Q4 2021 Harley-Davidson Inc Earnings Call
Thank you for standing by and welcome to the Harley Davidson 2021 fourth quarter and year end Investor and Analyst Conference call.
Speaker 1: Thank you for standing by and welcome to the Harley Davidson 2021 fourth quarter and year-end investor and analyst conference LE Tag Key derivative tick Holy creative programs at Let's sites
Speaker 1: Please be advised Saturday's conference is being recorded. I would now like to hand the conference over to Sean Collins. Thank you. Please go ahead.
Please be advised that today's conference is being recorded.
I'd now like to hand, the conference over to Shawn Collins. Thank you. Please go ahead.
Thank you. Good morning, everyone. This is Shawn Collins, the director of Investor Relations at Harley Davidson you can access the slides supporting today's call on the Internet at Investor Harley Davidson Dot com.
Speaker 2: Thank you. Good morning, everyone. This is Sean Collins, the Director of Investor Relations at Harley Davidson. You can access the slides supporting today's call on the internet at InvestorHarleyDavidson.com.
Speaker 2: Our comments will include forward-looking statements that are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters we have noted in our latest earnings release and filings with the SEC. Harley Davidson disclaims any obligation to update information in this video.
Our comments will include forward looking statements that are subject to risks that could cause actual results to be materially different. Those risks include among others matters. We have noted in our latest earnings release and filings with the SEC Harley Davidson disclaims any obligation to update information in this call joining.
Speaker 2: Joining me this morning are CEO Jochen Zeitz and CFO Gina Getter. In addition, Chief Commercial Officer Adele O'Sullivan will join for the Q&A. Jochen, let's get started.
Joining me. This morning are CEO youll can sites and CFO Dziennik Theater in addition, cheap.
Chief Commercial officer, Dan Sullivan will join for the Q&A Jochen, let's get started.
Speaker 3: Thank you, Sean, and good morning, everyone. Thank you for joining us today.
Thank you Sean and good morning, everyone. Thank you for joining us today.
As we conclude the first view of the hardware our five year strategic plan to drive profitable growth Harley Davidson delivered a strong finish to 2021.
Speaker 3: As we conclude the first year of the hardwire, our five-year strategic plan to drive profitable growth, Harley Davidson delivered a strong finish to 2021.
We're very pleased with our performance, especially in light of the many challenges that 'twenty one brought us.
Speaker 3: We're very pleased with our performance, especially in light of the many challenges that 21 brought us.
We are particularly encouraged that the proof points of our delivery against our strategic pillars of the hotwire a visible across the board.
Speaker 3: We're particularly encouraged that the proof points of our delivery against the strategic pillars of the hardwire are visible across the board.
We anticipate the momentum from a strong 21 to continue into 'twenty, two and I am very optimistic about the great potential of Harley Davidson in the coming years.
Speaker 3: We anticipate the momentum from a strong 21 to continue into 22, and I'm very optimistic about the great potential of Harley Davidson in the coming years, especially when we look to what we achieved with rewire and our delivery of our hardwire milestones over the past year as part of the huge transformational journey the company is on.
Especially when we look to what we achieved with rewire and our delivery of our hotwire milestones over the past year as part of the huge transformational journey of the company soon.
However, we are mindful of the significant supply challenges that we expect to continue to impact the industry.
Speaker 3: However, we are mindful of the significant supply challenges that we expect to continue to impact the industry.
With <unk>, we realigned our organization, creating a culture of performance efficiency focus and speed.
Speaker 3: With Rewire, we realigned our organization, creating a culture of performance, efficiency, focus and speed.
Speaker 3: In unlocking this potential, we set the company's foundation for success. Gizrana, a completely new leadership team.
Unlocking this potential we set the company's foundation for success.
And a completely new leadership team.
And building on re why in February 2021, we launched the hotwire.
Speaker 3: And building on rewire in February 2021, we launched the hardware. This positioned Hollywood Davidson with capabilities, assets, and a legacy unmatched by any competitor, as the most desirable motorcycle brand in the world, backed by the leading positions in the most profitable segments.
Positioned Harley Davidson with capabilities assets and the legacy unmatched by any competitor as the most desirable motorcycle brand in the world backed by the leading positions in the most profitable segments.
Speaker 3: Rooted in desirability, the hardware continues to strengthen and build the brand, deepening loyalty, creating value, and driving engagement across both existing and new consumers.
[noise] rooted and desirability of the hardware continues to strengthen and build the brand deepening loyalty, creating value and driving engagement across both existing and new consumers.
I will briefly address our strategic pillars, and our delivery against them over the past year.
Speaker 3: I will briefly address our strategic pillars and our deliver against them over the past year.
Profit focus.
We are committed to strengthening and growing our position in our strongest motorcycle segments in touring large cruiser and trike.
Speaker 3: We are committed to strengthening and growing our position in our strongest motorcycle segments in touring, large cruiser and tripe.
Speaker 3: Not only are these segments the most profitable in the market globally, but we also believe these segments offer untapped potential to inspire more engagement while compelling new customers and riders to choose highly David.
Not only are these segments the most profitable in the market globally, but we also believe these segments of our untapped potential to inspire more engagement, while compelling new customers and drive us to choose holiday medicine.
Our data shows that in 2021, the tooling segment grew thanks to our strong performance in this category and as we look ahead, we will continue to focus on growing our stronghold segment.
Speaker 3: Our data shows that in 2021, the touring segment grew thanks to our strong performance in this category. And as we look ahead, we will continue to focus on growing our stronghold segment.
With the Hotwire, we made a commitment to introduce a series of motorcycles that align with our strategy to increase desirability and to drive the legacy of Harley Davidson.
Speaker 3: With the hardwired, we made a commitment to introduce a series of motorcycles that align with our strategy to increase desirability and to drive the legacy of Harley-David.
Speaker 3: In this context we launched our icons collection, our new limited edition series of extraordinary adaptations of production motorcycles, which looked to our story past and bright future.
In this context, we launched our icons collection, our new limited edition series of extraordinary adaptations of production motorcycles, which look to a storied past and bright future.
Speaker 3: The collection debuted with the Electra Glide Revival, the ultimate tribute to our heritage and grand American touring, with productions selling out from launch.
The collection debuted with electric light revival, the ultimate tribute to our heritage and Grand American touring with production of selling out from launch.
Selective expansion.
We are committed to focusing on opportunities in profitable segments aligned with our capabilities and that offer a clear path to market leadership.
Speaker 3: We are committed to focusing on opportunities and profitable segments aligned with our capabilities and that offer a clear path to market leadership.
Speaker 3: 21 saw the launch of Pan America, our first adventure touring motorcycle. From the outset, we saw the potential of the adventure touring category. As of today, it is the second fastest growing category in North America.
'twenty one so the launch of Pan America, our first adventure touring motorcycles.
From the outset, we saw the potential of the adventure touring category as of today. It is the second fastest growing category in North America.
The immediate success with Pan America resulted in selling out our allocation throughout the production year and has led to Pan America, becoming the number one selling adventure touring motorcycles in the U S. In 2021.
Speaker 3: immediate success of Pan America, resulted in selling out our allocation throughout the production year, and has led to Pan America becoming the number one selling adventure touring motorcycle in the US in 2021.
Not only has this product outperformed but it is also redefined it's category with its widest customizing the pan Americas in waste only Harley Davidson can deliver.
Speaker 3: Not only has this product outperformed, but it has also redefined its category with its riders customizing the Pan America in ways only Harley Davidson can deliver.
We continue to see the potential for Pan America across the globe, especially in Europe , the largest market for adventure touring building on our <unk> platform.
