Harley-Davidson, Inc. (HOG) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals a mixed performance with several negative indicators: a decline in global retail sales, revenue, and gross margins, and significant operating losses. Although there are some positives, such as the reduction in dealer inventory and improvement in LiveWire's performance, the overall financial health appears weak. The Q&A further highlights uncertainties in HDFS performance and the lack of clear guidance on future profitability and leverage metrics. Given the market cap, the stock is likely to experience a negative reaction in the range of -2% to -8%.
Key Financial Performance
Consolidated Revenue (Q4 2025) $379 million, down 28% year-over-year. This decline was driven by a 10% decrease in HDMC revenue and a 59% decrease in HDFS revenue.
Consolidated Operating Income (Q4 2025) Loss of $361 million compared to a loss of $193 million in Q4 2024. This was driven by an operating loss of $260 million at HDMC and $82 million at HDFS.
Earnings Per Share (Q4 2025) Loss of $2.44 compared to a loss of $0.93 in Q4 2024. This reflects the overall decline in revenue and increased costs.
Consolidated Revenue (Full Year 2025) $4.5 billion, down 14% year-over-year. The decline was attributed to lower HDMC revenue and reduced wholesale volumes.
Consolidated Operating Income (Full Year 2025) $387 million compared to $417 million in 2024. This reflects the challenging operating environment and lower revenue.
Earnings Per Share (Full Year 2025) $2.78 compared to $3.44 in 2024. This decline was due to lower revenue and increased costs.
North American Retail Sales (Q4 2025) Up 5% year-over-year, driven by strength in Grand American Touring products (up 6%) and lower-priced sport motorcycle models (up 33%).
International Retail Sales (Q4 2025) Down 10% year-over-year, with EMEA down 24%, Asia Pacific down 1%, and Latin America up 10%. The decline was driven by macroeconomic challenges and weak demand in certain regions.
Global Retail Sales (Q4 2025) Down 1% year-over-year, reflecting mixed performance across regions.
Dealer Inventory (End of Q4 2025) Down 17% globally compared to Q4 2024, exceeding the 10% reduction target. North America inventory declined 16%, and international inventory declined 20%.
HDMC Revenue (Q4 2025) $379 million, down 10% year-over-year. The decline was driven by lower wholesale volumes and increased incentive spending.
HDMC Gross Margin (Full Year 2025) 24.2%, down from 28% in 2024. The decline was due to increased tariffs, lower volumes, and negative operating leverage.
HDFS Revenue (Q4 2025) $106 million, down from $257 million in Q4 2024. The decline was due to lower retail and wholesale finance receivables.
HDFS Operating Income (Q4 2025) Loss of $82 million, driven by costs associated with liability management activities related to the HDFS transaction.
LiveWire Revenue (Q4 2025) Increased by 9% year-over-year, driven by a 61% increase in electric motorcycle units and a 7% increase in StaCyc units.
LiveWire Operating Loss (Q4 2025) Decreased by 30% year-over-year, reflecting improved cost management and increased sales.
Operating Cash Flow (Full Year 2025) $569 million, down from $1.064 billion in 2024. The decline was due to lower shipment volumes, higher costs, and retail finance receivables classified as operating cash outflows.
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Operating Highlights
New Trike Launch: The company is introducing an all-new redesigned Trike model in January 2026.
Affordable Motorcycle Lineup: Focus on critical price point motorcycles to help stoke demand.
LiveWire S4 Honcho: LiveWire's newest electric motorcycle, the S4 Honcho, is set to launch in spring 2026.
North American Retail Sales: Retail sales in North America increased by 5% in Q4 2025, with strength in Grand American Touring and lower-priced sport motorcycle models.
International Retail Sales: International retail sales declined by 10% in Q4 2025, with EMEA down 24% and Asia Pacific down 1%.
Latin America Growth: Retail sales in Latin America increased by 10% in Q4 2025, driven by growth in Brazil and Mexico.
Dealer Inventory Reduction: Dealer inventory in North America declined by 16% and globally by 17% in Q4 2025, exceeding the 10% global reduction target.
E-commerce Strategy Shift: Shifted to a model intended to drive dealership traffic and support motorcycle sales, addressing previous issues of customer confusion and excessive discounting.
