This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

StarTek, Inc. Reports Third Quarter 2012 Results

Stocks in this article: SRT

Recent 2012 Highlights

  • Continued sales momentum, signing ten new agreements year-to-date with an expected annual contract value of $50 million;
  • Improved revenue diversification with no single client representing more than 30% of our revenue; and
  • Strengthened operations leadership and consistency across all geographies with the promotion of Rod Leach to SVP, Global Operations.

"Our improvement in client revenue and geographic diversification as well as our improved EBITDA is solid progress," said Chad Carlson, President and Chief Executive Officer. "We continue to implement our StarTek Advantage System to improve results."

Effective January 1, 2012, the Company realigned its segment reporting into three distinct operating segments: Domestic (results from U.S. and Canadian sites), Asia Pacific (results from Philippine sites) and Latin America (results from Costa Rican and Honduran sites). In addition, during the first quarter the Company began including certain human resource, recruiting and facility costs in cost of services, rather than SG&A, to provide enhanced clarity on the Company’s operations and cost structure. All historical financial information in this release has been adjusted to provide comparability.

For additional information on revenue, margin and operating metrics, please refer to the Financial Scorecard posted on the Investor Relations section of the Company’s website ( www.investor.startek.com).

Conference Call and Webcast Details

The Company will host a conference call today, November 7, 2012, at 6:30 a.m. MDT (8:30 a.m. EDT) to discuss third quarter 2012 financial results. To participate in the teleconference, please call toll-free 866 202.0886 (or 617 213.8841 for international callers) and enter “81166257”. You may also listen to the teleconference live via the Company’s website at www.startek.com. For those that cannot access the live broadcast, a replay will be available on the Company’s website at www.startek.com.

About StarTek

StarTek, Inc. is a global provider of business process outsourcing services with approximately 10,000 employees, whom we refer to as Brand Warriors, who have been committed to making a positive impact on our clients’ business results for over 25 years. Our company mission is to enable and empower our employees to advance our clients’ brands every day to bring value to our stakeholders. We accomplish this by aligning with our clients’ business objectives resulting in a trusted partnership. The StarTek Advantage System is the sum total of our culture, customized solutions and processes that enhance our clients’ customers’ experience. The StarTek Advantage System is focused on improving customer experience and reducing total cost of ownership for our clients. StarTek has proven results for the multiple services we provide including sales, order management and provisioning, customer care, technical support, receivables management, and retention programs. We manage programs using a variety of multi-channel customer interaction capabilities including voice, chat, email, IVR and back-office support. StarTek has delivery centers in the U.S., Philippines, Canada, Costa Rica, Honduras and through our StarTek@Home workforce. For more information, go to www.startek.com or call +1303.262.4500.

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. These factors include, but are not limited to, risks relating to our reliance on two significant customers, consolidation by our clients, the concentration of our business in the telecommunications industry, pricing pressure, maximization of capacity utilization, lack of success of our clients’ products and services, consolidation of vendors by our clients, interruptions to the Company’s business due to geopolitical conditions and/or natural disasters, foreign currency exchange risk, lack of minimum purchase requirements in our contracts, ability to hire and retain qualified employees, the timely development of new products or services, failure to implement new technological advancements, increases in labor costs, lack of wide geographic diversity, continuing unfavorable economic conditions, our ability to effectively manage growth, increases in the cost of telephone and data services, unauthorized disclosure of confidential client or client customer information, risks inherent in the operation of business outside of North America, ability of our largest stockholder to affect decisions, stock price volatility, variation in quarterly operating results and inability to renew or replace sources of capital funding. Readers are encouraged to review Item 1A. - Risk Factors and all other disclosures appearing in the Company's Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission, for further information on risks and uncertainties that could affect StarTek’s business, financial condition and results of operation.

 

STARTEK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 
  Three Months Ended  

Nine Months Ended

September 30,

September 30,

2012   2011 2012   2011
Revenue $ 47,675 $ 51,701 $ 142,955 $ 168,350
Cost of services   41,575     49,591     128,246     156,046  
Gross profit 6,100 2,110 14,709 12,304
Selling, general and administrative expenses 6,924 8,636 22,579 28,016
Impairment losses and restructuring charges   533     291     4,086     3,563  
Operating loss (1,357 ) (6,817 ) (11,956 ) (19,275 )
Net interest and other income   108     5     295     11  
Loss before income taxes (1,249 ) (6,812 ) (11,661 ) (19,264 )
Income tax benefit   20     17     22     263  
Net loss $ (1,229 ) $ (6,795 ) $ (11,639 ) $ (19,001 )
 
 
Net loss per share
Basic $ (0.08 ) $ (0.45 ) $ (0.76 ) $ (1.26 )
Diluted $ (0.08 ) $ (0.45 ) $ (0.76 ) $ (1.26 )
 
Weighted average shares outstanding
Basic 15,263 15,108 15,230 15,065
Diluted 15,263 15,108 15,230 15,065
 
 

STARTEK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS & STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 
  As of
September 30, 2012   June 30, 2012
ASSETS
Current assets:
Cash, cash equivalents and investments $ 9,199 $ 11,368
Trade accounts receivable 35,112 31,984
Other current assets   10,549   10,494
Total current assets 54,860 53,846
 
Property, plant and equipment, net 30,325 30,626
Other assets   5,539   6,119
Total assets $ 90,724 $ 90,591
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 22,818 $ 21,823
Other liabilities   2,699   2,816
Total liabilities 25,517 24,639
 
Stockholders' equity   65,207   65,952
Total liabilities and stockholders' equity $ 90,724 $ 90,591
 
   
Three Months Ended Nine Months Ended
September 30, September 30,
2012   2011 2012   2011
Operating Activities
Net loss $ (1,229 ) $ (6,190 ) $ (11,639 ) $ (19,001 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation 2,948 3,901 10,008 11,948
Impairment losses - - 3,086 1,026
Non-cash compensation cost 301 324 997 1,194

Changes in operating assets & liabilities and other, net

  (958 )   (3,624 )   1,873     4,027  
Net cash provided by operating activities   1,062     (5,589 )   4,325     (806 )
Investing Activities
Purchases of property, plant and equipment (3,063 ) (3,239 ) (4,680 ) (7,417 )
Proceeds from note receivable   165     165     495     495  
Net cash used in investing activities   (2,898 )   (3,074 )   (4,185 )   (6,922 )
Financing Activities
Other financing, net   (3 )   12     3     140  
Net cash provided by financing activities (3 ) 12 3 140
Effect of exchange rate changes on cash   (330 )   16     (663 )   364  
Net decrease in cash and cash equivalents (2,169 ) (8,635 ) (520 ) (7,224 )
Cash and cash equivalents at beginning of period   11,368     20,151     9,719     18,740  
Cash and cash equivalents at end of period $ 9,199   $ 11,516   $ 9,199   $ 11,516  
 

STARTEK, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP MEASURES(Dollars in thousands)(Unaudited)

The information presented in this press release reports 1) Adjusted EBITDA, which the Company defines as net income (loss) plus income tax expense (benefit), interest expense (income), impairment and restructuring charges, depreciation expense and stock compensation expense, 2) operating loss before impairment and restructuring charges and 3) Net loss excluding severance costs and restructuring charges. The following tables provide reconciliation of 1) Adjusted EBITDA to net loss calculated in accordance with GAAP, 2) operating loss before impairment and restructuring charges to operating loss calculated in accordance with GAAP and 3) net loss before restructuring and severance to net loss in accordance with GAAP. This non-GAAP information should not be construed as an alternative to the reported results determined in accordance with generally accepted accounting principles in the United States (GAAP). It is provided solely to assist in an investor’s understanding of these items on the comparability of the Company’s operations. A reconciliation of the GAAP amounts to the non-GAAP amounts is shown below.

2 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,461.32 -153.49 -0.92%
S&P 500 1,927.11 -14.17 -0.73%
NASDAQ 4,382.8470 -36.6310 -0.83%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs