Harley-davidson, Inc. · NYSE:HOG
Harley-davidson — Q2 2023 Earnings Presentation
23 slides from Harley-davidson's earnings presentation, Jul 27, 2023
Slide 1: Q2 2023 Results
Q2 2023 Results Thursday, July 27, 2023
Slide 2: Call Participants
Q2 2023 RESULTS – 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: Q2 2023 Results – Performance Headlines
Q2 2023 RESULTS – PERFORMANCE HEADLINES ▪ Strategy remains grounded in desirability and profitability ▪ 120th Anniversary events in Budapest and Milwaukee reinforced overall brand strength ▪ Introduced two new CVO motorcycles, as well as new models in the Enthusiast and Icons collections ▪ HDMC Gros
Slide 4: 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 4
Slide 5: Consolidated – Q2 2023 Results
CONSOLIDATED – Q2 2023 RESULTS Q2 2023 Results1 Total ($ millions, except earnings per share) HDMC HDFS LiveWire HDI Revenue $1,198 $240 $7 $1,446 % vs PY -4% +19% -44% -2% Operating Income (Loss) $194 $59 ($32) $221 Margin % 16.2% 24.5% NM 15.3% % vs PY -8% -31% NM -20% Net Income Attributable to H
Slide 6: Consolidated – YTD 2023 Results
CONSOLIDATED – YTD 2023 RESULTS Q2 2023 Results1 Total ($ millions, except earnings per share) HDMC HDFS LiveWire HDI Revenue $2,756 $463 $15 $3,234 % vs PY +8% +17% -35% +9% Operating Income (Loss) $530 $117 ($57) $591 Margin % 19.2% 25.3% NM 18.3% % vs PY +23% -32% NM +4% Net Income Attributable t
Slide 7: 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 Q2 YTD 2023 North America +1% -7% -28% vs. Q2 ‘19 EMEA -6% -6% 73 Asia Pacific +2
Slide 8: HDMC Revenue Bridge
HDMC REVENUE BRIDGE Excludes LiveWire Results Q2 HDMC Revenue Bridge1 4% 2% -1% -4% -10% Volume Pricing Mix FX Total YTD HDMC Revenue Bridge1 6% 8% 1% 2% -1% Volume Pricing Mix FX Total 1 Q2 HDMC Revenue Bridge compares Q2 2023 results to Q2 2022 results on a year-over-year basis; YTD HDMC Revenue B
Slide 9: Q2 2023: HDMC Operating Income Margin
Q2 2023: HDMC OPERATING INCOME MARGIN Excludes LiveWire Results for 2021-20231,2 Operating Income Margin3,4 Q2 2022 Op Income Margin 16.8% $211M Volume -1.9 Pts ($43M) 16.8% 16.2% 15.3% FX -0.9 Pts ($13M) 12.6% Motorcycle Mix +0.8 Pts $14M Pricing +3.6 Pts $51M Supply Chain Costs +1.7 Pts $21M Opera
Slide 10: YTD 2023: HDMC Operating Income Margin
YTD 2023: HDMC OPERATING INCOME MARGIN Excludes LiveWire Results for 2021-20231,2 Operating Income Margin3,4 YTD 2022 Op Income Margin 16.9% $430M 19.2% 17.4% 16.9% Volume -0.1 Pts $1M FX -1.0 Pts ($35M) 11.0% Motorcycle Mix +1.2 Pts $42M Pricing +4.5 Pts $154M Supply Chain Costs +0.6 Pts $18M Opera
Slide 11: HDFS Segment: Q2 2023 Results
HDFS SEGMENT: Q2 2023 RESULTS Summary Financials Q2 +/- % vs. PY ($ millions) 2023 PY Revenue $240 +$38 +19% Interest Expense $86 +$38 +80% Provision for Credit Losses $57 +$28 +97% Operating Expense $38 ($1) -5% Total Expenses $181 +$65 +55% Operating Income $59 ($27) -31% Margin % 24.5% 11
Slide 12: HDFS Segment: YTD 2023 Results
