Harley-Davidson (HOG) 28 Jul 202020 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the 2020 Second Quarter Earnings Conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Investor of Director Burns, Relations. Shannon Thank you. ahead, go Please sir.

morning, everyone. Good

the supporting can the at page. investor.harley-davidson.com. You center call the in Click slides box this access Materials the of Earnings

call. risks statements materially with be Those the and any in risks matters disclaims are forward-looking our results others, different. include obligation among SEC. information have will cause actual Harley-Davidson comments subject Our in to filings to we that include, latest could to release this that update noted earnings

this CEO, Hund, Darrell also Jochen, are me Thomas; and be Q&A. CFO, Joining Zeitz; Interim morning Jochen for started. COO, will let’s Larry get joining

and Thank Shannon, hello, you, everyone.

We continue challenge and professionally. very unprecedented I’m pleased But to with our us as personally far. these to times. The accomplishments Rewire continues implemented, challenges face is so during COVID-XX

have for production work the life long that our renewed dedicated lines extraordinary We Through everyone an normal returned and this Rewire future events have our virus keeping a of equality. Our threat. our inclusivity from and progress as safe. far the together reality, put to goals Recent is priority significant recognize success. our for poses as up also will be our towards has The team making new and significant ways, in stand to commitment workers

first to We response the like in would from in to are on early an ongoing feedback marketplace. encouraged actions and the provide by key impacts I stakeholders the positive seeing we’re already COVID-XX. our update

our forefront. continues and health, First strength be to foremost, the the at and community well-being of

our constantly factories. keep implemented protocol safe diligently in to are and our tuning have We fine workers

the from We continue home expect year. most end working to of workers until non-production the

million cost-saving charges executing quarter, we deliver expect Second, excluding restructuring this as I savings, cash to are measures prudent in and year. last said $XXX

will QX our line pay discretionary repurchases dividend we dividend. $X.XX per suspended, in QX continue to cash with share of a share and Additionally, be

ease quarter, riders QX, unique help on of motorcycle requirements riders, dates quarter. who end and financial at interruptions. Third, dealer for with training. position payment provided changes needed we those cash and due I finally, payment achievable burden months $X.X billion also nearly on be requested sales certain we for the the global for that including billion dramatically adjusting to open pandemic each significant were help reduced. the end second support the our strengthened our needed further additional were support region, expanding At of systems. warranty quarter, necessary. $X.X secured Three for Goals Complexity the of the we motorcycle To And falling In dealers and our have needs significant ago, the an the terms liquidity. retail strong inventory, providing liquidity to by based of XX% with we set of realistic. dealers you shared be to about throughout extended

to also better to makes refocused capabilities our Our reality, difference else. align with strategy had be what on our and new a nothing focusing and capacity and

we strengthen defined bottom. Harley-Davidson to out We for attention Rewire playbook. on Harley-Davidson of realities, areas culture. Based urgency the needed also to We the top The of and rewire immediate these created from reignite and soul to our set

our swift on led has progress implementation been Our priorities. to and changes which significant diligent, of all has

focus across company. us priorities, at from duplication, of dollars a our global to eliminate is to our up Every First, and been enable rebuilt on has faster business, and organization now and up our and and across essential done function, and setting new decision-making the the current operating stability how has is done, structure long-term look at region model and work to our Harley-Davidson complexity. all will and its align for getting Significant is success. work spending hard country structure of what operating realities the focused, to areas we’re more entire valuable. the We’ve model simpler, organizational inefficiencies the taken cost ground business

and eliminating and essential. that not We’re simplifying in activities and – scrutinizing interaction interactions spend are categories small processes, large

examples. investments the function our on accountable back a great commercial events drive created would marketing for desirability. all management The new product our plans legacy, conversion and function on that maximize and on been we lines, Building marketing messaging. inventory are some regions brand sales brand, product Here to has global restructured countries. true We’ve spotlight across and heritage our strong shift the to on that build new put

while needs, while motorcycles. production find media and in development services directed and product forward. and will the is portfolio management dealer and to strength, freedom balancing going of staffing shown financial our Motorcycle improve a newly processing focused overall operation the these the increasing to support, management, celebrating cycle engineering been set, operation Harley-Davidson and volume be capabilities will be year. profitable clearly is our Clear being most will throughout life function spaces on Community strengthening desirable consumer the we performance have riding product and focusing better core better shared align Momoa, Product is products, Jason Harley-Davidson our future unrelenting complexity. and optimized product Manufacturing The fine-tuning peaks in journey hours expansion enhancing created and reducing and priorities with collection specialist positivity support into and of better criteria during also align and reconfigured all more new plan. needs. campaign challenging on online providing first approach by the building of valleys with times, social the brand our spirit

our a our mission. our We with This effectively work core internally and our further will people planet communications approach Officer model a ensure support greater to Sustainability with facilities drive communities efficiency administrative our messaging Investor function newly created will externally, and to to will and Our We’ve future in critical stakeholder and plan new a engaging merged of providing and to lead add with who includes priorities. the to operating the This our society. team commitment PI and Relations. we’re cohesive initiatives.

