On February 5, 2025, Harley-Davidson Inc (HOG, Financial) released its 8-K filing detailing its fourth quarter and full year 2024 financial results. The company, a leading global manufacturer of heavyweight motorcycles, faced significant challenges due to cyclical headwinds and a high-interest rate environment, impacting consumer confidence.
Company Overview
Harley-Davidson Inc (HOG, Financial) is renowned for its heavyweight motorcycles, including custom, cruising, and touring models. The company has expanded into the adventure touring market with the Pan America model and the electric segment with the LiveWire brand. Harley-Davidson Financial Services (HDFS) provides financing and insurance services, capturing around 38% of the heavyweight domestic market in 2023.
Performance and Challenges
For the fourth quarter of 2024, Harley-Davidson reported a diluted EPS loss of -$0.93, missing the analyst estimate of -$0.67. The company's revenue for the quarter was $688 million, exceeding the estimated $464.88 million. The decline in revenue was primarily due to a 47% decrease in Harley-Davidson Motor Company (HDMC) revenue, driven by lower volumes and an unfavorable mix.
Financial Achievements
Despite the challenges, Harley-Davidson achieved several financial milestones. The company reported a full-year diluted EPS of $3.44, slightly below the annual estimate of $3.64. HDMC's operating income for the year was $278 million, with an operating margin of 6.7%. HDFS reported a 6% increase in operating income to $248 million, highlighting the resilience of its financial services arm.
Income Statement Highlights
| Metric | Q4 2024 | Q4 2023 | Change |
|---|---|---|---|
| Revenue | $688 million | $1,053 million | -35% |
| Operating Income (Loss) | ($193 million) | ($21 million) | nm |
| Net Income Attributable to HDI | ($117 million) | $26 million | nm |
| Diluted EPS | ($0.93) | $0.18 | nm |
Analysis of Performance
The significant decline in HDMC's global motorcycle shipments, down 53% in Q4, was a major factor in the company's financial performance. This decline was attributed to dealer channel de-stocking and challenging market conditions. The company's gross margin also suffered, with a loss of 0.8% in Q4 compared to a 22.9% margin in the previous year.
Commentary and Outlook
In 2024, we saw our performance being significantly impacted by the continued cyclical headwinds for discretionary products, including the high-interest rate environment affecting consumer confidence," said Jochen Zeitz, Chairman, President and CEO of Harley-Davidson.
Looking ahead to 2025, Harley-Davidson expects HDMC revenue to be flat to down 5%, with an operating income margin of 7.0% to 8.0%. The company plans capital investments of $225 to $250 million, indicating a focus on strategic growth and innovation.
Conclusion
Harley-Davidson Inc (HOG, Financial) faces a challenging market environment, with significant declines in revenue and shipments impacting its financial performance. However, the company's strategic initiatives and focus on financial services provide a foundation for potential recovery and growth in the coming year. Value investors may find interest in Harley-Davidson's efforts to navigate these challenges and capitalize on future opportunities.
Explore the complete 8-K earnings release (here) from Harley-Davidson Inc for further details.
