HHS - Earnings call transcript Q2 2019

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Operator

Good day, and welcome to the Harte Hanks Second Quarter 2019 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Rob Fink of FNK IR. Please go ahead, sir.

Rob Fink

Thank you, and good afternoon, everyone. us. joining for you Thank Hosting the Del President; Mark Andrew today CFO. are Priore, Harrison, and call

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

Andrew Harrison

Rob. Thanks,

convert the business was pipeline full to phase received positive and next of we quarter of off kicked a our significant wins. for we to We ongoing began our new infusion some efforts, sales of cash, restructuring Second activity. us of

$X.X receipt sale from the in was $XX.X infusion These, a payment Digital. second amount of end first a tax $XX the XQ second quarter the million total and cash position of at of million the million to received have in the refund was of to the a contingent quarter, Our our of that from of added million. quarter contributed refund cash tax $XX.X million the $X

liquidity ability efforts. result, restructuring sales to the a efforts, a initiatives As advance improvement And have our business is we fund position. our in bolster further and strong our

over Went create on at stated to actions During aligning of these our and to Hanks revenues cost achieving emphasize to take structure also with requires priority. to our our these stabilizing we were first quarter Harte I May, our pursuing earnings in and opportunities commitment restore how to and how and both grow our both urgency revenue to our call profitability the required revenues time.

the three Over months, progress initiatives made achieve we've goals. advancing past significant these to better

three little provide of benefit this year we've past quarter important as EBITDA our I quarter, of improved second impact took highlight the to place on call revenue in through quarter nearly same compared reductions expense that performance. second the much has of and the and a adjusted in our to during made first Before earnings months resulting second quarter that, losses net declines, one narrower offset Despite ago. note the progress quarter the midway progress, the it's

fourth is based well-coordinated current year expertise restructuring. quarter EBITDA a and plan, on positive our named for involved to we over the effort. more expect our managed are to have cost cost this as our several as positive believe expect of take EBITDA as is that further, of effect. increasingly quarters we to begin our actively actions have impact an a a an plan, of positive This And we efforts years next We early full-time reduction XXXX. with adjusted recent project and leader adjusted project attainable the in in of year, to full goal extensive by Related restructuring the

established structure. engaged efforts skilled leaders support. functional highly and in business a and who every coordination with the we've infrastructure, This Few XXXX, million provide board successfully identifying two them corporate significant in board's work technology close and of on task yielding progress force and additional action engagement cost identified related materially the consultants third-party company. noteworthy $XX have area company of taking reduce outside expenses. and opportunities vendor of areas To-date, of of We been into to annualized the members experienced and the converting and opportunities of has several combination every identified savings The area task towards over senior strong and who savings. internal savings our future in expertise, force in is cost include

is In also pleased challenging work. of very and addition, I'm and of This savings far, estate, so results with involved. in proud the we're efforts G&A finding the everyone production. I'm management, opportunities real

opportunities detailed over I our XXXX. further sales During call strengthen wins the closed last provide yielded our that the million we new each to of to strengthened million XX quarter's We're in has pipeline, the future. our and more sales a results. of period now the teams additional of have $X.X closed new $X.X to service second will of our sales lines. this sales, major that our half business call, Mark Del making boost the I business had first year, Through in turn Priore With pipeline highlighted investments doubling for walk-through Mark? during to quarter pipeline of sales same with that,

Mark Del Priore

Andrew. Thanks,

million we his first in cash. ended comments, As in quarter Andrew with the mentioned $XX

payment to agreement in quarter, received a XX, we dated qualified XQ sale sale Digital $X contingent XXXX. million of related the February the During the defined purchase and as

restructuring initiatives, entities. that XXXX cash one our $XX.X to the on capital and believe on company Digital refunds the also availability of adequate position, the provides has with liquidity require which have our remaining we upfront improvement business XQ further received some federal combined the of and investments. loss foreign the our in income facility we Additionally, credit of continue our tax million onetime plan. associated generated fund advance turnaround It of and with to sale in We to will allowed

$X.X non $X.X are over substantially quarter these expenses a included part the today that carry $X.X period investments, This The in described expect June termination the severance, the and our contract realized data performance few to contracts. XX, was adjusted that EBITDA, the be will as asset to database related have million for on the that realized of disseminated cost the and We included million. comprised in efforts is quarter charges expenses the definition in quarters. payback related press restructuring understanding the additional to measure which order in a in impairment, short restructuring expenses ended ended discussed of fee of earnings a his the which restructuring financial quarters, restructuring restructuring in closed Andrew refer few the expense release in the operating second project lease earnings charges named In in EBITDA months and that quarter to provide this press restructuring non-GAAP next supplemental with and Please returns, measure, serves of call six of is comments. by charges will during over XXXX, Andrew, result has disclosures. trends. related expected next second release adjusted XX, company build With our million we attractive improved reduced XXXX to after of market other The Wipro. underlying and will first the performance recorded facility customer an mention write-offs, March restructuring

focused been To-date, savings $XX few identified with We million of the significant more are part expect this have of restructuring. has to restructuring over annualized this there our on report additional cost. that charges vendor A associated next quarters. been than

addition million year-to-date $XX.X reductions first annualized of since end This by vendor-related additional in $X.X our reduced the quarter, achieved we first In million. million brings the an the annualized annualized $X vendor-related to in savings costs the vendor quarter. our to cost

in are of Additionally, annualized $X.X in process initiatives additional advancing an to vendor-related savings. we the remove million

to second the results. quarter Turning

$X.X negative last of from period EBITDA adjusted improved same negative the in quarter despite million $XX.X declines Second year-over-year. to revenue million year $X.X million

Second XX%. to year-over-year $XX.X the compared of for last mentioned, million just $XX.X decline revenue year or million I was $XX.X quarter million that

decline down service were or in revenues quarter among of down care The quarter, financial XX%, health customer services, verticals which in transportation our to a large verticals an center million our retail, vertical. the BXB, the and line. $X.X retail was our largest the to contact in by increase in For loss was due mostly consumer, XXXX, second compared offset

the year-ago and or and selling, reduced a expenses the administrative second in to $XX.X $XX.X the Our offset primarily million, to were of compared of $XX.X operating distribution in of quarter and XX%. operating XXXX decline million production costs general labor, revenue. for the areas million decrease We our in advertising, expenses quarter,

expense, $X.X massive million in second $X.X adjusting cost-cutting basic operating of that for by XX, operating year-ago of in the for reductions $X.X million quarter $X.X period. undertaken was quarter. to and was compared decline net second was by second in share of in exceeded ended XXXX diluted million. compared face of million the the the June adjusted $X.XX quarter resulting loss reflects period second loss Again, or for XXXX to and a expenses, the million million the Excluding in revenue the to compared our the the second declined initiatives or decline. by $X.X basic of $X.XX expenses restructuring $XX.X share This in the per the diluted of company the quarter cost quarter XXXX, the same compared the Net share to restructuring $X.X XXXX. loss million revenue $X.X quarter Operating in year-over-year per a loss loss year-ago million our nonrecurring

balance our to Turning liquidity. sheet and

I of March a XXXX XX, and cash on million. to equivalents XXXX, both XX, XX, June earlier, cash $XX XXXX. cash of As we of and December had mentioned balance million $XX.X compares This as

XXXX, operator, $XX on million in would to we debt, Q&A. $XX.X the of With current As we bank XX, the million had reflects open for long-term like call that, June facility. draw credit which our

Operator

Instructions] Please [Operator the question Markets. go NOBLE Now Kupinski first from ahead. we Capital of Michael take

Michael Kupinski

deal that. my making and taking there's for great I of lifting guys question. heavy you progress, that congratulations of are a so a you on know lot thanks Thank been

So a of couple things.

