PROG (PRG) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including the Balance Sheets, Statements of Earnings, and Statements of Cash Flows, along with detailed notes explaining the company's business, accounting policies, fair value measurements, loan receivables, commitments, contingencies, restructuring expenses, segment information, income taxes, and a significant subsequent event regarding the sale of Vive Financial. Condensed Consolidated Balance Sheets This section presents the company's unaudited condensed consolidated balance sheets as of September 30, 2025, and December 31, 2024 ASSETS (In Thousands): | ASSETS (In Thousands) | Sep 30, 2025 | Dec 31, 2024 | | :---------------------- | :----------- | :----------- | | Cash and Cash Equivalents | $292,610 | $95,655 | | Accounts Receivable (net) | $63,742 | $80,225 | | Lease Merchandise (net) | $501,152 | $680,242 | | Loans Receivable (net) | $160,350 | $146,985 | | Total Assets | $1,546,601 | $1,513,767 | | LIABILITIES & EQUITY (In Thousands) | Sep 30, 2025 | Dec 31, 2024 | | :---------------------- | :----------- | :----------- | | Accounts Payable and Accrued Expenses | $101,314 | $93,190 | | Deferred Income Tax Liabilities | $105,707 | $74,320 | | Debt, Net | $594,537 | $643,563 |\ | Total Liabilities | $843,044 | $863,486 |\ | Total Shareholders' Equity | $703,557 | $650,281 |\ | Total Liabilities & Shareholders' Equity | $1,546,601 | $1,513,767 | - Cash and Cash Equivalents increased by $196.9 million from December 31, 2024, to September 30, 2025, reaching $292.6 million[10][166] - Lease Merchandise (net) decreased by $179.1 million, primarily due to a decrease in Progressive Leasing's GMV and higher early buyouts[10][166] - Debt, Net decreased by $49.0 million, mainly due to the repayment of $50.0 million on the Revolving Facility in January 2025[10][166] Condensed Consolidated Statements of Earnings This section presents the company's unaudited condensed consolidated statements of earnings for the three and nine months ended September 30, 2025, and 2024 REVENUES (In Thousands): | REVENUES (In Thousands) | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :---------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Lease Revenues and Fees | $556,583 | $582,551 | $1,777,814 | $1,773,617 | | Interest and Fees on Loans Receivable | $38,525 | $23,594 | $106,045 | $66,559 | | Total Revenues | $595,108 | $606,145 | $1,883,859 | $1,840,176 | | OPERATING PROFIT | $53,529 | $49,231 | $170,574 | $144,726 | | NET EARNINGS | $33,121 | $83,962 | $106,322 | $139,702 | | Basic EPS | $0.83 | $1.99 | $2.64 | $3.25 | | Diluted EPS | $0.82 | $1.94 | $2.60 | $3.19 | | Cash Dividends Declared Per Share | $0.13 | $0.12 | $0.39 | $0.36 | - Total Revenues decreased by 1.8% for the three months ended September 30, 2025, compared to the same period in 2024, primarily due to lower lease revenues, partially offset by growth in Other operations[12][132] - Net Earnings decreased by 60.6% for the three months ended September 30, 2025, compared to the same period in 2024, largely due to a significant income tax benefit in the prior year[12][151] - For the nine months ended September 30, 2025, Net Earnings decreased by 23.9% to $106.3 million, compared to $139.7 million in the prior year, primarily due to a non-cash reversal of an uncertain tax position in 2024[12][152][165] Condensed Consolidated Statements of Cash Flows This section presents the company's unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2025, and 2024 Cash Flow Activity (In Thousands): | Cash Flow Activity (In Thousands) | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net Earnings | $106,322 | $139,702 | | Cash Provided by Operating Activities | $389,865 | $223,013 | | Cash Used in Investing Activities | $(69,041) | $(35,648) | | Cash Used in Financing Activities | $(123,869) | $(121,055) | | Increase in Cash and Cash Equivalents | $196,955 | $66,310 | | Cash and Cash Equivalents at End of Period | $292,610 | $221,726 | - Cash provided by operating activities increased by $166.9 million to $389.9 million for the nine months ended September 30, 2025, primarily due to a $93.3 million decrease in cash paid for lease merchandise[15][168] - Cash used in investing activities increased by $33.4 million to $69.0 million, mainly due to a $314.5 million increase in investments in loans receivable, partially offset by a $282.6 million increase in proceeds from loan repayments[15][169] - Cash used in financing activities was $123.9 million, primarily for repayment of the revolving credit facility ($50.0 million), share repurchases ($51.8 million), and cash dividends ($15.6 million)[15][170] Notes to Condensed Consolidated Financial Statements This section