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CORRECTING and REPLACING PROG Holdings Exceeds First Quarter 2023 Expectations, Raises Full-Year Earnings Outlook

  • Consolidated revenues of $655.1 million, earnings before taxes of $67.6 million;
  • Adjusted EBITDA of $89.7 million, increase of 38.9% year-over-year
  • Diluted EPS of $1.00; Non-GAAP Diluted EPS of $1.11, up 94.7% year-over-year
  • Progressive Leasing write-offs of 6.0%, down from 7.3% in Q1 2022
  • E-commerce increased 100bps to 16.9% of Progressive Leasing GMV

There have been edits made to correct a clerical error with respect to the range of Earnings Before Taxes for Progressive Leasing set forth in the Company’s Revised 2023 Outlook, and within the related Reconciliation of Revised Full Year 2023 Outlook for Adjusted EBITDA. Also, the headline for the table now titled “Gross Merchandise Volume by Quarter” was corrected from what was previously titled “Quarterly Revenues by Segment.”

The updated release reads:

PROG HOLDINGS EXCEEDS FIRST QUARTER 2023 EXPECTATIONS, RAISES FULL-YEAR EARNINGS OUTLOOK

  • Consolidated revenues of $655.1 million, earnings before taxes of $67.6 million;
  • Adjusted EBITDA of $89.7 million, increase of 38.9% year-over-year
  • Diluted EPS of $1.00; Non-GAAP Diluted EPS of $1.11, up 94.7% year-over-year
  • Progressive Leasing write-offs of 6.0%, down from 7.3% in Q1 2022
  • E-commerce increased 100bps to 16.9% of Progressive Leasing GMV

PROG Holdings, Inc. (NYSE:PRG), the fintech holding company for Progressive Leasing, Vive Financial, and Four Technologies, today announced financial results for the first quarter ended March 31, 2023.

"We're pleased with our strong start to the year, with first quarter results exceeding expectations due to a favorable shift in our lease dispositions and the decisive actions we have taken to strengthen our portfolio and reduce our operating expenses," said PROG Holdings President and CEO Steve Michaels. "The strength of our first quarter earnings combined with the current stability of our lease portfolio gives us the confidence to increase our earnings outlook for the year despite continued soft consumer demand in our key categories. We have been successful in our efforts to protect our margins and position our company for long-term success regardless of macroeconomic conditions and expect to continue to do so during this uncertain environment. Our financial strength, highlighted by strong margins and cash flow, continues to enable us to selectively invest in key initiatives to support our longer-term growth plans at a time when growth is challenged," concluded Michaels.

Consolidated revenues for the first quarter of 2023 were $655.1 million, a decrease of 7.8% from the same period in 2022 due to tightened lease decisioning in mid-2022, decreased customer demand for leasable goods, and a year-over-year decline in the number of customers exercising early lease buyouts. This decline in revenues was partially offset by year-over-year improvements in customer payment behavior during the first quarter of 2023.

The Company reported consolidated net earnings for the first quarter of 2023 of $48.0 million, compared with $27.1 million in the prior year period. Adjusted EBITDA for the quarter increased 38.9% to $89.7 million, or 13.7% of revenues, compared with $64.6 million, or 9.1% of revenues for the same period in 2022. The year-over-year growth in Adjusted EBITDA was driven primarily by historically low 90 day buyout activity for the period, improved customer payment behavior resulting from prior lease decisioning tightening, benefit from previous cost-cutting measures, and continued portfolio management.

Diluted earnings per share for the first quarter of 2023 were $1.00 compared with $0.49 in the year ago period. On a non-GAAP basis, diluted earnings per share were $1.11 in the first quarter of 2023, compared with $0.57 for the same quarter in 2022. Our weighted average shares outstanding assuming dilution in the first quarter was 13.6% lower than the same quarter in 2022.

