The world’s largest maker of heavyweight motorcycles continues to struggle. Net income fell 82% in its fiscal fourth quarter to $8.3 million, compared with a year earlier. Earnings per share were 5 cents, down from 27 cents a year earlier. Revenue, however, was up: $1.23 billion from $1.11 billion last year.

It appears that a big part of the earnings drop is the 91% effective tax rate associated with President Trump’s tax cut, along with  a $29.4 million charge for a voluntary product recall.

Click on the link below to see H-D’s whole 30-page presentation.

Harley-Q4 2017 Quarterly Slides

Furthermore, this morning’s USA Today reports that part of H-D’s consolidation plan will result in closure of H-D’s Kansas City manufacturing plant, along with the loss of 800 jobs.

It’s not exactly a rosy picture for the Motor Company, but it’s seen much worse; see 2009-2010 in the above chart. Limp sales over the past few years have encouraged the introduction of a slew of new models and rider initiatives for 2018, and the slide presentation claims there are 32,000 more H-D riders in the U.S. than there were a year ago. Plant consolidation, lower taxes, and increasing overseas sales are expected to boost the bottom line going forward. And H-D even says it plans to “invest more aggressively in electric motorcycle technology.”

HOG stock was down nearly 9% on the news (on a bad day for Wall Street in general). But we wouldn’t count H-D out anytime soon. It’s not over till the Fat Bob sings.

 

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  • Jon Jones

    Fewer LOUD PIPES is a good thing.

    • MARC

      I belong to a local HOG chapter in Northern Calif, and not one of them rides a bike with loud pipes. Even though some of my bikes are not Harley’s I still get questions from neighbors asking if I belong to Hells Angels. Isn’t stereotyping grand😊

      • Alaskan18724

        That’s profiling, and profiling is wrong.

        • Gruf Rude

          You are over-stating. Profiling is done all the time by everyone. ‘Improper profiling’ is profiling that is solely based on characteristics that are not actually predictive. The usual context for the term ‘improper profiling’ is in police work, where a government agent focuses suspicion on a group of folks based on a legally protected status, such as race or religion.

          • Alaskan18724

            Not according to Ron White….

          • Alaskan18724

            “The police were stopping everyone driving on that particular sidewalk. That’s profiling, and profiling is wrong.”

          • Gruf Rude

            LOL

          • smoketrain

            We all profile, it is a term invented by a stinking liberal lawyer. The correct word to use is discrimination or discernment, by using this we exercise our abilities to use sound reasoning to make correct choices-and some make poor ones too.

          • Douglas

            And, as George Clooney said in “Up in the air”, profiling (or generalizations about ethnicity) “is quicker”. (Really out of character for him, since he is a raving lefty). But his line in the movie was correct….n c’est pas?

      • Sayyed Bashir

        Which chapter do you belong to?

        • Marc

          Redwood empire

          • Sayyed Bashir

            I used to belong to the Auburn CA chapter when I bought my Softail Custom in 2007. Didn’t have time to ride with them. The Auburn dealership closed several years ago so I go to the Folsom dealership. They have frequent HOG rides.

      • RyYYZ

        Amazing. Around here I’d say it’s definitely a minority of Harleys I see (and hear) that are running stock or otherwise reasonable pipes. Most are virtually unmuffled and noisy as hell. I really hate those guys’ bikes. And also the extremely loud sport bikes (at least they’re usually gone quickly) and diesel trucks.

        • Jon Jones

          Right on the money. The MAJORITY of the HD crowd loves those LOUD-ASS pipes. A quiet Harley is as rare as unbiased journalism.

          • Douglas

            Let’s don’t forget that said pipes are saving their lives…..

          • Jon Jones

            Yeah.

            That.

    • Jim

      I don’t know, Jon. I still like cruisers, and with the Japanese cruiser scene fading away, it’s pretty much down to Indian and Harley. I hope they both survive, loud pipes or otherwise. Riding a Softail Deluxe the other day made me realize just how nice the new platform is. I’d love to own one someday.

      • Sayyed Bashir

        Good for you!

    • Born to Ride

      They must be switching to R1s because whenever my eardrums are being slaughtered by a non-Harley, it’s a goddamn crossplane yammer hammer.

      • Sayyed Bashir

        Some cars and trucks around here are pretty loud too. I wonder how come they don’t get a ticket.

        • Jon Jones

          The diesel pickups in my area are ridiculously loud. Noise enforcement just doesn’t seem to occur.

          • DickRuble

            Nobody enforces noise regulations.

          • Jon Jones

            And OHVs. Many have some of the loudest exhausts imaginable on their OHVs. Seems we’re doomed if law enforcement is just as guilty and stupid as rednecks in this regard.

