Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries PROG Holdings Reports Fourth Quarter 2022 Results By: PROG Holdings, Inc. via Business Wire February 22, 2023 at 07:00 AM EST Consolidated revenues of $612.1 million Consolidated earnings before taxes of $53.7 million; Adjusted EBITDA increased 3.2% year-over-year to $74.4 million or 12.2% of revenues Diluted EPS of $0.73; Non-GAAP Diluted EPS of $0.84, up 25% year-over-year Progressive Leasing write-offs of 6.5%, down from 6.8% in Q4 2021 E-commerce increased to 20.4% 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 fourth quarter ended December 31, 2022. "Our fourth quarter results exceeded both our top and bottom line expectations, primarily driven by decisions made in the first half of 2022 to improve our portfolio performance and adjust our cost structure in the face of macroeconomic headwinds," said PROG Holdings President and CEO Steve Michaels. "During the quarter, we saw continued improvement in the quality of our lease portfolio as a result of these decisioning changes, and we were able to deliver write-offs within our targeted annual range for 2022 despite the pressures facing our consumers. We believe that our market leadership and financial strength will allow us to navigate through this uncertain period, continue to broaden our partner base, and position us to capitalize on increased consumer demand when the current macroeconomic headwinds subside." Consolidated Results Consolidated revenues for the fourth quarter of 2022 were $612.1 million, a decrease of 5.3% from the same period in 2021, with the impact of lower approval rates and weak retail traffic partially offset by an increase in average ticket size, further penetration with large national retail partners, and additional e-commerce integrations. The Company reported consolidated net earnings for the fourth quarter of 2022 of $36.1 million, compared with $37.8 million in the prior year period. Adjusted EBITDA for the quarter was $74.4 million, or 12.2% of revenues, compared with $72.1 million, or 11.2% of revenues for the same period in 2021. The year over year growth in Adjusted EBITDA was driven primarily by strong portfolio performance and cost disciplines instituted mid-year to adjust for the anticipated decline in revenue. Diluted earnings per share for the fourth quarter of 2022 were $0.73 compared with $0.59 in the year ago period. On a non-GAAP basis, diluted earnings per share were $0.84 in the fourth quarter of 2022, compared with $0.67 for the same quarter in 2021. Our weighted average shares outstanding assuming dilution in the fourth quarter was 22.9% lower than the same quarter in 2021. Progressive Leasing Results Progressive Leasing's fourth quarter GMV decreased 14.8% to $540.9 million compared with the same period in 2021, primarily due to tighter decisioning on lease approvals and weaker traffic patterns for our retail partners, both in store and online. E-commerce GMV within the segment decreased 4.4% year-over-year; however, it increased to 20.4% of the segment's total GMV in the fourth quarter of 2022. The provision for lease merchandise write-offs was 6.5% of lease revenues in the fourth quarter of 2022, down both sequentially and year-over-year. We continued to see improved delinquency trends within the quarter following the tightening in decisioning made earlier in the year. Liquidity and Capital Allocation PROG Holdings ended the fourth quarter of 2022 with cash of $131.9 million and gross debt of $600 million. The Company repurchased $36.2 million of its stock in the quarter at an average price of $17.83 per share and has $337.3 million remaining under its previously-announced $1 billion share repurchase program. 2023 Outlook The Company is issuing full year and Q1 2023 outlook for revenues, net earnings, adjusted EBITDA, GAAP diluted EPS, and non-GAAP diluted EPS. This outlook assumes a difficult operating environment with continued soft demand for consumer durable goods, no material changes in the Company's decisioning posture, and no impact from additional share repurchases. Full Year 2023 Outlook (In thousands, except per share amounts) Low High PROG Holdings - Total Revenues $ 2,340,000 $ 2,440,000 PROG Holdings - Net Earnings 82,500 103,500 PROG Holdings - Adjusted EBITDA 215,000 245,000 PROG Holdings - Diluted EPS 1.69 2.12 PROG Holdings - Diluted Non-GAAP EPS 2.11 2.54 Progressive Leasing - Total Revenues 2,275,000 2,370,000 Progressive Leasing - Earnings Before Taxes 147,000 167,000 Progressive Leasing - Adjusted EBITDA 228,000 251,000 Vive - Total Revenues 65,000 70,000 Vive - Earnings Before Taxes 2,500 4,500 Vive - Adjusted EBITDA 5,000 8,000 Other - Loss Before Taxes (26,000 ) (23,000 ) Other - Adjusted EBITDA (18,000 ) (14,000 ) Three Months Ended March 31, 2023 Outlook (In thousands, except per share amounts) Low High PROG Holdings - Total Revenues $ 635,000 $ 660,000 PROG Holdings - Net Earnings 34,500 37,500 PROG Holdings - Adjusted EBITDA 72,000 77,000 PROG Holdings - Diluted EPS 0.71 0.77 PROG Holdings - Diluted Non-GAAP EPS 0.82 0.88 Conference Call and Webcast The Company has scheduled a live webcast and conference call for Wednesday, February 22nd, 2023, at 8:30 A.M. ET to discuss its financial results for the fourth quarter of 2022. 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 "believe," "continue," "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, 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; (iv) changes in the enforcement of existing laws and regulations and the adoption of new laws and regulations that may unfavorably impact our businesses; (ix) the risk that our capital allocation strategy, including our current share repurchase program, will not be effective at enhancing shareholder value; (x) our cost reduction initiatives may not be adequate or may have unintended consequences that could be disruptive to our businesses; (xi) 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; (xii) increased competition from traditional and virtual lease-to-own competitors and also from competitors of our Vive segment; (xiii) 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; (xiv) our increased level of indebtedness; (xv) 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 (xvi) 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 benefits we expect to realize from our market leadership and financial strength, including our ability to broaden our base of POS partners and to capitalize on increased consumer demand when the current macroeconomic headwinds subside; and (ii) our full-year and first-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 Twelve Months Ended December 31, December 31, 2022 2021 2022 2021 REVENUES: Lease Revenues and Fees $ 592,942 $ 629,950 $ 2,523,785 $ 2,619,005 Interest and Fees on Loans Receivable 19,155 16,593 74,041 58,915 612,097 646,543 2,597,826 2,677,920 COSTS AND EXPENSES: Depreciation of Lease Merchandise 399,017 439,438 1,757,730 1,820,010 Provision for Lease Merchandise Write-offs 38,271 42,912 193,926 126,984 Operating Expenses 112,377 107,405 450,374 397,399 Impairment of Goodwill — — 10,151 — 549,665 589,755 2,412,181 2,344,393 OPERATING PROFIT 62,432 56,788 185,645 333,527 Interest Expense, Net (8,701 ) (3,931 ) (37,401 ) (5,323 ) EARNINGS BEFORE INCOME TAX EXPENSE 53,731 52,857 148,244 328,204 INCOME TAX EXPENSE 17,646 15,038 49,535 84,647 NET EARNINGS $ 36,085 $ 37,819 $ 98,709 $ 243,557 EARNINGS PER SHARE Basic $ 0.74 $ 0.60 $ 1.90 $ 3.69 Assuming Dilution $ 0.73 $ 