- The Go-Private Transaction with Capital Square Partners Is
Expected to Close by End Of 2023 -
DENVER , Nov. 9, 2023
/PRNewswire/ -- Startek, Inc. (NYSE:SRT) ("Startek" or the
"Company"), a global customer experience (CX) solutions provider,
is reporting financial results for the third quarter ended
September 30, 2023. As a result of
current and planned divestitures, the Company has classified
Middle East and Argentina operations as 'Held for Sale and
Discontinued Operations'. Accordingly net revenue, gross profit,
gross margin, SG&A expenses and adjusted EBITDA are reported
for the continuing operations and net income, EPS, adjusted net
income/(loss) and adjusted EPS are reported after consolidating
continuing and discontinued operations.
Third Quarter
2023 Financial Summary ($ in millions, excl. margin
items)
|
|
|
|
|
|
Q3
2023
|
|
|
Q3
2022
|
|
|
Change
|
|
Revenue
|
|
|
93.63
|
|
|
|
94.88
|
|
|
|
(1.32) %
|
|
Gross
Profit
|
|
|
12.49
|
|
|
|
14.57
|
|
|
|
(14.28) %
|
|
Gross
Margin
|
|
|
13.34 %
|
|
|
|
15.36 %
|
|
|
(202)bps
|
|
SG&A
Expenses
|
|
|
10.32
|
|
|
|
12.99
|
|
|
|
(20.55) %
|
|
Adjusted
EBITDA [3]
|
|
|
8.94
|
|
|
|
9.54
|
|
|
|
(6.29) %
|
|
Net Income
(Loss) [1]
|
|
|
(24.23)
|
|
|
|
0.24
|
|
|
|
(10,195.83) %
|
|
EPS[1]
|
|
|
(0.60)
|
|
|
|
0.01
|
|
|
|
(6,100.00) %
|
|
Adjusted Net
Income [2], [3]
|
|
|
11.83
|
|
|
|
5.67
|
|
|
|
108.64 %
|
|
Adjusted
EPS[2], [3]
|
|
|
0.29
|
|
|
|
0.14
|
|
|
|
142.86 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[1] Reflects net income (loss) and
EPS attributable to Startek shareholders.
|
|
[2] Reflects Adjusted net income and
adjusted EPS attributable to Startek shareholders.
|
[3] Refer to
the reconciliation of GAAP to Non-GAAP financial
measures.
|
|
Third Quarter 2023 Financial Summary
Net revenue in the third quarter was $93.63 million compared to $94.88 million in the year-ago quarter. The
slight decrease was primarily due to foreign currency movement of
certain currencies relative to the US Dollar. The Company also saw
some softness in volume across certain clients within the Company's
international footprint which was largely offset by ramp-up of new
clients won in the past few quarters. On a constant currency basis,
net revenue increased 2.04% compared to the year-ago quarter.
Gross profit in the third quarter was $12.49 million compared to $14.57 million in the year-ago quarter. Gross
margin was 13.34% compared to 15.36% in the year-ago quarter. The
decline in gross profit and gross margin was primarily driven by
the aforementioned lower volumes which led to a mismatch in
staffing levels.
Selling, general and administrative (SG&A) expenses in the
third quarter declined to $10.32
million compared to $12.99
million in the year-ago quarter. The SG&A expense for
both the periods include non-recurring costs related to the merger
transaction. Adjusting for these costs, as a percentage of revenue,
SG&A decreased to 10.70% compared to 12.20% in the year-ago
quarter. The improvement was primarily due to operational
efficiency across the board.
Adjusted EBITDA* in the third quarter was $8.94 million compared to $9.54 million in the year-ago quarter. The
decrease is primarily attributable to the aforementioned decline in
net revenue, as well as currency exchange losses during the
period.
Net income (loss) attributable to Startek shareholders in the
third quarter was $(24.23)
million or $(0.60) per share,
compared to a net income of $0.24
million or $0.01 per share in
the year-ago quarter. The decline was primarily a result of a
$19.6 million non-cash impairment
charge on goodwill due to change in the forecasts considering the
aforementioned decline in revenue. This represents income (loss)
attributable to Startek shareholders from continuing operations of
$(24.60) million in Q3 2023 and $0.13
million in Q3 2022, along with income (loss) attributable to
Startek shareholders from discontinued operations of $0.37 million in Q3 2023 and $0.11 million in Q3 2022.
