Harley-davidson, Inc. · NYSE:HOG
Harley-davidson — Q4 2023 Earnings Presentation
22 slides from Harley-davidson's earnings presentation, Feb 8, 2024
Slide 1: Q4 and Full Year 2023 Results & 2024 Outlook
Q4 and Full Year 2023 Results & 2024 Outlook Thursday, February 8, 2024
Slide 2: Call Participants
Q4 & FULL YEAR 2023 RESULTS & 2024 OUTLOOK – EARNINGS CALL Call Participants ▪ Jochen Zeitz, Chairman, President and CEO ▪ Jonathan Root, Chief Financial Officer ▪ Edel O’Sullivan, Chief Commercial Officer ▪ Karim Donnez, CEO – LiveWire (NYSE: LVWR) ▪ Shawn Collins, Director Investor Relations 2
Slide 3: Hardwire Stage II Pillars
HARDWIRE STAGE II PILLARS 1 2 3 Profit Selective Lead in Focus Expansion & Electric Redefinition 4 5 6 Growth Integrated Inclusive Beyond Customer Stakeholder Bikes Experience Management 3
Slide 4: 2023 Performance Headlines
2023 PERFORMANCE HEADLINES ▪ Delivered diluted EPS of $4.87 ▪ Achieved 13.6% operating margin at HDMC ▪ HDMC unit profitability returned to historically healthy levels ▪ HDMC global motorcycle shipments of 179,984, down 7% ▪ HDFS operating income finished down 26% ▪ LiveWire launched Del Mar electri
Slide 5: Consolidated – Q4 2023 Results
CONSOLIDATED – Q4 2023 RESULTS Q4 2023 Results1 Total ($ millions, except earnings per share) HDMC HDFS LiveWire HDI Revenue $792 $246 $15 $1,053 % vs PY -14% +15% +67% -8% Operating Income (Loss) ($44) $58 ($35) ($21) Margin % -5.6% 23.5% NM -2.0% % vs PY NM -10% NM NM Net Income Attributable to HD
Slide 6: Consolidated – Full Year 2023 Results
CONSOLIDATED – FULL YEAR 2023 RESULTS FY 2023 Results1 Total ($ millions, except earnings per share) HDMC HDFS LiveWire HDI Revenue $4,845 $954 $38 $5,836 % vs PY -1% +16% -18% +1% Operating Income (Loss) $661 $235 ($117) $779 Margin % 13.6% 24.6% NM 13.3% % vs PY -2% -26% NM -14% Net Income Attribu
Slide 7: Worldwide Retail Sales and Inventory
WORLDWIDE RETAIL SALES AND INVENTORY Excludes LiveWire Units Retail Sales Dealer Inventory Units Retail Motorcycle Sales of H-D Motorcycles (vs. PY) Worldwide Harley-Davidson Dealer Inventory Units (Thousands)2,3 Q4 FY 2023 North America -9% -10% EMEA -22% -11% -18% vs. Q4 ‘19 Asia Pacific -10% -3%
Slide 8: HDMC Revenue Bridge
HDMC REVENUE BRIDGE Excludes LiveWire Results Q4 HDMC Revenue Bridge1 7% 1% -7% -14% -14% 2 Volume Pricing Mix FX Total FY 2023 HDMC Revenue Bridge1 3% 4% -1% -1% -7% 2 Volume Pricing Mix FX Total 1 "Q4 HDMC Revenue Bridge” compares Q4 ‘23 revenue to Q4 ‘22 revenue on a year-over-year basis; “FY 202
Slide 9: FY 2023: HDMC Operating Income Margin
FY 2023: HDMC OPERATING INCOME MARGIN Excludes LiveWire Results1,2 Operating Income Margin3,4,5 FY 2022 Op Income Margin $677 mm 13.9% 13.9% 13.6% Volume ($131) -1.8 Pts FX ($54) -1.0 Pts 10.6% Motorcycle Mix $133 +2.3 Pts 7.6% Pricing $139 +2.4 Pts Supply Chain Costs ($48) -1.0 Pts Operating Expens
Slide 10: HDFS Segment: Q4 2023 Results
HDFS SEGMENT: Q4 2023 RESULTS Summary Financials Q4 +/- % vs. PY ($ millions) 2023 PY Revenue $246 +$32 +15% Interest Expense $89 +$22 +32% Provision for Credit Losses $57 +$6 +12% Operating Expense $43 +$10 +32% Total Expenses $188 +$38 +25% Operating Income $58 ($6) -10% Margin % 23.5% 10
Slide 11: HDFS Segment: Full Year 2023 Results
HDFS SEGMENT: FULL YEAR 2023 RESULTS Summary Financials FY +/- % vs. PY ($ millions) 2023 PY Revenue $954 +$133 +16% Interest Expense $332 +$115 +53% Provision for Credit Losses $227 +$82 +57% Operating Expense $159 +$19 +14% Total Expenses $719 +$216 +43% Operating Income $235 ($83) -26% Margin % 2
