PRG - Earnings call transcript Q3 2021

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Operator

Good day and welcome to the PROG Holdings Inc. Q3 2021 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. to of conference Investor like Baugh, to now President Vice Relations. would turn over the John I Please go ahead.

John Baugh

Thank you third Call. Holdings to the and good morning Quarter everyone. XXXX Welcome PROG Earnings

and Steve Chief which our Officer. is this Investor of Many already our PROG are our Brian have Financial morning Relations you available a this Officer, and on me Holdings, Joining website morning, President seen Chief of earnings Executive Garner, issued Michaels, investor.progholdings.com. copy release

performance this want forward-looking expected performance the Harbor end certain may future periods actual forward-looking including share to tender the call, that subsequent we During comparisons modified for statements. on to statements statements in found up to GMV obligation expect non-GAAP expectations companies. update at the Company and EBITDA to to believes will that included in be measures affect measures Dutch stock, Safe the undertake our identifies risks our XX-K SEC other operational including provides and insight these cause detailed purchase assist are can operating in million in measures forward-looking new measures any morning. we regarding repurchase comparability call, we content related the Steve tables flows into be earnings financial in found to comments our make have that company's with with this differ understanding adjusted and help earlier results such materially Listeners with earnings we statements. our filings. performance. the I be provision of $X been and other be not cash repurchases Harbor emphasis turn and and over our statements timing make our of, earnings our can our your That are are results financial that delinquencies, Steve? for These EPS from of performance non-GAAP operational of prior forward-looking updated today's There auction will amount, any place no program, call execution, outlook. to investors to to non-GAAP reconciliation we company's to that, periods provision today risks performance metrics billion Safe issued ongoing additional our latest attention these financial of I net release On undue to facilitate we them meaningful and adjusted future filing offer and that and and to under the items certain to press benefits which XXXX our call With the the levels the write-offs certain provide of Michaels, and $XXX that cautioned non-GAAP of EBITDA, and non-GAAP of common release. our which program referring or may will The in shares further

Steve Michaels

as we us be morning. team to out year. proud John, appreciate look good you, morning, all I Thank this of everyone. strong I you close a couldn't more joining our and

PROG replacing market of offer, our combination debt the in cap be priced this we we which expire in capabilities which company. Now new commence towards the we Holdings of expect lease This trend through opportunity We and on and under e-commerce quarter the X our and in that represents believe plug-ins believe as anticipated while our to growth common announced e-commerce and price, Technologies. current from addition of creation light to stock in the program, between accelerating approximately morning, technological remain anticipated. a expect Pay earlier our XXXX priorities. growth, customers Later with to We have top the innovation tender represents of on a funded and attractive and new continued ability which cash. impact X, million a asset an XX% positioning has benefited pandemic's authorization, of our will of share partners to of continued the preserving strong invest the be as shares February. release per creation authorized repurchase profitable significant up at saw margin benefit will than through tender the growth The platforms clear are our range normalized We at demonstrations acquire somewhat M&A, great progress Dutch performance, value Buy PROG and long-term on repurchase QX, updated purchase XXXX. Holdings both excess a The offer cost organic offer made ongoing tender public an first shareholders. although we acquisition fin-tech authorization for to of in capital. X, our value our Board day modified standalone through authorization navigate of to and we our high performance, to to value tender also $XXX to billion the our company transaction year portfolio of new significant lowering end we a commitment November portfolio, exceptional auction the growth the our merchant announced Tomorrow offer commence in million $XX $XX the have to new $XXX and This returning intend $X December offer an share capital share In our and

will of November, my and the last priority incur the top We and for also believe too management expect the leverage cash allocation spin tender of capital based been flow additional to a increase for resulting Since strong and transaction, from fund shareholders Board conversations business. by profile the EBITDA has them. in our our many to with on the offer supported be we debt

holding and maintained Holdings, that very following Our Leasing strong spin with sheet. PROG established both well balance last Financial Vive remain models unlevered the Progressive company and proven a strong has year's with and are segments businesses started

will $XXX program priorities that cash million on February, PROG our earnings with you repurchase excess first remember, As call announced out capital in flow. and share laid Holdings our as we allocation funded

repurchased program, Over the including that past the quarter. months, in third we have $XX million in $XXX million shares nine under

our driven Our and decision alignment three accelerate by the purchases to key significantly is of share expand factors.

First, that our confidence environment in opportunity more the for long-term low our own investing by growth; interest cost an our creation attractive and value in second, third rate aggressively debt. affords shares;

are the we shared, previously times of X have range EBITDA. I to adjusted with net leverage approximately comfortable X.X As

and ongoing share this attractive needs, our Given tender our robust repurchases for of excess this range flexibility M&A maintains allows in offer. continued beyond opportunities cash growth free the organic leverage to flow pursue

influence the decisions forecast the size modest want own of invest of strongly and our expect to that not on I M&A on add opportunities, have tender believe ability our the capital reiterate addressable share purchases. business future of and to ability virtual amount course, in key general future we our capitalize price Of or diligently our to future to market. execute will the needs the leverage conditions, to factors lease a unserved impact point we stock, will offer economic large other to the here, our any

pipeline be of consider we to we when a As said on optionality that liquidity and have convert opportunities. strength access consistently, strong looking rely sheet sources we large to and balance to

advantage forward to and to provide of strength further sources competitive us. continue going maintain to expect they the We leverage those

