Investors seemed to be very happy with the financial results released last Thursday by PRA Group, given that the company’s stock price rose by 32% on Friday, the day after it published that the first quarter was much better than expected.
The company posted net income of $19.1 million during the first three months of 2020, compared with $15.2 million during the same period a year ago. On an earnings-per-share basis, the $0.42 recorded in the first quarter was 35% higher than the $0.31 per share that analysts had been expecting.
Citing improving collection rates on more portfolios that were purchased last year, PRA Group Chief Executive Kevin Stevenson also noted there were “favorable industry trends” that helped boost the company’s performance during the first quarter. Stevenson did note that the company did start to see the impact of COVID-19 on its performance toward the tail end of the first quarter, both in terms of a “reduced workforce and slightly decreased collection rates.”
During a call with analysts to discuss the company’s financial performance, Stevenson walked through some of the changes the company has put into place to deal with the coronavirus pandemic, including allowing some employees to work from home. The company could not send all of its collectors home to work, Stevenson said, because not all of PRA Group’s employees have stable Internet access, because some states would not allow collectors to work from home, and because collectors are not as effective when working from home instead of working in the office.
“The challenges of work-from-home collection environment in the U.S. are numerous, and these employees are not able to perform the fullest in their jobs,” Stevenson said. “One of those challenges is simply infrastructure because not all Internet services are created equal. Differing infrastructures, networking hardware, personal computers, personal devices, can all impact the speed and quality of at-home Internet service. This then impacts call quality and response time. We’ve tested this extensively. And the issues have included latency, noise in the line, down quality, echoing and even drop calls. So thankfully, at this time, eight of our U.S. sites are open. And while we’ve had as many as 80 collections FTE working off-site previously, we’ve moved that number down to about 20 in May. Now we love the idea of collectors working off-site. However, the challenges extend beyond technology.”
The number of collectors working from home represents about 1% of the company’s workforce, Stevenson said, and those who are working from home are about 50% to 75% as those working in the office.
