Harley-Davidson(HOG) - 2025 Q1 - Quarterly Results

First Quarter 2025 Financial Results Overview This section provides a comprehensive overview of Harley-Davidson's Q1 2025 financial performance, including consolidated results, segment-specific outcomes, and the withdrawal of the full-year outlook Executive Summary and Consolidated Results Harley-Davidson reported Q1 2025 results that were ahead of expectations in many areas, despite softer U.S. retail sales, actively managing challenging economic and tariff environments - CEO Statement: "Our first quarter results were ahead of our expectations in many areas, while retail sales in the U.S. came in softer than anticipated" The company is focused on navigating challenging economic and tariff environments through diligent execution of cost productivity, supply chain mitigation, tight operating expense control, and reducing dealer inventory, alongside increased marketing initiatives[3] Consolidated Financial Results (Q1 2025 vs. Q1 2024) | Metric | 2025 ($ in millions) | 2024 ($ in millions) | Change | | :--- | :--- | :--- | :--- | | Revenue | $1,329 | $1,730 | -23% | | Operating Income | $160 | $263 | -39% | | Net Income Attributable to HDI | $133 | $235 | -43% | | Diluted EPS | $1.07 | $1.72 | -38% | - Consolidated operating income decreased 39%, driven by a 51% decline at HDMC, partially offset by a 19% increase at HDFS LiveWire's operating loss improved by $9 million (32%) Consolidated operating income margin was 12% in Q1 2025, down from 15% in Q1 2024[5] - Repurchased $87 million of shares (3.4 million shares) on a discretionary basis[6] Harley-Davidson Motor Company (HDMC) Performance HDMC experienced a significant decline in Q1 2025, with motorcycle shipments down 33% and revenue down 27%, primarily due to planned shipment decreases and softer demand HDMC Key Financials (Q1 2025 vs. Q1 2024) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Motorcycle Shipments (thousands) | 38.6 | 57.7 | -33% | | Revenue | $1,082M | $1,476M | -27% | | Motorcycles Revenue | $864M | $1,222M | -29% | | Parts & Accessories Revenue | $143M | $166M | -14% | | Apparel Revenue | $57M | $64M | -11% | | Gross Margin | 29.1% | 31.2% | -2.1 pts. | | Operating Income | $116M | $238M | -51% | | Operating Margin | 10.8% | 16.2% | -5.4 pts. | - Revenue decline was primarily due to a planned decrease in wholesale shipments and unfavorable foreign currency, partially offset by favorable mix and global pricing/net incentives Parts & Accessories and Apparel revenue declines were attributed to lower customer traffic at dealer stores[7] - Gross margin decreased by 2.1 points due to the negative impact of lower volume on operating leverage, partially offset by favorable pricing Operating expense was $24 million lower than a year ago[8] Harley-Davidson Retail Motorcycle Sales Global retail motorcycle sales in Q1 2025 decreased 21% year-over-year, reflecting weak demand influenced by a high interest rate environment and an uncertain economic outlook Global Retail Motorcycle Sales (Q1 2025 vs. Q1 2024) | Region | 2025 (thousands) | 2024 (thousands) | Change | | :--- | :--- | :--- | :--- | | North America | 20.9 | 27.5 | -24% | | EMEA | 5.2 | 5.3 | -2% | | Asia Pacific | 4.4 | 6.0 | -28% | | Latin America | 0.6 | 0.6 | -6% | | Worldwide Total | 31.0 | 39.4 | -21% | - Weak demand was attributed to a high interest rate environment and an uncertain economic outlook, leading to unfavorable consumer confidence[9] - Asia Pacific retail performance was significantly weak in China and Japan[10] Harley-Davidson Financial Services (HDFS) Performance HDFS reported a 19% increase in operating income for Q1 2025, primarily driven by a lower provision for credit losses and reduced operating expenses, despite a modest decline in financing receivables HDFS Key Financials (Q1 2025 vs. Q1 2024) | Metric | 2025 ($ in millions) | 2024 ($ in millions) | Change | | :--- | :--- | :--- | :--- | | Revenue | $245 | $249 | -2% | | Operating Income | $64 | $54 | 19% | - Operating income increase was due to a lower provision for credit losses and lower operating expenses Interest expense remained largely flat[11] - Total quarter-ending financing receivables were $7.4 billion, down 6% year-over-year, due to a decrease in retail loan and commercial finance receivables[11] LiveWire Performance LiveWire's Q1 2025 revenue decreased by 42% due to lower electric motorcycle unit sales and STACYC electric bike sales, though its operating loss improved by 32% LiveWire Key Financials (Q1 2025 vs. Q1 2024) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Electric Motorcycle Unit Sales | 33 | 117 | -72% | | Revenue | $3M | $5M | -42% | | Operating Loss | ($20M) | ($29M) | 32% (improvement) | - The operating loss improvement includes a $7.3 million reduction in selling, administrative, and engineering expense from cost reduction activities taken in 2024[12] Other Financial Highlights and 2025 Outlook Harley-Davidson generated $142 million in cash from operating activities and ended the quarter with $1.9 billion in cash, withdrawing its full-year 2025 financial outlook due to global uncertainties - Generated $142 million of cash from operating activities[14] - Cash and cash equivalents