Harley-Davidson, Inc. Q2 2026 Earnings Call
Key Takeaways
- Harley-Davidson reported second quarter 2026 global retail sales of approximately 42,500 new motorcycles, up 1% year over year, driven by a 3% increase in North America and declines in EMEA and slight growth in Asia Pacific and Latin America.
- North American dealer inventory declined 15% year over year, with 85% of inventory being current model year 2026 motorcycles, the healthiest in years.
- Hdmc revenue increased 6% to $1.1 billion, with motorcycle revenue at $848 million and parts and accessories tracking ahead of plan.
- Hdmc gross profit margin was 27.5%, down 108 basis points year over year, while operating income margin improved to 6.6% from 5.9%.
- HDFs revenue decreased 55% to $117 million due to a capital light model and sale of loan assets, but operating income increased to $22 million with an 18.5% margin.
- Livewire segment revenue increased 52% driven by electric motorcycle sales and brand electric balance bikes, with an 18% reduction in net cash used by operating activities.
- Consolidated Harley-Davidson Inc revenue declined 6% due to HDFs revenue decrease; operating income was $76 million versus $112 million in prior year; earnings per share were $0.75 versus $0.88.
- The company repurchased 1.3 million shares for $30 million in Q2 and had $1.9 billion in cash and equivalents at quarter end.
- Management highlighted strong dealer profitability, improved inventory health, successful new motorcycle launches (Super Glide and Deadwood), and progress on parts and accessories business revitalization.
Outlook
- North America retail motorcycle sales grew for the third consecutive year-over-year quarter, with continued strength in touring and sport categories.
- Europe remains a challenging market with a 9% retail sales decline in Q2 and a market share drop from 4% to 3%.
- Asia Pacific showed slight retail sales growth led by Australia and New Zealand with over 20% growth.
- Latin America retail sales increased 4% in Q2 with Mexico up significantly and Brazil down.
- The tariff environment remains complex and evolving, with ongoing uncertainty impacting margins.
- Dealer inventory levels are considered healthy and balanced, supporting dealer profitability improvements.
- The company expects retail and wholesale shipments to maintain a largely 1-to-1 relationship for the rest of 2026.
- Livewire expects to continue reducing cash use and expand into the off-road category following the Dust Motorcycles acquisition.
Guidance
- Harley-Davidson increased 2026 full-year guidance for Hdmc retail and wholesale units to 133,500 to 138,500, up from 130,000 to 135,000 units.
- Hdmc operating income guidance was raised to a range of positive $10 million to positive $50 million from a previous range of positive $10 million to a loss of $40 million.
- HDFs operating income guidance was increased to $55 million to $70 million from $45 million to $60 million, reflecting the new capital light business model.
- Livewire continues to forecast an operating loss in the range of $70 million to $80 million with no change to guidance.
- The company expects tariff costs for 2026 to remain in the range of $75 million to $90 million before recoveries, consistent with prior guidance.
- No additional meaningful tariff recoveries are expected for the remainder of 2026.
- Management expects domestic dealer profitability to double in 2026.
- The company targets $150 million in fixed cost savings in 2027 and aims for over $350 million in Hdmc EBITDA.
- Production units at Hdmc are expected to be lower than wholesale shipments in 2026, which will pressure operating leverage and margin but align by 2027.
Executive Comments
- CEO Artie Starrs thanked employees, dealers, riders, and the motorcycle community for their support and commitment.
- Starrs emphasized the importance of dealer inventory health, noting the current inventory is the healthiest in years with over 85% being model year 2026 products.
- He highlighted the successful launches of the Super Glide and Deadwood motorcycles, noting strong sell-through and dealer enthusiasm.
- Starrs discussed the strategic focus on parts and accessories as core to the Harley-Davidson experience, with early positive results.
- He acknowledged challenges in Europe, domestic supplier issues impacting margins, and tariff uncertainties but expressed confidence in the company's strategic direction and progress.
- CFO Jonathan Root detailed financial results, including revenue growth, margin impacts, tariff expenses and recoveries, and the capital light model for HDFs.
- Root confirmed that $20 million of tariff recoveries in Q2 are included in updated guidance and explained the impact of the HDFs transaction on financials and cash flow.
- Management expressed optimism about 2027 targets but refrained from adjusting guidance at this time, citing ongoing focus on dealer profitability, inventory management, and product launches.
- They noted the strong residual values in the used bike market and improved MSRP realization as drivers of dealer profitability.
- The company plans to continue improving dealer inventory mix and forecasting with dealer advisory councils actively engaged.
Q&A
- Guidance for Hdmc includes the $20 million tariff refund disclosed in Q2.
- Sprint motorcycle is expected to ship by the end of 2026, and Sportster is planned for 2027, with initial retail targets in the mid-single digits thousands.
- Dealer inventory levels are currently appropriate and balanced; dealers are requesting more bikes in some locations and models, reflecting improved supply-demand alignment.
- Management is actively working with dealers to improve inventory mix by model, color, and region.
- Tariff recoveries of approximately $20 million in Q2 are included in guidance; total tariff cost guidance remains unchanged at $75 million to $90 million before recoveries.
- There is no change to 2027 cost savings or margin expectations despite supplier challenges experienced in 2026 so far.
- Retail environment in North America is good with normalized promotional activity in Q2 and continued market share gains, particularly in touring and sport categories.
- Livewire continues to reduce cash use and expand product offerings, including the acquisition of Dust Motorcycles for off-road expansion.
- Production units being below shipments in 2026 will pressure operating leverage but are expected to align by 2027.
- Retail sales cadence in Q2 was in line with expectations, with some variability due to weather, events, and motorcycle launches.
- Used bike market residuals are extremely strong, supporting dealer profitability alongside new motorcycle MSRP realization.
- The company repurchased 7.9 million shares worth $158 million in the first half of 2026, prioritizing capital return to shareholders.
- Management is confident in achieving $150 million fixed cost savings in 2027, with dedicated teams focused on this goal.
- No further tariff recoveries are expected for the remainder of 2026 beyond those already recognized.
- The company is encouraged by the early success of new motorcycle launches and the positive reaction from riders and dealers.
- No material increase in dealer inventory is expected in coming quarters, but inventory mix will be actively managed as the product portfolio broadens.
Thank you for standing by, and welcome to the Harley-Davidson 2026 second quarter investor and analyst conference call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Shawn Collins. Thank you. Please go ahead.
Thank you. Good morning. This is Shawn 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, Artie Starrs, and Chief Financial and Commercial Officer, Jonathan Root. With that, let me turn it over to Harley-Davidson CEO, Artie Starrs.
Thank you, Shawn. Good morning, everyone, and thank you for joining us today for our second quarter 2026 results. Before I get into the quarter, I want to start by thanking our Harley-Davidson employees and our dealers around the world. The progress we are beginning to see is the direct result of your focus, your urgency, and your commitment to this brand. I also want to thank our riders and the broader motorcycle community for continuing to support Harley-Davidson and for holding us to the high standard this company has earned over more than 120 years. Last quarter, we introduced our new strategic plan, Back to the Bricks. We said that 2026 would be a transition year as we reset the business, rebuild dealer confidence, improve execution, and position Harley-Davidson for stronger, more durable performance over time.
We also said that the work would not happen overnight, but that we would move with urgency and discipline. In the second quarter, we are pleased with the early progress we made against that plan. At the motor company, our results reflect a business that we believe is beginning to stabilize and a team that is executing with greater focus. Domestic retail remains strong, with North America retail up 3%, the third consecutive year-over-year quarter of retail growth in North America.