- Breach Inlet Capital urges PROG Holdings (PRG, Financial) to initiate a strategic review to unlock significant shareholder value.
- PRG's share price has fallen by about 55% since its spin-off from Aaron's Holdings in 2020, significantly underperforming competitors.
- Breach Inlet Capital, holding around 2% of PRG shares, criticizes excessive executive compensation amidst declining company performance.
Breach Inlet Capital Management, LLC – an investment firm focused on underfollowed and misunderstood small-cap equities – has issued an open letter to shareholders of PROG Holdings, Inc. (PRG), urging the company to launch a strategic review process. The firm criticizes PRG's leadership for significant value destruction and unwillingness to engage with shareholders over the company's declining profits and share price.
Since PRG's spin-off from Aaron’s Holdings in 2020, the company's share price has dropped approximately 55%, while peer companies have seen an average increase of 50% during this period. Breach Inlet Capital holds about 2% of PRG’s outstanding shares, more than the entire board and management team combined, excluding CEO Steven Michaels.
The firm attributes PRG's underperformance to excessive dependency on large retail partners and misaligned executive compensation, with CEO and CFO pay increasing by over 86% between 2021 and 2024, despite a 30% drop in EBITDA. Breach Inlet Capital also highlights substantial market share loss and management's inadequate response to competitive pressures.
Breach Inlet Capital suggests that PRG's board should consider selling the company or its units to enhance shareholder value, proposing scenarios that could result in share prices rising between $45 to $80, implying potential upside of 60% to 180% from current prices.
The investment firm stresses the need for immediate action, given PRG's undervaluation metrics and significant potential for growth within its virtual lease-to-own and Buy Now, Pay Later segments. Breach Inlet Capital calls for fellow shareholders to voice their concerns and prompt the PRG board to take decisive steps towards transforming the company's fortunes.
