EX-99.1 2 d249160dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

PROG Holdings Reports Third Quarter 2021 Results

 

   

Progressive Leasing GMV of $493 million, up 9.9%

 

   

E-commerce grew 192% to 14.5% of Progressive Leasing GMV

 

   

Consolidated Revenues of $650 million, up 6.4%

 

   

Consolidated earnings before taxes of $77.9 million; Adjusted EBITDA of $93.6 million or 14.4% of revenues

 

   

Diluted EPS of $0.86; Non-GAAP Diluted EPS of $0.94

 

   

Board of Directors authorizes new $1 billion share repurchase program including a modified Dutch auction tender offer to purchase up to $425 million of Company stock, which is expected to commence November 4, 2021

SALT LAKE CITY, November 3, 2021- PROG Holdings, Inc. (NYSE:PRG), the fintech holding company for Progressive Leasing, Vive Financial, and Four Technologies, today announced financial results for the third quarter ended September 30, 2021.

“As we approach our first anniversary as a stand-alone, high-growth, asset-light fintech company, I’m pleased to report our continued progress positioning PROG Holdings for significant, long-term shareholder value creation. At the same time, we continue to successfully navigate pandemic-related volatility in our markets,” said Steve Michaels, President and Chief Executive Officer of PROG Holdings. “During the third quarter, portfolio performance continued to return towards more normalized pre-pandemic levels. Against this backdrop, we sustained accelerating growth in our lease portfolio, and we remain on track to deliver mid-to-high teens GMV growth and record adjusted EBITDA.”

Michaels added, “Since last November’s spin transaction, we have taken significant steps to align our capital structure and capital allocation strategy with our business’s impressive cash generation and balance sheet. Our Board’s authorization of a $1 billion share repurchase program, which includes a cash and debt-funded tender offer to purchase up to $425 million of our outstanding common stock will lower our cost of capital and further demonstrate our commitment to return excess capital to shareholders while maintaining our ability to invest in organic growth and attractive M&A opportunities.”


Financial Highlights

Consolidated revenues for the third quarter of 2021 were $650.4 million, an increase of 6.4% from the same period in 2020. The increase was primarily due to growth from key large national partners and continued e-commerce penetration. Progressive Leasing’s GMV increased 9.9% to $493.3 million compared with the same period in 2020, with e-commerce GMV growing 192% year-over-year. In addition, the Company’s lease portfolio ended the quarter 11.5% higher than the same period of 2020.

The Company reported consolidated net earnings from continuing operations for the third quarter of 2021 of $57.4 million compared with $74.6 million in the prior year period. Adjusted EBITDA for the third quarter of 2021 was $93.6 million compared with $110.6 million for the same period in 2020, a decrease of $17.0 million, or 15.4%. As a percentage of revenues, adjusted EBITDA was 14.4% in the third quarter of 2021 compared with 18.1% for the same period in 2020. The year-over-year decline in net earnings from continuing operations and adjusted EBITDA were primarily driven by Progressive Leasing’s delinquencies and write-offs approaching a more normalized level as compared to the extraordinarily low delinquency and write-off levels in the prior year quarter. That trend more than offset the benefit of higher revenues and the declining number of customers exercising their 90-day purchase option.

Diluted earnings per share from continuing operations for the third quarter of 2021 were $0.86 compared with $1.10 in the year ago period. On a non-GAAP basis, diluted earnings per share from continuing operations were $0.94 in the third quarter of 2021 compared with $1.17 for the same quarter in 2020.


The provision for lease merchandise write-offs at Progressive Leasing was 5.4% of lease revenues in the third quarter of 2021, compared with 2.1% in the same period of 2020. While this level is elevated from the record lows of the prior year, write-offs remain below the Company’s historical 6-8% annual range and are expected to remain at or below that historical range in the near-to mid-term.

Liquidity and Capital Allocation

PROG Holdings ended the third quarter of 2021 with cash of $128.8 million and debt of $50 million. The Company purchased $51.0 million of its stock in the period at an average price per share of $45.40.

The Company’s Board of Directors has authorized a new $1 billion share repurchase program, which replaces the Company’s prior $300 million program. Under the new authorization, purchases can be made from time to time using a variety of methods, which may include tender offers, open market purchases, purchases effected through 10b5-1 trading plans, accelerated share purchase programs, or other transactions. The amount of any shares of the Company’s common stock that are purchased under the new repurchase program and the timing of any such purchases will be determined based on market conditions and other factors, and the program may be suspended or discontinued at any time.

