Harley-Davidson Inc.
05/06/2026 | Press release | Distributed by Public on 05/06/2026 10:40
Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Unless the context otherwise requires, all references to the "Company" include Harley-Davidson, Inc. and all its subsidiaries. Harley-Davidson, Inc. operates in three segments: Harley-Davidson Motor Company (HDMC), LiveWire and Harley-Davidson Financial Services (HDFS).
The "% Change" figures included in the Results of Operations sections were calculated using unrounded dollar amounts and may differ from calculations using the rounded dollar amounts presented. Certain "% Change" deemed not meaningful (NM) have been excluded.
(1) Note Regarding Forward-Looking Statements
The Company intends that certain matters discussed in this report are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such by reference to this footnote or because the context of the statement will include words such as the Company "believes," "anticipates," "expects," "plans," "projects," "may," "will," "estimates," "targets," "intends," "forecasts," "seeks," "sees," "should," "feels," "commits," "assumes," "envisions," or words of similar meaning. Similarly, statements that describe or refer to future expectations, future plans, strategies, objectives, outlooks, targets, guidance, commitments or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially, unfavorably or favorably, from those anticipated as of the date of this report. Certain of such risks and uncertainties are described in close proximity to such statements or elsewhere in this report, including under the caption "Cautionary Statements" in this Item 2, as well as in Item 1A. Risk Factors, as well as in Item 1A. Risk Factors of the Company's Annual Report on Form 10-K for the year ended December 31, 2025. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in the "Key Factors Impacting the Company" and the "Guidance" sections in this Item 2 are only made as of May 5, 2026 and the remaining forward-looking statements in this report are made as of the date of the filing of this report (May 6, 2026), and the Company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
Overview(1)
Net income attributable to Harley-Davidson, Inc. was $24.8 million, or $0.22 per diluted share, in the first quarter of 2026 compared to $133.1 million, or $1.07 per diluted share, in the first quarter of 2025.
In the first quarter of 2026, HDMC segment operating income was $18.9 million, down $97.3 million from the first quarter of 2025. The decrease in operating income from the HDMC segment for the first quarter of 2026 was driven primarily by higher operating expenses, less beneficial product mix and pricing, higher manufacturing and tariff costs, and lower motorcycle shipments, partially offset by a favorable currency impact. Operating loss from the LiveWire segment in the first quarter of 2026 was $17.7 million compared to an operating loss of $19.8 million in the prior year quarter due primarily to improved gross margin on increased shipments as well as lower operating expenses. Operating income from the HDFS segment in the first quarter of 2026 was $22.2 million, down $41.8 million compared to the prior year quarter due primarily to lower interest income on lower retail finance receivables, partially offset by lower interest expense, a lower provision for credit losses, and favorable other income from servicing fees, higher investment income, and higher net premiums earned by the Company's insurance captive.
Worldwide retail sales of new Harley-Davidson motorcycles in the first quarter of 2026 increased 8.1% compared to the first quarter of 2025. Retail sales were up 13.9% in North America, partially offset by a 2.7% decline in Europe and a 9.1% decline in Asia-Pacific. Refer to the Harley-Davidson Motorcycles Retail Sales and Registration Data section for further discussion of retail sales results.
Key Factors Impacting the Company(1)
New Chief Executive Officer and Strategic Plan - Effective October 1, 2025, the Company hired a new Chief Executive Officer (CEO). Soon after the new CEO's appointment, the Company initiated a comprehensive evaluation of its strategy and operations.
The Hardwire, the Company's 2021-2025 strategic plan, concluded at the end of 2025. The Company announced its new strategic plan called Back to the Bricks during the second quarter of 2026. The Company's Back to the Bricks strategic plan is designed to restore the Company's performance and position the Company to deliver profitable growth.
The Back to the Bricks strategic plan is built on five key pillars:
•Deep appreciation of Harley-Davidson's competitive advantages and legacy: The Company believes its iconic brand, diversified and powerful revenue channels, and strong dealer network provide a powerful foundation for growth.
•Renewed commitment to exclusive dealer network to drive enterprise profitability: The Company's dealer network is a competitive advantage. The Company is planning actions to enable dealers to achieve significant growth in their profitability, which the Company believes will benefit dealers and the Company.
•Immediate actions to recapture share in areas where Harley-Davidson has right to win: The Company has strong legacy equity in existing markets including new motorcycles, used motorcycles, parts and accessories, apparel, and licensing. The Company's strategic plan is focused on positioning the Company to regain share and drive meaningful volume growth in categories where it believes it benefits from credibility, scale and deep rider connection.
•Strong financial position with a path to stronger cash flow and profitability: The Company believes cost and restructuring actions already underway support a path to stronger cash flow and profitability over time.
•Bolstered management team with balance of fresh perspectives and institutional knowledge: The Company has made a number of leadership appointments that support the Company as it leverages its innate strengths.
As part of its Back to the Bricks strategic plan, the Company has already undertaken certain actions to reduce ongoing costs and is continuing to review its cost base in light of the current retail and wholesale environment. The Company expects these cost reduction actions to reduce its cost base by at least $150 million compared to its 2025 cost base. The Company expects to identify opportunities and act on them so that it will realize these cost savings, which are incremental to the productivity savings achieved toward its cost productivity target during the Hardwire strategic plan, beginning in 2026 and fully realized beginning in 2028. In addition to these savings, the Company has set a target to achieve additional benefit to HDMC profitability through improved cost leverage and other activities that would result in a total benefit of at least $225 million during the same time period.
The Company's strategic plan includes enhancements and additions to its product portfolio, including the introduction of the Sprint and return of the Company's iconic Sportster, which the Company believes provide a path to achieve a mid-single-digit compound annualized growth rate (CAGR) target in worldwide dealer retail sales of Harley-Davidson motorcycles in the medium term, or approximately the next three to five years, as compared to 2025. The Company believes growth in worldwide dealer retail sales would positively impact HDMC wholesale shipments, revenue and profitability. The Company has also set targets to drive HDMC profitability higher in the medium term, including growth in its HDMC parts and accessories, apparel, and licensing businesses that target a mid-single-digit CAGR for revenue from a 2025 base and continued focus on its cost base that targets HDMC operating expense as a percent of HDMC revenue to be below 20% in the medium term. The Company believes its Back to the Bricks medium-term financial targets provide a path to improved HDMC profitability, including HDMC gross margin that ranges from 25% to 30% and continued growth in other HDMC performance measures, including operating income.
U.S. and Foreign Tariffs - During 2025 and continuing into 2026, the U.S. implemented new or increased tariffs on goods from various foreign countries, either generally or with respect to certain products. In certain circumstances, the U.S. and certain foreign countries continued to discuss trade policy which could impact the ongoing cost of tariffs for the Company. During the first quarter of 2026, the total cost of new or increased tariffs implemented in 2025 and 2026 that the Company incurred was approximately $45 million. The total cost of new or increased tariffs includes import and export tariffs implemented in 2025 and 2026 paid directly by the Company and indirect costs paid to suppliers for tariff-related price increases and excludes the benefit of any past or future mitigation actions, changes in demand and operational costs primarily to accelerate shipments ahead of actual or expected new or increased tariffs.
Certain tariffs have been challenged in U.S. courts, which could impact the continued application of the new or increased tariffs. Depending on the outcome of court challenges and any related actions by the administration or Congress, trade negotiations and other factors, the U.S. and foreign countries may sustain, amend, suspend or withdraw existing tariffs or implement new tariffs. If existing tariffs are sustained or new tariffs are implemented, it will likely increase the Company's cost of raw materials, components, finished motorcycles, parts and accessories and apparel and affect its ability to sell products domestically and internationally at or near current prices. The Company's U.S.-centric manufacturing footprint and sourcing limit its exposure to tariffs; however, based on the portions of the Company's business that are exposed directly or indirectly to tariffs and the magnitude of potential incremental tariffs, the impact to the Company could be material. The Company estimated the cost of new or increased import and export tariffs implemented in 2025 and 2026 paid directly by the Company and indirect costs paid to suppliers for tariff-related price increases, which excludes the benefit of any past or future mitigation actions, changes in demand and operational costs primarily to accelerate shipments ahead of actual or expected
new or increased tariffs. The Company's estimate of the cost of these tariffs for the full year 2026(1) as of May 1, 2026 ranges from $75 million to $90 million which compared to the Company's previous estimated range of $75 million to $105 million.
The Company plans to continue its efforts to mitigate the impact of tariffs, including engaging with governments to advocate for consideration of motorcycles in trade negotiations; pursuing recovery of previously paid tariffs, where appropriate; moving inventory into markets ahead of tariff effective dates; evaluating sourcing options and pricing for its products; and prudently managing costs.