The I critical digital and direct changes company’s leaving of key internal priority operating model, Harley-Davidson, strengthen out and new are new we to are painful for choices, product that in capabilities. but are hires all XXX and have adding our we is XXX comms, To finance without a improve success. technology roles been GIS appointed filling IT employees and fewer model The not as of recognize necessary critical HDFS, leadership these unfortunately operating our structure the in deliver HR, new us. our significantly CFO exceptional We the including approximately organizations and is to actions elevated approximately newly requires commercial, talent. streamlined significant administrative continue with development search management, legal, future areas, the positions to progress. reports positions motorcycle The engineering, across a created digital global also the being PR operations, functional as to our Investor function. in are with new Relations, and Finally,

fully portfolio maximum have product our Second, go-to-market a and for launches aligned been impact process. reset with

that portfolio. expand segments. our offering in invest with approximately in motorcycle refine the and matter while this We’re potential investment platforms plans context, the product new our our by next further models balancing spirit enables to most, touring better This globally our plan which high to to In XX%, us and streamlining products our iconic of Harley-Davidson. of first America. those launch most market-leading Pan our year. unprecedented to We with of motorcycle, the will their We embody to America Adventure in plan the expand see Touring strong strength Touring potential Pan motorcycles delivery we Adventure

an with products the will launch and reveal demand going dealer early be sales process. dealers shift product XXXX, of will market model QX, to timing Beginning year for launch for with improved into – We season. the in driving riding at start our and we

and As production we XXXX early we Year. arrive model XXXX year, year the will showrooms this bikes fall in our extended dealer expect year model in New have transition through

and using Rewire into our will invest elevated of the launches new and some go-to-market We investment into brand The product savings. capabilities

and full focused each channel merchandise forward. are and The initial priority businesses going to are organizations leaders tasked and new expert motorcycles we by growth Third, general and with on strategy now P&A parts to GM led strategy are building who and aligned are markets already to plans beyond our lineup. out product and ensuring reset business potential. laid future our They’ve is motorcycle accessories

accessories, parts drive leverage to For we and opportunities our engagement customer for motorcycles us will for sales of point dealers. customizing better at increase sale and our and the

at XX%. to least SKUs We also by reduce expect P&A

Harley-Davidson general riders. our the business the consumers, overall experience bring enhancing while will brand to Our merchandise for new

a deliver U.S. to is to reduce goal merchandise motorcycles incredible our that marketplace, with plan Our apparel that and stylish. XX% and least approach at will complexity, create of of in designed the consumers our innovative in maximum to of together to and reset enhance emerging include reductions brings new investments the comfortable durable, with SKU Major way and focus safe, parts our America, marketing efforts that for concentrating resources Pacific, on Fourth, markets, regions parts be and Harley-Davidson business into shifts structuring Asia primarily global our highest Canada, customize the line experience. our impact Europe with and the changes and expect is we and technology, deliver to truly in strategy. To enabling strategic We and future North we’ve their a more accessories, line holistic focused. general to priority one make in

aligns our better with potential. investments new business their Our structure global

forward, on Going majority we and to our our growth efforts vast of volume approximately XX potential. the representing concentrate plan markets,

agile volumes decisions support attention quickly in-market within countries more to We’ve exit freedom to focused teams and regional international to local These to plans evaluating needs, We’re conditions. market their markets, more our clearly not defined dealers equipped streamlined drive respond do be continued created understand profitability better framework provide make investment. offices to for the and consumer to will a business. and where and

our an dealer plan provide to network and also optimize experience. to We customer integrated improved

demand management the revamped brand our and we’ve protect to products. our of value supply, desirability and approach inventory and Lastly, to

As simultaneously our making is we a our long-term factories at right of for that the health approach new decisions implemented the aimed reopened, brand.

we The which products. promotional value our very the make our we’ve the me As through focus of strength in was to that brand favor investment Rewire, our riders worked activities, our of and lost on it our had in evident erode

Harley-Davidson drives significant, help of and revamped inventory significantly and volume willing the This We, the our have of outcomes initiatives promotions. already The across work customers and sacrifice forward. strength this value retail We’re discounting preserve products is to of that legacy are pure to while on which approach not supply a price add in value, to therefore, a management, testament to the and going desirability organization year. quest motorcycles for extraordinary Rewire its the reducing focusing pricing The for growth our brand.

supply new in our We inventory average, encouraged by selling and are the being value at that is were the MSRP motorcycles management. by U.S. On driven new

the we a already addition, In change better auction. with motorcycle more in saw evaluate ownership pricing witnessing and in of organization of and along and simplicity, the decisions, transformation with also in on how better used management a incorporated more across I’m at more outcomes. simply functions, focus meaningful process. a we and business credible from in and I’m leaders increased seeing and our – voices how ROI engagement at retail expectations increase the and awareness prioritization cost accountability

development, our all successful many world. two have Harley-Davidson a focus to the a through strategic The on on serve future We brand believe strong I work build a executed, the Rewire have of in phase and still foundation for as end the priorities the While will Rewire amount our of and company of five-year as most motorcycle efforts desirable of all intend we new foundation Rewire The The plan. of year. the been significant

form have strategy the For Harley-Davidson our ignited into of XXX will every of desirability aspect Harley-Davidson and years, the and the that experience foundation motorcycles desirability future.

