Harley-Davidson Inc.’s inventory soared 9% Thursday, placing it on observe for its highest shut in virtually two years, after the motorbike firm crushed earnings estimates for the fourth quarter.
The transfer put the inventory
HOG,
on observe for its highest shut because it ended at $51.96 on May 17, 2021.
The Milwaukee, Wisconsin-based firm managed to rebound from a manufacturing shutdown in May 2022, after a third-party provider mentioned it had a regulatory compliance matter regarding a part. That pressured Harley-Davidson to droop manufacturing for a two-week interval.
Motorcycle shipments rose 18% within the quarter over identical interval a 12 months earlier, propelling income up 12%, to $1.142 billion from $1.016 billion a 12 months in the past. That was forward of the FactSet consensus of $918 million. The beat got here throughout what is often a seasonally weak interval, as motorbike riders await the launch of latest fashions within the new 12 months.
“Compared to our estimate, better top-line performance (which benefited from strong unit growth and favorable pricing) alongside manufacturing leverage and operating cost control helped drive upside in the quarter,” mentioned William Blair analysts, who’ve a market-perform score on the inventory.
The report was the primary underneath the corporate’s new three-segment construction: Harley-Davidson Motor Company, or HDMC, which includes design, manufacturing, advertising and marketing and gross sales of the corporate’s bikes and associated merchandise; Harley-Davidson Financial Services, or HDFS, which offers financing and insurance coverage services and products to its sellers and retail clients; and LiveWire, the group that oversees design, advertising and marketing and gross sales of LiveWire electrical bikes and associated merchandise.
The latter was a subsidiary of Harley-Davidson that went public final September through a reverse merger with a special-purpose acquisition firm, or SPAC, known as AEA-Bridges Impact Corp. Harley-Davidson has retained an 89% stake in LiveWire and can proceed to consolidate its outcomes into earnings.
Chief Executive Jochen Zeitz advised analysts on the earnings name that the corporate’s five-year Hardwire strategic plan to drive worthwhile development had delivered a powerful end in its second 12 months of implementation.
“We have changed our overall approach and focus as a business from prioritizing unit growth at all costs to a more holistic view on profitable growth of motorcycles, parts and accessories, apparel and licensing and Harley-Davidson financial services,” mentioned Zeitz, in response to a FactSet transcript.
That revenue focus means a powerful push for the corporate’s most worthwhile bikes, that are housed in its Touring, Dodge Cruiser and Trike segments. These segments “offer a potential to inspire more engagement while compelling new customers and drivers to choose Harley-Davidson,” mentioned Zeitz.
The firm can also be focusing on nonriders by increasing its line of clothes and attire, creating its personal aesthetic with inspiration from the previous, he mentioned. “Harley-Davidson lifestyle is where we see the overall apparel and licensing opportunity, especially as it relates to nonriders, but also [to] existing and new brand aficionados,” he mentioned.
The firm is anticipating supply-chain inflation to ease in 2023 as logistics prices proceed to stabilize, in response to its chief monetary officer, Gina Goetter.
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It expects HDMC operating-income margins of 14.1% to 14.6% and HFS working earnings to fall by 20% to 25%. That’s attributable to greater rates of interest pushing borrowing prices greater.
“Given the macro backdrop, we are also expecting loss rates to rise above 2022 and are planning for losses” between 2% and a pair of.25%, Goetter advised analysts on the decision.
For LiveWire, the corporate expects to ship between 750 and a pair of,000 models, beneath a earlier forecast for as many as 7,000 bikes, because it’s transferring the launch of its Del Mar mannequin to the second half of the 12 months from an unique spring date.
Elsewhere in its earnings report, Harley-Davidson posted web earnings of $42 million, or 28 cents a share, for the quarter — up from $22 million, or 14 cents a share, in the identical interval a 12 months earlier, and forward of the FactSet consensus of seven cents.
For the complete 12 months, it expects HDMC income to develop 4% to 7%.
The inventory has gained 39.7% within the final 12 months, whereas the S&P 500
SPX,
has fallen 9%.
Source web site: www.marketwatch.com
