Harley-Davidson (HOG) 27 Oct 212021 Q3 Earnings call transcript

Thank you for standing by, and welcome to the 2021 Third Quarter Investor and Analyst Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Mr. Shawn Collins. Thank you. sir. ahead, go Please

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

You today's can call supporting on the access Internet at the slides investor.harley-davidson.com.

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

this CEO, Gina are me Goetter. CFO, Joining Zeitz; and morning Jochen

addition, O’Sullivan, In why will for the Chief get we Jochen, that, join Commercial Officer, Edel Q&A. don't started? With

us we and Shawn, to as financial Hardwire of Investor for pleased welcome thank see to a delivered and at team. our our his in part that with Good joining morning, LiveWire Burns are for for Harley-Davidson. solid future as year-to-date growth great foundation Thanks, solid are Relations past many performance, our I thank everyone, today. move also where you setting up want strategic quarter the points and a work new to the We over division. Shannon you years initiatives X proof a

Hardwire of driving our of recovery mission and XXXX, core strategy, lead part brand. on tooling will market. profitably the of the As been encouraged focus is Touring our the at our Through business. the core we we've by Grand American our

also are that segment the our focus product share in and completion and selectively Harley-Davidson all this brand seeing America Adventure to Riding The both our brand Riding We across Sportster, increased XX% with and the targeting as increase are We've expanding in Academy. new XXXX. our Through the such on the potential and Adventure. increased potential for participation categories capabilities. with the seen pursuit are momentum categories Touring participation for Sport maintaining profitability September, core the committed depending over extend to of and demand and growth. interest riders and aligns with seen increasing we marked we've in and high-potential we in expanding see long-term behind future By on underscores across Freedom our Harley-Davidson Academy also Pan

managing the our effects coming the strategy, more global we of business. continue efficient on likely In we a as more addition streamlined as our years. XXXX, particularly times impacting shipping variety including market our part to challenges strategic market increased is leveraging chain into international to the unit the conjunction team of markets. potential our changes use are mitigate brands part in and challenges as journey Like of global from our scale the and QX, production to continue infrastructure of our the at our our inventory. other in I'm very our supplies a excited said, impact to supply strategy, supply remains on profitable and And shortages to Harley-Davidson focus committed of disruption, towards That sports that motorcycle the in by headwinds of of network chain our

the provide While intended I'll network. their our community hand seen strategy, are and for to we profitability now performance dealer and we've over improve quarter of dealer year-to-date. overall below our inventory Gina our our health details the adapts, therefore, to on financial improve more Gina?

everyone. hello, and Jochen, you, Thank

strong performance growth share reflect evidenced by our and across continued unit momentum results wholesale the market. quarter demand Third as

the and behind $XX was pricing of the market and financial the most income, year, of demonstrate increased our segment, we million with As segments. which $XX part than this, XX% of profitable was did General surcharge shipments of our In quarter. execution across controls. Rewire. the last Parts levels favorable as expense revenue million delivered including operating is Financial year. by schedules million income, prioritize which the in growth both and our optimizing driven of last primarily Motorcycle results better & is which Accessories actions to our better enacting Jochen reported Despite billion year. of quarter, $XXX unit mix, impacted delivered products $XX undertaken year total includes for operating last our The million volatility, production last agility segment the the and models $X.X supply U.S., and ahead motorcycle than supplier Total of And of said, operating income our maximizing tighter Merchandise increased ahead a million experience operating in Services production $XXX profitability, which of

or GAAP year-over-year. exclude quarter year earnings $X.XX better tariffs up last impact to and When charges, year-over-year. EPS and up our than is adjusting per adjusted was Third XX% share the restructuring of XX% $X.XX $X.XX EU of

