Core Insights - PROG Holdings (PRG) reported quarterly earnings of $0.80 per share, exceeding the Zacks Consensus Estimate of $0.75 per share, and showing an increase from $0.72 per share a year ago, resulting in an earnings surprise of 6.67% [1] - The company achieved revenues of $623.32 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.62% and up from $577.4 million year-over-year [2] - PROG Holdings has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.94 on revenues of $671.76 million, while for the current fiscal year, the estimate is $3.84 on revenues of $2.62 billion [7] - The estimate revisions trend for PROG Holdings is mixed, leading to a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Financial - Consumer Loans industry, to which PROG Holdings belongs, is currently ranked in the top 8% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - The performance of PROG Holdings may be influenced by the overall industry outlook, as empirical research indicates a strong correlation between stock movements and earnings estimate revisions [5][8] Competitor Insights - Encore Capital Group (ECPG), a competitor in the same industry, is expected to report quarterly earnings of $1.55 per share, reflecting a year-over-year increase of 24%, with revenues anticipated to be $373.71 million, up 34.7% from the previous year [9][10]

Revenue Composition - Progressive Leasing accounted for approximately 96% of PROG Holdings' consolidated revenues for the year ended December 31, 2024[21]. - Vive contributed approximately 3% to the consolidated revenues for the same period[22]. - The majority of Progressive Leasing's revenues (58%) came from furniture, appliances, and electronics in 2024[34]. - Vive's revenue from furniture and mattresses represented 50% of its total revenue in 2024[34]. - In 2024, 52.6% of consolidated revenues were derived from the top three POS partners, and 78.2% from the top ten POS partners, indicating high revenue concentration risk[71]. Financial Performance - Revenues for the company reached $2.5 billion in 2024, marking a 2.3% increase from $2.4 billion in 2023[200]. - Net earnings for the company increased by 42.1% to $197.2 million in 2024, compared to $138.8 million in 2023[207]. - Earnings before income tax decreased to $163.6 million in 2024, down 16.6% from $196.2 million in 2023[207]. - Operating expenses increased by 4.0% to $469.2 million in 2024, compared to $451.1 million in 2023[207]. - The provision for lease merchandise write-offs increased to 7.5% of lease revenues in 2024, up from 6.7% in 2023, but remained within the targeted range of 6% to 8%[192]. Customer Engagement and Technology - PROG Holdings plans to grow gross merchandise volume (GMV) through existing and new POS partners, aiming to enhance customer engagement and simplify the leasing process[23]. - The company is investing in technology platforms to improve customer experience and expand e-commerce capabilities[23]. - The lease application volume increased in 2024 due to strategic growth initiatives and e-commerce integrations, positively impacting Gross Merchandise Volume (GMV)[189]. - In Q3 2024, Progressive Leasing's GMV generated from e-commerce platforms represented 17.0% of its total GMV[112]. Compliance and Regulatory Environment - The company expects continued focus from federal and state regulatory authorities on alternative consumer financial services, potentially increasing compliance costs and operational changes[60][61]. - The California Consumer Privacy Act and its amendments require the company to maintain complex compliance controls across multiple states, increasing operational costs[62]. - The company incurred substantial costs for compliance with federal, state, and local laws, which may continue to impact financial performance[63]. - Regulatory scrutiny on alternative financial services, including BNPL offerings, is increasing, which may impose additional compliance costs[81]. Market Risks and Economic Conditions - Adverse macroeconomic conditions, such as persistent inflation and elevated interest rates, could reduce demand for products and services, negatively impacting revenue[68]. - Inflationary pressures have significantly increased the cost of living, negatively affecting customer demand and financial performance in 2024[189]. - Big Lots, one of the top ten POS partners, filed for Chapter 11 bankruptcy in September 2024, which is expected to negatively impact Progressive Leasing's GMV in 2025[190]. Cybersecurity and Operational Risks - A cybersecurity incident in September 2023 affected Progressive Leasing's systems, but there was no major operational impact[85]. - The company has a cybersecurity program based on the NIST Cybersecurity Framework to mitigate data security threats[164]. - The company maintains cyber liability insurance and conducts regular audits and penetration tests to enhance its cybersecurity maturity[168]. - The company faces heightened cybersecurity risks during the modernization of its information management systems[82]. Employee and Organizational Structure - As of December 31, 2024, employee count was 1,261 for Progressive Leasing, 124 for Vive, and 18 for Four and Other, with the majority being full-time employees[42]. - Personnel costs for the years ended December 31, 2024, 2023, and 2022 were $172.5 million, $187.2 million, and $194.2 million, respectively[48]. - The company supports employee resource groups (ERGs) to promote inclusiveness and diversity, receiving executive and monetary support[41]. Shareholder Value and Capital Allocation - Progressive Leasing repurchased approximately 29.9% of its outstanding shares since Q4 2021, totaling $501.8 million, including $138.7 million in the 2024 fiscal year[90]. - The company initiated a quarterly cash dividend in February 2024, paying dividends for each fiscal quarter since Q1 2024[90]. - The capital allocation strategy aims to enhance shareholder value, but there is no assurance it will be effective[89]. Strategic Initiatives and Future Outlook - The company plans to implement a new enterprise resource planning system in fiscal 2025 to optimize financial processes and enhance scalability[82]. - The company is exploring expansion into complementary businesses and new technologies, including machine learning and AI[65]. - The company may pursue acquisitions or divestitures, which could have a material adverse impact on performance if not executed successfully[118].

