American Iron News Harley Offers Rebates To Sell 2016 Motorcycles

Reuters is reporting that “Harley-Davidson has taken the rare step of offering rebates on its 2016 motorcycles to U.S. dealers as an incentive for them to shift a backlog that has restricted sales of its latest models.” The report is based on statements from three anonymous Harley dealers and two unnamed analysts.

The rebate is stated to be up to $1,000 on 2016 models and will run through the end of April according to the Reuters’ report. Though the practice is something Harley’s competitors frequently incorporate, The Motor Company generally takes a staunch stance against the practice. But a strong dollar has actually been working against Harley as it lowers the price of motorcycles from competitors abroad and reduces profits on motorcycles Harley ships oversees. There’s also been strong competition internally from Polaris Industries whose Indian Motorcycle brand has been cutting into Harley-Davidson sales.

Harley-Davidson’s First Quarter 2017 report corroborates the Reuters’ report as 2017 motorcycle shipments have been reduced to 70,831 in the first quarter, a 14.7% reduction compared to the 83,036 it shipped in the first quarter of 2016. “This decision helped dealers focus on selling down their model year 2016 retail inventory,” states the financial report. The First Quarter 2017 statement also shows that retail motorcycle sales in the U.S. were down 5.7% compared to the year-ago quarter.

The Reuters’ report claims that two of the three dealers who confirmed the story said they had never been offered a rebate before.

One Harley dealer in a western state reportedly told Reuters’ “It’s not normal. Usually, any incentives are customer-facing.”

2017 FLTRXS Road Glide Special Review

by Dain Gingerellli

I was highballing north on US 395 along california’s Sierra Nevada Mountains, the Harley’s cruise control doing most of the work, when the slow-moving tractor-trailer up ahead forced me to reduce speed. I should point out, too, that this was no ordinary Harley-Davidson. I was riding a 2017 FLTRXS Road Glide Special, and its electronic odometer revealed that the Milwaukee-Eight engine had only recently been broken in by the crew at Harley’s West Coast fleet center. The big 107″ V-twin was loafing along at about 85 mph, the bike’s standard cruise control feature subbing for me while I relaxed and rested behind the RUSHMORE-inspired fairing. Life was good—until the big rig impeded our headway.

I gently applied the Reflex Linked brakes to cancel the cruise control command, hauling the speed down to about 60. A few cars approaching from the opposite direction prevented me from overtaking the slow-moving rig right away. Moments later an opening in the traffic set me free, so I purposely twisted the right grip, feeding raw gasoline and fresh air into the eight-valve engine’s thirsty combustion chambers. The single-cam engine liked that, and our speed increased proportionally until the Road Glide Special quickly found its new place on earth ahead of the lumbering big rig. Life was, once again, good for me.
Let me be clear about another point: I didn’t downshift to fifth gear while overtaking the truck. This new engine has torque (I almost feel guilty about not spelling that with a capital T!) in spades, making downshifting optional under most riding conditions. Harley claims 111.4 ft-lbs. at 3250 rpm, a figure that’s actually only a few ft-lbs. more than what the Twin Cam 103″ generated. What the 2017 figures fail to reveal is that the new Milwaukee-Eight’s torque curve is much broader than the 103″ engine’s. And I like the new torque curve. A lot.

AIM’s editor, Steve Lita, pointed out the technological highlights of Harley’s new engine in issue 341, and in issue 342 he gave a glimpse of what the new baggers that cradle the engine in their RUSHMORE frames are like. Now I’m going to tell you about what I consider to be the best bargain among those baggers: the Road Glide Special.

This bike has it all, and the marketing folks at Harley pretty much pegged it with the FLTRXS’s mission statement: “Long on features, comfort, and attitude.” Indeed, and beyond the standard RUSHMORE and new Milwaukee-Eight features, the Special sports Harley’s big Boom! Box 6.5GT touch-sensitive screen that’s positioned between the inner fairing’s two large speakers and right beneath the easy-to-read analog instruments.

Truth be told, though, I rarely use the infotainment feature. Oh, I’ll dabble with the navigation option now and then to save myself from being totally lost during an adventure, but otherwise I prefer to enjoy the drone of the engine’s exhaust note while racking up the miles. And what a sound the 2017 Road Glide Special’s new mufflers produce, a deep, rich, mellow tone, one that bikers have enjoyed for years. Harley engineers were able to attain this new, throatier sound by exorcising some of the mechanical-noise demons from the engine, primary drive, clutch, and transmission. Less clanging noise there creates a vacuum of sorts that can be filled with more decibels from the exhaust system, the end result a motorcycle with a noise factor that, in addition to complying with federal decibel regulations, sounds genuinely cool. Welcome to the 21st century of motorcycle engineering and marketing; the Road Glide Special clearly stands at the forefront of this new philosophy.