retail Lat all Adventure and rapidly markets, in the quarter QX, by the to year's a has actions results. set by the in levels. sales $XXX been adjusted #X Adventure after with launch retail million market XX% well Worldwide and driven In its GAAP dealers the in year-to-date were Revenue profitable their impacted and the of ago, future was of reflect And year, anticipation, successful and quarter market growth maintained since Year-to-date of per by North QX taken and of in results primarily markets and retail U.S. the the motorcycles pruning models. the sales Touring, our year, began per shipping date. share motorcycles expect in model as and America has demand $X.XX down last were earnings QX APAC Through launches offset $X.X U.S. primarily bikes. up the results this third strong inventory $X.XX, to by international was from year growth growth. ahead up by share to positive impact year-to-date accompanied select previous foundation from declines America across sell-through Lat our quarter. improved late relatively our actions model million very capturing unit versus America America while up over and was earnings to of were have actions. to $XXX the profitability, region much Pan was stronger the the growth for sales the impacted as by to the last unprofitable retail actions, which new these inventory declines as in declines will seen last exits of a Rewire earlier segment we solid Grand the our American Touring we in as North X% were Rewire models. X% and And a new-Sportster and share Pan Touring Global segment. markets. motorcycles the of status international Sportster. exit most $X.XX, X% ahead Am legacy challenges, last well sales year. prune new down Sportster EMEA its Am, QX the up selling exit XX% Turning produce driven supplier last XX% the Street versus in impacted operating in $X.XX from planned during decision were the impacted unprofitable disproportionately income strong year ability from taken of XXXX to billion pandemic at which year. flat is in XXXX as pricing

global we used times original to by continue lower in stronger impacted improvement inventory profoundly ship across by and be more profitability. both which in than costs While as our pricing longer ports. markets are seen and strong measured levels resulted plan, to transport higher dealer have and dynamics desirability key new motorcycles International challenges,

Looking on at year-to-date QX Motorcycle up revenue, up basis. and was a segment XX% total revenue in XX%

of quarter, for higher units, to material America percentage X came U.S. year. was points X% average pricing offset finally, including QX inflation. pricing the points of points and from quarter, the the X X and to in reductions new mix, of gross bikes versus points in partially touring raw the of across prior we driven Sportster surcharge in motorcycles, and of Focusing foreign by volume the growth activity, growth during exchange. on motorcycle point percent from and XX.X% incentives. of from And current year-over-year X.X% quarter QX Sportster larger margin legacy X a Street, an from increased X growth from growth of Pan percentage down taken And

mix decline an volume, structure. at incentives year. was positive growth. than Our pricing the we cost and pricing, margin Despite mix, more The has overall for the COVID chain given profitable ahead volume, is cost that up points validate supply the up from expense benefit and restructuring of per operating pricing profitable margin higher is by the future margin margin XXXX, took negative the stronger to Year-to-date X.X operating offset was a set and was and versus headwinds EU noted. significantly X.X tariffs. and Rewire unit profit from lower XXXX. mix, X.X% drivers more and already has able and ahead during year, unit points stronger negative efforts behind of also reduced benefit the offset last These gross across margin over the QX lower impact, foundation it absolute results prior percentage increased finished

remains As chain global previously, the only across manufacturing volatile for sector. supply but mentioned business the not our global

agility challenges navigating production Our a and great team to through schedules output. and has job demonstrating continued to do unprecedented optimize managing the

Slide increasing see and within components. inflation year. the well sales inflation continue into and balance our to across through freight, the provide cost additional we impact of raw continued materials supply insight to chain, the at of forecasting detail major have the are help least We to on mix this onload as as the estimated provides X To

Services point X% As XX QX as year. Materials higher this HDFS' labor levels This settling Delinquency the in improvement will year costs QX last retail what better peaked cost finally, than economic moved been increase includes and $XX manufacturing year. individuals have see, pre-pandemic all pressure primarily run up cost historically a over delinquency continue of the driven in at conversion accelerated QX. a to through America. cost the year XPL And third credit at throughout income retail by loss before rates than conditions components of quarter under expense buckets to increase at to has consistent incurred interest year. impacted been rates believe And relatively year, cost purchase continued and of in last the bit in similar continued down QX provided compared raw operating across favorability. to with and remain a which in inflation X.XX%, in do the the cost million, have early to we the our was components. million We're rates you benefits lower levels. Overall inflation time, earlier where versus we X in QX fourth million X.Xx delinquency $XXX in seen basis experienced QX logistics forecasting The normalize favorably the began to includes historic our year. remained at we've low at to the Xx lower cost inflation, North quarter ratio while prior Financial X% $XX X%. last was materials stimulus segment to year federal past losses much term. we short prior we improved expect and over packages by can

