Harley-Davidson, a renowned motorcycle brand over 100 years old

Harley Davidson is arguably one of the world’s most iconic motorcycle brands, with a loyal following that spans the decades. Founded in 1903, the company has survived two world wars and the Great Depression to become one of the largest motorcycle manufacturers internationally. In fact, Harley Davidson was only one of two American motorcycle manufacturers to survive the Great Depression.

Harley Davidson motorcycles are manufactured at factories located in York, Pennsylvania; Tomahawk and Menomonee Falls in Wisconsin; Manaus, Brazil; and Rayong, Thailand. Its products are marketed worldwide, and it also licenses and markets merchandise under the Harley Davidson brand. This includes apparel, home décor and ornaments, accessories, toys, scale models of its motorcycles, and video games.

Who were Harley and Davidson?

William Harley and Arthur Davidson, childhood friends from Milwaukee, teamed up in the late 19th century to build a motorised bike as a hobby, using their skills from jobs in pattern making and bicycle repair. Their prototype, which reached speeds of 25 miles per hour, attracted the interest of friends, prompting them to handcraft more motorcycles in a backyard shed.

By 1907, their efforts led to the official incorporation of the Harley-Davidson Motor Company, producing 150 motorcycles. Two more Davidson brothers joined the venture, and a distinctive gas tank logo was designed by their aunt, Jane.

By the 1910s, Harley-Davidson was producing thousands of motorcycles every year and had already become a pivotal player in what was an expanding motorcycle industry. World War I played a significant role in the company’s early success with the U.S. military ordering thousands of motorcycles for the war effort.

During the 1920s, the company continued to innovate, introducing new models and features that set it apart from competitors. It also became the biggest producer of motorcycles in the world, with bikes in 67 countries. The famous “teardrop” gas tank was introduced in 1925, which went on to become a distinctive characteristic of Harley-Davidson motorcycles.

After WW2, returning soldiers who had experienced motorcycles during their service fuelled a post-war boom in motorcycle sales. This led to Harley-Davidson producing larger, more powerful bikes to feed growing demand. The introduction of the Harley-Davidson “Panhead” engine in 1948 further transformed the motorcycle world, making the company’s motorcycles a preferred choice for avid fans. By the 1950s and 1960s Harley-Davidson had cemented its place in American culture.

Market capitalisation

Harley-Davidson has a reported market cap of more than $4 billion and revenue of $5.95 billion. It is listed on the New York Stock Exchange under the ticker symbol #HOG.

Interestingly, the company began trading on the NYSE on 1 July 1987 under the ticker symbol #HDI. In August 2006, this was changed to #HOG which was a nickname closely identified with Harley-Davidson for decades and a term of affection and respect for the company’s motorcycles all around the world.

Harley-Davidson delivers second quarter financial results

In the 2nd quarter of 2024, the company reported a diluted EPS of $1.63 and an HDMC operating income margin of 14.7%. While North American motorcycle retail performance saw a decline of 1%, retail sales of Touring and CVO motorcycles in the U.S. rose by more than 12%, contributing to a 5.3% rise in Touring market share to 75% for the first half of the year.

The company’s HDMC revenue grew by 13%, driven by a 16% rise in motorcycle shipments worldwide. Moreso, HDFS operating income went up by 21%, with revenue up 10%. In response to the current environment, Harley-Davidson revised its full-year 2024 financial outlook and announced a plan to repurchase $1 billion of shares by 2026.

Harley Davidson moves away from DEI initiatives

In response to prolonged pressure from anti-DEI activist Robby Starbucks, the corporation has ended its diversity, equity, and inclusion (DE) efforts. The Milwaukee-based motorcycle maker revealed that it has not had a corporate DEI function since April, has scrapped minority-owned supplier targets, and will end socially motivated employee training, restricting it to what is legally needed. Furthermore, the corporation intends to refocus employee resource groups on business development, mentoring, and training, emphasising the need of having a diverse customer base for success.

This move is similar to those taken by other U.S. companies, e.g. Tractor Supply and John Deere but is not without controversy. In fact, it has sparked criticism from the President of the Human Rights Campaign, Eric Blem, who has warned that dropping DEI principles could jeapordise consumer trust and employee morale, especially given the LGBTQ+ community’s economic influence. While Harley-Davidson’s decision comes amid political tensions in the U.S. pertinent to DEI, the company’s stock has climbed 5% since Starbucks launched  hiscampaign against the company’s DEI practices.

Buy back of $1 billion of common stock

In July 2024, Harley-Davidson announced a new effort to buy back $1 billion in common stock through 2026. This programme will use a newly approved share repurchase authorisation from the Board, as well as previously authorised shares, and will be funded by cash flow from operations. This new strategy replaces any previous share repurchase programs and builds on the $875 million in share repurchases undertaken by the firm since 2022 as part of its efforts to return capital to shareholders.

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INFORMAÇÃO LEGAL IMPORTANTE: Esta informação não é considerada como aconselhamento ou recomendação ao investimento, mas apenas como comunicação de marketing. O IronFX não é responsável por quaisquer dados ou pela informação fornecida por terceiros aqui mencionados, ou com links diretos, nesta comunicação.

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