HARLEY-DAVIDSON INC
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
HOG$32.66+0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-06.
0000793952-24-000103
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0000793952-24-000150
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 132 previous paragraphs and 162 current paragraphs.
70 unchanged; 52 reworded; 26 added; 8 removed; 2 previous and 14 current paragraphs rearranged.
Tables are not compared: 14 previous and 24 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (26)
Current report
During the second quarter of 2024, retail sales in North America were down 0.6% with a decline in Canada offsetting a slight increase in the United States. The improvement in the United States was more than offset by a decline in international markets, including a 16.0% decrease in Asia Pacific as well as a 1.3% decrease in Europe.
Current report
Factors affecting the comparability of net revenue, cost of goods sold and gross profit from the second quarter of 2023 to the second quarter of 2024 were as follows:
Current report
•Revenue and gross profit were unfavorably impacted by weaker average foreign currency exchange rates relative to the U.S. dollar compared to the same quarter last year.
Current report
•Manufacturing and other costs were negatively impacted by continued moderate inflation and a ratification bonus related to the new collective bargaining agreements with hourly employees in Wisconsin. These negative impacts were partially offset by productivity gains related to reduced reliance on expedited freight and reduced ocean freight rates.
Current report
Operating expenses were up in the second quarter of 2024 compared to the same period last year primarily due to an increase in warranty expenses and employee exit costs for select headcount reductions that the Company made in connection with its on-going effort to aggressively manage operating expenses and increase productivity.
Current report
During the second quarter of 2024, selling, administrative and engineering expense decreased $2.7 million compared to the second quarter of 2023 largely as a result of cost reduction initiatives.
Current report
Results of Operations for the Six Months Ended June 30, 2024
Current report
Compared to the Six Months Ended June 30, 2023
Current report
Consolidated Results
Current report
The Company reported operating income of $504.2 million in the first six months of 2024 compared to $590.9 million in the same period last year. HDMC segment operating income was $436.4 million in the first six months of 2024, down $93.7 million compared to the same period last year. Operating loss from the LiveWire segment increased $0.9 million compared to the first six months of 2023. Operating income from the HDFS segment increased $7.8 million compared to the first six months of 2023. Refer to the HDMC Segment, LiveWire Segment and HDFS Segment discussions for a more detailed analysis of the factors affecting operating income.
Current report
The Company's effective income tax rate for the first six months of 2024 was 19.3% compared to 23.8% for the same period in 2023. The decrease in the effective tax rate for the first six months of 2024 was attributable to changes in the mix of earnings for foreign jurisdictions that are taxed at rates that differ from the U.S. statutory rate.
Current report
Harley-Davidson Motorcycle Retail Sales(a)
Current report
Motorcycle Unit Shipments
Current report
(a)Includes Trike
Current report
The Company shipped 107,332 motorcycles worldwide during the first six months of 2024, which was 2.1% higher than the same period in 2023 when shipments were adversely impacted by an unplanned suspension at the Company's U.S. manufacturing operations. The motorcycles shipped during the first six months of 2024 compared to the same period last year included a higher mix of Grand American Touring motorcycles shipped as a percent of total shipments to improve availability of models most desired by customers during the riding season.
Current report
The estimated impacts of significant factors affecting the comparability of net revenue, cost of goods sold and gross profit from the first six months of 2023 to the first six months of 2024 were as follows (in millions):
Current report
Factors affecting the comparability of net revenue, cost of goods sold and gross profit from the first six months of 2023 to the first six months of 2024 were as follows:
Current report
•The increase in volume was primarily due to higher motorcycle shipments.
Current report
•Changes in the shipment mix of motorcycles had a favorable impact on gross profit as the Company shipped a greater proportion of Grand American Touring models in the first six months of 2024 compared to the same period in 2023.
Current report
Operating expenses were higher in the first six months of 2024 compared to the same period last year primarily due to an increase in warranty expenses and employee exit costs for select headcount reductions that the Company made in connection its on-going effort to aggressively manage operating expenses and increase productivity.
Current report
During the first six months of 2024, revenue decreased by $3.6 million, or 24.6%, compared to the first six months of 2023. The decrease was primarily due to lower electric balance bike volumes partially offset by an increase in electric motorcycle volumes sold during the first six months of 2024 as compared to the same period last year. Cost of sales increased by $0.4 million, or 2.5%, during the first six months of 2024 compared to the first six months of 2023 on higher electric motorcycle volumes.
Current report
During the first six months of 2024, selling, administrative and engineering expense decreased $3.2 million, or 5.8%, compared to the first six months of 2023 largely as a result of cost reduction initiatives.
Current report
The provision for credit losses was $7.4 million higher in the first six months of 2024 as compared to the prior year primarily due to higher actual credit losses partially offset by a favorable change in the allowance for credit losses. The favorable change in the allowance for credit losses in the first six months of 2024 was primarily due to a smaller increase in the reserve rate as compared to the first six months of 2023. The Company's outlook on economic conditions and its probability weighting of its economic forecast scenarios at the end of the second quarter of 2024 were weighted towards more pessimistic scenarios given continued challenging macro‐economic conditions, including a persistently high interest rate environment, elevated inflation levels, and muted consumer confidence. The Company’s expectations surrounding its economic forecasts may change in future periods as additional information becomes available.
Current report
Operating expenses increased $10.7 million in the first six months of 2024 compared to the first six months of 2023 due in part to higher repossession costs, unfavorable foreign currency rates, and higher tax-related expenses.
