Insiders ranked by realized 90-day signed return on their open-market trades at Harley-Davidson, Inc.. Minimum 3 scored trades. Returns are signed - a sale followed by a rally counts against the insider.
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.02pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-0.24pp
Flat
Net-tone change vs last year's 10-K.
MD&A
+0.21pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
negatively+5
unable+4
adverse+3
negative+3
loss+3
Positive rising
leading+4
successful+3
effective+3
able+1
desired+1
Risk Factors (Item 1A)
11,351 words
Item 1A. Risk Factors
An investment in Harley-Davidson, Inc. involves risks, including those discussed below. These risk factors should be considered carefully before deciding whether to invest in the Company.
Operational Risks
• The Company’s ability to remain competitive is dependent upon its capability to develop and successfully introduce new, innovative and compliant products while maintaining its ability to command a premium price relative to its competitors' motorcycles. The motorcycle market is highly competitive and continues to change in terms of styling preferences and advances in new technologies and, at the same time, is subject to increasing and evolving regulations, including those related to safety and emissions. Price, reliability, styling, quality, product features and engine displacement are some of the factors that impact competition in the motorcycle market. The importance customers place on these and other factors may vary by market location. Thus, the Company must continue to make product advancements and product portfolio decisions to respond to changing consumer preferences, market demands, and legal and regulatory requirements, and distinguish its products from its competitors’ products in the relevant markets. Introducing new products and motorcycle models may not lead to the results, including driving unit sales growth. As the Company incorporates new and different features and technology into its products, the Company must also protect its intellectual property from imitators. In addition, these new products must comply with applicable regulations in the markets in which they are sold and the potential demand for products that produce lower emissions and fuel economy. The Company must also be to design and manufacture these products in a cost- manner and deliver them to various markets globally. The Company’s global manufacturing footprint is a significant factor in its ability to deliver its products globally in a cost- manner; however, ongoing geopolitical tensions, supply chain , and logistics issues arising from regional may the Company’s ability to make strategic production decisions, including managing the production mix in response to factors such as raw material , workforce constraints, supplier , and other that could affect pricing. Further, the Company may take pricing actions , which have included and may continue to include introducing incentives, to make prices more to customers in the relevant markets. This may impact the Company's long-term ability to command a premium price relative to its competitors, and there is no guarantee that such actions will be .
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
loss+3
declines+3
unfavorable+2
depressed+2
closing+2
Positive rising
beneficial+6
effective+3
favorable+3
opportunities+3
desired+2
MD&A (Item 7)
16,319 words
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Harley-Davidson, Inc. operates in three segments: Harley-Davidson Motor Company (HDMC), LiveWire, and Harley-Davidson Financial Services (HDFS). Unless the context otherwise requires, all references to the "Company" include Harley-Davidson, Inc. and all its subsidiaries.
The “% Change” figures included in the Results of Operations section were calculated using unrounded dollar amounts and may differ from calculations using the rounded dollar amounts presented. Certain “% Change” deemed not meaningful (NM) have been excluded.
(1) Note Regarding Forward-Looking Statements
The Company intends that certain matters discussed in this report are “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such by reference to this footnote or because the context of the statement will include words such as the Company “believes,” “anticipates,” “expects,” “plans,” "projects," “may,” “will,” “estimates,” “targets,” “intends,” "forecasts," "seeks," "sees," "should," "feels," "commits," "assumes," "envisions," or words of similar meaning. Similarly, statements that describe or refer to future expectations, future plans, strategies, objectives, outlooks, targets, guidance, commitments or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially, unfavorably or , from those anticipated as of the date of this report. Certain of such risks and uncertainties are described in close proximity to such statements or elsewhere in this report, including in Item 1A. Risk Factors and under the Statements section in this Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and are not to place reliance on such forward-looking statements. The forward-looking statements included in the Overview and Guidance sections in this Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations are only made as of February 10, 2026 and the remaining forward-looking statements in this report are only made as of the date of the filing of this report (February 26, 2026), and the Company any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
• The Company faces increasing competition and failure to compete effectively may adversely impact its business and operating results. Many of the Company’s competitors are more diversified than the Company, and they may compete in all or many segments of the motorcycle market, other powersports markets and/or the automotive
market. Also, the Company’s manufacturer’s suggested retail price for its motorcycles is generally higher than its competitors. If price becomes a more important factor for consumers in the markets in which the Company competes, the Company may be at a competitive disadvantage. The Company also faces pricing pressure from international competitors who may have the advantage of manufacturing and marketing products in their respective countries, allowing them to sell products at lower prices within or outside of their respective countries. Furthermore, many competitors headquartered outside the U.S. experience a financial benefit when there is a strengthening in the U.S. dollar relative to their home currency that can enable them to reduce prices to U.S. consumers. The Company and LiveWire Group, Inc. are also subject to policies and actions of the U.S. Securities and Exchange Commission (SEC) and New York Stock Exchange (NYSE). Many major competitors of the Company and LiveWire Group, Inc. are not subject to the requirements of the SEC or the NYSE rules. As a result, the Company or LiveWire Group, Inc. may be required to disclose certain information that may put the Company or LiveWire Group, Inc. at a competitive disadvantage to their principal competitors. Additionally, the Company’s LiveWire segment is subject to competition in the electric vehicle sector from companies that are at various levels of maturity, which include several major motorcycle companies that have electric vehicles available today and other current and prospective motorcycle manufacturers that may be developing electric vehicles. Increased competition or failure of the electric vehicle market to develop may lead to lower vehicle unit sales and increased inventory, which may result in downward price pressure and adversely affect the business, prospects, financial condition and operating results of the LiveWire segment. As a result of new entrants into the electric vehicle market, there may be increased competition for component and other parts of LiveWire’s electric vehicles, which may have limited or single-source supply, or suppliers may be unwilling to provide product at lower volumes. In addition, the Harley-Davidson Financial Services segment faces competition from various banks, insurance companies and other financial institutions that may have access to additional sources of capital at more competitive rates and terms, particularly for borrowers in higher credit tiers. The Company's responses to these competitive pressures, or its failure to adequately address and respond to these competitive pressures, may have a material adverse effect on the Company’s business and results of operations.
• The Company relies on its suppliers to obtain raw materials and provide component parts for use in the manufacture of its motorcycles and products. Inflationary pressures, including on manufacturing, and the availability of components and raw materials, such as rare earth elements, or instability in logistics, including the escalating tensions between the U.S. and foreign leaders regarding the Panama Canal, and related costs may negatively impact the Company's profitability. The Company may experience supply problems relating to raw materials and components, such as component shortages, unfavorable pricing, poor quality, termination of supply of some of the Company's components or untimely delivery. The prices for these raw materials and components may fluctuate depending on market conditions, which include inflation of raw material costs, exchange rate fluctuations, commodity market volatility, tariffs, embargoes, sanctions, trade policies, and other trade restrictions. In certain circumstances, the Company relies on a single supplier to provide component parts or a contract manufacturer to manufacture certain components and/or products, and a change or disruption in these established relationships may cause disruption in the Company’s production schedule. In addition, the price and availability of raw materials and component parts from suppliers can be adversely affected by factors outside of the Company’s control, such as the supply of a necessary raw material, capacity constraints, labor shortages or disputes, natural disasters, extreme weather events, pandemics (like COVID-19), epidemics or other public health crises, trade and shipping disruptions, fluctuating costs of ocean freight, wars and trade policies. Further, the Company's suppliers and contract manufacturers may experience difficulty in funding their day-to-day cash flow needs because of tightening credit caused by financial market disruption. In addition, adverse economic conditions and related pressure on select suppliers or contract manufacturers due to difficulties in global manufacturing could adversely affect their ability to supply the Company. For example, one of the Company's suppliers, First Brands Group, LLC - a leading automotive parts provider - filed for Chapter 11 bankruptcy protection in September 2025 and has recently relied on the support of its customers as it works through various funding challenges. The Company had to work to mitigate potential negative effects on its supply chain due to this issue. The unavailability of any component or supplier or contract manufacturer could result in production delays and/or product design changes and impact the Company’s ability to fulfill orders. Changes in laws and policies relating to trade and taxation may also adversely impact the Company's foreign suppliers or contract manufacturers. Natural disasters, extreme weather, epidemics, or health crises at supplier or contract manufacturer locations may disrupt supply to the Company. These supplier risks may have a material adverse effect on the Company’s business and results of operations. Such disruptions have resulted in and could further result in manufacturing inefficiencies due to the delay in delivering components for production or having to find alternative components due to lack of availability and could place the Company in an uncompetitive position resulting in a material adverse effect on its operations, financial condition and/or cash flows.
• Increased supply of and/or declining prices for used motorcycles and excess supply of new motorcycles may adversely impact retail sales of new motorcycles by the Company's dealers. The Company has observed that when the supply of used motorcycles increases or the prices for used Harley-Davidson motorcycles decline, there can be reduced demand among retail purchasers for new Harley-Davidson motorcycles at or near manufacturer’s suggested retail prices. Further, the Company and its dealers can and do take actions that influence the markets for new and used Harley-Davidson motorcycles. For example, introduction of new motorcycle models with significantly different styling, design, functionality, technology or other customer satisfiers can result in increased supply of used motorcycles, which could result in declining prices for used motorcycles and prior model-year new motorcycles. Also, the Company’s approach to supply and inventory management may not be effective, or the Company’s competitors could choose to supply new motorcycles to the market in excess of demand at reduced prices, which could also have the effect of reducing demand for new Harley-Davidson motorcycles at or near manufacturer’s suggested retail prices. Reduced demand among retail purchasers for new Harley-Davidson motorcycles leads to reduced shipments by the Company and may have a material adverse effect on the Company’s business and results of operations.
• The Company must prevent and detect issues with its products, components purchased from suppliers, and the related manufacturing processes to reduce recall campaigns, warranty costs, litigation, product liability claims, delays in new model launches, disruptions in production and/or shipment, and regulatory investigations and fines. The Company must continually improve and adhere to appropriate product development and manufacturing processes and ensure that its suppliers, contract manufacturers, and their sub-tier suppliers adhere to appropriate product development and manufacturing processes, to ensure the Company and its dealers are selling high-quality products that meet customer needs and desires and comply with applicable regulations. If product designs or manufacturing processes are defective, the Company could experience delays in new model launches, disruptions in production, delays in shipment, field actions, such as product programs and product recalls, and inquiries or investigations from regulatory agencies, which could subject the Company to fines and penalties, and warranty claims and product liability claims, which may involve purported class actions or significant jury verdicts. For example, during the second quarter of 2022, the Company suspended all vehicle assembly and shipments for approximately two weeks due to a regulatory compliance matter relating to a Tier 2 supplier’s brake hose assemblies. In June 2023, the same Tier 2 supplier notified the Company that it was investigating a new, separate quality issue with brake hose assemblies produced by the Tier 2 supplier after the Company’s 2022 production suspension. Due to this issue, the Company was forced to suspend production of most of the motorcycles manufactured at its York facility and run limited motorcycle manufacturing operations there for approximately two weeks. Both the Tier 2 supplier and the Company leveraged NHTSA’s standard process to petition the agency for a determination that both of the potential non-compliances are inconsequential to motor vehicle safety. If NHTSA makes the inconsequentiality determinations requested, the Company will be exempt from conducting a field action or a recall of its motorcycles related to these matters. The Company expects that NHTSA will make the inconsequentiality determinations; however, it is possible that a recall or field action could be required that could cause the Company to incur material costs. Any future product recall, whether initiated by the Company, a supplier, or a contract manufacturer, may lead to negative publicity, harm the Company’s brand image, and negatively impact its business, prospects, financial condition, and operating results. Recalls arising from systems or components engineered or manufactured by any of these parties may also result in considerable expenses, potential litigation, and diversion of management attention and other resources, all of which could further affect the Company’s brand and overall performance. While the Company uses reasonable methods to estimate the cost of warranty, recall and product liabilities, and appropriately reflects those in its financial statements, there is a risk the actual costs could exceed estimates and result in damages that are not covered by insurance. Further, selling products with quality issues, the announcement of recalls and the filing of product liability claims (whether or not successful), may also adversely affect the reputation and brand strength of the Company with a resulting adverse impact on sales.
• The Company primarily sells its products at wholesale and must rely to a large extent on a network of independent dealers and distributors to manage the retail distribution of its products. The Company depends on the capability of its independent distributors and dealers to develop and implement effective retail sales plans to create demand among retail purchasers for the motorcycles and related products and services that the dealers purchase from the Company. If the Company’s distributors and dealers are not successful in these endeavors, or do not appropriately adapt to the evolving retail landscape and effectively implement successful retail strategies, then the Company may be unable to maintain or grow its revenues and meet its financial expectations. There is no assurance that the Company's dealers' or distributors' retail strategies will be successful. Additionally, distributors and dealers may experience difficulty in funding their day-to-day cash flow needs and paying their obligations resulting from adverse business conditions, such as weakened retail sales and tightened credit. If distributors and dealers are unsuccessful or unprofitable, they may exit or be forced to exit their business or, in some cases, the Company may seek to terminate relationships with certain distributors and dealers, leading to a reduction in the number of distributors or
dealers. The departure of dealers could also affect the LiveWire segment, since selling electric motorcycles directly to retail customers through the independent dealer network is a main sales channel. The Company could face lawsuits and additional adverse consequences related to the termination of its independent distributor and dealer relationships. Additionally, liquidating a former distributor’s or dealer’s inventory of new and used motorcycles can add downward pressure on new and used motorcycle prices which may cause adverse consequences for the remaining distributor and dealer network. Further, the unplannedloss of any of the Company’s independent distributors or dealers may lead to inadequate market coverage for retail sales of new motorcycles and for servicing previously sold motorcycles, create negative impressions of the Company with its retail customers and adversely impact the Company’s ability to collect wholesale receivables from that dealer. Finally, the Company is exposed to credit risk in the event of a dealer failure or inability to redistribute motorcycles that the Company has repossessed from a closing dealer or that a closing dealer has surrendered to the Company at invoice price through the Company’s subsidiary, HDFS.
• A significant cybersecurity incident or data privacy breach could disrupt the Company’s information technology environment and data security infrastructure, impacting its business operations, and may adversely affect the Company’s reputation, revenue and earnings. The Company utilizes information technology as a core component of its business operations. The security, availability, and integrity of its information technology environment and data security infrastructure are essential for the execution of specific business activities. Additionally, the Company relies on its ability to develop and continually update its information technology environment and related infrastructure in response to its changing business needs. The Company implements new and emerging technologies, such as artificial intelligence, and necessary upgrades to these technologies while supporting its older technologies. The implementation of the new technologies and upgrades to technologies may not perform as expected. Additionally, as technologies age, they may become obsolete, potentially leading to performance problems and raising cybersecurity risks. Third-party service providers and vendors not under the direct control of the Company may provide and/or manage some of these technologies. The Company and certain of its third-party service providers and vendors receive, digitally store and transmit personal and other information in connection with the Company’s human resources operations, financial services operations, e-commerce, the Harley Owners Group, dealer management, mobile applications and other aspects of its business. The Company’s information technology environment and data security infrastructure, and those of its third-party service providers and vendors, are susceptible to continually evolving cybersecurity risks. Unauthorized parties engage in a regular practice of attempting to gain access to these environments and infrastructure, including the information the Company and its third-party service providers and vendors maintain on them or use, through fraud or other means of deception. Hardware or software the Company develops or obtains from third-parties may contain defects in design or manufacture, vulnerabilities, or other problems that could unexpectedly compromise information security and/or the Company’s operations. The methods used to obtain unauthorized access, disable or degrade service or sabotage systems and networks are constantly evolving and may be difficult to anticipate or detect. Threat actors may also utilize new or emerging technologies such as artificial intelligence. The Company has implemented and regularly reviews and updates processes and procedures designed to protect againstunauthorized access to or use of secured data and to prevent data loss. However, the ever-evolving threats mean the Company and third-party service providers and vendors must continually evaluate and adapt systems and processes, and there is no assurance that they will be adequate to safeguard against all cybersecurity incidents or misuses of data. The Company and certain of the Company's third-party providers have experienced cybersecurity attacks, but to date they have not materially compromised the Company’s information technology environment or data security infrastructure or resulted in a material impact on the Company’s business or operations or intellectual property or the material release of confidential information about its employees, customers, dealers, suppliers or other third parties. Any future significant compromise or breach of the Company’s information technology environment or data security infrastructure, whether external or internal, or misuse of customer, employee, dealer, supplier or Company data could result in disruption to the Company’s operations, significant costs, lost sales, lawsuits with third-parties, fines and penalties, government enforcement actions, unauthorized release of confidential, proprietary or otherwise protected information, loss of intellectual property rights, such as trade secrets, corruption of data, negative impact on the value of investment in research, development and engineering, remediation costs and/or damage to the Company’s reputation. In addition, as the regulatory environment related to information security, data collection and use and privacy becomes increasingly rigorous with new and evolving requirements, compliance could also result in the Company being required to incur additional costs.
• The Company utilizes a limited number of contract manufacturers to produce certain components and/or products, which may present significant risks due to the lack of direct control over their activities, including delivery schedules, quality assurance, production costs and manufacturing yields. Our contract manufacturers' inability to produce certain components and/or products that satisfy our requirements may have a material
adverse effect on our business. In certain circumstances, the Company relies on contract manufacturers to provide manufacturing, procurement, logistics and distribution services for certain components and/or products. If the contract manufacturer becomes unwilling or unable to manufacture components and/or products at the required quantity, quality, cost or schedule, the Company may need to engage another contract manufacturer or build its own in-house manufacturing capabilities, which could cause the Company to incur significant cost and expense. Additionally, it may take time to transition to another contract manufacturer, and there is no assurance that another contract manufacturer would be able to meet the Company’s capacity, capability or quality requirements, or otherwise be an effective and acceptable manufacturing solution. Additionally, utilizing contract manufacturers subjects the Company to risks associated with the protection of our trademarks and other intellectual property. If our contract manufacturers fail to protect our trademarks, trade secrets and other intellectual property, either intentionally or unintentionally, including producing products that compete with ours, it may adversely affect our operations, financial condition and/or cash flows.
• The Company’s motorcycle operations are dependent upon unionized labor. A substantial portion of the hourly production employees working in the Company's motorcycle operations are represented by unions and covered by collective bargaining agreements. The Company is currently a party to four collective bargaining agreements with local affiliates of the International Association of Machinists and Aerospace Workers and the United Steelworkers of America. The current collective bargaining agreement with hourly employees in Pennsylvania will expire on October 15, 2027, and the agreements with employees in Wisconsin will expire on March 31, 2029. There is no certainty that the Company will be successful in negotiating new agreements with these unions that extend beyond the current expiration dates or that these new agreements will be on terms that will allow the Company to be competitive. The Company's decisions regarding opening, closing, expanding, contracting or restructuring its facilities may involve changes to existing or new bargaining agreements. Further, the Company's strategic decisions regarding the use of its global manufacturing operations, including using contract manufacturing, may adversely impact the successful renewal of the existing agreements. Failure to renew the existing agreements when they expire or to amend agreements or establish new collective bargaining agreements when that is necessary on terms acceptable to the Company and the unions could result in the relocation of production, work stoppages or other labor disruptions, which may have a material adverse effect on the Company’s business and results of operations.
• Weather and weather-related events may impact retail sales by the Company's dealers. The Company has observed that abnormally cold and/or wet conditions in a region, including impacts from hurricanes or unusual storms, could have the effect of reducing demand or changing the timing for purchases of new and used Harley-Davidson motorcycles and parts and accessories. Fires and other natural disasters could have similar negative impacts. Reduced demand for new Harley-Davidson motorcycles ultimately leads to reduced shipments by the Company.
• The Company has substantial liabilities for employee pension and healthcare benefits. The Company’s cash funding requirements and its estimates of liabilities and expenses for pensions and healthcare benefits for both active and retired employees are based on several factors that are outside the Company’s control. These factors include funding requirements of the Pension Protection Act of 2006, the rate used to discount the future estimated liabilities, the rate of return on plan assets, current and projected healthcare costs, healthcare reform or legislation, retirement age and mortality. Changes in these factors can impact the income, expense, liabilities and cash requirements associated with these benefits, which could have a material adverse effect on future results of operations, liquidity or shareholders’ equity.
• The Company relies on third-parties to perform certain operating and administrative functions for the Company. Similar to suppliers of raw materials and components, the Company may experience problems with outsourced services, such as unfavorable pricing, untimely delivery of services or poor quality. Also, these suppliers may experience adverse economic conditions due to changing economic factors that could lead to difficulties supporting the Company's operations, such as inflation, turnover, and labor strikes or shortages. In light of the amount and types of functions that the Company has outsourced, these service provider risks may have a material adverse effect on the Company's business and results of operations.
• The Company’s operations are dependent upon attracting and retaining skilled employees, including skilled labor, executive officers and other senior leaders. The Company’s future success depends on its continuing ability to: (i) identify, hire, develop, motivate, retain and promote skilled personnel for all areas of its organization, (ii) effectively execute reorganization actions within expected costs and realize the expected benefits of those actions, and (iii) attract qualified and experienced independent directors for its Board of Directors. The Company is highly dependent on its senior management, including its new Chief Executive Officer, Artie Starrs, other key personnel and its Board of Directors. A leadership transition can increase turnover risks, including among key personnel, and result
in changes in the Company's business strategy, which may impact its business and financial performance. The loss of key personnel or independent directors could adversely affect the Company’s operations and profitability. Any perceived uncertainties regarding the Company's future direction and control, its ability to develop effective strategies and execute its business plans, or alterations to the composition of its Board of Directors or senior management team could create a perception of instability or a shift in business direction, affecting the Company's ability to attract or retain qualified personnel or independent directors. Further, the Company’s current and future total compensation arrangements, which include benefits and incentive awards, may not be successful in attracting new employees and retaining and motivating the Company’s existing employees. In addition, the Company must cultivate and sustain a work environment where employees are engaged and energized in their jobs to maximize their performance, and the Company must effectively execute reorganization actions. In late 2025, after five years of its corporate employees primarily working remotely, the Company announced that Milwaukee-based corporate employees would return to on-site work at specified Company facilities, including the Company's historic Juneau Avenue campus in Milwaukee. This transition back into the office may impact the Company's culture and workplace which could lead to attrition and difficulty attracting qualified personnel. If the Company does not succeed in attracting new personnel, retaining existing personnel, implementing effective succession plans, executing reorganization actions and motivating and engaging personnel, including executive officers, the Company may be unable to develop and distribute products and services and effectively execute its plans and strategies.
• Artificial intelligence (AI) technology may adversely impact our business: (i) by potentially posing risks to Company confidential or proprietary information; (ii) by potentially giving rise to legal actions or reputational damage; (iii) if employees misuse AI; or (iv) if the Company fails to timely and appropriately adopt AI to remain competitive. The Company’s workforce may use AI technology, such as generative AI, which may result in the exposure of our confidential or proprietary information to unauthorized third-parties and the misuse of the Company’s intellectual property. Use of AI technology may also result in claimsagainst the Company allegingviolation of third-party intellectual property rights. Use of AI technology may also result in inaccurate results and biases that could cause mistakes in the Company's decision-making or other business activities, which may have an adverse impact on the Company's business and results of operations. Further, there is no assurance that the Company's training and enforcement of procedures governing the use of AI will be adequate to safeguard against the unauthorized use of AI technology. Additionally, if the Company does not adopt AI in a timely or effective manner, it could incur additional costs or face competitive disadvantages which may adversely affect the Company's business and results of operations.
Strategic Risks
• The Company recently appointed a new Chief Executive Officer and is developing a new strategic plan, which creates uncertainties that may have a material adverse effect on the Company's business and results of operations. Artie Starrs assumed the role of Chief Executive Officer on October 1, 2025. Soon after his appointment, he initiated a comprehensive evaluation of the Company's strategy and operations. The Company expects the strategic and operational evaluation activities to continue in the coming months to develop a new strategic plan for the Company. To the extent the Company is unable to successfully develop, implement, and execute its strategic plan, or if it experiences delays in the development, implementation or execution of the strategic plan, the Company’s business, financial condition and results of operation may be adversely affected. There is no assurance that the Company will be able to develop, implement, or execute business plans or strategies, or that they will ultimately be profitable or successful.
• International sales and operations, along with being an iconic American company, subject the Company to risks that may have a material adverse effect on its business. International operations and sales remain an important part of the Company’s business plans and strategies. Further, international operations and sales are subject to various risks, including political and economic instability, local labor market conditions, the imposition of new and existing foreign tariffs (including rebalancing tariffs in response to tariffs the U.S. imposes) and other trade barriers, the impact of foreign government laws and regulations, U.S. laws and regulations that apply to international operations, the effects of income and withholding taxes, governmental expropriation and differences in business practices. The Company may incur increased costs and experience delays or disruptions in product deliveries and payments in connection with international operations and sales that could cause loss of revenues and earnings. Additionally, the Company's global manufacturing presence may negatively affect U.S. consumer perspectives of its iconic American brand. This perception could also influence non-U.S. consumer preferences. As geopolitical tensions continue, nationalism may increase globally, causing consumers in the international market to refrain from purchasing the Company's products because the Company is an iconic American motorcycle manufacturer and/or U.S. consumers to refrain from purchasing the Company's products because of its global manufacturing locations, which could result in reduced demand for the Company's products and may have a material adverse effect on the
Company's business and results of operations. Unfavorable changes in the political, regulatory and business climate could have a material adverse effect on the Company’s net sales, financial condition, profitability and cash flows. International sales require modification of products to meet local requirements or preferences, which may impact the Company's ability to achieve international sales growth. Business practices that may be accepted in other countries can violate U.S. or other laws that apply to the Company. Violations of laws that apply to the Company's foreign operations, such as the U.S. Foreign Corrupt Practices Act and economic sanctions laws, could result in severecriminal or civil sanctions, could disrupt the Company's business and result in an adverse effect on the Company's reputation, business and results of operations.
• The Company’s success depends upon the continued strength of the Harley-Davidson brand. The Company believes that the Harley-Davidson brand has significantly contributed to the success of its business and that maintaining and enhancing the brand is critical to maintaining and expanding its customer base. Geopolitical tensions that give rise to anti-U.S. sentiments or campaigns may cause consumers in non-U.S. markets to cancel, reduce or defer purchases from U.S.-based companies. As an American icon, the Company may be subjected to some or all of these actions, which may have a negative impact on the Company's business and results of operations. Additionally, failure to protect the brand from infringers or to grow or maintain the value of the Harley-Davidson brand may have a material adverse effect on the Company’s business and results of operations. Further, third-parties with whom the Company has business relationships or that have, or are perceived to have, close ties to the brand, including its employees, dealers, brand ambassadors and influencer network, may fail to represent the brand in a manner consistent with the Company’s brand image or act in a manner that harms the Company’s reputation, which could cause immediate harm to the Company’s reputation and brand. The reputations of the Company’s employees, dealers, brand ambassadors and influencer network could negatively impact how consumers view the Company’s products or brand. The use of online media by the Company, its brand ambassadors, its influencer network, and its consumers has increased the risk that its brand and reputation could be negatively impacted. The speed and reach of information dissemination have drastically increased with the use of online media. The dissemination of information via online media has given users the ability to organize collective actions such as boycotts and other brand -damaging behaviors more effectively and could harm the Company’s brand or business, regardless of the information’s accuracy. The harm may be immediate, without affording the Company an opportunity for redress or correction, which may have an adverse effect on the Company’s business, financial condition and results of operations. In addition, an increase in the use of online media for product promotion and marketing may increase the burden on the Company to monitor compliance of such materials and increase the risk that such materials could contain problematic product or marketing claims in violation of applicable regulations. The Company's reputation may also be adversely affected by inappropriate use of its marks or name, including potential negative publicity, loss of confidence or other damage to the Company's image due to licensed use and/or unlicensed use. Additionally, third parties may challenge the Company's intellectual property or allege that the Company infringes or misappropriates intellectual property of the third parties. The Company may incur substantial costs to enforce or defend the Company's intellectual property or to defend the Company againstallegations of infringement or misappropriation. If the outcome of any such enforcement or defense is unfavorable to the Company, its brand could be adversely affected.
• Activist shareholders or activist campaigns could cause the Company to incur substantial costs, hinder the development of the Company’s new strategic plan or have other adverse impacts on the Company. The Company may receive proposals from shareholders requesting certain corporate actions that may not align with the Company’s business strategies or the interests of the Company’s other shareholders. Additionally, the Company may be the target of activist campaigns aimed at pressuring the Company to take actions that do not align with the Company’s business strategies or the interests of the Company’s shareholders, which can be costly and time-consuming. These activities may disrupt the Company’s operations by diverting the Board's and management’s attention and resources, and may negatively impact the reputation of the Company, its operating results, or its ability to attract or retain investors, customers, and employees. For example, in April 2025, one of the Company’s largest shareholders at that time, H Partners, launched an activist campaign during the proxy season in which it expressed disagreement with certain actions by specific members of the Company's Board of Directors and senior management. Although the Company prevailed in the proxy contest, it required the Company to retain advisors, including legal, financial and public relations, at significant cost and required significant time and attention from the Board of Directors and management.
• The timing and amount of the Company's share repurchase strategy are subject to a number of uncertainties. The Company previously announced its plan to repurchase $1 billion of its common stock on a discretionary basis between the third quarter of 2024 and the end of 2026. The amount and timing of share repurchases are based on a variety of factors that could cause the Company to limit, suspend or delay future stock repurchases. Such factors
include but are not limited to: (i) unfavorable market and economic conditions, (ii) the trading price of its common stock, (iii) the nature and magnitude of other investment opportunities available to the Company from time to time, (iv) legal constraints on trading at certain times; and (v) the availability of cash. Delaying, limiting or suspending the Company's stock repurchase program may negatively affect performance versus earnings per share targets, and ultimately its stock price.
• The LiveWire segment is an emerging entrant in the electric vehicle sector and may not be able to adequately control the costs of its operations, generate sufficient cash flows or obtain sufficient funding independent of the Company to sustain its operations, and there is no assurance that LiveWire will be able to successfully manage these risks. The Company maintains a controlling equity ownership of LiveWire as a separate business and significant ongoing commercial relationships with it. There are no assurances that LiveWire will be able to execute its business plans and strategies. The Company’s ability to realize the desired business benefits from LiveWire will be affected by, among other factors: (i) LiveWire's expectation of significant expenses and continuing losses for several years until the demand exists for its electric vehicles resulting in significant sales, which may occur later than expected or not at all; (ii) the ability of LiveWire to obtain sufficient funding from sources other than the Company to sustain its operations; (iii) the ability of LiveWire to achieveprofitability, which is dependent on the successful development and commercial introduction and acceptance of its electric vehicles, and its services, which may not occur; (iv) the ability of LiveWire to adequately control the costs of its operations; (v) competition in the electric vehicle sector, including the products and services of LiveWire; (vi) LiveWire's dependency on its ability to develop, maintain and strengthen its brand, which may impact its ability to build a critical mass of customers; (vii) the ability of LiveWire to execute on its plans to develop, produce, market and sell its electric vehicles; (viii) the willingness and ability of LiveWire's retail partners, largely drawn from the Company’s traditional motorcycle dealer network, to be able to effectively establish and maintain relationships with retail customers for electric vehicles; and (ix) the ability of LiveWire to adapt its long-term strategy and product offerings to align with evolving customer preferences and broader electric vehicle trends, including the slower than anticipated adoption of electric vehicles given a lack of government incentives, less favorable regulatory environment and slower expansion of charging infrastructure. If LiveWire is unable to successfully manage these risks, it may adversely affect the business and results of the Company’s operations.
• The Company's insurance coverage strategy may not be adequate to protect it from all business risks. The Company may be subject, in the ordinary course of business, to losses resulting from product liability or other litigation, accidents, cybersecurity incidents, acts of God and other claimsagainst it, for which the Company may have no insurance coverage or insufficient insurance coverage. Additionally, the Company may be subject to losses imputed onto the Company because of acts and inadequate insurance coverage and/or capitalization of suppliers and providers. The Company's policies may include significant deductibles or self-insured retentions, policy limitations and exclusions. Therefore, the Company cannot be certain that its insurance coverage will be sufficient to cover all future losses or claimsagainst it. A loss that is uninsured or that exceeds policy limits may require the Company to pay substantial amounts, which may harm the Company’s financial condition and operating results.
• The Company may not realize the desired benefits from the strategic transaction between HDFS and its strategic partners, KKR and PIMCO. During 2025, HDFS (i) sold to KKR and PIMCO a collective 9.8% of its common equity interest, (ii) sold to KKR and PIMCO the majority of its existing gross consumer retail loan receivables, including those held in securitized trusts, and (iii) began to sell up to two-thirds of HDFS’s on-going retail loan originations. Harley-Davidson Credit Corp., a subsidiary of HDFS, also completed the sale of a portion of HDCC’s promissory notes and security agreements portfolio to KKR Morrow Trust and HDL Trust. These strategic transactions may involve significant challenges and risks, including: (i) limiting HDFS’s ability to enter into other strategic transactions, such as with another third-party investor; (ii) adding complexities to HDFS’s business operations; (iii) requiring significant attention from HDFS’s management; and (iv) increasing governmental or regulatory issues for HDFS and the Company. There is no assurance that the Company will realize the desired financial or other benefits from these strategic transactions, including those related to HDFS's capital structure.
