Harley-Davison (HOG) Q4 Earnings & Revenues Miss Estimates

Harley-Davidson, Inc.’s (NYSE:HOG) adjusted earnings per share broke even in fourth-quarter 2018, which missed the Zacks Consensus Estimate of 17 cents. In the prior-year quarter, the figure was 54 cents.

The company’s net income was $0.5 million compared with $8.3 million registered a year ago.

Revenues from the Motorcycle and Related Products segment declined 8.7% year over year to $955.6 million in the reported quarter, which missed the Zacks Consensus Estimate of $1.05 billion. The company also reported consolidated revenues of $1.15 billion, marking a decline from the prior year’s $1.23 billion. This fall was majorly due to the declining motorcycle demand in the United States.

Harley-Davidson, Inc. Price, Consensus and EPS Surprise

2018 Results

In 2018, Harley-Davidson reported net income of $531.5 million, up from $521.8 in the previous year.

Consolidated revenues for the year went up to $5.72 billion from the year-ago figure of $5.65 billion.

Motorcycles and Related Products

In fourth-quarter 2018, operating loss from the Motorcycles and Related Products segment was $59.5 million compared with operating income of $35.5 million in the year-ago quarter. Further, operating margin was negative 6.2% compared with positive 3.4% recorded in the year-ago quarter. This fall in margin was due to restructuring charges, incremental tariffs and higher recall costs.

In the quarter ending on Dec 31, the company shipped 43,489 motorcycles compared with 47,198 in fourth-quarter 2017.

Harley-Davidson’s retail motorcycle sales in the United States declined 10.1% to 20,849 units. International sales plunged 2.6% to 18,462 motorcycles from 18,947 in the prior-year quarter. During the reported quarter, sales in Latin America, and Canada region gained 2.7% and 2.4%, respectively. However, sales in the Asia-Pacific, and the Middle East and Africa (EMEA) reduced by 6.2% and 1.4%, respectively.

Harley-Davidson’s worldwide retail motorcycle sales declined 6.7% to 39,311 units from 42,142 in the year-ago quarter.

Revenues from the Parts & Accessories segment decreased 15% to $142.2 million. Moreover, the metric for General Merchandise — including MotorClothes apparel and accessories — lost 18% to $58.4 million.

Harley-Davidson Financial Services

Revenues for Harley-Davidson Financial Services (“HDFS”) were $190.2 million compared with $181.9 million recorded in the prior-year quarter. Operating income slumped 0.6% to $63.3 million from $63.7 million in the year-ago quarter.

Financial Position

Harley-Davidson had cash and cash equivalents of $1.2 billion as of Dec 31, 2018, compared with $687.5 million as of Dec 31, 2017. Net long-term debt rose to $4.89 billion from $4.6 billion as of Dec 31, 2017.

At the end of 2018, Harley-Davidson’s operating cash inflow rose to $1.21 billion from $1 billion a year ago. Capital expenditure was $213.5 million compared with $206.3 million in the preceding year period.

Looking Forward

For 2019, Harley-Davidson projects full-year motorcycle shipments of 217,000-222,000 units. Further, for first-quarter 2019, it expects motorcycle shipments to be approximately 53,000-58,000 units.

For the current year, the company expects capital expenditure of $225-$245 million, which includes roughly $20 million to support manufacturing optimization.

Zacks Rank & Stocks to Consider

Harley-Davidson currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader auto sector are Dana Incorporated (NYSE:DAN) , General Motors Company (NYSE:GM) and Genuine Parts Company (NYSE:GPC) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dana has an expected long-term growth rate of 2.9%. Share price of the company has increased 27.9% in the past month.

General Motors has an expected long-term growth rate of 8.5%. Over the past month, shares of the company have gained 15%.

Genuine Parts has an expected long-term growth rate of 5%. Shares of the company have gained 0.9% in the past month.

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