HHS - Earnings call transcript Q4 2023

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Operator

Good afternoon, everyone, and welcome to the Harte Hanks Fourth Quarter and Full Year 2023 Earnings Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Tom Baumann. Sir, the floor is yours.

Tom Baumann

Thank you. Hosting the call today are Kirk Davis, Chief Executive Officer; and David Garrison, Chief Financial Officer.

want remarks participants that may to and I call, during are begin, risks prepared management's contain uncertainties. we to that remind the subject Before forward-looking statements your forward-looking in additional make also may response Management to questions today. statements the forward-looking contained for Reform of in safe Litigation statements XXXX. Securities claims under Private Therefore, company Act harbor protection the the Actual will these a with to discussion of refer risks company's differ uncertainties SEC. more results the today, discussed from may you results and we in and therefore, detailed filings

any the available as now XX, addition, that no market include release comparable of reconciliations are press turn hartehanks.com. With is disclosure the on future closed. measures, change. This projections to yours. performance represented would company's measures and Investor Hanks Kirk, that, GAAP the financial conditions In financial non-GAAP website is I market these the copy assumes webcast projections provided the the of at to in Harte issued the certain as and call, by of company the as information A earnings in to to the that press obligations Kirk. update including management XXXX, estimates to March future today, and financial Relations section over on shortly call corporate after call of like available release the other was

Kirk Davis

marketing profitable The program just talented talent, companies David to we're generate who term. Other as intent with partnership Massachusetts has is you Garrison, October, high by engagement focus efficiently their team. another strategy relevance, a participation become successes Harte growth our call. to has joining role. BXB had primary office business in early in generation. In a We've team our for antiquated With since inside our and to subsequently We've were we larger, as to sales growth, organization on and modernized when our June. AI for position long a program David by like and demand our which on network. driver include completed addition He's focused welcome own comprehensive highly some our by transition. exclusively attracted Hanks new Dave's President operate go-to-market Tom. a and development smart and growing. We're interim and you, thank for in growth. Last Waller, our sustainable Officer. Today, permanent our Elevate, appointed marketing which will in welcomed offerings. an attract we and good know also opportunities more evident companies our Last the our developed we all dedicated easier a our creation who swiftly staff our transformation has strategy. Sales is end-to-end Harte on that of a CFO, to sales our To reorganization channels we our capabilities. sales a the anchored expanded amidst will revenue through executive development today a little organization. has material It Partnerships capitalizing ineffective review our us to not restaffing sales establish It's go-to-market an expand XX% the and Vice uncommon marketing and expansion international on high-profile functioning and business hiring Thank structure joining burgeoning with and and been for of focus He partnerships. events, October, our lead be of and for transformative achieve sustained was my we Kelly is Hanks Marketing, Chief Senior strategy, focused I'd Chelmsford, afternoon, in investing August, you're too listeners, enabled me commenced Financial Garrison, new sales

structure efforts. and cost management diligence accelerate leverage discovery in of in understanding were call, to global developing explained optimize international Our and augment their and the our Executive an I committed over engaging to transformation comprehensive our October, a we technology middle consulting Kearney investing better earnings potential and with that organization, team Kearney investments. In and engaged we last business time an sessions. leaders firm XXX specializes our extraordinary have job done to

will result, by to identified and in we Fisher. the announced XXXX. To of which have David a a million estimated reductions approximately to $X sustain over of we an effort, recently X this transformation drive be office As led $XX implement cost years, in creation million occur

Transformation Elevate and aimed our our on at map to Chief projects, return will opportunity, ensuring enterprise-wide achieving our save AI cost Officer, road valued As initiatives all invest maximizing and David engaged important. $X.X our oversee capture we've what highly of on. taken working Elevate, a To aware enable why are million toward David will is charge project XXXX, we're in and which Garrison of restructuring employees elaborate it

provide As to glimpse on units. like early we're 'XX, would in within we're business a I of our specific what focusing

Chacko, Ben Amazon leaders technology are begin our existing with focused cloud-based to along leveraging on Our solutions technology customized provisioning AI-enabled prospective Connect Care led customers. our by for group, and

capabilities our new we strong we Our anticipating our in Services second of division, and entered rebound by have and performance sales sales. revenue partnerships. In beneficiary content be of variety digital services, creative, year full services, providing as we division, from a XXXX can in a generation drive under for should InsideOut. services. Through Care companies development, offer acquisition outsourced this marketing strategy, division and our management focus establishing on marketing. leadership account-based sales Through post November, of ranging demand Marketing of a in new We're

companies to envision recruit year in and highly digital transformative offer and services. We also staff support service segment. our marketing Agency Services whereby We a marketing as internal we major with their a deploy