Financial Risks
• The HDFS segment is exposed to credit risk on its retail and wholesale finance receivables. Credit risk is the risk of loss arising from a failure by a customer, including the Company's dealers, to meet the terms of any contract with HDFS. Wholesale and retail credit losses are influenced by general business and economic conditions, including inflation, unemployment rates, bankruptcy filings, recessionary conditions and other factors that negatively affect household incomes, as well as contract terms and customer credit profiles. These credit losses are also influenced by the markets for new and used motorcycles, and the Company and its dealers can and do take actions that impact those markets. For example, the introduction of new models by the Company that represent significant upgrades on
previous models may result in increased supply or decreased demand in the market for used Harley-Davidson branded motorcycles, including those motorcycles that serve as collateral or security for credit that HDFS has extended. This in turn could adversely impact the prices at which repossessed motorcycles may be sold, which may lead to increased credit loss rates for HDFS. Further, even when HDFS does exercise its rights to seek repossession of collateral, there is no assurance that a motorcycle will be successfullyrepossessed, which also may lead to increased credit loss rates for HDFS. Negative changes in general business, economic or market factors may have an additional adverse impact on the Company’s financial services credit losses and future earnings. HDFS's retail credit losses have changed, and the Company believes they will continue to change over time due to changing consumer credit behavior, macroeconomic conditions including the impact of inflation and HDFS's efforts to increase prudently structured loan approvals to sub-prime borrowers. In addition, HDFS's efforts to adjust underwriting criteria based on market and economic conditions and actions that the Company has taken and could take that impact motorcycle values may impact HDFS's retail credit losses.
• The Company is exposed to market risk from changes in foreign currency exchange rates, commodity prices and interest rates. The Company sells its products globally and in most markets outside the U.S. those sales are made in the foreign country’s local currency. As a result, a weakening in those foreign currencies relative to the U.S. dollar can adversely affect the Company's revenue and margin, and cause volatility in its results of operations. Furthermore, many competitors headquartered outside the U.S. experience a financial benefit from a strengthening in the U.S. dollar relative to their home currency that can enable them to reduce prices to U.S. consumers. The Company is also subject to risks associated with changes in prices of commodities. Earnings from the Company’s financial services business are affected by changes in interest rates. When benchmark interest rates are high when compared with the past periods of low benchmark interest rates, rates available to consumers for new vehicle financing are high as well, which makes the Company’s motorcycles relatively less affordable to customers and can steer customers to less expensive motorcycles that would be less profitable for the Company, adversely affecting the Company’s financial condition and operating results. Additionally, if consumer interest rates increase substantially or if financial service providers, including Harley-Davidson Financial Services, tighten lending standards or restrict their lending to certain classes of credit, customers may not desire or be able to obtain financing to purchase the Company’s motorcycles. The effects of inflation on the discretionary income of consumers, together with elevated interest rates relative to recent years, have adversely influenced both our dealers and consumers. This has resulted in reduced demand for our products. A further substantial increase in customer interest rates or tightening of lending standards could have a material adverse effect on the Company’s business, prospects, financial condition and operating results. Although the Company uses derivative financial instruments to some extent to manage a portion of its exposure to foreign currency exchange rates, commodity prices and interest rate risks, the Company does not attempt to manage its entire expected exposure, and these derivative financial instruments generally do not extend beyond one year, except for the Company's cross-currency swaps related to foreign denominated debt, the duration of which corresponds with the duration of the hedged debt, and may expose the Company to credit risk in the event of counterparty default to the derivative financial instruments. There can be no assurance that in the future the Company will successfully manage these risks.
• The HDFS segment is dependent on accessing capital markets to fund operations at competitive interest rates, the Company’s access to capital and its cost of capital are highly dependent upon its credit ratings, and any negative credit rating actions may adversely affect its earnings and results of operations. Liquidity is essential to the Company’s financial services business. Disruptions in financial markets may cause lenders and institutional investors to reduce or cease to loan money to borrowers, including financial institutions. The Company’s HDFS segment may be negatively affected by difficulty in raising capital in the long-term and short-term capital markets. These negative consequences may in turn adversely affect the Company’s business and results of operations in various ways, including through higher costs of capital and reduced funds available through its HDFS segment to provide loans to dealers and their retail customers. Additionally, the ability of the Company and its HDFS segment to access unsecured capital markets is influenced by their short-term and long-term credit ratings. If the Company’s credit ratings are downgraded or its ratings outlook is negatively changed, then the Company’s cost of borrowing could increase, which may result in reduced earnings and reduced interest margins, and the Company’s access to capital may be disrupted or impaired.
Legal, Regulatory & Compliance Risks
• Geopolitical conflicts and tensions have impacted the global economy, leading to the implementation of tariffs and additional trade restrictions and may significantly impact the Company's operations and financial performance. In
January 2025, the global tariff landscape began to quickly change with the U.S. implementing tariffs on various foreign countries, either generally or with respect to certain products, and certain of those foreign countries implementing rebalancing tariffs on the U.S., either generally or with respect to certain products. In certain circumstances, the U.S. and certain foreign countries temporarily suspended tariffs they had recently implemented, either in whole or in part. The U.S. continues to implement new, reinstated or adjusted tariffs, and the Company expects that it will continue with this practice. Foreign countries subject to these U.S. tariffs continue to implement new, reinstated or adjusted rebalancing tariffs, and the Company expects that foreign countries will continue with that practice. The U.S. and foreign countries may also amend, suspend or withdraw their respective tariffs at any time. New or increased tariffs are expected to negatively impact the Company’s ability to sell products domestically and internationally at or near current prices as tariffs impact the cost of raw materials, components and motorcycles.
For example, in 2018, the United States imposed tariffs on steel and aluminum imports from the European Union. In response, the EU enacted incremental rebalancing tariffs of 25% on selected goods imported into the EU, including non-electric motorcycles. Beginning in April 2021, these tariffs were applied to the Company’s motorcycles manufactured in the U.S. and Thailand, resulting in a total duty of 31% upon importation to the EU. The EU suspended the 25% rebalancing tariffs in October 2021 pending ongoing negotiations with the U.S., and this suspension was further extended for six months on August 5, 2025. The EU continues to evaluate the status of this suspension as trade discussions with the United States evolve. The Company is unable to predict the final outcome of these developments or their potential impact on rebalancing or future tariffs.
These tariffs have impacted the cost of motorcycles and could increase the cost of components and materials used to make the Company’s motorcycles and other products. Higher production costs could make the Company’s motorcycles and other products less affordable for consumers, both in the U.S. and in foreign countries, and negatively impact consumer demand. The Company may not be able to mitigate the effects of these tariffs which could negatively impact the Company’s operations and financial performance.
• The Company must comply with governmental laws and regulations that are subject to change and involve significant costs. The Company’s sales and operations in areas outside the U.S. are subject to foreign laws, regulations and the legal systems of foreign courts or tribunals. These laws and policies governing operations of foreign-based companies may result in increased costs or restrictions on the ability of the Company to sell its products in certain countries. U.S. laws and policies affecting foreign trade and taxation may also adversely affect the Company's international sales operations.
The Company’s U.S. sales and operations are subject to governmental policies and regulatory actions of agencies of the United States Government, including the United States Environmental Protection Agency (EPA), SEC, National Highway Traffic Safety Administration, U.S. Department of Labor and Federal Trade Commission. In addition, the Company’s sales and operations are also subject to laws and actions of state legislatures and other local regulators, including dealer statutes and licensing laws. Changes in regulations, changes in interpretations of regulations by governmental agencies, or the imposition of additional regulations may have a material adverse effect on the Company’s business and results of operations.
Tax – The Company is subject to income and non-income based taxes in the U.S. federal and state jurisdictions and in various foreign jurisdictions. Significant judgment is required in determining the Company's worldwide income tax liabilities and other tax liabilities. The Company believes that it complies with applicable tax laws. If the governing tax authorities have a different interpretation of the applicable laws or if there is a change in tax laws, the Company's financial condition and/or results of operations may be adversely affected. To the extent there are considerable changes to tax laws, the Company may need to readjust its tax strategy, and may not be able to take full advantage of, or fully mitigate the adverse impacts of, such changes.
Environmental – Many of the Company's products are subject to statutory and regulatory requirements governing emissions, noise and other matters, including standards imposed by the EPA, state regulatory agencies, such as the California Air Resources Board, and regulatory agencies in certain foreign countries where the Company’s motorcycle products are sold. The Company is also subject to statutory and regulatory requirements governing emissions and noise in the conduct of the Company’s manufacturing operations. Any significant change to the regulatory requirements governing emissions and noise may substantially increase the cost of manufacturing the Company’s products. If the Company fails to meet existing or new requirements, then the Company may be unable to produce and sell certain products or may be subject to fines or penalties.
Electric Vehicles - The Company's LiveWire segment is subject to substantial regulation. Unfavorable changes to, or failure to comply with, current or future regulations could substantially harm the Company’s business and its operating results. Increased environmental, safety, emissions or other regulations may result in higher costs, cash
expenditures and/or sales restrictions. Regulations related to the electric vehicle industry and alternative energy are currently evolving and the Company’s LiveWire segment faces risks associated with changes to these regulations, such as: (i) the imposition of a carbon tax or the introduction of a cap-and-trade system on electric utilities, either of which could increase the cost of electricity and thereby the cost of operating an electric vehicle; (ii) new state regulations of electric vehicles fees could discourage consumer demand for electric vehicles; (iii) the increase of subsidies for alternative fuels such as corn and ethanol could reduce the operating cost of vehicles that use such alternative fuels and gasoline, and thereby reduce the appeal of electric vehicles; (iv) revocation of or discontinuation of or lack of federal and/or state incentives or subsidies for the manufacture, sale or purchase of electric vehicles which could reduce the appeal of electric vehicles; (v) changes to the regulations governing the sourcing, assembly, transportation, and labeling of battery cells (such as the Batteries Regulation in the EU and related secondary legislation) could increase the cost of battery cells or make such commodities more difficult to obtain; (vi) changes in regulation, for example relating to the noise required to be emitted by electric vehicles, may impact the design or function of electric vehicles, and thereby lead to decreased consumer appeal; (vii) changes in regulations governing the range and miles per gallon of gasoline equivalent calculations could lower LiveWire’s electric vehicles’ ratings, making electric vehicles less appealing to consumers; and (viii) the amendment or rescission of the CAFE standards could reduce new business opportunities for the LiveWire business. To the extent compliance with new regulations is cost prohibitive, the Company’s business, prospects, financial condition and operating results could be materially and adversely affected.
Financial Services – The HDFS segment is governed by a wide range of U.S. federal and state and foreign laws that regulate financial and lending institutions, and financial services activities. In the U.S. for example, these laws include the federal Truth-in-Lending Act, Equal Credit Opportunity Act, Fair Credit Reporting Act, the Servicemembers Civil Relief Act, the unfair, deceptive and abusive practices (UDAAP) provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the consumer data privacy and security provisions of the Gramm-Leach Bliley Act. HDFS operations originate the majority of its consumer loans through its subsidiary, Eaglemark Savings Bank, a Nevada state thrift chartered as an Industrial Loan Company. U.S. federal and state bodies may in the future impose additional laws, regulations and supervision over the financial services industry, and priorities of federal and state regulators can be subject to change.
Violations of, or non-compliance with, relevant laws and regulations may limit the ability of HDFS to collect all or part of the principal or interest on applicable loans, may entitle the borrower to rescind the loan or obtain a refund of amounts previously paid, could subject HDFS to payment of damages, civil fines, or criminalpenalties and administrative sanctions and could limit the number of loans eligible for HDFS securitization programs or that may be available to sell to its strategic partners. Such regulatory requirements and associated supervision also could limit the discretion of HDFS in operating its business, such as through the suspension or revocation of any charter, license or registration at issue, as well as the imposition of administrative sanctions, including "cease and desist" orders. The Company cannot assure that the applicable laws or regulations will not be amended or construed in ways that are adverse to HDFS, that new laws and regulations will not be adopted in the future, or that laws and regulations will not attempt to limit the interest rates or convenience fees charged by HDFS, any of which may adversely affect the business of HDFS or its results of operations.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) is a sweeping piece of legislation impacting financial services and the full effect continues to evolve as regulations that are intended to implement the Dodd-Frank Act are adopted, and the text of the Dodd-Frank Act is analyzed by stakeholders and the courts. The Dodd-Frank Act also created the Consumer Financial Protection Bureau (the Bureau). The Bureau has significant enforcement and rule-making authority in the area of consumer financial products and services. The direction that the Bureau will take, the regulations it will adopt, and its interpretation of existing laws and regulations are all elements that are not yet fully known and subject to change. Given the fact that a single director leads the Bureau, and the director is subject to at-will removal by the President, the strategic direction and priorities of the Bureau can be subject to volatile swings upon changes in presidential administrations. The Bureau and the Federal Trade Commission (“FTC”) regularly investigate the products, services and operations of those engaged in vehicle finance activities. As a result of such investigations, both the Bureau and the FTC have announced various enforcement actions against lenders and servicers in the past few years involving significant penalties, consent orders, cease and desist orders and similar remedies that, if applicable to the Company or the products and services the Company offers, may require the Company to cease or alter certain business practices, which could have a material adverse effect on the Company's results of operations, financial condition, and liquidity. Compliance may be costly and could affect operating results as the implementation of new forms, processes, procedures and controls and infrastructure may be required. Compliance may create operational constraints and place limits on pricing. Failure to comply, as well as changes to laws and regulations, or the imposition of additional laws and regulations, could affect HDFS's
earnings, limit its access to capital, limit the number of loans eligible for HDFS securitization programs or sale to its strategic partners and have a material adverse effect on HDFS’ business and results of operations. The Bureau also has supervisory authority over certain non-bank larger participants in the vehicle financing market, which includes a non-bank subsidiary of HDFS, allowing the Bureau to conduct comprehensive and rigorous on-site examinations that could result in enforcement actions, fines, changes to processes and procedures, product-related changes or consumer refunds or other actions.
• Regulations related to materials that the Company purchases to use in its products could cause the Company to incur additional expenses and may have other adverse consequences. Laws or regulations impacting the Company's supply chain, such as the UK Modern Slavery Act and the Uyghur Forced Labor Prevention Act, could affect the sourcing and availability of some of the raw materials that the Company uses in the manufacturing of its products and the apparel and licensing products sourced from its suppliers. The Company's supply chain is complex, and if it is not able to fully understand its supply chain and effectively mitigate any issues, then the Company may face reputational challenges with customers, investors, regulators or others and other adverse consequences. For example, many countries in which the Company distributes its products are introducing regulations that require knowledge and disclosure of virtually all materials and chemicals in the Company’s products. Accordingly, the Company could incur significant costs related to the process of complying with these laws, including potential difficulty or added costs in satisfying the disclosure requirements.
• The Company is subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and noncompliance with such laws can subject the Company to administrative, civil and criminalfines and penalties, collateral consequences, remedial measures and legal expenses, all of which could adversely affect the Company’s business, results of operations, financial condition and reputation. The Company is subject to anti-corruption, anti-bribery, anti-money laundering and similar laws and regulations in various jurisdictions in which it conducts or in the future may conduct activities, including the U.S. Foreign Corrupt Practices Act (FCPA), the U.K. Bribery Act 2010 (the U.K. Bribery Act), and other anti-corruption laws and regulations. Due to Russia’s invasion of Ukraine, the U.S., in coordination with the United Kingdom and the European Union, among others, has implemented sanctions and export control measures targeting Russia, Belarus, and Russian-controlled regions of Ukraine (Crimea, the so-called Donetsk People's Republic, and Luhansk People's Republic). These measures include prohibitions on the export, re-export, or transfer of luxury goods, among other products, to Russia and Belarus, including motorcycles, motorcycle parts and accessories, and leather goods. A violation of these laws or regulations could adversely affect our business, results of operations, financial condition and reputation. The Company’s policies and procedures designed to ensure compliance with these regulations may not be sufficient and its directors, officers, employees, representatives, consultants, agents, and business partners could engage in improper conduct for which the Company may be held responsible.
The Company’s business also must be conducted in compliance with applicable economic and trade sanctions laws and regulations, such as those administered and enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control, the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council and other relevant sanctions authorities. The Company’s global operations expose the Company to the risk of violating, or being accused of violating, anti-corruption laws and economic and trade sanctions laws and regulations. The Company’s failure to comply with these laws and regulations may expose it to reputational harm as well as significant penalties, including criminalfines, imprisonment, civil fines, disgorgement of profits, injunctions and debarment from government contracts, as well as other remedial measures. Investigations of allegedviolations can be expensive and disruptive. Despite the Company’s compliance efforts and activities, it cannot assure compliance by its employees or representatives for which it may be held responsible, and any such violation could materially adversely affect the Company’s reputation, business, prospects, financial condition and operating results.
Non-compliance with anti-corruption, anti-bribery, anti-money laundering or financial and economic sanctions laws could subject the Company to whistleblower complaints, adverse media coverage, investigations and severe administrative, civil and criminal sanctions, collateral consequences, remedial measures and legal expenses, all of which could materially and adversely affect our business, prospects, financial condition and operating results. In addition, changes in economic sanctions laws in the future could adversely impact the Company’s business and investments in its common stock.
