8-K
PROG Holdings, Inc. (PRG)
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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 25, 2021
| PROG HOLDINGS, INC. |
|---|
(Exact name of Registrant as Specified in Charter)
| Georgia | 1-39628 | 85-2484385 | |||||
|---|---|---|---|---|---|---|---|
| (State or other Jurisdiction of Incorporation) | (Commission File<br><br>Number) | (IRS Employer<br><br>Identification No.) | 256 W. Data Drive | Draper, | Utah | 84020-2315 | |
| --- | --- | --- | --- | ||||
| (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):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.50 Par Value | PRG | New York Stock Exchange |
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 25, 2021, PROG Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and fiscal year ended December 31, 2020. 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 |
|---|---|
| 99.1 | Press release dated February 25, 2021. |
| Exhibit 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PROG Holdings, Inc. | |||
|---|---|---|---|
| By: | /s/ Brian Garner | ||
| Date: | February 25, 2021 | Brian Garner<br><br>Chief Financial Officer |
Document
EXHIBIT 99.1
| Contact: | PROG Holdings, Inc. |
|---|---|
| John Baugh | |
| Vice President, Investor Relations | |
| 385.351.1390 | |
| John.Baugh@progleasing.com |
PROG Holdings Reports Fourth Quarter 2020 Results
•Revenues of $605.7 million, up 6.5%
•Diluted EPS of $0.62; Non-GAAP Diluted EPS $0.95, up 46.2%
•Earnings before taxes of $66.3 million; Adjusted EBITDA of $90.0 million, up 35.9%
•Progressive Leasing earnings before taxes of $88.1 million; Adjusted EBITDA of $96.7 million, up 25.4%
•Board of Directors authorizes new $300 million share repurchase program
SALT LAKE CITY, UT February 25, 2021/PRNewswire/-PROG Holdings, Inc. (NYSE:PRG), a FinTech holding company operating Progressive Leasing, a leading provider of virtual in store, e-commerce and app-based point-of-sale lease-to-own solutions, and Vive Financial, an omni-channel provider of second-look revolving credit products, today announced fourth quarter 2020 results for the first time as a stand-alone public company.
“Our Progressive Leasing segment delivered record revenue, earnings before taxes, and adjusted EBITDA for the fourth quarter period, in spite of challenges posed by the pandemic”, said Steve Michaels, PROG’s Chief Executive Officer. “During our first quarter as a stand-alone FinTech company, the PROG team provided exceptional service to our customers and point-of-sale retail partners while also completing the spin-off of our former Aaron’s Business segment. We continued to navigate challenging economic conditions, as changes in customer behavior, supply chain disruptions, and broader economic uncertainty negatively impacted gross merchandise volume (GMV) in the period. During 2021, we expect to achieve strong GMV growth by expanding our e-commerce business and driving increased sales for our existing and new point-of-sale retail partners.”
Consolidated Results
For the fourth quarter of 2020, consolidated revenues were $605.7 million, an increase of 6.5% from the fourth quarter of 2019. The increase was primarily driven by continued strong customer payment performance across both the Progressive Leasing and Vive business segments, as well as elevated buyout activity in the period. These revenue drivers were partially offset by lower levels of GMV growth in the second and third quarters that had an unfavorable impact on fourth quarter revenue growth. Progressive Leasing's GMV for the fourth quarter of 2020 declined 3.4% compared to the prior year period, as strong growth in new national retailers and e-commerce was offset by the effects of pandemic-related challenges experienced by our point-of-sale retail partners.
The provision for lease merchandise write-offs was 4.5% of revenues in the fourth quarter of 2020 compared with 6.6% in the same period of 2019, below our annual target range of 6% to 8% of revenues. The lower write-offs resulted from lower delinquencies and customer payment performance exceeding prior year results.
The Company reported net earnings from continuing operations for the fourth quarter of 2020 of $42.3 million compared to a net loss from continuing operations of $138.1 million in the prior year period (which was burdened by one-time legal and regulatory expenses of $179.3 million). Net earnings in the fourth quarter of 2020 included $15.5 million of transaction expenses related to the spin-off of our former Aaron's Business segment, as well as $3.6 million of unallocated overhead costs that was previously allocated to that segment.
