THE AARON'S COMPANY, INC. Special Note Regarding Forward-Looking Information: Except for historical information contained herein, the matters set forth in this Form 10-Q are forward-looking statements. These statements are based on management's current expectations and plans, which involve risks and uncertainties. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as "anticipate," "believe," "could," "estimate," "expect," "intend," "plan," "project," "would," "should," and similar expressions. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the filing date of this Quarterly Report and which involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. These risks and uncertainties include factors that could cause our actual results and financial condition to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include, among others, those discussed in "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year endedDecember 31, 2020 (the "2020 Annual Report"). Except as required by law, the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances after the filing date of this Quarterly Report. The following discussion should be read in conjunction with the condensed consolidated financial statements as of and for the three months endedMarch 31, 2021 and 2020, including the notes to those statements, appearing elsewhere in this report. We also suggest that management's discussion and analysis appearing in this report be read in conjunction with the management's discussion and analysis and consolidated financial statements included in our 2020 Annual Report. Business OverviewPROG Holdings, Inc. ("we," "our," "us," the "Company", or "PROG Holdings ") is a financial technology holding company with two operating and reportable segments: (i)Progressive Leasing , a leading provider of in-store and e-commerce lease-to-own solutions; and (ii) Vive Financial ("Vive"), which offers omnichannel second-look revolving credit products. OurProgressive Leasing segment provides consumers with lease-purchase solutions through its point-of-sale partner locations and e-commerce website partners inthe United States (collectively, "POS partners"). It does so by purchasing merchandise from the POS partners desired by customers and, in turn, leasing that merchandise to the customers through a cancellable lease-to-own transaction.Progressive Leasing has no stores of its own, but rather offers lease-purchase solutions to the customers of traditional and e-commerce retailers. Our Vive segment primarily serves customers that may not qualify for traditional prime lending offerswho desire to purchase goods and services from participating merchants. Vive offers customized programs, with services that include revolving loans through private label and Vive-branded credit cards. Vive's current network of POS partner locations and e-commerce websites includes furniture, mattresses, home exercise equipment, and home improvement retailers, as well as medical and dental service providers. Separation and Distribution of the Aaron's Business Segment OnNovember 30, 2020 ,PROG Holdings (previously "Aaron's HoldingsCompany, Inc. ") completed the separation of its Aaron's Business segment from itsProgressive Leasing and Vive segments. The separation was effected through a tax-free distribution of all outstanding shares of common stock of The Aaron'sCompany, Inc. (referred to herein as "The Aaron's Company") to thePROG Holdings shareholders of record as of the close of business onNovember 27, 2020 (referred to as the "separation and distribution transaction"). Prior to the separation and distribution transaction, the Company's operating segments wereProgressive Leasing , the Aaron's Business, and Vive. All direct revenues and expenses of the Aaron's Business operations have been classified within discontinued operations, net of income tax, within our consolidated statements of earnings for all periods through the separation and distribution date ofNovember 30, 2020 . Certain corporate expenses that had previously been reported as expenses of the Aaron's Business segment in 2020 did not qualify for classification within discontinued operations and are reported as unallocated corporate expenses for segment purposes within continuing operations. These unallocated corporate expenses are in addition to corporate overhead costs allocated to theProgressive Leasing and Vive segments for periods through the separation and distribution date ofNovember 30, 2020 . We have focused our discussion in this management's discussion and analysis on our continuing operations ofProgressive Leasing , Vive, and unallocated corporate expenses. 21 --------------------------------------------------------------------------------
COVID-19 Pandemic
