Harley-Davidson's Q3 Net Income Soars 223% on Credit Loss Reversal

Ticker: HOG · Form: 10-Q · Filed: 2025-11-05T00:00:00.000Z

Sentiment: mixed

Topics: Motorcycles, Financial Services, Credit Losses, Earnings, 10-Q, Shareholder Returns, Powersports

Related Tickers: HOG, PII, HMC, TSLA

TL;DR

**HOG's Q3 numbers are a massive beat, driven by a credit loss reversal – time to rev up your portfolio!**

AI Summary

Harley-Davidson, Inc. (HOG) reported a significant increase in net income for the three months ended September 30, 2025, reaching $375.165 million, a substantial rise from $115.967 million in the prior year. This 223.5% surge was primarily driven by a dramatic reversal in financial services provision for credit losses, which swung from a $57.977 million expense in Q3 2024 to a $(301.499) million recovery in Q3 2025. Revenue from motorcycles and related products also saw a healthy increase, climbing to $1,079.522 million from $881.213 million, a 22.5% jump. However, financial services revenue slightly decreased to $261.188 million from $269.482 million. Operating income soared to $474.758 million from $105.796 million, reflecting improved profitability. For the nine months ended September 30, 2025, net income attributable to Harley-Davidson, Inc. increased to $618.041 million from $572.249 million in the same period of 2024. Diluted EPS for the quarter was $3.10, up from $0.91 year-over-year. The company also adopted ASU 2023-07 on December 31, 2024, retrospectively, enhancing segment reporting disclosures.

Why It Matters

This filing reveals a strong financial rebound for Harley-Davidson, largely fueled by a significant reduction in credit loss provisions within its financial services arm. For investors, the 223.5% increase in net income and $3.10 diluted EPS signals improved operational efficiency and potentially stronger shareholder returns, as evidenced by the increased cash dividends per share to $0.1800. Employees might see increased job security and potential for growth given the company's improved financial health. Customers could benefit from more stable financing options, while the broader market will observe HOG's ability to navigate economic headwinds, especially in the competitive powersports sector against rivals like Polaris Inc. and Honda Motor Co. Ltd.

Risk Assessment

Risk Level: medium — While net income surged, the significant $(301.499) million financial services provision for credit losses recovery for the three months ended September 30, 2025, compared to a $57.977 million expense in the prior year, indicates volatility in its financial services segment. Additionally, revenue from motorcycles and related products for the nine months ended September 30, 2025, decreased to $3,213,431 million from $3,717,375 million in 2024, suggesting potential underlying challenges in core product sales despite the quarterly gain.

Analyst Insight

Investors should closely monitor the sustainability of the financial services segment's performance and the trend in motorcycle sales. While the Q3 net income is impressive, the nine-month decline in motorcycle revenue suggests caution. Consider HOG a 'hold' for now, awaiting further quarters to confirm a consistent turnaround in core product demand.

Financial Highlights

revenue
$1,340,710,000
operating Margin
35.4%
net Income
$375,165,000
eps
$3.10
cash Position
$1,775,038,000
revenue Growth
+16.5%

Revenue Breakdown

SegmentRevenueGrowth
Motorcycles and related products$1,079,522,000+22.5%
Financial services$261,188,000-2.7%

Key Numbers

Key Players & Entities

FAQ

What drove Harley-Davidson's significant net income increase in Q3 2025?

Harley-Davidson's net income surged primarily due to a $(301.499) million recovery in financial services provision for credit losses in Q3 2025, a stark contrast to the $57.977 million expense in Q3 2024. Additionally, motorcycles and related products revenue increased by 22.5% to $1,079.522 million.

How did Harley-Davidson's motorcycle sales perform in Q3 2025?

Revenue from motorcycles and related products for the three months ended September 30, 2025, increased to $1,079.522 million, up from $881.213 million in the same period of 2024. However, for the nine months ended September 30, 2025, this revenue decreased to $3,213,431 million from $3,717,375 million in the prior year.

What was Harley-Davidson's diluted EPS for the quarter ended September 30, 2025?

Harley-Davidson reported a diluted earnings per share (EPS) of $3.10 for the three months ended September 30, 2025. This is a significant increase compared to $0.91 diluted EPS for the same period in 2024.

What is the impact of the new accounting standard ASU 2023-07 on Harley-Davidson?

Harley-Davidson adopted ASU 2023-07, Segment Reporting, on December 31, 2024, on a retrospective basis. This standard is intended to improve reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses, which is reflected in Note 16 of the financial statements.

How has Harley-Davidson's cash position changed?

As of September 30, 2025, Harley-Davidson's cash and cash equivalents stood at $1,775,038 million, an increase from $1,589,608 million at December 31, 2024. However, net cash provided by operating activities for the nine months ended September 30, 2025, was $416,903 million, down from $930,655 million in the prior year.

What are the key changes in Harley-Davidson's balance sheet regarding finance receivables?

Harley-Davidson reported finance receivables held for sale, net, of $4,080,885 million as of September 30, 2025, which were zero at December 31, 2024. Concurrently, finance receivables held for investment, net, decreased significantly from $2,031,496 million (current) and $5,256,798 million (non-current) at December 31, 2024, to $1,221,348 million (current) and $662,201 million (non-current) at September 30, 2025.

What is Harley-Davidson's strategic outlook given the Q3 results?

The Q3 results show strong profitability driven by financial services, but the nine-month decline in motorcycle revenue suggests a mixed outlook. The company's ability to manage credit losses effectively is a positive, but sustained growth will depend on revitalizing core motorcycle sales and adapting to market demands, potentially through its LiveWire segment.

How do Harley-Davidson's dividends compare year-over-year?

Harley-Davidson increased its cash dividends per share to $0.1800 for the three months ended September 30, 2025, up from $0.1725 in the same period of 2024. For the nine months, total dividends paid were $0.5400 per share in 2025, compared to $0.5175 in 2024.

What are the main risks identified in Harley-Davidson's filing?

The filing highlights risks associated with the volatility of financial services credit losses, as evidenced by the large swing in provision for credit losses. Additionally, the decline in nine-month motorcycle revenue suggests ongoing challenges in demand for its core products, which could impact future profitability.

What is Harley-Davidson's total equity as of September 30, 2025?

As of September 30, 2025, Harley-Davidson's total equity was $3,561,379 million. This represents an increase from $3,158,500 million at December 31, 2024, indicating an improvement in the company's financial health.

Risk Factors

Industry Context

Harley-Davidson operates in the motorcycle manufacturing industry, facing competition from other global manufacturers. The industry is influenced by consumer discretionary spending, economic conditions, and evolving consumer preferences towards different types of mobility and recreational activities. The company also has a significant financial services arm supporting its product sales.

Regulatory Implications

The adoption of new accounting standards like ASU 2023-07 requires careful implementation and ongoing compliance to ensure accurate financial reporting. Regulatory scrutiny on financial services operations, including credit risk management, remains a constant factor for companies like HOG.

What Investors Should Do

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Key Dates

Glossary

Provision for credit losses
An expense set aside by a financial institution to cover potential losses from loans that may not be repaid. (A significant reversal from expense to recovery in this line item dramatically impacted HOG's Q3 2025 net income.)
Operating income
A measure of a company's profit after deducting operating expenses from its revenue. (Soared to $474.758 million in Q3 2025, indicating improved core business profitability.)
Diluted EPS
Earnings per share calculated by dividing net income by the total number of diluted shares outstanding. (Increased substantially to $3.10 in Q3 2025 from $0.91 in Q3 2024, reflecting higher profitability on a per-share basis.)
Noncontrolling interests
The portion of equity in a subsidiary that is not owned by the parent company. (The 'Less: Loss attributable to noncontrolling interests' line item impacts the net income attributable to Harley-Davidson, Inc.)
Variable interest entities (VIEs)
Entities that are not controlled by their equity owners but by other parties through contractual arrangements. (HOG consolidates certain VIEs related to secured financing where it is the primary beneficiary.)

Year-Over-Year Comparison

Compared to the prior year's third quarter, Harley-Davidson reported a dramatic 223.5% increase in net income, largely due to a significant reversal in financial services credit loss provisions. Motorcycle revenue also saw a healthy 22.5% increase, contributing to a substantial rise in operating income. However, the nine-month revenue for motorcycles and related products showed a decline, indicating mixed performance trends across different periods. The company's cash position has strengthened, and treasury stock purchases have increased, suggesting a focus on capital return to shareholders.

Filing Stats: 4,568 words · 18 min read · ~15 pages · Grade level 15.9 · Accepted 2025-11-05 16:15:09

Filing Documents

Financial Information

Part I Financial Information 3

Financial Statements

Item 1. Financial Statements 3 Consolidated Statements of Operations 3 Consolidated Statements of Comprehensive Income 4 Consolidated Balance Sheets 5 Consolidated Statements of Cash Flows 7 Consolidated Statements of Shareholders' Equity 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 10 1. Basis of Presentation and Use of Estimates 10 2. New Accounting Standards 10 3. Revenue 12 4. Income Taxes 13 5. Earnings Per Share 14 6. Additional Balance Sheet and Cash Flow Information 14 7. Finance Receivables 16 8. Derivative Financial Instruments and Hedging Activities 23 9. Debt 26 10. Asset-Backed Financing 27 11. Fair Value 31 12. Product Warranty and Recall Campaigns 36 13. Employee Benefit Plans 37 14. Commitments and Contingencies 37 15. Accumulated Other Comprehensive Loss 39 16. Reportable Segments 41 17. Supplemental Consolidating Data 42 18. Subsequent Event 53

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 54

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 76

Controls and Procedures

Item 4. Controls and Procedures 78

Other Information

Part II Other Information 78

Legal Proceedings

Item 1. Legal Proceedings 78

Risk Factors

Item 1A. Risk Factors 78

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 80

Other Information

Item 5. Other Information 80

Exhibits

Item 6. Exhibits 80

Signatures

Signatures 82 Table of Contents

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements HARLEY-DAVIDSON, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three months ended Nine months ended September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024 Revenue: Motorcycles and related products $ 1,079,522 $ 881,213 $ 3,213,431 $ 3,717,375 Financial services 261,188 269,482 763,587 781,818 1,340,710 1,150,695 3,977,018 4,499,193 Costs and expenses: Motorcycles and related products cost of goods sold 798,683 618,580 2,320,261 2,566,272 Financial services interest expense 75,883 94,463 258,391 276,943 Financial services provision for credit losses ( 301,499 ) 57,977 ( 198,427 ) 175,017 Selling, administrative and engineering expense 292,885 273,879 849,098 870,985 865,952 1,044,899 3,229,323 3,889,217 Operating income 474,758 105,796 747,695 609,976 Other income, net 14,706 18,408 45,456 54,851 Investment income 12,267 16,450 32,158 45,665 Interest expense 10,182 7,707 25,564 23,066 Income before income taxes 491,549 132,947 799,745 687,426 Income tax provision 116,384 16,980 188,036 123,821 Net income 375,165 115,967 611,709 563,605 Less: Loss attributable to noncontrolling interests 2,201 3,073 6,332 8,644 Net income attributable to Harley-Davidson, Inc. $ 377,366 $ 119,040 $ 618,041 $ 572,249 Earnings per share: Basic $ 3.13 $ 0.92 $ 5.07 $ 4.30 Diluted $ 3.10 $ 0.91 $ 5.03 $ 4.27 Cash dividends per share $ 0.1800 $ 0.1725 $ 0.5400 $ 0.5175 The accompanying notes are integral to the consolidated financial statements. 3 Table of Contents HARLEY-DAVIDSON, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) (Unaudited) Three months ended Nine months ended September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024 Net income $ 375,165 $ 115,967 $ 611,709 $ 563,605 Other comprehensive (loss) income, net of tax: Foreign currency translation adjustments ( 1,642 ) 63,922 52,019 25,733 Deri

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation and Use of Estimates Principles of Consolidation and Basis of Presentation – The consolidated financial statements include the accounts of Harley-Davidson, Inc. and its subsidiaries and certain variable interest entities (VIEs) related to secured financing as the Company is the primary beneficiary. All intercompany accounts and material intercompany transactions have been eliminated. The Company has a controlling equity interest in LiveWire Group, Inc. As the controlling shareholder, the Company consolidates LiveWire Group, Inc. results with additional adjustments to recognize non-controlling shareholder interests. The Company operates in three reportable segments: Harley-Davidson Motor Company (HDMC), LiveWire and Harley-Davidson Financial Services (HDFS). Substantially all of the Company's international subsidiaries use their respective local currency as their functional currency. Assets and liabilities of international subsidiaries have been translated at period-end exchange rates, and revenues and expenses have been translated using average exchange rates for the period. Monetary assets and liabilities denominated in a currency that is different from an entity's functional currency are remeasured from the transactional currency to the entity's functional currency on a monthly basis. The aggregate transaction gain (loss) resulting from foreign currency remeasurements was $( 8.9 ) million and $ 5.8 million for the three month periods ended September 30, 2025 and September 30, 2024, respectively, and $ 11.6 million and $( 0.9 ) million for the nine month periods ended September 30, 2025 and September 30, 2024, respectively. In the opinion of the Company's management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Consolidated balance sheets as of September 30, 2

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