As part of the new repurchase program, the Company expects to commence a “modified Dutch auction” tender offer on November 4, 2021, for up to $425 million in value of its outstanding common stock at an anticipated cash purchase price per share of not less than $44.00 and not more than $50.00, less any applicable withholding taxes and without interest. Further information regarding the tender offer can be found in a separate press release, issued today, available on PROG Holdings’ investor relations page.


Outlook

The Company is updating its full year 2021 consolidated outlook for revenues, adjusted EBITDA, GAAP diluted EPS, and Non-GAAP diluted EPS. The change in outlook reflects increasing reserve requirements due to continued normalization of the portfolio. The revised revenue range for 2021 is $2.68 billion to $2.70 billion, and the revised adjusted EBITDA range is $390 million to $395 million. Non-GAAP diluted EPS is expected to be between $3.90 and $3.99, while GAAP diluted EPS is expected to be between $3.62 and $3.71. The impact of any share reduction from the tender offer is not included in this outlook and is expected to be immaterial to the full-year EPS.

Conference Call and Webcast

The Company has scheduled a live webcast and conference call for Wednesday, November 3, 2021, at 8:30 A.M. ET to discuss its financial results for the third quarter of 2021. To access the live webcast, visit the Company’s investor relations website, https://investor.progholdings.com/. To join the conference call via telephone, dial 877-270-2148 and request to join the PROG Holdings, Inc. call. International participants without internet access can join the conference call by dialing 412-902-6510 and requesting to join the PROG Holdings, Inc. call. The webcast will be archived for playback on the investor relations website following the event.

About PROG Holdings, Inc.

PROG Holdings, Inc. (NYSE:PRG) is a fintech holding company headquartered in Salt Lake City, UT, that provides transparent and competitive payment options to consumers. The Company owns Progressive Leasing, a leading provider of e-commerce, app-based, and in-store point-of-sale lease-to-own solutions, Vive Financial, an omnichannel provider of second-look revolving credit products, and Four Technologies, provider of Buy Now, Pay Later payment options through its platform, Four. More information on PROG Holdings’ companies can be found at https://www.progholdings.com.


Additional Information Regarding the Tender Offer

The tender offer described in this press release has not yet commenced, and there can be no assurance that PROG Holdings will commence the tender offer on the terms described in this release. The information regarding the tender offer in this press release is for informational purposes only. This press release is not a recommendation to buy or sell shares of common stock or any other securities, and it is neither an offer to purchase nor a solicitation of an offer to sell shares of common stock or any other securities. On the commencement date of the tender offer, a tender offer statement on Schedule TO, including an offer to purchase, a letter of transmittal and related materials, will be filed with the United States Securities and Exchange Commission (the “SEC”) by PROG Holdings. The tender offer will only be made pursuant to the offer to purchase, the letter of transmittal and related materials filed as a part of the Schedule TO. When available, shareholders should read carefully the offer to purchase, letter of transmittal and related materials because they contain important information, including the various terms of, and conditions to, the tender offer. Once the tender offer is commenced, shareholders will be able to obtain a free copy of the tender offer statement on Schedule TO, the offer to purchase, letter of transmittal and other documents that PROG Holdings will be filing with the SEC at the SEC’s website at www.sec.gov or from the information agent for the tender offer.

Forward Looking Statements:

Statements in this news release regarding our business that are not historical facts are “forward-looking statements” that involve risks and uncertainties which could cause actual results to differ materially from those contained in the forward-looking statements. Such forward-looking statements generally can be identified by the use of forward-looking terminology, such as “continue”, “continued”, “expects”, “expected”, “outlook”, “intends” and similar forward-looking terminology. These risks and uncertainties include factors such as (i) the impact of the COVID-19 pandemic and related measures taken by governmental or regulatory authorities to combat the pandemic, including the impact of the pandemic and such measures on: (a) demand for the lease-to-own products offered by our Progressive Leasing segment, (b) Progressive Leasing’s POS partners, and Vive’s and Four’s merchant partners, (c) Progressive Leasing’s, Vive’s and Four’s customers, including their ability and willingness to satisfy their obligations under their lease agreements and loan agreements, (d) Progressive Leasing’s point-of-sale partners being able to obtain the merchandise its customers need or desire, (e) our employees and labor needs, including our ability to adequately staff our operations, (f) our financial and operational performance, and (g) our liquidity, including risks arising from the increased level of debt that we expect to incur in connection with the tender offer to purchase up to $425 million of our common stock; (ii) changes in the enforcement of existing laws and regulations and the adoption of new laws and regulations that may unfavorably impact our businesses; (iii) the effects on our business and reputation resulting from Progressives Leasing’s announced settlement and related consent order with the FTC, including the risk of losing existing POS partners or being unable to establish new relationships with additional POS partners, and of any follow-on regulatory and/or civil litigation arising therefrom; (iv) other types of legal and regulatory proceedings and investigations, including those related to consumer protection, customer privacy, third party and employee fraud and information security; (v) our ability to protect confidential, proprietary, or sensitive information, including the personal and confidential information of our customers, which may be adversely affected by cyber-attacks, employee or other internal misconduct, computer viruses, electronic break-ins or “hacking”, or similar disruptions, any one of which could have a material adverse impact on our results of operations, financial condition, and prospects; (vi) increased competition from traditional and virtual lease-to-own competitors and also from competitors of our Vive segment; (vii) increases in lease merchandise write-offs and the provision for returns and uncollectible renewal payments


for Progressive Leasing, especially in light of the COVID-19 pandemic, and for loan losses, with respect to our Vive segment; (vii) the possibility that the operational, strategic and shareholder value creation opportunities expected from the spin-off of the Company’s Aaron’s Business segment may not be achieved in a timely manner, or at all; (ix) Vive’s business model differing significantly from Progressive Leasing’s, which creates specific and unique risks for the Vive business, including Vive’s reliance on two bank partners to issue its credit products and Vive’s exposure to the unique regulatory risks associated with the lending-related laws and regulations that apply to its business; (x) the effects of any increased expenses or unanticipated liabilities incurred as a result of, or due to activities related to, our recent acquisition of Four; (xi) Four’s business model differing significantly from Progressive Leasing’s and Vive’s, which creates specific and unique risks for the Four business, including Four’s exposure to the unique regulatory risks associated with the laws and regulations that apply to its business; (xii) our ability to consummate the tender offer on the terms and timing described herein, or at all, and to realize the benefits expected from the tender offer; and (xiii) the other risks and uncertainties discussed under “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which was filed with the SEC on February 26, 2021. Statements in this press release that are “forward-looking” include without limitation statements about (i) our ability to create long-term shareholder value; (ii) our ability to successfully navigate COVID-19 pandemic-related volatility in our markets; (iii) our outlook for GMV growth for 2021; (iv) the execution, amount and timing of, and benefits expected from, our expected tender offer to purchase up to $425 million of our common stock; (v) the nature and amount of any other share purchases under the $1 billion repurchase program authorized by our Board; (vi) our ability to continue to invest in organic growth opportunities and M&A opportunities (vii) the levels of delinquencies and write-offs we expect in future periods; and (viii) our updated 2021 financial performance outlook. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances after the date of this press release.

Investor Contact

John Baugh, CFA

Vice President, Investor Relations

john.baugh@progleasing.com

Media Contact

Mark Delcorps

Director, Corporate Communications

media@progleasing.com


PROG Holdings, Inc.

Consolidated Statements of Earnings (Loss)

(In thousands, except per share data)

 

     (Unaudited)
Three Months Ended
September 30,
     (Unaudited)
Nine Months Ended
September 30,
 
     2021     2020      2021     2020  

Revenues:

         

Lease Revenues and Fees

   $ 635,025   $ 601,105    $ 1,989,055   $ 1,849,388

Interest and Fees on Loans Receivable

     15,380     10,232      42,322     29,555
  

 

 

   

 

 

    

 

 

   

 

 

 

Total

     650,405     611,337      2,031,377     1,878,943

Costs and Expenses:

         

Depreciation of Lease Merchandise

     435,857     405,235      1,380,572     1,289,885

Provision for Lease Merchandise Write-offs

     34,174     12,578      84,072     104,443

Operating Expenses

     102,053     95,433      289,994     276,935

Separation Related Charges

     —         2,443      —         2,443
  

 

 

   

 

 

    

 

 

   

 

 

 

Total

     572,084     515,689      1,754,638     1,673,706
  

 

 

   

 

 

    

 

 

   

 

 

 

Operating Profit

     78,321     95,648      276,739     205,237

Interest Expense

     (444     —          (1,392     —    
  

 

 

   

 

 

    

 

 

   

 

 

 

Earnings from Continuing Operations before Income Tax

     77,877     95,648      275,347     205,237

Income Tax Expense

     20,464     21,005      69,609     13,915
  

 

 

   

 

 

    

 

 

   

 

 

 

Net Earnings from Continuing Operations

     57,413     74,643      205,738     191,322

Earnings (Loss) from Discontinued Operations, Net of Income Tax

     —         34,702      —         (293,605
  

 

 

   

 

 

    

 

 

   

 

 

 

Net Earnings (Loss)

   $ 57,413   $ 109,345    $ 205,738   $ (102,283
  

 

 

   

 

 

    

 

 

   

 

 

 

Basic Earnings (Loss) per Share:

         

Continuing Operations

   $ 0.87   $ 1.11    $ 3.07   $ 2.85

Discontinued Operations

     —         0.51      —         (4.38
  

 

 

   

 

 

    

 

 

   

 

 

 

Total Basic Earnings (Loss) per Share

   $ 0.87   $ 1.62    $ 3.07   $ (1.52
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted Earnings (Loss) per Share:

         

Continuing Operations

   $ 0.86   $ 1.10    $ 3.06   $ 2.82

Discontinued Operations

     —         0.51      —         (4.33
  

 

 

   

 

 

    

 

 

   

 

 

 

Total Diluted Earnings (Loss) per Share

   $ 0.86   $ 1.61    $ 3.06   $ (1.51
  

 

 

   

 

 

    

 

 

   

 

 

 

Weighted Average Shares Outstanding

     66,092     67,398      66,938     67,107

Weighted Average Shares Outstanding Assuming Dilution

     66,385     68,155      67,319     67,849


PROG Holdings, Inc.

Consolidated Balance Sheets

(In thousands, except share data)

 

     (Unaudited)
September 30, 2021
    December 31, 2020  

ASSETS:

    

Cash and Cash Equivalents

   $ 128,788   $ 36,645

Accounts Receivable (net of allowances of $60,578 in 2021 and $56,364 in 2020)

     67,447     61,254

Lease Merchandise (net of accumulated depreciation and allowances of $453,555 in 2021 and $409,307 in 2020)

     588,733     610,263

Loans Receivable (net of allowances and unamortized fees of $57,578 in 2021 and $52,274 in 2020)

     112,784     79,148

Property, Plant and Equipment, Net

     25,806     26,705

Operating Lease Right-of-Use Assets

     17,862     20,613

Goodwill

     306,649     288,801

Other Intangibles, Net

     143,029     154,421

Income Tax Receivable

     18,890     —    

Prepaid Expenses and Other Assets

     44,270     39,554
  

 

 

   

 

 

 

Total Assets

   $ 1,454,258   $ 1,317,404
  

 

 

   

 

 

 

LIABILITIES & SHAREHOLDERS’ EQUITY:

    

Accounts Payable and Accrued Expenses

   $ 116,813   $ 78,249

Deferred Income Tax Liability

     145,161     126,938

Customer Deposits and Advance Payments

     39,765     46,565

Operating Lease Liabilities

     26,063     29,516

Debt

     50,000     50,000
  

 

 

   

 

 

 

Total Liabilities

     377,802     331,268
  

 

 

   

 

 

 

SHAREHOLDERS’ EQUITY:

    

Common Stock, Par Value $0.50 Per Share: Authorized: 225,000,000 Shares at September 30, 2021 and December 31, 2020; Shares Issued: 90,752,123 at September 30, 2021 and December 31, 2020

     45,376     45,376

Additional Paid-in Capital

     325,309     318,263

Retained Earnings

     1,442,116     1,236,378
  

 

 

   

 

 

 
     1,812,801     1,600,017

Less: Treasury Shares at Cost

    

Common Stock: 25,360,538 Shares at September 30, 2021 and 23,029,434 at December 31, 2020

     (736,345     (613,881
  

 

 

   

 

 

 

Total Shareholders’ Equity

     1,076,456     986,136
  

 

 

   

 

 

 

Total Liabilities & Shareholders’ Equity

   $ 1,454,258   $ 1,317,404
  

 

 

   

 

 

 


PROG Holdings, Inc.

Consolidated Statements of Cash Flows

(In thousands)

 

    

Unaudited

Nine Months Ended

September 30,

 
     2021     2020  

OPERATING ACTIVITIES:

    

Net Earnings (Loss)

   $ 205,738   $ (102,283

Adjustments to Reconcile Net Earnings (Loss) to Cash Provided by Operating Activities:

    

Depreciation of Lease Merchandise

     1,380,572     1,672,841

Other Depreciation and Amortization

     21,954     74,683

Provisions for Accounts Receivable and Loan Losses

     152,523     224,959

Stock-Based Compensation

     14,803     21,378

Deferred Income Taxes

     16,948     (76,885

Impairment of Goodwill and Other Assets

     —         469,782

Non-Cash Lease Expense

     708     75,589

Other Changes, Net

     (2,715     5,529

Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions:

    

Additions to Lease Merchandise

     (1,446,046     (1,687,483

Book Value of Lease Merchandise Sold or Disposed

     87,005     263,007

Accounts Receivable

     (143,970     (183,807

Prepaid Expenses and Other Assets

     (3,864     (1,381

Income Tax Receivable

     (18,529     9,180

Operating Lease Right-of-Use Assets and Liabilities

     (1,411     (85,073

Accounts Payable and Accrued Expenses

     37,973     48,851

Accrued Regulatory Expense

     —         (175,000

Customer Deposits and Advance Payments

     (6,799     (2,041
  

 

 

   

 

 

 

Cash Provided by Operating Activities

     294,890     551,846

INVESTING ACTIVITIES:

    

Investments in Loans Receivable

     (139,980     (73,208

Proceeds from Loans Receivable

     97,158     50,154

Outflows on Purchases of Property, Plant and Equipment

     (6,815     (50,867

Proceeds from Disposition of Property, Plant, and Equipment

     55     3,829

Outflows on Acquisitions of Businesses and Customer Agreements. Net of Cash Acquired

     (22,942     (2,874

Proceeds from Dispositions of Businesses and Customer Agreements, Net of Cash Disposed

     —         359
  

 

 

   

 

 

 

Cash Used in Investing Activities

     (72,524     (72,607

FINANCING ACTIVITIES:

    

Proceeds from Debt

     —         5,625

Repayments on Debt

     —         (61,515

Dividends Paid

     —         (8,035

Acquisition of Treasury Stock

     (128,233     —    

Issuance of Stock Under Stock Option Plans

     3,133     9,876

Shares Withheld for Tax Payments

     (5,123     (11,734

Debt Issuance Costs

     —         (1,020
  

 

 

   

 

 

 

Cash Used in Financing Activities

     (130,223     (66,803
  

 

 

   

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

     —         (21
  

 

 

   

 

 

 

Increase in Cash and Cash Equivalents

     92,143     412,415

Cash and Cash Equivalents at Beginning of Period

     36,645     57,755
  

 

 

   

 

 

 

Cash and Cash Equivalents at End of Period

   $ 128,788   $ 470,170
  

 

 

   

 

 

 

Net Cash Paid (Received) During the Period

    

Interest

   $ 1,093   $ 8,501

Income Taxes

   $ 43,985   $ (19,362


PROG Holdings, Inc.

Quarterly Revenues by Segment

(In thousands)

 

     Unaudited
Three Months Ended
September 30, 2021
 
     Progressive Leasing      Vive      Other      Consolidated Total  

Lease Revenues and Fees

   $ 635,025    $ —      $ —      $ 635,025

Interest and Fees on Loans Receivable

     —          15,212      168      15,380
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Revenues

   $ 635,025    $ 15,212    $ 168    $ 650,405
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Unaudited
Three Months Ended
September 30, 2020
 
     Progressive Leasing      Vive      Other      Consolidated Total  

Lease Revenues and Fees

   $ 601,105    $ —      $ —      $ 601,105

Interest and Fees on Loans Receivable

     —          10,232      —          10,232
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Revenues

   $ 601,105    $ 10,232    $ —      $ 611,337
  

 

 

    

 

 

    

 

 

    

 

 

 


PROG Holdings, Inc.

Nine Months Revenues by Segment

(In thousands)

 

     Unaudited
Nine Months Ended
September 30, 2021
 
     Progressive Leasing      Vive      Other      Consolidated Total  

Lease Revenues and Fees

   $ 1,989,055    $ —      $ —      $ 1,989,055

Interest and Fees on Loans Receivable

     —          42,154      168      42,322
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Revenues

   $ 1,989,055    $ 42,154    $ 168    $ 2,031,377
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Unaudited
Nine Months Ended
September 30, 2020
 
     Progressive Leasing      Vive      Other      Consolidated Total  

Lease Revenues and Fees

   $ 1,849,388    $ —      $ —      $ 1,849,388

Interest and Fees on Loans Receivable

     —          29,555      —          29,555
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Revenues

   $ 1,849,388    $ 29,555    $ —      $ 1,878,943
  

 

 

