SRT - Earnings call transcript Q2 2018

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Operator

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Startek's financial results for the second quarter ended June 30, 2018.

Joining us today from Startek, President and Global CEO, Lance Rosenzweig, and the Company's Chief Financial Officer, Ramesh Kamath.

Following their remarks, we'll open the call for your questions.

Before we continue, we would like to remind all participants that the discussion today may contain certain statements, which are forward-looking in nature pursuant to the safe harbor provisions of the federal security laws. These statements are subject to various risks and uncertainties, and actual results may differ materially from those projections. listening posted call a on these and those the to summary all risks XX-Q latest their uncertainties. advise to today the review of Startek website for responsibility update the undertake not does these Startek projections. to Regulation their may call. today for on non-GAAP accordance earnings discussions the with G, section supplemental include company's of Further, the Investors today's along measures some in with website the presentation release slide of to via of like would section company's today's the remind available will be a www.startek.com. replay I at everyone webcast call Investors the website that

Chief Now call I would over to like Officer, to turn Startek's the Present Lance and Executive Rosenzweig. Global

Lance Rosenzweig

couple Aegis Thank leading I weeks when greatly have acquisition I meeting this you, through am with clients and ago, our and Startek serving by as so reacquainted at everyone. organization enjoyed and getting today up XXXX. many combined our and a Aegis of here Startek Aegis in many of colleagues of members be the of worked until of PeopleSupport and newly when assuming as afternoon, former Aegis. team I CEO USA my XXXX whom IPO thrilled the good with in exceptional of Since CEO to role serving and CEO

owned providing closing, XX% owning at $XX entity $X representing primary remaining been who Partners, both. thank CFO, me Concurrently, of extremely purchased million with this and call XX.X me CSP, period. with shares progressing to XX%. is I remaining few former as CEO, the there counsel of Carlson, XXX,XXX innovations updates team in and pioneer stock the acquire become technologies the is real Chad Chief our common in Norsworthy, of the stock approximately Startek's Let and exciting will opportunity BPO our as in on were The or million today's capital Don sage the Startek's to shares industry them all by combined with and Startek in issued he a Aegis, a smoothly, closing share. Aegis. common to common its our transition Chad begin There's integrating to share, to a of a call. to have primary shareholders earnings from CSP outstanding increased reviewing where and quickly be transaction former human transitionary Square helpful industry. want Startek exceptional Officer Capital Startek of market higher Innovation investment. details am shareholder unlock advanced Post Startek's the of company margins CSP grateful I stock the period last many to per approximately

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to serve allows in footprint their own our addition, international In backyards. companies us

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very area in we another which optimistic. is wins client are New

on with toward focused travel replacing next-generation and are and healthcare, companies services and financial hospitality. volumes wireless increasingly lost comprised progress retail.com, of global and and We programs seeing pipeline a in

want it globally. proprietary often, specific their and of and social services a automate bring while want While customers growth be stronger can technology. we suite to emerge with technologies base truly ideal XXXX finally, to Aegis' solution technology and dialogue multi-quarter that transactions will that we are will transition I beyond. solution. sense that to best-in-class leveraging higher provides in makes Today's markets, for where higher upon and service this AI we company a process, power the We diversified leading confident more touch And now recognize and desires media for holistic of a customized clients acumen margins a client Startek's

, newly shareholders to our afford our our significant combined clients Our benefits team companies and members.

and reach multilingual base to our offerings future global innovations. will the and of new Our reap benefits markets, access client technology-led and current

our development years become and part of opportunities functional cross with benefit in can professional for scale ahead. to even revenues, vast cost synergies Our And shareholders and training. growth the an larger from organization now of our margins will revenue in added diversification employees and the enhance

team's the sincere appreciative gratitude we want extremely both seamless are our integrate we operation. a companies of us my I where as and We all work lifting to are hard to required for heavy global to into offer get today,

will process the take this integration size, time, we underway. in well any but As are transaction of

off has neither that power post company PMI combined progress. Our have By already kicked making the could unlock enormous achieve substantial opportunities is the to we harnessing both organizations, alone. potential merger growth integration for now or of and team,

