HHS - Earnings call 3 2021 | Harte Hanks, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Harte Hanks Third Quarter Earnings Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Rob Fink of FNK IR. Sir, the floor is yours.

Rob Fink

Thank you, operator, and thank you, everyone, for joining us today. Hosting the call today are Brian Linscott, Harte Hanks' CEO; and Lauri Kearnes, Chief Financial Officer.

strategy, would this remind statements and call statements the I information that such outcomes begin, and about during business that provided may company's historical and we other like anticipated are everyone to the as industry statements Before expectations, outlook, not performance facts. financial contain forward-looking the and results differ also materially measures. uncertainties, in and of because statements risks with may and from and implied the XX-K in call financial Actual the that the those earnings including company's other filings in cautionary may described these release. The non-GAAP press XX-Q was those projected Form today's various SEC reference or included statement reconciliation press that and the the -- issued to other related earnings refer disclosures. Please release other of related for was a after close today The available release website hartehanks.com. the section Relations is at Investor of its company's earnings on

now that Brian call Brian, the to said, turn With over I'd the call Linscott. yours. like is to

Brian Linscott

Rob. variety industry-leading Harte This top optimal Thank corner delivering you, good both strong a solutions improved experiences ways We turned financial top-tier demonstrating on base. and delivered we Hanks, lines. enable Harte quarter solutions. the sophisticated of are a results afternoon. have another was that the Thank you and for and for highly customer in using Today's and differentiated bottom sought-after customer Hanks

expansion of at quarter, lease Kansas executed the end City. financial Harte is clients profitable in in Their drive commitment investing you already of our the day. Hanks every the and results. Since and foot the following: long-term in been see one, driver to to want have the future our we long-term the our who our include growth. progress last thank clients to a serve occupy square I earnings can examples Four specific to our investments success, business and XXX,XXX our passionately employees to third dedication our key we call, the

facility occupy our as square will Logistics growth the we continued entire & Hanks see foot opportunities within XXX,XXX to Fulfillment Harte forward, Going segment.

planning cloud-based to work we our alongside Earlier simplify, implementation in NetSuite to resource QX, and and we how we an realign retained and architecture as standardize as workflows that enterprise centralize Hanks redesign system work. our team Harte our system continue selected partner

Marketing ] cost this week, will Peterson month, Officer. most over result time. Last and expect and We grow analytics early role in Chief business. in will growth as Markets. Fanny to to Global Frank's meaningful as in Frank experience continued focus weeks. best-in-class uplisting strengthen hired leveraging ever-changing marketing our is savings Chief October, strategy coming our we execution Elliott Nasdaq on to Services. filed we landscape. capabilities we uplist effectively Officer Earlier critical In as hired marketing onto His Technology an technology this application our serve and position our customers our anticipate vast in Strategy to and in are the [ our We in we critical client

the Now all business. a progress will walk will walk with we the segments our you operating We on financials. strong through quarter results. made, of our Lauri third across you year-over-year to then I detailed and have had through improvements

Logistics performance Our and Marketing and outcomes focused ROI. and design, Services, drive sampling, data-driven end-to-end delivering solutions strategic creative execution to logistics technology e-commerce and enablement BXC as BXB supply and third, on optimize care that segments analytics, and insights, fulfillment, focused on focused chain follows: literature planning, are Fulfillment business customer Care, customers' and X full-service program people-driven; are tech-enabled product & Customer services; on and

a the each improved financials value quarter delivered is operational financial QX and X% of and dynamics for $X.X prior or visibility $XX.X million segment versus provide $X.X the which million an was positive quarter $XX.X of designed the was increase. the with year. over results. into and million, another transparency improvement year EBITDA revenue ago million company's Our to We reporting for a is business. into the strong quarter

and fourth EBITDA year-over-year improvement we operational anticipate through continued in flow to quarter, deliver year improvements expect will We this in implemented momentum the XXXX.

