Chad A. Carlson - Chief Executive Officer, President and Director Lisa A. Weaver - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Treasurer

David J. Koning - Robert W. Baird & Co. Incorporated, Research Division Omar Samalot

Good afternoon, everyone, and thanks for calling in. It is my pleasure to welcome everyone to StarTek's Third Quarter 2013 Earnings Call. I am joined on the call today by StarTek's President and Chief Executive Officer, Chad Carlson; and Chief Financial Officer, Lisa Weaver. Chad will deliver some brief commentary today. At the conclusion of Chad's prepared remarks, Chad and Lisa will conduct a question-and-answer session. For those of you who have not yet received a copy of today's earnings press release, please go to www.startek.com, where you can download a copy at the Investors section of their website. Please note that the discussion today may contain certain statements, which are forward-looking in nature, pursuant to the Safe Harbor provisions of the Federal Security Laws. These statements are subject to various risks and uncertainties, and actual results may vary materially from these projections. StarTek advises all those listening to this call to review the 2012 Form 10-K posted on their website for a summary of these risks and uncertainties. StarTek does not undertake the responsibility to update these projections. Further, the discussion today may include some non-GAAP measures. In accordance with the Regulation G, the company has reconciled these accounts back to the closest GAAP basis measurement. These reconciliations have been found in the earnings release on the Investor page of their website. I'll now turn the call over to Chad Carlson, StarTek's President and CEO. Chad A. Carlson: Thank you, Janine. Good afternoon, and thank you for joining. Third quarter revenue grew 23% over the third quarter of 2012. During the quarter, we signed $44 million of new business, including 1 new logo and various programs with existing clients. This is a testament to the solid performance and solutions our team is delivering for our customers. Year-to-date in booked new business is $62 million, in terms of Annual Contract Value. Gross margin decreased year-over-year, impacted mostly by unusual nonrecurring costs. Excluding these charges, gross margin was basically flat year-over-year. LatAm showed the most improvement due to increased capacity utilization, while APAC decreased due to the mix, facility expansion, and ramp-related costs. SG&A expense was in line with expectations. As a percentage of revenue, it was down to 12.2% from last year's third quarter of 14.5%. This is due to continued focus on cost management and efficiencies. Excluding the unusual expenses previously noted, net income was positive for the quarter. On previous calls, I have discussed the IT platform initiative, and we'd like to report that we are close to finalizing all key decisions, and a significant facet of the initiative is currently being implemented. The goal has been to enhance our service offering, and shift as much of our IT cost as possible from of a fixed, capital-intensive model to a variable cost model, both at the same time. We have made good progress and this will be a key accomplishment for the future. This will allow us to open new capacity in a capital-like manner. This should ensure a much better return on invested capital than the company has achieved in the past. I'm pleased to with several aspects of our business. We have stabilized and are growing our core business. The differentiation we have built is being recognized by our clients and potential new clients. We are and will continue to be investing in new capacity across all geographies. We have added new revenue opportunities into our portfolio, which will add to our diversification. We are focused on growth. Continued focus on optimizing existing operations, and wise investment and growth opportunities remain core aspects of our strategy. The growth rates we're experiencing may lead to temporary margin contraction as we bring new operations along, but once ramped, will be accretive to the overall margin performance. This is partially why I've used the word lumpy with respect to our results and why it is better to assess our year-over-year trends. It is important to recognize StarTek is trending in the right direction, and has many opportunities ahead. We ended third quarter with $6 million in cash and no debt. Our credit facility with Wells Fargo provides ample resources to fund further growth. We are making strides toward our vision, and I am encouraged with our progress. I have always stated our objective is to create value for our shareholders through predictable, profitable, sustainable growth, and this remains our focus. I'm proud of the team, and all their efforts to date, and I am excited about our future. Janine, Lisa and I will now take questions.

[Operator Instructions] We have Dave Koning from Baird on the line with a question. David J. Koning - Robert W. Baird & Co. Incorporated, Research Division: Nice job on the new signings. That's great to see. I guess, first of all, just -- by quite a bit that's the biggest new signings that you've -- you've had in a quarter. Is that pretty broad-based? I guess across several clients and maybe how quickly do some of those revenues come on? Lisa A. Weaver: Yes, it is across a handful of clients, Dave. A significant portion is new programs with existing clients. And that -- we have started ramping a portion of that, but I'd say that we don't expect to complete the ramps probably until mid to late Q2, 2014. David J. Koning - Robert W. Baird & Co. Incorporated, Research Division: Okay. Okay, good. And then, I guess, in terms of T-Mobile and AT&T, I think you should file your 10-Q tomorrow, but just wondering if you have any color on about how much revenue of each of those contributed this quarter. Lisa A. Weaver: Yes, sure. AT&T was a little over 25% of our revenue for the quarter, and T-Mobile is a little over 28%. David J. Koning - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then, I guess finally just on gross margins. It was a little weaker in the U.S. this quarter, but quite a bit better in Latin America. And just wondering, I guess, on both of those, are we pretty sustainable here in Latin America around, I guess, close to 10%, and U.S. should that bounce back a little bit? Lisa A. Weaver: Yes. So keep in mind, the one-time costs that we reconciled in the Reg G table was significant portion of those costs hit domestic. So, if you would've looked at our kind of normalized results, if you will, the results are actually better than same quarter last year. And then, that was -- you asked about Latin America, and yes, we're on track with expectations as we continue to increase our capacity utilization. David J. Koning - Robert W. Baird & Co. Incorporated, Research Division: Okay, good. And just finally then, so basically, the IT initiative costs are in the gross margins of the U.S. And are those -- when do those, I guess, stop? Are we going to see a little more of that or was it just a one quarter event? Lisa A. Weaver: We'll see a little more of that. A significant portion of that was accelerated depreciation of assets that are involved in the transition. So that will certainly continue for another couple of quarters, and then we do anticipate having some additional costs related to this of next year. And we'll continue to publish the reconciliation on the supplemental Reg G table going forward. Chad A. Carlson: Should be through most all of the mid-year next year.

