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Thank you for standing by. And welcome to the Harley-Davidson 2024 Fourth 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, sir.

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 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 in our latest filings with the SEC. Joining me for this morning’s call are Harley-Davidson Chief Executive Officer, Jochen

Thank you, Shawn. Good morning, everyone, and thank you for joining today’s call. In the fourth year of our Hardwire strategy, we saw our performance being significantly impacted by continued cyclical headwinds for discretionary products, including the high interest rate and environment affecting consumer confidence and creating affordability issues for our customers. While we were unable to achieve our original guidance of 2024, given the overall environment, we continued to make progress in the execution of the key elements of our strategic plan that we believe will set the business up best for future profitable growth when the market turns. That said, in the fourth quarter, the macro environment contributed to a decline of 15% in global retail sales, our seasonally lowest quarter of the year, with North America posting a 13% decline and our other international regions declining a combined 17%. For the full year, we ended 2024 with a global retail sales decline of 7%. In the face of industry headwinds, the launch of our new model year 2024 Street Glide and Road Glide touring motorcycles contributed to near 5% growth in the U.S. Touring segment and drove Harley-Davidson’s share to almost 75%, an increase of 3.5% since 2023. It’s worth noting that over the year, Harley-Davidson was the only manufacturer to gain a meaningful Touring segment market share in the U.S., with our share of the overall 601 plus CC market being slightly up based on the segment that we compete in. Nearly 12 months after the launch of our model year 2024 touring motorcycles, we continue to receive very positive feedback from customers, media and dealers. In December, Cycle World voted the CVO Road Glide ST the best cruiser of 2024. Also in December, Motorcycle.com voted the Street Glide as the best bike of 2024. The launch of these touring motorcycles was one of the primary product strategies within our profit-focused pillar of Hardwire, and our volume and financial results would have been dramatically impacted negatively without them. Through the fourth quarter, we continue to trim inventory by reducing the motorcycle production wholesale significantly, ending the year slightly below 2023 year-end levels. We believe this has set us up well for further significant inventory reduction, especially in the first half of the year that Jonathan will walk you through in a little bit. Providing more detail on our delivery against our Hardware pillars for the year, our end-to-profit focus, we’ve continued to emphasize our core products while investing in key product segments for the future. These actions are underpinned by our belief that focusing on our most profitable categories and geographies, emphasizing innovation and evolving the customer experience with our dealers will continue to yield benefits to the business and set the business up for long-term value creation. 2024 can be seen as a year of two halves. Retail sales of the Touring segment was up 18% in the first half of the year, led by the redesigned Touring platform in North America. Despite the decline of 4% for overall retail sales in North America for the full year, retail sales of the Touring segment finished the year up more than 8%. As mentioned earlier, we’ve taken share within Touring, with Harley-Davidson achieving 74.5% market share in the Touring segment in the U.S., the highest number since 2019. Touring is the heart of Harley-Davidson and our mission of the timeless pursuit of adventure. Remember, back in 2020, there was no plan for Touring, nor for any other core product segment. We quickly took the decision to change that, with Touring becoming part of the first pillar of our Hardwire strategic plan. With 2024, we continue to invest in our strongest and most profitable motorcycle segment, and we are planning for more impactful and new products to hit the market every year from here on, that were originated as part of our strategy. It’s important to recognize that the decisions we’ve taken as part of our Hardwire strategy have allowed us to re-establish our profitability, while ensuring we have the right product price then for years to come. Without the Hardwire and its priorities, we would currently be faced with a portfolio of uncompetitive products, with a vast majority of our motorcycles achieving negative operating income margins, with the Motor Company likely having little to no profitability. Selective expansion redefinition underpins our desire to win an attractive market’s in motorcycle segments, where we are focused on building our leadership. We are investing and have ambitions for our entry level motorcycle offering in select markets and the small cruiser segment starting next year. Adventure Touring was also a new segment for the company, aligned to this strategic initiative. We believe the segment has future growth potential for us and we are committed to continue to innovate with the platform. A proof point being the recently launched Pan America ST that will be landing in dealerships shortly, ahead of its debut in the Marvel Studios Thunderbolt film premiering May 2nd. Turning to growth beyond bikes, we are committed to creating products, services and experiences that inspire our customers to discover adventure and live the Harley-Davidson lifestyle. 2024 saw a build-out of capabilities for custom-built apparel, ensuring that our dealers are able to access the best in custom apparel from Harley-Davidson. Looking ahead, we expect for these capabilities to reach our international network this year. Leveraging the power of the Harley-Davidson brand in 2024, we are also proud to partner with Champion for the second time in the company’s history. Looking forward, we will continue to look for brand collaborations that will connect with our customers and communities, while at the same time expanding on our licensing opportunities globally as a brand. Creating integrated customer experiences ensures our customers have a seamless experience with our brand. 2024, we’ve continued our digital investments, adding more impactful features and benefits on new models, combined with an all-new digital experience on HD.com, focused on improving engagement, lead capture, and ultimately, with the intention of driving more traffic to our dealers. These efforts led to a 177% increase in the number of engagements with motorcycle paces for the model year 2025 launch. Turning to the physical experience that is integral to the brand, we’ve continued to invest in our experiences offering by strengthening our events across the globe and better aligning our efforts with those of our dealers. In 2024, we held our second annual homecoming event in Milwaukee with over 60,000 riders, fans and motor enthusiasts joining us to celebrate the Harley-Davidson brand. We’re looking forward to Homecoming 2025 this July with an incredible talent lineup. The Harley-Davidson Riding Academy or HDRA is an important initiative for the company operating in 225 dealerships across 43 states, making it the largest rider training network in the U.S. and the only nationwide rider licensing program sponsored by a motorcycle manufacturer. 