Harley-Davidson

Sometimes Less Really Is Just Less

Declaring its Q1, 2024 results, Chairman, President and CEO Jochen Zeitz, stated: "Harley-Davidson delivered a good start to the year with a 6% retail growth in North America, our largest and most important region.

"We are very pleased with the reception of this year's new product line-up led by our new Touring motorcycles and look forward to continuing the positive momentum as the riding season comes into full swing."

Delivering an HDMC operating income margin of 16.2% on revenue from that 6% U.S. unit growth, HDMC revenue was down by 5% ("primarily due to planned decrease in motorcycle shipments"), with HDFS operating income down 8% (despite its revenue being up by 12%.)

The company repurchased $98m of shares (2.5 million shares) on a discretionary basis; diluted EPS for the quarter was $1.72 and paid cash dividends of $24m.

LiveWire successfully launched its 3rd electric motorcycle, S2 Mulholland, and "became market leader in the U.S. for on-road electric motorcycles." The LiveWire segment posted an operating loss of $29m.

In detail, consolidated revenue in the first quarter was down 3% driven by the 5% decrease in HDMC revenue - which was partially offset by the HDFS revenue growth. Consolidated operating income in the first quarter was down 29%, resulting from the declines of 29% at HDMC, 8% at HDFS respectively, and the LiveWire segment loss. 

LiveWire revenue for the first quarter decreased by 39%. The revenue decline was due to a decrease in STACYC electric balance bike volumes and electric motorcycle product mix. Electric motorcycle unit sales increased, driven by new product launches. LiveWire's $29m. operating loss was the result of "continuing new model developing and EV systems costs investment initiatives."

Consolidated operating income margin in the first quarter was 15%, down from 21% in the first quarter a year ago.

First quarter global motorcycle shipments decreased 7%, "in-line with our expectations." Revenue was down 5%, driven by the decrease in wholesale shipments and lower global pricing, partially offset by favorable mix. Parts & Accessories revenue was down 1%, while Apparel revenue was down 10%, as the prior period included anniversary product apparel.

'global Q1 unit shipments -7%'

First quarter gross margin was down 4.5 points due to the impacts of pricing and sales incentives, lower volume and higher manufacturing costs. First quarter operating income margin was down 5.4 points; operating expenses were roughly flat in the quarter.

Global retail motorcycle sales in the first quarter were flat versus prior year. North America retail performance was up 6%, driven by sales of the new Touring motorcycles. International markets did not receive new 2024 Street Glide and Road Glide motorcycles in dealerships until the end of the first quarter. The decline in EMEA of 11% was driven by weakness in Germany and France. The decline in APAC of 12% was due to particular weakness in China. Latin America experienced modest growth in both Mexico and Brazil.

HDFS' operating income declined by $5m in the first quarter (-8%.) This was due to higher interest expense and a higher provision for credit losses. HDI generated $104m of cash from operating activities in Q1 and held $1.5bn of cash and cash equivalents at the end of the quarter.

For the full year 2024, the company reaffirmed guidance and continues to expect HDMC revenue flat to down 9% and operating income margin of 12.6 to 13.6%, with LiveWire electric motorcycle unit sales of 1,000 to 1,500 (improved operating loss of $105m to $115m, from previous guidance of an operating loss of $115m to $125m) and HDI capital investments of $225m to $250m.