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PROG Holdings Reports Fourth Quarter 2022 Results

  •  Consolidated revenues of $612.1 million
  • Consolidated earnings before taxes of $53.7 million; Adjusted EBITDA increased 3.2% year-over-year to $74.4 million or 12.2% of revenues
  • Diluted EPS of $0.73; Non-GAAP Diluted EPS of $0.84, up 25% year-over-year
  • Progressive Leasing write-offs of 6.5%, down from 6.8% in Q4 2021
  • E-commerce increased to 20.4% of Progressive Leasing GMV

PROG Holdings, Inc. (NYSE:PRG), the fintech holding company for Progressive Leasing, Vive Financial, and Four Technologies, today announced financial results for the fourth quarter ended December 31, 2022.

"Our fourth quarter results exceeded both our top and bottom line expectations, primarily driven by decisions made in the first half of 2022 to improve our portfolio performance and adjust our cost structure in the face of macroeconomic headwinds," said PROG Holdings President and CEO Steve Michaels. "During the quarter, we saw continued improvement in the quality of our lease portfolio as a result of these decisioning changes, and we were able to deliver write-offs within our targeted annual range for 2022 despite the pressures facing our consumers. We believe that our market leadership and financial strength will allow us to navigate through this uncertain period, continue to broaden our partner base, and position us to capitalize on increased consumer demand when the current macroeconomic headwinds subside."

Consolidated Results

Consolidated revenues for the fourth quarter of 2022 were $612.1 million, a decrease of 5.3% from the same period in 2021, with the impact of lower approval rates and weak retail traffic partially offset by an increase in average ticket size, further penetration with large national retail partners, and additional e-commerce integrations.

The Company reported consolidated net earnings for the fourth quarter of 2022 of $36.1 million, compared with $37.8 million in the prior year period. Adjusted EBITDA for the quarter was $74.4 million, or 12.2% of revenues, compared with $72.1 million, or 11.2% of revenues for the same period in 2021.

The year over year growth in Adjusted EBITDA was driven primarily by strong portfolio performance and cost disciplines instituted mid-year to adjust for the anticipated decline in revenue.

Diluted earnings per share for the fourth quarter of 2022 were $0.73 compared with $0.59 in the year ago period. On a non-GAAP basis, diluted earnings per share were $0.84 in the fourth quarter of 2022, compared with $0.67 for the same quarter in 2021. Our weighted average shares outstanding assuming dilution in the fourth quarter was 22.9% lower than the same quarter in 2021.

Progressive Leasing Results

Progressive Leasing's fourth quarter GMV decreased 14.8% to $540.9 million compared with the same period in 2021, primarily due to tighter decisioning on lease approvals and weaker traffic patterns for our retail partners, both in store and online. E-commerce GMV within the segment decreased 4.4% year-over-year; however, it increased to 20.4% of the segment's total GMV in the fourth quarter of 2022. The provision for lease merchandise write-offs was 6.5% of lease revenues in the fourth quarter of 2022, down both sequentially and year-over-year. We continued to see improved delinquency trends within the quarter following the tightening in decisioning made earlier in the year.

Liquidity and Capital Allocation

PROG Holdings ended the fourth quarter of 2022 with cash of $131.9 million and gross debt of $600 million. The Company repurchased $36.2 million of its stock in the quarter at an average price of $17.83 per share and has $337.3 million remaining under its previously-announced $1 billion share repurchase program.

2023 Outlook

The Company is issuing full year and Q1 2023 outlook for revenues, net earnings, adjusted EBITDA, GAAP diluted EPS, and non-GAAP diluted EPS. This outlook assumes a difficult operating environment with continued soft demand for consumer durable goods, no material changes in the Company's decisioning posture, and no impact from additional share repurchases.

