StarTek, Inc. EBITDA dropped on 33.9% and EBITDA Margin decreased on 3.4 pp from 10.7% to 7.2%
03/15/2021 • About StarTek, Inc. (
$SRT) • By InTwits
StarTek, Inc. reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 7.2% in 2020, 10.7% in 2019, 1.5% in 2018, 3.5% in 2017, 4.9% in 2016
- StarTek, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.2%. At the same time it's in pair with industry average of 14.0%
- CAPEX is quite volatile: $17m in 2020, $16m in 2019, $10m in 2018, $7m in 2017, $4m in 2016
- The company has unprofitable business model: ROIC is -1.0%
- It operates with high leverage: Net Debt/EBITDA is 3.5x while industry average is 1.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
StarTek, Inc.'s Revenue decreased on 2.7%. Annual revenue decline showed slowdown in 20Q4 - revenue increased slightly on 1.7%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 5.3 pp from -3.5% to 1.9% in 2020.
Gross Margin decreased on 2.9 pp from 16.9% to 14.0% in 2020. SG&A as a % of Revenue decreased on 4.2 pp from 13.9% to 9.7% in 2020. During the last 5 years SG&A as a % of Revenue topped in 2018 at 14.1% and was declining since that time.
Net Income margin decreased on 3.8 pp from -2.3% to -6.1% in 2020.
Investments (CAPEX, working capital and M&A)
In 2020 StarTek, Inc. had CAPEX/Revenue of 2.7%. The company showed almost no change in CAPEX/Revenue from 2017 to 2020. It's average level of CAPEX/Revenue for the last three years was 2.4%.
Return on investment
The company operates at negative ROIC (-1.0%) and ROE (-18.5%). ROIC decreased on 4.1 pp from 3.0% to -1.0% in 2020. ROE dropped on 11.9 pp from -6.6% to -18.5% in 2020.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.5x and Debt / EBITDA is 4.5x. Net Debt / EBITDA jumped on 0.3x from 3.3x to 3.5x in 2020. Debt dropped on 16.7% while cash jumped on 117%.
StarTek, Inc. has no short term refinancing risk: cash is higher than short term debt (120.3%).
Management team
Aparup Sengupta is a the company's CEO. Aparup Sengupta has spent 1 year with the company. The company's CFO is Vikash Sureka. Vikash Sureka has 28 days years tenure at the company.
Financial and operational results
FY ended 12/31/2020
StarTek, Inc. ($SRT) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 307.2 | 292.6 | 486.9 | 657.9 | 640.2 | -2.7% |
| Gross Profit | 36.4 | 32.4 | 70.2 | 110.9 | 89.6 | -19.2% |
| SG&A | 33.2 | 32.6 | 68.6 | 91.4 | 62.1 | -32.0% |
| EBITDA | 15.1 | 10.3 | 7.4 | 70.2 | 46.4 | -33.9% |
| Net Income | 0.4 | -1.3 | -34.3 | -15.0 | -39.0 | |
Balance Sheet
|
|---|
| Cash | 1.0 | 1.5 | 16.6 | 20.5 | 44.5 | 117.5% |
| Short Term Debt | 28.8 | 2.7 | | 64.4 | 37.0 | -42.5% |
| Long Term Debt | 5.5 | 22.2 | 152.1 | 184.5 | 170.4 | -7.7% |
Cash flow
|
|---|
| Capex | 3.8 | 7.2 | 9.6 | 15.6 | 17.4 | 11.9% |
Ratios
|
|---|
| Revenue growth | 8.9% | -4.8% | 66.4% | 35.1% | -2.7% | |
| EBITDA growth | -2,109.4% | -31.6% | -28.7% | 852.0% | -33.9% | |
|
|---|
| Gross Margin | 11.9% | 11.1% | 14.4% | 16.9% | 14.0% | -2.9% |
| EBITDA Margin | 4.9% | 3.5% | 1.5% | 10.7% | 7.2% | -3.4% |
| SG&A, % of revenue | 10.8% | 11.1% | 14.1% | 13.9% | 9.7% | -4.2% |
| Net Income Margin | 0.1% | -0.4% | -7.1% | -2.3% | -6.1% | -3.8% |
| CAPEX, % of revenue | 1.2% | 2.5% | 2.0% | 2.4% | 2.7% | 0.4% |
|
|---|
| ROIC | 3.5% | -1.0% | -6.3% | 3.0% | -1.0% | -4.1% |
| ROE | 0.9% | -2.8% | -24.7% | -6.6% | -18.5% | -11.9% |
| Net Debt/EBITDA | 2.2x | 2.3x | 18.4x | 3.3x | 3.5x | 0.3x |
StarTek, Inc. ($SRT) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 161 | 142 | 163 | 174 | | -0.2% | -11.5% | -1.2% | 1.7% |
| EBITDA | -7 | 15 | 22 | 16 | | -142.4% | -10.7% | 7.3% | 3.8% |
| Net Income | -27 | -5 | 0 | -8 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 28 | 47 | 48 | 45 | | 90.4% | 207.1% | 172.3% | 117.5% |
