Financial Data and Key Metrics Changes - Consolidated revenue for Q2 2025 decreased by 19%, primarily due to a planned reduction in motorcycle shipments and soft demand [10][27] - Consolidated operating income was $112 million, reflecting a 69% decline at HDMC, while HDFS operating income decreased by 2% [28][43] - Earnings per share for Q2 was $0.88, with global retail sales down 15% year over year [28][29] - Operating cash flow decreased by $68 million from the prior period, totaling $509 million [47] Business Line Data and Key Metrics Changes - HDMC revenue decreased by 23% in Q2, driven by a 28% decline in motorcycle shipments [34][35] - HDFS revenue was $257 million, down 2% due to lower retail and commercial receivables [43] - 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 [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 entered strategic partnerships with KKR and PIMCO for HDFS, aiming to enhance long-term value and reduce overall funding costs [4][5] - Plans to reduce debt by $450 million and accelerate a $1 billion share buyback program were announced [9][49] - The introduction of new entry-level products and a small displacement motorcycle is scheduled for 2026, 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 are signs of improvement in customer traffic in North America, with expectations for positive retail performance in the second half of the year [66][67] - The company remains cautious about the global tariff environment, estimating a full-year impact of $50 million to $85 million from tariffs [42] Other Important Information - The HDFS transaction is expected to generate $1.25 billion in cash for Harley Davidson, representing about 40% of the current market cap [9][10] - The company is committed to returning capital to shareholders despite the challenging operating environment [48] 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 in the business, reflecting the premium paid versus the post-transaction book value [52][54] Question: What is driving the underlying profitability of HDFS? - The profitability has improved due to stabilization in used motorcycle values and better repossession rates, contributing positively to HDFS performance [56][58] Question: How does the company view current dealer inventories and what is the target for year-end? - The company expects a significant reduction in dealer inventory, targeting a double-digit decline by year-end [71] Question: What is the timing of the model launch shift? - The model year shift is planned for the fall, with new models being introduced to maintain excitement in dealerships [73][74] Question: Are there any guarantees associated with the HDFS transaction regarding growth in retail sales? - There are no guarantees for maintaining certain growth rates or loss levels; however, there is confidence in the business's ability to run profitably through cycles [88][89]