 

Full Year 2023 Outlook

(In thousands, except per share amounts)

Low

High

 

 

 

PROG Holdings - Total Revenues

$

2,340,000

 

$

2,440,000

 

PROG Holdings - Net Earnings

 

82,500

 

 

103,500

 

PROG Holdings - Adjusted EBITDA

 

215,000

 

 

245,000

 

PROG Holdings - Diluted EPS

 

1.69

 

 

2.12

 

PROG Holdings - Diluted Non-GAAP EPS

 

2.11

 

 

2.54

 

 

 

 

Progressive Leasing - Total Revenues

 

2,275,000

 

 

2,370,000

 

Progressive Leasing - Earnings Before Taxes

 

147,000

 

 

167,000

 

Progressive Leasing - Adjusted EBITDA

 

228,000

 

 

251,000

 

 

 

 

Vive - Total Revenues

 

65,000

 

 

70,000

 

Vive - Earnings Before Taxes

 

2,500

 

 

4,500

 

Vive - Adjusted EBITDA

 

5,000

 

 

8,000

 

 

 

 

Other - Loss Before Taxes

 

(26,000

)

 

(23,000

)

Other - Adjusted EBITDA

 

(18,000

)

 

(14,000

)

 

Three Months Ended March 31, 2023

Outlook

(In thousands, except per share amounts)

Low

High

 

 

 

PROG Holdings - Total Revenues

$

635,000

$

660,000

PROG Holdings - Net Earnings

 

34,500

 

37,500

PROG Holdings - Adjusted EBITDA

 

72,000

 

77,000

PROG Holdings - Diluted EPS

 

0.71

 

0.77

PROG Holdings - Diluted Non-GAAP EPS

 

0.82

 

0.88

Conference Call and Webcast

The Company has scheduled a live webcast and conference call for Wednesday, February 22nd, 2023, at 8:30 A.M. ET to discuss its financial results for the fourth quarter of 2022. To access the live webcast, visit the Events and Presentations page of the Company’s Investor Relations website, https://investor.progholdings.com/.

About PROG Holdings, Inc.

PROG Holdings, Inc. (NYSE:PRG) is a fintech holding company headquartered in Salt Lake City, UT, that provides transparent and competitive payment options to consumers. The Company owns Progressive Leasing, a leading provider of e-commerce, app-based, and in-store point-of-sale lease-to-own solutions, Vive Financial, an omnichannel provider of second-look revolving credit products, and Four Technologies, a provider of Buy Now, Pay Later payment options through its platform, Four. More information on PROG Holdings' companies can be found at https://www.progholdings.com.

Forward-Looking Statements:

Statements in this news release regarding our business that are not historical facts are "forward-looking statements" that involve risks and uncertainties which could cause actual results to differ materially from those contained in the forward-looking statements. Such forward-looking statements generally can be identified by the use of forward-looking terminology, such as "believe," "continue," "outlook" and similar forward-looking terminology. These risks and uncertainties include factors such as (i) continued volatility and challenges in the macro environment and, in particular, the unfavorable effects on our business of the rapid increase in the rate of inflation currently being experienced in the economy, which has not been seen in more than forty years, significant increases in interest rates, and fears of a recession, and the impact of those headwinds on: (a) consumer confidence and customer demand for the merchandise that our POS partners sell; (b) our customers’ disposable income and their ability to make the lease and loan payments they owe the company; (c) the availability of consumer credit; (d) our labor costs; and (e) our overall financial performance and outlook; (ii) our businesses being subject to extensive laws and regulations, including laws and regulations unique to the industries in which our businesses operate, that may subject them to government investigations and significant monetary penalties and compliance-related burdens, as well as an increased focus by federal, state and local regulators on the industries within which our businesses operate, including with respect to consumer protection, customer privacy, third party and employee fraud and information security; (iii) deteriorating macroeconomic conditions resulting in the algorithms and other proprietary decisioning tools used in approving Progressive Leasing and Vive customers for leases and loans no longer being indicative of their ability to perform, which may limit the ability of those businesses to avoid lease and loan charge-offs or may result in their reserves being insufficient to cover actual losses; (iv) a large percentage of the company’s revenues being concentrated with several of Progressive Leasing’s key POS partners; (v) the risks that Progressive Leasing will be unable to attract new POS partners or retain and grow its business with its existing POS partners; (vi) Vive’s and Four’s business models differing significantly from Progressive Leasing’s, which creates specific and unique risks for the Vive and Four businesses, including Vive’s reliance on two bank partners to issue its credit products and Vive’s and Four’s exposure to the unique regulatory risks associated with the laws and regulations that apply to their businesses; (vii) the risks that interruptions, inventory shortages and other factors affecting the supply chains of our retail partners having a material and adverse effect on several aspects of our performance; (viii) the impact of the COVID-19 pandemic, including new variants, subvariants or additional waves of COVID-19 infections, on: (a) demand for the lease-to-own products offered by our Progressive Leasing segment, (b) Progressive Leasing’s point-of-sale or "POS" partners, and Vive’s and Four’s merchant partners, (c) Progressive Leasing’s, Vive’s and Four’s customers, including their ability and willingness to satisfy their obligations under their lease agreements and loan agreements, (d) Progressive Leasing’s POS partners being able to obtain the merchandise their customers need or desire, (e) our employees and labor needs, including our ability to adequately staff our operations, (f) our financial and operational performance, and (g) our liquidity; (iv) changes in the enforcement of existing laws and regulations and the adoption of new laws and regulations that may unfavorably impact our businesses; (ix) the risk that our capital allocation strategy, including our current share repurchase program, will not be effective at enhancing shareholder value; (x) our cost reduction initiatives may not be adequate or may have unintended consequences that could be disruptive to our businesses; (xi) the loss of the services of our key executives or our inability to attract and retain key talent, particularly with respect to our information technology function, may have a material adverse impact on our operations; (xii) increased competition from traditional and virtual lease-to-own competitors and also from competitors of our Vive segment; (xiii) adverse consequences to Progressive Leasing, including additional monetary penalties and/or injunctive relief, if it fails to comply with the terms of its 2020 settlement with the FTC, as well as the possibility of other regulatory authorities and third parties bringing legal actions against Progressive Leasing based on the same allegations that led to the FTC settlement; (xiv) our increased level of indebtedness; (xv) our ability to protect confidential, proprietary, or sensitive information, including the personal and confidential information of our customers, which may be adversely affected by cyber-attacks, employee or other internal misconduct, computer viruses, electronic break-ins or "hacking," or similar disruptions, any one of which could have a material adverse impact on our results of operations, financial condition, and prospects; and (xvi) the other risks and uncertainties discussed under "Risk Factors" in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 22, 2023. Statements in this press release that are "forward-looking" include without limitation statements about: (i) the benefits we expect to realize from our market leadership and financial strength, including our ability to broaden our base of POS partners and to capitalize on increased consumer demand when the current macroeconomic headwinds subside; and (ii) our full-year and first-quarter 2023 outlook. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances after the date of this press release.

