Good morning. My name is Amy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Harley-Davidson Second Quarter 2016 Earnings Conference Call. Thank you. Amy Giuffre, Director of Investor Relations, you may begin your conference.

Thank you, Amy, and good morning, everyone. You can access the slides supporting this call on the harley-davidson.com. Click Company at the top of the homepage, then Investor Relations and Events and Presentations. If you had any troubles downloading this morning, please try again as the link has been fixed. Our comments will include 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 call. This morning, our President and CEO, Matt Levatich and CFO, John Olin will be hosting. So, Matt, let's get started. Matthew S. Levatich - President, Chief Executive Officer & Director: Thanks, Amy, and thank you everyone for joining us on the call today. We talk in depth about our Q2 results and what we see going forward. You've all read the news release we issued this morning. John and I will bring context and perspective to those results and highlight some of the factors that are at place, so you can get the best read on our outlook for Q3, the full year and beyond. Before John goes into the detailed financials, I'd like to comment on two themes: market performance and then company performance. From a market perspective, we're very pleased with our share performance in the U.S. where we gained two points of share in the heavyweight segment for the quarter on top of our already strong share position. As the U.S. remains highly competitive, this gain is an important validation that our initial investments to drive demand are working. Since the beginning of the year, we made investments designed to impact customer choice and support our long-term strategy…

Your first question comes from the line of Craig Kennison with Baird. Craig, your line is open. Craig R. Kennison - Robert W. Baird & Co., Inc. (Broker): Okay. Thanks for taking my question. Matt, with respect to industry demand, what do you think accounts for the significant weakness in new bike sales, specifically what role did either credit conditions or a surplus in the supply of used bikes account for some of that weakness in new demand? Thanks. Matthew S. Levatich - President, Chief Executive Officer & Director: Thanks, Craig. I actually think that there's a lot going on, so it's really difficult to lay it off on any specific thing. Certainly, the uncertainty in the political environment, the credit conditions as you mentioned, the oil-dependent regions that we discussed, we have sort of numbers associated with that in particular. Also the significant growth last year, as I mentioned and the corresponding comp for this year, we knew that that was going to create pressure. The forecast for the industry growth were kind of in that 2% range and clearly it's not materializing that way. And so, we're looking at it very carefully, investing in new products and awareness and rider training and focusing on our efforts on what we can do to not only grow share, but grow our sales and primarily doing that through growing the sport. So, there is a lot of real positive things in that realm. I mentioned some of them in my opening remarks, but clearly this is a disappointment and we're regrouping as a result of it, and doubling down on what we know is working and to drive the industry. Craig R. Kennison - Robert W. Baird & Co., Inc. (Broker): Thanks.

Your next question comes from line of Sharon Zackfia with William Blair. Sharon, your line is open. Sharon M. Zackfia - William Blair & Co. LLC: Hi. Good morning. John, I had a question on the SG&A. I know you're still expecting it to be flattish year-over-year, but it was up nicely in the first half of the year. So where are you going to see the opportunities to have those dollars decline in the back half? And then when you look out in future years, is there more room to kind of keep that SG&A flattish in future years or how are you guys thinking about that? John A. Olin - Chief Financial Officer & Senior Vice President: Thanks, Sharon. So as you pointed out, when we look at SG&A over the first half, it is up about 6%, and I'm looking at our full year guidance to be flat to up slightly. Obviously the back half is going to be down. We would expect the third quarter to still be up on a year-over-year basis as we continue to spend that incremental investment in driving demand, and then we would expect the fourth quarter to be down quite a bit in terms of SG&A. And remember, Sharon, that in the fourth quarter of last year, there was a restructuring charge in that number of about $23 million in SG&A. And so with that, as long as the other reductions that we've made in the core infrastructure of the company to fund the incremental demand-driving investments, we would expect the overall back half of the year to be down in SG&A. John A. Olin - Chief Financial Officer & Senior Vice President: In terms of going forward. Sharon M. Zackfia - William Blair & Co. LLC: And then comment. Yeah. Thank you. John A. Olin - Chief Financial Officer & Senior Vice President: Sorry. In terms of going forward, we are focused on managing SG&A, but continuing to invest in the future, whether that be in new products or certainly the marketing of those. Sharon M. Zackfia - William Blair & Co. LLC: Okay. Thank you.

Your next question comes from the line of Felicia Hendrix with Barclays. Felicia, your line is open.

