Issue link: https://read.dmtmag.com/i/743349
FINANCIAL U.S. motorcycle sales dropped 7.1% Harley-Davidson, Inc. (NYSE:HOG) third quarter 2016 diluted earnings per share decreased 7.2 percent to $0.64 compared to diluted EPS of $0.69 in the same period in 2015. Net income was $114.1 million on consolidated revenue of $1.27 billion compared to net income of $140.3 million on consolidated revenue of $1.32 billion in the third quarter of 2015. H a r l e y - D a v i d s o n worldwide retail motorcycle sales in the third quarter were down 4.5 percent, primarily on weak U.S. industry trends. Harley-Davidson retail motorcycle sales in the U.S. were down 7.1 percent compared to the year-ago quarter, with the overall U.S. industry also down for the same period. Harley-Davidson's U.S. market share for the quarter was 52.3 percent in the 601cc-plus segment, essentially flat compared to the third quarter in 2015. Harley-Davidson international retail sales increased by 1.0 per- cent over the prior year quarter. "We continue to effectively navigate a fiercely competitive environment and an ongo- ing weak U.S. industry," said Matt Levatich, president and chief executive officer, Harley- Davidson, Inc. "We are pleased with the posi- tive results and the enthusiasm we've seen for our model year 2017 motorcycles, featuring the new Milwaukee-Eight engine. We are con- fident that the entire line-up will drive retail sales growth for the remainder of 2016 and position us well heading into the spring riding season next year." The Milwaukee-Eight engine packs innova- tive technologies that deliver improved horse- power, torque, and comfort and enhanced sound. It was introduced on touring motor- cycles in August as part of the model year 2017 product launch. Response to the new model year motorcycles drove increased retail sales in September over prior year. Through nine months, Harley-Davidson 2016 net income was $645.0 million on consolidated revenue of $4.89 billion com- pared to nine-month 2015 net income of $710.0 million on consolidated revenue of $4.81 billion. Diluted EPS was $3.55 com- pared to diluted EPS of $3.41 in the year-ago period. Worldwide retail motorcycle sales were down 1.9 percent compared to the same period in 2015. International retail sales were up 3.3 percent, offset by a decline of 4.7 percent in U.S. retail sales. Recognizing the continued slower industry growth in the U.S., the company will stream- line its operations in the fourth quarter of 2016. It expects to incur expenses of approxi- mately $20 million to $25 million in the fourth quarter, primarily for employee separation and reorganization costs. "Our value as a company and as a brand is the sum of 113 years of commitment to our riders and the freedom seekers we will inspire to ride in the future," said Levatich. "We remain intensely focused on growing the sport and delivering strong business results." GUIDANCE Harley-Davidson continues to expect to ship 264,000-269,000 motorcycles in 2016, which is approximately down 1 percent to up 1 percent from 2015. In the fourth quar- ter of 2016, the company expects to ship 44,200-49,200 motorcycles compared to 48,149 motorcycles shipped in the year-ago period. The company continues to expect full-year 2016 operating margin of approxi- mately 15-16 percent for the Motorcycles segment. The company continues to expect 2016 capital expenditures for Harley-David- son, Inc. of $255 million to $275 million. INCOME TAX RATE For the first nine months, Harley-Davidson's effective tax rate was 32.9 percent compared to 34.8 percent in 2015. The company con- tinues to expect its full-year 2016 effective tax rate will be approximately 33 percent. PSB 12 • November 7, 2016 • Powersports Business www.PowersportsBusiness.com Harley-Davidson Q3 retail sales down 4.5% worldwide STOCK MARKET WATCH Stock Price Percent Company Ticker 10/14/16 Change ARI Network Services, Inc. ARIS $5.20 17.4% MarineMax, Inc. HZO $20.86 11.5% Bridgestone Corp. ADR BRDCY $18.73 6.7% Cooper Tire & Rubber CTB $36.35 6.1% Brunswick Corp. BC $48.05 6.1% General Electric Co. GE $28.89 -4.1% Intl. Speedway Corp. Cl. A ISCA $30.95 -5.9% Polaris Industries, Inc. PII $75.79 -6.2% Universal Technical Institute UTI $1.56 -35.0% Spy Inc. XSPY $0.07 -47.2% POWERSPORTS BUSINESS WINNERS AND LOSERS MARKET WATCH Change 10/14/16 from 9/9 % Change Powersports Business Index 227.904 -3.82 -1.65% Dow Jones Index 157.765 0.46 0.29% S&P 500 Index 145.175 0.35 0.24% Source: Wells Fargo Securities LLC 0 50 100 150 200 250 300 2/19/16 3/11/16 4/8/16 4/29/16 5/20/16 6/17/16 7/22/16 8/12/16 9/9/16 10/14/16 PSB INDEXED VALUE DOW JONES INDEXED S&P 500 INDEXED STOCK MARKET ACTIVITY DEALER FINANCIAL SNAPSHOT SEPTEMBER 2016 Same Store Sales for 1,594 CDK Global Recre- ation dealers were up 1.0 percent overall com- pared to September 2015 numbers. The Northwest was the only region to see an increase in all four categories. The Midwest, West and South all saw increases in service, major units and overall. The Northeast decreased in three segments, down 5.5 percent in parts, 0.5 percent in major units and 0.1 percent overall. PARTS SALES In parts, 661 dealers were up, while 933 were down. SERVICE SALES Service sales saw 901 dealers increase and 664 decrease. MAJOR UNIT SALES 731 dealers were up, while 717 were down in major unit sales. NORTHWEST 2.1% Parts Department 2.0% Service Department 0.9% Major Units 1.8% Overall MIDWEST 0.0% Parts Department 6.5% Service Department 4.4% Major Units 3.6% Overall NORTHEAST -5.5% Parts Department 3.9% Service Department -0.5% Major Units -0.1% Overall SOUTH -6.8% Parts Department 5.9% Service Department 0.1% Major Units 0.4% Overall WEST -1.2% Parts Department 7.2% Service Department 0.3% Major Units 0.7% Overall UNITED STATES -3.0% Parts Department 5.7% Service Department 1.0% Major Units 1.0% Overall FOR MORE ON THE SAME STORE SALES DATA For more information on this report and other industry data, contact: cdkrecreation.com/dataservices MATT LEVATICH