Business Wire | Jul 29, 2021 07:00AM EDT

PROG Holdings Reports Second Quarter 2021 Results

Jul. 29, 2021

SALT LAKE CITY--(BUSINESS WIRE)--Jul. 29, 2021--PROG Holdings, Inc. (NYSE:PRG), the fintech holding company for Progressive Leasing, a leading provider of e-commerce, app-based, and in-store lease-to-own solutions, Vive Financial, a provider of omnichannel second-look revolving credit solutions, and Four Technologies, a provider of Buy Now, Pay Later solutions, today announced financial results for the second quarter ended June 30, 2021.

"I'm pleased to report exceptional financial results for the period, driven by a 25% increase in Progressive Leasing's GMV, strong customer payment performance, and a return to growth in our portfolio," said Steve Michaels, President and Chief Executive Officer of PROG Holdings. "Our Progressive Leasing segment delivered record second quarter results in GMV, revenue, Adjusted EBITDA, and earnings before taxes. We also expanded our fintech offerings with the acquisition of Buy Now, Pay Later provider Four Technologies as part of our strategy to grow our ecosystem of flexible and transparent consumer financial products. As we enter the second half of the year, we are encouraged by the opportunity to serve more of our significant addressable market."

Financial Highlights

Consolidated revenues for the second quarter of 2021 were $660.0 million, an increase of 10.1% from the same period in 2020. The increase was primarily due to growth of key large national partners and e-commerce penetration, and from continued strong customer payment performance across both the Progressive Leasing and Vive Financial businesses. Progressive Leasing's GMV increased 25.2% to $506 million compared with the same period in 2020, with e-commerce GMV growing 274% year-over-year.

The provision for lease merchandise write-offs at Progressive Leasing was 4.8% of lease revenues in the second quarter of 2021, compared with 6.1% in the same period of 2020. Low levels of delinquencies and strong customer payment performance benefited our provision for write-offs in the period.

The Company reported net earnings from continuing operations for the second quarter of 2021 of $68.8 million compared with $59.0 million in the prior year period. Adjusted EBITDA for the second quarter of 2021 was $104.9 million compared with $73.5 million for the same period in 2020, an increase of $31.4 million, or 42.7%. As a percentage of revenues, Adjusted EBITDA was 15.9% in the second quarter of 2021 compared with 12.3% for the same period in 2020. The increases in net earnings from continuing operations and adjusted EBITDA were primarily driven by the Company's increased revenues and improvements in our provision for write-offs.

Diluted earnings per share from continuing operations for the second quarter of 2021 were $1.02 compared with $0.87 in the year ago period. On a non-GAAP basis, diluted earnings per share from continuing operations were $1.09 in the first quarter of 2021 compared with $0.92 for the same quarter in 2020.

Liquidity and Capital Allocation

PROG Holdings ended the second quarter of 2021 with cash of $137.6 million and debt of $50 million. The Company repurchased $49.1 million of its stock in the period at an average price per share of $53.84, leaving $223 million available under its $300 million repurchase authorization. The company utilized $23 million of cash to purchase Four Technologies in the second quarter.

The Company expects to repurchase additional shares under its $300 million program from time to time, subject to its capital plan, market conditions, and other factors. The timing and amount of any further repurchases under the program will be determined by management. The Company is not obligated to acquire any specific number of shares, and the program may be suspended or discontinued at any time.

Outlook

The Company is increasing its full year 2021 consolidated outlook for Adjusted EBITDA to a range of $390 million to $405 million, up from the previous range of $380 million to $400 million, due to better-than-expected portfolio performance. Non-GAAP diluted EPS is expected to be between $3.90 and $4.10, up from a range of $3.80 and $4.05, while GAAP diluted EPS is expected to be between $3.66 and $3.86, up from a range of $3.56 and $3.81.

Conference Call and Webcast

The Company has scheduled a live webcast and conference call for Thursday, July 29, 2021, at 8:30 A.M. ET to discuss its financial results for the second 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.

