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Startek Reports Record Fourth Quarter and Full Year 2020 Financial Results
- Continued Operational Momentum Drives Strongest Levels of Quarterly Revenue, Gross Profit and Adjusted EBITDA in Company History -
- Recently Completed Debt Refinancing and
Fourth Quarter 2020 Financial Highlights ($ in millions, excl. margin items)
|
|
Q4 2020 |
Q3 2020 |
Q4 2019 |
||||||
|
Net Revenue |
$ |
174.5 |
|
$ |
162.7 |
|
$ |
171.6 |
|
|
Gross Profit |
$ |
30.9 |
|
$ |
22.9 |
|
$ |
27.6 |
|
|
Gross Margin |
|
17.7 |
% |
|
14.1 |
% |
|
16.1 |
% |
|
SG&A Expenses |
$ |
15.3 |
|
$ |
14.9 |
|
$ |
19.4 |
|
|
Net Income/(Loss)[1] |
$ |
(7.6 |
) |
$ |
0.4 |
|
$ |
(5.3 |
) |
|
Adjusted Net Income[2] |
$ |
8.8 |
|
$ |
3.3 |
|
$ |
5.8 |
|
|
Adjusted EBITDA[2] |
$ |
23.3 |
|
$ |
15.6 |
|
$ |
16.8 |
|
[1] Reflects net income (loss) attributable to Startek shareholders.
[2] Refer to the note below about Non-GAAP financial measures.
Full Year 2020 Financial Highlights ($ in millions, excl. margin items)
|
|
|
2020 |
|
|
2019 |
|
|
Net Revenue |
$ |
640.2 |
|
$ |
657.9 |
|
|
Gross Profit |
$ |
89.6 |
|
$ |
110.9 |
|
|
Gross Margin |
|
14.0 |
% |
|
16.9 |
% |
|
SG&A Expenses |
$ |
62.1 |
|
$ |
91.4 |
|
|
Net Income/(Loss) |
$ |
(39.0 |
) |
$ |
(15.0 |
) |
|
Adjusted Net Income |
$ |
8.5 |
|
$ |
4.7 |
|
|
Adjusted EBITDA |
$ |
58.2 |
|
$ |
52.1 |
|
Management Commentary
“We generated record results during the fourth quarter with solid growth across nearly every key financial metric,” said
“As we entered 2021, we further strengthened our commitment to enhancing the flexibility of our platform. Subsequent to the fourth quarter, we completed a
“The recent minority investment we made in
“Looking ahead to the rest of 2021, we are proud to have built such a strong foundation to continue driving operational efficiencies and enhancing our suite of services around the globe. We are grateful for the dedication of our team and the deep support of our shareholders as we further execute on our strategic growth plans.”
Fourth Quarter 2020 Financial Results
Net revenue in the fourth quarter increased to
Gross profit in the fourth quarter increased by 11.7% to
Selling, general and administrative (SG&A) expenses in the fourth quarter decreased to
Net loss attributable to Startek shareholders in the fourth quarter was
Adjusted net income* in the fourth quarter increased 50% to
Adjusted EBITDA* in the fourth quarter increased 38.5% to
On
Full Year 2020 Financial Results
Net revenue in 2020 was
Gross profit in 2020 was
Selling, general and administrative (SG&A) expenses in 2020 decreased significantly to
Net loss attributable to Startek shareholders in 2020 was
Adjusted net income* in 2020 increased to
Adjusted EBITDA* in 2020 increased 11.7% to
*A non-GAAP measure defined below.
Debt Refinancing and Capital Allocation
Subsequent to the fourth quarter,
On
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: 4245717
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, as well as in the investor relations section of the company’s website at www.startek.com.
