HHS - Earnings call transcript Q4 2018

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Operator

Good day, and welcome to the Harte Hanks Fourth Quarter and Full Year 2018 Earnings Conference Call. Today's conference is being recorded.

As a reminder, there will be a question-and-answer session during today’s call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Rob Fink of Hayden IR. sir. ahead, go Please

Rob Fink

good call Thank Chief today and Priore. Bant and us. Executive for Hosting Breen; Del Mark the is CFO, afternoon you you everyone. joining Officer, Thank Harte Hanks’

statements earnings Hanks' to would we is this SEC Investors and factors; outlook litigation to disposition, said, release that changes; was company's acquisitions, the measures. the of about historical effects and reconciliation structure; turn to various future on issued available results described refer differ I'd during contain they the other related outcomes; XX-Q website. like Before for facts. Harte strategy; or the of also the with in forecast expectation availability may anticipated and may market and implied and I not to financial everyone With other cautionary The materially cost-saving regulatory reference the earnings industry to that to refunds information and call call economic the non-GAAP company's all and as that section such may are statements, competitive disclosures. financial from like statements Actual adjustments capital of The business the those of tell close the release. expectations; and related serve; over forward-looking company's tax Bant. resources; after measures projected provided the those earnings for release that statements and performance Form the because in cost begin, XX-K and statements its in and uncertainties, filings including today's Please these the in other risks call

Bant Breen

call. thank to for today's Rob I'm Hanks. hosting as Harte first CEO you us my joining everyone for and call earnings excited you, of be Thank earnings

an by Board know, My marketing took Andrew you was Priore our Hanks as role, business Reidy of of the to serving the oversee accompanied and COO stepped Board. President, active Harte Martin of X, his of appointment CEO to Earlier and In our maintain the the I down he such last operations services Mark promotion XXXX. Del as of and our operational who into appointment could role of on the Behrens independent shifted year director shifted on today, May announced January to operational the the as no team. independent after and his was the in CFO. and joined of by many Martin followed of of member as Harrison role an quickly new unit. role independent status As longer the announcement as replaces organization Evan Evan CEO an into an within director on the Office we

have key it and join leadership at with a market this as of to with to Martin The of us Harte are our us highly future opportunities. have company is member We on heritage of best and Evan the maintaining and operational team focused Hanks the experienced team. and present fortunate blending continuing new

that leadership of capabilities untapped Directors, fit that this, on importantly operations. appreciation company's determined solutions for as Hanks, they the of experience core data assets well I the the the begin database the demonstrates technology of Fortune there have Board and build relationships. be the on there today's XXX of last our and of is this and by product the team strategic technology as high results strategic executional as I in in but of visited the offices I will across call have our my the the of detail clients that six at gained with XXXX, and clear know-how a data-driven marketing and reflect world that, agenda CEO company's marketing some Based and are contact, clients. and more at data will that The today, cost we was member CEO. challenges guidance digital a and weeks, to As was mail, nexus the Hanks by impacted and want our the customer at with an and client level, customer between Harte reviewing customer media, Harte an data. have discussion direct I my company breadth country well the they initiatives value have organization pursued a needs. media fulfillment of reduction Mark depth months efforts the the client fuel creative, the around across landscape, my not later The as eight I of new the powers capabilities offer of the We by met need preliminary in been which reporting management, In Office analytics, this discuss do company's impressed our competencies the over team. first as several of logistics.

