Harley-Davidson Inc.

Company Overview

Business Model: Harley-Davidson, Inc. operates through three reportable segments: Harley-Davidson Motor Company (HDMC), LiveWire, and Harley-Davidson Financial Services (HDFS). HDMC designs, manufactures, and sells Harley-Davidson motorcycles, parts, accessories, and apparel, and licenses its trademarks globally. LiveWire is an all-electric motorcycle brand focused on the two-wheel electric motorcycle space, selling electric motorcycles, electric balance bikes (under the STACYC brand), parts, accessories, and apparel. HDFS provides financing and servicing for wholesale inventory receivables and retail consumer loans, primarily for Harley-Davidson and LiveWire motorcycles, and offers motorcycle insurance and voluntary protection products through unaffiliated third parties.

Market Position: HDMC competes in the motorcycle industry based on product capabilities, features, styling, price, quality, reliability, warranty, financing availability, and dealer networks, with its motorcycles generally commanding a premium price. Key competitive advantages include unique styling, distinctive sound, customization, innovative design, superior quality and reliability, warranty, a comprehensive line of parts, accessories, and apparel, financing through HDFS, and a global dealer network. In 2025, Harley-Davidson, Inc.'s U.S. market share for new 601+cc motorcycle registrations was 34.5% (down from 37.3% in 2024), and its European market share was 3.4% (down from 5.0% in 2024). HDFS's ability to offer integrated wholesale and retail financial services in the U.S. and Canada is considered a significant competitive advantage. LiveWire operates in the emerging electric vehicle sector, facing competition from both established internal combustion engine (ICE) motorcycle companies and smaller electric vehicle-focused companies.

Recent Strategic Developments:

• Strategic Plan Transition: The Company's 2021-2025 strategic plan, "The Hardwire," concluded at the end of 2025. A new strategic plan is expected to be announced in conjunction with the first quarter 2026 earnings release, following a comprehensive evaluation by the new Chief Executive Officer.
• New Chief Executive Officer: Artie Starrs assumed the role of President and Chief Executive Officer on October 1, 2025.
• HDFS Strategic Transaction: In the second half of 2025, HDFS completed a strategic transaction with KKR and PIMCO. This involved the sale of a collective 9.8% common equity interest in HDFS for $46.6 million, the sale of the majority of HDFS's existing gross consumer retail loan receivables, and the initiation of a Forward Flow Agreement to sell up to two-thirds of new retail loan originations over a 5-year period. Proceeds from this transaction were used to redeem $700.0 million of 6.50% medium-term notes due 2028 and $500.0 million of 5.95% medium-term notes due 2029 (redeeming $437.1 million and $355.1 million, respectively, with the remaining $262.9 million of 2028 notes also redeemed), and to pay down the Company's $450 million term loan.
• Product Portfolio Expansion: Harley-Davidson, Inc. plans to introduce a new small displacement motorcycle and an iconic classic cruiser starting in 2026. LiveWire plans to launch production versions of two concept mini-motorcycles, signaling a strategic shift towards lightweight, urban-friendly mobility solutions.
• Model Year Launch Timing: The Company began shifting the timing of its annual new model year launch from January to the preceding fall for certain models in 2025, with plans to expand this to additional models in future years.
• Cost Productivity Initiatives: The Company achieved approximately $360 million in total cost productivity savings from 2022-2025, excluding manufacturing leverage, and has extended its target to "more than $400 million by the end of 2026." A review of the cost base is underway, with an expectation to identify opportunities for at least $150 million in total annual savings at HDMC and HDFS segments, to be realized beginning in 2027.

Geographic Footprint: Harley-Davidson, Inc. conducts business globally. HDMC has sales in the U.S., Canada, Europe/Middle East/Africa (EMEA), Asia Pacific, and Latin America, supported by 1,174 dealership points worldwide as of December 31, 2025. HDMC's manufacturing operations are primarily in the U.S. (Menomonee Falls, WI; Tomahawk, WI; York, PA), with additional facilities in Thailand (Rayong) and Brazil (Manaus). LiveWire sells in the U.S. and certain international markets. HDFS operates principally in the U.S. and Canada, with third-party financing available in other international regions.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin (HDMC): 24.2% (2025) vs 28.0% (2024)
• Operating Margin (HDMC): -0.8% (2025) vs 6.7% (2024)
• Operating Margin (LiveWire): -292.2% (2025) vs -415.9% (2024)
• Operating Margin (HDFS): 56.4% (2025) vs 23.9% (2024)
• Net Margin: 7.4% (2025) vs 8.6% (2024)

Investment in Growth:

• R&D Expenditure: $178.2 million (4.0% of revenue)
• Capital Expenditures: $153.7 million
• Strategic Investments: Harley-Davidson, Inc. provided LiveWire Group, Inc. with a $75.0 million term loan in December 2025. KKR and PIMCO acquired a 9.8% equity interest in HDFS for $46.6 million.