CFO In proven have clients to is express grow engagement our Ramesh to Infosys We Progeon, team executive experience BPO. maximizing I their in businesses stranger profitability. knowledge range CFO while level second Ramesh you presence. new helping now of CFO, as of take Minacs, fact, expanding to organization. quarter to already of forward turn a known new technology record several expanded brings we our from with geographical of like service opportunities much call offerings Ramesh to would of genuine These us. and to through our no Startek's and of seen Kamath, look over previously and as results. the having now wealth very industry, Aegis, CFO our served track leading with to a He finance interest

I'll over turn it Ramesh. you. to welcome, So

Ramesh Kamath

to for It's introduction. here. great Lance, warm you, Thank that be

which programs XX.X% to a few Lance also quarters. top which, last quarter, the decreased to So Startek's common has Startek compared now from programs second lost low into primarily in X.X% for $XX the over the straight been and decrease volumes the let same impacted second period me driven million The lost These noted, second compared jump was of year. Total $XX.X wireless last results. gross XXXX. in quarter margin volumes as million low the theme the client, revenue and to quarter quarter in by was

also margin gross for affected addition, client. program with costs a an In by new associated was existing onboarding

million duplicative drive will best purchasing procurement overhead expect by to lower the opportunities range in leveraging functions in over margin to practices additional services consolidation be familiar up geographies implementing through loss listeners in programs we to or infrastructure, quarter by improvement cost reiterate to retail bottom often EBITDA revenue different focus a expanded new XXXX. net our operating line have US$X.X non-GAAP is bottom $X.X as million a share clients. soft lost We the industry, growth offset programs of $XXX,XXX synergies, we and well. For and highly million corporate volumes. or and In filings, up proxy should $X.X must impact a of Startek's delivery various running factors the per of The when second per in plan gross now XXXX incur to margin there's $XX yielded why due the start a across to from described improved That year-ago accretive including wireless to less Operationally, prove our These to share to in time, look or net platform. with of work cost the in negative XXXX quarter. tandem. opportunity, existing was scale to of synergies we at our the Over $X.XX expect I lower $X.XX efficiencies revenue our volumes efficiencies the clients was promise and pressure line. new the our realize of plan company as revenue can or volumes with and to the EBITDA. with we quarter the combined and without driven programs client $X.X on get growth the now quarter Again, technology partially of cost associated the compared replace last and our global decrease these utilization to of much and synergies Consequently, program synergies in wireless the lost many minimum our period a to call in in Adjusted we we from benefit or our recognizing to financial and service for the back to campuses for year. metrics going-forward but second in Lance. from million we the confidence clients. continue please engagement note, The tracking second new a to systems XXXX largely as cable, to million providers. our of income power, turn will this was $XXX,XXX compared ramp integrate by

Lance Rosenzweig

you, compete in the and and scale, We now effectively more the marketplace. breadth Thank Ramesh. to capabilities profitably have

questions. clients, now thinking. provider for this a chapter management into are positioned team all call growth. opportunities The team, beginning, We I ahead will just and to stakeholders are a global Ramesh next uniquely the for and leading become of and with global I global global forward truly the practices open and Startek to best BPO look global

Operator

line Instructions] come the first And from with our question Baird. Patrick Schulz [Operator of will

open. is Your line now

Patrick Schulz

what I we of the from second to of expect should Aegis? of Aegis' revenue at year second half the in in guess, all, see growth kind first the contribution looking quarter, coming

Lance Rosenzweig

long-standing Patrick, thank of Startek providing going you guidance, had and practice. has that to be we not that. are practice continuing a for forward-looking

on for cannot comment So unfortunately, we expectations this later year.

