Harley-Davidson, Inc. (HOG) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed outlook: positive developments like new product launches and a strategic plan announcement are counterbalanced by concerns like increased operating cash usage and unclear guidance on tariffs and cost reductions. Despite some positive sentiment from analysts regarding new products and international growth, the lack of specific guidance and financial challenges temper enthusiasm. The market cap suggests less volatility, leading to a neutral prediction.
Key Financial Performance
North America Retail Sales Increased by 14% year-over-year, driven by strong demand and improved execution.
Global Retail Sales Increased by 8% year-over-year, reflecting actions taken to drive demand and improve execution.
Global Inventory Reduced by 22% year-over-year, prioritizing dealer inventory sell-through and aligning wholesale shipments with retail demand.
Consolidated Revenue Decreased by 12% year-over-year, primarily due to a 54% decline in HDFS revenue following a shift to a capital-light model.
Consolidated Operating Income Decreased to $23 million from $160 million year-over-year, driven by declines in HDMC and HDFS operating income.
Earnings Per Share (EPS) Decreased to $0.22 from $1.07 year-over-year, reflecting lower operating income.
North America Dealer Inventory Declined by 21% year-over-year, reflecting a more balanced setup for the riding season.
HDMC Revenue Decreased by 2% year-over-year to $1.1 billion, driven by lower volume, net pricing, and incentive spend, partially offset by favorable foreign currency.
HDMC Gross Profit Margin Decreased to 25.3% from 29.1% year-over-year, impacted by increased tariff costs, net pricing, product mix, and supply management costs.
HDMC Operating Income Decreased to $19 million from $116 million year-over-year, impacted by restructuring expenses, higher warranty spend, and increased marketing costs.
HDFS Revenue Decreased by 54% year-over-year to $112 million, due to lower interest income following the sale of loan assets.
HDFS Operating Income Decreased to $22 million, reflecting a 19.9% operating income margin, impacted by the reduced size of the retail loan portfolio.
LiveWire Revenue Increased by 87% year-over-year, driven by higher sales of electric motorcycles and StaCyc brand electric balance bikes.
LiveWire Operating Loss Decreased by 11% year-over-year, driven by improved gross profit and lower administrative and engineering expenses.
Net Cash Used in Operating Activities Increased to $228 million from $142 million year-over-year, due to reduced cash inflows at HDMC and HDFS.
Total Cash and Cash Equivalents Decreased to $1.8 billion from $1.9 billion year-over-year, reflecting share buybacks and reduced operating cash flow.
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Operating Highlights
New Motorcycle Launch: Harley-Davidson introduced new 2026 motorcycle models, including limited Touring motorcycles and redesigned Trike models. Additionally, the company announced the return of the iconic Sportster in 2027 and the launch of the Sprint motorcycle in late 2026.
Electric Motorcycle Growth: LiveWire segment revenue increased by 87% year-over-year, driven by electric motorcycle and StaCyc brand electric balance bike units. The focus is on launching the F4 Honcho product and expanding the network.
Market Share Growth: Harley-Davidson achieved a 38% market share in the U.S. 601cc+ market, up 2 percentage points year-over-year. In Europe, market share increased from 2% to 4%.
Regional Performance: North America retail sales grew by 14%, with U.S. sales up 16%. Latin America saw a 21% increase in retail sales, while EMEA and Asia Pacific experienced declines of 3% and 9%, respectively.
Dealer Inventory Management: Global dealer inventory was reduced by 22% year-over-year, with North America down 21% and outside North America down 23%. This aligns wholesale shipments with retail demand.
Cost Reduction: The company implemented cost-saving measures, targeting $150 million in annual run-rate savings by 2027. Actions include headcount reduction and restructuring.
Back to the Bricks Plan: The strategic plan focuses on restoring brand enthusiasm, strengthening dealer relationships, and driving profitable growth. Key initiatives include portfolio realignment, Parts & Accessories expansion, and targeted promotions.
Marketing Platform Launch: The new RIDE marketing platform was introduced to enhance brand engagement and focus on rider-centric storytelling.
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Risk or Challenges
Global Consumer Discretionary Landscape: The global consumer discretionary landscape remains uneven, posing challenges to retail sales and consumer demand.
Inflationary Pressures and Interest Rates: Pricing concerns among customers due to inflationary pressures and high interest rates could impact sales and profitability.