"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 "strategy to", "expects", "outlook", 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; (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 and also from competitors of our Vive segment; (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, 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; (viii) Vive's business model differing significantly from Progressive Leasing's, which creates specific and unique risks for the Vive business, including Vive's reliance on two bank partners to issue its credit products and Vive's exposure to the unique regulatory risks associated with the lending-related laws and regulations that apply to its business; (ix) the effects of any increased expenses or unanticipated liabilities incurred as a result of, or due to activities related to, our acquisition of Four; (x) 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; and (xi) 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 Securities and Exchange Commission on February 26, 2021. Statements in this press release that are "forward-looking" include without limitation statements about (i) our strategy to grow our ecosystem of consumer financial products; (ii) our ability to serve more of our addressable market for our offerings; (iii) our expectation to repurchase additional shares under our Board-authorized $300 million repurchase program; and (iv) our increased outlook for our full-year 2021 Adjusted EBITDA, Non-GAAP Earnings Per Share and GAAP Earnings Per Share performance. 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 (Loss)(In thousands, except per share data)

(Unaudited) (Unaudited) Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Revenues:

Lease Revenues and Fees $ 646,048 $ 589,749 $ 1,354,030 $ 1,248,283

Interest and Fees on 13,923 9,415 26,942 19,322 Loans Receivable

Total 659,971 599,164 1,380,972 1,267,605



Costs and Expenses:

Depreciation of Lease 439,658 420,731 944,715 884,649 Merchandise

Provision for Lease 31,258 36,151 49,898 91,865 Merchandise Write-offs

Operating Expenses 96,745 82,518 187,941 181,502

Total 567,661 539,400 1,182,554 1,158,016

Operating Profit 92,310 59,764 198,418 109,589

Interest Expense (436) - (948) -

Earnings Before IncomeTax Expense from 91,874 59,764 197,470 109,589 Continuing Operations

Income Tax Expense 23,037 767 49,145 (7,090) (Benefit)

Net Earnings from 68,837 58,997 148,325 116,679 Continuing Operations

Earnings (Loss) fromDiscontinued - 9,380 - (328,307) Operations, Net ofIncome Tax

Net Earnings (Loss) $ 68,837 $ 68,377 $ 148,325 $ (211,628)



Basic Earnings (Loss) per Share:

Continuing Operations $ 1.03 $ 0.88 $ 2.20 $ 1.74

Discontinued Operations - 0.14 - (4.90)

Total Basic Earnings $ 1.03 $ 1.02 $ 2.20 $ (3.16) (Loss) per Share

Diluted Earnings (Loss) per Share:

Continuing Operations $ 1.02 $ 0.87 $ 2.19 $ 1.72

Discontinued Operations - 0.14 - (4.85)

Total Diluted Earnings $ 1.02 $ 1.01 $ 2.19 $ (3.13) (Loss) per Share



Weighted Average Shares 67,011 67,097 67,368 66,959 Outstanding

Weighted Average SharesOutstanding Assuming 67,329 67,523 67,792 67,693 Dilution

PROG Holdings, Inc. Consolidated Balance Sheets (In thousands, except share data)

(Unaudited) June 30, 2021

December 31, 2020

ASSETS:

Cash and Cash Equivalents

$

137,549

$

36,645

Accounts Receivable (net of allowances of $48,459 in 2021 and $56,364 in 2020)

57,074

61,254

Lease Merchandise (net of accumulated depreciation and allowances of $416,700 in 2021 and $409,307 in 2020)

587,730

610,263

Loans Receivable (net of allowances and unamortized fees of $57,976 in 2021 and $52,274 in 2020)

103,055

79,148

Property, Plant and Equipment, Net

26,738

26,705

Operating Lease Right-of-Use Assets

18,765

20,613

Goodwill

306,627

288,801

Other Intangibles, Net

148,752

154,421

Prepaid Expenses and Other Assets

39,630

39,554

Total Assets

$

1,425,920

$

1,317,404

LIABILITIES & SHAREHOLDERS' EQUITY:

Accounts Payable and Accrued Expenses

$

102,041

$

78,249

Deferred Income Tax Liability

139,214

126,938

Customer Deposits and Advance Payments

44,093

46,565

Operating Lease Liabilities

27,237

29,516

Debt

50,000

50,000

Total Liabilities

362,585

331,268

SHAREHOLDERS' EQUITY:

Common Stock, Par Value $0.50 Per Share: Authorized: 225,000,000 Shares at June 30, 2021 and December 2020; Shares Issued: 90,752,123 at June 30, 2021 and December 31, 2020

45,376

45,376

Additional Paid-in Capital

318,911

318,263

Retained Earnings

1,384,703

1,236,378

Less: Treasury Shares at Cost

Common Stock: 24,252,222 Shares at June 30, 2021 and 23,029,434 at December 31, 2020

(685,655

)

(613,881

)

Total Shareholders' Equity

1,063,335

986,136

Total Liabilities & Shareholders' Equity

$

1,425,920

$

1,317,404

PROG Holdings, Inc.Consolidated Balance Sheets(In thousands, except share data)

(Unaudited) December 31, June 30, 2021 2020

ASSETS:

Cash and Cash Equivalents $ 137,549 $ 36,645

Accounts Receivable (net of allowances of 57,074 61,254 $48,459 in 2021 and $56,364 in 2020)

Lease Merchandise (net of accumulateddepreciation and allowances of $416,700 in 587,730 610,263 2021 and $409,307 in 2020)

Loans Receivable (net of allowances andunamortized fees of $57,976 in 2021 and 103,055 79,148 $52,274 in 2020)

Property, Plant and Equipment, Net 26,738 26,705

Operating Lease Right-of-Use Assets 18,765 20,613

Goodwill 306,627 288,801

Other Intangibles, Net 148,752 154,421

Prepaid Expenses and Other Assets 39,630 39,554

Total Assets $ 1,425,920 $ 1,317,404

LIABILITIES & SHAREHOLDERS' EQUITY:

Accounts Payable and Accrued Expenses $ 102,041 $ 78,249

Deferred Income Tax Liability 139,214 126,938

Customer Deposits and Advance Payments 44,093 46,565

Operating Lease Liabilities 27,237 29,516

Debt 50,000 50,000

Total Liabilities 362,585 331,268

SHAREHOLDERS' EQUITY:

Common Stock, Par Value $0.50 Per Share:Authorized: 225,000,000 Shares at June 30,2021 and December 2020; Shares Issued: 45,376 45,376 90,752,123 at June 30, 2021 and December31, 2020

Additional Paid-in Capital 318,911 318,263

Retained Earnings 1,384,703 1,236,378



Less: Treasury Shares at Cost

Common Stock: 24,252,222 Shares at June 30, (685,655 ) (613,881 ) 2021 and 23,029,434 at December 31, 2020

Total Shareholders' Equity 1,063,335 986,136

Total Liabilities & Shareholders' Equity $ 1,425,920 $ 1,317,404

PROG Holdings, Inc. Consolidated Statements of Cash Flows (In thousands)

Six Months Ended June 30,

2021

2020

OPERATING ACTIVITIES:

Net Earnings (Loss)

$

148,325

$

(211,628

)

Adjustments to Reconcile Net Earnings (Loss) to Cash Provided by Operating Activities:

Depreciation of Lease Merchandise

944,715

1,144,958

Other Depreciation and Amortization

14,247

50,154

Provisions for Accounts Receivable and Loan Losses

87,114

174,737

Stock-Based Compensation

8,137

12,487

Deferred Income Taxes

11,001

(73,656

)

Impairment of Goodwill and Other Assets

-

468,634

Non-Cash Lease Expense

464

50,638

Other Changes, Net

(1,180

)

5,109

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

Additions to Lease Merchandise

(974,271

)

(1,032,977

)

Book Value of Lease Merchandise Sold or Disposed

52,089

201,058

Accounts Receivable

(72,070

)

(134,467

)

Prepaid Expenses and Other Assets

106

(4,711

)

Income Tax Receivable

(20

)

(38,797

)

Operating Lease Right-of-Use Assets and Liabilities

(895

)

(53,544

)

Accounts Payable and Accrued Expenses

23,552

(19,713

)

Accrued Regulatory Expense

-

(175,000

)

Customer Deposits and Advance Payments

(2,473

)

(2,527

)

Cash Provided by Operating Activities

238,841

360,755

INVESTING ACTIVITIES:

Investments in Loans Receivable

(94,129

)

(39,986

)

Proceeds from Loans Receivable

62,938

32,248

Outflows on Purchases of Property, Plant and Equipment

(4,781

)

(33,885

)

Proceeds from Disposition of Property, Plant, and Equipment

45

2,220

Outflows on Acquisitions of Businesses and Customer Agreements. Net of Cash Acquired

(22,749

)

(1,209

)

Proceeds from Dispositions of Businesses and Customer Agreements, Net of Cash Disposed

-

359

Cash Used in Investing Activities

(58,676

)

(40,253

)

FINANCING ACTIVITIES:

Proceeds from Debt

-

5,625

Repayments on Debt

-

(60,748

)

Dividends Paid

(5,351

)

Acquisition of Treasury Stock

(77,196

)

-

Issuance of Stock Under Stock Option Plans

2,856

2,250

Shares Withheld for Tax Payments

(4,921

)

(5,877

)

Debt Issuance Costs

-

(1,020

)

Cash Used in Financing Activities

(79,261

)

(65,121

)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

-

(79

)

Increase in Cash and Cash Equivalents

100,904

255,302

Cash and Cash Equivalents at Beginning of Period

36,645

57,755

Cash and Cash Equivalents at End of Period

$

137,549

$

313,057

Net Cash Paid During the Period

Interest

$

435

$

6,722

Income Taxes

$

23,539

$

1,438

PROG Holdings, Inc.Consolidated Statements of Cash Flows(In thousands)

Six Months Ended June 30,

2021 2020

OPERATING ACTIVITIES:

Net Earnings (Loss) $ 148,325 $ (211,628 )

Adjustments to Reconcile Net Earnings (Loss) to Cash Provided by Operating Activities:

Depreciation of Lease Merchandise 944,715 1,144,958

Other Depreciation and Amortization 14,247 50,154

Provisions for Accounts Receivable and Loan 87,114 174,737 Losses

Stock-Based Compensation 8,137 12,487

Deferred Income Taxes 11,001 (73,656 )

Impairment of Goodwill and Other Assets - 468,634

Non-Cash Lease Expense 464 50,638

Other Changes, Net (1,180 ) 5,109

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

Additions to Lease Merchandise (974,271 ) (1,032,977 )

Book Value of Lease Merchandise Sold or Disposed 52,089 201,058

Accounts Receivable (72,070 ) (134,467 )

Prepaid Expenses and Other Assets 106 (4,711 )

Income Tax Receivable (20 ) (38,797 )

Operating Lease Right-of-Use Assets and (895 ) (53,544 ) Liabilities

Accounts Payable and Accrued Expenses 23,552 (19,713 )

Accrued Regulatory Expense - (175,000 )

Customer Deposits and Advance Payments (2,473 ) (2,527 )

Cash Provided by Operating Activities 238,841 360,755

INVESTING ACTIVITIES:

Investments in Loans Receivable (94,129 ) (39,986 )

Proceeds from Loans Receivable 62,938 32,248

Outflows on Purchases of Property, Plant and (4,781 ) (33,885 ) Equipment

Proceeds from Disposition of Property, Plant, 45 2,220 and Equipment

Outflows on Acquisitions of Businesses and (22,749 ) (1,209 ) Customer Agreements. Net of Cash Acquired

Proceeds from Dispositions of Businesses and - 359 Customer Agreements, Net of Cash Disposed

Cash Used in Investing Activities (58,676 ) (40,253 )

FINANCING ACTIVITIES:

Proceeds from Debt - 5,625

Repayments on Debt - (60,748 )

