Q4 2023 PROG Holdings Inc Earnings Call

Yeah.

Operator: Good day, and welcome to the PROG Holdings fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode.

Speaker Change: Good day and welcome to the Prague Holdings fourth quarter 2023 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question you will need to press star one on your telephone you will then hear.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.

Speaker Change: Or an automated message advising your hand dish raised to withdraw your question. Please press star one again, please be advised today's conference is being recorded.

Operator: To withdraw your question, please press star 11 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, John Baugh, Vice President of Vestry Relations. Please go ahead.

Speaker Change: I'd now like to hand, the conference over to your Speaker today, John Baugh, Vice President Investor Relations. Please go ahead.

Speaker Change: Yeah.

John Allen Baugh: Thank you, and good morning everyone. Welcome to the PROG Holdings fourth quarter 2023 earnings. Joining me this morning are Steve Michaels, President and Chief Executive Officer, and Brian Garner, Archie Financial.

Thank you and good morning, everyone.

John Allen Baugh: Welcome to the Prague Holdings fourth quarter 2023 earnings call.

John Allen Baugh: Joining me this morning are Steve Michael.

John Allen Baugh: Holdings', President and Chief Executive Officer.

John Baugh: Bryan Garner.

Bryan Garner: Our Chief Financial Officer.

John Allen Baugh: Many of you have already seen a copy of our earnings release issued this morning, which is available on our Investor Relations website. Investor. PROGHoldings.com, During this call, certain statements we make will be forward-looking, including comments regarding our 2024 full-year outlook and our outlook for the first quarter of 2024. With the help of our portfolio. Our capital allocation priorities, including our ability to continue paying a quarterly cash, and repurchase shares in future. Our expectations regarding GMB and the levels of charge-offs and 90-day purchase options. & Larry John Norris & William Chappell Produced By Produced By Produced By Produced By By by by by by by by by by by by by by by by by by by, Our expectations regarding the future performance of our other operations, and our expectations regarding consumer demand for leasable items in 2020. Listeners are cautioned not to place undue emphasis on forward-looking statements we make. And we undertake no obligation to up, any such state.

Bryan Garner: Many of you have already seen a copy of our earnings release issued this morning.

Bryan Garner: It is available on our Investor Relations website.

Bryan Garner: Investor Dot product holdings Dot com.

Bryan Garner: During this call certain statements, we make will be forward looking including comments regarding our 2020 for full year outlook and our outlook for the first quarter of 2024.

Bryan Garner: The health of our portfolio.

Bryan Garner: Our capital allocation priorities, including our ability to continue paying a quarterly cash dividend and repurchase shares in future periods.

Bryan Garner: Our expectations regarding GMB and the levels of charge offs and 90 day purchase options in 2024.

Bryan Garner: Our expectations regarding the future performance of our other operations.

Bryan Garner: And our expectations regarding consumer demand for leasable items in 2024.

Bryan Garner: Listeners are cautioned not to place undue emphasis on forward looking statements we make today.

Bryan Garner: And we undertake no obligation to update any such statements.

John Allen Baugh: On today's call... We will be referring to certain non-GAAP financials, including Adjusted EBITDA and non-GAAP EPS, which have been adjusted for certain items that may affect the comparability of our performance with other companies. These non-GAAP measures are detailed in the reconciliation tables included with our earnings release. The company believes that these non-GAAP financial measures provide meaningful insight into the company's operational performance and cash flows and provides these measures to investors to help facilitate comparisons of operating results with prior periods and to assist them in understanding the company's ongoing operations. With that, I would like to turn the call over to Steve Michaels, PROG Holdings President. Chief Executive. Thank you, John. Good morning, everyone.

Bryan Garner: On today's call.

Bryan Garner: We will be referring to certain non-GAAP financial measures, including adjusted EBITDA, and non-GAAP, EPS, which have been adjusted for certain items, which may affect the comparability of our performance with other companies.

Bryan Garner: These non-GAAP measures are detailed in the reconciliation tables included with our earnings release.

Bryan Garner: The company believes that these non-GAAP financial measures provide meaningful insight into the company's operational performance and cash flows and provides these measures to investors to help facilitate comparisons of operating results with prior periods and to assist them in understanding the company.

Bryan Garner: These ongoing operational performance.

Bryan Garner: With that I would like to turn the call over to Steve Michaels product Holdings, President and Chief Executive Officer.

Bryan Garner: Steve.

Steven A. Michaels: Thank you John and good morning, everyone I.

Steven A. Michaels: I appreciate you joining us as we report fourth quarter and full year 2023 results that matched or exceeded the outlook we provided in late October. Today, we will cover how Q4 unfolded, and fiscal year 2023 concluded.

Steven A. Michaels: I appreciate you joining us as we report fourth quarter and full year 2023 results that matched or exceeded the outlook. We provided in late October.

Steven A. Michaels: Today, we will cover how Q4 unfolded.

Steven A. Michaels: Our 2023 concluded.

Steven A. Michaels: Our Outlook for 2024, some of the strategic initiatives we are implementing to drive our business forward, and our decision to initiate a dividend as a complement to our capital return activity. Last year was another challenging year for both our customers and retail partners. The combination of weaker-than-expected retail traffic and a shift in consumer spending from leaseable categories to consumables and experiences impacted our business.

Steven A. Michaels: Our outlook for 2024.

Steven A. Michaels: Some of the strategic initiatives, we are implementing to drive our business forward.

And our decision to initiate a dividend as a complement to our capital return activities.

Steven A. Michaels: Last year was another challenging year for both our customers and retail partners.

The combination of weaker than expected retail traffic and a shift in consumer spending from leasable categories to consumables and experiences impacted our business.

Steven A. Michaels: We navigated these headwinds through strong operational execution and gaining share of share in our top retail partners, while balancing GMB pressures with portfolio management and continued spend. Despite a decline in revenues for the full year of 2023, our gross margin expanded, primarily due to strong customer payment behavior. As a reminder, our portfolio benefited from our decisioning changes made in mid-2022, along with our team's careful monitoring and management of the portfolio throughout 2023, which drove strong customer payments and lower-than-expected charge-offs throughout the year. The portfolio also benefited from fewer customers choosing to exercise their 90-day purchase option in the first half of 2023.

Steven A. Michaels: We navigated these headwinds through strong operational execution and gaining balance of share in our top retail partners.

Steven A. Michaels: While balancing GMB pressures with portfolio management and continued spend discipline.

Steven A. Michaels: Despite a decline in revenues for the full year of 2023, our gross margin expanded primarily due to strong customer payment behavior.

Steven A. Michaels: As a reminder, our portfolio benefited from our Decisioning changes made in mid 2022, along with our team's careful monitoring and management of the portfolio throughout 2023, which drove strong customer payments and lower than expected charge offs throughout the year.

Steven A. Michaels: The portfolio also benefited from fewer customers choosing to exercise their 90 day purchase option in the first half of 2023.

Steven A. Michaels: I want to thank our teams for executing at a high level through a volatile macroeconomic and consumer backdrop.

Steven A. Michaels: I want to thank our teams for executing at a high level through a volatile macroeconomic and consumer-backed environment. Gross margin expansion of 210 basis points, and improved write-offs of 6.7% compared to 7.7% in 2022. And a disciplined approach to spending drove year-over-year adjusted EBITDA growth of 41.3 million, or 16.1%, resulting in a 12.4% margin for 2023. Additionally, our non-GAAP diluted EPS of $3.67 grew 41.2% year over year, as we also benefited from a lower share count due to our share repurchase program. Turning to Q4 and our GMV performance, we delivered a 1.2% increase in progressive leasing GMV, materially above our expectations set in late October when we anticipated a mid-single-digit decline similar to Q3. The GMV pressures of Q3 2023 continued into October, with the month ending down 6.3% year-over-year.

Steven A. Michaels: Gross margin expansion of 210 basis points improve write offs of six 7% compared to seven 7% in 2022.

Steven A. Michaels: And a disciplined approach to spending drove year over year, adjusted EBITDA growth of $41 3 million or 16, 1%, resulting in a 12, 4% margin for 2023.

Steven A. Michaels: Our non-GAAP diluted EPS of $3 67.

Steven A. Michaels: Grew 41, 2% year over year as we also benefited from a lower share count due to our share repurchase program.

Steven A. Michaels: Turning to Q4, and our <unk> performance, we delivered a one 2% increase in progressive leasing GSV.

Steven A. Michaels: Materially above our expectations set in late October when we anticipated a mid single digit decline similar to Q3.

Steven A. Michaels: The GMB pressures of Q3 2023 continued into October with the month, ending down six 3% year over year.

Steven A. Michaels: The holiday season, however, performed better than expected, resulting in a positive <unk> comp for the quarter.

Steven A. Michaels: We believe this outperformance was driven by a mix of factors, including increased and more effective marketing spend.

Steven A. Michaels: Implementation of various initiatives with our retail partners.

Steven A. Michaels: Slightly higher approval and conversion rates.

Steven A. Michaels: Increased consumer demand for point of sale payment solutions and.

Steven A. Michaels: And some signs of trade down effects due to credit tightening above us in the stack.

Steven A. Michaels: Notably we observed strong sales in consumer electronics and smartphones during the holiday season.

Steven A. Michaels: The holiday season, however, performed better than expected, resulting in a positive GMV comp for the quarter. We believe this outperformance was driven by a mix of factors, including increased and more effective marketing spend, implementation of various initiatives with our retail partners, and slightly higher approval and conversion rates.

Steven A. Michaels: In Q4 e-commerce as a percentage of progressive leasing GSV was that a seasonal high representing approximately 20% of total leasing <unk>.

Steven A. Michaels: And we continued to add new E com retail partners during the quarter through our customizable integrations and plug ins.

Steven A. Michaels: We also deepened our integrations with several existing partners, including launching an E com card solution with a longtime top five retail partner.

Steven A. Michaels: In 2023, we added nearly twice as many new E Com partners as we added in 2022.

Steven A. Michaels: Increased consumer demand for point of sale payment solutions and some signs of trade down effects due to credit tightening above us in the stack. Notably, we observe strong sales in consumer electronics and smartphones during the holiday season. In Q4, e-commerce as a percentage of progressive leasing GMV was at a seasonal high, representing approximately 20% of total leasing GMV. And we continue to add new e-commerce retail partners during the quarter through our customizable integrations and plugins. We also deepened our integrations with several existing partners, including launching an e-commerce cart solution with a longtime top five retail partner. In 2023, we added nearly twice as many new e-commerce partners as we added in 2022, which allows us to further our strategy of being able to engage with our customers wherever and whenever it is most convenient for them. Entering 2024, we feel good about the health of our portfolio and our cost structure. We continue to make progress against our multi-year strategy to grow, enhance, and expand. To support our growth pillar, which emphasizes our dedication to business development efforts across new and existing retail partnerships, I'd like to highlight a few focus areas across sales and marketing.

Steven A. Michaels: Which allows us to further our strategy of being able to engage with our customers wherever and whenever is most convenient for them.

Steven A. Michaels: Entering 2024, we feel good about the health of our portfolio and our cost structure.

Steven A. Michaels: We continue to make progress against our multiyear strategy to grow enhance and expand.

Steven A. Michaels: To support.

Steven A. Michaels: Port our growth pillar, which emphasizes our dedication to business development efforts across new and existing retail partnerships.

Speaker Change: I'd like to highlight a few focus areas across sales and marketing.

Speaker Change: Within the retail channels environment of 2023, we grew balance of share with our top partners and continued our track record of renewing key retailers with multiyear exclusive contracts.

Speaker Change: Our sales team creates value for perspective, and existing partners through initiatives that drive incremental traffic and improved top of funnel applications and customer conversion.

Speaker Change: The team is in a business development mindset across all categories as this existing and new all the time.

Speaker Change: Our pursuit of new retail opportunities across regional and National brands is an important component of our growth strategy to capture more of our industries $30 billion to $40 billion addressable market.

Speaker Change: Sully under the grow pillar, we continued to enhance our direct to consumer marketing strategies through a focus on the customer lifecycle.

Speaker Change: We invest in top of the funnel marketing channels and brand awareness as a catalyst to scale growth.

Speaker Change: We also work closely with our retail partners to support strategic marketing campaigns to increase new customer acquisition and attract repeat business.

Speaker Change: Our high repeat customer base, which we nurture with engaging content that builds and maintains relationships helps us keep a healthy customer lifetime value to cost of acquisition ratio.

Steven A. Michaels: Within the retail challenge environment of 2023, we grew our balance of share with our top partners and continued our track record of renewing key retailers with multi-year exclusive contracts. Our sales team creates value for prospective and existing partners through initiatives that drive incremental traffic and improve top of funnel applications and customer conversion. The team is in a business development mindset across all categories, existing and new, all the time.

Speaker Change: Our direct to consumer efforts, which we referred to as Prague marketplace allow new and repeat customers to shop, when and where they want through our mobile app.

Speaker Change: Which has been downloaded more than 4 million times since its launch.

Speaker Change: We grew the Prague marketplace materially in 2023 and through continued enhancements. This year, we plan to roughly double the GMB for product marketplace in 2024.

Speaker Change: We view this marketplace as a complement to our retail partner channel since we already partner with some of the best retailers in the country.

Speaker Change: But we also have affiliate relationships with other leading retailers through our marketplace, which gives our customers more choice.

Speaker Change: Under our enhanced pillar, we are leveraging technology to make the journey quicker and more seamless for our retail partners and customers.

Steven A. Michaels: Our pursuit of new retail opportunities across regional and national brands is an important component of our growth strategy to capture more of our industry's $30 to $40 billion addressable market. Additionally, under the GROW pillar, we continue to enhance our direct consumer marketing strategies through a focus on the customer lifecycle. We invest in top of the funnel marketing channels and brand awareness as a catalyst to scale growth. We also work closely with retail partners to support strategic marketing campaigns to increase new customer acquisition and attract repeat business. Our high repeat customer base, which we nurture with engaging content that builds and maintains relationships, helps us keep a healthy customer lifetime value to cost of acquisition ratio. Our direct-to-consumer efforts, which we refer to as PROG Marketplace, allow new and repeat customers to shop when and where they want through our mobile app, which has been downloaded more than 4 million times since its launch.

Speaker Change: Our recent technology investments provide more self service tools to enable a superior retailer experience, while helping the customer make the best and most informed choices and offer greater personalization for a streamline shopping and Decisioning experience.

Speaker Change: Also a portion of our 2024 technology roadmap is dedicated to continuing our investment in our customer centric flexible lease platform to support new features for our customers and retail partners.

Speaker Change: Additionally, under our enhanced pillar, we launched the Prague Labs, R&D group last year to achieve productivity gains within the company and to improve our retailer and customer experience through generative AI.

Speaker Change: These efforts represent a strategic investment in improving our responsiveness to consumer and merchant needs, while reducing costs.

Speaker Change: In a relatively short period since the launch of Prague Labs. The group has piloted several value creating solutions within customer support fraud prevention marketing and code cleanup.

Speaker Change: Under the expand pillar, our multi product ecosystem continues to empower more of our customers through their financial journey.

Speaker Change: In 2023, we successfully launched our build product, which combines the benefits of an installment loan and a secured savings account to help customers build both positive credit history and personal savings.

Speaker Change: We expect 2024 to be a pivotal year as we leveraged necessary infrastructure to further integrate <unk>, our secondary credit offering for our buy now pay later solution and build our credit building product into our progressive leasing ecosystem.

Steven A. Michaels: We grew the PROG Marketplace materially in 2023, and through continued enhancements this year, we plan to roughly double the GMV for PROG Marketplace in 2024. We view this marketplace as a complement to our retail partner channel, since we already partner with some of the best retailers in the country. But we also have affiliate relationships with other leading retailers through our marketplace, which gives our customers more choice.

Speaker Change: We will also lean into marketing and through our cross selling motion believe we will drive incremental leasing GMB.

Speaker Change: In 2024 through customer acquisition and these cross marketing efforts, we anticipate that our other operations, which include foreign build will represent the size of a top 10 retailer in terms of the <unk> It will drive for our leasing business.

Speaker Change: Lastly, we have made good progress on the profitability of our other operations.

Speaker Change: We expect to reduce the drag on our 2024 earnings from these operations by approximately one third compared to 2023.

Steven A. Michaels: Under our enhanced pillar, we are leveraging technology to make the journey quicker and more seamless for our retail partners and customers. Our recent technology investments provide more self-service tools to enable a superior retailer experience while helping the customer make the best and most informed choice and offer greater personalization for a streamlined shopping and decisioning experience. Also, a portion of our 2024 technology roadmap is dedicated to continuing our investment in our customer-centric flexible lease platform to support new features for our customers and retail partners. Additionally, under our enhanced pillar, we launched the PROG Labs R&D group last year to achieve productivity gains within the company and to improve our retailer and customer experience through generative AI. These efforts represent a strategic investment in improving our responsiveness to consumer and merchant needs while reducing costs.

Speaker Change: And we believe other will reach profitability as we exit the year.

Speaker Change: While Brian will get into more detail on our 2024 outlook I'd like to summarize how we are thinking about the macro backdrop going into the year.

Speaker Change: Similar to 2023 due to continued economic pressures our customers are facing we believe the headwinds in demand for our leasable categories will continue in 2024.

Speaker Change: However, we are optimistic that as the year progresses, the initiatives outlined in our grow enhance expand strategy will further offset these pressures.

Speaker Change: Despite our strong 2023 holiday season, 2024 has started off with <unk> pressures across many of our retail partners.

Speaker Change: With trends softening since the holidays and major leasable categories, an uptick in promotional activity by retailers in an attempt to drive traffic could result in a decline in average ticket size.

Speaker Change: Q1 is heavily influenced by the tax refund season, which has yet to really kick in.

Speaker Change: Tax season impacts our business in several different ways and can have a margin impact due to refunds affecting the level of 90 day purchase activity.

Speaker Change: But can also have a <unk> impact based on the amount of liquidity our customers have.

Speaker Change: As we understand it the first large release of refunds will happen this week.

Steven A. Michaels: In the relatively short period since the launch of PROG Labs, the group has piloted several value-creating solutions within customer support, fraud prevention, marketing, and code cleanup. Under the expanding pillar, our multi-product ecosystem continues to empower more of our customers through their financial journey. In 2023, we successfully launched our Build product, which combines the benefits of an installment loan and a secured savings account to help customers build both a positive credit history and personal savings.

Speaker Change: But we will not know the full impact of how the tax season will unfold until late March when most of the tax refund activity should be complete.

Speaker Change: Our progressive leasing <unk> for the month of January was down low single digits.

Speaker Change: And given the macro headwinds and uncertainty I have been discussing we expect the quarter to end within a similar range.

Speaker Change: Even with these headwinds and unknown because we entered the year, we are optimistic about our strategic direction growth initiatives and the health of our portfolio.