0.59 $ 1.90 $ 3.67 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 49,029 63,319 51,921 66,026 Assuming Dilution 49,170 63,739 52,075 66,416 PROG Holdings, Inc. Consolidated Balance Sheets (In thousands, except share data) December 31, 2022 December 31, 2021 ASSETS: Cash and Cash Equivalents $ 131,880 $ 170,159 Accounts Receivable (net of allowances of $69,264 in 2022 and $71,233 in 2021) 64,521 66,270 Lease Merchandise (net of accumulated depreciation and allowances of $467,355 in 2022 and $463,929 in 2021) 648,043 714,055 Loans Receivable (net of allowances and unamortized fees of $53,635 in 2022 and $53,300 in 2021) 130,966 119,315 Property and Equipment, Net 23,852 25,648 Operating Lease Right-of-Use Assets 11,875 17,488 Goodwill 296,061 306,212 Other Intangibles, Net 114,411 137,305 Income Tax Receivable 18,864 14,352 Deferred Income Tax Assets 2,955 2,760 Prepaid Expenses and Other Assets 48,481 48,197 Total Assets $ 1,491,909 $ 1,621,761 LIABILITIES & SHAREHOLDERS’ EQUITY: Accounts Payable and Accrued Expenses $ 135,025 $ 135,954 Deferred Income Tax Liabilities 137,261 146,265 Customer Deposits and Advance Payments 37,074 45,070 Operating Lease Liabilities 21,122 25,410 Debt 590,966 589,654 Total Liabilities 921,448 942,353 SHAREHOLDERS' EQUITY: Common Stock, Par Value $0.50 Per Share: Authorized: 225,000,000 Shares at December 31, 2022 and 2021; Shares Issued: 82,078,654 at December 31, 2022 and 2021 41,039 41,039 Additional Paid-in Capital 338,814 332,244 Retained Earnings 1,154,235 1,055,526 1,534,088 1,428,809 Less: Treasury Shares at Cost Common Stock: 34,044,102 Shares at December 31, 2022 and 25,638,057 at December 31, 2021 (963,627 ) (749,401 ) Total Shareholders’ Equity 570,461 679,408 Total Liabilities & Shareholders’ Equity $ 1,491,909 $ 1,621,761 PROG Holdings, Inc. Consolidated Statements of Cash Flows (In thousands) Year Ended December 31, 2022 2021 OPERATING ACTIVITIES: Net Earnings $ 98,709 $ 243,557 Adjustments to Reconcile Net Earnings to Cash Provided by Operating Activities: Depreciation of Lease Merchandise 1,757,730 1,820,010 Other Depreciation and Amortization 33,851 33,258 Provisions for Accounts Receivable and Loan Losses 417,496 242,412 Stock-Based Compensation 17,521 21,349 Deferred Income Taxes (9,199 ) 15,729 Impairment of Goodwill and Other Assets 10,151 — Non-Cash Lease Expense (1,674 ) 974 Other Changes, Net (7,164 ) (7,561 ) Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions: Additions to Lease Merchandise (1,889,207 ) (2,054,467 ) Book Value of Lease Merchandise Sold or Disposed 197,489 130,665 Accounts Receivable (374,515 ) (229,703 ) Prepaid Expenses and Other Assets 68 (7,879 ) Income Tax Receivable and Payable (6,007 ) (29,753 ) Operating Lease Right-of-Use Assets and Liabilities 2,999 (1,955 ) Accounts Payable and Accrued Expenses 2,227 70,820 Customer Deposits and Advance Payments (7,996 ) (1,495 ) Cash Provided by Operating Activities 242,479 245,961 INVESTING ACTIVITIES: Investments in Loans Receivable (203,600 ) (182,204 ) Proceeds from Loans Receivable 159,707 132,281 Outflows on Purchases of Property and Equipment (9,674 ) (9,555 ) Proceeds from Property and Equipment 27 78 Proceeds (Outflows) from Acquisitions of Businesses and Customer Agreements 6 (22,766 ) Cash Used in Investing Activities (53,534 ) (82,166 ) FINANCING ACTIVITIES: Repayments on Revolving Facility, Net — (50,000 ) Proceeds from Debt — 591,750 Acquisition of Treasury Stock (223,598 ) (142,358 ) Tender Offer Shares Repurchased and Retired (274 ) (428,551 ) Issuance of Stock Under Stock Option Plans 1,150 4,592 Shares Withheld for Tax Payments (2,902 ) (5,123 ) Debt Issuance Costs (1,600 ) (591 ) Cash Used in Financing Activities (227,224 ) (30,281 ) (Decrease) Increase in Cash and Cash Equivalents (38,279 ) 133,514 Cash and Cash Equivalents at Beginning of Year 170,159 36,645 Cash and Cash Equivalents at End of Year $ 131,880 $ 170,159 Net Cash Paid During the Year: Interest Expense $ 35,712 $ 1,452 Income Taxes $ 62,172 $ 53,602 PROG Holdings, Inc. Quarterly Revenues by Segment (In thousands) (Unaudited) Three Months Ended December 31, 2022 Progressive Leasing Vive Other Consolidated Total Lease Revenues and Fees $ 592,942 $ — $ — $ 592,942 Interest and Fees on Loans Receivable — 17,886 1,269 19,155 Total Revenues $ 592,942 $ 17,886 $ 1,269 $ 612,097 (Unaudited) Three Months Ended December 31, 2021 Progressive Leasing Vive Other Consolidated Total Lease Revenues and Fees $ 629,950 $ — $ — $ 629,950 Interest and Fees on Loans Receivable — 16,308 285 16,593 Total Revenues $ 629,950 $ 16,308 $ 285 $ 646,543 PROG Holdings, Inc. Annual Revenues by Segment (In thousands) Twelve Months Ended December 31, 2022 Progressive Leasing Vive Other Consolidated Total Lease Revenues and Fees $ 2,523,785 $ — $ — $ 2,523,785 Interest and Fees on Loans Receivable — 70,911 3,130 74,041 Total Revenues $ 2,523,785 $ 70,911 $ 3,130 $ 2,597,826 Twelve Months Ended December 31, 2021 Progressive Leasing Vive Other Consolidated Total Lease Revenues and Fees $ 2,619,005 $ — $ — $ 2,619,005 Interest and Fees on Loans Receivable — 58,462 453 58,915 Total Revenues $ 2,619,005 $ 58,462 $ 453 $ 2,677,920 PROG Holdings, Inc. Gross Merchandise Volume by Quarter (In thousands) (Unaudited) Three Months Ended December 31, 2022 2021 Progressive Leasing $ 540,913 $ 634,654 Vive 40,417 42,455 Other 26,192 5,996 Total $ 607,522 $ 683,105 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 twelve months ended December 31, 2022, full year 2023 and first quarter 2023 outlook exclude intangible amortization expense, restructuring expenses, impairment of goodwill, 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 twelve months ended December 31, 2021, exclude intangible amortization expense and transaction costs associated with the acquisition of Four. 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 twelve months ended December 31, 2022, full year 2023 and first quarter 2023 outlook exclude stock-based compensation expense, restructuring expenses, and impairment of goodwill. Adjusted EBITDA for the three and twelve months ended December 31, 2021, exclude stock-based compensation expense and transaction costs associated with the acquisition of Four. The amounts for these pre-tax non-GAAP adjustments can be found in the three and twelve 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) Three Months Ended Twelve Months Ended Mar 31, Jun 30, Sept 30, Dec 31, Dec 31, 2022 Net Earnings $ 27,135 $ 19,484 $ 16,005 $ 36,085 $ 98,709 Add: Intangible Amortization Expense 5,724 5,723 5,724 5,723 22,894 Add: Restructuring Expense — 4,328 4,673 — 9,001 Add: Impairment of Goodwill — — 10,151 — 10,151 Less: Tax Impact of Adjustments(1) (1,488 ) (2,613 ) (2,703 ) (1,488 ) (8,292 ) Add: Accrued Interest on FTC Settlement Uncertain Tax Position 539 647 755 972 2,913 Non-GAAP Net Earnings $ 31,910 $ 27,569 $ 34,605 $ 41,292 $ 135,376 Earnings Per Share Assuming Dilution $ 0.49 $ 0.37 $ 0.32 $ 0.73 $ 1.90 Add: Intangible Amortization Expense 0.10 0.11 0.11 0.12 0.44 Add: Restructuring Expense — 0.08 0.09 — 0.17 Add: Impairment of Goodwill — — 0.20 — 0.19 Less: Tax Impact of Adjustments(1) (0.03 ) (0.05 ) (0.05 ) (0.03 ) (0.16 ) Add: Accrued Interest on FTC Settlement Uncertain Tax Position 0.01 0.01 0.01 0.02 0.06 Non-GAAP Earnings Per Share Assuming Dilution(2) $ 0.57 $ 0.52 $ 0.68 $ 0.84 $ 2.60 Weighted Average Shares Outstanding Assuming Dilution 55,706 52,961 50,547 49,170 52,075 (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 