Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Harte Hanks Reports Fiscal 2023 Third Quarter Results By: ACCESSWIRE November 09, 2023 at 16:05 PM EST Announces "Elevate," Transformative Plan To Improve Revenue Growth and Profitability CHELMSFORD, MA / ACCESSWIRE / November 9, 2023 / Harte Hanks, Inc. (NASDAQ:HHS), a leading global customer experience company focused on bringing companies closer to customers for 100 years, today announced financial results for the third quarter and nine-month periods ended September 30, 2023. Kirk Davis, Chief Executive officer, said: "In reporting my first quarter since joining Harte Hanks in June, I undertook this role against a backdrop of uncertainty. In May, prior management reported reduced visibility and projected challenging year-over-year comparisons attributable to macroeconomic headwinds, customer weakness in the financial services and technology sectors, and substantial non-recurring revenue attributable to pandemic-related projects. The revised outlook came with a commitment to preserve profitability, and a reorganization was announced. While our revenue performance and comparisons reflect prior management's assessment, we maintain a strong balance sheet and cash position, no debt, a $25 million credit facility, and considerable potential as we plan for our 101st year of continuous service." "I've gained a deep understanding of our company's position, capabilities, culture, and customers," continued Mr. Davis. "We excel in customer service, but we need a sales and marketing strategy and infrastructure capable of delivering consistent organic growth. What excites me is that there's a company-defining opportunity here. Improved sales execution and more effective marketing can meaningfully leverage our strengths and deliver tangible results." "We've shared with our employees a transformative plan, Elevate , which launched in early October and includes a collaboration with the Kearney organization," added Mr. Davis. "Kearney is a highly respected global consulting firm, and I've enjoyed great success working with the professionals at Kearney previously. Elevate is a sweeping endeavor aimed at materially improving our efficiency, revenue generation, profitability and employee experience. We are reengineering and expanding our sales and marketing organization, while planning to achieve a net cost reduction that improves our profitability. We're focused on creating a foundation for sustainable growth. It's our employees that will make it happen and we're equally focused on the experience we provide them." "As we look to the future, we are focused on transforming our revenue operations under new sales leadership," continued Mr. Davis. "We recently announced two key appointments. Kelly Waller, Corporate Senior Vice President of Sales and Marketing, is an outstanding sales leader with specific expertise in global marketing, demand generation and client retention, all important areas for Harte Hanks. Ron Lee, Senior Vice President of Inside Sales, is a highly accomplished inside sales executive, with a track record of success. We have immediately focused on scaling our inside sales division, pursuing strategic partnerships and plans to expand our international sales coverage. We're confident Kelly and Ron will revitalize our sales and marketing divisions, accelerate our pipeline development and drive improved performance." Third Quarter Financial Highlights Total revenues for Q3 2023 were $47.1 million, down 12.6% year over year compared to $53.9 million in Q3 2022. Included in 2023 was $2.2 million from InsideOut acquired in fourth quarter of 2022. Total Q3 revenues were essentially flat sequentially. Operating income was $2.9 million compared to $3.8 million in the prior-year quarter. Net income of $0.6 million, or $0.09 per basic and $0.08 per diluted share, compared to net income of $7.2 million, or $0.87 per basic and $0.83 per diluted share, in the prior year quarter. The third quarter of 2022 included $2.5 million in other income related to the sale of unused IP addresses. EBITDA was $3.9 million compared to $4.4 million in the same period in the prior year. 1 Adjusted EBITDA, which excludes stock-based compensation and severance, was $4.2 million compared to $5.4 million. Segment Highlights Customer Care, $14.0 million in revenue, 30% of total - Segment revenue decreased $3.4 million (19.4%) versus prior year and EBITDA totaled $2.0 million for the quarter, down 33.0% year-over-year. The InsideOut acquisition added $2.2 million to revenue in the quarter. The decrease in revenue is related to the early completion of larger promotional campaigns and programs. Management remains positive about the InsideOut acquisition. Fulfillment & Logistics Services, $22.5 million in revenue, 48% of total - Segment revenue decreased $965 thousand (4.1%) versus the prior year quarter and EBITDA totaled $2.9 million, up 2.8%. Revenue mix and a 4.4% decrease in operating expenses drove the improved EBITDA margins. The margin percentage continues to be impacted by variation in the revenue mix between lower margin logistics and the higher margin fulfillment services. Marketing Services, $10.6 million in revenue, 22% of total - Segment revenue declined $2.4 million (18.6%) compared to the prior year quarter and EBITDA for the quarter totaled $1.5 million vs. $1.9 million. Pressure on revenue was attributable to reduced project work in the financial services sector. We continue to see new project starts in pharmaceutical and retail businesses as we approach the holiday season. Consolidated Third Quarter 2023 Results Third quarter revenues were $47.1 million, down 12.6% from $53.9 million in the third quarter of 2022 due to decreased revenue in each of the Company's operating segments. Third quarter operating income was $2.9 million, compared to $3.8 million in the third quarter of 2022. The decrease resulted from a less favorable revenue mix and lower consolidated revenue. Net income for the quarter was $0.6 million, or $0.09 per basic and $0.08 per diluted share, compared to net income of $7.2 million, or $0.87 per basic and $0.83 per diluted share, in the third quarter last year. Results this quarter included $848 thousand of pension expense, as well as $160 thousand in stock-based compensation. The prior-year third quarter included $511 thousand of pension expense, as well as $927 thousand in stock-based compensation, as well as $2.5 million in other income related to the sale of unused IP addresses. Consolidated Year-to-Date 2023 Results Year-to-date revenues were $142.0 million, down 6.3% from $151.5 million in the same period of 2022. Year-to-date operating income was $5.6 million, compared to operating income of $11.7 million. Net income for the first nine months was $407 thousand, or $0.06 per basic and $0.05 per diluted share, compared to net income of $15.0 million, or $1.81 per basic and $1.73 per diluted share, in the first nine months of last year. Balance Sheet and Liquidity Harte Hanks ended the quarter with $13.3 million in cash and cash equivalents and $24.2 million of capacity on its credit line. The Company has no outstanding debt as of September 30, 2023. The Company's financial position continues to be strong, and it is well-positioned to execute on its long-term growth strategies in 2023 and beyond. During the quarter, Harte Hanks repurchased 77,227 shares at an average price of $6.35 per share for a total of $490 thousand. Conference Call Information The Company will host a conference call and live webcast to discuss these results on Thursday, November 9, 2023 at 4:30 p.m. EST. Interested parties may access the webcast at https://bit.ly/402QcsG or may access the conference call by dialing 877-545-0320 in the United States or 973-528-0002 from outside the U.S. and using access code 163449. A replay of the call can also be accessed via phone through November 23, 2023 by dialing (877) 481-4010 from the U.S., or (919) 882-2331 from outside the U.S. The conference call replay passcode is 49341. About Harte Hanks: Harte Hanks (NASDAQ: HHS ) is a leading global customer experience company whose mission is to partner with clients to provide them with CX strategy, data-driven analytics and actionable insights combined with seamless program execution to better understand, attract and engage their customers. Using its unparalleled resources and award-winning talent in the areas of Customer Care, Fulfillment and Logistics, and Marketing Services, Harte Hanks has a proven track record of driving results for some of the world's premier brands, including Bank of America, GlaxoSmithKline, Unilever, Pfizer, HBOMax, Volvo, Ford, FedEx, Midea, Sony and IBM among others. Headquartered in Chelmsford, Massachusetts, Harte Hanks has over 2,500 employees in offices across the Americas, Europe, and Asia Pacific. For more information, visit hartehanks.com As used herein, "Harte Hanks" or "the Company" refers to Harte Hanks, Inc. and/or its applicable operating subsidiaries, as the context may require. Harte Hanks' logo and name are trademarks of Harte Hanks, Inc. Cautionary Note Regarding Forward-Looking Statements: Our press release and related earnings conference call contain "forward-looking statements" within the meaning of U.S. federal securities laws. All such statements are qualified by this cautionary note, provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements other than historical facts are forward-looking and may be identified by words such as "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "seeks," "could," "intends," or words of similar meaning. These forward-looking statements are based on current information, expectations and estimates and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to vary materially from what is expressed in or indicated by the forward-looking statements. In that event, our business, financial condition, results of operations or liquidity could be materially adversely affected and investors in our securities could lose part or all of their investments. These risks, uncertainties, assumptions and other factors include: (a) local, national and international economic and business conditions, including (i) the outbreak of diseases, such as the COVID-19 coronavirus, which has curtailed travel to and from certain countries and geographic regions, created supply chain disruption and shortages, disrupted business operations and reduced consumer spending, (ii) market conditions that may adversely impact marketing expenditures, (iii) the impact of the Russia/Ukraine conflict on the global economy and our business, including impacts from related sanctions and export controls and (iv) the impact of economic environments and competitive pressures on the financial condition, marketing expenditures and activities of our clients and prospects; (b) the demand for our products and services by clients and prospective clients, including (i) the willingness of existing clients to maintain or increase their spending on products and services that are or remain profitable for us, and (ii) our ability to predict changes in client needs and preferences; (c) economic and other business factors that impact the industry verticals we serve, including competition and consolidation of current and prospective clients, vendors and partners in these verticals; (d) our ability to manage and timely adjust our facilities, capacity, workforce and cost structure to effectively serve our clients; (e) our ability to improve our processes and to provide new products and services in a timely and cost-effective manner though development, license, partnership or acquisition; (f) our ability to protect our facilities against security breaches and other interruptions and to protect sensitive personal information of our clients and their customers; (g) our ability to respond to increasing concern, regulation and legal action over consumer privacy issues, including changing requirements for collection, processing and use of information; (h) the impact of privacy and other regulations, including restrictions on unsolicited marketing communications and other consumer protection laws; (i) fluctuations in fuel prices, paper prices, postal rates and postal delivery schedules; (j) the number of shares, if any, that we may repurchase in connection with our repurchase program; (k) unanticipated developments regarding litigation or other contingent liabilities; (l) our ability to complete anticipated divestitures and reorganizations, including cost-saving initiatives; (m) our ability to realize the expected tax refunds; and (n) other factors discussed from time to time in our filings with the Securities and Exchange Commission, including under "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022 which was filed on March 31, 2023. The forward-looking statements in this press release and our related earnings conference call are made only as of the date hereof, and we undertake no obligation to update publicly any forward-looking statement, even if new information becomes available or other events occur in the future. Supplemental Non-GAAP Financial Measures: The Company reports its financial results in accordance with generally accepted accounting principles ("GAAP"). However, the Company may use certain non-GAAP measures of financial performance in order to provide investors with a better understanding of operating results and underlying trends to assess the Company's performance and liquidity in this press release and our related earnings conference call. We have presented herein a reconciliation of these measures to the most directly comparable GAAP financial measure. The Company presents the non-GAAP financial measure "Adjusted Operating Income" as a useful measure to both management and investors in their analysis of the Company's financial results because it facilitates a period-to-period comparison of Operating Income excluding stock-based compensation and severance. The most directly comparable measure for this non-GAAP financial measure is Operating Income. The Company presents the non-GAAP financial measure "EBITDA" as a supplemental measure of operating performance in order to provide an improved understanding of underlying performance trends. The Company defines "EBITDA" as Net Income adjusted to exclude income tax expense, other expense (income), net, and depreciation and amortization expense. The Company defines "Adjusted EBITDA" as EBITDA adjusted to exclude stock-based compensation and severance. The most directly comparable measure for EBITDA and Adjusted EBITDA is Net Income. We believe EBITDA and Adjusted EBITDA are an important performance metric because it facilitates the analysis of our results, exclusive of certain non-cash items, including items which do not directly correlate to our business operations; however, we urge investors to review the reconciliation of non-GAAP EBITDA to the comparable GAAP Net Income, which is included in this press release, and not to rely on any single financial measure to evaluate the Company's financial performance. The use of non-GAAP measures do not serve as a substitute and should not be construed as a substitute for GAAP performance but should provide supplemental information concerning our performance that our investors and we find useful. The Company evaluates its operating performance based on several measures, including these non-GAAP financial measures. The Company believes that the presentation of these non-GAAP financial measures in this press release and earnings conference call presentations are useful supplemental financial measures of operating performance for investors because they facilitate investors' ability to evaluate the operational strength of the Company's business. However, there are limitations to the use of these non-GAAP measures, including that they may not be calculated the same by other companies in our industry limiting their use as a tool to compare results. Any supplemental non-GAAP financial measures referred to herein are not calculated in accordance with GAAP and they should not be considered in isolation or as substitutes for the most comparable GAAP financial measures. 