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Thank you for standing by, and welcome to the Harley-Davidson 2023 Third Quarter Investor and Analyst Conference Call. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to Shawn Collins. Thank you. Please go ahead.

Thank you. Good morning. This is Shawn Collins, the Director of Investor Relations at Harley-Davidson. You can access the slides supporting today’s call on the Internet at the Harley-Davidson Investor Relations website. As you might expect, our comments will include forward-looking statements that are subject to business risks that could cause actual results to be materially different. Those risks include among others, matters we have noted in today’s earnings release and our latest filings with the SEC. With that, joining me this morning for the first part of the call are Harley-Davidson, Chief Executive Officer, Jochen

Thank you, Shawn, and good morning everyone. Thank you for joining us today for Harley-Davidson and LiveWire’s Q3 results. I will start with an overview of the HDMC business for the quarter. Karim will then provide commentary on LiveWire, and Jonathan will run out the financials for HDI including HDFS before we go into questions. As we closed out the third quarter of ‘23, it is clear that, the macroeconomic backdrop has been a challenge for our customers globally and in turn for our business with both inflationary pressures creating affordability challenges and high interest rates contributing to slower upgrade pipeline. We’ve continued to work through the effects of the unplanned production suspension in June and July, which impacted Q3 by delaying the availability of some of our high demand products, as well as altering our inventory mix, especially in North America. Given this complex environment, we continue to focus on the execution of our five-year strategic plan. Results for the quarter reflect a revenue decline of 9% at HDMC, partially offset by revenue growth of 15% at HDFS, contributing to an overall revenue decline of 6% for the quarter. This performance was driven by a 20% decline in wholesales due to the production suspension announced in late Q2, food [ph] and dealer inventory management, and market conditions in line with our latest guidance. This was partially offset by both higher pricing and mix. Q3 year-to-date, revenue for HDMC is up 2.1% despite the challenging conditions of the year. I want to provide a few more specifics behind these figures, taking into consideration both our Hardwire strategy as well as the realities of our sectors right now. Firstly, our Hardwire strategy prioritizes our stronghold categories of Touring, Softail, Trike, and CVO. The premium segment has been disproportionately impacted this year as affordability and discretionary spend have become more of a concern and as macroeconomic conditions have slowed down the upgrade cycle in these categories, particularly in a long-running platform like Rushmore and Touring. It’s important to note, however, that we continue to enjoy market-leading economics and more than 70% share in these highly desirable and profitable categories in North America. We believe that customer desire for a Harley Davidson Touring bike, the pinnacle of motorcycling remains undiminished despite the well-entrenched narratives to the contrary, and that both differentiation and a compelling value proposition can drive growth even in the challenging market. Secondly, our retail volume in North America in particular has been adversely affected by the sun setting of our legacy Sportster, which was a share builder in the Cruiser category. We believe our RevMAX platform introduced in ‘21 to be both unique and tech forward, and that the platform when positioned competitively has the potential for customer adoption to grow over time. Thirdly, we remain focused on managing inventory, our dealer channel to protect desirability and long-term profitability. Given overall market conditions, we’ve acted throughout the year to manage overall inventory levels within these constraints of manufacturing realities. It is important to note that the production suspension late in Q2 created challenges to our timing, mix, and distribution of inventory in the channel, which we also work to address throughout the quarter. It is also worth noting that as we finish ‘23 production at the end of last week, we believe current inventory and any remaining shipments for this year’s product will support retail volume throughout Q4 and early in ‘24. We also recognize that the market conditions where demand is more uneven requires us to operate at inventory levels that are higher than what we saw in ‘21 and ‘22. Lastly, we’ve increased our marketing and promotional spend to both support our loyal customers and dealers in a challenging environment and manage inventory mixed against our strategic objectives, particularly with product arriving later in the year. While this spend is higher than in both ‘21 and ‘22, it’s important to know that this investment is targeted, limited, and balanced across traffic driving and support for closing deals. We’ve seen this yield many learnings and better alignment with our dealer network. Despite the many challenges of the year, there are significant highlights to share. Firstly, our CVOs have been very well received in the market with sales in the category up 25% versus prior year, and demonstrating strong sell-through. Our dealers and customers are excited by the evolution this product demonstrated in the most exclusive category in our lineup. Secondly, both our combined Trike and Softail are also demonstrating retail growth up 12% for the year at the end of Q3. We’re actively expanding capacity for our Trike offering while driving more production to our hottest models with breakout in the Softail category being a good example of this. Both these examples demonstrate that even through difficult conditions, a compelling offer coupled with a strong value proposition can drive growth. Through the quarter, all global regions continued to show strong profitability driven by a strong focus on mix management and growth in our most profitable categories. This turnaround has contributed significantly to the bottom line for our business, and we believe this provides a solid platform for future profitable growth. As some of you have already noted, on October 3rd and 4th, we had an in-person dealer forum in Milwaukee for the leadership of our North American dealer network, the first of its kind, attended by roughly 80% of our dealer body in North America this event had three objectives: Firstly, to share exciting product developments with our dealer network; secondly, to build further alignment with our plans and investments designed to maximize impact in ’24; and thirdly, to get us all energized and prepared for what’s to come in ‘24. Over the course of 1.5 days our agenda spanned product introductions, growth and profitability planning, go to market alignment and updates on key initiatives like membership and loyalty. Feedback on the event has been overwhelmingly positive with over 90% of attendees satisfied with the information shared and the meeting overall, and with dealers highlighting the value of this session to ensure we are fully aligned as we enter the back half of our Hardwire strategy. As we’ve said before, we believe our dealer network is the strongest, most exclusive and most powerful dealer board in all of Powersports and remains a critical competitive advantage to drive growth, manage inventory and support our customer experience. Before I hand it over to Karim, Harley-Davidson remains committed to its Hardwired strategy with a focus on both profitability and desirability, and we will do everything possible to achieve our goals. That said, we are certainly realistic that current market conditions are challenging, but we’ll continue to focus on what we can control, including scrutinization of our OpEx and focusing on cost productivity gains.

