Key Takeaways
- Second quarter net profit decreased to $80M ($0.75 per share) compared to $108M ($0.88 per share) in the prior year period
- Total revenue declined 6% year-over-year to $1.23B; gross profit margin compressed to 27.5% from 28.6%
- The company delivered 39,200 motorcycles, representing a 9.4% YoY increase but falling short of analyst projections of 40,810 units
- Annual retail sales guidance upgraded to 133,500ā138,500 motorcycles from previous estimate of 130,000ā135,000
- HDMC operating income projection enhanced to $10Mā$50M, significantly improved from prior guidance of -$40M to $10M
Shares of Harley-Davidson (HOG) declined approximately 1% during Thursday’s premarket session following the motorcycle manufacturer’s second quarter financial report, which revealed softness in earnings despite surpassing certain analyst projections.
The company reported second quarter net profit of $80 million, translating to $0.75 per share, marking a decline from the $108 million, or $0.88 per share, recorded during the comparable quarter one year earlier. Total revenue contracted 6% on a year-over-year basis to $1.23 billion.
The per-share earnings figure came in $0.11 above Wall Street consensus estimates, providing some support despite the year-over-year deterioration in profitability.
Gross profit margin contracted to 27.5% from 28.6% in the year-ago period, pressured by elevated raw material expenses, less favorable product sales mix, and adverse currency exchange rate movements.
Harley-Davidson delivered 39,200 motorcycles throughout the three-month period ā marking a 9.4% increase from the prior year quarter, though missing analyst consensus projections of 40,810 unit shipments.
Global retail sales increased 1% year-over-year. The North American market expanded 3% while Latin America contributed 4% growth, offset partially by a 9% contraction in the EMEA region and flat performance across Asia Pacific.
Operating profit dropped 32%, primarily attributable to underperformance in the financial services segment, HDFS, which continues its strategic shift toward a capital-light business structure.
Strategic “Back to the Bricks” Initiative Advancing
Under the leadership of CEO Artie Starrs, the company has been redirecting focus away from high-end touring motorcycles toward lighter, more accessible bike models. Entry-level pricing now begins around the $10,000 threshold.
The strategic “Back to the Bricks” initiative focuses on reviving classic Harley motorcycle models and appealing to younger demographic segments through smaller-displacement engine offerings ā representing a meaningful departure from the brand’s historical core customer demographic.
Electric Subsidiary LiveWire Shows Improvement
The company’s electric motorcycle division, LiveWire, reduced its operating loss to $18 million from $19 million in the corresponding quarter of the previous year ā demonstrating modest but consistent progress.
Full-year projections for LiveWire anticipate an operating loss between $70Mā$80M, accompanied by capital expenditures ranging from $175Mā$200M.
Notwithstanding the quarterly shortfall, Harley-Davidson upgraded its full-year retail sales projection to 133,500ā138,500 motorcycles, increased from the previous forecast range of 130,000ā135,000 units.
The HDMC segment’s operating income forecast was elevated to $10Mā$50M, representing a substantial improvement from the previous guidance range of -$40M to $10M in profit.
Additionally, HDFS operating income expectations were revised upward, now projected at $55Mā$65M compared to the earlier range of $45Mā$60M.
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