Harley-Davidson, Inc.

Thank you for standing by and welcome to the Harley-Davidson 2024 Third Quarter Investor and Analyst Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Sean Collins. Thank you. Please go ahead.

Thank you. Good morning. This is Sean Collins, the Director of Investor Relations at Harley-Davidson. you can access the slides supporting today's call on the internet at the Harley-Davidson Investor Relations website. As you might expect, our comments will include forward-looking statements that are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters we have noted in today's earnings release and in our latest filings with the SEC. Joining me for this morning's call are Harley Davidson, Chief Executive Officer, Jochen Seitz. Also, Chief Financial Officer, Jonathan Root. And we have Livewire's Chief Executive Officer, Karim Denez. With that, let me turn it over to our CEO, Jochen Seitz. Jochen?

Thank you, Sean, and good morning, everyone. Thank you for joining us for our Q3 2024 results. In Q3, we saw an increasingly difficult global market environment in our and other big-ticket discretionary sectors. Macroeconomic and political uncertainty and the pressure of high interest rates affected both our industry and customers, especially in our core markets. This impact contributed to a decline of 13% in global retail sales of new motorcycles for Q3, with North America posting a 10% decline, compared to 18% across international regions. For the U.S., through the end of Q3, Harley-Davidson retail was down 1%, which was better than the overall motorcycle industry. Overall, we continue to see greater spend from higher-than-lower-income customers, as evidenced by motorcycle mix, where our CVO motorcycles continue to be up double-digit percentages throughout the year. In the U.S. specifically, through the end of Q3, Driven by our new touring lineup, our touring segment was up almost 10%, and we gained more than 4 percentage points of market share, outperforming the category, our other segments, and the market as a whole. In EMEA, Q3 retail sales declined 23%, with mixed performance on a country-by-country basis. EMEA continued to be adversely impacted by macroeconomic conditions and geopolitical uncertainty, which has led to sluggish economic growth. From a motorcycle family perspective, touring, CVOs, and trike motorcycles performed strongest in the region. In Asia Pacific, Q3 retails were down 16%, with larger than expected softness in Japan, partially offset by growth in Australia and New Zealand. Lastly, in LATAM, Q3 retails were up 4%. Despite the challenging overall operating environment, given the outstanding feedback we received from our customers, media, and our network, We continue to be enthusiastic about our new lineup of touring motorcycles, the redesign in all new road glide and street glide. We believe that our highly differentiated touring offering is well-placed to set the company up for future success in years to come, in addition to our other plans in the motorcycle development lineup. Looking ahead, as Jonathan will detail, given the lower than expected retail demand in Q3, we are revising our full year 24 outlook. In Q3, we continue to support the reduction of dealer inventory levels, reducing our production units as retail softened. At the end of the quarter, dealer inventory was down 13% relative to the end of Q2 of this year. We are committed to continue to reduce inventory levels and supporting dealer health, both in North America and in our international markets. As we prepare for our new model year launch in 2025 with a range of new exciting bikes, by a strong marketing push in collaboration with our dealer network. Turning briefly to HDFS, with Harley-Davidson Financial Services, we believe that we have a best-in-class asset to support our dealers and our customers in both economically strong and more challenging times. With a strong performance for the quarter, driven by higher retail and commercial finance receivables, HDFS continues to be an invaluable asset for all of our stakeholders. With regards to Livewire, as Karim will detail shortly, we continue to adjust to the overall and EV environment, increasing Livewire's focus on driving cost efficiencies and productivity across the business. Overall, despite the challenges facing the industry that have also impacted our business in the second half of the year to date, we've made progress towards our Hardwire 2 ambitions. We believe that in addition to our new touring lineup, that is by far the best product in the industry, we also have the right product in the pipeline in the coming years to drive profitable growth. We are committed to ensuring that our dealers receive that product at the right time and at the right price, in addition to providing strong marketing and sales support, which we expect to drive profitability across the company and our network. We're working hard to set ourselves up for a solid 25 and are positive in our ability to make sound progress in the new year. The combination of our best-in-class product and brand, coupled with a best-in-class dealer network, is a powerful pairing for success. However, we are mindful of the external factors, including interest rate reductions and improved consumer confidence that are required to provide the industry with a needed tailwind. Both cost control and cost productivity gains combined with tight capital allocation, are front of mind as we close out the year. We believe we have the right strategy with the hardwire, especially compared to others in the market, and that the decisions we made to invest in innovation and our core categories, that we know our customers and dealers love, were the right ones to both fuel the Harley-Davidson culture and business for years to come. Thank you, and now I'll hand over to Karim.