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Harley-Davidson Delivers Best 3rd Quarter Net Income Since 2015

Harley-Davidson, Inc. announced further progress implementing The Rewire, a critical overhaul of its business, setting a strong foundation for the company including a new operating model that realigns the organization for performance, reduces costs and sharpens focus on profitable products and markets. The end of The Rewire will be the foundation for The Hardwire, the company’s forthcoming five-year strategic plan (2021-2025), to deliver profitable growth and shareholder value based on expanding the desirability of Harley-Davidson. Harley-Davidson also reported third quarter 2020 financial results, including the strongest third quarter net income since 2015, reflecting initial positive impacts of The Rewire efforts.

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“We have driven significant progress across each key element of The Rewire playbook, and we believe the positive changes we have executed are setting our course for a winning future,” said Jochen Zeitz, chairman, president and CEO, Harley-Davidson. “We have started on our journey to become a high-performance company where business structure, leadership principles and our culture are all aligned. The platform we are creating will support the work ahead as we continue to develop and execute our new 5-year strategic plan, The Hardwire.”

Driving A High-Performance Culture

Harley-Davidson is evolving its culture to drive a high-performing, winning organization. The company is ramping up the competitive spirit of its employees and dealers to promote the heritage and value of the Harley-Davidson brand. Earlier this year, the company revealed a new vision and mission that are guiding and defining the company’s roadmap.


Vision: Building our legend and leading our industry through innovation, evolution and emotion.

Mission: More than building machines, we stand for the timeless pursuit of adventure. Freedom for the soul.

The Rewire
The Rewire efforts to date have strengthened the company’s focus on customers and dealers and reinforced desirability for the company’s brand and products, setting the foundation for its 2021-2025 strategic plan.

Highlights as of the end of the third quarter:

  • $250 million cash savings including SG&A and capital reductions expected in 2020
  • $115 million annual savings from restructuring actions taken expected starting in 2021
  • $3.6 billion cash and cash equivalents compared to $862 million in 2019
  • $1.1 billion of cash generated from operating activities compared to $849 million in 2019
  • Global dealer inventory down over 30 percent compared to third quarter 2019
  • 2020 motorcycles selling at full MSRP (avg. U.S. during the third quarter)
  • Used Harley-Davidson prices up significantly (U.S.)

Progress made across all five key elements of The Rewire include:


New Operating Model: Reduced Complexity and Increased Speed

The company’s new operating model eliminated duplication and complexity across global operations, resulting in significant expected ongoing SG&A savings and vast improvements in agility and efficiency.

The company also refreshed the leadership structure and team with most of the leaders being new to their roles and many bringing new perspectives and capabilities from outside the company.

Reset Global Business and Focus on High-Potential Markets

Harley-Davidson plans to concentrate on approximately 50 markets, primarily in North America, Europe and parts of Asia Pacific, that represent a high percentage of the company’s expected volume and growth potential. The company’s international business has been significantly reset and refocused with investment and resources aligned with projected market potential. Under the new participation model, approximately:

  • 36 highest potential markets will remain, with the resources and autonomy within a clearly defined framework, to best drive growth and profitability.
  • 17 markets will transition to more cost-effective distributor models. This includes India, where Hero MotoCorp will be the exclusive Harley-Davidson distributor and licensed to develop and sell a range of Harley-Davidson motorcycles.
  • 39 markets will be exited due to volume, profitability or potential that does not support continued investment.

Refined Motorcycle Line-Up and High-Impact Product Launches

The company has streamlined its planned product portfolio by 30 percent and overhauled launch timing and go-to-market practices for maximum impact and success.


Highlights of the new approach include:

  • Further streamlining – Eliminating optional offerings in the product portfolio with low customer uptake
  • Sharper focus – Reducing complexity and directing resources toward the highest priority and core stronghold products
    • Priority -Deliver Harley-Davidson’s first Adventure Touring motorcycle in 2021
    • Outsource – New venture created for eBicycles with minority equity participation for Harley-Davidson; marketed as Serial 1, Powered by Harley-Davidson
  • Seasonal alignment – Plans underway for a virtual, new model year launch for dealers and consumers in first quarter (shifted from August to be closer to the start of the riding season)
  • Marketing that drives desirability – The company executed new marketing campaigns featuring Jason Momoa and Ewan McGregor and Charley Boorman, stars of The Long Way Up, generating significant leads and growing awareness, excitement and desirability for the Harley-Davidson brand and products.
    • 500 million+ views of ‘United We Will Ride’ video by Jason Momoa
    • 56 million+ views of The Long Way Up trailer
    • 92,000 visits to The Long Way Up page on
    • 105 million+ positive media impressions of Long Way Up

Growth through Parts & Accessories (P&A) and General Merchandise (GM)

To drive growth, Harley-Davidson established new business units for P&A and GM that enable each to invest resources to establish new channel strategies and better product assortments.


