Harley-Davidson, Inc. NYSE Investor Meeting June 25, 2012

Transcription

1 Harley-Davidson, Inc. NYSE Investor Meeting June 25, 2012 Amy Giuffre, Director of Investor Relations Harley-Davidson, Inc. Rachel Perschke, Investor Relations Coordinator Harley-Davidson, Inc. Keith Wandell, Chairman, President and CEO Harley-Davidson, Inc. Matt Levatich, President Harley-Davidson Motor Company John Olin, Chief Financial Officer Harley-Davidson, inc.

2 This presentation will include forward-looking statements that are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters we have noted in our latest earnings release and filings with the U.S. SEC. Unless otherwise noted, the information presented, including without limitation all forward-looking statements, speaks only as of April 25, 2012 and does not reflect subsequent events, circumstances or changes in expectations. Inclusion of such forward-looking statement also does not constitute a reaffirmation of such statements of any subsequent date. Harley-Davidson disclaims any obligation to update any such information and does not intend to update such information if at all, until the Company s next quarterly earnings release which is currently scheduled to occur Aug. 1,

3 Chairman, President and Chief Executive Officer, Harley-Davidson, Inc. 2

4 Unleash Our Long-Term Potential Tap the Opportunities 3

5 Strategy Focus on the Harley-Davidson brand and strengthen it as one of the world s leading customer-focused, iconic brands by extending its reach beyond core customers and markets Be the global leader in the heavyweight Cruiser and Touring markets by anchoring and growing customer ridership through innovative products and services Be a flexible organization, focused on world class product development, manufacturing and retail to meet any level of market demand worldwide Develop great leaders to ensure a sustainable future for Harley- Davidson 4

6 Exceed Customer Expectations Create Growth Opportunities Build a Strong Business 5

7 Our Progress is Gratifying Employees, Dealers, Suppliers One Team, One Direction, Making a Difference 6

8 Enable Expressions of Personal Freedom and Individuality Globally 7

9 The Best is Yet to Come New Customers and Generations Products Manufacturing Retail Excellence 8

10 President and Chief Operating Officer, Harley-Davidson Motor Company 9

11 Global Reach 10

12 Dream of Personal Freedom 11

13 Transformation Product Development Manufacturing Retail 12

14 Product Development Reduce Time to Market Lead Emerging Trends Greater Capacity 13

15 Transformation Product Development Manufacturing Retail 14

16 Manufacturing People Methods Systems 15

17 Manufacturing Greater Flexibility Increased Efficiency New Operating Culture 16

18 Transformation Product Development Manufacturing Retail 17

19 Retail2020 Focus on the Customer 18

20 Retail2020 Respond to the Customer 19

21 Retail2020 It s All About the Customer 20

22 JOHN OLIN Senior Vice President and Chief Financial Officer, Harley-Davidson, Inc. 21

23 2012 Q Results Momentum Continued Shipments Revenue 64, % Motorcycles $ % Billion Income EPS $172 $0.74 Million +44.3% +45.1% Consolidated Motorcycle and Related Products and Financial Services Segments 22

24 Motorcycle Retail Sales - Worldwide Worldwide Harley-Davidson motorcycle retail sales were 59,677 units during Q driven by strong sales in the U.S. Worldwide Harley-Davidson Retail Sales Q1 12 WW 20.3% US 25.5% International 11.2% 25% 15% 5% -5% -15% -25% -35% Worldwide H-D yr/yr retail sales by quarter 20.3% 3.5% 5.6% 5.1% 10.9% -5.5% -7.7% -1.0% -21.3% -21.4% -18.2% -30.1% Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Motorcycles and Related Products Segment 23

25 Motorcycle Retail Sales - U.S. 45,000 35,000 25,000 15,000 5,000-5,000 U.S. H-D Retail Sales (Units) 31,691 39, % +25.5% Q1 '11 Q1 '12 U.S. H-D Retail Sales Q Stronger than expected retail sales Momentum from strong brand, 2012 product Unusually mild Q1 weather may have pulled forward some sales Harley-Davidson share of US 651+CC retail market First Quarter U.S. Dealer New Retail Inventory First Quarter U.S. Dealer Inventory* 60.0% 40.0% 20.0% 54.9% 55.7% 53.4% 57.4% 0.0% FY 2010 FY 2011 Q Q H-D share up 4.0 pts. in Q Industry up 17.5% in Q Q Q Q Q Q Q Q Yr./Yr. retail inventory down in Q Retail inventory up slightly from Q Motorcycles and Related Products Segment 24

