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01/10 19:55
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Earnings Per Share (EPS) $1.07, an increase from expectations of $0.80.
Operating Income Margin 12.1%, down from 15.2% year-over-year, a decline of 310 basis points primarily due to lower volume and dealer inventory management.
Consolidated Revenue $1.1 billion, down 23% year-over-year, largely due to decreased wholesale volume and lower retail sales.
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.
Gross Margin 29.1%, down from 31.2% year-over-year, a decrease of 210 basis points due to lower operating leverage and modest cost inflation.
Operating Expenses $199 million, down $24 million from the prior year.
HDFS Revenue $245 million, a decrease of 2% year-over-year, driven by lower retail and commercial receivables.
HDFS Operating Income $64 million, up $10 million or 19% year-over-year, driven by lower provision for credit losses and operating expenses.
Operating Cash Flow $142 million, up $38 million from the prior year, due to lower net cash outflows for wholesale financing.
Total Cash and Cash Equivalents $1.9 billion, which is $467 million higher than at the end of Q1 last year.
Share Repurchases 3.4 million shares bought back at a value of $87 million in Q1 2025.
LiveWire Operating Loss $20 million, an improvement from a $29 million loss in the prior year.
LiveWire Cash Burn $18 million, which is $9 million less than Q1 of 2024.
Retail Credit Loss Ratio 3.8%, slightly up from 3.7% in the prior year.
Total Retail Loan Originations Down 22% year-over-year.
Total Quarter End Net Financing Receivables $7.4 billion, down 6% versus prior year.
New Product Launch: In early March, Harley-Davidson launched the CVO Road Glide RR, a limited production motorcycle that sets a new benchmark for street-legal performance bagger, with production limited to 131 hand-assembled motorcycles.
Entry-Level Product Development: Harley-Davidson plans to introduce new entry-level products in smaller displacements and an iconic classic for the US and international markets starting next year.
Touring Motorcycle Innovations: Plans to introduce more innovations in touring and trunk motorcycle platforms as part of the hardwire strategy.
Market Expansion Strategy: The decision to roll out the model-year 2025 campaign later in the year in the US to align with the riding season, with a significant marketing development fund allocated to support dealers.
International Market Performance: EMEA retail sales down 2%, APAC down 28% primarily due to China and Japan, and LATAM down 6% year-over-year.
Operational Efficiency: Harley-Davidson achieved $24 million of unlevered productivity savings in Q1, primarily from logistics and supply chain initiatives.
Inventory Management: Global wholesale shipments were down 33% and dealer inventory was down 19% compared to Q1 last year.
Strategic Shift in Financial Services: Harley-Davidson is evaluating options for its investment in LiveWire, focusing on cost savings and sustainable business models.
Withdrawal of Financial Guidance: Due to macroeconomic uncertainty, Harley-Davidson has withdrawn its previous 2025 financial guidance.
Retail Sales Decline: Global retail sales were down 21% in Q1, with a 24% decline in North America, primarily due to low consumer confidence in an uncertain macro environment.
Inventory Management: Global wholesale shipments were down 33%, and dealer inventory was down 19%, indicating challenges in managing inventory levels amid declining sales.
Economic Uncertainty: The company is facing significant macroeconomic uncertainty, which has led to the withdrawal of previous 2025 guidance until there is more clarity.
Tariff and Trade Issues: Ongoing changes in global tariff and trade policies create unpredictability, with an estimated impact from new tariffs ranging from $130 million to $175 million.
LiveWire Investment Risks: Harley-Davidson is evaluating its investment in LiveWire due to headwinds in the EV segment, including a less favorable regulatory environment and slower EV adoption.
Consumer Discretionary Spending: The uncertain macro environment is affecting consumer discretionary spending, particularly for high-ticket items like motorcycles.
Credit Losses: Retail credit losses are influenced by the current macroeconomic environment, with a retail credit loss ratio of 3.8% in Q1.
Operating Income Margin: HDI operating income margin for the quarter came in at 12.1%.
Marketing Development Fund: The Marketing Development Fund is the most significant co-marketing investment made in the company’s history, aimed at supporting dealers.
New Product Launches: Planning to introduce new entry-level products in smaller displacements and an iconic classic for US and international markets starting next year.
Productivity Cost Program: Expecting to drive a $400 million improvement in productivity by 2025, with $257 million achieved from 2022 to 2024.
LiveWire Investment Evaluation: Harley-Davidson is evaluating all options for its investment in LiveWire, including seeking external capital.
2025 Financial Guidance: With uncertainty in the macro environment, Harley-Davidson is withdrawing its previous 2025 guidance.
Capital Expenditures: Capital expenditures are now projected to be in the range of $200 million to $225 million.
Share Repurchases: Plans to deliver on $1 billion in share repurchases by the end of 2026.
Tariff Impact: Estimated 2025 impact from new tariffs to be in the range of $130 million to $175 million.
Operating Losses for LiveWire: LiveWire now expects operating losses of approximately $59 million for the full year.
Share Repurchase Program: In Q1 of 2025, Harley-Davidson bought back 3.4 million shares of its stock at a value of $87 million.
Capital Allocation Strategy: Harley-Davidson plans to return capital to shareholders, with a commitment to execute discretionary share repurchases as part of its capital allocation strategy.
Shareholder Return Commitment: The company aims to deliver $1 billion in share repurchases by the end of 2026, having returned $1.5 billion in capital to shareholders since 2022.
Total Shareholder Return: As of mid-April, Harley-Davidson's stock has outperformed its peer group by 10 percentage points over the past five years, 3 percentage points over the last three years, and 7 percentage points over the last year.
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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