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Harley Financials and Growth Prospects for 2023

Will the Factory Ask Us to Change Our Tattoos to LiveWire?

by Bandit
2/24/2023


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Leather art from Adam Croft.
Leather art from Adam Croft.



Okay,

I’m not a financial advisor.
I’d rather build another motorcycle than chase the stock market. But take a look at my portfolio. I have maybe 20 motorcycles, one triumph, one Indian (I had two but traded my ’46 for a ’50 bobbed Panhead). What does that tell you? I’m a Harley guy. All bikers have a special relationship with Harley-Davidson. The question always is: Does the factory respect and embrace that relationship?



So, the final quarter, yearend financials surfaced, but they weren’t posted like they were in the past, you had to ask for them. However, the factory slipped into the mainstream media spotlight leading into 2023, in some troubling ways, and others indicate positive growth.

New Indian Sport Chief with T-bars.
New Indian Sport Chief with T-bars.



The boss professed going all electric. H-D planned to launch a Chinese built 350 cc model. The electric H-D component LiveWire took to its own platform and sales were down 30 percent. Ah, but this year is the 120th H-D Anniversary, which generally bodes well for sales. The M-8 seems to have issues on one hand with oil pump problems and cheap lower-end components. What about the new Sportster or the discontinued classic Sportster line, now being copied in China? Hang on 2023, there are two final thoughts: We are doomed and Indian is rising.



Where the hell do we start? How about the interview with Zeitz, the new CEO, who could be progressive or is he being bullied by the WOKE establishment? When the term WOKE surfaces, I think of a stir-fried Chinese dish. Hopefully, in the near future we will eat it and go about the business of riding free. In the meantime, the CEO announced that the iconic brand would go all electric in the future. “It’s just a matter of time.” You would have thought a tsunami of press and angry bikers would have stormed the iconic gates.

Let’s dig into the electric grid. The factory made the Livewire line of electric offerings a stand-alone business. What does that tell you, especially if all of H-D will ultimate be electric. Is Zeitz being smart and keeping the entities separate? If you study electric history, it’s had issues all the way back to Edison and Tesla. From time to time over the last 100 years, electric has been pushed but ultimately couldn’t do the job, like electric trolleys in the ‘30s.

The key to any business endeavor is an open and free market. Without it, we can’t test the true viability of any company. Governments, behind politics, will try to shove it down our throats until the money runs out. Then we might find discarded electric vehicles all over the country.

Here’s a comment from Greg Norman from Fox Business regarding the boss of Toyota:
Toyota’s president is questioning whether the push for the auto industry to phase out gas-powered vehicles and go exclusively electric is the right decision.

Akio Toyoda made these comments to reporters in Thailand, after the auto manufacturer said, around this time last year that it would produce 3.5 million electric vehicles annually by 2030, according to The Wall Street Journal.

"People involved in the auto industry are largely a silent majority," Toyoda said. "That silent majority is wondering whether EVs are really OK to have as a single option. But they think it’s the trend so they can’t speak out loudly."


Harley owns 89.4 percent of the LiveWire group. The company went public and they launched a new model in 2022 with supposedly 100 miles of city range.



“Today we are pleased to be opening reservations for the production edition of the S2 Del Mar – our second LiveWire motorcycle and the next step in the evolution of the LiveWire Brand,” said Jochen Zeitz, Chairman and CEO of LiveWire Group Inc. “The modular ARROW architecture underpinning the Del Mar, developed in-house at LiveWire Labs, demonstrates our ambition to lead in the EV space and establish LiveWire as the most desirable electric motorcycle brand in the world. We’re excited about the future at LiveWire and look forward to the company creating the path to the electrification of motorcycling.”

So, what’s the game. Is he hoping LiveWire will take off and he’ll just shut H-D down? Bada-bing.

Maybe there’s another reason to keep the LiveWire group in separate buildings. This just in from Clover at Entrepreneur: Electric cars burst into flames, not every day flames.

In the days following Hurricane Ian, the saltwater flooding in coastal areas caused the lithium-ion batteries in electric vehicles to combust.

