Harley-davidson, Inc. · NYSE:HOG
Harley-davidson — Q2 2020 Earnings Presentation
22 slides from Harley-davidson's earnings presentation, Jul 28, 2020
Slide 1: Harley-Davidson, Inc. - 2020 Second Quarter Business Update
HARLEY-DAVIDSON, INC. - 2020 SECOND QUARTER BUSINESS UPDATE July 28, 2020 Conference Call Slide Presentation July 28, 2020
Slide 2: 2020 Second Quarter Business Update
2020 SECOND QUARTER BUSINESS UPDATE This presentation supports the audio call. The audio for today’s call will be available at Harley-Davidson.com, or call (855) 859-2056 or (404) 537-3406 until August 11th. ID 3880243. CALL PARTICIPANTS Jochen Zeitz, Chairman, President and CEO Darrell Thomas,
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 savings – Most salaried employees working at home until at least end Supply chai
Slide 4: Vision & Mission
VISION & MISSION HARLEY-DAVIDSON MISSION More than building machines, we stand for the timeless pursuit of adventure. Freedom for the soul. VISION Building our legend and leading our industry through innovation, evolution and emotion. July 28, 2020 Conference Call Slide Presentation 4
Slide 5: Let's Ride
LET’S RIDE Video produced and directed by Jason Momoa launches “Let’s Ride” retail campaign, championing the positivity in riding motorcycles and the unrelenting spirit of Harley-Davidson riders July 28, 2020 Conference Call Slide Presentation 5
Slide 6: The Rewire
THE REWIRE KEY ELEMENTS – Q2 UPDATES New operating model; reduced complexity and increased speed • Eliminate duplication, inefficiencies and complexity across ALL areas and functions • Aligned operating model, cost structure to current realities of business Refined motorcycle line-up and high-impact
Slide 7: The Hardwire
THE HARDWIRE HARLEY-DAVIDSON’S 2021-2025 STRATEGIC PLAN • New 5-year strategic plan will build on the foundation of The Rewire • Focus: Harley-Davidson as the most desirable motorcycle brand in the world • Expect to share in Q4 Since the beginning, Harley-Davidson motorcycles have ignited desirabili
Slide 8: Q2 2020 Results vs. Prior Year
Q2 2020 RESULTS VS. PRIOR YEAR REVENUE NET LOSS EPS $0.87 $92.2 $(0.60) Billion Million Consolidated – Motorcycles and Related Products and Financial Services Segments (47.0)% $(287.8) million $(1.83) Q2 earnings impacted by: Motorcycles segment operating margin down ̶ Revenue down 53.3% on 58.7%
Slide 9: Worldwide Retail Sales and Inventory
WORLDWIDE RETAIL SALES H-D NEW RETAIL MOTORCYCLE SALES NEW 601+CC1 MARKET SHARE vs. prior year Q2 YTD (1.8) pts. (0.9) pts. H-D U.S. NEW (5.9) pts. Worldwide Retail Sales Rate (26.6)% (23.0)% 601+CC RETAIL (8.1) pts. MARKET SHARE2 North America SHARE - US (26.7)% (22.3)% - Canada (30.3)% (28.2)% R
Slide 10: Shipments & Revenue
SHIPMENTS & REVENUE SHIPMENTS REVENUE MOTORCYCLES SEGMENT MOTORCYCLES SEGMENT ($ millions) Q2 ‘20 vs. PY YTD ‘20 vs. PY Q2 ‘20 vs. PY YTD ’20 vs. PY Total 28,369 (58.7)% 81,342 (36.3)% Motorcycle $446.7 (60.4)% $1,346.1 (35.7)% P&A 168.7 (23.8)% 303.4 (20.4)% Touring 34.2% (10.8) pts. 38.5% (5.3) pt
Slide 11: Gross Margin & Operating Margin
GROSS MARGIN & OPERATING MARGIN GROSS MARGIN1 OPERATING MARGIN MOTORCYCLES SEGMENT ($ millions) MOTORCYCLES SEGMENT ($ millions) Q2 YTD Q2 YTD 2019 Gross Margin $454.7 $802.2 2019 Operating Income $180.7 $289.1 % of revenue 31.7% 30.5% % of revenue 12.6% 11.0% - Volume (256.0) (290.9) - Gross Margin
Slide 12: Financial Services Segment
FINANCIAL SERVICES SEGMENT OPERATING INCOME FINANCIAL SERVICES SEGMENT ($ millions) Q2 YTD 2019 Operating Income $75.5 $134.2 - Net interest income (8.3) 1.7 - Provision for retail loan losses (66.5) (104.1) - Provision for wholesale loan losses 1.7 (5.6) 1 - Operating expenses 6.4 6.0 - All other (
Slide 13: HDFS Operations and Liquidity
FINANCIAL SERVICES SEGMENT HDFS OPERATIONS AND LIQUIDITY OPERATIONS LIQUIDITY ($ millions) Originations End of Q2 2020 New and used H-D retail motorcycle loans Cash & equivalents $3,410.2 Q2 $935.6M (10.1)% vs. Q2 ’19 YTD $1.55B (10.4)% vs. YTD ’19 Availability Approximately 80%-85% prime Bank Credi
Slide 14: HDFS Retail Motorcycle Loan Performance
FINANCIAL SERVICES SEGMENT HDFS RETAIL MOTORCYCLE LOAN PERFORMANCE FINANCIAL SERVICES SEGMENT 6% Q2 30+ Day Delinquencies 4.65% 4.97% 4.50% 4.36% 5% 3.53% 4% 3.16% 3.25% 3.09% 3.33% 2.68% 2.75% 2.68% 2.71% 3% 1.75% 2% 1% '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 3% 2.69% Annualized Q2
Slide 15: Harley-Davidson, Inc. Consolidated Results
HARLEY-DAVIDSON, INC. 2020 HARLEY-DAVIDSON, INC. vs. Prior Year Cash & cash equivalents - $3.86 billion vs. $924.6 million at the end of Q2 Operating cash flow – $610.2 million vs. $496.2 million YTD Consolidated – Motorcycles and Related Products and Financial Services Segments Capital expend
Slide 16: 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 3-Yr. Avg. Free Cash Conversion(1)(2) Flow Margin(1)(2) 3-Yr. Avg. Cumulative Capital Return / 3-Yr. Avg. ROIC Market and ROE(1)(2) Capitalization(1)(
Slide 17: Shareholder Returns
SHAREHOLDER RETURNS DIVIDENDS SHARE REPURCHASES X Q2 Dividends Per Share Q2 Discretionary Share Repurchases Consolidated – Motorcycles and Related Products and Financial Services Segments Q2 dividend of $0.02 per share Suspended share repurchase program in Q2 2020 Board of Directors also approved
Slide 18: Guidance
GUIDANCE 2020 EXPECTATIONS $X.XX billion to $X.XX billion Revenue (QX: $X.XX billion to $X.XX billion) Motorcycles and Gross margin % Up year-over-year Related Products Due Asto uncertainty a result surrounding of the uncertainty Up year-over-year segment SG&A the magnitude (Upsurrounding theand as
Slide 19: 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 20: Reconciliation of GAAP to Non-GAAP Amounts
RECONCILIATION OF GAAP TO NON-GAAP AMOUNTS This presentation contains non-GAAP measures related to net (loss) income and diluted (loss) earnings per share that exclude restructuring plan costs and the impact of recent EU and China tariffs. Reconciliations of GAAP amounts to non-GAAP amounts are incl
Slide 21: 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 22: 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