Harley-Davidson (HOG) 27 Apr 232023 Q1 Earnings call transcript

Thank you for standing by, and welcome to the Harley-Davidson 2023 First Quarter Investor and Analyst Conference Call. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to Shawn Collins. Thank you. Please go ahead.

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

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

As actual results forward-looking be materially will to you risks, to our are business cause that subject include could that different. might expect, statements comments

in risks Those noted among with filings matters others, latest include, the have we our SEC.

Goetter; morning Executive and of the Financial Harley-Davidson Chief Officer, With President, Zeitz; part Officer, also Ryan that, call we first Gina joining have LiveWire for the me Chief Jochen this also Morrissey. are

Q&A addition, for O’Sullivan; of In have Interim Vine will we have will Officer, we Chief the Harley-Davidson's Edel portion Officer, Financial today's to be David Chief call, Commercial soon also Harley-Davidson [ and ].

it Jochen? Jochen turn our that, let over Zeitz. me CEO, to With

revenue Shawn, of results. a Harley-Davidson today $X.XXX strategic plan the everyone. for Thank Thank good quarter. consolidated 'XX, Hardwire the delivered year our year our morning, of strategic XXXX up to with you the execution for QX you, XX% and joining start and third our by to quarter billion, HDMC. through solid pleased our start to us first plan with with We're driven the

momentum XXXth to our we over anniversary this, year, the year. In build anticipate

the maintain a measured economic However, journey. we continues outlook wider its Harley-Davidson transformational on on picture.

focus product. as opportunities, brand prioritizing the are segments on said before, Hardwire business changed nature reflects we've Hardwire, our more of growth Rewire that the as believe holistic most overall the costs profitable placing execution a and well to stronghold we've and As the and that on selective globally our the categories premium through as the of at foundational and The growth. view desirability approach of focus expansion emphasizes an all work unit overriding profitable motorcycle we

of categories. principles volume's As we the remain our sake in core we for instead committed to macro for evolving chase a will navigate these environment, volume

that pipeline power will the remain also innovation our We in confident future.

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our highly We categories. believe in negatively premium profitability a promotional impact most approach would

focus with the activities to we find to them. motivate continue that customer to engage the on bike So our right dealers for

messaging opener with and which XX% season on is March generation participating example focus of is this. on And to our the marketing, a over lead we saw strategy. intend Our great continue to XX, network aligned of that

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we more Hardwire, a segments commitment in but choose also and the segments compelling trike. to are and believe segments, made namely cycle new large leadership only engagement the Not cruiser to we in grow market riders the our potential With smaller Harley's these offer while profitable customers strongest most touring, these Harley-Davidson. and to inspire globally, strengthen

model. restarted performance a motorcycle Road and X exclusive details. paint exciting the and of additional anniversary January, first ] featuring in trike Harley-Davidson model limited model lineup, anniversary also craftsmanship. the release anniversary we pride Glide limited Worldwide sport and Road night of off our breakout our years the with kicked Harley-Davidson and initial CVO focus trike XXX X X-wheeler This this cruiser, special and new refreshed to XXXth commemorative The reveal XXXth celebrating included Glide Aligned 'XX the motorcycles, finishes edition [ included middleweight release

our our strategy mind, to icons desirability excited launching Stay for for of with to commitment year, and announce a legacy and Harley-Davidson. tuned made that drive to the to also reveal We to next limited be the second of enthusiast that in additions will more. that collections. increase align our we introduce I'm motorcycles With edition week,

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also on aligned selectively continues their path potential currently APAC. segments that redefining custom developing and the product product encouraged geographic commitment With available with demonstrate and focus profitability. company's capabilities company opportunities HDX full and mind, The brand in to are to leadership a In approaches. go-to-market footprint, to of we we the by to reception in and in made strategically a markets bikes market XXX that by drive our target XXX our

components for this believe launches growth beyond value. accessories, potential Services and apparel lifestyle and we customer global customer, lifetime future success of Harley-Davidson pillar, know our opportunities. we are add new to in We important grow select parts and a and licensing new to base future for are a markets growth company's bikes Under customer as for provide vector the Financial a and brand and that excited our untapped

so P&A dealerships continue improved with ROs part in availability to & our volume, meaningful metrics Parts in gross service QX. margin expanding For Accessories, as despite retail the lower and growth in we drive

our and Harley-Davidson. XXXth anniversary and HD of craftmanship by successfully introduced synonymous defined apparel collection, the January, launched the lines, we with licensing in we apparel lifestyle in February, and For grouping collections, heritage

expect offering licensing of To brand. heritage, increasing experience, dealer improve business, Bringing apparel the which apparel roll on focus strategic celebrations, up our well together committed paying Harley-Davidson brand HD and of major to facets community revamped we XXXth focused gradually we our riding our upgrades, our and ramp culture, while and more the distribution anniversary year. about customer later aficionados enhanced on renewed motor priorities in the through many omnichannel expanding our as facility to offerings a are to we as experiences 'XX as but while for remain tribute this lifestyle and overall we capabilities, out building motorcycle that 'XX

Hardwire lies and as the our in In for QX. strategic expectations and company demand remain deliver some We and can overall on broader ahead traffic our on of patterns a that our profitability believe innovation year X summary, desirability health while other strategy consumer well in we metrics a restraint showed as of We committed our brand. of to premium and what brand sector. in are excited brand as focus for and of

everyone in our said Before model I that for I at more. over launch, hand Ryan, stay January year also should tuned to

to of committed I'm Touring new into next started categories, already. Touring in that we CVO Building we the huge innovate our on strategy, core yesterday's yesterday, a core Internet of era pleased amounts our highlight commitment lead of of As categories to of our motorcycles in CVO kickoff as to of the part new generation bikes, subject our us the will our teasing invest future. intrigue

can American and motorcycles spark In would that generations that lineage clearly Glide, category Glide of Electra in that traced generation Road by XXXX, wing of X The legacy faring on and the motorcycles lives cherished be riders Harley-Davidson of Glide Grand define most with bad ignite DNA with history followed. Harley-Davidson Street to of a to iconic will touring motorcycles introduced the the a the today new XXXX back Electra the Harley-Davidson's the Glide.

incremental enhance experience while and the the and around world. position carefully Over decade have the icons enthusiasts and thoughtfully improvements further to respecting minds engineers the driving designers the these as motorcycles, within Harley-Davidson of hearts evolve introducing heritage

aspiration design to most performance. Operations, models Harley-Davidson styling, motorcycles of of and these of along craftsmanship attention that ultimate the Since detail, the from with CVO, XXXX, and Vehicle have refinement production forged been limited collection deliver top-of-the-line the

Grand today, With of CVO in and area Road X and design, June. expanding most experience. innovation, Harley-Davidson for and of Glide of and while the definition to up, Glide We'll CVO we completely about CVO our bar the we've the launch new Street of breakouts ground the motorcycles, from riding the the iconic the in redefined ushering experience touring reimagined Harley-Davidson's official these in another Street rethinking the reset By American engineering more process. be taking these technology Glide, Glide at the new CVO boundaries Road a CVO models The CVO Harley-Davidson are motorcycles introduction sharing Pinnacle we've level.

on to the over Ryan Morrissey, Now of to an I LiveWire. hand provide at Ryan? update quarter the will LiveWire President

you, Good morning, everyone. Thank Jochen.

and brand production. XXXX, of LiveWire of quarter we Mar moving to on the into Del final the intensely As Europe stages bringing the first close is focused to

and efforts LiveWire these bring Our launch to events X next European introduce this the week in London, Berlin Amsterdam together addition major to portfolio. great riders the and Paris,

building to a marketing, efforts. in on partners our with and complementary service join to us field addition [indiscernible] retail in European up we In XX team, have over our sales take contracted the role and

in for in also the our to Overall, are We've original Mar media by we for the launch both combination the a with the of and the line the Del potential that the pricing are with the reception with Mar, addition for technology price of very ambition impressed addition Del pleased U.S. in announced Europe. and customers accessibility point. bike,

communicated into production We as quarter expect we in the and the to earlier of preparing are deliver for final of year. this third moving bikes the stages XXXX first

expected and And now the talk Goetter with Del reservations focus hand we LiveWire the collected the announcing financial over are In conversion new plan, in and performance we of in the within on last U.S. getting greater parameters detail. Gina terms to Harley-Davidson our since market of year to to products business Mar it through year. of for our the maximizing continued I'll

Gina?

under morning, mix, actions, the LiveWire. performance in and management unit prudent you, XXXX is financial quarter the good Thank the HD&C and everyone. QX HDFS HDMC, year. cost expectations. second increase our retail, significant X full reporting margin new structure prior productivity of ahead of to the attributed Despite with decline finished the segments and Pricing versus

in Turning finance Services revenue lower was pricing XX% segment prior and Harley-Davidson coupled with LiveWire. of XX% was the realization of and year, was a balance across of growth financial segment consolidated than first HDMC higher unit HDI was revenue LiveWire XX%, HDFS the of to result motorcycle motorcycles driven $X.X and decline across portfolio. volume HDMC versus XX% year, both electric continued billion Total Financial bikes. in by revenue a across growth growth with wholesale electric the up our receivables. And higher quarter. last results up decline

$XXX higher of million the Total consolidated XX% HDI $XX margin. macro with better declined million growth and operating revenue, the higher HDFS income operating was prior than was softened. by million XX%, income interest driven income in driven credit $XX operating HDMC by losses higher $XXX year, by as of and year. in conditions expense than prior coupled million gains operating

investment million development operating Del of LiveWire expense included finally, step-up increased behind loss with And product product the the in and company. operating launch a new associated standing of $XX Mar up the

last per quarter First $X.XX the as the factors as items. in $X.XX a below-the-line year as result well earnings of above noted continued share favorability of compares to

customer was a sales of X% due declined our by sales focused unit retail to macro as North combination American retail key planned demand rollouts by experience in on by new X%, the well declined single-digit staggered driven shift of including shift given strong retail our anniversary our new as QX of as XX% EMEA in year. for that mix at products sales exit retail markets, profitable motorcycles units. down primarily APAC XX% sales and Japan. environment. prior Global continued as the a grew from the were growth a as current versus Russia across more models well mindset to decline QX we high the QX

unit this of rates, shift and profitability EMEA result a mix overall improved. As improving FX

sales down retail X%. adversely retail and QX EMEA America declined conditions. XX% regional was by economic was Russia, impacted by Latin Excluding

to higher were season. first the of in availability down, for improve units second Improved of our product levels production to retail year has we However, the region. last ahead half continued at riding even of in and dealer though of us deliver probability allowed network the XXXX quarter

MSRP. minus versus up compared the be very basis, both levels inventory average continues inventory of increase down points attributed XX%, finished retail And standpoint, transaction On was of a to tight primarily and with or Inventory pricing percentage XXXX. healthier to from XXXX. to within plus the a X U.S. motorcycle our new threshold XXXX desirability materially prices year-over-year

revenue. at Looking

revenue from HDMC unit key parts both came businesses. profitable growth lower driven foreign in and by prioritize quarter. X drivers of focusing XX X and pricing continue and of growth, from XX% points and increased of from volume Total came increases points MSRP we for across QX, finally, and came as points X apparel wholesale the points through on accessories growth global incentives growth the pricing negative models Mix our of markets. to contributed most exchange. And impact the

foreign our to productivity, at now on headwinds. points was XX.X% prior a closely pricing, reminder, which was driven improvement margin commentary year. the excludes and cost impact gross exchange updated definition margins, as XX.X%, offsetting the LiveWire. is by More the of first and of of HDMC unit based the in The compares which cost X.X HDMC inflation in mix quarter

was and be basis, deceleration we X%. more continued by logistics, modest driven which largely see to inflation, shipping improve, experienced expenses expedited and the a On continue environment year-over-year cost to including lower supply freight approximately chain We rates. the

the and materials already operating HDMC metal primarily The was prior have continued year. to markets by driven noted. factors improvement margin Raw also the to XX.X% in from moderate. QX in XX.X% improved

to ratio was macro XXXX. of and operating XX% HDFS' driven QX The The in million, costs to current retail loss $XX year. HDFS compared last compares higher credit was decline loss relating by the credit higher several fiscal factors to was QX, to QX In income increase driven environment. annualized X.X%, an annualized credit down losses. in by increased which borrowing in losses X.X%

allowance retail the at for X.X%. quarter loss for the first credit steady addition, remained In

which year. versus while loan originations was XX% down XX% XX% quarter up net end retail financing and prior were up financing, Total receivables behind Total were billion receivables, $X.X inventory QX stronger product or billion, dealer in compared prior dealer both inventory wholesale financing retail to $X.X availability year. including loans was to

a prior up funding. was million of outstanding or QX average in $XX XX% higher expense higher The debt interest was and Total by increase versus year. driven cost

QX, we in we an put the liquidity of committed subsequent MTN completed liquidity from conduit bank in raised both of and $X.X the Euro together billion. the a funding the position. capital deal $X.XX This, end During strong has cash in billion HDFS HDFS in position resulted that And markets. quarter, in at a position very with facilities and April,

a electric loss step-up delivery and in decline with XX% majority the Harley-Davidson, to balance LiveWire the first to revenue electric quarter channel Operating million attributed million incorporate Wrapping the conservative a million, driven company's $XX partners its cost was in with from to $X the its standing up STACYC by to prior development the segment, product related by also Mar versus results. bikes taking the added Del for the $XX inventory. of For more year in financial with decreased expectations, motorcycle. of of the organization. line of losses approach Operating platform up new investment Inc. continued with loss

we XXXX. of originations in to and shipments which is year. quarter, decrease million which primarily prior equivalents from increase flow $XXX end $XX at QX The due the higher million cash cash prior down operating wholesale was an related in than timing $X.X first Total at receivable volume year. flow delivered was operating cash ended the of the In and the $XXX in cash in to million QX of billion,

from million LiveWire. $XXX includes number cash consolidated This

back Additionally, X capital value of million. stock during the we our million a first our of quarter, at allocation as strategy, part of $XX bought shares

of to profitable of HDMC apparel as on businesses inflationary the our Furthermore, core X line and growth X% guidance, X we and parts as line expect a we forecast points continue to growth which revenue X unit As incorporates points to of offset to X X%. continue more business moderated points pricing and of to growth approximately strategy. our outlook. we focus X support reaffirming with growth, top to we year licensing in Hardwire our accessories are mix look to rest XXXX, full of we the expects The and

anticipated offset supply expect within We efforts of margin HDMC from operating inflation We and currency cost will to productivity headwinds. chain XX.X%. pricing continue and the to positive believe XX.X% cost income expected impact the

We continuation throughout this There of original decline stay At losses that our XX% operating time, risk by holding guidance. losses to the income year. to to the high expect higher in QX, we HDFS XX%. could is are despite

However, it for keep to we is to have season core realized year. should riding loss several actions help underway total believe losses, into and deeper that investment efforts. We improve including annualized impact increased the repossession of collections rates to the stronger assess the prudent behind

XXX Mar expect no updated an continue of we capital change forecast and invest to operating investments to There launch new lastly, million unit timing $XXX incorporates need as of $XXX on LiveWire X,XXX to guidance. capability segment $XXX range million HDI, between we sales This total development to the We to product. million and Del units, loss to million. is $XXX our expect And for product continue enhancement. behind the

cost quarter, inflation about and be primary to points expectations to freight with of generally X compared X% raw have with first deflation warehousing and the Through continue the seen in logistics, XXXX. inflation line drivers within to of in continue materials. we of in aggregate the moderation to expected Labor X costs and inflation expect our

efficiency track operating year. to lap as to growth shutdown as improvements From continued goal. an we HDMC productivity performance, cost in in-year last well high production standpoint, remain have annual supplier teens We first supply from to our cadence we see the across teens which we chain, margin and half deliver in also the expect is the revenue contributing on for high as

year-over-year down we more experienced be back to seasonality compared as income XXXX. operating and revenue half in and production back what normalized we HDMC to to expect get We

moderate rates XXXX. line loss in as patterns, half declines we lap of down rate we back interest year and expect the HDFS, come seasonality to to the in the the with historical For operating income increases in begin

As fund allocation, throughout the XXXX environment, pleased we growth our executing repurchases. remain we of priorities focused the capital are targets results our the which and to In a dividends with share discretionary includes quarter capital expenditures our challenging mentioned look despite through achieving this of and to Hardwire remain on retail paying previously, initiatives, we year. summary, first resiliency the financial

back that, turn to questions. to take it I'll with the And your operator

the line question Bank Instructions] from And comes of Ohmes [Operator your of Robbie of first America.

