Harte Hanks(US:HHS)2019-11-13 00:18Financial 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]