Q2 2022 Harley-Davidson Inc Earnings Call
Okay.
Thank you for standing by and welcome to the Harley Davidson in 2022 second quarter Investor and Analyst Conference call. Please be advised that today's conference is being recorded I would 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.
Welcome to our Q2 2022 earnings call.
You can access the slides supporting today's call on the Internet.
Investor Dawn Harley Davidson Dotcom.
Our comments will include forward looking statements that are subject to the risks that could cause actual results to be materially different those risks include among others matters.
As 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 me. This morning are CEO yoga insights and CFO Gina Theater. In addition, Chief commercial Officer, Dan Sullivan will join for the Q&A with that let me turn it over to yoga.
Thank you Sean good morning, everyone and thank you for joining us today.
It's been a few months since the last so many of you at our Investor day in our hometown, Milwaukee, where we talked about the transformation, we own where we are headed what the opportunities on how we are planning to accelerate as a company and brand.
Or would the ambition and mindful Harley Davidson to be the most desirable motorcycle and lifestyle brand in the world.
Building upon the 119 year history in leading motor motorcycle culture into the future.
At our Investor day, as part of our plans for future growth, we announced hardware as stage two and exploration plan building on our hotwire priorities why tuning the engine of our business for improved acceleration and increased performance.
And despite the macro uncertainty forex and inflationary pressure and supply chain issues, we expect to deliver on our hardware ambitions.
We believe that the hotwire strategy is working we're making significant progress in transforming our business and now its the time to elevate our ambition beyond the current environment.
Before I provide some more detail on delivery of our strategic initiatives for Q2, I would like to comment briefly on the suspension of production and shipments that we experienced in the quarter.
The decision we took to temporarily closed our production facilities and suspend vehicle shipments was taken out of an abundance of caution and related to regulatory compliance issue with a break clauses provided by a tier two to our tier one suppliers.
We continue to work through the knock on effect of this action.
We've ramped up production and we believe that would be able to make up for the loss production throughout the remainder of the year.
As Gina will explain in more detail, we are therefore, not changing our guidance for the full year.
Now I'd like to look at some of the highlights of the quarter.
As part of the Hotwire, we made a commitment to invest for growth within our core categories.
Aligned to pillar one profit growth, we are strategically investing into touring when we believe we can catch up growth.
This investment is driven by the opportunity in our stronghold categories and most profitable segments at the core of our business.
We expect to invest $300 million over the next five years and innovation to reinvent re mention and reinvigorate in key categories, where we see the potential to grow our leadership, namely touring and cruiser and Troy.
Within these core segments, we know that our community wants elevated design performance and premium quality.
With our newest <unk> offering that we launched in June and we are delivering on all of these.
The enthusiast collection is an ongoing series of Harley Davidson motorcycles, featuring special edition pain.
To celebrate the unique backgrounds stories and special interests of riders within the Harley Davidson community.
Each enthusiasts collection design will be launched annually.
Available in limited quantities across a curated selection of motorcycle models.
For 'twenty two our debut enthusiasts collection features a Pan America, 12, 50, special Gi and the Tri glide Ultra Gi both showcasing an all new patent color created especially for this collection.
Paying homage to the OLED drab pains, Houston, Harley Davidson W. L. A models and completed with service inspired graphics.
The enthusiast collections complements our holiday or it's an icon has a limited edition collection designed to celebrate the unrivaled history and heritage of holiday.
Having a strong presence in adventure touring and sport is a focus of pillar two of our hardware strategy selective expansion and redefinition.
And after our successful product launches listen last year, we will continue to focus on delivering long term profitable growth with both adventure touring and sports segments utilizing our <unk> platform.
Ford is a great example of this strategy with sport, we know that the category skews younger.
We're seeing a higher proportion of new to the brand writers in this section. In addition to playing an important role as an incremental pipe for existing and new customers.
Delivering new to sport riders as part of our objectives to attract new customers to the brand. In addition to expanding the garage of all existing riders.
With this in mind in April we started a new chapter in the sports the story with the launch of <unk>.
Building on the 65 year legacy of Sportster with night. So we wanted to push both our performance and design capabilities, while ensuring the bike was an entry point to Harley Davidson Motorcycling and our brand.
Capitalize on market trends, taking inspiration from our community and recognizing our riders desire to make the Harley Davidson uniquely theirs with nights that we created canvas for creativity and personalization.
This was the theme of our launch campaign instrument of expression, which for the first time ever in the history of the company presented five five builders from around the world that put the incredible talent to work to showcase their individual artistic expression or factory model at launch.
