The Company provides retail financial services to customers of its dealers in the U.S. and Canada. The origination of retail loans is a separate and distinct transaction between the Company and the retail customer, unrelated to the Company’s sale of product to its dealers. Retail finance receivables consist of secured promissory notes and secured installment sales contracts and are primarily related to dealer sales of motorcycles to retail customers. The Company holds either titles or liens on titles to vehicles financed by promissory notes and installment sales contracts.

The Company offers wholesale financing to its dealers in the U.S. and Canada. Wholesale finance receivables are related primarily to the Company's sale of motorcycles, related parts and accessories and apparel to dealers. Wholesale loans to dealers are generally secured by financed inventory or property.

Finance receivables, net were as follows (in thousands):


	March 31, 2025		December 31, 2024		March 31, 2024
Retail finance receivables	$	6,514,733	$	6,681,106	$	6,799,510
Wholesale finance receivables	1,278,052		1,008,371		1,486,873
	7,792,785		7,689,477		8,286,383
Allowance for credit losses	(393,178)		(401,183)		(380,361)
	$	7,399,607	$	7,288,294	$	7,906,022

The Company’s finance receivables are reported at amortized cost, net of the allowance for credit losses. Amortized cost includes the principal outstanding, accrued interest, and deferred loan fees and costs. The Company's allowance for credit losses reflects expected lifetime credit losses on its finance receivables. Based on differences in the nature of the finance receivables and the underlying methodology for calculating the allowance for credit losses, the Company segments its finance receivables into the retail and wholesale portfolios. The Company further disaggregates each portfolio by credit quality indicators. As the credit risk varies between the retail and wholesale portfolios, the Company utilizes different credit quality indicators for each portfolio.

The retail portfolio primarily consists of a large number of small balance, homogeneous finance receivables. The Company performs a collective evaluation of the adequacy of the retail allowance for credit losses. The Company utilizes a vintage-based loss forecast methodology that includes decompositions for probability of default, exposure at default, attrition rate, and recovery balance rate. Reasonable and supportable economic forecasts for a two-year period are incorporated into the methodology to reflect the estimated impact of changes in future economic conditions, such as unemployment rates, household obligations or other relevant factors, over the two-year reasonable and supportable period. For periods beyond the Company’s reasonable and supportable forecasts, the Company reverts to its average historical loss experience using a mean-reversion process over a three-year period. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, or term as well as other relevant factors.

The wholesale portfolio is primarily composed of large balance, non-homogeneous loans. The Company’s evaluation for the wholesale allowance for credit losses is first based on a loan-by-loan review to determine whether the loans share similar risk characteristics. The Company individually evaluates loans that do not share risk characteristics. Loans identified as those for which foreclosure is probable are classified as Non-Performing, and a specific allowance for credit losses is established when appropriate. The specific allowance is determined based on the amortized cost of the related finance receivable and the estimated fair value of the collateral, less selling costs and the cash that the Company expects to receive. Finance receivables in the wholesale portfolio not individually assessed are aggregated, based on similar risk characteristics, according to the Company’s internal risk rating system and measured collectively. The related allowance for credit losses is based on factors such as the specific borrower’s financial performance and ability to repay, the Company’s past credit loss experience, reasonable and supportable economic forecasts, and the value of the underlying collateral and expected recoveries.

The Company considers various third-party economic forecast scenarios as part of estimating the allowance for expected credit losses and applies a probability-weighting to those economic forecast scenarios. Each quarter, the Company's outlook on economic conditions impacts the Company's retail and wholesale estimates for expected credit losses. At the end of the first quarter of 2025, the Company's probability weighting of its economic forecast scenarios was weighted towards more pessimistic scenarios given continued challenging macro-economic conditions including a persistently high interest rate environment, ongoing elevated inflation levels, muted consumer confidence, and risk of a recession.

Additionally, the historical experience incorporated into the portfolio-specific models does not fully reflect the Company's comprehensive expectations regarding the future. As such, the Company incorporated qualitative factors to establish an appropriate allowance for credit losses balance. These factors include motorcycle recovery value considerations, delinquency adjustments, specific problem loan trends, and changes in other portfolio-specific loan characteristics.

