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Startek Reports Record Fourth Quarter 2019 Financial Results
- Q4 Revenue up 8% to
Fourth Quarter 2019 Financial Results
Net revenue for the quarter increased 8% to
Gross profit in the fourth quarter was up 10% to
Selling, general and administrative (SG&A) expenses decreased to
Net loss attributable to Startek shareholders for the quarter was
Adjusted net income* in the fourth quarter of 2019 was
Adjusted EBITDA* for the quarter increased 48% to
At
*A non-GAAP measure defined below.
Management Commentary
“2019 marked our first full year as a combined company since the business combination with Aegis, and our exceptional fourth quarter results reflect the strength of our now fully integrated company,” said
“A key driver of our success in 2019, and especially the strong momentum in the back half of the year, was the buildout of our global leadership team. During the summer, we appointed
“Subsequent to the quarter, we made other key additions to our sales and leadership teams, including our new head of global sales,
Conference Call and Webcast Details
Startek management will hold a conference call today at
Date:
Time:
Toll-free dial-in number: (844) 239-5283
International dial-in number: (574) 990-1022
Conference ID: 4278589
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.
A telephonic replay of the conference call will also be available after
Toll-free replay number: (855) 859-2056
International replay number: (404) 537-3406
Replay ID: 4278589
About Startek
Startek is a leading global provider of technology-enabled business process outsourcing solutions. The company provides omni-channel customer experience management, back office and technology services to corporations around the world across a range of industries. The company has more than 47,000 outsourcing experts across 49 delivery campuses worldwide that are committed to delivering transformative customer experience for clients. Services include omni-channel customer care, customer acquisition, order processing, technical support, receivables management and analytics through automation, voice, chat, email, social media and IVR, resulting in superior business results for its clients. 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
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CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||
|
(In thousands, except per share data) |
||||||||||||
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|
||||||||||||
|
|
|
Unaudited |
|
Audited |
||||||||
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Year Ended
|
|
Nine months ended
|
||||
| Revenue |
172,151 |
|
158,585 |
|
659,205 |
|
420,317 |
|
||||
| Warrant Contra Revenue |
(565 |
) |
- |
|
(1,295 |
) |
- |
|
||||
| Net revenue |
171,586 |
|
158,586 |
|
657,910 |
|
420,317 |
|
||||
| Cost of services |
(143,950 |
) |
(133,504 |
) |
(547,014 |
) |
(355,591 |
) |
||||
| Gross profit |
27,636 |
|
25,081 |
|
110,896 |
|
64,726 |
|
||||
| Selling, general and administrative expenses |
(19,425 |
) |
(21,945 |
) |
(91,363 |
) |
(60,020 |
) |
||||
| Impairment losses and restructuring cost |
(7,758 |
) |
(1,341 |
) |
(9,827 |
) |
(3,962 |
) |
||||
| Acquisition related cost |
0 |
|
(3,138 |
) |
11 |
|
(7,036 |
) |
||||
| Operating Profit/ (loss) |
453 |
|
(1,343 |
) |
9,717 |
|
(6,292 |
) |
||||
| Share of profit/(loss) of equity-accounted investees |
(1,214 |
) |
94 |
|
(226 |
) |
115 |
|
||||
| Interest and other income |
417 |
|
183 |
|
858 |
|
616 |
|
||||
| Interest and other cost |
(4,377 |
) |
(4,015 |
) |
(16,682 |
) |
(11,836 |
) |
||||
| Exchange gain (loss), net |
401 |
|
(147 |
) |
(2,157 |
) |
(1,309 |
) |
||||
| Profit / (loss) before income taxes |
(4,320 |
) |
(5,228 |
) |
(8,490 |
) |
(18,706 |
) |
||||
| Tax expenses | ||||||||||||
| Current tax |
1,551 |
|
2,011 |
|
5,892 |
|
3,563 |
|
||||
| Deferred tax (benefit) / expenses |
(1,310 |
) |
372 |
|
(1,101 |
) |
7 |
|
||||
| Tax expense |
241 |
|
2,383 |
|
4,791 |
|
3,570 |
|
||||
| Net Income / (loss) |
(4,561 |
) |
(7,611 |
) |
(13,281 |
) |
(22,276 |
) |
||||
| Net (loss) / income attributable to: | ||||||||||||
| Owners of the parent |
(5,291 |
) |
(9,702 |
) |
(15,018 |
) |
(24,312 |
) |
||||
| Non controlling interest |
730 |
|
2,091 |
|
1,737 |
|
2,036 |
|
||||
|
(4,561 |
) |
(7,611 |
) |
