LiveWire Group, Inc. Q1 FY2026 earnings call

Artie Stars started with Q1 performance overview, noting North America retail sales increase, inventory reduction, dealer relationship focus, and new marketing platform reception. Jonathan Rue provided financial commentary on consolidated results, HDMC retail and revenue performance, margin, tariffs, HDFS, and LiveWire. The strategic plan 'Back to the Bricks' was introduced, focusing on leveraging competitive advantages, win-win with dealers, recapturing share, using balance sheet for investment and returns, and new leadership. Portfolio shift to rider-centric, parts and accessories as growth driver, refined promotions, new brand platform 'Ride', and dealer profitability focus.

Consolidated revenue in Q1 2026 was down 12% due to HDFS revenue dropping 54% after the HDFS transaction. HDMC retail sales: North America up 14% (U.S. up 16%, Canada down 8%), global retail sales of new motorcycles up 8%. HDMC revenue in Q1 was $1.1 billion, down 2%, with motorcycles at $836M, DNA bus apparel at $200M, licensing and other at $20M. HDMC gross profit was 25.3% vs 29.1% prior year. HDFS Q1 revenue $112M, down 54%, operating income $22M. LiveWire Q1 revenue up 87%, operating loss $18M, which was in line with expectations.

For full year 2026, HDMC retail and wholesale units expected 130,000 - 135,000. Shipments expected higher in Q2, flat in Q3, up in Q4. HDMC operating income expected positive $10M to loss $40M. HDFS operating income expected $45M - $60M. LiveWire operating loss expected $70M - $80M. Tariff cost for 2026 expected $75M - $90M, down from prior range. Midterm targets include mid single-digit retail unit growth, mid-single-digit growth in P&A and A&L, gross margins approaching 30%, operating expenses as % of sales below 20%, and 10 - 12% EBITDA margin. HDFS target operating income $125 - $150M by 2029.

Risks include matters noted in earnings release and SEC filings, such as global consumer discretionary landscape unevenness, inflationary pressures, interest rates, geopolitical uncertainty, tariff regulatory environment evolution with potential impacts, and risks related to LiveWire's operations and market reception.

Q: What is the medium term?

A: Three to five years.

Q: Tariff specifics?

A: 2026 tariff cost midpoint $83M, $45M in Q1, balance to be $38M, decreasing consecutively.

Q: Back to BRICS and demographics?

A: Prioritizing rider needs, Sportster and Sprint address entry points, marketing concept resonates with young people.

Q: HDFS op income target?

A: $125 - $150M by 2029, revenue streams include servicing fees, protection products, etc.

Q: Affordability and promotions?

A: Focus on accessibility, Q1 promotions on model year 25 touring, future more targeted.

Q: Sprint tariff impact?

A: Finalizing production plans, revised tariff guidance for 26.

Q: LiveWire role?

A: Excited about Honcho bike, monitoring, no direct funding from Harley-Davidson now.

Q: Dealer profitability and rebates?

A: Modest headwind from rebate program, predictability important.

Q: Dealer network size?

A: Looking for stronger network, value enthusiasm and service.

Q: Cost reduction and gross margin?

A: Teams identifying areas, pricing and mix relatively stable with favorability in balance of year