- Progressive Leasing GMV of $504.5 million
- Gross leased asset portfolio growth of 17.6%
year-over-year
- Consolidated revenues of $710.5 million
- Consolidated earnings before taxes of $39.8 million; Adjusted
EBITDA of $64.6 million or 9.1% of revenues
- Diluted EPS of $0.49; Non-GAAP Diluted EPS of $0.57
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,
2022.
"Our first quarter results were in line with our expectations,
and we believe we remain on track to achieve our full-year
outlook," said PROG Holdings President and CEO Steve Michaels. "We
have thrived through any number of macroeconomic cycles over our
more than twenty year history, so I am confident that our
experience, talented team, and ongoing investments have positioned
us well to continue delivering strong portfolio performance while
capturing a greater share of our large addressable market."
Consolidated Results
Consolidated revenues for the first quarter of 2022 were $710.5
million, a decrease of 1.5% from the same period in 2021. The
Company's revenue benefited from further penetration with large
national partners and continued growth in e-commerce, but was
offset by various macroeconomic factors.
Adjusted EBITDA for the first quarter of 2022 was $64.6 million
compared with $118.1 million for the same period in 2021. As a
percentage of revenues, adjusted EBITDA was 9.1% in the first
quarter of 2022, compared with 16.4% for the same period in 2021.
The Company reported consolidated net earnings for the first
quarter of 2022 of $27.1 million compared with $79.5 million in the
prior year period.
The year-over-year declines in adjusted EBITDA and net earnings
in the quarter were primarily driven by a return to normalized
portfolio performance and a higher level of SG&A investment to
support planned growth.
Diluted earnings per share for the first quarter of 2022 were
$0.49 compared with $1.16 in the year ago period. On a non-GAAP
basis, diluted earnings per share were $0.57 in the first quarter
of 2022 compared with $1.22 for the same quarter in 2021.
Progressive Leasing Results
Progressive Leasing's first quarter GMV decreased 1.1% to $504.5
million compared with the same period in 2021, primarily due to the
impact that the spike in Omicron-driven COVID-19 cases had on our
POS partners' operations and store traffic in the first half of the
quarter. E-commerce GMV within the segment increased 10.0%
year-over-year in the quarter, accounting for 15.9% of the
segment's total GMV. Progressive Leasing's gross leased asset
portfolio ended the quarter 17.6% higher than the same period of
2021, as early buyout rates declined year over year.
The provision for lease merchandise write-offs was 7.3% of lease
revenues in the first quarter of 2022, compared to the
stimulus-aided and historically low 2.6% in the first quarter of
2021.
Liquidity and Capital Allocation
PROG Holdings ended the first quarter of 2022 with cash of
$184.0 million and gross debt of $600 million. The Company
repurchased $78.1 million of its stock in the quarter at an average
price of $35.48 per share and has approximately $483 million
remaining under its previously announced $1 billion share
repurchase program.
2022 Outlook
The Company is reiterating its full year 2022 consolidated
outlook as presented in its fourth quarter 2021 earnings press
release, issued on February 23, 2022.
Conference Call and Webcast
PROG Holdings has scheduled a live webcast and conference call
for Wednesday, April 27, 2022, at 8:30 A.M. ET to discuss its
financial results for the first quarter 2022. To access the live
webcast, visit the Events and Presentations section of 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.
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 “expectations”,
“believe”, “outlook”, “continue” and similar forward-looking
terminology. These risks and uncertainties include factors such as
(i) 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; (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) increased focus by federal and state regulators
on businesses that serve subprime consumers, such as our
Progressive Leasing, Vive Financial and Four Technologies
businesses, and 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; (iv) the potential 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, including on customer demand for the merchandise that
our POS partners sell, our customers’ ability to make the lease and
loan payments they owe the Company, our labor costs, our overall
financial performance and outlook; (v) a large percentage of the
Company’s revenues being concentrated with several of Progressive
Leasing’s key POS partners; (vi) the risks that Progressive Leasing
will be unable to attract new POS partners or retain and grow its
business with its existing POS partners; (vii) the risk that our
capital allocation strategy, including our current share repurchase
program, will not be effective at enhancing shareholder value;
(viii) 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 laws and regulations that
apply to its business; (ix) 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; (x) increased competition from traditional and
virtual lease-to-own competitors and also from competitors of our
Vive segment; (xi) our increased level of indebtedness; (xii) 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; (xiii) the effects of any
increased expenses or unanticipated liabilities incurred as a
result of, or due to activities related to, our acquisition of Four
Technologies; (xiv) Four Technology’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; and (xv) 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, 2021, filed with the SEC on February 23, 2022.