26 Motorcycle Retail Sales - International Q1 12 International 11.2% - Canada 1.5% - EMEA Region -1.1% - Asia Pacific Region 25.4% - Latin America Region 85.2% International H-D Retail Sales Brazil dealer network gaining momentum Asia Pacific growth across entire region including Japan Europe growth in Germany, France and Switzerland; Softness in UK and southern countries Europe 651+CC Industry Retail Sales International Growth Progress Harley-Davidson share of Europe 651+CC retail market Goal: Add Intl dealers % 13.7% 12.6% 12.7% FY 2010 FY 2011 Q Q H-D share increased 0.1 pts. in Q Industry down 2.6% in Q Motorcycles and Related Products Segment 67 new dealers as of end of Q1 Opened dealers in Croatia, Russia, India, China and France in Q1 25

27 Harley-Davidson, Inc. Current Topics 26

28 Harley-Davidson, Inc. How does Europe impact your business? Approximately 17% of 2011 retail registrations We sell in local currency Strong foundation Brand and dealer strength Share growth 11 consecutive years #2 share in

29 Harley-Davidson, Inc shipment guidance and production? ,000 (up 5-7%) expected to ship in 2012* Takes into account Q1 Shipments up 19.4% Q2 Shipments expected to be up 18-26%* Q3 Production down as a result of ERP implementation* Q4 Production expected to be down in Q4; YE retail inventory lower than prior year* Ability to flex manufacturing at York starting in Q fewer production days compared to last year Lapping last year s ~7K unit inventory build to support ERP launch * As stated in our April 25 th, 2012 earnings release 28

30 Harley-Davidson, Inc. How is the U.S. retail inventory level? As of Q1 2012, U.S. retail inventory was at the lowest level since 2002 Expect pressure on retail inventory through Q3* Capacity constrained during ERP implementation Expect Q4 retail inventory to be lower than prior year* Flexible manufacturing capability in Q YE retail expected to be down vs as we expand flexible manufacturing to KC in 2014 * As stated in our April 25 th, 2012 earnings release 29

31 Harley-Davidson, Inc. What about gross margin? FY 2012 expect to 35.75% (up ~2pts. yr/yr)* Q1 gross margin of 35.9% Q2 gross margin expected to be slightly lower than Q1 2012* Lower production Going forward, gross margin will be impacted by Benefit of restructuring savings and elimination of temporary inefficiencies Incremental volume (incremental gross margin of 50%) Mix - International growth expected to be neutral impact on mix Currency - Key currency devaluation Continuous improvement productivity expected to help offset future inflation * As stated in our April 25 th, 2012 earnings release 30

32 Harley-Davidson, Inc. Why did you change ERP timing? Timing adjustment made as a result of learnings from testing Reduced complexity and improved system design More testing = higher confidence July 2 launch Expect slightly reduced overall production downtime* Timing now syncs with model year 2013 cut-over * As stated in our April 25 th, 2012 earnings release 31

33 Harley-Davidson, Inc. When will current restructuring be complete? Expected to be complete by the end of 2013 All costs and savings within expected ranges Q1 actual restructuring expense of $11.5 million vs. $23.0 million Q Cost $221 Actual Motorcycle Segment Restructuring Summary as of 4/25/12 $ Millions Total $164 Actual $68 Actual $50-$60 Estimated $0-$5 Estimated $500-$520 Estimated % Cash 65% 52% 93% Approx. 80% Approx. 50% Approx. 65% Annual Savings $91 Actual $172 Actual $217 Actual $275-$295 Estimated $300-$320 Estimated $315-$335 Estimated % SG&A 91% 64% 51% 35-45% 30-40% 30-40% Motorcycle and Related Products Segment 32

34 Harley-Davidson, Inc restructuring activities? Q1 Q2 Q3 Q4 Australia Wheel Manufacturing Exit Implement Kansas City Contract Activities GM/P&A Distribution consolidation Implement WI Contract York ERP Implementation York Flex. Mfg Prep Temporary Inefficiencies (Millions) $7 Actual $6-9 Estimated $9-14 Estimated $5-8 Estimated 2012 Total $32 Approx. Motorcycle and Related Products Segment 33

35 Harley-Davidson, Inc. What should we expect from HDFS in 2012? Strong business, strategically critical to Harley-Davidson, Inc Q credit losses lowest in 7 years Q earnings down slightly behind Q reserve release FY earnings expected to be lower in 2012 compared to 2011* Reserve Releases Q1 $12.4 $3.2 FY $39.4 Q1 yr/yr retail receivables outstanding down 3.5% Increased competition * As stated in our April 25 th, 2012 earnings release 34

