PROG (PRG) - 2025 Q1 - Quarterly Report

Financial Performance - PROG Holdings reported revenues of $684.1 million for Q1 2025, a 6.6% increase from$ 641.9 million in Q1 2024, driven by a larger lease portfolio [118]. - Earnings before income taxes rose to $47.2 million in Q1 2025, a 49.6% increase from$ 31.6 million in Q1 2024, primarily due to lower restructuring costs and increased revenues [128]. - Operating profit for Q1 2025 was $56.3 million, a 41.4% increase from$ 39.8 million in Q1 2024, indicating improved operational efficiency [128]. - Lease revenues and fees for Progressive Leasing increased by 5.0% to $651.6 million in Q1 2025, attributed to a larger lease portfolio [129]. - Cash provided by operating activities increased by 54.7% to$ 209.9 million, primarily due to higher cash received from early lease buyouts [143]. Customer Metrics - Active customer count for Progressive Leasing increased to 828, while Vive's active customer count rose to 88, reflecting stable growth in customer engagement [121]. - Gross Merchandise Volume (GMV) for Progressive Leasing decreased by $16.6 million (4.0%) to$ 401.96 million, while Vive's GMV increased by $4.7 million (14.8%) to$ 36.27 million in Q1 2025 compared to Q1 2024 [120]. - The total GMV for the Company increased by $59.2 million (11.9%) to$ 558.1 million in Q1 2025 compared to Q1 2024, driven by growth in the Other segment [120]. Expenses and Costs - Operating expenses decreased by 6.3% to $119.3 million in Q1 2025 from$ 127.3 million in Q1 2024 [131]. - Personnel costs increased by 1.0% to $45.2 million, while stock-based compensation rose by 19.0% to$ 7.9 million [131]. - The provision for lease merchandise write-offs increased to 7.4% of lease revenues in Q1 2025, up from 7.0% in Q1 2024, but remained within the targeted annual range of 6% to 8% [116]. - Provision for loan losses increased by 30.0% to $14.4 million, driven by growth in the Four business and macroeconomic uncertainties [134]. Cash Flow and Financing - Cash used in financing activities increased to$ 88.2 million, primarily for the repayment of $50.0 million drawn on the revolving credit facility [145]. - The company repurchased 935,992 shares for$ 26.1 million during Q1 2025, with remaining authorization of $335.2 million [148]. - Cash and cash equivalents increased by$ 117.6 million to $213.3 million as of March 31, 2025 [141]. Tax and Liabilities - The effective income tax rate decreased to 26.5% in Q1 2025 from 30.4% in Q1 2024, primarily due to discrete tax expenses in the prior year [140]. - As of March 31, 2025, the Company had deferred income tax liabilities of$ 64.4 million, reflecting temporary differences between tax basis and book basis [156]. - The Company made net tax payments of $0.3 million during the three months ended March 31, 2025, and anticipates estimated tax payments of$ 80.2 million for the next nine months [155]. Debt and Commitments - The Company issued $600 million in Senior Notes with a fixed annual interest rate of 6.0%, maturing on November 15, 2029 [159]. - As of March 31, 2025, the Company had no outstanding borrowings under its Revolving Facility, which is indexed to the Secured Overnight Financing Rate (SOFR) [163]. - Future interest payments on the Company's variable-rate debt are based on a margin of 1.5% to 2.5% over SOFR for revolving loans [158]. - The Company is in compliance with various covenants related to its Senior Notes as of March 31, 2025, and expects to maintain compliance in the future [154]. - The Company had unconditionally cancellable unfunded lending commitments totaling approximately$ 459.8 million as of March 31, 2025, which do not generate revenues or cash flows [160]. Market Conditions - Inflationary pressures and elevated living costs negatively impacted consumer confidence and demand for lease-to-own offerings, contributing to the decline in GMV for Progressive Leasing [117]. - The Company experienced elevated customer payment delinquencies, prompting a tightening of decisioning posture to maintain a healthy lease portfolio [116]. Operational Commitments - The Company has no long-term commitments to purchase merchandise or significant purchase agreements exceeding expected requirements for three months [159]. - The Company leases management and IT space under operating leases expiring at various times through 2028, with renewal options available [157]. - The Company does not use significant market risk sensitive instruments for hedging or trading purposes [164].