The Company has been successful in its appeal of certain tariffs. In April 2021, the Company received notification from the Economic Ministry of Belgium that, following a request from the EU, the Company would be subject to revocation of the Binding Origin Information (BOI) decisions that allowed it to supply its EU markets with certain motorcycles produced at its Thailand manufacturing facility at tariff rates of 6%. As a result of the revocation, all non-electric motorcycles that Harley-Davidson imported into the EU, regardless of origin, were subject to a total tariff rate of 31% from April 19, 2021 through the end of 2021. On October 30, 2021, the U.S. and EU announced an agreement related to the Section 232 tariffs on steel and aluminum that were implemented in 2018 by the U.S. and the subsequent rebalancing tariff measures taken by the EU. This agreement suspended the additional tariffs initially imposed by the EU on the Company's motorcycles, reducing the total EU tariff rate on the Company's motorcycles from 31% to 6%, effective January 1, 2022. The lower 6% tariff rate applied to all motorcycles imported by the Company into the EU, regardless of origin.
The Company pursued appeals of the revocation of the BOI decisions and the denial of its application for temporary extended reliance on the 6% tariff rate (for motorcycles produced in Thailand and ordered prior to April 19, 2021). The Company received a favorable judgment on the appeal of the denial of its application for temporary extended reliance, which resulted in the Company receiving an approximately €35 million refund on February 23, 2026 (or approximately $41 million remeasured to U.S. dollars), resulting in a reduction of HDMC cost of goods sold in the first quarter of 2026.
Outlook(1)
On May 5, 2026, the Company reaffirmed its expectations for 2026 (other than its updated tariff expectations discussed above), which are described below, and announced its 2026 - 2029 Back to the Bricks strategic plan, which included additional financial targets for 2027 through 2029, which are described above.
The Company expects 2026 wholesale shipments and worldwide dealer retail sales of Harley-Davidson motorcycles of 130,000 to 135,000 units as the Company believes global dealer retail inventory levels support the alignment of expected wholesale shipments with expected worldwide dealer retail sales of Harley-Davidson motorcycles. The Company expected shipments to be lower in the first quarter of 2026 as compared to the same quarter in 2025. The Company expects shipments to be lower, but relatively flat in the third quarter of 2026 as compared to the same quarter in 2025 and shipments to be higher in the second and fourth quarters of 2026 as compared to the same quarters in 2025.
The Company expects a reduced level of production in 2026 in light of the current retail environment. The Company expects the reduced level of production to negatively impact HDMC operating margins due to unfavorable manufacturing leverage as fixed costs are allocated over fewer units produced resulting in a higher unit cost. As a result of unfavorable manufacturing leverage and the expected additional cost of new or increased tariffs for the full year, the Company expects 2026 HDMC operating results to be in the range of $40 million operating loss to $10 million operating income.
The Company expects LiveWire operating loss of $70 million to $80 million in 2026.
The Company expects HDFS operating income of $45 million to $60 million in 2026, which compares to $490.4 million and $248.4 million in 2025 and 2024, respectively. The expected reduction in 2026 is related to HDFS's sale of its existing retail finance receivables in 2025, which benefited 2025 HDFS operating income and reduced HDFS's retail finance receivables balance and, as a result, is expected to reduce interest income on a lower retail finance receivables balance. The Company expects HDFS to continue to increase its retail finance receivable base over the coming years as it continues to originate retail finance receivables held for investment. The Company expects the anticipated increase in the retail finance receivable base will contribute to higher levels of HDFS operating income. As a result, the Company is targeting HDFS operating income to reach approximately three times 2026 expected HDFS operating income in or around 2029, resulting in a target operating income range of HDFS operating income of $125 million to $150 million in 2029.
In 2022, the Company set a cost productivity target to eliminate $400 million of incremental cost incurred since 2020 by 2025. The Company's efforts focused on production efficiency, logistics network optimization and supplier cost optimization. This target originally included a positive impact from manufacturing leverage of approximately $50 million to $70 million based on an anticipated reduction in the fixed cost per motorcycle associated with increasing production volumes. Given the decrease in production volumes in 2023 and 2024, the Company adjusted the target in 2024 by removing the impact of
manufacturing leverage and increasing productivity objectives in other areas to maintain the original target. In 2025, the Company extended its target to be more than $400 million by the end of 2026. Excluding the impact of manufacturing leverage, the Company achieved approximately $24 million, $123 million, $110 million, and $103 million of cost productivity savings in 2022, 2023, 2024, and 2025, respectively, resulting in total productivity savings of $360 million from the beginning of 2022 through the end of 2025.
The Company is committed to ongoing efforts to reduce cost. As part of the Company's Back to the Bricks strategic plan, the Company's cost reduction efforts include other cost levers that were not part of the cost productivity target that was set during its previous Hardwire strategic plan. The Company is pleased with the results of its cost productivity efforts; however, the Company expects to focus its ongoing efforts on cost goals included as part of its Back to the Bricks strategic plan.
The Company expects capital investments in 2026 of between $175 and $200 million.
The Company previously announced a plan to repurchase approximately $1 billion of shares on a discretionary basis in aggregate from the third quarter of 2024 through the end of 2026. The Company purchased $250 million of shares on a discretionary basis during the third and fourth quarters of 2024 and $347 million of shares on a discretionary basis in 2025, including $160 million of shares settled in 2025 pursuant to a $200 million accelerated share repurchase program (ASR). In the first quarter of 2026, the Company received 3.1 million shares as the final settlement of the ASR, which had a value of $65 million based on the share price at delivery. In addition to the shares delivered under the ASR, the Company repurchased $63 million shares on a discretionary basis in the first quarter of 2026 resulting in a total of $128 million of shares repurchased in the first quarter of 2026. The total amount of shares repurchased on a discretionary basis since the Company's announcement of the $1 billion share repurchase plan was $726 million. The Company is pleased with this performance and has decided that it will no longer pursue the $1 billion target as it expects to align its ongoing capital allocation priorities with its Back to the Bricks strategy, which includes return of capital to shareholders through discretionary share repurchases and dividends among other priorities.
Results of Operations for the Three Months Ended March 31, 2026
Compared to the Three Months Ended March 31, 2025
Consolidated Results
| Three months ended | |||||||||||||||||||||||
| (in thousands, except earnings per share) |
March 31, 2026 |
March 31, 2025 |
Increase (Decrease) |
% Change | |||||||||||||||||||
| Operating income - HDMC | $ | 18,925 | $ | 116,272 | $ | (97,347) | (83.7) | % | |||||||||||||||
| Operating loss - LiveWire | (17,671) | (19,809) | 2,138 | (10.8) | |||||||||||||||||||
| Operating income - HDFS | 22,240 | 64,036 | (41,796) | (65.3) | |||||||||||||||||||
| Operating income | 23,494 | 160,499 | (137,005) | (85.4) | % | ||||||||||||||||||
| Other income, net | 13,477 | 16,273 | (2,796) | (17.2) | |||||||||||||||||||
|
Investment income
|
8,696 | 8,941 | (245) | (2.7) | |||||||||||||||||||
| Interest expense | 3,570 | 7,686 | (4,116) | (53.6) | |||||||||||||||||||
| Income before income taxes | 42,097 | 178,027 | (135,930) | (76.4) | % | ||||||||||||||||||
| Income tax provision | 17,974 | 47,230 | (29,256) | (61.9) | |||||||||||||||||||
| Net income | 24,123 | 130,797 | (106,674) | (81.6) | % | ||||||||||||||||||
| Less: Loss attributable to noncontrolling interests | 650 | 2,307 | (1,657) | (71.8) | |||||||||||||||||||
| Net income attributable to Harley-Davidson, Inc. | $ | 24,773 | $ | 133,104 | $ | (108,331) | (81.4) | % | |||||||||||||||
| Diluted earnings per share | $ | 0.22 | $ | 1.07 | $ | (0.85) | (79.4) | ||||||||||||||||
The Company reported operating income of $23.5 million in the first quarter of 2026 compared to $160.5 million in the same period last year. The HDMC segment reported operating income of $18.9 million in the first quarter of 2026, a decrease of $97.3 million compared to the first quarter of 2025. Operating loss from the LiveWire segment decreased $2.1 million compared to the first quarter of 2025. Operating income from the HDFS segment decreased $41.8 million compared to the first quarter of 2025. Refer to the HDMC Segment, LiveWire Segment and HDFS Segment sections for a more detailed discussion of the factors affecting operating results.
