Q4 2023 LiveWire Group Inc Earnings Call

Thank you for standing by and welcome to the Harley Davidson in 2023 fourth quarter Investor and Analyst Conference call. Please be advised that today's conference is being recorded.

I'd now like to turn the call I would now like turn the call over to Sean Collins. Mr. Collins. Please go ahead. Thank you good morning.

This is Shawn Collins, the director of Investor Relations at Harley Davidson.

Today, you can access.

Continued to outperform the market with share gain in our core categories with Turing, reaching over 75% market share in the U S.

With large crews are coming in at over 80%.

Despite perceptions to the country. We continue to have a commanding leadership position in these core profit focused segments well ahead of all our competitors taken together and demonstrated by our strong gross margin performance.

Revenue was down slightly for the year as we navigated macro conditions impacting retailers and work to manage dealer inventory and production challenges.

Spite this hour combined benefits of pricing and mix inclusive of incentive spend unit separate points of topline growth leading to a 1% revenue decline driven by currency headwinds.

We continued to maintain our focus on profitability with operating income margin of 13, 6% and 23 versus our starting profitability of six 3% in 2019.

34000, less motorcycle unit sales and 6% revenue growth over the period.

We believe this is a clear proof point of our strategic orientation and execution in the current environment.

This is a function of our multiyear pricing and mix decisions across products and geographies with core products, reaching 84% of our mix up from 78% in 2019, and a significant increase in average profitability per unit as mentioned earlier.

But more on that from Jonathan later.

I will briefly address the selection of our hardware strategic pillars, and our delivery of them last year, starting with PD one profit focus.

We continue to prioritize mix with growth globally in our core units of dry CBO touring and Softgel outpacing overall retail performance last year. We also launched our new generation of road and Street CBOE with this transformation of product we are delivering on our hardware our promise of innovation as part of our focus on core categories setting.

Setting the stage for this year's Grand American touring launch.

And launching our icons and enthusiasts aligned to a profit focus we've been building on our commitment to introduce motorcycles that align with our strategy to increase our ability by the legacy of Harley Davidson.

We also continued our efforts to increase awareness of the chemo Burgos racing series with Motor America now tapping into the performance touring.

New product offerings.

And then two selective expansion.

We continue to make progress on our global partnership in our venture with Euro Motor Corp.

This is a solid example of innovative participation models and geographies that meta as part of a selective expansion strategy. We've been very pleased with the exception of the reception to the venture with over 30000 reservations to date, we will continue to look at select markets for small displacement offerings.

Military you need an electric.

<unk> continued to pioneer the EV segment through the <unk> platform with del Mar as Karim will detail later.

Jochen Zeitz: More than one year in, our decision to focus Livewire as a separate company in EV and focus Harley-Davidson on our traditional combustion segment is proving successful with a clear focus on segmentation and execution for both brands while utilizing joint synergies. Fila 5 Customer Experience With our dedication to enhancing the customer experience in line with our mission, in addition to our fuel program, we continue to invest in transforming our omnichannel capabilities in the pre- and post-purchase journey for the customer.

More than one year in our decision to focus live wire as a separate company in EV and focused holiday return on our traditional combustion segment is proving successful with clear focus on segmentation and execution for both brands, while utilizing joint synergies.

<unk> customer experience.

With our dedication to enhancing the customer experience in line with our mission. In addition to our fuel program. We continue to invest in transforming our omnichannel capabilities and the pre and post purchase journey for the customer.

Jochen Zeitz: Additionally, we continued the evolution of our marketing approach specifically to drive dealership traffic and engagement and to improve alignment on key messages with our dealer channel, as exemplified by our open houses, dealer sweepstakes, and in-store rewards. We've made good progress on the execution of our distribution system modernization, with the first milestones around product visibility and recommended orders coming online this year with our online platform HD1 Marketplace. We are now the leading marketplace for used Harley-Davidson motorcycles in America. And lastly, we're pleased with the progress of our rejuvenated membership offering, with over 700,000 members on the new platform to date. Growing membership that had been declining for years by over 300,000 new members in just seven months.

Additionally, we continue the evolution of our marketing approach, specifically to drive dealership traffic and engagement and to improve alignment on key messages with our dealer channel as exemplified by our open houses data sweepstakes and in store rewards.

We've made good progress on the execution of our distribution system modernization for the first milestones around product visibility and recommended orders coming online this year.

With our online platform HD one marketplace. We are now the leading marketplace for used Harley Davidson in America and lastly, we are pleased with the progress of our rejuvenated membership offering with over 700000 members on the new platform to date Boeing membership that had been declining for years by over 300000, new members in just seven.

Months.

We also successfully stood up homecoming as another core annual event to bring the brand closer to new and existing customers alike like no. Other brand can do and the motorcycle market.

Jochen Zeitz: We also successfully set up Homecoming as another core annual event to bring the brand closer to new and existing customers alike, like no other brand can do in the motorcycle market. Turning to 2024, I would like to comment on our new model year launch and outlook for the year. The Grand American Touring Category was born out of a unique experience on the American highway and was invented by Harley-Davidson.

Turning to 'twenty four I would like to comment on our new model year launch and outlook for the year.

The Grand American touring category was born out of a unique experience of American Highway and was invented by Harley Davidson.

Few products is iconic and is connected to one specific brands put.

Jochen Zeitz: Few products are as iconic and as connected to one specific brand. Put simply, towing is the heart of Harley-Davidson, our mission of the timeless pursuit of adventure. Back in 2020, there was no plan for touring.

Put simply Turing is the heart of Harley Davidson, our mission of timeless pursuit of adventure.

Back in 2020, there was no plans for touring and.

Jochen Zeitz: We quickly took the decision to change that, and it became the first and one of the most important priorities of our new Hotwire plan. As you saw from our launch in January, we are now excited to share what we believe is the most comprehensive product development on the Turing platform in well over 10 years. The Street Glide and Roll Glide models form the core of the Harley-Davidson Grand American Touring Motorcycle portfolio for 24 and represent the future of the sector. Both models featuring the new Milwaukee 8117 are more powerful, comfortable, and lighter and packed with advanced technology, including a new infotainment system, all wrapped up in a dramatic new visual design that will redefine the Harley-Davidson Grand American Touring experience for years to come.

We quickly took the decision to change that and it became the first and one of the most important priorities of our new Hotwire plant.

As you saw from our launch in January we are now excited to share. What we believe is the most comprehensive product development and the Turing platform in well over 10 years.

With Streetlight and road glide models form the core of the Harley Davidson Grand American touring motorcycles portfolio for 24 and represent the future of this segment.

Both models, featuring the new Milwaukee, eight 117, a more powerful comfortable and lighter in tact with advanced technology, including a new infotainment system all wrapped up in a dramatic new visual design that will redefine the Harley Davidson Grand American touring experience for years to come.

Jochen Zeitz: This latest lineup is not only the most advanced we've ever produced, but it also has the most customization potential that we've ever offered in touring. Additionally, for 24 to celebrate the 25th anniversary of our Custom Vehicle Operations, or CVO, we added the CVO Road Light ST and CVO Pan America to the lineup, complementing our new Road and Street Light CVOs first introduced during Homecoming last year. Starting with the CVO Road Glide SD, the lightest, fastest, and most sophisticated performance bagger ever produced by Harley-Davidson, is taking Hot Rod Bagger performance to the next level while tapping into the performance trend that we started with the King of the Baggers Racing Series.

This latest lineup is not only the most advanced with a produced but also has the most customization potential that we've ever offered in jewelry.

Additionally for 2004 to celebrate the 25th anniversary of our custom vehicle operation. So CBO, we added the CBO Road glide SD and CBO Pan America to the lineup complementing our New Road and Street glide Cboe's first introduced during home coming last year.

Starting with the CBO Road glide SD the lightest fastest and most sophisticated performance ever produced by Harley Davidson is taking hotrod backup performance to the next level.

By tapping into the performance trends that we fueled with the king of the Beggars Racing series.

Jochen Zeitz: The CVO RoadLight ST represents a unique collection of components providing high value for two performance-minded riders combined with West Coast custom style as seen in our Lowrider ST offering. We also expanded the CVO family beyond Grand American Touring for the first time to include a Pan-American CVO, highlighting another touring segment that we continue to innovate in, Adventure Touring. We've prepared and are investing in the 24 model launch and have ensured that we're getting motorcycles out into the network at the right time for the riding season. And although it's still early, having launched only two weeks ago, we've already seen a very positive initial reaction from the network, media, influencers, and consumers alike, with strong collaboration on awareness and traffic driving activities.

The CV overall slight S. T represents a unique collection of components, providing high value of two performance minded drivers combined with west coast custom style as seen in our low rider SD offering.

We also expanded the CVR family beyond Grand American touring for the first time to include a Pan American CBO.

I think another touring segment that we continue to innovate and adventure touring.

We have prepared and are investing in the 'twenty four model launch and have ensured that we're getting motorcycles out into the network at the right time for the riding season.

And although it's still early having launched only two weeks ago, we've already seen a very positive initial reaction from the network media Influencers and consumers alike with strong collaborations on awareness and traffic driving activities.

Jochen Zeitz: As we look to the years ahead, we're excited about the potential of this lineup for the brand. We are fully focused on growing retail on the basis of these fantastic bikes, even in the current environment. That said, it is still early in the year, and it is hard to predict the extent of the positive impact that our new touring models can have in the current high interest and overall industry market environment, such as we are very excited by the early read of our new model year launch. We're providing broader guidance than usual to our outlook given the continuing industry headwinds that affect our business. Furthermore, inventory management will continue to be a core part of our strategy to ensure that we have the right balance for both the network and the customer.

And as we look to the years ahead, we are excited about the potential of this lineup for the brand.

We are fully focused on growing retails on the basis of these fantastic bikes, even in the current environment.

That said it is still early in the year and it is hard to predict the extent of the positive impact that our new touring models can have in the current high interest in overall industry macro environment.

As such while we are very excited by the early read of our new model year launch, we're providing broader guidance unusual to our outlook given the continued industry headwinds that affect our business.

Furthermore, inventory management will continue to be a core part of our strategy to ensure that we have the right balance for both the network and customer.