Firefighters in Naples, Florida, needed to extinguish six blazes in EVs which had been submerged in seawater.

Heather Mazurkiewicz, a spokesperson for the fire department, said firefighters needed "thousands upon thousands" of gallons of water to extinguish the EV fires — much more than what a typical gas car fire would require.

There are serious issues with lithium batteries, and we won’t know the severity until the market grows or is forced to grow. I’m just an ordinary biker, but if someone hands me something the size of a dozen postage stamps stuck together and says it will start a 118-inch Harley, I get really suspicious and concerned about my shop and home. That’s a great deal of power crammed into a very small space.


• The Del Mar Launch Edition models will feature 3 unique colors; Pacific Gray, Nightfall Blue, and Asphalt Black at an MSRP of $16,999.

• Performance highlights include expected outcomes at production of output of 80 horsepower (59.6 kW), 184 ft-lb of torque, 75 minute 20%-80% recharge time using L2, and 431 pounds of weight, delivering projected 0-to-60 mph times of 3.1 seconds.

Issues will surface as the market grows but watch out.



Moving right along: I received a note from a brother a few months back about the new Chinese H-D. He was pissed about the model and taking the jobs away from American Workers. I hadn’t paid much attention, but we do have a very active Bikernet associate in India, so I get to hear about world markets. India generally can’t afford big Harleys, although they would love to own them. This bike will give dreamers a taste of Harley-Davidson all over the world without the cost or tariffs imposed on many imports.
 
The story of Harleys work with China's Qianjiang Group started in 2019. In 2022 two production licenses were granted and two models approved. The Qianjaing group bought Benelli and modified their 302s driveline with a longer stroked 338 cc engine. They’ve run into some issues, but what new model doesn’t?

Now the joint venture - called Zhejiang Jisheng Motor Vehicle Co, Ltd - has been given a manufacturing license and two models have been green-lighted for production. The original 338R has morphed into the 'X350' with the same chassis and styling as seen on the original sketches, but now using a 353 cc version of the Qianjiang parallel twin engine.
Here's a 500 Benelli. The factory said they couldn't share a photo of the new small H-D models, because they won't be sold in the US. Ah, but we had one. See above.
Here's a 500 Benelli. The factory said they couldn't share a photo of the new small H-D models, because they won't be sold in the US. Ah, but we had one. See above.


 
The factory also has type-approved a second model, the X500, based on the same engine and frame used by the Benelli Leoncino 500. This one will purportedly be configured with H-D legendary styling.

The approval documents report specifications including the X350, designated the 'HD350-10', will only make (36 hp), weighs 429 pounds wet, with a wheelbase of 4 feet 7 inches. Top speed is just 89 mph. Its wheels, suspension and brakes all appear identical to those used on the Benelli 302S. The X500, is listed to be 47 hp, making it an ideal A2-license machine in Europe, with a weight of 456 pounds and a wheelbase of 4 feet 9 inches.

Although the bikes are expected to mainly target Asian markets when they're officially launched, the smaller model already appears to be earmarked for the USA, although according to H-D Zeitz, they will, initially at least, be used purely as a Dealer Rider Academy training bike and not available for sale. A terrific way to test the motorcycle and the market.

A document filed by Harley-Davidson with the US NHTSA (National Highway Traffic Safety Administration), listing production models for 2023, includes the 'Harley-Davidson X350RA'. The document confirms the 353 cc capacity but cites a much lower power figure than the Chinese type-approval document, saying the model only has 23 hp. Might be an error, as it’s far less than the same engine achieves in other bikes.

These Chinese-built bikes could mean massive profits for the H-D brand worldwide, depending on a myriad of financial issues, from costs of manufacturing, shipping and the attack on the fossil fuel industry, which seems to be faltering.

The 350 will spring into world markets in 2023 and the 500 model is standing by for the first model test and sales results.




Zeitz is fortunate 2023 marks the 120th Anniversary of Harley-Davidson and all that entails including lots of publicity, events, anniversary models, apparel, anniversary bling and limited-edition iconic art, jewelry and memorabilia. I’m sure Scott Jacobs and Jeff Decker are hard at work creating masterful replicas and images of the iconic legacy.

Okay goddammit, I'll go to the Homecoming...
Okay goddammit, I'll go to the Homecoming...



The Four-Day Festival in Milwaukee Celebrates Harley-Davidson's 120th Anniversary and Kicks Off the Annual Homecoming Event.

Harley-Davidson will celebrate its 120th Anniversary by launching the Harley-Davidson Homecoming event, an annual four-day festival filled with music, food and moto-culture. The inaugural event will take place at multiple venues throughout the Milwaukee area on July 13-16, 2023, and welcomes riders, enthusiasts, and fans to meet in Milwaukee for a huge celebration.



“We invite everyone, riders, non-riders and fans around the world, to join us in Milwaukee next summer for the Harley-Davidson Homecoming where we will celebrate 120 years of our incredible brand,” said Jochen Zeitz. “This will be the first in a series of unforgettable annual events in Milwaukee. Stay tuned for more details in coming months, and we look forward to celebrating with you in 2023.”



Harley-Davidson recently launched “The Road to Harley-Davidson Homecoming Challenge” where riders and non-riders alike can participate in chances to earn virtual badges, win daily and monthly prizes and enter a sweepstakes for a chance to win a grand prize trip to Milwaukee to participate in the Homecoming event. For sweepstakes Official Rules, program and prize details and more information regarding The Road to Harley-Davidson Homecoming Challenge, download the Harley-Davidson App, or visit H-D.com/ride.

New Sportster.
New Sportster.



This event and celebration alone makes the Harley brand appear strong and resilient for 2023, even if they killed the Sportster and developed a new Indian fighter. Here’s our take on the Sportster move:
https://www.bikernet.com/pages/story_detail.aspx?id=15170

Harley-Davidson Inc.’s new apparel line — at least one segment of it — literally is going GQ.
Harley-Davidson Inc.’s new apparel line — at least one segment of it — literally is going GQ.



Let’s play with the financials.

Harley-Davidson, Inc. ("Harley-Davidson," "HDI," or the "Company"), (NYSE: HOG) fourth quarter and full year 2022 results.

"As we conclude the second year of the Hardwire, Harley-Davidson delivered a strong finish to the year, with solid execution of our strategic pillars," said Zeitz. "Since 1903, Harley-Davidson has pioneered American motorcycle design, technology, and performance - this year we'll be marking our 120th Anniversary with a year-long celebration, at locations across the globe and our biggest event ever in our hometown, Milwaukee. We are excited about what is going to be an unforgettable milestone for the company, celebrating the history, culture and community of Harley-Davidson with our riders, families and fans, reaching new customers and bringing more people to the brand."



2022 Highlights and Results

Delivered full year diluted EPS of $4.96, up 18 percent versus prior year.

Grew HDMC and LiveWire combined revenue by 9 percent behind higher wholesale shipments and global pricing realization.

Achieved 12% combined operating margin for HDMC and LiveWire, an increase of 3 points versus prior year as pricing and productivity offset cost inflation.

HDFS operating income finished down 23 percent and in-line with expectations as loss rates normalized throughout the year.

Completed carve-out and stand-up of LiveWire as a separate public company makes these numbers a conundrum. Are they throwing LiveWire, which is a separate company into the H-D mix to confuse the numbers?



Fourth Quarter 2022 Summary of Results

Delivered diluted EPS of $0.28 – up 100 percent versus prior year.
Grew HDMC global motorcycle shipments by 18 percent vs prior year as production levels rebounded from the Q2 production shutdown.
Achieved HDMC revenue growth of 14 percent behind unit growth and global pricing
HDFS Operating Income declined 32 percent due primarily to expected loss rate normalization

These numbers are significantly boosted by the death of the evil Covid plaque and its many economic impacts. Having the 120 Anniversary the next year is a major shot in the arm.



