Harley-Davidson, Inc.

Thank you for standing by, and welcome to the Harley-Davidson 2025 First 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 today will include forward-looking statements that are subject to risks that could cause actual results to be mutually different. Those risks include, among others, matters we have noted in today's earnings release and in our latest findings with the SEC. Joining me for this morning's call are Harley Davidson, Chief Executive Officer, Jochen Zeitz, also Chief Financial Officer and President of Commercial, Jonathan Root. And we have Livewire's Chief Executive Officer, Karine Denez, available for questions. With that, let me turn it over to our CEO, Jochen Zeitz. Jochen, over to you.

Thank you, Sean. Good morning, everyone, and thank you for joining today's call. HDI operating income margin for the quarter came in at 12.1%. Our bottom line performance was better than expected, driven by strong product mix, tight cost control in logistics, supply chain, and in our operating expenses, as we left significant spend related to our model year 24 touring launch. Global retail sales were down 21% in Q1, and down 24% in North America, softer than we expected, primarily in the US market, driven by historically low levels of consumer confidence in the uncertain macro environment. With the decision to roll out our model year 25 campaign later in the year in the US to be closer to the riding season, the majority of our marketing development fund is being allocated in Q2 and beyond to support the network well into and beyond the riding season. The Marketing Development Fund is the most significant co-marketing investment made in the company's history, where we believe this investment will be most effective in the current environment, closest to the sale with our dealers. Outside of North America, EMEA experienced a quarter with overall retail being down just 2%. The APEC region experienced a 28% retail decline driven by softness, primarily in China and Japan. And lastly, LATAM, so a 6% decline year-over-year in retail. As we move forward through this macro uncertainty, we remain committed to managing wholesale shipments in order to maintain reduced levels of dealer inventory. At the end of Q1, global wholesale shipments were down 33%, and dealer inventory was down 19% as compared to the end of Q1 last year, with U.S. inventory being down 23%. Turning to HDFS, our financial services business delivered a better than expected result with an increase of 19% in operating income for the quarter. Jonathan will provide some additional detail on how we believe there are opportunities to further leverage the strength of HDFS to benefit our customers, dealers, and shareholders alike. Looking to product, in addition to our 25 model year launch that we detailed at the last quarterly call, Harley-Davidson champions on-road performance as a key differentiator for the brand, underpinned by our customers' desire to take inspiration from the track onto the street. As we continue to look to racing for inspiration, in early March, we launched a new limited production Harley-Davidson, the CVO Road Glide RR, setting a new benchmark for a street-leading performance bagger as the most powerful and dynamic on-road production motorcycle ever offered in the company's 122-year history. Leveraging knowledge and components developed by the Harley-Davidson factory racing team competing in the King of the Beggar series, the CVO Road Glide RR combines exceptional performance with attention to custom detail, a hallmark of Harley-Davidson CVO limited production motorcycles. Production of the RR model will be limited to 131 hand-assembled serialized motorcycles available through select authorized Harley-Davidson dealers in the United States this year. We've seen an outstanding response to this launch across the network, and we do expect these to sell out from pre-order. Last quarter, we teased the next installment of entry-level product, something that we are very excited about, having been several years in development. Since 21, the strategic pillar of our hardwired strategy has been selective expansion and redefinition. expanding our cruiser offering into smaller displacements, including a true entry-level cruiser has been a focus in our plans. I'm pleased to confirm that we're planning to introduce new entry-level products in smaller displacements, as well as the introduction of an iconic classic for the US and international markets starting next year. We expect these products to be highly affordable and profitable additions to our portfolio and formative to the company's future growth. Turning to live wire, as already highlighted in February, the headwinds facing the broader power sports and discretionary leisure industry are even more complicated in the EV segment of the market. All signs are pointing to much later EV adoption than originally anticipated, given a lack of incentives and a notably less favorable regulatory environment, combined with a slower expansion of charging infrastructure. In that context, Harley-Davidson is evaluating all options for its investment in LifeWire, while LifeWire will continue evaluating all options for its business, including seeking external capital if and when needed. In addition, LifeWire plans to continue to drive additional significant cost savings to reduce cash burn and operating losses with the intention to get to a sustainable business model with existing funds available. Harley-Davidson does not plan to provide additional investments into Livewire beyond the line of credit agreement entered into Q124 of up to $100 million. With increased focus on cost and cash flow, Livewire now expects operating losses of approximately $59 million and a cash burn of $49 million versus previous operating loss guidance of $70 to $80 million for the full year. Turning back to Harley-Davidson, With the level of uncertainty we are seeing and the number of changes happening on an ongoing basis in global tariff and trade, it's difficult to predict what policies may impact customers over the course of the year and how consumer confidence will affect discretionary product purchases. We therefore are withdrawing our previous 2025 guidance until there's more clarity on the global economy and tariff landscape. While the tariff environment remains fluid, our continued engagement with various administrations leads us to be cautiously optimistic that there will be trade deals that will at least limit the overall tariff impact on the company and its operations. That said, our teams are working extremely hard to mitigate the impacts on 25, given the fluid tariff environment, while we are also focused on mitigation strategies to minimize potential longer-term impacts to the company. And with that, I'll hand it over to Jonathan.