StarTek, Inc. Reports Continued Revenue Growth and Sequential Margin Improvement.Adds Two New Clients to Portfolio DENVER -- StarTek, Inc. (NYSE NYSE See: New York Stock Exchange : SRT (1) (Source Routing Transparent) An IEEE-standard that provides bridging between Ethernet and Token Ring networks. Ethernet LANs use transparent bridging, and Token Ring LANs use source route bridging (SRB). ) reported third quarter fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $0.11, an increase of $0.05 per share from the previous quarter. Fully diluted earnings per share from continuing operations for the third quarter of 2005 were $0.25. Third quarter 2006 revenue of $61.9 million reflected an increase of 15% over the same period in the prior year. New clients launched during the past 12 months provided the Company with $12.2 million in incremental revenue during the third quarter of 2006. Total revenue from these new clients increased 39% over the previous quarter of 2006. Partially offsetting these revenue increases were declines in volume from StarTek's two largest clients. The Company also signed two new clients during the quarter, including Comcast, which is the Company's first named Intelligent Enterprise client. Sequentially, gross margin increased from 14% in the second quarter to 16% in the third quarter of 2006, reflecting progress in the ramp process for the Company's three new call centers. Gross margin during the third quarter of 2006 represented a decline from 23% in the same quarter of 2005. This decline was primarily attributable to higher carrying costs Carrying costs Costs that increase with increases in the level of investment in current assets. of three new call centers as a percentage of revenue, which was driven by higher-than-normal agent attrition associated with the continued ramp of the new call centers, increased competition for labor in certain of the Company's call center locations and some seasonality in the labor pool from which the Company draws. Gross margin for the quarter was also affected by a $0.9 million foreign exchange impact of a strengthening Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents versus the U.S. dollar. As a percentage of revenue, selling, general and administrative expenses declined from 13% in the third quarter of 2005 to 12% during the same quarter of 2006. However, total selling, general and administrative expenses increased slightly as a result of incremental expenses incurred to support three new facilities opened during 2006. Net interest and other income was $0.7 million higher in the third quarter of 2005 as a result of a gain on the sale of a facility in that year. Net income from continuing operations was $1.6 million during the third quarter of 2006, versus $3.7 million in the same period of 2005. "The announcements of two new clients during the quarter as well as our double-digit revenue growth and sequentially improving margins are a testament to the progress we've made thus far in growing the company," said Steve Butler Steve Butler (born September 26, 1956 in Amarillo, Texas) was an open-wheel racer who was successful in USAC Sprint Car and Silver Crown racing. Steve currently resides in Kokomo, IN. , President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of StarTek. "As the ramp process for our new call centers draws closer to completion, we believe we have positioned StarTek well for future growth opportunities. We remain focused on strengthening the relationships we have with our current clients and on seeking out new opportunities to provide value-added services to the outsourcing marketplace." The Board of Directors declared a quarterly dividend of $0.25 per share, payable on November 27, 2006, to the Company's stockholders of record as of November 15, 2006. About StarTek StarTek, Inc. (NYSE: SRT) is a leading provider of Business Process Optimization Process optimization is the practice of making changes or adjustments to a process, to get results. Optimization is the use of specific techniques to determine the most cost effective and efficient solution to a problem or design for a process. services for outsourced customer interactions. Since 1987, StarTek has provided customer experience management solutions that solve strategic business challenges so that fast-moving businesses can effectively manage customer relationships across all contact points - web, voice, email, fax, and video. This blended solution helps companies create and maintain customer satisfaction and frees them to focus on preserving capital, while StarTek delivers the ultimate customer experience. The company is managed by executives from the Financial, Cable MSO (1) (Multiple System Operator) Typically refers to a cable TV organization that owns more than one cable system, but it may refer to an operator of only one system. , CRM (Customer Relationship Management) An integrated information system that is used to plan, schedule and control the presales and postsales activities in an organization. and business services industries. Headquartered in Denver, Colorado, StarTek has 19 operational facilities across North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . For more information visit the company's website at www.StarTek.com. Conference Call The Company will host a conference call on November 1, 2006, to discuss the Company's financial results. The call will begin at 6:30 a.m. Mountain Time (8:30 a.m. Eastern Time) and can be accessed as follows:
USA: 866-510-0712
International: 617-597-5380
Passcode: 99118159
Conference Host: Steve Butler
A dial-in replay will be available from November 1, 2006, at 10:30 a.m. Mountain Time through November 8, 2006, and can be accessed as follows:
USA: 888-286-8010
International: 617-801-6888
Passcode: 82394224
A web-based replay will be available on November 9, 2006, and accessible from the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the company's website at www.startek.com. Forward-Looking Statements The matters regarding the future discussed in this news release include forward-looking statements as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such statements are subject to a number of risks and uncertainties. The following are important risks and uncertainties relating to StarTek's business that could cause StarTek's actual results to differ materially from those expressed or implied by any such forward-looking statements. These include, but are not limited to, risks relating to revenue from its principal clients, concentration of its client base in the telecommunications industry, consolidation in the telecommunications industry, risks related to fluctuations in the value of its investment securities portfolio, inability to effectively manage capacity, highly competitive markets, risks related to its contracts, decreases in numbers of vendors used by clients or potential clients, lack of success of StarTek's clients' products or services, considerable pricing pressure, risks associated with advanced technologies, inability to effectively manage growth, dependence on and requirement to recruit qualified employees, including additional sales personnel and key management personnel, potential future declines in revenue, lack of a significant international presence, and foreign exchange risks and other risks relating to conducting business in Canada. Readers are encouraged to review Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations - Risk Factors and all other disclosures appearing in the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2005, and subsequent filings with the Securities and Exchange Commission. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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