HARLEY-DAVIDSON, INC. - Quarter Report: 2024 September (Form 10-Q)

Other investing activities() Net cash used by investing activities()()Cash flows from financing activities:Proceeds from issuance of medium-term notes Repayments of medium-term notes ()Proceeds from securitization debt Repayments of securitization debt()()Borrowings of asset-backed commercial paper Repayments of asset-backed commercial paper()()

Net (decrease) increase in unsecured commercial paper

()

Net increase in deposits

Dividends paid()()Repurchase of common stock()()Other financing activities

Net cash provided by financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash ()

Net increase in cash, cash equivalents and restricted cash

$ $ Cash, cash equivalents and restricted cash:Cash, cash equivalents and restricted cash, beginning of period$ $ Net increase in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash, end of period$ $ Reconciliation of cash, cash equivalents and restricted cash on the Consolidated balance sheets to the Consolidated statements of cash flows: Cash and cash equivalents$ $ Restricted cash Restricted cash included in Other long-term assets Cash, cash equivalents and restricted cash per the Consolidated statements of cash flows$ $

The accompanying notes are integral to the consolidated financial statements.

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HARLEY-DAVIDSON, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands, except share and per share amounts)

(Unaudited)

Equity Attributable to Harley-Davidson, Inc.

Common Stock

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Treasury
Stock

Total

Equity Attributable to Noncontrolling Interests

Total Equity

Issued
Shares

Balance

Balance, December 31, 2023

()

Net income (loss)

—

()

Other comprehensive loss, net of tax (Note 15)

—

()

—

()

—

()

Dividends ($ per share)

—

()

—

()

—

()

Repurchase of common stock

—

()

—

()

Share-based compensation

—

Balance, March 31, 2024

()

Net income (loss)

—

()

Other comprehensive loss, net of tax (Note 15)

—

()

—

()

—

()

Dividends ($ per share)

—

()

—

()

—

()

Repurchase of common stock

—

()

—

()

Share-based compensation

—

Balance, June 30, 2024

()

Net income (loss)

—

()

Other comprehensive income, net of tax (Note 15)

—

Dividends ($ per share)

—

()

—

()

—

()

Repurchase of common stock

—

()

—

()

Share-based compensation

—

Balance, September 30, 2024

()

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Equity Attributable to Harley-Davidson, Inc.

Common Stock

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Treasury
Stock

Total

Equity Attributable to Noncontrolling Interests

Total Equity

Issued
Shares

Balance

Balance, December 31, 2022

()

Net income (loss)

—

()

Other comprehensive loss, net of tax (Note 15)

—

()

—

()

—

()

Dividends ($ per share)

—

()

—

()

—

()

Repurchase of common stock

—

()

—

()

Share-based compensation

—

million and $ million, respectively, and $ million and $ million in the nine months ended September 30, 2024 and September 30, 2023, respectively. The Company expects to recognize approximately $ million of the remaining unearned revenue over the next months and $ million thereafter.

% compared to % for the nine months ended September 30, 2023. The decrease in the effective tax rate for the nine months ended September 30, 2024 was attributable to changes in the mix of earnings for foreign jurisdictions that are taxed at rates that differ from the U.S. statutory rate and the benefit of increased income tax credits on lower taxable income.

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$ $ $ Basic weighted-average shares outstanding

Effect of dilutive securities – employee stock compensation plan

Diluted weighted-average shares outstanding Net earnings per share:Basic$ $ $ $ Diluted$ $ $ $

Shares of common stock related to share-based compensation that were not included in the effect of dilutive securities because the effect would have been anti-dilutive include million and million shares for the three months ended September 30, 2024 and September 30, 2023, respectively, and million and million shares for the nine months ended September 30, 2024 and September 30, 2023, respectively.

$ $

Mutual funds, included in Other long-term assets on the Consolidated balance sheets, are carried at fair value with gains and losses recorded in income. Mutual funds are held to support certain deferred compensation obligations.

Inventories, net – Substantially all inventories located in the U.S. are valued using the last-in, first-out (LIFO) method. Other inventories are valued at the lower of cost or net realizable value using the first-in, first-out (FIFO) method. Motorcycle finished goods inventories include motorcycles that are ready for sale and motorcycles that are substantially complete but awaiting installation of certain components. $ $ Motorcycle finished goods Parts and accessories and apparel Inventory at lower of FIFO cost or net realizable value Excess of FIFO over LIFO cost()()()$ $ $

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 $ million, $ million, and $ million, net of fees, of interest-bearing brokered certificates of deposit outstanding as of September 30, 2024, December 31, 2023, and September 30, 2023, respectively. The liabilities for deposits are included in Short-term deposits, net or Long-term deposits, net on the Consolidated balance sheets 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.

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2025 2026 2027 Thereafter Future maturities Unamortized fees()$ $ Adjustments to reconcile Net income to Net cash provided by operating activities:Depreciation and amortization Amortization of deferred loan origination costs Amortization of financing origination fees

Income related to long-term employee benefits

()()Employee benefit plan contributions and payments()()Stock compensation expense Net change in wholesale finance receivables related to sales()()Provision for credit losses Deferred income taxes()()Other, net ()Changes in current assets and liabilities:Accounts receivable, net()()

Finance receivables – accrued interest and other

  Inventories, net  Accounts payable and accrued liabilities()   $  $ $ $ $ $ Wholesale finance receivables      $ $ $ $ $ $  December 31, 2023Current31-60 Days
Past Due61-90 Days
Past DueGreater than
90 Days
Past DueTotal
Past DueTotalRetail finance receivables$ $ $ $ $ $ Wholesale finance receivables      $ $ $ $ $ $  September 30, 2023Current31-60 Days
Past Due61-90 Days
Past DueGreater than
90 Days
Past DueTotal
Past DueTotalRetail finance receivables$ $ $ $ $ $ Wholesale finance receivables      $ $ $ $ $ $

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$ $ $ $ $ $ $ $ Commodity contracts Cross-currency swaps $ $ $ $ $ $ $ $ $ Derivative Financial Instruments
Not Designated as Hedging InstrumentsSeptember 30, 2024December 31, 2023September 30, 2023Notional
Value

Assets(c)

LiabilitiesNotional
Value

Assets(c)

LiabilitiesNotional
Value

Assets(c)

LiabilitiesCommodity contracts$ $ $ $ $ $ $ $ $ Interest rate caps $ $ $ $ $ $ $ $ $

(a)Includes $ million of cross-currency swaps recorded in Other long-term liabilities as of September 30, 2023, with all remaining amounts recorded in Accrued liabilities.

(b)Includes $ million and $ million of cross-currency swaps recorded in Other long-term assets as of September 30, 2024 and December 31, 2023, respectively, with all remaining amounts recorded in Other current assets.

million and $ million of interest rate caps recorded in Other long-term assets as of December 31, 2023 and September 30, 2023, respectively, with all remaining amounts recorded in

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)$ $ $ $ $()$ $ Commodity contracts()()()()()()()()Cross-currency swaps () () () ()Treasury rate lock contracts () ()()()()Swap rate lock contracts ()() () $ $()$ $()$ $()$ $()

The location and amount of gains and losses recognized in income related to the Company's derivative financial instruments designated as cash flow hedges were as follows (in thousands):

Motorcycles and related products
cost of goods sold

Selling, administrative &
engineering expense

Interest expense

Financial services interest expense

Three months ended September 30, 2024

Line item on the Consolidated statements of operations in which the effects of cash flow hedges are recorded

Gain/(loss) reclassified from AOCL into income:

Foreign currency contracts

—

Commodity contracts

()

—

Cross-currency swaps

—

Treasury rate lock contracts

—

()

Swap rate lock contracts

—

()

Three months ended September 30, 2023

Line item on the Consolidated statements of operations in which the effects of cash flow hedges are recorded

Gain/(loss) reclassified from AOCL into income:

Foreign currency contracts

()

—

Commodity contracts

()

—

Cross-currency swaps

—

()

—

Treasury rate lock contracts

—

()

Swap rate lock contracts

—

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$ $ $ Gain/(loss) reclassified from AOCL into income:Foreign currency contracts — — — Commodity contracts()— — — Cross-currency swaps— — — Treasury rate lock contracts— — () Swap rate lock contracts— — — ()Nine months ended September 30, 2023

Line item on the Consolidated statements of operations in which the effects of cash flow hedges are recorded

$ $ $ $ Gain/(loss) reclassified from AOCL into income:Foreign currency contracts — — — Commodity contracts()— — — Cross-currency swaps— ()— — Treasury rate lock contracts— — ()()Swap rate lock contracts— — —

The amount of net gain included in Accumulated other comprehensive loss (AOCL) at September 30, 2024, estimated to be reclassified into income over the next 12 months was $ million.

)$ $()$ Commodity contracts() ()()Interest rate caps()()()()$()$ $()$()

The Company is exposed to credit loss risk in the event of non-performance by counterparties to its derivative financial instruments. Although no assurances can be given, the Company does not expect any of the counterparties to its derivative financial instruments to fail to meet their obligations. To manage credit loss risk, the Company evaluates counterparties based on credit ratings and, on a quarterly basis, evaluates each hedge’s net position relative to the counterparty’s ability to cover their position.

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$ $ million par value remeasured to U.S. dollar at September 30, 2024, December 31, 2023, and September 30, 2023, respectively

(b)€ million par value remeasured to U.S. dollar at September 30, 2024, December 31, 2023, and September 30, 2023, respectively

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2025 2026 2027 2028 Thereafter Future principal payments Unamortized discounts and debt issuance costs()$

10.

$()$ $ $ $ Asset-backed U.S. commercial paper conduit facility () Unconsolidated VIEs:Asset-backed Canadian commercial paper conduit facility () $ $()$ $ $ $

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$()$ $ $ $ Asset-backed U.S. commercial paper conduit facility () Unconsolidated VIEs:Asset-backed Canadian commercial paper conduit facility () $ $()$ $ $ $ September 30, 2023Finance receivablesAllowance for credit lossesRestricted cashOther assetsTotal assetsAsset-backed debt, netOn-balance sheet assets and liabilities:Consolidated VIEs:Asset-backed securitizations$ $()$ $ $ $ Asset-backed U.S. commercial paper conduit facility () Unconsolidated VIEs:Asset-backed Canadian commercial paper conduit facility () $ $()$ $ $ $

On-Balance Sheet Asset-Backed Securitization VIEs – The Company transfers U.S. retail motorcycle finance receivables to SPEs that in turn issue secured notes to investors, with various maturities and interest rates, secured by future collections of the purchased U.S. retail motorcycle finance receivables. Each on-balance sheet asset-backed securitization SPE is a separate legal entity, and the U.S. retail motorcycle finance receivables included in the asset-backed securitizations are only available for payment of the secured debt and other obligations arising from the asset-backed securitization transactions and are not available to pay other obligations or claims of the Company’s creditors until the associated secured debt and other obligations are satisfied. Restricted cash balances held by the SPEs are used only to support the securitizations. There are no amortization schedules for the secured notes; however, the debt is reduced monthly as available collections on the related U.S. retail motorcycle finance receivables are applied to outstanding principal. The secured notes currently have various contractual maturities ranging from 2025 to 2032.

The Company is the primary beneficiary of its on-balance sheet asset-backed securitization VIEs because it retains servicing rights and a residual interest in the VIEs in the form of a debt security. As the servicer, the Company is the variable interest holder with the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. As a residual interest holder, the Company has the obligation to absorb losses and the right to receive benefits which could potentially be significant to the VIE.

$ $ $ $ $ Second quarter Third quarter $ $ $ $ $ $

On-Balance Sheet Asset-Backed U.S. Commercial Paper Conduit Facility VIE – In November 2023, the Company renewed its $ billion revolving facility agreement (the U.S. Conduit Facility) with third-party banks and their asset-backed U.S.

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million at the lenders’ discretion. Prior to the November 2022 renewal, the Company drew against the $ million of uncommitted additional borrowings that were allowed prior to the renewal. The Company repaid the remaining balance of these uncommitted additional borrowings in full during the three months ended September 30, 2023. Availability under the U.S. Conduit Facility is based on, among other things, the amount of eligible U.S. retail motorcycle finance receivables held by the SPE as collateral.

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 outstanding debt and future 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. Prior to November 2022, when calculating the unused fee, the aggregate commitment did not include any unused portion of the $ million uncommitted additional borrowings allowed. 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. The expected remaining term of the related receivables held by the SPE is approximately years. Unless earlier terminated or extended by mutual agreement of the Company and the lenders, as of September 30, 2024, the U.S. Conduit Facility had an expiration date of November 20, 2024.

The Company is the primary beneficiary of its U.S. Conduit Facility VIE because it retains servicing rights and a residual interest in the VIE in the form of a debt security. As the servicer, the Company is the variable interest holder with the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. As a residual interest holder, the Company has the obligation to absorb losses and the right to receive benefits which could potentially be significant to the VIE.

During the first quarter of 2024, the Company transferred $ million of U.S. retail motorcycle finance receivables to an SPE which, in turn, issued $ million of debt under the U.S. Conduit Facility. There were finance receivable transfers under the U.S. Conduit Facility during the second or third quarter of 2024 or during the nine months ended September 30, 2023.

On-Balance Sheet Asset-Backed Canadian Commercial Paper Conduit Facility – In June 2024, 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$ million, which was a C$ million increase in the total commitment. The transferred assets are restricted as collateral for the payment of the associated debt. 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. The expected remaining term of the related receivables is approximately years. Unless earlier terminated or extended by mutual agreement of the Company and the lenders, as of September 30, 2024, the Canadian Conduit had an expiration date of June 30, 2025.

The Company is not the primary beneficiary of the Canadian bank-sponsored, multi-seller conduit VIE; therefore, the Company does not consolidate the VIE. However, the Company treats the conduit facility as a secured borrowing as it maintains effective control over the assets transferred to the VIE and, therefore, does not meet the requirements for sale accounting.

As the Company participates in and does not consolidate the Canadian bank-sponsored, multi-seller conduit VIE, the maximum exposure to loss associated with this VIE, which would only be incurred in the unlikely event that all the finance receivables and underlying collateral have no residual value, was $ million at September 30, 2024. The maximum exposure is not an indication of the Company's expected loss exposure.

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$ $ $ Second quarter

Nonrecurring Fair Value Measurements – Repossessed inventory was $ million, $ million and $ million as of September 30, 2024, December 31, 2023 and September 30, 2023, respectively, for which the fair value adjustment was a decrease of $ million, $ million and $ million, respectively. Fair value is estimated using Level 2 inputs based on the recent market values of repossessed inventory.

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$ $ $ $ $ Liabilities:Deposits, net$ $ $ $ $ $ Debt:Unsecured commercial paper$ $ $ $ $ $ Asset-backed U.S. commercial paper conduit facility$ $ $ $ $ $ Asset-backed Canadian commercial paper conduit facility$ $ $ $ $ $ Asset-backed securitization debt$ $ $ $ $ $ Medium-term notes$ $ $ $ $ $ Senior notes$ $ $ $ $ $

Finance Receivables, net – The carrying value of retail and wholesale finance receivables is amortized cost less an allowance for credit losses. The fair value of retail finance receivables is generally calculated by discounting future cash flows using an estimated discount rate that reflects current credit, interest rate and prepayment risks associated with similar types of instruments. Fair value is determined based on Level 3 inputs. The amortized cost basis of wholesale finance receivables approximates fair value because they are generally either short-term or have interest rates that adjust with changes in market interest rates.

Deposits, net – The carrying value of deposits is amortized cost, net of fees. The fair value of deposits is estimated based upon rates currently available for deposits with similar terms and maturities. Fair value is calculated using Level 3 inputs.

Debt – The carrying value of debt is generally cost, net of unamortized discounts and debt issuance costs. The fair value of unsecured commercial paper is calculated using Level 2 inputs and approximates carrying value due to its short maturity. The fair value of debt provided under the U.S. Conduit Facility and the Canadian Conduit Facility is calculated using Level 2 inputs and approximates carrying value since the interest rates charged under the facilities are tied directly to market rates and fluctuate as market rates change. The fair values of the medium-term notes and senior notes are estimated based upon rates currently available for debt with similar terms and remaining maturities (Level 2 inputs). The fair value of the fixed-rate debt related to on-balance sheet asset-backed securitization transactions is estimated based on pricing currently available for transactions with similar terms and maturities (Level 2 inputs). The fair value of the floating-rate debt related to on-balance sheet asset-backed securitization transactions is calculated using Level 2 inputs and approximates carrying value since the interest rates charged are tied directly to market rates and fluctuate as market rates change.

12.

limited warranty on all new motorcycles sold worldwide, except in certain markets, where the Company currently provides a standard limited warranty. The Company also provides a limited warranty on the battery for electric motorcycles. In addition, the Company provides a warranty for parts and accessories. The warranty coverage for the retail customer generally begins when the product is sold to a retail customer. The Company accrues for future warranty claims at the time of shipment using an estimated cost based primarily on historical Company claim information.

