Harley-Davidson, Inc. Reports Record Second Quarter Sales and Earnings; Additional Motorcycle Production Facility to be Located in York, Pa.
Harley-Davidson, Inc. Reports Record Second Quarter Sales and Earnings; Additional Motorcycle Production Facility to be Located in York, Pa.
MILWAUKEE, July 11 Harley-Davidson, Inc. today announced record sales and earnings for its second quarter ended June 24, 2001. The Company's second quarter sales were $850.9 million, an increase of 12.7 percent over the same period last year. Diluted earnings per share for the second quarter were 38 cents, a 28.3 percent increase compared to last year. "We've delivered another record quarter, led by strong motorcycle sales," said Jeffrey L. Bleustein, chairman and chief executive officer of Harley-Davidson, Inc. "Our consistent performance, as well as our ability to bring new products and services to market, reinforces our confidence in the Company's long-term growth. In fact, today we are finalizing plans to invest $145 million in a new 350,000-square-foot manufacturing facility in York, Pennsylvania." Motorcycles and Related Products Segment -- Second Quarter Results Second quarter sales of Harley-Davidson(R) motorcycles were $664.0 million, an increase of 15.1 percent over last year. Shipments of Harley-Davidson motorcycles in the second quarter totaled 60,161 units, up 6,832 units or 12.8 percent over last year. As a result of continued manufacturing success and product demand, the Company is increasing its 2001 target for Harley-Davidson motorcycles to 231,000 units, or a 12.9 percent increase over the prior year. The Company has set a goal of 256,000 Harley-Davidson units for 2002, a 10.8 percent increase over the 2001 goal. Second quarter sales of Parts and Accessories (P&A), which consist of Genuine Motor Parts and Genuine Motor Accessories, totaled $138.0 million, a 13.9 percent increase from the year-ago quarter. General Merchandise second quarter sales, which consist of MotorClothes(TM) apparel and collectibles, totaled $33.2 million, down 8.1 percent over the same period last year. Harley-Davidson's annual sales meeting is being held nearly three weeks earlier than in 2000, and the Company believes the timing of this event has had an impact on dealer orders during the second quarter. On a longer-term basis, the Company expects the growth rate for P&A revenues to increase slightly faster than Harley-Davidson's motorcycle unit growth rate. General Merchandise is expected to grow slightly slower than the motorcycle unit growth rate. Second quarter gross margin was 34.7 percent of revenue, up from 34.1 percent of revenue last year. A stronger mix of higher margin P&A categories as well as slightly improved General Merchandise margins accounted for much of the improvement. Second quarter operating margin for the Motorcycles and Related Products Segment was 18.1 percent of revenue, compared to 16.9 percent of revenue for the same period last year. The Company's gross margin improvement has driven operating margin improvement. Additionally, last year's second quarter operating expenses were negatively impacted by a $3 million recall reserve at the Buell Motorcycle Company subsidiary. Harley-Davidson Retail Data "For the first half of the year, U.S. registrations of Harley-Davidson motorcycles were up nearly 12 percent in a growing market, as we continue to fulfill the dreams of our customers," said Bleustein. Through June, retail registrations of Harley-Davidson motorcycles in Europe were down 9.9 percent, in a European heavyweight motorcycle market that has declined. The Company believes the softer European economy has caused a weakened heavyweight market. Through June, Harley-Davidson sales in the Asia-Pacific region were up 3.9 percent in a generally flat market. Although industry data through June is not yet available, the most recent market data is listed in the accompanying table. Financial Services Segment -- Second Quarter Results Harley-Davidson Financial Services, Inc. (HDFS) reported second quarter operating income of $23.1 million, up from $11.3 million in the year-ago quarter. The subsidiary's performance was driven by strong acceptance of its new consumer financing program, declining interest rates and strength across all product lines. The Company expects HDFS's total year 2001 operating income to be 55 to 60 percent higher than 2000 performance. Harley-Davidson, Inc. -- Six-Month Results For the six-month period, sales totaled $1.62 billion, a 12.7 percent increase over the year-ago period. Diluted earnings per share were 68 cents, an increase of 22.2 percent compared to the first six months last year. When the sale of the Harley-Davidson(R) Chrome VISA(R) card in first quarter 2000 is excluded, diluted earnings per share increased 27.3 percent. Through the first six months of this year, Harley-Davidson motorcycle revenue was $1.27 billion, a 14.1 percent increase. For the first six months of 2001, P&A revenue totaled $246.2 million, a 14.0 percent increase, while General Merchandise revenue totaled $72.3 million, a 4.0 percent increase compared with the same period in 2000. For the first six months, HDFS operating income was $28.1 million, a $13.5 million increase. Harley-Davidson, Inc. is the parent company for the group of companies doing business as Harley-Davidson Motor Company, Buell Motorcycle Company and Harley-Davidson 