Thank you, Jochen. Good morning, everyone. Q3 saw many important developments for LiveWire. As we continue to advance our product portfolio and build out our commercial footprint. Most importantly, we started production of the Del Mar at the Harley Davidson factory in York, Pennsylvania. This is an important milestone for LiveWire. After a multi-year investment in the S2 platform and the in-house development of the LiveWire battery pack, motor, power electronics, and software. We believe these investments have given us an industry leading technology and the capability to rapidly adapt and advance the S2 platform while reducing LiveWire’s dependency on third-party suppliers. Our early customers have now started to receive their Del Mar and the bikes are on the road in the US. Those riders that have experienced Del Mar are impressed by how the bike delivers on the LiveWire promise with outstanding specs and the more accessible price points. With production now ramping up, we expect to see increasing volumes in Q4 as we get more bikes to more customers. We recently announced European pricing for the Del Mar, confirmed delivery dates in Q1, 2024 and open reservations. Two weeks ago, we hosted media and influencers from across the European market at a Del Mar Press Event in Barcelona, building early momentum for the spring riding season. Our development teams are working hard to leverage the existing STACYC and LiveWire platforms to expand the Group’s portfolio and with more options to more riders. As we look to the end of the fiscal year, our cash investments are in line with our plan. We also expect to meet our most recent guidance based on demand and current daily production outputs. Thank you. And now I will hand it over to Jonathan.

