MARCH 2016 - Harley-Davidson

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MARCH 2016 - Harley-Davidson
OVERVIEW
                                       MARCH 2016
2016 Investor Relations Presentation
MARCH 2016 - Harley-Davidson
INVESTOR PRESENTATION
              MARCH 2016

 HARLEY-DAVIDSON, INC.

  John Olin, Senior Vice President and CFO
  Amy Giuffre, Director of Investor Relations
                                       Contact: amy.giuffre@harley-davidson.com

 This presentation includes 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 SEC. Harley-Davidson disclaims any obligation to update information in this presentation. Additional
 information and risk factors are included at the end of this presentation. The images in this presentation may not be
 reproduced without consent.

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MARCH 2016 - Harley-Davidson
COMPETITIVE ADVANTAGES
                                BRAND / PRODUCT / DISTRIBUTION / HDFS
2016 Investor Relations Presentation
MARCH 2016 - Harley-Davidson
BRAND

         HARLEY-DAVIDSON IS ONE OF THE STRONGEST, MOST RECOGNIZABLE
       BRANDS. WE INSPIRE FREEDOM AND INDEPENDENCE AROUND THE WORLD

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MARCH 2016 - Harley-Davidson
PRODUCT LEADERSHIP

                   HARLEY-DAVIDSON MOTORCYCLES LOOK, SOUND AND FEEL
                             AUTHENTIC, PREMIUM AND CUSTOM
                Model year 2016 includes 40 models priced from $6,849 to $40,299 U.S. MSRP
                Full range of motorcycles targeted to meet the needs of diverse customer targets

                                           CORE               OUTREACH
                                           RIDERS             RIDERS

                                                    INTERNATIONAL
                                                    RIDERS

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MARCH 2016 - Harley-Davidson
DEALER NETWORK

                GROWING, GLOBAL DEALERS DELIVERING A PREMIUM EXPERIENCE
                                        Over 1500 dealer points globally
                                        Largely exclusive network – focused on H-D brand
                                        Profitable and reinvesting in EXPERIENCE

                                                                                                 H-D Black Label
                                                                                                 Concept Store,
                                                                                                     Saigon

                                                               Alternative channels – Ecommerce,
                                                                 Black Label, Smart Store Pop-Up retail

         Seven Islands Harley-Davidson -
         Mumbai, India

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MARCH 2016 - Harley-Davidson
HARLEY-DAVIDSON FINANCIAL SERVICES

                              HDFS ENABLES AND ENHANCES THE HARLEY-
                                  DAVIDSON PURCHASE EXPERIENCE

             Largest financier of motorcycles - 1 of every 2 bikes sold in U.S.
             Exclusive to Harley-Davidson dealers - consistent source of retail/wholesale financing
             Experience - easy, responsive, provider of financing, insurance, extended service
             Profitable business segment - strong margins and return on equity

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MARCH 2016 - Harley-Davidson
PERFORMANCE SUMMARY
                      SEGMENTS / FINANCIAL RESULTS / RETAIL SALES / EXPECTATIONS

2016 Investor Relations Presentation
MARCH 2016 - Harley-Davidson
BUSINESS SEGMENTS

                                                     2015 REVENUE
                                                         $6.0 B
                Motorcycles and Related
                  Products Segment

                                       Motorcycles                                        Retail
                                        $4.13B            Motorcycles
                                                                                        Financing
                                                                                        $ 556.6M

                                  Parts and
                                 Accessories                                           Wholesale
                                  $862.6M                                              Financing
                                                                                        $61.9M

                                                                                             Insurance /
                          General                          Parts and
                                                                                                Other
                         Merchandise                      Accessories
                                                                                               $68.7M
                          $292.3M
                                                       General Merchandise   Financial Services
                                                                                 Segment
                                                        Financial Services

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MARCH 2016 - Harley-Davidson
FINANCIAL RESULTS

                                               FY 2015 VS. 2014

             REVENUE                            NET INCOME                          EPS

              $6.0                              $752.2                         $3.69

                                                                                             Consolidated – Motorcycles and Related Products and Financial Services Segments
                   Billion                           Million
                   (3.7)%                            (10.9)%                        (4.9)%

                    Motorcycles Segment operating income down on lower revenue
                     driven by lower shipments and unfavorable currency exchange
                       –     Strong gross margin percent – up 0.4 pts to 36.8% vs. PY

                    Financial Services Segment operating income up

                    Higher corporate interest expense behind recapitalization

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2015 RETAIL SALES

                                             2015 HARLEY-DAVIDSON MOTORCYCLE
                                                    RETAIL SALES (UNITS)

                                                                                Europe
                                            U.S. 168,240                       [16 country]
                                                                                36,894
    United States                                                                                           International