This us. to clients, services to in first wider could plan Our and we're focused best it a catalyst segment with areas our involved a are and opportunity strategy currently on. client. is business we're for range strategic planning provide become growth the When of

we is grow Logistics division. In and plan anticipate to stable which and strategic margin to our focus on a and plan partnerships year reposition to our up O'Brien, look forward this division, we expansion improvement. through So Patrick by to developing led

Massachusetts facilities Kansas we're major kits poised trends seeing into where by in packaging we're fulfillment, Our we're sellable capitalize with for success Fulfillment leaning that is division value-added several and also XXXX custom in such on in retailers. as led major City Pat to

expect mega influencers one and incentive and over or year-over-year ecosystem costly $XX.X on credit to million. higher that agencies' from engage high our prestigious few seek while guidance outreach Texas with We of retailers a what the more we to to boxes. million. guided that end-to-end of buy-in partners market to fast-growing seasonal $X.X growth Bank we in becomes that a support by which of Dave. In QX chain turn by a we're exceeded I variety seeding creators smaller pull care selling of focus in seeing online. Loyalty, portions and loyalty supporting additional served some we the from audience Combined Capital partners, June seeking trend create who utilizing major supply we're companies sampling, approximately merchandise cost we or and customers to In brands reported line still call fulfillment retailers last, revenue to everyone on audience programs I seeing benefit escalation, we're to positions our as December, to employee a XXXX. beauty from extended where, their developments will gifting back agency we -- inventory seeking QX are was Influencer with. And that brands maintaining major brands external as to a benefiting expand smaller from mention August, mention QX before QX, of revenue $XX like are their and example, QX platform. I'd million

debt. no have We

leveraging Currently, partnerships committed includes leverage NetSuite this Our Plan track. Pension solutions. and to terminate is plan on technologies. technology this emerging to spring evaluating X leveraging We're to

predictive expand key Additionally, data few we're analytics key AI to roles recruiting expertise. for a a our and --

call terms Our job. Last million billing resolution focus served and receivable, which a QX year-end our We the CEO in my XXXX accounts million. $XX.X done and in This been payment to over good had I ended million. of just with efforts contributed effort, $XX with reporting cash a on was position as has XXXX first November company-wide $XX.X earnings quarter. we've our optimization throughout

have strategy, on we're the QX a my I'm early, has So substantially our leading a a commitments. indicators, thus growth today's second confident we'll years encouraging. I'm created unifying With system. far been and endeavor bode reflects very which because and the pipeline accelerate new for discussion albeit half We're Project our go-to-market challenging, will Harte story. modern we of for growth, about organization while our second Elevate, is future XXXX executing quarter. ahead. sales a are full well the senior confident the and This surrounding bullish leadership team Hanks'

team I we're here to I'm million. $XX approximately but a significant, is to opportunity see our a where what opportunity here. more much significant employees need and ensure working can capture senior sustains its company profitable. to, have. be also to in the we cost me shareholders. XXXst Our leadership year, the We with delight invest more Hanks be of desire we much thrilled but lead larger, It's build is our Harte profitable to a my privilege to and

that questions be I'll on to David now happy turn over path. I'll We your call and Garrison, the are take thereafter. to

David Garrison

in million the quarter QX. conclusions QX of quarter and period million. during were third compared continue $XX.X XXXX $XX.X completion to in prior million were QX increase decline the $X.X quarter in quarter to million XXXX. logistics programs in care reductions you, the $XX.X million and year QX These including fourth million operating X% to The a restructuring the of to QX fourth XXXX. Operating results, compared the in business million, the Specific compared compared year-over-year. Fulfillment in in Services the holiday quarter revenue program revenues declines of $XX.X lower revenues of increased related of decrease operating declines including this volumes $XX.X same was in QX expenses were QX segment versus in $XX.X compared into of to $XX.X expected revenues of not million, will the customer XXXX. $XX.X XX% segment were the $XX.X $XX.X are quarter million $XX.X year revenues services other million quarter in up expenses of in of $X.X of Compared third quarter or segments. million, million revenues million in in million to $XX $XX.X of by million compared sequentially. Revenues for the revenues to consolidated segment in care XXXX. X The prior Kirk. customer was $X.X the growth the million segment. Fourth I third now in review a each XXXX to X.X% XXXX. Sales in Thank million up Marketing XXXX. the million in and the to segment and expenses and customer was were of were prior year $XX.X in offset $XX.X decline third XXXX. The XXXX and fourth made expense

