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01/10 20:45
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary reveals several negative aspects: a decline in HDFS revenue and operating income, decreased LiveWire unit sales, and a significant drop in consolidated operating income margin. The Q&A section highlights reduced consumer demand and higher interest rates impacting retail loan originations. Although there are positive elements like improved profitability in HDFS and expected retail sales growth, the overall sentiment is negative due to the withdrawal of 2025 guidance and macroeconomic uncertainties. Given the market cap, the stock price is likely to experience a negative reaction in the range of -2% to -8%.
HDFS operating income Expected to boost by $275 million to $300 million in fiscal year 2025 due to the strategic partnership with KKR and PIMCO, which includes selling over $5 billion of existing gross consumer retail loan receivables at a premium to par value.
Consolidated revenue Declined 19% year-over-year in Q2 2025, primarily due to a planned reduction in motorcycle shipments and soft demand.
Global motorcycle retail sales Down 15% year-over-year in Q2 2025, reflecting elevated interest rates, customer purchasing behavior, product demand softness, and overall economic uncertainty.
Dealer inventory Reduced by 28% globally compared to Q2 2024, aligning with the company's commitment to rightsize inventory and better match demand.
HDMC revenue Decreased by 23% in Q2 2025, driven by a 28% decline in motorcycle shipments and other factors like pricing and mix.
HDMC gross margin Decreased to 28.6% in Q2 2025 from 32.1% in Q2 2024, due to lower operating leverage and modest cost inflation.
HDFS revenue Came in at $257 million in Q2 2025, a decrease of 2% year-over-year, driven by modestly lower retail and commercial receivables.
HDFS operating income Decreased by 2% year-over-year in Q2 2025, driven by lower net interest income and higher operating expenses, partially offset by lower provision for credit losses.
LiveWire operating loss Improved by 34% year-over-year in Q2 2025, reflecting reduced operating expenses and cash burn.
LiveWire unit sales Decreased to 55 units in Q2 2025 from 158 units in Q2 2024, due to macroeconomic uncertainty and lack of incentives.
Consolidated operating income margin Declined to 8.6% in Q2 2025 from 14.9% in Q2 2024, primarily due to lower volume and reduced dealer inventories.
Retail loan originations Down 15% year-over-year in Q2 2025, reflecting reduced consumer demand and higher interest rates.
Operating cash flow Decreased by $68 million year-over-year in Q2 2025, due to lower net income and working capital activity.
New small displacement motorcycle: Harley-Davidson plans to launch its first small displacement motorcycle inspired by the iconic Springer model, targeting an entry price below $6,000. This product is aimed at U.S. and international markets and is expected to be released in the first half of 2026.
Racing-inspired CVO Road Glide RR: Introduced a limited production race replica priced at $110,000, which generated an oversubscribed waitlist and preorders.
LiveWire new models: LiveWire plans to launch production versions of two new concept models targeting lightweight, off-road, and urban-friendly mobility solutions, with formal launches expected in November.
Market share in Cruiser segment: Harley-Davidson gained 3 points of market share in the U.S. Cruiser segment, growing to 53% in Q2 2025.
Global motorcycle retail sales: Sales were down 15% year-over-year, with North America down 17% and international markets down 12%.
New tax incentive in the U.S.: Interest paid on loans for new U.S.-built motorcycle purchases up to $10,000 annually is now tax deductible, expected to stimulate demand.
HDFS transaction: Entered into a strategic partnership with KKR and PIMCO, selling a minority stake in HDFS and transforming it into a capital-light financing business. This transaction is expected to generate $1.25 billion in cash for Harley-Davidson and boost HDFS operating income by $275-$300 million in 2025.
Dealer inventory reduction: Global dealer inventory levels were reduced by 28% compared to Q2 2024, aligning with the company’s commitment to better match demand.
Productivity initiatives: Achieved $48 million in productivity savings in the first half of 2025, primarily from logistics and supply chain improvements.
New racing series partnership with MotoGP: Announced a new racing series featuring Harley-Davidson bagger motorcycles, set to launch in 2026, aiming to enhance brand visibility and innovation.
Tariff mitigation strategies: Engaged with governments to address global tariff challenges, with cautious optimism for future trade agreements.
Debt reduction and share buyback: Plans to reduce debt by $450 million and accelerate a $1 billion share buyback program, with $500 million targeted for the second half of 2025.
Global motorcycle retail sales: Sales were down 15% year-over-year, reflecting elevated interest rates, soft product demand, and overall economic uncertainty.
Dealer inventory: Global dealer motorcycle inventories were down 28% compared to Q2 '24, aligning with the company's commitment to rightsize inventory, but this reduction could impact short-term revenue.