Patrick Schulz

all XXXX. Has guys proxy looking your well, million in like guess, looks given $XXX lower lost assumptions if the at Aegis core as programs? driven is current and volatility? and that at these from market how much back much have, driven of they roughly I of how And from Perfect. expecting you and And is changed Or by XXXX environment? revenue business, currency are volumes

Lance Rosenzweig

cannot the guidance on quarter Right. that expect we we to numbers. specific And can but say was give challenges that quarter challenging, going in that early again, we those and cannot, forward. we is remarks XXXX, continue past guidance give our into What this unfortunately,

Patrick Schulz

one And if more, then, I may. Perfect.

You lost one one? Or top guys program an you did would see loss guys it about clients. guys this talked the of Was be? wireless the originally that impact as thought you how of as big from

Lance Rosenzweig

Yes.

expectations, portions frame are the by more two are particularly some the of in et accompanied seeing being are of this job is the generally, are of be what That's of declines in in have mobility with great on who I sides the there newer some but the we of weeks, position would business. wireless growth sector, in to just earlier industry, servicing we for we So both reference and sector, say that issues players traditional from and that volumes, the cetera. didn't a

increases they which slowdowns So the geographies there some is others. much in U.S. maturity in component, while growing there more that they countries have are rapidly brings in reached where And the areas, another in are haven't and then, levels Aegis

Operator

line Investor. Private [indiscernible] [Operator come Instructions] question And from next of the our will

Your line is now open.

Unidentified Analyst

the if post know net type can balance know what don't I was closing many but outstanding? ask the also total - and of the questions terms I of debt looking I shares or forward how post know closing, don't you in to

Ramesh Kamath

don't XX.X XX.XX is about a about debt and which to of net million. shares million the issued closing - issued I outstanding CSP. net post precise cash, shares $XXX decimal, million is The the shares million to XX.X have CSP includes

Unidentified Analyst

include -- the capital the and than number, $X also that does -- So after that and that's initially transaction if a thought. lower expenses net And infusion? number million also debt the

Ramesh Kamath

million Not paid. transaction the and of after rest Part accrued. is the capital the have expenses infusion. paid It been $X yet

Unidentified Analyst

you that include forma the are pro seeing that you able or the we'll when about And Aegis, be in for to numbers talk QX XX-Q? is something

Lance Rosenzweig

in [Omar], and GAAP closing post Unfortunately, QX will have been And reconciled GAAP numbers. they to GAAP. however, be proxy, Aegis forward, Yes. the were consolidated we not U.S. to The the also be numbers this at reconciling are and to reconciled numbers, providing U.S. disclosed numbers and QX cannot QX and U.S. time.

Unidentified Analyst

be in will at And a that or disclosed XX-Q, later the filing?

Lance Rosenzweig

disclosed be forward. going That in the Yes. and XX-Q QX would

Ramesh Kamath

show won't will be which It the XX-Q in Startek numbers. only for given this quarter,

Unidentified Analyst

savings about improvement if that those will synergies. of term talk and by identified this? of about you a you're - some expecting specific have you the can the cost wonder wonder levers to yield I achieve revenue of longer result, near-term more I Understood. did talk And will and results. $XX XXXX, in which yield that you million the more which EBITDA

Lance Rosenzweig

opportunities business expect The clients more look probably and synergies, existing have being on largely that some cost taking Sure. clients the and leverage to layered the other best be those consolidation in can in as the new for been that things at really by to geographies in basis practices synergies do The on of cost could the which synergies we see implementation now overheads, duplicative shorter-term see either supported first, reorient how by category. of We we and global early support the we of revenue well before include XXXX overtime. we starting comprised side, a will geographies right see, new company. some of revenue as that not on

Unidentified Analyst

The us opportunities. debt of there? proxy also what you're tell Can seeing mentioned you the refinancing potential