Adjusted EBITDA for the Company was $90.0 million for the fourth quarter of 2020, compared with $66.2 million for the same period in 2019, an increase of $23.8 million, or 35.9%. As a percentage of revenues, adjusted EBITDA was 14.9% in the fourth quarter of 2020 compared with 11.6% for the same period in 2019.
Diluted earnings per share from continuing operations for the fourth quarter of 2020 were $0.62 compared with diluted loss per share of $2.06 in the year ago period. The fourth quarter 2019 diluted loss per share was impacted by one-time legal and regulatory expenses of $179.3 million. On a non-GAAP basis, diluted earnings per share from continuing operations were $0.95 in the fourth quarter of 2020 compared with $0.65 for the same quarter in 2019, an increase of $0.30 or 46.2%.
Liquidity and Capital Allocation
The Company ended 2020 with a net debt position of $13 million and had $300 million of unused capacity on its $350 million revolving credit facility. In addition, the Company’s Board of Directors has authorized a new $300 million share repurchase program and determined to discontinue paying dividends for the foreseeable future.
“The Board’s decision to authorize a new repurchase program and discontinue the dividend, reflects our new positioning. With the spin-off behind us, our business is now high-growth and asset light. We have substantial capital to grow, through both re-investment in our business and potential opportunities to acquire innovative and scalable technologies or businesses. At the same time, we expect our strong cash flows will provide us the opportunity to return excess capital to shareholders through opportunistic buybacks,” said Mr. Michaels.
The Company expects to repurchase shares under its new $300 million program from time to time, subject to its capital plan, market conditions and other factors. The timing and exact amount of repurchases under the new repurchase program will be determined by the Company’s management. The Company is not obligated to acquire any particular number of shares and the new program may be suspended or discontinued at any time.
2021 Outlook
The Company is providing outlook for the first quarter of 2021, but will not be providing annual guidance at this time, as the economic uncertainty created by the pandemic, and uncertainty regarding the amount, nature and timing of any government stimulus, continues to impact our POS partners and our customers in a manner that limits its visibility into its full-year performance for 2021.
| Q1 2021 Outlook | ||||
|---|---|---|---|---|
| (In thousands, except per share amounts) | Low | High | ||
| PROG Holdings - Total Revenues | $ | 650,000 | $ | 670,000 |
| PROG Holdings - Net Earnings | 55,000 | 58,000 | ||
| PROG Holdings - Adjusted EBITDA1 | 85,000 | 90,000 | ||
| PROG Holdings - Diluted EPS | 0.81 | 0.87 | ||
| PROG Holdings - Diluted Non-GAAP EPS | 0.89 | 0.95 | ||
| Progressive Leasing - Total Revenues | 638,000 | 657,000 | ||
| Progressive Leasing - Earnings before taxes | 72,000 | 75,000 | ||
| Progressive Leasing - Adjusted EBITDA1 | 84,000 | 87,000 | ||
| Vive - Total Revenues | 12,000 | 13,000 | ||
| Vive - Earnings before taxes | 1,000 | 3,000 | ||
| Vive - Adjusted EBITDA1 | 1,000 | 3,000 |
1 The Q1 2021 Adjusted EBITDA outlook excludes stock-based compensation expense. See GAAP to Non-GAAP reconciliation below for further details.
Conference Call and Webcast
The Company will hold a conference call to discuss its quarterly results on Thursday, February 25, 2021 at 8:30 a.m. Eastern Time. The public is invited to listen to the conference call by webcast accessible through the Company’s investor relations website, investor.progleasing.com. The webcast will be archived for playback at that same site.
About PROG Holdings, Inc.