Current report
Quarterly transfers of Canadian retail motorcycle finance receivables to the Canadian Conduit and the respective proceeds were as follows (in millions):
Current report
Quarterly transfers of U.S. retail motorcycle finance receivables to SPEs, the respective proceeds, and the respective proceeds, net of discounts and issuance costs were as follows (in millions):
Removed paragraphs (8)
Previous report
During the first quarter of 2024, retail sales were up 5.6% in North America offset by a 12.3% decrease in Asia Pacific and an 11.0% decrease in EMEA.
Previous report
HDMC Segment
Previous report
Operating expenses were up slightly in the first quarter of 2024 compared to the same period last year related to higher marketing and warranty expenses, partially offset by lower employee-related costs.
Previous report
LiveWire Segment
Previous report
During the first quarter of 2024, selling, administrative and engineering expense remained relatively flat with the first quarter of 2023 as the Company continued to focus on product development.
Previous report
HDFS Segment
Previous report
During the first quarter of 2024, the Company transferred $34.9 million of Canadian retail motorcycle finance receivables to the Canadian Conduit for proceeds of $28.6 million. There were no finance receivable transfers under the Canadian Conduit during the first quarter of 2023.
Previous report
There were no on-balance sheet asset-backed securitization transactions during the first quarter of 2024. During the first quarter of 2023, the Company transferred $628.5 million of U.S. retail motorcycle finance receivables to an SPE which, in turn, issued $550.0 million, or $547.7 million net of discount and issuance costs, of secured notes through an on-balance sheet asset-backed securitization transaction.
Reworded paragraphs (52)
Previous wording
The Company intends that certain matters discussed in this report are “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such by reference to this footnote or because the context of the statement will include words such as the Company “believes,” “anticipates,” “expects,” “plans,” “may,” “will,” “estimates,” “targets,” “intends,” "forecasts," "sees," "feels," or words of similar meaning. Similarly, statements that describe or refer to future expectations, future plans, strategies, objectives, outlooks, targets, guidance, commitments or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially, unfavorably or favorably, from those anticipated as of the date of this report. Certain of such risks and uncertainties are described in close proximity to such statements or elsewhere in this report, including under the caption "Cautionary Statements" in this Item 2, as well as in Item 1A. Risk Factors of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in the "Key Factors Impacting the Company" and the “Guidance” sections in this Item 2 are only made as of April 25, 2024 and the remaining forward-looking statements in this report are made as of the date of the filing of this report (May 6, 2024), and the Company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
Current wording
The Company intends that certain matters discussed in this report are “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such by reference to this footnote or because the context of the statement will include words such as the Company “believes,” “anticipates,” “expects,” “plans,” “may,” “will,” “estimates,” “targets,” “intends,” "forecasts," "sees," "feels," or words of similar meaning. Similarly, statements that describe or refer to future expectations, future plans, strategies, objectives, outlooks, targets, guidance, commitments or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially, unfavorably or favorably, from those anticipated as of the date of this report. Certain of such risks and uncertainties are described in close proximity to such statements or elsewhere in this report, including under the caption "Cautionary Statements" in this Item 2, as well as in Item 1A. Risk Factors, as well as in Item 1A. Risk Factors of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in the "Key Factors Impacting the Company" and the “Guidance” sections in this Item 2 are only made as of July 25, 2024 and the remaining forward-looking statements in this report are made as of the date of the filing of this report (August 7, 2024), and the Company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
Previous wording
The Company's results for the first quarter of 2024 were generally in line with the Company's expectations which included a decline in the Company's wholesale shipments and an improvement in retail sales in North America as the Company launched its new 2024 model year motorcycles. Net income attributable to Harley-Davidson, Inc. was $234.9 million, or $1.72 per diluted share, in the first quarter of 2024 compared to $304.1 million, or $2.04 per diluted share, in the first quarter of 2023.
Current wording
Net income attributable to Harley-Davidson, Inc. was $218.3 million, or $1.63 per diluted share, in the second quarter of 2024 compared to $178.0 million, or $1.22 per diluted share, in the second quarter of 2023.
Previous wording
In the first quarter of 2024, HDMC segment operating income was $238.4 million, down $97.3 million from the first quarter of 2023. The decrease in operating income from the HDMC segment for the first quarter of 2024 was driven primarily by lower motorcycle shipments and lower pricing stemming from the elimination of a pricing surcharge late in 2023 and the Company's fine-tuned pricing strategy for 2024 compared to the same quarter last year. Operating loss from the LiveWire segment in the first quarter of 2024 was $29.2 million compared to an operating loss of $24.5 million in the prior year quarter due primarily to lower revenue from electric balance bikes and changes in the mix of electric motorcycle models sold. Operating income from the HDFS segment in the first quarter of 2024 was $53.9 million, down $4.5 million compared to the prior year quarter due primarily to higher interest expense, an increase in the provision for credit losses, and higher operating expenses partially offset by higher interest income.
Current wording
In the second quarter of 2024, HDMC segment operating income was $197.9 million, up $3.6 million from the second quarter of 2023. The increase in operating income from the HDMC segment for the second quarter of 2024 was driven primarily by higher motorcycle shipments and favorable mix partially offset by unfavorable impacts related to pricing and promotional costs to promote the sale of model year 2023 carryover inventory at dealers as well as higher manufacturing costs and operating expenses compared to the same quarter last year. Operating loss from the LiveWire segment in the second quarter of 2024 was $28.2 million compared to an operating loss of $32.0 million in the prior year quarter due primarily to lower operating expenses. Operating income from the HDFS segment in the second quarter of 2024 was $71.4 million, up $12.4 million compared to the prior year quarter due primarily to higher interest income partially offset by higher interest and operating expenses.
