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A Mid-Year 2014 Road Glide?

A Mid-Year 2014 Road Glide?

The Harley-Davidson Road Glide is different.  

Different design, different ride and the motorcycle has incredibly loyal customers.

Customers who appreciate the wind control and handling that comes with a frame mounted fairing are not typically going to switch to another model.  However, the Road Glide does take people off competitive brands and without it in the H-D line up dealers are missing an opportunity or worse, will see erosion of market segment share.

Sales numbers do talk and during the last earnings call, CFO John Olin stated that the Road Glide represented approximately 9% sales volume and would be back from its temporary hiatus.

And now in the buzzfeed there is more speculation about what the 2015 Road Glide fairing may look like.  Thanks to Worth Harley-Davidson, the Kansas City, MO., dealer posted photo’s on a Facebook page.  

Why wait for the 2015.  This nice custom fairing could hold all your aftermarket Project RUSHMORE electronic purchases?!

UPDATE:  July 8, 2014 – “Official” spy photos of the 2015 Road Glide are HERE.

UPDATED: August 1, 2014 – Harley-Davidson officially reveals the 2015 Road Glide.

Photo courtesy of Worth H-D.

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Indian TankCoincidence? 

On Friday, August 9th, three days after the Indian launch, the Harley-Davidson Chief Financial Officer, John Olin sold 11,104 shares of HOG stock.  The stock was sold at an average price of $59.00, for a total transaction of $655,136.00. Following the transaction, the CFO now directly owns 12,702 shares in the company. The sale was disclosed in a filing with the Securities & Exchange Commission, at this link.

Just a couple of days later Harley-Davidson CEO, Keith Wandell sold 77,102 shares of the stock in a transaction dated Tuesday, August 13th. The shares were sold at an average price of $58.82, for a total transaction of $4,535,139.64. Following the sale, Mr. Wandell now directly owns 70,545 shares in the company.  Those stock options must be working out for him as he now owns three motorcycles; a Street Glide CVO 2011; Road King Classic; and Dyna Wide Glide. 

Well-heeled Riders

Well-heeled Riders

As is often the situation with an executive selling  stock it was likely in the pipeline for weeks prior to the actual sale.

But, after the Great Recession began, the lingering impact of the worst downturn in a half-century continues to deplete the standard of living on the middle-class American household.  Let’s face it, the big factor in the market for anything expensive nowadays is that the only people who have disposable income are the super-rich… and THEY have more of it than anyone has ever had in all of human history.

Sure it’s become trite to slam the rich and I’m trying not to be repetitive.

But, it’s not about being ostentatious:  the super-rich don’t care about impressing the rest of us, because they never see us. They glide from the gated community to the private jet to the island vacation home without encountering any “downscalers.”  They mix exclusively with the other super-rich, and those are the only people they care about impressing.

And that’s tough, because when you’ve got enough money to buy about anything that’s ever been made without a second thought, you have to realize that the guy living next door to your McMansion can buy it too.  So, you’ve just ordered a one-off custom color CVO with a turquoise ostrich-skin seat with matching hand-made gloves and boots?  He’ll give it a glance and say, “Not bad. I think I’ll get a couple for my kids to use when they’re home from prep school.”

So, if really you want to one-up your neighbors by owning something they can’t, your choices are restricted to items with a built-in limited supply, such as art works, and a U.S. Congressmen. Or in keeping with a narrower interpretation of that custom motorcycle style genre, just minimize the amount of tchotchkes on that bone stock H-D motorcycle.

Simple is the new chrome and when your well-heeled fellow riders guffaw, you just have to learn to smirk in a superior way and say, “I guess you don’t grasp the irony…”

Photos courtesy of Indian Motorcycle and Flickr.

All Rights Reserved © Northwest Harley Blog

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H-D announced Q2’11 financial results this morning.

In a word – Booyah!

By every financial measure Harley-Davidson generated improvements in the second quarter of 2011, with strong earnings growth, increased shipments and growth in its dealers’ new motorcycle sales both in the U.S. and globally.  Here are some of the stats that CEO Keith Wandell and CFO John Olin reviewed from Anaheim, CA. where the annual dealer meeting and new product launch was in progress:

  • Revenue in Q2’11 was $1.51B (up 15%) with income up 36.8% to $190.6M
  • Motorcycle shipments up 7,769 in Q2’11 vs. Q2’10; Motorcycle segment revenue up $204.6M (18%) vs. Q2’10
  • Touring motorcycle shipments made up 38.3% in Q2’11; up 3.6%
  • International shipments were 36.2% in Q2’11 vs. Q2’10 at 42.5%
  • Shipment forecast for 2011 rose by about 8% and now H-D expects to ship between 228,000 and 235,000 motorcycles worldwide
  • Market segment share (651+cc) is 53.8%; up 0.2% from 2010
  • U.S. dealer network sales of uses motorcycles up 11% through May; Used bikes sales continue to firm up (meaning they offer the dealer a method to help offset the “sticker shock” of new bikes)

Did anything go less positive?  Well that depends on your viewpoint.  From a shareholder’s perspective it’s “Houston, we’re ready to throttle up”!   Stock price set a new 52-week high at $46.88.

As a rider/layman the touring motorcycle shipment increases were offset by the decreases in Custom and Sportster declines.  There were no age demographics quoted in the analyst call, but we’ve been told that typically “youngsters” don’t buy the higher priced baggers.  In addition, the new 2012 touring models that were announced earlier in the month have… shall we say… “lean” engineering innovation compared to previous years.  In a number of cases there we’re only paint palette changes and price increases made up the so-called “new” touring models.  There was about a 1% price increase in the U.S. market.  The lack of innovation is especially troubling (to me) given that product development spending was up $7M in the first half of 2011 which was described as a continuation of their strategy and focus on leaner engineering.  Sure metals and fuel costs are up, but the lack of stronger product changes is not always a recipe for long term success.

Nothing was noted on the call about the recent expansion in India.  Not sure why given that SG&A expenses were up about $13M on the strategy to grow 100 – 150 international dealers by 2014.  Latin America saw a decrease in retail sales which was largely due to all Brazil dealers being terminated.  There was a restart in that country and the new dealers (6) were coming up to speed.

Congrats to H-D on a great quarter!

UPDATE: Full transcript of the analyst call is HERE courtesy of SeekingAlpha.

Photo courtesy of H-D.  Full Disclosure: I don’t own H-D stock

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Santa wasn’t good to the motorcycle industry in 2009.  A weak economy, company layoffs, a housing melt-down, credit freeze, higher manufacturing costs and an ever discriminating consumer to boot.  As Harley-Davidson executives ponder over what happen this year, I can’t help but believe there are some major things on their wish lists to Santa.  So I’ve taken a scientific (parody alert!) guess of what some of H-D’s top executives want for Christmas:

Keith Wandell, CEO, Harley-Davidson: I got the head honcho job with the industry’s most iconic motorcycle manufacture in history, that has a cult-like following, with vendors tripping all over themselves to copy what we’ve done and I didn’t even have a motorcycle endorsement. I can’t think of anything more to ask for.  Oh wait, all those government stimulus funds – listen up Santa, I’ve been to the White House twice for dinner.  Have I not been nice enough?  Please let the spinner land on my project.

Mark-Hans Richer, Sr. VP & Chief Marketing Officer:  What the ho?  Please, Santa send us Tiger Woods!  As the leader of the world’s foremost authority on brand marketing, our team of cutting edge hoo-ha marketers developed a new strategy with Tiger as the spokesperson!  It’s set to appeal to the outlaw in every man.  We plan to dump that “ludicrous” campaign in favor of “Night of the Tiger”…complete with an exclusive Elin ghost flame paint scheme…

Bill Davidson, VP Core Customer Marketing: Please Santa let 2010 be the year for H-D in professional motorcycle racing.  Nothing but wins – in the dirt or drag or NHRA Pro – whatever it says on my t-shirt. Wait, can you also help people forget about that botched firing of Anne Paluso.  Really our plan is to go racing – go “team scream” or something like that.

John Olin, CFO: Motorcycle sales!  Santa it’s not my fault.  Please let me milk this “new in my job” for just a while longer.  What do they expect?  Miracles on Juneau Avenue!  Doesn’t it matter that I’ve been here less time than Keith?  I do have a motorcycle endorsement.  And, my calculator is newer than Lawrence’s!

Matthew Levatich, President & COO: Santa please get the Wisconsin Department of Transportation to approve and recognize my heroic role in getting the special license plate commemorating Harley-Davidson through the political red-tape as the state’s official motorcycle.   Yep, 2010 is shaping up to be a good performance review!  Memo to Enrico… get the bottle of Chianti ready!

Lawrence Hund, President & COO of H-D Finance: A new platinum edition HP 12C calculator.  The minus button on my last one quit working.

Gail Lione, EVP & General Counsel: Santa please tell us who is behind that NWHOG?!  Send us that macrant email address.  We have an important legal document gift we wish to serve send over to Northwest Harley Blog.

Paul James, Harley-Davidson Company Spokesperson: Please let me graduate the training class called “If the dream is big enough, the facts don’t matter” — a.k.a. the Mohammed Saeed al-Sahhaf school of bubbling optimism to distract the media and bloggers with superfluous BS so they ignore our fundamental problems.

James McCaslin, EVP Corporate Product Planning:  Santa can you get me a copy of Keith’s industry information?  I’ve never heard of “vendors tripping all over themselves to copy what we’ve done?”  I do remember a blogger at the 105th Anniversary trying to take a photo of a plant tour and we ran his butt right out the building before he was able to take pictures of the lunch room.

Karl Eberle, Sr. VP Manufacturing: Please make Indian go away. We are tired of being embarrassed in our own back yard when it comes to American cruisers and we don’t want that company bragging about their superior performance anymore.

Enrico D’Onofrio, Managing Director – MV Augusta: I already got what I wanted. Thanks for the early Christmas present H-D!  That sale notification surprised Wall Street… as you say in your home land… my golden shute is priceless. All this talk about motorcycles when the grape reigns supreme here in the zone of Tuscany… please pass the Chianti.

Jon R. Flickinger, President & COO of Buell: A job!  Also could you unload some of those dusty Buell’s in the warehouse?  My exit bonus is on the line.

Thanks for your readership during this past year. You may not have agreed with what I had to say at times, but it made for some lively discussions nevertheless. Merry Christmas, happy holidays and best wishes to you in 2010.

Photo courtesy of Flickr.

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pink_slipI’m fascinated by the decline or some might say the “fallout” of the Harley-Davidson management team.

HD announced a couple days ago that effective immediately the CFO, Tom Bergmann was leaving the company.  Labeling the hasty departure with the all too familiar and politically correct words; “seeking other career opportunities” to describe his abrupt exit.   Mr. Bergmann had been CFO since 2006 and in January 2009 it was announced he would take on the additional responsibility as president of Harley-Davidson Financial Services (HDFS) after Sy Naqvi’s sudden departure.  So it’s rather odd that on the very first day that the new CEO, Keith Wendell comes to work Mr. Bergmann would choose it as the most optimal time to leave?! 

I smell “Mr. Clean”… and I even provided Keith a 10-step success plan, but forcing out the CFO in the first 8 hours on the job was not on the list!

On the day of his departure, Tom had just completed a transaction that would provide about $1B in funding capacity that the company could use for consumer lending in 2009. The new funding was important, since the firm finances roughly one of every two HD motorcycle purchases.  HDFS increased the size of an existing $500 million asset-backed commercial paper conduit facility to up to $1.2B, based on the level of outstanding receivables. The facility expires April 29, 2010.  In addition, Tom negotiated to have replaced a 364-day, $950M bank credit facility expiring July 31 with a new 364-day, $625M credit facility expiring April 29, 2010. Together, the two agreements provide additional available credit of up to approximately $375M over the term of the agreements for the lending activities of HDFS. 

Getting the funding covered is a monkey off their back and a fairly impressive accomplishment to tell the new boss on day #1, but to turn around and say “Hasta la vista, baby”…I’m outta here.  WTF?  Whether Mr. Bergmann was run off the road or decided no more black leather, but instead it’s time for touring suits with leg guards and time to gear-up for a sound different than a low rumble…we’ll never know.

The HD press release stated that Controller John Olin would serve as interim CFO at the company.  Bergmann also served as President of Harley-Davidson Financial Services (HDFS) and Treasurer Perry Glassgow would take over on an interim basis.  Lastly it named Mark Kornetzke, senior director of financial reporting, as the company’s chief accounting officer.

Photo courtesy Henny Ray Abrams/Reuters.

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