Harley-Davidson (HOG) Q1 2026 Earnings Transcript

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Date

Tuesday, May 5, 2026 at 9 a.m. ET

Call participants

• Chief Executive Officer — Arthur Starrs
• Chief Financial Officer — Jonathan Root

Takeaways

• North America retail sales -- Up 14%, with US sales up 16% and Canada down 8%; approximately 24,000 motorcycles sold in the region.
• Global retail sales -- Increased 8%, with approximately 34,000 new motorcycles retailed worldwide; growth in North America offset a 4% decline internationally.
• Dealer inventory -- Decreased 22% globally, with North America down 21% and international markets down 23%, resulting in healthier, more current inventory positioning for the main riding season.
• US market share -- Harley-Davidson (NYSE:HOG) reached 38% in the US 601cc-plus segment, up two percentage points.
• Europe, Middle East, and Africa (EMEA) sales -- Declined 3%, yet European market share doubled from 2% to 4% driven by Adventure Touring models and rapid sell-through of new model year inventory.
• Asia Pacific sales -- Dropped 9%, with compression in core models, partially offset by Adventure Touring segments.
• Latin America sales -- Rose 21%, led by Brazil and Mexico and strength in Touring and Trike categories.
• Wholesale shipments -- Fell 3% to 37,300 units from 38,600, with expectations for stronger second and fourth quarter shipments and a more balanced annual cadence.
• HDMC revenue -- Decreased 2% to $1.1 billion; Motorcycles revenue at $836 million, Parts & Accessories plus Apparel at $200 million, Licensing and Other at $20 million; unfavorable mix, volume, and pricing pressures were partly mitigated by favorable currency movements.
• HDMC gross margin -- Fell to 25.3% from 29.1%, due to $45 million in additional tariff costs, negative pricing/incentive mix, lower volumes, and supply management costs, counteracted somewhat by prior tariff recovery settlements and currency gains.
• Operating expenses -- HDMC expenses increased by $49 million, split between $15 million in restructuring charges and $34 million for higher warranty costs from recalls, leadership changes, increased marketing, and select discrete items.
• HDMC operating income -- Declined to $19 million from $116 million a year ago.
• HDFS revenue -- Decreased 54% to $112 million, driven by lower interest income from the retail loan book sale; other income rose from servicing fees, investment income, and gains on third-party loan sales.
• HDFS operating income margin -- Posted 19.9% for the quarter as operating expenses were managed prudently with a $1 million decrease.
• Retail loan originations -- Rose 14% to $671 million; HDFS managed loans reported an annualized retail credit loss ratio of 3.6% compared to 3.8% previously.
• LiveWire segment -- Revenue climbed 87% with an 11% operating loss reduction, supported by gross profit gains and lower operating costs; net cash used by operating activities improved by over 25% compared to the prior year.
• Tariffs -- Cost $45 million in the first quarter, expected to total $75 million to $90 million for 2026, with sequentially declining impact through the year; new US tariff exemptions for certain motorcycles, parts, and accessories help mitigate future impact.
• Share repurchases -- 6.6 million shares worth $128 million repurchased in the first quarter of 2026, totaling 26.8 million shares or $726 million since the 2024 announcement; accelerated share repurchase agreement concluded in February 2026.
• Cash and equivalents -- Ended at $1.8 billion versus $1.9 billion prior period.
• First quarter EPS -- Earnings per share was 22¢, down from $1.07 in the prior period.
• Operating income guidance -- Forecasts for 2026: HDMC at positive $10 million to a loss of $40 million, HDFS at $45 million to $60 million; LiveWire operating loss forecasted at $70 million to $80 million.
• Unit guidance -- Full-year expectation of 130,000 to 135,000 HDMC retail and wholesale units, matching healthy inventory levels and projecting one-to-one retail to wholesale relationship.
• CapEx and margin targets -- CapEx to remain stable; medium-term gross margin target approaching 30%, operating expenses expected to decrease below 20% of sales; aiming for 10%-12% EBITDA margin.
• Cost savings initiative -- Company executing on at least $150 million in annual run-rate fixed cost reductions by 2027 and beyond versus 2025 baselines.
• Strategic plan -- "Back to the Bricks" plan prioritizes a more rider-centric and customizable product portfolio, renewed dealer economics, Parts and Accessories as a growth lever, and margin recovery.
• Portfolio announcements -- Iconic Sportster model returning in 2027; launch of the lightweight, customizable Sprint for 2026, both targeting accessibility and aftermarket revenue streams.
• Parts & Accessories growth plan -- Targeting 20%-30% sales growth by reinstating 30% of previously eliminated SKUs and integrating P&A into launch processes with HDFS financing solutions and aligned dealer incentives.
• Marketing -- Shift to a brand-building "Ride" platform, lower reliance on heavy promotions, increased investment in community-building, and new top-of-funnel initiatives.
• EBITDA target -- Plan calls for $350 million-plus EBITDA in 2027, with primary levers being fixed cost reduction, improved operating leverage, portfolio expansion, and focused promotions.
• HDFS long-term outlook -- Capital-light model expected to deliver $125 million to $150 million operating income by 2029, supporting expanded P&A financing solutions.

