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Summary of Harley Davidson Q4 2025 Earnings Call

1. Key Financial Results and Metrics:

• Q4 2025 Results:

  • Consolidated revenue decreased by 28% year-over-year to $1.4 billion.
  • Operating loss of $361 million compared to a loss of $193 million in Q4 2024.
  • Earnings per share (EPS) was a loss of $2.44, down from a loss of $0.93 in the prior year.
  • North American retail motorcycle sales increased by 5%, while international sales declined by 10%, leading to a global retail sales decrease of 1%.
  • Dealer inventory was down 17% year-over-year, exceeding the target reduction of 10%.

• Full Year 2025 Results:

  • Consolidated revenue of $4.5 billion, down 14% from 2024.
  • Operating income decreased to $387 million from $417 million in 2024.
  • EPS for the year was $2.78, down from $3.44 in 2024.

2. Strategic Updates and Business Highlights:

• CEO Arty Scars emphasized a focus on stabilizing the business, restoring dealer confidence, and aligning wholesale activity with retail demand.
• Actions taken include reducing wholesale shipments, targeted promotions, and improving inventory management.
• The company is finalizing a strategic plan to be announced in May 2026, focusing on dealer profitability, brand momentum, and cost reduction.
• The Harley Davidson Financial Services (HDFS) transaction aims to create a capital-light business model, reducing risk and improving financial flexibility.

3. Forward Guidance and Outlook:

• For 2026, Harley Davidson expects retail and wholesale motorcycle units to be between 130,000 and 135,000, indicating a one-to-one relationship.
• Anticipated operating income for HDMC is projected to range from a positive $10 million to a loss of $40 million, with HDFS expected to generate operating income of $45 million to $60 million.
• The company forecasts increased tariff costs between $75 million to $105 million for 2026, impacting margins.

4. Bad News, Challenges, or Points of Concern:

• The significant operating loss in Q4 reflects ongoing challenges, including elevated dealer inventory and macroeconomic pressures.
• HDFS reported an operating loss of $82 million due to costs associated with liability management and lower retail finance receivables.
• The company faces headwinds from inflation and high interest rates affecting consumer purchasing power.
• Retail sales in international markets, particularly EMEA and Asia Pacific, showed significant declines, raising concerns about global demand.

5. Notable Q&A Insights:

• Analysts questioned the long-term profitability of HDFS, with management indicating it may take 2-3 years to stabilize and rebuild earnings potential.
• The company is cautious about wholesale shipments, expecting Q1 2026 to be lower than Q1 2025, with a gradual increase anticipated in Q2.
• There was discussion regarding the pricing spread between new and used motorcycles, with management noting efforts to stabilize used values and improve affordability for consumers.
• The leadership team is focused on maintaining healthy inventory levels and supporting dealers through promotional activities to drive sales.

Overall, while Harley Davidson is taking steps to address its challenges and stabilize its operations, it faces significant headwinds that could impact its financial performance in the near term.