Harley-Davidson, Inc. (NYSE: HDI – news) today announced record sales and earnings for its third quarter ended September 24, 2000. The Company’s third quarter sales were $714.1 million, an increase of 14.6 percent over the third quarter last year. Diluted earnings per share for the third quarter were 27 cents, a 27.7 percent increase compared with last year. “Demand for our motorcycles has continued to exceed supply, even as we continue to increase our production capacity,” said Jeffrey L. Bleustein, chairman and chief executive officer of Harley-Davidson, Inc.
“An important step in continuing the growth of the Company was the ratification of a new labor agreement by the union employees at our production facility in York, Pennsylvania,” said Bleustein. “This new agreement runs until February 2007 and is an example of the strong collaborative relationship we have with our union partners.”
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Motorcycles and Related Products Segment — Third Quarter Results
Third quarter sales of Harley-Davidson® motorcycles were $528.1 million, an increase of 15.9 percent over the third quarter last year. Shipments totaled 48,077 units, up 5,462 units or 12.8 percent over last year. The Company has revised its production target upward to 203,000 Harley-Davidson motorcycles in 2000 and to 225,000 motorcycles for 2001.
Buell® motorcycle sales for the quarter totaled $10.4 million, down $6.3 million. Total shipments of 2,631 units during the quarter were comprised of 227 Buell V-Twin models and 2,404 Buell® Blast(TM) models. Buell’s V-Twin production was temporarily interrupted due to parts availability issues and a voluntary recall in June of this year. Buell’s V-Twin production is expected to resume during the month of October. The Company now estimates that it will produce 10,000 Buell units in 2000.
Sales of Parts and Accessories (P&A), which consist of Genuine Motor Parts and Genuine Motor Accessories, totaled $133.4 million, a 21.7 percent increase from the year-ago quarter. Third quarter sales of General Merchandise, which consists of MotorClothes apparel and collectibles, totaled $41.2 million, up 0.7 percent over the same period last year. The Company believes that the nine month growth rate for General Merchandise, 13.5 percent, is more indicative of the product line’s expected growth rate for 2000.
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By GlobalDataThird quarter gross margin was 33.6 percent of revenue, up slightly from 32.8 percent of revenue last year. Gross margin improved primarily due to favorable product line mix, favorable motorcycle mix and model year price increases, despite negative effects of European currencies and some manufacturing inefficiencies.
Third quarter operating margin for the Motorcycles and Related Products Segment was 16.3 percent of revenue, an improvement on last year’s third quarter margin of 15.4 percent. The increase in gross margin drove the commensurate increase in operating margin.
Harley-Davidson/Buell retail registrations have grown in all major markets, with the U.S. up 19.1 percent through August, Europe up 7.4 percent through July and Japan/Australia up 3.3 percent through May. (See table that follows for more detail.)
Financial Services Segment — Third Quarter Results
Harley-Davidson Financial Services, Inc.(HDFS), a subsidiary of Harley-Davidson, Inc., reported third quarter operating income of $9.6 million, a 27.9 percent increase compared to the year-ago quarter. The subsidiary continues to benefit from the increase in Harley-Davidson’s U.S. retail sales volume. HDFS also completed a $228 million asset-backed securitization during the third quarter.
Harley-Davidson, Inc. — Nine Month Results
For the nine month period ended September 24, 2000, sales totaled $2.15 billion, a 20.1 percent increase over the year-ago period. Diluted earnings per share were 82 cents, an increase of 32.7 percent. When the first quarter sale of the Harley-Davidson® Chrome VISA® card is excluded, diluted earnings per share were 80 cents, an increase of 28.8 percent.
Through the first nine months of this year, Harley-Davidson® motorcycle revenue was $1.64 billion, a 20.5 percent increase, while Buell® motorcycle revenue was $47.4 million, a 4.6 percent increase compared with the same period in 1999.
For the first nine months of 2000, P&A revenue totaled $349.4 million, a 22.9 percent increase, while General Merchandise revenue totaled $110.8 million, a 13.5 percent increase compared with the same period in 1999.
Through the first nine months of 2000, HDFS operating income was $24.2 million, a 25.7 percent increase over last year.
Acquisition of Italian Distributor
On October 2, 2000, Harley-Davidson acquired the assets of its Italian distributor in a cash transaction. The new wholly owned subsidiary will distribute Harley-Davidson and Buell motorcycles and related products through a network of independent dealers in Italy.
“We are strengthening our close-to-the-customer philosophy in this important market — one of the largest heavyweight motorcycle markets in Europe,” said Bleustein.
Harley-Davidson, Inc. is the parent company for the group of companies doing business as Harley-Davidson Motor Company, Buell Motorcycle Company and Harley-Davidson Financial Services, Inc. Harley-Davidson Motor Company, the only major U.S.-based motorcycle manufacturer, produces heavyweight motorcycles and offers a complete line of motorcycle parts, accessories, apparel, and general merchandise. Buell Motorcycle Company produces sport and sport-touring motorcycles. Harley-Davidson Financial Services, Inc. provides selected financial services to Harley-Davidson dealers and customers.