Other income, net in the first quarter of 2026 was lower than in the first quarter of 2025 due to lower non-operating income related to the Company's defined benefit plans.
Interest expense in the first quarter of 2026 was lower than in the first quarter of 2025 as the Company paid the outstanding principal and interest related to its $450.0 million 3.50% senior notes in July 2025.
The Company's effective income tax rate for the first quarter of 2026 was 42.7% compared to 26.5% for the first quarter of 2025. The increase in the effective income tax rate was attributable to discrete items recorded in the first quarter of 2026 as well as a decrease in income before income taxes and changes in the mix of earnings between the domestic and foreign jurisdictions that are taxed at rates that differ from the U.S. statutory rate.
Diluted earnings per share was $0.22 in the first quarter of 2026, down 79.4% from the same period last year. Diluted weighted average shares outstanding decreased from 124.7 million in the first quarter of 2025 to 110.8 million in the first quarter of 2026, driven by the Company's discretionary repurchases of common stock. Refer to Liquidity and Capital Resources for additional information concerning the Company's share repurchase activity.
Harley-Davidson Motorcycles Retail Sales and Registration Data
Harley-Davidson Motorcycle Retail Sales(a)
Retail unit sales of new Harley-Davidson motorcycles were as follows:
| Three months ended | |||||||||||||||||||||||
|
March 31, 2026 |
March 31, 2025 |
Increase
(Decrease)
|
% Change |
||||||||||||||||||||
| United States | 22,245 | 19,207 | 3,038 | 15.8 | % | ||||||||||||||||||
| Canada | 1,558 | 1,685 | (127) | (7.5) | |||||||||||||||||||
|
North America
|
23,803 | 20,892 | 2,911 | 13.9 | |||||||||||||||||||
| Europe/Middle East/Africa (EMEA) | 5,034 | 5,175 | (141) | (2.7) | |||||||||||||||||||
| Asia Pacific | 3,967 | 4,362 | (395) | (9.1) | |||||||||||||||||||
| Latin America | 703 | 581 | 122 | 21.0 | |||||||||||||||||||
| 33,507 | 31,010 | 2,497 | 8.1 | % | |||||||||||||||||||
(a)Data source for retail sales figures shown above is new sales warranty and registration information provided by dealers and compiled by the Company. The Company must rely on information that its dealers supply concerning new retail sales, and the Company does not regularly verify the information that its dealers supply. This information is subject to revision.
During the first quarter of 2026, retail sales in North America were up 13.9% driven by a 15.8% increase in the United States, partially offset by a 7.5% decrease in Canada. Outside of North America, retail sales were down during the first quarter of 2026, including a 2.7% decrease in Europe and a 9.1% decrease in Asia Pacific.
U.S. retail sales growth was primarily driven by the Company's Grand American Touring motorcycles, which had motorcycle incentives that were selectively introduced in 2025 and the first quarter of 2026 to assist dealers in reducing dealer inventory levels with a focus on reducing Grand American Touring dealer inventory. The decline in international markets was primarily driven by lower retail sales of the Company's Cruiser models, which were refreshed in 2025.
Worldwide retail inventory of new motorcycles was approximately 44,000 units at the end of the first quarter of 2026, which was down approximately 22% from the end of the first quarter of 2025 as increased retail sales contributed to reduced dealer inventory levels.
Motorcycle Registration Data and Market Share - 601+cc(a)(d)
The Company's U.S. market share of new 601+cc motorcycles increased during the first three months of 2026 compared to the first three months of 2025. The Company's European market share of new 601+cc motorcycles for the first three months of 2026 was up compared to the first three months of 2025. Industry retail registration data for new motorcycles and the Company's market share was as follows:
| Three months ended | |||||||||||||||||||||||
|
March 31, 2026 |
March 31, 2025 |
(Decrease) Increase |
% Change | ||||||||||||||||||||
| Industry new motorcycle registrations: | |||||||||||||||||||||||
|
United States(b)
|
58,045 | 52,410 | 5,635 | 10.8 | % | ||||||||||||||||||
|
Europe(c)
|
114,948 | 95,577 | 19,371 | 20.3 | % | ||||||||||||||||||
| Harley-Davidson market share data: | |||||||||||||||||||||||
|
United States(b)
|
37.8 | % | 36.2 | % | 1.6 | pts. | |||||||||||||||||
|
Europe(c)
|
3.5 | % | 2.5 | % | 1.0 | pts. | |||||||||||||||||
(a)Data includes on-road models with internal combustion engines with displacements greater than 600cc's and electric motorcycles with kilowatt (kW) peak power equivalents greater than 600cc's (601+cc). On-road 601+cc models include dual purpose models, three-wheeled motorcycles and autocycles.
(b)United States industry data is derived from information provided by Motorcycle Industry Council. This third-party data is subject to revision and update.
(c)Europe data includes Austria, Belgium, Denmark, Finland, France, Germany, Italy, Luxembourg, Netherlands, Norway, Spain, Sweden, Switzerland, and the United Kingdom. Industry data is derived from information provided by Management Services Helwig Schmitt GmbH. This third-party data is subject to revision and update.
(d)New motorcycle registrations for the industry and Harley-Davidson are provided by or derived from third-party sources. New motorcycle registrations include consumer registrations (retail registrations) and to a lesser extent manufacturer, distributor and dealer registrations (non-retail registrations), for example, to register demonstration fleets. In the later part of 2024, manufacturers (including the Company), distributors and dealers registered some motorcycles through non-retail registrations to qualify the motorcycles under the new Euro 5+ emissions standard to allow for subsequent retail sale after December 31, 2024. This included approximately 3,700 non-retail registrations of new Harley-Davidson motorcycles in 2024, which in turn adversely impacted the number of new Harley-Davidson motorcycle registrations during 2025. While the Company believes industry registrations for Europe were impacted in a similar manner, it does not have access to information necessary to confirm this.
HDMC Segment
Harley-Davidson Motorcycle Unit Shipments
Motorcycle unit shipments were as follows:
| Three months ended | |||||||||||||||||||||||||||||||||||
| March 31, 2026 | March 31, 2025 | Unit | Unit | ||||||||||||||||||||||||||||||||
| Units | Mix % | Units | Mix % |
Increase (Decrease) |
% Change | ||||||||||||||||||||||||||||||
| U.S. motorcycle shipments | 23,884 | 64.0 | % | 24,865 | 64.4 | % | (981) | (3.9) | % | ||||||||||||||||||||||||||
| Worldwide motorcycle shipments: | |||||||||||||||||||||||||||||||||||
|
Grand American Touring(a)
|
21,520 | 57.7 | % | 23,678 | 61.3 | % | (2,158) | (9.1) | % | ||||||||||||||||||||||||||
| Cruiser | 10,659 | 28.6 | % | 11,860 | 30.8 | % | (1,201) | (10.1) | |||||||||||||||||||||||||||
| Sport and Lightweight | 3,731 | 10.0 | % | 2,108 | 5.4 | % | 1,623 | 77.0 | |||||||||||||||||||||||||||
| Adventure Touring | 1,385 | 3.7 | % | 955 | 2.5 | % | 430 | 45.0 | |||||||||||||||||||||||||||
| 37,295 | 100.0 | % | 38,601 | 100.0 | % | (1,306) | (3.4) | % | |||||||||||||||||||||||||||
(a)Includes Trike
The Company shipped 37,295 motorcycles worldwide during the first quarter of 2026, which was 3.4% lower than the first quarter of 2025, consistent with the Company's expected timing of wholesale shipments throughout the year as dealers continued to adjust inventory levels based on the current retail environment and worldwide retail inventory levels.
Shipments to dealers in the first quarter of 2026 were lower than the first quarter of 2025 primarily due to lower U.S. motorcycle shipments. In the first quarter of 2026, the Company shipped a greater proportion of Sport and Lightweight and Adventure Touring models and a lower proportion of its Grand American Touring and Cruiser models as compared to the first quarter of 2025.