categories we plan world are strive while our brands today power We growth of the intend can enhancing will outside focused where that troubled the desirability future. on making times, Hardwire, our and and our make first in at our between the customers, Future be us balance our that we of brand, our decisions focus delivers share will the of that during soul. strategic the protecting drive to growth, iconic promoting will experience the find the of for win to those the to freedom the connect as and perfect with targeted peace one way few riding look The and value riders. to for All We the our world and the in remedy QX. to adventure these new community named, product

the discuss results turn Darrell to of financial I’ll it the over to Now, quarter.

sales of second actions during versus quarter, $XX prior to Slide approximately prior year. loss closures Services suspended dealer restructuring year-over-year, Thank manufacturing down you, savings significant QX was for taken of a ongoing compared on quarter lower of X, due last retail of by new were in further in down EPS the is $XXX as quarter Harley-Davidson CECL, Financial we with during on Based driven was COVID-XX. the were loan to reflecting pandemic result expected annual income was to to driven QX are reflected as charges our lower Motorcycle income results summary shipments, On consolidated primarily in to XX.X% quarter Consequently, and million losses, motorcycles million. considerably the down persisted. adjustments year, due year. significantly, operating by accordance net versus second operating our X. Jochen. The provision Slide the segment global worldwide income COVID-XX. primarily second

COVID-related noted operations. year, XX.X%, of We As a as at reopenings to the dealers year-over-year end the versus XX% network And saw down of U.S. dealer across most early quarter, towards July. U.S. dealers disruption. in of May end our closure sales EMEA XX% resumed QX nearly normal our of occur some QX end have begin of by sales on were global of down markets. experienced into saw the retail was global of decline call, April, prior we closed. or all retail XX.X% level the

declines and in Korea. by partially Mexico quarter and the Latin and saw Brazil down XX.X%, South Australia, offset China America Asia Pacific down in in was growth and finished declines XX%. by driven Japan

our During our increased points, competitors bike our in inventory decline from supply XX.X%, in of approach of new share segments, of new fleet X.X segments and the stronghold driven quarter, down to U.S. a management, market registrations sales. outside was and the growth percentage by promotions impact

versus was Europe down X.X in share X.X%, percentage market year. year-to-date Our points prior

impacted quarter While market we share, our market slight adversely outside by were performance experienced some in we improvement our of in segments segments. second stronghold better

increased also We segments. across competition price product saw all

actions as on of to continue mentioned, on desirable not aggressively dealer impact We’ll and into pandemic Wholesale revenue as the our business. approach management, volume, motorcycle driving QX value disruptions. the to supply manage we of long-term pandemic we’re and as the XX. improvements beyond, and, to focused Slide part our profitable the through motorcycles. strategy Jochen These shipments on supply fundamental of manage our noted across a network and simply Given XX.X%, already volume. were strengthen in new motorcycles in taking significantly are are COVID-XX-related Shipments down inventory impacted but the by

factory closed from factory Europe and motorcycle impacted revenue down family segment, bike. year’s average which reduced shipments shifted April. of the XX.X%. mix our second last quarter, Motorcycle two-thirds with cruising revenue was motorcycle was $XXX.X was the Lower closed throughout touring versus which per Thailand to quarter, Our million, for

and unfavorable Gross and mix, a by also by Currency lower-margin operating higher was and QX unfavorable details foreign reflected a U.S. manufacturing currency lower plant exchange Slide on currency and million, incentives to by $XX.X XX. driven our and favorable the Cruisers by aggressive Sportsters down Operating sales tariffs. was absorption year, presented management pricing. Foreign partially margin product lower cost to lower P&A. partially also last Gross bikes stronger for as expense, as by revenue raw restructuring down also of higher foreign year, slightly Touring due by margin impacted costs, adversely to decreased mix by gross in pricing. dollar. shipments, was and lower a impacted percent margin a – exchange offset offset and per higher impact offset and bike, Margin result related of margin SG&A. driving driven versus margin productivity mix negatively mix largely materials compared The partially exchange $XX.X shutdowns, of lower of by last revenue offset exchange million, QX margin

through quarter in last increased of provision to was higher compared as interest income our of million, by QX The customers. Credit debt lower due inventory Second fuel was face segment delinquencies year. on demand allowance operating were liquidity the as income Net to down Services and loan our ongoing by lower due for related in Credit million pandemic. million pandemic, which outstanding values spread also we QX, economy average The adjustment repossessions current recessionary a the XX.X% losses QX for $X.X million $X.X for at the offset down certain auction, efforts, and management $XX.X Financial in credit driven offering to used United result the in was decrease partially and includes QX continued million risk up retail credit COVID-XX deteriorate credit by was This and losses stronger down wholesale payment extensions were the increase losses, losses of losses. the $XX.X a accounts of unfavorable accelerating in allowance quarter to condition both increased year. bike. motorcycle actual for to $X.X to The for down States. continued a as the helped the to losses economic prior

Our allowance life impact reflects over entire estimated portfolio. in the loans the our of losses of

sales we billion Slides as strength the retail prudently segment had we in of partially cash of noted Additional and offset market liquidity At raised lower credit XX. billion $X.XX was driven by conduit fixed million transactions, to sales, economic up remain end of quarter, details strong by a from of points cash QX originations Cash and liquidity face of very by were percentage cash balance and X.X XX.X% QX, and by the Services new facilities liquidity versus we’ve the $X.XX the supported hold on uncertainty. Financial available available total bike $X.X Financial billion. Services year, of In prior are down dealers. share used strong for the XX Harley-Davidson elevated bike the bank $XXX and of sheet. equivalents equivalents Harley-Davidson and cash XX.X%.

