Harte Hanks, Inc. (NASDAQ:HHS) Q3 2022 Earnings Conference Call November 10, 2022 4:30 PM ET Company Participants Tom Baumann - Investor Relations Brian Linscott - Chief Executive Officer Lauri Kearnes - Chief Financial Officer Conference Call Participants Michael Kupinski - Noble Capital Markets Julio Romero - Sidoti & Company Operator Good afternoon, ladies and gentlemen and welcome to the Harte Hanks Third Quarter 2022 Earnings Call. [Operator Instructions] It is now my pleasure to turn the floor over to ...

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) This part presents the company's unaudited interim financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures [Item 1. Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited interim financial statements for Harte Hanks, Inc. as of September 30, 2022. It includes the Condensed Consolidated Balance Sheets, Statements of Comprehensive Income, Statements of Changes in Stockholders' Deficit, and Statements of Cash Flows, along with detailed notes explaining the accounting policies and financial details [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and stockholders' deficit at specific reporting dates Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $80,624 | $75,375 | | **Total Assets** | **$111,133** | **$107,861** | | **Total Current Liabilities** | $45,783 | $42,442 | | **Total Liabilities** | $114,199 | $122,853 | | **Total Stockholders' Deficit** | $(12,789) | $(24,715) | - Cash and cash equivalents decreased from **$11.9 million** at year-end 2021 to **$6.9 million** as of September 30, 2022[9](index=9&type=chunk) - Long-term debt was fully paid off, decreasing from **$5.0 million** at year-end 2021 to **zero** as of September 30, 2022[9](index=9&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section outlines the company's financial performance, including revenues, operating income, net income, and earnings per share over specific periods Q3 Financial Performance (Three Months Ended Sep 30, in thousands) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Revenue | $53,886 | $49,597 | | Operating Income | $3,773 | $4,226 | | Net Income | $7,166 | $4,404 | | Diluted EPS | $0.83 | $0.52 | Year-to-Date Financial Performance (Nine Months Ended Sep 30, in thousands) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Operating Revenues | $151,500 | $142,610 | | Operating Income | $11,678 | $4,776 | | Net Income | $14,972 | $13,215 | | Diluted EPS | $1.73 | $1.57 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the company's cash inflows and outflows from operating, investing, and financing activities over specific periods Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $22,252 | $(5,938) | | Net cash used in investing activities | $(5,686) | $(2,377) | | Net cash used in financing activities | $(6,421) | $(4,845) | - The significant improvement in operating cash flow was primarily due to higher net income (excluding non-cash gains in 2021) and favorable changes in working capital, including accounts receivable and payable[14](index=14&type=chunk)[164](index=164&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's accounting policies, segment information, and significant financial transactions - The company operates three business segments: Marketing Services, Customer Care, and Fulfillment & Logistics Services[18](index=18&type=chunk) Disaggregation of Revenue by Segment (Nine Months Ended Sep 30, 2022, in thousands) | Segment | Revenue | | :--- | :--- | | Marketing Services | $39,389 | | Customer Care | $50,499 | | Fulfillment and Logistics Services | $61,612 | | **Total Revenues** | **$151,500** | - On June 30, 2022, the Company entered into an agreement to repurchase all **9,926 shares** of its Series A Preferred Stock from Wipro for **$9.926 million** in cash and **100,000 shares** of common stock. The cash was placed in escrow[65](index=65&type=chunk) - The company completed its restructuring activities in 2021 and incurred **no restructuring expenses** in the first nine months of 2022, compared to **$4.9 million** in the same period of 2021[109](index=109&type=chunk)[110](index=110&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial results for the third quarter and first nine months of 2022, comparing them to the same periods in 2021. The analysis covers consolidated and segment-level performance, highlighting a revenue increase driven by the Fulfillment & Logistics segment, alongside declines in Marketing Services and Customer Care. The discussion also covers operating expenses, liquidity, capital resources, and the new credit facility [Results of Operations](index=37&type=section&id=Results%20of%20Operations) This section analyzes the company's consolidated