Business Segment Analysis

Harley-Davidson Motor Company (HDMC)

Financial Performance:

• Revenue: $3,578,308k (-12.2% YoY)
• Operating Loss: $28,731k (compared to operating income of $277,844k in 2024)
• Operating Margin: -0.8%
• Key Growth Drivers: The decline in operating results was primarily due to lower wholesale motorcycle shipments (124,477 units in 2025, down 16.4% from 2024) in response to a decline in worldwide retail motorcycle sales. Unfavorable manufacturing leverage from higher fixed costs per unit on lower production and shipment volumes, and the impact of new or increased tariffs ($67 million in 2025), also negatively impacted performance. These were partially offset by favorable changes in pricing, shipment mix (beneficial mix towards new limited edition models and models with upgrades), foreign currency rates, and lower raw material costs (excluding tariffs). Operating expenses increased due to higher marketing costs and proxy contest-related costs, partially offset by lower people costs and reduced product liability and warranty costs.

Product Portfolio: HDMC offers internal combustion engine motorcycles (600cc to ~2,000cc, and smaller-displacement Lightweight models) across six categories: Grand American Touring, Trike, Cruiser, Sport, Lightweight, and Adventure Touring. The segment also sells Genuine Motor Parts, Genuine Motor Accessories, Genuine MotorClothes®, and licenses its trademarks. Plans include introducing a new small displacement motorcycle and an iconic classic cruiser starting in 2026.

Market Dynamics: Worldwide retail sales of new Harley-Davidson motorcycles decreased 12.4% in 2025 compared to 2024, with declines of 12.9% in the U.S. and 11.5% internationally. This was attributed to a challenging macroeconomic environment, including high interest rates and depressed consumer sentiment. Worldwide retail inventory of new motorcycles was approximately 40,000 units at the end of 2025, down approximately 17% from 2024.

LiveWire

Financial Performance:

• Revenue: $25,671k (-2.6% YoY)
• Operating Loss: $75,016k (a decrease from $109,639k in 2024)
• Key Growth Drivers: The decrease in operating loss was primarily due to lower operating expenses, largely resulting from cost reduction initiatives. Revenue decreased due to promotional incentives, partially offset by higher electric motorcycle and electric balance bike volume. LiveWire motorcycle unit shipments increased by 6.7% to 653 units in 2025.

Product Portfolio: LiveWire focuses on all-electric motorcycles (e.g., LIVEWIRE ONE, MULHOLLAND, ALPINISTA, DEL MAR, S2), electric balance bikes (STACYC brand), electric bikes, parts, accessories, and apparel. The brand plans to launch production versions of two concept mini-motorcycles, shifting its product portfolio towards lightweight, urban-friendly mobility solutions.

Market Dynamics: LiveWire operates in the electric vehicle sector, facing competition from both ICE-focused motorcycle companies and other electric vehicle manufacturers. The adoption of electric vehicles has been slower than anticipated due to a lack of government incentives, a less favorable regulatory environment, and slower expansion of charging infrastructure.

Harley-Davidson Financial Services (HDFS)

Financial Performance:

• Revenue: $869,196k (-16.3% YoY)
• Operating Income: $490,382k (+97.6% YoY)
• Key Growth Drivers: The significant increase in operating income was primarily driven by a $191.4 million benefit from the release of the allowance for credit losses on receivables sold as part of the HDFS Transaction, and higher other income. This was partially offset by lower interest income, higher interest expense (including $72.6 million in debt extinguishment costs), and increased operating expenses. Other income increased due to a $27.9 million gain on the sale of residual interests in securitizations, $20.3 million in servicing income from the HDFS Transaction, and higher net premiums earned by Eaglemark Insurance Company Ltd. (EICL). On a managed basis, annual retail credit losses were 3.37% in 2025 (up from 3.31% in 2024), and the 30-day managed delinquency rate increased to 5.77% (from 5.34% in 2024).