Jochen Zeitz: And as we look to the year ahead, we will manage inventory cautiously, recognizing that we believe we are close to the right levels in the network. Our goal will be to ensure that we manage wholesale prices based on retail potential, so as to keep wholesale and retail prices in balance through a combination of retail levers and manufacturing adjustments, even as required. To conclude, despite the challenges in the market, we believe that we have created the right product and solid foundations on which to deliver our future ambitions for the company. Thank you, and now I'll hand it over to Karim to talk about Livewire. I am turning it over to you. Thank you, Johan. Good morning, everyone.

And as we look to the year ahead, we will manage inventory cautiously recognizing that we believe we are close to the right levels in the network.

Our goal would be to ensure that we manage wholesalers based on retail potential so as to keep wholesale and retail to imbalance through a combination of retail levels and manufacturing adjustments Ethernet is required.

To conclude despite the challenges in the market. We believe that we have created the right product and solid foundations on which to deliver our future ambitions for the company.

Thank you and now I'll hand, it over to Craig to talk lifestyle.

Turning over to you.

Thank you Johan and good morning, everyone.

Kareem: We are happy to report that after a strong fourth quarter, LiveWire delivered a 21% increase in LiveWire-branded annual unit sales versus 2022. We will finish the year with both units and operating labs in line with our revised guidance. Considering the ramp-up required for all new in-house developed products, we are pleased with the stabilizing supply base as well as the production of the F2 powertrain at Harley-Davidson's operations in Wisconsin and the assembly of the Delmar in Pennsylvania. With a positive reception of the newly developed platform from the ground up from both early customers and the media, 2024 promises to be an exciting year for Livewire. Our development team at both Stasic and Livewire continue to work to expand our portfolio and bring more options to more riders.

We are happy to report that our third.

Strong fourth quarter, <unk> delivered 21% increase in lightweight branded annual unit.

Versus 2022.

We finished the year with both units and operating loss in line with our revised guidance.

Considering the ramp up required for all new in house developed products.

We are pleased with the stabilizing supply base.

Whereas the production of the F. Two powertrain up Harley Davidson's operations in Wisconsin.

The assembly of the del Mar in Pennsylvania.

With a positive reception of the newly developed platform from the guava from both early customers and the media 2024 promises to be an exciting year for lightweight.

Our development teams at both <unk> and <unk>.

Continue to work to expand our portfolio and bring more options to more riders.

We believe these new products, along with our entry into new segments.

Kareem: We believe these new products, along with our entry into new segments, position Livewire to increase its unit sales without increasing spend over 2023. To accelerate the path to profitability, we plan to drive down the cost of our products and continue to carefully manage cash, which is reflected in our guidance. Thank you, and now I'll hand it over to Jonathan. Thank you, Kareem, and good morning, everyone.

Position LIBOR here to increase our unit plan without increasing spend over 2020.

To accelerate the path to profitability, we plan to drive down the cost of our products and continue to carefully manage cash which is reflected in our guidance.

Thank you and now I'll hand, it over to Jonathan.

Thank you Karim and good morning, everyone I plan to start on page five of the presentation, where I will briefly summarize the financial results for the fourth quarter of 2023, and subsequently I will go into further detail on each.

Jonathan: I plan to start on page 5 of the presentation, where I will briefly summarize the financial results for the fourth quarter of 2023, and subsequently, I will go into further detail on each. At HTMC, in Q4, global wholesale motorcycle shipments decreased by 13% as we remain mindful of dealer inventory and market conditions. In Q4, HDMC revenue was down 14% due to lower volumes where an improved mix was offset by pricing and incent expense. In Q4 and in 2023, as Jochen said, we continue to prioritize our focus on the core motorcycle mix of touring and cruiser motorcycles. We will cover further details of revenue when we turn to page 8. Turning to our consolidated results for the fourth quarter, total consolidated HDI revenue of $1.1 billion was down 8% compared to the same quarter last year.

At <unk> in Q4 global wholesale motorcycle shipments decreased by 13% as we remain mindful of dealer inventory and market condition.

In Q4, <unk> revenue was down 14% due to lower volumes were improved mix with.

It was offset by pricing and incentive spend in.

In Q4 and in 2023 as Johan said, we continued to prioritize our focus on core motorcycle mix of touring and cruiser motorcycles.

We will cover further details of revenue when we turn to page eight.

Turning to our consolidated results in the fourth quarter total consolidated <unk> revenue of $1 1 billion.

It was down 8% compared to this quarter last year.

Jonathan: The breakdown was at HTMC, where, as I mentioned, revenue declined by 14%. At HDFS, revenue grew by 15%. And at Livewire, revenue grew from $9 million in the fourth quarter of 2022 to $15 million in the fourth quarter of 2020. Total consolidated HDI operating income with a loss of $21 million, which compares to operating income of $4 million in the Q4 prior year period. The breakdown for 2023 was at HTMC, and operating income was a loss of $44 million, which is markedly lower than the profitable first three quarters of the year, where Q4 is a quarter with significantly fewer wholesale units compared to the remaining quarters in the year. Results were adversely impacted by lower wholesale volumes and higher incentive spend in the quarter. At HDFS, operating income of $58 million declined by 10% on a year-over-year basis, and at Livewire, an operating loss of $35 million was in line with expectations. Fourth quarter earnings per share were $18,000.

The breakdown was at <unk> as I mentioned revenue declined by 14% at <unk> revenue grew by 15%.

<unk> revenue grew from $9 million in the fourth quarter of 2000 $22 million to $15 million in the fourth quarter of 2023.

Total consolidated HDI operating income with a loss of $21 million, which compares to operating income of $4 million in the Q4 prior year period.

The breakdown for 2023 was at <unk> operating income was a loss of $44 million, which is markedly lower than the profitable first three quarters of the year, where Q4 is a quarter with significantly fewer wholesale units compared to the remaining quarters in the year.

Results were adversely impacted by lower wholesale volumes and hiring incentive spend in the quarter at.

<unk> operating income of $58 million declined by 10% on a year over year basis, and that life layer and operating loss of $35 million was in line with expectation.

Fourth quarter earnings per share was <unk> 18.

Jonathan: Turning to full year 2023 results, total consolidated revenue of just over $5.8 billion was 1% higher compared to last year, while total operating income of $779 million was 14% lower than last year. Full year earnings per share was $4.87 in 2023, which compares to $4.96 in 2022. We will talk further about each business segment's specific profits and loss drivers in greater detail in the next section. In Q4, global retail sales of new motorcycles, as mentioned earlier, were down 11% versus the prior year. In North America, Q4 retail sales declined by 9%, driven by the continued impact of a high interest rate environment on a consumer discretionary purchase decision. In addition, the discontinuation of legacy Sportster bikes at the end of 2022 continued to have an adverse impact on non-core unit sales. In EMEA, Q4 retail sales declined by 22%, driven by weakness in France and Germany. Overall, EMEA continues to be adversely impacted by overall macro conditions and sluggish economic growth. In Asia-Pacific, Q4 retail sales declined by 10%, driven by weakness in Australia and New Zealand, partially offset by strength in Japan and Thailand.

Yeah.

Turning to full year 2023 results total consolidated revenue of just over $5 8 billion.

Was 1% higher compared to last year.

Total operating income of $779 million was 14% lower than last year.

Full year earnings per share was $4 87 in 2023 and compares to $4 96 and 2022.

We will talk further about each business segment specific profit and loss drivers in greater detail in the next section.

In Q4 global retail sales of new motorcycles as mentioned earlier were down 11% versus the prior year.

In North America, Q4, retail sales declined by 9% driven by the continued impact of the high interest rate environment on a consumer discretionary purchase decision.

In addition, the discontinuation of legacy Sportster bikes at the end of 2022 continued to have an adverse impact on noncore unit sales.

In EMEA Q4, retail sales declined by 22% driven by weakness in France and Germany.

Overall EMEA continues to be adversely impacted by overall macro conditions and sluggish economic growth.

In Asia Pacific Q4, retail sales declined by 10% driven by weakness in Australia, and New Zealand, partially offset by strength in Japan and Thailand.

Jonathan: This is a marked improvement from what we covered last quarter. In Latin America, Q4 retail sales increased by 46%, driven by growth in both Brazil and Mexico. As the manufacturing environment continues to get back to a more normalized operation, product availability is much improved compared to the exceptionally tight levels of 2021 and 2022. As touched on earlier, dealer inventory at the end of Q4 was up approximately 50% from the end of Q4 in 2022. We believe current dealer inventory is in an appropriate position overall as we approach the spring 24 riding season and with the recent launch of new model year 24 motorcycles, especially our new Street Glide and Road Glide Touring. Looking at revenue, total HDMC revenue decreased 14% in Q4 and decreased by 1% for the whole year. In Q4, HDMC revenue declined largely due to lower wholesale unit ships. Looking closer at the key drivers for Q4, 14 points of decline came from decreased volume at HTMC as we reacted to the current market condition.

This is a market improvement from what we covered last quarter.

In Latin America, Q4, retail sales increased by 46% driven by growth in both Brazil and Mexico.

As the manufacturing environment continues to get back to a more normalized operation product availability is much improved compared to the exceptionally tight levels of 2021 and 2022.

As touched on earlier dealer inventory at the end of Q4 was up approximately 50% from the end of Q4 in 2022.

We believe current dealer inventory is at an appropriate position overall as we approach the spring 'twenty four riding season and with the recent launch of new model year 'twenty for motorcycles, especially our new Street glide and road glide touring models.

Looking at revenue total <unk> revenue decreased 14% in Q4 and decreased by 1% for the full year.

In Q4, <unk> revenue declined largely due to lower wholesale units shipped.

Looking closer at the key drivers for Q4.

14 points of decline came from decreased volume at <unk> as we reacted to the current market conditions.

Jonathan: Supported a Prudy Dealer Inventory Level and prepared for the 2024 model year launch with Street Glide, Road Glide, new CBL models, and more. The seven points of decline came from pricing and incentive spend, where, given existing market conditions, we selectively promoted high-margin products to support our customers in the higher rate environment that they are facing. In addition, we made the decision to implement incentives that resulted in a reduction to revenue of approximately $40 million in Q4, which will support model year 2023 carryover motorcycles into calendar year 2024 as enhanced dealer support. We expect this will help drive retail performance in 2024, contributing seven points of growth as we continue to prioritize our most profitable models and markets. And finally, foreign exchange contributed one point in Q4.