Speaker Change: In terms of gross margin, we have a difficult comparison between this year and last predominantly in the first half of the year.

2023 benefited from a goldilocks scenario of lower charge offs and fewer customers choosing to exercise their 90 day purchase option in the first half.

Speaker Change: Which based on behavior as we exited 2023, we are not expecting the historically low 90 day purchases from the first half of 2023 to repeat in 2024.

Steven A. Michaels: We expect 2024 to be a pivotal year as we leverage necessary infrastructure to further integrate VIVE, our secondary credit offering for our buy now, pay later solution, and build our credit building product into our progressive leasing ecosystem. We will also lean into marketing, and through our cross-selling motion, believe we will drive incremental leasing GMV. In 2024, through customer acquisition and these cross-marketing efforts, we anticipate that our other operations, which include for and build, will represent the size of a top 10 retailer in terms of the GMV it will drive for our leasing business. Lastly, we've made good progress on the profitability of our other operations. We expect to reduce the drag on our 2024 earnings from these operations by approximately one third compared to 2023.

Speaker Change: Our strategy remains solid across grow enhance and expand with resources in 2024 focused on numerous initiatives across these three pillars.

Speaker Change: Turning to capital allocation Prague Holdings Board of directors declared a quarterly cash dividend of <unk> 12 per share for the first quarter of 2024 and increase the availability under the company's share repurchase program to a total of $500 million.

Speaker Change: Reflecting our business model strong free cash flow generation and our ongoing commitment to returning excess capital to shareholders.

Speaker Change: We intend to pay a cash dividend on a quarterly basis going forward subject to a number of factors, including market conditions and approval by our board of directors.

Speaker Change: This dividend initiation is designed to complement our share repurchase program and our capital allocation priorities remain unchanged prioritizing reinvesting in the business followed by M&A and returning excess capital to shareholders.

Speaker Change: In summary, our performance in 2023, and our ongoing strategic initiatives lay a solid foundation for 2024 and beyond.

Steven A. Michaels: And we believe others will reach profitability as we exit the year. While Brian will get into more detail on our 2024 outlook, I'd like to summarize how we're thinking about the macro backdrop going into the year. Similar to 2023, due to continued economic pressures our customers are facing, we believe the headwinds and demand for our leasable categories will continue in 2024. However, we are optimistic that as the year progresses, the initiatives outlined in our Grow, Enhance, and Expand strategy will further offset these pressures. Despite a strong 2023 holiday season, 2024 started off with GMV pressures across many of our retail partners. With trends softening since the holidays in major leaseable categories, an uptick in promotional activity by retailers in an attempt to drive traffic could result in a decline in average ticket. P1 is heavily influenced by the tax refund season, which has yet to really kick in.

Speaker Change: We are excited about the opportunities ahead and remain dedicated to delivering value to our customers retail partners and shareholders.

Speaker Change: Before I turn the call over to Brian I want to announce that Curt Doughman cofounder of progressive leasing and Chief Innovation Officer and Board member of Prague Holdings will be retiring as a member of the executive team and this is 25th year of service.

Speaker Change: While he is retiring from his executive position Curt will transition to a senior advisor role and will continue as a member of our board of directors.

Speaker Change: It will be impossible to overemphasize the impact that Curt has had on both the virtual lease to own industry.

Brian: And on our company.

25 years ago, Curt and his partner Brent Wilson created the industry, we now call virtual lease to own with the founding of progressive leasing.

Brian: For the last two and a half decades, Curt has been the driving force behind the grit and innovation that has helped Prague remain a market leader, while creating a better today and unlocking the possibilities of tomorrow for millions of customers through financial empowerment.

Speaker Change: I want to congratulate Kurt for all he has built and thank him personally on behalf of the entire <unk> family for what he has accomplished in his exemplary career.

Speaker Change: We are fortunate that Curt will continue to advise and counsel us.

Speaker Change: He will remain involved in strategy, but his primary focus will be driving products philanthropic efforts, specifically, the Prague Foundation and its recently launched youth development Center.

Steven A. Michaels: Tax season impacts our business in several different ways and can have a margin impact due to refunds affecting the level of 90-day purchase activity, but it can also have a GMV impact based on the amount of liquidity our customers have. As we understand it, the first large release of refunds will happen this week. But we will not know the full impact of how the tax season will unfold until late March, when most of the tax refund activity should be complete.

Speaker Change: Which was also curt's brainchild.

Speaker Change: Thanks Kurt.

Speaker Change: I'll now turn the call over to our CFO, Bryan Garner, who will discuss our 2023 financial results and 2024 outlook in greater detail.

Speaker Change: Brian.

Bryan Garner: Thanks, Steve I'll start with a summary of the Q4 financial highlights.

Bryan Garner: Our fourth quarter results matched or exceeded our outlook showing strong demand for our virtual lease to own product as sales and marketing initiatives improved <unk> results and we continued to demonstrate our ability to manage financial drivers within our control.

Speaker Change: Beginning with Progressive leasing segment as Steve mentioned <unk>, we can improved one 2% compared to Q4 of last year.

Steven A. Michaels: Our progressive leasing GMV for the month of January was down low single digits. And given the macro headwinds and uncertainty I have been discussing, we expect the quarter to end within a similar range. Even with these headwinds and unknowns as we enter the year, we are optimistic about our strategic direction, growth initiatives, and the health of our portfolio. In terms of gross margin, we have a difficult comparison between this year and last, predominantly in the first half of the year.

Speaker Change: Materially above our expectations communicated on our Q3 call of a mid single digit decline.

Speaker Change: In addition to the benefit of strong consumer demand during the holiday season, or Tim increase the rate of marketing spend.

Speaker Change: And pursue direct to consumer opportunities, which contributed to overall results.

Speaker Change: As a portfolio of business. This JV tailwind late in the year, we will contribute more meaningfully to 2020 for revenue as compared to Q4 2023 revenue.

Speaker Change: Revenues for our progressive leasing segment declined 6% from $592 9 million to $557 5 million.

Steven A. Michaels: 2023 benefited from a Goldilocks scenario of lower charge-offs and fewer customers choosing to exercise their 90-day purchase option in the first half, which based on behavior as we exited 2023; we are not expecting the historically low 90-day purchases from the first half of 2023 to repeat in 2024. Our strategy remains solid across grow, enhance, and expand, with resources in 2024 focused on numerous initiatives across these three pillars Turning to capital allocation, PROG Holdings' Board of Directors declared a quarterly cash dividend of $0.12 per share for the first quarter of 2024 and increased the availability under the company's share repurchase program to a total of $500 million, reflecting our business model's strong free cash flow generation and our ongoing commitment to returning excess capital to shareholders.

Speaker Change: We entered the fourth quarter with a gross leased asset balance down nine 6% as compared to the same time last year and exited 2023 down five 2% as the improvement in Q4 <unk> benefited our portfolio size.

Speaker Change: Revenue for the fourth quarter exceeded the top end of our outlook largely due to the better than expected.

Speaker Change: Customer payment behavior, along with a slight benefit from the favorable <unk>.

Speaker Change: Year over year, we saw higher portfolio yield driven by favorable charge off trends, while revenue from 90 day purchases remain at normalized levels in the quarter.

Speaker Change: As gross margin improved 20 basis points year over year to 32, 9%.

Speaker Change: Our management of the lease portfolio led to strong customer payment behavior and resulted in a provision for lease merchandise write offs of 7% the midpoint of our annual targeted range of 6% to 8%.

Speaker Change: Progressive Leasing's SG&A expense as a percentage of revenue increased year over year to 15% in Q4 of 2023 from 13, 2% in Q4 of 2022.

Speaker Change: For the fourth quarter SG&A expense increased approximately $5 million year over year, primarily due to incremental marketing spend and onetime costs associated with the cyber incident that occurred in Q3.

Speaker Change: As I will discuss further on our outlook.

We expect the restructuring actions we took in January have put us on a trajectory for flat SG&A as a percentage of revenue in 2024.

Speaker Change: Adjusted EBITDA for Progressive leasing declined from $80 4 million to $65 8 million as headwinds to revenue and SG&A spend in Q4 compared to the same period last year or partially offset by portfolio performance, resulting in an adjusted EBITDA margin of 11, 8% within our targeted <unk>.

Steven A. Michaels: We intend to pay a cash dividend on a quarterly basis going forward, subject to a number of factors, including market conditions and approval by a board of directors. This dividend initiation is designed to complement our share repurchase program, and our capital allocation priorities remain unchanged. Prioritizing reinvesting in the business, followed by M&A and returning excess capital to shareholders. In summary, our performance in 2023 and our ongoing strategic initiatives lay a solid foundation for 2024 and beyond. We are excited about the opportunities ahead and remain dedicated to delivering value to our customers, retail partners, and shareholders. Before I turn the call over to Brian, I want to announce that Kurt Doman, co-founder of Progressive Leasing and chief innovation officer and board member of PROG Holdings, will be retiring as a member of the executive team in this, his 25th year of service.

Speaker Change: A range of 11% to 13%.

Speaker Change: Pivoting to consolidated results.

Speaker Change: Our Q4 non-GAAP EPS came in at <unk> 72.

Speaker Change: Exceeding the top end of our outlook due.

Speaker Change: Due in part to lower share count the resulted from our share repurchase program.

Speaker Change: Consolidated revenues declined five 7% from $612 1 million to $507 4 million driven by the decline at the progressive leasing segment.