If you hadn't had a chance to see the launch video I'd encourage you take a look at really demonstrates the level of personalization that can be experienced.
Looking ahead, we plan to continue to tap into the <unk> platform using modularity to explore new segments for the company.
Leading in electric pillars, three of our Hotwire strategy is another focus for both Harley Davidson and live wire.
In may at our Investor Day, We also reviewed the S. Two del Mar a new addition to the life of our portfolio and the first bite the feature of the new <unk> <unk> architecture.
The launch featured an addition of 100 units build to order and serialized as the del Mar launch edition models.
The reception to the launch edition was exceptional with a 100 reservation deposits selling out in 18 minutes.
As part of the journey of live wire, becoming the first publicly traded all electric motorcycle company in the U S yesterday, the SEC declared our S. Four registration statement effective.
Due to quarterly fiscal accounting, we now expect that lightweight will go public on September 26, which will be the start of both LIFO and Harley Davidson's fiscal fourth quarter.
And as part of this process, we expect that AAR bridges will hold its shareholder meeting to approve the transaction the week of September 12.
And now I'll hand over to Gina.
Thank you Ken.
Second quarter results reflect a modest year over year revenue and operating income decline largely attributed to the unexpected cubic production suspension.
We continue to operate within an environment of high raw material prices and broad supplier volatility.
That said as expected we have began to see cost inflation moderate and we expect to see this moderation continue in the second half of the year.
And despite the headwind from volume, we were able to grow our H D&C operating income and operating margin in the quarter as we continue to stay focused on our most profitable categories and our cost structure.
Looking more closely at our financial results in the quarter total consolidated revenue of $1 5 billion, 4% lower than last year.
Can't see wholesale motorcycle units were down 50% year over year and revenue was down to a lesser extent at 5% as a result of strong global pricing actions across the portfolio and growth within apparel.
Financial services segment revenue was up 1% as higher receivables and licensing revenue.
Total operating income of $278 million was down 1% compared to last year for.
<unk> operating income of $192 million was up 3% versus last year as pricing and cost productivity offset the impact of the suspension.
For each DFS operating income of $86 million declined 9% versus prior year as the credit loss rate continues to normalize in line with expectations and our loss reserve rates remained steady.
Second quarter GAAP earnings per share of $1 46 compares to $1 33 last year with the increase driven by the factors already noted as well as some favorability in below the line items, including other income due to lower pension expense lower effective tax rate and fewer shares outstanding.
Turning to Q2 year to date results total consolidated revenue of $3 billion was flat to last year and total operating income of $567 million was down 10% compared to last year.
Q2 year to date earnings per share of $2 91 compares to $3 <unk> last year.
Global retail sales of new motorcycles were down 23% in the quarter.
Overall retail results were negatively impacted by low inventory heading into the quarter and further exacerbated by the production suspension worldwide retail inventory of new motorcycles is at historical lows in Q2 inventory was down 13% versus last year.
In the key U S market retail inventory was down to 35% and ended Q2 at less than 10000 units.
Early in Q2, we were producing on average 4500 motorcycles per week. We are now producing above that weekly output rates and are working to increase inventory levels across the network.
We continue to see strong pricing dynamics for both new and used motorcycles in Q2 as we did in Q1 and throughout 2021.
Specifically within the U S Q2, new motorcycle transaction prices came in over 1% above MSRP.
Within the desirability threshold of plus or minus two percentage points.
On average in model year 2022 motorcycle is sitting on the dealer showroom for in the U S for less than 23 days.
Finally, despite our share loss in the U S market driven by unit availability, we continue to hold commanding share within our largest and most profitable categories touring and large crude there.
Looking at revenue total H D and C Q2 revenue was down 5% in Q2 and flat on a year to date basis.
Focusing on the key drivers in the quarter 10 points of negative impact came from volume.
10 points of growth from pricing and incentives driven by global MSRP price increases coupled with pricing surcharges in select markets.
In addition, we delivered strong price realization across both parts and accessories in the apparel businesses.
Two points of growth from favorable mix within motorcycles as well as SKU mix across the apparel business.
And finally three points of negative impact from foreign exchange as the dollar continued to strengthen throughout the quarter.
Drivers of the year to date revenue are relatively consistent with the positive impact from pricing offsetting the unit shortfall in headwind on FX.
