Ladies and gentlemen, thank you for standing by and welcome to today’s Harley-Davidson 2020 fourth quarter investor analyst conference call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. To ask a question during this time, you will simply need to press star then the number one on your telephone keypad. We ask you to keep your questions to one at a time. If you would like to ask another one, please jump back in the queue. If you require any further assistance, please press zero. Please be advised that today’s conference call is being recorded. I would now like to turn the call over to Shannon Burns, Manager of Investor Relations. Please go ahead.

Good morning everyone. Today we are webcasting the slides for this call. You can also access the slides at investor.harleydavidson.com. Our comments will include forward-looking statements that are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters we have noted in our latest earnings release and filings with the SEC. Harley-Davidson disclaims any obligation to update information in this call. Joining me this morning are CEO Jochen Zeitz, CFO Gina Goetter, and our Chief Commercial Officer, Larry Hund, who will also be joining us for Q&A. Jochen, let’s get started.

Thank you Shannon. I would like to welcome our shareholders, the financial community, dealers, employees, and all of our valued stakeholders who are joining us today. We’ve extended today’s call in order to first review our 2020 financial results and then discuss our new strategic plan, the Hardwire. 2020 was an extraordinary year for most companies with outsized challenges not seen before in our lifetime. We rose to those challenges. Our team managed COVID-19 impacts, keeping community wellbeing at the forefront, protecting liquidity and achieving significant cash savings. We also successfully overhauled the entire company through the Rewire. As a result, we expect to deliver ongoing gross cash savings of approximately $150 million starting this year. Just to name a few additional results of the Rewire, we streamlined our planned product portfolio by 30%, reset motorcycle model year launch timing closer to the start of the riding season, exited 39 markets with sharpened focus on our highest potential markets, optimized our dealer network, reducing the total network by approximately 160 net dealers, and our approach to supply and inventory management helped tighten dealer inventory by 59%, driving significant increases in key value metrics. We substantially reshaped and improved all aspects of the company, setting us on solid footing to deliver the next phase of our transformation. The entire team pulled together and put forth tremendous effort. We put in place the right leaders, structure, and strategy to perform at a much higher level. Throughout the year, we also made initial progress towards enhancing desirability. I’ll talk more about this later, but for now I will ask Gina to review our financial results for 2020. Gina?

Thank you Jochen. 2020 was indeed an extraordinary year for Harley-Davidson. We took significant actions to reset the company for future success through our Rewire actions and our pandemic response. Our fourth quarter results reflect the continued execution of our deliberate supply and inventory management approach as well as the impact of our new model year reset from Q3 to Q1 each year. With these strategic shifts, our Q4 revenue and margin were down significantly versus a year ago but exceeded our internal expectations for the quarter. Fourth quarter results were also impacted by $44 million of restructuring costs and brand investments to support the reset in new model year launch timing. Financial services had another strong quarter with operating income of $77 million, which is up 31% driven primarily by a lower provision for credit losses. On a full year basis, total revenue was down 24% driven by the motorcycle unit declines, and we delivered consolidated operating income of $10 million, resulting in full year earnings per share of $0.01. Adjusted earnings per share is $0.77, which excludes the impact of restructuring and tariffs. Rewire restructuring charges totaled $130 million for the full year. As a result of these restructuring actions, we reset our cost structure, effectively lowering our cost base by approximately $115 million. In Q4 and for the full year, global retail sales and market share of new Harley-Davidson motorcycles were down compared to last year, reflecting right retail inventory and a shift in timing of our model year launch. Across the dealer network, retail inventory of new motorcycles was down 64% in the U.S. and 51% internationally. We continue to see the positive impact related to our inventory and supply management efforts.

Thank you Gina. Now let’s look forward and talk about our Hardwire five-year strategic plan that will guide Harley-Davidson into the future. It’s been 11 months since we started this journey together as our world was gripped by the pandemic. We’ve successfully completed the Rewire comprehensive playbook across all aspects of our business to drive efficiency, speed and focus that we believe will yield significant results. We’ve also conducted a rigorous strategic review leading to the development of a clear path for the future, the Hardwire. This will be powered by H-D#1, a high performing, winning culture based on 10 clearly defined leadership principles. Our Hardwire strategic plan is rooted in desirability. Our ambition is to enhance our position as the most desirable motorcycle brand in the world. Desirability is a motivating force driven by emotion. Harley-Davidson has long been associated with igniting desirability - it’s in our DNA and it’s embedded in our vision. It is at the heart of our mission and it is part of our 118-year legacy. Done right, Harley-Davidson’s desirability preserves the value of our customers’ purchases, builds our brand beyond our riders, and ensures loyalty and drives engagement.

Moving onto margins, absolute gross margin was down in the fourth quarter and full year due to lower shipments, product mix, and unfavorable foreign currency exchange. These headwinds were partially offset by favorable raw materials pricing, and lower incremental tariffs within manufacturing. The motorcycle segment finished with an operating loss for both the quarter and the full year as we navigated COVID and executed the Rewire actions needed to properly position the company to execute the Hardwire plan.

We believe these actions will deliver solid margins by driving re-engagement and repeat purchase while bringing new customers into the brand in our core segments. Creating compelling reasons for repeat purchases is therefore key. We will deliver through inspirational products that live up to our vision. Touring and large cruiser customers will see differentiated yet true to Harley products that motivate them to buy our new models. We are investing in design, technology and performance enhancements that push the boundaries while maintaining a balance between classic and cutting edge designs. We also plan to extend and expand the opportunity to ride for new and existing customers by providing comfort, ease of use, and modern styling on our trike models.

Just a quick comment on the ’21 launch. Good response from customers, good response from dealers so far, so we are pleased with that, and then obviously looking forward to the reveal of Pan America here in a couple of weeks.

Hi, good morning. Lots to digest here, obviously. Really appreciate all of the qualitative color around the new Hardwire plan. I think all of the goals make a lot of sense to the street, but I wanted to dig in, maybe into some of the quantitative aspects of this. You’ve given obviously pretty good guidance for 2021.

No, I think that your math is getting into generally the right spot, and what I’d say in terms of where we’ve been historically as a company is setting very high expectations and then not delivering on those, so we wanted to purposely set a baseline that we are committed, we’re confident in delivering, and as Jochen said in his remarks, finding ways to over-deliver on that guidance. But right now, we are planning for how you said it, to get back and slowly build nice growth year after year after year, a sustainable model.

Hey Jochen, Gina and Shannon. Good morning, nice to speak with you.

Good morning, thank you. You’re talking about investing more in core touring and large cruisers, but at the same time you’re going to be compelling new riders to choose Harley. How do you plan to do that without investing in smaller displacement bikes?

Yes, I said in addition to touring and large cruisers, there are other opportunities as part of our 70-20-10 construct, and the 20% includes entering new segments and expanding profitability in existing segments. The new segment would be adventure touring, as an example, and the existing segment would be middleweight cruisers, which would include sportsters.

I just wanted to ask about the electric bike business. You noted you’ll establish a dedicated division for electric bikes with a focus on technology development, but can you discuss some of the specific goals in terms of timeline or number of models or price points for this division?

As I said, we are fully committed to electric and we will be revealing more of our electric strategy later in the year. Everything else, what I said is important because setting up a separate division, I think, is a significant move for the company because it just gives the autonomy and the flexibility to invest in the opportunities.

Okay, I want to thank everyone for joining us here today, and please remember to join us for the reveal of our all-new Pan America adventure touring motorcycle on February 22. See you then.