The Milwaukee-based company on Wednesday posted earnings of $1.78 a share, well above the $1.40 average of analysts’ estimates compiled by Bloomberg. Revenue from motorcycles and related products rose 24% from a year ago to $1.4 billion. Total revenue for the quarter was $1.6 billion, above analysts’ estimates of $1.4 billion.
Shares of Harley-Davidson rose 7.9%, to $40.04, at 10:11 a.m. in New York, reversing an annual decline. They were down 1.5% this year through Tuesday’s close.
Chief Executive Officer Jochen Zeitz has been grappling with rising costs, supply chain snarls and a temporary production shutdown that pinched inventory earlier this year — new challenges as he tries to bolster profits and expand the appeal of the 119-year-old brand. He has slashed costs and tightened inventory to raise motorcycle prices as part of his “Hardwire" turnaround plan.
Strong pricing helped Harley offset higher inflation, increase revenue and pad profit even as unit sales in its core US market shrank. Sales in the third quarter rebounded from earlier production snags.
On a conference call with analysts on Wednesday, Zeitz said demand has remained strong into October, but declined to give an outlook for next year.
“As we got to mid-August, things started to turn positive and retail sales have been positive ever since," he said on the call. “Confidence levels are certainly a lot higher in US and Asia, but inventory availability is fine."
Global motorcycle deliveries contracted 2% from the same quarter last year, to 49,600. Sales by that measure shrank 5% in North America, Harley’s largest market. Europe fell 4% and Latin America plunged 27%. Asia, the only region to show growth in the quarter, expanded sales 18%, to 7,600.
Harley was able to replenish inventory in the third quarter after halting production and shipments for two weeks in May and June because of a “regulatory compliance matter" with a part from one of its suppliers, the company said. At the time, it told investors it would make up for lost production in the second half of 2022.
The company maintained its guidance for 2022 of expected revenue growth of 5% to 10% in 2022, and operating income margin of 11% to 12%.
As part of Zeitz’s turnaround plan, Harley spun off its loss-making electric motorcycle business, LiveWire, last month via a reverse merger. Though the listing raised less money than anticipated, Zeitz said the cash haul would allow Harley-Davidson to fund its business plan as it develops more electric models. Harley retained a majority stake in LiveWire Group Inc and Zeitz is acting as CEO.