Focusing in on margin Q2, gross margin of 35% was flat versus prior year pricing and favorable unit next we're able to offset the deleverage cost headwinds associated with the production suspension as well as the higher cost inflation.
Additionally, in Q2, we began to comp the unfavorable impact from the incremental EU tariffs, which provided an additional margin tailwind.
In total supply chain inflation was 4% in the quarter, which is down from 8% in Q1, and 10% last year back half.
The deceleration in an inflation is primarily a result of that normalization across logistics.
Logistics costs are still remaining higher than a year ago, we did not experience as much volatile pricing as we did in the past year and we continued to reduce our reliance on expedited shipping.
Q2 operating margin improved from 14% in Q2 prior year to 15, 1% the.
The approximate 120 basis point improvement was driven by the factors noted as well as lower operating expense as we prudently manage spend commensurate with lower quarterly volumes.
The financial services segment operating income in Q2 was $86 million down $9 million compared to last year. The decline is largely driven by a higher provision for credit losses as actual losses normalize.
Looking at the <unk> space business retail originations in Q2 were up 1% versus last year on strong used motorcycle origination volume.
New motorcycle origination volume was down in line with lower than expected retail sales.
Total finance receivables in Q2 were $7 1 billion.
Which is up three 1% from last year in Q2, <unk> annualized retail credit loss ratio of one 4% compares to a ratio of <unk> eight 4% in Q2, 2021 or 56 basis points higher we.
We continue to see credit performance moved towards normalized levels as we move beyond the COVID-19 related benefits, which included the federal stimulus payments and loan due date extensions.
In addition, the retail allowance for credit losses at the end of Q2 was 5%, which is flat to the previous quarter.
Wrapping up with Harley Davidson, Inc. Financial results through the first two quarters, we delivered $244 million of operating cash flow, which is down from $644 million in the comparable period last year.
The decrease in operating cash flow was driven by unfavorable changes in working capital as well as higher net cash outflows related to wholesale finance receivables.
Total cash and cash equivalents ended at $2 2 billion.
Which is $453 million higher compared to the end of the prior year Q2.
The increase in cash is that each DFS following a securitized debt issuance in June of this year.
During Q2, we continued to repurchase shares and bought back approximately one 8 million shares in the quarter cumulatively through the second quarter, we have bought back 8 million shares.
As we look through the rest of 2022 as you consider earlier, we are reaffirming our full year outlook, where we continue to expect HD and fee revenue growth of 5% to 10%. This revenue growth forecast incorporates the expectation that we recoup and wholesale the units we lost as part of the production suspension.
It also includes what we know today in terms of the impact of the semiconductor and supplier challenges impacting our business we.
We expect revenue to continue to be positively impacted by our global pricing actions as we work to offset the cost headwinds across the supply chain.
We continue to expect <unk> operating income margin of 11% 12%.
The anticipated positive impact from pricing were more than offset the expected cost inflation across the supply chain.
The suspension of the additional EU tariffs realized in 2021 contributes over a point of margin growth.
We continue to expect <unk> 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 that we believe are not likely to repeat itself in 2022.
And lastly, we continue to expect capital investments of $190 million to $220 million as we invest behind product development and capability enhancements in support of our hardware strategy.
Embedded within our guidance for 2022 as LIBOR at this time, we remain committed to the outlook from the form S. Four filing with the SEC.
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 pay dividends and execute discretionary share repurchases.
This financial guidance includes the best cost forecast on supply chain that we have at this time it assumes that logistics materials will continue to improve as we move through the balance of the year in aggregate costs will continue to be inflationary, but we will move beyond the peak levels realized in 2021. This guidance also includes an updated assumption for the back.
Half FX rate for the Euro which is at one dollar and what's a.
My rough rule of thumb is that every penny difference in the back half is worth about $3 million of revenue.
At this point I'll turn it back to the operator to take your questions.
As a reminder to ask a question. Please press star one on your telephone keypad to withdraw your question Press Star. One again, we also ask that you limit yourself to one question. Our first question will come from the line of Craig Kennison with Baird. Please go ahead.
Hey, good morning. Thank you for taking my question had to do with the.
Production suspension and the impact on retail are you able to quantify maybe the lost retail sales and then how sure are you that you will get those sales back versus the customer moving on to do something else.
Okay.
Thank you Craig.
It's difficult to quantify the actual lost retail sales, but we believe that the demand out there certainly well ahead of the product that we were able to deliver especially in this period of no product being out there. There are some pretty good indicators that confirm that Gino already mentioned a few.
With.