provides detailed explanatory notes to the unaudited condensed consolidated financial statements NOTE 1. BASIS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note describes the company's business segments, significant accounting policies, and recent accounting pronouncements - PROG Holdings operates as a financial technology holding company with two reportable segments as of September 30, 2025: Progressive Leasing (lease-to-own solutions) and Vive Financial (second-look revolving credit products)[16] - The Vive segment's assets, primarily its credit card receivable portfolio, were sold on October 20, 2025, marking a strategic shift, and will be reported as discontinued operations from Q4 2025[18][118] - Four Technologies, Inc. (BNPL) is not a reportable segment due to its financial results not being significant, and its results are included within 'Other'[19][106] Accounts Receivable Allowance (In Thousands): | Item | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Beginning Balance | $68,788 | $64,682 | $71,607 | $64,180 | | Net Book Value of Accounts Written Off | $(90,920) | $(89,050) | $(283,158) | $(260,885) | | Recoveries | $9,480 | $8,224 | $32,026 | $28,823 | | Accounts Receivable Provision | $86,318 | $89,336 | $253,191 | $241,074 | | Ending Balance | $73,666 | $73,192 | $73,666 | $73,192 | Allowance for Lease Merchandise Write-offs (In Thousands): | Item | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Beginning Balance | $48,863 | $48,668 | $51,874 | $44,180 | | Net Book Value of Merchandise Written off | $(43,135) | $(44,533) | $(140,947) | $(130,526) | | Recoveries | $2,023 | $2,605 | $6,173 | $6,162 | | Provision for Write-offs | $41,037 | $44,736 | $131,688 | $131,660 | | Ending Balance | $48,788 | $51,476 | $48,788 | $51,476 | - The Company adopted ASU 2023-07 (Segment Reporting) for the year ended December 31, 2024, with no impact on financial position or results of operations[72] - The Company plans to adopt ASU 2023-09 (Income Tax Disclosures) for the fiscal year beginning January 1, 2025, and does not expect a material impact on consolidated financial statements[73] NOTE 2. FAIR VALUE MEASUREMENT This note details the fair value measurements of financial liabilities and certain assets, including valuation methodologies and input levels Financial Liabilities Measured at Fair Value (In Thousands): | Item | September 30, 2025 (Level 2) | December 31, 2024 (Level 2) | | :-------------------------- | :--------------------------- | :--------------------------- | | Deferred Compensation Liability | $3,673 | $2,971 | Fair Value of Fixed-Rate Debt and Loans Receivable (In Thousands): | Item | September 30, 2025 (Level 2/3) | December 31, 2024 (Level 2/3) | | :-------------------------- | :----------------------------- | :----------------------------- | | Senior Notes | $588,720 (Level 2) | $573,720 (Level 2) | | Loans Receivable, Net | $190,727 (Level 3) | $172,892 (Level 3) | - Vive's loans receivable are measured at amortized cost, with fair value estimated using a discounted cash flow methodology (Level 3 inputs)[79] - Four's loans receivable, net, approximated fair value based on a discounted cash flow methodology[80] NOTE 3. LOANS RECEIVABLE This note provides a breakdown of loans receivable, including credit quality, aging, and the allowance for loan losses Loans Receivable, Net (In Thousands): | Item | September 30, 2025 | December 31, 2024 | | :-------------------------- | :----------------- | :----------------- | | Loans Receivable, Gross | $222,155 | $204,327 | | Allowance for Loan Losses | $(51,468) | $(47,783) | | Loans Receivable, Net of Allowances and Unamortized Fees | $160,350 | $146,985 | - Loans Receivable, Net attributable to Four was $35.6 million as of September 30, 2025, up from $34.9 million at December 31, 2024[83] Credit Quality of Loan Portfolio by FICO Score (Vive) and Proprietary Risk Category (Four): | Category | September 30, 2025 | December 31, 2024 | | :-------------------------- | :----------------- | :----------------- | | Vive - FICO Score Category: | | | | 700 or greater | 13.1 % | 12.8 % | | Between 700 and 600 | 73.8 % | 76.9 % | | 600 or less | 13.1 % | 10.3 % | | Four - Proprietary Risk Category: | | | | Category A | 27.3 % | 26.9 % | | Category B | 48.0 % | 48.6 % | | Category C | 24.7 % | 24.5 % | Aging of Loans Receivable, Gross Balance (September 30, 2025): | Aging Category | Percentage | | :-------------------------- | :--------- | | 30-59 Days Past Due | 7.6 % | | 60-89 Days Past Due | 4.8 % | | 90 or More Days Past Due | 5.6 % | | Past Due Loans Receivable | 18.0 % | | Current Loans Receivable | 82.0 % | Allowance for Loan Losses (In Thousands): | Item | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Beginning Balance | $48,972 | $40,242 | $47,783 | $40,620 | | Provision for Loan Losses | $20,645 | $15,133 | $52,422 | $38,217 | | Charge-offs | $(21,155) | $(13,992) | $(56,971) | $(41,170) | | Recoveries | $3,006 | $1,858 | $8,234 | $5,574 | | Ending Balance | $51,468 | $43,241 | $51,468 | $43,241 | NOTE 4. COMMITMENTS AND CONTINGENCIES This note outlines the company's legal and regulatory matters, cybersecurity incident settlement, and unfunded lending commitments - The Company accrued $0.5 million for pending legal and regulatory matters as of September 30, 2025, and December 31, 2024, for which losses are probable and estimable[89] - Progressive Leasing received a request from the FTC in Q3 2024 to provide compliance evidence related to the 2020 FTC Settlement, which the Company is cooperating with[91][92] - A cybersecurity incident in Q3 2023 led to consolidated lawsuits, which were settled for $3.3 million on June 30, 2025, to be fully covered by cybersecurity insurance[94][95] - Unfunded lending commitments for Vive totaled $466.9 million as of September 30, 2025, representing available unused credit lines, though not all are expected to be drawn upon[97] NOTE 5. RESTRUCTURING EXPENSES This note details restructuring activities, expenses, and accrual balances related to severance and early contract termination costs - The Company incurred no new restructuring activities during the three and nine months ended September 30, 2025[100] - Total restructuring expenses for the nine months ended September 30, 2024, were $20.9 million, including severance, ROU asset impairment, property and equipment impairment, and early contract termination costs[100] Restructuring Accrual and Payment Activity (In Thousands): | Item | Balance at Dec 31, 2024 | Cash Payments (9M 2025) | Balance at Sep 30, 2025 | | :-------------------------- | :---------------------- | :---------------------- | :---------------------- | | Severance | $2,325 | $(864) | $1,461 | | Early Contract Termination Costs | $1,600 | $0 | $1,600 | | Total | $3,925 | $(864) | $3,061 | NOTE 6. SEGMENTS This note presents financial information by reportable segment, including assets, capital expenditures, and earnings before income tax - As of September 30, 2025, the Company has two reportable segments: Progressive Leasing and Vive. Four Technologies is included in 'Other'[103][106] - The CODM (President and CEO) evaluates segment performance based on segment revenues and earnings (loss) before income tax[107][108] Total Assets by Segment (In Thousands): | Segment | September 30, 2025 | December 31, 2024 | | :-------------------------- | :----------------- | :----------------- | | Progressive Leasing | $1,309,703 | $1,282,585 | | Vive | $146,023 | $137,762 | | Other | $90,875 | $93,420 | | Total Assets | $1,546,601 | $1,513,767 | Capital Expenditures by Segment (In Thousands): | Segment | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Progressive Leasing | $2,886 | $1,330 | $5,451 | $3,985 | | Vive | $26 | $77 | $64 | $245 | | Other | $641 | $631 | $1,934 | $1,807 | | Total Capital Expenditures | $3,553 | $2,038 | $7,449 | $6,037 | Earnings (Loss) Before Income Tax by Segment (In Thousands): | Segment | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Progressive Leasing | $46,738 | $47,177 | $146,909 | $136,596 | | Vive | $(74) | $(1,441) | $(398) | $108 | | Other | $(1,017) | $(3,889) | $(1,058) | $(14,951) | | Total | $45,647 | $41,847 | $145,453 | $121,753 | NOTE 7. INCOME TAXES This note discusses the impact of recent tax legislation on deferred tax liabilities and income tax receivables - The United States enacted the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, making 100% bonus depreciation permanent for qualified property acquired after January 19, 2025[116] - As a result of OBBBA, the Company's net deferred tax liability increased by $33.4 million and income tax receivable increased by $38.0 million, with no material impact expected on income tax expense[116] NOTE 8. SUBSEQUENT EVENT This note discloses the post-period sale of Vive's assets and its expected financial impact - On October 20, 2025, the Company completed the sale of substantially all of Vive's assets, primarily its credit card receivable portfolio, for an estimated $149.0 million cash[118] - The Vive segment will be presented as discontinued operations in the Company's consolidated financial statements starting in the quarter ending December 31, 2025[118] - The Company expects to recognize an estimated pretax gain of approximately $30.0 million from the sale in Q4 2025 and record $3.0 million to $5.0 million in restructuring costs[118][119] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance and condition for the