operating anticipate this performance from the year Customer Financial previous project to from revenue million is first remains in each and throughout year-over-year and and operating year, work the improving by increased our half $X project $X.X million of COVID-related and work of The quarter. reductions $X revenue prior in Care strong, improved we million segments. the in XXXX. EBITDA

against success enable in adapting We market, performance mitigate allows recognize to but today's pressures are we a flexibility technology Hanks us expiring as exceptional XXXX, In our from leases environment. from wage standards continue have the and the in our performance wage Care standards. will benefit recruiting the operate high we a pressures. in Customer working of maintained structure home, in work-from-home Customer U.S. invested environment to to that and in labor Harte cost Care work-from-home has some our

New services. health provide enrollment business wins care experience to Harte for members. supporting ability standards our and customer provider to customer services Medicare needing The partner by quarter a Hanks for for a insurance their chose on based annual the centers consistently care extensive included and exceed established Medicaid year-round our

year. from compared and increased the our $X.X million Now EBITDA million Revenue Fulfillment in & improved on to to the $X.X approximately $X.X to prior million year, Logistics prior business.

With facility, of improvement our into the we XXXX. City operations into Kansas anticipate the margin consolidation fulfillment continued FDA-approved

of consolidation due fulfillment mentioned, by previously an additional Kansas of warehouse client additional City impacted City control our serve racking areas. Global XX% only but Kansas QX The clients' to result impact City. footprint stored oil opportunities have last largely nature also transportation. nearly for production marketplace capacity has capacity client of today's of enablement square the XXX,XXX offsite cost our and organic in operations. operating and we inventories, feet. the The the years, greater fulfillment chain transportation have of we success. and increased of in of increased to sales will continued tightening expanded As will critical growth the our from markets capacity is further supply opportunities products, area Further, the warehouse material in in limited anticipate expansion increased Hanks our X.X Kansas more challenges After fulfillment in Harte experienced the in XXXX, critical completing installation the

deep our the However, and created clients. trucking the has relationships transportation been meet demand to and our long-standing operation in and logistics industry opportunities, from our has able additional

an consumers. sales financing customer New the Hanks welcome equipment. to launching business a business kits printed for U.S. included materials, wins international trade point-of-purchase Harte fulfill displays, show and quarter company new

EBITDA million last to $X.X Services on Marketing same compared quarter Marketing Services. rose by Finally, to year. the

Marketing and invested we realigned as from infrastructure our resources technology to and improved serve our driven profitability Services have the customers. segment in We better

engagements focus We as across existing brands, on geographies relationships as by well expanding client customers within continue our to our product clients. expanding capability mix lines, building within deeper the

categories. We on clients within are market prioritized also new attracting focused aggressively

to We capabilities needed integrated a and made building significant solutions, progress have large with profiles. market deliver growing CRM margin high

quarter New health business Harte and wins selected strategy included the customer provider. Hanks accelerate growth. analytics provide a The leading creative to insurance its to for membership services

In business line the that momentum well. in conclusion, are new revenue reflects very delivered we strong performing and business. Top quarter a

ability lead to at our increased we drive rightsized our to profitability. a have businesses. continue team segments, seasoned remain We to our and We have optimistic

that, with it over will And to turn I Lauri.

Laurilee Kearnes

strong was The quarter million. growth adjusted and sixth a Thank row of row $X.X a income in of year-over-year at positive quarter quarter achieved September operating revenue third EBITDA you, delivered $X.X Brian. We of million. in our our

We improvement. line continue to new be and business by wins the encouraged strong bottom

encouraged the and to we are you the focused continuing Brian market optimizing detail. our by like the of through needs streamlining we now more be As are to business results and on in results. I'd meet the mentioned, to walk today,

$X.X million our several Customer and result wind the $X.X led as we or $XX.X sequentially million period down first projects year-over-year The million or XXXX. $X.X the a was growth large X% half the was third Care of last quarter year. quarter of $XX.X which to up XX%, up second segment, revenue was in expect by million, that Revenue same million from over from up

Services down was or million Fulfillment & negative million and $X.X or X.X%. Marketing was $X.X services Logistics X.X%, up

are We for we year meet XXXX. full target and positive cost the structure have rightsized to momentum pleased achieved our the with our have goals

