PROG Holdings (PRG) risk factors, FY2024 10-K

Risks Related to our Regulatory Environment, Industry and Businesses

1. 01Progressive Leasing serves subprime consumers, and its lease-to-own business model poses inherent risks that may have a material and adverse effect on our results, financial condition, and prospects
2. 02These risks, which may have a material and adverse effect on several aspects of our performance in the future, are described further below
3. 03Progressive Leasing's relationship with its largest POS partners will have a significant impact on our operating revenues in future periods. The loss of any key POS partners would have a material adverse effect on our business
4. 04If Progressive Leasing is unable to attract additional POS partners and retain and grow its relationships with its existing POS partners, several aspects of our performance would be materially and adversely affected
5. 05other incentive payments offered to those POS partners by Progressive Leasing, and its ability to perform under, and maintain, its POS partner agreements, most of which have terms that do not exceed three years
6. 06If Progressive Leasing is unable to attract new consumers and retain and grow its relationships with its existing customers, several aspects of our performance would be materially and adversely affected
7. 07Although Vive and Four also serve subprime and near-prime consumers, their business models differ significantly from Progressive Leasing's lease-to-own business, which means each of these businesses have different risk profiles
8. 08The risks that are specific to Vive may also have a material and adverse effect on several aspects of our performance in the future
9. 09Our efforts to modernize and enhance certain enterprise-wide information management systems and technologies could adversely impact our businesses and operations
10. 10Our capital allocation strategy and financial policies, including our current stock repurchase and dividend programs, as well as any potential debt repurchase program may not be effective at enhancing shareholder value, or providing other benefits we expect
11. 11Our businesses operate in highly and increasingly competitive industries, and their inability to compete successfully would materially and adversely affect several aspects of our performance
12. 12If Progressive Leasing fails to maintain a consistently high level of customer satisfaction and trust in its brand, our business, results of operations, financial condition, and prospects would be materially and adversely affected
13. 13Any significant disruption in our vendors' information technology systems, or disruption in the information our businesses rely on in their lease and loan decisioning, may materially and adversely affect several aspects of our performance
14. 14Our business continuity and disaster recovery plans may not be sufficient to prevent losses in the event we experience a significant disruption in, or errors in, service on our platforms
15. 15Our businesses rely extensively on models in managing many aspects of their businesses, and if those models are not accurate or are misinterpreted, such errors may have a material adverse effect on several aspects of our performance
16. 16Real or perceived software errors, failures, bugs, defects, or outages may have a material and adverse effect on several aspects of our performance
17. 17While we take precautions to prevent consumer identity fraud, it is possible that identity fraud may still occur or has occurred, which may adversely affect the performance of our businesses' lease and loan portfolios
18. 18advertising and marketing materials. The Company is fully cooperating with the FTC in responding to the FTC's request for information and documents
19. 19Supply chain interruptions and inventory shortages, increases in the costs of imported goods, and other factors affecting the performance of our retail partners may have a material and adverse effect on several aspects of our business
20. 20E-commerce lease and loan origination processes may give rise to greater risks than in-store originations and processes
21. 21The concentration of our POS partners in one region or a limited number of markets may expose us to risks of adverse economic developments that are greater than if our POS partners were more geographically diverse
22. 22Progressive Leasing's and Vive's results depend on prominent presentation, integration, and support of their products and services by their POS partners
23. 23If we fail to promote, protect, and maintain our brands in a cost-effective manner, they may lose market share and several aspects of our performance may be materially and adversely affected
24. 24We may improve our products and services in ways that forego short-term gains
25. 25We may pursue acquisitions, strategic investments or divestitures, and the failure of an acquisition, investment or divestiture to produce the anticipated results may have a material adverse impact on several aspects of our performance
26. 26From time to time, we may undertake significant cost reduction initiatives, which may not be adequate or may have unintended consequences that could be disruptive to our businesses
27. 27Our ability to utilize certain types of contractual provisions designed to limit costly litigation, including class actions, may not be enforceable
28. 28The loss of the services of our key executives or our inability to attract and retain key talent, particularly with respect to our information technology function, may have a material adverse impact on our operations
29. 29Employee misconduct or misconduct by third parties acting on our behalf may harm us by subjecting us to monetary loss, significant legal liability, regulatory scrutiny and reputational harm
30. 30We may be unable to sufficiently obtain, maintain, protect, or enforce our intellectual property and other proprietary rights
31. 31We may be sued by third parties for alleged infringement, misappropriation, or other violation of their intellectual property or other proprietary rights
32. 32Some aspects of our information technology platforms include open source software, and our use of open source software may negatively affect several aspects of our performance
33. 33Progressive Leasing's and Vive's results are somewhat seasonal, which causes our results to fluctuate
34. 34Vive's and Four's allowance for loan losses may prove to be insufficient to cover losses on outstanding loans

Risks Related to Our Indebtedness

1. 35We may not be able to generate sufficient cash to service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful
2. 36intercompany payments to us, these limitations are subject to qualifications and exceptions. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness
3. 37Despite our current level of indebtedness, we and our subsidiaries may still be able to incur substantially more debt. This may further exacerbate the risks to our financial condition described above
4. 38The terms of the Revolving Facility and the indenture that governs the Senior Notes may restrict our current and future business plans and strategies, particularly our ability to respond to changes or to take certain actions
5. 39Our variable rate indebtedness subjects us to interest rate risk, which may cause our debt service obligations to increase significantly
6. 40Our stock price is volatile, and you may not be able to recover your investment if our stock price declines
7. 41If we fail to establish and maintain effective internal control over financial reporting and disclosure controls and procedures, we may not be able to accurately report our financial results, or report them in a timely manner
8. 42Our risk management processes and procedures may not be effective in mitigating our risks
9. 43If securities or industry analysts publish research that is unfavorable about our business, our stock price and trading volume may decline
10. 44Our actual operating results may differ significantly from our guidance
11. 45The principal reason we release guidance is to provide a basis for our management to discuss our business outlook with analysts and investors. We do not accept any responsibility for any projections or reports published by any of these persons
12. 46We are a holding company and are dependent on the operations and funds of our subsidiaries