Sign in

    Harley-Davidson Inc (HOG)

    Q4 2024 Earnings Summary

    Reported on Feb 7, 2025 (Before Market Open)
    Pre-Earnings Price$26.82Last close (Feb 4, 2025)
    Post-Earnings Price$27.20Open (Feb 5, 2025)
    Price Change
    $0.38(+1.42%)
    • Management remains confident in achieving the 15% operating income margin target in the future, aiming for double-digit margin in 2026, supported by exciting new product launches and slight volume growth.
    • The company expects improved performance in the second half of 2025, driven by new product launches and the continued potential in the touring segment, which still has significant growth opportunity as 70% of customers are not yet fully aware of the new touring product features.
    • Despite macroeconomic uncertainties, Harley-Davidson plans to maintain flat retail sales in 2025, with positive pricing expected to contribute favorably to revenue, demonstrating resilience in demand for their products.
    • Harley-Davidson's operating margins were negatively impacted in Q4 2024 due to lower volumes and manufacturing expenses, leading to operational challenges. The company faced deleverage from reduced production days and incurred costs associated with retooling for new models.
    • The company expects flat retail sales in 2025 despite previous initiatives like the touring refresh, indicating limited growth prospects. This flat outlook comes even after significant investments in product innovation, suggesting potential demand issues.
    • Achieving the targeted 15% operating margin is contingent on improved market conditions, which have not materialized in the past two years. The company's profitability goals rely on tailwinds in the retail environment, adding uncertainty to future performance.
    MetricYoY ChangeReason

    Total Revenue

    –34.7% (from $1,053.2M to $687.7M)

    Total revenue declined by 34.7% YoY in Q4 2024, primarily due to significant reductions in the HDMC and LiveWire segments, with only a modest offset from a 4.2% increase in HDFS revenue. This indicates that the drop in core motorcycle and electric product sales strongly influenced overall revenue performance.

    HDMC Revenue

    –47% (from $791.7M to $420.5M)

    HDMC revenue fell by 47% YoY, largely driven by a marked reduction in motorcycle shipments and decreased dealer demand, reflecting worsening market conditions and inventory adjustments. This steep decline in the flagship segment is the primary contributor to the overall revenue drop.

    HDFS Revenue

    +4.2% (from $246.2M to $256.7M)

    HDFS revenue increased modestly by 4.2% YoY, driven by higher interest income and improved financial performance in the services segment, which helped partially counterbalance the revenue losses in the core operating segments.

    LiveWire Revenue

    –32% (from $15.4M to $10.5M)

    LiveWire revenue decreased by 32% YoY, due to lower volumes and weaker sales of electric motorcycles and balance bikes in a market facing tougher competition and shifting consumer preferences. This decline contributes further pressure on overall revenue, particularly in the electrification segment.

    Operating Income

    Deteriorated from a loss of $21.15M to a loss of $193.35M

    Operating income worsened dramatically, with losses expanding from $21.15M in Q4 2023 to $193.35M in Q4 2024. This decline was driven by reduced margins and volumes in the HDMC segment along with increased cost pressures, which were not sufficiently mitigated by gains in the HDFS segment vs..

    Net Income & EPS

    Net Income: from $25.81M to a loss of $127.07M; EPS: from $0.22 to –$0.84

    Net income and EPS experienced a dramatic decline, falling from $25.81M to a loss of $127.07M and EPS dropping from $0.22 to –$0.84. The severe drop reflects the cumulative impact of lower revenue—driven by steep declines in HDMC and LiveWire—along with deteriorating operating income and rising cost pressures, confirming a challenging operating environment vs..

    MetricPeriodPrevious GuidanceCurrent GuidanceChange

    Retail units

    FY 2025

    no prior guidance

    flat

    no prior guidance

    Wholesale units

    FY 2025

    no prior guidance

    flat to down 5%

    no prior guidance

    Revenue

    FY 2025

    no prior guidance

    flat to down 5%

    no prior guidance

    Operating income margin

    FY 2025

    no prior guidance

    7% to 8%

    no prior guidance

    Global inventory levels

    FY 2025

    no prior guidance

    decrease by more than 10% by end of FY 2025

    no prior guidance

    Operating income (HDFS)

    FY 2025

    no prior guidance

    down 10% to 15%

    no prior guidance

    EPS

    FY 2025

    no prior guidance

    flat to down 5% from $3.44 reported in FY 2024

    no prior guidance

    TopicPrevious MentionsCurrent PeriodTrend

    Operating Margin Targets and Profitability

    Previously, margins were discussed in detail in Q1–Q3 with emphasis on revised guidance, cost productivity initiatives, and the long‐term 15% target despite challenges from lower volumes, unfavorable FX, and pricing/mix pressures.

