Prog Holdings, Inc. · NYSE:PRG
Prog — Aaron's Holdings Company — Investor Presentation (November 2020)
31 slides from Prog's investor presentation, Nov 18, 2020
Slide 1: Investor Presentation November 2020
Investor Presentation November 2020 Exhibit 99.1
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements in this presentation regarding our business that are not historical facts are "forward looking statements" that involve risks and uncertainties which could cause actual results to differ materially from those contained in the forward-looking statements. These risks a
Slide 3: Today's Presenters
Today’s Presenters Joined Aaron’s, Inc. in 1995 and held various roles in finance, operations, and strategy Served as Chief Financial Officer & President of Strategic Operations at Aaron’s since Feb 2016 MBA from Georgia State University More than 25 years’ finance and strategic operations experienc
Slide 4: Spin-off Transaction Summary
Spin-off Transaction Summary In July 2020, Aaron’s, Inc. announced plans to separate Progressive Leasing from Aaron’s in a tax-free spin-off. The resulting structure from the spin transaction will be two separate public companies. The Spinco (“The Aaron’s Company, Inc.”) and the Remainco which will
Slide 5: Who Are We?
Who Are We? Since pioneering virtual lease-to-own in 1999, Progressive Leasing continues to be the leading point-of-sale lease-to-own solution in the United States. We provide innovative purchase options and flexible payment terms for credit-challenged customers to purchase big ticket items at leadi
Slide 6: Key Investment Highlights
Large addressable market, broadly underserved Key Investment Highlights 1 PROG Holdings, Inc Profitable, high growth, asset light business model Proprietary, AI/machine-learning-based decisioning maximizes approval rates, while delivering consistent portfolio performance 2 Secure, scalable technolog
Slide 7: Our customers know what they want. We help them get it.
Our customers know what they want. We help them get it. “I’ve used Progressive Leasing for 3 major purchases so far. They are no-hassle, smooth and quick to use. The approval process was not cumbersome or taxing. Every time I’ve had to call the solution center they were helpful and pleasant. I don’t
Slide 8: Our Core Customer
Our Core Customer Generational Breakdown $3,300 median monthly income 39 average age 60% female and 40% male 66% rent and 33% own PROG Holdings, Inc Skews young, and getting younger Key Highlights Source: Company customer data
Slide 9: The Customer Experience – How it Works
The Customer Experience – How it Works Available online and in-store with select leading retailers Apply for a Lease Decisions are issued immediately upon submission of application. Instant Decisioning Customers take items home same day or arrange for delivery. Take Items Home Flexible, auto payment
Slide 10: Progressive at a Glance
Progressive at a Glance A Winning Formula of Sustained Growth and Consistent Portfolio Performance “[Progressive Leasing] has been bringing new customers to [our] stores — as well as some who haven’t been to them in a while.” “Progressive Leasing drives sales and it’s all incremental.” – CEO, leadin
Slide 11: Progressive at a Glance: Select Major Retail Partners
Progressive at a Glance Select Major Retail Partners Expected to be integrated into all major retail partners’ online checkout experience by the end of 2021 Source: Internal company records 12020 YTD through October Key Merchandise Categories PROG Holdings, Inc
Slide 12: Total Addressable Market
Total Addressable Market Progressive Leasing $2.4B Current VLTO Market Size $7B VLTO TAM $30-40 Billion Near-term Opportunity $23-$33 Billion untapped potential New customers New retailers Mid-term & Long-term Opportunity New products to address underserved customer and retailer needs New markets PR
Slide 13: 40% of US Population is Near or Below Prime
40% of US Population is Near or Below Prime U.S. FICO Score Distribution Addressable market approximates 1/3rd of U.S. population Total addressable dollars for virtual lease-to-own (LTO) estimated to be $30-$40bn Recent additions of Best Buy and Lowe’s illustrates broadening demand for LTO, and reta
Slide 14: Progressive's Decisioning Process
Progressive’s Decisioning Process Continuous optimization in decisioning flow Rapid experimentation ensures we always have empirical data to calibrate and improve our algorithms Regular review cycles of business logic, models, thresholds, etc. ensure we stay abreast of the retail marketplace, compet
Slide 15: How We Grow
How We Grow Drive higher retail partners with robust pipeline Drive new customers to retail partners through direct-to-consumer marketing efforts Large database of customers creates marketing opportunity through targeted outreach Technology driven innovation increases speed and ease of use for consu