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$ $ $ Warranties issued during the period Settlements made during the period()()()()Recalls and changes to pre-existing warranty liabilities Balance, end of period$ $ $ $

The liability for recall campaigns, included in the balance above, was $ million, $ million and $ million at September 30, 2024, December 31, 2023 and September 30, 2023, respectively.

13.

$ $ $ Interest cost Expected return on plan assets()()()()Amortization of unrecognized:

Prior service cost

Net gain

()()()()

Settlement gain

()

Special retirement benefit cost

Net periodic benefit income$()$()$()$()Postretirement Healthcare Benefits:Service cost$ $ $ $ Interest cost Expected return on plan assets()()()()Amortization of unrecognized:

Prior service cost (credit)

() ()

Net gain

()()()() ) )) ))) ) ) ) )) ))) ) ) ()$()$()

(a)Amounts reclassified are included in the computation of net periodic benefit (income) cost, discussed further in Note 15

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16.

business segments: HDMC, LiveWire and HDFS. The Company's reportable segments are strategic business units that offer different products and services and are managed separately based on the fundamental differences in their operations. $ $ $ Gross profit Selling, administrative and engineering expense Operating income LiveWire:Revenue

Gross (loss) profit

() ()()Selling, administrative and engineering expense Operating loss()()()()HDFS: Financial services revenue Financial services expense Operating income Operating income$ $ $ $

Total assets for the HDMC, LiveWire and HDFS segments were $ billion, $ billion and $ billion, respectively, as of September 30, 2024, $ billion, $ billion and $ billion, respectively, as of December 31, 2023, and $ billion, $ billion and $ billion, respectively, as of September 30, 2023.

17.

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$ $()$ Financial services () () Costs and expenses:Motorcycles and related products cost of goods sold Financial services interest expense Financial services provision for credit losses Selling, administrative and engineering expense () () Operating income Other income, net Investment income Interest expense Income before income taxes Income tax provision() Net income Less: (income) loss attributable to noncontrolling interests $ $ $ Net income attributable to Harley-Davidson, Inc.$ $ $ $ Nine months ended September 30, 2024Non-Financial Services EntitiesFinancial Services EntitiesConsolidating AdjustmentsConsolidatedRevenue:Motorcycles and related products$ $ $()$ Financial services () () Costs and expenses:Motorcycles and related products cost of goods sold Financial services interest expense Financial services provision for credit losses Selling, administrative and engineering expense () () Operating income Other income, net Investment income Interest expense Income before income taxes Provision for income taxes Net income Less: (income) loss attributable to noncontrolling interests Net income attributable to Harley-Davidson, Inc.$ $ $ $

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$ $()$ Financial Services () () Costs and expenses:Motorcycles and Related Products cost of goods sold Financial Services interest expense Financial Services provision for credit losses Selling, administrative and engineering expense () () Operating income () Other income, net Investment income () Interest expense Income before income taxes () Provision for income taxes Net income () Less: (income) loss attributable to noncontrolling interests Net income attributable to Harley-Davidson, Inc.$ $ $()$ Nine months ended September 30, 2023Non-Financial Services EntitiesFinancial Services EntitiesConsolidating AdjustmentsConsolidatedRevenue:Motorcycles and related products$ $ $()$ Financial services () () Costs and expenses:Motorcycles and related products cost of goods sold Financial services interest expense Financial services provision for credit losses Selling, administrative and engineering expense () () Operating income Other income, net

Investment income

() Interest expense Income before income taxes () Provision for income taxes Net income () Less: (income) loss attributable to noncontrolling interests Net income attributable to Harley-Davidson, Inc.$ $ $()$

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$ $ $ Accounts receivable, net () Finance receivables, net Inventories, net Restricted cash Other current assets () () Finance receivables, net Property, plant and equipment, net Pension and postretirement assets Goodwill Deferred income taxes () Lease assets Other long-term assets () $ $ $()$ LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities:Accounts payable$ $ $()$ Accrued liabilities () Short-term deposits, net Short-term debt Current portion of long-term debt, net () Long-term deposits, net Long-term debt, net Lease liabilities Pension and postretirement liabilities Deferred income taxes Other long-term liabilities Commitments and contingencies (Note 14) () $ $ $()$

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$ $ $ Adjustments to reconcile Net income to Net cash provided by operating activities:Depreciation and amortization Amortization of deferred loan origination costs Amortization of financing origination fees Provision for long-term employee benefits() ()Employee benefit plan contributions and payments() ()Stock compensation expense Net change in wholesale finance receivables related to sales ()()Provision for credit losses Deferred income taxes ()()()Other, net () Changes in current assets and liabilities:Accounts receivable, net() ()

Finance receivables – accrued interest and other

Inventories, net Accounts payable and accrued liabilities() ()()Other current assets() () () Net cash provided by operating activities () Cash flows from investing activities:Capital expenditures()() ()Origination of finance receivables () ()Collections on finance receivables () Other investing activities() ()Net cash used by investing activities()() ()

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Proceeds from securitization debt Repayments of securitization debt () ()Borrowings of asset-backed commercial paper Repayments of asset-backed commercial paper () ()

Net decrease in unsecured commercial paper

() ()

Net increase in deposits

Dividends paid() ()Repurchase of common stock() ()Other financing activities () Net cash (used) provided by financing activities() () Effect of exchange rate changes on cash, cash equivalents and restricted cash()

Net increase in cash, cash equivalents and restricted cash

$ $ $ $ Cash, cash equivalents and restricted cash:Cash, cash equivalents and restricted cash, beginning of period$ $ $ $

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, end of period$ $ $ $

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$ $()$ Adjustments to reconcile Net income to Net cash provided by operating activities:Depreciation and amortization Amortization of deferred loan origination costs Amortization of financing origination fees Provision for long-term employee benefits() ()Employee benefit plan contributions and payments() ()Stock compensation expense Net change in wholesale finance receivables related to sales ()()Provision for credit losses Deferred income taxes () ()Other, net()()()()Changes in current assets and liabilities:Accounts receivable, net() ()

Finance receivables – accrued interest and other

Inventories, net Accounts payable and accrued liabilities() () Other current assets() ()()() ()

Net cash provided by operating activities

() Cash flows from investing activities:Capital expenditures()() ()Origination of finance receivables () ()Collections on finance receivables () Other investing activities() Net cash used by investing activities()() ()

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Repayments of medium-term notes () ()Proceeds from securitization debt Repayments of securitization debt () ()Borrowings of asset-backed commercial paper Repayments of asset-backed commercial paper () ()Net decrease in unsecured commercial paper Net increase in deposits

The Company reported operating income of $105.8 million in the third quarter of 2024 compared to $209.3 million in the same period last year. The HDMC segment reported operating income of $55.1 million in the third quarter of 2024, a decrease of $120.1 million compared to the third quarter of 2023. Operating loss from the LiveWire segment increased $0.7 million compared to the third quarter of 2023. Operating income from the HDFS segment increased $17.4 million compared to the third quarter of 2023. Refer to the HDMC Segment, LiveWire Segment and HDFS Segment sections for a more detailed discussion of the factors affecting operating results.

Other income in the third quarter of 2024 was lower than in the third quarter of 2023, impacted by a smaller benefit related to a decrease in the fair value of LiveWire's warrant liability in the third quarter of 2024 compared to the third quarter of 2023 as well as lower non-operating income related to the Company's defined benefit plans.

The Company's effective income tax rate for the third quarter of 2024 was 12.8% compared to 17.7% for the third quarter of 2023. The decrease in the effective tax rate for the third quarter was attributable to changes in the mix of earnings for foreign jurisdictions that are taxed at rates that differ from the U.S. statutory rate and the benefit of increased income tax credits on lower taxable income.

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Diluted earnings per share was $0.91 in the third quarter of 2024, down 34.1% from the same period last year. Diluted weighted average shares outstanding decreased from 144.3 million in the third quarter of 2023 to 131.0 million in the third quarter of 2024, driven by the Company's discretionary repurchases of common stock. Refer to Liquidity and Capital Resources for additional information concerning the Company's share repurchase activity.

Harley-Davidson Motorcycles Retail Sales and Registration Data

Harley-Davidson Motorcycle Retail Sales(a)

Retail unit sales of new Harley-Davidson motorcycles were as follows:


	Three months ended
	September 30, 2024	September 30, 2023	Increase (Decrease)	% Change
United States	22,726	25,336	(2,610)	(10.3)	%
Canada	1,847	2,010	(163)	(8.1)
North America	24,573	27,346	(2,773)	(10.1)
Europe/Middle East/Africa (EMEA)	6,054	7,847	(1,793)	(22.8)
Asia Pacific	4,832	5,784	(952)	(16.5)
Latin America	707	681	26	3.8
	36,166	41,658	(5,492)	(13.2)	%

(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.

