Harley-Davidson Q2 Earnings Miss Estimates, Revenues Fall Y/Y

Harley-Davidson (HOG) reported a significant Q2 2025 underperformance, with adjusted earnings of $0.88 per share missing estimates and down from $1.63 year-over-year. Consolidated revenues dropped 19% to $1.31 billion, primarily due to a 27% decline in motorcycle revenues and a 28% decrease in global shipments to 35,800 units. Despite the core motorcycle business struggles, the company updated its full-year 2025 operating income guidance for Harley-Davidson Financial Services (HDFS) to $525-$550 million, following a new strategic partnership with KKR and PIMCO, while also narrowing LiveWire's expected operating loss.

Analysis

Harley-Davidson's second-quarter 2025 results reveal a significant deterioration in its core business, with adjusted earnings per share of 88 cents missing the consensus estimate of 99 cents and falling sharply from $1.63 in the prior-year quarter. The weakness was broad-based, as consolidated revenues declined 19% to $1.31 billion. The primary driver was the Motorcycle and Related Products segment, where revenues fell 23% due to a 28% year-over-year drop in global shipments to 35,800 units and a 15% decline in global retail sales. This demand slump was particularly acute in the key North American market, with retail sales down 17%, and was mirrored by double-digit declines in Asia Pacific and Latin America. While the electric-focused LiveWire division saw its operating loss narrow, its shipments collapsed by 65%, rendering its financial impact minimal. In a notable strategic shift, a new partnership with KKR and PIMCO for the Harley-Davidson Financial Services (HDFS) segment has led to an updated full-year operating income forecast of $525-$550 million, providing a degree of stability. However, the company's decision to withhold its 2025 financial outlook for the core motorcycle business, citing tariff uncertainties, combined with the suspension of share repurchases, underscores a profound lack of visibility and management caution.

Key Decisions for Investors

• Investors should exercise significant caution given the severe, double-digit decline in core motorcycle shipments and retail sales, which points to a fundamental weakening of consumer demand.
• The withholding of financial guidance for the main HDMC segment, alongside the halt in share buybacks, signals a high degree of management uncertainty and suggests a defensive posture until operational visibility improves.
• Monitor the performance of the Harley-Davidson Financial Services (HDFS) segment, as its new strategic partnership and stable income guidance may provide a valuation floor, contrasting sharply with the operational struggles in the motorcycle division.