Harley-Davidson, Inc. 10-Q Summary: Quarter Ended June 30, 2026
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026. Harley-Davidson, Inc. operates through three reportable segments: Harley-Davidson Motor Company (HDMC), LiveWire, and Harley-Davidson Financial Services (HDFS). The Company recently announced a new strategic plan, "Back to the Bricks," aimed at restoring performance and delivering profitable growth through cost reductions and portfolio enhancements.
Key Financial Metrics
| Metric | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Total Revenue | $1,230.4 million | $1,307.1 million | $2,403.0 million | $2,636.3 million |
| Net Income (Attributable to H-D) | $79.8 million | $107.6 million | $104.6 million | $240.7 million |
| Diluted EPS | $0.75 | $0.88 | $0.97 | $1.95 |
| Operating Income | $76.0 million | $112.4 million | $99.5 million | $272.9 million |
| Cash and Equivalents | $1,895.8 million | $1,587.7 million | $1,895.8 million | $1,587.7 million |
| Operating Cash Flow (YTD) | $(59.7) million | $509.5 million | $(59.7) million | $509.5 million |
| Total Debt (Outstanding) | $2,242.5 million | $6,854.7 million | $2,242.5 million | $6,854.7 million |
Material Changes vs. Prior Period
- Revenue Decline: Total revenue decreased 5.9% year-over-year in Q2 2026. This was driven primarily by a 54.5% drop in HDFS revenue due to the sale of the majority of its retail finance receivables in late 2025, which reduced interest income. HDMC revenue increased 5.8% due to higher motorcycle shipments.
- Profitability Pressure: Net income attributable to Harley-Davidson, Inc. fell 25.8% in Q2 2026. Operating income declined 32.4% primarily due to the structural reduction in HDFS earnings following the receivables sale.
- Segment Performance:
- HDMC: Operating income increased 18.0% to $72.3 million, driven by higher shipments, lower manufacturing/tariff costs, and lower operating expenses, partially offset by unfavorable product mix and raw material pricing.
- LiveWire: Operating loss narrowed slightly to $17.9 million due to lower operating expenses, despite a 51.6% revenue increase.
- HDFS: Operating income dropped 69.0% to $21.6 million. While interest income fell significantly, the segment benefited from lower interest expense and a reduced provision for credit losses.
- Cash Flow: Operating cash flow turned negative ($59.7 million outflow) for the first six months of 2026 compared to a $509.5 million inflow in 2025. This shift is largely due to the classification of retail finance receivable originations and sales as operating activities, alongside restructuring costs.
Guidance, Outlook, and Risks
- Revised 2026 Guidance:
- Shipments: Raised full-year wholesale shipments and worldwide dealer retail sales guidance to 133,500–138,500 units (previously 130,000–135,000).
- HDMC Operating Income: Revised to $10 million–$50 million (previously $40 million loss to $10 million income).
- HDFS Operating Income: Revised to $55 million–$70 million (previously $45 million–$60 million).
- LiveWire: Reaffirmed operating loss guidance of $70 million–$80 million.
- Strategic Plan: The "Back to the Bricks" plan targets $150 million in cost reductions and an additional $75 million in profitability benefits by the end of 2027. It includes the introduction of the Sprint model and the return of the Sportster.
- Tariff Exposure: Estimated full-year 2026 tariff costs range from $75 million to $90 million. The Company recognized $19.8 million in tariff recovery benefits in Q2 2026.
- Credit Rating: Subsequent to the period end (July 8, 2026), S&P Global Ratings lowered the Company's short-term rating to 'B' and long-term rating to 'BB+' with a Stable outlook. Moody's and Fitch maintained their ratings as of June 30, 2026.
- Contingencies: The Company faces potential costs of $140 million to $450 million related to a brake hose assembly compliance matter with supplier Proterial Cable America, Inc., though management expects an "Inconsequentiality Determination" from NHTSA to avoid a recall.
Investor Verification Checklist
- HDFS Portfolio Rebuild: Verify the pace of HDFS retail finance receivable originations and the associated impact on future interest income and credit loss provisions.
- Tariff Mitigation: Monitor the status of tariff refund claims and the potential for new trade restrictions impacting the $75–$90 million cost estimate.
- Brake Hose Contingency: Track NHTSA's decision on the "Inconsequentiality Determination" regarding the Proterial Cable brake hose assemblies to assess potential recall costs.
- Cost Reduction Execution: Assess progress on the "Back to the Bricks" cost-saving initiatives and the impact on HDMC operating margins.
- Liquidity and Credit Ratings: Review the impact of the recent S&P rating downgrade on borrowing costs and access to capital markets.