Slide 1: Harley-Davidson, Inc. - 2020 Third Quarter Business Update
HARLEY-DAVIDSON, INC. - 2020 THIRD QUARTER BUSINESS UPDATE October 27, 2020 Conference Call Slide Presentation October 27, 2020
Slide 2: 2020 Third Quarter Business Update
2020 THIRD QUARTER BUSINESS UPDATE This presentation supports the audio call. The audio playback for today’s call will be available at Harley-Davidson.com, or call (855) 859-2056 or (404) 537-3406 until November 10th. ID 4341979. CALL PARTICIPANTS Jochen Zeitz, Chairman, President and CEO Gina G
Slide 3: COVID-19 - Ongoing Response
COVID-19 - ONGOING RESPONSE Prioritize Health and Safety Preserve Cash Precautions and compliance Reduced non-essential costs – Mfg. operating with proper precautions in place – On track to deliver $250 million of cash savings versus 2020 planned spending (15% capital) – Most salaried employees
Slide 4: The Rewire
THE REWIRE KEY ELEMENTS New operating model: reduced complexity and increased speed Eliminated duplication and complexity across global operations Refreshed leadership structure; added new capabilities and fresh perspectives Protecting value - end of Q3 Reduced price gap between new and used
Slide 5: Focus on High-Potential Markets
FOCUS ON HIGH-POTENTIAL MARKETS 36 highest potential markets served with new H-D operating framework 17 markets transitioning to distributor model Exiting ~40 markets EMEA UK/Ireland Benelux/Nordics France DACH Spain/Italy Russia/Emerging markets NORTH AMERICA U.S. Canada APAC
Slide 6: Marketing
MARKETING OVER 100 MILLION POSITIVE MEDIA IMPRESSIONS OVER 5OO MILLION VIDEO VIEWS - L O N G W AY U P - October 27, 2020 Conference Call Slide Presentation
Slide 7: Q3 2020 Results vs. Prior Year
Q3 2020 RESULTS VS. PRIOR YEAR Motorcycles Financial Services Total HDI Segment Segment Revenue $1.17B $964M $202M % vs. PY -8.4% -9.8% -0.9% Consolidated – Motorcycles and Related Products and Financial Services Segments Operating Income $138M $47M $91M % vs. PY +15.1% -0.5% +25.1% Net Income $120M
Slide 8: Inventory and Worldwide Retail Sales
WORLDWIDE RETAIL SALES H-D NEW RETAIL MOTORCYCLE SALES NEW 601+CC1 MARKET SHARE vs. Prior Year (1.1) pts. (0.9) pts. Q3 YTD H-D U.S. NEW (6.8) pts. (8.5) pts. Worldwide Retail Sales -8.1% -18.1% 601+CC RETAIL MARKET SHARE2 SHARE North America -11.3% -18.9% U.S. -10.3% -18.3% RETAIL SALES Canada -25.
