- Reduced Outstanding Debt by Nearly 60% Over
Last Four Months -
- Authorized $20 Million Share Repurchase
Program -
Startek, Inc. (NYSE:SRT) ("Startek" or the "Company"), a global
customer experience (CX) solutions provider, is reporting financial
results for the first quarter ended March 31, 2023. As a result of
current and planned divestitures, the Company has classified Middle
East and Argentina operations as 'Held for Sale and Discontinued
Operations'. Accordingly net revenue, gross profit, gross margin,
SG&A expenses and adjusted EBITDA are reported for the
continuing operations and net income, EPS, adjusted net
income/(loss) and adjusted EPS are reported after consolidating
continuing and discontinued operations.
First Quarter 2023 Financial Summary ($ in millions,
excl. margin items)
Q1 2023
Q1 2022
Change
Net Revenue
92.09
101.09
(8.90)%
Gross Profit
12.96
13.79
(6.02)%
Gross Margin
14.07%
13.64%
43bps
SG&A Expenses
10.29
11.96
(13.96)%
Adjusted EBITDA [3]
8.29
8.95
(7.37)%
Net Income (Loss) [1]
(0.67)
(1.24)
(45.97)%
EPS[1]
(0.01)
(0.03)
(66.67)%
Adjusted Net Income [2], [3]
3.18
3.34
(4.79)%
Adjusted EPS[2], [3]
0.08
0.08
0%
[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.
Management Commentary
“Throughout the quarter, we made significant progress towards
de-leveraging our balance sheet, expanding our pipeline and adding
new clients, primarily in our e-commerce and BFSI verticals,” said
Bharat Rao, Global CEO of Startek. “As we continued to execute on
our sales initiatives, we secured five new customer logos and
expanded business lines with seven existing customers. Building on
the successful digital initiatives and proof-of-concepts, we have
been able to ramp clients into these new services and exceed their
expectations at a newfound pace. These successful initiatives have
generated positive sentiment throughout our customer base and
helped in building the momentum as we continue to expand our
pipeline.
“Over the last four months, we have paid down nearly 60% of our
outstanding debt and reworked our repayment schedule to free up
near-term cash flow for investments in growth. As part of our
ongoing capital allocation strategy, we used the proceeds from the
sale of our interest in Contact Center Company (“CCC”) to prepay
$55 million in debt and authorized a $20 million dollar share
repurchase program to capitalize on a meaningfully improved balance
sheet. Subsequent to the end of the quarter, we also introduced a
new visual identity to underscore Startek's commitment to combining
data insights and customer service experience. By achieving these
objectives, we believe we have built a strong foundation for
Startek, enabling us to focus more on operating our core business
and delivering the best customer experience to our clients.
“The work we've done over the last several quarters to
deleverage our balance sheet, stabilize margins through proactive
pricing adjustments, and bolster our technology to increase agent
efficiency has paid off. Our investments in digital, IT and
security have been predominantly deployed, and we do not anticipate
the need for any significant incremental investments for the time
being. Recently, we received recognition from the Business
Intelligence Group as the Outsource Partner of the Year at the 2023
Excellence in Customer Service Awards and won the Bronze Stevie
Award in the 2023 Asia-Pacific Stevie Awards for our work in aiding
clients in overcoming challenging customer experience scenarios. As
always, we are proud to be continually recognized for providing an
unparalleled customer experience.
“Going forward, we will continue to focus on enhancing our
operations across our core business segments and targeting key
geographies that support profitability and growth. Overall, we feel
that we have built a strong foundation for our ongoing business to
provide a best-in-class customer experience. We remain committed to
delivering sustainable growth and prioritizing the long-term health
of the Company, and we look forward to continuing to execute our
strategic growth roadmap and returning value to our
shareholders.”
First Quarter 2023 Financial Summary
Net revenue in the first quarter was $92.09 million compared to
$101.09 million in the year-ago quarter. The decrease was primarily
due to ramp down of a cable & media client in the previous
year, softness with a client in the hyper scale space and foreign
currency movement, offset by a healthy performance across the
Company’s ecommerce and banking, financial services and insurance
(“BFSI”) verticals. On a constant currency basis, net revenue
decreased 4.41% compared to the year-ago quarter.
