AMD266 September 2021 Aftermarket Moto Design 266 September 2021

SEPT 2021




H-D Q2 - " Strong Demand , Improved Margins , Volatile Supply Chain Environment " as Harley Launches H-D1 Marketplace

SEPT 2021

ISSUE # 266


Overall good results for Q2 , backed up by strong evidence that the company is meeting initial Hardwire Strategic Plan objectives , failed to persuade investors that the ' Back Half ' headwinds and margin hits that are stored up justify sustaining or improving the share price . From a 2021 high of around $ 52.00 in mid-May , Harley ' s share price had lost north of 10 % of value to trade at around $ 40.00 in the space of eight weeks either side to the Q2 fiscals announcement . This was despite clear evidence that the Strategic Plan objectives are not just starting to be met , but that they appear to be robust ' proof points ' that the Jochen Zeitz driven recovery is going to deliver investor value . Indeed , in addition to margins likely to be softer in the second half of the year ( operating margin is forecast at negative single digits for H2 from being positive mid-teens in H1 ), it would appear that Harley is already a

victim of its own success in unit sales terms . Principally , but not exclusively , referencing the already sold-out-for- 2021 Pan America , Zeitz told investors that the hoped for rebuild in dealer inventories in Q2 did not happen , and is not now likely to happen until into 2022 at the soonest - simply because
CFO Gina Goetter Harley has been and will continue to " sell what we make , essentially ." Worldwide H-D new retail motorcycle dealer quarter end inventory was at 21,000 units by the end of Q2 in 2020 . Having reduced to some 14,000 units

SPORTSTER S by the end of Q1 this year , Harley has seen it stay low ( at 13,000 units ) by the end of Q2 this year - rather than seeing an expected rebound . Zeitz said : " I ' m pleased with the pace of improvements and with the strong quarter that we have delivered . " We are starting to see the initial proof points as we execute our Hardwire Strategy , as demonstrated by these positive financial results . We are encouraged by the signs of consumer positivity in the market , however , we remain mindful of the significant supply chain challenges that we expect to continue to impact the sector ." Q2 H-D total consolidated revenue was up 77 % ( at $ 1.5bn over Q2 2020 ), with North America Q2 retail sales up 43 % over Q2 2020 and , more significantly , up 5 % over Q2 2019 . Bottom-line results reflect significant operating income improvement with strong results in both the Motorcycles and the Financial Services segments . This quarter has seen the relaunch of LiveWire as a standalone Harley

Continues on page 8 >>>
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The Sportster S is the first model in Harley ' s " all new sport category "; we also have pictures of a ' base-level ' model that is undergoing consumer research ... see pages 14-16 .