Lance Rosenzweig

flow is focused quick long-term shareholders maximize a a running jump very then, on basis. The business take generate cash company, and me in. forward, that opportunities will for Let a and Ramesh, stab going strong on

debt rigorous approach cash flow to enable have we increasingly terms. to us better at to access Our overtime, think, will better

And that company a we think in that on so highly is going have to that, focused I -- don't the timeline remain specific direction. but we

Ramesh Kamath

we mentioned, started on continue, have two here, to Lance two bankers since just was done. Omar, have meeting weeks deal as we job the and been weeks but the

conversation banks with expect have too soon, wouldn't anything but I So the the started.

to banks out the of some reached And have even us proactively.

given pretty optimistic refinance So the debt the that we in makes was proxy. us can as that

Unidentified Analyst

And what obviously, terms an for see opportunity there you beneficial more from have. you already currently

Lance Rosenzweig

again,… Well,

Ramesh Kamath

make terms, won't sense same sign to up on It debt it? the would new

Unidentified Analyst

half capacity you're was and how second of this I able wondering company On quarter, that, premerger, by of new low-margin the the that mentioned able in and initiative the business of to rating replace this QX. they you side, -- talk achieve bring stuff highest the you're all Startek if to the to had expected year? to if the if end about so, see moving do into utilization

Lance Rosenzweig

Yes. It's a very good question.

from clients, revenue through that with the large margins bottom and point of challenging was line. quarter in fell some of second view these the The to a

forward, as Going bring opportunity as on growth and very the clients. focused to well clients we to both in new are grow

of As more and sectors, services mentioned, in retail.com I rapidly sector, healthcare, the and some the travel growing financial hospitality.

and forward, see direction. to in that the we building going the a company growth, pipeline in expect about excited of we're So mindset

Unidentified Analyst

mutually has if identified beneficial guys you so, have Amazon, of been it ramping? terms In business? And

Lance Rosenzweig

our and which practice, and I some clients. that do are But larger are we looking we multiple been is have with on do countries as happy not, global Sure. global individual in operations business. We basis very that a at, expanding have in indeed a clients do say comment that would what on of

Unidentified Analyst

provider? will talk potential as among new because logo about Or new a clients potential of global you the truly now open to opportunities you any Can Maybe doors diverse cross-selling that now clients given existing their opportunities footprint? size? your

Lance Rosenzweig

leading on chunk clients what the my a happy opportunities I've the and both excitement offer the seeing of the of and that very of that ahead, good with market. we with in and been the time I'm can to with the we're in companies And two at spent of including Startek, some world's the broad brands terms I've the prospects, road visiting weeks more footprint new around size

Unidentified Analyst

premerger, there? wondering the flow the how Ramesh, get cash the I'm postmerger? different was work XX you're if XX you for DSOs usually, a in on in days. chance seeing what to timing handle to would that had And a out

Ramesh Kamath

should a thing. should done. That's that Yes. We think I fair be possible. be

Unidentified Analyst

And finally, will in have what see from to the put should Obviously, line? things - of expect a there. industry target in thought different reporting of then, be the you revenue different we SG&A about in postmerger competitors included standpoint? percentage And your what

Ramesh Kamath

but many on reporting we in template of calendar. at the to I for our comment specific, that August, least I changes middle given reporting, in don't on already won't percentages propose are a for this too in make

forward, and things Going at take improve it we disclosure, that we if will need time. to only changes, and will it make change

Operator

At this the Mr. time, I question-and-answer to Rosenzweig, please call would session. this Mr. concludes to over proceed. the like turn back Rosenzweig. now

Lance Rosenzweig

Thank you broad And differentiators great Ramesh again, forward very we've back progress excited quarter. to be and on global more be a And to Key reporting we look both much. technology across I a got companies. saddle, our platform. not and in could just the next team new recap, to and

Operator

your conference. participation and gentlemen, today's thank Ladies for on you

now You disconnect. may

Startek (SRT) 11 Aug 182018 Q2 Earnings call transcript