23 days of model being on the dealer's floor strong dynamics in the new and used motorcycle with MSRP being up one 3% overall.
Including our entry price products, which are even up higher.
The used market in particular in that period being extraordinarily slow because high actually.
On the used market and the pricing in the used market when there were no bikes in.
New bikes in the market in the dealers and that is an.
The demand was there, but we just couldn't deliver the new bikes.
Into the dealers said there was a big shift towards.
Towards the used business in that time.
And that obviously had it didn't show up in retail.
In terms of our confidence I mean that is all the supply related right now we feel confident that what we've seen since the suspension.
That our production volume is picking up and we are able to start compensating some of the shortfalls. We've had due to the shutdown. So hence our guidance that'd be concerned for the rest of the year. So we feel pretty confident about that assuming obviously that there is no other extraordinary.
Happening in the supply chain, which which we don't foresee at this point in time.
Thank you Hey, Craig.
Greg This is Gina I'll, just add a few kind of numbers to yoga and commentary so before before the suspension. We were running around 4500 units per week that was our output so being down to two five weeks, we would say that was roughly call. It 10 to 12000 units of lost production.
Given the speed with which products was moving from our inventory through the dealer through the customer.
That kind of gives you a rough ballpark of retail to yoga point, we don't we don't predict or forecast retail, but that just gives you a quantity of kind of what we lost in terms of production in terms of how we feel confident in the back half that 4500 unit run rate. We are we are producing over that now so as we work to recoup.
And kind of get the shipments into this critical Q3 window, we are producing above above that alpha right and so that is what gives us confidence in being able to confirm our guidance.
Our next question will come from the line of Robbie <unk> with Bank of America. Please go ahead.
Hey, good morning, and thanks for taking my questions, maybe just a follow up on.
Craig's question.
So the dealers are.
It had been kind of starved.
Units for a while.
I think they would be happy to get.
Shipment shifts into the back half, but it is kind of riding season is ending in a lot of regions.
But my broader question is has there been any feedback from dealers.
Any slowdown more recently as analysts were seeing a lot of slowdowns or sharp slowdowns in discretionary spending and other types of categories I didn't know if you could.
Speak to that and then.
Also separately maybe.
Can we get some color on sort of the international outlook for shipments versus.
U S. <unk> were there any differences in how those regions.
How you managed international versus domestic.
The production shortfall.
Yes.
Yes.
Thank you for the question.
In terms of our dealers. They are seeing now a constant flow of new products into the dealerships, which we resumed in July after the suspension and what we are seeing since then is actually an accelerating performance.
In terms of our retail, which especially in July if we think about this month, that's about to and we saw a nice pick up.
In retail numbers as soon as the product became available and we can confirm that through our overall loan applications, which were actually positive. So if you look at us and taken together. So there are some good indications of the product is moving out.
New product a little bit later in the month for example, because it took time to go through the system to get to the dealers, whereas use was strong and especially the first couple of weeks of the month, but overall we are seeing.
Good sell through are happening as the product hits the retailers.
As for the international markets.
Obviously, it takes a little longer because those spikes.
Getting ownership, whereas in North America.
On the chart and those lead times are lot longer. So the production suspension will take a little bit longer to work its way through the system and to Thailand did start up a little bit.
A little.
Slower than than the U S market, but from a U S perspective, very strong recovery that we've been seeing and internationally.
A recovery, but at a slower pace.
Got you that's really helpful and just really quickly for Gina is there anything from the back half mid single digit each DMC op margin.
You can remind us about sort of <unk> versus <unk> that we should be thinking about.
Okay.
A good question I would say.
For the fourth quarter remember one that our operating expense always kind of ticks up in the fourth quarter compared to the previous three as we get ready for new product launches and finish that product development for the next model year. So there's always an uptick in spend there as well.
The other two keep in mind, two positives I guess as tailwind one is the impact of the incremental tariffs that will be a benefit for us in Q4, because those are in those went all the way through 2021 and then the second is when you think about our raw material inflation and when we really started to see that accelerate.
Q3 was high Q4 was higher and.
And so we'll be comping that.
That kind of those peak levels of inflation as we get to the back half of this year.
Terrific. Thank you very much.
Yes, sorry, just wanted to point you mentioned driving season, obviously riding season is still in full swing in their markets.
They are riding season is starting later than September so.
Even if <unk>.
Some of the products will not get retailers the positive of that will be that it will start to replenish our staff to inventory in dealerships in a positive manner. If we think about next year. So I don't foresee the quantities that we're manufacturing to probably get us to the levels of inventory, we wanted to be but we.