          • mrskullman40

            Agreed! There are WAY more jacked up diesel spittin loud mouths in my area than loud bikes by far!

          • Jon Jones

            They also enjoy parking their Penismobiles and letting them idle for 20-60 minutes at the shop I work at.

            A despicable, wasteful bunch of assholes.

          • David K

            It doesn’t generate enough income for the police. DUI’s bring in more cash.

      • Mary

        Gℴogle gives the people $99/hr to complete few task on a home computer .. Do job for only few hours in a whole day & live happy more time together with your own family … Any person can also do this easy work…on Wednesday I bought a latest Car after I been getting $9932 last six weeks .it sounds high-quality process but you will no longer forgive yourself if you don’t test it.!mx571d:➥➥➥ http://GoogleCashCareerGeoJobsFromHomeJobs/get/hourly ♥r♥♥♥r♥y♥l♥u♥♥s♥♥w♥j♥x♥♥♥b♥♥y♥m♥p♥♥♥d♥♥♥w♥x♥♥w♥v♥♥z♥♥♥t♥♥♥z♥p♥♥w♥♥♥s♥♥♥n:::::!oe49o:lhuh

    • SerSamsquamsh

      Personally, I can’t wait for an HD fire sale! When stage IV pipes are available at Costco imagetsome for the whole family:)

      • Motonirvana

        You will have to buy a six pack of stage IV Kirkland signature pipes 😅

        • Jon Jones

          Made me lol!

        • SerSamsquamsh

          Is that six pipes total or 12?

      • David K

        Do they really think that the release of their announced battery bike are going to make a positive splash? I don’t see many people buying them anytime soon!

        • SerSamsquamsh

          Sadly it probably won’t but it’s interesting a major manufacturer is taking the plunge – HD would have been my last guess for that. Electric bikes would be great commuters but the huge price premium tacked on because of “long term savings” is more of a deterant than any factor imo.

    • David K

      I am loving this!

  • Mad4TheCrest

    Look, I am no Trump fan, but I can’t understand how his/GOP’s tax bill resulted in a “91% effective rate” for a corporation. That’s HUGE!

    • Old MOron

      They’re prolly cooking the books to say, “Look, it’s not our fault.”

      • DickRuble

        Cooking the books is the right term. That’s something GAAP was “engineered” for. They call it “providing businesses with flexibility in reporting”.

    • john phyyt

      “91% effective tax” driven by write down of net deferred tax assets..
      Makes sense to “take advantage” of the current higher tax environment. Then next year you can show much more profit with much lower tax cost. There may be rebound effect next year.

      Put Simply if you know you are going to pay less tax next year why show much profit this year?

      • Sayyed Bashir

        Someone who knows what he’s talking about.

      • John B.

        If current trends continue HD will pay no income tax because they will not have any profit!

      • DickRuble

        One other area the Japanese have demonstrated their superiority. This type of accounting scheming is not possible in their system.

  • JMDGT

    91% effective tax rate? No. That is wrong. The recall charge is believable.

  • spiff

    The article states they plan on increasing overseas sales. That would be a good idea seeing that international sales are down across the board.

    • DickRuble

      There aren’t enough suckers and knuckleheads overseas.. We’ve got all of them. If they die off or wise up, HD is in trouble.

      • spiff

        The artice I read stated that the bikes were just to large for the type of riding done in the rest of the world.,

      • Douglas

        Well, H-D’s (along w/Rolex and watches of that ilk, Kolibri lighters {et al}, ivory figurenes…..the list goes on) are status symbols in Japan and likely other affluent countries in the Orient. In Europe, tho’, probably not so much.

        • Born to Ride

          I was just gonna point out their popularity in Japan and the irony of it. Lol

  • mikstr

    One word: schadenfreude…

  • Lewis

    How would the new tax law affect Q4 2017 numbers? It takes effect tax year 2018.

  • Motonirvana

    Interesting that the Kansa City plant is being shuttered while HD is building a new plant in Thailand.

    • Lewis

      I think just about all the major manufacturers have plants in that area of Asia.

    • Aaron MacDonald

      It’s only interesting until you learn that the bikes they build in Thailand are to be sold in Asia using parts sourced from the United States.

  • John B.

    Deferred tax asset is an accounting term that refers to a situation where a business has overpaid taxes (i.e., paid taxes in advance) on its balance sheet. Since corporate tax rates will go down in 2018 and future years under President Trump’s tax reform, HD decided to reduce the amount of prepaid taxes on its books because it makes no sense to prepay taxes in 2017, when tax rates will go down in 2018. This has NOTHING to do with the health of HD’s business, or the health of the motorcycling industry.

