HRTH - Earnings call transcript Q4 2020

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Operator

Good day, and welcome to the Harte Hanks Fourth Quarter and Full Year 2020 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Sheila Ennis. Please go ahead.

Sheila Ennis

Thank you, Kevin, and good afternoon, everyone. us. joining for Thanks today Hanks; Benett, and call CEO Chairman of Harte Lauri are the Executive Andrew and Hosting Kearnes, CFO.

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

Andrew Benett

Sheila. you, Thank

We're express and have us grace sincere employees take and our lives through similarly operating business have just appreciation our approached on each that results our comfort delivering end nearing Hanks who the and & this everyone around colleagues segments: past pleased has all to tunnel. to year day Fulfillment are the and that. with hopefully the call year's Services, for that to my life both challenges we the could First, to for forced I three want X,XXX-plus Marketing I This our managed Care with Customer we're grit, both want quarter the the Logistics. year. to announce into I at Harte strong navigate and that daily hope the thank structured world of

strengthened Customer reflect be As progress will excellent our talk XX-K, business we hires on strengthened and and began efforts, the will greater provided begin our the we the our cash an XXXX. our additional and position. highlight our executive strengthened position, from We've with, XXXX To begun income this. in results through million to XXXX, business, our we've first, in new by and made year optimism significant our reporting end. balance financial segment our financial an Care in cost equivalents tax $X.X detail. progress forward. reduction $XX.X in anticipate around million cash sheet going I'll with from In results Lauri refund our

marketing interactions leveraging our prototypical business our and the to Hanks profile services for the center Care our center clients XX.X% work, tech-first a volume existing results Care customer significant to XXX-degree continuing call increased year. for wins. aggregating from our Revenue new offering, progress in capabilities. segment fueled XXXX, with Customer quarter, transforming Secondly, Customer a our grew by made In by BPO we clients contact project cross-channel and Harte from CRM provide

tied brick-and-mortar recruiting, constraints work home to allowed eliminate In has and as cost such to addition, space, hardware typical connectivity. facilities, pure aspects leveraging at us of

dashboard business Marketing development reporting from modeling, our Services intelligence with technology Tableau added as also and our capabilities business. also capabilities such our We analytic improve and to expanded borrowing

kudos integrated an we consumer formalized real-time multiple across [indiscernible] in platform that interact messaging Salesforce for for multiple support, leading more in platforms. to transformation Zendesk. of we interacts media, and solution an CX, amazing and Chacko, team integrate Customer social through Managing Oracle including We the Huge the relationship customers this Ben to our new business stellar the for his XXXX. allows CRMs As creating Director our across with Care

cost implemented every reductions. XXXX We our across over of cost the $XX reducing in by overall Thirdly, reductions company, aspect costs million.

and EBITDA. key third positive in a $X.X the quarter distribution, was of our in production, positive cutting million our cost our expenses a Commercial including labor, we Officer, new hires. operating in quarter, leaders. our the advertising drive our EBITDA across leading client, segment marketing selling, general efforts responsible all managing and for adjusted Our new two Joyce executive contributor on We adjusted To Karel enterprise. reduced Services momentum, row is areas, to and sales our for and Fourth, brought G&A Chief and growth expenses. new Marketing

and integrated a experienced Pat leader sell our Wayfair Services. background a by positions high-touch Managing journey & in And Fulfillment at Before entire foundation Logistics XXXX, also including program a through customer Fulfillment now Bain e-commerce in In his Director BXC set marketing roles and CRM an of optimism former of to O'Brien experience. in XXXX. for a and operational C-suite and and joining BXB in our powered Logistics we cloud-based strategy Pat at agencies, held January, we full-service us our growth fulfillment, focused strong joined Marketing Joyce our innovative is – Services, for OMS. MRM/McCann, Digitas. on Consulting. by decades Businesses WMS business powered businesses. as February data and Fulfillment with subscale We and & BXB the Services lastly, Marketing Wunderman fulfillment transformed In focus first-party from

our we post-COVID extremely XXXX world. businesses for are positioned look a and well we to As beyond, believe

from Our three operating trend that increase this continue pandemic. pandemic. to is the well large segments from We're participate due a benefit addressable markets the that shift e-commerce shifts in to behavioral beyond the confident lasting

beyond. value we and believe focused CPG, confident and with customer company have relationships such to as products client our we to leadership categories We as these a Financial room Services, strong as in high-growth feel turnaround. adding BXB experience Healthcare have and enter and relationships tech, have To in important, we and highly we an positioning with grow a differentiated conclude, go-to-market Equally XXXX, a on offering. unified omnichannel new team service

Customer Care track, back on is Our business after delivering performance decline. strong of years

it new that Services and and the Fulfillment With these quarter We leading I'll see have Lauri over the in full to executives now expect and to Marketing & improved in year. to businesses. we go XXXX performance through said, turn Logistics,

Lauri Kearnes

you, Thank Andrew.

work be Care, three for our the well Revenues Andrew by we existing on As this organized increased segments: Logistics and Fulfillment moving Services, as in forward. reporting Care them the quarter; segment have we'll around continuing clients. volumes by as company Customer & grew Marketing fueled and noted, with Customer was project XX.X%

as performing Fulfillment our Our as for reductions budgets well company's be mail The COVID. Marketing with was modest continue Services down to due clients. cost stabilizing the to due XXXX Logistics show business quarterly XX.X% down efforts in to production clients' some consistency. COVID reflected a mostly business reduction to impacts due results, due our facility our marketing was of which a in to & X.X% elimination

With EBITDA consistent EBITDA. in current to business, stabilization revenue and quarter row is pipeline and respect at Our coupled a QX. the to third pleased positive I is cutting, are positive $XX.X This to with growth $X.X weighted million. that in am key adjusted that report million cost new adjusted the contributors are we our

both Our unweighted of heading pipeline strong is million, XXXX. remain into $XX which

we're to the the focus to encouraged As quarter $XX.X business ago were growth the results in streamlining quarter continuing by million investing. million Andrew a revenue in or include meet compared the XX%. today, has market of and like walk to are the stabilization to described, where quarterly part $X.X and in now the the I'd on detail. and $XX.X for of year-over-year lines our restructuring optimization business needs of more Fourth million decline revenues efforts we through year

as year $X.XX in the to $X share the million million income of GAAP $X.X Our in Fourth related $X the versus and to and or We distribution, the same This loss reduced as in operating facility ago expenses down million, mail to and quarter at operating closure in per $XXX,XXX fourth year. transportation in quarter. year-ago generated income period came million diluted and net loss of the $X QX the year in quarter $XXX,XXX compared and the quarter. $X.XX $XX.X a last reduction our for production $XXX,XXX Operating $XX.X We and in our quarter, share compares net of well ago the or from operating expenses of EBITDA facilities. in adjusted per decreases period. million respectively. expenses basic basic was in $X.XX labor and fourth expenses diluted were driven million from were GAAP

of were to Now year to in achieve a This in XXXX. of $X.X XXXX turning Marketing care to Customer a at million versus compared with decline income a million million, in enabled XXXX. strong By XXXX XXXX. year million the million for this increase was year Services year-over-year. the performance a operating revenue segment $XXX.X $XX.X made In to million $X.X million $XXX XXXX. The $XX.X results. of revenue in operating million that year-over-year million Services, had cost $X.X from income reductions to XXXX, was revenue. declined a Operating to revenue despite loss ago. segment, year compared of Fulfillment loss was in million income Revenues in the compared $XX.X million loss in million XXXX for an in decline or in million revenue $X $X.X $XX.X while million last $XX.X Operating us Logistics XX.X%. is $XX.X compared in to $XX.X from million full we & the $X.X was million up for $XXX.X year-over-year increase

