LiveWire Gr (NYSE:LVWR) released first-quarter financial results and hosted an earnings call on Tuesday. Read the complete transcript below.
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The full earnings call is available at https://events.q4inc.com/attendee/170803264
Summary
LiveWire Gr reported a 12% decline in consolidated revenue for Q1 2026, primarily due to a 54% decline in HDFS revenue after transitioning to a capital light model.
The company saw a 14% increase in North American retail sales, contributing to an 8% global growth, despite a challenging consumer environment.
Management introduced a new strategic plan ‘Back to the BRICS’ focusing on leveraging brand strengths, enhancing dealer relationships, and expanding product lines with models like Sportster and Sprint.
LiveWire Gr reaffirmed its full-year guidance, expecting retail and wholesale units to align closely, with plans to manage dealer inventory effectively.
CEO Artie Stars emphasized the importance of dealer profitability, aiming to double it by 2026 through inventory rightsizing and strategic initiatives in parts and accessories.
Full Transcript
OPERATOR
Ladies and gentlemen, thank you for standing by and welcome to The Harley Davidson 2026 first quarter investor and Analyst Conference Call. Please be advised that today’s conference call is being recorded. I would now like to hand the call over to Sean Collins. Thank you. Please go ahead.
Sean Collins (Director of Investor Relations)
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 Arty Starrs and Chief Financial and Commercial Officer Jonathan Roof. With that, let me turn it over to Harley Davidson CEO Arty Starrs.
Artie Starrs
Thank you, Sean and good morning everyone and thank you for joining us today for our Q1 2026 financial results as well as an introduction to our new strategic plan, which we’re calling Back to the BRICKS. I’ll begin with an overview of of our Q1 performance. Jonathan will then provide additional financial commentary before we turn to our strategy. Before I get into it, I’d like to take a moment to acknowledge our deeply committed and passionate Harley Davidson employees who work tirelessly to bring Harley Davidson alive across the world. Thank you Team HD. Starting with retail sales, we’re pleased with our performance. This quarter, North America delivered a 14% increase versus the prior year, contributing to global retail sales growth of 8% in what remains a challenging consumer environment. These results reflect the impact of the actions we’ve taken to drive demand and improve execution. As noted on the Q4 earnings call, dealer health and inventory levels remain a key focus for the company. During the quarter, we reduced global inventory by 22% year over year as we continued to prioritize dealer inventory sell through and aligning wholesale shipments with retail demand. We’ll share more detail on this in our strategy discussion. Strengthening dealer relationships has also remained a priority. We recognize the critical role our dealer network plays in the Harley Davidson ecosystem and we’re encouraged by the renewed sense of partnership and momentum across the network. This will be an important driver as we move forward into our next chapter. During the quarter, we also formally reopened our Juneau Avenue headquarters in Milwaukee, Wisconsin, affectionately referred to by our Harley Davidson community as the BRICKS, with our employees at headquarters returning to the office for the first time since 2020. Finally, we’ve been encouraged by the early reception to our new marketing platform ride, I’ll speak more about the brand platform and the value we believe it will bring as part of our strategy presentation. With that, I’ll turn it over to Jonathan.