Next call comes from Adam Goldstein, private investor.

I missed the very beginning of this call. I don't know if you give any more detail about the $43.6 million of new businesses and well, astoundingly good. Is there anything more you can tell -- I mean, what happened? What's going on here? Chad A. Carlson: The once-new business.

Okay. Chad A. Carlson: No, I tell the team all the time, nothing sells like operational excellence and I think, all in all, the team is doing a good job with our core business and the bulk of that is coming from existing client relationships. So, in this business, success begins success.

Well, okay. Well, that's obviously great. So, I was curious about this -- you made a small acquisition in the healthcare vertical. Any progress in getting some new business in that new vertical? Chad A. Carlson: Yes, I'm pretty pleased with our pipeline and the opportunities there, and this is an exciting time in the healthcare industry with need to drive improvement in patient care, and also improve efficiencies in the overall system. I'm particularly excited about our ability to leverage our executives and our management team's experience in this space, which is actually probably kind of unknown to a lot of people, but a breadth of our team has a significant amount of healthcare experience. And to combine that with the deep technology experience that StarTek has had over the years through device support, wireless services, things of that nature, and combining that with the platform company that we picked up and moving into the clinical care side of things, some of the transformation going on in the healthcare industry puts us in a very interesting time in that industry and we're pretty excited about our opportunities there.

All right. Well, that sounds great. I remember last quarter, we were talking a little bit about -- I know that you've had this one extremely underutilized location in the U.S., I was wondering if maybe this -- any progress towards filling up that capacity? Can any of this new business perhaps be put into that capacity? Chad A. Carlson: We've made progress on our plan there. But the impacts there are still within these numbers.

Okay. Also, would you still say that in terms of gross margin, that the underutilization of that facility is still a significant drag on U.S. gross margins? Chad A. Carlson: Yes. We still have a few facilities that we're working through the process of how do we optimize margins in those locations.

Okay. I've got kind a of a generic question. Usually, every quarter, you discuss the amount of new business this quarter plus the year-to-date, but the one problem I have been trying to analyze is I never really know how much of that new business is truly new business, as opposed to just kind of being a rolling-over of previous contracts that maybe have now... Chad A. Carlson: We never count anything that's a rollover a continuation of new business. We never report that as a new business number.

Okay, great. Now what about, also, is this new business net of any lost old business? Lisa A. Weaver: No, it's just new bookings.

Okay. So, that's just new bookings. But I mean, what I'm asking is, when these numbers are -- when you guys give these numbers, is it possible there is some expiration of old contracts that are detracting from this that really ought to be subtracted from this? Or would you separately report any lost old business? Chad A. Carlson: If we have material losses, we'll report those.

Losses, meaning lost revenue? Chad A. Carlson: Yes.

Okay. So basically, I can assume when I see new business won, it's not a rollover and I don’t need to subtract out any previous business that may have been lost that's basically growth. Lisa A. Weaver: Yes. And let me just clarify that, Adam. Call volumes have been slow, to the extent that there is that contraction of volume, and existing contracts that wouldn't be called out specifically. So when Chad says if we have material losses, that would be contracts of business that we have in fact lost.

Yes. I understand that. But it's interesting, you say, call volume is low. Is that across all of the clients? Lisa A. Weaver: No, I was giving that as an example. I said, if call volumes were up or down on existing contracts, that would not necessarily -- that would not be reported as a win or loss.

I understand. That makes sense. Okay. Let's see. That's about it, actually. That's all my questions. I'm obviously thrilled with these results, so keep up the good work.

[Operator Instructions] We have Omar Samalot, an independent analyst on the line with a question.

Thank you for the non-GAAP breakdown provided. That was really helpful. And congratulations on a $0.01 a share results. That was really, really good despite all this growth. So, excellent execution. So, $44 million, wow. Again, I have to, I guess, repeat the question before, what happened? I mean, could you give a breakdown of industries, what -- how did you get that? Chad A. Carlson: That's mostly coming out of our core business, our core clients, Omar.