Enough about the features, let’s talk about the Road Glide Special’s comfort. I’m on record in past bike reviews stating that I love touring aboard Electra Glides. I still like those batwing fairing bikes but, in truth, when it comes to absolute comfort, this RG Special fits me like the proverbial glove. My 5′ 8″ frame and 30″ inseam are well-matched to the bike’s ergonomics. I can flat foot stops at traffic lights thanks to a claimed seat height of 25.9″ (laden), and the reach to the handgrips is relaxed and natural. The seat’s bucket shape is form-fit to my derriere, and the tinted stub windshield mixed with the fairing’s RUSHMORE ducting allows just the right amount of wind blast to entertain me without pounding me. The small winglets at the base of the aerodynamically shaped shark-nose fairing help with that, and because the High Output engine doesn’t have the Twin Cooled liquid-cooling option, there are no fairing lowers to further isolate me from the elements so I don’t feel like I’m wrapped fully in a cocoon. I’m on a motorcycle.

Now let’s discuss the Special’s attitude. There are two key elements to a bagger: it must be capable of toting a reasonable amount of gear for extended rides, and it must look cool in carrying out its mission. The RG Special’s two lockable saddlebags boast a claimed 2.3 cubic feet of storage capacity, and while I can’t exactly describe just what that equates to in real-world gear, I can say that I was able to pack three days worth of personal inventory plus my camera gear for the blast up US 395.
And the FLTRXS looked cool—you know, attitude— while making the run up 395. Start with the paint. Vivid Black remains the standard color for the base model, which places MSRP at a rather cool $23,999. Our test bike sported the Hard Candy Custom paint option (three new color choices are on tap for 2017, two of which are Hard Candy Custom colors), which boosts price to $26,999. Yeah, it ain’t cheap, so determine just how much attitude you want, and then set your budget.

No matter the color option, though, all Road Glide Specials ride with the same cool chassis features, giving each bike a stance that shouts Attitude! The parts mix includes the 19″ (front) and 16″ (rear) Enforcer cast aluminum wheels with Brembo calipers and Dunlop Harley-Davidson Series tires. The bike’s stance is further set by a lowered suspension that features Harley’s updated specs. Claimed front suspension travel is 4.6″ front, 2.1″ rear.

New for 2017, the 49mm fork legs are filled with Showa Dual Bending Valve (SBDV) technology to smooth the ride up front. Out back you’ll find a pair of coil-over spring shocks with hand adjustability to set preload. As a unit, plus the low-profile tires (130/60-19″ front, 180/65-16″ rear), the suspension sets the Special nice and low, the way a bagger should be. There’s a small price to pay, however, as shortened suspension means there’s less up-and-down travel to absorb some of the bumps in the road. To be sure, the new suspension technology works well over smaller road holes and frost heaves, but a series of repetitious bumps challenges the damping rates; expect some chatter or jack hammering at times.
For the most part, though, the ride remains controlled and rather refined. Moreover, after spending all day in the saddle, I never felt fatigued or beaten. I always looked forward to the next day’s ride. And for me, that and the attention to detail and attitude are what make the FLTRXS so special for me as a bagger enthusiast. AIM

2017 American Flat Track – Georgia Short Track

The Flat Track circuit heads to Georgia this weekend, March 25, for the follow-up to the historic races at the Daytona TT. The race is being held at the Dixie Speedway, in Woodstock, GA. Jared Mees (No. 9 Indian Motorcycle Rogers Racing Scout FTR750) looks to maintain momentum, building on his success after taking the top position in Daytona. He’ll be facing off against rival Bryan Smith (No. 1 Indian Motorcycle Racing backed by Allstate Scout FTR750), who placed second in Daytona and hopes to chip away at the five-point lead Mees has built. The H-D factory team, headed up by Jake Johnson, Kenny Coolbeth Jr., and Brandon Robinson, will be looking to rebound. Johnson finished highest of the team in Daytona, placing fifth.

 

Ain’t it fun having these two motorcycle titans competing against one another again?

Harley Expands Street Line, Launches 2017 Street Rod

Inverted 43mm fork, a new speed cowl, 17″ wheels, and a new seat spruce up the Street line.

Ah, so here we are again. Harley-Davidson, with its century-old heritage and wisdom, needs to sink its hooks into another generation of  young riders, thus bolstering the future of the brand by banking on customer loyalty, the bravado of the Bar and Shield, the familial feeling among Harley riders, and remaining the perennial cool kid on the block.  Alas, the question plaguing many big corporations trying to tap into the youth remains–how?

