Harte Hanks (NYSE:HHS), a leader in developing customer
relationships, experiences and defining interaction-led marketing,
today announced financial results for its second quarter 2017,
ended June 30, 2017.
Commenting on performance, President and Chief
Executive Officer Karen Puckett said, “Consistent with our
expectations we continue to see improved trends, driven by our
focus on customer satisfaction and client retention. We
continue to attract new clients with revamped marketing, sales and
new service innovation, which was the foundation for achieving our
new sales bookings plan for the quarter, doubling our first quarter
bookings. During the second quarter, our rate of revenue
decline improved to 2.7% year-over-year which is much better than
the second quarter of 2016. In addition, our efforts to
streamline the business and more effectively manage our costs
structure resulted in an operating loss improvement of $4.9 million
from the year ago period.”
Ms. Puckett continued, “Our strategy remains the
same: improve our financial results by focusing on customer
satisfaction and client retention while attracting new clients with
revamped marketing, sales and innovative capabilities.”
Second Quarter Results
Second quarter 2017 revenues were $94.7 million
compared to $97.3 million during the same quarter last year,
representing a 2.7% decline from the same period last year.
Second quarter 2017 operating loss from continuing operations was
$1.8 million, a $4.9 million improvement compared to an operating
loss from continuing operations of $6.7 million in the year-ago
quarter.
Net loss from continuing operations for the second
quarter of 2017 was $2.7 million or $0.04 per share, an improvement
of $4.3 million, or $0.07 per share, compared the year-ago
quarter.
Chief Financial Officer, Robert Munden said,
“During the quarter our cash flows included payment of $34 million
in taxes related to the Trillium sale, $1.3 million for capital
expenditures, and $2 million for a lawsuit loss accrued in
2016. We continue to believe that our net cash position will
improve in the second half of 2017, and that we have the financial
flexibility to effectively run the business.”
The following table presents financial highlights
of the company's operations for the second quarter of 2017 and
2016, respectively. More detailed financial results are
attached.
RESULTS FROM OPERATIONS |
(In thousands, except
per share amounts) |
Three Months Ended June 30, |
|
|
2017 |
|
|
2016 |
|
% Change* |
Revenues from
continuing operations |
$ |
94,722 |
|
$ |
97,317 |
|
(2.7 |
) |
Operating loss from
continuing operations |
|
(1,791 |
) |
|
(6,689 |
) |
73.2 |
|
Net loss from
continuing operations |
|
(2,653 |
) |
|
(6,912 |
) |
61.6 |
|
Loss per share |
|
(0.04 |
) |
|
(0.11 |
) |
63.6 |
|
Shares outstanding
(weighted average common and common equivalent shares
outstanding) |
|
61,896 |
|
|
61,460 |
|
0.7 |
|
* Improvements shown as positive.
The company will host a conference call to discuss the earnings
release today at 10:00 a.m. Eastern Time. To access an audio
webcast, please use the link available in the Investors Events
section of the Harte Hanks website.
The telephonic conference call number is (877) 329-7568 for
domestic callers and +1 (719) 457-2641 for international callers.
The conference ID is 7067975.
An audio replay will be available shortly after the call through
Saturday, October 28, 2017 at (844) 512-2921, or +1 (412) 317-6671,
with conference ID 7067975. The replay also will be available for
one year in the Investors section of the Harte Hanks website.