2024, we were proud to hit 1 million riders trained celebrating the 25th anniversary this year. Promoting rider education and training for both experienced and new riders is an important part of the overall riding ecosystem. Harley-Davidson, we are committed to building ridership and deepening our connection with customers, ultimately reinforcing our position as the most desirable motorcycle brand in the world. Turning to cost productivity, as we covered with Q3 earnings, we’ve taken further steps to tighten OpEx across the organization without negatively impacting demand driving initiatives for our core segments. One example of this is typical choices we’ve made in headcount. Comparing end of Q4 2024 to the end of Q4 2023, accelerate headcount is down by 7%. While 2024 includes employees severance expense, this run rate favorability will display itself more fully in 2025. In addition, Jonathan will cover our cost productivity performance for the year and we continue to execute very well in that area. Since announcing that focus, we achieved $257 million in productivity savings. Cost productivity continued to be a positive contributor to cash flow. We remain pleased with the cash flow generation of Harley-Davidson delivering operating cash flow well over $1 billion in 2024, nearly a 40% increase from prior year. 2025, we plan to display further cost progress across the P&L. We believe OpEx productivity will allow us to run with flats to slightly down OpEx, even after an increased focus on marketing, continued product investment. Additionally, we expect our cost productivity target to deliver approximately $100 million of additional savings in 2025. I would like to now comment on our new model year launch. The 2025 model year campaign, we revealed all new and refreshed motorcycles for this year’s lineup, with products released sitting squarely within our product focus and selective expansion strategic focus. Harley-Davidson cruiser motorcycle lineup includes six new models with significantly improved performance and technology. Additionally, for 2025, we updated the powerful Sportster S model. For its 26th year, we introduced the collection of limited production CVO motorcycles that includes four models. Lastly, new for this year are the Streetlight Ultra, a fully equipped long-haul Touring model complementing our new touring lineup, as well as the previously mentioned Pan America’s 1250 ST Adventure Sport motorcycle. Both incredible machines with visor down suggesting that Harley-Davidson Streetlight Ultra might be the most capable American tourer on the market. We also continue to be excited about the Adventure Sport category and its application to racing. January, we celebrated Joan Pedrero’s extraordinary performance in the Africa Eco Race, where he secured first place in the 1000cc plus category. This win is a groundbreaking moment that showcases the Harley-Davidson Pan America capability and versatility in a class of its own. Additionally, we were pleased to see team Settlement Harley-Davidson rider Cory West take the 2024 Super Hooligan Championship on his race-prepared Pan America 1250, showing the versatility of the platform. Performance and racing continue to be key differentiators across our product portfolio and we’ll continue to expand on our racing efforts in the U.S. and beyond. To support our model year launch, we’ve adapted our marketing approach specifically to drive dealership traffic and improve alignment on key messages within our dealer channel, rather than spending significant funds on teasing and pushing the global launch as we did before. For this reason, we launched the Marketing Development Fund, a new initiative designed to drive leads, foot traffic and customer transactions and conversions in our network. Driven by a desire to complement dealer marketing spend, adding additional financial support from the Motor Company, we believe the Marketing Development Fund will not only strengthen collaboration between the Motor Company and the dealer network, but also foster effective change management to drive growth. This commitment by Harley-Davidson represents the single largest marketing investment on behalf of the company on a per unit and absolute basis in our history. While it has only just been launched, we’ve seen strong uptakes through the network. As we’ve said previously, the health of the dealer network remains critical. We’ve taken many steps throughout 2024 to support the network through this challenging environment and we’re taking further actions into 2025 to continue our support for the network. Jonathan will provide more detail on guidance. We are realistic and cautious, not having reliable signals yet in either direction as we start the year. Hence our guidance to flat retail sales for the year, positive performance skewed towards the second half. I know that the decisions we’ve made and the bold actions we have taken as part of our Hardware strategy are continuing to strengthen our foundation for the future. The industry has faced many headwinds over the past couple of years, impacting at all levels, from OEM to dealer to customer. But we believe we are best positioned to take advantage of any uptick in consumption. Additionally, we will continue to explore any and all opportunities for transformational change, and we are committed to achieving our Hardwire profit targets over time as soon as we are seeing tailwinds in consumption of discretionary products in the two-wheel and overall power sports industry. Assuming a slightly improved outlook in 2026, we expect to deliver solid improvement in margin performance. The actions that we’ve taken in 2024 expectations for 2025, in 2026 we expect to balance retail, production and wholesale. We now expect that this will allow us to deliver a double-digit margin in 2026, climbing to our 15% target in the years following due to a combination of factors, including expected slight volume growth supported through exciting product portfolio launches every year. Lastly, tariffs are on everybody’s mind. Without having a clear view of what is to come, when and for how long, we’ve not yet incorporated any new tariffs in our outlook. We believe we have and are continuing to take all possible actions to mitigate the impact of tariffs and we’ll continue to take precautionary measures where possible. That said, we have neither production in Canada nor Mexico and 100% of our bikes and our core product segments are manufactured in the U.S. Those motorcycles manufactured in our U.S. plants and in partnership with our skilled union workforce account for the vast majority of our profits in the U.S. business and most of our sourcing also being U.S.-centric. We’ll provide more detail once we have a more complete tariff picture. Any discriminatory tariffs against Harley-Davidson, a great American icon, returning in Europe, we plan to fight aggressively with all means available and call for reciprocal treatment for all motorcycles imported into the U.S. Thank you. And I’ll now hand it over to Karim for more detail on LiveWire.

Thanks, Jochen. Good morning, everyone. LiveWire concluded 2024 with an operating loss of $110 million and 612 revenue units, both within the range of our revised guidance. In the Electric Motorcycle segment, LiveWire’s global retail performance grew by 46% year-over-year, with LiveWire maintaining its leadership position with a 65% market share in the U.S. 50-plus horsepower on-road EV segment. Turning to our STACYC segment, despite a decrease in STACYC total unit sales in 2024, driven largely by reduced sales to third-party distributors, the U.S. market saw significant growth. STACYC recorded a 21% increase in U.S. dealer sales and a 20% increase in U.S. online sales. Strategies initially implemented during the year enabled the company to achieve a cash burn below target for 2024. We expect these efforts to reduce 2025 total cash used by operating and investing activities by about 40%, which we expect to be $60 million or less. Looking ahead to 2025, LiveWire entered the year with four models in the market, including three built on our S2 platform and, as announced at EICMA in Q4, plans for an electric maxi-scooter in the first half of 2026, with a primary focus on the European market. The company’s commitment to innovation and market expansion will be evidenced by planned new products on both the Electric Motorcycles and STACYC segment designed to appeal to a broader global customer base. We believe these initiatives position the company to enter a new market segment and enhance its competitive edge. Now, I’ll hand it over to Jonathan.