Thank you, Karim. And good morning, everyone. The third quarter of 2023 is the fourth time under our new reporting structure with the three-business segment of HDMC, HDFS, and LiveWire. In Q3, global wholesale shipments decreased by 20% as Jochen referenced earlier, due to the production suspension announced in late Q2, prudent dealer inventory management, and market conditions in-line with our latest guidance. In addition, we comped a very strong growth quarter that was up 19% in 2022. From a Q3 revenue standpoint, improved global pricing and our continued focus on core motorcycle mix of Touring and Cruiser motorcycles, were able to partially offset the unit declines. This enabled us to turn in a consistent margin performance on a year-to-date basis. Turning to our financial results in the third quarter, total consolidated HDI revenue of $1.5 billion, was down 6% compared to last year. The breakdown was, at HDMC, revenue declined by 9%. At HDFS, revenue grew by 15%, and at LiveWire, revenue declined by 45%. Total consolidated HDI operating income was $209 million, which was $129 million lower than the prior year. The breakdown was, at HDMC, operating income of $175 million was 37% lower than the prior year. At HDFS, operating income of $59 million declined by 27% on a year-over-year basis, and at LiveWire, an operating loss of $25 million was in-line with our expectations. Third quarter earnings per share of $1.38 is down 22% as a result of the factors noted. As we look at our year-to-date results, total consolidated HDI revenue of $4.8 billion was up 4% compared to the same period last year. The breakdown of this was, at HDMC, revenue increased by 2%, at HDFS, revenue grew by 17%, and at LiveWire, revenue declined by 39%. Total consolidated HDI operating income was $800 million, which is $105 million lower than the prior year. The breakdown of this was; at HDMC, operating income of $705 million compares to $709 million in the prior year’s period, reflecting a strong operating margin of 17.4% in 2023 year-to-date. At HDFS, operating income of $177 million declined by 30%, and at LiveWire an operating loss of $82 million was in-line with our expectations. Year-to-date earnings per share of $4.65, compares to $4.68 last year. Global retail sales of new motorcycles were down 16% versus the prior year. In North America, Q3 retail sales declined by 15%, driven by the impact of a high-interest rate environment on consumer discretionary purchase decisions. In addition, the discontinuation of legacy Sportster bikes at the end of 2022 continues to have an adverse impact on non-core units’ sales. In EMEA, Q3 retail sales declined by 13% driven by the planned unit mix shift towards profitable core product segments. Core bikes now comprise 80% of sales up from 70% in 2022. In Q3, Touring bikes were up 10% versus prior year. In Asia Pacific, Q3 retail sales declined by 24% versus prior year, which is down sequentially relative to Q2 ‘23 when retail sales were up 24%. The weakness in Asia Pacific was primarily driven by weaker than expected demand in China, where the Chinese economy was softer than we had expected. In Latin America, Q3 retail sales declined by 11%, driven by weakness in Brazil that was partially offset by growth in Mexico. Beneath the surface of our Q3 retail results, we note that the production suspension that we experienced for several weeks in June and July of 2023 had an adverse impact on retail sales, particularly in the key North American market. It delayed deliveries in high-demand units to the end of Q3 rather than earlier in the season. It also created challenges in the distribution and mix of the inventory in the channel. This held back our preferred motorcycle mix versus what we had expected. On a year-over-year basis, average inventory in Q3 was up by more than 50% to broaden product availability compared to the exceptionally tight levels of 2021 and 2022. Dealer inventory continues to be down versus 2019 levels. We believe current dealer inventory plus remaining 2023 calendar year shipments will support the rest of Q4 and early Q1 of 2024. From a retail pricing standpoint, new Harley-Davidson motorcycle transaction prices in the U.S. year-to-date have been broadly in line with our desirability threshold of plus or minus two percentage points of MSRP. At the HDMC segment revenue declined by 9% due to lower wholesale units shipped in Q3. Wholesale units were down 20% in Q3. Looking at the HDMC revenue bridge and focusing on the key drivers for the quarter, 18 points of decline came from decreased volume at HDMC which was primarily driven by the previously mentioned decrease in wholesale motorcycle unit shipments. Three points of growth came from pricing through both global MSRP increases and pricing across the parts and accessories and apparel and licensing businesses. Mix contributed six points of growth as we continue to prioritize our most profitable models in markets. And finally, foreign exchange was flat in Q3. At HDMC, operating income of $175 million in Q3 was 6.1 points lower than prior year, driven by lower wholesale shipments and higher operating expenses. HDMC gross margin in Q3 was 31.7%, which compares to 34.4% in the prior year. The decline of 2.7 points or 270 basis points was driven by the negative impacts of lower volume, unfavorable manufacturing impacts, and foreign currency more than offsetting the positive impacts from pricing and shipment mix. We experienced more modest cost inflation, which was approximately 1% in Q3. On a year-over-year basis, the deceleration continued to be largely driven by logistics, including lower expedited shipping expenses and favorable ocean freight rates. Raw materials and metal markets have also continued to moderate. HDMC operating margin came in at 13.5% in Q3 from 19.6% in the prior year. The decrease was due to higher operating expense including higher people costs and marketing spend. For the year-to-date period at HDMC, operating income of $705 million compares to $709 million operating income in the prior period. HDMC operating margin of 17.4% in the year-to-date period is approximately 50 basis points lower than the prior period. This small decrease is due to the negative effects of volume, foreign currency, supply chain costs, and higher operating expense offset by the positive effects of higher pricing and improved mix. At Harley-Davidson Financial Services revenue increased by 15%, driven by higher finance receivables and higher interest income. HDFS operating income in Q3 was $59 million down 27% compared to last year. The Q3 decline was driven by higher borrowing costs as well as higher provision for credit losses due to realized credit losses and an increase in the credit reserve. In Q3 HDFS annualized retail credit loss ratio came in at 2.7%, which compares to 2.6% in Q2 of this year. During the quarter, losses followed their typical seasonality curve with performance in line with expectations. These levels compare to an annualized loss of 1.9% in full-year 2022. The increase in credit losses was driven by several factors relating to the current macroeconomic environment. In addition, the allowance for credit losses for the third quarter increased to 5.4%, up from 5.3% in Q2 and from 5.1% during fiscal 2022. Total retail loan originations in Q3 were down 15% while commercial lending receivables were up 39%, to $1.05 billion behind stronger product availability compared to prior year. Total quarter-end net financing receivables, including both retail loans and commercial lending receivables was $7.7 billion, which was up 4% versus prior year. Total interest expense in Q3 was up $23 million or up 38% versus prior year. The increase was driven by a higher cost of funds as lower interest rate debt matured and was replaced with current market rate debt. Through the end of Q3 we raised approximately $2.5 billion in the capital markets. Cash and committed bank and conduit facilities resulted in an HDFS liquidity position of $2.5 billion. We believe this has put HDFS in a very strong position from both a funding and liquidity perspective. For the LiveWire segment third quarter revenue decreased from $15 million to $8 million versus prior year due to the lower unit sales of LiveWire ONE electric motors cycles and STACYC electric balance bikes. During the third quarter of 2023, LiveWire began shipping Del Mar the first motorcycle on the company’s S2 platform. LiveWire operating loss of $25 million was in line with expectations and driven by planned development costs to advance EV systems activities around Del Mar and cost of standing up a new organization. Third quarter also saw a sequential decrease in LiveWire’s operating loss of $7 million as compared to the second quarter of 2023. Wrapping up with Harley-Davidson, Inc. financial results. Year to date, we delivered $707 million of operating cash flow, which was up $132 million from the prior year. The increase in operating cash flow was due to positive working capital activity driven by a larger decrease in inventory in the first nine months of 2023 versus the same period in 2022. Total cash and cash equivalents ended at $1.9 billion, which was $148 million higher than at the end of Q3 prior year. This consolidated cash number includes $200 million from LiveWire. Additionally, during the first nine months of 2023, as part of our capital allocation strategy, we bought back 6.1 million shares of our stock at a value of $226 million. As we look to the rest of 2023, we are reaffirming our most recent full-year guidance, which expects HDMC revenue growth of flat to plus 3%. HDMC operating income margin of 13.9% to14.3%. We continue to believe the anticipated positive impacts from pricing and our cost productivity efforts within supply chain will offset expected cost inflation and currency headwinds. At HDFS, we continue to expect operating income to decline by 20% to 25%. In Q3, we experienced higher realized credit losses than in Q2 as seasonality played out, as we had expected. We continue to stay focused on several actions underway to effectively manage the business in today’s credit environment, including increased investments behind collections, and stronger repossession efforts. And we continue to build other revenue sources, such as licensing and trademark revenue and insurance revenue, which continued to exceed that from the same period prior year. LiveWire continues to expect unit sales between 601,000 units and an operating loss range of $115 million to $125 million. This forecast incorporates the updated launch timing of the new Del Mar electric motorcycle. And lastly, for total HDI, we continue to expect capital investments of $225 million to $250 million, as we continue to invest behind product development and capability enhancements. During the first nine months of the year, we are seeing cost inflation generally in-line with our expectations and continue to expect in aggregate about one to two points of inflation for the full year of 2023, compared to 4% in 2022. Labor and warehousing costs continue to be the primary drivers of inflation, with deflation and moderation expected within logistics, freight, and raw materials. We now expect $70 million of cost productivity in 2023, as a result of the updated production environment. This is down from an estimate of $100 million at the end of Q2. For HDFS, we expect the operating income declines to moderate in the last quarter of the year, as we begin to comp the interest rate increases and normalizing losses that began in late 2022. As we look at capital allocations for the remainder of 2023, our priorities remain to fund growth of the Hardwire initiatives, which includes the capital expenditures mentioned previously, paying dividends, and executing discretionary share repurchases. In summary, we are pleased with the resiliency of our financial results, especially our margin performance despite a complex retail environment. And with that, I will turn it back to the operator to take your questions. Thank you.

