Thursday, Mar 28 2024 | Time 21:28 Hrs(IST)
image
Business Economy


Startek Reports Third Quarter 2021 Financial Results

 GREENWOOD VILLAGE, Colo. and MUMBAI, IndiaNov. 3, 2021 /PRNewswire/ -- Startek, Inc. (NYSE: SRT) ("Startek" or the "Company"), a global provider of customer experience management solutions, is reporting financial results for the third quarter ended September 30, 2021.


Startek_Logo

Third Quarter 2021 Financial Highlights ($ in millions, excl. margin items)



























































































































 

Q3 2021




 

Q3 2020




 

Change



Net Revenue



$



172.8




 

$



162.7




 


 

6%



Gross Profit



$



21.5




 

$



22.3




 


 

(3)%



Gross Margin




 

12.5%




 


 

13.7%




 

-120bps



SG&A Expenses



$



13.1




 

$



14.3




 


 

(8)%



Net Income/(Loss)[1]



$



0.1




 

$



0.4




 


 

(79)%



EPS[1]



$



0.00




 

$



0.01




 


 

(80)%



Adjusted Net Income/(Loss)[2][3]



$



2.9




 

$



3.3




 


 

(13)%



Adjusted EPS[2][3]



$



0.07




 

$



0.08




 


 

(14)%



Adjusted EBITDA[3]



$



15.9




 

$



15.6




 


 

2%



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



[2] Reflects Adjusted net income (loss) attributable to Startek shareholders.



[3] Refer to the note below about Non-GAAP financial measures




                  


Management Commentary 


"During the third quarter, we continued to drive growth across core verticals and strengthen our operational foundation," said Aparup Sengupta, Executive Chairman and Global CEO of Startek. "We generated year-over-year increases across both revenue and adjusted EBITDA. While we maintained our disciplined approach to cost management across our organization, we experienced some gross margin pressure led by the cybersecurity event. Despite this, our work to invest in key platform enhancements, drive continued business development, and support our personnel across all geographies in which we operate has allowed us to continually improve our position as a nimble and innovative provider of differentiated customer experiences.


"Examining our performance by vertical, our growth during the third quarter was primarily driven by sustained momentum with our telecom clients, as well as continued strength within both banking & financial services and technology & IT services. By geography, we generated meaningful year-over-year improvements in India, the Middle East, and South Africa, with some year-over-year revenue softness in the United States due to growing pandemic-related labor constraints. As we continue to monitor these trends, we are placing a strong priority on ensuring we have a robust set of resources for delivering our high-quality business process management solutions. This includes increasing our sales, solutioning and marketing workforce, fine-tuning our go-to-market approach, and continuing to make investments in new digital capabilities for our platform. All of these investments are to strengthen our ability to preserve the quality and high-touch nature of our client services, no matter where or how we deploy them.   


"Subsequent to the quarter, we further bolstered our senior management team with the announcement of two new executive appointments. Our new president, Bharat Rao, has been a Startek board member since 2018 and is a former Managing Partner at Capital Square Partners, and our new Global Chief Revenue Officer, Vivek Sharma, is Infosys BPM's former Senior Vice President for Global Sales. Both Bharat and Vivek have extensive experience with driving growth and innovation across new industry segments, and I look forward to working closely with them to accelerate our capabilities across the customer experience transformation journeys we offer. 


"As we move into the fourth quarter, we remain focused on maintaining our momentum within our key geographies and verticals, as well as ensuring the continued efficiency of our global operations. We will continue working to execute on these objectives and maximize the value we create for our clients and shareholders."


Third Quarter 2021 Financial Results


Net revenue in the third quarter increased 6% to $172.8 million compared to $162.7 million in the year-ago quarter. The increase was driven by sustained strong performance across key verticals and geographies.


Gross profit in the third quarter was $21.5 million compared to $22.3 million in the year-ago quarter. Gross margin was 12.5% compared to 13.7% in the year-ago quarter. The decrease was primarily driven by higher growth in telecom, financial and business services and public sector enterprises verticals that are delivered onshore, as well as growing wage pressure and labor shortages in the United States.


Selling, general and administrative (SG&A) expenses in the third quarter decreased to $13.1 million compared to $14.3 million in the year-ago quarter. As a percentage of revenue, SG&A improved 120 basis points to 7.6% compared to 8.8% in the year-ago quarter as a result of continued operating leverage at the back of the higher revenue base generated during the quarter.