QX, to to equity of debt equity was higher our debt required no than to XX:X. debt within X.X:X, which our As ratio covenants, well be

delinquencies plus last the we a favorable, management to basis were XX-day Our inefficiencies new down as related XXX implementation year. of system loan points startup lack

of have request slower customers risk. pace crisis. much is an QX. see to the may was due future to pose Customers first-half of and economic who continue QX The We the extensions of extensions requests the these in it challenges incremental than received COVID-XX-related payment

quarters on that received In X results have a credit made XX. increase loan. the remaining customers X.XX%, are basis three year. approximately have of The retail point Slide extension However, QX prior QX, a rate Harley-Davidson, on summarized financial payment their loss was Inc. over

net Our and levels billion. quarter-end of favorable driven partially by equivalents million activity, cash Year-to-date lower flow this cash cash and cash lower from $X.XX year offset by – balance was to year. last financing million income operating inventory $XXX.X compared was $XXX.X wholesale flows

compared effective and tax charts rate $X.XX the of We decrease the that quarterly second time, In the as we XX.X% and in paid quarter, which in in a peers Slide leader due are generate our tax cash. discrete ROIC, income benefit a motor believe we year-to-date on to a year. XXXX, demonstrated the X.X% leader of expenses was the are per reduced our company; tax share. Our last company’s recorded over we amongst the XX expressed demonstrates primarily at ability to HDFS, of income first-half dividend a year-over-year ROE, rate to during loss. was percent The pre-tax as a

of on you previously, the not quarter. we know, communicated did in stock a as basis and purchase discretionary As any our will

taking impact uncertainty to dividend we the the approve intend assess ongoing QX Much The stock XXXX. take share. current we remains $X.XX environment of As and of did a in to not said, Therefore, to the our back-half continue global strengthen we actions up the the drive short-term to per cash, of To Board as repurchase are we pandemic’s pandemic, given the prudent economy continue to suspend and with uncertainty wrap our the do COVID-XX serve as Jochen on our is reasonably actions we’re for we value financial forecast performance. it results, difficult The the confident Rewire impacting for will our financials, financial on and guidance and business, remains while business long-term XXXX. our stakeholders.

Now, your let’s take questions.

question Instructions] [Operator Hardiman James Wedbush. from first Your is of

my taking for Thanks question. morning. good Hey,

any you what touch you opened July retail almost looks June like? within So it’s you July, whatever like? an to somewhat be of could did quarter? of And color how color sort quarter we’re momentum on, that curious how want regards of talk that looked the give with you’ll Maybe things month-to-month? end was of from I’m then what different front. any through us the if now the So, at actually question in us have open-ended obviously, to but give the ultimately, And the which dealers the those you on policies, on really would can helpful? were

Thanks, James. This Hund. is Larry

take you of sequentially, motorcycle for about dealers to look we the sales. end of if at throughout and additional then a end worldwide Dealerships in sales XX% about By So, went May. motorcycle for May, as April, had saw open had dealers openings we our of open June. open of only then XX% we tended

were open – we by XX% there about worldwide that dealers for end of had sale. the June, So

are as I went as management. most given And being obviously, far of would June got can the trending we demand dealers And say, increased sales again, would supply expected, and approach by say, we the month of to July, as sales new you I quarter. our the our inventory quarter, as once throughout sequentially then imagine, So as month strongest open.

of result if as caveat, forward? to retail significantly that move new I last to inventories as to degree, and with expected that, point. And a may, I a is now some continue follow-up guess, will lower a that are we the has strategy Trending just as the that expectation limit that

and the retail to we said, guidance But So impact I work I updating inventory supply an management both clearly, will went to of approach giving new that some retail through and used not have auction. benefits demand we sales, think, on as at prices Darrell we we’re think, as to here. motorcycle new for used desirability for as saw that, pricing, quarter of and and and the create motorcycles the benefits balancing benefits of

Excellent. the and luck. guys, Thanks good for color,

Your Shawn of Collins next question is Citigroup. from

morning. Great. Thank Good you. Hi, guys.

Shawn. Good morning,

– you’ve million wanted laid out I cash you about $XXX you. Can I that savings savings. break please? CapEx you. ask savings got that wanted are to and out thank the in that SG&A know the savings. annual to cost you the SG&A expected, Thank I between

for Shawn, Thanks, your Yes. question.

break not we than We’re to we’ve that up that any expect made what capital out reductions. further of SG&A going done those and already, basically, expenditure which is be will savings

And point, to $XXX going the so $XXX to that’s we discussed QX. on that you, tell million. say I at we’re this we track deliver million all are about in the though, that will

So and for that any that be that taking. we’re charges full-year, we’ll that the we before to are be confident going deliver to is restructuring able

expect in to million And quarter, we charge deliver add restructuring said savings. we to the earlier to in Darrell second $XXX took that, SG&A the that, what is

So that gives you some indication.

