Harley-Davidson(US:HOG)2019-04-23 19:04Financial Data and Key Metrics Changes - Consolidated net income decreased compared to the prior year due to lower operating income, with EPS for the quarter at $0.80, and $0.98 when excluding restructuring costs and incremental tariffs [20][22][36] - Worldwide retail sales of new Harley-Davidson motorcycles in Q1 were down 3.8% year-over-year, with U.S. retail sales down 4.2% [21][24] - Financial Services operating income decreased by 7.6% [20][30] Business Line Data and Key Metrics Changes - Motorcycle operating income was impacted by lower shipments and unfavorable mix, with revenue for the Motorcycle segment down 12.3% due to a 7.9% decrease in motorcycle shipments [20][28] - Retail sales of Street motorcycles were significantly impacted by limited availability following a recall, but resumed in late March slightly ahead of expectations [21][22] - International retail sales were down 3.3% year-over-year, significantly impacted by the lack of Street motorcycles available for sale [25][26] Market Data and Key Metrics Changes - U.S. market share of new bike registrations was 51.1%, up 0.6 percentage points, with market share gains driven by stronger dealer support and marketing efforts [24][25] - Retail sales in emerging ASEAN markets increased by 126% due to tariff mitigation from the Thailand manufacturing investment [13][27] - Retail sales in Japan and Australia were weak, with Japan experiencing a decline and Australia facing competitive new product introductions [26] Company Strategy and Development Direction - The company is focused on building the next generation of Harley-Davidson riders globally through the "More Roads to Harley-Davidson" plan, aiming to expand into new segments and markets [6][14] - The strategy includes launching new middleweight models and entering segments representing nearly 90% of the global motorcycle volume [14][55] - The company is committed to electrification and expanding its product offerings, including electric motorcycles and pedal-assist bicycles [10][15] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the ongoing challenges in the U.S. motorcycle industry, including trade wars and competitive pressures [8][22] - Despite headwinds, management is encouraged by recent retail sales trends and believes the "More Roads" plan will drive significant growth [36][37] - The company is prepared to face challenges and is committed to long-term growth and shareholder returns [36][37] Other Important Information - The company has hired a new Brand President to unify and enhance the brand's presence across all consumer touchpoints [16][45] - The Thailand facility is expected to provide competitive pricing and growth opportunities in the ASEAN region [27] - The company plans to maintain a minimum of 12 months of projected liquidity needs in cash or committed credit facilities [33] Q&A Session Summary Question: Outlook for the remainder of the year - Management confirmed that Q1 performance does not change the outlook for the remainder of the year, maintaining expectations for operating margins of 8% to 9% [39][40] Question: Objectives of the new Brand President role - The new Brand President role aims to leverage the brand's power across all consumer interactions to inspire new riders [44][45] Question: Impact of tariffs on business - Management discussed the significant impact of EU tariffs and the ongoing strategy to mitigate these through international manufacturing [48][49] Question: Changes in retail sales trends - Recent sales trends showed improvement, particularly in March, driven by increased marketing and dealer support [66][68] Question: Street motorcycles availability - Street motorcycles are fully accounted for in the second quarter outlook, with expectations to catch up on lost sales [60][62] Question: Market conditions in France and the U.K. - France showed good growth in Q1, while the U.K. continued to face challenges due to Brexit-related uncertainties [64]