During the third quarter of 2024, retail sales in North America were down 10.1% driven by a 10.3% decline in the United States with additional reductions in international markets, including a 16.5% decrease in Asia Pacific as well as a 22.8% decrease in Europe.

U.S. retail sales were negatively impacted by a continued challenging macroeconomic environment, which included high interest rates adversely impacting consumer discretionary spending. Retail sales declines in Asia Pacific, Canada and Europe were also primarily due to challenging macroeconomic conditions. In Asia Pacific, the decline included lower sales in Japan with other countries contributing to the decline, partially offset by higher sales in Australia and New Zealand. In Europe, the level of decline on a country-by-country basis was mixed during the quarter.

Worldwide retail inventory of new motorcycles was approximately 60,000 units at the end of the third quarter of 2024, which is down approximately 13% from the end of the second quarter of 2024 and up approximately 20% compared to the end of the third quarter of 2023. The Company plans to continue its support of dealer efforts to reduce inventory during the remainder of 2024.(1) Retail inventory of new motorcycles is based on dealer inventory units at the end of each quarter.

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HDMC Segment

Harley-Davidson Motorcycle Unit Shipments

Motorcycle unit shipments were as follows:


	Three months ended
	September 30, 2024			September 30, 2023			Unit	Unit
	Units	Mix %		Units	Mix %		Increase (Decrease)	% Change

U.S. motorcycle shipments	15,850	57.6	%	30,167	66.6	%	(14,317)	(47.5)	%



Worldwide motorcycle shipments:
Grand American Touring(a)	15,493	56.3	%	23,781	52.5	%	(8,288)	(34.9)	%
Cruiser	9,610	34.9	%	17,142	37.9	%	(7,532)	(43.9)
Sport and Lightweight	1,770	6.4	%	3,103	6.9	%	(1,333)	(43.0)


Adventure Touring	647	2.4	%	1,243	2.7	%	(596)	(47.9)
	27,520	100.0	%	45,269	100.0	%	(17,749)	(39.2)	%

(a)Includes Trike

The Company shipped 27,520 motorcycles worldwide during the third quarter of 2024, which was 39.2% lower than the third quarter of 2023. Shipments to dealers in the third quarter of 2024 were lower than the third quarter of 2023 as dealers adjusted inventory levels for the current retail environment. The Company shipped a greater proportion of Grand American Touring models to improve availability of models most desired by customers.

Segment Results

Condensed statements of operations for the HDMC segment were as follows (dollars in thousands):


	Three months ended
	September 30, 2024			September 30, 2023			Increase (Decrease)		% Change
Revenue:
Motorcycles	$	615,628		$	1,023,090		$	(407,462)	(39.8)	%
Parts and accessories	174,301			184,809			(10,508)		(5.7)
Apparel	55,688			49,325			6,363		12.9
Licensing	3,897			9,586			(5,689)		(59.3)
Other	26,891			30,171			(3,280)		(10.9)
	876,405			1,296,981			(420,576)		(32.4)
Cost of goods sold	612,592			886,291			(273,699)		(30.9)
Gross profit	263,813			410,690			(146,877)		(35.8)
Operating expenses:
Selling & administrative expense	183,756			208,609			(24,853)		(11.9)
Engineering expense	24,920			26,828			(1,908)		(7.1)

	208,676			235,437			(26,761)		(11.4)
Operating income	$	55,137		$	175,253		$	(120,116)	(68.5)	%
Operating margin	6.3		%	13.5		%	(7.2)		pts.

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The estimated impact of significant factors affecting the comparability of net revenue, cost of goods sold and gross profit from the third quarter of 2023 to the third quarter of 2024 were as follows (in millions):


	Net Revenue		Cost of Goods Sold		Gross Profit
Three months ended September 30, 2023	$	1,297.0	$	886.3	$	410.7
Volume	(418.8)		(274.2)		(144.6)
Price and sales incentives	19.3		—		19.3
Foreign currency exchange rates and hedging	(3.0)		(20.6)		17.6
Shipment mix	(18.1)		15.2		(33.3)
Raw material prices	—		(2.8)		2.8
Manufacturing and other costs	—		8.7		(8.7)
	(420.6)		(273.7)		(146.9)
Three months ended September 30, 2024	$	876.4	$	612.6	$	263.8

Factors affecting the comparability of net revenue, cost of goods sold and gross profit from the third quarter of 2023 to the third quarter of 2024 were as follows:

•The decrease in volume was primarily due to lower motorcycle shipments.

•Revenue was positively impacted by lower promotional activity compared to the prior year, partially offset by the elimination of the pricing surcharge late in 2023 and a fine-tuned pricing strategy for 2024.

•Revenue was unfavorably impacted by weaker average foreign currency exchange rates relative to the U.S. dollar compared to the same quarter last year. Gross profit was favorably impacted by balance sheet remeasurement and favorable net foreign currency gains associated with hedging recorded in cost of goods sold.

•Changes in the shipment mix had an unfavorable impact on gross profit. During the third quarter of 2024, the positive impact of changes in mix between motorcycle families was more than offset by the unfavorable impacts of model mix changes within motorcycle families and a higher mix of shipments to lower margin markets as shipments during the third quarter of 2024 declined from the same period last year at a faster rate in the U.S. than in other less profitable markets.

•Raw material costs were lower compared to the prior year.

•Manufacturing and other costs were negatively impacted by continued moderate inflation and unfavorable manufacturing leverage related to higher fixed costs per unit resulting from lower production volumes. These negative impacts were partially offset by supply-chain productivity gains.

Operating expenses were lower in the third quarter of 2024 compared to the same period last year primarily related 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):


	Three months ended
	September 30, 2024		September 30, 2023		(Decrease) Increase		% Change
Revenue	$	4,808	$	8,144	$	(3,336)	(41.0)	%
Cost of goods sold	5,988		7,052		(1,064)		(15.1)
Gross profit	(1,180)		1,092		(2,272)		(208.1)
Selling, administrative and engineering expense	24,905		26,435		(1,530)		(5.8)
Operating loss	$	(26,085)	$	(25,343)	$	(742)	2.9	%

LiveWire motorcycle unit shipments	99		50		49		98.0	%

During the third quarter of 2024, revenue decreased by $3.3 million, or 41.0%, compared to the third quarter of 2023. The decrease was primarily due to lower electric balance bike volumes partially offset by an increase in electric motorcycle

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units sold during the quarter as compared to the same period last year. Cost of sales decreased by $1.1 million, or 15.1%, during the third quarter of 2024 compared to the third quarter of 2023 due primarily to lower electric balance bike volumes.

During the third quarter of 2024, selling, administrative and engineering expense decreased $1.5 million compared to the third quarter of 2023 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):


	Three months ended
	September 30, 2024		September 30, 2023		Increase (Decrease)		% Change
Revenue:
Interest income	$	232,990	$	207,673	$	25,317	12.2	%
Other income	36,492		36,261		231		0.6
	269,482		243,934		25,548		10.5
Expenses:
Interest expense	94,463		84,123		10,340		12.3
Provision for credit losses	57,977		60,854		(2,877)		(4.7)
Operating expense	40,298		39,582		716		1.8

	192,738		184,559		8,179		4.4
Operating income	$	76,744	$	59,375	$	17,369	29.3	%

Interest income was higher for the third quarter of 2024 compared to the same period last year, primarily due to higher average outstanding finance receivables at a higher average yield. Interest expense increased due to higher average interest rates on higher average outstanding debt and deposits.

The provision for credit losses decreased $2.9 million compared to the third quarter of 2023 driven by a favorable change in the allowance for credit losses partially offset by higher actual credit losses. The favorable change in the allowance for credit losses was due to a decrease in retail receivables and a smaller increase in the retail reserve rate compared to the third quarter of 2023, partially offset by an increase in the wholesale reserve.

The allowance for credit losses considers current economic conditions and the Company’s outlook on future conditions. At the end of the third quarter 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. Refer to the Results of Operations for the Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023 for a discussion of 2024 annualized credit losses.

Operating expenses increased $0.7 million compared to the third quarter of 2023 due in part to increased insurance-related expenses, partially offset by lower employee-related costs.

