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Harley-Davidson 2013 fourth quarter financial results

By Press Release

MILWAUKEE, Jan. 30—Harley-Davidson, Inc. (NYSE:HOG) reported that earnings and dealer new motorcycle sales continued their growth in the fourth quarter of 2013 and for the full year, compared to the year-ago periods.

Fourth-quarter diluted earnings per share increased 9.7 percent to $0.34, primarily on strong operating results in the Motorcycles segment including higher revenue and lower operating expense compared to the year-ago period. Fourth-quarter net income was $75.4 million on consolidated revenue of $1.19 billion, compared to net income of $70.6 million on consolidated revenue of $1.17 billion in the year-ago period.

Worldwide retail sales of new Harley-Davidson motorcycles grew 5.7 percent in the quarter and 4.4 percent for the full year, compared to the year-ago periods.

For the full year 2013, Harley-Davidson net income was $734 million on consolidated revenue of $5.9 billion, compared to full-year 2012 net income of $623.9 million on consolidated revenue of $5.58 billion. Full-year 2013 diluted earnings per share were $3.28, up 20.6 percent from EPS of $2.72 in 2012.

“Without question 2013 was an outstanding year for Harley-Davidson. We unveiled game-changing motorcycles like Project RUSHMORE and Street, launched surge manufacturing, celebrated our 110th anniversary with customers around the globe and delivered continued financial growth,” said Keith Wandell, chairman, president and chief executive officer of Harley-Davidson, Inc.

“Harley-Davidson has been relentless at driving improvements throughout the organization that enable us to design, build and deliver motorcycles with unprecedented speed, efficiency, safety and quality. Together with our dealers, we continue to broaden our customer base and inspire riders to experience our brand. In 2013, retail sales of new Harley-Davidson motorcycles to outreach customers in the U.S. grew at more than twice the rate of sales growth to core customers, and we continued to expand the reach of our brand in international markets.

“None of these results would be possible without the great efforts of our employees, dealers and suppliers, working as one team and moving in one direction to fulfill customers’ dreams,” said Wandell. “Moving forward, we believe we are well positioned to leverage our momentum, expand our reach among new and existing customers, and further strengthen Harley-Davidson’s position as one of the world’s leading brands.”

Retail Harley-Davidson Motorcycle Sales

Dealers worldwide sold 45,875 new Harley-Davidson motorcycles in the fourth quarter of 2013, compared to 43,405 motorcycles in the year-ago quarter. In the U.S., dealers sold 27,387 new Harley-Davidson motorcycles in the quarter, up 6.3% compared to sales of 25,753 motorcycles in the year-ago period. In international markets, dealers sold 18,488 new Harley-Davidson motorcycles during the quarter, up 4.7 percent compared to 17,652 motorcycles in the year-ago period, with unit sales up 6.1 percent in the Asia Pacific region, 5.5 percent in the EMEA region and 13.3 percent in Canada, and down 2.8 percent in the Latin America region.

For the full year 2013, dealers sold 260,839 new Harley-Davidson motorcycles worldwide, compared to 249,849 motorcycles in 2012, with retail unit sales up 4.4 percent in the U.S., 9.8 percent in the Asia Pacific region, 13.1 percent in the Latin America region and 4.6 percent in Canada, and down 1.0 percent in the EMEA region, compared to the full year 2012.

Harley-Davidson Motorcycles and Related Products Segment Results

Fourth-Quarter Results: Operating income for the Motorcycles and Related Products segment (the Motorcycles segment) grew 14.3 percent to $60.7 million in the fourth quarter of 2013, compared to operating income of $53.1 million in the year-ago period. Operating income in the quarter benefited from higher revenue and lower operating expense compared to the prior-year period.

Revenue from sales of motorcycles to dealers and distributors grew 1.4 percent to $781.8 million, compared to revenue of $771.1 million in the year-ago period. The Company shipped 46,618 motorcycles worldwide during the quarter, compared to shipments of 47,067 motorcycles in the year-ago period.

Revenue from motorcycle parts and accessories was $169.3 million during the quarter, up 4.8 percent compared to the year-ago period, and revenue from general merchandise, which includes MotorClothes apparel and accessories, was $75.9 million, up 2.5 percent compared to the year-ago period.

Gross margin for the Motorcycles segment was 31.5 percent in the fourth quarter of 2013, compared to 31.8 percent in the fourth quarter of 2012. Fourth-quarter operating margin for the Motorcycles segment was 5.9 percent, compared to operating margin of 5.3 percent in last year’s fourth quarter.

Twelve-Month Results: For the full year 2013, the Company shipped 260,471 motorcycles to dealers and distributors, a 5.2-percent increase compared to 2012. Full-year revenue from motorcycles grew 8.0 percent to $4.07 billion, revenue from parts and accessories grew 1.5 percent to $873.1 million and revenue from general merchandise decreased 1.2 percent to $295.9 million, compared to 2012. Full-year gross margin for the Motorcycles segment was 35.4 percent and operating margin was 16.6 percent, compared to 34.8 percent and 14.5 percent, respectively, in 2012.

Financial Services Segment Results

Operating income from financial services was $61.3 million in the fourth quarter of 2013, compared to $63.0 million in last year’s fourth quarter. Full-year 2013 operating income from financial services was $283.1 million, compared to $284.7 million in 2012. Results for the fourth quarter and full year reflect an increased provision for credit losses, partially offset by favorable net interest income.

Guidance

Harley-Davidson expects to ship 279,000 to 284,000 motorcycles to dealers and distributors worldwide in 2014, an approximate 7- to 9-percent increase from 2013 shipments. In the first quarter of 2014, the Company expects to ship 76,500 to 81,500 motorcycles, compared to 75,222 motorcycles shipped in the year-ago period. The Company expects full-year 2014 operating margin of 17.5 percent to 18.5 percent for the Motorcycles segment. The Company expects 2014 capital expenditures for Harley-Davidson, Inc. of $215 million to $235 million.

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