PROG Holdings, Inc.

Consolidated Statements of Earnings

(In thousands, except per share data)

 

(Unaudited)

Three Months Ended

 

Twelve Months Ended

 

December 31,

 

December 31,

 

2022

 

2021

 

2022

 

2021

REVENUES:

 

 

 

 

 

 

 

Lease Revenues and Fees

$

592,942

 

 

$

629,950

 

 

$

2,523,785

 

 

$

2,619,005

 

Interest and Fees on Loans Receivable

 

19,155

 

 

 

16,593

 

 

 

74,041

 

 

 

58,915

 

 

 

612,097

 

 

 

646,543

 

 

 

2,597,826

 

 

 

2,677,920

 

 

 

 

 

 

 

 

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

Depreciation of Lease Merchandise

 

399,017

 

 

 

439,438

 

 

 

1,757,730

 

 

 

1,820,010

 

Provision for Lease Merchandise Write-offs

 

38,271

 

 

 

42,912

 

 

 

193,926

 

 

 

126,984

 

Operating Expenses

 

112,377

 

 

 

107,405

 

 

 

450,374

 

 

 

397,399

 

Impairment of Goodwill

 

 

 

 

 

 

 

10,151

 

 

 

 

 

 

549,665

 

 

 

589,755

 

 

 

2,412,181

 

 

 

2,344,393

 

OPERATING PROFIT

 

62,432

 

 

 

56,788

 

 

 

185,645

 

 

 

333,527

 

Interest Expense, Net

 

(8,701

)

 

 

(3,931

)

 

 

(37,401

)

 

 

(5,323

)

EARNINGS BEFORE INCOME TAX EXPENSE

 

53,731

 

 

 

52,857

 

 

 

148,244

 

 

 

328,204

 

INCOME TAX EXPENSE

 

17,646

 

 

 

15,038

 

 

 

49,535

 

 

 

84,647

 

NET EARNINGS

$

36,085

 

 

$

37,819

 

 

$

98,709

 

 

$

243,557

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

Basic

$

0.74

 

 

$

0.60

 

 

$

1.90

 

 

$

3.69

 

Assuming Dilution

$

0.73

 

 

$

0.59

 

 

$

1.90

 

 

$

3.67

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING:

 

 

 

 

 

 

 

Basic

 

49,029

 

 

 

63,319

 

 

 

51,921

 

 

 

66,026

 

Assuming Dilution

 

49,170

 

 

 

63,739

 

 

 

52,075

 

 

 

66,416

 

PROG Holdings, Inc.

