Welcome!

News Feed Item

StarTek, Inc. Reports Second Quarter 2013 Results

StarTek, Inc. (NYSE:SRT) today announced its second quarter 2013 financial results.

Second Quarter Highlights

  • Adjusted EBITDA of $1.9 million in the second quarter of 2013 compared to $(0.4) million in the prior year period;
  • Launched new Philippines provincial location;
  • Significant portion of IT Platform initiative moving to implementation;
  • $12.0 million of new business signed in the second quarter, including one new logo; $18.0 million signed year to date;
  • Revenue growth of 66% on all clients excluding largest two, with no one client representing more than 28% of total revenue;
  • Year to date SG&A reduction of 7.7% versus 2012; and
  • Cash balance of $10.0 million at the end of the quarter.

Second Quarter 2013 Financial Results

Second quarter 2013 revenue increased 25.1% compared to the second quarter of 2012, the result of solid growth with existing clients and new business signed in 2012. All segments showed year over year revenue growth and, while Asia Pacific margins declined versus 2012, both the Domestic and Latin America segments improved significantly. The Company had a net loss of $1.3 million, or $0.08 per share, during the second quarter of 2013 as compared to a net loss of $4.3 million, or $0.28 per share, in the second quarter of 2012.

Gross margin increased from 7.4% in the second quarter of 2012 to 10.1% in the second quarter of 2013. This improvement was due to improved Domestic margins of 12.3% in the second quarter of 2013 and the ongoing ramp of the Honduras location in Latin America. Latin America margins improved to (1.2%) in the second quarter of 2013 from (8.1%) in the second quarter of 2012.

SG&A expenses decreased 1.8% from $7.3 million during the second quarter of 2012 to $7.2 million during the second quarter of 2013, decreasing from 16.5% to 13.0% of revenue, due to the continued focus on cost management.

Subsequent to the end of the quarter, we completed an acquisition totaling $1.5 million, which will be used as a platform for us to accelerate our growth within the healthcare services vertical.

Liquidity and Capital Resources

As of June 30, 2013, the Company's cash position was approximately $10.0 million compared to $9.2 million as of December 31, 2012. The Company had approximately $0.3 million and $0.5 million in capital expenditures during the quarters ended June 30, 2013 and 2012, respectively. The acquisition of Ideal Dialogue Company, LLC resulted in a use of $0.8 million of cash during the second quarter of 2013.

"I am pleased with our year over year revenue growth across all regions," said Chad Carlson, President and Chief Executive Officer. "This is continued evidence that clients trust the execution of our team and are pleased with the solutions offered via the StarTek Advantage System. Gross margin improved in 2 of our 3 regions and Asia Pacific was held down by ramp and training costs. The challenges with operational performance in Asia Pacific, which I discussed last quarter, are largely behind us and we are off to a great start in our new provincial site in the Philippines."

For additional information on revenue and margin, please refer to the Financial Scorecard attached as Exhibit 99.2 to the Current Report on Form 8-K, which includes this press release.

Conference Call and Webcast Details

The Company will host a conference call today, August 12, 2013, at 3:00 p.m. MDT (5:00 p.m. EDT) to discuss second quarter 2013 financial results. To participate in the teleconference, please call toll-free 866.271.5140 (or 617.213.8893 for international callers) and enter “76399809”. You may also listen to the teleconference live via the Company’s website at www.startek.com. For those that cannot access the live broadcast, a replay will be available on the Company’s website at www.startek.com.

About StarTek

StarTek, Inc. is a global provider of business process outsourcing services with approximately 10,200 employees, whom we refer to as Brand Warriors, that have been committed to making a positive impact on our clients’ business results for over 25 years. Our mission is to enable and empower our Brand Warriors to promote our clients’ brands every day to bring value to our stakeholders. We accomplish this by aligning with our clients’ business objectives, resulting in a trusted partnership. The StarTek Advantage System is the sum total of our culture, customized solutions and processes that enhance our clients’ customer experience. The StarTek Advantage System is focused on improving customer experience and reducing total cost of ownership for our clients. StarTek has proven results for the multiple services we provide, including sales, order management and provisioning, customer care, technical support, receivables management, and retention programs. We manage programs using a variety of multi-channel customer interaction capabilities, including voice, chat, email, IVR and back-office support. StarTek has delivery centers in the U.S., Philippines, Canada, Costa Rica, Honduras and through its StarTek@Home workforce. For more information, go to www.startek.com or call +1303.262.4500.

