Merger Integration Plan Ahead of Schedule
Financial Results
As a result of the reverse acquisition accounting for the
The business combination also resulted in a change in fiscal year-end from
Total revenue for the quarter increased 26.4% to
Gross profit for the quarter increased 13.6% to
Selling, general and administrative (SG&A) expenses were
Net loss attributable to
Adjusted EBITDA* for the quarter was
At
*A non-GAAP measure defined below.
Management Commentary
“During the quarter, our clients began to experience the benefit of our global reach and access to new markets, multi-lingual offerings and new digital solutions resulting from the
“From a sales perspective, although we continue to face headwinds in the telecom vertical, we are experiencing strong momentum in our non-telecom verticals and have executed on several cross-sell opportunities, including a new geographic implementation with one of our largest strategic client partners. This momentum has been further enabled by a reorganization of our global sales team, which is now being led by our recently appointed Chief Revenue Officer,
“In addition to Joe, we’ve established our global executive team by appointing leaders from both organizations and all department heads have their immediate organizational structure in place.
“As we look ahead, we plan to continue our cost synergy initiatives into next year. We will also sharpen our focus to accelerate revenue growth across the globe, particularly in high-growth verticals such as technology, financial services, next generation retail, healthcare and travel. The foundation for our success is nearly set, and we continue to expect synergies, revenue growth and operating efficiencies following our recent business combination to add
Conference Call and Webcast Details
Date:
Time:
Toll-free dial-in number: (844) 239-5283
International dial-in number: (574) 990-1022
Conference ID: 4388769
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 Liolios at (949) 574-3860.
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A replay of the conference call will be available after
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About
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, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) |
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Three Months Ended |
Six Months Ended |
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2018 | 2017 | 2018 | 2017 | |||||||||||||||||
Revenue | $ | 151,509 | $ | 119,819 | $ | 261,732 | $ | 233,817 | ||||||||||||
Cost of services | 128,747 | 99,762 | 222,087 | 196,265 | ||||||||||||||||
Gross profit | 22,762 | 20,057 | 39,645 | 37,552 | ||||||||||||||||
Selling, general and administrative expenses | 22,818 | 14,219 | 38,075 | 27,827 | ||||||||||||||||
Transaction related fees | 3,898 | — | 3,898 | — | ||||||||||||||||
Impairment losses and restructuring charges, net | 2,621 | — | 2,621 | — | ||||||||||||||||
Operating income (loss) | (6,575 | ) | 5,838 | (4,949 | ) | 9,725 | ||||||||||||||
Interest and other expense, net | (3,362 | ) | (1,478 | ) | (8,528 | ) | (1,371 | ) | ||||||||||||
Income (loss) before income taxes | (9,937 | ) | 4,360 | (13,477 | ) | 8,354 | ||||||||||||||
Income tax expense | 953 | 1,505 | 1,187 | 2,429 | ||||||||||||||||
Net income (loss) | $ | (10,890 | ) | $ | 2,855 | $ | (14,664 | ) | $ | 5,925 | ||||||||||
Net income (loss) attributable to non-controlling interests | 11 | 481 | (55 | ) | 1,536 | |||||||||||||||
Net income (loss) attributable to Startek shareholders | $ | (10,901 | ) | $ | 2,374 | $ | (14,609 | ) | $ | 4,389 | ||||||||||
Net income (loss) per common share - basic | $ | (0.32 | ) | $ | 0.11 | $ | (0.54 | ) | $ | 0.21 | ||||||||||
Weighted average common shares outstanding - basic | 33,812 | 20,767 | 27,289 | 20,767 | ||||||||||||||||
Net income (loss) per common share - diluted | $ | (0.32 | ) | $ | 0.11 | $ | (0.54 | ) | $ | 0.21 | ||||||||||
Weighted average common shares outstanding - diluted | 33,812 | 20,767 | 27,289 | 20,767 | ||||||||||||||||
STARTEK, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) |
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September 30, 2018 | March 31, 2018 | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 14,133 | $ | 17,693 | |||||
Restricted cash | 6,392 | 5,226 | |||||||
Trade accounts receivable, net | 145,156 | 110,545 | |||||||
Prepaid expenses and other current assets | 19,462 | 18,772 | |||||||
Total current assets | 185,143 | 152,236 | |||||||
Property, plant and equipment, net | 35,784 | 25,814 | |||||||
Intangible assets, net | 139,158 | 110,320 | |||||||
Goodwill | 240,553 | 153,368 | |||||||
Other non-current assets | 27,643 | 24,903 | |||||||
Total assets | $ | 628,281 | $ | 466,641 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Current liabilities | $ | 134,909 | $ | 117,966 | |||||
Long term debt | 150,336 | 127,133 | |||||||
Other non-current liabilities | 27,002 | 27,397 | |||||||
Total liabilities | 312,247 | 272,496 | |||||||
Equity attributable to Startek shareholders | 268,636 | 146,693 | |||||||
Non-controlling interest | 47,398 | 47,452 | |||||||
Total stockholders’ equity | $ | 316,034 | $ | 194,145 | |||||
Total liabilities and stockholders’ equity | $ | 628,281 | $ | 466,641 | |||||
STARTEK, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
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Six Months Ended September 30, | ||||||||||
2018 | 2017 | |||||||||
Operating Activities | ||||||||||
Net income (loss) | $ | (14,664 | ) | $ | 5,925 | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 12,643 | 8,699 | ||||||||
Provision for doubtful accounts | 1,726 | 242 | ||||||||
Share-based compensation expense | 249 | — | ||||||||
Deferred income taxes | (366 | ) | (98 | ) | ||||||
Changes in operating assets & liabilities and other, net | 871 | (8,007 | ) | |||||||
Net cash provided by operating activities | $ | 459 | $ | 6,761 | ||||||
Investing Activities | ||||||||||
Purchases of property, plant and equipment | (4,511 | ) | (7,555 | ) | ||||||
Distributions received from affiliates | — | 1,315 | ||||||||
Cash acquired in Aegis Transactions | 1,496 | — | ||||||||
Net cash used in investing activities | $ | (3,015 | ) | $ | (6,240 | ) | ||||
Financing Activities | ||||||||||
(Payments) proceeds on long term debt | (2,800 | ) | 664 | |||||||
Proceeds from other debts, net | 4,204 | 3,589 | ||||||||
Net cash provided by financing activities | $ | 1,404 | $ | 4,253 | ||||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash | (1,242 | ) | (36 | ) | ||||||
Net (decrease) increase in cash and cash equivalents and restricted cash | (2,394 | ) | 4,738 | |||||||
Cash and cash equivalents and restricted cash at beginning of period | $ | 22,919 | $ | 19,511 | ||||||
Cash and cash equivalents and restricted cash at end of period | $ | 20,525 | $ | 24,249 | ||||||
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 Operating income (loss) plus Impairment losses and restructuring charges, net, Depreciation and amortization expense, Share-based compensation expense, Transaction related fees, 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 our strength and performance of our ongoing operations for our investors and analysts.
Three Months Ended |
Six Months Ended |
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2018 | 2017 | 2018 | 2017 | ||||||||||||||||
Operating income (loss) | $ | (6,575 | ) | $ | 5,838 | $ | (4,949 | ) | $ | 9,725 | |||||||||
Impairment losses and restructuring charges, net | 2,621 | — | 2,621 | — | |||||||||||||||
Depreciation and amortization expense | 7,919 | 4,465 | 12,643 | 8,699 | |||||||||||||||
Share-based compensation expense | 249 | — | 249 | — | |||||||||||||||
Transaction related fees | 3,898 | — | 3,898 | — | |||||||||||||||
Adjusted EBITDA | $ | 8,112 | $ | 10,303 | $ | 14,462 | $ | 18,424 | |||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20181108005950/en/
Source:
Liolios
Investor Relations:
Sean Mansouri or Cody Slach
949-574-3860
investor@startek.com