PRG PROG Holdings Inc

• Consolidated revenues of $592.2 million; Earnings before taxes of $48.3 million
• Adjusted EBITDA of $72.3 million
• Diluted EPS of $0.77; Non-GAAP Diluted EPS of $0.92
• Progressive Leasing GMV of $454.5 million, 7.9% growth year-over-year
• Raises full year consolidated revenue and earnings outlook

PROG Holdings, Inc. (NYSE:PRG), the fintech holding company for Progressive Leasing, Vive Financial, Four Technologies, and Build today announced financial results for the second quarter ended June 30, 2024.

"We are pleased to report a strong second quarter that exceeded our outlook on all key metrics, particularly on GMV, which grew 7.9% year-over-year" said PROG Holdings President and CEO Steve Michaels. "Second quarter GMV growth reflects our continued investment in marketing, sales, and technology, and we believe we are just beginning to see the benefits of these efforts. Additionally, our application funnel improved as credit supply above us has tightened. Despite a continued soft retail backdrop in our leasable categories, we were able to grow GMV and improve our balance of share at retail partners across both national and regional accounts. As reflected in our revised outlook, we expect the momentum we have seen in GMV to continue in the third quarter and drive year-over-year revenue growth in the second half of 2024. We are excited about the positive developments in our GMV trajectory and our ability to effectively manage our portfolio performance and spend levels to deliver shareholder value," concluded Michaels.

Consolidated Results

Consolidated revenues for the second quarter of 2024 remained relatively flat at $592.2 million, a decrease of 0.1% from the same period in 2023.

Consolidated net earnings for the quarter were $33.8 million, compared with $37.2 million in the prior year period. The decline in net earnings was primarily driven by headwinds from portfolio performance returning to more normalized pre-pandemic levels, a smaller portfolio size during the quarter, and $2.9 million of restructuring expense related to our cost reduction actions during the second quarter of 2024. Adjusted EBITDA for the quarter decreased 3.7% to $72.3 million, or 12.2% of revenues, compared with $75.0 million, or 12.7% of revenues for the same period in 2023. The year-over-year decline in adjusted EBITDA was driven primarily by headwinds from portfolio performance returning to pre-pandemic levels, and a smaller portfolio size during the quarter, partially offset by a decrease in Progressive Leasing's SG&A due to cost reduction actions executed in the first quarter of 2024, along with disciplined spending.

Diluted earnings per share for the second quarter of 2024 were $0.77, compared with $0.79 in the year ago period. On a non-GAAP basis, diluted earnings per share were $0.92 in the second quarters of 2024 and 2023. The Company's weighted average shares outstanding assuming dilution in the second quarter was 6.8% lower year-over-year.

Progressive Leasing Results

Progressive Leasing's second quarter GMV of $454.5 million was up 7.9% compared to the same period in 2023. The provision for lease merchandise write-offs for the quarter was 7.7%, within the Company's 6%-8% targeted annual range.

Liquidity and Capital Allocation

PROG Holdings ended the second quarter of 2024 with cash of $250.1 million and gross debt of $600 million. The Company repurchased $36.7 million of its stock in the quarter at an average price of $35.67 per share, leaving $438.8 million of repurchase authorization under its $500 million share repurchase program. Additionally, the Company paid a cash dividend of $0.12 per share.

2024 Outlook

PROG Holdings is updating its full year 2024 outlook for revenue and earnings as well as providing its outlook for revenues, net earnings, adjusted EBITDA, GAAP diluted EPS and non-GAAP diluted EPS for the third quarter of 2024. This outlook assumes a continuation of the benefits from tightened credit above us, a difficult operating environment with soft demand for leasable consumer goods, no material changes in the Company's decisioning posture, no material increase in the unemployment rate for our consumer base, an effective tax rate for non-GAAP EPS of approximately 28%, and no impact from additional share repurchases.

 

Revised 2024 Outlook

 

Previous 2024 Outlook

(In thousands, except per share amounts)

Low

High

 

Low

High

 

 

 

 

 

 

PROG Holdings - Total Revenues

$

2,400,000

 

$

2,450,000

 

 

$

2,285,000

 

$

2,360,000

 

PROG Holdings - Net Earnings

 

110,500

 

 

116,000

 

 

 

97,500

 

 

108,000

 

PROG Holdings - Adjusted EBITDA

 

265,000

 

 

275,000

 

 

 

240,000

 

 

255,000

 

PROG Holdings - Diluted EPS

 

2.52

 

 

2.68

 

 

 

2.18

 

 

2.43

 

PROG Holdings - Diluted Non-GAAP EPS

 

