SRT - Earnings call transcript Q2 2019

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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 quarter ended June 30, 2019.

Joining us today is StarTek's President and Global CEO, Lance Rosenzweig; and the company's CFO, 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 securities laws.

These statements are subject to various risks and uncertainties, and actual results may vary materially from those projections. and listeners XX-K call for posted on are the latest review a all these and XX-Q on risks advise to to this the summary Startek uncertainties. their website responsibility Startek does update projections. to not these the undertake non-GAAP the with in has these Regulation Further, the to company accordance amounts the measures back include and closest today may reconciled discussion some G, GAAP-based measurement.

website. replay everyone found in be the the today's of at their on that can the Investors remind www.startek.com. to webcast release be I earnings can available like reconciliations Investors of the These call section the would company's section via of website

Now and to global turn ahead, like I Zweig. Lance call Please go would over president CEO, sir. to Startek's the

Lance Rosenzweig

joining month Thank earnings with transformed second say you, last our Jonathan. the afternoon, marked Aegis, and proudly that Good our has for Startek business call. and the quarter everyone, business Last thank anniversary all one-year XX considerably since XXXX can months. combination these I of over you

We experience new global companies. profitability, added repositioned a of to client-centric operational satisfaction team, have led improved appointed and management customer high-growth client premium enhance and new a as to implemented tech-enabled and a that global management synergies has margins for Startek scale model provider leadership

very of And results. a by our aided of growth. volatile the client has predictability and In have diversification through some business stability what wins, stability revenue. future and once key declining clients set stage been summary, taken the for new we have was we established This have and further and

XX% compared during verticals the For XXXX. of quarter XX% of all non-telco revenue perspective, our in to accounted for second

mass enabled growth, grow by their clients keenly nature been have has cross-selling geographies. us can targeting own new by both organically on reflects we and also and expand commitment provider execution focused services longer which with, focusing This the of margins We that business but being on industry in last since no every a market. to the quarter to the also combination our consistently gross premium year,

reminded significantly While that that India's improving have consistently our people bestowed with among and employer our honor. of regard, across also leading a our been been thrilled recognized In industries companies as performance, drive we that India, are XX in to we this every day are Aon by best have financial success.

I passionate to workplace, would vibrant and our for and mission globe. the like congratulate of the in fostering thank employer an and our team being choice creating across of leaders

of June, XXXX have As annual indexes' you reconstitution. the may to the seen added have been the at we in conclusion Russell index

come this have public this broader addition as far and investment provide to proud going awareness company are expect the to a forward. We increased community new to index

to are Now we of anniversary that we geographies uniformity branding appropriate to completed the implement across combination, believe phase bring business it on we is are X-year of the our planning our coming to better weeks. to have which reflect the businesses, and in the growth, next combined to

to our to In our operations. global uniformity we bringing felt client bring important uniformity it was addition to to also branding,

operating officer. leadership next Dell. the chief is and with our level. have in of customer-centric like Rajiv Rajiv decades of had global proven record a experience Ahuja very organizations Rajiv we with AOL and as multifaceted such, As a has appointed to track our Convergys, companies successful taking recently leader industry roles

to reported our at as collaborative instill and campuses operations. was outstanding of bring leadership and me tech-enabled President firsthand we Rajiv earlier and to I know also in our a the Aegis He insights career he directly to look forward as client past, Startek. leveraging culture has We ASEAN with ANZ. to the will so Rajiv's in his continue

take you closing the over Ramesh results. call turn I to Kamath, to Startek's the our with CFO, remarks, up like to wrapping financial Before would through

Ramesh?

Ramesh Kamath

results financial are Due quarterly we regards from to The publicly Startek we year-ago limitations period. certain are company April available XXth, June today in Lance. XXXX. to Aegis information, reporting the includes Xst you, the from and unable through financials Thank provide financials combined to

As against we would not financials the comparisons a be year-on-year as we of two one. discuss comparing will result, companies

Instead, effective highlight qualitative the it item. believe with for trends commentary quarter-over-quarter the we results would about more be general major drivers and to each

results results. today, our As noted ending press and Aegis' both in XXst, March quarter release Startek comparative the for include XXXX, the

compared for said The modest quarter having revenue is quarter quarter typically the softest as March for to was in that, Now primarily million million ending driven decrease revenue of the XXst, was the seasonality XXXX. by quarter two the one total $XXX.X $XXX.X year. from the

such quarter greater has footprint. across as ending due our verticals travel. compared March management percentage decline million global $XX.X that as sequential client, for million point retail, of increased $XX.X margin gross were with next-gen actually to and employee that healthcare improved SG&A million on services, continued compared once great model with XX.X% to million some quarter. the technology, profit compared quarter in the in for was as $XX.X sequentially, utilization XX as to in growing XXst, the quarter, again rollout quarter first to financial to greater primarily slightly high-growth able the modest have Gross quarter our of this by for seasonality to enabled $XX.X the XX.X% industry, the to a Margins basis increasing fact, new we offset clients a our accomplishment In XXXX. our is client-centric because operate

in The million the million per quarter XX.X%, revenue, share EBITDA $XX.X negative or to slight in result quarter the for $X.X income increase increase tax an $XX a percentage to investments expense. $X.XX with quarter increase negative March was ending was loss increased the XX, Net quarter to the as along of by XXst. with compared million Adjusted March driven XXXX. return, share or SG&A in ending $X.XX a compared a continued As net in as loss the for a of a aforementioned was for compared technology. of million XX.X% to increase in sales and per $X.X was SG&A loss the

prepared a Lance. percentage compared the As and revenue, concludes now was This to remarks, my I'll X.X%. EBITDA back turn of adjusted X.X% call to

Lance?

Lance Rosenzweig

you, Ramesh Kamath. Thank

anniversary further that This As I we say mentioned the phase with company's experiences. growth. solidify into will transformative next phase our one-year our position are now I leader behind us, our a customer can earlier, of in confidently as global

have customer to and We across experts globe, unique next-gen the learning and more interaction machine like data than authentic. every XX,XXX science customer experience technologies make utilizing

for and core Ramesh come. the I loyalty world's Jonathan, to the what open customer is the premier and clients now success we positioning as years will brands for do, questions. Startek for and our of Enabling call to we look partner forward for the finest

Operator

from Instructions] of from [Operator Our Capital. Lake Argento first line question Mark comes Street

Your question please.

Mark Argento

Thanks for Lance. question. taking Hey, my

I some organizational for you you have of know year done it's key been ones businesses, guys Just realigning a nice the job a kind two now, the a couple structures. integrating of kind here. of

Can you particular really had specific or well. maybe if and of expansion in talk extension about wins terms some work. realignment of then that of client? anecdotes relationships, would helpful, a trying client as also be you Any seeing both Any talk maybe but business there? either anecdotally at to of an see level business focus, or at you've client Just can new verticals kind at wins that that least realignment, or specifically with a of of the expanding kind

Lance Rosenzweig

answer in you, ways. And Sure. an question. Mark. Thank It's it two I'll excellent

a And First, with additional partially but client can our our of as further global where were what operations successes. think by of expanding it's enterprise. existing of we additional operating performance function to of multiple And in we've several had That's our is there function respect lines strong a seen expanding of verticals our our that in outstanding I also client to footprint we've and unified to base. have business. some clients global globalized and teams, successes geographies

success we've client the seen Second, the also new on front.

team, signs been been a mentioned in all it's now and that our past, great show it's in of brought reorganized a head as success. We the global sales We've sales, organization. global a new single have, so

as, closes and services verticals, of We have auto financial including had telco. education verticals, and and successful new our existing as multiple some well in

And how sales achieve results. very pleased working together we've to been with global our organization been these has

