4Q05 HDI

[PapaUtah]

HDI in the news…

*** HDI U.S. retail motorcycle sales for the quarter were up 0.7%, vs. a 7.6% increase for the market. We estimate that retail inventory levels now stand at over 50,000 bikes (over 70 bikes per U.S. retail unit). Q4 U.S. registrations totaled 42,624, and Harley shipped 74,383 bikes domestically, resulting in a sequential inventory increase of 31,759 bikes.

Translation: Slowing sales growth for Harley and more imbalance in their supply/demand curve. Look for incentives and falling prices. Maybe they could borrow Wal*Mart’s “Watch Out for Falling Prices!” marketing campaign? Overall the industry had a 7.6% increase in sales…somebody is gaining market share at HDIs expense.

*** General merchandise revenues led the way and increased 10.2% for 4Q05.

Translation: They might not buy a bike, but the teddy bears, t-shirts and other miscellaneous Made in China crap is still flying off the shelves!

*** Revenue for the full year was $5.34 billion, compared with $5.02 billion

in 2004, a 6.5 percent increase. Net income for the year was $959.6 million.

Translation: They are still making a boatload of money in Milwaukee with gross margins of 38% on their bikes! Figuring in the dealers cut and more than half of the price of a new Harley is profit for the dealer or Willie G. and friends in Beertown. Net margins after all other expenses was a staggering 23.4%.

Expect healthy news from the other manufacturers as their sales were up significantly relative to HDI. They may have additional R&D costs around new models that may affect margins but the industry as a whole looks strong!

 

[radman]

John is happy.

 

[twowheelnut]

Local HD dealer is supplying free tires for as long as you own the bike... Discounts to follow.

 

[gr8eyes]

May be time to short the stock

 

[Geezer]

Local HD dealer is supplying free tires for as long as you own the bike... Discounts to follow.

Installation included?

 

[twowheelnut]

Local HD dealer is supplying free tires for as long as you own the bike...  Discounts to follow.

Installation included?

They're ad does not specify, but I rather doubt labor is included. Still $200+ bucks worth of tires every 9 - 12 months adds up... Oh, wait. Wheel weights are H-D logoed. Deduct $50 each.

 

[Wyosteve]

I wonder if a portion of the revenue increase we are seeing from non-HD manufacturers is in large part the sales of all the scooters that are being sold. I think we will see lots of motorcycle statistics skewed because of the huge number that are being sold.

 

[PapaUtah]

I wouldn't short Harley. They generate nice cash flow and regular dividends. They are just not going to be a growth stock in the future. They will end up in a lot of value and income oriented portfolios. I don't see HDI going to $100 anytime soon unless there is a drastic change in the market, demographics or their business model.

As for the others I hope the increases will show them the market is vibrant and they will continue to develop and bring new products to the market. Maybe we will see a new Gold Wing challenger from one of the manufacturers. I think the "new" FJR is a sign that things like that maybe happening. The VMax prototype, etc.

Increasing scooter sales could be the "older" tail of the Harley buyers age distribution moving from HDs to scooters as they become more frail. Could an HDI scooter be in the future? Look at the sidecar...hmmm????

And increasing sales also brings the possibility that there will be more of us out there!!!

:clap:

 

[snowmonkey]

So John, I'm curious to hear what your read is on YAMHF ?

 

[PapaUtah]

I do not have access to a lot of international research as we are a domestic shop. It would be more difficult to gauge Yamaha, Honda, Kawasaki or Suzuki easily without talking to an analyst covering them. They are all very different from HDI. All have much broader, diversified product lines. Separating their motorcycle business from the rest of the products would be key. Honda had $75 Billion in sales, Yamaha $40 B or so. HDI had sales of $5 billion. Very different companies.

I personally look at the HDI data as a proxy for the industry in the states and then color it with the motorcycle industry association data as to product mix, segmentation, etc. If you back out the HDI portion you can get a feel for what’s happening as a whole to the other manufacturers.

With on-highway registrations up 7.6% for the industry last quarter and HDI up .7% That implies someone other than HDI is moving product at an increasing pace. Industry data has been indicating a slowing of the growth in the “cruiser” market over the past year. The “sport” market has been growing the fastest during the same period. HD doesn’t have a product in that category so the other manufacturers are picking up some of the overall market share. But with the others we are dealing with maybe 10-15% of the total company so the impact is muted. Accord sales are more important to Honda than Goldwing sales.

That data coupled with HDIs admission that their increase in deliveries will be in the 5% range(and most of that has been going into dealer inventory!) instead of 9-11% in past is why their stock has stalled and retreated a little. Raging share prices go to stocks with high growth potential(think GOOG). HDI is not a high growth company at this time. It generates lots of cash, pays regular dividends and will be a potential value/income play in the near future. But people are not going to pay a premium for something growing at 5%, so I don’t expect any big rally in HDI in the foreseeable future.

 

[Bigboi]

I can assure you the sky is not falling, for HDI, but you may not wish to invest in brown audio tape or spinning hard drives.

 

[twowheelnut]

More ways for Harley to make green:

Yours for only $29,000 NIC V-twin and tranny.

 

[Bigboi]

Interesting, Two Wheel...

 

[KSFJR]

Local HD dealer is supplying free tires for as long as you own the bike

So that's like what, an average of .25 sets for every Harley sold or do they replace them for dry rot.

 

[PapaUtah]

Another interesting bit of research from one of the street analysts today...

"Installed core base. There are an estimated 1.5 million Harley-Davidson motorcycles are in circulation with only 1.0 million actively ridden."

I believe that explains the "Harley OWNERS Group". :alcoholic:

 

[Bounce]

Doubt labor is included. Still $200+ bucks worth of tires every 9 - 12 months adds up.

Don't you mean every 4 or 5 years? The average rider puts 1500 miles a year (or less) on their bike.

 

[snowmonkey]

Doubt labor is included.  Still $200+ bucks worth of tires every 9 - 12 months adds up.

Don't you mean every 4 or 5 years? The average rider puts 1500 miles a year (or less) on their bike.

Is this another lame attempt at bashing Harley owners or is it simple-minded post to hi-jack this thread?

 

[radman]

Doubt labor is included.  Still $200+ bucks worth of tires every 9 - 12 months adds up.

Don't you mean every 4 or 5 years? The average rider puts 1500 miles a year (or less) on their bike.

Is this another lame attempt at bashing Harley owners or is it simple-minded post to hi-jack this thread?

I was gonna post more or less the same thing-TDubs estimate was just beggin for it. But I resisted. Am I losing my touch, have I acquired sensitivity, or is it simple laziness? I NEED ANSWERS HERE DAMMIT!!!

 

[twowheelnut]

Doubt labor is included.  Still $200+ bucks worth of tires every 9 - 12 months adds up.

Don't you mean every 4 or 5 years? The average rider puts 1500 miles a year (or less) on their bike.

Is this another lame attempt at bashing Harley owners or is it simple-minded post to hi-jack this thread?

I was gonna post more or less the same thing-TDubs estimate was just beggin for it. But I resisted. Am I losing my touch, have I acquired sensitivity, or is it simple laziness? I NEED ANSWERS HERE DAMMIT!!!

Okay, you're a ****.

And 1,500 miles or less per year? You must be thinking about of gay bikers from Minnesota... (or Texas) :****: