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): February 23, 2022
(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 February 23, 2022, PROG Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and fiscal year ended December 31, 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 | ||||
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: | February 23, 2022 | Brian Garner Chief Financial Officer | |||||||||
Exhibit 99.1
PROG Holdings Reports Fourth Quarter 2021 Results
•Progressive Leasing Q4 GMV of $635 million, up 18.3%
•E-commerce grew 45% to 18.2% of Progressive Leasing Q4 GMV
•Q4 consolidated revenues of $647 million, up 6.8%
•Q4 consolidated earnings before taxes of $52.9 million; Adjusted EBITDA of $72.1 million or 11.2% of revenues
•Diluted EPS of $0.59; Non-GAAP Diluted EPS of $0.67 for Q4
•Returned $439 million of capital to shareholders in Q4 through the repurchase of 13.7% of outstanding shares
SALT LAKE CITY, February 23, 2022 - 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, 2021.
"We closed out 2021 with a strong fourth quarter of GMV performance driven by continued growth in our e-commerce channel and with our larger retail partners," said Steve Michaels, President and Chief Executive Officer of PROG Holdings. "In addition, the significant steps we took in the quarter to recapitalize our balance sheet through the issuance of $600 million in senior unsecured notes and the repurchase of $425 million of our stock in a successful modified Dutch auction tender offer are expected to benefit our earnings per share and decrease our cost of capital while maintaining our flexibility to execute on our capital allocation priorities."
"I am excited about 2022 as we continue our investments in existing and new partnerships and products that we expect to drive future growth,” Michaels continued. "We believe we are well positioned to capture an even greater portion of our large addressable market while maintaining strong profitability and generating significant free cash flow."
Consolidated Results
Consolidated revenues for the fourth quarter of 2021 were $646.5 million, an increase of 6.8% from the same period in 2020, primarily due to growth from key large national partners and continued e-commerce penetration.
Adjusted EBITDA for the fourth quarter of 2021 was $72.1 million compared with $94.6 million for the same period in 2020. As a percentage of revenues, adjusted EBITDA was 11.2% in the fourth quarter of 2021, compared with 15.6% for the same period in 2020. The Company reported consolidated net earnings from continuing operations for the fourth quarter of 2021 of $37.8 million compared with $42.3 million in the prior year period.
The year-over-year declines in adjusted EBITDA and net earnings from continuing operations in the fourth quarter were primarily driven by Progressive Leasing's delinquencies and write-offs approaching a more normalized level as compared to the extraordinarily low delinquency and write-off levels in the prior year quarter, which the Company believes were supported by government stimulus. These declines were also due to an increase in SG&A investments compared to the pandemic-related reductions of 2020.
Diluted earnings per share from continuing operations for the fourth quarter of 2021 were $0.59 compared with $0.62 in the year ago period. On a non-GAAP basis, diluted earnings per share from continuing operations were $0.67 in the fourth quarter of 2021 compared with $0.95 for the same quarter in 2020.
Progressive Leasing Results
Progressive Leasing's fourth quarter GMV increased 18.3% to $635 million compared with the same period in 2020. Its e-commerce GMV increased 45.0% year-over-year in the quarter and 150.5% annually, and accounted for 15.2% of its annual GMV. Progressive Leasing's gross leased asset portfolio ended the quarter 15.5% higher than the same period of 2020 due to GMV growth and lower 90-day buyout levels.
The provision for lease merchandise write-offs was 6.8% of lease revenues in the fourth quarter of 2021. While this level is elevated from the stimulus-driven record lows of the prior year, write-offs are in line with the Company's pre-pandemic levels.
Liquidity and Capital Allocation
PROG Holdings ended the fourth quarter of 2021 with cash of $170 million and gross debt of $600 million. The Company repurchased $439 million of its stock in the quarter at an average price per share of $48.86, inclusive of the $425 million of shares repurchased at $49.00 per share through its tender offer. Since the end of 2021, the Company has repurchased an additional $52 million of stock at an average price of $40.65 per share. The Company has approximately $509 million remaining under its previously announced $1 billion share repurchase program.
2022 Outlook
The Company is issuing its full year 2022 consolidated outlook for revenues, net earnings, adjusted EBITDA, GAAP diluted EPS, and Non-GAAP diluted EPS. On a consolidated basis, the Company expects 4-8% annual revenue growth and a return to adjusted EBITDA margins in the 11-13% range while investing in new products, talent, and technologies that will provide meaningful future contributions. This outlook anticipates GMV improving throughout the year after a slow start due to macroeconomic conditions, no further deterioration of those conditions, and no impact of any share repurchases beyond what the Company has completed to date.
| Full Year 2022 Outlook | ||||||||
| (In thousands, except per share amounts) | Low | High | ||||||
| PROG Holdings - Total Revenues | $ | 2,790,000 | $ | 2,900,000 | ||||
| Revenue growth rate versus 2021 | 4.2 | % | 8.3 | % | ||||
| PROG Holdings - Net Earnings | 165,000 | 189,000 | ||||||
| Net Earnings as a % of 2022 revenue outlook | 5.9 | % | 6.5 | % | ||||
| PROG Holdings - Adjusted EBITDA | 320,000 | 350,000 | ||||||
| Adjusted EBITDA as a % of 2022 revenue outlook | 11.5 | % | 12.1 | % | ||||
| PROG Holdings - Diluted EPS | 2.90 | 3.35 | ||||||
| Diluted EPS decline versus 2021 | (21.0) | % | (8.7) | % | ||||
| PROG Holdings - Diluted Non-GAAP EPS | 3.25 | 3.70 | ||||||
| Diluted Non-GAAP EPS decline versus 2021 | (17.5) | % | (6.1) | % | ||||
| Progressive Leasing - Total Revenues | 2,730,000 | 2,830,000 | ||||||
| Progressive Leasing - Earnings Before Taxes | 245,000 | 263,000 | ||||||
| Progressive Leasing - Adjusted EBITDA | 330,000 | 350,000 | ||||||
| Vive - Total Revenues | 60,000 | 70,000 | ||||||
| Vive - Earnings Before Taxes | 9,000 | 13,000 | ||||||
| Vive - Adjusted EBITDA | 10,000 | 15,000 | ||||||
| Other - Loss Before Taxes | (29,000) | (21,000) | ||||||
| Other - Adjusted EBITDA | (20,000) | (15,000) | ||||||
Conference Call and Webcast
The Company has scheduled a live webcast and conference call for Wednesday, February 23, 2022, at 8:30 A.M. ET to discuss its financial results for the fourth quarter and full-year 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.
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.
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 , “expected”, “believe”, “expect”, "outlook", “expectation” and similar forward-looking terminology. These risks and uncertainties include factors such as (i) the impact of the COVID-19 pandemic, including new variants or additional waves of COVID-19 infections, on: (a) demand for the lease-to-own products offered by our Progressive Leasing segment, (b) Progressive Leasing’s 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) increased focus by federal and state regulators on businesses that serve subprime consumers, such as our Progressive Leasing, Vive Financial and Four Technologies businesses, and other types of legal and regulatory proceedings and investigations, including those related to consumer protection, customer privacy, third party and employee fraud and information security; (iv) the potential unfavorable effects on our business of the rapid increase in the rate of inflation being experienced in the economy including on customer demand for the merchandise that our point of sale (“POS”) partners sell, and on our customers’ ability to make the lease and loan payments they owe us; (v) a large percentage of the Company’s revenues being concentrated with several of Progressive Leasing’s key POS partners; (vi) the risks that Progressive Leasing will be unable to attract new POS partners or retain and grow its business with its existing POS partners; (vii) the risk that our capital allocation strategy, including our current share repurchase program, will not be effective at enhancing shareholder value; (viii) Vive’s business model differing significantly from Progressive Leasing’s, which creates specific and unique risks for the Vive business, including Vive’s reliance on two bank partners to issue its credit products and Vive’s exposure to the unique regulatory risks associated with the lending-related laws and regulations that apply to its business; (ix) adverse consequences to Progressive Leasing, including additional monetary penalties and/or injunctive relief, if it fails to comply with the terms of its 2020 settlement with the FTC, as well as the possibility of other regulatory authorities and third parties bringing legal actions against Progressive Leasing based on the same allegations that led to the FTC settlement; (x) increased competition from traditional and virtual lease-to-own competitors and also from competitors of our Vive segment; (xi) our increased level of
