Q2 2020 Startek Inc Earnings Call
Good afternoon, everyone. Thank you for participating in today's conference call to just go Starteks financial results for the second quarter ended June Thirtyth 2020.
Joining us today, our Starteks, chairman and CEO approved <unk>.
The company's President <unk>, Chief who just how the Companys CFO Ramesh Kumar.
Following their remarks, well open the call for your questions before we continue we would like to remind all participants that's a discussion today.
Contains certain statements, which are forward looking in nature pursuant to the safe Harbor for <unk> in the federal six <unk> Securities laws.
These statements are based on information currently available to us and are subject to various risks and uncertainties that could cause actual results to differ materially.
Startek advises all those listening to this coal to review the latest 10-Q, one 10-K posted on its website for a summary of these risks and uncertainties Startek 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.
Is reconciled these amounts.
Actually the closest GAAP based measurement the reconciliations can be found and the earnings release on the Investor section of their website.
I would like to remind everyone thought a webcast replay of todays call will be available via the investor section of the company's website at Www Dot Startek Dot com.
No I would like to turn the conference over to start <unk> Executive Chairman and global CEO apartments and Gupta. Please go ahead.
Thank you very much Scott good afternoon, everyone and thank you all for joining.
Although we continue to face challenges related to the cool with 19 pandemic across geographies the still emerged as a stronger more efficient organization during the second quarter.
We drove sequential improvements each month on the top and bottom line.
No virtual command center has allowed us to make quick decisions and keep our operations as more than continuous as possible across the globe.
We continue to prioritize our teams health and safety during these uncertain times.
We the status of locked down send reopenings around the world constantly fluctuating we moved quickly to get our indaba Global work force either working from home or even one of our Delaware campuses under strict social distancing and recommend it tells the guidelines.
Today, approximately 25% off our global workforce is back in one off what the Liberty centers and 65% off a workforce is working remotely tanks to this dark cloud on new technology Gil capability that enables our team members to Delaware seamless and high quality customer so there's no matter where they.
They are in the world.
Rajiv will provide more details on this new platform later on in the gone.
But having approximately 90% offer total workforce now actively scheduled after operating we'd just 60% of a global team in April has significantly improved up position to address the continued strong demand from many lines.
I'm extremely proud of funding flexibility and efficiency in making this large scale adjustments so quickly.
In addition to helping our team members adapt to this new work environment. We're also focused on making sure. Our lines are equipped with the right technology to address the evolving needs of their customers.
Both got into lines and prospects have been increasingly adopting digital services in response to the pandemic.
But equally in high growth verticals that are experiencing elevated customer demand.
In industries, such as healthcare E Commerce, and cable and media. Our park does business are rapidly evolving and the need to ensure that digital capabilities evolves as well as so that they can keep pace with the customers expectations.
Our momentum in these industries point to a strong and growing opportunity our business development teams have done a fantastic job. During these times by driving new opportunities in these areas. While also expanding programs with existing clients. In fact, we have already signed two new with healthcare lines with strong potential for growth.
One of which will be rolled out in the third quarter.
Subsequent to the water we entered into an amendment agreement.
For our senior term loan and revolving credit facility.
The demand continues to provide for 100, then 40 million terms on facility along with a 20 million revolver credit facility.
The amendments now provide us with a detriment of principal payments until February 2021, and as many of you saw indeed, if I last week. They have allowed us to increase the facility from 20 million to 27.5 million.
The majority of our financial covenants have also been waived for the remainder of the year, including covenants related to cash flow cover interest cover and adjusted leverage ratio.
These amendments underscore our lenders confidence in our strategy and growth potential as well, it's not improving business trends.
Why do we cannot fully predict how they fix of the pandemic will play out we are confident in the resiliency of her business and our strategy in this environment. We will have more context to provide on our ongoing responds to the pandemic and I started you can issue does later in the call, but first I would like that Darren I would like.
Turning to school or what do our CFO to Michigan.