And prudent dealer inventory levels.

And prepared for the 2020 for model year launch Street Glide Road glide, new CDL models and more.

Seven points of decline came from pricing and incentive spend where given the existing market conditions, we selectively promoted high margin products to support our customers in the higher rate environment that they are facing.

In addition, we made the decision to implement incentives, which resulted in a reduction to revenue of approximately $40 million in Q4.

Which will support model year, 2023, carryover motorcycles into calendar year 2024, as enhanced dealer support.

We expect this will help drive retail performance in 2024.

Mix contributed seven points of growth as we continue to prioritize our most profitable models in market.

And finally foreign exchange contributed one point in Q4.

Jonathan: For the full year of 2023, HDMC revenue declined by 1%, and the key drivers for the full year included seven points of decline, which came from decreased volume at HDMC, driven by an overall decrease in wholesale motorcycle unit shipments. Three points of increase, which came from pricing net of incentives through both global motorcycle MSRP increases and price increases across parts and accessories and the parallel, and the aforementioned actions to help support retail in the 2024 calendar year for the remaining 2023 Model Year Dealer Inventory, a mix which contributed four points of growth as we continue to prioritize our most profitable models and markets. And finally, foreign exchange, which resulted in one point of negative impact as the dollar strengthened for the full year.

For the full year of 2023, <unk> revenue declined by 1% were the key drivers for the whole year included <unk>.

Seven points of decline, which came from decreased volume at <unk> driven by an overall decrease in wholesale motorcycle unit shipments three.

Three points of increase which came from pricing net of incentives through both global motorcycle MSRP increases and price increases across the parts and accessories and apparel businesses.

And the aforementioned actions helped support retail in the 2024 calendar year for the remaining 2023 among your dealer inventory.

Mix, which contributed four points of growth as we continue to prioritize our most profitable model than market.

And finally foreign exchange, which resulted in one point of negative impact as the dollar strengthened for the full year.

Jonathan: In Q4, typically our lowest growth margin quarter of the year, growth margin of 22.9% was down 360 basis points behind the impacts of lower volumes, pricing, and incentive spend, which I covered in my earlier comment, and manufacturing costs, more than offsetting the benefits of shipment mix and lower raw material costs. Operating income margin fell by 210 basis points due to the factors above, in addition to operating expense favorability of 18% in the quarter.

In Q4, typically our lowest gross margin quarter of the year gross margin of 22, 9% was down 360 basis points behind the impacts of lower volumes pricing and incentive spend which I covered in my earlier comments and.

<unk> manufacturing costs more than offsetting the benefit of shipment mix and lower raw material costs.

Operating income margin fell by 210 basis points due to the factors above in addition to operating expense favorability of 18% in the quarter.

Jonathan: We continue to experience more moderate cost inflation relative to what we experienced in 2022. In Q4, cost inflation came in at a rate between 1 and 2%. For the full year 2023, HDMC's gross margin came in at 32.3%, which was 110 basis points better than a year ago, despite lower volume. Mix and pricing were positive for the year and were partially offset by lower volumes, supply chain and manufacturing costs, and foreign currency. For the full year 2023, HDMC's operating margin came in at 13.6% and compared to 13.9% for the full year 2022, which is approximately 20 basis points lower after accounting for rounding. The small decrease in operating margins was due to the factors just mentioned and largely due to higher operating expenses from earlier in the year.

We continued to experience more moderate cost inflation relative to what we experienced in 2022.

In Q4 cost inflation came in at a rate between 1% and 2%.

For the full year 2023, H DMT gross margin came in at 32, 3%, which was 110 basis points better than a year ago, Despite lower volumes.

Mix and pricing were positive for the year and were partially offset by lower volumes supply chain and manufacturing costs and foreign currency.

For the full year 2023, H D&C operating margin came in at 13, 6% and compared to 13, 9% and full year 2022, which is approximately 20 basis points lower after accounting for rounding.

The small decrease in operating margin was due to the factors just mentioned and largely due to higher operating expenses from earlier in the year.

Jonathan: At Harley-Davidson Financial Services, in Q4, revenue increased by 15%, driven by higher commercial finance receivables and higher interest rates. HDFS operating income was $58 million, down 10% compared to last year and an improvement over trends seen earlier in the year. The Q4 decline was driven by higher borrowing costs, a higher provision for credit losses, and higher operating costs. These increased costs were partially offset by higher interest rates. Total interest expense was up $22 million, or 32% versus prior year. The increase was driven by a higher cost of funds as lower interest rate debt matured and was replaced with current market rate debt. The provision for credit loss expense increased $6 million in the fourth quarter as a result of higher realized credit losses, partially offset by a favorable reserve change in absolute dollars.

At Harley Davidson financial services in Q4 revenue increased by 15% driven by higher commercial finance receivables and higher interest income.

<unk> operating income was $58 million down, 10% compared to last year and an improvement to trends seen earlier in the year.

Q4 decline was driven by higher borrowing costs, a higher provision for credit losses and higher operating expenses.

These increased costs were partially offset by higher interest income.

Total interest expense was up $22 million.

Or 32% versus the prior year.

The increase was driven by a higher cost of funds is lower interest rate debt matured and was replaced with current market rate debt.

Provision for credit loss expense increased $6 million in the fourth quarter as a result of higher realized credit losses, partially offset by a favorable reserve change in absolute dollars.

Jonathan: For the full year 2023, HDFS's annualized retail credit loss ratio came in at 3%, which compares to 2.7% through Q3 2023. These levels compare to an annualized loss of 1.9% in full year 2022. The increase in credit losses was driven by several factors relating to the current macroeconomic environment and the related customer and industry dynamics. In addition, the allowance rate for credit losses for Q4 remains flat at 5.4% from Q3, but up from 5.1% during fiscal 2022, as we prudently calculate our loan loss reserves in accordance with CECL methodology. Total retail loan originations in Q4 were down slightly, by 1%, while commercial lending receivables were up 42%, to $1.06 billion, behind stronger product availability compared to the prior.

For the full year 2023 X DFS is the annualized retail credit loss ratio came in at 3%, which compares to two 7% through Q3 23.

These levels compared to an annualized loss of one 9% and full year 2022.

The increase in credit losses was driven by several factors relating to the current macroeconomic environment and the related customer and industry dynamics.

In addition, the allowance rate for credit losses for Q4 remained flat at five 4% from Q3, but up from five 1% during fiscal 2022.

We prudently calculate our loan loss reserves in accordance with seasonal methodology.

Total retail loan originations in Q4 were down slightly by 1%, while commercial lending receivables were up 42% to 106 billion behind stronger product availability compared to the prior year.

Total quarter end net financing receivables, including both retail loans and commercial lending receivables were $7 5 billion, which was up 5% versus prior year.

Kareem: Total quarter-end net financing receivables, including both retail loans and commercial lending receivables, were $7.5 billion, which was up 5% versus prior. For the full year 2023, operating income at HDFS came in at $235 million, or down 26% relative to full year 2022, which compares to our financial guidance of down 20 to 25 percent. Through the end of Q4, we raised approximately $2.5 billion in the capital markets for all of 2023; cash and committed bank and conduit facilities resulted in an HDFS liquidity position of $2.2 billion as of year end. This approach has put HDFS in a very strong position from both a funding and liquidity perspective. For the Livewire segment, fourth-quarter revenue increased from $9 million in the fourth quarter of 2022 to $15 million in the fourth quarter of 2023, due in part to higher unit sales of Del Mar Electric Motors. As Kareem mentioned, in Q3, Livewire began shipping Del Mar, the first motorcycle, on their F2 platforms, and they are pleased with the successful rollout in Q4 with 482 units shipped. Livewire's operating loss of $35 million in Q4 was in line with expectations and driven by planned development costs to advance EV systems and activities around them.

For the full year 2023 operating income at <unk> came in at $235 million or down 26% relative to full year 2022, which compares to our financial guidance.

20% to 25% for the year.

Through the end of Q4, we raised approximately $2 5 billion.

In the capital markets for all of 2023.

Cash and committed bank and conduit facilities resulted in an H DFS liquidity position of $2 2 billion.

As of year end.

Approach has put <unk> in a very strong position from both the funding and liquidity perspective.

For the library segment fourth quarter revenue increased from $9 million in the fourth quarter of 'twenty $2 million to $15 million in the fourth quarter of 2023 due in part to higher unit sales of del Mar Electric motorcycles.

As Karim mentioned in Q3, <unk> began shipping del Mar the first motorcycle on there at two platform and they are pleased with the successful rollout in Q4 with 482 units shipped.

<unk> operating loss of $35 million in Q4 was in line with expectations and driven by planned development costs, two advanced E beam system and activities around del Mar.

For full year 2023, the operating loss of $117 million was in line with guidance given the early stage nature of the business and the electric motorcycle market as a whole.

Jonathan: For full year 2023, the operating loss of $117 million was in line with guidance given the early stage nature of the business and the electric motorcycle market as a whole. Wrapping up with Consolidated Harley-Davidson, Inc.'s full year financial results, we delivered $755 million of operating cash flow, which was up $207 million from the prior year. The increase in operating cash flow was due to positive working capital activity at HDMC driven by a decrease in inventory in 2023 as compared to an increase in inventory in 2022. Total cash and cash equivalents ended at $1.5 billion, which was $100 million higher than at the end of 2022. This consolidated cash number includes $168 million from Livewire.

Wrapping up with consolidated Harley Davidson, Inc. Full year financial results, we delivered $755 million of operating cash flow, which was up $207 million from the prior year.

The increase in operating cash flow was due to positive working capital activity at <unk> driven by a decrease in inventory in 2023 as compared to an increase in inventory in 2022.

Total cash and cash equivalents ended at $1 5 billion, which was $100 million higher than at the end of 2022.

This consolidated cash number includes $168 million from library.

Jochen Zeitz: During the whole year 2023, as part of our capital allocation strategy, we bought back 10.2 million shares of our stock at a value of $350 million. This was greater than the $324 million we repurchased in 2022, and these years together amount to nearly $675 million worth of share buybacks over the last two years. This represents 12% of our shared output. We have also paid out $189 million in dividends over the last two years.