Jonathan Roof (Chief Financial and Commercial Officer)
Thank you Artie, and good morning to all. I plan to start on page four of the presentation where I will briefly summarize the financial results for the first quarter. Subsequently, I will go into further detail on each business segment. Let me start with our consolidated financial Results for the first quarter of 2026. Consolidated revenue in the first quarter was down 12%, driven primarily by Harley-Davidson Financial Services revenue being down 54% as it moved into a new Capital Light model. After the closing of the Harley-Davidson Financial Services transaction where we sold a significant part of the retail loan book and agreed to a forward flow in which we expect to sell approximate two thirds of future originations. Consolidated operating income in the first quarter came in at $23 million compared to operating income of $160 million in Q1 of 2025. This was driven by a significant year over year decline in operating income at both HDMC and Harley-Davidson Financial Services. As we expected, the operating loss at Livewire was $18 million, which was in line with our expectations and $2 million favorable to a year ago. In Q1, earnings per share was $0.22, which compares to $1.07 in Q1 of 2025. Now turning to Page 5 and HDMC retail performance in Q1 North American retail sales of new motorcycles were up 14% versus prior year with approximately 24,000 motorcycles sold in Q1. Retail sales of new motorcycles outside of North America were down 4% versus prior year with approximately 10,000 motorcycles sold, resulting in Q1 global retail sales of new motorcycles being up 8% versus the prior year with a total of approximately 34,000 motorcycles retailed. While we are relatively pleased with the start to the year, particularly in the US we remain mindful of the global consumer discretionary landscape which remains uneven. We are aware that pricing continues to be on the top of customers minds given the current global setup that includes inflationary pressures, interest rates that continue to run above recent historical lows, and global geopolitical uncertainty. In North America, Q1 retail sales were up 14% where US retail sales were up 16% and Canada retail sales were down 8%. Results were driven by continued strength in our touring and trike models as consumers reacted well to our new 2026 motorcycle launch and targeted customer incentives. This translated into a significant market share gain with Harley Davidson Reaching 38% of the US 601cc plus market up 2 percentage points Year over year. Dealer inventory In North America declined 21% year over year, reflecting a more balanced setup as we enter the main riding season. In EMEA, Q1 retail sales posted a modest decline of 3% in the quarter. Performance reflected a subdued economic environment in Europe, although supported with early model year 2026 price product momentum across the continent, as evidenced by the quick sell through of new units that began arriving later in Q1. The Rev Max platform continued to outperform the broader portfolio led by Adventure Touring, which showed strong growth year over year. In addition, from a market share standpoint, we moved from 2% to 4% of share in the European market in Q1. In Asia Pacific, Q1 retail sales declined by 9% in the quarter. We experienced modest declines in the core portfolio including Touring, Trike and Softail, reflecting broad based pressure across Japan, Australia and China, partially offset by positive results in our non core motorcycle portfolio with strength in Adventure Touring. In Latin America, Q1 retail sales delivered another strong quarter with retail up 21% where both Brazil, our largest Latin American market, and Mexico were up while other Latin American countries were down modestly year over year. Touring and Trike were the standout categories in the market. Dealer inventory at the end of Q1 of 26 was down 22% versus the end of Q1 of 25. Specifically, North American dealer inventory was down 21% and dealer inventory outside of North America was down 23%. This has allowed Harley Davidson dealers to start the upcoming 2026 riding season with a largely appropriate setup. In addition, the quality of dealer inventory is healthier today than one year ago as it is more current from a model year standpoint. At the end of Q1, North America dealer inventory was comprised of approximately two thirds of current model year 2026 motorcycles. In comparison, in the prior year period, a little less than 1/2 of all dealer inventory was current model year. We expect this improvement in healthy dealer inventory to pay dividends in future periods and believe it sets Harley Davidson and our dealers up for greater success. Before we get into revenue, let’s conclude with some information on wholesale shipments. From a wholesale shipment perspective. In Q1 of 2026 we delivered approximately 37.3 thousand units compared to 38.6 thousand units in Q1 of 2025, which is down 3% year over year. As we are now beginning the prime riding season in North America, we have recently heard from dealers that they could benefit from more inventory with regard to particular places, models and trim levels. This is a good sign and we expect to ship more units on a year over year basis in Q2 and Q4 while running lower in Q3 in comparison to the prior year periods. We expect this will get us to a more even shipment cadence across the quarters in comparison to what we have delivered in recent years. Now turning to page 6 and HDMC revenue performance in Q1 HDMC revenue decreased by 2% coming in at $1.1 billion. We point out that from a business line standpoint motorcycles came in