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PROG Holdings Exceeds Second Quarter 2023 Expectations, Raises Full-Year Financial Outlook

  • Consolidated revenues of $592.8 million
  • Earnings before taxes of $52.0 million
  • Adjusted EBITDA of $75.0 million, increase of 44% year-over-year
  • Diluted EPS of $0.79; Non-GAAP Diluted EPS of $0.92, up 76.9% year-over-year
  • Progressive Leasing write-offs of 7.1%, down from 9.8% in Q2 2022

PROG Holdings, Inc. (NYSE:PRG), the fintech holding company for Progressive Leasing, Vive Financial, Four Technologies, and Build today announced financial results for the second quarter ended June 30, 2023.

"Our second quarter results exceeded our expectations, driven by strong portfolio performance and disciplined SG&A management," said Steve Michaels, PROG Holdings' President and CEO. "The stability of our lease portfolio and continuing favorable trends, despite soft consumer demand in key leasable categories, gives us the confidence to increase our full-year 2023 outlook. Furthermore, the results we have achieved year-to-date and the results we expect in the remainder of the year incorporate meaningful investments in various initiatives which we believe support our strategic long-term growth plans," concluded Michaels.

Consolidated revenues for the second quarter of 2023 were $592.8 million, a decrease of 8.7% from the same period in 2022, caused primarily by the headwinds from Progressive Leasing’s Q2 2022 decisioning tightening, slow customer demand for leasable goods, and continued year-over-year declines in the number of customers choosing to utilize early lease buyout options. This decline in revenues was partially offset by continued strong Progressive Leasing customer payment behavior during the quarter.

Consolidated net earnings for the quarter were $37.2 million, compared with $19.5 million in the prior year period. Adjusted EBITDA for the quarter increased 44% to $75.0 million, or 13% of revenues, compared with $52.2 million, or 8% 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, strong customer payment behavior due to prior lease decisioning tightening, and continued benefits from previous cost-cutting measures.

Diluted earnings per share for the second quarter of 2023 were $0.79, compared with $0.37 in the year ago period. On a non-GAAP basis, diluted earnings per share were $0.92 in the second quarter of 2023, compared with $0.52 for the same period in 2022. The Company's weighted average shares outstanding assuming dilution in the second quarter was 11.5% lower year-over-year.

Progressive Leasing Results

Progressive Leasing's second quarter GMV decreased 14.7% to $421.2 million compared with the same period in 2022, primarily due to the Company's tighter decisioning posture this year compared with last year, and continued weakness in demand for consumer durable goods. The provision for lease merchandise write-offs declined to 7.1% of lease revenues in the second quarter of 2023, due to continued portfolio management and strong customer payment behavior. Delinquencies improved year-over-year as a result of the Company's previous decisioning tightening. Gross margins also benefited from fewer customers choosing to utilize 90-day buyout options compared to the previous year's quarter.

Liquidity and Capital Allocation

PROG Holdings ended the second quarter of 2023 with cash of $252.8 million and gross debt of $600 million. The Company repurchased $35.4 million of its stock in the quarter at an average price of $32.65 per share and has $265.4 million remaining under its previously announced $1 billion share purchase program.

2023 Outlook

The Company is revising upwards its full year earnings and revenue outlook and providing a Q3 2023 outlook for revenues, net earnings, adjusted EBITDA, GAAP diluted EPS, and non-GAAP diluted EPS. The primary factors driving the increase in PROG Holdings' annual earnings outlook are the strength of the Company's earnings in the first half of 2023 and the expectation that improved gross margins from strong portfolio management will continue. 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 purchases.

 

Revised Outlook

 

Previously Revised Outlook

(In thousands, except per share amounts)

Low

High

 

Low

High

 

 

 

 

 

 

PROG Holdings - Total Revenues

$

2,360,000

 

$

2,390,000

 

 

$

2,300,000

 

$

2,375,000

 

PROG Holdings - Net Earnings

 

125,500

 

 

133,000

 

 

 

99,500

 

 

112,500

 

PROG Holdings - Adjusted EBITDA

 

270,000

 

 

280,000

 

 

 

235,000

 

 

255,000

 

PROG Holdings - Diluted EPS

 

2.64

 

 

2.80

 

 

 

2.09

 

 

2.37

 

PROG Holdings - Diluted Non-GAAP EPS

 

3.10

 

 

3.25

 

 

 

2.50

 

 

2.77

 