We'd like to start the year healthier than we have before which would be positive. So even if those bikes don't all retail.
That will certainly not be an abundance of bikes in the overall network.
Got it that's incredibly helpful. Thanks, so much.
Your next question will come from the line of Brent <unk> with Keybanc. Please go ahead.
Hey, good morning.
Going back to your comments on international retail if I'm doing my math right. It looks like you actually built some inventory.
Internationally.
But retail there was still pretty weak. So so it was the drag there are less of an inventory impact or was that more of a.
Demand impact just trying to parse through that.
Definitely it is not a demand impact overall demand was strong pretty much across the board.
But the available bikes in the dealerships that.
Where the concern.
Yes. This is Steve I'll just to add to that picture on international I think that it varies by by region certainly the dynamics in North America as you explained.
Indicate that there continues to be appetite for those motorcycles as they come back online and and really it was the question of supply I think as you look at some of those international markets and we're very pleased with the performance in APAC, which despite those same challenges in terms of motorcycle availability, we had a very a very important quarter in terms of growth and that is not what.
Expanding some of the impact of like for example, the Covid shutdowns in China, which certainly created a bit of a backlog on the retail despite the availability of the wholesales.
EMEA and the broadening of the European market. That's certainly suffered through several other factors that have been very significant obviously the ongoing conflict in Ukraine as well.
Some other challenges with the Euro FX rate are things that that we believe has had an impact and will continue to have an impact. It is also one of the reason for it is the longest lead time for us to be able as Jochen mentioned to reactivate production into flow supply. So certainly it is a picture of that for Q2 that was slightly different than for our domestic market overall.
A little bit stronger, but we expect that the back half of the year will have its own dynamics with hopefully ongoing strength in the APAC market, particularly as the China geography opens up again.
And just one final one final point on that that last year in 2021 for international in Q2, Q3, we really saw inventories get to very unhealthy levels. There. So there is some element of that growth that is we're not we.
We figured out the shipping and things differently. This year than we did last in the height of kind of all of that the craze of logistics.
Got it okay. Thank you.
Your next question will come from the line of Joseph <unk> with Raymond James. Please go ahead. Thanks.
Hi, good morning.
Couple of questions for me first are you seeing any evidence of softness among your core consumer either maybe for trade down towards smaller less expensive models, lower P&A attachment rates or maybe the increases in payment delinquencies.
And then maybe second you mentioned you curtailed some operating expenses.
In Q2 after the production shutdown.
Costs come back in the second half.
Yeah.
Thanks.
Thanks for the two questions. So the operating expenses should not be coming back I mean, we didn't need to create additional demand through stimulus marketing stimuli, because there was not enough product out there. So we don't believe that we will need to spend. Additionally, these funds that we've essentially.
<unk> then in the back half of the year.
So there should be positive.
From a cost perspective throughout the year, but I'll, let gina.
To elaborate on that a little bit more.
We did not see softening among our core consumers.
A attachment was lower but that was lower because there were no bikes to tetra P&A too. So that was another reflection of our P&A per se, but.
There's not enough new bikes in the market that you could accessorize accordingly.
If you look at credit apps, you could say there might be slight.
In Q2.
Slight decline in the in.
Subprime into supplying tier in terms of number of applicants, but that could also very well be due to the fact that we had the potential.
Do we hit the shutdown of the manufacturing so we can't attribute that at all to a decline in.
In demand. So overall, it's hard to really give good indications simply because product availability and low inventory levels.
Have made it a clean read on that on the economy and the consumer very difficult, but the sickness that I've mentioned in terms of used and new.
Our strong and the fact that we.
Retail is jumping back up as we are delivering more bikes to the consumer is certainly positive but the next couple of months will show, where the consumer setting, but right now we are reasonably confident.
Hey, Joe. This is this is gino so as we look at delinquencies and loss rates in particular, so in Q2, we had started to normalize consistent with what we've been saying is we entered into 'twenty, one and that does but the loss rate in the delinquency rate was going to normalize when we look at how those rates compare to say like a <unk>.
Four year, Rolling average or EBIT like taking 2000 2021 out of that we're still both from a loss rate in a delinquency standpoint underneath kind of below those those historical rates. So we're not yet seeing it play through and just kind of the customer side from that from a payment standpoint.
