HOG · Harley-Davidson, Inc.

Harley-Davidson's second-quarter 2026 results demonstrate a mixed performance: solid execution in the core motorcycle business, but headwinds from the financial services segment. Consolidated revenue declined 6% to $1.23 billion, primarily due to a 55% drop in HDFS revenue as the company transitions to a capital-light model. However, HDMC revenue grew 6% to $1.1 billion, driven by a 9% increase in global motorcycle shipments (39,209 units) and favorable foreign exchange, partially offset by net pricing. North American retail sales rose 3% to 29,751 units, reflecting strength in Touring and Sport categories and a positive response to the new 2026 lineup. Gross margin for HDMC contracted 1.1 percentage points to 27.5%, impacted by unfavorable product mix and net pricing, though manufacturing cost improvements and a tariff recovery provided some offset. Operating expenses at HDMC decreased $6 million year-over-year to $232 million, including $3 million in restructuring charges. HDFS operating income fell 69% to $22 million on lower interest income and portfolio size, but provision for credit losses and interest expense were also significantly lower. LiveWire revenue surged 52% to $9 million on higher electric motorcycle and STACYC sales, though its operating loss narrowed only slightly to $18 million. The company raised its full-year 2026 guidance: HDMC now expects operating income of $10 million to $50 million (versus prior $40 million loss to $10 million profit), and HDFS operating income of $55 million to $65 million (versus $45 million to $60 million). Retail sales and wholesale shipment guidance were also lifted to 133,500–138,500 units from 130,000–135,000. Management attributed the improved outlook to first-half results, market share gains, and progress on the 'Back to the Bricks' strategic initiatives. CEO Artie Starrs noted confidence in creating long-term shareholder value. The balance sheet remains strong with $1.9 billion in cash, though total debt stands at $2.24 billion. Free cash flow was negative $60 million in the first half due to working capital and investment, but capital spending is expected to be $175 million to $200 million for the full year. The company returned $41 million in dividends and $158 million in discretionary share repurchases during the first six months.