PROG Holdings, Inc.

Good day and welcome to the Prague Holdings Inc. Q2 2021 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to John Barr, VP of Investor Relations. Please go ahead.

Thank you and good morning, everyone. Welcome to the Prague Holdings second quarter 2021 earnings call. Joining me this morning are Steve Michaels, Prague Holdings President and Chief Executive Officer, and Brian Garner, our Chief Financial Officer. 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 the updated outlook for our full year 2021 adjusted EBITDA, non-GAAP earnings per share, and GAAP earnings per share performance. I want to call your attention to our safe harbor provision for forward-looking statements, that can be found at the end of our earnings release. The Safe Harbor provision identifies risks that may cause actual results to differ materially from the content of our forward-looking statements. There are additional risks that can be found in our latest 10-K filing. Listeners are cautioned not to place undue emphasis on forward-looking statements, and we undertake no obligation to update any such statements. On today's call, we will be referring to certain non-GAAP financial measures, including EBITDA, an adjusted EBITDA, non-GAAP net earnings, and non-GAAP EPS, which have been adjusted for certain items which 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 operational performance. With that, I will now turn the call over to Steve Michaels. Steve?

Thanks, John, and good morning, everyone. We're excited to report our Q2 financial results, which reflect an acceleration of growth as we continue to navigate the landscape of the pandemic. GMV for our progressive leasing segment grew 25.2% over the prior year period, an increase from the 10.4% GMV growth in Q1. While this comparison is against retail shutdowns occurring during the depths of the pandemic, GMV growth in the second quarter of 2021 was largely driven by the continued scaling of large national accounts and increased penetration in e-commerce. E-commerce GMV grew 274% in the quarter and represented 13% of Progressive Leasing's GMV. We continue to expect e-commerce to be a meaningful driver of growth in the future. As we recently announced, We've enhanced our plug and play capabilities with the deployment of our updated Magento 2 and WooCommerce plugins. The enhancements allow one-click integration by retailers and reduce the time from application to checkout for consumers. We've already seen positive momentum from these updates with some of our existing POS partners, and we're engaged in discussions with potential new retailers that utilize these e-commerce platforms. We believe that increasingly the consumer's purchase journey will be a multi-channel experience, and we offer solutions that allow them to transact when and where they choose. As I mentioned, Progressive Leasing delivered a strong 25.2% GMV growth rate in the quarter as compared to the prior year period. We expect Q2 will be the peak of our year-over-year GMV growth rate in 2021. with the back half of the year weighted more heavily towards Q4 growth. We continue to believe we will deliver mid to high teens GMV growth for the full year 2021. We should note that there remain a number of uncertainties, including the impact of monthly child tax credit payments, which we will see through the rest of 2021 and potentially beyond. While data is very limited, Our expectation is that we will not see a spike in early purchase options similar to the spike we saw following the large single payment stimulus checks that benefited portfolio performance but served as a headwind to GMV growth. We continue to hear from our POS partners that the use of POS financing across the credit spectrum remains below pre-pandemic levels. Our revenues in the second quarter were $660 million, compared to $599 million last year, an increase of 10.1%. Our growth in revenue was driven by a continued improvement in our portfolio size as strong GMV performance added to our least asset balance in the period. 90-day buyouts declined from the peak of late Q1 2021, although they are still higher than pre-pandemic levels. Gross margins benefited from strong portfolio performance. During the quarter, we continue to experience delinquencies and write-offs near historic lows, driving our EBITDA above our more typical annual range of 11% to 13%. Our adjusted EBITDA was $104.9 million versus $73.5 million last year, an increase of 42.7% for a margin of 15.9% of revenues. Recently, we completed the acquisition of four technologies, a Miami-based BNPL company that allows consumers to pay for merchandise through four interest-free installments. We are excited about how combining Four with Progressive Leasing and Vive builds upon our direct consumer growth strategy and delivers an exceptional value proposition to retailers looking to offer their customers additional payment options. We're pleased that the Four team is excited about the opportunity for value creation and has agreed to continue leading 4 Technologies as a separate business and subsidiary of Prague Holdings Inc. As disclosed in our second quarter 10Q, we paid $23 million of cash for the business. There are also several multi-year performance-based metrics that could result in additional equity-based payments for the 4 team. Most importantly, we believe the addition of 4 to our digital platform will allow us to grow and leverage our large database of loyal customers, as well as increase the value of our offerings to current and potential new retail partners. We do not expect the transaction to be material to our consolidated financial results in the near term, but strategically, we think owning four will drive incremental growth in our core LTO business. The company also repurchased approximately 50 million of stock during the quarter. Even with the growth in GMV and the cash used in the acquisition and buybacks, we ended the quarter with a net cash position of $88 million. Our capital priorities remain unchanged. First, we will fund organic growth. Next, we will look for strategic M&A opportunities that are largely focused around new products or technical capabilities. And lastly, we will return excess cash to shareholders. In Q2, we delivered across all three of these capital allocation priorities. Finally, I want to thank our employees for their commitment to our customers and partners as we strive to innovate and tailor solutions that will enable consumers to shop however, wherever, and whenever they want. I will now turn the call over to our CFO, Brian Garner, who will discuss our financial results in more detail. Brian?