1 EBITDA is a non-GAAP financial measure. See "Supplemental Non-GAAP Financial Measures" below. EBITDA is also the Company's measure of segment profitability. Investor Relations Contact: Rob Fink or Tom Baumann646.809.4048 / 646.349.6641FNK IRHHS@fnkir.com Harte Hanks, Inc. Consolidated Statements of Operations (Unaudited) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, In thousands, except per share data 2023 2022 2023 2022 Revenues $ 47,119 $ 53,886 $ 142,001 $ 151,500 Operating expenses Labor 22,953 27,389 74,084 78,416 Production and distribution 15,378 16,175 43,158 42,400 Advertising, selling, general and administrative 4,922 5,970 16,071 17,243 Depreciation and amortization expense 952 579 3,051 1,763 Total operating expenses 44,205 50,113 136,364 139,822 Operating income 2,914 3,773 5,637 11,678 Other expense (income), net Interest expense (income), net 1 84 (150 ) 313 Pension expense 848 511 2,545 1,533 Foreign currency gain (331 ) (2,790 ) (26 ) (5,582 ) Other (income) expense, net (134 ) (2,417 ) 1,241 (1,902 ) Total other expense (income), net 384 (4,612 ) 3,610 (5,638 ) Income before income taxes 2,530 8,385 2,027 17,316 Income tax expense 1,912 1,219 1,620 2,344 Net income 618 7,166 407 14,972 Less: Preferred stock dividends - 125 - 371 Less: Earnings attributable to participating securities - 868 - 1,817 Income attributable to common stockholders $ 618 $ 6,173 $ 407 $ 12,784 Earning per common share Basic $ 0.09 $ 0.87 $ 0.06 $ 1.81 Diluted $ 0.08 $ 0.83 $ 0.05 $ 1.73 Weighted-average common shares outstanding Basic 7,239 7,125 7,340 7,045 Diluted 7,314 7,524 7,509 7,418 Harte Hanks, Inc. Condensed Consolidated Balance Sheets (Unaudited) In thousands, except per share data September 30, 2023 December 31, 2022 ASSETS Current Assets Cash and cash equivalents $ 13,288 $ 10,364 Accounts receivable (less allowance for doubtful accounts of $170 and $163, respectively) 33,303 39,700 Unbilled accounts receivable 10,350 7,893 Contract assets 433 309 Prepaid expenses 2,722 2,176 Prepaid income tax and income tax receivable 1,221 4,262 Other current assets 878 1,607 Total current assets 62,195 66,311 Net property, plant and equipment 9,279 10,523 Right-of-use assets 16,773 19,169 Other assets 22,565 23,981 Total assets $ 110,812 $ 119,984 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable and accrued expenses $ 18,547 $ 22,465 Accrued payroll and related expenses 4,944 6,679 Deferred revenue and customer advances 5,681 4,590 Customer postage and program deposits 1,445 1,223 Other current liabilities 2,652 2,862 Short-term lease liabilities 5,446 5,747 Total current liabilities 38,715 43,566 Pensions liabilities - Qualified plans 17,388 18,674 Pension liabilities - Nonqualified plan 18,510 19,098 Long-term lease liabilities, net of current portion 13,553 16,575 Other long-term liabilities 2,142 3,263 Total liabilities 90,308 101,176 Stockholders' equity Common stock 12,221 12,221 Additional paid-in capital 160,213 218,411 Retained earnings 846,897 846,490 Less treasury stock (953,591 ) (1,010,012 ) Accumulated other comprehensive loss (45,236 ) (48,302 ) Total stockholders' equity 20,504 18,808 Total liabilities and stockholders' equity $ 110,812 $ 119,984 Harte Hanks, Inc. Reconciliations of Non-GAAP Financial Measures (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, In thousands, except per share data 2023 2022 2023 2022 Net Income $ 618 $ 7,166 407 $ 14,972 Income tax expense 1,912 1,219 1,620 2,344 Other expense (income), net 384 (4,612 ) 3,610 (5,638 ) Depreciation and amortization expense 952 579 3,051 1,763 EBITDA $ 3,866 $ 4,352 $ 8,688 $ 13,441 Stock-based compensation 160 927 1,203 1,776 Severance 166 123 1,376 201 Adjusted EBITDA $ 4,192 $ 5,402 $ 11,267 $ 15,418 Operating income $ 2,914 $ 3,773 $ 5,637 $ 11,678 Stock-based compensation 160 927 1,203 1,776 Severance 166 123 1,376 201 Adjusted operating income $ 3,240 $ 4,823 $ 8,216 $ 13,655 Adjusted operating margin (a) 6.9 % 9.0 % 5.8 % 9.0 % (a) Adjusted Operating Margin equals Adjusted Operating Income divided by Revenues. Harte Hanks, Inc. Statement of Operations by Segments (Unaudited) Quarter ended September 30, 2023 Marketing Services Customer Care Fulfillment & Logistics Services Unallocated Corporate Total (In thousands) 2023 Revenues $ 10,591 $ 13,998 $ 22,530 $ - $ 47,119 Segment Operating Expense $ 8,370 $ 11,339 $ 18,995 $ 4,549 $ 43,253 Contribution margin (loss) $ 2,221 $ 2,659 $ 3,535 $ (4,549 ) $ 3,866 Shared Services $ 706 $ 668 $ 680 $ (2,054 ) $ - EBITDA $ 1,515 $ 1,991 $ 2,855 $ (2,495 ) $ 3,866 Depreciation and Amortization Expense $ 71 $ 253 $ 249 $ 379 $ 952 Operating income (loss) $ 1,444 $ 1,738 $ 2,606 $ (2,874 ) $ 2,914 Quarter ended September 30, 2022 Marketing Services Customer Care Fulfillment & Logistics Services Unallocated Corporate Total 2022 Revenues $ 13,016 $ 17,375 $ 23,495 $ - $ 53,886 Segment Operating Expense $ 9,970 $ 13,661 $ 19,865 $ 6,038 $ 49,534 Contribution margin (loss) $ 3,046 $ 3,714 $ 3,630 $ (6,038 ) $ 4,352 Shared Services $ 1,125 $ 743 $ 853 $ (2,721 ) $ - EBITDA $ 1,921 $ 2,971 $ 2,777 $ (3,317 ) $ 4,352 Depreciation and Amortization Expense $ 98 $ 206 $ 176 $ 99 $ 579 Operating income (loss) $ 1,823 $ 2,765 $ 2,601 $ (3,416 ) $ 3,773 SOURCE: Harte Hanks, Inc. 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Harte Hanks Reports Fiscal 2023 Third Quarter Results By: ACCESSWIRE November 09, 2023 at 16:05 PM EST Announces "Elevate," Transformative Plan To Improve Revenue Growth and Profitability CHELMSFORD, MA / ACCESSWIRE / November 9, 2023 / Harte Hanks, Inc. (NASDAQ:HHS), a leading global customer experience company focused on bringing companies closer to customers for 100 years, today announced financial results for the third quarter and nine-month periods ended September 30, 2023. Kirk Davis, Chief Executive officer, said: "In reporting my first quarter since joining Harte Hanks in June, I undertook this role against a backdrop of uncertainty. In May, prior management reported reduced visibility and projected challenging year-over-year comparisons attributable to macroeconomic headwinds, customer weakness in the financial services and technology sectors, and substantial non-recurring revenue attributable to pandemic-related projects. The revised outlook came with a commitment to preserve profitability, and a reorganization was announced. While our revenue performance and comparisons reflect prior management's assessment, we maintain a strong balance sheet and cash position, no debt, a $25 million credit facility, and considerable potential as we plan for our 101st year of continuous service." "I've gained a deep understanding of our company's position, capabilities, culture, and customers," continued Mr. Davis. "We excel in customer service, but we need a sales and marketing strategy and infrastructure capable of delivering consistent organic growth. What excites me is that there's a company-defining opportunity here. Improved sales execution and more effective marketing can meaningfully leverage our strengths and deliver tangible results." "We've shared with our employees a transformative plan, Elevate , which launched in early October and includes a collaboration with the Kearney organization," added Mr. Davis. "Kearney is a highly respected global consulting firm, and I've enjoyed great success working with the professionals at Kearney previously. Elevate is a sweeping endeavor aimed at materially improving our efficiency, revenue generation, profitability and employee experience. We are reengineering and expanding our sales and marketing organization, while planning to achieve a net cost reduction that improves our profitability. We're focused on creating a foundation for sustainable growth. It's our employees that will make it happen and we're equally focused on the experience we provide them." "As we look to the future, we are focused on transforming our revenue operations under new sales leadership," continued Mr. Davis. "We recently