Speaker 3: We continue to see the potential for Pan America grossed the globe, especially in Europe , the largest Margaret Ford venture touring, building on our REFMAX platform.
Speaker 3: 21 also saw the launch of sports for S. Bike that has brought the Harley Davidson brand to a greater customer set beyond our stronghold segments like no other.
'twenty. One also saw the launch of sports to S. Bike that has both the holiday what's the brand to a greater customer sets beyond our stronghold segments like no other.
Speaker 3: With sport as the fastest growing category in North America, we realize the potential of the sports to edge to engage and bring new riders to the Harley Davidson brand.
With sport is the fastest growing category in North America, we realize the potential of the sports to is to engage and bring new riders to the holiday with some brand.
As we look at our delivery against selective expansion, we successfully launched two bikes that were amongst the fastest selling motorcycles in our portfolio.
Speaker 3: As we look at our delivery against selective expansion, we successfully launched two bikes that were amongst the fastest selling motorcycles in our portfolio against the backdrop of a claim and overwhelming positive media coverage with waiting lists extending into this year.
Against the backdrop of a claim an overwhelming positive media coverage with waiting lists extending into this year.
Importantly, both of these launches were delivered with a strategically streamline portfolio aligned to our Hotwire goes that's all model and SKU count reduced by 40% since 2020.
Speaker 3: Importantly, both these launches were delivered with a strategically streamlined port for you, aligned to our hardware goals. That saw a model in SKU account reduced by 40% since 2020. Allowing us to focus on the very best that Harley Davidson has to offer.
Allowing us to focus on the very best at Harley Davidson has to offer.
Speaker 3: Looking forward, we'll continue to test further avenues for desirable long-term growth.
Looking forward, we continue to test further avenues for desirable long term growth.
Leading electric.
Electric motor side that are important to Harley davidson's future and we remain committed to staying at the forefront for electric motorcycle technology.
Speaker 3: Electric motorcycles are important to Hollywood, Davidson's future, and we will remain committed to staying at the forefront of electric motorcycle technology.
Speaker 3: in 2021, we not only stood up live wire as a standalone brand, but we also announced that through business combination agreement with AEA Bridges Impact Co. Live wire would become a publicly traded company on the New York Stock Exchange.
In 2021, we not only stood up lifeway as a standalone brand, but we also announced that through a business combination agreement with Aea bridges impactful Lifewire would become a publicly traded company on the New York Stock Exchange.
The transaction is expected to close in the first half of this year and we're very excited about the potential for life wire to be the most desirable electric motorcycle company in the world.
Speaker 3: The transaction is expected to close in the first half of this year, and we are very excited about the potential for live wire to be the most desirable electric motorcycle company in the world.
Speaker 3: The live wire team began scaling the retail network in the back half of 2021, building on our 12 original parts.
The Lifeway team began scaling the retail network in the back half of 2021.
Building on our 12 original partners.
The network has grown from 20 retailers at the end of Q3 to 49 retailers as of February one.
Speaker 3: The Navigas grown from 20 retailers at the end of Q3 to 49 retailers as of February 1.
Speaker 3: We're also looking forward to introducing the first product on live-wise new error architecture in the second quarter of this year.
We're also looking forward to introducing the first product and likewise, new architecture in the second quarter of this year.
We believe that LIBOR will drive incremental business and help us to expand our reach in business in the coming decades through pioneering the electric motorcycle market and developing the technology of the future.
Speaker 3: We believe that LIFOR will drive incremental business and help us to expand our reach and business in the coming decades through pioneering the electric motorcycle market and developing the technology of the future. For LIFOR this is just the beginning.
For Lifeway or this is just the beginning.
Growth beyond bikes.
Speaker 3: Hollywood, Davidson Financial Services, HD1 Marketplace, Parts and Accessories and General merchandise are important drivers of the company's future success as a global lifestyle brand.
David with financial services, HD, one marketplace parts and accessories and general merchandise are important drivers of the company's future success as a global lifestyle brand <unk>.
Speaker 3: providing untapped potential to grow our customer base and add to customer lifetime value.
Providing untapped potential to grow our customer base and edge to customer lifetime value.
Speaker 3: HDFS is an important asset to other Davidson from both brand and revenue point of view. As we look ahead, we look forward to widening our HDFS offering to new Mark.
<unk> is an important asset to our the Davidson from both brand and revenue point of view.
And as we look ahead, we look forward to widening our https offering to new markets.
In 'twenty one we also launched HD one marketplace the ultimate destination for pre owned holiday.
Speaker 3: In 2021, we also launched HD1 Marketplace, the ultimate destination for pre-owned Harley Davidson.
Speaker 3: America. Back by the strength and scale of our dealer network and enhanced by the Halliday's and certified program for extra piece of wine.
America.
Backed by the strength and scale of our dealer network and enhanced by the Harley Davidson certified program for extra peace of mind.
The HD one marketplace platform is connecting our customers community and our strong dealer network.
Speaker 3: The HD1 marketplace platform is connecting our customers, community and our strong dealer network.
H D. One marketplace is just the first step towards our ambitious transformation of HDD comp into the leading online destination for everything Harley Davidson.
Speaker 3: HD1 Marketplace is just the first step to with our ambitious transformation of HD.com into the leading online destination for everything Harley David.
Speaker 3: And as we look to the future, we want our online credence to connect and support our HD network from enhanced online experiences, unique community engagement, to exclusive content and learning.
And as we look to the future we want our online presence to connect and support our HD network from enhanced online experiences unique community engagement to exclusive content and learning.
Speaker 3: With personalization at the heart of motor culture and the Hollywood Davidson brand, parts and accessories is now a growth area for the business. Last year, revenue grew 13% and we believe there's potential to continue that growth trajectory as more riders look to make the Hollywood Davidson uniquely theirs. We feel very positive about the performance of our general merchandise business with 23% growth for the year.
With personalization at the heart of modal culture, and the holidays, some brand parts and accessories and our growth area for the business.
Last year revenue grew 13% and we believe there's potential to continue that growth trajectory is more riders look to make the Holly Davidson uniquely theirs, we feel very positive about the performance of our general merchandise business with 23% growth for the year.
Speaker 3: Last week we announced the strategic rename of our general merchandise business to the parallel and licensing with the appointment of a senior executive and creative director to help build the business.
Last week, we announced the strategic re name of our general merchandise business to apparel and licensing with the appointment of a senior executive and creative director to help boost the business.
Speaker 3: The potential to grow both our parallel and licensing businesses, leveraging the power of the Hollywood Davidson brand across the globe is you.
The potential to grow both our apparel and licensing businesses leveraging the power of the holiday to some brand across the globe is huge.
The potential of the Harley Davidson brand beyond bikes is significant.
Speaker 3: The potential of the holiday of some brand-be-owned bikes is significant.
Speaker 3: We're one of the most recognized of our brands in the world. And as we grow our lifestyle product to reach wider audiences, we know that people would want to be part of our brand, be through the strengthening of our retail product, our online community, and our lower riding communities.
We one of the most recognizable brands in the world.
And as we grow our lifestyle product to reach wider audiences. We know that people would want to be part of our brand b through the strengthening of our retail product our online community and our loyal riding communities.
Customer experience.
By putting customers at the forefront of our products experiences and investments we are able to define customers as people, who simply love our products.
Speaker 3: By putting customers at the forefront of our products, experiences and investments, we are able to define customers as people who simply love our product.
Speaker 3: whether they don't ride but love our brand, those who may dream of motorcycle, or have just learned to ride, or the way to commit riders who are deeply passionate about and invested in our unique lifestyle brand and culture.
