HOG — Harley-Davidson, Inc.

Summary of Harley-Davidson Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Consolidated Revenue: Down 12% year-over-year, primarily due to a 54% decline in Harley-Davidson Financial Services (HDFS) revenue after transitioning to a capital-light model.
• Operating Income: $23 million, significantly lower than $160 million in Q1 2025.
• Earnings Per Share: $0.22, down from $1.07 in Q1 2025.
• Retail Sales: Global retail sales of new motorcycles increased by 8%, with North America up 14%. Approximately 34,000 motorcycles were sold globally.
• Dealer Inventory: Reduced by 22% year-over-year, indicating improved inventory management.
• HDFS Operating Income: $22 million with a margin of 19.9%. Retail credit loss ratio improved to 3.6%.
• LiveWire Segment: Revenue increased by 87%, with a focus on electric motorcycle launches.

2. Strategic Updates and Business Highlights

• "Back to the Bricks" Plan: A new strategic initiative aimed at revitalizing the brand and enhancing dealer profitability. This includes a focus on rider-centric products, leveraging the dealer network, and improving parts and accessories sales.
• New Product Launches: The return of the Sportster in 2027 and the introduction of the Sprint motorcycle, aimed at attracting younger riders and enhancing accessibility.
• Marketing Strategy: Launched a new brand platform, "Ride," focusing on authentic storytelling and rider engagement.
• Dealer Relationships: Strengthening ties with dealers to improve profitability and enhance customer experience.

3. Forward Guidance and Outlook

• 2026 Guidance: Reaffirmed expectations for HDMC retail units between 130,000 and 135,000. Anticipated higher shipments in Q2 and Q4, with a flat Q3.
• Tariff Costs: Expected to be between $75 million and $90 million for the full year, slightly lower than previous guidance.
• Medium-Term Targets: Aiming for mid-single-digit retail growth, with an EBITDA target of $350 million by 2027.

4. Bad News, Challenges, or Points of Concern

• Revenue Decline: Significant drop in consolidated revenue and operating income raises concerns about overall business health.
• HDFS Transition: The shift to a capital-light model has resulted in lower interest income and a reduced retail loan portfolio.
• Market Challenges: Ongoing inflationary pressures and geopolitical uncertainties affecting consumer discretionary spending.
• Demographic Headwinds: Concerns about the declining popularity of motorcycling among younger generations, which could impact future sales.

5. Notable Q&A Insights

• Demographic Strategy: Addressing concerns about younger riders through the introduction of accessible models like the Sportster and Sprint, which are expected to attract new customers.
• Tariff Impact: Management indicated that tariff costs would decrease over the year, with a focus on mitigating impacts through strategic adjustments.
• Dealer Profitability: Emphasis on improving dealer economics through predictable rebate structures and enhanced inventory management.
• LiveWire's Role: While LiveWire is seen as a growth opportunity, there is no immediate intention to fund it directly from Harley-Davidson's capital.

Overall, while Harley-Davidson shows promising growth in retail sales and strategic initiatives, it faces significant challenges in revenue decline and market dynamics that could impact its long-term performance.