Headquartered in Salt Lake City, Utah, PROG Holdings, Inc.'s (NYSE-PRG) is a financial technology holding company operating Progressive Leasing, a leading provider of virtual in store, e-commerce and app-based point-of-sale lease-to-own solutions, and Vive Financial, an omni-channel provider of second-look revolving credit products. The Company’s mission is to provide simple and affordable payment options for credit challenged consumers. Progressive Leasing’s fair and transparent lease-purchase option has helped millions of consumers and their families use and own the products they need through more than 25,000 point-of-sale partner locations and e-commerce websites in 45 states. Vive Financial provides second-look credit products that are originated through federally insured banks at over 3,000 point-of-sale partner locations and e-commerce websites.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this news release regarding our business that are not historical facts are “forward-looking statements” that involve risks and uncertainties which could cause actual results to differ materially from those contained in the forward-looking statements. Such forward-looking statements generally can be identified by the use of forward-looking terminology, such as “expect”, “believe”, “outlook”, “guidance”, and similar terminology. These risks and uncertainties include factors such as (i) the impact of the COVID-19 pandemic and related measures taken by governmental or regulatory authorities to combat the pandemic, and whether additional government stimulus payments or supplemental unemployment benefits will be approved, and the nature, amount and timing of any such payments or benefits, including the impact of the pandemic and such measures on: (a) demand for the lease-to-own products offered by our Progressive Leasing segment, (b) Progressive Leasing’s POS partners, (c) Progressive Leasing’s customers, including their ability and willingness to satisfy their obligations under their lease agreements, (d) Progressive Leasing’s point-of-sale partners being able to obtain the merchandise its customers need or desire, (e) our employees and labor needs, including our ability to adequately staff our operations, (f) our financial and operational performance, and (g) our liquidity; (ii) changes in the enforcement of existing laws and regulations and the adoption of new laws and regulations that may unfavorably impact our businesses; (iii) the effects on our business and reputation resulting from Progressives Leasing’s
announced settlement and related consent order with the FTC, including the risk of losing existing POS partners or being unable to establish new relationships with additional POS partners, and of any follow-on regulatory and/or civil litigation arising therefrom; (iv) other types of legal and regulatory proceedings and investigations, including those related to consumer protection, customer privacy, third party and employee fraud and information security; (v) increased competition from traditional and virtual lease-to-own competitors; (vi) increases in lease merchandise write-offs and the provision for returns and uncollectible renewal payments for Progressive Leasing, especially in light of the COVID-19 pandemic; (vii) the possibility that the operational, strategic and shareholder value creation opportunities expected from the spin-off of the Company’s Aaron’s Business segment may not be achieved in a timely manner, or at all; and (viii) the other risks and uncertainties discussed under “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which will be filed with the Securities and Exchange Commission later today. Statements in this press release that are “forward-looking” include without limitation statements about (i) the strength of our businesses during the ongoing economic uncertainty caused by the COVID pandemic; (ii) our expectations for growth in Progressive Leasing’s gross merchandise volume, expanding our business with e-commerce partners, and driving increased sales for existing and new POS partners; (iii) statements regarding our plans to repurchase shares under our newly authorized $300 million repurchase program and the manner in which, and frequency with which, we may do so, the consistency of our business model and ability to generate strong cash flows, and our ability to create meaningful shareholder value over the long term; and (iv) our outlook for our consolidated financial performance for the first quarter of 2021. 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) <br> Three Months Ended | Twelve Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31, | December 31, | |||||||
