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]

Financial Data and Key Metrics Changes - Consolidated revenue in Q4 2025 was down 28%, with HDMC revenue down 10% and HDFS revenue down 59% [23] - Consolidated operating income for Q4 was a loss of $361 million, compared to a loss of $193 million in Q4 2024 [23] - For the full year 2025, consolidated revenue was $4.5 billion, a 14% decrease compared to the previous year, with earnings per share at $2.78, down from $3.44 in 2024 [25][44] Business Line Data and Key Metrics Changes - HDMC retail sales in Q4 increased by 5% in North America but decreased by 10% internationally, leading to a global retail sales decline of 1% [25] - For the full year 2025, North American retail sales were down 13%, while EMEA retail sales were down 11% [26][28] - HDMC revenue for the full year decreased by 13% to $3.6 billion, driven by a 16% decrease in wholesale volumes [32] Market Data and Key Metrics Changes - North American dealer inventory declined by 16% year-over-year, while global dealer inventory was down 17%, exceeding the 10% reduction target [10][30] - In Latin America, Q4 retail sales increased by 10%, with both Brazil and Mexico showing growth [29] - Asia Pacific retail sales were down 15% for the full year, with significant weakness in China [28] Company Strategy and Development Direction - The company is focused on stabilizing the business by restoring dealer confidence and aligning wholesale activity with retail demand [5] - Immediate priorities include improving dealer profitability, reigniting brand momentum, and reducing costs [6] - A strategic plan announcement is expected in May 2026, aiming for sustainable growth [4][21] Management's Comments on Operating Environment and Future Outlook - Management views 2026 as a transition year to reset the business and finalize the new strategy, with expectations of operating margin pressure due to lower production runs [11][48] - The company anticipates a cost of $75 million to $105 million in new or increased tariffs for 2026, compared to $67 million in 2025 [48] - Management is optimistic about the brand's potential and is committed to rebuilding trust and long-term earnings power [21] Other Important Information - The HDFS transaction is expected to transform the financial services model into a capital-light, de-risked business [22] - The company plans to conduct a rigorous review of its cost base and operating expenses, targeting at least $150 million in annual run rate savings starting in 2027 [18][73] - LiveWire is focusing on launching new products and expanding its network while managing costs [42] Q&A Session Summary Question: HDFS operating income expectations - Analyst inquired about the HDFS operating income expectations, which were lower than initially anticipated, and sought clarification on the long-term profitability of the business [52] - Management explained that HDFS is expected to stabilize and potentially triple its income over the next few years, but current volume levels are lower than expected [53][55] Question: Wholesale guidance and inventory levels - Analyst asked about the cadence of wholesale shipments and inventory levels for 2026 [58] - Management indicated that Q1 2026 wholesale shipments would be lower than the previous year, with an expected increase in Q2, while emphasizing the importance of healthy inventory levels [59][63] Question: Retail expectations and LiveWire investment - Analyst questioned the expectations for global retail sales and the willingness to invest in LiveWire despite potential losses [64] - Management expressed optimism about new product launches and the potential for retail sales growth, while confirming continued investment in LiveWire [66][70]

Financial Data and Key Metrics Changes - Consolidated revenue in Q4 2025 decreased by 28%, with HDMC revenue down 10% and HDFS revenue down 59% [25] - Consolidated operating income for Q4 was a loss of $361 million, compared to a loss of $193 million in Q4 2024 [26] - For the full year 2025, consolidated revenue was $4.5 billion, a 14% decrease compared to the previous year, and operating income was $387 million, down from $417 million in 2024 [27] Business Line Data and Key Metrics Changes - HDMC retail performance saw North American retail sales of new motorcycles up 5% in Q4, while international retail sales were down 10% [27] - For the full year 2025, global retail sales of new motorcycles were down 12%, with North America and international markets performing similarly [30] - HDFS revenue for Q4 was $106 million, down from $257 million in the prior year, primarily due to lower retail and wholesale finance receivables [38] Market Data and Key Metrics Changes - North American retail sales for Q4 were up 5%, while EMEA retail sales declined by 24% due to macroeconomic conditions [28][29] - In Asia-Pacific, Q4 retail sales declined by 1%, with significant weakness in China [29] - Latin American retail sales increased by 10% in Q4, with both Brazil and Mexico showing growth [30] Company Strategy and Development Direction - The company is focused on stabilizing the business by restoring dealer confidence and aligning wholesale activity with retail demand [6] - Immediate priorities include improving dealer profitability, reigniting brand momentum, and reducing costs [7] - A strategic plan is expected to be announced in May 2026, with a focus on sustainable growth and optimizing inventory management [4][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2025 was a challenging year, with macro-driven pressures and internal challenges [4] - The company expects 2026 to be a transition year as it resets the business and finalizes its new strategy [12] - Margins are expected to be under pressure in the near term due to production runs being below wholesale [13] Other Important Information - Dealer inventory at the end of Q4 was down 17% compared to the previous year, exceeding the target reduction of 10% [30] - The HDFS transaction is expected to transform the business into a capital-light, de-risked model, with a significant reduction in debt [25][37] - The company plans to conduct a rigorous review of its cost base and operating expenses to align with current demand levels [20] Q&A Session Summary Question: Inquiry about HDFS operating income expectations - Management indicated that HDFS operating income for 2026 is expected to be between $45 million and $60 million, with long-term profitability projected to be significantly higher [51][52] Question: Wholesale guidance and inventory levels - Management noted that Q1 2026 wholesale shipments are expected to be down slightly compared to the previous year, with a gradual increase anticipated in Q2 [57][60] Question: Expectations for global retail sales - Management expressed optimism about U.S. retail sales, particularly with the introduction of new models, while being cautious about overall retail performance [64][66]

Harley-Davidson (NYSE:HOG) Q4 2025 Earnings call February 10, 2026 09:00 AM ET Company ParticipantsArtie Starrs - President and CEOJonathan Root - CFOShawn Collins - Director of Investor RelationsConference Call ParticipantsBrandon Rolle - Equity Research AnalystCraig Kennison - Senior Research AnalystJaime Katz - Senior Equity Research AnalystJames Hardiman - Equity Research AnalystNoah Zatzkin - Equity Research AnalystRobin Farley - Equity Research AnalystTristan Thomas-Martin - Equity Research AnalystOpe ...

Financial Data and Key Metrics Changes - Consolidated revenue in Q4 2025 decreased by 28%, with HDMC revenue down 10% and HDFS revenue down 59% [24] - Consolidated operating income for Q4 was a loss of $361 million, compared to a loss of $193 million in Q4 2024 [25] - Full year 2025 consolidated revenue was $4.5 billion, a 14% decrease compared to the previous year, with operating income of $387 million, down from $417 million in 2024 [26] Business Line Data and Key Metrics Changes - HDMC retail sales in Q4 increased by 5% in North America but decreased by 10% internationally, leading to a global retail sales decline of 1% [26] - For the full year 2025, HDMC revenue decreased by 13% to $3.6 billion, driven by a 16% drop in wholesale volumes [31] - HDFS revenue for Q4 was $106 million, down from $257 million in the prior year, primarily due to lower retail and wholesale finance receivables [37] Market Data and Key Metrics Changes - North American retail sales were up 5% in Q4, while EMEA retail sales declined by 24% due to adverse macroeconomic conditions [27][28] - Asia-Pacific retail sales decreased by 1% in Q4, with significant weakness in China, while Latin America saw a 10% increase in Q4 [29] - Global retail sales of new motorcycles were down 12% for the full year 2025 [29] Company Strategy and Development Direction - The company is focused on stabilizing the business by restoring dealer confidence and aligning wholesale activity with retail demand [5] - Immediate priorities include improving dealer profitability, reigniting brand momentum, and reducing costs [6] - A strategic plan announcement is expected in May 2026, with a focus on sustainable growth and optimizing inventory management [4][12] Management's Comments on Operating Environment and Future Outlook - Management views 2026 as a transition year to reset the business and expects margins to be under pressure due to production running below wholesale [12] - The company anticipates a cost of $75 million to $105 million in new or increased tariffs for 2026, which will impact operating margins [46] - Management is optimistic about returning to long-term earnings and free cash flow levels, emphasizing the importance of dealer health and inventory management [12][23] Other Important Information - The HDFS transaction is expected to transform the business into a capital-light, de-risked model, with a significant reduction in HDFS debt [24][36] - The company plans to conduct a rigorous review of its cost base and operating expenses to align with current demand levels [19] - A total of $150 million in annual run rate savings is anticipated starting in 2027, excluding LiveWire [70] Q&A Session Summary Question: HDFS operating income expectations - Management indicated that HDFS operating income for 2026 is expected to be between $45 million and $60 million, with a long-term view of potentially tripling that figure [50][52] Question: Wholesale guidance and inventory levels - Management expects Q1 2026 wholesale shipments to be slightly down compared to the previous year, with an increase anticipated in Q2 [56][58] Question: Global retail expectations - Management is optimistic about U.S. retail sales, particularly with new model introductions, and expects some upside in 2026 compared to 2025 [63][66] Question: Annual run rate savings distribution - The $150 million in annual run rate savings will not include LiveWire and is expected to be realized starting in the back half of 2026 [70][71] Question: Bridging wholesale growth to operating income - Management acknowledged the challenges in achieving operating income amidst tariff impacts and production versus wholesale dynamics [74]