Thank you. [Operator Instructions]. Thank you. Your first question comes from Craig Kennison from Baird. Please go ahead.

Hey, good morning. Thanks for taking my question. You know between retail sales and your HDFS portfolio, you have very good insight into the areas of stress the consumer is facing today. I’m just wondering how you would describe the U.S. consumer today at various income levels and credit tiers. And then what the key pages of your recession playbook might be if we indeed enter a recession in ‘24?

Craig, good morning. Thank you for your question. I think we see some of the elements that you are describing around consumer health show up in a couple of different metrics. We certainly in the first place see a lot of customers sitting on the sidelines, essentially just putting this level of a discretionary purchase to the side in 2023, which obviously for us, the business that is very much dependent upon an upgrade cycle of certain regularity is quite a meaningful impact. That I think is the first factor. We have understanding of that through market research of just customers sort of putting a purchase of this nature out of their mind in a year like 2023. Secondly, you see a lot of customers, maybe even those with high credit worthiness, looking at the level of the rates and saying, that having a certain amount of rate shock and saying, we are not going to pay those level of rates based also on many years and many decades of lower rates. So that is the second place where it shows up. And then the third level is potentially for our more credit challenged customers or customers at a different income level, potentially a little bit lower, just looking at the monthly payment that results, particularly when you consider a trade-in that might be worth a little bit less, given what was paid forward in ‘21 and ‘22. Not seeing the ability to really add to their monthly payment to manage an upgrade or a new motorcycle purchase. It’s just a limit of affordability within their month-to-month budget. So, it is prevalent in a couple of different places, just people sitting this year out, people not willing to pay those rates, and then just difficulty potentially in reaching the monthly payment. I’ll let Jonathan in a minute comment a little bit more on the health of the customer. But to your second point around our recession playbook, our recession playbook is very much rooted in our strategy, which is we intend to continue to defend and protect the most important and profitable categories for our business. Our stronghold categories of Touring ,Trike, CVO and Softail, as Jochen mentioned in his commentary, and even in a difficult year like this one, we have seen that where we have a stronger value proposition, product innovation, we see relatively stronger performance, so that intend to continue emphasizing innovation and development in those stronghold categories. We will continue to work with HDFS and with our dealers who are the best in the business, with the right tools to put in the market to be able to make each and every customer that is interested in a motorcycle be able to find the right combination of factors and the right bike for them, and continue to use other important aspects of our business, like used motorcycles like P&A and A&L to make sure that consumers are still flowing to the dealerships and still have the opportunity to engage with our brand, even in a recessionary environment.

Thank you.

And before Jonathan takes on, just in terms of recession playbook, obviously, we are going to take a hard look at OpEx and cost productivity. I think those are two areas where we have room for improvement given the developments in the market. And obviously, we know that in the last couple of years, cost productivity due to the inflationary pressures we’ve seen has declined. And that’s something we are taking a very hard look at in addition to OpEx, in order to be prepared for no matter what comes our way.

