Alexander Perry

Alexander Perry from Bank of America asked about Penske Automotive Group's outlook for the parts and service business, including expected same-store growth and key initiatives driving performance. He also sought an update on the freight market, specifically regarding supply-side overcapacity and overall optimism.

Answer

Richard Shearing, President of North American Operations, outlined a target of mid-single-digit growth for fixed operations, driven by customer pay initiatives, AI/tech videos, and targeting older vehicle owners. Roger S. Penske, Chair and CEO, highlighted the strong performance of Longo Toyota's body shop and accessory businesses. Anthony Faccione, VP and Corporate Controller, expressed optimism for the freight market due to capacity tightening, clarity on regulations, and increased industry orders, expecting benefits from interest rates and manufacturing onshoring.

Alexander Perry asked for Penske Automotive Group's outlook on the parts and service business for the year, including expected same-store growth and key company initiatives driving this performance. He also inquired about the outlook for the freight market, specifically if there's relief from supply-side overcapacity headwinds and if the company is more optimistic.

Answer

Richard Shearing, President of North American Operations, highlighted the parts and service business as a bedrock of profitability, targeting mid-single-digit growth, driven by increased effective labor rates and fixed absorption. Initiatives include AI, tech videos, and targeting older vehicles. Roger Penske, Chair and CEO, added the significant gross profit from Longo Toyota's body shop and growth in OE accessories. Anthony Faccione, VP and Corporate Controller, expressed optimism for the freight market, citing capacity tightening due to regulatory crackdowns, increased clarity on tariffs and EPA regulations, and anticipated benefits from interest rates and manufacturing onshoring.

Alexander Perry from Bank of America questioned if the reduction in the EPS guidance was purely due to the increased tariff impact or if other factors were involved. He also asked about the revenue contribution and margin profile of the motorized two-wheel business.

Answer

CFO Dennis Schemm confirmed the EPS guidance change was a direct result of the pre-mitigated tariff impact estimate increasing from $38 million to $50 million. CEO Mike Dennison added that the motorized two-wheel business has a margin profile in line with the core powersports business and its growth has been significant enough to more than offset the decline in the side-by-side market.

Alexander Perry from Bank of America asked about the wide range in the 2025 EPS guidance, seeking clarity on the factors that would lead to the high versus low end. He also requested more detail on the potential impact of tariffs and the company's mitigation strategies, particularly for aluminum bats sourced from China.

Answer

CFO Dennis Schemm explained the guidance range reflects execution on the product roadmap amid macro headwinds, with the back half expected to be stronger. CEO Mike Dennison added that hitting the high end of the EPS range is dependent on executing the internal $25 million cost reduction plan. On tariffs, Dennison noted the situation is fluid, but the biggest concern is the secondary impact on consumer demand and OEM partners.

Alexander Perry sought clarification on the Q4 guidance for the bike business, which implied a sequential decline, and asked about the outlook for gross margins in Q4 and into the next year.

Answer

CFO Dennis Schemm confirmed the bike business is expected to be flat year-over-year, implying a sequential decline to the $78-$80 million range. CEO Mike Dennison addressed gross margins, expecting sequential improvement in PVG, a rebound in AAG margins as inventory actions conclude, and relatively flat margins in the SSG segment (bike and Marucci). He noted that long-term margin improvement will be driven by cost-out initiatives.

Alexander Perry of Bank of America questioned the drivers behind the stronger-than-expected domestic growth in Q2 and inquired about the outlook and key drivers for domestic growth in the second half of the year. He also asked which specific product categories are expected to fuel outsized growth for the remainder of 2025.

Answer

CEO Mark Barrocas attributed the Q2 domestic upside to strong POS growth and robust consumer demand that accelerated through the quarter. For the second half, he noted the guidance remains conservative due to potential consumer reactions to price increases, but Q3 demand has continued to be strong. Barrocas identified the Beauty category as a primary driver of outsized innovation and growth, with new hair and skin care products launching soon. He also teased a new product launch in the outdoor category.

Alexander Perry inquired about the 2025 new product roadmap, asking which products were most exciting, their potential revenue contribution, and the typical scaling timeline. He also asked about plans for expanding into new wholesale channels like sporting goods.

Answer

CEO Mark Adam Barrocas confirmed plans to expand into sporting goods, beauty retailers, and grocery channels in 2025. He noted that while it's hard to generalize, many 2024 products will see a full-year impact in 2025 as global rollouts take about 12 months. He specifically highlighted Shark CryoGlow as a potential '$100 million-plus opportunity' for the year, emphasizing the strong pre-launch consumer engagement and continuous flow of innovation.

Alexander Perry sought details on which Topgolf value initiatives were the most significant contributors to traffic, their impact on ticket size, the drivers of the July comp acceleration, and whether the Q3 guidance was conservative.

Answer

Topgolf CEO Artie Starrs identified the early week '50% off golf' offer and the Summer Fun Pass as major drivers of the 6% traffic increase, which was offset by a lower ticket size. He attributed the strong July trend to consistent and effective marketing. Starrs explained the Q3 guidance reflects ongoing softness in the corporate events business, which tempers the strong momentum from walk-in and reservation channels.

Alexander Perry asked about the key drivers for the strong acceleration in Topgolf's corporate events comparable sales in Q4 and the outlook for events versus walk-in traffic in 2025. He also sought clarification on the expected decline in the core Golf Equipment business, questioning if it was due to market share pressure or channel inventory.

Answer

Arthur Starrs, CEO of Topgolf, attributed the Q4 events success to giving local teams more flexibility in product and pricing and better leveraging scale to share learnings across markets. For 2025, he expects walk-in traffic to perform slightly better than events. Oliver Brewer, President and CEO, clarified that the core business revenue decline is primarily driven by a $60 million foreign exchange headwind, a more competitive product launch cycle, and the intentional resizing of the Jack Wolfskin business.

Alexander Perry asked what factors were offsetting the higher-than-expected attrition from 'click to cancel,' allowing the company to narrow its same-store sales guidance to the high end. He also inquired about the membership outlook for the second half of the year.

Answer

CFO Jay Stasz explained the guidance update reflects strong Q2 results and that while the churn outlook was moderated, it remains conservative. He reiterated that Q3 is seasonally a slower quarter for net member growth but pointed to slight membership gains over the last four quarters as a positive trend.

Alexander Perry inquired about any differences in Black Card penetration by age demographic and the data sources that informed the decision to optimize the club format with more strength equipment.

Answer

CFO Jay Stasz noted that while Gen Z typically has lower Black Card penetration than other generations, the trend has been consistent year-over-year. CEO Colleen Keating explained that the format optimization was informed by a balance of consumer survey data showing a preference for strength and direct observation of how members use the clubs. She emphasized that the company constantly tests new formats in its corporate-owned clubs to see what resonates most with members.

Alexander Perry questioned the updated club opening guidance, asking why the 2025 forecast was narrowed to 10 units while the 2026 target was accelerated, and sought clarity on membership expectations for the second half of the year.

Answer

Founder, Chairman, and CEO Bahram Akradi attributed the 2025 unit count to a focus on optimizing construction costs and strengthening the balance sheet. EVP & CFO Erik Weaver confirmed that typical Q3 membership seasonality is expected, but cautioned that year-over-year comparisons are affected by the different scale of new club openings. Akradi added that underlying trends remain very strong.

Alexander Perry of Bank of America questioned the drivers of the raised same-store sales guidance, asking if it was due to Q1 outperformance or higher future expectations. He also asked about the potential impact of tariffs on construction and equipment costs.

Answer

Bahram Akradi, Founder, Chairman and CEO, explained the guidance remains guarded due to macroeconomic uncertainty, despite strong retention and in-center spend. Regarding tariffs, Akradi stated the impact is de minimis, as the company can mitigate costs through value engineering and favorable contractor negotiations. Erik Weaver, Executive Vice President and CFO, added that most fitness equipment is sourced from Italy and Sweden, not regions subject to the discussed tariffs.

Alexander Perry from Bank of America inquired if Q1 comparable sales are trending above the full-year 7-8% guidance and asked for the key drivers of the disproportionate increase in the EBITDA forecast. He also questioned the strategy around desired club capacity and its impact on pricing power and enrollment fees.

Answer

Executive Erik Weaver confirmed that Q1 comps are expected to be higher than the full-year average due to lapping prior strategic initiatives and attributed the strong EBITDA flow-through to robust average dues and retention. CEO Bahram Akradi explained that club capacity is managed by total visits, which creates pricing power and waitlists in saturated clubs, noting a significant, ongoing opportunity to raise dues on legacy members to current rack rates.

Alexander Perry asked for the key drivers behind the raised guidance and questioned the pricing strategy for Q4 and 2025, including whether prices would be reset higher.

Answer

EVP and CFO Erik Weaver cited strong flow-through from dues, robust retention, and high demand for DPT as reasons for the guidance raise. Founder, Chairman and CEO Bahram Akradi emphasized that member retention is the best in company history (over 70%) and is the primary driver. He explained that future pricing will be used strategically on a club-by-club basis to manage capacity and experience, rather than through blanket increases, leveraging the gap between current member rates and rack rates.

Alexander Perry of Bank of America asked for management's perspective on current dealer inventory levels, the target for year-end, and the timing and sequencing of the planned shift in new model launches.

Answer

CEO Jochen Zeitz affirmed the company's commitment to a significant, double-digit percentage reduction in dealer inventory by year-end. CFO Jonathan Root added that the model year launch will shift to the fall to help extend the selling season, with special edition models continuing to be released throughout the year to maintain excitement.

Alexander Perry of Bank of America inquired about the company's current view on dealer inventory levels, the target for year-end, and the timing of the upcoming model launch shift.

Answer

Chairman, President & CEO, Jochen Zeitz, reaffirmed the commitment to a significant, double-digit reduction in dealer inventory by year-end. CFO & President - Commercial, Jonathan Root, added that the model year launch will shift to the fall, which helps extend the selling season and allows for continuous new product introductions throughout the year to maintain market excitement.

Alexander Perry of Bank of America inquired about the company's current view on dealer inventory levels, the year-end target, and the timing of the upcoming model year launch shift.

Answer

CEO Jochen Zeitz reiterated the commitment to a significant, double-digit percentage reduction in dealer inventory by year-end. CFO Jonathan Root added that the model year refresh for touring and Softail bikes will move to the fall, which helps extend the selling season, and that special edition models will continue to be released throughout the year to maintain market excitement.

Alexander Perry from Bank of America inquired about the decision to reintroduce entry-level motorcycles, asking about their potential pricing and style. He also requested more details on the significant shift of the model year launch cadence to the fall.

Answer

CEO Jochen Zeitz explained that the reintroduction of entry-level bikes is part of the "selective expansion" pillar of the Hardwire strategy, made possible by freed-up CapEx. He stressed that unlike past models, these new bikes are engineered to be profitable. CFO Jonathan Root detailed that the model year shift to the fall is a multi-year effort based on dealer feedback to extend the selling season. He noted it's a "Herculean effort" for the internal teams and will begin with some model year '26 bikes this fall.

Alexander Perry of Bank of America asked about the long-term strategy for the LiveWire segment, specifically how Harley-Davidson plans to manage its operating losses and what the future of the business is if EV adoption rates remain low.

Answer

Chief Executive Officer Jochen Zeitz stated that the company is continuously evaluating LiveWire's performance and long-term prospects. He highlighted that significant actions have already been taken to streamline the business, reducing the guided 2025 operating loss to $70-$80 million (from $110 million) and cutting cash burn by over 40%. He assured that management is weighing the benefits against the costs of the investment.

Alexander Perry from BofA Securities asked about the outlook for HDMC gross margins in Q4 and for the next year, considering promotional activities and production shifts.

Answer

CEO Jochen Zeitz stated that current promotional support is selective and primarily focused on interest rate assistance, which is less aggressive than competitors. CFO Jonathan Root added that the Q4 margin will be 'quite challenged' due to the sizable reduction in wholesale shipments. He noted that consumers respond best to rate promos, and the company will continue this strategy to support dealers and drive traffic.

Alexander Perry from Bank of America asked about the outlook for HDMC gross margins in Q4 and for the upcoming year, considering promotional activities and production shifts.

Answer

CEO Jochen Zeitz stated that current promotions are selective, focusing on interest rate assistance and are less aggressive than competitors. CFO Jonathan Root followed up by stating that Q4 gross margin will be "quite challenged" due to the significant reduction in wholesale shipments. He confirmed they will continue using rate-focused promotions to support dealers and drive retail traffic.

Alexander Perry from Bank of America inquired about the outlook for HDMC gross margins in Q4, the potential use of promotions to clear inventory, and any visibility into 2025 gross margins.

Answer

CEO Jochen Zeitz noted that current promotions are primarily interest rate assistance and are less aggressive than competitors. CFO Jonathan Root stated that Q4 margin will be 'quite challenged' due to significant wholesale shipment reductions but confirmed they will continue to use rate-based promotions to support dealers and drive retail sales.

Alexander Perry of Bank of America requested more detail on the embedded pricing expectations for new and used RVs in the second half of the year. He also asked about any emerging positive trends ('green shoots') in higher-content units and the drivers behind the ASP increase observed in July.

Answer

President Matthew Wagner clarified that while ASPs will rise seasonally in Q3 and Q4 due to a shifting inventory mix, the year-over-year declines are expected to remain in the 10-12% range, consistent with the first half. He confirmed seeing 'green shoots' in demand for their contract-manufactured Class A, B, and C units and noted plans to expand into new segments like Super C. Chairman & CEO Marcus Lemonis added that the ASP lift in July is a typical seasonal improvement.

Alexander Perry of Bank of America sought more granular detail on the embedded pricing expectations for new and used vehicles for the remainder of the year, and questioned what was driving the observed ASP increase in July.

Answer

President Matthew Wagner explained that while year-over-year ASP declines are expected to continue, sequential ASPs will increase in Q3 and Q4 due to a seasonal shift in inventory mix toward higher-cost units. He noted the average cost of new inventory has risen over 12%. Wagner also pointed to "green shoots" in motorized segments, driven by the success of their contract manufactured units, which are their best-sellers in Class A, B, and C categories.

Alexander Perry asked what is driving the company's business strength despite broader weakness in consumer confidence. He also inquired about the specific factors contributing to the significant outperformance in the used RV segment.

Answer

Chairman and CEO Marcus Lemonis attributed the company's resilience to its focus on the large installed base of existing RVers and the affordability of RVing as a vacation alternative. EVP Matt Wagner explained that used segment outperformance stems from a refined procurement strategy, creating arbitrage between new and used, and a creative approach to sourcing inventory to meet demand.

Alexander Perry inquired about the drivers behind Indian Motorcycle's significant market share gains and whether the ORV retail market has hit a bottom.

Answer

CEO Michael Speetzen credited Indian's outperformance to a superior product lineup, including the Power Plus and Scout models, strong global distribution, and a major competitor being distracted. Regarding ORV retail, he was hesitant to call a bottom, describing the market as 'less volatile' but noted that consumer reluctance on big-ticket items persists, particularly in the recreation segment.

Alexander Perry questioned if the estimated $55 million tariff offset could increase and how sticky that figure is. He also asked which business segment's top-line view has changed the most since the last guidance was issued.

Answer

CFO Bob Mack explained the offset is dynamic and hard to forecast, as it depends on the timing of sourcing changes, USMCA compliance improvements, and potential policy shifts. He noted about 20% of the tariffed inventory cost from this year would defer into 2026. CEO Mike Speetzen added that no single segment's view has changed dramatically relative to others, as the broader economic uncertainty affects all of them. Mack noted the positive retail performance of heavyweight motorcycles as a bright spot.

Alexander Perry asked if it was fair to assume Q4 retail trends would be similar to Q3 for ORV, Marine, and Motorcycles. He also inquired about the expected promotional environment in Q4 and if any easing was factored into the guidance.

Answer

CEO Mike Speetzen confirmed that assuming similar retail trends from Q3 into Q4 was a fair assessment for all segments, with the exception of the snowmobile business, which is an unknown variable dependent on weather. He stated definitively that no easing of the promotional environment is expected in Q4, noting that while Polaris has made some MSRP adjustments to reduce the need for constant deals, the overall market remains highly promotional.

Alexander Perry from Bank of America asked for an explanation of the divergence between positive point-of-sale data and declining reported revenue, and whether the back-half outlook had been tempered.

Answer

CFO Paul Ruh attributed the revenue gap to a shift from direct import to domestic shipping, which delays revenue recognition, and confirmed that channel inventories are at appropriate levels. CEO Ynon Kreiz stated the back-half outlook has not been tempered; rather, the wider guidance range reflects general consumer uncertainty, and he remains excited about momentum in key brands.

Alexander Perry asked about recent changes in retailer buying behavior, whether Mattel's advantages could lead to market share gains, and the drivers behind the strong Q2 point-of-sale (POS) growth.

Answer

CFO Anthony DiSilvestro noted no material changes in orders but mentioned potential volatility in direct import shipments. CEO Ynon Kreiz suggested that industry dynamics could shift, allowing Mattel to strengthen its position as a trusted partner. The CFO clarified that the double-digit Q2-to-date POS growth was driven by the Easter timing shift, with year-to-date POS up low single digits.

Alexander Perry questioned how 2025 sell-in could be positive given declining POS exit rates and elevated retail inventory. He also sought more detail on the tariff mitigation strategy, such as pricing elasticity and cost-sharing.

Answer

CFO Anthony DiSilvestro explained that while retail inventory is slightly elevated, creating a Q1 headwind, the company is confident in its full-year growth drivers. He stated that the guidance includes a range of mitigating actions for tariffs but declined to share specific details of their 'playbook' to maintain a competitive edge. CEO Ynon Kreiz emphasized that Mattel's geographically balanced supply chain is a proactive, multi-year strategic advantage that provides significant flexibility.

Alexander Perry inquired about the sentiment of top retailers heading into the holiday season and whether there was a shipment shift from Q3 to Q4. He also asked if the outlook for power brands like Barbie had changed.

Answer

CFO Anthony DiSilvestro described retailer sentiment as positive, noting they prioritize toys as a strategic category. He confirmed Mattel is well-positioned with appropriate inventory levels and a full slate of demand drivers. He also stated there was no change to the overall outlook for the power brands for the year.

Alexander Perry from Bank of America asked for more color on the health of the Magic: The Gathering player base, specifically the 40% growth in unique players, and sought to understand the key drivers behind the downward revision of the full-year Consumer Products guidance.

Answer

CEO Chris Cocks clarified the 40% unique player growth refers specifically to organized play participants, a highly measurable subset, and noted that all other metrics also point to robust total player base growth. CFO & COO Gina Goetter attributed the CP guidance downgrade to retailers pausing Q2 orders and pushing back shelf resets, which impacted the annual outlook and inventory flow for the second half.

Alexander Perry from Bank of America asked for clarification on the segment guidance, suggesting a lower Consumer Products margin is being offset by higher Wizards profit, and inquired where the company has the most pricing power.

