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Harley Davidson (HOG) Q1 Earnings Top Estimates, Fall Y/Y

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Harley-Davidson, Inc. (HOG - Free Report) reported first-quarter 2024 adjusted earnings of $1.72 per share, which beat the Zacks Consensus Estimate of $1.48 but fell 16% year over year. The motorcycle manufacturer generated consolidated revenues (including motorcycle sales and financial services revenues) of $1.73 billion, down 3% from the prior-year quarter.

Harley-Davidson, Inc. Price, Consensus and EPS Surprise

Harley-Davidson, Inc. Price, Consensus and EPS Surprise

Harley-Davidson, Inc. price-consensus-eps-surprise-chart | Harley-Davidson, Inc. Quote

Segmental Highlights

Harley-Davidson Motor Company (HDMC): Total revenues from the Motorcycle and Related Products segment, constituting the bulk of the firm’s overall revenues, decreased 5% on a year-over-year basis to $1.47 billion but topped our forecast of $1.37 billion on higher-than-expected motorcycle shipments. The company’s global shipments were 57,700 motorcycles, which declined 7% year over year but exceeded our projection of 55,663 units.

In the quarter under review, revenues from the sale of motorcycles came in at $1.22 billion, down 6% year over year. Revenues for parts & accessories declined 1% from a year ago to $166 million. Revenues from apparel tailed off 10% year over year to $64 million. Revenues from licensing and others came in at $9 million and $15 million, up 44% and 51%, respectively, on a year-over-year basis.

During the reported quarter, Harley-Davidson retailed 39,400 motorcycle units globally, flat year over year. Its retail motorcycle units sold in North America increased 6% to 27,500. Sales in EMEA and Asia Pacific declined 11% and 12%, respectively, whereas sales in Latin America inched up 2% on a year-over-year basis.

The operating income from the segment declined 29% year over year to $238 million due to lower volume and higher manufacturing costs.

Harley-Davidson Financial Services (HDFS): Revenues for Harley-Davidson Financial Services totaled $249 million, which increased 12% year over year and exceeded our forecast of $233.5 million. Operating income declined 8% to $54 million owing to higher interest expense and a higher provision for credit losses.

LiveWire: During the reported quarter, the total shipment for LiveWire was 117 units, up 86% compared with the year-ago quarter. Revenues contracted 39% to $5 million and missed our estimate of $9.5 million due to lower-than-expected shipments. Operating loss widened from $25 million to $29 million but was narrower than our projection of $31.1 million.

Financial Position

In the first quarter, selling, general and administrative expenses from the HDMC unit were $222.6 million. The company paid dividends of 17.25 cents per share in the reported quarter.

Harley-Davidson had cash and cash equivalents of $1.46 billion as of Mar 31, 2024, down from $1.56 billion as of Mar 31, 2023. In the same period, long-term debt decreased to $4.99 billion from $5.27 billion recorded on Mar 31, 2023.

2024 Guidance

For 2024, the company expects revenues from HDMC to be flat to down 9%. The operating income margin expectation for the segment is in the range of 12.6% to 13.6%. HOG expects its operating income for Financial Services to be flat to up 5%. For the LiveWire segment, motorcycle wholesale units are expected in the range of 1,000-1,500. Operating loss for the segment is anticipated in the range of $105-$115 million. Capital expenditure projection for the full year is in the range of $225-$250 million.

Zacks Rank & Key Picks

HOG currently carries a Zacks Rank #4 (Sell).

A few top-ranked players in the auto space include PACCAR (PCAR - Free Report) , Dorman Products (DORM - Free Report) and Allison Transmission (ALSN - Free Report) . While PCAR and DORM sport a Zacks Rank #1 (Strong Buy) each, ALSN carries a Zacks Rank #2 (Buy) currently.  You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for PCAR’s 2024 and 2025 EPS has moved up by 8 cents and 10 cents, respectively, in the past 30 days. The trucking giant surpassed earnings estimates in the trailing four quarters, with the average surprise being 17.07%.

The Zacks Consensus Estimate for DORM’s 2024 sales and earnings suggests year-over-year growth of 3.8% and 22.25%, respectively. EPS estimates for 2024 and 2025 have improved by 34 cents and 44 cents, respectively, in the past 60 days.

The Zacks Consensus Estimate for ALSN’s 2024 sales and earnings suggests year-over-year growth of 2.8% and 4.7%, respectively. The consensus estimate for 2024 and 2025 has improved by 11 cents and 32 cents, respectively, in the past 30 days.

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