To take you through stock exponential results for the second quarter, Ramesh or what do you.
Thank you.
In keeping with the structure reuse last quarter.
I'll keep my review of the second quarter results.
Let's now review for the quarter was gone there was 1.2 million compared to one or 2.6 million in the second quarter <unk> <unk> <unk>.
No.
Well go to show continued to be impacted by the Goldman mine. There did go down in response to the finder make in many of our geography.
Along with corresponding reduction you're not I do look schools.
Gross profit for the fourth though.
18.8 billion.
Compared to 27.6 million in the second quarter couldn't be 19.
I'm gross margins were 11.1%.
But to 17.2%.
The decline in gross margin was primarily driven by continued impact from second quarter Lockdown in key geographies, such as India, Philippines and undo dots.
Selling general and administrative do as you're in the expenses.
These 214.6 million compared to couldn't be full point ninemillion into your other goldcorp.
As a percentage of revenue.
They include 500 and growing the business one.
To 10.3% as compared to 15.5 person in the order book what.
With the improvement driven.
Let's see so cost reductions that we have implemented over the last 12 month and particularly since it bird wouldn't be Grundy.
We are proud to report that this box all four consecutive quarter, Oh, as Jim <unk> cost reductions the flipping a constant evaluation on operating expenses and our ability to drive efficiencies across our geographies.
Net loss attributable to start their shareholders for the quarter.
Well, it's why point 2 million or 14 cents for sure as compared to a net loss of 3.6 million or 10 cents bullshit in the other goldcorp.
Adjusted net loss in the second Quadro couldn't get Granby.
It was all those 2.6 million or seven cents per share as compared to the adjusted net loss of dollars 0.1.
Essentially zero cents per share in the second quarter up couldn't be 19.
Adjusted EBITDA for the quarter was gone up 8.8 million as compared to 11 million.
To the order book what.
As a percentage of revenue adjusted EBITDA was 6.2% as compared to 6.9%.
Our ability to maintain adjusted EBITDA margins in the 6% range.
Despite the superiority optical were 19 challenges during the low points in <unk>.
Yeah, so either remarkable feat.
From a balance you spoke to a June cookie it.
Oh gosh unrestricted cash increased significantly to dollars for up to 6.4 million as compared to 39.7 million at March 31 Grundy Glenn.
This increase in our cash balance was primarily driven by controllable costs.
Yes, that's resulted in working capital improvements.
Before.
Uh huh.
And a 7.5 equity these completed in June Twentytwenty.
Total debt at the ended the quarter degrees, good dollars 149.9 million as compared to 175.2 million.
I still do one grand deep Wendy.
But I'm really driven by the closure of what you'd be able facility.
Repayment loans from the proceeds all non recourse.
Huh.
And then that June 30, Twentytwenty wasn't it used to dollars 93.5 million compared to 135.5 million I'd much or do you want guaranteed grant.
But really not strong cash position amended credit agreement and increased the watering facility.
We're very confident with our liquidity position as it stands today.
We will continue to actively monitor a working capital I'm kind of schools.
<unk>.
Manage expenses and limit all nonessential spending.
Given the improving trends in our business.
We are now comfortable to began leading listing in both I'd and non I'd capital expenditures in the back half of this year.
Well the join me.
Especially as global conditions surrounding the pandemic continue do you want.
This concludes my prepared remarks, and I will now handle.
Lets you.
Thank you and MH.
As Bruce mentioned earlier, our team has done an exceptional job of 17 and adapting to this new and evolving environment amid dependent me.
On a bunch of gene response swiftly and facilitates remarked what capabilities across our global footprint was driven by the new work at home solution we implemented.
<unk> dark cloud.
Dark cloud gives us the ability to watch the higher onboard train and manage the performance up our work at home agents, while keeping all of our current employees connected.
We did not have such a comprehensive digital infrastructure in place.
So to the pandemic and I'm very proud of the speed and agility displayed by our global teams in rolling out the solution.
We recognize that remote welcome to form a significant part of the new normal and we are committed to ensuring that stock remains a bought off that's evolving landscape.
Across our geographies.
Our Malaysian delivery sites well one of the first two bounced back quickly from the bank.
Locked down and mobility restrictions of almost.
Clearly been lifted across Felicia, which has allowed our workforce to move freely and work at higher levels of capacity.
Meanwhile, the most significant colbert impacts we have centered around the world are consistent with what we reported last quarter.
In India, even go Lockdowns were lifted boss transportation did not reopened right away and this affected our team members ability commute to and from work.
The implementation of social distancing measures also impacted our ability to ramp up our workforce and productivity in the region, but we have now made better progress in bringing our teams in India back on line.
In Honduras nationwide Lockdowns have been on and off over the past few months, which makes long film visibility difficult. However, we have great. You just stopped business do these geography specific effect by providing a robust remote work infrastructure and leaving.
Continued to further optimize the solution.
As we look ahead and consider the long term effects of reopening.
And Lockdowns are not operations, we are closely monitoring our approach to how we manage our physical campuses.
We have been in close communication with our landlords around the worried about negotiating new gums discounts and definite insofar rents and I'm happy to report at most of our land logs had agreed to partner with us and provide us with some form of concessions.
It is a big too soon to speak speculate what our long term footprint. They look like on the other side of the pandemic.
But know that we are actively evaluating the cost benefit of keeping expenses pieces of real estate and underutilized campuses, especially given the success of our work at home solution in many geographies.
Regardless of the outcomes.
We will continue to be prudent stewards of capital as we have <unk> during this double in feared.
Hopefully.
He does that bring that we are optimistic about the consistent.
Significant improvements that we have driven across our organization through the pandemic and be a focused on driving up performance even further.
The quarters ahead.
With that.
I will pass the call back to walk through.
For his closing remarks.
Approved.
[noise]. Thank you Roger you think you Ramesh barge or what do you said, we cannot fully pedic or how the wells will look in the months and quarters ahead. However, we have established an excellent foundation to manage through this environment first and foremost we will continue to place our highest priority on supporting and protect.
I think our global workforce, because we're not team members a comfortable and well equipped we know that lines and their customers will receive the same high quality experience said, we have always delivered.
The technology company that patients we made to ensure a global team safety and operational continue witty had been remarkable.
We are positioning starting to be at the new frontier of customer experience management and I'm very grateful for the dedication of our teams around the globe and I've gotten us to this position we could not have you imagine being on the stronger footing during the low points in April.
I'm proud of the work that we have accomplished we didnt plan to continue to improving our position as a value added strategic partner talked lines.
We are in a strong financial position and our strict and prudent focus on cost controls will carry forward starting has demonstrated great adaptability and resiliency over this past few months and we are well positioned to continue navigating this dynamic operating environment.
Scott We will now open the call for questions.
[noise]. Thank you.
If you like Christopher question. Please press the one follow up with a four in your telephone keypad [noise].
Sure that anyone need assistance at this time, Please press star zero for in a real system.
Once again, that's one of four to register for question on brief on for the first question.
[noise] [noise] [noise] once you can just as a reminder address your question. Please first one for.
To have a question from Dave Koning from Baird. Please go ahead. Your line is open.
Yeah, Hey, guys. Thanks, so much and nice job navigating through.
Through the difficulty.
Thank you I guess, yeah, Yeah, and I guess my first question.
I was reading through the 10-Q and it talks about how at the end of July 50% of your agent that home, 30% in centers and 20% idle and I'm. Just wondering how does that compare kind of with Q2. You know just just as I think about our revenue run rate in the at the end of July was was that a similar mix to what Q2.
Feeling or or is that showing a pretty nice improvement, which would you know which would basically say Q3 should have revenue up from Q2.
Oh, well that would be forward looking in my my mind, a day, but I can tell you that do we have improved ourselves month on month. So April may June I think we have definitely improved and as we speak in July.