Speaker Change: Consolidated adjusted EBITDA declined 18% to $61 million from $74 4 million in the year ago period, driven by the contraction in revenue at the Progressive leasing segment, partially offset by favorability in gross margin.

Speaker Change: Our adjusted EBITDA performance was at the midpoint of our outlook.

Speaker Change: As announced in this morning's earnings press release, the Companys Board has approved a quarterly cash dividend of <unk> 12 per share an increase the remaining authorization under the company's existing share repurchase program to a total of $500 million.

Speaker Change: To Echo Steve these decisions speak to the strong profitability and cash flow generation of our business, which allow us to return value to shareholders through a combination of dividends and share repurchases.

Speaker Change: We repurchased $4 7 million shares of our common stock in 2023 at a weighted average price of $29 75.

Steven A. Michaels: While he is retiring from his executive position, Kurt will transition to a senior advisor role and will continue as a member of our board of directors. It would be impossible to overemphasize the impact that Kurt has had on both the virtual lease to own industry and on our company. 25 years ago, Curt and his partner Brent Wilson created the industry we now call virtual lease to own with the founding of Progressive Lease. For the last two and a half decades, Curt has been the driving force behind the grit and innovation that has helped PROG remain a market leader while creating a better today and unlocking the possibilities of tomorrow for millions of customers through financial empowerment. I want to congratulate Kurt on all he has built and thank him personally on behalf of the entire PROG family for what he has accomplished in his exemplary career.

Speaker Change: The company generated $204 million of cash from operations, which is net of the working capital needed to fund <unk>.

Speaker Change: Moving to the balance sheet.

Speaker Change: We ended the quarter with net debt of $444 6 million comprised of $155 4 million in cash and $600 million of gross debt, which is 149 times, our trailing 12 months adjusted EBITDA.

Speaker Change: We remain undrawn on our $350 million revolver at quarter end.

Speaker Change: I'll now touch on some key aspects of our 2020 for outlook.

Speaker Change: It was provided in this morning's earnings press release.

Speaker Change: We expect <unk> headwinds to continue through at least the first half of 2024 with a year over year percentage decline of our first quarter <unk> down low single digits.

Speaker Change: We expect these first half D&B pressures combined with the gross leased asset balance down five 2% as we enter 2024 will result in consolidated revenue being down year over year.

Speaker Change: Our portfolio performance is expected to remain strong and we will continue to actively manage yields throughout 2024.

Speaker Change: However, we expect gross margin to be a difficult compare to 2023 for the progressive leasing segment as we saw a record low percentage of customers exercising their 90 day purchase option in the first half of last year.

Speaker Change: Coupled with lower charge off rate throughout the year.

Speaker Change: We anticipate a slight increase in progressive lesions provision for lease merchandise write offs.

Brian Garner: We are fortunate that Curt will continue to advise and counsel us. He will remain involved in strategy, but his primary focus will be driving PROG's philanthropic efforts, specifically the PROG Foundation and its recently launched Youth Development Center, which was also Kurt's brainchild. Thanks, Kurt. I'll now turn the call over to our CFO, Brian Garner, who will discuss our 2023 financial results and 2024 Outlook in greater detail.

Speaker Change: But we still expect to deliver yet another year of consistent performance within our targeted annual range of 16%.

Speaker Change: The cost actions that we announced last month, including a reduction in workforce the termination of certain independent sales agent agreements in office space consolidation are intended to drive efficiencies within the cost structure and should allow for the progressive leasing segment's SG&A as a percentage of revenue to remain.

Speaker Change: Main roughly flat year over year.

Speaker Change: In 2020 for these cost actions will drive roughly $10 million of year over year savings for progressive leasing, partially offset by investments in growth initiatives across the leasing business and other operations.

Speaker Change: Turning to the consolidated outlook for 2024, we expect revenues to be in the range of $2 4 billion to $2 three 4 billion <unk>.

Brian Garner: Thanks, Steve. I'll start with a summary of the Q4 financial highlights. Our fourth quarter results matched or exceeded our outlook, showing strong demand for a virtual leased-owned product. The sales and marketing initiatives improved GMV results, and we continue to demonstrate our ability to manage financial drivers within our company. Beginning with the progressive leasing segment, as Steve mentioned, GMV for progressive leasing improved 1.2% compared to Q4 of last year, materially above our expectations communicated in our Q3 call of a mid single-digit decline. In addition to the benefit of strong consumer demand during the holiday season, our team increased the rate of marketing spend and pursued direct consumer opportunities, which contributed to overall results. As a portfolio business, this GMV tailwind late in the year will contribute more meaningfully to 2024 revenue as compared to Q4 2023. However, revenues for a progressive leasing segment declined 6% from $592.9 million to $557.5 million.

Adjusted EBITDA in the range of $230 million to $250 million and non-GAAP EPS in the range of $2 70.

Speaker Change: The $3.

Speaker Change: This outlook assumes a difficult operating environment with continued soft demand for consumer durable goods no material changes in the Companys decisioning posture and effective tax rate for non-GAAP EPS of approximately 29%.

Speaker Change: No material increases in the unemployment rate for our consumer.

Speaker Change: And no impact from additional share repurchases.

Speaker Change: In closing I want to emphasize the company's ability to operate at a high level.

Speaker Change: Through a challenging macro environment and thank the team for several wins during 2023, including an increase in balances share with top retail partners. The renewal of multiyear exclusive agreements with several key partners strong portfolio performance and disciplined SG&A spending.

Speaker Change: In 2024, we will continue to focus on our growth initiatives balanced with portfolio performance and.

Speaker Change: And controlled spending to maximize shareholder value.

Speaker Change: I will now turn the call back over to the operator for the Q&A portion of the call operator.

Speaker Change: Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Brian Garner: We entered the fourth quarter with a gross lease asset balance down 9.6% as compared to the same time last year and exited 2023 down 5.2%, as the improvement in Q4 GMV benefited our portfolio. Revenue for the fourth quarter exceeded the top end of our outlook, largely due to the better than expected customer payment behavior, along with a slight benefit from the favorable GM. Year over year, we saw higher portfolio yield driven by favorable charge-off trends, while revenue from 90-day purchases remained at normalized levels in the quarter, and gross margin improved 20 basis points year over year to 32.9%. Our management of the lease portfolio led to strong customer payment behavior and resulted in a provision for lease merchandise write-offs of 7%, the midpoint of our annual targeted range of 60. Progressive Leasing's SG&A expense as a percentage of revenue increased year-over-year to 15% in Q4 of 2023 from 13.2% in Q4 of 2023. For the fourth quarter, SG&A expense increased approximately $5 million year-over-year, primarily due to incremental marketing spend and one-time costs associated with the cyber incident that occurred in Q3.

Speaker Change: One moment for our first question.

Speaker Change: Our first question comes from Kyle Joseph with Jefferies. Your line is open.

Kyle Joseph: Hey, good morning, Steve and Brian Congrats on navigating a challenging year and thanks for taking my questions.

Kyle Joseph: Montana.

Kyle Joseph: Just getting your perspective on kind of the health of that.

Speaker Change: Underlying consumer.

Speaker Change: And in your guidance.

Speaker Change: Kind of run through you talked about.

Speaker Change: And motivation of ABL activity, but also a little bit higher provision.

That's a function what what's driving that is that really just a function of the kind of the goldilocks scenario reversing obviously weighing.

Speaker Change: Inflation.

Speaker Change: Relatively healthy employment environment, but just kind of want to get a sense of what's going on with your consumer.

Speaker Change: Yes, you got to Carl Thank you.

Speaker Change: And you hit on some of it right so without going to too far in the past obviously 'twenty two is a super stressful time for our consumer.

Speaker Change: With inflation and then 2023 was certainly stable and maybe you could even say improving and you mentioned goldilocks right. So we've talked a lot about the.

Speaker Change: The lower 90 day buyouts that happened during during tax season, and probably as if not more importantly, those 90 day buyout.

Speaker Change: That did not happen those customers continuing to pay.

Speaker Change: And not like rolling through to charge offs. So they might've had some stress that cause them not to be able to do the 90 day or to choose not to do the 90 day, but they were able to continue making their payments.

Speaker Change: And that resulted in the Goldilocks now as you flip to the back half of 2023, the 90 day activity normalized and certainly that's where we were exiting 2023.

Brian Garner: As I will discuss further in our outlook, we expect the restructuring actions we took in January have put us on a trajectory for flat SG&A as a percentage of revenue in 2020. Adjusted EBITDA for progressive leasing declined from $80.4 million to $65.8 million as headwinds to revenue and SG&A spend in Q4 compared to the same period last year or partially offset by portfolio performance, resulting in an adjusted EBITDA margin of 11.8% within our targeted annual range of 11 to. Pivoting to Consolidated Results

Speaker Change: And it's difficult for us to.

Speaker Change:

Speaker Change: To assume that goldilocks or historically low levels of 90 days are going to repeat.

Speaker Change: We don't really have a ton of visibility into that right now because tax season really hasnt really kicked in yet.

Speaker Change: But.

Speaker Change: That's what's baked into our view the consumer's in good shape.

Speaker Change: Employment as you said is strong.

Speaker Change: There's certainly been some cost inflation that has an outsized impact on our consumer but jobs are good so.

Speaker Change: We're not waiting for the shoe to drop or just not assuming that the goldilocks that happened and for the most most of 'twenty three but certainly more pronounced in the first half of 'twenty three it will repeat we will have more visibility into that over the next six or eight weeks as tax season plays out but.

Brian Garner: Our Q4 non-GAAP EPS came in at $0.72, exceeding the top end of our outlook, due in part to a lower share count that resulted from our share repurchase program. Consolidated revenues declined 5.7% from $612.1 million to $577.4 million, driven by the decline at the progressive leasing. Consolidated Adjusted EBITDA declined 18% to $61 million from $74.4 million in the year-ago period, driven by the contraction in revenue at the progressive leasing segment, but partially offset by the favorable gross margin. Our adjusted EBITDA performance was at the midpoint of our outlook. As announced in this morning's earnings press release, the company's board has approved a quarterly cash dividend of 12 cents per share and increased the remaining authorization under the company's existing share repurchase program to a total of $500 million.

Speaker Change: We're in good shape from a from a consumer.

Speaker Change: Health standpoint, but we're just not expecting a.

Speaker Change: A complete repeat of 2023.

Speaker Change: Yes, yes that makes sense and then just one follow up for me I think you mentioned that you saw a little bit of a tailwind in the fourth quarter <unk> as a result.

Speaker Change: Trade down effect.

Speaker Change: Thank you Brian on your perspective, obviously, it seems like the macro environment changes a few weeks ago, we were talking about a soft landing and now we're.

Speaker Change: Talking about potentially higher rates.

Speaker Change: And then obviously some big names in the prime consumer finance basis weight, but.

Speaker Change: Like are you seeing.

Kind of incremental trade down and in the fourth quarter and expectation.

Speaker Change: From your conversations with retailers.

Speaker Change: Yeah. Thanks, Kyle Yes, I mean, we believe that the fourth quarter benefited in the holiday season benefited from certainly a number of factors one of which was more evidence of a trade down.

Speaker Change: Impact, which as we've talked about for many quarters, we've been anticipating.

Speaker Change: It has been delayed but we did talking to our retail partners. We did hear that finance generally was a bright spot during the holidays.

Speaker Change: And that wasn't just <unk> that was from the primary.

Speaker Change: All the way to <unk>.

Speaker Change: And which demonstrates that the consumers' need for a payment option on big ticket items.

Speaker Change: And we've also heard directly from retailers that their primaries have told them that.

Brian Garner: To echo Steve, these decisions speak to the strong profitability and cash flow generation of our business, which allows us to return value to shareholders through a combination of dividends and share repo. We repurchased 4.7 million shares of our common stock in 2023 at a weighted average price of $29.75. The company generated $204 million of cash from operations, which is net of the working capital needed to fund GMC. Moving to the balance sheet, we ended the quarter with net debt of $444.6 million, comprised of $155.4 million in cash and $600 million of gross debt, which is 1.49 times our trailing 12-month adjusted EBIT. We remain undrawn on our $350 million revolver at the end of the quarter.

Speaker Change: They have tightened and are planning to tightened again in the future.

Speaker Change: The way, we think about it though is it.

Speaker Change: It's really more about the traffic the traffic that is generated of that traffic more consumers. We believe we will need a purchase option overtime purchase option and less of them will be approved by the their primary providers.

Speaker Change: No.

Speaker Change: That's one of the drivers of our belief that we can continue to gain barrels of share within our retail partners.

Speaker Change: And offset the otherwise challenging demand environment.

Speaker Change: The magnitude of the trade down impact the tailwind if you will.

Speaker Change: It is difficult to predict because even if you see top of funnel dynamics.

Speaker Change: It's not a direct linear relationship to funded GMB.

Speaker Change: But it's certainly a removal of a headwind than we.

Speaker Change: We hope it will be a tailwind into the into 2024 and beyond.

Speaker Change: Got it very helpful. Thanks for taking my questions.

Speaker Change: Thanks Scott.

Speaker Change: Our next question.

Speaker Change: Okay.

Speaker Change: Our next question comes from Jason Haas with Bank of America. Your line is open.

Brian Garner: I'll now touch on some key aspects of our 2024 outlook, which was provided in this morning's earnings press release. We expect GMV headwinds to continue through at least the first half of 2024, with the year over year percentage decline of our first quarter GMV down a low single. We expect these first task GMV pressures combined with a gross lease asset balance down 5.2% as we enter 2024 will result in consolidated revenue being down year over. However, our portfolio performance is expected to remain strong, and we will continue to actively manage yield throughout 2020. However, we expect gross margin to be a difficult compare to 2023 for the progressive leasing segment, as we saw a record low percentage of customers exercising their 90 day purchase option in the first half of last year, coupled with lower charge-off rates throughout. We anticipate a slight increase in progressive lease and provision for leased merchandise right off.

Jason Haas: Hey, good morning, and thanks for taking my questions.

Jason Haas: Curious if you could just talk a little bit more color on what you saw in regards to write offs and <unk> I think historically, you've seen write offs will tick down from <unk> to <unk>, but this quarter. We saw a step up and then following on that I'm, just curious about how you're thinking about the cadence of write offs on through July 24.

Jason Haas: Yes.

Jason Haas: There are some seasonal dynamics, there, but right in the middle of our historical range of 7% in there was there was no inclination that.

Jason Haas: The portfolio was degradation in any way beyond our beyond.

Jason Haas: Where we're comfortable.

Jason Haas: All indications are we're in a very healthy place as we enter into 2024.

Jason Haas: As we look at 2024.

Jason Haas: As we've sized up.

Jason Haas: The current macro and what Steve alluded to kind of the the reversion from a goldilocks scenario to a more normalized scenario. We do expect may be just a slight uptick on an annualized basis.

Jason Haas: From what we posted here in.

Jason Haas: 2023, which was below the midpoint of that 6% to 8% so.

Jason Haas: Portfolio remains.

Jason Haas: At the forefront of what we're focused on from a from a.

Brian Garner: But we still expect to deliver yet another year of consistent performance within our targeted annual range of 60. The cost actions that we announced last month, including reducing the workforce, the termination of certain independent sales agent agreements, and Office-Based Consolidation, are intended to drive efficiencies within the cost structure and should allow for the Progressive Leasing Segment's SG&A as a percentage of revenue to remain roughly flat yearly. In 2024, these cost actions will drive roughly $10 million of year-over-year savings for progressive leasing, partially offset by investments and growth initiatives across the leasing business and other operations. Turning to the Consolidated Outlook for 2024, we expect revenues to be in the range of $2.24 billion to $2.34 billion, adjusted EBITDA in the range of $230 million to $250 million, and non-GAAP EPS in the range of $2.70 to $3 This outlook assumes a difficult operating environment with continued soft demand for consumer durable goods.

Jason Haas: P&L management standpoint, and optimizing gross margins, but I think we feel very confident in our ability to deliver within that range before for 2024.

Speaker Change: Jason and just.

Jason Haas: Clarify was there any.

Jason Haas: Decisioning changes.

Jason Haas: Loosen credit at all in the quarter are now.

Steve: Jason This is Steve.

Steve: Were always tweaking and adjusting and testing on the Decisioning, but no wholesale changes were done.

Steve: In the quarter.

Steve: Approval rates in the quarter were slightly higher than the previous year.

Steve: <unk>.

More so in the online channel than in the in store channel, but on a weighted average.

Steve: Slightly higher.

Steve: But obviously as you know those different channels have different conversion.

Steve: Dynamics.

Steve: Theres more purchase intent if you're in the store versus online so.

Steve: An increase or a change to approve rates in store would have a bigger impact on <unk>, but nothing that we believe really flows through into.

Steve: On the <unk>.

Steve: Noticeable change in our portfolio performance or.

Steve: We're certainly write offs.

Speaker Change: Got it that's helpful and then as a follow up I was curious if you could provide some more color on the weakness that.

Speaker Change: You've seen in January I'm curious.

Speaker Change: How that compared on e-commerce versus in store I know there are some bad winter weather in January in certain regions.

Brian Garner: No material changes in the company's decisioning posture, an effective tax rate for non-GAAP EPS of approximately 29%, no material increases in the unemployment rate for our consumer, and no impact from additional share repurchase. In closing, I want to emphasize the company's ability to operate at a high level through a challenging macro environment and thank the team for several wins during 2020, including an increase in the balance of share with top retail partners and the renewal of multi-year exclusive agreements with several key partners. Strong Portfolio Performance and a Disciplined SG Nation

Speaker Change: Also by category. If there were any categories that were noticeably stronger or weaker in January.

Speaker Change: Yes, I mean January is Ben I know you follow it very closely.

Ben: Well documented how.

Ben: Fairly soft and I told the team we weren't allowed to say the word weather on the call that you broke the seal for us So certainly some weather events.

Ben: Some weather events out there.

Ben: Across the country that had more impact on in store then.

Ben: Then online but.

Ben: <unk>.

Ben: Coming out of that coming out of the holiday season, we did CLO in January as we as we said in the prepared remarks down kind of low single digits, there wasn't a market differ.

Ben: Difference between the two different channels.

Ben:

Ben: As far as categories go.

Ben: <unk>.

Ben: We.

Ben: Similar to.

Ben: To the holiday season, we continued to see.

Ben: Consumer electronics was actually performing better.

Ben: <unk>.

Ben: Some of the.

Ben: Promotional driven.

Operator: In 2024, we will continue to focus on growth initiatives balanced with portfolio performance and Controlled Spending to Maximize Shareholder Value. I will now turn the call back over to the operator for the Q&A portion of the call. Operator?

Ben: Furniture stores had had some decent some decent days are decent weekends, but overall it was.

Ben: Softer than we were.

Ben: Planning for.

Ben: And was there any pick up during the Presidents' day.

Speaker Change: We can never too early to say.

Speaker Change: Yes, too early to say, we partnered well with our with our retailers for their the sales that they were the.

Speaker Change: The campaigns they were putting on.

Speaker Change: The data will still come in with.

Operator: Thank you. At this time, we'll conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced.

Speaker Change: With some delay in funded leases in deliveries and things of that nature.

Speaker Change: As you have written <unk>.

Speaker Change: Tax season, and whether it's delayed or not that has an impact on.

Speaker Change: On purchase activity during the Presidents' day so.

Operator: To withdraw your question, please press star 1-1 again. One moment for our first question. Our first question comes from Kyle Joseph with Jeffries. Your line is open. Hey, good morning, Steve and Brian.

Speaker Change: It's difficult to really put a pin in February until we start to see how tax season comes through and really not through till the end of March.

Speaker Change: Going to happen.

Speaker Change: Got it really helpful. Thank you.

Speaker Change: Thanks, David.

Speaker Change: One moment our next question.

Speaker Change: Our next question comes from Bradley Thomas with Keybanc capital markets. Your line is open.

Bradley Thomas: Hi, good morning.

Kyle Joseph: Congratulations on navigating a challenging year. And thanks for taking my questions. I'd love to start just getting your perspective on kind of the health of the underlying consumer. In your guidance kind of run through, you talked about a normalization of EBO activity, but also a little bit higher provision. You know, is that a function?

Bradley Thomas: I apologize if I missed this in the prepared remarks.

Bradley Thomas: Our remarks today I don't think it was in the press release, Steve I was hoping you could talk a little bit about customer counts and how thats been trending I believe youre starting to lap.

Bradley Thomas: A point, where there was a bit of a step down in the number of customers about a year ago. So just curious about how that's trending and how you all are thinking about that going forward.

Steven A. Michaels: What's driving that? Is that really just a function of the kind of the Goldilocks scenario, reversing, obviously weighing inflation, but you know, a relatively healthy employment environment, but just kind of want to get the sense of, you know, what's going on with your consumer. Yeah, you got it, Kyle. Thank you. And you hit on some of it, right.

Steve: Yes, Brian I don't have those numbers right in front of me, we can get those to you.

Speaker Change: After in the after call that we'll file the K here.

Speaker Change: Shortly as well but.

Obviously.

Speaker Change: We have a lot of repeat business.

Speaker Change: We are always looking to add new customers to the to.

Speaker Change: To the ecosystem and that's some of the discussion that we had about our our multi product ecosystem and the other products that we have helping to introduce new customers to our.

Speaker Change: To all of our products, including leasing.

Speaker Change: From the.

Steven A. Michaels: So without going too, too far in the past, obviously, 2022 was a super stressful time for our consumers with inflation. And then 2023 was certainly stable. And maybe you could even say improving. And you mentioned Goldilocks, right?

Speaker Change: From the.

Speaker Change: Existing retailers that we have.

Speaker Change: The more mature those relationships become we will have a higher repeat business. So obviously, we're working very hard to try and add new retailers and then we will get it.

Speaker Change: New influx of customers in that regard, but as far as the year over year customer numbers I don't have those right in front of me.

Steven A. Michaels: So we've talked a lot about the lower 90 day buyouts that happened during tax season. And probably, as if not more importantly, those 90 day buyouts that did not happen, those customers continuing to pay and not like rolling through to a charge off. So they might have had some stress that caused them not to be able to do the 90 day or to choose not to do the 90 day, but they were able to continue making their payments. And that resulted in the Goldilocks.

Speaker Change: All right.

Speaker Change: I'm happy to.

Okay.

Speaker Change: And you guys still hear me.

Speaker Change: Yes, we got you, yes, I was going to.

Speaker Change: I was going to say.

Speaker Change: Youll see in the K there is its down just slightly but consistent with the.

Speaker Change: The decline in <unk> GLA, so right around 5%. So there's not a there's not a disconnect from customer count.

Speaker Change: So it's pretty good system.

Speaker Change: I appreciate it and really I was going to kind of tie it to my follow up question just around.

Speaker Change: Dynamics like average lease balance and.

Steven A. Michaels: Now, as you flip to the back half of 2023, the 90-day activity normalized, and certainly that's where we were exiting 2023, and it's difficult for us to assume that Goldilocks or historically low levels of 90 days are going to repeat. We don't really have a ton of visibility into that right now, because tax season really hasn't really kicked in yet, but that's what's baked into The consumer's in good shape, employment, as you said, is strong. There's certainly been some cost inflation that has an outsized impact on our consumer, but jobs are good, so we're not waiting for the shoe to drop. We're just not assuming that the Goldilocks that happened for most of 23, but certainly more pronounced in the first half of 23, will repeat. We'll have more visibility into that over the next six or eight weeks as tax season plays out, but we're in good shape from a consumer health standpoint. We're just not expecting a complete repeat of 2023.

Speaker Change: Some of the dynamics with deflation.

Speaker Change: We're seeing out from your retail partners.

Speaker Change: Broadly a lot of the hard goods furniture et cetera had been seeing deflation, particularly is lower.

Speaker Change: Lower container rates have flowed through.

Speaker Change: So I was curious how youre seeing that affect your business.

Speaker Change: It's been reducing average lease balance or if the customers are taking up.

Speaker Change: Usable.

Passengers they have with you towards their pro for it and then kind of how youre thinking about that dynamic going forward.

Speaker Change: Yes.

Speaker Change: Yeah, we actually I don't remember if we talked about that last February as call, but it was we expected that to happen.

Speaker Change: Little bit anyways reduction in average basket size or ticket size in 2023.

Speaker Change: And we didn't really see it it was fairly flat in 'twenty three.

Speaker Change: But.

Speaker Change: We are we are seeing and whether it be deflation or promotional activity.

To clear inventory out there is there could be some pressure on average ticket and that is.

Speaker Change: Theres, a small amount of that baked into our forecast for 2024.

Speaker Change: Got you understood.

Speaker Change: If I can squeeze in one last one obviously the new share repurchase program quite quite sizable just just curious if you could give us any context around.

Steven A. Michaels: Got it. Yeah, that makes sense. And then just one follow-up from me. I think you mentioned that you saw a little bit of a tailwind in fourth quarter GMB as a result of the trade-down effect. But I just want to, you know, pick your brain on your perspective.

Speaker Change: Leverage ratios.

Speaker Change: Our potential capacity to get after that program over the course of this year.

Speaker Change: Yes, I mean, we.

Speaker Change: I will call it popped up the repurchase authorization the board did up to $500 million as you know we've been.

Steven A. Michaels: Obviously, it seems like the macro environment is changing. A few weeks ago, we were talking about a soft landing, and now we're talking about potentially higher rates. And then, obviously, some big news in the prime consumer finance space this week. But, you know, give us a sense of, are you seeing, you know, kind of incremental trade-down into the fourth quarter and expectations just from your conversations with retailers? Yeah, thanks, Kyle.

Speaker Change: Pretty aggressive acquirers of our of our stock over the last several years.

Speaker Change: We will continue to look at that for our our preferred method of returning capital to shareholders. However, we did.

Speaker Change: <unk> the dividend.

Speaker Change: As well the board approve that in.

Speaker Change: And so that we look at that as a nice complement to those activities.

Speaker Change: As it relates to.

Speaker Change: Leverage ratios, it's similar to what we have said, we're kind of comfortable in that one five to two turns of net leverage range.

And that will we look at that.

Steven A. Michaels: Yeah, I mean, we believe that the fourth quarter benefited and the holiday season benefited from a number of factors, one of which was more evidence of a trade down impact, which, as we've talked about, for many quarters, we've been anticipating, and it has been delayed. But we did, talking to our retail partners, we did hear that finance generally was a bright spot during the holidays. And that wasn't just LTO; that was from the primary all the way to LTO, and which demonstrates the consumer's need for a payment option on big ticket items. And we've also heard directly from retailers that their primary sources have told them that they have tightened and are planning to tighten again in the future. The way we think about it, though, is that it's really more about the traffic, right, the traffic that is generated. Of that traffic, more consumers, we believe, will need a purchase option, an overtime purchase option, and fewer of them will be approved by their primary providers.

Speaker Change: Annual basis, not necessarily on a quarter to quarter basis, because thats going to fluctuate.

Speaker Change: But.

Speaker Change: The current leverage ratio is comfortable for us and we will generate cash.

Speaker Change: And pretty much all scenarios.

Speaker Change: That we can accomplish from a growth standpoint, and certainly are our forecast for 2024 has us generating additional cash flow and as we define excess cash flow, we'll look to.

Speaker Change: Turn that too.

Speaker Change: We continue to return that to shareholders with our primary vehicle being repurchases, but now we have a dividend as well.

Speaker Change: Great. Thank you so much Steve.

Steve: Thanks, Brad.

Speaker Change: One moment our next question.

Speaker Change: Our next question comes from Anthony <unk> with loop capital markets. Your line is open.

Anthony: Good morning, Thanks for taking my question I guess my first question is in terms of what Youre seeing on the retail partner in the retail partner pipeline.

Anthony: Both from an F&B perspective, but also from an enterprise perspective.

Anthony: Okay.

Speaker Change: Yes, Anthony I mean.

Speaker Change: Obviously pipeline is a big focus of ours continues to be.

Speaker Change: The on the SMB side.

Speaker Change: Depending on which <unk>.

Steven A. Michaels: So, that's one of the drivers of our belief that we can continue to, you know, gain balance of share within our retail partners and offset the otherwise challenging demand environment. The magnitude of the trade-down impact, the tailwind, if you will, is difficult to predict because even if you see top-of-funnel dynamics... It's not a direct or linear relationship to funded GMV, but it's certainly a removal of the headwind.

Speaker Change: Vertical or category or in there's various levels of maturation.

Speaker Change: And as we've talked about a number of times I would say.

Speaker Change: More.

Speaker Change: I'll call it competitive area with more players out there.

Speaker Change: But we do a great job in the regional SMB space and we'll continue to look to grow that business through.

Speaker Change: They're growing existing partnerships as well as converting pipeline the national side or the enterprise side is always a.

Steven A. Michaels: And we hope it will be a tailwind into 2024 and beyond. Got it. Very helpful. Thanks for taking my question. Thanks, Kyle. One moment for our next question, www.projectchambermusic.com. Our next question comes from Jason Haas with Think of America. Your line is open.

Speaker Change: Frustratingly long sales cycle.

Speaker Change: Not really any new updates and certainly not any names for you here this morning, but.

Speaker Change: Clearly remains a top priority of ours.

Speaker Change: And we believe this continued challenging environment as a supportive backdrop.

Speaker Change: For those conversations to lead to conversions.

Speaker Change: Got it that's helpful. And then as you think about <unk> you mentioned that you think the GMB is going to be down low single digits for the first quarter.

Speaker Change: What do you think has to happen for for GMB to possibly inflect.

Speaker Change: This year I mean, you did have nice nice GMB, certainly much better than you're expecting positive GMB growth in quite some time in the fourth quarter. So what do you think has to happen for us to see positive GMB growth.

Jason Haas: Hey, good morning, and thanks for taking my questions. I'm curious if you could provide a little bit more color on what you saw in regards to write-offs in 4Q. I think historically, we've seen write-offs tick down from 3Q to 4Q, but this quarter, we saw a step up. And then following that, I'm just curious about how you think about the cadence of write-offs through 2024. Yeah, Kyle, there is some seasonal dynamics there, but, you know, right in the middle of our historical range of 7%.

Speaker Change: Let's say for the last.

Speaker Change: Three quarters or any of the last three quarters of 2024. Thanks.

Speaker Change: Yes Anthony.

Speaker Change: We have a lot of things going on internally with our existing retail retail partners I think.

Speaker Change: We highlighted a and E comm card integration with a longtime top five partner.

Speaker Change: It's those types of things can help us.

Speaker Change: Overcome an otherwise soft demand environment.

Brian Garner: And there was no inclination that the portfolio was degrading in any way beyond our beyond, you know, where we're comfortable. All indications are we're in a very healthy place as we enter into 2024. You know, as we look at 2024, as we've sized up the current macro and what Steve alluded to kind of the reversion from a Goldilocks scenario to a more normalized scenario, we do expect maybe just a slight uptick on an annualized basis from what we posted here in 2023, which was below the midpoint of that 68%. So, you know, the portfolio remains at the forefront of what we're focused on from a P&L management standpoint and optimizing gross margins. But I think we feel very confident in our ability to deliver within that range for 2020. Mr. Jason, just to clarify, were there any decision changes? Did you loosen credit at all in the quarter, or not? Jason, this is Steve.

Speaker Change: And we have a number of those things on the roadmap and many of those one of the things that the current difficult retail environment is done while we hasnt.

Speaker Change: Resulted in a large enterprise pipeline conversion it has.

Speaker Change: Resulted in.

Speaker Change: Increased prioritization of projects from existing retailers.

Speaker Change: Our internal objectives, including.

Speaker Change: Prague marketplace, our direct to consumer motion that I mentioned in the prepared remarks, as well as our cross sell marketing motions from our other products can kind of manufacture GM.

Speaker Change: <unk> in the face of a tough environment.

Speaker Change: While we are working day and night on large pipeline conversions, we can play a small ball and hit singles and doubles and really inflect that.

Speaker Change: Or overcome hopefully that soft environment. So those are the things we're working on.

Speaker Change: We mentioned in the that.

Speaker Change: That we expect.

Speaker Change: The progress on those things certainly as the year progresses.

Speaker Change:

Speaker Change: And look forward to continuing to report out to you guys on that.

Speaker Change: That's helpful. Thank you.

Speaker Change: One moment our next question.

Speaker Change: Our next question comes from Bobby Griffin with Raymond James Your line is open.

Good morning. This is Alexandra <unk> on for Bobby Griffin. Thank you for taking our question maybe.

Steven A. Michaels: We were always tweaking and adjusting and testing the decisioning, but no wholesale changes were made in the quarter. Approval rates in the quarter were slightly higher than the previous year, more so in the online channel than in the in-store channel, but on a weighted average, slightly higher. And obviously, as you know, those different channels have different conversion rates. There's more purchase intent if you're in the store versus online. So an increase or a change to approval rates in the store would have a bigger impact on GMV, but nothing that we believe really flows through into a noticeable change in our portfolio performance or, or certainly right on. Got it.

Maybe first.

Alexandra: Just a follow up on the GMB My apologies if I missed it in the prepared remarks, but what is the full year 2024 sales guidance imply for the full year <unk> outlook.

Speaker Change: Yes, we don't actually guide for <unk> for the year. So obviously everybody has their models and you can kind of back into revenue although disposition types.

Speaker Change: And those the revenue composition will have a big <unk>.

Speaker Change: Factor in that so what we what we did last year and what we intend to do this year is give a little bit of view on what our what we think <unk> be.

Speaker Change: For the quarter as we were reporting on it.

Speaker Change: The next quarter in front of US as we are reporting on the last one but we have not given a full guide for <unk> for 2024.

Steven A. Michaels: That's helpful. And then, as a follow-up, I was curious if you could provide some more color on the weakness that you've seen in January. I'm curious how that compared on e-commerce versus in stores. I know there's some bad winter weather in January in certain regions.

Speaker Change: Okay understood and then maybe just on 2020 for profitability guidance, what are the building blocks to kind of get us to the low end versus the high end of that range would suggest Robert.

Robert: Independent or are there some other puts and takes there.

Robert: Yes, I think what I'd point you to.

Robert: In terms of in terms of some of the variability that exists within the model obviously, there's there's the.

Steven A. Michaels: And then also by category, if there were any categories that were noticeably stronger or weaker in January. Yeah, I mean, January has been, I know you follow very closely, pretty well documented how fairly soft it is, and I told the team we weren't allowed to say the word weather on the call, but you broke the seal for us. So certainly some weather events, some weather events out there and across the country that had more impact on in-store than online, but coming out of the holiday season, we did see a low in January, as we said in prepared remarks, down kind of low single digits, there wasn't a market impact or difference between the two different channels as far as categories go.

The revenue dynamics, which you pointed to in a challenging environment I would also.

Robert: Just highlight the gross profit and the gross margin dynamic I think.

Robert: If we would explore different scenarios there's there's.

Robert: The potential for variability there I think we're we're confident in our ability to manage the portfolio like we said, but if if the goldilocks scenario that we saw in 2023 persist for any.

Robert: Duration here in 2024, Thats, obviously upside to the model.

Robert: And we will continue to protect against the downside. So I think the gross margin or gross profit as outside revenue is the other single biggest factor from an SG&A perspective.

Robert: I think those though.

Robert: Cost dynamics remained well within our control and when should we manage and align those with what we're seeing on topline.

Robert: Yes, it's really revenue and the gross margin dynamic.

Steven A. Michaels: You know, we, we added similar to, to the holiday season, we continued to see Consumer Electronics was actually performing better, and some of the promotionally driven furniture stores had had some decent days or decent weekends. But overall, it was softer than we were planning for. Was there any pickup during the President's Day weekend, or is it too early to say? Yeah, too early to say. We partnered well with our retailers for their sales that they were the campaigns they were putting on. You know, the data will still come in with some delay and funded leases and deliveries and things of that nature. And as you have written, tax season and whether it's delayed or not has an impact on purchase activity during during President's Day.

Okay. That's very helpful. And then lastly for me roughly stable dividend.

Speaker Change: Hey, guys upping.

Speaker Change: Up in the share repurchase.

Speaker Change: Just given the strong cash flow generation of the business what is the implied free cash flow off of the guide should we expect a similar adjusted EBITDA to cash flow conversion in 2023, and 2023 and 2024.

Speaker Change: Yes, I mean, I think Thats fair.

Speaker Change: There is there's cash taxes dynamic where you might have.

Speaker Change: A little more.

Speaker Change: And cash taxes, but I think the relationship between EBITDA and.

Speaker Change: Free cash flow is relatively consistent the big the big variable in that is <unk> and is you're putting working capital out on the street. So what I would pay attention to there is obviously, if we start to.

Speaker Change: Exceed our GM V plan.

Speaker Change: <unk> starts to come later in the year that can be that can be a pretty significant usage of free cash flow. So that's the that's the variability I would point you towards but but otherwise you're you're thinking about it right.

Steven A. Michaels: So it's difficult to really put a pin in February until we start to see how tax season comes through and really not until the end of March what what's going to happen. Really helpful. Thank you. Thanks, Steve. One moment for our next question. Our next question comes from Bradley Thomas with KeyBank Capital Markets. Your line is open. Hi, good morning.

Speaker Change: The consistency between EBITDA and free cash flow absent those dynamics.

Speaker Change: Thank you so much best of luck in 2024.

Speaker Change: Thank you.

Speaker Change: That concludes our question and answer session. At this time I would like to turn the call back to Steve Michaels, President and Chief Executive Officer for closing remarks.

