Harley-Davidson, Inc.

2014 First Quarter Update

April 22, 2014

2014 First Quarter Update

This presentation supports the quarterly conference call

Conference call participants:

Introduction

Amy Giuffre, Director, Investor Relations, H-D, Inc.

Opening Remarks

Keith Wandell, Chairman, President and CEO, H-D, Inc.

Financial Results

John Olin, Senior Vice President and CFO, H-D, Inc.

HDFS Results

Larry Hund, President & COO, HDFS

Q&A

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.
April 22, 2014 Conference Call Slide Presentation

2014 First Quarter Business Perspectives

Keith Wandell, Chairman, President & CEO

April 22, 2014 Conference Call Slide Presentation

Perspectives

2014 Q1
Motorcycle Shipments +7.3%
Revenue +9.9%
Diluted EPS +22.2%
Retail Motorcycle Sales +5.8%

April 22, 2014 Conference Call Slide Presentation

Perspectives

Right Motorcycle
Right Customer
Right Time

April 22, 2014 Conference Call Slide Presentation

Perspectives

Street Glide Special

Breakout

U.S. #1 and #2 Best-Selling New Motorcycle Models in 2013

April 22, 2014 Conference Call Slide Presentation

Perspectives

Harley-Davidson Street 750 and 500

April 22, 2014 Conference Call Slide Presentation

Perspectives

Low Rider

April 22, 2014 Conference Call Slide Presentation

SuperLow 1200T

Perspectives

Number One:
U.S. Outreach and Core

April 22, 2014 Conference Call Slide Presentation

April 22, 2014 Conference Call Slide Presentation

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2014 First Quarter Financial Results

John Olin, Senior Vice President & CFO, Harley-Davidson, Inc.

Larry Hund, President and COO, Harley-Davidson Financial Services

April 22, 2014 Conference Call Slide Presentation

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Harley-Davidson, Inc. Results

Revenue

Net Income

EPS

$1.73
Billion

$265.9
Million

$1.21

9.9%

18.6%

22.2%

Earnings impacted by:

Motorcycles Segment operating income increased 25.6%

11.1% increase in revenue (7.3% increase in motorcycle shipments)
Higher gross margin percent
Higher yr./yr. SG&A spending (SG&A down as a percent of revenue)
Operating margin of 22.1%, up 2.5 percentage points
Financial Services Segment operating income decreased 11.7%

Lower yr./yr. interest expense, partially offset by higher yr./yr. tax rate
April 22, 2014 Conference Call Slide Presentation

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Consolidated Motorcycles and Related Products and Financial Services Segments

Q1 2014 Vs. Q1 2013 Results

Motorcycle Retail Sales - Worldwide

Worldwide Harley-Davidson Retail Sales
Q1 14

WW

5.8%

US

3.0%

International

10.9%

Q1 worldwide retail sales were 57,415, up 3,161 motorcycles

Both U.S. and International retail sales growth yr./yr.
Slow start to retail sales in the U.S. due to weather
Continued positive response to MY 2014 motorcycles

We remain confident in our full-year shipment expectations

April 22, 2014 Conference Call Slide Presentation

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13

Motorcycles and Related Products Segment

compared to last year

Motorcycle Retail Sales

U.S. Harley-Davidson
H-D share of US 601+CC retail market
56.0%
56.1%

H-D U.S. New Retail Motorcycle Sales (Units)

35.7

+3.0%
Thousands

-12.7%

+2.4 pts.

Q1 '13

Q1 '14

Q1 H-D share down 0.1 pts. due to

absence of Road Glide

Q1 '14
H-D U.S. New Retail Motorcycle Inventory* (Units)

Q1 retail sales adversely impacted by:

Absence of Road Glide models

Poor weather in Eastern 2/3 of U.S.

Retail momentum expected behind exciting

motorcycles

Strong Rushmore sales

Street 500 and 750 motorcycles widely

anticipated

Launched two additional models in March

April 22, 2014 Conference Call Slide Presentation

INVENTORY

* At period end

Q1 '09

Q1 '10

Q1 '11

Q1 '12

Q1 '13

Q1 '14

U.S. retail inventory up 750 motorcycles yr./yr.

14

Motorcycles and Related Products Segment

SALES

Q1 '13

-0.1 pts.

SHARE

34.7

Motorcycle Retail Sales

International Harley-Davidson
Vs. PY

Harley-Davidson share of Europe 601+CC retail market

Q1 14

10.9%

- Canada

-2.4%

- EMEA Region
- Asia Pacific Region

20.5%
8.9%

Q1 '13

H-D market share down 0.1 pts.

Europe

Q1 '14

Industry retail sales strong

Strong growth across Europe (mild weather)

International Growth Progress

Strong growth in Japan driven by consumption

tax increase that went into effect April 1, 2014

Emerging markets up double-digits

Latin America

Growth in Brazil and Mexico

Challenging macro-economic conditions in Brazil

April 22, 2014 Conference Call Slide Presentation

OPPORTUNITY

Asia Pacific

Goal: Add 100-150 Intl. dealers 2009-2014

120

2 new dealers added in Q1 2014

120 total new international dealers added

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Motorcycles and Related Products Segment

SALES

- Latin America Region

8.2%

11.3%

SHARE

International

11.4%

Shipment & Mix

Harley-Davidson Motorcycle Shipments

Total

80,682

7.3%

Touring

44.8%

3.2 pts.

Custom

36.1%

-4.2 pts.

19.1%
100.0%

1.0 pts.

Street / Sportster

Motorcycle shipments in Q1 compared to 2013:

Up 5,460 motorcycles or 7.3%
At high end of guidance range of 76,500 to 81,500
Strong Touring mix as we surged to meet expected spring demand
In Q1 2014, 32.7% of motorcycle shipments were international compared

to 32.6% in 2013
April 22, 2014 Conference Call Slide Presentation

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Motorcycles and Related Products Segment

Q1 2014 Vs. Q1 2013

Revenue

Motorcycle
P&A
General Merchandise
Other
Total Revenue

Q1 2014

% change

$1,305.0

13.1%

198.1

7.7%

64.1

-11.1%

4.5

3.8%

$1,571.7

11.1%

Motorcycle segment revenue was up $157.4 million, or

11.1% in Q1 2014 compared to Q1 2013 behind a

7.3% increase in shipments
Average motorcycle revenue per unit increased $836

in Q1 2014 compared to Q1 2013

April 22, 2014 Conference Call Slide Presentation

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Motorcycles and Related Products Segment

Motorcycle Segment - Revenue ($ Millions)

Gross Margin
Gross Margin
Motorcycle Segment
($ Millions)

Q1
2013 Gross Margin

$519.4
36.7%

- Volume

31.6

- Motorcycle pricing net of cost

14.0

- Mix

17.2

- Currency

5.2

- Raw materials

1.8

- Manufacturing

2.9

$592.1

2014 Gross Margin

% of revenue

37.7%

Motorcycle segment gross margin was up $72.7 million compared to last

year

April 22, 2014 Conference Call Slide Presentation

18

Motorcycles and Related Products Segment

% of revenue

Operating Margin
Operating Margin
Motorcycle Segment
($ Millions)
Q1
2013 Operating Income

$ 276.8
Operating Margin (% of revenue)

19.6%

72.7

- Gross Margin
- Restructuring Programs (2009-13)

(4.7)

2014 Operating Income

$347.7
Operating Margin (% of revenue)

22.1%

Motorcycle segment operating income was up $70.9 million,

or 25.6% compared to last year

April 22, 2014 Conference Call Slide Presentation

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Motorcycles and Related Products Segment

- SG&A

2.9

HDFS Operating Income

Operating Margin
Financial Services Segment
($ Millions)

Q1
$71.5

- Net interest

(0.9)

- Provision for retail motorcycle loan losses

(6.3)

- Provision for wholesale loan losses

(1.1)

- Operating expenses
- All other

(0.2)
0.2

2014 Operating Income

$63.2

Financial Services operating income was down $8.3 million

primarily due to increased provisions for credit losses

April 22, 2014 Conference Call Slide Presentation

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20

Financial Services Segment

2013 Operating Income

HDFS Results

Q1 2014 HDFS
Originated $608.7 million in new & used retail motorcycle loans (+19.3% yr./yr.)
52.0% share of U.S. Harley-Davidson new retail motorcycle sales (+6.2 pts. yr./yr.)
$6.55 billion in finance receivables outstanding (+6.7% yr./yr.)

$5.25 billion retail

$1.30 billion wholesale

April 22, 2014 Conference Call Slide Presentation

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21

Financial Services Segment

Q1 2014 U.S. retail motorcycle originations 75% - 80% prime

HDFS Results
Retail 30+ Day Delinquencies
Managed Retail Motorcycle Loans
5%

4.89%
4.57%

4%

3.68%
2.92%

3%

2.66%

2.56%
2%
1%
Q1 2009

3.41%

Q1 2010

Q1 2011

Q1 2012

Q1 2013

Q1 2014

Annualized Loss Experience

Managed Retail Motorcycle Loans

2%

1.58%

1.33%
1.00%

1.09%

1%

0%
Q1 2009
April 22, 2014 Conference Call Slide Presentation

Q1 2010

Q1 2011

Q1 2012

Q1 2013

Q1 2014
22

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Financial Services Segment

2.83%

3%

Harley-Davidson, Inc. Cash

Cash/Liquidity Position
Cash & Marketable Securities
H-D, Inc.
$0.64
HDFS

$0.39

Total

$1.03

Availability
Bank Credit Facilities

Obtain cost-effective funding through

diversified sources
Balance long-term and short-term funding
vehicles

$0.38

Asset-Backed Conduit

$0.60

Total Availability

$0.98

Recent
Activities

Maintain a minimum of 12 months projected

liquidity in cash and/or committed credit
facilities

Balance unsecured and secured funding

Extension of debt maturities (MTNs)

Q1 2014

Q2 2014

20M share repurchase authorization

$850M asset-backed securitization transaction

at an avg. rate of 0.93%

Repurchased 1.2M shares for $76.6M

Dividend increased 31.0% to $0.275/share
$120M dividend from HDFS to H-D, Inc.
$303M high-interest debt retired

April 22, 2014 Conference Call Slide Presentation

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Consolidated Motorcycles and Related Products and Financial Services Segments

As of March 30, 2014 ($ Billions)

2014 Liquidity Strategy

Harley-Davidson, Inc.

Cash & Marketable Securities 3/30/14 - $1.03 billion vs. $1.15 billion as of 3/31/13
Operating cash flow - $203.6 million generated vs. $108.5 million used in Q1 2013

No voluntary pension contribution Q1 2014 vs. $175 million contribution Q1 2013

Lower working capital
Increased earnings of $42 million
Capital spending - $25.9 million vs. $22.3 million in Q1 2013
Depreciation expense - $43.4 million vs. $42.9 million in Q1 2013
Tax rate 35.0% vs. 33.8% in Q1 2013

Yr./yr. increase due to last years retroactive reinstatement of the R&D tax credit

April 22, 2014 Conference Call Slide Presentation

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Consolidated Motorcycles and Related Products and Financial Services Segments

Q1 2014 Harley-Davidson, Inc.

Guidance

2014 Expectations
as of April 22 2014

Motorcycle shipments
Motorcycles and
related products
segment

Financial services
segment
Harley-Davidson,
Inc.

April 22, 2014 Conference Call Slide Presentation

279,000 284,000
(Q2 92,000 97,000)

Gross margin %

Up modestly year/year

SG&A

Up year/year, down as % of
revenue

Operating margin %

17.5 - 18.5%

HDFS operating income

Down modestly year/year

Capital expenditures

$215 - $235 million

Effective tax rate

Approximately 35.5%
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Harley-Davidson, Inc.
We are focused on delivering results and returning value to shareholders

Harley-Davidson Delivers
Strong Margins / Strong Returns

April 22, 2014 Conference Call Slide Presentation

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Forward-Looking Statements

The Company intends that certain matters discussed in this presentation are forwardlooking 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. (cont.)

April 22, 2014 Conference Call Slide Presentation

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Forward-Looking Statements (cont.)

The Companys ability to meet the targets and expectations noted depends upon, among other
factors, the Company's ability to (i) execute its business strategy, (ii) adjust to fluctuations in
foreign currency exchange rates, interest rates and commodity prices, (iii) manage through
inconsistent economic conditions, including changing capital, credit and retail markets,
(iv) manage through the effects inconsistent and unpredictable weather patterns may have on
retail sales of motorcycles, (v) implement and manage enterprise-wide information technology
solutions, including solutions at its manufacturing facilities, and secure data contained in those
systems, (vi) anticipate the level of consumer confidence in the economy, (vii) continue to realize
production efficiencies at its production facilities and manage operating costs including materials,
labor and overhead, (viii) manage production capacity and production changes, (ix) manage
changes and prepare for requirements in legislative and regulatory environments for its products,
services and operations, (x) provide products, services and experiences that are successful in the
marketplace, (xi) manage risks that arise through expanding international manufacturing,
operations and sales, (xii) manage the credit quality, the loan servicing and collection activities,
and the recovery rates of HDFS loan portfolio, (xiii) continue to manage the relationships and
agreements that it has with its labor unions to help drive long-term competitiveness, (xiv) manage
supply chain issues, including any unexpected interruptions or price increases caused by raw
material shortages or natural disasters, (xv) develop and implement sales and marketing plans
that retain existing retail customers and attract new retail customers in an increasingly competitive
marketplace, (xvi) adjust to healthcare inflation and reform, pension reform and tax changes, (xvii)
retain and attract talented employees, (xviii) manage the risks that our independent dealers may
have difficulty obtaining capital and managing through changing economic conditions and
consumer demand, (xix) continue to have access to reliable sources of capital funding and adjust
to fluctuations in the cost of capital, (xx) continue to develop the capabilities of its distributor and
dealer network, and (xxi) detect any issues with our motorcycles or manufacturing processes to
avoid delays in new model launches, recall campaigns, increased warranty costs or litigation.
(cont.)

April 22, 2014 Conference Call Slide Presentation

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Forward-Looking Statements (cont.)

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 Companys ability to sell its motorcycles and related products and services and to
meet its financial expectations also depends on the ability of the Companys
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 Companys 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.
###

April 22, 2014 Conference Call Slide Presentation

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