Progressive up Now our third which performance. growth our portfolio both I'd profitability portfolio like of and XX% Leasing the the of against line third reflect year-to-date, to in and expectations. XX% normalization to in turn and is for GMV backdrop with increased in our results, accelerating continued strong quarter our the quarter modestly segment

As GMV unfavorably rate. POS store acceleration year. more that last QX partners, shift by and growth to e-commerce, comparison when robust stronger in prior I drive schedule we by an seasonal the the of quarter's we than have a was call, stated GMV our did we QX last even include to on QX's in to year where should promotional COVID planned exceed impacted growth many an easier presence Factors expect traffic a

on deliver the of provided previously growth for in our outlook teens XXXX. We well-positioned GMV are to mid-to-high

supply e-commerce expect and this and track on As mid-teens QX always, XXX% the in E-commerce year-over-year our GMV total for grew in driver macro chain deliver a the growth. impact significant of change channel from XXXX to We environment, global a from including XX.X% in full of quarter. contribution could GMV GMV represented the to key GMV a year results. remain in be XXXX, X% up future the

help innovative to that integrations customized and e-commerce drive rates. and the some our retailers e-commerce including in and Leasing make in to these Commerce Magento designed growth use expect technology platforms, is user-friendly launched We and to conversion transaction largest increase of X more plug-ins WooCommerce Salesforce to for plug-ins speed progressive with key future invest and GMV. products Cloud, We we continue easier

in and medium-sized focused on SMB the and retailers. growing and We existing new business have small increased our market we investment with remain

serve we a individual retailers QX, lowering manage management lease access cost Central, details ability our customers. retailer rolled while and PROG During time, that greatly creating to and for platform a simultaneously over out SMB Partners’ our better enhances to experience

in the realizing benefits and products these We to the to expect come. initiatives of begin quarters

business. stimulus significant and of As XXXX and in We significant levels short-term has stimulus had XX-day for headwind benefits much we unprecedented delinquencies payments low growth federal record been in during elected into a option. have write-offs and unemployment cash as the recent the purchases to and our were on and XXXX quarters, a portfolio noted enhanced Conversely, customers experienced impact early purchase lease pay opt to or pandemic. of GMV more our

we our board. quarter, the typical toward see across last beginning commented trend we more As behaviors back are to customers

saw In the levels. last federal to during quarter year-over-year, through increased temporary for QX. and purchase for levels. subsides, fact, pre-COVID Write-offs but and our trended key remain Opt-ins stimulus XX-day closer and support as portfolio of pre-pandemic early economic metrics option October, sequentially below impact other has we down the period returning

of expect noted to X%. write-offs range As we the our we normalize have recent continue pre-pandemic annual quarters, to to in X% to

end that, related pool will levels. indicators moment. Having and are than normalization we line portfolio outlook EBITDA primarily As pre-pandemic updated outlook expected with the Brian range. morning's of to performance our sooner the lowered is our performance, in earnings revenue This seen the fiscal XXXX provisions by adjusted discuss this for lowered said higher early as driven and in release, in reserve top our metrics of a

We have stated within do we in the write-offs X% annual X% that the our of proven to intend of we can to past and range years performance manage to over the continue future. portfolio our several so

$XXX an Our quarter increase to compared of revenues million the were X.X%. $XXX million, in last consolidated year,

two XXXX. of has March low Leasing our grown Our in Progressive consecutive portfolio segment now quarters for in hitting a after

margins EBITDA to adjusted elevated compared remain Our when norms. historical

EBITDA adjusted target While did prior rise year, from to XX%. the SG&A XX.X% XX% portfolio above strong performance our the margins annual our expenses drove of

margins prior QX and decline expect as QX to continue adjusted We to portfolio EBITDA normalize. from trends the year QX,

to Finally, now employees turn I our to they for partners all to our will strive want tailor results want. discuss solutions in and thank call to we commitment to consumers Brian that and Garner, wherever as enable I our financial CFO, our customers innovate over who will greater however, their Brian? the whenever and shop, of will detail,

Brian Garner

Steve. Thanks,

in reflect dynamics XX% stands portfolio margin leased year The continue annual in future to trend results our to in with material result nevertheless expected, range. continued accelerate, annual key less these, ago low portfolio quarter net as compared historical normalization growth than drove still the we strong to XX% higher quarter, write-offs, and a Also, typical to benefit range. third X% levels decreasing metrics, asset revenues. perform period early EBITDA of which of the X% gross our along portfolio XX-day to towards including record better the which other as quarter, buyout exceeding to The write-offs

we ramp to GMV leased continue our as the expect into in fourth We initiatives. gross this on quarter, assets execute

customer due history. the As I important Progressive in QX XX.X% driven comparison of results Leasing's Leasing programs, results. Leasing results government when XX-day performance buyout an revenue toward financial the $XXX Progressive to Revenues EBITDA the the segment, reflects XXXX. $XX.X the trend comparison of The increase a an XXXX for were million backdrop from to by year's Last record present Progressive for or performance quarter to normalization period year-over-year million, compared highest we payment rate which rates. QX of stimulus it's X.X%, margin to growth XXXX declining and the third for customer were unprecedented of payment a recall segment move had the

second the consecutive benefit grew period. The key XXXX. for size we double-digit top-line expect of portfolio portfolio growth the gross This XX.X% same since year-over-year, QX asset XXX leasing’s as the of third into in in versus in point see first We an to basis represents variables trended yield quarter lease revenue rest acceleration growth QX, gross portfolio from we closer improvement. third last year-over-year for a quarter Portfolio the pre-pandemic and will XX.X% XX.X% balance of leased that of acceleration our a continued typical year, quarter decrease gross and was the margin remain period as margins. to gain