financial performance, including revenue, operating income, and expenses, for the reported periods Consolidated Results Summary (in thousands) | Period | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | :--- | | **Q3** | Revenues | $53,886 | $49,597 | 8.6% | | | Operating Income | $3,773 | $4,226 | (10.7)% | | **9 Months** | Revenues | $151,500 | $142,610 | 6.2% | | | Operating Income | $11,678 | $4,776 | 144.5% | - Q3 2022 revenue increased by **$4.3 million (8.6%) YoY**, driven by a **$8.4 million** increase in Fulfillment & Logistics, which offset decreases in Customer Care (**$2.4 million**) and Marketing Services (**$1.7 million**)[131](index=131&type=chunk) - Q3 2022 operating expenses increased by **$4.7 million (10.5%) YoY**, primarily due to a **$5.3 million** rise in production and distribution costs linked to higher logistics revenue and transportation costs[134](index=134&type=chunk)[135](index=135&type=chunk) - Other income for Q3 2022 was **$4.7 million**, a significant increase from **$0.6 million** in Q3 2021, mainly due to a **$2.5 million** gain from the sale of IP addresses[146](index=146&type=chunk) [Segment Results](index=39&type=section&id=Segment%20Results) This section provides a detailed breakdown of financial performance across the company's Marketing Services, Customer Care, and Fulfillment & Logistics segments Marketing Services Segment Performance (Q3 2022 vs Q3 2021) | Metric | Q3 2022 | Q3 2021 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $13,016 | $14,729 | -11.6% | | Operating Income | $1,823 | $2,655 | -31.3% | Customer Care Segment Performance (Q3 2022 vs Q3 2021) | Metric | Q3 2022 | Q3 2021 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $17,375 | $19,768 | -12.1% | | Operating Income | $2,765 | $3,819 | -27.6% | Fulfillment & Logistics Services Segment Performance (Q3 2022 vs Q3 2021) | Metric | Q3 2022 | Q3 2021 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $23,495 | $15,100 | 55.6% | | Operating Income | $2,601 | $1,511 | 72.1% | [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, credit facilities, and expected capital expenditures, outlining its ability to meet short-term and long-term obligations - Cash and cash equivalents were **$6.9 million** at September 30, 2022, down from **$11.9 million** at December 31, 2021[160](index=160&type=chunk) - The company entered a new **three-year, $25.0 million** asset-based revolving credit facility with Texas Capital Bank in December 2021. As of September 30, 2022, there were **no borrowings outstanding**, with **$24.2 million available**[168](index=168&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) - The company expects to receive an additional **$7.6 million** in tax refunds in 2022 related to NOL carryback provisions from the CARES Act[161](index=161&type=chunk) - Capital expenditures for 2022 are expected to be approximately **$6 million to $7 million**, mainly for a new ERP system and the Kansas City facility expansion[162](index=162&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company has indicated that this section is not applicable for this reporting period - The company states this item is 'Not applicable'[182](index=182&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of September 30, 2022. There were no material changes to internal controls over financial reporting during the quarter, and the shift to remote work due to COVID-19 has not had a material impact on these controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2022[185](index=185&type=chunk) - No changes in internal controls over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[186](index=186&type=chunk) [Part II. Other Information](index=45&type=section&id=Part%20II.%20Other%20Information) This part covers legal proceedings, risk factors, unregistered sales of equity securities, and a list of exhibits filed with the report [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various claims and legal proceedings in the ordinary course of business. Management believes that appropriate and adequate accruals have been made and that the probability of a material loss beyond these accruals is remote - The company is subject to various claims and legal proceedings in the ordinary course of business. Management believes appropriate accruals have been made and the probability of material loss beyond amounts accrued is remote[105](index=105&type=chunk)[106](index=106&type=chunk)[188](index=188&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2021 - No material changes were reported during the three months ended September 30, 2022, to the risk factors previously disclosed in the 2021 10-K[189](index=189&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not