Okay. And I also noticed that -- I don't know if you're familiar with the ISD outsourcing index for Q3, the Information Services Group, and they reported that StarTek made their Top 20 BPO list for the first time in annual concert value. Obviously now I see why. But what caught my eye was that there was many other competitors that did not make that list. So, do you think that you have been able to carve out a niche for you guys in the BPO market that may be giving you an edge versus the competition? Chad A. Carlson: I think we work hard every day to execute well for our clients and our customers. And try to engage with our employees and our clients, and therefore, they're customers in a different way. And I think some of our approach in how we try to engage with our clients in a trusted straightforward approach is refreshing to some in the industry, and we'll continue to try to do that and to execute well on behalf of our clients. Whether that creates an edge or a niche, I don't know, but we're pretty pleased with our results so far.

And it's obviously working so. Okay. I saw a $900,000 loss on disposable of assets. Is that basically the IT asset write-down you've been referring to? Lisa A. Weaver: Yes.

Okay. Perfect. Let's see. I saw the announcement that you were reopening Enid location, which you've had closed for some time. Is that -- could you say what type of vertical -- is that a new vertical or part of the existing business? And when do you think that, that will be ongoing? Chad A. Carlson: Yes. That's new program with an existing client. And, we're in the process of hiring management staff and bringing their facility back up now, and should be starting production early this year or next year.

Okay, good. All right. Could you give us an update on the buildings that you were trying to sell, and really, I noticed that some -- that where under in-contract status. I don't know if you can say anything about that? Lisa A. Weaver: No, we said good activity there, Omar. So that's... Chad A. Carlson: That's all we can say at this point. Lisa A. Weaver: That's all we can say at this point.

Okay, got it. No problem. Okay. And I know that you don't like to give guidance at all. Is there anything that you would feel comfortable saying about how Q4 is shaping up at all? Chad A. Carlson: Well, right now, we're hands-down focused on bringing in a lot of this new business and growth, and looking at some new facilities that we've added capacity for, and making sure that we have the right leadership in place to handle those initiatives in a successful fashion, while also really honing in on, focusing on how do we make a mark in the healthcare space.

We have Dave Koning from Baird on the line with a question. David J. Koning - Robert W. Baird & Co. Incorporated, Research Division: So, just as kind of a follow-up. I guess, I know you don't like to provide a lot of guidance, but are we at a point where this quarter, on a normalized basis, I guess you generated a $0.01 of positive EPS. Are we at a point where we're at a normalized basis now -- you feel like you're going to kind of achieve ongoing profitability and kind of have just natural leverage across gross margins and a little leverage across lower operating expenses as a percentage of revenue too? Chad A. Carlson: Well, I think, our trends are up. I think it's going to depend how much growth and some of the investments in growth of new facilities that we're looking to bringing on and how that impacts us on a quarter-to-quarter basis. Dave, it's certainly heading in the right direction. David J. Koning - Robert W. Baird & Co. Incorporated, Research Division: Okay. Is there any way... Chad A. Carlson: I mean, you've been around this space for a while, so you know when we're bringing a new facility, we're investing a lot in plant and resources and leadership and personnel and training of production agency and everything before I would have moved in to revenue mode. So for bringing a few of those online, for essence, this quarter, I think we are somewhere between 100 and 125 basis-point dilution due to our ramps and growth initiatives. So, if we have a few that's going on, you could see some contraction in our margins. David J. Koning - Robert W. Baird & Co. Incorporated, Research Division: Got you. Yes, that makes sense. Margin just naturally being a little choppy depending on timing of ramps. That makes sense. Now, on a revenue basis, if we look at the last 5 quarters now, outside of Q1, which is seasonally weak, I think sequential growth was between 3% to 16% each of the last -- I guess, 4 out of last 5 quarters. So you're in a really good sequential growth among probably the best in the industry. Is that the right level like this 3% to 5% we've seen in the last couple of quarters? I mean, is that based on some of the new ramps so we should just kind of expect over the next several quarters now other than maybe Q1, which is seasonally weak? Chad A. Carlson: I don't look at it as it much sequentially, I look more year-over-year. And if we're double-digit growth, I'm pretty happy. David J. Koning - Robert W. Baird & Co. Incorporated, Research Division: Okay. Okay. So we should necessarily expect mid-20s on an ongoing business, but double -- somewhere in the double digits might be sustainable, at least for a little bit? Chad A. Carlson: Yes. At this scale, I think so. I'm not happy for below double-digit growth right now, on an annual basis. David J. Koning - Robert W. Baird & Co. Incorporated, Research Division: That's good. I think a lot -- yes, a lot of these competitors would like to have that takeover of growth. So congrats on that. Chad A. Carlson: If we're below that, I am not happy.

We have no further questions at this time. I will now turn the call over to Chad for final remarks. Chad A. Carlson: Okay, we appreciate all your interest, and we'll get back to work. Thank you.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.