Harte Hanks(HHS) - 2024 Q2 - Quarterly Report

Financial Performance - Revenue for the three months ended June 30, 2024, decreased by $2.7 million, or 5.7$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$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$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$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]