From RoadRacing World
HARLEY-DAVIDSON REPORTS REVENUE AND EARNINGS GROWTH FOR 2006
Annual Worldwide Retail Sales Increase 8.5 Percent
Milwaukee, Wis., January 18, 2007 -- Harley-Davidson, Inc. (NYSE: HOG) today announced its results for the fourth quarter and year ended December 31, 2006. Revenue for the quarter was $1.50 billion compared to $1.34 billion in the year-ago quarter, an 11.9 percent increase. Net income for the quarter was $252.4 million compared to $230.0 million, an increase of 9.7 percent over the fourth quarter of 2005. Fourth quarter diluted earnings per share (EPS) were $0.97, a 15.5 percent increase compared to last year’s $0.84.
Revenue for the full year was $5.80 billion, compared with $5.34 billion in 2005, an 8.6 percent increase. Wholesale shipments of Harley-Davidson motorcycles were 349,196 units for the year, a 6.1 percent increase compared to 2005. Net income for the year was $1.04 billion, an 8.7 percent increase versus last year’s $959.6 million. Diluted EPS for the full year were $3.93, a 15.2 percent increase compared with $3.41 in 2005.
“After more than two decades of uninterrupted growth at Harley-Davidson, our dedicated employees and passionate dealers have once again delivered excellent results,” said Jim Ziemer, Chief Executive Officer. “I couldn’t ask for a more committed workforce and dealer network.”
“In 2006, the Company’s revenue and earnings surpassed 2005 results demonstrating continued growth. At the same time, our dealers achieved impressive Harley-Davidson motorcycle sales volumes. The enthusiastic worldwide response to the changes in our 2007 models contributed to an 8.5 percent increase in retail sales during the year,” said Ziemer.
“Furthermore, the Company continued to return significant value to shareholders in 2006. We increased dividend payments by 22.5 percent over the prior year and repurchased 19.3 million shares of our common stock during 2006 at a cost of $1.06 billion.”
“As we look to the future, we believe Harley-Davidson will deliver EPS growth in the range of 11 – 17 percent each year through 2009. On an annual basis we expect solid revenue growth, margin improvement, and the benefits of strong free cash flow to drive this earnings growth,” said Ziemer.
The Company also expects to ship between 82,000 and 84,000 Harley-Davidson motorcycles for the first quarter of 2007.
Motorcycles and Related Products Segment – Fourth Quarter Results
Revenue from Harley-Davidson motorcycles was $1.22 billion, an increase of $135.6 million or 12.5 percent over the same period last year. Shipments of Harley-Davidson motorcycles totaled 92,848 units, an increase of 5,260 units or 6.0 percent over last year’s fourth quarter.
Revenue from Parts and Accessories (P&A), which consists of Genuine Motor Parts and Genuine Motor Accessories, totaled $179.2 million, an increase of $9.3 million or 5.5 percent over the year-ago quarter. Revenue from General Merchandise, which consists of MotorClothes apparel and collectibles, totaled $70.6 million, an increase of $10.1 million or 16.7 percent over the year-ago quarter.
Gross margin for the fourth quarter of 2006 was 38.0 percent of revenue compared to 38.3 percent for the fourth quarter last year. Fourth quarter operating margin decreased to 22.8 percent from 23.4 percent in the fourth quarter of 2005.
Motorcycle Retail Sales Data
During the fourth quarter, worldwide retail sales of Harley-Davidson motorcycles increased 6.4 percent over the prior year quarter. In the U.S., retail sales of Harley-Davidson motorcycles increased 0.3 percent for the quarter while the heavyweight motorcycle industry in the U.S. decreased 1.7 percent. Retail sales of Harley-Davidson motorcycles grew 29.4 percent in international markets during the fourth quarter of 2006 compared to the fourth quarter of 2005. Fourth quarter retail sales increased 31.2 percent in Europe; Japan was up 19.6 percent; Canada was up 37.4 percent and all other international markets combined were up 34.0 percent.
Worldwide retail sales of Harley-Davidson motorcycles increased 8.5 percent in 2006 compared to 2005. In the U.S., retail sales of Harley-Davidson motorcycles increased 5.9 percent while the U.S. heavyweight motorcycle market was up 4.9 percent for the same period. In our international markets, Harley-Davidson retail sales for the full year grew 18.6 percent. Retail sales in Europe increased 14.6 percent; Japan was up 16.3 percent; Canada was up 15.9 percent and all other international markets combined were up 34.3 percent.
Financial Services Segment
Harley-Davidson Financial Services (HDFS) reported fourth quarter operating income of $47.6 million, an increase of $8.1 million or 20.7 percent compared to the year-ago quarter. The increase is primarily due to higher wholesale and retail net interest income.
Income Tax Rate
The Company's fourth quarter effective income tax rate was 35.1 percent compared to 35.5 percent in the same quarter last year. This decrease primarily reflects the retroactive reinstatement of the federal research and development tax credit. The Company’s full year effective tax rate in 2006 was 35.8 percent.
Harley-Davidson, Inc. - Twelve Month Results
For the fiscal year ended 2006, revenue totaled $5.80 billion, an 8.6 percent increase over 2005. EPS were $3.93, an increase of 15.2 percent compared to 2005.
Shipments of Harley-Davidson motorcycles were 349,196 units in 2006, a 6.1 percent increase compared to last year’s 329,017 units. Harley-Davidson motorcycle revenue was $4.55 billion, up 8.8 percent compared to last year’s $4.18 billion. P&A revenue totaled $862.3 million, a 5.7 percent increase over last year’s $815.7 million. General Merchandise revenue totaled $277.5 million, a 12.0 percent increase compared to $247.9 million during 2005.
Motorcycle segment gross margin for the full year was 38.5 percent of revenue compared to 38.2 percent for 2005. Full year 2006 operating margin increased to 24.4 percent from 24.3 percent compared to the prior year.
HDFS operating income was $210.7 million, a 10.0 percent increase over last year’s $191.6 million.
Cash and marketable securities totaled $896.5 million as of December 31, 2006. Cash flow from operations was $761.8 million and capital expenditures were $219.6 million during 2006. In 2007, capital expenditures are expected to be between $300 million and $325 million.
The Company repurchased 2.1 million shares of its common stock at a cost of $151.0 million during the fourth quarter of 2006. For the full year of 2006, the Company repurchased 19.3 million shares of its common stock at a cost of $1.06 billion. On December 31, 2006, the Company had 258,052,356 shares of common stock outstanding.
As of December 31, 2006, there are 22.8 million shares remaining on two board-approved share repurchase authorizations. An additional board-approved share repurchase authorization is in place to offset option exercises.