Harley-Davidson Inc Earnings Struck By Tax Charge, Stock Falls On Weak Guidance

harley-davidson earnings
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Harley-Davidson Inc (NYSE:HOG) released its Q4 2017 earnings report before opening bell this morning. Harley-Davidson earnings came in at 5 cents per share on $1.23 billion in sales. Analysts had been expecting $1.03 billion in revenue.

Harley-Davidson earnings for Q4 2017

The company said higher motorcycle shipments in Q4 2017 drove revenues higher on a year-over-year basis. Harley-Davidson took a charge of $53.1 million in connection with the tax reform bill and a $29.4 million pre-tax charge in connection with a voluntary recall of products.

Worldwide retail motorcycle sales declined 6.7% in 2017 versus 2016. Retail sales in the U.S. fell 8.5% year over year, while international retail sales slipped 3.9%. During Q4 2017, Harley-Davidson’s worldwide retail motorcycle sales fell 9.6% year over year, including an 11.1% decline in U.S. retail motorcycle sales, which was worse than the 6.5% decline in the overall industry. Motorcycle shipments grew to 47,198 from 42,414 in the year-ago quarter.

Harley-Davidson prepares first electric motorcycle

While cars have been hogging the limelight for electric vehicles for years, and Tesla’s semi-truck is starting to steal attention as well, motorcycles are also going electric. Harley-Davidson plans to launch its first electric motorcycle within the next 18 months.

“The EV motorcycle market is in its infancy today, but we believe premium Harley-Davidson electric motorcycles will help drive excitement and participation in the sport globally,” President and CEO Matt Levatich said in a statement. “As we expand our EV capabilities and commitment, we get even more excited about the role electric motorcycles will play in growing our business.”

Harley-Davidson provides guidance

Harley-Davidson said it expects motorcycle shipments for 2018 to be between 231,000 and 236,000, which came up far short of the consensus at 243,842. In Q1 2018, the company expects to ship about 60,000 to 65,000 motorcycles. The motorcycle manufacturer also expects a charge of $170 million to $200 million to consolidate its motorcycle assembly plants. Harley-Davidson also expects $250 million to $270 million in capital expenditures for this year, including about $50 million for manufacturing optimization.

Following the Harley-Davidson earnings release, the company’s stock plunged by more than 7% to as low as $51.32 in premarket trading.