Product Portfolio: HDFS provides wholesale floorplan and open account financing to HDMC and LiveWire dealers in the U.S. and Canada. It offers retail installment lending for new and used Harley-Davidson and LiveWire motorcycles to consumers in these regions. HDFS also facilitates motorcycle insurance and voluntary protection products through unaffiliated third parties and licenses the Harley-Davidson brand for credit cards and other financial products.

Market Dynamics: HDFS competes with various banks, credit unions, and other financial institutions. In 2025, HDFS financed 68.4% of new Harley-Davidson motorcycles retailed by dealers in the U.S. and 20.7% in Canada. The challenging macroeconomic environment, including high interest rates and inflationary pressures, has adversely impacted consumer discretionary purchases and HDFS's interest income margin.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $347.5 million (13.1 million shares) in 2025, including $160 million of shares settled in 2025 from a $200 million accelerated share repurchase (ASR) program.
• Dividend Payments: $86.4 million ($0.72 per share) in 2025.
• Future Capital Return Commitments: As of December 31, 2025, 23.4 million shares remained under board-approved discretionary share repurchase authorizations (no dollar limit or expiration date). The Company is pausing near-term discretionary share repurchases (excluding ASR shares due) until its new strategic plan is announced. Capital allocation priorities are to (i) fund strategic initiatives, (ii) pay dividends, and (iii) exercise discretionary share repurchases.

Balance Sheet Position:

• Cash and Equivalents: $3,091,744k (2025) vs $1,589,608k (2024)
• Total Debt: $2,967,017k (2025) vs $6,960,382k (2024)
• Net Cash Position: $124,727k (2025) vs -$5,370,774k (2024)
• Credit Rating:
  • Moody’s: P3 (Short-Term), Baa3 (Long-Term), Stable Outlook.
  • Standard & Poor’s: A3 (Short-Term), BBB- (Long-Term), CreditWatch Negative Outlook.
  • Fitch: F2 (Short-Term), BBB+ (Long-Term), Stable Outlook.
• Debt Maturity Profile (Future principal payments as of December 31, 2025): $821,814k in 2026, $500,000k in 2027, $144,903k in 2029, $716,152k in 2030, and $300,000k thereafter.

Cash Flow Generation:

• Operating Cash Flow: $568,922k (2025) vs $1,063,833k (2024)
• Free Cash Flow: $415,243k (2025) vs $867,270k (2024)

Operational Excellence

Production & Service Model: HDMC's manufacturing processes are primarily performed in its U.S. facilities (Menomonee Falls, WI; Tomahawk, WI; York, PA), supplying the U.S. and certain international markets. Additional facilities in Thailand (Rayong) manufacture for Asian and European markets and limited non-core models for North America. A facility in Brazil (Manaus) assembles motorcycles from component kits. LiveWire motorcycles are manufactured and assembled by HDMC, while STACYC electric balance bikes are produced through contract manufacturing agreements in Taiwan and China.

Supply Chain Architecture: Key Suppliers & Partners:

• Raw Materials: Principal raw materials include steel and aluminum castings, forgings, steel sheet and bar for both HDMC and LiveWire products, as well as battery cells and semi-conductor chips for LiveWire.
• Components: HDMC purchases electronic fuel injection systems, batteries, tires, seats, electrical components, instruments, and wheels. LiveWire also purchases batteries, tires, seats, electrical components, instruments, and wheels.
• Troubled Supplier: First Brands Group, LLC, an automotive parts provider, filed for Chapter 11 bankruptcy in September 2025, requiring Harley-Davidson, Inc. to mitigate potential supply chain disruptions.
• Tier 2 Supplier Issue: Proterial Cable America, Inc. (PCA) has had regulatory compliance and quality issues with brake hose assemblies, leading to production suspensions at the York facility in 2022 and 2023. Harley-Davidson, Inc. is seeking "Inconsequentiality Determinations" from NHTSA to avoid potential recalls, with estimated costs ranging from $140 million to $450 million if a recall were required.

Facility Network: Harley-Davidson, Inc. operates a corporate office in Milwaukee, WI, and product development centers in Wauwatosa, WI (HDMC) and Milwaukee, WI (LiveWire). Manufacturing facilities are located in Menomonee Falls, WI; Tomahawk, WI; York, PA; Rayong, Thailand; and Manaus, Brazil. HDFS has corporate and operational offices in Reno, NV, and Plano, TX. LiveWire Labs include a customer experience center in Malibu, CA, and retail operations in Carson, CA. STACYC's corporate office and R&D are in Fort Worth, TX.

