StarTek (SRT) Tops Q2 EPS by 13c, Revenues Beat

StarTek (NYSE: SRT) reported Q2 EPS of $0.15, $0.13 better than the analyst estimate of $0.02. Revenue for the quarter came in at $171.6 million versus the consensus estimate of $165.13 million.

Fourth Quarter 2019 Financial Results

• Net revenue for the quarter increased 8% to $171.6 million compared to $158.6 million in the fourth quarter of 2018.
• Gross profit in the fourth quarter was up 10% to $27.6 million compared to $25.1 million in the year ago quarter, with gross margin up 10 basis points to 15.9% compared to 15.8%.
• Selling, general and administrative (SG&A) expenses decreased to $19.4 million compared to $21.9 million in the year-ago quarter. As a percentage of revenue, SG&A improved 250 basis points to 11.3% compared to 13.8% in the year-ago quarter.
• Net loss attributable to Startek shareholders for the quarter was $5.3 million or $(0.14) per share, compared to a net loss of $9.7 million or $(0.26) per share in the year-ago quarter. Net loss in the fourth quarter of 2019 included a $7.1 million goodwill impairment primarily related to Argentina and South Africa.
• Adjusted net income* in the fourth quarter of 2019 was $5.8 million, or $0.15 per share, compared to an adjusted net loss* of $6.9 million or $(0.19) in the fourth quarter of 2018.
• Adjusted EBITDA* for the quarter increased 48% to $16.8 million compared to $11.4 million in the year-ago quarter.
• At December 31, 2019, cash and restricted cash increased to $32.6 million compared to $24.6 million at December 31, 2018. Total debt at the end of 2019 was reduced to $174.8 million compared to $185.7 million at the end of 2018. This resulted in a reduction of net debt to $142.2 million compared to $161.1 million.

“2019 marked our first full year as a combined company since the business combination with Aegis, and our exceptional fourth quarter results reflect the strength of our now fully integrated company,” said Aparup Sengupta, executive chairman and CEO of Startek. “We delivered on multiple key initiatives over the last year, including execution of our client diversification strategy with high-growth companies, implementing a lean and efficient cost structure across our global operations, and expanding our service offerings to include higher-margin digital solutions that further position Startek as a value-added partner to our clients.

“A key driver of our success in 2019, and especially the strong momentum in the back half of the year, was the buildout of our global leadership team. During the summer, we appointed Rajiv Ahuja to global COO, and under his leadership we added key personnel to implement global best practices, ensuring all of our clients receive a consistent, high-quality experience. In fact, during the fourth quarter we launched a centralized, virtual command center that monitors our customer service activity around the world 24/7.

“Subsequent to the quarter, we made other key additions to our sales and leadership teams, including our new head of global sales, Rick Ferry, and chief technology officer, P S Reddy. Both Rick and Reddy bring unique and relevant skill sets to our organization that will help us position Startek as one of the premier global CX providers for high-growth companies. We are very proud of our accomplishments over the last year, but we are far from done as we look to carry this momentum through 2020 and the years ahead.”

For earnings history and earnings-related data on StarTek (SRT) click here.

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