Whether they don't drive, but love our brand those who May dream of Motorcycling of just learn to ride all the way to committed ride us we're deeply passionate about and invested in our unique lifestyle brand and culture.
Speaker 3: We continue to invest in and redefine our overall customer experience to our dealerships and especially in our online presence as we know many customers start their journey with Harley Davidson online.
We continue to invest in and redefine our overall customer experience through our dealerships and especially in our online presence as we know many customers start their journey with Harley Davidson online.
Our E Commerce functionality has been improved to include customer notifications on restocking now features a bike build a platform for select motorcycles.
Speaker 3: Our e-commerce functionality has been improved to include customer notifications on restocking, and now features our bike builder platform for select motorcycling.
Speaker 3: Looking ahead, we will continue to invest in our digital capabilities, ensuring the best in-class customer experience.
Looking ahead, we will continue to invest in our digital capabilities, ensuring best in class customer experience.
And lastly, inclusive stakeholder management.
Our approach to optimize long term value for all stakeholders, we view inclusive stakeholder management in the context of people planet and profit with all three deeply embedded in the past and future success of the Harley Davidson brand and company.
Speaker 3: Our approach to optimize long-term value for all stakeholders, review inclusive stakeholder management in the context of people, planet, and profit, with all three deeply embedded in the past and future success of the Harley Davidson brand and company.
Speaker 3: 21, so as implement the hardware ground for the first time in our company's history, all our employees around the world, including that our factories became shareholder in our company, demonstrating a renewed commitment to Holly Davidson as not only a great brand, but a great company and a great employer. Now I'll hand over to Gina to run through the number.
'twenty one so let's implement the hotwire ground for the first time in our company's history, all our employees around the world, including at our factories became shareholders in our company demonstrating our renewed commitment to Harley Davidson as not only great brand, but a great company and a great employer now I'll hand over to Jean.
<unk> to run through the numbers.
Speaker 4: Thank you, Yogan. Fourth quarter results reflect continued demand momentum as evidenced by our strong wholesale unit growth and retail sales growth across North America.
Fourth quarter results reflect continued demand momentum as evidenced by our strong wholesale unit growth and retail sales growth across North America.
Speaker 4: While we continue to deal with a challenging supply chain and inflationary environment, the actions that we took as part of the rewire and hardware strategy throughout the year have resulted in a leaner cost structure and overall margin expansion.
We continue to deal with the challenging supply chain and inflationary environment. The actions that we took as part of the rewire and hardware strategy throughout the year have resulted in a leaner cost structure and overall margin expansion.
Speaker 4: Looking more closely at our financial results in the quarter, total revenue of a billion dollars was 40% ahead of last year behind increased motorcycle shipments, favorable motorcycle unit mix, pricing, and growth across all of our other businesses, including general merchandise, parts, and accessories.
Looking more closely at our financial results in the quarter total revenue of $1 billion with 40%.
Last year behind increased motorcycle shipments.
Riverboat motorcycle unit mix pricing and growth across all of our other businesses, including general merchandise parts and accessories.
Speaker 4: Total operating loss of $7 million was an improvement over last year, with gains across both of our reported segments.
Total operating loss of $7 million was an improvement over last year with gains across both of our reporting segments.
Speaker 4: The motorcycle segment, which includes our newly renamed apparel and licensing business and parts and accessories products, delivered in operating loss of $102 million compared to a loss of $196 million last year.
Recycled segment, which include our newly renamed apparel and licensing business and parts and accessories products.
An operating loss of $102 million compared to a loss of $196 million last year.
Speaker 4: Remember that Q4 is impacted both by seasonality and lower host ailshipments due to the change in our model year launch to the beginning of the calendar year.
Remember that Q4 is impacted by seasonality and lower wholesale shipments due to the change in our model year launch till the beginning of the calendar year.
Speaker 4: Fourth quarter gap earnings per share of 14 cents compares to a loss of 63 cents last year. When adjusted to exclude the impact of restructuring charges are adjusted EPS with 15 cents and compares to an adjusted loss of 46 cents per share last year.
Fourth quarter GAAP earnings per share of <unk> 10, compared to a loss of 63 turns last year.
When adjusted to exclude the impact of restructuring charges. Our adjusted EPS was <unk> 15, and compares to an adjusted loss of 46 cents per share last year.
Turning to full year 2021 results revenue of $5 $3 billion with 32% ahead of 2020 and operating income of $823 million was $814 million ahead of last year.
Speaker 4: Turning to full year 2021 results, revenue of $5.3 billion was 32% ahead of 2020, an operating income of $823 million, was $814 million ahead of last year.
Speaker 4: Full-year results reflect strong revenue and profit growth over the pandemic impacted results of 2020 as well as the positive impact to margin as a result of our cost reduction action improving to our unit mix and price.
Full year results reflect strong revenue and profit growth over the pandemic impacted results of 2020 as well as the positive impact on margin as a result of our cost reduction actions and prudent to our unit mix and pricing.
Speaker 4: Full year 2021 gap earnings per share of $4.19 compares to gap earnings per share of one cent last year. While adjusted earnings per share of $4.21 compares to adjusted earnings per share of $53.00 last year.
Full year 2021, GAAP earnings per share of $4 19.
Compares to GAAP earnings per share of one last year, while adjusted earnings per share of $4 21 compares to adjusted earnings per share of 63% last year.
Global retail sales of new motorcycles were up 2% in the quarter with growth in North America offsetting declines in our international markets.
Speaker 4: Global retail sales of new motorcycles were up 2% in the quarter, with growth in North America off-setting declines in our international market.
Speaker 4: North America Q4 retail sales were up 8% versus last year, driven by 23% growth in Grand American touring. The launch of sports dress, as well as our continued success with Pan America.
North America Q4, retail sales were up 8% versus last year, driven by 23% growth in Grand American touring the launch of sports or F. As well as our continued success with Pan America.
Speaker 4: In our international markets, the retail sales declines continued to be impacted by the actions we took during the rewire to exit markets and prune unprofitable models.
In our international markets. The retail sales declines continued to be impacted by the actions. We took during the rewire to exit markets and prune unprofitable models.
Speaker 4: Consistent to what we reviewed in Q3, Amia and APEC sales continue to be disproportionately impacted by the decision to exit the unprofitable streets and legacy sports or bike.
Fits into what we reviewed in Q3, EMEA and APAC sales continued to be disproportionately impacted by the decision to exit the unprofitable Street and legacy Sportster bikes.
Speaker 4: And in LaTam, the declines from the model pruning and market exits were accompanied by pricing increases across select models, resulting in improved region profitability.
And in Latam with declines from the motto pruning and market exits were accompanied by pricing increases across like model, resulting in improved retail profitability.
Worldwide retail inventory of new motorcycles was down 23% versus last year and down a similar amount relative to the previous quarter, primarily due to strong demand in particular in the U S market.
Speaker 4: Worldwide retail inventory of new motorcycles was down 23% versus last year, and down a similar amount relative to the previous quarter, primarily due to shron demand in particular in the US market.
Speaker 4: Overall, we continue to see strong pricing dynamics for both new and used motorcycles, and we continue to see improved profitability at the dealer level. In light of more limited retail inventory, we have also put in place a reservation system that has been met with great support by both dealers and customers.
Overall, we continue to see strong pricing dynamics for both new and used motorcycles and we can continue to see improved profitability at the dealer level.
In light of more limited retail inventory. We've also put in place a reservation system and it's been met with great support by both dealers and customers.
Looking more closely at revenue total motorcycle segment revenue was up 54% in Q4 and up 39% for the full year.
