SRT - Earnings call transcript Q4 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 December 31, 2019.

Joining us today are StarTek's Chairman and CEO, Aparup Sengupta; the company's CFO, Ramesh Kamath and the company's Global COO, Rajiv Ahuja.

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 based on information currently available to us and are subject to various risks and uncertainties that could cause actual results to differ materially. uncertainties. listening XX-K call for posted of risks those latest review a all these and XX-Q on and advises to to this the summary StarTek its website update StarTek any does the not responsibility forward-looking undertake statements. to

website. release Further section reconciliations In with measures. in can reconciled amounts be Regulation some closest of the earnings has accordance back company found the to today on the GAAP-based discussion Relations include these non-GAAP their the may Investor G, measurement. the The

like everyone available of the company's remind would today's call Investors the replay I a webcast to that of www.startek.com. will via website be at section

to Now proceed. like and CEO, over Sengupta. turn I'd to StarTek's Chairman the call please Sir, Aparup

Aparup Sengupta

joining. very [ph] Thank much everyone, and Gigi and afternoon, all you good for thank you

results strength to key store improvement second in fully fourth combination half the as our Since of exceptional especially our made team. company. quarter ages of we additions driven Our with XXXX the a after leadership quarter, integrated quarter have now business consistent reflect we

XXXX done space. and of we customer in management we global that a the and work was are have consolidated company the year first drive an industry proud synergies experience become leader our to as full

efficiencies our across During global quality new we geographies. better of focused improved operating the our fourth procedures on and all presence quarter leveraging implementing through control

optimizing have things capabilities Since COO Global throughout serve. Rajiv Ahuja joined our service been region as summer, we our last team every we

same been This our centralized improvements ensure high on the him hear quarter, matter the from a activity for monitors later we and and virtual the our have leadership of the customer up In details already time Rajiv's you'll established of to. on day, in business no he experience customers that team around more driving capability call center during XX/X. command service fact his on material quality what night in our location. all world receive that

to customer offerings at our the forefront digital want center solutions that. insights been and managing on we ensure help intelligence, our and to include that from working using clients experience. to to this artificial predicting To We analytics was service our have on deliver of experience, customer capabilities us optimize innovation serve and higher-margin better further initiatives driving expand digital digital we with are our

Regarding we client to strategy continue the several on out quarters. diversification, over execute past laid

clients growth. We new own that growth of can nature and our clients by and are up-selling both highly on also organically focused accelerate geographies services by adding our

GEN education continue For target exciting next and in financial services, new technology, companies we travel, healthcare. verticals clients retail, to like high-growth

healthcare for interest seeing In significant a opportunity the fact presents near-term us globe. across of prospect we're strong as from levels

non-telco up XXXX execution of For perspective significantly the verticals our XXXX. on revenue for from on XX% in in XX% accounted calendar

to to last reminder point, as as we opposed we note not more important a concentration telco signed are client data established useful for it's highlighted targeting quarterly positioned while is Telco provider recently such cable UK as verticals media long high-growth update. the is like on As our vertical that and

continue to do softness business our India. verticals see in we remain of stable, our most Today with telco however US telco

mitigate telco Indian have decision client an our during of the We steps to engagement our with taken to impact one low-margin not QX. renew including

in will the unprofitable opposed continue to our improve looking margins revenue. chasing We region to as

our best with in improvements organization want profitability. growth is technology have customer and is vendor a companies we when driving we merely companies, growing right our and the seen the our serve goals As a at experience clients their serve than help differentiated past, truly seeking in call with to This that mindset across are a for and customers. the operations, center partnered the rather to ultimately the achieve StarTek we've stated its them as services. and strategic traditional partner StarTek as

quarter. further, I take financial turn you now for to would the through Kamath the Ramesh our StarTek's commenting results to call over to Before Ramesh? our CFO, like

Ramesh Kamath

compared Jumping fourth to of Thank million right as X% Aparup. in $XXX.X the results, into you, to quarter the quarter XXXX. net revenue the million $XXX.X for increased

growth holiday growth by in With the e-commerce, driven volumes. increased and healthcare

For familiar fourth strongest the that with the quarter due quarter is those historically less not of our industry year seasonality. to the

it revenue expect quarter to would So of in XXXX. not levels be higher appropriate sequentially one

increased margin million profit to ended in quarter the million for the to in compared gross basis $XX.X December to to XXXX XX.X% XX.X% points quarter the ago quarter. as up $XX.X Gross quarter as XX XX% compared with year

employee result utilization of benefit a Margins improve on to as command which positioning us enables footprint. global also from our focus continue provider, insight to stronger a StarTek Our to across margins a pricing. stronger continue as premium

administrative general $XX.X and decreased to to expenses ago million $XX.X as SG&A the in year quarter. Selling, million compared

on As travel, costs. other XX.X% a to communication, the and with compared percentage legal improved basis to XXX spend in lower power, of the by ago revenue, points as XX.X% improvement driven SG&A year quarter,