Net income attributable to Startek shareholders in the third quarter was $0.1 million or $0.00 per share, compared to a net income of $0.4 million or $0.01 per share in the year-ago quarter.


Adjusted net income* in the third quarter was $2.9 million or $0.07 per diluted share, compared to an adjusted net income* of $3.3 million or $0.08 per share in the year-ago quarter.


Adjusted EBITDA* in the third quarter increased slightly to $15.9 million compared to $15.6 million in the year-ago quarter. The increase was driven by the aforementioned growth in net revenue.


On September 30, 2021, cash and restricted cash were $63.5 million compared to $54.1 million[1] at June 30, 2021. The increase was primarily due to improved working capital during the third quarter. Total debt at September 30, 2021 decreased to $170.4 million compared to $173.9 million at June 30, 2021, and net debt at September 30, 2021 was $106.9 million[2] compared to $119.8 million at June 30, 2021.


During the three months ended September 30, 2021, the Company repurchased an aggregate of 57,759 shares of common stock under its repurchase plan, at an average cost of $5.67 per share.


*A non-GAAP measure defined below.


Conference Call and Webcast Details


Startek management will hold a conference call today at 5:00 p.m. Eastern time to discuss its financial results. The conference call will be followed by a question and answer period.


Date: Tuesday, November 2, 2021



Time: 5:00 p.m. Eastern time



Toll-free dial-in number: (844) 239-5283



International dial-in number: (574) 990-1022



Conference ID: 3536546


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 Investor Relations at (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 8:00 p.m. Eastern time on the same day through November 9, 2021.


Toll-free replay number: (855) 859-2056



International replay number: (404) 537-3406



Replay ID: 3536546


[1] Cash balance excluding restricted cash as at September 30, 2021 amounted to $56.8 million as compared to $47 million as at June 30, 2021.


[2] Net debt excluding restricted cash balance at September 30, 2021 was $113.5 million compared to $126.9 million at June 30, 2021.


About Startek


Startek is a global provider of tech-enabled business process management solutions. The company provides omni-channel customer experience, digital transformation, and technology services to some of the finest brands globally. Startek is committed to impacting clients' business outcomes by focusing on enhancing customer experience and digital & AI enablement across all touch points and channels. Startek has more than 46,000 CX experts spread across 46 delivery campuses in 13 countries. The company services over 200 clients across a range of industries such as Banking and Financial Services, Insurance, Technology, Telecom, Healthcare, Travel & Hospitality, Ecommerce, Consumer Goods, Retail, and Energy & Utilities. 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-K for the fiscal year ended December 31, 2020, as filed with the Securities and Exchange Commission (SEC) on March 15, 2021, 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


Giuseppe Montefinese



Startek, Inc.



+1 732-890-8929



[email protected]   


Cody Cree or Jackie Keshner



Gateway Investor Relations



+1 949-574-3860



[email protected] 


Danveer Bhasin



Startek



+91-993-013-5788



[email protected]


 


 


STARTEK, INC. AND SUBSIDIARIES



 CONSOLIDATED STATEMENTS OF INCOME (LOSS)



(In thousands, except per share amounts)



(Unaudited)


 


















































































































































































































































































































 

Three Months Ended



Spetember 30,



Nine Months Ended



September 30,




 

2021



2020



2021



2020



Revenue




 

172,948




 

163,097




 

525,879




 

466,926



Warrant contra revenue




 

(161)




 

(410)




 

(991)




 

(1,173)



Net revenue



$



172,787



$



162,687



$



524,888



$



465,753



Cost of services




 

(151,264)




 

(140,392)




 

(454,124)




 

(408,747)



Gross profit



$



21,523



$



22,295



$



70,764



$



57,006




 


 


 


 


 


 


 


 


 

Selling, general and administrative expenses




 

(13,099)




 

(14,292)




 

(39,568)




 

(45,030)



Impairment losses and restructuring/exit cost




 

(85)




 

12




 

(1,964)




 

(24,545)



Operating income/ (loss)



$



8,339



$



8,015



$



29,232



$



(12,569)




 


 


 


 


 


 


 


 


 

Share of loss of equity-accounted investees




 

(46)




 

(5)




 

(1)




 

(25)



Interest expense, net




 

(2,236)




 

(3,988)




 

(18,489)




 

(10,683)



Exchange gain / (loss), net




 

(533)




 

(621)




 

42




 

(331)



