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Harley-Davidson 2011 third quarter financial results

Motor Company sales growth tops 5 percent

Earnings climb to $0.78 per share

Milwaukee, Wis., Oct. 18—Harley-Davidson, Inc. (NYSE: HOG) reported continued strong improvement in earnings and dealer retail sales in the third quarter of 2011 and through the first nine months, when compared to 2010.

The Company reported 2011 third-quarter income from continuing operations of $183.6 million, or $0.78 per share; a 95.9-percent boost when compared to 2010 third-quarter income of $93.7 million, or $0.40 per share. According to the Company, third-quarter operating income from motorcycles and related products grew 78 percent on higher shipment volume and operating margin improvement, while operating income from Financial Services grew 21.9 percent on continued improvement in credit performance, compared to the third quarter of 2010.

Retail sales of new Harley-Davidson motorcycles grew 5.1 percent worldwide in the third quarter compared to the prior year’s period, which saw a 5.4-percent rise in the U.S.

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 are pleased with our sustained progress and we continue to realize strong momentum in the transformation of our business,” said Keith Wandell, president and chief executive officer of Harley-Davidson, Inc.

“Two years ago we embarked on our strategy to focus solely on the Harley-Davidson brand, provide the flexibility required in today’s market and make Harley-Davidson lean, agile and more effective than ever at delivering remarkable products and extraordinary customer experiences. Today, we continue to see the positive results of the course we have charted,” Wandell said. “The changes underway in manufacturing, product development and retail capability will increasingly enable Harley-Davidson to be customer-led like never before.”

Retail Harley-Davidson Motorcycle Sales

Third-quarter retail Harley-Davidson new motorcycle sales grew 5.1 percent on a worldwide basis compared to last year’s third quarter to 61,838 total units. Dealers sold 42,640 new Harley-Davidson motorcycles in the U.S., a 5.4-percent increase compared to last year’s third quarter. In international markets, dealers sold 19,198 new Harley-Davidson motorcycles during the third quarter, an increase of 4.4 percent.

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. Through nine months, industry-wide U.S. heavyweight new motorcycle (651cc-plus) retail unit sales increased 3.7 percent, compared to the year-ago period.

Harley-Davidson Motorcycles and Related Products Segment Financial Results

Third-quarter results: Revenue from Harley-Davidson Motorcycles during the third quarter of 2011 of $922.3 million was up 15.5 percent compared to the year-ago period. The Company shipped 61,745 Harley-Davidson motorcycles to dealers and distributors worldwide during the quarter.

Revenue from Motorcycle Parts and Accessories (P&A) totaled $235.7 million during the quarter, a 7.6-percent rise from 2010. Revenue from General Merchandise, which includes MotorClothes Apparel and Accessories, was $69.3 million, up 8.2 percent compared to the year-ago period.

Nine-Month Results: Through the first nine months of 2011, the Company shipped 182,387 Harley-Davidson motorcycles to dealers and distributors, a 9.9-percent increase compared to last year’s 166,013 units.

Revenue from Harley-Davidson Motorcycles through nine months was $2.76 billion, a 13.2-percent increase, while P&A revenue was $655.4 million, a 9.3-percent increase from the first nine months of 2010. General Merchandise revenue was $204.8 million, which is an increase of 3.6 percent from a year ago.

Financial Services Segment

The Financial Services segment recorded operating income of $62 million in the third quarter, compared to operating income of $50.9 million in the third quarter of 2010. The increase in year-over-year operating income was largely the result of continued improvement in credit performance at Harley-Davidson Financial Services. Through nine months, operating income from financial services was $212 million, compared to operating income of $138.4 million in the first three quarters of 2010.

Guidance

Harley-Davidson continues to expect to ship 228,000 to 235,000 Harley-Davidson motorcycles to dealers and distributors worldwide in 2011, including an expected 45,500 to 52,500 motorcycles in the fourth quarter.

For the full year, Harley-Davidson now expects gross margin to be between 33.5 percent and 34.5 percent, compared to previous guidance of 34 percent to 35 percent. The Company continues to expect capital expenditures of between $210 million and $230 million, which includes $70 million to $85 million to support restructuring activities.

Restructuring Update

Harley-Davidson has lowered cost estimates related to the restructuring of its production operations and now expects all previously announced company-wide restructuring activities to result in one-time charges of $480 million to $495 million, including 2011 charges of $70 million to $80 million. The Company continues to expect savings on a cumulative basis in 2011 of $210 million to $230 million from restructuring activities initiated since early 2009. annual ongoing savings of $305 million to $325 million are expected when the restructuring is fully implemented. Through the first nine months of 2011, the Company incurred restructuring charges of $49 million, including $12.4 million in the third quarter.

During the third quarter, Harley-Davidson completed the consolidation of final assembly operations at York, Pennsylvania. Final assembly of all Touring, Softail, Trike and Custom Vehicle Operations (CVO) motorcycles now occurs on a single assembly line.

 

 

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