at $836 million, T&A plus apparel came in at $200 million and licensing and other came in at $20 million. The drivers of overall revenue at HDMC included lower volume or shipments and lower net pricing and incentive spending. These were partially offset by favorable foreign currency. Now turning to page 7 and HDMC margin performance in Q1HDMC gross profit came in at 25.3% which compares to 29.1% in the prior year. The year over year decrease was driven by the unfavorable impacts of increased Tariff costs of $45 million in Q1, which will be covered in more detail in the next slide. Net pricing and incentive spend due to effective sell through of prior model year dealer inventory product mix, lower volumes and higher than expected supply management costs as we work through a unique supplier situation. These were partially offset by the positive effects of tariff recoveries, settlement from prior years and favorable foreign exchange. In Q1 operating expenses totaled $248 million which was $49 million higher compared to prior year. This falls into two broad buckets. The first piece is a restructuring expense of $15 million driven by costs incurred related to strategic changes including the company’s decision to eliminate certain roles resulting in one time employee termination benefits and and other restructuring charges. The second piece consists of $34 million of additional costs in the quarter specifically due to higher warranty spend due to select product recalls. Select people costs primarily related to executive team changes on a year over year basis, increased marketing spend as the marketing development fund matures and limited other discrete expenses to operate the business. In Q1HDMC had operating income of $19 million which compares to operating income of $116 million in the prior year period. Turning to slide 8 in 2026, the overall global tariff regulatory environment continues to evolve. There are a number of factors at play in this space including the potential for increased tariff recoveries, evolution in the application of IEFA section 122 and updates to section 232 steel and aluminum tariffs in Q1 we saw the most significant year over year impact in tariffs we expect to experience this year. This is a result of the increased tariff levels which were initially put in place beginning in Q2 of 2025. In Q1 of 26 the cost of new or increased tariffs was $45 million. As tariff policy changes, there are lags associated with the various tariff levels as these adjustments work their way through our parts inventory imported prior to the current section 232 pronouncements. We continue to pursue mitigation actions where possible and pursue tariff recoveries when applicable. We note that recent US Administration tariff regulation announced in early April included an exemption on certain motorcycles and for parts and accessories for the use in the manufacturing of motorcycles. We would note that Harley Davidson is a business very centered in and around the United States. Three of our four manufacturing centers are U.S. based and 100% of our U.S. core product is manufactured in the U.S. this change will serve in helping mitigate the impact of to tariffs to Harley Davidson and enable us to strengthen our commitment to US Manufacturing at this point in time. We expect the cost of increased tariffs to be in a range of 75 million to $90 million for the full year 2026, which is favorable to what we guided to in our prior quarter. From a cadence perspective, our expected tariff amount will decrease consecutively as we work our way across the remaining quarters in 2026. Turning to Harley-Davidson Financial Services on page nine at Harley Davidson Financial Services, Q1 revenue came in at $112 million, a decrease of 54% driven by lower interest income due to the decline in retail receivables related to the sale of loan assets as part of the new Harley-Davidson Financial Services transaction. Other income within Harley-Davidson Financial Services revenue was favorable year over year and due primarily to new servicing fees, investment income and new gains on third party loan sales. Harley-Davidson Financial Services operating income was $22 million representing an operating income margin of 19.9%. On the expense side, interest expense and the provision for credit loss expense were both significantly lower, which was due to the decreased size of the retail loan portfolio and related debt on a year over year basis and as expected with the change in strategy associated with the Harley-Davidson Financial Services transaction, the Harley-Davidson Financial Services team continues to manage expenses prudently with operating expenses decreasing by $1 million versus prior year. Turning to page 10 in Q1, Harley-Davidson Financial Services’s annualized retail credit loss ratio on managed loans was 3.6% which compares to 3.8% in the year ago period. We are pleased with Harley-Davidson Financial Services loan origination activities as total Retail loan originations in Q1 were up 14%, coming in at $671 million. In Q1, total gross financing receivables were $2.5 billion at the end of Q1, where retail receivables were $1.3 billion and commercial receivables were $1.2 billion. Now turning to Slide 11 for the LiveWire segment. For the first quarter of 2026, LiveWire revenue increased 87% over prior year driven by increases in electric motorcycle and Stasik brand electric balance bike units. Consolidated operating loss decreased by 11% resulting from improved gross profit and lower selling administrative and engineering expenses. In turn, this drove an improvement of over 25% in net cash used by operating activities in Q1 of 