Consolidated Balance Sheets

(In thousands, except share data)

 

 

December 31,

2022

 

December 31,

2021

ASSETS:

 

 

 

 

Cash and Cash Equivalents

 

$

131,880

 

 

$

170,159

 

Accounts Receivable (net of allowances of $69,264 in 2022 and $71,233 in 2021)

 

 

64,521

 

 

 

66,270

 

Lease Merchandise (net of accumulated depreciation and allowances of $467,355 in 2022 and $463,929 in 2021)

 

 

648,043

 

 

 

714,055

 

Loans Receivable (net of allowances and unamortized fees of $53,635 in 2022 and $53,300 in 2021)

 

 

130,966

 

 

 

119,315

 

Property and Equipment, Net

 

 

23,852

 

 

 

25,648

 

Operating Lease Right-of-Use Assets

 

 

11,875

 

 

 

17,488

 

Goodwill

 

 

296,061

 

 

 

306,212

 

Other Intangibles, Net

 

 

114,411

 

 

 

137,305

 

Income Tax Receivable

 

 

18,864

 

 

 

14,352

 

Deferred Income Tax Assets

 

 

2,955

 

 

 

2,760

 

Prepaid Expenses and Other Assets

 

 

48,481

 

 

 

48,197

 

Total Assets

 

$

1,491,909

 

 

$

1,621,761

 

LIABILITIES & SHAREHOLDERS’ EQUITY:

 

 

 

 

Accounts Payable and Accrued Expenses

 

$

135,025

 

 

$

135,954

 

Deferred Income Tax Liabilities

 

 

137,261

 

 

 

146,265

 

Customer Deposits and Advance Payments

 

 

37,074

 

 

 

45,070

 

Operating Lease Liabilities

 

 

21,122

 

 

 

25,410

 

Debt

 

 

590,966

 

 

 

589,654

 

Total Liabilities

 

 

921,448

 

 

 

942,353

 

SHAREHOLDERS' EQUITY:

 

 

 

 

Common Stock, Par Value $0.50 Per Share: Authorized: 225,000,000 Shares at December 31, 2022 and 2021; Shares Issued: 82,078,654 at December 31, 2022 and 2021

 

 

41,039

 

 

 

41,039

 

Additional Paid-in Capital

 

 

338,814

 

 

 

332,244

 

Retained Earnings

 

 

1,154,235

 

 

 

1,055,526

 

 

 

 

1,534,088

 

 

 

1,428,809

 

Less: Treasury Shares at Cost

 

 

 

 

Common Stock: 34,044,102 Shares at December 31, 2022 and 25,638,057 at December 31, 2021

 

 

(963,627

)

 

 

(749,401

)

Total Shareholders’ Equity

 

 

570,461

 

 

 

679,408

 

Total Liabilities & Shareholders’ Equity

 

$

1,491,909

 

 

$

1,621,761

 

PROG Holdings, Inc.

Consolidated Statements of Cash Flows

(In thousands)

 

Year Ended December 31,

 

2022

 

2021

OPERATING ACTIVITIES:

 

 

 

Net Earnings

$

98,709

 

 

$

243,557

 

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

 

 

 

Depreciation of Lease Merchandise

 

1,757,730

 

 

 

1,820,010

 

Other Depreciation and Amortization

 

33,851

 

 

 

33,258

 

Provisions for Accounts Receivable and Loan Losses

 

417,496

 

 

 

242,412

 

Stock-Based Compensation

 

17,521

 

 

 

21,349

 

Deferred Income Taxes

 

(9,199

)

 

 

15,729

 

Impairment of Goodwill and Other Assets

 

10,151

 

 

 

 

Non-Cash Lease Expense

 

(1,674

)

 

 

974

 

Other Changes, Net

 

(7,164

)

 

 

(7,561

)

Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions:

 

 

 

Additions to Lease Merchandise

 

(1,889,207

)

 

 

(2,054,467

)

Book Value of Lease Merchandise Sold or Disposed

 

197,489

 

 

 

130,665

 

Accounts Receivable

 

(374,515

)

 

 

(229,703

)

Prepaid Expenses and Other Assets

 

68

 

 

 

(7,879

)

Income Tax Receivable and Payable

 

(6,007

)

 

 

(29,753

)

Operating Lease Right-of-Use Assets and Liabilities

 

2,999

 

 

 

(1,955

)

Accounts Payable and Accrued Expenses

 

2,227

 

 

 

70,820

 

Customer Deposits and Advance Payments

 

(7,996

)

 

 

(1,495

)

Cash Provided by Operating Activities

 

242,479

 

 

 

245,961

 

INVESTING ACTIVITIES:

 

 

 

Investments in Loans Receivable

 

(203,600

)

 

 

(182,204

)

Proceeds from Loans Receivable

 

159,707

 

 

 

132,281

 

Outflows on Purchases of Property and Equipment

 

(9,674

)

 

 

(9,555

)

Proceeds from Property and Equipment

 

27

 

 

 

78

 

Proceeds (Outflows) from Acquisitions of Businesses and Customer Agreements

 

6

 

 

 

(22,766

)

Cash Used in Investing Activities

 

(53,534

)

 

 

(82,166

)

FINANCING ACTIVITIES:

 

 

 

Repayments on Revolving Facility, Net

 

 

 

 

(50,000

)

Proceeds from Debt

 

 

 

 

591,750

 

Acquisition of Treasury Stock

 

(223,598

)

 

 

(142,358

)

Tender Offer Shares Repurchased and Retired

 

(274

)

 

 

(428,551

)

Issuance of Stock Under Stock Option Plans

 

1,150

 

 

 

4,592

 

Shares Withheld for Tax Payments

 

(2,902

)

 

 

(5,123

)

Debt Issuance Costs

 

(1,600

)

 

 

(591

)

Cash Used in Financing Activities

 

(227,224

)

 

 

(30,281

)

(Decrease) Increase in Cash and Cash Equivalents

 

(38,279

)

 

 

133,514

 

Cash and Cash Equivalents at Beginning of Year

 

170,159

 

 

 

36,645

 

Cash and Cash Equivalents at End of Year

$

131,880

 

 

$

170,159

 

Net Cash Paid During the Year:

 

 

 

Interest Expense

$

35,712

 

 

$

1,452

 

Income Taxes

$

62,172

 

 

$

53,602

 

PROG Holdings, Inc.

Quarterly Revenues by Segment

(In thousands)

 

(Unaudited)

 

Three Months Ended

 

December 31, 2022

 

Progressive Leasing

Vive

Other

Consolidated Total

Lease Revenues and Fees

$

592,942

$

$

$

592,942

Interest and Fees on Loans Receivable

 

 

17,886

 

1,269

 

19,155

Total Revenues

$

592,942

$

17,886

$

1,269

$

612,097

 

(Unaudited)

 

Three Months Ended

 

December 31, 2021

 

Progressive Leasing

Vive

Other

Consolidated Total

Lease Revenues and Fees

$

629,950

$

$

$

629,950

Interest and Fees on Loans Receivable

 

 

16,308

 

285

 

16,593

Total Revenues

$

629,950

$

16,308

$

285

$

646,543

PROG Holdings, Inc.

Annual Revenues by Segment

(In thousands)

 

 

Twelve Months Ended

 

December 31, 2022

 

Progressive Leasing

Vive

Other

Consolidated Total

Lease Revenues and Fees

$

2,523,785

$

$

$

2,523,785

Interest and Fees on Loans Receivable

 

 

70,911

 

3,130

 

74,041

Total Revenues

$

2,523,785

$

70,911

$

3,130

$

2,597,826

 

 

 

Twelve Months Ended

 

December 31, 2021

 

Progressive Leasing

Vive

Other

Consolidated Total

Lease Revenues and Fees

$

2,619,005

$

$

$

2,619,005

Interest and Fees on Loans Receivable

 

 

58,462

 

453

 

58,915

Total Revenues

$

2,619,005

$

58,462

$

453

$

2,677,920

PROG Holdings, Inc.

Gross Merchandise Volume by Quarter

(In thousands)

 

(Unaudited)

 

Three Months Ended December 31,

 

 

2022

 

 

2021

Progressive Leasing

$

540,913

 

$

634,654

Vive

 

40,417

 

 

42,455

Other

 

26,192

 

 

5,996

Total

$

607,522

 

$

683,105

Use of Non-GAAP Financial Information:

Non-GAAP net earnings, non-GAAP diluted earnings per share, and adjusted EBITDA are supplemental measures of our performance that are not calculated in accordance with generally accepted accounting principles in the United States ("GAAP"). Non-GAAP net earnings and non-GAAP diluted earnings per share for the three and twelve months ended December 31, 2022, full year 2023 and first quarter 2023 outlook exclude intangible amortization expense, restructuring expenses, impairment of goodwill, and accrued interest on an uncertain tax position related to Progressive Leasing's $175 million settlement with the FTC in 2020. Non-GAAP net earnings and non-GAAP diluted earnings per share for the three and twelve months ended December 31, 2021, exclude intangible amortization expense and transaction costs associated with the acquisition of Four. The amount for the after-tax non-GAAP adjustment, which is tax effected using our statutory tax rate, can be found in the reconciliation of net earnings and earnings per share assuming dilution to non-GAAP net earnings and earnings per share assuming dilution table in this press release.

The Adjusted EBITDA figures presented in this press release are calculated as the Company’s earnings before interest expense, net, depreciation on property and equipment, amortization of intangible assets and income taxes. Adjusted EBITDA for the three and twelve months ended December 31, 2022, full year 2023 and first quarter 2023 outlook exclude stock-based compensation expense, restructuring expenses, and impairment of goodwill. Adjusted EBITDA for the three and twelve months ended December 31, 2021, exclude stock-based compensation expense and transaction costs associated with the acquisition of Four. The amounts for these pre-tax non-GAAP adjustments can be found in the three and twelve months ended segment EBITDA tables in this press release.

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

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

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

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

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

PROG Holdings, Inc.

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

(In thousands, except per share amounts)

 

(Unaudited)

 

 

Three Months Ended

Twelve

Months Ended

 

Mar 31,

Jun 30,

Sept 30,

Dec 31,

Dec 31,

 

 

2022

 

Net Earnings

$

27,135

 

$

19,484

 

$

16,005

 

$

36,085

 

$

98,709

 

Add: Intangible Amortization Expense

 

5,724

 

 

5,723

 

 

5,724

 

 

5,723

 

 

22,894

 

Add: Restructuring Expense

 

 

 

4,328

 

 

4,673

 

 

 

 

9,001

 

Add: Impairment of Goodwill

 

 

 

 

 

10,151

 

 

 

 

10,151

 

Less: Tax Impact of Adjustments(1)

 

(1,488

)

 

(2,613

)

 

(2,703

)

 

(1,488

)

 

(8,292

)

Add: Accrued Interest on FTC Settlement Uncertain Tax Position

 

539

 

 

647

 

 

755

 

 

972

 

 

2,913

 

Non-GAAP Net Earnings

$

31,910

 

$

27,569

 

$

34,605

 

$

41,292

 

$

135,376

 

Earnings Per Share Assuming Dilution

$

0.49

 

$

0.37

 

$

0.32

 

$

0.73

 

$

1.90

 

Add: Intangible Amortization Expense

 

0.10

 

 

0.11

 

 

0.11

 

 

0.12

 

 

0.44

 

Add: Restructuring Expense

 

 

 

0.08

 

 

0.09

 

 

 

 

0.17

 

Add: Impairment of Goodwill

 

 

 

 

 

0.20

 

 

 

 

0.19

 

Less: Tax Impact of Adjustments(1)

 

(0.03

)

 

(0.05

)

 

(0.05

)

 

(0.03

)

 

(0.16

)

Add: Accrued Interest on FTC Settlement Uncertain Tax Position

 

0.01

 

 

0.01

 

 

0.01

 

 

0.02

 

 

0.06

 

Non-GAAP Earnings Per Share Assuming Dilution(2)

$

0.57

 

$

0.52

 

$

0.68

 

$

0.84

 

$

2.60

 

Weighted Average Shares Outstanding Assuming Dilution

 

55,706

 

 

52,961

 

 

50,547

 

 

49,170

 

 

52,075

 

(1)

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

(2)

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

PROG Holdings, Inc.