Income/ (loss) before income taxes



$



5,524



$



3,401



$



10,784



$



(23,609)



Income tax expense




 

(2,402)




 

(1,649)




 

(9,397)




 

(5,808)



Net income/ (loss)



$



3,122



$



1,752



$



1,387



$



(29,417)




 


 


 


 


 


 


 


 


 

Net income/ (loss)




 


 


 


 


 


 


 


 

Net income attributable to non-controlling interests




 

3,046




 

1,385




 

6,581




 

1,990



Net income/ (loss) attributable to Startek shareholders




 

76




 

367




 

(5,194)




 

(31,407)




 


 


 


 


 


 


 


 


 

Net income/ (loss) per common share - basic



$



0.00



$



0.01



$



(0.13)



$



(0.80)



Net income/ (loss) per common share - diluted



$



0.00



$



0.01



$



(0.13)



$



(0.80)




 


 


 


 


 


 


 


 


 

Weighted average common shares outstanding - basic




 

40,788




 

40,275




 

40,723




 

39,143



Weighted average common shares outstanding - diluted




 

41,094




 

40,626




 

41,171




 

39,143




 


STARTEK, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (LOSS)



(In thousands, except per share amounts)



(Unaudited)


 


























































































































































































































 

Three Months Ended



September 30,



Nine Months Ended



September 30,




 

2021



2020



2021



2020



Net income/ (loss)



$



3,122



$



1,752



$



1,387



$



(29,417)



Net income attributable to non-controlling interests




 

3,046




 

1,385




 

6,581




 

1,990



Net income/ (loss) attributable to Startek shareholders




 

76




 

367




 

(5,194)




 

(31,407)




 


 


 


 


 


 


 


 


 

Other comprehensive income/ (loss), net of taxes:




 


 


 


 


 


 


 


 

Foreign currency translation adjustments




 

(179)




 

936




 

(2,147)




 

(2,729)



Change in fair value of derivative instruments




 

-




 

103




 

8




 

(577)



Pension amortization




 

(669)




 

774




 

(1,090)




 

(1,856)



Other comprehensive income/ (loss)



$



(848)



$



1,813



$



(3,229)



$



(5,162)




 


 


 


 


 


 


 


 


 

Other comprehensive income/ (loss), net of taxes




 


 


 


 


 


 


 


 

Other comprehensive income/ (loss) attributable to non-controlling interests




 

(374)




 

413




 

(443)




 

(1,211)



Other comprehensive income/ (loss) attributable to Startek shareholders




 

(474)




 

1,400




 

(2,786)




 

(3,951)




 

$



(848)



$



1,813



$



(3,229)



$



(5,162)



Comprehensive income/ (loss)




 


 


 


 


 


 


 


 

Comprehensive income attributable to non-controlling interests




 

2,672




 

1,798




 

6,138




 

779



Comprehensive income/ (loss) attributable to Startek shareholders




 

(398)




 

1,767




 

(7,980)




 

(35,358)




 

$



2,274



$



3,565



$



(1,842)



$



(34,579)




 


STARTEK, INC. AND SUBSIDIARIES 



CONSOLIDATED BALANCE SHEETS



(In thousands, except share data)



(Unaudited)


 


































































































































































































































































































































































 

September 30,



December 31,




 

2021



2020



Assets




 


 


 


 

Current assets




 


 


 


 

Cash and cash equivalents




 

56,840




 

44,507



Restricted cash




 

6,634




 

6,052



Trade accounts receivables, net




 

68,504




 

83,560



Unbilled revenue




 

62,066




 

49,779



Prepaid and other current assets




 

13,928




 

14,542



Total current assets



$



207,972



$



198,440




 


 


 


 


 

Non-current assets




 


 


 


 

Property, plant and equipment, net




 

35,228




 

34,225



Operating lease right-of-use assets




 

56,775




 

69,376



Intangible assets, net




 

92,695




 

100,440



Goodwill




 

183,397




 

183,397



Investment in equity-accounted investees




 

25,006




 

111



Deferred tax assets, net




 

3,273




 

5,294



Prepaid expenses and other non-current assets




 

15,482




 

13,370



Total non-current assets



$



411,856



$



406,213



Total assets




 

619,828



$



604,653




 


 


 


 


 

Liabilities and Shareholders' Equity




 


 


 


 

Current liabilities




 


 


 


 

Trade accounts payables




 

6,351




 