X.X% for the on As technology, public occurred last trend for of conservative ranged the XXXX. period, the was and $XX as in Leasing Leasing’s X% XXXX height this of quarter, X.X% reinvest Progressive as of QX they XX.X% more quarter and historically spend Progressive earnings in I were the has XX.X% revenues operational X% QX million versus line relative year. standalone as in of for prior pre-pandemic the of activities. to higher in and in third year, to in SG&A company to the same increased in and a million the cost provision the the at segment compared between we efforts, $XX.X is sales QX was comparison, of basis. efficiencies the on towards in investments we call spend revenue-generating with annual period mentioned the year-over-year write-offs an levels SG&A SG&A XXXX marketing, In expected The result revenues year. percentage pandemic

QX stimulus more increase of write-off we the posture we the we on addition back performance benefited the low adopted by in call, payment in discussed driven pandemic. to our levels decision when our As saw environment, to strong to half earnings XXXX last the all-time expected XXXX from we from conservative due

write-offs of adjusted the with X.X% write-offs and were for million, the We XXXX strong and QX, QX for reference, $XX.X in XXXX. of and payment line believe X.X% in Progressive third the respectively was XXXX EBITDA X% seasonally QX drove our the be quarter For QX will margin. rate. that of in Write-offs QX pre-pandemic XX.X% were Leasing performance further in XXXX X.X% quarter pre-COVID typical X.X% in Adjusted XXXX. a third reflecting

last compared was to operations was $XX.X $XXX.X million last million for XX% lower the including margin from consolidated for results, by relative of the with XXXX, We to in to cash of $XX Vive year's is the adjusted a quarter our record XX% down favorable ending and third months XTechnologies quarter consolidated businesses year. portfolio $XXX.X historical generated million. $XXX.X and driven associated for million write-offs. position million performance So, the of EBITDA, period same the of Financial cash our continued XXXX, and primarily annual from to performance the levels, strong first range nine Pivoting and debt

to and $X.XX, We GAAP have compared $X.XX the $X.XX $XXX period under million in $X.XX facility. the revolving available XXXX. was the credit EPS year for diluted compared a ago our EPS to same was non-GAAP

our range entered the $XXX billion. as $X.XX earnings relating release, As trends of lowered This outlook range consolidated the are incorporates a fourth revenue noted the million recent our full to we EBITDA we for metrics. quarter, XXXX and $XXX to to adjusted this performance billion to $X.X morning's year portfolio outlook of in normalization seeing to million we updated

begin second July are and significant Specifically, and beginning to assets, XXXX changes are current reserve the receivable, in anticipated driver outlook. and than half the revenue, in increases will outlook provided which stimulus when the relating our for write-offs release the results strong impact leased reserves to year we of impact primary the which seeing impact and payment these XXXX pull-forward reserves accounts XXXX by the the to we historically into The after of relating driven the the performance. rebuild environment of into more

translate As of into next margins performance remains pre-pandemic over EBITDA early will more and portfolio Steve and line in strong indicators quarters. few mentioned, with write-offs we believe ranges the

a per $XX.XX, X.X weighted X.X of shares $XX.XX an Year-to-date million were million. Finally, $XXX.X totaling company share, at price purchases totaling average million $XX shares acquired during quarter, the with million. the average of

and offer, to call, of new operator? favorable over to billion this things repurchase levels press at as the which the turn $X to for I'll operator authorization. now the for shares we detailed release, will price in a morning's the continue Q&A opportunities the tender acquire highlighted look Steve Beyond under portion

Operator

[Operator you. Thank Instructions] Markets. first comes Anthony Our from Loop Please question Chukumba go Capital ahead. with

Anthony Chukumba

Good thank taking for morning, question. and you so much my

the not guided to the a to given X% going that still statement rate. about historically, necessarily do are of normalization, you not So, sort post-pandemic right that’s lot there sort about always a makes versus you've anymore, talked the to right checks fact X% about of think changes that's Or Is any write-off maybe question kind guess which sort the think range? long-term? of or rate way but sense my How of you I that? to write-off is, pre-pandemic of the