 

 

 

 

 

Progressive Leasing - Total Revenues

 

2,295,000

 

 

2,320,000

 

 

 

2,235,000

 

 

2,305,000

 

Progressive Leasing - Earnings Before Taxes

 

197,500

 

 

204,000

 

 

 

168,000

 

 

180,000

 

Progressive Leasing - Adjusted EBITDA

 

279,000

 

 

285,500

 

 

 

248,000

 

 

261,000

 

 

 

 

 

 

 

Vive - Total Revenues

 

65,000

 

 

70,000

 

 

 

65,000

 

 

70,000

 

Vive - Earnings Before Taxes

 

4,000

 

 

5,000

 

 

 

2,500

 

 

4,500

 

Vive - Adjusted EBITDA

 

7,000

 

 

8,500

 

 

 

5,000

 

 

8,000

 

 

 

 

 

 

 

Other - Loss Before Taxes

 

(24,000

)

 

(22,000

)

 

 

(26,000

)

 

(23,000

)

Other - Adjusted EBITDA

 

(16,000

)

 

(14,000

)

 

 

(18,000

)

 

(14,000

)

 

Three Months Ended September 30, 2023 Outlook

(In thousands, except per share amounts)

Low

High

 

 

 

PROG Holdings - Total Revenues

$

560,000

$

575,000

PROG Holdings - Net Earnings

 

21,500

 

25,500

PROG Holdings - Adjusted EBITDA

 

55,000

 

60,000

PROG Holdings - Diluted EPS

 

0.46

 

0.55

PROG Holdings - Diluted Non-GAAP EPS

 

0.58

 

0.67

Conference Call and Webcast

The Company has scheduled a live webcast and conference call for Wednesday, July 26th, 2023, at 8:30 A.M. ET to discuss its financial results for the second 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 and inclusive consumer financial products. 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, Four Technologies, provider of Buy Now, Pay Later payment options, and Build, provider of personal credit building products. More information about PROG Holdings and its companies can be found at https://investor.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 "continuing", "expect", "believe", "outlook" 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, sub-variants 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 performance and stability of our lease portfolio; (ii) our ability to continue to make investments in initiatives to support our strategic long-term growth plans and the outcomes of those initiatives; and (iii) our revised full year 2023 outlook and our third-quarter 2023 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

 

(Unaudited)

Six Months Ended

 

June 30,

 

June 30,

 

2023

 

2022

 

2023

 

2022

REVENUES:

 

 

 

 

 

 

 

Lease Revenues and Fees

$

574,839

 

 

$

631,344

 

 

$

1,211,921

 

 

$

1,324,258

 

Interest and Fees on Loans Receivable

 

18,007

 

 

 

18,100

 

 

 

36,065

 

 

 

35,650

 

 

 

592,846

 

 

 

649,444

 

 

 

1,247,986

 

 

 

1,359,908

 

 

 

 

 

 

 

 

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

Depreciation of Lease Merchandise

 

384,874

 

 

 

439,113

 

 

 

820,313

 

 

 

936,124

 

Provision for Lease Merchandise Write-offs

 

40,965

 

 

 

61,788

 

 

 

79,329

 

 

 

112,118

 

Operating Expenses

 

107,710

 

 

 

111,606

 

 

 

212,969

 

 

 

225,264

 

 

 

533,549

 

 

 

612,507

 

 

 

1,112,611

 

 

 

1,273,506

 

OPERATING PROFIT

 

59,297

 

 

 

36,937

 

 

 

135,375

 

 

 

86,402

 

Interest Expense, Net

 

(7,283

)

 

 

(9,608

)

 

 

(15,774

)

 

 

(19,237

)

EARNINGS BEFORE INCOME TAX EXPENSE

 

52,014

 

 

 

27,329

 

 

 

119,601

 

 

 

67,165

 

INCOME TAX EXPENSE

 

14,796

 

 

 

7,845

 

 

 

34,350

 

 

 

20,546

 

NET EARNINGS

$

37,218

 

 

$

19,484

 

 

$

85,251

 

 

$

46,619

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

Basic

$

0.80

 

 

$

0.37

 

 

$

1.81

 

 

$

0.86

 

Assuming Dilution

$

0.79

 

 

$

0.37

 

 

$

1.79

 

 

$

0.86

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING:

 

 

 

 

 

 

 

Basic

 

46,474

 

 

 

52,880

 

 

 

47,160

 

 

 

54,134

 

Assuming Dilution

 

46,896

 

 

 

52,961

 

 

 

47,514

 

 

 

54,326

 

PROG Holdings, Inc.