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. Harley-Davidson Financial Services, Inc. provides wholesale and retail financing and insurance programs to Harley-Davidson dealers and customers. Forward-Looking Statements The Company intends that certain matters discussed in this release 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" or "estimates" or words of similar meaning. Similarly, statements that describe future plans, objectives, outlooks, targets 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 from those anticipated as of the date of this 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 cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this release are only made as of the date of this release, and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. The Company's ability to reach targeted production objectives and maintain revenue and income growth depends upon, among other factors, the Company's ability to: (i) continue to realize production efficiencies at its production facilities through the implementation of innovative manufacturing techniques and other means, (ii) successfully implement production capacity increases in its facilities, (iii) successfully introduce new products and services, (iv) avoid unexpected P&A /general merchandise supplier backorders, (v) sell all of the motorcycles it has the capacity to produce, (vi) continue to develop the capacity of its distributor and dealer network, (vii) avoid unexpected changes in the regulatory environment for its products, and (viii) successfully adjust to foreign currency exchange rate fluctuations. In addition, the Company could experience delays in the operation of manufacturing facilities, work stoppages, difficulty with suppliers, natural causes or other factors. Risk factors are also disclosed in documents previously filed by the Company with the Securities and Exchange Commission. Harley-Davidson, Inc. Condensed Consolidated Statements of Income (Unaudited) (In thousands, except per share amounts) Three Months Ended Six Months Ended June 24, June 25, June 24, June 25, 2001 2000 2001 2000 Net sales $850,944 $754,973 $1,618,221 $1,436,086 Gross profit 294,953 257,146 588,070 488,451 Operating income Motorcycles and related products 153,998 127,228 289,554 239,868 Financial services 23,086 11,282 28,065 14,614 Corporate expenses (3,974) (2,259) (6,776) (5,264) Total operating income 173,110 136,251 310,843 249,218 Interest income, net 4,794 3,424 9,593 6,296 Gain on sale of credit card business -- -- -- 18,915 Other income (expense), net (17) 189 (937) (136) Income before provision for taxes 177,887 139,864 319,499 274,293 Provision for income taxes 62,260 49,277 111,824 103,479 Net income $115,627 $90,587 $207,675 $170,814 Earnings per common share: Basic $.38 $.30 $.69 $.56 Diluted $.38 $.29 $.68 $.55 Weighted-average common shares: Basic 302,621 303,337 302,285 303,123 Diluted 306,569 308,104 306,330 307,914 Harley-Davidson, Inc. Condensed Consolidated Balance Sheets (In thousands) June 24, Dec 31, June 25, 2001 2000 2000 (Unaudited) (Unaudited) ASSETS Current assets: Cash and cash equivalents $546,656 $419,736 $297,917 Accounts receivable, net 136,781 98,311 115,743 Finance receivables, net 545,883 530,859 451,983 Inventories 177,678 191,931 157,415 Other current assets 63,025 56,427 50,760 Total current assets 1,470,023 1,297,264 1,073,818 Finance receivables, net 452,247 234,091 329,082 Other long-term assets 920,031 905,049 782,326 Total assets $2,842,301 $2,436,404 $2,185,226 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of finance debt $192,044 $89,509 $48,163 Other current liabilities 477,504 408,234 422,066 Total current liabilities 669,548 497,743 470,229 Finance debt 355,000 355,000 280,000 Other long-term liabilities 101,911 97,340 81,749 Postretirement health care benefits 85,148 80,666 78,222 Shareholders' equity 1,630,694 1,405,655 1,275,026 Total liabilities and shareholders' equity $2,842,301 $2,436,404 $2,185,226 Harley-Davidson, Inc. Net Sales and Motorcycle Shipment Data Three Months Ended Six Months Ended June 24, June 25, June 24, June 25, 2001 2000 2001 2000 NET SALES (in thousands) Harley-Davidson(R) motorcycles $663,994 $576,949 $1,268,604 $1,112,199 Buell(R) motorcycles 15,739 20,188 30,903 36,950 Parts & Accessories 137,984 121,101 246,229 215,967 General Merchandise 33,162 36,067 72,333 69,562 Other 65 668 152 1,408 Total net sales $850,944 $754,973 $1,618,221 $1,436,086 HARLEY-DAVIDSON UNITS Motorcycle shipments: United States 48,072 42,252 88,339 78,576 Export 12,089 11,077 25,976 23,810 Total 60,161 53,329 114,315 102,386 Motorcycle product mix: Touring 28.4% 29.0% 27.7% 27.9% Custom 50.2 49.4 51.0 50.6 Sportster(R) 21.4 21.6 21.3 21.5 Total 100.0 100.0 100.0 100.0 BUELL UNITS Motorcycle shipments: Buell (excluding Blast(TM)) 1,757 1,955 3,350 3,802 Buell Blast 711 1,325 1,565 1,816 2,468 3,280 4,915 5,618 Year-to-date Heavyweight (651+ cc) Motorcycle Retail Registrations (Units), 2001, data through month indicated. 2001 2000 % change United States -- H-D (June) 93,851 83,691 +11.8 -- Industry (May) 182,002 159,198 +14.3 Europe -- H-D (June) 13,038 14,466 -9.9 -- Industry (April) 117,760 128,176 -8.1 Japan/Australia -- H-D (June) 5,822 5,603 +3.9 -- Industry (March) 12,840 12,891 -0.4 Only Harley-Davidson(R) motorcycles are included in the Harley-Davidson (H-D) data. Sources: Motorcycle Industry Council, Giral S.A., JAMA, ABS, Company reports.