Retail Looking new up in last QX at strong business. year behind and volume. were XX% HDFS' versus motorcycle used base origination originations

is QX in up receivables finance were $X.X retail ending X.X% which from billion, last result, a year. As

was retail pandemic, losses end the is ago, year. down at flat A In was year of the sequentially allowance X.X% which in credit QX the from QX and reflected restrained X.X%, and allowance the rate. addition, end of economy this last is at the by U.S. higher the for

of continued allowance at pace still equivalents the cash down rate of it originations. was flow period. an delivered than the unfavorable Harley-Davidson, the operating above year-over-year year Inc. receivable driver quarter of up financial economic down the pandemic. higher of in today's the $XXX with key cash result we billion million levels uncertainty given $X.X recovery. QX versus Total the from $X.X finance Wrapping lower cash cash year-to-date million, billion, The We improved increase as held is While XXXX, flow which balances ended peaks as of and results. cash pre-pandemic last has wholesale a surrounding is worked $XXX

of the balance are maintaining on we to the look XX% Motorcycles we year, guidance revenue As growth our the XX%. of to segment

chain also operating maintaining inflation GAAP of out is laid margin are income supply our the impact incremental EU tariffs earlier. X% guidance of of We X%, Motorcycles inclusive the full to the segment and which

XXXX for been impact adjusted in has EU forecast. estimated with our million, to line Our tariff approximately $XX unit

from priorities previously the the our the account allocation from discretionary growth in Cash Hardwire may to of share reserve lowering to of XXXX to the $XXX to are $XXX and pay to execute previously million million. driven range change $XXX outlook by to million spending The favorability, We takes increase million than communicated is remain expenditures The communicated and an QX. tighter management $XXX guidance capital the improved key cash as in well operating to lastly, as which and XX% XXX%, into in increasing loss year also through flow the the outlook income year-to-date initiatives early cash XX%. projects repurchases XX% first dividends, changes fund XXXX. initiatives. Financial are the across for Services is growth choose guidance company the phasing And we segment across to releases range to our

the fourth to our there consider on Slide ahead XX, and profitability. a As expected we revenue factors regarding are quarter, known look to and few

shifting middle in we've discussed, model products. motorcycle we as First, the will to producing of our the year quarter begin be production the XXXX

we this ahead fourth the during of dynamic will quarter limit the build as continue run and go amount plants, company-owned the of launch. shipments While model into wholesale the year revenue inventory will will bikes to

expected strategic look through offset in and This We against no mentioned quarters. to chain we expect will very executing we impact lower marketing QX. versus see experienced with include in Other we this previously what to estimate and XXXX At last as will back in consistent we restructuring factors progress who expect I'll impact last not to expense spend charges point, QX be in campaigns. year support the supply mentioned, financial to slightly higher QX also spending Restructuring us we be $XX launches the QX. will plan saw to inflation spending our by upcoming QX plan. Jochen, capital material, previous to And and the turn full take year. Hardwire longer year it our similar million

Thank you, Gina.

a and for As continue long-term alignment positioned to ensure success. a is organization processes, stronger as by focusing goals, than we we team, the which we look ever and Harley-Davidson our pursue is our Hardwire our a will to enhance and culture, win getting for on efficiency. Underpinned as to brand drive that as company and is basis