3.25

 

 

3.40

 

 

 

2.85

 

 

3.10

 

 

 

 

 

 

 

Progressive Leasing - Total Revenues

 

2,325,000

 

 

2,355,000

 

 

 

2,210,000

 

 

2,265,000

 

Progressive Leasing - Earnings Before Taxes

 

178,000

 

 

182,000

 

 

 

159,000

 

 

169,000

 

Progressive Leasing - Adjusted EBITDA

 

273,500

 

 

278,500

 

 

 

251,000

 

 

261,000

 

 

 

 

 

 

 

Vive - Total Revenues

 

55,000

 

 

65,000

 

 

 

55,000

 

 

65,000

 

Vive - Earnings Before Taxes

 

1,500

 

 

3,000

 

 

 

1,500

 

 

3,000

 

Vive - Adjusted EBITDA

 

3,000

 

 

5,000

 

 

 

3,000

 

 

5,000

 

 

 

 

 

 

 

Other - Total Revenues

 

20,000

 

 

30,000

 

 

 

20,000

 

 

30,000

 

Other - Loss Before Taxes

 

(20,000

)

 

(18,000

)

 

 

(20,000

)

 

(18,000

)

Other - Adjusted EBITDA

 

(11,500

)

 

(8,500

)

 

 

(14,000

)

 

(11,000

)

 

Three Months Ended September 30, 2024 Outlook

(In thousands, except per share amounts)

Low

High

 

 

 

PROG Holdings - Total Revenues

$

590,000

$

605,000

PROG Holdings - Net Earnings

 

27,000

 

30,000

PROG Holdings - Adjusted EBITDA

 

60,000

 

65,000

PROG Holdings - Diluted EPS

 

0.61

 

0.71

PROG Holdings - Diluted Non-GAAP EPS

 

0.70

 

0.80

Conference Call and Webcast

The Company has scheduled a live webcast and conference call for Wednesday, July 24, 2024, at 8:30 A.M. ET to discuss its financial results for the second quarter of 2024. 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, Four Technologies, a provider of Buy Now, Pay Later payment options through its platform, Four, and Build, provider of personal credit building products. More information on PROG Holdings and its companies can be found at https://investor.progholdings.com/.

Forward Looking Statements:

Statements in this news release regarding our business that are not historical facts are "forward-looking statements" that involve risks and uncertainties which could cause actual results to differ materially from those contained in the forward-looking statements. Such forward-looking statements generally can be identified by the use of forward-looking terminology, such as "continue", "believe", "expects", "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 significant inflation, elevated 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, in particular consumer durables; (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; and (d) 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) the impact of the cybersecurity incident experienced by Progressive Leasing in September 2023 and expenses incurred in connection with responding to the matter, including the litigation filed in response to that incident, or any regulatory proceedings that may result from the incident; (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) Vive’s and Four’s business models differing significantly from Progressive Leasing’s, which creates specific and unique risks for each of the Vive and Four businesses, including Vive’s reliance on a limited number of bank partners to issue its credit products and each of Vive’s and Four’s exposure to the unique regulatory risks associated with the laws and regulations that apply to each of their businesses; (viii) our ability to continue 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; (ix) our cost reduction initiatives may not be adequate or may have unintended consequences that could be disruptive to our businesses, including with respect to our global workforce strategy; (x) the risk that our capital allocation strategy, including our current stock repurchase and dividend programs, as well as any future debt repurchase program, will not be effective at enhancing shareholder value and may have an adverse impact on our cash reserves; (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) the transactions offered by our Progressive Leasing, Vive and/or Four businesses may be negatively characterized by government officials, consumer advocacy groups or the media; (xiv) real or perceived software or system errors, failures, bugs, defects or outages, including those that may be caused by third-party vendors, may adversely affect Progressive Leasing, Vive or Four; 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, 2023, filed with the SEC on February 21, 2024. Statements in this press release that are "forward-looking" include without limitation statements about: (i) the benefits we expect from our marketing, sales and technology investments, including the timing of those benefits; (ii) our expectations regarding GMV growth for the quarter ending September 30, 2024 and revenue growth for the second half of 2024; (iii) our ability to continue investing in our business, including with respect to marketing, sales and technology initiatives; (iv) our ability to continue to effectively manage our portfolio and spending levels to deliver shareholder value; and (v) our revised full year 2024 outlook and our third quarter 2024 outlook. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances after the date of this press release.

PROG Holdings, Inc.

