Harley-Davidson(HOG) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2024, consolidated revenue decreased by 35%, primarily due to a 47% decline in HDMC revenue, partially offset by a 4% increase in HDFS revenue [45] - Consolidated operating loss in Q4 was $193 million, compared to an operating loss of$ 21 million in Q4 2023 [46] - Full year 2024 consolidated revenue was $5.2 billion, an 11% decrease compared to the previous year, with consolidated operating income of$ 417 million, down 47% from 2023 [48] - Earnings per share for 2024 was $3.44, down from$ 4.97 in 2023 [50] Business Line Data and Key Metrics Changes - HDMC revenue decreased by 15% for the full year 2024, while HDFS revenue increased by 9% [48] - LiveWire reported an operating loss of $110 million for 2024, with a 31% decline in revenue [49][40] - HDMC's operating income was$ 278 million, down 58% from the prior year, while HDFS operating income was $248 million, up 6% [49] Market Data and Key Metrics Changes - Global retail sales of new motorcycles declined by 15% in Q4 2024, with North America down 13% and international sales down 17% [50] - For the full year 2024, global retail sales were down 7%, with North America retail sales declining by 4% and international sales down 13% [54] - EMEA retail sales were down 11% for the full year, while Asia Pacific retail sales declined by 18% [52][53] Company Strategy and Development Direction - The company continues to execute its Hardwire strategy, focusing on profitable growth despite macroeconomic challenges [6] - The launch of new models, particularly in the Touring segment, has contributed to market share gains, with Harley-Davidson achieving a 74.5% market share in the US Touring segment [7][12] - The company plans to invest in entry-level motorcycles and small cruisers, as well as expand into the adventure touring segment [14][15] Management's Comments on Operating Environment and Future Outlook - Management noted that the high interest rate environment has impacted consumer confidence and affordability [6] - The company expects flat retail sales for 2025, with positive performance skewed towards the second half of the year [34][80] - Management is cautious about macroeconomic conditions but believes the company is well-positioned for future growth [35] Other Important Information - The company achieved operating cash flow of over$ 1 billion in 2024, a nearly 40% increase from the prior year [24] - Total headcount was down by 7% compared to the end of Q4 2023, contributing to cost productivity savings of $257 million [23][68] - The company repurchased 12.5 million shares in 2024, totaling$ 450 million, as part of its capital allocation strategy [78] Q&A Session Summary Question: Inventory reduction expectations for touring - Management expects dealer inventory to end the year down 10%, with a more pronounced decrease in the first half of the year [92][93] Question: Margin surprise in Q4 - The margin surprise was attributed to lower volumes, manufacturing costs, and retooling expenses, impacting overall operating income margin [102] Question: Retail outlook for 2025 - Management anticipates a better performance in the second half of 2025 compared to the first half, driven by new product launches and customer awareness [106][108]