Okay. Thanks Jochen. And I’ll just add a couple of points. I think Edel covered this really nicely, but I think with where we are in consumer health, we are seeing a more stressed consumer. So as we reach out to the consumer from an HDFS perspective, they are working a little harder to balance payments across their portfolio than where they were. Certainly, when you look at the segments, there’s more tension in subprime than there is in prime. Across the HDFS business for a number of years, we’ve been reducing our exposure to the subprime side, so the portfolio has less subprime consumers in it than it has versus the last few years. To provide a little bit of color in terms of where we are in delinquency, we’re certainly seeing delinquency up a little bit versus the same period prior year. This is also demonstrated and disclosed on our page 13, where we walk through what we’re seeing from a credit loss standpoint as that kind of moves up. And then with that, we’ve taken some changes in the provision to make sure that we are covered from a future perspective. And then, just touching a little bit further on recession playbook, I think Jochen hit on a couple of really good thoughts, right. Making sure that we’re looking at the OpEx side of our business to ensure that we’re bringing out costs where we can. We’re not stopping there. We are continuing to go a little further and make sure that we are thinking about the cost of goods sold side and really diving in there to ensure that we can hit targets. And then the last piece I think is from a recession playbook perspective, when we look at HDFS and think about some of the nearer term actions that we can take. Obviously the portfolio that you have is the one that you work with. So from the standpoint of what we do day in and day out, it’s really about making sure that we have the appropriate collection staff in place, that we’re going after customers in a way that’s fair and helps bring them current. And then, we also look at kind of different technology tools that we can use to help our associates and help our customers, so reaching out to customers in different fashions. So rather than just in a telephone approach, we make sure that we can use texts, that we’re using email, that we’re really allowing customers to interact with us in ways that they want to. And then, last point that I’ll touch on, is that we do actually run our calls through an AI process to really look and make sure that we’re comfortable with the way that our collectors are interacting with consumers. So overall, I think a very good question. Something that we certainly feel like we’re managing, in line with the environment that we’re in, but again, good question, thank you so much.

Your next question comes from the line of Robby Ohmes from Bank of America. Please go ahead.

That’s very helpful. Thank you.

Your next question comes from the line of Joseph Altobello from Raymond James. Please go ahead.

Thanks. Good morning. Just want to follow-up on that last commentary regarding dealer inventory. You mentioned that they are elevated versus ‘21 and ‘22. And if my math is right, I have you guys at about 15 weeks on-hand. I think you ended last year around 10 weeks. So just so I am clear, it sounds like you are comfortable at that 15-week level overall, or do you think that number comes -- have to come down a little bit next year, somewhere between that 10-week and 15-week number?

We are, Joseph, comfortable with that number at this point. Obviously, we will have to see how the fourth quarter unfolds. But all the effects that Edel has mentioned, play into this and therefore from today’s perspective, we feel that the inventory level is okay.

Okay. Thank you.

Your next question comes from the line of James Hardiman from Citi. Please go ahead.

Good morning. Thanks for taking my call. So, I was hoping maybe we could bridge the gap between sort of where we are from a retail perspective and the guidance that I think we’re down about 9% year-to-date, which I’ve got to think is worse than where you previously thought it would be. And yet the HDMC guidance is still for flat to up 3%. So obviously pricing seems to be playing a role. You got a big benefit in the third quarter. But maybe help us bridge that gap for the year, and really more specifically, since you’ve already reported the first three quarters for the fourth quarter, I get to about flattish revenues implied for HDMC in the fourth quarter. I guess, how do you get there? What are you assuming for retail, ASP shipments, etc.?

Yes, thanks James. I think, look, we are not providing a retail guidance, and from a wholesale perspective I think you’ve done the math, right. What you should from a retail perspective bear in mind, and we’ve elaborated on that during the script is that actually more than 50% of the retail decline is attributed to the retirement of the sports store, right. So that has a significant effect and that will continue all the way until the sports is retired out, which is more or less at the end of the second quarter, and that’s in line with our strategy. So, bear that in mind when you look at retails and retail declines.

Yes, and I think the only piece that I would add on the – as we think about the business and it’s demonstrated in a year-to-date basis, is just the strength of what we have seen from a mix and a pricing perspective. So obviously, I know there’s often a focus out there in terms of unit units, units, and as we look at how we’re running the business, we are certainly working to make sure that we’re maintaining price advantage wherever we can.

That’s helpful. I’ll hop in the queue – back in the queue. Thanks guys.

I think James, as a little bit of additional context, when we compare things, right, often there’s a reference made to 2019, and besides the fact that it’s a completely different environment with many factors different today versus 2019, including obviously interest rates and consumer sentiment. Our HDMC profitability went from 9.1% to 17.4%, an 8.3% increase – percentage point increase. So that’s substantial, and I think it’s a testament even in this current environment that we are in – that the strategy is working and the profitability is there, and that’s on a year-to-date basis, but also applies to the third quarter, where we’ve seen an increase from 4.4% IO to 13.5% in comparison. So please bear that in mind, that’s a 9.1% increase in operating income percentage point. So, I think that’s also the context as Jonathan mentioned, you guys are focusing a lot on unit sales and everything else. I think profitability is something not to be disregarded.