You have scheduled a workforce, which is close to 90%.
And while the workforce is one measure for figuring out what the revenue is going to look like but by and large if you look at the revenue off a quarter is a function of several things in terms of where expansion happens just to give you. An example, and expansion in U.S.. So even for 100 people.
It's almost two times more revenue than an expansion of similar headcount of people in Philippines already in India.
However, the profitability is it definitely height in Philippines, or not as much as in the U.S.. So a revenue and profitability is a function of many factors, which is a very unique to client situations, but up an estimation Nordic estimation off the number of workforce that is now.
Available for.
Growth and far subsequent work that is going to happen in Q3 is a fairly good indication off or potentially seeing growth off what we have seen in quarter two.
Yeah, that's that makes sense that that's really helpful. I guess secondly.
You you break out in the filing you breakout like India industry like a revenue together as a segment and that that was down 40% year over year and you talk to that on the call I thought it was interesting, though the Americas revenue was actually up 10% year over year, and I guess, what's what's driving that particular strength.
Is your biggest geo kind of thought.
I used to sell so just wondering on that.
Sure I Oscar Rajiv to give you a sense of that Rajiv.
Thank you up rope yeah, great question, Dave So.
I think the singular difference.
If one can pointed out is the fact that a India, especially had a locked down which was enforced by the law in letter ENSPIRIT, whereas in the U.S.
Was business as usual life as usual well do a very large extent.
There was an initial Peter but a number of states went into locked down and that impacted our ability to get to people into our brick and mortar centers, but.
Given the spike in cases in India.
That was contraction in demand and on the other and.
We were finding it difficult to get people into our brick and mortar, saying it does which is like India saw a drop off nearly 40% as pointed out for you but a.
Good part is that a we covered up some of that we'd have a spike in demand that we picked up in the U.S.
Yeah, Yeah, no doubt that was great to see.
And then maybe just the last one just on costs and we've done a remarkable job on S. DNA and just keeping costs under control.
Is it fair to think about that run rate is something where you probably want to cut that deep in a you know there was a normal environment. So as things normalize. It does as you know kind of start ramping backup a little bit.
What kind of stay as low as its Matt.
Yeah, I think they've that's a great question I mean, I've always believed that me and Rajiv and Ramesh when we were discussing.
Only a month to month of April in the early weeks of the month of April when we have a standing at this something.
Complete catastrophic pandemic that was setting a das you said you know what do we have under do three things we have to survive we have to secure and we have to shine.
And in order to do that we took all measures that were discretionary nature and when not useful. So we just do a magnifying glass in looking at what are those discretionary expenses that we've been doing which are not required if you have to run and efficient organization in a situation like this.
And I would say that's the positive of call. It I mean, it taught us to be on our feet. All the time hour by hour day by day week by week trial balanced by trying to balance across geographies.
And we are happy to report a significant improvement that has happened on a CNN. That's the new normal on the base of which will be bucking. However.
When things open up post pandemic, probably people start traveling customers would expect to just started zoom call or a teams call customers would expect us to one visit them or they would common me daus and art business development team or operating team will go back to flying side when do those meetings, so that will basically in China.
But the travel cost a which is part of his DNA, but barring that Oh I do not see much off up I would say cost tradition that would gum or other than what is customary for a natural business school that happens you add proportionate workforce, which held in managing those processes. So.
Long story short I think Oh, we have not gone to the bone.
We are we at you know very comfortable position, we feel very proud of what has been accomplished at the same time you have now set a kind of a benchmark for ourselves that this is the foundation on which we will build and grow this organization.
Great. Thank you.
Thanks, Dave.
And our next question is from Mark Argento with Lake Street Capital markets. Please go ahead. Your line is open.
Yeah.
And then everybody and a nice work in a tough environment.
I was hoping if you could maybe highlight any sectors or end markets are you seeing any kinda increased activity.