announced two key appointments. Kelly Waller, Corporate Senior Vice President of Sales and Marketing, is an outstanding sales leader with specific expertise in global marketing, demand generation and client retention, all important areas for Harte Hanks. Ron Lee, Senior Vice President of Inside Sales, is a highly accomplished inside sales executive, with a track record of success. We have immediately focused on scaling our inside sales division, pursuing strategic partnerships and plans to expand our international sales coverage. We're confident Kelly and Ron will revitalize our sales and marketing divisions, accelerate our pipeline development and drive improved performance." Third Quarter Financial Highlights Total revenues for Q3 2023 were $47.1 million, down 12.6% year over year compared to $53.9 million in Q3 2022. Included in 2023 was $2.2 million from InsideOut acquired in fourth quarter of 2022. Total Q3 revenues were essentially flat sequentially. Operating income was $2.9 million compared to $3.8 million in the prior-year quarter. Net income of $0.6 million, or $0.09 per basic and $0.08 per diluted share, compared to net income of $7.2 million, or $0.87 per basic and $0.83 per diluted share, in the prior year quarter. The third quarter of 2022 included $2.5 million in other income related to the sale of unused IP addresses. EBITDA was $3.9 million compared to $4.4 million in the same period in the prior year. 1 Adjusted EBITDA, which excludes stock-based compensation and severance, was $4.2 million compared to $5.4 million. Segment Highlights Customer Care, $14.0 million in revenue, 30% of total - Segment revenue decreased $3.4 million (19.4%) versus prior year and EBITDA totaled $2.0 million for the quarter, down 33.0% year-over-year. The InsideOut acquisition added $2.2 million to revenue in the quarter. The decrease in revenue is related to the early completion of larger promotional campaigns and programs. Management remains positive about the InsideOut acquisition. Fulfillment & Logistics Services, $22.5 million in revenue, 48% of total - Segment revenue decreased $965 thousand (4.1%) versus the prior year quarter and EBITDA totaled $2.9 million, up 2.8%. Revenue mix and a 4.4% decrease in operating expenses drove the improved EBITDA margins. The margin percentage continues to be impacted by variation in the revenue mix between lower margin logistics and the higher margin fulfillment services. Marketing Services, $10.6 million in revenue, 22% of total - Segment revenue declined $2.4 million (18.6%) compared to the prior year quarter and EBITDA for the quarter totaled $1.5 million vs. $1.9 million. Pressure on revenue was attributable to reduced project work in the financial services sector. We continue to see new project starts in pharmaceutical and retail businesses as we approach the holiday season. Consolidated Third Quarter 2023 Results Third quarter revenues were $47.1 million, down 12.6% from $53.9 million in the third quarter of 2022 due to decreased revenue in each of the Company's operating segments. Third quarter operating income was $2.9 million, compared to $3.8 million in the third quarter of 2022. The decrease resulted from a less favorable revenue mix and lower consolidated revenue. Net income for the quarter was $0.6 million, or $0.09 per basic and $0.08 per diluted share, compared to net income of $7.2 million, or $0.87 per basic and $0.83 per diluted share, in the third quarter last year. Results this quarter included $848 thousand of pension expense, as well as $160 thousand in stock-based compensation. The prior-year third quarter included $511 thousand of pension expense, as well as $927 thousand in stock-based compensation, as well as $2.5 million in other income related to the sale of unused IP addresses. Consolidated Year-to-Date 2023 Results Year-to-date revenues were $142.0 million, down 6.3% from $151.5 million in the same period of 2022. Year-to-date operating income was $5.6 million, compared to operating income of $11.7 million. Net income for the first nine months was $407 thousand, or $0.06 per basic and $0.05 per diluted share, compared to net income of $15.0 million, or $1.81 per basic and $1.73 per diluted share, in the first nine months of last year. Balance Sheet and Liquidity Harte Hanks ended the quarter with $13.3 million in cash and cash equivalents and $24.2 million of capacity on its credit line. The Company has no outstanding debt as of September 30, 2023. The Company's financial position continues to be strong, and it is well-positioned to execute on its long-term growth strategies in 2023 and beyond. During the quarter, Harte Hanks repurchased 77,227 shares at an average price of $6.35 per share for a total of $490 thousand. Conference Call Information The Company will host a conference call and live webcast to discuss these results on Thursday, November 9, 2023 at 4:30 p.m. EST. Interested parties may access the webcast at https://bit.ly/402QcsG or may access the conference call by dialing 877-545-0320 in the United States or 973-528-0002 from outside the U.S. and using access code 163449. A replay of the call can also be accessed via phone through November 23, 2023 by dialing (877) 481-4010 from the U.S., or (919) 882-2331 from outside the U.S. The conference call replay passcode is 49341. About Harte Hanks: Harte Hanks (NASDAQ: HHS ) is a leading global customer experience company whose mission is to partner with clients to provide them with CX strategy, data-driven analytics and actionable insights combined with seamless program execution to better understand, attract and engage their customers. Using its unparalleled resources and award-winning talent in the areas of Customer Care, Fulfillment and Logistics, and Marketing Services, Harte Hanks has a proven track record of driving results for some of the world's premier brands, including Bank of America, GlaxoSmithKline, Unilever, Pfizer, HBOMax, Volvo, Ford, FedEx, Midea, Sony and IBM among others. Headquartered in Chelmsford, Massachusetts, Harte Hanks has over 2,500 employees in offices across the Americas, Europe, and Asia Pacific. For more information, visit hartehanks.com As used herein, "Harte Hanks" or "the Company" refers to Harte Hanks, Inc. and/or its applicable operating subsidiaries, as the context may require. Harte Hanks' logo and name are trademarks of Harte Hanks, Inc. Cautionary Note Regarding Forward-Looking Statements: Our press release and related earnings conference call contain "forward-looking statements" within the meaning of U.S. federal securities laws. All such statements are qualified by this cautionary note, provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements other than historical facts are forward-looking and may be identified by words such as "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "seeks," "could," "intends," or words of similar meaning. These forward-looking statements are based on current information, expectations and estimates and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to vary materially from what is expressed in or indicated by the forward-looking statements. In that event, our business, financial condition, results of operations or liquidity could be materially adversely affected and investors in our securities could lose part or all of their investments. These risks, uncertainties, assumptions and other factors include: (a) local, national and international economic and business conditions, including (i) the outbreak of diseases, such as the COVID-19 coronavirus, which has curtailed travel to and from certain countries and geographic regions, created supply chain disruption and shortages, disrupted business operations and reduced consumer spending, (ii) market conditions that may adversely impact marketing expenditures, (iii) the impact of the Russia/Ukraine conflict on the global economy and our business, including impacts from related sanctions and export controls and (iv) the impact of economic environments and competitive pressures on the financial condition, marketing