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StarTek, Inc. Reports Second Quarter 2011 Results

Stocks in this article: SRT

StarTek, Inc. (NYSE:SRT) today announced its financial results for the second quarter ended June 30, 2011. The Company reported second quarter 2011 revenue of $57.1 million and a net loss of $0.64 per share.

Fueled by new client wins and the expansion of existing programs, full-time equivalent offshore agents grew 13% and offshore revenue grew 17% compared to the first quarter of 2011. Training and other costs associated with the ramp-up of these programs resulted in offshore margins decreasing slightly to 7% from 9% in the first quarter of 2011. The offshore growth is part of the Company’s strategy to offset its shrinking North American call volumes, which resulted in lower North American margins in the second quarter. The Company’s SG&A expense totaled $13.2 million in the second quarter of 2011; however, excluding $2.9 million of severance costs, it would have been $10.3 million for the quarter. The Company’s net loss for the quarter totaled $9.7 million, or $0.64 per share. Excluding the above severance costs and impairment and restructuring charges of $3.3 million, the net loss would have been $0.27 per share. Adjusted EBITDA, which excludes the same severance costs and impairment and restructuring charges, as well as stock compensation expense, was $0.5 million in the second quarter of 2011. The Company ended the quarter with approximately $20 million in cash and cash equivalents and no bank debt. Capital expenditures for the current quarter totaled $2.3 million.

Financial Highlights

Second quarter 2011 revenue of $57.1 million represented a decrease of 4.2% compared to the first quarter of 2011, and a decrease of 15.6% compared to the second quarter of 2010. The decline was driven by U.S. and Canadian revenue, which fell approximately $4.4 million from the first quarter of 2011, $1.6 million of which was attributable to the closure of the Company’s site in Alexandria, Louisiana and the ramp-down of business in Cornwall, Ontario. The decline in U.S. and Canadian revenue was partially offset by revenue growth in the offshore segment of approximately $2.0 million, or 17%, compared to the first quarter of 2011.

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