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Risks

• HDMC gross margin declined to 25.3% from 29.1% due to $45 million in tariff costs, negative net pricing, lower volumes, and supply management challenges, indicating operational headwinds.
• HDMC operating income fell to $19 million from $116 million, reflecting margin compression and higher costs from recalls, restructuring, and leadership transition.
• HDFS revenue decreased 54%, caused by the strategic move to a capital-light model and divestiture of retail loan assets, significantly lowering interest income and altering the segment's financial profile.
• Operating cash flow declined, with net use of $228 million in the first quarter versus $142 million inflow prior period, attributed to reduced HDMC shipment cash inflow and the impact of new retail finance receivables classified as held for sale under the HDFS forward flow arrangement.

Summary

Harley-Davidson reported a material shift in revenue streams and segment contribution following the HDFS transaction, with consolidated revenue down 12% and HDFS revenue declining 54%. Management launched the "Back to the Bricks" strategy aimed at recapturing share through a more balanced, rider-focused lineup, significant cost reduction, and prioritized dealer profitability. Tariff costs remained a drag but were partially alleviated by regulatory exemptions and are forecasted to ease sequentially throughout 2026. Iconic model relaunches, notably the return of Sportster in 2027 and introduction of Sprint in 2026, target portfolio accessibility, aftermarket engagement, and long-term growth. New guidance maintains full-year outlooks while emphasizing one-to-one retail-to-wholesale alignment, improved cost discipline, and structural EBITDA growth plans.

• Arthur Starrs stated, "Dealer profitability is non-negotiable and ultimately a win for shareholders," directly linking frontline economics to brand health and future investment.
• Jonathan Root conveyed, "Within the first quarter, we had $45 million in tariffs in [the first quarter], and we expect the impact to decline sequentially through the remaining quarters consistent with our full-year outlook," providing clarity on tariff headwinds moderation.
• LiveWire's 87% revenue growth and reduction in operating loss signals progress in the electric vehicle segment, with net cash use improvement offering a positive trajectory for cash flow objectives.
• The company is concluding its previous $1 billion multi-year accelerated repurchase program after purchasing 26.8 million shares, indicating a shift in capital allocation philosophy under the updated strategy.

Industry glossary

• HDFS: Harley-Davidson Financial Services; the subsidiary responsible for consumer and dealer motorcycle financing, now operating under a capital-light forward flow model post-asset sale.
• Wholesale shipments: Motorcycles shipped by the company to dealers, not yet sold at retail; a key indicator of production and channel inventory movement.
• SKU: Stock Keeping Unit; unique identifiers for individual products or components, such as Parts and Accessories (P&A).
• Capital-light model: A business approach emphasizing lower asset ownership and reduced capital requirements, exemplified by HDFS’s transition to focus on servicing and loan origination sales.
• Forward flow arrangement: A financing agreement under which future loan originations are regularly sold to third parties as they are originated, thereby reducing balance sheet exposure.
• ASR (Accelerated Share Repurchase): A method for companies to repurchase a substantial block of outstanding shares quickly, often in conjunction with a financial intermediary.
• Blank-canvas motorcycle: A model designed purposefully for customization, enabling substantial personalization by riders through Parts and Accessories sales.

