Harley-Davidson Inc (HOG) Reports Q3 2023 Earnings Amidst Challenging Market Conditions
Harley-Davidson Inc (NYSE:HOG) reported a 6% decline in consolidated revenue for Q3 2023, with a 38% decrease in operating income.
The company's HDMC Revenue declined by 9%, while HDFS Revenue increased by 15%.
Harley-Davidson successfully launched two new CVO motorcycles, leading to a 25% increase in CVO retail sales.
The company reaffirms its full-year 2023 outlook, despite challenging market conditions.
On October 26, 2023, Harley-Davidson Inc (NYSE:HOG) released its third quarter 2023 earnings report. Despite facing a challenging macro and consumer backdrop, the company managed to preserve profitability at an industry-leading level. The successful launch of their pinnacle CVO motorcycles resulted in a 25% increase in CVO retail sales. However, HDMC Revenue declined by 9%, primarily due to a 20% decrease in wholesale shipments.
Financial Highlights and Results
The company's consolidated revenue for Q3 2023 was down by 6%, driven by a 9% decline in HDMC Revenue, partially offset by a 15% increase in HDFS Revenue. The consolidated operating income decreased by 38%, with a 37% decline at HDMC, a 27% decline at HDFS, and an operating loss of $25 million in the LiveWire segment. The company delivered a diluted EPS of $1.38.
Year-to-Date 2023 Highlights and Results
Year-to-date, Harley-Davidson achieved an HDMC Operating Income Margin of 17.4%. HDMC Revenue was up by 2% compared to the previous year, with global pricing and improved mix offsetting lower wholesale motorcycle unit shipments. The company also repurchased $226 million of shares on a discretionary basis.
Harley-Davidson Motor Company (HDMC) Results
Third quarter global motorcycle shipments decreased by 20%, due to the production suspension announced in late Q2 2023, prudent dealer inventory management, and market conditions. Revenue was down by 9%, with improved mix and global pricing partially offsetting unit declines. Parts & Accessories revenue was down by 8%, largely in line with revenue from Motorcycles. Apparel revenue was down by 29%, driven by lower volumes in North America.
Harley-Davidson Financial Services (HDFS) Results
HDFS revenue was up $32 million in the third quarter, an increase of 15% versus the prior year, driven primarily by higher interest income. HDFS operating income declined by $22 million, or down 27%, driven by an increased provision for credit losses and higher interest expense.
LiveWire Results
With the majority of Del Mar shipments landing in Q4, LiveWire revenue for the third quarter was down versus the prior year. LiveWire operating loss of $25 million in the third quarter, in line with expectations, was driven by product development and other spending associated with the launch of the Del Mar electric motorcycle.
2023 Financial Outlook
For the full year 2023, the company reaffirms its most recent guidance and continues to expect HDMC revenue growth of flat to 3% and operating income margin of 13.9 to 14.3%. HDFS is expected to see an operating income decline of 20 to 25%. LiveWire is projected to have motorcycle unit sales of 6001,000 and an operating loss of $115 to $125 million.
Despite the challenging market conditions, Harley-Davidson remains committed to its Hardwire strategy with a focus on both desirability and profitability. The company is gearing up for 2024 and will ensure that it is fully aligned and ready as it closes out the year with Q4.
Explore the complete 8-K earnings release (here) from Harley-Davidson Inc for further details.
This article first appeared on GuruFocus.
