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[CVOJOE]

Milwaukee, WI - Harley-Davidson, Inc. (NYSE: HOG) announced Thursday its results for the second quarter ended July 1, 2007. Revenue for the quarter was $1.62 billion compared to $1.38 billion in the year ago quarter, a 17.7 percent increase. Net income for the quarter was $290.5 million compared to $243.4 million, an increase of 19.3 percent over the second quarter of 2006. Second quarter diluted earnings per share (EPS) were $1.14, a 25.3 percent increase compared to last year’s $0.91. During the second quarter the Company repurchased $429.9 million of its common stock.
“During the second quarter, we shipped 95,117 Harley-Davidson motorcycles to our dealers around the world, driving strong financial results,” said Jim Ziemer, Chief Executive Officer of Harley-Davidson, Inc. “On the retail side of the business, our dealers’ sales were down 1.2 percent worldwide during the quarter, with U.S. dealers’ sales down 5.5 percent and international retail sales growing at double digit rates. Retail sales in every major country in Europe were up during the quarter, resulting in 13.7 percent growth in total European sales. Japan, Canada, and all other international markets grew at a combined rate of 13.4 percent,” he said.
“Last week at our annual dealer meeting in Nashville, Tennessee, we introduced our new line of 2008 models including the spectacular, limited edition 105th Anniversary motorcycles. A new Dyna Fat Bob motorcycle, along with the ground-breaking new Rocker and the Rocker C models, completely redefine the custom motorcycle category. And to top that off, we unveiled significant new features for our touring motorcycles, a major power increase for the VRSC models, and the first liquid-cooled Buell motorcycle, the 1125R. Products like these reaffirm our heavyweight category leadership,” said Ziemer.

The Company expects to ship between 91,000 and 95,000 Harley-Davidson motorcycles during the third quarter of 2007. For the full year of 2007, Harley-Davidson continues to expect EPS growth in the range of 4 - 6 percent compared to 2006 based on moderate revenue growth, lower operating margin, and the benefits of our strong free cash flow. Looking ahead to 2008 and 2009, the Company expects solid revenue growth, operating margin improvement and the continued benefits of strong free cash flow to drive EPS growth in the range of 11 - 17 percent. “While we remain comfortable with this guidance, U.S. retail sales of Harley-Davidson motorcycles in the first half of the year have not met our expectations. As a result, we will continue to closely monitor the retail environment and regularly assess our planned wholesale shipments throughout the remainder of 2007,” said Ziemer.

Second Quarter Results
Revenue from Harley-Davidson motorcycles was $1.25 billion, an increase of $226.4 million or 22.0 percent versus the same period last year. Shipments of Harley-Davidson motorcycles totaled 95,117 units, an increase of 15,321 units or 19.2 percent compared to last year’s second quarter. Revenue from Parts and Accessories (P&A), which consists of Genuine Motor Parts and Genuine Motor Accessories, totaled $263.4 million, an increase of $11.7 million or 4.6 percent over the year-ago quarter. Revenue from General Merchandise, which consists of MotorClothes apparel and collectibles, totaled $72.7 million, an increase of $5.6 million or 8.4 percent over the year-ago quarter. Gross margin for the second quarter of 2007 was 37.4 percent of revenue compared to 37.5 percent for the second quarter last year. Second quarter operating margin increased to 23.8 percent from 23.6 percent in the second quarter of 2006.

During the second quarter, worldwide retail sales of Harley-Davidson motorcycles decreased 1.2 percent compared to the prior year second quarter. In the U.S., retail sales of Harley-Davidson motorcycles decreased 5.5 percent for the quarter. The heavyweight motorcycle market in the U.S. decreased 6.2 percent for the same period. Retail sales of Harley-Davidson motorcycles grew 13.6 percent in international markets during the second quarter of 2007 compared to the second quarter of 2006. Second quarter retail sales increased 13.7 percent in Europe; Canada was up 9.9 percent; and Japan was up 5.2 percent. All other international markets combined were up 27.4 percent.

[HWYMAN1]

Sales being what they are, it appears they are still making money ( even with accounting publications, if you can trust them?) john

[miker]

Its gotta be tough to make money when you are repairing so many bikes gratis on warranty...Must be in the massive margin on them.

Miker

[kojak]

Here come the rebates!

[SOKOOLJ]

I am suprised with the sales just because of fuel costs creeping up. I personally know a handfull of friends who were 1st time buyers this year, with fuel costs being thier biggest motivator (well they might have used it as a justification for thier other halves).

[reo]

So if the factory plans on keeping production numbers still at mid 90's and the dealers numbers here are down 5.5% then moco marketing will probably be thinking how to get the dealers to make their showrooms even bigger.

Roy.....

[grc]

So if the factory plans on keeping production numbers still at mid 90's and the dealers numbers here are down 5.5% then moco marketing will probably be thinking how to get the dealers to make their showrooms even bigger.

Roy.....

    If not the showrooms, then at least the warehouse or off-site storage facilities.

Most dealers have already been warehousing new bikes for at least the past year, and unless H-D cuts production significantly I would expect the oversupply to get bigger, up to the point where the dealers refuse to accept additional product.  I'm not sure what floorplan interest rates are for motorcycle dealers right now, but I would assume at least 5 - 7%.  That becomes a big expense, especially when the oversupply also reduces income by reducing or eliminating the additional markup many dealers were able to tack on in the past.  I still get a big chuckle every time I see an ad offering free freight, free prep, $1000 discounts, etc., especially from the jerks who used to charge well over MSRP on everything but Sportsters and then treat you like crap.  Ahhh, it feels kind of nice when the worm turns, even if it does screw with our resale values.  

Jerry

[charlie]

If you go into the dealer's here in GA. The bikes are moving, don't know where there going but they are moving.

[skyglide]

You have to wonder if the motorcycle industry has hit its peak and on the way down? The Rocker should be a very big hit for HD. From what I have been hearing local there is a big demand that stealer can not supply