Startek Reports First Quarter 2021 Financial Results

-  Demand Strength and Operational Momentum Drive Continued Growth Across Net Revenue, Adjusted EBITDA and Adjusted Net Income -

 

GREENWOOD VILLAGE, CO May 10, 2021 - Startek, Inc. (NYSE:SRT) ("Startek" or the "Company"), a global provider of customer experience management solutions, is reporting financial results for the first quarter ended March 31, 2020.

 

First Quarter 2021 Financial Highlights ($ in millions, excl. margin items)

 

 

Q1 2021

Q4 2020

Q1 2020

Net Revenue

$163.1

$174.5

$160.9

Gross Profit

$24.7

$30.9

$20.1

Gross Margin

15.1%

17.7%

12.5%

SG&A Expenses

$14.2

$15.3

$17.3

Net Income/(Loss)[1]

$(12.2)

$(7.6)

$(26.6)

    Adjusted Net Income[2], [3]

$1.7

$8.8

$(1.0)

Adjusted EBITDA[3]

$18.0

$23.3

$10.5

[1] Reflects net income (loss) attributable to Startek shareholders.

[2] Reflects Adjusted net income (loss) attributable to Startek shareholders.

[3] Refer to the note below about Non-GAAP financial measures.

 

Management Commentary

  

“Our first quarter results demonstrate the continued benefits of the operational improvements and efficiencies we implemented throughout last year,” said Aparup Sengupta, Executive Chairman and Global CEO of Startek. “Even though Q1 typically represents a seasonally soft period for our business, we generated year-over-year growth across all financial metrics. In addition to an increase in net revenue, we generated strong expansion across gross profit, gross margin and adjusted EBITDA, which also benefitted from continued grants from some governments during the quarter. We expect our commitment to prudent cost management and flexibly supporting our global client base to propel our progress through the remainder of the year.

 

“With certain geographies still heavily impacted by the pandemic, as well as the uneven pace of recovery and vaccine access around the world, we have focused on keeping our agents safe while flexibly addressing our clients’ evolving needs. About 65% of our global team is currently working remotely, and we have diligently ensured that they have the resources they need to complete their work. We have continued to optimize the Startek Cloud platform through integrating additional cloud computing, IT service management and automation services, further enhancing the seamlessness of our operations. With these enhanced capabilities, we have improved the flexibility and resilience of our platform, with greater elasticity in how we manage our workforce across our geographies.

 

“While e-commerce tailwinds are not as heightened as they were during last quarter’s holiday season, they still served as a source of strength for us throughout the first quarter. This is in conjunction with the growth we generated across our healthcare, cable and media verticals, including our recent work to support COVID-19 assistance programs in the United States. The strong start to the year has positioned us to deliver robust growth in the current fiscal year.

 

“As we look to the rest of 2021, we will keep working to advance our operational momentum through driving additional efficiencies and innovation throughout our organization. We also plan on being at the forefront in supporting government efforts to quell the effects people around the globe are experiencing from COVID-19, which we take lot of pride in. Our thoughts remain with everyone in India and around the world who is contending with the ongoing economic and health impacts of the global pandemic.”

 

 

First Quarter 2021 Financial Results

 

Net revenue in the first quarter increased to $163.1 million compared to $160.9 million in the year-ago quarter. The increase was driven by continued client demand strength, particularly within the Company’s e-commerce, healthcare, cable and media verticals. On a constant currency basis, net revenue increased 2.3% compared to the year-ago quarter.

 

Gross profit in the first quarter increased 23% to $24.7 million compared to $20.1 million in the year-ago quarter. Gross margin increased 260 basis points to 15.1% compared to 12.5% in the year-ago quarter. The increase was primarily driven by the aforementioned strength within Startek’s client base, including a greater revenue mix from high-margin verticals. The margin expansion was also aided by grants received in the first quarter.

 

Selling, general and administrative (SG&A) expenses in the first quarter decreased to $14.2 million compared to $17.3 million in the year-ago quarter. As a percentage of revenue, SG&A improved 200 basis points to 8.7% compared to 10.7% in the year-ago quarter as a result of the ongoing cost reductions the Company has implemented over the past several quarters and in response to COVID-19.

 

Net loss attributable to Startek shareholders in the first quarter improved to $12.2 million or $(0.30) per share, compared to a net loss of $26.6 million or $(0.69) per share in the year-ago quarter. Net loss in the first quarter of 2021 reflects a one-time charge related to expenses associated with the debt refinancing the Company completed in February 2021.

 

Adjusted net income* in the first quarter improved to $1.7 million or $0.04 per diluted share, compared to an adjusted net loss* of $1.0 million or $(0.02) per share in the year-ago quarter.

 

Adjusted EBITDA* in the first quarter increased 72% to $18.0 million compared to $10.5 million in the year-ago quarter. The increase was primarily driven by the aforementioned revenue growth and margin expansion and cost reductions.

 

On March 31, 2021, cash and restricted cash increased to $64.6 million [1] compared to $50.6 million at December 31, 2020. The increase was largely driven by improved working capital this quarter relative to previous quarters. Total debt at March 31, 2021 was $172.8 million compared to $136.0 million at December 31, 2020, and net debt at March 31, 2021 was $108.1 million [2] compared to $85.4 million at December 31, 2020. The increase primarily reflects the use of proceeds of the refinancing to repay in full the previous senior debt facility and to also make the investment in CSS.

 

*A non-GAAP measure defined below.

 

Conference Call and Webcast Details

 

Startek management will hold a conference call today at 5:00 p.m. Eastern time to discuss its financial results. The conference call will be followed by a question and answer period.

 

Date: Monday, May 10, 2021
Time: 5:00 p.m. Eastern time
Toll-free dial-in number: (844) 239-5283
International dial-in number: (574) 990-1022
Conference ID: 4684167

 

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 8:00 p.m. Eastern time on the same day through May 17, 2021.

 

Toll-free replay number: (855) 859-2056
International replay number: (404) 537-3406
Replay ID: 4684167

 

 

                      

[1] Cash balance excluding restricted cash as at March 31, 2021 amounted to $57.7 million as compared to $44.5 million as at December 31, 2020.

[2] Net debt excluding restricted cash balance at March 31, 2021 was $115.1 million compared to $91.5 million at December 31, 2020.

 

 

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 December 31, 2020, as filed with the Securities and Exchange Commission (SEC) on March 15, 2021, as well as other filings with the SEC, for further information on risks and uncertainties that could affect Startek's business, financial condition and results of operation. Copies of these filings are available from the SEC, the Company’s website or the Company’s investor relations department. Startek assumes no obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date herein.

 

Investor Relations

Cody Cree or Jackie Keshner

Gateway Investor Relations

(949) 574-3860

SRT@gatewayir.com