Craig R. Kennison

Craig R. Kennison inquired about the revised HDFS operating income expectations for 2026, noting they are significantly lower than previous projections, and sought clarification on the long-term profitability outlook for the business.

Answer

CFO Jonathan Root explained that the 2026 guidance for HDFS operating income is between $45 million and $60 million, with a long-term run rate expected to be approximately triple that midpoint, taking 2.5-3 years to achieve. He attributed the short-term difference to a cautious outlook on overall volume and lower wholesale assets due to disciplined inventory management. CEO Artie Starrs confirmed that rebuilding the balance sheet and managing wholesale levels are key to future income growth.

Craig R. Kennison asked about the expected HDFS operating income for 2026, noting it's significantly lower than previous expectations, and sought clarification on the long-term profitability of the business.

Answer

Jonathan Root, Chief Financial and Commercial Officer, stated that HDFS's 2026 operating income is guided between $45 million and $60 million, with a long-term standard run rate expected to be approximately triple the midpoint in 2.5-3 years. He attributed the short-term difference to a cautious outlook on overall volume and lower wholesale assets due to reduced dealer inventory. Artie Starrs, Chief Executive Officer, clarified if more retail and wholesale stock units were needed for the long-term income target, to which Jonathan Root confirmed that multiple years of balance sheet rebuilding and disciplined inventory management are key.