Harley beats analysts’ expectations, plans to repurchase $1 billion in shares

By Ashley Smart

Jul 25, 2024 11:25 am

Harley-Davidson headquarters — Harley-Davidson Inc.'s headquarters in Milwaukee.

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Harley-Davidson LiveWire Jochen Zeitz Karim Donnez

Milwaukee-based Harley-Davidson’s second quarter results exceeded analysts’ expectations as the company reported a revenue increase of 13% for Harley-Davidson Motor Company, the segment of the business that manufactures and sells motorcycles. The 13% increase in revenue was largely driven by increasing shipments of motorcycles, partially offset by lower pricing. Analysts interviewed by FactSet predicted the

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Milwaukee-based Harley-Davidson’s second quarter results exceeded analysts’ expectations as the company reported a revenue increase of 13% for Harley-Davidson Motor Company, the segment of the business that manufactures and sells motorcycles. The 13% increase in revenue was largely driven by increasing shipments of motorcycles, partially offset by lower pricing. Analysts interviewed by FactSet predicted the company would post earnings per share of $1.40. Harley exceeded those expectations with earnings per share of $1.63. Second quarter global motorcycle shipments increased by 16%. Global retail motorcycle sales in the second quarter were down 3% while North America retail performance decreased 1%. LiveWire, the publicly traded electric vehicle company spun off from Harley-Davidson, sold 158 electric motorcycles in quarter two, a 379% increase over last year when the company sold just 33 bikes. LiveWire is still operating at a loss of 12%, or approximately $4 million. The manufacturer recently secured a $89 million federal grant to help it ramp up production of its electric motorcycles. “Our market presence continues to grow steadily, especially in Europe, with two models: LiveWire ONE and LiveWire Del Mar. In late June, we also launched (a) basic electric balance bike in the EMEA market to broaden our product offering and reach new customer segments,” said Karim Donnez, chief executive officer of LiveWire. The innovation happening at LiveWire is working, but “it will take time” for customers to learn about the business, said Jochen Zeitz, chairman, president and CEO of Harley-Davidson. The company updated its guidance on Wednesday, now forecasting Harley-Davidson Motor Company revenue to be down 5% to 9%, compared with previous guidance of flat to down 9%. [caption id="attachment_592349" align="alignleft" width="300"]

Jochen Zeitz, chief executive officer of Harley-Davidson.[/caption] "Despite a challenging market, we are pleased with our second quarter performance, in which we grew our U.S. market share in a declining market, with notable unit growth of more than 11% in the important core category of Touring (bikes)," said Zeitz. "We continue to be focused on executing our Hardwire strategy, leveraging our innovation and product pipeline while delivering on our cost productivity goals." Harley-Davidson also announced Wednesday plans to repurchase $1 billion of its shares now through 2026. The company has already repurchased $875 million in shares since 2022. Companies that have bought back their own shares have historically posted “immediate returns between two and 12 percentage points above the market value,” according to the Harvard Business Review. "...We have focused on cost efficiency and profitable growth to set the company up for future success, as demonstrated by more than doubling unit profitability since 2019," said Zeitz. "As we look ahead, we remain focused on the profitability of our business and deploying our capital efficiently. We expect this will allow us to continue to return cash to shareholders."