expenditures and activities of our clients and prospects; (b) the demand for our products and services by clients and prospective clients, including (i) the willingness of existing clients to maintain or increase their spending on products and services that are or remain profitable for us, and (ii) our ability to predict changes in client needs and preferences; (c) economic and other business factors that impact the industry verticals we serve, including competition and consolidation of current and prospective clients, vendors and partners in these verticals; (d) our ability to manage and timely adjust our facilities, capacity, workforce and cost structure to effectively serve our clients; (e) our ability to improve our processes and to provide new products and services in a timely and cost-effective manner though development, license, partnership or acquisition; (f) our ability to protect our facilities against security breaches and other interruptions and to protect sensitive personal information of our clients and their customers; (g) our ability to respond to increasing concern, regulation and legal action over consumer privacy issues, including changing requirements for collection, processing and use of information; (h) the impact of privacy and other regulations, including restrictions on unsolicited marketing communications and other consumer protection laws; (i) fluctuations in fuel prices, paper prices, postal rates and postal delivery schedules; (j) the number of shares, if any, that we may repurchase in connection with our repurchase program; (k) unanticipated developments regarding litigation or other contingent liabilities; (l) our ability to complete anticipated divestitures and reorganizations, including cost-saving initiatives; (m) our ability to realize the expected tax refunds; and (n) other factors discussed from time to time in our filings with the Securities and Exchange Commission, including under "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022 which was filed on March 31, 2023. The forward-looking statements in this press release and our related earnings conference call are made only as of the date hereof, and we undertake no obligation to update publicly any forward-looking statement, even if new information becomes available or other events occur in the future. Supplemental Non-GAAP Financial Measures: The Company reports its financial results in accordance with generally accepted accounting principles ("GAAP"). However, the Company may use certain non-GAAP measures of financial performance in order to provide investors with a better understanding of operating results and underlying trends to assess the Company's performance and liquidity in this press release and our related earnings conference call. We have presented herein a reconciliation of these measures to the most directly comparable GAAP financial measure. The Company presents the non-GAAP financial measure "Adjusted Operating Income" as a useful measure to both management and investors in their analysis of the Company's financial results because it facilitates a period-to-period comparison of Operating Income excluding stock-based compensation and severance. The most directly comparable measure for this non-GAAP financial measure is Operating Income. The Company presents the non-GAAP financial measure "EBITDA" as a supplemental measure of operating performance in order to provide an improved understanding of underlying performance trends. The Company defines "EBITDA" as Net Income adjusted to exclude income tax expense, other expense (income), net, and depreciation and amortization expense. The Company defines "Adjusted EBITDA" as EBITDA adjusted to exclude stock-based compensation and severance. The most directly comparable measure for EBITDA and Adjusted EBITDA is Net Income. We believe EBITDA and Adjusted EBITDA are an important performance metric because it facilitates the analysis of our results, exclusive of certain non-cash items, including items which do not directly correlate to our business operations; however, we urge investors to review the reconciliation of non-GAAP EBITDA to the comparable GAAP Net Income, which is included in this press release, and not to rely on any single financial measure to evaluate the Company's financial performance. The use of non-GAAP measures do not serve as a substitute and should not be construed as a substitute for GAAP performance but should provide supplemental information concerning our performance that our investors and we find useful. The Company evaluates its operating performance based on several measures, including these non-GAAP financial measures. The Company believes that the presentation of these non-GAAP financial measures in this press release and earnings conference call presentations are useful supplemental financial measures of operating performance for investors because they facilitate investors' ability to evaluate the operational strength of the Company's business. However, there are limitations to the use of these non-GAAP measures, including that they may not be calculated the same by other companies in our industry limiting their use as a tool to compare results. Any supplemental non-GAAP financial measures referred to herein are not calculated in accordance with GAAP and they should not be considered in isolation or as substitutes for the most comparable GAAP financial measures. 1 EBITDA is a non-GAAP financial measure. See "Supplemental Non-GAAP Financial Measures" below. EBITDA is also the Company's measure of segment profitability. Investor Relations Contact: Rob Fink or Tom Baumann646.809.4048 / 646.349.6641FNK IRHHS@fnkir.com Harte Hanks, Inc. Consolidated Statements of Operations (Unaudited) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, In thousands, except per share data 2023 2022 2023 2022 Revenues $ 47,119 $ 53,886 $ 142,001 $ 151,500 Operating expenses Labor 22,953 27,389 74,084 78,416 Production and distribution 15,378 16,175 43,158 42,400 Advertising, selling, general and administrative 4,922 5,970 16,071 17,243 Depreciation and amortization expense 952 579 3,051 1,763 Total operating expenses 44,205 50,113 136,364 139,822 Operating income 2,914 3,773 5,637 11,678 Other expense (income), net Interest expense (income), net 1 84 (150 ) 313 Pension expense 848 511 2,545 1,533 Foreign currency gain (331 ) (2,790 ) (26 ) (5,582 ) Other (income) expense, net (134 ) (2,417 ) 1,241 (1,902 ) Total other expense (income), net 384 (4,612 ) 3,610 (5,638 ) Income before income taxes 2,530 8,385 2,027 17,316 Income tax expense 1,912 1,219 1,620 2,344 Net income 618 7,166 407 14,972 Less: Preferred stock dividends - 125 - 371 Less: Earnings attributable to participating securities - 868 - 1,817 Income attributable to common stockholders $ 618 $ 6,173 $ 407 $ 12,784 Earning per common share Basic $ 0.09 $ 0.87 $ 0.06 $ 1.81 Diluted $ 0.08 $ 0.83 $ 0.05 $ 1.73 Weighted-average common shares outstanding Basic 7,239 7,125 7,340 7,045 Diluted 7,314 7,524 7,509 7,418 Harte Hanks, Inc. Condensed Consolidated Balance Sheets (Unaudited) In thousands, except per share data September 30, 2023 December 31, 2022 ASSETS Current Assets Cash and cash equivalents $ 13,288 $ 10,364 Accounts receivable (less allowance for doubtful accounts of $170 and $163, respectively) 33,303 39,700 Unbilled accounts receivable 10,350 7,893 Contract assets 433 309 Prepaid expenses 2,722 2,176 Prepaid income tax and income tax receivable 1,221 4,262 Other current assets 878 1,607 Total current assets 62,195 66,311 Net property, plant and equipment 9,279 10,523 Right-of-use assets 16,773 19,169 Other assets 22,565 23,981 Total assets $ 110,812 $ 119,984 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable and accrued expenses $ 18,547 $ 22,465 Accrued payroll and related expenses 4,944 6,679 Deferred revenue and customer advances 5,681 4,590 Customer postage and program deposits 1,445 1,223 Other current liabilities 2,652 2,862 Short-term lease liabilities 5,446 5,747 Total current liabilities 38,715 43,566 Pensions