EX-99.1 2 a20240809ex991earningsq2-24.htm EX-99.1 Document
Exhibit 99.1
logoa.jpg
Harte Hanks Reports Second Quarter 2024 Results
Sales transformation completed in April, accelerating sales pipeline growth
Cost initiatives identified through Project Elevate progressing well
Appointment of first Chief Customer and Data Officer ushers in new era of customer leadership
Successfully completed termination of Pension Plan I, leaving cash balance of $11 million and no debt
Chelmsford, Massachusetts – August 8, 2024 - Harte Hanks, Inc. (NASDAQ: HHS), a leading global customer experience company focused on bringing companies closer to customers for over 100 years, today announced financial results for the second quarter ended June 30, 2024.
Kirk Davis, Chief Executive Officer, said: "In my first year, I have been laser-focused on building an exceptionally strong executive team, united in our mission to redefine our company. Last quarter, I emphasized the importance of enhancing our customer organization and announced our plan to recruit the company's first Chief Customer and Data Officer. Today, I am thrilled to confirm that Sharona Sankar-King will assume this pivotal role, joining us on September 4th from Bain & Company. Sharona's expertise in integrating data and analytics across product lines will be transformative, accelerating our ability to harness Gen AI for innovative customer solutions. Her leadership will be a powerful catalyst in driving our ambitious growth objectives."
"While we are committed to rapidly building a modern, growing company, we remain firmly grounded in the present" continued Mr. Davis. "Our sales and marketing reorganization, which we concluded in April is maturing well. As we shared last quarter, we have new clients progressing through our sales cycle and are expanding our sales pipeline. We also continue to execute on the specific cost savings initiatives we identified in Project Elevate, resulting from our engagement with the Kearney organization throughout Q4 of 2023 and Q1 of 2024. "
Second Quarter Highlights
•The Company ended the quarter with a cash balance of $11.0 million on June 30, 2024.
•Contribution payment of $6.1 million executed for the termination of Pension Plan I.
•Total revenues for Q2 2024 were $45.0 million, down 5.7% compared to $47.8 million in Q2 2023.
•Operating income was $1.4 million compared to $1.7 million in the same quarter in the prior year.
•Harte Hanks recorded $0.4 million in restructuring charges in Q2 2024, related to execution of Project Elevate.
•Net loss, inclusive of the $38.2 million in pension termination charges and $10.1 million in tax benefit, was $27.8 million, or $3.84 per basic and diluted share, compared to net income of $0.6 million, or $0.08 per basic and diluted share, in the prior year quarter.
•The second quarter of 2024 had EBITDA of $2.4 million compared to EBITDA of $2.7 million in the same period in the prior year. Adjusted EBITDA, which excludes stock-based compensation, severance and restructuring charges, was $3.6 million for Q2 2024 and $4.4 million for the same quarter in 2023.
Segment Highlights
•Customer Care, $12.4 million in revenue, 27% of total – Segment revenue for the quarter decreased $2.5 million or 17.0% versus the prior year and EBITDA totaled $2.3 million for the quarter, a decline of 14.3% compared to the same period in the prior year. The year over year decline related to the timing of fluctuating work that shifted between quarters with a specific client.
•Sales Services, $4.4 million in revenue, 10% of total - Segment revenue for the quarter increased $2.1 million or 92.2% versus the prior year and EBITDA totaled $1.0 million for the quarter, an increase of 297% compared to the same period in the prior year. This increase in revenue related to the growth with a large fintech client.