Consolidated Statements of Earnings

(In thousands, except per share data)

 

 

(Unaudited) Three Months Ended

 

(Unaudited) Six Months Ended

 

June 30,

 

June 30,

 

2024

 

2023

 

2024

 

2023

REVENUES:

 

 

 

 

 

 

 

Lease Revenues and Fees

$

570,516

 

 

$

574,839

 

 

$

1,191,066

 

 

$

1,211,921

 

Interest and Fees on Loans Receivable

 

21,645

 

 

 

18,007

 

 

 

42,965

 

 

 

36,065

 

 

 

592,161

 

 

 

592,846

 

 

 

1,234,031

 

 

 

1,247,986

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

Depreciation of Lease Merchandise

 

384,799

 

 

 

384,874

 

 

 

816,370

 

 

 

820,313

 

Provision for Lease Merchandise Write-offs

 

43,783

 

 

 

40,965

 

 

 

86,924

 

 

 

79,329

 

Operating Expenses

 

107,901

 

 

 

107,710

 

 

 

235,242

 

 

 

212,969

 

 

 

536,483

 

 

 

533,549

 

 

 

1,138,536

 

 

 

1,112,611

 

OPERATING PROFIT

 

55,678

 

 

 

59,297

 

 

 

95,495

 

 

 

135,375

 

Interest Expense, Net

 

(7,339

)

 

 

(7,283

)

 

 

(15,589

)

 

 

(15,774

)

EARNINGS BEFORE INCOME TAX EXPENSE

 

48,339

 

 

 

52,014

 

 

 

79,906

 

 

 

119,601

 

INCOME TAX EXPENSE

 

14,565

 

 

 

14,796

 

 

 

24,166

 

 

 

34,350

 

NET EARNINGS

$

33,774

 

 

$

37,218

 

 

$

55,740

 

 

$

85,251

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

Basic

$

0.79

 

 

$

0.80

 

 

$

1.29

 

 

$

1.81

 

Assuming Dilution

$

0.77

 

 

$

0.79

 

 

$

1.26

 

 

$

1.79

 

CASH DIVIDENDS DECLARED PER SHARE:

 

 

 

 

 

 

 

Common Stock

$

0.12

 

 

$

—

 

 

$

0.24

 

 

$

—

 

WEIGHTED AVERAGE SHARES OUTSTANDING:

 

 

 

 

 

 

 

Basic

 

42,955

 

 

 

46,474

 

 

 

43,325

 

 

 

47,160

 

Assuming Dilution

 

43,721

 

 

 

46,896

 

 

 

44,124

 

 

 

47,514

PROG Holdings, Inc.

Consolidated Balance Sheets

(In thousands, except share data)

 

 

(Unaudited)

 

 

 

 

June 30, 2024

 

December 31, 2023

ASSETS:

 

 

 

 

Cash and Cash Equivalents

 

$

250,134

 

 

$

155,416

 

Accounts Receivable (net of allowances of $64,682 in 2024 and $64,180 in 2023)

 

 

61,453

 

 

 

67,879

 

Lease Merchandise (net of accumulated depreciation and allowances of $434,348 in 2024 and $423,466 in 2023)

 

 

563,594

 

 

 

633,427

 

Loans Receivable (net of allowances and unamortized fees of $48,937 in 2024 and $50,022 in 2023)

 

 

119,322

 

 

 

126,823

 

Property and Equipment, Net

 

 

21,505

 

 

 

24,104

 

Operating Lease Right-of-Use Assets

 

 

4,116

 

 

 

9,271

 

Goodwill

 

 

296,061

 

 

 

296,061

 

Other Intangibles, Net

 

 

81,776

 

 

 

91,664

 

Income Tax Receivable

 

 

10,354

 

 

 

32,918

 

Deferred Income Tax Assets

 

 

2,368

 

 

 

2,981

 

Prepaid Expenses and Other Assets

 

 

50,024

 

 

 

50,711

 

Total Assets

 

$

1,460,707

 

 

$

1,491,255

 

LIABILITIES & SHAREHOLDERS’ EQUITY:

 

 

 

 

Accounts Payable and Accrued Expenses

 

$

150,337

 

 

$

151,259

 

Deferred Income Tax Liabilities

 

 

87,252

 

 

 

104,838

 

Customer Deposits and Advance Payments

 

 

34,746

 

 

 

35,713

 

Operating Lease Liabilities

 

 

13,605

 

 

 

15,849

 

Debt

 

 

592,914

 

 

 

592,265

 

Total Liabilities

 

 

878,854

 

 

 

899,924

 

SHAREHOLDERS' EQUITY:

 

 

 

 

Common Stock, Par Value $0.50 Per Share: Authorized: 225,000,000 Shares at June 30, 2024 and December 31, 2023; Shares Issued: 82,078,654 at June 30, 2024 and December 31, 2023

 

 

41,039

 

 

 

41,039

 

Additional Paid-in Capital

 

 

347,552

 

 

 

352,421

 

Retained Earnings

 

 

1,338,201

 

 

 

1,293,073

 

 

 

 

1,726,792

 

 

 

1,686,533

 

Less: Treasury Shares at Cost

 

 

 

 

Common Stock: 39,763,190 Shares at June 30, 2024 and 38,404,527 at December 31, 2023

 

 

(1,144,939

)

 

 

(1,095,202

)

Total Shareholders’ Equity

 

 

581,853

 

 

 

591,331

 

Total Liabilities & Shareholders’ Equity

 

$

1,460,707

 

 

$

1,491,255

PROG Holdings, Inc.

Consolidated Statements of Cash Flows

(In thousands)

 

 

(Unaudited)

 

Six Months Ended June 30,

 

2024

 

2023

OPERATING ACTIVITIES:

 

 

 

Net Earnings

$

55,740

 

 

$

85,251

 

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

 

 

 

Depreciation of Lease Merchandise

 

816,370

 

 

 

820,313

 

Other Depreciation and Amortization

 

14,515

 

 

 

15,895

 

Provisions for Accounts Receivable and Loan Losses

 

174,822

 

 

 

161,237

 

Stock-Based Compensation

 

13,737

 

 

 

12,260

 

Deferred Income Taxes

 

(16,973

)

 

 

(21,190

)

Impairment of Assets

 

6,018

 

 

 

—

 

Non-Cash Lease Expense

 

(1,603

)

 

 

(1,482

)

Other Changes, Net

 

(155

)

 

 

(2,506

)

Changes in Operating Assets and Liabilities:

 

 

 

Additions to Lease Merchandise

 

(836,084

)

 

 

(803,250

)

Book Value of Lease Merchandise Sold or Disposed

 

89,549

 

 

 

82,096

 

Accounts Receivable

 

(145,312

)

 

 

(132,460

)

Prepaid Expenses and Other Assets

 

377

 

 

 

(857

)

Income Tax Receivable and Payable

 

26,206

 

 

 

(44

)

Accounts Payable and Accrued Expenses

 

(5,113

)

 

 

(5,442

)

Customer Deposits and Advance Payments

 

(967

)

 

 

(4,441

)

Cash Provided by Operating Activities

 

191,127

 

 

 

205,380

 

INVESTING ACTIVITIES:

 

 

 

Investments in Loans Receivable

 

(172,513

)

 

 

(90,746

)

Proceeds from Loans Receivable

 

158,644

 

 

 

84,491

 

Outflows on Purchases of Property and Equipment

 

(3,999

)

 

 

(4,388

)

Other Proceeds

 

46

 

 

 

13

 

Cash Used in Investing Activities

 

(17,822

)

 

 

(10,630

)

FINANCING ACTIVITIES:

 

 

 

Dividends Paid

 

(10,346

)

 

 

—

 

Acquisition of Treasury Stock

 

(61,177

)

 

 

(71,836

)

Issuance of Stock Under Stock Option and Employee Purchase Plans

 

799

 

 

 

606

 

Cash Paid for Shares Withheld for Employee Taxes

 

(7,863

)

 

 

(2,533

)

Debt Issuance Costs

 

—

 

 

 

(29

)

Cash Used in Financing Activities

 

(78,587

)

 

 

(73,792

)

Increase in Cash and Cash Equivalents

 

94,718

 

 

 

120,958

 

Cash and Cash Equivalents at Beginning of Period

 

155,416

 

 

 

131,880

 

Cash and Cash Equivalents at End of Period

$

250,134

 

 

$

252,838

 

Net Cash Paid During the Period:

 

 

 

Interest

$

18,461

 

 

$

18,531

 

Income Taxes

$

12,728

 

 

$

53,624

PROG Holdings, Inc.

Quarterly Revenues by Segment

(In thousands)

 

(Unaudited)

 

Three Months Ended

 

June 30, 2024

 

Progressive Leasing

Vive

Other

Consolidated Total

Lease Revenues and Fees

$

570,516

$

—

$

—

$

570,516

Interest and Fees on Loans Receivable

 

—

 

15,421

 

6,224

 

21,645

Total Revenues

$

570,516

$

15,421

$

6,224

$

592,161

 

 

(Unaudited)

 

Three Months Ended

 

June 30, 2023

 

Progressive Leasing

Vive

Other

Consolidated Total

Lease Revenues and Fees

$

574,839

$

—

$

—

$

574,839

Interest and Fees on Loans Receivable

 

—

 

17,187

 

820

 

18,007

Total Revenues

$

574,839

$

17,187

$

820

$

592,846

PROG Holdings, Inc.

Six Months Revenues by Segment

(In thousands)

 

 

(Unaudited)

 

Six Months Ended

 

June 30, 2024

 

Progressive Leasing

Vive

Other

Consolidated Total

Lease Revenues and Fees

$

1,191,066

$

—

$

—

$

1,191,066

Interest and Fees on Loans Receivable

 

—

 

31,471

 

11,494

 

42,965

Total Revenues

$

1,191,066

$

31,471

$

11,494

$

1,234,031

 

 

(Unaudited)

 

Six Months Ended

 

June 30, 2023

 

Progressive Leasing

Vive

Other

Consolidated Total

Lease Revenues and Fees

$

1,211,921

$

—

$

—

$

1,211,921

Interest and Fees on Loans Receivable

 

—

 

34,340

 

1,725

 

36,065

Total Revenues

$

1,211,921

$

34,340

$

1,725

$

1,247,986

PROG Holdings, Inc.

Gross Merchandise Volume by Quarter

(In thousands)

 

(Unaudited)

 

Three Months Ended June 30,

 

2024

 

2023

Progressive Leasing

$

454,508

 

$

421,220

Vive

 

35,757

 

 

39,850

Other

 

56,139

 

 

14,600

Total GMV

$

546,404

 

$

475,670

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 diluted earnings per share for the full year 2024 outlook excludes intangible amortization expense, restructuring expenses, costs related to the cybersecurity incident, and accrued interest on an uncertain tax position related to Progressive Leasing's $175 million settlement with the FTC in 2020. Non-GAAP diluted earnings per share for the third quarter 2024 outlook excludes intangible amortization expense and accrued interest on an uncertain tax position related to Progressive Leasing's $175 million settlement with the FTC in 2020. Non-GAAP net earnings and non-GAAP diluted earnings per share for the three and six months ended June 30, 2024 exclude intangible amortization expense, restructuring expenses, costs related to the cybersecurity incident, and accrued interest on an uncertain tax position related to Progressive Leasing's $175 million settlement with the FTC in 2020. Non-GAAP net earnings and non-GAAP diluted earnings per share for the three and six months ended June 30, 2023 exclude intangible amortization expense, restructuring expenses, regulatory insurance recoveries, and accrued interest on an uncertain tax position related to Progressive Leasing's $175 million settlement with the FTC in 2020. The amount for the after-tax non-GAAP adjustment, which is tax effected using our statutory tax rate, can be found in the reconciliation of net earnings and earnings per share assuming dilution to non-GAAP net earnings and earnings per share assuming dilution table in this press release.

The Adjusted EBITDA figures presented in this press release are calculated as the Company’s earnings before interest expense, net, depreciation on property and equipment, amortization of intangible assets and income taxes. Adjusted EBITDA for the three and six months ended June 30, 2024 and full year 2024 outlook excludes stock-based compensation expense, restructuring expenses, and costs related to the cybersecurity incident. Adjusted EBITDA for the three and six months ended June 30, 2023 excludes stock-based compensation expense, restructuring expenses, and regulatory insurance recoveries. Adjusted EBITDA for third quarter 2024 outlook excludes stock-based compensation expense. The amounts for these pre-tax non-GAAP adjustments can be found in the segment EBITDA tables in this press release.

Management believes that non-GAAP net earnings, non-GAAP diluted earnings per share, and adjusted EBITDA provide relevant and useful information, and are widely used by analysts, investors and competitors in our industry as well as by our management in assessing both consolidated and business unit performance.

Non-GAAP net earnings, non-GAAP diluted earnings, and adjusted EBITDA provide management and investors with an understanding of the results from the primary operations of our business by excluding the effects of certain items that generally arose from larger, one-time transactions that are not reflective of the ordinary earnings activity of our operations or transactions that have variability and volatility of the amount. We believe the exclusion of stock-based compensation expense provides for a better comparison of our operating results with our peer companies as the calculations of stock-based compensation vary from period to period and company to company due to different valuation methodologies, subjective assumptions and the variety of award types. This measure may be useful to an investor in evaluating the underlying operating performance of our business.

Adjusted EBITDA also provides management and investors with an understanding of one aspect of earnings before the impact of investing and financing charges and income taxes. These measures may be useful to an investor in evaluating our operating performance because the measures:

• Are widely used by investors to measure a company’s operating performance without regard to items excluded from the calculation of such measure, which can vary substantially from company to company depending upon accounting methods, book value of assets, capital structure and the method by which assets were acquired, among other factors.
• Are used by rating agencies, lenders and other parties to evaluate our creditworthiness.
• Are used by our management for various purposes, including as a measure of performance of our operating entities and as a basis for strategic planning and forecasting.

Non-GAAP financial measures, however, should not be used as a substitute for, or considered superior to, measures of financial performance prepared in accordance with GAAP, such as the Company’s GAAP basis net earnings and diluted earnings per share and the GAAP revenues and earnings before income taxes of the Company’s segments, which are also presented in the press release. Further, we caution investors that amounts presented in accordance with our definitions of non-GAAP net earnings, non-GAAP diluted earnings per share, and adjusted EBITDA may not be comparable to similar measures disclosed by other companies, because not all companies and analysts calculate these measures in the same manner.

PROG Holdings, Inc.

Reconciliation of Net Earnings and Earnings Per Share Assuming Dilution to Non-GAAP Net Earnings and Earnings Per Share Assuming Dilution

(In thousands, except per share amounts)

 

 

(Unaudited)

(Unaudited)

 

Three Months Ended

Six Months Ended

 

June 30,

June 30,

 

2024

2023

2024

2023

Net Earnings

$

33,774

 

$

37,218

 

$

55,740

 

$

85,251

 

Add: Intangible Amortization Expense

 

4,239

 

 

5,723

 

 

9,889

 

 

11,447

 

Add: Restructuring Expense

 

2,886

 

 

963

 

 

20,900

 

 

1,720

 

Add: Costs Related to the Cybersecurity Incident

 

116

 

 

—

 

 

232

 

 

—

 

Less: Regulatory Insurance Recoveries

 

—

 

 

—

 

 

—

 

 

(525

)

Less: Tax Impact of Adjustments(1)

 

(1,883

)

 

(1,738

)

 

(8,066

)

 

(3,287

)

Add: Accrued Interest on FTC Settlement Uncertain Tax Position

 

1,078

 

 

970

 

 

2,156

 

 

1,940

 

Non-GAAP Net Earnings

$

40,210

 

$

43,136

 

$

80,851

 

$

96,546

 

Earnings Per Share Assuming Dilution

$

0.77

 

$

0.79

 

$

1.26

 

$

1.79

 

Add: Intangible Amortization Expense

 

0.10

 

 

0.12

 

 

0.23

 

 

0.24

 

Add: Restructuring Expense

 

0.07

 

 

0.02

 

 

0.47

 

 

0.04

 

Add: Costs Related to the Cybersecurity Incident

 

—

 

 

—

 

 

0.01

 

 

—

 

Less: Regulatory Insurance Recoveries

 

—

 

 

—

 

 

—

 

 

(0.01

)

Less: Tax Impact of Adjustments(1)

 

(0.04

)

 

(0.04

)

 

(0.18

)

 

(0.07

)

Add: Accrued Interest on FTC Settlement Uncertain Tax Position

 

0.02

 

 

0.02

 

 

0.05

 

 

0.04

 

Non-GAAP Earnings Per Share Assuming Dilution(2)

$

0.92

 

$

0.92

 

$

1.83

 

$

2.03

 

Weighted Average Shares Outstanding Assuming Dilution

 

43,721

 

 

46,896

 

 

44,124

 

 

47,514

 

(1)

 

Adjustments are tax-effected using an assumed statutory tax rate of 26%.

(2)

 

In some cases, the sum of individual EPS amounts may not equal total non-GAAP EPS calculations due to rounding.

PROG Holdings, Inc.

Non-GAAP Financial Information

Quarterly Segment EBITDA

(In thousands)

 

 

(Unaudited)

 

Three Months Ended

 

June 30, 2024

 

Progressive Leasing

Vive

Other

Consolidated Total

Net Earnings

 

 

 

$

33,774

Income Tax Expense(1)

 

 

 

 

14,565

Earnings (Loss) Before Income Tax Expense

$

53,966

$

631

$

(6,258

)

 

48,339

Interest Expense, Net

 

7,655

 

—

 

(316

)

 

7,339

Depreciation

 

1,651

 

166

 

441

 

 

2,258

Amortization

 

4,009

 

—

 

230

 

 

4,239

EBITDA

 

67,281

 

797

 

(5,903

)

 

62,175

Stock-Based Compensation

 

6,135

 

360

 

600

 

 

7,095

Restructuring Expense

 

258

 

—

 

2,628

 

 

2,886

Costs Related to the Cybersecurity Incident

 

116

 

—

 

—

 

 

116

Adjusted EBITDA

$

73,790

$

1,157

$

(2,675

)

$

72,272

(1)

 

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

 

(Unaudited)

 

Three Months Ended

 

June 30, 2023

 

Progressive Leasing

Vive

Other

Consolidated Total

Net Earnings

 

 

 

$

37,218

Income Tax Expense(1)

 

 

 

 

14,796

Earnings (Loss) Before Income Tax Expense

$

55,422

$

1,758

$

(5,166

)

 

52,014

Interest Expense, Net

 

7,117

 

166

 

—

 

 

7,283

Depreciation

 

1,795

 

182

 

216

 

 

2,193

Amortization

 

5,421

 

—

 

302

 

 

5,723

EBITDA

 

69,755

 

2,106

 

(4,648

)

 

67,213

Stock-Based Compensation

 

4,899

 

294

 

1,652

 

 

6,845

Restructuring Expense

 

963

 

—

 

—

 

 

963

Adjusted EBITDA

$

75,617

$

2,400

$

(2,996

)

$

75,021

(1)

 

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

PROG Holdings, Inc.

Non-GAAP Financial Information

Six Month Segment EBITDA

(In thousands)

 

 

(Unaudited)

 

Six Months Ended

 

June 30, 2024

 

Progressive Leasing

Vive

Other

Consolidated Total

Net Earnings

 

 

 

$

55,740

Income Tax Expense(1)

 

 

 

 

24,166

Earnings (Loss) Before Income Tax Expense

$

89,419

$

1,549

$

(11,062

)

 

79,906

Interest Expense, Net

 

16,222

 

—

 

(633

)

 

15,589

Depreciation

 

3,461

 

332

 

833

 

 

4,626

Amortization

 

9,430

 

—

 

459

 

 

9,889

EBITDA

 

118,532

 

1,881

 

(10,403

)

 

110,010

Stock-Based Compensation

 

10,846

 

698

 

2,193

 

 

13,737

Restructuring Expense

 

18,272

 

—

 

2,628

 

 

20,900

Costs Related to the Cybersecurity Incident

 

232

 

—

 

—

 

 

232

Adjusted EBITDA

$

147,882

$

2,579

$

(5,582

)

$

144,879

(1)

 

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

 

(Unaudited)

 

Six Months Ended

 

June 30, 2023

 

Progressive Leasing

Vive

Other

Consolidated Total

Net Earnings

 

 

 

$

85,251

 

Income Tax Expense(1)

 

 

 

 

34,350

 

Earnings (Loss) Before Income Tax Expense

$

126,473

 

$

3,921

$

(10,793

)

 

119,601

 

Interest Expense, Net

 

15,317

 

 

457

 

—

 

 

15,774

 

Depreciation

 

3,700

 

 

350

 

398

 

 

4,448

 

Amortization

 

10,842

 

 

—

 

605

 

 

11,447

 

EBITDA

 

156,332

 

 

4,728

 

(9,790

)

 

151,270

 

Stock-Based Compensation

 

8,452

 

 

582

 

3,226

 

 

12,260

 

Restructuring Expense

 

1,720

 

 

—

 

—

 

 

1,720

 

Regulatory Insurance Recoveries

 

(525

)

 

—

 

—

 

 

(525

)

Adjusted EBITDA

$

165,979

 

$

5,310

$

(6,564

)

$

164,725

 

(1)

 

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

PROG Holdings, Inc.

Non-GAAP Financial Information

Reconciliation of Revised Full Year 2024 Outlook for Adjusted EBITDA

(In thousands)

 

 

Fiscal Year 2024 Ranges

 

Progressive Leasing

Vive

Other

Consolidated Total

Estimated Net Earnings

 

 

 

$110,500 - $116,000

Income Tax Expense(1)

 

 

 

49,000 - 51,000

Projected Earnings (Loss) Before Income Tax Expense

$178,000 - $182,000

$1,500 - $3,000

$(20,000) - $(18,000)

159,500 - 167,000

Interest Expense, Net

31,000

—

(1,000)

30,000

Depreciation

7,000

500

2,000

9,500

Amortization

17,000

—

1,000

18,000

Projected EBITDA

233,000 - 237,000

2,000 - 3,500

(18,000) - (16,000)

217,000 - 224,500

Stock-Based Compensation

22,000 - 23,000

1,000 - 1,500

4,000 - 5,000

27,000 - 29,500

Restructuring Expense

18,500

—

2,500

21,000

Projected Adjusted EBITDA

$273,500 - $278,500

$3,000 - $5,000

$(11,500) - $(8,500)

$265,000 - $275,000

(1)

 

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

PROG Holdings, Inc.

Non-GAAP Financial Information

Reconciliation of Previously Revised Full Year 2024 Outlook for Adjusted EBITDA

(In thousands)

 

 

Fiscal Year 2024 Ranges

 

Progressive Leasing

Vive

Other

Consolidated Total

Estimated Net Earnings

 

 

 

$97,500 - $108,000

Income Tax Expense(1)

 

 

 

43,000 - 46,000

Projected Earnings (Loss) Before Income Tax Expense

$159,000 - $169,000

$1,500 - $3,000

$(20,000) - $(18,000)

140,500 - 154,000

Interest Expense, Net

31,000 - 29,000

—

—

31,000 - 29,000

Depreciation

8,000

500

2,000

10,500

Amortization

17,000

—

1,000

18,000

Projected EBITDA

215,000 - 223,000

2,000 - 3,500

(17,000) - (15,000)

200,000 - 211,500

Stock-Based Compensation

18,000 - 20,000

1,000 - 1,500

3,000 - 4,000

22,000 - 25,500

Restructuring Expense

18,000

—

—

18,000

Projected Adjusted EBITDA

$251,000 - $261,000

$3,000 - $5,000

$(14,000) - $(11,000)

$240,000 - $255,000

(1)

 

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

PROG Holdings, Inc.

Non-GAAP Financial Information

Reconciliation of the Three Months Ended September 30, 2024 Outlook for Adjusted EBITDA

(In thousands)

 

 

Three Months Ended September 30, 2024 Outlook

 

Consolidated Total

Estimated Net Earnings

$27,000 - $30,000

Income Tax Expense(1)

12,000 - 13,000

Projected Earnings Before Income Tax Expense

39,000 - 43,000

Interest Expense, Net

7,500

Depreciation

2,500

Amortization

4,000

Projected EBITDA

53,000 - 57,000

Stock-Based Compensation

7,000 - 8,000

Projected Adjusted EBITDA

$60,000 - $65,000

(1)

 

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

PROG Holdings, Inc.

Reconciliation of Revised Full Year 2024 Outlook for Earnings Per Share

Assuming Dilution to Non-GAAP Earnings Per Share Assuming Dilution

 

Full Year 2024

 

Low

High

Projected Earnings Per Share Assuming Dilution

$

2.52

 

$

2.68

 

Add: Projected Intangible Amortization Expense

 

0.41

 

 

0.41

 

Add: Projected Interest on FTC Settlement Uncertain Tax Position

 

0.07

 

 

0.07

 

Add: Projected Restructuring Expense

 

0.48

 

 

0.48

 

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

 

(0.23

)

 

(0.23

)

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

$

3.25

 

$

3.40

 

(1)

 

Adjustments are tax-effected using an assumed statutory tax rate of 26%.

(2)

 

In some cases, the sum of individual EPS amounts may not equal total non-GAAP EPS calculations due to rounding.

PROG Holdings, Inc.

Reconciliation of Previously Revised Full Year 2024 Outlook for Earnings Per Share

Assuming Dilution to Non-GAAP Earnings Per Share Assuming Dilution

 

Full Year 2024

 

Low

High

Projected Earnings Per Share Assuming Dilution

$

2.18

 

$

2.43

 

Add: Projected Intangible Amortization Expense

 

0.41

 

 

0.41

 

Add: Projected Interest on FTC Settlement Uncertain Tax Position

 

0.07

 

 

0.07

 

Add: Projected Restructuring Expense

 

0.41

 

 

0.41

 

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

 

(0.21

)

 

(0.21

)

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

$

2.85

 

$

3.10

 

(1)

 

Adjustments are tax-effected using an assumed statutory tax rate of 26%.

(2)

 

In some cases, the sum of individual EPS amounts may not equal total non-GAAP EPS calculations due to rounding.

PROG Holdings, Inc.

Reconciliation of the Three Months Ended September 30, 2024 Outlook for Earnings Per Share

Assuming Dilution to Non-GAAP Earnings Per Share Assuming Dilution

 

 

Three Months Ended September 30, 2024

 

Low

High

Projected Earnings Per Share Assuming Dilution

$

0.61

 

$

0.71

 

Add: Projected Intangible Amortization Expense

 

0.09

 

 

0.09

 

Add: Projected Interest on FTC Settlement Uncertain Tax Position

 

0.02

 

 

0.02

 

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

 

(0.02

)

 

(0.02

)

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

$

0.70

 

$

0.80

(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/20240724341262/en/

Investor Contact John A. Baugh, CFA Vice President, Investor Relations john.baugh@progleasing.com