Harley-Davidson, Inc.

Thank you.

Good morning. This is Faisal Ghori, Head of Investor Relations and Strategy at Harley-Davidson. You can access the slides supporting today's call on the internet at the Harley-Davidson IR 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 CEO Artie Starrs and Chief Financial and Commercial Officer Jonathan Root. With that, let me turn it over to Harley-Davidson CEO Artie Starrs.

Thank you, Faisal. Good morning, everyone, and thank you for joining us today. Before I get into the quarter, I want to thank our Harley-Davidson employees and dealers around the world. The progress we are seeing reflects your focus, urgency, and commitment to this brand. I also want to thank our riders and the broader motorcycle community for supporting Harley-Davidson and holding us to the high standard this company has earned over 123 consecutive years. We are well into our first year of executing back to the bricks, and I am pleased with our continued progress. From the start, we said this work would require discipline, stronger execution, and renewed focus on our dealers, riders, and the fundamentals that make Harley-Davidson distinctive. It would not happen overnight, but we would move urgently and measure progress through tangible proof points. This quarter provided several of those proof points. At the end of September, we hosted our 2026 Global Dealer Forum, bringing together approximately 2,000 dealers, team members and employees. We further aligned on strategy, prepared for 2027 and previewed the motorcycles and initiatives defining our next phase. The energy was strong, the engagement candid, and the enthusiasm clear. I also completed my third North American Dealer Roadshow. Across nine US stops, our team met with dealers to discuss our long-term shared vision for Harley-Davidson and our near-term areas of focus, including parts and accessories, the Sprint 440 and Sportster 883 launches, and Inventory Optimization. Internal category leaders join me for these conversations, connecting dealers directly to our Milwaukee teams to reinforce our forum messaging. That dialogue helps us move faster, sharpen decisions, strengthen dealer economics and improve the rider experience. The quarter's results reinforce that progress. Domestic retail rose more than 9%, extending strength in our home market. It shows that riders respond when we put the right motorcycles, dealer engagement, and marketing support in the market. We also improved dealer inventory health and quality. More than 88% of global dealer inventory is model year 2026 product, marking our seventh consecutive quarter of year over year inventory declines. We remain disciplined in aligning wholesale with retail demand, improving channel quality, and strengthening dealer margins. Dealer health is non-negotiable and foundational to Harley-Davidson's long-term earnings power. With the right inventory, timing and margin profile, dealers can focus on serving riders, building community and growing the brand. North American dealer profitability has made tremendous strides quickly. Dealer enthusiasm is strong. and we look forward to updating you in the first quarter of 2027 on 2026 performance against Target. More work remains in North America, though average profitability improvement is tracking ahead of plans communicated earlier this year. Continued progress against our strategy will accelerate and broaden that improvement. Significant work remains internationally, especially in Europe. Our product work provides another early proof point of back to the bricks. Superglide's second quarter success and Deadwood's third quarter success are generating brand enthusiasm and improving dealer economics through strong sell-through. These are authentic Harley-Davidson motorcycles with real character designed for customization and a stronger emotional connection with riders. Riders have responded well to our initial portfolio adjustments. Sell-through is strong, MSRP realization is at a two-year high, and we have gained significant market share, particularly in U.S. softtail. The signal is clear. The market responds to desirable, authentic Harley-Davidson motorcycles supported by a sharper go-to-market approach. Our marketing is also working harder. The messaging is resonating, especially through grassroots partnerships with custom bike builders and shop owners around the Superglide and Deadwood launches. These partnerships put the brand in the hands of people who live motorcycle culture every day. That is Harley-Davidson's home and where we belong. Parts and Accessories is tracking ahead of our plans and our newly formed P&A leadership team is actioning to expand our 2027 portfolio supporting model year 2027 launches. This will include P&A, for Harley-Davidson Sprint and Sportster launches. Customization is core to the Harley-Davidson experience. It deepens rider connection, creates dealer opportunity, and supports a stronger, more diversified revenue model. Apparel and licensing, which we have rebranded MotorClose internally, consistent with our back-to-the-brick strategy and department heritage, is also tracking ahead of our beginning-of-the-year plans. HDFS is also executing well. It remains a strategic asset and critical enabler for dealers and customers. The team continues advancing a more capital efficient model while supporting retail sales, dealer financing, and the rider experience. Together, progress in domestic retail, dealer inventory, and profitability, product launches, parts and accessories, apparel and licensing, and HDFS gives us confidence to raise our full year guidance. We are still early, but the business is moving in the right direction. Our strong balance sheet and disciplined capital allocation also enabled us to repurchase approximately $91 million of shares in the quarter. That reflects confidence in the business, our commitment to returning capital, and restored enterprise free cash flow. That said, we also have areas where we need to improve in areas where the operating environment remains uncertain. First, Europe remains challenging and we are dissatisfied with our performance. We are making portfolio adjustments that we expect to help significantly over time and applying the same discipline used across the business, better alignment of product, price, customer demand, dealer economics, and local market needs. European dealers are excited about the near term Harley-Davidson Sprint and Sportster 883 launches. These smaller displacement motorcycles were critical to Europe's mix and are essential to healthy, durable dealer profitability. Second, we continue working through supplier challenges, primarily in the United States. Our team has managed them well, but margins remain affected. We are improving reliability, reducing supply chain friction, and supporting our manufacturing and product teams to deliver consistent quality. Third, tariff uncertainty persists. The environment continues to evolve, and although mitigation actions are underway, we are watching it closely. Harley-Davidson is centered in the United States with a deep commitment to U.S. manufacturing, and we will manage tariff impacts with discipline. We are clear-eyed about these challenges. Back to the Bricks is not a campaign. It is a sustained reset of how we operate, support dealers, bring products to market, and connect with riders. Our progress gives us confidence in our plan and the targets we have set. Lastly, I want to acknowledge Livewire's announcement this morning that conditions and events raise substantial doubt about the company's ability to continue as a going concern, and that Livewire has withdrawn its guidance. On Monday, Livewire announced that a special restructuring committee has been formed. As was previously stated, we do not intend to fund the company's operating losses. Looking ahead, the foundation is stronger. Dealer inventory is healthier, down nearly 26% year over year. Dealer profitability has improved and is tracking favorably against our goal of doubling it in 2026. New motorcycles are generating enthusiasm and strong sell-through. Marketing is more focused and connected to the community. Parts and accessories and apparel and licensing are ahead of plan. HDFS is executing well, and our teams are operating with greater focus and urgency. Significant work remains, but the early evidence supports our strategy. We will keep listening to dealers and riders, making disciplined choices on inventory, product cost, and capital, and holding ourselves accountable for translating the Harley-Davidson brand into stronger, more durable performance. I want to close by thanking again our employees and dealers and our riders and the motorcycle community. This brand is strongest when it stays close to the people who ride, customize, sell, service and celebrate these motorcycles. Back to the Bricks puts that truth at the center of the business. In the coming weeks, I look forward to seeing riders and enthusiasts at SEMA a large automotive aftermarket event, and EICMA, the world's largest motorcycle show, which takes place in Milan. I'm also eager to meet dealers in market while in Asia and Europe later this quarter to learn how we can serve them even better. Harley-Davidson Sprint will launch first internationally, and enthusiasm is strong among dealers who have recently test ridden the bikes. Formal planning is underway for Harley-Davidson's 125th anniversary in 2028. The motorcycle lineup has been in development for some time, and our rider-centric events and engagement will be our best yet. We will use 2027 to build excitement across the motorcycle community for an extraordinary celebration. More to come.