Financial Data and Key Metrics Changes - Consolidated revenue in Q3 2025 increased by 17%, driven by a 23% increase in HDMC revenue, which rose by $198 million compared to the prior year [16][20] - Consolidated operating income for Q3 was $475 million, primarily influenced by HDFS operating income, which was positively impacted by the HDFS transaction [16][22] - Earnings per share for Q3 was $3.10, with global retail down 6% [17][30] - HDFS revenue decreased by 3%, while LiveWire revenue increased by 16% [16][30] Business Line Data and Key Metrics Changes - HDMC's operating income decreased by 2% year-over-year, while LiveWire reported an operating loss of $18 million [16][30] - HDMC gross margin was 26.4%, down from 30.1% in the prior year, due to unfavorable operating leverage and increased tariffs [21][22] - HDFS's operating income increased by 472% year-over-year, driven by a lower provision for credit losses and higher other income [26][28] Market Data and Key Metrics Changes - Global retail was down 6%, with North America down 5% and international markets down 9% [17][30] - In North America, the Softail family saw a 9% increase, while Adventure Touring bikes were up 4% [18][19] - EMEA retail was down 17%, but non-core segments like Adventure Touring and Nightster motorcycles showed strong growth [19][20] - In Latin America, retail was up 16%, marking the first quarter of growth since Q3 2024 [19][20] Company Strategy and Development Direction - The company is focused on improving dealer health and profitability, with immediate actions to enhance motorcycle inventory management and introduce market-responsive promotions [5][6] - The HDFS transaction aims to transform the business into a capital-light model, unlocking $1.2 to $1.25 billion in discretionary cash [14][15] - Future strategies include enhancing product accessibility, improving speed to market, and focusing on cost and capital efficiency [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment in Q3 results but highlighted the strategic value of the HDFS transaction [6][16] - The current macro environment is challenging, with high interest rates and inflation impacting consumer confidence [17][30] - Management is optimistic about future product launches and the potential to attract younger riders through new offerings [36][38] Other Important Information - The company plans to use proceeds from the HDFS transaction for debt reduction, share buybacks, and organic growth initiatives [32][31] - Total cash and cash equivalents at the end of Q3 were $1.8 billion, down $469 million from the previous year [31] Q&A Session Summary Question: Thoughts on demographic headwinds facing Harley-Davidson - Management acknowledged the need to attract younger riders and emphasized the importance of a fun and welcoming dealership experience [36][37] Question: Elaboration on market-responsive promotions - Management indicated that high dealer inventory levels necessitate promotional activities to drive sales, particularly for Touring models [39][40] Question: Impact of the HDFS transaction on operating income - Management confirmed that the transaction is expected to provide a $275-$300 million operating income benefit in the second half of the year [44][46] Question: Expectations for fourth quarter retail performance - Management noted improvements in dealer traffic but refrained from providing specific guidance due to market uncertainties [57][58] Question: Shipment expectations for 2026 - Management indicated that inventory levels are being managed carefully, with a focus on reducing Touring inventory while preparing for new model launches [52][54]

Financial Data and Key Metrics Changes - Consolidated revenue in Q3 increased by 17%, driven by a 23% increase in HDMC revenue, amounting to an additional $198 million compared to the prior year [23] - Consolidated operating income for Q3 was $475 million, primarily influenced by the HDFS transaction, with an operating income margin of 35.4%, significantly up from 9.2% in the same quarter last year [24] - Earnings per share for Q3 was reported at $3.1, with a decline in global retail by 6% [25] Business Line Data and Key Metrics Changes - HDMC revenue rose by 23% in Q3, with motorcycle shipments up 33% to 36,500 units, while HDFS revenue decreased by 3% and LiveWire revenue increased by 16% [24][25] - LiveWire reported a consolidated operating loss of $18 million, but improved its operating loss by 30% or $8 million compared to the previous year [41] Market Data and Key Metrics Changes - Global retail was down 6%, with North America down 5% and international markets down 9%, reflecting soft demand due to high interest rates and inflation concerns [25] - In North America, the Softail family saw a growth of 9%, while Adventure Touring bikes increased by 4% [25][26] - In Latin America, retail was up 16%, marking the first quarter of growth for the region since 2024 [29] Company Strategy and Development Direction - The company is focusing on improving dealer health and profitability, with immediate actions to enhance motorcycle inventory management and introduce market-responsive promotions [6][7] - The strategic partnership with KKR and PIMCO aims to transform HDFS into a capital-light model, unlocking $1.2 billion to $1.25 billion in discretionary cash through 2026 [21][22] - Future product offerings will balance aspiration with accessibility to attract new riders, with a focus on affordability and speed to market [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment in the Motor Company's results but highlighted the positive impact of the HDFS transaction [10] - The current macro environment is challenging, with high interest rates affecting consumer confidence, but there is optimism about improving dealer engagement and sales performance [25][46] - The company plans to provide more details on its strategy and expectations in the spring of next year [45] Other Important Information - Global dealer motorcycle inventories decreased by 13% compared to the end of 2024, with a commitment to further reduce inventory levels [30] - The company has returned $1.7 billion to shareholders through share repurchases and dividends since the start of 2022 [43] Q&A Session Summary Question: How does the company plan to address demographic headwinds? - Management acknowledged the need to attract younger riders and plans to enhance the brand's image and product offerings to make them more appealing to younger demographics [50][54] Question: Can you elaborate on market-responsive customer promotions? - Management indicated that high dealer inventory levels necessitate immediate promotional actions, including local marketing initiatives and lower APR financing options to drive sales [56][60] Question: What is the expected impact of the HDFS transaction on future operating income? - Management confirmed that the transaction is expected to provide significant operating income benefits, with $275 million to $300 million anticipated in the second half of the year [65][68] Question: What are the shipment expectations for 2026? - Management indicated that while they are not providing specific guidance for 2026, they expect to continue reducing dealer inventory and improving sales performance [71][75] Question: How is the company addressing the current retail environment? - Management noted that they are seeing sequential improvements in dealer traffic and are focused on enhancing marketing strategies to drive sales [86]