StarTek million for South to quarter impairment was fourth on attributable loss pertaining the or Africa. quarter XXXX million of per loss of net $X.XX shareholders a $X.XX in to share ago the largely $X.X in year $X.X $X.X compared includes as share to Argentina Net million Net goodwill and per loss the a quarter.

been we line. for the positive Although the would it quarter, loss been operating GAAP had net below goodwill improved impairment this not have

increased quarter reflect the to XX loss compared ago income net $XX.X for To million $XX.X as to the an in compared quarter. fourth share share $X.X $X.XX $X.XX XX% of adjusted or XXXX impacts a million the of $X.X XXXX. year to EBITDA in non-operating of net adjusted quarter the fourth was quarter these a million for million quarter -- of Adjusted

by compared percentage from point to EBITDA to a X.X%. revenue XXX of As X.X% as basis increased adjusted

cash our year as XX, initiatives including efficiency. As restricted and culmination a at sales Aparup From synergies XX, to our XXXX. perspective on balance earlier, group the compared conversion $XX.X last December increased and pipeline, reflect here mentioned million our improvements as of $XX.X over to of the executing December million cash sheet our various operational

at of in resulted net end million XXXX debt $XXX.X XXXX debt a to at compared net customer $XXX.X net nonrecourse basis. receivables of our million reduction to a excludes $X.X on Note of of million $XXX.X which was compared reduced as December XXXX, as the the debt factor to million. to $XXX.X million Our that end

This Rajiv. concludes my prepared remarks. turn I'll now call Rajiv? over the to

Rajiv Ahuja

Thank Ramesh. you

gone in priorities at I in hard one in Having best of deconstructing that StarTek the organization of put Joining organization. have and take deeper to in understanding a middle have reconstructing the competencies team a and the the of of practices portions part top the my long XXXX, been two, has reside about developed look gone to about place. processes then

we Through created two so with momentum and immense over I'm quarters last this process the pleased improvements we that extremely the far. made have operational

to The adding originates globe world around of strive nucleus at from, client we is up customers. the led geography class a for driven, regardless call centered consistent our business billion the a focus to and a over call ensuring a experience of time which corner all of create that truth. moments One our of

earlier our in will mentioned refining this Implementation our track management times practices. global best established of Aparup keep we us our global across touch model this center operational to network. quarter all technology experience come. of this and fully can to With further command As virtual align customer more like client centralized and position our points standards well we've global a financing

a lot all in and of well revenue creating operations added focused value-added digital also driving success for We have as customers products confident XXXX feel horsepower by future. dream continued on team, are in we and for that a I to as sales, to up other margin resource out building committed very set new now defining our that refer team is what I as our the by

and of Rick was Technology Agus in a Officer, relevant background has past [ph] organizations. to Ferry organization. and quarter who new world-class a Reddy as Global in a strong and founding maintaining customer relationships sets us worked BS Following we having member global a recently many IT each BS the Chief joined for Sales, has bring team very managing sales in significant our CTO the skill driving Reddy Rick the unique experience Head fourth appointed growth. networks strong who at and new

buildout expanded latest our to addition For will would help high-growth creating better in robust announce Information completed Very we be the value-added our products. This serve digital the bolster and soon team the sales driving team us companies focused our to executive on position pipeline with Officer. most part our Digital a and a we of innovation new Chief to team clients. have drive and

would remarks. Aparup? At Aparup his like buy to closing for to back I this ball the point,

Aparup Sengupta

much very you that. appreciate I Thank Rajiv.

been get us and prospects, is create our team earlier, StarTek is foundation of our providers as and The I optimized is never of experience our majority had the to global stronger footprint As infrastructure global customer to premier for high-growth in pipeline our one mentioned is place, solutions position partner. has conditioned a companies a to innovative and refined StarTek we further digital have differentiate sales as value-added to high-growth our here. with goal filled technology

have goals We double-digit but be corporation adjusted built with is know EBITDA the a the our of of achieve done down for billion-dollar are XXXX, becoming proud momentum there all still ambitious we strong to we to work margins. road

tragic my the the call COVID Before for up express by condolences want to affected Q&A outbreak. deepest would I all opening for families XX

outbreak had while and the as virtually it date. learn effect operations on certainly monitoring more. the remains to a we are no provide We plan concern, closely We global situation updates accordingly to our

for will open now aside That we the questions. call

Operator

from Lake Mark [Operator comes instructions] first Our from Argento the of question line Street.

line Your now is open.