try here. and obey one and question this the I'll rules make

sort the is maybe quarter in understand how quarter you that shipments we And shipments think be should the play we the the through question this us And you first think mindset macro move inventory think and current what dealer you is customer the year. -- the into quarter that unit first that dealer XX,XXX there on the the dealers of at, I be for season North Was the the help the for changing. as about the forward in my levels network. of inventory a pull range mentioned dealer and help environment ended in us America want in? levels how think think maybe -- about to will may you riding I out in

is play us it should understand out now. think but how help year could I know everything how just the just constantly Maybe about and it like looks right how changing, we

first I'm that turn always questions to with to remarkable. quite you take in you. job joking a But do question. I'm is part. just it. going asking fabulous love over X Robbie, I to That the of X Edel

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and for we season the in as QX. we So properly the are for it set the of think up bulk comes QX

rates the since we QX regards of on And Now and mean question moderation sentiment and there obviously also it that behavior. think in some early was in we're riding I customer in very dynamics to that saw what with retail I it season. clear environment an overall the the seeing your rising is also is in in inflation consumer of

around continue we affordability, overall, rates. monthly the to message However, focusing emphasize on

channel allowing dealers traffic best finding well the continue continue for as into to to is think our each the bike on as we tools we partners work find right emphasize individual right individual them. consumer with drive where And chance bike have the our We the that the each for for dealerships to to to suited consumer we for best allow of them. HDFS

with think outlook to tools riding have we these all right to pieces the flat and we in retail support place, retain to So year. the season positive for slightly the of

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

for math . a question. going math away a going -- you, gift Gina, away is I which got

Love it.

Okay.

that assume helpful looking like XX,XXX versus looking at XX, fewer and shipments Slide I'm XXXX. -- it's your in unit and at I'm very wholesale you

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guidance X wholesale points of to that's our it, revenue is that What growth. X% we've unit X% growth to call embedded of roughly, in of said X

we X% X% ahead. landed 'XX and there in take where So to

a to believe your are on kind up hang shipment you QX. on just looks then guidance retail of you like then. -- little able expected lighter to How to than I given came to to a follow To what year? And in that the softer what start got in extent

Yes.

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in production that mind expecting had and that year keep pretty feel during that Plus, we that, We the will QX. suspension in QX QX last and confident we're come. growth QX

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

on first guess, retail what of guess just you a terms us QX. Obviously, But seeing what in May and I'm you're give in of Maybe far so June. easy have so April? follow-up far I question, seeing you're in I Craig. compares, kind in curious

quarter. yes, get certainly We've seen today's improvement Yes. now in the with I riding is Thanks, really But we've are the April, but really to as first here. call -- improvement season. starting the seen happy seen as an far so into about Jochen we Joseph, we're said,

is this think an in a you're Okay. but 'XX? you a to modest versus question And And that position on earlier expect don't to I the year the still asked I pipeline than higher year. inventory. last end X,XXX this it, modest, were, call, you call question regarding it, some it, but better years X,XXX define call expect X follow-up you you know bikes Obviously, guys ago. I just much on how

I'm this I sentiment Gina. is Joe, We're you -- number, not to think the correct. going but an is not give exact

that year, finally were healthier, getting healthiest, coming inventory, think first of like year So not levels to we felt was as but this back healthier about we this into the we healthier. the

still feel we to like year we fill 'XX, bit. exit room this we a a as some have as So

we later 'XX if have how that prepping with and the going we're what in the 'XX bikes 'XX we And we year order make be mind, are will a to that or year decision ready we as consider up in year. riding to with to end season the of in preproduce of bear the many for obviously calendar

mind that well. as bear So in

line comes question from next the Your Citigroup. with James of Hardiman

can actually So the of clarification April an just you saw the Academy sort channel Jochen, an us versus out, year. I Riding guys trying improvement you third of I with still retail around think couple that maybe in for I'm fill was retail up? number. a in quarter to retail. And maybe I the said think or improvement Basically, of in that April. think you substantial what points Is figure the declines was targeting growth you help just are

I'm assuming for dimensionalize a second that presumes big quarter. us help just the Maybe growth number that.

go. even We Yes. still to Look, over April have week is not a yet.

