Revenue Performance - Fourth quarter revenue for 2024 was $47.1 million, a decrease of 4.8% compared to $49.5 million in Q4 2023[4] - Full-year revenue for 2024 was $185.2 million, down 3.3% from $191.5 million in 2023[12] - Total revenues for the year ended December 31, 2024, were $185,242,000, a decrease of 3.7% compared to $191,492,000 in 2023[27] - For the three months ended December 31, 2024, total revenues were $47,129,000, a decrease from $49,491,000 in the same period of 2023, reflecting a decline of 4.8%[28] Net Loss and Earnings - Fourth quarter net loss was $2.4 million, or $0.33 per share, compared to a net loss of $2.0 million, or $0.27 per share, in the prior year[11] - Full-year net loss for 2024 was $30.3 million, or $4.15 per share, compared to a net loss of $1.6 million, or $0.21 per share, in 2023[12] - Net loss for Q4 2024 was $2,434,000, compared to a net loss of $1,977,000 in Q4 2023, representing a 23.1% increase in loss year-over-year[26] Cash and Assets - The company ended 2024 with $9.9 million in cash, down from $18.4 million at the end of 2023, and zero debt[8] - Cash and cash equivalents decreased to $9,934,000 in 2024 from $18,364,000 in 2023, a decline of 45.9%[25] - Total assets decreased to $101,782,000 in 2024 from $122,757,000 in 2023, reflecting a reduction of 17.0%[25] - Total liabilities decreased to $80,093,000 in 2024 from $102,900,000 in 2023, a decline of 22.1%[25] EBITDA and Operating Income - Adjusted EBITDA for Q4 2024 was $3.5 million, compared to $5.2 million in Q4 2023[8] - Adjusted EBITDA for Q4 2024 was $3,509,000, down from $5,209,000 in Q4 2023, indicating a decline of 32.6%[26] - EBITDA for the year ended December 31, 2024, was $6,478,000, compared to $7,596,000 in 2023, indicating a decrease of 14.7%[27] - Operating income for the year ended December 31, 2024, was $2,093,000, down from $3,359,000 in 2023, representing a decline of 37.7%[27] Segment Performance - Customer Care segment revenue was $15.0 million, accounting for 32% of total revenue, with an 18.0% decrease in EBITDA year-over-year[8] - Fulfillment & Logistics Services segment revenue was $20.8 million, representing 44% of total revenue, with a 31.4% decrease in EBITDA[8] - Marketing Services segment revenue was $11.3 million, down 12.1% year-over-year, with EBITDA impacted by a $3.2 million impairment[8] Impairments and Charges - The company reported a goodwill impairment charge of $1,631,000 in Q4 2024, with no such charge in Q4 2023[24] - Impairment charges for goodwill and intangible assets were $3,168,000 for both the year ended December 31, 2024, and 2023[27] Restructuring and Expenses - The company incurred restructuring expenses of $2,402,000 for the year ended December 31, 2024, compared to $5,687,000 in 2023, indicating a reduction of 57.8%[27] - The company reported an unallocated expense of $21,818,000 for the year ended December 31, 2024, compared to $20,347,000 in 2023, indicating an increase of 7.2%[27] Strategic Initiatives - The company is focused on Project Elevate to optimize cost structure and streamline operations, with plans to continue these initiatives into 2025[5]

Revenue Concentration - Harte Hanks generated 72.1% of total revenue from its largest 25 clients in 2024, with the largest client accounting for 9.4%[34] - Approximately 72.1% of total revenue for 2024 was generated by the 25 largest clients[56] - The largest client generated 9.4% of total revenues in 2024 and represented 11.9% of total accounts receivable as of December 31, 2024[56] Operational Initiatives - The company expects restructuring cost reductions from "Project Elevate" to total $16.0 million from 2024 to 2026, with restructuring charges of $2.4 million and $5.7 million incurred in 2024 and 2023, respectively[33] - The company initiated "Project Elevate" to optimize operations and is expected to achieve reorganization savings of $16 million from 2024 to 2026[124] - In 2023, the company initiated Project Elevate to transform its operational cost structure and improve agility across business segments[65] Service Offerings - Harte Hanks operates in six service categories: data, marketing, sales, customer care, fulfillment, and logistics, addressing growth and customer experience challenges for B2B and B2C businesses[20] - Harte Hanks supports enterprise-level supply chain management and eCommerce scalability through its logistics services[27] - The company leverages a fleet of over 15,000 trucks for scalable third-party logistics services[34] - Harte Hanks' fulfillment network spans the U.S. and includes capabilities in Europe for efficient international product distribution[29] Technology and Innovation - The company plans to enhance its customer care services by integrating AI technology to reduce customer effort and operational costs[25] - Harte Hanks' proprietary DataView tool provides a 360-degree customer view with over 1,500 attributes for accurate predictive marketing[25] - The company has developed proprietary software, including NexTOUCH and Allink 360, which are integral to its business operations[49] Workforce and Employment - As of December 31, 2024, Harte Hanks employed 1,715 full-time employees and 288 part-time employees, with 1,141 employees based outside of the U.S.