I very get you that’s back into great. Thank Okay, helpful. Very Thanks. much. queue. will the

is question of Jaime next Your Morningstar. Katz from

Hi, the be? we percentage at? good can any there’s what to markets if I’m of think If Thanks. about that of give taking question. willing curious us Thanks morning. you’re you’re might maybe that looking my insight exit international shipments anyway for quantifying on

I But give exact say, of won’t I a number. that is an shipments. relatively percentage small So would

our sales XX about take shipments. generate primary that as majority really roughly you look of vast and said, the If a at markets focusing retail we on we’re it,

amount generate may choose exit. are amount which a But to we evaluating, still modest sales of markets are markets relatively of our relatively We our and a modest profits. those that

on Touring And I think model? it have next back. that year you out was set pushed was come Okay. I comments the the well? then Do said release, Adventure think Streetfighter the being to press in any model as

will At going point, year. into this next focus Yes. the be Adventure Touring

at expect and streamline by As we Year. to this let’s Adventure product reductions. color terms in But and reduction of an so something XX% on be line-related revealing about not can for we point. the about to in our into product want will Other as focus us lineup we segment model it’s exciting decisions, real-time, really I New said new Touring going talk earlier,

Excellent. so Thank much. you

Johnson from of Your question Capital is Gerrick BMO next Markets.

Hi, sure good morning. this. you I’m quantified not

million rate? mentioned is So million incorporated earlier? in to the that $XXX we a much you actions. this that of savings that current And Or the how $XXX Is ongoing year? related in that run expect is

we is But strategic new Darrell a as said, run of looking plan That five-year also part building into are as rate. initiatives. to reinvest the brand

So if caveat want that reinvesting the on initiatives. for correct. with but you might dollar brand more into At investing is dollar, to and building we take run decide that a rate,

Jochen, a Okay. And, question you. for

should strengthening own In mentioned should You memory you recognized? So a of the would What H-D question? be manager culture. answer question. be be your that discarded? managers in monk, say in elements you must collective this Which your must book themselves how ask brought and what

chase the world around street. overall, look, the I I too. dedicated engagement members believe we’re company the energy to do has are its and understandable, Selectively, an earlier, revitalize. of around a upon for our on go XXX of to the we commitment. we also that already and which people. the totally is and back and year That morale, really world, on have every in is around we employees that’s order winning in. I – that’s difficult has And passion there That team difficult the energy But have incredible weeks very the is in employee The culture certain and do the a to on which by thing over are culture by has new in to seen need very Harley-Davidson talent. effect Obviously, fantastic. we I world, I amount want a huge changes last passion sales. has I’m five XXX despite to affected will seeing consecutive been to The Well, and positive we trend get mentioned as – restructurings read. our that let calling that environment and downward bringing couple I’m of had Well get workforce suffered. is of sort tough, morale because see

have some are in the have We talent. we in talent already hire brought looking into new But fantastic company. to areas, we and

and are complementing talent was that’s we very happen to down way much things A company And the the didn’t the structure So are a about processes with way of defined – strong way why a it. power think is team have outside. unlock – the think that the from newly going were the was organization will And new I forward. reset the newly the team place the structured, lot of run, the operating rewire a forward. comprehensive in going really and as we this I how that processes the model an in defined operates that that’s defined, and of Harley-Davidson

Okay. Thank much for very that. you

question next Wolfe from Research. Greg Your of Badishkanian is

definitely is erodes share there risk And guys, Greg. morning. the It’s share market for in you some Wightman significantly next the trend this over we pretty share a to was do look that down actually U.S., is Hey, But transition good If year-over-year, the figures, on Fred I particularly permanently? that that few any of quarters? year. just expect mean, and how at market

So out. we’re once not again, guidance going giving

drives quarter, were talked there outside second – of really from – fleet Darrell And travel and really of that COVID growth primarily I the Davidson H-D tourists about, the a type been right, sales, has things those you if as Europe reduced. currently, of share think, certainly, segments think about certainly, in lot impacted a of Fleet market. lot here – with is that where competes. fleet dramatically that four we if One sales, come in

promotion on we supply promotion didn’t impact market And the obviously, approach was demand meaningful management, whole lot with and in U.S. quarter. in inventory a had the touring. the of our that a the in then and had, quarter there we in So do to

greater So came results those at going retail the during at think demand, that supply, increased increased auction motorcycles in were long-term inventory to I the positives going and we would the gap really price that that, quarter. the with say that for used Harley-Davidson. out And drivers with our used the motorcycles closing management, used forward. drive in for is a that’s of an is pricing big What new pricing positive that new for

what Larry may And if I add said. to

I it and mentioned, supply more then, once focused are important. And the until way. matter. brand And really the desirability demand that think, balanced. on more Larry as simply is volume or it’s share Share is is not look of this we that at meaningful for

– We we what sure we’re I’ve will demand and experienced, sales demand make our not the oversupply pull and bikes and before not at a or look past promoting the pushing look if and if supply products market. start that and And at want season model, you the market even into not pulls our push to you started. the

define right of metrics will had So to new that the not of business, improved couple desirability. the to our last going define and in we pursue of expense volume have fundamentals will at of are alluded we the some months. Larry And actually them already that

XX,XXX want bikes. inventories plan? the versus Okay. would in internal that Maybe be ideally U.S. your of point. and just to where mean, down that sort is last I mean, to I it where you dealer on follow-up

down about more. than plants at Worldwide down as the quarter. were had was said, down U.S. we inventories more certainly we Obviously, the more say, were would down Darrell closed. second XX%. We that. of The end I So were

right business. is regular for the would inventory plants going the think And a a we than the basis. but has So would give forward. fair was lighter of quarter opened were end on we amount shipping you motorcycles won’t second lighter and I throughout quarter been like a specific that, come back that the amount amount we certainly and fair as we certainly number, have down second at measurement than expect that

you. Thank Great.

