Seeking Alpha

Sageworks, Inc.'s  Instablog

Sageworks, Inc.
Send Message
Sageworks, a financial information company, develops financial analysis technology and provides private company industry data. Sageworks' broad and expandable technologies allow for rapid financial analysis and interpretation as well as the aggregation of financial data. Sageworks uses... More
My company:
Sageworks, Inc.
My blog:
Sageworks
View Sageworks, Inc.'s Instablogs on:
  • Heavy Metal Thunder: Motorcycle Sales Up

    Heavy metal thunder: Motorcycle sales up

    Sales at retailers of motorcycles and ATVs have fired up since the recession, according to new data from Sageworks Inc., a financial information company.

    The sales trends are similar to those reported by major motorcycle manufacturers in recent months, including market-leader Harley Davidson Inc. (NYSE: HOG) and Italian speedster-maker Ducati Motor Holding Group S.p.A. Both have seen growing interest in the fuel-efficient rides, especially as the recession's effects have waned.

    Sales at motorcycle and ATV dealers (NAICS code 441228) are up nearly 16 percent over the last 12 months, and profitability has improved from near-breakeven in 2009 to nearly 3 percent net profit margins over the last 12 months, Sageworks' data shows.

    Sageworks analyst Robb Granado said the fact that sales are stronger at both dealers and manufacturers indicates the industry probably isn't flooding retail floors with too much inventory.

    "The fact that we see the retailers doing well shows it's actual end-user demand," he said. "That's a positive story for both the future of both the retailers and the manufacturers."

    Dealers posted 7.47 percent sales growth in 2010 after a 13.77 percent decline in 2009, Granado noted. "We see a nice growth number in 2010, which could be that snap back from the recession," he said. "You'd expect that trend of growth coming off the contraction."

    But the strong growth has continued, perhaps aided more recently by still-high gasoline prices and the warm, nice weather much of the U.S. saw early in 2012, he said.

    Harley-Davidson reported retail sales of new motorcycles from its licensed U.S. dealers grew more than 25 percent in the April 1-ended quarter, citing the company's initiatives and an improving macro-economic picture. That was on top of 5.8 percent retail sales growth in the U.S. for all of 2011. And Ducati, which is being purchased by Volkswagen's Audi AG,reported 20 percent sales growth so far this year, including 48 percent growth in the U.S. during May.

    And the Motorcycle Industry Council, which represents major manufacturers, has reportedly said first-quarter industry sales rose 8.8 percent, aided by higher gasoline prices and unseasonably warm weather across much of the country. The council couldn't immediately provide data or a comment, but it has previously said fuel-efficient models, such as scooters, helped generate a 0.3 percent increase in 2011 sales among a dozen brands in its retail report.

    Granado noted that private dealers' total sales in 2011 seem to have outpaced the 5.8 percent growth in retail sales of new motorcycles reported by Harley-Davidson, and this could be due to a number of factors. "Dealers' sales figures in Sageworks' database would also include revenue from used motorcycle sales, parts and repairs," he said.

    The Motorcycle Industry Council said earlier this year that spending on maintenance, repair and tires and other parts has been rising.

    About the Author

    Mary Ellen Biery is a research specialist at Sageworks, a financial information company.

    Jul 19 12:47 PM | Link | 1 Comment
  • Business Banking Is Back

    By Mary Ellen Biery, Sageworks Inc.

    Business banking is back - well, mostly.

    Commercial lending has been growing, according to Federal Reserve data. And recent research by Sageworks, a financial information company, shows that businesses' borrowing-related financial ratios have improved, making access to credit more likely.

    Based on Federal Reserve data, commercial and industrial (C&I) lending by U.S. commercial banks has increased each month for the last 14, after declining for 23 of the preceding 24 months. Banks' renewed emphasis on business banking is evident in their lending and their hiring. Bank of America Corp. (NYSE:BAC), for example, has said it will hire 1,000 small-business bankers around the country by mid-2012.

    (click to enlarge)Meanwhile, the economy is improving. In addition to GDP growth and a declining unemployment rate, private company sales and profit margins are up and steadily increasing, based on Sageworks' analysis of financial statements.

    "It is evident that lending is getting back to pre-recessionary levels as private companies continue to improve," said Sageworks CEO Brian Hamilton. "When banks lend more money and businesses are doing better and start borrowing more, this trend tends to sustain economic recovery."

    Looking at all privately held companies in Sageworks' database, average debt-to-EBITDA and debt-to-equity ratios have decreased in 2010 and in 2011, according to a financial statement analysis.

    Meanwhile, companies' average debt-service ratios and interest coverage ratios have increased again in 2011 after improving in 2010.

    Sageworks' data on credit-related metrics is consistent with some of the trends recently called out by Clopton Capital, a Chicago provider of business loans. In a press release last week, the firm said credit profiles of recent applicants for nearly all types of business loans have been better than in previous years, thanks to improved economic conditions.

