Harley-Davidson(HOG) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated revenue in Q3 2024 decreased by 26%, with HDMC revenue down 32% and HDFS revenue growth of 10% [13][14] - Consolidated operating income was $106 million, down 49% from the prior year, primarily due to a decrease of$ 120 million at HDMC [13][14] - Q3 earnings per share was $0.91, down 34% from$ 1.38 last year [14] - Year-to-date consolidated revenue of $4.5 billion was down 6% compared to last year [14][15] - Total cash and cash equivalents ended at$ 2.2 billion, which was $366 million higher than at the end of Q3 prior year [25][26] Business Line Data and Key Metrics Changes - HDMC revenue decreased by 32% in Q3, driven by a 39% decrease in wholesale units shipped [16][18] - HDFS revenue increased by 10% in Q3, driven by higher retail and commercial finance receivables [20][21] - LiveWire segment revenue decreased by 30% year-to-date, with an operating loss of$ 83 million [24][29] Market Data and Key Metrics Changes - Global retail sales of new motorcycles declined by 13% in Q3, with North America down 10% and international regions down 18% [2][4] - EMEA retail sales declined 23%, while Asia-Pacific retails were down 16%, and LatAm saw a 4% increase [4][5] - In the U.S., Harley-Davidson retail was down 1% through the end of Q3, outperforming the overall motorcycle industry [2][3] Company Strategy and Development Direction - The company is focused on reducing dealer inventory levels and supporting dealer health as it prepares for the new model year launch in 2025 [5][7] - The Hardwire strategy aims to drive productivity improvements and maintain a strong dealer network [20][50] - LiveWire is adjusting its focus to drive cost efficiencies and productivity while preparing for future growth in the EV market [10][11] Management's Comments on Operating Environment and Future Outlook - Management noted an increasingly difficult global market environment due to macroeconomic and political uncertainty, impacting consumer discretionary spending [2][5] - The company is revising its full-year 2024 outlook due to lower-than-expected retail demand [5][27] - Management expressed cautious optimism for 2025, emphasizing the need for external factors like interest rate reductions and improved consumer confidence [7][50] Other Important Information - Dealer inventory at the end of Q3 was down 13% relative to the end of Q2, with expectations to reduce inventory by another 20% by the end of 2024 [16][39] - The company bought back 4 million shares at a cost of $150 million in Q3, totaling 9.5 million shares for the first nine months of 2024 [26] Q&A Session Summary Question: Themes from recent dealer conversations - Management highlighted dealer profitability as a primary concern and discussed support measures for the dealer network in 2025 [31][32] Question: Retail trends in Q3 - Management noted a strong start in July but a weaker exit in September, attributing this to macroeconomic uncertainties [35][36] Question: Retail and wholesale alignment - Management aims to align retail and wholesale units, expecting to reduce dealer inventory levels significantly [38][39] Question: LiveWire's cash burn reduction - Management confirmed a focus on reducing cash burn by 40% next year, with significant actions already taken to streamline operations [63][65] Question: Expectations for 2025 - Management expressed cautious optimism for 2025, emphasizing the importance of external factors and ongoing cost control measures [49][50]