sell any unregistered equity securities during the quarter ended September 30, 2022. Additionally, no shares were repurchased under the company's stock repurchase program, which has since been terminated - The company did not sell any unregistered equity securities during the quarter ended September 30, 2022[190](index=190&type=chunk) - No shares of common stock were repurchased under the stock repurchase program during Q3 2022. This program has been terminated[178](index=178&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications (Sections 302 and 906 of the Sarbanes-Oxley Act) and Inline XBRL data files - Exhibits filed include certifications from the CEO and CFO as required by the Sarbanes-Oxley Act of 2002, and Interactive Data Files (XBRL)[194](index=194&type=chunk)

Financial Data and Key Metrics Changes - Revenue for the second quarter was $48.6 million, a decrease of 1.4% from $49.3 million in the same period last year [41] - Operating income increased by $2.6 million to $4 million compared to $1.4 million in the year-ago quarter [44] - EBITDA more than doubled to $4.6 million from $2.1 million in the second quarter last year [21][45] - Net income for the quarter was $4.5 million, with fully diluted earnings per share of $0.52 compared to $1.27 in the second quarter last year [39][44] Business Line Data and Key Metrics Changes - Customer Care revenue decreased by 19.8% year-over-year to $15.3 million, with EBITDA down 25% to $2.5 million [22][41] - Fulfillment & Logistics revenue increased by approximately $3.9 million or 24.3% year-over-year, with EBITDA up 91.7% to $3.2 million [28][41] - Marketing Services revenue slightly decreased to $13.5 million, but EBITDA improved to $1.8 million from $1.7 million in the prior year quarter [33][41] Market Data and Key Metrics Changes - The company is experiencing healthy demand for Fulfillment & Logistics services despite larger logistics players announcing a slowdown in spending [29] - The Customer Care pipeline remains healthy with new and former customers, indicating potential for future growth [23] Company Strategy and Development Direction - The company is focused on an asset-light business model and aims to deepen existing customer relationships while expanding into new segments [8][12] - Investments in technology and partnerships are expected to enhance market opportunities and drive revenue growth [14][15] - The company plans to continue operational improvements and expand revenues and margins [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the outlook for revenue growth despite a modest decrease in the current quarter, citing new customer relationships and upcoming projects [10][11] - The company anticipates strong sequential results in the third quarter, supported by new business wins and increased staffing for upcoming projects [11][23] - Management noted that there have been no significant reductions in spending from clients due to macroeconomic pressures [71] Other Important Information - The company reached an agreement to repurchase all preferred shares held by Wipro, which will eliminate the dilutive impact to common shareholders [16][47] - The company sold unused IP address blocks for proceeds totaling $2.5 million, contributing to a one-time improvement in cash flow [17][18] Q&A Session Summary Question: What has increased confidence in year-over-year revenue growth? - Management noted a focus on cross-segment selling and new contracts contributing to revenue growth [52] Question: What went right for the Fulfillment & Logistics segment? - Strong performance was attributed to double-digit EBITDA margins and a favorable revenue mix [54] Question: Is there healthy demand for Fulfillment & Logistics despite larger players slowing down? - Management confirmed positive momentum with existing clients and new business opportunities [57] Question: Are there plans for traditional financing options now that debt is paid off? - Management clarified that a new traditional financing arrangement was closed last December [64] Question: What are the best uses of cash at this point? - Management indicated a focus on continued investment in the business and potential acquisition opportunities [76]

Harte Hanks, Inc. (HRTH) Q3 2021 Earnings Conference Call November 11, 2021 4:30 PM ET Company Participants Rob Fink - FNK, IR Brian Linscott - Chief Executive Officer Lauri Kearnes - Chief Financial Officer Conference Call Participants Michael Kupinski - Noble Capital Markets Operator Good day, ladies and gentlemen, and welcome to the Harte Hanks Third Quarter Earnings Call. At this time, all participants have been placed on the listen-only mode and the floor will be open for questions and comments after t ...