Steve Michaels

Yes. for of Yes, several you, will environment, demand include and from Anthony. also morning, GMV standpoint reserves we pre-pandemic from is flexible that about frankly, we've more buildup and it we've write-offs a for quarters Thank believe the actually for we've increased payment normalization will rooting quite that a discussed it and been include been talking This customer the while options. Steve. normalized this because in probably a it behavior

and it's - we're to targeting. range didn't X% appropriate right was the we think that period to be our on XXXX in very portfolio X% an yes, business. that guideposts those X% will XX-month put way living trailing Specifically, X% range to until the range no run we those that X% X% hit, that, out to we the write-offs with when pandemic deliver within range, distant memory is the there ability annual We we tightly. are is We the early the believe and that's an it manage a and to demonstrates pandemic which believe where

data are the to initiatives, deliver from learning our growth that on us have within evaluating that is poor laid and a help range as comfortable out. also performance. in We to well earnings X% But us the we for as constantly believe X% ranges we've we the

Anthony Chukumba

Got follow-ups. quick, just helpful quick two then it. and super That's

I on to the got guess, Just question, and then, pipeline. XTechnologies has updates partner ask retail any somebody Thank you. the

Steve Michaels

kind is Holdings, I excited drag job little last to down into the the is and PROG for get app tech we team. awesome doing X EBITDA the getting of spend great South appreciate a just a there team that's as of bit We're start-up. great Florida, that. category integrated great Yes. a notice team, with and will in certainly a talked and you'll about an quarter platform a a another But

there. So we've got to some investment do

multiple product We conversations would - use just had also to where include product partners done results intel prospective progressive had conversations. with solutions. partners about we solutions. how we partners. good good We’ve very some We've conversations ecosystem. for cross-marketing multiple increase existing the about and retail are We've grow are to retail PROG and see limited had getting having good those the We've retail with can

then, So about there have solution this not VLTO is retailer will excited about partner transformational we out their And lot early incremental to it continue frustrating pipeline, will answer, are a talked know that. there having to that time But way. in and it's finance as stack. we business is a Obviously, that continue you is a opportunity every I believe as we we to the of but have a on very update along excited are we not the very run innings it it, this That's and them It's to there partner, look development yet. will process forward the as addressable in developed so unserved the but around why out there. we an and happen. difficult fully our we wins that that's and continuing are year, have of progressing announcement conversations market about it's

Anthony Chukumba

much. Thanks work. so the it. good up Got Keep

Steve Michaels

Thanks Anthony.

Operator

Joseph question with Please Our ahead. next Jefferies. Kyle go from comes

Kyle Joseph

taking for questions. my Thanks morning. Good Hey.

quarter. about supply talk comps? more the then, credit to about second walk was GMV. you And wanted Can it chain Just that - Obviously, issues? through normalization. Was deceleration a difficult the us talked you versus it

GMV back pre-pandemic You out. levels your how talked normalization about you getting of anticipate plays kind kind of toward as Would well?

Steve Michaels

say, And guidance in well our GMV are Yes, we Yes, that thanks. GMV giving last I did was quarter. year. the for we confident the would the we said so expected. GMV say, mid-to-high in for we expectations – our specifically on Well, call line quarterly teens the with Kyle. full without

have are in we We rate growth a that and still than range knew would QX that QX. higher

about there to inventory line our the a and we know in and times I if that in for you and of was that supply canceling expectations. the that in, coming some if before the exposed be are agreement XX extent lease retail But supply we've weeks, furniture Certainly, delivery with than, chain, And a long outages wait of not it's as QX. higher our likelihood ready execute So, us, group we expectations that are available of different for been to a have previous in on now. customer partners that may is exposed to calls, immune talked chain much, are much may from number to XX it.

that our our with mid – to headwinds, but So, we and maintain will and or for believe we still XXXX. that by impacted even hit high-teens those will continue pressures we to are GMV be,

quarter two talk can GMV few or lag. months that or with it headwind a normalization, the but The or come model. a originations. there portfolio is probably talked we for been simultaneously not It for reserve is happening a lag or faster a we've is, with Brian buildups little happen happened it's anticipated, us of unknown is does and it's that expecting about It a bad again, believe it thing the removal faster We a little on than a these about On comes it. will more. a, not

XXXX said, So, stable for environment a plans on are got this as more pandemic XX and the together and months. us views watching versus overall, predictable in we February. over our and operating we we've that But normal our last are we've all and we'll is putting you update

Kyle Joseph

a but inflation about of for seeing, on sort to then to and Yes environment costs, are this demand talk it. follow-up demand you the essential of you would that you greater sort talk expect about with of and see in also kind prices Got credit? normalization, leases for consumer higher goods

Steve Michaels

think yes. answer both is ways, right. short Inflation the I touch mean, I

you just definitely what said a So, increase. figure extent is To need in for should payment expensive, factor a get the bit flexible little durables consumer more options the big that. that

watching On our prices the flip we're are portfolio customers performance, the prices because gas side, food probably exposed prices. to rent and higher and

And that so, other double-edge decision on bit feel a compensate confident ability I of a the to side. front we And portfolio little to a think sword. slight have the But side, is manage for and the a then, the we demand it's from it help.