Full Conference Call Transcript

Arthur Starrs: Thank you, Shawn, 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 are calling Back to the Bricks. I will begin with an overview of our Q1 performance. Jonathan will then provide additional financial commentary before we turn to our strategy. Before I get into it, I would like to take a moment to acknowledge our deeply committed and passionate Harley-Davidson, Inc. employees who work tirelessly to bring Harley-Davidson, Inc. alive across the world. Thank you, Team HD. Starting with retail sales, we are 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 have 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 will 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, Inc. ecosystem, and we are 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, Inc. community as the Bricks, with our employees at headquarters returning to the office for the first time since 2020. Finally, we have been encouraged by the early reception to our new marketing platform, Ride. I will speak more about the brand platform and the value we believe it will bring as part of our strategy presentation.

With that, I will turn it over to Jonathan.

Jonathan Root: Thank you, Arthur, 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 2026. Consolidated revenue in the first quarter was down 12%, driven primarily by HDFS revenue being down 54% as it moved into a new capital-light model after the closing of the HDFS transaction where we sold a significant part of the retail loan book and agreed to a forward flow in which we expect to sell approximately 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 2025. This was driven by a significant year-over-year decline in operating income at both HDMC and HDFS, 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 22¢, which compares to $1.07 in 2025. Now turning to page five and HDMC retail performance. In Q1, North American retail sales of new motorcycles were up 14% versus prior year, 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, Inc. reaching 38% of the US 601cc-plus market, up two 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 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 2026 was down 22% versus the end of 2025. Specifically, North American dealer inventory was down 21% and dealer inventory outside of North America was down 23%.

This has allowed Harley-Davidson, Inc. 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 one-half 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, Inc. and our dealers up for greater success.

Before we get into revenue, let us conclude with some information on wholesale shipments. From a wholesale shipment perspective, in 2026, we delivered approximately 37,300 units compared to 38,600 units in 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 compared to the prior year period.

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 six 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, P&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 spend. These were partially offset by favorable foreign currency. Now turning to page seven and HDMC margin performance.

In Q1, HDMC 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 other reoccurring charges. The second piece consists of $34 million of additional cost 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 Q1, HDMC had operating income of $19 million, which compares to operating income of $116 million in the prior year period. Turning to slide eight.

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 AIFTA 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 2025. In 2026, 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, Inc. is a business very centered in and around the United States. Three of our four manufacturing centers are US-based and 100% of our US core product is manufactured in the US.

This change will serve in helping mitigate the impact of tariffs to Harley-Davidson, Inc. 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 HDFS 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 HDFS transaction. Other income within HDFS revenue was favorable year over year due primarily to new servicing fees, investment income, and new gains on third-party loan sales. HDFS 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 HDFS transaction. The HDFS team continues to manage expenses prudently with operating expenses decreasing by $1 million versus prior year. Turning to page 10. In Q1, HDFS'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 HDFS 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 2026, LiveWire revenue increased 87% over prior year driven by increases in electric motorcycle and STACYC 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 2026 compared to 2025.

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 shipment.

Also at HDFS, 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 HDFS transaction which concluded throughout 2025. Total cash and cash equivalents ended 2026 at $1.8 billion compared to $1.9 billion a year ago. As part of our share buyback strategy, in 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 12/31/2025, with the remainder expected to be delivered in early 2026.

On 02/12/2026, our ASR was concluded, and we received an additional 3.1 million shares on 02/13/2026. 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, $63.3 million, in 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 2024 earnings announcement, where we also announced a plan to repurchase $1 billion worth of our shares through 2026, we have repurchased a total of 26.8 million shares. That is a total value of $726 million of Harley-Davidson, Inc. shares purchased.

We are pleased with the performance and have decided to conclude reporting on the program, as we look forward to aligning our capital allocation approach with the updated strategy that Arthur 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 2026 motorcycle launch, including the new limited Touring motorcycles and 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 units 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, 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 the cost of between $75 million to $90 million of new or increased tariffs based upon current tariff levels and versus a 2024 baseline. This is an update to the prior range we provided of $75 million to $105 million. At HDMC, we expect operating income of positive $10 million to a loss 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, Harley-Davidson Financial Services now employs a capital-light, de-risked 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 will turn it back to Arthur to cover our strategic plan.

