Unit Sales rebound; stocks, earnings climb

Unit sales figures for motorcycles and ATVs in June brought plenty of smiles across the powersports industry, and investors jumped on stocks of two companies that posted record earnings for the second quarter ended in June.
As you’ll see in our regular sales report from the Motorcycle Industry Council (MIC) appearing on Page 25 of this issue, unit sales for June showed gains across ATV and all motorcycle segments. That hasn’t happened since last December.
At the same time, Polaris Industries and Harley-Davidson Motorcycle Company reported strong performances for the second quarter and six-month periods ended June 30, 2003.
Analysts following the two companies were pleased with MIC results and the performance of the two companies and provided positive comments in their immediate market reports.
Investors responded aggressively. Polaris common stock jumped $6 July 15, the day it made its earnings announcement, closing at $72.85 on trading of 305,000 shares. Polaris’ 52-week high price for its stock is $77.
At the same time, investors were jumping on Harley-Davidson stock. Tuesday, July 15, the day before it announced its earnings, Harley common climbed $1.89 to close at $43.68 on huge trading volume of 7.3 million shares. Average daily volume for Harley common is 3.4 million shares. Harley’s 52 week high is $54.99.
Following its earnings announcement on July 16, Harley stock moved up $2.19 to $45.87 on trading of 9.4 million shares.
Unit Sales Pick Up
Perhaps the best thing about the June sales figures reported by the MIC was the strength of the gains seen across all motorcycles segments. Total motorcycle sales were up 26.1% for June, compared to the same month last year. For the year to date through June, total motorcycle sales were up 3.7%, or 17,638 units, hitting a total of 499,739 units.
Gains were posted across the board, with off-highway unit sales climbing 42% for the month, up 10% for the six months this year.
Scooter sales continued their solid performance, as well, even though total numbers weren’t that large. June sales were 5,787, up 13.4%. Scooter sales were up 11.6% through June at 23,362 units.
ATVs also were strong, with June sales hitting 61,015 units, up 10.6%. With the June boost, 2003 sales are just about even with those of 2002 for the same six months.
Earnings Are Strong
Both Harley-Davidson and Polaris reported record earnings, bolstered by sales in different segments of the powersports industry. Polaris made its money off ATV sales and Harley, of course, continued to dominate in the heavyweight cruiser segment.
Polaris’ net income for the second quarter was up 6%, even though sales increased only 4%. For the six months, Polaris earned $33.4 million on sales of $691.1 million. ATV sales increased 24% over the second quarter last year.
Tom Tiller, Polaris president and CEO, said the company expects to earn $4.80 to $4.90 per diluted share of common stock for the year, an increase of 9% to 12% for the year.
One day after Polaris’ announcement, Harley reported record sales and earnings for its second quarter. Sales were $1.22 billion, up 21.8%, and earnings were $202.2 million. Just as important, Harley reported retail sales increased more than 14% — it sold more bikes than any quarter in its 100-year history. Worldwide shipments of Harley-Davidson motorcycles in the second quarter were 76,025 units, up 16% over the same period last year, and exceeded the company goal by 600 bikes. Harley expects to sell 290,600 bikes this year.
Analysts Back harley and Polaris numbers
Joseph Hovorka, analyst with Raymond James, upgraded his Harley recommendation to Strong Buy from Market Perform, based in large part upon the performance and MIC’s report. Harley’s second quarter earnings of 66 cents per share exceeded Hovorka’s estimate by eight cents.
At A.G. Edwards, Tim Conder says that Polaris continues to outperform the market on the ATV side, especially in big machines larger than 500cc. He’s estimating 2003 earnings to be $4.88.