So certainly, color other improvement not April. said, said, I as I we've than seen an what just rather I'd in provide any additional to it. But

numbers. small pretty are Academy Riding

they overall QX at mind comps, as that season that shutdown, retail, look really feel the and Gina bikes is have achievable. as riding the guidance outlook significant the on at slightly retail said, the a confident wider we weight had this if had if impact. highlighted figure, the in I've all up QX, of And production on in flat look to don't in limited the is measured a we that available earlier. economic you So we But that bearing you in picture, are and based

retail, be both to couple also but slightly points think a clear, you which of to wholesale, I the to flat And for, get said going you're ultimately? up is

do but to is well, primarily that, -- yes, referring that that too. comment would you if That the indicate that math, retail, is wholesale to

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

rather CVOs than new once. Jochen cadence the or strategy can please Edel, release and you at all anniversary discuss behind the models the dropping

CVO You have and why the about more X June. released couple rest and in change the strategy? coming in How model a

question. the . for much very you Thank Yes.

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it characterize maybe for turn then the to give just and the strategy. back you over I'll to Jochen me Let component, QX sense the overall

years. took historically cadence event deliberate want around level We but bikes think of previous anniversary have a We release year the year. at a Milwaukee we that summer. our very anniversary of this really anniversary this the model our we than in in in start excitement So it's maintain important of different decision lot to also excitement throughout to the a

So staggered throughout we have the activities to related dealership and little throughout make that deliveries building we in the have the anniversary of launch a that of to traffic the the products sure excitement bit year. year

years, cadence, CVOs. I then talk And different So bulk certainly season. was was thing, as prior support trends impact reveal an bit compare launch. you, will us, think a about that about year. And reveal I continue we yesterday QX, I'll It allowed the our think to significant throughout one support the the more to it little have traffic or it extraordinary that initial significant back a Jochen, a we'll talk maybe but same impact throughout think, will turn it a the as will but to and we the of retail excitement to teas for in we CVO go riding

then when what add. ready are of ready year, the be This our fully Yes. necessity and on I much first go. not primarily and targeted feel we the year. the -- bikes the is creating And Thanks, based excitement obviously, engineered Edel. also the we is bikes based are on to half to timing mean, manufactured to is throughout towards

through launch. timing the certainly is launch grow So we to the big riding on wanted video based received we that good keep new But CVO. the initial the we've excitement the will accomplishing of the us, and think we timing obviously excitement the be feedback season, for also into which on and plays overall,

called sounds great. there's Lightweight. segment That And new a Okay. motorcycle

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the accounts XXX as in bikes. it as Riding XXX HD Academy America, our includes and North launch in China for That well

Your comes of Noah Zatzkin Capital with from Markets. the next KeyBanc question line

as credit the need looks thinking rate, How rate quarter. that rate through relates about X.X% seasonality Could you of to in how potential about relative kind of kind think first loss the as should the understand on help just you're we Just what us it And then the to from adjust loss guide year. guidance? you progress normal that a percentage? rate the like to

This is David.

credit realized the in were as losses to I in important all, about understand of So it's same QX first the QX. they were that think

$XX.X $XX realized credit about had in QX. we of losses in QX, million million So

a receivables was So balance have slightly it amount higher similar dollar the a little. a dropped but because very percentage

important a auto greater than that's that understand loan portfolio much is HDFS thing other portfolio. the The seasonality to typical exhibits loan

tend the That of QX. quarters. we And QX. delinquencies that season, riding couple It's late the because see riding peak tend of seen manifest losses season start not the in into and then on to certainly people see what the to riding the to was credit we to increased what we pay that So see, Delinquencies understand in time in are loss. through ultimately elevated. of we've important particularly also driver themselves past season, over

last years seen retail though that year bike to some there's a What repossession last over been then borrowers range declines XX values defaulting, the They're as that is was see the in subset default, really there's of weaker a we've well. And or in are and starting we're there so. really when who industry. they

to loses COVID. see So start a industry left of repossession or through, people lot during the coming you defaults as

that being the previously. bikes of credit of opposed I the lower losses residual so about seen seasonality. the on think weaker, higher rest to all, led values we've first And severity those industry the ultimately that year, has to of Where repossession as we of a because loss the mentioned

expect QX. and reduce QX would through loss to that rate we So

-- lead the So -- we would by loss year. rate a definition, would would to for lead that lower

reducing been the cutoffs Gina a on. working the remarks, We've we've mentioned We've improving number as that our been But in strategy. been improving and loan-to-value prepared score ratios. things of origination

We've activities, put and enhancements in efforts severity to repossession lot improve our of making also a using accelerated delinquencies in late-stage the loss. We're we strategy texting servicing to so of improved calling place. our

want that of the -- and don't we to leads feel in us all our something guidance Gina, a So think that's lower can for combined we're add why to what confident know that? that to annual that call indicating we we year. year if you guidance the the rate for be will

