UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________
FORM 8-K
________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): July 29, 2021
(Exact name of Registrant as Specified in Charter)
(State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||||||||
Registrant’s telephone number, including area code: (385 ) 351-1369
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On July 29, 2021, PROG Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the three months ended June 30, 2021. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference. The information contained in this paragraph, as well as Exhibit 99.1 referenced herein, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits:
Exhibit No. | Description | ||||
Exhibit 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PROG Holdings, Inc. | |||||||||||
By: | /s/ Brian Garner | ||||||||||
Date: | July 29, 2021 | Brian Garner Chief Financial Officer | |||||||||
EXHIBIT 99.1
PROG Holdings Reports Second Quarter 2021 Results
•Progressive Leasing GMV of $506 million, up 25.2%
•E-commerce grew 274% to 13.0% of Progressive Leasing GMV
•Consolidated Revenues of $660 million, up 10.1%
•Diluted EPS of $1.02; Non-GAAP Diluted EPS of $1.09, up 18.5%
•Consolidated earnings before taxes of $68.8 million; Adjusted EBITDA of $104.9 million, up 42.7%
SALT LAKE CITY, July 29, 2021- PROG Holdings, Inc. (NYSE:PRG), the fintech holding company for Progressive Leasing, a leading provider of e-commerce, app-based, and in-store lease-to-own solutions, Vive Financial, a provider of omnichannel second-look revolving credit solutions, and Four Technologies, a provider of Buy Now, Pay Later solutions, today announced financial results for the second quarter ended June 30, 2021.
“I'm pleased to report exceptional financial results for the period, driven by a 25% increase in Progressive Leasing's GMV, strong customer payment performance, and a return to growth in our portfolio," said Steve Michaels, President and Chief Executive Officer of PROG Holdings. “Our Progressive Leasing segment delivered record second quarter results in GMV, revenue, Adjusted EBITDA and earnings before taxes. We also expanded our fintech offerings with the acquisition of Buy Now, Pay Later provider Four Technologies as part of our strategy to grow our ecosystem of flexible and transparent consumer financial products. As we enter the second half of the year, we are encouraged by the opportunity to serve more of our significant addressable market."
Financial Highlights
Consolidated revenues for the second quarter of 2021 were $660.0 million, an increase of 10.1% from the same period in 2020. The increase was primarily due to growth of key large national partners and e-commerce penetration, and from continued strong customer payment performance across both the Progressive Leasing and Vive Financial businesses. Progressive Leasing's GMV
increased 25.2% to $506 million compared with the same period in 2020, with e-commerce GMV growing 274% year-over-year.
The provision for lease merchandise write-offs at Progressive Leasing was 4.8% of lease revenues in the second quarter of 2021, compared with 6.1% in the same period of 2020. Low levels of delinquencies and strong customer payment performance benefited our provision for write-offs in the period.
The Company reported net earnings from continuing operations for the second quarter of 2021 of $68.8 million compared with $59.0 million in the prior year period. Adjusted EBITDA for the second quarter of 2021 was $104.9 million compared with $73.5 million for the same period in 2020, an increase of $31.4 million, or 42.7%. As a percentage of revenues, Adjusted EBITDA was 15.9% in the second quarter of 2021 compared with 12.3% for the same period in 2020. The increases in net earnings from continuing operations and adjusted EBITDA were primarily driven by the Company’s increased revenues and improvements in our provision for write-offs.
Diluted earnings per share from continuing operations for the second quarter of 2021 were
$1.02 compared with $0.87 in the year ago period. On a non-GAAP basis, diluted earnings per share from continuing operations were $1.09 in the first quarter of 2021 compared with $0.92 for the same quarter in 2020.
Liquidity and Capital Allocation
PROG Holdings ended the second quarter of 2021 with cash of $137.5 million and debt of $50 million. The Company repurchased $49.1 million of its stock in the period at an average price per share of $53.84, leaving $223 million available under its $300 million repurchase authorization. The company utilized $23 million of cash to purchase Four Technologies in the second quarter.
The Company expects to repurchase additional shares under its $300 million program from time to time, subject to its capital plan, market conditions, and other factors. The timing and amount of any further repurchases under the program will be determined by management. The Company
is not obligated to acquire any specific number of shares, and the program may be suspended or discontinued at any time.
