8-K: Harley-Davidson 2025 Results & 2026 Outlook

Harley-Davidson reported a challenging 2025 with declining sales and an operating loss at HDMC, but outlined a strategic reset and positive 2026 outlook for HDFS.

Summary

• Full Year 2025 diluted EPS was $2.78, a 19% decrease from $3.44 in 2024.
• Fourth Quarter 2025 diluted EPS loss was $2.44, compared to a loss of $0.93 in Q4 2024.
• Global retail motorcycle sales for Full Year 2025 totaled 132,535 units, down 12% from the prior year.
• HDMC global motorcycle shipments for Full Year 2025 were 124,477 units, a 16% decrease from the prior year.
• HDMC reported an operating loss of $29 million for Full Year 2025, a significant decline from an operating income of $278 million in 2024.
• HDFS operating income reached a record high of $490 million for Full Year 2025, driven by a strategic partnership with KKR and PIMCO, which also facilitated a $1 billion dividend to HDI.
• LiveWire operating loss for Full Year 2025 was $75 million, which was in line with expectations, with 653 EV motorcycles sold.
• Returned $434 million of capital to shareholders in Full Year 2025, comprising $347 million in discretionary share repurchases and $86 million in dividends paid.
• Fourth Quarter 2025 North America retail motorcycle sales increased 5% year-over-year to 15,847 units.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a challenging report with significant declines in core motorcycle business metrics for 2025, partially offset by a strong performance from HDFS due to a strategic transaction and a forward-looking strategic reset.

Positives

• HDFS closed a strategic partnership with KKR and PIMCO, which is believed to unlock significant value and transform HDFS into a capital-light, de-risked business.
• HDFS operating income reached a record high of $490 million for Full Year 2025, representing a 97% increase from $248 million in 2024.
• The HDFS transaction facilitated a $1 billion dividend from HDFS to HDI in Q4 2025.
• Global dealer inventory levels of new motorcycles finished Full Year 2025 down 17% compared to the end of Q4 2024, indicating effective inventory management.
• Fourth Quarter 2025 North America retail motorcycle sales increased by 5% year-over-year, driven by strength in the Touring category.
• LiveWire operating loss of $75 million for Full Year 2025 was 32% less than the prior year and was in line with expectations.
• LiveWire's Fourth Quarter revenue increased 9% and its operating loss was 30% less than the prior year.

Negatives

• Full Year 2025 diluted EPS of $2.78 was down 19% from $3.44 in 2024.
• Fourth Quarter 2025 diluted EPS loss was $2.44, a significant increase from the loss of $0.93 in Q4 2024.
• Global retail motorcycle sales for Full Year 2025 were down 12% from the prior year.
• HDMC global motorcycle shipments for Full Year 2025 decreased 16% from the prior year.
• HDMC reported an operating loss of $29 million for Full Year 2025, a substantial decline from an operating income of $278 million in 2024.
• Consolidated revenue for Full Year 2025 was $4,473 million, down 14% from $5,187 million in 2024.
• Consolidated operating income for Full Year 2025 was $387 million, down 7% from $417 million in 2024.
• HDMC Fourth Quarter revenue was down 10% to $379 million, and its operating loss was $260 million, compared to a $214 million loss in the prior year period.
• HDMC gross margin for Full Year 2025 was 24.2%, a decrease of 3.8 points from 28.0% in 2024, primarily due to incremental tariffs, negative operating leverage, and lower volumes.
• EMEA retail sales declined by 24% in Q4 and 11% for the full year, driven by weakness across the region.
• Asia Pacific retail sales declined by 15% for the full year, with significant weakness in non-core motorcycle models.
• HDFS Fourth Quarter revenue was down 59% from the prior year, driven by lower retail and wholesale finance receivables at lower yields.

