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 ...

Harte Hanks, Inc. (NASDAQ:HHS) Q4 2019 Earnings Conference Call March 12, 2020 4:30 PM ET Company Participants Rob Fink – FNK, Investor Relations Andrew Benett – Executive Chairman and Chief Executive Officer Laurilee Kearnes – Chief Financial Officer Conference Call Participants Michael Kupinski – NOBLE Capital Markets Operator Good day and welcome to the Harte Hanks Fourth Quarter and Year-End 2019 Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference ove ...

Financial Data and Key Metrics Changes - The company achieved positive adjusted EBITDA of $203,000, a significant improvement from a negative $6.9 million in the same period last year [23][29] - Revenue for the third quarter was $51.4 million, down from $63.6 million a year ago, reflecting a year-over-year decline of $12.2 million or 19% [29] - Operating expenses decreased by $18 million or 24% year-over-year, totaling $59.9 million compared to $73.9 million in the previous year [31] Business Line Data and Key Metrics Changes - Revenue declined in B2B consumer financial services, retail, and transportation verticals, with retail experiencing the largest decline of $6.1 million or 41% [30] - The healthcare vertical saw an increase, contributing positively to the overall performance [30] Market Data and Key Metrics Changes - The company reported a year-over-year revenue decline of $12.2 million, which is an improvement compared to declines of $15 million in Q2 and $22 million in Q1 [22] Company Strategy and Development Direction - The company is focused on eliminating low-margin contracts and pursuing value-based engagements with healthier margins [6][7] - Efforts include consolidating smaller production facilities into larger, strategically located ones to create efficiencies [12] - The company aims to retain high-quality revenue and control costs while adding new business from existing and new accounts [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving positive adjusted EBITDA for the full year 2020, indicating a material decline in cash burn [7][24] - The company expects to continue seeing improvements in EBITDA as restructuring costs decline [24][26] Other Important Information - The company ended the third quarter with $32 million in cash, down from $39 million at the end of Q2 [25] - Restructuring expenses for the third quarter totaled $3.1 million, with annualized savings identified of more than $21 million associated with these efforts [27][28] Q&A Session Summary Question: Can you talk about the quality of revenues and how you plan to manage revenues going forward? - Management acknowledged the discontinuation of low-margin revenue and emphasized that new revenue is coming at higher margins [39] Question: How does the pipeline of business translate in terms of profitability? - Management stated that the new business won is generally profitable from the beginning, although it may take time to ramp up [43] Question: What is the magnitude of the decrease in losses from vendor relationships? - Management indicated that they were previously spending over $10 million a year on certain vendors, with most costs expected to be eliminated by Q1 [46] Question: Was the consolidation of facilities in the third quarter or fourth quarter? - Management confirmed that the consolidation began in the third quarter and will continue into the fourth quarter [48] Question: Will there be any revenue impact from the consolidation? - Management stated that the revenue impact from the consolidation would not be material [51]

Harte Hanks Inc. (NASDAQ:HHS) Q2 2019 Earnings Conference Call August 8, 2019 4:30 PM ET Company Participants Rob Fink – Managing Partner-FNK IR Andrew Harrison – President and Chief Operating Officer Mark Del Priore – Chief Financial Officer Conference Call Participants Michael Kupinski – NOBLE Capital Markets Operator Good day, and welcome to the Harte Hanks Second Quarter 2019 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Rob Fink of FNK ...