Harley-Davidson(US:HOG)2020-04-28 18:18Financial Data and Key Metrics Changes - In Q1 2020, consolidated net income decreased year-over-year, with EPS reported at $0.45, reflecting the impact of COVID-19 on operations [22][23] - Motorcycle segment operating income was lower due to decreased shipments and unfavorable currency effects, although strong manufacturing productivity partially offset these declines [22][27] - Financial services operating income fell by 60.9%, primarily due to adjustments in loan loss provisions related to COVID-19 [22][29] Business Line Data and Key Metrics Changes - Worldwide retail sales of new Harley-Davidson motorcycles decreased by 17.7% compared to the previous year, with significant declines noted in the latter part of March due to COVID-19 [23][24] - U.S. retail sales were down 15.5%, with a peak growth of 6.6% in the first half of March before a sharp decline due to dealer closures [24][25] - International retail sales dropped by 20.7%, with EMEA markets experiencing a 28.4% decline [26] Market Data and Key Metrics Changes - U.S. market share for new bike registrations fell to 48.9%, a decrease of 2.2 percentage points, influenced by competitive discounting and a shift in sales mix [24] - In the EMEA region, market share decreased to 7.6%, down 1.3 percentage points, affected by increased competition and unfavorable sales mix [26] Company Strategy and Development Direction - The company is implementing "The Rewire," a strategic plan aimed at realigning priorities, execution, and operating models to drive sustained profit and long-term growth [12][14] - Focus will be on enhancing core strengths while balancing expansion into new markets, with an emphasis on profitable segments [14][15] - The company plans to simplify product launches and align them with market demands, particularly focusing on Adventure Touring, Streetfighter, and Electric segments [16][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the significant challenges posed by COVID-19 and emphasized the need for swift and decisive actions to navigate the crisis [5][6] - The company remains committed to preserving cash and securing additional liquidity, with a strong liquidity position of nearly $2.5 billion at the end of the quarter [9][33] - Management expressed confidence in the brand's long-term potential despite current challenges, highlighting the importance of disciplined inventory management and cost control [22][23] Other Important Information - The company has suspended discretionary share repurchases and reduced its Q2 cash dividend to $0.02 per share, down from $0.38 in Q1 [8] - The organization is undergoing structural changes to enhance decision-making speed and reduce complexity [11][17] Q&A Session Summary Question: What drove the strong retail sales performance prior to COVID? - Management noted that strong dealer performance and new model introductions contributed to a 6.6% growth in retail sales before the pandemic [36][37] Question: How is the CEO search progressing? - The acting CEO stated that the focus is on implementing the Rewire plan and there is no update on the CEO search at this time [41][42] Question: What is the outlook for HDFS and credit loss provisions? - Management explained that the increase in reserves was influenced by the new CECL accounting standard and economic conditions, with expectations of further increases in the second quarter [45][46][49] Question: How does the company plan to optimize the dealer network? - The company is actively monitoring dealer performance and exploring opportunities for consolidation and online sales to strengthen the dealer network [67][71]