During the whole year of 2023 as part of our capital allocation strategy, we bought back $10 2 million shares of our stock at a value of $350 million. This was greater than the $324 million, we repurchased in 2022 and these years combined amounts to nearly 675 million.

Worth of share buybacks in the last two years.

This represents 12% of our shares outstanding.

We have also paid out $189 million in dividends over the last two years.

Jonathan: These combined actions both demonstrate the strong cash flow generated by Harley-Davidson, Inc., as well as the commitment we have to returning capital to shareholders. As we look to our financial outlook for 2024, as Jochen discussed, we are excited about our new 2024 motorcycle line. But we recognize that the overall macro environment, including high interest rates, add complexity to our customers' decision to purchase discretionary products.

These combined actions both demonstrate the strong cash flow generated by Harley Davidson, Inc. As well as the commitment we have to returning capital to shareholders.

As we look to our financial outlook for 2024 as Youll can discussed we are excited.

About our new 2024 and motorcycle lineup.

But we recognize that the overall macro environment, including high interest rate and complexity to our customers decision to purchase discretionary product.

Jonathan: At HDMC, we expect retail units to be flat to up 9%, which results in 163,000 to 178,000 retail units. Currently, we believe dealers are appropriately positioned from an inventory standpoint. Thus, we expect that retail unit sales and wholesale unit shipments will move together on a balanced basis in 2020. This range would result in wholesale unit shipments being down between 1% and 10% versus 2023, which equates to 163,000 to 178,000 wholesale units. This results in HDMC revenue coming in flat to down 9%.

At <unk>, we expect our retail unit to be flat to up 9%, which resulted in 163000 to 178000 retail unit.

Currently we believe dealers are appropriately positioned from an inventory standpoint, but we expect that retail units sold and wholesale unit shipments will move together on a balanced basis in 2024.

This range would result in wholesale unit shipments to be down between 1% and 10% versus 2023, which equates to 163000 to 178000 wholesale units.

This results in ATM fee revenue coming in flat to down 9%.

Jonathan: We expect HDMC operating income margin of 12.6% to 13.6% in 2024, which is flat to that by 100 basis points from the 2023 level. The drivers of margin include negative operating leverage due to lower whole-trail margin, foreign currency, which is expected to be a mix, which is expected to be slightly favorable, pricing, which will be slightly down as we eliminate the surcharge and fine-tune our pricing. Lastly, we expect some additional manufacturing costs as we realign factory processes in the initial year of production of the new Street Glide and Road Glide motors. At HDFS, we expect HDFS property income to be flat, two up, five down.

We expect <unk> operating income margin of 12, 6% to 13, 6% in 2024.

This is flat to down 100 basis points from the 2023 level.

Drivers of margin include negative operating leverage due to lower wholesale volume.

Foreign currency, which is expected to be a headwind mix, which is expected to be slightly favorable.

Pricing, which will be slightly down as we eliminated the surcharge and fine tune our pricing strategy.

Lastly, we expect some additional manufacturing costs as we realign factory processes in the initial year of production of the New Street glide and road glide motorcycles.

At HFF, we expect <unk> operating income to be flat to up 5%.

Jochen Zeitz: We expect the business to stabilize as it comes to higher interest rate environments that began in 2022 with our borrowing cost moderating based upon the anticipated Fed. We also expect the retail and wholesale portfolios to come into balance and be more in line with the higher rate environment as the retail portfolio resets, thus driving greater revenue, and we expect consumers to settle into the existing macro backdrop, and therefore, we expect the loss rate will begin to moderate in the second half of 2024 as At Livewire, Livewire is forecasting unit sales between 1,000 and 1,500 units and an operating loss in the range of $115 million to $125 million. This is consistent with the 2023 guidance range while delivering between 50% and 125% more motor speed.

We expect the business to stabilize as it comes to the higher interest rate environment that began in 2022 with our borrowing cost moderating based upon the anticipated fed action.

We also expect the retail and wholesale portfolios to come into balance and more in line with the higher rate environment as the retail portfolio reset.

Driving greater revenue.

And we expect consumers to settle into the existing macro backdrop and therefore, we expect the loss rate will begin to moderate in the second half of 2024 as compared to the second half of 2023.

<unk> Library is forecasting unit sales between 1500 units and an operating loss in the range of $115 million to $125 million.

This is consistent with the 2023 guidance range, while delivering between 50% and 125% more motorcycles.

And lastly for total HDI, we expect capital investments in the range of $225 million to $250 million. This is the same forecast as in 2023, where we plan to continue to invest behind product development and capability enhancements.

Jochen Zeitz: And lastly, for total HDI, we expect capital investments in the range of $225 to $250 million. This is the same forecast as in 2023, where we plan to continue to invest in product development and capability enhancement. Our investment focus remains driven by core product innovation, investments in manufacturing to automate and reduce costs as part of our productivity journey, as well as planned investments for life. One of our initiatives, identified as part of the Hardwire Strategy, is driving productivity to eliminate the $400 million of incremental supply chain costs incurred since 2010. In 2022, we delivered approximately $50 million to WordBank. In 2023, we delivered approximately $70 million additional towards that goal, where we focused on reducing expedited costs among other assets.

Our investment focus remains driven by core product innovation investments in manufacturing to automate and reduce costs as part of our productivity journey as well as planned investments for library.

One of our initiatives identified as part of the hard wire strategy driving productivity to eliminate the $400 million of incremental supply chain costs incurred in 2020.

In 2022, we delivered approximately $50 million toward that goal in.

In 2023, we delivered approximately $70 million additional towards that goal, where we focused on reducing expedited costs among other actions.

2024 is expected to deliver approximately $100 million incremental cost productivity towards this goal with a focus on production efficiency logistics network optimization and supplier cost optimization through consolidation and regionalization.

As we look at capital allocation in 2024, our priorities remain to fund the profitable growth of the hardware initiatives, which includes the capital expenditures mentioned previously paying dividend and continuing to execute discretionary share repurchases.

Operator: 2024 is expected to deliver approximately $100 million in incremental cost productivity towards this goal, with a focus on production efficiency, logistics network optimization, and supplier cost optimization through consolidation and regionalization. As we look at capital allocation in 2024, our priorities remain to fund the profitable growth of the hardwire initiatives, which includes the capital expenditures mentioned previously, paying dividends, and continuing to execute discretionary share repayments. As covered previously, in 2022 and 2023, we returned nearly $865 million in capital to our shareholders. In 2024, at this point in time, we are planning to buy back a similar dollar amount of our common shares as we did in 2023. And with that, we'll open it up to Q&A. Thank you. Ladies and gentlemen, as a reminder to ask a question for today, please press star followed by the number one on your telephone keypad. And to withdraw your question, simply press star one again.

As covered previously in 2022 and 2023, we returned nearly $865 million in capital to our shareholders. In 2024 at this point in time, we are planning to buy back a similar dollar amount of our common shares as we did in 2023.

And with that we'll open it up to Q&A.

Thank you, ladies and gentlemen, as a reminder to ask a question for today. Please press star followed by the number one on your telephone keypad and to withdraw your question simply press Star. One again, we ask that you limit yourself to one question. Thank you.

Our first question comes from the line of Craig Kennison with Baird.

Your line is live.

Hey, good morning, Thanks for taking my question and Jonathan Thanks for the additional commentary that was very helpful.

My question goes to dealer sentiment.

It's a tough time to be a dealer they've got skinny margin in high floor plan interest rates.

You all have had success with project fuel in some cases, but that capital investment is a very big ask for dealers that are struggling with cash flow. So.

I'm just wondering with the leadership change like how might you re imagine your relationship with the dealer and are there opportunities to par.

Craig Kinison: We ask that you limit yourself to one question. Thank you. Our first question comes from the line of Craig Kinison with Baird. Your line is live. Hey, good morning.

Partner with them in different ways.

Thank you Craig.

Jochen Zeitz: Thanks for taking my question. And Jonathan, thanks for the additional commentary. That was very helpful. My question goes to dealer sentiment. You know, it's a tough time to be a dealer. It's got skinny margins and high floor plan interest rates.

Well as you said, we have to recognize that last year has been a tough year for dealers.

Overall interest rate rise that affected the demand has certainly led to a much lower profitability.

Jochen Zeitz: You all have had success with Project Fuel in some cases, but that capital investment is a very big ask for dealers that are struggling with cash flow. I'm just wondering, you know, with the leadership change, like how might you reimagine your relationship with the dealer and other opportunities to partner with them in different ways? Thank you, Craig.

If you look at 'twenty, one 'twenty two we had record profitability in our network, which is what's great and at least it helps many of our dealers to buffer the decline that we had seen but we obviously take that into consideration with all actions and decisions. We take are in.

Jochen Zeitz: Well, as you said, we have to recognize that last year was a tough year for dealers. You know, the overall interest rate rise that affected demand certainly led to much lower profitability. If you look at 21, 22, we had record profitability in our network, which is, you know, was great. And at least it helped many of our dealers to buffer the decline that we had seen. But we obviously take that into consideration with all actions and decisions we take in terms of new product launches, in terms of pricing, in terms of fuel, and all the projects that we are putting into the network. That said, I would say.

In terms of.

New product launch in terms of pricing and in terms of fuel and all of the projects that we are putting into the into the network that said I would say.

The dealer sentiment overall has improved significantly and that is very much a result of a new product launch model year launch that excites the network and the dealers and as I had mentioned that it's already led to a quite positive feedback from the media from influences from customers that have I mean early to buy the product.

So we are trying to find the right balance here of making sure that facilities are being upgraded recognizing that many facilities had not been upgraded for 'twenty is sometimes even 30 years and there's never a perfect time to do this but we certainly take financial difficulties into consideration as much as we can.

Jochen Zeitz: The dealer sentiment overhaul has improved significantly, and that is very much a result of a new product launch, a model year launch that excites the network and the dealers. And as I had mentioned, that has already led to quite positive feedback from the media, from influencers, from customers that have come in early to buy the product. So, you know, we are trying to find the right balance here of making sure that facilities are being upgraded, recognizing that, you know, many facilities have not been upgraded for 20, sometimes even 30 years. And there's never a perfect time to do this, but we certainly take financial difficulties into consideration as much as we can when it comes to the fusion facility or upgrade. Overall, we've completed 20 facilities so far.