liabilities - Qualified plans 17,388 18,674 Pension liabilities - Nonqualified plan 18,510 19,098 Long-term lease liabilities, net of current portion 13,553 16,575 Other long-term liabilities 2,142 3,263 Total liabilities 90,308 101,176 Stockholders' equity Common stock 12,221 12,221 Additional paid-in capital 160,213 218,411 Retained earnings 846,897 846,490 Less treasury stock (953,591 ) (1,010,012 ) Accumulated other comprehensive loss (45,236 ) (48,302 ) Total stockholders' equity 20,504 18,808 Total liabilities and stockholders' equity $ 110,812 $ 119,984 Harte Hanks, Inc. Reconciliations of Non-GAAP Financial Measures (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, In thousands, except per share data 2023 2022 2023 2022 Net Income $ 618 $ 7,166 407 $ 14,972 Income tax expense 1,912 1,219 1,620 2,344 Other expense (income), net 384 (4,612 ) 3,610 (5,638 ) Depreciation and amortization expense 952 579 3,051 1,763 EBITDA $ 3,866 $ 4,352 $ 8,688 $ 13,441 Stock-based compensation 160 927 1,203 1,776 Severance 166 123 1,376 201 Adjusted EBITDA $ 4,192 $ 5,402 $ 11,267 $ 15,418 Operating income $ 2,914 $ 3,773 $ 5,637 $ 11,678 Stock-based compensation 160 927 1,203 1,776 Severance 166 123 1,376 201 Adjusted operating income $ 3,240 $ 4,823 $ 8,216 $ 13,655 Adjusted operating margin (a) 6.9 % 9.0 % 5.8 % 9.0 % (a) Adjusted Operating Margin equals Adjusted Operating Income divided by Revenues. Harte Hanks, Inc. Statement of Operations by Segments (Unaudited) Quarter ended September 30, 2023 Marketing Services Customer Care Fulfillment & Logistics Services Unallocated Corporate Total (In thousands) 2023 Revenues $ 10,591 $ 13,998 $ 22,530 $ - $ 47,119 Segment Operating Expense $ 8,370 $ 11,339 $ 18,995 $ 4,549 $ 43,253 Contribution margin (loss) $ 2,221 $ 2,659 $ 3,535 $ (4,549 ) $ 3,866 Shared Services $ 706 $ 668 $ 680 $ (2,054 ) $ - EBITDA $ 1,515 $ 1,991 $ 2,855 $ (2,495 ) $ 3,866 Depreciation and Amortization Expense $ 71 $ 253 $ 249 $ 379 $ 952 Operating income (loss) $ 1,444 $ 1,738 $ 2,606 $ (2,874 ) $ 2,914 Quarter ended September 30, 2022 Marketing Services Customer Care Fulfillment & Logistics Services Unallocated Corporate Total 2022 Revenues $ 13,016 $ 17,375 $ 23,495 $ - $ 53,886 Segment Operating Expense $ 9,970 $ 13,661 $ 19,865 $ 6,038 $ 49,534 Contribution margin (loss) $ 3,046 $ 3,714 $ 3,630 $ (6,038 ) $ 4,352 Shared Services $ 1,125 $ 743 $ 853 $ (2,721 ) $ - EBITDA $ 1,921 $ 2,971 $ 2,777 $ (3,317 ) $ 4,352 Depreciation and Amortization Expense $ 98 $ 206 $ 176 $ 99 $ 579 Operating income (loss) $ 1,823 $ 2,765 $ 2,601 $ (3,416 ) $ 3,773 SOURCE: Harte Hanks, Inc. View source version on accesswire.com: https://www.accesswire.com/801790/harte-hanks-reports-fiscal-2023-third-quarter-results
Announces "Elevate," Transformative Plan To Improve Revenue Growth and Profitability CHELMSFORD, MA / ACCESSWIRE / November 9, 2023 / Harte Hanks, Inc. (NASDAQ:HHS), a leading global customer experience company focused on bringing companies closer to customers for 100 years, today announced financial results for the third quarter and nine-month periods ended September 30, 2023. Kirk Davis, Chief Executive officer, said: "In reporting my first quarter since joining Harte Hanks in June, I undertook this role against a backdrop of uncertainty. In May, prior management reported reduced visibility and projected challenging year-over-year comparisons attributable to macroeconomic headwinds, customer weakness in the financial services and technology sectors, and substantial non-recurring revenue attributable to pandemic-related projects. The revised outlook came with a commitment to preserve profitability, and a reorganization was announced. While our revenue performance and comparisons reflect prior management's assessment, we maintain a strong balance sheet and cash position, no debt, a $25 million credit facility, and considerable potential as we plan for our 101st year of continuous service." "I've gained a deep understanding of our company's position, capabilities, culture, and customers," continued Mr. Davis. "We excel in customer service, but we need a sales and marketing strategy and infrastructure capable of delivering consistent organic growth. What excites me is that there's a company-defining opportunity here. Improved sales execution and more effective marketing can meaningfully leverage our strengths and deliver tangible results." "We've shared with our employees a transformative plan, Elevate , which launched in early October and includes a collaboration with the Kearney organization," added Mr. Davis. "Kearney is a highly respected global consulting firm, and I've enjoyed great success working with the professionals at Kearney previously. Elevate is a sweeping endeavor aimed at materially improving our efficiency, revenue generation, profitability and employee experience. We are reengineering and expanding our sales and marketing organization, while planning to achieve a net cost reduction that improves our profitability. We're focused on creating a foundation for sustainable growth. It's our employees that will make it happen and we're equally focused on the experience we provide them." "As we look to the future, we are focused on transforming our revenue operations under new sales leadership," continued Mr. Davis. "We recently announced two key appointments. Kelly Waller, Corporate Senior Vice President of Sales and Marketing, is an outstanding sales leader with specific expertise in global marketing, demand generation and client retention, all important areas for Harte Hanks. Ron Lee, Senior Vice President of Inside Sales, is a highly accomplished inside sales executive, with a track record of success. We have immediately focused on scaling our inside sales division, pursuing strategic partnerships and plans to expand our international sales coverage. We're confident Kelly and Ron will revitalize our sales and marketing divisions, accelerate our pipeline development and drive improved performance." Third Quarter Financial Highlights Total revenues for Q3 2023 were $47.1 million, down 12.6% year over year compared to $53.9 million in Q3 2022. Included in 2023 was $2.2 million from InsideOut acquired in fourth quarter of 2022. Total Q3 revenues were essentially flat sequentially. Operating income was $2.9 million compared to $3.8 million in the prior-year quarter. Net income of $0.6 million, or $0.09 per basic and $0.08 per diluted share, compared to net income of $7.2 million, or $0.87 per basic and $0.83 per diluted share, in the prior year quarter. The third quarter of 2022 included $2.5 million in other income related to the sale of unused IP addresses. EBITDA was $3.9 million compared to $4.4 million in the same period in the prior year. 1 Adjusted EBITDA, which excludes stock-based compensation and severance, was $4.2 million compared to $5.4 million. Segment Highlights Customer Care, $14.0 million in revenue, 30% of total - Segment revenue decreased $3.4 million (19.4%) versus prior year and EBITDA totaled $2.0 million for the quarter, down 33.0% year-over-year. The InsideOut acquisition added $2.2 million to revenue in the quarter. The decrease in revenue is related to the early completion of larger promotional campaigns and programs. Management remains positive about the InsideOut acquisition. Fulfillment & Logistics Services, $22.5 million in revenue, 48% of total - Segment revenue decreased $965 thousand (4.1%) versus the prior year quarter and EBITDA totaled $2.9 million, up 2.8%. Revenue mix and a 4.4% decrease in operating expenses drove the improved EBITDA margins. The margin percentage continues to be impacted by variation in the revenue mix between lower margin logistics and the higher margin fulfillment services. Marketing Services, $10.6 million in revenue, 22% of total - Segment revenue declined $2.4 million (18.6%) compared to the prior year quarter and EBITDA for the quarter totaled $1.5 million vs. $1.9 million. Pressure on revenue was attributable to reduced project work in the financial services sector. We continue