Outlook
The Company is increasing its full year 2021 consolidated outlook for Adjusted EBITDA to a range of $390 million to $405 million, up from the previous range of $380 million to $400 million, due to better-than-expected portfolio performance. Non-GAAP diluted EPS is expected to be between $3.90 and $4.10, up from a range of $3.80 and $4.05, while GAAP diluted EPS is expected to be between $3.66 and $3.86, up from a range of $3.56 and $3.81.
Conference Call and Webcast
The Company has scheduled a live webcast and conference call for Thursday, July 29, 2021, at 8:30 A.M. ET to discuss its financial results for the second quarter of 2021. To access the live webcast, visit the Company's investor relations website, https://investor.progholdings.com/ To join the conference call via telephone, dial 877-270-2148 and request to join the PROG Holdings, Inc. call. International participants without internet access can join the conference call by dialing 412-902-6510 and requesting to join the PROG Holdings, Inc. call. The webcast will be archived for playback on the investor relations website following the event.
About PROG Holdings, Inc.
PROG Holdings, Inc. (NYSE:PRG) is a fintech holding company headquartered in Salt Lake City, UT, that provides transparent and competitive payment options to consumers. The Company owns Progressive Leasing, a leading provider of e-commerce, app-based, and in-store point-of-sale lease-to-own solutions, Vive Financial, an omnichannel provider of second-look revolving credit products, and Four Technologies, provider of Buy Now, Pay Later payment options through its platform, Four. More information on PROG Holdings' companies can be found at https://www.progholdings.com.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:
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 “strategy to”, “expects”, "outlook", and similar forward-looking
terminology. These risks and uncertainties include factors such as (i) the impact of the COVID-19 pandemic and related measures taken by governmental or regulatory authorities to combat the pandemic, including the impact of the pandemic and such measures on: (a) demand for the lease-to-own products offered by our Progressive Leasing segment, (b) Progressive Leasing’s POS partners, and Vive’s and Four’s merchant partners, (c) Progressive Leasing’s, Vive’s and Four’s customers, including their ability and willingness to satisfy their obligations under their lease agreements and loan agreements, (d) Progressive Leasing’s point-of-sale partners being able to obtain the merchandise its customers need or desire, (e) our employees and labor needs, including our ability to adequately staff our operations, (f) our financial and operational performance, and (g) our liquidity; (ii) changes in the enforcement of existing laws and regulations and the adoption of new laws and regulations that may unfavorably impact our businesses; (iii) the effects on our business and reputation resulting from Progressives Leasing’s announced settlement and related consent order with the FTC, including the risk of losing existing POS partners or being unable to establish new relationships with additional POS partners, and of any follow-on regulatory and/or civil litigation arising therefrom; (iv) other types of legal and regulatory proceedings and investigations, including those related to consumer protection, customer privacy, third party and employee fraud and information security; (v) increased competition from traditional and virtual lease-to-own competitors and also from competitors of our Vive segment; (vi) increases in lease merchandise write-offs and the provision for returns and uncollectible renewal payments for Progressive Leasing, especially in light of the COVID-19 pandemic, and for loan losses, with respect to our Vive segment; (vii) the possibility that the operational, strategic and shareholder value creation opportunities expected from the spin-off of the Company’s Aaron’s Business segment may not be achieved in a timely manner, or at all; (viii) Vive’s business model differing significantly from Progressive Leasing’s, which creates specific and unique risks for the Vive business, including Vive’s reliance on two bank partners to issue its credit products and Vive’s exposure to the unique regulatory risks associated with the lending-related laws and regulations that apply to its business; (ix) the effects of any increased expenses or unanticipated liabilities incurred as a result of, or due to activities related to, our acquisition of Four; (x) Four’s business model differing significantly from Progressive Leasing's and Vive’s, which creates specific and unique risks for the Four business, including Four’s exposure to the unique regulatory risks associated with the laws and regulations that apply to its business; and (xi) the other risks and uncertainties discussed under “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which was filed with the Securities and Exchange Commission on February 26, 2021. Statements in this press release that are “forward-looking” include without limitation statements about (i) our strategy to grow our ecosystem of consumer financial products; (ii) our ability to serve more of our addressable market for our offerings; (iii) our expectation to repurchase additional shares under our Board-authorized $300 million repurchase program; and (iv) our increased outlook for our full-year 2021 Adjusted EBITDA, Non-GAAP Earnings Per Share and GAAP Earnings Per Share performance. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances after the date of this press release.
