Harley-Davidson, Inc. (NYSE:HOG) Q2 2023 Earnings Call Transcript

Jochen Zeitz: Well, the Riding Academy in the first quarter was down, and that was purely weather-related, because a lot of the Riding Academy initiatives couldn’t happen due to bad weather pretty much throughout America. So — but the Riding Academies overall, the courses are fully booked, and we expect that to continue. And maybe there is an opportunity that the weather stays better throughout the year and longer. Certainly, nobody is going to do Riding Academy in whatever, 100 Fahrenheit. But weather hasn’t been benefiting Riding Academy, but when the courses happen — and bookings for our courses are very strong and continue to be strong throughout the year, if weather permits.

David MacGregor: [Indiscernible] emission rates.

Edel O’Sullivan: Yes. Sorry, I just wanted to add a little bit on that as well as your question on new versus used. So we continue to see a very strong conversion rate coming out of our Riding Academy classes. These are one of the main avenues that we have for new to sport riders to join the Harley-Davidson brand. We find that our new to sport riders are actually well distributed between both new and used. Obviously, used is a bigger component overall. But they are both in new and used. And it is also true that many of those new to sport riders are entering across the full gamut of our motorcycles, so not necessarily just on smaller CC or lower CC motorcycles, but also on some of our broader or larger motorcycles. So it is an excellent feeder, and we do see conversion of earnings to sport riders into both new and used motorcycles across the full gamut of CCs all the way up into our touring range.

Operator: Our next question comes from Jaime Katz from Morningstar. Please go ahead. Your line is open.

Jaime Katz: Hi, good morning. I guess, I’d be interested to hear, given the suspensions you had both last year and this year, if there are any particular protocols you guys have put into place to ensure the quality of the products from the suppliers that you’re dealing with. And then if you could, could you clarify whether or not EV is really back on track with the start-up of the Del Mar to ship at the cadence that was previously expected? Thanks.

Jochen Zeitz: Yes. I mean we have a top-notch quality control in place. The issue that we’ve seen last year and this year are not related, first of all, and they were from a Tier 2 supplier, which is pretty much, quality-wise, supervised by our Tier 1 supplier. So while we have overall quality measures in place and have a Chief Quality Officer as well and very clear mechanisms of how we control quality through — during production in particular, and thereafter, obviously, with product in the field, we cannot control every single component that is being delivered from Tier 2 suppliers to Tier 1 suppliers. There is some level of control that needs to be provided by the Tier 2 supplier themselves, obviously, and then our Tier 1 supplier as well that are working on using those components into their systems.

So — and the 2, as I mentioned, these 2 aspects were not related, and we treat that as a quality issue. And through the control that we had, we were — we found out that there was an issue through our Tier 2 and Tier 1 supplier. So that’s as much as I can say. And then…

Karim Donnez: Good morning, Jamie. So for EV back on track, well, I guess we got a bit delayed on the start of production for the Del Mar. But we’re happy to report that the first bikes actually were produced yesterday. So now we have the ramp-up upcoming in August. So we will be back on track with the Del Mar very soon now.