2023 Financial Outlook

For the full year 2023, the Company expects:

HDMC: revenue growth of 4 to 7% and operating income margin of 14.1 to 14.6%

HDFS: operating income decline of 20 to 25%

LiveWire: motorcycle wholesale units 750–2,000 and operating income loss of $115 to $125 million

Harley-Davidson, Inc: capital investments of $225 to $250 million



New Segment Reporting Structure

LiveWire Group, Inc. ("LiveWire Group") became a separate public company trading on the New York Stock Exchange (Ticker: LVWR) on September 27, 2022. Following the close, Harley-Davidson has an equity interest in LiveWire Group of approximately 89.4% and will continue to consolidate LiveWire Group results with adjustments for non-controlling shareholder interests. Consolidated Net Income attributable to Harley-Davidson, Inc. and EPS calculations will now reflect these adjustments.

LiveWire revenue for the fourth quarter 2022 decreased by 28% and full year revenue increased 31% driven by higher LiveWire units and STACYC electric balance bike sales. LiveWire operating losses in both comparable periods were driven by increased product development costs and investments in talent & capabilities to support the new company.

The above answers the questions I had but points a finger at the reporting and Zeitz. Is he using the historic H-D legacy and fan base to build LiveWire and ultimately kill Harley-Davidson?




This year can be a boom to the H-D brand worldwide, unless of course we are doomed, attacked by Russia, given a virus from the Chinese or lose all of our rights to ride and build motorcycles by the WOKE Chinese stir-fry crowd. As Elon Musk recently said, “I bought Twitter because it was governed by the Berkley and San Francisco crowd and their ideologies hurt the country.” He wants to build a platform for the truth.

 
--Bandit 
 
And save the World. It's a blast and whacky forever!
And save the World. It's a blast and whacky forever!


 

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Reader Comments


About your article, I'm getting real tired of people bitching about being woke. The worlds fucking changing get over it! it's getting real old hearing people bitch about change, being woke to me means being aware of something that's wrong and wanting to fix it. You bitch about being profiled when you ride and you want it to end because it's not right, well that's being woke.

Cry me a river if you feel slighted, they don't pay attention to me, you got something that I didn't and it's not fair, white grievance, my ass, my feelings got hurt,too fucking bad! the world changes better get used to it. Being a grumpy white guy just don't cut it, I know because I am one, I'm your age, I just want to live my life how I want to. I don't tell you how to live yours so don't tell me how to live mine, you do your shit and I'll do mine, bitching about everything seems to me that you want change too,so I guess in a sense your woke to,KINDA FUNNY

pat
shoreline, WA
Tuesday, March 7, 2023
Editor Response Destroying the country is not progressive or free. I want to be left alone to do my thing until the end. But I can't stand by and watch folks try to destroy the country for whatever reason, maybe because the can.

I won't tolerate folks lying to the public over climate change because they don't like oil and want to control every aspect of your life. Oil made us great. It added CO2 to the atmosphere when it was getting too low and plants would die. So, what are you going to tell kids who want to grow up, party, build motorcycles, travel, ride in a hot rod and they find out their government lied to them for 20 years. Hang on.
--Bandit
A few comments on Harley financials and growth. I remember when Harley had the partnership with Buell and how that turned out. I’m curious to see if history repeats itself with the Livewire brand. How long will the company stay committed to it? And I’m not completely opposed to the idea of electric motorcycles, but issues such as range still need to be worked out.

As for the idea of Chinese Harleys, that does make sense if they want to make a larger dent in the Asian/ Indian market. Also, I have been surprised to learn about how many motorcycle manufactures in Europe have ties to China. I still would like to see a smaller displacement, less expensive Harley sold here in the states.

I had sticker shock when I visited the local dealer a couple of months ago with my son. We later went down the block to the local Triumph dealer. The pricing on the different bikes were more reasonable for new riders. My current bike is a 2016 Moto Guzzi V7 II Stone which I find is a good size for me now. It’s also quirky like the older Harley’s I rode, but with some modern refinements.

Jim Weed
San Diego, CA
Saturday, February 25, 2023
Editor Response Thanks for this, good points.
--Bandit

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