Harley-Davidson Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 1, 2025
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Operator

Thank you for standing by, and welcome to the Harley Davidson twenty twenty five First Quarter Investor and Analyst Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Sean Collins. Thank you. Please go ahead.

Shawn Collins
Shawn Collins
Director of IR at Harley-Davidson

Thank you. Good morning. This is Sean Collins, the Director of Investor Relations at Harley Davidson. You can access the slides supporting today's call on the Internet at the Harley Davidson Investor Relations website. As you might expect, our comments today will include forward looking statements that are subject to risks that could cause actual results to be materially different.

Shawn Collins
Shawn Collins
Director of IR at Harley-Davidson

Those risks include, among others, matters we have noted in today's earnings release and in our latest filings with the SEC. Joining me for this morning's call are Harley Davidson Chief Executive Officer, Jochen Zeitz, also Chief Financial Officer and President of Commercial, Jonathan Root. And we have LiveWire's Chief Executive Officer, Karim Dines, available for questions. With that, let me turn it over to our CEO, Jochen Zeitz. Jochen, over to you.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

Thank you, Sean. Good morning, everyone, and thank you for joining today's call. HTI operating income margin for the quarter came in at 12.1%. Our bottom line performance was better than expected, driven by strong product mix, tight cost control in logistics, supply chain and in our operating expenses as we left significant spend related to our model year 2024 touring launch. Global retail sales were down 21% in Q1 and down 24% in North America, softer than we expected primarily in The U.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

S. Market, driven by historically low levels of consumer confidence in the uncertain macro environment. With the decision to roll out our model year '25 campaign later in the year in The U. S. To be closer to the riding season, the majority of our marketing development fund is being allocated in Q2 and beyond to support the network well into and beyond the riding season.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

The Marketing Development Fund is the most significant co marketing investment made in the company's history, where we believe this investment will be most effective in the current environment closest to the sale with our dealers. Outside of North America, EMEA experienced a quarter with overall retail being down just 2%. The APAC region experienced a 28% retail decline driven by softness primarily in China and Japan. And lastly, LATAM saw a 6% decline year over year in retail. As we move forward through this macro uncertainty, we remain committed to managing wholesale shipments in order to maintain reduced levels of dealer inventory.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

At the end of Q1, global wholesale shipments were down 33% and dealer inventory was down 19% as compared to the end of Q1 last year, with U. S. Inventory being down 23%. Turning to HDFS, our Financial Services business delivered a better than expected result with an increase of 19% in operating income for the quarter. Jonathan will provide some additional detail on how we believe there are opportunities further leverage the strength of HDFS to benefit our customers, dealers and shareholders alike.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

Looking to product, in addition to our twenty five model year launch that we detailed at the last quarterly call, Harley Davidson champions on road performance as a key differentiator for the brand underpinned by our customers' desire to take inspiration from the track onto the street. As we continue to look to racing for inspiration, in early March, we launched a new limited production Harley Davidson, the CVO Road Glide RR, setting a new benchmark for a street leader performance bagger as the most powerful and dynamic on road production motorcycle ever offered in the company's one hundred and twenty two year history. Leveraging knowledge and components developed by the Harley Davidson factory racing team competing in the King of the Packet series, the CVO Road Glide RR combines exceptional performance with attention to custom detail, a hallmark of Harley Davidson's CBO limited production motorcycles. Production of the R R model will be limited to 131 hand assembled serialized motorcycles available through select authorized Harley Davidson dealers in The United States this year. We've seen an outstanding response to this launch across the network and we do expect these to sell out from preorder.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

Last quarter, we teased the next installment of entry level product, something that we are very excited about having been several years in development. Since 2021, a strategic pillar of our hardwire strategy has been selective expansion and redefinition, Expanding our cruiser offering into smaller displacements including a true entry level cruiser has been a focus in our plans. I'm pleased to confirm that we are planning to introduce new entry level products in smaller displacements as well as the introduction of an iconic classic for The U. S. And international markets starting next year.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

We expect these products to be highly affordable and profitable additions to our portfolio and formative to the company's future growth. Turning to LiveWire. As already highlighted in February, the headwinds facing the broader powersports and discretionary leisure industry are even more complicated in the EV segment of the market. All signs are pointing to much later EV adoption than originally anticipated, given a lack of incentives and a notably less favorable regulatory environment combined with a slower expansion of charging infrastructure. In that context, Harley Davidson is evaluating all options for its investment in LiveWire, while LiveWire will continue evaluating all options for its business, including seeking external capital if and when needed.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

In addition, LifeWire plans to continue to drive additional significant cost savings to reduce cash burn and operating losses with the intention to get to a sustainable business model with existing funds available. Harley Davidson does not plan to provide additional investments into LiveWire beyond the line of credit agreement entered into Q1 twenty twenty four of up to $100,000,000 With increased focus on costs and cash flow, LiveWire now expects operating losses of approximately $59,000,000 and a cash burn of $49,000,000 versus previous operating loss guidance of 70,000,000 to $80,000,000 for the full year. Turning back to Harley Davidson. With the level of uncertainty we are seeing and the number of changes happening on an ongoing basis in global tariff and trade, it's difficult to predict what policies may impact customers over the course of the year and how consumer confidence will affect discretionary product purchases. We therefore are withdrawing our previous 2025 guidance until there's more clarity on the global economy and tariff landscape.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

While the tariff environment remains fluid, our continued engagement with various administrations leads us to be cautiously optimistic that there will be trade deals that will at least limit the overall tariff impact on the company and its operations. That said, our teams are working extremely hard to mitigate the impacts on '25 given the fluid tariff environment, while we are also focused on mitigation strategies to minimize potential longer term impacts to the company. And with that, I'll hand it over to Jonathan.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

