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Startek Reports Quarterly Financial Results
Financial Results
The results presented for the quarter ended
The business combination of
Total revenue for the quarter increased 5% to
Gross profit for the quarter increased 10% to
Gross margin was 15.8% during the quarter compared to 15.0% in the
quarter ended
Selling, general and administrative (SG&A) expenses were
Net loss attributable to
Adjusted EBITDA* for the quarter increased 40% to
At
*A non-GAAP measure defined below.
Management Commentary
“The Startek and Aegis integration is largely complete and led to a very
strong quarter of both operational performance and business
development,” said
“Our post-merger integration team continues to identify cost synergies,
while also executing on cross-sell opportunities with our expanded
geography and service capabilities. Given several new client programs
and an accelerating pipeline, we added to our capacity with the opening
of a third delivery campus in
“Subsequent to the quarter, we strengthened our board of directors with
the appointments of
“Looking ahead, we will continue to identify revenue and cost synergies, while focusing our business development efforts in high-growth verticals such as technology, financial services, next-gen retail, healthcare and travel. We also expect to ramp our technology investments in 2019, while reducing our net debt position and strengthening the balance sheet. Given our strengthening sales pipeline, we remain well positioned to execute on our growth initiatives and look forward to carrying this momentum through the year.”
Conference Call and Webcast Details
Date:
Time:
Toll-free
dial-in number: (844) 239-5283
International dial-in number: (574)
990-1022
Conference ID: 6268337
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.
The conference call will also be broadcast live and available for replay here.
A replay of the conference call will be available after
Toll-free replay number: (855) 859-2056
International replay
number: (404) 537-3406
Replay ID: 6268337
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 | ||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||||
|
(In thousands, except per share data) |
||||||||||||||||||||||
|
(Unaudited) |
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|
Three Months Ended December 31, |
Nine Months Ended |
Successor* |
Predecessor* |
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| 2018 | 2017 | |||||||||||||||||||||
| Revenue | $ | 158,585 | $ | 130,667 | $ | 420,317 | $ | 169,957 | $ | 310,120 | ||||||||||||
| Cost of services | $ | 133,504 | 116,119 | $ | 355,591 | $ | 143,918 | $ | 265,770 | |||||||||||||
| Gross profit | 25,081 | 14,548 | 64,726 | 26,039 | 44,350 | |||||||||||||||||
| Selling, general and administrative expenses | 21,945 | 7,124 | 60,020 | 15,925 | 32,105 | |||||||||||||||||
| Transaction related fees | 3,138 | 3,712 | 7,036 | 7,994 | 107 | |||||||||||||||||
| Impairment losses and restructuring charges, net | 1,341 | — | 3,962 | 1,868 | — | |||||||||||||||||
| Operating income (loss) | (1,343 | ) | 3,712 | (6,292 | ) | 252 | 12,138 | |||||||||||||||
| Share of profit of equity affiliates | 94 | 134 | 115 | 76 | 996 | |||||||||||||||||
| Interest and other expense, net | 3,979 | 2,317 | 12,529 | 3,858 | 4,581 | |||||||||||||||||
| Income (loss) before income taxes | (5,229 | ) | 1,529 | (18,706 | ) | (3,530 | ) | 8,553 | ||||||||||||||
| Income tax expense | 2,383 | 1,722 | 3,570 | 1,305 | 3,178 | |||||||||||||||||
| Net income (loss) | $ | (7,611 | ) | $ | (193 | ) | $ | (22,276 | ) | $ | (4,835 | ) | $ | 5,375 | ||||||||
| Net income (loss) attributable to non-controlling interests | 2,091 | 2,184 | 2,036 | 1,980 | 2,712 | |||||||||||||||||
| Net income (loss) attributable to Startek shareholders | $ | (9,702 | ) | $ | (2,377 | ) | $ | (24,312 | ) | $ | (6,815 | ) | $ | 2,663 | ||||||||
| Net income (loss) per common share - basic | $ | (0.26 | ) | $ | (0.12 | ) | $ | (0.80 | ) | $ | (0.33 | ) | $ | 0.13 | ||||||||
| Weighted average common shares outstanding - basic | 37,105 | 20,600 | 30,518 | 20,600 | 20,600 | |||||||||||||||||
| Net income (loss) per common share - diluted | $ | (0.26 | ) | $ | (0.12 | ) | $ | (0.80 | ) | $ | (0.33 | ) | $ | 0.13 | ||||||||
| Weighted average common shares outstanding - diluted | 37,105 | 20,600 | 30,518 | 20,600 | 20,600 | |||||||||||||||||
* The consolidated financial statements for
| STARTEK, INC. AND SUBSIDIARIES | |||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||
|
(In thousands) |
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|
(Unaudited) |
|||||||||
| As of December 31, | As of March 31, | ||||||||
| 2018 | 2018 | ||||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 16,617 | $ | 17,693 | |||||
| Restricted cash | 7,952 | 5,226 | |||||||
| Trade accounts receivable, net | 107,836 | 63,138 | |||||||
| Prepaid expenses and other current assets | 60,985 | 66,179 | |||||||
| Total current assets | 193,390 | 152,236 | |||||||
| Property, plant and equipment, net | 42,242 | 36,726 | |||||||
| Intangible assets, net | 126,384 | 103,888 | |||||||
| Goodwill | 225,450 | 153,368 | |||||||
| Other non-current assets | $ | 17,173 | $ | 20,423 | |||||
| Total assets | $ | 604,639 | $ | 466,641 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
| Current liabilities | 145,358 | 117,966 | |||||||
| Deferred tax liabilities | 18,901 | 17,711 | |||||||
| Long term debt | 152,100 | 127,133 | |||||||
| Accrued expenses and other non-current liabilities | 11,907 | 9,686 | |||||||
| Total liabilities | 328,266 | 272,496 | |||||||
| Equity attributable to Startek shareholders | 231,017 | 146,693 | |||||||
| Non-controlling interest | 45,356 | 47,452 | |||||||
| Total stockholders’ equity | 276,373 | 194,145 | |||||||
| Total liabilities and stockholders’ equity | $ | 604,639 | $ | 466,641 | |||||
| STARTEK, INC. AND SUBSIDIARIES | |||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
|
(In thousands) |
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|
(Unaudited) |
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|
|
Nine months ended |
Successor * |
Predecessor * |
||||||||||||
| Operating Activities | |||||||||||||||
| Net income (loss) | $ | (22,276 | ) | $ | (4,835 | ) | $ | 5,375 | |||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||||||
| Depreciation and amortization | 20,462 | 8,184 | 11,603 | ||||||||||||
| Provision for doubtful accounts | 2,253 | 216 | 158 | ||||||||||||
| Impairment of PPE | 483 | ||||||||||||||
| Share-based compensation expense | 674 | — | — | ||||||||||||
| Deferred income taxes | 7 | (909 | ) | (74 | ) | ||||||||||
| Share of profit of equity affiliates | (115 | ) | (76 | ) | (996 | ) | |||||||||
| Unrealised exchange gains and losses (net) | — | (639 | ) | 230 | |||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||
| Trade accounts receivable, net | (10,982 | ) | (3,995 | ) | 5,392 | ||||||||||
| Prepaid expenses and other assets | 1,643 | 12,599 | (21,507 | ) | |||||||||||
| Trade accounts payable | (669 | ) | (702 | ) | 4,459 | ||||||||||
| Income taxes, net | (4,475 | ) | (1,951 | ) | (2,775 | ) | |||||||||
| Accrued and other liabilities | 14,503 | (13,571 | ) | 18,410 | |||||||||||
| Net cash provided by (used in) operating activities | 1,508 | (5,679 | ) | 20,275 | |||||||||||
| Investing Activities | |||||||||||||||
| Purchases of property, plant and equipment, net | (7,690 | ) | (1,490 | ) | (7,587 | ) | |||||||||
| Proceeds/(Payment) for margin money deposits | (2,865 | ) | (2,044 | ) | 544 | ||||||||||
| Payment for acquisition, net of cash acquired | — | (258,643 | ) | — | |||||||||||
| Proceeds from equity-accounted investee | 48 | — | 1,438 | ||||||||||||
| Cash acquired in Aegis Transactions | 1,496 | — | — | ||||||||||||
| Net cash used in investing activities | (9,011 | ) | (262,177 | ) | (5,605 | ) | |||||||||
| Financing Activities | |||||||||||||||
| Proceeds from the issuance of common stock | 4,605 | 153,910 | — | ||||||||||||
| Proceeds (payments) on long term debt | (4,200 | ) | 132,730 | (1,233 | ) | ||||||||||
| Dividends paid | (3,137 | ) | — | (8,750 | ) | ||||||||||
| Proceeds from other debts, net | 10,555 | (1,414 | ) | 915 | |||||||||||
| Net cash provided by financing activities | 7,823 | 285,226 | (9,068 | ) | |||||||||||
| Net increase in cash and cash equivalents | 320 | 17,370 | 5,602 | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (1,396 | ) | 323 | (30 | ) | ||||||||||
| Cash and cash equivalents at beginning of period | $ | 17,693 | $ | — | $ | 15,785 | |||||||||
| Cash and cash equivalents at end of period | $ | 16,617 | $ | 17,693 | $ | 21,357 | |||||||||
* The consolidated financial statements for
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES
(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 |
Nine Months Ended |
||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
| Operating Income (Loss) | $ | (1,343 | ) | $ | 3,712 | $ | (6,292 | ) | $ | 13,437 | |||||||||
| Transaction related fees | $ | 3,138 | $ | 3,712 | $ | 7,036 | $ | 3,712 | |||||||||||
| Impairment losses and restructuring charges, net | $ | 1,341 | — | $ | 3,962 | — | |||||||||||||
| Depreciation and amortization expenses | $ | 7,819 | $ | 4,839 | $ | 20,462 | $ | 13,538 | |||||||||||
| Share-based compensation expenses | $ | 425 | — | $ | 674 | — | |||||||||||||
| Adjusted EBITDA | $ | 11,380 | $ | 12,263 | $ | 25,842 | $ | 30,687 | |||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190313005760/en/
Source:
Investor Relations
Sean Mansouri, CFA or Cody Slach
Liolios
(949)
574-3860
investor@startek.com