Harley-Davidson’s second quarter 2016 worldwide retail motorcycle sales were down by -1.9 percent on weak domestic U.S. industry results. Harley-Davidson retail motorcycle sales in the U.S. were down -5.2 percent compared to the year-ago quarter, with the overall U.S. industry down -8.6 percent for the same period.
|Harley-Davidson President and CEO Matt Levatich: “Our investments to grow product awareness and ridership globally are beginning to take hold in a number of markets”|
Meaning that at 49.5 percent, Harley managed to claw back 2.0 percentage points of market share in a down market compared to the second quarter in 2015. International retail sales increased by +4.3 percent over the prior year quarter.
For the first six months of 2016 worldwide retail motorcycle sales were down -0.6 percent from the same period in 2015; international sales were up +4.4 percent, offset by a -3.4 percent decline in U.S. retail sales.
“reduced 2016 unit shipment forecast”
"We are pleased with our ability to gain market share in the U.S.," said Matt Levatich, President and Chief Executive Officer, Harley-Davidson, Inc. "Competition in the U.S. remains intense, and our demand-driving investments are showing traction."
Given market softness in the U.S., the continued competitive environment and global economic uncertainty, the company is taking the precautionary step of lowering its full-year motorcycle shipment guidance, revising its forecast to ship 264,000 to 269,000 motorcycles to dealers worldwide in 2016, which is approximately between -1.0 percent and +1.0percent from 2015. The company says this action is consistent with its long-standing commitment to manage supply in line with demand. The company had previously provided full-year shipment guidance of 269,000 to 274,000 motorcycles.
In the third quarter, the company expects to ship 48,500 to 53,500 motorcycles compared to 53,472 motorcycles shipped in the year-ago period.
"While our investments to grow product awareness and ridership globally are beginning to take hold in a number of markets, current conditions in the U.S. and economic headwinds in other parts of the world combine to raise caution for us as we continue to focus our strategy to drive demand and deliver strong returns to shareholders," said Levatich.
Retail sales in Europe, the Middle East and Africa (EMEA) were up by +8.2 percent in the second quarter and +8.4 percent for the first six months. Asia Pacific retail sales were up by +0.8 percent in the quarter and up +3.4 percent for the first six months compared to 2015. Canada retail sales grew +2.0 percent in the quarter and +7.2 percent for the first six months versus a year ago as the market there continued to respond favorably to the company's transition to direct distribution.
Revenue from motorcycles and related products was up versus the prior quarter behind increased motorcycle shipments. Operating margin as a percent of revenue decreased versus the prior year, primarily as a result of lower than expected gross margin driven by unfavorable mix, currency and manufacturing expenses.
Financial Services operating income was higher in the second quarter compared to the year ago period, driven by a $9.3 million gain generated from a full securitization. The company now expects full-year 2016 operating margin of approximately 15 to 16 percent for the Motorcycles segment, compared to prior guidance of 16 to 17 percent. The company continues to expect 2016 capital expenditures for Harley-Davidson, Inc. of $255 million to $275 million.
Second quarter 2016 diluted earnings per share increased by +7.6 percent to $1.55 compared to diluted EPS of $1.44 in the same period in 2015. Net income was $280.4 million on consolidated revenue of $1.86 billion compared to net income of $299.8 million on consolidated revenue of $1.82 billion in last year's second quarter.
Through six months, Harley-Davidson's 2016 net income was $530.9 million on consolidated revenue of $3.61 billion, compared to its six-month 2015 net income of $569.7 million on consolidated revenue of $3.50 billion. Six-month 2016 diluted EPS was $2.91, up +7.4 percent from $2.71 in the year-ago period.
Cash and marketable securities totaled $869.7 million at the end of the second quarter, compared to $1.30 billion in the year-ago quarter. During the first six months of 2016, Harley-Davidson generated $456.3 million of cash from operating activities compared to $613.9 million for the same period in 2015.
The company paid a cash dividend of $0.35 per share for the second quarter for a total of $0.70 for the first six months of 2016. On a discretionary basis, the company repurchased 2.6 million shares of Harley-Davidson common stock for $118.9 million.
In the second quarter of 2016, there were approximately 181.3 million weighted-average diluted shares outstanding, compared to approximately 208.6 million shares in the year-ago quarter. At the end of the second quarter, 23.0 million shares remained on board-approved share repurchase authorizations.