Harley-Davidson Q3 2024 Report

Overview

Harley-Davidson (NYSE:HOG), Inc. (HDMC) reported a challenging third quarter in 2024, facing significant headwinds in the global market that led to a decline in retail sales and revenue. The company saw a 13% drop in overall retail sales, with a stark 23% decrease in the EMEA region. Despite these challenges, U.S. retail sales remained relatively stable, decreasing by only 1%, thanks to a nearly 10% growth in the touring segment. Harley-Davidson's consolidated revenue fell by 26%, and operating income dropped by 49% to $106 million. Earnings per share were down 34% year-over-year at $0.91. The company revised its full-year outlook and is taking strategic actions to improve profitability and dealer support, focusing on reducing inventory and cost management efforts.

Key Takeaways

• Global retail sales decreased by 13%, with a 23% decline in EMEA.
• U.S. retail sales down 1%, buoyed by a 10% growth in touring.
• Consolidated revenue dropped 26%, and operating income fell 49% to $106 million.
• Earnings per share decreased by 34% to $0.91 year-over-year.
• The company aims to reduce dealer inventory by 20% by year-end and revised its full-year outlook.
• LiveWire, Harley-Davidson's EV segment, holds a 69% market share in the U.S. with a product announcement planned at EICMA in November.

Company Outlook

• Revised expectations for 2024 retail and wholesale unit sales between 149,000-153,000 units, down from earlier estimates.
• Revenue projected to decline 14%-16%, with an operating income margin estimated between 7.5%-8.5%.
• Focus remains on funding profitable growth and prioritizing dividends and share repurchases.
• Targeting a 15% operating income margin by the end of 2025.

Bearish Highlights

• Notable 23% drop in retail sales in EMEA.
• 32% decrease in HDMC revenue and 39% drop in wholesale motorcycle shipments.
• Gross margin decreased to 30.1% from 31.7% year-over-year.

Bullish Highlights

• Harley-Davidson Financial Services revenue rose 10% to $286 million.
• Operating income for HDFS increased by 29% to $77 million.
• The company repurchased 9.5 million shares for $350 million during the year.

Misses

• Full-year earnings per share fell to $4.27, an 8% decline from 2023.
• Year-to-date total consolidated revenue reached $4.5 billion, down 6% compared to the previous year.

Q&A Highlights

• Plans for selective promotional support in Q4 to manage dealer inventory.
• Ongoing discussions about more affordable bike offerings, particularly for RevMax products in 2025.
• Focus on conservative budgeting and cost productivity, aiming for $400 million in savings.

Summary

Despite economic challenges, Harley-Davidson is pursuing strategic actions to manage costs and inventory levels, while aiming for future profitability through innovation and dealer support.