Segment Results
Condensed statements of operations for the HDMC segment were as follows (dollars in thousands):
| Three months ended | |||||||||||||||||||||||
| March 31, 2026 | March 31, 2025 |
Increase (Decrease) |
% Change |
||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
|
Motorcycles
|
$ | 836,294 | $ | 863,863 | $ | (27,569) | (3.2) | % | |||||||||||||||
|
Parts and accessories
|
142,243 | 143,433 | (1,190) | (0.8) | |||||||||||||||||||
|
Apparel
|
57,313 | 57,322 | (9) | - | |||||||||||||||||||
|
Licensing
|
6,048 | 3,058 | 2,990 | 97.8 | |||||||||||||||||||
|
Other
|
13,573 | 13,829 | (256) | (1.9) | |||||||||||||||||||
| 1,055,471 | 1,081,505 | (26,034) | (2.4) | ||||||||||||||||||||
| Cost of goods sold | 788,482 | 766,261 | 22,221 | 2.9 | |||||||||||||||||||
| Gross profit | 266,989 | 315,244 | (48,255) | (15.3) | |||||||||||||||||||
| Operating expenses | 248,064 | 198,972 | 49,092 | 24.7 | |||||||||||||||||||
| Operating income | $ | 18,925 | $ | 116,272 | $ | (97,347) | (83.7) | % | |||||||||||||||
| Operating margin | 1.8 | % | 10.8 | % | (9.0) | pts. | |||||||||||||||||
The estimated impact of significant factors affecting the comparability of net revenue, cost of goods sold and gross profit from the first quarter of 2025 to the first quarter of 2026 were as follows (in millions):
|
Net Revenue |
Cost of Goods Sold |
Gross Profit |
|||||||||||||||
| Three months ended March 31, 2025 | $ | 1,081.5 | $ | 766.3 | $ | 315.2 | |||||||||||
| Volume | (29.8) | (19.8) | (10.0) | ||||||||||||||
| Price and sales incentives | (22.4) | - | (22.4) | ||||||||||||||
| Foreign currency exchange rates and hedging | 24.1 | 9.8 | 14.3 | ||||||||||||||
| Shipment mix | 2.1 | 22.7 | (20.6) | ||||||||||||||
| Raw material prices | - | (0.6) | 0.6 | ||||||||||||||
| Manufacturing and other costs | - | 10.1 | (10.1) | ||||||||||||||
| (26.0) | 22.2 | (48.2) | |||||||||||||||
| Three months ended March 31, 2026 | $ | 1,055.5 | $ | 788.5 | $ | 267.0 | |||||||||||
Factors affecting the comparability of net revenue, cost of goods sold and gross profit from the first quarter of 2025 to the first quarter of 2026 were as follows:
•The decrease in volume was primarily due to lower motorcycle shipments.
•Revenue was negatively impacted by increased motorcycle incentives that were selectively introduced in the first quarter of 2026 to continue to assist dealers in reducing dealer inventory levels with a focus on reducing Grand American Touring dealer inventory.
•Revenue and gross profit were favorably impacted by stronger average foreign currency exchange rates relative to the U.S. dollar compared to the same quarter last year, partially offset by unfavorable impacts from hedging activities.
•Changes in the shipment mix had a favorable impact on revenue and an unfavorable impact on gross profit. The benefit to revenue was driven by an increase in the mix of new limited edition models within families which have a higher price. The benefit to revenue was partially offset within gross profit as the new limited edition models also carry a higher cost than other motorcycles in the same family. Shipment mix also included an unfavorable impact on revenue and gross profit primarily driven by a shift from the Grand American Touring family to the Sport and Lightweight and Adventure Touring families, which are lower priced and lower margin motorcycle families.
•Raw material costs were lower compared to the prior year.
•Manufacturing and other costs were negatively impacted by higher supply management costs as well as higher tariff costs, partially offset by a tariff recovery as discussed in Key Factors.
Operating expenses were higher in the first quarter of 2026 compared to the same period last year primarily related to higher people costs, including one-time employee termination benefits, and product recall costs.
LiveWire Segment
Segment Results
Condensed statements of operations for the LiveWire segment were as follows (in thousands, except unit shipments):
| Three months ended | |||||||||||||||||||||||
| March 31, 2026 | March 31, 2025 |
(Decrease)
Increase
|
% Change |
||||||||||||||||||||
| Revenue | $ | 5,116 | $ | 2,743 | $ | 2,373 | 86.5 | % | |||||||||||||||
| Cost of goods sold | 5,651 | 4,524 | 1,127 | 24.9 | |||||||||||||||||||
| Gross profit | (535) | (1,781) | 1,246 | (70.0) | |||||||||||||||||||
| Selling, administrative and engineering expense | 17,136 | 18,028 | (892) | (4.9) | |||||||||||||||||||
| Operating loss | $ | (17,671) | $ | (19,809) | $ | 2,138 | (10.8) | % | |||||||||||||||
| LiveWire motorcycle unit shipments | 91 | 33 | 58 | 175.8 | % | ||||||||||||||||||
During the first quarter of 2026, revenue increased by $2.4 million, or 86.5%, compared to the first quarter of 2025. The increase was primarily due to higher electric motorcycle, electric balance bike, and electric bike unit volumes sold during the quarter as compared to the same period last year. Cost of sales increased by $1.1 million, or 24.9%, during the first quarter of 2026 compared to the first quarter of 2025 due to higher electric motorcycle, electric balance bike, and electric bike unit volumes.
During the first quarter of 2026, selling, administrative and engineering expense decreased $0.9 million, or 4.9%, compared to the first quarter of 2025 as the Company continued to focus on cost containment.
HDFS Segment
Segment Results
Condensed statements of operations for the HDFS segment were as follows (in thousands):
| Three months ended | |||||||||||||||||||||||
| March 31, 2026 | March 31, 2025 |
Increase (Decrease) |
% Change |
||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Interest income | $ | 50,062 | $ | 209,469 | $ | (159,407) | (76.1) | % | |||||||||||||||
| Other income | 61,882 | 35,492 | 26,390 | 74.4 | |||||||||||||||||||
| 111,944 | 244,961 | (133,017) | (54.3) | ||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||
| Interest expense | 39,297 | 88,934 | (49,637) | (55.8) | |||||||||||||||||||
| Provision for credit losses | 13,153 | 53,334 | (40,181) | (75.3) | |||||||||||||||||||
| Operating expense | 37,254 | 38,657 | (1,403) | (3.6) | |||||||||||||||||||
| 89,704 | 180,925 | (91,221) | (50.4) | ||||||||||||||||||||
| Operating income | $ | 22,240 | $ | 64,036 | $ | (41,796) | (65.3) | % | |||||||||||||||
Interest income was lower for the first quarter of 2026 compared to the same period last year, primarily due to lower average outstanding finance receivables at a lower average yield. The decrease in average outstanding finance receivables was due to the sale of a significant portion of retail finance receivables in 2025. As such, average yield on the current portfolio is lower than the average yield on the finance receivable portfolio held as of March 31, 2025. Other income increased $26.4 million largely due to favorable servicing fees, investment income, and higher net premiums earned by Eaglemark Insurance
Company Ltd. (EICL), the Company's insurance captive. Interest expense decreased $49.6 million due to lower average borrowings at a lower average interest rate. Average borrowings decreased due to the paydown of debt, largely from proceeds from the sale of retail finance receivables in 2025. The average interest rate declined due to a difference in borrowing mix from the prior year quarter.
The provision for credit losses decreased $40.2 million compared to the first quarter of 2025 primarily driven by favorable actual credit losses due to the smaller retail portfolio, partially offset by an unfavorable reserve increase. The unfavorable reserve increase was due to growth in the retail portfolio as HDFS rebuilds its retail finance receivable portfolio, compared to a decline in the first quarter of 2025. The allowance for credit losses considers current economic conditions and the Company's outlook on future conditions. At the end of the first quarter of 2026, the Company's outlook on economic conditions and its probability weighting of its economic forecast scenarios was weighted toward more pessimistic scenarios given continued challenging macro-economic conditions, including a persistently high interest rate environment and muted consumer confidence. The Company's expectations surrounding its economic forecasts may change in future periods as additional information becomes available.
On a managed basis, which considers all loans serviced by the Company, annualized retail credit losses on the Company's retail motorcycle loans were 3.59% for the first quarter of 2026 compared to 3.79% in the first quarter of 2025. The 30-day managed basis delinquency rate for retail motorcycle loans increased to 4.63% at March 31, 2026 from 4.47% at March 31, 2025. On a managed basis, annualized retail credit losses declined primarily due to lower charge-offs and higher recoveries. The 30-day managed basis delinquency rate increased due to a challenging economic environment and portfolio dynamics.
Operating expenses decreased $1.4 million compared to the first quarter of 2025 due in part to a hedging gain resulting from the Company's redemption of its €700.0 million 6.36% medium-term notes due 2026 in the first quarter of 2026 prior to the notes' maturity, partially offset by an increase in insurance claim costs incurred by EICL.