Slide 16: Financials
Financials Progressive Leasing” (NYSE: PRG)
Slide 17: High Growth with Consistent Margins
High Growth with Consistent Margins CAGR ~21.7% Revenue1 (Millions) Adj. EBITDA1 (Millions) CAGR ~26.9% Margins 13.3% 12.7% 11.9% 12.4% 13.6-13.7% Source: Aaron's, Inc. SEC filings, Management estimates 1Includes both Progressive Leasing and Vive Financial results. PROG Holdings, Inc
Slide 18: Strong Free Cash Flow Profile
Strong Free Cash Flow Profile Free Cash Flow1 (Millions) Source: Aaron's, Inc. SEC filings 1Defined as cash flow from operating activities minus cash used in investing activities, before tax. Includes both Progressive Leasing and Vive Financial results. PROG Holdings, Inc Invoice Growth % 12% 29% 21
Slide 19: Efficient Capital Business Model
Efficient Capital Business Model ROIC1 Lease Portfolio Turnover2 Source: Aaron's, Inc. SEC filings, Management estimates 1Return on Invested capital is net operating profit after tax divided by Progressive and Vive's segment equity, plus third party and intercompany debt, minus cash. 2Total lease de
Slide 20: Capital Allocation and Liquidity Framework
Capital Allocation and Liquidity Framework Maintain a strong liquidity position Committed revolving credit facility of $350 million Post-spin net cash position of $50-70 million Maintain low leverage with plans to grow EBITDA and generate free cash flow Capital light business model allows for future
Slide 21: Financial Profile and Outlook
Financial Profile and Outlook PROG Holdings, Inc Revenue Adj. EBITDA1 $2.163MM $2.575-$2.675B $2.475-$2.5B $268.8MM $305-323MM $337-342MM 2019 Feb 2020 Outlook 2020E 1Refer to Non-GAAP reconciliation in Appendix. Includes both Progressive Leasing and Vive Financial.
Slide 22: Key Investment Highlights
Large addressable market, broadly underserved Key Investment Highlights 1 PROG Holdings, Inc Profitable, high growth, asset light business model Proprietary, AI/machine-learning-based decisioning maximizes approval rates, while delivering consistent portfolio performance 2 Secure, scalable technolog
Slide 23: Appendix
Appendix Progressive Leasing” (NYSE: PRG)
Slide 24: Board & Governance
Board & Governance Ray Robinson Chairman Aaron’s, Inc. (Board Chairman) AT&T (Former President Southern Region) Douglas C. Curling Compensation Chair Aaron’s, Inc. (Director) New Kent Capital & New Kent Consulting LLC (Managing Partner) Cynthia N. Day Audit Chair Aaron’s, Inc. (Director) Citizens Ba
Slide 25: Our Commitment To Employees, Compliance & Community
Our Commitment To Employees, Compliance & Community Diverse talent: 49% female, 41% people of color CEO chairs Diversity & Inclusion Council; Employee-led Resource Groups include Black Inclusion Group and Women In Leadership Progressive Leasing Code of Conduct 24/7 Anonymous Hotline for Employee Com
Slide 26: Use of Non-GAAP financial measures
Use of Non-GAAP financial measures This presentation includes information that does not conform to U.S. GAAP and are considered non-GAAP measures. Adjusted EBITDA, Adjusted EBITDA margin, free cash flow, return on invested capital, and 2016-2018 revenues are supplemental measures of our performance
Slide 27: Reconciliation of Non-GAAP: Revenue
Reconciliation of Non-GAAP: Revenue PROG Holdings, Inc (1) “Total Revenues, net of Progressive Bad Debt Expense” assumes that Progressive bad debt expense is recorded as a reduction to lease revenues and fees instead of within operating expenses for 2018, 2017, and 2016 to provide comparability with
Slide 28: Reconciliation of Non-GAAP: Adjusted EBITDA and EBITDA margin
28 Reconciliation of Non-GAAP: Adjusted EBITDA and EBITDA margin PROG Holdings, Inc (1) Taxes are calculated on a consolidated basis and are not identifiable by Company segments. (2) Depreciation expense on property, plant and equipment only.
Slide 29: Reconciliation of Non-GAAP: Free cash flow
Reconciliation of Non-GAAP: Free cash flow PROG Holdings, Inc (1) Consolidated Aaron's, Inc. cash income tax payments (refunds) are not identifiable by segment and are included in the Aaron's Business segment cash provided by operating activities. Consolidated cash income tax payments (refunds) were
Slide 30: Reconciliation of Non-GAAP: Return on invested capital
30 Reconciliation of Non-GAAP: Return on invested capital PROG Holdings, Inc (1) Taxes are calculated on a consolidated basis and are not identifiable by Company segments. Management believes 25% is reasonable estimate of a non-GAAP income tax rate. (2) Invested capital is calculated as Progressive
Slide 31: Thank You
Thank You Progressive Leasing” (Nv PR)
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