indebtedness; (xii) our ability to protect confidential, proprietary, or sensitive information, including the personal and confidential information of our customers, which may be adversely affected by cyber-attacks, employee or other internal misconduct, computer viruses, electronic break-ins or “hacking”, or similar disruptions, any one of which could have a material adverse impact on our results of operations, financial condition, and prospects; (xiii) the effects of any increased expenses or unanticipated liabilities incurred as a result of, or due to activities related to, our recent acquisition of Four Technologies; (xiv) Four Technology’s business model differing significantly from Progressive Leasing's and Vive’s, which creates specific and unique risks for the Four business, including Four’s exposure to the unique regulatory risks associated with the laws and regulations that apply to its business; and (xv) the other risks and uncertainties discussed under “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, to be filed with the SEC on February 23, 2022. Statements in this press release that are “forward-looking” include without limitation statements about (i) the benefits of the recapitalization of our balance sheet on our earnings per share and cost of capital; (ii) our capital allocation priorities; (iii) increasing our share of the addressable market for our products and services; (iv) our future profitability and free cash flow; (v) the benefits we expect from our investments in existing and new products and partnerships; and (vi) our outlook for 2022. 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
Vice President, 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 | Year Ended | |||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Lease Revenues and Fees | $ | 629,950 | $ | 594,017 | $ | 2,619,005 | $ | 2,443,405 | ||||||||||||
| Interest and Fees on Loans Receivable | 16,593 | 11,635 | 58,915 | 41,190 | ||||||||||||||||
| Total | 646,543 | 605,652 | 2,677,920 | 2,484,595 | ||||||||||||||||
| Costs and Expenses: | ||||||||||||||||||||
| Depreciation of Lease Merchandise | 439,438 | 401,037 | 1,820,010 | 1,690,922 | ||||||||||||||||
| Provision for Lease Merchandise Write-offs | 42,912 | 26,889 | 126,984 | 131,332 | ||||||||||||||||
| Operating Expenses | 107,405 | 95,690 | 397,399 | 373,460 | ||||||||||||||||
| Legal and Regulatory Insurance Recoveries | — | — | — | (835) | ||||||||||||||||
| Separation Related Charges | — | 15,510 | — | 17,953 | ||||||||||||||||
| Total | 589,755 | 539,126 | 2,344,393 | 2,212,832 | ||||||||||||||||
| Operating Profit | 56,788 | 66,526 | 333,527 | 271,763 | ||||||||||||||||
| Interest Expense | (3,931) | (187) | (5,323) | (187) | ||||||||||||||||
| Earnings from Continuing Operations Before Income Tax | 52,857 | 66,339 | 328,204 | 271,576 | ||||||||||||||||
| Income Tax Expense | 15,038 | 24,034 | 84,647 | 37,949 | ||||||||||||||||
| Net Earnings from Continuing Operations | 37,819 | 42,305 | 243,557 | 233,627 | ||||||||||||||||
| Loss from Discontinued Operations, Net of Income Tax | — | (1,487) | — | (295,092) | ||||||||||||||||
| Net Earnings (Loss) | $ | 37,819 | $ | 40,818 | $ | 243,557 | $ | (61,465) | ||||||||||||
| Basic Earnings (Loss) per Share: | ||||||||||||||||||||
| Continuing Operations | $ | 0.60 | $ | 0.62 | $ | 3.69 | $ | 3.47 | ||||||||||||
| Discontinued Operations | — | (0.02) | — | (4.39) | ||||||||||||||||
| Total Basic Earnings (Loss) per Share | $ | 0.60 | $ | 0.60 | $ | 3.69 | $ | (0.91) | ||||||||||||
| Diluted Earnings (Loss) per Share: | ||||||||||||||||||||
| Continuing Operations | $ | 0.59 | $ | 0.62 | $ | 3.67 | $ | 3.43 | ||||||||||||
| Discontinued Operations | — | (0.02) | — | (4.34) | ||||||||||||||||
| Total Diluted Earnings (Loss) per Share | $ | 0.59 | $ | 0.60 | $ | 3.67 | $ | (0.90) | ||||||||||||
| Weighted Average Shares Outstanding | 63,319 | 67,719 | 66,026 | 67,261 | ||||||||||||||||
| Weighted Average Shares Outstanding Assuming Dilution | 63,739 | 68,537 | 66,416 | 68,022 | ||||||||||||||||
PROG Holdings, Inc.
Consolidated Balance Sheets
(In thousands, except share data)
| December 31, | ||||||||||||||
| 2021 | 2020 | |||||||||||||
| ASSETS: | ||||||||||||||
| Cash and Cash Equivalents | $ | 170,159 | $ | 36,645 | ||||||||||
| Accounts Receivable (net of allowances of $71,233 in 2021 and $56,364 in 2020) | 66,270 | 61,254 | ||||||||||||
| Lease Merchandise (net of accumulated depreciation and allowances of $463,929 in 2021 and $409,307 in 2020) | 714,055 | 610,263 | ||||||||||||
| Loans Receivable (net of allowances and unamortized fees of $53,300 in 2021 and $52,274 in 2020) | 119,315 | 79,148 | ||||||||||||
| Property, Plant and Equipment, Net | 25,648 | 26,705 | ||||||||||||
| Operating Lease Right-of-Use Assets | 17,488 | 20,613 | ||||||||||||
| Goodwill | 306,212 | 288,801 | ||||||||||||
| Other Intangibles, Net | 137,305 | 154,421 | ||||||||||||
| Income Tax Receivable | 14,352 | — | ||||||||||||
| Deferred Income Tax Assets | 2,760 | — | ||||||||||||
| Prepaid Expenses and Other Assets | 48,197 | 39,554 | ||||||||||||
| Total Assets | $ | 1,621,761 | $ | 1,317,404 | ||||||||||
| LIABILITIES & SHAREHOLDERS’ EQUITY: | ||||||||||||||
| Accounts Payable and Accrued Expenses | $ | 135,954 | $ | 78,249 | ||||||||||
| Deferred Income Tax Liability | 146,265 | 126,938 | ||||||||||||
| Customer Deposits and Advance Payments | 45,070 | 46,565 | ||||||||||||
| Operating Lease Liabilities | 25,410 | 29,516 | ||||||||||||
| Debt | 589,654 | 50,000 | ||||||||||||
| Total Liabilities | 942,353 | 331,268 | ||||||||||||
| SHAREHOLDERS' EQUITY: | ||||||||||||||
| Common Stock, Par Value $0.50 Per Share: Authorized: 225,000,000 Shares at December 31, 2021 and 2020; Shares Issued: 82,078,654 at December 31, 2021 and 90,752,123 at December 31, 2020 | 41,039 | 45,376 | ||||||||||||
| Additional Paid-in Capital | 332,244 | 318,263 | ||||||||||||
| Retained Earnings | 1,055,526 | 1,236,378 | ||||||||||||
| 1,428,809 | 1,600,017 | |||||||||||||
| Less: Treasury Shares at Cost | ||||||||||||||
| Common Stock: 25,638,057 Shares at December 31, 2021 and 23,029,434 at December 31, 2020 | (749,401) | (613,881) | ||||||||||||
| Total Shareholders’ Equity | 679,408 | 986,136 | ||||||||||||
| Total Liabilities & Shareholders’ Equity | $ | 1,621,761 | $ | 1,317,404 | ||||||||||
PROG Holdings, Inc.