Bradley Thomas: I apologize if I missed this in the prepared remarks, but I don't think it was in the press release. Steve, I was hoping you could talk a little bit about the customer count and how that's been trending. I believe you're starting to lap a point where there was a bit of a step down in the number of customers about a year ago. So I'm just curious about how that's trending and how you all are thinking about that going forward. Yeah, Brad, I don't have those numbers right in front of me.

Steven A. Michaels: Yes, I'd like to again, thank you guys for joining us this morning and for your continued interest in Prague Holdings. Our teams did a great job and delivered a strong 2023, we feel good about the positioning of our portfolio and we're making the right investments in people and technology to further our three pillared strategy of grow enhance expand.

Steven A. Michaels: We look forward to updating you on our progress on 2024 as initiatives during our Q1 call in late April.

Steven A. Michaels: If you have a great day.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Speaker Change: Okay.

Steven A. Michaels: We can get those to you after the after call, and we'll file the K here shortly as well. But, you know, obviously, we have a lot of repeat business. We are always looking to add new customers to the ecosystem. And that's some of the discussion that we had about our multi-product ecosystem and the other products that we have helping to introduce new customers to all of our products, including leasing from the from the existing retailers that we have. You know, the more mature those relationships become, we will have higher repeat business. So obviously, we're working very hard to try and add new retailers, and then we'll get a new influx of customers in that regard. But as far as the year's customer numbers are concerned, I don't have those right in front of me. But I'm happy. Can you guys still hear me?

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Brian Garner: Yeah, we got you. Yeah, I was gonna say I've got a you'll see in the K there, it's down just slightly but consistent with the decline in GLA, so right around 5%. So there's not a disconnect from customer count in GLA. So it's pretty, I appreciate it.

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Steven A. Michaels: And really, I was going to kind of tie it to my follow-up question just around dynamics like average lease balance and some of the dynamics with deflation that we're seeing from your retail partner. You know, broadly, a lot of the hard goods, furniture, etc., you know, have been seeing deflation, particularly as, you know, lower container rates have flowed through. So I was curious, you know, how you're seeing that affect your business? You know, if it's been reducing the average lease balance, or if the customers are taking up usable capacity that they have with you for which they're approved, and then kind of how you're thinking about that dynamic going forward. Yeah, Yeah, we actually, I don't remember if we talked about that on last February's call, but it was, we expected that to happen a little bit anyways, a reduction in average basket size or ticket size in 2023. And we didn't really see it; it was fairly flat in 23.

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Steven A. Michaels: But, you know, we're seeing, and whether it be deflation or promotional activity to clear inventory out, there could be some pressure on average ticket prices, and that is there's a small amount of that baked into our forecast for 2024. Gotcha, understood. Well, if I could squeeze in one last one.

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Steven A. Michaels: Obviously, the, you know, new share repurchase program, quite, quite sizable. Just curious if you could give us any context around, you know, leverage ratios or potential capacity to, you know, get after that program over the course of this year. Yeah, I mean, we, we, we, I'll call it topping up the repurchase authorization, the board did up to 500 million. As you know, we've been pretty aggressive acquirers of our stock over the last several years, and we can will continue to look at that for our preferred method of returning capital to shareholders. However, we did initiate a dividend, as well; the board approved that, and we look at that as a nice compliment to those activities. As it relates to leverage ratios, it's similar to what we have said. We're kind of comfortable in that one and a half to two turns of net leverage range.

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Steven A. Michaels: And we look at that on an annual basis, not necessarily on a quarter to quarter basis because that's going to fluctuate. But the current leverage ratio is comfortable for us, and we will generate cash in pretty much all scenarios that we can accomplish from a growth standpoint. And certainly, our forecast for 2024 has us generating additional cash flow. And as we define excess cash flow, we'll look to return that to... continue to return that to shareholders with our primary vehicle being repurchases, but now we have a dividend as well. Great. Thank you so much, Steve. Thanks, Brad.

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Operator: One moment for our next question. Our next question comes from Anthony Chukumba with Loop Capital Markets. Your line is open. Good morning.

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Anthony Chukumba: Thanks for taking my question. I guess my first question is in terms of what you're seeing on the retail side of the retail partner pipeline, both from an F&B perspective, but also from an enterprise perspective. Yeah, Anthony, I mean, obviously, pipeline is a big focus of ours and continues to be. On the SMB side, depending on which vertical or category you're in, there are various levels of maturation. And as we've talked about a number of times, that's a more, I'll call it, competitive area; there are more players out there. But we do a great job in the regional SMB space, and we'll continue to look to grow that business through growing existing partnerships, as well as converting pipeline. The national side or the enterprise side is always a frustratingly long sales cycle, and not really any new updates and certainly not any names for you here this morning. But clearly remains the top priority of ours, and we believe this continued challenging environment is a supportive backdrop for those conversations to lead to conversion. I got it.

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Steven A. Michaels: That's helpful. And then as you think about GMB, you mentioned that you think your GMB is going to be down low single digits for the first time. What do you think has to happen for GMB to positively inflect this year? I mean, you did have a nice GDP, certainly much better than you expected, and the first positive GDP growth in quite some time in the fourth quarter. So what do you think has to happen for us to see positive GDP growth, let's say, in the last three quarters or any of the last three quarters of 2024? Thanks.

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Steven A. Michaels: Yeah, Anthony, I mean, we have a lot of things going on internally with our existing retail partners. I think we highlighted an e-commerce cart integration with a longtime Top 5 partner. Those types of things can help us overcome an otherwise soft demand environment, and we have a number of those things on the roadmap. And many of those, one of the things that the current difficult retail environment has done, while it hasn't resulted in a large enterprise pipeline conversion, it has resulted in increased prioritization of projects from existing retailers.

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Steven A. Michaels: And so our internal objectives, including PROG Marketplace, our direct-to-consumer motion that I mentioned in the prepared remarks, as well as our cross-sell marketing motions from our other products, can kind of manufacture GMV in the face of a tough environment. And while we're working day and night on large pipeline conversions, we can play small ball and hit singles and doubles and really inflect that or overcome, hopefully, that soft environment. So those are the things we're working on, and we mentioned that we expect progress on those things, certainly as the year progresses, and look forward to continuing to report back to you guys on that. That's helpful, thank you. Please take a moment for our next question. Our next question comes from Bobby Griffin with Raymond James. Your line is open. Good morning, this is Alessandra Jimenez on behalf of Bobby Griffin.

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Alessandra Jimenez: Thank you for taking our questions. Maybe first, just a follow-up on GMV. My apologies that I missed it in the prepared remarks, but what is the full year 2024 sales guidance apply for the full year of GMV outlook? Yeah, we don't actually guide GMV for the year.

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Steven A. Michaels: So obviously, everybody has their models, and you can kind of back into revenue, although disposition types and revenue composition will have a big factor in that. So what we did last year and what we intend to do this year is give a little bit of a view on what our GMV will be for the quarter as we're reporting on it, or the next quarter in front of us as we're reporting on the last one, but we have not given a full guide for GMV for 2024. Okay, I understand.

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Brian Garner: And then maybe just on 2024 profitability guidance, what are the building blocks to kind of get us to the low end versus the high end of that range? Is it just, you know, revenue-dependent, or there's some other put and takes there? Yeah, I think what I'd point you to, in terms of some of the variability that exists within the model, obviously, there's the revenue dynamics, which you pointed out in a challenging environment. I would also just highlight the gross profit and the gross margin dynamic. I think, As we've explored different scenarios, there's the potential for variability there. I think we're confident in our ability to manage the portfolio like we said, but if the Goldilocks scenario that we saw in 2023 persists for any duration here in 2024, that's obviously upside to the model, and we'll continue to protect against the downside. So I think the gross margin and gross profit, outside of revenue, is the other single biggest factor. From an SD&A perspective...

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Brian Garner: I think those... Those cost dynamics remain well within our control, and we'll make sure we manage and align those with what we're seeing on the top line. Yeah, it's really revenue and gross margin dynamics. Okay, that's very helpful.

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Alessandra Jimenez: And then lastly, for me, we're pleased to see the dividend announcement. And then, as I said, increasing the share repurchase, just given the strong cash flow generation of the business, what is the implied free cash flow off of the guide? Should we expect a similar adjusted EBITDA to cash flow conversion in 2023, 2023, and 2024? Yeah, I mean, I think that's fair.

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Brian Garner: There's a cash taxes dynamic where you might have a little more in cash taxes, but I think the relationship between EBITDA and free cash flow is relatively consistent. The big, big variable in that is GMV, and as you're putting working capital out on the street. So what I'd pay attention to there is obviously if we start to exceed our GMV plan, or GMV starts to come later in the year, that can be a pretty significant usage of free cash flow. So that's the variability I'd point you towards, but otherwise, you're thinking about it right. The consistency between EBITDA and free cash flow is absent both.

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Alessandra Jimenez: Thank you so much. Best of luck in 2024. Thank you. That concludes the question and answer session. At this time, I would like to turn the call back to Steve Michaels, President and Chief Executive Officer, for closing remarks. Yeah, I'd like to again thank you guys for joining us this morning and for your continued interest in PROG Holdings. Our teams did a great job and delivered a strong 2023. We feel good about the positioning of our portfolio. And we're making the right investments in people and technology to further our three-pillared strategy of grow, enhance, and expand. We look forward to updating you on our progress on 2024's initiatives during our Q1 call in late April. Hope you have a great day!

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Alessandra Jimenez: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Thanks for watching! ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ??

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