[49] - 58% of Harte Hanks' workforce was female as of December 31, 2024[51] - The company focuses on training and talent development, offering various learning opportunities to its employees[50] Financial Performance - Operating revenue for the year ended December 31, 2024, was $185.2 million, a decrease of $6.3 million, or 3.3%, compared to $191.5 million in 2023[125] - Operating expenses decreased by $5.0 million, or 2.6%, to $183.1 million for the year ended December 31, 2024, compared to $188.1 million in 2023[127] - The net loss for the year ended December 31, 2024, was $30.3 million, an increase of 1829.7% compared to a net loss of $1.6 million in 2023[125] - The diluted EPS from operations for 2024 was $(4.15), reflecting an increase of 1834.2% compared to $(0.21) in 2023[125] Market Challenges - The B2B services industry is highly competitive, with significant market share potentially lost to in-house operations or new entrants[57] - The company faces significant competition from rivals with greater financial and technical resources, which may lead to pricing pressures and reduced profit margins[60] - The company is experiencing margin compression due to rising labor costs and higher service charges from third-party providers, which may adversely affect profitability[70] - Inflation and supply chain disruptions have negatively affected the discretionary spending of customers, potentially impacting the company's results of operations[71] Regulatory and Compliance Risks - The company anticipates ongoing proposals and adoptions of new regulations affecting privacy, data protection, and marketing laws, which may impose significant compliance costs and potential fines for violations[81] - Compliance with privacy and data protection laws is costly and time-consuming, with potential penalties for non-compliance that could materially impact business operations[83] - The evolving regulatory landscape surrounding AI technologies may lead to increased operational costs and constraints on development and deployment[86] Financial Position and Liabilities - As of December 31, 2024, the company reported approximately $24.4 million in unfunded pension liabilities, indicating potential future financial obligations[98] - The company had the ability to borrow approximately $24.0 million under its Credit Facility as of December 31, 2024[151] - Total other expenses increased by $34.7 million to $40.0 million, primarily due to $37.5 million in pension termination charges[133] Audit and Financial Reporting - The audit opinion confirmed that the financial statements present fairly the company's financial position and results of operations for the year ended December 31, 2024[203] - The financial statements were prepared in accordance with generally accepted accounting principles in the United States[203] - The company has implemented a clawback policy to address potential financial misstatements[97] - The company is currently evaluating the impact of recent accounting pronouncements, including ASU 2023-09 and ASU 2024-03, on its financial disclosures[168][169]

Financial Data and Key Metrics Changes - In Q3 2024, the company reported a revenue increase of 1.1% year-over-year, reaching $47.6 million compared to $47.1 million in Q3 2023, marking an improvement from a negative 16.6% revenue decline in Q3 2023 [6][12] - Operating income for Q3 2024 was $1.9 million, down from $2.9 million in Q3 2023, while adjusted operating income was $3.1 million compared to $3.2 million in the same period last year [15] - EBITDA for Q3 2024 was $2.9 million, down from $3.9 million in Q3 2023, with adjusted EBITDA at $4.1 million compared to $4.2 million in the prior year [15] Business Line Data and Key Metrics Changes - Customer Care segment revenues increased to $13.1 million in Q3 2024 from $11.8 million in Q3 2023, driven by expanded workloads from multiple customers in the entertainment industry [12] - Sales Services revenues rose to $4.2 million compared to $2.2 million in the same quarter last year, primarily due to increased volume from a large client [12] - Marketing Services segment revenues fell to $9.1 million from $10.6 million year-over-year, attributed to customer budget reductions and the conclusion of certain programs [13] - Fulfillment and logistics revenues decreased to $21.3 million from $22.5 million, due to lower logistics volume and rates not keeping pace with new programs [13] Market Data and Key Metrics Changes - The company has secured new clients in various sectors, including a dynamic design marketplace and a top 15 financial services client, indicating growth opportunities in diverse markets [10][11] - The addition of a new client in the global luxury automotive industry and a prominent global resale marketplace for luxury goods highlights the company's expansion into high-value markets [11] Company Strategy and Development Direction - The company is focused on transforming its business for sustainable growth and optimizing free cash flow, with a strategy that includes creating lasting value through investment and recalibration [6][7] - The establishment of the Customer Excellence and Growth division aims to enhance customer experience and leverage data and AI capabilities across business segments [8][9] - Project Elevate is a key initiative aimed at improving profitability through cost reductions and increasing free cash flow, with a target of $6 million in EBITDA improvement [14][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that the revenue turnaround may not be linear, anticipating fluctuations and occasional declines as part of the growth journey [7] - The focus remains on adapting to customer needs and prioritizing innovation to enhance the company's competitive position in the market [20] Other Important Information - As of September 30, 2024, cash and cash equivalents were $5.9 million, down from $13.3 million a year prior, with a current line of credit of $25 million extended until June 2025 [16] - The pension plan was terminated in June 2024, resulting in a significant reduction of liabilities on the balance sheet [17][18] Q&A Session Summary - No questions were raised during the Q&A session, and the management concluded the call by expressing gratitude to investors, employees, and partners for their support [20][21]

分组1 - Harte-Hanks reported quarterly earnings of $0.13 per share, exceeding the Zacks Consensus Estimate of $0.10 per share, and showing an increase from $0.08 per share a year ago, representing a 30% earnings surprise [1] - The company achieved revenues of $47.63 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 0.91% and up from $47.12 million year-over-year [2] - Over the last four quarters, Harte-Hanks has surpassed consensus EPS estimates three times and has also topped consensus revenue estimates three times [2] 分组2 - The stock has underperformed the market, losing about 0.7% since the beginning of the year compared to the S&P 500's gain of 25.5% [3] - The current consensus EPS estimate for the coming quarter is $0.15 on revenues of $50.1 million, while the estimate for the current fiscal year is -$3.43 on revenues of $187.78 million [7] - The Advertising and Marketing industry, to which Harte-Hanks belongs, is currently ranked in the bottom 39% of over 250 Zacks industries, indicating potential challenges ahead [8]

Financial Performance - Total revenues for Q3 2024 were $47.6 million, an increase of 1.1% compared to $47.1 million in Q3 2023[3] - Operating income was $1.9 million, down from $2.9 million in the same quarter of the prior year[3] - Net income for the quarter was $0.1 million, or $0.02 per basic and diluted share, compared to net income of $0.6 million, or $0.09 per basic and $0.08 per diluted share, in the prior year quarter[9] - EBITDA for Q3 2024 was $2.9 million, compared to $3.9 million in the same period in the prior year[3] - The company reported a comprehensive income of $236,000 for Q3 2024, compared to $562,000 in Q3 2023[24] - Adjusted EBITDA for Q3 2024 was $4.14 million, slightly down from $4.19 million in Q3 2023[28] - The company’s total operating income for the three months ended September 30, 2024, was $1,898,000, compared to $2,914,000 in the same period of 2023, a decline of 34.8%[29] Segment Performance - Customer Care segment revenue was $13.1 million, an increase of 10.4% year-over-year, with EBITDA totaling $2.5 million, up 40.5%[4] - Sales Services segment revenue was $4.2 million, an increase of 94.1% year-over-year, with EBITDA totaling $0.7 million, up 237%[5] - Fulfillment & Logistics Services segment revenue was $21.3 million, a decrease of 5.4% year-over-year, with EBITDA declining 53.1%[6] - Marketing Services segment revenue was $9.1 million, a decrease of 14.6% year-over-year, while EBITDA increased to $2.1 million from $1.5 million[7] - The contribution margin for the Marketing Services segment was $2,892,000, down from $2,221,000 in the prior year, indicating a decline of 30.2%[29] - The contribution margin for the Fulfillment & Logistics segment was $2,115,000, down from $3,535,000 in the prior year, a decrease of 40.2%[29] - Operating income for the Fulfillment & Logistics segment was $1,074,000, down from $2,606,000 in the prior year, a decline of 58.8%[29] Expenses and Liabilities - Total operating expenses for Q3 2024 were $45.73 million, compared to $44.21 million in Q3 2023, an increase of 3.4%[23] - Segment operating expenses for Customer Care increased to $9,995,000 in Q3 2024 from $9,380,000 in Q3 2023, an increase of 6.5%[29] - The overall segment operating expenses for the company increased to $44,694,000 in Q3 2024 from $43,253,000 in Q3 2023, an increase of 3.3%[29] - The company reported a loss of $5,195,000 in unallocated corporate expenses for the three months ended September 30, 2024, compared to a loss of $2,874,000 in the same period of 2023[29] Cash and Assets - The company ended the quarter with $5.9 million in cash and cash equivalents and $24.0 million of capacity on its credit line[10] - Cash and cash equivalents decreased to $5.94 million as of September 30, 2024, from $18.36 million at the end of 2023[25] - Total assets decreased to $108.13 million as of September 30, 2024, down from $122.76 million at the end of 2023[25] - Total liabilities decreased to $87.08 million as of September 30, 2024, from $102.90 million at the end of 2023[26] Future Outlook - The company expects low to mid-single-digit revenue contraction in Q4 2024 due to changes in customer programs[2]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2024 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-07120 HARTE HANKS, INC. (Exact name of registrant as specified in its charter) Delaware1 Executive Drive, Chelm ...

