American Motorcycle Dealer AMD 251 June 2020 | Page 8

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"Finally, in the face of significant
uncertainty, we have taken swift
action to protect the company by
bolstering our already strong balance
sheet and liquidity position."
The reference to liquidity is telling, and
the company has indeed now
announced that it will suspend its
share buyback scheme, at least for the
time being, but is still to pay
'the dealer network
will contract'
shareholders a dividend, and that
among other measure to protect
liquidity, Harley is approaching banks
with a view to raising an additional
$1.2bn.
Inevitably, the first quarter 2020
results reflect the impact of COVID-19
on the company's business.
Global retail motorcycle sales of
Harley-Davidson models in the first
quarter were up a strong +6.6 percent
until the pandemic took hold in the
U.S. in mid-March. For the full quarter,
U.S. retail sales finished down -15.5
percent compared to the prior year at
23,732 units, with Harley's domestic
U.S. 601+ cc market share down -2.2
percentage points to 48.9 percent.
International retail sales were
down -20.7 percent compared to
2019, with Harley's European 601+ cc
market share at 7.6 percent in the first
quarter. In Europe (EMEA) the
company sold 7,730 units in the
quarter, which was down by -28.4%;
Asia Pacific was down by -5.3%
(5,752 units); Latin America was down
-21.5% (1,758 units), with Canada
-24.7% (1,466 units).
Worldwide Harley-Davidson retail
motorcycle sales were -17.7% for the
first quarter at 40,439 units (down
from 49,151 units in Q1 2019). Total
motorcycle shipments were -10.0% at
52,973 units in the quarter.
Revenue from the Motorcycles and
'reduce the
high level of
complexity'
Related Products segment was down
by -8.0% in the first quarter at
$1,099.8m (from $1,195.6m in the
year-ago quarter) reflecting the
temporary global motorcycle
manufacturing suspension that began
in mid-March. Motorcycles revenue
was -6.8% at $899.4m, with gross
margin largely flat at 29.0%;
operating margin was down year-overyear
(-1.4 pts at 7.7%) primarily due
to lower revenues and increased
SG&A, offset by lower restructuring
expense.
On top of everything else, the
production shutdown appears to have
slewed the product mix for the quarter
in a way that reduced revenue and
profit. Touring models were down by
-1.7 pts at 48% of mix, with Cruisers
up by +3.3 pts at 38% of production;
Street/Sportster were -1.5 pts at
21.2% of mix.
Financial Services segment first
quarter operating income of $22.9m
was down -60.9 percent, driven by an
increase in the provision for loan losses
related to the impact of the COVID-19
crisis as well as the impact of the new
"Current Expected Credit Losses" or
CECL accounting pronouncement.
Cash and marketable securities were
$1.47bn at the end of Q1 compared to
$759.6m in Q1 2019. Harley-
Davidson's cash from operating
activities was an outflow of $8.6m in
Q1 compared to an inflow of $32.7m
in Q1 2019. Q1 effective tax rate was
26.3% (24.9% Q1 2019).
The company paid a Q1 cash dividend
of $0.38 per share; the company did
not repurchase shares on a
discretionary basis during the first
quarter; there were 153.7m weightedaverage
diluted common shares
outstanding and 18.2m shares
remained on board-approved share
'leadership
isolated and over
centralized'
repurchase authorizations.
GAAP diluted EPS was $0.45 versus
$0.80 in 2019. Net income was
$69.7m on consolidated revenue of
$1.30bn versus net income of
$127.9m on consolidated revenue of
$1.38bn in 2019.
As a result of the uncertainty
surrounding the magnitude and
duration of the COVID-19 pandemic,
Harley-Davidson withdrew all
guidance on March 26, 2020.
Jochen Zeitz went on to say: "COVID-
19 has dramatically changed our
business environment and it is critical
we respond with agility to this new
reality.
"The crisis has provided an
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Harley-Davidson Motorcycle Retail Sales 2008-2019
2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
North America Region
United States 125,960 132,868 147,972 161,658 168,240 171,079 168,863 161,678 151,683 143,391 162,385 218,939
Canada 8,946 9,690 10,081 10,203 9,669 9,871 11,062 10,573 10,502 10,376 11,406 16,502
Europe Region
(Includes Middle East and Africa)
Europe 38,441 41,179 39,773 39,942 36,894 38,491 35,927 37,027 39,334 37,378 36,444 40,725
Other 5,645 5,423 5,162 5,896 6,393 6,832 6,682 6,000 5,006 3,810 3,560 4,317
Asia Pacific Region
Japan 17,753 18,429 9,506 10,279 9,700 10,775 10,751 10,642 10,401 11,405 13,105 14,654
Other 11,760 10,295 20,842 22,610 22,558 19,299 16,139 13,839 11,015 9,582 9,884 10,595
Total Worldwide Retail Sales 218,273 22,051 242,788 260,289 264,627 267,999 260,839 249,849 235,188 222,110 242,634 313,769
8 AMERICAN MOTORCYCLE DEALER - JUNE 2020 www.AMDchampionship.com