    

 

 

    

 

 

    

 

 

 


Use of Non-GAAP Financial Information:

Non-GAAP net earnings from continuing operations, non-GAAP diluted earnings from continuing operations per share, and adjusted EBITDA are supplemental measures of our performance that are not calculated in accordance with generally accepted accounting principles in the United States (“GAAP”). Non-GAAP net earnings from continuing operations and non-GAAP diluted earnings from continuing operations per share for the three and nine months ended September 30, 2021 and the Company’s full year 2021 outlook, exclude intangible amortization expense, acquisition related transaction costs, and accrued interest on an uncertain tax position related to Progressive Leasing’s $175 million settlement with the FTC in 2020. Non-GAAP net earnings from continuing operations and non-GAAP diluted earnings from continuing operations per share for the three and nine months ended September 30, 2020 exclude intangible amortization expense, restructuring expenses, separation related charges from our spin-off of Aaron’s Business, insurance recoveries for legal and regulatory fees incurred related to Progressive Leasing’s 2020 FTC settlement, and income tax benefits from our revaluation of net operating loss carrybacks resulting from the CARES Act. The amounts for these after-tax non-GAAP adjustments, which are tax effected using our statutory tax rate, can be found in the reconciliation of net earnings from continuing operations and earnings from continuing operations per share assuming dilution to non-GAAP net earnings from continuing operations and earnings from continuing operations per share assuming dilution table in this press release.

The Adjusted EBITDA figures presented in this press release are calculated as the Company’s earnings from continuing operations before interest expense, net, depreciation on property, plant and equipment, amortization of intangible assets and income taxes. Adjusted EBITDA for the three and nine months ended September 30, 2021 and 2020 also excludes stock-based compensation expense, restructuring expenses, acquisition related transaction costs, separation related charges from our spin-off of Aaron’s Business, and insurance recoveries for legal and regulatory fees incurred related to Progressive Leasing’s 2020 FTC settlement. The amounts for these pre-tax non-GAAP adjustments can be found in the three and nine-month segment EBITDA tables in this press release. Adjusted EBITDA for the Company’s full year 2021 outlook is calculated as projected earnings before interest expense, interest income, depreciation on property, plant and equipment, amortization of intangible assets and income taxes. Adjusted EBITDA for the Company’s full year 2021 outlook also excludes stock-based compensation expense and the acquisition related transaction costs.

Management believes that non-GAAP net earnings from continuing operations, non-GAAP diluted earnings from continuing operations per share, and adjusted EBITDA provide relevant and useful information, and are widely used by analysts, investors and competitors in our industry as well as by our management in assessing both consolidated and business unit performance.


Non-GAAP net earnings from continuing operations, non-GAAP diluted earnings from continuing operations, and adjusted EBITDA provide management and investors with an understanding of the results from the primary operations of our business by excluding the effects of certain items that generally arose from larger, one-time transactions that are not reflective of the ordinary earnings activity of our operations or transactions that have variability and volatility of the amount. We believe the exclusion of stock-based compensation expense provides for a better comparison of our operating results with our peer companies as the calculations of stock-based compensation vary from period to period and company to company due to different valuation methodologies, subjective assumptions and the variety of award types. This measure may be useful to an investor in evaluating the underlying operating performance of our business.

Adjusted EBITDA also provides management and investors with an understanding of one aspect of earnings before the impact of investing and financing charges and income taxes. These measures may be useful to an investor in evaluating our operating performance because the measures:

 

   

Are widely used by investors to measure a company’s operating performance without regard to items excluded from the calculation of such measure, which can vary substantially from company to company depending upon accounting methods, book value of assets, capital structure and the method by which assets were acquired, among other factors.

 

   

Are used by rating agencies, lenders and other parties to evaluate our creditworthiness.

 

   

Are used by our management for various purposes, including as a measure of performance of our operating entities and as a basis for strategic planning and forecasting.

Non-GAAP financial measures, however, should not be used as a substitute for, or considered superior to, measures of financial performance prepared in accordance with GAAP, such as the Company’s GAAP basis net earnings from continuing operations and diluted earnings from continuing operations per share and the GAAP revenues and earnings from continuing operations before income taxes of the Company’s segments, which are also presented in the press release. Further, we caution investors that amounts presented in accordance with our definitions of non-GAAP net earnings from continuing operations, non-GAAP diluted earnings from continuing operations per share, and adjusted EBITDA may not be comparable to similar measures disclosed by other companies, because not all companies and analysts calculate these measures in the same manner.