Unidentified Corporate Participant

taking for Mark, guys, on thanks my this for John Hey question. is

on or with guess in of but there First the can color of other that the onion you you Could I the quarter, impact your and just clients you're out strength. verticals back touched little you sights more that, I on where vertical could said a most you surrounding line know potential any than the peel organization there of more some the seeing Coronavirus more within provide diversification. be any impacted no bit

a what with you an just it one the maybe third go of And helpful. because that of your through clients, you, that like Thank be looks of then becoming center would strategy full partner, outside technology is guys. relationship about call talk example

Aparup Sengupta

very to give you I'll your answer you the John questions. Thank Sure. much and just

trying on, I whole all managing Coronavirus there times you lay that some disasters the is only to experience I just because of can what happen know can figure don't what's know operations. the XX/X our outages. world but there out I our of understand going breakages, and We tell I are don't on many First of that are

many all being of storms in that. that handled Philippines we in we've have so places and many have handled We other our so seen life

employees I are in what I communicative system that a deployed monitoring our What to but of highlights have time an speak of have done By by point kind ask the and is what needs we of to some in execution mean question on of on deployed will give Rajiv we've balance to like too. patience more containment the to we we the Rajiv infrared off centers is quickly been constantly learned a done monitoring those. that would as to we and ensuring Asian the that I'll that going it of we to getting this we in that and and all and use you globally be are some deploy at answer side fundamental most share few airport on that putting scanners like scanning has as that it and put course, and pieces call of strategy have is but is signs.

Rajiv Ahuja

Sure thing Aparup.

across first readings The So our was a imposing sites, of containment obviously global we've to which restricted most site. is next vendors. thermal well digital thing that ban our that the can visitors well strategy. was step but restricted scanners as we've temperature is we part of entering -- it not to temperatures done as as as only took This the for deployed travel for employees anybody thermometers take also

and back they be outbreak are the coming testing to reports the the which the testing shifts We've the have is so as individual once shifts out facilities, if WHO come beyond contain is hours source permissible readings a have if -- to guidelines, about XX being for Whenever is takes is and the also try any individual the laid as there we bought to all adequate typically shifts directed in which limits unit hospitals that in start that limits immediately resource into they the the some which by split nearest means coming the to put potential are policy split is in that permissible location are place. quinine being are be found beyond finding for detected. a at to the

a meetings together. gatherings. large of the large number of We're use limited We encouraging people technology. stopped getting where We've

So been with in state number put happy guidelines at line of WHO been issued XX,XXX in back to have be a so across countries the spread it and to pace you. to none spreading while of single to we this initiatives point most case at that them that seems a that XX,XXX not have employees of far. Aparup very rapid a reported XX that different have

Aparup Sengupta

to always an critical a on Sure. something build has organization very population digital working that and that's inside talk organization we that you and the customer is of outside. customers have strongly people and we and is value that for on which And that our I and believe than want substantial AI on is many transmission digital meaningful we're is to but work

of is as of which is So truth, the and of managing are nuggets we around believe experience in conversational that we doing is person those into so adjusted that and that go out many we're moments deeper in what's a business unhappy many going find are space customer to mining are organization and many the happy, some enterprise in for that. neutral, terms sentiment how more are of do get that how the around a and we're both how on

a And an you sheet you I'll an wanted of example, me becoming site balance to in example. terms give partner,

say you service, taken have service, let's they’ve silos. lines broadband these to built let's service, also Let's say of this have digital provide many say have have consumer bandwidth a multiple a They you incentive retail you streaming of kind organization have the you marketplace. service you are service, service offering a you organizations and and have isolated them

prestigious am for the am services one I I has three if I does instance and buyer for other am service, also brought know all that not company a who I subscriber service. customer So a call when a these the and from

missing give team with and are So that wallet terms of technology solved making truth view conversation design grand those areas single that as surprisingly which unification I the on through and happen. unfold we're approach our moments which is a brand customer working propositions a a that those with at be adjacencies of and a of in customer quickly is instead that that the in of this engineering around some to of going share going has is call can the required during solutions of times other the of some

and it not of our And with creating that to around conversation what about been has agent and with in addition about we're Digital is that we on in do is do brands. within insights the some are customer Chief Officer internal team the internal as he conversation some working insight comes to our brand, is conversation, in out the going to find I with everything and the on analytics

able we billing brand's thing are will policies or and and those lines. Pricing be for plated our around companies getting for technology clients brand's create systems those to our issues, are other all dashboards

some on that digital vision have a the are site. of those we So

answer So long John. questions that's you that to asked of series the the

Unidentified Corporate Participant

Go ahead.