The operating expense I agree with yoga and that these were these should not come back into the P&L, primarily it was marketing and marketing not only connect at the corporate centre level, but also very direct within our markets and within our regions that we just given that we didn't have product we weren't we weren't going to spend on that lead gen.
Okay, great. Thank you.
Your next question will come from the line of Fred Wightman with Wolfe Research. Please go ahead.
Hey, guys. Good morning, I was hoping you could just sort of justify rationalize.
Our company back half operating margin guidance, you have a step up in sort of the sales contribution to understand that you guys are running at higher output than you were in the first half.
But it looks like you expect them to come in at the low end of that operating margin guidance in the mid single digit range. So what is sort of the bridge from that higher sales outlook with a softer margin performance I would assume there'll be some fixed cost leverage there, but maybe not.
Yes.
Yes.
When do we think about the back half you're absolutely going to see some benefit from from the leverage play thrill remember last year in our back half typically we would run our back half realm.
Relatively flat margins that disconnect zero margin as that deleverage later this year or back half is going to be margin positive because of that deleverage because we have lower levels of inflation is still inflation just coming off of.
The peaks that we have seen and then from an operating expense standpoint, we're continuing to stay kind of relatively in line with what we saw last year. So those are the big things that drive drive that difference, but the fact that we had shipments moving from Q2 into the back half of the year is probably the single biggest change when you look at kind of year over year.
I guess I just meant more relative to the outlook that you guys had provided last quarter. It looks like youre expecting mid single digit now, but I think last quarter that was mid to high single digits.
Despite the lower outlook.
I don't I'll have to follow up with you on that I mean, there really hasnt been a material change in our back half other than as production volume shifting.
Okay. Thank you.
Your next question will come from the line of Garrick Johnson with BMO capital markets. Please go ahead.
Great. Thank you good morning, I have two if I may.
You recently dropped price on road King Road glide and Street glide basic models and be as an option as opposed to a standard feature so.
Can you talk about that strategy.
Hi, good morning rebel again, so that is actually not a price decrease that is actually a change in the configuration of the motorcycle given some of the supply challenges, we have had particularly as it relates to avs.
So in order to continue to build what are sort of are highest demand and also our most profitable bikes. We have made the choice to create some options around that features particularly around ABS and then price accordingly in.
In fact, we are we have taken significant pricing in this category across the past year.
Continuing to transact above MSRP when it comes to.
Particularly in Q2 to all of our families. So this is more driven by accommodation given the supply chain challenges and making sure that we are we're fair to our customers.
Those changes occur as opposed to any price decreases on the actual counseling.
Right, Okay, great. Thanks, and second if the FTC order regarding warranty work goes through.
What kind of financial impact could that have both directly or indirectly.
There'll be minimal minimal financial impact.
Okay, great. Thank you.
The final question will come from the line of Jamie Katz with Morningstar. Please go ahead.
Hi, Good morning. Thanks for taking my question just had a couple of follow ups on each DFS.
Merrily, whether you guys are seeing.
Any more consumers purchasing with cash rather than bonds, and then whether or not you guys are financing of about the same percentage of loans in the past or if that has changed and I guess Additionally, piggybacking on to that.
Is there some promotional.
Financing cadence, we should think about over the back half of the year I think you guys have planned thanks.
Hey, Jamie this is gena, so I'll start with that.
Second part of the question for Us and in short no. We have no just given where inventory positions are sitting there very limited promo that has happened and is planned to happen the balance of the year as we look about the loan loan applications and what we're financing relatively consistent we're not seeing a material change total.
Number of kind of loan originations relatively flat, we're seeing a little bit of uptick in new obviously, and then uses a bit down but overall overall, we are relatively flat. When you look at the split <unk> between Prime and subprime again, you really have to squint to see a difference between where we've been historically and <unk>.
Some of that that split of the business and when you look at it yet.
Kind of what is happening within the tiers is given where inventory levels are sitting it's really hard to discern if any of it is driven because of the broader macro factors or if it is just because the inventory hasnt been available. So right now through Q2 and even through July I would say we've through three weeks of July we have seen our total.
Loan applications up our total loans actually kind of provided are up versus where we've been last year. So we're continuing to see the trends move in the right direction as the inventory availability.
And if I just have a complex to just come back to the previous question on the FTC settlement just to be clear.
Was not a financial settlement. It was just the settlement concerning language Houston our warranty.
And effectively clarifying the lower just to be clear no financial settlement.
With the FTC.
And there are no further questions at this time. This concludes today's conference call. Thank you all for joining you may now disconnect.
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