Harley-Davidson 1Q Net Income Up 3.2%
Harley-Davidson, Inc. (NYSE: HDI) net income for its first quarter ended March 26, 2006, was $234.6 million, up 3.2 percent from net income of $227.2 million during the first quarter of 2005. First quarter diluted earnings per share (EPS) were $0.86, an 11.7 percent increase compared with last year’s $0.77.
The company’s first quarter revenue was $1.29 billion, a four percent increase compared to revenue of $1.24 billion in the year-ago quarter.
Revenue from Harley-Davidson motorcycles was $1.01 billion, an increase of $29.6 million, or 3 percent compared to the first quarter last year. Shipments of Harley-Davidson motorcycles totaled 79,506 units, an increase of 2,790 units, or 3.6 percent over last year’s first quarter.
Worldwide retail sales of Harley-Davidson motorcycles increased 6.9 percent for the first quarter of 2006 compared to the same period in 2005. In the U.S., retail sales of Harley-Davidson motorcycles increased 5.8 percent for the quarter. The heavyweight motorcycle market in the U.S. increased 6.8 for the same period.
In international markets, retail sales of Harley-Davidson motorcycles grew 11.6 percent. First quarter retail sales were up 16.3 percent in Japan and 6.6 percent in Europe.
Revenue from Parts and Accessories (P&A), which consists of Genuine Motor Parts and Genuine Motor Accessories, totaled $182.9 million, an increase of $6.0 million, or 3.4 percent over the year-ago quarter. Revenue from General Merchandise, which consists of MotorClothes apparel and collectibles, totaled $68.6 million, an increase of $9.1 million, or 15.3 percent.
Gross margin for the first quarter of 2006 was 38.4 percent of revenue, up from 37.6 percent for the same period in 2005. Operating margin increased from 24.2 percent in the first quarter of 2005 to 24.3 percent in the first quarter of 2006.
“Harley-Davidson is off to an excellent start for 2006, having achieved record revenue and earnings,” said Jim Ziemer, President and Chief Executive Officer, Harley-Davidson, Inc. “In addition, our dealers continued their retail sales growth momentum from the second half of 2005 as motorcycle sales increased by approximately 7 percent worldwide in the first quarter.”
Harley-Davidson’s second quarter shipment plan is 78,000 2006 model year motorcycles. Production in the second quarter is scheduled to include approximately 13,000 2007 models to prepare for the new model introduction in mid July; however, these 2007 motorcycles will not be shipped until the third quarter.
The company’s wholesale shipment target for the calendar year 2006 remains between 348,000 and 352,000 Harley-Davidson motorcycles. “We believe that the prospects for retail growth remain strong and support a wholesale unit growth rate in the range of five to nine percent annually and an annual EPS growth rate of 11 to 17 percent,” said Ziemer.
For the long term, the company expects the growth rate for P&A revenue to be slightly higher than Harley-Davidson’s motorcycle shipment growth rate, and the General Merchandise growth rate is expected to be lower than the motorcycle shipment growth rate.
