LiveWire Group, Inc. (LVWR) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights several concerning trends: declining global sales, reduced margins, and significant losses in HDFS operating income. Despite a positive note on electric motorcycle sales, the overall financial health appears weak. The Q&A section reveals management's lack of clarity on future profitability and margin targets, further adding to uncertainty. Given the market cap of approximately $1.5 billion, these negative factors are likely to lead to a stock price decline in the range of -2% to -8% over the next two weeks.
Key Financial Performance
Consolidated revenue (Q4 2025) $379 million, down 28% year-over-year. Driven by HDMC revenue down 10% and HDFS revenue down 59%.
Consolidated operating income (Q4 2025) Loss of $361 million compared to a loss of $193 million in Q4 2024. Driven by operating losses at HDMC ($260 million) and HDFS ($82 million).
Earnings per share (Q4 2025) Loss of $2.44 compared to a loss of $0.93 in Q4 2024.
Consolidated revenue (Full Year 2025) $4.5 billion, down 14% year-over-year. Driven by decreased wholesale volumes and flat net pricing.
Consolidated operating income (Full Year 2025) $387 million compared to $417 million in 2024. Decline due to lower motorcycle shipment volumes and unfavorable manufacturing and tariff costs.
Earnings per share (Full Year 2025) $2.78 compared to $3.44 in 2024.
North American retail sales (Q4 2025) Up 5% year-over-year with 15,847 motorcycles sold. Driven by strength in Grand American Touring (up 6%) and sport motorcycle models (up 33%).
International retail sales (Q4 2025) Down 10% year-over-year with 9,440 motorcycles sold. Weakness in EMEA and Asia-Pacific regions.
Global retail sales (Q4 2025) Down 1% year-over-year with 25,287 motorcycles sold.
Dealer inventory (Q4 2025) Down 17% globally year-over-year. North America down 16%, International down 20%.
HDMC revenue (Q4 2025) $379 million, down 10% year-over-year. Decline driven by net pricing, incentive spend, and decreased wholesale volumes.
HDMC gross margin (Full Year 2025) 24.2%, down from 28% in 2024. Decline due to incremental tariffs, negative operating leverage, and lower volumes.
HDFS revenue (Q4 2025) $106 million, down from $257 million in Q4 2024. Decline due to lower retail and wholesale finance receivables.
HDFS operating income (Q4 2025) Loss of $82 million compared to a profit in Q4 2024. Driven by liability management costs of $73 million.
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.
Operating cash flow (Full Year 2025) $569 million, down from $1.64 billion in 2024. Decline due to lower motorcycle shipment volumes and unfavorable manufacturing and tariff costs.
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Operating Highlights
New Product Launch: LiveWire's newest motorcycle, the Honcho, is set to launch later this year, targeting the evolving EV motorcycle category with smaller mini motos.
Product Customization: Focus on designing motorcycles that invite customization and ensuring supply chain reliability to meet demand.
Affordable Lineup: Introduction of a more affordable lineup of motorcycles in 2026 to address critical price points and stoke demand.
Market Expansion: Continued network expansion for LiveWire and focus on international markets like Japan and emerging Asian markets.
Regional Performance: North American retail sales increased by 5% in Q4, while international sales declined by 10%, with EMEA and China showing significant weakness.
Inventory Management: Dealer inventory reduced by 17% globally, exceeding the 10% target, with North America down 16% and international down 20%.
Cost Savings: Targeting $150 million in annual run-rate savings impacting 2027 and beyond through a rigorous cost review.
Dealer Support: Implemented targeted promotions and adjusted e-commerce strategy to drive dealership traffic and improve dealer profitability.
Strategic Reset: Focused on stabilizing the business, rebuilding dealer trust, and aligning wholesale activity with retail demand.
HDFS Transformation: Transitioned Harley-Davidson Financial Services to a capital-light, derisked business model through a strategic partnership with KKR and PIMCO.
Cultural Rebuilding: Reopening Milwaukee headquarters to improve decision-making, collaboration, and accountability.
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Risk or Challenges
Dealer Inventory Management: Elevated dealer inventory, particularly touring inventory in North America, has negatively impacted wholesale shipments and margins. Efforts to reduce inventory levels are ongoing but have created financial pressure.
Dealer Network Health: Dealer health is uneven, with some dealers facing challenges. This poses risks to long-term growth and earnings power, as a healthy dealer network is critical for the company's success.
E-commerce Strategy: The company's e-commerce strategy has historically created customer confusion and driven excessive discounting, negatively impacting dealer economics.
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 key markets like China.
Tariff Costs: Increased tariffs have added significant costs, with $67 million incurred in 2025 and an expected $75 million to $105 million in 2026, pressuring margins.