Exhibit 99.1
•Fulfillment & Logistics Services, $20.5 million in revenue, 46% of total – Segment revenue for the quarter increased $0.9 million or 4.4% versus the prior year quarter and EBITDA totaled $1.6 million, decline of 19.4%. The contribution margin was impacted by investments in technology, the increased cost of facilities, and in the revenue mix between lower margin logistics and the higher margin fulfillment services. The profitability is expected to improve through the year as the revenue mix shifts to fulfillment in the second half of the year.
•Marketing Services, $7.7 million in revenue, 17% of total – Segment revenue for the quarter decreased $3.2 million or 29.1% compared to the prior year quarter and EBITDA for the second quarter totaled $0.8 million vs. $1.3 million for the second quarter of 2023. Revenue decline is the result of customer turnover and reductions in client spending. The reduction in EBITDA was the result of lower revenues and the expected contribution margin.
Consolidated Second Quarter 2024 Results
Second quarter revenues were $45.0 million, down 5.7% from $47.8 million in the second quarter of 2023 due to decreased revenue in two of the Company’s operating segments.
Second quarter operating income was $1.4 million, compared to $1.7 million in the second quarter of 2023. The decrease resulted from a restructuring expense during the quarter.
Net loss for the quarter was $27.8 million, or $3.84 per basic and diluted share, compared to net income of $0.6 million, or $0.08 per basic and diluted share, in the second quarter of the prior year. The net loss included $38.2 million of pension plan termination charges and a related tax benefit of $10.1 million, without which the results would have been approximately $0.3 million of net income for the quarter.
Balance Sheet and Liquidity
Harte Hanks ended the quarter with $11.0 million in cash and cash equivalents and $24.0 million of capacity on its credit line. The Company has no outstanding debt as of June 30, 2024. The Company’s financial position continues to be strong, and it is well-positioned to execute on its long-term growth strategies in 2024 and beyond.
Conference Call Information
The Company will host a conference call and live webcast to discuss these results at 4:30 p.m. EDT today, August 8, 2024. Interested parties may access the webcast at https://www.webcaster4.com/Webcast/Page/2810/50867 or access the conference call by dialing 888-506-0062 in the United States or 973-528-0011 from outside the U.S. and using access code 821775.

A replay of the call can also be accessed via phone through August 22, 2024, by dialing (877) 481-4010 from the U.S., or (919) 882-2331 from outside the U.S. The conference call replay passcode is 50867.
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 GlaxoSmithKline, Unilever, Pfizer, Warner Bros Discovery, Volvo, Ford, FedEx, Midea, and IBM among others. Headquartered in Chelmsford, Massachusetts, Harte Hanks has over 2,000 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.

Exhibit 99.1

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) market conditions that may adversely impact marketing expenditures, and (ii) the impact of economic environments and competitive pressures on the financial condition, marketing expenditures and activities of our clients and prospects; (iii) the demand for our products and services by clients and prospective clients, including (iv) the willingness of existing clients to maintain or increase their spending on products and services that are or remain profitable for us, and (vi) our ability to predict changes in client needs and preferences; (b) economic and other business factors that impact the industry verticals we serve, including competition, inflation and consolidation of current and prospective clients, vendors and partners in these verticals; (c) our ability to manage and timely adjust our facilities, capacity, workforce and cost structure to effectively serve our clients; (d) 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; (e) our ability to protect our facilities against security breaches and other interruptions and to protect sensitive personal information of our clients and their customers; (f) 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; (g) the impact of privacy and other regulations, including restrictions on unsolicited marketing communications and other consumer protection laws; (h) fluctuations in fuel prices, paper prices, postal rates and postal delivery schedules; (i) the number of shares, if any, that we may repurchase in connection with our repurchase program; (j) unanticipated developments regarding litigation or other contingent liabilities; (k) our ability to complete reorganizations, including cost-saving initiatives; and (l) 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, 2023 which was filed on April 1, 2024. 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.


Exhibit 99.1
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, restructuring expense 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 does 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.
Investor Relations Contact:
Rob Fink or Tom Baumann
646.809.4048 / 646.349.6641
FNK IR
HHS@fnkir.com
Source: Harte Hanks, Inc.

Exhibit 99.1
Harte Hanks, Inc.
Consolidated Statements of Operations (Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
In thousands, except per share amounts2024202320242023
Revenue$45,035 $47,762 $90,483 $94,882 
Operating expenses
Labor22,682 26,666 46,167 51,131 
Production and distribution13,679 13,328 27,429 27,780 
Advertising, selling, general and administrative5,852 5,065 11,791 11,149 
Restructuring expenses427 - 1,280 - 
Depreciation and amortization expense1,022 1,033 2,068 2,099 
Total operating expenses43,662 46,092 88,735 92,159 
Operating income1,373 1,670 1,748 2,723 
Other expense, net
Interest expense (income), net39 59 50 (151)
Pension Plan termination charges38,217 - 38,217 - 
Other (income) expense, net(45)791 561 3,377 
Total other expense, net38,211 850 38,828 3,226 
(Loss) income before income taxes(36,838)820 (37,080)(503)
Income tax (benefit) expense(9,004)240 (9,075)(292)
Net (loss) income(27,834)580 (28,005)(211)
(Loss) income per common share
Basic$(3.84)$0.08 $(3.86)$(0.03)
Diluted$(3.84)$0.08 $(3.86)$(0.03)
Weighted average shares used to compute (loss) income per share
Basic7,2577,3587,2467,392
Diluted7,3657,5057,3547,392
Comprehensive (loss) income, net of tax:
Net (loss) income$(27,834)$580 $(28,005)$(211)
Adjustment to pension liability, net29,179 402 29,524 1,142 
Foreign currency translation adjustment(1,403)100 (1,937)1,980 
Total other comprehensive loss, net of tax27,776 502 27,587 3,122 
Comprehensive (loss) income$(58)$1,082 $(418)$2,911 