Comes to the fewest facility.

Our upgrades overall, we've completed 20 facilities. So far we expect about 75 to be completed by the end of 'twenty five we have over 100 dealerships in process across all levels of completion from agreement to full build in North America alone. So overall you could say good success.

And please recognize that this program.

Be in place for over 10 years. So we don't expect all of this to happen. So some dealers are ready and want to go and they come certainly pushed in line some might have a tougher time to do that and we would take that into consideration and it's a 10 year program. So we expect dealer profitability should be improving and Obama order.

Jochen Zeitz: We expect about 75 to be completed by the end of 2025. We have over 100 dealerships in the process across all levels of completion from agreement to full build in North America alone. So, overall, you could say it's a good success. And please recognize that this program will be in place for over 10 years. So, we don't expect all of this to happen. But, some dealers are ready and want to go. And they certainly come first in line. Some might have a tougher time doing that,

Sentiment has improved I think the multiyear launch certainly has helped and now we are all preparing and ready for the riding season.

Thank you.

Thanks for your question.

Our next question comes from the line of Alex Perry with Bank of America. Your line is life.

Hi, Thanks for taking my question here I just wanted to ask how we should be thinking about mix in 2004 do you expect to be heavier on touring and trike shipments this year and lower on sports stars and how long do you expect the promo and sell those headwinds that you saw in <unk> impacting the motorcycle gross margin.

Jochen Zeitz: And we would take that into consideration. And It's a 10-year program. So, we expect dealer profitability should be improving, and overall, sentiment has improved. I think the model year launch certainly has helped, and now we are all preparing and ready for the riding season. Thank you. Thanks for your question. Our next question comes from a line from Alex Perry with Bank of America. Your line is live. Hi, thanks for taking my question here. I just wanted to ask how we should be thinking about mixing in 24.

Thank you.

Well, we've adjusted our pricing according to our new model year launch in particular in touring is important too.

Alex Perry: Do you expect to be heavier on touring and trike shipments this year and lower on sportsters? And how long do you expect the promotion and sales and headwinds that you saw in 4Q to impact motorcycle gross margins? Thank you.

To make sure that the carryover product that our dealers have in inventory are priced competitively to our new products and which is why we've taken the action that Jonathan laid out in his presentation.

<unk>.

But we feel good about what we have taken in terms of actions so far and we just have to recognize that the consumer environment.

Jochen Zeitz: Well, we've adjusted our pricing according to our new model year launch. In particular, in touring, it is important to make sure that the carry-over products that our dealers have in inventory are priced competitively with our new products, and which is why we've taken the action that Jonathan laid out in his presentation. We feel good about what we have taken in terms of action so far, and we just have to recognize that the consumer environment in our industry with discretionary premium products has been challenged due to the high interest rates, and we've taken action accordingly. So we feel that the right price at this point in time, but obviously, we will be flexible to adjust whatever is required in the current environment.

Our industry with discretionary premium product has been challenged due to the high interest rates and we've taken action accordingly, So we feel the right.

The right pricing at this point in time, but obviously, we will be flexible to adjust whatever is required.

In the current environment.

FEMSA Meeks our priorities as you as you know we have emphasized this part of the Hotwire stage two strategy was to shift more towards the high value products.

From cruiser to drive to.

Turing and the new product or the new model year launch I think is a clear indication of that.

Jochen Zeitz: In terms of SMICs, our priorities, as you know, and we have stressed as part of the Hardwire Stage 2 strategy, were to shift more towards the high-value products from cruiser to trike to touring, and the new product or the new model year launch, I think, is a clear indication of that. You know, Sportster, we still had in the network in 2023. We didn't ship any Sportsters until the end, or after 20

So we still had.

No.

Decent amount of sports is in the network.

In 2003, we didn't ship any sports does.

To the end.

After 'twenty two so those should anniversary themselves out of the network pretty quickly, but we feel that with the pricing that we have in our entry price point products, such as the nights to and moving all the way up to a new.

Jochen Zeitz: So those should anniversary themselves out of the network pretty quickly. But we feel that with the pricing that we have in our entry price point products, such as the Nightstar, and moving all the way up to our new touring models, we are competitively priced and have an exciting product offering on the market right now. But, as I said, it's still early in the season.

Touring models, we are competitively priced and have an exciting product offering.

Market right now, but as I said, it's still early in the season, we will have to see how things go we want to make sure that.

The network and then move to through the 'twenty threes as quickly as possible.

Jochen Zeitz: We'll have to see how things go. We want to make sure that the network can move through the 23s as quickly as possible because we want to reduce the inventory in the dealer network, which is why we've emphasized that, and we've taken appropriate action, so we'll continue to do so if necessary. Thank you. That's very helpful.

Because we want to reduce the inventory in the deal in the dealer network, which is why we've emphasized that and we've taken according actions will continue to do so if necessary.

Thank you that's very helpful best of luck going forward.

Thank you.

Yeah.

Our next question is from the line of Fred Wightman with Wolfe Research. Your line is live.

Fred Whiteman: Best of luck going forward. Thank you. Our next question is from the line of Fred Whiteman with Wolf Research. Your line is live.

Hey, guys I just wanted to follow up on the dealer inventory commentary I understand that you feel like you're in pretty good shape at this point in the year, but can you just talk about the mix of sort of current versus non current products and how you see.

Adele O'Sullivan: Hey, guys, I just wanted to follow up on the dealer inventory commentary. I understand that you feel like you're in pretty good shape at this point in the year, but can you just talk about the mix of current versus non-current products and how you see that unwinding in the face of the more meaningful touring refresh for this model year. Good morning.

That unwinding in the face of the more meaningful touring refresh for this model year.

Good morning. Thank you for your question, Yes, as you say, we have we believe largely be appropriate level of inventory in our network that.

Adele O'Sullivan: Thank you for your question. Yes, as you say, we believe we have, largely, the appropriate level of inventory in our network that is even accounting for some of the early release driven by the logistics considerations in Q1 as we ramped up the major product launch of our Street Glide and Road Glide and touring platform in general, and that is also accounting for some delays in the arrival of the product in 2023, which we have referenced in our previous conversation. Exactly, as you note, we believe that this inventory is important in Q1 to support retail. Obviously, as we ramp up, there is a period of time until we reach complete dealer fill for the inventory of 23, which is the majority at this time of the inventory in the network is appropriately used to support retail as we ramp up to 24.

That is even accounting for some of the early release driven by the logistics considerations in Q1 of my bumped up a major product launch of our <unk>.

<unk> client and touring platform in general and that is also accounting for some delays in the arrival of the product in 2023 of which we have referenced in our previous conversation exactly as you know we believe that that inventory is important in Q1 to support retail obviously.

Ramp up there is a period of time until we reach complete dealer fill ins.

Inventory of <unk>, which is the majority at this time of the inventory in the network.

Appropriately used to support retail as they ramp up 24th and then exactly I can also note.

As we move through the early part of the season and more of those 24 come online a priority for us and where we have directed our financial support.

Adele O'Sullivan: And then, exactly as you also note, for us, as we move through the early part of the season and more of those 24 come online, the priority for us, and where we have directed our financial support, as Jonathan has mentioned, is to work down those levels of 23, to create more and more room for 24. We think that 23 will serve as an interesting entry price point also for customers that prefer some of the features of the older technology, so they have a role to play going forward. And, of course, in general, we are watching the levels of inventory. We think as we work through 24, we want to keep it roughly in a one-to-one balance, also accounting for floor plan costs in our dealership. So overall, ensuring we keep a balance and that we work through those 20-23s as more of the 20-24s in such an important category for us as Grand American Touring come online. Perfect. Thank you. Our next question comes on the line with Joe Altobello and Raymond Jenks.

As Jonathan has mentioned working down those levels of <unk> to create more than mobile for 24 weeks.

Think that 2016 will serve as an interesting entry price points also for customers that prefer some of the features of the older technology.

So to play golf.

And of course in general we are watching the levels of inventory, we think that will work through 'twenty four we want to keep it roughly in a one to one balance also accounting for Floorplan cost dealerships.

Ensuring we keep the balance.

We'll walk through those 2020 as more of the 2020 for such an important category for us as Brandon American tolling come online.

Yes.

Perfect. Thank you.

Thanks.

Our next question comes from the line of Joe Alto Bello with Raymond James Your.

Joe Altobello: Your line is live. Thanks. Hey, guys. Morning.

Your line is less.

Thanks, Hey, guys. Good morning. So you did mentioned several aches Dfc margin puts and takes in 2024 I assume the negative operating leverage you are expecting is the biggest driver of that so if you could quantify how much of a drag that is on margins. This year and how much is the greater dealer support that you have.

Joe Altobello: So you did mention several HDMC, you know, margin puts and takes in 2024. I assume the negative operating leverage you're expecting is the biggest driver of that. So if you could quantify how much of a drag that is on margins this year and how much greater dealer support you're expecting this year as well, which I guess is included in pricing. Sure, thanks Joe. So I think as we take a look at what we saw for 2023, as we've talked about, we put programs in place that certainly were a bit of a drag on what we saw from an overall margin perspective. And obviously, we called that out in the script and the details of that.

Conducting this year as well, which I guess it was included in pricing.

Sure. Thanks, Joe So I think as we as we take a look at what we saw for 2023 as we've talked about we put programs in place that certainly were a bit of a drag.

What we saw from an overall margin perspective, so obviously, we called that out through the script and the details of that so we have about $40 million that that hit 2023 that really benefits us as we work through kind of clearing the retail in 2024.

Jonathan: So we have about $40 million that hit 2023 that really benefits us, as we work through kind of clearing the retail in 2024, and so obviously as we look forward with some of the actions that we have in the marketplace to drive retail in 2024 we made sure that we that we kind of matched up the Revenue associated with delivering those bikes in the marketplace to moving them in 2024 The other piece that I think is worth noting too is that as as you take a look I think Adele touched on this a little bit, but as you take a look at your, As you take a look at where we are from a retail perspective, I think Adele covered that nicely, too, in terms of the model year mix and what's in dealer inventory today. So obviously, more 23s are in the network today, and then we're shipping 24s in as we go. That's very helpful, Jonathan.