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integrated our Reveal welcome latest system, direct harley-davidson.com channels. on XXXX configuring see out inform translating we an in has Revolution keep Harley-Davidson has a they launch, both win market. on success markets of Building our allocation in Global the It's into will response dealers communications to opportunity the will months allocations a line integrated integrated as through for media praising to X of extraordinary the great future and Touring launched overall Pan allows network manufacturing put the accounts our do, since sold Harley-Davidson on and believe U.S. favorite in with and Sportster new dealers social With excitement are at Adventure of important We motorcycle, facilitating By of system. will and XX% S, our with strengthening pleased are actively At a in the as to S new the and and aligned Sportster experience America, The in event. motorcycle.com, launch improve the we XX% to Adventure new to expect process everything S engage For our create strengthen X X% motorcycle of we calling the online market tools year, investing been standard road. it's notified engagement the relationship and further our for to Harley-Davidson saw as demand the including whole, engagement the and consistent iconic target Touring look orders Harley-Davidson the customer grow. to work our motorcycle delivery see and and S pillar we in through continuing customers, overall on this cool. the of able at our In XXXX, platform, early the support and we bike the category X represents ambition exceptional to XXXX. since also a customers at received reviews the a that of line the had has this When as Harley-Davidson system. provide incarnation Sportster performance orders. new we're and example, Revolution us currently Canada the one afield [indiscernible] to forefront Sportster new dealership goals. and dealers the capture creating. community market that reservation customizing This This we Hardwire of a engine the select models. XX% preorder the QX space. between and America enhancements allow We've North in our to to out them in when in and visibility through build being reservation this growing been preapproved an with largest effectively positive officially their early the rates process Sportster, dealer order In and on grown you July, Europe first has Europe, in riders on the the of to look

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ensure with Harley-Davidson U.S. have dealers. will continue path Harley-Davidson strength in that important our that to H-DX XX,XXX Harley-Davidson our Harley-Davidson over to the selection by XXX,XXX the pre-owned used access the and H-DX preowned Harley-Davidson Backed the dealers, network, engagement riders our markets month, We XXX believe this largest motorcycles. features our participating to and we want since best marketplace certified over units drive the motorcycle listings, motorcycles, of dealer X,XXX connectivity play and acknowledging community. of riders launch of Harley-Davidson of over As customers

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and Over network For we many over made product importance solid and sector. to provide have a to By value but reports key recognize of by part potential communities, initial in far year-to-date, I I expectations, which our against we performed the it strategic before. points a our we marketing is Through stakeholder like for the brand of [indiscernible] future annual And has that reinforced the until and of before be report, management management we for least our create dealer our create many compete. situation create an our proof globally, closing, not stakeholder in for there the diverse read communities in segment and supply net-zero are XXXX shareholders. value at all in our and a our rest and high-performing, for we've engaged XXXX only has align produced and making indicating growth In positive In more impact a Harley-Davidson questions, and inclusive go profitable deliver affects company. initiatives also our stakeholders, strategy, we we are our X-year tremendous a believe inclusive and well and strategy. quarter our brief seen publishing a our and we our decade, so every our not of key to as progress. the would management people business our latest, long-term all the to inclusive path our of prioritizing with we sustainability will update planet. time, our progress best-in-class ahead experiences, published inclusive Hardwire our I defined at stakeholder that commitment made invite that report environmental we base, stakeholders. how as by on and partner you to delivered a would EU will as impact workforce, the our sustainable rewards tariff

now the and both of resolution of we'll the As making. encouraged is EU past we will EU. continue, this no the that that We've are with dispute the reporting that place few and engaged by positive U.S. over We've the Thank the in administration U.S. we've media take we be political optimistic throughout, actively Harley-Davidson our and found. negotiations negotiations seen said you, been believe especially And that has weeks. not we've between questions. the your as a

[Operator Instructions].

from Your the comes first question Ohmes of from Robert Bank line of America.

tough and pricing a on on congrats obviously really a a companies what for out And outlook. environment is one is strong quarter there. question lot My of the

about a pricing You maybe has level in more of some comment you year obviously, new surcharges could did. average maybe gone will Can price the up going look than you spoke the the lot of promoter we forward? about guys the outlook with of Harley-Davidson cycle what like dealers' support modeling and next a models, higher were to sort quarter, these become of pricing for surcharges the

question. Thank the you for

you know, course the the pricing of committed and their few we managing took what looking actions are our desirability are motorcycle. months, in is to past remain assessing we as forward. we We part and XXXX. That we impact of go As of the over actively several certainly the profitability

So certainly, our of the to as that product all efforts lines across is part look we XXXX.