Exhibit 99.1
Harte Hanks, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
In thousands, except shares and per share amountsJune 30, 2024December 31, 2023
ASSETS
Current assets
Cash and cash equivalents$10,974 $18,364 
Accounts receivable, net30,564 34,313 
Contract assets and unbilled accounts receivable8,119 7,935 
Prepaid expenses2,330 1,915 
Prepaid income taxes and income tax receivable1,758 1,758 
Other current assets1,292 928 
Total current assets55,037 65,213 
Net property, plant and equipment8,430 8,855 
Right-of-use assets23,896 25,417 
Other assets22,370 23,272 
Total assets$109,733 $122,757 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses$20,248 $23,176 
Accrued payroll and related expenses4,410 5,615 
Deferred revenue and customer advances3,484 3,195 
Customer postage and program deposits1,318 1,815 
Other current liabilities2,808 9,495 
Current portion of lease liabilities4,134 4,815 
Total current liabilities36,402 48,111 
Pension liabilities - Qualified plans9,766 10,540 
Pension liabilities - Nonqualified plan18,190 18,630 
Long-term lease liabilities, net of current portion22,291 23,691 
Other long-term liabilities2,476 1,928 
Total liabilities89,125 102,900 
Stockholders’ equity
Common stock12,221 12,221 
Additional paid-in capital145,703 157,889 
Retained earnings816,915 844,920 
Less treasury stock(937,728)(951,083)
Accumulated other comprehensive loss(16,503)(44,090)
Total stockholders’ equity20,608 19,857 
Total liabilities and stockholders’ equity$109,733 $122,757 

Exhibit 99.1
Harte Hanks, Inc.
Reconciliations of Non-GAAP Financial Measures (Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
In thousands, except per share data2024202320242023
Net (loss) income$(27,834)$580 $(28,005)$(211)
Income tax (benefit) expense(9,004)240 (9,075)(292)
Other expense, net38,211 850 38,828 3,226 
Depreciation and amortization expense1,022 1,033 2,068 2,099 
EBITDA$2,395 $2,703 $3,816 $4,822 
Stock-based compensation734 503 1,286 1,042 
Severance5 1,187 8 1,209 
Restructuring expense427 — 1,280 — 
Adjusted EBITDA$3,561 $4,393 $6,390 $7,073 
Operating income$1,373 $1,670 $1,748 $2,723 
Stock-based compensation734 503 1,286 1,042 
Severance5 1,187 8 1,209 
Restructuring expense427 — 1,280 — 
Adjusted operating income$2,539 $3,360 $4,322 $4,974 
Adjusted operating margin (a)
5.6%7.0%4.8%5.2%
(a)Adjusted Operating Margin equals Adjusted Operating Income divided by Revenues.
Harte Hanks, Inc.
Statement of Operations by Segments (Unaudited)
In thousands
Three months ended June 30, 2024Marketing ServicesCustomer CareSales ServicesFulfillment & LogisticsRestructuringUnallocated CorporateTotal
Revenue$7,738 $12,384 $4,414 $20,499 $— $— $45,035 
Segment operating expense6,047 9,454 3,234 18,113 427 5,365 42,640 
Contribution margin (loss)$1,691 $2,930 $1,180 $2,386 $(427)$(5,365)$2,395 
Overhead allocation856 612 204 827 — (2,499)— 
EBITDA$835 $2,318 $976 $1,559 $(427)$(2,866)$2,395 
Depreciation and amortization165 54 196 243 — 364 1,022 
Operating income (loss)$670 $2,264 $780 $1,316 $(427)$(3,230)$1,373 
Three months ended June 30, 2023Marketing ServicesCustomer CareSales ServicesFulfillment & LogisticsRestructuringUnallocated CorporateTotal
Revenue$10,921 $14,915 $2,296 $19,630 $— $— $47,762 
Segment operating expense8,835 11,491 2,050 16,931 — 5,752 45,059 
Contribution margin (loss)$2,086 $3,424 $246 $2,699 $— $(5,752)$2,703 
Overhead allocation766 720 — 765 — (2,251)— 
EBITDA$1,320 $2,704 $246 $1,934 $— $(3,501)$2,703 
Depreciation and amortization47 173 198 241 — 374 1,033 
Operating income (loss)$1,273 $2,531 $48 $1,693 $— $(3,875)$1,670