Arthur Starrs: Now turning to our strategic plan for Harley-Davidson, Inc. On behalf of our Harley-Davidson, Inc. 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 have done since October. We have 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, Inc. and position the company for growth.

First, we are intensely focused on leveraging Harley-Davidson, Inc.'s competitive advantages—specifically brand, diversified revenue channels, and most notably, P&A 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, Inc. has a clear right to win.

Fourth, we are 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, Inc. First, our 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, Inc.

Second, through our best-in-class dealer network, we serve a global community across segments we have 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 have spent time with riders and dealers at events, rallies, and swap meets. What stands out is the emotional connection. Riders talk about their motorcycles, their rides, and their community in deeply personal ways. For them, riding is not just about getting somewhere. It is about the experience itself. The ride is the destination. Turning to slide four.

In the midst of a bold restoration of the business to drive value for shareholders, what is 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 are 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 are 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, Inc. and dealer economics, we can create more value for riders, stronger profitability for dealers, and more dependable cash flow for shareholders. I will come back to this in more detail shortly. Another key pillar is Parts and Accessories. Customization is at the heart of Harley-Davidson, Inc.

It is 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 are 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 are also reinforcing MotorClothes and Apparel, growing from the core of the brand. On promotions, as inventory is normalized, we are shifting to a more targeted and disciplined approach—one that supports volume while protecting margins. An expanded portfolio will play an important role here as well. From an investment standpoint, we continue to see upside in existing platforms, particularly within Touring.

But our near-term focus is on executing better with the platforms we already have rather than introducing entirely new ones. By leveraging our existing platforms and powertrain to bring new motorcycles to market, we are operating with a more capital-efficient model. Finally, we have taken important steps to refocus our brand around our community, as reflected in the launch of the Ride marketing platform. Taken together, we believe these actions position us to revitalize the business by leaning into what has always made Harley-Davidson, Inc. strong and executing with greater clarity and discipline.

As you can see on slide five, we have experienced a decline in retail volumes, and that has had a direct and meaningful impact on both company and dealer performance. At the core of this is a loss of relevancy with riders, most notably with the exit of iconic motorcycles like the Sportster, which limited accessibility and contributed to lower volumes. Additionally, we are excited to introduce Sprint, the perfect entry for many to the Harley-Davidson, Inc. brand. At the same time, as volumes declined, our cost base remained largely fixed, putting pressure on margins and driving a greater reliance on broad-based promotions, particularly on higher-priced motorcycles.

Importantly, lower throughput has had a direct impact on our dealers—reducing traffic, compressing profitability, and limiting the performance of key revenue streams like Parts and Accessories and Service. All of this reinforces the critical point: restoring profitable volume is central to improving overall performance. That is exactly what our strategy is designed to address—making the brand more accessible through a combination of portfolio changes, more targeted pricing and promotions, and improved operational execution. Moving to slide six. While recent performance has been impacted, the underlying market opportunity remains significant. We see meaningful white space in existing markets—areas where Harley-Davidson, Inc. has strong legacy equity and a clear right to win.

Across new motorcycles, used motorcycles, Parts and Accessories, and Apparel, there is share of wallet that we were capturing as recently as 2019 that we are no longer capturing today. That creates a very direct opportunity to regain market share and do so in segments where our brand is already strong. Importantly, this strategy is not about entering new categories where we lack a competitive advantage. It is about doubling down on the categories we know, where we have credibility, scale, and deep rider connection. We believe this positions us to regain lost share while driving meaningful volume growth over time. Now turning to our strengths on slide seven.

The foundation of Harley-Davidson, Inc. is its legacy—an unparalleled brand with unique American heritage, as recognized recently by USA Today as part of their 50 iconic brands that shaped America series—underpinned by a best-in-class dealer experience, deeply committed riders, and craftsmanship that delivers something truly unique. When I first joined the company, those advantages were immediately clear, and as we have looked more closely at the data, they have only become more compelling. We are one of the most recognized and esteemed brands in the category, and in many ways, we help define it. Our dealer network is a true competitive advantage, consistently delivering a best-in-class customer experience and serving as the frontline of our brand.

Our riders have an incredible affinity for Harley-Davidson, Inc. They do not just buy our products. They live our brand. It is a level of loyalty and engagement that is difficult to replicate. All of this is anchored in superior craftsmanship and quality that continues to resonate strongly with our riders. Taken together, these strengths provide a powerful foundation as we execute our plan and move the business forward. Now turning to our strategic roadmap on slide eight. Against the backdrop we have just discussed, we have developed a plan for the next several years that unfolds in three clear phases. First is the reset.

This phase is already underway and focused on taking cost out, rightsizing dealer inventory, strengthening our dealer relationships, and rolling out the Ride marketing platform. We are making progress across all these areas, and today we will provide an update on that momentum. Second is the growth phase. Beginning next year, you will see a more expanded and balanced portfolio, designed around what riders want while leveraging the full life cycle of the motorcycle to unlock additional revenue streams. Parts and Accessories will play a much larger role both in dealerships and as a core revenue driver. At the same time, we are refining our promotional approach to be more targeted, driving traffic and volume while preserving profitability.

Third is the acceleration of value creation. As the portfolio becomes more accessible and better aligned to the needs of our full spectrum of riders, we see opportunity to deepen ridership engagement. This includes greater participation in the used motorcycle ecosystem, as well as further driving adjacent areas like Apparel and Licensing. With the foundation established in the first two phases, we believe we are well positioned to drive more sustainable enterprise growth and wider economic enterprise benefits. Turning to slide nine. What are we doing right now? We have already begun putting this plan into action, and we are encouraged by the early momentum.

As part of phase one, our actions on cost and inventory have been swift and effective. We have moved quickly to reduce headcount and take cost out of cost of goods sold, creating room to reinvest in key growth areas like Parts and Accessories. As we previously outlined, we expect to deliver at least $150 million in annual run-rate cost savings that will impact 2027 and beyond versus 2025 levels. At the same time, we have made meaningful progress on inventory. Global retail inventory is now at a much healthier level, down a significant 22% year over year. We still see opportunity to improve assortment and allocation at the dealer level. Importantly, these actions are starting to translate into results.

We are seeing sales momentum return with retail growth and market share gains, including an 8% increase in global retail sales in Q1 2026. Now turning to our dealers on slide 10. The Harley-Davidson, Inc. dealer network is a clear competitive advantage, and our strategy is intentionally designed to support and strengthen their profitability. I firmly believe this company will go only as far as our dealers take us. That is why dealer profitability is a central pillar of our plan. Since joining, I have spent a significant amount of time with dealers along with the broader leadership team, listening and learning directly from them on the ground.

Our focus is on earning their trust and ensuring they are confident and excited about the path forward. We have already taken action through inventory rightsizing, better alignment on promotions, and structural improvements to dealer programs. We are not done—there are additional actions ahead that we expect to further strengthen dealer economics. Our objective is clear: to materially improve dealer profitability over time, supporting a stronger, more stable network, and enabling long-term growth. As shown on the slide, we are targeting a meaningful step up in dealer profitability over the next several years. Moving to slide 11, it is important to understand the role dealers play in the Harley-Davidson, Inc. ecosystem.

Dealer profitability is non-negotiable and ultimately a win for shareholders. At the core, brick-and-mortar economics and frontline enthusiasm are directly linked. When our dealers are profitable, they can invest in their business, delivering a better rider experience at the point of interaction with our brand. Stronger dealer economics also reduce the need for discounting and OEM promotional support, helping preserve the premium positioning and long-term health of the brand. Dealers are not just our primary sales channel. They are a powerful marketing engine, building the brand in local communities at scale. When they are successful, we unlock the ability to invest more in rider growth through initiatives like Riding Academy, HOG engagement, and events that deepen connection to the brand.