Hi. Good morning. Thanks for taking my questions. I guess this question is for you both, Matt and John. Do you think that you're positioned appropriately for the declining industry that seemed to surprise you in the quarter? I'm just wondering if your plans for the second half and also for next year are appropriate for the current environment. I mean understand the reasons behind the inventory build that you talked about, positioning for the new models, getting ahead of Kansas City ERP. But, just given the environment, given the surprises that continue to come and given the competition, I'm just wondering how much you've stress tested your growth plans for the second half and for next year. John A. Olin - Chief Financial Officer & Senior Vice President: Okay. Thanks, Felicia. Let me break the question up into two answers. First, inventory as we exit the first half. Retail inventory was up 20, or I'm sorry 8,300 units, largely driven by five incremental models. On average, our dealers have about 2.5 of each of those models in their dealerships. And that adds up actually to over 8,000 units. But, we also wanted to ship in ahead of the ERP implementation. So, when we look at second quarter, and you also, you look at the retail side, which is up 8,300 units, our company-owned inventory is down quite a bit. And, when you net those two, we're basically up in the second quarter one-third of July's production. And, that's what we expect to lose. So, to answer your question, as we exit the first half, we're right in line with what we expected in terms of inventory on a year-on-year basis, again, to compensate for the lost production in July. When we extend that forward, we were expecting inventories in…

Your next question comes from the line of Tim Conder with Wells Fargo Securities. Tim, your line is open.

Thank you. John, on HDFS with the prime sale, how do you see any of those potential transactions going forward? And then does this leave you with more loans that you still have on the balance sheet or exposure to a higher mix of prime? And then one other thing related to Brexit, what are you seeing in the UK and Europe retail trends post the Brexit vote. Any impact whatsoever? Thank you. John A. Olin - Chief Financial Officer & Senior Vice President: Thanks, Jim. When we look at the securitization that we recently did about a month ago, there were two changes in that securitization from normal securitizations that we execute. (35:40) pointed out is that they were made up of a 100% of prime receivables and the second one is we sold the residual interest that allowed us to classify it off balance sheet. Your question centers around the prime aspect of it, so historically we've sold securitizations that resemble our originations about 80% prime and 20% subprime. I've heard all kinds of speculation as to why we did a 100% prime, so let me clear that up, some of that speculation has been is we can't sell subprime into the market, and that is absolute untruth nonsense. So for over a decade, we've been selling a mix of prime and subprime into a very robust demand in the marketplace and that have not changed at all. What has changed over the last couple securitization is that our spreads have widened on the securitization to our benchmark. Our benchmark is prime auto, and there is no one else that does a mixture of securitizations like we do, so we benchmark the prime auto. What we have noticed over the last couple securitizations is the spreads widening out…

Okay.

Your next question comes from the line of Greg Badishkanian from Citigroup. Greg, your line is open.

Thanks. Great. Thank you. Two questions, first on follow-up to kind of Tim's question, just Europe, I mean, the 8% growth this quarter, what was the key driver for that? And how sustainable can it be, because it's been – it was strong last quarter as well pretty similar? And then second, there was some speculation that I think you were in discussions or maybe you received an offer from private equity firm few weeks back. Just wondering was that, is that the case or are you in a – were you in any serious conversations or are you at this point? John A. Olin - Chief Financial Officer & Senior Vice President: All right. First question Greg is with regards to Europe, we – again, we couldn't be more pleased – I think, Matt mentioned it in his upfront remarks is the focus of our European team on getting people on our motorcycles, the demos that they're doing has driven a tremendous amount of volume in that market. Also, our product offering, you got to remember that Europe has got a bigger mix of Cruisers, to Touring than we have in the United States. The product is just as well received in Europe, as it is here in the United States, that's certainly helping to drive some of the performance, and we expect the team there to continue to focus on getting people exposed to our motorcycles and we couldn't again be more pleased with where we're at in growing market share. Again, and just as a competitive market as the United States, not driven by price (39:58) Europe by tremendous addition of the lower displacement motorcycles. And again, we're doing well and gaining share in a robustly growing market in Europe. The second comment is with regards to market rumors, surrounding our stock and a potential private equity investor, we don't comment on any rumors – any stock market rumors. That would consume our entire life if we did that.

Thanks.

Your next question comes from the line of James Hardiman with Wedbush. James, your line is open.

Hi, good morning. Thanks for taking my call. A clarification and then a question from me. I guess, first, obviously retail was materially worse than what you anticipated and yet the shipments were actually a little bit higher than the high-end of your guidance. I guess what was different there than how you anticipated heading into the quarter? And then maybe a little bit of a follow-up to Robin's question. We're trending towards the lower-end of that down 1% to up 1% in terms of retail year-to-date. I guess, what gives you confidence that the industry and/or your numbers will get any better, and I guess what happens if the industry gets worse given that the most recent data point is a step down from what we saw in the first quarter? Thanks. John A. Olin - Chief Financial Officer & Senior Vice President: Okay. Thanks, James. When you look at the second quarter, we did ship a little bit over the high end of guidance and at the same time during the quarter, we were cutting production quite dramatically and our retail sales were down. So, you're saying is, can you help me out – help me understand this. So, basically as we got toward the end of the quarter, we had all the product made, and that was either in retail or in our company-owned inventory, and typically we have a bit of company-owned inventory in the United States, that facilitates the flow and the orderly shipment of motorcycles. We made the decision to ship it all out prior to the period. The reason we did that is in the very outside chance that we had any issues with ERP system. If they're in our system, we may have trouble getting them shipped. So it was just a…

Great. Thanks. I'll hop back in the queue.

Your next question comes from the line of Jaime Katz with Morningstar. Jaime, your line is open.

Good morning. Thanks for taking my questions. First, I am curious with regards to inventory and what's in the channel now in light of the slower growth environment. Can you guys talk about your thoughts on the ability to take prices in the next model year coming online, and then if you would comment on where you might be seeing the most share gains. I know – I think the share losses last year were from international competitors, but it sounds like there's still a decent amount of discounting going on, so if you have any color on that, that would be really helpful. Thanks. John A. Olin - Chief Financial Officer & Senior Vice President: Yes. With regards to inventory, retail sales, we've talked a little bit about that. We feel that we're at the right spot given our forward look at retail sales, given where we expect inventories to be. And if we haven't shown our resolve to manage this company for the long-term value of our shareholders and the actions that we've taken to keep the marketplace, aggressively managed supply in line with demand or to hold to – we're not going to discount our way out of this soft spot that we're expecting that people aren't looking. We've got tremendous resolve and we will manage the inventory at appropriate levels. And now with regards to pricing, I'm not going to speak a lot about that because in three weeks you'll see the new models, and you'll see the pricing and you can answer that question for yourself, Jamie. But again, we feel very comfortable where we're at with regards to the market, and we'll continue to manage it very tightly. I'm glad you asked about share gains in the United States. I couldn't be more thrilled…

Thank you.

Your next question comes from the line of David MacGregor with Longbow Research. David, your line is open.

Yes. Good morning, everyone. I realize there's a limit on what you want to say about model year 2017 just given we're so close to the rollout. But I guess what I wanted to ask you was, what did you learn from the model year 2016 product and the way it was received in a more competitive environment that's guided you on your plans for 2017? Matthew S. Levatich - President, Chief Executive Officer & Director: Yeah. Thanks, David, I appreciate the question. Actually, we're incredibly pleased with the model year 2016 products and how they drove the market globally. This is a lot of the S models that we launched a year ago basically, as well as the products we introduced during the model year. And clearly, there are a lot of constraints in this competitive environment that we're in, but our product drives customer passion, customer loyalty and sales and market share. We saw that with the shift in sales to large cruisers, which helped us gain share. Those large cruisers are a little lower margin than our touring motorcycles. So that's part of the gross margin deterioration that we just spoke about on the call today. But product is a very key lever for us. It's one of our four focus areas to increase both the cadence and the impact of the product and 2016 is a good example of both, high-impact product at an increased cadence. And 2017 is going to be no different. It's a formula that's working for us and we've invested more heavily, both capital and expense as part of the demand driving shift to make sure that the product that we deliver makes a difference in the marketplace and that we do it well and we do it more rapidly. And so, that's a new pattern for us that we can expect rolling forward in 2017, 2018 and beyond.

Thanks very much.

Your next question comes from the line of James Hardiman with Wedbush. James, your line is open.

