Harley Davidson Updates Guidance For Shipments After 3-Week Strike At Manufacturing Plant Ends
Milwaukee, Wis. - Harley-Davidson, Inc. (NYSE:HOG) announced today that it is updating guidance for motorcycle shipments for the first quarter of 2007 and financial guidance for the full year. Guidance is being revised to reflect the impact of a three week strike that concluded Thursday, February 22, 2007, at the Company’s manufacturing facility in York, Pa. Full production at the Pennsylvania and Wisconsin plants is expected to resume over the next week. In all, the strike will result in a loss of approximately one month’s production.
“While we are pleased to have reached an agreement with our unionized employees in York, a disruption of this magnitude has a significant impact on our business, as well as our suppliers, dealers, employees and our retail customers,” said Tom Bergmann, Chief Financial Officer.
“Although the recovery process has begun, the immediate impact will be a reduction in our first quarter Harley-Davidson® motorcycle shipments from our previous guidance of 82,000 - 84,000 units, to revised guidance of 64,000 - 66,000 units. We expect to make up approximately 4,000 – 5,000 of these motorcycles during the remainder of the year resulting in full year shipment plans for approximately 14,000 fewer motorcycles than we originally planned. This decision was made after carefully evaluating our production constraints, supply chain issues, cost implications, timing of shipments to dealers, and the delayed start of 2008 model year production caused by the strike,” said Bergmann.
For the full year 2007, Harley-Davidson now expects moderate revenue growth, lower margins, and earnings per share (EPS) growth in the range of 4 – 6 percent compared to 2006. The Company expects its EPS growth rate to return to 11 – 17 percent in 2008 and 2009.
Harley-Davidson, Inc. is the parent company for the group of companies doing business as Harley-Davidson Motor Company, Buell Motorcycle Company and Harley-Davidson Financial Services. Harley-Davidson Motor Company, the only major U.S.-based motorcycle manufacturer, produces heavyweight motorcycles and offers a complete line of motorcycle parts, accessories, apparel, and general merchandise. Buell Motorcycle Company produces sport and sport-touring motorcycles. Harley-Davidson Financial Services provides wholesale and retail financing and insurance programs to Harley-Davidson dealers and customers.
The Company intends that certain matters discussed in this release are “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as the Company “believes,” “anticipates,” “expects,” “plans,” or “estimates” or words of similar meaning. Similarly, statements that describe future plans, objectives, outlooks, targets, guidance or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this release. Certain of such risks and uncertainties are described below. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this release are only made as of the date of this release, and the Company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
The Company’s ability to meet the targets and expectations noted depends upon, among other factors, the Company’s ability to (i) continue to realize production efficiencies at its production facilities and manage operating costs including materials, labor and overhead, (ii) manage production capacity and production changes, (iii) manage supply chain issues, (iv) provide products, services and experiences that are successful in the marketplace, (v) develop and implement sales and marketing plans that retain existing retail customers and attract new retail customers in an increasingly competitive marketplace, (vi) sell all of its motorcycles and related products and services to its independent dealers and distributors, (vii) continue to develop the capacity of its distributor and dealer network, (viii) manage changes and prepare for requirements in legislative and regulatory environments for its products, services and operations, (ix) adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices, (x) manage regional and worldwide demographic trends and economic and political conditions, including healthcare inflation, pension reform and tax changes (xi) manage the credit quality and recovery rates of HDFS’s loan portfolio, (xii) retain and attract talented employees and (xiii) detect any defects in our motorcycles to minimize delays in new model launches, recall campaigns, increased warranty costs or litigation. In addition, the Company could experience delays or disruptions in its operations as a result of work stoppages, strikes, natural causes, terrorism or other factors. Other factors are described in risk factors that the Company has disclosed in documents previously filed with the Securities and Exchange Commission.
The Company’s ability to sell all of its motorcycles and related products and services also depends on the ability of the Company’s independent dealer network to sell them to retail customers. The Company depends on the capability of its independent dealers and distributors to develop and implement effective retail sales plans to create demand for the motorcycles and related products and services they purchase from the Company.
In addition, the Company’s independent dealers and distributors may experience difficulties in selling Harley-Davidson motorcycles and related products and services as a result of weather, economic conditions or other factors.
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