to see new project starts in pharmaceutical and retail businesses as we approach the holiday season. Consolidated Third Quarter 2023 Results Third quarter revenues were $47.1 million, down 12.6% from $53.9 million in the third quarter of 2022 due to decreased revenue in each of the Company's operating segments. Third quarter operating income was $2.9 million, compared to $3.8 million in the third quarter of 2022. The decrease resulted from a less favorable revenue mix and lower consolidated revenue. Net income for the quarter was $0.6 million, or $0.09 per basic and $0.08 per diluted share, compared to net income of $7.2 million, or $0.87 per basic and $0.83 per diluted share, in the third quarter last year. Results this quarter included $848 thousand of pension expense, as well as $160 thousand in stock-based compensation. The prior-year third quarter included $511 thousand of pension expense, as well as $927 thousand in stock-based compensation, as well as $2.5 million in other income related to the sale of unused IP addresses. Consolidated Year-to-Date 2023 Results Year-to-date revenues were $142.0 million, down 6.3% from $151.5 million in the same period of 2022. Year-to-date operating income was $5.6 million, compared to operating income of $11.7 million. Net income for the first nine months was $407 thousand, or $0.06 per basic and $0.05 per diluted share, compared to net income of $15.0 million, or $1.81 per basic and $1.73 per diluted share, in the first nine months of last year. Balance Sheet and Liquidity Harte Hanks ended the quarter with $13.3 million in cash and cash equivalents and $24.2 million of capacity on its credit line. The Company has no outstanding debt as of September 30, 2023. The Company's financial position continues to be strong, and it is well-positioned to execute on its long-term growth strategies in 2023 and beyond. During the quarter, Harte Hanks repurchased 77,227 shares at an average price of $6.35 per share for a total of $490 thousand. Conference Call Information The Company will host a conference call and live webcast to discuss these results on Thursday, November 9, 2023 at 4:30 p.m. EST. Interested parties may access the webcast at https://bit.ly/402QcsG or may access the conference call by dialing 877-545-0320 in the United States or 973-528-0002 from outside the U.S. and using access code 163449. A replay of the call can also be accessed via phone through November 23, 2023 by dialing (877) 481-4010 from the U.S., or (919) 882-2331 from outside the U.S. The conference call replay passcode is 49341. About Harte Hanks: Harte Hanks (NASDAQ: HHS ) is a leading global customer experience company whose mission is to partner with clients to provide them with CX strategy, data-driven analytics and actionable insights combined with seamless program execution to better understand, attract and engage their customers. Using its unparalleled resources and award-winning talent in the areas of Customer Care, Fulfillment and Logistics, and Marketing Services, Harte Hanks has a proven track record of driving results for some of the world's premier brands, including Bank of America, GlaxoSmithKline, Unilever, Pfizer, HBOMax, Volvo, Ford, FedEx, Midea, Sony and IBM among others. Headquartered in Chelmsford, Massachusetts, Harte Hanks has over 2,500 employees in offices across the Americas, Europe, and Asia Pacific. For more information, visit hartehanks.com As used herein, "Harte Hanks" or "the Company" refers to Harte Hanks, Inc. and/or its applicable operating subsidiaries, as the context may require. Harte Hanks' logo and name are trademarks of Harte Hanks, Inc. Cautionary Note Regarding Forward-Looking Statements: Our press release and related earnings conference call contain "forward-looking statements" within the meaning of U.S. federal securities laws. All such statements are qualified by this cautionary note, provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements other than historical facts are forward-looking and may be identified by words such as "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "seeks," "could," "intends," or words of similar meaning. These forward-looking statements are based on current information, expectations and estimates and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to vary materially from what is expressed in or indicated by the forward-looking statements. In that event, our business, financial condition, results of operations or liquidity could be materially adversely affected and investors in our securities could lose part or all of their investments. These risks, uncertainties, assumptions and other factors include: (a) local, national and international economic and business conditions, including (i) the outbreak of diseases, such as the COVID-19 coronavirus, which has curtailed travel to and from certain countries and geographic regions, created supply chain disruption and shortages, disrupted business operations and reduced consumer spending, (ii) market conditions that may adversely impact marketing expenditures, (iii) the impact of the Russia/Ukraine conflict on the global economy and our business, including impacts from related sanctions and export controls and (iv) the impact of economic environments and competitive pressures on the financial condition, marketing expenditures and activities of our clients and prospects; (b) the demand for our products and services by clients and prospective clients, including (i) the willingness of existing clients to maintain or increase their spending on products and services that are or remain profitable for us, and (ii) our ability to predict changes in client needs and preferences; (c) economic and other business factors that impact the industry verticals we serve, including competition and consolidation of current and prospective clients, vendors and partners in these verticals; (d) our ability to manage and timely adjust our facilities, capacity, workforce and cost structure to effectively serve our clients; (e) our ability to improve our processes and to provide new products and services in a timely and cost-effective manner though development, license, partnership or acquisition; (f) our ability to protect our facilities against security breaches and other interruptions and to protect sensitive personal information of our clients and their customers; (g) our ability to respond to increasing concern, regulation and legal action over consumer privacy issues, including changing requirements for collection, processing and use of information; (h) the impact of privacy and other regulations, including restrictions on unsolicited marketing communications and other consumer protection laws; (i) fluctuations in fuel prices, paper prices, postal rates and postal delivery schedules; (j) the number of shares, if any, that we may repurchase in connection with our repurchase program; (k) unanticipated developments regarding litigation or other contingent liabilities; (l) our ability to complete anticipated divestitures and reorganizations, including cost-saving initiatives; (m) our ability to realize the expected tax refunds; and (n) other factors discussed from time to time in our filings with the Securities and Exchange Commission, including under "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022 which was filed on March 31, 2023. The forward-looking statements in this press release and our related earnings conference call are made only as of the date hereof, and we undertake no obligation to update publicly any forward-looking statement, even if new information becomes available or other events occur in the future. Supplemental Non-GAAP Financial Measures: The Company reports its financial results in accordance with generally accepted accounting principles ("GAAP"). However, the Company may use certain non-GAAP measures of financial performance in order to provide investors with a better understanding of operating results and underlying trends to assess the Company's performance and liquidity in this press release and our related