SALT LAKE CITY--(BUSINESS WIRE)--PROG Holdings, Inc. (NYSE:PRG), the fintech holding company for Progressive Leasing, Vive Financial, and Four Technologies, today announced financial results for the third quarter ended September 30, 2021.
“As we approach our first anniversary as a stand-alone, high-growth, asset-light fintech company, I’m pleased to report our continued progress positioning PROG Holdings for significant, long-term shareholder value creation. At the same time, we continue to successfully navigate pandemic-related volatility in our markets," said Steve Michaels, President and Chief Executive Officer of PROG Holdings. “During the third quarter, portfolio performance continued to return towards more normalized pre-pandemic levels. Against this backdrop, we sustained accelerating growth in our lease portfolio, and we remain on track to deliver mid-to-high teens GMV growth and record adjusted EBITDA."
Michaels added, “Since last November’s spin transaction, we have taken significant steps to align our capital structure and capital allocation strategy with our business’s impressive cash generation and balance sheet. Our Board’s authorization of a $1 billion share repurchase program, which includes a cash and debt-funded tender offer to purchase up to $425 million of our outstanding common stock will lower our cost of capital and further demonstrate our commitment to return excess capital to shareholders while maintaining our ability to invest in organic growth and attractive M&A opportunities.”
Financial Highlights
Consolidated revenues for the third quarter of 2021 were $650.4 million, an increase of 6.4% from the same period in 2020. The increase was primarily due to growth from key large national partners and continued e-commerce penetration. Progressive Leasing's GMV increased 9.9% to $493.3 million compared with the same period in 2020, with e-commerce GMV growing 192% year-over-year. In addition, the Company's lease portfolio ended the quarter 11.5% higher than the same period of 2020.
The Company reported consolidated net earnings from continuing operations for the third quarter of 2021 of $57.4 million compared with $74.6 million in the prior year period. Adjusted EBITDA for the third quarter of 2021 was $93.6 million compared with $110.6 million for the same period in 2020, a decrease of $17.0 million, or 15.4%. As a percentage of revenues, adjusted EBITDA was 14.4% in the third quarter of 2021 compared with 18.1% for the same period in 2020. The year-over-year decline in net earnings from continuing operations and adjusted EBITDA were primarily driven by Progressive Leasing's delinquencies and write-offs approaching a more normalized level as compared to the extraordinarily low delinquency and write-off levels in the prior year quarter. That trend more than offset the benefit of higher revenues and the declining number of customers exercising their 90-day purchase option.
Diluted earnings per share from continuing operations for the third quarter of 2021 were $0.86 compared with $1.10 in the year ago period. On a non-GAAP basis, diluted earnings per share from continuing operations were $0.94 in the third quarter of 2021 compared with $1.17 for the same quarter in 2020.
The provision for lease merchandise write-offs at Progressive Leasing was 5.4% of lease revenues in the third quarter of 2021, compared with 2.1% in the same period of 2020. While this level is elevated from the record lows of the prior year, write-offs remain below the Company's historical 6-8% annual range and are expected to remain at or below that historical range in the near-to mid-term.
Liquidity and Capital Allocation
PROG Holdings ended the third quarter of 2021 with cash of $128.8 million and debt of $50 million. The Company purchased $51.0 million of its stock in the period at an average price per share of $45.40.
The Company’s Board of Directors has authorized a new $1 billion share repurchase program, which replaces the Company’s prior $300 million program. Under the new authorization, purchases can be made from time to time using a variety of methods, which may include tender offers, open market purchases, purchases effected through 10b5-1 trading plans, accelerated share purchase programs, or other transactions. The amount of any shares of the Company’s common stock that are purchased under the new repurchase program and the timing of any such purchases will be determined based on market conditions and other factors, and the program may be suspended or discontinued at any time.
As part of the new repurchase program, the Company expects to commence a “modified Dutch auction” tender offer on November 4, 2021, for up to $425 million in value of its outstanding common stock at an anticipated cash purchase price per share of not less than $44.00 and not more than $50.00, less any applicable withholding taxes and without interest. Further information regarding the tender offer can be found in a separate press release, issued today, available on PROG Holdings’ investor relations page.
Outlook
The Company is updating its full year 2021 consolidated outlook for revenues, adjusted EBITDA, GAAP diluted EPS, and Non-GAAP diluted EPS. The change in outlook reflects increasing reserve requirements due to continued normalization of the portfolio. The revised revenue range for 2021 is $2.68 billion to $2.70 billion, and the revised adjusted EBITDA range is $390 million to $395 million. Non-GAAP diluted EPS is expected to be between $3.90 and $3.99, while GAAP diluted EPS is expected to be between $3.62 and $3.71. The impact of any share reduction from the tender offer is not included in this outlook and is expected to be immaterial to the full-year EPS.
Conference Call and Webcast
The Company has scheduled a live webcast and conference call for Wednesday, November 3, 2021, at 8:30 A.M. ET to discuss its financial results for the third quarter of 2021. To access the live webcast, visit the Company's investor relations website, https://investor.progholdings.com/. To join the conference call via telephone, dial 877-270-2148 and request to join the PROG Holdings, Inc. call. International participants without internet access can join the conference call by dialing 412-902-6510 and requesting to join the PROG Holdings, Inc. call. The webcast will be archived for playback on the investor relations website following the event.
