Harley-Davidson (HOG) Beats on Q1 Earnings, Guides Lower - Analyst Blog
Harley-Davidson, Inc. HOG reported a 5% year-over-year rise in earnings to $1.27 per share in the first quarter of 2015 from $1.21 recorded in the year-ago quarter. Also, earnings beat the Zacks Consensus Estimate of $1.24.
The year-over-year increase came on the back of higher revenues from the Financial Services segment and a significant decline in interest expense. Net income increased 1.5% to $269.9 million from $265.9 million a year ago.
Harley-Davidson Inc. - Earnings Surprise | FindTheCompany
Consolidated revenues declined 3.5% to $1.67 billion, exceeding the Zacks Consensus Estimate of $1.59 billion. The decline was due to unfavorable foreign currency exchange and lower motorcycle shipments. Operating income dropped 0.2% to $410.1 million from $410.9 million in the first quarter of 2014.
Motorcycles and Related Products
Revenues from Motorcycles and Related Products declined to $1.51 billion in first-quarter 2015 from $1.57 billion in the year-ago quarter. Operating income from Motorcycles and Related Products decreased to $345.5 million from $347.7 million a year ago. The year-over-year decline was due to unfavorable currency translation, partially offset by productivity gains.
Revenues from Harley-Davidson motorcycles fell 3.8% to $1.26 billion. Harley-Davidson shipped 79,589 motorcycles to dealers and distributors worldwide during the first quarter of 2015, compared with 80,682 shipments in first-quarter 2014.
Harley-Davidson’s worldwide dealer retail sales of new motorcycles went down 1.3% to 56,661 units from 57,415 motorcycles sold in the year-ago quarter. Sales in the U.S declined 0.7% to 35,488 motorcycles. International sales went down 2.4% to 21,173 motorcycles from 21,685 motorcycles in the prior-year quarter. A 1.1% decline in sales in the Asia Pacific region and a 5.6% fall in the Europe, Middle East, and Africa (“EMEA”) region, offset the 0.3% increase in the Latin America region and a 5.7% improvement in Canada.
Revenues from Parts and Accessories decreased 7.2% to $183.9 million, while revenues from General Merchandise – which includes MotorClothes apparel and accessories – improved 3.6% to $66.4 million.
Harley-Davidson Financial Services (HDFS)
Revenues in the Financial Services segment increased 5.2% to $162.4 million in first-quarter 2015. Operating income increased 2.4% to $64.7 million from $63.2 million in the year-ago quarter due to favorable net interest and higher non-lending income. However, this was partially offset by higher provision for credit losses.
Financial Position
Harley-Davidson had cash and cash equivalents of $1.17 billion as of Mar 31, 2015, compared with $935.8 million as of Mar 31, 2014. Total debt increased to $5.93 billion from $5.09 billion as of Mar 31, 2014.
In the first quarter of 2015, Harley-Davidson’s operating cash flow declined to $174.7 million from $203.6 million in the same period a year ago. Capital expenditures increased to $38.1 million from $25.9 million in the first quarter of 2014.
Share Repurchase
Harley-Davidson spent $182.5 million to repurchase 2.9 million shares in the first quarter of 2015. At the end of March, 18.6 million shares remained under the company’s share repurchase authorization.
Looking Forward
Harley-Davidson lowered the guidance for growth rate of motorcycle shipments in 2015 to 2–4% from the previous projection of 4–6%. The company now expects shipments of 276,000–281,000 units this year, down from 282,000–287,000 units expected earlier.
Harley-Davidson also reaffirmed the guidance for operating margin from the Motorcycle segment in the range of 18–19% and capital expenditures of $240–$260 million for 2015.
In the second quarter of 2015, Harley-Davidson expects to ship 83,000–88,000 motorcycles, lower than 92,217 motorcycles shipped in the year-ago period.
Currently, Harley-Davidson carries a Zacks Rank #3 (Hold). Better-ranked automobile stocks include Gentherm Inc. THRM, Allison Transmission Holdings, Inc. ALSN and General Motors Company GM, all sporting a Zacks Rank #1 (Strong Buy).
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