26 compared to Q1 of 25 for 2026. LiveWire’s focus is heavily geared around the imminent launch of its S4 Honcho products, in particular continued network expansion, cost savings and improvements, and product innovation and development focused on products that will be profitable and positive drivers of cash flow. Now turning to slide 12 wrapping up with consolidated Harley Davidson Inc. Financial results we had net cash use of $228 million from operating activities in Q1, which compares to $142 million of operating cash in the prior year period. Operating cash flow was lower than the prior year due to reduced cash inflows at HDMC on lower wholesale shipments. Also at hdfs, the operating cash flow decreased due to reduced interest income and due to new originations of retail finance receivables under the forward flow arrangement that were classified as held for sale which is classified as an operating activity under US gaap. As a result, the originations to be sold to our strategic partners or outflows reduced cash flow from operations as there were no comparative retail finance receivable originations classified as held for sale in the first quarter of the prior year. This was partially offset by the inflows from the proceeds from the sale of retail finance receivables classified as held for sale. This will remain a distinct year over year item as we move through 2026 as a result of the Harley-Davidson Financial Services transaction which concluded throughout the second half of 2025. Total cash and cash equivalents ended Q1 of 2026 at 1.8 billion billion compared to $1.9 billion a year ago. As part of our share buyback strategy in Q4 of 2025 we entered into an accelerated share repurchase agreement to repurchase $200 million of shares of the company’s common stock as part of the ASR Agreement, we received $160 million or 80% of the notional worth of shares or 6.3 million shares delivered to us before December 31, 2025, with the remainder expected to be delivered in early 2026. On February 12, 2026, our ASR was concluded and we received an additional 3.1 million shares on February 13 of 2026. These shares had a value of $64.7 million considering the share price during the ASR’s performance period. Beyond the ASR, the company also repurchased another 3.5 million shares on a discretionary basis for $63.3 million in the first quarter of 2026. Therefore, in Q1 we repurchased a total of 6.6 million shares worth $128 million on a discretionary basis. We note that since our Q2 of 2024 earnings announcement, where we also announced a Plan to repurchase $1 billion worth of our shares through 2026, that we have repurchased a total of 26.8 million shares. That is a total value of $726 million of Harley Davidson shares purchased. We are pleased with the performance and have decided to conclude reporting on this program as we look forward to aligning our capital allocation approach with the updated strategy that Artie and I will walk through shortly. Share buybacks remain an important part of our capital allocation strategy and you will hear more on this, including a refreshed and updated approach to capital return to shareholders as we enter the main riding season. We remain pleased with our dealer inventory levels and leading market share position in the US new model year 26 motorcycle launch including the new Limited Touring motorcycles and the all new redesigned Trike models. We are also pleased with the reception to a number of new, more affordable motorcycles which have a focus on critical price points to help stoke demand. While we are not changing our financial guidance, we would note that our optimism on the year has increased. This is due in large part to our retail results in North America and we are also pleased with the early actioning of our cost reduction work for the full year 2026. The company reaffirms its guidance and continues to expect at HDMC retail units of $130,000 to 135,000 and wholesale units of 130,000 to 135,000. We believe that global dealer inventory levels are healthy and therefore we expect retail and wholesale to have a largely one to one relationship in 2026. In line with my earlier comments versus prior year, we expect shipments to be higher in Q2, relatively flat in Q3 and then up again in Q4. At the same time, we continue to expect production units at HDMC to be lower than wholesale unit shipped in 2026. As we work to prudently manage overall company inventory levels for 2026, we expect this will have a deleverage impact which will put pressure on operating leverage and operating margin, but we expect to come into alignment by next year. In addition, we still expect to face a greater overall cost for incremental tariffs in 2026 compared to 2025 and which we covered in detail previously. As a reminder, in full year 2025 we incurred a cost of $67 million in new or increased tariffs and in 2026 we forecast a cost of between 75 million to $90 million of new or increased tariffs based upon current tariff levels and versus a 24 baseline. This is an update to the prior range we provided of 75 million to $105 million. At HTMC, we expect operating income of positive $10 million to a loss of of $40 million. At HDFS we expect operating income of 45 million to $60 million. As a reminder, the new Business model at HDFS Given the HDFS transaction where Harley Davidson Financial Services now employs a capital light de-risk business model and has a significantly changed financial earnings profile relative to before the transaction. For Livewire, we are forecasting an operating loss in the range of 70 million to $80 million and with that I’ll turn it back to Artie to cover our strategic plan.