Operational Metrics: HDMC accrued $28.2 million associated with 12 voluntary recalls over the three years ending December 31, 2025. LiveWire accrued $0.3 million associated with 4 voluntary recalls over the same period. The Company achieved $360 million in cost productivity savings from 2022-2025, excluding manufacturing leverage.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: LiveWire sells electric motorcycles and related products direct to consumers through a company-owned dealer and online sales. HDMC sells products directly to consumers via eCommerce websites in Canada and certain European markets.
• Channel Partners: HDMC products are primarily sold through a global network of independent dealers. LiveWire products are sold wholesale to independent retail partners and direct to consumers through select international partners. STACYC products are sold wholesale to independent dealers and distributors. HDFS provides financing through HDMC and LiveWire dealerships.

Customer Portfolio: Enterprise Customers: Harley-Davidson, Inc. relies on a global network of 1,174 independent dealership points as of December 31, 2025. All U.S. and Canadian independent HDMC dealers and all U.S. independent LiveWire dealers utilized HDFS financing programs at some point during 2025. Customer Concentration: Approximately 10% of HDFS's gross outstanding retail finance receivables were originated in Texas as of December 31, 2025.

Geographic Revenue Distribution:

• HDMC (2025): United States ($2,404,505k), EMEA ($538,781k), Canada ($161,449k), Japan ($112,376k), Australia and New Zealand ($105,855k), Other countries ($255,342k).
• LiveWire (2025): United States ($19,053k), International ($6,618k).
• HDFS (2025): United States ($843,453k), Canada ($12,775k), Europe ($8,056k), Other countries ($4,912k).

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The motorcycle market is highly competitive, characterized by evolving styling preferences, technological advancements, and increasing regulatory requirements (safety, emissions). The electric vehicle sector, where LiveWire operates, is emerging and faces challenges from slower-than-anticipated adoption due to a lack of government incentives, a less favorable regulatory environment, and limited charging infrastructure expansion. The financial services industry is competitive, with HDFS leveraging convenience, service, brand association, and dealer relations. Macroeconomic conditions, including high interest rates and inflation, have negatively impacted consumer demand for discretionary products like motorcycles.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: Harley-Davidson, Inc. competes with diversified motorcycle manufacturers in various segments, other powersports markets, and the automotive market. In the electric vehicle sector, LiveWire faces competition from major motorcycle companies with existing electric offerings and new entrants. HDFS competes with banks, credit unions, and other financial institutions for retail and wholesale financing, and with national and regional insurance companies for insurance products.

Competitive Response Strategy: The Company focuses on continuous product advancements and portfolio decisions to meet changing consumer preferences and regulatory demands. It aims to protect its intellectual property and maintain cost-efficient design and manufacturing. Pricing actions, including incentives, are used to manage demand. LiveWire is focused on securing external capital and implementing cost savings to achieve a sustainable business model.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: The Company faces risks from demand volatility due to general economic conditions, including high interest rates and depressed consumer sentiment, which impact discretionary purchases. The motorcycle market is subject to changing styling preferences and technological advancements, requiring continuous product innovation. The LiveWire segment, as an emerging entrant in the electric vehicle sector, faces significant expenses, potential continuing losses, and risks related to slower-than-anticipated EV adoption, competition, and dependence on external funding. New Strategic Plan Uncertainty: The appointment of a new Chief Executive Officer and the ongoing development of a new strategic plan introduce uncertainties that could impact business and financial performance.

Operational & Execution Risks

Supply Chain Vulnerabilities: The Company relies on a complex supply chain for raw materials and components, exposing it to risks from inflationary pressures, material shortages, logistics instability, and supplier disruptions (e.g., First Brands Group, LLC bankruptcy). Reliance on single or limited-source suppliers (e.g., Proterial Cable America, Inc. for brake hose assemblies) poses risks of production delays and quality issues. Quality Issues & Recalls: The Company must prevent and detect product issues to avoid recalls, warranty costs, litigation, and reputational damage. Past issues with brake hose assemblies from Proterial Cable America, Inc. led to production suspensions and potential recall costs estimated between $140 million and $450 million if regulatory determinations are unfavorable. Labor Relations: A significant portion of the manufacturing workforce is unionized, and failure to successfully negotiate collective bargaining agreements could lead to work stoppages or disruptions. Talent Management: The Company's success depends on attracting and retaining skilled employees and leaders, and managing leadership transitions and organizational changes, such as the return to on-site work for corporate employees. Cybersecurity: The Company's information technology environment and data security infrastructure are susceptible to evolving cybersecurity risks, which could disrupt operations, lead to data breaches, and harm reputation.

