HARLEY-DAVIDSON, INC. (HOG)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 was deliberately soft as HOG cut wholesale shipments to de-stock dealer channels; consolidated revenue fell 35% to $688M and diluted EPS was a loss of -$0.93, driven by a 47% revenue decline at HDMC and negative gross margin at the motor company .
• HDFS partially offset with revenue growth (+4% YoY) but operating income fell 20% on higher credit loss provisions; LiveWire reduced operating losses versus prior year but remains a drag .
• 2025 guidance is cautious: HDMC revenue flat to down 5% with 7–8% OI margin, HDFS operating income down 10–15%, LiveWire 1,000–1,500 units and an operating loss of $70–$80M; HDI EPS flat to down 5% and capex $225–$250M .
• Management emphasized inventory normalization (30%+ reduction expected in H1’25), cost productivity ($100M targeted in 2025, $257M delivered cumulative to date), and continued touring product strength as key drivers for mid-term margin recovery .

What Went Well and What Went Wrong

What Went Well

• Touring product strength and share gains: U.S. Touring market share reached ~74.5%, with retail Touring/Trike/CVO up >8% for 2024; management called the redesigned Street Glide/Road Glide a primary strategic win underpinning Hardwire priorities .
• Cost productivity progress and cash generation: $1.1B cash from operations in 2024; cumulative productivity savings reached $257M, with ~$100M further targeted in 2025 .
• Dealer inventory actions: Year-end dealer inventory of new motorcycles down >4% YoY and ~19% below Q3 sequentially, setting up for improved dealer health and 2025 seasonality .

What Went Wrong

• HDMC margins and volumes: Q4 HDMC gross margin was -0.8% and operating loss was -$214M on 53% shipment decline; mix and negative operating leverage outweighed pricing benefits .
• Consolidated P&L pressure: Q4 operating loss of -$193M and net loss attributable to HDI of -$117M; consolidated revenue down 35% YoY as wholesale shipments were cut more than retail .
• Credit costs and macro headwinds: HDFS operating income fell 20% YoY on higher credit loss provisions and borrowing costs; management cited higher payments, inflation, and normalized used values pressuring recoveries .

Financial Results

Consolidated Performance vs Prior Quarters

HDMC Margins & Revenue vs Prior Quarters

Segment Breakdown

KPIs (Q4 2024)

Guidance Changes

Additional context from the call: OpEx expected flat to slightly down in 2025 with ~$100M incremental productivity savings; EPS headwinds include higher tax rate, lower interest income, lower other income; share repurchases planned at $350M in 2025 under the $1B program .

Earnings Call Themes & Trends

Management Commentary

• “The launch of our new Street Glide and Road Glide touring motorcycles contributed to nearly 5% growth in the U.S. Touring segment and drove H-D’s market share to 74.5% in ‘24.” — Jochen Zeitz .
• “We are realistic and cautious… Hence, our guidance to flat retail sales for the year, positive performance skewed towards the second half.” — Jochen Zeitz on 2025 .
• “Excluding the impact of leverage, we delivered approximately $24M in 2022, $123M in 2023, and $110M in 2024… We expect to achieve another $100M in 2025.” — Jonathan Root .
• “We expect HDMC revenue to be flat to down 5%. We expect operating income margin to come in between 7% and 8%.” — Jonathan Root .
• “We believe we have begun to see stabilization in used values after many quarters of decline.” — Jonathan Root (HDFS) .

Q&A Highlights

• Inventory and seasonality: Management expects >30% dealer inventory reduction in H1’25, implying double-digit declines in wholesale in front half and a stronger back half; retail guided flat for 2025 .
• Margin drivers: Q4 margin weakness was largely volume deleverage and retooling costs; 2025 OI margin uplift assumes pricing tailwind, OpEx favorability, less manufacturing headwinds, with FX/mix headwinds .
• Dealer support and pricing: 2025 approach is more surgical by model; pricing strategy into 2025 positioned positively per dealer feedback .
• HDFS outlook: Health of book acceptable; reserves increased modestly; expected 2025 headwind from lower assets and cost of funds dynamics .
• LiveWire trajectory: Operating loss reduction planned; contribution margin positive targeted by year-end; maxi-scooter in H1’26 leveraging S2 platform and Kymco expertise focused on Europe .

Estimates Context

S&P Global consensus estimates were unavailable in this session due to a data request limit, so vs-estimate comparisons are not shown. Management noted Q4 revenue was “in line” with expectations while the margin miss was driven by volume deleverage and manufacturing costs; 2025 guidance implies sell-side models may need to reduce HDFS and consolidate EPS and margin assumptions given expected EPS flat to down 5%, HDFS down 10–15%, and FX/mix headwinds at HDMC .

Key Takeaways for Investors

• Q4 was intentionally weak to reset dealer inventory; negative HDMC gross margin and consolidated loss reflect purposeful wholesale cuts more severe than retail trends—near-term pressure, but constructive for channel health into 2025 .
• Touring franchise remains a bright spot with leading share and ongoing innovation; despite macro headwinds, this should underpin mix quality and mid-term margin recovery as volumes normalize .
• 2025 is a transition year: HDMC OI margin guided 7–8%, EPS flat to down 5%, HDFS down 10–15%—position sizing should reflect back-half-weighted cadence and FX/mix risks .
• Cost productivity and OpEx discipline are credible offsets; with ~$100M 2025 savings and inventory reductions, operating leverage could inflect in 2H’25, with double-digit OI margin targeted for 2026 .
• Credit normalization appears to be stabilizing; HDFS reserve rates edged up, but used values have stopped deteriorating, reducing tail risk to credit losses .
• Policy risk persists (EU tariffs after Mar-31-2025); potential FX headwinds and tariff scenarios are not baked into guidance—monitor EU negotiations and FX trends for downside/hedge implications .
• Capital returns continue: $450M repurchased in 2024 and $350M planned for 2025 within the $1B program; dividend sustained ($0.1725 in Q4) supporting total shareholder return even as earnings consolidate .