Kyle Joseph

I one as pipeline? how as at from it. one to well last be retailers, NPL. waterfall XXXX you I'd the the remised didn't ask impacting the Can And if that's me, Got about be talk about going

Steve Michaels

the the in to of the referred it left other about we've are profile the you complement a competitor, used of gets Yes, term. the of the out in be, and not consumer. continue from you not part I When product, spectrum. and products when most about the not the I'm know specifically, talked also I Pay for we to on Pay the as spectrum, from to as the NPL before, end continues NPL active to of average longer when kind the a really think I a end own broadly term leased only our X sub-prime it's X space. to about order size, the not, the do think installment they But talking loans, in well, go but talk products,

education options the the stack of the if standpoint, the we the of top some they little sees an Pay the provider. product the We've to a offering about that, of retailer widen mindshare talking get bit retailer much of all take some a fully X their the It because in pretty because NPL customers their thing, funnel. But prioritize is to and the positive prioritization, as and be, talked that headwind of it's front of less finance payment developed from So, in a I into that. initiative. some an could farther the will LTO in everybody power think IT

Kyle Joseph

Appreciate all questions. my it. Thanks for answering

Steve Michaels

Thanks. Kyle.

Operator

next America. Haas comes of ahead. Please go from question Our Jason Bank with

Jason Haas

questions. key that and am performance It the your I national like at retail large curious quarter. Hey. the was about Good my source morning sounds a of taking thanks partners. during for strength

if curious about driving talk could what that. So, was you

Steve Michaels

about in Yes. we great without Thanks, Jason. still we Good large morning. our getting I have continue partners with early are partnership to and specific, just guess excited being the innings.

innovate So, talked appetite as increasing to product and we've for and quarters, well an it the luck And and good partnering about and on continuing had we've marketing. previous make collaborative just easier more frictionless.

et do of do years partner as you bigger seen three, we with the have and cetera. at think, I get as to and in, in a past, the scale. those comfort that that. But And still more expected would you we'll to two kind retailers just to and work in got so, have continue we've we've The it's more

that in were suggestions build happy the are retail that couple partner and first than they to maybe and with so You take your quarters. they credibility more

innings, specific about GMV be So, would a product we to roadmap We to are excited season. help the is still the of conversion the early for like in I with, said, - that but it's to holiday a not good the retailer will application which a forward only and very innovations production. funnel got exciting us. be We've also kind retailers look of great those funnel,

Jason Haas

supply have been very shortages, That's topical chain mentioned you great which And then, lately. to the hear.

And impactful more getting quarter? but GMV expectation your worsen. So to XQ. just the I as impacted am people as those just, acceleration, shortages look visibility extent would an less out or your think whether guidance of into impactful, that be expect within curious have you be could to if what could curious then, those about And lot we I a

curious, risk. potential that's a So, extent what to

Steve Michaels

to talk definitely, is there There is retailers It's We difficult Yes, question. us. obviously. our I no mean, impact. every day, for

good know in comps up up from And We've that so, inventory it balance for versus that the more show an not credit or but they tax shortages retailer, where the in a cards and are in talked personal we inventory it payment purchases in of could position. past even show about options. in-store have the we feel cash composition of toward of or their may the sales

the But Having so, I still QX high-teens and to could before July said our on on an no that holidays. masked bit, we into wouldn't even get it's pressures numbers the certainly of And we it and speak chain. specific mid is I our it stock growth but selling we good what even that a got. line to the to have that add-back. of But sold GMV at being deposit will confidence question. GMV in the or and lands. impact expectations still don't they've have QX supply - we There hit even printed GMV plans accelerate retailers during be ability us. got, in the standpoint out have that's sales believe they've mean, are laid a number, facing that, they We end it with little were they the being from the like on

Jason Haas

Got makes Thanks. it. sense. That

Operator

with Our Raymond next go ahead. comes Bobby Griffin from Please question James.

Alessandra Jimenez

for taking our Good on morning. questions. Bobby for you Thank This is Jimenez Alessandra Griffin.

quarter. largest recently have programs or GMV driver further strong new the First, to been some of the of dive the platform? was I bit in the you growth in launched GMV e-commerce customers plug-and-play growth, into including the What wanted a on existing the working e-commerce

Steve Michaels

our of in are specific the quarters that surface. and WooCommerce, have Magento partner to an about using us. the to and you e-com our a question But for plug-and-play - these scratching optionality answer while just question. to retail we is GMV – coming is, thousands Commerce exciting help capabilities it leading really thousands be thank really the come. The e-commerce Cloud, smaller - in we with I like the of these our us retailers plug-ins from years the specific we that's excited growth e-com the future we're with. for majority platforms continues are are about and Salesforce opportunity excited the that to GMV And your portion X, of channel and feel still things penetration larger But E-commerce the grow is have Yes, partners. the to those e-com to will growth the

Alessandra Jimenez

Okay. only And you XX-day credit That's then, see lower accounts? tax And accounts on or you your do what at child retail larger the impact options business? helpful. believe across did the had

Steve Michaels

pandemic. forms of season that a child Yes, we've been of it'd observed. in difficult just rounds same generally of during to various which is other credit pandemic tax before the not one kind the stimulus stimulus - see, be tax or the Whether of has case types the the

really seen tax an So, impact child from we haven't credit.