•   2015 retail [-1.7%]                                     WW                                          •   2015 retail [-0.5%]
                                                                                         Asia Pacific
                                                           264,627                         32,258
•   64% of total sales                                      [-1.3%]                                     •   36% of total sales

                                                                                  Latin America
                                                                                      11,173
                                                                              Canada
                                                                                 9,669
                                                                      Other Intl.
                                                                        6,393

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GUIDANCE

                                                2016 EXPECTATIONS
                                                     as of January 28, 2016

                                       Motorcycle shipments                   269,000 – 274,000 , up 1% to 3% vs. 2015
                                                                              [Q1 78,000 – 83,000]

             Motorcycles and           Gross margin %                         Down year/year
             related products
                 segment                                                      Flat to up modestly year/year – Down as
                                       SG&A
                                                                              a percent of revenue

                                       Operating margin %                     16% – 17%
             Financial services
                                       HDFS operating income                  Down modestly year/year
                 segment

                                       Capital expenditures                   $255 - $275 million
          Harley-Davidson, Inc.
                                       Effective tax rate                     Approximately 34.5%

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STRATEGY
                                       OBJECTIVES / FOCUS AREAS
2016 Investor Relations Presentation
OBJECTIVES

                           WE OUR EXECUTING OUR PLAN TO LEAD AND GROW

                1. LEAD IN EVERY MARKET

                2. GROW THE SPORT OF MOTORCYCLING IN THE U.S.
                            • Grow number of U.S. core customers and grow U.S. outreach customers at a
                               faster rate

                3. GROW U.S. RETAIL SALES AND GROW INTERNATIONAL
                      RETAIL SALES AT A FASTER RATE
                            • Add 150 to 200 new international dealerships by 2020

                4. GROW REVENUE AND GROW EARNINGS FASTER THAN
                      REVENUE THROUGH 2020

                5. OUTPERFORM THE S&P 500

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FOCUS AREAS

          WE ARE SHARPENING OUR FOCUS, INVESTING AND LEVERAGING OUR
         STRATEGIC ADVANTAGES TO DRIVE DEMAND NOW AND INTO THE FUTURE

 2016
 INVESTMENT                                  +65% Marketing
                                 $70M
                                             +35% Product Development

FOCUS AREAS
                                       1. INCREASE PRODUCT AND BRAND AWARENESS

                                       2. GROW NEW RIDERSHIP IN THE U.S.

                                       3. INCREASE AND ENHANCE BRAND ACCESS

                                       4. ACCELERATE THE CADENCE AND IMPACT OF

                                         NEW PRODUCTS

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FOCUS ON AWARENESS

                          INCREASE AWARENESS OF OUR PRODUCTS AND BRAND

     Extend brand reach                    Improve brand and                           Continue US
     beyond core                           product awareness                           outreach success
     customers                             among all customers                 7% CAGR to Outreach since 2010

                                                                               #1 in sales to young adults,
                                                                                African Americans, Hispanics,
                                                                                women

                                                                               More sales to young adults today
                                                                                then to Boomers when they were
                                                                                18-34
                                       +65% marketing investment
                                                                                  H-D New Motorcycle Purchasers
                                        More media, more experiences,
                                         more retail progra2016:
                                                                                                  Outreach
                                        - 50% more U.S. riding events Q1
                                        - 100K+ demos in EMEA
                                        - Brand in unexpected places
                                                                                                   Core

                                                                           Source: Company data

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FOCUS ON US RIDERSHIP

                                                      GROW NEW RIDERSHIP IN THE U.S.
          Attract first-time riders                                                             Harley-Davidson 101
                                                                                    Bring new riders into the sport and intro them
                                                                                     to H-D experience
                                                                                     - Dealer-hosted, fun events to
                                                                                      engage diverse customers,
                                                                                      remove barriers

 Over the last 5 years, an increasing number of first-                                          Riding Academy
   time, on-road motorcyclists have purchased new
   H-D motorcycles. For 2015 (Oct.), over 1/3 had not                                U.S. graduates +35% in 2016
   owned a motorcycle previously
   (IHS Automotive, Polk; retail registrations, USA, 11/1/10-10/31/15 & 1/1/15 t       - Dealers offering program +18% by 6/16
   10/31/15)
                                                                                       - Extend learn to ride for free program
               H-D New Motorcycle Purchasers
                                First-
                                Motorcycle