Tariff environment: The fluid global tariff environment and negative consumer sentiment remain challenges, with direct tariff costs expected to range from $50 million to $85 million in 2025.
Interest rates and economic uncertainty: Persistently higher-than-expected interest rates and economic uncertainty are impacting customer purchasing behavior and overall demand.
LiveWire segment: LiveWire reported a 34% improvement in operating loss but continues to face challenges with lower unit sales and lack of consumer incentives for EV products.
HDFS credit losses: Retail credit losses increased slightly, with delinquencies remaining elevated due to higher bike payments and inflationary pressures.
Production volumes: Lower production volumes resulted in higher fixed costs per unit, negatively impacting gross margins.
Competitive pressures: Competitors leaned heavily on promotional activity, while Harley-Davidson exercised greater restraint, potentially impacting market share.
Asia Pacific market: Retail sales were down 21% due to intense competition in lightweight and smaller motorcycle segments, particularly in Japan and China.
North American market: Customer traffic in dealerships remained low, although conversion rates were stable. Elevated interest rates and macroeconomic uncertainty continue to weigh on performance.
HDFS Transaction and Financial Impact: Harley-Davidson has entered into strategic partnerships with KKR and PIMCO for HDFS. The transaction is expected to significantly increase HDFS' return on equity (ROE) to the high 20s and boost HDFS earnings by $275 million to $300 million in operating income for 2025. The company plans to reduce debt by $450 million and accelerate its $1 billion share buyback program, with $500 million targeted for the second half of 2025. Additionally, $300 million will be allocated to future growth opportunities.
New Efficiency Program: In response to ongoing economic uncertainty and high interest rates, Harley-Davidson plans to introduce a new efficiency program leveraging technology, including AI, to deliver substantial cost savings and productivity gains.
New Product Launches: The company plans to launch a small displacement motorcycle priced below $6,000 in the first half of 2026, targeting U.S. and international markets. This will be followed by an iconic entry-level Cruiser motorcycle. Both products aim to drive future profitable growth and expand Harley-Davidson's market segments.
Racing Initiatives: Harley-Davidson announced a new racing series in 2026 featuring bagger motorcycles, in partnership with MotoGP. This initiative aims to enhance brand visibility and innovation.
LiveWire Strategic Pivot: LiveWire plans to launch production versions of two new concept models in November 2025, targeting lightweight, off-road, and urban-friendly mobility solutions. This aligns with broader EV adoption trends and aims to reduce operating losses.
Global Tariff Environment: The company estimates full-year 2025 tariff costs to range between $50 million and $85 million, down from previous estimates. Harley-Davidson is implementing mitigation strategies and remains optimistic about future trade agreements.
Share Buyback Program: With the cash generated from the HDFS transaction, Harley-Davidson plans to accelerate its $1 billion share buyback program announced last year. The company intends to purchase $500 million in the second half of 2025. This is part of their broader capital allocation strategy to return value to shareholders.
The earnings call presents a mixed picture. Positive factors include strategic partnerships, new product launches, and a significant increase in HDFS operating income. However, global retail sales are down, margins have declined, and the company has withdrawn guidance, which typically leads to negative sentiment. The Q&A reveals management's optimism about future strategies but also highlights demographic challenges and high inventory levels. Considering the market cap, the overall sentiment is neutral, indicating a small potential stock price movement within the -2% to 2% range over the next two weeks.
The earnings call summary reveals several negative aspects: a decline in HDFS revenue and operating income, decreased LiveWire unit sales, and a significant drop in consolidated operating income margin. The Q&A section highlights reduced consumer demand and higher interest rates impacting retail loan originations. Although there are positive elements like improved profitability in HDFS and expected retail sales growth, the overall sentiment is negative due to the withdrawal of 2025 guidance and macroeconomic uncertainties. Given the market cap, the stock price is likely to experience a negative reaction in the range of -2% to -8%.
The earnings call reveals several concerning points: a significant decline in revenue and operating income margins, coupled with weak guidance for 2025. Despite a positive EPS surprise, the overall financial health appears strained, with declining shipments and retail sales. The Q&A section highlights uncertainties about strategic partnerships and the HDFS division, adding to investor concerns. The market cap suggests moderate volatility, but the negative financial indicators and lack of clear strategic direction are likely to result in a stock price decline over the next two weeks.
The earnings call summary indicates a challenging financial performance with declines in global retail sales, wholesale shipments, HDMC revenue, and gross margin. Although there are some positives, such as increased operating cash flow and share repurchases, the flat to declining guidance for 2025 and uncertainties around HDFS and tariffs weigh negatively. The Q&A section reveals concerns about management clarity and strategic direction. Given the market cap, the stock is likely to experience a negative reaction, with a projected movement between -2% and -8% over the next two weeks.
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