Thank you, Karim, and good morning to all. I plan to start on Page 4 of the presentation, where I will briefly summarize the financial results for the fourth quarter and full year of 2024. Subsequently, I will go into further detail on each business segment. Let me start with consolidated financial results for the fourth quarter of 2024. Consolidated revenue in Q4 was down 35%, driven mainly by HDMC revenue being down 47% and partially offset by HDFS revenue growth of 4%. Consolidated operating loss in Q4 was $193 million, which compares to an operating loss of $21 million in Q4 of 2023. This was driven by an operating loss of $214 million at HDMC, while HDFS operating income of $46 million was unfavorable by $12 million relative to a year ago. The operating loss at LiveWire was $26 million, which was in line with our expectations and $9 million favorable relative to a year ago. As a reminder, we expected the fourth quarter to be a reduced quarter from a profit standpoint at the Harley-Davidson Motor Company segment. This is a result of the intentional reduced wholesale shipments in Q4 as part of preparation for the new model year product launch in January of this year and our commitment to not slow dealer inventory year-over-year. Again, I plan to go into further detail on each business segment’s profit and loss drivers in the next section. In Q4, earnings per share was a loss of $0.93, which is down from a profit of $0.18 in Q4 of 2023. Turning to full year 2024 financial results on Page 5, consolidated revenue of $5.2 billion was 11% lower compared to last year, while consolidated operating income of $417 million was 47% lower than last year. Full year 2024 consolidated revenue performance was as follows. At HDMC, revenue decreased by 15%, at HDFS, revenue increased by 9%, and at LiveWire, revenue declined by 31%. Full year 2024 consolidated operating income of $417 million, compares to $779 million of consolidated operating income in 2023. Business segment performance was as follows. At HDMC, operating income of $278 million was 58% lower than prior year, at HDFS, operating income of $248 million was 6% higher than prior year, and at LiveWire, an operating loss of $110 million was 6% favorable to prior year. For the full year 2024, earnings per share was $3.44 and compares to $4.87 in 2023. Now, turning to Page 6 and HDMC retail performance. As Jochen already mentioned, in Q4, global retail sales of new motorcycles were down 15% versus the prior year. This is a continuation of the trend that began at the start of Q3 and continued to play out through the second half of 2024, where we saw an increasingly difficult global market environment in our and other big-ticket discretionary sectors. Macroeconomic uncertainty, continued inflationary pressures and the pressure of high interest rates affected both our industries and our customers, especially at our core markets. In North America, Q4 retail sales declined by 13%, while international retail sales, excluding Canada, declined by 17% year-over-year. In EMEA, Q4 retail sales declined by 7%, driven by weakness in Germany and the surrounding region. EMEA continued to be adversely impacted by overall macroeconomic conditions. For the full year 2024, EMEA retail sales were down 11%, where a majority of the retail weakness was in non-core motorcycles. The Touring category was up 10% on the year. In Asia-Pacific, Q4 retail sales declined by 26%, as the region has remained weak since the second half of 2023. The Q4 retail sales decline was driven by weakness in Japan and China, with Australia and New

Thank you. [Operator Instructions] Thank you. Our first question will come from Megan Clapp from Morgan Stanley. Please go ahead. Your line is open.

Hi. Thanks very much. Good morning. Thanks for taking our question. Jonathan, a lot of helpful detail there, so thank you. Appreciate it. I wanted to just follow up on your commentary around the first quarter in particular and just how to think about the cadence of the year overall. I think you mentioned you’re expecting an inventory reduction of more than 30% in the first quarter, and from a revenue comparison perspective, you’re not going to be building dealer inventory for Touring as you did in 2024, so maybe a hard comparison on Touring plus still taking some shipments out of the channel. So, can you just maybe put a finer point on what that means for your expectations for the first quarter?

Sure. We’ll probably talk more, I think, in front half and back half of the year rather than get into quarters specifically, but Megan, your question’s I think a really good one that we feel is important to make sure that you do have an understanding on, but as we look at where dealer inventory globally kind of lands across 2025, we expect to end the year down 10% or a little bit over from a total dealer inventory perspective. As we think about what that looks like across the quarters, again, front half would be down a little over 30% and so obviously as we flow through that and think about some of the dealer impacts related to that, we have dealers who run the year down probably about 35%, call, it a 35%-ish average across the entire year, but obviously it kind of trails off because of the actions that we took in 2024 to bring down inventory in Q4. So with that, you see a more pronounced decrease in inventory in the front half than the back half, so 30% plus and then 10% plus kind of year end. As we think about the wholesale related impacts to that, it does mean that front half of the year wholesale will be down versus where we were in 2024, so front half probably down in the double-digit -- kind of double-digit range from a percentage standpoint, and then as we move towards the back half of the year, up quite a bit in the back half in order to make sure that we end the year appropriately positioned from an inventory standpoint.

Our next question comes from Joe Altobello from Raymond James. Please go ahead. Your line is open.

Thanks. Hey, guys. Good morning. I guess I try to squeeze in a couple questions if I could. I guess first on the quarter, where was the big margin surprise? Because revenue was in line, shipments were maybe slightly below expectation. So first question is where the big margin surprise was in Q4? And then maybe to follow up on that, the retail outlook for flat in 2025, maybe you’re thinking there given that you’re lapping a Touring refresh this year. Thanks.

All right. Thanks, Joe. I can start with, I’ll start with the sort of margin piece from a Q4 perspective, and then between Jochen and I, we’ll cover the retail piece. So on the Q4 margin, we have a margin walk that I think was page eight of the deck, and if you take a look at that from a full year perspective, you can see the impacts associated with volume, as well as sort of manufacturing and other related expense. So we’re pretty pleased in terms of some of the positives that we delivered on. I think you heard Jochen’s commentary and my commentary around productivity and the productivity that we drove in 2024. I think that overall was a good news, but as we think about some of the things from a 2024 perspective, obviously, we were a little bit off from an overall retail perspective. We made the commitment that we would manage retail and wholesale in alignment with each other throughout the year. So as we got to the back part of 2024, there were a number of down days that we used to manage inventory and make sure that we were managing production in the right way. We also had a little bit of cost associated with retooling for new Softail and kind of getting everything aligned from an overall line rate design perspective within there. And then obviously the volume that I just talked about, that hits from an absorption or deleverage perspective. So as we add up those elements, that kind of creates the challenge in terms of the overall myth from an operating income margin standpoint. And then Jochen, do you want to take Jeo’s question from a retail outlook standpoint?

Sure. I think if you look at the first half and the second half of last year, we had a stronger performance in the first half versus the second half, not just because or only because of the Touring launch, but in general, we’ve seen a drop off in the second half, which is pretty much in line with what other industries or related industries have seen. So therefore we expect a better performance in the second half versus the first half. We also think from a macroeconomic point of view, it’s probably going to be more choppy in the first half than the second half. You mentioned the Touring launch. I think what’s important to note is that we have beyond Touring a lot of innovation in our product lineup, which is reflected in our guidance. And then the Touring product that we’ve launched is still very new to many of our customers. We have 1.6 million Touring riders just across the United States. With last year’s sales of new touring bikes haven’t -- we still have a customer base of 95% that haven’t looked or purchased our product. This means that’s 1.5 million that can potentially upgrade to the new product platform. And if you look at previous launches that were not as comprehensive in terms of remodel as our Touring launch now is, that benefit came over several years, not just the first year. And data shows that 30% of our customers are very aware of our new touring product features, but that makes 70% that are not fully aware yet. So there’s definitely a lot of potential in the coming years to convince customers and some are just holding off and don’t want to buy the first generation and want to familiarize themselves more. So we still think Touring has opportunity for growth in the future, for sure. And this platform should run for many years, given that it’s all new compared to our Rushmore products in the past. But in terms of comms, certainly we believe the first half is going to be slower than the second half.

Our next question comes from James Hardiman from Citi. Please go ahead. Your line is open.

Hey. Good morning. Thanks for taking my question. So, any help with the sort of margin bridge? You’re guiding revenues to be flat to down modestly, but operating margin to be up. And it looks like on the OpEx front, it sounds like that’s going to basically track revenues, so maybe pretty flat as a percentage of sales. So I assume we’re to model gross margins to be up pretty materially in 2025. Now, you gave us a lot of the negatives, right? FX is going to be a negative. It sounds like mix is going to be a negative. I guess, how do we get to that Motor Company margin growth that you’re guiding to? Thanks.

All right, James. So I can start. So I think as we go through and we take a look from an overall volume perspective, obviously, as you talked about, we’re pretty flat. So as we think about walking off of 6.7% for 2024, we end up with a relatively flat guide from a volume perspective. From a pricing standpoint, we expect a little bit of favorability that’s in there as we look at the actions that we’ve taken across the portfolio. There’s a little bit of a negative impact in 2025 from FX, so probably a little bit greater than the negative impact that you saw in the 2023 to 2024 walk. A little bit of a challenge from a mix standpoint because we have the new Softails that are hitting. Obviously, the Touring are higher margin motorcycles, so there’s a little bit of a mix dynamic in there. We don’t think that we’re going to see sort of the same level of unfavorability from manufacturing and others. And then we think we have a little bit of favorability that falls in there from an OpEx perspective. Those are for the reasons that Jochen talked about in his remarks. And so with that, you kind of add up to the 7% to 8% guide that we provided.