Company Performance - Harte-Hanks closed at $6.98, showing no change from the previous session, lagging behind the S&P 500's daily gain of 0.38% [1] - The company's shares experienced a loss of 5.55% over the previous month, underperforming the Business Services sector's gain of 11.43% and the S&P 500's gain of 4.9% [1] Upcoming Earnings - Harte-Hanks is set to disclose its earnings on November 14, 2024, with analysts expecting earnings of $0.10 per share, reflecting a year-over-year growth of 25% [2] - The consensus estimate for revenue is $47.2 million, indicating a 0.17% growth compared to the same quarter of the previous year [2] Yearly Forecast - For the entire year, Zacks Consensus Estimates forecast earnings of -$3.43 per share and revenue of $187.78 million, representing changes of -936.59% and -1.94% respectively compared to the previous year [3] Analyst Estimates - Recent changes to analyst estimates for Harte-Hanks are important as they reflect short-term business trends, with upward revisions indicating analysts' positivity towards the company's operations [4] - Adjustments in estimates are directly associated with imminent stock price performance, which investors can leverage using the Zacks Rank [5] Zacks Rank - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), has shown an impressive track record, with 1 stocks generating an average annual return of +25% since 1988 [6] - Currently, Harte-Hanks holds a Zacks Rank of 3 (Hold), with the consensus EPS estimate remaining stagnant over the past month [6] Industry Context - The Advertising and Marketing industry, part of the Business Services sector, has a Zacks Industry Rank of 151, placing it in the bottom 41% of over 250 industries [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Company Performance - Harte-Hanks (HHS) closed at $7.44, marking a +1.64% move from the prior day, outperforming the S&P 500 which gained 0.42% [1] - The stock has fallen by 2.79% in the past month, lagging behind the Business Services sector's gain of 4.34% and the S&P 500's gain of 2.06% [1] Upcoming Earnings - The upcoming earnings disclosure is highly anticipated, with projected earnings per share (EPS) of $0.10, reflecting a 25% increase from the same quarter last year [2] - Revenue is forecasted to be $47.2 million, indicating a 0.17% growth compared to the corresponding quarter of the prior year [2] Full Year Projections - For the full year, Zacks Consensus Estimates project earnings of -$3.43 per share and revenue of $187.78 million, representing changes of -936.59% and -1.94% respectively from the prior year [3] - Recent changes to analyst estimates indicate a dynamic nature of near-term business trends, with positive revisions suggesting optimism about the company's outlook [3] Analyst Ratings - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), currently rates Harte-Hanks at 3 (Hold) [5] - The consensus EPS projection has remained stagnant over the past 30 days [5] Industry Context - The Advertising and Marketing industry, part of the Business Services sector, holds a Zacks Industry Rank of 73, placing it in the top 29% of over 250 industries [6] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [6]

Company Performance - Harte-Hanks (HHS) closed at $7.54, with a daily increase of +0.94%, outperforming the S&P 500's gain of 0.28% [1] - Over the past month, Harte-Hanks shares have decreased by 0.93%, underperforming the Business Services sector's gain of 6.6% and the S&P 500's gain of 2% [1] Earnings Expectations - Analysts expect Harte-Hanks to report earnings of $0.10 per share, reflecting a year-over-year growth of 25% [2] - The consensus estimate for quarterly revenue is $48.45 million, which is an increase of 2.82% from the previous year [2] Full Year Projections - For the full year, Zacks Consensus Estimates project earnings of -$3.43 per share and revenue of $190.94 million, indicating changes of -936.59% and -0.29% respectively from the prior year [3] - Recent adjustments to analyst estimates are important as they reflect short-term business trends, with positive revisions indicating analyst optimism [3] Zacks Rank and Industry Performance - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), currently rates Harte-Hanks at 3 (Hold) [5] - The Advertising and Marketing industry, part of the Business Services sector, holds a Zacks Industry Rank of 47, placing it in the top 19% of over 250 industries [6]

