Harley-davidson, Inc. · NYSE:HOG
Harley-davidson — Q4 2022 Earnings Presentation
21 slides from Harley-davidson's earnings presentation, Feb 2, 2023
Slide 1: Q4 and Full Year 2022 Results & 2023 Outlook
Q4 and Full Year 2022 Results & 2023 Outlook Thursday, February 2, 2023
Slide 2: Call Participants
Q4 & FULL YEAR 2022 RESULTS & 2023 OUTLOOK – EARNINGS CALL Call Participants ▪ Jochen Zeitz, Chairman, President and CEO ▪ Gina Goetter, Chief Financial Officer ▪ Edel O’Sullivan, Chief Commercial Officer ▪ Ryan Morrissey, President – LiveWire (NYSE: ‘LVWR’) ▪ Shawn Collins, Director Investor Relati
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: Performance Headlines
PERFORMANCE HEADLINES ▪ Delivered full year 2022 diluted EPS of $4.96, +18% versus prior year ▪ HDMC revenue growth of +9% behind increased wholesale units and pricing ▪ Achieved 12% combined operating margin for HDMC and LiveWire, an increase of 3 points vs. prior year, through global pricing & cos
Slide 5: Harley-Davidson Financial Reporting: Three Segments
HARLEY-DAVIDSON FINANCIAL REPORTING: THREE SEGMENTS1 HDMC HDFS LiveWire Harley-Davidson Harley-Davidson LiveWire Motor Company2 Financial Services3 Group, Inc.4 Harley-Davidson Motorcycles, Financing for LiveWire Motorcycles, P&A, Apparel & Licensing Both HDMC and LiveWire STACYC HARLEY-DAVIDSON, IN
Slide 6: Consolidated – Q4 2022 Results
CONSOLIDATED – Q4 2022 RESULTS Q4 2022 Results 1,2,3,4 Total ($ millions, except earnings per share) HDMC HDFS LiveWire HDI Revenue $919 $214 $9 $1,142 % vs PY +14% +7% -28% +12% Operating Income (Loss) -$32 $64 -$29 $4 Margin % -3.5% 30.0% NM NM % vs PY +61% -32% NM NM Total HDI Net Income $42 Marg
Slide 7: Consolidated – Full Year 2022 Results
CONSOLIDATED – FULL YEAR 2022 RESULTS FY 2022 Results 1,2,3,4 Total ($ millions, except earnings per share) HDMC HDFS LiveWire HDI Revenue $4,888 $821 $47 $5,755 % vs PY +9% +3% +31% +8% Operating Income (Loss) $677 $318 -$85 $909 Margin % 13.9% 38.7% NM 15.8% % vs PY +42% -23% NM +10% Total HDI Net
Slide 8: Worldwide Retail Sales and Inventory
WORLDWIDE RETAIL SALES AND INVENTORY Excludes LiveWire Units Retail Sales Average Dealer Inventory Units Retail Motorcycle Sales of H-D Motorcycles (vs. PY) Worldwide Harley-Davidson Dealer Inventory Units (Thousands)2 Q4 ‘22 FY ’22 North America -2% -12% -39% vs. Q4 ‘19 EMEA +1% -1% 60 Asia Pacific
Slide 9: Revenue Bridge
REVENUE BRIDGE1,2,3 Q4 2022 HDMC + LiveWire Revenue 14% 14% 10% 9% 0% -5% Volume Pricing Mix FX HDMC HDMC + LW FY 2022 HDMC + LiveWire Revenue 7% 9% 9% 3% 1% -3% Volume Pricing Mix FX HDMC HDMC + LW 1 LiveWire results had previously been included in HDMC results 2 HDMC historical results have been u
Slide 10: FY 2022: HDMC + LiveWire Operating Income Margin
FY 2022: HDMC + LIVEWIRE OPERATING INCOME MARGIN Includes LiveWire Results1 Operating Income Margin2,3 FY 2021 Op Income Margin 9.0% $409M 12.0% Volume +1.0 Pts $64M 9.0% FX -0.8 Pts -$66M 6.3% Motorcycle Mix -0.1 Pts $1M Pricing +5.8 Pts $330M Supply Chain Costs -1.9 Pts -$95M Operating Expenses -1
Slide 11: FY 2022: HDMC Operating Income Margin
FY 2022: HDMC OPERATING INCOME MARGIN Excludes LiveWire Results1,2 Operating Income Margin3,4 FY 2021 Op Income Margin 10.6% $477M 13.9% Volume +0.9 Pts $58M 10.6% 7.6% FX -0.8 Pts -$66M Motorcycle Mix -0.1 Pts $1M Pricing +5.8 Pts $330M Supply Chain Costs -1.9 Pts -$95M -3.4% Operating Expenses -0.