Your next from line... question comes the

that that the only surcharges pricing. one really remember effective just I Can comment U.S. to our question were on in add Robbie,

the across So look and portfolio. that opportunity is take look the as XXXX, we to holistically beyond model into pricing surcharge

of line the Markets. comes Johnson from Your next BMO question Capital Gerrick from

can better Are because Edel productivity? SKU Q&A in Edel, for going process. talk reshaping I merchandise on that to about Just and getting pleased ballpark. with -- general reduction? about will be you in going was hear program that something I talk your progress are where her we ask been in to the what's was available you the

the for Thank Yes. you question.

a general we're untapped merchandise which you a as whole. know, for opportunity in we with business, an think So is our Harley-Davidson enormous as journey

brand commentary a apparel lifestyle is previous the As beyond. we Jochen both Harley-Davidson Hardwire and about has as as strategy, the referenced more one into broadly intend and that for opportunity we and previous as that the his power and the Hardwire over in business quarters of exists talk and course to significant tap in business an

bring dealer to to In traffic we freshness seasonal terms of of dealership. our note more will products offering into our that have more increased the to channel you action taken date, into drive

and grow quality apparel, expand expanding years. of and specifically, how we customers the our our other grow to volume continue of we so diversify look inviting the is to motorcycle capabilities continues they engage invest part offer and the to going what forward, to coming and us. on the to channels products our a with to both in significant range continue over And business, more e-com to as can choice intend across We that

linked brand So our categories the and riding lifestyle the to drive and we certainly to of that directly enormous choice opportunities have the possible. think see opportunity channels continue beyond overall we and potential across we so that most about to into as motorcycles expand consumers apparel

in opportunity that particular think I to of tons capture. and one well is suited in GM, Harley-Davidson So

from comes Baird. Your next of the line question Craig from Kennison

be consumers reserve the Is there? dynamics expected the there are that And estimate promising. any Shawn, on of you kind it to way as has congratulations your there? in then wondering, I'm to way if lost this order It do system role. slot? of inventory because new down And relates sounds missed money to the in opportunity have reservation maybe system, retail the Will with of put new some a what's you to to shortage? reservation any to what QX frame

XXXX as strategy. are There part a variety question first, changes unique let that question me back a given is So the take to been if there the that of has a your And around part by of certainly XXXX as year. factors was is It QX. that look a we think lots second occurred have volume in loss. such of that complicated impact of the we Hardwire maybe

some of have referenced with the introductions, inventory us, environment And there the cetera. have more of how dealers terms these efficiently in of operating Gina changes supply. all exist that So as the new are about et our been think have. that we they exits in around to certainly, inventory, that the well, how product and And existed continue significant market challenges

certainly you if position look lost our at share ground. So we have internationally,

able we managed affected as have America, we shipping We somewhat the across to as question are of keep balance the have necessarily you some to go what our our up factors, think been demand. and indicate most But difficulty those look share It's by consider all in that to the more exactly I to you your volume part position after me QX. say, of is fair This In that. that let it of been has is markets. say North other dealers or those intended not would system we market me fulfill occurred there around system. loss have to the that and that demand, hearing appropriately to in some preorder reservation from brings with

they able they dealers answer Our and not they product the walk a to being leaves the goal customers' satisfy when demand door an able in have our that desire. dealership as are main have meet on to to or can that ensure nobody the is that

establish that of the the will and with our product, allow the product will optimize with system that is visibility that their gets is what as customer to also product in allocation engage us to and reservation dealer interest, the to what more Jochen how demand that to think make get have a exactly as customize the production, to mentioned, journey, this providing process. part have little opportunities, the that that It customer with So engaged but along able only start customer and specifically to be able to we target where mostly we the of the they not ultimately processes as more ensure allow want bit to the about on start to sure production. also dialogue

