MARCH 2016 - Harley-Davidson
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OVERVIEW
MARCH 2016
2016 Investor Relations Presentation
INVESTOR PRESENTATION
MARCH 2016
HARLEY-DAVIDSON, INC.
John Olin, Senior Vice President and CFO
Amy Giuffre, Director of Investor Relations
Contact: amy.giuffre@harley-davidson.com
This presentation includes 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 presentation. Additional
information and risk factors are included at the end of this presentation. The images in this presentation may not be
reproduced without consent.
2016 Investor Relations Presentation 2
COMPETITIVE ADVANTAGES
BRAND / PRODUCT / DISTRIBUTION / HDFS
2016 Investor Relations Presentation
BRAND
HARLEY-DAVIDSON IS ONE OF THE STRONGEST, MOST RECOGNIZABLE
BRANDS. WE INSPIRE FREEDOM AND INDEPENDENCE AROUND THE WORLD
2016 Investor Relations Presentation 4
PRODUCT LEADERSHIP
HARLEY-DAVIDSON MOTORCYCLES LOOK, SOUND AND FEEL
AUTHENTIC, PREMIUM AND CUSTOM
Model year 2016 includes 40 models priced from $6,849 to $40,299 U.S. MSRP
Full range of motorcycles targeted to meet the needs of diverse customer targets
CORE OUTREACH
RIDERS RIDERS
INTERNATIONAL
RIDERS
2016 Investor Relations Presentation 5
DEALER NETWORK
GROWING, GLOBAL DEALERS DELIVERING A PREMIUM EXPERIENCE
Over 1500 dealer points globally
Largely exclusive network – focused on H-D brand
Profitable and reinvesting in EXPERIENCE
H-D Black Label
Concept Store,
Saigon
Alternative channels – Ecommerce,
Black Label, Smart Store Pop-Up retail
Seven Islands Harley-Davidson -
Mumbai, India
2016 Investor Relations Presentation 6
HARLEY-DAVIDSON FINANCIAL SERVICES
HDFS ENABLES AND ENHANCES THE HARLEY-
DAVIDSON PURCHASE EXPERIENCE
Largest financier of motorcycles - 1 of every 2 bikes sold in U.S.
Exclusive to Harley-Davidson dealers - consistent source of retail/wholesale financing
Experience - easy, responsive, provider of financing, insurance, extended service
Profitable business segment - strong margins and return on equity
2016 Investor Relations Presentation 7
PERFORMANCE SUMMARY
SEGMENTS / FINANCIAL RESULTS / RETAIL SALES / EXPECTATIONS
2016 Investor Relations Presentation
BUSINESS SEGMENTS
2015 REVENUE
$6.0 B
Motorcycles and Related
Products Segment
Motorcycles Retail
$4.13B Motorcycles
Financing
$ 556.6M
Parts and
Accessories Wholesale
$862.6M Financing
$61.9M
Insurance /
General Parts and
Other
Merchandise Accessories
$68.7M
$292.3M
General Merchandise Financial Services
Segment
Financial Services
2016 Investor Relations Presentation 9
FINANCIAL RESULTS
FY 2015 VS. 2014
REVENUE NET INCOME EPS
$6.0 $752.2 $3.69
Consolidated – Motorcycles and Related Products and Financial Services Segments
Billion Million
(3.7)% (10.9)% (4.9)%
Motorcycles Segment operating income down on lower revenue
driven by lower shipments and unfavorable currency exchange
– Strong gross margin percent – up 0.4 pts to 36.8% vs. PY
Financial Services Segment operating income up
Higher corporate interest expense behind recapitalization
2016 Investor Relations Presentation 102015 RETAIL SALES
2015 HARLEY-DAVIDSON MOTORCYCLE
RETAIL SALES (UNITS)
Europe
U.S. 168,240 [16 country]
36,894
United States International
• 2015 retail [-1.7%] WW • 2015 retail [-0.5%]
Asia Pacific
264,627 32,258
• 64% of total sales [-1.3%] • 36% of total sales
Latin America
11,173
Canada
9,669
Other Intl.
6,393
2016 Investor Relations Presentation 11GUIDANCE
2016 EXPECTATIONS
as of January 28, 2016
Motorcycle shipments 269,000 – 274,000 , up 1% to 3% vs. 2015
[Q1 78,000 – 83,000]
Motorcycles and Gross margin % Down year/year
related products
segment Flat to up modestly year/year – Down as
SG&A
a percent of revenue
Operating margin % 16% – 17%
Financial services
HDFS operating income Down modestly year/year
segment
Capital expenditures $255 - $275 million
Harley-Davidson, Inc.
Effective tax rate Approximately 34.5%
2016 Investor Relations Presentation 12STRATEGY
OBJECTIVES / FOCUS AREAS
2016 Investor Relations PresentationOBJECTIVES
WE OUR EXECUTING OUR PLAN TO LEAD AND GROW
1. LEAD IN EVERY MARKET
2. GROW THE SPORT OF MOTORCYCLING IN THE U.S.
• Grow number of U.S. core customers and grow U.S. outreach customers at a
faster rate
3. GROW U.S. RETAIL SALES AND GROW INTERNATIONAL
RETAIL SALES AT A FASTER RATE
• Add 150 to 200 new international dealerships by 2020
4. GROW REVENUE AND GROW EARNINGS FASTER THAN
REVENUE THROUGH 2020
5. OUTPERFORM THE S&P 500
2016 Investor Relations Presentation 14FOCUS AREAS
WE ARE SHARPENING OUR FOCUS, INVESTING AND LEVERAGING OUR
STRATEGIC ADVANTAGES TO DRIVE DEMAND NOW AND INTO THE FUTURE
2016
INVESTMENT +65% Marketing
$70M
+35% Product Development
FOCUS AREAS
1. INCREASE PRODUCT AND BRAND AWARENESS
2. GROW NEW RIDERSHIP IN THE U.S.
3. INCREASE AND ENHANCE BRAND ACCESS
4. ACCELERATE THE CADENCE AND IMPACT OF
NEW PRODUCTS
2016 Investor Relations Presentation 15FOCUS ON AWARENESS
INCREASE AWARENESS OF OUR PRODUCTS AND BRAND
Extend brand reach Improve brand and Continue US
beyond core product awareness outreach success
customers among all customers 7% CAGR to Outreach since 2010
#1 in sales to young adults,
African Americans, Hispanics,
women
More sales to young adults today
then to Boomers when they were
18-34
+65% marketing investment
H-D New Motorcycle Purchasers
More media, more experiences,
more retail progra2016:
Outreach
- 50% more U.S. riding events Q1
- 100K+ demos in EMEA
- Brand in unexpected places
Core
Source: Company data
2016 Investor Relations Presentation 16FOCUS ON US RIDERSHIP
GROW NEW RIDERSHIP IN THE U.S.
Attract first-time riders Harley-Davidson 101
Bring new riders into the sport and intro them
to H-D experience
- Dealer-hosted, fun events to
engage diverse customers,
remove barriers
Over the last 5 years, an increasing number of first- Riding Academy
time, on-road motorcyclists have purchased new
H-D motorcycles. For 2015 (Oct.), over 1/3 had not U.S. graduates +35% in 2016
owned a motorcycle previously
(IHS Automotive, Polk; retail registrations, USA, 11/1/10-10/31/15 & 1/1/15 t - Dealers offering program +18% by 6/16
10/31/15)
- Extend learn to ride for free program
H-D New Motorcycle Purchasers
First-
Motorcycle
Owned a
motorcycle
previously
2016 Investor Relations Presentation 17FOCUS ON ACCESS
INCREASE AND ENHANCE BRAND ACCESS
International dealership growth Enhance premium experience
40 dealerships added in 2015 Riding Academy and HDFS global expansion
Planned +150-200 dealerships by 2020 Global operations expansion - H-D Canada subsidiary
2015
Developing innovative and new experiences to
inspire new and current riders
Grand Opening Chengdu, China Smart Store, San Jose, CA Dec. 2015
2016 Investor Relations Presentation 18FOCUS ON PRODUCT IMPACT
ACCELERATE CADENCE AND IMPACT OF NEW PRODUCTS
“Fatten the Tails” - Balanced approach to delivering products across the spectrum
2016 + 35% yr/yr investment in product development
Flexible manufacturing capability – produce closer to demand – right bike, right place, right time
Transformed product development organization and methodology - reduced time-to-market by 30%
“Fatten the Tails” Product Development Approach
Street Glide
S models
CVO
Breakout
Softail Slim
Offer customer-led Road King
Fat Bob
Iron 883 products that grow
Street and diversify our Ultra Ltd
customer base Tri-Glide
Current Customer Future Customer
2016 Investor Relations Presentation 19SHAREHOLDER VALUE
CAPITAL ALLOCATION
2016 Investor Relations PresentationSHAREHOLDER VALUE
Harley-Davidson consistently returns value to our shareholders
Dividends Per Share Discretionary Share Repurchases
Current Year
CAGR ++
CAGR 25%
Multi-Year
* $750 million funded by debt issuance
2016 Investor Relations Presentation 21Through focused investment in growth,
Harley-Davidson expects to :
drive demand
increase impact
further broaden appeal and
deliver strong value to shareholders
Harley-Davidson ® StreetTM 750 Motorcycles
