Harley-Davidson(US:HOG)2024-11-06 20:46Financial Performance - Net income for Harley-Davidson, Inc. in Q3 2024 was $119.0 million, or $0.91 per diluted share, down from $198.6 million, or $1.38 per diluted share in Q3 2023[154]. - Operating income for Q3 2024 was $105.8 million, a decrease of 49.4% from $209.3 million in Q3 2023[175]. - Net income attributable to Harley-Davidson, Inc. was $119.0 million in Q3 2024, a decrease of 40.1% from $198.6 million in Q3 2023[175]. - Diluted earnings per share decreased to $0.91 in Q3 2024, down 34.1% from $1.38 in Q3 2023[178]. - Revenue for the third quarter of 2024 was $876.4 million, a decrease of $420.6 million or 32.5% compared to the same period in 2023[187]. - The Company reported a gross profit of $263.8 million in Q3 2024, a decrease of 35.8% from $410.7 million in Q3 2023[185]. - Operating income for the first nine months of 2024 was $610.0 million, down $190.3 million or 23.8% from $800.2 million in the same period last year[197]. - Net income attributable to Harley-Davidson, Inc. for the first nine months of 2024 was $572.2 million, a decrease of $108.5 million or 15.9% compared to $680.8 million in the same period last year[197]. - Diluted earnings per share for the first nine months of 2024 was $4.27, down from $4.65 in the same period last year, reflecting a decrease of 8.2%[200]. Sales and Shipments - Worldwide retail sales of new Harley-Davidson motorcycles declined by 13.2% in Q3 2024 compared to Q3 2023, with North America down 10.1% and EMEA down 22.8%[156]. - Worldwide motorcycle shipments were 27,520 units in Q3 2024, a decline of 39.2% compared to 45,269 units in Q3 2023[184]. - Harley-Davidson's worldwide retail sales of new motorcycles decreased by 5.3% in the first nine months of 2024, totaling 125,569 units compared to 132,609 units in the same period last year[202]. - In North America, retail sales fell by 1.7%, with 86,896 units sold, while Europe/Middle East/Africa (EMEA) and Asia Pacific saw declines of 11.7% and 14.9%, respectively[202]. - Harley-Davidson shipped 134,852 motorcycles worldwide, a decrease of 10.4% compared to 150,440 units in the first nine months of 2023[206]. Segment Performance - HDMC segment operating income decreased by $120.1 million to $55.1 million in Q3 2024, primarily due to lower motorcycle shipments as dealers adjusted inventory levels[155]. - The HDMC segment reported operating income of $55.1 million in Q3 2024, down $120.1 million or 68.5% compared to the same period last year[175]. - Revenue for the HDMC segment was $2,905.9 million, down 9.7% from $3,216.4 million in the same period last year[207]. - Operating income for the HDMC segment decreased by 30.3% to $491.5 million, with an operating margin of 13.3% compared to 17.4% in the prior year[207]. - LiveWire motorcycle sales are projected to be between 600 to 1,000 units in 2024, down from a previous estimate of 1,000 to 1,500 units[170]. - LiveWire segment revenue decreased by $3.3 million, or 41.0%, to $4.8 million in the third quarter of 2024, primarily due to lower electric balance bike volumes[189]. - LiveWire segment revenue decreased by $6.974 million, or 30.4%, to $15.958 million, primarily due to lower electric balance bike volumes[212]. Cost and Productivity - The company achieved approximately $123 million in productivity savings in 2023 and expects around $100 million in cost productivity savings for 2024[172]. - Operating expenses in the third quarter of 2024 were lower due to reduced people costs and discretionary spending, reflecting the company's focus on cost discipline[188]. - Operating expenses for the first nine months of 2024 were lower due to reduced personnel costs and discretionary spending, reflecting the company's focus on cost discipline[210]. Future Outlook - The company expects HDMC revenue to decline by 14% to 16% in 2024, a revision from the previous expectation of a 5% to 9% decline[168]. - Retail unit sales for 2024 are now expected to be down 6% to 8% compared to 2023, revised from a previous expectation of flat to up 3%[168]. - HDFS operating income is expected to increase by 5% to 10% in 2024, revised from a previous expectation of flat to up 5%[170]. - Capital investments for 2024 are projected to be between $225 million and $250 million, focusing on core product innovation and manufacturing improvements[173]. - The Company plans to repurchase approximately $1 billion of shares starting in Q3 2024 through the end of 2026, with a revised plan to repurchase up to $450 million in 2024[174]. Tax and Financial Position - The effective income tax rate for Q3 2024 was 12.8%, down from 17.7% in Q3 2023, due to changes in earnings mix and increased tax credits[177]. - The company's effective income tax rate for the first nine months of 2024 was 18.0%, down from 22.1% in the same period in 2023, due to changes in the mix of earnings[199]. - As of September 30, 2024, total outstanding debt was $7.798 billion, an increase from $7.310 billion in 2023, with significant components including $3.837 billion in medium-term notes and $2.245 billion in asset-backed securitization debt[233]. - Interest-bearing brokered certificates of deposit outstanding were $549.0 million as of September 30, 2024, compared to $478.9 million in 2023, reflecting a growth of approximately 14.6%[234]. - The Company extended its $710.0 million five-year credit facility maturing in April 2025 to April 2029, enhancing liquidity and financial flexibility[235]. Market Risks - The Company has significant exposure to market risks from changes in foreign currency exchange rates, commodity prices, and interest rates[258]. - The HDMC segment's operating results are affected by fluctuations in the value of the U.S. dollar relative to foreign currencies, particularly the Euro and Japanese yen[259]. - HDFS segment operating income is affected by changes in interest rates, utilizing interest rate caps to mitigate fluctuations[262]. - The Company uses derivative financial instruments to hedge commodity prices, with no material changes reported[260]. - HDFS's retail credit losses have normalized to higher levels after a period of historically low levels, influenced by changing consumer credit behavior and macroeconomic conditions[255]. Compliance and Governance - The Company is subject to various operating and financial covenants related to its credit facilities, limiting its ability to incur certain debts and participate in mergers[250]. - Harley-Davidson Financial Services Inc. and the Company remained in compliance with all existing covenants as of September 30, 2024[252]. - The Fair Trade Commission in Japan is conducting an ongoing investigation into Harley-Davidson Japan KK[270]. - No changes in the Company's internal control over financial reporting during the quarter ended September 30, 2024[268]. - The Company has evaluated the effectiveness of its disclosure controls and procedures, concluding they were effective as of the end of the reporting period[267].