includes As year. facilities during our this production were of down a this QX reminder, segment shut that mail

including adding The full of were XXXX, distribution decrease to operating administrative improved the million $XX.X selling, $XX.X revenue. general $XXX.X all million and expenses more compared year offset We $XX.X financial decline for and Our operating reduced a XX.X%. $XXX.X our advertising, results. production decline million in to decline in to and momentum expenses than of in revenues or in offset expenses expenses our operating in the million the million areas, XXXX labor,

million expenses for totaled year of million, $XX.X $X.X full restructuring compared Our XXXX. XXXX to in the

efforts, million was full the operating cost of in our of to improvement loss result loss efficiency of $XX.X XXXX. a major XXXX year operating for million XXXX, the aggressive a As $XX.X

full Net We in the $X.X expect non-recurring loss EBITDA XXXX. XXXX. diluted basic to XXXX for three momentum in year in compared a to restructuring million row $X.XX per Adjusted million million of and or for share million positive the diluted was to in full the $X.X loss benefit of to $X.XX positive We year $XX.X of in share $XXX,XXX loss the $X.X of loss XXXX. and loss operating Net XXXX. for in net and improved have now basic our adjusted loss per a impairment included a EBITDA to income XXXX XXXX an quarters tax this million. compared adjusted Adjusting for of $X.X was or continue compared $XX.X XXXX. million expenses, a

We XXXX additional our to by back. of tax million related end are $X.X refund expecting the NOL an carry of XXXX

Turning to balance our liquidity. and sheet

As of compares XX, as of balance we ended million this period cash cash to $XX.X had cash XXXX December December equivalents of of XX, the million, XXXX. $XX.X and a

as strength We revolving as credit back questions. had sufficient over to note. future I continue your million which our executing debt, our long-term reflects to balance long-term $XX.X facility that, current take draw on sheet believe of the our turn well the also fund will plan operator XX, December million XXXX portion of on With as and PPP we $XX in it the transformation have growth. to We

Operator

[Operator Instructions] ahead line NOBLE Michael go We Capital of go Thank to Markets. now of you. Kupinski Please the can sir.

Michael Kupinski

on and very executed many fourth that. I EBITDA quarter you appreciate media did the you well. operate in your positive very environment know Thank difficult a companies, in and congratulations you I as – you, quarter. and

kind you So the segments? like three in questions. now is – bit for there into most in company categories Since the the little each of operating from, terms for the accounts one you derived of is of – is talk segment segments, about where instance, of about like, or a those a talk revenues how each large of of just can couple maybe where what accounts organized could portions revenue

Andrew Benett

give we'll Yes, I and we categories. – can can obviously, start, you client

Marketing CRM is our it, components a Services business, solutions. So everything strategy to technology to that CRM to agency business a essentially in e-mail from has creative, a implement few

look would as and business that business, competitors holding at companies pure-play that about agencies. about their think we you when think in within So you big the CRM

fulfillment, we aspects does categories. product also Logistics fulfillment, trade fulfillment, Our fulfillment marketing then literature be Fulfillment do today the biggest would and business three of & multiple

fulfillment printing as you're As there's literature in as been a category whole. aware, a a as decline there's less

So is Customer the obviously components business the when e-commerce three Care look stands and what mentioned which those are of call, a that that and offer on has seats services product more at services. is made today, as transformation That fulfillment, is And based BXC revenue, see business, is transforming, product about. as the growth is our of we've e-commerce we majority you I well. with say to technology for What any of the then it in the on client number I as fulfillment. given all would BXB the been

over time. we And well business see as so transforming that

Michael Kupinski

in obviously, revenue Can what a you one-time the guess, or how much in talk little about big of it. bit Customer Care, a revenues the that call of Got you in would, in jump recurring terms And your nature? quarter. I is

Andrew Benett

Yes. want Lauri, do that to give now? what we sense would think for a be you

Lauri Kearnes

Sure.