HDFS SEGMENT: YTD 2023 RESULTS Summary Financials YTD +/- % vs. PY ($ millions) 2023 PY Revenue $463 +$69 +17% Interest Expense $160 +$70 +78% Provision for Credit Losses $110 +$52 +89% Operating Expense $76 +$2 +3% Total Expenses $346 +$124 +56% Operating Income $117 ($55) -32% Margin % 25.3% 12
Slide 13: HDFS Segment Performance
HDFS SEGMENT PERFORMANCE Realized Retail Credit Losses1, 2 Retail Finance Receivables & Allowance Annual (FY) / Annualized (Q) Receivables ($ mm) Allowance Percentage 5.9% 5.1% 5.1% 5.3% 5.0% 4.4% $7.0 $6.7 $6.7 2.6% $6.5 $6.4 $6.3 2.0% 1.9% 1.4% 1.2% FY '19 FY '20 FY '21 FY '22 Q2 '23 CECL Q4 '20 Q
Slide 14: HDFS Funding Status
HDFS FUNDING STATUS HDFS Funding and Liquidity Position – as of end of Q2 2023 ▪ Completed three transactions in 2023: o $550M ABS in February o $700M 5-year MTN in March1 o €700M 3-year MTN in April (or $760M) ▪ HDFS is ahead of its funding plan for 2023 ▪ HDFS liquidity of $2.4B above 12-month thr
Slide 15: LiveWire Segment: Q2 2023 Results & Highlights
LIVEWIRE SEGMENT: Q2 2023 RESULTS & HIGHLIGHTS1 ▪ Completing final activities for expected start of $ millions production of Del Mar motorcycle in Q3 Actual Units Q2 2022 Q2 2023 % vs PY ▪ Continued product development on third motorcycle in LiveWire family (second on the S2 Motorcycle Units 225 33
Slide 16: Consolidated – YTD 2023 Results
CONSOLIDATED – YTD 2023 RESULTS HDI Operating Cash Flow ($ millions) – YTD ‘23 HDI Financial Metrics – YTD ‘23 ▪ Capital Investments1 – $93 million $411 ▪ Dividends Paid – $48 million ▪ Discretionary Shares Repurchased – $156 million $244 (4.1 million shares) ▪ Effective Tax Rate – 24% ▪ Cash & Cash
Slide 17: 2023 Harley-Davidson, Inc. Guidance
2023 HARLEY-DAVIDSON, INC. GUIDANCE Now Expect: Continue to Expect: Now Expect: HDMC HDFS LiveWire Revenue Growth Operating Income Y-o-Y LiveWire Units Flat to +3% Down 20 to 25% 600 - 1,000 Operating Income Margin Operating Loss +13.9 to 14.3% ($115M) to ($125M) Continue to Expect: Harley Davidson,
Slide 18: Expect HDMC Unit Profitability to Return to Historically Healthy Levels
EXPECT HDMC UNIT PROFITABILITY TO RETURN TO HISTORICALLY HEALTHY LEVELS Excludes LiveWire Results for 2020-2023 HDMC Unit Profitability1,2,3 Key Drivers Since 2019: • ~23,000 fewer Wholesale units driven by strategic ~$3,700/Unit ~$3,500/Unit market exits and model pruning • Improved profitability t
Slide 19: Supply Chain Outlook
SUPPLY CHAIN OUTLOOK 2021 – 2023 Cost Inflation: Actual / Realized 2021 Cost of Sales 2021 2022 1H 2023 2023 $3.2B 2023 Annual Outlook Actual Actual Actual Outlook Tariffs, Duties, Other Declining ocean freight offset by Logistics > +100% +12% -4% Flat to -2% warehouse & labor increases Manufacturin
Slide 20: Appendix: Supplemental Information
APPENDIX: SUPPLEMENTAL INFORMATION 20
Slide 21: 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 22: 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 23: 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