LiveWire (LVWR) 24 Oct 242024 Q3 Earnings call transcript

Thank you for standing by and welcome to the Harley-Davidson 2024 Third Quarter Investor and Analyst Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Shawn Collins. Thank you. Please go ahead.

Thank you. morning. Good Collins, Investor Shawn at Director the is Relations of Harley-Davidson. This

today's access Relations the the can call website. slides Investor You Harley-Davidson supporting on the Internet at

As matters results in with to forward-looking materially different. release will to you and include, our that noted be our the among in risks are earnings others, risks actual filings that have SEC. subject include cause could Those might expect, we latest statements comments today's

Jochen Karim Officer, also call have it are let Jochen Harley-Davidson Officer, CEO, Joining Root; Chief me Zeitz. our me for Jonathan Executive Financial this morning's LiveWire's Chief Chief Donnez. With turn Zeitz; and we Jochen? to Executive over Officer, that,

In Shawn, our industry Thank sectors. retail interest This sales rates increasingly morning, everyone. an global decline with the our and in motorcycles us to difficult both you global you, of in across impact North affected high market for especially new political and and and good pressure XX% discretionary we XXXX a regions. for international ticket core QX, of other big environment decline XX% compared saw joining XX% posting Thank and results. uncertainty our Macroeconomic for contributed QX our markets. a of America in to QX customers

through income lower EMEA lineup, mix continued on share; a a market to industry. basis. and we driven percentage up to EMEA, more and uncertainty, than conditions led up declined sales continue impacted Overall, the evidenced U.S. by our Harley-Davidson specifically retail points mixed outperforming greater with by better be performed motorcycle performance we overall from was by X our was the gained as new of throughout strongest in higher perspective, growth. the offset and U.S. down Touring where of almost through CVOs Touring with segment motorcycles Japan adversely segments year. In the a in New retails the of whole. For double-digit macroeconomic Zealand. partially in the market economic QX, Asia and by percentages our XX% family category, was XX% to continue end the softness QX down the were than and X%, CVO as our In Australia geopolitical From XX% other end than has Touring, expected which to sluggish growth customers spend motorcycle motorcycle country-by-country retail larger QX the In which be QX than Pacific, region. Trike motorcycles see

QX offering set differentiated believe given in Touring to and all-new of about to challenging Touring up Road We LatAm, were highly the our continue we and operating in motorcycles, Street in our media we our redesign Glide for well in be the up that plans the retails X%. Despite overall feedback placed to network; motorcycle environment our to development new received future come addition enthusiastic in the lineup. our other Lastly, success company Glide. the is from outstanding customers, lineup years

than lower At of the was units given QX, inventory reducing levels, inventory retail Jonathan QX, the QX this dealer expected to down are 'XX ahead, as production of our continued of year to retail in reduction In dealer end the XX% the revising Looking we will as year. support our detail, quarter, end softened. of we full demand outlook. the relative

bikes for in as marketing helped strong to network. we to our and prepare international a health reduce new continue our and markets are year by with supporting in We range committed launch in dealer of our model with push new America North 'XX collaboration levels both a in inventory exciting dealer

invaluable in is be to With quarter we HDFS. have support for economically both our all higher continue efficiencies of we and EV focus progress half asset also the the drive that strong new have to across to HDFS performance far LiveWire's we the our we've Services, made industry, that best the driven a to ambitions. times. the on strong our increasing also the the cost best-in-class coming to to pipeline industry driving the second addition a towards customers With the receivables, Hardwire adjust and in business. Overall, in believe in Touring to to that the we right our challenging in profitable X more and asset have shortly, of Harley-Davidson for product Financial despite continued the by briefly productivity challenges growth. stakeholders. year-to-date, Karim that believe our Turning finance facing overall and retail LiveWire, commercial years as and the detail in by We impacted will our environment lineup an With business regards dealers product

ensuring in addition to committed at support, right sales and and strong that our company product expect drive network. right the price to are which providing We to profitability that the at and time we our dealers across marketing receive the

is solid up new positive hard combination of success. with powerful The coupled are in product for set year. a We to pairing in 'XX sound our for and the are working brand progress ability and best-in-class dealer a a ourselves to our make network best-in-class

fuel that for and made core our customers in we with the know Karim. needed to the over and that allocation out year. capital with We are productivity cost required the external are front mind right we mindful improved provide However, with both categories in our business have and as industry were cost and Both the to interest now love dealers the I'll factors, close believe to reductions ones of including consumer right decisions to the And tight innovation confidence, compared especially come. Thank control the to rate of invest a tailwind. gains culture we the and you. hand others the that and we Hardwire to combined we Harley-Davidson are market strategy years

products adoption brand amidst than U.S. economic for LiveWire year-to-date anticipated electric on-road than context, and with the political In everyone. market. proved the in this global Thanks, Jochen. any QX, market Good morning, uncertainty. other motorcycles be the more slower in In to retained challenging EV