Previous wording
Worldwide retail sales of new Harley-Davidson motorcycles in the first quarter of 2024 were flat compared to the first quarter of 2023, including a 5.6% increase in North America, the Company's largest market, and offsetting decreases in EMEA and Asia-Pacific. The positive retail sales results in North America were driven by sales of the Company's new model year 2024 Touring motorcycles, while international markets declined primarily due to macroeconomic conditions. Refer to the Harley-Davidson Motorcycles Retail Sales and Registration Data section for further discussion of retail sales results.
Current wording
Worldwide retail sales of new Harley-Davidson motorcycles in the second quarter of 2024 declined 3% compared to the second quarter of 2023. Retail sales of Harley-Davidson motorcycles continued to be impacted by a challenging macro environment including high interest rates adversely impacting consumer discretionary spending. Retail sales in North America were down 0.6% with a decline in Canada offsetting a slight increase in the United States. Despite challenging conditions, retail sales were up 0.3% in the United States as they were positively impacted by sales of the Company's new model year 2024 Touring motorcycles. Retail sales were down 1.3% in EMEA and 16.0% in Asia-Pacific. Refer to the Harley-Davidson Motorcycles Retail Sales and Registration Data section for further discussion of retail sales results.
Previous wording
Interest Rates - Interest rates increased significantly during 2022 and into 2023 as central banks attempted to reduce inflation. The current higher interest rate environment has adversely impacted HDFS' interest income margin due to a higher cost of funds that is only partially offset by increased interest rates on financing products sold by HDFS. Additionally, higher interest rates have adversely impacted consumer discretionary purchases, like purchases of the Company's motorcycles, as higher borrowing costs have made these purchases less affordable or impacted the consumer's ability to obtain financing. While the Company expects interest rates to moderate, interest rates remained heightened during the first three months of 2024.
Current wording
Interest Rates - Interest rates increased significantly during 2022 and into 2023 as central banks attempted to reduce inflation. The current higher interest rate environment has adversely impacted HDFS' interest income margin due to a higher cost of funds that is only partially offset by increased interest rates on financing products sold by HDFS. Additionally, higher interest rates have adversely impacted consumer discretionary purchases, like purchases of the Company's motorcycles, as higher borrowing costs have made these purchases less affordable or impacted the consumer's ability to obtain financing. While the Company expects interest rates to moderate, interest rates remained heightened during the first six months of 2024.
Previous wording
On April 25, 2024, the Company reaffirmed its expectations for HDMC and HDFS and revised its expectations for LiveWire for 2024:
Current wording
On July 25, 2024, the Company reaffirmed its expectations for HDFS and LiveWire for 2024 and revised its expectations for both HDMC and the Company's planned share repurchases:
Previous wording
The Company continues to expect HDMC revenue to be flat to down 9% in 2024 compared to 2023. The Company expects worldwide dealer retail unit sales of Harley-Davidson motorcycles in 2024 to be flat to up 9% compared to 2023. The Company's expectation is for wholesale shipments to move on a balanced basis with dealer retail unit sales in 2024 so that dealer inventory remains appropriately positioned throughout the course of the year. Therefore, the Company expects wholesale unit shipments of Harley-Davidson motorcycles in 2024 to be down between 1% and 10% compared to 2023. In addition, the Company's revenue expectation for 2024 assumes (i) pricing to be down slightly compared to 2023 given the elimination of the pricing surcharge late in 2023 and a fine-tuned pricing strategy in 2024, especially with respect to the Company's new Touring models, (ii) the impact of motorcycle shipment mix to be favorable compared to 2023 given the Company's continued focus on core products as part of The Hardwire strategy and (iii) an adverse impact of foreign currency exchange rates in 2024.
Current wording
Based on results for the first half of 2024, the Company now expects HDMC revenue to be down 5% to down 9% in 2024 compared to 2023. The Company's previous expectation was for HDMC revenue to be flat to down 9% compared to 2023. The Company continues to expect that, for the full-year 2024, wholesale unit shipments of Harley-Davidson motorcycles will be in balance with dealer retail unit sales of new Harley-Davidson motorcycles resulting in a dealer inventory level at the end of 2024 that is similar to the end of 2023. Therefore, the Company now expects both wholesale shipments and retail sales to be within a range of approximately 163,000 to 168,000 units for the full year of 2024, down from its previous expectation for wholesale shipments and retail sales that were within a range of approximately 163,000 to 178,000 units in 2024. Based on the updated unit expectations for 2024, retail unit sales in 2024 are expected to be flat to up 3% compared to 2023 and wholesale unit shipments are expected be down 7% to down 10% compared to 2023. In addition, the Company's revenue expectation for 2024 also reflects expectations that (i) pricing will be down slightly compared to 2023 given the elimination of the pricing surcharge late in 2023 and a fine-tuned pricing strategy in 2024, especially with respect to the Company's new Touring models, (ii) the impact of motorcycle shipment mix will be favorable compared to 2023 given the Company's continued focus on core products as part of The Hardwire strategy and (iii) there will be an adverse impact from foreign currency exchange rates in 2024.
Previous wording
The Company continues to expect HDMC operating margin as a percent of revenue to be 12.6% to 13.6% in 2024. The Company believes the expected decline in operating margin compared to 2023 will be due to (i) lower expected wholesale unit volumes compared to 2023 and the resulting negative impact of higher costs per unit, (ii) lower overall pricing compared to 2023 and continued modest supply chain inflation, and (iii) the impact of unfavorable foreign currency exchange rates. Finally, the Company also expects some incremental manufacturing costs to re-align factory processes in the initial year of production of its new model year 2024 Touring motorcycles.