Mark Argento

ramp the gestation to, period? to achieving for kind of kick off say, of All what's what's initially in period these right. when run the time a, XXX% you XX%, terms That's typically, helpful. XX%, And ramp or you rate? traditional long How

Lance Rosenzweig

Yeah. by of varies It type the client.

given on focus some finest growing these So sophisticated are our of brands, companies. the world's

and And et training, does they enormous levels so be require. integration up to longer, of the cetera, because bit launch of world-scale time is to kind amount IT the take that it a an

couple begins. So the see And typically, we when couple a of from about themselves then of will quarters a ramp usually those quarters. ramps would last

a closing of sort a after we're deal. go from at full year about So

have another That business the these said of that a types multiple about company of doing clients and history should though, well, us that available is are that. to thing lines has we of beautiful perform they

when opportunity beyond the signed. these initial And even are its to a further, new grow consistently, excited others about seen contract grow that the So coming. level, we've to there's we're up and we really clients even that SOWs

Mark Argento

Great. That is helpful.

four those So some should materially of the about how the onboarding? for Is we obviously of rates, start quarters over kind impact that onboarded to way some next you've should business that think of to adjusting XX, run the revenue seasonality. that three, new business see new

Lance Rosenzweig

fair characterization. a Yeah. That is

Mark Argento

Amazon maybe relationship? done And extent about revenue be know right. the quickly, relationship kind All or in and I degree there time that anecdotal before terms can in helpful. growing percentage the to was but progressing, how terms that would your is of contribution? deal of of Any deepening, things there, a of then maybe talk a anything you

Lance Rosenzweig

is not target next-gen what growth And a in success we growth say been seeing great discuss individual but retail that category can vertical. is have that We do I the and us. key clients, for Sure.

is that come things does vertical note seasonality. that One of the to with

So the QX. and and four, down and and peak grow to three slows then retail across Qs tends QX across business

able So saw presence happy they organizations. of quite brands passion that leading decline seasonality toward vertical. sort with customer sophistication overcome our their bring as business, we're the kind happy despite strong vertical. we mostly centric seasonal overall in they our and with of of but in the we're to very bring that that very have and they But it, that given clients that We're growth the in the honestly QX, global and customers

bodes well And we on others clients, both as with increasingly as, targeting. us, well that we with are that that those think

Mark Argento

Thank Great. you. That's helpful.

Lance Rosenzweig

Mark. you, Thank

Operator

Our line from Patrick next Schultz from of question Baird. comes

Your please. question

Patrick Schultz

and question, my on taking quarter. for a Thanks great congrats

Lance Rosenzweig

Patrick. you, Thank

Ramesh Kamath

Thank you.

Patrick Schultz

updates previously I million you you question have synergy Do you of guys out kind target. that? first updates? any any The laid know I have have is, on your do $XX

Lance Rosenzweig

and more mentioned to I say synergies. becomes becomes time, the say or a over gain or of more of target is, a is whether to difficult not function we synergy that discretionary reason increasingly is function that this And quarter that So synergies that so ago calculate. it a

not we're number. commenting publicly So specific on that

say very with, But existing, what that our to our are progress could we've our respect with to is with happy relative initial we I set relative synergies. targets that to specifically

specifically very reporting of the nature So not it. about against just good it, we're given that. feeling We're of sort discretionary

Patrick Schultz

you. like And also a Thank is on income $X.X million remind for looks you could the, then Awesome. interest what us the noncontrolling quarter? from

Lance Rosenzweig

why don't you one? Ramesh, take Yeah. that

Ramesh Kamath

Yeah.

investment our relating them. Australian is partnerships to And subsidiary there, have We from in this small that.