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 Twelve Months Ended Mar 31, Jun 30, Sept 30, Dec 31, Dec 31, 2021 Net Earnings $ 79,488 $ 68,837 $ 57,413 $ 37,819 $ 243,557 Add: Intangible Amortization Expense 5,421 5,421 5,723 5,724 22,289 Add: Transaction Expense — 561 — — 561 Less: Tax Impact of Adjustments(1) (1,409 ) (1,555 ) (1,488 ) (1,488 ) (5,940 ) Add: Accrued Interest on FTC Settlement Uncertain Tax Position — — 1,040 350 1,390 Non-GAAP Net Earnings $ 83,500 $ 73,264 $ 62,688 $ 42,405 $ 261,857 Earnings Per Share Assuming Dilution $ 1.16 $ 1.02 $ 0.86 $ 0.59 $ 3.67 Add: Intangible Amortization Expense 0.08 0.08 0.09 0.09 0.34 Add: Transaction Expense — 0.01 — — 0.01 Less: Tax Impact of Adjustments(1) (0.02 ) (0.02 ) (0.02 ) (0.02 ) (0.09 ) Add: Accrued Interest on FTC Settlement Uncertain Tax Position — — 0.02 0.01 0.02 Non-GAAP Earnings Per Share Assuming Dilution(2) $ 1.22 $ 1.09 $ 0.94 $ 0.67 $ 3.94 Weighted Average Shares Outstanding Assuming Dilution 68,260 67,329 66,385 63,739 66,416 (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 December 31, 2022 Progressive Leasing Vive Other Consolidated Total Net Earnings $ 36,085 Income Tax Expense(1) 17,646 Earnings (Loss) Before Income Tax Expense 61,187 $ 41 $ (7,497 ) 53,731 Interest Expense 8,590 111 — 8,701 Depreciation 2,283 199 200 2,682 Amortization 5,420 — 303 5,723 EBITDA 77,480 351 (6,994 ) 70,837 Stock-Based Compensation 2,925 100 566 3,591 Adjusted EBITDA 80,405 $ 451 $ (6,428 ) $ 74,428 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment. (Unaudited) Three Months Ended December 31, 2021 Progressive Leasing Vive Other Consolidated Total Net Earnings $ 37,819 Income Tax Expense(1) 15,038 Earnings (Loss) Before Income Tax Expense $ 50,998 $ 8,092 $ (6,233 ) 52,857 Interest Expense 3,788 143 — 3,931 Depreciation 2,825 224 29 3,078 Amortization 5,421 — 303 5,724 EBITDA 63,032 8,459 (5,901 ) 65,590 Stock-Based Compensation 3,327 78 3,141 6,546 Adjusted EBITDA $ 66,359 $ 8,537 $ (2,760 ) $ 72,136 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment. PROG Holdings, Inc. Non-GAAP Financial Information Twelve Month Segment EBITDA (In thousands) Twelve Months Ended December 31, 2022 Progressive Leasing Vive Other Consolidated Total Net Earnings $ 98,709 Income Tax Expense(1) 49,535 Earnings (Loss) Before Income Tax Expense $ 174,143 $ 9,195 $ (35,094 ) 148,244 Interest Expense 37,003 398 — 37,401 Depreciation 9,691 795 471 10,957 Amortization 21,683 — 1,211 22,894 EBITDA 242,520 10,388 (33,412 ) 219,496 Stock-Based Compensation 12,633 391 4,497 17,521 Restructuring Expense 8,343 658 — 9,001 Impairment of Goodwill — — 10,151 10,151 Adjusted EBITDA $ 263,496 $ 11,437 $ (18,764 ) $ 256,169 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment. Twelve Months Ended December 31, 2021 Progressive Leasing Vive Other Consolidated Total Net Earnings $ 243,557 Income Tax Expense(1) 84,647 Earnings (Loss) Before Income Tax Expense $ 319,126 $ 20,223 $ (11,145 ) 328,204 Interest Expense 4,850 473 — 5,323 Depreciation 10,078 849 42 10,969 Amortization 21,684 — 605 22,289 EBITDA 355,738 21,545 (10,498 ) 366,785 Stock-Based Compensation 14,919 287 6,143 21,349 Transaction Expense 561 — — 561 Adjusted EBITDA $ 371,218 $ 21,832 $ (4,355 ) $ 388,695 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment. PROG Holdings, Inc. Non-GAAP Financial Information Reconciliation of 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 (Loss) 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 March 31, 2023 Outlook for Adjusted EBITDA (In thousands) Three Months Ended March 31, 2023 Outlook Consolidated Total Estimated Net Earnings $34,500 - $37,500 Income Tax Expense(1) 15,500 - 16,500 Projected Earnings (Loss) Before Income Tax Expense 50,000 - 54,000 Interest Expense 9,000 Depreciation 2,000 Amortization 6,000 Projected EBITDA 67,000 - 71,000 Stock-Based Compensation 5,000 - 6,000 Projected Adjusted EBITDA $72,000 - $77,000 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company segments. PROG Holdings, Inc. Reconciliation of 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(1) 0.48 0.48 Add: Projected Interest on FTC Settlement Uncertain Tax Position 0.06 0.06 Subtract: Tax Effect on Non-GAAP Adjustments (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 March 31, 2023 Outlook for Earnings Per Share Assuming Dilution to Non-GAAP Earnings Per Share Assuming Dilution Three Months Ended March 31, 2023 Low High Projected Earnings Per Share Assuming Dilution $ 0.71 $ 0.77 Add: Projected Intangible Amortization Expense(1) 0.12 0.12 Add: Projected Interest on FTC Settlement Uncertain Tax Position 0.02 0.02 Subtract: Tax Effect on Non-GAAP Adjustments (0.03 ) (0.03 ) Projected Non-GAAP Earnings Per Share Assuming Dilution(2) $ 0.82 $ 0.88 (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. View source version on businesswire.com: https://www.businesswire.com/news/home/20230222005345/en/Contacts Investor Contact John Baugh, CFA Vice President, Investor Relations john.baugh@progleasing.com Media Contact Mark Delcorps Director, Corporate Communications media@progholdings.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
PROG Holdings Reports Fourth Quarter 2022 Results By: PROG Holdings, Inc. via Business Wire February 22, 2023 at 07:00 AM EST Consolidated revenues of $612.1 million Consolidated earnings before taxes of $53.7 million; Adjusted EBITDA increased 3.2% year-over-year to $74.4 million or 12.2% of revenues Diluted EPS of $0.73; Non-GAAP Diluted EPS of $0.84, up 25% year-over-year Progressive Leasing write-offs of 6.5%, down from 6.8% in Q4 2021 E-commerce increased to 20.4% 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 fourth quarter ended December 31, 2022. "Our fourth quarter results exceeded both our top and bottom line expectations, primarily driven by decisions made in the first half of 2022 to improve our portfolio performance and adjust our cost structure in the face of macroeconomic headwinds," said PROG Holdings President and CEO Steve Michaels. "During the quarter, we saw continued improvement in the quality of our lease portfolio as a result of these decisioning changes, and we were able to deliver write-offs within our targeted annual range for 2022 despite the pressures facing our consumers. We believe that our market leadership and financial strength will allow us to navigate through this uncertain period, continue to broaden our partner base, and position us to capitalize on increased consumer demand when the current macroeconomic headwinds subside." Consolidated Results Consolidated revenues for the fourth quarter of 2022 were $612.1 million, a decrease of 5.3% from the same period in 2021, with the impact of lower approval rates and weak retail traffic partially offset by an increase in average ticket size, further penetration with large national retail partners, and additional e-commerce integrations. The Company reported consolidated net earnings for the fourth quarter of 2022 of $36.1 million, compared with $37.8 million in the prior year period. Adjusted EBITDA for the quarter was $74.4 million, or 12.2% of revenues, compared with $72.1 million, or 11.2% of revenues for the same period in 2021. The year over year growth in Adjusted EBITDA was driven primarily by strong portfolio performance and cost disciplines instituted mid-year to adjust for the anticipated decline in revenue. Diluted earnings per share for the fourth quarter of 2022 were $0.73 compared with $0.59 in the year ago period. On a