X.X% seasonality, Not seasonality was we talking on kind the that the to give of the year, than a sense that say lower David the you for presentation, rate QX. a lower the And in Slide about. historical everyone annual we posted for when added slide core, XX the to

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

a guess questions. I couple of

us you factors. extent at trying be those all, referenced just variable? hedged down can the remind might just sense and point the of you that's inflation is First I'm in the versus locked the of of in balance there year logistics which raw on -- or a over to material get this to much how risk

in the that are mind like lot suppliers. the to Gina. -- raw materials material they this the standpoint, raw we buy From themselves a that and gadgets a go David, from keep of don't buying come is gadgets

yes, line, standpoint, So from a say. or for the risk a I I material raw hedging would of -- material opportunity it's us would kind say from not so a on hedging

play of taken And As kind that to and of the they're routing for year what current the back saw look of absolutely kind but bit, the markets seen little year. through forecast we've balance rest the around the the metal QX, we a come we've -- down. of we in out current

And lower expect rates we low. were much do ocean particularly last of continue to see within where year, they They're logistics than freight. the stay kind to

talked quarter, and the within rates the we continuing labor last warehousing. we're about inflation see to As

talked year, the we're not X seeing last different quarter. what So terribly outlook we overall inflation than about for

Right.

guess Okay. I here. should we get a question And in LiveWire then

and you So business maybe liquidity plan. a for got question sufficient here. for you've XXXX mentioned Ryan that cash But

category? here. in you to that of sentiment. We've product your slowing development continue gives fund that a consumer you preserves sort macro got I've market talked of rate confidence the can But about What leadership that already

Yes. question. for the Thanks

stated, that. think I think, development track with to as grow quarter units. is stay of part expectations, the But the to mean, as continue is then to the the stated the course, for us I product we look to the particular, a contributing things. we environments in line first largely I I think in you look as macro as here, with our couple we at term, at of just continue on and long important

of the then, of a Europe. Mar the we forward. very obviously this is And course, pleased for key that pillar strategic week. released to past side, course, the important on with we're product And the it's like which reception going development introduction And quite Del into that, us just

continue think improves to get the the greater So with we of of things, scale, overall which, course, two economics. we those

the with We're then combination the continue starting rate cash . obviously that plan and this So point. our able of and comfortably track. stay position and burn on at our to

range got at low end on the that Are if you've still in comfortably end the plan guidance? the shipment of up with you you that track

at Even be end the low cash burn. a guidance, Yes. similar of we'll that at

So we'll and still the the track be of parameters within on plan.

with Your the Rolle Brandon Davidson. D.A. next question of comes from line

that on in question drop Just you're of pricing now. what then of a Could the used big the versus a market the talk just you year start with have taking and changed also inventory seeing might this it how And to gap. year about years. talk quick terms about pretty this maybe right new used prior gap availability versus values in used

you Thank for the question.

is in price in -- historical in shift, some you years, certainly in in higher of moderation the new market levels new of as the expected playing terms certainly, are year that, some as given gap, used certainly are availability out that the it mentioned still prior So we the than and dynamics the above so this of seeing different such. we overall, but

part and a than certainly, used to the prior Obviously, the how build market But for dynamic year in years. us, in there new of market. use is is a maintaining this a different very healthy ecosystem important part we growth is continue overall of

seen So with we than would I healthier we remain, have historical terms. think, a dynamic in

just of entering Are there? anything with market? years? inventory And see is prior the line in Okay. Great. you the more availability Or it

couple of little the the some have seen been we would than I interruptions has historically of years would say given it's largely past as a the different couple expected. of bit years. production past Again, the over of dynamic

So some as itself out year. go we that of is the working through

mind in dealerships. that much available especially in the now bearing new And healthier inventory quarter, the for first

question America. You of Bank from of have follow-up a Robbie Ohmes

outlook and put quarters So this the The within I gross the margin for trends is The missed. the in through quarter, guess, I incredible. was will last guidance. the call margin X of us should up just Gena, you us, in obviously, Harley your put because up think about margin with gross you be for that how thinking margin is, first EBIT pretty I you you next about you, was guys off quarter margin quarter quarter HDMC margin this what moderation. with -- talk guide, Can help HDMC. hoping be we the for first could incredible understand implies what the gross first gross gross next But you

have model of markets. 'XX very was benefit in From the strongest still went Absolutely. Thanks a to for going year us. very, both mix for margin favorable. going in those the question. pricing of definitely our midyear the Yes, be of We had units unit in is way really our terms standpoint, some we QX everything the pricing of quarter strong delivery, that

and track Plus we're were the that productivity pricing. from the that on seeing. a And standpoint, model then we year 'XX offset inflation cost

-- pretty did down supply first bit, stabilize started rates out come expedited has quarter. supply the a broader we in see substantially chain chain As that to shipping

which that all of to So really we're factors gain. big we the all firing margin kind of led had cylinders, on

balance feel then the of year, in guide comfortable about we've still pretty overall, that think given. we As we the the

of mix, Some quite first same pricing. quarter. as that the very That the we positive example, for just not had the will in year, positive back factors we I'd move still say the as The half what kind an the like in out as first end was thing settle positive year, through were the so of as of slightly positive, quarter. for

be then will biggest model QX, pricing year -- QX, the in pricing and the in we So biggest QX. start lap to impact the 'XX

of again, that lessen as but So positive impact the for will of kind pricing is the still go throughout. we year,

biggest the be foreign to negative going front to we the inflation in the is become back year cost single starts besides more probably end move That negative The exchange. neutralized the -- through half as of year. the of

back the puts in definitely the some bulleted. but it's bit little to But the half, it if think a margin be weighted I'd front growth of margin and overall you about front half say with half So takes. will guide,

You have with Citigroup. from a follow-up James question Hardiman

rate to obviously, you're What look like So down come you've does to that's to HDFS, going may have most X.X X then On X ultimately you've be for need saying quarters. big impacted with me. next follow-ups the you over number negatively guess, X.X%, comments for retail. that consistent as to year of be that seems timing think the how the driver provision And there. made some I notably sort that side, think HDFS. I that launch retail guided the on

same And little more though a so maybe there's inventory maybe wholesale -- build. and bit the essentially even was

right, piece about you won't some be that I'm maybe latter quarter. sort Some difficult think can as framed little handicap, there's is hoping a the the second retail is out of some I timing easier you retail, benefit until bit mindset then to to how the timing pretty tease of consumer stuff. Obviously, maybe quantify. but that and

-- started to over rate would year. Sure, you giving But James. at call so guidance a number, the say question, is, it, for is mid-Xs loss of for I'll and part I'll in Edel. the first I'd turn it we a take our that then embedded what without I HDFS, precise

feel can within the that levels that we we what we've that's given. guidance absorb So that

question, say so I retail the have we in ahead expect that wholesale we shipped significantly wouldn't what retail. necessarily On in versus

a riding on inventory discussed have all healthier as in the The we start CVOs some and so anniversary potentially this have have we we models is would season. new I into inventory the to the that previous go of point certainly as even models, to our riding position think dealership contrary we season. of had years, specifically

the We deliberately throughout are that year. shipping

and both the in models wholesale for models some QX go certainly new of for of for our So see half QX through come we the and as as CVOs, actually the as the you which retail will anniversary will well the year. back

and is is the we its would seen its than out way rippling the just through product way So what working have overall cadence how the of very different historically. network

And Jochen made then want is the a sports we to just the This point that sunsetting. are year that did around earlier. I product reiterate

dynamic to grow product of platform is a volume. well, that it certainly we'll evolve rest will retail, of still, some lower But expectation match component are there sort year. RevMax the over as the that of that our significantly QX as as are We but that and was it and of obviously, time become over will sense are these evolves, an is there

we So I us versus the overall, would the would cadence historically. the and wholesale very done say differently looks it prepositioning have than it's less about retail, just

color. good really That's at luck And Gina, next stop. good your

Thank you.

back it this no questions turn would at to now time. over I like are closing There further Jochen remarks. for to Zeitz some

Well, us thank you, today. everybody, joining for

again at I'd much missed. day. Gina for As service this thank to and and joining certainly the since her role, will like leaving call. quarterly new great us the her really all us, a opportunity company best to, she be you and end XXXX. started she will is Rob have in Thank very alluded the her take month, be of to Wish her for last and you very the this

today's concludes conference call. This

now may disconnect. You