Progressive Leasing Results

Progressive Leasing's first quarter GMV decreased 17.0% to $418.7 million compared with the same period in 2022, primarily due to the Company's current decisioning posture on lease approvals and weaker traffic patterns for its retail partners. E-commerce GMV within the segment decreased 11.7% year-over-year; however, the rate of decline in e-commerce was less than in-store, and the channel increased 100 basis points to 16.9% of the segment's total GMV in the first quarter of 2023. The provision for lease merchandise write-offs declined to 6.0% of lease revenues in the first quarter of 2023, driven by continued portfolio management and strong customer payment behavior. The Company continued to see improved delinquency trends within the quarter as a result of the steps taken to tighten decisioning in 2022.

Liquidity and Capital Allocation

PROG Holdings ended the first quarter of 2023 with cash of $249.8 million and gross debt of $600 million. The Company repurchased $36.5 million of its stock in the quarter at an average price of $25 per share and has $300.8 million remaining under its previously announced $1 billion share repurchase program.

2023 Outlook

The Company is revising upwards its full year earnings outlook, lowering modestly our revenue expectations, and providing a Q2 2023 outlook for revenues, net earnings, adjusted EBITDA, GAAP diluted EPS, and non-GAAP diluted EPS. The strength of our Q1 earnings combined with the anticipation that gross margins will be a larger tailwind than originally expected are the primary factors informing the increase in our annual earnings outlook. This outlook assumes a difficult operating environment with continued soft demand for consumer durable goods, no material changes in the Company's decisioning posture or portfolio performance, and no impact from additional share repurchases.

 

Revised Outlook

 

Previous Outlook

(In thousands, except per share amounts)

Low

 

High

 

Low

 

High

 

 

 

 

 

PROG Holdings - Total Revenues

$

2,300,000

 

$

2,375,000

 

$

2,340,000

 

$

2,440,000

 

PROG Holdings - Net Earnings

 

99,500

 

 

112,500

 

 

82,500

 

 

103,500

 

PROG Holdings - Adjusted EBITDA

 

235,000

 

 

255,000

 

 

215,000

 

 

245,000

 

PROG Holdings - Diluted EPS

 

2.09

 

 

2.37

 

 

1.69

 

 

2.12

 

PROG Holdings - Diluted Non-GAAP EPS

 

2.50

 

 

2.77

 

 

2.11

 

 

2.54

 

 

 

 

 

 

Progressive Leasing - Total Revenues

 

2,235,000

 

 

2,305,000

 

 

2,275,000

 

 

2,370,000

 

Progressive Leasing - Earnings Before Taxes

 

168,000

 

 

180,000

 

 

147,000

 

 

167,000

 

Progressive Leasing - Adjusted EBITDA

 

248,000

 

 

261,000

 

 

228,000

 

 

251,000

 

 

 

 

 

 

Vive - Total Revenues

 

65,000

 

 

70,000

 

 

65,000

 

 

70,000

 

Vive - Earnings Before Taxes

 

2,500

 

 

4,500

 

 

2,500

 

 

4,500

 

Vive - Adjusted EBITDA

 

5,000

 

 

8,000

 

 

5,000

 

 

8,000

 

 

 

 

 

 

Other - Loss Before Taxes

 

(26,000

)

 

(23,000

)

 

(26,000

)

 

(23,000

)

Other - Adjusted EBITDA

 

(18,000

)

 

(14,000

)

 

(18,000

)

 

(14,000

)

 

 

Three Months Ended June 30, 2023

Outlook

(In thousands, except per share amounts)

Low

High

 

 

 

PROG Holdings - Total Revenues

$

565,000

$

585,000

PROG Holdings - Net Earnings

 

24,000

 

 

28,000

 

PROG Holdings - Adjusted EBITDA

 

60,000

 

 

65,000

 

PROG Holdings - Diluted EPS

 

0.51

 

 

0.59

 

PROG Holdings - Diluted Non-GAAP EPS

 

0.62

 

 

0.70

 

 

Conference Call and Webcast

The Company has scheduled a live webcast and conference call for Wednesday, April 26th, 2023, at 8:30 A.M. ET to discuss its financial results for the first quarter of 2023. To access the live webcast, visit the Events and Presentations page of the Company’s Investor Relations website, https://investor.progholdings.com/.

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, a 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.

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", "outlook", "should", and similar forward-looking terminology. These risks and uncertainties include factors such as (i) continued volatility and challenges in the macro environment and, in particular, the unfavorable effects on our business of the rapid increase in the rate of inflation currently being experienced in the economy, which has not been seen in more than forty years, significant increases in interest rates, and fears of a recession, and the impact of those headwinds on: (a) consumer confidence and customer demand for the merchandise that our POS partners sell; (b) our customers’ disposable income and their ability to make the lease and loan payments they owe the company; (c) the availability of consumer credit; (d) our labor costs; and (e) our overall financial performance and outlook; (ii) our businesses being subject to extensive laws and regulations, including laws and regulations unique to the industries in which our businesses operate, that may subject them to government investigations and significant monetary penalties and compliance-related burdens, as well as an increased focus by federal, state and local regulators on the industries within which our businesses operate, including with respect to consumer protection, customer privacy, third party and employee fraud and information security; (iii) deteriorating macroeconomic conditions resulting in the algorithms and other proprietary decisioning tools used in approving Progressive Leasing and Vive customers for leases and loans no longer being indicative of their ability to perform, which may limit the ability of those businesses to avoid lease and loan charge-offs or may result in their reserves being insufficient to cover actual losses; (iv) a large percentage of the company’s revenues being concentrated with several of Progressive Leasing’s key POS partners; (v) the risks that Progressive Leasing will be unable to attract new POS partners or retain and grow its business with its existing POS partners; (vi) Vive’s and Four’s business models differing significantly from Progressive Leasing’s, which creates specific and unique risks for the Vive and Four businesses, including Vive’s reliance on two bank partners to issue its credit products and Vive’s and Four’s exposure to the unique regulatory risks associated with the laws and regulations that apply to their businesses; (vii) the risks that interruptions, inventory shortages and other factors affecting the supply chains of our retail partners having a material and adverse effect on several aspects of our performance; (viii) the impact of the COVID-19 pandemic, including new variants, subvariants or additional waves of COVID-19 infections, on: (a) demand for the lease-to-own products offered by our Progressive Leasing segment, (b) Progressive Leasing’s point-of-sale or "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 POS partners being able to obtain the merchandise their 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; (ix) changes in the enforcement of existing laws and regulations and the adoption of new laws and regulations that may unfavorably impact our businesses; (x) the risk that our capital allocation strategy, including our current share repurchase program, will not be effective at enhancing shareholder value; (xi) our cost reduction initiatives may not be adequate or may have unintended consequences that could be disruptive to our businesses; (xii) the loss of the services of our key executives or our inability to attract and retain key talent, particularly with respect to our information technology function, may have a material adverse impact on our operations; (xiii) increased competition from traditional and virtual lease-to-own competitors and also from competitors of our Vive segment; (xiv) adverse consequences to Progressive Leasing, including additional monetary penalties and/or injunctive relief, if it fails to comply with the terms of its 2020 settlement with the FTC, as well as the possibility of other regulatory authorities and third parties bringing legal actions against Progressive Leasing based on the same allegations that led to the FTC settlement; (xv) our increased level of indebtedness; (xvi) 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; and (xvii) 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, 2022, filed with the SEC on February 22, 2023. Statements in this press release that are "forward-looking" include without limitation statements about: (i) the strength of our margins and our ability to protect them; (ii) our ability to invest in initiatives to support our longer-term growth, and the outcome of those growth initiatives; and (iii) our revised full year outlook and our second-quarter 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.

 

PROG Holdings, Inc.

Consolidated Statements of Earnings

(In thousands, except per share data)

 

 

 

 

 

(Unaudited)

Three Months Ended

 

 

March 31,

 

 

2023

 

2022

REVENUES:

 

 

 

Lease Revenues and Fees

$

637,082

 

 

$

692,914

 

Interest and Fees on Loans Receivable

 

18,058

 

 

 

17,550

 

 

 

655,140

 

 

 

710,464

 

 

 

 

 

COSTS AND EXPENSES:

 

 

 

Depreciation of Lease Merchandise

 

435,439

 

 

 

497,011

 

Provision for Lease Merchandise Write-offs

 

38,364

 

 

 

50,330

 

Operating Expenses

 

105,259

 

 

 

113,658

 

 

 

579,062

 

 

 

660,999

 

OPERATING PROFIT

 

76,078

 

 

 

49,465

 

Interest Expense, Net

 

(8,491

)

 

 

(9,629

)

EARNINGS BEFORE INCOME TAX EXPENSE

 

67,587

 

 

 

39,836

 

INCOME TAX EXPENSE

 

19,554

 

 

 

12,701

 

NET EARNINGS

$

48,033

 

 

$

27,135

 

EARNINGS PER SHARE

 

 

 

Basic

$

1.00

 

 

$

0.49

 

Assuming Dilution

$

1.00

 

 

$

0.49

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING:

 

 

 

Basic

 

47,854

 

 

 

55,402

 

Assuming Dilution

 

48,139

 

 

 

55,706

 

 

PROG Holdings, Inc.

Consolidated Balance Sheets

(In thousands, except share data)

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

March 31,

2023

 

December 31,

2022

ASSETS:

 

 

 

 

Cash and Cash Equivalents

 

$

249,844

 

 

$

131,880

 

Accounts Receivable (net of allowances of $65,170 in 2023 and $69,264 in 2022)

 

 

55,819

 

 

 

64,521

 

Lease Merchandise (net of accumulated depreciation and allowances of $454,444 in 2023 and $467,355 in 2022)

 

 

571,668

 

 

 

648,043

 

Loans Receivable (net of allowances and unamortized fees of $50,149 in 2023 and $53,635 in 2022)

 

 

122,352

 

 

 

130,966

 

Property and Equipment, Net

 

 

23,253

 

 

 

23,852

 

Operating Lease Right-of-Use Assets

 

 

11,234

 

 

 

11,875

 

Goodwill

 

 

296,061

 

 

 

296,061

 

Other Intangibles, Net

 

 

108,688

 

 

 

114,411

 

Income Tax Receivable

 

 

14,054

 

 

 

18,864

 

Deferred Income Tax Assets

 

 

2,955

 

 

 

2,955

 

Prepaid Expenses and Other Assets

 

 

53,658

 

 

 

48,481

 

Total Assets

 

$

1,509,586

 

 

$

1,491,909

 

LIABILITIES & SHAREHOLDERS’ EQUITY:

 

 

 

 

Accounts Payable and Accrued Expenses

 

$

152,379

 

 

$

135,025

 

Deferred Income Tax Liabilities

 

 

126,901

 

 

 

137,261

 

Customer Deposits and Advance Payments

 

 

34,481

 

 

 

37,074

 

Operating Lease Liabilities

 

 

19,742

 

 

 

21,122

 

Debt

 

 

591,291

 

 

 

590,966

 

Total Liabilities

 

 

924,794

 

 

 

921,448

 

SHAREHOLDERS' EQUITY:

 

 

 

 

Common Stock, Par Value $0.50 Per Share: Authorized: 225,000,000 Shares at March 31, 2023 and December 31, 2022; Shares Issued: 82,078,654 at March 31, 2023 and December 31, 2022

 

 

41,039

 

 

 

41,039

 

Additional Paid-in Capital

 

 

337,103

 

 

 

338,814

 

Retained Earnings

 

 

1,202,268

 

 

 

1,154,235

 

 

 

 

1,580,410

 

 

 

1,534,088

 

Less: Treasury Shares at Cost

 

 

 

 

Common Stock: 35,336,539 Shares at March 31, 2023 and 34,044,102 at December 31, 2022

 

 

(995,618

)

 

 

(963,627

)

Total Shareholders’ Equity

 

 

584,792

 

 

 

570,461

 

Total Liabilities & Shareholders’ Equity

 

$

1,509,586

 

 

$

1,491,909

 

 

PROG Holdings, Inc.