PROG Holdings Inc.

Reconciliation of Net Earnings and Earnings Per Share Assuming Dilution from Continuing Operations to Non-GAAP Net Earnings and Earnings Per Share Assuming Dilution from Continuing Operations

(In thousands, except per share amounts)

 

     Unaudited  
     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  
     2021     2020     2021     2020  

Net Earnings from Continuing Operations

   $ 57,413   $ 74,643   $ 205,738   $ 191,322

Add: Intangible Amortization Expense

     5,723     5,565     16,565     16,697

Add: Separation Related Charges

     —         2,443     —         2,443

Less: Insurance Recoveries Related to Legal and Regulatory Expenses

     —         (835     —         (835

Add: Transaction Expense

     —         —         561     —    

Add: Restructuring Expenses, net

     —         —         —         238

Less: Tax Impact of Adjustments (1)

     (1,488     (1,865     (4,452     (4,821

Add: Accrued Interest on FTC Settlement Uncertain Tax Position

     1,040     —         1,040     —    

Less: NOL Carryback Revaluation

     —         —         —         (35,540
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net Earnings from Continuing Operations

   $ 62,688   $ 79,951   $ 219,452   $ 169,504
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings from Continuing Operations Per Share Assuming Dilution

   $ 0.86   $ 1.10   $ 3.06   $ 2.82

Add: Intangible Amortization Expense

     0.09     0.08     0.25     0.25

Add: Separation Related Charges

     —         0.04     —         0.04

Less: Insurance Recoveries Related to Legal and Regulatory Expenses

     —         (0.01     —         (0.01

Add: Transaction Expense

     —         —         0.01     —    

Less: Tax Impact of Adjustments (1)

     (0.02     (0.03     (0.07     (0.07

Add: Accrued Interest on FTC Settlement Uncertain Tax Position

     0.02     —         0.02     —    

Less: NOL Carryback Revaluation

     —         —         —         (0.52
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Earnings from Continuing Operations Per Share Assuming Dilution(2)

   $ 0.94   $ 1.17   $ 3.26   $ 2.50
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted Average Shares Outstanding Assuming Dilution

     66,385     68,155     67,319     67,849

 

(1)

Adjustments are tax-effected using an assumed statutory tax rate of 26.0%.

(2)

In some cases, the sum of individual EPS amounts may not equal total non-GAAP EPS calculations due to rounding.


PROG Holdings Inc.

Non-GAAP Financial Information

Quarterly Segment EBITDA

(In thousands)

 

     Unaudited
Three Months Ended
September 30, 2021
 
     Progressive Leasing      Vive      Other     Consolidated Total  

Net Earnings from Continuing Operations

           $ 57,413

Income Taxes(1)

             20,464
          

 

 

 

Earnings (Loss) from Continuing Operations Before Income Taxes

   $ 76,435    $ 6,354      (4,912     77,877

Interest Expense

     307      137      —         444

Depreciation

     2,627      240      13     2,880

Amortization

     5,421      —          302     5,723
  

 

 

    

 

 

    

 

 

   

 

 

 

EBITDA

     84,790      6,731      (4,597     86,924

Stock-Based Compensation

     3,587      78      3,002     6,667
  

 

 

    

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 88,377    $ 6,809    $ (1,595   $ 93,591
  

 

 

    

 

 

    

 

 

   

 

 

 

 

(1)

Taxes are calculated on a consolidated basis and are not identifiable by Company Segment.

 

     Unaudited
Three Months Ended
September 30, 2020
 
     Progressive Leasing     Vive     Unallocated
Corporate Expenses
    Consolidated Total  

Net Earnings from Continuing Operations

         $ 74,643

Income Taxes(1)

           21,005
        

 

 

 

Earnings (Loss) from Continuing Operations Before Income Taxes

   $ 106,682   $ (2,347   $ (8,687     95,648

Depreciation

     2,208     196     —         2,404

Amortization

     5,420     145     —         5,565
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     114,310     (2,006     (8,687     103,617

Insurance Recoveries Related to Legal and Regulatory Expenses

     (835     —         —         (835

Stock-Based Compensation(2)

     2,931     141     2,345     5,417

Separation Costs

     1,765     —         678     2,443
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 118,171   $ (1,865   $ (5,664   $ 110,642
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Taxes are calculated on a consolidated basis and are not identifiable by Company Segment.

(2)

2020 quarterly Adjusted EBITDA metrics have been updated to add-back Stock-based compensation to conform to management’s 2021 definition of Adjusted EBITDA.