Dividends Paid (5,351 )

Acquisition of Treasury Stock (77,196 ) -

Issuance of Stock Under Stock Option Plans 2,856 2,250

Shares Withheld for Tax Payments (4,921 ) (5,877 )

Debt Issuance Costs - (1,020 )

Cash Used in Financing Activities (79,261 ) (65,121 )

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH - (79 ) EQUIVALENTS

Increase in Cash and Cash Equivalents 100,904 255,302

Cash and Cash Equivalents at Beginning of Period 36,645 57,755

Cash and Cash Equivalents at End of Period $ 137,549 $ 313,057

Net Cash Paid During the Period

Interest $ 435 $ 6,722

Income Taxes $ 23,539 $ 1,438

PROG Holdings, Inc. Quarterly Revenues by Segment (In thousands)

Unaudited

Three Months Ended

June 30, 2021

Progressive Leasing

Vive

Consolidated Total

Lease Revenues and Fees

$

646,048

$

-

$

646,048

Interest and Fees on Loans Receivable

13,923

13,923

Total Revenues

$

646,048

$

13,923

$

659,971

PROG Holdings, Inc.Quarterly Revenues by Segment(In thousands)

Unaudited

Three Months Ended

June 30, 2021

Progressive Vive Consolidated Leasing Total

Lease Revenues and Fees $ 646,048 $ - $ 646,048

Interest and Fees on Loans 13,923 13,923 Receivable

Total Revenues $ 646,048 $ 13,923 $ 659,971

Unaudited

Three Months Ended

June 30, 2020

Progressive Leasing

Vive

Consolidated Total

Lease Revenues and Fees

$

589,749

$

-

$

589,749

Interest and Fees on Loans Receivable

-

9,415

9,415

Total Revenues

$

589,749

$

9,415

$

599,164

Unaudited

Three Months Ended

June 30, 2020

Progressive Vive Consolidated Leasing Total

Lease Revenues and Fees $ 589,749 $ - $ 589,749

Interest and Fees on Loans - 9,415 9,415 Receivable

Total Revenues $ 589,749 $ 9,415 $ 599,164

PROG Holdings, Inc. Six Months Revenues by Segment (In thousands)

Unaudited

Six Months Ended

June 30, 2021

Progressive Leasing

Vive

Consolidated Total

Lease Revenues and Fees

$

1,354,030

$

-

$

1,354,030

Interest and Fees on Loans Receivable

-

26,942

26,942

Total Revenues

$

1,354,030

$

26,942

$

1,380,972

PROG Holdings, Inc.Six Months Revenues by Segment(In thousands)

Unaudited

Six Months Ended

June 30, 2021

Progressive Vive Consolidated Leasing Total

Lease Revenues and Fees $ 1,354,030 $ - $ 1,354,030

Interest and Fees on Loans - 26,942 26,942 Receivable

Total Revenues $ 1,354,030 $ 26,942 $ 1,380,972

Unaudited

Six Months Ended

June 30, 2020

Progressive Leasing

Vive

Consolidated Total

Lease Revenues and Fees

$

1,248,283

$

-

$

1,248,283

Interest and Fees on Loans Receivable

-

19,322

19,322

Total Revenues

$

1,248,283

$

19,322

$

1,267,605

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 six months ended June 30, 2021 and the Company's full year 2021 outlook, exclude intangible amortization expense and acquisition related transaction costs. Non-GAAP net earnings from continuing operations and non-GAAP diluted earnings from continuing operations per share for the three and six months ended June 30, 2020 exclude intangible amortization expense, restructuring expenses, 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 before interest expense, net, depreciation on property, plant and equipment, amortization of intangible assets and income taxes. Adjusted EBITDA for the three and six months ended June 30, 2021 and 2020 also excludes stock-based compensation expense, restructuring expenses, and acquisition related transaction costs. The amounts for these pre-tax non-GAAP adjustments can be found in the quarterly 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.

