Startek Reports Fourth Quarter and Full Year 2021 Financial Results|||

– Acquirement Growth for the Fourth Quarter and Total Yr Driven by Connected Strength Beyond Cadre Verticals –

– Ongoing Investments in Sales Ecosystem, Technological Capabilities, and Digital Partnerships Aim to Bolster the Company’s Operational Foundation to Support Long-Term Growth –

GREENWOOD VILLAGE, Colo.–(BUSINESS WIRE)–Startek, Inc. (NYSE:SRT) (“Startek” or the “Company”), a global customer experience (CX) solutions provider, is reporting financial results for the 4th quarter and full twelvemonth ended December 31, 2021.

Fourth Quarter 2021 Financial Summary

($ in millions, excl. margin items)

Q4 2021

Q4 2020

Change

Cyberspace Acquirement

$

178.7

$

174.5

2

%

Gross Profit

$

26.viii

$

30.2

(11

)%

Gross Margin

15

%

17.3

%

-230

bps

SG&A Expenses

$

15.ane

$

14.7

3

%

Net Income/(Loss)
[i]

$

six.vii

$

(7.6

)

188

%

EPS
[ane]

$

0.16

$

(0.nineteen

)

184

%

Adapted Net Income/(Loss)
[2]

,
[iii]

$

12.9

$

eight.8

47

%

Adjusted EPS
[two]

,
[3]

$

0.32

$

0.22

45

%

Adapted EBITDA
[3]

$

18.nine

$

23.3

(xix

)%

Total Year 2021 Fiscal Summary

($ in millions, excl. margin items)

2021

2020

Change

Cyberspace Revenue

$

703.6

$

640.2

ten

%

Gross Profit

$

97.vi

$

87.two

12

%

Gross Margin

13.nine

%

13.6

%

thirty

bps

SG&A Expenses

$

54.6

$

59.7

(9

)%

Internet Income/(Loss)
[1]

$

1.5

$

(39.0

)

104

%

EPS
[1]

$

0.04

$

(0.99

)

104

%

Adjusted Net Income/(Loss)
[2]

,
[three]

$

27.3

$

8.five

221

%

Adjusted EPS
[2]

,
[3]

$

0.67

$

0.22

205

%

Adjusted EBITDA
[three]

$

72.4

$

58.two

24

%

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

[2]
Reflects Adjusted internet income (loss) attributed to Startek shareholders.

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


Direction Commentary

“During the quaternary quarter, nosotros connected to support our growth across core verticals and meaningfully enhance our operational foundation,” said Republic of india Rao, Global CEO of Startek. “We generated year-over-yr revenue growth for both the fourth quarter and full year, while maintaining our disciplined approach to toll management across the concern. Since bold the helm of our executive leadership team in October 2021, I’ve spent a considerable amount of time meeting with our management teams across the world, along with many of our client accounts and stakeholders, to evaluate how we are performing relative to expectations.

“Throughout this initial evaluation catamenia, nosotros have already fabricated significant changes beyond the organization. On an operational level, nosotros continued to invest in our technological capabilities, especially in cybersecurity, to ensure that nosotros remain protected against futurity threats and fully optimize the dexterity of our services. We likewise greatly bolstered our leadership team, calculation five new executives, including myself, since October 2021 to round out our C-suite. With a strong focus on accelerating assisting growth, while providing our clients a best-in-grade, digital-first customer experience, we at present have an executive squad that is fully aligned on the mission at-hand going frontward.

“Every bit we progress through 2022, nosotros’re going to go on making meaningful investments to drive growth. We’ve already started building out a revamped sales infrastructure with a reorganized lead generation squad, and we conceptualize calculation additional senior sales leaders over the next few months. To further back up our sales process, our marketing team has been at work improve defining our overall value proposition to customers and implementing more constructive go-to-marketplace strategies. We volition too proceed to have a disciplined approach with our price structure. In fact, through a detailed assay, we have been identifying centers with sub-optimal operation to evaluate the necessary consolidation or correct-sizing deportment to improve the overall utilization of our footprint.

“Our work to optimize our cost structure, build out our leadership team, and refine our sales and marketing focus has positioned us to further heighten our omni-channel capabilities and execute on our growth initiatives in 2022. I am incredibly proud of our team’s sustained commitment to providing all-time-in-class service to our customers during this time of evaluation and transition. I have the utmost conviction in our bolstered organizational structure to begin accelerating on our growth trajectory.”