Our next question comes from Robin Farley from UBS. Please go ahead. Your line is open.

Great. Thanks. I wanted to just clarify, with your guidance for motorcycle revenue flat to down 5%, I think you said price would be positive for the year. So does that imply percent of units down a bit more than that flat to 5%? And then just on retail, I know you gave some color to the first half versus second half. But assuming that if you’re trying to clear inventory you’re shipping below your retail expectations, what should we kind of think about as the reference of your retail expectation for the year? Just so we can kind of, as we move through the year, kind of see how it’s tracking versus your guidance and maybe kind of adjust our expectations accordingly? Thanks.

Okay. Thank you, Robin. So I’ll start with, I think, from a wholesale perspective, we probably think flat to down a little bit. So as we look at that, that’s a little bit of the volume -- there’ll be a little bit of volume challenge in there that is offset by the pricing piece that I talked about. And then I think relative to your question on retail, overall for right now from the commentary that we talked about, we think of retail as being flat in 2025. So certainly a little bit difficult to predict as we think about macroeconomic situation and where we are. But overall we are thinking about an environment globally that gets us to flat retail, wholesale maybe up a little bit, and then pricing a little bit favorable. And hopefully that answers your question around how we manage to do that.

Our next question comes from Fred Wightman from Wolfe Research. Please go ahead. Your line is open.

Hey guys. Good morning. I was hoping you could just give us a sense for where the mix of current versus non-current product that dealers have on lots today stands. If we look back last year, you’d called out some incremental dealer support to clear through non-currents. I think there was a $40 million number initially and then you upsized that down the road. So are you assuming incremental dealer support year-over-year? Does that wind up being favorable? How do you sort of think about that? Thanks.

All right. Thank you, Fred. So I’ll start. And I think in terms of the mix, we obviously have just started shipping in 2025 model year motorcycles. So literally just hitting within the last week or so. So as we look at dealer inventory in terms of what’s out there, we’ve covered the fact that we’re down a little bit from where we ended 2020, kind of same period year ago. As we look at what -- how we’re managing through inventory in 2025, we’ve covered sort of the conservatism that we expect in the first half of the year, how we’re shipping pretty carefully from that standpoint. So we think that dealers are pretty well positioned from an overall inventory perspective. The other thing that is a tremendous difference in 2025 calendar year versus 2024 calendar year is the way that I would define it as kind of quality of inventory, right? So as we think about the mix of Touring bikes that dealers have on their floor, they have redesigned -- the redesigned Touring bikes that are out there. Jochen talked about market receptivity and market reaction to those, which were positive in 2024. So, overall, with that, we think the health of the dealer inventory is better. The piece that I think we are doing that’s a little bit different in 2025 versus 2024 is being more surgical in where we look for dealer support. So rather than sort of applying support across a family like we did a year ago, we actually now kind of look at specific models within that family and provide the support a little bit more carefully from that standpoint. Again, something that we think we’re able to do because of the mix of dealer inventory that’s out there in the network.

Just to add one point, also please look at pricing. We’ve strategically priced our products going into 2025 versus 2024. So I think that is an important factor and has been perceive -- received very positively.

Our next question comes from Alex Perry from Bank of America. Please go ahead. Your line is open.

Hi. Thanks for taking my questions here. I actually wanted to ask about LiveWire. So thinking about LiveWire more longer-term, how do you think about managing that business and sort of managing the operating losses there? I guess if demand and adoption of electric does not materialize meaningfully over the next few years, how are you thinking about LiveWire longer term would be great? Thanks. Bye.

Yeah. Alex, good question. I think we are continuously evaluating from a Harley-Davidson perspective how to achieve the best performance for Harley-Davidson and for LiveWire. And we are obviously considering mid- and long-term perspectives in this evaluation. Beyond what we’ve said today, there’s little to nothing that I want to comment on. But the first significant step Karim has already mentioned, we are reducing our operating losses from $110 million last year to $70 million to $80 million and cash burn by at least 40% or more to $60 million. o the team has taken, under Karim’s leadership, a lot of significant actions to downsize the organization, refocus the product portfolio and ensure that the cash burn and the operating losses are being reduced. So that is an indication of how we are streamlining the business in light of the new realities. Beyond that, I can’t really comment, but rest assured that we are continuously evaluating the development of LiveWire from a Harley-Davidson perspective as well, the benefits it brings and the costs that we incur by being invested in that business.

