Harley-Davidson Misses Q2 Street Estimates Hit By Unplanned Production Suspension

Harley-Davidson Inc HOG reported Q2 FY23 HDMC sales decline of 4% Y/Y to $1.20 billion, missing the consensus of $1.29 billion.

Harley-Davidson Motor Company (HDMC) revenue was impacted by a decline in shipments (-10% Y/Y) on an unplanned production suspension.

Related: Harley-Davidson Limits Motorcycle Production At York Facility After Supplier Quality Issue 

Consolidated revenue fell 2% Y/Y, on a decline in HDMC revenue, partly negated by HDFS revenue growth of 19%.

HOG's EPS of $1.22 missed the consensus of $1.25.

Gross profit margin in HDMC expanded 400 basis points Y/Y to 34.8%. 

Operating income in HDMC fell 8% Y/Y to $194 million, with the operating margin contracting 60 basis points to 16.2%.

Consolidated operating income for the quarter declined 20% Y/Y to $221 million, with an operating margin of 15.3% vs. 18.9% a year ago.

As of June 30, 2023, Harley-Davidson generated $410.5 million in operating cash flow and held cash and equivalents of $1.7 billion.

"Harley-Davidson showed continued progress in delivery of our Hardwire strategy this quarter, despite the macro-economic conditions affecting both the business and our customers. Following the production suspension we experienced late in the quarter impacting motorcycle shipments, we achieved retail growth for the quarter in addition to a strong increase in gross margin. We are confident in our ability to navigate near-term headwinds and remain optimistic on the future, most notably following the successful launch of our game-changing CVO's and the highly attended gathering of our community during our anniversary year, reinforcing the enduring power of the brand," said Jochen Zeitz, Chairman, President and CEO. 

In H1 2023, the company repurchased shares worth $156 million. 

Outlook: Harley-Davidson revised FY23 HDMC revenue growth outlook to flat to 3% from 4% - 7%.

HOG reaffirmed FY23 capital investments of $225 million - $250 million.

Also Read: Harley-Davidson Sees India As Global Motorcycle Making Hub

Price Action: HOG shares are trading higher by 5.15% at $39.61 on the last check Thursday.