Thank you, Jochen, and good morning to all. In my role as President of Commercial, I would like to expand on Jochen's comments regarding the continued development of a very robust product portfolio. In addition to a new small displacement motorcycle and the introduction of an iconic classic cruiser starting next year, we also plan to introduce more innovation in our Touring and Trike motorcycle platforms, all reflections of the execution of the Hardwire strategy for future years. That said, it is important to note that our new Touring motorcycles introduced in the last eighteen months are a very important factor in differentiating old from new in look, sound, feel, and performance, and the new large cruisers are delivering excitement capability and performance refreshes to our lineup this year. Additionally, based on much feedback, we will begin to shift the model year timing to the fall to create additional selling opportunities later in the year.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

In order to support dealer health in these challenging times, we have also made changes in our fuel facility program through revised requirements and financial incentives. Of the five ninety four global dealers identified as requiring a fuel upgrade, 35% have either been completed or are in process at this point, which is on track with our original ten year time horizon. We have also refined our flexible rewards program to improve its attainability and attractiveness. And as you heard from Jochen, we introduced the marketing development fund to put dollars where we believe they have the most effective result. Before I get into the financial results, I would also like to touch on some speculation in the press surrounding Harley Davidson Financial Services and its strategic direction.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

As part of the hardwire, we are pursuing value enhancing opportunities for all stakeholders, including customers, dealers, lenders, debt holders and shareholders. With that in mind, we can confirm today that we are evaluating an investment into HDFS if the following transaction objectives are met. First, any arrangement would demonstrate the class leading returns of HDFS as a driver of value for Hog shareholders by proving out a significant premium valuation versus book value. This is all made possible as HDFS is the highest returning transportation related captive finance company in America. Secondly, an investment must establish a value enhancing long term strategic partnership.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

Thirdly, an arrangement must lead to securing long term funding optionality that would maintain and perhaps even lower the overall cost of funding and improve the competitiveness of our offers. Lastly, we commit to maintaining and even improving service levels and support across the range of retail finance, commercial finance, card products and insurance and protection products. Later on in my remarks, I will go further into the Q1 financial results and fundamentals of the HDFS business. I plan to start on Page four of the presentation, where I will briefly summarize the consolidated financial results for the first quarter of twenty twenty five, and subsequently, I will go into further detail on each business segment. As Jochen already mentioned, consolidated revenue in the first quarter was down 23%, largely in line with expectations across HDMC and HDFS, while revenue also decreased at LiveWire.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

Consolidated operating income in the first quarter was $160,000,000 driven by a decline of 51% at HDMC. This was partially offset by an increase of 19% in operating income at HDFS. At the LiveWire segment, the operating loss came in at $20,000,000 Consolidated operating income margin in the first quarter came in better than expected at 12.1% relative to 15.2% in the first quarter a year ago, representing a three ten basis point decline, primarily due to the impacts associated with lower volume as we deliver on our commitment to help bring down dealer inventory. I plan to go into further detail on each business segment's profit and loss drivers in the next section. First quarter earnings per share was $1.07 In Jochen's remarks, he addressed retail sales and market share.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

Note the change in market share. We are now reporting on total cruiser category given our future product plans in small cruiser. And furthermore, there are competitive dynamics on products that shift between large and small cruiser throughout 2024. Moving on to dealer inventory. We believe current dealer inventory and product availability are in an improving and healthier position overall as we approach the upcoming spring twenty twenty five riding season.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

This is important with the recent launch of new model year 2025 motorcycles, especially with the redesigned Softail motorcycles introduced earlier this year and year two of new Touring motorcycles, which were first introduced with model year 2024. We remain committed to a year end dealer inventory reduction of approximately 10%, and we are well on our way, as already demonstrated, in Q1. Looking at revenue. HDMC revenue decreased by 27% in Q1. Focusing on the key drivers for the quarter, 30 points of decline came from decreased wholesale volume at HTMC where motorcycle shipments in the quarter were down 33%, coming in at 39,000 units compared to 58,000 units in the year ago period.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

This level balances our need to be prepared for the upcoming riding season and the potential for a softer demand environment given the recent macro headlines and uncertainty. Two points of growth came from favorable year over year pricing for 2025 model year product and net sales incentives. Two points of growth came from mix as we continue to prioritize our most profitable models and markets. And finally, foreign exchange impacts resulted in one point of decline to Q1 revenue relative to prior year. In Q1, AT and T gross margin was 29.1%, which compares to 31.2% in the prior year period.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

The decrease of two ten basis points was driven by the revenue factors I just spoke about and lower operating leverage, which includes modest cost inflation of less than 1%. In order to deliver on our commitment to help bring down dealer inventory, production volumes were down commensurate

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

with

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

the lower wholesale shipments in Q1 twenty twenty five. The lower production volumes resulted in a higher fixed cost per unit on motorcycle shift in Q1 twenty twenty five. The unfavorable impact of lower operating leverage was modestly offset by other productivity savings related primarily to supply management during the quarter. Operating expenses in Q1 came in $24,000,000 lower than prior year at $199,000,000 which resulted in an HDMC operating margin of 10.8%, which compares to 16.2 in the prior year period, which included fill of the all new StreetGlide and RoadGlide motorcycles. Before we turn to the next slide, I would like to give a brief update on our ongoing productivity cost program, one of the initiatives identified as part of the hardwire strategy where we were expecting to drive a $400,000,000 improvement in productivity by 2025.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

