HARLEY-DAVIDSON INC
For the period ended Sep 30, 2024. Filed Nov 6, 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.
Sep 30, 2024 · Filed Nov 6, 2024
HOG$34.20+4.7%Stored close · as of Nov 9, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious 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 OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0000793952-24-000165
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 162 previous paragraphs and 163 current paragraphs.
87 unchanged; 63 reworded; 12 added; 11 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 24 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 (12)
Current report
On October 24, 2024, the Company updated its expectations for 2024 as follows:
Current report
Worldwide retail inventory of new motorcycles was approximately 60,000 units at the end of the third quarter of 2024, which is down approximately 13% from the end of the second quarter of 2024 and up approximately 20% compared to the end of the third quarter of 2023. The Company plans to continue its support of dealer efforts to reduce inventory during the remainder of 2024.(1) Retail inventory of new motorcycles is based on dealer inventory units at the end of each quarter.
Current report
Factors affecting the comparability of net revenue, cost of goods sold and gross profit from the third quarter of 2023 to the third quarter of 2024 were as follows:
Current report
•Changes in the shipment mix had an unfavorable impact on gross profit. During the third quarter of 2024, the positive impact of changes in mix between motorcycle families was more than offset by the unfavorable impacts of model mix changes within motorcycle families and a higher mix of shipments to lower margin markets as shipments during the third quarter of 2024 declined from the same period last year at a faster rate in the U.S. than in other less profitable markets.
Current report
•Manufacturing and other costs were negatively impacted by continued moderate inflation and unfavorable manufacturing leverage related to higher fixed costs per unit resulting from lower production volumes. These negative impacts were partially offset by supply-chain productivity gains.
Current report
Operating expenses were lower in the third quarter of 2024 compared to the same period last year primarily related to lower people costs, including the cost of compensation and benefits, and decreases in other discretionary spending as the Company continued to focus on cost discipline and increased productivity.
Current report
Operating expenses increased $0.7 million compared to the third quarter of 2023 due in part to increased insurance-related expenses, partially offset by lower employee-related costs.
Current report
Results of Operations for the Nine Months Ended September 30, 2024
Current report
Compared to the Nine Months Ended September 30, 2023
Current report
Factors affecting the comparability of net revenue, cost of goods sold and gross profit from the first nine months of 2023 to the first nine months of 2024 were as follows:
Current report
•Raw material costs were lower than in the prior year.
Current report
Operating expenses were lower in the first nine months of 2024 compared to the same period last year primarily due to lower people costs, including the cost of compensation and benefits, and decreases in other discretionary spending as the Company continued to focus on cost discipline and increased productivity.
Removed paragraphs (11)
Previous report
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 report
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 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:
Previous report
•Raw material costs benefited from continued moderation in the rate of inflation.
Previous 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.
Previous report
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 report
Results of Operations for the Six Months Ended June 30, 2024
Previous report
Compared to the Six Months Ended June 30, 2023
Previous 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:
Previous report
•Raw material costs benefited from continued moderation in the rate of inflation.
Previous 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.
Reworded paragraphs (63)
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, 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.
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," "commits," 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 October 24, 2024 and the remaining forward-looking statements in this report are made as of the date of the filing of this report (November 6, 2024), and the Company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
Previous 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.
Current wording
Net income attributable to Harley-Davidson, Inc. was $119.0 million, or $0.91 per diluted share, in the third quarter of 2024 compared to $198.6 million, or $1.38 per diluted share, in the third quarter of 2023.
Previous 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.