Rajiv Ahuja

strategy was to speech our just adopt saying, and identify and closely support, very are approach, channel further with than just John five clarify we rather analytics media, pillars Aparup social short Omni what which RPA. working analytics, a digital basically

where etcetera. off based last seeing and the which we given would typically hospitality, pillars the think of the travel, get is what terms probably So I question, be are impact are is industries hit to these our strategy we digital that airlines would five that volume, current are your most in

of to these Fortunately, have much not exposure industries. we an do too

seen to there in stay we've as have more some of the are people a we home tendency In at that a turn industries other seen because is slight pickup dealing fact with online. shop

online will for volume clients the retail picking are start So up that probably in space. dealing or

now softness of be not we of volume about. as material kind to So any I'm seeing that need worried

Unidentified Corporate Participant

on the the and time Awesome, for taking very guys, thanks congrats helpful quarter.

Operator

you. Thank

Our FBR. Riley line Cummins next of from the question B. Zach from comes

now line open. is Your

Zach Cummins

Yeah questions a on congrats strong for taking my quarter thanks and here.

there I success new throughout mean beyond. goal technology strategy really the material sales the here you're what's executive head from what and chief changes XXXX upon and into XXXX and you’ve through seen is of of terms officer build or the any XXXX In doing for appointments to in

Aparup Sengupta

Yeah we I've sales Ferry strongly the on Rick entrepreneurs the senior our Sales, of wanted employees dream that Head or head get hired, of team what to I to is be Global just to believe and executives. get

of built how of company I and that a little background entrepreneur with give who was just for Agus So to Agus narrate build several dollar billion organization. small worked a from in story bit can years has was to and residence Rick a an

Rick up So system also close understanding market the phenomenal export the an was all and four comes and providers. healthcare ecosystem peers of experience he in he's and American with and North very

So I -- which are those we think not infringed those articles to table. is bring he the verticals to he's and in will going speaking bring frankly those not in

BS a officer optimization global bring Reddy In chief terms in and going a to he's of technology network. in

As you Agus in of the the organization know call StarTek a we had part and organization. mean is what I you part of

So the see we're currently frankly bring both is some that potential speaking to we of optimization doing them finding trying of a synergies we're and are to we lot what of where bear. and marry can are

reconstruct larger license and are us Microsoft there is thousand For in as and buying Rajiv a that X find some we example India as we both have really a deconstruct in and licenses muscle. well for therefore we potential negotiating the buy now to as so US said more

there the in IT consumer applications building with the some of a we experience our potentially that that space might we're technology team, on reinstating for and years mean existing. I need client of is Secondly, applications for do

team got So augmented. that

to to central customer business vendor. this because difference in areas a very them working for on the and to it customers, of a not largely our difference we're some how can a you our to are just that we and important a be make team partner is those be So closer the to make is

have that our within has has enterprise that the team been chain it we kind down enterprise. So the value going management within motto and the the articulated of and

believe of of offshore for call opportunities that and And what for fungibility of are looking you we Ages centric, clearly a movement onshore have continents and world company was sales are terms multi-shore working and to of flexibility is in there that lot of centric. clients ability a what rest North the the across earlier America largely and cultures was having the StarTek and

So these anytime. customers two liking network move with really now can are a call is ability together, what where call or have anywhere, actually coming conversation or a the you process they a a to

a give to Just used which is the around if is basically of somebody the feet always probably happens example back US call near answered on in within somewhere makes to it not that the the you and the let's enterprise gets work and say originated work give XX let's India facility. by office I goes which call I speed shore definition say eight part and days, world of some he an minutes and somebody within to the US then bound which in the means

happens what So pretty within I mean the much organization. that's internally

continents experience and an of to are cost one have you by have a at is across entire using what world your that that organization are you that hand pricing the the total and cultures both customers ability worlds, is ability bringing and ownership an you to give on large. the reconfigure we our rate helping that amazing is best give a of get faster the also now at to your reduce telling story that the the table and we So you

Zach Cummins

you gross helpful couple just in for margin but That's that decline for a appreciate little saw sequential a Ramesh and quick a really strong gross actually margin on basis. the bit quarter I questions we

as your about expectations you are proceed and talk of for can forward that gross we drivers margin So what from really here? the