Changes in the allowance for credit losses on finance receivables were as follows (in thousands):


	Three months ended
	September 30, 2024		September 30, 2023
Balance, beginning of period	$	393,517	$	381,780
Provision for credit losses	57,977		60,854
Charge-offs, net of recoveries	(51,582)		(49,920)
Balance, end of period	$	399,912	$	392,714

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Results of Operations for the Nine Months Ended September 30, 2024

Compared to the Nine Months Ended September 30, 2023

Consolidated Results


	Nine months ended
(in thousands, except earnings per share)	September 30, 2024		September 30, 2023		(Decrease) Increase		% Change
Operating income - HDMC	$	491,488	$	705,326	$	(213,838)	(30.3)	%
Operating loss - LiveWire	(83,494)		(81,874)		(1,620)		2.0
Operating income - HDFS	201,982		176,780		25,202		14.3
Operating income	609,976		800,232		(190,256)		(23.8)
Other income, net	54,851		54,136		715		1.3
Investment (loss) income	45,665		31,044		14,621		47.1
Interest expense	23,066		23,104		(38)		(0.2)
Income before income taxes	687,426		862,308		(174,882)		(20.3)
Provision for income taxes	123,821		190,546		(66,725)		(35.0)
Net income	$	563,605	$	671,762	$	(108,157)	(16.1)	%
Less: Loss attributable to noncontrolling interests	8,644		9,016		(372)		(4.1)	%
Net income attributable to Harley-Davidson, Inc.	572,249		680,778		(108,529)		(15.9)	%
Diluted earnings per share	$	4.27	$	4.65	$	(0.38)	(8.2)	%

The Company reported operating income of $610.0 million in the first nine months of 2024 compared to $800.2 million in the same period last year. HDMC segment operating income was $491.5 million in the first nine months of 2024, down $213.8 million compared to the same period last year. Operating loss from the LiveWire segment increased $1.6 million compared to the first nine months of 2023. Operating income from the HDFS segment increased $25.2 million compared to the first nine months of 2023. Refer to the HDMC Segment, LiveWire Segment and HDFS Segment discussions for a more detailed analysis of the factors affecting operating income.

Other income in the first nine months of 2024 was higher than the same period last year impacted by a benefit related to LiveWire's warrant liability, which decreased in fair value, partially offset by lower non-operating income related to the Company's defined benefit plans.

The Company's effective income tax rate for the first nine months of 2024 was 18.0% compared to 22.1% for the same period in 2023. The decrease in the effective tax rate for the first nine months of 2024 was attributable to changes in the mix of earnings for foreign jurisdictions that are taxed at rates that differ from the U.S. statutory rate and the benefit of increased income tax credits on lower taxable income.

Diluted earnings per share was $4.27 in the first nine months of 2024, down from diluted earnings per share of $4.65 for the same period last year. Diluted weighted average shares outstanding decreased from 146.3 million in the first nine months of 2023 to 134.0 million in the first nine months of 2024, driven by the Company's discretionary repurchases of common stock. Please refer to Liquidity and Capital Resources for additional information concerning the Company's share repurchase activity.

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Harley-Davidson Motorcycles Retail Sales and Registration Data

Harley-Davidson Motorcycle Retail Sales(a)

Retail unit sales of new Harley-Davidson motorcycles were as follows:


	Nine months ended
	September 30, 2024	September 30, 2023	Increase (Decrease)	% Change
United States	80,710	81,774	(1,064)	(1.3)	%
Canada	6,186	6,653	(467)	(7.0)
North America	86,896	88,427	(1,531)	(1.7)
Europe/Middle East/Africa (EMEA)	19,333	21,884	(2,551)	(11.7)
Asia Pacific	17,188	20,190	(3,002)	(14.9)
Latin America	2,152	2,108	44	2.1
	125,569	132,609	(7,040)	(5.3)	%

Worldwide retail sales of new Harley-Davidson motorcycles were down 5.3% during the first nine months of 2024 compared to the same period last year driven primarily by declines in North America, Europe and Asia Pacific. Retail sales in the United States were negatively impacted by a continued challenging macroeconomic environment, which included high interest rates adversely impacting consumer discretionary spending, partially offset by a benefit to retail sales from promotions focused on the sale of model year 2023 carryover inventory at dealers. 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 most of the Company's larger markets.

Motorcycle Registration Data and Market Share – 601+cc(a)

The Company's U.S. market share of new 601+cc motorcycles increased during the first nine months of 2024 compared to the first nine months of 2023 on higher retail sales relative to the industry led by strong retail growth in the Company's Touring motorcycles as compared to the prior year. The Company's European market share of new 601+cc motorcycles for first nine months of 2024 was down compared to the first nine months of 2023. Industry retail registration data for new motorcycles and the Company's market share was as follows:


	Nine months ended
	September 30, 2024		September 30, 2023		(Decrease) Increase	% Change
Industry new motorcycle registrations:
United States(b)	212,501		215,744		(3,243)	(1.5)	%
Europe(c)	411,930		406,193		5,737	1.4	%

Harley-Davidson market share data:
United States(b)	37.7	%	37.3	%	0.4	pts.
Europe(c)	4.4	%	4.9	%	(0.5)	pts.

(a)Data includes on-road models with internal combustion engines with displacements greater than 600cc's and electric motorcycles with kilowatt (kW) 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.

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HDMC Segment

Motorcycle Unit Shipments

Motorcycle unit shipments were as follows:


	Nine months ended
	September 30, 2024			September 30, 2023			Unit	Unit
	Units	Mix %		Units	Mix %		Increase (Decrease)	% Change

U.S. motorcycle shipments	89,761	66.6	%	96,984	64.5	%	(7,223)	(7.4)	%



Worldwide motorcycle shipments:
Grand American Touring(a)	80,194	59.5	%	76,270	50.7	%	3,924	5.1	%
Cruiser	39,711	29.4	%	53,876	35.8	%	(14,165)	(26.3)
Sport and Lightweight	10,827	8.0	%	15,849	10.5	%	(5,022)	(31.7)


Adventure Touring	4,120	3.1	%	4,445	3.0	%	(325)	(7.3)
	134,852	100.0	%	150,440	100.0	%	(15,588)	(10.4)	%

(a)Includes Trike

The Company shipped 134,852 motorcycles worldwide during the first nine months of 2024, which was 10.4% lower than the same period in 2023 as dealers adjusted inventory levels for the current retail environment. The motorcycles shipped during the first nine months of 2024 compared to the same period last year included a higher mix of Grand American Touring motorcycles shipped as a percent of total shipments to improve availability of models most desired by customers.

Segment Results

Condensed statements of operations for the HDMC segment were as follows (dollars in thousands):


	Nine months ended
	September 30, 2024			September 30, 2023			Increase (Decrease)		% Change
Revenue:
Motorcycles	$	2,905,861		$	3,216,387		$	(310,526)	(9.7)	%
Parts and accessories	534,359			568,001			(33,642)		(5.9)
Apparel	183,192			187,072			(3,880)		(2.1)
Licensing	18,312			20,912			(2,600)		(12.4)
Other	59,693			60,574			(881)		(1.5)
	3,701,417			4,052,946			(351,529)		(8.7)
Cost of goods sold	2,543,407			2,667,756			(124,349)		(4.7)
Gross profit	1,158,010			1,385,190			(227,180)		(16.4)
Operating expenses:
Selling & administrative expense	592,477			601,399			(8,922)		(1.5)
Engineering expense	74,045			78,465			(4,420)		(5.6)

	666,522			679,864			(13,342)		(2.0)	%
Operating income	$	491,488		$	705,326		$	(213,838)	(30.3)	%
Operating margin	13.3		%	17.4		%	(4.1)		pts.

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The estimated impacts of significant factors affecting the comparability of net revenue, cost of goods sold and gross profit from the first nine months of 2023 to the first nine months of 2024 were as follows (in millions):


	Net Revenue		Cost of Goods Sold		Gross Profit
Nine months ended September 30, 2023	$	4,052.9	$	2,667.7	$	1,385.2
Volume	(395.5)		(260.8)		(134.7)
Price and sales incentives	(72.7)		—		(72.7)
Foreign currency exchange rates and hedging	(15.4)		(14.5)		(0.9)
Shipment mix	132.1		107.3		24.8
Raw material prices	—		(12.2)		12.2
Manufacturing and other costs	—		55.9		(55.9)
	(351.5)		(124.3)		(227.2)
Nine months ended September 30, 2024	$	3,701.4	$	2,543.4	$	1,158.0

Factors affecting the comparability of net revenue, cost of goods sold and gross profit from the first nine months of 2023 to the first nine months of 2024 were as follows:

•The decrease in volume was primarily due to lower motorcycle shipments.

