartan Motors Inc. , Johnson Controls Inc. (JCI - Free Report) and Gentex Corp. (GNTX - Free Report) , each carrying a Zacks Rank #2 (Buy).
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Harley-Davidson (HOG) Q2 Earnings Beat, Revenues in Line
Harley-Davidson, Inc. (HOG - Free Report) reported earnings of $1.55 per share in the second quarter of 2016, which were higher than $1.44 recorded in the year-ago quarter. Further, earnings surpassed the Zacks Consensus Estimate of $1.53. Net income decreased to $280.4 million from $299.8 million a year ago.
Consolidated revenues rose to $1.86 billion from $1.82 billion in the second quarter of 2015. Operating income declined to $412.3 million from $462.5 million in the year-ago period.
Motorcycles and Related Products
Revenues from Motorcycles and Related Products improved to $1.67 billion in second-quarter 2016 from $1.65 billion in the year-ago quarter. Further, the figure was in line with the Zacks Consensus Estimate. The improvement was driven by higher motorcycle shipments.
Operating income from Motorcycles and Related Products decreased significantly to $322.7 million from $380.6 million a year ago.
Revenues from Harley-Davidson motorcycles rose 1.7% to $1.33 billion. The company shipped 88,160 motorcycles to dealers and distributors worldwide during the second quarter of 2016, compared with 85,172 shipments in second-quarter 2015.
Harley-Davidson’s worldwide dealer retail sales of new motorcycles dropped 1.9% to 87,266 units from 88,931 motorcycles sold in the year-ago quarter. The decline was due to weak U.S. industry sales. Sales in the U.S. fell 5.2% to 54,786 motorcycles. International sales went up 4.3% to 32,480 motorcycles from 31,141 motorcycles sold in the prior-year quarter. An improvement of 0.8% in sales in the Asia-Pacific region, 8.2% in the Europe, Middle East, and Africa (“EMEA”) region, and 2% in Canada was partially offset by a 5% decline in the Latin America region.
Revenues from Parts and Accessories improved 0.5% to $258.2 million, while revenues from General Merchandise – which includes MotorClothes apparel and accessories – fell 2.3% to $75.8 million.
Harley-Davidson Financial Services (HDFS)
Revenues in the Financial Services segment rose 10% to $190.96 million in second-quarter 2016. Operating income improved 9.4% to $89.6 million from $81.9 million in the year-ago quarter due to gains generated from a full securitization.
Financial Position
Harley-Davidson had cash and cash equivalents of $864.7 million as of Jun 26, 2016, compared with $1.25 billion as of Jun 28, 2015. Total debt increased to $7.06 billion from $6.21 billion as of Jun 28, 2015.
In the first half of 2016, Harley-Davidson’s operating cash flow declined to $456.3 million from $613.9 million in the first half of 2015. Capital expenditures increased to $107.5 million from $85.2 million in the first half of 2015.
Share Repurchases
Harley-Davidson spent $118.9 million to repurchase 2.6 million shares in the reported quarter. As of Jun 30, 2016, Harley-Davidson had remaining authorization to buy back nearly 23 million shares.
Looking Forward
In the third quarter of 2016, Harley-Davidson expects to ship 48,500−53,500 motorcycles, compared with 53,472 motorcycles shipped in the year-ago period.
Harley-Davidson reduced its guidance for motorcycle shipments in 2016 to 264,000–269,000 units from the prior range of 269,000–274,000 units. This implies that the year-over-year change in shipments will vary between a decline of 1% and a rise of 1%. The lower guidance is due to softness in the U.S. market, high competition and global economic uncertainty.
The company also reduced its guidance for operating margin from the Motorcycle segment to 15%–16% from the prior range of 16%–17%. It expects capital expenditures of $255–$275 million this year.
HARLEY-DAVIDSON Price, Consensus and EPS Surprise
HARLEY-DAVIDSON Price, Consensus and EPS Surprise | HARLEY-DAVIDSON Quote
Zacks Rank
Currently, Harley-Davidson carries a Zacks Rank #3 (Hold). Some better-ranked automobile stocks include Spartan Motors Inc. , Johnson Controls Inc. (JCI - Free Report) and Gentex Corp. (GNTX - Free Report) , each carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>