Speaker 4: Looking more closely at revenue, total motorcycle segment revenue was up 54% in Q4, and up 39% for the full year. Focusing on Q4 activity, 36 points of this growth came from higher year over year wholesale volume for motorcycle units. Driven by growth across our core motorcycle segments, as well as meaningful growth in parts and accessories in the general merchandise and licensing businesses.
Focusing on Q4 activity 36 points of this growth came from higher year over year wholesale volume for motorcycle unit driven by growth across our core markets motorcycles segment as well as meaningful growth in parts and accessories in the general merchandise and licensing businesses.
Speaker 4: 13 points of growth came from mix due to a larger percentage of touring bikes sold in North America and six points of growth from pricing and incentives primarily due to the pricing surcharge in the US that was put in place to partially offset raw material and place
13 points of growth came from mix due to a larger percentage of touring bikes sold in North America, and six points of growth from pricing and incentives primarily due to the pricing surcharge in the U S that was put in place to partially offset raw material inflation.
Speaker 4: And finally, one point of negative impact from foreign exchange.
And finally, one point of negative impact from foreign exchange.
Speaker 4: Drivers for full year revenue growth are consistent with what play through for the quarter.
Drivers for full year revenue growth are consistent with what play through for the quarter.
Turning to margin Q4 gross margin of 19, 5% was down two one percentage points versus prior year, a margin benefit from stronger volume profitable mix and pricing was more than offset by the negative cost headwinds across the supply chain and additional EU tariffs.
Speaker 4: Turning the margins, Q4 gross margin of 19.5% was down 2.1 percentage points versus prior year. A margin benefit from stronger volume, profitable mix, and pricing was more than offset by the negative cost headwinds across the supply chain and additional EU tariffs.
Speaker 4: In the quarter, the impact from the additional EU terrace was approximately 1.3 percentage points of March.
In the quarter the impact from the additional EU tariffs was approximately one three percentage points of margin.
Q4 operating margin.
Speaker 4: Q4 operating margin finished at negative 12.5%, compared to negative 37% last year. Due to materially lower operating expenses this year and heavier restructuring charges in the prior Q4.
Finished at negative 12, 5%.
Impaired to negative 37% last year didn't materially lower operating expenses this year and heavier restructuring charges in the prior Q4.
Speaker 4: Full year operating margin of 9% was significantly ahead of last year, given the impact of the pandemic. And was also 2.7 points ahead of 2018.
Full year operating margin of 9% was significantly ahead of last year, given the impact of the pandemic and without the two seven points ahead of 2019 despite.
Despite the absolute unit decline versus 2019, which drives a negative margin headwind the focus to a more profitable mix and a leaner cost structure has significantly strengthened the overall margin profile for the business, even with the inflationary supply chain environment.
Speaker 4: Despite the absolute unit decline versus 2019, which drives the negative margin headland, the focus to a more profitable mix and a leaner cost structure has significantly strengthened the overall margin profile for the business, even with the inflationary supply chain environment.
The financial services segment operating income in Q4 was $95 million up $18 million compared to last year, driven by lower interest expense and lower restructuring costs, partially offset by higher provision for credit losses as loss rates begin to increase back towards historical levels.
Speaker 4: The financial services segment operating income in Q4 was $95 million of 18 million compared to last year driven by lower interest expense and lower restructuring costs. Partially offset by higher provision for credit losses as loss rates begin to increase back towards historical levels.
Speaker 4: HDFS's retail credit loss ratio remained historically low at 1.2%. A 19 basis point improvement over the last year.
Etfs as retail credit loss ratio remain historically low at one 2% a 19 basis point improvement over last year.
Speaker 4: Overall, retail delinquency rates have been favorably impacted by the improved economic condition and the benefits provided to individuals under the federal stimulus packages early in 2021. Delinquency rates have continued to run lower than pre-pandemic historical levels, and we do expect these rates to begin to normalize in 2022.
Overall retail delinquency rates have been favorably impacted by the improved economic conditions and the benefits provided to individuals under the federal stimulus packages early in 2021 delinquency.
Delinquency rates have continued to run lower than pre pandemic historical levels and we do expect these rates to begin to normalize in 2022.
Speaker 4: Looking at HDFS's base business, retail originations in Q4 were up 25% versus last year, behind strong new and youth motorcycle origination volume. Ending retail finance receivables in Q4 were $60.5 billion, which is up 2.4% from last year.
Looking at each Dfs's based business retail originations in Q4 were up 25% versus last year behind strong new and used motorcycle origination volume ending retail finance receivables in Q4 were $6 $5 billion, which is up two 4% from last year.
Speaker 4: In addition, the retail allowance for credit losses at the end of Q4 was 5%, which is relatively unchanged from Q3. And while today's allowance rate has improved versus the peak of 2020, it is still above pre-pandemic levels given the continued uncertainties surrounding the pace of economic recovery.
In addition, the retail allowance for credit losses at the end of Q4 was 5%, which is relatively unchanged from Q3 and while today's allowance rate has improved versus the peak in 2020. It is still about pre pandemic levels given the continued uncertainty surrounding the pace of economic recovery.
Speaker 4: Rapping up with Harley Davidson in financial results, we delivered full year 2021 operating cash flow of $976 million, down $202 million from last year. Operating cash flow declines where a result of unit growth and increased loan originations across the HBFS. In total cash and cash equivalents ended the quarter at $1.9 billion, which is $1.4 billion lower than last year, as we work down higher cash balances held because the result of the pandemic.
Wrapping up with Harley Davidson, Inc. Financial results, we delivered full year 2021, operating cash flow of $976 million down $202 million from last year operating cash flow declines were a result of unit growth and increased loan originations across HD at that.
And total cash and cash equivalents ended the quarter at $1 $9 billion, which is $1 $4 billion lower than last year. As we worked on higher cash balances held as a result of the pandemic.
As we look to our financial outlook for 2022, we expect <unk> revenue growth of 5% to 10%. This revenue growth forecast incorporates what we know today in terms of the impact of the semiconductor challenges that the industry is facing we expect revenue to be positively impacted by our global pricing action.
Speaker 4: As we look to our financial outlook for 2022, we expect HDMC revenue growth of 5 to 10%. This revenue growth forecasting incorporates what we know today in terms of the impact of the semiconductor challenges that the industry is facing. We expect revenue to be positively impacted by our global pricing actions as we work to offset the cost headlands across the supply chain.
As we work to offset the cost headwinds across the supply chain.
Speaker 4: Furthermore, we expect the parks and accessories and apparel and licensing businesses to accelerate top-line growth in line with our hardware strategy.
Furthermore, we expect the parts and accessories and apparel and licensing businesses to accelerate top line growth in line with our hardware strategy.
Speaker 4: We expect HDMC operating income margin of 11 to 12%.
We expect <unk> operating income margin of 11% to 12%. We believe the anticipated positive impact from volume leverage unit mix and pricing combined with growth across our margin accretive businesses of P&A and apparel were more than offset the expected cost inflation across supply chain.
Speaker 4: We believe the anticipated positive impact from volume leverage, unit mix, and pricing, combined with growth across our margin of creative businesses of PNA and apparel, will more than offset the expected cost inflation across the pricing.
Also the removal of the additional EU tariffs realized in 2021 contributes over a point of margin growth.
Speaker 4: Also, the removal of the additional EU tariffs realized in 2021 contributes over a point of margin growth.
Speaker 4: Finally, we expect 2022 margins to also be positively impacted by operating expense leverage, even as we increase investment behind live wire.
Finally, we expect 2022 margins to also be positively impacted by operating expense leverage even as we increase investment behind my wire.