Slide 12: HDFS Segment: Q4 2022 Results
HDFS SEGMENT: Q4 2022 RESULTS Summary Financials Q4 +/- % vs. PY ($ millions) 2022 PY Revenue $214 +$14 +7% Interest Expense $67 +$23 +53% Provision for Credit Losses $51 +$30 +151% Operating Expense $32 -$9 -22% Total Expenses $150 +$45 +43% Operating Income $64 -$31 -32% Margin % 30.0% 12
Slide 13: HDFS Segment: Full Year 2022 Results
HDFS SEGMENT: FULL YEAR 2022 RESULTS Summary Financials Full Year +/- % vs. PY ($ millions) 2022 PY Revenue $821 +$25 +3% Interest Expense $218 +$25 +13% Provision for Credit Losses $145 +$120 NM1 Operating Expense $140 -$23 -14% Total Expenses $503 +$122 +32% Operating Income $318 -$97 -23% Margin
Slide 14: HDFS Segment Performance
HDFS SEGMENT PERFORMANCE Realized Retail Credit Losses1,2,3 Retail Finance Receivables & Allowance Annual (FY) Receivables ($ mm) Allowance Percentage Average annual loss rate 1.9% 5.9% 1.9% 1.9% 5.0% 5.0% 5.1% 2.0% 1.8% 4.4% $6.9 1.8% $6.7 1.4% $6.5 $6.4 $6.3 1.2% FY '16 FY '17 FY '18 FY '19 FY '20
Slide 15: Consolidated Full Year 2022 Results
CONSOLIDATED FULL YEAR 2022 RESULTS HDI Operating Cash Flow ($ millions) Full Year 2022 HDI Financial Metrics ▪ Full Year Capital Investments1 – $180 million $976 ▪ Full Year Dividends Paid – $93 million ▪ Full Year Discretionary Shares Repurchased – $548 $324 million (8.4 million shares) ▪ Full Yea
Slide 16: 2023 Harley-Davidson, Inc. Guidance
2023 HARLEY-DAVIDSON, INC. GUIDANCE HDMC HDFS LiveWire Revenue Growth Operating Income Y-o-Y LiveWire Units +4 to 7% Down 20 to 25% 750 - 2,000 Operating Income Margin Operating Loss +14.1 to 14.6% ($115M) to ($125M) Harley Davidson, Inc. Capital Investment $225M – 250M 16
Slide 17: Supply Chain Outlook
SUPPLY CHAIN OUTLOOK 2021 – 2022 Cost Inflation: Actual / Realized 2021 Cost of Sales 2021 2022 2023 $3.2B Actual Actual Outlook 2023 Annual Outlook Tariffs, Duties, Other Declining ocean freight rates offset by >100% +12% +0-2% Logistics warehouse and labor cost increases Manufacturing +3% +5% +3-5
Slide 18: HDMC Unit Profitability Expected to Return to Historically Healthy Levels
HDMC UNIT PROFITABILITY EXPECTED TO RETURN TO HISTORICALLY HEALTHY LEVELS Excludes LiveWire Results – for 2020-2022 HDMC Unit Profitability1,2,3 Key Drivers Since 2019: ~$3,700/Unit • ~23,000 fewer Wholesale ~$3,500/Unit units driven by strategic market exits and model pruning • Improved profitabili
Slide 19: LiveWire 2022 Results and 2023 Outlook
LIVEWIRE 2022 RESULTS AND 2023 OUTLOOK • Completed the carve-out and stand-up of LiveWire as $ millions 2021A 2022A 2023E separate public company Actual Units • Nearly doubled the reach of the U.S. retail network to 75 contracted partner locations Motorcycle Units 461 597 750 – 2,000 • On track to l
Slide 20: Forward Looking Statements
FORWARD LOOKING STATEMENTS Cautionary Note Regarding Forward-Looking Statements The company intends that certain matters discussed in this presentation and our associated comments are “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Secur
Slide 21: Forward Looking Statements Continued
FORWARD LOOKING STATEMENTS CONTINUED The company’s ability to sell its motorcycles and related products and services and to meet its financial expectations also depends on the ability of the company’s dealers to sell its motorcycles and related products and services to retail customers. The company