Statements in this press release that are “forward-looking” include
without limitation statements about (i) our full-year 2022 outlook;
and (ii) our ability to continue delivering strong portfolio
performance while capturing a greater share of our addressable
market. 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,
2022
2021
REVENUES:
Lease Revenues and Fees
$
692,914
$
707,982
Interest and Fees on Loans Receivable
17,550
13,019
710,464
721,001
COSTS AND EXPENSES:
Depreciation of Lease Merchandise
497,011
505,057
Provision for Lease Merchandise
Write-offs
50,330
18,640
Operating Expenses
113,658
91,196
660,999
614,893
OPERATING PROFIT
49,465
106,108
Interest Expense
(9,629
)
(512
)
EARNINGS BEFORE INCOME TAX
EXPENSE
39,836
105,596
INCOME TAX EXPENSE
12,701
26,108
NET EARNINGS
$
27,135
$
79,488
EARNINGS PER SHARE
Basic
$
0.49
$
1.17
Assuming Dilution
$
0.49
$
1.16
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic
55,402
67,730
Assuming Dilution
55,706
68,260
PROG Holdings, Inc.
Consolidated Balance
Sheets
(In thousands, except share
data)
(Unaudited)
March 31, 2022
December 31,
2021
ASSETS:
Cash and Cash Equivalents
$
184,010
$
170,159
Accounts Receivable (net of allowances of
$76,507 in 2022 and $71,233 in 2021)
72,463
66,270
Lease Merchandise (net of accumulated
depreciation and allowances of $473,557 in 2022 and $463,929 in
2021)
645,225
714,055
Loans Receivable (net of allowances and
unamortized fees of $52,286 in 2022 and $53,300 in 2021)
116,859
119,315
Property, Plant and Equipment, Net
24,492
25,648
Operating Lease Right-of-Use Assets
16,534
17,488
Goodwill
306,212
306,212
Other Intangibles, Net
131,581
137,305
Income Tax Receivable
14,337
14,352
Deferred Income Tax Assets
2,760
2,760
Prepaid Expenses and Other Assets
58,248
48,197
Total Assets
$
1,572,721
$
1,621,761
LIABILITIES & SHAREHOLDERS’
EQUITY:
Accounts Payable and Accrued Expenses
$
134,162
$
135,954
Deferred Income Tax Liability
152,365
146,265
Customer Deposits and Advance Payments
39,492
45,070
Operating Lease Liabilities
24,175
25,410
Debt
589,993
589,654
Total Liabilities
$
940,187
$
942,353
SHAREHOLDERS' EQUITY:
Common Stock, Par Value $0.50 Per Share:
Authorized: 225,000,000 Shares at March 31, 2022 and December 31,
2021; Shares Issued: 82,078,654 at March 31, 2022 and December 31,
2021
41,039
41,039
Additional Paid-in Capital
331,055
332,244
Retained Earnings
1,082,661
1,055,526
1,454,755
1,428,809
Less: Treasury Shares at Cost
Common Stock: 27,660,899 Shares at March
31, 2022 and 25,638,057 at December 31, 2021
(822,221
)
(749,401
)
Total Shareholders’ Equity
632,534
679,408
Total Liabilities & Shareholders’
Equity
$
1,572,721
$
1,621,761
PROG Holdings, Inc.
Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Three Months Ended March
31,
2022
2021
OPERATING ACTIVITIES:
Net Earnings
$
27,135
$
79,488
Adjustments to Reconcile Net Earnings to
Cash Provided by Operating Activities:
Depreciation of Lease Merchandise
497,011
505,057
Other Depreciation and Amortization
8,482
7,114
Provisions for Accounts Receivable and
Loan Losses
96,230
42,964
Stock-Based Compensation
6,623
4,163
Deferred Income Taxes
6,100
5,529
Non-Cash Lease Expense
274
229
Other Changes, Net
(1,709
)
(179
)
Changes in Operating Assets and
Liabilities, Net of Effects of Acquisitions and Dispositions:
Additions to Lease Merchandise
(480,113
)
(490,710
)
Book Value of Lease Merchandise Sold or
Disposed
51,933
21,335
Accounts Receivable
(94,743
)
(29,238
)
Prepaid Expenses and Other Assets
(9,395
)
(4,422
)
Income Tax Receivable and Payable
841
20,459
Operating Lease Right-of-Use Assets and
Liabilities
(556
)
(400
)
Accounts Payable and Accrued Expenses
(4,237
)
6,438
Customer Deposits and Advance Payments
(5,577
)
(759
)
Cash Provided by Operating Activities
98,299
167,068
INVESTING ACTIVITIES:
Investments in Loans Receivable
(42,323
)
(48,720
)
Proceeds from Loans Receivable
39,052
30,821
Outflows on Purchases of Property, Plant
and Equipment
(2,328
)
(1,844
)
Proceeds from Property, Plant, and
Equipment
6
12
Proceeds from Acquisitions of
Businesses
7
—
Cash Used in Investing Activities
(5,586
)
(19,731
)
FINANCING ACTIVITIES:
Acquisition of Treasury Stock
(78,080
)
(28,102
)
Tender Offer Shares Repurchased and
Retired
199
—
Issuance of Stock Under Stock Option
Plans
—
282
Shares Withheld for Tax Payments
(2,516
)
(5,011
)
Debt Issuance Costs
1,535
—
Cash Used in Financing Activities
(78,862
)
(32,831
)
Increase in Cash and Cash Equivalents
13,851
114,506
Cash and Cash Equivalents at Beginning of
Period
170,159
36,645
Cash and Cash Equivalents at End of
Period
$
184,010
$
151,151
Net Cash Paid During the Period:
Interest
$
185
$
223
Income Taxes
$
4,157
$
101
PROG Holdings, Inc.
Quarterly Revenues by
Segment
(In thousands)
(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
(Unaudited)
Three Months Ended
March 31, 2021
Progressive Leasing
Vive
Other
Consolidated Total
Lease Revenues and Fees
$
707,982
$
—
$
—
$
707,982
Interest and Fees on Loans Receivable
—
13,019
—
13,019
Total Revenues
$
707,982
$
13,019
$
—
$
721,001
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, 2022, exclude intangible amortization expense and accrued
interest on an uncertain tax position related to Progressive
Leasing's $175.0 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. 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, plant and equipment, amortization of
intangible assets and income taxes. Adjusted EBITDA for the three
months ended March 31, 2022 and 2021 exclude stock-based
compensation expense. The amounts for these pre-tax non-GAAP
adjustments can be found in the three-month 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,
2022
2021
Net Earnings
$
27,135
$
79,488
Add: Intangible Amortization Expense
5,724
5,421
Less: Tax Impact of Adjustments(1)
(1,488
)
(1,409
)
Add: Accrued Interest on FTC Settlement
Uncertain Tax Position
539
—
Non-GAAP Net Earnings
$
31,910
$
83,500
Earnings Per Share Assuming Dilution
$
0.49
$
1.16
Add: Intangible Amortization Expense
0.10
0.08
Less: Tax Impact of Adjustments(1)
(0.03
)
(0.02
)
Add: Accrued Interest on FTC Settlement
Uncertain Tax Position
0.01
—
Non-GAAP Earnings Per Share Assuming
Dilution(2)
$
0.57
$
1.22
Weighted Average Shares Outstanding
Assuming Dilution
55,706
68,260
(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, 2022
Progressive Leasing
Vive
Other
Consolidated Total
Net Earnings
$
27,135
Income Taxes(1)
12,701
Earnings (Loss) Before Income Taxes
$
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.
(Unaudited)
Three Months Ended
March 31, 2021
Progressive Leasing
Vive
Other
Consolidated Total
Net Earnings
$
79,488
Income Taxes(1)
26,108
Earnings Before Income Taxes
$
104,172
$
1,424
$
—
105,596
Interest Expense
435
77
—
512
Depreciation
2,212
187
—
2,399
Amortization
5,421
—
—
5,421
EBITDA
112,240
1,688
—
113,928
Stock-Based Compensation
4,063
100
—
4,163
Adjusted EBITDA
$
116,303
$
1,788
$
—
$
118,091
(1)
Taxes are calculated on a consolidated
basis and are not identifiable by Company Segment.
PROG Holdings Inc.
Gross Merchandise Volume by
Quarter
(In thousands)
(Unaudited)
Three Months Ended March
31,
2022
2021
Progressive Leasing
$
504,462
$
510,046
Vive
42,614
55,898
Other
7,086
—
Total
$
554,162
$
565,944
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220427005276/en/
Investor Contact John Baugh, CFA Vice President, Investor
Relations john.baugh@progleasing.com
Media Contact Mark Delcorps Director, Corporate
Communications media@progleasing.com
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