Gross profit in the first quarter decreased by 6.02% to $12.96
million compared to $13.79 million in the year-ago quarter. Gross
margin improved 43 basis points to 14.07% compared to 13.64% in the
year-ago quarter. The increase in gross margin is primarily
attributable to proactive pricing adjustments, a higher portion of
service delivered near-shore and offshore, and less pressure from
inflation on wage costs during the period.
Selling, general and administrative (SG&A) expenses in the
first quarter decreased to $10.29 million compared to $11.96
million in the year-ago quarter. As a percentage of revenue,
SG&A decreased to 11.17% compared to 11.83% in the year-ago
quarter. The decrease in SG&A expenses is due to the inclusion
of certain one-time costs in the prior period. Adjusting for this,
the SG&A expense during this quarter remained flat relative to
the prior period.
Adjusted EBITDA* in the first quarter was $8.29 million compared
to $8.95 million in the year-ago quarter. The decrease in adjusted
EBITDA is primarily attributable to the aforementioned decrease in
net revenue, as well as currency exchange losses during the
period.
Net income (loss) attributable to Startek shareholders in the
first quarter was $(0.67) million or $(0.01) per share, compared to
a net income of $(1.24) million or $(0.03) per share in the
year-ago quarter. This represents income (loss) attributable to
Startek shareholders from continuing operations of $(0.56) million
in Q1 2023 and $(0.77) million in Q1 2022, along with income (loss)
attributable to Startek shareholders from discontinued operations
of $(0.11) million in Q1 2023 and $(0.47) million in Q1 2022.
Adjusted net income* in the first quarter was $3.18 million or
$0.08 per diluted share, compared to an adjusted net income* of
$3.34 million or $0.08 per diluted share in the year-ago quarter.
This represents adjusted net income (loss) from continuing
operations of $2.23 million in Q1 2023 and $2.76 million in Q1
2022, along with adjusted net income (loss) from discontinued
operations of $0.95 million in Q1 2023 and $0.58 million in Q1
2022.
On March 31, 2023, cash and restricted cash was $24.94
million[1] compared to $72.40 million
as at December 31, 2022. The decrease in cash balance was driven by
the utilization of $41 million in proceeds received from the
Company’s divesture in CSS, to prepay debt. Total debt as at March
31, 2023, was $130.67 million compared to $175.91 million as at
December 31, 2022, and net debt as at March 31, 2023, was $105.73
million[2] compared to $103.51 million
as at December 31, 2022.
During the three months ended March 31, 2023, the Company had
not repurchased common stock under our repurchase plan.
*A non-GAAP measure defined below.
Conference Call and Webcast Details
Startek management will host the call, followed by a
question-and-answer period.
Date: Thursday, May 11, 2023 Time: 5 p.m. ET Toll-free dial-in
number: 1-844-826-3035 International dial-in number: 1-412-317-5195
Conference ID: 10178216
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 Group, Inc. at
1-949-574-3860.
The conference call will be broadcast live and available for
replay here, as well as in the investor relations section of the
company’s website at www.startek.com. A telephonic replay of the
conference call will also be available after 8 p.m. ET on the same
day through May 18, 2023.
Toll-free replay number: 1-844-512-2921 International replay
number: 1-412-317-6671 Replay ID: 10178216
[1] Cash balance excluding
restricted cash as at March 31, 2023 amounted to $15.77 million as
compared to $22.46 million as at December 31, 2022. Restricted cash
of $49.95 million in the period ended December 31, 2022, included
$41 million which was received from the net proceeds of CSS
Redemption that was utilized to prepay debt in January 2023.
[2] Net debt excluding restricted
cash balance at March 31, 2023 was $114.90 million compared to
$153.45 million at 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 32,000 employees delivering services in 11
countries. The Company services over 140 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.
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.
STARTEK, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME (LOSS)
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended March
31,
2023
2022
Revenue
92,089
101,092
Cost of services
(79,129
)
(87,302
)
Gross profit
12,960
13,790
Selling, general and administrative
expenses
(10,287
)
(11,962
)
Impairment losses and restructuring/exit
cost
(317
)
5
Operating income (loss)
2,356
1,833
Share of income (loss) of equity accounted
investee
-
(8
)
Interest expense and other income
(expense), net
(2,077
)
(1,730
)
Foreign exchange gains (losses), net
72
(224
)
Income (loss) from continuing
operations before tax expenses
351
(129
)
Tax expenses
(909
)
(638
)
Income (loss) from continuing
operations, net of tax (A)
(558
)
(767
)
Income (loss) before income tax expenses
from Discontinued operations
3,661
2,508
Tax expenses of discontinued
Operations
(1,184
)
(1,455
)
Income (loss) from discontinued
operations, net of tax (B)
2,477
1,053
Net income (loss) (A+B)
1,919
286
Income (loss) from continuing
operations (A)
Income (loss) attributable to
noncontrolling interests
-
-
Income (loss) attributable to Startek
shareholders
(558
)
(767
)
(558
)
(767
)
Income (loss) from discontinued
operations (B)
Income (loss) attributable to
noncontrolling interests
2,589
1,529
Income (loss) attributable to Startek
shareholders
(112
)
(476
)
2,477
1,053
Net income (loss) (A+B)
Net income (loss) attributable to
noncontrolling interests
2,589
1,529
Net income (loss) attributable to Startek
shareholders
(670
)
(1,243
)
1,919
286
Net income (loss) per common share from
continuing operations
Basic net income (loss) attributable to
Startek shareholders
(0.01
)
(0.02
)
Diluted net income (loss) attributable to
Startek shareholders
(0.01
)
(0.02
)
Net income (loss) per common share from
discontinued operations
Basic net income (loss) attributable to
Startek shareholders
(0.00
)
(0.01
)
Diluted net income (loss) attributable to
Startek shareholders
(0.00
)
(0.01
)
Net income (loss) per common share from
continuing and discontinued operations
Basic net income (loss) attributable to
Startek shareholders
(0.01
)
(0.03
)
Diluted net income (loss) attributable to
Startek shareholders
(0.01
)
(0.03
)
Weighted average common shares
outstanding
Basic
40,321
40,338
Diluted
40,321
40,338
STARTEK, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OTHER COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended March
31,
2023
2022
Net income (loss) (A+B)
1,919
286
Net income (loss) attributable to
non-controlling interests
2,589
1,529
Net income (loss) attributable to Startek
shareholders
(670
)
(1,243
)
Other comprehensive income (loss), net
of taxes from continuing operations:
Foreign currency translation
adjustments
(124
)
546
Pension amortization
124
64
Other comprehensive income (loss) from
continuing operations
-
610
Other comprehensive income (loss), net
of taxes from discontinued operations:
Foreign currency translation
adjustments
-
1
Pension amortization
1,125
(1,200
)
Other comprehensive income (loss) from
discontinuing operations
1,125
(1,199
)
Other comprehensive income (loss) from
continuing and discontinuing operations
1,125
(590
)
Other comprehensive income (loss), net
of taxes from continuing operations
Attributable to noncontrolling
interest
-
-
Attributable to Startek shareholders
-
610
-
610
Other comprehensive income (loss), net
of taxes from discontinued operations
Attributable to noncontrolling
interests
614
(655
)
Attributable to Startek shareholders
511
(544
)
1,125
(1,199
)
Comprehensive income (loss) from
continuing and discontinuing operations
Attributable to noncontrolling
interests
3,203
874
Attributable to Startek shareholders
(159
)
(1,177
)
3,044
(303
)
STARTEK, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
data)
(Unaudited)
March 31,
December 31,
2023
2022
Assets
Current assets
Cash and cash equivalents
15,770
22,457
Restricted cash
9,172
49,946
Trade accounts receivables, net
48,141
47,138
Unbilled revenue
26,373
24,207
Prepaid expenses and other current
assets
14,556
9,159
Assets classified as held for sale
205,883
202,831
Total current assets
319,895
355,738
Non-current assets
Property, plant and equipment, net
22,784
22,945
Operating lease right-of-use assets
38,842
36,450
Intangible assets, net
77,184
79,745
Goodwill
120,505
120,505
Deferred tax assets, net
3,347
2,771
Prepaid expenses and other non-current
assets
6,794
7,889
Total non-current assets
269,456
270,305
Total assets
589,351
626,043
Liabilities and Stockholders’
Equity
Current liabilities
