StarTek Inc. (SRT, Financial) filed Quarterly Report for the period ended 2009-09-30.
StarTek Inc. is a global provider of process management services and owns and operates branded vertical market Internet web sites. Their process management service platforms include E-commerce support and fulfillment provisioning management for telecommunications systems high-end inbound technical support and an offering of supply chain management services. As an outsourcer of process management services as its core business StarTek allows its clients to focus on their primary business reduce overhead replace fixed costs with variable costs and reduce working capital needs. Startek Inc. has a market cap of $89.3 million; its shares were traded at around $6.01 with and P/S ratio of 0.4.
Revenue increased by $3.5 million, or 5.1%, from $68.9 million in the third quarter of 2008 to $72.5 million in the third quarter of 2009. The increase was driven by a $3.2 million increase in revenue in our U.S. segment. Of this increase, $5.6 million was from two new sites that were opened in mid-2008 (Mansfield, Ohio and Jonesboro, Arkansas). In addition, a site that transitioned to a new customer during 2009 contributed approximately $1.7 million of additional revenue in the third quarter of 2009 compared to the third quarter of 2008. These increases were partially offset by $3.2 million less revenue from site closures in Big Spring, Texas and Petersburg, Virginia in August 2008 and December 2008, respectively. The remainder of the offset was driven by decreases in the number of average full-time equivalent agents and utilization at other U.S. locations. In the third quarter of 2009, average full-time equivalent agents decreased by 4.8% from the third quarter of 2008 due to layoffs and hiring freezes in certain locations in order to address certain discrepancies in our hiring practices. The hiring freezes have since been lifted. Revenues in our Canadian segment declined by $2.8 million in the third quarter of 2009 compared to the same period in 2008. Of this decrease, $2.5 million was due to the site closure in Regina, Saskatchewan. The remainder was due to a decline of 6.8% in average full-time equivalent agents at our other Canadian locations. Revenue from our Offshore segment increased from $0.1 million in the third quarter of 2008 to $3.2 million in the third quarter of 2009 from our site in Makati City, Philippines which opened in September 2008 and continues to ramp.
Cost of services decreased by $1.7 million, or 2.9%, from $60.7 million in the third quarter of 2008 to $59.0 million in the third quarter of 2009. Cost of services in the U.S. increased by approximately $0.8 million, of which $0.2 million was related to the net addition of new sites year over year, as discussed above. Gross profit as a percentage of revenue in the U.S. increased from 15.8% in the third quarter of 2008 to 19.5% in the third quarter of 2009. This increase was driven by higher utilization, which we define as average full-time equivalent agents divided by available seat capacity, which increased from 65% in the third quarter of 2008 to 77% in the third quarter of 2009. Cost of services in Canada declined by $5.0 million in the third quarter of 2009 from the third quarter of 2008, of which $2.8 million was due to the closure of the facility in Regina, Saskatchewan and $1.9 million was due to improvements in the Canadian to U.S. dollar exchange rate. The remaining decrease in the Canadian segment was due to fewer agents, as described above. Cost of services for our Offshore segment increased by approximately $2.4 million due to the opening of our Makati City, Philippines location.
Selling, general and administrative expenses increased by $0.9 million, or 8.6%, from $10.2 million in the third quarter of 2008 to $11.1 million in the third quarter of 2009. As a percentage of revenue, selling, general and administrative expenses increased from 14.8% to 15.3%. The increase was driven by an increase of $0.5 million in salary expense and $0.4 million in hiring expense in the third quarter of 2009 compared to the third quarter of 2008 due to investments in personnel in support of growth efforts.
Impairment losses and restructuring charges declined from $0.3 million in the third quarter of 2008 to $0 in the third quarter of 2009. In the third quarter of 2008, we recorded $0.3 million in restructuring charges related to the closure of our Big Spring, Texas location in August 2008. We did not incur any impairment losses or restructuring charges during the third quarter of 2009.
Loss from discontinued operations was $0 during the third quarter of 2009 and approximately $0.4 million during the third quarter of 2008. The loss in 2008 was due to the write-off of the principal on a note receivable related to the sale of our supply chain management services platform in December 2005 for which approximately $0.7 million related to the principal of the note receivable, less an associated tax benefit of approximately $0.2 million. This was partially offset by the removal of income from discontinued operations related to the sale of our Domain.com subsidiary in February 2009.
Read the The complete Report
StarTek Inc. is a global provider of process management services and owns and operates branded vertical market Internet web sites. Their process management service platforms include E-commerce support and fulfillment provisioning management for telecommunications systems high-end inbound technical support and an offering of supply chain management services. As an outsourcer of process management services as its core business StarTek allows its clients to focus on their primary business reduce overhead replace fixed costs with variable costs and reduce working capital needs. Startek Inc. has a market cap of $89.3 million; its shares were traded at around $6.01 with and P/S ratio of 0.4.