PROG Holdings Inc.

Non-GAAP Financial Information

Nine Month Segment EBITDA

(In thousands)

 

     Unaudited
Nine Months Ended
September 30, 2021
 
     Progressive Leasing      Vive      Other     Consolidated Total  

Net Earnings from Continuing Operations

           $ 205,738

Income Taxes(1)

             69,609
          

 

 

 

Earnings (Loss) from Continuing Operations Before Income Taxes

   $ 268,128    $ 12,131    $ (4,912     275,347

Interest Expense

     1,062      330      —         1,392

Depreciation

     7,253      625      13     7,891

Amortization

     16,263      —          302     16,565
  

 

 

    

 

 

    

 

 

   

 

 

 

EBITDA

     292,706      13,086      (4,597     301,195

Stock-Based Compensation

     11,592      209      3,002     14,803

Transaction Expense

     561      —          —         561
  

 

 

    

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 304,859    $ 13,295    $ (1,595   $ 316,559
  

 

 

    

 

 

    

 

 

   

 

 

 

 

(1)

Taxes are calculated on a consolidated basis and are not identifiable by Company Segment.

 

     Unaudited
Nine Months Ended
September 30, 2020
 
     Progressive Leasing     Vive     Unallocated
Corporate Expenses
    Consolidated Total  

Net Earnings from Continuing Operations

         $ 191,322

Income Taxes(1)

           13,915
        

 

 

 

Earnings (Loss) from Continuing Operations Before Income Taxes

   $ 232,502   $ (7,873   $ (19,392     205,237

Depreciation

     6,508     623     —         7,131

Amortization

     16,262     435     —         16,697
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     255,272     (6,815     (19,392     229,065

Insurance Recoveries Related to Legal and Regulatory Expenses

     (835     —         —         (835

Stock-Based Compensation(2)

     8,937     321     6,574     15,832

Restructuring Expenses, Net

     —         —         238     238

Separation Costs

     1,765     —         678     2,443
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 265,139   $ (6,494   $ (11,902   $ 246,743
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Taxes are calculated on a consolidated basis and are not identifiable by Company Segment.

(2)

2020 quarterly Adjusted EBITDA metrics have been updated to add-back Stock-based compensation to conform to management’s 2021 definition of Adjusted EBITDA.


PROG Holdings Inc.

Gross Merchandise Volume by Quarter

(In thousands)

 

     Three Months Ended      Year Ended      Three Months Ended  
     Mar 31,      Jun 30,      Sept 30,      Dec 31,      Dec 31,      Mar 31,      Jun 30,      Sept 30,  
    

 

     2020     

 

     2020     

 

     2021     

 

 

Progressive Leasing

   $ 462,025    $ 404,018    $ 448,843    $ 536,422    $ 1,851,308    $ 510,046    $ 505,971    $ 493,277

Vive

     25,376      21,536      37,883      45,956      130,751      55,898      51,701      49,085

Other

     —          —          —          —          —          —          —          2,655
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 487,401    $ 425,554    $ 486,726    $ 582,378    $ 1,982,059    $ 565,944    $ 557,672    $ 545,017
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


Reconciliation of Full Year 2021 Outlook for Adjusted EBITDA

(In thousands)

 

     Full Year 2021 Ranges  
     Consolidated  

Estimated Net Earnings

   $ 248,000-$252,000  

Taxes

     84,500-85,000  
  

 

 

 

Projected Earnings Before Taxes

     332,500-337,000  

Interest Expense

     1,900  

Depreciation

     11,100  

Amortization

     22,500  
  

 

 

 

Projected EBITDA

     368,000-372,500  

Stock-Based Compensation

     22,000-22,500  
  

 

 

 

Projected Adjusted EBITDA

   $ 390,000-$395,000  
  

 

 

 


Reconciliation of Full Year 2021 Outlook for Earnings Per Share

Assuming Dilution to Non-GAAP Earnings Per Share Assuming Dilution

 

     Full Year 2021 Range  
     Low      High  

Projected Earnings Per Share Assuming Dilution

   $ 3.62    $ 3.71

Add Projected Intangible Amortization Expense

     0.24      0.24

Add Acquisition transaction costs

     0.01      0.01

Add Projected Interest on FTC Settlement Uncertain Tax Position

     0.03      0.03
  

 

 

    

 

 

 

Projected Non-GAAP Earnings Per Share Assuming Dilution

   $ 3.90    $ 3.99