Financial & Regulatory Risks

Market & Financial Risks: The Company is exposed to market risks from fluctuations in foreign currency exchange rates, commodity prices, and interest rates, which can impact revenue, margins, and financing costs. HDFS is particularly sensitive to interest rate changes and relies on access to capital markets, with its credit ratings influencing borrowing costs. Credit risk on HDFS's retail and wholesale finance receivables is influenced by macroeconomic conditions and motorcycle values. Regulatory & Compliance Risks: Harley-Davidson, Inc. is subject to extensive governmental laws and regulations, including environmental controls (EPA, CARB), motor vehicle safety (NHTSA), and financial services regulations (CFPB, Dodd-Frank Act). Changes in these regulations or non-compliance could result in increased costs, fines, penalties, or operational restrictions. Trade & Tariffs: Geopolitical conflicts and tensions have led to the implementation of tariffs and trade restrictions, increasing costs of raw materials, components, and finished products, and impacting sales domestically and internationally.

Geopolitical & External Risks

Geopolitical Exposure: International sales and operations expose the Company to risks from political and economic instability, foreign tariffs, trade barriers, and anti-U.S. sentiments. Ongoing regional conflicts could further impact supply chains and demand. Weather & Natural Disasters: Abnormally adverse weather conditions and natural disasters can reduce retail sales of motorcycles and related products.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas: HDMC focuses on product development and improvements for its internal combustion engine motorcycles, with R&D expenditures of $154.3 million in 2025. LiveWire is dedicated to pioneering the two-wheel electric motorcycle space, with R&D expenditures of $23.9 million in 2025, focusing on new products, designs, and technologies. Innovation Pipeline: HDMC plans to introduce a new small displacement motorcycle and an iconic classic cruiser starting in 2026. LiveWire plans to launch production versions of two concept mini-motorcycles, reflecting a strategic shift towards lightweight, urban-friendly mobility solutions.

Intellectual Property Portfolio: The Company strategically manages a portfolio of patents, trade secrets, copyrights, and trademarks. HDMC owns patent rights related to its motorcycles and production processes, with an active patent portfolio averaging 13 years remaining. LiveWire holds design patents (15-year term) and utility patents (20-year term) for its electric motorcycles and products. Harley-Davidson, Inc. maintains a vigorous worldwide program for trademark registration and enforcement, protecting highly recognizable trademarks such as HARLEY-DAVIDSON, H-D, Bar & Shield Logo, and LiveWire's brand marks.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: Artie Starrs was appointed CEO on October 1, 2025. The Company is currently conducting a search to fill the Chief Information Security Officer position, with the IT Security Manager serving as acting CISO.

Board Composition: The Audit and Finance Committee, responsible for enterprise risk oversight including cybersecurity, consists entirely of independent directors. Directors are subject to stock ownership guidelines requiring them to hold five times their annual retainer in common stock.

Human Capital Strategy

Workforce Composition: As of December 31, 2025, Harley-Davidson, Inc. had approximately 5,500 global employees, with 80.6% based in the U.S. The workforce is 60.0% salaried, and 31.5% (approximately 1,700) are hourly unionized employees at U.S. manufacturing facilities, covered by collective bargaining agreements expiring between October 2027 and March 2029.

Talent Management: Acquisition & Retention: The Company focuses on attracting, developing, and retaining talent through initiatives such as STEAM (Science, Technology, Engineering, Arts & Math) programs (e.g., BUILD Moto Mentor Program, STEAM Lab) and a Developing Leaders Program (DLP) for new and emerging leaders (over 120 participants in 2025). A New Employee Community program engaged over 475 new employees in 2025. Employee Value Proposition: The Company has implemented a revamped Total Rewards approach, including pay for performance, pay transparency, and annual market evaluations. It invests in employee well-being through programs like Healthy Behavior Rewards and mental health support (engaging over 20% of the global population). Diversity & Development: The Company promotes employee engagement through its "Here to Help" volunteer program, with employees completing over 1,250 volunteer hours in 2025.