Speaker 4: We expect the HDFS operating income to decline by 20 to 25%. This decline is largely a result of the favorable allowance releases and lower credit losses in 2021. We believe this favorable impact is not likely to repeat itself in 2022.
We expect the H DFS operating income to decline by 20% to 25%.
This decline is largely a result of the favorable allowance releases and lower credit losses. In 2021, we believe this favorable impact is not likely to repeat itself in 2022.
Speaker 4: And lastly, we expect capital investments of $190 to $220 million as we continue to invest behind product development and capability enhancement in support of our hardware strategy.
And lastly, we expect capital investments of $190 million to $220 million as we continue to invest behind product development and capability enhancements in support of our hardware strategy.
This financial guidance is reflected of the supply chain outlook that we have at this time, we are forecasting that the operating conditions and higher rates will hold in the first half of the year and we anticipate a moderate improvement versus prior year in the back half across logistics and raw materials.
Speaker 4: This financial guidance is reflected at the supply chain outlook that we have at this time. We are forecasting that the operating conditions and higher rates will hold in the first half of the year. And we anticipate a moderate improvement versus prior year in the back half across logistics and raw materials. Semiconductor availability is expected to be challenged, assuming improvements in the latter half of the year.
Semiconductor availability is expected to be challenged assuming improvements in the latter half of the year.
Embedded within our guidance for 2022 as <unk> at this time, we remain committed to the outlook issued as part of our December 13th announcement.
Speaker 4: Embedded within our guidance for 2022 is live-wire. At this time, we remain committed to the outlook issue this part of our December 13th announcement.
Speaker 4: Finally, as we look to the 2022 capital allocation, our priorities remain to fund growth of the hardware initiatives, which includes the capital expenditures mentioned previously.
Finally, as we look to the 2022 capital allocation our priorities remain to fund growth at the hardware initiatives, which includes the capital expenditures mentioned previously.
Speaker 4: We will also pay dividends and yesterday we announced an increase in our first quarter 2022 payout to 15 and 3 quarter cents a share, which is up 5% versus prior year.
We will also pay dividends and yesterday, we announced an increase in our first quarter 2020 to pay out to 15, and three quarter cents per share, which is up 5% versus prior year.
Speaker 4: In addition, we plan to execute discretionary share repurchases in 2022, and we have 18.2 million shares remaining on our Board approved share repurchase plan. At this point, I'll turn it back over to Yoken who will-
In addition, we plan to execute discretionary share repurchases in 2022, and we have $18 2 million shares remaining on our board approved share repurchase plan.
At this point I'll turn it back over to Johan who will wrap this up.
Thank you Gina.
Speaker 3: To round out today's presentation, I want to provide some highlights from our most recent launch event in January entitled Further Faster, which hopefully many of you were able to see. If not, please check out the content online.
To round out today's presentation I want to provide some highlights from our most recent launch event in January entitled to further foster.
Hopefully many of you were able to see if not please check out the content online.
Speaker 3: This year we focus on our stronghold profitable segments unveiling a selection of powerful new grand American touring, cruiser and custom vehicle operations in short CBO motorcycles for this year.
This year, we focused on all our stronghold profitable segments unveiling a selection of powerful new Grand American touring and cruiser and custom vehicle operations in short CBO motorcycles for this year.
Speaker 3: This reveal consists of eight new models, each powered by the Milwaukee 8-117, the most powerful factory installed engine offered by Harley-David.
This review consist of eight new models each powered by the Milwaukee 817, the most powerful factory installed engine offered by Harley Davidson.
The Grand American touring line, we introduced the Streetlight S T and road glide is T.
Speaker 3: In the Grand American Touring Line, we introduce the Streetlight ST and Roadlight ST.
Speaker 3: Cruiser we introduced the more powerful low rider S and the low rider ST And for CBR we introduced four super premium models
Four crews that we introduced the more powerful low rider S and the low rider S T.
And for CBO, we introduced four Super premium models.
Speaker 3: The virtually bend attracted over 1.5 million views on the launch page of the Harley Davidson earth comm and over 540,000 views of the launch film and content.
The virtual event attracted over one 5 million views on the launch page on Harley Davidson Com and over 540000 views of the launch feeling contend.
Speaker 3: We also saw over 120,000 people sign up to the event at 50% increase compared to 2021.
We also saw over 120000 people sign up to the event.
50% increase compared to 2021.
Most notable was the response to the low rider S. T. The latest in our cruiser lineup.
Speaker 3: Most notable was the response to the low rider ST, the latest in our cruiser lineup.
Speaker 3: The demand was so high for this bike that we sold out our first consumer education in 10 minutes.
Demand was so high for the Spike that we sold out our first consumer location in 10 minutes.
This is just one example that highlights the strong desirability that we've been able to build through our strategy for our brand and product.
Speaker 3: This is just one example that highlights the strong desire ability that we've been able to build through our strategy for our brand and product.
Speaker 3: As ever, we look forward to bringing you more. So stay tuned for some more product news to come this year from Harley Davidson and live wire.
As ever we look forward to bringing you more so stay tuned for some more product news to come this year from Harley Davidson and lifestyle.
And just before we head to questions I'm happy to announce that in May we will be hosting an investor day for Harley Davidson and Lifewire updating you on our exciting road ahead.
Speaker 3: And just before we head to questions, I'm happy to announce that in May, we will be hosting an investor day for other days with an end-life wire, updating you on our exciting road ahead. I hope you can join us in Milwaukee. Thank you for your time.
I hope you can join us in Milwaukee.
Thank you for your time. This morning now we'll take your questions.
Thank you.
Speaker 1: As a reminder to ask a question, please press star one on your telephone keypad. To enjoy your question, press the Pound key. We also ask if you could limit yourself to one question and return to the QE for additional. Thank you.
As a reminder to ask a question. Please press star one on your telephone keypad to withdraw your question press. The pound key we also ask if you could limit yourself to one question and return to the queue for additional thank you.
Speaker 1: Your first question comes from Great Ganesan from Beard, New Orleans.
Your first question comes from Craig Kennison from Baird. Your line is open.
Speaker 5: Hey, good morning. Thanks for taking my question. It's a big picture question on hard wire. I know last year you provided guidance that
Hey, good morning, Thanks for taking my question, it's a big picture question on hard wire.
So last year, you provided guidance that.
Speaker 5: EPS in 2025 would grow at a keger of a low-double digit pace. But we never knew what 2021 EPS would be. Now that we know 2021 EPS was $4.21. We apply, let's say, 10 to 12% keger growth.
EPS in 2025 would grow at a CAGR of a low single low double digit pace.
But we never knew what 2021 EPS would be now that we know 2021 EPS was $4 in 'twenty one.
If we apply let's say 10% to 12%.
CAGR growth on that it would get to <unk>.
Speaker 5: 2025 EPS guidance in the $6.15 range to $6.60 range. Am I doing the math right on the guidance you offered for live wire?
2025, EPS guidance in the $6.15 range to $6 60 range am I doing the math right on the guidance you offered for LIBOR.
You mean for hardware.
Gina.
Yes hardware I'm sorry.
Speaker 4: So yeah, good question. When we initially launched the hardwired targets, we said it would be...
Yes.
Yes, good question.
Initially launched a hardwired target we said it was based on where we finished in 2021 and then we would grow from there. So as our performance this year was better than our original guidance.
Speaker 4: and then we would grow from there. So as our performance this year was better than our original guidance, if you would apply the initial targets that we put out there last year, I think you're doing the math right. As we kind of get towards the investor day and may, what you can expect to see from us is how pieces like live wire come to life differently as part of the hardware and how that accelerates. The initial guidance that we put out for the hardware attack.
