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HARLEY-DAVIDSON, INC. (HOG)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered a major headline beat driven by the HDFS transaction: Diluted EPS was $3.10 vs S&P Global consensus of $1.64*, and revenue was $1.34B vs $1.01B consensus*, largely due to a $301M provision benefit from reversing retail credit loss reserves as receivables were classified held-for-sale and subsequently sold in October .
  • HDMC execution mixed: wholesale shipments +33% and revenue +23% YoY, but HDMC gross margin fell to 26.4% (−370 bps YoY) and operating margin to 5.0% (−130 bps) due to unfavorable operating leverage, $27M tariff headwind, and FX .
  • Retail demand remained soft: global retail −6% YoY (North America −5%, EMEA −17%), while dealer inventories were reduced −13% YoY; management prioritized dealer health, affordability promotions, and inventory mix actions .
  • Guidance and capital allocation: HDMC FY25 outlook remains withdrawn; LiveWire operating loss guidance widened to $72–$77M (from $59–$69M); HDFS expected FY25 OI ≈$525–$550M; company announced a $200M ASR within its $1B repurchase plan by 2026 and expects $1.2–$1.25B discretionary cash unlocked by Q1’26 from the HDFS transaction .
  • Narrative catalysts: new CEO Artie Starrs emphasized dealer-first execution, affordability, and promotions; 2026 model reveals and pricing ladders; continued tariff mitigation; accelerated buybacks and debt reduction potentially supportive for shares .

What Went Well and What Went Wrong

What Went Well

  • HDFS transformation uplift: Operating income surged to $439M (+472% YoY), supported by the $301M credit loss allowance reversal and a $27M gain on sale of securitization residual interests; management expects $1.2–$1.25B discretionary cash unlocked by Q1’26 .
  • Wholesale execution despite demand softness: HDMC shipments +33% YoY (36.5K units), driving HDMC revenue +23%; Softail lineup registering positive momentum, with U.S. large cruiser share expanding from 61% to 68% YoY .
  • Dealer inventory progress and capital returns: Global dealer inventories −13% YoY; YTD buybacks of 6.8M shares ($187M) and a new $200M ASR announced, reinforcing capital allocation discipline .

Quotes:

  • “Our success begins with our dealers—when they thrive, Harley-Davidson thrives.” – Artie Starrs, CEO .
  • “We are unlocking significant value…transforming HDFS into a capital-light, de-risked business.” – Jonathan Root, CFO .

What Went Wrong

  • Retail demand weakness: Global retail −6% YoY; EMEA particularly soft (−17%), with macro confidence and high rates weighing on traffic and affordability .
  • Margin compression at HDMC: Gross margin fell to 26.4% and OI margin to 5.0%, hurt by unfavorable operating leverage (Q2 cost base flowing into Q3), $27M tariffs, and FX .
  • LiveWire loss trajectory widened: Operating loss improved QoQ but FY25 guidance updated to a larger loss ($72–$77M), reflecting pricing incentives and evolving strategic priorities .

Financial Results

Headline Results by Quarter (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$1.329 $1.307 $1.341
Diluted EPS ($)$1.07 $0.88 $3.10
Consolidated Operating Income Margin (%)12% 9% 35.4%

Q3 2025 Actual vs Prior Year and vs S&P Global Consensus

MetricQ3 2024Q3 2025 ActualConsensus (Q3 2025)
Revenue ($USD Billions)$1.151 $1.341 $1.012*
Diluted EPS ($)$0.91 $3.10 $1.64*
EBITDA ($USD Millions)—$534.3 [GetEstimates matched actual]*$265.9*

Note: Asterisks indicate values retrieved from S&P Global.

Segment Breakdown – Q3 2025

SegmentRevenue ($USD Millions)Operating Income ($USD Millions)Key Notes
HDMC Total$1,074 $54 Shipments 36.5K (+33%)
• Motorcycles$822 —Driven by shipments +33%
• Parts & Accessories$167 —−4% YoY
• Apparel$56 —+1% YoY
• Licensing$6 —+42% YoY
• Other$23 —−14% YoY
HDFS$261 $439 $301M provision benefit; $27M gain
LiveWire$6 $(18) 184 units (+86% YoY)

KPIs – Q3 2025

KPIQ3 2025YoY / Context
Global Retail (units)34.0K −6% YoY; NA −5%, EMEA −17%, APAC −3%
HDMC Shipments (units)36.5K +33% YoY
HDMC Gross Margin (%)26.4% −370 bps YoY (op leverage, tariffs, FX)
HDMC OI Margin (%)5.0% −130 bps YoY
Tariff Cost (quarter)$27M YTD tariff impacts discussed on call
Dealer Inventories−13% YoY Ongoing reduction focus
Effective Tax Rate24% (YTD) —
Operating Cash Flow (YTD)$417M —
Cash & Equivalents$1.775B (Q3 end) —
Share Repurchases (YTD)$187M (6.8M shares) Planned $200M ASR

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
HDMC FY OutlookFY 2025Provided Feb 5; Withdrawn May 1 Withheld (unchanged) Maintained withheld
HDFS Operating IncomeFY 2025~$525–$550M ~$525–$550M Maintained
LiveWire Operating LossFY 2025$59–$69M $72–$77M Lowered (widened loss)
ASR ProgramThrough Q1 2026$1B by end-2026 New $200M ASR announced Executing buybacks
DividendQ3 2025—$0.18 per share Declared