XX-plus leadership the with the XXXX notable QX, LiveWire EV XXXX market several events, Bike September. of XX% the HP Del Electric year-to-date. Within LiveWire continued the position had including in quarter being by Best exposure In and in shares its in on-road MCN awarded Mar segment,

Mar this addition, third ended for household Paris outpacing Del short In consecutive LiveWire August expectations. a of a a quarter, retail for we SX enjoyed wholesale our in moment global we the name. Despite making still

for guidance revising to As guidance full full a our units. remains X,XXX to the year. year unchanged XXX we motorcycle are Operating result, loss

rightsizing future environment, market with best feel the expands. products as is EV on market the business look, preparing Our for a EV LiveWire the given and the and growth focus unique sound delivering there out

for compared expect and enthusiasts, expected that we to we burn EV diligently to Recognizing year of XX% cash access to Stay end, experience. operations of also at addressable and product our will our headcount compared of next product directed the increasing tuned of we the expenses additional to have current by that EICMA streams taken with existing actively now to new reducing believe hand XXXX. ahead, in in market. overall expanding Looking announce revenue centralization offering anticipation already are confirm that and manage the XXXX streamlined XX% meaningfully significantly that in To addressable medium looking XXXX Jonathan. heading And Avenue. We've to to our it I'll our Milwaukee is completed Juneau to at cost, reduction November in been the move I'm start pleased into more. Thank this an to lab leading performance XXXX. also a while an our Actions the bring company to segment organization product improve motorcycle to over is LiveWire the EV the term you. year market planning expanding its approximately

while to down you, the plan revenue summarize to and I quarter XX% XX% down results million into XX%. good loss HDFS third XX.X% operating in offset loss the At operating HDMC period income by HDMC. partially growth and driven third year-over-year to XXXX. down income of and where XXX in $XXX plan the presentation year HDFS, of operating quarter points. I each by third HDFS by operating million, of was business by a margin million third for $XX further to operating was period at X.X%, the the morning compares margin start on segment's ago. margin points decrease next segment section. Thank from of was prior detail in on drivers in which consolidated HDMC X up by will $XXX revenue up XXX down briefly XX% in where and basis a basis year $X The Page consolidated prior year improved go financial was driven Karim, I profit was to the quarter Consolidated the was the the income LiveWire quarter million all. compared of operating was the revenue Consolidated the

Third which $X.XX is year. from down last was quarter XX% earnings share per $X.XX,

The revenue by $XX and LiveWire, by was the operating Total HDI income at HDMC, in at revenue HDI and was million year. components lower revenue of period of revenue flip income at at As this increased than the $XXX our of operating operating XX%. to million million an year last earnings year-to-date $XXX of was of same increased in $X.XX year-to-date $X.XX, which HDFS, were: declined this an with and by billion operating million compared $XXX reflecting margin LiveWire, period; down per XX.X% by HDFS, X% were: than year. down million, consolidated was prior of line expectations. Year-to-date the operating XX% at decreased in XX%; lower prior year-to-date was loss components X%; share we XXXX. the period; $XXX consolidated in The compares in income to HDMC, our Total of XX% page the results. $X.X at X% to was

his consumer in has introductory As taken in the seemingly discretionary ticket QX big region. on from different comments, dynamics pause Jochen based said spend global a each in consumer

down relative levels reducing second of XX% and both at of end As Jochen QX mentioned, QX internationally. inventory the this of focus XXXX by year domestically to inventory the on half as dealer of the end we is in

in support dealers reduce our attempts of prioritizing the remainder 'XX. inventory their are to for for We their

dealers focused as Harley-Davidson develop environment are of of end forward a will around dealers our look healthier expect grassroots the inventory QX to on partnering and to earlier, Jochen throughout the heavily with the down XXXX and into from 'XX activations. We XX% inventory to come to improving marketing the profitability more so levels at levels similar we network XXXX dealer mentioned our where, XXXX. We with grow dealer be start

availability to Trike, inventory of prioritize motorcycles. Touring, We CVO continue and and Softail

balance the for further our XXXX a talk about of retail both will and motorcycles for We minutes. in expectations just wholesale few

