Harley-Davidson(US:HOG)2024-04-25 16:45Financial Data and Key Metrics Changes - Consolidated revenue in Q1 2024 decreased by 3%, driven by a 5% decline in HDMC revenue, partially offset by a 12% growth in HDFS revenue [24] - Consolidated operating income fell by 29%, with HDMC down 29% and HDFS down 8%, while LiveWire reported an operating loss of $29 million [24] - Q1 earnings per share was $1.72, with global retail sales of new motorcycles flat compared to the prior year [25] Business Line Data and Key Metrics Changes - HDMC revenue decreased by 5% in Q1, with a decline attributed to decreased wholesale volume and pricing adjustments [27] - HDFS revenue increased by $26 million or 12%, driven by higher retail and commercial finance receivables [30] - LiveWire segment revenue decreased despite higher unit sales due to product mix and a change in retail partner strategy, resulting in an operating loss of $29 million [32] Market Data and Key Metrics Changes - North America saw a 6% growth in retail sales, while EMEA and Asia Pacific experienced declines of 11% and 12% respectively [25][26] - Dealer inventory at the end of Q1 was up approximately 26% compared to the end of Q1 2023, indicating a healthy position as the riding season approaches [26] Company Strategy and Development Direction - The company is focused on its Hardwire strategy, emphasizing profit focus, product redevelopment, and expanding its electric vehicle offerings through LiveWire [8][14] - The launch of the new Street Glide and Road Glide models is seen as a significant investment and a key driver for future growth [10][11] - The company aims to return excess free cash flow to shareholders through share repurchases and dividends, having returned nearly $1 billion since 2022 [20][33] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of high interest rates on consumer confidence and affordability but noted positive customer enthusiasm for motorcycles [6] - The outlook for HDMC expects retail units to be flat to up 9%, with wholesale unit shipments projected to decline between 1% and 10% compared to the prior year [17] - Management remains optimistic about the new motorcycle lineup and the potential for improved performance in the second half of the year [68] Other Important Information - The company plans to centralize LiveWire operations in Milwaukee to enhance efficiency and reduce costs [23] - The second Annual Homecoming event is scheduled for July 25 to 28, aiming to strengthen community ties and brand engagement [16] Q&A Session Summary Question: Health of the dealer network amidst macro stress - Management expressed that dealer sentiment is generally positive, with enthusiasm for new models, but acknowledged concerns regarding the impact of rising interest rates on dealer health [39][40] Question: Breakdown of retail growth between model years - Retail growth in North America was primarily driven by the redesigned 2024 models, with a significant portion of sales initially coming from 2023 models [48][49] Question: Expectations for HDMC gross margins - Management confirmed that Q1 gross margins were in line with expectations, with a forecast for modest improvements moving forward [59][60] Question: Seasonal trends in retail credit losses - Management expects retail credit losses to follow a normal seasonal pattern, with Q1 typically being the highest quarter [78] Question: Adoption of flex financing - Initial adoption of flex financing has been positive, but full integration into the dealer network is expected to take 12 to 24 months [75]