Harley-davidson, Inc. · NYSE:HOG
Harley-davidson — Q1 2023 Earnings Presentation
20 slides from Harley-davidson's earnings presentation, Apr 27, 2023
Slide 1: Q1 2023 Results
Q1 2023 Results Thursday, April 27, 2023
Slide 2: Call Participants
Q1 2023 RESULTS – EARNINGS CALL Call Participants ▪ Jochen Zeitz, Chairman, President and CEO ▪ Gina Goetter, Chief Financial Officer ▪ David Viney, Interim Chief Financial Officer1 ▪ Edel O’Sullivan, Chief Commercial Officer ▪ Ryan Morrissey, President – LiveWire (NYSE: ‘LVWR’) ▪ Shawn Collins, Dir
Slide 3: Q1 2023 Results – Performance Headlines
Q1 2023 RESULTS – PERFORMANCE HEADLINES ▪ Delivered diluted EPS of $2.04 or +41% versus prior year ▪ Strategy remains grounded in desirability and profitability ▪ HDMC revenue growth behind strong wholesale shipments, unit mix and price realization ▪ Significant margin growth as a result of pricing,
Slide 4: Hardwire Stage II Pillars
HARDWIRE STAGE II PILLARS 1 2 3 Profit Selective Lead in Focus Expansion & Electric Redefinition 4 5 6 Growth Integrated Inclusive Beyond Customer Stakeholder Bikes Experience Management 4
Slide 5: Harley-Davidson Financial Reporting: Three Segments
HARLEY-DAVIDSON FINANCIAL REPORTING: THREE SEGMENTS1 New in Q4 Fiscal Year 2022 HDMC HDFS LiveWire Harley-Davidson Harley-Davidson LiveWire Motor Company2 Financial Services3 Group, Inc.4 Harley-Davidson Motorcycles, Financing for LiveWire Motorcycles, P&A, Apparel & Licensing Both HDMC and LiveWire
Slide 6: Consolidated – Q1 2023 Results
CONSOLIDATED – Q1 2023 RESULTS Q1 2023 Results 1,2,3,4 Total ($ millions, except earnings per share) HDMC HDFS LiveWire HDI Revenue $1,558 $223 $8 $1,789 % vs PY +21% +16% -25% +20% Operating Income (Loss) $336 $58 ($25) $370 Margin % 21.6% 26.2% NM 20.7% % vs PY +53% -32% NM 28% Total HDI Net Incom
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 Q1 ’22 Q1 ’23 North America -4% -17% -33% vs. Q1 ‘20 EMEA +28% -6% 67 Asia Pacifi
Slide 8: Q1 2023: HDMC Revenue Bridge
Q1 2023: HDMC REVENUE BRIDGE Excludes LiveWire Results 21% 12% 8% 3% -2% Volume Pricing Mix FX HDMC Wholesale Unit Growth, Global Pricing and Favorable Unit Mix Drove Double Digit Topline Growth 8
Slide 9: Q1 2023: HDMC Operating Income Margin
Q1 2023: HDMC OPERATING INCOME MARGIN Excludes LiveWire Results for 2021-20231,2 Operating Income Margin3,4 Q1 2022 Op Income Margin 16.9% $219M 21.6% 19.8% 16.9% Volume +1.3 Pts $44M FX -1.0 Pts ($22M) 7.7% Motorcycle Mix +1.5 Pts $29M Pricing +5.3 Pts $104M Supply Chain Costs -0.3 Pts ($5M) Operat
Slide 10: HDFS Segment: Q1 2023 Results
HDFS SEGMENT: Q1 2023 RESULTS Summary Financials Q1 +/- % vs. PY ($ millions) 2023 PY Revenue $223 +$31 +16% Interest Expense $74 +$31 +75% Provision for Credit Losses $52 +$24 +82% Operating Expense $39 +$4 +12% Total Expenses $165 +$59 +56% Operating Income $58 -$28 -32% Margin % 26.2% 10
Slide 11: HDFS Segment Performance
HDFS SEGMENT PERFORMANCE Realized Retail Credit Losses 1,2 Retail Finance Receivables & Allowance Annual(FY) / Annualized(Q) Receivables ($ mm) Allowance Percentage 3.2% 5.9% 5.0% 5.1% 5.1% Average annual loss rate ~1.9% 4.4% $6.7 $6.7 $6.5 $6.4 2.0% $6.3 1.9% 1.8% 1.9% 1.8% 1.4% 1.2% FY '16 FY '17
Slide 12: HDFS Credit Loss Seasonality & Current Funding Status
HDFS CREDIT LOSS SEASONALITY & CURRENT FUNDING STATUS Historically Highest Loss Rate in Q1 HDFS Funding and Liquidity Position And Has Moderated During Riding Season1 5-Year Average Historical Quarterly Loss Rate ▪ Completed three transactions in 2023: 1.98% o $550M ABS in February 1.75% o $700M 5-y
Slide 13: LiveWire Segment: Q1 2023 Results and Expectations
LIVEWIRE SEGMENT: Q1 2023 RESULTS AND EXPECTATIONS1 $ millions Q1 2022 Q1 2023 % vs PY Actual Units ▪ Continued development of the S2 platform with Del Mar first deliveries targeted for Q3 2023 Motorcycle Units2 97 63 -35% ▪ On track to expand distribution in 2023 in Europe with 34 contracted partne
Slide 14: Consolidated Q1 2023 Results
CONSOLIDATED Q1 2023 RESULTS HDI Operating Cash Flow ($ millions) Q1 2023 HDI Financial Metrics ▪ Capital Investments1 – $49 million $139 ▪ Dividends Paid – $24 million ▪ Discretionary Shares Repurchased – $84 million (2.0 million shares) ▪ Effective Tax Rate – 23% $47 ▪ Cash & Cash Equivalents2 – $
Slide 15: Reaffirming 2023 Guidance
2023 HARLEY-DAVIDSON, INC. REAFFIRMING 2023 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 15
Slide 16: Appendix: Supplemental Information
APPENDIX: SUPPLEMENTAL INFORMATION 16
Slide 17: HDMC Unit Profitability Expected to Return to Historically Healthy Levels
HDMC UNIT PROFITABILITY EXPECTED TO RETURN TO HISTORICALLY HEALTHY LEVELS Excludes LiveWire Results for 2020-2023 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
Slide 18: Supply Chain Outlook
SUPPLY CHAIN OUTLOOK 2021 – 2023 Cost Inflation: Actual / Realized 2021 Cost of Sales 2021 2022 Q1 2023 2023 $3.2B 2023 Annual Outlook Actual Actual Actual Outlook Tariffs, Duties, Other Declining ocean freight offset by Logistics > +100% +12% -5% +0-2% warehouse & labor increases Manufacturing +3%
Slide 19: 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 20: Forward Looking Statements Continued
FORWARD LOOKING STATEMENTS CONTINUED (aa) manage through the effects inconsistent and unpredictable weather patterns may have on retail sales of motorcycles; (bb) implement and manage enterprise-wide information technology systems, including systems at its manufacturing facilities; (cc) manage chang