Prog Holdings, Inc. · NYSE:PRG
Prog — Aaron's Holdings Company — Investor Presentation (November 2020)
28 slides from Prog's investor presentation, Nov 18, 2020
Slide 1: Investor Presentation
Exhibit 99.2 Aarons Investor Presentation November 18, 2020
Slide 2: Forward-looking statements
As used in this presentation, “we,” “us,” “our,” “our Company” and “the Company” refer to The Aaron’s Company, Inc. 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 resu
Slide 3: Agenda
Agenda Financial Profile and Outlook Investment Highlights Strategic Priorities 1 2 Company Overview 4 3
Slide 4: Management team and investor contact
Media and Investor Contact: Michael Dickerson, Vice President, Corporate Communications & Investor Relations mike.dickerson@aarons.com | (678) 402-3590 Douglas Lindsay Chief Executive Officer Served as President of the Aaron’s Business since February 2016 Prior to Aaron’s, served as CFO and COO of A
Slide 5: The Aaron's Company Overview
The Aaron’s Company Overview Source: Company Filings 1 All figures reflect Form 10 financials 2 Upholstered furniture and bedding only 3 As of 12/31/19 4 Other product categories comprise 3% of revenue 5 Consumer Electronics includes televisions, gaming and audio Geographic Footprint3 Key Product Ca
Slide 6: Key Investment Highlights
Key Investment Highlights Large, resilient customer base representing ~30% of the U.S. population Compelling customer value proposition driven by competitive pricing, high approval rates, and best-in-class customer service Digitally-enabled, omni-channel strategy that provides an integrated online a
Slide 7: Transformation Has Positioned Aaron's for Growth
Transformation Has Positioned Aaron’s for Growth Highly decentralized operating model Early-stage E-commerce platform 100% manual lease origination decisioning in stores Manual payment process with majority of payments occurring in stores Opportunities for refinement in merchandising, pricing and su
Slide 8: Aaron's Mission Guides Our Strategic Priorities
Enhance people’s lives by providing easy access to high-quality products through affordable lease and purchase options Mission Simplify and Digitize the Customer Experience Align Store Footprint to Customer Opportunity Strategic Priorities Aaron’s Mission Guides Our Strategic Priorities Promote the
Slide 9: Aaron's Offers a Compelling Customer Value Proposition
Aaron’s Offers a Compelling Customer Value Proposition Wholesale inventory costs Lease term flexibility Re-lease returned merchandise Low Monthly Payments Competitive Total Cost of Ownership Low customer acquisition costs Product return capabilities Advanced decisioning High Approval Rates Advanced
Slide 10: Store Footprint Provides Foundation for Value Proposition
Service, Repairs, & Collections Warehousing & Reverse Logistics Hard-to-replicate market footprint, logistics infrastructure, and dynamic store operating model create a competitive advantage Store Footprint Provides Foundation for Value Proposition Fast Delivery & Setup Shop Online or In Showroom Aa
Slide 11: Digital-First Strategy Enhances the Customer Experience
Leverage digital technology to streamline all key touchpoints in the customer journey Digitize the Journey Put the Customer in Control Accelerate Omni-channel Provide the customer with increased flexibility and choice in all aspects of their experience Add capabilities that provide a seamless shoppi
Slide 12: Centralized Lease Decisioning Enhances Operating Model
Agile and Flexible Decisioning improves lease pool performance and labor efficiency Model adjustments can be made instantly across all channels National rollout completed in Q2 2020 enables optimization of decisioning across all markets Creates significant differentiation between other direct-to-con
Slide 13: Aarons.com is an Industry Leading E-Commerce Platform
Aarons.com is an Industry Leading E-Commerce Platform E-Com Revenue Growth YoY New, Younger Customers… Aarons.com customers are 5 years younger than in-store 55% of Aarons.com customers have never shopped at Aaron’s before E-Com % of Lease Revenue Website Traffic (millions) Seamless Customer Experie
Slide 14: New Concept Stores Improve Customer Experience