Patrick Schultz

can as Thank you. expect QX. flatten compared you here? ticked it to out And looks from it This up SG&A, like bit you. low to kind expense SG&A little think of with a Thank is we Could go? as then

Ramesh Kamath

also continue we to comes don't our increase we the the think mentioned move bucket make one typical number. we in to four the to in looking, script, in of is we on other. Though growth for to or And to three we idea is due plan nor But business not are materially that to be The and and increase quarter the in. as increased is definitely do investments forward SG&A technology. expecting plan provide sales it seasonality that I from

Patrick Schultz

kind or is Interest Is actually a Okay. could of a that $X going come down have million this interest Thank forward? see more you. little expense one normalized now. tick at me. It's down for one out And level? out final then we further rates

Ramesh Kamath

interest Actually, against $X.X and around rate our some the debt foreign in taken that. interest Singapore million, exchange in we that was million. hedge a The $X.X there balances for is loss is, have

interest then doing stabilizes, just that expecting cost come than that, nothing, interest the not change forward. will by down that we any if go Other I'm much. cost in the So as by

Operator

comes next from [Operator Instructions] Samalo], Our line private of investor. [Omar question

Your question please.

Unidentified Analyst

Hey, are guys. How you?

Lance Rosenzweig

Hi Omar.

Unidentified Analyst

of it's there's the basing Amazon additional revenue. the, noticed of I an So warrants? warrant item accounting the I contract related to imagine

Ramesh Kamath

that warrant. to right. is Yes, It you're quite relating

Unidentified Analyst

Okay.

So determining that you a that want period a reach for works commenting it but assumption? know will way it has against revenue is Is minimum I threshold warrant. it, don't as agreement that to that on or means stuff, obviously, time that, touch that fair the that the

Ramesh Kamath

Absolutely.

You're ensure that is had we quite like that And a we and it, outside once Monte to the consultant just evaluation we million. did from first reached, $X.X Carlo correct. do an book

Unidentified Analyst

from small comment little Okay. that? Got it. I maybe a And also restructuring Got amount you could bit noticed it. a costs, on

Ramesh Kamath

word, You amount said it's of have closed the we small booked. and there is the that right small site We a amount. in employee some one restructuring U.S.

when expect is will I a began are, severances other large go anything a these mean, that we part Again, said we it but big had that we of of there. having So merger. off, don't expense that, restructuring which part now jump we the specific is

Unidentified Analyst

was for you have wonder I find handy? to good. balance debt quarter, a if Okay, And net I that trying the

Ramesh Kamath

net about opened not up, quarter. gotten million. the don't than is a down $X.X but few debt exact it back, me. It think, The have moments down. with I I No. the for not I number had it's less handy is

Unidentified Analyst

It's a Okay. higher? little

Ramesh Kamath

off. our from coming now on much That's are usual growth fact up, but not are again the come we that expenses too

Unidentified Analyst

gross that's When high, Well, of this warrant pretty XX.X%, Okay. I pretty quarter-over-quarter good a good. higher aside view, that pretty from is, a for you also this accounting, so down And like revenue. mean, unusually quarter my and industry, that quarter, point that's good. higher put margin, looks

business really want I new congratulate and growth, to revenues higher guys. seems you It

Ramesh Kamath

you. Thank

Lance Rosenzweig

you, your Really comments. appreciate Thank Omar.

Unidentified Analyst

Thank you.

Operator

question-and-answer Thank this you. the hand conclude today's the like Lance does to to back of program. Rosenzweig for session And further I'd program any remarks.

Lance Rosenzweig

thank for for you support this Jonathan, afternoon you, us and all continued for and joining Thank your StarTek.

at meet and Annual be with phone. Conference will make Gateway investors, ourselves early by XXXX September always in happy to We that available we're to

you speak to results in quarterly don't we you November. look very then, you if next when forward Thank So our report speaking we much.

Operator

gentlemen ladies This your and you, Thank today's conference. in the conclude program. participating for does

disconnect. You Good may all day.

Startek (SRT) 11 Aug 192019 Q2 Earnings call transcript