And so obviously as we look forward with some of the actions that we have in the marketplace to drive retail in 2024, we've made sure that we that we kind of matched up.

The revenue associated with delivering those bikes in the marketplace to moving them in 2024.

The other piece that I think is worth noting too is that as as you take a look I think a dell touched on this a little bit but as you take a look at your.

As you take a look at.

Where we are from a.

Retail perspective.

<unk> covered that nicely too in terms of the model year mix in Watson dealer inventory today.

Obviously more 'twenty threes or are in the network today, and then we're shipping 'twenty for us and as we go.

That's very helpful. Jonathan Let me just to follow up on that in terms of promotions.

Jochen Zeitz: And let me just follow up on that in terms of promotion and discounts. How much elasticity did you see in retail once you started to increase the amount of spending? Well, if you look at the fourth quarter in particular, you know, we saw a nice positive retail increase in the month of December and sequential improvement from October, November through December. And that is, I would say, partly correlated to the amount of promotions we had in the market. So we see a reaction in the market when we are putting these promotions in. And the key will be to have the right mix between carryover and new products, which we try to accomplish and achieve as quickly as possible already towards the end of January with the new model year launch so that there's a good mix because not everyone is going to buy new. Some will buy used or carryover electronics.

Discounts how much elasticity that you see in a retail once you started to.

To increase the.

The amount of spending.

While we.

If you look at the fourth quarter in particular, we saw a nice.

Positive.

They'll increase in the month of December while and then sequential improvement from October November through December and that is.

I would say partly correlated to demand of promotions, we had in the market. So we see a reaction in the market. When when we are putting these promotions and the key will be to have the right mix between carryover.

And new products, which we tried to accomplish and achieve as quickly as possible in already towards.

The end of January with the new model year launch so that they could make speakers not everyone is going to buy new.

Bye.

If you use or carryover products. So I think the dealer network is certainly well stocked to fulfill.

Jochen Zeitz: So I think the dealer network is certainly well stocked to fulfill any request from our customers. And we hope to move, as we said, through those 23 model year carryovers as quickly as possible, and we have an aggressive shipping schedule for our 24s. So, very early in the year at this point in time, which is, as I mentioned earlier, why our guidance is much broader than it usually would be, and, you know, the year started relatively modest for the industry as a whole, not just for us, but since we've shipped our new 24s, we've seen a nice and significant improvement, which is testament to the new product and to our customers being excited about what we have to offer in the I got it.

We'll fill any any requests from our customers and we hope to move as we said through those 23 motor you carry overs.

Quickly as possible and we have an aggressive shipping schedule for 24 hours. So very early in the year at this point in time, which is as I mentioned earlier like why a guy with as much broader than it usually would be.

And the year started relatively modest for the industry as a whole not just for us, but since we have shipped our new 24, so we've seen a nice.

And a significant improvement, which is testament to the new product and to our customers being excited about what we have to offer and the new one with a new model year.

Jochen Zeitz: Thank you. Our next question is from the line of James Hardiman with Citigroup. Your line is live. Hey, good morning.

Got it thank you.

Yeah.

Our next question is from the line of James Hardiman with Citigroup. Your line is live.

James Hardiman: Thanks for taking my question. So, follow up on the guidance, and Jonathan really appreciates the added color on sort of the wholesale versus retail. I think you said for retail in 24 flats up 9%. Maybe help us with the major drivers there. I know it's sometimes not very helpful to think about an industry number because you're such a big part of the industry in certain segments, but just trying to tease out the overall sort of how you're thinking about the demand backdrop relative to the benefit from what sounds like an unprecedented new product call. And then maybe help us with some of the below-the-line items as well. Obviously, you don't guide to an EPS number, but you know tax and share count, maybe interest expense.

Hey, good morning, Thanks for taking my question so follow up on the guidance and Jonathan really appreciate the added color on sort of the wholesale versus retail.

I think you said for retail in 'twenty four flat to up 9%, maybe help us with the major drivers there I know, it's sometimes not very helpful to think about an industry number because you are such a big part of the industry in certain segments, but just trying to tease out the overall.

How youre thinking about the demand backdrop relative to the benefit from from what sounds like an impressive unprecedented new product Hall.

And then maybe help us with some of the below the line item well, obviously, you don't guide to it.

Number but.

Tax and share count maybe.

James Hardiman: I mean, I think we should be getting to an EPS number in the low to mid $4 range, but I don't know if that's quite right based on how you're thinking about the bottom line. Thanks. Okay, great.

Maybe interest expense.

I think we should be getting to an EPS number in the low to mid $4 range, but I don't know if thats quite right based on how youre thinking about the below the line.

Okay, great. Thanks, James I'll start with I'll start with sort of some of your questions on what we saw from below the line maybe helpful for yogurt or at all to create a little bit of commentary in terms of their perspective on retail for 2024, I think if we if we just start with below the line. Obviously, we saw a lot of favorability in two.

Jonathan: Thanks, James. I'll start with sort of some of your questions on what we saw from below the line. It would be helpful for Jochen or Adele to provide a little bit of commentary in terms of their perspective on retail for 2024. I think if we just start with below the line, obviously, we saw a lot of favorability in 2023 relative to some pension adjustments and things of that nature. So that's the primary driver in terms of what you see from that standpoint.

And in 'twenty, three relative to some pension adjustments and things of that nature.

So thats the primary driver in terms of what you see from that standpoint, obviously shareholders are benefiting from an EPS perspective with the focus that we have on on share buybacks that we kind of walked through.

Jochen Zeitz: Obviously, shareholders are benefiting from an EPS perspective with the focus that we have on share buybacks that we kind of walked through a little bit earlier today. So certainly for us, a pretty big consideration point, I think, for how we reward shareholders. Relative to retail, as you said, the flat to up nine kind of equates to $163,000 to $178,000. Jochen, you know, James, as you replied back, kind of touched on the fact that that is a wider range than what we normally see for a variety of reasons. But Jochen, do you want to comment any further on that?

A little bit earlier today.

Certainly for us pretty big.

Pretty big consideration point, I think for how we reward shareholders relative to retail as you said flat to up nine kind of equates to 163000 to 178000 Youll can.

James as you reflect back kind of touched a little bit on the.

The fact that that is a wider range than what we normally see for a variety of reasons, but youll can do you want to comment any further on that.

Jochen Zeitz: Well, not much to add to what I already indicated earlier, it's early in the year; we really need to get closer and into the riding season at this point in time. You know, we believe we have an extraordinary product, and early reception is great. But the overall environment in terms of interest rates is certainly a headwind, which we've experienced very much throughout the entire year of 23, and we'll just have to see how it all works out, and our retail guidance is the global guidance; it's not just the US or North America guidance. Touring, while we've been able to shift the mix in the international markets, including profitability more towards our profit focus categories, it has the most significance in the North American market, so that requires the US market to pull a lot of weight when it comes to retail growth in 24, and we just have to see what's possible. Early indications right now with our new model year launch are positive, but it's way too early to really give more concrete guidance than what we've said. That's really helpful.

Well not much to add to what I already indicated earlier, it's early in the year.

We really need to get closer and into the riding season at this point in time, we believe we have an extraordinary product early reception is great.

But the overall environment in terms of interest rates is certainly a headwind which we.

Very much throughout the entire year of 'twenty three.

And we'll just have to see how it how it all works out in our retail guidance. The global guidance, it's not just the U S or North America guidance touring why we've been able to shift the mix in the international markets, including profitability more towards our profit focused categories.

It has the most significance in the North American market, so that requires the U S market to.

Put a lot of weight when it comes to retail growth in 'twenty four and we'll just have to see what's possible early indications right now with our new model year launch a positive, but it's way too early to really give more concrete guidance than what we've said.

That's really helpful. If I could just sneak in a clarification Jonathan is there any way to just think about the tax rate and the share count for 24, obviously those are.

James Hardiman: If I could just sneak in a clarification, Jonathan, is there any way to just think about the tax rate and the share count for 2024? Obviously, those could be some swing factors, and I just want to make sure everybody's on the same page. Yep. No, great question.

So it could be some swing factors I just want to make sure everybody's on the same page.

Yes, no great question, and I think as we think about share count obviously.

Jonathan: And I think as we think about the share count, obviously, you know, we've talked through our commitment to looking at share buybacks consistent with what we looked at in 2023. So, obviously, that cadence will come down over time. So, from a share buyback perspective, we'd probably buy back throughout the quarters, obviously not in one big block at a time. But I think that's the piece that's worth factoring in, looking at share price movement, looking at the dollar target that we've set, and then just thinking through how that will impact us across the year. James, I've given Jonathan and the finance team the challenge to be able to give guidance on EPS as of next year, so mark your calendar. We'll hopefully be able to achieve that. I am looking forward to it. Thanks, guys. All righty.

We've talked through our commitment.

Looking at share buybacks consistent with what we looked at in 2023, So obviously that cadence will come down over time, so from a from a share buyback perspective, we've probably buyback.

Throughout throughout the quarters.

Obviously not in one big block at time, but I think that's the piece that's worth factoring in is looking at share price movement looking in the dollar target that we've set and then just thinking through how that will impact across the year.

James I've, given Jonathan and the finance team the challenge too.

Were you able to give guidance on EPS as of next year. So Mark your calendar will hopefully be able to achieve that.

Looking forward to it thanks, guys alright.

Tristan Thomas-Martin: Thanks, James. Our next question is from the line of Tristan Thomas-Martin with BMO Capital Markets. Your line is live. Hey, good morning.

Alrighty Thanks James.

Our next question is from the line of Tristan Thomas Martin with BMO capital markets. Your line is less.

Hey, good morning.

Jochen Zeitz: I just wanted to kind of get your thoughts on the model year 24 touring pricing. If I look at, for example, the 24 Street Glide, it's more expensive than a base street glide for 23, but I think the features are much more comparable to, let's say, a street glide special, where 23 is more expensive than a 24.

I just wanted to kind of get your thoughts on the model year 'twenty four towards pricing. If I look at for example, 20 <unk> Street glide, it's more expensive than our base three club for 'twenty three but I think the features are much more comparable to let's say like a street glide special where 23 was more expensive than a 24.