• The Company’s operations may be affected by greenhouse gas emissions and climate change and related regulations . There are significant legislative and regulatory efforts to limit greenhouse gas emissions. The U.S. Congress has previously considered and may in the future implement restrictions on greenhouse gas emissions. In addition, several U.S. states, including states where the Company has manufacturing facilities, have previously
considered and may in the future implement greenhouse gas registration and reduction programs. Energy security and availability and its related costs affect all aspects of the Company’s manufacturing operations worldwide, including the Company’s supply chain and contract manufacturers. The Company’s manufacturing facilities use energy, including electricity and natural gas, and certain of the Company’s facilities emit amounts of greenhouse gas that may be affected by these legislative and regulatory efforts. Greenhouse gas regulation could increase the price of the electricity the Company purchases, increase costs for use of natural gas, potentially restrict access to or the use of natural gas, require the Company to purchase allowances to offset the Company’s own emissions or result in an overall increase in costs of raw materials, any one of which could increase the Company’s costs, reduce competitiveness in a global economy or otherwise negatively affect the Company’s business, operations or financial results. Many of the Company’s suppliers face similar circumstances. Physical risks to the Company’s business operations as identified by the Intergovernmental Panel on Climate Change and other expert bodies include scenarios such as sea level rise, extreme weather conditions and resource shortages. Extreme weather may disrupt the production and supply of component parts or other items, such as natural gas, a fuel necessary for the manufacture of motorcycles and their components. Supply disruptions would raise market rates and jeopardize the continuity of motorcycle production.
Further, in response to concerns about global climate changes and related changes in consumer preferences, the Company is likely to face greater regulatory pressure to develop products that generate less emissions and to generate less emissions in all phases of its operations. For example, both the United Kingdom (UK) and EU passed legislation in 2022, which each subsequently revised, to end new fossil fuel car sales by 100% by 2035 in the UK and by 90% by 2035 in the EU. While these laws target fossil fuel cars, the ongoing concerns about global climate and related changes in consumer preferences could lead to a similar ban on internal combustion engines for motorcycles, which would have a material adverse effect on the Company’s business and results of operations. Additionally, in the near term, the Company will not be primarily focused on electric vehicles but will be channeling its focus in this area through its majority investment in LiveWire Group, Inc. As a result, the separation of the LiveWire business may adversely affect the Company's efforts to develop electric vehicles outside of the LiveWire business, at least in the near term, and that could have longer-term negative impacts on the Company's ability to offer electric vehicles in response to pressure to develop products that generate less emissions.
General Risks
• Changes in general economic and business conditions, tightening of credit and retail markets, political events or other factors may adversely impact dealers’ retail sales. The motorcycle industry is impacted by general economic conditions over which motorcycle manufacturers have little control. These factors can weaken the retail environment and lead to weaker demand for discretionary purchases, such as the Company's motorcycles. Weakened economic conditions in certain business sectors and geographic areas can also: (i) result in reduced demand for the Company's products; (ii) negatively impact the business performance and operations of the Company's network of independent dealerships; and (iii) negatively impact the business performance and operations of the Company's suppliers, all of which may negatively impact the financial performance and operations of the Company. Tightening of credit can limit the availability of funds from financial institutions and other lenders and sources of capital which could adversely affect the ability of: (i) retail consumers to obtain loans for the purchase of motorcycles from lenders; and (ii) the Company's independent dealers and suppliers, and HDFS, to effectively operate their businesses. For example, recent macroeconomic conditions have impacted the Company's customers globally, with inflationary pressures creating affordability challenges and high interest rates contributing to delays in customers' decisions to upgrade to new models, which adversely impact dealers' retail sales and the Company's results of operations.
• Geopolitical conditions, including regional conflicts, terrorism, war, and international disputes could cause damage or disruption to commerce and the economy, and thus have a material adverse effect on the Company’s financial condition and operating results. The Company operates around the world in various geographic regions and is subject to global events that are beyond its control. The motorcycle industry can also be affected by regional conflicts and other factors over which motorcycle manufacturers have little control. For example, the ongoing conflict between Russia and Ukraine has led to an unprecedented expansion of sanctions programs imposed by the United States, European Union, United Kingdom, Canada, Switzerland, Japan and other countries against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic and Luhansk People’s Republic.
Further, ongoing regional conflicts, including the military conflict between Israel and Hamas, a U.S. designated Foreign Terrorist Organization and the risk of increased tensions between, for example, China and Taiwan and the U.S. and the EU, could result in increased pressure on our supply chain, which could increase the cost of
manufacturing. The Company has a number of suppliers in China, and a conflict between China and Taiwan may impact the Company's supply chain. The EU is the Company's second largest sales region, and escalated tensions between the U.S. and the EU could impact demand for the Company's motorcycles in that region. The length, impact and outcome of international conflicts are highly unpredictable, and such conflicts could lead to significant volatility in commodity prices and supply and prices of energy resources, instability in financial markets, supply chain interruptions, political and social instability, changes in consumer or purchaser preferences as well as increases in cyberattacks and espionage, which could impact the Company's financial condition and operating results.
• The Company is and may in the future become subject to legal proceedings and commercial or contractual disputes. Potential future lawsuits or other claims, or future adverse developments associated with existing unresolved lawsuits and other claims, may harm the Company’s business, financial condition, reputation and brand. The defense of these lawsuits or other claims may result in the expenditure of significant financial resources and the diversion of management’s time and attention away from business operations. An increase in the number of nuclear jury verdicts and overall amounts of jury awards may also increase the costs of defense, insurance and award payments, and may also encourage plaintiffs to initiate more lawsuits and higher settlement demands regardless of the merits of their claims. The Company may be required to make payments in connection with the resolution of lawsuits or other claims by settlement or otherwise, and any such payment or associated costs may have a material adverse effect on the Company’s business and results of operations.
The Company disclaims any obligation to update these risk factors or any other forward-looking statements. The Company assumes no obligation, and specifically disclaims any such obligation, to update these risk factors or any other forward-looking statements to reflect actual results, changes in assumptions or other factors affecting such forward-looking statements.
favorably
Cautionary
cautioned
undue
disclaims
Overview (1)
During 2025, a challenging economic environment, including high-interest rates and depressed consumer sentiment resulting from economic uncertainty, continued to adversely impact consumer demand for premium discretionary products, including the Company's motorcycles. Net income attributable to Harley-Davidson, Inc. for 2025 was $338.7 million, or $2.78 per diluted share, down from $455.4 million, or $3.44 per diluted share, in 2024. Consolidated operating income in 2025 decreased $30.0 million compared to 2024 primarily due to unfavorable operating results in the HDMC segment. This was partially offset by higher operating income in the HDFS segment driven by a transaction the Company entered into with two counterparties, related to HDFS, during the second half of 2025 (HDFS Transaction) and lower operating losses in the LiveWire segment.
HDMC segment operating loss was $28.7 million in 2025 compared to operating income of $277.8 million in 2024. The reduction in operating results was due primarily to lower motorcycle shipments, which fell in response to a decline in worldwide retail motorcycle sales. Operating income was also unfavorably impacted by unfavorable manufacturing leverage related to higher fixed costs per unit on lower production and shipment volumes as well as the impact from new or increased tariffs implemented in 2025, partially offset by favorable changes in pricing, shipment mix, foreign currency rates and raw material costs.
LiveWire segment operating loss was $75.0 million in 2025 compared to an operating loss of $109.6 million in 2024. The decrease in operating loss was due primarily to lower operating expenses, largely as a result of cost reduction initiatives.
HDFS segment operating income was $490.4 million in 2025 compared to operating income of $248.4 million in 2024. The increase in operating income was due primarily to a release of the allowance for credit losses on receivables sold as part of the HDFS Transaction and higher other income, partially offset by lower interest income, higher interest expense, including debt extinguishment costs, and higher operating expenses.
Retail sales of Harley-Davidson motorcycles declined during 2025 as they continued to be negatively impacted by a challenging macroeconomic environment. Worldwide dealer retail unit sales of new Harley-Davidson motorcycles decreased 12.4% in 2025 compared to 2024. During 2025, retail sales decreased 12.9% and 11.5% in U.S. and international markets, respectively, compared to 2024. Refer to the Harley-Davidson Retail Sales section for further discussion of retail sales results.
Key Factors Impacting the Company
U.S. and Foreign Tariffs – During 2025, the U.S. implemented new or increased tariffs on goods from various foreign countries, either generally or with respect to certain products. In certain circumstances, the U.S. and certain foreign countries continued to discuss trade policy which could impact the on-going cost of tariffs for the Company. During 2025, the total cost of new or increased tariffs implemented in 2025 that the Company incurred was approximately $67 million (a) .
Certain tariffs have been challenged in U.S. courts, including tariffs levied under the International Emergency Economic Powers Act of 1977 which the Supreme Court ruled were unconstitutional on February 20, 2026, which could impact the continued application of the new or increased tariffs. Depending on the outcome of court challenges and any related actions by the administration or Congress, trade negotiations and other factors, the U.S. and foreign countries may sustain, amend, suspend or withdraw existing tariffs or implement new tariffs. If existing tariffs are sustained or new tariffs are implemented,
it will likely increase the Company’s cost of raw materials, components, finished motorcycles, parts and accessories and apparel and affect its ability to sell products domestically and internationally at or near current prices. The Company's U.S.-centric manufacturing footprint and sourcing limit its exposure to tariffs; however, based on the portions of the Company's business that are exposed directly or indirectly to tariffs and the magnitude of potential incremental tariffs, the impact to the Company could be material. The impacts of new or increased tariffs to the Company for the full year 2025 and the Company's expectations for 2026 (1) as of February 8, 2026 are as follows (dollars in millions):
Tariff
2025 Impact (a)
2026 Estimate (a)
China
Mexico
Canada
India
Thailand
Rest of world
Steel and aluminum
Total
(a) Includes the cost of new or increased import and export tariffs implemented in 2025 paid directly by the Company and indirect costs paid to suppliers for tariff-related price increases. Excludes the benefit of any past or future mitigation actions, changes in demand and operational costs primarily to accelerate shipments ahead of actual or expected new or increased tariffs.
The Company plans to continue its efforts to mitigate the impact of tariffs, including engaging with governments to advocate for consideration of motorcycles in trade negotiations; pursuing recovery of tariffs, where appropriate; moving inventory into markets ahead of tariff effective dates; evaluating sourcing options and pricing for its products; and prudently managing cost.
In its efforts to pursue recovery of tariffs, the Company has been successful in its appeal of certain tariffs. In April 2021, the Company received notification from the Economic Ministry of Belgium that, following a request from the EU, the Company would be subject to revocation of the Binding Origin Information (BOI) decisions that allowed it to supply its EU markets with certain motorcycles produced at its Thailand manufacturing facility at tariff rates of 6%. As a result of the revocation, all non-electric motorcycles that Harley-Davidson imported into the EU, regardless of origin, were subject to a total tariff rate of 31% from April 19, 2021 through the end of 2021. On October 30, 2021, the U.S. and EU announced an agreement related to the Section 232 tariffs on steel and aluminum that were implemented in 2018 by the U.S. and the subsequent rebalancing tariff measures taken by the EU. This agreement suspended the additional tariffs initially imposed by the EU on the Company's motorcycles, reducing the total EU tariff rate on the Company’s motorcycles from 31% to 6%, effective January 1, 2022. The lower 6% tariff rate applied to all motorcycles imported by the Company into the EU, regardless of origin.
The Company pursued appeals of the revocation of the BOI decisions and the denial of its application for temporary extended reliance on the 6% tariff rate (for motorcycles produced in Thailand and ordered prior to April 19, 2021). The Company received a favorable judgment on the appeal of the denial of its application for temporary extended reliance, which resulted in the Company receiving a €35 million refund on February 23, 2026 (or $42 million remeasured to U.S. dollars on February 23, 2026). This did not impact the Company's financial statements for the year ended December 31, 2025; it will impact the results for the first quarter of 2026.
Interest Rates - Despite an interest rate decline in the latter part of 2024 and another in the third quarter of 2025, interest rates remained heightened in 2025. The declines in the latter part of 2024 and third quarter of 2025 follow a significant increase during 2022 and 2023 as central banks attempted to reduce inflation. The current higher interest rate environment has adversely impacted HDFS' interest income margin due to a higher cost of funds that is only partially offset by increased interest rates on financing products sold by HDFS. Additionally, higher interest rates have adversely impacted consumer discretionary purchases, like purchases of the Company's motorcycles, as higher borrowing costs have made these purchases less affordable or impacted the consumer's ability to obtain financing.
HDFS Transaction - In the second half of 2025, the Company entered into the HDFS Transaction with two counterparties relating to HDFS. The key aspects of the transaction include:
• Sale of Existing Retail Finance Receivables: During the second half of 2025, HDFS agreed to sell the majority of its existing retail finance receivables, including its securitization beneficial interests. As a result, the Company had the following impacts:
▪ Sale of Securitization Beneficial Interests: HDFS completed the sale of 95% of its residual interests in retail finance receivables that were previously transferred to certain special purpose entities (SPEs) through on-balance sheet asset-backed securitization transactions, resulting in a gain of $27.9 million and the deconsolidation of $1.9 billion of net finance receivables and $1.7 billion of related debt, among other assets and liabilities.
▪ Sale of Retail Finance Receivables: HDFS sold $4.1 billion of retail finance receivables originated prior to the HDFS transaction, resulting in the release of the related allowance for credit losses and contributing to a $191.4 million benefit in the provision for credit losses in 2025.
• Sale of On-Going Retail Loan Originations: HDFS agreed to sell up to two-thirds of new retail loan originations to the counterparties over a 5-year period (Forward Flow Agreement) and began selling a portion of new retail loan originations to the counterparties during the fourth quarter of 2025. HDFS earns loan servicing fees over the period it services loans purchased by the counterparties at a rate of 1% per annum for prime loans and 2.5% per annum for subprime loans.
• Equity Investments in HDFS: Each of the counterparties paid $23.3 million cash to acquire 4.9% of HDFS based on a multiple of approximately 1.75x HDFS's post-transaction equity carrying value for a total of 9.8% of HDFS. As a result, the counterparties began participating in HDFS equity, including its earnings, representing a non-controlling interest in the Company's ownership of HDFS, in the fourth quarter. Seven years after closing the transaction or in the event of a change of control of Harley-Davidson, Inc. or HDFS, each counterparty will have the right to exchange (1) their HDFS ownership interest for Harley-Davidson common stock. Three years after closing the transaction, the Company has the right to repurchase the counterparties' ownership interest in HDFS using cash that would otherwise be available to the Company in the form of a dividend from HDFS; however, the Company may not purchase any more than one-third of the counterparties' HDFS ownership in an individual year.
Using proceeds from the HDFS Transaction, HDFS executed a tender offer for its $700.0 million 6.50% medium-term notes due 2028 and $500.0 million 5.95% medium-term notes due 2029, resulting in $437.1 million and $355.1 million of notes being redeemed, respectively. HDFS subsequently executed a make-whole redemption, resulting in the remaining $262.9 million of medium-term notes due 2028 being redeemed. The Company recognized a loss on debt extinguishment of $67.6 million, which included unamortized discounts and fees, related to the medium-term note transactions and an additional $5.0 million related to other debt settlement transactions during 2025. The $72.6 million of loss from debt extinguishment is included within Financial services interest expense on the Consolidated statements of operations. The tender offer and subsequent make-whole redemption on the medium-term notes contributed to the $3.6 billion decrease in HDFS debt and deposits during 2025, largely driven by lower funding needs and using proceeds from the HDFS Transaction.
Proceeds from the HDFS Transaction were also used to pay down the Company's $450 million term loan and enter into a $200 million accelerated share repurchase (ASR) program, which contributed 6.3 million shares to the Company's 2025 discretionary share repurchases, with the remainder available for settlement of the HDFS medium-term notes due in 2026 and expected to be used for general corporate purposes (1) .
HDFS now carries a lower retail finance receivables balance as compared to 2024 due to the sale of a significant portion of its retail loan portfolio in the fourth quarter of 2025 and the sale of a portion of its new originations within the quarter. As a result, the Company expects HDFS’s operating income will be reduced as it earns less interest income on HDFS’s lower retail finance receivable balance, partially offset by new retail loan servicing fees for servicing loans that have been sold and from expected ongoing sales of loans under the Forward Flow Agreement (1) .
New Products and Annual Launch Timing - The Company has announced plans to introduce a new small displacement motorcycle, which the Company believes will be profitable, and an iconic classic cruiser starting in 2026. In addition, the Company began to shift the timing of its annual new model year launch from January to the preceding fall for certain models in 2025 and expects to continue expanding to additional models in future years to create additional retail selling opportunities later in each calendar year. Finally, the Company announced LiveWire's plans to launch production versions of two concept mini-motorcycles, which represents a strategic shift in LiveWire's product portfolio to align with evolving customer preferences and growing global demand for lightweight, urban-friendly mobility solutions.
