HARLEY-DAVIDSON, INC. Q1 FY2025 earnings call

• Product Launches: Launched CVO Road Glide RR, planning new entry-level products in smaller displacements and an iconic classic. Model-year 2025 campaign shifted to later in the year. - Financial Services: Evaluating investment in HDFS with objectives to demonstrate class-leading returns, establish value-enhancing partnership, secure long-term funding, and maintain service levels. - Inventory: Dealer inventory improving, aiming for 10% year-end reduction in US. - Tariffs: Q1 direct tariff impact $9M, 2025 impact range $130M-$175M, with mitigation actions underway. - Share Repurchases: Bought back 3.4M shares worth $87M in Q1.

HDMC: Revenue decreased by 27% in Q1. Motorcycle shipments down 33% to 39,000 units. Gross margin 29.1% vs 31.2% prior year. HDFS: Revenue $245M, down 2%; operating income $64M, up 19% due to lower provision for credit losses and operating expenses. LiveWire: Revenue decreased, operating loss $20M, cash used $18M in Q1, sold 33 units. Revenue contribution: HDMC likely the largest segment given its size, HDFS and LiveWire smaller but with distinct performances.

• Withdrew 2025 financial guidance due to macro uncertainty and tariff fluidity. - Capital allocation priorities: Fund profitable growth of Hardwire initiatives, reduce CAPEX to $200M-$225M, pay dividends, and execute discretionary share repurchases.

• Macro Environment: Uncertainty affecting retail sales, especially in North America. - Tariffs: Uncertainty in tariff policies impacting costs and competitiveness. - LiveWire: Headwinds in EV segment due to slower adoption, lack of incentives, and charging infrastructure issues.

Q: Regarding HDFS, what might the economics of a long-term strategic partnership look like for Harley-Davidson?

A: Jonathan Root stated it's early in discussion, focusing on demonstrating premium value, long-term funding optionality, and continuing product portfolio robustness.

Q: Just as a follow-up, what has changed from prior conclusion that HDFS was strategic?

A: Jonathan Root said it's about getting a more realistic market valuation of HDFS.

Q: Jochen, any update on timing of retirement and replacement input?

A: Jochen Zeitz said process is continuing, led by Heidrick & Struggles, and he'll lead until successor is appointed.

Q: Color on tariff sources and anti-American sentiment?

A: Jochen Zeitz and Jonathan Root discussed US-centric manufacturing, China sourcing impact, and no significant anti-American sentiment seen.

Q: Retail environment in April and pricing lever?

A: Jochen Zeitz noted sequential improvement in North America, and pricing and mix watched with competitor promotions.

Q: Why bring back entry-level bikes and model year timing shift?

A: Jochen Zeitz said strategic pillar for entry-level with profitability aim; Jonathan Root discussed model year shift to fall for extended selling opportunities.

Q: LiveWire annual cost savings and long-term thinking?

A: Jochen Zeitz and Karim Donnez talked about cost reductions and focusing on addressable EV market.

Q: Tariff mitigation and US competitive advantage?

A: Jochen Zeitz discussed mitigation actions and potential US competitive advantage if tariffs stay high.

Q: Model year 2026 launch cadence?

A: Jonathan Root said working on details, no meaningful volume impact in 2025, more info in 90 days.