Financial Data and Key Metrics Changes - The company reported Q2 revenue of $49.3 million, an 18% increase from $41.6 million in the same quarter last year [10][21] - Adjusted EBITDA for Q2 was $4.4 million, marking the fifth consecutive quarter of positive adjusted EBITDA [10][26] - Net income for the quarter was $10.6 million, or $1.27 per diluted share, which included a $10 million debt extinguishment related to PPP loan forgiveness [26][27] Business Line Data and Key Metrics Changes - Customer Care segment revenue increased by $4 million year-over-year, with EBITDA improving to $3.4 million from $2.1 million [14][21] - Fulfillment and Logistics revenue rose by approximately $2.5 million, with EBITDA improving to $1.7 million from a loss of $1 million in the prior year [15][16] - Marketing Services segment revenue increased by $1.2 million, with EBITDA growing to $1.7 million compared to $1.2 million in the prior year [16][24] Market Data and Key Metrics Changes - The company experienced revenue growth across all business segments, with Customer Care leading the growth [21][22] - The company noted strong revenue tailwinds from COVID-related projects, although these are expected to temper as 2021 progresses [14][32] Company Strategy and Development Direction - The company is focused on cost reduction initiatives in real estate, restructuring charges, and labor savings, which are expected to drive margin improvements [12][13] - The implementation of a new ERP system is underway, expected to be completed by the end of next year, with anticipated cost savings [13][42] - The company aims to create deeper relationships with existing clients while attracting new clients, particularly in the CRM solutions market [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued performance and profitability, despite challenges in the customer care segment due to the winding down of COVID-related projects [18][32] - The company is encouraged by new business wins and growth in areas where investments have been made, particularly in pharmaceuticals and consumer packaged goods [20][21] Other Important Information - Operating expenses for Q2 were $47.8 million, a slight increase from $47.5 million in the prior year, with significant reductions in advertising and restructuring costs [25] - As of June 30, 2021, the company had cash and cash equivalents of $19.3 million and long-term debt of $13.1 million, a reduction of $14 million compared to the prior quarter [27] Q&A Session Summary Question: Insights on Customer Care revenue growth and future expectations - Management acknowledged that COVID-related project revenue will continue into Q3 but is expected to step down, making year-over-year growth challenging [32] Question: Performance of the Marketing Services segment - Management noted increased momentum in Marketing Services due to leadership changes and improved client spending [33] Question: Momentum in Fulfillment and Logistics and consolidation expenses - Management indicated that the consolidation efforts were largely completed in Q2, with expectations for optimization in Q3 and beyond [35][38] Question: Real estate lease exits and their impact - Management clarified that they are looking to exit multiple leases to reduce operating expenses, rather than selling real estate [40] Question: Capital allocation and debt reduction plans - Management indicated an increase in capital spending related to ERP implementation but emphasized a continued asset-light strategy [41][42]

Financial Data and Key Metrics Changes - The company reported Q1 2021 revenue of $43.8 million, an 8% increase from $40.5 million in Q1 2020 [7][16] - Adjusted EBITDA for Q1 was $2.2 million, marking the fourth consecutive quarter of positive adjusted EBITDA [7][15] - The operating loss improved to $884,000 from a $5.1 million loss in the same quarter last year [19] Business Line Data and Key Metrics Changes - **Customer Care**: Revenue increased by $8.1 million year-over-year, with EBITDA improving to $2.6 million from a negative $800,000 [10][16] - **Fulfillment & Logistics**: Revenue declined by $4 million year-over-year, but EBITDA improved to $1.2 million from a negative $700,000 [11][18] - **Marketing Services**: Revenue and EBITDA declined by $600,000 and $500,000 respectively due to reduced client marketing spend [13][18] Market Data and Key Metrics Changes - The company experienced strong revenue growth in the Customer Care segment, driven by COVID-related projects, which are expected to taper off as the year progresses [10][16] - The Fulfillment & Logistics segment benefited from a favorable litigation settlement of $750,000 [18] Company Strategy and Development Direction - The company has organized into three operating segments: Customer Care, Fulfillment & Logistics, and Marketing Services, aiming for transparency and visibility into financials [6] - Cost reduction initiatives are expected to deliver an incremental $6 million to $8 million in EBITDA improvement in 2022 [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future performance, citing stabilized top-line revenue and a rightsized cost structure [14] - The company is encouraged by new business wins and growth in pharmaceutical and consumer packaged goods verticals [15] Other Important Information - As of March 31, 2021, the company had cash and cash equivalents of $24.9 million, down from $29.4 million at the end of 2020 [20][21] - Long-term debt stood at $18.4 million, which includes a portion of the PPP loan [21] Q&A Session Summary Question: Revenue expectations for the second quarter - Management indicated that $40 million is a baseline for future quarterly revenues [24] Question: Labor expenses outlook - Management anticipates some increases in labor costs due to adjustments in the Customer Care business and broader labor market challenges [26][27] Question: Customer Care revenue expectations for Q2 - Management has good visibility for Q2 but noted uncertainty for the second half of the year due to the nature of COVID-related projects [28]

