Startek, Inc. (NYSE:SRT), a global provider of customer
experience management solutions, is reporting financial results for
the quarter ended March 31, 2019.
Financial Results
The results presented for the quarter ended March 31, 2019 and
December 31, 2018 include both Startek and Aegis financial results.
As a result of the reverse acquisition accounting for the Startek
and Aegis business combination on July 20, 2018, the results
presented for the quarter ended March 31, 2018 include only Aegis
financial results.
Total revenue for the quarter increased 2% to $161.1 million
compared to $158.6 million in the quarter ended December 31, 2018,
and was up 40% compared to $115.1 million in the quarter ended
March 31, 2018.
Gross profit for the quarter increased 9% to $27.2 million
compared to $25.1 million in the quarter ended December 31, 2018,
and was up 29% compared to $21.2 million in the quarter ended March
31, 2018.
Gross margin was 16.9% during the quarter compared to 15.8% in
the quarter ended December 31, 2018 and 18.4% in the quarter ended
March 31, 2018.
Selling, general and administrative (SG&A) expenses were
$24.1 million compared to $21.9 million in the quarter ended
December 31, 2018, and $14.4 million in the year-ago quarter. As a
percentage of revenue, SG&A was 14.9% compared to 13.8% in the
quarter ended December 31, 2018 and 12.5% in the year-ago
quarter.
Net loss attributable to Startek shareholders for the quarter
was $3.3 million or $(0.09) per share, compared to a net loss of
$9.7 million or $(0.26) per share in the quarter ended December 31,
2018, and a net loss of $6.2 million or $(0.30) per share in the
year-ago quarter.
Adjusted EBITDA* for the quarter was $10.9 million compared to
$11.4 million in the quarter ended December 31, 2018. Adjusted
EBITDA* for the year-ago quarter was $12.8 million.
*A non-GAAP measure defined below.
Management Commentary
“The momentum in our business from the end of 2018 has carried
into the first quarter,” said Lance Rosenzweig, president &
global CEO of Startek. “While the first quarter typically takes a
step back from Q4 due to seasonality, Startek managed to grow
revenue during this period due to the continued ramp of both new
and existing client programs across multiple geographies. We also
generated a strong sequential improvement in gross margin, largely
driven by our new client-centric management model and continued
focus on serving high-growth verticals such as technology,
financial services, next-gen retail, healthcare and travel. We have
now consistently expanded margins each quarter since the business
combination last year.
“Subsequent to the quarter, Startek received multiple accolades
for our digital transformation efforts and CX management. In early
April, we received the Top 50 Digital Edge Award from CIO Executive
Council and IDG for our innovative proprietary IT helpdesk chatbot.
And just last week, we were named to the 2019 Best of the Global
Outsourcing 100 list by IAOP for our performance across several
categories, including leadership and top innovation. Receiving
these awards and being recognized as a leader in digital
transformation is a major accomplishment for our team and further
solidifies our position as an industry-leading CX services
provider.
“As we look ahead, we will continue to focus on delivering
best-in-class omnichannel solutions and implementing transformative
technologies to help our clients better engage with their
customers. We will also continue to reinvest in our business from a
sales, marketing and technology perspective to bolster our growing
pipeline and ensure we are continuously driving innovation to
better serve our clients. With strong momentum at our back, we
remain committed to delivering revenue growth and margin expansion
in 2019.”
Conference Call and Webcast Details
Startek management will hold a conference call today at 5:00
p.m. Eastern time to discuss its quarterly financial results. The
conference call will be followed by a question and answer
period.
Date: Wednesday, May 8, 2019Time: 5:00 p.m. Eastern
timeToll-free dial-in number: (844) 239-5283International dial-in
number: (574) 990-1022Conference ID: 8554778
Please call the conference telephone number 5-10 minutes prior
to the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact Gateway at (949) 574-3860.
The conference call will also be broadcast live and available
for replay here.
A replay of the conference call will be available after 8:00
p.m. Eastern time on the same day through May 15, 2019.
Toll-free replay number: (855) 859-2056International replay
number: (404) 537-3406Replay ID: 8554778
About Startek
Startek is a leading global provider of business process
outsourcing solutions. The company provides customer experience
management, back office and technology services to corporations
around the world across a range of industries. Operating under the
Startek and Aegis brands, the company has more than 45,000
outsourcing experts across 54 delivery campuses worldwide that are
committed to enhancing the customer experience for clients.
Services include omnichannel customer care, customer acquisition,
order processing, technical support, receivables management and
analytics through automation, voice, chat, email, social media and
IVR, resulting in superior business results for its clients. To
learn more about Startek’s global solutions, please visit
www.startek.com.
Forward-Looking Statements
The matters regarding the future discussed in this news release
include forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements are intended to be identified in this document by the
words “anticipate,” “believe,” “estimate,” “expect,” “intend,”
“may,” “objective,” “outlook,” “plan,” “project,” “possible,”
“potential,” “should” and similar expressions. As described below,
such statements are subject to a number of risks and uncertainties
that could cause Startek's actual results to differ materially from
those expressed or implied by any such forward-looking statements.
Readers are encouraged to review risk factors and all other
disclosures appearing in the Company's Form 10-KT for the fiscal
year ended December 31, 2018, as filed with the SEC on March 14,
2019, as well as other filings with the SEC, for further
information on risks and uncertainties that could affect Startek's
business, financial condition and results of operation. Copies of
these filings are available from the Securities and Exchange
Commission, the Company’s website or the Company’s investor
relations department. Startek assumes no obligation to update or
revise any forward-looking statements as a result of new
information, future events or otherwise. Readers are cautioned not
to place undue reliance on these forward-looking statements that
speak only as of the date herein.
STARTEK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended March 31, 2019
2018 Revenue $ 161,142 $ 115,095 Cost of services
133,928 93,938 Gross profit 27,214 21,157 Selling,
general and administrative expenses 24,079 14,405 Restructuring and
other merger related cost 1,093 6,257 Operating
income (loss) 2,042 495 Interest and other expense, net (4,814 )
(5,343 ) Income (loss) before income taxes (2,772 ) (4,848 )
Income tax expense 385 332 Net income (loss) $
(3,157 ) $ (5,180 ) Net income (loss) attributable to
non-controlling interests 189 972 Net income
(loss) attributable to Startek shareholders $ (3,346 ) $
(6,152 ) Net loss per common share - basic and diluted $ — $
0.00 Weighted average common shares outstanding - basic and diluted
37,522,499 20,600,000
STARTEK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
March 31, 2019 December 31, 2018
ASSETS Current assets: Cash and cash equivalents $ 14,595 $
16,617 Restricted cash 11,093 7,952 Trade accounts receivable, net
102,548 107,836 Prepaid expenses and other current assets 67,953
60,985 Total current assets 196,189 193,390 Property, plant and
equipment, net 41,638 42,242 Right-of-use assets 76,983 —
Intangible assets, net 118,726 121,336 Goodwill 226,505 225,450
Other non-current assets 24,077 22,221 Total assets $ 684,118 $
604,639
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
liabilities 173,273 145,358 Long term debt 149,582 152,100
Operating lease liabilities 55,016 — Other non-current liabilities
31,413 30,808 Total liabilities $ 409,284 $ 328,266 Equity
attributable to Startek shareholders 229,203 231,017
Non-controlling interest 45,631 45,356 Total stockholders’ equity $
274,834 $ 276,373 Total liabilities and stockholders’ equity $
684,118 $ 604,639
STARTEK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March 31, 2019
2018 Operating Activities Net income (loss) $
(3,157 ) $ (5,180 ) Adjustments to reconcile net income (loss) to
net cash provided by operating activities: Depreciation and
amortization 7,304 6,025 Provision for doubtful accounts 630 374
Share-based compensation expense 425 — Deferred tax (benefit) /
expenses (659 ) (918 ) Share of profit of affiliates (342 ) (64 )
Profit on sale of property, plant and equipment (251 ) — Changes in
operating assets & liabilities and other, net (4,327 ) 3,521
Net cash provided by operating activities $ (377 ) $ 3,758
Investing Activities Purchases of property, plant and
equipment (3,495 ) (2,919 ) Distributions received from affiliates
— 22 Net cash used in investing activities $ (3,495 )
$ (2,897 )
Financing Activities (Payments) proceeds
on long term debt (1,400 ) — Proceeds from other debts, net 6,617
488 Net cash provided by financing activities $ 5,217
$ 488 Effect of exchange rate changes on cash and cash equivalents
and restricted cash (226 ) (31 ) Net (decrease) increase in cash
and cash equivalents and restricted cash 1,119 1,318 Cash and cash
equivalents and restricted cash at beginning of period $ 24,569
$ 21,601 Cash and cash equivalents and restricted
cash at end of period $ 25,688 $ 22,919
STARTEK, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURE (In
thousands)(Unaudited)
This press release contains references to the non-GAAP financial
measure of Adjusted EBITDA. Reconciliation of this non-GAAP measure
to its comparable GAAP measure is included below. This non-GAAP
information should not be construed as an alternative to the
reported results determined in accordance with GAAP. It is provided
solely to assist in an investor’s understanding of these items on
the comparability of the Company’s operations.
Adjusted EBITDA:
The Company defines non-GAAP Adjusted EBITDA as Net loss plus
Income tax expense, Interest and other expense, net, Depreciation
and amortization expense, Restructuring and other merger related
cost, Share-based compensation expense and Warrant contra revenue
(if applicable). Management uses Adjusted EBITDA as a performance
measure to analyze the performance of our business. Management
believes that excluding these non-cash and other non-recurring
items permits a more meaningful comparison and understanding of our
strength and performance of our ongoing operations for our
investors and analysts.
Three Months Ended March 31,
2019 2018 Net loss $ (3,157 ) $ (5,180 )
Income tax expense 385 332 Interest and other expense, net 4,814
5,343 Depreciation and amortization expense 7,304 6,025
Restructuring and other merger related cost 1,093 6,257 Share-based
compensation expense 425 —
Adjusted
EBITDA $ 10,864 $
12,777
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version on businesswire.com: https://www.businesswire.com/news/home/20190508005757/en/
Investor RelationsSean Mansouri, CFA or Cody SlachGateway
Investor Relations(949) 574-3860investor@startek.com
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