certainly, back of the mixing say think options, We – ingredients a here sit portfolio checks. a - of would of still toward question. don't it receiving was at of look It's and has and could trending which hurt. normalization. some normalization. more and a lot a much monthly lot board. we monthly decline about and the haven’t in bowl buyout check not it's noise our But in have have seen in the seen that your hurt. the across I as tax performance phase and our the XX-day in we've can't expected That's when we our actually child It's there is at pretty credit, customers portfolio I we these retailer-specific It's talked

income. that impact from very And direct so, it's the difficult see to monthly

Alessandra Jimenez

best Understood. luck year. of and Thank you of the the balance on

Steve Michaels

you. Thank

Operator

Markets. question next with Capital Brad go Our ahead. Thomas comes KeyBanc Please from

Brad Thomas

taking thinking hoping you about an seasonality Thanks Hi, last for fourth see for think quarter. write-offs year you how how Progressive all remind quarter? morning. it bit year? the a little Obviously, was for do And just unusual are about question. the us my normally for for fourth How was about it could I good for trending you year. you this

Brian Garner

this The the in calendar year. lowest Hey, Brian. QX write-off Yes. is - represents the typically percentage

or with mentioned the portfolio - us Steve perhaps range. we be X% typically would of build low up still as I happening. dynamics to normalization It's X% not to see. while reserve below will that is there think at as that I expect

reserve we write-offs at lower for say, normal, up XXXX sense. that fairly QX typical is the build example. be what a been in than the performance line that we experiencing bit will but don’t and with it toward close are in – of I trend so, muting we've makes And XXXX, as But back of to

Steve Michaels

don't gave Brian and Brad, numbers, I those And want to misspeak.

So what of for and were XXXX QX they XXXX?

Brian Garner

QX of XXXX was X.X and X.X. QX was

Brad Thomas

great. Okay,

you year-over-year? go be up as sequentially just clear, to to well it X.X, So, from expecting are as the

Brian Garner

from doing up we the even to factoring kind into we've been am though a reserve threading. I and somewhere that's historically needle X.X this with close and of Up where then are that. Yes, build

Brad Thomas

decisioning? trends, just Very in do or trends those you doing be you where may underwriting you about think about as approval you're are and and position been a your Or decisioning we tightening to like How things should in feel think with helpful to we like think rates that, you line? able keep that? about some need as have and your

Steve Michaels

team decisioning. are is Yes. Well, and Steve. I adjusting decisioning. evaluating Hey, really first in The dialed mean, constantly this we Brad, has of in. just tweaking all,

rates approval composition. with some continually customer bit. we've in several the higher composition about of approval we of other that which a tightening repeat had the pre-pandemic, a increasing quite several changes, over pandemic quarters, we've a about had we talked retailers retailer with during with that current higher talked some obviously of posture along years, after But the we've are having are than last the As those changing addition over slightly a rates the last come

that the And see what top rates of wouldn't we posture. an say so, more higher in almost coming of are funnel. a I the aggressive approval output decisioning It's necessarily

indicators with trending while are telling in think back It's line is performances expectations. pre-pandemic, days, at And bad we We days thing. at finger constantly so, that indicators. But pool at is we which X look these don't scale. a and look the XX us has on our all performance towards the line overall in XX days, our metrics our and early pool with those expectations,

It's while I we to manage comfortably where something we have And so, that do were the annual would the tightening. never not rule before within we that X% feel to now that range out X% doing business pandemic like to right within some

Brad Thomas

And more I existing had with about just Steve, you are I that one think, pandemic, partners, during things it can helpful. high me your list. to having Progressive ask really their if retailers was on the more conversations focused on don't That's many and retailers were seems the pushing that really that they

normal about more So advertising, you Are share you them here? What with creative from can them the observation Progressive with are that conversations a my us reengaging own world. retailers promotions, take toolkit you Or seeing more as tools with Progressive? be in been of more we have training? it’s tidbits more more seeing should other

Steve Michaels

program. and to retailer retailer Yes. with not it's only you're When year progressed have yes, comps, XX% are that's existing I comps, of business and even function know your it's an all couple and dynamic with incremental our printing as drive the point. this has team our they in continue that a we to a right. an interesting comfort to the and But but is to interested of a - things, not seen desire talking also

but same like but it had they relationship the inflection know nature are of management as And direct agreed the of opportunity naming do got with campaigns promotional are exciting internal also to onboarded retailers that a ones you Progressive names, reach and just we've years And logo where major have we've the some that they've that two campaigns toolkit. co-branded that means seeing a collateral mail for maybe XXXX for their promotional for But include that digital we've without us, of of co-branded. Leasing and And in we the an so, had retailers validated newly old for time kind at call because least made retailers our kind fashioned not I’d of board, are in actually our across point retailers, in first lot future it's logo email, and to number we kind the had that's And that had may decision. seeing material. for we yes, once does change. we on

acceleration our in will are the excited in partially QX. about with as we continue help us So, We GMV future it will think of that. well. pay to dividends But that periods,

Brad Thomas

great. That's much, Thanks so Steve.