Importantly, healthy dealer profitability attracts capital, bringing more investment into the network and supporting long-term rider-centric growth. Moving to slide 12, I want to spend a moment on the lens through which we are now viewing growth and profitability. We have done significant work to better understand how we make money as one enterprise—Harley-Davidson, Inc. and our dealers together. What is clear is that focusing solely on wholesale and retail motorcycle margins is an incomplete view. A motorcycle generates value over its entire life cycle—across Parts and Accessories, Service, Finance and Insurance, and ultimately, the used market. Importantly, Harley-Davidson, Inc. and our dealers participate in that value at different points in time across multiple revenue streams.

So going forward, we are managing the business against this broader enterprise economic model. By increasing new motorcycle volumes, we not only drive profit at the point of sale, we also expand the base of motorcycles in the market, which fuels downstream revenue across all of these channels. We believe this will create a more stable, diversified, and sustainable earnings profile over time. It also changes how we think about the portfolio. We intend to bring motorcycles to market in a way that supports the full enterprise profit model—not just the economics of an individual launch or motorcycle. We expect this to reduce pressure on any single product and lead to more balanced performance across cycles.

Importantly, the portfolio changes we are making—particularly around accessibility and customization—play directly into this model by supporting higher volumes and stronger life cycle value. Over time, we plan for this to become a compounding growth engine. The return of Sportster and the introduction of new models like Sprint are great examples of how this approach will create value across the system. We are really excited to announce that our iconic Harley-Davidson, Inc. Sportster will be returning in 2027. This has been the most requested motorcycle from both our riders and our dealers, and we are bringing it back better than ever. Sportster is a perfect embodiment of Back to the Bricks, and it fits naturally within our enterprise economic model.

For context, Sportster has historically been a middleweight, highly customizable motorcycle with an air-cooled powertrain and an accessible starting price point, making it an important entry to the Harley-Davidson, Inc. brand. While it was discontinued in 2022, it has remained incredibly strong in the used market, often retaining value at or above original MSRP, which speaks to its enduring appeal. With its accessibility, we expect Sportster to drive higher volumes, and with its customization potential, we expect strong attachment to Parts and Accessories as riders personalize their motorcycles. Beyond the motorcycle itself, Sportster also creates opportunity across Apparel, Licensing, and the broader rider ecosystem.

Importantly, it demonstrates how our strategy generates value across the full life cycle, from the initial sale to entry into the used market. Taken together, Sportster is a critical part of our plan to restore volume, strengthen our portfolio, and drive long-term enterprise value. We look forward to sharing more specifics later this year. Additionally, we are excited to bring Sprint to market beginning in 2026. This lightweight, customizable, and accessible motorcycle provides a great entry to the brand for many riders. We are excited to be returning to a space that we have not been in since the 1960s, and we believe that the Sprint will provide a great starting point.

Zooming out to a broader view of the portfolio, we are taking deliberate steps to realign the portfolio, making it more rider-centric and better positioned to replicate the value creation cycle we just discussed across more models. Over the past few years, pricing and portfolio decisions reduced accessibility for some riders, which contributed to lower volumes and ultimately pressure on profitability. We are addressing that directly. Going forward, you will see a more balanced lineup across price points while still maintaining our premium positioning. We are also expanding the use of blank-canvas motorcycles, which we know is a key differentiator for Harley-Davidson, Inc., giving riders more opportunity to personalize their motorcycles through Genuine Parts and Accessories.

These changes are informed by deep analysis of the used market, direct dealer engagement, and what we have learned from recent promotional activity. Importantly, we see clear gaps in the portfolio that we can address efficiently without starting from scratch. We are leveraging our existing platforms and powertrain where we see significant room for growth, allowing us to expand the lineup without incremental capital investment. Taken together, this positions us to deliver what riders want, improve accessibility, and drive stronger volume and life cycle value across the portfolio. Now turning to Parts and Accessories on slide 16. This is one of our most important revenue channels and a significant growth opportunity.

We believe there is potential to drive 20% to 30% sales growth over time. We also recognize that we have underinvested in this area in recent years. Customization is at the core of the Harley-Davidson, Inc. experience and a key driver of dealer profitability. No two Harley-Davidson, Inc. motorcycles on the road are the same, and that is exactly how riders want it. We have laid out a clear roadmap to rebuild our leadership in Parts and Accessories, leveraging our dealer network and existing manufacturing and supply chain capabilities. That starts with expanding our assortment, including reinstating approximately 30% of SKUs that were previously eliminated.

