Harley-Davidson (HOG 13.38%), the storied American motorcycle manufacturer, reported its Q2 2025 results on July 30, 2025. The most important news from the release was the company's revenue beat, with GAAP sales reaching $1,307 million—well ahead of the $1,099 million analyst consensus. However, earnings per share (GAAP) fell short at $0.88, under the expected $0.96. Year-over-year, most core metrics showed steep declines: revenue dropped 19%, operating income slid 53%, and earnings per share were down 46%. ...

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%, with operating income at $160 million, a decline of 51% at HDMC, partially offset by a 19% increase in HDFS operating income [20][28] - The consolidated operating income margin for Q1 was 12.1%, down from 15.2% in the previous year, primarily due to lower volume impacting dealer inventory [20][25] - Earnings per share for Q1 was reported at $1.7, reflecting the overall decline in revenue and operating income [21] 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 [22][23] - 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 [27][28] - LiveWire segment reported an operating loss of $20 million, with revenue decreasing due to lower unit sales of electric motorcycles [30] 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 [11][88] - The company is evaluating its investment in LiveWire due to challenges in the EV market, including slower adoption rates and regulatory hurdles [12][97] 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 [13][34] - There is cautious optimism regarding potential trade deals that may mitigate tariff impacts, although the situation remains fluid [14][59] - Sequential improvement in retail sales was noted from February to April, indicating a slight recovery in consumer demand [66] Other Important Information - The company achieved $142 million in operating cash flow, an increase of $38 million from the prior period, with total cash and cash equivalents at $1.9 billion [31][32] - Harley-Davidson repurchased 3.4 million shares for $87 million in Q1 2025 as part of its capital allocation strategy [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 attractive offers for customers and dealers [39][40] Question: What has changed regarding the strategic value of HDFS? - The focus is on ensuring a market-based view of HDFS's value while still recognizing its strategic importance to the company [42] Question: Can you provide insight into the tariff impacts and anti-American sentiment? - Management noted that while tariffs pose challenges, the company has a strong U.S.-centric manufacturing base, and there has not been significant negative sentiment affecting sales [56][64] Question: How is the retail environment evolving, especially in April? - Sequential improvement was observed in retail sales from February to April, with management noting that April showed signs of recovery compared to March [66] Question: What led to the decision to bring back entry-level bikes? - The company aims to capitalize on the opportunity to create profitable entry-level models, having previously focused on core business investments [88] Question: How are cost savings being tracked for LiveWire? - LiveWire is projected to reduce operating losses significantly, with ongoing efforts to drive cost savings and achieve a sustainable business model [97]

Harley-Davidson (HOG) Q1 2025 Earnings Call May 01, 2025 09:00 AM ET Company Participants Shawn Collins - Director of IRJochen Zeitz - Chairman, President & CEOJonathan Root - Chief Financial Officer and President, Commercial Harley-Davidson, Inc.Robin Farley - Managing DirectorAlexander Perry - Director, Equity ResearchKarim Donnez - CEODavid Macgregor - President Conference Call Participants Craig Kennison - Director of Research Operations & Senior Research AnalystJoseph Altobello - MD & Senior AnalystJam ...

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]