Harley-Davidson (HOG) reported strong fourth-quarter sales that showed a solid uptick in motorcycle sales. We think the motorcycle-maker’s results bode well for the
Harley’s revenue jumped nearly 12% on the heels of a 10.9% increase in unit motorcycle sales worldwide (unit motorcycle sales jumped almost 12% in the
Harley-Davidson’s income from continuing operations swung to a gain of $54.6 million ($0.24 per share) versus a loss of over $42 million in the same period a year ago. The firm saw tremendous improvement in its Motorcycles/Related Products and Financial Services divisions, the latter driven by improved credit performance. Fourth-quarter operating margin for its Motorcycles/Related Products division was 3.5%, reversing an operating loss in the same period a year ago. Its Financial Services segment recorded operating income of $56.8 million in the fourth quarter versus $43.5 million in the same period a year ago. For the full year 2011, Harley pulled in roughly $696 million in free cash flow (~$885 cash from operations less ~$189 million in capital expenditures).
Looking ahead to 2012, the momentum is expected to continue for Harley-Davidson. The company expects to ship 240,000 to 245,000 motorcycles to dealers and distributors, a 3% to 5% increase from 2011 levels. For the first quarter of 2012, Harley has plans to ship as many as 63,000 motorcycles. The firm’s gross margin is expected to be between 34.75% and 35.75%, above the 31.2% level achieved in the fourth quarter, indicating slightly better pricing and cost controls. We’re keeping a close eye on Harley as a potential long candidate in the portfolio of our Best Ideas Newsletter.