Looking versus motorcycles we of wholesale QX HDMC QX. of decreased This was QX revenue by a shipped at largely units XX% shipping in decrease of shipped XX,XXX 'XX in in revenue, XX% where result motorcycles 'XX. XX,XXX in QX the in

year the the came on pricing half the key a motorcycles; focus introduction X impact result Focusing points shipments compare for revenue in new of point and drivers was In and in contribution and motorcycles of the and basis motorcycle the points the prior in year; was supply of of seen was supply by the gross lower third we operating the quarter. some XX.X%, The of growth lower came motorcycles, all standpoint: of we rate accelerate more largely the which costs leverage. There inflation were of XX% where to includes foreign exchange driven incentives; the HDMC from XX.X% decrease decline flat helped to from portfolio at we foreign first year. year model shipments of decreased to Touring chain exchange and quarter as during material of mix as were the margin on which of raw actions pricing, in year negative the than negative as chain hedging second rest impacts down and the X% of compares from HDMC retail our shipments finally, savings, including from motorcycle XX X round overall in volumes was favorable on meaningfully the out offset volume half the favorable the net of decline lower quarter in the XXX XXXX CVO which quarter, a begin QX, management point wholesale positives including and sales quarter. manufacturing net pricing, sales prior

OpEx was which in QX On were HDMC million prior reduction margin year. maintain prior significant productivity the came our lower to relative X.X% as we due HDMC. cost HDMC the at at million, XX.X% operating discipline to from or million manage $XX year expense income side, efforts wholesales. continue than the operating $XX $XXX XX% and was expenses in in increase overall to lower prior operating year in to

includes XX.X%, period, impacts offset favorable mix by year-to-date prior operating lower were will pricing, from from XXX XX.X% HDMC to and the chain deeply negative leverage, motorcycle points the basis For partially year. gross which sales The the inflation overall in decrease discuss and regarding These impacts positive which productivity. costs lower favorable more moderate by raw margin impacts which incentives. and was manufacturing and expenses, negative less I volumes, was material of compares lower in net driven comments supply the

income take discipline to due were in by QX expenses actions $XX Lastly, X% months, of we we million, compared cost year maintained $XXX was the this first which as operating was late that period. through or year. lower HDMC million in $XXX prior XX.X% margin in year. first X months began overall million to the HDMC operating prior lower X operating XX.X% was the than to

to as expecting part productivity. next million on update brief our as I in productivity the the a Hardwire are we give identified July, let the one me $XXX program, of Before did of strategy, a initiatives improvement slide, in cost we to drive turn

excluding million. communicated of leverage of holding As now our $XXX a we previously impact the multiyear reminder, are while target

of we we $XX impact year. XXXX QX $XX million delivered the in In XXXX. in and million Excluding $XXX leverage, this through of approximately delivered million XXXX, have

expenses Fed-based portfolio Financial were higher reset was for now Harley-Davidson while expense ratio over by revenue by driven XX XX% funds or In by $XX segment. prior million dynamics. credit rate losses, versus ratio and increased interest loss QX, or XX% annualized losses QX higher income. HDFS driving increase Financial Total and of driven loss replaced finance interest related as year. HDFS' operating was At as credit million commercial compares debt was higher rate higher was The $XX higher driven borrowing average increased The last and rates, income were driven lower million, costs annualized several time up by year. retail was million the matured which increase Services as the to the or increase QX current in up XXXX. operating largely offset to retail debt. Slide credit factors $XX changes up and with continues QX an well XX% to by Services, with by the Turning was and in flat. was interest as income interest $XX market credit which and compared to in cost receivables X.X%, of to industry which is retail The the interest of X.X% relating provision up lower environment macroeconomic currently current customer partially yields

originations loan quarter-end retail in activities XX% while commercial commercial loans financing, $X.X $X.X up compared our prior future to year-end the and of versus the virtually net retail flat of in credit were reflects to year. came X.X%, billion. financing addition, down best at the In up and current prior X.X% was receivables, Total estimate both were XXXX. This billion, including environment. quarter allowance QX retail XX% retail X% lending third was which Total losses financing for at for QX both and

driven million expenses. increase Slide and compared or to up last costs, credit for HDFS. or interest than was higher provision which results Turning losses year-to-date by XX offset by higher higher XX%. million, was XX% year-to-date income up $XX and higher income, year. operating to $XXX Revenue at borrowing increased to operating The million $XX more HDFS

third-party down ago, segment, volumes. or to line models of balance LiveWire continued for reduction third year electric quarter we year million, a operating STACYC, to expenses in overall XXXX the a reduce million million $XX the to actioned as to to quarter. At compared new the unit revenue was compared in initiatives business, administrative period due also motorcycles compared revenue were to in motorcycles. increased year, the electric higher prior in due $X motorcycles the sales down the than distributor was sales EV of For bike down which loss expected the prior Selling, to branded in engineering $X cost our prior in expectations invest year. with EV X% of LiveWire more motorcycle and LiveWire QX and of

from lower a the at the segment, prior result million, year-to-date LiveWire was $XX For as down results XX% of of revenue STACYC. the year revenue

over period. year For period, sold a the increase year-to-date electric motorcycles, is LiveWire XXX which prior the triple-digit