Steve Michaels

Brad. Thanks,

Operator

Caintic next Our from comes Vincent with Please ahead. go Stephens. question

Vincent Caintic

Good Thanks. for Thanks taking questions. Hey. morning. my

kind kind we getting But of of just I based to on and the quarter. just will be then, fourth XXXX a First, know guidance question guidance February. in

like So everything it seems is of kind normalized.

kind is X% the my jumping-off any to the got kind margin, calculate metrics going quarter if wondering our with estimates back if to X% looking you. or are am quarter is year-over-year, I and math the growing seems has write-offs And fourth it's the as good update by to XX% I've when like of anything say it GMV correctly. EBITDA point like for be guide fourth let's unusual I we of of just these if are go-forward. the a Thank So,

Steve Michaels

you said in I Brian answer I I that to your but question, just think - the QX. start chime had with X% I'll grow can not GMV and Vincent. guess, at implied then question the in. to Yes, was

said? your had right, you that what you math If is

Vincent Caintic

Yes.

might redo correct I have wrong. if me am please think that, I so. to I but

Steve Michaels

mean and are mid high-teens. guiding to we are, to growth I Yes, we year-to-date a GMV XX%

growth have the a to just wouldn't of maintain to you think, it high-teens mid type so that I those X%. maintain order to be in So rate

not We guiding just to X%. are wouldn't make number, obviously not the to that I wanted it but - are we sure be

the guide? on Brian, So,

Brian Garner

remarks, as Yes, with portfolio the watching QX Vincent, decline think, into just that ourselves here, as QX. I in think accelerate I as things a first, to the we've accelerating in couple into I in expect the we a that mentioned to QX, then, my respect from And we encouraging prepared in and we QX is position again. XXXX, and metrics acceleration growth it seen very here are

launching point. So our that's

leased see is good a you'll which portfolio, year. to as exit that we so, assets gross as the And the balance in on position sheet look

necessitate are think that and you you significant had not just undercurrents customer would is happening, did reserves a the financials piece reserves as the half other was extremely and year the I to, the The that that about strong performance in within front Steve into draw The of the this back really books. half trends on of exactly year, paying last the saw right. is decline the we

weren’t And reserves next we we year And an point just to happen. is have down. occurred inevitably was the was a or that those that to normalized began and bring going to at them rebuild portfolio to future that year eventuality so, this we knew whether

getting outlook was And the us while you- happen forecasted XXXX year, I for so in a results, dynamic anyway. without was year, caused pull-forward our to take into certainly to this at of that different into it's light that look think a that this something again

And I accelerated Steve exit the for those the and so, GMV picture And that XXXX it talking QX. well we see, is as into the year. bodes a undercurrents think I growth that main are about

just the happening of outside So, while and I would respect bit X% there's answers stages movement to watching be check bit financial in think to are what a cetera, X% early lot et write-offs they we in are are questions. the sooner. about. indicators early that we in expect. they With delinquency not up, optimistic Hopefully a to of terms staying of moving that It's your typically a

Vincent Caintic

- like, fourth Thank am throughout is you think that and that's helpful. box, guess, it's your your fairly that's the underwriting into And are when been process you credit right not really actually we're it about on going changing quarter. like this consistent I that Okay, through sounds you. at that that's, as yes, I pandemic all entire

Brian Garner

standpoint, the of Well, we've Vincent but last been we fall in at it box. of the or it into for, and decisioning around that consistent we've tightened talked we tightening our pretty decisioning months pandemic, some spring a of so very back - XXXX about from a bit rolled the call onset six as the XXXX starting the

but constantly are not couple in finger tweaked really they're the that being not, have dials And so dials that nothing we much dial, evaluating is I the the said we're as really yes, quarters. on our the last and

Vincent Caintic

when look remind that cash is to it priorities can your that the what use you. free capital you free wondering what can nice for, and return large and the the of company you at flow was if putting so, Okay, the you us generation work. very share avenues And different perfect. next your are. Thank buyback the cash And question, I that was see to

For in this can expect about capital what Thank your I how particular the detail, buyback. more do structure know you to much you debt talked share do you share raise fund do like you buybacks? prepared to of your remarks, in forward? about it's, you. to And billion but like maybe expect $X sort look going

Brian Garner

business. and judiciously. and year a growing opportunities efficient past spin not in acknowledged evaluating has was to Vincent. that Yes, far high we the organic fortunate invest which our allocation the ourselves the just, are that at looking almost our the focus great where in on capital reinvest business ago, the growth, prudently a reminder, can last Since in we reinvest And I've for structure and we rates, in capital thanks. really most and to are is Board we've year, our of capital are as self-fund - net been priorities in ways profile growth excess cash pretty and and capital cash now. position a flow we’re deploy very And

you when we've capital strategic then current our growth we're and Then and tech excess okay, to shareholders. about and the and there of how talked of return is, and be box is capabilities that capital that's check looking the of to platforms to well, thing say kind that. would so, M&A And organic look third extensions for and and And opportunistic products. plenty you for

a we amount against shares Board February. the and that do of market million purchases to tune average our in. $XXX And repurchase daily been back and executing been trading aggressive get the Based on more framework in to authorization that $XXX volume, authorized to so, that's We've open shares difficult announced million it's year-to-date. the an of

do that that's launch So the of the reasons to we planning are to tender look that tomorrow. one we

have X/XX cash. As here sit on that we we still net

this raise to would some look tender. debt on execute to we So

all strong right And got because strong of so can leverage supportive group. the But - the to now. markets going the what business and markets rata how the said take bank We've rates capital we environment the or look you haven't model balance look attractive. pro and we great open. are We great But and debt advantage a soon forward sheet. fairly is credit pretty that. the those public form as sheet, that some But We on updating also to to available position and imagine, are market do we're put on balance attractive in are that.