Adjusted net income* in the third quarter increased 108.64% to
$11.83 million or $0.29 per diluted share, compared to an adjusted
net income* of $5.67 million or
$0.14 per diluted share in the
year-ago quarter. This represents adjusted net income (loss) from
continuing operations of $11.34
million in Q3 2023 and $4.60
million in Q3 2022, along with adjusted net income (loss)
from discontinued operations of $0.48
million in Q3 2023 and $1.07
million in Q3 2022.
On September 30, 2023, cash and
restricted cash was $40.84 million[1]
compared to $72.40 million as at
December 31, 2022. The decrease in
cash balance was driven by the utilization of the proceeds from the
strategic transactions to prepay debt. Total debt as at
September 30, 2023, was $77.67 million compared to $175.91 million as at December 31, 2022, and net debt at
September 30, 2023, was $36.83
million[2] compared to $103.51
million as at December 31,
2022.
On April 24, 2023, the Board of
Directors approved an authorization to repurchase up to
$20 million of the Company's common
stock from time to time in accordance with the requirements of the
Securities and Exchange Commission. During the three months ended
September 30, 2023, the Company
repurchased 14,011 shares at an average cost of $2.87 per share.
*A non-GAAP measure defined below.
Subsequent Event and Conference Call
On October 10, 2023, Startek
announced that it entered into a definitive agreement to be
acquired by funds managed by Capital Square Partners ("CSP") in an
all-cash transaction with a total enterprise value of approximately
$217 million and total equity value
of approximately $174 million. Under
the terms of the agreement, CSP will acquire all shares of Startek
common stock not already owned by CSP for $4.30 per share in cash.
The transaction is expected to close before the end of calendar
year 2023, subject to the satisfaction of customary closing
conditions. The transaction is not subject to any financing
contingency. Upon completion of the transaction, Startek will no
longer trade on the New York Stock Exchange and will become a
private company.
As a result of the definitive agreement and upcoming plans to
become a private company, Startek management will not be hosting a
conference call to discuss the third quarter results.
[1] Cash balance excluding restricted cash at
September 30, 2023 amounted to
$36.72 million as compared to
$22.46 million on December 31, 2022.
[2] Net debt excluding restricted cash balance at
September 30, 2023 was $40.95 million compared to $153.45 million on December 31, 2022.
About Startek
Startek is a leading global provider of technology-enabled
customer experience (CX) solutions. The Company provides
omnichannel CX, digital transformation, and technology
services to some of the world's leading brands. Startek is
committed to impacting clients' business outcomes by focusing on
enhancing CX and digital enablement across all touch points and
channels. Startek has more than 35,000 employees delivering
services in 11 countries. The Company services over 145 clients
across a range of industries such as banking and financial
services, insurance, technology, telecoms, healthcare, travel and
hospitality, consumer goods, retail and energy and utilities.
To learn more visit www.startek.com and follow us on
LinkedIn @Startek.
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, 2022, as
filed with the Securities and Exchange Commission (SEC) on
March 28, 2023, 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
Gateway Group, Inc.
(949) 574-3860
SRT@gateway-grp.com
Media Relations
Neha Iyer
Startek
neha.iyer@startek.com
EK, INC. AND
SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF INCOME (LOSS)
|
|
(In thousands, except
per share amounts)
|