Answer

CFO & COO Gina Goetter confirmed this interpretation, stating the unchanged Consumer Products guidance reflects a wide range of outcomes, with the segment's potential margin pressure being offset by Wizards' outperformance and accelerated cost savings. CEO Chris Cocks noted that pricing power comes from innovation and strong brands like Marvel, Star Wars, and the upcoming PLAY-DOH Barbie collaboration, while aiming to protect key price points like $9.99 and $19.99.

Alexander Perry asked about the underlying revenue run rate for MONOPOLY GO!, the drivers of other digital gaming strength in the quarter, Q4 POS trends for Consumer Products, and the reasons for the expected Q1 revenue decline.

Answer

CEO Chris Cocks maintained the ~$10 million per month revenue expectation from MONOPOLY GO! and highlighted that Baldur's Gate 3 also significantly outperformed forecasts. CFO and COO Gina Goetter clarified that the anticipated Q1 revenue decline for Consumer Products is primarily due to the timing shift of Easter.

Alexander Perry asked for clarification on the implied Q4 guidance for the Wizards of the Coast segment, which suggests a revenue decline of over 20% and a significant step-down in operating margin.

Answer

CFO Gina Goetter confirmed the decline is driven by MAGIC set timing, specifically the tough comparison to last year's Lord of the Rings holiday set, which creates significant volume deleverage impacting the margin. CEO Chris Cocks added that the timing of a major January set release is also shifting some sell-in from Q4 into the next fiscal year.

Alexander Perry of Bank of America questioned the decision to withdraw the annual financial guidance, asking if it was due to volatile consumer trends and whether the positive sales momentum from Q4 had continued into Q1. He also requested guidance on the wholesale channel's outlook for the year.

Answer

Executive Neil Bowden confirmed that positive sales performance has continued into the start of fiscal 2026. However, he stated the decision to pull the annual outlook was driven entirely by the uncertain global consumer environment and unpredictable trade landscape, not by internal performance. Carrie Baker, President of Brand & Commercial, addressed the wholesale channel, stating that fiscal 2026 is considered a 'trough' year after the completion of major streamlining efforts. She indicated plans for expansion in travel retail in APAC and with influential partners in EMEA.

Alexander Perry from Bank of America inquired about the rationale for maintaining the full-year revenue guidance despite lowering the DTC comparable sales forecast. He also sought details on the drivers of the 22% DTC comp growth in North America in December and the continued positive momentum into January.

Answer

Executive Neil Bowden explained that with limited time left in the year, they added conservatism to the DTC comp forecast but noted potential upside in Wholesale. Carrie Baker, President of Brand & Commercial, attributed the December strength to well-trained teams, effective inventory management, and the significant impact of marketing activations following the Snow Goose launch. Dani Reiss, Chairman and CEO, confirmed positive consolidated DTC comps in January, driven by outstanding store performance globally, while also noting the company continued to invest in marketing because it was proving effective.

Alexander Perry inquired about the growth drivers within the non-heavyweight down category and the expected cadence of D2C comparable sales for the fiscal year.

Answer

President Carrie Baker identified apparel, windwear, and footwear as key growth drivers in Q1, particularly in APAC, and confirmed the core heavyweight down category is also expected to grow. CEO Dani Reiss explained that while quarterly guidance isn't provided, they anticipate driving toward positive D2C comps in the peak season to meet the annual low single-digit growth target.

Alexander Perry questioned whether the withdrawal of guidance was driven more by demand or cost uncertainty, asked about volatility in DTC trends, and requested a reminder of the company's sourcing penetration by country.

Answer

CFO Jim Swanson explained that pulling guidance was a response to the multitude of uncertainties affecting both consumer behavior and the cost environment, not one single factor. He clarified that current business trends have not worsened. For sourcing details, he directed the question to the company's 10-K filing. CEO Tim Boyle added that Columbia's highly diversified sourcing is a significant competitive advantage.