About PROG Holdings, Inc.
PROG Holdings, Inc. (NYSE:PRG) is a fintech holding company headquartered in Salt Lake City, UT, that provides transparent and competitive payment options to consumers. The Company owns Progressive Leasing, a leading provider of e-commerce, app-based, and in-store point-of-sale lease-to-own solutions, Vive Financial, an omnichannel provider of second-look revolving credit products, and Four Technologies, provider of Buy Now, Pay Later payment options through its platform, Four. More information on PROG Holdings' companies can be found at https://www.progholdings.com.
Additional Information Regarding the Tender Offer
The tender offer described in this press release has not yet commenced, and there can be no assurance that PROG Holdings will commence the tender offer on the terms described in this release. The information regarding the tender offer in this press release is for informational purposes only. This press release is not a recommendation to buy or sell shares of common stock or any other securities, and it is neither an offer to purchase nor a solicitation of an offer to sell shares of common stock or any other securities. On the commencement date of the tender offer, a tender offer statement on Schedule TO, including an offer to purchase, a letter of transmittal and related materials, will be filed with the United States Securities and Exchange Commission (the “SEC”) by PROG Holdings. The tender offer will only be made pursuant to the offer to purchase, the letter of transmittal and related materials filed as a part of the Schedule TO. When available, shareholders should read carefully the offer to purchase, letter of transmittal and related materials because they contain important information, including the various terms of, and conditions to, the tender offer. Once the tender offer is commenced, shareholders will be able to obtain a free copy of the tender offer statement on Schedule TO, the offer to purchase, letter of transmittal and other documents that PROG Holdings will be filing with the SEC at the SEC’s website at www.sec.gov or from the information agent for the tender offer.
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”, “continued”, “expects”, “expected”, "outlook", “intends” and similar forward-looking terminology. These risks and uncertainties include factors such as (i) the impact of the COVID-19 pandemic and related measures taken by governmental or regulatory authorities to combat the pandemic, including the impact of the pandemic and such measures on: (a) demand for the lease-to-own products offered by our Progressive Leasing segment, (b) Progressive Leasing’s POS partners, and Vive’s and Four’s merchant partners, (c) Progressive Leasing’s, Vive’s and Four’s customers, including their ability and willingness to satisfy their obligations under their lease agreements and loan agreements, (d) Progressive Leasing’s point-of-sale partners being able to obtain the merchandise its customers need or desire, (e) our employees and labor needs, including our ability to adequately staff our operations, (f) our financial and operational performance, and (g) our liquidity, including risks arising from the increased level of debt that we expect to incur in connection with the tender offer to purchase up to $425 million of our common stock; (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) 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; (vi) increased competition from traditional and virtual lease-to-own competitors and also from competitors of our Vive segment; (vii) increases in lease merchandise write-offs and the provision for returns and uncollectible renewal payments for Progressive Leasing, especially in light of the COVID-19 pandemic, and for loan losses, with respect to our Vive segment; (vii) the possibility that the operational, strategic and shareholder value creation opportunities expected from the spin-off of the Company’s Aaron’s Business segment may not be achieved in a timely manner, or at all; (ix) Vive’s business model differing significantly from Progressive Leasing’s, which creates specific and unique risks for the Vive business, including Vive’s reliance on two bank partners to issue its credit products and Vive’s exposure to the unique regulatory risks associated with the lending-related laws and regulations that apply to its business; (x) the effects of any increased expenses or unanticipated liabilities incurred as a result of, or due to activities related to, our recent acquisition of Four; (xi) Four’s business model differing significantly from Progressive Leasing's and Vive’s, which creates specific and unique risks for the Four business, including Four’s exposure to the unique regulatory risks associated with the laws and regulations that apply to its business; (xii) our ability to consummate the tender offer on the terms and timing described herein, or at all, and to realize the benefits expected from the tender offer; and (xiii) the other risks and uncertainties discussed under “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which was filed with the SEC on February 26, 2021. Statements in this press release that are “forward-looking” include without limitation statements about (i) our ability to create long-term shareholder value; (ii) our ability to successfully navigate COVID-19 pandemic-related volatility in our markets; (iii) our outlook for GMV growth for 2021; (iv) the execution, amount and timing of, and benefits expected from, our expected tender offer to purchase up to $425 million of our common stock; (v) the nature and amount of any other share purchases under the $1 billion repurchase program authorized by our Board; (vi) our ability to continue to invest in organic growth opportunities and M&A opportunities (vii) the levels of delinquencies and write-offs we expect in future periods; and (viii) our updated 2021 financial performance 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.
|
(Unaudited) Three Months Ended |
(Unaudited) Nine Months Ended |
||||||||||||
|
September 30, |
September 30, |
||||||||||||
|
2021 |
2020 |
2021 |
2020 |
||||||||||
Revenues: |
|
|
|
|
||||||||||
Lease Revenues and Fees |
$ |
635,025 |
|
$ |
601,105 |
$ |
1,989,055 |
|
$ |
1,849,388 |
|
|||
Interest and Fees on Loans Receivable |
|
15,380 |
|
|
10,232 |
|
42,322 |
|
|
29,555 |
|
|||
Total |
|
650,405 |
|
|
611,337 |
|
2,031,377 |
|
|
1,878,943 |
|
|||
|
|
|
|
|
||||||||||
Costs and Expenses: |
|
|
|
|
||||||||||
Depreciation of Lease Merchandise |
|
435,857 |
|
|
405,235 |
|
1,380,572 |
|
|
1,289,885 |
|
|||
Provision for Lease Merchandise Write-offs |
|
34,174 |
|
|
12,578 |
|
84,072 |
|
|
104,443 |
|
|||
Operating Expenses |
|
102,053 |
|
|
95,433 |
|
289,994 |
|
|
276,935 |
|
|||
Separation Related Charges |
|
— |
|
|
2,443 |
|
— |
|
|
2,443 |
|
|||
Total |
|
572,084 |
|
|
515,689 |
|
1,754,638 |
|
|
1,673,706 |
|
|||
Operating Profit |
|
78,321 |
|
|
95,648 |
|
276,739 |
|
|
205,237 |
|
|||
Interest Expense |
|
(444 |
) |
|
— |
|
(1,392 |
) |
|
— |
|
|||
Earnings from Continuing Operations before Income Tax |
|
77,877 |
|
|
95,648 |
|
275,347 |
|
|
205,237 |
|
|||
Income Tax Expense |
|
20,464 |
|
|
21,005 |
|
69,609 |
|
|
13,915 |
|
|||
Net Earnings from Continuing Operations |
|
57,413 |
|
|
74,643 |
|
205,738 |
|
|
191,322 |
|
|||
Earnings (Loss) from Discontinued Operations, Net of Income Tax |
|
— |
|
|
34,702 |
|
— |
|
|
(293,605 |
) |
|||
Net Earnings (Loss) |
$ |
57,413 |
|
$ |
109,345 |
$ |
205,738 |
|
$ |
(102,283 |
) |
|||
|
|
|
|
|
||||||||||
Basic Earnings (Loss) per Share: |
|
|
|
|
||||||||||
Continuing Operations |
$ |
0.87 |
|
$ |
1.11 |
$ |
3.07 |
|
$ |
2.85 |
|
|||
Discontinued Operations |
|
— |
|
|
0.51 |
|
— |
|
|
(4.38 |
) |
|||
Total Basic Earnings (Loss) per Share |
$ |
0.87 |
|
$ |
1.62 |
$ |
3.07 |
|
$ |
(1.52 |
) |
|||
Diluted Earnings (Loss) per Share: |
|
|
|
|
||||||||||
Continuing Operations |
$ |
0.86 |
|
$ |
1.10 |
$ |
3.06 |
|
$ |
2.82 |
|
|||
Discontinued Operations |
|
— |
|
|
0.51 |
|
— |
|
|
(4.33 |
) |
|||
Total Diluted Earnings (Loss) per Share |
$ |
0.86 |
|
$ |
1.61 |
$ |
3.06 |
|
$ |
(1.51 |
) |
|||
|
|
|
|
|
||||||||||
Weighted Average Shares Outstanding |
|
66,092 |
|
|
67,398 |
|
66,938 |
|
|
67,107 |
|
|||
Weighted Average Shares Outstanding Assuming Dilution |
|
66,385 |
|
|
68,155 |
|
67,319 |
|
|
67,849 |
|
|||
|
(Unaudited) |
|
||||||||
September 30, 2021 |
December 31, 2020 |
|||||||||
ASSETS: |
|
|
||||||||
Cash and Cash Equivalents |
$ |
128,788 |
|
$ |
36,645 |
|
||||
Accounts Receivable (net of allowances of $60,578 in 2021 and $56,364 in 2020) |
|
67,447 |
|
|
61,254 |
|
||||
Lease Merchandise (net of accumulated depreciation and allowances of $453,555
|
|
588,733 |
|
|
610,263 |
|
||||
Loans Receivable (net of allowances and unamortized fees of $57,578 in 2021 and
|
|
112,784 |
|
|
79,148 |
|
||||
Property, Plant and Equipment, Net |
|
25,806 |
|
|
26,705 |
|
||||
Operating Lease Right-of-Use Assets |
|
17,862 |
|
|
20,613 |
|
||||
Goodwill |
|
306,649 |
|
|
288,801 |
|
||||
Other Intangibles, Net |
|
143,029 |
|
|
154,421 |
|
||||
Income Tax Receivable |
|
18,890 |
|
|
— |
|
||||
Prepaid Expenses and Other Assets |
|
44,270 |
|
|
39,554 |
|
||||
Total Assets |
$ |
1,454,258 |
|
$ |
1,317,404 |
|
||||
LIABILITIES & SHAREHOLDERS’ EQUITY: |
|
|
||||||||
Accounts Payable and Accrued Expenses |
$ |
116,813 |
|
$ |
78,249 |
|
||||
Deferred Income Tax Liability |
|
145,161 |
|
|
126,938 |
|
||||
Customer Deposits and Advance Payments |
|
39,765 |
|
|
46,565 |
|
||||
Operating Lease Liabilities |
|
26,063 |
|
|
29,516 |
|
||||
Debt |
|
50,000 |
|
|
50,000 |
|
||||
Total Liabilities |
|
377,802 |
|
|
331,268 |
|
||||
SHAREHOLDERS' EQUITY: |
|
|
||||||||
Common Stock, Par Value $0.50 Per Share: Authorized: 225,000,000 Shares at
|
|
45,376 |
|
|
45,376 |
|
||||
Additional Paid-in Capital |
|
325,309 |
|
|
318,263 |
|
||||
Retained Earnings |
|
1,442,116 |
|
|
1,236,378 |
|
||||
|
|
1,812,801 |
|
|
1,600,017 |
|
||||
Less: Treasury Shares at Cost |
|
|
||||||||
Common Stock: 25,360,538 Shares at September 30, 2021 and 23,029,434
|
|
(736,345 |
) |
|
(613,881 |
) |
||||
Total Shareholders’ Equity |
|
1,076,456 |
|
|
986,136 |
|
||||
Total Liabilities & Shareholders’ Equity |
$ |
|
1,454,258 |
|
$ |
|
1,317,404 |
|
||
|
Unaudited Nine Months Ended September 30, |
|||||||
|
2021 |
2020 |
||||||
OPERATING ACTIVITIES: |
|
|
||||||
Net Earnings (Loss) |
$ |
205,738 |
|
$ |
(102,283 |
) |
||
Adjustments to Reconcile Net Earnings (Loss) to Cash Provided by Operating Activities: |
|
|
||||||
Depreciation of Lease Merchandise |
|
1,380,572 |
|
|
1,672,841 |
|
||
Other Depreciation and Amortization |
|
21,954 |
|
|
74,683 |
|
||
Provisions for Accounts Receivable and Loan Losses |
|
152,523 |
|
|
224,959 |
|
||
Stock-Based Compensation |
|
14,803 |
|
|
21,378 |
|
||
Deferred Income Taxes |
|
16,948 |
|
|
(76,885 |
) |
||
Impairment of Goodwill and Other Assets |
|
— |
|
|
469,782 |
|
||
Non-Cash Lease Expense |
|
708 |
|
|
75,589 |
|
||
Other Changes, Net |
|
(2,715 |
) |
|
5,529 |
|
||
Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions: |
|
|
||||||
Additions to Lease Merchandise |
|
(1,446,046 |
) |
|
(1,687,483 |
) |
||
Book Value of Lease Merchandise Sold or Disposed |
|
87,005 |
|
|
263,007 |
|
||
Accounts Receivable |
|
(143,970 |
) |
|
(183,807 |
) |
||
Prepaid Expenses and Other Assets |
|
(3,864 |
) |
|
(1,381 |
) |
||
Income Tax Receivable |
|
(18,529 |
) |
|
9,180 |
|
||
Operating Lease Right-of-Use Assets and Liabilities |
|
(1,411 |
) |
|
(85,073 |
) |
||
Accounts Payable and Accrued Expenses |
|
37,973 |
|
|
48,851 |
|
||
Accrued Regulatory Expense |
|
— |
|
|
(175,000 |
) |
||
Customer Deposits and Advance Payments |
|
(6,799 |
) |
|
(2,041 |
) |
||
Cash Provided by Operating Activities |
|
294,890 |
|
|
551,846 |
|
||
INVESTING ACTIVITIES: |
|
|
||||||
Investments in Loans Receivable |
|
(139,980 |
) |
|
(73,208 |
) |
||
Proceeds from Loans Receivable |
|
97,158 |
|
|
50,154 |
|
||
Outflows on Purchases of Property, Plant and Equipment |
|
(6,815 |
) |
|
(50,867 |
) |
||
Proceeds from Disposition of Property, Plant, and Equipment |
|
55 |
|
|
3,829 |
|
||
Outflows on Acquisitions of Businesses and Customer Agreements. Net of Cash Acquired |
|
(22,942 |
) |
|
(2,874 |
) |
||
Proceeds from Dispositions of Businesses and Customer Agreements, Net of Cash Disposed |
|
— |
|
|
359 |
|
||
Cash Used in Investing Activities |
|
(72,524 |
) |
|
(72,607 |
) |
||
FINANCING ACTIVITIES: |
|
|
||||||
Proceeds from Debt |
|
— |
|
|
5,625 |
|
||
Repayments on Debt |
|
— |
|
|
(61,515 |
) |
||
Dividends Paid |
|
— |
|
|
(8,035 |
) |
||
Acquisition of Treasury Stock |
|
(128,233 |
) |
|
— |
|
||
Issuance of Stock Under Stock Option Plans |
|
3,133 |
|
|
9,876 |
|
||
Shares Withheld for Tax Payments |
|
(5,123 |
) |
|
(11,734 |
) |
||
Debt Issuance Costs |
|
— |
|
|
(1,020 |
) |
||
Cash Used in Financing Activities |
|
(130,223 |
) |
|
(66,803 |
) |
||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
|
— |
|
|
(21 |
) |
||
Increase in Cash and Cash Equivalents |
|
92,143 |
|
|
412,415 |
|
||