When Harley announced the new Street lineup in 2013, subsequently introducing it in 2014, this represented a shift in thinking. The Street 500 and 750 were the first lightweight models to roll out of the minds in Milwaukee since the Sprints of the ’70s. (The Kansas City factory handles North American production and shipping, and the factory in Bawal, India, handles production for overseas markets. H-D outsourced production of the smaller-displacement models there as early as 2011.) The models featured the Revolution X motor, which, like the V-Rod’s Revolution, is liquid-cooled and employs a single overhead cam; the differences, however, span beyond displacement, including a single internal counterbalancer, vertically split crankcases, and screw and locknut valve adjustment. In a two-pronged strategy, H-D set its sights on two major demographics with distant but similar tastes, both of which demanded a larger chunk of The Motor Company’s attention: Millennials (specifically new riders) and the Southeastern Asia market.

And while the new Street family received more of a distant cousin’s welcoming party in North America, the overwhelming reaction from Asia remained positive. In a land where lightweight, maneuverable, cost-effective, 500cc-and-less motorcycles are the main mode of transportation and commuting, Harley seemed to have finally and successfully embraced the market overseas. And if those specific tastes sound like a lot of the scoots (hmm…cafes and scramblers) you see in your city, well Harley smells what’s cooking.

There she blows, a new entry-level bike ready to hop from borough to borough.

Welcome to the fray the 2017 Harley-Davidson Street Rod, this designation repurposed from the V-Rod’s discontinued model. That’s where the comparisons end, however, as this Street Rod is the third member in the Street family and the first to feature a new, updated motor, the High Output Revolution X 750. That’s right, another new Harley motor. Only this time around, the design team merely revamped the liquid-cooled Revolution X with a larger air box, dual-throttle body, revised four-valve cylinder heads and high-lift camshafts, and a more voluminous muffler. Plus, the compression ratio bounds up to 12:1. With the target market ostensibly 18-34 year-old city dwellers, the brand-new Street Rod, equipped with the new High Output Revolution X 750, should be capable in the midrange, bopping through the accordion of stop-and-go traffic and offering the necessary giddyup.

The Street Rod’s air intake is inspired by superchargers, drawing attention to the new motor and helping with the power gains.

Rolling stock is new, too, with two fresh 17″ Split 7-Spoke black cast wheels, front and rear, wrapped in new Michelin Scorcher 21 radials. Up front, a 43mm inverted fork handles bumps, and coil-over rear shocks have an external reservoir to increase fluid capacity and improve control; rear travel increases to 4.6″. The seat was specifically designed for the Street Rod, a sporty piece that might call to mind something on, say, an XR1200. It’ll help achieve the leaned-over, aggressive riding style which many young guns employ carving through the city on brief jaunts. Couple that with a 29.4″ seat, 3.7″ higher, more gracious lean angle, and a drag bar, and you have yourself a sportier design capable of handling all the city terrors.

The drag handlebar moves the rider forward, and the bar-ends are a nice touch in cleaning up the front end.

 

Coil-over suspension with an external reservoir helps with control and adjustments.

Harley has good reason to expand the Street lineup. This is an entry-level motorcycle, one that allows a new rider to flaunt the Bar and Shield and break into the sport with style. As a bonus, Harley can start to cultivate its next crop of riders who may eventually upgrade to cruisers and, later, Touring models. Funnel the young through the ranks, and start that process early. Figures actually back up Harley’s augmentation; as maligned as the Street 500 and 750 might have seemed, sales of  Sportster and Street models increased from 23,396 in the first quarter of 2014 to 29,149 in the first quarter of 2015.

Consider this. CivicScience conducted a survey over the course of a year that compared adults ages 18 and up, regardless of gender, to adults ages 18-34 (Millennials, yo).  A simple question: Do you currently own a motorcycle? Of those aged 18 and up, 11% answered either, “Yes, but I need a new one,” or, “No, but I plan to buy one soon.” Of the Millennial demo, 14% are in the market for either their first bike or a new one.

Can Harley finesse its way into the tight pockets of new riders?  Offering a liquid-cooled, small-displacement package at a fair price point, one that represents enduring tradition, shows that Harley-Davidson is paying attention to all its markets and is starting to break from the norm while retaining standards that loyalists desire. Build from within, out. And tapping in to the Millennial market ain’t a bad way to expand your business model.

 

Mark Potter’s Man Cave

Harley memorabilia offers a quaint and acceptable substitute to wallpaper.