Consolidated Statements of Cash Flows
(In thousands)
| Year Ended December 31, | |||||||||||
| OPERATING ACTIVITIES: | 2021 | 2020 | |||||||||
| Net Earnings (Loss) | $ | 243,557 | $ | (61,465) | |||||||
| Adjustments to Reconcile Net Earnings (Loss) to Cash Provided by Operating Activities: | |||||||||||
| Depreciation of Lease Merchandise | 1,820,010 | 2,163,443 | |||||||||
| Other Depreciation and Amortization | 33,258 | 93,814 | |||||||||
| Provisions for Accounts Receivable and Loan Losses | 242,412 | 288,206 | |||||||||
| Stock-Based Compensation | 21,349 | 41,218 | |||||||||
| Deferred Income Taxes | 15,729 | (141,407) | |||||||||
| Impairment of Goodwill and Other Assets | — | 470,681 | |||||||||
| Non-Cash Lease Expense | 974 | 92,277 | |||||||||
| Other Changes, Net | (7,561) | 9,172 | |||||||||
| Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions: | |||||||||||
| Additions to Lease Merchandise | (2,054,467) | (2,351,064) | |||||||||
| Book Value of Lease Merchandise Sold or Disposed | 130,665 | 317,763 | |||||||||
| Accounts Receivable | (229,703) | (250,159) | |||||||||
| Prepaid Expenses and Other Assets | (7,879) | 7,753 | |||||||||
| Income Tax Receivable and Payable | (29,753) | 17,066 | |||||||||
| Operating Lease Right-of-Use Assets and Liabilities | (1,955) | (109,356) | |||||||||
| Accounts Payable and Accrued Expenses | 70,820 | 39,660 | |||||||||
| Accrued Regulatory Expense | — | (175,000) | |||||||||
| Customer Deposits and Advance Payments | (1,495) | 3,362 | |||||||||
| Cash Provided by Operating Activities | 245,961 | 455,964 | |||||||||
| INVESTING ACTIVITIES: | |||||||||||
| Investments in Loans Receivable | (182,204) | (112,596) | |||||||||
| Proceeds from Loans Receivable | 132,281 | 69,358 | |||||||||
| Outflows on Purchases of Property, Plant and Equipment | (9,555) | (64,345) | |||||||||
| Proceeds from Property, Plant, and Equipment | 78 | 7,482 | |||||||||
| Outflows on Acquisitions of Businesses and Customer Agreements. Net of Cash Acquired | (22,766) | (14,793) | |||||||||
| Proceeds from Dispositions of Businesses and Customer Agreements, Net of Cash Disposed | — | 359 | |||||||||
| Cash Used in Investing Activities | (82,166) | (114,535) | |||||||||
| FINANCING ACTIVITIES: | |||||||||||
| (Repayments) Borrowings on Revolving Facility, Net | (50,000) | 50,000 | |||||||||
| Proceeds from Debt | 591,750 | 5,625 | |||||||||
| Repayments on Debt | — | (347,646) | |||||||||
| Acquisition of Treasury Stock | (142,358) | — | |||||||||
| Tender Offer Stock Repurchased and Retired | (428,551) | — | |||||||||
| Dividends Paid | — | (13,778) | |||||||||
| Issuance of Stock Under Stock Option Plans | 4,592 | 12,362 | |||||||||
| Shares Withheld for Tax Payments | (5,123) | (11,734) | |||||||||
| Debt Issuance Costs | (591) | (3,233) | |||||||||
| Transfer of Cash to The Aaron's Company | — | (54,150) | |||||||||
| Cash Used in Financing Activities | (30,281) | (362,554) | |||||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | — | 15 | |||||||||
| Increase (Decrease) in Cash and Cash Equivalents | 133,514 | (21,110) | |||||||||
| Cash and Cash Equivalents at Beginning of Year | 36,645 | 57,755 | |||||||||
| Cash and Cash Equivalents at End of Year | $ | 170,159 | $ | 36,645 | |||||||
| Net Cash Paid During the Year: | |||||||||||
| Interest Expense | $ | 1,452 | $ | 10,447 | |||||||
| Income Taxes | $ | 53,602 | $ | 29,000 | |||||||
PROG Holdings, Inc.
Quarterly Revenues by Segment
(In thousands)
| 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 | ||||||
| Unaudited | ||||||||||||||
| Three Months Ended | ||||||||||||||
| December 31, 2020 | ||||||||||||||
| Progressive Leasing | Vive | Other | Consolidated Total | |||||||||||
| Lease Revenues and Fees | $ | 594,017 | $ | — | $ | — | $ | 594,017 | ||||||
| Interest and Fees on Loans Receivable | — | 11,635 | — | 11,635 | ||||||||||
| Total Revenues | $ | 594,017 | $ | 11,635 | $ | — | $ | 605,652 | ||||||
PROG Holdings, Inc.
