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Harley-Davidson(HOG) - 2023 Q4 - Annual Report

Financial Performance - Harley-Davidson, Inc. reported total revenue of $5.84 billion for the year ended December 31, 2023, an increase from $5.76 billion in 2022, representing a growth of approximately 1.5%[322]. - The net income attributable to Harley-Davidson, Inc. for 2023 was $706.6 million, compared to $741.4 million in 2022, reflecting a decrease of about 4.7%[322]. - The company's operating income for 2023 was $779.1 million, down from $909.3 million in 2022, a decrease of about 14.3%[322]. - Comprehensive income attributable to Harley-Davidson, Inc. for 2023 was $743.6 million, compared to $640.4 million in 2022, representing an increase of about 16.1%[326]. - Harley-Davidson's earnings per share (EPS) for 2023 was $4.96, slightly down from $5.01 in 2022, a decrease of about 1%[322]. - The company declared cash dividends per share of $0.66 in 2023, an increase from $0.63 in 2022, marking a growth of approximately 4.8%[322]. Financial Position - Total assets increased to $12,140,554 thousand in 2023 from $11,492,476 thousand in 2022, representing a growth of approximately 5.7%[329]. - Total liabilities increased to $8,888,259 thousand in 2023 from $8,585,668 thousand in 2022, which is an increase of approximately 3.5%[329]. - The total equity attributable to Harley-Davidson, Inc. increased to $3,252,808 thousand in 2023 from $2,903,519 thousand in 2022, representing a growth of about 12.0%[337]. - The company's retail receivable portfolio totaled $6.8 billion as of December 31, 2023, with an associated allowance for credit losses of $367 million[318]. - Cash, cash equivalents, and restricted cash at the end of 2023 totaled $1,648,811 thousand, up from $1,579,177 thousand at the end of 2022, representing an increase of about 4.4%[334]. Credit and Allowance for Losses - The allowance for credit losses increased to $381.97 million in 2023 from $358.71 million in 2022[395]. - The financial services provision for credit losses increased to $227.2 million in 2023, up from $145.1 million in 2022, reflecting a rise of approximately 56.5%[322]. - Retail finance receivables past due for 90 days or more totaled $67.3 million in 2023, compared to $62.0 million in 2022, reflecting an increase of 4.2%[409]. - The provision for credit losses for retail finance receivables was $225,665,000 in 2023, compared to $144,756,000 in 2022, indicating a significant increase in expected credit losses[403]. Derivative Financial Instruments - The notional U.S. dollar value of outstanding foreign currency contracts was $540.1 million as of December 31, 2023, down from $550.2 million in 2022[291]. - The Company selectively uses derivative financial instruments to manage market risks, including foreign currency exchange rates and interest rates[290]. - The Company’s total derivative financial instruments designated as cash flow hedging instruments had a notional value of $1,961.3 million in 2023, up from $1,918.0 million in 2022[422]. - The total gain/(loss) recognized in income related to derivative financial instruments designated as cash flow hedges for 2023 was $48.583 million, compared to a loss of $44.767 million in 2022[425]. Interest Rates and Debt - A one-percentage point increase in interest rates would increase financial services interest expense by approximately $11.9 million as of December 31, 2023[296]. - The Company’s total long-term debt as of December 31, 2023, was $6.246 billion, compared to $6.142 billion in 2022[437]. - The weighted-average interest rate of outstanding commercial paper balances was 6.18% at December 31, 2023, compared to 5.28% in 2022[437]. - Interest expense on secured notes for the year ended December 31, 2023, was $91.8 million, compared to $51.6 million in 2022[452]. Economic and Market Conditions - LiveWire plans to expand its business internationally, which is expected to increase its exposure to currency rate risk[294]. - The Company’s probability weighting of economic forecast scenarios is currently leaning towards a near-term recession due to high interest rates and elevated inflation levels[400]. - Retail credit losses increased significantly due to macro-economic factors, including higher motorcycle payments and inflationary pressures, leading to a total charge-off of $263,915,000 in 2023[401]. Pension and Benefits - The Company’s pension benefit obligation was $1,553.9 million as of December 31, 2023, compared to $2,174.6 million in 2022[474]. - The funded status of the pension and SERPA plans improved to $333.5 million in 2023 from $255.6 million in 2022, reflecting a 30% increase[479]. - The expected return on plan assets for pension plans was 6.80% in 2023, up from 5.60% in 2022, reflecting a positive outlook on investment performance[483]. - The service cost for pension and SERPA benefits decreased to $5.2 million in 2023 from $19.1 million in 2022, indicating a decline of 72.8%[480].