A view of a showroom floor at Chicago Harley-Davidson Wrigleyville
dealership in Chicago
Updated Thu, July 27, 2023
By Bianca Flowers and Kannaki Deka
(Reuters) -Harley-Davidson Inc. missed Wall Street expectations on Thursday as profit declined 18% in the second quarter and slowing consumer demand in North America, its largest market, prompted the company to cut its sales outlook for the year.
Despite disappointing earnings, shares for the Milwaukee-based company were up 5.3%. Gross margins improving 400 basis points from last year tamped down on market concerns, said Garrett Nelson, a senior equity analyst at CFRA Research, in an email.
"Investors are focusing on the positives -- significant gross margin improvement, ongoing share repurchases, and a view that [Harley's] guidance has been brought down to more achievable levels," he said.
Company executives partially attributed the earnings miss to production being temporarily halted in June at the company's York, Pennsylvania, assembly plant for the second time in just over 12 months due to a parts shortage.
The 120-year-old manufacturer revised its full-year revenue target and is anticipating sales growth for its motorcycles and related products to be flat to 3% from its previous forecast of 4% to 7%. Operating margins are expected to be between 13.9% and 14.3%.
Tighter credit for American borrowers is denting consumers' ability to purchase big-ticket leisure items, Harley Chief Executive Jochen Zeitz told investors on a conference call.
"We've seen clear impact on customer demand and affordability with higher interest rates giving pause to higher-credit customers," he said.
Harley's price increases and surcharges for popular models have lifted the manufacturer's earnings per share in previous quarters, but analysts say the slowing demand is also reflective of consumers becoming less tolerant of price hikes.
Harley has sustained margin growth through its wealthier customer base but hasn't been as successful luring younger riders with the release of its electric bikes, such as its more affordable Del Mar model that retails for nearly half the price point of its top-selling bikes.
The manufacturer also shifted its electric motorcycles unit sales for the year. Lower sales for its latest model, LiveWire ONE, and electric-powered balance bikes for kids translated to a 44% yearly decline in revenue.
Worldwide retail sales were up 3% year-over-year, while bike shipments declined 10%.
Net profit declined to $178 million, or $1.22 earnings per share, in the quarter ended June 30, falling below analysts' forecasts of $1.25 per share. Revenue for motorcycles and related products came in at $1.2 billion, a 4% drop from the year prior.
(Reporting by Bianca Flowers in Chicago and Kannaki Deka in Bengaluru; Editing by Sriraj Kalluvila and Conor Humphries)
Updated Thu, July 27, 2023
By Bianca Flowers and Kannaki Deka
(Reuters) -Harley-Davidson Inc. missed Wall Street expectations on Thursday as profit declined 18% in the second quarter and slowing consumer demand in North America, its largest market, prompted the company to cut its sales outlook for the year.
Despite disappointing earnings, shares for the Milwaukee-based company were up 5.3%. Gross margins improving 400 basis points from last year tamped down on market concerns, said Garrett Nelson, a senior equity analyst at CFRA Research, in an email.
"Investors are focusing on the positives -- significant gross margin improvement, ongoing share repurchases, and a view that [Harley's] guidance has been brought down to more achievable levels," he said.
Company executives partially attributed the earnings miss to production being temporarily halted in June at the company's York, Pennsylvania, assembly plant for the second time in just over 12 months due to a parts shortage.
The 120-year-old manufacturer revised its full-year revenue target and is anticipating sales growth for its motorcycles and related products to be flat to 3% from its previous forecast of 4% to 7%. Operating margins are expected to be between 13.9% and 14.3%.
Tighter credit for American borrowers is denting consumers' ability to purchase big-ticket leisure items, Harley Chief Executive Jochen Zeitz told investors on a conference call.
"We've seen clear impact on customer demand and affordability with higher interest rates giving pause to higher-credit customers," he said.
Harley's price increases and surcharges for popular models have lifted the manufacturer's earnings per share in previous quarters, but analysts say the slowing demand is also reflective of consumers becoming less tolerant of price hikes.
Harley has sustained margin growth through its wealthier customer base but hasn't been as successful luring younger riders with the release of its electric bikes, such as its more affordable Del Mar model that retails for nearly half the price point of its top-selling bikes.
The manufacturer also shifted its electric motorcycles unit sales for the year. Lower sales for its latest model, LiveWire ONE, and electric-powered balance bikes for kids translated to a 44% yearly decline in revenue.
Worldwide retail sales were up 3% year-over-year, while bike shipments declined 10%.
Net profit declined to $178 million, or $1.22 earnings per share, in the quarter ended June 30, falling below analysts' forecasts of $1.25 per share. Revenue for motorcycles and related products came in at $1.2 billion, a 4% drop from the year prior.
(Reporting by Bianca Flowers in Chicago and Kannaki Deka in Bengaluru; Editing by Sriraj Kalluvila and Conor Humphries)
LiveWire Delays Rollout of S2 Del Mar Electric Motorcycle
The venture still majority-owned by Harley-Davidson is forecasting a 2023 operating loss of around $120 million.
Jennifer Ramsay
Feb. 22, 2023
LiveWire, Harley-Davidson Inc.’s all-electric motorcycle division, has sharply lowered its 2023 sales forecast because of a delay in the release of its new offering, the S2 Del Mar. It will now be released sometime during the second half of 2023. Executives forecasted the expected sale of units to be between 750 and 2,000, down from the original 7,000. In 2022, the company delivered 597 units of the LiveWire ONE (starting price $22,799), and the S2 motorcycle was projected to sell at a higher volume due to its lower price ($16,999).
Deployment of the S2 will not be limited to North America, either. 2023 will also see the company expand into Europe, with a new European vice president.
When asked about how the delay would affect LiveWire’s original expectation to deliver 15,000 units in 2024, President Ryan Morrissey focused on the long-term, saying it won’t affect his team’s larger strategy.
“We're continuing to focus on innovating in the core EV systems, the product portfolio, and expanding our distribution,” Morrissey said. “If you continue to look at the long-term trajectory and the long-term goals that we've set for the company, they continue to be the right ones.”
Launch of the S2 Del Mar was expected to help put the company on track to profitability in 2026. Currently, the anticipated operating loss for 2023 is approximately $120 million.
On the financial side, the company had a 31% increase in revenue to $47 million for 2022. However, there was an operating income loss of $29 million in Q4 alone, and $85 million for the whole year. In comparison, the net loss for 2021 was $68 million, with $20 million in Q4. LiveWire ended the year with $265 million in cash and cash equivalents.
Shares of LiveWire are trading at just over $7 per share, five months after it became as the first EV motorcycle company on the NYSE. Harley-Davidson made shares public in a bid to raise funds for new public development as LiveWire merged with SPAC AEA-Bridges Impact Corp. and Taiwanese electric scooter company KYMCO.
Why execs predict 'massive' future for stalled electric unit at Harley-Davidson's LiveWire
Rich Kirchen
Mon, July 31, 2023
Harley-Davidson Inc. CEO Jochen Zeitz’s goal of creating an all-electric motorcycle brand has stalled but executives say LiveWire ultimately will make “a massive impact” on electrifying the industry.
Rich Kirchen
Mon, July 31, 2023
Harley-Davidson Inc. CEO Jochen Zeitz’s goal of creating an all-electric motorcycle brand has stalled but executives say LiveWire ultimately will make “a massive impact” on electrifying the industry.
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