Harley-Davidson (HOG) 24 Oct 242024 Q3 Earnings call transcript

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

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

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

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

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

QX up retails in Lastly, were X%. LatAm,

offering challenging be media we the in we the in and We our other the come customers, and Street Road our highly continue well to redesign up new placed in Despite of plants for to new touring network, company years differentiated overall receive is feedback the environment, believe to set future that our operating success motorcycles, motorcycle from outstanding addition all our in the our to Glide. given enthusiastic touring Glide about lineup. development lineup

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

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

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

a dealers in addition pairing our set powerful new and to support, ensuring right and company brand, marketing the ourselves drive that providing The to and up strong the time a at solid We sound ability in to which and our committed positive expect at the are the year. we hard working to are best-in-class We're is of receive that network. network our dealer for profitability with product price progress for 'XX make a to our across right best-in-class and in coupled success. product combination sales

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

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

road [indiscernible], notable being several in LiveWire leadership XX% position exposure segment, market by HP awarded with events, its BET continued including the quarter has on September. EV Within electric Del XXXX in LiveWire Mar the and the in share bike MCN XXXX of the XX-plus year-to-date.

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

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

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

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

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

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

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

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

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

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

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

continue of CVO tail prioritize motorcycles. availability and to touring, soft trike, and We inventory

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

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

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

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

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

the cost QX $XX due X% were months, to expenses Lastly, in discipline began we late take we in million X lower the by that this first of maintained operating actions year. or overall as to

which operating XX.X% million, lower through months first compared year prior XX.X% the in was million was the $XXX was year. income operating margin prior $XXX period. to HDMC than X HDFS

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

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

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

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

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

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

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

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

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

with which in LiveWire expectations. period, million, $XX operating line the For was loss was our

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

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

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

full down We the XX% a come XX.X% the full is and in change resulting We change for believe year, X% XX.X% be wholesale X% These full X% XX% retail range revenue for a of XX% that positioned inputs the margin income operating top XXXX. in to flat HDMC is impact X% a targets. down downward the for these full expect revision our full expect for year, X.X% the for operating The guided X% from to leverage. between change year to due the and the XX% full from now up more from to. to is the we to which revised is year, year, of the company to we for which change line year had expect X.X% income XX% to in full and reductions wholesale lower results QX now down of year for in which from expect shipments the range production range previously year. for year, appropriately which reductions the X% of range to for has the earnings. We and at change down in is a and to to We full revenue be to to to down be a HDMC full the

for unchanged. XXX operating we continue of of full X,XXX earnings. XXXX be the expect between for up $XXX change and from to full $XXX million expect revised. of investment guidance range year while year for XXXX LiveWire, range upward which revised year to XX% unchanged. the units, flat is to the now to deliver for loss QX is electric the in million to million a million, $XXX We operating At At capital X% income year, motorcycle full at is X% to expect where to full we which in the is now the up $XXX is guidance HDFS, And

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

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

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

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

that lineup in earlier, to will in I've we're year of internal there we So for measures product is a mentioned going go brand the addition [indiscernible] in year up measures continue new more have sure are strength co-marketing the lot [indiscernible] other We next are to in we certainly [indiscernible]? to the and and [indiscernible] the challenged that I single we said, most work proud network, next investments will to very in industry, make network [indiscernible] hard And other networks [indiscernible]. terms and network network to well, continues make of hard say profitable profitability. as the network would it we're and working want [indiscernible] [indiscernible] [indiscernible] particular, we in our that probably

Our next question Megan Stanley. Morgan with comes from Alexander

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

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

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

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

Sure, Megan.

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

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

James with from Citi. comes question Hardiman Our next

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

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

it relative I So dealer about are by I inventory, a to think that relates So down of the to QX is sounds at in questions the Dealer primarily end really good XX% question inventory your how retail? end there. of think like around QX.

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

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

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

So I hope helps. that

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

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

this making that that adjustments the X are we in we hear seen a had with we seem -- believe I of you here. me don't have planning that I we the address James, to in shipments right the we And weaker be will although the third will if can we know some year issues line We have better. Yes, quarter, next don't believe and that so. year way. the quarters think are

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

with comes next question from Raymond James. Joseph Our Altobello

to James' question. Just on up follow

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

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

square how numbers? So those do X we

right. Joe. All Thanks,

we -- as at probably to want get So into don't this too point. much XXXX

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

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

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

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

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

think to what I touring bear in going not happen question, mind the you should is big inventory change your to back is obviously, in coming that Just again.

in bikes new market, have and into them over We we'll touring fantastic year. the carry the

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

touring the a So inventory quality of better factor as previous was lot than a in the is mind. it so qualifying to well bear as year,

Our with Farley next question comes Robin from UBS.

targets, in about your just it that I there the similar But being point retail. electric sales things for And plan, get obviously, for I for level, on I'll add your know had around about can which, for guess, doesn't of expectations LiveWire of I which flat fine at for what long case if be to your -- expectations have to sort are how similar additional if trying broadly. year losses? long year that. you how and a with it's this vehicle like more you might business, there commitment tell about reevaluate hit challenging at nothing is you throw profitable high sense next those thinking don't would just thinking if take long? when to one. meet willing another didn't I first inventory multiyear a sort be about how think we there's to your I maybe of term, kind long just a it you'd and losses at of business environment a that and point about these to a guess to second question you the year guess turning a question just Just it us for

Yes. Thanks, Robin.

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

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

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

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

down. team positive hard working year. manufacturing or I that next costs and profit gross and Karim's to margin. leadership, In LiveWire has so -- to much order very that operating next has a down we XX% working significantly He burn lower we year. is coming achieve under significant are margin taken, have We're by in sold breakeven we terms or a need taken that going cash the -- the costs improve to The of into get to think can of cash actions taking burn our reduced LiveWire, mentioned number be are units

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

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

with Wightman question Our Fred next comes Research. Wolfe from

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

Okay.

Sounds good.

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

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

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

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

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

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

that have So of from you as removed you from obviously productivity. $XXX year, our commitment recall And million earlier actually to leverage this calculation. cost in may we

real So $XXX million dependent upon that's a something units. that's not like

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

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

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

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

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

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

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

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

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

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

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

Yes.

Okay. Thanks, Jochen.

think as does in from of QX. like the you margin you So look my asked pieces, a what think margin question I QX, -- around about couple as Alex, and

wholesale reduction in a the shipments. sizable have pretty We

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

margin QX will challenged. quite certainly So be

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

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

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

comes next Our from with Zatzkin Noah question KeyBanc.

but put year. burn point on comment I working of kind to just you cash you're XX% the [indiscernible] a fine by too Is it, LiveWire, that made think I $XX fair [indiscernible] to it guess just to kind on to first, out translates LiveWire if $XX expenses, that, assume figure to for meaning a million loss from million that trying of less next directly there's potential year. operating next

Sure.

can I then can Karim in. So jump start, and

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

Thanks, Yes. Noah.

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

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

days them will will of horizon announced LiveWire. believe we XX that again, be at for the [indiscernible]. And expand in One those products significantly

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

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

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

Great question, Noah.

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

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

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

that see into think we on ready in not we're As interesting guide about, detail we But move are I to things XXXX, place probably of in through working actually we've -- probably yet. an as where and XXXX budget nature. talked we're we'll

debt portfolio. a retail little a end think little before seeing an where in cuff. of in reset equivalent we're a place we off But speaking bit bit the I portfolio the resetting the have up we will So

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

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

Our next from Longbow comes question MacGregor with David Research.

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

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

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

And share 'XX? market the for then

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

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

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

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

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

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

I of big a general just items, question more update the is of maybe of you've touring. product you've the portfolio. given thoughts some from Like kind your the is concerns, with bikes? kind ticket Just about pointed broader wondering, some a of got any success there out affordable headwinds consumer revisiting portability was lot

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

so things under for may XX,XXX, More affordable be bikes, example?

Yes.

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

Our final with comes Morningstar. from question Jamie Katz

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

share what exactly in? So you market have gained

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

context, big slightly. market even So overall in context, the improved in the share we've

quarter, but But the So better better than -- touring. that every been doing we've segments. in a considers perspective, significantly market the in that then all touring -- from

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

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

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

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

that the So case. will be

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

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

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

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

disconnect. now may You