Harley-Davidson Q3 Profit Misses Estimates; Lowers Full-year Shipment Guidance

(RTTNews) - Harley-Davidson, Inc. (HOG) reported that Dealers worldwide sold 72,178 new Harley-Davidson motorcycles in the third quarter of 2015 compared to 73,217 motorcycles in the year-ago quarter. As the third quarter did not unfold as the company expected, Harley-Davidson lowered full-year shipment guidance.

Harley-Davidson now expects to ship 265,000 to 270,000 motorcycles to dealers and distributors worldwide in 2015, which is approximately flat to down 2 percent from 2014. The company had most recently provided full-year shipment guidance of 276,000 to 281,000 motorcycles. In the fourth quarter, the company expects to ship 47,000 to 52,000 motorcycles compared to 47,157 motorcycles shipped in the year-ago period.

The company now expects full-year 2015 operating margin of approximately 16 percent to 17 percent for the motorcycles segment, compared to prior guidance of 18 percent to 19 percent for full-year operating margin.

In 2016, Harley-Davidson will increase its investment in customer-facing marketing by approximately 65 percent above 2015 levels. The company also plans to increase its investment in new product development by approximately 35 percent from 2015 levels. These changes represent an approximate $70 million increase in investment to drive demand compared to 2015. The company intends to fund the increased demand-driving actions by reallocating existing spending. Harley-Davidson expects to incur one-time expenses of approximately $30 million to $35 million in the fourth quarter of 2015, primarily for employee separation and reorganization costs related to this reallocation.

For the third-quarter, net income was $140.3 million or $0.69 per share, compared to $150.1 million or $0.69 per share, prior year. On average, 19 analysts polled by Thomson Reuters expected the company to report profit per share of $0.78 for the quarter. Analysts' estimates typically exclude special items.

Motorcycles and related products revenue was $1.14 billion compared to $1.13 billion last year. Analysts expected revenue of $1.21 billion for the quarter. Consolidated revenue was $1.32 billion compared to $1.30 billion in the year-ago period.

The company shipped 53,472 motorcycles to dealers and distributors worldwide during the quarter compared to shipments of 50,670 motorcycles in the year-ago period. Operating income from motorcycles and related products was $143.1 million during the quarter compared to operating income of $146.3 million in the year-ago period.