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Nov. 14, 2005 – Finance Digest

November 14, 2005
Filed under Features

H-D earnings climb 16%
Harley-Davidson Inc. net income for the third quarter ended Sept. 25, 2005, was $265 million, or 96 cents a share, up from $229 million, or 77 cents a share, for the third quarter 2004. Net sales were $1.43 billion, up 10% from $1.3 billion during the same period in 2004.
Third quarter revenue from Harley-Davidson motorcycles was $1.11 billion, an increase of $113.6 million or 11.4% over last year. Worldwide wholesale shipments of Harley-Davidson motorcycles in the third quarter totaled 87,585 units, up 8.7% from the year-ago period. On a year-to-date basis, Harley-Davidson motorcycle sales were up 5.0% in the U.S., 19.3% in Europe, and 11.4% in Japan.
Third quarter revenue from Parts & Accessories (P&A), which consists of Genuine Motor Parts and Genuine Motor Accessories, totaled $231.2 million, up 3% from P&A sales during the same quarter 2004. Third quarter revenue from General Merchandise, which consists of MotorClothes apparel and collectibles, totaled $64.5 million, up 5.1%.
For the nine months ended Sept. 25, net income was $729.6 million, or $2.57 per share, compared with $680.8 million, or $2.29 per share, for the same period a year ago. Net sales grew to $4 billion from $3.8 billion.
Harley-Davidson shipped a total of 241,429 motorcycles during the first nine months of the year, a 2% increase compared to last year’s 236,702 units. Motorcycle revenue for the nine-month period was $3.10 billion, up 5.4% from revenue of $2.94 billion for the same period in 2004. P&A revenue totaled $645.8 million, up 3.5% from $623.7 million in 2004. General Merchandise revenue totaled $187.4 million, up 11%.
The Milwaukee-based company’s 2005 shipment target remains at 329,000 units. It forecasts a shipment of 348,000 to 352,000 motorcycles next year.


Polaris 3Q sales up 6%
Polaris Industries Inc., Medina, Minn., says net income for its third quarter, ended Sept. 30, 2005, was $51.1 million, or $1.17 per share, up from net income of $44.6 million, or $1.00 per diluted share, for the third quarter 2004. Sales during the third quarter 2005 were $543.1 million, up 6% from sales of $510.6 million during the same period last year.
For the nine months ended Sept. 30, 2005, Polaris reported net income of $100.4 million, or $2.27 per diluted share, up from net income of $89.1 million, or $1.98 per share, for the nine months ended Sept. 30, 2004. Sales were $1.343 billion, up 9% from sales of $1.234 billion for the nine-month period in 2004.
ATV sales for the third quarter 2005 increased 4% over the same period in 2004. For the nine-month 2005 period, ATV sales increased 9% compared to the comparable prior year period.
Still, ATV retail sales were below company expectations in the third quarter. Polaris said lower sales resulted in dealer and factory inventories too high for comfort, “given our view of economic conditions for the balance of the year.” Polaris plans to reduce its expected ATV shipments to dealers during the fourth quarter 2005.
Sales of Victory motorcycles increased 45% during the third quarter 2005 from the third quarter 2004. Polaris said the increase is attributable to improved brand recognition, the success of the new Hammer and 8-Ball models, continued acceptance of the Vegas and Kingpin models, and improvement in the dealer network. Year to date through September 30, 2005, Victory motorcycle sales increased 24% compared to the same period in 2004.
Snowmobile sales increased 10% for the third quarter 2005 compared to last year’s third quarter primarily due to timing of shipments and an increase in the average selling price per unit. For the nine-month 2005 period, snowmobile sales increased 4% compared to the prior year-to-date period.
Finally, Parts, Garments, and Accessories (PG&A) sales increased 8% for the third quarter and year-to-date periods ended September 30, 2005. Higher sales of ATV, Ranger and Victory PG&A offset somewhat lower sales of snowmobile PG&A, the company said.
During the third quarter 2005 the company repurchased and retired 382,000 shares of its common stock for $19.2 million, bringing total share repurchases to 1.9 million shares, or $111.3 million for the year-to-date period ending September 30, 2005.
Polaris reduced its guidance for full year 2005 earnings per share from continuing operations to the range of $3.24 to $3.29 per diluted share, a 7% to 8% increase over 2004. Previously announced earnings per share from continuing operations guidance was $3.32 to $3.42 per diluted share. Fourth quarter earnings per share from continuing operations are now expected to be in the range of $0.97 to $1.02 per diluted share compared to $1.05 in the fourth quarter of 2004.


Cat’s 2Q profits flat
Arctic Cat Inc., Thief River Falls, Minn., reported net sales of $276.3 million for the fiscal 2006 second quarter ended Sept. 30, 2005, up 15% compared to sales of $240.7 million during the same period last year. Net earnings for the quarter were $19.2 million, or 96 cents per diluted share, versus $19.7 million, or 94 cents per diluted share, in the prior-year period.
Arctic Cat repurchased 401,500 shares of its common stock during the second quarter as part of a $20 million share repurchase program.
For the six-month period, net sales rose 12% to $384.2 million compared to $343.3 million in the first half of last year. Net earnings were $19.7 million, or 98 cents per diluted share, versus $19.8 million, or 94 cents per diluted share, in the prior-year first half.
Sales of Arctic Cat’s ATVs grew to $135.8 million, up 35%from $100.6 million in the prior-year second quarter. ATV sales during the first six months of the year increased 27%to $177.3 million versus $139.7 million in the first six months of last year.
Sales of Arctic Cat snowmobiles were virtually flat at $111.4 million in the 2006 second quarter versus sales of $112.0 million in the same period last year. Snowmobile sales for the first six months of the year were $163.5 million, compared to $162.7 million in the prior-year period.
Second quarter parts, garments and accessories (PG&A) sales totaled $29.0 million, up 3% from $28.1 million in the prior-year second quarter. Six-month PG&A sales totaled $43.5 million, an increase of 6% versus $40.9 million in the year-ago period.
Earnings were reduced by lower margins, said Christopher A. Twomey, chairman and chief executive officer. “We continue to aggressively pursue initiatives designed to reduce costs and enhance the company’s operational efficiency,” he said.
Arctic Cat anticipates fiscal 2006 third-quarter net sales for the period ending Dec. 31, 2005, to range between $189 million and $199 million compared to $188.9 million for the same period last year. Net earnings for the quarter are estimated to be between 19 cents and 24 cents per diluted share versus earnings of 28 cents per diluted share in the prior-year quarter.
For the fiscal year ending March 31, 2006, Arctic Cat anticipates record net sales in the range of $710 million to $725 million. The company is continuing to forecast lower margins in fiscal 2006, due to increased raw material costs, lower snowmobile sales and a less favorable yen/dollar exchange rate, resulting in estimated full-year diluted earnings per share in the range of $1.31 to $1.36.

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