Consolidated Statements of Cash Flows

(In thousands)

 

 

 

 

 

(Unaudited)

Three Months Ended March 31,

 

 

2023

 

2022

OPERATING ACTIVITIES:

 

 

 

Net Earnings

$

48,033

 

 

$

27,135

 

Adjustments to Reconcile Net Earnings to Cash Provided by Operating Activities:

 

 

 

Depreciation of Lease Merchandise

 

435,439

 

 

 

497,011

 

Other Depreciation and Amortization

 

7,979

 

 

 

8,482

 

Provisions for Accounts Receivable and Loan Losses

 

78,665

 

 

 

96,230

 

Stock-Based Compensation

 

5,415

 

 

 

6,623

 

Deferred Income Taxes

 

(10,360

)

 

 

6,100

 

Non-Cash Lease Expense

 

(739

)

 

 

274

 

Other Changes, Net

 

(814

)

 

 

(1,709

)

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

 

 

 

Additions to Lease Merchandise

 

(399,289

)

 

 

(480,113

)

Book Value of Lease Merchandise Sold or Disposed

 

40,225

 

 

 

51,933

 

Accounts Receivable

 

(61,249

)

 

 

(94,743

)

Prepaid Expenses and Other Assets

 

(5,087

)

 

 

(9,395

)

Income Tax Receivable and Payable

 

26,295

 

 

 

841

 

Operating Lease Right-of-Use Assets and Liabilities

 

 

 

 

(556

)

Accounts Payable and Accrued Expenses

 

(4,501

)

 

 

(4,237

)

Customer Deposits and Advance Payments

 

(2,593

)

 

 

(5,577

)

Cash Provided by Operating Activities

 

157,419

 

 

 

98,299

 

INVESTING ACTIVITIES:

 

 

 

Investments in Loans Receivable

 

(43,045

)

 

 

(42,323

)

Proceeds from Loans Receivable

 

44,128

 

 

 

39,052

 

Outflows on Purchases of Property and Equipment

 

(1,678

)

 

 

(2,328

)

Proceeds from Property and Equipment

 

5

 

 

 

6

 

Proceeds from Acquisitions of Businesses

 

 

 

 

7

 

Cash Used in Investing Activities

 

(590

)

 

 

(5,586

)

FINANCING ACTIVITIES:

 

 

 

Acquisition of Treasury Stock

 

(36,472

)

 

 

(78,080

)

Tender Offer Shares Repurchased and Retired

 

 

 

 

199

 

Shares Withheld for Tax Payments

 

(2,393

)

 

 

(2,516

)

Debt Issuance Costs

 

 

 

 

1,535

 

Cash Used in Financing Activities

 

(38,865

)

 

 

(78,862

)

Increase in Cash and Cash Equivalents

 

117,964

 

 

 

13,851

 

Cash and Cash Equivalents at Beginning of Period

 

131,880

 

 

 

170,159

 

Cash and Cash Equivalents at End of Period

$

249,844

 

 

$

184,010

 

Net Cash Paid During the Period:

 

 

 

Interest Expense

$

268

 

 

$

185

 

Income Taxes

$

2,532

 

 

$

4,157

 

 

PROG Holdings, Inc.