Financial Data and Key Metrics Changes - The company reported a revenue decline of 10% in Q4 2020, with revenues at $47.1 million compared to $52.3 million in the same quarter last year [21] - For the full year 2020, revenues were $176.9 million, down 18.7% from $217.6 million in 2019 [23] - Adjusted EBITDA for Q4 was $1.9 million, a decrease from $3 million in the same period last year, marking the third consecutive quarter of positive adjusted EBITDA [22][25] - The net loss for 2020 was $1.7 million, significantly improved from a net loss of $26.3 million in 2019 [26] Business Line Data and Key Metrics Changes - Customer Care segment revenue grew by 44.5% in Q4, driven by project work and increased volumes from existing clients [7][18] - Marketing Services revenue decreased by 6.3% due to clients' reduced marketing budgets amid COVID-19 [18] - Fulfillment & Logistics revenue declined by 39.3%, impacted by the closure of the mail production facility and COVID-19 effects [18] Market Data and Key Metrics Changes - The company anticipates an additional $7.5 million from an income tax refund by year-end 2021, contributing to a strengthened financial position [6][26] - The weighted pipeline for new business is reported at $14.8 million, with an unweighted pipeline of $41 million, indicating strong prospects heading into 2021 [20] Company Strategy and Development Direction - The company has restructured into three operating segments: Marketing Services, Customer Care, and Fulfillment & Logistics, to better align with market needs [5][18] - There is a focus on transforming the Customer Care business into a tech-first offering, integrating cross-channel interactions and leveraging CRM capabilities [7][9] - The company aims to capitalize on the e-commerce growth trend accelerated by the pandemic, positioning itself as an omnichannel customer experience provider [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for growth in 2021, citing strong client relationships in high-growth categories such as Financial Services, CPG, Healthcare, and B2B tech [14][15] - The company is focused on cost reduction efforts, having cut over $20 million in costs in 2020, which contributed to improved financial results [10][25] - Management believes the transformation and restructuring efforts will continue to yield positive results and stabilize revenue [21][35] Other Important Information - The company has made significant executive hires to drive growth, including a new Chief Commercial Officer and Managing Director for Fulfillment & Logistics [11][12] - The operating expenses for the full year 2020 decreased by 21.6% to $187.5 million, reflecting successful cost-cutting measures [24] Q&A Session Summary Question: Can you discuss revenue sources for each operating segment? - Management explained that Marketing Services operates as a CRM agency, while Fulfillment & Logistics includes product fulfillment and trade marketing fulfillment, with a noted decline in literature fulfillment [32] Question: How much of the Customer Care revenue is recurring versus one-time? - Management indicated that 10% to 20% of the revenue is from project work, with opportunities for longer-term projects [34] Question: How are the segments performing in the first quarter? - Management noted that they see stabilization in top-line revenue and are focused on improving EBITDA across all segments [35] Question: What are the expected annualized cost savings for 2021? - Management mentioned ongoing restructuring efforts and the implementation of a new cloud-based ERP system aimed at driving further efficiencies [37] Question: What is the status of third-party vendor costs? - Management confirmed that they have made significant progress in reducing reliance on third-party vendors and are moving towards an asset-light model [38] Question: How should the business pipeline translate into future revenue? - Management emphasized the importance of both the quality and quantity of the pipeline, with a focus on higher-margin, higher-ticket items [40]

Harte Hanks, Inc. (NASDAQ:HHS) Q3 2020 Earnings Conference Call November 12, 2020 4:30 PM ET Company Participants Sheila Ennis - Investor Relations Andrew Benett - Executive Chairman and Chief Executive Officer Lauri Kearnes - Chief Financial Officer Conference Call Participants Michael Kupinski - NOBLE Capital Markets Operator Good day, everyone, and welcome to the Harte Hanks Third Quarter 2020 Financial Results Conference Call. Today's call is being recorded. At this time, I would like to turn the confer ...