OnMarch 11, 2020 , theWorld Health Organization declared the outbreak of COVID-19 a pandemic. Since then, the COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and increased unemployment levels. Although the temporary showroom and/or store closures or reduced hours and scope of operations that many of our POS partners experienced during portions of 2020 have eased, other pandemic-related factors continue to unfavorably impact many of our POS partners, including decreased in-store customer traffic, as compared to historical levels, due to consumer fears associated with the pandemic. While customer demand improved throughout the end of 2020 and into 2021, supply chain disruptions have resulted in shortages of available products at certain POS partners, primarily in the appliance, electronics and furniture categories. These pandemic-related developments had an unfavorable impact onProgressive Leasing's generation of new lease agreements, gross merchandise volume and revenues. The COVID-19 pandemic may adversely impact our business, results of operations, financial condition, liquidity and/or cash flow in future periods. The extent of any such adverse impacts will depend on future developments, which are highly uncertain and cannot be predicted, including (i) the length and severity of the pandemic, including, for example, the emergence of more contagious and harmful variants of COVID-19 and localized outbreaks or additional waves of COVID-19 cases; (ii) the impact of any such outbreaks on our customers, POS partners, and employees; (iii) the nature of any government orders issued in response to such outbreaks; (iv) the effectiveness and availability of vaccines; and (v) whether there is any additional government stimulus in response to the pandemic, as well as the nature, timing and amount of such stimulus payments. In response to COVID-19, theU.S. government enacted certain fiscal stimulus measures in several phases to assist in counteracting the economic disruptions caused by the pandemic. OnMarch 27, 2020 , the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law. A second round of stimulus benefits was enacted and paid inDecember 2020 . OnMarch 11, 2021 , the American Rescue Plan Act of 2021 was signed into law, providing a third round of stimulus payments to individuals and extending supplemental unemployment assistance throughSeptember 6, 2021 , while exempting the first$10,200 of unemployment benefits from income tax. We believe all of those government stimulus measures provided economic support to many of our customers, resulting in an increase in payment activity and early lease buyouts, as well as lease merchandise, accounts receivable, and loan receivable write-offs trending lower. We believe a significant portion of ourProgressive Leasing and Vive customers received stimulus payments and/or federally supplemented unemployment payments during 2020 and 2021, which enabled them to continue making payments to us under their lease-to-own or credit card agreements, despite the economically challenging times resulting from the COVID-19 pandemic. We cannot be certain that our customers will continue making their payments to us at the current levels, in future periods, if the federal government does not continue supplemental unemployment benefits and/or enact additional stimulus measures. For example, if the rate of unemployment remains relatively high, the government's failure to do so could result in a significant reduction in the portion of our customerswho continue making payments owed to us under their lease-to-own or credit card agreements. Additionally, with respect to the stimulus provided under the American Rescue Plan Act and any further stimulus measures that may be enacted in the future, we cannot be certain that our customers will use such benefits to continue making payments to us at the current levels under their lease-to-own or credit card agreements. Additionally, any future stimulus payments and/or federally supplemented unemployment payments may result in changing consumer spending behaviors resulting in fewer consumers executing lease-to-own or credit card agreements with us and/or more existing customers electing early lease buyouts options, which have lower margins. 22 --------------------------------------------------------------------------------
Highlights
The following summarizes significant financial highlights from the first quarter of 2021: •We reported revenues of$721.0 million , an increase of 7.9% compared to the first quarter of 2020. Our growth in revenues was primarily driven by strong customer payment activity and elevated early lease buyouts, which we believe is the result of recent government stimulus measures that are benefiting our customers as discussed above. We also experienced continued growth from large national POS partners and an increase in lease revenues generated from e-commerce platforms. These increases were partially offset by a delayed tax refund season and smaller average refunds. •Earnings before income taxes increased to$105.6 million compared to$49.8 million in 2020. The increase is primarily due to the overall revenue growth driven by strong customer payment activity and a decrease in the provision for lease merchandise write-offs. •The$55.8 million increase in earnings before income taxes, compared to first quarter of 2020, was also impacted by the following: •In the first quarter of 2020, we established incremental lease merchandise and accounts receivable COVID-19 allowances of$16.1 million in response to the economic uncertainty created by the pandemic. In the first quarter of 2021, we released$2.5 million of those allowances, resulting in an$18.6 million increase to earnings before income taxes compared to the first quarter of 2020. As ofMarch 31, 2021 , we had$8.5 million and$3.2 million of incremental lease merchandise and accounts receivable COVID-19 allowances, respectively. Given the significant uncertainty regarding customer payment behaviors resulting from the COVID-19 pandemic, including the existence and/or extent of any future government stimulus measures, a high level of estimation was involved in determining the allowances as ofMarch 31, 2021 . If we continue to experience the recent strong customer payment trends and low levels of write-offs in future periods, some or all of these incremental COVID-19 allowances may be reversed in future periods as a change in managements estimated allowance for write-offs. •In the first quarter of 2020, the allowance for loan losses for Vive increased by$7.0 million due to unfavorable forecasted macroeconomic conditions resulting from the pandemic. In the first quarter of 2021, we released$2.4 million of allowances for loan losses, primarily due to forecasted improvements in macroeconomic conditions as ofMarch 31, 2021 , resulting in a$9.4 million increase in earnings before income taxes compared to the first quarter of 2020. •We recognized$5.7 million of unallocated corporate costs in the first quarter of 2020, which relates to overhead costs previously recognized within the Aaron's Business segment that did not qualify for classification within discontinued operations. These unallocated corporate costs incurred in the first quarter of 2020 were partially offset by additional corporate costs incurred in the first quarter of 2021 related to new personnel and functions associated with the Company becoming a standalone public company following theNovember 30, 2020 separation and distribution transaction. Key Operating Metrics Gross Merchandise Volume. We believe gross merchandise volume (GMV) is a key performance indicator of ourProgressive Leasing and Vive segments, as it provides the total value of new lease and loan originations written into our portfolio over a specified time period. GMV does not represent revenues earned by the Company, but rather is a leading indicator we use in forecasting revenues the Company may earn in the short-term.Progressive Leasing's GMV is defined as the retail price of merchandise acquired byProgressive Leasing , which it then leases to its customers. Vive's GMV is defined as gross loan originations. 23 -------------------------------------------------------------------------------- The following table presents our GMV for the Company for the periods presented: For the Three Months EndedMarch 31 (Unaudited and In Thousands) 2021 2020 GMV: Progressive Leasing$ 510,046 $ 462,025 Vive 55,898 25,376 Total GMV$ 565,944 $ 487,401 The increase inProgressive Leasing's GMV was driven by both higher average merchandise price per lease and by an increase in the quantity of new leases originated in the first quarter of 2021, compared to the first quarter of 2020, resulting from continued scale from large national POS partners and increased penetration in e-commerce. E-commerce channels generated 14.3% ofProgressive Leasing's GMV in the first quarter of 2021 compared to 1.9% in the first quarter of 2020. Vive's GMV growth was driven by an increase in loan originations at both new and existing POS partners. OurProgressive Leasing and Vive GMV was unfavorably impacted by showroom and/or store closures and other disruptions for our POS partners in the second half ofMarch 2020 , as a result of governmental orders and voluntary measures taken by our POS partners in response to the COVID-19 pandemic, which also contributed to higher GMV in the first quarter of 2021 when compared to the first quarter of 2020. Active Customer Count. Our active customer count represents the total number of customers that have an active lease agreement with ourProgressive Leasing segment or an active loan with our Vive segment. The following table presents our consolidated active customer count, which includes an immaterial number of customers that have both an active lease agreement and loan agreement, for the Company for the periods presented: As of March 31 (Unaudited) 2021 2020 Active Customer Count: Progressive Leasing 878,000 998,000 Vive 74,000 50,000 Total Active Customer Count 952,000 1,048,000 We believe the decline in the number ofProgressive Leasing customers was due to a combination of (i) more customers electing to exercise early lease buyouts, as a result of receiving government stimulus benefits; and (ii) showroom and/or store closures and other disruptions experienced by our POS partners for periods of time in 2020, which continued to unfavorably impactProgressive Leasing's customer count in the first quarter of 2021. Key Components of Earnings Before Income Taxes In this management's discussion and analysis section, we review our condensed consolidated results. For the three months endedMarch 31, 2021 and the comparable prior year period, some of the key revenue, cost and expense items that affected earnings before income taxes were as follows: Revenues. We separate our total revenues into two components: (i) lease revenues and fees and (ii) interest and fees on loans receivable. Lease revenues and fees include all revenues derived from lease agreements from