What To Take From Harley-Davidson Full Year Results?

by Trefis Team
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Harley-Davidson (NYSE: HOG) released its Q4 and full year results for the Fiscal Year 2019. The company reported $5.72 million in revenue, up by 1.2% year on year (YOY). The Net Income reported was $531.5 million, up by 1.9% YOY and EPS was $3.19, up by 5.6% YOY. The CEO during the investor call mentioned that the company has met or exceeded all planned milestones and the execution is on track and the company is energized with new and different people, riders and non-riders.

We have a $46 price estimate for the company, which is above the current market price. View our interactive dashboard – Our Outlook For Harley-Davidson in FY 2019 – and modify the key assumptions to arrive at your own price estimate for the company.


Key highlights of Fiscal Year 2018:

The CEO during the call said that the company met or exceeded all stated planned milestones. In 2018, the full year e-commerce sales were up by 32%, they opened 23 apparel stores in Asia, 56 International dealers added, on track for 2-6 new models per year. In July, 2018 the company had announced the “More Roads to Harley-Davidson plan,” the acceleration of their strategy to build the next generation of Harley-Davidson riders, grow motorcycling, and return the business to growth through 2022.

The company is on track to launch the new middleweight motorcycles in 2020. The Pan-America Adventure Touring and Streetfighter Motorcycle are being put through the paces on all kinds of terrain and are demonstrating power, strength, and competitiveness. During the year the company sold 228,051 motorcycles overall (down 6.1% YOY), with the US contributing 132,868 (down 10.2% YOY), and the international market contributing 95,183 motorcycles (up 0.4% YOY).


Fiscal Year 2019 outlook:

The company expects to make motorcycle shipments in the range of 217,000 to 222,000 and expects the gross margin to be down YOY, but with the operating margin expected to be flat. Restructuring expenses will be approximately $40-45 million and capital expenditures are expected to be in the range of $225-245 million.

The company acknowledges the market challenges will persist and in the investor call the CEO said “we know market challenges will persist and we’re meeting them head-on with drive, clarity of purpose, and a solid plan. Our More Roads plan leverages our many strengths and it is our call to action as industry leader.”  In the U.S., the company is expected to increase relevant motorcycling. They will also address the changing global and consumer preferences towards more accessible motorcycles and a growing interest in demand for the electric segment. The company further believes that And More Roads has tremendous international opportunities that can drive international sales to become at least 50% of the annual sales volume in the near term.


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