Ramesh Kamath

to one There at so of top pass exceptional gross cost it and the quarter on adds that's revenue recurring are an this we is through quarter. margin, not quarter for three $X.X. had drivers cost

reason reason, pay needing on spend join this to first the the up extra our quarter basis urgent to cost that's recruitment more of So quarter and we ahead in a had sometimes to both second to $X.X. our little ramp and an bit the agents on impact the

the to million the $X changes of on is all is of part last for done occurred on of we have need for benefits because four. year booked that The rates, that are quarter that extra cost interest this event available etcetera typical this volatility end the of as employee assumptions in the we almost valuation variety the

continue previous in If our it the guess of then you don't netted but close said in will Zack, that, having I'm you all forward-looking we these you as but sure quarters roughly your was these give lie the quarters quarter, future to items margin off, the constitutions. a gross can ahead. some How do would statement can

Zach Cummins

the Understand the for to about your drivers you was SG&A it what's SG&A line, continue that we to for optimize forward? that savings flipside the and move to on and in talk that then there see nice quarter then approach as the savings on the can of

Ramesh Kamath

what is one it's what item pleases items press When and we just not multiple and a the exactly and bit. script the drivers too that me spread have said across release in of quite the

savings savings travel, is there employee the there is even on on is costs. power fuel, there rentals, savings on some So and

it more need that Rajiv going on our cost as disappointed not from and the forward myself, and but control. going mentioned would if I adds we're item Rajiv Aparup sales I Going of that and lot and cost to every invest I think to a beyond other to focused know on line prevent team Aparup we're be to

Zach Cummins

Understand.

Aparup Sengupta

global of vendor with we it for of the which idea and a entire understanding I you we ecosystem. and is share decades in also got good have a the I me now he be I comes don't add and landscape to Rajiv think that experience with may probably management spend think leader

there of lot regular spend, non-GAAP of started a using is a As happens are on those lot going a Japanese forms into auctions those you and the you is company also what various creating expense know basis just of and that reverse happening. there have auction, a depth optimizations this auction of and call in

we we're deploy on to the bring And believe on to which GA on and so and strongly going those it the our save GA going is we down is sales whatever F that's of which the way sneaks and go. I'm sales out deploy into envision and future. that continue to that your the we momentum in the the organization growth just we that

Zach Cummins

Understand. That's helpful of as congrats go XXXX. best on QX we and in luck here through

Operator

next comes from the Thank open. you your is line [ph] Samaha now of our line question Omar

Unidentified Corporate Participant

debt wonderful Really thank still for great reporting really a now. continuing increased only congratulations five it what is been earnings a very job in asking finally also wanted and per years done. quarter, well helpful SG&A to strong it you I line, I've cash pay for non-GAAP share, the for about the strong great the Really on business. investing flow quarter to down EBITDA, job while

to it. great see it's So finally

but capacity Are in you're to about that's utilization the in been a was position I that rate. knows is wondering say touch you sense? to not a company in what a at anything I position metric

Rajiv Ahuja

This to it. little is provide of color Rajiv I'll bit a and

one of our up QX capacity our the be we in QX very so of XX% in giving versus you a give about growth you in which geographies terms is utilization. almost and that close the to recent Philippines went to Americas capacity utilization I you gives saw X% Just picture of a am a jump sense fairly by across a

move announced move our the locations. we shut already plans driven was Grand some As by week is that down to a and fact of which clients we late along that last in US in center fact alternate Junction the of in to wanted to some

the and that announced coming center why capacity but would in able would increase US. utilization and next across is increasing it up already while I'm of to course further going up the our not the ideally utilization in like, by quarter capacity, utilization that be revenue manner that is is to which new that hoping lead report we So would we in we giving

data I'm a So points of you just giving couple

Operator

this Thank session. turn does conclude you. At time call Sengupta. I'll Mr. now to to over proceed. the question-and-answer like our Please this

Aparup Sengupta

manner on this I'm and due for that you looking with for you thank outbreak appreciate you, patient help barring forward and the to of your you for your trip when covering first the forward with whenever US to much you don't this your Thank better. and things indeed next I to my and see in conducting all analysts report time US and COVID next many you speaking results. joining restrictions to you over for and meeting StarTek, continued this maybe support either our Okay. I spring afternoon become look opens all Gigi then, to or in the shareholders meeting for If our quarter we Thank really XX travel very operator.

Operator

gentlemen. you, and ladies Thank

disconnect. now may You

Startek (SRT) 12 Mar 202019 Q4 Earnings call transcript