ourProgressive Leasing segment. Interest and fees on loans receivable represents merchant fees, finance charges and annual and other fees earned on outstanding loans in our Vive segment. Depreciation of Lease Merchandise. Depreciation of lease merchandise primarily reflects the expense associated with depreciating merchandise leased to customers byProgressive Leasing . Provision for Lease Merchandise Write-offs. The provision for lease merchandise write-offs represents the estimated merchandise losses incurred but not yet identified by management and adjustments for changes in estimates for the allowance for lease merchandise write-offs. Operating Expenses. Operating expenses include personnel costs, stock-based compensation expense, the provision for loan losses, professional services expense, intangible asset amortization expense, occupancy costs, advertising, and insurance costs, among other expenses. Interest Expense. Interest expense consists of interest incurred on the Company's senior unsecured revolving credit facility (the "Revolving Facility"). 24 --------------------------------------------------------------------------------
Results of Operations - Three months ended
Three Months Ended
March 31, Change
(In Thousands) 2021 2020 $ %
REVENUES:
Lease Revenues and Fees 707,982 658,534 $ 49,448 7.5 %
Interest and Fees on Loans Receivable 13,019 9,908 3,111 31.4
721,001 668,442 52,559 7.9
COSTS AND EXPENSES:
Depreciation of Lease Merchandise 505,057 463,919 41,138 8.9
Provision for Lease Merchandise Write-Offs 18,640 55,714 (37,074) (66.5)
Operating Expenses 91,196 98,984 (7,788) (7.9)
614,893 618,617 (3,724) (0.6)
OPERATING PROFIT 106,108 49,825 56,283 113.0
Interest Expense (512) - (512) nmf
EARNINGS FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES 105,596 49,825 55,771 111.9
INCOME TAX EXPENSE (BENEFIT) 26,108 (7,857) 33,965 nmf
NET EARNINGS FROM CONTINUING OPERATIONS 79,488 57,682 21,806 37.8
LOSS FROM DISCONTINUED OPERATIONS, NET OF
INCOME TAX - (337,687) 337,687 100.0
NET EARNINGS (LOSS) $ 79,488 $ (280,005) $ 359,493 nmf
nmf-Calculation is not meaningful
25
--------------------------------------------------------------------------------Revenues
Information about our revenues by source and reportable segment is as follows:
Three Months Ended
March 31, Change
(In Thousands) 2021 2020 $ %
REVENUES:
Lease Revenues and Fees1 $ 707,982 $ 658,534 $ 49,448 7.5 %
Interest and Fees on Loans Receivable2 13,019 9,908 3,111 31.4
Total Revenues $ 721,001 $ 668,442 $ 52,559 7.9 %
1 All Lease Revenues and fees are attributable to the
Progressive Leasing revenues increased driven by strong customer payment performance, elevated early lease buyout activity, continued growth from large national POS partners, and an increase in lease revenues generated from e-commerce platforms. These increases were partially offset by a delayed tax refund season and smaller average refunds. The increase in Vive revenues was due to a 120.3% increase in GMV in 2021, resulting in growth in our loans receivable portfolio and additional interest revenues. Operating Expenses Information about certain significant components of operating expenses for the first quarter of 2021 as compared to the first quarter of 2020 is as follows: Three Months Ended March 31, Change (In Thousands) 2021 2020 $ % Personnel Costs1$ 44,217 $ 43,029 $ 1,188 2.8 % Stock-based Compensation 4,163 4,862 (699) (14.4) Occupancy Costs 1,382 1,787 (405) (22.7) Advertising 2,920 1,675 1,245 74.3 Provision for Loan Losses 6,468 12,722 (6,254) (49.2) Intangible Amortization 5,421 5,566 (145) (2.6) Professional Services 4,347 3,060 1,287 42.1 Other Operating Expenses 22,278 26,283 (4,005) (15.2) Operating Expenses$ 91,196 $ 98,984 $ (7,788) (7.9) % nmf-Calculation is not meaningful 1 Personnel costs excludes stock-back compensation expense, which is reported separately in the operating expense table. The increase in personnel costs of$1.2 million was driven by an increase of$2.9 million atProgressive Leasing for additional hiring and promotions resulting from continued growth in the business, new personnel costs for functions associated with becoming a standalone public company effectiveNovember 30, 2020 , and the decision to not accrue for short-term incentive payments in the first quarter of 2020 due to uncertainties on the future impacts of the COVID-19 pandemic as ofMarch 31, 2020 . These increases were partially offset by$2.1 million related to executive personnel costs incurred by the Aaron's Business segment in the first quarter of 2020, but did not qualify for classification within discontinued operations, and are classified within unallocated corporate costs for segment purposes. Stock-based compensation decreased$0.7 million due to$2.0 million incurred in the first quarter of 2020 for executive awards previously classified within the Aaron's Business segment, which did not qualify for classification within discontinued operations, that are classified within unallocated corporate expenses. This decrease was partially offset by$1.3 million of additional expense in the first quarter of 2021 as the result of a stock compensation modification and awards for additional personnel resulting from our continued growth and as a result ofPROG Holdings becoming a standalone public company. The decreased provision for loan losses was due to continued strong customer payment activity and changes to estimates in our allowance for loan losses, partially offset by the establishment of new allowances due to GMV growth. In the first quarter of 2020, the allowance for loan losses for Vive increased by$7.0 million due to unfavorable forecasted macroeconomic conditions resulting from the COVID-19 pandemic. In the first quarter of 2021, we released$2.4 million of allowances for loan losses due 26 -------------------------------------------------------------------------------- to forecasted improvements in macroeconomic conditions as ofMarch 31, 2021 , resulting in a$9.4 million increase in earnings before income taxes compared to the first quarter of 2020. Professional services expenses increased due to costs incurred in 2021 related to ourNovember 30, 2020 separation and distribution transaction. Other operating expenses decreased as a result of certain unallocated corporate overhead costs incurred in 2020 that were previously allocated to the Aaron's Business segment, offset by an increase of$1.1 million in insurance costs. Other Costs and Expenses Depreciation of lease merchandise. Depreciation of lease merchandise increased due to growth in GMV in the first quarter of 2021 compared to 2020. As a percentage of total lease revenues and fees, depreciation of lease merchandise increased to 71.3% from 70.4% in the prior year quarter, primarily due to a higher percentage of our customers exercising 90-day buyouts and other early buyout elections in 2021. Provision for lease merchandise write-offs. The provision for lease merchandise write-offs decreased$37.1 million due to continued strong payment activity from customers, a decline in write-offs, and changes to estimates in our allowance for lease merchandise write-offs. In the first quarter of 2020, we established incremental COVID-19 lease merchandise allowances of$11.7 million . In the first quarter of 2021, we released$1.9 million of this allowance, resulting in a$13.6 million decline in the provision for lease merchandise write-offs compared to the first quarter of 2020. We established the incremental allowance in the first quarter of 2020 based on management's best estimate of the potential unfavorable impacts the COVID-19 pandemic may have on our customers' ability to continue making payments on their leases. We continued to experience strong customer payment activity and low write-offs throughMarch 31, 2021 , resulting in a downward adjustment to our allowance for write-offs. Given the significant uncertainty regarding the impacts of the COVID-19 pandemic and its effects on our customers and on our business going forward, a high level of estimation was involved in determining the allowance as ofMarch 31, 2021 ; therefore, actual lease merchandise write-offs could differ materially from the allowance. The provision for lease merchandise write-offs as a percentage of lease revenues decreased to 2.6% in 2021 from 8.5% in 2020. This decrease was due to improved customer payment activity, low write-offs, and changes in estimates on the allowance as discussed above. Earnings Before Income Taxes Information about our earnings before income taxes by reportable segment is as follows: Three Months Ended March 31, Change (In Thousands) 2021 2020 $ % EARNINGS BEFORE INCOME TAXES: Progressive Leasing$ 104,172 $ 62,707 $
41,465 66.1 %
Vive 1,424 (7,152) 8,576 119.9
Unallocated Corporate Expenses - (5,730) 5,730 100.0
Total Earnings Before Income Taxes
nmf-Calculation is not meaningful The factors impacting the change in earnings before income taxes are discussed above. Income Tax Expense Income tax expense increased to$26.1 million for the three months endedMarch 31, 2021 compared to a$7.9 million income tax benefit in the prior year comparable period. The benefit for the three months endedMarch 31, 2020 is the result of a$34.2 million discrete income tax benefit generated by the provisions of the CARES Act in 2020, which resulted from the rate differential on the carryback of the Company's 2018 net operating loss previously recorded at 21% to the 2013 tax year, where the benefit was recognized at 35%. There are no material adjustments between the Company's effective tax rate of 24.7% for the three months endedMarch 31, 2021 and the Company's statutory income tax rate. 27 -------------------------------------------------------------------------------- Overview of Financial Position The major changes in the condensed consolidated balance sheet fromDecember 31, 2020 toMarch 31, 2021 include: •Cash and cash equivalents increased$114.5 million to$151.2 million during the three months endedMarch 31, 2021 . For additional information, refer to the "Liquidity and Capital Resources" section below. •Lease merchandise, net of accumulated depreciation and allowances, decreased$35.7 million due primarily to an increase in early lease buyouts which we believe has resulted from recent government stimulus benefiting our customers, partially offset by a reduction in the allowance for lease merchandise write-offs resulting from continued strong payment activity and low write-off trends. •Loans receivable, net of allowances and unamortized fees, increased$12.2 million due to growth in loan originations with Vive's POS partners. •Prepaid expenses and other assets increased$4.5 million primarily due to a$4.2 million increase to prepaid expenses for annual software subscriptions and renewals. •Accounts payable and accrued expenses increased$26.9 million due to a$20.5 million increase in income taxes payable as a result of earnings for the three months endedMarch 31, 2021 . Accrued sales and personal property taxes also increased by$4.7 million from prior quarter. 28 -------------------------------------------------------------------------------- Liquidity and Capital Resources General We expect that our primary capital requirements will consist of: •Reinvesting in our business, including buying merchandise for the operations ofProgressive Leasing . Because we believeProgressive Leasing will continue to grow, we expect that the need for additional lease merchandise will remain a major capital requirement; •Making merger and acquisition investment(s) to further broaden our product offerings; and •Returning excess cash to shareholders through periodically repurchasing stock. Other capital requirements include (i) expenditures related to software development; (ii) expenditures related to our corporate operating activities; (iii) personnel expenditures; (iv) income tax payments; (v) funding of loans receivable for Vive; and (vi) servicing our outstanding debt obligation. Our capital requirements have been financed through: •cash flows from operations; •private debt offerings; •bank debt; and •stock offerings. As ofMarch 31, 2021 , the Company had$151.2 million of cash,$50.0 million outstanding on our Revolving Facility, and$300.0 million of availability under the Revolving Facility. The Company's cash flow statement for the three months endedMarch 31, 2020 was not required to be adjusted for discontinued operations. Accordingly, the cash flow activities for the Aaron's Business discontinued operations is included in the below discussion and analysis for the three months endedMarch 31, 2020 . Cash Provided by Operating Activities Cash provided by operating activities was$167.1 million and$227.8 million during the three months endedMarch 31, 2021 and 2020, respectively. The$60.7 million decrease in operating cash flows was primarily due to the separation of the Aaron's Business, which accounted for$80.0 million of the cash provided by operating activities during the three months endedMarch 31, 2020 . The$19.3 million increase in cash provided by operating activities from continuing operations when compared to the same period in 2020 was driven by an increase in customer payment activity, including an increase in early lease buyouts. Changes in certain working capital accounts also contributed to operating cash inflows, including$42.5 million related to the change in accounts receivable. Other significant changes included$45.2 million of additionalProgressive Leasing merchandise purchases during the three months endedMarch 31, 2021 compared to the same period in 2020. Other changes in cash provided by operating activities are discussed above in our discussion of results for the three months endedMarch 31, 2021 . Cash Used in Investing Activities Cash used in investing activities was$19.7 million and$30.6 million during the three months endedMarch 31, 2021 and 2020, respectively. The$10.9 million decrease in investing cash outflows in the first quarter of 2021 as compared to the same period in 2020 was primarily due to a$21.7 million decrease in cash outflows for purchases of property, plant and equipment resulting from less capital expenditures on the Aaron's Business discontinued operations store investments prior to the separation and distribution transaction, and a$15.9 million increase in proceeds on loans receivable driven by strong customer payment activity and growth in the portfolio in the first quarter of 2021 compared to the first quarter of 2020. These reductions in cash outflows were partially offset by a$26.7 million increase in cash outflows for investments in Vive loans receivable due to growth in loan origination activity. Cash (Used in) Provided by Financing Activities Cash used in financing activities was$32.8 million during the three months endedMarch 31, 2021 compared to cash provided of$296.2 million during the same period in 2020. Cash flows provided by financing activities in 2020 was primarily due to$305.2 million cash of inflows from net borrowing on debt and the Company's Revolving Facility. The Company repurchased common stock totaling$28.1 million during the three months endedMarch 31, 2021 compared to no repurchases in the same period of 2020. 