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Harte Hanks, Inc. |
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Consolidated Statements of Operations (Unaudited) |
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Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
In thousands, except per share data |
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2017 |
|
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|
2016 |
|
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|
2017 |
|
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|
2016 |
|
|
|
Operating
revenues |
|
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|
|
|
|
|
|
|
$ |
94,722 |
|
|
$ |
97,317 |
|
|
$ |
189,616 |
|
|
$ |
196,880 |
|
|
|
Operating expenses |
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Labor |
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57,103 |
|
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|
62,444 |
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|
117,453 |
|
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|
124,996 |
|
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|
Production and distribution |
|
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|
26,521 |
|
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|
27,427 |
|
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|
53,399 |
|
|
|
57,306 |
|
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|
|
Advertising, selling, general and administrative |
|
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|
|
|
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|
|
10,226 |
|
|
|
10,934 |
|
|
|
21,286 |
|
|
|
23,577 |
|
|
|
|
Depreciation, software and intangible asset amortization |
|
|
|
|
|
|
|
|
2,663 |
|
|
|
3,201 |
|
|
|
5,610 |
|
|
|
6,237 |
|
|
|
|
|
Total
operating expenses |
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|
96,513 |
|
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|
104,006 |
|
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|
197,748 |
|
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|
212,116 |
|
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Operating loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,791 |
) |
|
|
(6,689 |
) |
|
|
(8,132 |
) |
|
|
(15,236 |
) |
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Other expenses |
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Interest expense, net |
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1,235 |
|
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|
2,400 |
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|
2,258 |
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3,781 |
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Other, net |
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1,826 |
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|
597 |
|
|
|
3,324 |
|
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|
348 |
|
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Total other
expenses |
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|
3,061 |
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|
2,997 |
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|
5,582 |
|
|
|
4,129 |
|
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Loss from continuing operations before income taxes |
|
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|
(4,852 |
) |
|
|
(9,686 |
) |
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|
(13,714 |
) |
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(19,365 |
) |
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Income tax benefit |
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(2,199 |
) |
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|
(2,774 |
) |
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|
(3,675 |
) |
|
|
(5,506 |
) |
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Loss from continuing operations |
|
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|
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|
|
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|
(2,653 |
) |
|
|
(6,912 |
) |
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(10,039 |
) |
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(13,859 |
) |
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Income from discontinued operations, net of income taxes |
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|
- |
|
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|
2,649 |
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- |
|
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|
3,993 |
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Net loss |
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|
|
|
|
|
|
|
|
$ |
(2,653 |
) |
|
$ |
(4,263 |
) |
|
$ |
(10,039 |
) |
|
$ |
(9,866 |
) |
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Basic earnings (loss) per common share |
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Continuing operations |
|
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|
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|
$ |
(0.04 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.23 |
) |
|
|
Discontinued operations |
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|
- |
|
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|
0.04 |
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- |
|
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|
0.07 |
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Basic loss per common share |
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$ |
(0.04 |
) |
|
$ |
(0.07 |
) |
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$ |
(0.16 |
) |
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$ |
(0.16 |
) |
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Weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
|
61,896 |
|
|
|
61,460 |
|
|
|
61,792 |
|
|
|
61,395 |
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Diluted earnings (loss) per common share |
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|
Continuing operations |
|
|
|
|
|
|
|
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|
|
$ |
(0.04 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.23 |
) |
|
|
Discontinued operations |
|
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|
|
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|
- |
|
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|
0.04 |
|
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- |
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|
0.07 |
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|
Diluted loss per common share |
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$ |
(0.04 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.16 |
) |
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$ |
(0.16 |
) |
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|
Weighted-average common and common equivalent shares
outstanding |
|
61,896 |
|
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|
61,460 |
|
|
|
61,792 |
|
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|
61,395 |
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Balance Sheet Data (Unaudited) |
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|
June 30, |
|
December 31, |
|
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|
|
In
thousands |
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2017 |
|
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2016 |
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Cash and
cash equivalents |
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|
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|
|
$ |
13,074 |
|
|
$ |
46,005 |
|
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|
Total
debt |
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$ |
12,116 |
|
|
$ |
- |
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Harte Hanks, Inc. |
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Revenue Mix (Unaudited) |
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Vertical Markets - Percent of Revenue |
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Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
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2017 |
|
2016 |
|
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2017 |
|
2016 |
|
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|
Auto and
Consumer Brands |
|
|
|
|
|
|
|
|
|
25.2 |
% |
22.3 |
% |
|
23.7 |
% |
22.1 |
% |
|
|
Financial and Insurance Services |
|
|
15.5 |
% |
14.6 |
% |
|
15.7 |
% |
14.2 |
% |
|
|
Healthcare and Pharmaceuticals |
|
|
5.4 |
% |
7.6 |
% |
|
5.8 |
% |
8.2 |
% |
|
|
B2B |
|
|
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|
21.6 |
% |
21.6 |
% |
|
22.2 |
% |
21.3 |
% |
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Retail |
|
|
|
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|
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|
24.1 |
% |
25.6 |
% |
|
24.2 |
% |
25.9 |
% |
|
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Transportation |
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|
|
8.2 |
% |
8.3 |
% |
|
8.4 |
% |
8.3 |
% |
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|
100.0 |
% |
100.0 |
% |
|
100.0 |
% |
100.0 |
% |
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About Harte Hanks:Harte Hanks is a global
marketing services firm specializing in multi-channel marketing
solutions that connect our clients with their customers in powerful
ways. Experts in defining, executing and optimizing the
customer journey, Harte Hanks offers end-to-end marketing services
including consulting, strategic assessment, data, analytics,
digital, social, mobile, print, direct mail and contact center.
