Harley-Davidson Motor Company (HOG, Financial) produces custom, cruiser and touring motorcycles and offers a complete line of Harley-Davidson motorcycle parts, accessories, riding gear and apparel and general merchandise. Harley-Davidson Financial Services provides wholesale and retail financing, insurance, extended service and other protection plans and credit card programs to Harley-Davidson dealers and riders in the U.S., Canada and other select international markets.
The company, established in 1903 and having its headquarters at Milwaukee, has an approximate of 6400 employees.
Strong second-quarter earnings
Diluted earnings per share of $1.62 grew 33.9 percent on higher motorcycle shipments and continued improvement in operating efficiencies, compared to the year-ago period. Second-quarter net income was $354.2 million on consolidated revenue of $2.00 billion, compared to net income of $271.7 million in the year-ago period on consolidated revenue of $1.79 billion.
Through six months, Harley-Davidson 2014 net income was $620.1 million on consolidated revenue of $3.73 billion, compared to six-month 2013 net income of $495.9 million on consolidated revenue of $3.37 billion. Six-month 2014 diluted earnings per share were $2.82, up 28.2 percent from EPS of $2.20 in the year-ago period.
"Harley-Davidson's second-quarter results reflect the financial strength of the company and brand, including the benefits of continuous improvement throughout our operation," said Harley-Davidson, Inc. Chairman, President and Chief Executive Officer Keith Wandell. "As a customer-led organization, our employees, dealers in 90 countries and suppliers are focused every day on providing outstanding products and experiences for customers around the world."
Cashflow
Cash and marketable securities totaled $1.06 billion at the end of the second quarter, compared to $1.43 billion at the end of last year's second quarter. During the first six months of 2014, Harley-Davidson generated cash from operating activities of $570.6 million, compared to $389.7 million in the year-ago period. On a discretionary basis, the Company repurchased 1.9 million shares of Harley-Davidson, Inc. common stock during the second quarter of 2014 at a cost of $135.7 million.
Motorcycle sales
Dealers worldwide sold 90,218 new Harley-Davidson motorcycles in the second quarter of 2014 compared to 90,193 motorcycles in the year-ago quarter. In the U.S., dealers sold 58,225 new HOG motorcycles in the quarter, compared to sales of 58,241 motorcycles in the year-ago period. The company believes second-quarter U.S. retail sales were adversely affected by prolonged poor weather across parts of the U.S. and soft Sportster motorcycle sales ahead of the highly anticipated arrival of Street motorcycles in dealer showrooms.
In international markets, dealers sold 31,993 new Harley-Davidson motorcycles during the second quarter, compared to 31,952 motorcycles in the year-ago period, with sales up 7.0 percent in the EMEA Region and 1.5 percent in the Asia Pacific Region, and down 10.4 percent in the Latin America Region and 18.0 percent in Canada. (Company’s Website)
Plans ahead
HOG is planning to expand its customer base by creating more products for women. It is planning to tap the market for women bikers. The company is all set to roll out electric powered motorcycles. Livewire is its upcoming electric motorcycle. The motorcycle may be fully an electric one or a hybrid to suit the tastes of people who are not interested in fully electric motorcycle. In 2015, Project LiveWire will continue in the U.S. and expand into Canada and Europe.
“Project LiveWire is more like the first electric guitar – not an electric car,” said Mark-Hans Richer, Senior Vice President and Chief Marketing Officer of Harley-Davidson. “It’s an expression of individuality and iconic style that just happens to be electric."
Final thoughts
With a market capitalization of $13.5 billion, this is surely a company to look forward to. It is currently focusing on international expansion. It has strong fundamentals and a track record of paying good dividends. It has a massive fan following across the world. I am pretty bullish about this company. According to me, this company is going to create good returns for its valued investors.
The company's top line is also projected to grow in the future. Together these factors add to the company's per-share earnings and increase the operating cash flows and shareholders' profits. The company also has a wide global reach and large scale of operations. Strong brand reputation, customer loyalty and global scale of operations are indicative of a wide moat by this company.