Investor Contact
John Baugh, CFA
VP, Investor Relations
john.baugh@progleasing.com
Media Contact
Mark Delcorps
Director, Corporate Communications
media@progleasing.com
PROG Holdings, Inc.
Consolidated Statements of Earnings (Loss)
(In thousands, except per share data)
| (Unaudited) Three Months Ended | (Unaudited) Six Months Ended | |||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Lease Revenues and Fees | $ | 646,048 | $ | 589,749 | $ | 1,354,030 | $ | 1,248,283 | ||||||||||||
| Interest and Fees on Loans Receivable | 13,923 | 9,415 | 26,942 | 19,322 | ||||||||||||||||
| Total | 659,971 | 599,164 | 1,380,972 | 1,267,605 | ||||||||||||||||
| Costs and Expenses: | ||||||||||||||||||||
| Depreciation of Lease Merchandise | 439,658 | 420,731 | 944,715 | 884,649 | ||||||||||||||||
| Provision for Lease Merchandise Write-offs | 31,258 | 36,151 | 49,898 | 91,865 | ||||||||||||||||
| Operating Expenses | 96,745 | 82,518 | 187,941 | 181,502 | ||||||||||||||||
| Total | 567,661 | 539,400 | 1,182,554 | 1,158,016 | ||||||||||||||||
| Operating Profit | 92,310 | 59,764 | 198,418 | 109,589 | ||||||||||||||||
| Interest Expense | (436) | — | (948) | — | ||||||||||||||||
| Earnings Before Income Tax Expense from Continuing Operations | 91,874 | 59,764 | 197,470 | 109,589 | ||||||||||||||||
| Income Tax Expense (Benefit) | 23,037 | 767 | 49,145 | (7,090) | ||||||||||||||||
| Net Earnings from Continuing Operations | 68,837 | 58,997 | 148,325 | 116,679 | ||||||||||||||||
| Earnings (Loss) from Discontinued Operations, Net of Income Tax | — | 9,380 | — | (328,307) | ||||||||||||||||
| Net Earnings (Loss) | $ | 68,837 | $ | 68,377 | $ | 148,325 | $ | (211,628) | ||||||||||||
| Basic Earnings (Loss) per Share: | ||||||||||||||||||||
| Continuing Operations | $ | 1.03 | $ | 0.88 | $ | 2.20 | $ | 1.74 | ||||||||||||
| Discontinued Operations | — | 0.14 | — | (4.90) | ||||||||||||||||
| Total Basic Earnings (Loss) per Share | $ | 1.03 | $ | 1.02 | $ | 2.20 | $ | (3.16) | ||||||||||||
| Diluted Earnings (Loss) per Share: | ||||||||||||||||||||
| Continuing Operations | $ | 1.02 | $ | 0.87 | $ | 2.19 | $ | 1.72 | ||||||||||||
| Discontinued Operations | — | 0.14 | — | (4.85) | ||||||||||||||||
| Total Diluted Earnings (Loss) per Share | $ | 1.02 | $ | 1.01 | $ | 2.19 | $ | (3.13) | ||||||||||||
| Weighted Average Shares Outstanding | 67,011 | 67,097 | 67,368 | 66,959 | ||||||||||||||||
| Weighted Average Shares Outstanding Assuming Dilution | 67,329 | 67,523 | 67,792 | 67,693 | ||||||||||||||||
PROG Holdings, Inc.
Consolidated Balance Sheets
(In thousands, except share data)
| (Unaudited) June 30, 2021 | December 31, 2020 | |||||||||||||
| ASSETS: | ||||||||||||||
| Cash and Cash Equivalents | $ | 137,549 | $ | 36,645 | ||||||||||
| Accounts Receivable (net of allowances of $48,459 in 2021 and $56,364 in 2020) | 57,074 | 61,254 | ||||||||||||
| Lease Merchandise (net of accumulated depreciation and allowances of $416,700 in 2021 and $409,307 in 2020) | 587,730 | 610,263 | ||||||||||||
| Loans Receivable (net of allowances and unamortized fees of $57,976 in 2021 and $52,274 in 2020) | 103,055 | 79,148 | ||||||||||||
| Property, Plant and Equipment, Net | 26,738 | 26,705 | ||||||||||||
| Operating Lease Right-of-Use Assets | 18,765 | 20,613 | ||||||||||||
| Goodwill | 306,627 | 288,801 | ||||||||||||
| Other Intangibles, Net | 148,752 | 154,421 | ||||||||||||
| Prepaid Expenses and Other Assets | 39,630 | 39,554 | ||||||||||||
| Total Assets | $ | 1,425,920 | $ | 1,317,404 | ||||||||||
| LIABILITIES & SHAREHOLDERS’ EQUITY: | ||||||||||||||
| Accounts Payable and Accrued Expenses | $ | 102,041 | $ | 78,249 | ||||||||||
| Deferred Income Tax Liability | 139,214 | 126,938 | ||||||||||||
| Customer Deposits and Advance Payments | 44,093 | 46,565 | ||||||||||||
| Operating Lease Liabilities | 27,237 | 29,516 | ||||||||||||
| Debt | 50,000 | 50,000 | ||||||||||||
| Total Liabilities | 362,585 | 331,268 | ||||||||||||
| SHAREHOLDERS' EQUITY: | ||||||||||||||
| Common Stock, Par Value $0.50 Per Share: Authorized: 225,000,000 Shares at June 30, 2021 and December 2020; Shares Issued: 90,752,123 at June 30, 2021 and December 31, 2020 | 45,376 | 45,376 | ||||||||||||
| Additional Paid-in Capital | 318,911 | 318,263 | ||||||||||||
| Retained Earnings | 1,384,703 | 1,236,378 | ||||||||||||
| Less: Treasury Shares at Cost | ||||||||||||||
| Common Stock: 24,252,222 Shares at June 30, 2021 and 23,029,434 at December 31, 2020 | (685,655) | (613,881) | ||||||||||||
| Total Shareholders’ Equity | 1,063,335 | 986,136 | ||||||||||||
| Total Liabilities & Shareholders’ Equity | $ | 1,425,920 | $ | 1,317,404 | ||||||||||
PROG Holdings, Inc.
Consolidated Statements of Cash Flows
(In thousands)
| Six Months Ended June 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| OPERATING ACTIVITIES: | |||||||||||
| Net Earnings (Loss) | $ | 148,325 | $ | (211,628) | |||||||
| Adjustments to Reconcile Net Earnings (Loss) to Cash Provided by Operating Activities: | |||||||||||
| Depreciation of Lease Merchandise | 944,715 | 1,144,958 | |||||||||
| Other Depreciation and Amortization | 14,247 | 50,154 | |||||||||
| Provisions for Accounts Receivable and Loan Losses | 87,114 | 174,737 | |||||||||
| Stock-Based Compensation | 8,137 | 12,487 | |||||||||
| Deferred Income Taxes | 11,001 | (73,656) | |||||||||
| Impairment of Goodwill and Other Assets | — | 468,634 | |||||||||
| Non-Cash Lease Expense | 464 | 50,638 | |||||||||
| Other Changes, Net | (1,180) | 5,109 | |||||||||
| Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions: | |||||||||||
| Additions to Lease Merchandise | (974,271) | (1,032,977) | |||||||||
| Book Value of Lease Merchandise Sold or Disposed | 52,089 | 201,058 | |||||||||
| Accounts Receivable | (72,070) | (134,467) | |||||||||
| Prepaid Expenses and Other Assets | 106 | (4,711) | |||||||||
| Income Tax Receivable | (20) | (38,797) | |||||||||
| Operating Lease Right-of-Use Assets and Liabilities | (895) | (53,544) | |||||||||
| Accounts Payable and Accrued Expenses | 23,552 | (19,713) | |||||||||
| Accrued Regulatory Expense | — | (175,000) | |||||||||
| Customer Deposits and Advance Payments | (2,473) | (2,527) | |||||||||
| Cash Provided by Operating Activities | 238,841 | 360,755 | |||||||||
| INVESTING ACTIVITIES: | |||||||||||
| Investments in Loans Receivable | (94,129) | (39,986) | |||||||||
| Proceeds from Loans Receivable | 62,938 | 32,248 | |||||||||
| Outflows on Purchases of Property, Plant and Equipment | (4,781) | (33,885) | |||||||||
| Proceeds from Disposition of Property, Plant, and Equipment | 45 | 2,220 | |||||||||
| Outflows on Acquisitions of Businesses and Customer Agreements. Net of Cash Acquired | (22,749) | (1,209) | |||||||||
| Proceeds from Dispositions of Businesses and Customer Agreements, Net of Cash Disposed | — | 359 | |||||||||
| Cash Used in Investing Activities | (58,676) | (40,253) | |||||||||
| FINANCING ACTIVITIES: | |||||||||||
| Proceeds from Debt | — | 5,625 | |||||||||
| Repayments on Debt | — | (60,748) | |||||||||
| Dividends Paid | (5,351) | ||||||||||
| Acquisition of Treasury Stock | (77,196) | — | |||||||||
| Issuance of Stock Under Stock Option Plans | 2,856 | 2,250 | |||||||||
| Shares Withheld for Tax Payments | (4,921) | (5,877) | |||||||||
| Debt Issuance Costs | — | (1,020) | |||||||||
| Cash Used in Financing Activities | (79,261) | (65,121) | |||||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | — | (79) | |||||||||
| Increase in Cash and Cash Equivalents | 100,904 | 255,302 | |||||||||
| Cash and Cash Equivalents at Beginning of Period | 36,645 | 57,755 | |||||||||
| Cash and Cash Equivalents at End of Period | $ | 137,549 | $ | 313,057 | |||||||
| Net Cash Paid During the Period | |||||||||||
| Interest | $ | 435 | $ | 6,722 | |||||||
| Income Taxes | $ | 23,539 | $ | 1,438 | |||||||
PROG Holdings, Inc.
Quarterly Revenues by Segment
(In thousands)
| Unaudited | |||||||||||
| Three Months Ended | |||||||||||
| June 30, 2021 | |||||||||||
| Progressive Leasing | Vive | Consolidated Total | |||||||||
| Lease Revenues and Fees | $ | 646,048 | $ | — | $ | 646,048 | |||||
| Interest and Fees on Loans Receivable | 13,923 | 13,923 | |||||||||
| Total Revenues | $ | 646,048 | $ | 13,923 | $ | 659,971 | |||||
| Unaudited | |||||||||||
| Three Months Ended | |||||||||||
| June 30, 2020 | |||||||||||
| Progressive Leasing | Vive | Consolidated Total | |||||||||
| Lease Revenues and Fees | $ | 589,749 | $ | — | $ | 589,749 | |||||
| Interest and Fees on Loans Receivable | — | 9,415 | 9,415 | ||||||||
| Total Revenues | $ | 589,749 | $ | 9,415 | $ | 599,164 | |||||
PROG Holdings, Inc.
Six Months Revenues by Segment
(In thousands)
| Unaudited | |||||||||||
| Six Months Ended | |||||||||||
| June 30, 2021 | |||||||||||
| Progressive Leasing | Vive | Consolidated Total | |||||||||
| Lease Revenues and Fees | $ | 1,354,030 | $ | — | $ | 1,354,030 | |||||
| Interest and Fees on Loans Receivable | — | 26,942 | 26,942 | ||||||||
| Total Revenues | $ | 1,354,030 | $ | 26,942 | $ | 1,380,972 | |||||
| Unaudited | |||||||||||
| Six Months Ended | |||||||||||
| June 30, 2020 | |||||||||||
| Progressive Leasing | Vive | Consolidated Total | |||||||||
| Lease Revenues and Fees | $ | 1,248,283 | $ | — | $ | 1,248,283 | |||||
| Interest and Fees on Loans Receivable | — | 19,322 | 19,322 | ||||||||
| Total Revenues | $ | 1,248,283 | $ | 19,322 | $ | 1,267,605 | |||||
Use of Non-GAAP Financial Information:
Non-GAAP net earnings from continuing operations, non-GAAP diluted earnings from continuing operations per share, and adjusted EBITDA are supplemental measures of our performance that are not calculated in accordance with generally accepted accounting principles in the United States (“GAAP”). Non-GAAP net earnings from continuing operations and non-GAAP diluted earnings from continuing operations per share for the three and six months ended June 30, 2021 and the Company's full year 2021 outlook, exclude intangible amortization expense and acquisition related transaction costs. Non-GAAP net earnings from continuing operations and non-GAAP diluted earnings from continuing operations per share for the three and six months ended June 30, 2020 exclude intangible amortization expense, restructuring expenses, and income tax benefits from our revaluation of net operating loss carrybacks resulting from the CARES Act. The amounts for these after-tax non-GAAP adjustments, which are tax effected using our statutory tax rate, can be found in the reconciliation of net earnings from continuing operations and earnings from continuing operations per share assuming dilution to non-GAAP net earnings from continuing operations and earnings from continuing operations per share assuming dilution table in this press release.
The Adjusted EBITDA figures presented in this press release are calculated as the Company’s earnings before interest expense, net, depreciation on property, plant and equipment, amortization of intangible assets and income taxes. Adjusted EBITDA for the three and six months ended June 30, 2021 and 2020 also excludes stock-based compensation expense, restructuring expenses, and acquisition related transaction costs. The amounts for these pre-tax non-GAAP adjustments can be found in the quarterly segment EBITDA tables in this press release. Adjusted EBITDA for the Company's full year 2021 outlook is calculated as projected earnings before interest expense, interest income, depreciation on property, plant and equipment, amortization of intangible assets and income taxes. Adjusted EBITDA for the Company's full year 2021 outlook also excludes stock-based compensation expense and the acquisition related transaction costs.
Management believes that non-GAAP net earnings from continuing operations, non-GAAP diluted earnings from continuing operations per share, and adjusted EBITDA provide relevant and useful information, and are widely used by analysts, investors and competitors in our industry as well as by our management in assessing both consolidated and business unit performance.
Adjusted EBITDA, non-GAAP net earnings from continuing operations and non-GAAP diluted earnings from continuing operations provide management and investors with an understanding of the results from the primary operations of our business by excluding the effects of certain items that generally arose from larger, one-time transactions that are not reflective of the ordinary earnings activity of our operations or transactions that have variability and volatility of the amount. We believe the exclusion of stock-based compensation expense provides for a better comparison of our operating results with our peer companies as the calculations of stock-based compensation vary from period to period and company to company due to different valuation methodologies, subjective assumptions and the variety of award types. This measure may be useful to an investor in evaluating the underlying operating performance of our business.
Adjusted EBITDA also provides management and investors with an understanding of one aspect of earnings before the impact of investing and financing charges and income taxes. These measures may be useful to an investor in evaluating our operating performance because the measures:
•Are widely used by investors to measure a company’s operating performance without regard to items excluded from the calculation of such measure, which can vary substantially from company to company depending upon accounting methods, book value of assets, capital structure and the method by which assets were acquired, among other factors.
•Are used by rating agencies, lenders and other parties to evaluate our creditworthiness.
•Are used by our management for various purposes, including as a measure of performance of our operating entities and as a basis for strategic planning and forecasting.
Non-GAAP financial measures, however, should not be used as a substitute for, or considered superior to, measures of financial performance prepared in accordance with GAAP, such as the Company’s GAAP basis net earnings from continuing operations and diluted earnings from continuing operations per share and the GAAP revenues and earnings from continuing operations before income taxes of the Company’s segments, which are also presented in the press release. Further, we caution investors that amounts presented in accordance with our definitions of non-GAAP net earnings from continuing operations, non-GAAP diluted earnings from continuing operations per share, and adjusted EBITDA may not be comparable to similar measures disclosed by other companies, because not all companies and analysts calculate these measures in the same manner.
PROG Holdings Inc.
Reconciliation of Net Earnings and Earnings Per Share Assuming Dilution from Continuing Operations to Non-GAAP Net Earnings and Earnings Per Share Assuming Dilution from Continuing Operations
(In thousands, except per share amounts)
| Unaudited | ||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||
| June 30, | June 30, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||
| Net Earnings from Continuing Operations | $ | 68,837 | $ | 58,997 | $ | 148,325 | $ | 116,679 | ||||||
| Add: Intangible Amortization Expense | 5,421 | 5,566 | 10,842 | 11,132 | ||||||||||
| Add: Transaction Expense | 561 | — | 561 | — | ||||||||||
| Add: Restructuring Expenses, net | — | 238 | — | 238 | ||||||||||
Less: Tax impact of adjustments (1) | (1,555) | (1,509) | (2,964) | (2,956) | ||||||||||
| Less: NOL Carryback Revaluation | — | (1,350) | — | (35,540) | ||||||||||
| Non-GAAP Net Earnings from Continuing Operations | $ | 73,264 | $ | 61,942 | $ | 156,764 | $ | 89,553 | ||||||
| Earnings from Continuing Operations Per Share Assuming Dilution | $ | 1.02 | $ | 0.87 | $ | 2.19 | $ | 1.72 | ||||||
Add: Intangible Amortization Expense | 0.08 | 0.08 | 0.16 | 0.16 | ||||||||||
| Add: Transaction Expense | 0.01 | — | 0.01 | — | ||||||||||
Less: Tax impact of adjustments (1) | (0.02) | (0.02) | (0.04) | (0.04) | ||||||||||
| Less: NOL Carryback Revaluation | — | (0.02) | — | (0.53) | ||||||||||
Non-GAAP Earnings from Continuing Operations Per Share Assuming Dilution(2) | $ | 1.09 | $ | 0.92 | $ | 2.31 | $ | 1.32 | ||||||
| Weighted Average Shares Outstanding Assuming Dilution | 67,329 | 67,523 | 67,792 | 67,693 | ||||||||||
(1) Adjustments are tax-effected using an assumed statutory tax rate of 26.0%.
(2) In some cases, the sum of individual EPS amounts may not equal total non-GAAP EPS calculations due to rounding.
PROG Holdings Inc.
Non-GAAP Financial Information
Quarterly Segment EBITDA
(In thousands)
| Unaudited | |||||||||||
| Three Months Ended | |||||||||||
| June 30, 2021 | |||||||||||
| Progressive Leasing | Vive | Consolidated Total | |||||||||
| Net Earnings from Continuing Operations | $ | 68,837 | |||||||||
Income Taxes(1) | 23,037 | ||||||||||
| Earnings from Continuing Operations Before Income Taxes | $ | 87,521 | $ | 4,353 | 91,874 | ||||||
| Interest Expense | 320 | 116 | 436 | ||||||||
| Depreciation | 2,414 | 198 | 2,612 | ||||||||
| Amortization | 5,421 | — | 5,421 | ||||||||
| EBITDA | 95,676 | 4,667 | 100,343 | ||||||||
| Stock-Based Compensation | 3,942 | 31 | 3,973 | ||||||||
| Transaction Expense | 561 | — | 561 | ||||||||
| Adjusted EBITDA | $ | 100,179 | $ | 4,698 | $ | 104,877 | |||||
(1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment.
| Unaudited | ||||||||||||||
| Three Months Ended | ||||||||||||||
| June 30, 2020 | ||||||||||||||
| Progressive Leasing | Vive | Unallocated Corporate Expenses | Consolidated Total | |||||||||||
| Net Earnings from Continuing Operations | $ | 58,997 | ||||||||||||
Income Taxes(1) | 767 | |||||||||||||
| Earnings (Loss) from Continuing Operations Before Income Taxes | $ | 63,113 | $ | 1,626 | $ | (4,975) | 59,764 | |||||||
| Depreciation | 2,179 | 210 | — | 2,389 | ||||||||||
| Amortization | 5,421 | 145 | — | 5,566 | ||||||||||
| EBITDA | 70,713 | 1,981 | (4,975) | 67,719 | ||||||||||
Stock-Based Compensation(2) | 3,270 | 96 | 2,187 | 5,553 | ||||||||||
| Restructuring Expenses, Net | — | — | 238 | 238 | ||||||||||
| Adjusted EBITDA | $ | 73,983 | $ | 2,077 | $ | (2,550) | $ | 73,510 | ||||||
(1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment.
(2) 2020 quarterly Adjusted EBITDA metrics have been updated to add-back Stock-based compensation to conform to management's 2021 definition of Adjusted EBITDA.
PROG Holdings Inc.
Non-GAAP Financial Information
Six Month Segment EBITDA
(In thousands)
| Unaudited | |||||||||||
| Six Months Ended | |||||||||||
| June 30, 2021 | |||||||||||
| Progressive Leasing | Vive | Consolidated Total | |||||||||
| Net Earnings from Continuing Operations | $ | 148,325 | |||||||||
Income Taxes(1) | 49,145 | ||||||||||
| Earnings from Continuing Operations Before Income Taxes | $ | 191,693 | $ | 5,777 | 197,470 | ||||||
| Interest Expense | 755 | 193 | 948 | ||||||||
| Depreciation | 4,626 | 385 | 5,011 | ||||||||
| Amortization | 10,842 | — | 10,842 | ||||||||
| EBITDA | 207,916 | 6,355 | 214,271 | ||||||||
| Stock-Based Compensation | 8,005 | 131 | 8,136 | ||||||||
| Transaction Expense | 561 | — | 561 | ||||||||
| Adjusted EBITDA | $ | 216,482 | $ | 6,486 | $ | 222,968 | |||||
(1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment.
| Unaudited | ||||||||||||||
| Six Months Ended | ||||||||||||||
| June 30, 2020 | ||||||||||||||
| Progressive Leasing | Vive | Unallocated Corporate Expenses | Consolidated Total | |||||||||||
| Net Earnings from Continuing Operations | $ | 116,679 | ||||||||||||
Income Taxes(1) | (7,090) | |||||||||||||
| Earnings (Loss) from Continuing Operations Before Income Taxes | $ | 125,820 | $ | (5,526) | $ | (10,705) | 109,589 | |||||||
| Depreciation | 4,300 | 427 | — | 4,727 | ||||||||||
| Amortization | 10,842 | 290 | — | 11,132 | ||||||||||
| EBITDA | 140,962 | (4,809) | (10,705) | 125,448 | ||||||||||
Stock-Based Compensation(2) | 6,006 | 180 | 4,229 | 10,415 | ||||||||||
| Restructuring Expenses, Net | — | — | 238 | 238 | ||||||||||
| Adjusted EBITDA | $ | 146,968 | $ | (4,629) | $ | (6,238) | $ | 136,101 | ||||||
(1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment.
(2) 2020 quarterly Adjusted EBITDA metrics have been updated to add-back Stock-based compensation to conform to management's 2021 definition of Adjusted EBITDA.
PROG Holdings Inc.
Gross Merchandise Volume by Quarter
(In thousands)
| Three Months Ended | Year Ended | Three Months Ended | |||||||||||||||||||||||||||
| Mar 31, | Jun 30, | Sept 30, | Dec 31, | Dec 31, | Mar 31, | Jun 30, | |||||||||||||||||||||||
| 2020 | 2020 | 2021 | |||||||||||||||||||||||||||
| Progressive Leasing | $ | 462,025 | $ | 404,018 | $ | 448,843 | $ | 536,422 | $ | 1,851,308 | $ | 510,046 | $ | 505,971 | |||||||||||||||
| Vive | 25,376 | 21,536 | 37,883 | 45,956 | 130,751 | 55,898 | 51,701 | ||||||||||||||||||||||
| Total | $ | 487,401 | $ | 425,554 | $ | 486,726 | $ | 582,378 | $ | 1,982,059 | $ | 565,944 | $ | 557,672 | |||||||||||||||
Reconciliation of Full Year 2021 Outlook for Adjusted EBITDA
(In thousands)
| Full Year 2021 Ranges | |||||
| Consolidated | |||||
| Estimated Net Earnings | $251,000 - $259,000 | ||||
| Taxes | 83,000 - 88,000 | ||||
| Projected Earnings Before Taxes | 334,000 -347,000 | ||||
| Interest Expense | 1,700 | ||||
| Depreciation | 11,600 | ||||
| Amortization | 21,700 | ||||
| Projected EBITDA | 369,000 - 382,000 | ||||
| Stock-Based Compensation | 21,000 - 23,000 | ||||
| Projected Adjusted EBITDA | $390,000 - $405,000 | ||||
Reconciliation of Full Year 2021 Outlook for Earnings Per Share
Assuming Dilution to Non-GAAP Earnings Per Share Assuming Dilution
| Full Year 2021 Range | ||||||||
| Low | High | |||||||
| Projected Earnings Per Share Assuming Dilution | $ | 3.66 | $ | 3.86 | ||||
| Add Projected Intangible Amortization Expense | 0.24 | 0.24 | ||||||
| Projected Non-GAAP Earnings Per Share Assuming Dilution | $ | 3.90 | $ | 4.10 | ||||