Harley is riding high

Harley-Davidson Inc.’s remarkable recovery continued in the third quarter, as the Milwaukee-based company’s net income grew to $183.6 million, or 78 cents per share, from $88.8 million, or 38 cents per share, in the same period a year ago.
Retail sales of new Harley-Davidson motorcycles grew 5.1 percent worldwide in the third quarter compared with the prior-year period, led by a 5.4 percent rise in the United States.
"We are pleased with our sustained progress and we continue to realize strong momentum in the transformation our business," said Keith Wandell, president and chief executive officer of Harley-Davidson.
"Two years ago we embarked on our strategy to focus solely on the Harley-Davidson brand, provide the flexibility required in today’s market and make Harley-Davidson lean, agile and more effective than ever at delivering remarkable products and extraordinary customer experiences. Today, we continue to see the positive results of the course we have charted," Wandell said. "The changes underway in manufacturing, product development and retail capability will increasingly enable Harley-Davidson to be customer-led like never before. Harley-Davidson’s transformation involves a tremendous amount of highly complex, challenging work across every part of the organization. While much remains to be done, we are well down the road and everyone involved deserves much credit for bringing these changes to life. I continue to be impressed by the willingness of all employees, including the union leadership, to do the necessary things to transform our business to be a world class, sustainable operation."
The company expects to ship 228,000 to 235,000 Harley-Davidson motorcycles to dealers and distributors worldwide in 2011, including 45,500 to 52,500 motorcycles in the fourth quarter.
For the full year, Harley-Davidson now expects gross margin to be between 33.5 percent and 34.5 percent, compared to previous guidance of 34.0 percent to 35.0 percent. The company continues to expect capital expenditures of between $210 million and $230 million, which includes $70 million to $85 million to support restructuring activities.
Harley-Davidson has lowered cost estimates related to the restructuring of its production operations and now expects all previously announced company-wide restructuring activities to result in one-time charges of $480 million to $495 million, including 2011 charges of $70 million to $80 million. The company continues to expect to realize savings on a cumulative basis in 2011 of $210 million to $230 million from restructuring activities initiated since early 2009, and annual ongoing savings of $305 million to $325 million when the restructuring is fully implemented. Through the first nine months of 2011, the company incurred restructuring charges of $49.0 million, including $12.4 million in the third quarter. During the third quarter, Harley-Davidson completed the consolidation of final assembly operations at York, Pa. Final assembly of all Touring, Softail, Trike and Custom Vehicle Operations (CVO) motorcycles now occurs on a single assembly line.