This edition of My Garage appeared in the Summer 2016 issue of American Iron Garage. Back issues of  American Iron Magazine and American Iron Garage are available at Greaserag.com.

Mark’s 2007 Softail Deluxe combines retro and modern to keep his oasis grounded in the present day.

Kick back and relax, and please try not to drag your jaw on the floor. Welcome to Mark Potter’s home garage, something more of a gearhead haven and the initial induction to a new segment here in AIG. And what a way to kick it off. Mark’s garage is a polished collection of wow and more wow, and it’s a delectable collection of eye candy for all. From the decadent, handmade Harley-Davidson-imprinted floor plate, cut to look exactly like the Bar & Shield, to the stroll through history lining the walls in the form of posters, newspaper clippings, photographs, and artifacts, any motorcycle enthusiast would find a warm, fuzzy welcome in Mark’s garage.

This micro-Harley utopia orbits the centerpiece of the garage, the nucleus of Mark’s universe: his 1942 WLA. We would be content enough hanging around in the garage, lighting a stogie, taking in a ballgame on Mark’s surround sound television, and lapping on for hours about Harleys and all of the memorabilia strewn around the room. But talking points would begin and end with what Mark attributes to fully tying the room together, the mint ’42 WLA in all its historic glory. WLAs were introduced in 1942 as production of

Here’s that ’42 WLA, the bruising cruiser that helped win the war. Now, ain’t that nice?

civilian motorcycles was almost stopped entirely when America entered World War II. The WLA, also known as The Liberator, primarily operated as a military vehicle, though many soldiers who rode them during the war were inspired to purchase Harleys when they returned home. Mark’s WLA dons an all-black paint job (as opposed to a military green), but it’s still an incredible piece of history flashing its style in the middle of his garage.
Mark did most of the work, along with some help from his riding buddies. He tells us that it’s an ever-evolving process, but it has been heaps of fun to build and, of course, enjoy. The Harley bistro table was handmade, and the barstools feature leather seats with the Harley-Davidson logo. Not lost in the luster is his 2007 Softail Deluxe, sporting some sweet sharktail exhaust tips, and fitting into his blast-from-the-past theme with some whitewalls and a windshield.

Everywhere you turn, you’re met face-to-face with Harley-Davidson history.

We’re thoroughly impressed with Mark’s motorcycle Valhalla, and we appreciate his letting us take a look around. Maybe you’re lucky enough to have a friend who puts in this kind of legwork for his “man cave,” but we’d certainly take an invite from Mark any night of the week. It’s Miller time! AIG

2017 Harley-Davidson Breakout First Ride Review Video

American Iron Editor Bryan Harley on the 2017 Breakout

Sometimes it’s fun to get lost in the desert on a Harley. 

The 2017 Breakout delivers a tried-and-true Harley-Davidson riding experience. Low-slung in a stretched frame, riders straddle a wide tank and reach for the wide drag bars in a punched out riding position. Drop the clutch and there’s an explosion of power, the electronic throttle control dialed and quick to respond. Between the 21” tall front hoop and burly 240mm rear resides an authoritative High Output Twin Cam 103B engine. The front is kicked out at 35-degrees while the bike skirts the ground at 4.3 inches. Straight line hustle is what the Breakout’s all about.

Then there’s those wheels. The 21 spoke Turbine Wheels are some of the finest that come out of the factory. Just the right amount of machining accentuates the highlights on the otherwise black hoops.

We rambled around the edges of the desert on the 2017 Breakout, braving the broken roads around Ocotillo Wells and weathering the winds of the Salton Sea to bring you this first ride video review. Come along for the ride, then be on the lookout for more analysis in a future issue of American Iron Magazine.

2017 Breakout Stats – 39.26 mpg  Weight – 699 lbs. (310.5 front, 388.5 rear)

PRICING
Vivid Black – $19,299
Color – $19,699
Custom Color – $20,249
Hard Candy Custom – $20,499
ABS Option – Standard
Security Option – Standard
California Emissions – $200
Freight – $390

DIMENSIONS
Length – 95.7 in.
Seat Height, Laden – 24.7 in.
Seat Height, Unladen – 25.8 in.
Ground Clearance – 4.3 in.
Rake (steering head) (deg) – 35
Trail – 5.7 in.
Wheelbase – 67.3 in.
Tires, Front Specification – 130/60B21 63H
Tires, Rear Specification – 240/40R18 79V
Fuel Capacity – 5 gal.
Oil Capacity (w/filter)- 3.5 qt.
Weight, As Shipped – 678 lbs.
Weight, In Running Order – 707 lbs.

ENGINE
Engine – Air-cooled, High Output Twin Cam 103B
Bore – 3.87 in.
Stroke – 4.374 in.
Displacement – 103.1 cu. In.
Compression Ratio – 9.6:1
Fuel System – Electronic Sequential Port Fuel Injection (ESPFI)

DRIVETRAIN
Primary Drive – Chain, 34/46 ratio
Gear Ratios (overall) – 1st 9.311
Gear Ratios (overall) – 2nd 6.454
Gear Ratios (overall) – 3rd 4.793
Gear Ratios (overall) – 4th 3.882
Gear Ratios (overall) – 5th 3.307
Gear Ratios (overall) – 6th 2.79

CHASSIS
Exhaust – Staggered, straight cut chrome mufflers with gloss black muffler shields
Wheels, Front Type – Gloss Black Turbine with machined highlights
Wheels, Rear Type – Gloss Black Turbine with machined highlights
Brakes, Caliper Type – 4-piston fixed front; 2-piston floating rear

PERFORMANCE
Engine Torque Testing Method J1349
Engine Torque – 99.5 ft-lb
Engine Torque (rpm) – 3,000
Lean Angle, Right (deg.) – 23.4
Lean Angle, Left (deg.) – 23.4
Fuel Economy: Claimed Combined City/Hwy 42 mpg

Harley-Davidson Sales, Profits Down in 3Q 2016 Financial Report

Harley-Davidson, Inc. (NYSE:HOG) third quarter 2016 diluted earnings per share decreased 7.2 percent to $0.64 compared to diluted EPS of $0.69 in the same period in 2015. Net income was $114.1 million on consolidated revenue of $1.27 billion compared to net income of $140.3 million on consolidated revenue of $1.32 billion in the third quarter of 2015.

Harley-Davidson worldwide retail motorcycle sales in the third quarter were down 4.5 percent, primarily on weak U.S. industry trends. Harley-Davidson retail motorcycle sales in the U.S. were down 7.1 percent compared to the year-ago quarter, with the overall U.S. industry also down for the same period. Harley-Davidson’s U.S. market share for the quarter was 52.3 percent in the 601cc-plus segment, essentially flat compared to the third quarter in 2015. Harley-Davidson international retail sales increased by 1.0 percent over the prior year quarter.

“We continue to effectively navigate a fiercely competitive environment and an ongoing weak U.S. industry,” said Matt Levatich, president and chief executive officer, Harley-Davidson, Inc. “We are pleased with the positive results and the enthusiasm we’ve seen for our Model Year 2017 motorcycles, featuring the new Milwaukee-Eight engine. We are confident that the entire line-up will drive retail sales growth for the remainder of 2016 and position us well heading into the spring riding season next year.”

The Milwaukee-Eight engine packs innovative technologies that deliver improved horsepower, torque, and comfort and enhanced sound. It was introduced on Touring motorcycles in August as part of the Model Year 2017 product launch. Response to the new model year motorcycles drove increased retail sales in September over prior year.

Through nine months, Harley-Davidson 2016 net income was $645.0 million on consolidated revenue of $4.89 billion compared to nine-month 2015 net income of $710.0 million on consolidated revenue of $4.81 billion. Diluted EPS was $3.55 compared to diluted EPS of $3.41 in the year-ago period. Worldwide retail motorcycle sales were down 1.9 percent compared to the same period in 2015. International retail sales were up 3.3 percent, offset by a decline of 4.7 percent in U.S. retail sales.

Recognizing the continued slower industry growth in the U.S., the company will streamline its operations in the fourth quarter of 2016. It expects to incur expenses of approximately $20 million to $25 million in the fourth quarter, primarily for employee separation and reorganization costs.

“Our value as a company and as a brand is the sum of 113 years of commitment to our riders and the freedom seekers we will inspire to ride in the future,” said Levatich. “We remain intensely focused on growing the sport and delivering strong business results.”

 

Retail Harley-Davidson Motorcycle Sales

$ in thousands 3rd Quarter Nine Months
2016 2015 Change 2016 2015 Change
Americas Region
   U.S. 45,469 48,918 (7.1)% 135,581 142,196 (4.7)%
   Canada 2,663 2,554 4.3% 8,946 8,414 6.3%
   Latin America 2,605 2,818 (7.6)% 7,064 8,091 (12.7)%
Europe, Middle East, Africa (EMEA) Region 10,224 10,031 1.9% 37,947 35,598 6.6%
Asia Pacific Region 7,994 7,857 1.7% 24,141 23,471 2.9%
Worldwide Total 68,955 72,178 (4.5)% 213,679 217,770 (1.9)%

Retail sales in EMEA were up 1.9 percent in the third quarter and up 6.6 percent for the first nine months due to the popularity of Model Year 2016 cruiser motorcycles and our focus on driving demand through test rides. Asia Pacific retail sales were up 1.7 percent in the quarter and up 2.9 percent for the first nine months compared to 2015 behind strong growth in Australia and Japan.

Motorcycles and Related Products Segment Results

$ in thousands 3rd Quarter Nine Months
2016 2015 Change 2016 2015 Change
Motorcycle Shipments (vehicles) 48,611 53,472 (9.1)% 219,807 218,233 0.7%
Revenue
   Motorcycles 788,856 812,398 (2.9)% 3,437,066 3,376,356 1.8%
   Parts & Accessories 231,279 252,226 (8.3)% 673,192 692,938 (2.8)%
   General Merchandise 65,289 69,008 (5.4)% 211,664 212,954 (0.6)%
Gross Margin Percent 33.6 34.6 (1.0)pts 36.1 37.9 (1.8)pts
Operating Income 108,929 143,065 (23.9)% 764,135 869,122 (12.1)%
Operating Margin Percent 10.0% 12.5% (2.5)pts 17.6% 20.2% (2.6)pts

 

Revenue from motorcycles and related products was down compared to the third quarter in 2015, primarily behind decreased motorcycle shipments. Operating margin as a percent of revenue decreased versus the prior year as a result of lower gross margin behind unfavorable manufacturing expense and higher year-over-year SG&A.

 

Financial Services Segment Results

$ in thousands 3rd Quarter Nine Months
2016 2015 Change 2016 2015 Change
Revenue 183,183 177,109 3.4% 547,505 513,093 6.7%
Operating Income 69,447 72,771 (4.6)% 215,391 219,348 (1.8)%

 

Operating income from financial services was down 4.6 percent in the third quarter compared to the year ago period.

Guidance

Harley-Davidson continues to expect to ship 264,000 to 269,000 motorcycles in 2016, which is approximately down 1 percent to up 1 percent from 2015. In the fourth quarter of 2016, the company expects to ship 44,200 to 49,200 motorcycles compared to 48,149 motorcycles shipped in the year-ago period. The company continues to expect full-year 2016 operating margin of approximately 15 to 16 percent for the Motorcycles segment. The company continues to expect 2016 capital expenditures for Harley-Davidson, Inc. of $255 million to $275 million.

Income Tax Rate

For the first nine months, Harley-Davidson’s effective tax rate was 32.9 percent compared to 34.8 percent in 2015. The company continues to expect its full-year 2016 effective tax rate will be approximately 33 percent.

Cash Flow

Cash and marketable securities totaled $795.3 million at the end of the third quarter, compared to $1.42 billion a year ago. During the first nine months of the year, Harley-Davidson generated $927.8 million of cash from operating activities compared to $1.02 billion for the same period in 2015.

Shareholder Returns

In the third quarter, the company paid a cash dividend of $0.35 per share. During the same time period, on a discretionary basis, the company repurchased 2.1 million shares of Harley-Davidson common stock for $104.6 million. Also in the third quarter, there were approximately 179.3 million weighted-average diluted shares outstanding, compared to approximately 204.6 million shares in the year-ago quarter. As of September 25, 2016, a total of 20.9 million shares remained on board-approved share repurchase authorizations.

Company Background

Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company and Harley-Davidson Financial Services. Since 1903, Harley-Davidson Motor Company has fulfilled dreams of personal freedom with custom, cruiser and touring motorcycles, riding experiences and events and a complete line of Harley-Davidson motorcycle parts, accessories, general merchandise, riding gear and apparel. Harley-Davidson Financial Services provides wholesale and retail financing, insurance, extended service and other protection plans and credit card programs to Harley-Davidson dealers and riders in the U.S., Canada and other select international markets. For more information, visit Harley-Davidson’s Web site at www.harley-davidson.com.

 

 

 

Harley Reportedly Set to Lay Off 200 Employees in the Fall

Harley-Davidson logo

Reports by The York Daily Record (YRD) and Milwaukee Sentinel Journal state Harley-Davidson is preparing to lay off approximately 200 employees this fall. The cuts come as a Harley adjusts “our production plan to align with 2016 guidance.”

That guidance includes a cut in shipment projections to 264,000 to 269,000 motorcycles announced in Harley’s second quarter financial report of 2016, down from the initial projections of 269,000 to 274,000 released in its first quarter 2016 report. This comes on the heels of lowered shipment totals in 2015 as well which were first projected to be in the 282,000 to 287,000 range before scaling back due in part to aggressive price cuts by competitors and a strong dollar hurting sales internationally. Retail motorcycle sales on the whole were down 1.3% for in 2015 with 264,627 units sold compared to 2014 totals of 267,999 motorcycles.

According to news reports, the layoffs will be divided between its York, Menomonee Falls, and Tomahawk plants. The York Daily Record reports 117 workers will be laid off at the York, Pa. assembly plant that handles production of Harley’s Touring, Trike, Softail and CVO motorcycles, while the Milwaukee Sentinel Journal reports 35 layoffs are slated for Harley’s windshield and plastic-parts plant in Tomahawk, Wis. This leaves 48 cuts to Harley’s engine division at Menomonee Falls, Wis. These numbers may vary as “some of the reductions will come from not filling vacant positions” according to YDR.

While recent sales have been slow, the curve has the potential to swing upward as Harley-Davidson just released new engine platforms, a 107” and 114” version of its new eight valve, single cam Milwaukee-Eight V-Twin. The 107” Milwaukee-Eight will power Harley-Davidson’s Touring motorcycles and trikes while the 114” can be found in its premium CVO models. Harley-Davidson also updated suspension on its tourers, another attractive factor to potential buyers.

Harley-Davidson Lowers 2016 Outlook After Second Quarter Report

Harley-Davidson logo

Harley-Davidson, Inc. (NYSE:HOG) second quarter 2016 diluted earnings per share increased 7.6 percent to $1.55 compared to diluted EPS of $1.44 in the same period in 2015. Net income was $280.4 million on consolidated revenue of $1.86 billion compared to net income of $299.8 million on consolidated revenue of $1.82 billion in last year’s second quarter.

Harley-Davidson worldwide retail motorcycle sales in the second quarter were down 1.9 percent on weak U.S. industry results. Harley-Davidson retail motorcycle sales in the U.S. were down 5.2 percent compared to the year-ago quarter, with the overall U.S. industry down 8.6 percent for the same period. Harley-Davidson U.S. market share for the quarter was 49.5 percent, an increase of 2.0 points over the same period in 2015. International retail sales increased by 4.3 percent over the prior year quarter.

“We are pleased with our ability to gain market share in the U.S.,” said Matt Levatich, President and Chief Executive Officer, Harley-Davidson, Inc. “Competitiveness in the U.S. remains intense, and our demand-driving investments are showing traction.”

Through six months, Harley-Davidson’s 2016 net income was $530.9 million on consolidated revenue of $3.61 billion compared to six-month 2015 net income of $569.7 million on consolidated revenue of $3.50 billion. Six-month 2016 diluted EPS was $2.91, up 7.4 percent from $2.71 in the year-ago period.  Worldwide retail motorcycle sales were down 0.6 percent from the same period in 2015. International sales were up 4.4 percent, offset by a 3.4 percent decline in U.S. retail sales.

Given market softness in the U.S., the continued competitive environment and global economic uncertainty, the company is taking the precautionary step of lowering its full-year shipment guidance. The company now expects to ship 264,000 to 269,000 motorcycles to dealers worldwide in 2016. This action is consistent with the company’s long-standing commitment to manage supply in line with demand.

“While our investments to grow product awareness and ridership globally are beginning to take hold in a number of markets, current conditions in the U.S. and economic headwinds in other parts of the world  combine to raise caution for us as we continue to focus our strategy to drive demand and deliver strong returns to shareholders,” said Levatich.

Retail Harley-Davidson Motorcycle Sales

2nd Quarter Six Months
2016 2015 Change 2016 2015 Change
Americas Region
   U.S. 54,786 57,790 (5.2)% 90,112 93,278 (3.4)%
   Canada 3,813 3,737 2.0% 6,283 5,860 7.2%
   Latin America 2,573 2,708 (5.0)% 4,459 5,273 (15.4)%
Europe, Middle East, Africa (EMEA) Region 17,513 16,179 8.2% 27,723 25,567 8.4%
Asia Pacific Region 8,581 8,517 0.8% 16,147 15,614 3.4%
Worldwide Total 87,266 88,931 (1.9)% 144,724 145,592 (0.6)%

Retail sales in EMEA were up 8.2 percent in the second quarter and 8.4 percent for the first six months behind a strong reception to the new 2016 motorcycle models and increased demand driving investments. Asia Pacific retail sales were up 0.8 percent in the quarter and up 3.4 percent for the first six months compared to 2015. Canada retail sales grew 2.0 percent in the quarter and 7.2 percent for the first six months versus a year ago as the market continued to respond favorably to the company’s transition to direct distribution.