Current wording
Given the updated expectations for revenue and wholesale unit shipments, the Company now expects HDMC operating margin as a percent of revenue to be 10.6% to 11.6% in 2024, which is lower than its previous expectation of 12.6% to 13.6% in 2024. The Company continues to believe the expected decline in operating margin in 2024 compared to 2023 will be due to (i) lower expected wholesale unit volumes compared to 2023 and the resulting negative impact of higher costs per unit, (ii) lower overall pricing compared to 2023 and continued modest supply chain inflation, and (iii) the impact of unfavorable foreign currency exchange rates. Finally, the Company also expects some incremental manufacturing costs in 2024 due primarily to the re-alignment of factory processes in the initial year of production of its new model year 2024 Touring motorcycles.
Previous wording
The Company continues to expect LiveWire motorcycle sales of 1,000 to 1,500 units in 2024, but has lowered its operating loss expectation for LiveWire. The Company now expects the LiveWire operating loss for 2024 to be $105 million to $115 million, an improvement from the previous expectation of $115 million to $125 million.
Current wording
The Company continues to expect LiveWire motorcycle sales of 1,000 to 1,500 units in 2024 and expects LiveWire's operating loss for 2024 to be $105 million to $115 million.
Previous wording
The Company continues to expect HDFS operating income to be flat to up 5% in 2024 compared to 2023. The Company expects HDFS results to stabilize in 2024 as it compares to the higher interest rate environment that began in 2022 and with a moderation in borrowing costs in 2024 based on anticipated actions of the U.S. Federal Reserve. The Company also expects the average yield on the retail and wholesale finance receivable portfolios to be more in-line with the recent higher interest rate environment as the retail portfolio shifts to include a higher mix of recent loans with higher interest rates resulting in greater interest revenue. Additionally, the Company expects the credit loss rate will begin to moderate in the second half of 2024 compared to the second half of 2023 as consumers adjust to the existing economic environment.
Current wording
The Company continues to expect HDFS operating income to be flat to up 5% in 2024 compared to 2023. The Company expects HDFS results to stabilize in 2024 as it compares to the higher interest rate environment that began in 2022 and with a moderation in borrowing costs in 2024 based on anticipated actions of the U.S. Federal Reserve. The Company also expects the average yield on the retail and wholesale finance receivable portfolios to be more in-line with the recent higher interest rate environment as the retail portfolio shifts to include a higher mix of recent loans with higher interest rates resulting in greater interest revenue. Additionally, the Company expects the credit loss rate will begin to moderate in the second half of 2024 and into 2025 compared to the second half of 2023 through the first half of 2024 as consumers adjust to the existing economic environment.
Previous wording
The Company has a productivity target to eliminate $400 million of incremental cost incurred since 2020 by 2025. The Company achieved approximately $50 million in productivity savings in 2022 and approximately $70 million in 2023. The Company remains focused on production efficiency, logistics network optimization and supplier cost optimization through consolidation and regionalization in 2024. The Company continues to expect approximately $100 million of additional cost productivity savings in 2024.
Current wording
In 2022 the Company set a productivity target to eliminate $400 million of incremental cost incurred since 2020 by 2025. This target originally included a positive impact from manufacturing leverage of approximately $50 million to $70 million based on an anticipated reduction in the fixed cost per motorcycle associated with increasing production volumes. Given the decrease in production volumes in 2023 and the expected decrease in 2024, the Company has adjusted the target by removing the impact of manufacturing leverage and increasing productivity objectives in other areas. The total productivity target remains at $400 million. Excluding the impact of manufacturing leverage, the Company achieved approximately $24 million in productivity savings in 2022 and approximately $123 million in 2023. The previously reported productivity savings, which included the impact of manufacturing leverage (whether positive or negative) were approximately $50 million and $70 million in 2022 and 2023, respectively. The Company remains focused on production efficiency, logistics network optimization and supplier cost optimization through consolidation and regionalization in 2024. The Company continues to expect approximately $100 million of additional cost productivity savings in 2024 and achieved savings of approximately $50 million during the first half of 2024.
Previous wording
The Company's capital allocation priorities remain to fund profitable growth through The Hardwire initiatives, to pay dividends, and to execute share repurchases on a discretionary basis. The Company is currently planning to repurchase a similar dollar amount of shares in 2024 as were repurchased in 2023.
Current wording
The Company's capital allocation priorities remain to fund profitable growth through The Hardwire initiatives, to pay dividends, and to execute share repurchases on a discretionary basis. In July 2024, the Company announced plans to repurchase approximately $1 billion of shares on a discretionary basis in aggregate starting in the third quarter of 2024 through the end of 2026. As a result, the Company now plans to repurchase up to $500 million of shares in 2024. Share repurchases in 2024 were previously planned to be at a level similar to 2023 which included $350 million of discretionary share repurchases. The Company believes this plan highlights its operating discipline, its overall cash flow generation and long-term earnings power as reflected by its continued commitment to deliver a 15% HDMC operating income margin by the end of 2025.
Previous wording
The Company reported operating income of $263.1 million in the first quarter of 2024 compared to $369.6 million in the same period last year. The HDMC segment reported operating income of $238.4 million in the first quarter of 2024, a decrease of $97.3 million compared to the first quarter of 2023. Operating loss from the LiveWire segment increased $4.7 million compared to the first quarter of 2023. Operating income from the HDFS segment decreased $4.5 million compared to the first quarter of 2023. Refer to the HDMC Segment, LiveWire Segment and HDFS Segment sections for a more detailed discussion of the factors affecting operating results.
Current wording
The Company reported operating income of $241.1 million in the second quarter of 2024 compared to $221.3 million in the same period last year. The HDMC segment reported operating income of $197.9 million in the second quarter of 2024, a decrease of $3.6 million compared to the second quarter of 2023. Operating loss from the LiveWire segment increased $3.8 million compared to the second quarter of 2023. Operating income from the HDFS segment increased $12.4 million compared to the second quarter of 2023. Refer to the HDMC Segment, LiveWire Segment and HDFS Segment sections for a more detailed discussion of the factors affecting operating results.