is question of next Craig Kennison from Baird. Your

great taking for brand Yes, next-generation going to is sense. value focus the topic the make and like kudos means first makes is and more important? accessible question on question riders? of to of What But building Gerrick factor. as that a my thanks for riders And a kind affordability that scarcity a be that is premium well. next-generation that on you bike to demographics. With of My do affordability Harley-Davidson, can

corrected. bikes, go be your affordability devalues value been think, our obviously goes used But – in to of that’s the needed MSRP prices your down, I and Well, problem has when not that down needs what the past. a and

value So Harley-Davidson into sure are and the your preserved – is significant it investment when from you doesn’t to you buy you product. make you making want a that Harley-Davidson put the deteriorate product, moment

is I relative. affordability think So

Some have said that we to want be don’t want to be exclusive. No, we exclusive.

the In And all to the part is are built fact, value as that customers. as a desirability, different around next we of which brand, managing and our strategic but our protect five-year we want products the plan. to with of want be metrics inclusive for we

the look also we’ve I buying And been that heard at and – soul, for targeting honestly, share as is aging Harley-Davidson to the we a pursuit actually quite is Well, And say, past now. the right customer of timeless aging, is we riding adventure, more at and the feel oversimplified freedom more they rather who do it’s looking so expect I’ve in who to it think, and is of age. dynamic buy mission age. Harley-Davidson and the that had consumer Harley-Davidson call remember out. view. think now regardless I that important a future? than who in much we demographics, our like those I’m has often for I to need our that so

consumers would fact, resources, have say, this I aging into as time In post they free and riding, are especially more pandemic.

But our a that’s over it XXXX. if not has that’s times an lot brand, for is does at will than XX-plus age to And agent is look of really company. the demographics. you And not since that and show time teenagers emotion we increased that people focus XXXX. since and times is be you attitude that to say just X.X critical. actually at Harley-Davidson That that X data, incidence increased the riding, engagement look of that the about said, into at XX-plus, being of attracting rate, so actually more And over or age for adults our if young

if positive. So that’s huge and And riders And for need used focus have and on really new I done there’s amount in XXX,XXX the that only we’ve you actually used think, We second purchased product. alone, new a change. bikes, bikes. XXXX new look our together, of to then well quarter. at shows bikes of the that sales demand to that over tend we In

our So I’d desirability not more will I the on the in five-year protecting will and models, certainly into, about that will be of be our hence, say, strategic affordability but focusing product, by Entry value by talking we but future. look plan. cheapening it

Rollé Brandon from Northcoast comes Research. question next of Your

morning. sports industry. seeing Registrations new My the on like question rider or is you’re seeing? Good other you comment on power that? you’re dynamic are industries the Could riders? seeing seems Could you comment on Academy in what Riders new It

sparked sales I in in and U.S., also other RVs mean, has particular outdoor has interest, trends, trend. believe specifically, this benefit the Motorcycling and certainly internationally that will activities, Harley-Davidson, especially products. continue boats Yes. in is and bicycles yes, for in COVID-XX in we from and but visible outdoor to positive and

the quarter Riding well. ride slight in experience mean, I added actually learn second new two and actually expect – seen ride. to In we be rest now, increased we our new Academy, the to that and the programs to we’ve of said for taking regarding classes a of increase all with the sales we’ve And and together, has full to as As particular, year. used

long-term, And at believe outdoor activities, have our including power run So an classes that positive we’ve on seen Academy should our U.S. long in – then Riding Harley-Davidson effect dealerships. interest motorcycles, also a going sport significant forward. increase increased a the we in in in the

Jonas question is of from next Adam Morgan Your Stanley.

to dealers company you’ve as to some company of company of Jochen, hope? much, line been culture. kind question You’re degradation hit want now? the maybe being of anecdotes, was able kind was some open are in I refreshingly seeing deeper I this just what very ask. of you the Thanks transition the and how wanted to right But any share the how into workers, out it’s to as to But to can The you with much. and much management reach of going from the asked pivot just, period morale thoughts, the dark to anxiety the the in comes moods,

question. that and Now is a very great important

that’s happens not to decisions say perspective, of speech change And problem, that those been, Managing too this. is on. delegate to needs much, is of country, to years From to from early first to if I spoken Director senior removed what relatively decision-making clearly has And business it should we my out for XX needs to make We important know meet to has sure me to how have and management, how a responsibility say tried a right? XX my need Let a culture, there make that all, years say, something I within the that from to who and So, happen. I dramatically. that right where defined in management a and – removed person framework.

