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01/11 16:19
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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%.
Global Retail Sales Q4 2024: Down 15% YoY; Full Year 2024: Down 7% YoY. Decline attributed to cyclical headwinds, high interest rates affecting consumer confidence.
Consolidated Revenue (Q4) $420 million, down 35% YoY; Full Year 2024: $5.2 billion, down 11% YoY. Decline driven by HDMC revenue down 47%, partially offset by HDFS revenue growth of 4%.
Consolidated Operating Loss (Q4) $193 million, compared to a loss of $21 million in Q4 2023. Driven by an operating loss of $214 million at HDMC.
Earnings Per Share (Q4) Loss of $0.93, down from a profit of $0.18 in Q4 2023.
Consolidated Operating Income (Full Year) $417 million, down 47% YoY from $779 million in 2023. Decline attributed to lower revenues and increased costs.
HDMC Revenue (Full Year) $4.1 billion, down 15% YoY. Decline driven by decreased wholesale volume and pricing pressures.
HDFS Revenue (Full Year) $1 billion, up 9% YoY. Growth attributed to higher average yields despite lower retail finance receivables.
LiveWire Revenue (Full Year) $26 million, down 31% YoY. Decline due to lower unit sales of electric motorcycles.
Operating Cash Flow (Full Year) $1.1 billion, up nearly 40% from $755 million in 2023. Increase driven by favorable changes in wholesale finance receivables and working capital.
Operating Expenses (Full Year) $877 million, down $28 million YoY. Cost discipline maintained through productivity initiatives.
HDMC Gross Margin (Full Year) 28%, down from 32.3% in 2023. Decline driven by lower volumes and unfavorable pricing mix.
HDFS Operating Income (Full Year) $248 million, up 6% YoY. Growth attributed to higher interest income despite increased provisions for credit losses.
LiveWire Operating Loss (Full Year) $110 million, 6% favorable to prior year. Losses managed through cost reduction initiatives.
Dealer Inventory (End of Q4) Down 19% sequentially from Q3; down over 4% YoY. Reflects inventory management strategy.
Productivity Savings (Cumulative) $257 million achieved since the start of the productivity program, with expectations for an additional $100 million in 2025.
New Model Launches: The launch of the Model Year '24 StreetGlide and RoadGlide Touring motorcycles contributed to nearly 5% growth in the U.S. Touring segment, increasing Harley Davidson's market share to almost 75%.
New Product Development: For the '25 model year, Harley Davidson introduced six new cruiser models and updated the Powerfolds Forster S model, along with limited production CVO motorcycles.
Electric Vehicle Expansion: LiveWire plans to launch an electric Maxi scooter in the first half of 2026, focusing on the European market.
Market Share Growth: Harley Davidson gained meaningful touring segment market share in the U.S., achieving 74.5% market share, the highest since 2019.
Retail Sales Performance: Despite a 15% decline in global retail sales in Q4, the Touring segment saw an 8% increase in retail sales for the full year.
Inventory Management: Harley Davidson reduced motorcycle production wholesale significantly, ending the year slightly below 2023 levels, setting up for further inventory reduction in 2025.
Cost Productivity: Achieved $257 million in productivity savings, with plans for an additional $100 million in 2025.
Strategic Focus: Continued investment in core products and profitable motorcycle segments, with a focus on innovation and customer experience.
Operational Efficiency: Reduced headcount by 7% and maintained overall cost discipline, leading to a projected flat to slightly down OpEx in 2025.
Cyclical Headwinds: The company is facing cyclical headwinds for discretionary products, particularly due to a high interest rate environment affecting consumer confidence and affordability.
Global Retail Sales Decline: In Q4, global retail sales declined by 15%, with North America down 13% and international regions down 17%. For the full year, global retail sales were down 7%.
Inventory Management: The company is actively reducing inventory levels, which may impact wholesale shipments and revenue in the short term.
Macroeconomic Uncertainty: The overall macroeconomic environment remains uncertain, with inflationary pressures and high interest rates affecting consumer spending.
Tariff Risks: There is uncertainty regarding potential new tariffs, which could impact the company's operations and pricing strategies.
Electric Motorcycle Segment Losses: LiveWire, the electric motorcycle segment, reported an operating loss of $110 million, indicating challenges in achieving profitability.
Credit Losses: HDFS reported an increase in retail credit losses due to higher bike payments and inflationary pressures affecting customers.
Dealer Network Health: The health of the dealer network is critical, and the company is taking steps to support dealers amid challenging market conditions.
Future Profitability Concerns: The company is cautious about future profitability, particularly in light of ongoing economic challenges and the performance of the LiveWire segment.
Strategic Initiatives: Continued execution of the hardwired strategy focusing on core products and profitable segments, including the launch of new models like the '24 StreetGlide and RoadGlide Touring motorcycles.
Cost Productivity: Achieved $257 million in productivity savings, with plans for an additional $100 million in 2025.
Inventory Management: Reduced dealer inventory by 19% in Q4 2024, with expectations for a further reduction of over 30% in the first half of 2025.
Marketing Development Fund: Launched a new initiative to drive leads and customer transactions, representing the largest marketing investment in company history.
LiveWire Strategy: Focus on reducing operating losses and cash burn, with a target to achieve contribution margin positivity by the end of 2025.
Revenue Expectations: Guidance for flat retail sales in 2025, with wholesale units expected to be flat to down 5%.
Operating Income Margin: Expected operating income margin between 7-8% for 2025.
EPS Guidance: Earnings per share expected to be flat to down 5% compared to $3.44 in 2024.
Capital Expenditures: Planned capital investments in the range of $225 million to $250 million for 2025.
Long-term Margin Target: Expect to achieve double-digit margins in 2026, with a long-term target of 15%.
Share Repurchase Program: In Q4, Harley Davidson bought back 3,000,000 shares at a cost of $100,000,000, bringing the total for 2024 to 12,500,000 shares at a total value of $450,000,000, which is 9% of shares outstanding at the beginning of 2024. Since announcing a $1,000,000,000 share repurchase plan on July 25, 2024, 7,100,000 shares have been repurchased at a cost of $250,000,000.
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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