0000793952-26-000032
SEC filingNet income fell 81% to $24.8M in Q1 2026 due to HDMC operating income plunge and tariff costs.
In Q1 2026, Harley-Davidson reported net income of $24.8M ($0.22 per diluted share), down 81.4% from $133.1M ($1.07) in Q1 2025. Total operating income dropped 85.4% to $23.5M. The dramatic decline was driven by a $97.3M decrease in HDMC segment operating income, partially offset by a $2.1M improvement in LiveWire's operating loss and a $41.8M drop in HDFS operating income. Key headwinds included higher operating expenses (including one-time employee termination benefits and product recall costs), unfavorable product mix and pricing, increased manufacturing and tariff costs, and lower motorcycle shipments. The effective tax rate rose to 42.7% from 26.5% due to discrete items and mix shifts.
HDMC: Segment revenue fell 2.4% to $1.06B, with motorcycle revenue down 3.2% on 3.4% lower wholesale shipments. Gross profit decreased 15.3% to $267.0M, and operating margin shrank from 10.8% to 1.8%. Adverse factors included $22.4M from price/sales incentives, $20.6M from unfavorable shipment mix, and $10.1M from manufacturing/tariff costs, partially offset by $14.3M favorable currency and a $41M tariff refund.
LiveWire: Revenue surged 86.5% to $5.1M on 175.8% higher unit shipments (91 units vs 33). Gross loss narrowed to $0.5M from $1.8M, and operating loss improved to $17.7M from $19.8M due to cost containment.
HDFS: Revenue plunged 54.3% to $111.9M as interest income fell 76.1% on a smaller retail finance receivable portfolio following the 2025 sale. Operating income dropped 65.3% to $22.2M, though the provision for credit losses decreased 75.3% to $13.2M. Managed annualized credit losses improved to 3.59% from 3.79%.
Management provided 2026 guidance: wholesale shipments and retail sales of 130,000-135,000 units; HDMC operating result between a $40M loss and $10M income; HDFS operating income of $45M-$60M; LiveWire operating loss of $70M-$80M; and capital investments of $175M-$200M. The company announced its 'Back to the Bricks' strategic plan, targeting mid-single-digit CAGR in retail sales, HDMC gross margin of 25-30%, and HDMC operating expense below 20% of revenue in the medium term. The estimated full-year tariff cost (new/increased) is $75M-$90M, down from a prior range of $75M-$105M. The company expects cost reductions of at least $150M versus 2025, fully realized by 2028.
As of March 31, 2026, Harley-Davidson held $1.805 billion in cash and cash equivalents, a significant decrease from $3.092 billion at year-end 2025, primarily driven by debt repayments and share repurchases. Total debt (including current portion) stood at $2.132 billion, down from $2.967 billion at December 31, 2025. The company's shareholders' equity was $3.064 billion. Finance receivables held for investment, net, totaled $2.015 billion, while finance receivables held for sale, net, were $426.8 million.
The most significant commitment disclosed in the Notes is a contingent liability related to a regulatory compliance matter with brake hose assemblies. The company estimates that a potential field action or recall, if required, could cost between $140 million and $450 million. The company believes it will not be required to conduct a recall and has not accrued any costs. Other commitments include operating lease liabilities and contractual obligations related to debt, but no specific aggregate purchase commitment figure was provided.
During the first quarter of 2026, Harley-Davidson repurchased $70.0 million of its common stock. The company paid $21.5 million in dividends, or $0.1875 per share, a 4.2% increase from the prior year's $0.18 per share. Capital expenditures totaled $31.8 million. The company redeemed €700.0 million (approximately $811 million) of its 6.36% medium-term notes due 2026, resulting in a $0.3 million loss on extinguishment. No new debt was issued during the quarter.
The company operates in three reportable segments: HDMC, LiveWire, and HDFS. HDMC revenue decreased 2.4% YoY to $1.055 billion, with operating income falling sharply to $18.9 million from $116.3 million. LiveWire revenue grew 86.5% to $5.1 million, but its operating loss narrowed slightly to $17.7 million. HDFS revenue declined 54.3% to $111.9 million, with operating income of $22.2 million. Segment assets were $3.763 billion for HDMC, $127.6 million for LiveWire, and $3.355 billion for HDFS.