Slide 9: Shipments & Revenue
SHIPMENTS & REVENUE SHIPMENTS REVENUE MOTORCYCLES SEGMENT MOTORCYCLES SEGMENT ($ millions) Q3 vs. PY YTD vs. PY Q3 vs. PY YTD vs. PY Total Shipments 42,983 -6.2% 124,325 -28.3% Total Revenue $964 -9.8% $2,733 -26.1% Shipment Mix Motorcycle $684 -12.2% $2,030 -29.3% Touring 38.4% -5.0 pts 38.5% -5.2
Slide 10: Gross Margin & Operating Income
GROSS MARGIN & OPERATING INCOME GROSS MARGIN1 OPERATING INCOME MOTORCYCLES SEGMENT ($ millions) MOTORCYCLES SEGMENT ($ millions) Q3 YTD Q3 YTD 2019 Gross Margin $320 $1,122 2019 Operating Income $47 $336 % of Revenue 29.9% 30.3% % of Revenue 4.4% 9.1% Volume & Mix -2.0 pts -3.4 pts Pricing & Incenti
Slide 11: Financial Services Segment Operating Income
FINANCIAL SERVICES SEGMENT OPERATING INCOME FINANCIAL SERVICES SEGMENT ($ millions) Q3 YTD 2019 Operating Income $73 $207 Net Interest Income ($16) ($14) Provision for Retail Loan Losses $27 ($77) Provision for Wholesale Loan Losses ($1) ($7) Operating Expenses1 $8 $14 All Other - ($4) Financial Ser
Slide 12: Financial Services Operations
FINANCIAL SERVICES OPERATIONS Total New and Used Retail Motorcycle Loan Market Share: Total U.S. H-D New Motorcycle Originations Sales Financed $2,626 $2,409 ($ millions) 67.6% 67.5% 66.3% 67.5% $900 $862 Q3 YTD Q3 YTD 2019 2020 2019 2020 Financial Services Segment Total gross finance receivables
Slide 13: HDFS Retail Motorcycle Loan Performance
FINANCIAL SERVICES SEGMENT HDFS RETAIL MOTORCYCLE LOAN PERFORMANCE FINANCIAL SERVICES SEGMENT Q3 30+ Day Delinquencies 5.59% 5.80% 6% 4.91% 4.83% 5% 3.73% 4% 3.61% 3.72% 3.60% 3.75% 3.24% 3.16% 3.11% 3.00% 1 3% 2.59% 2% '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 3% 2.70% Annualized Q3 L
Slide 14: Harley-Davidson, Inc. Consolidated Cash Flow Items
HARLEY-DAVIDSON, INC. 2020 Harley-Davidson, Inc. vs. Prior Year Cash & cash equivalents - $3.56 billion vs. $862 million at the end of Q3 Consolidated – Motorcycles and Related Products and Financial Services Segments Operating cash flow – $1.14 billion vs. $849 million YTD Capital expenditure
Slide 15: Cash Generation/Returns
CASH GENERATION/RETURNS Harley-Davidson leads in cash generation and consistently returned cash to shareholders (2017-2019) 3-Yr. Avg. Free Cash Flow Conversion(1)(2) 3-Yr. Avg. Free Cash Flow Margin(1)(2) 3-Yr. Avg. ROIC and ROE(1)(3) 3-Yr. Avg. Cumulative Capital Return / Market Capitalization(1)(
Slide 16: The Hardwire 2021-2025 Strategic Plan
THE HARDWIRE 2021-2025 STRATEGIC PLAN Harley-Davidson as the Most Desirable Motorcycle Brand in the World Desirability provides the framework for H-D’s work and success measures. It will be organized around DESIRABLE: Growth strategy for motorcycles, P&A and GM Customer focus inclusive of distin
Slide 17: Driving a High-Performing Culture
DRIVING A HIGH-PERFORMING CULTURE • Evolving culture to drive a winning organization • Ramping up competitive spirit • Grounded in new vision and mission October 27, 2020 Conference Call Slide Presentation 17
Slide 18: Non-GAAP Measures
NON-GAAP MEASURES This presentation includes financial measures that have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP) and are therefore referred to as non-GAAP financial measures. The non-GAAP measures listed below are intended to be considered by user
Slide 19: Reconciliation of GAAP to Non-GAAP Amounts
RECONCILIATION OF GAAP TO NON-GAAP AMOUNTS This presentation contains non-GAAP measures related to net income and diluted earnings per share that exclude restructuring plan costs and the impact of tariffs. Reconciliations of GAAP amounts to non-GAAP amounts are included below. ($ thousands, except p
Slide 20: Reconciliation of GAAP to Non-GAAP Amounts
RECONCILIATION OF GAAP TO NON-GAAP AMOUNTS This presentation contains performance measures calculated using non-GAAP amounts as inputs. These performance measures include: “3-yr. Avg. Free Cash Flow Conversion", “3-yr. Avg. Free Cash Flow Margin“, “3-Yr. Avg. ROIC and ROE”. Reconciliations of report
Slide 21: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Cautionary Note Regarding Forward-Looking Statements The company intends that certain matters discussed in this press release are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act