Geopolitical Uncertainty: Global geopolitical uncertainty adds to market unpredictability, potentially affecting operations and sales.
Tariff Costs: Increased tariff costs, amounting to $45 million in Q1 2026, are expected to total $75-$90 million for the year, impacting gross margins.
Supply Management Costs: Higher-than-expected supply management costs due to a unique supplier situation have negatively affected gross profit.
Restructuring Expenses: Restructuring expenses of $15 million related to strategic changes, including role eliminations, have added to operating costs.
Warranty and Recall Costs: Higher warranty spend due to product recalls has increased operating expenses.
Dealer Inventory Challenges: While inventory levels have improved, there are still challenges in aligning inventory with dealer needs, particularly for specific models and trim levels.
Decline in HDFS Revenue: HDFS revenue decreased by 54% due to a shift to a capital-light model, impacting overall financial performance.
LiveWire Operating Loss: LiveWire segment reported an $18 million operating loss, reflecting ongoing challenges in the electric motorcycle market.
Decline in International Sales: Retail sales outside North America declined by 4%, with specific pressure in regions like Asia Pacific and EMEA.
Dealer Profitability: Lower dealer profitability due to reduced traffic and compressed margins has impacted the overall ecosystem.
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Guidance & Outlook
HDMC Retail Units: The company reaffirms its guidance for 2026, expecting HDMC retail units of 130,000 to 135,000 and wholesale units of 130,000 to 135,000. Retail and wholesale are expected to have a largely one-to-one relationship in 2026.
Production Units: Production units at HDMC are expected to be lower than wholesale units shipped in 2026 as the company works to prudently manage overall inventory levels. Alignment is expected by next year.
Tariff Costs: The cost of increased tariffs in 2026 is forecasted to be between $75 million to $90 million, which is favorable compared to the prior guidance range of $75 million to $105 million.
HDFS Operating Income: HDFS is expected to achieve operating income of $45 million to $60 million in 2026.
LiveWire Operating Loss: LiveWire is forecasted to incur an operating loss in the range of $70 million to $80 million in 2026.
Dealer Inventory: Global dealer inventory levels are considered healthy, with a 22% year-over-year reduction. North American dealer inventory declined by 21%, and inventory outside North America declined by 23%. This is expected to set up dealers for greater success in the 2026 riding season.
Wholesale Shipments: The company expects to ship more units on a year-over-year basis in Q2 and Q4, while running lower in Q3 compared to the prior year period. This is aimed at achieving a more even shipment cadence across quarters.
Parts & Accessories Growth: The company sees potential to drive 20% to 30% sales growth in Parts & Accessories over time, with a focus on expanding the assortment and integrating parts into the motorcycle launch process.
Sportster and Sprint Models: The iconic Sportster model will return in 2027, and the new Sprint model will launch in the back half of 2026. These models are expected to drive higher volumes and contribute to long-term enterprise value.
Marketing Strategy: The company is shifting to a more disciplined and targeted promotional approach, focusing on driving traffic and conversion at a lower cost. The new RIDE marketing platform aims to enhance brand engagement and relevance.
EBITDA Target: The company aims to achieve $350 million-plus EBITDA by 2027, driven by cost reductions, better alignment of wholesale and retail volumes, and growth in Parts & Accessories.
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Shareholder Return Plan
Share Buyback Program: In Q4 of 2025, Harley-Davidson entered into an Accelerated Share Repurchase (ASR) agreement to repurchase $200 million of the company's common stock. As part of the ASR agreement, $160 million worth of shares (6.3 million shares) were delivered before December 31, 2025, with the remainder delivered in early 2026. On February 12, 2026, the ASR was concluded, and an additional 3.1 million shares valued at $64.7 million were received. Beyond the ASR, the company repurchased another 3.5 million shares on a discretionary basis for $63.3 million in Q1 of 2026. In total, Harley-Davidson repurchased 6.6 million shares worth $128 million in Q1 of 2026. Since the announcement of the $1 billion share repurchase plan in Q2 of 2024, the company has repurchased 26.8 million shares worth $726 million.
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Key Q&A
Q:What does the company mean by 'medium term' in their targets?
A:The company defines 'medium term' as 3 to 5 years.
Q:What are the expectations for tariff refunds and their impact on the 2027 EBITDA?