Previous wording
Other income in the first quarter of 2024 was higher than in the first quarter of 2023, impacted by a larger benefit related to LiveWire's warrant liability, which decreased in fair value, partially offset by lower non-operating income related to the Company's defined benefit plans.
Current wording
Other income in the second quarter of 2024 was higher than in the second quarter of 2023, impacted by a benefit related to LiveWire's warrant liability, which decreased in fair value, partially offset by lower non-operating income related to the Company's defined benefit plans.
Previous wording
The Company's effective income tax rate for the first quarter of 2024 was 20.0% compared to 23.0% for the first quarter of 2023.
Current wording
The Company's effective income tax rate for the second quarter of 2024 was 18.4% compared to 25.1% for the second quarter of 2023. The decrease in the effective tax rate for the second quarter was attributable to changes in the mix of earnings for foreign jurisdictions that are taxed at rates that differ from the U.S. statutory rate.
Previous wording
Diluted earnings per share was $1.72 in the first quarter of 2024, down 15.7% from the same period last year. Diluted weighted average shares outstanding decreased from 148.9 million in the first quarter of 2023 to 136.9 million in the first quarter of 2024, driven by the Company's discretionary repurchases of common stock. Refer to Liquidity and Capital Resources for additional information concerning the Company's share repurchase activity.
Current wording
Diluted earnings per share was $1.63 in the second quarter of 2024, up 33.6% from the same period last year. Diluted weighted average shares outstanding decreased from 145.8 million in the second quarter of 2023 to 134.1 million in the second quarter of 2024, driven by the Company's discretionary repurchases of common stock. Refer to Liquidity and Capital Resources for additional information concerning the Company's share repurchase activity.
Previous wording
Worldwide retail inventory of new motorcycles was approximately 69,000 units at the end of the first quarter of 2024, or up approximately 26% compared to the end of the first quarter of 2023, but remained lower than historical levels experienced prior to 2020. The average historical retail inventory level at the end of the first quarter during 2015 through 2019 was approximately 83,000 units. The Company believes current overall dealer inventory is appropriate given the upcoming spring riding season and the recent launch of new model year 2024 motorcycles. Retail inventory of new motorcycles is based on units at the end of the quarter rather than average monthly inventory levels within the quarter.
Current wording
Worldwide retail inventory of new motorcycles was approximately 68,000 units at the end of the second quarter of 2024, or up approximately 47% compared to the end of the second quarter of 2023, but remained lower than historical levels experienced prior to 2020. The Company believes current overall dealer inventory of new motorcycles is appropriate during the riding season and considering the recent launch of new model year 2024 motorcycles. Retail inventory of new motorcycles is based on units at the end of the quarter rather than average monthly inventory levels within the quarter.
Previous wording
The Company shipped 57,672 motorcycles worldwide during the first quarter of 2024, which was 7.3% lower than the first quarter of 2023. Shipments to dealers in the first quarter of 2024 were lower than the first quarter of 2023 when wholesale shipments benefited from dealers rebuilding inventory levels following the low levels experienced during the COVID-19 pandemic. In addition, the Company shipped a greater proportion of Grand American Touring models to improve availability of models most desired by customers going into riding season.
Current wording
The Company shipped 49,660 motorcycles worldwide during the second quarter of 2024, which was 15.7% higher than the second quarter of 2023. Shipments to dealers in the second quarter of 2024 were higher than the second quarter of 2023 when shipments were adversely impacted by an unplanned suspension at the Company's U.S. manufacturing operations. In addition, the Company shipped a greater proportion of Grand American Touring models to improve availability of models most desired by customers during the riding season.
Previous wording
The estimated impact of significant factors affecting the comparability of net revenue, cost of goods sold and gross profit from the first quarter of 2023 to the first quarter of 2024 were as follows (in millions):
Current wording
The estimated impact of significant factors affecting the comparability of net revenue, cost of goods sold and gross profit from the second quarter of 2023 to the second quarter of 2024 were as follows (in millions):
Previous wording
•The decrease in volume was primarily due to lower motorcycle shipments.
Current wording
•The increase in volume was primarily due to higher motorcycle shipments.
Previous wording
•Changes in the shipment mix had a favorable impact on gross profit.
Current wording
•Changes in the shipment mix had a favorable impact on gross profit as the Company shipped a greater proportion of Grand American Touring models during the quarter.
Previous wording
During the first quarter of 2024, revenue decreased by $3.1 million, or 39.4%, compared to the first quarter of 2023. The decrease was primarily due to lower electric balance bike volumes and an unfavorable change in the mix of electric motorcycles sold during quarter as compared to the same period last year. Cost of sales increased by $2.1 million, or 33.0%, during the first quarter of 2024 compared to the first quarter of 2023 due to higher electric motorcycle volumes.
Current wording
During the second quarter of 2024, revenue decreased by $0.6 million, or 8.2%, compared to the second quarter of 2023. The decrease was primarily due to lower electric balance bike volumes partially offset by an increase in electric motorcycle units sold during the quarter as compared to the same period last year. Cost of sales decreased by $1.7 million, or 17.4%, during the second quarter of 2024 compared to the second quarter of 2023 due primarily to lower electric balance bike volumes.
Previous wording
Interest income was higher for the first quarter of 2024 compared to the same period last year, primarily due to higher average outstanding finance receivables at a higher average yield. Other income decreased due to lower insurance and licensing revenue as well as lower investment income. Interest expense increased due to higher average interest rates on higher average outstanding debt and deposits.