Financial Data and Key Metrics Changes - The second quarter revenues were $41.6 million, up over $1 million sequentially from the previous quarter, but down $13.1 million year-over-year from $54.7 million [44] - Adjusted EBITDA improved to $480,000 compared to negative $1.8 million in the same period last year, indicating successful execution of the turnaround plan [51] - Operating loss was $5.9 million for the second quarter, an improvement from the $6.6 million operating loss in the year-ago quarter [49] Business Line Data and Key Metrics Changes - The B2B vertical revenue increased by $3.1 million or 28.2% due to heightened demand for contact center services [45] - The retail segment saw a decline of $7.3 million, primarily due to COVID-19 impacts, while the transportation segment experienced over 80% decline due to a large client not renewing [45] - The company fully exited its direct mail production business, which is expected to eliminate just under $1 million in quarterly losses [46] Market Data and Key Metrics Changes - The company reported a current weighted pipeline of $10.3 million and an unweighted pipeline of $31.2 million, with $10.1 million secured towards the $13 million annual goal [26] - There is a noted increase in demand for B2B services, particularly in contact center operations, which is expected to continue generating growth [42] Company Strategy and Development Direction - The company is focused on a three-pillar strategy: optimizing the business, growing current services, and transforming the business model [13] - A significant reduction in real estate footprint is underway, including a new 300,000 square foot fulfillment facility in Kansas City [16] - The company is enhancing its IT infrastructure by moving to the cloud, which is expected to yield over $2 million in annual savings [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving adjusted EBITDA positivity for the year and being free cash flow positive in the second half of 2021 [12] - The company is adapting to the pandemic by streamlining operations and focusing on higher-margin business lines [42] - Management believes that the changes being made will position the company competitively for the long term [55] Other Important Information - The company recognized a $1.5 million one-time tax benefit related to NOL carrybacks due to the CARES Act [50] - As of June 30, 2020, the company had cash and cash equivalents of $30.1 million, an increase from $23.5 million at the end of the previous quarter [52] Q&A Session Summary Question: Congratulations on achieving positive adjusted EBITDA - Management acknowledged the achievement and noted that it was the first positive cash flow in the second quarter since at least 2017 [58] Question: Can you provide insight on revenue stabilization and client losses? - Management confirmed that they believe they have stabilized the top line and are not experiencing the same customer losses as before [61] Question: What is the timeline for the $13 million in annualized savings? - Management clarified that the $13 million is an annualized figure, with a significant portion expected to be realized in the second, third, and fourth quarters [66] Question: Can you break down the savings by quarter? - Management indicated that savings began in the second quarter and will be more pronounced in the third and fourth quarters [67] Question: What should be expected regarding employee expenses going forward? - Management noted that increases in employee expenses are related to the revenue mix, particularly in the contact center business [71]

Harte Hanks, Inc. (NASDAQ:HHS) Q1 2020 Earnings Conference Call May 14, 2020 4:30 PM ET Company Participants Rob Fink – Investor Relations, FNK Andrew Benett – Executive Chairman and Chief Executive Officer Lauri Kearnes – Chief Financial Officer Conference Call Participants Michael Kupinski – Noble Capital Markets Operator Good day, and welcome to the Harte Hanks First Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, th ...