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
93,629
|
|
|
|
94,878
|
|
|
|
276,915
|
|
|
|
292,117
|
|
Cost of
services
|
|
|
(81,141)
|
|
|
|
(80,311)
|
|
|
|
(239,782)
|
|
|
|
(253,182)
|
|
Gross
profit
|
|
|
12,488
|
|
|
|
14,567
|
|
|
|
37,133
|
|
|
|
38,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
|
(10,322)
|
|
|
|
(12,990)
|
|
|
|
(31,429))
|
|
|
|
(34,350)
|
|
Impairment (losses)/
reversals and restructuring/exit cost
|
|
|
(24,894)
|
|
|
|
(37)
|
|
|
|
(24,769))
|
|
|
|
(110)
|
|
Operating income
(loss)
|
|
|
(22,728)
|
|
|
|
1,540
|
|
|
|
(19,065))
|
|
|
|
4,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share of income (loss)
of equity accounted investee
|
|
|
-
|
|
|
|
297
|
|
|
|
-
|
|
|
|
4,122
|
|
Interest expense and
other income (expense), net
|
|
|
(1,998)
|
|
|
|
(1,999)
|
|
|
|
(5,657)
|
|
|
|
(5,044)
|
|
Foreign exchange gains
(losses), net
|
|
|
(308)
|
|
|
|
1,208
|
|
|
|
109
|
|
|
|
1,114
|
|
Income (loss) from
continuing operations before tax expenses
|
|
|
(25,034)
|
|
|
|
1,046
|
|
|
|
(24,613)
|
|
|
|
4,667
|
|
Tax expenses
|
|
|
437
|
|
|
|
(913)
|
|
|
|
(573)
|
|
|
|
(2,854)
|
|
Income (loss) from
continuing operations, net of tax (A)
|
|
|
(24,597)
|
|
|
|
133
|
|
|
|
(25,186)
|
|
|
|
1,813
|
|
Income (loss) before
income tax expenses from discontinued operations
|
|
|
367
|
|
|
|
3,056
|
|
|
|
3,118
|
|
|
|
5,865
|
|
Pre-tax gain on
disposal
|
|
|
-
|
|
|
|
-
|
|
|
|
11,666
|
|
|
|
-
|
|
Tax expenses of
discontinued operations
|
|
|
-
|
|
|
|
(925)
|
|
|
|
(5,374)
|
|
|
|
(2,500)
|
|
Income (loss) from
discontinued operations, net of tax (B)
|
|
|
367
|
|
|
|
2,131
|
|
|
|
9,410
|
|
|
|
3,365
|
|
Net income (loss)
(A+B)
|
|
|
(24,230)
|
|
|
|
2,264
|
|
|
|
(15,776)
|
|
|
|
5,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations (A)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
attributable to noncontrolling interests
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Income (loss)
attributable to Startek shareholders
|
|
|
(24,597)
|
|
|
|
133
|
|
|
|
(25,186)
|
|
|
|
1,813
|
|
|
|
|
(24,597)
|
|
|
|
133
|
|
|
|
(25,186)
|
|
|
|
1,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
discontinued operations (B)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
attributable to noncontrolling interests
|
|
|
-
|
|
|
|
2,021
|
|
|
|
2,589
|
|
|
|
4,311
|
|
Income (loss)
attributable to Startek shareholders
|
|
|
367
|
|
|
|
110
|
|
|
|
6,821
|
|
|
|
(946)
|
|
|
|
|
367
|
|
|
|
2,131
|
|
|
|
9,410
|
|
|
|
3,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
(A+B)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to noncontrolling interests
|
|
|
-
|
|
|
|
2,021
|
|
|
|
2,589
|
|
|
|
4,311
|
|
Net income (loss)
attributable to Startek shareholders
|
|
|
(24,230)
|
|
|
|
243
|
|
|
|
(18,365)
|
|
|
|
867
|
|
|
|
|
(24,230)
|
|
|
|
2,264
|
|
|
|
(15,776)
|
|
|
|
5,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per common share from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss)
attributable to Startek shareholders
|
|
|
(0.61)
|
|
|
|
0.01
|
|
|
|
(0.62)
|
|
|
|
0.04
|
|
Diluted net income
(loss) attributable to Startek shareholders
|
|
|
(0.61)
|
|
|
|
0.01
|
|
|
|
(0.62)
|
|
|
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per common share from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss)
attributable to Startek shareholders
|
|
|
0.01
|
|
|
|
0.00
|
|
|
|
0.17
|
|
|
|
(0.02)
|
|
Diluted net income
(loss) attributable to Startek shareholders
|
|
|
0.01
|
|
|
|
0.00
|
|
|
|
0.17
|
|
|
|
(0.02)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per common share from continuing and discontinued
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss)
attributable to Startek shareholders
|
|
|
(0.60)
|
|
|
|
0.01
|
|
|
|
(0.45)
|
|
|
|
0.02
|
|
Diluted net income
(loss) attributable to Startek shareholders
|
|
|
(0.60)
|
|
|
|
0.01
|
|
|
|
(0.45)
|
|
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
40,298
|
|
|
|
40,326
|
|
|
|
40,300
|
|
|
|
40,316
|
|
Diluted
|
|
|
40,298
|
|
|
|
40,333
|
|
|
|
40,300
|
|
|
|
40,354
|
|
STARTEK, INC. AND
SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OTHER
COMPREHENSIVE INCOME (LOSS)
|
(In thousands, except
per share amounts)
|
(Unaudited)
|
|
|
|
Three Months
Ended
September
30,
|
|
|
Nine Months
Ended
September
30,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
Net income (loss)
(A+B)
|
|
|
(24,230)
|
|
|
|
2,264
|
|
|
|
(15,776)
|
|
|
|
5,178
|
|
Net income (loss)
attributable to noncontrolling interests
|
|
|
-
|
|
|
|
2,021
|
|
|
|
2,589
|
|
|
|
4,311
|
|
Net income (loss)
attributable to Startek shareholders
|
|
|
(24,230)
|
|
|
|
243
|
|
|
|
(18,365)
|
|
|
|
867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss), net of taxes from continuing
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
|
|
(1,053)
|
|
|
|
(3,701)
|
|
|
|
(3,578)
|
|
|
|
(7,089)
|
|
Pension
amortization
|
|
|
-
|
|
|
|
184
|
|
|
|
124
|
|
|
|
184
|
|
Other comprehensive
income (loss) from continuing operations
|
|
|
(1,053)
|
|
|
|
(3,517)
|
|
|
|
(3,454)
|
|
|
|
(6,905)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss), net of taxes from discontinued
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
|
|
-
|
|
|
|
-
|
|
|
|
(50)
|
|
|
|
(1)
|
|
Pension
amortization
|
|
|
-
|
|
|
|
(41)
|
|
|
|
4,187
|
|
|
|
(727)
|
|
Other comprehensive
income (loss) from discontinued operations
|
|
|
-
|
|
|
|
(41)
|
|
|
|
4,137
|
|
|
|
(728)
|
|
Other comprehensive
income (loss) from continuing and discontinued
operations
|
|
|
(1,053)
|
|
|
|
(3,558)
|
|
|
|
683
|
|
|
|
(7,633)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss), net of taxes from continuing
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to
noncontrolling interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Attributable to Startek
shareholders
|
|
|
(1,053)
|
|
|
|
(3,517)
|
|
|
|
(3,454)
|
|
|
|
(6,905)
|
|
|
|
|
(1,053)
|
|
|
|
(3,517)
|
|
|
(3,454)
|
|
|
|
(6,905)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss), net of taxes from discontinued
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to
noncontrolling interests
|
|
|
-
|
|
|
|
(23)
|
|
|
|
614
|
|
|
|
(397)
|
|
Attributable to Startek
shareholders
|
|
|
-
|
|
|
|
(18)
|
|
|
|
3,523
|
|
|
|
(331)
|
|
|
|
|
-
|
|
|
|
(41)
|
|
|
4,137
|
|
|
|
(728)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss) from continuing and discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to
noncontrolling interests
|
|
|
-
|
|
|
|
1,998
|
|
|
|
3,203
|
|
|
|
3,914
|
|
Attributable to Startek
shareholders
|
|
|
(25,283)
|
|
|
|
(3,292)
|
|
|
|
(18,296)
|
|
|
|
(6,370)
|
|
|
|
|
(25,283)
|
|
|
|
(1,294)
|
|
|
(15,093)
|
|
|
|
(2,456)
|
|
STARTEK, INC. AND
SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(In thousands, except
share data)
|
(Unaudited)
|
|
|
|
September
30,
|
|
|
December
31,
|
|
|
|
2023
|
|
|
2022
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
36,718
|
|
|
|
22,457
|
|
Restricted
cash
|
|
|
4,122
|
|
|
|
49,946
|
|
Trade accounts
receivables, net
|
|
|
41,144
|
|
|
|
47,138
|
|
Unbilled
revenue
|
|
|
27,109
|
|
|
|
24,207
|
|
Prepaid expenses and
other current assets
|
|
|
14,045
|
|
|
|
9,159
|
|
Assets classified as
held for sale
|
|
|
7,783
|
|
|
|
202,831
|
|
Total current
assets
|
|
|
130,921
|
|
|
|
355,738
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
25,932
|
|
|
|
22,945
|
|
Operating lease
right-of-use assets
|
|
|
27,478
|
|
|
|
36,450
|
|
Intangible assets,
net
|
|
|
72,023
|
|
|
|
79,745
|
|