totaled $1.9 billion at the end of the quarter[14] - Effective tax rate was 27 percent[14] - Paid cash dividends of $23 million[14] - Withdrew full year 2025 financial outlook due to uncertain global tariff situation and macroeconomic conditions[13] Company Background This section outlines Harley-Davidson, Inc.'s corporate structure, vision, mission, and its strategic interest in LiveWire Group, Inc Company Background Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company and Harley-Davidson Financial Services, aiming to be the most desirable motorcycle brand globally, and holds a controlling interest in LiveWire Group, Inc - Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company (HDMC) and Harley-Davidson Financial Services (HDFS)[15] - Vision: Building our legend and leading our industry through innovation, evolution and emotion Mission: More than building machines, we stand for the timeless pursuit of adventure Freedom for the soul Ambition: Maintain our place as the most desirable motorcycle brand in the world[15] - Holds a controlling interest in LiveWire Group, Inc., the first publicly traded all-electric motorcycle company in the United States, with an ambition to be the most desirable electric motorcycle brand in the world[15] Forward-Looking Statements and Risk Factors This section provides a cautionary note on forward-looking statements and details various material factors that could impact Harley-Davidson's future financial results and operations Cautionary Note Regarding Forward-Looking Statements This section provides a cautionary note that statements in the press release regarding future expectations, plans, or goals are forward-looking and subject to risks and uncertainties that could cause actual results to differ materially - Statements discussing future expectations, plans, strategies, objectives, outlooks, targets, guidance, commitments, or goals are considered "forward-looking statements" and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995[17] - Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially, unfavorably or favorably The Company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances[17] Important Factors Affecting Future Results Harley-Davidson's future results are subject to numerous material factors, including strategic execution, supply chain management, tariff impacts, market conditions, brand value, economic fluctuations, capital access, product development, competition, credit quality, and various operational and regulatory risks - Key factors include the ability to execute business plans (e.g., Hardwire strategic plan, LiveWire evolution), manage supply chain and logistics issues (quality, interruptions, price increases, raw material shortages, inflation), and manage the impact of new or adjusted tariffs[18] - Other important factors include accurately analyzing and reacting to changing market conditions, interest rates, and geopolitical environments, maintaining and enhancing the Harley-Davidson brand value, and managing through changes in general economic and business conditions[18] - HDFS's retail credit losses have normalized to higher levels and are expected to continue changing due to consumer credit behavior, macroeconomic conditions (including inflation), and efforts to increase prudently structured loan approvals to sub-prime borrowers[21] - The Company's operations, demand for its products, and its liquidity could be adversely impacted by tariff impacts, inflation, work stoppages, facility closures, strikes, natural causes, widespread infectious disease, terrorism, war or other hostilities[22] Condensed Consolidated Financial Statements This section presents Harley-Davidson's condensed consolidated statements of operations, balance sheets, and cash flows for the first quarter of 2025, highlighting key financial movements Condensed Consolidated Statements of Operations The Condensed Consolidated Statements of Operations for Q1 2025 show a significant decline in overall revenue and profitability compared to Q1 2024, with HDMC revenue down 27% and LiveWire revenue down 42%, leading to a 43% decrease in net income attributable to Harley-Davidson, Inc Condensed Consolidated Statements of Operations (Q1 2025 vs. Q1 2024) | Metric (in thousands) | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | HDMC Revenue | $1,081,505 | $1,476,106 | | Operating income from HDMC | $116,272 | $238,445 | | LiveWire revenue | $2,743 | $4,704 | | Operating loss from LiveWire | ($19,809) | ($29,241) | | HDFS revenue | $244,961 | $248,797 | | Operating income from HDFS | $64,036 | $53,875 | | Operating income (Consolidated) | $160,499 | $263,079 | | Net income attributable to Harley-Davidson, Inc. | $133,104 | $234,941 | | Diluted EPS | $1.07 | $1.72 | | Cash dividends per share | $0.1800 | $0.1725 | Condensed Consolidated Balance Sheets The Condensed Consolidated Balance Sheets show an increase in total assets from December 31, 2024, to March 31, 2025, primarily driven by higher cash and cash equivalents and current finance receivables Condensed Consolidated Balance Sheets (Selected Items, in thousands) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $1,931,175 | $1,589,608 | $1,464,614 | | Finance receivables, net (current) | $2,286,672 | $2,031,496 | $2,523,250 | | Inventories, net | $712,312 | $745,793 | $779,575 | | Total Assets | $12,382,381 | $11,881,579 | $12,334,920 | | Short-term debt | $498,500 | $640,204 | $938,719 | | Current portion of long-term debt, net | $1,839,100 | $1,851,513 | $1,281,840 | | Long-term debt, net | $4,963,261 | $4,468,665 | $4,988,891 | | Shareholders' equity | $3,173,690 | $3,158,500 | $3,336,086 | Condensed Consolidated Statements of Cash Flows In Q1 2025, net cash provided by operating activities increased to $141.5 million, with investing activities shifting to a net provision of cash and financing activities also providing net cash, resulting in a significant net increase in cash Condensed Consolidated Statements of Cash Flows (Q1 2025 vs. Q1 2024, in thousands) | Metric | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $141,534 | $103,997 | | Net cash provided (used) by investing activities | $61,395 | ($112,500) | | Net cash provided (used) by financing activities | $150,185 | ($25,925) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $356,413 | ($41,448) | | Cash, cash equivalents and restricted cash, end of period | $2,097,267 | $1,607,363 | - Investing activities shifted from a net cash use of $112.5 million in Q1 2024 to a net cash provision of $61.4 million in Q1 2025, primarily influenced by finance receivables[30] - Financing activities provided $150.2 million in net cash in Q1 2025, a significant change from a net use of $25.9 million in Q1 2024, driven by proceeds from medium-term notes and repayments of securitization debt[30] Supplemental Financial Data This section provides detailed supplemental financial data for HDMC revenue, motorcycle shipments, gross profit analysis, HDFS credit loss allowances, and worldwide retail sales HDMC Revenue and Motorcycle Shipment Data (Detailed) HDMC's Q1 2025 revenue declined across all categories, with motorcycles down 29% and licensing down 66%, while total worldwide motorcycle shipments decreased 33% HDMC Revenue Breakdown (Q1 2025 vs. Q1 2024, in thousands) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Motorcycles | $863,863 | $1,221,540 | | Parts & Accessories | $143,433 | $166,193 | | Apparel | $57,322 | $64,112 | | Licensing | $3,058 | $8,930 | | Other | $13,829 | $15,331 | | Total HDMC Revenue | $1,081,505 | $1,476,106 | HDMC Worldwide Motorcycle Shipments by Category (Q1 2025 vs. Q1 2024) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Grand American Touring | 23,678 | 35,356 | | Cruiser | 11,860 | 15,691 | | Sport and Lightweight | 2,108 | 4,963 | | Adventure Touring | 955 | 1,662 | | Total Worldwide Shipments | 38,601 | 57,672 | - LiveWire Motorcycle Shipments decreased significantly from 117 units in Q1 2024 to 33 units in Q1 2025[32] HDMC Gross Profit Analysis HDMC's gross profit decreased by $146 million from Q1 2024 to Q1 2025, primarily driven by lower volume and manufacturing costs, partially offset by favorable pricing and shipment mix Estimated Impact on HDMC Gross Profit (Q1 2024 to Q1 2025, in millions) | Factor | Impact | | :--- | :--- | | 2024 gross profit | $461 | | Volume | ($140) | | Price and sales incentives | $23 | | Foreign currency exchange rates and hedging | — | | Shipment mix | $12 | | Raw material prices | ($1) | | Manufacturing and other costs | ($40) | | Total Change | ($146) | | 2025 gross profit | $315 | HDFS Receivables Allowance for Credit Losses (Detailed) The allowance for credit losses for HDFS receivables decreased slightly from $401.2 million at the beginning of Q1 2025 to $393.2 million at the end, as charge-offs exceeded the provision for credit losses HDFS Receivables Allowance for Credit Losses (Q1 2025 vs. Q1 2024, in thousands) | Metric | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Balance, beginning of period | $401,183 | $381,966 | | Provision for credit losses | $53,334 | $61,010 | | Charge-offs, net of recoveries | ($61,339) | ($62,615) | | Balances, end of period | $393,178 | $380,361 | Worldwide Retail Sales of Harley-Davidson Motorcycles (Detailed) Detailed retail sales data confirms a 21% global decline in Q1 2025, with the United States experiencing a 25% drop and Asia Pacific a 28% drop, contributing to the overall weak demand Worldwide Retail Sales of Harley-Davidson Motorcycles by Region (Q1 2025 vs. Q1 2024) | Region | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | United States | 19,207 | 25,726 | | Canada | 1,685 | 1,760 | | Total North America | 20,892 | 27,486 | | EMEA | 5,175 | 5,264 | | Asia Pacific | 4,362 | 6,034 | | Latin America | 581 | 621 | | Total worldwide retail sales | 31,010 | 39,405 | - Data source for retail sales figures is new sales warranty and registration information provided by dealers, which is subject to revision[38] Media and Financial Contacts This section provides essential contact information for media and financial inquiries regarding Harley-Davidson, Inc Media and Financial Contacts This section provides contact information for media and financial inquiries related to Harley-Davidson, Inc - Media Contact: Jenni Coats, jenni.coats@Harley-Davidson.com, 414.343.7902[23] - Financial Contact: Shawn Collins, shawn.collins@Harley-Davidson.com, 414.343.8002[23]