Cash and Cash Equivalents at Beginning of Period |
|
36,645 |
|
|
57,755 |
|
||
Cash and Cash Equivalents at End of Period |
$ |
128,788 |
|
$ |
470,170 |
|
||
Net Cash Paid (Received) During the Period |
|
|
||||||
Interest |
$ |
1,093 |
|
$ |
8,501 |
|
||
Income Taxes |
$ |
43,985 |
|
$ |
(19,362 |
) |
||
|
Unaudited |
||||||||||||
|
Three Months Ended |
||||||||||||
|
September 30, 2021 |
||||||||||||
|
Progressive Leasing |
Vive |
Other |
Consolidated Total |
|||||||||
Lease Revenues and Fees |
$ |
635,025 |
|
$ |
— |
|
$ |
— |
|
$ |
635,025 |
|
|
Interest and Fees on Loans Receivable |
— |
|
15,212 |
|
168 |
|
15,380 |
|
|||||
Total Revenues |
$ |
635,025 |
|
$ |
15,212 |
|
$ |
168 |
|
$ |
650,405 |
|
|
|
Unaudited |
|||||||||||
|
Three Months Ended |
|||||||||||
|
September 30, 2020 |
|||||||||||
|
Progressive Leasing |
Vive |
Other |
Consolidated Total |
||||||||
Lease Revenues and Fees |
$ |
601,105 |
|
$ |
— |
|
$ |
— |
|
$ |
601,105 |
|
Interest and Fees on Loans Receivable |
— |
|
10,232 |
|
— |
|
10,232 |
|
||||
Total Revenues |
$ |
601,105 |
|
$ |
10,232 |
|
$ |
— |
|
$ |
611,337 |
|
|
Unaudited |
||||||||||||
|
Nine Months Ended |
||||||||||||
|
September 30, 2021 |
||||||||||||
|
Progressive Leasing |
Vive |
Other |
Consolidated Total |
|||||||||
Lease Revenues and Fees |
$ |
1,989,055 |
|
$ |
— |
|
$ |
— |
|
$ |
1,989,055 |
|
|
Interest and Fees on Loans Receivable |
— |
|
42,154 |
|
168 |
|
42,322 |
|
|||||
Total Revenues |
$ |
1,989,055 |
|
$ |
42,154 |
|
$ |
168 |
|
$ |
2,031,377 |
|
|
|
Unaudited |
||||||||||||
|
Nine Months Ended |
||||||||||||
|
September 30, 2020 |
||||||||||||
|
Progressive Leasing |
Vive |
Other |
Consolidated Total |
|||||||||
Lease Revenues and Fees |
$ |
1,849,388 |
|
$ |
— |
|
$ |
— |
|
$ |
1,849,388 |
|
|
Interest and Fees on Loans Receivable |
— |
|
29,555 |
|
— |
|
29,555 |
|
|||||
Total Revenues |
$ |
1,849,388 |
|
$ |
29,555 |
|
$ |
— |
|
$ |
1,878,943 |
|
|
Use of Non-GAAP Financial Information:
Non-GAAP net earnings from continuing operations, non-GAAP diluted earnings from continuing operations per share, and adjusted EBITDA are supplemental measures of our performance that are not calculated in accordance with generally accepted accounting principles in the United States (“GAAP”). Non-GAAP net earnings from continuing operations and non-GAAP diluted earnings from continuing operations per share for the three and nine months ended September 30, 2021 and the Company's full year 2021 outlook, exclude intangible amortization expense, acquisition related transaction costs, and accrued interest on an uncertain tax position related to Progressive Leasing's $175 million settlement with the FTC in 2020. Non-GAAP net earnings from continuing operations and non-GAAP diluted earnings from continuing operations per share for the three and nine months ended September 30, 2020 exclude intangible amortization expense, restructuring expenses, separation related charges from our spin-off of Aaron's Business, insurance recoveries for legal and regulatory fees incurred related to Progressive Leasing's 2020 FTC settlement, and income tax benefits from our revaluation of net operating loss carrybacks resulting from the CARES Act. The amounts for these after-tax non-GAAP adjustments, which are tax effected using our statutory tax rate, can be found in the reconciliation of net earnings from continuing operations and earnings from continuing operations per share assuming dilution to non-GAAP net earnings from continuing operations and earnings from continuing operations per share assuming dilution table in this press release.
