Harley-Davidson (HOG) Q3 Earnings call transcript Oct 24, 2024
2min read In the third quarter of 2024, Harley-Davidson faced a difficult global market environment, with both their industry and customers impacted by macroeconomic and political uncertainty. This resulted in a decline of 13% in global retail sales of new motorcycles for Q3, with North America posting a 10% decline compared to 18% across international regions. Despite these challenges, Harley-Davidson managed to outperform the overall industry in the U.S. market, with a 1% decline in retail sales compared to the industry's 2% decline.
Product Lineup and Market Share
Harley-Davidson's focus on innovation, particularly in their touring motorcycles, has been a key factor in their success. Their new lineup of touring motorcycles, including the redesign of all new Road Glide and Street Glide models, has been well received by customers and the media. This has led to a double-digit percentage increase in sales for their CVO motorcycles and a 10% growth in the touring segment in the U.S. market. Harley-Davidson has also gained more than 4 percentage points of market share, outperforming the industry in the touring segment.
Investment in Electric Vehicles
Harley-Davidson's electric vehicle subsidiary, LiveWire, has faced challenges in the third quarter, with retail outpacing wholesale for a third consecutive quarter. This has led to a revision of the full year guidance to 600 to 1,000 motorcycle units, with operating loss remaining unchanged. Despite these challenges, Harley-Davidson is committed to investing in LiveWire and adjusting to the overall electric vehicle environment. They are focusing on rightsizing the business, delivering the best EV products, and expanding their addressable market.
Financial Performance
Harley-Davidson reported a 26% decrease in consolidated revenue for the third quarter, driven by a 32% decrease in wholesale units shipped. The company's operating income was down 49% compared to the prior year period, with a focus on reducing dealer inventory levels. Harley-Davidson Financial Services, however, reported a 10% increase in revenue due to higher retail and commercial finance receivables.
Looking Ahead
Harley-Davidson is working to set itself up for a solid 2025, with a focus on profitability and improving inventory management. The company is committed to reducing dealer inventory levels and supporting dealer health in both North America and international markets. They are also prioritizing the availability and inventory of touring, trike, Softail, and CVO motorcycles, which are key to their Hardwire strategy.
Investor and Analyst Questions
During the earnings call, investors and analysts asked about Harley-Davidson's dealer profitability, retail trends, and the future of LiveWire. The company provided updates on their product lineup, financial performance, and strategies for managing dealer inventory and improving profitability. They also discussed their plans for expanding their addressable market in the electric vehicle segment and their commitment to innovation and cost productivity gains.
Conclusion
Harley-Davidson's third quarter earnings call revealed a company navigating challenging market conditions with a focus on innovation, cost productivity, and dealer support. Despite the decline in retail sales, the company remains optimistic about its future, with a strong product lineup and a commitment to delivering profitable growth. As they move into 2025, Harley-Davidson is well-positioned to continue its leadership in the motorcycle industry, with a focus on innovation, cost productivity, and expanding its addressable market in the electric vehicle segment.