The initial targets that we put out there last year.
Doing the math right.
We kind of get towards in the Investor day in May and what you can expect to see from US is how pieces like LIBOR.
Utilizing differently as part of the hardware and how that accelerate.
Initial guidance that we put out for the hardware.
Okay.
I'll now.
Does that answer your question Craig.
So yes.
Speaker 5: So, yeah, generally, I guess, can we endorse this $6.10 to $6.50 range roughly?
Generally I guess can.
Can we endorsed the $6 10 to $6 50 range roughly.
Since we're not changing our long range targets today Youre doing the math correctly, what I'm, saying, though is when we put out the targets last year Livewire.
Speaker 4: Since we're not changing our long-range targets today, you're doing the math correctly. What I'm saying though is when we put out the targets last year, live wire, it wasn't...
For the division was not set up to be a standalone company that is a material change to our outlook that as we get towards our Investor day in May we will be helping you put together the pieces of how that updated outlook matches with what is going to be ice business to provide a new long term projections.
Speaker 4: standalone company. That is a material change to our outlook that as we get towards our investor day in May We'll be helping you put together the pieces of how that updates
So in short Craig spend standby for updates in May.
Speaker 3: So in short, correct, then, standby for updates in May.
It sounds great. Thank you.
Yeah.
Your next question comes from Robbie Holmes from Bank of America.
Speaker 1: Your next question comes from Robbie Holmes from Bank of America.
Yeah.
Speaker 1: again your next question comes from roby homes from bank of america park and you're okay
Again. Your next question comes from Robbie Holmes from Bank of America.
Alright.
Can you hear me okay.
Good morning, Yeah, sorry, I'm not sure what happened there.
Speaker 2: Yeah, sorry, I'm not sure what happened there. So my question is on, good morning. My question's on motorcycle revenue growth outlook for 2022. Can you help us think through how you've had really strong price increases supporting revenue growth in 21? What's this sort of, what should our thinking be on price increases? And also, what should our thinking be on international unit sales returning to growth?
So my question is on good morning. My question is on motorcycle revenue growth outlook for 2022.
Can you help us think through how you've had really strong price increases supporting revenue growth in 'twenty one.
This sort of what should our thinking be on price increases and also what should our thinking beyond international unit sales returning to growth.
Okay.
Speaker 6: Hi, good morning probably, this is Yggella Sullivan. Thank you for your question. So let me take the latter part of the question, and then I'll turn it over to Gina for more specifics on the pricing element. So in short, we think that there is demand in the market that is both domestic and in-
Hi, good morning Robin.
All of them. Thank you for your question. So let me take the latter part of the question and then I'll turn it over to Gino for more specifics on the pricing element.
We think that there is demand in the market that is both domestic and international obviously this year still continues to be impacted by actions.
I didn't hear anything in 2021 continue to be impacted by actions taken during the rewire, particularly in our international markets.
Do expect as we look to 'twenty, two and beyond of course subject to the realities of the supply chain that we will be seeing some of that increased demand.
In our international markets as well.
Domestic market.
Speaker 4: and rabbit disoost, you know, on the pricing question. In 2021, our pricing was really limited to the surcharge that we put in market in the US. As we move to 2022, pricing will be global and have both mechanisms of both surcharge as well as MSRP pricing depending on the market. So we move from a very US based pricing mechanism in 2021 to a global price.
And Ravi this is gino on the pricing question.
In 2021, our pricing was really limited to the surcharge that we put in market in the U S.
As we move through 2022 pricing will be global and have both mechanisms for both surcharge as well as MSRP pricing depending on the market. So we move from a very U S based pricing mechanism in 'twenty, one for global pricing.
Okay.
'twenty two.
Speaker 2: Gotcha, that's helpful. And so the 5 to 10% does include some pricing benefits to the sort of unit volume assumption on the motorcycle side, you know, could be viewed as conservative.
Got you that's helpful and so the 5% to 10% does include some.
Pricing benefits to the.
Unit volume assumption on the motorcycle side could be viewed as.
Conservative.
We went to Alaska.
Speaker 2: Yeah, it sort of implies that the unit volume growth would be obviously less than 5% to 10%. You know, on the motorcycle division. So could be, potentially, is conservative for your unit assumptions given the demand you're seeing.
Yes, it sort of implies that the unit volume growth would be obviously less than 5% to 10%.
On a motorcycle division so.
So it could be viewed potentially as conservative.
Your unit assumptions, given the demand youre seeing.
Well.
Speaker 3: Well, what we said clearly is the supply chain issues are not going away. In fact, they intensify going into the year and enhance our guidance. It's realistic from...
What we said clearly.
The supply chain issues are not going away in fact, they intensify going into the year.
So our guidance is realistic from today's perspective, and what we're seeing in the supply chain.
Got it thanks, so much that's really helpful.
That said we.
Speaker 3: That said, we have solid demand for product and for those who witnessed our launch of our 22-mode years been exceptionally well received. So there's a question of subplot.
Solid demand for our product lines.
The launch of volume 22, multiyear it's been exceptionally well received.
The question of supply and not a question of demand.
Okay.
Speaker 1: Your next question comes from Billy Covattis from Morgan Stanley , your links.
Your next question comes from Bill <unk> from Morgan Stanley . Your line is open.
Hi, just a follow up on the last question.
Speaker 7: Hi, just to follow up on the last question there, can you give us your embedded assumptions for retail sales versus more of a production restock in 2022 for that 5% to 10% motorcycle revenue growth? Did you agree?
Can you give us your embedded assumptions for retail sale versus more of a production restock in 2022, it's about 5% to 10% motorcycle revenue growth.
Well it depends on the on the.
The range of the guidance right. If you're if you assumed price increases in the low end of the range. Then you would see small or a little bit more little unit growth and as you move towards the higher end of the range you would assume unit growth and that would be.
Speaker 3: the range of the guidance, right? If you assume price increases and the lower end of the range, then...
Speaker 3: small or little unit growth, and as you move towards the high end of the range, you will assume unit growth, and that would be captured in.
Captured in retailers as well as in wholesale.
Yeah.
Speaker 4: Billy, this is Gina Basin, where inventory position sits.
Based on where our inventory position said you can do unit assumption and the unit growth assumption for wholesale pretty much its been a ladder up.
Speaker 4: unit assumption and the unit grows assumption for wholesale pretty much is going to ladder up to what we would say for.
What we would pay for retailers as well.
Speaker 7: Got it. Thank you. And just a real quick follow up on the margins. Really strong outlook there. 11 to 12%. Could you just break that down a little bit further? How much of it is sort of operating leverage? How much of it is the EU tariffs being sort of mitigated? Any other expenses that you're sort of taking out? Client mix?
Got it thank you and just a real quick follow up on the margins really strong outlook, the 11% to 12% could you just break that down a little bit further out how much of it is sort of operating leverage how much of it is the EU tariffs.
Being sort of mitigated any other expenses that you're sort of taking out higher mix.
Speaker 7: Exiting on profitable markets. Just any other color you can provide them the margins. Thank you
Existing unprofitable markets just any other color you can provide on margins. Thank you Sir.
Sure I'll.
Speaker 4: Sure, I'll start with the easy one, so the EU tariff and removing that additional.
Start with the easy one to the EU tariffs.
Moving that additional tariff is worth about a point.
Speaker 4: as the moves from 21 to 22 about a point of that is tied up there. We also have a positive volume and mix.
We knew from 'twenty, one 'twenty two about a point of that is tied up there. We also have a positive.
Volume and mix and then the pricing component that we talked about earlier.