Fourth Quarter 2021 Financial Results

Net revenue in the fourth quarter increased slightly to $178.vii 1000000 compared to $174.5 1000000 in the twelvemonth-ago quarter. The increase was attributable to continued solid functioning within the Visitor’southward core verticals and geographies. On a abiding currency basis, net revenue increased two.2% compared to the prior year period.

Gross profit in the fourth quarter was $26.8 million compared to $xxx.2 million in the year-agone quarter. Gross margin was 15% compared to 17.iii% in the year-ago quarter. The decrease was primarily due to the touch of a one-off operation bonus declared in Dec 2021 and continued growth in the telecom and government verticals that are delivered onshore, partially offset by the Visitor’s sustained delivery to prudent price management across the organization.

Selling, general and administrative (SG&A) expenses in the fourth quarter were $fifteen.1 1000000 compared to $14.7 million in the year-ago quarter. Every bit a percentage of acquirement, SG&A was the same at 8.four% compared to the year-agone quarter. The increase was driven by the investments in sales, marketing and digital teams where the Company added new positions to strengthen its become-to-market efforts.

Net income attributable to Startek shareholders in the fourth quarter increased significantly $6.seven million or $0.xvi per share, compared to a cyberspace loss of $7.6 meg or $(0.xix) per share in the twelvemonth-ago quarter. The net income in the current menstruation included a $half-dozen.7 meg touch of fair value gains from the investment in CSS Corp. that was partially beginning by an approximate $4.5 million impairment accuse on right-of-utilise assets related to operating leases in select geographies where the Company’south client service is pivoting towards at-home delivery.

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Adjusted net income* in the quaternary quarter was $12.9 one thousand thousand or $0.32 per diluted share, compared to adjusted net income* of $eight.8 million or $0.22 per diluted share in the year-ago quarter.

Adjusted EBITDA* in the 4th quarter was $eighteen.9 million compared to $23.3 million in the twelvemonth-ago quarter. The subtract was primarily driven by the aforementioned lower levels of gross profit and incremental investments in SG&A during the quarter.

At December 31, 2021, cash and restricted cash were $55.4 million
[1]

compared to $63.five million at September 30, 2021. The decrease was due to the lower level of working capital letter generated during the 4th quarter relative to the third quarter of 2021. Total debt at December 31, 2021 was $170.0 one thousand thousand compared to $170.4 million at September 30, 2021, and net debt at December 31, 2021 was $114.vi million
[two]

compared to $106.9 million at September xxx, 2021.

During the iii months concluded December 31, 2021, the Company repurchased an aggregate of 353,810 shares of common stock nether its repurchase plan, at an boilerplate cost of $4.44 per share.

Total Year 2021 Financial Results

Internet revenue in 2021 increased ten% to $703.six million compared to $640.two meg in 2020. This increment was primarily due to strong operation and recovery trends beyond core verticals, including the additional acquirement generated from the U.Southward. COVID-19 aid government contract in the 2d quarter of 2021. On a abiding currency basis, internet revenue increased ten.vi% compared to the prior year.

Gross profit in 2021 increased 12% to $97.6 one thousand thousand compared to $87.ii one thousand thousand in 2020. Gross margin increased 30 footing points to 13.9% compared to 13.6% in 2020. The increase was primarily due to the recovery and growth trends across several core verticals, including the increased revenue from the healthcare and education vertical equally a result of the same vaccine programme in the second quarter. The increase was also supported by lower rental costs in 2021 relative to 2020 due to favorable renegotiations during lease contract renewals.

Selling, general and administrative (SG&A) expenses in 2021 decreased to $54.6 million compared to $59.vii million in 2020. Every bit a percentage of revenue, SG&A improved 150 ground points to 7.eight% compared to 9.iii% in 2020 equally a result of the Company’s higher acquirement base and lower communication and maintenance expenses.

Net income to Startek shareholders in 2021 improved to $1.v million or $0.04 per share, compared to a cyberspace loss of $(39.0) million or $(0.99) per share in 2020. Net income in 2021 included a onetime charge related to expenses associated with the debt refinancing the Company completed in February 2021, every bit well as the aforementioned approximate $iv.5 million in impairment charges recorded in the fourth quarter of 2021. Cyberspace loss in 2020 included an estimate $35.9 million goodwill impairment charge deemed in the start quarter and in the fourth quarter due to COVID-nineteen related forecasted declines in the Visitor’s business in India, South Africa, Australia and Argentine republic, owing primarily to the devaluation of the local currency.

