- Global Retail Sales Decline: 13% decline in global retail sales of new motorcycles for Q3.
- North America Retail Sales: 10% decline in North America retail sales.
- International Retail Sales: 18% decline across international regions.
- EMEA Retail Sales: 23% decline in EMEA retail sales.
- Asia-Pacific Retail Sales: 16% decline in Asia-Pacific retail sales.
- LatAm Retail Sales: 4% increase in LatAm retail sales.
- Consolidated Revenue: Down 26% in Q3.
- HDMC Revenue: Down 32% in Q3.
- HDFS Revenue Growth: 10% increase in Q3.
- Consolidated Operating Income: $106 million, down 49% from prior year.
- Consolidated Operating Margin: 9.2% in Q3, down from 13.5% in prior year.
- Earnings Per Share: $0.91, down 34% from $1.38 last year.
- Year-to-Date Consolidated Revenue: $4.5 billion, down 6% compared to last year.
- Year-to-Date Operating Income: $610 million, $190 million lower than prior year.
- Year-to-Date Earnings Per Share: $4.27, down 8% from $4.65 in 2023.
- Dealer Inventory Reduction: Down 13% at the end of Q3 relative to the end of Q2.
- HDMC Gross Margin: 30.1% in Q3, down from 31.7% in prior year.
- HDFS Operating Income: $77 million, up 29% compared to last year.
- HDFS Retail Credit Loss Ratio: 3.1% in Q3, up from 2.7% in Q3 2023.
- LiveWire Market Share: 69% of the CC-plus HD on-road EV segment year-to-date.
- LiveWire Operating Loss: $26 million in Q3, $1 million more than a year ago.
- Operating Cash Flow: $931 million in the first nine months of 2024, up from $707 million last year.
- Share Buyback: 4 million shares repurchased in Q3 at a cost of $150 million.
Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Harley-Davidson Inc (HOG, Financial) gained more than 4 percentage points of market share in the US touring segment, outperforming the category and the market as a whole.
- The company continues to see greater spending from higher-income customers, with CVO motorcycles up double-digit percentages throughout the year.
- Harley-Davidson Financial Services (HDFS) reported a strong performance with a 10% revenue growth driven by higher retail and commercial finance receivables.
- Despite challenges, Harley-Davidson Inc (HOG) is enthusiastic about its new lineup of touring motorcycles, which received outstanding feedback from customers and media.
- The company is committed to reducing dealer inventory levels, which were down 13% relative to the end of Q2, to support dealer health and prepare for the 2025 model year launch.
Negative Points
- Global retail sales of new motorcycles declined by 13% in Q3, with North America down 10% and international regions down 18%.
- Consolidated revenue in the third quarter was down 26%, driven by a 32% decrease in HDMC revenue.
- The operating income margin for Harley-Davidson Inc (HOG) decreased to 9.2% from 13.5% in the prior year period.
- LiveWire's retail sales outpaced wholesale for a third consecutive quarter but still fell short of expectations, leading to a revised full-year guidance.
- The company revised its full-year 2024 outlook downward due to lower-than-expected retail demand, with expected retail and wholesale units now in the range of 149,000 to 153,000.
Q & A Highlights
Q: Jochen, can you share any themes from recent dealer conversations and your message to dealers?
A: Dealer profitability is a major concern. We held our annual dealer forum in October, which was a good opportunity to engage with our dealers. We presented our support plans for 2025, including new product lineups and co-marketing investments. Dealers rated the forum highly, indicating optimism despite the challenging environment.
Q: Can you discuss the trend of retail over the third quarter and how it informed your outlook for Q4?
A: Q3 started strong in July but ended weaker than expected, especially in late September. This aligns with trends seen across the powersports industry. Macroeconomic and geopolitical uncertainties, interest rate changes, and weather events impacted sales.
Q: Why do you think aligning retail with wholesale is the right target for 2024, given the retail weakness?
A: Dealer inventory at the end of Q3 was down 13% from Q2. We aim to reduce it by another 20% by year-end, aligning with the start of 2024 levels. We prioritize inventory for key categories like touring and trike motorcycles, which are central to our strategy.
Q: What are your expectations for LiveWire, given the challenging EV market?
A: We've taken significant actions to reduce cash burn by 40% next year. We've centralized operations and reduced headcount by 30%. We remain committed to investing prudently in LiveWire to maintain leadership in electrification, ensuring Harley-Davidson has access to this technology when needed.
Q: Can you elaborate on the 15% operating margin target for 2025 and the key drivers?
A: We are focused on aligning production, wholesale, and retail, which will improve leverage. Our cost productivity program aims for a $400 million improvement, excluding leverage. We also maintain strong operating discipline around OpEx, which has shown positive results this quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
