Harley Davidson (HOG) Q4 Earnings Beat Estimates, Improve Y/Y

This story originally appeared on Zacks

Harley-Davidson, Inc. HOG reported fourth-quarter 2021 adjusted earnings of 14 cents per share against the Zacks Consensus Estimate of a loss of 41 cents. Higher-than-anticipated revenues from both Motorcycles & Related Products and Financial Services segments resulted in this outperformance. The bottom line also compares favorably with the loss of 63 cents per share reported in the year-ago quarter.
The iconic motorcycle manufacturer generated consolidated revenues (including motorcycle sales and financial services revenues) of $1,016 million, up 40% from the year-earlier quarter.

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Segmental Highlights

Motorcycles and Related Products: Total revenues from the Motorcycle and Related products segment, which constitute the bulk of the firm’s overall revenues, jumped 54% on a year-over-year basis to $816 million. The top line also surpassed the consensus mark of $645 million. This upside primarily resulted from an increase in wholesale shipments, favorable motorcycle unit mix and pricing. The segment’s operating loss narrowed from $196 million to $102 million in the quarter under review. The loss was also narrower than the Zacks Consensus Estimate of a loss of $163 million.
In the December quarter, revenues from the sale of motorcycles came in at $546 million, increasing 71% year over year. The company shipped 29,100 motorcycles worldwide, up 39%.
During the reported quarter, Harley-Davidson retailed 34,000 motorcycle units globally, up 2% year over year. Its retail motorcycle units sold in North America grew 8% to 19,600. Meanwhile, sales in the EMEA (Europe, Middle East and Africa), Asia Pacific and Latin America declined 7%, 2% and 16%, respectively, from the year-ago period.
Revenues for Parts & Accessories were up 13% from the prior year to $165 million and topped the consensus mark of $161 million. Revenues for General Merchandise — including Motor Clothes apparel and accessories — went up 46% from the prior-year quarter’s figure to $73 million and topped the consensus mark of $48.73 million.
Financial Services: Revenues for Harley-Davidson Financial Services totaled $200.4 million, up 3.2% year over year and beat the consensus mark of $199 million. Operating income jumped to $95.1 million from the $76.7 million, thanks to lower interest expense. The metric also topped the consensus mark of $76 million.

Financial Position

In the fourth quarter of 2021, selling, general and administrative expenses came down to $259.4 million from $276.4 million witnessed in fourth-quarter 2020. The firm generated $976 million of cash from operating activities in 2021. The company paid dividends of 6 cents per share on a full-year basis in 2021.
Harley-Davidson had cash and cash equivalents of $1,874.7 million as of Dec 31, 2021, significantly down from the $3,257.2 million recorded at the end of 2020. The long-term debt decreased to $4,595.6 million from $5,932.9 million recorded as of Dec 31, 2020.

2022 Guidance

For 2022, considering that supply chain challenges will improve in the second half of the year, Harley-Davidson now forecasts a decline of 20-25% in its operating income for Financial Services. Capital expenditure for the full year is projected within $190-$220 million.
The company expects revenues from the motorcycles segment to grow in the band of 5-10% in the current year. Harley-Davidson has also kept the operating income margin expectation for the segment intact at 11-12%.

Zacks Rank & Other Key Picks

Currently, Harley Davidson has a Zacks Rank #2 (Buy).
Other top players in the auto space include Goodyear Tire GT and Tesla TSLA, each sporting a Zacks Rank #1(Strong Buy), and Genuine Parts GPC, carrying a Zacks Rank #2 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Goodyear has an expected earnings growth rate of 51.7% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 1.1% upward over the past 60 days.
Goodyear’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. GT pulled off a trailing four-quarter earnings surprise of 228.5%, on average. The stock has also rallied 64.1% over a year.
Tesla has an expected earnings growth rate of 35.21% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 5% upward over the past 60 days.
Tesla’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters. TSLA pulled off a trailing four-quarter earnings surprise of 25.38%, on average. The stock has also rallied 5.1% over a year.
Genuine Parts has an expected earnings growth rate of 10.03% for the current year. The Zacks Consensus Estimate for earnings for the current year has been revised around 2.2% upward over the past 60 days.
Genuine Parts’ earnings beat the Zacks Consensus Estimate in all the trailing four quarters. GPC pulled off a trailing four-quarter earnings surprise of around 16%, on average. The stock has also rallied 23.8% over a year.

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