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Harley-Davidson (HOG) Beats on Q1 Earnings, Scraps '20 View
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Harley-Davidson, Inc. (HOG - Free Report) reported earnings per share of 45 cents in first-quarter 2020, surpassing the Zacks Consensus Estimate of 40 cents. This outperformance resulted from solid revenues in the company’s Financial Services segment. Sales in the Financial Services segment totaled $198.4 million, topping the consensus mark of $194 million.
The bottom-line figure, however, declined from the prior-year’s 80 cents per share.
The company’s net income amounted to $69.7 million compared with the year-ago quarter’s $127.9 million.
Total revenues from Motorcycle and Related products, which form the bulk of overall revenues of the firm, declined 8% year over year to $1099.8 million in the reported quarter. However, the top line surpassed the Zacks Consensus Estimate of $1,017 million. The company reported consolidated revenues (including motorcycle sales and financial services revenues) of $1.30 billion, down 5.8% year over year.
Harley-Davidson, Inc. Price, Consensus and EPS Surprise
Motorcycles and Related Products: In the first quarter, operating income from the Motorcycles and Related Products segment amounted to $84.6 million, lower than the operating income of $108.4 million reported in the year-ago period. This decline was mainly due to the temporary suspension of global motorcycle manufacturing in March amid the coronavirus crisis.
In the quarter ended Mar 29, 2020, the company shipped 52,973 motorcycles, down 10.05% year over year.
Harley-Davidson’s worldwide retail motorcycle units sold dropped 17.7% to 40,439 from the year-ago quarter’s 49,151. The company’s retail motorcycle units sold in the United States also declined 15.5% from the year-ago quarter to 23,732. International units sold decreased 20.7% to 16,707 motorcycles from 21,060 in the prior-year quarter. Sales in the Middle East and Africa, Asia Pacific, Canada and Latin America declined 28.4%, 5.3%, 24.7% and 21.5%, respectively from the year-ago period.
Revenues for Parts & Accessories fell 15.7% from the prior year to $134.7 million. The same for General Merchandise — including Motor Clothes apparel and accessories — declined 11.3% from the prior-year quarter to $49.2 million.
Financial Services: Revenues for Harley-Davidson Financial Services increased to $198.4 million from the prior-year quarter’s $188.7 million. However, the operating income slumped 60.9% to $22.9 million from the year-ago quarter’s $58.7 million.
Financial Position
Harley-Davidson had cash and cash equivalents of $1,465 million as of Mar 29, 2020, higher than the $749.6 million reported in the prior-year quarter. Net long-term debt decreased to $4,478 million from the year-ago period’s $4,744 million. Its long-term debt-to-capital ratio was 72.58% at the end of the first quarter.
As of Mar 29, 2020, the company’s net operating cash outflow was $8.58 million compared with $32.67 million as of Mar 31, 2019. Capital expenditure in the quarter was $32.93 million compared with the $35.25 million recorded in 2019.
Cost-Containment Measures Amid Coronavirus Crisis
Harley-Davidson has enforced a number of measures, including a substantial reduction in all non-essential spending, a company-wide hiring freeze, staffing-level adjustments and no merit increments for 2020, in a bid to minimize costs during this period of reduced business. Additionally, the company has suspended discretionary share repurchases. In total, it expects these efforts to preserve around $250 million of cash in 2020.
During second-quarter 2020, the company approved a cash dividend of 2 cents per share, down from the first-quarter 2020 dividend of 38 cents.
2020 Outlook
Harley-Davidson withdrew its 2020 guidance in response to disruptions to the company’s supply chain due to the coronavirus crisis.
Zacks Rank & Stocks to Consider
Harley-Davidson currently carries a Zacks Rank #4 (Sell).
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Harley-Davidson (HOG) Beats on Q1 Earnings, Scraps '20 View
Harley-Davidson, Inc. (HOG - Free Report) reported earnings per share of 45 cents in first-quarter 2020, surpassing the Zacks Consensus Estimate of 40 cents. This outperformance resulted from solid revenues in the company’s Financial Services segment. Sales in the Financial Services segment totaled $198.4 million, topping the consensus mark of $194 million.
The bottom-line figure, however, declined from the prior-year’s 80 cents per share.
The company’s net income amounted to $69.7 million compared with the year-ago quarter’s $127.9 million.
Total revenues from Motorcycle and Related products, which form the bulk of overall revenues of the firm, declined 8% year over year to $1099.8 million in the reported quarter. However, the top line surpassed the Zacks Consensus Estimate of $1,017 million. The company reported consolidated revenues (including motorcycle sales and financial services revenues) of $1.30 billion, down 5.8% year over year.
Harley-Davidson, Inc. Price, Consensus and EPS Surprise
Harley-Davidson, Inc. price-consensus-eps-surprise-chart | Harley-Davidson, Inc. Quote
Segmental Highlights
Motorcycles and Related Products: In the first quarter, operating income from the Motorcycles and Related Products segment amounted to $84.6 million, lower than the operating income of $108.4 million reported in the year-ago period. This decline was mainly due to the temporary suspension of global motorcycle manufacturing in March amid the coronavirus crisis.
In the quarter ended Mar 29, 2020, the company shipped 52,973 motorcycles, down 10.05% year over year.
Harley-Davidson’s worldwide retail motorcycle units sold dropped 17.7% to 40,439 from the year-ago quarter’s 49,151. The company’s retail motorcycle units sold in the United States also declined 15.5% from the year-ago quarter to 23,732. International units sold decreased 20.7% to 16,707 motorcycles from 21,060 in the prior-year quarter. Sales in the Middle East and Africa, Asia Pacific, Canada and Latin America declined 28.4%, 5.3%, 24.7% and 21.5%, respectively from the year-ago period.
Revenues for Parts & Accessories fell 15.7% from the prior year to $134.7 million. The same for General Merchandise — including Motor Clothes apparel and accessories — declined 11.3% from the prior-year quarter to $49.2 million.
Financial Services: Revenues for Harley-Davidson Financial Services increased to $198.4 million from the prior-year quarter’s $188.7 million. However, the operating income slumped 60.9% to $22.9 million from the year-ago quarter’s $58.7 million.
Financial Position
Harley-Davidson had cash and cash equivalents of $1,465 million as of Mar 29, 2020, higher than the $749.6 million reported in the prior-year quarter. Net long-term debt decreased to $4,478 million from the year-ago period’s $4,744 million. Its long-term debt-to-capital ratio was 72.58% at the end of the first quarter.
As of Mar 29, 2020, the company’s net operating cash outflow was $8.58 million compared with $32.67 million as of Mar 31, 2019. Capital expenditure in the quarter was $32.93 million compared with the $35.25 million recorded in 2019.
Cost-Containment Measures Amid Coronavirus Crisis
Harley-Davidson has enforced a number of measures, including a substantial reduction in all non-essential spending, a company-wide hiring freeze, staffing-level adjustments and no merit increments for 2020, in a bid to minimize costs during this period of reduced business. Additionally, the company has suspended discretionary share repurchases. In total, it expects these efforts to preserve around $250 million of cash in 2020.
During second-quarter 2020, the company approved a cash dividend of 2 cents per share, down from the first-quarter 2020 dividend of 38 cents.
2020 Outlook
Harley-Davidson withdrew its 2020 guidance in response to disruptions to the company’s supply chain due to the coronavirus crisis.
Zacks Rank & Stocks to Consider
Harley-Davidson currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the same sector are Douglas Dynamics, Inc. (PLOW - Free Report) , Spartan Motors, Inc. and Modine Manufacturing Company (MOD - Free Report) , each carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>