Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- LiveWire Group Inc (LVWR, Financial) reported a triple-digit increase in branded unit sales compared to Q2 2023.
- Retail sales outpaced wholesale, making LiveWire the number one on-road electric motorcycle retailer in the US for the first half of 2024.
- LiveWire's market presence grew steadily, especially in Europe, with two models now in the market.
- Operating loss improved by 12% compared to Q2 2023, highlighting cost reduction efforts.
- The company received an $89 million grant from the Department of Energy to invest in its York, Pennsylvania facility, supporting EV motorcycle manufacturing.
Negative Points
- LiveWire Group Inc (LVWR) continues to face a challenging market environment, particularly in the US.
- Despite improvements, LiveWire still reported an operating loss of $28 million for Q2 2024.
- Revenue from the electric balance bike business (STACYC) was down compared to the prior year.
- The company plans for a significant reduction in cash burn next year, indicating ongoing financial challenges.
- LiveWire's revenue declined by 25% in the first half of 2024 compared to the prior year.
Q & A Highlights
Q: What does guidance assume for retail in 2024? And what's your bigger-picture assessment of consumer response to new products?
A: We expect retail guidance to be 0% to 3% for the full year. The innovation has moved the needle significantly, especially considering the overall industry trends. The reception of new products has been extraordinarily positive, and we believe this will help our business in the coming years.
Q: Can you talk about the second half gross margin assumption and SG&A expense management?
A: We are pleased with our operating margin performance despite production volume challenges. We have instituted cost-saving measures and investments in manufacturing to reduce costs. This has been factored into our updated guidance.
Q: How did retail trends evolve over the quarter, and why do you expect retail growth in the second half?
A: Retail trends were consistent throughout the quarter. We expect growth in the second half due to positive consumer and dealer reactions to new products, improved inventory availability, and better manufacturing consistency compared to last year.
Q: Can you provide color on the touring market share and retail performance in June?
A: Our touring market share was strong in Q2, with significant growth in the US. The production disruption last year did not significantly impact June's performance, and we are pleased with the market share gains in the touring segment.
Q: What are your dealers' perspectives on inventory levels, and do they want further reductions?
A: Dealers are starting to see inventory reductions, with a 35% decline expected in the US by year-end. Overall, there has been minimal pushback, and we believe the reductions are significant and well-received.
Q: How do you feel about the health of the HDFS book and annualized retail credit losses?
A: We are pleased with the HDFS performance. While consumer delinquency is slightly higher than desired, overall losses are in line with expectations. We remain confident in our reserve levels and the portfolio's health.
Q: Can you provide a breakdown of channel inventory by model year and discuss promotional levers for the rest of the year?
A: We have minimal levels of 2023 models in the market and have stopped promoting them. Currently, there are no promotions for 2024 models, but we are monitoring the situation closely.
Q: Is the updated operating margin guidance primarily due to production and fixed cost absorption, or does it include incremental dealer support costs?
A: The updated guidance primarily reflects the impacts of production volume and leverage. We are being thoughtful about inventory levels and ensuring dealers are well-positioned, but the main driver is production-related leverage.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