20,074



Accrued expenses




 

57,193




 

57,118



Short term debt




 

3,929




 

15,505



Current maturity of long term debt




 

2,217




 

2,180



Current maturity of operating lease obligation




 

17,825




 

19,327



Other current liabilities




 

43,801




 

39,987



Total current liabilities



$



131,316



$



154,191




 


 


 


 


 

Non-current liabilities




 


 


 


 

Long term debt




 

164,240




 

118,315



Operating lease liabilities




 

41,176




 

52,052



Other non-current liabilities




 

17,412




 

15,498



Deferred tax liabilities, net




 

17,616




 

17,715



Total non-current liabilities



$



240,444



$



203,580



Total liabilities



$



371,760



$



357,771




 


 


 


 


 

Stockholders' equity:




 


 


 


 

Common stock, 60,000,000 non-convertible shares, $0.01 par value, authorized;



40,859,738 and 40,453,462 shares issued and outstanding at September 30, 2021 and



December 31, 2020, respectively




 

409




 

405



Additional paid-in capital




 

292,053




 

288,700



Accumulated deficit




 

(90,737)




 

(85,543)



Treasury stock, 57,759 and nil shares at September 30, 2021 and December 31, 2020,



respectively, at cost




 

(329)




 

-



Accumulated other comprehensive loss




 

(10,072)




 

(7,286)



Equity attributable to Startek shareholders



$



191,324



$



196,276



Non-controlling interests




 

56,744




 

50,606



Total stockholders' equity



$



248,068



$



246,882



Total liabilities and stockholders' equity



$



619,828



$



604,653




 


 


STARTEK, INC. AND SUBSIDIARIES 



CONSOLIDATED STATEMENTS OF CASH FLOWS



(In thousands)



(Unaudited)


 











































































































































































































































































































































































































 

Nine Months Ended September 30,




 

2021



2020



Operating Activities




 


 


 


 

Net loss



$



1,387



$



(29,417)




 


 


 


 


 

Adjustments to reconcile net loss to net cash provided by operating activities:




 


 


 


 

Depreciation and amortization




 

20,398




 

21,279



Impairment of goodwill




 

-




 

22,708



Profit on sale of property, plant and equipment




 

(37)




 

181



Provision for doubtful accounts




 

23




 

2,089



Amortisation of debt issuance cost




 

2,980




 

1,148



Amortisation of call option premium




 

360




 

-



Warrant contra revenue




 

991




 

1,173



Share-based compensation expense




 

932




 

447



Deferred income taxes




 

1,838




 

1,192



Share of loss of equity-accounted investees




 

1




 

25




 


 


 


 


 

Changes in operating assets and liabilities:




 


 


 


 

Trade accounts receivables




 

13,120




 

26,171



Prepaid expenses and other assets




 

(11,968)




 

(117)



Trade accounts payables




 

(13,409)




 

(10,155)



Income taxes, net




 

(602)




 

1,300



Accrued expenses and other liabilities




 

6,543




 

27,421



Net cash generated from operating activities



$



22,557



$



65,445




 


 


 


 


 

Investing Activities




 


 


 


 

Purchase of property, plant and equipment




 

(13,358)




 

(10,141)



Investment in equity-accounted investees




 

(25,000)




 

-



Payments for call option premium




 

(3,000)




 

-



Proceeds from equity-accounted investees




 

102




 

429



Net cash used in investing activities



$



(41,256)



$



(9,712)




 


 


 


 


 

Financing Activities




 


 


 


 

Proceeds from the issuance of common stock




 

1,434




 

8,379



Proceeds from long term debt




 

165,000




 

-



Payments on long term debt




 

(117,600)




 

(4,200)



Payments for loan fees related to long term debt




 

(2,794)




 

-



Payments on other debt, net




 

(13,145)




 

(35,697)



Common stock repurchase




 

(329)




 

0



Net cash generated from/ (used in) financing activities



$



32,566



$



(31,518)




 


 


 


 


 

Net increase in cash and cash equivalents




 

13,867




 

24,215



Effect of exchange rate changes on cash and cash equivalents and restricted cash




 

(952)




 

(256)



Cash and cash equivalents and restricted cash at beginning of period




 

50,559




 

32,626



Cash and cash equivalents and restricted cash at end of period



$



63,474



$



56,585




 


 


 


 


 

Components of cash and cash equivalents and restricted cash




 


 


 


 

Balance with banks




 

56,840




 