Financial Data and Key Metrics Changes - Consolidated revenue for Q2 decreased by 19%, primarily due to a planned reduction in motorcycle shipments and soft demand [10][26] - Consolidated operating income was $112 million, reflecting a 69% decline at HDMC [27] - Earnings per share for Q2 was $0.88, with global retail sales down 15% year over year [27][28] - Cash and cash equivalents at the end of Q2 were $1.6 billion, down $261 million from the previous year [47][48] Business Line Data and Key Metrics Changes - HDMC revenue decreased by 23% in Q2, driven by a 28% decline in motorcycle shipments [34] - HDFS revenue was $257 million, a decrease of 2%, while operating income was $70 million, also down 2% [43][44] - LiveWire reported an operating loss of $19 million, an improvement from a $28 million loss in the prior year [46] Market Data and Key Metrics Changes - North American retail sales were down 17%, while international markets saw a 12% decline [27][28] - In Asia Pacific, retail sales decreased by 21% due to intense competition [31] - The U.S. cruiser category experienced a 6% volume growth, increasing market share to 53% [32] Company Strategy and Development Direction - The company entered strategic partnerships with KKR and PIMCO for HDFS, enhancing flexibility and reducing overall leverage [4][6] - Plans to reduce debt by $450 million and accelerate a $1 billion share buyback program [9][50] - Introduction of new entry-level products and a small displacement motorcycle targeting a price below $6,000 [20][19] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing economic uncertainty and elevated interest rates impacting customer purchasing behavior [10][11] - There is cautious optimism regarding future trade agreements that may mitigate operational impacts [14] - Management expects a significant improvement in retail performance in July, with positive trends anticipated for the remainder of the year [67][68] Other Important Information - The company plans to implement a new efficiency program leveraging technology, including AI, to drive cost savings [11] - The global tariff environment remains uncertain, with an estimated full-year impact from tariffs projected between $50 million and $85 million [42] Q&A Session Summary Question: What are the components used to calculate the 1.75 times book value marker for the HDFS transaction? - The calculation is based on the proceeds from KKR and PIMCO's equity investment relative to the post-transaction book value of HDFS [52][54] Question: What is driving the underlying profitability of HDFS, and what is the normalized profitability expected in 2026? - The profitability has improved due to stabilization in used values and better repossession rates, with normalized earnings expected to be around $240 million to $250 million annually [56][65] Question: How does the company feel about current dealer inventories and the target for year-end? - The company expects a significant reduction in dealer inventory, targeting a double-digit decline by year-end [73] Question: Why was the 4.9% equity sale the right level, and are there any tax ramifications? - The 4.9% limit is due to regulatory requirements from the FDIC, and the $1.25 billion figure is a pretax amount [78][82] Question: Is there any guarantee of growth in retail sales or receivables associated with the HDFS transaction? - There are no guarantees regarding growth rates or loss levels associated with the transaction [89]

Financial Data and Key Metrics Changes - Consolidated revenue in Q2 2025 decreased by 19%, largely in line with expectations across HDMC and HDFS, while revenue also decreased at LiveWire [27] - Consolidated operating income for Q2 was $112 million, a decline of 69% at HDMC, while HDFS operating income decreased by 2% [28] - Earnings per share for Q2 was $0.88, with global retail sales down 15% year-over-year [28][29] - Operating cash flow was $509 million, down $68 million from the prior period, with total cash and cash equivalents at $1.6 billion, a decrease of $261 million year-over-year [46][47] Business Line Data and Key Metrics Changes - HDMC revenue decreased by 23% in Q2, driven by a 28% decline in motorcycle shipments, totaling 36,000 units compared to 50,000 units in the prior year [34] - HDFS revenue was $257 million, a decrease of 2%, with operating income at $70 million, down 2% compared to last year [43] - LiveWire reported an operating loss of $19 million, an improvement from a $28 million loss in the prior Q2, with unit