changes on finance which positive by our Harley-Davidson, equivalents end as than was of and billion, For months The in cash flow we delivered the influenced expectations. Wrapping prior from which as the wholesale X in consolidated ended up first results. receivables. includes last of in with was was same of the cash in QX LiveWire which was year. in tight million, as at million $XXX management operating higher million Total We change was working well loss flow a consolidated up $XXX line operating million cash inventory at $XX $XX in period, million year. This focus capital financial period the operating at Inc. LiveWire. number XXXX, with cash $XXX $X.X increase cash

in the a of X as X to $XXX beginning shares in shares of million to the of shares XXXX. XXXX million a million at of cost total of back the in at shareholders; shares part of million. This our X% which first line to QX, months cost return with $XXX million, value in of XXXX. total brings to at Harley-Davidson Additionally, our at of our our million back amount $XXX common X bought shares and allocation X.X we of capital compares of stock This strategy capital our a X.X outstanding months commitment bought of is stock

experienced the which XXXX to of units first we continue QX, HDMC, At the sold to we and than to we year, lower outlook. wholesale in of months expect at unit retail now expect we X demand are be the earnings. which Given that the expected QX shipments is end from will to and the continue revising balanced our into be expect year change units, in full wholesale XXX,XXX XXXX we XXX,XXX retail units retail range and broadly XXX,XXX by a of XXX,XXX to

We down change and the We expect range the to of which X% operating XX% of a revised down a is full XXXX. At for for HDMC XXXX up where LiveWire, for the full XX% from in at from full is At is X% margin the now to full to the revision full now a of in X% up expect down flat X% be full our and a down full position guidance X,XXX to and a electric year HDMC to. to QX previously between The income full XX% continue X% operating deliver in operating now that leverage. for is of the is change revenue believe while XX% retail in year, the expect the to come the for range we for guided QX year year, change range million expect now down We a expect is which is the to year for inputs is reductions year XXXX wholesale we be between reductions to to income production $XXX full the year, be be full resulting loss lower which targets. million, which the in expect the income capital to X% from XXX to for units revised from X% XX% change investment revised. shipments company HDFS, for the motorcycle year full flat to upward we to operating from range change downward year. had to range is of We which up XX% of the $XXX to These is earnings. the year, for to year. And expect revenue And to impact earnings. the range result X.X% appropriately in line We change X.X% at in for to XX.X% we X% full top which to for the for $XXX full unchanged. million and and of $XXX million these due more guidance XX.X% year year, unchanged. to wholesale

priorities initiatives, allocation power the growth outlined quarter. of commitment to operating it flow remain share XXXX. And our repurchases and continuing As we capital as Hardwire We the and operating profitable margin end and Q&A. open a reminder, our by expenditures, execute continued to the our of XX% in includes long-term discipline, discretionary feel fund paying the highlights which capital this dividends generation the previous is earnings deliver up overall supported will HDMC a with cash that, by to income to

first comes Your Craig Instructions] Kennison [Operator with question Baird. from

your wondering that Jochen, conversations message feels has bit. It dealers? little changed what a like share could any recent if to that you themes your through may is come I'm and have dealer up

obviously exceptional. That's whether the and and in discretionary marine as rated profitability I probably are store motorcycles. Gap] forum our year company dealer forum in collectively business, barometer business to we of the with week, in you outcomes a really at presented it the this dealers mind. RV network industry dealer the level as a obviously don't very that good that the our feeling overwhelmingly going you've for away us success the and want much the good at or and you what good as which what opportunity with that in is with we way forward. was team. we of rating, the any October for front a as Gap] interactions We think in network dealer obviously came difficult to dealers is for given forum, the it annual we're about 'XX [Audio profitability have the addition very seen to as motor throughout indication it's a in the we and tough business, almost is see And to good is environment with time XX% understandably, held, [Audio are outcome is to of engage our it going And the mentioned, leadership and many the support a Craig, in

the we product put next that So year [Audio the next and measures: addition a make to go that internal year will new for investments going other we're up marketing core lineup measures Gap] in to particular in in strong force.

we're earlier, that working our that And we I dealer in As network in say industry terms profitability. But of network as we will work challenged a Gap]. than healthy Gap]. are there's well brand said, have certainly other to be continue I network to I powersport mentioned [Audio best networks lot proud make and in would this more hard to probably say of strength are and [Audio will hard [Audio a to most Gap] very and a the profitable want single network the sure network continues we

Our comes from next question Megan with Morgan Stanley. Alexander

down some think to in obviously particularly wanted of perhaps telegraphed The a I XX% questions, retail. XQ, couple that's in on August. okay, I if well noise there ask was

an talked July you off maybe last okay start quarter. think about to I

fourth quarter similar the seems quarter outlook implied, exited over guess So how what can quarter, to XQ? in XQ. looks just for for maybe the the relatively how reported of your third I that the you to informed trend Obviously about you but then a wide be first, you talk third range and retail

understand So maybe takes just you of us can around the puts that. kind and help

Megan. Sure,

ended started and industries with what as So pretty U.S., heard and QX with just line is globe. whole from we a not in out July but think we've much the and competitors expected motor weaker than late strong most we a and September, especially powersports in which across

well changes the elections So as especially assume macro uncertainty we some Gap]. in America geopolitical U.S. that rates believe with and as the expected North in and in U.S. and events [Audio interest and weather upcoming the greater we EMEA