You know maybe E commerce or other types of financial services relative to maybe some of the travel you did highlight anything there that would be great.
A quick or second question around it going forward given how you guys have been able to pivot fairly successfully to.
More of a work from home environment do you see that model or more of a watch type model in the future.
Within that you might keep in place a post pandemic, but.
Sure I'll, just give you a very high level or strategic overview as to where it stands and <unk> osgood relative to fill in the details on that line ecosystem.
The global pandemic, what it has done is it has done two things. One is it has suddenly thought all of us up and ER as to how to be at Jive and have the ability to be a continuing partner.
Which is their respective off the ability for agents to Glenn say don't brick and mortar campuses. So I would say.
During the toughest times innovations happened and I would say the innovation that has happened that started and we will continue to see that momentum ahead is that we we created a product or service product called start low that's dark cloud is universal ability that actually allows an agent to work.
From anywhere in the was and that has made us it truly global organization, which is now agnostic to where we have all centers as long as somebody has an internet connection reasonably good intended in internet connection. He has the ability he or she has the ability to basically support a customer so that that that's happened and we at least.
Leasing up customer the saying that well this seems very interesting and this is something that we would like to have a as a continuing offering as you go and move ahead, they feel very comfortable than doing pandemic times that we have not shut the shop and gone home. We have continued to service them. So this is going to be definitely a bar.
The offering not want is going into the mix off how much you will be work from home and how much will be brick and mortar.
He's an answer I do not have at this point in time, because human memories change if God forbid goes away and vanishes from this world people might still want to have people sitting in centers. So those are kind of smaller off a bought shot I don't want to take that but definitely the star cloud is going to be one of the key competitive advantage that we have created.
In the marketplace. So in the rapid manner in which we have deployed.
So what does that is concerned on the client side, we're seeing very interesting things unfolding, especially on the E Commerce and cable and media and health care and I think Rajiv fees at the heart of it and he will give you a very good highlight on that.
Rajiv.
Thank you I broke yeah.
So mark I think you partially answered the first thought if your question.
Yes, yeah, we see a logical like ecommerce, yes I.
Cable and media on health care, especially stocking Destocking run Hawk now as a lot.
Getting lift carried and ER and people start stepping up.
Wearing it.
Continued traction <unk> is across essentially all industry retail automotive travel and hospitality and knock them. So view is that a need for industries will probably be the lost the I'll get back on that two feet.
Part is that Starteks exposure.
Due to these four verticals retail automotive travel and hospitality is is far far lower than some of our competitors. So it hasn't affected us to the extent back or some of the others had been affected.
Coming to a box to your question I think a future work is gonna look very different forced the pandemic.
Or the causes a bank.
And and work from home will form a significant component.
Approved absolutely spot on back up you know it would be a gold is that kind of on our progress crime attaching downward.
Like.
That the significant component or are the book host bank do who operate from their living room, and ER and that is flying come up with this offering on a stark low which then essentially.
Well the more work involved working from home.
Intelligently purposeful automation.
Southgate square, so so weve got better positioned to give you what those numbers looked like really a couple of quarters down the road bike at this point Oh.
All I can say is.
That.
<unk>.
[noise] course work at home or forming a part of a number of Hawk line overall network strengthens.
But it makes sense then just one quick follow up.
You.
Can you highlight or.
Shed some light on.
The new capabilities or services.
Your clients might be asking of you are from you.
And this new environment in terms of being able to serve their customer.
Yeah. So you know what we've done is a let's let's take a what are the current contact channels that are in place you've got.
Oh you.
Got email you've got Jack do you have got SMS more biolabs, you've got the web.
Got social media and video.
That other different funds that channels that are currently play what the what start cloud.
Effectively does is it brings contact intelligence, coupled with contact efficiency, coupled with gone back automation.
And thereby helps.
But an omni channel experience.
Seamlessly agnostic location off a wed be using just be start off so that's now farming there.
And critical Autopart on Gorgon lockers factors, both with our existing client as well as it's been a prospective clients that you're talking to and and it's amazing how how phenomenal a shift.
Sure that Uh huh.
Recall there.
And his goal that rourke films or.
How lineside warming up to the Guy who ran up willing to embrace.
Uh huh.
As a group of an adjustable so.
Okay well.
A lot more.
Well in automation I mean.
Over the course of the next few quarters, because our clients now they realize that ER.
Automation can.
Hello them.
Livermore far less.
So that forms and overall part of our digital.
Capabilities and and it's being you that they.
Look back very favorably by by all the clients are getting touch.
And Mark just to just give you have any macro view mark just to give you a macro view off or just Rajiv said, we are clearly looking at and staring at a capability that we have developed on star cloud, we're seeing that customers in this pandemic. They have learned a few things and that is how to be resilient how to manage disaster recovery.
And what is business continuing to start cloud suddenly has gone and proven to a customer that if we have 100 seater or a 500 seat or maybe in the U.S. thousands it and the Philippines, and so and so forth. We now have kind of end finite seater capacity that can be that can be lit up anywhere in the world. So that's a huge amount of.
Shortens that outsourcing managers in companies really very comfortable about and this is just not the their capability. It's also our ability to ride on their infrastructure and basically bakish the whole teeing off of conversation and the context and bring it back and lifestyle and at home with almost.
Similar near similar kind off a accuracy and security.
Even in a Sito Trust network, so that that's a tall order and that would have been a very theoretical powerpoint slide had they not being a pandemic, but this is now proven.
And you know times off a real real large scale beat up if I may say, a the declines have really embraced in a very very big Gran <unk>. We believe that we would definitely got more clarity stronger that child, a workforce so pricing the customer experience piece is concerned.
Thank you very much with additional color and good luck guys.
Thanks Mark.
We have a question from Cummins with B. Riley FBR. Please go ahead. Your line is open.
Yeah, Hi, good afternoon. Thanks for taking my questions I really appreciate and congrats on on the nice bounce back throughout Q2.
And that's just speaking to the two new healthcare clients that you talked about in the script.
So can you can you give us a sense of how you came about winning these clients was it a highly competitive bid or was it something where these clients were proactively coming to you to try to find a way to more proactively serve their their end customers.
[noise] fantastic that's a great question on it gives me the segue to once again mentioned.
That which I had mentioned earlier that we have got Rick ferry as executive Vice President for business development and he is based on North America. He's a very astute and season leader and has been in this space for a very very long time and has been I really do your colleague also during my erstwhile ages days when I was a global.
CEO and end of the declines in these times have to go with partners that not only have the capacity, but also the capability and the executive air cover that is required to manage large scale programs and this has got customer that we are talking off our fortune Clos companies. So, yes, kudos to pretty much of that business.
Well up and deem that went and opened the door, but open in opening the door is one part but also executing them flawlessly is another thing on both front, especially with Rajiv admire your team members on the operating side and recovery on the business development side created a phenomenal executive air cover the kleinfeld.
Very short and confident.
And I think that has led to a signing up a this two large contracts that we have talked often get one more contract that we are not discussing at this point in time, but that's also very very creative contract. So our business developing machine has started kicking in the engine as cranked up and it's only a matter of time with all this digital capabilities and some more to come in the fuel.
Sure, we feel very poised and comfortable as to where we are going to take this company too.
Understood that that's helpful and speaking of the digital capabilities.
The launch of start cloud can you speak to how the mix of.
Oil volumes versus all your other digital channels has really changed with your agents since the start of the pandemic.
I will give you picked on.
He will give you Oh, yeah. Please I just give a technology on sort of sooner I was going to give the process on Sir [laughter]. The technology answer is that the beauty of star take a start cloud is that when you go into a call Center you you ride on two channels. So one is a voice in which the voice guns and other is that technology, which is a screen which is a city.