Motorcycles and Related Products Segment Results

$ in thousands 2nd Quarter Six Months
2016 2015 Change 2016 2015 Change
Motorcycle Shipments (vehicles) 88,160 85,172 3.5% 171,196 164,761 3.9%
Revenue
   Motorcycles $1,330,632 $1,308,837 1.7% $2,648,210 $2,563,958 3.3%
   Parts & Accessories $258,208 $256,840 0.5% $441,913 $440,712 0.3%
   General Merchandise $75,757 $77,518 (2.3)% $146,375 $143,946 1.7%
Gross Margin Percent 36.4% 39.2% (2.8) pts 36.9% 39.1% (2.2) pts
Operating Income $322,749 $380,603 (15.2)% $655,206 $726,057 (9.8)%
Operating Margin Percent 19.3% 23.1% (3.8)pts 20.2% 23.0% (2.8)pts

Revenue from motorcycles and related products was up versus the prior quarter behind increased motorcycle shipments. Operating margin as a percent of revenue decreased versus the prior year primarily as a result of lower than expected gross margin driven by unfavorable mix, currency and manufacturing expenses.

Financial Services Segment Results

$ in thousands 2nd Quarter Six Months
2016 2015 Change 2016 2015 Change
Revenue $190,964 $173,609 10.0% $364,322 $335,984 8.4%
Operating Income $89,573 $81,913 9.4% $145,944 $146,577 (0.4)%

Financial services operating income was higher in the second quarter compared to the year ago period driven by a $9.3 million gain generated from a full securitization.

Guidance                                                                                                 

Harley-Davidson is revising its full-year guidance for motorcycle shipments and now expects to ship 264,000 to 269,000 motorcycles to dealers worldwide in 2016, which is approximately down 1 percent to up 1 percent from 2015. The company had previously provided full-year shipment guidance of 269,000 to 274,000 motorcycles.  In the third quarter, the company expects to ship 48,500 to 53,500 motorcycles compared to 53,472 motorcycles shipped in the year-ago period. The company now expects full-year 2016 operating margin of approximately 15 to 16 percent for the Motorcycles segment, compared to prior guidance of 16 to 17 percent. The company continues to expect 2016 capital expenditures for Harley-Davidson, Inc. of $255 million to $275 million. 

Income Tax Rate

For the first half of 2016, Harley-Davidson’s effective tax rate was 32.7 percent compared to 34.9 percent in 2015. The lower rate is due to the successful closure of various tax audits. The company now expects its full-year 2016 effective tax rate will be approximately 33 percent.

Cash Flow

Cash and marketable securities totaled $869.7 million at the end of the second quarter, compared to $1.30 billion in the year-ago quarter. During the first six months of 2016, Harley-Davidson generated $456.3 million of cash from operating activities compared to $613.9 million for the same period in 2015.

Shareholder Returns

The company paid a cash dividend of $0.35 per share for the second quarter for a total of $0.70 for the first six months of 2016. On a discretionary basis, the company repurchased 2.6 million shares of Harley-Davidson common stock for $118.9 million.  In the second quarter of 2016, there were approximately 181.3 million weighted-average diluted shares outstanding, compared to approximately 208.6 million shares in the year-ago quarter. At the end of the second quarter, 23.0 million shares remained on board-approved share repurchase authorizations.

Harley’s New Boom! Audio Music Player Tank Pouch

HARLEY-DAVIDSON BOOM! AUDIO MUSIC PLAYER POUCH

Designed for motorcycle use, the new Boom! Audio Music Player Tank Pouch (P/N 76000193, $44.95) from Harley-Davidson Genuine Motor Parts & Accessories lets riders securely carry a smart phone, music player or electronic toll pass on the bike. Built-in magnets hold the pouch securely to a steel fuel tank, and the clear play-through window permits touchscreen control. An anti-skid interior allows the pouch to accommodate players of various sizes and a neoprene jacket offers hard-core protection for the device. A double zipper permits output cables to exit the pouch at any point, so the player can be plugged into the motorcycle audio system or play directly to rider headphones.

These and other Harley-Davidson Genuine Motor Parts & Accessories are available at more than 750 authorized retail locations in the United States and online.

About Harley-Davidson Motor Company
Since 1903, Harley-Davidson Motor Company has fulfilled dreams of personal freedom with cruiser, touring and custom motorcycles, riding experiences and events, and a complete line of Harley-Davidson motorcycle parts, accessories, general merchandise, riding gear and apparel. For more information, visit www.h-d.com.