PRA Group reported fourth-quarter profits of $31 million yesterday, compared with $18 million in the fourth quarter of 2018, and full-year profits of $98 million, up from $76 million in 2018, thanks in part to the payoff from investments to make collectors and the company’s call centers more efficient and productive.
Total revenue for the fourth quarter was $269 million, up from $237 million in the fourth quarter of 2018. Revenue for all of 2019 was $1.0 billion — the first time the company has cracked that milestone — up from $908 million in 2018.
“PRA has entered 2020 in a position of strength,” said Kevin Stephenson, the company’s current president and chief executive, during a conference call with analysts to discuss the company’s results. “We believe we have the industry winds at our back. In the U.S. market, we currently see a steady supply. We see rational returns and a healthy market share.”
The company’s portfolio acquisitions in the United States were lower in the fourth quarter than the previous three quarters of 2019 at $140 million, but its purchases in Europe were significantly higher during the last three months of the year — more than $260 million.
Cash collected during the fourth quarter in the United States was $316 million, up from $280 million in the fourth quarter of 2018, and the company pointed to a 19% increase in legal collections as a reason for the increase.
When asked about the improvements in collector performance, Stephenson offered some additional details about what the company has done inside its call centers.
“If I think about collector productivity and maybe even a larger question I may just choose the answer here as well, but it’s really about collector staffing,” he said. “As we look at staffing and productivity, we’re trying to solve for a number of variables and I think about things like our inventory. So what is our inventory doing? Are we buying larger balance accounts? Are we buying smaller balance accounts? Are we buying, again, whether it’s a major line credit card or some sort of installment-based product? I think about consumer behavior, and then, of course, technology and data.
“And so all these things are coming together today, advised us on how many reps that we need to have on the floor and how to route calls to them. So that’s kind of a long-winded answer, but I would say what you’re seeing today is really a function of some technology deployments and as well as our scoring and data improvements.”
The company also announced that Steve Fredrickson, one of the company’s co-founders, will become the company’s non-executive chairman on April 1. He had been the executive chairman since June 2017. Fredrickson founded PRA Group in 1996 with Stephenson.