Harley-Davidson, Inc. (HOG) Earnings

Management highlights

### Strategic Progress: Back to the Bricks Plan - 2026 is a transition year to reset the business, rebuild dealer confidence, improve execution, and build long-term durable performance. Early progress against the plan is on track, with the business stabilizing and moving in the right direction. - Domestic North American retail has grown year-over-year for three consecutive quarters, with 3% growth in Q2 2026. US market share in the 601+ cc segment reached 32% year-to-date, with continued strength in the touring category. ### Dealer Health and Inventory Management - Dealer inventory health has improved for seven consecutive quarters, and is the healthiest it has been in years, with over 85% of global dealer inventory being 2026 model year product. A healthy dealer network is foundational to long-term earnings power, and this priority remains non-negotiable. - Management expects domestic dealer profitability to double in 2026, driven by better inventory balance, strong used motorcycle residuals, and improved MSRP realization on new motorcycles. ### Product and Brand Updates - Two new custom-focused "blank canvas" motorcycles (Superglide and Deadwood) were launched, aligned with the Back to the Bricks strategy focused on core Harley-Davidson customization identity. Early sell-through for Superglide has been strong, with high MSRP realization and dealer enthusiasm; Deadwood is just arriving at US dealerships, with overwhelmingly positive early market reaction. - The P&A business, a core driver of rider connection and dealer profitability, is tracking ahead of 2026 full-year plans. A new general manager has been appointed, and the team is preparing for the 2027 model year P&A launch alongside new motorcycle launches. - Marketing has shifted to a more focused, local, community-centered approach, with successful grassroots partnerships with custom bike builders for the new model launches. ### HDFS Strategic Update - HDFS remains a critical strategic asset enabling dealer and customer financing, and has transitioned to a more capital-efficient business model following the 2025 strategic partnership with KKR and PIMCO. HDFS performance is ahead of plan, including forward flow activity for originated retail loans. ### Geographic Performance - Europe remains a challenging market, with Q2 retail down 9% and market share down 1pp to 3% year-over-year. Management is implementing portfolio and market alignment adjustments, including the planned 2027 return of the Sportster 883, which has generated strong dealer excitement.

Guidance

- HDMC retail and wholesale units for full year 2026: revised upward to 133,500 to 138,500 units, from the prior range of 130,000 to 135,000 units. Management expects retail and wholesale to move roughly 1:1 for the remainder of 2026, given healthy dealer inventory levels. - HDMC operating income for full year 2026: revised upward to $10 million to $50 million, from the prior range of a $40 million loss to $10 million gain. The upward revision reflects realized tariff recoveries that were not included in original guidance. - HDFS operating income for full year 2026: revised upward to $55 million to $70 million, from the prior range of $45 million to $60 million. - LiveWire 2026 operating loss guidance is maintained at $70 million to $80 million, no change. - Total expected 2026 gross tariff costs are maintained at $75 million to $90 million, unchanged from prior guidance. No additional meaningful tariff recoveries are expected for the remainder of 2026. - Management reaffirmed prior 2027 targets: $150 million in fixed cost savings and over $350 million in HDMC EBITDA. Management does not plan to update 2027 targets until later in 2026, and notes current performance is ahead of initial plans, with no expected impact from 2026 year-to-date supplier issues on 2027 targets.

Segment performance

Harley-Davidson Motor Company (HDMC): Q2 2026 revenue was $1.1 billion, up 6% year-over-year. Revenue breakdown: motorcycle revenue $848 million (77.1% of total HDMC revenue), Parts & Accessories (P&A) $177 million (16.1% of total HDMC revenue), Apparel and Licensing $62 million (5.6% of total HDMC revenue), other revenue $17 million (1.5% of total HDMC revenue). HDMC gross margin was 27.5%, down 108 basis points year-over-year; operating income was $72 million (operating margin 6.6%), up from $61 million (5.9%) year-over-year; adjusted EBITDA was $115 million (10.4% margin), up from $97 million (9.3%) year-over-year. Global new motorcycle retail sales were up 1% year-over-year to 42,500 units: North America +3% to ~30,000 units, EMEA -9%, Asia Pacific flat, Latin America +4% to 4% after 21% growth in Q1 2026. Wholesale shipments were 39,200 units, up 9% year-over-year. Global dealer inventory was down 17% year-over-year, 85% of North American dealer inventory is 2026 model year, up from less than 75% year-over-year. Harley-Davidson Financial Services (HDFS): Q2 2026 revenue was $117 million, down 55% year-over-year, due to the new capital-light model implemented after selling most of the retail loan portfolio in 2025. Operating income was $22 million, with an 18.5% operating margin. Annualized retail credit loss ratio was 3.0%, down from 3.3% year-over-year; retail loan originations were up 10% to $940 million; total gross financing receivables were $2.7 billion at quarter end. LiveWire: Q2 2026 consolidated revenue was up 52% year-over-year, driven by higher unit sales of electric motorcycles and Stasic brand electric balance bikes. Net cash used by operating activities improved 18% year-over-year through June 30, 2026. LiveWire began production of the S4 Honcho and completed the acquisition of Dust Motorcycles to expand into the off-road category. Consolidated Harley-Davidson, Inc.: Q2 2026 revenue was down 6% year-over-year, driven by the HDFS revenue decline; operating income was $76 million, down from $112 million year-over-year; EPS was $0.75, down from $0.88 year-over-year.

