Harley-Davidson Delivers Second Quarter Financial Results
"Despite a challenging market, we are pleased with our second quarter performance, in which we grew our U.S. market share in a declining market, with notable unit growth of more than 11 percent in the important core category of Touring1," said
Second Quarter 2024 Highlights and Related Results
- Delivered diluted EPS of $1.63
- HDMC operating income margin of 14.7 percent
-
North America motorcycle retail performance was down 1 percent, while retail sales of Touring and CVO motorcycles was up more than 12 percent in theU.S. - Touring market share of 75 percent, up 5.3 percent in first half of the year1
- HDMC revenue up 13 percent driven by global motorcycle shipments up 16 percent
- HDFS operating income up 21 percent, and revenue was up 10 percent
- Company revises its full year 2024 financial outlook to reflect the current environment
- Today, Harley-Davidson announced plan to repurchase
$1 billion of shares through 20262
Second Quarter 2024 Results
$ in millions (except EPS) |
2nd quarter |
||
2024 |
2023 |
Change |
|
Revenue |
|
|
12 % |
Operating Income |
|
|
9 % |
Net Income Attributable to HDI |
|
|
23 % |
Diluted EPS |
|
|
34 % |
Consolidated revenue in the second quarter was up 12 percent, driven primarily by an HDMC revenue increase of 13 percent. HDFS revenue was up 10 percent in the second quarter.
Consolidated operating income in the second quarter was up 9 percent, driven by an increase of 2 percent at HDMC, an increase of 21 percent at HDFS, and a decreased operating loss at the LiveWire segment. Consolidated operating income margin in the second quarter was 14.9 percent relative to 15.3 percent in the second quarter a year ago.
1 Source: |
2 See press release dated |
$ in millions |
2nd quarter |
||
2024 |
2023 |
Change |
|
Motorcycle Shipments (thousands) |
49.7 |
42.9 |
16 % |
Revenue |
|
|
13 % |
Motorcycles |
|
|
20 % |
Parts & Accessories |
|
|
-10 % |
Apparel |
|
|
-4 % |
Licensing |
|
|
7 % |
Other |
|
|
-14 % |
Gross Margin |
32.1 % |
34.8 % |
-2.7 pts. |
Operating Income |
|
|
2 % |
Operating Margin |
14.7 % |
16.2 % |
-1.5 pts. |
Second quarter global motorcycle shipments increased by 16 percent. Revenue was up 13 percent driven by increased shipments and improved mix, partially offset by lower pricing and foreign exchange effects. Parts & Accessories revenue was down 10 percent. Apparel was down 4 percent as the prior year's period included a greater benefit from anniversary product apparel sales.
Second quarter gross margin was down 2.7 points due to the impacts of pricing and sales incentives, higher manufacturing costs, and adverse impacts from foreign exchange. These effects were partially offset by higher wholesale volumes and improved mix. Second quarter operating income margin was down 1.5 points, where operating expenses increased modestly.
Harley-Davidson Retail Motorcycle Sales
Motorcycles (thousands) |
2nd quarter |
||
2024 |
2023 |
Change |
|
|
34.8 |
35.1 |
-1 % |
EMEA |
8.0 |
8.1 |
-1 % |
|
6.3 |
7.5 |
-16 % |
|
0.8 |
0.8 |
0 % |
Worldwide Total |
50.0 |
51.5 |
-3 % |
Global retail motorcycle sales in the second quarter were down 3 percent versus prior year.
The decline in EMEA of 1 percent was driven by weakness in
$ in millions |
2nd quarter |
||
2024 |
2023 |
Change |
|
Revenue |
|
|
10 % |
Operating Income |
|
|
21 % |
HDFS operating income increased by
LiveWire – Results
$ in millions |
2nd quarter |
||
2024 |
2023 |
Change |
|
Electric Motorcycle Unit Sales |
158 |
33 |
379 % |
Revenue |
|
|
-8 % |
Operating Loss |
( |
( |
12 % |
LiveWire revenue for the second quarter decreased by 8 percent, due to a decrease in STACYC third party branded distributor volumes, partially offset by an increase in electric motorcycle unit sales. Operating loss improved by approximately $4 million (or 12 percent) driven by overall cost reduction initiatives.
Other
- Generated
$578 million of cash from operating activities - Effective tax rate was 19 percent
- Paid cash dividends of
$47 million - Repurchased
$200 million of shares (5.5 million shares) on a discretionary basis - Cash and cash equivalents of
$1.8 billion at the end of the quarter
2024 Financial Outlook
For the full year 2024, the Company now expects:
- HDMC: revenue down 5 to 9 percent compared to 2023 and operating income margin of 10.6 to 11.6 percent
For the full year 2024, the Company continues to expect:
- HDFS: operating income flat to up 5 percent compared to 2023
- LiveWire: electric motorcycle unit sales of 1,000 to 1,500 and operating loss of
$105 to$115 million -
Harley-Davidson, Inc : capital investments of$225 to$250 million
Company Background
Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company and Harley-Davidson Financial Services. Our vision: Building our legend and leading our industry through innovation, evolution and emotion. Our mission: More than building machines, we stand for the timeless pursuit of adventure. Freedom for the soul. Our ambition is to maintain our place as the most desirable motorcycle brand in the world. Since 1903, Harley-Davidson has defined motorcycle culture by delivering a motorcycle lifestyle with distinctive and customizable motorcycles, experiences, motorcycle accessories, riding gear and apparel. Harley-Davidson Financial Services provides financing, insurance and other programs to help get riders on the road. Harley-Davidson also has a controlling interest in
Webcast
Harley-Davidson will discuss its financial results and outlook on an audio webcast at 8:00 a.m. CDT today. The webcast login and supporting slides can be accessed at http://investor.harley-davidson.com/news-and-events/events-and-presentations. The audio replay will be available by approximately
Cautionary Note Regarding Forward-Looking Statements
The company intends that certain matters discussed in this press release and our associated comments are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as the company "believes," "anticipates," "expects," "plans," "may," "will," "estimates," "targets," "intends," "forecasts," "is on track," "sees," "feels," or words of similar meaning. Similarly, statements that describe or refer to future expectations, future plans, strategies, objectives, outlooks, targets, guidance, commitments, or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially, unfavorably or favorably, from those anticipated as of the date of this press release. Certain of such risks and uncertainties are described below. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this press release are only made as of the date of this press release, and the company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
Important factors that could affect future results and cause those results to differ materially from those expressed in the forward-looking statements include, among others, the Company's ability to: (a) execute its business plans and strategies, including The
The Company's ability to sell its motorcycles and related products and services and to meet its financial expectations also depends on the ability of the Company's dealers to sell its motorcycles and related products and services to retail customers. The Company depends on the capability and financial capacity of its dealers to develop and implement effective retail sales plans to create demand for the motorcycles and related products and services they purchase from the Company. In addition, the Company's dealers and distributors may experience difficulties in operating their businesses and selling Harley-Davidson motorcycles and related products and services as a result of weather, economic conditions, or other factors.
HDFS' retail credit losses have normalized in recent quarters to higher levels after a period of historically low levels of credit losses. Further, the Company believes that HDFS's retail credit losses will continue to change over time due to changing consumer credit behavior, macroeconomic conditions, including the impact of inflation and HDFS's efforts to increase prudently structured loan approvals to sub-prime borrowers. In addition, HDFS's efforts to adjust underwriting criteria based on market and economic conditions and the actions that the Company has taken and could take that impact motorcycle values may impact HDFS's retail credit losses.
