Livewire Group Inc. ((LVWR)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Livewire Group Inc. underscored a challenging year for Harley-Davidson, with significant declines in sales and revenue, notably in the international markets. Despite certain positive developments in segments like Touring and cost productivity, the company faced broader economic challenges, culminating in a substantial operating loss for LiveWire. The general sentiment expressed during the call was one of cautious optimism amidst a backdrop of financial hurdles.
Touring Segment Growth
Harley-Davidson’s Touring segment emerged as a bright spot, showcasing a robust 18% growth in the first half of 2024, resulting in an 8% increase for the full year. The company also captured a commanding 74.5% market share in the U.S. Touring segment, marking its highest level since 2019.
Cost Productivity Success
The company successfully generated $257 million in productivity savings by 2024, with plans for an additional $100 million in savings by 2025. These efforts positively impacted the operating cash flow, which saw an impressive nearly 40% increase, surpassing $1 billion.
Positive Customer Engagement
The launch of new motorcycle models was met with significant enthusiasm, as evidenced by a 177% increase in customer engagements on the Harley-Davidson website, signaling strong consumer interest and engagement.
LiveWire Market Performance
LiveWire demonstrated a 46% year-over-year growth in global retail performance, maintaining a 65% market share in the U.S. 50-plus horsepower on-road EV segment, showcasing its strong market position.
Significant Revenue Decline
Despite these successes, Harley-Davidson faced a severe 35% decline in consolidated revenue for the fourth quarter of 2024. This included a 47% drop in HDMC revenue and a consolidated operating loss of $193 million, primarily due to reduced wholesale shipments.
Global Retail Sales Decline
The company experienced a 15% decline in global retail sales during the fourth quarter and a 7% decrease for the full year, influenced by macroeconomic factors and rising interest rates.
Challenges in Asia-Pacific Region
The Asia-Pacific region posed significant challenges, with a 26% drop in retail sales for the fourth quarter, driven by weaknesses in key markets such as Japan and China.
LiveWire Operating Loss
LiveWire reported an operating loss of $110 million for 2024, aligning with revised guidance expectations, yet highlighting the financial challenges faced by the segment.
Forward-Looking Guidance
Looking ahead, Harley-Davidson provided cautious guidance amidst the challenging market conditions. The company expects flat retail units for 2025, with a potential 5% decline in wholesale units. Despite a 47% decrease in Q4 HDMC revenue, Harley-Davidson remains committed to its Hardwire strategy, focusing on cost productivity and product innovation. For 2025, there are plans to enhance the operating income margin to between 7% and 8%, alongside targeting an additional $100 million in cost productivity savings. LiveWire aims to reduce its operating losses to between $70 million and $80 million in 2025, with hopes for a double-digit margin by 2026, contingent on slight volume growth and favorable market conditions.
In summary, the earnings call for Livewire Group Inc. painted a mixed picture for Harley-Davidson, highlighting both achievements and significant challenges. While there were notable successes in the Touring segment and cost productivity, the company faced considerable revenue and sales declines, particularly in international markets. The forward-looking guidance reflects a cautious yet optimistic approach to navigating the economic landscape, with strategic plans to bolster profitability and market share in the coming years.