As a reminder, for the cumulative three year period of 2022 through 2024, we achieved unlevered productivity savings of $257,000,000 We expect to achieve another $100,000,000 in 2025 and again in 2026, exceeding our hardwire dollar target by over 10%, but doing so one year later than anticipated, as mentioned in February. In Q1, we achieved $24,000,000 of unlevered productivity, primarily from logistics and supply chain initiatives. Also, to address what is on many people's minds, tariffs. The Q1 direct tariff impact for HTNC was limited to $9,000,000 Harley Davidson is a business very centered in and around The U. S.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

Three of four manufacturing plants are U. S. Based, including final assembly in York, Pennsylvania and powertrain operations and injection molding with class leading paint application, each in Wisconsin. We also have a U. S.-centric approach to sourcing with approximately 75% of component purchasing coming from The U.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

S. And all of our core products sold in The U. S. Are assembled in The U. S.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

With that in mind, we estimate our 2025 impact from new tariffs to be in the range of 130,000,000 to $175,000,000 We have a number of actions underway to mitigate the impact and this situation will remain fluid given the uncertainty that still exists. Turning back to HDFS and its performance. At Harley Davidson Financial Services, Q1 revenue came in at $245,000,000 a decrease of 2% driven by modestly lower retail receivables and commercial receivables. HDFS operating income was $64,000,000 up $10,000,000 or 19% compared to last year. The Q1 increase was driven by a lower provision for credit losses and lower operating expenses, while interest expense was flat in the quarter.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

The provision for credit loss expense was $8,000,000 lower as a result of the favorable reserve change and lower overall credit losses. The reserve change was $7,000,000 favorable as compared to Q1 of twenty twenty four, primarily on a decrease in the retail receivables. In Q1, HCFS' annualized retail credit loss ratio was 3.8%, which compares to 3.7% in the year ago period. Retail credit losses were $2,000,000 less year over year. However, lower retail receivables resulted in the small increase in the retail credit loss ratio.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

Retail credit losses continue to be driven by several factors relating to the current macroeconomic environment and the related customer and industry dynamics. In addition, the retail allowance for credit losses for the first quarter remained flat at 5.7% from Q4 of twenty twenty four. Total retail loan originations in Q1 were down 22, while commercial financing activities were also down, decreasing 14% to $1,300,000,000 Total quarter end net financing receivables, including both retail loans and commercial financing, was $7,400,000,000 which was down 6% versus prior year. For the LiveWire segment, electric motorcycles revenue decreased in the first quarter of twenty twenty five compared to the prior year period, driven by lower unit sales of LiveWire electric motorcycles and SAFIC electric ballast bikes. Selling, engineering and administrative expenses were $7,000,000 lower compared to the prior year.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

LiveWire operating loss of $20,000,000 was in line with our expectations and compares to an operating loss of $29,000,000 in the prior Q1. In terms of net cash used during the quarter, LiveWire used $18,000,000 in Q1 of twenty twenty five or $9,000,000 less relative to Q1 of twenty twenty four. On a unit basis, LiveWire reported sales of 33 units in Q1 compared to 117 units sold in the prior Q1. The uncertain macro environment is weighing on the consumers' discretionary appetite for early stage EV products. Wrapping up with consolidated Harley Davidson, Inc.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

Q1 financial results, we delivered $142,000,000 of operating cash flow, which was up $38,000,000 from the prior period. The increase in operating cash flow was due largely to lower net cash outflows for Wholesale Financing compared to Q1 of twenty twenty four. Total cash and cash equivalents ended at $1,900,000,000 which was $467,000,000 higher than at the end of Q1 prior year. This consolidated cash number includes $46,000,000 of LiveWire. Also of note, as Jochen indicated, Harley Davidson does not plan to provide additional investments into LiveWire beyond the line of credit agreement entered into in Q1 of twenty twenty four of up to $100,000,000 Additionally, as part of our capital allocation strategy and in line with our commitment to return capital to our shareholders, we bought back 3,400,000.0 shares of our stock at a value of $87,000,000 in Q1 of twenty twenty five.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

As Jochen already mentioned, we are mindful of the overall macroeconomic and tariff environment uncertainty and significant softness in high ticket consumer discretionary spend. Although we feel positive about the trajectory of our internal operations and overall operating efficiency displayed in Q1, we are withdrawing our 2025 financial outlook or guidance that we shared in early February. Specifically the metrics on Slide 15 of our Q4 twenty twenty four earnings presentation as covered on 02/05/2025. In regards to items that we can control, we look at capital allocation for the rest of 2025, where our priorities remain to fund profitable growth of the Hardwire initiatives, which includes a slight reduction in capital expenditures, which is now a range from 200,000,000 to $225,000,000 paying dividends and continuing to execute discretionary share repurchases. We will continue to monitor our business performance and cash flow and determine discretionary share repurchases based upon our cash flow.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

This will be determined in consideration of our plans to deliver on our $1,000,000,000 in share repurchases by the end of twenty twenty six, which we announced in July of twenty twenty four. As covered previously, in the three plus year period from 2022 to current, we have returned $1,500,000,000 in capital to our shareholders, including $1,200,000,000 of shares repurchased, equivalent to 22% of shares outstanding at the beginning of this period. While shareholder returns for The U. S. Discretionary leisure and powersports peers have been mired in a prolonged cyclical industry downturn over the past several years, we would like to reinforce some recent information we have released.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

Hogstock has outperformed its peer group. From a total shareholder return basis, which includes dividends, as of mid April, Hog has outperformed its peer group by 10 percentage points in the past five years since May of twenty twenty, by three percentage points over the last three years and by seven percentage points over the last year. In wrapping up, as we continue in 2025, we remain committed to delivering on behalf of all of our stakeholders. We are dealing with a challenging macroeconomic environment and dynamic tariff circumstances, and we are pleased with the resilience and resourcefulness displayed by our Harley Davidson team members and dealers. And with that, we will open it up to Q and A.

