Harte Hanks(US:HHS)2023-05-12 20:21Financial Performance - Revenue for the three months ended March 31, 2023, was $47,120,000, a decrease of 3.9% compared to $49,062,000 for the same period in 2022[9] - Operating income for Q1 2023 was $1,053,000, down 73.0% from $3,894,000 in Q1 2022[9] - Net loss attributable to common stockholders for Q1 2023 was $791,000, compared to net income of $2,819,000 in Q1 2022, representing a significant decline[9] - Comprehensive income for Q1 2023 was $1,829,000, compared to $3,851,000 in Q1 2022, indicating a decrease of 52.5%[9] - Basic loss per common share was $(0.11) for the three months ended March 31, 2023, compared to earnings of $0.40 per share for the same period in 2022[84] - The company reported a net loss of $791,000 for the three months ended March 31, 2023, compared to a net income of $3,345,000 for the same period in 2022[84] - Operating income fell to $1,053,000 in Q1 2023, down 73.0% from $3,894,000 in Q1 2022[9] - Total operating expenses increased to $46,067,000 in Q1 2023, up 2.0% from $45,168,000 in Q1 2022[9] Assets and Liabilities - Total current assets decreased to $62,179,000 as of March 31, 2023, from $66,311,000 at December 31, 2022, a reduction of 6.4%[8] - Total liabilities decreased to $93,918,000 as of March 31, 2023, down from $101,176,000 at December 31, 2022, a decline of 7.1%[8] - Stockholders' equity increased to $20,965,000 as of March 31, 2023, compared to $18,808,000 at December 31, 2022, an increase of 11.5%[8] - Cash and cash equivalents increased to $13,118,000 as of March 31, 2023, from $10,364,000 at December 31, 2022, an increase of 26.8%[8] - The company reported a pension liability of $17,988,000 for qualified plans as of March 31, 2023, down from $18,674,000 at December 31, 2022[8] Revenue Segments - Marketing Services revenue recognized over time was $10,420,000, down from $10,895,000 in the prior year, while revenue recognized at a point in time decreased from $2,029,000 to $819,000[34] - Customer Care segment revenue decreased from $17,742,000 in Q1 2022 to $14,416,000 in Q1 2023[34] - Fulfillment and Logistics Services revenue increased from $18,396,000 in Q1 2022 to $21,465,000 in Q1 2023, with revenue recognized over time at $18,090,000[34] - The Marketing Services segment reported revenues of $11.24 million, while the Customer Care segment reported revenues of $14.42 million for the same period[103] Cash Flow and Investments - Cash flows from operating activities for Q1 2023 were $1,704,000, compared to a cash outflow of $764,000 in Q1 2022[11] - The company had cash and cash equivalents of $14,118,000 at the end of Q1 2023, an increase from $12,211,000 at the end of Q1 2022[11] - Net cash provided by operating activities increased by $2.5 million year-over-year to $1.7 million for the three months ended March 31, 2023, primarily due to a $10.7 million decrease in accounts receivable and contract assets[135] - Net cash used in investing activities decreased by $0.8 million year-over-year to $0.6 million for the three months ended March 31, 2023, mainly due to reduced cash used for purchasing property, plant, and equipment[136] Acquisitions and Growth - The acquisition of Inside Out Solutions, LLC was completed on December 1, 2022, for an aggregate purchase price of approximately $7.5 million[87] - The acquisition is expected to enhance the company's marketing services and customer care segments, driving profitable revenue growth through demand generation and inside sales offerings[89] - For the quarter ended March 31, 2023, the InsideOut operation generated revenue of $2.8 million and net earnings of $0.5 million[93] - The company recognized $3.6 million of intangible assets and $2.4 million of goodwill associated with the InsideOut acquisition, amortizing the intangible assets over five years[93] Tax and Compliance - The effective income tax rate was 41.8% for the three months ended March 31, 2023, compared to 12.0% for the same period in 2022[78] - The effective tax rate for the first quarter of 2023 was 41.8%, an increase of 29.8% from the prior year, primarily due to changes in valuation allowance and state income taxes[124] Shareholder Actions - The company approved a share repurchase program on May 2, 2023, with authorization to repurchase $6.5 million of its Common Stock[111] - No shares were repurchased under the stock repurchase program during the three months ended March 31, 2023, with $11.4 million remaining authorization as of that date[151] Lease and Operating Costs - Operating lease costs for the three months ended March 31, 2023, were $1.456 million, a decrease from $1.581 million in the same period of 2022[56] - Total lease liabilities as of March 31, 2023, amounted to $22.018 million, slightly down from $22.322 million as of December 31, 2022[55] - The weighted average remaining lease term for operating leases was 5.7 years as of March 31, 2023, compared to 6.2 years in the previous year[56] - Total future minimum lease payments for operating leases are projected to be $23.93 million, with the remainder of 2023 accounting for $4.872 million[56]