StarTek, Inc.

Good afternoon everyone and thank you for participating in today's conference call to discuss the StarTech financial results for the first quarter ended March 31st 2023. Joining us today are StarTech Global CEO Bharat Rao and the company's Global CFO Nishit Shah. 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 the various risks and uncertainties that could cause actual results to differ materially. StarTech also advises listening to this call to review the latest 10K posted on its website for a summary of these 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 on the earnings release on the investor section of their website. I would like to remind everyone today that the Webcast replay of today's call will be available via the investor section of the company's website at www.startech.com. Additionally, the company has included a presentation which can be found via the website link and on the investor section of the company's website to coincide with the call. I'd now like to turn the call over to StarTech Global CEO, Bharat Rao. Bharat, please proceed.

Thank you, Darcy. and good afternoon, everyone, and thank you all for joining. As Darcy mentioned, we'll be following along the quarterly investor presentation that you can find on our investor relations site and via the webcast link. So let's start on slide two and recap some of the highlights from the start of the year. As we've talked about at length, Last year's focus was on investing in our capabilities to enhance the customer experience and begin rolling out proof of concepts for innovative new tools. We did this with the goal of driving further upselling with current clients while simultaneously attracting new clients across all our key verticals. We dedicated a significant amount of time and resources into these initiatives to ensure that we had the right structure in place and that all of our agents were trained accordingly for successful implementation. While we were working on these initiatives, we were also making strategic moves to ensure that we were focusing on our core competencies that we believe will drive long-term profitable growth and showing up our balance sheet to ensure our cost of capital did not prove to be a hindrance to these growth objectives. We enter 2023 with the main priority for this year being execution. I'm pleased to report that we made significant progress on execution as we deploy the solution that we have spent the last few years developing. We've been talking of a two-pronged sales approach to scaling our solutions. First, enhancing our performance and growing volumes of current clients. And the second, using our proof of concepts and performance-driven reputation to attract new clients. We've had a total of 12 new wins in the first quarter. Five of these wins were new logos across the utilities, e-commerce, healthcare, and BFSI verticals, while the remaining wins included successful ramp-ups, providing new services and additional volumes to existing clients. To continue this momentum forward, we have integrated the digital and sales teams under the Chief Growth Officer umbrella in order to better align objectives and capitalize on both these strategies. We also find that our clients are aligned on our focus to transition services to our offshore model in an effort to become more cost efficient in the current macroeconomic environment. Most of the digital tools we have invested in have focused on agent amplification, which improves the ability of agents to be able to understand processes easier and shorten training cycles, making a ramp-up stage much quicker and more efficient, ultimately allowing for better agent and customer engagement. To continue aligning our organizational priorities, We also made progress with our strategic divestitures subsequent to the quarter closing. We officially completed our transaction to sell our interest in contact center company and have so far repaid about 60% of the total debt that was outstanding at the beginning of the year. We've also unveiled a new visual identity that better aligns with the investments we've made into our platform over the last few years. And lastly, we announced a $20 million share purchase authorization as we believe our prevailing share price does not reflect the value of our long-term potential. And we continue to view our own stock as a great investment. So let's dive into some of the details and what we are prioritizing over this coming year. Turning to slide three, I'm very excited about the brand identity that we've introduced last month. We believe this new visual identity reflects our company's mission and values and embodies our commitment to innovation and customer experience excellence. It also marks the final integration with Aegis and we have retired all legacy Aegis branding and we'll be using this visual identity as our branding across the globe. We believe this is a perfect way to start our next chapter focused on execution and encapsulates all the work we've put into developing this platform over the last several years. We've already noticed benefits from having a unified brand across all our markets and believe this will further propel our growth objectives of becoming a leading customer experience solution provider. I encourage all of you to visit our website and social media channels along with the marketing collateral we've issued to experience the new branding. Coinciding with the progress we have made in developing our solutions and services to be the best in class, we are also continually recognized for these efforts from third parties to further validate the effectiveness of our platform. Looking at slide four, I'm proud of our team's consistent efforts to showcase our services, and it's an honor to be recognized as the Outsource Partner for the Year for 2023, win multiple Stevie Awards for our technology and services, and receive an A-plus rating uncomparably, along with winning awards for our culture and human resources teams. At the end of the day, we operate in a human capital business amplified by the power of technology, and we are proud to be consistently recognized as a leader in our industry. We believe this will continue to serve us well and further expand our sales pipeline as our reputation becomes more widely known. Moving to slide five, as I mentioned earlier, we have made significant strides to shore up our balance sheet to the strongest level we've seen in five years. With the $55 million in proceeds from the CCC transaction closing, we were able to allocate $7 million towards the prepayment of our revolving credit facility and $48 million towards prepayment on our senior term loan. If you combine this with the previously disclosed strategic moves, we've been able to eliminate just over $100 million in debt repayments from our balance sheets. As a result, our net leverage ratio has come down significantly and we expect this to continue to move down as we begin our sales effort, which flow through to the bottom line and expand our EBITDA base, along with using proceeds from a planned divestiture of our Argentina operations to further pay down debt. In the current interest rate environment, these moves have significantly lowered our interest cost burden improved the overall health of our balance sheet, and have provided us flexibility to allocate more capital for investing into our sales, digital, and IT efforts. Now turning to slide six, we believe we are very well positioned to continue capitalizing on the sales momentum we've begun to generate. As you will see on the graph on the right-hand side, We've already generated more new logo wins than we did in all of 2021. And we've already accomplished nearly half of what we generated last year. We have a strong pipeline of new sales needs that we believe will allow us to exceed our 2022 new logo win number. To help us accomplish this, we've been integrating our marketing data into our sales CRM to enable an AI-driven lead generation. This will allow us to deploy digital tools that can mine our databases and improve our conversion rates. With the macroeconomic environment being unpredictable and challenging, as I mentioned earlier, our clients are pushing to move services nearshore and offshore at a much quicker pace. Although this does have an impact on top line, we believe increasing volumes from new client wins and expanded services from existing clients will more than offset this impact. And we believe we will continue to see gross margins expand throughout the rest of the year. In fact, I can confidently say that we do not expect to see wage increases as we did in 2022. We have also been able to capture additional pricing with our customers as their contracts come up for renewal, which is further helping us maintain a healthy margin profile. Overall, I'm confident in the direction our organization is moving in. We built a strong foundation. made the necessary investments, and significantly improved the health of our balance sheet. Now we need to execute and capitalize on all the effort we have put into this platform. With a strong pipeline, an efficient cost structure, and the capital to continue investing in our best-in-class capabilities, I firmly believe that we are on the right path towards profitable growth and delivering sustainable value to all our stakeholders. I'd now like to turn over the call to Nishit Shah to provide further details on our first quarter financial results, of which you can see a recap starting on slide seven. Thank you all for joining us, and I'll be available to answer any questions you may have during the Q&A session at the end of this call.

Nishit, I'll pass over the call to you. Thank you. Thanks, Bharat.