We are also refocusing on core categories where Harley-Davidson, Inc. has historically been strong, like seats, exhaust, lighting, windshields, and handlebars, and pairing that with an increased emphasis on blank-canvas motorcycles that are designed for personalization. Importantly, we are integrating Parts and Accessories into the motorcycle launch process, ensuring availability at launch, supported by HDFS financing and aligned dealer incentives. As we execute this, we expect stronger dealer performance, increased attachment rates, and ultimately both revenue growth and margin expansion over time. Turning to slide 17. We are also refining our approach to promotions. Historically, our promotional activity has been broader and less targeted.

More recently, we used promotions to help reset elevated dealer inventory, which, while necessary, put pressure on profitability. Now with inventory at healthier levels, we are shifting to a more disciplined and targeted approach focused on driving traffic and conversion at a lower cost. An important enabler of this is our expanding portfolio, which allows for more value-based messaging across a broader range of products, rather than relying on heavy discounting on a narrower mix. We are also strengthening our capabilities with recent hires who bring deep experience in performance marketing in automotive retail. The launch of our marketing development fund in 2025 is a key step in better aligning scale with more effective localized dealer messaging.

Together, these efforts are improving how we manage incentive spend, driving more predictable growth, while recognizing that many riders do not require heavy promotion to convert. The result is a more efficient model which we believe will support volume recovery while protecting margins. Now turning to our marketing approach on slide 18. Last month, we launched our new brand platform, Ride, which really brings everything together. It is built on a simple but powerful insight: joy and swagger. At its core, Ride celebrates the experience of riding—and most importantly, our riders themselves. They and their motorcycles are the stars of the show. This reflects a broader shift in how we show up as a brand.

We are moving toward more authentic, rider-focused storytelling that reinforces the community and culture at the heart of Harley-Davidson, Inc. We are also reallocating our marketing investments, moving away from a heavier e-commerce spend and toward top-of-funnel brand-building efforts to drive awareness and engagement. You may have even seen us recently on Wheel of Fortune. At the same time, we are making better use of tools like the marketing development fund while upgrading our digital platforms and programs to support both global scale and local activation.

Perhaps most importantly, the power of Ride is that it gives us a single unified voice while still allowing flexibility for riders and dealers around the world to bring the brand to life in their own way. It connects all aspects of Harley-Davidson, Inc.—from product to community to marketing—under one cohesive platform. As you can see on the slide, it creates a clear and flexible framework for how we bring the brand to life across riders, dealers, and markets around the world. Over time, we expect this to drive stronger engagement, deeper relevance, and ultimately growth. Now I will hand it over to Jonathan to take you through the financial section. Jonathan, over to you.

Jonathan Root: Thanks, Arthur. Now turning to our financials on slide 21. All of the facets of the strategy we have just laid out support our financial growth trajectory over the next few years. We believe we have a clear path to achieving $350 million-plus EBITDA in 2027. The path to get there is clear and execution-driven, anchored by roughly $150 million in fixed cost reduction, better alignment between wholesale and retail volume, the full impact of Sportster and Sprint, targeted expansion in high-margin Parts and Accessories, and more effective, disciplined promotions. Beyond 2027, the story does not stop. We expect continued strong growth driven by further cost absorption, a broader P&A and motorcycle portfolio, incremental product improvement, and smarter incentive execution.

The bottom line is this is a structural step change in profitability with clear levers and meaningful upside ahead. Now on slide 22, we will take a closer look at how we get there. This bridge outlines the key initiatives that will drive EBITDA improvement. In the near term, the focus will be on cost reduction and operating leverage, which we see as the primary drivers of performance. With these actions already underway, we have a clear line of sight to achieving $350 million or more. Beyond 2027, drivers for continued growth will include, but not be limited to, improvements in motorcycle margins and volume, supported by growth in Parts and Accessories. Turning to our medium-term targets on slide 23.

