StarTek Inc. (SRT, Financial) filed Quarterly Report for the period ended 2010-06-30.
Startek Inc. has a market cap of $68.4 million; its shares were traded at around $4.59 with a P/E ratio of 76.5 and P/S ratio of 0.2. SRT is in the portfolios of Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.
Revenue decreased by $5.6 million, or 7.7%, from $73.3 million in the second quarter of 2009 to $67.7 million in the second quarter of 2010. The decrease was driven by a $8.6 million decline in revenue in our U.S. segment. Of this decrease, $3.7 million is attributable to the closure of two sites in the first quarter of 2010 (Victoria, Texas and Laramie, Wyoming). Revenue declined approximately $4.9 million among our other sites driven by a decline in call volumes from our second largest client and telecommunications clients serving the traditional wireline or land telephone services. Revenue in our Canadian segment declined by $2.8 million in the second quarter of 2010 compared to the second quarter of 2009. Of this decrease, $1.2 million is attributable to the closure of our Thunder Bay, Ontario facility in March 2010. Revenue in the Canadian segment also decreased approximately $1.2 million from the second quarter of 2009 to the second quarter of 2010 from our Sarnia, Ontario location, which we expect to close in November 2010. Revenue from our Offshore segment increased by $5.8 million, from $2.0 million in the second quarter of 2009 to $7.8 million in the second quarter of 2010. The increase was due primarily to our two new sites in Ortigas, Philippines and Heredia, Costa Rica, which contributed $3.2 million in revenue. The remainder was a result of the ramp-up of our Makati, Philippines facility, which contributed $2.6 million in additional revenue in the second quarter of 2010.
Cost of services decreased by $0.1 million, or 0.2%, from $60.2 million in the second quarter of 2009 to $60.0 million in the second quarter of 2010. Cost of services in the U.S. decreased by approximately $5.1 million. Gross profit as a percentage of revenue in the U.S. decreased from 19.4% in the second quarter of 2009 to 15.2% in the second quarter of 2010. The decrease in cost of services in the U.S. was driven by a $3.7 million decline related to the two site closures in the first quarter of 2010, as discussed above, as well as a reduction in full-time equivalent agents due to the lower call volumes from our second largest wireless client and wireline telecommunications customers, described above. Cost of services in Canada declined by $1.1 million in the second quarter of 2010 from the second quarter of 2009, of which $1.2 million was due to the closure of the facility in Thunder Bay, Ontario. Cost of services for our Offshore segment increased by approximately $6.1 million due to the opening of two new sites in Ortigas, Philippines and Heredia, Costa Rica, and the ramp-up of our Makati, Philippines location, which increased the number of full-time equivalent agents in our Offshore segment from 277 in the second quarter of 2009 to 1,261 in the second quarter of 2010.
Selling, general and administrative expenses decreased by $0.6 million, or 5.7%, from $10.9 million in the second quarter of 2009 to $10.3 million in the second quarter of 2010. The decrease in selling, general and administrative expenses was primarily due to the absence of $0.6 million of expense recorded in the second quarter of 2009 due to an accrual for the settlement of our shareholder lawsuit. Depreciation expense increased by $0.3 million in the second quarter of 2010 as compared to the second quarter of 2009, due to an increase in the amount of property, plant and equipment, period over period, which was partially offset by a decline in personnel expense of $0.2 million. As a percentage of revenue, selling, general and administrative expenses increased from 14.9% to 15.2% period over period.
During the three months ended June 30, 2010, we recorded approximately $0.8 million of impairment losses and restructuring charges ($0.6 million in our Canadian segment and $0.2 million in our U.S. segment). We recorded $0.3 million related to the impairment of certain assets at our Sarnia, Ontario location, which we expect to close in November 2010, $0.2 million for a reduction in the fair value of our building that is held for sale at our closed Laramie, Wyoming facility, and $0.3 million due to a change in our sublease estimate at our closed Regina, Saskatchewan facility. During the three months ended June 30, 2009, we did not incur any impairment losses or restructuring charges.
Net interest and other income was approximately $0.2 million during the second quarter of 2010, compared to net interest and other expense of approximately $0.1 million during the second quarter of 2009. The increase was due to a decrease in interest expense of approximately $0.2 million due to the pay-off of certain notes payable in 2009, and a realized gain of approximately $0.1 million for the recovery of a previously impaired investment.
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Startek Inc. has a market cap of $68.4 million; its shares were traded at around $4.59 with a P/E ratio of 76.5 and P/S ratio of 0.2. SRT is in the portfolios of Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.
Highlight of Business Operations:
During the second quarter of 2010 we recorded $4.2 million, or $0.29 per share, in income tax expense related to a valuation allowance against U.S. net deferred tax assets. U.S. GAAP requires that we assess whether a valuation allowance should be established against our deferred tax assets based on the consideration of all available evidence using a more likely than not standard. In making such judgments, significant weight is given to evidence that can be objectively verified. Based on all available evidence, in particular our three-year historical cumulative losses, recent operating losses and an expected fiscal year 2010 U.S. pre-tax loss, we recorded a valuation allowance against our net deferred tax asset. The recording of a valuation allowance has no impact on cash and does not preclude us from utilizing the full amount of the deferred tax asset in future profitable periods.Revenue decreased by $5.6 million, or 7.7%, from $73.3 million in the second quarter of 2009 to $67.7 million in the second quarter of 2010. The decrease was driven by a $8.6 million decline in revenue in our U.S. segment. Of this decrease, $3.7 million is attributable to the closure of two sites in the first quarter of 2010 (Victoria, Texas and Laramie, Wyoming). Revenue declined approximately $4.9 million among our other sites driven by a decline in call volumes from our second largest client and telecommunications clients serving the traditional wireline or land telephone services. Revenue in our Canadian segment declined by $2.8 million in the second quarter of 2010 compared to the second quarter of 2009. Of this decrease, $1.2 million is attributable to the closure of our Thunder Bay, Ontario facility in March 2010. Revenue in the Canadian segment also decreased approximately $1.2 million from the second quarter of 2009 to the second quarter of 2010 from our Sarnia, Ontario location, which we expect to close in November 2010. Revenue from our Offshore segment increased by $5.8 million, from $2.0 million in the second quarter of 2009 to $7.8 million in the second quarter of 2010. The increase was due primarily to our two new sites in Ortigas, Philippines and Heredia, Costa Rica, which contributed $3.2 million in revenue. The remainder was a result of the ramp-up of our Makati, Philippines facility, which contributed $2.6 million in additional revenue in the second quarter of 2010.
Cost of services decreased by $0.1 million, or 0.2%, from $60.2 million in the second quarter of 2009 to $60.0 million in the second quarter of 2010. Cost of services in the U.S. decreased by approximately $5.1 million. Gross profit as a percentage of revenue in the U.S. decreased from 19.4% in the second quarter of 2009 to 15.2% in the second quarter of 2010. The decrease in cost of services in the U.S. was driven by a $3.7 million decline related to the two site closures in the first quarter of 2010, as discussed above, as well as a reduction in full-time equivalent agents due to the lower call volumes from our second largest wireless client and wireline telecommunications customers, described above. Cost of services in Canada declined by $1.1 million in the second quarter of 2010 from the second quarter of 2009, of which $1.2 million was due to the closure of the facility in Thunder Bay, Ontario. Cost of services for our Offshore segment increased by approximately $6.1 million due to the opening of two new sites in Ortigas, Philippines and Heredia, Costa Rica, and the ramp-up of our Makati, Philippines location, which increased the number of full-time equivalent agents in our Offshore segment from 277 in the second quarter of 2009 to 1,261 in the second quarter of 2010.
Selling, general and administrative expenses decreased by $0.6 million, or 5.7%, from $10.9 million in the second quarter of 2009 to $10.3 million in the second quarter of 2010. The decrease in selling, general and administrative expenses was primarily due to the absence of $0.6 million of expense recorded in the second quarter of 2009 due to an accrual for the settlement of our shareholder lawsuit. Depreciation expense increased by $0.3 million in the second quarter of 2010 as compared to the second quarter of 2009, due to an increase in the amount of property, plant and equipment, period over period, which was partially offset by a decline in personnel expense of $0.2 million. As a percentage of revenue, selling, general and administrative expenses increased from 14.9% to 15.2% period over period.
During the three months ended June 30, 2010, we recorded approximately $0.8 million of impairment losses and restructuring charges ($0.6 million in our Canadian segment and $0.2 million in our U.S. segment). We recorded $0.3 million related to the impairment of certain assets at our Sarnia, Ontario location, which we expect to close in November 2010, $0.2 million for a reduction in the fair value of our building that is held for sale at our closed Laramie, Wyoming facility, and $0.3 million due to a change in our sublease estimate at our closed Regina, Saskatchewan facility. During the three months ended June 30, 2009, we did not incur any impairment losses or restructuring charges.
Net interest and other income was approximately $0.2 million during the second quarter of 2010, compared to net interest and other expense of approximately $0.1 million during the second quarter of 2009. The increase was due to a decrease in interest expense of approximately $0.2 million due to the pay-off of certain notes payable in 2009, and a realized gain of approximately $0.1 million for the recovery of a previously impaired investment.
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