The Adjusted EBITDA figures presented in this press release are calculated as the Company’s earnings from continuing operations before interest expense, net, depreciation on property, plant and equipment, amortization of intangible assets and income taxes. Adjusted EBITDA for the three and nine months ended September 30, 2021 and 2020 also excludes stock-based compensation expense, restructuring expenses, acquisition related transaction costs, separation related charges from our spin-off of Aaron's Business, and insurance recoveries for legal and regulatory fees incurred related to Progressive Leasing's 2020 FTC settlement. The amounts for these pre-tax non-GAAP adjustments can be found in the three and nine-month segment EBITDA tables in this press release. Adjusted EBITDA for the Company's full year 2021 outlook is calculated as projected earnings before interest expense, interest income, depreciation on property, plant and equipment, amortization of intangible assets and income taxes. Adjusted EBITDA for the Company's full year 2021 outlook also excludes stock-based compensation expense and the acquisition related transaction costs.
Management believes that non-GAAP net earnings from continuing operations, non-GAAP diluted earnings from continuing operations per share, and adjusted EBITDA provide relevant and useful information, and are widely used by analysts, investors and competitors in our industry as well as by our management in assessing both consolidated and business unit performance.
Non-GAAP net earnings from continuing operations, non-GAAP diluted earnings from continuing operations, and adjusted EBITDA provide management and investors with an understanding of the results from the primary operations of our business by excluding the effects of certain items that generally arose from larger, one-time transactions that are not reflective of the ordinary earnings activity of our operations or transactions that have variability and volatility of the amount. We believe the exclusion of stock-based compensation expense provides for a better comparison of our operating results with our peer companies as the calculations of stock-based compensation vary from period to period and company to company due to different valuation methodologies, subjective assumptions and the variety of award types. This measure may be useful to an investor in evaluating the underlying operating performance of our business.
Adjusted EBITDA also provides management and investors with an understanding of one aspect of earnings before the impact of investing and financing charges and income taxes. These measures may be useful to an investor in evaluating our operating performance because the measures:
- Are widely used by investors to measure a company’s operating performance without regard to items excluded from the calculation of such measure, which can vary substantially from company to company depending upon accounting methods, book value of assets, capital structure and the method by which assets were acquired, among other factors.
- Are used by rating agencies, lenders and other parties to evaluate our creditworthiness.
- Are used by our management for various purposes, including as a measure of performance of our operating entities and as a basis for strategic planning and forecasting.
Non-GAAP financial measures, however, should not be used as a substitute for, or considered superior to, measures of financial performance prepared in accordance with GAAP, such as the Company’s GAAP basis net earnings from continuing operations and diluted earnings from continuing operations per share and the GAAP revenues and earnings from continuing operations before income taxes of the Company’s segments, which are also presented in the press release. Further, we caution investors that amounts presented in accordance with our definitions of non-GAAP net earnings from continuing operations, non-GAAP diluted earnings from continuing operations per share, and adjusted EBITDA may not be comparable to similar measures disclosed by other companies, because not all companies and analysts calculate these measures in the same manner.
|
Unaudited |
||||||||||||
|
Three Months Ended |
Nine Months Ended |
|||||||||||
|
September 30, |
September 30, |
|||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
Net Earnings from Continuing Operations |
$ |
57,413 |
|
$ |
74,643 |
|
$ |
205,738 |
|
$ |
191,322 |
|
|
Add: Intangible Amortization Expense |
|
5,723 |
|
|
5,565 |
|
|
16,565 |
|
|
16,697 |
|
|
Add: Separation Related Charges |
|
— |
|
|
2,443 |
|
|
— |
|
|
2,443 |
|
|
Less: Insurance Recoveries Related to Legal and Regulatory Expenses |
|
— |
|
|
(835 |
) |
|
— |
|
|
(835 |
) |
|
Add: Transaction Expense |
|
— |
|
|
— |
|
|
561 |
|
|
— |
|
|
Add: Restructuring Expenses, net |
|
— |
|
|
— |
|
|
— |
|
|
238 |
|
|
Less: Tax Impact of Adjustments (1) |
|
(1,488 |
) |
|
(1,865 |
) |
|
(4,452 |
) |
|
(4,821 |
) |
|
Add: Accrued Interest on FTC Settlement Uncertain Tax Position |
|
1,040 |
|
|
— |
|
|
1,040 |
|
|
— |
|
|
Less: NOL Carryback Revaluation |
|
— |
|
|
— |
|
|
— |
|
|
(35,540 |
) |
|
Non-GAAP Net Earnings from Continuing Operations |
$ |
62,688 |
|
$ |
79,951 |
|
$ |
219,452 |
|
$ |
169,504 |
|
|
|
|
|
|
|
|||||||||
Earnings from Continuing Operations Per Share Assuming Dilution |
$ |
0.86 |
|
$ |
1.10 |
|
$ |
3.06 |
|
$ |
2.82 |
|
|
Add: Intangible Amortization Expense |
|
0.09 |
|
|
0.08 |
|
|
0.25 |
|
|
0.25 |
|
|
Add: Separation Related Charges |
|
— |
|
|
0.04 |
|
|
— |
|
|
0.04 |
|
|
Less: Insurance Recoveries Related to Legal and Regulatory Expenses |
|
— |
|
|
(0.01 |
) |
|
— |
|
|
(0.01 |
) |
|
Add: Transaction Expense |
|
— |
|
|
— |
|
|
0.01 |
|
|
— |
|
|
Less: Tax Impact of Adjustments (1) |
|
(0.02 |
) |
|
(0.03 |
) |
|
(0.07 |
) |
|
(0.07 |
) |
|
Add: Accrued Interest on FTC Settlement Uncertain Tax Position |
|
0.02 |
|
|
— |
|
|
0.02 |
|
|
— |
|
|
Less: NOL Carryback Revaluation |
|
— |
|
|
— |
|
|
— |
|
|
(0.52 |
) |
|
Non-GAAP Earnings from Continuing Operations Per Share Assuming Dilution(2) |
$ |
0.94 |
|
$ |
1.17 |
|
$ |
3.26 |
|
$ |
2.50 |
|
|
|
|
|
|
|
|||||||||
Weighted Average Shares Outstanding Assuming Dilution |
|
66,385 |
|
|
68,155 |
|
|
67,319 |
|
|
67,849 |
|
|
(1) Adjustments are tax-effected using an assumed statutory tax rate of 26.0%. |
|||||||||||||
(2) In some cases, the sum of individual EPS amounts may not equal total non-GAAP EPS calculations due to rounding. |
|||||||||||||
|
Unaudited |
|||||||||
|
Three Months Ended |
|||||||||
|
September 30, 2021 |
|||||||||
|
Progressive Leasing |
Vive |
Other |
Consolidated Total |
||||||
Net Earnings from Continuing Operations |
|
|
|
$ |
57,413 |
|||||
Income Taxes(1) |
|
|
|
|
20,464 |
|||||
Earnings (Loss) from Continuing Operations Before Income Taxes |
$ |
76,435 |
$ |
6,354 |
|
(4,912 |
) |
|
77,877 |
|
Interest Expense |
|
307 |
|
137 |
|
— |
|
|
444 |
|
Depreciation |
|
2,627 |
|
240 |
|
13 |
|
|
2,880 |
|
Amortization |
|
5,421 |
|
— |
|
302 |
|
|
5,723 |
|
EBITDA |
|
84,790 |
|
6,731 |
|
(4,597 |
) |
|
86,924 |
|
Stock-Based Compensation |
|
3,587 |
|
78 |
|
3,002 |
|
|
6,667 |
|
Adjusted EBITDA |
$ |
88,377 |
$ |
6,809 |
$ |
(1,595 |
) |
$ |
93,591 |
|
(1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment. |
||||||||||
|
Unaudited |
||||||||||||
|
Three Months Ended |
||||||||||||
|
September 30, 2020 |
||||||||||||
|
Progressive Leasing |
Vive |
Unallocated
|
Consolidated Total |
|||||||||
Net Earnings from Continuing Operations |
|
|
|
$ |
74,643 |
|
|||||||
Income Taxes(1) |
|
|
|
|
21,005 |
|
|||||||
Earnings (Loss) from Continuing Operations Before Income Taxes |
$ |
106,682 |
|
$ |
(2,347 |
) |
$ |
(8,687 |
) |
|
95,648 |
|
|
Depreciation |
|
2,208 |
|
|
196 |
|
|
— |
|
|
2,404 |
|
|
Amortization |
|
5,420 |
|
|
145 |
|
|
— |
|
|
5,565 |
|
|
EBITDA |
|
114,310 |
|
|
(2,006 |
) |
|
(8,687 |
) |
|
103,617 |
|
|
Insurance Recoveries Related to Legal and Regulatory Expenses |
|
(835 |
) |
|
— |
|
|
— |
|
|
(835 |
) |
|
Stock-Based Compensation(2) |
|
2,931 |
|
|
141 |
|
|
2,345 |
|
|
5,417 |
|
|
Separation Costs |
|
1,765 |
|
|
— |
|
|
678 |
|
|
2,443 |
|
|
Adjusted EBITDA |
$ |
118,171 |
|
$ |
(1,865 |
) |
$ |
(5,664 |
) |
$ |
110,642 |
|
|
(1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment. |
|||||||||||||