Our next question comes from David MacGregor from Longbow Research. Please go ahead. Your line is open.

Hi. Good morning. This is Joe Nolan on for David. Just briefly, I wanted to touch on your outlook for some of your international end markets. If you could provide any detail there?

Okay. Hi, Joe. So I think as we sort of take a look at where we are from an international perspective, probably looking back is a little bit of an important perspective in terms of trying to look forward. So as we think about 2024, there were some markets in international that were positive, some markets that were a little bit down. So as we think China and Japan proved a little bit of a challenge as we look back, Australia and New

Our next question comes from Noah

All right. Thanks for taking my question. Maybe just a couple on HDFS. I guess first, how are you feeling about the health of the book? And then in light of SOFR declining, I know you guys have variable rate debt, but what are kind of the big moving pieces on the expense or the income side that’s driving the decline in the guide? And then, is there some expected credit loss baked in there, conservatism? I’m just trying to better understand that? Thank you.

Okay. Great. Thank you, Noah. So as we look at HDFS, I think, overall health of the book, a couple of things. So as we think through some of the sort of historical originations, there’s a little bit of pressure as we think about some of the variability in motorcycle values over time. So as we look toward the final quarter of 2024 and forward, we feel like if you remember, there was a tremendous rise up in youth values in the period following COVID. There’s a little bit of normalization. As we go through and we look at statistics and kind of performance over the last few months, we feel like there’s probably stability in where youth values are. So that’s positive. From a consumer perspective, again, with recent originations, we’ve been originating at very, very high credit quality. So the overall kind of mix of the portfolio is looking pretty strong and pretty healthy. So I think that’s a positive. When we kind of look at things in absolute dollar perspective, we feel good from a percentage standpoint and things pop out a little bit. So as we work with our dealer network to really bring down wholesale inventory levels, you see that reflected negatively in HDFS results. So that’s a big part of what you’re seeing on a year-over-year basis relative to what we guide is wholesale asset levels from a year-over-year standpoint that come down. We also recognize that as we’ve had a little bit of a challenged sales environment in comparison to where we were in kind of the year or years immediately following COVID, that puts a little bit of pressure on asset levels as those customers continue to pay down their loans. So, overall, I would say that we’re pretty pleased with the health of the book. We feel like it’s being managed in a way that’s pretty positive. Percentages can throw things off a little bit just because of numerator’s denominator effect. And then when we think about Fed rate, as we look at the parts of our portfolio that are actually tied to a variable rate, that’s the wholesale business. So our dealers will continue to see savings in wholesale rate between units that aren’t being delivered at the same level and where Fed rates are going, but that does put a little bit of pressure on HDFS. So for the most part, it’s a story of kind of assets, the story of some benefit that accrues to the dealers rather than the HDFS business. And then the other piece that we always consistently work to manage is that as we bring on any new debt, that’s at a higher debt level than where we were three years, four years ago. So we just have a little bit of sort of short-term normalization around that, but overall, continue to be very pleased with that business.

Our next question comes from Tristan Thomas-Martin from BMO Capital Markets. Please go ahead. Your line is open.

Hey. Good morning. Two kind of housekeeping questions. I believe you mentioned growing to a HDMC operating income margin target in the future. Is that still 15%? And just quickly following up on Noah’s questions, was there any seasonal accounting change embedded in the HDFS guidance? Thanks.

Yes, Tristan. As I’ve mentioned, we continue to believe the 15% target is achievable. And if we assume 2026 balanced retail production and wholesale business or shipments, and then think about achieving a double-digit margin in 2026, if we can achieve that with this year’s outlook, the 15% target is still achievable. But obviously, that requires us to get a slight volume growth that is support and that we believe is actually supported -- is going to be supported through exciting new products that we are launching. I’ve mentioned in my opening remarks that we are also having an entry-level motorcycle in select markets starting off next year, and a small cruiser segment in the following year. So supported with product launches, we believe the 15% is possible. But it’s hard to give you a timeline on that, other than the double-digit operating profit that we believe is achievable, assuming that we achieve this year’s levels. So yes, we feel comfortable. I think we are positioned well, but obviously, we need some tailwinds and a slightly improved retail environment and power sports industry, which we haven’t seen now for two years in a row. So I think that has to happen. We need some tailwinds overall, not significant, but certainly not a depressed market that we’ve seen in all of power sports, RVs, marine, pretty much anything that’s discretionary. So that will have to happen for us to achieve those 15% operating margins.

And then, Tristan…

Our next…

… really quickly, just on Tristan’s seasonal change question. So from an HDFS perspective, we did adjust reserves up a little bit as we think about, again, to your point, seasonal lifetime loss evaluation. We did add a small amount to make sure that we were covered from that standpoint.

Our next question comes from Brandon Rolle from D.A. Davidson. Please go ahead. Your line is open.

Thank you for squeezing me in here. Just a quick one on LiveWire. How far away are we from seeing a profit on the LiveWire business? It’s been a headwind to earnings for years now, and I guess, I’m wondering, clients are wondering, is there anything that would change your mind about continuing down this path with LiveWire and how committed are you to this business? Thank you.

Well, I think the first part…

The first part is the outlook and then I’m going to comment from a Harley perspective.

Yeah. Thank you, Jochen. Thanks, Brandon. Look, from the LiveWire perspective, as you saw, we are reducing our expenses quite significantly year-over-year. We do work on accelerating our path to profitability. We have an internal program, very aggressive on reducing our bond cost. We do see, actually, an opportunity to have contribution margin positive by the end of the year between all of the work we’ve done on bond cost, on conversion cost, et cetera. That would be the first step before we actually break even the business. Obviously, it was mentioned before, I think by Alex, that it’s a demand adoption challenge right now. But there are segments and markets where EV is having some traction, especially you look at Europe, the maxi-scooters, the other type of mobility segment, which we announced back at EICMA. And we really believe that we’re working towards where the market is putting when EV bring additional value. And so we’ll keep working on this. We do have a plan to accelerate our path to profitability. You start seeing some very significant improvement this year and you should expect to continue seeing some improvement. For the second part of your question, let Jochen comment.

Yes, Brandon. As I said, we are evaluating the business performance of LiveWire very carefully. There are a lot of benefits that LiveWire bring beyond electrification to Harley as well. But obviously, we are not achieving the targets that we’ve set out for many different reasons, EV adoption being or slower pace of EV adoption obviously being contributing factor. So we will watch this very carefully. LiveWire needs to perform, and we’ve invested a significant amount of money and that performance needs to happen. Otherwise, we’ll obviously have to look at some optionality here. But we are committed to the business at this point, but we need to see improvement in the business performance based on Karim, what he’s mentioned. I think losing the losses continuously and really focusing hard on reducing the cash flow is critical. And then adoption and sales obviously need to show up and this year, we’ll need to prove that.

Our last question comes from Jaime Katz from Morningstar. Please go ahead. Your line is open.

Hi. Good morning. I just want to stay on that electric topic. I guess I’m thinking about this new product that you guys are launching. And given the strain or lack of support from a retail perspective or demand, I guess, what was the strategic purpose of rolling out a new product where there’s low demand in the segment? And I guess, where does the incremental investment lie with that and what does the profit margin opportunity look like for that new unit? Just trying to think about that profit progression? Thanks.

Thank you. Just to clarify, are you talking about the Alpinista lounge that we just had on the S2 platform?

The maxi-scooter that I assume is going into the P&L of LiveWire?

Yes. It is correct. Okay. Thank you for clarifying. So that scooter is expected to hit markets in 2026. We are right now working diligently on the development of it. There is a strategic rationale for it, which is pretty strong for us. It does leverage two key things. The first one is the S2 platform, which is fully developed in market right now, and knowhow and expertise of our second largest shareholder, KYMCO, who are already in this market segment. So when you take the combination of the two, we feel like we have everything it takes to come and have a value proposition for this specific segment that would be extremely competitive, not only in terms of performance, but in terms of market positioning as well. There is a push and there is actually growth in this maxi-scooter segment EV right now in Europe in particular. So we are clearly targeting this segment next year.

If I just may add from a Harley-Davidson perspective, the LiveWire has not invested into a new platform, but is using the existing S2 platform to launch line extensions. And that is one of the major reasons why we are also operating with a smaller engineering team at this point, not investing into a new platform or bigger platform, which was originally planned, which is the reason why we are -- why LiveWire is able to reduce the operating loss significantly to between $70 million and $80 million, and the cash burn as well. And therefore, the focus right now is really getting pump costs out, reducing cost of sales and reducing the loss per bike. But as I said, we will have to watch. We are watching this very carefully with a mid- to long-term perspective in mind and look at the risk and rewards going forward to decide how the business is going to be positioned in the future.