Operator

We will now begin the question and answer session. And your first question comes from the line of Craig Kennison with Baird. Craig, please go ahead.

Craig Kennison
Director of Research Operations & Senior Research Analyst at Baird

Hey, thanks. Good morning. Regarding HDFS, what might the economics of a long term strategic partnership look like for Harley Davidson?

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

Hey, Craig. Good morning. This is Jonathan. Jonathan. So thank you for your question.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

Certainly, as we work through anything from an HDFS perspective, we feel like we're in, pretty early stages from a discussion standpoint and where we go. I think consistent with the messaging that we've put out relative to the HDFS transaction, we feel like paying attention to, questions that we get from investors from time to time around how to value that business, really ensuring that we have the ability to markedly demonstrate the premium value of that business and its premium to book, is something that we feel is very important and something that the market has asked for. So that's our first area of focus. Second, as we think about sort of long term strategic partnership, that really goes hand in hand with the long term funding optionality that we're looking for. So ensuring that we really do have the ability on an ongoing and consistent basis, regardless of the dynamics of the economy and situations that we may be in, to really, ensure that we can maintain our class leading returns, maintain really attractive offers for our customers and for our dealers.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

So that sort of falls into the next piece. And then, obviously, as as we look, we do con you know, envision continuing the the product portfolio robustness that HDFS offers. So that's something that would continue long term. Relative to how any of the financials could be impacted sort of short term short term or long term, we really need to let the process play out a little bit, see where we land, and and I expect that we'll be able to give a a more detailed answer to that question, as we come together next quarter.

Craig Kennison
Director of Research Operations & Senior Research Analyst at Baird

And just as a follow-up, Jonathan, like what has changed from, I guess, a prior conclusion from management that HDFS was strategic? Is it that you think you can hang on to some of that strategic value while getting a more realistic market valuation of what that business is truly worth? Or was there something else driving this change of heart?

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

Yes. No, I think that's absolutely it, is really ensuring that we can give kind of a market based view on the value of that business. It is something that we do envision kind of, still participating in. So from that standpoint, it's not as if we envision sort of jettisoning the entire business and not having access to HDFS and the strategic importance of that business. So from our perspective, we feel like it's probably good, you know, good governance, good a good approach to be in the market and take a look at that business from time to time.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

That is, in fact, something that that we do, every now and again across the business. We thought that it was worth addressing in our quarter in light of the fact that somebody leaked some news somewhere and we know that it appeared. And so in light of the fact that we knew that we would get questions, we needed to make sure that we are sharing the information equally among all investors.

Craig Kennison
Director of Research Operations & Senior Research Analyst at Baird

That's great. Thank you, Jonathan.

Operator

And your next question comes from the line of Joseph Altobello with Raymond James. Joseph, please go ahead.

Joseph Altobello
Joseph Altobello
MD & Senior Analyst at Raymond James Financial

Thanks. Hey, guys. Good morning. So, Jonathan, I want to go back to your answer to Craig on the HDFS sale. I don't want to put words in your mouth, but it sounds like the genesis of this is you guys don't feel like you're getting full value in your stock for this business, not that a separation would benefit HDMC.

Joseph Altobello
Joseph Altobello
MD & Senior Analyst at Raymond James Financial

Is that fair?

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

Yes. I think that is fair. Again, we certainly believe in the strategic nature of HDFS. I mean, you know, it's a business that I ran before I was in my current role. It's a group of people who I love.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

It's a part of the business that I feel delivers really exceptional value to our dealer body and to our customers. And so as we look forward, certainly, the the elements that we've called out a couple of times here are elements that we do envision we would still be able to display going forward.

Joseph Altobello
Joseph Altobello
MD & Senior Analyst at Raymond James Financial

Got it. And just to follow-up on that, obviously, Jochen, you've announced that that you're looking to retire this year. I guess, first, any any update on timing? And second, would the the your replacement want or need some input on this decision?

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

Well, what we are talking about today has been something or has been part of our hardwire strategic evaluation over the last few years. So we're not doing anything that is new. We always look to improve our business outlook and increase shareholder value. So this is something that was part of our overall strategic plan. And from that point of view, there's no point in stopping that, but continue it.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

And there's an opportunity now that we believe is worthwhile evaluating. In terms of timing, I can't really talk about it. I'm not part of the committee of independent directors that are running the search. And but what I do know is the process continuing at pace. You might have read, led by Heidegger and Struggles.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

And I'm committed to lead the company until the suit of success has appointed. But exact timing is really at the discretion of the Board.

Joseph Altobello
Joseph Altobello
MD & Senior Analyst at Raymond James Financial

Okay. Understood. Thank you.

Operator

And your next question comes from the line of James Hardiman with Citi. James, please go ahead.

James Hardiman
James Hardiman
Director - Leisure and Travel Analyst at Citi

Hey, good morning. And thanks for taking

James Hardiman
James Hardiman
Director - Leisure and Travel Analyst at Citi

my questions. In particular, the process of trying to wade through tariff impact. Maybe we could spend a little bit of time on that slide. Would love a little bit of color on the various tariff sources. I guess China and Mexico.

James Hardiman
James Hardiman
Director - Leisure and Travel Analyst at Citi

Well, I guess China is pretty straightforward. Mexico, I don't know if there's an opportunity to bring that number down. Obviously, the USMCA compliance, I think, seems to be the key there. But then Canada and the EU specifically, just help us think through some of that. I think the EU is currently on pause in terms of their tariffs on our stuff, but I know it's complicated with with you guys, a, as we think about if they do put tariffs on whether Thailand would would be tariff or not.