run So wait have we make who and countries, the to that the micromanage which within ultimately That’s to run can they means It leadership best decisions, delegate. that mean happen going don’t that markets. to for clear that that doesn’t forward. just those framework having in going region know should a be not

visited you down, The of the not throughout processes, made the costs and received rehire visited was. what and management operation, understanding earlier, I The focus And take on of I’ve a to company. that Tomahawk, right the It’s something that setting weeks, the of the to to in lot significant a we the need the valleys and new on This right we more the faster, required factories account. not York make them structure said with importantly engagement inconceivable peaks more production essentially our on to But right complex as making go have more to into right me, reference That will we years people going side. cost gotten many is so long-term and is never the later, become Rewire model, the fill that’s focus and right less quality. and after It’s focused. ourselves that the at. to general success. interim, long-term will But as effect is course, have do the our – about casual not effect cost-cutting five and we on that I people quality. really effects success place by operating I couple then same actually, tremendous of slicing work the side three just being I just I the our side bring year and we’ve factories there layoff the this positive input reality. we believe I for costs the workers been the good that that have adjusting not focus up up on our been is is, shouldn’t is by it’s focus feedback senior it’s now, tough. actually and the what’s the same let in positive gap, morale. certainly putting down for based your to experience in having that In that think cost But in for you we’re a cheese decisions received very go actually to to will morale. high-performance a that I’ve setting having really more sure that is well, exercise. company months of I helping colleagues to And tough so we’ve think, powertrain much except of progress. a a is is understand Obviously,

area we we many I That’s think right on. that’s an something touch now. So dealers with –well, need are in mean, I’ve to been I dealers. work focusing that And

received But only many weeks, In restrictions we we still think the of all I’m so the I right rather feedback couple from next far decision. making the to on dealers seeing. that fact, physically I’ve overall, that than our are out travel with positive are in dealers reaching virtually

anxiety actually that and we with are forward going hope. a in we not It’s way. are on rewire plan. we pass communicating quickly, clear much clear believe do and hope, a playbook it’s lot are that I executing of a So But more strategy. clear significant it’s a will It’s

communicating we the hope week. to is I’m every I the – that We communicated are seminar After bad improve. that a can all things your transparency organization every step global being we take the of full good, the communicating have for have personally it’s the this answers all and – throughout employees, because important question. we decisions call,

of comes next from question William Sharon Zackfia Your Blair.

good Hi, Thanks question. for taking morning. the

HDFS understand On be unusual what, originations, the total company’s versus quarter? could the on help something the might I to then, $XX different and as you do related And and lower? used us the they’re structurally more million think, disruptions year-over-year SG&A, there you Did higher that was anything, decline actually if financing in the to revenues. something than related within the ongoing coronavirus

right. All Thanks, Sharon.

hiring same first to place of aren’t except helped that extent the that otherwise. they the fact office the the on of that part a COVID necessarily there down the So spending not and unique question that therefore, view, drive they’re obviously, you’re that point the the seeing. SG&A would freeze on is SG&A a in And put in people from for we’ve and side, nothing be is

$XXX to its And lines million So respect just of the it’s that really of promise coming the all million we $XX is made with through commitment. part SG&A.

We’re traveling. not

point not or could hiring that freeze. COVID to. We’re spending unique a money. We There’s I had – nothing to

yes, So to driven with used. better, respect it and HDFS, their was performance was by

promotions. no were there However,

to was strategies that you demand as dealers. supply positioned their creating bikes. the are talked the segment. to see, back And than finance motorcycle that a well HDFS are we’ve bikes about through goes we’ve used that those been all can being already, it taken stronger is for sold that performance think, basically I and inventory our

about it’s promotions, again, part management originations it And whole use. seeing all and through HDFS play strong no So, opportunities process. There of were. we’re those for except supply financing special at of inventory was the out where the use, nothing

Conder Tim Fargo from Wells comes question Securities. next of Your

for one Thank take wants I if you. one for this. and to Larry you may, whoever or Jochen,

you And a what Rewire, where regional just versus then, Rewire it’s long-term at areas stocking replenished the the So give how average? maybe profiling use new maybe in can maybe The especially looking the us and at QX maybe kind at The of reference On program? a of you Larry. the for was a end of their of that anyway replenishment, dealers spread, looking point and year-over-year basis in part part of that’s are Hardwire, changing, as changing or The and America North basis Jochen,

Okay.

one-third, about two-thirds But roughly, use in new used the a obviously, used. new new. two-third – split, there’s third on a motorcycles it’s maybe the spread, more than So market lot probably

So for obviously this pricing the out floor if back doesn’t It what are that holds better. the the yes. from the Larry, guess, depreciate about? value that talking to because brand, of right it narrows value interest guys as in precipitates better value dealer the long-term you you have much consumer, I differentials,

in it – you quarter saw X% We give We the about two quarter, certainly, pricing for used throughout seen that. – saw higher we’ve good on I’ll any things increase probably previous was than a while.

than probably June, saw of look not through as quarter, at we back opened they went were If through as sold. bikes more you and XX% we May for as you up went going comparable the were you that – in kind auctions saw, previously the you the options, roughly quarter, if the for about entire but went quarter

solidified pricing So quarter. gives the hopefully, of way that used benchmarks a couple of you second the in in

where sort just versus is or you a it? that where of then long-term want And

that good. Certainly, think is haven’t levels that Tim. Obviously, in a are gap I seen anything those closes while, quite that we that

used a the thing as going would if think that, great. good their the isn’t momentum motorcycle, motorcycles lot retaining Jochen that value having clearly depreciation we be in have as steep buy of past. think customer I it Obviously, We a benchmark closes think we be a curve as the to as a a is they as new feeling that. like and far was said, as far direction. So don’t more, in less it right I be gap that’s that that if think that on

your question. And, other Tim, to

a As is U.S., around dense quite world, applies to I that healthy said, because balancing it to we markets and levels the applies inventory and supply have demand all the other key, States, network there’s new a has process, it that our is more on of as we call particular, importance. focus And – lot United SD&I dealer in even now. hence, the management in

management sit the responsibility the the needed not has with in actually that responsibility ultimately changed. and on with that function the people hence, is and we called And inventory Inventory will that the a commercial something management problem sit was, So will past, inventory. accountability, our commercial fix. function. we’re with to That’s that the