New Chief Executive Officer and New Strategic Plan - Effective October 1, 2025, the Company hired a new Chief Executive Officer (CEO). Soon after the new CEO's appointment, the Company initiated a comprehensive evaluation of its strategy and operations. The Company expects the strategic and operational evaluation activities to continue in the coming months, which the Company expects will result in the announcement of a new strategic plan in the second quarter of 2026.
Guidance (1)
On February 10, 2026, the Company announced the following expectations for 2026, which exclude potential impacts that could result from the adoption of the new strategic plan the Company expects to announce in the second quarter of 2026:
The Company expects 2026 wholesale shipments and worldwide dealer retail sales of Harley-Davidson motorcycles of 130,000 to 135,000 units as the Company believes global dealer retail inventory levels support the alignment of expected wholesale shipments with expected worldwide dealer retail sales of Harley-Davidson motorcycles. The Company expects shipments to be lower in the first and third quarters of 2026 as compared to the same quarters in 2025, and it expects shipments to be higher in the second and fourth quarters of 2026 as compared to the same quarters in 2025.
The Company expects a reduced level of production in light of the current retail environment. The reduced level of production is expected to negatively impact HDMC operating margins due to unfavorable manufacturing leverage as fixed costs are allocated over fewer units produced resulting in a higher unit cost. As a result of unfavorable manufacturing leverage and the expected additional cost of new or increased tariffs for a full year, the Company expects 2026 HDMC operating results in the range of $40 million operating loss to $10 million operating income.
The Company expects LiveWire operating loss of $70 million to $80 million in 2026.
The Company expects HDFS operating income of $45 million to $60 million in 2026, which compares to $490.4 million and $248.4 million in 2025 and 2024, respectively. The expected reduction in 2026 is related to the HDFS Transaction, which benefited 2025 HDFS operating income and reduced HDFS's retail finance receivables balance and, as a result, is expected to reduce interest income on a lower retail finance receivables balance. The Company expects HDFS to continue to increase its retail finance receivable base over the coming years as it continues to originate retail finance receivables held for investment. The anticipated increase in the retail finance receivable base will contribute to higher levels of HDFS operating income which the Company expects will reach approximately three times 2026 expected HDFS operating income in or around 2029.
In 2022, the Company set a cost productivity target to eliminate $400 million of incremental cost incurred since 2020 by 2025. The Company's efforts are focused on production efficiency, logistics network optimization and supplier cost optimization. This target originally included a positive impact from manufacturing leverage of approximately $50 million to $70 million based on an anticipated reduction in the fixed cost per motorcycle associated with increasing production volumes. Given the decrease in production volumes in 2023 and 2024, the Company adjusted the target in 2024 by removing the impact of manufacturing leverage and increasing productivity objectives in other areas to maintain the original target. In 2025, the Company extended its target to be more than $400 million by the end of 2026. Excluding the impact of manufacturing leverage, the Company achieved approximately $24 million, $123 million, $110 million, and $103 million of cost productivity savings in 2022, 2023, 2024, and 2025, respectively, resulting in total productivity savings of $360 million since the beginning of 2022. The Company is committed to on-going efforts to increase productivity and is reevaluating its productivity targets in connection with the development of a new strategic plan it expects to share in the second quarter of 2026.
The Company is conducting a review of its cost base, including operating expenses, in light of the current retail and wholesale environment. The Company expects its review will identify opportunities for the Company to reduce its cost base that, when the Company acts on them, the Company expects will result in at least $150 million of total annual savings at its HDMC and HDFS segments compared to its current cost base. The Company expects to identify and act on the opportunities so that it will realize these cost savings beginning in 2027. The Company expects these savings to be incremental to the previously announced productivity savings the Company expects to achieve by the end of 2026, which the Company expects will continue into 2027.
The Company expects capital investments in 2026 of between $175 and $200 million.
The Company previously announced a plan to repurchase approximately $1 billion of shares on a discretionary basis in aggregate from the third quarter of 2024 through the end of 2026. The Company purchased $250 million shares on a discretionary basis during the third and fourth quarters of 2024 and $347 million shares on a discretionary basis in 2025, including $160 million of shares settled in 2025 pursuant to the $200 million ASR program. The Company remains committed to returning excess capital to shareholders in a disciplined and sustainable manner; however, the Company is pausing near-term discretionary share repurchases, with the exception of shares due to the Company under its ASR program at December 31, 2025 which were delivered on February 13, 2026, until it develops its new strategic plan that it expects to announce in the second quarter of 2026.
Results of Operations 2025 Compared to 2024
Consolidated Results
(in thousands, except earnings per share)
Increase
(Decrease)
Operating income - HDMC
Operating loss - LiveWire
Operating income - HDFS
Operating income
Other income, net
Investment income
Interest expense
Income before income taxes
Income tax provision
Net income
Less: Loss attributable to noncontrolling interests
Net income attributable to Harley-Davidson, Inc.
Diluted earnings per share
The Company reported operating income of $386.6 million in 2025 compared to $416.6 million in 2024 due to lower operating results at the HDMC segment, partially offset by higher operating income at the HDFS segment and a lower operating loss at the LiveWire segment. The HDMC segment reported operating loss of $28.7 million compared to operating income of $277.8 million in 2024. Operating loss from the LiveWire segment decreased $34.6 million compared to 2024. Operating income from the HDFS segment increased $242.0 million compared to 2024. Refer to the HDMC segment, LiveWire segment and HDFS segment discussions for a more detailed analysis of the factors affecting operating results.
Other income, net was lower in 2025 compared to 2024 as the prior year was favorably impacted by income related to a decrease in the fair value of LiveWire's warrant liabilities which did not recur in 2025. Investment income decreased in 2025 as compared to 2024 driven by lower income from cash equivalents.
The Company's effective income tax rate for 2025 was a 28.2% expense compared to a 13.9% expense for 2024. The Company's 2025 effective tax rate was unfavorably impacted by valuation allowances recorded during 2025, which reduced deferred tax assets. This compares to the Company's 2024 effective tax rate which was favorably impacted by the mix of earnings from certain non-US jurisdictions that have a lower statutory tax rate or have beneficial tax holidays. Refer to Note 3 of the Notes to Consolidated financial statements for further discussion regarding the Company’s effective tax rate.
Diluted earnings per share was $2.78 in 2025 compared to $3.44 in 2024 with the decrease due to lower net income partially offset by the benefit of lower weighted average shares outstanding as compared to 2024. Diluted weighted average shares outstanding decreased from 132.3 million in 2024 to 121.3 million in 2025 primarily due to repurchases of common stock.
Harley-Davidson Motorcycle Retail Sales and Registration Data
Harley-Davidson Motorcycle Retail Sales (a)
Retail unit sales of new Harley-Davidson motorcycles were as follows:
Increase
(Decrease)
% Change
United States
Canada
North America
Europe/Middle East/Africa (EMEA)
Asia Pacific
Latin America
(a) Data source for retail sales figures shown above is new sales warranty and registration information provided by dealers and compiled by the Company. The Company must rely on information that its dealers supply concerning new retail sales, and the Company does not regularly verify the information that its dealers supply. This information is subject to revision.
Worldwide retail sales of new Harley-Davidson motorcycles decreased 12.4% during 2025 compared to 2024 driven primarily by declines in North America, Europe and Asia Pacific.
The decline in North American retail sales was driven by lower retail sales in the United States, which continued to be negatively impacted by a challenging macroeconomic environment, including high interest rates and depressed consumer sentiment, adversely impacting consumer discretionary spending. In addition, the decline in retail sales was due in part to a positive impact in the prior year associated with the launch of the Company's redesigned 2024 new model year Touring motorcycles, which is the Company's highest volume motorcycle family. This was partially offset by a smaller decline in the Company's Cruiser models, which the Company refreshed in 2025. Retail sales in Asia Pacific and Europe were soft also primarily due to challenging macroeconomic conditions.
Worldwide retail inventory of new motorcycles was approximately 40,000 units at the end of 2025, which was down approximately 17% from the end of 2024 primarily due to more significant reductions of models other than Grand America Touring models, as dealers reduced inventory levels in the current retail environment which resulted in lower HDMC shipments in 2025 compared to 2024.
Motorcycle Registration Data - 601+cc (a)(d)
The Company's Harley-Davidson motorcycle U.S. market share of new 601+cc motorcycle registrations for 2025 was 34.5%, down 2.8 percentage points compared to 2024 (Source: Motorcycle Industry Council). The Company's Harley-Davidson motorcycle European market share of new 601+cc motorcycle registrations for 2025 was 3.4%, down 1.6 percentage points compared to 2024 (Source: Management Services Helwig Schmitt GmbH). Refer to Item 1. Business for additional market share information.
Industry registration data for new motorcycles was as follows:
Increase
% Change
United States (b)
Europe (c)
(a) Data includes on-road models with internal combustion engines with displacementsgreater than 600cc's and electric motorcycles with kilowatt peak power equivalents greater than 600cc's (601+cc). On-road 601+cc models include dual purpose models, three-wheeled motorcycles and autocycles.
(b) United States industry data is derived from information provided by Motorcycle Industry Council. This third-party data is subject to revision and update.
(c) Europe data includes Austria, Belgium, Denmark, Finland, France, Germany, Italy, Luxembourg, Netherlands, Norway, Spain, Sweden, Switzerland, and the United Kingdom. Industry data is derived from information provided by Management Services Helwig Schmitt GmbH. This third-party data is subject to revision and update.
(d) New motorcycle registrations for the industry and Harley-Davidson are provided by or derived from third-party sources. New motorcycle registrations include consumer registrations (retail registrations) and to a lesser extent manufacturer, distributor and dealer registrations (non-retail registrations), for example, to register demonstration fleets. In the later part of 2024, manufacturers (including the Company), distributors and dealers registered some motorcycles in Europe through non-retail registrations to qualify the motorcycles under the new Euro 5+ emissions standard to allow for subsequent retail sale after December 31, 2024. This included approximately 3,700 non-retail registrations of new Harley-Davidson motorcycles in 2024, which in turn adversely impacted the number of new Harley-Davidson motorcycle registrations during 2025. While the Company believes industry registrations for Europe in 2024 were impacted in a similar manner, it does not have access to competitor information necessary to confirm this.
HDMC Segment
Motorcycle Unit Shipments
Wholesale motorcycle unit shipments were as follows:
Unit
Unit
Units
Mix %
Units
Mix %
Increase
(Decrease)
% Change
Motorcycle Units:
United States
International
Motorcycle Units:
Grand American Touring (a)
Cruiser
Sport and Lightweight
Adventure Touring
(a) Includes Trike
HDMC shipped 124,477 motorcycles worldwide during 2025, which was 16.4% lower than during 2024. Shipments to dealers in 2025 were lower than 2024 based on a planned decrease in motorcycle shipments and softer than expected retail demand as dealers adjusted inventory levels for the current retail environment. The Company shipped a greater proportion of its refreshed Cruiser models and a lower proportion of Grand American Touring models as the prior year included the launch of the Company's newly redesigned Touring motorcycles.
Segment Results
Condensed statements of operations for the HDMC segment were as follows (in thousands):
Increase
(Decrease)
Change
Revenue:
Motorcycles
Parts and accessories
Apparel
Licensing
Other
Cost of goods sold
Gross profit
Operating expenses
Operating income
Operating margin
pts.
The estimated impacts of the significant factors affecting the changes in revenue, cost of goods sold and gross profit from 2024 to 2025 were as follows (in millions):
Revenue
Cost of Goods Sold
Gross Profit
Volume
Price
Foreign currency exchange rates and hedging
Shipment mix
Raw material prices
Manufacturing and other costs
The following factors affected the changes in net revenue, cost of goods sold and gross profit from 2024 to 2025:
• The decrease in volume was primarily due to lower wholesale motorcycle shipments.
• Revenue was positively impacted by favorable pricing on new model year motorcycles as well as parts and accessories and apparel, partially offset by increased motorcycle incentives that were selectively introduced in 2025 to assist dealers in reducing dealer inventory levels in 2025 and into 2026 with a focus on reducing Grand American Touring dealer inventory.
• Revenue and gross profit were positively impacted by stronger foreign currency exchange rates relative to the U.S. dollar as well as favorable net foreign currency impacts associated with balance sheet remeasurements recorded in cost of goods sold.
• Changes in the shipment mix of motorcycles had a favorable impact on gross profit primarily driven by beneficial mix within families toward new limited edition models and models with upgrades and new features, partially offset by unfavorable impacts from shipping a lower proportion of Grand American Touring models.
• Raw material costs, excluding the impact of tariffs, were lower than in the prior year.
• Manufacturing and other costs were negatively impacted by unfavorable manufacturing leverage related to higher fixed costs per unit resulting from lower production and shipment volumes as well as higher tariff and logistics costs. These negative impacts were partially offset by supply-chain productivity gains.
Operating expenses were higher in 2025 compared to 2024 primarily due to increased marketing costs as the Company supported its dealers' marketing efforts during the riding season as well as costs related to the Company's proxy contest in connection with the 2025 annual meeting of shareholders, partially offset by lower people costs, including the cost of compensation and benefits, as well as lower product liability and warranty costs on lower volume.
LiveWire Segment
Segment Results
Condensed statements of operations for the LiveWire segment were as follows (in thousands, except unit shipments):
(Decrease)
Increase
% Change
Revenue
Cost of goods sold
Gross profit
Selling, administrative and engineering expense
Operating loss
LiveWire motorcycle unit shipments
During 2025, revenue decreased by $0.7 million, or 2.6%, compared to 2024. The decrease was primarily due to the impact of promotional incentives, partially offset by higher electric motorcycle and electric balance bike volume. Cost of sales
decreased by $8.8 million, or 22.6%, during 2025 compared to 2024 primarily due to lower downward inventory valuation adjustments on lower inventory purchases.
During 2025, selling, administrative and engineering expense decreased $26.5 million, or 27.3%, compared to 2024 largely as a result of cost reduction initiatives.
HDFS Segment
Segment Results
Condensed statements of operations for the HDFS segment were as follows (in thousands):
(Decrease)
Increase
% Change
HDFS revenue:
Interest income
Other income
HDFS expenses:
Interest expense
Provision for credit losses
Operating expenses
Operating income
Interest income was lower in 2025 compared to 2024, primarily due to lower average outstanding retail finance receivables at a higher average yield and lower average outstanding wholesale receivables at a lower average yield. Other income increased largely due to a gain on sale of residual interests in securitizations, servicing income earned as a result of the HDFS Transaction, and higher net premiums earned by Eaglemark Insurance Company Ltd. (EICL), the Company's insurance captive that reinsures several Harley-Davidson-branded voluntary protection products provided by unaffiliated third parties. Interest expense increased primarily due to $72.6 million in debt extinguishment costs, partially offset by a decrease in interest expense on outstanding debt. The debt extinguishment costs and declines in outstanding retail finance receivables and debt were primarily a result of the HDFS Transaction.
The provision for credit losses decreased $438.6 million compared to 2024 primarily due to a release of the allowance for credit losses associated with loans sold in conjunction with the HDFS Transaction combined with favorable actual credit losses and reserve impacts due to the smaller retail portfolio. The allowance for credit losses considers current economic conditions and the Company's outlook on future conditions. At the end of 2025, the Company's outlook on economic conditions and its probability weighting of its economic forecast scenarios was weighted toward more pessimistic scenarios given continued challenging macro-economic conditions, including a persistently high interest rate environment and muted consumer confidence. The Company's expectations surrounding its economic forecasts may change in future periods as additional information becomes available.
On a managed basis, which considers all loans serviced by the Company, annual retail credit losses on the Company's retail motorcycle loans were 3.37% during 2025 compared to 3.31% in 2024. The 30-day managed basis delinquency rate for retail motorcycle loans increased to 5.77% at December 31, 2025 from 5.34% at December 31, 2024. The unfavorable managed basis retail credit loss and delinquency performance were driven by several factors connected to the macro-economic environment and the related customer and industry dynamics, including the impact of higher motorcycle payments and general inflationary pressures on retail customers. Additionally, while recovery values at auction have stabilized, values continue to run below historical levels.
Wholesale credit losses were $4.8 million higher than in 2024 driven by the charge-off of finance receivables at several troubled dealers.
Operating expenses increased $10.4 million in 2025 primarily due to an increase in insurance claim costs incurred by EICL as well as HDFS employee costs.
Changes in the allowance for credit losses on finance receivables were as follows (in thousands):
Balance, beginning of period
Provision for credit losses
Charge-offs, net of recoveries
Sale of Residual Interests in Securitizations
Balance, end of period
At December 31, 2025, the allowance for credit losses on retail finance receivables was $(22.3) million compared to $378.4 million at December 31, 2024. The allowance for credit losses on the retail motorcycle loan portfolio was in an asset position at December 31, 2025 as estimated recoveries from retail finance receivables previously charged-off exceeded the allowance for credit losses on loans held for investment. The allowance for credit losses on wholesale finance receivables was $24.6 million at December 31, 2025 and $22.8 million at December 31, 2024.
Refer to Note 6 of the Notes to Consolidated financial statements for further discussion regarding the Company’s allowance for credit losses on finance receivables.