Artie Starrs
Now turning to our Strategic Plan for Harley Davidson. On behalf of our Harley Davidson community, Jonathan and I are excited to introduce our Back to the Bricks plan designed to reignite brand enthusiasm with riders around the world while driving profitable growth for our dealers and shareholders. It is grounded in the work we’ve done since October. We’ve spent significant time assessing the business, engaging deeply with dealers and riders and most recently through a global roadshow where we connected directly with the majority of our dealer network and all of our global dealer advisory councils. The Back to the Bricks plan will restore Harley Davidson and position the company for growth. First, we are intensely focused on leveraging Harley Davidson’s competitive advantages, specifically brand diversified revenue channels and most notably parts and accessories and financing products and our dealer network. Second, we are leaning into a true win win model with our dealer network. Our dealers are not only our retail channel but the frontline builders of our Rider community. They are the true source of strength and a competitive advantage. When our dealers win, the enterprise wins and so do our shareholders. Third, we have already taken immediate actions to recapture share by better serving the large and community of riders where Harley Davidson has a clear right to win. Fourth, we’re doing this from a position of strength and plan to leverage our balance sheet bolstered by cost and restructuring actions to enable both investment in the business and returns to shareholders. We are executing against a clear path to strong and growing free cash flow and EBITDA margin. And lastly, we brought on some great leadership talent to support the business as we enter this new chapter for the company. Moving to slide three there are really three things that define Harley Davidson. First, we are a 123 year young brand that designs and manufactures the best motorcycles in the world, combining iconic design, precision engineering and a look, sound and feel that is unmistakably Harley Davidson. Second, through our best in class dealer network, we serve a global community across segments we’ve helped define over decades. Our riders show up in powerful ways through HOG chapters, rallies, events and by giving back to their local communities. And third, maybe most importantly, is the culture of riding. Since starting at the company, I’ve spent time with riders and dealers at events, rallies and swap meets and what stands out is the emotional connection. Riders talk about their motorcycles, their rides and their community in deeply personal ways. For them, riding isn’t just about getting somewhere, it’s about the experience itself. The ride is the destination. Turning to Slide four we’re in the midst of a bold restoration of the business to drive value for shareholders. What’s clear is that our heritage remains a powerful advantage. Not something to preserve, but something to build from. It starts with our portfolio taking a step back. Over the last several years, we leaned heavily into touring and electric. Going forward, we are shifting to a more rider centric portfolio, one that is more accessible, more customizable and better aligned to the needs of the full spectrum of our riders. Touring will always remain our core. We’re building clear pathways into the brand that support long term touring growth while also addressing other riding occasions and styles. Importantly, we can do this using our existing platforms, moving from too many of too few to a more balanced lineup. We’re also adopting an enterprise profitability model, recognizing that our success is directly tied to the success of our dealers. When dealers win, we win. By aligning Harley Davidson and dealer economics, we can create more value for riders, stronger profitability for dealers and more dependable cash flow for shareholders. Come back to this in more detail shortly. Another key pillar is parts and accessories. Customization is at the heart of Harley Davidson, it’s how riders make each bike their own. What we often think of as freedom for the soul, or more personally, freedom for your soul. We’re reestablishing parts and accessories as a core growth driver, one where we have a clear right to win and in alignment with dealers, as this is an important component of their profitability. We’re also reinforcing motor clothes and apparel growing from the core of the brand. On promotions, as …
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