    Lenders in the $628 billion equipment finance sector have also reported improving credit-quality metrics and increased business amid in recent months. Cumulative new business volume for equipment finance companies is up 22 percent so far this year after a 25 percent increase in 2011, according to the Equipment Leasing and Finance Association.

    "The continued strengthening in financing volume and trend toward healthier portfolios provide clear evidence that the equipment finance marketplace is in the midst of regaining some of the momentum lost during the Great Recession," ELFA President and CEO William G. Sutton said in a press release last month.

    Despite improvements in some areas of commercial lending, however, commercial real estate lending remains soft. CRE lending by commercial U.S. banks has declined each month for nearly three years, Federal Reserve data shows.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: BAC, economy
    Apr 09 11:40 AM | Link | Comment!
  • Businesses More Optimistic About Hiring

    By Mary Ellen Biery, Sageworks Inc.

    U.S. businesses might not yet feel great about the economy, but they're at least more optimistic about hiring, several recent surveys show. As some surveys note, however, what business owners say they want to do and what they actually do are often very different, pointing to continued uncertainty in the employment situation.

    Small-business owners, by a 22 percent to 8 percent margin, expect to increase rather than cut the number of jobs at their company over the next 12 months, indicating they're more optimistic about hiring than at any time in four years, a Wells Fargo/Gallup Small Business Index recent poll found.

    A separate survey of private-company CEOs and CFOs out last week from PwC, the U.S. member firm of PricewaterhouseCoopers LLP, found more than half of executives surveyed plan to add to their workforce, up about 6 percentage points from the previous quarter. About 3 percent plan to reduce headcount, and PwC projected a composite 2 percent increase in private companies' headcount based on the survey responses.

    "This focus on growth is in spite of private companies' ongoing ambivalence about the economy," PwC said. Nearly half of the executives surveyed remain uncertain about U.S. economic prospects, though the percentage expressing pessimism dropped eight points to 16 percent. Those expressing optimism increased to 39 percent but remained well below 63 percent from a year ago, PwC said, adding that private companies' view of the world economy was even dimmer.

    U.S. unemployment in January fell to 8.3 percent from 8.5 percent in December and 9.1 percent a year earlier, the Labor Department reported on Friday. Employment gains were in professional business services such as employment services and accounting, in manufacturing, in health care and in leisure industries such as restaurants and bars.

    The National Federation of Independent Business, however, said few of the jobs are being created on Main Street. The trade group said its monthly economic survey of small employers, which was released Feb. 14, found the net change in employment per firm (seasonally adjusted) in January was zero. Eleven percent of owners added an average 3 workers per firm over the past several months, but a similar percentage reduced employment by an average of 2.9 workers per firm, the NFIB said.

    And job creation plans are minimal, the NFIB added. Thirteen percent of respondents plan to increase employment and 7 percent plan reductions, for a net job-planning percentage that declined for the third month in a row.

    Libby Bierman, an analyst with financial information company Sageworks Inc., said the hiring data collected by Gallup and NFIB validates what the January unemployment rate showed: 2011 was not the year small businesses increased their payroll.

    "Instead they conservatively focused on lean operations to increase, or at least maintain, profitability," Bierman said. "The results of an earlier Sageworks survey-like the forward-looking data from Gallup-give hope that 2012 will be more promising for job seekers."

    Sageworks recently asked U.S. accounting firms to assess the hiring outlook based on their conversations with business clients and found that more accountants expect hiring than firing in the year ahead. About three-quarters of accountants surveyed indicate they expect businesses to maintain their employee counts in 2012, while about 16 percent believe businesses will increase or significantly increase hiring. Less than 7 percent surveyed expected businesses to cut payroll, according to the single-question survey conducted from Nov. 11 through Dec. 16.

    This year may be even promising if job seekers look for opening in industries with high margins, Bierman added.

    Sageworks conducted a financial analysis to determine some of the industries with the highest profit margins in 2011 and found that accounting, legal services, dentists and other health practitioners and real estate landlords had adjusted net profit margins of between 16 and nearly 21 percent.

    "These industries with high margins have some cushion and may be more inclined to increase overhead and payroll," Bierman said.

    Organizers of the Wells Fargo/Gallup survey noted that in recent years, business owners often expected to increase hiring but later reported actually eliminating more jobs than they created. Twenty-two percent of small-business owners reported cutting jobs in the past year, compared with 13 percent saying they added jobs. And small-business owners continue to express a preference for hiring contract or temporary workers rather than full-time employees, the survey found.

    "It remains to be seen whether the greater expectations for hiring in the next 12 months will become reality," the Wells Fargo/Gallup survey report said.

    Sageworks, a financial information company, collects and analyzes data on the performance of privately held companies and provides financial forecasting software.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: economy
    Feb 23 6:17 PM | Link | Comment!
Full index of posts »
Latest Followers

Latest Comments


Most Commented
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.