Due to the use of projections and assumptions in estimating the losses, the amount of losses incurred by the Company in either portfolio could differ from the amounts estimated. Further, the Company’s allowance for credit losses incorporates known conditions at the balance sheet date and the Company’s expectations surrounding the economic forecasts. The


	Three months ended March 31, 2025
	Retail		Wholesale		Total
Balance, beginning of period	$	378,373	$	22,810	$	401,183
Provision for credit losses	50,801		2,533		53,334
Charge-offs	(77,534)		(641)		(78,175)
Recoveries	16,836		—		16,836
Balance, end of period	$	368,476	$	24,702	$	393,178
	Three months ended March 31, 2024
	Retail		Wholesale		Total
Balance, beginning of period	$	367,037	$	14,929	$	381,966
Provision for credit losses	60,989		21		61,010
Charge-offs	(81,368)		—		(81,368)
Recoveries	18,753		—		18,753
Balance, end of period	$	365,411	$	14,950	$	380,361

The Company manages retail credit risk through its credit approval process and ongoing collection efforts. The Company uses FICO scores, a standard credit rating measurement, to differentiate the expected default rates of retail credit applicants, enabling the Company to better evaluate credit applicants for approval and to tailor pricing according to this assessment. For the Company’s U.S. and Canadian retail finance receivables, the Company determines the credit quality indicator for each loan at origination and does not update the credit quality indicator subsequent to the loan origination date.

As loan performance by credit quality indicator differs between the U.S. and Canadian retail loans, the Company’s credit quality indicators vary for the two portfolios. For U.S. retail finance receivables, those with a FICO score of 740 or above at origination are generally considered super prime, loans with a FICO score between 640 and 740 are generally categorized as prime, and loans with FICO score below 640 are generally considered sub-prime. For Canadian retail finance receivables, those with a FICO score of 700 or above at origination are generally considered super prime, loans with a FICO score between 620 and 700 are generally categorized as prime, and loans with FICO score below 620 are generally considered sub-prime.

The amortized cost along with period gross charge-offs of the Company's U.S. and Canadian retail finance receivables by vintage and credit quality indicator was as follows (in thousands):


	March 31, 2025
	2025		2024		2023		2022		2021		2020 & Prior		Total
U.S. Retail:
Super prime	$	246,251	$	930,951	$	619,801	$	390,933	$	173,826	$	72,153	$	2,433,915
Prime	237,047		959,136		746,249		588,551		316,903		179,922		3,027,808
Sub-prime	83,027		290,920		201,277		159,669		104,683		86,365		925,941
	566,325		2,181,007		1,567,327		1,139,153		595,412		338,440		6,387,664
Canadian Retail:
Super prime	8,019		32,371		25,930		15,301		6,824		3,038		91,483
Prime	2,247		8,365		7,693		6,000		3,582		2,917		30,804
Sub-prime	334		1,578		1,081		807		370		612		4,782
	10,600		42,314		34,704		22,108		10,776		6,567		127,069
	$	576,925	$	2,223,321	$	1,602,031	$	1,161,261	$	606,188	$	345,007	$	6,514,733
Gross charge-offs for the three months ended March 31, 2025:
U.S. Retail	$	—	$	18,323	$	22,716	$	18,667	$	9,775	$	6,425	$	75,906
Canadian Retail	—		419		491		365		159		194		1,628
	$	—	$	18,742	$	23,207	$	19,032	$	9,934	$	6,619	$	77,534


	December 31, 2024
	2024		2023		2022		2021		2020		2019 & Prior		Total
U.S. Retail:
Super prime	$	1,040,491	$	694,941	$	449,697	$	206,974	$	67,668	$	28,606	$	2,488,377
Prime	1,042,910		821,719		659,000		363,507		141,495		82,771		3,111,402
Sub-prime	318,689		224,656		180,048		119,457		58,297		47,624		948,771
	2,402,090		1,741,316		1,288,745		689,938		267,460		159,001		6,548,550
Canadian Retail:
Super prime	36,011		29,098		17,468		8,330		3,179		1,096		95,182
Prime	9,111		8,687		6,724		4,033		2,212		1,524		32,291
Sub-prime	1,701		1,229		972		435		462		284		5,083
	46,823		39,014		25,164		12,798		5,853		2,904		132,556
	$	2,448,913	$	1,780,330	$	1,313,909	$	702,736	$	273,313	$	161,905	$	6,681,106
Gross charge-offs for the year ended December 31, 2024:
U.S. Retail	$	18,322	$	92,489	$	90,023	$	47,678	$	19,628	$	17,143	$	285,283
Canadian Retail	241		1,474		1,398		755		391		464		4,723
	$	18,563	$	93,963	$	91,421	$	48,433	$	20,019	$	17,607	$	290,006


	March 31, 2024
	2024		2023		2022		2021		2020		2019 & Prior		Total
U.S. Retail:
Super prime	$	311,848	$	963,226	$	651,375	$	328,904	$	126,727	$	73,138	$	2,455,218
Prime	294,135		1,087,821		900,078		522,250		226,247		173,807		3,204,338
Sub-prime	87,446		305,352		246,904		168,542		88,980		88,826		986,050
	693,429		2,356,399		1,798,357		1,019,696		441,954		335,771		6,645,606
Canadian Retail:
Super prime	11,736		43,504		27,785		15,068		7,456		4,063		109,612
Prime	2,566		12,375		10,180		6,336		3,779		3,526		38,762
Sub-prime	456		1,760		1,355		601		744		614		5,530
	14,758		57,639		39,320		22,005		11,979		8,203		153,904
	$	708,187	$	2,414,038	$	1,837,677	$	1,041,701	$	453,933	$	343,974	$	6,799,510
Gross charge-offs for the three months ended March 31, 2024:
U.S. Retail	$	—	$	21,760	$	28,748	$	16,286	$	7,111	$	6,363	$	80,268
Canadian Retail	—		245		335		212		145		163		1,100
	$	—	$	22,005	$	29,083	$	16,498	$	7,256	$	6,526	$	81,368

The Company's credit risk on the wholesale portfolio is different from that of the retail portfolio. Whereas the retail portfolio represents a relatively homogeneous pool of retail finance receivables that exhibit more consistent loss patterns, the wholesale portfolio exposures are less consistent. The Company utilizes an internal credit risk rating system to manage credit risk exposure consistently across wholesale borrowers and individually evaluates credit risk factors for each borrower. The Company uses the following internal credit quality indicators, based on an internal risk rating system, listed from highest level of risk to lowest level of risk for the wholesale portfolio: Doubtful, Substandard, Special Mention, Medium Risk and Low Risk. Based upon the Company’s review, the dealers classified in the Doubtful category are the dealers with the greatest likelihood of being charged-off, while the dealers classified as Low Risk are least likely to be charged-off. Additionally, the Company classifies dealers identified as those in which foreclosure is probable as Non-Performing. The internal rating system considers factors such as the specific borrower's ability to repay and the estimated value of any collateral. Dealer risk rating classifications are reviewed and updated by the Company on a quarterly basis.

The amortized cost of the Company's wholesale finance receivables, by vintage and credit quality indicator, was as follows (in thousands):


	March 31, 2025
	2025		2024		2023		2022		2021		2020 & Prior		Total
Non-Performing	$	2,208	$	3,698	$	643	$	—	$	—	$	—	$	6,549
Doubtful	13,553		19,970		3,765		107		—		8,357		45,752
Substandard	5,038		6,560		1,683		—		—		—		13,281
Special Mention	2,494		2,016		297		—		—		—		4,807
Medium Risk	2,335		1,375		131		—		—		—		3,841
Low Risk	664,472		445,883		50,616		38,095		1,547		3,209		1,203,822
	$	690,100	$	479,502	$	57,135	$	38,202	$	1,547	$	11,566	$	1,278,052
Gross charge-offs for the three months ended March 31, 2025:
Wholesale	$	1	$	506	$	134	$	—	$	—	$	—	$	641


	December 31, 2024
	2024		2023		2022		2021		2020		2019 & Prior		Total
Non-Performing	$	6,430	$	4,702	$	129	$	—	$	—	$	2	$	11,263
Doubtful	25,827		3,869		139		—		—		8,196		38,031
Substandard	14,470		2,928		—		—		—		—		17,398
Special Mention	3,162		362		19		—		—		—		3,543
Medium Risk	1,471		271		—		—		—		—		1,742
Low Risk	808,771		83,611		38,815		1,702		3,358		137		936,394
	$	860,131	$	95,743	$	39,102	$	1,702	$	3,358	$	8,335	$	1,008,371
Gross charge-offs for the year ended December 31, 2024:
Wholesale	$	709	$	710	$	42	$	—	$	—	$	1	$	1,462


	March 31, 2024
	2024		2023		2022		2021		2020		2019 & Prior		Total
Non-Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Doubtful	1,612		1,783		216		—		—		10		3,621
Substandard	10,570		10,989		436		—		—		8		22,003
Special Mention	2,332		1,954		183		—		—		317		4,786
Medium Risk	1,051		938		—		—		—		—		1,989
Low Risk	861,075		521,155		54,703		4,110		4,646		8,785		1,454,474
	$	876,640	$	536,819	$	55,538	$	4,110	$	4,646	$	9,120	$	1,486,873

Retail finance receivables are contractually delinquent if the minimum payment is not received by the specified due date. Retail finance receivables at amortized cost, excluding accrued interest, are generally charged-off when the receivable is 120 days or more delinquent, the related asset is repossessed, or the receivable is otherwise deemed uncollectible. The Company reverses accrued interest related to charged-off accounts against HDFS interest income when the account is charged-off. The Company reversed $9.4 million and $9.5 million of accrued interest against HDFS interest income during the three months ended March 31, 2025 and March 31, 2024, respectively. All retail finance receivables accrue interest until either collected or charged-off. Due to the timely write-off of accrued interest, the Company made the election provided under Accounting Standards Codification (ASC) Topic 326, Financial Instruments - Credit Losses to exclude accrued interest from its allowance for credit losses. Accordingly, as of March 31, 2025, December 31, 2024, and March 31, 2024, all retail finance receivables were accounted for as interest-earning receivables.

Wholesale finance receivables are delinquent if the minimum payment is not received by the contractual due date. Wholesale finance receivables are written down once the Company determines that the specific borrower does not have the ability to repay the loan in full. Interest continues to accrue on past due finance receivables until the date the Company

determines that foreclosure is probable, and the finance receivable is placed on non-accrual status. The Company will resume accruing interest on these accounts when payments are current according to the terms of the loans and future payments are reasonably assured. While on non-accrual status, all cash received is applied to principal or interest as appropriate. Once an account is charged-off, the Company will reverse the associated accrued interest against HDFS interest income. As the Company follows a non-accrual policy for interest, the allowance for credit losses excludes accrued interest for the wholesale portfolio. The Company reversed $0.1 million of accrued interest related to the charge-off of Non-Performing dealer loans during the three months ended March 31, 2025. There were no charged-off accounts for the three months ended March 31, 2024 and as such, the Company did not reverse any wholesale accrued interest during that period. At March 31, 2025 and December 31, 2024, $0.6 million and $0.5 million of wholesale finance receivables were over 90 days or more past due and on non-accrual status, respectively. There were no dealers on non-accrual status at March 31, 2024.

Additional information related to the wholesale finance receivables on non-accrual status was as follows (in thousands):


	Amortized Cost		Amortized Cost		Interest Income
	January 1, 2025		March 31, 2025		Recognized
Wholesale:
No related allowance recorded	$	7,510	$	6,549	$	37
Related allowance recorded	3,753		—		—
	$	11,263	$	6,549	$	37

The aging analysis of the Company's finance receivables was as follows (in thousands):


	March 31, 2025
	Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Total
Retail finance receivables	$	6,266,363	$	138,090	$	52,813	$	57,467	$	248,370	$	6,514,733
Wholesale finance receivables	1,268,943		5,273		1,475		2,361		9,109		1,278,052
	$	7,535,306	$	143,363	$	54,288	$	59,828	$	257,479	$	7,792,785

	December 31, 2024
	Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Total
Retail finance receivables	$	6,368,447	$	178,752	$	69,257	$	64,650	$	312,659	$	6,681,106
Wholesale finance receivables	1,002,584		3,463		718		1,606		5,787		1,008,371
	$	7,371,031	$	182,215	$	69,975	$	66,256	$	318,446	$	7,689,477

	March 31, 2024
	Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Total
Retail finance receivables	$	6,569,714	$	131,720	$	47,672	$	50,404	$	229,796	$	6,799,510
Wholesale finance receivables	1,486,224		240		219		190		649		1,486,873
	$	8,055,938	$	131,960	$	47,891	$	50,594	$	230,445	$	8,286,383