StarTek, Inc.

Good afternoon, everyone, and thank you for participating in today's conference call to discuss StarTech's financial results for the fourth quarter and full year ended December 31, 2020. Joining us today are StarTech's Executive Chairman and Global CEO, Agarup Sengupta, the company's CFO, Vikash Surekha, and the company's President, 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 discussions 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 the various risks and uncertainties that could cause actual results to differ materially. StarTech advises all those listening to this call to review the latest 10Q and 10K posted on its website for a summary of the risks and uncertainties. StarTech does not undertake the responsibility to update any forward-looking statements. Further, the discussion today may include some non-GAAP measures. In accordance with Regulation G, the company has reconciled these amounts back to the closest GAAP-based measurements. The reconciliations can be found in the earnings release on the investor section of their website. I would like to remind everyone that a webcast replay of today's call will be available via the investor section of the company's website at www.startech.com. Now I would like to turn the call over to StarTech's Executive Chairman and Global CEO, Agarwal Sengupta. Sir, please proceed.

Thank you very much, Dilem. Good afternoon, everyone, and thank you all for joining. As we closed out 2020, we drove record results across nearly every key financial metric during the fourth quarter. In addition to generating solid growth and benefiting from seasonal strengths within our existing client network, we maintained our keen organization-wide focus on cost management during the quarter. These catalysts helped us drive both sequential and year-over-year profitability improvements with record performance on both gross profit and adjusted EBITDA. Our accomplishments this quarter and throughout 2020 is a testament to the diligent, tireless work of our global teams. Q4 typically serves as a higher volume period for our business as we help our clients manage elevated customer demand around the holidays. This holiday season served as a particularly high demand period for our e-commerce clients as it processed increased customer order volumes and facilitated more frequent customer service interactions. In addition, we experienced robust volumes for clients in our healthcare and education verticals. While clients in these three verticals experienced strong tailwinds toward 2020, our revamped Technological capabilities and organization-wide efficiency added even greater value to their experience management capabilities during this period. This, in turn, opened up new lines of business for us during the quarter and into 2021, providing additional opportunities for bringing our more robust, optimized suite of services to the market. On a broader scale, we advanced our recovery from the mid-year lows of the pandemic at a healthy pace. As of today, approximately 98% of our pre-COVID global workforce is active and providing our usual high-quality service for our clients and their customers. Further, to preserve our team's health and adhere to current pandemic-related restrictions around the world, we have about 55% of our workforce working remotely and the other 43% working out of brick-and-mortar campuses. Our StarTech Cloud omnichannel platform has allowed us to seamlessly facilitate this hybrid work environment with capabilities that enable team members to work productively from any remote device while preserving the continuity and security of our customer interactions. Rajiv will be on the call later to discuss our operational progress in further detail, but I'm extremely proud of how StarTech has emerged as the last year's challenges as stronger, more efficient organization. StarTech Cloud has also served as an exciting catalyst for our renewed long-term focus on advancing our digital initiative. We anticipate that the hybrid remote work structure is here to stay for the long term, and as such, expanding our digital capabilities will help fuel our revenue growth and operating leverage going forward. As we recently announced, we have made a strategic minority investment in CSS Corp, an IT services and technology support company that provides mission-critical AI, automation, analytics, cloud, and digital solutions. CSS serves high-growth technology customers across five continents with a platform-based service model that is well-suited for optimizing the future of technology-driven customer engagement. As part of our evolving digital-driven go-to-market strategy, we will work with CSS as a sister organization to develop areas of collaboration over the next three to six months, primarily in three areas. One, develop a go-to-market strategy to leverage CSS platform-based technology support services to our existing customers and develop new customer opportunities for these services. Enhance complementary value creation by creating new service offerings by leveraging our service delivery capabilities under StarTech Cloud and the focus service offerings from CSS across AI, automation, analytics, cloud, and digital solutions. And three, develop cross-sell opportunities at arm's length basis where we can bring additional value to customers by leveraging the additional service offerings and enhanced footprint of the companies. These are early days, and we will work to develop and define areas of collaboration that allow StarTech and CSS to maintain their distinct identities and value proposition to customers while being able to leverage each other in a pragmatic and a dynamic way. I want to reiterate how proud I am of the progress we sustained throughout 2020 and of our team's incredible adaptability within the most challenging global conditions we have ever faced. Now, for a more comprehensive overview of our fourth quarter and a full-year financial performance, I'll turn the call over to a new CFO, Vikash Surekha. Vikash brings 25 years of extensive finance experience to StarTech, having previously served as a CFO of IBS Software and held financial leadership positions at Wipro Limited and App Labs Technologies. We are grateful for Ramesh Kama's significant contribution during this past two years as CFO. With that said, please join me in welcoming Vikash to the call as he joins StarTech during an important juncture in our company's evolution. Vikash?

Thank you for the warm introduction, Aproop. I'm equally excited and honored to lead the finance organization of StarTech as we embark on our next phase of growth and digital expansion. Jumping right into our results, Net revenue in Q4 increased to 174.5 million, up 7.2% from Q3, and up slightly from 171.6 million in the year-ago quarter. This sequential and year-over-year growth reflects elevated demand and seasonal strength within our existing client base. On a constant currency basis, net revenue increased by 4.7% compared to the year-ago quarter. Gross profit for Q4 increased to 30.9 million, which is up 34.9% from Q3 and up 12% from 27.6 million in the year-ago quarter. Gross margin increased to 17.7%, which is up 360 basis points compared to 14.1% in Q3 and up 160 basis points from 16.1% in the year-ago quarter. Similar to our top line, the sequential and year-over-year increases in gross profit and margin reflect strong growth within our client base and a greater revenue mix of higher margin digital services. The Q4 gross profit includes benefits from government grants of $2.7 million. Selling general and administrative expenses for Q4 were $15.4 million compared to $14.9 million in Q3, but decreased relative to $19.4 million in the year-ago quarter. As a percentage of revenue, SG&A improved to 8.8% compared to 9.1% in Q3 and 11.3% in the year-ago quarter, reflecting the continued benefits of cost reductions we have implemented over the last 12 months. Net loss attributable to StarTech shareholders for Q4 was 7.6 million or minus 19 cents per shareholder. compared to a net income of 0.4 million or 1 cent per share in Q3 and a loss of 5.3 million or minus 14 cents per share in the year-ago quarter. Net loss in the fourth quarter of 2020 include 13.2 million goodwill impairment caused by reduced business outlook in India, Australia and South Africa due to COVID-19 impact, and devaluation of local currency in Argentina. Adjusted EBITDA in Q4 increased to 23.2 million, up nearly 49% from Q3 and up 38.2% compared to the year-ago quarter. As a percentage of revenue, adjusted EBITDA increased to 13.3%, up 370 basis points compared to 9.6% in Q3 and up 350 basis points compared to 9.8% in the year-ago quarter. The increase was primarily driven by our aforementioned revenue growth, margin expansion, and cost reductions, as well as incremental government grants that we received in certain regions. Adjusted for incremental grants, our adjusted EBITDA for fourth quarter was 20.5 million. From a balance sheet perspective, at December 31st, our cash and restricted cash was 50.6 million, compared to 56.6 million at September 30, 2020, with a decrease due to higher capital expenditure incurred in Q4. Total debt at 31 December 2020 remained flat at 136 million compared to September 30, 2020. Net debt at December 31, 2020 was 85.4 million compared to 79.4 million at September 30, 2020. We continue to remain comfortable with our liquidity position as it stands today and focus on prudently managing non-essential expenses and other costs to preserve the optimal efficiency of our operations. Now, let me briefly review StarTech's full year 2020 performance. Net revenue in 2020 was 640.2 million compared to 657.9 million in 2019. The overall decline was led by adverse forex movements particularly in Argentina and India. On a constant currency basis, net revenue increased by 0.9% compared to 2019. The COVID-19 induced impact on revenue we witnessed during Q1 and Q2 was offset by elevated seasonal volume in the second half of 2020. Gross profit in 2020 was 89.6 million compared to 110.9 million in 2019, and gross margin was 14% compared to 16.9% in 2019. Adjusted EBITDA in 2020 was 58.1 million compared to 52.1 million in 2019. This represents an increase of 11.6%. As a percentage of revenue, adjusted EBITDA was 9.1% in 2020 115 basis points compared to 7.9% in 2019. While gross profit reduction was driven by higher costs relative to revenues in our geographies that were severely impacted by COVID-19, the overall adjusted EBITDA increase was driven by our ongoing actions on cost reduction and continued focus on prudent cost management. Net loss attributable to StarTech shareholders in 2020 was $39 million or minus 99 cents per share compared to a net loss of 15 million or minus 39 cents per share in 2019. Net loss in 2020 included 35.9 million goodwill impairment we recorded in 2020. As I mentioned before, we have entered 2021 with a strong financial and operational foundation and have taken additional steps to advance our progress. Subsequent to fourth quarter, our wholly owned subsidiary, CSP Alpha Holdings, successfully completed a debt refinancing with a newly secured $185 million senior debt facility, which comprises a $165 million term loan and a $20 million revolving credit facility. The term loan bears a moratorium on principal repayment for 21 months and will amortize on a quarterly basis beginning in November 2022. This facility further expands our liquidity position and enables us to extend the maturities of our debt. With the current flexibility of a balance sheet, we are well poised to not only support our ongoing operation, but also capitalize on strategic opportunities to drive long-term accretive growth. This concludes my prepared remarks. I will now turn the call over to Rajiv. Rajiv, over to you.