Consolidated Balance Sheets

(In thousands, except share data)

 

 

 

(Unaudited)

 

 

 

 

June 30,

2023

 

December 31,

2022

ASSETS:

 

 

 

 

Cash and Cash Equivalents

 

$

252,838

 

 

$

131,880

 

Accounts Receivable (net of allowances of $65,544 in 2023 and $69,264 in 2022)

 

 

53,249

 

 

 

64,521

 

Lease Merchandise (net of accumulated depreciation and allowances of $455,912 in 2023 and $467,355 in 2022)

 

 

548,886

 

 

 

648,043

 

Loans Receivable (net of allowances and unamortized fees of $49,071 in 2023 and $53,635 in 2022)

 

 

122,812

 

 

 

130,966

 

Property and Equipment, Net

 

 

23,655

 

 

 

23,852

 

Operating Lease Right-of-Use Assets

 

 

10,585

 

 

 

11,875

 

Goodwill

 

 

296,061

 

 

 

296,061

 

Other Intangibles, Net

 

 

102,964

 

 

 

114,411

 

Income Tax Receivable

 

 

19,606

 

 

 

18,864

 

Deferred Income Tax Assets

 

 

2,852

 

 

 

2,955

 

Prepaid Expenses and Other Assets

 

 

49,549

 

 

 

48,481

 

Total Assets

 

$

1,483,057

 

 

$

1,491,909

 

LIABILITIES & SHAREHOLDERS’ EQUITY:

 

 

 

 

Accounts Payable and Accrued Expenses

 

$

130,841

 

 

$

135,025

 

Deferred Income Tax Liabilities

 

 

115,968

 

 

 

137,261

 

Customer Deposits and Advance Payments

 

 

32,633

 

 

 

37,074

 

Operating Lease Liabilities

 

 

18,350

 

 

 

21,122

 

Debt

 

 

591,616

 

 

 

590,966

 

Total Liabilities

 

 

889,408

 

 

 

921,448

 

SHAREHOLDERS' EQUITY:

 

 

 

 

Common Stock, Par Value $0.50 Per Share: Authorized: 225,000,000 Shares at June 30, 2023 and December 31, 2022; Shares Issued: 82,078,654 at June 30, 2023 and December 31, 2022

 

 

41,039

 

 

 

41,039

 

Additional Paid-in Capital

 

 

343,016

 

 

 

338,814

 

Retained Earnings

 

 

1,239,486

 

 

 

1,154,235

 

 

 

 

1,623,541

 

 

 

1,534,088

 

Less: Treasury Shares at Cost

 

 

 

 

Common Stock: 36,368,322 Shares at June 30, 2023 and 34,044,102 at December 31, 2022

 

 

(1,029,892

)

 

 

(963,627

)

Total Shareholders’ Equity

 

 

593,649

 

 

 

570,461

 

Total Liabilities & Shareholders’ Equity

 

$

1,483,057

 

 

$

1,491,909

 

PROG Holdings, Inc.

Consolidated Statements of Cash Flows

(In thousands)

 

(Unaudited)

Six Months Ended

June 30,

 

2023

 

2022

OPERATING ACTIVITIES:

 

 

 

Net Earnings

$

85,251

 

 

$

46,619

 

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

 

 

 

Depreciation of Lease Merchandise

 

820,313

 

 

 

936,124

 

Other Depreciation and Amortization

 

15,895

 

 

 

17,021

 

Provisions for Accounts Receivable and Loan Losses

 

161,237

 

 

 

201,980

 

Stock-Based Compensation

 

12,260

 

 

 

9,040

 

Deferred Income Taxes

 

(21,190

)

 

 

(696

)

Non-Cash Lease Expense

 

(1,482

)

 

 

549

 

Other Changes, Net

 

(2,506

)

 

 

(3,748

)

Changes in Operating Assets and Liabilities:

 

 

 

Additions to Lease Merchandise

 

(803,250

)

 

 

(951,751

)

Book Value of Lease Merchandise Sold or Disposed

 

82,096

 

 

 

114,427

 

Accounts Receivable

 

(132,460

)

 

 

(188,921

)

Prepaid Expenses and Other Assets

 

(857

)

 

 

(5,216

)

Income Tax Receivable and Payable

 