Changes in the allowance for credit losses on finance receivables were as follows (in thousands):
| Three months ended | |||||||||||
|
March 31, 2026 |
March 31, 2025 |
||||||||||
| Balance, beginning of period | $ | 2,235 | $ | 401,183 | |||||||
| Provision for credit losses | 13,153 | 53,334 | |||||||||
| Charge-offs, net of recoveries | 6,208 | (61,339) | |||||||||
| Balance, end of period | $ | 21,596 | $ | 393,178 | |||||||
Other Matters
Commitments and Contingencies
The Company is subject to lawsuits and other claims related to product, product recall, commercial, employee, environmental and other matters. In determining costs to accrue related to these items, the Company carefully analyzes cases and considers the likelihood of adverse judgments or outcomes, as well as the potential range of possible loss. Any amounts accrued for these matters are monitored on an ongoing basis and are updated based on new developments or new information as it becomes available for each matter. Refer to Note 14 of the Notes to Consolidated financial statements for a discussion of the Company's commitments and contingencies.
Liquidity and Capital Resources
The Company's strategy is to maintain a minimum of twelve months of its projected liquidity requirements through a combination of cash and cash equivalents and availability under its credit facilities. The Company believes its current cash, cash equivalents and availability under its credit facilities are sufficient to meet its liquidity requirements, consistent with this strategy.
The Company expects to fund its ongoing operations (excluding the origination of finance receivables) and its capital allocation priorities, which include reinvesting in key growth initiatives, including the related capital expenditures, the return of excess capital to shareholders through dividends and discretionary share repurchases, and opportunistic acquisition activity, primarily with cash flows from operating activities and cash and cash equivalents on hand.(1) The Company expects to fund the origination of finance receivables primarily with unsecured debt, unsecured commercial paper, asset-backed commercial paper conduit facilities, committed unsecured bank facilities, asset-backed securitizations, brokered certificates of deposit and cash and cash equivalents on hand. In addition, the Company expects to fund a portion of its retail finance receivables through the sale of up to two-thirds of the retail finance receivables that HDFS originates shortly after origination.(1)
The Company's cash and cash equivalents and availability under its credit and conduit facilities at March 31, 2026 were as follows (in thousands):
|
Cash and cash equivalents(a)
|
$ | 1,805,068 | ||||||
| U.S. commercial paper conduit facility: | ||||||||
|
Asset-backed U.S. commercial paper conduit facility(b)(c)
|
450,547 | |||||||
| Borrowings against committed facility | - | |||||||
| Net asset-backed U.S. commercial paper conduit committed facility availability | 450,547 | |||||||
|
Asset-backed Canadian commercial paper conduit facility(b)(d)
|
7,952 | |||||||
| Borrowings against committed facility | - | |||||||
| Net asset-backed Canadian commercial paper conduit facility | 7,952 | |||||||
| Availability under credit and conduit facilities: | ||||||||
| Credit facilities | 1,420,000 | |||||||
| Commercial paper outstanding | (498,685) | |||||||
| Net credit facility availability | 921,315 | |||||||
| $ | 3,184,882 | |||||||
(a)Includes $67.5 million of cash and cash equivalents held by LiveWire Group, Inc.
(b)Includes facilities expiring in the next 12 months which the Company expects to renew prior to expiration.(1)
(c)Total committed borrowing capacity of the U.S. commercial paper conduit facility was $1.50 billion at March 31, 2026. Availability was limited based on the amount of U.S. retail finance receivables available to be used as collateral.
(d)Total committed borrowing capacity of the Canadian Conduit facility was C$165.0 million ($118.6 million) at March 31, 2026. Availability was limited based on the amount of Canadian retail finance receivables available to be used as collateral.
To access the debt capital markets, the Company relies on credit rating agencies to assign short-term and long-term credit ratings. Generally, lower credit ratings result in higher borrowing costs and reduced access to debt capital markets. A credit rating agency may change or withdraw the Company's ratings based on its assessment of the Company's current and future ability to meet interest and principal repayment obligations. The Company's short-term debt ratings affect its ability to issue unsecured commercial paper. The Company's short- and long-term credit ratings, as of March 31, 2026 were as follows:
| Short-Term | Long-Term | Outlook | |||||||||||||||
| Moody's | P3 | Baa3 | Stable | ||||||||||||||
| Standard & Poor's | A3 | BBB- | CreditWatch Negative | ||||||||||||||
| Fitch | F2 | BBB | Negative | ||||||||||||||
The Company recognizes that it must continue to monitor and adjust its business to changes in the lending environment. The Company intends to continue with a diversified funding profile through a combination of short-term and long-term funding vehicles and to pursue a variety of sources to obtain cost-effective funding.(1) HDFS segment results could be negatively affected by higher costs of funding and increased difficulty of raising, or potential unsuccessful efforts to raise funding in the short-term, medium-term and long-term capital markets.(1) These negative consequences could in turn adversely affect the Company's business and results of operations in various ways, including through higher costs of capital, reduced funds available through HDFS to provide loans to dealers and their retail customers, and dilution to existing shareholders through the use of alternative sources of capital. The Company expects that the ongoing sale of a portion of retail finance receivables to third parties will reduce its funding risk in the near-term.(1)
Cash Flow Activity
The Company's cash flow activities were as follows (in thousands):
| Three months ended | |||||||||||
| March 31, 2026 | March 31, 2025 | ||||||||||
|
Net cash provided (used) by operating activities
|
$ | (228,021) | $ | 141,534 | |||||||
|
Net cash provided (used) by investing activities
|
(92,004) | 61,395 | |||||||||
|
Net cash provided (used) by financing activities
|
(959,337) | 150,185 | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (7,314) | 3,299 | |||||||||
|
Net (decrease) increase in cash, cash equivalents and restricted cash
|
$ | (1,286,676) | $ | 356,413 | |||||||
Operating Activities
Cash flow provided by operating activities reflected a net outflow in the first three months of 2026 compared to a net inflow in the first three months of 2025. The net outflow in the first three months of 2026 was primarily due to originations of retail finance receivables classified as held for sale, net of proceeds from the collection and sales of retail finance receivables held for sale. Cash flows from the origination, collection and sales of retail finance receivables the Company intends to sell at origination are classified within cash flow from operating activities. There were no originations of retail finance receivables held for sale in the first three months of 2025. Cash flow provided by operating activities was also impacted by unfavorable operating cash flows from the HDMC segment due in large part to lower shipment volumes and higher costs compared to the first three months of 2025 as well as unfavorable operating cash flows from the HDFS segment due in large part to lower interest income compared to the first three months of 2025.
The Company's ongoing operating cash requirements include those related to existing contractual commitments which it expects to fund with cash inflows from operating activities. The Company's purchase orders for inventory used in manufacturing generally do not become firm commitments until 90 days prior to expected delivery. The Company's material contractual operating cash commitments at March 31, 2026 relate to leases, retirement plan obligations and income taxes. The Company's long-term lease obligations and future payments are discussed further in Note 9 of the Notes to Consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. There are no required qualified pension plan contributions in 2026. The Company's expected future contributions and benefit payments related to its defined benefit retirement plans are discussed further in Note 14 of the Notes to Consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. The Company has a liability for unrecognized tax benefits of $19.8 million and related accrued interest and penalties of $10.7 million as of March 31, 2026. The Company cannot reasonably estimate the period of cash settlement for either the liability for unrecognized tax benefits or accrued interest and penalties. The Company continues to expect that it will fund its ongoing operating cash requirements related to the origination of wholesale finance receivables and retail finance receivables held for sale with the issuance of debt and the sale of a portion of its retail finance receivables to third parties.(1)
Investing Activities
The Company's most significant investing activities consist of capital expenditures and the originations and collections of retail finance receivables held for investment. In the first three months of 2026, the Company also had $51.6 million of proceeds due to the settlement of derivative instruments related to the Company's redemption of its €700.0 million 6.36% medium-term notes due 2026 prior to the notes' maturity during the first three months of 2026. There were no comparable proceeds in the first three months of 2025. Capital expenditures were $31.8 million in the first three months of 2026 compared to $30.0 million in the same period last year. The Company's 2026 plan includes capital investments, all of which the Company expects to fund with net cash flow generated by operations.(1)
Net cash outflows related to finance receivables held for investment during the first three months of 2026 compared to net cash inflows during the first three months of 2025, which resulted in a net decrease in cash flows from investing activities of $213.3 million. The net decrease was driven by lower collections of finance receivables held for investment due primarily to a portion of retail finance receivable collections and originations being classified as operating cash flows as discussed above. The unfavorable impact of lower collections on investing cash flow was partially offset by lower originations of finance receivables held for investment. The Company funded its finance receivables held for investment net lending activity through the issuance of debt as discussed in "Financing Activities" below.