Slide 12: HDFS Segment Performance
HDFS SEGMENT PERFORMANCE Realized Retail Credit Losses1, 2 Retail Finance Receivables & Allowance Annual (FY) Receivables ($B) Allowance Percentage 5.9% 5.4% 5.4% 5.0% 5.1% 3.0% 4.4% $7.0 $6.8 $6.7 $6.5 $6.4 $6.3 2.0% 1.9% 1.4% 1.2% FY '19 FY '20 FY '21 FY '22 FY '23 CECL Q4 '20 Q4 '21 Q4 '22 Q3 '23
Slide 13: HDFS Funding Status
HDFS FUNDING STATUS HDFS Funding and Liquidity Position – FY 2023 ▪ Completed four capital markets transactions in 2023: o $550M ABS in February1 o $700M 5-year MTN in March2 o €700M 3-year MTN in April (or $760M) o $500M ABS in September ▪ Paid a $200M inter-company dividend to HDI in September ▪ L
Slide 14: LiveWire Segment: Q4 & Full Year 2023 Results
LIVEWIRE SEGMENT: Q4 & FULL YEAR 2023 RESULTS1 $ millions FY Full Year 2023 Actual Units Q4 22 Q4 23 FY 23 22 ▪ Unit sales2 of 660 electric motorcycles, up double digits Motorcycle 69 514 597 660 Units ▪ Operating loss in-line with our expectations LiveWire (units) ▪ Continued investment in bike mod
Slide 15: Consolidated – Full Year 2023 Results: Cash Flow
CONSOLIDATED – FULL YEAR 2023 RESULTS HDI Operating Cash Flow ($ millions) HDI Financial Metrics $755 ▪ Capital Investments1 – $219 million ▪ Dividends Paid – $96 million $548 ▪ Shares Repurchased on Discretionary Basis – $350 million (10.2 million shares) ▪ Effective Tax Rate – 20% ▪ Cash & Cash Eq
Slide 16: Capital Allocation – Share Buybacks / Dividends in 2022 & 2023
CAPITAL ALLOCATION – SHARE BUYBACKS / DIVIDENDS IN 2022 & 2023 $674 Million in Share Buybacks2 18.6 mm Shares Repurchased or 12% of Shares Outstanding 1,2 10.2 mm $350 mm $324 mm 8.4 mm FY 2022 FY 2023 FY 2022 FY 2023 $189 Million of Capital in Dividends paid to common shareholders in 2022 & 2023 1
Slide 17: 2024 Harley-Davidson, Inc. Guidance
2024 HARLEY-DAVIDSON, INC. GUIDANCE HDMC HDFS LiveWire Revenue Operating Income Y-o-Y LiveWire Units1 Flat to down 9% Flat to up 5% 1,000 - 1,500 Operating Income Margin Operating Loss 12.6% to 13.6% ($115M) to ($125M) Harley Davidson, Inc. Capital Investment $225M – $250M 17 1Unit sales comprises b
Slide 18: Appendix: Supplemental Information
APPENDIX: SUPPLEMENTAL INFORMATION 18
Slide 19: HDMC Unit Profitability Returned to Historically Healthy Levels
HDMC UNIT PROFITABILITY RETURNED TO HISTORICALLY HEALTHY LEVELS Excludes LiveWire Results for 2020-2023 HDMC Unit Profitability1,2,3 Key Drivers Since 2019: • ~23,000 fewer Wholesale ~$3,700/Unit ~$3,700/Unit units driven by strategic ~$3,500/Unit market exits and model pruning ~$2,500/Unit • Improv
Slide 20: Harley-Davidson Financial Reporting: Three Segments
HARLEY-DAVIDSON FINANCIAL REPORTING: THREE SEGMENTS1 New in Q4 Fiscal Year 2022 HDMC HDFS LiveWire Harley-Davidson Harley-Davidson LiveWire Motor Company2 Financial Services3 Group, Inc.4 Harley-Davidson Motorcycles, Financing for LiveWire Motorcycles, P&A, Apparel & Licensing Both HDMC and LiveWire
Slide 21: Forward Looking Statements
FORWARD LOOKING STATEMENTS Cautionary Note Regarding Forward-Looking Statements The Company intends that certain matters discussed in this presentation are “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act
Slide 22: Forward Looking Statements Continued
FORWARD LOOKING STATEMENTS CONTINUED In recent years, Harley-Davidson Financial Services (HDFS) experienced historically low levels of retail credit losses, but credit losses have been normalizing to higher levels in recent quarters. Further, the Company believes that HDFS's retail credit losses wil