Risks

• Ability to develop and successfully implement a new strategic plan.
• Managing supply chain and logistics issues, including quality issues, unexpected interruptions, price increases, raw material shortages, inflation, war, or natural disasters.
• Impact of new, reinstated, or adjusted tariffs on the ability to sell products domestically and internationally, and on the cost of raw materials and components.
• Accurately analyzing, predicting, and reacting to changing market conditions, interest rates, geopolitical environments, and shifting global consumer needs and interests.
• Maintaining and enhancing the value of the Harley-Davidson brand, including detecting and mitigating the impact of activist collective actions like boycotts.
• Managing through changes in general economic and business conditions, including capital, credit, and retail markets, and changing domestic and international political environments.
• Successfully accessing capital and/or credit markets on acceptable terms.
• Developing and introducing products, services, and experiences on a timely basis that the market accepts and that generate desired sales levels and financial returns.
• Managing the impact that prices for and supply of used motorcycles may have on the business, including on retail sales of new motorcycles.
• Preventing, detecting, and remediating any issues with motorcycles or associated design, manufacturing, or assembly processes to avoid delays, recall campaigns, regulatory investigations, increased warranty costs, or litigation.
• Successfully managing and reducing costs throughout the business.
• Risks related to LiveWire operating as a separate public company, including its ability to execute plans, demand for electric vehicles, and obtaining sufficient funding from sources other than the Company.
• Managing quality and regulatory non-compliance issues relating to brake hose assemblies provided by Proterial Cable America, Inc.
• Maintaining a productive relationship with Hero MotoCorp as a distributor and licensee.
• Successfully maintaining or achieving a manner to sell motorcycles in Europe, China, and ASEAN countries that does not subject them to incremental tariffs.
• Managing Thailand corporate and manufacturing operations to avail itself of preferential free trade agreements and duty rates.
• Retaining and attracting talented employees and leadership, and effectively managing executive transitions and return-to-office policies.
• Accurately estimating and adjusting to fluctuations in foreign currency exchange rates, interest rates, and commodity prices.
• Managing the credit quality, loan servicing and collection activities, and recovery rates of Harley-Davidson Financial Services' loan portfolio.
• Preventing ransomware attacks or cybersecurity incidents and data privacy breaches, and responding to related evolving regulatory requirements.
• Adjusting to tax reform, healthcare inflation and reform, and pension reform.
• Managing through the effects inconsistent and unpredictable weather patterns may have on retail sales of motorcycles.
• Implementing and managing enterprise-wide information technology systems.
• Managing changes, preparing for, and responding to evolving requirements in legislative and regulatory environments related to products, services, and operations.
• Managing exposure to product liability claims and commercial or contractual disputes.
• Continuing to manage relationships and agreements with labor unions to help drive long-term competitiveness.
• Realizing the desired business benefits from KKR's and PIMCO's investments in Harley-Davidson Financial Services, Inc.
• Managing risks related to functions outsourced and the use of artificial intelligence by the Company and its vendors and suppliers.
• Achieving anticipated results with respect to the pre-owned motorcycle program, H-D1 Marketplace, and Apparel and Licensing.
• Optimizing capital allocation in light of the Company's capital allocation priorities.
• Managing the Company's share repurchase strategy.
• Managing issues related to climate change and related regulations.

Future Outlook

For the full year 2026, Harley-Davidson expects HDMC global motorcycle retail sales and wholesale shipments to be between 130,000 and 135,000 units. HDMC operating income is projected to range from a $40 million loss to a $10 million profit. HDFS operating income is anticipated to be $45 million to $60 million, while LiveWire is expected to incur an operating loss of $70 million to $80 million. Capital investments are forecasted to be $175 million to $200 million. These figures may be impacted by a new strategic plan expected to be announced in May 2026.

Management Comments

• "As we close out a challenging year for the Company, we are taking deliberate actions to stabilize the business, restore dealer confidence, and align wholesale activity with retail demand."
• "While near-term results reflect these actions, the progress we are seeing reinforces our confidence in the reset underway and our ability to rebuild Harley-Davidson's long-term earnings and cash-flow power."
• "With an iconic brand, a deeply loyal rider community, and a dealer network unlike any other, we believe Harley-Davidson is well positioned as we chart a clear path forward." Artie Starrs, President and CEO, Harley-Davidson.

Industry Context

StockSavvy.ai notes that Harley-Davidson's challenges in 2025, particularly the decline in global retail sales and HDMC operating loss, reflect broader shifts in the motorcycle market, including changing consumer preferences and affordability concerns. The strategic partnership for HDFS and the focus on inventory reduction suggest a move towards a more agile and capital-efficient model, a trend seen in other mature industries facing disruption. The continued losses at LiveWire highlight the significant investment and time required to establish a foothold in the nascent electric vehicle market, a common hurdle for traditional manufacturers transitioning to new technologies.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders: Impacted by declining EPS, share repurchases, and dividends. Potential for future value creation from the strategic reset and HDFS partnership.
• Dealers: Efforts are underway to restore dealer confidence and align wholesale activity with retail demand. Global dealer inventory levels are down, which could improve dealer profitability.
• Employees: Potential for organizational changes as the company undergoes a strategic reset and aims to eliminate personnel duplication and inefficiencies.
• Customers: Impacted by product development initiatives and potential changes in product offerings (e.g., LiveWire). Affordability is noted as a focus for the company.

Next Steps

• Final settlement of the Accelerated Share Repurchase (ASR) agreement is expected no later than the second quarter of 2026.
• A new strategic plan is expected to be announced in May 2026.
• The Board of Directors expects to decrease its size from nine to eight members, effective at the conclusion of the upcoming annual meeting of shareholders.

Key Dates

Recommendation

While Harley-Davidson faces significant headwinds with declining core motorcycle sales and an operating loss in its motor company segment, the strategic reset, strong HDFS performance driven by a new partnership, and proactive inventory management provide a foundation for potential future stabilization. The 2026 outlook suggests continued challenges but also a clear path for strategic adjustments. Investors should hold to observe the execution of the new strategic plan expected in May 2026 before making further investment decisions.

Keywords

Harley-Davidson, HOG, Motorcycle, Financial Results, SEC Filing, Earnings, 2025, 2026 Outlook, HDMC, HDFS, LiveWire, Retail Sales, Shipments, EPS, Operating Income, Share Repurchase, Dividends, KKR, PIMCO, Corporate Governance