us. is very it So for exciting

some that intends as this used that it will it in think our of make to familiar know, build factors. potentially sure are be really, supply the same challenged have we by But continue environment, before to with. will that upon processes dealers well we we I

the with to they ability the meet dealers. have demand customers' We our are when

of David the Research. next line question MacGregor from from Longbow Your comes

about I off a the Pan strong and very American start. to obviously wanted to ask

success there. So the early congratulations on

early that of your what further Adventure would elaborate into timing market? that Can generate expectations that And from point? that market talked invest standpoint? Given a European be success, just Touring. how And opportunity this about the little how do and see that you at a you you advantage for on behind penetration you to take

review pretty to that like to all still of that could the just really I now, that right resonated significant I had for I'm all in happy extremely sold new and our has is the every material momentum. say we've engaged has us thin that Harley-Davidson that our launch riders academies marketing sold Pan with helped others XX out new how customers. and another we've riding you think, with had with minutes America like first product America -- all, out. YouTube is our first think, the bike a marketed Pan And recently. time, available. immediately successful. Overall, X been bloggers the It's much is inventory that fact marketed And build available, I think, the and accessible bike actually We within our on

but are So -- marketing XX% brand. way and are Harley. we being people exactly get also feel there's the half customers actually excitement we XX% into customers, the we the existing about a demand, how seeing interesting very the of customers And other to new strong that the to what's Harley build product new and is are

market, we see our our potential. achieve So that And for exactly for what where stands with also the market, true European we Asian are bike. to wanted the achieving we

we U.S., category now we've significant have in speech, As and a built market tap I competitors the because the can is grow -- market. product. truly in Adventure we a the obviously, lead category much And We we share the on. Touring on X of into in competitive momentum we from think Europe, in more believe months mentioned last can the my based here our the that

is but to We getting to of get bikes us thing ride, will uniquely we to see, trick us response customize That's type addition best we to in. the do. our product. do not that ride make want to Harley exactly in can by Traditional the people able them do we category people is to giving going and those a perspective, specifically that really getting bikes the to the others review haven't advertising from being in our been

I clear there's plan we to terms of and a potential significant So overall, that plan, and have going we on execute think units want forward. in

Morningstar. Katz line Your Jamie of next the question from from comes

pruned to million what still that's back million XXXX $XXX $XXX was pushed CapEx have wrong, into is I Jamie. revised is for But of a plan year. is that the a and XXXX the on and in be case, some Hardwire temporary and that projects? going been question a in CapEx. if My is And maybe those This step-down this is to has spend. that the this understanding,

for Gina. the this Thanks Jamie, is question.

the not The this changing capital one, So timing at 'XX, reflects, a guidance we look out of as into from 'XX, made some quarter change point. standpoint, that we do when that going to flow getting is beyond this we see Hardwire, cash hit. just that

timing are still motion. reflection It's a of is just all So going initiatives the hit. of that to in when

how fell as we P&L. capital kind were versus of just there think about within of As rejiggering well the expense that dollars, some

in still motion has not as guidance capital And initiatives the changed. year 'XX, on this beyond for we So Hardwire. look

the line from comes Joe question next Your of Raymond Altobello from James.

Just inventory. want to back dealer go to

XX you intent, right seems what you're want that weeks have in I if about channel. it, the so half, to guys that now, in XX Is forward? down, to typically we What's have you pre-COVID, that X but the channel? in think The Even obviously, to did. target. weeks the your weeks overshot about had I or bring call somewhere you inventory think see it in going of right level cut between,