We expect to return to sustainable growth across key metrics. We expect to achieve mid-single-digit retail unit growth over the medium term. As Arthur discussed, this return to growth will be driven by the significant actions we are taking across our business. Furthermore, we expect the momentum in retail units and other enabling actions to drive mid-single-digit growth in P&A and A&L. Combined with the ongoing inventory rightsizing, we expect this return to growth to have a significant impact on dealer health. From a margin standpoint, we expect to drive significant improvement in gross margins, approaching 30%, while operating expenses as a percentage of sales decrease to less than 20% from the 25% in 2025.

Over the midterm, we expect CapEx to remain broadly in line with recent expenditure levels. In totality, we expect to deliver attractive top-line growth and drive towards a 10% to 12% EBITDA margin over the medium term. These targets reflect a more balanced and resilient business model underpinned by the Back to the Bricks strategy. I will now touch briefly on HDFS on slide 24. We believe that the business remains a highly strategic asset. Following the transaction, we have transitioned to a more capital-light model while maintaining HDFS's role in supporting motorcycle sales and dealer financing.

We recently held a call to discuss the HDFS business in greater detail, but at a high level, we expect HDFS to see improved returns while reducing capital intensity. We expect to continue to strengthen HDFS's leading position in powersports and intend to expand our high-value finance and insurance product suite with optimized offers supporting motorcycle sales. In connection with our enhanced P&A offerings, HDFS plans to leverage additional financing to drive P&A sales. Lastly, we are also better training dealers to maintain the best-in-class penetration rate of HDFS. With all this in mind, we are targeting $125 million to $150 million in operating income for the business by 2029. Turning to capital allocation on slide 25.

Our priorities remain consistent. We will reinvest in the business where we see opportunities to drive growth across the key initiatives of our strategy. We also remain committed to returning capital to our shareholders through share buybacks and dividends. Additionally, we remain open to opportunistic, value-additive M&A. And with that, I will hand it back to Arthur.

Arthur Starrs: Thank you, Jonathan. To conclude, Harley-Davidson, Inc. is built on a strong foundation—an iconic brand, a deeply loyal rider base, and a differentiated dealer network. We are excited about the path forward. Our dealers are energized, and we are seeing real enthusiasm from the rider community around Back to the Bricks. This strategy is intentionally grounded in our core strengths, and we are doubling down on what makes Harley-Davidson, Inc. unique, especially our dealer network. Importantly, execution is already underway, and we are seeing early signs that our actions are delivering results. We are doing this from a position of strength, with a solid financial foundation to support both investment in the business and returns to shareholders.

We have the right team in place, energized and equipped with the experience needed to deliver on this plan. We remain committed to working closely with our dealers every step of the way to create value for our riders, and ultimately for our shareholders. Thank you for your time this morning, and with that, we will take your questions.

Operator: We will now open the call for questions. Thank you. And, ladies and gentlemen, if you do have questions for today, please press star followed by the number one on your telephone keypad. We will take our first question from the line of Robin Margaret Farley from UBS. Your line is live.

Robin Margaret Farley: Great, thank you. Two questions, if I may. First is just wondering what medium term is—is 2029 medium term—just to kind of put a finer point on thinking about the targets? And then the other question is a little bit tricky with tariffs. Some of the bridge to your 2027 EBITDA is from, I guess, lower tariffs lumped in with some other things. If you could just help us think about that—what you are expecting, what is factored in terms of tariff refunds into that—and your full-year '26 guide was unchanged, but tariffs seem a little better, so maybe there is an offset there.

And then just, I do not know if the manufacturing for Sprint—if you are assuming tariffs on that, if that is going to be outside the US and potentially tariffs. I know that is a lot of tariff rolled up into one, but just whatever you want to address. Thank you.

Arthur Starrs: Robin, thank you. It is Arthur. I appreciate the questions. I will take the first one, and then I will let Jonathan handle the tariff specifics. When we said medium term, we mean three to five years, so hopefully that helps. And on the tariff piece, Jonathan?

Jonathan Root: Thank you, Robin. From a tariff standpoint, when you look at our 2026 estimate, we obviously have a midpoint of $83 million. Within the first quarter, we had $45 million in tariffs in Q1, and we expect the impact to decline sequentially through the remaining quarters consistent with our full-year outlook.

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