Harley-Davidson Back In the Game, Sales Up 5 Percent in Q1

Investors Might Be Sweaty, But The Overall Numbers Tell the Tale

Harley-Davidson Inc.’s highway to more efficient manufacturing might be a tad bumpier than expected, but the overall numbers point to good news. Share prices tumbled Tuesday as investors sweated disappointing profit margins and sales from the Milwaukee-based motorcycle maker.

Those gloom-and-doom worries were largely outweighed by a solid financial performance for the third quarter, in which Harley’s net income more than doubled. On the New York Stock Exchange, Harley shares were down 8.2%, or $3.04, to $34.17 in recent trading.

Disruptions in production at the company’s York, Pa., plant hurt sales of some of Harley’s larger and higher-margin motorcycles. The lower-margin products, such as the smaller Sportsters made at Harley’s plant in Kansas, were selling just dandy.

After a stretch of lackluster sales numbers, it looks like the iconic manufacturer of American motorcycles is back in the game – and they have the sales numbers to prove it.

Sales of brand-spanking-new Harley-Davidsons want up 5.1 percent worldwide in the third quarter when compared to the prior-year, and most of that increase came from a a 5.4 percent jump in sales in the United States. That sales increase beats the 3.5 percent projection the company expected based on a recent survey of Harley-Davidson dealerships.

It looks like the folks at the Motor Company are outperforming the whole of the overall sales in the big bike segment as well. Through the first nine months of this year, industry-wide U.S. heavyweight motorcycle (651cc-plus) retail sales increased 3.7 percent, compared to the year-ago period.

Milwaukee is a couple of percentage points ahead of that curve, and that bodes well for HD in a down market.

Perhaps more importantly, the company is posting a tidy jump in profits as well.

Income from operations in the third-quarter 2011 rose 95.9 percent to $183.6 million. That represents a  $0.78 per share, when compared to income of $93.7 million, or $0.40 per share from operations during the same quarter last year. Third-quarter operating income from motorcycles and related products went up 78 percent due to higher shipment volume and operating margins.

The company’s credit arm, Financial Services, also managed to grow 21.9 percent on the strength of continued upticks in credit performance over the same period during 2010.

For the first nine months of 2011, Harley-Davidson income from continuing operations was up 63.5 percent compared to the year-ago period to $493.4 million, or $2.09 per share. Retail sales of new Harley-Davidson motorcycles through nine months grew 4.9 percent worldwide compared to the year-ago period.

“We’re pleased with our sustained progress and we continue to realize strong momentum in the transformation our business,” said Keith Wandell, president and CEO. “Two years ago, we embarked on our strategy to focus solely on the Harley-Davidson brand…and we continue to see the positive results of the course we have charted.”

Retail Harley-Davidson Sales

Third-quarter retail sales of Harley-Davidson new motorcycle sales grew 5.1 percent compared to last year’s third quarter to 61,838 units. Dealers sold a total of 42,640 new Harley-Davidson motorcycles in the United States, which represents a 5.4 percent increase compared to last year’s third quarter.

In international markets? International dealers sold 19,198 new Harley-Davidson motorcycles during the third quarter, an increase of 4.4 percent compared to the year-ago period.

Through nine months, worldwide retail sales of new Harley-Davidson motorcycles increased 4.9 percent compared to the prior-year period to 194,829 units. U.S. retail sales of new Harley-Davidson motorcycles increased 4.7 percent to 127,930 units through three quarters compared to the year-ago period.

In international markets, retail sales of new Harley-Davidson motorcycles increased 5.2 percent to 66,899 units for the first nine months of 2011 compared to 2010.

“Harley-Davidson’s transformation involves a tremendous amount of highly complex, challenging work across every part of the organization. While much remains to be done, we are well down the road and everyone involved deserves much credit for bringing these changes to life,” Wandell said. “I continue to be impressed by the willingness of all employees, including the union leadership, to do the necessary things to transform our business to be a world class, sustainable operation.”


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