$X results this was one reflect EBITDA $X.X million increased driven revenue with decreased by this improvement Customer the driven the Marketing costs closure completed The These mostly as as services that increased is by million of cost the of XXX%. that year, facilities facility. in million we was EBITDA efficiencies. of for Care EBITDA segment work or resulting improved to Logistics XX% improvement XXX%. or or our structure business. the grew well rightsize previously EBITDA done large & $X.X Fulfillment consolidation in Services

the $X.X in This Our to from quarter growth in primarily in quarter. revenue income share in million was We as improvement This was for operating We restructuring and production compared expenses of per year year the quarter. is expenses quarter. in as $X.X to ago EBITDA down million. attributed $X.XX net an million the third in million reduced or $XXX,XXX and diluted million quarter $XX.X $X.XX distribution sustained per the for efforts. the $XX.X $X.X posted ago million, expense from our income basic the quarter year quarter. was improvement management $X.X ago well and costs. Operating third the is for third

our balance to Now turning sheet.

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

to have tax As in income XXXX. $X.X loss for due XX, operating our of receivable carryback September million we net

or in early We expect funds XXXX to receive late these XXXX.

in of As million no long-term short-term we have and XX, $XX.X debt September XXXX, debt.

over you. will With turn questions. I that, your to Thank the to take it operator back

Operator

[Operator coming Instructions] Michael from We question a Kupinski. have

Michael Kupinski

NOBLE with Capital Markets. I'm

was quarter. quarter. work First of really to a that congratulations a of on know I there solid lot that went all,

largely a COVID-related you revenue the didn't you Or the of were color a didn't Was fall other some as than were off increase couple line? that us a questions. Customer to revenue factors might. for kind it there. that that wondering what lot And The off? can led you expected. that you things were If was fall was give stronger strong obviously, the little customer expected that you on growth of thought there much us quarter. that like moving just in such can it because as what business It I if give Care, A sounds I had

Brian Linscott

is of Lauri, in well The Brian, as in. opportunities. into based to extended the yes, us some COVID This project and revenue fact, project that feel reality we've for as free expanded COVID-related chime Sure. is, additional longer kind

uptick. So rather third nice the actually we than a had quarter, shrinking in

we're and also volumes Customer the the But that Care unique to situations operating right quarter that just large performance. customer very excited whole additional third another to as in are business had led very experienced is well nature. the onetime now, in We great that see call continued some somewhat a

Michael Kupinski

of this from It we can commentary of off may me so the sense QX, to you sounds And give business Customer Customer year. your kind fall that particularly maybe first like a next going how Care? should of or not Care-related the part COVID-related business until in view

if maybe give could just like you for into from or maybe fourth getting kind pacings the give So wondering a contributions COVID-related the the was you impact of revenue quarter. look just sense what business a could of I of if the you're on us us sense QX

Brian Linscott

Yes.

going the of I that we the the continuing I project-related the phaseout in projects next of in happen nice quarters well, second is COVID-related sense of some a it at So And and said the relatively first revenue think think the more quarter. in you year. fourth clip to Michael, see

Michael Kupinski

number, gauge the strongly. strongly Okay. was give didn't still we XXXX. was perform hoped more mean might were as fell into as have a Marketing us then offset would COVID-related that in as Care, go kind we Customer largely loss that maybe the of as offset that sense, as Marketing decent the Services, I was one we the guess, I strongly ability it process case of perform thought if weakness the could not that a as but and to some but Services yet just if And business off you anticipated the

that you kind you go business as if into how of Can perform you as Marketing the into could XXXX? revenue go us and sense Services a kind better give actually that, of think a that fourth we of quarter is

Brian Linscott

revenue. fantastic say million a I a guess your Yes. think I year-over-year I'd EBIT increase I having is -- do first that and And in on $X.X question appreciate recognize performance, but I

of One of the things that we're shift bit I revenue is seeing mix. a what change little think in the a

print. the And $X so outsourced million related to declines some mail of or revenue us direct managing directly worth over

see you segments business. manage I think customers. Services we for so campaigns areas, And higher-margin but a moving little of more revenue what highly-profitable, we're with the is of into out And shift Marketing our bit certain

are to legacy as we done management experience And think direct positioned past, with of growth we've some modest the more that I cycle we certainly so well some mail largely. in print the out and outsourced