•Revenue was adversely impacted by the elimination of the pricing surcharge late in 2023 and a fine-tuned pricing strategy for 2024.

•Revenue and gross profit were negatively impacted by weaker average foreign currency exchange rates relative to the U.S. dollar partially offset by favorable net foreign currency gains associated with hedging recorded in cost of goods sold.

•Changes in the shipment mix of motorcycles had a favorable impact on gross profit due primarily to a higher proportion of Grand American Touring models shipped in the first nine months of 2024 compared to the same period in 2023.

•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 a ratification bonus related to the 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 the first nine months of 2024 compared to the same period last year primarily 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.

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LiveWire Segment

Segment Results

Condensed statements of operations for the LiveWire segment were as follows (in thousands, except unit shipments):


	Nine months ended
	September 30, 2024		September 30, 2023		(Decrease) Increase		% Change
Revenue	$	15,958	$	22,932	$	(6,974)	(30.4)	%
Cost of goods sold	22,865		23,516		(651)		(2.8)
Gross profit	(6,907)		(584)		(6,323)		NM
Selling, administrative and engineering expense	76,587		81,290		(4,703)		(5.8)
Operating loss	$	(83,494)	$	(81,874)	$	(1,620)	2.0	%

LiveWire motorcycle unit shipments	374		146		228		156.2

During the first nine months of 2024, revenue decreased by $7.0 million, or 30.4%, compared to the first nine months of 2023. The decrease was primarily due to lower electric balance bike volumes partially offset by an increase in electric motorcycle volumes sold during the first nine months of 2024 as compared to the same period last year. Cost of sales decreased by $0.7 million, or 2.8%, during the first nine months of 2024 compared to the first nine months of 2023 due primarily to lower electric balance bike volumes.

During the first nine months of 2024, selling, administrative and engineering expense decreased $4.7 million, or 5.8%, compared to the first nine months of 2023 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):


	Nine months ended
	September 30, 2024		September 30, 2023		Increase (Decrease)		% Change
Revenue:
Interest income	$	666,903	$	586,752	$	80,151	13.7	%
Other income	114,915		120,638		(5,723)		(4.7)
	781,818		707,390		74,428		10.5
Expenses:
Interest expense	276,943		243,677		33,266		13.7
Provision for credit losses	175,017		170,496		4,521		2.7
Operating expense	127,876		116,437		11,439		9.8

(a)Includes $88.4 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)C$165.0 million Canadian Conduit facility agreement remeasured to U.S. dollars at September 30, 2024.

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 debt ratings, as of September 30, 2024 were as follows:

Short-Term

Long-Term

Outlook

Moody’s

Baa3

Stable

Standard & Poor’s

BBB-

Stable

Fitch

BBB+

Stable

The Company recognizes that it must continue to monitor and adjust its business to changes in the lending environment. 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 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

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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.

Cash Flow Activity

The Company's cash flow activities were as follows (in thousands):


	Nine months ended
	September 30, 2024		September 30, 2023
Net cash provided by operating activities	$	930,655	$	706,767
Net cash used by investing activities	(486,177)		(511,133)
Net cash provided by financing activities	313,460		253,576
Effect of exchange rate changes on cash, cash equivalents and restricted cash	198		(8,415)
Net increase in cash, cash equivalents and restricted cash	$	758,136	$	440,795

Operating Activities

Cash flow provided by operating activities in the first nine months of 2024 compared to the first nine months of 2023 benefited from changes in working capital and lower net cash outflows related to wholesale finance receivables, partially offset by lower net income. Working capital was positively impacted primarily by larger decreases in inventory and accounts receivable in the first nine months of 2024 as compared to same period last year.

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 September 30, 2024 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 in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. There are no required qualified pension plan contributions in 2024. 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 in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. The Company has a liability for unrecognized tax benefits of $19.0 million and related accrued interest and penalties of $8.7 million as of September 30, 2024. 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 finance receivables with the issuance of debt.

Investing Activities

The Company’s most significant investing activities consist of capital expenditures and retail finance receivable originations and collections. Capital expenditures were $140.4 million in the first nine months of 2024 compared to $138.9 million in the same period last year. The Company's 2024 plan includes estimated capital investments between $225 million and $250 million, all of which the Company expects to fund with net cash flow generated by operations.(1)

Net cash outflows for finance receivables during the first nine months of 2024 were $27.5 million lower compared to the same period last year due to lower retail finance receivable originations, partially offset by lower finance receivable collections. The Company funds its finance receivables net lending activity through the issuance of debt, discussed in "Financing Activities" below.

Financing Activities

The Company’s financing activities consist primarily of dividend payments, share repurchases, and debt activity.

The Company paid dividends of $0.5175 and $0.495 per share totaling $69.5 million and $72.8 million during the first nine months of 2024 and 2023, respectively.

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Cash outflows for share repurchases were $359.8 million in the first nine months of 2024 compared to $239.4 million in the same period last year. Share repurchases during the first nine months of 2024 include $350.0 million or 9.5 million shares of common stock related to discretionary repurchases and $9.8 million or 0.3 million shares of common stock employees surrendered to satisfy withholding taxes in connection with the vesting of restricted stock units and performance shares. On July 18, 2024, the Company's Board of Directors authorized the Company to repurchase up to 24.4 million additional shares of its common stock on a discretionary basis. As of September 30, 2024, there were 24.6 million shares remaining on a board-approved share repurchase authorization. In July 2024, the Company announced plans to repurchase approximately $1 billion of shares on a discretionary basis in aggregate starting in the third quarter of 2024 through the end of 2026. As a result, the Company now plans to repurchase up to $450 million of shares in 2024 which has been revised from its previous plan of up to $500 million. The Company expects to fund the share repurchases with cash flow from operations.

Financing cash flows related to debt and brokered certificates of deposit activity resulted in net cash inflows of $0.7 billion in the first nine months of 2024 compared to net cash inflows of $0.6 billion in the same period last year. The Company’s total outstanding debt and liability for brokered certificates of deposit consisted of the following (in thousands):


	September 30, 2024		September 30, 2023
Outstanding debt:
Unsecured commercial paper	$	497,373	$	815,081
Asset-backed Canadian commercial paper conduit facility	94,142		79,755
Asset-backed U.S. commercial paper conduit facility	378,968		272,766
Asset-backed securitization debt, net	2,244,742		2,138,684
Medium-term notes, net	3,836,572		3,257,396
Senior notes, net	746,618		745,900
	$	7,798,415	$	7,309,582

Deposits, net	$	549,010	$	478,933

Refer to Note 9 of the Notes to Consolidated financial statements for a summary of future principal payments on the Company's debt obligations. Refer to Note 6 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 $549.0 million and $478.9 million, net of fees, of interest-bearing brokered certificates of deposit outstanding as of September 30, 2024 and September 30, 2023, 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 September 30, 2024 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 on hand.(1)

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Medium-Term Notes – The Company had the following unsecured medium-term notes issued and outstanding at September 30, 2024 (in thousands):

Principal Amount

Rate

Issue Date

Maturity Date

$669,864(a)

3.14%

November 2019

November 2024

$700,000

3.35%

June 2020

June 2025

$781,508(b)

6.36%

April 2023

April 2026

$500,000

3.05%

February 2022

February 2027

$700,000

6.50%

March 2023

March 2028

$500,000

5.95%

June 2024

June 2029

(a)€600.0 million par value remeasured to U.S. dollar at September 30, 2024

(b)€700.0 million par value remeasured to U.S. dollar at September 30, 2024

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 $14.8 million and $17.3 million at September 30, 2024 and September 30, 2023, respectively. There were no medium-term note maturities during the nine months ended September 30, 2024 or the third quarter of 2023. During the second quarter of 2023, $706.7 million of 4.94% medium-term notes matured, and the principal and accrued interest were paid in full. During the first quarter of 2023, $350.0 million of 3.35% medium-term notes matured, and the principal and accrued interest were paid in full.

Senior Notes – 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 mature in July 2025 and have an interest rate of 3.50%, and $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-Balance Sheet Asset-Backed Canadian Commercial Paper Conduit Facility – In June 2024, 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, which was a C$40.0 million increase in the total commitment. The transferred assets are restricted as collateral for the payment of the associated debt. 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. The expected remaining term of the related receivables is approximately 5 years. Unless earlier terminated or extended by mutual agreement between the Company and the lenders, as of September 30, 2024, the Canadian Conduit had an expiration date of June 30, 2025.