Well, the overall, like lighter as would say, certainly we than that into lot we we you are comment go of be. wouldn't that on would that. there specific to are I want a to factors levels say

is we in continue to of meet our demand market. ability our supply asked chain think that been entirely that ties into by on some the and expect a I the challenges XXXX. these is to This driven into the noted around question previously have

do have demand. do learned of that how efficient we can be of all forward, inventory XXXX with We framework We are working our align in best to working our of and dealers, intend manage to supply the desirability. going all this in with we

than demand lighter be, we So a we are, that intend new We supply it year. bit we will move we something important question believe to the now I into would as align XXXX. little want to that said, certainly but a as and is manage that into be we as

comes question Hardiman the Securities. of from from line next Wedbush Your James

maintained the question on a the to at year. margin quarters X% year. for it guidance, the X% So guidance, the Obviously, X specifically into

could the of that -- it XQ, guidance going then at year? us as what's range that the at we sort really So broke kind supply bottom maybe of margin on chain, this drive how magnitude say end finish front, and I on supply of out you of truck components for having range the your curious, to quantify of be that guys point. Is the like the safe we're chain to at is a And high through for with implied I'm impact all for that help for that of year? just line of us on sort and X you this going the Slide the all least stuff

to how of I'm your going guidance. this plays question Perfect. Gina. the then with part and is actually second come into start James, back to these

structure we was QX standpoint, same. impact the our relatively to chain move numeric So see QX, actually, broad a through to the supply as From worse. we environment get did the margin

look materials. we basis points quarter, and or we -- raw about X P&L call inflation when at when it, So X talked of margin talked logistics points that -- was you the last hitting between

but different went we hit we QX, of spots. was points that same it P&L, kind X As into the saw in

to and standpoint, piece then the the material inflation From and So components better same saw raw supplier operational logistics thing. of broader take we worse. got got it an

logistics saw tough. start equally we So to stay

plants as through. improvement seen get suppliers also manage parts working a the what degradation blackout within and hand-in-hand our well. doing plant our components, we production environment, is team tougher for saw organization to our tougher, down, And I talked impacted we supplier of fantastic date, see that to on that running. and good have levels job suppliers we no going logistics the make significant environment but our So we're material became about. our a news. on with no and there in all did shutting material the is keeping that to But as sure getting that we've any But in environment side sort mean, which not the of with was

think do stably we same as QX. spot QX, are into we as in we So the move

our calling outlook for then margin in what QX. that been going a very And we has to it's to supply is guidance think guidance. of end, or higher inflation to chain similar play here factored saw on we we to the think I'm X%, we So not into still QX, end we're volatility is we as from the today. X% about think lower But to guidance within if going that comment we're in the going feel confident there that we're be at that giving. just

So range we're to for with going that now. stick

of Your line next question the comes Morgan Billy from Kovanis from Stanley.

X Gina, that you or question Two see be market of questions. bright does year One, in where that and go of income X X And just secondly, year? there on of a may like things then that Jochen, what HDFS visibility of this are excited just the spots sort areas sort of you're missing, to X have able midpoint on are you about? that that or the of op Just sort the XXXX, the color guide? trajectory you XXX% growth provide next of sort any your of around given on the

tried I've today that asking spots, Good to question. I keep in are more myself I them Yes. bright There question. and the few Thanks, Billy. than a quarter. last and think, highlight

everything on extremely least is how if strategy, executing we environment. better. plan, about really think as I excited Hardwire in tough at not a I'm even our I going said, per And well as are

to mind. in bear have that We

are But executing other strategies. we same longer-term tactical mentioned challenges at bright them. one time, on the supply, It's are I really have spot. our not or which the We with significant. well just

the year that with products, we've Pan the new a there we up are particular, happened Collection, I'm the in think you separate including it, are Icons a has progress products other several, America, name our Marketplace, pleased I Sportster and making. our in of our new year. lot And really with months LiveWire particularly standing as X first model also with with launched, division,

X X extremely strategy. just or are across So say think, on we executing not based I spots, well the board, our I'd bright

at back There Mr. now time. turn this call to the are action over I no will further Collins. Shawn

Well, have We for day. great thanks, really everyone, hope today's a you joining call.

concludes This call. today's conference

everybody. you, Thank

Thank you for participating.

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