Hardiman James from comes question next with Citi. Our

we think here general 'XX light the wholesale. outlook for at like in sounds I right this do year? it you why look assumes retail level that's to the retail guess confidence bigger question of point? So XXXX, your have And is with to of destock even the target we weakness, still you line more the I in what's as guess that next think about as won't

this Happy take is James, one. this out and Jonathan. to start

really sounds to around primarily I dealer how retail. relates and inventory think So that are questions it like your

I the a think end inventory XX% there. good of by in QX. So QX relative the is end at Dealer down question of to about

levels continue focus to will of We final the reduce to on 'XX. dealer continuing inventory quarter in

and end categories and So you Hardwire about the to key we to Well, share Certainly CVO our strategy. to as industry. is down the same ask you probably we've that, levels standpoint, They're at core our know are levels, the we which to from the obviously the question gets look that we that core aim categories Softail at look that motorcycles. XX% will We within be? today's Trike, our seen continue another where to prioritize we last availability, Touring, inventory growth as be of of key about the us year. from

sure ensuring can by make we've again, alignment, year our that positioned want retail appropriately our our to commitment to all since about dealers is guidance. as the of of and keep we going. that in you something beginning as we're to which doing XXXX part talked year get you that move wholesale that we the that the And we that then have the do are to end So really referenced, of are

So hope that helps.

a sort that come inventory down a keep that of digits. even inventories in right, the of mid-single I start to for I time if flat. in question year those the which know down Normally inventories be would is to we assume year the to need here. for further, versus don't level, environment, guess retail I turns right? But would Well, my have Flat follow-up why is going right is that

And this we incremental year? create next an so as does for potential reductions overhang think about

we issues We James, line that believe if so you better. had have be. I some me and can hear to the here. don't with know seem will I don't we think

quarter, planning have seen of weaker way. are we quarters that the address we that are adjustments in year year next the we third this we X shipments the right believe making Although and the will that a in

we So the significant feel year. adjustment and is do pretty right confident that thing the this to throughout

Joseph Our with next Raymond question from James. comes Altobello

up Just question. James' a on follow

retail have the right, So in XXX,XXX to channel math ended anticipating of my XXXX if year and bikes bikes. XXX,XXX you XX,XXX with I you're this

you're year. you're in year and at end imagine year-over-year going bikes anticipating XX,XXX flat saying channel you're can't Now to that level I next retail this the same

numbers? those we how X square So do

as But probably we we're to -- this overall probably to same think out that an 'XX too from where laid feel going be the think the don't full at point get going. like be expect time wholesale we're right into so So guidance we XXXX what we've the on isn't we're much giving range obviously don't want where to unit we certainly of to I overall in perspective. XXX,XXX units about XXX,XXX and we going, as and this retail

far next earnings. the sure in covering you adjustments some quarters terms we're way period, in where want into make XXXX our detail pretty well XXXX. that we do with and those will move to the we that of we ending QX for throughout we to get 'XX. positioning again the year into quarter's too more moving and an are distributing beginning we're as where dealers that end probably up we don't So of think alignment But in then And we'll see that

just That's helpful. a follow-up. Maybe Okay.

rate quarter. cadence pickup cut You or retail too post October Fed's Any in the mentioned in still early? is it of the the

that quarter, the overall and be running this going comment October as will practice we retail, case practice, previously, an prudent on QX not to said we are release we on as the I'm until we continue Well, best in with going to and future. in

coming to inventory Just your back question.

what think bear to mind I the change Touring not again. is in in going happen should obviously you that big is

have into the carry we We in Touring year. and the bikes new them fantastic over will market

into the are the terms carrying of an carrying inventory that new platform bear gets the in have over. Rather platform year. into carried quality old So in we the mind new of that having the we year, new than that

is was a year. inventory than lot Touring the of quality the previous better So it

as So in as bear a qualifying well mind. to factor

from comes Farley Robin question with next UBS. Our

level similar had throw in us know your just around about turning maybe retail. you what questions add to to and I more case that can your guess expectations for there's flattening a question year one. But second things for I next don't in nothing about I I'll inventory first tell in

