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01/11 16:28
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary indicates several negative factors: declining revenue and operating income, reduced financial outlook, and ongoing losses in the LiveWire segment. Despite cost control efforts and a share buyback program, the financial performance is weak, with significant year-over-year declines in key metrics. The Q&A section highlights dealer concerns, macroeconomic uncertainties, and management's vague responses, further impacting sentiment. The market cap suggests moderate stock price sensitivity. Overall, the combination of weak financial results, lowered guidance, and management's unclear responses points to a negative stock price movement of -2% to -8%.
Consolidated Revenue Q3 2024 $931 million, down 26% year-over-year, driven by HDMC revenue down 32% and partially offset by HDFS revenue growth of 10%.
Consolidated Operating Income Q3 2024 $106 million, down 49% year-over-year, driven by a decrease of $120 million at HDMC.
Consolidated Operating Margin Q3 2024 9.2%, down from 13.5% in the prior year, with HDMC operating income margin down 720 basis points year-over-year.
Earnings Per Share Q3 2024 $0.91, down 34% from $1.38 last year.
Total Consolidated HDI Revenue Year-to-Date 2024 $4.5 billion, down 6% compared to last year, with HDMC revenue decreasing by 9% and HDFS revenue increasing by 11%.
Total Consolidated HDI Operating Income Year-to-Date 2024 $610 million, down $190 million from the prior year.
HDMC Operating Income Year-to-Date 2024 $491 million, down 30% year-over-year, reflecting an operating margin of 13.3%.
HDFS Operating Income Year-to-Date 2024 $202 million, up 14% compared to last year.
LiveWire Operating Loss Q3 2024 $26 million, $1 million more than a year ago.
LiveWire Revenue Year-to-Date 2024 $16 million, down 30% from the prior year.
Operating Cash Flow Year-to-Date 2024 $931 million, up from $707 million in the same period last year.
Total Cash and Cash Equivalents Q3 2024 $2.2 billion, $366 million higher than at the end of Q3 prior year.
Share Buybacks Q3 2024 4 million shares at a cost of $150 million, totaling 9.5 million shares bought back in the first nine months of 2024 at a total value of $350 million.
Dealer Inventory Q3 2024 Down 13% relative to the end of Q2 2024.
HDFS Revenue Q3 2024 Increased by $26 million, or 10%, driven by higher retail and commercial finance receivables.
HDFS Operating Income Q3 2024 $77 million, up $17 million, or up 29% compared to last year.
HDFS Annualized Retail Credit Loss Ratio Q3 2024 3.1%, compared to 2.7% in Q3 of 2023.
Total Quarter-End Net Financing Receivables Q3 2024 $7.8 billion, up 2% versus prior year.
HDFS Revenue Year-to-Date 2024 Increased by $74 million or 11%.
LiveWire Operating Loss Year-to-Date 2024 $83 million, in line with expectations.
LiveWire Electric Motorcycles Sold Year-to-Date 2024 374 units, a triple-digit increase over the prior year period.
HDMC Gross Margin Q3 2024 30.1%, down from 31.7% in the prior year.
HDMC Operating Income Q3 2024 $55 million, down $120 million from prior year.
HDMC Operating Margin Q3 2024 6.3%, down from 13.5% in the prior year.
HDMC Operating Expenses Q3 2024 $27 million lower relative to prior year, or 11%.
HDMC Gross Margin Year-to-Date 2024 31.3%, down from 34.2% in the prior year.
HDMC Operating Income Year-to-Date 2024 $491 million, down $214 million from prior year.
HDFS Interest Expense Q3 2024 Up $10 million, or up 12% versus the prior year.
HDFS Provision for Credit Losses Q3 2024 Lower provision for credit losses compared to last year.
LiveWire Revenue Q3 2024 Increased due to higher unit sales of EV motorcycles.
New Touring Lineup: The new touring lineup, including redesigned Road Glide and Street Glide, received outstanding feedback and is expected to drive future success.
LiveWire New Product Segment: LiveWire plans to announce a new product segment at EICMA in November, aimed at expanding its addressable market and generating additional revenue.
Market Share Growth: In the U.S., Harley-Davidson gained more than four percentage points of market share in the Touring segment, outperforming the category and the overall market.
Retail Sales Performance: Despite a 13% decline in global retail sales, Harley-Davidson's retail was down only 1% in the U.S., better than the overall motorcycle industry.
Dealer Inventory Reduction: Dealer inventory was reduced by 13% relative to the end of Q2 2024, with plans to further reduce inventory by 20% by the end of 2024.
Cost Control Measures: Harley-Davidson is focused on cost control and productivity gains, aiming for a $400 million improvement in productivity.
Revised Full-Year Outlook: Due to lower than expected retail demand, Harley-Davidson revised its full-year 2024 outlook for retail and wholesale shipments.