Quarterly Revenues by Segment

(In thousands)

 

 

 

 

 

(Unaudited)

 

 

Three Months Ended

 

 

March 31, 2023

 

 

Progressive Leasing

 

Vive

 

Other

 

Consolidated Total

Lease Revenues and Fees

$

637,082

$

$

$

637,082

Interest and Fees on Loans Receivable

 

 

17,153

 

905

 

18,058

Total Revenues

$

637,082

$

17,153

$

905

$

655,140

 

(Unaudited)

 

Three Months Ended

 

March 31, 2022

 

Progressive Leasing

 

Vive

 

Other

 

Consolidated Total

Lease Revenues and Fees

$

692,914

$

$

$

692,914

Interest and Fees on Loans Receivable

 

 

17,116

 

434

 

17,550

Total Revenues

$

692,914

$

17,116

$

434

$

710,464

 

PROG Holdings, Inc.

Gross Merchandise Volume by Quarter

(In thousands)

 

 

 

 

 

(Unaudited)

 

 

Three Months Ended March 31,

 

 

2023

 

2022

Progressive Leasing

$

418,683

$

504,462

Vive

 

36,530

 

42,614

Other

 

13,607

 

7,086

Total

$

468,820

$

554,162

 

Use of Non-GAAP Financial Information:

Non-GAAP net earnings, non-GAAP diluted earnings 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 and non-GAAP diluted earnings per share for the three months ended March 31, 2023, full year 2023 outlook and second quarter 2023 outlook exclude intangible amortization expense, restructuring expenses, regulatory insurance recoveries, 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 and non-GAAP diluted earnings per share for the three months ended March 31, 2022 exclude intangible amortization expense and accrued interest on an uncertain tax position related to Progressive Leasing's $175 million settlement with the FTC in 2020. The amount for the after-tax non-GAAP adjustment, which is tax effected using our statutory tax rate, can be found in the reconciliation of net earnings and earnings per share assuming dilution to non-GAAP net earnings and earnings 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 before interest expense, net, depreciation on property and equipment, amortization of intangible assets and income taxes. Adjusted EBITDA for the three months ended March 31, 2023, full year 2023 outlook and second quarter 2023 outlook exclude stock-based compensation expense, restructuring expenses, and regulatory insurance recoveries. Adjusted EBITDA for the three months ended March 31, 2022 exclude stock-based compensation expense. The amounts for these pre-tax non-GAAP adjustments can be found in the three segment EBITDA tables in this press release.

Management believes that non-GAAP net earnings, non-GAAP diluted earnings 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, non-GAAP diluted earnings, 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 and diluted earnings per share and the GAAP revenues and earnings 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, non-GAAP diluted earnings 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 to Non-GAAP Net Earnings and Earnings Per Share Assuming Dilution

(In thousands, except per share amounts)

 

 

 

 

 

(Unaudited)

 

 

Three Months Ended

 

 

March 31,

 

 

2023

 

2022

Net Earnings

$

48,033

 

$

27,135

 

Add: Intangible Amortization Expense

 

5,724

 

 

5,724

 

Add: Restructuring Expense

 

757

 

 

 

Less: Tax Impact of Adjustments(1)

 

(1,549

)

 

(1,488

)

Add: Accrued Interest on FTC Settlement Uncertain Tax Position

 

970

 

 

539

 

Less: Regulatory Insurance Recoveries

 

(525

)

 

 

Non-GAAP Net Earnings

$

53,410

 

$

31,910

 

Earnings Per Share Assuming Dilution

$

1.00

 

$

0.49

 

Add: Intangible Amortization Expense

 

0.12

 

 

0.10

 

Add: Restructuring Expense

 

0.02

 

 

 

Less: Tax Impact of Adjustments(1)

 

(0.03

)

 

(0.03

)

Add: Accrued Interest on FTC Settlement Uncertain Tax Position

 

0.02

 

 

0.01

 

Less: Regulatory Insurance Recoveries

 

(0.01

)

 

 

Non-GAAP Earnings Per Share Assuming Dilution(2)

$

1.11

 

$

0.57

 

Weighted Average Shares Outstanding Assuming Dilution

 

48,139

 

 

55,706

 

(1)

Adjustments are tax-effected using an assumed statutory tax rate of 26%.