2016 Investor Relations Presentation 22FORWARD LOOKING STATEMENTS The company intends that certain matters discussed in this presentation are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as the company "believes," "anticipates," "expects," "plans," or "estimates" or words of similar meaning. Similarly, statements that describe future plans, objectives, outlooks, targets, guidance or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this presentation. Certain of such risks and uncertainties are described below. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this presentation are only made as of the date of this presentation, and the company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. The company's ability to meet the targets and expectations noted depends upon, among other factors, the company's ability to (i) execute its business strategy, including making new investments to drive demand for its products for the costs and on the timing that are within expectations, (ii) manage through changes in general economic conditions, including changing capital, credit and retail markets, and political events, (iii) accurately estimate and adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices, (iv) balance production volumes for its new motorcycles with consumer demand, including in circumstances where competitors may be supplying new motorcycles to the market in excess of demand at reduced prices, (v) execute its marketing strategy of appealing to and growing sales to multi-generational and multi-cultural customers worldwide in an increasingly competitive marketplace, (vi) develop and introduce products, services and experiences that are successful in the marketplace, (vii) continue to develop the capabilities of its distributors and dealers and manage the risks that its independent dealers may have difficulty obtaining capital and managing through changing economic conditions and consumer demand, (viii) successfully access the capital and/or credit markets on terms (including interest rates) that are acceptable to the company and within its expectations, (vix) effect repurchases of its common stock at share prices that are within its expectations, (x) complete the transition to the new direct distribution model in Canada on the timing and for the costs that are within its expectations, (xi) prevent a cybersecurity breach involving digital consumer, employee or dealer personal data, (xii) manage the impact that prices for and supply of used motorcycles may have on retail sales of new motorcycles, (xiii) manage risks that arise through expanding international manufacturing, operations and sales, (xiv) manage through the effects inconsistent and unpredictable weather patterns may have on retail sales of motorcycles, (xv) manage changes and prepare for requirements in legislative and regulatory environments for its products, services and operations, (xvi) manage supply chain issues, including quality issues and any unexpected interruptions or price increases caused by raw material shortages or natural disasters, (xvii) detect any issues with its motorcycles or any associated manufacturing processes to avoid delays in new model launches, recall campaigns, increased warranty costs or litigation, ((xviii) implement and manage enterprise-wide information technology solutions, including solutions at its manufacturing facilities, (xix) continue to realize production efficiencies at its production facilities and manage operating costs including materials, labor and overhead, (xx) execute its flexible production strategy, (xxi) continue to manage the relationships and agreements that it has with its labor unions to help drive long-term competitiveness, (xxii) adjust to healthcare inflation and reform, pension reform and tax changes, (xxiii) retain and attract talented employees, and (xxiv) manage the credit quality, the loan servicing and collection activities, and the recovery rates of HDFS' loan portfolio. In addition, the company could experience delays or disruptions in its operations as a result of work stoppages, strikes, natural causes, terrorism or other factors. Other factors are described in risk factors that the company has disclosed in documents previously filed with the Securities and Exchange Commission. 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 independent dealers to sell its motorcycles and related products and services to retail customers. The company depends on the capability and financial capacity of its independent dealers and distributors 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 independent 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. 2016 Investor Relations Presentation 23
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