HHS - Earnings call transcript Q1 2021

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Operator

Good day, and welcome to Harte Hanks First Quarter 2021 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, ma’am.

Sheila Ennis

Thank you, 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.

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

Andrew Benett

This delivered hard team on through nearing by navigate We year the and year’s approached and each I the the through year-over-year want to streamlining past of the of work clients. you a quarter. and challenges Sheila. that our their first our continued with the I improvements that. Hanks and day could we’re of hopefully through that lives have tunnel. in financials. you, start call has hope both take thanking We forced strong cost forward similarly I grace progress appreciation Lauri made, for with further have showed all want to comfort had behalf of managed everyone end grid. all us Harte business detailed look the will on my Thank employees our express I sincere to organization. just reductions the who you daily And take our to the we’ve then walking for and

e-commerce each Marketing we’ve BXC markets. As tech-directed omnichannel services; we and segments in Logistics, into Customer three focused customer that CRM & Services, addressable on operating shared last BXB Care, quarter, on focused focused compete company Fulfillment the on organized care; and services. large fulfillment

second, we delivered rate. segment or improvement; margin revenue the to stabilized Our and quarter company’s of drive for We revenue of quarter improvements an three run and million we’ve versus which the identify a strong and $XX of continue which is a quarter, X% a into reporting with, $XX.X note important It’s believe over strong run further an like also on EBITDA is deliver our each for year from rate is of progress: meaningful transparency first, in rate; be operating will adjusted increase. year. focus will revenue our positive our quarter To I’d to and positive improvement and to financials operating there. cost fourth believe will improvement revenue segments begin and flow our the delivered XXXX. incremental run operating dynamics a million indicators $X EBITDA the $X.X to EBITDA is is was ago third, we’ve cash in free that our $XX.X QX value QX quarter the through visibility business. year, provide in negative reductions reductions, and XXXX designed stabilized quarterly – And with a going flow to the we which cost Further, a to for believe forward. into row baseline positive EBITDA. we the lastly, million. that we million adjusted that structure base cost $XXX,XXX, we prior the taken million

in reductions reduction areas: cost improvement Second, second, initiatives We real first, drive margin believe focused third, in million taken declines costs; our our These to in will recurring actions will reduction $X vapor restructuring savings taken from cost are an cost $X in reducing and initiatives estate XXXX. improvement. million we operating deliver three XXXX. EBITDA footprint; believe incremental in

expect way. In is progress of the began system. seeing segments finalized XXXX, million that planning anticipate the our resource to from $X.X savings a cost Customer a addition, in company-wide QX, our $XXX,XXX quarter. negative from $X.X increased year-over-year we We infrastructure for the to revenue our improved ERP indicator review technology And we enterprise third the new operating prior to in and in project along to quarter million we’re previous realize Care each date. and into implementing extend lastly, and the EBITDA

COVID-related as experience progresses. project expect temper to work, continue XXXX We down from strong which revenue to tailwinds we

We’re environment, in performing clients domestically work-from-home both and internationally. a for well

As real year-over-year contributing and the a footprint EBITDA. savings Austin result, improved Manila, to estate cost our we reduced and in

network. customer sports for government wins vaccine quarter a care support state delivering COVID business well for New as a as include major customer for digital the streaming technology

declined $X Fulfillment direct negative said, $X.X from mail to due Revenue our improved to EBITDA the primarily of year. in & million closure facility million prior during to year, previous the the That XXXX. $XXX,XXX Turning compared to Logistics.

prior our With operational our complete, footprint. Kansas with the in we improvement into consolidation additional operations will facility opportunities continued of the XXXX. growth were The that of not City feasible enable Kansas anticipate capacity margin City fulfillment

and and warehouse of order cloud-based focused this systems. the for management segment driving profitability leadership implementation efficiencies New on a facility through is further

wins for provide a $XXX,XXX continued pandemic. to company And and which the multibillion-dollar program literature revenue a care Services client business also services. included due from for New large courier and $XXX,XXX, respectively, EBITDA by fulfillment a prior marketing quarter related lastly, and in the softness the declined large we company for quarter sampling CPG Marketing for customer to spend

Our creating new attracting deeper and on clients. focused with leadership is existing clients relationships new

than integrated We’re a building revenue needed market deliver and large mix. solutions, capabilities to profiles existing higher-margin with the growing our CRM

about new CPG BXB one CRM brands ability of data for With the and turn our our over our engagements. We’ve to demonstrate me line our in that, with planning, In for as more revenue, well-respected rightsized wins at business the it Lauri including we’re our creative future. analytics, team as These conclusion, well detailed largest CRM quarter engagement world’s component broader and a progress optimistic distributors. customer stabilized execution I’ll for look from New strategic segments lead projects built a include services, businesses. provide CRM electronic two a to top to sell to wins seasoned management financials.

Lauri Kearnes

Thank our in But with have EBITDA March fourth adjusted as quarter was you, the just our expenses, a year-over-year reduced operating million $X.X quarter XXXX. growth revenue since of our quarter Andrew. and steadily posted. important, of we first row We positive achieved

new of have packaged pharmaceutical areas encouraged invested, where wins business the potential consumer growth to be goods and we effects While and continue unpredictable, our including pandemic the in we by verticals. are

details We to and more continuing of to detail. focus – optimizing in walk now to today, our and the are on needs business meet are encouraged through the the like by streamlining the results market more I’d the in we results.

increase from the Care million $X.X First grew or quarter revenue sequentially X%. revenue was first our in fourth year in from million a $X.X million Revenue up, for across quarter. $XX.X however, quarter year-over-year is This million, the down last quarter. Customer segment the of $XX.X

noted, XXX% large result segment $X Our million to projects as wind of or the year. over a several expect course year-over-year Customer Care Andrew that, up down as was the we of