Environmental & Social Impact

Environmental Commitments: Harley-Davidson, Inc. strives to comply with international, federal, state, and local environmental control requirements related to air, water, and noise emissions. The Company expects environmental standards to become more stringent, leading to continued research, development, and production costs. Climate change-related legislation and evolving consumer preferences are likely to increase regulatory pressure to develop products that generate fewer emissions.

Supply Chain Sustainability: The Company is subject to laws impacting its supply chain, such as the UK Modern Slavery Act and the Uyghur Forced Labor Prevention Act, which could affect raw material sourcing and availability. Regulations requiring disclosure of materials and chemicals in products also impact operations.

Social Impact Initiatives: The Company supports local communities through its "Here to Help" employee volunteer program and sponsors initiatives like the BUILD Moto Mentor Program, which provides experiences for high school students in STEAM fields.

Business Cyclicality & Seasonality

Demand Patterns: HDMC's wholesale motorcycle shipments and retail sales generally correlate with regional riding seasons. LiveWire also experiences seasonality in wholesale shipments and retail sales, which track regional riding seasons and are impacted by new model introductions. HDFS's retail financing activities are greatest from mid-March through August, while wholesale financing volume is affected by dealer inventory levels, typically higher in the first half of the year. The motorcycle industry is sensitive to general economic conditions, with high interest rates and depressed consumer sentiment negatively impacting demand for discretionary purchases.

Planning & Forecasting: The Company plans HDMC wholesale shipments to align with expected worldwide dealer retail sales. HDFS's allowance for credit losses incorporates current economic conditions and outlooks on future conditions, utilizing probability-weighted economic forecast scenarios.

Regulatory Environment & Compliance

Regulatory Framework: Harley-Davidson, Inc. operates under a complex regulatory framework. HDMC and LiveWire products are subject to certification by the United States Environmental Protection Agency (EPA) and the California Air Resources Board (CARB) for emissions and noise standards, as well as safety standards from the U.S. National Highway Traffic Safety Administration (NHTSA) and international bodies. HDFS operations are supervised by federal and state administrative agencies and foreign governmental authorities, including the Consumer Financial Protection Bureau (CFPB), which has significant enforcement and rule-making authority over consumer financial products and services.

Trade & Export Controls: The Company is impacted by a dynamic global tariff landscape, including U.S. tariffs on foreign goods and rebalancing tariffs from foreign countries. For example, EU rebalancing tariffs on non-electric motorcycles, which were 31% from April 2021, were suspended to 6% from January 2022 and further extended. The Company is also subject to export control measures and sanctions targeting countries like Russia and Belarus, which prohibit the export of luxury goods, including motorcycles.

Legal Proceedings: Harley-Davidson, Inc. is involved in various legal proceedings. The Japan Fair Trade Commission initiated an investigation into Harley-Davidson Japan KK in July 2024 for alleged improper activity. A product liability lawsuit resulted in an $81 million award in November 2024, which was settled and fully resolved in the third quarter of 2025. The Company is also managing regulatory compliance and quality issues with brake hose assemblies from its Tier 2 supplier, Proterial Cable America, Inc., and is seeking "Inconsequentiality Determinations" from NHTSA to avoid potential recall costs estimated between $140 million and $450 million.

Tax Strategy & Considerations

Tax Profile: The Company's effective tax rate was 28.2% in 2025, unfavorably impacted by valuation allowances recorded against deferred tax assets and a global minimum tax provision of $8.8 million related to Thailand. These impacts were partially offset by federal tax credits and tax holidays in Thailand, which decreased foreign taxes by $15.1 million in 2025 and are expected to expire between 2026 and 2027. The H.R. 1, the One Big Beautiful Bill Act, enacted in July 2025, introduced tax law changes relevant to manufacturing, but did not materially impact the Company's effective tax rate for the periods presented.

Insurance & Risk Transfer

Risk Management Framework: Harley-Davidson, Inc. manages its exposure to market risks from foreign currency exchange rates, commodity prices, and interest rates through the selective use of derivative financial instruments, including foreign currency contracts, commodity contracts, and cross-currency swaps. The Company maintains insurance coverage for product liability exposures, though policies may include significant deductibles, limitations, and exclusions. The Company evaluates counterparties for derivative financial instruments based on credit ratings to manage credit loss risk.