The new chief executive of PRA Group highlighted several cost-cutting initiatives during his first earnings call with analysts this week, mentioning “near-term challenges” in the company’s U.S. operations while also indicating that the company is going to be expanding its legal collection channel. The moves are being taken by the company to help turn its financial situation around, after posting a loss of $60 million for the first quarter of 2023, compared to a profit of $40 million during the same period a year ago.
Vikram Atal was named president and CEO of the company at the end of March, replacing Kevin Stevenson who co-founded the company back in 1996 and ran it for more than two decades.
Atal mentioned during prepared remarks before taking questions from analysts that the company is undergoing a “reduction in force mainly in our U.S. operations to right-size the organization,” while also expanding the company’s legal collections channel and “evaluating the possibility of outsourcing and leveraging third-parties for certain activities we are now doing internally.”
A “softer-than-expected” income tax season, coupled with lower volumes of portfolio purchases in recent years combined to be the reasons why collections during the first quarter were 14% lower than the same period of 2022, Atal said. Atal did mention that portfolio purchases were ramping up, largely due to increases in the amount of credit card accounts that are being charged off by lenders in the United States.