36 Harley-Davidson, Inc. Future Growth? Investment Focused Investment in Growth Products International Expansion Relevance Custom & touring segments Own Customization Transform product development org. and methodology Expect to add new dealers through 2014 Biggest opportunities in Brazil, India and China Build brand strength Multi-cultural, multi-generational strategy Leverage brand strength globally Grow sales to core and Outreach (Outreach at faster rate) 35

37 Harley-Davidson, Inc. Capital allocation plans? Will continue to maintain 12 months of projected liquidity Committed to dividend and share repurchases $0.62 annualized dividend, up 55% since 2010 Q % increase Q % increase Repurchased 6.2 million shares (as of end of Q1) 36

38 Harley-Davidson, Inc. Strategy How will you measure success? Targets 09 through 14 Progress Through 2011 Outperform S&P over time In 2011, HOG was up over 12% while the S&P was flat Grow intl. retail sales at a faster rate than domestic Add intl. dealers 62 added through 2011 International sales were up 6.1% in 2011, the U.S. was up 5.8% Intl retail sales to exceed 40% Grow sales to outreach and core customers Outreach will grow at a faster rate than core Earnings grow at faster rate than revenue through 2014 including: Realize restructuring savings of $315 - $335 million through 2013 SG&A spending as a decreasing percentage of revenue 36% of 2011 retail sales were international achieved #1 mkt share position in all outreach segments. Increased market share in Young Adults pts, Women +7.0 pts, African American pts, and Hispanic pts. While both core and outreach grew, core grew at a slightly faster rate EPS was up from $1.11 in 2010 to $2.33 in 2011 Realized $217 of savings through 2011; on-track to goal SG&A down nearly 3pts as a percent of revenue in 2011 * As reported in Harley-Davidson s October 30, Q filing with the SEC 37

39 Forward Looking Statement The Company intends that certain matters discussed in this presentation are forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of These forward-looking statements can generally be identified as such because the context of the statement will include words such as the Company believes, anticipates, expects, plans, or estimates or words of similar meaning. Similarly, statements that describe future plans, objectives, outlooks, targets, guidance or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this presentation. Certain of such risks and uncertainties are described below. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this presentation are only made as of the date of this presentation, and the Company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. 38

40 Forward Looking Statement The Company s ability to meet the targets and expectations noted depends upon, among other factors, the Company's ability to (i) execute its business strategy, (ii) effectively execute the Company s restructuring plans within expected costs and timing, (iii) implement and manage enterprise-wide information technology solutions, including solutions at its manufacturing facilities, and secure data contained in those systems, (iv) adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices, (v) anticipate the level of consumer confidence in the economy, (vi) manage through inconsistent economic conditions, including changing capital, credit and retail markets, (vii) continue to realize production efficiencies at its production facilities and manage operating costs including materials, labor and overhead, (viii) successfully implement with our labor unions the agreements that we have executed with them that we believe will provide flexibility and cost-effectiveness to accomplish restructuring goals and long-term competitiveness, (ix) manage risks that arise through expanding international operations and sales, (x) manage supply chain issues, including any unexpected interruptions or price increases caused by raw material shortages or natural disasters, (xi) manage production capacity and production changes, (xii) provide products, services and experiences that are successful in the marketplace, (xiii) develop and implement sales and marketing plans that retain existing retail customers and attract new retail customers in an increasingly competitive marketplace, (xiv) manage the risks that our independent dealers may have difficulty obtaining capital and managing through changing economic conditions and consumer demand, (xv) continue to have access to reliable sources of capital funding and adjust to fluctuations in the cost of capital, (xvi) manage the credit quality, the loan servicing and collection activities, and the recovery rates of HDFS loan portfolio, (xvii) sell all of its motorcycles and related products and services to its independent dealers, (xviii) continue to develop the capabilities of its distributor and dealer network, (xix) manage changes and prepare for requirements in legislative and regulatory environments for its products, services and operations, (xx) adjust to healthcare inflation and reform, pension reform and tax changes, (xxi) retain and attract talented employees, and (xxii) detect any issues with our motorcycles or manufacturing 39

41 Forward Looking Statement In addition, the Company could experience delays or disruptions in its operations as a result of work stoppages, strikes, natural causes, terrorism or other factors. Other factors are described in risk factors that the Company has disclosed in documents previously filed with the Securities and Exchange Commission. The Company s ability to sell its motorcycles and related products and services and to meet its financial expectations also depends on the ability of the Company s independent dealers to sell its motorcycles and related products and services to retail customers. The Company depends on the capability and financial capacity of its independent dealers and distributors to develop and implement effective retail sales plans to create demand for the motorcycles and related products and services they purchase from the Company. In addition, the Company s independent dealers and distributors may experience difficulties in operating their businesses and selling Harley-Davidson motorcycles and related products and services as a result of weather, economic conditions or other factors. # 40