earnings conference call. We have presented herein a reconciliation of these measures to the most directly comparable GAAP financial measure. The Company presents the non-GAAP financial measure "Adjusted Operating Income" as a useful measure to both management and investors in their analysis of the Company's financial results because it facilitates a period-to-period comparison of Operating Income excluding stock-based compensation and severance. The most directly comparable measure for this non-GAAP financial measure is Operating Income. The Company presents the non-GAAP financial measure "EBITDA" as a supplemental measure of operating performance in order to provide an improved understanding of underlying performance trends. The Company defines "EBITDA" as Net Income adjusted to exclude income tax expense, other expense (income), net, and depreciation and amortization expense. The Company defines "Adjusted EBITDA" as EBITDA adjusted to exclude stock-based compensation and severance. The most directly comparable measure for EBITDA and Adjusted EBITDA is Net Income. We believe EBITDA and Adjusted EBITDA are an important performance metric because it facilitates the analysis of our results, exclusive of certain non-cash items, including items which do not directly correlate to our business operations; however, we urge investors to review the reconciliation of non-GAAP EBITDA to the comparable GAAP Net Income, which is included in this press release, and not to rely on any single financial measure to evaluate the Company's financial performance. The use of non-GAAP measures do not serve as a substitute and should not be construed as a substitute for GAAP performance but should provide supplemental information concerning our performance that our investors and we find useful. The Company evaluates its operating performance based on several measures, including these non-GAAP financial measures. The Company believes that the presentation of these non-GAAP financial measures in this press release and earnings conference call presentations are useful supplemental financial measures of operating performance for investors because they facilitate investors' ability to evaluate the operational strength of the Company's business. However, there are limitations to the use of these non-GAAP measures, including that they may not be calculated the same by other companies in our industry limiting their use as a tool to compare results. Any supplemental non-GAAP financial measures referred to herein are not calculated in accordance with GAAP and they should not be considered in isolation or as substitutes for the most comparable GAAP financial measures. 1 EBITDA is a non-GAAP financial measure. See "Supplemental Non-GAAP Financial Measures" below. EBITDA is also the Company's measure of segment profitability. Investor Relations Contact: Rob Fink or Tom Baumann646.809.4048 / 646.349.6641FNK IRHHS@fnkir.com Harte Hanks, Inc. Consolidated Statements of Operations (Unaudited) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, In thousands, except per share data 2023 2022 2023 2022 Revenues $ 47,119 $ 53,886 $ 142,001 $ 151,500 Operating expenses Labor 22,953 27,389 74,084 78,416 Production and distribution 15,378 16,175 43,158 42,400 Advertising, selling, general and administrative 4,922 5,970 16,071 17,243 Depreciation and amortization expense 952 579 3,051 1,763 Total operating expenses 44,205 50,113 136,364 139,822 Operating income 2,914 3,773 5,637 11,678 Other expense (income), net Interest expense (income), net 1 84 (150 ) 313 Pension expense 848 511 2,545 1,533 Foreign currency gain (331 ) (2,790 ) (26 ) (5,582 ) Other (income) expense, net (134 ) (2,417 ) 1,241 (1,902 ) Total other expense (income), net 384 (4,612 ) 3,610 (5,638 ) Income before income taxes 2,530 8,385 2,027 17,316 Income tax expense 1,912 1,219 1,620 2,344 Net income 618 7,166 407 14,972 Less: Preferred stock dividends - 125 - 371 Less: Earnings attributable to participating securities - 868 - 1,817 Income attributable to common stockholders $ 618 $ 6,173 $ 407 $ 12,784 Earning per common share Basic $ 0.09 $ 0.87 $ 0.06 $ 1.81 Diluted $ 0.08 $ 0.83 $ 0.05 $ 1.73 Weighted-average common shares outstanding Basic 7,239 7,125 7,340 7,045 Diluted 7,314 7,524 7,509 7,418 Harte Hanks, Inc. Condensed Consolidated Balance Sheets (Unaudited) In thousands, except per share data September 30, 2023 December 31, 2022 ASSETS Current Assets Cash and cash equivalents $ 13,288 $ 10,364 Accounts receivable (less allowance for doubtful accounts of $170 and $163, respectively) 33,303 39,700 Unbilled accounts receivable 10,350 7,893 Contract assets 433 309 Prepaid expenses 2,722 2,176 Prepaid income tax and income tax receivable 1,221 4,262 Other current assets 878 1,607 Total current assets 62,195 66,311 Net property, plant and equipment 9,279 10,523 Right-of-use assets 16,773 19,169 Other assets 22,565 23,981 Total assets $ 110,812 $ 119,984 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable and accrued expenses $ 18,547 $ 22,465 Accrued payroll and related expenses 4,944 6,679 Deferred revenue and customer advances 5,681 4,590 Customer postage and program deposits 1,445 1,223 Other current liabilities 2,652 2,862 Short-term lease liabilities 5,446 5,747 Total current liabilities 38,715 43,566 Pensions liabilities - Qualified plans 17,388 18,674 Pension liabilities - Nonqualified plan 18,510 19,098 Long-term lease liabilities, net of current portion 13,553 16,575 Other long-term liabilities 2,142 3,263 Total liabilities 90,308 101,176 Stockholders' equity Common stock 12,221 12,221 Additional paid-in capital 160,213 218,411 Retained earnings 846,897 846,490 Less treasury stock (953,591 ) (1,010,012 ) Accumulated other comprehensive loss (45,236 ) (48,302 ) Total stockholders' equity 20,504 18,808 Total liabilities and stockholders' equity $ 110,812 $ 119,984 Harte Hanks, Inc. Reconciliations of Non-GAAP Financial Measures (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, In thousands, except per share data 2023 2022 2023 2022 Net Income $ 618 $ 7,166 407 $ 14,972 Income tax expense 1,912 1,219 1,620 2,344 Other expense (income), net 384 (4,612 ) 3,610 (5,638 ) Depreciation and amortization expense 952 579 3,051 1,763 EBITDA $ 3,866 $ 4,352 $ 8,688 $ 13,441 Stock-based compensation 160 927 1,203 1,776 Severance 166 123 1,376 201 Adjusted EBITDA $ 4,192 $ 5,402 $ 11,267 $ 15,418 Operating income $ 2,914 $ 3,773 $ 5,637 $ 11,678 Stock-based compensation 160 927 1,203 1,776 Severance 166 123 1,376 201 Adjusted operating income $ 3,240 $ 4,823 $ 8,216 $ 13,655 Adjusted operating margin (a) 6.9 % 9.0 % 5.8 % 9.0 % (a) Adjusted Operating Margin equals Adjusted Operating Income divided by Revenues. Harte Hanks, Inc. Statement of Operations by Segments (Unaudited) Quarter ended September 30, 2023 Marketing Services Customer Care Fulfillment & Logistics Services Unallocated Corporate Total (In thousands) 2023 Revenues $ 10,591 $ 13,998 $ 22,530 $ - $ 47,119 Segment Operating Expense $ 8,370 $ 11,339 $ 18,995 $ 4,549 $ 43,253 Contribution margin (loss) $ 2,221 $ 2,659 $ 3,535 $ (4,549 ) $ 3,866 Shared Services $ 706 $ 668 $ 680 $ (2,054 ) $ - EBITDA $ 1,515 $ 1,991 $ 2,855 $ (2,495 ) $ 3,866 Depreciation and Amortization Expense $ 71 $ 253 $ 249 $ 379 $ 952 Operating income (loss) $ 1,444 $ 1,738 $ 2,606 $ (2,874 ) $ 2,914 Quarter ended September 30, 2022 Marketing Services Customer Care Fulfillment & Logistics Services Unallocated Corporate Total 2022 Revenues $ 13,016 $ 17,375 $ 23,495 $ - $ 53,886 Segment Operating Expense $ 9,970 $ 13,661 $ 19,865 $ 6,038 $ 49,534 Contribution margin (loss) $ 3,046 $ 3,714 $ 3,630 $ (6,038 ) $ 4,352 Shared Services $ 1,125 $ 743 $ 853 $ (2,721 ) $ - EBITDA $ 1,921 $ 2,971 $ 2,777 $ (3,317 ) $ 4,352 Depreciation and Amortization Expense $ 98 $ 206 $ 176 $ 99 $ 579 Operating income (loss) $ 1,823 $ 2,765 $ 2,601 $ (3,416 ) $ 3,773 SOURCE: Harte Hanks, Inc. View source version on accesswire.com: https://www.accesswire.com/801790/harte-hanks-reports-fiscal-2023-third-quarter-results