Twelve Months Revenues by Segment
(In thousands)
| 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 | ||||||
| Twelve Months Ended | ||||||||||||||
| December 31, 2020 | ||||||||||||||
| Progressive Leasing | Vive | Other | Consolidated Total | |||||||||||
| Lease Revenues and Fees | $ | 2,443,405 | $ | — | $ | — | $ | 2,443,405 | ||||||
| Interest and Fees on Loans Receivable | — | 41,190 | — | 41,190 | ||||||||||
| Total Revenues | $ | 2,443,405 | $ | 41,190 | $ | — | $ | 2,484,595 | ||||||
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 twelve months ended December 31, 2021 and the Company's full year 2022 outlook, exclude intangible amortization expense, acquisition related transaction costs, 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 from continuing operations and non-GAAP diluted earnings from continuing operations per share for the three and twelve months ended December 31, 2020 exclude intangible amortization expense, restructuring expenses, separation related charges from our spin-off of Aaron's Business, insurance recoveries for legal and regulatory fees incurred related to Progressive Leasing's 2020 FTC settlement, 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 from continuing operations before interest expense, net, depreciation on property, plant and equipment, amortization of intangible assets and income taxes. Adjusted EBITDA for the three and twelve months ended December 31, 2021 and 2020 also excludes stock-based compensation expense, restructuring expenses, acquisition related transaction costs, separation related charges from our spin-off of Aaron's Business, and insurance recoveries for legal and regulatory fees incurred related to Progressive Leasing's 2020 FTC settlement. The amounts for these pre-tax non-GAAP adjustments can be found in the three and twelve-month segment EBITDA tables in this press release. Adjusted EBITDA for the Company's full year 2022 outlook is calculated as projected earnings before interest expense, interest income, depreciation on property, plant and equipment, amortization of intangible assets, income taxes, and stock-based compensation.
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.
Non-GAAP net earnings from continuing operations, non-GAAP diluted earnings from continuing operations, 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 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 | Twelve Months Ended | ||||||||||||||||
| Mar 31, | Jun 30, | Sept 30, | Dec 31, | Dec 31, | |||||||||||||
| 2021 | |||||||||||||||||
| Net Earnings from Continuing Operations | $ | 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 from Continuing Operations | $ | 83,500 | $ | 73,264 | $ | 62,688 | $ | 42,405 | $ | 261,857 | |||||||
| Earnings from Continuing Operations 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 from Continuing Operations 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 26.0%.
(2)In some cases, the sum of individual EPS amounts may not equal total non-GAAP EPS calculations due to rounding.
PROG Holdings Inc.
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 | Twelve Months Ended | ||||||||||||||||
| Mar 31, | Jun 30, | Sept 30, | Dec 31, | Dec 31, | |||||||||||||
| 2020 | |||||||||||||||||
| Net Earnings from Continuing Operations | $ | 57,682 | $ | 58,997 | $ | 74,643 | $ | 42,305 | $ | 233,627 | |||||||
| Add: Intangible Amortization Expense | 5,566 | 5,566 | 5,565 | 5,444 | 22,141 | ||||||||||||
| Add: Separation Costs | — | — | 2,443 | 2,293 | 4,736 | ||||||||||||
Add: Separation Costs - Executive Stock Compensation Acceleration(1) | — | — | — | 13,217 | 13,217 | ||||||||||||
| Less: Legal and Regulatory Insurance Recoveries | — | — | (835) | — | (835) | ||||||||||||
| Add: Restructuring Expense | — | 238 | — | — | 238 | ||||||||||||
Less: Tax Impact of Adjustments(1) | (1,447) | (1,509) | (1,865) | (2,012) | (6,833) | ||||||||||||
| Less: NOL Carryback Revaluation | (34,190) | (1,350) | — | — | (35,540) | ||||||||||||
| Add: Valuation Allowance on Foreign Tax Credits | — | — | — | 4,034 | 4,034 | ||||||||||||
| Non-GAAP Net Earnings from Continuing Operations | $ | 27,611 | $ | 61,942 | $ | 79,951 | $ | 65,281 | $ | 234,785 | |||||||
| Earnings from Continuing Operations Per Share Assuming Dilution | $ | 0.85 | $ | 0.87 | $ | 1.10 | $ | 0.62 | $ | 3.43 | |||||||
Add: Intangible Amortization Expense | 0.08 | 0.08 | 0.08 | 0.08 | 0.33 | ||||||||||||
| Add: Separation Costs | — | — | 0.04 | 0.03 | 0.07 | ||||||||||||
Add: Separation Costs - Executive Stock Compensation Acceleration(1) | — | — | — | 0.19 | 0.19 | ||||||||||||
| Less: Legal and Regulatory Insurance Recoveries | — | — | (0.01) | — | (0.01) | ||||||||||||
| Add: Restructuring Expense | — | — | — | — | — | ||||||||||||
Less: Tax Impact of Adjustments(1) | (0.02) | (0.02) | (0.03) | (0.03) | (0.10) | ||||||||||||
| Less: NOL Carryback Revaluation | (0.50) | (0.02) | — | — | (0.52) | ||||||||||||
| Add: Valuation Allowance on Foreign Tax Credits | — | — | — | 0.06 | 0.06 | ||||||||||||
Non-GAAP Earnings from Continuing Operations Per Share Assuming Dilution(2) | $ | 0.41 | $ | 0.92 | $ | 1.17 | $ | 0.95 | $ | 3.45 | |||||||
| Weighted Average Shares Outstanding Assuming Dilution | 67,864 | 67,523 | 68,155 | 68,537 | 68,022 | ||||||||||||
(1)Adjustments are tax-effected using an assumed statutory tax rate of 26.0%, except for the separation costs related to executive stock compensation acceleration which did not result in a current or deferred tax benefit.
(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, 2021 | ||||||||||||||
| Progressive Leasing | Vive | Other | Consolidated Total | |||||||||||
| Net Earnings from Continuing Operations | $ | 37,819 | ||||||||||||
Income Taxes(1) | 15,038 | |||||||||||||
| Earnings (Loss) from Continuing Operations Before Income Taxes | $ | 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.
| Unaudited | ||||||||||||||
| Three Months Ended | ||||||||||||||
| December 31, 2020 | ||||||||||||||
| Progressive Leasing | Vive | Unallocated Corporate Expenses | Consolidated Total | |||||||||||
| Net Earnings from Continuing Operations | $ | 42,305 | ||||||||||||
Income Taxes(1) | 24,034 | |||||||||||||
| Earnings (Loss) from Continuing Operations Before Income Taxes | $ | 88,134 | $ | (3,307) | $ | (18,488) | 66,339 | |||||||
| Interest Expense | 187 | — | — | 187 | ||||||||||
| Depreciation | 2,356 | 192 | — | 2,548 | ||||||||||
| Amortization | 5,421 | 23 | — | 5,444 | ||||||||||
| EBITDA | 96,098 | (3,092) | (18,488) | 74,518 | ||||||||||
| Stock-Based Compensation | 3,518 | 46 | 1,007 | 4,571 | ||||||||||
| Separation Costs | 572 | — | 14,938 | 15,510 | ||||||||||
| Adjusted EBITDA | $ | 100,188 | $ | (3,046) | $ | (2,543) | $ | 94,599 | ||||||
(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, 2021 | ||||||||||||||
| Progressive Leasing | Vive | Other | Consolidated Total | |||||||||||
| Net Earnings from Continuing Operations | $ | 243,557 | ||||||||||||
Income Taxes(1) | 84,647 | |||||||||||||
| Earnings (Loss) from Continuing Operations Before Income Taxes | $ | 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.
| Twelve Months Ended | ||||||||||||||
| December 31, 2020 | ||||||||||||||
| Progressive Leasing | Vive | Unallocated Corporate Expenses | Consolidated Total | |||||||||||
| Net Earnings from Continuing Operations | $ | 233,627 | ||||||||||||
Income Taxes(1) | 37,949 | |||||||||||||
| Earnings (Loss) from Continuing Operations Before Income Taxes | $ | 320,636 | $ | (11,180) | $ | (37,880) | 271,576 | |||||||
| Interest Expense | 187 | — | — | 187 | ||||||||||
| Depreciation | 8,864 | 815 | — | 9,679 | ||||||||||
| Amortization | 21,683 | 458 | — | 22,141 | ||||||||||
| EBITDA | 351,370 | (9,907) | (37,880) | 303,583 | ||||||||||
| Insurance Recoveries Related to Legal and Regulatory Expenses | (835) | — | — | (835) | ||||||||||
| Stock-Based Compensation | 12,455 | 367 | 7,581 | 20,403 | ||||||||||
| Restructuring Expenses, Net | — | — | 238 | 238 | ||||||||||
| Separation Costs | 2,337 | — | 15,616 | 17,953 | ||||||||||
| Adjusted EBITDA | $ | 365,327 | $ | (9,540) | $ | (14,445) | $ | 341,342 | ||||||
(1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment.
PROG Holdings Inc.
Gross Merchandise Volume by Quarter
(In thousands)
(In thousands)
| Three Months Ended | Year Ended | |||||||||||||||||||
| Mar 31, | Jun 30, | Sept 30, | Dec 31, | Dec 31, | ||||||||||||||||
| 2021 | ||||||||||||||||||||
| Progressive Leasing | $ | 510,046 | $ | 505,971 | $ | 493,277 | $ | 634,654 | $ | 2,143,948 | ||||||||||
| Vive | 55,898 | 51,701 | 49,085 | 42,455 | 199,139 | |||||||||||||||
| Other | — | — | 2,655 | 5,996 | 8,651 | |||||||||||||||
| Total | $ | 565,944 | $ | 557,672 | $ | 545,017 | $ | 683,105 | $ | 2,351,738 | ||||||||||
| Three Months Ended | Year Ended | |||||||||||||||||||
| Mar 31, | Jun 30, | Sept 30, | Dec 31, | Dec 31, | ||||||||||||||||
| 2020 | ||||||||||||||||||||
| Progressive Leasing | $ | 462,025 | $ | 404,018 | $ | 448,843 | $ | 536,422 | $ | 1,851,308 | ||||||||||
| Vive | 25,376 | 21,536 | 37,883 | 45,956 | 130,751 | |||||||||||||||
| Other | — | — | — | — | — | |||||||||||||||
| Total | $ | 487,401 | $ | 425,554 | $ | 486,726 | $ | 582,378 | $ | 1,982,059 | ||||||||||
Reconciliation of Full Year 2022 Outlook for Adjusted EBITDA
(In thousands)
| Full Year 2022 Ranges | ||||||||||||||
| Progressive Leasing | Vive | Other | Consolidated Total | |||||||||||
| Estimated Net Earnings | $165,000 - $189,000 | |||||||||||||
Taxes(1) | 60,000 - 66,000 | |||||||||||||
| Projected Earnings (Loss) Before Taxes | $245,000 - $263,000 | $9,000 - $13,000 | $(29,000) - $(21,000) | 225,000 - 255,000 | ||||||||||
| Interest Expense | 37,000 | — | — | 37,000 | ||||||||||
| Depreciation | 10,000 | 1,000 | — | 11,000 | ||||||||||
| Amortization | 21,000 | — | 1,000 | 22,000 | ||||||||||
| Projected EBITDA | 313,000 - 331,000 | 10,000 - 14,000 | (28,000) - (20,000) | 295,000 - 325,000 | ||||||||||
| Stock-Based Compensation | 17,000 - 19,000 | 0 - 1,000 | 5,000 - 8,000 | 25,000 | ||||||||||
| Projected Adjusted EBITDA | $330,000 - $350,000 | $10,000 - $15,000 | $(20,000) - $(15,000) | $320,000 - $350,000 | ||||||||||
(1) Taxes are calculated on a consolidated basis and are not identifiable by Company segments.
Reconciliation of Full Year 2022 Outlook for Earnings Per Share
Assuming Dilution to Non-GAAP Earnings Per Share Assuming Dilution
| Full Year 2022 Range | ||||||||
| Low | High | |||||||
| Projected Earnings Per Share Assuming Dilution | $ | 2.90 | $ | 3.35 | ||||
| Add: Projected Intangible Amortization Expense | 0.31 | 0.31 | ||||||
| Add: Projected Interest on FTC Settlement Uncertain Tax Position | 0.04 | 0.04 | ||||||
| Projected Non-GAAP Earnings Per Share Assuming Dilution | $ | 3.25 | $ | 3.70 | ||||