Last up to date on February tenth, 2022 at 01:55 pm
As Harley-Davidson works in the direction of the spinoff and merger of its LiveWire model right into a separate, publicly-traded firm, new securities filings present a good portion of revenue associated to the brand new entity has come from the sale of electrical stability bicycles for teenagers, not the electrical motorcycles Harley has invested hundreds of thousands in growing.
Harley launched LiveWire, its first electrical bike, in 2019 after almost a decade of growth work. The identical yr, the corporate purchased StaCyc, a maker of electrical bikes for teenagers. Harley paid $7 million in money for StaCyc and the full consideration for the corporate was nearly $12 million. The deal contains greater than $6.5 million in potential earn outs based mostly on gross sales volumes via May of this yr.
In December, Harley introduced plans to spinoff LiveWire and merge it with AEA-Bridges Impact Corp., a particular objective acquisition company that held talks with 17 different firms earlier than zeroing in on LiveWire. Harley will nonetheless personal round 74% of LiveWire after the deal.
According to securities filings, monetary advisors for Harley first contact ABIC in late April 2021. The SPAC did not solely deal with LiveWire till after a collection of conferences that befell between June 18 and July 13.
Beyond offering background on the deal, the securities filings additionally provide a extra detailed take a look at how LiveWire has carried out since Harley launched it as a manufacturing line in 2019.
For the 33 months protecting 2019, 2020 and the primary 9 months of 2021, Harley acknowledged a complete of $73.9 million in revenue associated to the LiveWire model it plans to spin out, in accordance with securities filings.
Much of that revenue, $41.3 million, got here from gross sales of the StaCyc electrical stability bikes. Another $29.9 million got here from gross sales of electrical motorcycles whereas the reminder was from components, equipment and common merchandise.
However, saying that almost all of revenue got here from youngsters bikes is difficult by Harley’s accounting of its efforts to assist sellers put together to promote electrical motorcycles. In the fourth quarter of 2020, Harley provided its unbiased sellers a $15.3 million gross sales concession in recognition of EV associated investments made by sellers.
Taking out the concession, electrical bike revenue from 2019 to September 2021 was $45.2 million in comparison with $41.3 million.
The comparability can also be difficult by Harley’s choice to drop the Harley-Davidson branded LiveWire mannequin and set up the electrical bike as its personal model. The plan to ascertain the LiveWire model was introduced in May, simply after Harley’s monetary advisors made contact with ABIC.
Electric bike revenues within the first 9 months of 2021 dropped to $5.4 million, down from $25 million in 2020 as the corporate decreased shipments and elevated gross sales promotions to clear the supplier community of H-D branded LiveWires.
Across the 33-month interval lined within the securities filings, Harley’s wholesale shipments of Livewire complete 1,942 items, with 62% of these delivery inside the U.S.
Harley reported retail gross sales of 1,648 items with 1,057 of these promoting within the U.S.
The figures assist spotlight simply how far LiveWire has to go to satisfy the forecasts set out when the spinoff was introduced. Harley forecasts LiveWire will attain 7,236 items in 2023 with automobile revenue of $118 million. By 2026, the corporate estimate gross sales will attain 100,961 items and nearly $1.5 billion in revenue.
As it occurs, 2026 can also be the primary yr Harley forecasts LiveWire could have a web revenue, estimating it at $64 million. Net losses from 2021 to 2025 are estimated at a mixed $509 million. The firm reported a web loss for LiveWire of $56.5 million in 2019 and $77.6 million in 2020, a mixed complete of $134.1 million.
The firm’s filings for LiveWire word it’s an early stage firm and buyers ought to count on it to incur vital bills and losses for a number of years. The firm reported $58.1 million in engineering bills and $96.1 million in promoting, common and administrative bills within the 33-month interval lined within the filings.
“We do not expect to be profitable for the foreseeable future as we invest in our business, build capacity and ramp-up operations, and we cannot assure you that we will ever achieve or be able to maintain profitability in the future,” the submitting says. “Even if we are able to successfully develop our electric vehicles and attract customers, there can be no assurance that we will be financially successful.”
Introducing new fashions is a key half of the corporate reaching its formidable longer-term targets. The authentic LiveWire was unveiled with an almost $30,000 price ticket, however the one unveiled in 2021 got here in priced at $22,000.
Later this yr, LiveWire will launch the Del Mar, a lighter, nimbler bike at an excellent lower cost. Future plans name for different lighter-weight, highway-capable electrical motorcycles at lower cost factors as properly, and the corporate plans to vastly increase distribution to worldwide markets.