We benefited we of Logistics $X.X the our meet achieved goals increased $X.X have during Services with cost on to momentum quarter. the litigation settlement structure from segment million. a XXXX. the & full rightsized Fulfillment decrease target year million $XXX,XXX of revenue and for favorable segment our for This are EBITDA a the pleased have positive

underperforming eliminated to mail direct of at in we in year. Marketing this we have saw as $XXX,XXX see decline complete both EBITDA EBITDA locations and the expect continued our consolidated Services in respectively. slight and QX fulfillment facilities, a improvement we As consolidation and $XXX,XXX, revenue facility

early to As in Andrew part of client spend stated, a the due the in quarter pandemic. the to continue we marketing see softness

client we wins moving encouraged new and spend QX. we in So by increases and are March into in saw

This labor the is quarter. quarter. reported operating is posted and diluted and in quarter. ago We Operating of our to efforts per aggressive the $X.X were sustained for Our million, expenses GAAP improvement primarily loss loss a $XX.X all quarter costs, cost year areas, from improvement in $XXX,XXX. and operating $X.XX million. first of except net to per the share in net year We million This operating remain down the growth. which first also expenses income $X.XX revenue efficiency major our loss was or GAAP reduced $X.X ago elevated. basic attributed in from $XX.X quarter restructuring million We $X.X XXXX million the first

loss carryback. for XXXX and note this benefit, to included adjusting that this XXXX our net $X.X $X.X tax tax would have been million. an However, million our please benefit NOL related XXXX When

$X.X So of after best this year the adjustment. reflecting this loss the million is improvement

year. $X.X quarter million adjusted period last in million compared of the As loss a was same noted, $X.X EBITDA first to

turning Now liquidity. balance and to our sheet

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

$XX.X March long-term million we in XXXX, of XX, debt. As had

Act to Plan pension passed our Rescue qualified American contributions in the was required impacts Additionally, our plans. that March

contributions of million. prior in our $X.X from to expected plans are all Our contributions million, expected XXXX now down pension $X.X

balance future and questions. I it half prior your We years we plan on future to will sufficient the our growth. turn Thank sheet that, to to believe take back strength expectations. With contributions you. in also We expect transformation operator have be executing fund approximately to of continue over our

Operator

start first Capital [Operator Instructions] from with NOBLE we Michael question Markets. And our Kupinski,

Michael Kupinski

all, both expense great of in a line, of a start the terms questions. revenue on on to year. congratulations you and obviously, on first surprise of couple the A Well, to guys both. Kudos

second think know lot a should quarter, into we as million you we data, all appreciate on I all, as a And the look Andrew, you said of basis. to really added of color. us gave and use the quarterly base $XX go I that for the First I

kind just meant? year? of understand what to Or comment you think I million $XX trying that to that are throughout I’m least telecasting quarter So per that at are going you be the revenues guess

Andrew Benett

Yes. Thanks, Michael.

on that So we’re telegraphing go-forward so that a we basis. baseline, see least it that should at a as is be

Michael Kupinski

Got you.

terms in Or a – at of we’re I assume Am that to likely you so And of we see to are would is labor down. restructuring to that? expenses said look then little going that to start a assume how costs wind expenses. right I the going labor – obviously, in should labor increases I more bit lot forward? what

Andrew Benett

some Lauri, to over see you going second. will I’m and a hand increases We in – to

increases the in labor see challenges labor segment. adjust the work-from-home challenges for some we just well as now, Customer you right we market as labor see experienced will to We broader environment, a business the forward. with in is, that as going Care that in our U.S. Part in of

And one anticipate of labor go So kind being if that forecast you to Lauri, do want that. add and we factors. costs that a to few will of up,

we would Beyond rightsizing against in labor of we’re businesses, that, discussed. say, of each the for labor if it’s benchmarks these the for cost mode I that – against – revenue Michael,

Lauri Kearnes

to as percentage depending I add Care to And we’ve our revenue. our labor revenue, that mix the has that, segment of earlier, a Yes. on obviously, would Michael, of Customer discussed higher

right of the labor some based from now on driving certainly results strong that’s that So the segment. higher

Michael Kupinski

the actually revenue have viewpoint least you’re business And Care think call you in what performing a that’s the came COVID-related Customer likely year? have will I in of, would QX? to off that might in I And strong because you the second to Customer of Do you Lauri, Care in in trail in continue the how half. of some much well second that be last of say the in mentioned guess, half was not that how of anticipating

Lauri Kearnes

get QX I that into mean we to I fairly second that a half would But it’s I you Yes. year, the going maintain rate. when visibility we’re say run good the have think to of out especially we’re project very revenue. certainly difficult coming that we Obviously, things have of are very we hope to COVID-related, that visibility. all change know, with which quickly, this, impacts as services

Michael Kupinski

PPP I’m PPP if did that the this, debt, mentioned a loan You long-term sorry you loan, $XX.X have And include in right? had the may forgiveness? but million

Lauri Kearnes

of of and long should includes that which Yes, that. on in that. depending a the there’s There’s term, in term, you payments, some short portion then some see the timing

Michael Kupinski

$XX.X Okay. much How PPP? do the how much of you on million, that left have

Lauri Kearnes

$XX.X the had the of term. line PPP capital of million short we of that our So PPP is that was rest credit, Texas rest of the in – a is and

Operator

there It evening. would like no have a today’s questions. this for call. further are At Thank your time, we and to you appears conclude nice participation,

may You now disconnect.

Harte Hanks (HHS) 19 May 212021 Q1 Earnings call transcript