(44

)

 

 

(571

)

Operating Lease Right-of-Use Assets and Liabilities

 

 

 

 

(401

)

Accounts Payable and Accrued Expenses

 

(5,442

)

 

 

(9,841

)

Customer Deposits and Advance Payments

 

(4,441

)

 

 

(8,873

)

Cash Provided by Operating Activities

 

205,380

 

 

 

155,742

 

INVESTING ACTIVITIES:

 

 

 

Investments in Loans Receivable

 

(90,746

)

 

 

(92,741

)

Proceeds from Loans Receivable

 

84,491

 

 

 

76,244

 

Outflows on Purchases of Property and Equipment

 

(4,388

)

 

 

(5,494

)

Proceeds from Property and Equipment

 

13

 

 

 

17

 

Proceeds from Acquisitions of Businesses

 

 

 

 

7

 

Cash Used in Investing Activities

 

(10,630

)

 

 

(21,967

)

FINANCING ACTIVITIES:

 

 

 

Acquisition of Treasury Stock

 

(71,836

)

 

 

(176,475

)

Tender Offer Shares Repurchased and Retired

 

 

 

 

199

 

Issuance of Stock Under Stock Option Plans

 

606

 

 

 

663

 

Shares Withheld for Tax Payments

 

(2,533

)

 

 

(2,516

)

Debt Issuance Costs

 

(29

)

 

 

1,535

 

Cash Used in Financing Activities

 

(73,792

)

 

 

(176,594

)

Increase (Decrease) in Cash and Cash Equivalents

 

120,958

 

 

 

(42,819

)

Cash and Cash Equivalents at Beginning of Period

 

131,880

 

 

 

170,159

 

Cash and Cash Equivalents at End of Period

$

252,838

 

 

$

127,340

 

Net Cash Paid During the Period:

 

 

 

Interest Expense

$

18,531

 

 

$

17,085

 

Income Taxes

$

53,624

 

 

$

19,475

 

PROG Holdings, Inc.

Quarterly Revenues by Segment

(In thousands)

 

 

(Unaudited)

 

Three Months Ended

 

June 30, 2023

 

Progressive Leasing

Vive

Other

Consolidated Total

Lease Revenues and Fees

$

574,839

$

$

$

574,839

Interest and Fees on Loans Receivable

 

 

17,187

 

820

 

18,007

Total Revenues

$

574,839

$

17,187

$

820

$

592,846

 

(Unaudited)

 

Three Months Ended

 

June 30, 2022

 

Progressive Leasing

Vive

Other

Consolidated Total

Lease Revenues and Fees

$

631,344

$

$

$

631,344

Interest and Fees on Loans Receivable

 

 

17,518

 

582

 

18,100

Total Revenues

$

631,344

$

17,518

$

582

$

649,444

PROG Holdings, Inc.

Six Months Revenues by Segment

(In thousands)

 

 

(Unaudited)

 

Six Months Ended

 

June 30, 2023

 

Progressive Leasing

Vive

Other

Consolidated Total

Lease Revenues and Fees

$

1,211,921

$

$

$

1,211,921

Interest and Fees on Loans Receivable

 

 

34,340

 

1,725

 

36,065

Total Revenues

$

1,211,921

$

34,340

$

1,725

$

1,247,986

 

(Unaudited)

 

Six Months Ended

 

June 30, 2022

 

Progressive Leasing

Vive

Other

Consolidated Total

Lease Revenues and Fees

$

1,324,258

$

$

$

1,324,258

Interest and Fees on Loans Receivable

 

 

34,634

 

1,016

 

35,650

Total Revenues

$

1,324,258

$

34,634

$

1,016

$

1,359,908

PROG Holdings, Inc.

Gross Merchandise Volume by Quarter

(In thousands)

 

 

(Unaudited)

 

Three Months Ended June 30,

 

2023

 

2022

Progressive Leasing

$

421,220

 

$

494,003

Vive

 

39,850

 

 

47,003

Other

 

14,600

 

 

11,394

Total GMV

$

475,670

 

$

552,400

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 and six months ended June 30, 2023, full year 2023 revised outlook and third 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 and six months ended June 30, 2022 exclude intangible amortization expense, restructuring expenses, 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 and six months ended June 30, 2023, full year 2023 revised outlook and third quarter 2023 outlook exclude stock-based compensation expense, restructuring expenses, and regulatory insurance recoveries. Adjusted EBITDA for the three and six months ended June 30, 2022 exclude stock-based compensation expense and restructuring expenses. The amounts for these pre-tax non-GAAP adjustments can be found in the three and six months ended 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)