Financial Performance - Consolidated revenues for Q4 2024 were $623.3 million, an increase of 8.0% from Q4 2023[4] - Consolidated net earnings for the quarter were $57.5 million, compared to $18.6 million in the prior year period[5] - Adjusted EBITDA for Q4 2024 was $65.7 million, representing 10.5% of revenues, slightly down from 10.6% in Q4 2023[5] - Total revenues for the year ended December 31, 2024, increased to $2,463,496 thousand, up from $2,408,264 thousand in 2023, representing a growth of approximately 2.3%[26] - Net earnings for the year ended December 31, 2024, were $197,249 thousand, compared to $138,838 thousand in 2023, reflecting a significant increase of 42%[22] - Non-GAAP net earnings for the twelve months ended December 31, 2024, were $148,411,000, while for the twelve months ended December 31, 2023, they were $170,643,000, indicating a decrease of 13%[37] - Earnings per share assuming dilution for the twelve months ended December 31, 2024, was $4.53, compared to $2.98 for the twelve months ended December 31, 2023, reflecting a 52% increase[37] Cash and Debt Management - PROG Holdings ended Q4 2024 with cash of $95.7 million and gross debt of $650.0 million[9] - The company’s cash and cash equivalents at the end of the period were $95,655 thousand, down from $155,416 thousand at the end of 2023, a decrease of about 38.5%[22] - Total liabilities decreased to $863,486 thousand as of December 31, 2024, from $899,924 thousand in 2023, a reduction of approximately 4%[20] Growth and Projections - Progressive Leasing's GMV for Q4 2024 was $597.5 million, reflecting a year-over-year growth of 9.1%[6] - For full year 2025, PROG Holdings projects total revenues between $2,515,000 and $2,590,000[11] - The projected diluted EPS for full year 2025 is between $2.82 and $3.22[11] - Projected consolidated total adjusted EBITDA for fiscal year 2025 is estimated to be between $260,000,000 and $280,000,000[46] - Projected Earnings Per Share (EPS) for the full year 2025 is expected to range from $3.10 to $3.50, assuming dilution[48] Operational Efficiency - Cash provided by operating activities decreased to $138,525 thousand in 2024 from $204,236 thousand in 2023, a decline of approximately 32.2%[22] - The company reported lease revenues and fees of $2,366,489 thousand for the year ended December 31, 2024, compared to $2,333,588 thousand in 2023, marking a growth of about 1.4%[26] - The company reported a restructuring expense of $22,691,000 for the twelve months ended December 31, 2024, compared to $12,533,000 for the twelve months ended December 31, 2023, showing an increase of 81%[43] Future Strategies - The company plans to continue its three-pillared strategy focusing on growth, enhancement, and expansion in 2025[3] - The company plans to continue focusing on market expansion and new product development to drive future growth[29] Miscellaneous - The provision for lease merchandise write-offs for Q4 2024 was 7.9%, with a full year provision of 7.5% within the targeted range of 6-8%[8] - The company incurred costs related to a cybersecurity incident totaling $285,000 for the twelve months ended December 31, 2024[43] - The weighted average shares outstanding assuming dilution decreased from 46,550,000 for the twelve months ended December 31, 2023, to 43,549,000 for the twelve months ended December 31, 2024[37] - Projected Adjusted EBITDA for Q1 2025 is estimated to be between $63,000 and $68,000[47] - Estimated Net Earnings for Q1 2025 are projected to be between $28,000 and $32,000[47]

Financial Data and Key Metrics Changes - Q3 2024 consolidated revenue reached $606.1 million, a 4% increase compared to Q3 2023 [6][22] - Adjusted EBITDA for Q3 was $63.5 million, representing a 10.5% margin, down from 12.3% in the previous year [6][22] - The gross leased asset (GLA) balance increased by 3.8% year-over-year, marking a positive trend after a decline earlier in the year [7][18] Business Line Data and Key Metrics Changes - The Progressive Leasing segment's GMV grew by 11.6% year-over-year, exceeding expectations [5][17] - Revenue for the Progressive Leasing segment increased by 3.3% from $564.2 million in Q3 2023 to $582.6 million in Q3 2024 [18] - The number of customers with active leases increased by 3.4% year-over-year [12] Market Data and Key Metrics Changes - E-commerce GMV accounted for 16.6% of total Progressive Leasing GMV in Q3 2024, up from 14.4% in Q2 2024 [12] - The company reported that over 75% of Progressive Leasing GMV is under multi-year exclusive contracts [10] Company Strategy and Development Direction - The company focuses on a three-pillar strategy: grow, enhance, and expand, which has driven improvements across key performance metrics [6][8] - A long-term exclusive partnership was signed with American Signature, Inc., enhancing regional market positioning [8] - The PROG Marketplace platform has seen over 300% growth year-to-date, indicating strong direct-to-consumer engagement [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining write-offs within the targeted annual range of 6% to 8% for 2024 [19][24] - The company anticipates Q4 GMV growth to be in the range of high single to low double digits, driven by positive momentum [15][23] - Management acknowledged potential headwinds from store closures and bankruptcies in the retail sector but remains optimistic about partnerships and market dynamics [28] Other Important Information - The company ended Q3 2024 with $221.7 million in cash and a net leverage ratio of 1.4 times trailing 12 months adjusted EBITDA [22] - A quarterly cash dividend of $0.12 per share was paid in September, and 810,000 shares were repurchased during the quarter [22] Q&A Session Summary Question: Can you discuss the GMV dynamics considering the bankruptcy situation? - Management noted that while GMV performance was strong, the bankruptcy of certain retailers could pose a 100 to 150 basis point headwind for Q4 [28] Question: What are the expectations for write-offs in Q4? - Management expects Q4 write-offs to step down from Q3 levels, aligning with typical seasonal trends [30] Question: How does the trade-down population affect early buyouts and write-offs? - The trade-down population tends to have a higher propensity for early buyouts, which may help mitigate write-offs despite some overall delinquency increases [38] Question: What is the outlook for the Progressive Marketplace? - The Progressive Marketplace is performing well, with significant growth driven by improved marketing and customer experience [35] Question: What is the long-term GMV growth potential? - Management indicated that while the market is under-penetrated, growth will depend on adding new retailers and optimizing customer experience [58][59]

Company Performance - PROG Holdings reported quarterly earnings of $0.77 per share, exceeding the Zacks Consensus Estimate of $0.76 per share, but down from $0.90 per share a year ago, representing an earnings surprise of 1.32% [1] - The company posted revenues of $606.15 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1.09% and up from $582.88 million year-over-year [1] - Over the last four quarters, PROG Holdings has consistently surpassed consensus EPS and revenue estimates [1] Stock Performance - PROG Holdings shares have increased approximately 52% since the beginning of the year, significantly outperforming the S&P 500's gain of 22.7% [2] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [4] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.75 on revenues of $601.84 million, and for the current fiscal year, it is $3.34 on revenues of $2.44 billion [4] - The trend of estimate revisions for PROG Holdings is mixed, which may change following the recent earnings report [4] Industry Context - The Financial - Consumer Loans industry, to which PROG Holdings belongs, is currently ranked in the bottom 43% of over 250 Zacks industries, which may impact stock performance [5] - Another company in the same industry, Capital One, is expected to report quarterly earnings of $3.70 per share, reflecting a year-over-year decline of 16.9% [5]

Revenue and Earnings - The company reported revenues of $606.1 million for Q3 2024, a 4.0% increase from $582.9 million in Q3 2023[86]. - Lease revenues and fees increased by 3.3% to $582,551,000 compared to $564,183,000 in the same period last year[92]. - Net earnings surged to $83,962,000, a significant increase from $35,012,000 in the same quarter of 2023[92]. - Total revenues for the nine months ended September 30, 2024, were $1,840,176, a 0.5% increase from $1,830,863 in the same period of 2023[100]. - Net earnings increased by 16.2% to $139,702, up from $120,263 in the prior year[100]. Gross Merchandise Volume (GMV) - Gross Merchandise Volume (GMV) for Progressive Leasing increased by $47.5 million (11.6%) to $456.7 million, while Vive's GMV rose by $3.5 million (10.0%) to $38.8 million compared to Q3 2023[87]. - Total GMV for the company reached $557.5 million, reflecting a 20.1% increase from $464.0 million in the same quarter last year[87]. - The increase in Progressive Leasing revenues was primarily due to an 11.6% increase in gross merchandise volume compared to the same quarter in 2023[93]. Customer Metrics - Active customer count for Progressive Leasing grew to 848,000, up from 820,000 in the prior year, driven by strategic initiatives and tightening credit supply[89]. - E-commerce channels contributed 16.6% of Progressive Leasing's GMV in Q3 2024, up from 14.8% in Q3 2023[87]. Operating Performance - Earnings before income taxes decreased to $41.8 million in Q3 2024, down from $48.1 million in Q3 2023, primarily due to higher provisions for lease merchandise write-offs and loan losses[86]. - Operating profit decreased by 10.3% to $49,231,000, down from $54,884,000 in the prior year[92]. - Operating profit decreased by 23.9% to $144,726 from $190,259 in the same period last year[100]. Costs and Expenses - The company incurred $0.1 million and $0.3 million in costs related to a cybersecurity incident for Q3 2024 and year-to-date, respectively, totaling $3.2 million since the incident occurred[84]. - Total operating expenses rose by 1.8% to $111,108,000 from $109,183,000 year-over-year[95]. - Personnel costs decreased by 9.6% to $42,260,000, down from $46,729,000 in the same quarter last year[95]. - Provision for lease merchandise write-offs increased by $7,770,000, representing a 21.0% rise compared to the previous year[92]. - Restructuring expenses rose significantly by $18.9 million due to additional restructuring activities during the nine months ended September 30, 2024[104]. Tax and Income - The effective income tax rate was (100.6)% for the three months ended September 30, 2024, compared to 27.2% for the same period in 2023[99]. - Income tax benefit for the nine months ended September 30, 2024 was $17.9 million, compared to an expense of $47.4 million in the prior year, resulting in an effective tax rate of (14.7)% versus 28.3% in 2023[109]. Cash Flow and Investments - Cash and cash equivalents increased by $66.3 million to $221.7 million as of September 30, 2024[111]. - Cash provided by operating activities was $223.0 million for the nine months ended September 30, 2024, down from $292.5 million in the same period in 2023, a decrease of $69.5 million[114]. - Cash used in investing activities increased to $35.6 million from $18.8 million year-over-year, driven by a $143.1 million increase in cash investments in loans receivable[115]. - Cash used in financing activities was $121.1 million, including $98.2 million for stock repurchases and $15.4 million in dividends[116]. Shareholder Returns - The company repurchased 2,620,562 shares for $98.2 million during the nine months ended September 30, 2024, with remaining authorization for an additional $401.8 million[118]. - Aggregate dividend payments during the nine months ended September 30, 2024 totaled $15.4 million, with a quarterly cash dividend of $0.12 per share declared on August 8, 2024[119]. Debt and Commitments - As of September 30, 2024, the company had $600.0 million in indebtedness and $350.0 million available under the Revolving Facility, with no outstanding balance[120]. - Unfunded lending commitments through the Vive business totaled approximately $498.7 million as of September 30, 2024, down from $523.9 million at the end of 2023[124].

