Yahoo Finanza Harley-Davidson Inc (HOG) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges ...
Revenue: Q1 consolidated revenue down 3%, with HDMC revenue decrease of 5% partially offset by HDFS revenue growth of 12%.
Net Income: Consolidated operating income down 29%, with HDMC down 29%, HDFS down 8%, and LiveWire operating loss of $29 million.
Earnings Per Share (EPS): First quarter EPS was $1.72.
Free Cash Flow: Operating cash flow in Q1 was $104 million, up from $47 million in the prior period.
Gross Margin: HDMC gross margin was 31.2%, down 450 basis points from the previous year.
Operating Margin: HDMC operating margin reported at 16.2%.
Retail Sales: Global retail sales of new motorcycles were flat; North America up 6%, EMEA down 11%, Asia Pacific down 12%.
Inventory Levels: Dealer inventory at the end of Q1 was up approximately 26% compared to end of Q1 2023.
Dividends and Share Repurchases: $773 million in shares bought back and $214 million in dividends paid since the beginning of 2022 through Q1 2024.
Guidance: HDMC expects retail units to be flat to up 9%, revenue flat to down 9%, and operating income margin of 12.6% to 13.6%.
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you speak to the health of the dealer network given the macro stress affecting inventory and margins? A: Jonathan R. Root, CFO of Harley-Davidson, noted that dealers are enthusiastic about the new models, particularly the Street Glide and Road Glide. However, rising interest rates pose challenges. The company is supporting dealers by balancing channel inputs with retail and offering selective interest rate subventions to help manage inventory and attract rate-sensitive customers.
Q: How did retail growth in North America for Q1 break down between model years '23 and '24? A: Jonathan R. Root explained that at the start of Q1, sales were predominantly 2023 models, as the 2024 models were not released until partway through the quarter. By March, the majority of sales were 2024 models, particularly in the touring category.
Q: What are the expectations for the quarterly cadence of retail sales throughout the year? A: CEO Jochen Zeitz indicated that the first quarter did not have the new '24 models in international markets, which should improve in subsequent quarters. He expects the U.S. market might outperform international markets due to the touring focus of new products.
Q: How are HDMC gross margins expected to trend throughout the year? A: Jochen Zeitz and Jonathan R. Root stated that Q1 gross margins were as expected and they anticipate improvements in line with their targets for the year. The first quarter's margin reflected planned dynamics, including impacts from new model introductions and pricing strategies.
Q: Can you provide an update on the adoption of Flex Financing and its impact? A: Jonathan R. Root mentioned that while adoption of Flex Financing is in early stages, several dealers have begun using the product. Full adoption across the dealer network is expected to take 12 to 24 months.
Q: What led to the improved operating loss guidance for LiveWire? A: Karim Donnez, CEO of LiveWire, explained that operational efficiencies and cost reductions from centralizing operations in Milwaukee are expected to improve the operating loss by $10 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