some terms moderation, still visibility seems at down give you the balance revenues bit. the it have of your lot the the about quarter, – seem a positive the on you of outlook rightsize revenues year, what bit being know little business, thoughts the a obviously have In pretty you EBITDA have but might you the maybe Can to you the cost-cutting like revenue of to are a positive I us thoughts quite fourth least that showing for of have? done obviously, Certainly, in revenues, but what doing. some are on and

that So any there you offer? visibility can

Andrew Harrison

you to do Mark, one? start on this Yes. want

Mark Del Priore

Yes. Sure.

adjusted to obviously, we're So of stick on the and structure There's the customers standpoint, providing nimble forward-looking is side get Mike, important revenue line just EBITDA. going providing is side, in initiatives Andrew of positive very logo going But will on and as we're but I off to things our year. guidance. we're being and cost our our with retaining what the us remaining on that, new forward-looking hold revenue on next moving where new a year, to the some talk said we of a think, existing on later on we're revenue with doing in focused I and to as will some lot driving customers. from getting EBITDA allow parts And of about terms from revenue revenue think and information well the in

Michael Kupinski

give the me give that fair of like would thoughts you imagine, through last terms some me declines cost what degree cadence color me to kind reduction, consolidate any in quarter, Can of instance? reduction it cost looks that? the more maybe enough. payroll? that particularly you give your or of idea, did indicated facilities, expect expenses, any and be through efforts you you terms That's it quarter level can production of any on just I we of Or can and whether distribution yet? in Did can an you were the thoughts the that for in of you obviously, go expense midway the

Andrew Harrison

Yes.

all-inclusive an got, costs, Mike, my I we've So approach of labor we've at in looking said and cost comments, as non-labor both kind reductions. and our to got we're

side, So some on changes those continue have the labor we in part. will and made

We somewhat fully have on in do in probably will take non-labor-related effect those QX. reductions. QX through So and flow cost more a and big focus

have quickly show of A substantially, also, Some that those identified, start part of possible. few latter towards it those has started action through, up have had already flow will taking a as said but of We've to more as as XXXX. been I begun. the lot to

Michael Kupinski

The want right, that to that I you additional make, is cost available cost vendor make you that that addition in the that agreements? the that or you this are additional cuts you $XX that of Is have – for are million or can – just $XX.X that I more $XX – in the inclusive $XX million believe heard to that think million? I cuts think million there million said that's you what year. third-party you sure Did I million change or $XX.X of what $XX

Andrew Harrison

the then I'll Mark here, we million. but kind up me said and more let throw right let Yes. something Well, of than at $XX the numbers first, say

don't been we million more specifically, have XXXX. identified gave million think than I in $XX $XX So

in similar a we had So a amount of preliminary as restructuring part the XXXX identified efforts.

would would flow million we've not this those that? includes if to the to all line. begun obviously, in what that, there's do through, XXXX. but $XX – than in year bottom of addition identified the And So Mark, more be have to you

Michael Kupinski

I'm sorry.

So that's XXXX. million $XX and so $XX.X inclusive the million was of for included that far

Mark Del Priore

correct. is That

Michael Kupinski

Okay. Yes.

at There's paying is Okay. the you're through this point in for And is with just right? at down interest try cash to and point, then going keep the there debt what the debt, million, that to it? this manage $XX no plans

Mark Del Priore

Yes. debt doesn't XXXX. we forward. It table up No all we're regarding We'll options But And keeping on expire forward. that evaluate go currently. have we going as the until of plans financing runway. plenty

Michael Kupinski

it. Got

that’s thank Okay, you. have I all

Mark Del Priore

Thanks, Mike.

Operator

Thank you. have further we And no questions.

to or call So closing to like back remarks. for the any you I'd turn additional

Andrew Harrison

we forward want I next look for to thanks, the call. call Well, joining and Okay. quarter's say everyone, to today,

Operator

your Thank concludes participation. you. Thank today's This call. all you for

now may disconnect. You

Harte Hanks (HHS) 10 Aug 192019 Q2 Earnings call transcript