Speaker 4: talked about earlier, that is a positive headwind that helps to offset more than offset with coming out of from a supply chain.
That is a positive headwind that helps to offset more than offset what's coming at us from a supply chain standpoint.
Got it thank you.
Your next.
Speaker 1: Your next question comes from Fred Whitman from Wolf Research, Helene.
Question comes from Fred Wightman from Wolfe research he only in children.
Speaker 2: Hey guys, good morning. I was hoping maybe it's a question for Gina, but given the guidance is expecting some second half improvement, can you just give us a little help on the cadence as we move through the year? It sounds like the supply chain got a little bit worse into the first quarter, but should we be expecting steady improvement as we move through the years? There really a step function increase in the back half of the year? How does that sort of shake out from a timing perspective? Yeah, good question. I would say that we improve as we move through the year. So our back half will be better than...
Hey, guys. Good morning, I was hoping.
Maybe it's a question for Ciena, but given the guidance is expecting some second half improvement can you just give us a little help on the cadence as we move through the year. It sounds like the supply chain got a little bit worse into the first quarter, but should we be expecting steady improvement as we move through the year or is that really a step function increase in the back half of the year, how does that sort of shake out from a timing perspective.
Yes.
Yeah. Good question I would say that.
Improve as we move through the year, so our back half will be better than.
Again, given what is coming at us from a supply chain standpoint. So when you think about our cost inflation environment as we move through 'twenty. One you know every quarter, we kind of saw more inflation.
Speaker 4: You know every quarter we kind of saw more.
Speaker 4: But the first half of 21 was less than the back half
The first half of 'twenty, one was less in the back half of 2022.
Speaker 4: Now as we move in, or 21, I'm sorry, and then as we move in at 2022, we still have kind of another half of inflation that kind of matches up where we ended the year. So...
And Tony one I'm, sorry, and then as we move into 2022, we still have kind of another half of inflation.
That kind of matches up where we ended the year.
I would definitely see the cadence is being re accelerate as we move into the back half.
Speaker 3: to emphasize that assumes an improvement in the supply chain in the second half. Visibility is relatively...
To emphasize that assumes an improvement in the supply chain in the second half visibility is relatively limited at this point in time, so that's that.
Speaker 3: So that's that's based on what we know today and that the supply chain over.
Based on what we know today and that the supply chain or we'll see some improvement in the second half.
Makes sense and then just as a follow up could we walk through the bridge on the Capex outlook mid points over $200 million you guys came in just over $140 million I think this year, so any big projects or big things that sort of gets you from 'twenty one to 'twenty two.
Speaker 2: Makes sense and then just as the follow up could we walk through the bridge on the CAPEX outlook Midpoint's over 200 million you guys came in just over 140 million. I think this year So any big projects or big things that sort of get you from 21 to 22 The biggest that change here
I think the biggest step change you'll see with wildfire itself. So.
And then kind of the investment that we're putting behind EV. We're also going to continue to build on our core innovation pipeline and you'll hear more about that as we're moving through this year.
Speaker 4: We're also going to continue to build on our core innovation pipeline and you'll hear more about that.
Speaker 4: And then we continue to invest in capabilities and you know, it would take previous
And then we continue to invest in capabilities.
We talked previously on calls about our digital ecosystem.
Speaker 4: building up things like the marketplace or use platform that that happened.
Building on things like the marketplace, our us platform.
And it continues through 2022.
Great. Thank you.
Yeah.
Your next question.
Speaker 1: comes from Joe Altabello from Raymond James, he'll let you.
It comes from Joe <unk> from Raymond James Your line is open.
Hey, Thanks, good morning.
Speaker 7: Good morning. This is the first question I wanted to clarify something mentioned earlier, Gina, about wholesale and retail. It sounds like you expect wholesale and retail to be really equal this year. And so no pipeline sale opportunity in 22 is that.
First question just wanted to clarify something I said earlier cheetah about wholesale and retail are it sounds like you expect wholesale and retail to be really equal. This year. So no pipeline fill opportunity in 'twenty two is that correct.
I would say there is going to be limited pipeline fill capability just given the supply constraints that we have.
Speaker 4: I would say they're going to be limited by blind fill capability, just given the supply constraints that we have. So I see those two moving.
Those two moving more in sync throughout 2019.
Okay.
Yep, sorry, guys alright.
Speaker 6: Oh, just to add to that, Joe, for the perspective of what is happening overall with inventory levels. I think you will see that our dealers and indeed the entire network have become much more efficient in how we manage retail.
Alright, just to add to that Joe from a perspective of what is happening overall with the inventory level I think you will see that our dealers.
Indeed, the entire network has become much more efficient in how we manage retail sales and inventory.
I think much better at managing our level of retail sales that requires much less inventory in the system and some of that is obviously the work of our dealers.
Speaker 6: better at managing a level of retail sales that requires much less inventory in the system. And some of that is obviously the work of our dealers.
To support the sales and the customer demand, but also tools that we have put in place like our preorder and reservation system that allow us to capture that demand is much more efficiently. So I would expect as we go through 'twenty, two and beyond that we will continue to make some of those changes and innovations to allow us to support.
Speaker 6: but also tools that we have put in place like our pre-ordering reservation system that allow us to capture that demand.
Speaker 6: I would expect as we go through 22 and beyond that we will continue to make some of those changes and innovations to allow us to support a...
Retail sales growth with a very different position on inventory, but I wonder if in the case historically.
Speaker 7: very helpful. Just maybe on live wire, this slide that you gave us in mid-December showed an even loss for live wire in 22, about 111 million. I just want to confirm, is that what's baked into the 11 to 12 percent margin for that segment? Yes, we have not.
Very helpful and just maybe on wildfire.
The slides that you gave us in mid December showed an EBIT loss for life wire in 22 of about 111 million I just want to confirm is that what's baked into the 11% 12% margins for that segment.
Yes, yes, we have not changed our library of assumptions okay. Thank you.
Yep.
Okay.
Okay.
Speaker 1: Your next question comes from Gary Johnson from BMO Capital Marks.
Your next question comes from Gary Johnson from BMO capital markets.
Yeah.
Speaker 5: I think it would be more like my question is on the tariff situation. It seems like inconsistent presentation over the quarters. So sometimes it's excluded is.
Hey, Good morning. My question is on the tariff situation. It seems like inconsistent presentation over the quarters, just sometimes it's excluded.
Speaker 5: you know, non-recurring items sometimes is not. It didn't look like it was this quarter, but you did call it out. So it changes our starting points a little bit in relation to Craig's question as we roll forward, compounding our growth assumptions. So should we go back and...
Nonrecurring items, sometimes it's not it didn't look like it was this quarter, but you did call. It out so that changes our starting point is a little bit in relation to Craig's question.
We rolled forward our compounding.
Growth assumptions.
So should we go back and put all those tariffs back into our numbers for 'twenty, one and 2020 you tariffs.
Speaker 8: Put all those tariffs back into our numbers for 21 and 2020. The U-tariff.
Okay.
Speaker 4: You know, this is, you know, I would not add them back in. When you go back to our original hardware targets that we gave, we did not have tariff built into there. You go back to the original guidance, all the way back a year ago that we gave on 21. There were no tariff included, and the outlook.
No. This is Gino no I would not I would not add them back and when you go back to our original hardware or target that we gave we did not have parents built into there.
Go back to the original guidance you know all the way back a year ago that we gave on 'twenty. One there were no tariffs included in the outlook I should say no additional charge.
And then the outlook that we gave.
For the next five years. Additionally.
Additional tariffs.
Okay alright, thank you.
Speaker 1: Your next question comes from David McGregor from Longbow Research.