that data-centric online pressures implement scheduled organizations. unlike designed as deliveries as many other a our and mail say tracking are an from investment marketing printed can with organizations via an organization to logistics, from carry industry, think any that XX,XXX direct reality, platforms our support freight service over general When I carriers our We may experimental the to in well old our of most brick-and-mortar that printers. an proprietary and I from technology which community we the organization Harte services. solutions truckers and embedded I'm line price and fastest-growing accessed mail, competitors. real-time we is address strategies the In in Hanks misperception have use direct-to-consumer new independent that referring corporate are to new the old-world infrastructure deliver largest freight and marketing of that network virtual enables tightly comparison, the

and manufacturers, the fastest-growing engine companies largest in delivery are direct-to-consumer for retailers the We the some that U.S. drives of

undervalued analytics, of of our databases I connected When technology and to XXX temperature-controlled is our get we I the capability designed largest deliver to looking and range and called to and am All this customers' When outsource proprietary a logistical management that by build-out wide is businesses supported is its clients. for referring that believe clients platform. FDA-approved some support we that this on our the that data management customer budget. this say fulfillment, direct product deliver I and on work convenient time I to of our are relationships advanced are and by destination service. Allink technology to our next-touch world, of warehouses in logistical We am referring the power customer geographically say

website a a be ask it information, fund Price received from for prospectus printed on you we or customized financial SUV Hanks. likely If it's ETF, printed more an and automaker's Harte mutual new City marathon, contact, for sent it your to could and that a it you. race message recent New or they York made child phone, via I'm platforms when customer Road or Runner's support referring And websites. participated in received sure we we swag. say to deliver social, their And if I well

buyers, inquiries the customers. are all designs technology builds short, that of your impressive today are an and supports In that We answered. and delivers teams company activate make solutions we to sure and product have

truly the best our happen. and its and our talent for sleeves commitment rolls and make results, innovative creative can up problem real to practices that our tried-and-tested strategies, We things known having are solving

world the data see Harte customer base exchange clients customer places exciting emerging Hanks we between powerful combined Harte in believe and -- the themselves of XX product over first-party data at points Hanks data terms are last and print company's with across direct the technological where relationship it matter transition than utilized We customer country. in position cloud-based privacy of a into understands to Over these the XX are a infrastructure. value perspective. ever. most one learning stewarded a last years, We shepherded and world. We development that believe of is years, Hanks inflection opt-in and more factors, regulation, from machine the possibility storm that and through marketing this with Also of assist on the a we Harte an customer companies, omni-channel perfect the how

that Harte still knowledge expertise from a succeed direct-to-consumer today. and product as and was buy In or the to platforms fact, shift laws consumers BXC experience world, and directly we Harte brands shipping Hanks enterprises as instrumental such has real fulfillment the govern and well. in help shop as to Jet Hanks drafting via and retail purchase in where Amazon and

new as deliver they the in the capabilities marketing assist have economy. clients to We

clients. reinvigorated Our with our roster to welcome we the engagements some and as promise the quarter new showing expanded in logos key first story is

data-driven customer and with competencies challenges, Over several world. capabilities, building am quarters, Hanks as today's I we are our summary, marketplace. Harte our next evolving have honing the focused brings always a the on most importantly, to In core that encouraged we facing

our Hanks is to areas capabilities. of resources the We Harte where value our new demonstrable implementing will Hanks focus on energies our strategic the Harte of business breadth can a customers. that committed to management The leverages plan add and

financial and year value Priore for provide customers We are Mark the fourth update quarter focused unlocking now Mark? shareholders. through would and I Del profitability, to a reestablishing the full turn walk like on revitalizing to over growth, call and results. and you to

Mark Del Priore

expenses with opportunity shareholder progress step Year-over-year projects me light down have Hanks in and Office Thank back opportunity XX% after hired resulted I CEO saw before you, Harte various a lower Harte net we facing in CFO capital This has we time expenses and significant unique position. and the significant costs has on to effort and in this to interim joined of cut more associated opportunities myself and Bant. to operating for the a accepting rationalize and provided was company's gain appreciation me great this Hanks the our the the finance-related what forward. October are made restructuring. of the structure, its with being that revenue offered losses. value base. challenges the I of work encouraged drive and model, I than with and as narrowing familiarize going operating believe during the to a company