48,463



Restricted cash




 

6,634




 

8,122



Total cash and cash equivalents and restricted cash



$



63,474



$



56,585




 


 


 


 


 

Supplemental disclosure of cash flow information




 


 


 


 

Cash paid for interest and other finance costs




 

19,985




 

10,392



Cash paid for income taxes




 

7,884




 

2,752



Non-cash warrant contra revenue




 

991




 

1,173



Non-cash share-based compensation expenses




 

932




 

447




 


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, Exchange gain / (loss), net, Depreciation and amortization expense, Restructuring and other acquisition-related costs, 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 the 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, investments that investors may want to evaluate separately (such as based on fair value), 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



September 30,



Nine Months Ended



September 30,




 

2021



2020



2021



2020



Net Profit/(Loss)




 

3,122




 

1,752




 

1,387




 

(29,417)



Income tax expense




 

2,402




 

1,649




 

9,397




 

5,808



Interest and other expense, net




 

2,282




 

3,993




 

18,490




 

10,708



Exchange gain/(loss), net




 

533




 

621




 

(42)




 

331



Depreciation and amortization expense




 

6,927




 

6,951




 

20,398




 

21,279



Impairment losses and restructuring cost




 

85




 

(12)




 

1,964




 

24,545



Share-based compensation expense




 

341




 

238




 

932




 

447



Warrant contra revenue




 

161




 

410




 

991




 

1,173



Adjusted EBITDA



$



15,853



$



15,602



$



53,517



$



34,874




 













































































































































































Adjusted EPS:




 


 


 


 


 


 


 


 


 

Three Months Ended



September 30,



Nine Months Ended



September 30,




 

2021



2020



2021



2020



Profit attributable to Startek shareholders




 

76




 

367




 

(5,194)




 

(31,407)



Add: Share based compensation expense




 

341




 

238




 

932




 

447



Add: Amortization of intangible assets, net of tax




 

2,279




 

2,279




 

6,785




 

6,801



Add: Warrant contra revenue




 

161




 

410




 

991




 

1,173



Add: Goodwill impairment loss




 

-




 

-




 

-




 

22,708



Add: Debt issuance cost




 

-




 

-




 

10,937




 

-



Adjusted net income / (loss) (non-GAAP)



$



2,856



$



3,294



$



14,451



$



(277)




 


 


 


 


 


 


 


 


 

Weighted average common shares outstanding - basic




 

40,788




 

40,275




 

40,723




 

39,143



Weighted average common shares outstanding - diluted




 

41,094




 

40,626




 

41,171




 

39,143




 


 


 


 


 


 


 


 


 

Adjusted EPS - basic



$



0.07



$



0.08



$



0.35



$



(0.01)



Adjusted EPS - diluted



$



0.07



$



0.08



$



0.35



$



(0.01)




 


More News
India's core sector output rises to three-month high of 6 7 pc in February

India's core sector output rises to three-month high of 6 7 pc in February

28 Mar 2024 | 7:51 PM

New Delhi, Mar 28 (UNI) Driven primarily by coal, cement and crude oil production, India's core sector comprising of eight key infrastructure components grew 6.7% year-on-year in February 2024, as per data released by Ministry of Commerce and Industry on Thursday.

see more..

Honda Motorcycle & Scooter India achieves historic 6 cr domestic sales milestone

28 Mar 2024 | 7:19 PM

Mumbai, Mar 28 (UNI) Honda Motorcycle & Scooter India (HMSI) announced on Thursday that it has accomplished a historic achievement of 6 crore domestic sales in India. Honda ventured into the Indian market with its first two-wheeler, the Activa, in 2001.

see more..

28 Mar 2024 | 5:28 PM

UNI NK AKS.

see more..
Luminous enters solar panel mfg; 250 MW facility launched with initial investment of Rs 120 cr

Luminous enters solar panel mfg; 250 MW facility launched with initial investment of Rs 120 cr

28 Mar 2024 | 5:16 PM

Rudrapur, Mar 28 (UNI) From power Back-up solutions to Batteries and Solar applications, Luminous Power Technologies on Thursday announced the launch of its state-of-the-art solar panel manufacturing facility here.

see more..

Kottayam-Kochi Rubber Market rates

28 Mar 2024 | 5:04 PM

Kottayam, Mar 28 (UNI) Following were the Rubber Market rates announced by the Rubber Board here on Thursday per quintal.

see more..
image