non-GAAP basis, diluted earnings per share were $0.84 in the fourth quarter of 2022, compared with $0.67 for the same quarter in 2021. Our weighted average shares outstanding assuming dilution in the fourth quarter was 22.9% lower than the same quarter in 2021. Progressive Leasing Results Progressive Leasing's fourth quarter GMV decreased 14.8% to $540.9 million compared with the same period in 2021, primarily due to tighter decisioning on lease approvals and weaker traffic patterns for our retail partners, both in store and online. E-commerce GMV within the segment decreased 4.4% year-over-year; however, it increased to 20.4% of the segment's total GMV in the fourth quarter of 2022. The provision for lease merchandise write-offs was 6.5% of lease revenues in the fourth quarter of 2022, down both sequentially and year-over-year. We continued to see improved delinquency trends within the quarter following the tightening in decisioning made earlier in the year. Liquidity and Capital Allocation PROG Holdings ended the fourth quarter of 2022 with cash of $131.9 million and gross debt of $600 million. The Company repurchased $36.2 million of its stock in the quarter at an average price of $17.83 per share and has $337.3 million remaining under its previously-announced $1 billion share repurchase program. 2023 Outlook The Company is issuing full year and Q1 2023 outlook for revenues, net earnings, adjusted EBITDA, GAAP diluted EPS, and non-GAAP diluted EPS. This outlook assumes a difficult operating environment with continued soft demand for consumer durable goods, no material changes in the Company's decisioning posture, and no impact from additional share repurchases. Full Year 2023 Outlook (In thousands, except per share amounts) Low High PROG Holdings - Total Revenues $ 2,340,000 $ 2,440,000 PROG Holdings - Net Earnings 82,500 103,500 PROG Holdings - Adjusted EBITDA 215,000 245,000 PROG Holdings - Diluted EPS 1.69 2.12 PROG Holdings - Diluted Non-GAAP EPS 2.11 2.54 Progressive Leasing - Total Revenues 2,275,000 2,370,000 Progressive Leasing - Earnings Before Taxes 147,000 167,000 Progressive Leasing - Adjusted EBITDA 228,000 251,000 Vive - Total Revenues 65,000 70,000 Vive - Earnings Before Taxes 2,500 4,500 Vive - Adjusted EBITDA 5,000 8,000 Other - Loss Before Taxes (26,000 ) (23,000 ) Other - Adjusted EBITDA (18,000 ) (14,000 ) Three Months Ended March 31, 2023 Outlook (In thousands, except per share amounts) Low High PROG Holdings - Total Revenues $ 635,000 $ 660,000 PROG Holdings - Net Earnings 34,500 37,500 PROG Holdings - Adjusted EBITDA 72,000 77,000 PROG Holdings - Diluted EPS 0.71 0.77 PROG Holdings - Diluted Non-GAAP EPS 0.82 0.88 Conference Call and Webcast The Company has scheduled a live webcast and conference call for Wednesday, February 22nd, 2023, at 8:30 A.M. ET to discuss its financial results for the fourth quarter of 2022. 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 "believe," "continue," "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, 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; (iv) changes in the enforcement of existing laws and regulations and the adoption of new laws and regulations that may unfavorably impact our businesses; (ix) the risk that our capital allocation strategy, including our current share repurchase program, will not be effective at enhancing shareholder value; (x) our cost reduction initiatives may not be adequate or may have unintended consequences that could be disruptive to our businesses; (xi) 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; (xii) increased competition from traditional and virtual lease-to-own competitors and also from competitors of our Vive segment; (xiii) 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; (xiv) our increased level of indebtedness; (xv) 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 (xvi) 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 benefits we expect to realize from our market leadership and financial strength, including our ability to broaden our base of POS partners and to capitalize on increased consumer demand when the current macroeconomic headwinds subside; and (ii) our full-year and first-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 Twelve Months Ended December 31, December 31, 2022 2021 2022 2021 REVENUES: Lease Revenues and Fees $ 592,942 $ 629,950 $ 2,523,785 $ 2,619,005 Interest and Fees on Loans Receivable 19,155 16,593 74,041 58,915 612,097 646,543 2,597,826 2,677,920 COSTS AND EXPENSES: Depreciation of Lease Merchandise 399,017 439,438 1,757,730 1,820,010 Provision for Lease Merchandise Write-offs 38,271 42,912 193,926 126,984 Operating Expenses 112,377 107,405 450,374 397,399 Impairment of Goodwill — — 10,151 — 549,665 589,755 2,412,181 2,344,393 OPERATING PROFIT 62,432 56,788 185,645 333,527 Interest Expense, Net (8,701 ) (3,931 ) (37,401 ) (5,323 ) EARNINGS BEFORE INCOME TAX EXPENSE 53,731 52,857 148,244 328,204 INCOME TAX EXPENSE 17,646 15,038 49,535 84,647 NET EARNINGS $ 36,085 $ 37,819 $ 98,709 $ 243,557 EARNINGS PER SHARE Basic $ 0.74 $ 0.60 $ 1.90 $ 3.69 Assuming Dilution $ 0.73 $ 0.59 $ 1.90 $ 3.67 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 49,029 63,319 51,921 66,026 Assuming Dilution 49,170 63,739 52,075 66,416 PROG Holdings, Inc. Consolidated Balance Sheets (In thousands, except share data) December 31, 2022 December 31, 2021 ASSETS: Cash and Cash Equivalents $ 131,880 $ 170,159 Accounts Receivable (net of allowances of $69,264 in 2022 and $71,233 in 2021) 64,521 66,270 Lease Merchandise (net of accumulated depreciation and allowances of $467,355 in 2022 and $463,929 in 2021) 648,043 714,055 Loans Receivable (net of allowances and unamortized fees of $53,635 in 2022 and $53,300 in 2021) 130,966 119,315 Property and Equipment, Net 23,852 25,648 Operating Lease Right-of-Use Assets 11,875 17,488 Goodwill 296,061 306,212 Other Intangibles, Net 114,411 137,305 Income Tax Receivable 18,864 14,352 Deferred Income Tax Assets 2,955 2,760 Prepaid Expenses and Other Assets 48,481 48,197 Total Assets $ 1,491,909 $ 1,621,761 LIABILITIES & SHAREHOLDERS’ EQUITY: Accounts Payable and Accrued Expenses $ 135,025 $ 135,954 Deferred Income Tax Liabilities 137,261 146,265 Customer Deposits and Advance Payments 37,074 45,070 Operating Lease Liabilities 21,122 25,410 Debt 590,966 589,654 Total Liabilities 921,448 942,353 SHAREHOLDERS' EQUITY: Common Stock, Par Value $0.50 Per Share: Authorized: 225,000,000 Shares at December 31, 2022 and 2021; Shares Issued: 82,078,654 at December 31, 2022 and 2021 41,039 41,039 Additional Paid-in Capital 338,814 332,244 Retained Earnings 1,154,235 1,055,526 1,534,088 1,428,809 Less: Treasury Shares at Cost Common Stock: 34,044,102 Shares at December 31, 2022 and 25,638,057 at December 31, 2021 (963,627 ) (749,401 ) Total Shareholders’ Equity 570,461 679,408 Total Liabilities & Shareholders’ Equity $ 1,491,909 $ 1,621,761 PROG Holdings, Inc. Consolidated Statements of Cash Flows (In thousands) Year Ended December 31, 2022 2021 OPERATING ACTIVITIES: Net Earnings $ 98,709 $ 243,557 Adjustments to Reconcile Net Earnings to Cash Provided by Operating Activities: Depreciation of Lease Merchandise 1,757,730 1,820,010 Other Depreciation and Amortization 33,851 33,258 Provisions for Accounts Receivable and Loan Losses 417,496 242,412 Stock-Based Compensation 17,521 21,349 Deferred Income Taxes (9,199 ) 15,729 Impairment of Goodwill and Other Assets 10,151 — Non-Cash Lease Expense (1,674 ) 974 Other Changes, Net (7,164 ) (7,561 ) Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions: Additions to Lease Merchandise (1,889,207 ) (2,054,467 ) Book Value of Lease Merchandise Sold or Disposed 197,489 130,665 Accounts Receivable (374,515 ) (229,703 ) Prepaid Expenses and Other Assets 68 (7,879 ) Income Tax Receivable and Payable (6,007 ) (29,753 ) Operating Lease Right-of-Use Assets and Liabilities 2,999 (1,955 ) Accounts Payable and Accrued Expenses 2,227 70,820 Customer Deposits and Advance Payments (7,996 ) (1,495 ) Cash Provided by Operating Activities 242,479 245,961 INVESTING ACTIVITIES: Investments in Loans Receivable (203,600 ) (182,204 ) Proceeds from Loans Receivable 159,707 132,281 Outflows on Purchases of Property and Equipment (9,674 ) (9,555 ) Proceeds from Property and Equipment 27 78 Proceeds (Outflows) from Acquisitions of Businesses and Customer Agreements 6 (22,766 ) Cash Used in Investing Activities (53,534 ) (82,166 ) FINANCING ACTIVITIES: Repayments on Revolving Facility, Net — (50,000 ) Proceeds from Debt — 591,750 Acquisition of Treasury Stock (223,598 ) (142,358 ) Tender Offer Shares Repurchased and Retired (274 ) (428,551 ) Issuance of Stock Under Stock Option Plans 1,150 4,592 Shares Withheld for Tax Payments (2,902 ) (5,123 ) Debt Issuance Costs (1,600 ) (591 ) Cash Used in Financing Activities (227,224 ) (30,281 ) (Decrease) Increase in Cash and Cash Equivalents (38,279 ) 133,514 Cash and Cash Equivalents at Beginning of Year 170,159 36,645 Cash and Cash Equivalents at End of Year $ 131,880 $ 170,159 Net Cash Paid During the Year: Interest Expense $ 35,712 $ 1,452 Income Taxes $ 62,172 $ 53,602 PROG Holdings, Inc. Quarterly Revenues by Segment (In thousands) (Unaudited) Three Months Ended December 31, 2022 Progressive Leasing Vive Other Consolidated Total Lease Revenues and Fees $ 592,942 $ — $ — $ 592,942 Interest and Fees on Loans Receivable — 17,886 1,269 19,155 Total Revenues $ 592,942 $ 17,886 $ 1,269 $ 612,097 (Unaudited) Three Months Ended December 31, 2021 Progressive Leasing Vive Other Consolidated Total Lease Revenues and Fees $ 629,950 $ — $ — $ 629,950 Interest and Fees on Loans Receivable — 16,308 285 16,593 Total Revenues $ 629,950 $ 16,308 $ 285 $ 646,543 PROG Holdings, Inc. Annual Revenues by Segment (In thousands) Twelve Months Ended December 31, 2022 Progressive Leasing Vive Other Consolidated Total Lease Revenues and Fees $ 2,523,785 $ — $ — $ 2,523,785 Interest and Fees on Loans Receivable — 70,911 3,130 74,041 Total Revenues $ 2,523,785 $ 70,911 $ 3,130 $ 2,597,826 Twelve Months Ended December 31, 2021 Progressive Leasing Vive Other Consolidated Total Lease Revenues and Fees $ 2,619,005 $ — $ — $ 2,619,005 Interest and Fees on Loans Receivable — 58,462 453 58,915 Total Revenues $ 2,619,005 $ 58,462 $ 453 $ 2,677,920 PROG Holdings, Inc. Gross Merchandise Volume by Quarter (In thousands) (Unaudited) Three Months Ended December 31, 2022 2021 Progressive Leasing $ 540,913 $ 634,654 Vive 40,417 42,455 Other 26,192 5,996 Total $ 607,522 $ 683,105 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 twelve months ended December 31, 2022, full year 2023 and first quarter 2023 outlook exclude intangible amortization expense, restructuring expenses, impairment of goodwill, 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 twelve months ended December 31, 2021, exclude intangible amortization expense and transaction costs associated with the acquisition of Four. 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 twelve months ended December 31, 2022, full year 2023 and first quarter 2023 outlook exclude stock-based compensation expense, restructuring expenses, and impairment of goodwill. Adjusted EBITDA for the three and twelve months ended December 31, 2021, exclude stock-based compensation expense and transaction costs associated with the acquisition of Four. The amounts for these pre-tax non-GAAP adjustments can be found in the three and twelve 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) Three Months Ended Twelve Months Ended Mar 31, Jun 30, Sept 30, Dec 31, Dec 31, 2022 Net Earnings $ 27,135 $ 19,484 $ 16,005 $ 36,085 $ 98,709 Add: Intangible Amortization Expense 5,724 5,723 5,724 5,723 22,894 Add: Restructuring Expense — 4,328 4,673 — 9,001 Add: Impairment of Goodwill — — 10,151 — 10,151 Less: Tax Impact of Adjustments(1) (1,488 ) (2,613 ) (2,703 ) (1,488 ) (8,292 ) Add: Accrued Interest on FTC Settlement Uncertain Tax Position 539 647 755 972 2,913 Non-GAAP Net Earnings $ 31,910 $ 27,569 $ 34,605 $ 41,292 $ 135,376 Earnings Per Share Assuming Dilution $ 0.49 $ 0.37 $ 0.32 $ 0.73 $ 1.90 Add: Intangible Amortization Expense 0.10 0.11 0.11 0.12 0.44 Add: Restructuring Expense — 0.08 0.09 — 0.17 Add: Impairment of Goodwill — — 0.20 — 0.19 Less: Tax Impact of Adjustments(1) (0.03 ) (0.05 ) (0.05 ) (0.03 ) (0.16 ) Add: Accrued Interest on FTC Settlement Uncertain Tax Position 0.01 0.01 0.01 0.02 0.06 Non-GAAP Earnings Per Share Assuming Dilution(2) $ 0.57 $ 0.52 $ 0.68 $ 0.84 $ 2.60 Weighted Average Shares Outstanding Assuming Dilution 55,706 52,961 50,547 49,170 52,075 (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 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 Twelve Months Ended Mar 31, Jun 30, Sept 30, Dec 31, Dec 31, 2021 Net Earnings $ 79,488 $ 68,837 $ 57,413 $ 37,819 $ 243,557 Add: Intangible Amortization Expense 5,421 5,421 5,723 5,724 22,289 Add: Transaction Expense — 561 — — 561 Less: Tax Impact of Adjustments(1) (1,409 ) (1,555 ) (1,488 ) (1,488 ) (5,940 ) Add: Accrued Interest on FTC Settlement Uncertain Tax Position — — 1,040 350 1,390 Non-GAAP Net Earnings $ 83,500 $ 73,264 $ 62,688 $ 42,405 $ 261,857 Earnings Per Share Assuming Dilution $ 1.16 $ 1.02 $ 0.86 $ 0.59 $ 3.67 Add: Intangible Amortization Expense 0.08 0.08 0.09 0.09 0.34 Add: Transaction Expense — 0.01 — — 0.01 Less: Tax Impact of Adjustments(1) (0.02 ) (0.02 ) (0.02 ) (0.02 ) (0.09 ) Add: Accrued Interest on FTC Settlement Uncertain Tax Position — — 0.02 0.01 0.02 Non-GAAP Earnings Per Share Assuming Dilution(2) $ 1.22 $ 1.09 $ 0.94 $ 0.67 $ 3.94 Weighted Average Shares Outstanding Assuming Dilution 68,260 67,329 66,385 63,739 66,416 (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 December 31, 2022 Progressive Leasing Vive Other Consolidated Total Net Earnings $ 36,085 Income Tax Expense(1) 17,646 Earnings (Loss) Before Income Tax Expense 61,187 $ 41 $ (7,497 ) 53,731 Interest Expense 8,590 111 — 8,701 Depreciation 2,283 199 200 2,682 Amortization 5,420 — 303 5,723 EBITDA 77,480 351 (6,994 ) 70,837 Stock-Based Compensation 2,925 100 566 3,591 Adjusted EBITDA 80,405 $ 451 $ (6,428 ) $ 74,428 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment. (Unaudited) Three Months Ended December 31, 2021 Progressive Leasing Vive Other Consolidated Total Net Earnings $ 37,819 Income Tax Expense(1) 15,038 Earnings (Loss) Before Income Tax Expense $ 50,998 $ 8,092 $ (6,233 ) 52,857 Interest Expense 3,788 143 — 3,931 Depreciation 2,825 224 29 3,078 Amortization 5,421 — 303 5,724 EBITDA 63,032 8,459 (5,901 ) 65,590 Stock-Based Compensation 3,327 78 3,141 6,546 Adjusted EBITDA $ 66,359 $ 8,537 $ (2,760 ) $ 72,136 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment. PROG Holdings, Inc. Non-GAAP Financial Information Twelve Month Segment EBITDA (In thousands) Twelve Months Ended December 31, 2022 Progressive Leasing Vive Other Consolidated Total Net Earnings $ 98,709 Income Tax Expense(1) 49,535 Earnings (Loss) Before Income Tax Expense $ 174,143 $ 9,195 $ (35,094 ) 148,244 Interest Expense 37,003 398 — 37,401 Depreciation 9,691 795 471 10,957 Amortization 21,683 — 1,211 22,894 EBITDA 242,520 10,388 (33,412 ) 219,496 Stock-Based Compensation 12,633 391 4,497 17,521 Restructuring Expense 8,343 658 — 9,001 Impairment of Goodwill — — 10,151 10,151 Adjusted EBITDA $ 263,496 $ 11,437 $ (18,764 ) $ 256,169 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment. Twelve Months Ended December 31, 2021 Progressive Leasing Vive Other Consolidated Total Net Earnings $ 243,557 Income Tax Expense(1) 84,647 Earnings (Loss) Before Income Tax Expense $ 319,126 $ 20,223 $ (11,145 ) 328,204 Interest Expense 4,850 473 — 5,323 Depreciation 10,078 849 42 10,969 Amortization 21,684 — 605 22,289 EBITDA 355,738 21,545 (10,498 ) 366,785 Stock-Based Compensation 14,919 287 6,143 21,349 Transaction Expense 561 — — 561 Adjusted EBITDA $ 371,218 $ 21,832 $ (4,355 ) $ 388,695 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment. PROG Holdings, Inc. Non-GAAP Financial Information Reconciliation of 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 (Loss) 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 March 31, 2023 Outlook for Adjusted EBITDA (In thousands) Three Months Ended March 31, 2023 Outlook Consolidated Total Estimated Net Earnings $34,500 - $37,500 Income Tax Expense(1) 15,500 - 16,500 Projected Earnings (Loss) Before Income Tax Expense 50,000 - 54,000 Interest Expense 9,000 Depreciation 2,000 Amortization 6,000 Projected EBITDA 67,000 - 71,000 Stock-Based Compensation 5,000 - 6,000 Projected Adjusted EBITDA $72,000 - $77,000 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company segments. PROG Holdings, Inc. Reconciliation of 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(1) 0.48 0.48 Add: Projected Interest on FTC Settlement Uncertain Tax Position 0.06 0.06 Subtract: Tax Effect on Non-GAAP Adjustments (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 March 31, 2023 Outlook for Earnings Per Share Assuming Dilution to Non-GAAP Earnings Per Share Assuming Dilution Three Months Ended March 31, 2023 Low High Projected Earnings Per Share Assuming Dilution $ 0.71 $ 0.77 Add: Projected Intangible Amortization Expense(1) 0.12 0.12 Add: Projected Interest on FTC Settlement Uncertain Tax Position 0.02 0.02 Subtract: Tax Effect on Non-GAAP Adjustments (0.03 ) (0.03 ) Projected Non-GAAP Earnings Per Share Assuming Dilution(2) $ 0.82 $ 0.88 (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. View source version on businesswire.com: https://www.businesswire.com/news/home/20230222005345/en/Contacts Investor Contact John Baugh, CFA Vice President, Investor Relations john.baugh@progleasing.com Media Contact Mark Delcorps Director, Corporate Communications media@progholdings.com
Consolidated revenues of $612.1 million Consolidated earnings before taxes of $53.7 million; Adjusted EBITDA increased 3.2% year-over-year to $74.4 million or 12.2% of revenues Diluted EPS of $0.73; Non-GAAP Diluted EPS of $0.84, up 25% year-over-year Progressive Leasing write-offs of 6.5%, down from 6.8% in Q4 2021 E-commerce increased to 20.4% 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 fourth quarter ended December 31, 2022. "Our fourth quarter results exceeded both our top and bottom line expectations, primarily driven by decisions made in the first half of 2022 to improve our portfolio performance and adjust our cost structure in the face of macroeconomic headwinds," said PROG Holdings President and CEO Steve Michaels. "During the quarter, we saw continued improvement in the quality of our lease portfolio as a result of these decisioning changes, and we were able to deliver write-offs within our targeted annual range for 2022 despite the pressures facing our consumers. We believe that our market leadership and financial strength will allow us to navigate through this uncertain period, continue to broaden our partner base, and position us to capitalize on increased consumer demand when the current macroeconomic headwinds subside." Consolidated Results Consolidated revenues for the fourth quarter of 2022 were $612.1 million, a decrease of 5.3% from the same period in 2021, with the impact of lower approval rates and weak retail traffic partially offset by an increase in average ticket size, further penetration with large national retail partners, and additional e-commerce integrations. The Company reported consolidated net earnings for the fourth quarter of 2022 of $36.1 million, compared with $37.8 million in the prior year period. Adjusted EBITDA for the quarter was $74.4 million, or 12.2% of revenues, compared with $72.1 million, or 11.2% of revenues for the same period in 2021. The year over year growth in Adjusted EBITDA was driven primarily by strong portfolio performance and cost disciplines instituted mid-year to adjust for the anticipated decline in revenue. Diluted earnings per share for the fourth quarter of 2022 were $0.73 compared with $0.59 in the year ago period. On a non-GAAP basis, diluted earnings per share were $0.84 in the fourth quarter of 2022, compared with $0.67 for the same quarter in 2021. Our weighted average shares outstanding assuming dilution in the fourth quarter was 22.9% lower than the same quarter in 2021. Progressive Leasing Results Progressive Leasing's fourth quarter GMV decreased 14.8% to $540.9 million compared with the same period in 2021, primarily due to tighter decisioning on lease approvals and weaker traffic patterns for our retail partners, both in store and online. E-commerce GMV within the segment decreased 4.4% year-over-year; however, it increased to 20.4% of the segment's total GMV in the fourth quarter of 2022. The provision for lease merchandise write-offs was 6.5% of lease revenues in the fourth quarter of 2022, down both sequentially and year-over-year. We continued to see improved delinquency trends within the quarter following the tightening in decisioning made earlier in the year. Liquidity and Capital Allocation PROG Holdings ended the fourth quarter of 2022 with cash of $131.9 million and gross debt of $600 million. The Company repurchased $36.2 million of its stock in the quarter at an average price of $17.83 per share and has $337.3 million remaining under its previously-announced $1 billion share repurchase program. 2023 Outlook The Company is issuing full year and Q1 2023 outlook for revenues, net earnings, adjusted EBITDA, GAAP diluted EPS, and non-GAAP diluted EPS. This outlook assumes a difficult operating environment with continued soft demand for consumer durable goods, no material changes in the Company's decisioning posture, and no impact from additional share repurchases. Full Year 2023 Outlook (In thousands, except per share amounts) Low High PROG Holdings - Total Revenues $ 2,340,000 $ 2,440,000 PROG Holdings - Net Earnings 82,500 103,500 PROG Holdings - Adjusted EBITDA 215,000 245,000 PROG Holdings - Diluted EPS 1.69 2.12 PROG Holdings - Diluted Non-GAAP EPS 2.11 2.54 Progressive Leasing - Total Revenues 2,275,000 2,370,000 Progressive Leasing - Earnings Before Taxes 147,000 167,000 Progressive Leasing - Adjusted EBITDA 228,000 251,000 Vive - Total Revenues 65,000 70,000 Vive - Earnings Before Taxes 2,500 4,500 Vive - Adjusted EBITDA 5,000 8,000 Other - Loss Before Taxes (26,000 ) (23,000 ) Other - Adjusted EBITDA (18,000 ) (14,000 ) Three Months Ended March 31, 2023 Outlook (In thousands, except per share amounts) Low High PROG Holdings - Total Revenues $ 635,000 $ 660,000 PROG Holdings - Net Earnings 34,500 37,500 PROG Holdings - Adjusted EBITDA 72,000 77,000 PROG Holdings - Diluted EPS 0.71 0.77 PROG Holdings - Diluted Non-GAAP EPS 0.82 0.88 Conference Call and Webcast The Company has scheduled a live webcast and conference call for Wednesday, February 22nd, 2023, at 8:30 A.M. ET to discuss its financial results for the fourth quarter of 2022. 