on we strength billion remarks, to where comfortable focused from But we for net balance the But run in will reasons on tender future to to intend strong structure range to said sheet with that will we we focused also the the tender, not launch are that times, $X the X.X number prepared million are on decent a leverage which retail current is today. a I've and existing tomorrow. we We're which in of X we're conservative that, a the constantly now. are my executing said I launch, kind outlined and of perspective the having $XXX past in fact partners. that want that project We right

Steve Michaels

when respect can look you free year-to-date, are million nominal with flow for $XXX generally adjust And which speaking. flow Yes. and capital Vincent, cash from you then, cash that expenditures, operations at pretty to

environment. half, the account, that's generation, organic I sense forward a investments business. of the cash been you of stimulus But growth. that meaningful gives that think first in I think it's into So, a made power elevated the because the our taking we've of in bit the Obviously, and going

on there optionality. are I going we strong very forward, – So, a for is think footing

Vincent Caintic

Thanks much. Very Thanks. helpful. very

Operator

ahead. Anthony is question a follow-up go next Our Markets. Capital from Loop Chukumba Please with

Anthony Chukumba

Thanks for dip. me taking double my to question allowing and

to on be wanted times First times just competitive thoughts from think assume earn terms are if your what gone estimated guess, out. of American XX I the you acquisition the questions that I impact the deal of XXXX landscape of that a stock, Finance. do current deal? says because deal week's two I has cash announcement what first what EBITDA get perspective valuation mean, thoughts from somewhat will And of then of related. your that So, just the last right, you the also, that about at nine in your

So, why did how do where part the just your to Or is? you Thanks. that's maybe tender think thoughts. about of you stock offer? Love your get

Steve Michaels

consistent I Anthony. in be that. Thanks will Yes.

a industry of a above. compliance think it's profile public helps positive our from and think companies that from part that industry a the standpoint, I competitive the competitors for I from from standpoint, standpoint, private all a standpoint, become us

might as I difficult think talked positive have expectations. that the that private have about I or it's So transaction not view in shareholders single compete regard. even I've that how the to margin guardrails against same companies somewhat some

a positive got and high that company is first think VLTO and So, decent positive. I a a be not a loans. all, right. it's the of play their is infrastructure I Cash a well, APR having under of thing valuation that They've pure From of being kind will installment public think First size business standpoint, player,

not us – not a not have percentage that believe that why business that's am that's American First have to sorry, different against for I a Finance, AFF - and share it XX other so that because in a bit and vehicles really of from should profile a of different are one than AFF more times we multiple standpoint. we different segment. valuation we like use believe sitting sure So times. we multiple these bit to is, little exactly we earn what clearly, but business First the are a of aggressive. am But Cash, it's got don't we of out where XX higher able repurchase we're EBITDA command program little profile a But are levels reasons I should that get the feel – undervalued this and commanding sitting. the for larger We attractive to multiple execute be a a

a tick it's the think thing for I valuations on good net-net for industry to hopefully the up. the will so, - year and continue And

Anthony Chukumba

it. Thank you. Got

Operator

from Our Please Goetsch Loop Hal Markets. comes next ahead. with Capital go question

Hal Goetsch

merchants Pay shift where a mentioned is taking chance becoming if for acquisition. Buy they first channel or you all if that this play firm market the market you. website becoming the to Fin-Techs Thank wondering the you what There quad financing the was at just co-brand maybe this is the visit providers financing place option use where your customer funnel from And can the a like of their Later or with of link you the the retail. Now are in to I customers. some profile heading and Hey. with toward a them literally back

run. that think I be might long thoughts will over plate where Thank your your it's in go you. the on

Steve Michaels

Yes. on partners we are to partner we our our direct is I couple I virtuous mean, continue digital retail thoughts preferred engaged into the repeat us. network, network. kind use that a couple customer And the there our – partner every add on new increased you. We've business. cycle guess, channel logo into - a back Thank listen, preferred have higher we got customer of channels we can for because that. or is, also to - a it's an our of great acquisition them One but a retailers, and time for and

deliver their into our the are we incremental also our talking both saying and our us partner just their past, a for not on grow us we're direct you we and through accepted are into retail not we retailers also Vifor which as to helps channels, business into in ecosystem but are with that and GMV And in their so marketing rails it we've our motion discussions only say, similar driving but retailers, what environment. consumer and consumers is and riding Leasing helps where us attract can is them here Progressive direct hey talked about but about

our so, referring - effect minds into. we of something the that And is and this certainly to are are you that network leaning front

Hal Goetsch

very Okay. you much. Thank

Operator

This over to Michaels conference would for to closing Steve remarks. concludes I the turn our like back any question-and-answer session.

Steve Michaels

and offer and and view Thank very forward you updating you us look your to PROG much. quarter interest and XXXX. today. for our appreciate in in next on tender support that you of We joining this Yes. you February the process all We launching tomorrow updating also Thank during Holdings. all

much. thanks So, very

Operator

The for conference you presentation. concluded. now is today’s attending Thank

You may now disconnect.

PROG (PRG) 7 Nov 212021 Q3 Earnings call transcript