LiveWire Group, Inc. Q3 FY2026 earnings call

• Strategic Progress ('Back to the Bricks'): The company reports strong early progress in its strategic reset. Domestic retail sales rose more than 9%, extending strength in the home market. Dealer inventory health has improved significantly, with over 88% of global dealer inventory being model year 2026 product.
• Dealer Economics: North American dealer profitability is improving rapidly, tracking ahead of plans. The goal is to double dealer profitability in 2026. Dealer enthusiasm is high, with many dealers requesting more inventory rather than asking for help selling existing stock.
• Product Launches: The Superglide (Q2) and Deadwood (Q3) launches were successful proof points, generating brand enthusiasm and strong sell-through. MSRP realization is at a two-year high. Upcoming launches include the Harley-Davidson Sprint and Sportster 883, which are critical for international markets, particularly Europe.
• Market Share: Harley-Davidson gained significant market share in the U.S. Softail category, reaching 37% of the U.S. 601+ CC market (up 3 percentage points). In Europe, market share increased to 4% from 3%.
• Operational Efficiency: Parts and Accessories and Apparel/Licensing are tracking ahead of plan. HDFS is executing well under its new capital-efficient model. The company repurchased approximately $91 million in shares during the quarter.
• Challenges: Europe remains challenging due to a subdued economic environment and portfolio gaps, though specific sub-markets like Belgium, Eastern Europe, Spain, and Italy showed growth. Supplier challenges in the U.S. continue to affect margins, and tariff uncertainty persists.

• HDMC (Harley-Davidson Motor Company): Revenue was $964 million, a decrease of 10% year-over-year. This segment contributed the majority of the company's top line before HDFS adjustments. Breakdown: Motorcycle revenue $734 million; Parts & Accessories (P&A) $153 million; Apparel and Licensing $60 million; Other $18 million.
• HDFS (Harley-Davidson Financial Services): Revenue was $111 million, a significant decrease of 58% year-over-year, driven by lower interest income due to the sale of loan assets and a shift to a capital-light model.
• Livewire: Revenue increased 41% year-over-year, driven by increased unit sales of electric motorcycles and Stasic brand electric balance bikes.

• Full Year 2026 HDMC Global Motorcycle Retail Sales: Raised to a range of 135,500 to 139,000 units (previously 133,500–138,500).
• Full Year 2026 HDMC Global Motorcycle Wholesale Shipments: Raised to a range of 135,500 to 139,000 units (previously 133,500–138,500).
• Full Year 2026 HDMC Operating Income: Raised to a range of $25 million to $55 million (previously $10 million–$50 million). Note: This includes $31 million in restructuring costs year-to-date.
• Full Year 2026 HDFS Operating Income: Raised to a range of $60 million to $70 million (previously $55 million–$70 million).
• Full Year 2026 Capital Investment: Reduced to a range of $140 million to $165 million (previously $175 million–$200 million).
• Livewire: Guidance withdrawn due to substantial doubt about the company's ability to continue as a going concern.

• European Performance: The company is dissatisfied with performance in Europe, citing a subdued economic environment and historical portfolio gaps that have yet to be fully addressed by recent product launches.
• Supply Chain and Tariffs: Supplier challenges in the United States continue to impact margins. Tariff uncertainty persists, with full-year gross tariff costs expected to be higher ($105–$120 million vs. previous estimate of $75–$90 million), though net operating income impact is expected to remain neutral due to recoveries.
• Livewire Viability: Livewire has announced conditions raising substantial doubt about its ability to continue as a going concern and has withdrawn guidance. Harley-Davidson does not intend to fund Livewire's operating losses.
• Raw Material Costs: Headwinds from raw materials and freight/diesel costs remain a potential margin pressure point, though the company is managing cost out efforts internally.

Q: Spencer Hannes asked about dealer inventory comfort levels and how they translate to profitability.

A: CEO Artie Starrs stated that dealer profitability in North America is on track to double in 2026, pacing ahead of plans. Inventory levels are significantly better than a year ago, with most dealers now asking for more bikes. While some regional imbalances exist, the overall setup is favorable, supported by strong sell-through of recent launches like Superglide and Deadwood.

Q: Anthony Bonadio asked about margin impacts from commodity pressures and market share gains.

A: CFO Jonathan Root noted that while raw materials provided a ~1% headwind to gross margin, manufacturing efficiency gains offset this. CEO Starrs attributed market share gains primarily to the successful launch of Superglide and Deadwood, which filled portfolio gaps at specific price points and resonated with riders seeking customizable 'blank canvas' motorcycles.

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

A: Starrs explained that the Sprint targets both new riders and experienced riders looking for a smaller bike for town use. He highlighted that the Riding Academy conversion rate is low (~8-10%) because riders often buy other brands; these new bikes aim to capture those prospects immediately after training. Enthusiasm is strong from both new and veteran riders.

Q: Craig Kennison asked if European challenges are due to anti-American sentiment or Harley-specific issues.

A: Starrs emphasized that enthusiasm for the brand remains high in Europe, but the region suffers from portfolio gaps, specifically the absence of the Sportster 883. Root added that while Germany and France face pressure, other markets like Belgium, Eastern Europe, and Southern Europe grew. The upcoming Sprint and Sportster launches are critical to addressing these structural issues.

Q: James Hardiman asked about the sustainability of 9% domestic retail growth into 2027.

A: Starrs indicated that the growth is driven by repeatable factors: distinctive product characteristics, pricing, and marketing. He views the current strategy execution as only halfway complete, with significant runway remaining. Root added that disciplined inventory management, particularly in Touring and CBO segments, supports sustainable growth despite tough comparisons.