The Company's operations, demand for its products, and its liquidity could be adversely impacted by work stoppages, facility closures, strikes, natural causes, widespread infectious disease, terrorism, war or other hostilities, including the conflict in
### (HOG-Earnings)
|
||||||||
Condensed Consolidated Statements of Operations |
||||||||
(In thousands, except per share amounts) |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
||||
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
|
HDMC revenue |
|
$ 1,348,906 |
|
$ 1,198,136 |
|
$ 2,825,012 |
|
$ 2,755,965 |
Gross profit |
|
433,126 |
|
417,474 |
|
894,196 |
|
974,500 |
Selling, administrative and engineering expense |
|
235,221 |
|
223,137 |
|
457,845 |
|
444,427 |
Operating income from HDMC |
|
197,905 |
|
194,337 |
|
436,351 |
|
530,073 |
|
|
|
|
|
|
|
|
|
LiveWire revenue |
|
6,448 |
|
7,026 |
|
11,152 |
|
14,788 |
Gross loss |
|
(1,784) |
|
(2,940) |
|
(5,725) |
|
(1,676) |
Selling, administrative and engineering expense |
|
26,382 |
|
29,044 |
|
51,682 |
|
54,855 |
Operating loss from Livewire |
|
(28,166) |
|
(31,984) |
|
(57,407) |
|
(56,531) |
|
|
|
|
|
|
|
|
|
HDFS revenue |
|
263,539 |
|
240,361 |
|
512,336 |
|
463,456 |
HDFS expense |
|
192,176 |
|
181,376 |
|
387,098 |
|
346,051 |
Operating income from HDFS |
|
71,363 |
|
58,985 |
|
125,238 |
|
117,405 |
|
|
|
|
|
|
|
|
|
Operating income |
|
241,102 |
|
221,338 |
|
504,182 |
|
590,947 |
Other income, net |
|
15,879 |
|
7,226 |
|
36,443 |
|
27,322 |
Investment income |
|
14,811 |
|
11,151 |
|
29,215 |
|
21,176 |
Interest expense |
|
(7,680) |
|
(7,696) |
|
(15,359) |
|
(15,416) |
Income before income taxes |
|
264,112 |
|
232,019 |
|
554,481 |
|
624,029 |
Income tax provision |
|
48,706 |
|
58,189 |
|
106,842 |
|
148,370 |
Net income |
|
$ 215,406 |
|
$ 173,830 |
|
$ 447,639 |
|
$ 475,659 |
Less: Loss attributable to noncontrolling interests |
|
2,863 |
|
4,209 |
|
5,571 |
|
6,470 |
Net income attributable to Harley-Davidson, Inc. |
|
$ 218,269 |
|
$ 178,039 |
|
$ 453,210 |
|
$ 482,129 |
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ 1.64 |
|
$ 1.24 |
|
$ 3.36 |
|
$ 3.33 |
Diluted |
|
$ 1.63 |
|
$ 1.22 |
|
$ 3.34 |
|
$ 3.27 |
|
|
|
|
|
|
|
|
|
Weighted-average shares: |
|
|
|
|
|
|
|
|
Basic |
|
133,412 |
|
143,414 |
|
134,759 |
|
144,724 |
Diluted |
|
134,108 |
|
145,787 |
|
135,513 |
|
147,351 |
|
|
|
|
|
|
|
|
|
Cash dividends per share: |
|
$ 0.1725 |
|
$ 0.1650 |
|
$ 0.3450 |
|
$ 0.3300 |
|
||||||||
LiveWire results presented in the Company's financial statements represent the LiveWire reportable segment as determined in accordance with |
|
||||||||
Condensed Consolidated Balance Sheets |
||||||||
(In thousands) |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
2023 |
|
2023 |
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
1,849,159 |
|
1,533,806 |
|
1,521,940 |
Accounts receivable, net |
|
|
|
321,285 |
|
267,200 |
|
329,487 |
Finance receivables, net |
|
|
|
2,472,784 |
|
2,113,729 |
|
1,979,645 |
Inventories, net |
|
|
|
668,924 |
|
929,951 |
|
846,033 |
Restricted cash |
|
|
|
137,486 |
|
104,642 |
|
135,618 |
Other current assets |
|
|
|
188,002 |
|
214,401 |
|
201,702 |
|
|
|
|
5,637,640 |
|
5,163,729 |
|
5,014,425 |
|
|
|
|
|
|
|
|
|
Finance receivables, net |
|
|
|
5,545,780 |
|
5,384,536 |
|
5,530,221 |
Other long-term assets |
