Demand for Harley-Davidson (NYSE: HOG ) motorcycles hasn't slowed down despite the tepid economic growth both domestically and worldwide. This morning, the company reported a 7.5% increase in third-quarter revenue to $1.34 billion and a 23.7% increase in earnings per share to $0.73. The earnings mark hit estimates on the dot and revenue easily topped the $1.17 billion estimate.
Worldwide, dealers sold 70,517 new motorcycles, an increase of 15.5% from a year ago, driven by the Project Rushmore motorcycles launched last year. Sales rose 20% in the United States, 10% in the Asia-Pacific region, and 15.6% in Latin America. Canada saw a 7% increase and Europe, the Middle East and Africa notched 1.6% growth.
Consumers did trend toward lower-cost vehicles, though, which is why revenue didn't increase as quickly as unit sales. Despite this trend, gross margin was up to 35.3% from 34.7% a year ago, a credit to the company's cost controls.
For the full year, Harley-Davidson expects to deliver 259,000 to 264,000 motorcycles and expects gross margin to continue to improve to between 35.25% and 36.25%. Guidance was unchanged from a year ago.
Not only has Harley-Davidson been able to grow motorcycle sales at far faster than economic growth, it's expanding margins and increased earnings at over three times the rate of sales. That bodes well for the company's long-term operations and shareholders as well. The stock isn't cheap at 17 times next year's earnings estimates, but it's got a strong brand and operations running on all cylinders.