Harley-Davidson, Inc. reported their second quarter 2018 results and announced they will share details about its accelerated strategy for growth on July 30.
Harley-Davidson international retail motorcycle sales were up 0.7 percent in the second quarter of 2018 compared to 2017, and U.S. retail sales were down 6.4 percent. Worldwide retail sales decreased 3.6 percent.
“Our results in the second quarter reflect business performance that is in line with our expectations. With the focus of every employee and dealer, we are making progress building the next generation of Harley-Davidson riders in line with our long-term objectives. Our manufacturing optimization, demand-driving investments and commitment to manage supply in line with demand remain on target and continue to strengthen our business,” said Matt Levatich, president and chief executive officer, Harley-Davidson, Inc.
On July 30, Harley-Davidson will share plans to accelerate its strategy to build the next generation of riders globally. Leveraging core strengths in the business, brand and dealer network, the company intends to invest in opportunities that inspire increased ridership sooner and deliver sustainable growth for the future.
Harley-Davidson’s strategy supports the company’s 2027 objectives to: build 2 million new riders in the U.S., grow its international business to 50 percent of annual volume, launch 100 new high impact motorcycles and do so profitably and sustainably.
“We will take bold actions that better leverage our vast capabilities and competitive firepower –excellence in product development, manufacturing, brand and our great dealer network. We will motivate our existing loyal riders and inspire future riders who are not even thinking about two-wheeled freedom,” said Levatich. “We are tapping into the spirit that drove our founders back in 1903… We’re out to secure the legacy of Harley-Davidson freedom for the next generations of riders.”
To further improve its manufacturing operations and cost structure, in the first quarter of 2018 the company commenced its multi-year manufacturing optimization initiative anchored by the consolidation of its motorcycle assembly plant in Kansas City, Mo. into its plant in York, Pa.
The company continues to expect to incur restructuring and other consolidation costs of $170 million to $200 million and capital investment of approximately $75 million through 2019 and expects ongoing annual cash savings of $65 million to $75 million after 2020. In the second quarter 2018, costs related to the manufacturing optimization were $14.8 million and year-to-date were $62.3 million.
For the full-year 2018, the company continues to expect the following:
• Motorcycle shipments to be approximately 231,000 to 236,000 motorcycles. In the third quarter, the company expects to ship approximately 45,500 to 50,500 motorcycles
• Capital expenditures of $250 million to $270 million including approximately $50 million to support manufacturing optimization
• Effective tax rate of approximately 23.5 to 25 percent
The company has adjusted its outlook relating to the following and now expects:
• Motorcycles segment operating margin as a percent of revenue to be approximately 9 to 10 percent given the expected impact of tariffs in 2018
• Financial Services segment operating income to be flat to up slightly given strong year-to-date performance.