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 "believe," "continue," "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, 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; (iv) changes in the enforcement of existing laws and regulations and the adoption of new laws and regulations that may unfavorably impact our businesses; (ix) the risk that our capital allocation strategy, including our current share repurchase program, will not be effective at enhancing shareholder value; (x) our cost reduction initiatives may not be adequate or may have unintended consequences that could be disruptive to our businesses; (xi) 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; (xii) increased competition from traditional and virtual lease-to-own competitors and also from competitors of our Vive segment; (xiii) 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; (xiv) our increased level of indebtedness; (xv) 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 (xvi) 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 benefits we expect to realize from our market leadership and financial strength, including our ability to broaden our base of POS partners and to capitalize on increased consumer demand when the current macroeconomic headwinds subside; and (ii) our full-year and first-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 Twelve Months Ended December 31, December 31, 2022 2021 2022 2021 REVENUES: Lease Revenues and Fees $ 592,942 $ 629,950 $ 2,523,785 $ 2,619,005 Interest and Fees on Loans Receivable 19,155 16,593 74,041 58,915 612,097 646,543 2,597,826 2,677,920 COSTS AND EXPENSES: Depreciation of Lease Merchandise 399,017 439,438 1,757,730 1,820,010 Provision for Lease Merchandise Write-offs 38,271 42,912 193,926 126,984 Operating Expenses 112,377 107,405 450,374 397,399 Impairment of Goodwill — — 10,151 — 549,665 589,755 2,412,181 2,344,393 OPERATING PROFIT 62,432 56,788 185,645 333,527 Interest Expense, Net (8,701 ) (3,931 ) (37,401 ) (5,323 ) EARNINGS BEFORE INCOME TAX EXPENSE 53,731 52,857 148,244 328,204 INCOME TAX EXPENSE 17,646 15,038 49,535 84,647 NET EARNINGS $ 36,085 $ 37,819 $ 98,709 $ 243,557 EARNINGS PER SHARE Basic $ 0.74 $ 0.60 $ 1.90 $ 3.69 Assuming Dilution $ 0.73 $ 0.59 $ 1.90 $ 3.67 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 49,029 63,319 51,921 66,026 Assuming Dilution 49,170 63,739 52,075 66,416 PROG Holdings, Inc. Consolidated Balance Sheets (In thousands, except share data) December 31, 2022 December 31, 2021 ASSETS: Cash and Cash Equivalents $ 131,880 $ 170,159 Accounts Receivable (net of allowances of $69,264 in 2022 and $71,233 in 2021) 64,521 66,270 Lease Merchandise (net of accumulated depreciation and allowances of $467,355 in 2022 and $463,929 in 2021) 648,043 714,055 Loans Receivable (net of allowances and unamortized fees of $53,635 in 2022 and $53,300 in 2021) 130,966 119,315 Property and Equipment, Net 23,852 25,648 Operating Lease Right-of-Use Assets 11,875 17,488 Goodwill 296,061 306,212 Other Intangibles, Net 114,411 137,305 Income Tax Receivable 18,864 14,352 Deferred Income Tax Assets 2,955 2,760 Prepaid Expenses and Other Assets 48,481 48,197 Total Assets $ 1,491,909 $ 1,621,761 LIABILITIES & SHAREHOLDERS’ EQUITY: Accounts Payable and Accrued Expenses $ 135,025 $ 135,954 Deferred Income Tax Liabilities 137,261 146,265 Customer Deposits and Advance Payments 37,074 45,070 Operating Lease Liabilities 21,122 25,410 Debt 590,966 589,654 Total Liabilities 921,448 942,353 SHAREHOLDERS' EQUITY: Common Stock, Par Value $0.50 Per Share: Authorized: 225,000,000 Shares at December 31, 2022 and 2021; Shares Issued: 82,078,654 at December 31, 2022 and 2021 41,039 41,039 Additional Paid-in Capital 338,814 332,244 Retained Earnings 1,154,235 1,055,526 1,534,088 1,428,809 Less: Treasury Shares at Cost Common Stock: 34,044,102 Shares at December 31, 2022 and 25,638,057 at December 31, 2021 (963,627 ) (749,401 ) Total Shareholders’ Equity 570,461 679,408 Total Liabilities & Shareholders’ Equity $ 1,491,909 $ 1,621,761 PROG Holdings, Inc. Consolidated Statements of Cash Flows (In thousands) Year Ended December 31, 2022 2021 OPERATING ACTIVITIES: Net Earnings $ 98,709 $ 243,557 Adjustments to Reconcile Net Earnings to Cash Provided by Operating Activities: Depreciation of Lease Merchandise 1,757,730 1,820,010 Other Depreciation and Amortization 33,851 33,258 Provisions for Accounts Receivable and Loan Losses 417,496 242,412 Stock-Based Compensation 17,521 21,349 Deferred Income Taxes (9,199 ) 15,729 Impairment of Goodwill and Other Assets 10,151 — Non-Cash Lease Expense (1,674 ) 974 Other Changes, Net (7,164 ) (7,561 ) Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions: Additions to Lease Merchandise (1,889,207 ) (2,054,467 ) Book Value of Lease Merchandise Sold or Disposed 197,489 130,665 Accounts Receivable (374,515 ) (229,703 ) Prepaid Expenses and Other Assets 68 (7,879 ) Income Tax Receivable and Payable (6,007 ) (29,753 ) Operating Lease Right-of-Use Assets and Liabilities 2,999 (1,955 ) Accounts Payable and Accrued Expenses 2,227 70,820 Customer Deposits and Advance Payments (7,996 ) (1,495 ) Cash Provided by Operating Activities 242,479 245,961 INVESTING ACTIVITIES: Investments in Loans Receivable (203,600 ) (182,204 ) Proceeds from Loans Receivable 159,707 132,281 Outflows on Purchases of Property and Equipment (9,674 ) (9,555 ) Proceeds from Property and Equipment 27 78 Proceeds (Outflows) from Acquisitions of Businesses and Customer Agreements 6 (22,766 ) Cash Used in Investing Activities (53,534 ) (82,166 ) FINANCING ACTIVITIES: Repayments on Revolving Facility, Net — (50,000 ) Proceeds from Debt — 591,750 Acquisition of Treasury Stock (223,598 ) (142,358 ) Tender Offer Shares Repurchased and Retired (274 ) (428,551 ) Issuance of Stock Under Stock Option Plans 1,150 4,592 Shares Withheld for Tax Payments (2,902 ) (5,123 ) Debt Issuance Costs (1,600 ) (591 ) Cash Used in Financing Activities (227,224 ) (30,281 ) (Decrease) Increase in Cash and Cash Equivalents (38,279 ) 133,514 Cash and Cash Equivalents at Beginning of Year 170,159 36,645 Cash and Cash Equivalents at End of Year $ 131,880 $ 170,159 Net Cash Paid During the Year: Interest Expense $ 35,712 $ 1,452 Income Taxes $ 62,172 $ 53,602 PROG Holdings, Inc. Quarterly Revenues by Segment (In thousands) (Unaudited) Three Months Ended December 31, 2022 Progressive Leasing Vive Other Consolidated Total Lease Revenues and Fees $ 592,942 $ — $ — $ 592,942 Interest and Fees on Loans Receivable — 17,886 1,269 19,155 Total Revenues $ 592,942 $ 17,886 $ 1,269 $ 612,097 (Unaudited) Three Months Ended December 31, 2021 Progressive Leasing Vive Other Consolidated Total Lease Revenues and Fees $ 629,950 $ — $ — $ 629,950 Interest and Fees on Loans Receivable — 16,308 285 16,593 Total Revenues $ 629,950 $ 16,308 $ 285 $ 646,543 PROG Holdings, Inc. Annual Revenues by Segment (In thousands) Twelve Months Ended December 31, 2022 Progressive Leasing Vive Other Consolidated Total Lease Revenues and Fees $ 2,523,785 $ — $ — $ 2,523,785 Interest and Fees on Loans Receivable — 70,911 3,130 74,041 Total Revenues $ 2,523,785 $ 70,911 $ 3,130 $ 2,597,826 Twelve Months Ended December 31, 2021 Progressive Leasing Vive Other Consolidated Total Lease Revenues and Fees $ 2,619,005 $ — $ — $ 2,619,005 Interest and Fees on Loans Receivable — 58,462 453 58,915 Total Revenues $ 2,619,005 $ 58,462 $ 453 $ 2,677,920 PROG Holdings, Inc. Gross Merchandise Volume by Quarter (In thousands) (Unaudited) Three Months Ended December 31, 2022 2021 Progressive Leasing $ 540,913 $ 634,654 Vive 40,417 42,455 Other 26,192 5,996 Total $ 607,522 $ 683,105 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 twelve months ended December 31, 2022, full year 2023 and first quarter 2023 outlook exclude intangible amortization expense, restructuring expenses, impairment of goodwill, 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 twelve months ended December 31, 2021, exclude intangible amortization expense and transaction costs associated with the acquisition of Four. 