Cost Savings Initiative: Targeting at least $150 million in annual run-rate savings impacting 2027 and beyond.
Dealer Network Health: Resetting relationships with dealers to build mutual trust and improve inventory management.
Brand Reorientation: Focusing on joyful and optimistic brand storytelling to better align with rider community values.
Capital-Light HDFS Model: Transitioned Harley-Davidson Financial Services to a capital-light, derisked business model.
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Risk or Challenges
Dealer Inventory Management: Elevated dealer inventory, particularly in North America, has negatively impacted wholesale shipments and margins. The company is taking actions to address this, but the overhang of Touring models remains a significant challenge.
Dealer Network Health: Dealer health is uneven, with some dealers facing challenges. This is critical for long-term growth and earnings power, and the company is working to rebuild trust and improve dealer profitability.
E-commerce Strategy: The company's e-commerce strategy has historically created customer confusion and driven excessive discounting, negatively impacting dealer economics. Corrective actions are being implemented.
Global Retail Sales Performance: International retail sales, particularly in EMEA and Asia Pacific, have been weaker than expected due to macroeconomic conditions and challenges in specific markets like China.
Tariff Costs: The company faced $67 million in new or increased tariffs in 2025, with expectations of $75 million to $105 million in tariff costs for 2026, pressuring margins.
Operating Leverage and Margins: Margins are under pressure due to production running below wholesale levels, creating operating deleverage. This is expected to continue into 2026.
HDFS Financial Model Transition: The transition to a capital-light, derisked business model for Harley-Davidson Financial Services has significantly changed its financial earnings profile, with near-term impacts on income.
Product Portfolio and Pricing: The current product portfolio and pricing have limited the brand's reach, putting it out of reach for some potential riders. Adjustments are needed to align with economic realities and customer expectations.
Supply Chain and Customization: The supply chain has been insufficient in supporting demand for parts and accessories, which are critical for customization and dealer profitability.
Economic and Market Conditions: Global inflationary pressures, high interest rates, and macroeconomic uncertainties are impacting customer purchasing behavior, particularly for big-ticket discretionary items.
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Guidance & Outlook
2026 Financial Outlook: Harley-Davidson expects retail units of 130,000 to 135,000 and wholesale units of 130,000 to 135,000, indicating a one-to-one relationship between retail and wholesale. Production units are expected to be lower than wholesale units to manage inventory levels prudently. Operating income for HDMC is forecasted to range from a positive $10 million to a loss of $40 million. HDFS is expected to generate operating income of $45 million to $60 million, while LiveWire anticipates an operating loss of $70 million to $80 million.
Dealer Inventory Management: Dealer inventory levels are expected to start 2026 at more appropriate levels, with a focus on balancing inventory by model and family. The company plans to continue managing inventory levels prudently to ensure alignment with retail demand.
Tariff Costs: Incremental tariff costs for 2026 are forecasted to range between $75 million and $105 million, applied more uniformly throughout the year compared to 2025.
New Product Launches: The company plans to launch new model year '26 motorcycles, including redesigned Trike models, long-haul Touring motorcycles, and an affordable lineup of motorcycles targeting critical price points to stimulate demand.
Strategic Plan Announcement: Harley-Davidson plans to announce its updated strategic plan in May 2026, which will include further details on cost savings and operational strategies.
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Shareholder Return Plan
Dividend Program: While a key priority remains returning excess capital to shareholders, we are currently evaluating the timing of our share buyback initiatives. In the near term, we expect to be measured in our approach to share repurchase and while we finalize our strategic plan that we expect to announce in May.
Share Buyback Program: In Q4, we entered into an accelerated share repurchase agreement with Goldman Sachs to repurchase $200 million of shares of the company's common stock. We entered into the $200 million ASR and $160 million was delivered to 12/31 and with the remainder in early 2026. For the full year 2025, we repurchased a total value of $347 million or 13.1 million shares in total which represents around 11% of December 31, 2024, shares outstanding. This amount includes the aforementioned ASR agreement.
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Key Q&A
Q:What is the long-term profitability outlook for HDFS, and what factors are influencing its current performance?