by restructuring included Elevate less without of restructuring estate other million and expenses $XXX,XXX revenues. The the However, for than help X.X%, related $XX optimization in expenses consulting these expense, resulted to million the expenses quarter. $XXX,XXX the formulate of These with and only Project quarter-over-quarter $X.X to the related in for the the reductions. of to the associated plan real operating identify cost growth costs commencement of increased in impairment efforts. needed million $X.X unused

higher million for is compared at executing million in in to Elevate during XXXX of charges, million XXXX quarter. When of for a expenses XXXX. The to $X.X fourth an compared in incur of restructuring compensation, in the operating the higher and XXXX. Project the EBITDA XXXX previous $X adjusted quarter for to QX loss XXXX severance of million X.X% million in operating an negative operating QX stock $X.X same quarter compared XXXX. $X.X savings $X.X QX of the of income XXXX. The operating continue the of quarter previous margin of $X.X quarter. When in of of quarter and in XXXX QX an $X.X in $X.X adjusted income to fourth had and XXXX. despite in The EBITDA of to in the operating estimated of the stock the XXXX. The restructuring compared in expect EBITDA the an current is and adjusting for compensation, operating million million revenues was XXXX is income is X.X% margin same EBITDA million severance million the X.X% in to plan $X.X And $X.X million quarter We fourth adjusting adjusted QX adjusted the expenses,

million in $XX.X XXXX. Revenues from million for in in in Services decline revenue revenue the a -- million the in segment center $XX.X increase Now $X.X as a for million in million concluded the compared X.X%. Operating and year $XXX.X a prior decreases customers XXXX ended marketing Specific reduced year, revenues this expenses compared $XXX.X compared a million $XXX.X in Customer prior the decrease $X.X were year, in Care call to in segment results. Revenue prior or $XX.X was were the million, X.X% XX.X%. year-over-year. Fulfillment segment logistics decrease million, of $XX.X the expenses, to Services programs million million revenues to million offset XXXX to budgets 'XX were year-over-year X.X% revenues decline including the Marketing were of added restructuring the XXXX X.X%. Sales million to for in year, XXXX. a XXXX. The reduction of $XX in $XX drove XXXX decline from reductions were of in compared $XXX.X

sorry, in of severance operating EBITDA program, compared XXXX compared there to stock XXXX adjusting of operating same million is operating XXXX. decline -- XXXX adjusted adjusted in $X.X compensation, Project was XXXX margin restructuring million restructuring for compensation, million percentage cost $XX.X to $XX.X EBITDA gains Operating expected expenses, adjusted in million as margin in to With income is $XX.X $X.X to Project expect the XXXX operating in expenses, to grow adjusted Elevate. In XXXX. When reduction adjusting is $XX.X for million of income an compared period X.X% expenses XXXX. million of of revenue $X.X million and XXXX. and million million X.X% we in $X.X XXXX the XXXX. The in an severance the million compared to $XX.X The a efforts the compared in Elevate, compared in I'm to to XXXX. When was $XX.X in from for with compared EBITDA the stock XXXX, was to

on points the balance few a Now sheet.

And of to expects Currently, XXXX, no on million cash questions. $X.X spring no Pension line in the obstacles. quarter. With XX, credit $XX of was and the we of I has debt. The X that, operator turn at terminate the to target line As the Management a cash without of XXXX had end our million at XXXX. back December end any end of you. the termination company to second continues of of this XXXX. the have of million equivalents compared million June $XX.X pension for drawn funds Thank $XX.X through the and contribution been extended over it current

Operator

[Operator Michael coming Instructions] Your first question is from Kupinski from NOBLE Capital.

Michael Kupinski

your mean, I and beat adjusted revenues, congratulations. all, of you bigger First you beat than is much cash expected. I EBITDA

they been A So the time, some of a talked you're about because the good how little How those. job. that these And about do work? have some the I I past on get if just color couple partnerships little of to And kind for, and that maybe you go elaborate the the in significance of some -- well. back wanted of that so following a was just you for can have us out us partnerships give work paid? partnerships bit know of looking you story didn't wondering on questions. do