Hi that Pops up so you have a kind of interconnectivity with the client server, which is one connection and you have the voice switches routed through any city or I, VR and so and so forth. So the ability to much of this do and bring into a single unit is what started cloud is all about and that has now given an agent.
Speak on the same line on the phone as well as work simultaneously. So that is a significant technological I would say system integration with multiple partners and R&D that.
Our technology team quickly dropped in into better.
Now in terms of processors, how customers are thinking in terms of digital capability Rajiv is at the heart of it in the boiler room, So Rajiv overdue.
Yeah. Thanks approved I think you've covered a large florida for exactly just to be a little more specific.
[music].
You know the moment.
Let me.
ER and locked down started a into why the started adding the up.
Knocked down started getting in forced obviously business continuity was the first thing that goes up almost in a in the mines of every client.
And they have to make sure that irrespective of the geography.
We are the lights went on so up so what do you was diverted to different parts of the often global network and there were certain geographies and India. For example, where wed spend all inject up of work at home solutions any quickly the cause of restrictions on.
Oh limitations on account of Internet penetration bandwidth availability et cetera clients decided.
Change the contact channels from same voice.
Chat or email for that matter, so we get a.
Or change in the in the product mix because prior to the finally, a 95% off the Watson that the that start to just pick up was essentially.
That has changed to a certain extent so almost the vitesse. So they can lose.
But whether that will continue.
<unk> into the show once kick start now hunky exactly.
Luckily progress discussions are still on the declines.
Probably a better position to there for that or next quarter over quarter loss that but yes that was a shift.
No change in the product mix as opposed to equal.
Understood. That's that's helpful context, and then just final question Ramesh geared towards you I know in your script. You mentioned there was plans to ramp up investments in Capex in the back half. That's here can you provide us a little more detail on areas those investments will be geared towards.
Got you know this is a forward looking statements I'd gone for what you do.
But I'd be hurt the business is growing and I'm your clients, what I'm, saying.
The initiatives that are Jew Allen approved mentioned on the digital site technology investments will do something that we will definitely Oh, sorry go ahead to make sure we don't lose a job growth.
Understood. That's that's helpful. Thanks again for taking my question.
Yeah.
And we had a question from Omar Samalot private Investor. Please go ahead. Your line is open.
Hey, guys or why there. Thank you for taking my questions.
Hi, I'm or.
So I I I was expecting a worse.
Result, so I'm I'm pleased to see how you guys really.
I mean, what remiss that it was a remarkable feat for sure.
I was looking at the thank you and I notice that revenue essentially quarter over quarter.
It was down 11.6% however, the segment operating income.
It was only down 6.8% from.
I mean is obviously as you make cuts help but how are you able to software and the impact on the gross profit. So so nice.
I'm actually wondering that.
Sure.
You would've seen that was the gross margin decline, but our continuing decline on as she in there as it goes to solve plant in sort of see you're on your which was very impressive quarter on quarter as gender dropped so.
By close to $2.6 million across the board.
Fair amount of it was part of the ongoing process that had started earlier this year on cost cutting and that'll help us to learned a little bit more softly, then we would have.
As it did it cost level also Linda bundle makes it does it go wider limited time for us to react, but as the quarter more than that operating team.
We're really focused on cutting costs across whenever it as possible and that was the decline on gross margin is also not as much as it could have so he's been a huge amount of hardwood quote or do you and his entire team, but I think we have done an exceptional job.
I have to agree.
In terms of the swift cost cutting and as DNA.
Do you guys comment on what were the area. So that most significant impact or in terms of those cuts.
See I call. It Oh, please because talent talent technology.
Training and other associated transactional expenses, such as transportation and so and so forth. So we came up with this 40 strategy, which is to focus on all elements, which are discretionary nature, which are categorized into three parts, which is vital essential and desirable. So we felt.
Just on that what do we need as vital energy what is essential and keep those and basically if we do not need to kill those so this keeping people start to your own those four areas. The for these that I've talked off around is vital essential and desirable was kind of a threedemin should approach that the entire leadership.