New Concept Stores Improve Customer Experience Easy-to-navigate, larger showrooms highlight expanded assortment Innovative operating model and technology enhance customer experience Value-engineered buildouts modernize the Aaron’s brand Analytics-driven market strategy aligns store footprint with ou
Slide 15: Real Estate Strategy Leads to Fewer, More Profitable Stores
Site selection is driven by data analytics and insights into where customers live, work, and shop Recurring revenue model produces compelling real estate consolidation opportunities A A A A A A A A 1 2 3 4 Illustrative Case Study Proposed Site Existing Stores 10 Miles 5 Miles 1 2 4 3 Illustrative Ca
Slide 16: Historical Financial Performance
Historical Financial Performance1 1 All figures reflect Form 10 financials 2 LTM is 12-month period ending 9/30/20 3 Includes Company-operated and franchise stores Revenue ($ millions) Total Store Count3 Same Store Revenues Adjusted EBITDA ($ millions) YoY Growth N/A 0.7% (0.6%) (2.5%) Margin 2 2 2
Slide 17: Strong and Flexible Balance Sheet
Strong and Flexible Balance Sheet Liquidity at Spin Date2 ~$300M Capital Position at Spin Date1 Cash: $40M - $50M Debt: $0 1 Debt excludes capitalized leases of $1.2M 2 Liquidity includes $250M revolving credit facility 3 Subject to Board approval Expected Annual Dividend3 $10M - $15M We are committ
Slide 18: 2021 Outlook
Larger per-store portfolio Fewer stores Return to normalized collections Modest improvement in write-offs from historic levels Standalone public company costs Normalized labor expenses Strong profitability Working capital benefit from store closures Capex spend of $70M - $80M Adjusted EBITDA Margin
Slide 19: 2021 – 2025 Outlook
Adjusted EBITDA Margin Free Cash Flow1 Revenues 1 After capex and before impact of any dividends that may be approved by Board Initial decline followed by low single digit growth Margin expanding to 11.5% – 12.5% $60M – $90M per year 2021 – 2025 Outlook Strategy expected to drive improving profitabi
Slide 20: Commitment to Regulatory Compliance
A strong culture of compliance is foundational to our business Commitment to Regulatory Compliance Invest in seasoned regulatory and compliance teams and systems Conduct organization-wide ongoing training to support compliance programs Actively monitor and audit key risk areas and recommend complian
Slide 21: Committed to the Environment, Our Communities, and Strong Corporate Governance
Committed to the Environment, Our Communities, and Strong Corporate Governance Environmental Adopted waste-reduction programs resulting in recycling ~10 million pounds of materials annually Implemented comprehensive waste audit program at furniture manufacturing facilities Reduced amount of material
Slide 22: Key Investment Highlights
Key Investment Highlights Large, resilient customer base representing ~30% of the U.S. population Compelling customer value proposition driven by competitive pricing, high approval rates, and best-in-class customer service Digitally-enabled, omni-channel strategy that provides an integrated online a
Slide 23: Thank You
Thank You
Slide 24: Appendix
_ §F fe |) Appendix a
Slide 25: Board / Governance
Note: Expect to add additional Board members after completion of the spin. Board / Governance John W. Robinson III Chairman Aaron’s, Inc. (CEO & Board Member) Progressive (Former CEO) TMX (Former President & COO) Joined Board in November 2014 Kelly Barrett Home Depot (Former SVP of Home Services) Co
Slide 26: Non-GAAP financial information
We report our financial results in accordance with accounting principles generally accepted in the United States (“GAAP”). We supplement the reporting of our financial information determined under GAAP with certain non-GAAP financial information. These non-GAAP financial measures, however, should no
Slide 27: Reconciliation to Adjusted EBITDA
Reconciliation to Adjusted EBITDA Note: All figures reflect Form 10 financials
Slide 28: Reconciliation of Adjusted EBITDA to Free Cash Flow
Reconciliation of Adjusted EBITDA to Free Cash Flow Note: All figures reflect Form 10 financials
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