Michael Kupinski

may. just you. they, what in if Got us those costs just if go kind questions, of next more had happen I the going to Customer was Care Obviously, And in were cost a you you you are can I some level couple wondering because duplicative into quarter. year. for gauge obviously, as not probably of

on kind an you continuing give from whether XXXX. as to what costs reduce of sense gauge just these reductions you can basis maybe a into And you then of are or us cost you also that go annualized not those if and be can if might levels

Brian Linscott

Yes.

if first question of So you the part for Customer restate Care. the sorry, I'm could

redundancy? mentioned You

Michael Kupinski

operating, redundancy there can in of I the and in in kind were you redundancy -- terms there. other in -- think because give just quarter, facilities of us the consolidations think the Yes, that I further were were wondering was cost and might of sense had the forth cost of if that impact still I third duplicative we what on and doing be some some quarter quarter. you a if so with

Brian Linscott

Yes. I'm talked... multiple Fulfillment largely the Logistics And facilities? Or we're talking about business & the with assuming you

Michael Kupinski

-- sorry. Yes. Yes I'm

that. about Sorry

Brian Linscott

Yes. No, Yes. that's good.

the out modest our largest there is redundancies the in duplication some fulfillment of of through locations. there at third part of but said, in kind fourth the some is kind with multiple way end cycled the quarter of that the the no, there's quarter, consolidation -- of That So minor cost of lingering some we're occupying leases second working fulfillment quarter. still and our where

Michael Kupinski

on thoughts just general from then these your And cuts levels? Okay. cost

Brian Linscott

make kind take relates I the next to location -- are it Care, savings. larger or that of we don't to Customer million of references cost know I some will specifically Lauri, more want that to So of the if the off year leases chunks. $X leases we know generate of of one you run that some going know as operating

given of that make labor in the we're challenges the we what flow But market, think with year. depending all everyone to sure anticipate, line certainly, I next is labor cautionarily bottom not knows the we of market. if those cost pressures sure straight reductions on the do further

Laurilee Kearnes

that we don't Right. those year anticipate And say costs I next would well. restructuring also as

year. savings offset Brian we'll So have as supply that But some pressures some price chain or in be on pressures savings. some we that going some into have to some that other next right, could labor cause minor issues cost or whether mentioned, areas, those

Michael Kupinski

what the revenues just meant fourth term you revenue had Brian, quarter. from mean And you Were understand momentum. you're increase revenue Are mentioned third you quarter? going expecting the to did then, -- by What anticipating momentum into the that that? I'm you trying looking be that you an would by

Brian Linscott

it's apologize, momentum. correctly, if Hopefully, didn't I it I year-over-year but state Yes.

momentum anticipate on we quarter. fourth in year-over-year So continued the revenue certainly

Michael Kupinski

in meaning just your the what the in quarter. in that And mean momentum the I were you fourth be want clarify. in anticipate by -- third that -- have increase means to to year-over-year up that fourth Is that? quarter, an would you in you revenues the year-over-year -- X%,

Brian Linscott

correct. That's Yes.

Michael Kupinski

you're quite position financing better debt? -- where in was some the of obtaining terms the financial in then on wondering, conventional for And I you've are than just more of been company's you. possibility you in Got a And much time.

Brian Linscott

Lauri. we're ahead, -- So go

Laurilee Kearnes

few that more evaluating working process something I that in look we're And we're that's of be side. the certainly the mean months, over on. conventional on something will of the Yes. in debt next at to process that the

Operator

queue. the no are turn I over floor more There back to now questions in would like to Brian.

Brian Linscott

your time Thank thank time. a afternoon. evening. joining you, until we you appreciate and next all and this Have And good for

Operator

call. you. Thank today's conference conclude gentlemen, Ladies this does and

this you at time, your participation. your disconnect day. have phone wonderful a may You lines for and Thank

Harte Hanks (HHS) 11 Nov 212021 Q3 Earnings call transcript