"I'm pleased with the pace of improvements and with the strong quarter that we have delivered," said Jochen Zeitz, Chairman, President and CEO, Harley-Davidson.
"We are starting to see the initial proof points as we execute our Hardwire Strategy, as demonstrated by these positive financial results. We are encouraged by the signs of consumer positivity in the market; however, we remain mindful of the significant supply chain challenges that we expect to continue to impact the sector."
Results In Brief from the H-D News Release…
- Delivered Q2 GAAP diluted EPS of $1.33, up $1.93 over Q2 2020
- Q2 H-D, Inc. total revenue up 77 percent over Q2 2020
- North America Q2 retail sales up 43% over Q2 2020 and up 5% over Q2 2019
- Delivered strong Motorcycles and Related Products (Motorcycles) segment gross margin and operating margin driven by the Rewire product portfolio adjustments
- Delivered Financial Services segment Q2 2021 operating income growth of $90 million over Q2 2020 driven by a lower provision for credit losses
- Launched LiveWire as a standalone brand and introduced LiveWire ONE - the electric motorcycle built for the urban experience, with the power and range to take you beyond
- Revealed Sportster S, the all-new Sportster motorcycle built on the Revolution Max platform
- Launched H-D1 Marketplace on July 21st, 2021 as the ultimate online destination for pre-owned Harley-Davidson motorcycles in North America.
Second Quarter 2021 Results
Q2 consolidated revenue was up 77 percent versus Q2 2020 driven by strong growth in the Motorcycles and Related Products segment. Bottom-line results reflect significant operating income improvement with strong results in both the Motorcycles and the Financial Services segments.
Global retail motorcycle sales in the second quarter were up 24 percent, driven by a strong Q2 North America retail performance. EMEA Q2 retail sales declines were a result of the company's decision not to continue selling Street and legacy Sportster motorcycles in Europe. Latin America retail sales were impacted by a reduction in dealers and pricing actions across the portfolio, which were executed as part of the Rewire strategy.
Revenue from the Motorcycles and Related Products segment was up significantly during the second quarter primarily driven by a 100 percent increase in wholesale shipments as the company lapped last year's COVID-19 related shutdown.
Parts and Accessories second quarter revenue was up 32 percent while General Merchandise was up 47 percent over Q2 2020.
Second quarter gross margin was up 14.5 percentage points to Q2 prior year while second quarter operating margin finished up 32 percentage points over Q2 prior year due to volume gains behind lapping last year's COVID-19 related shutdown, improved motorcycle unit mix and lower restructuring expense.
Financial Services segment operating income was up significantly over prior year in the second quarter, primarily driven by a lower provision for credit losses.
Other Results
Harley-Davidson generated $644 million of cash from operating activities year-to-date in 2021, $34 million favorable to year-to-date 2020. Cash and cash equivalents were $1.7 billion at the end of the second quarter, down $2.1 billion to the end of Q2 2020 as the company has intentionally brought down cash balances as it believes the pandemic-related liquidity concerns have eased.
Tax Rate - The company's second quarter effective tax rate was 25 percent.
Dividends - The company paid cash dividends of $0.15 per share in Q2 2021.
As a result of its Q2 performance, for the full-year 2021, the company now expects:
- Financial Services segment operating income growth of 75 to 85 percent, an increase from the previously communicated range of 50 to 60 percent.
- GAAP Motorcycles segment operating income margin of 6 to 8 percent given the recent EU's decision to keep the current tariff at 31 percent while tariff negotiations occur. If the company is successful in materially mitigating the additional EU tariffs in 2021, the company expects the operating income margin would be 7 to 9 percent.
Additionally, for the full-year 2021, the company continues to expect:
- Motorcycles segment revenue growth to be 30 to 35 percent.
- Capital expenditures of $190 million to $225 million.
- Cash allocation priorities remain to first fund growth through The Hardwire initiatives, then to pay dividends. Given the company's strong cash position, the company may also choose to execute discretionary share repurchases.