of it like willing losses how get have long when the might point broadly. it sense we I a on meet sales guess to there for it that take of year hit similar if additional long? at obviously those of a there and plan, this trying which term, losses? how profitable kind you think Just Just be is be business LiveWire vehicle fine targets, point long business, about to about if challenging another thinking just commitment your you for didn't that. a doesn't and to environment guess you'd you your to at reevaluate of for a thinking electric are to I multiyear sort about with just these year how your sort expectations long which it's would

solid more our expectations, much of ourselves a to hard sound terms set for year. are that up 'XX in ability think not can progress add other very reemphasize are positive we I in the to working there's in than 'XX we new and I make really

are consumer and improved years rate a a provide of that cautiously that be couple mindful the pairing dealer combination our a best-in-class of products are we've network that reductions to and had We for think to of not optimistic. we external that call needed the best-in-class now. tailwind, course factors, powerful with including for required success. industry tailwind true a interest have Now But confidence,

measures, early XXXX on our right have we compared in our that of the is total our So And invest them categories to highlighted continue of in cost and control to tight a Jonathan dealers that we continue million cost 'XX that we combined and customers, gains and productivity know to gains, and addition core have right the our with the our in our course to capital the productivity especially allocation innovation we've goal our been expect strategy in of favor focus made market. others we $XXX decisions. believe in achieve to decisions in

as can as think I that's color I So 'XX. give for much

has next The XX% or going significant cash In by leadership have are we LiveWire the terms down. into cash that He burn has of mentioned I our taken next think burn year. coming taken we year. reduced taking significantly LiveWire, down Karim's under and actions are costs operating

sold We number need a order are that gross to that profit manufacturing costs can working -- achieve to be margin the team is we of positive or to get breakeven units working lower and much very hard in so to a margin. improve

the continue given them, actions to that it have other position is electrification believe at to year to the of as certainly and was important But venture in But time we in We develops. in time but a be. how do. X access one important business Karim, very comparison has that different Harley-Davidson in at it started we auto believe the adoption technology So point please is this you for time to LiveWire repeat we and very sport to do at also been in course and sure this might see the this us we to the when invest, of prudently And spaces. that if and want take appropriate whenever leader EV taken. what that to know a ensure

the are these now, For we taking. what are actions

comes Our from next Research. question with Fred Wolfe Wightman

the would wondering blocks the margin could 'XX. building think sort think that But target volumes. about operating XX% that about just could for you performance. from of mid-teens us just I'm from you lower helpful. comment year's think pieces to I help of this know made of just be that sort to target, sort get big you if that us a help deleverage chunky operating Jonathan, I reaffirming margin a of there's lot the if

Okay.

Sounds good.

So OI year end sort so good I by of the full think margin. We've about XXXX XXXX. around question that think of XX% talked

we're how of with X terms We inside taking the taking in of Harley walls of the the of much year. actions is that how year and improvement. we're This things way managing are shipments and that pleased the the second down certainly pretty in that half we're really unusual some drives

some we've of between a ever talked more some I in little probably have production and that this than differences we thought about think year -- of terms We we this the wholesale. also bit would

move forward into XXXX and up begin relationship as line And the so to and we retail. XXXX, we between production, wholesale

from So of obviously enjoy with see some the that you benefits standpoint. a leverage that, we

meaningful that pretty improvement. a there's something So of really drives us productivity amount from a standpoint. is significant we that Cost for pretty feel impact

our a So million $XXX And commitment from million removed we like to of in recall this cost dependent productivity. have obviously so earlier actually $XXX real leverage that's something from may that's you upon units. you as year, calculation not that

addition, some improvement. think stack have those in a surgically in changes we product changes things X as can And So then and standpoint. you do portfolio there we from and see we that to pretty order tweaks, pricing are

in piece have that And see the on you I touch actually and this OpEx show So helps. quarter. discipline that up operating pretty then that around would just other is we strong really

last a way we of of some seeing within quarter end the in quarter. positive that P&L up this kind actions the took with So that you hitting

to example XX% the for $XX QX we actions down You in million so due took. that OpEx down see

a factors in XX% I of that the think number look as across OI So give target. confidence P&L, contributing are there margin us you that

then there mechanism couple dealers are that, cut there to out when different is of talking for actually say you a were that? you the just dealer mentions wondering Okay. a about And shipments or support. helping about I'm

And measures are the on execute they many as for other we there I as development ground successful fund that are 'XX. set there mentioned our dealers have to marketing many a speech, will a the benefit retail that that drive from next And taken our investment up in network; marketing Well, significant my to of evolving the dealers and in year have are next adjustments evolution how perspective, to leads of the fuel see years. initiatives for that our more how over presented we traffic upgrades achievable including we we couple network, our to the target digitally our 'XX. facility

other coming is that that is at a with rates down see of we've the activities as all strong number be able around product especially improvement going that we've not activities as critical So there which the course are course feel of that next just the dealer announced, to well. in of time overall reduction, to profitability inventory the a should in into same and We addition based year. well 'XX in network launched

America. from Our next question Bank of comes Alex Perry with

then next should from you quarter? fourth follow-up ask promos the we of wanted little announced last production gross about the quarter. business? in be of about bit be costs some down of gross a thinking dealer on how sort to the taking And you've of out leveraging a help for given and Will just inventory? work the to Any HDMC thinking year some shifts be margins how we especially increased should I margins that

market. on than said, promotional less in market the however, manner fourth of retail are interest In some sure assistance competition believe line however, way want But support that with me we briefly And offering are of are that target promotional start more now promos. in in are in Let mainly, the rate we select promotions the promos we have aggressive. can a is our quarter. offering Right that competitors make our we Jonathan our we we core that the highlight our achieve now. where to right for markets,

Okay.

from as So pieces. a think Alex, I QX, you of couple think -- about

like As have margin around what shipments. the we the margin does you question asked reduction sizable a QX, pretty and in look wholesale in

a sizable cut with think obviously see So we and and wholesale are you we've from it's that that provided you pretty shipments. retail can range in where to going

challenged. quite will margin QX So be certainly

at around we through we As -- a question answering promos. look and take the go

anything what our on As have responsive seen thoughtful we more of are in competitors to a promos, consumers promos, being you look that of have like promo feel and particularly focused what else. consumer at our We've number go pretty year standpoint. we current and A than is take a from really promos in perspective, model terms rate look primarily through have we rate we a we there. from cash if rate at been out

critical feel that's something look year to we of our we to allow at to that and it's sure campaigns like make them fair traffic, help perhaps close consumers that sales them with dealers as again So consumer we're some ensure form that at retail. our for balance continue giving of supporting the deliver to our of that we'll and kind the We are drive dealers. good

you'll a so been see much think we've I And what doing. of continuation of

question comes KeyBanc. Zatzkin with Noah next from Our

you're too I of but working a point if fair meaning that guess XX% next you fine operating comment year. expenses kind that LiveWire. burn the first LiveWire on cash just think next by of put made kind to to million Is out Not it, potential $XX to that to on I to figure stem assume for less $XX loss trying from million a just there's directly to it translates year?

Sure.

can start I in. can and So Karim then jump

a up cash on a I some perspective between very focused you there's color There's Karim over that I'll the it that and think you of into flow thing to related of critical is equation. But he's as bit of see some LiveWire end depreciation operating P&L. think, tightly. Noah, that. business little that their cash and the difference what burn how on a one So to Karim, pretty represents a very, is of from the paint managing part hand I side elements obviously their income you little some seeing where compensation

that related Karim? they some well as that, elements. But do as they have addition, In compensation work some with through depreciation

So operating in year. explained, obviously has as next the a burn Jonathan impact performance yes, loss the cash direct for

XX% workforce operate make taken we year. We in the of a reduction Milwaukee. innovation which lab relocated well set obviously most as California next our left products in introducing up a we now. for for on from way entirely California and to beginning already by don't we've still sure fairly said this focus the be operating is point, a that So next a do that a Everything expensive loss we've place reduction anything We've at can key to market. the on organization working significant year. from. expect to that our reduced Having the year. continue compared this, keep are of We've we to in was fit have streamlined done overall And actions significant

of announced that significantly XX them again believe will products at we EICMA. One expand be the And those for LiveWire. will days horizons in

we're not good look recognize especially pockets is all but different under of right you market segments. good, traction the environment there segments, tough Europe. true type it EV actually EV EV at of in if now, So we for And are in

for So more 'XX loss XXXX LiveWire business to compared cash in right and to to come up now significant But is the operating on this a already the one. performance. set overall have reduction burn very

you cuts nice If performance just ability I there are How HDFS. to how interplay expected book? could about growth first, next guess I this and And feeling maybe year? squeeze the drive the on between then of the one about obviously of more health the kind thinking in are rate quarter. you

Noah. question, Great

this then quick move year next with on start we'll into year. So and the question

what and XXXX and our doing stay virtually managing consumer job prior a is consumer flat a team prior ensuring reserve So of we're think The look managing we in HDFS sort a that I seeing with certainly which the a quarter were on bit see versus fairly change we limited wonderful in is little they perspective, you from losses, stressed. reserve of track, at and as year.