    In Q4 2024, the focus remains on achieving a long‐term 15% target while highlighting near-term challenges such as lower volumes, FX headwinds, and mix dynamics that resulted in a significant margin decline compared to 2023.

    Consistent emphasis on margin targets persists, but there is increased pressure from lower volumes and external factors. This topic remains central for profitability and future performance.

    Touring Segment Growth and Product Innovation

    Q1–Q3 consistently highlighted strong growth in the Touring segment, market share gains in North America and EMEA, and robust product innovation (e.g., redesigned Street Glide/Road Glide) driving competitive positioning.

    Q4 2024 emphasizes record market share gains (e.g., 74.5% in the U.S.) and solid year‐over‐year unit growth along with continued innovation through refreshed models and strategic launches for 2025.

    Steady and optimistic sentiment with consistent growth and enhanced product innovation, which positions the company strongly for future market leadership.

    New Product Launches

    Across Q1–Q3, new launches—spanning touring, CVO, and electric models—were consistently discussed, demonstrating an ongoing commitment to refresh the portfolio and address diverse segments.

    Q4 2024 details an expanded 2025 lineup (including new cruiser models, adventure touring, and an electric maxi scooter for 2026) that builds on previous launches while venturing into new segments.

    Continual innovation pipeline remains a priority with expanded scope into new market segments (electric and adventure) expected to have a significant future impact.

    LiveWire Electric Motorcycle Segment Performance

    In Q1–Q3, LiveWire performance was discussed with emphasis on operating losses, unit sales growth in parts, and efforts to control costs while navigating challenges in pricing and market adoption.

    Q4 2024 reports a further decline in revenue and slightly reduced operating loss, with initiatives aimed at reducing cash burn and reaching contribution margin positivity by the end of 2025.

    Persistent operational challenges continue with efforts to improve efficiency and profitability. The segment is under intense scrutiny given its impact on the future electric vehicle strategy.

    Retail Sales Trends and Pricing Strategy

    Q1–Q3 discussions noted mixed regional retail performance with modest growth in North America offset by declines internationally, while pricing strategies (including promotional adjustments) helped partially mitigate margin pressures.

    Q4 2024 highlights a significant global retail sales decline coupled with pricing actions that contributed positively to margins, but macroeconomic challenges remain a concern.

    Consistent downward retail trends are being managed via strategic pricing adjustments. While pricing is delivering some benefits, overall sales pressures persist and will continue to affect future revenue growth.

    Manufacturing Challenges: Production Volumes and Retooling Costs

    Q1–Q3 consistently addressed lower production volumes and the impact of manufacturing retooling costs on fixed costs and margins, with adjustments made to manage production efficiencies.

    In Q4 2024, challenges persist with significantly lower production volumes affecting gross margins and added retooling costs for new model platforms (e.g., Softail).

    Ongoing production challenges remain a persistent headwind, highlighting the need for operational efficiency improvements. This could materially impact future profitability if not managed effectively.

    Inventory Management Concerns

    Across Q1–Q3, dealer inventory challenges were addressed with strategies to reduce excess stock and improve inventory quality, including selective promotions and aggressive production adjustments.

    Q4 2024 shows continued efforts to reduce dealer inventory (notably a 19% sequential drop and plans for a 10% global reduction in 2025) by intentionally cutting wholesale shipments to align with market demand.

    Sustained focus on inventory reduction is evident across periods. The aggressive measures to balance inventory levels are critical to improving cash flow and dealer profitability into the future.

    Financial Services Performance and Credit Risk

    Q1–Q3 consistently reported revenue growth driven by higher yields and receivables, accompanied by increasing credit loss ratios and higher borrowing costs, reflective of macroeconomic pressures.

    In Q4 2024, while HDFS revenue grew modestly, operating income was pressured by increased credit loss provisions and higher borrowing costs, with credit ratios slightly worsening.

    Stable revenue growth in the financial segment is underpinned by rising credit risk. Managing these risks continues to be pivotal for dealer financing and overall financial health, affecting future margins.

    International Market Dynamics (Asia Pacific/China)

    Q1–Q3 discussions consistently noted a decline in retail sales in the Asia Pacific region, primarily driven by weakness in China, with intermittent optimistic signals from other countries like Australia and New Zealand.

    Q4 2024 reports a steep decline (18% drop) in Asia Pacific retail sales with China and Japan continuing to perform weakly, although slight growth is expected in parts of the region for 2025.