And effect replenishment, of automatically replenish. we also are And course, In that in one But network. terms is trading that make means inventories sure some has much the have they some that we think on each are that product, an yes, how of we will that should other other. bear – it also mind. that start or of too there factors right model dealers to among throughout that if that want also I

want don’t to have will do also to on trade dealers, the dealers our overall other throughout among price. unlocking is also something So compete it’s inventory our And I help with think, network. that we what improve each

dealers As things I to follow said, and significantly be we certainly, our to than and hope that and price they plan with competing rather as focus suit promotions strategic right From only on to will our and have that apply needed if time fellow that our it’s competitors. and will reduced, But reduced competition rewire five-year dealers be and at themselves. doing stop the our discounting looking doesn’t with think by us. time

they address also to need need that something we going that’s and think address I actually to forward.

from Your David Longbow of Research. next MacGregor is question

Asia? can taking on Hi, the you to us an morning. Thanks question. the for forward good planning update guys David. It’s for if Are Colton move displacement in bike West there? so, with progress on small you still And give my

And something to we to like would closer our launch not on I right now. said, specific products actual to product are like to reveal elaborate launch. going and As much would whether I when we is that

will further say that. fourth to At there’s in point, this detail We new about provide the really quarter. nothing

Your Spak of Capital next is Joseph from RBC Markets. question

if the wondering I with occur, could much or how or go update of line give new get can plant everyone. Good sense I of you to want XX% think, an And review you I a your guess Thanks. us your year-over-year, consolidation inventories secondly, U.S. for capacity down XX%. morning, maybe to align as questions. One, was opportunity, that Two how were XXXX maybe but reports lower some levels? it company’s so you compares like there looks to or maybe then that,

plan So do the you back-half? still in to under ship

a referring you referring motor or manufacturing you to Are capacity, are our to side?

Manufacturing capacity, sorry. Yes, yes?

expected we measures that surround manufacturing capacity. adjusted volumes capacity pandemic, all obviously, align our have to uncertainties, necessary our going to our have but with Well, we manufacturing the taken the forward

So see think approach. pretty we say, assuming we are the are taken, we much but we’ll realize, what realistic that I future I quantities set, that foreseeable conservative in would have

and timing that’s at mentioned probably then rest the drive we with times that. of continued to call, the the to are shipping there you your providing in so next second Joseph, forecasts retiming significantly, August, the Darrell And, like And throughout that into said been we’ll of did things year the mention, the value model should year. year year, the So are the QX on revenue dealership as And the we’ve Most an But sales have of in combination in shipments exiting far said, far the closures back-half. of impact in through is of that’s looking think of part question going demand in approach supply desirability, things delivery guidance. call, several that year, as going markets, I’d to some historically that some as we certain on impact of new ultimately, as consider your our as we are concerned. rest second-half the line inventory we’re our shipments, as then year. far retail new the have not right? concerned, volume and are say, to and certainly continue going from early late to smaller is and of as as to as I factors the both management, back-half

So impact moment, could uncertainty certainly that at there’s an finally, but predict will that additional impact. the have probably disruptions, have then an COVID-XX And that the just, of as hard well. to potential

year. I So to influence gives the shipments you as of that during guess, the direction, things hopefully, that could some back-half

from Felicia comes question final Barclays. of Your Hendrix

Hi, question, And for as a good of picture. – it’s Jochen big final morning. kind

So customer think that do if not the back, is sweeping you had a And be? stepping program. to you broad Harley what Harley wants and you’ve the three unveiled would prioritize But they delivering? issues what top had, that

not three enough. Well, is I’m afraid

have will go to I ask So everything back to you to I said.

the is without that is everything other think want highlight than without can’t say I to operating that people the you I part organizational right of the succeed. in anything structure, a place, really playbook important. model And maybe proper wouldn’t right and

action, on areas say, So focusing would which The already of do. We but I more and addressed the of Rewire, we’ve taken I they forward give think until move and to already the come other that that, complete end want. significant year. now have customers we what

been sometimes want our are to to that brand very but of the once, that Harley we makes But it’s the problem, know don’t reasons quite offering ones the looking at product what has that’s lives on product why investment hard product pipeline. be true complexity the from product just is and but have extraordinary have for one customers and more our for that a substantial and stretch. We that new want and And every to our just complexity, a come of think, to not we in launch worth product who into confusing even a would of focused for some a bike. it’s like are view and a times, That category much that also buy more of too certainly especially at something and brand are development huge into is might I to those be the not customers difficult. point even bit

You can’t be everything for everybody.

We an to extraordinary we for and everybody. are But desirable brand. become everything that doesn’t ever mean that want

they that to are launch into retained we and desirability offering not the reflected ourselves we So of needs offer to in be the part categories needs if the today. be products and

wraps up you have hope Thank our an That right. and today. day. joining for All us, outstanding for everyone, you, questions

Thank this call. conference Ladies your for today’s gentlemen, you and concludes participation.

now may You disconnect.