Earnings Preview: Harley-Davidson

| About: Harley-Davidson, Inc. (HOG)
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Harley-Davidson (NYSE:HOG) is expected to report Q4 earnings before the market open on Tuesday, January 24 with a conference call scheduled for 9:00 am ET.


Analysts are looking for EPS of 23c on revenue of $1.01B. The consensus range is 19c-29c for EPS, and revenue of $952M-$1.06B, according to First Call. In October, Harley-Davidson said it expected to ship 228,000-235,000 motorcycles in 2011 and 45,500-52,500 motorcycles in Q4. The company also forecast a 2011 gross margin 33.5%-34.5% vs. previous gross margin guidance 34%-35% and said it would take a one-time charge of $480M-$495M on restructuring. As it recovers from a slump in sales due to the recession, Harley-Davidson is increasing its efforts to attract more women, the Wall Street Journal reported in October. In December, Harley-Davidson said it would cease operations at New Castalloy, its Australian subsidiary producer of cast motorcycle wheels and wheel hubs, and source those components through other existing suppliers. Harley-Davidson said it expected the transition of supply from the Adelaide-based New Castalloy to be complete by mid-2013. The Chicago Tribune reported last month that the company started sending pink slips to hourly workers in Wisconsin, as it looked to reduce full-time headcount at Milwaukee-area plants by about 26%.

Analyst Views

RBC Capital believes Harley-Davidson saw some acceleration in November, and the firm estimated the company's U.S. retail sales through the first two months of the quarter are up mid-single-digits. The firm sees potential upside to Q4 consensus estimates, but thinks 2012 estimates may be aggressive. Citigroup's channel checks indicate Harley-Davidson's retail sales trends picked up to around 10% in November and early December versus up 3%-5% during October. Citi finds the trends encouraging, but points out Q4 is a seasonally small quarter for Harley-Davidson. The firm's checks also suggest dealer inventories remain lean. Analysts and investors will listen for comments about Q1 and 2012 motorcycle shipments, as well as how demand for motorcycles is faring.