Business Context and Reporting Period
This summary covers the Form 10-K Annual Report for Harley-Davidson, Inc. for the fiscal year ended December 31, 2025. The Company operates through three reportable segments: Harley-Davidson Motor Company (HDMC), LiveWire, and Harley-Davidson Financial Services (HDFS). The reporting period was characterized by a challenging macroeconomic environment, including high interest rates and depressed consumer sentiment, which adversely impacted demand for premium discretionary products. The Company concluded its "Hardwire" strategic plan in 2025 and is developing a new strategic plan under new CEO Artie Starrs, expected to be announced in Q2 2026.
Key Financial Metrics
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Total Revenue | $4,473.2 million | $5,186.8 million | (13.8%) |
| Net Income (Attributable to H-D) | $338.7 million | $455.4 million | (25.6%) |
| Diluted EPS | $2.78 | $3.44 | (19.2%) |
| Operating Income | $386.6 million | $416.6 million | (7.2%) |
| Operating Cash Flow | $568.9 million | $1,063.8 million | (46.5%) |
| Cash and Cash Equivalents | $3,091.7 million | $1,589.6 million | +94.5% |
| Total Debt (Outstanding) | $2,967.0 million | $6,960.4 million | (57.4%) |
Segment Performance
- HDMC: Reported an operating loss of $28.7 million (vs. $277.8 million income in 2024) due to lower shipments, unfavorable manufacturing leverage, and tariff impacts. Revenue declined 13.2% to $3,578.3 million.
- LiveWire: Operating loss narrowed to $75.0 million (vs. $109.6 million in 2024) driven by cost reduction initiatives. Revenue was $25.7 million.
- HDFS: Operating income surged to $490.4 million (vs. $248.4 million in 2024). This increase was primarily driven by a $191.4 million benefit from the release of the allowance for credit losses on receivables sold in the HDFS Transaction and a $27.9 million gain on the sale of securitization beneficial interests.
Material Changes vs. Prior Period
- Wholesale Shipments: HDMC shipped 124,477 motorcycles in 2025, a 16.4% decrease from 2024. Worldwide dealer retail sales declined 12.4%.
- HDFS Transaction: In late 2025, the Company entered a strategic transaction with KKR and PIMCO. HDFS sold the majority of its existing retail finance receivables ($4.1 billion) and 95% of its residual interests in securitization trusts. This resulted in the deconsolidation of $1.9 billion of net finance receivables and $1.7 billion of related debt.
- Tariff Impact: New or increased tariffs implemented in 2025 cost the Company approximately $67 million. The Company estimates 2026 tariff costs could range from $75 million to $105 million.
- Debt Reduction: Total debt decreased by approximately $4 billion, largely due to the HDFS Transaction proceeds used to redeem medium-term notes and pay down a term loan.
Guidance, Outlook, and Risks
2026 Guidance
- Shipments: Expected wholesale shipments and worldwide dealer retail sales of 130,000 to 135,000 units.
- HDMC Operating Results: Expected range of $40 million operating loss to $10 million operating income, impacted by unfavorable manufacturing leverage and full-year tariff costs.
- LiveWire Operating Loss: Expected to be between $70 million and $80 million.
- HDFS Operating Income: Expected to be between $45 million and $60 million, significantly lower than 2025 due to the reduced retail finance receivable balance following the HDFS Transaction.
- Capital Investments: Expected to be between $175 million and $200 million.
- Share Repurchases: The Company is pausing near-term discretionary share repurchases until the new strategic plan is announced, excluding shares due under the Accelerated Share Repurchase (ASR) program.
Key Risks and Contingencies
- Supply Chain & Tariffs: Ongoing geopolitical tensions and new tariffs (e.g., on steel, aluminum, and imports from China, Mexico, Canada, EU, India, Thailand) pose significant cost risks. A supplier bankruptcy (First Brands Group) in September 2025 required mitigation efforts.
- Product Liability: A potential recall related to brake hose assemblies from a Tier 2 supplier (Proterial Cable America) could cost between $140 million and $450 million if NHTSA does not grant an inconsequentiality determination. No costs have been accrued as the Company expects a favorable determination.
- LiveWire Viability: LiveWire faces risks related to slower-than-anticipated EV adoption, lack of government incentives, and the need to secure external funding. The Company does not plan additional investments beyond a $75 million term loan.
- Leadership Transition: The appointment of a new CEO and the development of a new strategic plan introduce execution risks.
Investor Verification Checklist
- HDFS Transaction Impact: Verify the sustainability of HDFS earnings in 2026 given the one-time benefits in 2025 and the reduced loan portfolio.
- Tariff Exposure: Assess the Company's ability to pass on the estimated $75-$105 million in 2026 tariff costs to consumers without further eroding demand.
- Brake Hose Recall: Monitor NHTSA's decision on the inconsequentiality petition regarding brake hose assemblies, as a recall could materially impact 2026 results.
- LiveWire Funding: Track LiveWire's progress in securing external capital under its At-The-Market program to sustain operations without further parent company support.
- Dealer Inventory: Monitor dealer inventory levels, which were down 17% at year-end 2025, to gauge the alignment of wholesale shipments with retail demand.