Harley-Davidson (HOG) Q4 2025 Earnings Transcript

Core Insights - The company is focused on stabilizing its business by restoring dealer confidence and aligning wholesale activity with retail demand, aiming for sustainable growth in the future [1][3] - Immediate priorities include improving dealer profitability, reigniting brand momentum, and reducing costs, with a commitment to these goals remaining unchanged [1][5] - The company is optimistic about early signs of improvement, particularly in North American retail sales, which have shown growth [2][11] Inventory Management - The company has taken intentional actions to address elevated dealer inventory, particularly in North America, resulting in a 16% decline in dealer inventory relative to year-end 2024 levels [11][33] - Global dealer inventory was down 17% over the same period, exceeding the target of a 10% reduction, indicating solid progress [11][33] - The focus on inventory discipline is central to the company's strategy, with targeted promotional support for touring models and disciplined quarterly planning [10][12] Financial Performance - In Q4 2025, consolidated revenue decreased by 28%, driven by a 10% decline in HDMC revenue and a 59% drop in HDFS revenue [26][28] - The operating loss for Q4 was $361 million, compared to a loss of $193 million in 2024, with significant losses attributed to both HDMC and HDFS [26][27] - For the full year 2025, consolidated revenue was $4.5 billion, a 14% decrease compared to the previous year, with earnings per share dropping from $3.44 to $2.78 [28][29] Retail Sales Performance - North American retail sales of new motorcycles increased by 5% in Q4, while international sales decreased by 10%, leading to a global retail sales decline of 1% [28][30] - The company experienced strength in lower-priced sport motorcycle models, which were up 33%, while the Grand American touring product saw a 6% increase [30][32] - EMEA retail sales declined by 24% in Q4, reflecting ongoing macroeconomic challenges, while Asia Pacific retail sales were down 1% [30][31] Strategic Initiatives - The company is committed to restoring relationships with dealers, improving inventory management, and enhancing customer focus through a refined product portfolio [5][6] - A new e-commerce strategy is being implemented to drive dealership traffic and support motorcycle sales, addressing previous issues of customer confusion and excessive discounting [8][9] - The company plans to announce a new strategic plan in May, which is expected to outline further initiatives for growth and stability [3][24] Future Outlook - The company anticipates 2026 to be a transition year, with expectations for improved dealer health and a return to long-term earnings power [12][53] - Projected retail units for 2026 are between 130,000 to 135,000, with a similar expectation for wholesale units, indicating a balanced approach to inventory management [54][55] - The company expects to face increased costs from tariffs in 2026, forecasting between $75 million to $105 million based on current levels [55][56]