P&A Strategy

  • Better leverage opportunity to inspire riders through customization
  • Synergize with motorcycle product strategy
  • Improve pricing and inventory strategy; reduce SKUs by 15 percent for 2021
  • Enhance training and field support to drive sales growth

GM Strategy

  • Realign product in critical categories; build category management plans
  • Reestablish design principles centered around authenticity, brand heritage and quality
  • Sharpen focus on most profitable SKUs; reduce SKUs by 25 percent for 2021

Protecting Value

The company is operating with a remodeled approach to supply and inventory management with a focus on a powerful dealer network to better preserve the value and desirability of Harley-Davidson motorcycles for customers. Some initial outcomes of this approach as of the end of the third quarter include:

  • Reduced price gap between new and used Harley-Davidson motorcycles in the U.S.
  • Global dealer inventory down over 30 percent
  • Essentially eliminated promotions and discounting with a focus on brand building

A strong network of profitable dealers is essential to delivering the most desirable Harley-Davidson experience. The company continues to optimize its network to strengthen priority markets and provide an improved and integrated customer experience.

COVID-19 Response and Recovery

The company continues to proactively manage its business through the pandemic and has maintained robust protocols to keep workers safe in its factories. Most non-production workers will continue to work from home at least until the end of the year.


Included in the company’s broad cost and cash savings measures are SG&A reductions, curtailed capital spending, suspended discretionary share repurchases and a prudent approach to dividend payments. The company will pay a fourth quarter cash dividend of $0.02 per share, in line with its second and third quarter dividends. The dividend is payable December 18, 2020 to the shareholders of record of the company’s common stock as of December 4, 2020.

The company has also maintained its strong liquidity position with $4.7 billion in liquidity at the end of the quarter.

Net income in Q3 2020 was $120 million, up 39 percent over prior year and the highest Q3 result since 2015. Q3 results reflect the actions taken in the third quarter under the company’s The Rewire effort. Q3 GAAP diluted EPS was $0.78 versus $0.55 in Q3 2019. Excluding restructuring plan costs and the impact of tariffs, adjusted Q3 diluted EPS was $1.05 versus $0.70 in Q3 2019.


Global retail motorcycle sales in the third quarter of 2020 were down 8 percent compared to the prior year reflecting, among other things, the company’s shift in timing of the launch of new model year motorcycles from August each year to early Q1 to better align with seasonality.

Revenue from the Motorcycles and Related Products segment was down in Q3 compared to the prior year due to, among other things, the shift in timing of its motorcycle model year change-over from August to early Q1 annually. Gross margin was flat to prior year and operating margin was up during the quarter compared to Q3 2019 primarily due to aggressive cost management in the face of the COVID-19 pandemic and actions taken under The Rewire.


Financial Services segment third quarter operating income was up 25 percent due primarily to a decrease in the provision for loan losses driven by lower actual losses at the end of Q3 versus the previous quarter.

Other Results

Cash – Cash and cash equivalents were $3.6 billion at the end of Q3 2020, compared to $862 million at the end of Q3 2019. Harley-Davidson generated $1.1 billion of cash from operating activities year-to-date 2020 compared to $849 million year-to-date 2019.

Tax Rate – Harley-Davidson’s year-to-date effective tax rate was 10.8 percent in Q3 2020 compared to 24.6 percent in Q3 2019. The decline in the effective tax rate was primarily due to discrete income tax benefits which reduced the Company’s income tax expense.


Dividend & Share Repurchase – The company paid a cash dividend of $0.02 per share for the third quarter of 2020. The company did not repurchase shares on a discretionary basis during the first three quarters of 2020. During the quarter, there were 154 million weighted-average diluted common shares outstanding and 18 million shares remained on board-approved share repurchase authorizations.


Given the uncertainty that remains surrounding the impact and duration of the COVID-19 pandemic, the company is not providing 2020 financial guidance.

Harley-Davidson is developing its 2021-2025 strategic plan, The Hardwire. Building on the foundation and principles of The Rewire, the driver of the new plan will be Harley-Davidson as the most desirable motorcycle brand in the world for its customers, employees, community and investors.

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