Risks & headwinds

- The European market continues to face a subdued operating environment, with weaker-than-desired retail performance and market share decline in Q2 2026. - Ongoing domestic supplier challenges have impacted HDMC margins in 2026 year-to-date, though management has mitigated most impacts to date. - Tariff policy remains uncertain and fluid, creating ongoing cost volatility for the business, even as management has secured unexpected recoveries in 2026. - Global consumer discretionary demand remains uneven, with persistent inflationary pressures, interest rates above historical averages, and geopolitical uncertainty keeping pricing top of mind for consumers. - Production levels are expected to be lower than wholesale shipments in 2026, which will create deleverage pressure on operating margins, though alignment is expected by 2027.

Analyst Q&A

• Q: Analyst asked for confirmation that the 2026 HDMC guidance includes the $20 million IEPA tariff refund, and requested shipment volume details for the upcoming 2027 Sportster launch, noting historical volumes exceeded 40,000 units annually. /

  A: Management confirmed the $20 million tariff recovery is included in the updated 2026 guidance, and that the total 2026 gross tariff cost guidance of $75-90 million remains unchanged from prior guidance. Management confirmed the Sprint model will ship by end of 2026, and Sportster will launch in 2027, but declined to provide specific year-one shipment targets beyond noting mid-single-digit retail growth targets are prudent, with upside possible given strong dealer and rider enthusiasm for the upcoming models. Additional details will be provided next quarter.

• Q: Analyst asked for clarity on how inventory levels will adjust as the product portfolio broadens under the Back to the Bricks strategy, and asked what improvements have been made to dealer forecasting and response time for new models. /

  A: Management stated current aggregate inventory levels are broadly appropriate after seven quarters of improvement, with no material change from current levels expected in the near term. Most dealers now report inventory is appropriate or that they want more units, a major shift from 2025 when most held excess inventory. Management is actively working with dealer advisory councils to improve forecasting to ensure the right models are available in the right regions, as a natural extension of existing inventory improvement work.

• Q: Analyst asked whether management sees improved industry demand in North American Q2, and how much of Harley-Davidson's growth comes from industry trends versus the company's own strategic changes. /

  A: Management confirmed North American retail demand is healthy, with Q2 up 3% and Q1 up double digits, even after Q1 had higher promotion that normalized in Q2. Harley-Davidson's market share performance has been strong, particularly in the touring segment, and the company's portfolio adjustments to add accessible, core Harley-Davidson models like Superglide, Deadwood, and Nightster are driving growth. Management noted the full-year guidance midpoint implies ~1% growth in the second half, which represents strong performance on a two-year stacked basis.

• Q: Analyst asked for an update on the 2027 $150 million fixed cost savings target under the Back to the Bricks strategy, and for additional details on cost-cutting initiatives. /

  A: Management stated the company remains on track (or slightly ahead) to hit the $150 million target, and that cost reduction is a top priority for the leadership team with a dedicated group focused on the work. Headcount reductions were completed earlier in 2026, and the business has also refocused its portfolio and P&A operations to eliminate non-core activities, with additional cost of goods savings initiatives in progress. No additional details will be provided until 2027 guidance is firmed up later this year.

• Q: Analyst asked what dealers view as the appropriate long-term inventory level, and for an update on trends in the used motorcycle market. /

  A: Management reported used Harley-Davidson residuals are extremely strong, which alongside strong new MSRP realization is a major driver of the expected doubling of dealer profitability in 2026. Management noted that where nearly all dealers reported excess inventory in Q4 2025, the vast majority now believe inventory is appropriate or want more units, which is the right aggregate position with healthy supply-demand balance. Management added that there is still room to improve inventory mix by region and dealer to further improve turns and sales with current aggregate inventory levels.