Current wording
In the third quarter of 2024, HDMC segment operating income was $55.1 million, down $120.1 million from the third quarter of 2023. The decrease in operating income from the HDMC segment for the third quarter of 2024 was driven primarily by lower motorcycle shipments as dealers adjusted inventory levels for the current retail environment. HDMC operating income was also impacted by unfavorable mix partially offset by favorable impacts related to pricing and lower promotional costs, changes in foreign currency exchange rates and lower operating expenses compared to the same quarter last year. Operating loss from the LiveWire segment in the third quarter of 2024 was $26.1 million compared to an operating loss of $25.3 million in the prior year quarter due primarily to lower electric balance bike volumes partially offset by lower operating expenses. Operating income from the HDFS segment in the third quarter of 2024 was $76.7 million, up $17.4 million compared to the prior year quarter due primarily to higher interest income and a lower provision for credit losses, partially offset by higher interest expense.
Previous 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.
Current wording
Worldwide retail sales of new Harley-Davidson motorcycles in the third quarter of 2024 declined 13.2% compared to the third quarter of 2023. Retail sales in North America were down 10.1%. Retail sales of Harley-Davidson motorcycles continued to be impacted by a challenging macroeconomic environment, including high interest rates adversely impacting consumer discretionary spending. Retail sales were down 22.8% in EMEA and 16.5% in Asia-Pacific driven by softness in Japan with other countries contributing to the decline, partially offset by increases in Australia and New Zealand. 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 six 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. Interest rates declined during the third quarter of 2024 and the Company expects interest rates to continue to moderate. However, interest rates remained heightened during the first nine months of 2024.
Previous 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.
Current wording
Given the lower than expected results for the first nine months of 2024 and sales expectations for the remainder of the year, the Company now expects HDMC revenue to be down 14% to down 16% in 2024 compared to 2023. The Company's previous expectation was for HDMC revenue to be down 5% 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 of new motorcycles 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 149,000 to 153,000 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 168,000 units in 2024. Based on these updated unit expectations for 2024, retail unit sales in 2024 are expected to be down 6% to 8% compared to 2023, which is down from the previous expectation of flat to up 3%, and wholesale unit shipments are expected to be down 16% to 17% compared to 2023, which is down from the previous expectation of down 7% to 10%.
Previous 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.
Current wording
Based on the updated expectations for revenue and wholesale unit shipments as well as its results for the first nine months of 2024, the Company now expects HDMC operating margin as a percent of revenue to be 7.5% to 8.5% in 2024, which is lower than its previous expectation of 10.6% to 11.6% in 2024.
Previous 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.
Current wording
The Company now expects LiveWire motorcycle sales of 600 to 1,000 units in 2024 and continues to expect LiveWire's operating loss for 2024 to be $105 million to $115 million. The Company's previous expectation was for LiveWire motorcycle sales of 1,000 to 1,500 units in 2024.
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 and into 2025 compared to the second half of 2023 through the first half of 2024 as consumers adjust to the existing economic environment.
Current wording
The Company now expects HDFS operating income to be up 5% to up 10% in 2024 compared to 2023. The Company's previous expectation was for HDFS operating income to be flat to up 5% in 2024 compared to 2023.
Previous 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.
Current wording
In 2022, the Company set a productivity target to eliminate $400 million of incremental cost incurred since 2020 by the end of 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. The Company continues to expect approximately $100 million of cost productivity savings in 2024 and achieved savings of approximately $84 million during the first nine months of 2024.
Previous wording
The Company continues to expect capital investments in 2024 of between $225 and $250 million. The Company plans to continue to invest in product development and capability enhancements that support The Hardwire strategy. The Company's focus remains on core product innovation, investments in manufacturing to automate and reduce costs to improve productivity as well as planned investments for LiveWire.
Current wording
The Company continues to expect capital investments in 2024 of between $225 and $250 million. The Company's focus remains on core product innovation, investments in manufacturing to automate and reduce costs to improve productivity as well as planned investments for LiveWire.
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. 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.
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 and remains committed to this plan. The Company now plans to repurchase up to $450 million of shares in 2024 which has been revised from its previous plan of up to $500 million. The Company believes its capital allocation priorities highlight 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 which it would sustain for the full year 2026.
Previous 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.
Current wording
The Company reported operating income of $105.8 million in the third quarter of 2024 compared to $209.3 million in the same period last year. The HDMC segment reported operating income of $55.1 million in the third quarter of 2024, a decrease of $120.1 million compared to the third quarter of 2023. Operating loss from the LiveWire segment increased $0.7 million compared to the third quarter of 2023. Operating income from the HDFS segment increased $17.4 million compared to the third 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 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.
Current wording
Other income in the third quarter of 2024 was lower than in the third quarter of 2023, impacted by a smaller benefit related to a decrease in the fair value of LiveWire's warrant liability in the third quarter of 2024 compared to the third quarter of 2023 as well as lower non-operating income related to the Company's defined benefit plans.
Previous 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.
Current wording
The Company's effective income tax rate for the third quarter of 2024 was 12.8% compared to 17.7% for the third quarter of 2023. The decrease in the effective tax rate for the third 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 and the benefit of increased income tax credits on lower taxable income.
Previous 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.
Current wording
Diluted earnings per share was $0.91 in the third quarter of 2024, down 34.1% from the same period last year. Diluted weighted average shares outstanding decreased from 144.3 million in the third quarter of 2023 to 131.0 million in the third 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
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 wording
During the third quarter of 2024, retail sales in North America were down 10.1% driven by a 10.3% decline in the United States with additional reductions in international markets, including a 16.5% decrease in Asia Pacific as well as a 22.8% decrease in Europe.
Previous wording
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 wording
U.S. retail sales were negatively impacted by a continued challenging macroeconomic environment, which included high interest rates adversely impacting consumer discretionary spending. Retail sales declines in Asia Pacific, Canada and Europe were also primarily due to challenging macroeconomic conditions. In Asia Pacific, the decline included lower sales in Japan with other countries contributing to the decline, partially offset by higher sales in Australia and New Zealand. In Europe, the level of decline on a country-by-country basis was mixed during the quarter.
Previous 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.
Current wording
The Company shipped 27,520 motorcycles worldwide during the third quarter of 2024, which was 39.2% lower than the third quarter of 2023. Shipments to dealers in the third quarter of 2024 were lower than the third quarter of 2023 as dealers adjusted inventory levels for the current retail environment. The Company shipped a greater proportion of Grand American Touring models to improve availability of models most desired by customers.
Previous 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):
Current wording
The estimated impact of significant factors affecting the comparability of net revenue, cost of goods sold and gross profit from the third quarter of 2023 to the third quarter of 2024 were as follows (in millions):
Previous wording
•The increase in volume was primarily due to higher motorcycle shipments.
Current wording
•The decrease in volume was primarily due to lower motorcycle shipments.
Previous wording
•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 wording
•Revenue was positively impacted by lower promotional activity compared to the prior year, partially offset by the elimination of the pricing surcharge late in 2023 and a fine-tuned pricing strategy for 2024.
Previous wording
•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 wording
•Revenue was unfavorably impacted by weaker average foreign currency exchange rates relative to the U.S. dollar compared to the same quarter last year. Gross profit was favorably impacted by balance sheet remeasurement and favorable net foreign currency gains associated with hedging recorded in cost of goods sold.
Previous 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.
Current wording
•Raw material costs were lower compared to the prior year.
Previous 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.
Current wording
During the third quarter of 2024, revenue decreased by $3.3 million, or 41.0%, compared to the third 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 $1.1 million, or 15.1%, during the third quarter of 2024 compared to the third quarter of 2023 due primarily to lower electric balance bike volumes.
Previous wording
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 wording
During the third quarter of 2024, selling, administrative and engineering expense decreased $1.5 million compared to the third quarter of 2023 largely as a result of cost reduction initiatives.
Previous 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.
Current wording
Interest income was higher for the third quarter of 2024 compared to the same period last year, primarily due to higher average outstanding finance receivables at a higher average yield. Interest expense increased due to higher average interest rates on higher average outstanding debt and deposits.
Previous 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.
