Harley-Davidson 2025 Q2 Earnings Misses Targets as Net Income Falls 50.9%

Harley-Davidson (HOG) reported its fiscal 2025 Q2 earnings on Jul 29th, 2025. Harley-Davidson missed expectations in its second-quarter earnings, reporting a net income decline of 50.9% compared to last year. The company did not provide an annual performance forecast due to ongoing tariff uncertainties. However, strategic moves, including a partnership with KKR and PIMCO, are expected to unlock $1.25 billion in cash, aimed at reducing debt and accelerating share repurchases. The outlook remains cautious but optimistic, with plans for potential investments in future growth.

Revenue

Harley-Davidson saw a revenue decrease of 19.3% in 2025 Q2, totaling $1.31 billion compared to $1.62 billion in 2024 Q2. The HDMC segment generated $1.04 billion, with Motorcycles contributing $778.05 million. Parts & Accessories added $186.87 million, while Apparel brought in $55.24 million. The Licensing segment had $5.94 million in revenue, and Other accounted for $17.54 million. LiveWire and HDFS contributed $6.01 million and $257.44 million, respectively.

Earnings/Net Income

Harley-Davidson's EPS fell sharply by 45.7% to $0.89 in 2025 Q2 from $1.64 in 2024 Q2. The net income declined to $105.75 million, representing a drop of 50.9% from $215.41 million a year ago. The EPS performance was unfavorable, reflecting challenging market conditions.

Price Action

The stock price of Harley-Davidson dropped 4.69% during the latest trading day, declined 6.13% during the past week, and fell 3.16% month-to-date.

Post Earnings Price Action Review

The strategy of buying Harley-Davidson shares after a quarter-over-quarter revenue increase on the financial report release date and holding for 30 days has proven ineffective. Over the last three years, this approach yielded a compound annual growth rate (CAGR) of -1.42%, a stark contrast to the benchmark's impressive 87.35% CAGR. The strategy experienced a maximum drawdown of 0.00% and a Sharpe ratio of -0.03, highlighting its significant underperformance. Additionally, the strategy was marked by high volatility at 41.69%, indicating substantial price fluctuations during the holding period.

CEO Commentary

Jochen Zeitz, Chairman, President, and CEO of Harley-Davidson, commented on the Q2 results, attributing the performance to a challenging commercial landscape and tariff uncertainties. He emphasized a strategic partnership for Harley-Davidson Financial Services (HDFS) with KKR and PIMCO, valuing HDFS at 1.75 times its post-transaction book value and unlocking $1.25 billion in cash. This will facilitate debt reduction of $450 million and acceleration of a $1 billion share buyback program, along with investments of up to $300 million for future growth.

Guidance

Harley-Davidson foresees the KKR and PIMCO transaction enhancing HDFS's capacity to serve customers and dealers while optimizing its capital structure. The company plans to use part of the unlocked $1.25 billion for debt reduction and to accelerate share repurchases by $500 million in the latter half of 2025. Additionally, up to $300 million could be invested in growth opportunities, reflecting a cautious yet optimistic outlook amid market challenges.

Additional News

Harley-Davidson is reportedly negotiating to sell a minority stake in its financial division, a move that could significantly alter its financial landscape. Additionally, the company announced a transaction involving over $5 billion in loans from its financial division to KKR and PIMCO, which led to a pre-market stock rally of up to 12%. These strategic financial maneuvers are aimed at improving liquidity and optimizing Harley-Davidson's capital structure. Furthermore, the company continues to face challenges with declining U.S. demand for leisure vehicles, as economic uncertainties prompt consumers to reassess non-essential purchases.