(13,281 |
) |
(22,276 |
) |
|||||
| Net income (loss) per common share | ||||||||||||
| Basic EPS |
(0.14 |
) |
(0.26 |
) |
(0.39 |
) |
(0.80 |
) |
||||
| Weighted average common shares outstanding - Basic |
38,492 |
|
37,105 |
|
38,132 |
|
30,518 |
|
||||
| Diluted EPS |
(0.14 |
) |
(0.26 |
) |
(0.39 |
) |
(0.80 |
) |
||||
| Weighted average common shares outstanding - Diluted |
38,492 |
|
37,105 |
|
38,132 |
|
30,518 |
|
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CONSOLIDATED BALANCE SHEETS |
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(In thousands) |
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(Audited) |
||||||
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As of |
|
As of |
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| Assets | ||||||
| Current assets | ||||||
| Cash and cash equivalents |
20,464 |
|
16,617 |
|
||
| Restricted cash |
12,162 |
|
7,952 |
|
||
| Trade accounts receivables, net |
108,479 |
|
107,836 |
|
||
| Unbilled revenue |
41,449 |
|
42,135 |
|
||
| Prepaid expenses and other current assets |
12,008 |
|
18,850 |
|
||
| Total current assets |
194,562 |
|
193,390 |
|
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| Non-current assets | ||||||
| Property, plant and equipment, net |
37,507 |
|
42,242 |
|
||
| Operating lease right-of-use assets |
73,692 |
|
- |
|
||
| Intangible assets, net |
110,807 |
|
121,336 |
|
||
|
219,341 |
|
225,450 |
|
|||
| Investment in equity affiliates |
553 |
|
2,097 |
|
||
| Deferred tax assets, net |
5,251 |
|
5,048 |
|
||
| Prepaid expenses and other non-current assets |
16,370 |
|
15,076 |
|
||
| Total non-current assets |
463,521 |
|
411,249 |
|
||
| Total assets |
658,083 |
|
604,639 |
|
||
| Liabilities and Stockholders’ Equity | ||||||
| Current liabilities | ||||||
| Trade accounts payables |
25,449 |
|
26,886 |
|
||
| Short term debt |
26,491 |
|
21,975 |
|
||
| Current maturity of long term debt |
17,601 |
|
9,800 |
|
||
| Current maturity of operating lease obligation |
19,677 |
|
- |
|
||
| Current maturity of finance lease obligation |
632 |
|
1,816 |
|
||
| Accrued expenses and other current liabilities |
82,598 |
|
84,881 |
|
||
| Total current liabilities |
172,448 |
|
145,358 |
|
||
| Non-current liabilities | ||||||
| Long term debt |
130,144 |
|
152,100 |
|
||
| Operating lease liabilities |
54,341 |
|
- |
|
||
| Accrued expenses and other non-current liabilities |
11,140 |
|
11,907 |
|
||
| Deferred tax liabilities, net |
18,226 |
|
18,901 |
|
||
| Total non-current liabilities |
213,851 |
|
182,908 |
|
||
| Total liabilities |
386,299 |
|
328,266 |
|
||
| Stockholders’ equity | ||||||
| Common stock, 60,000,000 non-convertible shares, |
385 |
|
374 |
|
||
| Additional paid-in capital |
276,827 |
|
267,317 |
|
||
| Accumulated (deficit) / earnings |
(46,145 |
) |
(31,127 |
) |
||
| Accumulated other comprehensive income (loss) |
(6,022 |
) |
(5,547 |
) |
||
| Equity attributable to Startek Shareholders |
225,045 |
|
231,017 |
|
||
| Non-controlling interest |
46,739 |
|
45,356 |
|
||
| Total stockholders’ equity |
271,784 |
|
276,373 |
|
||
| Total liabilities and stockholders’ equity |
658,083 |
|
604,639 |
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||
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
|
(In thousands) |
||||||||
|
(Audited) |
||||||||
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||||||||
|
|
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Year ended
|
|
Nine months ended
|
||||
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Operating activities |
|
|
|
|
|
|
|
|
|
Net Income/(loss) |
|
|
(13,281 |
) |
|
|
(22,276 |
) |
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income/ (Loss) to net cash provided by (used in) operating activities |
|
|
|
|
|
|
|
|
|
Depreciation and amortisation |
|
|
29,723 |
|
|
|
20,462 |
|
|
Impairment of goodwill |
|
|
7,146 |
|
|
|
|
|
|
Share of profit/(loss) of equity affiliates |
|
|
226 |
|
|
|
(115 |
) |
|
Warrant contra revenue |
|
|
1,295 |
|
|
|
- |
|
|
Impairment /(profit) on sale of PPE |
|
|
- |
|
|
|
483 |
|
|
Share-based compensation expense |
|
|
1,516 |
|
|
|
674 |
|
|
Deferred tax (benefit) / expenses |
|
|
(1,101 |
) |
|
|
7 |
|
|
Provision for doubtful accounts |
|
|
1,640 |
|
|
|
2,253 |
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
|
(4,492 |
) |
|
|
(10,982 |
) |
|
Prepaid expenses and other assets |
|
|
4,199 |
|
|
|
1,643 |
|
|
Trade accounts payable |
|
|
(734 |
) |
|
|
(669 |
) |
|
Accrued expenses and other current liabilities |
|
|
962 |
|
|
|
14,503 |
|
|
Income taxes, net |
|
|
(542 |
) |
|
|
(4,475 |
) |
|
Net cash provided by operating activities |
|
|
26,556 |
|
|
|
1,508 |
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment (net) |
|
|
(15,564 |
) |
|
|
(7,690 |
) |
|
Cash and cash equivalents acquired on reverse merger |
|
|
- |
|
|
|
1,496 |
|
|
Proceeds from equity-accounted Affiliates |
|
|
1,308 |
|
|
|
48 |
|
|
Net cash used in investing activities |
|
|
(14,256 |
) |
|
|
(6,146 |
) |
|
|
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock |
|
|
6,710 |
|
|
|
4,605 |
|
|
Payments on long term debt |
|
|
(9,800 |
) |
|
|
(4,200 |
) |
|
Proceeds from other debt, net |
|
|
(858 |
) |
|
|
10,555 |
|
|
Dividends paid |
|
|
- |
|
|
|
(3,137 |
) |
|
Net cash (used-in)/provided by financing activities |
|
|
(3,948 |
) |
|
|
7,823 |
|
|
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
|
8,352 |
|
|
|
3,185 |
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(295 |
) |
|
|
(1,535 |
) |
|
Cash and cash equivalents at the beginning of period |
|
|
24,569 |
|
|
|
22,919 |
|
|
Cash and cash equivalents at the end of period |
|
|
32,626 |
|
|
|
24,569 |
|
|
|
|
|
|
|
|
|
|
|
|
Components of cash and cash equivalents |
|
|
|
|
|
|
|
|
|
Cash on hand |
|
|
9 |
|
|
|
12 |
|
|
Restricted cash |
|
|
12,162 |
|
|
|
7,952 |
|
|
Balance with banks on current account |
|
|
20,455 |
|
|
|
16,605 |
|
|
Total cash and cash equivalents |
|
|
32,626 |
|
|
|
24,569 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of Cash Flow Information |
|
|
|
|
|
|
|
|
|
Cash paid for Interest |
|
|
15,329 |
|
|
|
9,687 |
|
|
Cash paid for income taxes |
|
|
6,379 |
|
|
|
7,654 |
|
|
Non cash warrant contra revenue |
|
|
1,295 |
|
|
|
- |
|
|
Non cash share-based compensation expenses |
|
|
1,516 |
|
|
|
674 |
|
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 Net loss plus Income tax expense, Interest and other expense, net, Depreciation and amortization expense, Restructuring and other merger related cost, Share-based compensation expense and Warrant contra revenue. 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.
Adjusted EPS:
Adjusted EPS is a non-GAAP financial measure presenting the earnings generated by our ongoing operations that we believe is 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
|
|
Three months ended
|
|
Year ended
|
|
Nine months ended
|
||||||
| Net Loss |
(4,560 |
) |
(7,611 |
) |
(13,281 |
) |
(22,276 |
) |
||||
| Income tax expense |
241 |
|
2,383 |
|
4,791 |
|
3,570 |
|
||||
| Interest and other expense, net |
4,773 |
|
3,886 |
|
18,206 |
|
12,414 |
|
||||
| Depreciation and amortization expense |
7,667 |
|
7,819 |
|
29,723 |
|
20,462 |
|
||||
| Restructuring and other merger related cost |
7,758 |
|
4,479 |
|
9,817 |
|
10,998 |
|
||||
| Share-based compensation expense |
365 |
|
425 |
|
1,516 |
|
674 |
|
||||
| Warrant contra revenue |
565 |
|
- |
|
1,295 |
|
- |
|
||||
| Adjusted EBITDA |
16,808 |
|
11,381 |
|
52,068 |
|
25,842 |
|
||||
| Adjusted EPS: | ||||||||||||
|
Three months ended
|
Three months ended
|
Year ended
|
Nine months ended
|
|||||||||
| Net loss attributable to Startek shareholders |
(5,291 |
) |
(9,702 |
) |
(15,018 |
) |
(24,312 |
) |
||||
| Add: Share based Compensation |
365 |
|
425 |
|
1,516 |
|
674 |
|
||||
| Add: Amortization of Intangible assets |
2,279 |
|
2,349 |
|
8,956 |
|
6,095 |
|
||||
| Add: Warrant contra revenue |
565 |
|
- |
|
1,295 |
|
- |
|
||||
| Add: |
7,146 |
|
- |
|
7,146 |
|
- |
|
||||
| Add: Deferred Tax Adjustment |
780 |
|
- |
|
780 |
|
- |
|
||||
| Adjusted Net Income / (loss) (non-GAAP) |
5,844 |
|
(6,928 |
) |
4,675 |
|
(17,543 |
) |
||||
| Weighted average common shares outstanding - basic |
38,492 |
|
37,105 |
|
38,132 |
|
30,518 |
|
||||
| Adjusted EPS - Basic |
0.15 |
|
(0.19 |
) |
0.12 |
|
(0.57 |
) |
||||
| Weighted average common shares outstanding - Diluted |
38,492 |
|
37,105 |
|
38,132 |
|
30,518 |
|
||||
| Adjusted EPS - Diluted |
0.15 |
|
(0.19 |
) |
0.12 |
|
(0.57 |
) |
||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20200312005784/en/
Investor Relations
Gateway Investor Relations
(949) 574-3860
investor@startek.com
Source: