8-K: LiveWire Group Reports Improved Second Quarter Results, Driven by Electric Motorcycle Sales

LiveWire Group, Inc. saw a 12% improvement in consolidated operating loss and a significant increase in electric motorcycle sales in the second quarter of 2024.

Summary

• LiveWire Group, Inc. announced its second quarter 2024 financial results, showing a 12% improvement in consolidated operating loss compared to the same period last year.
• The company's electric motorcycle unit sales increased by 35% compared to the first quarter of 2024 and had a triple-digit increase compared to the second quarter of 2023, reaching 158 units.
• Consolidated revenue was $6.4 million, a decrease of 8% year-over-year, with electric motorcycle revenue increasing by 219% to $2.4 million and STACYC revenue decreasing by 36% to $4.0 million.
• The consolidated operating loss improved by $3.8 million, driven by cost reduction initiatives, resulting in a loss of $28.2 million.
• Net loss for the quarter was $24.8 million, compared to $40.7 million in the same period last year, primarily due to a decrease in interest income offset by an increase in non-operating income related to the decrease in fair value of the outstanding warrants.
• For the full year 2024, the company expects electric motorcycle sales of 1,000 to 1,500 units and an operating loss between $105 and $115 million.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to the significant growth in electric motorcycle sales and improvement in operating loss, but the overall financial performance is still weak with continued losses and declining revenue in the STACYC segment. The company is making progress but still faces significant challenges.

Positives

• The company achieved significant growth in electric motorcycle sales, with a 35% increase over the previous quarter and a triple-digit increase year-over-year.
• LiveWire's consolidated operating loss improved by 12% year-over-year, indicating progress in cost management.
• The net loss decreased by $15.9 million compared to the same quarter last year.
• Electric motorcycle revenue saw a substantial increase of 219% year-over-year.
• The company is committed to cost reduction initiatives while investing in portfolio expansion.

Negatives

• Consolidated revenue decreased by 8% year-over-year, primarily due to a decline in STACYC sales.
• STACYC revenue decreased by 36% year-over-year, attributed to reduced third-party branded distributor volumes and increased product development costs.
• The STACYC segment experienced a significant increase in operating loss, reaching $1.4 million compared to $0.1 million in the same quarter last year.
• The company continues to operate at a loss, with a consolidated operating loss of $28.2 million for the quarter.
• The company's cash and cash equivalents decreased from $167.9 million at the end of 2023 to $113.0 million at the end of June 2024.

Risks

• The company has a history of losses and expects to incur significant expenses and continuing losses for the foreseeable future.
• LiveWire faces challenges as a pioneer in the highly competitive and rapidly evolving electric vehicle industry.
• The company is dependent on Harley-Davidson for a number of services, and the termination of these arrangements could require significant investment.
• There are risks associated with the company's ability to attract and retain customers and key personnel.
• The company's business overlaps with Harley-Davidson's business, which could lead to conflicts or be perceived as competition.

Future Outlook

For the full year 2024, the company expects electric motorcycle sales of 1,000 to 1,500 units and an operating loss between $105 and $115 million.

Management Comments

• Karim Donnez, CEO of LiveWire, stated that the company achieved continued growth in existing markets for the Electric Motorcycles segment and maintained its position as the #1 on-road electric motorcycle retailer in the U.S. for the first half of 2024.
• The CEO also mentioned the company's commitment to cost reduction initiatives while investing in portfolio expansion in both the Electric Motorcycles and STACYC segments, with upcoming new products planned.

Industry Context

The results reflect the ongoing challenges and opportunities in the electric vehicle market, with LiveWire focusing on growth in the electric motorcycle segment while managing costs and navigating competition. The company's performance is being closely watched as it establishes itself as a standalone entity in the EV sector.

Comparison to Industry Standards

• LiveWire's electric motorcycle sales growth is a positive sign, but the overall revenue decline and continued operating losses highlight the challenges of scaling in the EV market.
• Compared to other electric motorcycle manufacturers, LiveWire's focus on the premium segment and its relationship with Harley-Davidson provide a unique market position.
• The significant operating loss in the STACYC segment is concerning and may require strategic adjustments to improve profitability.
• The company's cost reduction initiatives are crucial for achieving long-term financial sustainability, as many EV companies are facing similar challenges in managing expenses.

Stakeholder Impact

• Shareholders may be encouraged by the growth in electric motorcycle sales and the improvement in operating loss, but concerned about the continued losses and declining revenue in the STACYC segment.
• Employees may be impacted by the company's cost reduction initiatives and the ongoing restructuring efforts.
• Customers may benefit from the company's investment in new products and portfolio expansion.
• Suppliers may be affected by the company's efforts to manage costs and streamline its supply chain.
• Creditors will be monitoring the company's financial performance and its ability to manage its debt.

Next Steps

• The company plans to continue investing in portfolio expansion in both the Electric Motorcycles and STACYC segments, with upcoming new products planned.
• LiveWire leadership will be joining the Harley-Davidson, Inc. audio webcast to discuss the results, developments in the business, and updates to the company's outlook.

Key Dates

Keywords

electric motorcycles, electric balance bikes, EV, LiveWire, financial results, operating loss, revenue, unit sales, cost reduction, STACYC