| 2020 | 2019 | 2020 | 2019 | |||||
| Revenues: | ||||||||
| Lease Revenues and Fees | $ | 594,017 | $ | 559,549 | 2,443,405 | $ | 2,128,133 | |
| Interest and Fees on Loans Receivable | 11,635 | 9,103 | 41,190 | 35,046 | ||||
| Total | 605,652 | 568,652 | 2,484,595 | 2,163,179 | ||||
| Costs and Expenses: | ||||||||
| Depreciation of Lease Merchandise | 401,037 | 379,038 | 1,690,922 | 1,445,027 | ||||
| Provision for Lease Merchandise Write-offs | 26,889 | 36,668 | 131,332 | 153,516 | ||||
| Operating Expenses | 95,690 | 94,783 | 373,460 | 357,762 | ||||
| Legal and Regulatory Expense, net of insurance recoveries | — | 179,261 | (835) | 179,261 | ||||
| Separation Related Charges | 15,510 | — | 17,953 | — | ||||
| Total | 539,126 | 689,750 | 2,212,832 | 2,135,566 | ||||
| Operating Profit (Loss) | 66,526 | (121,098) | 271,763 | 27,613 | ||||
| Interest Expense | (187) | — | (187) | — | ||||
| Earnings (Loss) Before Income Tax Expense from Continuing Operations | 66,339 | (121,098) | 271,576 | 27,613 | ||||
| Income Tax Expense | 24,034 | 17,028 | 37,949 | 52,228 | ||||
| Net Earnings (Loss) from Continuing Operations | 42,305 | (138,126) | 233,627 | (24,615) | ||||
| (Loss) Earnings from Discontinued Operations, Net | (1,487) | 31,069 | (295,092) | 56,087 | ||||
| Net Earnings (Loss) | $ | 40,818 | $ | (107,057) | $ | (61,465) | $ | 31,472 |
| Basic Earnings (Loss) per Share: | ||||||||
| Continuing Operations | $ | 0.62 | $ | (2.06) | $ | 3.47 | $ | (0.37) |
| Discontinued Operations | (0.02) | 0.46 | (4.39) | 0.83 | ||||
| Total Basic Earnings (Loss) per Share | 0.60 | (1.60) | (0.91) | 0.47 | ||||
| Diluted Earnings (Loss) per Share: | ||||||||
| Continuing Operations | $ | 0.62 | $ | (2.06) | $ | 3.43 | $ | (0.37) |
| Discontinued Operations | (0.02) | 0.46 | (4.34) | 0.83 | ||||
| Total Diluted Earnings (Loss) per Share | 0.60 | (1.60) | (0.90) | 0.47 | ||||
| Weighted Average Shares Outstanding | 67,719 | 66,908 | 67,261 | 67,322 | ||||
| Weighted Average Shares Outstanding Assuming Dilution | 68,537 | 66,908 | 68,022 | 67,322 |
PROG Holdings, Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
| December 31, 2020 | December 31, 2019 | |||
|---|---|---|---|---|
| ASSETS: | ||||
| Cash and Cash Equivalents | $ | 36,645 | $ | 57,755 |
| Accounts Receivable (net of allowances of $56,364 in 2020 and $65,573 in 2019) | 61,254 | 67,080 | ||
| Lease Merchandise (net of accumulated depreciation and allowances of $409,307 in 2020 and $428,288 in 2019) | 610,263 | 651,820 | ||
| Loans Receivable (net of allowances and unamortized fees of $52,274 in 2020 and $21,134 in 2019) | 79,148 | 75,253 | ||
| Property, Plant and Equipment, Net | 26,705 | 30,365 | ||
| Operating Lease Right-of-Use Assets | 20,613 | 24,279 | ||
| Goodwill | 288,801 | 288,801 | ||
| Other Intangibles, Net | 154,421 | 176,562 | ||
| Income Tax Receivable | — | 17,607 | ||
| Prepaid Expenses and Other Assets | 39,554 | 27,456 | ||
| Assets of Discontinued Operations | — | 1,880,822 | ||
| Total Assets | $ | 1,317,404 | $ | 3,297,800 |
| LIABILITIES & SHAREHOLDERS’ EQUITY: | ||||
| Accounts Payable and Accrued Expenses | $ | 78,249 | $ | 58,622 |
| Accrued Regulatory Expense | — | 175,000 | ||
| Deferred Income Tax Liability | 126,938 | 100,292 | ||
| Customer Deposits and Advance Payments | 46,565 | 44,222 | ||
| Operating Lease Liabilities | 29,516 | 33,904 | ||
| Debt | 50,000 | — | ||
| Liabilities of Discontinued Operations | — | 1,148,501 | ||
| Total Liabilities | 331,268 | 1,560,541 | ||
| SHAREHOLDERS' EQUITY: | ||||
| Common Stock, Par Value $0.50 Per Share: Authorized: 225,000,000 Shares at December 31, 2020 and 2019; Shares Issued: 90,752,123 at December 31, 2020 and 2019 | 45,376 | 45,376 | ||
| Additional Paid-in Capital | 318,263 | 290,229 | ||
| Retained Earnings | 1,236,378 | 2,029,613 | ||
| Accumulated Other Comprehensive Loss | — | (19) | ||
| Less: Treasury Shares at Cost | ||||
| Common Stock: 23,029,434 Shares at December 31, 2020 and 24,034,053 at December 31, 2019 | (613,881) | (627,940) | ||
| Total Shareholders’ Equity | 986,136 | 1,737,259 | ||
| Total Liabilities & Shareholders’ Equity | $ | 1,317,404 | $ | 3,297,800 |
PROG Holdings, Inc.
