LVWR — LiveWire Group, Inc.

Summary of Harley-Davidson Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Consolidated Revenue: Decreased by 12% year-over-year to $1.1 billion.
• Operating Income: $23 million, down from $160 million in Q1 2025.
• Earnings Per Share (EPS): $0.22, compared to $1.07 in Q1 2025.
• Retail Sales: North America saw a 14% increase, contributing to global retail sales growth of 8% with approximately 34,000 motorcycles sold.
• HDFS Revenue: Down 54% to $112 million due to a shift to a capital-light model.
• LiveWire Operating Loss: $18 million, in line with expectations but improved by $2 million year-over-year.
• Cash and Cash Equivalents: Ended Q1 at $1.8 billion, down from $1.9 billion year-over-year.

2. Strategic Updates and Business Highlights

• "Back to the Bricks" Plan: A new strategic initiative aimed at revitalizing the brand and improving dealer relationships.
• Dealer Inventory: Reduced by 22% year-over-year, leading to healthier inventory levels ahead of the riding season.
• New Marketing Platform: Launched "RIDE" to enhance brand engagement and community connection.
• Product Portfolio: Focus on reintroducing the Sportster and launching the new Sprint model to attract younger riders and improve accessibility.
• Parts and Accessories (P&A): Emphasis on expanding P&A offerings as a core growth driver, targeting 20-30% sales growth over time.

3. Forward Guidance and Outlook

• Full-Year 2026 Guidance: Retail units expected between 130,000 to 135,000, with similar wholesale unit expectations.
• Operating Income Expectations: HDMC operating income forecasted between a profit of $10 million to a loss of $40 million; HDFS expected to generate $45 million to $60 million in operating income.
• Long-Term EBITDA Target: Aiming for $350 million or more by 2027, driven by cost reductions and improved alignment between retail and wholesale volumes.

4. Bad News, Challenges, or Points of Concern

• Declining Revenue and Income: Significant drops in revenue and operating income raise concerns about profitability.
• Tariff Costs: Anticipated increased tariffs of $75 million to $90 million for 2026, impacting margins.
• Global Economic Environment: Ongoing consumer discretionary pressures and geopolitical uncertainties could affect sales.
• HDFS Transition: The shift to a capital-light model may lead to reduced revenue from traditional financing activities.

5. Notable Q&A Insights

• Demographic Challenges: Concerns about declining interest in motorcycling among younger generations were acknowledged, with strategies aimed at making the brand more accessible.
• Dealer Profitability: Emphasis on improving dealer economics through predictable programs and better inventory management.
• Impact of Promotions: Q1 promotions helped clear excess inventory, but future strategies will focus on targeted promotions to protect margins.
• LiveWire's Role: The electric motorcycle segment is seen as a long-term growth opportunity, although it will not receive direct funding from Harley-Davidson.
• M&A Opportunities: Potential for acquisitions that align with growth strategies, particularly in parts and accessories.

Overall, while Harley-Davidson is experiencing some financial challenges, the company is implementing a new strategic plan aimed at revitalizing the brand, improving dealer relationships, and enhancing product offerings to drive future growth.