Harley-Davidson (HOG) Q3 Earnings Miss Estimates, Fall 22% Y/Y
Harley-Davidson, Inc. HOG reported third-quarter 2023 adjusted earnings of $1.38 per share, which missed the Zacks Consensus Estimate of $1.39 and declined 22% year over year. Lower-than-anticipated revenues from the Motorcycles & Related Products primarily resulted in the underperformance. The motorcycle manufacturer generated consolidated revenues (including motorcycle sales and financial services revenues) of $1,549 million, down 6% from the prior-year quarter.
Harley-Davidson, Inc. Price, Consensus and EPS Surprise
Harley-Davidson, Inc. price-consensus-eps-surprise-chart | Harley-Davidson, Inc. Quote
Segmental Highlights
Harley-Davidson Motor Company: Total revenues from the Motorcycle and Related Products segment, constituting the bulk of the firm’s overall revenues, decreased 9% on a year-over-year basis to $1,297 million and missed our forecast of $1,353 million on lower-than-expected motorcycle shipments. The operating income for the segment decreased to $175 million from $279 million in the corresponding quarter of 2022.
In the quarter under review, revenues from the sale of motorcycles came in at $1,023 million, down 9% year over year. The company’s global shipments came in at 45,300 motorcycles, down 20% and also fell short of our projection of 52,145 units.
During the reported quarter, Harley-Davidson retailed 41,700 motorcycle units globally, down 16% year over year. Its retail motorcycle units sold in North America decreased 15% to 27,300. Sales in EMEA (Europe, the Middle East and Africa), Asia Pacific and Latin America declined 13%, 24% and 11%, respectively, on a year-over-year basis.
Revenues for parts & accessories were down 8% from a year ago to $185 million and missed our estimate of $204 million. Revenues from apparel tailed off 29% year over year to $49 million and missed our projection of $75 million.
Harley-Davidson Financial Services: Revenues for Harley-Davidson Financial Services totaled $244 million, up 15% year over year, and exceeded our forecast of $202 million. Operating income declined 27% to $59 million and missed our estimate of $60 million.
LiveWire: During the reported quarter, the total shipment for LiveWire was 50 units, down 76% compared with the year-ago quarter levels. Revenues declined 45% to $8 million and matched our estimate. Operating loss widened from $21 million to $25 million, in line with our projection.
Financial Position
In the third quarter, selling, general and administrative expenses from the HDMC unit increased to $235.4 million from $210.2 million in the year-ago quarter. The company paid dividends of 16.50 cents per share in the reported quarter.
Harley-Davidson had cash and cash equivalents of $1.87 billion as of Sep 30, 2023, up from $1.43 billion as of Dec 31, 2022. In the same period, long-term debt increased to $5.85 billion from $4.45 million recorded on Dec 31, 2022.
2023 Guidance
For 2023, the company expects revenues from HDMC to be flat to up 3%. The operating income margin expectation for the motorcycle segment is in the range of 13.9% to 14.3%. HOG expects its operating income for Financial Services to decline 20-25%. For the LiveWire segment, motorcycle wholesale units are expected to be in the range of 600-1,000. Operating loss for the segment is anticipated to be in the range of $115-$125 million. Capital expenditure projection for the full year is in the range of $225-$250 million.
Zacks Rank and Key Picks
HOG currently carries a Zacks Rank #3 (Hold).
A few top-ranked players in the auto space include Toyota TM, Honda HMC and Nissan NSANY, each sporting a Zacks Rank #1 (Strong Buy) currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TM’s fiscal 2024 sales and EPS implies year-over-year growth of 10.5% and 27.5%, respectively. The earnings estimate for fiscal 2024 and 2025 has been revised upward by 4 cents and 21 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for HMC’s fiscal 2024 sales and EPS implies year-over-year growth of 7.7% and 29.4%, respectively. The earnings estimate for fiscal 2024 and 2025 has been revised upward by 4 cents and 7 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for NSANY’s fiscal 2024 EPS implies year-over-year growth of 12.6%. The earnings estimate for fiscal 2024 and 2025 has been revised upward by 10 cents and 3 cents, respectively, in the past 30 days.
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