Consolidated Statements of Cash Flows
(In thousands)
| Twelve Months Ended<br>December 31, | ||||
|---|---|---|---|---|
| (In Thousands) | 2020 | 2019 | ||
| OPERATING ACTIVITIES: | ||||
| Net (Loss) Earnings | $ | (61,465) | $ | 31,472 |
| Adjustments to Reconcile Net (Loss) Earnings to Net Cash Provided by Operating Activities: | ||||
| Depreciation of Lease Merchandise | 2,163,443 | 1,972,358 | ||
| Other Depreciation and Amortization | 93,814 | 105,061 | ||
| Accounts Receivable Provision | 254,168 | 322,963 | ||
| Provision for Credit Losses on Loans Receivable | 34,038 | 21,667 | ||
| Stock-Based Compensation | 41,218 | 26,548 | ||
| Deferred Income Taxes | (141,407) | 49,967 | ||
| Impairment of Goodwill | 446,893 | — | ||
| Impairment of Assets | 23,788 | 30,344 | ||
| Non-Cash Lease Expense | 92,277 | 114,934 | ||
| Other Changes, Net | 9,172 | (9,886) | ||
| Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions: | ||||
| Additions to Lease Merchandise | (2,351,064) | (2,484,755) | ||
| Book Value of Lease Merchandise Sold or Disposed | 317,763 | 401,960 | ||
| Accounts Receivable | (250,159) | (331,636) | ||
| Prepaid Expenses and Other Assets | 7,753 | (25,860) | ||
| Income Tax Receivable | 17,066 | 10,458 | ||
| Operating Lease Right-of-Use Assets and Liabilities | (109,356) | (124,384) | ||
| Accounts Payable and Accrued Expenses | 39,660 | 20,183 | ||
| Accrued Litigation Expense | (175,000) | 175,000 | ||
| Customer Deposits and Advance Payments | 3,362 | 10,791 | ||
| Cash Provided by Operating Activities | 455,964 | 317,185 | ||
| INVESTING ACTIVITIES: | ||||
| Investments in Loans Receivable | (112,596) | (70,313) | ||
| Proceeds from Loans Receivable | 69,358 | 53,170 | ||
| Proceeds from Investments | — | 1,212 | ||
| Outflows on Purchases of Property, Plant and Equipment | (64,345) | (92,963) | ||
| Proceeds from Disposition of Property, Plant, and Equipment | 7,482 | 14,090 | ||
| Outflows on Acquisitions of Businesses and Customer Agreements. Net of Cash Acquired | (14,793) | (14,285) | ||
| Proceeds from Dispositions of Businesses and Customer Agreements, Net of Cash Disposed | 359 | 2,813 | ||
| Cash Used in Investing Activities | (114,535) | (106,276) | ||
| FINANCING ACTIVITIES: | ||||
| Borrowings (repayments) on Revolving Facility, Net | 50,000 | (16,000) | ||
| Proceeds from Debt | 5,625 | — | ||
| Repayments on Debt | (347,646) | (68,531) | ||
| Acquisition of Treasury Stock | — | (69,255) | ||
| Dividends Paid | (13,778) | (9,437) | ||
| Issuance of Stock Under Stock Option Plans | 12,362 | 7,749 | ||
| Shares Withheld for Tax Payments | (11,734) | (13,038) | ||
| Debt Issuance Costs | (3,233) | (40) | ||
| Transfer of Cash to The Aaron's Company | (54,150) | — | ||
| Cash Used in Financing Activities | (362,554) | (168,552) | ||
| EFFECT OF EXCHANGE RATE CHANGES | 15 | 120 | ||
| (Decrease) Increase in Cash and Cash Equivalents | (21,110) | 42,477 | ||
| Cash and Cash Equivalents at Beginning of Year | 57,755 | 15,278 | ||
| Cash and Cash Equivalents at End of Year | $ | 36,645 | $ | 57,755 |
PROG Holdings, Inc.