    • Max Wellian

      Perhaps, but shipping fewer bikes and closing a plant might be a symptom. Can’t say your explanation of why paying less tax this year caused a decrease in their earnings though.

  • John B.

    Manufacturing facilities moving overseas is a major reason wages have been stagnant in the US over the past 30 years. Globalists don’t mind, however, because these overseas plants provide jobs and higher wages in the countries where the plants reside. The American worker can’t compete against workers in countries that dine on insects and cashews. America first! US Politicians R And D have sold the American worker down the river (like that dude in Uncle Tom’s Cabin), which is why the middle class cannot afford Harleys.

    • jeff benson

      It’s not that simple. The high regulatory costs are a bigger factor than wages. For example the regulatory costs of building a new refinery in the US equals the cost of building a plant. Even small businesses are required to buy scads of permits from alphabet agencies. None of these costs do much more than provide nice salaries and pensions for the bureaucrats. Wages are a factor but by no means the only factor in decisions to close plants.

      • John B.

        I agree with your comment. Except for transportation costs related to shipping goods back to the U.S., manufacturing in Thailand is less expensive in nearly every way possible. That’s hard to compete with.

    • Max Wellian

      No, the middle class can’t afford Harleys mainly because Harley is greedy.
      I can afford a Harley. I like a couple of them. They aren’t worth near what the dealers are asking for them. I’ve seen their profit margins. Ridiculous. They are preying on those who desperately want to buy them some “cool.” I just like to be able to stretch out my busted leg. Highway pegs on standard bikes are a lot cheaper.

      • Born to Ride

        At least they have profit margins. Suzuki sells their bikes to the dealership for a few hundred bucks under MSRP. If they sell a brand new bike for msrp and tax only, they lose money on the sale. I’d like me a new Vstrom 1000, but not for 16 grand OTD.

        • Max Wellian

          If it’s under their cost to give it to you, that’s a screaming buy that won’t be around long. Business that give away money generally don’t have a long shelf life…
          These guys always have great deals. You can get it way cheaper from him.
          https://jandjcycle.com/Showroom/Current-Inventory/NEW/Suzuki/Motorcycles

          • Born to Ride

            Msrp and tax on a Vstrom is like 14.5, they add “freight and setup” fees on top of that so they can pay their staff and rent. Usually 1500-2000$.

          • Max Wellian

            I’ve bought a bike from J&J and they don’t levy any of those charges. Least not when I bought mine.

          • Born to Ride

            Depends on the bike. Suzuki might be particularly bad. The salesman told me that they can do msrp plus tax on Ducati’s all day long because there is profit margin on those bikes. On a Triumph they can sell a bike with a small markup like just “freight”. But on Japanese brands they pretty much have nothing to work with.

  • Auphliam

    There’s a few things at play here, and little of it really has much do with actual HD sales.
    1) The local tax abatements they were granted to build the plant (including the city gifting them the property) expires this year. They’re bailing before they have to start paying.
    2) As somebody else mentioned, HD used to pay taxes in advance to offset their impact on year to year numbers. With the coming tax cut, it makes no sense to do that now so they’ve decided to bite the bullet and take the hit (that’s been delayed annually by this continued practice) now.
    3) In addition to Sportsters and Streets, the KC plant was the Dyna plant. They eliminated the Dyna line and I’m pretty sure they’re not selling enough Streets to justify the cost of such a large plant.

    • Lewis

      That explains the tax thing. Thanks!

  • smoketrain

    Bring back the Baja 100!

  • Joe Binghampton

    Must be a million plus used Harleys for sale nationwide, just Craigslist. HD will never get from out from under that. It’s like a sea of noise, until they all break down.

    • DickRuble

      That’s what I thought in 2006.

    • Jon Jones

      True. They need a separate category on Craigslist. Interesting to note how many have ape-hangers. Maybe riding the Harley wasn’t as enjoyable when retarded handlebars were installed? Even apes don’t approve of this stupid trend.

    • Donnie

      It always seems that every Harley and Corvette is for sale. Midlife crisis mobiles.

  • steveinandiego

    baby-boomers, like i, are aging. here in san diego i do not see many next-generation HD riders. i tested a new 2015 street bob three years ago. i loved it, but couldn’t justify +$17K, though i had all cash burning a hole in my pocket. bought a new suzuki v-strom 650 for $8k otd. woot!

    • Born to Ride

      I see tons of guys my age and a little older rolling around on street bobs. Probably ten years old but how could you tell? They all have the same black tank and wire wheels, and various acoutremonts to “individualize” them. They ride to the bars, pick up chicks with their cool cut off jackets and perfectly trimmed beards. I don’t hate on em at all, but they aren’t the next generation of motorcyclists by a long shot.

  • mikstr