Financing Activities
The Company's financing activities consist primarily of dividend payments, share repurchases, and debt activity.
The Company paid dividends of $0.188 and $0.180 per share totaling $21.5 million and $22.9 million during the first three months of 2026 and 2025, respectively.
Cash outflows for share repurchases were $70.0 million in the first three months of 2026 compared to $93.1 million in the same period last year. Share repurchases during the first three months of 2026 included $63.3 million related to 3.5 million shares of common stock purchased on a discretionary basis.
In addition, the Company received 3.1 million shares delivered upon final settlement of the ASR the Company entered into with Goldman Sachs & Co. LLC (Goldman) on November 5, 2025. Under the ASR, the Company paid $200 million to Goldman on November 6, 2025, which was a $200 million financing cash outflow in the fourth quarter of 2025, and received an initial delivery of 6.3 million shares of the Company's common stock, representing 80% of the payment amount divided by the Company's closing share price on November 5, 2025, which reduced weighted average shares outstanding in the fourth quarter of 2025.
On February 13, 2026, Goldman settled the ASR by delivering 3.1 million shares of the Company's common stock, resulting in a total delivery of 9.4 million shares under the $200 million ASR. The total number of shares purchased by the Company pursuant to the ASR was based on the volume-weighted average price of the Company's common stock, less a discount, during the repurchase period. The amount delivered on February 13, 2026, which represented the difference between the initially delivered shares and the total number of shares purchased, reduced weighted average shares outstanding in the first quarter of 2026.
Share repurchases during the first three months of 2026 also included $6.7 million or 0.3 million shares of common stock employees surrendered to satisfy withholding taxes in connection with the vesting of restricted stock units and performance shares.
In July 2024, the Company's Board of Directors authorized the Company to repurchase up to 24.4 million additional shares of its common stock on a discretionary basis. In July 2025, the Company's Board of Directors authorized the Company to repurchase up to 15.0 million additional shares of its common stock on a discretionary basis with no dollar limit or expiration date. As of March 31, 2026, there were 16.8 million shares remaining under board-approved share repurchase authorizations.
Financing cash flows related to debt and brokered certificates of deposit activity resulted in net cash outflows of $0.9 billion in the first three months of 2026 compared to net cash inflows of $0.3 billion in the same period last year. The Company's total outstanding debt and liability for brokered certificates of deposit consisted of the following (in thousands):
|
March 31, 2026 |
March 31, 2025 |
||||||||||
| Outstanding debt: | |||||||||||
| Unsecured commercial paper | $ | 498,685 | $ | 498,500 | |||||||
| Asset-backed Canadian commercial paper conduit facility | - | 68,275 | |||||||||
| Asset-backed U.S. commercial paper conduit facility | - | 531,260 | |||||||||
| Asset-backed securitization debt, net | - | 1,658,745 | |||||||||
| Medium-term notes, net | 1,335,802 | 3,797,100 | |||||||||
| Senior notes, net | 297,309 | 746,981 | |||||||||
| $ | 2,131,796 | $ | 7,300,861 | ||||||||
| Deposits, net | $ | 477,638 | $ | 513,330 | |||||||
Refer to Note 9 of the Notes to Consolidated financial statements for a summary of future principal payments on the Company's debt obligations. Refer to Note 6 of the Notes to Consolidated financial statements for a summary of future maturities on the Company's certificates of deposit.
Deposits - HDFS offers brokered certificates of deposit to customers indirectly through contractual arrangements with third-party banks and/or securities brokerage firms through its bank subsidiary. The Company had $477.6 million and $513.3 million, net of fees, of interest-bearing brokered certificates of deposit outstanding as of March 31, 2026 and March 31, 2025, respectively. The deposits are classified as short- and long-term liabilities based upon the term of each brokered certificate of deposit issued. Each separate brokered certificate of deposit is issued under a master certificate, and as such, all outstanding brokered certificates of deposit are considered below the Federal Deposit Insurance Corporation insurance coverage limits.
Credit Facilities - As of March 31, 2026, the Company had a $710.0 million five-year credit facility with a maturity in April 2027 and a $710.0 million five-year credit facility with a maturity in April 2029. The five-year credit facilities (together, the Global Credit Facilities) bear interest at variable rates, which may be adjusted upward or downward depending on certain criteria, such as credit ratings. The Global Credit Facilities also require the Company to pay a fee based on the average daily unused portion of the aggregate commitments. The Global Credit Facilities are committed facilities primarily used to support the Company's unsecured commercial paper program. On April 6, 2026, the Company amended its April 2027 credit facility by reducing the facility's capacity from $710.0 million to $650.0 million and extending the maturity to April 2031. The April 2029 credit facility was also amended by reducing the facility's capacity from $710.0 million to $650.0 million and to conform in all respects to the April 2031 credit facility other than maturity date.
Unsecured Commercial Paper - Subject to limitations, the Company could issue unsecured commercial paper of up to $1.42 billion as of March 31, 2026 supported by the Global Credit Facilities, as discussed above. Outstanding unsecured commercial paper may not exceed the unused portion of the Global Credit Facilities. Maturities may range up to 365 days from the issuance date. The Company intends to repay unsecured commercial paper as it matures with additional unsecured commercial paper or through other means, such as borrowing under the Global Credit Facilities, borrowing under its asset-backed U.S. commercial paper conduit facility or through the use of operating cash flow and cash on hand.
Medium-Term Notes - The Company had the following unsecured medium-term notes issued and outstanding at March 31, 2026 (in thousands):
| Principal Amount | Rate | Issue Date | Maturity Date | |||||||||||||||||
| $500,000 | 3.05% | February 2022 | February 2027 | |||||||||||||||||
| $144,903 | 5.95% | June 2024 | June 2029 | |||||||||||||||||
|
$700,487(a)
|
5.61% | March 2025 | March 2030 | |||||||||||||||||
(a)€610.0 million par value remeasured to U.S. dollars at March 31, 2026
The U.S. dollar-denominated medium-term notes provide for semi-annual interest payments and the foreign currency-denominated medium-term notes provide for annual interest payments. Principal on the medium-term notes is due at maturity. Unamortized discounts and debt issuance costs on the medium-term notes reduced the outstanding balance by $9.6 million and $21.5 million at March 31, 2026 and March 31, 2025, respectively.
Unsecured Note Redemptions -During March 2026, the Company redeemed its €700.0 million 6.36% medium-term notes due 2026 prior to the notes' maturity resulting in a $0.3M loss on extinguishment, which included unamortized discounts and fees, within Financial services interest expense on the Consolidated statements of operations.
Senior Notes and Term Loan - In July 2015, the Company issued $750.0 million of unsecured senior notes in an underwritten offering. The senior notes provide for semi-annual interest payments and principal due at maturity. $450.0 million of the senior notes, which had an interest rate of 3.50%, matured and were repaid in full in July 2025. $300.0 million of the senior notes mature in July 2045 and have an interest rate of 4.625%. The Company used the proceeds from the debt to repurchase shares of its common stock in 2015.
On-Balance Sheet Asset-Backed Canadian Commercial Paper Conduit Facility - In June 2025, the Company renewed and amended its revolving facility agreement (Canadian Conduit) with a Canadian bank-sponsored asset-backed commercial paper conduit. Under the renewed and amended agreement, the Canadian Conduit is contractually committed, at the Company's option, to purchase eligible Canadian retail motorcycle finance receivables for proceeds up to C$165.0 million. The transferred assets are restricted as collateral for the payment of the associated debt.
Availability under the Canadian Conduit is based on, among other things, the amount and credit performance of eligible Canadian retail motorcycle finance receivables held as collateral. As of March 31, 2025, the Company was temporarily unable to draw on the Canadian Conduit as a result of elevated credit losses. The June 2025 renewal restored the Company's access to the Canadian Conduit facility and increased credit loss thresholds for future periods.
The terms for this debt provide for interest on the outstanding principal based on prevailing market interest rates plus a specified margin. The Canadian Conduit also provides for a program fee and an unused commitment fee based on the unused portion of the total aggregate commitment. There is no amortization schedule; however, the debt is reduced monthly as available collections on the related finance receivables are applied to outstanding principal. Upon expiration of the Canadian Conduit, any outstanding principal will continue to be reduced monthly through available collections. Unless earlier terminated or extended by mutual agreement between the Company and the lenders, as of March 31, 2026, the Canadian Conduit had an expiration date of June 30, 2026.