Highlight of Business Operations:
In February 2009, we closed our facility in Regina, Saskatchewan. The closure of our Regina facility was driven by market conditions, namely recruiting challenges in this location, which impacted the profitability of the site and management determined it was in our long-term interest to close the location. This closure resulted in approximately $2.5 million and $7.8 million less revenue during the three and nine months ended September 30, 2009, respectively, and increased gross profit by $0.3 million and $0.4 million during the three and nine months ended September 30, 2009, respectively, compared to the comparable periods ended September 30, 2008 due to negative gross profit at this facility in 2008. We also incurred restructuring charges of approximately $4.4 million during the nine months ended September 30, 2009 related to the closure, which is discussed in further detail below.Revenue increased by $3.5 million, or 5.1%, from $68.9 million in the third quarter of 2008 to $72.5 million in the third quarter of 2009. The increase was driven by a $3.2 million increase in revenue in our U.S. segment. Of this increase, $5.6 million was from two new sites that were opened in mid-2008 (Mansfield, Ohio and Jonesboro, Arkansas). In addition, a site that transitioned to a new customer during 2009 contributed approximately $1.7 million of additional revenue in the third quarter of 2009 compared to the third quarter of 2008. These increases were partially offset by $3.2 million less revenue from site closures in Big Spring, Texas and Petersburg, Virginia in August 2008 and December 2008, respectively. The remainder of the offset was driven by decreases in the number of average full-time equivalent agents and utilization at other U.S. locations. In the third quarter of 2009, average full-time equivalent agents decreased by 4.8% from the third quarter of 2008 due to layoffs and hiring freezes in certain locations in order to address certain discrepancies in our hiring practices. The hiring freezes have since been lifted. Revenues in our Canadian segment declined by $2.8 million in the third quarter of 2009 compared to the same period in 2008. Of this decrease, $2.5 million was due to the site closure in Regina, Saskatchewan. The remainder was due to a decline of 6.8% in average full-time equivalent agents at our other Canadian locations. Revenue from our Offshore segment increased from $0.1 million in the third quarter of 2008 to $3.2 million in the third quarter of 2009 from our site in Makati City, Philippines which opened in September 2008 and continues to ramp.
Cost of services decreased by $1.7 million, or 2.9%, from $60.7 million in the third quarter of 2008 to $59.0 million in the third quarter of 2009. Cost of services in the U.S. increased by approximately $0.8 million, of which $0.2 million was related to the net addition of new sites year over year, as discussed above. Gross profit as a percentage of revenue in the U.S. increased from 15.8% in the third quarter of 2008 to 19.5% in the third quarter of 2009. This increase was driven by higher utilization, which we define as average full-time equivalent agents divided by available seat capacity, which increased from 65% in the third quarter of 2008 to 77% in the third quarter of 2009. Cost of services in Canada declined by $5.0 million in the third quarter of 2009 from the third quarter of 2008, of which $2.8 million was due to the closure of the facility in Regina, Saskatchewan and $1.9 million was due to improvements in the Canadian to U.S. dollar exchange rate. The remaining decrease in the Canadian segment was due to fewer agents, as described above. Cost of services for our Offshore segment increased by approximately $2.4 million due to the opening of our Makati City, Philippines location.
Selling, general and administrative expenses increased by $0.9 million, or 8.6%, from $10.2 million in the third quarter of 2008 to $11.1 million in the third quarter of 2009. As a percentage of revenue, selling, general and administrative expenses increased from 14.8% to 15.3%. The increase was driven by an increase of $0.5 million in salary expense and $0.4 million in hiring expense in the third quarter of 2009 compared to the third quarter of 2008 due to investments in personnel in support of growth efforts.
Impairment losses and restructuring charges declined from $0.3 million in the third quarter of 2008 to $0 in the third quarter of 2009. In the third quarter of 2008, we recorded $0.3 million in restructuring charges related to the closure of our Big Spring, Texas location in August 2008. We did not incur any impairment losses or restructuring charges during the third quarter of 2009.
Loss from discontinued operations was $0 during the third quarter of 2009 and approximately $0.4 million during the third quarter of 2008. The loss in 2008 was due to the write-off of the principal on a note receivable related to the sale of our supply chain management services platform in December 2005 for which approximately $0.7 million related to the principal of the note receivable, less an associated tax benefit of approximately $0.2 million. This was partially offset by the removal of income from discontinued operations related to the sale of our Domain.com subsidiary in February 2009.
Read the The complete Report
