PROG (PRG) - 2024 Q1 - Quarterly Results

First Quarter 2024 Financial Results Consolidated Financial Performance PROG Holdings reported a 2.0% decrease in Q1 2024 consolidated revenues to $641.9 million, with net earnings and adjusted EBITDA significantly impacted by restructuring and portfolio normalization | Financial Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Consolidated Revenues | $641.9M | $655.1M | -2.0% | | Net Earnings | $22.0M | $48.0M | -54.2% | | Adjusted EBITDA | $72.6M | $89.7M | -19.1% | | Diluted EPS (GAAP) | $0.49 | $1.00 | -51.0% | | Diluted EPS (Non-GAAP) | $0.91 | $1.11 | -18.0% | - The decline in net earnings was primarily driven by $18.0 million of restructuring expenses related to cost reduction actions executed in January[4] - The year-over-year decrease in adjusted EBITDA was mainly due to headwinds from portfolio performance returning to pre-pandemic levels and a smaller portfolio size[4] - The company's financial performance exceeded its expectations, driven by better-than-expected Gross Merchandise Volume (GMV), strong portfolio performance, and disciplined spending[2] Segment Performance Progressive Leasing's GMV remained flat year-over-year at $418.5 million, with lease merchandise write-offs at 7.0%, within the targeted 6%-8% range - Progressive Leasing's first quarter GMV of $418.5 million was flat compared to the same period in 2023[7] - The provision for lease merchandise write-offs for the quarter was 7.0%, which is within the Company's targeted annual range of 6%-8%[7] | GMV by Segment (in thousands) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Progressive Leasing | $418,512 | $418,683 | | Vive | $31,602 | $36,530 | | Other | $48,791 | $13,607 | | Total GMV | $498,905 | $468,820 | Liquidity and Capital Allocation The company maintained solid liquidity with $252.8 million in cash and $600 million in gross debt, returning capital via $24.4 million in stock repurchases and a $0.12 per share dividend - Ended the first quarter of 2024 with cash of $252.8 million and gross debt of $600 million[8] - Repurchased $24.4 million of its stock in the quarter, with $475.6 million remaining under the current share repurchase authorization[8] - A cash dividend of $0.12 per share was paid during the quarter[8] 2024 Outlook Full Year 2024 Outlook PROG Holdings raised its full-year 2024 guidance, now anticipating consolidated revenues between $2.285 billion and $2.360 billion and non-GAAP diluted EPS of $2.85 to $3.10 - The company updated its full-year 2024 outlook for revenue and earnings, raising its previous guidance[9] | Revised 2024 Outlook (in millions) | Low | High | | :--- | :--- | :--- | | Total Revenues | $2,285 | $2,360 | | Net Earnings | $97.5 | $108.0 | | Adjusted EBITDA | $240.0 | $255.0 | | Diluted Non-GAAP EPS | $2.85 | $3.10 | - The outlook is based on assumptions of a challenging operating environment with continued soft demand for consumer durable goods and no material increases in unemployment for its customer base[9] Second Quarter 2024 Outlook For Q2 2024, the company projects total revenues between $550 million and $575 million, with adjusted EBITDA of $58 million to $63 million and non-GAAP diluted EPS of $0.65 to $0.75 | Q2 2024 Outlook (in millions) | Low | High | | :--- | :--- | :--- | | Total Revenues | $550.0 | $575.0 | | Net Earnings | $26.0 | $29.0 | | Adjusted EBITDA | $58.0 | $63.0 | | Diluted Non-GAAP EPS | $0.65 | $0.75 | - The company projects low single-digit GMV growth for the second quarter, despite the challenging macroeconomic environment[2] Consolidated Financial Statements Consolidated Statements of Earnings For Q1 2024, total revenues were $641.9 million, down from $655.1 million, with operating profit decreasing to $39.8 million and net earnings falling to $22.0 million year-over-year | (In thousands) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Revenues | $641,870 | $655,140 | | Operating Profit | $39,817 | $76,078 | | Net Earnings | $21,966 | $48,033 | | Diluted EPS | $0.49 | $1.00 | Consolidated Balance Sheets As of March 31, 2024, total assets were $1.46 billion (down from $1.49 billion), with cash increasing to $252.8 million and total liabilities decreasing to $876.6 million | (In thousands) | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and Cash Equivalents | $252,826 | $155,416 | | Total Assets | $1,461,666 | $1,491,255 | | Total Liabilities | $876,576 | $899,924 | | Total Shareholders' Equity | $585,090 | $591,331 | Consolidated Statements of Cash Flows In Q1 2024, cash provided by operating activities was $135.7 million, with $34.7 million used in financing for stock repurchases and dividends, resulting in a $97.4 million net cash increase | (In thousands) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Cash Provided by Operating Activities | $135,733 | $157,419 | | Cash Used in Investing Activities | ($3,597) | ($590) | | Cash Used in Financing Activities | ($34,726) | ($38,865) | | Increase in Cash and Cash Equivalents | $97,410 | $117,964 | Non-GAAP Financial Measures and Reconciliations Use of Non-GAAP Financial Information The company uses non-GAAP financial measures like non-GAAP net earnings, diluted EPS, and adjusted EBITDA to clarify core operations by excluding items such as intangible amortization and restructuring expenses - Non-GAAP measures are used to provide relevant and useful information by excluding the effects of certain one-time or volatile items not reflective of ordinary earnings activity[28][29] - Key adjustments include intangible amortization, restructuring expenses, costs related to a cybersecurity incident, and stock-based compensation[26][27] - The company cautions that these non-GAAP measures should not be used as a substitute for GAAP-prepared financial performance measures and may not be comparable to similar measures from other companies[30] Reconciliation of GAAP to Non-GAAP Results For Q1 2024, GAAP net earnings of $22.0 million were reconciled to non-GAAP net earnings of $40.6 million, primarily adjusted for restructuring expenses and intangible amortization, resulting in a non-GAAP diluted EPS of $0.91 | Reconciliation (in thousands) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Earnings (GAAP) | $21,966 | $48,033 | | Add: Restructuring Expense | $18,014 | $757 | | Add: Intangible Amortization | $5,650 | $5,724 | | Other Adjustments & Tax Impact | ($5,005) | ($1,104) | | Non-GAAP Net Earnings | $40,641 | $53,410 | | Reconciliation | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Diluted EPS (GAAP) | $0.49 | $1.00 | | Non-GAAP Diluted EPS | $0.91 | $1.11 | Reconciliation of Outlook The report provides detailed reconciliations for its forward-looking guidance, reconciling projected full-year 2024 GAAP net earnings to adjusted EBITDA and GAAP EPS to non-GAAP EPS | Revised FY 2024 Outlook Reconciliation | Low | High | | :--- | :--- | :--- | | Projected Diluted EPS (GAAP) | $2.18 | $2.43 | | Adjustments (Amortization, Restructuring, etc.) | $0.89 | $0.89 | | Tax Effect on Adjustments | ($0.21) | ($0.21) | | Projected Non-GAAP Diluted EPS | $2.85 | $3.10 | | Q2 2024 Outlook Reconciliation | Low | High | | :--- | :--- | :--- | | Projected Diluted EPS (GAAP) | $0.56 | $0.66 | | Adjustments (Amortization, etc.) | $0.11 | $0.11 | | Tax Effect on Adjustments | ($0.02) | ($0.02) | | Projected Non-GAAP Diluted EPS | $0.65 | $0.75 |