| Short Term Debt | 73 | 59 | 53 | 37 | | 41.9% | -9.4% | -15.4% | -42.5% |
| Long Term Debt | 183 | 169 | 154 | 170 | | -10.7% | -15.5% | -18.4% | -7.7% |
Ratios
|
|---|
| Gross Margin | 12.5% | 11.1% | 14.1% | 17.7% | | -4.4% | -6.0% | -3.2% | 1.6% |
| EBITDA Margin | -4.5% | 10.7% | 13.5% | 9.4% | | -14.9% | 0.1% | 1.1% | 0.2% |
| Net Income Margin | -16.5% | -3.7% | 0.2% | -4.3% | | -14.4% | -1.4% | 1.9% | -1.3% |
Peers in Data Processing & Outsourced Services
Below we provide StarTek, Inc. benchmarking against other companies in Data Processing & Outsourced Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Square, Inc. ($SQ) | - | 29.6% | 49.0% | 42.9% | 101.5% |
| Global Payments Inc. ($GPN) | - | 37.2% | -15.3% | 45.9% | 51.1% |
| Fiserv, Inc. ($FISV) | - | 3.5% | 2.2% | 74.9% | 45.8% |
| NIC Inc. ($EGOV) | - | 5.8% | 2.5% | 2.7% | 30.0% |
| StoneCo Ltd ($STNE) | - | 74.3% | 106.0% | 63.1% | 28.9% |
| |
|---|
| Median (39 companies) | 6.7% | 11.8% | 7.4% | 8.9% | -3.3% |
|---|
| StarTek, Inc. ($SRT) | - | -4.8% | 66.4% | 35.1% | -2.7% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Verra Mobility Corp ($VRRM) | - | 97.4% | 97.5% | 95.7% | 91.5% |
| EVO Payments, Inc. ($EVOP) | - | - | - | 80.2% | 80.8% |
| StoneCo Ltd ($STNE) | 69.7% | 70.8% | 79.5% | 83.4% | 76.8% |
| WEX Inc. ($WEX) | 54.7% | 58.8% | 63.3% | 61.7% | 56.8% |
| Sabre Corporation ($SABR) | 32.2% | 30.1% | 27.8% | 56.6% | 56.6% |
| |
|---|
| Median (31 companies) | 39.5% | 39.5% | 41.0% | 41.7% | 36.7% |
|---|
| StarTek, Inc. ($SRT) | 11.9% | 11.1% | 14.4% | 16.9% | 14.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Visa Inc. ($V) | 55.6% | 69.2% | 65.8% | 68.1% | 68.5% |
| Mastercard Incorporated ($MA) | 56.9% | 56.5% | 51.8% | 60.9% | 56.6% |
| FleetCor Technologies, Inc. ($FLT) | 52.0% | 50.8% | 55.9% | 57.6% | 52.2% |
| StoneCo Ltd ($STNE) | 31.4% | 26.0% | 53.0% | 62.4% | 52.1% |
| Black Knight, Inc. ($BKI) | 43.0% | 44.6% | 43.3% | 46.0% | 44.9% |
| |
|---|
| Median (38 companies) | 21.3% | 21.1% | 19.4% | 22.2% | 19.1% |
|---|
| StarTek, Inc. ($SRT) | 4.9% | 3.5% | 1.5% | 10.7% | 7.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| PagSeguro Digital Ltd. ($PAGS) | 6.4% | 4.3% | 1.4% | 5.8% | 22.3% |
| StoneCo Ltd ($STNE) | 7.2% | 18.4% | 8.9% | 12.9% | 11.2% |
| Cardtronics plc ($CATM) | 9.9% | 9.6% | 8.0% | 9.3% | 8.3% |
| Verra Mobility Corp ($VRRM) | - | 11.5% | 7.2% | 6.6% | 6.2% |
| Fiserv, Inc. ($FISV) | 5.3% | 5.0% | 6.2% | 7.1% | 6.1% |
| |
|---|
| Median (38 companies) | 3.2% | 2.9% | 3.2% | 3.3% | 3.1% |
|---|
| StarTek, Inc. ($SRT) | 1.2% | 2.5% | 2.0% | 2.4% | 2.7% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Mastercard Incorporated ($MA) | 57.5% | 60.6% | 64.7% | 72.7% | 47.6% |
| International Money Express, Inc. ($IMXI) | -1.3% | -1.4% | 12.1% | 36.0% | 31.4% |
| NIC Inc. ($EGOV) | 63.1% | 52.1% | 39.3% | 26.5% | 30.8% |
| Visa Inc. ($V) | 18.1% | 21.9% | 23.0% | 27.2% | 23.2% |
| Western Union Company (The) ($WU) | 10.7% | 11.9% | 27.8% | 21.5% | 22.1% |
| |
|---|
| Median (39 companies) | 11.7% | 10.7% | 12.1% | 8.3% | 6.4% |
|---|
| StarTek, Inc. ($SRT) | 3.5% | -1.0% | -6.3% | 3.0% | -1.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| WEX Inc. ($WEX) | 6.7x | 4.4x | 3.1x | 3.4x | 12.1x |
| Exela Technologies Inc ($XELAU) | 8.1x | - | 9.7x | - | 10.7x |
| Alliance Data Systems Corporation ($ADS) | 10.7x | 10.1x | 9.0x | 11.7x | 9.2x |
| Verra Mobility Corp ($VRRM) | - | 10.7x | 6.9x | 3.5x | 4.7x |
| GreenSky, Inc. ($GSKY) | -1.5x | -1.5x | 0.5x | 1.5x | 4.6x |
| |
|---|
| Median (35 companies) | 1.3x | 2.3x | 2.0x | 2.1x | 1.9x |
|---|
| StarTek, Inc. ($SRT) | 2.2x | 2.3x | 18.4x | 3.3x | 3.5x |
