Q4 2011 Earnings Call
January 24, 2012 9:00 am ET
Amy Giuffre -
John Olin - Chief Financial Officer and Senior Vice President
Lawrence G. Hund - President of HDFS and Chief Operating Officer of HDFS
Keith E. Wandell - Chief Executive Officer, President and Director
James Hardiman - Longbow Research LLC
Timothy A. Conder - Wells Fargo Securities, LLC, Research Division
Gerrick L. Johnson - BMO Capital Markets U.S.
Jaime M. Katz - Morningstar Inc., Research Division
Rod Lache - Deutsche Bank AG, Research Division
Sharon Zackfia - William Blair & Company L.L.C., Research Division
Felicia R. Hendrix - Barclays Capital, Research Division
Robin M. Farley - UBS Investment Bank, Research Division
Craig R. Kennison - Robert W. Baird & Co. Incorporated, Research Division
Edward Aaron - RBC Capital Markets, LLC, Research Division
Previous Statements by HOG
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Good morning. My name is Melissa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter 2011 Earnings Conference Call. [Operator Instructions] Amy Giuffre, Director of Investor Relations, you may begin your conference.
Thank you, Melissa, and welcome to Harley-Davidson Fourth Quarter 2011 Earnings Conference Call. The audio for today's call is being webcast live on www.harley-davidson.com. The slides, which are generally available at least 30 minutes prior to the call, can be accessed by clicking on Company, Investor Relations, then Events and Presentations.
Our comments today 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 SEC. Harley-Davidson disclaims any obligation to update information in this call.
This morning, you'll hear from Harley-Davidson's CEO, Keith Wandell; CFO, John Olin; and President of Harley-Davidson Financial Services, Larry Hund. Then we'll open the call for your questions.
So let's get started. Keith?
Keith E. Wandell
Well, thank you, Amy. Good morning, and thanks for joining us on the call. Throughout 2011, everyone at Harley-Davidson has been hard at work transforming our company. And we've come a long way and I couldn't be more proud of our team. And I know our entire team finds it gratifying to see these efforts reflected in the financial results that we reported today.
Our fourth quarter continued the positive trend of this year. We had strong improvement earnings in Q4, capping off a year in which earnings more than doubled from 2010. And the year finished strong at retail as well. New Harley-Davidson motorcycles were up almost 11% worldwide compared to last year's fourth quarter and up almost 6% for the full year. And sales were strong in both the U.S. and the international markets. Once again, we gained market share.
For the fourth quarter, Harley-Davidson held a 59.4% share of the U.S. heavyweight market, and our 2011 full-year market share was 55.7%. These results are a demonstration of the dedication and hard work of all of our employees and our dealers to be customer-led and to fulfill customers' dreams through remarkable motorcycles and extraordinary customer experiences. We are committed to be world class in everything we do to be more agile, more efficient and more effective at developing and building great motorcycles and delivering them to customers around the world.
Let's take a look at some of the key milestones along our journey. In 2011, we made great strides in the transformation of our York operations. All the motorcycles there are now built under one roof on one assembly line. But even more powerful than the bricks-and-mortar change is the change in the culture, where the employees in the line are creating and implementing operating improvements on a daily basis.
Similar changes are underway in the operating structure at Kansas City and we're on a fast ramp-up in Milwaukee and Tomahawk in preparation for the new contract that will enable these changes in just a couple of months. And our CKD operations in Brazil and India are implementing these operation systems as well. We also moved into a new facility in Brazil to give us the capability and the capacity to meet the needs of that growing market going forward.
When it comes to creating remarkable motorcycles, we have reengineered our entire product development approach and it really started to gain traction in 2011. The goal is to implement a laser-focus on the best product opportunities, to reduce time-to-market and increase product development capacity through efficiencies. And while this work is more behind the scenes and not as visible as manufacturing, it's just as significant.
At retail, we began to work with our worldwide dealer network to provide the capabilities and systems that will improve all the ways that Harley-Davidson interacts with customers. The goal is to provide a premium retail experience with every customer everyday and everywhere in the world while strengthening our dealer profitability. One example is e-commerce, where in 2011, we laid the foundation for an entirely new, rich and distinctly Harley-Davidson online shopping experience that will roll out this year. And in 2011, we continued to expand in international markets. We opened regional headquarter offices in Singapore to support the Asia Pacific region and the Miami to support Latin America and Mexico. We added 35 dealers in international markets, including Mexico, India, Thailand, Turkey, China and Brazil. In fact, in Brazil, we completely restarted retail operations through 11 new dealers. And together with the team here at Harley-Davidson, they have done a fantastic job and it's the key reason, along with improvements in Mexico, for the 17.5% retail sales growth in Latin America in 2011.