Quarterly transfers of Canadian retail motorcycle finance receivables to the Canadian Conduit and the respective proceeds were as follows (in millions):


	2024				2023
	Transfers		Proceeds		Transfers		Proceeds
First quarter	$	34.9	$	28.6	$	—	$	—
Second quarter	20.6		16.9		40.5		33.5


Third quarter	17.9		14.7		10.8		8.9
	$	73.4	$	60.2	$	51.3	$	42.4

On-Balance Sheet Asset-Backed U.S. Commercial Paper Conduit Facilities VIE – In November 2023, 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. From November 2020 through November 2022, the U.S. Conduit Facility allowed for uncommitted additional borrowings of up to $300.0 million at the lenders’ discretion. Prior to the November 2022 renewal, the Company drew against the $300.0 million of uncommitted additional borrowings that were allowed prior to the renewal. The Company repaid the

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remaining balance of these uncommitted additional borrowings in full during the three months ended September 30, 2023. Availability under the U.S. Conduit Facility is based on, among other things, the amount of eligible U.S. retail motorcycle finance receivables held by the SPE as collateral.

During the first quarter of 2024, the Company transferred $334.8 million of U.S. retail motorcycle finance receivables to an SPE which, in turn, issued $306.0 million of debt under the U.S. Conduit Facility. There were no finance receivable transfers under the U.S. Conduit Facility during the second or third quarter of 2024 or during the nine months ended September 30, 2023.

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. The expected remaining term of the related receivables held by the SPE is approximately 5 years. Unless earlier terminated or extended by mutual agreement of the Company and the lenders, as of September 30, 2024, the U.S. Conduit Facility had an expiration date of November 20, 2024.

Asset-Backed Securitization VIEs – For all of its 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 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. The Company's current outstanding asset-backed securitizations do not meet the criteria to be accounted for as a sale because, in addition to retaining servicing rights, the Company retains a financial interest in the VIE in the form of a debt security. These transactions are treated as secured borrowings, and as such, the retail motorcycle finance receivables remain on the balance sheet with a corresponding obligation reflected as debt. There is no amortization schedule for the secured notes; however, the debt is reduced monthly as available collections on the related retail motorcycle finance receivables are applied to outstanding principal. The secured notes currently have various contractual maturities ranging from 2025 to 2032.

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):


	2024						2023
	Transfers		Proceeds		Proceeds, net		Transfers		Proceeds		Proceeds, net
First quarter	$	—	$	—	$	—	$	628.5	$	550.0	$	547.7
Second quarter	607.8		550.0		547.6		—		—		—


Third quarter	663.1		600.0		597.6		576.0		500.0		497.8
	$	1,270.9	$	1,150.0	$	1,145.2	$	1,204.5	$	1,050.0	$	1,045.5

Intercompany Agreements – On January 27, 2023, Harley-Davidson, Inc. entered into a revolving line of credit with Harley-Davidson Financial Services, Inc. whereby Harley-Davidson Financial Services, Inc. may borrow up to $200.0 million at market interest rates. There were no borrowings by Harley-Davidson Financial Services, Inc. during the life the agreement, which expired on July 27, 2024.

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 Inc.’s fixed-charge coverage at 1.25 and minimum net worth of $40.0 million. Support may be provided at Harley-Davidson, Inc.'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 (the “Convertible Term Loan”) with LiveWire Group, Inc. and a wholly-owned subsidiary of LiveWire Group, Inc. whereby LiveWire may obtain term loans in one or more advances up to an aggregate principal amount of $100.0 million. The outstanding

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principal under the Convertible Term Loan bears interest at a floating rate per annum, as calculated on the date of each advance and as of each June 1 and December 1 thereafter. The interest rate is calculated based on the sum of (i) the forward-looking term rate based on SOFR for a six-month interest period, plus (ii) 4.00%. The Convertible Term Loan does not include affirmative covenants impacting the operations of LiveWire. The Convertible Term Loan includes negative covenants restricting the ability of LiveWire to incur indebtedness, create liens, sell assets, make investments, make fundamental changes, make dividends or other restricted payments and enter into affiliate transactions. The Convertible Term Loan has 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. In the event that the Convertible Term Loan cannot be settled in cash by LiveWire at maturity, unless otherwise agreed between Harley-Davidson, Inc. and LiveWire, the Convertible Term Loan will be converted to equity of LiveWire Group, Inc. at a conversion price per share of LiveWire Group, Inc. common stock equal to 90% of the volume weighted average price per share of common stock for the 30 trading days immediately preceding the conversion date. As of September 30, 2024, there had been no draws and there was no outstanding balance under the Convertible Term Loan.

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' 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.

As of September 30, 2024, Harley-Davidson Financial Services Inc. and the Company remained in compliance with all of the then existing covenants.

Cautionary Statements

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) execute its business plans and strategies, including The Hardwire, each of the pillars, and the evolution of LiveWire as a standalone brand, which includes the risks noted below; (b) manage supply chain and logistics issues, including quality issues, unexpected interruptions or price increases caused by supplier volatility, raw material shortages, inflation, war or other hostilities, including the conflict in Ukraine and the Red Sea conflict, or natural disasters and longer shipping times and increased logistics costs; (c) accurately analyze, predict and react to changing market conditions and successfully adjust to shifting global consumer needs and interests; (d) maintain and enhance the value of the Harley-Davidson brand, including detecting and mitigating or remediating the impact of social media collective actions, such as calls for boycotts and other brand-damaging behaviors that could harm the Company's brand or business; (e) realize the expected 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; and (iii) 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 Annual Report on Form 10-K for the year ended December 31, 2023; (f) successfully access the capital and/or credit markets on terms that are acceptable to the Company and within its expectations; (g) successfully carry out its global manufacturing and assembly operations; (h) 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, including successfully implementing and executing plans to strengthen and grow its leadership position in Grand American Touring, large Cruiser and Trike, and grow its complementary businesses; (i) perform in a manner that enables the Company to benefit from market opportunities while competing against existing and new competitors; (j) 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 and the Red Sea conflict; (k) manage the impact that prices for and supply of used motorcycles may have on its business, including on retail sales of new motorcycles; (l) prevent, detect and remediate any issues with its motorcycles or any issues associated with the manufacturing processes to avoid

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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; (m) successfully manage and reduce costs throughout the business; (n) manage risks related to a resurgence of the COVID-19 pandemic, emergence of a new pandemic, epidemic, disease outbreak or other public health crises, such as supply chain disruptions, its ability to carry out business as usual, and government actions and restrictive measures implemented in response; (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) successfully appeal: (i) the revocation of the Binding Origin Information (BOI) decisions that allowed the Company to supply its European Union (EU) market with certain of its motorcycles produced at its Thailand operations at a reduced tariff rate and (ii) the denial of the Company’s application for temporary relief from the effect of the revocation of the BOI decisions; (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 in India; (s) manage and predict the impact that new, reinstated or adjusted tariffs may have on the Company’s ability to sell products internationally, and the cost of raw materials and components, including the temporary lifting of the incremental tariffs on motorcycles imported into the EU from the U.S., which was extended to March 31, 2025; (t) accurately predict the margins of its segments in light of, among other things, tariffs, inflation, foreign currency exchange rates, the cost associated with product development initiatives and the Company's complex global supply chain; (u) successfully maintain a manner in which to sell motorcycles in China and the Company's Association of Southeast Asian Nations (ASEAN) countries that does not subject its motorcycles to incremental tariffs; (v) 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; (w) retain and attract talented employees, and eliminate personnel duplication, inefficiencies and complexity throughout the organization; (x) accurately estimate and adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices; (y) manage the credit quality, the loan servicing and collection activities, and the recovery rates of Harley-Davidson Financial Services' loan portfolio; (z) prevent a ransomware attack or cybersecurity breach involving consumer, employee, dealer, supplier, or Company data and respond to evolving regulatory requirements regarding cybersecurity and data privacy; (aa) 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; (bb) manage through the effects inconsistent and unpredictable weather patterns may have on retail sales of motorcycles; (cc) implement and manage enterprise-wide information technology systems, including systems at its manufacturing facilities; (dd) 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; (ee) manage its exposure to product liability claims in a manner that avoids or successfully mitigates the impact of substantial jury verdicts, including the successful resolution or appeal of the verdict in the product lawsuit against the Company in which, in August 2024, a jury awarded approximately $288 million in damages to the plaintiffs, and manage exposure in commercial or contractual disputes; (ff) continue to manage the relationships and agreements that the Company has with its labor unions to help drive long-term competitiveness; (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; and (hh) optimize capital allocation in light of the Company's capital allocation priorities.