Financial Performance - Consolidated revenues for Q3 2024 were $606.1 million, a 4.0% increase from Q3 2023[3]. - Net earnings for the quarter were $84.0 million, significantly up from $35.0 million in the prior year, primarily due to a $53.6 million non-cash tax benefit[4]. - Adjusted EBITDA for Q3 2024 was $63.5 million, representing 10.5% of revenues, down from 12.3% in the same period last year[4]. - Diluted EPS for Q3 2024 was $1.94, compared to $0.76 in the same period last year; non-GAAP diluted EPS was $0.77, down from $0.90[5]. - Net earnings for the nine months ended September 30, 2024, were $139,702, up 16.2% from $120,263 in the same period of 2023[15]. - Basic earnings per share for Q3 2024 were $1.99, significantly higher than $0.77 in Q3 2023[13]. - Consolidated total net earnings for the nine months ended September 30, 2024, were $139,702,000, compared to $120,263,000 for the same period in 2023, representing a year-over-year increase of approximately 16.2%[31][32]. Revenue and Growth Metrics - Progressive Leasing's GMV reached $456.7 million, reflecting an 11.6% year-over-year growth[6]. - Total revenues for the three months ended September 30, 2024, reached $606,145 thousand, an increase from $582,877 thousand in the same period of 2023, representing a growth of approximately 4.3%[16][17]. - Lease revenues and fees for Q3 2024 reached $582,551, an increase of 3.3% from $564,183 in Q3 2023[13]. - Interest and fees on loans receivable totaled $23,594 for Q3 2024, compared to $18,694 in Q3 2023, reflecting a growth of 26.5%[13]. - The company experienced a gross merchandise volume of $557,464 thousand for the three months ended September 30, 2024, compared to $464,044 thousand in the same period of 2023, indicating a growth of approximately 20.1%[21]. Cash and Debt Management - The company ended Q3 2024 with cash of $221.7 million and gross debt of $600 million[7]. - Cash and cash equivalents increased to $221,726 as of September 30, 2024, compared to $155,416 at the end of 2023, marking a growth of 42.5%[14]. - Total liabilities decreased to $815,533 as of September 30, 2024, compared to $899,924 at the end of 2023, a reduction of 9.4%[14]. - The company repurchased $37.0 million of its stock at an average price of $45.69 per share, with $401.8 million remaining under its repurchase program[7]. Future Outlook and Projections - The full year 2024 revenue outlook was revised to a range of $2,440,000 to $2,460,000, with net earnings expected between $165,500 and $170,500[8]. - The company anticipates continued focus on market expansion and new product development in the upcoming quarters, aiming to enhance revenue streams and customer engagement[22]. - The projected adjusted EBITDA for the full year 2024 is estimated to be between $270,000,000 and $275,000,000, reflecting a potential decline from previous estimates[33][35]. - The company expects net earnings for the full year 2024 to range from $165,500,000 to $170,500,000, with projected earnings before income tax expenses of $162,500,000 to $165,500,000[33]. - The projected non-GAAP earnings per share for the full year 2024 is expected to be between $3.30 and $3.40, reflecting adjustments for intangible amortization and restructuring expenses[38][39]. Operational Metrics and Expenses - The provision for lease merchandise write-offs was 7.7%, within the targeted annual range of 6%-8%[6]. - The company reported a provision for lease merchandise write-offs of $44,736 in Q3 2024, compared to $36,966 in Q3 2023, indicating an increase of 21.0%[13]. - Stock-based compensation for the nine months ended September 30, 2024, was $21,588,000, compared to $19,081,000 for the same period in 2023, showing an increase of approximately 13.2%[31][32]. - Restructuring expenses for the nine months ended September 30, 2024, totaled $20,906,000, compared to $1,958,000 for the same period in 2023, indicating a significant increase[31][32]. - Interest expense for the full year 2024 is projected to be between $31,000,000 and $32,000,000, with depreciation and amortization expected to total $9,500,000 and $18,000,000, respectively[33][35]. Non-GAAP Financial Measures - Non-GAAP net earnings for the three months ended September 30, 2024, were $33,412 thousand, compared to $41,676 thousand in the same period of 2023, reflecting a decrease of approximately 19.8%[28]. - Adjusted EBITDA for the nine months ended September 30, 2024, was $208,346,000, compared to $236,455,000 for the same period in 2023, indicating a decrease of about 11.9%[31][32]. - Management emphasizes the importance of non-GAAP financial measures in assessing the company's performance and making strategic decisions, highlighting their relevance in the industry[24][25].

Group 1 - The stock of PROG Holdings, Inc. (PRG) is experiencing significant attention due to high implied volatility in the options market, particularly the Oct. 18, 2024 $22.50 Call option [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant price change or an upcoming event that could lead to a rally or sell-off [2] - PROG Holdings is currently rated as a Zacks Rank 1 (Strong Buy) in the Financial - Consumer Loans industry, which is in the top 26% of the Zacks Industry Rank [3] Group 2 - Over the past 60 days, two analysts have raised their earnings estimates for PROG Holdings for the current quarter, increasing the Zacks Consensus Estimate from 62 cents per share to 76 cents [3] - The high implied volatility may indicate a developing trading opportunity, as options traders often seek to sell premium on options with high implied volatility to capture decay [4]

For those looking to find strong Finance stocks, it is prudent to search for companies in the group that are outperforming their peers. PROG Holdings (PRG) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? Let's take a closer look at the stock's year-to-date performance to find out. PROG Holdings is a member of the Finance sector. This group includes 860 individual stocks and currently holds a Zacks Sector Rank of #2. Th ...

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