SRT StarTek Inc

Exhibit 99.1

Startek Reports Third Quarter 2023 Financial Results

- The Go-Private Transaction with Capital Square Partners Is Expected to Close by End Of 2023 -

DENVER – November 9, 2023 - Startek, Inc. (NYSE:SRT) ("Startek" or the "Company"), a global customer experience (CX) solutions provider, is reporting financial results for the third quarter ended September 30, 2023. As a result of current and planned divestitures, the Company has classified Middle East and Argentina operations as 'Held for Sale and Discontinued Operations'. Accordingly net revenue, gross profit, gross margin, SG&A expenses and adjusted EBITDA are reported for the continuing operations and net income, EPS, adjusted net income/(loss) and adjusted EPS are reported after consolidating continuing and discontinued operations.

Third Quarter 2023 Financial Summary ($ in millions, excl. margin items)

[1] Reflects net income (loss) and EPS attributable to Startek shareholders.

[2] Reflects Adjusted net income and adjusted EPS attributable to Startek shareholders.

[3] Refer to the reconciliation of GAAP to Non-GAAP financial measures.

Third Quarter 2023 Financial Summary

Net Revenue in the third quarter was $93.63 million compared to $94.88 million in the year-ago quarter. The slight decrease was primarily due to foreign currency movement of certain currencies relative to the US Dollar. The Company also saw some softness in volume across certain clients within the Company’s international footprint which was largely offset by ramp-up of new clients won in the past few quarters. On a constant currency basis, net revenue increased 2.04% compared to the year-ago quarter.

Gross profit in the third quarter was $12.49 million compared to $14.57 million in the year-ago quarter. Gross margin was 13.34% compared to 15.36% in the year-ago quarter. The decline in gross profit and gross margin was primarily driven by the aforementioned lower volumes which led to a mismatch in staffing levels.

Selling, general and administrative (SG&A) expenses in the third quarter reduced to $10.32 million compared to $12.99 million in the year-ago quarter. The SG&A expense for both the periods include non-recurring costs related to the merger transaction. Adjusting for these costs, as a percentage of revenue, SG&A decreased to 10.70% compared to 12.20% in the year-ago quarter. The improvement was primarily due to operational efficiency across the board.

Adjusted EBITDA* in the third quarter was $8.94 million compared to $9.54 million in the year-ago quarter. The decrease is primarily attributable to the aforementioned decline in net revenue, as well as currency exchange losses during the period.

Net income (loss) attributable to Startek shareholders in the third quarter was $(24.23) million or $(0.60) per share, compared to a net income of $0.24 million or $0.01 per share in the year-ago quarter. The decline was primarily a result of a $19.6 million non-cash impairment charge on goodwill due to change in the forecasts considering the aforementioned decline in revenue. This represents income (loss) attributable to Startek shareholders from continuing operations of $(24.60) million in Q3 2023 and $0.13 million in Q3 2022, along with income (loss) attributable to Startek shareholders from discontinued operations of $0.37 million in Q3 2023 and $0.11 million in Q3 2022.

Adjusted net income* in the third quarter increased by 108.64% to $11.83 million or $0.29 per diluted share, compared to an adjusted net income* of $5.67 million or $0.14 per diluted share in the year-ago quarter. This represents adjusted net income (loss) from continuing operations of $11.34 million in Q3 2023 and $4.60 million in Q3 2022, along with adjusted net income (loss) from discontinued operations of $0.48 million in Q3 2023 and $1.07 million in Q3 2022.

On September 30, 2023, cash and restricted cash was $40.84 million[1] compared to $72.40 million as at December 31, 2022. The decrease in cash balance was driven by the utilization of the proceeds from the strategic transactions to prepay debt. Total debt as at September 30, 2023, was $77.67 million compared to $175.91 million as at December 31, 2022, and net debt as at September 30, 2023, was $36.83 million[2] compared to $103.51 million as at December 31, 2022.

On April 24, 2023, the Board of Directors approved an authorization to repurchase up to $20 million of the Company’s common stock from time to time in accordance with the requirements of the Securities and Exchange Commission. During the three months ended September 30, 2023, the Company repurchased 14,011 shares at an average cost of $2.87 per share.

*A non-GAAP measure defined below.

   Subsequent Event and Conference Call

On October 10, 2023, Startek announced that it entered into a definitive agreement to be acquired by funds managed by Capital Square Partners (“CSP”) in an all-cash transaction with a total enterprise value of approximately $217 million and total equity value of approximately $174 million. Under the terms of the agreement, CSP will acquire all shares of Startek common stock not already owned by CSP for $4.30 per share in cash.

The transaction is expected to close before the end of calendar year 2023, subject to the satisfaction of customary closing conditions. The transaction is not subject to any financing contingency. Upon completion of the transaction, Startek will no longer trade on the New York Stock Exchange and will become a private company.

As a result of the definitive agreement and upcoming plans to become a private company, Startek management will not be hosting a conference call to discuss the third quarter results.

^[1] Cash balance excluding restricted cash as at September 30, 2023 amounted to $36.72 million as compared to $22.46 million on December 31, 2022.

^[2] Net debt excluding restricted cash balance at September 30, 2023 was $40.95 million compared to $153.45 million on December 31, 2022.

About Startek

Startek is a leading global provider of technology-enabled customer experience (CX) solutions. The Company provides omnichannel CX, digital transformation, and technology services to some of the world’s leading brands. Startek is committed to impacting clients’ business outcomes by focusing on enhancing CX and digital enablement across all touch points and channels. Startek has more than 35,000 employees delivering services in 11 countries. The Company services over 145 clients across a range of industries such as banking and financial services, insurance, technology, telecoms, healthcare, travel and hospitality, consumer goods, retail and energy and utilities.

To learn more visit www.startek.com and follow us on LinkedIn @Startek. 

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-K for the fiscal year ended December 31, 2022, as filed with the Securities and Exchange Commission (SEC) on March 28, 2023, 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 SEC, 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.

Investor Relations

Cody Cree
Gateway Group, Inc.
(949) 574-3860

SRT@gateway-grp.com

   Media Relations

Neha Iyer

Startek

neha.iyer@startek.com 

STARTEK, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In thousands, except per share amounts)

(Unaudited)

STARTEK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share amounts)

(Unaudited)

STARTEK, INC. AND SUBSIDIARIES

 CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

STARTEK, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

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 income (loss) plus Income tax expense, Share of income (loss) of equity-accounted investees, Interest expense and other income (expense), net, Depreciation and amortization expense, Impairment losses and restructuring cost, Share-based compensation expense, Foreign exchange gains (losses), net, Merger transaction costs, Transaction related costs, CSS option amortization and other non-recurring costs (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.

Adjusted EPS:

Adjusted EPS is a non-GAAP financial measure presenting the earnings generated by the ongoing operations that we believe are useful to investors in making meaningful comparisons to other companies, although our measure of Adjusted EPS may not be directly comparable to similar measures used by other companies, and period-over-period comparisons. Adjusted EPS is defined as our diluted earnings per common share attributable to Startek shareholders adjusted to exclude the effects of the amortization of acquisition-related intangible assets, and the impact of certain events, gains, losses or other charges that affect period-over-period comparisons. Acquisition-related intangible assets are recognized as a result of the application of Accounting Standards Codification Topic (“ASC”) 805, Business Combinations (such as customer relationships and Brand), and their amortization is significantly affected by the size and timing of our acquisitions.

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