Your next question comes from the line of Tristan Thomas Martin from BMO Capital Markets. Please go ahead.

Okay, thank you.

Your next question comes from the line of Noah

Hi. Thanks for taking my question. Just wondering if you could provide some color or help quantify the impact of the production suspension on 3Q shipments and how you think about the retail impact during the quarter there. Do you expect resumption of shipments to be a retail tailwind in the fourth quarter?

Well, if you look, as we mentioned in our speech that shipments have resumed, but they actually came in later than we had hoped for in the third quarter. So some of our most desirable products came in later in the third quarter, and that certainly has had some impact. To quantify, the impact on retail is quite difficult, so I’ll refrain from that. But the interruption has certainly messed up our mix a little bit and the shipment of our most desirable units and that impact we’ve certainly seen play out. Now, how much you can, how much of that you can pick up in the fourth quarter remains to be seen, but that’s obviously what we’re trying to achieve.

Very helpful. Maybe just one more and I know you’re not guiding to 2024, but as it relates to HDFS, I guess, how are you thinking about kind of a baseline for expected credit losses next year given higher rates? Thanks.

Yes, you’re welcome. So, good question. We’re actually not talking about 2024 or 2024 guidance at this point. We want to make sure that we close out the year and have confidence in what we are communicating further out, so we’ll probably hold on that. I think the important point for us is as we look at what you’ve – what we’ve displayed, again within the presentation today and what we’re seeing in terms of realized retail credit losses, certainly those have accelerated. We think that we’re starting to comp a period that’s a little bit easier from a comp perspective than where we were in the first half of the year. So the kind of the trend that we’re on is in the right direction, but probably not the right severity. So that will start to slow down a little bit as we move into the back quarter or the final quarter of the year. But again, as we look forward to 2024, we’re going to save that for a future call with you that’s a little bit more informed and a little bit more accurate.

Thank you.

Your next question comes from the line of David MacGregor from Longbow Research. Please go ahead.

Yes. Good morning, everyone. I wanted to ask about LiveWire, and it seems as though you are still targeting that 600 bikes at the low end of the range, which would imply a pretty substantial inflection in shipments here in fourth quarter. I guess, how confident are you in that 600 unit sort of target. Can you talk about what percentage of these bikes may be pre-sold at this point? Have you adjusted your plan price point on the Del Mar to account for maybe some of the affordability issues that were discussed earlier in the call? And I think importantly, at what rate does the operating loss respond to the ramp in unit shipments?

Good morning, David. Thanks for the question. Our level of confidence is where it should be to reaffirm guidance. We have enough demand to fulfill the guidance in terms of number of units. We are back in production, ramping up right now as we speak. So we feel pretty confident that between demand that we have with pre-orders, along with the capacity available at York that we can fulfill that number. So that’s the first part of the question. The second, we stick to the pricing that was communicated earlier.

Okay. And are you able to speak to, at what rate the operating loss responds to the ramp in unit shipments?

The operating loss is in line with the investments that were planned for the year. So at this stage, it’s exactly the rate that we are supposed to have.

I guess I am just trying to get a sense of going forward with what that operating leverage, that volume leverage might look like in ‘24 and ‘25 as we ramp?

Well, I think it would give you the same response that I gave, which is we don’t comment on ’24, ‘25 on this call.

Your next question comes from the line of Brandon Rolle from D.A. Davidson. Please go ahead.

Great. Thank you.

Our next question comes from the line of James Hardiman from Citi. Please go ahead.

Hey. Thanks for taking my follow-up. So back to sort of the inventory conversation. I think I get why inventories would be up versus ‘21 and ‘22. Those were pretty depleted levels, but I guess what I still struggle with here, inventories are – versus ‘19, they are down less than retail is, right? And so days-on-hand, weeks-on-hand, at least by my math, are up fairly meaningfully versus 2019. And you can – when you first came in it seemed like the message was pretty loud and clear that you guys thought that inventories were way too high coming out of 2019. So help me sort of square those two things. I mean, it just – it feels like so much of the effort in the first couple years went toward leaning out the channel and as we sit here today, we’re sort of worse than we were back then – at least on a weeks-on-hand basis.