Financial Performance - Revenue for the three months ended June 30, 2024, decreased by $2.7 million, or 5.7%, to $45.0 million compared to the same period in 2023[104] - Operating expenses for the three months ended June 30, 2024, were $43.7 million, a decrease of $2.4 million, or 5.3%, from $46.1 million in the prior year[106] - The company recorded a net loss of $27.8 million for the three months ended June 30, 2024, compared to a net income of $0.6 million in the same period of 2023[104] - Revenue for the six months ended June 30, 2024, decreased by $4.4 million, or 4.6%, to $90.5 million compared to the same period in 2023[109] - Operating expenses for the six months ended June 30, 2024, were $88.7 million, a decrease of $3.4 million, or 3.7%, from $92.2 million in the prior year[110] - Other expense, net, for the three months ended June 30, 2024, was $38.2 million, primarily due to the pension termination charge[108] Transformation and Strategy - Project Elevate is expected to exceed the savings target of $6 million for 2024, with a two-year target of $16 million in savings by the end of 2025[99] - The company is undergoing a transformation in its sales and marketing organization, focusing on staff expansion and international sales[109] Segment Performance - Marketing Services segment revenue decreased by $3.2 million, or 29.1%, for the three months ended June 30, 2024, compared to the same period in 2023, primarily due to customer turnover and reduced client spending[116] - Customer Care segment revenue decreased by $2.5 million, or 17.0%, for the three months ended June 30, 2024, primarily due to timing fluctuations with specific programs[119] - Sales Services segment revenue increased by $2.1 million, or 92.2%, for the three months ended June 30, 2024, driven by increased work from a large fintech customer[122] - Fulfillment & Logistics Services segment revenue increased by $0.9 million, or 4.4%, for the three months ended June 30, 2024, due to higher volumes and new programs from existing customers[124] - Operating income for the Marketing Services segment decreased by $0.6 million, or 47.4%, for the three months ended June 30, 2024, due to reduced revenue[116] - Operating income for the Customer Care segment was $2.3 million for the three months ended June 30, 2024, compared to $2.5 million for the same period in 2023, reflecting a decrease of $0.3 million[119] - Operating income for the Sales Services segment increased to $0.8 million for the three months ended June 30, 2024, compared to $48 thousand for the same period in 2023, marking a significant increase[122] - Operating income for the Fulfillment & Logistics Services segment decreased by $0.4 million for the three months ended June 30, 2024, primarily due to revenue mix and higher facility and technology expenses[124] Cash and Capital Management - The company had cash and cash equivalents of $11.0 million as of June 30, 2024, down from $18.4 million at December 31, 2023[126] - Net cash used in operating activities was $4.1 million for the six months ended June 30, 2024, compared to net cash provided of $4.6 million for the same period in 2023, indicating a decrease of $8.7 million year-over-year[128] - As of June 30, 2024, the company had no borrowings outstanding under the Credit Facility and had letters of credit outstanding amounting to $1.0 million[134] - The company had the ability to borrow $24.0 million under the Credit Facility as of June 30, 2024[134] - No dividends were paid in the three months ended June 30, 2024 and 2023[134] - The Board of Directors approved a share repurchase program for $6.5 million, with $2.4 million used to repurchase 0.4 million shares in 2023[134] - In the three and six months ended June 30, 2024, no shares were repurchased, while 0.3 million shares were repurchased for $1.9 million in the same period of 2023[134] Governance and Compliance - The company believes there are no conditions that raise substantial doubt about its ability to continue as a going concern for the next twelve months[135] - The management evaluated the effectiveness of disclosure controls and procedures as of June 30, 2024, concluding they were effective at a "reasonable assurance" level[138] - There were no changes in internal controls over financial reporting during the most recent fiscal quarter that materially affected the internal control[138] - The company maintains disclosure controls designed to ensure timely reporting of required information[137] - Legal proceedings information is incorporated by reference from the Notes to Condensed Consolidated Financial Statements[139]