(2) 2020 quarterly Adjusted EBITDA metrics have been updated to add-back Stock-based compensation to conform to management's 2021 definition of Adjusted EBITDA. |
|||||||||||||
Non-GAAP Financial Information Nine Month Segment EBITDA (In thousands) |
||||||||||
|
Unaudited |
|||||||||
|
Nine Months Ended |
|||||||||
|
September 30, 2021 |
|||||||||
|
Progressive Leasing |
Vive |
Other |
Consolidated Total |
||||||
Net Earnings from Continuing Operations |
$ |
205,738 |
||||||||
Income Taxes(1) |
|
|
|
|
69,609 |
|||||
Earnings (Loss) from Continuing Operations Before Income Taxes |
$ |
268,128 |
$ |
12,131 |
$ |
(4,912 |
) |
|
275,347 |
|
Interest Expense |
|
1,062 |
|
330 |
|
— |
|
|
1,392 |
|
Depreciation |
|
7,253 |
|
625 |
|
13 |
|
|
7,891 |
|
Amortization |
|
16,263 |
|
— |
|
302 |
|
|
16,565 |
|
EBITDA |
|
292,706 |
|
13,086 |
|
(4,597 |
) |
|
301,195 |
|
Stock-Based Compensation |
|
11,592 |
|
209 |
|
3,002 |
|
|
14,803 |
|
Transaction Expense |
|
561 |
|
— |
|
— |
|
|
561 |
|
Adjusted EBITDA |
$ |
304,859 |
$ |
13,295 |
$ |
(1,595 |
) |
$ |
316,559 |
|
(1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment. |
||||||||||
|
Unaudited |
|||||||||||||
|
Nine Months Ended |
|||||||||||||
|
September 30, 2020 |
|||||||||||||
|
Progressive Leasing |
Vive |
Unallocated
|
Consolidated Total |
||||||||||
Net Earnings from Continuing Operations |
|
|
|
$ |
|
191,322 |
|
|||||||
Income Taxes(1) |
|
|
|
|
13,915 |
|
||||||||
Earnings (Loss) from Continuing Operations Before Income Taxes |
$ |
232,502 |
|
$ |
(7,873 |
) |
$ |
(19,392 |
) |
|
205,237 |
|
||
Depreciation |
|
6,508 |
|
|
623 |
|
|
— |
|
|
7,131 |
|
||
Amortization |
|
16,262 |
|
|
435 |
|
|
— |
|
|
16,697 |
|
||
EBITDA |
|
255,272 |
|
|
(6,815 |
) |
|
(19,392 |
) |
|
229,065 |
|
||
Insurance Recoveries Related to Legal and Regulatory Expenses |
|
(835 |
) |
|
— |
|
|
— |
|
|
(835 |
) |
||
Stock-Based Compensation(2) |
|
8,937 |
|
|
321 |
|
|
6,574 |
|
|
15,832 |
|
||
Restructuring Expenses, Net |
|
— |
|
|
— |
|
|
238 |
|
|
238 |
|
||
Separation Costs |
|
1,765 |
|
|
— |
|
|
678 |
|
|
2,443 |
|
||
Adjusted EBITDA |
$ |
265,139 |
|
$ |
(6,494 |
) |
$ |
(11,902 |
) |
$ |
246,743 |
|
||
(1) Taxes are calculated on a consolidated basis and are not identifiable by Company Segment. |
||||||||||||||
(2) 2020 quarterly Adjusted EBITDA metrics have been updated to add-back Stock-based compensation to conform to management's 2021 definition of Adjusted EBITDA. |
||||||||||||||
|
Three Months Ended |
|
Year Ended |
|
Three Months Ended |
||||||||||||||||||||||
|
Mar 31, |
Jun 30, |
Sept 30, |
Dec 31, |
|
Dec 31, |
|
Mar 31, |
Jun 30, |
Sept 30, |
|||||||||||||||||
|
2020 |
|
2020 |
|
2021 |
|
|||||||||||||||||||||
Progressive Leasing |
$ |
462,025 |
|
$ |
404,018 |
|
$ |
448,843 |
|
$ |
536,422 |
|
|
$ |
1,851,308 |
|
|
$ |
510,046 |
|
$ |
505,971 |
|
$ |
493,277 |
|
|
Vive |
25,376 |
|
21,536 |
|
37,883 |
|
45,956 |
|
|
130,751 |
|
|
55,898 |
|
51,701 |
|
49,085 |
|
|||||||||
Other |
— |
|
— |
|
— |
|
— |
|
|
— |
|
|
— |
|
— |
|
2,655 |
|
|||||||||
Total |
$ |
487,401 |
|
$ |
425,554 |
|
$ |
486,726 |
|
$ |
582,378 |
|
|
$ |
1,982,059 |
|
|
$ |
565,944 |
|
$ |
557,672 |
|
$ |
545,017 |
|
|
Reconciliation of Full Year 2021 Outlook for Adjusted EBITDA (In thousands) |
||
|
Full Year 2021 Ranges |
|
|
Consolidated |
|
Estimated Net Earnings |
$248,000-$252,000 |
|
Taxes |
84,500-85,000 |
|
Projected Earnings Before Taxes |
332,500-337,000 |
|
Interest Expense |
1,900 |
|
Depreciation |
11,100 |
|
Amortization |
22,500 |
|
Projected EBITDA |
368,000-372,500 |
|
Stock-Based Compensation |
22,000-22,500 |
|
Projected Adjusted EBITDA |
$390,000-$395,000 |
|
Reconciliation of Full Year 2021 Outlook for Earnings Per Share Assuming Dilution to Non-GAAP Earnings Per Share Assuming Dilution |
|||||||
|
Full Year 2021 Range |
||||||
|
Low |
High |
|||||
Projected Earnings Per Share Assuming Dilution |
$ |
3.62 |
|
$ |
3.71 |
|
|
Add Projected Intangible Amortization Expense |
0.24 |
|
0.24 |
|
|||
Add Acquisition transaction costs |
0.01 |
|
0.01 |
|
|||
Add Projected Interest on FTC Settlement Uncertain Tax Position |
0.03 |
|
0.03 |
|
|||
Projected Non-GAAP Earnings Per Share Assuming Dilution |
$ |
3.90 |
|
$ |
3.99 |
|
|