James Hardiman
James Hardiman
Director - Leisure and Travel Analyst at Citi

And then b, just how do we think through beyond tariffs, some of the anti American sentiment that's happening right now and whether you think that's a a major risk factor going forward and and if you've seen any of that. I know that's there's a lot built into there, but, you know, obviously, this is an unprecedented situation we find ourselves in. Thanks.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

Yes. Thank you, James, for the question. Let me try and get my hands around the answer here. I think what Jonathan mentioned is important. 100% of our core products manufactured in The U.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

S. And 95% of our overall revenues. So manufacturing is from a U. S. Perspective not the issue.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

Europe is obviously different. We believe based on what we understand from trade deals that are being negotiated that we will be part of the trade deal and the sort of highest tariffs that were waived around in the past by the Europeans for liquor and motorcycles will likely not apply. But that's based on the information we have and we will be part of an overall trade deal that is being negotiated. So manufacturing into The U. Is a plays a minor role, where the big impact is the sourcing.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

But that said, 75% of our product that we raw materials and components that we are sourcing are U. S.-based. So we have a very U. S.-centric supply already, which is actually higher than many auto manufacturers in The U. S.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

And but like everybody else like auto and other peer sectors, we do have exposure primarily to China when you look at the big impact and that is because of the 145% duties. That's the big impact with 75,000,000 to €100,000,000 potentially out of the CHF 1 hundred and 30 million, 1 hundred and 70 5 million that we need to mitigate in 2025. So at some point, a trade deal with China is critical. While our exposure and our overall spend as a company in China is actually or coming from China is well below 6%, one hundred and forty five % make it so significant, which is why we've already since 2018 start to move proactively product components out of China and we are continuing to do so. That's not a process that happens overnight, but it's certainly part of our script.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

So that I think that should give you a bit of an indication. But we do, of course, need help, especially when it comes to China, just like everybody else in peer spaces and in auto as well because some components just have been historically very centered around Chinese sourcing and manufacturing. But overall, I think we are in a pretty decent position, all things considered, versus some of our competitors.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

Yeah. And James, I would just I would just add a a couple of points too. As you go through and you look at what we've included in the in the picture for 2025 in our in our little chart that kind of lays out, impact, We've we've proactively thought through where do we ship products in ahead of time, where do we try to make sure that we mitigate exposure, in the current period. You know, 2025 is the current period. And so as we work through that, that's why that number, is contained in the way that it is.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

And then as as Jochen talks about, the situation remains very, very fluid, and and certainly feels a little bit different from one day to the next, which is really where all of this lands as we start adding up, the significant variability that could be out there depending upon where things land. Our, you know, our range could be wider, than even what we put on this on on our table. But as we really try to distill this down to provide a best picture that we can, we think this is most likely with what we know today. It will probably look different a week or two from now. So this is another one where we do expect that we will provide an update and provide you with more information.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

We certainly hope for all of us that we have greater clarification over the coming ninety days.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

And James, in terms of sentiment, we haven't really experienced something that we would consider significant just like some in auto have experienced. But I think people can differentiate between us being Harley Davidson and tariffs overall that governments impose. So I would say that is at this point in time not an issue. People can differentiate very well. And our business in Canada, to take an example, has not suffered as a result.

James Hardiman
James Hardiman
Director - Leisure and Travel Analyst at Citi

Okay. That's really helpful. And I guess to that demand question, obviously, you guys the guidance was withdrawn. I guess I'm just trying to wrap my head around how much of that is the tariff slide, right, and the and the movement that we could see in the tariff numbers and sort of the ex tariff business. Right?

James Hardiman
James Hardiman
Director - Leisure and Travel Analyst at Citi

And and maybe sort of drawing a distinction between the the pre Liberation Day environment, right, which was essentially your first quarter, and then the post Liberation Day environment. So maybe speak to what you've seen in terms of demand trends. If can tell us about April, great. But even if not, how you think about sort of where the consumer's head is at with your product?

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

Yes. I mean, as we've just completed April, I usually don't talk about the running month, but this is now completed because we are a little later than usual with our earnings. So if you look at February, March, April in North America, we've seen sequential improvement from February to March and April. So April has actually not deteriorated, but slightly improved or you could say significantly improved versus March and March was better than February. Internationally, it's pretty much the same.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

As I mentioned in my remarks opening remarks, The international markets were pretty much in line with maybe one exception in Asia with our expectation. We've always said going into the year our comps get much easier in the second half of the year. And as we are lapping our substantial touring launch in particular in North America that those are tougher comps to crack and that will take a little bit of time. But that's basically what we've seen especially in The U. S.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

Our most important market improvement versus March versus February.

James Hardiman
James Hardiman
Director - Leisure and Travel Analyst at Citi

That's really helpful color. Thank you.

Operator

And your next question comes from the line of Robin Farley with UBS. Robin, please go ahead.

Robin Farley
Robin Farley
Managing Director at UBS Group

Thank you. Just circling back to the financial services topic. I guess, over the years, has seemed like HDFS is sort of the marketing arm for Harley, right, since Harley don't go on sale. It's you know, the financing offers. And obviously, the majority of, HUD by sales finance through, you know, through HCFS.

Robin Farley
Robin Farley
Managing Director at UBS Group

And it's been a meaningful part of, you know, Harley's overall earnings in any given year. So I guess what what's different today that would make that make sense to sell it with that? Because it it seems like all of those factors that were historically reasons why it didn't make sense are still kind of factors that are in play today. So just wondering what has changed in the environment or your expectations that makes it seem like something you'd want to do now?