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. These factors include, but are not limited to, risks relating to our reliance on significant customers, consolidation by our clients, the concentration of our business in the telecommunications industry, pricing pressure, maximization of capacity utilization, lack of success of our clients’ products and services, consolidation of vendors by our clients, interruptions to the Company’s business due to geopolitical conditions and/or natural disasters, foreign currency exchange risk, lack of minimum purchase requirements in our contracts, ability to hire and retain qualified employees, the timely development of new products or services, failure to implement new technological advancements, increases in labor costs, lack of wide geographic diversity, continuing unfavorable economic conditions, our ability to effectively manage growth, increases in the cost of telephone and data services, unauthorized disclosure of confidential client or client customer information, risks inherent in the operation of business outside of North America, ability of our largest stockholder to affect decisions, stock price volatility, variation in quarterly operating results and inability to renew or replace sources of capital funding. Readers are encouraged to review Item 1A. - Risk Factors and all other disclosures appearing in the Company's Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission, for further information on risks and uncertainties that could affect StarTek’s business, financial condition and results of operation.

   

STARTEK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

 
Three Months

Ended June 30,

Six Months

Ended June 30,

2013   2012 2013   2012
Revenue $ 55,576 $ 44,421 $ 109,386 $ 95,280
Cost of services 49,955   41,150   99,037   86,672  
Gross profit 5,621 3,271 10,349 8,608
Selling, general and administrative expenses 7,198 7,329 14,448 15,653
Impairment losses and restructuring charges, net (437 ) 467   (437 ) 3,553  
Operating loss (1,140 ) (4,525 ) (3,662 ) (10,598 )
Net interest and other income 31   (84 ) (66 ) (187 )
Loss before income taxes (1,171 ) (4,441 ) (3,596 ) (10,411 )
Income tax expense (benefit) 101   (163 ) 4   (2 )
Net loss $ (1,272 ) $ (4,278 ) $ (3,600 ) $ (10,409 )
 
Net loss per common share - basic and diluted $ (0.08 ) $ (0.28 ) $ (0.24 ) $ (0.68 )
 
Weighted average shares outstanding - basic and diluted 15,335 15,239 15,319 15,214
 

STARTEK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

   

  June 30, 2013  

December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents $ 9,995 $ 9,183
Trade accounts receivable, net 40,659 41,070
Other current assets 8,708   10,027
Total current assets 59,362 60,280
Property, plant and equipment, net 21,832 26,310
Other assets 7,719   6,542
Total assets $ 88,913   $ 93,132
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 26,440 $ 23,879
Other liabilities 2,185   2,974
Total liabilities 28,625 26,853
Total stockholders’ equity 60,288   66,279
Total liabilities and stockholders' equity $ 88,913   $ 93,132
 

STARTEK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

   
Three Months Ended June 30, Six Months Ended June 30,
2013   2012 2013   2012
Operating Activities
Net loss $ (1,272 ) $ (4,278 ) $ (3,600 ) $ (10,409 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation 3,115 3,250 6,184 7,060
Impairment losses 3,086
Non-cash compensation cost 391 362 857 696
Amortization of deferred gain on sale leaseback transaction (68 ) (138 )
Changes in operating assets & liabilities and other, net 1,297   2,141   (68 ) 2,830  
Net cash provided by operating activities 3,463   1,475   3,235   3,263  
Investing Activities
Purchases of property, plant and equipment (330 ) (455 ) (1,454 ) (1,617 )
Proceeds from note receivable 165 165 330 330
Cash paid for acquisition of business (750 )   (1,500 )  
Net cash used in investing activities (915 ) (290 ) (2,624 ) (1,287 )
Financing Activities
Other financing, net 27   2   140   6  
Net cash provided by financing activities 27 2 140 6
Effect of exchange rate changes on cash 81   (290 ) 61   (333 )
Net increase in cash and cash equivalents 2,656 897 812 1,649
Cash and cash equivalents at beginning of period $ 7,339   $ 10,471   $ 9,183   $ 9,719  
Cash and cash equivalents at end of period $ 9,995   $ 11,368   $ 9,995   $ 11,368  
 

STARTEK, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(In thousands)

(Unaudited)

The information presented in this press release may report 1) adjusted EBITDA, which the Company defines as net income (loss) plus income tax expense (benefit), interest expense (income), impairment losses and restructuring charges, depreciation expense and stock compensation expense and 2) operating loss before impairment losses and restructuring charges. The following tables provide reconciliation of 1) adjusted EBITDA to net loss calculated in accordance with generally accepted accounting principles in the United States (GAAP) and 2) operating loss before impairment losses and restructuring charges to operating loss calculated in accordance with GAAP. 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. A reconciliation of the GAAP amounts to the non-GAAP amounts is shown below.

 

Adjusted EBITDA:

  Three Months Ended   Six Months Ended
June 30, 2013   June 30, 2012 June 30, 2013   June 30, 2012
Net loss $ (1,272 ) $ (4,278 ) $ (3,600 ) $ (10,409 )
Income tax expense (benefit) 101 (163 ) 4 (2 )
Interest expense (income) 6 1 9 (17 )
Impairment losses and restructuring charges, net (437 ) 467 (437 ) 3,553
Depreciation expense 3,115 3,250 6,184 7,060
Stock compensation expense 391   362   857   696  
Adjusted EBITDA $ 1,904   $ (361 ) $ 3,017   $ 881  
 

Operating Loss before Impairment Losses and Restructuring Charges:

  Three Months Ended   Six Months Ended
June 30, 2013   June 30, 2012 June 30, 2013   June 30, 2012
Operating loss $ (1,140 ) $ (4,525 ) $ (3,662 ) $ (10,598 )
Impairment losses and restructuring charges, net (437 ) 467   (437 ) 3,553  
Operating loss before impairment losses and restructuring charges, net $ (1,577 ) $ (4,058 ) $ (4,099 ) $ (7,045 )