                                 Owned a
                                 motorcycle
                                 previously

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FOCUS ON ACCESS
                                           INCREASE AND ENHANCE BRAND ACCESS

         International dealership growth                           Enhance premium experience
      40 dealerships added in 2015                       Riding Academy and HDFS global expansion

      Planned +150-200 dealerships by 2020               Global operations expansion -        H-D Canada subsidiary
                                                            2015

                                                          Developing innovative and new experiences to
                                                            inspire new and current riders

               Grand Opening Chengdu, China                         Smart Store, San Jose, CA Dec. 2015

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FOCUS ON PRODUCT IMPACT

                              ACCELERATE CADENCE AND IMPACT OF NEW PRODUCTS
    “Fatten the Tails” - Balanced approach to delivering products across the spectrum

    2016 + 35% yr/yr investment in product development

    Flexible manufacturing capability – produce closer to demand – right bike, right place, right time

    Transformed product development organization and methodology - reduced time-to-market by 30%

                                      “Fatten the Tails” Product Development Approach
                                                                 Street Glide
                                                          S models
                                                                                    CVO
                                                Breakout

                                           Softail Slim
                                                              Offer customer-led          Road King
                                      Fat Bob
                        Iron 883                              products that grow
                   Street                                      and diversify our                      Ultra Ltd
                                                                customer base                                     Tri-Glide

                                           Current Customer                     Future Customer
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SHAREHOLDER VALUE
                                         CAPITAL ALLOCATION
2016 Investor Relations Presentation
SHAREHOLDER VALUE

                                 Harley-Davidson consistently returns value to our shareholders

                                       Dividends Per Share                      Discretionary Share Repurchases
Current Year

                                                                                                CAGR ++
                                              CAGR 25%
   Multi-Year

                                                                        * $750 million funded by debt issuance
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Through focused investment in growth,
                                            Harley-Davidson expects to :
                                             drive demand
                                             increase impact
                                             further broaden appeal and
                                             deliver strong value to shareholders

                                                 Harley-Davidson ® StreetTM 750 Motorcycles

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FORWARD LOOKING STATEMENTS

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 1995. 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.
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, including making new
investments to drive demand for its products for the costs and on the timing that are within expectations, (ii) manage through changes in general economic conditions, including
changing capital, credit and retail markets, and political events, (iii) accurately estimate and adjust to fluctuations in foreign currency exchange rates, interest rates and commodity
prices, (iv) balance production volumes for its new motorcycles with consumer demand, including in circumstances where competitors may be supplying new motorcycles to the
market in excess of demand at reduced prices, (v) execute its marketing strategy of appealing to and growing sales to multi-generational and multi-cultural customers worldwide in an
increasingly competitive marketplace, (vi) develop and introduce products, services and experiences that are successful in the marketplace, (vii) continue to develop the capabilities of
its distributors and dealers and manage the risks that its independent dealers may have difficulty obtaining capital and managing through changing economic conditions and consumer
demand, (viii) successfully access the capital and/or credit markets on terms (including interest rates) that are acceptable to the company and within its expectations, (vix) effect
repurchases of its common stock at share prices that are within its expectations, (x) complete the transition to the new direct distribution model in Canada on the timing and for the
costs that are within its expectations, (xi) prevent a cybersecurity breach involving digital consumer, employee or dealer personal data, (xii) manage the impact that prices for and
supply of used motorcycles may have on retail sales of new motorcycles, (xiii) manage risks that arise through expanding international manufacturing, operations and sales, (xiv)
manage through the effects inconsistent and unpredictable weather patterns may have on retail sales of motorcycles, (xv) manage changes and prepare for requirements in
legislative and regulatory environments for its products, services and operations, (xvi) manage supply chain issues, including quality issues and any unexpected interruptions or price
increases caused by raw material shortages or natural disasters, (xvii) detect any issues with its motorcycles or any associated manufacturing processes to avoid delays in new model
launches, recall campaigns, increased warranty costs or litigation, ((xviii) implement and manage enterprise-wide information technology solutions, including solutions at its
manufacturing facilities, (xix) continue to realize production efficiencies at its production facilities and manage operating costs including materials, labor and overhead, (xx) execute its
flexible production strategy, (xxi) continue to manage the relationships and agreements that it has with its labor unions to help drive long-term competitiveness, (xxii) adjust to
healthcare inflation and reform, pension reform and tax changes, (xxiii) retain and attract talented employees, and (xxiv) manage the credit quality, the loan servicing and collection
activities, and the recovery rates of HDFS' loan portfolio.
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.

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