Why Harley-Davidson Shares Are Plunging Today

Harley-Davidson Inc HOG reported third-quarter FY23 HDMC sales of $1.297 billion, missing the analyst consensus estimate of $1.36 billion. HDMC revenue was down 9%, with improved mix and global pricing partially offsetting unit declines.

Global motorcycle shipments decreased 20%, hit by production suspension announced in late Q2 2023, prudent dealer inventory management, and market conditions.

Consolidated revenue was down 6%, driven by a revenue decline of 9% at HDMC, which was partially offset by revenue growth of 15% at HDFS. HOG's EPS of $1.38 beat the consensus of $1.36.

Gross profit margin in HDMC contracted 270 basis points Y/Y at 31.7%. Operating income in HDMC was $175.25 million (down 37%), with the operating margin decreasing 610 basis points to 13.5%.

Consolidated operating income for the quarter fell 38.2% to $209.3 million, with a margin of 13.5% versus 20.6% a year ago.

Harley-Davidson generated $706.7 million in cash from operating activities for nine months. It held cash and equivalents of $2.01 billion as of September 30, 2023.

Outlook: Harley-Davidson reaffirms FY23 HDMC revenue growth outlook of flat - 3% and operating income margin of 13.9% - 14.3%.

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

Price Action: HOG shares are trading lower by 9.65% at $26.04 on the last check Thursday.