Adjusted cyberspace income* in 2021 increased significantly to $27.3 meg or $0.67 per diluted share, compared to adjusted net income* of $eight.5 million or $0.22 per diluted share in 2020.

Adjusted EBITDA* in 2021 increased 24% to $72.four meg compared to $58.2 1000000 in 2020. The increase is due to the aforementioned acquirement growth and cost reductions driven during the year.

During the yr ended December 31, 2021, the Company repurchased an aggregate of 412,769 shares of its common stock under its repurchase plan, at an average price of $4.61 per share.

*A not-GAAP measure defined beneath.


[1]
Greenbacks residuum excluding restricted cash at December 31, 2021 amounted to $47.nine one thousand thousand every bit compared to $56.8 million at September thirty, 2021.

[two]
Net debt excluding restricted cash rest at December 31, 2021 was $122.ane million compared to $113.6 million at September 30, 2021.

Conference Call and Webcast Details

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

Date: Thursday, March ten, 2022

Time: v:00 p.thousand. Eastern Time

Price-free dial-in number: (844) 239-5283

International dial-in number: (574) 990-1022

Conference ID: 5348066

Please call the conference telephone number v-10 minutes prior to the start time. An operator will annals your name and organization. If you have any difficulty connecting with the briefing call, please contact Gateway Grouping at (949) 574-3860.

The conference call volition 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.

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A telephonic replay of the conference telephone call will too be available afterward 8:00 p.one thousand. Eastern time on the same day through March 17, 2022.

Toll-free replay number: (855) 859-2056

International replay number: (404) 537-3406

Replay ID: 5348066

Virtually Startek

Startek is a global provider of tech-enabled concern 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 concern outcomes by focusing on enhancing customer experience and digital & AI enablement across all touch points and channels. Startek has more than than 45,000 CX experts spread across 45 delivery campuses in 13 countries. The company services over 200 clients across a range of industries such as banking and financial services, insurance, technology, telecom, healthcare, travel & hospitality, ecommerce, consumer appurtenances, retail, and energy & utilities. To acquire more about Startek’s global solutions, delight visit www.startek.com.

Forward-Looking Statements

The matters regarding the future discussed in this news release include forwards-looking statements equally defined in the Individual Securities Litigation Reform Human activity of 1995. Such forrard-looking statements are intended to exist identified in this document by the words “anticipate,” “believe,” “gauge,” “expect,” “intend,” “may,” “objective,” “outlook,” “programme,” “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 bodily results to differ materially from those expressed or implied past any such forward-looking statements. Readers are encouraged to review risk factors and all other disclosures actualization in the Company’s Form x-K, as well as other filings with the Securities and Exchange Commission (SEC), for further data on risks and uncertainties that could bear upon Startek’s concern, financial condition and results of operation. Copies of these filings are bachelor from the SEC, the Visitor’s website or the Company’s investor relations department. Startek assumes no obligation to update or revise any frontward-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.

STARTEK, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income (loss)

(In thousands, except per share amounts)

Iii Months Ended December

Year Ended December

2021

2020

2021

2020

Revenue

177,667

174,918

703,546

641,844

Warrant contra revenue

1,078

(449

)

87

(1,622

)

Net revenue

178,745

174,469

703,633

640,222

Cost of services

(151,907

)

(144,227

)

(606,031

)

(552,973

)

Gross profit

26,838

xxx,242

97,602

87,249

Selling, general and administrative expenses

(15,075

)

(fourteen,712

)

(54,643

)

(59,744

)

Harm losses and restructuring/exit cost

(half dozen,262

)

(thirteen,254

)

(eight,226

)

(37,799

)

Operating income (loss)

5,501

two,276

34,733

(10,294

)

Share of income (loss) of equity-accounted investees

half dozen,682

(6

)

half dozen,681

(31

)

Involvement expense, cyberspace

(684

)

(two,693

)

(19,173

)

(13,376

)

Foreign substitution gains (losses), internet

(691

)

(1,853

)

(649

)

(2,183

)

Income (loss) before income tax expense

10,808

(2,275

)

21,592

(25,884

)

Tax expense

(2,469

)

(1,951

)

(11,866

)

(7,760

)

Net income (loss)

eight,339

(4,226

)

9,726

(33,644

)

Net income (loss)

Internet income attributable to noncontrolling interests

ane,645

3,351

8,226

v,341

Cyberspace income (loss) owing to Startek shareholders

6,694

(seven,577

)

ane,500

(38,985

)

8,339

(four,226

)

9,726

(33,644

)

Internet income (loss) per common share

Basic net income (loss) owing to Startek shareholders

0.16

(0.19

)

0.04

(0.99

)

Diluted net income (loss) attributable to Startek shareholders

0.16

(0.xix

)

0.04

(0.99

)

Weighted average common shares outstanding

Basic

40,707

xl,333

40,719

39,442

Diluted

40,865

xl,333

41,086

39,442

STARTEK, INC. AND SUBSIDIARIES

Condensed Consolidated Residue Sheets

(Audited)

(In thousands, except share and per share data)

December 31,

2021

Dec 31,

2020

Assets

Current assets

Greenbacks and cash equivalents

47,940

44,507

Restricted cash

7,456

six,052

Merchandise accounts receivables, internet

106,937

83,560

Unbilled revenue

50,074

49,779

Prepaid and other electric current assets

12,611

14,542

Full current assets

225,018

198,440

Non-electric current assets

Property, found and equipment, net

34,168

34,225

Operating lease right-of-utilise avails

63,012

69,376

Intangible avails, internet

90,092

100,440

Goodwill

183,397

183,397

Investment in equity-accounted investees

31,688

111

Deferred tax assets, net

3,664

5,294

Prepaid expenses and other non-current assets

11,436

13,370

Total non-electric current assets

417,457

406,213

Total assets

642,475

604,653

Liabilities and Stockholders’ Equity

Current liabilities

Trade accounts payables

11,916

xx,074

Accrued expenses

53,203

57,118

Curt term debt

iii,611

fifteen,505

Current maturity of long term debt

6,241

2,180

Current maturity of operating lease obligation

24,393

xix,327

Other current liabilities

48,265

39,987

Total current liabilities

147,629

154,191

Non-current liabilities

Long term debt

160,175

118,315

Operating lease liabilities

44,263

52,052

Other non-current liabilities

nineteen,562

fifteen,498

Deferred tax liabilities, net

17,526

17,715

Total not-current liabilities

241,526

203,580

Total liabilities

389,155

357,771

Stockholders’ disinterestedness

Common stock, sixty,000,000 non-convertible shares, $0.01 par value, authorized; 40,893,396 and 40,453,462 shares issued equally of December 31, 2021, and December 31, 2020, respectively

409

405

Additional paid-in capital

291,537

288,700

Accumulated deficit

(84,043

)

(85,543

)

Treasury stock, 412,769 and nil shares as of December 31, 2021, and December 31, 2020, respectively, at cost

(1,912

)

0

Accumulated other comprehensive loss

(10,687

)

(7,286

)

Equity attributable to Startek shareholders

195,304

196,276

Non-controlling interest

58,016

50,606

Total stockholders’ equity

253,320

246,882

Full liabilities and stockholders’ equity

642,475

604,653

STARTEK, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Audited)

(In thousands, except per share amounts)

Year Ended Dec 31,

2021

2020

Operating activities

Net income (loss)

9,726

(33,644

)

Adjustments to reconcile net income (loss) to net cash generated from operating activities:

Depreciation and amortization

28,137

28,201

Damage of goodwill

35,944

Damage of right-of-use assets

4,514

Turn a profit on sale of property, plant and equipment

(106

)

167

Provision for doubtful accounts

370

2,662

Amortization of debt issuance costs (including loss on extinguishment of debt)

11,607

one,454

Amortization of call option premium

1,200

Warrant contra acquirement

(87

)

1,622

Share-based compensation expense

ane,418

832

Deferred income taxes

1,389

(276

)

Share of (income) loss of equity-accounted investees

(6,681

)

31

Changes in operating avails and liabilities:

Merchandise accounts receivables

(26,207

)

nineteen,971

Prepaid expenses and other assets

1,104

(11,376

)

Trade accounts payable

(7,739

)

(four,635

)

Income taxes, net

three,049

two,668

Accrued expenses and other liabilities

vii,434

22,432

Net cash generated from operating activities

29,128

66,053

Investing activities

Purchase of property, plant and equipment

(17,570

)

(17,414

)

Investment in equity-accounted investees

(25,000

)

Payments for call option premium

(3,000

)

Proceeds from disinterestedness-accounted investees

104

395

Net cash used in investing activities

(45,466

)

(17,019

)

Financing activities

Proceeds from the issuance of mutual stock

i,510

9,026

Gain from long term debt (net of debt issuance cost paid to lenders)

156,525

Payments of long term debt

(117,600

)

(eight,400

)

Payments for loan fees related to long term debt

(2,794

)

Payments on a line of credit, net

(24,529

)

Payments on other debts, net

(13,656

)

(vii,304

)

Mutual stock repurchases

(1,912

)

Net greenbacks (used in) generated from financing activities

22,073

(31,207

)

Net increase in greenbacks and cash equivalents

5,735

17,827

Effect of commutation rate changes on greenbacks and cash equivalents and restricted cash

(898

)

106

Cash and cash equivalents and restricted cash at the first of menstruum

50,559

32,626

Greenbacks and cash equivalents and restricted greenbacks at the end of flow

55,396

50,559

Components of cash and cash equivalents and restricted cash

Balances with banks

47,940

44,507

Restricted greenbacks

vii,456

six,052

Total cash and cash equivalents and restricted cash

55,396

fifty,559

Supplemental disclosure of cash flow information

Greenbacks paid for interest and other finance price

22,359

thirteen,080

Cash paid for income taxes

seven,081

4,795

Noncash warrant contra revenue

(87

)

1,622

Noncash share-based compensation expenses

1,418

832

STARTEK, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO Not-GAAP MEASURES

(In thousands)

(Unaudited)


This printing release contains references to the non-GAAP financial measure of Adjusted EBITDA. Reconciliation of this non-GAAP measure to its comparable GAAP measure is included below. This non-GAAP data should not exist construed as an alternative to the reported results determined in accordance with GAAP. It is provided solely to assist in an investor’s understanding of these items on the comparability of the Visitor’southward operations.

Adjusted EBITDA:

The Company defines non-GAAP Adjusted EBITDA as Net loss plus Income taxation expense, Interest and other expense, net, Depreciation and amortization expense, Restructuring and other acquisition related cost, Share-based bounty expense and Warrant contra revenue (if applicable). Management uses Adjusted EBITDA as a performance measure to clarify the operation of our business. Direction believes that excluding these non-greenbacks and other not-recurring items permits a more than meaningful comparison and understanding of our force and performance of our ongoing operations for our investors and analysts.

Adapted EPS:

Adjusted EPS is a non-GAAP fiscal measure presenting the earnings generated by our ongoing operations that we believe is useful to investors in making meaningful comparisons to other companies, although our measure of Adjusted EPS may not be directly comparable to similar measures used by other companies, and flow-over-period comparisons. Adjusted EPS is defined every bit our diluted earnings per common share attributable to Startek shareholders adjusted to exclude the effects of the amortization of acquisition-related intangible assets, investments that investors may want to evaluate separately (such as based on off-white value) and the impact of sure events, gains, losses or other charges that affect period-over-period comparisons. Acquisition-related intangible assets are recognized as a result of the awarding of Accounting Standards Codification Topic (“ASC”) 805, Business Combinations (such every bit client relationships and Make), and their amortization is significantly affected by the size and timing of our acquisitions.

Adjusted EBITDA:

Iii Months Ended December

Year Ended Dec 31,

2021

2020

2021

2020

Cyberspace income (loss)

8,339

(4,226

)

9,726

(33,644

)

Income revenue enhancement expense

2,469

one,951

11,866

7,760

Interest and other expense, net

(5,998

)

two,699

12,492

thirteen,407

Foreign exchange gains (losses), net

691

1,853

649

2,183

Depreciation and amortization expense

7,739

half dozen,922

28,137

28,201

Impairment losses and restructuring cost

6,262

13,254

8,226

37,799

Share-based bounty expense

486

385

1,418

832

Warrant contra revenue

(1,078

)

449

(87

)

1,622

Adjusted EBITDA

18,910

23,287

72,427

58,160

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