Results of Operations 2024 Compared to 2023
Consolidated Results
(in thousands, except earnings per share)
Increase
(Decrease)
Operating income - HDMC
Operating loss - LiveWire
Operating income - HDFS
Operating income
Other income, net
Investment income
Interest expense
Income before income taxes
Income tax provision
Net income
Less: Loss attributable to noncontrolling interests
Net income attributable to Harley-Davidson, Inc.
Diluted earnings per share
The Company reported lower operating income of $416.6 million in 2024 compared to $779.1 million in 2023 due to lower operating income at the HDMC segment partially offset by improved operating results at the HDFS and LiveWire segments. The HDMC segment reported operating income of $277.8 million compared to $661.2 million in 2023. Operating loss from the LiveWire segment decreased $7.2 million compared to 2023. Operating income from the HDFS segment increased $13.7 million compared to 2023. Refer to the HDMC segment, LiveWire segment and HDFS segment discussions for a more detailed analysis of the factors affecting operating results.
Other income, net in 2024 was impacted by income related to a decrease in the fair value of LiveWire's warrant liabilities in 2024 compared to an increase in 2023, partially offset by lower non-operating income related to the Company's defined benefit plans. Investment income increased in 2024 as compared to 2023 driven by higher income from cash equivalents.
The Company's effective income tax rate for 2024 was a 13.9% expense compared to a 19.8% expense for 2023. The Company's 2024 effective tax rate was favorably impacted by the mix of earnings from certain non-US jurisdictions that have a lower statutory tax rate or have beneficial tax holidays and tax benefits related to continued investment in research and development. Refer to Note 3 of the Notes to Consolidated financial statements for further discussion regarding the Company’s effective tax rate.
Diluted earnings per share was $3.44 in 2024 compared to $4.87 in 2023 with the decrease due to lower net income partially offset by the benefit of lower weighted average shares outstanding as compared to 2023. Diluted weighted average shares outstanding decreased from 145.1 million in 2023 to 132.3 million in 2024 primarily due to repurchases of common stock.
Harley-Davidson Motorcycle Retail Sales and Registration Data
Harley-Davidson Motorcycle Retail Sales (a)
Retail unit sales of new Harley-Davidson motorcycles were as follows:
Increase
(Decrease)
% Change
United States
Canada
North America
Europe/Middle East/Africa (EMEA)
Asia Pacific
Latin America
(a) Data source for retail sales figures shown above is new sales warranty and registration information provided by dealers and compiled by the Company. The Company must rely on information that its dealers supply concerning new retail sales, and the Company does not regularly verify the information that its dealers supply. This information is subject to revision.
Worldwide retail sales of new Harley-Davidson motorcycles decreased 7.1% during 2024 compared to 2023 driven primarily by declines in North America, Europe and Asia Pacific.
The decline in North American retail sales was driven by lower retail sales in the United States, which were negatively impacted by a continued challenging macroeconomic environment that included high interest rates adversely impacting consumer discretionary spending. Retail sales in Asia Pacific and Europe were soft also primarily due to challenging macroeconomic conditions. In Asia Pacific, the decline in retail sales was primarily due to lower sales in Japan and China, while lower retail unit sales in Europe were driven by declines in Germany and the surrounding region.
Despite the overall decline in retail sales, North America retail sales of Grand American Touring motorcycles, including Trike motorcycles, increased more than 8% in 2024 compared to 2023 as the Company introduced updated Grand American Touring motorcycles and continued to focus on its most profitable products.
Worldwide retail inventory of new motorcycles was approximately 48,000 units at the end of 2024, which was down approximately 5% from the end of 2023.
Motorcycle Registration Data - 601+cc (a)(d)
The Company's Harley-Davidson motorcycle U.S. market share of new 601+cc motorcycle registrations for 2024 was 37.3%, down 0.6 percentage points compared to 2023 (Source: Motorcycle Industry Council). The Company's Harley-Davidson motorcycle European market share of new 601+cc motorcycle registrations for 2024 was 5.0%, up 0.2 percentage points compared to 2023 (Source: Management Services Helwig Schmitt GmbH). Refer to Item 1. Business for additional market share information.
Industry registration data for new motorcycles was as follows:
Increase
% Change
United States (b)
Europe (c)
(a) Data includes on-road models with internal combustion engines with displacementsgreater than 600cc's and electric motorcycles with kilowatt peak power equivalents greater than 600cc's (601+cc). On-road 601+cc models include dual purpose models, three-wheeled motorcycles and autocycles.
(b) United States industry data is derived from information provided by Motorcycle Industry Council. This third-party data is subject to revision and update.
(c) Europe data includes Austria, Belgium, Denmark, Finland, France, Germany, Italy, Luxembourg, Netherlands, Norway, Spain, Sweden, Switzerland, and the United Kingdom. Industry data is derived from information provided by Management Services Helwig Schmitt GmbH. This third-party data is subject to revision and update.
(d) New motorcycle registrations for the industry and Harley-Davidson are provided by or derived from third-party sources. New motorcycle registrations include consumer registrations (retail registrations) and to a lesser extent manufacturer, distributor and dealer registrations (non-retail registrations), for example, to register demonstration fleets. In the later part of 2024, manufacturers (including the Company), distributors and dealers registered some motorcycles in Europe through non-retail registrations to qualify the motorcycles under the new Euro 5+ emissions standard to allow for subsequent retail sale after December 31, 2024. As a result, Harley-Davidson new motorcycle registrations for Europe in 2024 included a higher proportion of non-retail registrations in 2024 compared to 2023. While the Company believes industry registrations for Europe in 2024 were impacted in a similar manner, it does not have access to competitor information necessary to confirm this.
HDMC Segment
Harley-Davidson Motorcycle Unit Shipments
Wholesale motorcycle unit shipments were as follows:
Unit
Unit
Units
Mix %
Units
Mix %
Increase
(Decrease)
% Change
Motorcycle Units:
United States
International
Motorcycle Units:
Grand American Touring (a)
Cruiser
Sport and Lightweight
Adventure Touring
(a) Includes Trike
HDMC shipped 148,862 motorcycles worldwide during 2024, which was 17.3% lower than during 2023. The reduction in shipments was consistent with the Company's plan for 2024, which included aligning wholesale and retail sales as dealers and the Company acted to adjust dealer inventory levels for the current retail environment.
The motorcycles shipped during 2024 compared to 2023 included a higher mix of Grand American Touring motorcycles as a percent of total shipments to improve availability of models most desired by customers following the introduction of all-new Grand American Touring motorcycles.
Segment Results
Condensed statements of operations for the HDMC segment were as follows (in thousands):
Increase
(Decrease)
Change
Revenue:
Motorcycles
Parts and accessories
Apparel
Licensing
Other
Cost of goods sold
Gross profit
Operating expenses
Operating income
Operating margin
pts.
The estimated impacts of the significant factors affecting the changes in revenue, cost of goods sold and gross profit from 2023 to 2024 were as follows (in millions):
Revenue
Cost of Goods Sold
Gross Profit
Volume
Price
Foreign currency exchange rates and hedging
Shipment mix
Raw material prices
Manufacturing and other costs
The following factors affected the changes in net revenue, cost of goods sold and gross profit from 2023 to 2024:
• The decrease in volume was primarily due to lower wholesale motorcycle shipments.
• Revenue was adversely impacted by the elimination of the pricing surcharge late in 2023 and a fine-tuned pricing strategy for 2024 partially offset by higher promotional costs in the fourth quarter of 2023 that did not recur in 2024.
• Revenue and gross profit were negatively impacted by weaker foreign currency exchange rates relative to the U.S. dollar as well as less favorable net foreign currency impacts associated with balance sheet remeasurements recorded in cost of goods sold.
• Changes in the shipment mix of motorcycles had a favorable impact on revenue due primarily to a shift away from Cruiser models to higher priced Grand American Touring models during 2024 compared to 2023. The impact of shipment mix on gross profit was adversely impacted by incremental costs primarily within the Grand American Touring motorcycle family related to new product features and upgrades included on the Company's model year 2024 motorcycles. Shipment mix was also negatively impacted by unfavorable changes in mix within apparel and licensing.
• Raw material costs were lower than in the prior year.
• Manufacturing and other costs were negatively impacted by unfavorable manufacturing leverage related to higher fixed costs per unit resulting from lower production volumes, continued moderate inflation and payment of a ratification bonus related to new collective bargaining agreements with hourly employees in Wisconsin. These negative impacts were partially offset by supply-chain productivity gains.
Operating expenses were lower in 2024 compared to 2023 due to lower people costs, including the cost of compensation and benefits, and decreases in other discretionary spending as the Company continued to focus on cost discipline and increased productivity.
LiveWire Segment
Segment Results
Condensed statements of operations for the LiveWire segment were as follows (in thousands, except unit shipments):
(Decrease)
Increase
% Change
Revenue
Cost of goods sold
Gross profit
Selling, administrative and engineering expense
Operating loss
LiveWire motorcycle unit shipments
During 2024, revenue decreased by $11.9 million, or 31.2%, compared to 2023. The decrease was primarily due to lower volumes of electric balance bikes and electric motorcycles as well as a lower average prices on electric motorcycles. Cost of sales decreased by $5.4 million, or 12.2%, during 2024 compared to 2023 on lower volumes of electric balance bikes and electric motorcycles.
During 2024, selling, administrative and engineering expense decreased $13.7 million, or 12.4%, compared to 2023 largely as a result of lower product development costs and cost reduction initiatives.
HDFS Segment
Segment Results
Condensed statements of operations for the HDFS segment were as follows (in thousands):
(Decrease)
Increase
% Change
HDFS revenue:
Interest income
Other income
HDFS expenses:
Interest expense
Provision for credit losses
Operating expenses
Operating income
Interest income was higher in 2024 compared to 2023, primarily due to higher average outstanding finance receivables at a higher average yield. Other income decreased largely due to lower licensing revenue partially offset by higher insurance-related income. Interest expense increased due to higher average interest rates on higher outstanding debt and deposits.
The provision for credit losses increased $20.1 million compared to 2023 due to higher actual retail and wholesale credit losses partially offset by a favorable change in the allowance for credit losses. The favorable change in the allowance for credit losses was largely due to a decrease in retail receivables, partially offset by a larger increase in the wholesale reserve on increased portfolio risk, as compared to 2023. The allowance for credit losses considered current economic conditions and the Company's outlook on future conditions. At the end of 2024, the Company's outlook on economic conditions and its probability weighting of its economic forecast scenarios was weighted toward more pessimistic scenarios given continued challenging macro-economic conditions, including a persistently high interest rate environment and muted consumer confidence. The Company's expectations surrounding its economic forecasts may change in future periods as additional information becomes available.
Annual retail credit losses on the Company's retail motorcycle loans were 3.31% during 2024 compared to 3.00% in 2023. The 30-day delinquency rate for retail motorcycle loans at December 31, 2024 increased to 5.34% from 5.09% at December 31, 2023. The unfavorable retail credit loss and delinquency performance were driven by several factors connected to the macro-economic environment and the related customer and industry dynamics, including the impact of higher motorcycle payments and general inflationary pressures on retail customers. Additionally, the Company continued to experience downward pressure on recovery values at auction. Wholesale credit losses were $1.5 million higher than 2023 driven by the charge-off of finance receivables related to two troubled dealers.
Operating expenses were higher in 2024 compared to 2023 due in part to increased repossession costs, insurance-related expenses, and foreign currency losses, partially offset by lower employee-related costs.
Changes in the allowance for credit losses on finance receivables were as follows (in thousands):
Balance, beginning of period
Provision for credit losses
Charge-offs, net of recoveries
Balance, end of period
At December 31, 2024, the allowance for credit losses on finance receivables was $378.4 million for retail receivables and $22.8 million for wholesale receivables. At December 31, 2023, the allowance for credit losses on finance receivables was $367.0 million for retail receivables and $14.9 million for wholesale receivables.
Refer to Note 6 of the Notes to Consolidated financial statements for further discussion regarding the Company’s allowance for credit losses on finance receivables.
Other Matters
New Accounting Standards Issued But Not Yet Adopted
Refer to Note 1 of the Notes to Consolidated financial statements for a discussion of new accounting standards that will become effective for the Company in the future.
Critical Accounting Estimates
The Company’s financial statements are based on the selection and application of significant accounting policies, which require management to make significant estimates and assumptions. Management believes that the following are the critical judgment areas in the application of accounting policies that currently affect the Company’s financial condition and results of operations. Management has discussed the development and selection of these critical accounting estimates with the Audit and Finance Committee of the Company's Board of Directors.
Allowance for Credit Losses on Retail Finance Receivables – The allowance for credit losses on retail finance receivables represents the Company’s estimate of lifetime losses, net of recoveries, for its retail finance receivables.
The retail portfolio primarily consists of a large number of small balance, homogeneous finance receivables. The Company performs a collective evaluation of the adequacy of the retail allowance for credit losses. The Company utilizes weighted-average remaining maturity and vintage-based loss forecast methodologies. Vintage-based forecasts include decompositions for probability of default, exposure at default, attrition rate, and recovery balance rate. Reasonable and supportable economic forecasts for a one- or two-year period are incorporated into the methodologies to reflect the estimated impact of changes in future economic conditions, such as unemployment rates, household obligations or other relevant factors, over the reasonable and supportable period. For periods beyond the Company’s reasonable and supportable forecasts, the Company reverts to its average historical loss experience immediately or using a mean-reversion process over a three-year period. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, or term as well as other relevant factors.
Refer to Note 6 of the Notes to Consolidated financial statements for further discussion regarding the Company’s allowance for credit losses on finance receivables.
Product Recalls – The estimated costs associated with voluntary recalls are recorded when the liability is both probable and estimable. The accrued cost of a recall is based on an estimate of the cost to repair each affected motorcycle and the number of motorcycles expected to be repaired based on historical data concerning the percentage of affected customers that take advantage of recall offers. As actual experience becomes available, it is used to update the accruals.
The factors affecting actual recall costs can be volatile. As a result, actual recall costs may differ from estimates, which could lead to material changes in the Company’s accrued recall costs. The Company’s recall liabilities are discussed further in Note 13 of the Notes to Consolidated financial statements .
Pensions and Other Postretirement Healthcare Benefits – The Company has a defined benefit pension plan and postretirement healthcare benefit plans, which cover certain eligible employees and retirees. The Company also has unfunded supplemental employee retirement plan agreements (SERPA) with certain employees.
U.S. Generally Accepted Accounting Principles (GAAP) requires that companies recognize in their consolidated balance sheets a liability for defined benefit pension and postretirement plans that are underfunded or an asset for defined benefit pension and postretirement benefit plans that are overfunded.
Pension, SERPA and postretirement healthcare obligations and costs are calculated through actuarial valuations. The valuation of benefit obligations and net periodic benefit costs relies on key assumptions including discount rates, mortality, long-term expected return on plan assets, future compensation and healthcare cost trend rates.
The Company determines its discount rate assumptions by referencing high-quality long-term bond rates that are matched to the duration of its benefit obligations. Based on this analysis, the Company decreased the weighted-average discount rate for pension and SERPA obligations from 5.65% as of December 31, 2024 to 5.55% as of December 31, 2025. The Company decreased the weighted-average discount rate for postretirement healthcare obligations from 5.63% as of December 31, 2024 to 5.39% as of December 31, 2025. The Company determines its healthcare trend assumption for the postretirement healthcare obligation by considering factors such as estimated healthcare inflation, the utilization of healthcare benefits and changes in the health of plan participants. Based on the Company’s assessment of this data as of December 31, 2025, the Company set its healthcare cost trend rate for the upcoming year at 6.27% as of December 31, 2025. The Company expects the healthcare cost trend rate to reach its ultimate rate of 5.00% by 2033. (1) These assumption changes were reflected immediately in the benefit obligation and will be amortized into net periodic benefit costs over future periods.
Plan assets are measured at fair value and are subject to market volatility. In estimating the expected return on plan assets, the Company considers the historical returns on plan assets, adjusted to reflect the current view of the long-term investment market.
Changes in the funded status of defined benefit pension and postretirement benefit plans resulting from the difference between assumptions and actual results are initially recognized in other comprehensive income and amortized to expense or income over future periods. Sensitivity to changes in major assumptions used in the pension and postretirement healthcare obligations and costs was as follows (in thousands):
Amounts based
on current
assumptions
Impact of a 1%
decrease in the
discount rate
Impact of a 1%
increase in the
healthcare
cost trend rate
Impact of a 1%
decrease in the
expected return on assets
2025 Net periodic benefit cost (income):
Pension and SERPA
Postretirement healthcare
2025 Benefit obligations:
Pension and SERPA
Postretirement healthcare
The impact of a 1% decrease in the discount rate on net periodic benefit income includes an unfavorable impact on the amortization of unrecognized net actuarial losses, an unfavorable impact on service cost and a favorable impact on interest cost. The amounts based on current assumptions above exclude the impact of settlements and curtailments. This information should not be viewed as predictive of future amounts. The calculations of pension, SERPA and postretirement healthcare obligations and costs are based on many factors in addition to those discussed here. This information should be considered in combination with the information provided in Note 14 of the Notes to Consolidated financial statements .
Income Taxes – The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes (Topic 740). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and other loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company reviews its deferred income tax asset valuation allowances on a quarterly basis or whenever events or changes in circumstances indicate that a review is required. In determining the requirement for a valuation allowance, the historical and projected financial results of the legal entity or consolidated group recording the net deferred income tax asset is considered, along with any positive or negative evidence including tax law changes. Since future financial results and tax law may differ from previous estimates, periodic adjustments to the Company’s valuation allowances may be necessary.
The Company is subject to income taxes in the U.S. and foreign jurisdictions. These tax laws and regulations are complex and significant judgment is required in determining the Company’s worldwide provision for income taxes and recording the related deferred tax assets and liabilities.
In the ordinary course of the Company’s business, there are transactions and calculations where the ultimate tax determination is uncertain. Accruals for unrecognized tax benefits are provided for in accordance with the requirements of Topic 740. An unrecognized tax benefit represents the difference between the recognition of benefits related to items for income tax reporting purposes and financial reporting purposes. The unrecognized tax benefit is included within Other long-term liabilities on the Consolidated balance sheets . The Company has a liability for interest and penalties on exposure items, if applicable, which is recorded as a component of the overall income tax provision. The Company is regularly audited by tax authorities as a normal course of business. Although the outcome of tax audits is always uncertain, the Company believes that
it has appropriate support for the positions taken on its tax returns and that its annual tax provision includes amounts sufficient to pay any assessments (1) . Nonetheless, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year.
Refer to Note 3 of the Notes to Consolidated financial statements for further discussion regarding the Company's income taxes.
Commitments and Contingencies
The Company is subject to lawsuits and other claims related to product, commercial, employee, environmental and other matters. In determining costs to accrue related to these items, the Company carefully analyzes cases and considers the likelihood of adverse judgments or outcomes, as well as the potential range of possible loss. Any amounts accrued for these matters are monitored on an ongoing basis and are updated based on new developments or new information as it becomes available for each matter. Refer to Note 15 of the Notes to Consolidated financial statements for a discussion of the Company's commitments and contingencies.
Liquidity and Capital Resources
The Company’s strategy is to maintain a minimum of twelve months of its projected liquidity requirements through a combination of cash and cash equivalents and availability under its credit facilities. The Company believes its current cash, cash equivalents and availability under its credit facilities are sufficient to meet its liquidity requirements, consistent with this strategy.
The Company expects to fund its on-going operations (excluding the origination of finance receivables) and its capital allocation priorities, including capital expenditures and the return of excess capital to shareholders, primarily with cash flows from operating activities and cash and cash equivalents on hand, including cash generated in 2025 from the HDFS Transaction as described in Key Factors . (1) The Company expects to fund the origination of finance receivables primarily with unsecured debt, unsecured commercial paper, asset-backed commercial paper conduit facilities, committed unsecured bank facilities, asset-backed securitizations, brokered certificates of deposit and cash and cash equivalents on hand. In addition, the Company expects to fund a portion of its finance receivables through the sale under the Forward Flow Agreement of up to two-thirds of the retail finance receivables that HDFS originates shortly after they are originated. (1)
The Company’s cash and cash equivalents and availability under its credit and conduit facilities at December 31, 2025 were as follows (in thousands):
Cash and cash equivalents (a)
U.S. commercial paper conduit facility:
Asset-backed U.S. commercial paper conduit facility (b)(c)
Borrowings against committed facility
Net asset-backed U.S. commercial paper conduit committed facility availability
Asset-backed Canadian commercial paper conduit facility (b)(d)
Borrowings against committed facility
Net asset-backed Canadian commercial paper conduit facility
Availability under credit and conduit facilities:
Credit facilities
Commercial paper outstanding
Net credit facility availability
(a) Includes $82.8 million of cash and cash equivalents held by LiveWire Group, Inc.
(b) Includes facilities expiring in the next 12 months which the Company expects to renew prior to expiration. (1)
(c) Total committed borrowing capacity of the U.S. commercial paper conduit facility was $1.50 billion at December 31, 2025. Availability was limited based on the amount of U.S. retail finance receivables available to be used as collateral.
(d) Total committed borrowing capacity of the Canadian Conduit facility was C$165.0 million ($120.4 million) at December 31, 2025. Availability was limited based on the amount of Canadian retail finance receivables available to be used as collateral.
To access the debt capital markets, the Company relies on credit rating agencies to assign short-term and long-term credit ratings. Generally, lower credit ratings result in higher borrowing costs and reduced access to debt capital markets. A credit rating agency may change or withdraw the Company’s ratings based on its assessment of the Company’s current and future ability to meet interest and principal repayment obligations. The Company’s short-term debt ratings affect its ability to issue unsecured commercial paper. The Company’s short- and long-term credit ratings as of December 31, 2025 were as follows:
Short-Term
Long-Term
Outlook
Moody’s
Baa3
Stable
Standard & Poor’s
BBB-
CreditWatch Negative
Fitch
BBB+
Stable
The Company recognizes that it must continue to monitor and adjust its business to changes in the lending environment. The Company expects that the Forward Flow Agreement associated with the HDFS Transaction as described in Key Factors will reduce its funding risk in the near-term. (1) The Company intends to continue with a diversified funding profile through a combination of short-term and long-term funding vehicles and to pursue a variety of sources to obtain cost-effective funding. (1) HDFS segment results could be negatively affected by higher costs of funding and increased difficulty of raising, or potential unsuccessful efforts to raise, funding in the short-term, medium-term and long-term capital markets. (1) These negative consequences could in turn adversely affect the Company’s business and results of operations in various ways, including through higher costs of capital, reduced funds available through HDFS to provide loans to dealers and their retail customers, and dilution to existing shareholders through the use of alternative sources of capital. As a result of the HDFS Transaction, however, the Company believes those risks are reduced in the near term.
Cash Flow Activity
The Company's cash flow activities for the years ended December 31, were as follows (in thousands):
Net cash provided by operating activities
Net cash provided (used) by investing activities
Net cash used by financing activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Net increase in cash, cash equivalents and restricted cash
Operating Activities
The decrease in operating cash flow in 2025 compared to 2024 was primarily due to lower motorcycle shipment volumes and unfavorable manufacturing and tariff costs compared to 2024. Additionally, operating cash flow decreased due to originations of retail finance receivables classified as held for sale under the Forward Flow Agreement. Cash flows from the origination and collection of retail finance receivables the Company intends to sell at origination are classified within cash flow from operating activities. There were no originations of retail finance receivables held for sale in 2024. Cash flow provided by operating activities was also impacted by positive working capital impacts primarily related to an increase in accounts payable, partially offset by a smaller decrease in inventory in 2025 compared to 2024.
The Company's ongoing operating cash requirements include those related to existing contractual commitments which it expects to fund with cash inflows from operating activities. The Company's purchase orders for inventory used in manufacturing generally do not become firm commitments until 90 days prior to expected delivery. The Company's material contractual operating cash commitments at December 31, 2025 relate to leases, retirement plan obligations and income taxes. The Company's long-term lease obligations and future payments are discussed further in Note 9 of the Notes to Consolidated financial statements. The Company’s expected future contributions and benefit payments related to its defined benefit retirement plans are discussed further in Note 14 of the Notes to Consolidated financial statements . The Company's income taxes include a liability for unrecognized tax benefits and related accrued interest and penalties as discussed further in Note 3 of the Notes to Consolidated financial statements . The Company cannot reasonably estimate the period of cash settlement for either the liability for unrecognized tax benefits or accrued interest and penalties. The Company continues to expect that it will fund its ongoing operating cash requirements related to the origination of wholesale finance receivables and retail finance receivables held for sale with the issuance of debt and the sale of retail finance receivables to its counterparties under the Forward Flow Agreement. (1)
Investing Activities
The Company’s most significant ongoing investing activities consist of capital expenditures and the originations and collections of retail finance receivables held for investment. In 2025, the Company also had $3.7 billion of net proceeds from the sale of retail finance receivables initially held for investment, $125.4 million of net proceeds from the sale of securitization beneficial interests, and $23.7 million of collections from its retained securitization beneficial interests related to the HDFS Transaction with no comparable proceeds or collections in 2024. Capital expenditures were $153.7 million and $196.6 million during 2025 and 2024, respectively.
Net cash inflows related to the origination and collection of finance receivables held for investment in 2025, which consisted primarily of retail finance receivables held for investment, were $295.6 million higher than in 2024 primarily due to lower origination of finance receivables held for investment, partially offset by lower collections of finance receivables held for investment, during 2025. The reduction in originations of finance receivables held for investment was partially due to a portion of retail finance receivable originations being classified as operating cash flows starting in the third quarter of 2025 as they were held for sale under the Forward Flow Agreement, partially offset by lower collection of retail finance receivables that were classified as held for sale at origination. The Company funded its finance receivables held for investment net lending activity through the issuance of debt as discussed in the Financing Activities section.
Financing Activities
The Company’s ongoing financing activities consist primarily of dividend payments, share repurchases, deposits and debt activities.
The Company paid dividends of $0.72 per share totaling $86.4 million during 2025 and $0.69 per share totaling $91.2 million during 2024.
Cash outflows for shares repurchased on a discretionary basis, including shares repurchased pursuant to the ASR, were $347.5 million in 2025 and $450.0 million in 2024. Shares repurchased on a discretionary basis in 2025 do not include $40.0 million of financing cash outflows related to cash that was paid under the ASR agreement that the Company expects will result in discretionary shares delivered to the Company in the first half of 2026 as discussed further in Note 4 of the Notes to Consolidated financial statements . (1) Share repurchases of common stock that employees surrendered to satisfy withholding taxes in connection with the vesting of restricted stock units and performance shares were $5.8 million or 0.2 million shares and $9.8 million or 0.3 million shares during the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, there were 23.4 million shares remaining under board-approved share repurchase authorizations.
During 2025, the Company had $46.6 million of financing cash inflows related to capital contributions from the counterparties in the HDFS Transaction as each of the counterparties paid cash to acquire 4.9% of HDFS as discussed in Key Factors . There was no corresponding activity in 2024.
Financing cash flows related to debt and brokered certificates of deposit activities resulted in net cash outflows of $2.6 billion and $21.3 million in 2025 and 2024, respectively. The Company’s total outstanding debt and liability for brokered certificates of deposit consisted of the following as of December 31 (in thousands):
Outstanding debt:
Unsecured commercial paper
Asset-backed Canadian commercial paper conduit facility
Asset-backed U.S. commercial paper conduit facility
Asset-backed securitization debt, net
Medium-term notes, net
Senior notes, net
Deposits, net
Refer to Note 10 of the Notes to Consolidated financial statements for a summary of future principal payments on the Company's debt obligations. Refer to Note 5 of the Notes to Consolidated financial statements for a summary of future maturities on the Company's certificates of deposit.
Deposits – HDFS offers brokered certificates of deposit to customers indirectly through contractual arrangements with third-party banks and/or securities brokerage firms through its bank subsidiary. The Company had $536.6 million and $550.6 million, net of fees, of interest-bearing brokered certificates of deposit outstanding as of December 31, 2025 and 2024, respectively. The deposits are classified as short- and long-term liabilities based upon the term of each brokered certificate of deposit issued. Each separate brokered certificate of deposit is issued under a master certificate, and as such, all outstanding brokered certificates of deposit are considered below the Federal Deposit Insurance Corporation insurance coverage limits.
Credit Facilities – In April 2024, the Company extended its existing $710.0 million five-year credit facility that was due to mature in April 2025 so that it now matures in April 2029 and amended the language of its existing $710.0 million five-year credit facility that matures in April 2027 so that it conforms in all respects to the April 2029 credit facility other than maturity date. The five-year credit facilities (together, the Global Credit Facilities) bear interest at variable rates, which may be adjusted upward or downward depending on certain criteria, such as credit ratings. The Global Credit Facilities also require the Company to pay a fee based on the average daily unused portion of the aggregate commitments. The Global Credit Facilities are committed facilities primarily used to support the Company's unsecured commercial paper program.
Unsecured Commercial Paper – Subject to limitations, the Company could issue unsecured commercial paper of up to $1.42 billion as of December 31, 2025 supported by the Global Credit Facilities, as discussed above. Outstanding unsecured commercial paper may not exceed the unused portion of the Global Credit Facilities. Maturities may range up to 365 days from the issuance date. The Company intends to repay unsecured commercial paper as it matures with additional unsecured commercial paper or through other means, such as borrowing under the Global Credit Facilities, borrowing under its asset-backed U.S. commercial paper conduit facility or through the use of operating cash flow and cash and cash equivalents on hand.
Medium-Term Notes – The Company had the following unsecured medium-term notes issued and outstanding at December 31, 2025 (in thousands):
Principal Amount
Rate
Issue Date
Maturity Date
April 2023
April 2026
February 2022
February 2027
June 2024
June 2029
March 2025
March 2030
(a) €700.0 million par value remeasured to U.S. dollar at December 31, 2025
(b) €610.0 million par value remeasured to U.S. dollar at December 31, 2025
The U.S. dollar-denominated medium-term notes provide for semi-annual interest payments and the foreign currency-denominated medium-term notes provide for annual interest payments. Principal on the medium-term notes is due at
maturity. Unamortized discounts and debt issuance costs on the medium-term notes reduced the outstanding balance by $10.9 million and $13.1 million at December 31, 2025 and 2024, respectively.
Unsecured Note Redemptions — During November 2025, the Company executed a tender offer for its $700.0 million 6.50% medium-term notes due 2028 and $500.0 million 5.95% medium-term notes due 2029, resulting in $437.1 million and $355.1 million of notes being redeemed, respectively. During December 2025, the Company executed a make-whole redemption resulting in the remaining $262.9 million of medium-term notes due 2028 being redeemed. The Company recognized a loss on debt extinguishment of $67.6 million, which included unamortized discounts and fees, within Financial services interest expense on the Consolidated statements of operations in connection with these actions.
Senior Notes and Term Loan – In July 2015, the Company issued $750.0 million of unsecured senior notes in an underwritten offering. The senior notes provide for semi-annual interest payments and principal due at maturity. $450.0 million of the senior notes, which had an interest rate of 3.50%, matured in July 2025. $300.0 million of the senior notes mature in July 2045 and have an interest rate of 4.625%. The Company used the proceeds from the debt to repurchase shares of its common stock in 2015.
On July 1, 2025, the Company entered into a term loan facility that permitted the Company to draw up to $450.0 million on or prior to July 31, 2025. On July 24, 2025, the Company drew $450.0 million under the facility which carried an interest rate of term Secured Overnight Financing Rate (SOFR) plus a margin based on the Company's credit rating. The Company used the proceeds to pay down the principal and interest of the $450.0 million 3.50% senior notes that matured in July 2025. In November 2025, the Company used proceeds from the HDFS Transaction to pay down the principal and interest of the term loan facility in full. The facility included operating and financial covenants that are substantially the same as those described below and applicable under the Global Credit Facilities at the current credit rating levels for the Company's short-term and long-term debt.
On-Balance Sheet Asset-Backed Canadian Commercial Paper Conduit Facility – In June 2025, the Company renewed and amended its revolving facility agreement (Canadian Conduit) with a Canadian bank-sponsored asset-backed commercial paper conduit. Under the renewed and amended agreement, the Canadian Conduit is contractually committed, at the Company's option, to purchase eligible Canadian retail motorcycle finance receivables for proceeds up to C$165.0 million. The transferred assets are restricted as collateral for the payment of the associated debt. Availability under the Canadian Conduit is based on, among other things, the amount and credit performance of eligible Canadian retail motorcycle finance receivables held as collateral.
The terms for this debt provide for interest on the outstanding principal based on prevailing market interest rates plus a specified margin. The Canadian Conduit also provides for a program fee and an unused commitment fee based on the unused portion of the total aggregate commitment. There is no amortization schedule; however, the debt is reduced monthly as available collections on the related finance receivables are applied to outstanding principal. Upon expiration of the Canadian Conduit, any outstanding principal will continue to be reduced monthly through available collections. Unless earlier terminated or extended by mutual agreement between the Company and the lenders, as of December 31, 2025, the Canadian Conduit had an expiration date of June 30, 2026.
There were no finance receivable transfers under the Canadian Conduit Facility during the year ended December 31, 2025. Quarterly transfers of Canadian retail motorcycle finance receivables to the Canadian Conduit and the respective proceeds were as follows in 2024 (in millions):
Transfers
Proceeds
First quarter
Second quarter
Third quarter
Fourth quarter
On-Balance Sheet Asset-Backed U.S. Commercial Paper Conduit Facilities VIE – In October 2025, the Company renewed its $1.50 billion revolving facility agreement (the U.S. Conduit Facility) with third-party banks and their asset-backed U.S. commercial paper conduits. Under the revolving facility agreement, the Company may transfer U.S. retail motorcycle finance receivables to an SPE, which in turn may issue debt to those third-party banks and their asset-backed U.S. commercial paper conduits. Availability under the U.S. Conduit Facility is based on, among other things, the amount and credit performance of eligible U.S. retail motorcycle finance receivables held by the SPE as collateral. In addition to extending the term of the U.S.
Conduit Facility, the October 2025 amendment updated the fee structure and finance receivable take-out provisions to better align with ongoing HDFS funding needs, including consideration of the Forward Flow Agreement that formed part of the HDFS Transaction.
Under the U.S. Conduit Facility, the assets of the SPE are restricted as collateral for the payment of the debt or other obligations arising in the transaction and are not available to pay other obligations or claims of the Company’s creditors. The terms for this debt provide for interest on the outstanding principal based on prevailing commercial paper rates if funded by a conduit lender through the issuance of commercial paper. The interest rate on all borrowings, if not funded by a conduit lender through the issuance of commercial paper, is based on the Secured Overnight Financing Rate (SOFR), with provisions for a transition to other benchmark rates in the future, if necessary. In addition to interest, a program fee is assessed based on the outstanding debt principal balance. The U.S. Conduit Facility also provides for an unused commitment fee based on the unused portion of the total aggregate commitment. There is no amortization schedule; however, the debt is reduced monthly as available collections on the related finance receivables are applied to outstanding principal. Upon expiration of the U.S. Conduit Facility, any outstanding principal will continue to be reduced monthly through available collections. Unless earlier terminated or extended by mutual agreement of the Company and the lenders, as of December 31, 2025, the U.S. Conduit Facility has an expiration date of October 30, 2026.
Quarterly transfers of U.S. retail motorcycle finance receivables to the U.S. Conduit and the respective proceeds were as follows (in millions):
Transfers
Proceeds
Transfers
Proceeds
First quarter
Second quarter
Third quarter
Fourth quarter
On-Balance Sheet Asset-Backed Securitization VIEs – For all of its on-balance sheet asset-backed securitization transactions, the Company transfers U.S. retail motorcycle finance receivables to separate VIEs, which in turn issue secured notes with various maturities and interest rates to investors. All of the notes held by the VIEs are secured by future collections of the purchased U.S. retail motorcycle finance receivables. The U.S. retail motorcycle finance receivables included in the asset-backed securitization transactions are not available to pay other obligations or claims of the Company's creditors until the associated debt and other obligations are satisfied. Restricted cash balances held by the VIEs are used only to support the asset-backed securitizations.
The accounting treatment for asset-backed securitizations depends on the terms of the related transaction and the Company’s continuing involvement with the VIE. During the third quarter of 2025, in conjunction with the HDFS Transaction, HDFS determined that it was no longer the primary beneficiary of most of its asset-backed securitization VIEs and also met the criteria for those asset-backed VIEs to be accounted for as a sale. Accordingly, those VIEs were deconsolidated and accounted for as sales during the third quarter of 2025. After deconsolidating certain VIEs in conjunction with the HDFS Transaction, the Company had one on-balance sheet asset-backed securitization remaining that was repaid in full during 2025. Refer to Note 11 of the Notes to Consolidated financial statements for further discussion.
Quarterly transfers of U.S. retail motorcycle finance receivables to SPEs, the respective proceeds, and the respective proceeds, net of discounts and issuance costs were as follows (in millions):
Transfers
Proceeds
Proceeds, net
Transfers
Proceeds
Proceeds, net
First quarter
Second quarter
Third quarter
Fourth quarter
Off-Balance Sheet Asset-Backed Financing - During the third quarter of 2025, HDFS sold 95% of its residual interest in retail finance receivables that were transferred to certain SPEs through on-balance sheet asset-backed securitization
transactions to two counterparties as part of the HDFS Transaction. As a result, HDFS determined that it was no longer the primary beneficiary of the associated VIEs. Accordingly, the VIEs were deconsolidated during the third quarter of 2025. HDFS confirmed that the transfers of loans that occurred at the inception of each VIE met the criteria for an accounting sale under ASC 860. For more information refer to Note 11 of the Notes to Consolidated financial statements.
Intercompany Agreements – Harley Davidson, Inc. has a support agreement with Harley-Davidson Financial Services Inc. whereby, if required, Harley-Davidson, Inc. agrees to provide Harley-Davidson Financial Services Inc. with financial support to maintain Harley-Davidson Financial Services lnc.'s fixed-charge coverage at 1.25 and minimum net worth of $40.0 million. Support may be provided at Harley-Davidson, lnc.'s option as capital contributions or loans. No amount has ever been provided to Harley-Davidson Financial Services Inc. under the support agreement.
On February 14, 2024, Harley-Davidson, Inc. entered into a Convertible Delayed Draw Term Loan Agreement (Convertible Term Loan) with LiveWire Group, Inc. and a wholly-owned subsidiary of LiveWire Group, Inc. whereby LiveWire was able to obtain term loans in one or more advances up to an aggregate principal amount of $100.0 million. The Convertible Term Loan had a maturity date of the earlier of (i) 24 months from the date of the first draw on the loan or (ii) October 31, 2026. The Convertible Term Loan contained a provision that provided for Harley-Davidson, Inc. to convert amounts outstanding to equity at the maturity date if, on the maturity date, Harley-Davidson, Inc. determined, acting reasonably and in good faith, that LiveWire Group, Inc. did not have the financial wherewithal to repay all amounts outstanding. LiveWire Group, Inc. did not draw any amounts under the Convertible Term Loan.
On November 9, 2025, Harley-Davidson, Inc. entered into an Amended and RestatedDelayed Draw Term Loan Agreement (Term Loan) with LiveWire Group, Inc. and a wholly-owned subsidiary of LiveWire Group, Inc., which amended the Convertible Term Loan. The Term Loan provided LiveWire Group, Inc. with access of up to $75.0 million to be drawn between November 17, 2025 and December 15, 2025. The maturity date of the amount outstanding under the Term Loan, including interest, is December 15, 2027. The Term Loan requires mandatory prepayment of the principal amount of the Term Loan from the first $10.0 million of net proceeds (defined as gross proceeds less offering costs) from the At-The-Market program managed by LiveWire Group Inc., which is a program designed to raise capital from external investors in LiveWire Group Inc. The At-The-Market proceeds mandatory prepayment would apply to any funds raised from the funding of the Term Loan through the maturity date. No other scheduled principal payments are required to be made on the Term Loan and the remaining principal balance must be paid in full on the maturity date. The amount outstanding under the Term Loan bears interest at a floating rate per annum, as calculated as of the date of funding of the Term Loan and as of each June 1 and December 1 thereafter, equal to the sum of (i) the forward-looking term rate based on SOFR (secured overnight financing rate published by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate)) for a 6-month interest period, plus (ii) 4.00%. Interest is compounded on a semi-annual basis on May 31 and November 30 and is required to be paid in full on the maturity date. The Term Loan includes negative covenants restricting the ability of LiveWire Group, Inc. to incur indebtedness, create liens, sell assets, make investments, make fundamental changes, make dividends or other restricted payments and enter into affiliate transactions. All of the obligations under the Term Loan are secured by a security interest in substantially all of the assets of LiveWire Group, Inc.
On December 15, 2025, LiveWire Group, Inc. borrowed $75.0 million under the Term Loan, which remained outstanding as of December 31, 2025.
The Company believes headwinds facing the broader powersports and discretionary leisure industries are even more complicated in the electric vehicle (EV) segment of the market. The Company believes indicators point to a much later EV adoption than the Company originally anticipated given a lack of government incentives and a notably less favorable regulatory environment, combined with a slower expansion of charging infrastructure. LiveWire will continue seeking external capital under its At-The-Market program and review its product portfolio, including its planned introduction of smaller mini-motorcycles that are oriented toward urban use. In addition, LiveWire plans to continue to drive additional significant cost savings to reduce operating losses with the intention of establishing a sustainable business model with the existing funds available. The Company does not plan to make additional investments in LiveWire beyond the amount outstanding under the Term Loan described above.
Operating and Financial Covenants – Harley-Davidson Financial Services Inc. and the Company are subject to various operating and financial covenants related to the credit facilities and various operating covenants under the medium-term and senior notes and the U.S. and Canadian asset-backed commercial paper conduit facilities. The more significant covenants are described below.
The operating covenants limit the Company’s and Harley-Davidson Financial Services Inc.’s ability to:
• Assume or incur certain liens;
• Participate in certain mergers or consolidations; and
• Purchase or hold margin stock.
Under the current financial covenants of the Global Credit Facilities, the ratio of Harley-Davidson Financial Services Inc.’s consolidated debt, excluding secured debt, to Harley-Davidson Financial Services Inc.’s consolidated allowance for credit losses on finance receivables plus Harley-Davidson Financial Services Inc.’s consolidated shareholders' equity, excluding accumulated other comprehensive loss (AOCL), cannot exceed 10.0 to 1.0 as of the end of any fiscal quarter. In addition, the ratio of the Company's consolidated debt to the Company's consolidated debt and consolidated shareholders’ equity (where the Company's consolidated debt in each case excludes that of Harley-Davidson Financial Services Inc. and its subsidiaries, and the Company's consolidated shareholders’ equity excludes AOCL) cannot exceed 0.7 to 1.0 as of the end of any fiscal quarter. No financial covenants are required under the medium-term or senior notes or the U.S. or Canadian asset-backed commercial paper conduit facilities.
At December 31, 2025 and 2024, Harley-Davidson Financial Services Inc. and the Company remained in compliance with all of the then-existing covenants.
Cautionary Statements
The Company intends that certain matters discussed in this report are “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such by reference to this footnote or because the context of the statement will include words such as the Company “believes,” “anticipates,” “expects,” “plans,” "projects," “may,” “will,” “estimates,” “targets,” “intends,” "forecasts," "seeks," "sees," "should," "feels," "commits," "assumes," "envisions," or words of similar meaning. Similarly, statements that describe or refer to future expectations, future plans, strategies, objectives, outlooks, targets, guidance, commitments or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially, unfavorably or favorably, from those anticipated as of the date of this report. Certain of such risks and uncertainties are described below. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this report are only made as of the date of this report, and the Company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
Important factors that could affect future results and cause those results to differ materially from those expressed in the forward-looking statements include, among others, the Company's ability to: (a) develop and begin to implement a new strategic plan that will ultimately be successful; (b) manage supply chain and logistics issues, including without limitation quality issues, unexpectedinterruptions or price increases caused by supplier volatility, raw material shortages, inflation, war or other hostilities, including the conflict in Ukraine, or natural disasters and longer shipping times and increased logistics costs; (c) manage and predict the impact that new, reinstated or adjusted tariffs may have on the Company’s ability to sell products domestically and internationally, and the cost of raw materials and components, including tariffs recently imposed or that may be imposed by the U.S. on foreign goods or rebalancing or other tariffs recently imposed or that may be imposed by foreign countries on U.S. goods; (d) accurately analyze, predict and react to changing market conditions, interest rates, and geopolitical environments, and successfully adjust to shifting global consumer needs and interests; (e) accurately predict the margins of its segments in light of, among other things, tariffs, rebalancing trade measures, inflation, foreign currency exchange rates, the cost associated with product development initiatives and the Company's complex global supply chain; (f) maintain and enhance the value of the Harley-Davidson brand, including detecting and mitigating or remediating the impact of activist collective actions, such as calls for boycotts and other brand-damaging behaviors that could harm the Company's brand or business; (g) manage through changes in general economic and business conditions, including changing capital, credit and retail markets, and the changing domestic and international political environments, including as a result of the conflict in Ukraine; (h) successfully access the capital and/or credit markets on terms that are acceptable to the Company and within its expectations; (i) successfully carry out its global manufacturing and assembly operations; (j) develop and introduce products, services and experiences on a timely basis that the market accepts, that enable the Company to generate desired sales levels and that provide the desired financial returns; (k) perform in a manner that enables the Company to benefit from market opportunities while competing against existing and new competitors; (l) manage the impact that prices for and supply of used motorcycles may have on its business, including on retail sales of new motorcycles; (m) prevent, detect and remediate any issues with its motorcycles or any issues associated with the design, manufacturing or assembly processes to avoid delays in new model launches, recall campaigns, regulatory agency investigations, increased warranty costs or litigation and adverse effects on its reputation and brand strength, and carry out any product programs or recalls within expected costs and timing; (n) successfully manage and reduce costs throughout the business; (o) continue to develop the capabilities of its distributors and dealers, effectively implement changes relating to its dealers and distribution methods, including the Company's dealer footprint, and manage the risks that its dealers may have difficulty obtaining capital and managing through changing economic conditions and consumer demand; (p) realize the desired business benefits from LiveWire operating as a separate
public company, which may be affected by, among other things: (i) the ability of LiveWire to execute its plans to develop, produce, market and sell its electric vehicles; (ii) the demand for and consumer willingness to adopt two- and three-wheeled electric vehicles; (iii) the ability of LiveWire to obtain sufficient funding from sources other than the Company to sustain its operations; and (iv) other risks and uncertainties indicated in documents filed with the SEC by the Company or LiveWire Group, Inc., including those risks and uncertainties noted in Risk Factors under Item 1.A of LiveWire Group Inc.'s most recent Annual Report on Form 10-K; (q) manage the quality and regulatory non-compliance issues relating to the brake hose assemblies provided to the Company by Proterial Cable America, Inc. in a manner that avoids future quality or non-compliance issues and additional costs or recall expenses that are material; (r) maintain a productive relationship with Hero MotoCorp as a distributor and licensee of the Harley-Davidson brand name; (s) successfully maintain or achieve a manner in which to sell motorcycles in Europe, China, and the Company's Association of Southeast Asian Nations (ASEAN) countries that does not subject its motorcycles to incremental tariffs; (t) manage its Thailand corporate and manufacturing operation in a manner that allows the Company to avail itself of preferential free trade agreements and duty rates, and sufficiently lower prices of its motorcycles in certain markets; (u) retain and attract talented employees and leadership and qualified and experienced independent directors for its Board of Directors, eliminate personnel duplication, inefficiencies and complexity throughout the organization, successfully complete transitions of executives, and effectively manage the return to on-site work of Milwaukee-based corporate employees at specified Company facilities; (v) accurately estimate and adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices; (w) manage the credit quality, the loan servicing and collection activities, and the recovery rates of HDFS's loan portfolio; (x) prevent ransomware attacks or cybersecurity incidents and data privacy breaches and respond to related evolving regulatory requirements; (y) adjust to tax reform, healthcare inflation and reform and pension reform, and successfully estimate the impact of any such reform on the Company’s business; (z) manage through the effects inconsistent and unpredictable weather patterns may have on retail sales of motorcycles; (aa) implement and manage enterprise-wide information technology systems, including systems at its manufacturing facilities; (bb) manage changes, prepare for, and respond to evolving requirements in legislative and regulatory environments related to its products, services and operations, including increased environmental, safety, emissions or other regulations; (cc) manage its exposure to product liability claims in a manner that avoids or successfully mitigates the impact of substantial jury verdicts and manage exposure in commercial or contractual disputes; (dd) continue to manage the relationships and agreements that the Company has with its labor unions to help drive long-term competitiveness; (ee) realize the desired business benefits from KKR's and PIMCO's investments in HDFS; (ff) manage risks related to functions the Company outsources and the use of artificial intelligence by the Company and its vendors and suppliers; (gg) achieve anticipated results with respect to the Company's preowned motorcycle program, Harley-Davidson Certified, the Company's H-D1 Marketplace, and Apparel and Licensing; (hh) optimize capital allocation in light of the Company's capital allocation priorities; (ii) manage the Company's share repurchase strategy; and (jj) manage issues related to climate change and related regulations.
The Company’s ability to sell its motorcycles and related products and services and to meet its financial expectations also depends on the ability of the Company’s dealers to sell its motorcycles and related products and services to retail customers. The Company depends on the capability and financial capacity of its dealers to develop and implement effective retail sales plans to create demand for the motorcycles and related products and services they purchase from the Company. In addition, the Company’s dealers and distributors may experience difficulties in operating their businesses and selling Harley-Davidson motorcycles and related products and services as a result of weather, economic conditions, or other factors.
HDFS's retail credit losses will continue to change over time due to changing consumer credit behavior, macroeconomic conditions including the impact of inflation and HDFS's efforts to increase prudently structured loan approvals to sub-prime borrowers. In addition, HDFS’s efforts to adjust underwriting criteria based on market and economic conditions, and actions that the Company has taken and could take that impact motorcycle values, may impact HDFS's retail credit losses.
The Company's operations, demand for its products, and its liquidity could be adversely impacted by changes in tariffs, inflation, work stoppages, facility closures, strikes, natural causes, widespread infectious disease, terrorism, war or other hostilities, including the conflict in Ukraine, or other factors. Refer to “Risk Factors” under Item 1.A of this report for a discussion of additional risk factors and a more complete discussion of some of the cautionary statements noted above.