Current wording
Interest income was higher for the second quarter of 2024 compared to the same period last year, primarily due to higher average outstanding finance receivables at a higher average yield. Other income decreased in part due to reduced investment income and unfavorable licensing revenue. Interest expense increased due to higher average interest rates on higher average outstanding debt and deposits.
Previous wording
The provision for credit losses increased $8.6 million compared to the first quarter of 2023, driven by higher actual credit losses partially offset by a favorable change in the allowance for credit losses. The favorable change in the allowance for credit losses was due to a reserve rate increase during the first quarter of 2023 compared to a flat reserve rate in the first quarter of 2024, partially offset by receivable growth.
Current wording
The provision for credit losses decreased $1.2 million compared to the second quarter of 2023 driven by a favorable change in the allowance for credit losses partially offset by higher actual credit losses. The favorable change in the allowance for credit losses was due to a smaller increase in the retail reserve rate and slower receivables growth compared to the second quarter of 2023.
Previous wording
The allowance for credit losses considers current economic conditions and the Company’s outlook on future conditions. At the end of the first quarter of 2024, the Company's outlook on economic conditions and its probability weighting of its economic forecast scenarios was weighted toward more pessimistic scenarios given continued challenging macro-economic conditions, including a persistently high interest rate environment, elevated inflation levels, and muted consumer confidence.
Current wording
The allowance for credit losses considers current economic conditions and the Company’s outlook on future conditions. At the end of the second quarter of 2024, the Company's outlook on economic conditions and its probability weighting of its economic forecast scenarios was weighted toward more pessimistic scenarios given continued challenging macro-economic conditions, including a persistently high interest rate environment, elevated inflation levels, and muted consumer confidence. Refer to the Results of Operations for the Six Months Ended June 30, 2024 Compared to the Six Months ended June 30, 2023 for a discussion of 2024 annualized credit losses.
Previous wording
Operating expenses increased $6.4 million compared to the first quarter of 2023 due in part to increased repossession costs, higher tax-related expenses, and unfavorable foreign currency rates partially offset by lower employee-related costs and a smaller loss on a securitization interest rate cap derivative valuation.
Current wording
Operating expenses increased $4.3 million compared to the second quarter of 2023 due in part to a loss on a securitization interest rate cap derivative valuation versus a gain in the prior year and higher repossession costs.
Previous wording
North America retail sales were positively impacted by the launch of the Company's new 2024 model year motorcycles driven by sales of the new Touring models. Retail sales in Europe and Asia Pacific were soft primarily due to challenging macroeconomic conditions. In Europe, the decline in retail sales was primarily due to lower sales in Germany and France, while lower retail unit sales in Asia Pacific were driven primarily by declines in China. In most international markets, the 2024 model year motorcycles only started to arrive at dealers later in the first quarter, limiting the impact of new model year motorcycles on retail sales during the first quarter.
Current wording
Worldwide retail sales of new Harley-Davidson motorcycles were down 1.7% during the first six months of 2024 compared to the same period last year driven primarily by a declines in Asia Pacific and Europe, partially offset by an increase in the United States. Retail sales in the United States were positively impacted by the Company's new 2024 model year Touring models despite a continued challenging macro environment which included high interest rates adversely impacting consumer discretionary spending. The Company's retail sales also benefited from promotions focused on the sale of model year 2023 carryover inventory at dealers. Retail sales in Asia Pacific and Europe were soft primarily due to challenging macroeconomic conditions. In Asia Pacific, the decline in retail sales was primarily due to lower sales in China, while lower retail unit sales in Europe were driven primarily by declines in Germany.
Previous wording
The Company's U.S. market share of new 601+cc motorcycles increased during the first three months of 2024 compared to the first three months of 2023 on higher retail sales relative to the industry. The Company's European market share of new 601+cc motorcycles for first three months of 2024 was down compared to the first three months of 2023. Industry retail registration data for new motorcycles and the Company's market share was as follows:
Current wording
The Company's U.S. market share of new 601+cc motorcycles increased during the first six months of 2024 compared to the first six months of 2023 on higher retail sales relative to the industry. The Company's European market share of new 601+cc motorcycles for first six months of 2024 was down compared to the first six months of 2023. Industry retail registration data for new motorcycles and the Company's market share was as follows:
Previous wording
•Revenue was adversely impacted by the elimination of the pricing surcharge late in 2023, a fine-tuned pricing strategy for 2024 and higher promotional costs to promote the sale of model year 2023 carryover inventory at dealers. The Company expects this will help drive dealer retail performance in 2024(1).
Current wording
•Revenue was adversely impacted by the elimination of the pricing surcharge late in 2023, a fine-tuned pricing strategy for 2024 and higher promotional costs to promote the sale of model year 2023 carryover inventory at dealers.
Previous wording
•The impact of foreign currency changes on revenue compared to prior year was flat. Gross profit was negatively impacted by unfavorable net foreign currency losses related primarily to hedging, recorded in cost of goods sold.
Current wording
•Revenue and gross profit were negatively impacted by weaker average foreign currency exchange rates relative to the U.S. dollar as well as unfavorable net foreign currency losses associated with hedging recorded in cost of goods sold.
Previous wording
•Manufacturing and other costs were negatively impacted by lower operating leverage and continued modest cost inflation of approximately 2%. The majority of units shipped in the first quarters of 2024 and 2023 were produced in the preceding fourth quarters in advance of the new model year launch. Production volumes were lower in the fourth quarter of 2023 compared to the fourth quarter of 2022, which resulted in a higher fixed cost per unit for units shipped in the first quarter of 2024 as compared to units shipped in the first quarter of 2023. The impact of lower operating leverage was partially offset by other productivity gains including reduced reliance on expedited freight as well as reduced ocean freight rates.
Current wording
•Manufacturing and other costs were negatively impacted by lower manufacturing leverage, continued moderate inflation and a ratification bonus related to the new collective bargaining agreements with hourly employees in Wisconsin. The lower manufacturing leverage related to units shipped at the start of 2024 but produced in the fourth quarter of 2023, in advance of the new model year launch, when production volumes were lower compared to the prior year period which resulted in a higher fixed cost per unit. These negative impacts were partially offset by productivity gains, including reduced reliance on expedited freight as well as reduced ocean freight rates.
Previous wording
Annualized losses on the Company's retail motorcycle loans were 3.74% during the first quarter of 2024 compared to 3.21% in the first quarter of 2023. The 30-day delinquency rate for retail motorcycle loans at March 31, 2024 increased to 4.00% from 3.74% at March 31, 2023. The unfavorable retail credit loss and delinquency performance was driven by several factors connected to the macro-economic environment and related customer and industry dynamics, including the impact of higher motorcycle payments and general inflationary pressures on customers. Additionally, the Company experienced downward pressure on recovery values at auction.
Current wording
Annualized credit losses on the Company's retail motorcycle loans were 3.12% at the end of the second quarter of 2024 compared to 2.61% at the end of the second quarter of 2023. The 30-day delinquency rate for retail motorcycle loans at June 30, 2024 increased to 3.92% from 3.63% at June 30, 2023. The unfavorable retail credit loss and delinquency performance were driven by several factors connected to the macro-economic environment and related customer and industry dynamics, including the impact of higher motorcycle payments and general inflationary pressures on customers. Additionally, the Company continues to experience downward pressure on recovery values at auction.
Previous wording
The Company’s strategy is to maintain a minimum of twelve months of its projected liquidity needs through a combination of cash and cash equivalents and availability under its credit facilities.
Current wording
The Company’s strategy is to maintain a minimum of twelve months of its projected liquidity requirements through a combination of cash and cash equivalents and availability under its credit facilities. The Company believes its current cash, cash equivalents and availability under its credit facilities are sufficient to meet its liquidity requirements, consistent with this strategy.
Previous wording
The Company believes its current cash, cash equivalents and availability under its credit facilities are sufficient to meet its liquidity requirements, consistent with its strategy. The Company expects to fund its operations, excluding the origination of finance receivables, primarily with cash flows from operating activities and cash and cash equivalents on hand.(1) The Company expects to fund the origination of finance receivables primarily with unsecured debt, unsecured commercial paper, asset-backed commercial paper conduit facilities, committed unsecured bank facilities, asset-backed securitizations and brokered certificates of deposit.(1)
Current wording
The Company expects to fund its on-going operations (excluding the origination of finance receivables) and its capital allocation priorities including capital expenditures, dividends and discretionary share repurchases primarily with cash flows from operating activities and cash and cash equivalents on hand.(1) The Company expects to fund the origination of finance receivables primarily with unsecured debt, unsecured commercial paper, asset-backed commercial paper conduit facilities, committed unsecured bank facilities, asset-backed securitizations and brokered certificates of deposit.(1)
Previous wording
(a)Includes $141.0 million of cash and cash equivalents held by LiveWire Group, Inc.
Current wording
(a)Includes $113.0 million of cash and cash equivalents held by LiveWire Group, Inc.
Previous wording
(c)C$125.0 million Canadian Conduit facility agreement remeasured to U.S. dollars at March 31, 2024.
Current wording
(c)C$165.0 million Canadian Conduit facility agreement remeasured to U.S. dollars at June 30, 2024.
Previous wording
Cash flow provided by operating activities in the first three months of 2024 compared to the first three months of 2023 benefited from changes in working capital and lower net cash outflows related to wholesale finance receivables, partially offset by lower net income. Working capital was positively impacted primarily by favorable changes in accounts receivable compared to the first three months of 2023.
Current wording
Cash flow provided by operating activities in the first half of 2024 compared to the first half of 2023 benefited from changes in working capital, partially offset by higher net cash outflows related to wholesale finance receivables and lower net income. Working capital was positively impacted primarily by a larger decrease in inventory in the first half of 2024 as compared to same period last year and increases in accounts payable and accrued expenses in the first half of 2024 as compared to decreases in accounts payable and accrued expenses in the first half of 2023.
Previous wording
The Company's ongoing operating cash requirements include those related to existing contractual commitments which it expects to fund with cash inflows from operating activities. The Company's purchase orders for inventory used in manufacturing generally do not become firm commitments until 90 days prior to expected delivery. The Company's material contractual operating cash commitments at March 31, 2024 relate to leases, retirement plan obligations and income taxes. The Company's long-term lease obligations and future payments are discussed further in Note 9 of the Notes to Consolidated financial statementsin the Company's Annual Report on Form 10-K for the year ended December 31, 2023. There are no required qualified pension plan contributions in 2024. The Company’s expected future contributions and benefit payments related to its defined benefit retirement plans are discussed further in Note 14 of the Notes to Consolidated financial statementsin the Company's Annual Report on Form 10-K for the year ended December 31, 2023. The Company has aliability for unrecognized tax benefits of $18.1 million and related accrued interest and penalties of $8.6 million as of March 31, 2024. The Company cannot reasonably estimate the period of cash settlement for either the liability for unrecognized tax benefits or accrued interest and penalties. The Company continues to expect that it will fund its ongoing operating cash requirements related to the origination of finance receivables with the issuance of debt.
Current wording
The Company's ongoing operating cash requirements include those related to existing contractual commitments which it expects to fund with cash inflows from operating activities. The Company's purchase orders for inventory used in manufacturing generally do not become firm commitments until 90 days prior to expected delivery. The Company's material contractual operating cash commitments at June 30, 2024 relate to leases, retirement plan obligations and income taxes. The Company's long-term lease obligations and future payments are discussed further in Note 9 of the Notes to Consolidated financial statementsin the Company's Annual Report on Form 10-K for the year ended December 31, 2023. There are no required qualified pension plan contributions in 2024. The Company’s expected future contributions and benefit payments related to its defined benefit retirement plans are discussed further in Note 14 of the Notes to Consolidated financial statementsin the Company's Annual Report on Form 10-K for the year ended December 31, 2023. The Company has aliability for unrecognized tax benefits of $18.5 million and related accrued interest and penalties of $8.7 million as of June 30, 2024. The Company cannot reasonably estimate the period of cash settlement for either the liability for unrecognized tax benefits or accrued interest and penalties. The Company continues to expect that it will fund its ongoing operating cash requirements related to the origination of finance receivables with the issuance of debt.
Previous wording
The Company’s most significant investing activities consist of capital expenditures and retail finance receivable originations and collections. Capital expenditures were $46.4 million in the first three months of 2024 compared to $45.1 million in the same period last year. The Company's 2024 plan includes estimated capital investments between $225 million and $250 million, all of which the Company expects to fund with net cash flow generated by operations.(1)
Current wording
The Company’s most significant investing activities consist of capital expenditures and retail finance receivable originations and collections. Capital expenditures were $87.8 million in the first half of 2024 compared to $86.5 million in the same period last year. The Company's 2024 plan includes estimated capital investments between $225 million and $250 million, all of which the Company expects to fund with net cash flow generated by operations.(1)
Previous wording
Net cash outflows for finance receivables during the first three months of 2024 were $39.6 million higher compared to the same period last year due to lower retail finance receivable collections, partially offset by lower originations of finance receivables. The Company funds its finance receivables net lending activity through the issuance of debt, discussed in "Financing Activities" below.
Current wording
Net cash outflows for finance receivables during the first half of 2024 were $49.5 million higher compared to the same period last year due to lower retail finance receivable collections, partially offset by lower originations of finance receivables. The Company funds its finance receivables net lending activity through the issuance of debt, discussed in "Financing Activities" below.
Showing the first 40 of 52 pairs. Open the source sections for the rest.
Rearranged current paragraphs (14)
Current report — wording carried from elsewhere
U.S. retail sales were positively impacted by the Company's new 2024 model year motorcycles driven by sales of the new Touring models despite a continued challenging macro environment which included high interest rates adversely impacting consumer discretionary spending. The Company's retail sales also benefited from promotions focused on the sale of model year 2023 carryover inventory at dealers. Retail sales in Asia Pacific, Canada and Europe were soft primarily due to challenging macroeconomic conditions. In Asia Pacific, the decline in retail sales was primarily due to lower sales in China, while lower retail unit sales in Europe were led by a decline in Germany.
Current report — wording carried from elsewhere
•Revenue was adversely impacted by the elimination of the pricing surcharge late in 2023 and a fine-tuned pricing strategy for 2024 as well as higher promotional costs to promote the sale of model year 2023 carryover inventory at dealers.
Current report — wording carried from elsewhere
Other income in the first six months of 2024 was higher than the same period last year impacted by a benefit related to LiveWire's warrant liability, which decreased in fair value, partially offset by lower non-operating income related to the Company's defined benefit plans.
Current report — wording carried from elsewhere
Diluted earnings per share was $3.34 in the first six months of 2024, up from diluted earnings per share of $3.27 for the same period last year, despite lower net income, due to the impact of lower diluted weighted average shares outstanding. Diluted weighted average shares outstanding decreased from 147.4 million in the first six months of 2023 to 135.5 million in the first six months of 2024, driven by the Company's discretionary repurchases of common stock. Please refer to Liquidity and Capital Resources for additional information concerning the Company's share repurchase activity.
Current report — wording carried from elsewhere
Harley-Davidson Motorcycles Retail Sales and Registration Data
Current report — wording carried from elsewhere
Retail unit sales of new Harley-Davidson motorcycles were as follows:
Current report — wording carried from elsewhere
(a)Data source for retail sales figures shown above is new sales warranty and registration information provided by dealers and compiled by the Company. The Company must rely on information that its dealers supply concerning new retail sales, and the Company does not regularly verify the information that its dealers supply. This information is subject to revision.
Current report — wording carried from elsewhere
Motorcycle unit shipments were as follows:
Current report — wording carried from elsewhere
Condensed statements of operations for the HDMC segment were as follows (dollars in thousands):
Current report — wording carried from elsewhere
•Raw material costs benefited from continued moderation in the rate of inflation.
Current report — wording carried from elsewhere
Condensed statements of operations for the LiveWire segment were as follows (in thousands, except unit shipments):
Current report — wording carried from elsewhere
Condensed statements of operations for the HDFS segment were as follows (in thousands):
Current report — wording carried from elsewhere
Interest income was higher for the first six months of 2024, primarily due to higher average outstanding finance receivables at a higher average yield. Other income decreased largely due to lower investment income and lower licensing and insurance revenues. Interest expense increased due to higher average interest rates on higher average outstanding debt and deposits.
Current report — wording carried from elsewhere
Changes in the allowance for credit losses on finance receivables were as follows (in thousands):
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Factors affecting the comparability of net revenue, cost of goods sold and gross profit from the first quarter of 2023 to the first quarter of 2024 were as follows:
Previous report — wording carried elsewhere
On-Balance Sheet Asset-Backed Canadian Commercial Paper Conduit Facility – In June 2023, the Company renewed its