From visionary thinking to tactical execution, Harte Hanks
delivers smarter customer interactions for some of the world's
leading brands. Harte Hanks 5,000+ employees are located in North
America, Asia-Pacific and Europe. For more information, visit
Harte Hanks at www.hartehanks.com, call 800-456-9748, email us at
pr@hartehanks.com. Follow us on Twitter @hartehanks or
Facebook at https://www.facebook.com/HarteHanks.
Cautionary Note Regarding Forward-Looking
Statements:
Our press release and related earnings conference call contain
“forward-looking statements” within the meaning of U.S. federal
securities laws. All such statements are qualified by this
cautionary note, provided pursuant to the safe harbor provisions of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Statements other than
historical facts are forward-looking and may be identified by words
such as “may,” “will,” “expects,” “believes,” “anticipates,”
“plans,” “estimates,” “seeks,” “could,” “intends,” or words of
similar meaning. These forward-looking statements are based
on current information, expectations and estimates and involve
risks, uncertainties, assumptions and other factors that are
difficult to predict and that could cause actual results to vary
materially from what is expressed in or indicated by the
forward-looking statements. In that event, our business,
financial condition, results of operations or liquidity could be
materially adversely affected and investors in our securities could
lose part or all of their investments. These risks,
uncertainties, assumptions and other factors include: (a) local,
national and international economic and business conditions,
including (i) market conditions that may adversely impact marketing
expenditures and (ii) the impact of economic environments and
competitive pressures on the financial condition, marketing
expenditures and activities of our clients and prospects; (b) the
demand for our products and services by clients and prospective
clients, including (i) the willingness of existing clients to
maintain or increase their spending on products and services that
are or remain profitable for us, and (ii) our ability to predict
changes in client needs and preferences; (c) economic and other
business factors that impact the industry verticals we serve,
including competition and consolidation of current and prospective
clients, vendors and partners in these verticals; (d) our ability
to manage and timely adjust our facilities, capacity, workforce and
cost structure to effectively serve our clients; (e) our ability to
improve our processes and to provide new products and services in a
timely and cost-effective manner though development, license,
partnership or acquisition; (f) our ability to protect our
facilities against security breaches and other interruptions and to
protect sensitive personal information of our clients and their
customers; (g) our ability to respond to increasing concern,
regulation and legal action over consumer privacy issues, including
changing requirements for collection, processing and use of
information; (h) the impact privacy and other regulations,
including restrictions on unsolicited marketing communications and
other consumer protection laws; (i) fluctuations in fuel prices,
paper prices, postal rates and postal delivery schedules; (j) the
number of shares, if any, that we may repurchase in connection with
our repurchase program; (k) unanticipated developments regarding
litigation or other contingent liabilities; (l) the ability to
integrate and successfully leverage newly-acquired service
offerings as anticipated; (m) our ability to complete anticipated
divestitures and reorganizations; and (n) other factors discussed
from time to time in our filings with the Securities and Exchange
Commission, including under “Item 1A. Risk Factors” in our Annual
Report on Form 10-K for the year ended December 31, 2016 and in our
Quarterly Report on Form 10-Q for the three months ended March 31,
2017. The forward-looking statements in this press release
and our related earnings conference call are made only as of the
date hereof and we undertake no obligation to update publicly any
forward-looking statement, even if new information becomes
available or other events occur in the future.
Supplemental Non-GAAP Financial Measures:
In this press release and our related earnings conference call,
the company may use certain non-GAAP measures of financial
performance in order to provide investors with a better
understanding of operating results and underlying trends to assess
the company’s performance and liquidity. The company
evaluates its operating performance based on several measures,
including non-GAAP financial measures. The company believes
that certain non-GAAP financial measures are useful supplemental
financial measures of operating performance for investors because
they facilitate investors’ ability to evaluate the operational
strength of the company’s business. Any supplemental
financial measures referred to are not calculated in accordance
with GAAP and they should not be considered substitutes for net
income as an indicator of operating performance.
As used herein, “Harte Hanks” refers to Harte Hanks, Inc.
and/or its applicable operating subsidiaries, as the context may
require. Harte Hanks’ logo and name are trademarks of Harte
Hanks.
Contact:Scott HamiltonPublic & Investor
Relations(303) 214 - 5563scott.hamilton@hartehanks.com
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