Strategic Restoration and Operational Context

• Management is pivoting from a high-price, low-volume strategy to a 'rider-centric' portfolio, acknowledging that previous exits from iconic segments like the Sportster reduced brand accessibility.

• Performance attribution for Q1 was driven by a 14% retail increase in North America, fueled by targeted incentives to clear prior model year inventory and a successful 2026 model launch.

• The 'Back to the Bricks' strategy shifts focus toward an enterprise profitability model, where success is measured by the total lifecycle value of a motorcycle across parts, service, and financing rather than just the initial sale.

• Operational execution is focused on leveraging existing platforms and powertrains to expand the lineup without significant incremental capital investment, favoring 'blank canvas' bikes that drive high-margin customization.

• Management explicitly linked the health of the dealer network to enterprise success, implementing a fixed 'holdback' program to provide dealers with the financial predictability needed for long-term investment.

• Market dynamics show a 22% year-over-year reduction in global inventory, which management describes as a necessary reset to align wholesale shipments with actual retail demand.

Growth Phase and Financial Targets

• The company targets $350 million+ in EBITDA by 2027, underpinned by $150 million in annual run-rate cost savings and the reintroduction of the Sportster and Sprint models.

• Guidance for 2026 assumes a one-to-one relationship between retail and wholesale units, with shipments expected to be higher in Q2 and Q4 to achieve a more even seasonal cadence.

• Management expects a structural step-change in profitability by 2029, targeting HDFS operating income of $125 million to $150 million under a new capital-light, de-risked business model.

• The strategy anticipates mid-single-digit retail unit growth over the medium term (3-5 years) as the portfolio becomes more accessible to younger and entry-level riders.

• Future margin expansion is dependent on a 20% to 30% targeted growth in Parts & Accessories (P&A) sales, supported by reinstating 30% of previously eliminated SKUs.

Regulatory Headwinds and Structural Shifts

• Tariff costs remain a significant headwind, with an expected full-year impact of $75 million to $90 million, though management noted recent U.S. exemptions for certain parts may provide future relief.

• A $15 million restructuring charge was recorded in Q1 related to headcount reductions and the elimination of certain roles to streamline the fixed cost base.

• The HDFS segment underwent a fundamental structural change, moving to a model where approximately 2/3 of future loan originations are sold to third parties, significantly altering the revenue profile.

• Higher warranty spend due to select product recalls and executive team transition costs contributed to a $34 million increase in operating expenses during the quarter.