Trade accounts payables
5,783
2,428
Accrued expenses
30,470
29,707
Short term debt
14,878
14,267
Current maturity of long term debt
48,854
120,466
Current maturity of operating lease
liabilities
15,403
14,492
Other current liabilities
19,014
17,615
Liabilities classified as held for
sale
86,953
89,486
Total current liabilities
221,355
288,461
Non-current liabilities
Long term debt
66,943
41,175
Operating lease liabilities
27,895
26,651
Other non-current liabilities
2,801
2,682
Deferred tax liabilities, net
15,451
15,508
Total non-current liabilities
113,090
86,016
Total liabilities
334,445
374,477
Stockholders’ equity
Common stock, 60,000,000 non-convertible
shares, $0.01 par value, authorized; 41,133,224 and 41,098,456
shares issued as of March 31, 2023 and December 31, 2022
respectively.
411
411
Additional paid-in capital
293,869
293,472
Accumulated deficit
(87,073
)
(86,302
)
Treasury stock, 839,214 shares as of March
31, 2023 and December 31, 2022, at cost
(3,749
)
(3,749
)
Accumulated other comprehensive loss
(15,547
)
(16,058
)
Equity attributable to Startek
shareholders
187,911
187,774
Non-controlling interest
66,995
63,792
Total stockholders’ equity
254,906
251,566
Total liabilities and stockholders’
equity
589,351
626,043
STARTEK, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March
31,
2023
2022
Operating activities
Income from continuing and discontinued
operations
1,919
286
less: Income (loss) from discontinued
operations, net of tax
2,477
1,053
Income (loss) from continuing
operations, net of tax
(558
)
(767
)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization
5,238
5,831
Profit on sale of property, plant and
equipment
(1
)
(19
)
Provision/(reversal) for doubtful
accounts
196
(56
)
Amortization of debt issuance costs
(including loss on extinguishment of debt)
40
146
Amortization of call option premium
-
360
Mark to market gain on derivative
instrument
(87
)
-
Share-based compensation expense
380
428
Deferred income taxes
(209
)
(80
)
Share of income (loss) of equity accounted
investee
-
8
Changes in operating assets and
liabilities:
Trade accounts receivables (including
unbilled revenue)
(3,634
)
5,533
Prepaid expenses and other assets
(3,553
)
(3,813
)
Trade accounts payable
3,333
(1,004
)
Income taxes, net
(342
)
(917
)
Accrued expenses and other liabilities
1,710
(5,727
)
Net cash generated from/used in by
operating activities from continuing operations
2,513
(77
)
Net cash generated from/used in
operating activities from discontinued operations
(6,425
)
1,586
Net cash generated from/used in
operating activities
(3,912
)
1,509
Investing activities
Purchase of property, plant and equipment
and intangible assets, net
(2,525
)
(1,576
)
Net cash generated from/used in
investing activities from continuing operations
(2,525
)
(1,576
)
Net cash generated from/used in
investing activities from discontinued operations
(3,518
)
(1,271
)
Net cash generated from/used in
investing activities
(6,043
)
(2,847
)
Financing activities
Proceeds from the issuance of common
stock
17
140
Payments of long term debt
(45,466
)
-
Proceeds from a line of credit, net
594
-
Payments of other borrowings, net
(418
)
(558
)
Common stock repurchases
-
(1,271
)
Net cash generated from/used in
financing activities from continuing operations
(45,273
)
(1,689
)
Net cash generated from/used in
financing activities from discontinued operations
(132
)
(84
)
Net cash generated from/used in
financing activities
(45,405
)
(1,773
)
Net increase in cash and cash
equivalents
(55,360
)
(3,111
)
Effect of exchange rate changes on cash
and cash equivalents and restricted cash
(272
)
(37
)
Cash and cash equivalents and restricted
cash at beginning of period
115,146
55,396
Cash and cash equivalents and
restricted cash at end of period
59,514
52,248
Less: Cash and cash equivalents from
discontinued operations
(34,572
)
(23,368
)
Cash and cash equivalents and
restricted cash of continuing operations at end of period
24,942
28,880
Components of cash and cash equivalents
and restricted cash
Balances with banks
15,770
25,834
Restricted cash
9,172
3,046
Total cash and cash equivalents and
restricted cash
24,942
28,880
Supplemental disclosure of cash flow
information
Cash paid for interest and other finance
cost
3,759
2,313
Cash paid for income taxes
1,103
1,675
Supplemental disclosure of non-cash
activities
Non-cash share-based compensation
expenses
380
428
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, Private offer 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.