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

Yes. Thanks, Robin. We didn't say that we are planning to sell HDFS. In fact, we wanted to clarify a rumor that's out there that said we would. That's not the case.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

Having been around a little bit that especially in the times of the financial crisis, there was a lot of pressure on the business to sell HDFS. The Board felt at the time that would not be a good idea and we all believe that this is still not a good idea. But that said, is significant value that we are not being appreciated for as a business. And if there is a win win scenario for our customers, for our dealers and for our shareholders, it's something that we need to look into and that's part of our overall strategy. And that's what we were trying to convey with our remarks.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

So there is no sale of HDFS imminent.

Robin Farley
Robin Farley
Managing Director at UBS Group

Okay. Okay. Thank you. And then just wanted to follow-up on you mentioned the retail environment in April had maybe improved versus March. It probably assuming that with the suspension of guidance, it's probably still worse than maybe your expectation for the year when you had given previous guidance.

Robin Farley
Robin Farley
Managing Director at UBS Group

I know you talked about increasing marketing spend. Is there anything else I mean pricing was a net positive in Q1, but is that a lever that you're going to maybe need to pull in this environment? Just kind of thinking about what which we should expect here in kind of peak riding season. Thanks.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

Right. Yes, I think what I said in my opening remarks is important to bear in mind. Our touring launch, a very significant launch happened earlier in the year last year and significant funds were allocated early in the year, whereas we moved our marketing development fund later into the riding season and starting now. So there is a shift that you will need to bear in mind. And I think you've alluded to that already in our February call that we have tough comps to work against due to the touring launch and the shift in new product that we've been launching and marketing as of now.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

So that has that is definitely contributing factor. In terms of the promotional environment, I think it's interesting to see that some of our competitors have are blanketing the promotions for '24, some selectively already promoting '25. We have very targeted promotions in market, nothing for '25 as of yet. So the promotional environment of our competitors has certainly been more significant than ours. And that's something of course that we need to keep in mind.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

But that said, would not draw much of a conclusion of us not giving guidance to better or worse. But as I said earlier, we've been more or less in line with the international market when it comes to retail sales. Japan has been softer and North America has been softer than anticipated. So that's as much color as we can provide right now with the sequential improvement between February, March and April.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

Yes. And I would add in Robin on your pricing your kind of pricing and mix question. As we think about some of the timing of when soft sales hit, we began shipping those really pretty late in the first quarter as we start to think through what our mix looks like. So from an overall pricing and mix perspective, we probably may we may see a little bit of pressure on that as we look out in the balance of the year with some mix changes in the way that we price some of the different products. And we are seeing that the consumer is certainly a little bit sensitive on top end, high discretionary.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

So for us, it's a pretty close watch, I think, in terms of the overall, portfolio sales, what mix looks like as we get into the balance of the year. But I do think importantly, as Jochen touched on, we have competitors who are who are already discounting their 25. That is something that we don't think, promotes a lot of a lot of health across the business from a long term standpoint. And so that's something that we certainly are making sure that we're being a lot more disciplined on, but obviously, something that we are going to have to make sure that we watch. Thank you for your question.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

Maybe one additional topic or comment is some proprietary research. We talked a bit about ridership in the past. We often do research with our with owners and non owners. And currently, what we are getting back as feedback is that 60% of non owners and roughly half of our existing owners, they feel that the current economic environment is causing them to delay a purchase. And riders and non owner intend to find the need to see improvement in the personal financial situation before they consider purchase.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

And the primary reason is interest rates and overall economic uncertainty. So that's something that's coming back strongly, which would indicate that we just need to see a change from a cyclical downturn into something that's stabilizing and ideally interest rates coming down and more consumer confidence coming back, especially for bigger ticket discretionary products.

Robin Farley
Robin Farley
Managing Director at UBS Group

Okay, great. Thank you.

Operator

And your next question comes from the line of Alex Berry with Bank of America. Alex, please go ahead.

Alexander Perry
Alexander Perry
Director, Equity Research at Bank of America

Hi. Thanks for taking my questions here. Just first, I wanted to ask what led to the decision to bring back the entry level bikes? Any sense on, the pricing, the sort of look and feel of those units? Will they resemble prior models such as the Iron eight eighty three?

Alexander Perry
Alexander Perry
Director, Equity Research at Bank of America

And then on the model launch timing shift, can you just give us a little more color on that? It seems like a pretty significant change in sort of the cadence of the business. We'll model year 2026 launch this fall. How will you phase that in? That'd be really helpful.

Alexander Perry
Alexander Perry
Director, Equity Research at Bank of America

Thanks.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

Sure. I'm happy to take the first question in terms of entry level. As part of our strategy, we've always said selective expansion and redefinition is a pillar which gets additional investment. The first few years of the hardware, we invested heavily in our core business because there was no investment going whatsoever into our core businesses of Touring, Softail and Trike or Cruiser and Trike. And as time progressed, we had the necessary CapEx to start investing into entry level.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

That said, historically, if I look at the last thirty years, we've never had an entry model that actually made money for Harley Davidson. And we believe that we have an opportunity now based on how we're engineering these bikes to actually come out with a product that is competitive that is in look, sound and feel very Harley Davidson and profitable. So that's and that is something that we feel good about after having made significant investments in our core business, which carry 80% of our overall profitability.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

Hi, Alex. And I'll talk a little bit about model year timing. So as you can imagine, as we shift model year timing, it certainly has implications across the entire company. It has, some implications for our dealer network as we think through the way that we carry out some activities. So it will be a change that that takes us sort of a a number of years to get everything fully on track and pulled back into the fall.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