Im got together and systematically went on in short so some of them it to do with talent, which is to do with labor, which were kind of fat sitting somewhere or something was to do with technology read there.
After the merger of the company's some reorganization and some optimization on that front or were done and something related to a the manner in which training was in part it and there's remote a learning and development lifecycle that we have implemented in started cloud which is from higher to retire process.
So all those basically kept in and then the we also looked at optimization off all the transactional and stuff like transportation and so and so forth baby bus people and we optimize some of those stuff. So all this put together has really really actually worked up like a symphony and ER and they worked at breakneck speed and Ah we were many.
Got killed and in some form a because we also had two kinds of cash.
And that kind of brought in the outcome of what do you see in quarter. Two so we are ready I would say we have survived we have secured and we're going to work to a Chinese.
Right.
In terms of one of those phones, you said you know the labor part of it obviously when you're when you're that kind of situation you have to swiftly and shut down or or reduce so I'm wondering if you've characterized the impacts or I'm not sure. If we saw in this quarter or maybe we'll see.
In future quarters, but obviously you know you're gonna have turnover and retraining in some cases I was wondering I guess you know how how much of an impact that would have or did you experience for that.
In terms of a turnover and refilling of agents or maybe coming up in the future I don't know if anything you can see about that.
That'd be very hard to comment on our at this point in time, because it's very unique for every program Rajiv what do you like to take a stab on it but I don't think we can comment very spect specifically on this very large generic question.
Yeah, but I'll just take a.
You know pick stab under the Omar.
Let's assume for a moment in particular program went dark on account of Ah or the Mac.
And you know what we did was.
Any done at Dawdling.
Everybody that was associated with that program went on a normal work no pay model, so, thereby be weren't getting extra cost when there was no revenue flowing into the organization.
However.
When it comes store.
Once these programs hopefully are up and running demand picks up.
That point of dying, but you know.
Hi College here the book Falls, how many of them, we'll come back you have to higher Oh, a large bunch of people and then put them drinking again or is something that has yet to play out but ah, but at this point.
He rather than effectively off referred to.
No well not be ang or to a virtual system that youve a that each odyssey spoken to place globally, we're keeping contacts WAM on a weekly basis.
Equally goes out in touch with the region.
They're talking to them, just making sure that though that you know the green fine.
The one thing.
And.
Also telling them that they've got to constantly keep making sure that did a brushing up that's true and staying up cleaned up when the process. So that I think.
Laying out when it starts.
Coming back into our centers by adding to that would be contingent upon when demand picks up but.
If it goes to attach a number does it go to attach a.
Plus an old stores that are at this point of directly.
No. That's the that's helpful and and finally, obviously it seems India, India America.
And what.
Were hard hit in terms of revenue for the quarter I can you talk about what you see for those markets for you guys. Just a recovery continues.
So I think they do these guys, who say that we are ready willing and able to.
That said, we are ready willing any.
Well, you only hasn't when that demand stocks picking up.
Like I said, we are keeping the current work force warm Oh, we bought a large percentage of our workforce now deployed or at home and a and it very short notice now are almost within about a 12 to 18 hours. We can now we can actually we can actually light up a work at homes.
Solution, that's the journey.
Robert Technology teams have covered.
Over the course or lost a few months so up so I think it's just a matter at all when demand starts picking up and I know that from the supply side I can underwrite act a that we'd be in a position complete whatever demand exists out there.
Very good guys well. Thank you very much for four for answered the questions and and I wasn't the best of luck to give you guys doing glut.
Thanks, Thank you Omar.
At this time. This concludes our question and answer session I would now like to turn the call back over to Mr. Sengupta. Please proceed.
Thank you Scott a and thank you all for joining US this afternoon and for your continued support as topic I look forward to speaking with you next when we report our third quarter results. Thank you stay safe stay healthy.
But.
Thank you everyone. Thank you.
You may now disconnect.
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Uh huh.
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