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q1)Current Period (Q3 2025)Trend
HDFS strategic partnershipValued at ~1.75x post-transaction book; planned to unlock $1.25B; OI +$275–$300M in 2H Agreements completed; $4.1B held-for-sale sold Oct; servicing fees; $1.2–$1.25B discretionary cash expected by Q1’26 Positive / executing
Dealer inventory & promotionsTarget double-digit inventory reduction; disciplined promotions; MDF rollout Inventories −13% YoY; lower APR programs, extended terms; targeted Touring promotions Improving alignment
TariffsEstimated full-year $50–$85M (reduced from prior range) Q3 direct cost $27M; environment fluid; mitigation ongoing Mixed headwind
Product & affordabilityEntry-level “Sprint” bike < $6K target; pricing ladders (9/14/19/24) 2026 reveals and Solo trims; affordability emphasis; dealer-first programs Building momentum
Regional retail trendsQ2: NA −17%, EMEA −5%, APAC −21% Q3: NA −5%, EMEA −17%, APAC −3%; LATAM +16% Mixed; LATAM improving
LiveWire strategyCost reductions; widened OI loss guidance; EV adoption slower Units +86% QoQ; OI loss improvement, but FY loss range widened Operational improvement, financial headwind

Management Commentary

  • “Going forward you can expect an intensified focus on the key drivers of sustainable growth: strong and profitable dealerships… locally relevant marketing, and capital-efficient growth.” – Artie Starrs, CEO .
  • “This transaction releases over $1.2 billion in discretionary cash and sets the foundation for higher returns and sustained growth.” – Jonathan Root, CFO .
  • “Third quarter gross margin was down 3.7 points… unfavorable operating leverage, new/increased tariffs ($27M), unfavorable FX… partially offset by net pricing and mix.” – Jonathan Root .
  • “We’re introducing market-responsive customer-facing promotions… lower APR programs extended to 60/72 months to address affordability.” – Jonathan Root .

Q&A Highlights

  • Demographics and new riders: CEO emphasized brand joy, playfulness in marketing, and more affordable/lighter products (Sprint), to broaden reach among younger riders .
  • Promotions and inventory: Targeted financing support and promotions, particularly Touring/CVO pockets, to drive dealer traffic and reduce inventories .
  • HDFS transaction cadence: Affirmed ~$275M upside and $1.2–$1.25B cash unlock through Q1’26; capital-light model to support higher ROE and servicing fees .
  • Shipments/inventory outlook: Continued year-end inventory reduction; family mix largely healthy except Touring/CVO; pricing ladder to aid 2026 model success .
  • Q4 retail tone: Guidance withheld given tariff/macro uncertainty; sequential dealer traffic improvements, but no formal retail outlook .

Estimates Context

  • Q3 2025 results materially beat consensus: EPS $3.10 vs $1.64*, revenue $1.341B vs $1.012B*, EBITDA $534.3M vs $265.9M*; # of estimates: EPS (10), revenue (11)*.
  • Forward quarters imply normalization vs the one-time HDFS uplift: Q4 2025 EPS −$1.06*, revenue $0.482B*, Q1 2026 EPS $0.96*, revenue $1.140B*, Q2 2026 EPS $0.78*, revenue $1.085B*.
    Values retrieved from S&P Global.
MetricQ3 2025Q4 2025Q1 2026Q2 2026
Primary EPS Consensus Mean ($)1.64*−1.06*0.96*0.78*
Revenue Consensus Mean ($USD Billions)1.012*0.482*1.140*1.085*
EBITDA Consensus Mean ($USD Millions)265.9*−136.3*173.0*136.3*
Primary EPS – # of Estimates10*9*7*7*
Revenue – # of Estimates11*11*7*7*

Key Takeaways for Investors

  • The EPS beat is largely non-recurring: driven by HDFS allowance reversal and securitization gains; forward consensus embeds normalization, so expect reversion toward core HDMC economics absent similar transaction effects .
  • Watch HDMC margins: shipment-driven revenue growth did not translate to margin expansion due to operating leverage and tariffs; management targeting affordability, mix, cost programs, and tariff mitigation to stabilize margins .
  • Dealer-first strategy and capital returns: inventory reductions, financing promotions, and a $200M ASR within a $1B plan may support sentiment; debt reduction expected with HDFS proceeds .
  • Tariffs remain the key macro swing factor: $27M Q3 headwind and a fluid policy backdrop are the primary external risks to margin trajectory and demand .
  • Product pipeline/affordability: 2026 reveals, pricing ladders, and the planned Sprint entry product are central to recapturing younger riders and addressing price sensitivity .
  • LiveWire trajectory: operational improvements and unit growth, but FY loss widened; maintain cautious stance on EV economics until incentives/infrastructure improve .
  • Near-term trading lens: Post-transaction capital unlock, ASR pace, and tariff clarity are likely stock drivers; medium-term thesis hinges on HDMC margin stabilization, dealer health, and execution on affordability and product cadence .