Alexander Perry inquired about Columbia's exposure to potential China tariffs, asking for the percentage of U.S. goods sourced from China and any mitigation initiatives. He also followed up on gross margin, asking for the specific drivers of the implied Q4 expansion and whether those tailwinds are expected to continue into the first half of next year.

Answer

CEO Tim Boyle affirmed that the company began moving sourcing out of China years ago and has very small exposure, though he noted trade wars are generally not beneficial. CFO Jim Swanson quantified the exposure as approximately 20% for footwear and a low single-digit percent for apparel. Regarding Q4 gross margin, Swanson reiterated that the primary driver for expansion is having much cleaner inventory than a year ago, resulting in significantly lower wholesale closeout sales.

Alexander Perry of Bank of America requested further clarification on tariffs, asking if the current guidance implies that cost increases are being fully offset or passed on to customers without impacting operating margins. He also asked about the expected shipment cadence for the RV segment throughout the remainder of the year.

Answer

CEO Andy L. Nemeth reiterated that the company's goal is to mitigate as much of the tariff impact as possible through multiple levers, including sourcing and product solutions, in partnership with customers. President, RV, Jeff Rodino noted that while RV retail has been resilient, the revised guidance reflects caution due to consumer confidence, and production levels are expected to align with this more conservative outlook.

Alexander Perry asked for more color on the drivers of increased enthusiasm in the RV segment and questioned whether rate relief or potential tariffs are factored into the guidance.

Answer

CEO Andy L. Nemeth attributed the enthusiasm to a combination of OEM discipline, improved consumer confidence, and strong underlying interest in the outdoor lifestyle. CFO Andrew Roeder confirmed 50 basis points of rate relief is baked into the plan. Nemeth added that no impact from tariffs is currently included in the guidance, citing confidence in their risk mitigation strategies.

Alexander Perry inquired about the expected shaping of operating margin and Powersports shipments in 2025, asking if pressure would be concentrated in the first half followed by a second-half rebound.

Answer

CEO Andy L. Nemeth generally agreed with a second-half weighted recovery but suggested the RV segment could see improvement earlier due to extremely lean inventories. President, Powersports Kip Ellis confirmed the Powersports outlook follows a similar pattern, with proactive inventory cuts leading to a potential pivot around mid-Q2 or in the second half of 2025.

Alexander Perry of Bank of America asked about the long-term strategy for the LiveWire segment, specifically how Harley-Davidson plans to manage its operating losses if the adoption of electric motorcycles does not significantly improve in the coming years.

Answer

CEO Jochen Zeitz stated that Harley-Davidson is continuously evaluating LiveWire's performance and its strategic fit. He highlighted that LiveWire has already taken significant steps to reduce its operating loss from $110 million to a guided $70-$80 million and cut cash burn by over 40%. While committed to the business, Zeitz emphasized that performance needs to improve and that the company will continue to assess all options for LiveWire's future.

Alexander Perry of Bank of America questioned the long-term strategy for LiveWire, asking how the company plans to manage its operating losses and what the future holds if the adoption of electric motorcycles does not significantly improve.

Answer

CEO Jochen Zeitz stated that Harley-Davidson is continuously evaluating LiveWire's performance and considering all options. He highlighted that a significant first step has been taken to reduce LiveWire's operating loss from $110 million to a guided $70-$80 million and cut cash burn by over 40%. While acknowledging the benefits LiveWire provides, he emphasized that the business must perform and that its development is being watched very carefully.

Asked about the outlook for HDMC gross margins in Q4, the use of promotions to clear inventory, and expectations for gross margins in the next year.

Answer

Management expects Q4 gross margin to be 'quite challenged' due to the significant reduction in wholesale shipments. They are using select promotional support, primarily interest rate assistance, which they find more effective than cash offers and believe is less aggressive than competitor promotions.