Harte Hanks(US:HHS)2022-08-12 01:25Financial 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]