I that. in think a great increase seen we have

a months continued project But thought what continue in project its XX% short would recurring. work continue what we year-long portion, a to I had project there's But grow there's some we necessarily rather that's planned. than of a we do we not work consider that to would period. think of project still some longer that still than short-term that between that into And that to maybe be XX%, work expand even six and can if and to opportunities that

Michael Kupinski

we looks give are or like performing each are the of it quarter? much the Can into quarter us sense on And pretty of through kind here. these pretty how first you first a segments one just divisions

Andrew Benett

Yes.

and before the talked towards get now businesses are at we've how look for continuing of quarter about and growth EBITDA we and believe those top revenue businesses. as obviously beyond, so this we've need and stabilized to talked we and And first about line improve to these each

continuing we So beyond. see quarter in that and the fourth

Michael Kupinski

And Okay. cost reduction what terms some in be you've cost ongoing efforts. XXXX? you might that mentioned you of provide savings thought then annualized Can in have

Andrew Benett

beyond. Yes, I want Lauri, the and think that and if touch touch you maybe its implementation XXXX on to well? ERP on as

Lauri Kearnes

restructuring focus footprint over of overhead-related we the the as as been to system cut costs as embarking we in business especially a drive before, – normally from restructuring in continuing our $XX of some our us also would complete million. on in And certainly implementation costs IT we've projects we've We're enable that mean, We're the I cloud-based a well reduce to Certainly, stated, expect through an with that efficiency in further ERP on. efforts as some had revenue. coming to new years, our and going additional costs. we Sure. we facilities our discussed XXXX. has expect fluctuate through you know, reducing

Michael Kupinski

Or know and in Got were and further vendors reductions most point – that at last vendors satisfied a on Where you. stand need so the were year of cut you you you to do terms your the in cost third-party of are this third-party to most reduce And cost of year before in terms – area? efforts forth. of that to cost I there?

Andrew Benett

have. we Yes,

completely. have all, vendors, with pay regards to we First of third

be an But terms – not also which as real few technology, just past, last we've made of in is Secondly, a standpoint, this asset-light, and estate the tremendous our from also example. we've that's over footprint the as in progress goal discussed years. we've to and

moving own labor Logistics internal OMS, development. WMS much our and towards open business, our a more in for & reducing architecture, So we're Fulfillment

also cost only systems on our not on reliant are maintain third-party on reliant fixed we're reliant vendors, forward we as going not we So not be but and fixed or work. won't deliver to cost

Michael Kupinski

And then clarification. just finally, a

of look and gave guys translates how information we how forward just in pipeline revenue of a sense this frame? the over going should numbers what give business. terms on into of kind You that time you you the me Can at provided of

Andrew Benett

Yes.

see is we likeliness Obviously, tracking weighted about to at about, – pipeline or on convert weighted the that's at at as important – encouraged like that million. the quality of is XX% quality higher of the conversion, we the to there we've quality higher is as what So pipeline feel numbers. a than past. as in talked $XX the Where is in of the

than So clients and what one example. I more are mean design by by an engaging that our as service, and with we're selling how it, is prospects

So it's but services. it's more a also ticket quality, leveraging higher higher item,

which at to obviously, announce way, wins But tougher So that's and see our is obviously towards see higher more other as types one client to quality. the and across you it, is more see, item another work doing, the that the businesses. is we way look number. the of margin, way is we're transition client higher and ticket to that which wins, work of the all And

Michael Kupinski

on Congratulations again. you. your Great. Thank progress,

Andrew Benett

Thank you.

Lauri Kearnes

you. Thank

Operator

this are no at questions time. further There

Andrew Benett

for Perfect. very you. you we your time, and Well, conclude, thank much it. to all Thank appreciate

Lauri Kearnes

Thank you.

Operator

that gentlemen, you thank participation. and call. conference Ladies for We concludes your today's

disconnect. You now may

Harte Hanks (HHS) 19 Mar 212020 Q4 Earnings call transcript