Adjusted EBITDA:
Three Months Ended March
31,
2023
2022
Continuing Operations
Net income (loss)
(558
)
(767
)
Tax expense
909
638
Share of income of equity accounted
investee
-
8
Interest expense and other income
(expense), net
2,077
1,730
Foreign exchange gains (losses), net
(72
)
224
Depreciation and amortization expense
5,238
5,831
Private offer transaction cost
-
500
Impairment losses and restructuring
cost
317
(5
)
Share-based compensation expense
380
428
CSS option amortisation
-
360
Adjusted EBITDA
8,291
8,947
Discontinued Operations
Net income (loss)
2,477
1,053
Tax expense
1,184
1,455
Interest expense and other income
(expense), net
640
(756
)
Foreign exchange gains (losses), net
124
184
Depreciation and amortization expense
-
1,758
Impairment losses and restructuring
cost
1,345
1,412
Adjusted EBITDA from Discontinued
Operations
5,770
5,106
Adjusted EBITDA from Continuing and
Discontinued Operations
14,061
14,053
Adjusted EPS:
Three Months Ended March
31,
2023
2022
Continuing Operations
Income (loss) attributable to Startek
shareholders
(558
)
(767
)
Share based compensation expense
298
428
Amortization of intangible assets, net of
tax
2,244
2,244
Private offer transaction cost
-
500
Impairment losses and restructuring
cost
249
(4
)
CSS option amortisation
-
360
Adjusted net income
2,233
2,761
Discontinued Operations
Income (loss) attributable to Startek
shareholders
(112
)
(476
)
Impairment losses and restructuring
cost
1,057
1,059
Adjusted net income (loss) from
Discontinued Operations
945
583
Adjusted Net Income from Continuing and
Discontinued Operations
3,178
3,344
Weighted average common shares outstanding
- basic
40,321
40,338
Weighted average common shares outstanding
- diluted
40,321
40,338
Adjusted EPS from Continuing Operations -
Basic
0.06
0.07
Adjusted EPS from Continuing Operations -
Diluted
0.06
0.07
Adjusted EPS from Discontinued Operations
- Basic
0.02
0.01
Adjusted EPS from Discontinued Operations
- Diluted
0.02
0.01
Adjusted EPS from Continuing and
Discontinued Operations - Basic
0.08
0.08
Adjusted EPS from Continuing and
Discontinued Operations - Diluted
0.08
0.08
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230511005735/en/
Investor Relations Cody Cree Gateway Group, Inc. (949)
574-3860 SRT@gatewayir.com
Media Relations Neha Iyer Startek
neha.iyer@startek.com
StarTek (NYSE:SRT)
Gráfico Histórico do Ativo
De Abr 2024 até Mai 2024
StarTek (NYSE:SRT)
Gráfico Histórico do Ativo
De Mai 2023 até Mai 2024