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: 4245717
About Startek
Startek is a global provider of tech-enabled business process management solutions. The company provides omni-channel customer experience, digital transformation, and technology services to some of the finest brands globally. Startek is committed to impacting clients’ business outcomes by focusing on enhancing customer experience and digital & AI enablement across all touch points and channels. Startek has more than 42,000 CX experts spread across 46 delivery campuses in 13 countries. The company services over 220 clients across a range of industries such as Banking and Financial Services, Insurance, Technology, Telecom, Healthcare, Travel & Hospitality, Ecommerce, Consumer Goods, Retail, and Energy & Utilities. 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
|
|
|
Condensed Consolidated Statements of Income (loss) |
|
(In thousands, except per share amounts) |
|
|
|
Unaudited |
|
|
Audited |
|
||||||||||
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
||||||||||
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
174,918 |
|
|
|
172,151 |
|
|
|
641,844 |
|
|
|
659,205 |
|
|
Warrant contra revenue |
|
|
(449 |
) |
|
|
(565 |
) |
|
|
(1,622 |
) |
|
|
(1,295 |
) |
|
Net Revenue |
|
|
174,469 |
|
|
|
171,586 |
|
|
|
640,222 |
|
|
|
657,910 |
|
|
Cost of services |
|
|
(143,598 |
) |
|
|
(143,950 |
) |
|
|
(550,601 |
) |
|
|
(547,014 |
) |
|
Gross profit |
|
|
30,871 |
|
|
|
27,636 |
|
|
|
89,621 |
|
|
|
110,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
(15,341 |
) |
|
|
(19,425 |
) |
|
|
(62,116 |
) |
|
|
(91,363 |
) |
|
Impairment losses and restructuring/exit cost |
|
|
(13,254 |
) |
|
|
(7,758 |
) |
|
|
(37,799 |
) |
|
|
(9,827 |
) |
|
Acquisition related cost |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
11 |
|
|
Operating Income (Loss) |
|
|
2,276 |
|
|
|
453 |
|
|
|
(10,294 |
) |
|
|
9,717 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share of loss of equity-accounted investees |
|
|
(6 |
) |
|
|
(1,214 |
) |
|
|
(31 |
) |
|
|
(226 |
) |
|
Interest expense, net |
|
|
(2,692 |
) |
|
|
(3,960 |
) |
|
|
(13,376 |
) |
|
|
(15,824 |
) |
|
Exchange gain / (loss), net |
|
|
(1,853 |
) |
|
|
401 |
|
|
|
(2,183 |
) |
|
|
(2,157 |
) |
|
Loss before income taxes |
|
|
(2,275 |
) |
|
|
(4,320 |
) |
|
|
(25,884 |
) |
|
|
(8,490 |
) |
|
Tax expense |
|
|
(1,951 |
) |
|
|
(241 |
) |
|
|
(7,760 |
) |
|
|
(4,791 |
) |
|
Net Loss |
|
|
(4,226 |
) |
|
|
(4,561 |
) |
|
|
(33,644 |
) |
|
|
(13,281 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to noncontrolling interests |
|
|
3,351 |
|
|
|
730 |
|
|
|
5,341 |
|
|
|
1,737 |
|
|
Net loss attributable to Startek shareholders |
|
|
(7,577 |
) |
|
|
(5,291 |
) |
|
|
(38,985 |
) |
|
|
(15,018 |
) |
|
|
|
|
(4,226 |
) |
|
|
(4,561 |
) |
|
|
(33,644 |
) |
|
|
(13,281 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net loss attributable to Startek shareholders |
|
|
(0.19 |
) |
|
|
(0.14 |
) |
|
|
(0.99 |
) |
|
|
(0.39 |
) |
|
Diluted net loss attributable to Startek shareholders |
|
|
(0.19 |
) |
|
|
(0.14 |
) |
|
|
(0.99 |
) |
|
|
(0.39 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
40,333 |
|
|
|
38,492 |
|
|
|
39,442 |
|
|
|
38,132 |
|
|
Diluted |
|
|
40,333 |
|
|
|
38,492 |
|
|
|
39,442 |
|
|
|
38,132 |
|
|
|
|
Condensed Consolidated Balance Sheets |
|
(Audited) |
|
(In thousands, except share and per share data) |
|
|
|
|
|
|
|
|
||
|
Assets |
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
44,507 |
|
|
|
20,464 |
|
|
Restricted cash |
|
|
6,052 |
|
|
|
12,162 |
|
|
Trade accounts receivables, net |
|
|
83,560 |
|
|
|
108,479 |
|
|
Unbilled revenue |
|
|
49,779 |
|
|
|
41,449 |
|
|
Prepaid and other current assets |
|
|
14,542 |
|
|
|
12,008 |
|
|
Total current assets |
|
|
198,440 |
|
|
|
194,562 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
34,225 |
|
|
|
37,507 |
|
|
Operating lease right-of-use assets |
|
|
69,376 |
|
|
|
73,692 |
|
|
Intangible assets, net |
|
|
100,440 |
|
|
|
110,807 |
|
|
|
|
|
183,397 |
|
|
|
219,341 |
|
|
Investment in equity accounted investees |
|
|
111 |
|
|
|
553 |
|
|
Deferred tax assets, net |
|
|
5,294 |
|
|
|
5,251 |
|
|
Prepaid expenses and other non-current assets |
|
|
13,370 |
|
|
|
16,370 |
|
|
Total non-current assets |
|
|
406,213 |
|
|
|
463,521 |
|
|
Total assets |
|
|
604,653 |
|
|
|
658,083 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
Trade accounts payables |
|
|
20,074 |
|
|
|
25,449 |
|
|
Accrued expenses |
|
|
57,118 |
|
|
|
45,439 |
|
|
Short term debt |
|
|
15,505 |
|
|
|
26,491 |
|
|
Current maturity of long term debt |
|
|
2,180 |
|
|
|
18,233 |
|
|
Current maturity of operating lease liabilities |
|
|
19,327 |
|
|
|
19,677 |
|
|
Other current liabilities |
|
|
39,987 |
|
|
|
37,159 |
|
|
Total current liabilities |
|
|
154,191 |
|
|
|
172,448 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
Long term debt |
|
|
118,315 |
|
|
|
130,144 |
|
|
Operating lease liabilities |
|
|
52,052 |
|
|
|
54,341 |
|
|
Other non-current liabilities |
|
|
15,498 |
|
|
|
11,140 |
|
|
Deferred tax liabilities, net |
|
|
17,715 |
|
|
|
18,226 |
|
|
Total non-current liabilities |
|
|
203,580 |
|
|
|
213,851 |
|
|
Total liabilities |
|
|
357,771 |
|
|
|
386,299 |
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
|
|
|
Common stock, 60,000,000 non-convertible shares, |
|
|
405 |
|
|
|
385 |
|
|
Additional paid-in capital |
|
|
288,700 |
|
|
|
276,827 |
|
|
Accumulated deficit |
|
|
(85,543 |
) |
|
|
(46,145 |
) |
|
Accumulated other comprehensive loss |
|
|
(7,286 |
) |
|
|
(6,022 |
) |
|
Equity attributable to Startek shareholders |
|
|
196,276 |
|
|
|
225,045 |
|
|
Noncontrolling interest |
|
|
50,606 |
|
|
|
46,739 |
|
|
Total stockholders’ equity |
|
|
246,882 |
|
|
|
271,784 |
|
|
Total liabilities and stockholders’ equity |
|
|
604,653 |
|
|
|
658,083 |
|
|
|
|
Condensed Consolidated Statements of Cash Flows |
|
(Audited) |
|
(In thousands, except per share amounts) |
|
|
|
Year Ended |
|
|||||
|
|
|
2020 |
|
|
2019 |
|
||
|
Operating activities |
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(33,644 |
) |
|
|
(13,281 |
) |
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
28,201 |
|
|
|
29,723 |
|
|
Impairment of goodwill |
|
|
35,944 |
|
|
|
7,146 |
|
|
Loss on sale of property, plant and equipment |
|
|
167 |
|
|
|
- |
|
|
Provision for doubtful accounts |
|
|
2,662 |
|
|
|
1,640 |
|
|
Amortisation of debt issuance cost |
|
|
1,454 |
|
|
|
1,414 |
|
|
Warrant contra revenue |
|
|
1,622 |
|
|
|
1,295 |
|
|
Share-based compensation expense |
|
|
832 |
|
|
|
1,516 |
|
|
Deferred income taxes |
|
|
(276 |
) |
|
|
(1,101 |
) |
|
Share of loss of equity accounted investees |
|
|
31 |
|
|
|
226 |
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
|
Trade accounts receivables, net |
|
|
19,971 |
|
|
|
(4,492 |
) |
|
Prepaid and other assets |
|
|
(11,376 |
) |
|
|
4,199 |
|
|
Trade accounts payables |
|
|
(4,635 |
) |
|
|
(734 |
) |
|
Income taxes, net |
|
|
2,668 |
|
|
|
(542 |
) |
|
Accrued expenses and other liabilities |
|
|
22,432 |
|
|
|
962 |
|
|
Net cash generated from operating activities |
|
|
66,053 |
|
|
|
27,971 |
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
(17,414 |
) |
|
|
(15,564 |
) |
|
Proceeds from equity accounted investees |
|
|
395 |
|
|
|
1,308 |
|
|
Net cash used in investing activities |
|
|
(17,019 |
) |
|
|
(14,256 |
) |
|
|
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock |
|
|
9,026 |
|
|
|
6,710 |
|
|
Payments on long term debt |
|
|
(8,400 |
) |
|
|
(9,800 |
) |
|
Payments on line of credit, net |
|
|
(24,529 |
) |
|
|
(6,623 |
) |
|
(Payments on) / proceeds from other borrowings, net |
|
|
(7,304 |
) |
|
|
4,351 |
|
|
Net cash used in from financing activities |
|
|
(31,207 |
) |
|
|
(5,362 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
17,827 |
|
|
|
8,353 |
|
|
Effect of exchange rate changes on cash and cash equivalents and restricted cash |
|
|
106 |
|
|
|
(296 |
) |
|
Cash and cash equivalents and restricted cash at the beginning of period |
|
|
32,626 |
|
|
|
24,569 |
|
|
Cash and cash equivalents and restricted cash at the end of period |
|
|
50,559 |
|
|
|
32,626 |
|
|
|
|
|
|
|
|
|
|
|
|
Components of cash and cash equivalents and restricted cash |
|
|
|
|
|
|
|
|
|
Balances with banks |
|
|
44,507 |
|
|
|
20,464 |
|
|
Restricted cash |
|
|
6,052 |
|
|
|
12,162 |
|
|
Total cash and cash equivalents and restricted cash |
|
|
50,559 |
|
|
|
32,626 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of Cash Flow Information |
|
|
|
|
|
|
|
|
|
Cash paid for interest and other finance cost |
|
|
13,080 |
|
|
|
15,329 |
|
|
Cash paid for income taxes |
|
|
4,795 |
|
|
|
6,379 |
|
|
Government grants/subsidy received |
|
|
2,689 |
|
|
|
- |
|
|
Non cash warrant contra revenue |
|
|
1,622 |
|
|
|
1,295 |
|
|
Non cash share-based compensation expenses |
|
|
832 |
|
|
|
1,516 |
|
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 acquisition related cost, Share-based compensation expense 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.
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.
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Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
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Year Ended
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|
||||||||||
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
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Net Loss |
|
|
(4,226 |
) |
|
|
(4,561 |
) |
|
|
(33,644 |
) |
|
|
(13,281 |
) |
|
Income tax expense |
|
|
1,951 |
|
|
|
241 |
|
|
|
7,760 |
|
|
|
4,791 |
|
|
Interest and other expense, net |
|
|
2,699 |
|
|
|
5,174 |
|
|
|
13,407 |
|
|
|
16,050 |
|
|
Exchange gain/(loss), net |
|
|
1,853 |
|
|
|
(401 |
) |
|
|
2,183 |
|
|
|
2,157 |
|
|
Depreciation and amortization expense |
|
|
6,922 |
|
|
|
7,667 |
|
|
|
28,201 |
|
|
|
29,723 |
|
|
Impairment losses and restructuring cost |
|
|
13,254 |
|
|
|
7,758 |
|
|
|
37,799 |
|
|
|
9,817 |
|
|
Share-based compensation expense |
|
|
385 |
|
|
|
365 |
|
|
|
832 |
|
|
|
1,516 |
|
|
Warrant contra revenue |
|
|
449 |
|
|
|
565 |
|
|
|
1,622 |
|
|
|
1,295 |
|
|
Adjusted EBITDA |
|
|
23,287 |
|
|
|
16,808 |
|
|
|
58,160 |
|
|
|
52,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Adjusted EPS: |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
||||||||||
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
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Profit attributable to Startek shareholders |
|
|
(7,577 |
) |
|
|
(5,291 |
) |
|
|
(38,985 |
) |
|
|
(15,018 |
) |
|
Add: Share based compensation expense |
|
|
385 |
|
|
|
365 |
|
|
|
832 |
|
|
|
1,516 |
|
|
Add: Amortization of intangible assets, net of tax |
|
|
2,277 |
|
|
|
2,279 |
|
|
|
9,078 |
|
|
|
8,956 |
|
|
Add: Warrant contra revenue |
|
|
449 |
|
|
|
565 |
|
|
|
1,622 |
|
|
|
1,295 |
|
|
Add: |
|
|
13,236 |
|
|
|
7,146 |
|
|
|
35,944 |
|
|
|
7,146 |
|
|
Add: Deferred tax adjustments |
|
|
- |
|
|
|
780 |
|
|
|
- |
|
|
|
780 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Adjusted net income / (loss) (non-GAAP) |
|
|
8,770 |
|
|
|
5,844 |
|
|
|
8,491 |
|
|
|
4,675 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - Basic |
|
|
40,333 |
|
|
|
38,492 |
|
|
|
39,442 |
|
|
|
38,132 |
|
|
Weighted average common shares outstanding - Diluted |
|
|
40,333 |
|
|
|
38,492 |
|
|
|
39,442 |
|
|
|
38,132 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Adjusted EPS - Basic |
|
|
0.22 |
|
|
|
0.15 |
|
|
|
0.22 |
|
|
|
0.12 |
|
|
Adjusted EPS - Diluted |
|
|
0.22 |
|
|
|
0.15 |
|
|
|
0.22 |
|
|
|
0.12 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20210315005787/en/
Investor Relations
Gateway Investor Relations
(949) 574-3860
SRT@gatewayir.com
Source: