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StarTek, Inc. Reports Third Quarter 2011 Results

Stocks in this article: SRT

StarTek, Inc. (NYSE:SRT) today announced its financial results for the third quarter ended September 30, 2011. The Company reported third quarter 2011 revenue of $52.0 million, which represents a decrease of 9.0% and 20.7% compared to the second quarter of 2011 and the third quarter of 2010, respectively. The Company reported a net loss of $0.41 per share, compared to a net loss of $0.64 per share and $0.30 per share in the second quarter of 2011 and the third quarter of 2010, respectively.

During the third quarter, the Company continued to experience weakness in its North American operations with lower revenue and gross profit, however, the Company’s offshore segment continued to show strong growth. Offshore revenue increased 20.2% compared to the second quarter of 2011 to $16.8 million and now represents approximately 32.4% of total revenue. The growth in offshore revenue was driven primarily by the ramp-up of new business wins in the Company’s Philippine and Costa Rica locations. These ramps also resulted in improved offshore gross margins which increased from approximately 7.3% in the second quarter of 2011 to 12.2% in the third quarter of 2011. During the quarter, the Company further expanded its international footprint by opening a new Honduras facility. The growth offshore was more than offset by North American declines in both revenue and gross margin. The North American decline was due primarily to the downsizing of two sites (one in the U.S. and one in Canada) and the closure of another Canadian site. The Company’s third quarter 2011 net loss was $6.2 million, or $0.41 per share. Adjusted EBITDA for the quarter was negative $1.5 million compared to $0.5 million in the second quarter 2011. The Company ended the quarter with approximately $11.5 million in cash and cash equivalents and no bank debt. Capital expenditures totaled $3.2 million.

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