Harley-Davidson releases Q4’23 results
Harley-Davidson has reported its fourth-quarter and full-year results for 2023. “In the third year of our Hardwire strategy we have made progress in key elements of our strategic plan – focusing on our most profitable products and markets, which we believe will continue to yield benefits to the business and have set us up for long-term value creation despite the current challenging environment for the industry,” says Jochen Zeitz, chairman, president and CEO, Harley-Davidson. “We are excited by the early read of our new model year launch, the most comprehensive product development in the touring platform in well over 10 years, that will redefine the Harley-Davidson Grand American Touring experience for years to come and lay the foundation to drive retail sales growth in ’24.”
2023 Highlights and Results
- Delivered diluted EPS of $4.87
- Achieved 13.6% operating margin at HDMC
- HDMC unit profitability returned to historically healthy levels
- HDMC global motorcycle shipments of 179,984, down 7% year-over-year
- HDFS operating income finished down 26%
- LiveWire launched the Del Mar electric motorcycle – the first bike off the S2 platform
Fourth Quarter 2023 Summary of Results
- Delivered diluted EPS of $0.18
- HDMC global motorcycle shipments of 29,544, down 13% year-over-year
- HDFS operating income declined 10%
- LiveWire sold 514 electric motorcycles
For the full year 2024, the Company expects:
- HDMC: revenue flat to down 9% and operating income margin of 12.6% to 13.6%
- HDFS: operating income flat to up 5%
- LiveWire: electric motorcycle unit sales of 1,000 to 1,500 and an operating loss of $115 to $125 million
- Harley-Davidson, Inc: capital investments of $225 to $250 million
Fourth Quarter and Full Year 2023 Results
| $ in millions (except EPS) | 4th quarter | Full Year | ||||
| 2023 | 2022 | Change | 2023 | 2022 | Change | |
| Revenue | $1,053 | $1,142 | -8 % | $5,836 | $5,755 | 1 % |
| Operating Income (Loss) | ($21) | $4 | nm | $779 | $909 | -14 % |
| Net Income Attributable to HDI | $26 | $42 | -38 % | $707 | $741 | -5 % |
| Diluted EPS | $0.18 | $0.28 | -36 % | $4.87 | $4.96 | -2 % |
| nm – not meaningful | ||||||
In the fourth quarter, consolidated revenue was down 8 percent, driven by a revenue decline of 14 percent at HDMC, partially offset by revenue growth of 15 percent at HDFS. In the fourth quarter, the consolidated operating loss was $21 million versus the operating income of $4 million in the prior year’s period. The result was driven by an operating loss of $44 million at HDMC, a decline of 10 percent at HDFS, and an operating loss of $35 million in the LiveWire segment.
For the full year, consolidated revenue was up 1 percent, driven by a revenue increase of 16 percent at HDFS, partially offset by a revenue decline of 1 percent at HDMC. For the full year, consolidated operating income was down 14 percent. The result was driven by an operating income decline of 2 percent at HDMC and a decline of 26 percent at HDFS, and a higher operating loss in the LiveWire segment.
Harley-Davidson Motor Company (HDMC) – Results
| $ in millions (except units) | 4th quarter | Full Year | ||||
| 2023 | 2022 | Change | 2023 | 2022 | Change | |
| Motorcycle Shipments (thousands) | 29.5 | 34.0 | -13 % | 180.0 | 193.5 | -7 % |
| Revenue | $792 | $919 | -14 % | $4,845 | $4,888 | -1 % |
| Motorcycles | $583 | $666 | -13 % | $3,799 | $3,787 | 0 % |
| Parts & Accessories | $130 | $151 | -14 % | $698 | $732 | -5 % |
| Apparel | $57 | $73 | -21 % | $244 | $271 | -10 % |
| Licensing | $8 | $10 | -27 % | $29 | $39 | -27 % |
| Other | $14 | $18 | -22 % | $75 | $58 | 29 % |
| Gross Margin | 22.9 % | 26.5 % | -3.6 pts. | 32.3 % | 31.3 % | 1.1 pts. |
| Operating Income (Loss) | ($44) | ($32) | nm | $661 | $677 | -2 % |
| Operating Margin | (5.6 %) | (3.5 %) | -2.1 pts. | 13.6 % | 13.9 % | -0.2 pts. |
| nm – not meaningful | ||||||
In the fourth quarter, global motorcycle shipments at HDMC decreased by 13 percent due to prudent dealer inventory management and market conditions. Revenue was down 14 percent, due to lower volumes, where improved mix was offset by incentive spend. Parts & Accessories revenue was down 14 percent, largely in line with motorcycle revenue. Apparel revenue was down 21 percent driven by high dealer inventory levels resulting in lower replenishment.
The fourth quarter gross margin was down 3.6 points behind the impacts of lower volume, higher sales incentives and other manufacturing costs, more than offsetting the benefits of shipment mix and lower raw material costs. The fourth quarter operating margin fell by 2.1 points due to the factors above, where operating expenses were lower in the quarter due in part to LiveWire transaction costs in the prior year’s period.
Harley-Davidson Retail Motorcycle Sales
(excludes LiveWire units)
| Motorcycles (thousands) | 4th quarter | Full Year | ||||
| 2023 | 2022 | Change | 2023 | 2022 | Change | |
| North America | 17.5 | 19.2 | -9 % | 105.9 | 117.1 | -10 % |
| EMEA | 5.1 | 6.6 | -22 % | 27.0 | 30.5 | -11 % |
| Asia Pacific | 6.8 | 7.5 | -10 % | 27.0 | 27.9 | -3 % |
| Latin America | 0.8 | 0.6 | 46 % | 2.9 | 2.9 | 0 % |
| Worldwide Total | 30.2 | 33.8 | -11 % | 162.8 | 178.5 | -9 % |
In the fourth quarter, global retail sales of Harley-Davidson motorcycles were down 11 percent versus the prior year. North American retail performance was down 9 percent and continues to be impacted by both the high interest rate environment and the discontinuation of legacy Sportster at the end of 2022 in the region. The decline in EMEA of 22 percent was driven by weakness in the France and German markets. The decline in APAC of 10 percent was driven by weakness in the Australian and New Zealand markets. Latin America sales increases were driven by growth in both Brazil and Mexico.
For the full year, global retail sales of Harley-Davidson motorcycles were down 9 percent versus the prior year. North American retail performance continues to be adversely impacted by higher interest rates, economic uncertainty, and lower sales of non-core motorcycles. EMEA retail has been adversely impacted by sluggish economic growth and the planned mix shift towards the profitable core product segments. APAC retail performance experienced strong growth in the first half of the year but slowed in the second half of the year, with overall growth in Japan for the year.
Harley-Davidson Financial Services (HDFS) – Results
| $ in millions | 4th quarter | Full Year | ||||
| 2023 | 2022 | Change | 2023 | 2022 | Change | |
| Revenue | $246 | $214 | 15 % | $954 | $821 | 16 % |
| Operating Income | $58 | $64 | -10 % | $235 | $318 | -26 % |
HDFS revenue was up $32 million in the fourth quarter, an increase of 15 percent versus the prior year, driven primarily by higher interest income. The HDFS operating income decline of $6 million, or down 10 percent, was driven by higher interest expenses, higher operating expenses and an increased provision for credit losses. The increase in the provision for credit losses was driven by several factors relating to the current macroeconomic environment. Total quarter ending net finance receivables were $7.5 billion, which was up 5 percent versus the prior year, driven primarily by an increase in wholesale commercial lending receivables.
LiveWire – Results
| $ in millions | 4th quarter | Full Year | ||||
| 2023 | 2022 | Change | 2023 | 2022 | Change | |
| Electric Motorcycle Shipments (units) | 514 | 69 | 645 % | 660 | 597 | 11 % |
| Revenue | $15 | $9 | 67 % | $38 | $47 | -18 % |
| Operating Loss | ($35) | ($29) | nm | ($117) | ($85) | nm |
| nm – not meaningful | ||||||
In the fourth quarter, LiveWire revenue increased to $15 million from $9 million, driven by unit sales of the new Del Mar electric motorcycles. LiveWire’s operating loss of $35 million in the fourth quarter, in line with the company’s expectations, was driven by continued product development and other spending associated with the delivery of the Del Mar electric motorcycle to market.
Other 2023 Harley-Davidson, Inc. Results
- Generated $755 million of cash from operating activities
- Effective tax rate was 19.8%
- Paid cash dividends of $96 million
- Repurchased $350 million of shares (10.2 million shares) on a discretionary basis
- Financing raised for HDFS of $2.5 billion
- Cash and cash equivalents of $1.5 billion at year-end
Segment Reporting Structure
LiveWire Group became a separate public company trading on the New York Stock Exchange (Ticker: LVWR) on September 27, 2022. Harley-Davidson has a controlling equity interest in LiveWire Group and continues to consolidate LiveWire Group results with adjustments for non-controlling shareholder interests. Net Income attributable to Harley-Davidson, Inc. and EPS reflect these adjustments.
Beginning with the fourth quarter of 2022, new business segment reporting now includes:
- Harley-Davidson Motor Company (HDMC): Group that is accountable for the design, manufacturing, marketing and sales of Harley-Davidson motorcycles and related products
- Harley-Davidson Financial Services (HDFS): Group that provides motorcycle and related products financing and insurance products and services for our dealers and retail customers
- LiveWire: Group that is accountable for the design, marketing and sales of LiveWire electric motorcycles and related products, including STACYC electric balance bikes
- Harley-Davidson, Inc. (HDI): Corporate entity for the overall Company, under which HDMC, HDFS and LiveWire operate