Quarterly Revenues by Segment
(In thousands)
| Unaudited | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended | ||||||
| December 31, 2020 | ||||||
| Progressive Leasing | Vive | 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 |
| Unaudited | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Three Months Ended | ||||||
| December 31, 2019 | ||||||
| Progressive Leasing | Vive | Consolidated Total | ||||
| Lease Revenues and Fees | $ | 559,549 | $ | — | $ | 559,549 |
| Interest and Fees on Loans Receivable | — | 9,103 | 9,103 | |||
| Total Revenues | $ | 559,549 | $ | 9,103 | $ | 568,652 |
PROG Holdings Inc.
Twelve Month Revenues by Segment
(In thousands)
| Twelve Months Ended | ||||||
|---|---|---|---|---|---|---|
| December 31, 2020 | ||||||
| Progressive Leasing | Vive | 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 |
| Twelve Months Ended | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| December 31, 2019 | ||||||
| Progressive Leasing | Vive | Consolidated Total | ||||
| Lease Revenues and Fees | $ | 2,128,133 | $ | — | $ | 2,128,133 |
| Interest and Fees on Loans Receivable | — | 35,046 | 35,046 | |||
| Total Revenues | $ | 2,128,133 | $ | 35,046 | $ | 2,163,179 |
Use of Non-GAAP Financial Information:
Non-GAAP net earnings from continuing operations, non-GAAP diluted earnings from continuing operations per share, EBITDA 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 2020 exclude (i) intangible amortization expense; (ii) insurance reimbursements for certain legal costs associated with our FTC regulatory charge; (iii) stock-based compensation modification expense and other executive retirement charges resulting from our separation and distribution of Aaron's Business; (iv) income tax benefits from our revaluation of net operating loss carrybacks resulting from the CARES Act; (v) income tax expense for the recognition of a revaluation allowance on foreign tax credits resulting from our separation and distribution of Aaron's Business; and (vi) certain corporate restructuring charges. Non-GAAP net (loss) earnings from continuing operations and non-GAAP diluted earnings from continuing operations per share for 2019 exclude (i) intangible amortization expense, (ii) regulatory charge and legal expenses associated with our settlement of the FTC matter; and (iii) certain corporate restructuring charges. 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 (loss) from continuing operations and earnings (loss) 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 EBITDA and adjusted EBITDA figures presented in this press release are calculated as the Company’s earnings before interest expense, depreciation on property, plant and equipment, amortization of intangible assets and income taxes. Adjusted EBITDA also excludes the other adjustments described in the calculation of non-GAAP net earnings above. The amounts for these pre-tax non-GAAP adjustments can be found in the quarterly and twelve months segment EBITDA tables in this press release. Adjusted EBITDA for the Company's Q1 2021 outlook is calculated as projected earnings before interest expense, depreciation on property, plant and equipment, amortization of intangible assets and income taxes. Adjusted EBITDA for the Company's Q1 2021 outlook also excludes stock-based compensation expense.
Management believes that non-GAAP net earnings from continuing operations, non-GAAP diluted earnings from continuing operations per share, EBITDA 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.
EBITDA, adjusted EBITDA, non-GAAP net earnings from continuing operations and non-GAAP diluted earnings from continuing operations provide management and investors with an understanding of the results from the primary operations of our business by excluding the effects of certain items that generally arose from larger, one-time transactions that are not reflective of the ordinary earnings activity of our operations or transactions that have variability and volatility of the amount. Stock-based compensation expense for our Q1 2021 outlook has been excluded from projected adjusted EBITDA. We believe the exclusion of stock-based compensation expense provides for a better comparison of our operating results beginning in 2021 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.