sales down to 55 from 158 [46] Market Data and Key Metrics Changes - North American retail sales were down 17%, while international markets saw a decline of 12% [28][29] - In EMEA, retail was down 5%, with growth in Germany and the Benelux regions offset by declines in France and the UK [30] - Asia Pacific retail was down 21%, attributed to intense competition in the lightweight motorcycle segments [31] Company Strategy and Development Direction - The company has entered strategic partnerships with KKR and PIMCO for HDFS, aiming to enhance long-term value and reduce overall funding costs [3][5] - A new efficiency program will be introduced to enhance productivity, leveraging technology including AI for cost savings [11] - Plans to launch new entry-level products and a small displacement motorcycle are set for 2026, targeting an entry price below $6,000 [20][19] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing economic uncertainty and elevated interest rates impacting customer purchasing behavior [10][29] - There are signs of improvement in customer traffic in North America, with expectations for positive comp growth in the latter half of the year [64][65] - The company remains cautious about the global tariff environment, estimating a full-year impact from tariffs to be between $50 million and $85 million [42] Other Important Information - The HDFS transaction is expected to generate $1.25 billion in cash for Harley Davidson, allowing for debt reduction and share buybacks [9][49] - The company plans to reduce debt by $450 million and invest up to $300 million in future growth opportunities [49] Q&A Session Summary Question: What are the components used to calculate the 1.75 times book value marker for the HDFS transaction? - The calculation is based on the proceeds from KKR and PIMCO for their equity investment in the business, reflecting the premium paid versus the post-transaction book value [51][53] Question: What is driving the underlying profitability of HDFS, and what is the normalized profitability expected in 2026? - The profitability has improved due to stabilization in used values and better repossession rates, with normalized earnings expected to be around $240 million to $250 million annually [55][62] Question: How does the company feel about current dealer inventories and the target for year-end? - The company expects a significant reduction in dealer inventory, targeting a double-digit decline by year-end [69][70] Question: What is the rationale for the 4.9% equity sale in the HDFS transaction? - The 4.9% limit is due to regulatory requirements from the FDIC regarding ownership percentages in the HDFS business [76][78]

Financial Data and Key Metrics Changes - Harley Davidson's consolidated revenue in Q1 2025 decreased by 23% compared to the previous year, with operating income down 51% at HDMC, partially offset by a 19% increase in operating income at HDFS [18][19][26] - The consolidated operating income margin for Q1 was 12.1%, down from 15.2% in the same quarter last year, primarily due to lower volume and dealer inventory management [19][32] - Earnings per share for Q1 was reported at $1.07 [19] Business Line Data and Key Metrics Changes - HDMC revenue decreased by 27% in Q1, driven by a 33% decline in motorcycle shipments, totaling 39,000 units compared to 58,000 units in the prior year [21][22] - HDFS revenue was $245 million, a decrease of 2%, while operating income increased by 19% to $64 million due to lower provisions for credit losses [26][27] - LiveWire segment reported an operating loss of $20 million, which was an improvement from a $29 million loss in the prior year [29] Market Data and Key Metrics Changes - Global retail sales were down 21% in Q1, with a 24% decline in North America, attributed to low consumer confidence [5][6] - EMEA region saw a retail decline of just 2%, while APAC experienced a 28% decline, primarily due to softness in China and Japan [7] - LATAM reported a 6% decline in retail sales year over year [7] Company Strategy and Development Direction - The company is focusing on a significant marketing development fund to support dealer networks and product launches closer to the riding season [6][10] - Harley Davidson plans to introduce new entry-level products and expand its cruiser offerings, aiming for affordability and profitability [10][11] - The company is evaluating its investment in LiveWire due to challenges in the EV segment and plans to drive cost savings to achieve a sustainable business model [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns over the uncertain macroeconomic environment and its impact on consumer confidence, leading to the withdrawal of previous 2025 guidance [12][32] - There is cautious optimism regarding trade deals that may mitigate tariff impacts, although the situation remains fluid [13][56] - Sequential improvement in retail sales was noted from February to April, indicating potential recovery [65][66] Other Important Information - The company achieved $142 million in operating cash flow, an increase from the prior period, and ended Q1 with $1.9 billion in cash and cash equivalents [31][32] - Harley Davidson repurchased 3.4 million shares for $87 million