Free cookie consent management tool by TermsFeedUpdate cookies preferencesCall Archives - H Touring Bikes
Categories
Harley Davidson News

Harley-Davidson, Inc. (NYSE:HOG) Q1 2025 Earnings Call Summary


Harley-Davidson, Inc. (NYSE:HOG) Q1 2025 Earnings Call Transcript

Date: May 1, 2025

Harley-Davidson, Inc. exceeds earnings expectations with an EPS of $1.07, surpassing the anticipated $0.80.

Operator: Thank you for standing by, and welcome to the Harley-Davidson 2025 First Quarter Investor and Analyst Conference Call. Today’s conference is being recorded. I would now like to hand the conference over to Shawn Collins. Thank you. Please go ahead.

Shawn Collins: Thank you. Good morning. This is Shawn Collins, the Director of Investor Relations at Harley-Davidson. The slides supporting today’s call can be accessed on the Harley-Davidson Investor Relations website. Our comments today may include forward-looking statements that involve risks which could result in actual results differing materially. These risks are outlined in our earnings release and latest SEC filings. Joining me for today’s call are our Chief Executive Officer, Jochen Zeitz; Chief Financial Officer and President of Commercial, Jonathan Root; and LiveWire’s CEO, Karim Donnez, who will be available for questions. Now, I’ll turn it over to our CEO, Jochen Zeitz. Jochen, the floor is yours.

Jochen Zeitz: Thank you, Shawn. Good morning, everyone, and thank you for joining today’s call. Our operating income margin for the quarter stands at 12.1%. Our bottom line performance exceeded expectations, thanks to a favorable product mix and strict cost management across logistics, supply chain, and operating expenses, following our significant spend on the 2024 touring launch. However, we saw a 21% decline in global retail sales in Q1 and a 24% drop in North America, largely influenced by low consumer confidence amid economic uncertainty. We’ve decided to push our model-year 2025 advertising campaign to later in the year in the U.S. to align with the riding season. Consequently, our Marketing Development Fund will primarily support our network starting in Q2 and continuing into the riding season.

The Marketing Development Fund represents our largest co-marketing investment in history, which we believe will be most efficient in the current market, directly supporting our dealers. In EMEA, overall retail declined by only 2%, whereas the APAC region saw a significant 28% decline, primarily due to challenges in China and Japan. LATAM faced a 6% year-over-year drop in retail. As we navigate this uncertain environment, we are committed to controlling wholesale shipments to maintain lower inventory levels. By the end of Q1, global wholesale shipments were down 33%, and dealer inventory saw a 19% decline compared to Q1 last year, with U.S. inventory down 23%.

Turning to HDFS, our financial services segment outperformed expectations, showing a 19% increase in operating income this quarter. Jonathan will share further insights on how we plan to leverage HDFS to support our customers, dealers, and shareholders. In terms of product initiatives, alongside our 2025 model-year launch, we’re emphasizing our on-road performance as a key differentiator for the Harley-Davidson brand, inspired by racing.
We recently launched the limited production CVO Road Glide RR, marking a record in street-legal performance baggers as the most powerful motorcycle in our 122-year history, produced in a limited run of 131 hand-assembled units available at select dealers. The response to this launch has been exceptional, and we expect these to sell out from preorders.

Additionally, we are advancing our entry-level product line, which we’ve developed over several years. Our strategic focus has shifted towards expanding our offerings into smaller displacements, including a true entry-level cruiser, set to debut next year, with affordability and profitability in mind.

Regarding LiveWire, the challenges in the broader powersports and discretionary leisure industry are compounded in the EV segment, with indications suggesting that EV adoption may be slower than initially projected. This pressurizes Harley-Davidson’s evaluations of its investment in LiveWire, which will explore external capital options if required. LiveWire is also pressing forwards with cost-saving measures to manage cash flow and operating losses effectively, expecting an operating loss of approximately $59 million and cash burn of $49 million for the year, an improvement from previous forecasts of $70 million to $80 million.

Given the prevailing uncertainties in global tariffs and trade, we are withdrawing our previous guidance for 2025 until there’s greater clarity regarding economic conditions. Despite these turbulent times, our ongoing discussions with various administrations provide cautious optimism for potential trade agreements that could mitigate overall tariff impacts.

Now, I’ll turn it over to Jonathan.

Jonathan Root: Thank you, Jochen, and good morning. As President of Commercial, I want to delve further into our robust product portfolio development. In addition to the new small displacement motorcycle and the iconic classic cruiser launching next year, we plan to innovate further within our touring and trunk motorcycle lines, executing our hardwire strategy effectively. Our new touring models from the last 18 months distinguish our offerings and improve their appearance, sound, and performance.

Additionally, we are adjusting our model year introduction to the fall, creating more sales opportunities for the second half of the year. To support our dealers during these challenging times, we have modified our fuel facility program with revised requirements and incentives. To date, the upgrade process for our identified 594 global dealers is progressing well, adhering to our 10-year timeline.

Before discussing financial results, I’d like to clarify some speculation regarding Harley-Davidson Financial Services’ strategic direction. As outlined in our hardwire strategy, we’re pursuing value-enhancing opportunities for all stakeholders, including customers and shareholders, particularly evaluating investments in HDFS based on specific transaction goals.

Now, I’ll summarize Q1 2025 consolidated financial results before diving into segment specifics. Overall revenue fell by 23%. Consolidated operating income for the quarter was $160 million, with HDMC operating income down 51%, offset by HDFS’s 19% increase in income, while LiveWire reported an operating loss of $20 million. The consolidated income margin stood at 12.1%, reflecting a decrease from 15.2% in the prior year, primarily influenced by lower volumes.

First quarter earnings per share reached $1.07. As mentioned by Jochen, the retail sales and market share dynamics are now reported on the total cruiser category. Furthermore, inventory conditions are improving leading into the 2025 riding season.

HDMC revenue saw a 27% decline driven by lower wholesale volumes, where shipments dropped 33%. Despite a decrease, we anticipate an improved overall balance as we proceed through the riding season. The gross margin for HDMC for Q1 was 29.1%, compared to 31.2% from the previous year, primarily influenced by the revenue drops.

In terms of operating expenses, these were $24 million lower than last year, resulting in an HDMC operating margin of 10.8%. We continue to work towards our target of a $400 million improvement in productivity by 2025, having achieved $257 million in productivity savings from 2022 to 2024, with an additional $100 million expected in 2025.

On tariffs, the Q1 direct impact for HDMC was limited to $9 million. With the majority of our production and components sourced from the U.S. and a careful focus on potential tariff impacts, we estimate a 2025 exposure from new tariffs to fall between $130 million and $175 million. We are confident in our existing strategy to mitigate impacts while securing our market position.

For HDFS’s performance, Q1 revenue decreased by 2%, driven by modest declines in retail and commercial receivables, though operating income rose to $64 million. Our annualized retail credit loss ratio was 3.8%, slightly up from the previous year. Retail credit losses continue to reflect several macroeconomic pressures.

In the LiveWire segment, revenues fell due to reduced unit sales of electric motorcycles. Operating losses came in at $20 million, consistent with expectations. Overall, LiveWire’s cash burn for Q1 was down to $18 million.

Consolidated cash and cash equivalents ended at $1.9 billion, marking a $467 million uptick from the prior year, including $46 million from LiveWire. Furthermore, we repurchased 3.4 million shares valued at $87 million in Q1, continuing our commitment to return capital to shareholders amid uncertainties in the economic landscape.

As we approach the peak riding season, it remains critical to observe market trends and protective measures, especially around our pricing strategies. Thank you for your ongoing support, and now we will open the floor to questions.

Q&A Session

Operator: We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Craig Kennison with Baird. Please go ahead.

Craig Kennison: Good morning. Regarding HDFS, what might the economics of a long-term strategic partnership look like for Harley-Davidson?

Jonathan Root: Good morning, Craig. We are still in the early stages of discussions regarding potential HDFS partnerships. Our focus remains on demonstrating the premium value of HDFS to ensure it drives shareholder value, while also seeking options for funding and maintaining competitive service levels across our retail finance offerings.

Craig Kennison: As a follow-up, what has changed from previous management conclusions that HDFS was strategic? Are you now looking for more realistic market valuations?

Jonathan Root: Yes, that’s an accurate summary. We perceive the need to assess the business strategically while recognizing its continued importance and value to our broader operations.

Operator: Next, we have Joseph Altobello from Raymond James. Please proceed.

Joseph Altobello: Hi, Jonathan. So you seem to be suggesting that HDFS isn’t under consideration for sale; it’s more about unlocking its value?

Jonathan Root: Correct. We believe in HDFS’s strategic importance and the exceptional value it delivers. We’re not planning to divest but rather to ensure its value is appropriately recognized.

Operator: And now we have James Hardiman from Citi. Please go ahead.

James Hardiman: Thank you. Could you elaborate on your tariff impact and potential mitigation strategies?

Jochen Zeitz: Certainly. We are actively engaging with government entities to address tariff implications. Our approach includes slowing shipments, altering our supply chain, and potentially revisiting pricing structures in light of current economic conditions. This situation remains fluid, and we will continuously adapt our strategies accordingly.

Operator: Our final question comes from Tristan Thomas-Martin with BMO Capital Markets. Please proceed.

Tristan Thomas-Martin: Good morning. With some of the model year 2026 launches occurring in the fall, how does this change quarterly sales cadence?

Jonathan Root: We’re still refining those details. However, we aim to maintain a balance between our dealer inventory and retail performance, ensuring we manage shipments cautiously without overloading dealers in light of market trends.

Operator: That concludes today’s conference call. You may now disconnect.

Categories
Harley Davidson News

Major Shareholders Take a Stand Against Harley-Davidson Leadership, Call for Strategic Change

Criticizes Disconnected Board of Directors and Misaligned Strategic Direction

CANTON, Ga., April 29, 2025 /PRNewswire/ — Purple Chip Capital Management, LLC (“Purple Chip Capital”), a value-focused investment manager and long-standing shareholder of Harley Davidson, Inc. (NYSE:HOG) (“Harley Davidson” or the “Company”), has announced its support for H Partners’ push for change at Harley-Davidson and its decision to WITHHOLD votes for CEO and Chairman Jochen Zeitz, and Directors Thomas Linebarger and Sara Levinson at the upcoming 2025 Annual Meeting of Shareholders.

“As dedicated Harley Davidson shareholders and enthusiasts, we have observed with concern how the Company has diverged from the foundational principles that established it as a lasting American icon. Owning a Harley Davidson has always been about more than just riding a bike; it embodies being part of a vibrant culture and community recognized throughout the United States. This community has flourished through a network of dealerships that offer tailored services, exclusive events, and distinctive customization options associated with Harley Davidson products.

Under the current Board of Directors, this culture has been overlooked, undermining the legacy that has propelled Harley Davidson for nearly 125 years in favor of online sales and misaligned product lines, along with a departure from the quality customization that has made each Harley Davidson unique. The Company needs a board committed to recognizing its unique value and treating dealerships as vital partners crucial to its success. Without thriving dealerships, the community we cherish will diminish, and performance will continue to decline.

On the product side, the electric Livewire bike line has proven to be a significant misstep and should be discontinued. Harley Davidson riders prefer robust American power over electric engines. The Company should shift its focus towards attracting new generations of riders, revitalizing its lineup, and reintroducing the iconic Sportster 883 as an entry-level motorcycle. Additionally, ongoing efforts to cut costs through the introduction of plastic components have significantly lowered the allure of the full Harley Davidson product range. It’s crucial to revive the pride that Harley Davidson riders have always felt in their bikes and the brand while restoring high-quality parts and accessories made from chrome, steel, and leather.

We are encouraged to see H Partners echoing our concerns about the current direction of Harley Davidson, and we will WITHHOLD our votes for Directors Zeitz, Linebarger, and Levinson at the Annual Meeting. We believe removing these long-serving directors, who are clearly out of touch with Harley Davidson’s legacy, is a crucial step toward revitalizing the Company for the benefit of its riders, dealers, and shareholders.”

About Purple Chip Capital
Purple Chip Capital Management is an investment management firm established and led by Jason T. Dickerson, recognized for its value-driven investment strategy and long-term approach. Based in Canton, Georgia, Purple Chip Capital specializes in identifying undervalued companies, typically employing a concentrated portfolio strategy, while actively engaging with management when necessary to enhance performance.

Media Contact 
ASC Advisors
Max Rayden
[email protected]
203 992 1230 

Major Shareholders Take a Stand Against Harley-Davidson Leadership, Call for Strategic Change View original content:https://www.prnewswire.com/news-releases/purple-chip-capital-supports-h-partners-campaign-for-change-at-harley-davidson-announces-intent-to-withhold-its-votes-at-2025-annual-meeting-of-shareholders-302441227.html

SOURCE Purple Chip Capital Management, LLC

Categories
Harley Davidson News

Beloved Harley-Davidson Store to Close After 73 Years, Shoppers Call It ‘Devastating News for the Community’

MOTORCYCLISTS are mourning the closure of a cherished Harley-Davidson store, which has served the community for 73 years.

Customers will no longer visit the Harley-Davidson Sports Center in Duluth, Minnesota, located around 150 miles north of Minneapolis.

Duluth's Harley-Davidson Sport Center is closing after 73 years

3

Duluth’s Harley-Davidson Sport Center is closing after 73 yearsCredit: Facebook / Harley-Davidson Sport Center

The store continues to sell its existing inventory (stock image)

3

The store continues to sell its existing inventory (stock image)Credit: Getty

Dennis and Suzanne Kachelmyer, who have owned the motorcycle shop for many years, broke the news of the closure in a Facebook post on Monday.

Customers expressed their disappointment and frustration regarding the announcement in the comments section of the post.

“This is unfortunate news for the biker community,” remarked one Facebook user.

“Wishing the best for all the employees affected by this. I hope someone steps in to purchase this business for us riders.”

READ MORE ON HARLEY-DAVIDSON

“We have no other convenient option for our bikes.”

Another commenter expressed, “What? This is devastating news, I’m saddened to hear this. I reside in International Falls and this was my nearest dealership.”

“Really heartbreaking news, I was just about to plan some maintenance before next year’s riding season,” a third user shared.

The owners mentioned in the comments that they are in the process of selling their remaining inventory.

While standard business operations have concluded, they are working through existing service orders and remaining stock, including motorcycles.

They have confirmed that regular business activities have already ceased, with an ongoing wind-down of their current operations, including service work orders and leftover inventory, including motorcycles.

New Harley-Davidson models anticipated to debut in 2026 – and they’re not your average motorcycles

The exact date for the store’s closure remains uncertain.

Customers holding gift cards for the center can either request a refund or use them to purchase existing merchandise.

The owners expressed that sharing years of passion for riding has been a true privilege.

“Our love for Harley-Davidson motorcycles, the community, and the experiences has provided us with countless moments of joy and excitement, doing what we cherish every day!” the Kachelmyers shared.

Harley-Davidson Closures in 2024

Currently, there are over 650 Harley-Davidson dealerships across the United States.

Unfortunately, several stores have closed for various reasons throughout 2024, with minimal explanations provided.

Here’s a recap of some Harley-Davidson locations that have shut down this year and the reasons behind their closures:

The San Francisco location closed in June after 110 years due to ‘chaos’ from new management.

Miracle City Harley-Davidson in Titusville, Florida, closed in September, with no justification offered.

Harley-Davidson’s flagship location in New York City ceased operations on September 28, with the owner citing economic challenges.

Reiman’s Harley-Davidson dealership in Kewanee, Illinois, shut its doors in October after the owners sold the establishment to the Walter Brothers Harley Davidson dealership in Peoria, Illinois.

Additionally, the dealership in West Bend, Wisconsin, is temporarily closing for the season from November 2 until April 1, 2024.

“It deeply saddens us to confront these difficult economic times, leading to the hard decision to close our doors and wind down the operations.”

“To our Harley-Davidson family, we are grateful for this lifelong journey!” the owners expressed.

“Keep riding and enjoying; we look forward to crossing paths with you on the road!”

The store has not yet responded to The U.S. Sun’s request for comment.

As the Kachelmyers step away from their venture, another motorcycle family is set to expand its operations.

Carolina Coast Harley-Davidson in Wilmington, North Carolina, and Beach House Harley-Davidson in Shallotte, North Carolina, are changing ownership after over three decades under the management of Rick and Janice Noyes.

The two dealerships are being taken over by Charlie Cole, Will Cole, and Freddy Tedesco of the Cole Family of Harley-Davidson Dealerships.

Harley-Davidson Sports Center in Duluth, which is about 150 miles north of Minneapolis

3

Harley-Davidson Sports Center in Duluth, which is about 150 miles north of MinneapolisCredit: Google Maps