|
|
|
1,576,822 |
|
1,592,289 |
|
1,470,915 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
|
$ 1,038,234 |
|
$ 996,021 |
|
$ 950,110 |
Short-term deposits, net |
|
|
|
206,972 |
|
253,309 |
|
216,293 |
Short-term debt |
|
|
|
497,792 |
|
878,935 |
|
695,356 |
Current portion of long-term debt, net |
|
|
|
2,021,344 |
|
1,255,999 |
|
604,700 |
|
|
|
|
3,764,342 |
|
3,384,264 |
|
2,466,459 |
|
|
|
|
|
|
|
|
|
Long-term debt, net |
|
|
|
4,949,871 |
|
4,990,586 |
|
5,765,246 |
Other long-term liabilities |
|
|
|
612,713 |
|
513,409 |
|
594,000 |
|
|
|
|
|
|
|
|
|
Shareholders' equity |
|
|
|
3,433,316 |
|
3,252,295 |
|
3,189,856 |
|
|
|
|
|
|
|
|
|
|
||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||
(In thousands) |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
|
|
|
$ 577,642 |
|
$ 410,520 |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
|
|
|
(87,835) |
|
(86,526) |
Finance receivables, net |
|
|
|
|
|
(308,988) |
|
(259,520) |
Other investing activities |
|
|
|
|
|
(206) |
|
850 |
Net cash used by investing activities |
|
|
|
|
|
(397,029) |
|
(345,196) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from issuance of medium-term notes |
|
|
|
|
|
495,856 |
|
1,446,304 |
Repayments of medium-term notes |
|
|
|
|
|
- |
|
(1,056,680) |
Proceeds from securitization debt |
|
|
|
|
|
547,618 |
|
547,706 |
Repayments of securitization debt |
|
|
|
|
|
(506,489) |
|
(645,377) |
Net decrease in unsecured commercial paper |
|
|
|
|
|
(379,743) |
|
(75,229) |
Borrowings of asset-backed commercial paper |
|
|
|
|
|
351,429 |
|
33,547 |
Repayments of asset-backed commercial paper |
|
|
|
|
|
(125,654) |
|
(129,961) |
Net increase in deposits |
|
|
|
|
|
56,007 |
|
122,288 |
Dividends paid |
|
|
|
|
|
(47,359) |
|
(48,193) |
Repurchase of common stock |
|
|
|
|
|
(209,675) |
|
(169,645) |
Other financing activities |
|
|
|
|
|
8 |
|
76 |
Net cash provided by financing activities |
|
|
|
|
|
181,998 |
|
24,836 |
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
|
|
(10,821) |
|
(490) |
||
|
|
|
|
|
|
|
|
|
Net increase in cash, cash equivalents and restricted cash |
|
|
|
|
|
$ 351,790 |
|
$ 89,670 |
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash: |
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash, beginning of period |
|
|
|
|
|
$ 1,648,811 |
|
$ 1,579,177 |
Net increase in cash, cash equivalents and restricted cash |
|
|
|
|
|
351,790 |
|
89,670 |
Cash, cash equivalents and restricted cash, end of period |
|
|
|
|
|
$ 2,000,601 |
|
$ 1,668,847 |
|
|
|
|
|
|
|
|
|
Reconciliation of cash, cash equivalents and restricted cash on the Consolidated balance sheets to the Consolidated statements of cash flows: |
|
|
|
|
|
|||
Cash and cash equivalents |
|
|
|
|
|
$ 1,849,159 |
|
$ 1,521,940 |
Restricted cash |
|
|
|
|
|
137,486 |
|
135,618 |
Restricted cash included in Other long-term assets |
|
|
|
|
|
13,956 |
|
11,289 |
Cash, cash equivalents and restricted cash per the Consolidated statements of cash flows |
|
|
$ 2,000,601 |
|
$ 1,668,847 |
HDMC Revenue and Motorcycle Shipment Data |
||||||||
(Unaudited) |
||||||||
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|
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|
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|
|
|
|
|
Three months ended |
|
Six months ended |
||||