(Unaudited)

 

Three Months Ended

Six Months Ended

 

June 30,

June 30,

 

2023

2022

2023

2022

Net Earnings

$

37,218

 

$

19,484

 

$

85,251

 

$

46,619

 

Add: Intangible Amortization Expense

 

5,723

 

 

5,723

 

 

11,447

 

 

11,447

 

Add: Restructuring Expense

 

963

 

 

4,328

 

 

1,720

 

 

4,328

 

Less: Tax Impact of Adjustments(1)

 

(1,738

)

 

(2,613

)

 

(3,287

)

 

(4,101

)

Add: Accrued Interest on FTC Settlement Uncertain Tax Position

 

970

 

 

647

 

 

1,940

 

 

1,186

 

Less: Regulatory Insurance Recoveries

 

 

 

 

 

(525

)

 

 

Non-GAAP Net Earnings

$

43,136

 

$

27,569

 

$

96,546

 

$

59,479

 

Earnings Per Share Assuming Dilution

$

0.79

 

$

0.37

 

$

1.79

 

$

0.86

 

Add: Intangible Amortization Expense

 

0.12

 

 

0.11

 

 

0.24

 

 

0.21

 

Add: Restructuring Expense

 

0.02

 

 

0.08

 

 

0.04

 

 

0.08

 

Less: Tax Impact of Adjustments(1)

 

(0.04

)

 

(0.05

)

 

(0.07

)

 

(0.08

)

Add: Accrued Interest on FTC Settlement Uncertain Tax Position

 

0.02

 

 

0.01

 

 

0.04

 

 

0.02

 

Less: Regulatory Insurance Recoveries

 

 

 

 

 

(0.01

)

 

 

Non-GAAP Earnings Per Share Assuming Dilution(2)

$

0.92

 

$

0.52

 

$

2.03

 

$

1.09

 

Weighted Average Shares Outstanding Assuming Dilution

 

46,896

 

 

52,961

 

 

47,514

 

 

54,326

 

(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

 

June 30, 2023

 

Progressive Leasing

Vive

Other

Consolidated Total

Net Earnings

 

 

 

$

37,218

Income Tax Expense(1)

 

 

 

 

14,796

Earnings (Loss) Before Income Tax Expense

$

55,422

$

1,758

$

(5,166

)

 

52,014

Interest Expense, Net

 

7,117

 

166

 

 

 

7,283

Depreciation

 

1,795

 

182

 

216

 

 

2,193

Amortization

 

5,421

 

 

302

 

 

5,723

EBITDA

 

69,755

 

2,106

 

(4,648

)

 

67,213

Stock-Based Compensation

 

4,899

 

294

 

1,652

 

 

6,845

Restructuring Expense

 

963

 

 

 

 

963

Adjusted EBITDA

$

75,617

$

2,400

$

(2,996

)

$

75,021

(1)

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

 

(Unaudited)

 

Three Months Ended

 

June 30, 2022

 

Progressive Leasing

Vive

Other

Consolidated Total

Net Earnings

 

 

 

$

19,484

Income Tax Expense(1)

 

 

 

 

7,845

Earnings (Loss) Before Income Tax Expense

$

27,383

$

3,355

$

(3,409

)

 

27,329

Interest Expense, Net

 

9,525

 

83

 

 

 

9,608

Depreciation

 

2,524

 

195

 

97

 

 

2,816

Amortization

 

5,421

 

 

302

 

 

5,723

EBITDA

 

44,853

 

3,633

 

(3,010

)

 

45,476

Stock-Based Compensation

 

2,643

 

99

 

(325

)

 

2,417

Restructuring Expense

 

3,673

 

655

 

 

 

4,328

Adjusted EBITDA

$

51,169

$

4,387

$

(3,335

)

$

52,221

(1)

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

PROG Holdings, Inc.

Non-GAAP Financial Information

Six Months Segment EBITDA

(In thousands)

 

 

(Unaudited)

 

Six Months Ended

 

June 30, 2023

 

Progressive Leasing

Vive

Other

Consolidated Total

Net Earnings

 

 

 

$

85,251

 

Income Tax Expense(1)

 

 

 

 

34,350

 

Earnings (Loss) Before Income Tax Expense

$

126,473

 

$

3,921

$

(10,793

)

 

119,601

 

Interest Expense, Net

 

15,317

 

 

457

 

 

 

15,774

 

Depreciation

 

3,700

 

 

350

 

398

 

 

4,448

 

Amortization

 

10,842

 

 

 

605

 

 

11,447

 

EBITDA

 

156,332

 

 

4,728

 

(9,790

)

 

151,270

 

Stock-Based Compensation

 

8,452

 

 

582

 

3,226

 

 

12,260

 

Restructuring Expense

 

1,720

 

 

 

 

 

1,720

 

Regulatory Insurance Recoveries

 

(525

)

 

 

 

 

(525

)

Adjusted EBITDA

$

165,979

 

$

5,310

$

(6,564

)

$

164,725

 

(1)

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

 

(Unaudited)

 

Six Months Ended

 

June 30, 2022

 

Progressive Leasing

Vive

Other

Consolidated Total

Net Earnings

 

 

 

$

46,619

Income Tax Expense(1)

 

 

 

 

20,546

Earnings (Loss) Before Income Tax Expense

$

69,464

$

7,778

$

(10,077

)

 

67,165

Interest Expense, Net

 

19,048

 

189

 

 

 

19,237

Depreciation

 

5,053

 

392

 

129

 

 

5,574

Amortization

 

10,842

 

 

605

 

 

11,447

EBITDA

 

104,407

 

8,359

 

(9,343

)

 

103,423

Stock-Based Compensation

 

6,601

 

187

 

2,252

 

 

9,040

Restructuring Expense

 

3,673

 

655

 

 

 

4,328

Adjusted EBITDA

$

114,681

$

9,201

$

(7,091

)

$

116,791

(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

 

 

 

$125,500 - $133,000

Income Tax Expense(1)

 

 

 

52,000 - 54,000

Projected Earnings (Loss) Before Income Tax Expense

$197,500 - $204,000

$4,000 - $5,000

$(24,000) - $(22,000)

177,500 - 187,000

Interest Expense, Net

31,500 - 30,500

1,000

32,500 - 31,500

Depreciation

9,000

1,000

1,000

11,000

Amortization

21,500

1,000

22,500

Projected EBITDA

259,500 - 265,000

6,000 - 7,000

(22,000) - (20,000)

243,500 - 252,000

Stock-Based Compensation

18,500 - 19,500

1,000 - 1,500

6,000

25,500 - 27,000

Restructuring Expense/Regulatory Insurance Recoveries

1,000

1,000

Projected Adjusted EBITDA

$279,000 - $285,500

$7,000 - $8,500

$(16,000) - $(14,000)

$270,000 - $280,000

(1)

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

PROG Holdings, Inc.

Non-GAAP Financial Information

Reconciliation of Previously 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 (Loss) Before Income Tax Expense

$168,000 - $180,000

$2,500 - $4,500

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

144,500 - 161,500

Interest Expense, Net

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 the Three Months Ended September 30, 2023 Outlook for Adjusted EBITDA

(In thousands)

 

 

Three Months Ended September 30, 2023 Outlook

 

Consolidated Total

Estimated Net Earnings

$21,500 - $25,500

Income Tax Expense(1)

9,500 - 10,500

Projected Earnings Before Income Tax Expense

31,000 - 36,000

Interest Expense, Net

8,000 - 7,500

Depreciation

3,000

Amortization

6,000

Projected EBITDA

48,000 - 52,500

Stock-Based Compensation

7,000 - 7,500

Projected Adjusted EBITDA

$55,000 - $60,000

(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

$

2.64

 

$

2.80

 

Add: Projected Intangible Amortization Expense

 

0.48

 

 

0.48

 

Add: Projected Interest on FTC Settlement Uncertain Tax Position

 

0.08

 

 

0.08

 

Add: Restructuring Expense/Regulatory Insurance Recoveries

 

0.03

 

 

0.03

 

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

 

(0.13

)

 

(0.13

)

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

$

3.10

 

$

3.25

 

(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 Previously 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 the Three Months Ended September 30, 2023 Outlook for Earnings Per Share

Assuming Dilution to Non-GAAP Earnings Per Share Assuming Dilution

 

 

Three Months Ended September 30, 2023

 

Low

High

Projected Earnings Per Share Assuming Dilution

$

0.46

 

$

0.55

 

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)

$

0.58

 

$

0.67

 

(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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