29 -------------------------------------------------------------------------------- Share Repurchases We purchase our stock in the market from time to time as authorized by our Board of Directors. OnFebruary 22, 2021 , the Company's Board of Directors terminated the share repurchase program that was in effect as ofDecember 31, 2020 and replaced it with a new repurchase program that permits the Company to repurchase up to$300.0 million of the Company's outstanding common stock. The Company repurchased 588,726 shares for$28.1 million during the three months endedMarch 31, 2021 . As ofMarch 31, 2021 , we had the authority to purchase additional shares up to our remaining authorization limit of$271.9 million . Debt Financing OnNovember 24, 2020 , the Company entered into a credit agreement with a consortium of lenders providing for a$350.0 million senior unsecured revolving credit facility, under which revolving borrowings became available on the date of the completion of the separation and distribution transaction, and under which all borrowings and commitments will mature or terminate onNovember 24, 2025 . As ofMarch 31, 2021 ,$50.0 million was outstanding under the Revolving Facility and the total available credit under the Revolving Facility was$300.0 million . The Revolving Facility includes an uncommitted incremental facility increase option ("Incremental Facilities") which, subject to certain terms and conditions, permits the Company at any time prior to the maturity date to request an increase in extensions of credit available thereunder by an aggregate additional principal amount of up to$300.0 million . Our Revolving Facility contains certain financial covenants, which include requirements that the Company maintain ratios of (i) total net debt to EBITDA of no more than 2.50:1.00 and (ii) consolidated interest coverage of no less than 3.00:1.00. The Company will be in default under the credit agreement if it fails to comply with these covenants, and all borrowings outstanding could become due immediately. We are in compliance with these financial covenants atMarch 31, 2021 and believe that we will continue to be in compliance in the future. Commitments Income Taxes During the three months endedMarch 31, 2021 , we made net tax payments of$0.1 million . Within the next nine months, we anticipate making estimated tax payments of$75.7 million forU.S. federal income taxes and state income taxes. Leases. We lease management and information technology space for corporate functions as well as call center space and storage space for our hub facilities under operating leases expiring at various times through 2027. Our corporate and call center leases contain renewal options for additional periods ranging from three to five years. We also lease transportation vehicles under operating leases which generally expire during the next three years. We expect that most leases will be renewed or replaced by other leases in the normal course of business. Contractual Obligations and Commitments Future interest payments on the Company's variable-rate debt are based on a rate per annum equal to, at our option, (i) the London Interbank Overnight ("LIBO") rate plus a margin within the range of 1.5% to 2.5% for revolving loans, based on total leverage, or the administrative agent's base rate plus a margin ranging from 0.5% to 1.5%, as specified in the agreement. Future interest payments related to our Revolving Facility are based on the borrowings outstanding at that time. The variable rate for our borrowings under the Revolving Facility was 1.875% atMarch 31, 2021 . Future interest payments may be different depending on future borrowing activity and interest rates. The Company has no long-term commitments to purchase merchandise nor does it have significant purchase agreements that specify minimum quantities or set prices that exceed our expected requirements for three months. Deferred income tax liabilities as ofMarch 31, 2021 were$132.5 million . Deferred income tax liabilities are calculated based on temporary differences between the tax basis of assets and liabilities and their respective book basis, which will result in taxable amounts in future years when the liabilities are settled at their reported financial statement amounts. The results of these calculations do not have a direct connection with the amount of cash taxes to be paid in any future periods. As a result, scheduling deferred income tax liabilities as payments due by period could be misleading because this scheduling would not necessarily relate to liquidity needs. 30
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Unfunded Lending Commitments The Company, through its Vive business, has unfunded lending commitments totaling approximately$349.7 million and$287.3 million as ofMarch 31, 2021 andDecember 31, 2020 , respectively, that do not give rise to revenues and cash flows. These unfunded commitments arise in the ordinary course of business from credit card agreements with individual cardholders that give them the ability to borrow, against unused amounts, up to the maximum credit limit assigned to their account. While these unfunded amounts represented the total available unused lines of credit, the Company does not anticipate that all cardholders will utilize their entire available line at any given point in time. Commitments to extend unsecured credit are agreements to lend to a cardholder so long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Critical Accounting Policies Refer to the 2020 Annual Report. Recent Accounting Pronouncements Refer to Note 1 to the condensed consolidated financial statements for a discussion of recently issued accounting pronouncements, including pronouncements that were adopted in the current year.
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