Harley-Davidson's second quarter was the moment the company publicly reset its strategy. A new Chief Executive Officer who started on October 1, 2025 unveiled a plan called Back to the Bricks during the quarter itself. The plan commits to ongoing cost reductions. The plan also targets an additional HDMC segment benefit. The combined annual savings target is near $225 million by year-end 2027. The plan also introduced a refreshed product roadmap. The roadmap is anchored by a new Sprint platform and the return of the Sportster nameplate. The plan reset medium-term targets around gross margin and segment cost structure. The reported numbers have not yet caught up. Diluted earnings per share fell year over year. Consolidated operating income dropped. Net income attributable to Harley-Davidson declined. The stock at $27.15 sits within a fifty-two week band that runs from the high teens to the low thirties. The stock sits at the mid-point of that range.
The strongest evidence behind the bull case is the HDMC segment, which is Harley-Davidson's core motorcycle business. HDMC operating income rose 18% in the second quarter. The segment reached $72.3 million in operating income. Worldwide motorcycle shipments rose 9.4%. The Sport and Lightweight segment of the mix grew to 11.8% from 8.8%, which weighs on margin. Adjusted EBITDA for HDMC reached $114.6 million, up 18.5% year over year. Management raised its full-year wholesale shipment guidance. The new range represents an increase over the previous range. The gross margin did compress in the quarter. Management acknowledged that tariff costs, an unfavorable mix and elevated incentives are still creating headwinds. The revised guidance implies management is confident enough in the back-half ramp.
The strongest counterargument is the HDFS segment, which is the captive finance arm that lends to dealers and retail buyers of Harley-Davidson motorcycles. HDFS operating income fell 69% in the second quarter. The decline reflects the 2025 sale of the majority of HDFS's retail finance receivables working its way through the comparison. Interest income dropped 72%. HDFS's full-year operating income is now guided to a small fraction of the 2025 result. The credit picture also softened. Managed-basis 30-day retail delinquency rose. Annualized managed credit losses improved to 3.00% from 3.25%. The second quarter also saw a tariff recovery benefit in cost of goods sold. The forward variable that ties the whole story together is HDMC gross margin in the back half of 2026. The margin has to climb toward the medium-term target range while Back to the Bricks cost actions start to hit the income statement.