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. 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

Six Months Ended

June 30, 2020

Progressive Vive Consolidated Leasing Total

Lease Revenues and Fees $ 1,248,283 $ - $ 1,248,283

Interest and Fees on Loans - 19,322 19,322 Receivable

Total Revenues $ 1,248,283 $ 19,322 $ 1,267,605

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 six months ended June 30, 2021 and the Company's full year 2021 outlook, exclude intangible amortization expense and acquisition related transaction costs. Non-GAAP net earnings from continuing operations and non-GAAP diluted earnings from continuing operations per share for the three and six months ended June 30, 2020 exclude intangible amortization expense, restructuring expenses, 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 before interest expense, net, depreciation on property, plant and equipment, amortization of intangible assets and income taxes. Adjusted EBITDA for the three and six months ended June 30, 2021 and 2020 also excludes stock-based compensation expense, restructuring expenses, and acquisition related transaction costs. The amounts for these pre-tax non-GAAP adjustments can be found in the quarterly 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.

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. We believe the exclusion of stock-based compensation expense provides for a better comparison of our operating results with our peer companies as the calculations of stock-based compensation vary from period to period and company to company due to different valuation methodologies, subjective assumptions and the variety of award types. This measure may be useful to an investor in evaluating the underlying operating performance of our business.

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

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

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

PROG Holdings Inc.Reconciliation of Net Earnings and Earnings Per Share Assuming Dilution fromContinuingOperations to Non-GAAP Net Earnings and Earnings Per Share Assuming DilutionfromContinuing Operations(In thousands, except per share amounts)

Unaudited

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Net Earnings from Continuing $ 68,837 $ 58,997 $ 148,325 $ 116,679 Operations

Add: Intangible Amortization 5,421 5,566 10,842 11,132 Expense

Add: Transaction Expense 561 - 561 -

Add: Restructuring Expenses, net - 238 - 238

Less: Tax impact of adjustments ^ (1,555 ) (1,509 ) (2,964 ) (2,956 )(1)

Less: NOL Carryback Revaluation - (1,350 ) - (35,540 )

Non-GAAP Net Earnings from $ 73,264 $ 61,942 $ 156,764 $ 89,553 Continuing Operations



Earnings from ContinuingOperations Per Share Assuming $ 1.02 $ 0.87 $ 2.19 $ 1.72 Dilution

Add: Intangible Amortization 0.08 0.08 0.16 0.16 Expense^

Add: Transaction Expense 0.01 - 0.01 -

Less: Tax impact of adjustments ^ (0.02 ) (0.02 ) (0.04 ) (0.04 )(1)

Less: NOL Carryback Revaluation - (0.02 ) - (0.53 )

Non-GAAP Earnings from ContinuingOperations Per Share Assuming $ 1.09 $ 0.92 $ 2.31 $ 1.32 Dilution^(2)



Weighted Average Shares 67,329 67,523 67,792 67,693 Outstanding Assuming Dilution

(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.

(1) Adjustments are tax-effected using an assumed statutory tax rate of 26.0%.

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

PROG Holdings Inc. Non-GAAP Financial Information Quarterly Segment EBITDA (In thousands)

Unaudited

Three Months Ended

June 30, 2021

Progressive Leasing

Vive

Consolidated Total

Net Earnings from Continuing Operations

$

68,837

Income Taxes(1)

23,037

Earnings from Continuing Operations Before Income Taxes

$

87,521

$

4,353

91,874

Interest Expense

320

116

436

Depreciation

2,414

198

2,612

Amortization

5,421

-

5,421

EBITDA

95,676

4,667

100,343

Stock-Based Compensation

3,942

31

3,973

Transaction Expense

561

-

561

Adjusted EBITDA

$

100,179

$

4,698

$

104,877

PROG Holdings Inc.Non-GAAP Financial InformationQuarterly Segment EBITDA(In thousands)

Unaudited

Three Months Ended

June 30, 2021

Progressive Vive Consolidated Leasing Total

Net Earnings from Continuing Operations $ 68,837

Income Taxes^(1) 23,037

Earnings from Continuing Operations $ 87,521 $ 4,353 91,874 Before Income Taxes

Interest Expense 320 116 436

Depreciation 2,414 198 2,612

Amortization 5,421 - 5,421

EBITDA 95,676 4,667 100,343

Stock-Based Compensation 3,942 31 3,973

Transaction Expense 561 - 561

Adjusted EBITDA $ 100,179 $ 4,698 $ 104,877

(1)

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

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

Unaudited

Three Months Ended

June 30, 2020

Progressive Leasing

Vive

Unallocated Corporate Expenses

Consolidated Total

Net Earnings from Continuing Operations

$

58,997

Income Taxes(1)

767

Earnings (Loss) from Continuing Operations Before Income Taxes

$

63,113

$

1,626

$

(4,975

)

59,764

Depreciation

2,179

210

-

2,389

Amortization

5,421

145

-

5,566

EBITDA

70,713

1,981

(4,975

)

67,719

Stock-Based Compensation(2)

3,270

96

2,187

5,553

Restructuring Expenses, Net

-

-

238

238

Adjusted EBITDA

$

73,983

$

2,077

$

(2,550

)

$

73,510

Unaudited

Three Months Ended

June 30, 2020

Progressive Unallocated Consolidated Leasing Vive Corporate Total Expenses

Net Earnings from Continuing $ 58,997 Operations

Income Taxes^(1) 767

Earnings (Loss) from Continuing $ 63,113 $ 1,626 $ (4,975 ) 59,764 Operations Before Income Taxes

Depreciation 2,179 210 - 2,389

Amortization 5,421 145 - 5,566

EBITDA 70,713 1,981 (4,975 ) 67,719

Stock-Based Compensation^(2) 3,270 96 2,187 5,553

Restructuring Expenses, Net - - 238 238

Adjusted EBITDA $ 73,983 $ 2,077 $ (2,550 ) $ 73,510

(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.

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

2020 quarterly Adjusted EBITDA metrics have been updated to add-back(2) Stock-based compensation to conform to management's 2021 definition of Adjusted EBITDA.

PROG Holdings Inc. Non-GAAP Financial Information Six Month Segment EBITDA (In thousands)

Unaudited

Six Months Ended

June 30, 2021

Progressive Leasing

Vive

Consolidated Total

Net Earnings from Continuing Operations

$

148,325

Income Taxes(1)

49,145

Earnings from Continuing Operations Before Income Taxes

$

191,693

$

5,777

197,470

Interest Expense

755

193

948

Depreciation

4,626

385

5,011

Amortization

10,842

-

10,842

EBITDA

207,916

6,355

214,271

Stock-Based Compensation

8,005

131

8,136

Transaction Expense

561

-

561

Adjusted EBITDA

$

216,482

$

6,486

$

222,968

PROG Holdings Inc.Non-GAAP Financial InformationSix Month Segment EBITDA(In thousands)

Unaudited

Six Months Ended

June 30, 2021

Progressive Vive Consolidated Leasing Total

Net Earnings from Continuing Operations $ 148,325

Income Taxes^(1) 49,145

Earnings from Continuing Operations $ 191,693 $ 5,777 197,470 Before Income Taxes

Interest Expense 755 193 948

Depreciation 4,626 385 5,011

Amortization 10,842 - 10,842

EBITDA 207,916 6,355 214,271

Stock-Based Compensation 8,005 131 8,136

Transaction Expense 561 - 561

Adjusted EBITDA $ 216,482 $ 6,486 $ 222,968

(1)

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

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

Unaudited

Six Months Ended

June 30, 2020

Progressive Leasing

Vive

Unallocated Corporate Expenses

Consolidated Total

Net Earnings from Continuing Operations

$

116,679

Income Taxes(1)

(7,090

)

Earnings (Loss) from Continuing Operations Before Income Taxes

$

125,820

$

(5,526

)

$

(10,705

)

109,589

Depreciation

4,300

427

-

4,727

Amortization

10,842

290

-

11,132

EBITDA

140,962

(4,809

)

(10,705

)

125,448

Stock-Based Compensation(2)

6,006

180

4,229

10,415

Restructuring Expenses, Net

-

-

238

238

Adjusted EBITDA

$

146,968

$

(4,629

)

$

(6,238

)

$

136,101

Unaudited

Six Months Ended

June 30, 2020

Progressive Unallocated Consolidated Leasing Vive Corporate Total Expenses

Net Earnings from Continuing $ 116,679 Operations

Income Taxes^(1) (7,090 )

Earnings (Loss) fromContinuing Operations Before $ 125,820 $ (5,526 ) $ (10,705 ) 109,589 Income Taxes

Depreciation 4,300 427 - 4,727

Amortization 10,842 290 - 11,132

EBITDA 140,962 (4,809 ) (10,705 ) 125,448

Stock-Based Compensation^(2) 6,006 180 4,229 10,415

Restructuring Expenses, Net - - 238 238

Adjusted EBITDA $ 146,968 $ (4,629 ) $ (6,238 ) $ 136,101

(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

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

2020 quarterly Adjusted EBITDA metrics have been updated to add-back(2) Stock-based compensation to conform to management's 2021 definition of Adjusted EBITDA

PROG Holdings Inc. Gross Merchandise Volume by Quarter (In thousands)

Three Months Ended

Year Ended

Three Months Ended

Mar 31,

Jun 30,

Sept 30,

Dec 31,

Dec 31,

Mar 31,

Jun 30,

2020

2020

2021

Progressive Leasing

$

462,025

$

404,018

$

448,843

$

536,422

$

1,851,308

$

510,046

$

505,971

Vive

25,376

21,536

37,883

45,956

130,751

55,898

51,701

Total

$

487,401

$

425,554

$

486,726

$

582,378

$

1,982,059

$

565,944

$

557,672

PROG Holdings Inc.Gross Merchandise Volume by Quarter(In thousands)

Three Months Ended Year Ended Three Months Ended

Mar 31, Jun 30, Sept 30, Dec 31, Dec 31, Mar 31, Jun 30,

2020 2020 2021

Progressive $ 462,025 $ 404,018 $ 448,843 $ 536,422 $ 1,851,308 $ 510,046 $ 505,971 Leasing

Vive 25,376 21,536 37,883 45,956 130,751 55,898 51,701

Total $ 487,401 $ 425,554 $ 486,726 $ 582,378 $ 1,982,059 $ 565,944 $ 557,672



Reconciliation of Full Year 2021 Outlook for Adjusted EBITDA (In thousands)

Full Year 2021 Ranges

Consolidated

Estimated Net Earnings

$251,000 - $259,000

Taxes

83,000 - 88,000

Projected Earnings Before Taxes

334,000 -347,000

Interest Expense

1,700

Depreciation

11,600

Amortization

21,700

Projected EBITDA

369,000 - 382,000

Stock-Based Compensation

21,000 - 23,000

Projected Adjusted EBITDA

$390,000 - $405,000

Reconciliation of Full Year 2021 Outlook for Adjusted EBITDA(In thousands)

Full Year 2021 Ranges

Consolidated

Estimated Net Earnings $251,000 - $259,000

Taxes 83,000 - 88,000

Projected Earnings Before Taxes 334,000 -347,000

Interest Expense 1,700

Depreciation 11,600

Amortization 21,700

Projected EBITDA 369,000 - 382,000

Stock-Based Compensation 21,000 - 23,000

Projected Adjusted EBITDA $390,000 - $405,000

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

$

3.66

$

3.86

Add Projected Intangible Amortization Expense

0.24

0.24

Projected Non-GAAP Earnings Per Share Assuming Dilution

$

3.90

$

4.10

View source version on businesswire.com: https://www.businesswire.com/news/home/20210729005291/en/

CONTACT: Investor Contact John Baugh, CFA VP, Investor Relations john.baugh@progleasing.com

CONTACT: Media Contact Mark Delcorps Director, Corporate Communications media@progleasing.com