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Silver Spring Networks, Inc. (NYSE: SSNI) extended its Internet of Things technology platform with performance enhancements to Gen5 – its fifth generation critical infrastructure networking platform. Already delivering nearly 23 million devices on five continents as one of the leading networking providers in the market, Silver Spring announced it is doubling the maximum speed of its Gen5 network to up to 2.4 Mbps, increasing computational performance by 10x, supporting simultaneous mesh communic...
Eighty percent of a data scientist’s time is spent gathering and cleaning up data, and 80% of all data is unstructured and almost never analyzed. Cognitive computing, in combination with Big Data, is changing the equation by creating data reservoirs and using natural language processing to enable analysis of unstructured data sources. This is impacting every aspect of the analytics profession from how data is mined (and by whom) to how it is delivered. This is not some futuristic vision: it's ha...
The cloud promises new levels of agility and cost-savings for Big Data, data warehousing and analytics. But it’s challenging to understand all the options – from IaaS and PaaS to newer services like HaaS (Hadoop as a Service) and BDaaS (Big Data as a Service). In her session at @BigDataExpo at @ThingsExpo, Hannah Smalltree, a director at Cazena, will provide an educational overview of emerging “as-a-service” options for Big Data in the cloud. This is critical background for IT and data profes...
Father business cycles and digital consumers are forcing enterprises to respond faster to customer needs and competitive demands. Successful integration of DevOps and Agile development will be key for business success in today’s digital economy. In his session at DevOps Summit, Pradeep Prabhu, Co-Founder & CEO of Cloudmunch, covered the critical practices that enterprises should consider to seamlessly integrate Agile and DevOps processes, barriers to implementing this in the enterprise, and pr...
The principles behind DevOps are not new - for decades people have been automating system administration and decreasing the time to deploy apps and perform other management tasks. However, only recently did we see the tools and the will necessary to share the benefits and power of automation with a wider circle of people. In his session at DevOps Summit, Bernard Sanders, Chief Technology Officer at CloudBolt Software, explored the latest tools including Puppet, Chef, Docker, and CMPs needed to...
Sensors and effectors of IoT are solving problems in new ways, but small businesses have been slow to join the quantified world. They’ll need information from IoT using applications as varied as the businesses themselves. In his session at @ThingsExpo, Roger Meike, Distinguished Engineer, Director of Technology Innovation at Intuit, showed how IoT manufacturers can use open standards, public APIs and custom apps to enable the Quantified Small Business. He used a Raspberry Pi to connect sensors...
Let’s face it, embracing new storage technologies, capabilities and upgrading to new hardware often adds complexity and increases costs. In his session at 18th Cloud Expo, Seth Oxenhorn, Vice President of Business Development & Alliances at FalconStor, will discuss how a truly heterogeneous software-defined storage approach can add value to legacy platforms and heterogeneous environments. The result reduces complexity, significantly lowers cost, and provides IT organizations with improved effi...
It's easy to assume that your app will run on a fast and reliable network. The reality for your app's users, though, is often a slow, unreliable network with spotty coverage. What happens when the network doesn't work, or when the device is in airplane mode? You get unhappy, frustrated users. An offline-first app is an app that works, without error, when there is no network connection.
Data-as-a-Service is the complete package for the transformation of raw data into meaningful data assets and the delivery of those data assets. In her session at 18th Cloud Expo, Lakshmi Randall, an industry expert, analyst and strategist, will address: What is DaaS (Data-as-a-Service)? Challenges addressed by DaaS Vendors that are enabling DaaS Architecture options for DaaS
One of the bewildering things about DevOps is integrating the massive toolchain including the dozens of new tools that seem to crop up every year. Part of DevOps is Continuous Delivery and having a complex toolchain can add additional integration and setup to your developer environment. In his session at @DevOpsSummit at 18th Cloud Expo, Miko Matsumura, Chief Marketing Officer of Gradle Inc., will discuss which tools to use in a developer stack, how to provision the toolchain to minimize onboa...
SYS-CON Events announced today that Catchpoint Systems, Inc., a provider of innovative web and infrastructure monitoring solutions, has been named “Silver Sponsor” of SYS-CON's DevOps Summit at 18th Cloud Expo New York, which will take place June 7-9, 2016, at the Javits Center in New York City, NY. Catchpoint is a leading Digital Performance Analytics company that provides unparalleled insight into customer-critical services to help consistently deliver an amazing customer experience. Designed...
Companies can harness IoT and predictive analytics to sustain business continuity; predict and manage site performance during emergencies; minimize expensive reactive maintenance; and forecast equipment and maintenance budgets and expenditures. Providing cost-effective, uninterrupted service is challenging, particularly for organizations with geographically dispersed operations.
When building large, cloud-based applications that operate at a high scale, it’s important to maintain a high availability and resilience to failures. In order to do that, you must be tolerant of failures, even in light of failures in other areas of your application. “Fly two mistakes high” is an old adage in the radio control airplane hobby. It means, fly high enough so that if you make a mistake, you can continue flying with room to still make mistakes. In his session at 18th Cloud Expo, Lee...
DevOps is not just last year’s buzzword. Companies with DevOps practices are 2.5x more likely to exceed profitability, market share, and productivity goals. But how do you enable high performance? What can you do right now to start? Find out from DevOps experts including Gene Kim, co-author of "The Phoenix Project," and the Dynatrace Center of Excellence.
With the proliferation of both SQL and NoSQL databases, organizations can now target specific fit-for-purpose database tools for their different application needs regarding scalability, ease of use, ACID support, etc. Platform as a Service offerings make this even easier now, enabling developers to roll out their own database infrastructure in minutes with minimal management overhead. However, this same amount of flexibility also comes with the challenges of picking the right tool, on the right ...