Harley Running on Fumes: Fool by Numbers
By
Anders Bylund
January 25, 2008
|
On Jan. 25, motorcycle maven Harley-Davidson (NYSE: HOG) released earnings for the 2007 fiscal year -- a period ended Dec. 31, 2007.
- Harley burned a lot of cash over the last year while unsold inventory piled up in its warehouses. The fickle aspirational consumer strikes again.
- Double-digit sales growth abroad wasn't enough to erase a weak American market. The domestic market is vital to these biker boys; nearly 80% of Harley's sales happen at home, year after year.
- Management is fighting to keep shareholders happy with a glad-handed buyback plan, but with the cash reserve running low, it's becoming an uphill battle. And borrowing money on a corporate scale ain't as easy as it used to be, thanks to the ongoing credit crunch in Wall Street's banking district.
(Figures in millions, except per-share data.)
Income Statement Highlights
|
FY 2007
|
FY 2006
|
Change
|
|
Sales
|
$5,727
|
$5,801
|
(1.3%)
|
|
Net Profit
|
$934
|
$1,043
|
(10.5%)
|
|
EPS
|
$3.74
|
$3.93
|
(4.8%)
|
|
Diluted Shares
|
249.9
|
265.3
|
(5.8%)
|
Get back to basics with the income statement.
Margin Checkup
|
FY 2007
|
FY 2006
|
Change*
|
|
Gross Margin
|
36.9%
|
38.5%
|
(1.6)
|
|
Operating Margin
|
24.9%
|
27.5%
|
(2.6)
|
|
Net Margin
|
16.3%
|
18.0%
|
(1.7)
|
*Expressed in percentage points.
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets
|
FY 2007
|
FY 2006
|
Change
|
|
Cash + ST Invest.
|
$405
|
$897
|
(54.8%)
|
|
Accounts Rec.
|
$181
|
$143
|
26.7%
|
|
Inventory
|
$350
|
$288
|
21.5%
|
|
Liabilities
|
FY 2007
|
FY 2006
|
Change
|
|
Accts Payable & Accrued Liabilities
|
$785
|
$763
|
2.9%
|
|
Long-Term Debt
|
$0
|
$0
|
N/A
|
The balance sheet reflects the company's health.
Cash Flow Highlights
|
FY 2007
|
FY 2006
|
Change
|
|
Cash From Ops.
|
$798
|
$762
|
4.8%
|
|
Capital Expenditures
|
$242
|
$220
|
10.3%
|
|
Free Cash Flow
|
$556
|
$542
|
2.6%
|
Free cash flow is a Fool's best friend.
Competitive Context
|
Market Cap
|
Trailing P/E Ratio
|
CAPS Rating (out of 5)
|
|
Honda Motor (NYSE: HMC)
|
$55,579
|
8.6
|
****
|
|
BMW Group
|
$35,368
|
8.5
|
***
|
|
Harley-Davidson
|
$9,687
|
9.75
|
**
|
|
Yamaha Motor
|
$5,808
|
7.7
|
-
|
|
Polaris Industries (NYSE: PII)
|
$1,356
|
13.0
|
**
|
Using the latest reported numbers from Capital IQ. Keep your partners close and the competition in your vest pocket.
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