three and nine months ended September 30, 2025, compared to the prior year. It covers business overview, macroeconomic impacts, key financial highlights, operating metrics, and a detailed analysis of revenues, expenses, and liquidity, including the impact of the Vive asset sale. Special Note Regarding Forward-Looking Information This section provides a cautionary statement regarding forward-looking information and associated risks - The report contains forward-looking statements based on management's current expectations and plans, which involve inherent risks and uncertainties[122] - Readers are cautioned not to place undue reliance on these statements, as actual results may differ materially due to various factors, including those discussed in the 2024 Annual Report's 'Risk Factors' section[122] Business Overview This section describes the company's business model and its reportable segments - PROG Holdings is a financial technology holding company offering transparent payment options, with two reportable segments: Progressive Leasing and Vive Financial[124] - Progressive Leasing provides lease-purchase solutions through POS partners, while Vive Financial offers second-look revolving credit products, though Vive's assets were sold post-period[125][126] - Four Technologies (BNPL) and Build (credit building tool) are also part of PROG Holdings' ecosystem, with their financial results reported within the 'Other' category[127][128] Macroeconomic and Business Environment This section discusses the macroeconomic factors and business environment impacting the company's performance - Progressive Leasing's lease revenues increased in H1 2025 due to a larger lease portfolio, but Q3 2025 revenues were lower due to a smaller gross leased asset balance compared to prior year[129] - The bankruptcy of Big Lots in late 2024 negatively impacted Progressive Leasing's GMV, revenue, and earnings in 2025[129] - Elevated inflationary pressures, increased cost of living, and high interest rates disproportionately affected the Company's customer base, leading to decreased demand and unfavorable GMV and financial performance[131] - Progressive Leasing tightened its decisioning posture in Q1 2025 due to elevated customer payment delinquencies, which improved lease portfolio performance but unfavorably impacted GMV[130] Highlights This section summarizes key financial and operational highlights for the reporting period Financial Highlights (3 Months Ended Sep 30, 2025 vs. 2024): | Metric | 2025 (In Millions) | 2024 (In Millions) | Change ($) | Change (%) | | :-------------------------- | :----------------- | :----------------- | :--------- | :--------- | | Revenues | $595.1 | $606.1 | $(11.0) | (1.8)% | | Earnings Before Income Taxes | $45.6 | $41.8 | $3.8 | 9.1% | GMV Changes (3 Months Ended Sep 30, 2025 vs. 2024): | Segment | Change ($ In Millions) | | :-------------------------- | :--------------------- | | Progressive Leasing | $(45.7) | | Vive | $7.6 | | Other (Four) | $101.0 | - The GMV decrease was attributed to the Big Lots bankruptcy and tighter decisioning, while Vive's GMV increased due to expanded loan origination programs[132] - Earnings before income taxes increased primarily due to higher revenues in 'Other' operations, partially offset by increased provision for loan losses and certain SG&A expenses[132] Key Operating Metrics This section presents key operational metrics such as Gross Merchandise Volume and active customer count Gross Merchandise Volume (GMV) (In Thousands): | Segment | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Progressive Leasing | $410,943 | $456,651 | $(45,708) | (10.0)% | | Vive | $46,308 | $38,755 | $7,553 | 19.5% | | Other | $163,086 | $62,058 | $101,028 | 162.8% | | Total GMV | $620,337 | $557,464 | $62,873 | 11.3% | - Progressive Leasing's GMV decrease was due to the Big Lots bankruptcy, tighter decisioning, and macroeconomic factors, while e-commerce channels contributed 23.0% of its GMV in Q3 2025 (up from 16.6% in Q3 2024)[134] - GMV from 'Other' operations significantly increased by 162.8% due to growth in Four loan originations[134] Active Customer Count (In Thousands, as of Sep 30): | Segment | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Progressive Leasing | 784 | 848 | | Vive | 96 | 91 | | Other | 338 | 148 | - Progressive Leasing's active customer count decreased due to tighter decisioning and the Big Lots bankruptcy, while Vive and 'Other' (Four) saw increases due to loan originations and continued growth[135] Key Components of Earnings Before Income Tax This section outlines the primary revenue and expense components contributing to earnings before income tax - Revenues are categorized into lease revenues and fees (Progressive Leasing) and interest and fees on loans receivable (Vive, Four, and other strategic businesses)[137] - Key expense components include depreciation of lease merchandise, provision for lease merchandise write-offs, and operating expenses (personnel, loan losses, software, advertising, etc.)[138][139] - Interest expense, net, covers interest on Senior Notes and the Revolving Facility, offset by interest income from cash deposits[140] Results of Operations – Three months ended September 30, 2025 and 2024 This section analyzes the company's financial performance for the three months ended September 30, 2025, compared to the prior year Consolidated Results (In Thousands): | Metric | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Total Revenues | $595,108 | $606,145 | $(11,037) | (1.8)% | | Operating Profit | $53,529 | $49,231 | $4,298 | 8.7% | | Earnings Before Income Tax | $45,647 | $41,847 | $3,800 | 9.1% | | Net Earnings | $33,121 | $83,962 | $(50,841) | (60.6)% | - Progressive Leasing revenues decreased by 4.5% due to a smaller gross leased asset balance, Big Lots bankruptcy, and tighter decisioning, while Vive revenues increased due to a larger loan portfolio[143] - Operating Expenses increased by 9.8%, driven by a $3.1 million rise in bank charges and processing fees (due to Four's GMV growth) and a $5.5 million increase in provision for loan losses (also due to Four's growth)[142][145][146] - Income tax expense was $12.5 million in Q3 2025, compared to a benefit of $42.1 million in Q3 2024, primarily due to a $53.6 million non-cash reversal of an uncertain tax position in 2024[151] Results of Operations – Nine Months Ended September 30, 2025 and 2024 This section analyzes the company's financial performance for the nine months ended September 30, 2025, compared to the prior year Consolidated Results (In Thousands): | Metric | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Total Revenues | $1,883,859 | $1,840,176 | $43,683 | 2.4% | | Operating Profit | $170,574 | $144,726 | $25,848 | 17.9% | | Earnings Before Income Tax | $145,453 | $121,753 | $23,700 | 19.5% | | Net Earnings | $106,322 | $139,702 | $(33,380) | (23.9)% | - Progressive Leasing revenues increased slightly (0.2%) due to a larger lease portfolio entering 2025, despite a decrease in GMV during the period[153] - Operating Expenses increased by 3.2%, driven by higher professional services ($7.5 million), computer software expense ($3.7 million), and bank charges/processing fees ($7.6 million), largely due to growth in Four[155][156][157] - Restructuring expense decreased by $20.9 million as there were no new activities in 2025, compared to significant charges in 2024[160] - Income tax expense was $39.1 million, compared to a benefit of $17.9 million in the prior year, primarily due to the 2024 non-cash tax position reversal[165] Overview of Financial Position This section provides a summary of the company's financial position, including changes in assets, liabilities, and equity - Cash and cash equivalents increased by $196.9 million to $292.6 million during the nine months ended September 30, 2025[166] - Accounts receivable, net, decreased by $16.5 million, and lease merchandise, net, decreased by $179.1 million, both primarily due to lower Progressive Leasing GMV[166] - Deferred income tax liabilities increased by $31.4 million and income tax receivables increased by $38.0 million due to the permanent extension of 100% federal bonus depreciation by the OBBBA[166] - Debt, net, decreased by $49.0 million, mainly from the repayment of $50.0 million on the Revolving Facility[166] Liquidity and Capital Resources This section discusses the company's capital requirements, financing sources, and liquidity position - Primary capital requirements include reinvesting in the business (lease merchandise), M&A, and returning excess cash to shareholders via repurchases and dividends[171] - Capital has been financed through cash flows from operations, private debt offerings, bank debt, and stock offerings[171] - As of September 30, 2025, the Company had $292.6 million in cash, $350.0 million available under the Revolving Facility (with no outstanding borrowings), and $600.0 million in gross indebtedness (Senior Notes)[167][176][178] - The Company repurchased 1,835,792 shares for $51.8 million during the nine months ended September 30, 2025, with $309.6 million remaining authorization[173] - Quarterly cash dividends of $0.13 per share were declared, totaling $15.6 million for the nine months ended September 30, 2025[174] - The Revolving Facility matures on November 15, 2029, and the Senior Notes (6.00% fixed annual interest) mature on November 15, 2029. The Company was in compliance with all debt