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|
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|
|
|
|
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
HDMC REVENUE (in thousands) |
|
|
|
|
|
|
|
|
Motorcycles |
|
$ 1,068,693 |
|
$ 890,919 |
|
$ 2,290,233 |
|
$ 2,193,297 |
Parts and accessories |
|
193,865 |
|
215,520 |
|
360,058 |
|
383,192 |
Apparel |
|
63,393 |
|
66,356 |
|
127,504 |
|
137,747 |
Licensing |
|
5,485 |
|
5,116 |
|
14,414 |
|
11,326 |
Other |
|
17,470 |
|
20,225 |
|
32,803 |
|
30,403 |
|
|
$ 1,348,906 |
|
$ 1,198,136 |
|
$ 2,825,012 |
|
$ 2,755,965 |
|
|
|
|
|
|
|
|
|
HDMC |
|
32,334 |
|
24,229 |
|
73,911 |
|
66,817 |
|
|
|
|
|
|
|
|
|
HDMC WORLDWIDE MOTORCYCLE SHIPMENTS |
|
|
|
|
|
|
|
|
Grand American Touring(a) |
|
29,345 |
|
20,270 |
|
64,701 |
|
52,489 |
Cruiser |
|
14,410 |
|
15,476 |
|
30,101 |
|
36,734 |
Sport and Lightweight |
|
4,094 |
|
6,161 |
|
9,057 |
|
12,746 |
Adventure Touring |
|
1,811 |
|
1,027 |
|
3,473 |
|
3,202 |
|
|
49,660 |
|
42,934 |
|
107,332 |
|
105,171 |
(a) Includes Trike |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LiveWire Motorcycle Shipments |
|
158 |
|
33 |
|
275 |
|
96 |
HDMC Gross Profit |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|
|
|
|
|
The estimated impact of significant factors affecting the comparability of gross profit from the second quarter of 2023 to the second quarter of 2024 were as follows (in millions): |
||||||||
|
|
|
|
|
|
|
|
|
|
|
Three months |
|
|
|
Six months |
|
|
2023 gross profit |
|
$ 417 |
|
|
|
$ 975 |
|
|
Volume |
|
40 |
|
|
|
9 |
|
|
Price and sales incentives |
|
(45) |
|
|
|
(92) |
|
|
Foreign currency exchange rates and hedging |
|
(14) |
|
|
|
(18) |
|
|
Shipment mix |
|
51 |
|
|
|
58 |
|
|
Raw material prices |
|
8 |
|
|
|
9 |
|
|
Manufacturing and other costs |
|
(24) |
|
|
|
(47) |
|
|
|
|
16 |
|
|
|
(81) |
|
|
2024 gross profit |
|
$ 433 |
|
|
|
$ 894 |
|
|
HDFS Finance Receivables Allowance for Credit Losses |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
||||
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Balance, beginning of period |
|
$ 380,361 |
|
$ 358,431 |
|
$ 381,966 |
|
$ 358,711 |
Provision for credit losses |
|
56,030 |
|
57,278 |
|
117,040 |
|
109,642 |
Charge-offs, net of recoveries |
|
(42,874) |
|
(33,929) |
|
(105,489) |
|
(86,573) |
Balance, end of period |
|
$ 393,517 |
|
$ 381,780 |
|
$ 393,517 |
|
$ 381,780 |
Worldwide Retail Sales of Harley-Davidson Motorcycles(a) |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
||||
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
32,258 |
|
32,161 |
|
57,984 |
|
56,438 |
|
|
2,579 |
|
2,899 |
|
4,339 |
|
4,643 |
|
|
34,837 |
|
35,060 |
|
62,323 |
|
61,081 |
EMEA |
|
8,015 |
|
8,120 |
|
13,279 |
|
14,037 |
|
|
6,322 |
|
7,525 |
|
12,356 |
|
14,406 |
|
|
824 |
|
821 |
|
1,445 |
|
1,427 |
Total worldwide retail sales |
|
49,998 |
|
51,526 |
|
89,403 |
|
90,951 |
|
||||||||
(a) Data source for retail sales figures shown above is new sales warranty and registration information provided by dealers and compiled by the Company. The Company must rely on information that its dealers supply concerning new retail sales, and the Company does not regularly verify the information that its dealers supply. This information is subject to revision. |
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