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 twelve months ended December 31, 2022, full year 2023 and first quarter 2023 outlook exclude stock-based compensation expense, restructuring expenses, and impairment of goodwill. Adjusted EBITDA for the three and twelve months ended December 31, 2021, exclude stock-based compensation expense and transaction costs associated with the acquisition of Four. The amounts for these pre-tax non-GAAP adjustments can be found in the three and twelve 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) Three Months Ended Twelve Months Ended Mar 31, Jun 30, Sept 30, Dec 31, Dec 31, 2022 Net Earnings $ 27,135 $ 19,484 $ 16,005 $ 36,085 $ 98,709 Add: Intangible Amortization Expense 5,724 5,723 5,724 5,723 22,894 Add: Restructuring Expense — 4,328 4,673 — 9,001 Add: Impairment of Goodwill — — 10,151 — 10,151 Less: Tax Impact of Adjustments(1) (1,488 ) (2,613 ) (2,703 ) (1,488 ) (8,292 ) Add: Accrued Interest on FTC Settlement Uncertain Tax Position 539 647 755 972 2,913 Non-GAAP Net Earnings $ 31,910 $ 27,569 $ 34,605 $ 41,292 $ 135,376 Earnings Per Share Assuming Dilution $ 0.49 $ 0.37 $ 0.32 $ 0.73 $ 1.90 Add: Intangible Amortization Expense 0.10 0.11 0.11 0.12 0.44 Add: Restructuring Expense — 0.08 0.09 — 0.17 Add: Impairment of Goodwill — — 0.20 — 0.19 Less: Tax Impact of Adjustments(1) (0.03 ) (0.05 ) (0.05 ) (0.03 ) (0.16 ) Add: Accrued Interest on FTC Settlement Uncertain Tax Position 0.01 0.01 0.01 0.02 0.06 Non-GAAP Earnings Per Share Assuming Dilution(2) $ 0.57 $ 0.52 $ 0.68 $ 0.84 $ 2.60 Weighted Average Shares Outstanding Assuming Dilution 55,706 52,961 50,547 49,170 52,075 (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 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 Twelve Months Ended Mar 31, Jun 30, Sept 30, Dec 31, Dec 31, 2021 Net Earnings $ 79,488 $ 68,837 $ 57,413 $ 37,819 $ 243,557 Add: Intangible Amortization Expense 5,421 5,421 5,723 5,724 22,289 Add: Transaction Expense — 561 — — 561 Less: Tax Impact of Adjustments(1) (1,409 ) (1,555 ) (1,488 ) (1,488 ) (5,940 ) Add: Accrued Interest on FTC Settlement Uncertain Tax Position — — 1,040 350 1,390 Non-GAAP Net Earnings $ 83,500 $ 73,264 $ 62,688 $ 42,405 $ 261,857 Earnings Per Share Assuming Dilution $ 1.16 $ 1.02 $ 0.86 $ 0.59 $ 3.67 Add: Intangible Amortization Expense 0.08 0.08 0.09 0.09 0.34 Add: Transaction Expense — 0.01 — — 0.01 Less: Tax Impact of Adjustments(1) (0.02 ) (0.02 ) (0.02 ) (0.02 ) (0.09 ) Add: Accrued Interest on FTC Settlement Uncertain Tax Position — — 0.02 0.01 0.02 Non-GAAP Earnings Per Share Assuming Dilution(2) $ 1.22 $ 1.09 $ 0.94 $ 0.67 $ 3.94 Weighted Average Shares Outstanding Assuming Dilution 68,260 67,329 66,385 63,739 66,416 (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 December 31, 2022 Progressive Leasing Vive Other Consolidated Total Net Earnings $ 36,085 Income Tax Expense(1) 17,646 Earnings (Loss) Before Income Tax Expense 61,187 $ 41 $ (7,497 ) 53,731 Interest Expense 8,590 111 — 8,701 Depreciation 2,283 199 200 2,682 Amortization 5,420 — 303 5,723 EBITDA 77,480 351 (6,994 ) 70,837 Stock-Based Compensation 2,925 100 566 3,591 Adjusted EBITDA 80,405 $ 451 $ (6,428 ) $ 74,428 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment. (Unaudited) Three Months Ended December 31, 2021 Progressive Leasing Vive Other Consolidated Total Net Earnings $ 37,819 Income Tax Expense(1) 15,038 Earnings (Loss) Before Income Tax Expense $ 50,998 $ 8,092 $ (6,233 ) 52,857 Interest Expense 3,788 143 — 3,931 Depreciation 2,825 224 29 3,078 Amortization 5,421 — 303 5,724 EBITDA 63,032 8,459 (5,901 ) 65,590 Stock-Based Compensation 3,327 78 3,141 6,546 Adjusted EBITDA $ 66,359 $ 8,537 $ (2,760 ) $ 72,136 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment. PROG Holdings, Inc. Non-GAAP Financial Information Twelve Month Segment EBITDA (In thousands) Twelve Months Ended December 31, 2022 Progressive Leasing Vive Other Consolidated Total Net Earnings $ 98,709 Income Tax Expense(1) 49,535 Earnings (Loss) Before Income Tax Expense $ 174,143 $ 9,195 $ (35,094 ) 148,244 Interest Expense 37,003 398 — 37,401 Depreciation 9,691 795 471 10,957 Amortization 21,683 — 1,211 22,894 EBITDA 242,520 10,388 (33,412 ) 219,496 Stock-Based Compensation 12,633 391 4,497 17,521 Restructuring Expense 8,343 658 — 9,001 Impairment of Goodwill — — 10,151 10,151 Adjusted EBITDA $ 263,496 $ 11,437 $ (18,764 ) $ 256,169 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment. Twelve Months Ended December 31, 2021 Progressive Leasing Vive Other Consolidated Total Net Earnings $ 243,557 Income Tax Expense(1) 84,647 Earnings (Loss) Before Income Tax Expense $ 319,126 $ 20,223 $ (11,145 ) 328,204 Interest Expense 4,850 473 — 5,323 Depreciation 10,078 849 42 10,969 Amortization 21,684 — 605 22,289 EBITDA 355,738 21,545 (10,498 ) 366,785 Stock-Based Compensation 14,919 287 6,143 21,349 Transaction Expense 561 — — 561 Adjusted EBITDA $ 371,218 $ 21,832 $ (4,355 ) $ 388,695 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment. PROG Holdings, Inc. Non-GAAP Financial Information Reconciliation of 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 (Loss) 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 March 31, 2023 Outlook for Adjusted EBITDA (In thousands) Three Months Ended March 31, 2023 Outlook Consolidated Total Estimated Net Earnings $34,500 - $37,500 Income Tax Expense(1) 15,500 - 16,500 Projected Earnings (Loss) Before Income Tax Expense 50,000 - 54,000 Interest Expense 9,000 Depreciation 2,000 Amortization 6,000 Projected EBITDA 67,000 - 71,000 Stock-Based Compensation 5,000 - 6,000 Projected Adjusted EBITDA $72,000 - $77,000 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company segments. PROG Holdings, Inc. Reconciliation of 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(1) 0.48 0.48 Add: Projected Interest on FTC Settlement Uncertain Tax Position 0.06 0.06 Subtract: Tax Effect on Non-GAAP Adjustments (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 March 31, 2023 Outlook for Earnings Per Share Assuming Dilution to Non-GAAP Earnings Per Share Assuming Dilution Three Months Ended March 31, 2023 Low High Projected Earnings Per Share Assuming Dilution $ 0.71 $ 0.77 Add: Projected Intangible Amortization Expense(1) 0.12 0.12 Add: Projected Interest on FTC Settlement Uncertain Tax Position 0.02 0.02 Subtract: Tax Effect on Non-GAAP Adjustments (0.03 ) (0.03 ) Projected Non-GAAP Earnings Per Share Assuming Dilution(2) $ 0.82 $ 0.88 (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. View source version on businesswire.com: https://www.businesswire.com/news/home/20230222005345/en/
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