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 [email protected] 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
SYS-CON Events announced today that Massive Networks, that helps your business operate seamlessly with fast, reliable, and secure internet and network solutions, has been named "Exhibitor" of SYS-CON's 21st International Cloud Expo ®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. As a premier telecommunications provider, Massive Networks is headquartered out of Louisville, Colorado. With years of experience under their belt, their team of...
SYS-CON Events announced today that IBM has been named “Diamond Sponsor” of SYS-CON's 21st Cloud Expo, which will take place on October 31 through November 2nd 2017 at the Santa Clara Convention Center in Santa Clara, California.
Infoblox delivers Actionable Network Intelligence to enterprise, government, and service provider customers around the world. They are the industry leader in DNS, DHCP, and IP address management, the category known as DDI. We empower thousands of organizations to control and secure their networks from the core-enabling them to increase efficiency and visibility, improve customer service, and meet compliance requirements.
In his session at 21st Cloud Expo, Michael Burley, a Senior Business Development Executive in IT Services at NetApp, will describe how NetApp designed a three-year program of work to migrate 25PB of a major telco's enterprise data to a new STaaS platform, and then secured a long-term contract to manage and operate the platform. This significant program blended the best of NetApp’s solutions and services capabilities to enable this telco’s successful adoption of private cloud storage and launchi...
SYS-CON Events announced today that TidalScale will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. TidalScale is the leading provider of Software-Defined Servers that bring flexibility to modern data centers by right-sizing servers on the fly to fit any data set or workload. TidalScale’s award-winning inverse hypervisor technology combines multiple commodity servers (including their ass...
As hybrid cloud becomes the de-facto standard mode of operation for most enterprises, new challenges arise on how to efficiently and economically share data across environments. In his session at 21st Cloud Expo, Dr. Allon Cohen, VP of Product at Elastifile, will explore new techniques and best practices that help enterprise IT benefit from the advantages of hybrid cloud environments by enabling data availability for both legacy enterprise and cloud-native mission critical applications. By rev...
As popularity of the smart home is growing and continues to go mainstream, technological factors play a greater role. The IoT protocol houses the interoperability battery consumption, security, and configuration of a smart home device, and it can be difficult for companies to choose the right kind for their product. For both DIY and professionally installed smart homes, developers need to consider each of these elements for their product to be successful in the market and current smart homes.
Join IBM November 1 at 21st Cloud Expo at the Santa Clara Convention Center in Santa Clara, CA, and learn how IBM Watson can bring cognitive services and AI to intelligent, unmanned systems. Cognitive analysis impacts today’s systems with unparalleled ability that were previously available only to manned, back-end operations. Thanks to cloud processing, IBM Watson can bring cognitive services and AI to intelligent, unmanned systems. Imagine a robot vacuum that becomes your personal assistant tha...
Companies are harnessing data in ways we once associated with science fiction. Analysts have access to a plethora of visualization and reporting tools, but considering the vast amount of data businesses collect and limitations of CPUs, end users are forced to design their structures and systems with limitations. Until now. As the cloud toolkit to analyze data has evolved, GPUs have stepped in to massively parallel SQL, visualization and machine learning.
In his Opening Keynote at 21st Cloud Expo, John Considine, General Manager of IBM Cloud Infrastructure, will lead you through the exciting evolution of the cloud. He'll look at this major disruption from the perspective of technology, business models, and what this means for enterprises of all sizes. John Considine is General Manager of Cloud Infrastructure Services at IBM. In that role he is responsible for leading IBM’s public cloud infrastructure including strategy, development, and offering ...
SYS-CON Events announced today that N3N will exhibit at SYS-CON's @ThingsExpo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. N3N’s solutions increase the effectiveness of operations and control centers, increase the value of IoT investments, and facilitate real-time operational decision making. N3N enables operations teams with a four dimensional digital “big board” that consolidates real-time live video feeds alongside IoT sensor data a...
In his session at 21st Cloud Expo, Raju Shreewastava, founder of Big Data Trunk, will provide a fun and simple way to introduce Machine Leaning to anyone and everyone. Together we will solve a machine learning problem and find an easy way to be able to do machine learning without even coding. Raju Shreewastava is the founder of Big Data Trunk (www.BigDataTrunk.com), a Big Data Training and consulting firm with offices in the United States. He previously led the data warehouse/business intellige...
In a recent survey, Sumo Logic surveyed 1,500 customers who employ cloud services such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP). According to the survey, a quarter of the respondents have already deployed Docker containers and nearly as many (23 percent) are employing the AWS Lambda serverless computing framework. It’s clear: serverless is here to stay. The adoption does come with some needed changes, within both application development and operations. Tha...
SYS-CON Events announced today that Avere Systems, a leading provider of enterprise storage for the hybrid cloud, will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Avere delivers a more modern architectural approach to storage that doesn't require the overprovisioning of storage capacity to achieve performance, overspending on expensive storage media for inactive data or the overbui...
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend 21st Cloud Expo October 31 - November 2, 2017, at the Santa Clara Convention Center, CA, and June 12-14, 2018, at the Javits Center in New York City, NY, and learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.