A:The company expects tariff amounts to decrease consecutively by quarter, benefiting from the current tariff structure. They are not providing specific 2027 guidance but suggest it will be more attractive than 2026. Tariff refunds are factored in but are not a significant driver for the company.
Q:How does the 'Back to the Bricks' strategy address demographic challenges in motorcycling?
A:The strategy prioritizes rider needs with a rider-centric portfolio, including the reintroduction of the Sportster and the introduction of the Sprint. These models aim to attract younger riders and address gaps in the portfolio, such as entry-level motorcycles for Riding Academy graduates.
Q:What is the contribution of the Sportster and Sprint to the company's medium-term retail growth target?
A:The Sportster and Sprint are significant contributors to the mid-single-digit retail growth target. Historical sales of the Sportster and projected sales of the Sprint are expected to drive a substantial portion of this growth.
Q:Are there plans to expand into other subcategories beyond smaller cc engines?
A:Yes, the company plans to address current gaps in the portfolio, including motorcycles with more or less content, leveraging existing platforms and powertrains. They also teased a modern expression of their iconic cafe racer.
Q:How does the company plan to grow its international business with the Sportster and Sprint?
A:The Sportster is the number one request from global dealers, indicating strong international demand. The company sees these models as addressing global needs and expects them to contribute to international growth.
Q:What are the expectations for the HDFS segment's operating income and revenue streams?
A:The HDFS segment targets $125 million to $150 million in operating income. Revenue streams include interest income, fee-based services, protection products, card products, and wholesale/commercial loans. The company retains 1/3 of originations on its balance sheet and services all loans.
Q:What is the company's approach to opportunistic M&A?
A:The company is open to M&A that accelerates core growth areas, such as dealer profitability and parts & accessories. However, M&A is not a top priority.
Q:How is the company addressing affordability and accessibility for motorcycle buyers?
A:The company is focusing on a broader portfolio with more options at different price points. They aim to meet riders' needs with a rider-centric portfolio and be more targeted in promotional activities.
Q:What is the company's strategy for improving dealer profitability?
A:The strategy includes inventory management, a rider-centric portfolio, and leveraging marketing campaigns. The company has also implemented a fixed holdback system for better predictability and cash flow for dealers.
Q:What role does LiveWire play in the company's product portfolio?
A:LiveWire is focused on the electric motorcycle segment, with the upcoming launch of the Honcho bike. The company has no plans for additional funding for LiveWire beyond a loan provided in 2025.
Q:What are the company's plans for its U.S. dealer network?
A:The company aims to maintain a healthy dealer network, balancing smaller, family-owned dealerships with larger entities. They are not focused on size but on dealer enthusiasm and rider service.
Q:What are the top opportunities for cost reduction this year?
A:Cost reduction opportunities include headcount adjustments, non-headcount-related costs, and cost of goods-related actions. The company is confident in achieving its $150 million-plus target for 2027 and beyond.
Q:How are pricing and mix expected to trend for the remainder of the year?
A:Pricing and mix are expected to remain relatively stable or show slight favorability. The company anticipates less impact from incentive-related activities after addressing inventory challenges in Q1.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the timing and amount of tariff refunds, the exact contribution of the Sportster and Sprint to retail growth, and the breakdown of medium-term retail CAGR by U.S. versus global markets. They also did not elaborate on the specific cost reduction areas or provide detailed guidance on LiveWire's future demand-shaping strategies.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Apparel Licensing
Davidson dealer
Harley Davidson
PA
Page
Parts Accessories
RIDE
Section
Slide
Sprint
accessibility volume
advantage
channel
community
connection
creation
dealer profitability
economics
ecosystem
enterprise model
experience
focus
frontline
inventory level
investment
life cycle
marketing platform
momentum
part
phase
powertrain
pressure
rider dealer
role
scale
step
tariff recovery
HOG Transcript
Harley-Davidson, Inc. (HOG) Q1 2026 Earnings Call Transcript
Unknown5-5
The earnings call presents a mixed outlook: positive developments like new product launches and a strategic plan announcement are counterbalanced by concerns like increased operating cash usage and unclear guidance on tariffs and cost reductions. Despite some positive sentiment from analysts regarding new products and international growth, the lack of specific guidance and financial challenges temper enthusiasm. The market cap suggests less volatility, leading to a neutral prediction.
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%.
HOG Slides
HOG Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
