Cars and Drivers

Harley-Davidson Q4 Results Muted by Cost-Cutting

Chris Lange

Published: January 30, 2018 10:10 am

Last Updated: January 12, 2020 3:57 am

Harley-Davidson Inc. (NYSE: HOG) reported its most recent quarterly results before the markets opened on Tuesday. While results for the fourth quarter were strong, this still was not enough to offset some cost-cutting measures that the company is undertaking.

The company posted $0.54 in earnings per share (EPS) and $1.05 billion in revenue, versus consensus estimates from Thomson Reuters of $0.46 in EPS on revenue of $1.01 billion. In the same period of last year, Harley-Davidson said it had EPS of $0.27 and $933.02 million in revenue.

Harley-Davidson plans to further improve its manufacturing operations and cost structure by commencing a multiyear manufacturing optimization initiative by the consolidating of its motorcycle assembly plant in Kansas City, Missouri into its plant in York, Pennsylvania.

In doing this, the company expects to incur restructuring and other consolidation costs of $170 million to $200 million and capital investment of approximately $75 million over the next two years, and it expects ongoing annual cash savings of $65 million to $75 million after 2020.

Also during the fourth quarter, Harley-Davidson worldwide retail motorcycle sales declined 9.6% year over year. Harley-Davidson U.S. retail motorcycle sales were down 11.1%, and the overall industry was down 6.5% compared to the year-ago quarter. Harley-Davidson U.S. market share was 50.8% in the 601+cc segment in the fourth quarter.

Matt Levatich, president and CEO of Harley-Davidson, commented:

Our actions to address the current environment through disciplined supply and cost management position us well as we drive to achieve our long-term objectives to build the next generation of Harley-Davidson riders globally. We finished 2017 with over 32,000 more Harley-Davidson riders in the U.S. than one year ago, and we delivered another year of strong cash generation and cash returns to our shareholders.

Shares of Harley traded down about 6% at $51.80 Tuesday morning, with a consensus analyst price target of $52.79 and a 52-week range of $44.52 to $63.40.