Jochen Zeitz: So just kind of wanted to get your thoughts on kind of some of the changes, the model consolidation, is this just an overall way to address affordability without just straight up lowering MSRPs or getting too promotional? Well, we wanted to make sure that our new products were competitive, and we believe that we've accomplished that for sure given the early reactions that we've seen in the market. And as you rightly said, we included several key features and benefits that we previously had in our ST and special models in our mid-levels now and increased the price from the base level to our base models to reflect the additional content that now comes as standard equipment.

So just kind of wanted to get your thoughts on kind of some of the changes. The model consolidation is this just an overall way to address affordability without just straight up lowering of those rfps are getting too promotional.

Yeah.

Well, we wanted to make sure that our products are competitive and we believe that we've accomplished that for sure given the early reactions that we've seen in the market and as you rightly said we included several key features and benefits.

As we previously had in our SD and special models in our in our mid levels now and and an.

<unk> increased the price from the base level.

Our base models to reflect the additional content that now comes as a standard equipment. In addition, we are offering a lot of P&A packages that allow a customer to to essentially get up to a product that is S T and special pricing level and.

Jochen Zeitz: In addition, we are offering a lot of P&A packages that allow our customers to essentially get up to a product that is at the ST and special pricing levels and features levels, and that's what we've tried to achieve by reducing, at this point, the overall complexity of our touring setup. I think it's the best of both worlds that we're achieving with our new pricing. It's competitive, but it's still $24,999, and that's, while higher than our base models, it's lower than our STs and specials.

And features level and that's what we've tried to achieve by reducing at this point overall complexity of our Turing setup. So it's I think it's the best of all worlds that we are achieving with with our new pricing.

It's competitive but it's still at 24 990 999 and.

While higher than our base model is it slower than <unk> and special and again, if you look at the pricing actions that we've taken.

Jochen Zeitz: Again, if you look at the pricing actions that we took in the fourth quarter and our carryover products, that needed to consider the new pricing for our new models. So, STs and Specials needed to give support and continue to give dealer support to price them accordingly in order to move them out and sell them. I think that's essentially the key decision that we've made and so far, it's proven very successful, and the comments that you see in online forums, people understand that there are a lot more key features and a lot more benefits that we've previously had in our STs and are now, especially, already incorporated in our mid-level. Got it.

In the fourth quarter, and our carryover product that needed to.

Consider.

The new pricing for new models, so as decent special needed to we need to get needed to give support and continue to need <unk> support to price them Accordingly in order to move them out and sell them.

And I think that that's essentially the key decisions that we've made and so far it's proven very successful in.

The comments that you would see in online forums people understand that there's a lot more features and look more benefits that we previously had an hour as decent, especially now already incorporated in our mid levels.

Noah Zatzkin: Thank you. Thank you for your question. Our next question comes from the line of Noah Zatzkin with KeyBank.

Got it thank you.

Thanks for your question.

Next question comes from the line of Noah is that skin with Keybanc.

Kareem: Your line is live. Hi, thanks for taking my question. Maybe just one on Livewire for me, you know, looking out over the next several years, how are you thinking about the unit and profitability ramp there? And has anything changed in terms of your medium-term view for the business and the opportunity? Thanks.

Your line is live.

Hi, Thanks for taking my question, maybe just one on live wire for me.

<unk> out over the next several years, how are you thinking about the unit profitability ramp there and has anything changed in terms of your medium term view.

For the business and the opportunity thanks.

Thank you Noah.

Kareem: But I guess when we look at our live wire right now, our focus is really about product innovation and cost improvement. We want to reach profitability as fast as we can. So we're in a strong position to capture the opportunity as the market develops. So right now, we remain focused on our long-term vision of being the leader in the two-wheel EV industry, driven again by innovation and performance in the short term, and a strong internal plan to reach profitability as soon as possible. For your questions, Our next question is from the line of David McGregor with Longbow Research. Your line is live. Yes, good morning.

But I guess when we look at Libre right now our focus is.

Really about product innovation and cost improvement, we want to reach profitability.

As we can so we're in a strong position to capture the opportunity of the market develop so right now we remain focused on our long term vision of being the leader to really EV industry, driven again by innovation in both online short term.

Strong internal plan to reach profitability as soon as practical.

Thanks.

Thanks for your question.

Our next question is from the line of David Macgregor with Longbow Research. Your line is live.

Yes, good morning, and thanks for taking my call my questions I guess I just wanted to follow up on the LIBOR discussion cream could you dig a little bit deeper into kind of the experience. This quarter consumer reaction to these two del Mar you shipped 660 bikes in 'twenty three could you talk about kind of retail sales and how that may have grown through the year and you are.

David McGregor: Thanks for taking my call. My questions: I guess I just wanted to follow up on the LiveWire discussion. Kareem, could you dig a little bit deeper into kind of the experience this quarter, the consumer reactions, the S2 Del Mar. You shipped 660 bikes in 23. Could you talk about retail sales and how that may have grown through the year? And you're talking about 126 dealers this year; what are you expecting to grow that to in 2024? Thank you. Yeah, thanks for the follow-up question.

Talking about 102006 dealers. This year, what are you expecting to grow that too in 2024. Thank you.

Yes. Thanks for the question follow up question when I look at this stage, we feel pretty good about the Q.

Kareem: When you look at this page, we feel pretty good about the Q4 shipments because we have more orders in hand than shipments done so far. So we feel pretty good about retail and the conversion in the short term. Now, we're working really hard on creating a retail engine and supporting our dealers, which is why you saw that we reached 126 retailers globally. Obviously, when you look at the number of bags, it makes it a very attainable target for retailers to achieve at retail.

Q4 shipments because we have more orders in hand.

Shipments done so far so we feel pretty good about retail and the conversion in a short short term now we absolutely working really hard on.

Creating a retail LNG and supporting our dealers, which is why useful that we reached 126 retailers globally.

Obviously, when you look at the number of bikes.

It makes it very obtainable target for retailers to achieve.

Kareem: So our goal is to essentially, in 2024, match retail with wholesale. So the team is hard at work to deliver on making retail momentum sustained and support wholesale. Thanks. Good luck. Our next question comes from a line from Jamie Katz with Morningstar. Your line is live.

So our goal is to so essentially in 2024 much retained with wholesale.

So what you mean.

That work to deliver on.

Making retail momentum.

<unk> and <unk> to support horseman.

Great Thanks, and good luck to them.

Thank you.

Our next question comes from the line of Jamie Katz with Morningstar. Your line is flash.

Hi, Good morning, I wanted to focus in on market share, which actually improved quarter over quarter.

Jamie Katz: I want to focus in on market share, which actually improved quarter over quarter. But I'm wondering, you know, where you guys are trying to structurally drive that over time? Or is it something that this 40% level may be the new normal given the shift in consumer demand for other types of bikes? Would you help us think about that in the longer term? Thank you, Thanks, Jamie. Well, our focus as part of this strategy has been very clear, you know, shifting the mix towards our core focus, our core categories, right? That's tri-cruiser, touring, and that shift has proven extremely successful.

But I'm wondering where you guys are trying to structurally drive that you over time or is it something that may be.

40% level is.

The new normal given the shift in consumer demand to other types of bikes could you help us think about that longer term. Thanks.

Thanks, Jamie.

Our focus as part of this strategy has been very clear.

Shifting the mix towards our core focus of our core categories right. That's try cruiser touring and that shift has proven.

Being the successful we've mentioned earlier you know average unit.

Jochen Zeitz: We've mentioned earlier, you know, our average unit profitability is up from $1,300 to $3,700. So, you know, not being obsessed by unit sales over the last few years served us well in terms of overall profitability, which has improved from 6.3% to 13.6%, so an extraordinary improvement. That said, obviously, we want to grow our business too, and we believe that with our new model, year 24, we have that opportunity. We have the right foundation, but we also need a more accommodating economic environment. And when I say economic environment, then I'm talking about our industry and high interest rates that, you know, are a tough challenge for many of our core customers.

The abilities up from 1300 to $3700.

So you know not being obsessed by unit sales over the last few years served us well in terms of overall profitability, which has improved from six 3% to 13, 6% sort of extraordinary improvement that said, obviously, we want to grow our business to we believe that with our new model year 'twenty.

We have that opportunity we have the right foundation, but we also need to.

More accommodating economic.

Environment, and when I say economic environment than I am talking about our industry and high interest rates that.

A tough challenge for many of our core customers.

Jochen Zeitz: So, I don't want to evade the answer to your question, but, you know, our focus is on growth and profitable growth. That's how we will complete our Hardwire Stage 2 strategy at the end of 25. What comes after that, we will address at the appropriate time. We do look at market shares, but we're not obsessed with market shares. I've never been, and I never will.

<unk>.

I don't want to evade you had the answer to your question, but our all our focus is on growth and profitable growth and that's that's how we will complete our hotwire as stage two strategy at the end of 'twenty five what comes after that we will address at the appropriate time.

We do look at market shares, but we are not obsessed by market shares I've never been and never will but of course, it's pleasing to see that in this tough environment, especially in the fourth quarter, we were able to grow our touring sure. Thank.

Jochen Zeitz: But, of course, it's pleasing to see that in this tough environment, especially in the fourth quarter, we were able to grow our touring share back to 75%, and large cruisers 80%. I mean, that's commanding. You know, give or take 5%, that's always the swing that you're going to see throughout the year. Also, on a rolling 12-month forward or backward. And I think that's, you know, likely where we're going to be. But we believe there's an opportunity to take market share, especially in touring and through our trike offering, because we have a competitive and great product. And that should see a positive development certainly next year if all our plans come to fruition, and hopefully, that will carry through in future years as well, at least until the end of our Hardwire Stage 2, which is at the end of 25. The touring platform, as I mentioned, has been in development since 2020, and it's the first refresh.

Back to 75% large cruiser, 80% I mean, that's that.

It's commanding.

Give or take 5% that's always the swing that youre going to see throughout the year.

Also on a rolling 12 month forward or backward.

I think thats.

Like <unk>, where we're going to be but we believe there is an opportunity to take market share, especially in touring and through a trike offering because we have competitive great product and that should see a positive development certainly next year, if all our plans come to fruition.

Hopefully that will carry through in future years as well at least until the end of our Aqua stage, two which is at the end of 'twenty five the Turing platform as I mentioned is a.

