HARLEY-DAVIDSON, INC. Q3 FY2026 earnings call

• Back-to-the-Bricks Strategy Progress: The company reports strong execution on its strategic reset, highlighted by North American retail growth of 9% and improved dealer profitability, which is tracking ahead of plans to double year-over-year.
• Product Launch Success: Recent launches of the Superglide and Deadwood models generated high enthusiasm, strong sell-through, and MSRP realization at a two-year high, filling portfolio gaps in the softtail segment.
• Dealer Inventory Health: Global dealer inventory declined 26% YoY, with over 88% being current model year product. This disciplined approach has significantly improved channel quality and dealer margins.
• Parts & Accessories/Apparel: Both segments are performing ahead of plan, driven by a shift toward dealer-centric customization and stronger brand engagement.
• International Challenges: Performance remains weak in Europe (EMEA) due to macroeconomic headwinds and portfolio gaps, though new launches like the Sprint are expected to aid recovery. Latin America saw a 7% decline.
• Livewire Restructuring: Harley-Davidson confirmed it will not fund Livewire’s operating losses following Livewire’s withdrawal of guidance and declaration of going concern doubts.

HDMC: Revenue of $964 million (down 10% YoY), representing a gross margin of 28.1%. Operating income was $44 million (margin 4.6%), or $58 million excluding restructuring charges. Adjusted EBITDA was $94 million (margin 9.7%). HDFS: Revenue of $111 million (down 58% YoY due to loan asset sales and lower interest income). Operating income was $11 million (margin 9.7%). Livewire: Revenue increased 41% YoY; however, the company has withdrawn guidance and announced substantial doubt regarding its going concern status.

• HDMC Retail Sales: Raised full-year 2026 global motorcycle retail sales guidance to 135,500–139,000 units (previously 133,500–138,500).
• HDMC Wholesale Shipments: Raised full-year 2026 wholesale shipment guidance to 135,500–139,000 units (previously 133,500–138,500).
• HDMC Operating Income: Raised full-year 2026 operating income guidance to $25–$55 million (previously $10–$50 million), including $31 million in restructuring costs.
• HDFS Operating Income: Raised full-year 2026 operating income guidance to $60–$70 million (previously $55–$70 million).
• CapEx: Reduced full-year 2026 capital investment guidance to $140–$165 million (previously $175–$200 million).
• Tariffs: Full-year 2026 gross tariff costs expected to be $105–$120 million (up from prior estimate of $75–$90 million), though net impact on operating income is neutralized by recoveries.
• Livewire: Guidance withdrawn.

• European Market Weakness: Continued challenges in key European markets like Germany and France due to economic sentiment and lack of competitive small-displacement motorcycles.
• Supply Chain & Tariffs: Ongoing supplier challenges affecting US margins and significant uncertainty surrounding tariff policies, with potential cost increases passed through by suppliers.
• Livewire Viability: Substantial doubt regarding Livewire’s ability to continue as a going concern, with no further funding commitment from Harley-Davidson.
• Raw Material Costs: Headwinds from rising raw material and freight costs, partially offset by internal efficiency gains.

Q: Spencer Hennis asked about dealer inventory levels and their translation to profitability.

A: CEO Artie Starrs stated that North American dealer profitability is on track to double year-over-year, pacing ahead of plans. Inventory levels are meaningfully better than last year (down ~20-26%), with most dealers asking for more bikes rather than needing help selling them. He emphasized that prudent inventory management and strong product launches like the Superglide and Deadwood are driving this improvement, though regional allocation optimization remains an opportunity.

Q: Anthony Bonadio inquired about commodity pressure and margin mitigation.

A: CFO Jonathan Root noted that while raw materials created a ~1% headwind in Q3, manufacturing efficiencies within four walls offset some of this. He expressed confidence in managing inflationary pressures like diesel and freight costs through ongoing cost-out initiatives, maintaining confidence in achieving the targeted EBITDA margins despite external headwinds.

Q: Noah Zatzkin asked about the target customer for the upcoming Sprint and Sportster launches.

A: Starrs explained that the Sprint appeals to both new riders and experienced riders seeking a smaller bike for urban use. He highlighted a key metric: the yield of new bike sales from Riding Academy students has been low (~8-10%) due to lack of suitable entry-level products. The Sprint aims to capture this demand, converting academy graduates directly into buyers, while also attracting older riders looking for a second bike.

Q: Andrew Didora asked about cannibalization risks from the Sprint and Sportster launches.

A: Starrs stated that significant cannibalization is unlikely because the $6,000-$10,000 price points and customization-focused use cases do not overlap significantly with the core Softail and Touring lineups. He cited strong dealer enthusiasm and distinct consumer needs as evidence that these bikes will expand the rider base rather than just shifting existing buyers down the value chain.

Q: James Hardiman asked about the sustainability of the strong Q3 retail growth and LiveWire's trajectory.

A: Starrs attributed growth to successful execution of specific portfolio holes (Superglide/Deadwood) and repeatable factors like brand resonance and pricing. He sees significant runway for 2027 with new launches. Regarding LiveWire, he reiterated that Harley-Davidson will not fund its operating losses, consistent with previous statements, leaving Livewire to manage its own restructuring.