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01/10 19:54
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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 However, global retail sales are down, margins have declined, and the company has withdrawn guidance, which typically leads to negative sentiment.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.
Consolidated revenue $475 million in Q3 2025, up 17% year-over-year. This increase was largely driven by a 23% rise in HDMC revenue, offset by a 3% decline in HDFS revenue and a 16% increase in LiveWire revenue.
HDMC revenue $198 million increase in Q3 2025, up 23% year-over-year. This was driven by a 33% increase in motorcycle shipments (36,500 units), flat pricing net of sales incentives, a 2% increase from mix, and a 1% growth from foreign exchange impacts.
HDFS operating income $362 million increase in Q3 2025, up 472% year-over-year. This was primarily due to a $301 million benefit from the reversal of the allowance for credit losses, a $27 million gain on the sale of securitization residual interest, and higher other income, partially offset by lower net interest income and higher operating expenses.
LiveWire operating loss $18 million in Q3 2025, an improvement of $8 million (30%) year-over-year. This was driven by increased electric bike revenue and lower selling, administrative, and engineering expenses.
Global retail sales Down 6% in Q3 2025 year-over-year. North America was down 5%, international markets were down 9%, reflecting soft demand due to unfavorable consumer confidence, high interest rates, and inflation concerns.
Softail family sales Up 9% in North America in Q3 2025 year-over-year, driven by the revised product lineup. Globally, Softail family sales also delivered positive growth.
Global dealer motorcycle inventories Down 13% at the end of Q3 2025 compared to Q3 2024. This reduction aligns with the company's focus on better matching inventory with demand.
HDMC gross margin 26.4% in Q3 2025, down from 30.1% in Q3 2024. The decline was due to unfavorable operating leverage, $27 million in new or increased tariffs, and unfavorable foreign currency impacts, partially offset by favorable pricing and mix.
HDFS retail credit loss ratio 3.2% in Q3 2025, slightly up from 3.1% in Q3 2024. Retail credit losses were $35 million in Q3 2025.
LiveWire unit sales 184 units in Q3 2025, up from 99 units in Q3 2024. This increase was driven by the Twist & Go promotion.
Operating cash flow $417 million in Q3 2025 year-to-date, down from $931 million in Q3 2024 year-to-date. The decline was due to new originations of retail finance receivables classified as held for sale.
Total cash and cash equivalents $1.8 billion at the end of Q3 2025, down $469 million from Q3 2024. This includes $16 million at LiveWire.
Softail family: Delivered strong growth of 9% in North America, reflecting the strength of the revised product lineup.
Adventure Touring bikes: Up 4% in Q3 2025, driven by the refreshed 2025 Adventure Touring lineup, including the Pan America 1250 ST.
LiveWire S4 Honcho: Successfully launched in September, met with positive reception, and expected to be on streets next year.
U.S. market share in large cruiser category: Expanded from 61% in Q3 2024 to 68% in Q3 2025, driven by the updated Softail lineup.
Latin America: Retail up 16%, with significant growth in Brazil and Mexico, marking the first quarter of growth since Q3 2024.
APAC region: Retail down 3%, but Japan showed positive growth for the first time since Q4 2023, with strong performance in Thailand, Malaysia, and Taiwan.
HDFS transaction: Transformed into a capital-light model, unlocking $1.2-$1.25 billion in discretionary cash by Q1 2026 and reducing capital requirements.
Dealer inventory management: Global dealer motorcycle inventories reduced by 13% at the end of Q3 2025 compared to Q3 2024, with a focus on better matching inventory with demand.
Productivity cost program: Achieved $75 million in productivity savings year-to-date, with a target of $100 million for 2025.
Dealer network health: Focus on improving dealer profitability, introducing market-responsive promotions, and suspending penalties for noncompliance with facility guidelines for 12 months.
E-commerce strategy: Assessing alternative approaches to better meet consumer expectations while balancing dealer network needs.
Capital allocation: Plans to reduce $450 million in debt, invest in organic growth initiatives, and repurchase $1 billion in shares by 2026.
Dealer Network Health: The company acknowledges the need to improve dealer health across the network, focusing on dealer profitability and inventory management. Current challenges include high inventory levels, particularly in the touring and CVO segments, and the need for market-responsive promotions to drive traffic and sales.
Macroeconomic Environment: The company is operating in a challenging macroeconomic environment characterized by high interest rates, inflation concerns, and unfavorable consumer confidence, which are impacting demand and customer traffic.
Affordability and Product Portfolio: Affordability is a critical factor in the current interest rate environment. The company must balance aspiration with accessibility in its product portfolio to appeal to new riders and avoid over-reliance on specific product families.
Speed to Market: The company needs to improve its speed in bringing new products and innovations to market to capture new riders and remain competitive.
Cost and Capital Efficiency: In the current demand environment, the company must sharpen its focus on cost and capital efficiency to ensure sustainable growth.
Tariff Costs: The company faces significant costs from new or increased tariffs, which have already resulted in $45 million of incremental costs year-to-date and are expected to range between $55 million and $75 million for the full year 2025.
Global Retail Performance: Global retail sales are down 6%, with North America down 5% and international markets down 9%, reflecting soft demand and economic pressures. Specific regions like EMEA and APAC are facing affordability and inflationary challenges.
Inventory Management: Global dealer motorcycle inventories are down 13% year-over-year, but the company continues to prioritize reducing inventory levels to better match demand.
HDFS Transformation: The transformation of Harley-Davidson Financial Services into a capital-light model introduces risks related to the management of finance receivables and the reliance on strategic partners for funding.
Future Product Launches: Harley-Davidson plans to bring new products and experiences to market faster, aiming to capture new riders and balance aspiration with accessibility in their product portfolio.
Dealer Network Health: The company is committed to improving dealer profitability and health, including reducing inventory levels, introducing market-responsive promotions, and reviewing e-commerce approaches.
HDFS Transformation: The transformation of Harley-Davidson Financial Services (HDFS) into a capital-light model is expected to unlock $1.2 billion to $1.25 billion in discretionary cash by Q1 2026, reduce capital requirements, and increase return on equity.
Capital Allocation: Proceeds from the HDFS transaction will be used for debt reduction, share repurchases, and other corporate purposes, with plans to repurchase $1 billion in shares by the end of 2026.
LiveWire Segment: The LiveWire electric motorcycle segment is expected to reduce its operating loss to between $72 million and $77 million for 2025, with new product launches like the S4 Honcho anticipated to hit the streets next year.
Cost and Capital Efficiency: The company plans to sharpen its focus on cost and capital efficiency, ensuring investments drive long-term value and sustainability.
Marketing Strategy: Harley-Davidson aims to simplify marketing programs to support local activations and events, driving customer engagement and dealer success.
Global Dealer Inventory: The company is committed to reducing global dealer inventory levels significantly by year-end 2025 to better match inventory with demand.
Cash Dividends: Since the start of 2022, Harley-Davidson has returned an aggregate of $1.7 billion through discretionary share repurchases and cash dividends.
Share Repurchase Program: In Q3 of 2025, Harley-Davidson bought back 3.4 million shares of its stock at a value of $100 million. For the Q3 2025 year-to-date period, the company has bought back 6.8 million shares of its stock at a value of $187 million. Additionally, Harley-Davidson announced plans to enter into an accelerated share repurchase agreement with Goldman Sachs to repurchase $200 million of shares of the company's common stock. This is part of the previously announced plan to repurchase $1 billion in shares by the end of 2026.
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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