It has been in development since 2020, and it's the first refresh and in fact, it sort of refreshes the complete rebuild from the bottom up in every respect and I think the positive reactions give us that opportunity, but it's a little early to comment how lasting that is going to be but.

Jochen Zeitz: And in fact, it's not a refresh; it's a complete rebuild from the bottom up in every respect. And I think the positive reactions give us that opportunity. But it's a little early to comment on how lasting that is going to be.

Jochen Zeitz: But we feel very good about it. Thank you. And we have a final question for today from the line of Brandon Rohl with DA Davidson. Your line is live.

But we feel very good about it.

Thank you.

And we have a final question for today from the line of Brandon Rolle with D. A Davidson your line is live.

Brandon Rohl: Thank you for squeezing in my question here. Just a question on your margin guidance. I think you had called out additional manufacturing costs as being a headwind to guidance this year. Could you size up the amount of headwind from those additional manufacturing costs and then provide any additional color on feedback you're receiving for the model year 24 lineup?

Thank you for squeezing my question here just.

Just a question on your margin guidance I think you had called out additional manufacturing cost as being a headwind.

Our guidance this year could you size up you know the amount of headwind from those additional manufacturing costs and then provide any additional color on feedback youre receiving for the model year 'twenty four lineup. Thank you.

Jonathan: Thank you. All right, thank you, Brandon. We'll start with your question on what we're seeing from a manufacturing perspective and some of the noise that we have within there. So obviously, we've put a $400 million price target out there from a productivity perspective. We walked through what we've seen over the last couple of years and where we anticipate 2024 landing. So, you know, about 100 million dollars of positivity that lands in 2024 to help offset what we see from an inflationary perspective.

Alright, Thank you Brandon.

We'll start with your we'll start with your sort of question on what we're seeing from a manufacturing perspective, and some of the noise that we have within there. So obviously, we've put a $400 million price target out there from a productivity perspective, we walked through what we've seen over the last couple of years, and where we envision 2024 landing.

So about $100 million of positivity that lands in 2024 to help offset what we see from an inflationary perspective.

Jonathan: As you look at that movement over time, we obviously feel pretty positive about it. When you kind of talk through some of the headwinds that we see as we take a look at what this means from a margin perspective, obviously, depending upon where we fall from an overall volume perspective with our fairly wide range, we want to make sure that we are looking at moving our retail and wholesale in concert with each other. We obviously have a lot that we have to pay attention to from a structural cost and as you think through sort of a leverage or de-leverage impact. And so I think from that standpoint, certainly a little bit of noise as we just try to work through what that could mean from an overall leverage or de-leverage impact.

You look at that movement over time, we obviously feel pretty positive about that when you kind of talk through some of the headwind that we see as we take a look at what this means from a margin perspective.

Obviously, depending upon where we fall from an overall volume perspective, with our with our fairly wide range as we wanted to make sure that we are looking at moving.

Our retail and wholesale in concert with each other.

We obviously have a lot that we have to pay attention to from a structural cost and as you think through sort of a leverage or deleverage.

<unk>.

And so I think from from that standpoint, certainly a little bit of noise. As we just try to work through what that could mean from an overall leverage or deleverage impact.

Jonathan: And then as we think about manufacturing optimization, supply chain efficiency, as Jochen talked about, this is a transformative launch as you look at the significance of what we have with Street Glide and Road Glide, which are now hitting our dealers. Obviously, as you have sort of a very, very major change that occurs all the way from your suppliers through to what we end up moving into our dealerships, there's a lot of, there's a lot of change and a lot of variability that can occur with that. We feel like it's been a fairly smooth launch so far, but we certainly always want to make sure that we are living in a world where we're not over-promising to anyone. And I think beyond that, Jochen and Adele, do you have questions on, or, sorry, do you have some comments relative to the 25 model year reception? Well, look, there is not much more to add.

And then as we think about manufacturing optimization and supply chain efficiency as Johan talked about this is this is a transformative launch as you look at the significance of what we have with street glide and road glide that are that are now hitting our dealers.

Obviously as you have sort of.

Very very major change that occurs all the way from your suppliers through to what we ended up moving into our dealerships Theres a lot of there's a lot of.

Just a lot of change and a lot of variability that can occur with that we feel like it's been a fairly.

Fairly smooth launch so far, but we certainly always want to make sure that we have.

Our living in a world, where we're not over promising to anyone.

And I think beyond that.

On the dental Jeff question on or I am sorry, you have some comments relative to the 25 model year reception.

Well go you ahead of time of your time.

24, well look I'm not much much more to add maybe overall I would say.

Jochen Zeitz: Maybe overall, I would say there's been a really positive reaction to our overall pricing strategy when it comes to the carryover product and our new product. I think that the decisions we've taken in the fourth quarter will help us in 2024, and I think you know the unanimously positive reactions to our new Street Guide Road Glide. Lots of excitement about our new CVO ST. We've started the trend with performance and picked up on a trend that we saw years ago developing, especially on the west coast but in other parts of America as well, and, as I mentioned in my speech, we've tried to push that hard with our King of the Beggars race series and our race bike, so really bringing a performance aspect into our product is now shown with our CVO Road Glide

This really positive reaction to our overall pricing strategy with when it comes to the carryover product in our new product I think the decisions we've taken the fourth quarter.

<unk> will help it will help us.

In 'twenty four.

And.

Thank you.

Unilaterally positive reactions to our to our new streetcar road glide lots of excitement about our new CV OSD.

We started the trend with performance and picked up on the trends that we saw years ago, developing especially on the west coast, but other parts of America as well and we've as I mentioned in my speech that we have to.

Sorry to push that hard with a king of the Beggars race series and our array spikes, so really bring it performance aspect.

Our product is now showing with our CBO road glide SD fantastic product very well priced.

Jochen Zeitz: Fantastic product very well priced and and lots of excitement I've been riding, big group of influencers in Las Vegas and I mean there was just a lot of excitement around our touring new touring bikes I don't want to forget our first CVO ever outside of the touring category with our adventure touring bike Also a testament to our development on continuous focus on developing the adventure touring market. So overall, We feel good about it and also the pricing in our entry product, Nightstar, that we've adjusted accordingly, great product especially for new riders as well as an entry bike so we should see some positive development that in you know overall in the year but as I said it's early days we don't want to get overly excited here um you know 23 was a tough year and interest rates haven't changed and the outlook certainly doesn't suggest that that's going to happen in the prime riding season so we'll have to balance our our excitement for the new product with realities of the box, Thank you, and if I could just follow up on the manufacturing cost question, would you be able to break out the initial startup costs for the new touring production line versus just additional manufacturing costs throughout the year? I think all we can say in the largest investment in a single platform that Harley-Davidson ever made.

Lots of excitement I've been writing.

A big group of Influencers in Las Vegas, and I mean, it was just a lot of excitement around our touring new touring bikes I I don't want to forget.

First CBO ever outside of the touring category with our adventure touring bike also a testament to our development and continuous focus on developing the adventure touring market. So overall.

We feel good about it and also the pricing entry product a nice stuff that we've adjusted.

Accordingly, great product, especially for new riders as well as an entry bike.

So we should see some positive developments that are in.

In the year, but as I said, it's early days, we don't want to get overly excited.

<unk>.

23 was a tough year and interest rates haven't changed.

The outlook certainly doesn't suggest that that's going to happen in the prime the riding season. So we'll have to balance our our excitement for the new product with realities of the market.

Thank you and if I could just follow up on the manufacturing cost question would you be able to break out the initial startup costs for the new touring a production line versus just additional manufacturing costs throughout the year.

All we can say in the largest investment in a single platform that Hollywood.

Jonathan: Yep, and I think, Brandon, the good news is that you will hear more from us as we move through the year and talk about our financials and do our year-over-year comp. So, in our standard fashion, we'll make sure that we're continuing to provide breakouts that we're seeing from a revenue perspective. We'll obviously walk through and talk through the P&L. The promise that we do make is that throughout 2024, we certainly will be talking about this. And, you know, as you would imagine, 2024 is a little bit noisy when you look at some things quarter-over-quarter and some of the changes that we anticipate that we'll see in terms of things, you know, shipping units into the dealer network.

Davidson ever made.

Yes, and I think and I think Brandon the good news is that you will hear more from us as we move through the through the year and talk about our financials and do our kind of year over year comp so in sort of our in our standard fashion, we will make sure that we're continuing to provide breakouts that we're seeing from a revenue perspective, we'll obviously walk through and talk.

Through the P&L, so that the promise that we do make is that throughout 2024, we certainly will be talking about this and as you would imagine 2024 is a little bit noisy when you look at some things quarter over quarter and some of the changes.

That we envisioned in that we'll see in terms of in terms of things shipping shipping units into the dealer network and as <unk> talked about throughout his prepared comments and I talked about <unk>, obviously getting that match between retail and wholesale is something that we feel is very important but yes, we'll be excited to talk about that with you throughout this year.

Jonathan: And as, you know, Zeokin talked about throughout his prepared comments and I talked about in mine, obviously getting that match between retail and wholesale is something that we feel is very important. But, yeah, we'll be excited to talk about that with you throughout this year. Great, thank you. You're welcome. Thank you. Thank you.

Great. Thank you.

Youre welcome. Thank you.

Thank you to close out today I'd like to hand, the call back over to CEO European sites for any closing comments.

Jochen Zeitz: To close out today, I'd like to hand the call back over to CEO Jochen Zeitz for any closing comments. Yes, well, thank you again to everyone for joining us today. Before we sign off, I just wanted to take the opportunity to thank Adele O'Sullivan for her many contributions to the company over the past three years and to wish her very well in her future endeavors. So, thank you very much, Adele, and thank you all for joining us this morning. Thank you, ladies and gentlemen. Thank you, and ladies and gentlemen, this does conclude today's conference call. Thanks for joining. You may now disconnect. Have a great day! www.microsoft.com

Yes, well. Thank you again to everyone for joining us today before we sign off I just wanted to take the opportunity to thank Adele is Sullivan for her many contributions to the company over the past three years.

And two we showed a very well on her future endeavors. So thank you very much Adele and thank you all for joining us this morning.

Thank you ladies and Jim.

Thank you and ladies and gentlemen, this does conclude today's conference call. Thanks for joining you may now disconnect and have a great day.

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