in Q1 as part of its capital allocation strategy [31][33] Q&A Session Summary Question: What might the economics of a long-term strategic partnership look like for Harley Davidson? - Management emphasized the importance of demonstrating the premium value of HDFS and maintaining long-term funding optionality [36][38] Question: Is it fair to say that the genesis of the HDFS sale consideration is due to not receiving full value in stock? - Management confirmed the strategic nature of HDFS and the need to ensure its value is recognized [44][45] Question: Can you provide color on the various tariff sources and their impacts? - Management discussed the significant impact of tariffs, particularly from China, and the proactive measures taken to mitigate these effects [51][57] Question: How has the retail environment changed recently? - Management noted sequential improvement in retail sales from February to April, with expectations for easier comparisons in the second half of the year [65][66] Question: What led to the decision to bring back entry-level bikes? - The decision was based on a strategic focus on selective expansion and the belief that new entry-level models can be competitive and profitable [88][90] Question: What are the annual cost savings targets for LiveWire? - LiveWire is targeting reduced operating losses and cash burn, with significant cost-saving measures in place [98][99]

Financial Data and Key Metrics Changes - Harley-Davidson's consolidated revenue in Q1 2025 decreased by 23% compared to the previous year, with operating income down 51% at HDMC, partially offset by a 19% increase in operating income at HDFS [18][20][26] - The consolidated operating income margin for Q1 was 12.1%, down from 15.2% in the same quarter last year, primarily due to lower volume and efforts to reduce dealer inventory [18][22] - Earnings per share for Q1 was reported at $1.07 [18] Business Line Data and Key Metrics Changes - HDMC revenue decreased by 27% in Q1, driven by a 33% decline in motorcycle shipments, totaling 39,000 units compared to 58,000 units in the prior year [20][21] - HDFS revenue was $245 million, a decrease of 2%, while operating income increased by 19% to $64 million due to lower provisions for credit losses [26][27] - LiveWire segment reported an operating loss of $20 million, which was an improvement from a $29 million loss in the prior year [29] Market Data and Key Metrics Changes - Global retail sales were down 21% in Q1, with a 24% decline in North America, attributed to low consumer confidence [4][5] - EMEA region saw a retail decline of just 2%, while APAC experienced a 28% decline, primarily due to softness in China and Japan [6] - LATAM reported a 6% decline in retail sales year over year [6] Company Strategy and Development Direction - The company is focusing on a selective expansion strategy, planning to introduce new entry-level products and an iconic classic motorcycle starting next year [9][88] - A significant marketing development fund is being allocated to support dealer networks closer to the riding season [5][14] - The company is evaluating its investment in LiveWire due to challenges in the EV segment and plans to drive cost savings to achieve a sustainable business model [10][11][96] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns over the uncertain macroeconomic environment and its impact on consumer confidence, leading to the withdrawal of the 2025 financial guidance [11][31] - There is cautious optimism regarding potential trade deals that may mitigate tariff impacts [12][56] - Sequential improvement in retail sales was noted from February to April, indicating a slight recovery in consumer demand [64][65] Other Important Information - The company achieved $142 million in operating cash flow, an increase of $38 million from the prior year, and ended Q1 with $1.9 billion in cash and cash equivalents [30][31] - Harley-Davidson repurchased 3.4 million shares for $87 million in Q1 as part of its capital allocation strategy [30][33] Q&A Session Summary Question: What might the economics of a long-term strategic partnership look like for Harley Davidson? - Management emphasized the importance of demonstrating the premium value of HDFS and maintaining long-term funding optionality [36][38] Question: Is it fair to say that the strategic nature of HDFS is being reconsidered due to stock valuation? - Management confirmed that while HDFS remains strategic, they are exploring options to ensure its value is recognized in the market [44][46] Question: Can you provide insight into the tariff impacts and anti-American sentiment? - Management clarified that while tariffs pose challenges, the majority of their products are manufactured in the U.S., and they have a U.S.-centric sourcing strategy [50][54] Question: How has the retail environment changed in April compared to previous months? - Management reported sequential improvement in retail sales from February to April, indicating a positive trend [64][65] Question: What led to the decision to bring back entry-level bikes? - The company believes it can now offer competitive entry-level models that are profitable, following significant investments in core business areas [88][89]