    Persistent underperformance in key international markets (especially China) remains a significant concern. While some regions show modest recovery, the overall weakness could impact global growth prospects if conditions do not improve.

    Labor Relations and Union Contracts

    Q1 2024 featured the ratification of a new 5‑year union contract, while Q3 highlighted positive union flexibility and supportive relations, underscoring a constructive labor environment.

    Q4 2024, however, does not mention labor relations or union contracts, suggesting that this topic may have receded from immediate discussion as earlier agreements have been settled [—].

    Less emphasis in the current period indicates that union-related issues may be considered settled after recent contract ratifications, reducing near-term labor concerns; however, past strong partnerships remain important for operational stability.

    1. Operating Margin Guidance
      Q: How will operating margin grow despite flat revenue?
      A: Management expects operating margin to improve in 2025 even with flat to modestly down revenues. They anticipate slight pricing favorability offsetting volume challenges. While FX and mix are negatives due to new Softails, they don't expect the same level of unfavorable manufacturing costs as in 2024. Additionally, they foresee some favorable impact from operating expenses. Overall, they guide to a 7% to 8% operating margin for the motor company in 2025.

    2. Inventory Reduction Impact
      Q: What's the impact of inventory reduction on 2025 expectations?
      A: The company plans to reduce dealer inventory globally by over 30% in the first half of 2025 and end the year down over 10%. This will cause wholesale shipments to be down double digits in the first half but up significantly in the back half to align inventory appropriately. As a result, the first half wholesale will be down versus 2024.

    3. Q4 Margin Surprise
      Q: What caused the Q4 margin surprise?
      A: The Q4 margin was impacted by several factors. There were down days used to manage inventory, leading to lower production volumes and unfavorable absorption. Costs were incurred for retooling for new Softail models. The volume reduction also resulted in deleverage impacts. Despite positive productivity gains in 2024, these factors led to margin challenges in the quarter.

    4. LiveWire's Future
      Q: How is management approaching LiveWire amid ongoing losses?
      A: Management is carefully evaluating LiveWire's performance. They are reducing operating losses from $110 million last year to $70–80 million and cutting cash burn by at least 40% to $60 million. Actions include downsizing the organization and refocusing the product portfolio. They acknowledge that EV adoption has been slower than expected and indicate that LiveWire needs to perform to justify continued investment.

    5. HDFS Outlook
      Q: What's the outlook for HDFS and the health of its loan book?
      A: The loan book is healthy, with recent originations at high credit quality. However, reducing wholesale inventory levels negatively impacts HDFS results due to lower asset levels. While used motorcycle values have stabilized, there is pressure as customers pay down loans. Parts of the portfolio tied to variable rates will see savings passed to dealers, putting pressure on HDFS income. They have also adjusted reserves to cover lifetime loss valuations.

    6. Retail Expectations for 2025
      Q: What are retail sales expectations for 2025?
      A: Management expects retail sales to be flat globally in 2025. The first half is anticipated to be slower due to macroeconomic factors, with better performance expected in the second half. Touring products remain new to many customers, with only 30% awareness of new features, suggesting opportunity for future sales growth.

    7. Dealer Inventory and Support
      Q: How is the company managing dealer inventory and support?
      A: Dealer inventory quality and health are better compared to last year, with recent shipments of 2025 models. The company is adopting a more surgical approach to dealer support, targeting specific models rather than applying broad incentives across a family. Strategic pricing adjustments have also been made for 2025 versus 2024.

    8. Operating Margin Target
      Q: Is the 15% motorcycle operating margin target still achievable?
      A: Management continues to believe the 15% operating margin target is achievable, assuming balanced retail production and slight volume growth supported by new product launches. Achieving a double-digit margin in 2025 is a step towards this goal. They note that tailwinds such as an improved retail environment in the power sports industry are necessary.

    9. International Market Outlook
      Q: What's the outlook for international markets?
      A: International markets are expected to be flat overall in 2025. In 2024, some markets like China and Japan faced challenges, while Australia, New Zealand, and parts of Europe like Spain, Portugal, and Italy performed well. Asia Pacific is expected to see slight growth in 2025, but macroeconomic uncertainties persist.

    10. LiveWire's New Maxi Scooter
      Q: What's the rationale behind launching a new Maxi scooter?
      A: The new Maxi scooter, expected in 2026, leverages the existing S2 platform and the expertise of their second-largest shareholder, Kimco. It targets the growing EV Maxi scooter segment in Europe. Development utilizes existing resources, allowing cost reduction by operating with a smaller engineering team and avoiding investment in a new platform. This strategy focuses on expanding product offerings while managing costs.