Focus on EV Market: LiveWire is adjusting its focus to drive cost efficiencies and productivity, while preparing for future growth in the EV market.
Global Market Environment: The company is facing an increasingly difficult global market environment, particularly in big-ticket discretionary sectors, due to macroeconomic and political uncertainty, and high interest rates affecting both the industry and customers.
Retail Sales Decline: Global retail sales of new motorcycles declined by 13% in Q3, with North America down 10% and international regions down 18%. EMEA saw a 23% decline, attributed to macroeconomic conditions and geopolitical uncertainty.
Inventory Management: Dealer inventory was reduced by 13% relative to the end of Q2, with plans to further reduce inventory by 20% by the end of 2024, indicating a need to manage excess stock due to lower retail demand.
LiveWire Performance: LiveWire is experiencing challenges in the EV market with slower than anticipated adoption, leading to a revision of full-year guidance for electric motorcycle units to 600-1,000, while maintaining an unchanged operating loss guidance.
Interest Rate Impact: The company is mindful of external factors such as interest rate reductions and improved consumer confidence, which are necessary for a positive impact on the industry.
Credit Losses: HDFS reported an increase in the annualized retail credit loss ratio to 3.1%, up from 2.7% in the previous year, indicating potential risks in consumer credit health.
Cost Control Measures: The company is focused on cost control and productivity gains, with a target of $400 million in productivity improvements, which is critical given the current economic challenges.
Market Share Concerns: Despite gaining market share in the touring segment, the overall market share performance is under scrutiny due to the declining retail environment and competitive pressures.
New Touring Lineup: Harley-Davidson is enthusiastic about its new lineup of touring motorcycles, particularly the redesigned Road Glide and Street Glide, which are expected to drive future success.
Hardwire Strategy: The company is committed to its Hardwire strategy, focusing on innovation and core categories to ensure long-term growth.
Cost Control Measures: Harley-Davidson is prioritizing cost control and productivity gains, aiming for a $400 million improvement in productivity.
LiveWire Adjustments: LiveWire is focusing on cost efficiencies and productivity, with a significant reduction in cash burn expected next year.
Dealer Support: The company is implementing measures to support dealer profitability, including marketing investments and inventory management.
Full-Year 2024 Outlook: Harley-Davidson revised its full-year 2024 outlook, expecting retail and wholesale units to be in the range of 149,000 to 153,000, down from previous estimates.
Revenue Expectations: The company expects HDMC revenue to decline by 14% to 16% for the full year, a revision from earlier guidance.
Operating Income Margin: The operating income margin is now expected to be between 7.5% and 8.5% for the full year, down from previous estimates.
LiveWire Unit Guidance: LiveWire expects to deliver between 600 and 1,000 electric motorcycle units for the full year, with an unchanged operating loss guidance of $105 million to $115 million.
HDFS Outlook: HDFS guidance for the full year is revised upward, expecting operating income to increase by 5% to 10%.
Share Buyback Program: In Q3, Harley-Davidson bought back 4 million shares of its stock at a cost of $150 million. This brings the total shares bought back in the first nine months of 2024 to 9.5 million shares at a total value of $350 million, which is 7% of shares outstanding at the beginning of 2024.
The earnings report shows significant declines in key metrics, including a 28% drop in motorcycle shipments, decreased margins, and lower operating income. Although there are some improvements, such as reduced operating losses for LiveWire and positive trends in retail sales, the overall financial health is concerning. The Q&A reveals a cautious outlook with uncertainties in dealer inventories and incomplete information on new initiatives. The withdrawal of 2025 guidance and tariff impacts further dampen sentiment, leading to a negative outlook for the stock price.
The earnings call highlights several negative aspects: a decline in gross margin and operating margin, a 23% drop in consolidated revenue, and a mixed Q&A session with unclear management responses. While there are positive elements like increased operating income in HDFS and cost savings, the overall sentiment is overshadowed by weak financial performance and lack of clarity on strategic issues. Given the company's small-cap status, these factors are likely to result in a negative stock price movement in the short term.
The earnings call reflects several negative indicators: substantial declines in global retail and wholesale sales, reduced operating margins, and a drop in consolidated revenue. Despite positive elements like share repurchases and improved cash flow, the weak financial performance and unclear guidance on strategic partnerships and tariff impacts outweigh these. The market cap indicates a moderate reaction, leading to a negative sentiment prediction (-2% to -8%).
Despite the share repurchase program, the financial performance was weak with significant revenue decline and operating losses. The guidance was revised downward, and there are concerns about future profitability, especially in the LiveWire segment. The Q&A highlighted inventory and margin issues, and management's vague responses on LiveWire's profitability timeline add uncertainty. The market cap suggests moderate reaction, leading to an expected negative stock price movement of -2% to -8%.
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