PROG (US:PRG)2024-04-24 13:17PART I. FINANCIAL INFORMATION This section presents PROG Holdings, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, earnings, and cash flows, with detailed notes Item 1. Financial Statements This section presents PROG Holdings, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, earnings, cash flows, and comprehensive notes Condensed Consolidated Balance Sheets Total assets decreased slightly to $1.46 billion as of March 31, 2024, driven by reduced lease merchandise, while cash significantly increased Condensed Consolidated Balance Sheet Highlights (Unaudited) | (In Thousands) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and Cash Equivalents | $252,826 | $155,416 | | Lease Merchandise, Net | $557,419 | $633,427 | | Loans Receivable, Net | $117,928 | $126,823 | | Total Assets | $1,461,666 | $1,491,255 | | Liabilities & Equity | | | | Debt | $592,589 | $592,265 | | Total Liabilities | $876,576 | $899,924 | | Total Shareholders' Equity | $585,090 | $591,331 | | Total Liabilities & Shareholders' Equity | $1,461,666 | $1,491,255 | Condensed Consolidated Statements of Earnings Total revenues decreased by 2.0% to $641.9 million, leading to a 54.3% drop in net earnings to $22.0 million for Q1 2024 Condensed Consolidated Statement of Earnings (Unaudited) | (In Thousands, Except Per Share Data) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Revenues | | | | Lease Revenues and Fees | $620,550 | $637,082 | | Total Revenues | $641,870 | $655,140 | | Operating Profit | $39,817 | $76,078 | | Net Earnings | $21,966 | $48,033 | | Earnings Per Share (Diluted) | $0.49 | $1.00 | | Cash Dividends Declared Per Share | $0.12 | $— | Condensed Consolidated Statements of Cash Flows Cash provided by operating activities decreased to $135.7 million, while cash used in financing activities totaled $34.7 million, resulting in a $97.4 million net increase in cash Condensed Consolidated Statement of Cash Flows Highlights (Unaudited) | (In Thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 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 | | Cash and Cash Equivalents at End of Period | $252,826 | $249,844 | Notes to Condensed Consolidated Financial Statements The notes detail the company's business segments, accounting policies, and specific financial items, including a cybersecurity incident and restructuring activities - The company operates through two reportable segments: Progressive Leasing (lease-to-own solutions) and Vive Financial (second-look revolving credit products) It also includes Four Technologies, a Buy Now, Pay Later (BNPL) company, which is not a reportable segment151617 - A cybersecurity incident in Q3 2023 led to $0.1 million in Q1 2024 costs and $2.9 million aggregate expenses, with consolidated lawsuits656692 - Restructuring expenses totaled $18.0 million in Q1 2024, primarily for early contract termination, asset impairments, and employee severance9899139 Segment Earnings Before Income Tax Expense | (In Thousands) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Progressive Leasing | $35,453 | $71,051 | | Vive | $918 | $2,163 | | Other | ($4,804) | ($5,627) | | Total | $31,567 | $67,587 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's Q1 2024 financial performance, highlighting revenue and earnings declines, GMV growth, and liquidity management in a challenging macroeconomic environment - The company faces a challenging macroeconomic environment with elevated inflation impacting customer demand for merchandise119 Gross Merchandise Volume (GMV) by Segment | (In Thousands) | Q1 2024 | Q1 2023 | Change % | | :--- | :--- | :--- | :--- | | Progressive Leasing | $418,512 | $418,683 | 0.0% | | Vive | $31,602 | $36,530 | (13.5)% | | Other | $48,791 | $13,607 | nmf | | Total GMV | $498,905 | $468,820 | 6.4% | Active Customer Count by Segment | As of March 31 (In Thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Progressive Leasing | 819 | 861 | | Vive | 83 | 89 | | Other | 99 | 28 | - Earnings before income taxes decreased to $31.6 million from $67.6 million in Q1 2023, driven by restructuring costs, lower revenues, and higher write-offs124 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposure relates to interest rate fluctuations on its variable-rate debt, though no outstanding borrowings currently exist - The company is exposed to interest rate risk via its variable-rate Revolving Facility, indexed to SOFR or the prime rate167 - As of March 31, 2024, no outstanding borrowings existed under the Revolving Facility, mitigating immediate interest rate risk167 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal controls - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2024172 - No material changes occurred in internal control over financial reporting during Q1 2024173 PART II. OTHER INFORMATION This section details legal proceedings, risk factors, equity transactions, and other required disclosures for the reporting period Item 1. Legal Proceedings The company is involved in various legal proceedings, with management not expecting any single matter to have a material adverse impact - The company refers to Note 4 for legal proceedings, not expecting any single matter to have a material adverse impact174 Item 1A. Risk Factors The company reports no updates to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2023 - No updates to the company's risk factors from the 2023 Annual Report175 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 780,562 shares for approximately $24.4 million in Q1 2024, with a reauthorized share repurchase program of up to $500 million Share Repurchase Activity for Q1 2024 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2024 | — | $— | | Feb 2024 | 250,000 | $30.03 | | Mar 2024 | 530,562 | $31.91 | | Total | 780,562 | N/A | - The Board reauthorized up to $500 million in common stock repurchases on February 21, 2024, with $475.6 million remaining as of March 31, 2024176 Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None177 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable178 Item 5. Other Information The company reported no other information for this item - None179 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - Lists filed exhibits, including CEO/CFO certifications and XBRL data files181