DEFA14A: Harley-Davidson Urges Shareholders to Vote White Proxy Card Amidst H Partners' Campaign

Harley-Davidson is urging shareholders to vote using the white proxy card for all director nominees at the upcoming annual meeting, dismissing a campaign by H Partners hedge fund.

Summary

• Harley-Davidson is actively campaigning against H Partners, a hedge fund, urging shareholders to vote for its director nominees using the white proxy card.
• The company highlights its 'Hardwire' strategy, claiming it's delivering strong results and creating shareholder value.
• Harley-Davidson states it has outperformed its peers in total shareholder return (TSR), driven by a leading operating margin and strong free cash flow generation.
• Since 2022, Harley-Davidson has returned over $1.4 billion to shareholders through share repurchases and dividends, representing 78 cents of every dollar of free cash flow.
• The company's board emphasizes that the 'Hardwire' strategic plan is delivering results, including productivity savings and U.S. touring market share growth.
• Harley-Davidson is targeting $357 million in productivity savings by 2025 and $457 million by 2026.
• The company highlights the experience and expertise of its board members, spanning automotive, digital transformation, finance, and brand building.
• Shareholders are instructed to discard any blue proxy cards received from H Partners and vote using the enclosed white proxy card via mail, online, phone, or QR code.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook for Harley-Davidson, highlighting its strategic plan, financial performance, and shareholder returns. However, the ongoing campaign by H Partners introduces an element of uncertainty and risk, preventing a higher sentiment score.

Positives

• Harley-Davidson has outperformed peers in total shareholder return (TSR).
• The company's operating margin is 4 percentage points higher than its peer median.
• Free cash flow generation relative to EBITDA is 2x better than its peer median.
• Over $1.4 billion has been returned to shareholders since 2022 through share repurchases and dividends.
• The 'Hardwire' strategic plan is delivering productivity savings, with $257 million achieved from 2022-2024.
• Harley-Davidson achieved the highest capital return yield among its peers in 2024.
• U.S. Touring market share in 2024 was 74.5% (~5% growth YOY).
• Dealer inventory reduction in 4Q24 YOY (19% compared to 3Q24).
• HDFS Performance hit all-time high during the Hardwire strategic plan.

Negatives

• H Partners is waging a campaign against Harley-Davidson, asking shareholders to withhold votes from certain directors, which the company views as a threat to its strategic plan.
• The document mentions 'extremely challenging market conditions for powersports companies like Harley-Davidson'.

Risks

• The company faces risks and uncertainties regarding its ability to execute its business plans and strategies, including the 'Hardwire' strategic plan.
• Supply chain and logistics issues could impact performance.
• Changes in tariffs could negatively affect the company.
• Inaccurate analysis or prediction of changing market conditions, interest rates, and geopolitical environments could impact results.
• Failure to adapt to shifting global consumer needs and interests poses a risk.
• The company faces risks related to maintaining and enhancing the value of the Harley-Davidson brand.
• General economic and business conditions could impact performance.
• The company faces risks related to the LiveWire operating as a separate business.
• The actions of H Partners Management, LLC could lead to costs and management distraction.

Future Outlook

Harley-Davidson expects to achieve $357M in productivity savings by 2025 and $457M by 2026. The company believes its 'Hardwire' strategy will lead to sustainable, profitable growth and create value for all shareholders.

Management Comments

• The Board is overseeing a plan that has delivered strong and sustainable cash flows, which benefit you, our shareholders.
• H Partners actions jeopardize the continued success of the Hardwire plan and we believe expose your investment to unnecessary and undue risk.

Industry Context

The document references 'extremely challenging market conditions for powersports companies,' suggesting the industry is facing headwinds. Harley-Davidson is positioning its 'Hardwire' strategy as a way to navigate these challenges and outperform competitors.

Comparison to Industry Standards

• Harley-Davidson compares its performance to a peer group consisting of BRP Inc., Brunswick Corp, Polaris Inc., Thor Industries, Inc. and Winnebago Industries, Inc.
• The company claims its operating margin is 4 percentage points higher than the peer median.
• Harley-Davidson states its free cash flow generation relative to EBITDA is 2x better than its peer median.
• Harley-Davidson achieved the highest capital return yield among its peer group in 2024.

Stakeholder Impact

• Shareholders are directly impacted by the company's performance and capital return policies.
• The document emphasizes the importance of shareholder votes in shaping the company's future.
• The company's strategic plan and performance impact employees, customers, and other stakeholders.

Next Steps

• Shareholders are urged to vote using the white proxy card before the May 14, 2025 Annual Meeting.

Key Dates

Keywords

Harley-Davidson, shareholders, proxy vote, H Partners, Hardwire strategy, total shareholder return, capital return, board of directors, productivity savings