Your next question comes from David Mcgregor from Longbow Research.
Yes, good morning, everyone and thanks for taking the question I guess I wanted to ask about the Pan American and <unk>.
Speaker 8: Just good morning everyone, thanks for taking the question. I guess I wanted to ask you about the Pan America and you've referenced already the expectation that supply channel issues start to improve at least significantly since 2022 rolls out. How are you thinking about availability on this product? And obviously a lot of excitement, but you need to get it into the hands of the dealers. So what are you looking at for 2022?
It's already the expectation that supply channel issues.
<unk>.
Significantly as 2022 rolls out.
How are you thinking about availability on this product and obviously a lot of excitement but.
We need to get it into the hands of the dealers. So what are you looking at for 2022 there.
Well availability overall has been constrained.
Speaker 3: Well, availability overall has been constrained and everything we've sold into the market has pretty much sold through. So, we expect that to continue. That said, we had...
Everything we've sold into the market Thats pretty much sold through so we expect that to continue that said we had.
Speaker 3: able to deliver a significant amount of pan-M-set meters, the number one.
We're able to deliver.
A significant amount of paradigms that made us the number one.
Model in the adventure touring market already last year and.
Speaker 3: model in the ventured touring market already last year.
Expect to continue to deliver.
Speaker 3: Solid amount of Panamera because also this year but
The module Pan American's also this year, but everything from.
Speaker 3: everything taken together, Pan America, just like other products are of course supplied.
Everything taken together Pan America, just like other products are not supply constrained.
Does the availability inflect at some point throughout the year or is it just kind of a slow gradual improvement as the year unfolds.
Speaker 8: Does the availability inflect at some point trip the year? Is it just kind of a slow gradual improvement as the year unfolds? It possibly predicted this point in time.
Unfortunately can predict at this point in time.
It's actually Dave.
De valuation of the components that you are getting or not getting and adjusting your production.
Speaker 3: that you're getting or not getting and adjusting your production accordingly.
Accordingly so.
Hard to predict at this point in time.
Speaker 8: I think it's just related to that, you know, just thinking about the strategic value of light cruisers. Obviously, limited profitability opportunity, but it also gathers new writers into the brand. How are you thinking about light cruisers longer?
And I guess just related to that.
Just thinking about the strategic value of light cruisers, obviously limited profitability opportunity, but it also gathers new riders into the brand how are you thinking about like a cruise is longer term.
Well.
Speaker 3: Well, nothing to add to what we've said in the past, we'll be commenting on new models.
Nothing to add to what we've said in the past we will be commenting on new models.
Speaker 3: when we launch them or if we launch them to the market, so I'd say stand by for more.
When we when we launch them, we launched into the market.
Say standby for mall.
Okay. Thank you.
Thank you.
Speaker 1: Your next question comes from Jamie Catch from Morningstar, Helens.
Thank you Yuri.
Your next question comes from Jamie Katz from Morningstar. Your line is open.
Speaker 9: Thanks, good morning. I'm hoping you guys would be willing to talk about how you perceive the long-term growth algorithm for apparel and licensing, given the new hires behind the business and the fact that now looks like that might be something that grows maybe above historic levels. Thanks. Thanks.
Thanks, Good morning, I am hoping you guys would be willing to talk about how you perceive the long term growth algorithm for apparel and licensing given the new hires behind the business and the fact that now looks like that might be something that grows maybe above historic levels. Thanks.
Thanks, Jamie.
Well as you know that I'm I'm very positive about the growth beyond bikes.
Speaker 3: Well, you know that I'm very positive about growth beyond bikes and that primarily includes parallel licensing in addition.
This primarily includes patent.
Patent licensing in addition to parts and accessories, and we will be upping our game in both.
Speaker 3: both categories going forward. I'm not going to quantify at this point, I'd say stay tuned for more in May. We'll be talking about that that will be part of our presentation, but if you're confident the brand has very strong appeal in different consumer groups, different age groups that we want to capture, and that's why I've...
Categories going forward I'm not going to quantify it at this point I'd say stay tuned for more in May we'll be talking about that that would be part of.
Our presentation, but we feel confident in the brand has very strong appeal and different consumer groups different age groups that we want to capture and that's why we've decided to strengthen the team now and make it a direct report as well.
You can tap into the potential in the coming years, it's not something that will happen overnight.
Really exciting if you if you apply a long term perspective.
Speaker 9: Okay, and then just as a housekeeping, I think we should see some sort of filing for the live wire offering. Can you give us any insight on the timing of that just so we can get more detail? That's out today, so you'll behave the way you want. Yes, for with slide. Excellent. Thank you. Happy reading.
Okay, and then just as a housekeeping I think we should see some sort of filing for the live ly or offering can you give us any insight on the timing of that just so we could get more detail that's out today, so you'll be able to access.
Yes, four was excellent.
Thank you Kathy.
Happy reading.
[laughter].
Speaker 1: Your next question comes from Ryan Sunby from William Blair. Pylane.
Your next question comes from Ryan Sundby from William Blair. Your line is open.
Yeah, Hey, good morning, Thanks for the question.
Speaker 8: Yeah, hey, good morning. Thanks for the question. I guess with model and execute have done about 40% since 2020, is the reshaping of the portfolio were done here? And are there any opportunities where EC may be?
I guess with modeling and SKU count down about 40% in 2020, if the reshaping of the portfolio work done here and are there any opportunities where you see maybe.
Areas to focus more or maybe areas, where you pulled back too far I guess any color there would be great.
Speaker 5: There it is to focus more or maybe areas where you pull back too far. I guess any color there would be great.
Definitely not too far off there is always more opportunity to fine tune our product mix I mean going into the rewire. It was just a lot of product out there that cannibalized itself and we took the reduction to 30%. If you remember me talking about it.
Speaker 3: Definitely not too far. There's always more opportunity to find to our product mix. Going into the rewire, it was just a lot of product out there that...
Speaker 3: reduction to 30% if you remember we talked about that back then and we saw further opportunities.
And we saw further opportunity and took it to 40%.
That said, it's plus or minuses now I Wouldnt say, we are adding new modules necessarily without taking all of this out I'd say, 40% is a good base going forward, but we continue to look at new opportunities and I will always asked the question when and if we introduce a new model. If there is another one that we could take out because it's kind of like in your overall portfolio.
Speaker 3: That said, it's plus or minuses. Now I wouldn't say we are adding new models necessarily without taking others out. I'd say 40% is a good base.
Speaker 3: will always ask the question when and if we introduce a new model, if there's another one that we could take out because it's kind of rising the overall portfolio. But the 40% is a pretty solid.
But the 40% is a pretty solid number.
Initially it didn't actually I think we would achieve a part b actually overachieve that number already locked.
Speaker 3: but we actually overgives that number of already lost.
Okay. That's helpful. And then I guess just opinions up so strong in Q4 here was there any change in approach like I said any shipping cadence that you kind of laid out under the hardware.
Speaker 8: That's helpful. And then, it's just a penis up so strong in Q4 here. Would there any change in approach to the, like I said, any shipping cadence that you can't light out under a hardware? No, no, no. Continue.
No.
No no continue.
Q4.
That's kind of a wholesale unit shipment, we changed that model year launch at the beginning of the calendar year.
Okay. That's helpful. Okay. That's helpful. Thank you.
Yep.
Yeah.
There is no further question at this time and this concludes today's conference call. Thank you all for joining you may now disconnect.
Speaker 1: There's no further question this time, and this includes today's conference call. Thank you all for joining, you may not understand.
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Speaker 10: Again.
Speaker 10: And the C, So this pro pro.
Yeah.
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