A:HDFS is expected to achieve an operating income of $45 million to $60 million by 2026, with a standardized run rate potentially tripling the midpoint in 2.5 to 3 years. Current performance is influenced by cautious volume outlooks, lower dealer inventory, and reduced wholesale assets, which pressure earnings.
Q:Do you need more retail and wholesale stock units to triple HDFS income?
A:Yes, time is needed for retail assets to flow in and rebuild the balance sheet over multiple years. Wholesale levels are currently lower due to disciplined inventory management with dealers.
Q:What is the cadence for wholesale shipments in 2026, and how are inventory levels being managed?
A:Wholesale shipments in Q1 2026 will be slightly down year-over-year, increase in early Q2, decrease slightly in Q3, and rise significantly in Q4. Inventory levels are being managed to support dealers, focusing on healthy levels and selling through Touring inventory.
Q:What are the expectations for global retail sales in 2026, particularly in the U.S., and what factors contribute to this outlook?
A:Global retail sales are expected to be flat, with some upside in U.S. Touring sales due to the introduction of new models like the limited and Trike. Dealer enthusiasm and customer feedback on new models, as well as a full year of soft sales, contribute to this outlook.
Q:What is the status of LiveWire's financial support and future investment?
A:Harley-Davidson extended a $75 million loan to LiveWire, down from the original $100 million. LiveWire is seeking other capital sources, and Harley-Davidson's financial commitment is limited to the loan extension.
Q:How is the $150 million annual run rate savings in 2027 distributed, and what is the expected cadence?
A:The $150 million savings applies to the motor company and HDFS, not LiveWire. Savings will begin in the back half of 2026, with full realization on an annual basis starting in 2027.
Q:What factors contribute to the modest operating income loss for HDMC in 2026 despite wholesale growth?
A:Factors include a $25 million tariff headwind, deleverage challenges from balancing wholesale and production, supply chain impacts, and a one-to-one retail-to-wholesale relationship. Touring inventory adjustments also affect ASP and mix.
Q:What is the current state of the used versus new pricing spread, and how is it expected to evolve?
A:The spread is narrowing due to promotional activities and stabilization or improvement in used values. Some parts of the portfolio have seen increased used values, informing product development and innovation.
Q:What is the potential for motor company operating margin beyond 2026?
A:The company sees significant upside potential for operating margins beyond 2026, with more details to be provided in the May investor meeting.
Q:What are the leverage metrics targets for the end of 2026?
A:Details on leverage metrics and capital allocation strategy will be provided in the May investor meeting. The company has highlighted the planned payoff of a EUR 700 million note.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the potential for motor company operating margin beyond 2026 and leverage metrics targets for the end of 2026, deferring these topics to the May investor meeting.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Avenue headquarters
Commercial Officer
Davidson core
HDFS asset
HOG Chapter
Harley Davidson
Milwaukee
Paris
accountability
action dealer
activity demand
choice
class
community Harley
culture
customization
dealer profitability
dealer rider
dealership
discipline
flexibility
focus
health
identity
intervention
inventory level
motorcycle rider
part
pressure
priority dealer
reach
reality
relationship
rider dealer
run rate
success
term brand
term power
trajectory
trust
visit
work
HOG Transcript
Harley-Davidson, Inc. (HOG) Q4 2025 Earnings Call Transcript
Unknown2-10
The earnings call reveals a mixed performance with several negative indicators: a decline in global retail sales, revenue, and gross margins, and significant operating losses. Although there are some positives, such as the reduction in dealer inventory and improvement in LiveWire's performance, the overall financial health appears weak. The Q&A further highlights uncertainties in HDFS performance and the lack of clear guidance on future profitability and leverage metrics. Given the market cap, the stock is likely to experience a negative reaction in the range of -2% to -8%.
Harley-Davidson, Inc. (HOG) Q3 2025 Earnings Call Transcript
Unknown11-4
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.
Harley-Davidson, Inc. (HOG) Q2 2025 Earnings Conference Call Transcript
Unknown7-30
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%.
Harley-Davidson, Inc. (NYSE:HOG) Q1 2025 Earnings Call Transcript
Unknown5-3
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.
HOG Slides
HOG Report
Frequently Asked Questions
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