XXXX. the received the are More balance preserving profitability Hanks a one refund. and achieving now goals strengthening on to a and in focused be our in we position Harte I tax to million my year, believe I'm Simultaneously, Subsequent this of to of better end $X.X importantly, sheet. we primary return will

intermediate our the sufficient our Digital. on near-term We also receive expect liquidity execute bolster $X tax I'm as Together, we XXXX in half liquidity. approximately that refund an to the of second result strategy. million of maintained generated a items the two of tax for loss and we confident income significantly will sale these of term a capital have XQ we to receivable the

Financial service loss in mostly verticals, center among a XXXX. last for our year-over-year was a down million Turning in to $XX year. comparison, an to were decline or The million the we revenue a included million Healthcare at $XX.X our the that was verticals due revenue X% down specific $XX.X year's note of from financial XQ results. to saw $XX.X revenue aligned of should Revenues million BXB, in quarter end was which decline year or contact vertical Adjusting I revenue Consumer Digital last of Digital decline compared was and of million while February revenue XQ Retail Fourth XX%. our the for which XX%, XX%. customer the Transportation Consumer, $XX.X million large better for increase compared to or results line. the Brand Services, sold $X.X last largest

XX%. included million advertising million expenses was the of million XXXX for in Digital of or operating from revenue. of our in also quarter, our million to in the assets revenue. the The quarter were a labor impacted fourth $XX.X year-over-year the down SG&A XXXX, operating year-ago XQ results. fourth million expenses the in primarily decrease quarter large the Our cost that the offset operating There operating driven loss for of the decline by $XX.X primarily an quarter $XX.X We loss $XX.X loss and of XXXX XX%. expenses impairment XXXX to million. to compared of asset was fourth in of $XX $XX.X in year-ago reduced were decline these or areas $X.X Net expenses The impairment expense compared quarter. expense million of a was decline of the Operating million $XXX.X

$XX.X share for the was loss share income loss fourth $X.X and quarter in Our Net of income XXXX. million and $X.XX a diluted these year to quarter operating in or adjusted of expenses operating of million diluted of operating expenses, XXXX. included net expenses for million in basic fourth quarter the XXXX $X.XX of the compared or per Adjusting compared basic non-recurring $X.X non-recurring the $X.X million $X.X of fourth prior adjusted to our million was per period.

of our $XXX.X Now to the full of The for declines let million results. me million year-over-year impact XXXX industry of of for in impacted XXXX. year all BXB in and to Digital the sale XX% primarily to our turn from XQ of first compared verticals. our Operating of decrease to consumer XXXX $XX.X year of revenues The full reduction led the and $XXX.X vertical. revenue million XXXX reflects XXXX quarter were the

represented million, down to Healthcare down revenue accounted the expenses take align of sale XX%. which Retail lower the XX% cost to Services Total down million, million XX% of $XXX.X production, our of production, million compared was $XX.X revenue. Our revenue. $XX.X from revenue $XX.X full $XX.X demand for labor, represented total advertising vertical down total of was of services. represented XX% $XXX.X SG&A Financial to in with was finally, of compared our total XXXX and million down XX% XX% and segment Digital, revenue, was as a by of this total XXXX decrease revenue XXXX XX% follows: vertical total result out on smallest represented $XX.X compared structure as distribution actions in revenue. expenses of well which segment of largest is Brands across XX% And million, compared revenue. million, X% is at XXXX operating revenue broken and operating to the our to year our compared revenue, and $XX.X million, the our revenue. board represented million compared Consumer XXXX. our for XX% was as XX% our in we $XX total Transportation were X% was XX% XXXX XXXX to the XXXX, to was decrease our market for revenues revenue as revenue BXB expenses reduction million, to down our or and and continue XQ and $XXX.X – This to compared

a lower lower loss amortization the Digital. was compared the addition, to intangible depreciation and software elimination XXXX, asset and XXXX. driven expenditures operating assets In than sale was upon million of intangible expense $XX.X $XX larger million expenses for in loss decrease that XXXX an operating in compared was the Operating to capital decline was primarily the XQ due of improvement to revenue. in The primarily of by

For for the per compared The compared primarily recognized the income sale share diluted to in XXXX. loss February gain XXXX. the diluted XQ result the or year full for million XXXX, had an of $XX.X in net Net $X.XX share of $XX.X income of improvement $X.X a million of was year XXXX. was of of million the per income Digital pretax tax for $XX full $X.XX benefit XXXX an of to benefit $XX.X million or we million, of tax

liquidity. sheet Turning to balance our and

net end had equivalents received of $XX.X cash the year-end, refund, it in loss received December XXXX, had XXXX. refund to a anticipated February related but carry-back. that of this previously received instead cash we $X.X of of million we end to XXXX, at compared million, $X.X will of tax XXXX operating the a million Subsequent of XXXX. be We and As was tax to in

of of $X bank result we We $XX.X December we $XX million the the XX, of debt $XX.X million. approximately on tax year of Digital. of million as to total the capital XXXX, for receive in a loss long-term credit of had half facility tax XXXX we on drawn outstanding second income an a ended receivable for generated sale expect refund our the As million XQ with a

like cash the on the refunds we we With With turnaround the believe sheet our would credit have to our due, fund facility Q&A. to and liquidity adequate we are tax operator, open balance plan. to for availability continue under that, call our we

Operator

We'll Michael question Markets. Noble you. Please first from ahead. our Thank Kupinski Capital from [Operator Instructions] take go now

open. is line Your

Michael Kupinski

you. Thank

about maybe And give of just just tell couple Just to I I the that I feeling -- that company. about that me a about the fresh good just team's you're of bit do others. focus what that intently? you the company softball general your new eyes have was it company excited kind see to me and feeling you a going look suppose at to if more you it's wondering the you're a the of little learned about? know Can a Where bit efforts have have just I the to want of way. before -- you question little management to kind maybe your

Let's there. start

Bant Breen

thank Bant And This Breen. Great. is you for the Yes. question.

it's against, always see has So relationship area. working spent in that but center I've is actually not customer something my actually kind Harte at played we Hanks that known, it of it's world company key in look from, powering and that a its the and in company that came of data. advertising whole up a that really Harte maybe I've today, Hanks, we has marketing where of interesting. When is core as the marketing has and Hanks the Harte world. a the only thing the that I at solutions company direct that's really stated marketing Hanks been kind powers we that's is front, industry are career And going Harte I've role marketing competed admired I've customer the

for well. helpful for critical be infrastructure Acxiom But the and to the that new as economy that company see we we've has seen others, with companies some As also pieces of a like seem critically us. companies is this area

these where get in really we'll that with efforts. our data economy new And where that be excited businesses so are and solutions focusing is marrying appropriate for knowledge I

Michael Kupinski

you. does when that that customers Got lost? has for against base And customers of now? stabilized client it Brand cycle the the And adjusting loss, Consumer company the

Bant Breen

traveling eight really with still businesses out bigger with we So first meeting core have attracting stated I logos, work doing these of sectors. some of that well. building are we the strong customers. front, I and in and of I'd see now, with as we all across new And we're that we our bases a weeks we spent going great major see a we and base that say, say up lot -- And as customers verticals work very

Michael Kupinski

you the renewed and bit them? for there whether with there can about Wipro are talk little And opportunities contract a a relationship

Bant Breen

So as we we the and is work and that an of client with know, as Wipro basis. the you shareholder several the continue company on on -- business, infrastructure on to a several areas well of continues business as Wipro the ongoing relationships on of

Mark Del Priore

to together I'll a current our reflect we of that as ours, continue ways Wipro add key about is better Yes. as can that. obviously stream, better to revenue talk the to agreement right-size we vendor work well them and to so…

Michael Kupinski

I all That's Thank you. you. have. Got

Bant Breen

Thank you.

Mark Del Priore

Thanks Mike.

Operator

queue are time. There at in questions no this the further

Bant Breen

everyone right. us you joining for Cheers. Thank All today.

Harte Hanks (HHS) 14 Mar 192018 Q4 Earnings call transcript