2025-05-01 14:00Financial 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]