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

(In thousands, except per share amounts)

 

(Unaudited)

 

 

Three Months Ended

Twelve

Months Ended

 

Mar 31,

Jun 30,

Sept 30,

Dec 31,

Dec 31,

 

 

2021

 

Net Earnings

$

79,488

 

$

68,837

 

$

57,413

 

$

37,819

 

$

243,557

 

Add: Intangible Amortization Expense

 

5,421

 

 

5,421

 

 

5,723

 

 

5,724

 

 

22,289

 

Add: Transaction Expense

 

 

 

561

 

 

 

 

 

 

561

 

Less: Tax Impact of Adjustments(1)

 

(1,409

)

 

(1,555

)

 

(1,488

)

 

(1,488

)

 

(5,940

)

Add: Accrued Interest on FTC Settlement Uncertain Tax Position

 

 

 

 

 

1,040

 

 

350

 

 

1,390

 

Non-GAAP Net Earnings

$

83,500

 

$

73,264

 

$

62,688

 

$

42,405

 

$

261,857

 

Earnings Per Share Assuming Dilution

$

1.16

 

$

1.02

 

$

0.86

 

$

0.59

 

$

3.67

 

Add: Intangible Amortization Expense

 

0.08

 

 

0.08

 

 

0.09

 

 

0.09

 

 

0.34

 

Add: Transaction Expense

 

 

 

0.01

 

 

 

 

 

 

0.01

 

Less: Tax Impact of Adjustments(1)

 

(0.02

)

 

(0.02

)

 

(0.02

)

 

(0.02

)

 

(0.09

)

Add: Accrued Interest on FTC Settlement Uncertain Tax Position

 

 

 

 

 

0.02

 

 

0.01

 

 

0.02

 

Non-GAAP Earnings Per Share Assuming Dilution(2)

$

1.22

 

$

1.09

 

$

0.94

 

$

0.67

 

$

3.94

 

Weighted Average Shares Outstanding Assuming Dilution

 

68,260

 

 

67,329

 

 

66,385

 

 

63,739

 

 

66,416

 

(1)

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

(2)

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

PROG Holdings, Inc.

Non-GAAP Financial Information

Quarterly Segment EBITDA

(In thousands)

 

(Unaudited)

 

Three Months Ended

 

December 31, 2022

 

Progressive Leasing

Vive

Other

Consolidated Total

Net Earnings

 

 

 

$

36,085

Income Tax Expense(1)

 

 

 

 

17,646

Earnings (Loss) Before Income Tax Expense

 

61,187

$

41

$

(7,497

)

 

53,731

Interest Expense

 

8,590

 

111

 

 

 

8,701

Depreciation

 

2,283

 

199

 

200

 

 

2,682

Amortization

 

5,420

 

 

303

 

 

5,723

EBITDA

 

77,480

 

351

 

(6,994

)

 

70,837

Stock-Based Compensation

 

2,925

 

100

 

566

 

 

3,591

Adjusted EBITDA

 

80,405

$

451

$

(6,428

)

$

74,428

(1)

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

 

(Unaudited)

 

Three Months Ended

 

December 31, 2021

 

Progressive Leasing

Vive

Other

Consolidated Total

Net Earnings

 

 

 

$

37,819

Income Tax Expense(1)

 

 

 

 

15,038

Earnings (Loss) Before Income Tax Expense

$

50,998

$

8,092

$

(6,233

)

 

52,857

Interest Expense

 

3,788

 

143

 

 

 

3,931

Depreciation

 

2,825

 

224

 

29

 

 

3,078

Amortization

 

5,421

 

 

303

 

 

5,724

EBITDA

 

63,032

 

8,459

 

(5,901

)

 

65,590

Stock-Based Compensation

 

3,327

 

78

 

3,141

 

 

6,546

Adjusted EBITDA

$

66,359

$

8,537

$

(2,760

)

$

72,136

(1)

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

PROG Holdings, Inc.

Non-GAAP Financial Information

Twelve Month Segment EBITDA

(In thousands)

 

 

Twelve Months Ended

 

December 31, 2022

 

Progressive Leasing

Vive

Other

Consolidated Total

Net Earnings

 

 

 

$

98,709

Income Tax Expense(1)

 

 

 

 

49,535

Earnings (Loss) Before Income Tax Expense

$

174,143

$

9,195

$

(35,094

)

 

148,244

Interest Expense

 

37,003

 

398

 

 

 

37,401

Depreciation

 

9,691

 

795

 

471

 

 

10,957

Amortization

 

21,683

 

 

1,211

 

 

22,894

EBITDA

 

242,520

 

10,388

 

(33,412

)

 

219,496

Stock-Based Compensation

 

12,633

 

391

 

4,497

 

 

17,521

Restructuring Expense

 

8,343

 

658

 

 

 

9,001

Impairment of Goodwill

 

 

 

10,151

 

 

10,151

Adjusted EBITDA

$

263,496

$

11,437

$

(18,764

)

$

256,169

(1)

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

 

 

 

Twelve Months Ended

 

December 31, 2021

 

Progressive Leasing

Vive

Other

Consolidated Total

Net Earnings

 

 

 

$

243,557

Income Tax Expense(1)

 

 

 

 

84,647

Earnings (Loss) Before Income Tax Expense

$

319,126

$

20,223

$

(11,145

)

 

328,204

Interest Expense

 

4,850

 

473

 

 

 

5,323

Depreciation

 

10,078

 

849

 

42

 

 

10,969

Amortization

 

21,684

 

 

605

 

 

22,289

EBITDA

 

355,738

 

21,545

 

(10,498

)

 

366,785

Stock-Based Compensation

 

14,919

 

287

 

6,143

 

 

21,349

Transaction Expense

 

561

 

 

 

 

561

Adjusted EBITDA

$

371,218

$

21,832

$

(4,355

)

$

388,695

(1)

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

PROG Holdings, Inc.

Non-GAAP Financial Information

Reconciliation of Full Year 2023 Outlook for Adjusted EBITDA

(In thousands)

 

Fiscal Year 2023 Ranges

 

Progressive Leasing

Vive

Other

Consolidated Total

Estimated Net Earnings

 

 

 

$82,500 - $103,500

Income Tax Expense(1)

 

 

 

41,000 - 45,000

Projected Earnings (Loss) Before Income Tax Expense

$147,000 - $167,000

$2,500 - $4,500

$(26,000) - $(23,000)

123,500 - 148,500

Interest Expense

34,000

1,000

35,000

Depreciation

8,000

1,000

1,500

10,500

Amortization

22,000

1,500

23,500

Projected EBITDA

211,000 - 231,000

4,500 - 6,500

(23,000) - (20,000)

192,500 - 217,500

Stock-Based Compensation

17,000 - 20,000

500 - 1,500

5,000 - 6,000

22,500 - 27,500

Projected Adjusted EBITDA

$228,000 - $251,000

$5,000 - $8,000

$(18,000) - $(14,000)

$215,000 - $245,000

(1)

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

PROG Holdings, Inc.

Non-GAAP Financial Information

Reconciliation of the Three Months Ended March 31, 2023 Outlook for Adjusted EBITDA

(In thousands)

Three Months Ended March 31, 2023 Outlook

 

Consolidated Total

Estimated Net Earnings

$34,500 - $37,500

Income Tax Expense(1)

15,500 - 16,500

Projected Earnings (Loss) Before Income Tax Expense

50,000 - 54,000

Interest Expense

9,000

Depreciation

2,000

Amortization

6,000

Projected EBITDA

67,000 - 71,000

Stock-Based Compensation

5,000 - 6,000

Projected Adjusted EBITDA

$72,000 - $77,000

(1)

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

PROG Holdings, Inc.

Reconciliation of Full Year 2023 Outlook for Earnings Per Share

Assuming Dilution to Non-GAAP Earnings Per Share Assuming Dilution

 

Full Year 2023 Range

 

Low

High

Projected Earnings Per Share Assuming Dilution

$

1.69

 

$

2.12

 

Add: Projected Intangible Amortization Expense(1)

 

0.48

 

 

0.48

 

Add: Projected Interest on FTC Settlement Uncertain Tax Position

 

0.06

 

 

0.06

 

Subtract: Tax Effect on Non-GAAP Adjustments

 

(0.13

)

 

(0.13

)

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

$

2.11

 

$

2.54

 

(1)

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

(2)

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

PROG Holdings, Inc.

Reconciliation of the Three Months Ended March 31, 2023 Outlook for Earnings Per Share

Assuming Dilution to Non-GAAP Earnings Per Share Assuming Dilution

 

Three Months Ended March 31, 2023

 

Low

High

Projected Earnings Per Share Assuming Dilution

$

0.71

 

$

0.77

 

Add: Projected Intangible Amortization Expense(1)

 

0.12

 

 

0.12

 

Add: Projected Interest on FTC Settlement Uncertain Tax Position

 

0.02

 

 

0.02

 

Subtract: Tax Effect on Non-GAAP Adjustments

 

(0.03

)

 

(0.03

)

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

$

0.82

 

$

0.88

 

(1)

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

(2)

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

 

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