We have got a lot of feedback from from our dealers. We've got a lot of feedback from customers around the fact that they sort of have enthusiasm for for some key dates and some special moments that can line up with a fall a fall intro. We do also think that it helps us extend the season a little bit. So from a dealer perspective, we think there's a whole lot of benefit of really driving people into the dealer network through through the fall and and some of the months that we start to see the the leaves change and and leaves fall. So we think there's some benefit from that standpoint, that our dealers will really appreciate, and enjoy.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

So as we as we think through the timing associated with that from an overall sales cadence perspective, the thought is that it helps extend it really helps our our dealer network in a way that they have provided feedback on, and it's something that we've listened to. But, again, your question in terms of what does it look like over, what, you know, what does it look like? Is it a multiyear thing? It absolutely is multiyear. It does actually require sort of what what I would define as Herculean effort by engineering, supply chain, manufacturing, as we think through all of the implications for them.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

We certainly have increased the workload for our marketing and commercial teams as we think about a year where we end up doing a little bit more from an overall marketing dealer education, dealer training standpoint. So it's a heavy lift in the year that you start to make the change, but it will begin, this this fall, for some of our 26 model year motorcycles. So a lot of excitement around there. But thank you, Alex.

Alexander Perry
Alexander Perry
Director, Equity Research at Bank of America

Perfect. That's all incredibly helpful. Best of luck going forward.

Operator

And your next question comes from the line of Noah Zatzkin with KeyBanc Capital Markets. Noah, please go ahead.

Noah Zatzkin
Noah Zatzkin
Vice President & Equity Research Analyst at KeyBanc Capital Markets

Hi, thanks for taking my question. I guess just around some of the LiveWire comments that you made. Can you remind us how you're thinking about kind of like the annual cost savings that you're tracking toward going forward? And then as you look longer term, has anything changed in terms of your thinking around that business? Thanks.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

Yes. Noah, as I indicated, last item, projecting operating loss of €59,000,000 and cash burn of 49,000,000 which is dramatically reduced to previous year and to the original guidance LifeWire gave in February. So we continue to work down the cost and that's on an EBIT level. What has changed is exactly what I've mentioned in my opening remarks. There are headwinds that are facing broader powersports and discretionary leisure industry, but those sort of difficulties are even more complicated in the EV segment, which is due to the fact or is actually leading to EV adoption that's just not happening as originally anticipated.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

And that is because we have no longer any incentives for EV purchases for our customers. We have a less favorable regulatory environment, which was a huge risk for Harley Davidson only a couple of years ago. And the charging infrastructure here we very much rely on auto is expanding much slower than anticipated in some markets around the world where LifeWire is selling. And that's what led us to look into all options and Lightwire to do the same thing. And we are driving significant BOM cost reductions, bill of material cost reductions, which I'm sure Corinne can maybe talk a little bit more about and additional cost savings to really reduce the cash burn and the losses in order to be able to get to a sustainable business model with the existing funds that are currently available.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

Karim, do you want to add anything to that?

Karim Donnez
Karim Donnez
CEO at LiveWire Group

Sure. Thank you, Johan. So as you said, we've done tremendous progress in our cost savings efforts and we continue to do so. Now we also recognize that we play very specific segments of the EV market and we continue looking at the addressable market that we could tap into where EV can better shine. There are plenty of opportunities we're looking at right now.

Karim Donnez
Karim Donnez
CEO at LiveWire Group

Too early to talk about it, but we absolutely want to make the best use of the money available. And we've made a ton of progress, and we continue improving on our operating loss and cash burn going forward.

Noah Zatzkin
Noah Zatzkin
Vice President & Equity Research Analyst at KeyBanc Capital Markets

Thank you.

Operator

And your next question comes from the line of David MacGregor with Longbow Research. David, please go ahead.

David Macgregor
President at Longbow Research

Hey, good morning everyone. Thanks for taking my questions. I guess I just wanted to start on tariffs. I wasn't clear from your answer to James' question, we just not talking about mitigating circumstances at this point? There's just too much uncertainty around this whole issue and there's more to come on that?

David Macgregor
President at Longbow Research

Or is there at least some high level discussion you can provide in terms of how you'd go about addressing that mitigation need?

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

Sure, of course. I think overall, there are five things we are doing. First of all, we are engaging very actively with DC, with the administration and actually administrations, not just the U. S. Administration, but also Europe in particular, to ensure that there is a good understanding of our position and the impact that those tariffs have on our business at home and abroad.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

There's a lot of talk about auto, but we want to make sure that we are part of and the agenda. So that's critical. And I think there's a pretty good understanding of the impacts, number one. So any future tariff deals that are to be made should be including us and that's incredibly important, so we are not left out. We've also divided mitigation into short term, which Jonathan talked about for 2025 and longer term, because you can't just shift and change supply chains overnight.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

And you've got to make sure that there's some sort of some certainty in terms of tariffs that either stick and stay around or might just be temporary. So you don't want to make some big decisions and rash decisions without knowing what the longer term tariff situation is going to look like. So short term, we've been accelerating or slowing down shipments to navigate the tariff environment during the year, which is why the impact has already been much lower than what we would have seen in the current tariff environment. We are also making adjustments to our supply chain short term where we can and that will be diversifying so that we have more options, but also reducing and building up new capacity elsewhere, which usually takes a little bit of time. That's nothing that happens overnight.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

And the most immediate focus is on our Chinese content, given obviously the size of the impact with 145% tariff that are now imposed on it. We're also slowing down expenses overall without compromising product and marketing investments, as Jonathan alluded to, important in this environment. And last but not least, we are looking at pricing, but I think we have to also be cognizant of the current recessionary environment for discretionary leisure products and to make sure that we remain competitive. So there is a bit of a trade off between pricing versus volume in a very sensitive environment. But of course, pricing is a lever that we're also looking at, but not so much at this point in time, maybe selectively without significant price increases at least in the short term in the making.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

And that's pretty much what the team is working literally 20 fourseven on mitigating short term and planning for the long term.