Hey, thanks for taking a couple follow-ups here. So, the gain on sale with HDFS, I guess help us understand. I'm assuming that that gain comes out of future potential income that we would have otherwise seen in a normal securitization transaction. How should we think about that? John A. Olin - Chief Financial Officer & Senior Vice President: Thanks, James. It's a good question. In the 8-K that we put out, we talked about this overall transaction is neutral when you look at the present value of earnings per share. So, it's a great question. Basically, here's what happened. What happens is, in a securitization we sell off a bunch of bonds to investors and it goes into a trust and all the residual earnings that we get off of that we keep, because we keep the risk and we keep that reward. What we did (50:43) a slightly different market and we found an investor to buy that and what they did is they paid us a bunch of upfront cash to buy that residual interest in the trust or those trailing earnings. We believe that the opportunity cost of the transaction that we did is about $7 million of those trailing earnings, so to do broad math, we took a $9 million gain, gave up about $7 million of opportunity cost, so they would have earned about $16 million. We took $9 million today, right. So if you take and you discount over the next seven years, that $7 million that would have come in, bring it to the present value, a net impact on EPS, along with the fact that because it's off balance sheet, we have freed up equity at HDFS to maintain the same debt-to-equity, we've now got more equity, so HDFS wrote a…

That's really helpful. And then maybe just two real quick hitters here. Inventories are going to be down domestically, are they also going to be – or I'm sorry, flat domestically, are they also going to be flat internationally or will we see some growth there? And you also mentioned I think earlier in the Q&A that you maybe had some stats on oil areas versus non-oil areas, I was wondering if you'd care to share those? Thanks. John A. Olin - Chief Financial Officer & Senior Vice President: Sure. Sure, James. Internationally, we do expect to grow modestly as well. We'll be adding a lot of dealerships this year and they're growing markets, and we would expect to add a little bit of inventory internationally. The second quarter – sorry, so your second question is on oil dependent areas. We talked about this last quarter. It is certainly a headwind to the industry. And what we saw about a year ago, first quarter – well, first quarter 2015, we first noticed that those areas were declining more than other areas in the United States, obviously driven by the depression in oil prices. We saw that increase from a modest amount in the first quarter, increased through the second quarter and third quarter, and it hit about a 10% rate in the fourth quarter. Now, we've seen that hold at 10% in the fourth quarter of last year, the first quarter of this year, and the second quarter was also a 10%. As we look forward, we're going to start to lap more significant rises on a year-over-year basis, hopefully we'll start to see it temper a little bit, but at this point, it's not getting worse, but it is not getting better either.

Very helpful. Thank you.

Your last question comes from the line of Scott Hamann with KeyBanc Capital Markets. Scott, your line is open.

Thanks, good morning. Can you talk a little bit about the demand creation money that you're spending, is $70 million still a good number for this year? When did you kind of start to deploy that? Where are you seeing some of the best traction? And then would you consider spending more or even less as you kind of look forward? Thanks. John A. Olin - Chief Financial Officer & Senior Vice President: Thanks, Scott. Great question. So, again, going back to a year-ago, we tried some things in the second quarter and third quarter, some worked, some didn't. We kind of regrouped, looked at what was working, what wasn't, and we sized the overall opportunity. We came back as a company and said we needed $70 million to really address the widened price gaps which is a headwind to us, and compete without lowering price or discounting. And we got into the marketplace early in the first quarter, $70 million and again we're very pleased with what we're seeing in terms of new people coming in, being trained on through our Rider Academy, the motorcycles that they're buying with that, the demos that are going on, Live Your Legend campaign, again Heroes Ride Free that promotion that we're getting, people that identify very closely with our brand, getting them free training to get on motorcycles, all of that is working well and you're seeing that manifests itself in our competitiveness with expanded price gaps in the second quarter. In terms of where we go with the $70 million? That's something that we evaluate on an ongoing basis. And not only the overall dollar amount of the buck – of the $70 million, we will look at, and change when need be whether that'd be more or less. We're also looking at what's working and what's not, and trying to become very nimble on how we redirect the money in the right spots whether that be within a market or between markets, or within a promotion or between promotions. There is nothing but a single-minded focus here on driving demand.

Hi. Thank you everyone for your time this morning. Thanks for your time this morning, everyone. The audio and slides will be available at harleydavidson.com. The audio can also be accessed until August 11 by calling 404-537-3406 or 855-859-2056 in the U.S. The pin number is 424-153-21#. We appreciate your investment in Harley-Davidson. If you have any questions, please contact Investor Relations at 414-343-8002. Thanks.

This concludes today's conference call. You may now disconnect.