Current wording
The provision for credit losses decreased $2.9 million compared to the third 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 decrease in retail receivables and a smaller increase in the retail reserve rate compared to the third quarter of 2023, partially offset by an increase in the wholesale reserve.
Previous 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.
Current wording
The allowance for credit losses considers current economic conditions and the Company’s outlook on future conditions. At the end of the third 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 and muted consumer confidence. Refer to the Results of Operations for the Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023 for a discussion of 2024 annualized credit losses.
Previous wording
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 wording
The Company reported operating income of $610.0 million in the first nine months of 2024 compared to $800.2 million in the same period last year. HDMC segment operating income was $491.5 million in the first nine months of 2024, down $213.8 million compared to the same period last year. Operating loss from the LiveWire segment increased $1.6 million compared to the first nine months of 2023. Operating income from the HDFS segment increased $25.2 million compared to the first nine 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.
Previous wording
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 wording
Other income in the first nine 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.
Previous wording
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 wording
The Company's effective income tax rate for the first nine months of 2024 was 18.0% compared to 22.1% for the same period in 2023. The decrease in the effective tax rate for the first nine 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 and the benefit of increased income tax credits on lower taxable income.
Previous wording
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 wording
Diluted earnings per share was $4.27 in the first nine months of 2024, down from diluted earnings per share of $4.65 for the same period last year. Diluted weighted average shares outstanding decreased from 146.3 million in the first nine months of 2023 to 134.0 million in the first nine 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.
Previous 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.
Current wording
Worldwide retail sales of new Harley-Davidson motorcycles were down 5.3% during the first nine months of 2024 compared to the same period last year driven primarily by declines in North America, Europe and Asia Pacific. Retail sales in the United States were negatively impacted by a continued challenging macroeconomic environment, which included high interest rates adversely impacting consumer discretionary spending, partially offset by a benefit to retail sales from promotions focused on the sale of model year 2023 carryover inventory at dealers. Retail sales in Asia Pacific and Europe were soft also primarily due to challenging macroeconomic conditions. In Asia Pacific, the decline in retail sales was primarily due to lower sales in Japan and China, while lower retail unit sales in Europe were driven by declines in most of the Company's larger markets.
Previous 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:
Current wording
The Company's U.S. market share of new 601+cc motorcycles increased during the first nine months of 2024 compared to the first nine months of 2023 on higher retail sales relative to the industry led by strong retail growth in the Company's Touring motorcycles as compared to the prior year. The Company's European market share of new 601+cc motorcycles for first nine months of 2024 was down compared to the first nine months of 2023. Industry retail registration data for new motorcycles and the Company's market share was as follows:
Previous wording
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 wording
The Company shipped 134,852 motorcycles worldwide during the first nine months of 2024, which was 10.4% lower than the same period in 2023 as dealers adjusted inventory levels for the current retail environment. The motorcycles shipped during the first nine 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.
Previous wording
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 wording
The estimated impacts of significant factors affecting the comparability of net revenue, cost of goods sold and gross profit from the first nine months of 2023 to the first nine months of 2024 were as follows (in millions):
Previous wording
•The increase in volume was primarily due to higher motorcycle shipments.
Current wording
•The decrease in volume was primarily due to lower motorcycle shipments.
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.
Current wording
•Revenue was adversely impacted by the elimination of the pricing surcharge late in 2023 and a fine-tuned pricing strategy for 2024.
Previous 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.
Current wording
•Revenue and gross profit were negatively impacted by weaker average foreign currency exchange rates relative to the U.S. dollar partially offset by favorable net foreign currency gains associated with hedging recorded in cost of goods sold.
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The Company's outlook on economic conditions and its probability weighting of its economic forecast scenarios at the end of the third quarter of 2024 were weighted towards more pessimistic scenarios given continued challenging macro‐economic conditions, including a persistently high interest rate environment and muted consumer confidence. The Company’s expectations surrounding its economic forecasts may change in future periods as additional information becomes available.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
•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.