David Macgregor
President at Longbow Research

And I guess you've talked about your U. S.-centric manufacturing footprint or your U. S.-centric sourcing approach. Do you foresee once the dust starts to sell around some of these tariff issues that this could ultimately result in a competitive advantage for you in The United States? And if so, could you talk about the extent to which that might be?

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

Possibly. If tariffs stay high for imported motorcycles, that could be a competitive advantage because what our big disadvantage was that our international competitors were importing bikes at essentially no tariff, while we were very much focused on U. S. Manufacturing. And so that could be a positive.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

That is said, what would not help is obviously, if we then encounter trade barriers elsewhere in the world such as Europe, because we do not have European manufacturing. So there's a positive that could be potentially negative and we hope hopefully we will win in the end. But from a U. S. Pure U.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

S. Perspective, trade barriers obviously would be helpful given our U. S. Manufacturing base. Then there's the supply chain, the supply chain that is happens for everybody to be over supply chain.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

While we are the most probably the most U. S.-centric in terms of supply chain with 75%, it's still a big whammy when you have to have even a few components come out of Asia with 145% duty, mean, there's not much you can do, but you can't just ship these things overnight. So that's something that we're looking at longer term for sure. And we've already started to do that many years ago.

David Macgregor
President at Longbow Research

Right. Okay. Thank you very much. Good luck.

Operator

And our final question comes from the line of Tristan Thomas Martin with BMO Capital Markets. Tristan, please go ahead.

Tristan Thomas-Martin
Tristan Thomas-Martin
Leisure Analyst at BMO Capital Markets

Hey, good morning. Just one for me. So it sounds like with the model year probably some of the model year '26 launches occurring in the fall, how does that change how we

Tristan Thomas-Martin
Tristan Thomas-Martin
Leisure Analyst at BMO Capital Markets

should think about kind of

Tristan Thomas-Martin
Tristan Thomas-Martin
Leisure Analyst at BMO Capital Markets

quarterly cadence relative to where you were last quarter? Thanks.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

Alrighty. Thanks, Tristan. So from a from a cadence perspective, we're still working through, some of the exact and final details on that.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

As you probably noticed, we withdrew guidance relative to relative to our unit guidance. So from that standpoint, we're probably not gonna get into that in terms of the appropriateness of having that conversation when it's something that has been withdrawn. I do expect that we'll be able to provide more information ninety days from now, and we do have a little bit of greater, certainty around the tariff environment, the kind of second and third order effects that that ends up having. So more to come on that front. But from our perspective, we certainly do not envision, using it as an opportunity to ship a ton of inventory in later in the year if that's sort of what the question could be implying.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

So from from our perspective, we did talk through the importance of making sure that we are paying attention to retail trends in the marketplace, what we're doing from a wholesale perspective, and really keeping alignment and balance, between those items. So I think when we had originally provided our guidance, back in back in the February time frame, we talked through, ensuring that we would that we would really try to manage our our dealer inventory very carefully. We do not envision this as an opportunity to load up dealers with inventory or do anything from that standpoint. So we will continue to be very careful in in what we ship in and and really looking at the retail trends. But so nothing so all all that said, I think, you know, recognizing that it is, we are in a certainly a unique period.

Jonathan Root
Jonathan Root
Chief Financial Officer and President, Commercial Harley-Davidson, Inc. at Harley-Davidson

We don't envision it as something that's a tremendously meaningful impact from a volume perspective for 2025. As we move forward into '26 and we think about cadence, we certainly will be able to give you more information, as we're getting closer to that time frame. But for right now, we don't envision kind of meaningful movement in overall cadence of the quarters.

Jochen Zeitz
Jochen Zeitz
Chairman, President & CEO at Harley-Davidson

And I think Tristan, what we've also said is that we are committed to our inventory reduction in particular in The U. S. For year end, but also overall globally. So that stays, right? So that should be giving you a good indication that not much should be changing as a result of the model year shift.

Tristan Thomas-Martin
Tristan Thomas-Martin
Leisure Analyst at BMO Capital Markets

Got it. Thank you, guys.

Operator

That concludes today's conference call. You may now disconnect.

Executives
    • Shawn Collins
      Shawn Collins
      Director of IR
    • Jochen Zeitz
      Jochen Zeitz
      Chairman, President & CEO
    • Jonathan Root
      Jonathan Root
      Chief Financial Officer and President, Commercial Harley-Davidson, Inc.
Analysts
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Key Takeaways

  • Q1 HTMC results: operating margin was 12.1% on strong product mix and cost control, while global retail sales fell 21% (24% in North America) amidst low consumer confidence, with wholesale shipments down 33% and dealer inventory off 19% from last year.
  • HDFS performance: Financial Services operating income rose 19%, driven by lower credit loss provisions, and the company is evaluating a strategic investment to unlock premium valuation and secure long-term funding optionality.
  • New product launches: Harley-Davidson rolled out the limited-edition CVO Road Glide RR (131 units) and plans to introduce affordable, profitable entry-level cruisers and an iconic classic model starting in 2026.
  • LiveWire update: Facing slower EV adoption, LiveWire will pursue further cost savings to reduce cash burn and operating losses (guidance now $59M loss and $49M cash burn) while exploring all strategic options.
  • Tariff and macro uncertainty: The company has withdrawn its 2025 guidance due to fluid global tariff risks (estimated impact of $130–175M) and is actively pursuing mitigation strategies and trade-deal negotiations.
AI Generated. May Contain Errors.
Earnings Conference Call
Harley-Davidson Q1 2025
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