us outlook the allows to So is standpoint year. the outlook what business HDFS on I good. pretty think from a the our for consumer health That's increase

so think we're the into equivalent in through seeing I actually we end in off move about, we're But probably bit before an guide will budget bit where speaking a detail see the in working probably and nature of retail think in interesting not I But talked as to -- portfolio ready we'll cuff. an up we a XXXX, the of XXXX debt place things As little where that on we're we have we a place yet. resetting we've portfolio. little are reset

in moved for a nice have direction things So XXXX. really

to but expect as in of bit little move before in XXXX we don't forward But years. XXXX. think on front strong come look into challenge us I XXXX for a more as got we that a will HDFS subsequent I of that front,

with Research. question from next David MacGregor Our comes Longbow

quarter there to XXXX? just pretty do to disruptive Company way your down secondly, I weather? What in that XXXX, might a you guess from think any market a did I your still how attributable Motor it's I sense retail much about And to about be out standpoint. been XX% realize you disruptive are early numbers? would Is and a thinking share just then parse how love talking that bit get to little of weather but have to

not of significant retail weather thereafter. when certainly That's being having with close to to we open East David, Helen led tougher able has then the the and prepare on towards environment to and the dealers immediately also Coast dealership end saw a towards especially September. their to hit end impact some

So an in in that but the impact internationally, U.S. so the been certainly certainly U.S. has not much

then And share the market 'XX?

more this have to Well, we're Touring lineup for much not 'XX product going in year feel comment strong to point on We continue. at really in next we time. a

CVO, particularly has as segment, double-digit CVO We've Touring in CVO our doing adventure that the in throughout the offered market. earlier, strong. been Our we've growth I strong offering, seen a touring including mentioned quarters

are wait see. defend have lineup that But impacted maybe by good but to also some that's positioned for have market can course next until we well overall We environment. we shall we'll to And February share, that, in a believe We segments, think I indication. before give we beyond gain the some year. certainly of

in seen, tough that significantly been which the most really even effect of indication is quarters innovation as having Hardwire Touring great and of you have we've strategy a taken As in have our industry segment, share and in positive outperformed up market part times. a

that that traffic confident are it positive and other going we with make are our in similar taking network we and in have to forward they to 'XX the generate additional dealer So that ready addition to actions for innovations leads network. be together effect we for sure to continue pipeline a will have dealer that we'll the

question Thomas-Martin Our BMO next comes Tristan with from Capital Markets.

updated out, some was the question just Touring. success wondering the a there affordable of bikes? big consumer just ticket a lot had more for of product is thoughts kind I broader pointed portfolio given you've revisiting the with affordability maybe about concerns, of items, of some your any like headwinds of kind Just you general

you repeat the revisit Could I'm sorry? what,

affordable so $XX,XXX things bikes More example. maybe for under

But of pricing that about rest Max 'XX. talk with are our into assured, wait to lists to going until But the said, addressing next new with price that level we out. product entry our going not need We're we Rev the in particular year. are until year products

final question Morningstar. from Our comes Jamie Katz with

you I'm hoping year-over-year I looks and you increased you in the not But share your in sequentially share. Touring on X%. has can market X% share you X market deck, look market and total gained clarify comments. it said when both like your believe that Cruiser Slide had

So what in? share exactly have you gained market

retail overall terms gained business, of Touring we've And new which overall was primary the the down our year. quarter, the primarily you our focus sales share in significantly market at were lineup market share. then we've Well, product every in segment, the Throughout the look if less this outperformed industry. of industry than

then Touring. So even the a in segments. market the all better we've improved significantly Touring that been in than doing overall the we've share every quarter market but slightly, context, in from But perspective, considers

XX% slides, Yes. just last I on doesn't quarter. and that. market XX% it just the It's that. indicate understand this share It indicates quarter

the a other than is business. significantly shipments of of would have change, while level of on quite It's been been that it I sort it's decade the profile since there's question ago. different a but operating is The a maybe structural clear the big been have reassessing

whether of think a should level? your utilization higher trigger not about to labor capacity on or reevaluated be sort what footprint So maybe much would manufacturing you really for look or or

that our a and assured of much together, a this budget that sure rest in basing we're are and as which on operations constantly. that Well, productivity to make are the we've we consideration OpEx course, process driver that why going key outlook conservative forward. we we're at of a going And are those key so is emphasized putting looking cost is

case. be will that the So

will has is OpEx continue our question the an it. achieve that months a for that XX challenged feel terms to confident, productivity the anticipated market structure year, do realistic, adjustments base been That and and last improvement as order into goals operating plans going with taking cost next the made highlighted, and our are no measures said, want Stage about Jonathan to so to will we year that makes with we we we of this over to year, margin. what us OpEx have I environment we our see tight Hardwire in already that in We that conservative in next have think certainly see X

And certainly doesn't the Jamie, add just from optimized that perspective. that we ensuring would cost obviously the and have side very remain a we on I great delivering of to of very, work things without that to $XXX in productivity committed relative manufacturing come everything a million deal

And that strong very sustainable future. $XXX been drive with the the support we and they We that you we think appreciate a again the of partnered million appreciative So certainly have relationship have something about. delivering we've And think have to in unions. to our I displayed are level together, feel we talking we've that that that flexibility our of. is commitment we

There this joining. all concludes call. no for time. This conference at questions today's further are Thank you

now You disconnect. may