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' retail credit losses have normalized in recent quarters to higher levels after a period of historically low levels of credit losses. Further, the Company believes that 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 the 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 work stoppages, facility closures, strikes, natural causes, widespread infectious disease, terrorism, war or other hostilities, including the conflict in Ukraine and the Red Sea conflict, or other factors. Refer to Risk Factors under Item 1.A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of additional risk factors and a more complete discussion of some of the cautionary statements noted above.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk from changes in foreign currency exchange rates, commodity prices and interest rates. To reduce such risks, the Company selectively uses derivative financial instruments. All hedging transactions are authorized and executed pursuant to regularly reviewed policies and procedures, which prohibit the use of financial instruments for speculative trading purposes. Sensitivity analysis is used to manage and monitor foreign currency exchange rate and interest rate risks. Further disclosure relating to the fair value of the Company's derivative financial instruments is included in Note 8 of the Notes to Consolidated financial statements.

HDMC Segment

The Company sells its motorcycles and related products internationally and in most markets those sales are made in the foreign country’s local currency. As a result, the HDMC segment operating results are affected by fluctuations in the value of the U.S. dollar relative to foreign currencies. The Company’s most significant foreign currency exchange rate risk resulting from the sale of motorcycles and related products relates to the Euro, Australian dollar, Japanese yen, Brazilian real, Canadian dollar, Mexican peso, Chinese yuan, Singapore dollar, Thai baht and Pound sterling. The Company utilizes foreign currency contracts to mitigate the effect of certain currencies' fluctuations on HDMC segment operating results. The foreign currency contracts are entered into with banks and allow the Company to exchange currencies at a future date, based on a fixed exchange rate. There have been no material changes to the foreign currency exchange rate market risk information included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

The Company purchases commodities for the use in the production of motorcycles. As a result, HDMC segment operating income is affected by changes in commodity prices. The Company uses derivative financial instruments on a limited basis to hedge the prices of certain commodities. There have been no material changes to the commodity market risk information included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

LiveWire Segment

LiveWire sells its electric motorcycles, electric balance bikes and related products internationally, and in most markets, those sales are made in the foreign country’s local currency. As a result, LiveWire’s operating results are affected by fluctuations in the values of the U.S. dollar relative to foreign currencies; however, the impact of such fluctuations on LiveWire’s operations to date have not been material given the majority of LiveWire’s sales are currently in the U.S. LiveWire plans to expand its business and operations internationally and expects its exposure to currency rate risk to increase as it grows its international presence.

HDFS Segment

The Company has interest rate-sensitive financial instruments including financial receivables, debt and interest rate derivative financial instruments. As a result, HDFS operating income is affected by changes in interest rates. The Company utilizes interest rate caps to reduce the impact of fluctuations in interest rates on its asset-backed securitization transactions. There have been no material changes to the interest rate market risk information included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

HDFS also has short-term commercial paper and debt issued through the commercial paper conduit facilities that is subject to changes in interest rates, which it does not hedge. There have been no material changes to the interest rate market risk information included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

The Company has foreign denominated medium-term notes, and as a result, HDFS operating income is affected by fluctuations in the value of the U.S. dollar relative to foreign currencies and interest rates. At September 30, 2024, this exposure related to the Euro. The Company utilizes cross-currency swaps to mitigate the effect of the foreign currency exchange rate and interest rate fluctuations related to foreign denominated debt. There have been no material changes to the foreign currency exchange rate and interest rate market risk information included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2023 for further information concerning the Company's market risk.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures – In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’s management evaluated, with the participation of the Company’s President and Chief Executive Officer and the Chief Financial Officer, the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon their evaluation of these disclosure controls and procedures, the President and Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission rules and forms, and to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its President and Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding disclosure.

Changes in Internal Controls – There were no changes in the Company's internal control over financial reporting during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

The information required under this Item 1 of Part II is contained in Item 1 of Part I of this Quarterly Report on Form 10-Q in Note 14 of the Notes to Consolidated financial statements, and such information is incorporated herein by reference in this Item 1 of Part II.

H-D Japan Matter - The Fair Trade Commission in Japan has an on-going investigation into Harley-Davidson Japan KK, a subsidiary of the Company. This matter is discussed further in Item 1. Legal Proceedings of the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2024.

Item 1A. Risk Factors

An investment in Harley-Davidson, Inc. involves risks, including the risk factors discussed in Item 1A. Risk Factors of the Company's Annual Report on Form 10-K for the year ended December 31, 2023, which have not materially changed except as set forth below. This risk factor has been updated to reflect the expiration date of the new collective bargaining agreements with hourly employees in Wisconsin.

•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 three 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 require changes to existing or new bargaining agreements. Failure to renew agreements when they expire or to establish new collective bargaining agreements on terms acceptable to the Company and the unions could result in the relocation of production facilities, work stoppages or other labor disruptions, which 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.

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

The Company's share repurchases, which consisted of shares repurchased on a discretionary basis and shares of common stock that employees surrendered to satisfy withholding taxes in connection with the vesting of restricted stock units and performance shares, were as follows during the quarter ended September 30, 2024:


2024 Fiscal Month	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1 to July 31	269,740	$	37	269,740	28,357,896
August 1 to August 31	2,111,751	$	37	2,111,751	26,247,097
September 1 to September 30	1,672,189	$	37	1,672,189	24,575,327
	4,053,680	$	37	4,053,680

In August 2023, the Company's Board of Directors authorized the Company to repurchase up to 10.0 million shares of its common stock on a discretionary basis with no dollar limit or expiration date. In July 2024, the Company's Board of Directors authorized the Company to repurchase up to 24.4 million additional shares of its common stock on a discretionary basis with no dollar limit or expiration date. The Company repurchased 4.0 million shares on a discretionary basis during the quarter ended September 30, 2024 under these authorizations. As of September 30, 2024, 24.6 million shares remained under these authorizations.

Under the share repurchase authorization, the Company’s common stock may be purchased through any one or more of a Rule 10b5-1 trading plan and discretionary purchases on the open market, block trades, accelerated share repurchases or privately negotiated transactions. The repurchase authority has no expiration date but may be suspended, modified or discontinued at any time.

The Company maintains a capital allocation policy to (i) fund The Hardwire strategic initiatives, including the associated capital expenditures, (ii) pay dividends and (iii) exercise discretionary share repurchases. This policy is designed to support the investment required to enhance the long-term value of the Company and to return any excess cash to shareholders.

The amount of capital to be allocated to share repurchases is approved periodically by the Company’s Board of Directors, taking into account the Company’s expected cash flow over time. The specific number of shares repurchased, if any, and the timing of repurchases are determined by Company management from time to time and will depend on a number of factors, including share price, trading volume, and general market conditions, as well as on working capital requirements, general business conditions, and other factors.

The Harley-Davidson, Inc. 2020 Incentive Stock Plan and the 2022 Aspirational Incentive Stock Plan (Incentive Plans) and predecessor stock plans permit participants to satisfy all or a portion of the statutory federal, state, and local withholding tax obligations arising in connection with plan awards by electing to (a) have the Company withhold shares otherwise issuable under the award, (b) tender back shares received in connection with such award, or (c) deliver other previously owned shares, in each case having a value equal to the amount to be withheld. During the third quarter of 2024, the Company acquired 3,852 shares of common stock that employees presented to the Company to satisfy withholding taxes in connection with the vesting of restricted stock units and performance shares.

Item 5. Other Information

During the period ended September 30, 2024, no director or Section 16 officer of the Company or a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits

Refer to the exhibit index immediately following this page.

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Harley-Davidson, Inc.

Exhibit Index to Form 10-Q


Exhibit No.						Description
31.1						Chief Executive Officer Certification pursuant to Rule 13a-14(a)
31.2						Chief Financial Officer Certification pursuant to Rule 13a-14(a)
32.1						Written Statement of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. §1350
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH						XBRL Taxonomy Extension Schema Document
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						XBRL Taxonomy Extension Label Linkbase Document
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File - formatted in Inline XBRL and contained in Exhibit 101

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			HARLEY-DAVIDSON, INC.

Date: November 6, 2024			/s/ Jonathan R. Root
			Jonathan R. Root
			Chief Financial Officer
			(Principal financial officer)


Date: November 6, 2024			/s/ Mark R. Kornetzke
			Mark R. Kornetzke
			Chief Accounting Officer
			(Principal accounting officer)

HARLEY-DAVIDSON, INC. - Quarter Report: 2024 September (Form 10-Q)

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