covenants[175][177][178][179] - Unfunded lending commitments for Vive totaled approximately $466.9 million as of September 30, 2025, which are unconditionally cancellable[185] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section addresses the company's exposure to market risks, primarily interest rate risk. As of September 30, 2025, the company had no outstanding variable-rate debt, thus mitigating immediate interest rate sensitivity. The company does not use market risk sensitive instruments for hedging or speculative purposes. - As of September 30, 2025, the Company had no outstanding borrowings under its Revolving Facility, which is indexed to SOFR or the prime rate[188] - A hypothetical 1.0% increase or decrease in interest rates would not affect interest expense due to the absence of variable-rate debt outstanding[188] - The Company does not use no significant market risk sensitive instruments for hedging commodity, foreign currency, or other risks, nor does it not hold them for trading or speculative purposes[189] Item 4. Controls and Procedures This section details the evaluation of the company's disclosure controls and procedures, which were deemed effective as of September 30, 2025. It also outlines changes in internal control over financial reporting related to the phased implementation of a new enterprise resource planning (ERP) system, which is expected to continue into 2026 and will involve ongoing modifications to internal controls. - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of September 30, 2025, providing reasonable assurance that disclosure objectives are met[192] - The Company began utilizing aspects of a new multi-phase ERP system in Q3 2025, leading to modifications, removals, and new designs of internal controls to align with the new system[193] - Changes to internal control over financial reporting are expected to continue as the ERP implementation progresses, with ongoing evaluation for material effects[193][194] PART II. OTHER INFORMATION This section provides additional disclosures including legal proceedings, risk factors, equity security sales, defaults, and exhibits Item 1. Legal Proceedings This section refers to Note 4 of the financial statements for details on legal and regulatory proceedings. The company does not currently believe that any outstanding legal proceedings will have a material adverse impact on its business, financial position, or results of operations, though an adverse resolution of multiple items could. - The Company is party to various legal and regulatory proceedings in the ordinary course of business[195] - Management does not currently believe that any single outstanding legal proceeding will have a material adverse impact, but acknowledges that an adverse resolution of multiple items could[195] - Further information on legal and regulatory proceedings is incorporated by reference from Note 4 to the condensed consolidated financial statements[195] Item 1A. Risk Factors The Company reports no updates to its risk factors disclosure from its 2024 Annual Report. - There are no updates to the risk factors disclosure previously reported in the 2024 Annual Report[196] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or share repurchases during the three months ended September 30, 2025. - No share repurchases or other unregistered sales of equity securities occurred during the three months ended September 30, 2025[197] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities. - There were no defaults upon senior securities[198] Item 4. Mine Safety Disclosures This item is not applicable to the Company. - This item is not applicable[199] Item 5. Other Information No directors or executive officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements during the three months ended September 30, 2025. - No directors or executive officers adopted, modified, or terminated any Rule 10b5-1(c) trading arrangements during the three months ended September 30, 2025[200] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications from the CEO and CFO, XBRL documents, and the Inline XBRL formatted cover page. - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer (31.1, 31.2, 32.1, 32.2)[201] - XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Labels Linkbase, and Presentation Linkbase Documents are included[201] - The cover page is formatted in Inline XBRL (included in Exhibit 101)[201] Signatures The report is duly signed on behalf of PROG Holdings, Inc. by the Chief Financial Officer, Brian Garner, and the Vice President, Financial Reporting, Matt Sewell, on October 22, 2025. - The report was signed by Brian Garner, Chief Financial Officer, and Matt Sewell, Vice President, Financial Reporting, on October 22, 2025[204]