There were no finance receivable transfers under the Canadian Conduit Facility during the first quarter of 2026 or 2025.
On-Balance Sheet Asset-Backed U.S. Commercial Paper Conduit Facilities VIE - In October 2025, the Company renewed its $1.50 billion revolving facility agreement (the U.S. Conduit Facility) with third-party banks and their asset-backed U.S. commercial paper conduits. Under the revolving facility agreement, the Company may transfer U.S. retail motorcycle finance receivables to an SPE, which in turn may issue debt to those third-party banks and their asset-backed U.S. commercial paper conduits. Availability under the U.S. Conduit Facility is based on, among other things, the amount and credit performance of eligible U.S. retail motorcycle finance receivables held by the SPE as collateral. In addition to extending the term of the U.S. Conduit Facility, the October 2025 amendment updated the fee structure and finance receivable take-out provisions to better align with ongoing HDFS funding needs.
Under the U.S. Conduit Facility, the assets of the SPE are restricted as collateral for the payment of the debt or other obligations arising in the transaction and are not available to pay other obligations or claims of the Company's creditors. The terms for this debt provide for interest on the outstanding principal based on prevailing commercial paper rates if funded by a conduit lender through the issuance of commercial paper. The interest rate on all borrowings, if not funded by a conduit lender through the issuance of commercial paper, is based on the Secured Overnight Financing Rate (SOFR), with provisions for a transition to other benchmark rates in the future, if necessary. In addition to interest, a program fee is assessed based on the outstanding debt principal balance. The U.S. Conduit Facility also provides for an unused commitment fee based on the
unused portion of the total aggregate commitment. There is no amortization schedule; however, the debt is reduced monthly as available collections on the related finance receivables are applied to outstanding principal. Upon expiration of the U.S. Conduit Facility, any outstanding principal will continue to be reduced monthly through available collections. Unless earlier terminated or extended by mutual agreement of the Company and the lenders, as of March 31, 2026, the U.S. Conduit Facility had an expiration date of October 30, 2026.
There were no finance receivable transfers under the U.S. Conduit Facility during the first quarter of 2026. During the first quarter of 2025, the Company transferred $179.5 million of U.S. retail motorcycle finance receivables to an SPE which, in turn, issued $155.0 million of debt under the U.S. Conduit Facility.
On-Balance Sheet Asset-Backed Securitization VIEs - For all of its on-balance sheet asset-backed securitization transactions, the Company transfers U.S. retail motorcycle finance receivables to separate VIEs, which in turn issue secured notes with various maturities and interest rates to investors. All of the notes held by the VIEs are secured by future collections of the purchased U.S. retail motorcycle finance receivables. The U.S. retail motorcycle finance receivables included in the asset-backed securitization transactions are not available to pay other obligations or claims of the Company's creditors until the associated debt and other obligations are satisfied. Restricted cash balances held by the VIEs are used only to support the asset-backed securitizations.
The accounting treatment for asset-backed securitizations depends on the terms of the related transaction and the Company's continuing involvement with the VIE. During the third quarter of 2025, HDFS determined that it was no longer the primary beneficiary of most of its asset-backed securitization VIEs and also met the criteria for those asset-backed VIEs to be accounted for as a sale. Accordingly, those VIEs were deconsolidated and accounted for as sales during the third quarter of 2025. After deconsolidating certain VIEs, the Company had one on-balance sheet asset-backed securitization remaining that was repaid in full during 2025. Refer to Note 10 of the Notes to Consolidated financial statements for further discussion.
There were no transfers of U.S. retail motorcycle finance receivables to SPEs during the first quarter of 2026 or 2025.
Off-Balance Sheet Asset-Backed Financing - During the third quarter of 2025, HDFS sold 95% of its residual interest in retail finance receivables that were transferred to certain SPEs through on-balance sheet asset-backed securitization transactions to two counterparties. As a result, HDFS determined that it was no longer the primary beneficiary of the associated VIEs. Accordingly, the VIEs were deconsolidated during the third quarter of 2025. HDFS confirmed that the transfers of loans that occurred at the inception of each VIE met the criteria for an accounting sale under ASC 860. For more information refer to Note 10 of the Notes to Consolidated financial statements.
Intercompany Agreements - Harley Davidson, Inc. has a support agreement with Harley-Davidson Financial Services Inc. whereby, if required, Harley-Davidson, Inc. agrees to provide Harley-Davidson Financial Services Inc. with financial support to maintain Harley-Davidson Financial Services Inc.'s fixed-charge coverage at 1.25 and minimum net worth of $40.0 million. Support may be provided at Harley-Davidson, Inc.'s option as capital contributions or loans. No amount has ever been provided to Harley-Davidson Financial Services Inc. under the support agreement.
On February 14, 2024, Harley-Davidson, Inc. entered into a Convertible Delayed Draw Term Loan Agreement (Convertible Term Loan) with LiveWire Group, Inc. and a wholly-owned subsidiary of LiveWire Group, Inc. whereby LiveWire was able to obtain term loans in one or more advances up to an aggregate principal amount of $100.0 million. The Convertible Term Loan had a maturity date of the earlier of (i) 24 months from the date of the first draw on the loan or (ii) October 31, 2026. The Convertible Term Loan contained a provision that provided for Harley-Davidson, Inc. to convert amounts outstanding to equity of LiveWire Group, Inc. at the maturity date if, on the maturity date, Harley-Davidson, Inc. determined, acting reasonably and in good faith, that LiveWire Group, Inc. did not have the financial wherewithal to repay all amounts outstanding. LiveWire Group, Inc. did not draw any amounts under the Convertible Term Loan.
On November 9, 2025, Harley-Davidson, Inc. entered into an Amended and Restated Delayed Draw Term Loan Agreement (Term Loan) with LiveWire Group, Inc. and a wholly-owned subsidiary of LiveWire Group, Inc., which amended the Convertible Term Loan. The Term Loan provided LiveWire Group, Inc. with access to up to $75.0 million to be drawn between November 17, 2025 and December 15, 2025. The maturity date of the amount outstanding under the Term Loan, including interest, is December 15, 2027. The Term Loan requires mandatory prepayment of the principal amount of the Term Loan from the first $10.0 million of net proceeds (defined as gross proceeds less offering costs) from the At-The-Market program managed by LiveWire Group Inc., which is a program designed to raise capital from external investors in LiveWire Group Inc. The At-The-Market proceeds mandatory prepayment would apply to any funds raised from the funding of the Term Loan through the maturity date. No other scheduled principal payments are required to be made on the Term Loan and the remaining principal balance must be paid in full on the maturity date. The amount outstanding under the Term Loan bears interest at a floating rate per annum, as calculated as of the date of funding of the Term Loan and as of each June 1 and December 1 thereafter, equal to the sum of (i) the forward-looking term rate based on SOFR (secured overnight financing rate published by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate)) for
a 6-month interest period, plus (ii) 4.00%. Interest is compounded on a semi-annual basis on May 31 and November 30 and is required to be paid in full on the maturity date. The Term Loan includes negative covenants restricting the ability of LiveWire Group, Inc. to incur indebtedness, create liens, sell assets, make investments, make fundamental changes, make dividends or other restricted payments and enter into affiliate transactions. All of the obligations under the Term Loan are secured by a security interest in substantially all of the assets of LiveWire Group, Inc.
On December 15, 2025, LiveWire Group, Inc. borrowed $75.0 million under the Term Loan, which remained outstanding as of March 31, 2026.
The Company believes indicators point to a much later EV adoption in the powersports and discretionary leisure industries than the Company originally anticipated given a lack of government incentives and a less favorable regulatory environment, combined with a slower expansion of charging infrastructure. LiveWire will continue seeking external capital under its At-The-Market program and review its product portfolio. In addition, LiveWire plans to continue to focus on cost savings to reduce operating losses with the intention of establishing a sustainable business model with the existing funds available. The Company does not plan to make additional investments in LiveWire beyond the amount outstanding under the Term Loan described above.
Operating and Financial Covenants - Harley-Davidson Financial Services Inc. and the Company are subject to various operating and financial covenants related to the credit facilities and various operating covenants under the medium-term and senior notes and the U.S. and Canadian asset-backed commercial paper conduit facilities. The more significant covenants are described below.
The operating covenants limit the Company's and Harley-Davidson Financial Services Inc's ability to:
•Assume or incur certain liens;
•Participate in certain mergers or consolidations; and
•Purchase or hold margin stock.
Under the current financial covenants of the Global Credit Facilities, the ratio of Harley-Davidson Financial Services Inc.'s consolidated debt, excluding secured debt, to Harley-Davidson Financial Services' consolidated allowance for credit losses on finance receivables plus Harley-Davidson Financial Services Inc's consolidated shareholders' equity, excluding accumulated other comprehensive loss (AOCL), cannot exceed 10.0 to 1.0 as of the end of any fiscal quarter. In addition, the ratio of the Company's consolidated debt to the Company's consolidated debt and consolidated shareholders' equity (where the Company's consolidated debt in each case excludes that of Harley-Davidson Financial Services Inc. and its subsidiaries, and the Company's consolidated shareholders' equity excludes AOCL), cannot exceed 0.7 to 1.0 as of the end of any fiscal quarter. No financial covenants are required under the medium-term or senior notes or the U.S. or Canadian asset-backed commercial paper conduit facilities.
As of March 31, 2026 and 2025, Harley-Davidson Financial Services Inc. and the Company remained in compliance with all of the then existing covenants.
Cautionary Statements
Important factors that could affect future results and cause those results to differ materially from those expressed in the forward-looking statements include, among others, the Company's ability to: (a) execute its business plans and strategies, including the Company's new strategic plan announced in the second quarter of 2026, successfully execute its approach to a full enterprise economic model, and strengthen its existing businesses while allowing for growth; (b) manage supply chain and logistics issues, including without limitation quality issues, unexpected interruptions or price increases caused by supplier volatility, raw material shortages, inflation, war or other hostilities, including the conflict in Iran, or natural disasters and longer shipping times and increased logistics costs; (c) manage and predict the impact that new, reinstated or adjusted tariffs may have on the Company's ability to sell products domestically and internationally, and the cost of raw materials and components, including tariffs recently imposed or that may be imposed by the U.S. on foreign goods or rebalancing or other tariffs recently imposed or that may be imposed by foreign countries on U.S. goods; (d) accurately analyze, predict and react to changing market conditions, interest rates, and geopolitical environments, and successfully adjust to shifting global consumer needs and interests, including successfully realigning its product portfolio, which encompasses re-introducing the Sportster; (e) accurately predict the margins of its segments in light of, among other things, tariffs, rebalancing trade measures, inflation, foreign currency exchange rates, the cost associated with product development initiatives and the Company's complex global supply chain; (f) maintain and enhance the value of the Harley-Davidson brand, including detecting and mitigating or remediating the impact of activist collective actions, such as calls for boycotts and other brand-damaging behaviors that could harm the Company's brand or business; (g) manage through changes in general economic and business conditions, including changing capital, credit and retail markets, and the changing domestic and international political
environments, including as a result of the conflict in Iran; (h) successfully access the capital and/or credit markets on terms that are acceptable to the Company and within its expectations; (i) successfully carry out its global manufacturing and assembly operations; (j) develop and introduce products, services and experiences on a timely basis that the market accepts, that enable the Company to generate desired sales levels and that provide the desired financial returns, including successfully implementing and executing plans to shift to a rider-centric portfolio that includes a focus on accessibility and customization and growing its parts and accessories and apparel businesses; (k) perform in a manner that enables the Company to benefit from market opportunities while competing against existing and new competitors; (l) successfully manage and reduce costs throughout the business; (m) manage the impact that prices for and supply of used motorcycles may have on its business, including on retail sales of new motorcycles; (n) prevent, detect and remediate any issues with its motorcycles or any issues associated with the design, manufacturing, or assembly processes to avoid delays in new model launches, recall campaigns, regulatory agency investigations, increased warranty costs or litigation and adverse effects on its reputation and brand strength, and carry out any product programs or recalls within expected costs and timing; (o) successfully manage and reduce costs throughout the business; (p) continue to develop the capabilities of its distributors and dealers, effectively implement changes relating to its full enterprise economic model, and manage the risks that its dealers may have difficulty obtaining capital and managing through changing economic conditions and consumer demand; (q) realize the desired business benefits from LiveWire operating as a separate public company, which may be affected by, among other things: (i) the ability of LiveWire to execute its plans to develop, produce, market and sell its electric vehicles; (ii) the demand for and consumer willingness to adopt two- and three-wheeled electric vehicles; (iii) the ability of LiveWire to obtain sufficient funding from sources other than the Company to sustain its operations; and (iv) other risks and uncertainties indicated in documents filed with the SEC by the Company or LiveWire Group, Inc., including those risks and uncertainties noted in Risk Factors under Item 1.A of LiveWire Group Inc.'s most recent Annual Report on Form 10-K; (r) manage the quality and regulatory non-compliance issues relating to the brake hose assemblies provided to the Company by Proterial Cable America, Inc. in a manner that avoids future quality or non-compliance issues and additional costs or recall expenses that are material; (s) maintain a productive relationship with Hero MotoCorp as a distributor and licensee of the Harley-Davidson brand name; (t) successfully maintain or achieve a manner in which to sell motorcycles in Europe, China, and the Company's Association of Southeast Asian Nations (ASEAN) countries that does not subject its motorcycles to incremental tariffs; (u) manage its Thailand corporate and manufacturing operation in a manner that allows the Company to avail itself of preferential free trade agreements and duty rates, and sufficiently lower prices of its motorcycles in certain markets; (v) retain and attract talented employees and leadership and qualified and experienced independent directors for its Board of Directors, eliminate personnel duplication, inefficiencies and complexity throughout the organization, and successfully complete transitions of executives, and effectively manage the return to on-site work of Milwaukee-based corporate employees at specified Company facilities; (w) accurately estimate and adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices; (x) manage the credit quality, the loan servicing and collection activities, and the recovery rates of Harley-Davidson Financial Services' loan portfolio; (y) prevent a ransomware attack or cybersecurity incidents and data privacy breaches and respond to related evolving regulatory requirements; (z) adjust to tax reform, healthcare inflation and reform and pension reform, and successfully estimate the impact of any such reform on the Company's business; (aa) manage through the effects inconsistent and unpredictable weather patterns may have on retail sales of motorcycles; (bb) implement and manage enterprise-wide information technology systems, including systems at its manufacturing facilities; (cc) manage changes, prepare for, and respond to evolving requirements in legislative and regulatory environments related to its products, services and operations, including increased environmental, safety, emissions or other regulations; (dd) manage its exposure to product liability claims in a manner that avoids or successfully mitigates the impact of substantial jury verdicts and manage exposure in commercial or contractual disputes; (ee) continue to manage the relationships and agreements that the Company has with its labor unions to help drive long-term competitiveness; (ff) realize the desired business benefits from KKR's and PIMCO's investments in Harley-Davidson Financial Services, Inc.; (gg) manage risks related to functions the Company outsources and the use of artificial intelligence by the Company and its vendors and suppliers; (hh) achieve anticipated results with respect to the Company's preowned motorcycle program, Harley-Davidson Certified, the Company's H-D1 Marketplace, and Apparel and Licensing; (ii) optimize capital allocation in light of the Company's capital allocation priorities; (jj) manage the Company's share repurchase strategy; (kk) manage issues related to climate change and related regulations; and (ll) realize the expected effects of the anticipated increase in Harley-Davidson Financial Services, Inc.'s retail finance receivable base on Harley-Davidson Financial Services, Inc.'s operating income.
The Company's ability to sell its motorcycles and related products and services and to meet its financial expectations also depends on the ability of the Company's dealers to sell its motorcycles and related products and services to retail customers. The Company depends on the capability and financial capacity of its dealers to develop and implement effective retail sales plans to create demand for the motorcycles and related products and services they purchase from the Company. In addition, the Company's dealers and distributors may experience difficulties in operating their businesses and selling Harley-Davidson motorcycles and related products and services as a result of weather, economic conditions, or other factors.
The Company believes that HDFS' retail credit losses will continue to change over time due to changing consumer credit behavior, macroeconomic conditions, including the impact of inflation and HDFS's efforts to increase prudently structured loan approvals to sub-prime borrowers. In addition, HDFS's efforts to adjust underwriting criteria based on market and
economic conditions and actions that the Company has taken and could take that impact motorcycle values may impact HDFS's retail credit losses.
The Company's operations, demand for its products, and its liquidity could be adversely impacted by changes in tariffs, inflation, work stoppages, facility closures, strikes, natural causes, widespread infectious disease, terrorism, war or other hostilities, including the conflict in Iran, or other factors. Refer to Risk Factors under Item 1.A of this report and Risk Factors under Item 1.A of the Company's Annual Report on Form 10-K for the year ended December 31, 2025 for a discussion of additional risk factors and a more complete discussion of some of the cautionary statements noted above.
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