Operating Leverage: Production runs below wholesale levels are expected to create operating deleverage, further pressuring margins in the near term.
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, creating near-term financial challenges.
Cost Structure Mismatch: The company's current cost structure and manufacturing capacity are built for higher volumes than current demand, necessitating cost reductions.
LiveWire Segment: The LiveWire electric motorcycle segment continues to operate at a loss, with an operating loss of $18 million in Q4 2025 and forecasted losses of $70 million to $80 million in 2026.
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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. Production units are expected to be lower than wholesale units to manage inventory levels prudently. Operating income for HDMC is forecasted to be between 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 now at more appropriate levels globally, with a 17% reduction in 2025. The company plans to maintain disciplined inventory management in 2026 to align with retail demand and ensure sustainable dealer health.
Tariff Costs: Harley-Davidson forecasts a cost of $75 million to $105 million in new or increased tariffs for 2026, compared to $67 million in 2025. These costs are expected to be applied more uniformly throughout the year.
New Product Launches: The company plans to launch redesigned Trike models, long-haul Touring motorcycles, and a more affordable lineup of motorcycles in 2026 to address critical price points and stoke demand.
Strategic Plan Announcement: Harley-Davidson expects to announce its updated strategic plan in May 2026, which will include further details on cost savings, operational changes, and growth 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 repurchases 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 before 12/31 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 a standardized run rate of approximately triple the midpoint of its 2026 guidance ($45 million to $60 million) 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:No, the increase in income will come with time as retail assets flow in and the balance sheet rebuilds 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 will be down in Q1 2026 compared to the prior year, increase in early Q2, slightly lower in Q3, and materially higher in Q4. Inventory levels are being managed to support dealers, focusing on healthy levels and selling through touring inventory.
Q:What is the expectation for global retail sales in 2026, and what factors contribute to this outlook?
A:Global retail sales are expected to be flat. Factors include enthusiasm for the new limited and Trike models, focus on selling down 2025 touring inventory, and careful management of CVO retail and wholesale shipments.
Q:What is the $150 million annual run rate savings in 2027 and beyond, and how will it be realized?
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. No restructuring charges are included in the guidance.
Q:How does the 4%-8% wholesale growth in 2026 align with operating income expectations for HDMC?
A:Despite 4%-8% wholesale growth, HDMC operating income is expected to be flat due to factors like a $25 million tariff headwind, deleverage from balancing wholesale and production, and supply chain impacts. Positive offsets include a one-to-one retail-to-wholesale relationship and non-motorcycle contributions.
Q:What is the current state of the used vs. new pricing spread, and how is it expected to evolve?
A:The gap between new and used motorcycle prices is narrowing due to promotional activities and stabilization of 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 but will provide detailed targets and strategy updates in the May Investor Meeting.
Q:What are the leverage metrics targets for the end of 2026?
A:Leverage metrics and overall capital allocation strategy will be discussed in detail during 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 direct answers to questions about the potential for Motor Company operating margin beyond 2026 and specific leverage metrics targets for the end of 2026. They deferred these topics to the May Investor Meeting, offering no detailed guidance or clarity in the current discussion.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Avenue headquarters
Davidson brand
Davidson core
Davidson motorcycle
HDFS asset
HDFS capital
HOG Chapter
Harley Davidson
Milwaukee
Paris
accountability
action dealer
activity demand
choice
commerce
community Harley
culture
customization
dealer profitability
dealer rider
dealership
discipline
employee
flexibility
focus
health
identity
intervention
inventory level
momentum
motorcycle rider
priority dealer
reach
reality
relationship
rider community
rider dealer
success
term brand
term power
trajectory
trust
visit
work
LVWR Transcript
LiveWire Group, Inc. (LVWR) Q4 2025 Earnings Call Transcript
Unknown2-10
The earnings call highlights several concerning trends: declining global sales, reduced margins, and significant losses in HDFS operating income. Despite a positive note on electric motorcycle sales, the overall financial health appears weak. The Q&A section reveals management's lack of clarity on future profitability and margin targets, further adding to uncertainty. Given the market cap of approximately $1.5 billion, these negative factors are likely to lead to a stock price decline in the range of -2% to -8% over the next two weeks.
LiveWire Group, Inc. (LVWR) Q2 2025 Earnings Call Transcript
Unknown7-30
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.
LiveWire Group, Inc. (LVWR) Q1 2025 Earnings Call Transcript
Unknown5-2
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.
Earnings call transcript: LiveWire’s stock rises 4.39% post Q1 2025 earnings
Unknown5-1
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%).
LVWR Report
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