(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

 

 

March 31, 2023

 

 

Progressive Leasing

 

Vive

 

Other

 

Consolidated Total

Net Earnings

 

 

 

$

48,033

 

Income Tax Expense(1)

 

 

 

 

19,554

 

Earnings (Loss) Before Income Tax Expense

$

71,051

 

$

2,163

$

(5,627

)

 

67,587

 

Interest Expense

 

8,200

 

 

291

 

 

 

 

8,491

 

Depreciation

 

1,905

 

 

168

 

 

182

 

 

2,255

 

Amortization

 

5,421

 

 

 

 

303

 

 

5,724

 

EBITDA

 

86,577

 

 

2,622

 

 

(5,142

)

 

84,057

 

Stock-Based Compensation

 

3,553

 

 

288

 

 

1,574

 

 

5,415

 

Restructuring Expense

 

757

 

 

 

 

 

 

757

 

Regulatory Insurance Recoveries

 

(525

)

 

 

 

 

 

(525

)

Adjusted EBITDA

$

90,362

 

$

2,910

 

$

(3,568

)

$

89,704

 

(1)

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

 

 

(Unaudited)

 

Three Months Ended

 

March 31, 2022

 

Progressive Leasing

 

Vive

 

Other

 

Consolidated Total

Net Earnings

 

 

 

$

27,135

 

Income Tax Expense(1)

 

 

 

 

12,701

 

Earnings (Loss) Before Income Tax Expense

$

42,081

$

4,423

$

(6,668

)

 

39,836

Interest Expense

 

9,523

 

 

106

 

 

 

 

9,629

 

Depreciation

 

2,529

 

 

197

 

 

32

 

 

2,758

 

Amortization

 

5,421

 

 

 

 

303

 

 

5,724

 

EBITDA

 

59,554

 

 

4,726

 

 

(6,333

)

 

57,947

 

Stock-Based Compensation

 

3,958

 

 

88

 

 

2,577

 

 

6,623

 

Adjusted EBITDA

$

63,512

 

$

4,814

 

$

(3,756

)

$

64,570

 

(1)

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

 

PROG Holdings, Inc.

Non-GAAP Financial Information

Reconciliation of Revised Full Year 2023 Outlook for Adjusted EBITDA

(In thousands)

 

 

 

Fiscal Year 2023 Ranges

 

Progressive Leasing

Vive

Other

Consolidated Total

Estimated Net Earnings

 

 

 

$99,500 - $112,500

Income Tax Expense(1)

 

 

 

45,000 - 49,000

Projected Earnings Before Income Tax Expense

$168,000 - $180,000

$2,500 - $4,500

$(26,000) - $(23,000)

144,500 - 161,500

Interest Expense

32,000

1,000

33,000

Depreciation

9,000

1,000

1,500

11,500

Amortization

21,000

1,500

22,500

Projected EBITDA

230,000 - 242,000

4,500 - 6,500

(23,000) - (20,000)

211,500 - 228,500

Stock-Based Compensation

18,000 - 19,000

500 - 1,500

5,000 - 6,000

23,500 - 26,500

Projected Adjusted EBITDA

$248,000 - $261,000

$5,000 - $8,000

$(18,000) - $(14,000)

$235,000 - $255,000

(1)

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

 

PROG Holdings, Inc.

Non-GAAP Financial Information

Reconciliation of Previous Full Year 2023 Outlook for Adjusted EBITDA

(In thousands)

 

 

 

 

 

Fiscal Year 2023 Ranges

 

 

Progressive Leasing

 

Vive

 

Other

 

Consolidated Total

Estimated Net Earnings

 

 

 

 

 

 

$82,500 - $103,500

Income Tax Expense(1)

 

 

 

 

 

 

41,000 - 45,000

Projected Earnings Before Income Tax Expense

$147,000 - $167,000

 

$2,500 - $4,500

 

$(26,000) - $(23,000)

 

123,500 - 148,500

Interest Expense

34,000

 

1,000

 

 

35,000

Depreciation

8,000

 

1,000

 

1,500

 

10,500

Amortization

22,000

 

 

1,500

 

23,500

Projected EBITDA

211,000 - 231,000

 

4,500 - 6,500

 

(23,000) - (20,000)

 

192,500 - 217,500

Stock-Based Compensation

17,000 - 20,000

 

500 - 1,500

 

5,000 - 6,000

 

22,500 - 27,500

Projected Adjusted EBITDA

$228,000 - $251,000

 

$5,000 - $8,000

 

$(18,000) - $(14,000)

 

$215,000 - $245,000

(1)

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

 

PROG Holdings, Inc.

Non-GAAP Financial Information

Reconciliation of the Three Months Ended June 30, 2023 Outlook for Adjusted EBITDA

(In thousands)

 

 

 

 

 

Three Months Ended June 30, 2023 Outlook

 

 

Consolidated Total

Estimated Net Earnings

$24,000 - $28,000

Income Tax Expense(1)

11,000 - 12,000

Projected Earnings Before Income Tax Expense

35,000 - 40,000

Interest Expense

9,000

Depreciation

3,000

Amortization

6,000

Projected EBITDA

53,000 - 58,000

Stock-Based Compensation

7,000

Projected Adjusted EBITDA

$60,000 - $65,000

(1)

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

 

PROG Holdings, Inc.

Reconciliation of Revised Full Year 2023 Outlook for Earnings Per Share

Assuming Dilution to Non-GAAP Earnings Per Share Assuming Dilution

 

 

 

 

 

Full Year 2023 Range

 

 

Low

 

High

Projected Earnings Per Share Assuming Dilution

$

2.09

 

$

2.37

 

Add: Projected Intangible Amortization Expense

 

0.47

 

 

0.47

 

Add: Projected Interest on FTC Settlement Uncertain Tax Position

 

0.06

 

 

0.06

 

Subtract: Tax Effect on Non-GAAP Adjustments(1)

 

(0.12

)

 

(0.12

)

Projected Non-GAAP Earnings Per Share Assuming Dilution(2)

$

2.50

 

$

2.77

 

(1)

Adjustments are tax-effected using an assumed statutory tax rate of 26%.

(2)

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

 

PROG Holdings, Inc.

Reconciliation of Previous Full Year 2023 Outlook for Earnings Per Share

Assuming Dilution to Non-GAAP Earnings Per Share Assuming Dilution

 

 

 

 

 

Full Year 2023 Range

 

 

Low

 

High

Projected Earnings Per Share Assuming Dilution

$

1.69

 

$

2.12

 

Add: Projected Intangible Amortization Expense

 

0.48

 

 

0.48

 

Add: Projected Interest on FTC Settlement Uncertain Tax Position

 

0.06

 

 

0.06

 

Subtract: Tax Effect on Non-GAAP Adjustments(1)

 

(0.13

)

 

(0.13

)

Projected Non-GAAP Earnings Per Share Assuming Dilution(2)

$

2.11

 

$

2.54

 

(1)

Adjustments are tax-effected using an assumed statutory tax rate of 26%.

(2)

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

 

PROG Holdings, Inc.

Reconciliation of the Three Months Ended June 30, 2023 Outlook for Earnings Per Share

Assuming Dilution to Non-GAAP Earnings Per Share Assuming Dilution

 

 

 

 

 

Three Months Ended June 30, 2023

 

 

Low

 

High

Projected Earnings Per Share Assuming Dilution

$

0.51

 

$

0.59

 

Add: Projected Intangible Amortization Expense

 

0.13

 

 

0.13

 

Add: Projected Interest on FTC Settlement Uncertain Tax Position

 

0.02

 

 

0.02

 

Subtract: Tax Effect on Non-GAAP Adjustments(1)

 

(0.03

)

 

(0.03

)

Projected Non-GAAP Earnings Per Share Assuming Dilution(2)

$

0.62

 

$

0.70

 

(1)

Adjustments are tax-effected using an assumed statutory tax rate of 26%.

(2)

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

 

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