Goodwill
|
|
|
100,857
|
|
|
|
120,505
|
|
Deferred tax assets,
net
|
|
|
3,126
|
|
|
|
2,771
|
|
Prepaid expenses and
other non-current assets
|
|
|
9,148
|
|
|
|
7,889
|
|
Total non-current
assets
|
|
|
238,564
|
|
|
|
270,305
|
|
Total
assets
|
|
|
369,485
|
|
|
|
626,043
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Trade accounts
payables
|
|
|
8,696
|
|
|
|
2,428
|
|
Accrued
expenses
|
|
|
31,470
|
|
|
|
29,707
|
|
Short term
debt
|
|
|
10,643
|
|
|
|
14,267
|
|
Current maturity of
long term debt
|
|
|
12,269
|
|
|
|
120,466
|
|
Current maturity of
operating lease liabilities
|
|
|
15,120
|
|
|
|
14,492
|
|
Other current
liabilities
|
|
|
21,067
|
|
|
|
17,615
|
|
Liabilities classified
as held for sale
|
|
|
6,365
|
|
|
|
89,486
|
|
Total current
liabilities
|
|
|
105,630
|
|
|
|
288,461
|
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
|
Long term
debt
|
|
|
54,755
|
|
|
|
41,175
|
|
Operating lease
liabilities
|
|
|
20,111
|
|
|
|
26,651
|
|
Other non-current
liabilities
|
|
|
3,279
|
|
|
|
2,682
|
|
Deferred tax
liabilities, net
|
|
|
15,274
|
|
|
|
15,508
|
|
Total non-current
liabilities
|
|
|
93,419
|
|
|
|
86,016
|
|
Total
liabilities
|
|
|
199,049
|
|
|
|
374,477
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
|
|
Common stock,
60,000,000 non-convertible shares, $0.01 par value, authorized;
41,209,497
and 41,098,456 shares issued as of September 30, 2023 and December
31, 2022
respectively.
|
|
|
412
|
|
|
|
411
|
|
Additional paid-in
capital
|
|
|
294,725
|
|
|
|
293,472
|
|
Accumulated
deficit
|
|
|
(104,768)
|
|
|
|
(86,302)
|
|
Treasury stock, 905,204
and 839,214 shares as of September 30, 2023 and December 31,
2022
respectively, at cost
|
|
|
(3,944)
|
|
|
|
(3,749)
|
|
Accumulated other
comprehensive loss
|
|
|
(15,989)
|
|
|
|
(16,058)
|
|
Equity attributable
to Startek shareholders
|
|
|
170,436
|
|
|
|
187,774
|
|
Non-controlling
interest
|
|
|
-
|
|
|
|
63,792
|
|
Total stockholders'
equity
|
|
|
170,436
|
|
|
|
251,566
|
|
Total liabilities
and stockholders' equity
|
|
|
369,485
|
|
|
|
626,043
|
|
STARTEK, INC. AND
SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2023
|
|
|
2022
|
|
Operating
activities
|
|
|
|
|
|
|
|
|
Income from continuing
and discontinued operations
|
|
|
(15,776)
|
|
|
|
5,178
|
|
less: Income (loss)
from discontinued operations, net of tax
|
|
|
9,410
|
|
|
|
3,365
|
|
Income (loss) from
continuing operations, net of tax
|
|
|
(25,186)
|
|
|
|
1,813
|
|
|
|
|
|
|
|
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
16,420
|
|
|
|
16,856
|
|
Impairment of
goodwill
|
|
|
19,648
|
|
|
|
-
|
|
Impairment of
right-of-use assets
|
|
|
4,391
|
|
|
|
-
|
|
Profit on sale of
property, plant and equipment
|
|
|
(41)
|
|
|
|
(166)
|
|
Provision/(reversal)
for doubtful accounts
|
|
|
(472)
|
|
|
|
(112)
|
|
Amortization of debt
issuance costs (including loss on extinguishment of
debt)
|
|
|
120
|
|
|
|
426
|
|
Amortization of call
option premium
|
|
|
-
|
|
|
|
1,080
|
|
Mark to market gain on
derivative instrument
|
|
|
(314)
|
|
|
|
-
|
|
Share-based
compensation expense
|
|
|
1,138
|
|
|
|
1,213
|
|
Deferred income
taxes
|
|
|
(428)
|
|
|
|
(1,101)
|
|
Share of income (loss)
of equity accounted investee
|
|
|
-
|
|
|
|
(4,122)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
Trade accounts
receivables (including unbilled revenue)
|
|
|
766
|
|
|
|
(1,119)
|
|
Prepaid expenses and
other assets
|
|
|
(3,979)
|
|
|
|
(2,289)
|
|
Trade accounts
payable
|
|
|
6,386
|
|
|
|
2,391
|
|
Income taxes,
net
|
|
|
(4,351)
|
|
|
|
150
|
|
Accrued expenses and
other liabilities
|
|
|
(1,181)
|
|
|
|
(4,216)
|
|
Net cash generated
from/used in by operating activities from continuing
operations
|
|
|
12,917
|
|
|
|
10,804
|
|
Net cash generated
from/used in operating activities from discontinued
operations
|
|
|
(7,691)
|
|
|
|
11,464
|
|
Net cash generated
from/used in operating activities
|
|
|
5,226
|
|
|
|
22,268
|
|
|
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
|
|
|
Purchase of property,
plant and equipment and intangible assets, net
|
|
|
(10,677)
|
|
|
|
(9,645)
|
|
Proceeds from sale of
discontinued operations, net of cash disposed
|
|
|
35,782
|
|
|
|
-
|
|
Net cash generated
from/used in investing activities from continuing
operations
|
|
|
25,105
|
|
|
|
(9,645)
|
|
Net cash generated
from/used in investing activities from discontinued
operations
|
|
|
(3,616)
|
|
|
|
(2,294)
|
|
Net cash generated
from/used in investing activities
|
|
|
21,489
|
|
|
|
(11,939)
|
|
|
|
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
|
|
|
Proceeds from the
issuance of common stock
|
|
|
116
|
|
|
|
348
|
|
Payments of long term
debt
|
|
|
(93,466)
|
|
|
|
-
|
|
Payment from a line of
credit, net
|
|
|
(3,569)
|
|
|
|
1,110
|
|
Payments of other
borrowings, net
|
|
|
(1,272)
|
|
|
|
(2,319)
|
|
Common stock
repurchases
|
|
|
(195)
|
|
|
|
(1,636)
|
|
Net cash generated
from/used in financing activities from continuing
operations
|
|
|
(98,386)
|
|
|
|
(2,497)
|
|
Net cash generated
from/used in financing activities from discontinued
operations
|
|
|
(325)
|
|
|
|
534
|
|
Net cash generated
from/used in financing activities
|
|
|
(98,711)
|
|
|
|
(1,963)
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
and cash equivalents
|
|
|
(71,995)
|
|
|
|
8,366
|
|
Effect of exchange rate
changes on cash and cash equivalents and restricted cash
|
|
|
(1,142)
|
|
|
|
(2,432)
|
|
Cash and cash
equivalents and restricted cash at beginning of period
|
|
|
115,146
|
|
|
|
55,396
|
|
Cash and cash
equivalents and restricted cash at end of period
|
|
|
42,008
|
|
|
|
61,330
|
|
Less: Cash and cash
equivalents from discontinued operations
|
|
|
(1,168)
|
|
|
|
(33,358)
|
|
Cash and cash
equivalents and restricted cash of continuing operations at end of
period
|
|
|
40,840
|
|
|
|
27,972
|
|
|
|
|
|
|
|
|
|
|
Components of cash
and cash equivalents and restricted cash
|
|
|
|
|
|
|
|
|
Balances with
banks
|
|
|
36,718
|
|
|
|
22,267
|
|
Restricted
cash
|
|
|
4,122
|
|
|
|
5,705
|
|
Total cash and cash
equivalents and restricted cash
|
|
|
40,840
|
|
|
|
27,972
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information
|
|
|
|
|
|
|
|
|
Cash paid for interest
and other finance cost
|
|
|
8,442
|
|
|
|
7,071
|
|
Cash paid for income
taxes
|
|
|
5,024
|
|
|
|
3,619
|
|
Supplemental
disclosure of non-cash activities
|
|
|
|
|
|
|
|
|
Non-cash share-based
compensation expenses
|
|
|
1,138
|
|
|
|
1,213
|
|
STARTEK, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP
MEASURE
(In thousands)
(Unaudited)
This press 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
information should not be 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 Company's operations.
Adjusted EBITDA:
The Company defines non-GAAP Adjusted EBITDA as Net income
(loss) plus Income tax expense, Share of income (loss) of
equity-accounted investees, Interest expense and other income
(expense), net, Depreciation and amortization expense, Impairment
losses and restructuring cost, Share-based compensation expense,
Foreign exchange gains (losses), net, Merger transaction costs,
Transaction related costs, CSS option amortization and other
non-recurring costs (if applicable). Management uses Adjusted
EBITDA as a performance measure to analyze the performance of our
business. Management believes that excluding these non-cash and
other non-recurring items permits a more meaningful comparison and
understanding of our strength and performance of our ongoing
operations for our investors and analysts.
Adjusted EPS:
Adjusted EPS is a non-GAAP financial measure presenting the
earnings generated by the ongoing operations that we believe are
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
period-over-period comparisons. Adjusted EPS is defined as our
diluted earnings per common share attributable to Startek
shareholders adjusted to exclude the effects of the amortization of
acquisition-related intangible assets, and the impact of
certain events, gains, losses or other charges that affect
period-over-period comparisons. Acquisition-related intangible
assets are recognized as a result of the application of Accounting
Standards Codification Topic ("ASC") 805, Business Combinations
(such as customer relationships and Brand), and their amortization
is significantly affected by the size and timing of our
acquisitions.
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September
30,
|
|
|
Nine Months
Ended
September
30,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
Continuing
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
|
(24,597)
|
|
|
|
133
|
|
|
|
(25,186)
|
|
|
|
1,813
|
|
Tax expense
|
|
|
(437)
|
|
|
|
913
|
|
|
|
573
|
|
|
|
2,854
|
|
Share of income (loss)
of equity accounted investee
|
|
|
-
|
|
|
|
(297)
|
|
|
|
-
|
|
|
|
(4,122)
|
|
Interest expense and
other income (expense), net
|
|
|
1,998
|
|
|
|
1,999
|
|
|
|
5,657
|
|
|
|
5,045
|
|
Foreign exchange
(gains) losses, net
|
|
|
308
|
|
|
|
(1,208)
|
|
|
|
(109)
|
|
|
|
(1,114)
|
|
Depreciation and
amortization expense
|
|
|
5,885
|
|
|
|
5,812
|
|
|
|
16,420
|
|
|
|
16,855
|
|
Meger transaction
cost
|
|
|
304
|
|
|
|
1,411
|
|
|
|
304
|
|
|
|
2,603
|
|
Impairment losses and
restructuring cost
|
|
|
24,894
|
|
|
|
37
|
|
|
|
24,769
|
|
|
|
110
|
|
Share-based
compensation expense
|
|
|
369
|
|
|
|
380
|
|
|
|
1,138
|
|
|
|
1,213
|
|
Other non recurring
costs / (Income)
|
|
|
216
|
|
|
|
-
|
|
|
|
1,316
|
|
|
|
-
|
|
CSS option
amortisation
|
|
|
-
|
|
|
|
360
|
|
|
|
-
|
|
|
|
1,080
|
|
Adjusted
EBITDA
|
|
|
8,940
|
|
|
|
9,540
|
|
|
|
24,882
|
|
|
|
26,337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a)
Argentina
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
|
368
|
|
|
|
(844)
|
|
|
|
(2,052)
|
|
|
|
(3,116)
|
|
Interest expense and
other income (expense), net
|
|
|
(406)
|
|
|
|
(124)
|
|
|
|
(2,415)
|
|
|
|
(1,399)
|
|
Foreign exchange gains
(losses), net
|
|
|
350
|
|
|
|
233
|
|
|
|
706
|
|
|
|
445
|
|
Depreciation and
amortization expense
|
|
|
-
|
|
|
|
146
|
|
|
|
-
|
|
|
|
439
|
|
Impairment losses and
restructuring cost
|
|
|
404
|
|
|
|
961
|
|
|
|
3,570
|
|
|
|
3,010
|
|
Adjusted
EBITDA
|
|
|
716
|
|
|
|
372
|
|
|
|
(191)
|
|
|
|
(621)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
b)
CCC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
|
-
|
|
|
|
2,972
|
|
|
|
11,462
|
|
|
|
6,480
|
|
Tax expense
|
|
|
-
|
|
|
|
924
|
|
|
|
5,374
|
|
|
|
2,499
|
|
Interest expense and
other income (expense), net
|
|
|
-
|
|
|
|
890
|
|
|
|
1,174
|
|
|
|
2,198
|
|
Foreign exchange gains
(losses), net
|
|
|
-
|
|
|
|
5
|
|
|
|
10
|
|
|
|
20
|
|
Depreciation and
amortization expense
|
|
|
-
|
|
|
|
1,622
|
|
|
|
-
|
|
|
|
4,844
|
|
Impairment losses and
restructuring cost
|
|
|
-
|
|
|
|
-
|
|
|
|
4
|
|
|
|
30
|
|
Other non recurring
costs / (Income)
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,666)
|
|
|
|
-
|
|
Adjusted
EBITDA
|
|
|
-
|
|
|
|
6,413
|
|
|
|
6,358
|
|
|
|
16,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA from
discontinued operations (a+b)
|
|
|
716
|
|
|
|
6,785
|
|
|
|
6,167
|
|
|
|
15,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA from
continuing and discontinued operations
|
|
|
9,656
|
|
|
|
16,325
|
|
|
|
31,049
|
|
|
|
41,787
|
|
Adjusted
EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September
30,
|
|
|
Nine Months
Ended
September
30,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
Continuing
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
attributable to Startek shareholders
|
|
|
(24,597)
|
|
|
|
133
|
|
|
|
(25,186)
|
|
|
|
1,813
|
|
Share based
compensation expense
|
|
|
186
|
|
|
|
380
|
|
|
|
664
|
|
|
|
1,213
|
|
Amortization of
intangible assets, net of tax
|
|
|
1,310
|
|
|
|
2,279
|
|
|
|
4,507
|
|
|
|
6,783
|
|
Merger transaction
cost
|
|
|
177
|
|
|
|
1,411
|
|
|
|
177
|
|
|
|
2,603
|
|
Impairment losses and
restructuring cost
|
|
|
14,535
|
|
|
|
37
|
|
|
|
14,458
|
|
|
|
110
|
|
Other non recurring
costs / (Income)
|
|
|
84
|
|
|
|
-
|
|
|
|
768
|
|
|
|
-
|
|
CSS option
amortisation
|
|
|
-
|
|
|
|
360
|
|
|
|
-
|
|
|
|
1,080
|
|
Adjusted net
income
|
|
|
11,343
|
|
|
|
4,600
|
|
|
|
15,036
|
|
|
|
13,602
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a)
Argentina
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
attributable to Startek shareholders
|
|
|
368
|
|
|
|
(844)
|
|
|
|
(2,052)
|
|
|
|
(3,116)
|
|
Impairment losses and
restructuring cost
|
|
|
116
|
|
|
|
961
|
|
|
|
2,084
|
|
|
|
3,010
|
|
Adjusted net income
(loss)
|
|
|
484
|
|
|
|
117
|
|
|
|
32
|
|
|
|
(106)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
b)
CCC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
attributable to Startek shareholders
|
|
|
-
|
|
|
|
951
|
|
|
|
8,872
|
|
|
|
2,168
|
|
Impairment losses and
restructuring cost
|
|
|
-
|
|
|
|
-
|
|
|
|
3
|
|
|
|
30
|
|
Other non recurring
costs / (Income)
|
|
|
-
|
|
|
|
-
|
|
|
|
(7,477)
|
|
|
|
-
|
|
Adjusted net income
(loss)
|
|
|
-
|
|
|
|
951
|
|
|
|
1,398
|
|
|
|
2,198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income
from discontinued operations (a+b)
|
|
|
484
|
|
|
|
1,068
|
|
|
|
1,430
|
|
|
|
2,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income
from continuing and discontinued operations
|
|
|
11,827
|
|
|
|
5,668
|
|
|
|
16,466
|
|
|
|
15,694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding - basic
|
|
|
40,298
|
|
|
|
40,326
|
|
|
|
40,300
|
|
|
|
40,316
|
|
Weighted average common
shares outstanding - diluted
|
|
|
40,298
|
|
|
|
40,333
|
|
|
|
40,300
|
|
|
|
40,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EPS from
continuing operations - Basic
|
|
|
0.28
|
|
|
|
0.11
|
|
|
|
0.37
|
|
|
|
0.34
|
|
Adjusted EPS from
continuing operations - Diluted
|
|
|
0.28
|
|
|
|
0.11
|
|
|
|
0.37
|
|
|
|
0.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EPS from
discontinued operations - Basic
|
|
|
0.01
|
|
|
|
0.03
|
|
|
|
0.04
|
|
|
|
0.05
|
|
Adjusted EPS from
discontinued operations - Diluted
|
|
|
0.01
|
|
|
|
0.03
|
|
|
|
0.04
|
|
|
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EPS from
continuing and discontinued operations - Basic
|
|
|
0.29
|
|
|
|
0.14
|
|
|
|
0.41
|
|
|
|
0.39
|
|
Adjusted EPS from
continuing and discontinued operations - Diluted
|
|
|
0.29
|
|
|
|
0.14
|
|
|
|
0.41
|
|
|
|
0.39
|
|
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SOURCE Startek Inc.