EBITDA and adjusted EBITDA also provide 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 a financial measurement that is 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 (loss) from continuing operations and diluted earnings (loss) from continuing operations per share and the GAAP revenues and earnings (loss) 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, EBITDA, 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, | ||||||
| 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 | |||||
| Add: Legal and Regulatory Expense, Net of 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 | |||||
| Add Legal and Regulatory Expense, Net of 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.
Reconciliation of Net Earnings (Loss) and Earnings (Loss) 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, | ||||||
| 2019 | ||||||||||
| Net Earnings (Loss) from Continuing Operations | $ | 38,788 | $ | 39,112 | $ | 35,611 | $ | (138,126) | $ | (24,615) |
| Add: Intangible Amortization Expense | 5,566 | 5,566 | 5,565 | 5,566 | 22,263 | |||||
| Add: Separation Costs | — | — | — | — | — | |||||
| Add: Legal and Regulatory Expense | — | — | — | 4,261 | 4,261 | |||||
| Add: FTC Legal Settlement(1) | — | — | — | 175,000 | 175,000 | |||||
| Add: Restructuring Expense | — | 304 | — | — | 304 | |||||
| Less: Tax impact of adjustments (1) | (1,447) | (1,526) | (1,447) | (2,555) | (6,975) | |||||
| Non-GAAP Net Earnings from Continuing Operations | $ | 42,907 | $ | 43,456 | $ | 39,729 | $ | 44,146 | $ | 170,238 |
| Earnings (Loss) from Continuing Operations Per Share Assuming Dilution | $ | 0.56 | $ | 0.57 | $ | 0.52 | $ | (2.06) | (0.37) | |
| Add: Intangible Amortization Expense | 0.08 | 0.08 | 0.08 | 0.08 | 0.32 | |||||
| Add: Separation Costs | — | — | — | — | — | |||||
| Add: Legal and Regulatory Expense | — | — | — | 0.06 | 0.06 | |||||
| Add: FTC Legal Settlement (1) | — | — | — | 2.56 | 2.55 | |||||
| Add: Restructuring Expense | — | — | — | — | — | |||||
| Less: Tax impact of adjustments (1) | (0.02) | (0.02) | (0.02) | (0.04) | (0.10) | |||||
| Non-GAAP Earnings from Continuing Operations Per Share Assuming Dilution(2) | $ | 0.62 | $ | 0.63 | $ | 0.58 | $ | 0.65 | $ | 2.48 |
| Weighted Average Shares Outstanding Assuming Dilution(3) | 68,773 | 68,793 | 68,652 | 68,308 | 68,631 |
(1)Adjustments are tax-effected using an assumed statutory tax rate of 26.0%, except for the FTC legal settlement 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.
(3)For the three and twelve months ended December 31, 2019, the GAAP Weighted Average Shares Outstanding Assuming Dilution was 66,908 and 67,322, respectively and the Non-GAAP Weighted Average Shares Outstanding Assuming Dilution was 68,308 and 68,631 respectively.
PROG Holdings Inc.
Non-GAAP Financial Information
Quarterly Segment EBITDA
(In thousands)
| Unaudited | ||||||||
|---|---|---|---|---|---|---|---|---|
| Three Months Ended | ||||||||
| December 31, 2020 | ||||||||
| Progressive Leasing | Vive | Unallocated Corporate Expenses | Consolidated Total | |||||
| Net Earnings from Continuing Operations | $ | 42,305 | ||||||
| Income Taxes1 | 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 |
| Separation Costs | 572 | — | 14,938 | 15,510 | ||||
| Adjusted EBITDA | $ | 96,670 | $ | (3,092) | $ | (3,550) | $ | 90,028 |
| Unaudited | ||||||||
| Three Months Ended | ||||||||
| December 31, 2019 | ||||||||
| Progressive Leasing | Vive | Unallocated Corporate Expenses | Consolidated Total | |||||
| Net Loss from Continuing Operations | $ | (138,126) | ||||||
| Income Taxes1 | 17,028 | |||||||
| Earnings (Loss) from Continuing Operations Before Income Taxes | $ | (109,858) | $ | (1,594) | $ | (9,646) | $ | (121,098) |
| Depreciation | 2,288 | 209 | — | 2,497 | ||||
| Amortization | 5,421 | 145 | — | 5,566 | ||||
| EBITDA | $ | (102,149) | $ | (1,240) | $ | (9,646) | $ | (113,035) |
| Legal and Regulatory Expense, Net of Insurance Recoveries | 179,261 | — | — | 179,261 | ||||
| Adjusted EBITDA | $ | 77,112 | $ | (1,240) | $ | (9,646) | $ | 66,226 |
(1)Taxes are calculated on a consolidated basis and are not identifiable by Company Segment.
PROG Holdings Inc.
Non-GAAP Financial Information
Twelve Months Segment EBITDA
(In thousands)
| Twelve Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| December 31, 2020 | ||||||||
| Progressive Leasing | Vive | Unallocated Corporate Expenses | Consolidated Total | |||||
| Net Earnings from Continuing Operations | $ | 233,627 | ||||||
| Income Taxes1 | 37,949 | |||||||
| Earnings (Loss) 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 |
| Legal and Regulatory Expense, Net of Insurance Recoveries | (835) | — | — | (835) | ||||
| Separation Costs | 2,337 | — | 15,616 | 17,953 | ||||
| Restructuring Expenses, Net | — | — | 238 | 238 | ||||
| Adjusted EBITDA | $ | 352,872 | $ | (9,907) | $ | (22,026) | $ | 320,939 |
| Twelve Months Ended | ||||||||
| December 31, 2019 | ||||||||
| Progressive Leasing | Vive | Unallocated Corporate Expenses | Consolidated Total | |||||
| Net Loss from Continuing Operations | $ | (24,615) | ||||||
| Income Taxes1 | 52,228 | |||||||
| Earnings (Loss) Before Income Taxes | $ | 64,283 | $ | (6,127) | $ | (30,543) | $ | 27,613 |
| Depreciation | 8,284 | 805 | — | 9,089 | ||||
| Amortization | 21,683 | 580 | — | 22,263 | ||||
| EBITDA | $ | 94,250 | $ | (4,742) | $ | (30,543) | $ | 58,965 |
| Legal and Regulatory Expense, Net of Insurance Recoveries | 179,261 | — | — | 179,261 | ||||
| Restructuring Expenses, Net | — | — | 304 | 304 | ||||
| Adjusted EBITDA | $ | 273,511 | $ | (4,742) | $ | (30,239) | $ | 238,530 |
(1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment.
Reconciliation of Q1 2021 Outlook for Adjusted EBITDA
(In thousands)
| Q1 2021 Ranges | |||
|---|---|---|---|
| Progressive Leasing | Vive | Consolidated Total | |
| Estimated Net Earnings | $55,000 - $58,000 | ||
| Taxes1 | 18,000 - 20,000 | ||
| Projected Earnings Before Taxes | $72,000 - $75,000 | $1,000 - $3,000 | $73,000 - $78,000 |
| Interest Expense | 500 | 50 | 550 |
| Depreciation | 2,300 | 200 | 2,500 |
| Amortization | 5,400 | — | 5,400 |
| Projected EBITDA | 80,000 - 83,000 | 1,000 - 3,000 | 81,000 - 86,000 |
| Stock-based compensation | 3,900 | 100 | 4,000 |
| Projected Adjusted EBITDA | $84,000 - $87,000 | $1,000 - $3,000 | $85,000 - $90,000 |
(1) Taxes are calculated on a consolidated basis and are not identifiable by Company segments.
Reconciliation of Q1 2021 Outlook for Earnings Per Share
Assuming Dilution to Non-GAAP Earnings Per Share Assuming Dilution
| Q1 2021 Range | ||||
|---|---|---|---|---|
| Low | High | |||
| Projected Earnings Per Share Assuming Dilution | $ | 0.81 | $ | 0.87 |
| Add Projected Intangible Amortization Expense | 0.08 | 0.08 | ||
| Projected Non-GAAP Earnings Per Share Assuming Dilution | $ | 0.89 | $ | 0.95 |