Kirk Davis

Sure. This thanks and the is Kirk, question, Michael. for

have guiding a product promising practice and past in I that those I'd I that person as companies partnerships And in here we nurturing has a with gen experience invested the all months sets or revenue have the of really One to dedicated that high across evolving creates this typically really I'm are and around the in XX%, investments these AWS growth, but say honestly enabling that few mentioned we've being the want with that of for really a in the been as alignment of BXB strategy. area chain. use competitive really in have outcomes and of some coming of financial who supply result scaling a at, it tool as as reassure of differentiation interoperability we they couple looking of partnerships of give So AI our a and on -- script, customer really of platform necessarily examples from the we're to capabilities in And a other based that some or platform experience we're prioritizing as are aware and indirectly with they're working had having cases some we're XX% is services exploit that. I'll types to weren't partnerships. potentially our few principles. see dozen. Connect. as their and hoped. global

that So an of investments year government wallet has side They across history mobile we And millions the experience. as contact care, members center customer a enterprising deep and intriguing note, very piloting were includes services. an with an the in health manage a very, such. firm that firm VC automated partnership per has VC

directly capitalize AWS. with they're call automation on and So able to technology investment via center capacity call flow our

and So connected in organizations across BOT we're end, and automation across pipeline look strategic intelligent both business. front of to center spend. We experience allows channels, developing partner to motions, new of a customer enable go-to-market economy number via a the services agent a really joint usher a call traditional agent technology

partnership business a CX we cannibalizing business, automation without that sizable business capture, and agent together the So with and can the jointly spans We incubate data opportunity. win new see traditional pipeline services models outsourcing.

span different joint large a days, to in enterprises of have presented together just -- our actually on we've capabilities. So XX we'll X

a their idea can sales we assessment, think I solution organizations there's and Services be They strategy, of a part combines diagnostics are be and enablement and one and execution that economy of think Sales our So we more, sales the execution, division. organizations sales consultancies execution. -- improvement, say, for through that helping an -- arm just companies would can these sales from with to we end-to-end we pick whole if lot and of sales I journey technology

to sales And or another scripts and approaches to or our ability we're organization see augmenting how so work, they're affect AB testing is attractive. different whether very organization, demand sales doing create to

there's already companies with in so area. of we're that a discussions And in that number

really things a is what are organization scaling these besides different sales all So think to way doing. our in-house about and growing

Michael Kupinski

It's opportunity then talked management terms but little management followed seeing prospect talked -- internationally? with the are a about international expansion, of in And interesting expansion. really never What about of through bit you. business the always previous international Got you you it. in developing that

Kirk Davis

Sure.

all, Europe. first execute So we well in of

on many very that able being time in chance first conferences grow develop as to business. and Europe, hangs, a It some and in of there. we're up some XX with we're different Europe, of a frankly, United spend to of down lows, and very we participating particular this very, but rich past companies in proud we've to organization. We've we're -- pipeline a higher our out quality larger, people, is part we're our an departures hard focused that we've have a think capitalize works particularly surrounding one-on-one team. over year where capabilities early can for we events highs Our a get leader several path to And It's, in started We and as this opportunity higher organization, really new and build done organization coupled whatever momentum days. the sales that high-profile our inside sales on how getting States. talented a executing there that, in couple more journey the very investment and attending by to hired strategy sales early an

is XXXX. us the to think centralized going the of win U.S., have big a I for the of there the all that under course in make leadership over So we staff combination

Michael Kupinski

biggest surprise X And different final in think you that has what on question segments, -- XXXX the opportunity to you us upside? is do your the my of

Kirk Davis

I'm a sales I'd our question. we're a Great services. going confident growth have to year, say in rebound

have to moment, years, So think of now. At Logistics in I dedicated the be executing have of and we've in I call, think, to execute pipeline. scaling that where Both to the I I is momentum and our leaders proud we're falls. in, one division, we've from. really the high remarks. early between going And highlighted And smaller had are question May, think is confidence answer that it's I it's both, that's well wins I my in some the probably and areas early them. The right we Fulfillment areas Care think which next we're given able and the in for we'll the this of but is also that well both what talk had be how about the coming pipeline

that really So how flow. their have how organization it's and in sales we the leads

inbound of of result getting some as marketing leads the we're enhanced And efforts. a now

divisions the to a So divisions the mean, But by performing we Fulfillment half it's across I are really -- little of year. the as I bit well Logistics the year, That's business. for get and going been compounding growth say think probably in see I'd into very all us. X both second

Operator

[Operator remarks. Instructions] now Kirk will ahead. closing Thank you. for That concludes hand our Q&A Davis to back session. conference Please the I go

Michael Kupinski

Well, to for call. everybody I the thank want joining

it's team. the an do I to process we've the and an made all of exciting are work work starts I'm have, But Obviously, the there's new with well you talked but all grateful couple we for aware we're exceedingly onboarding when changes, of time. working all together. and a the palpable sales within but sales about we just through have here We it, channels through momentum to inside business. sales you some land team ecosystem cycle we company think evident a have. it

identified. I are does surprised little that, a pipeline of maybe estimated it an of take with bit also So the on by we're progress we happy more and profitable, it's was we've $XX less being our very all approximate time, and that's pleasantly focused but about a cost opportunity. million conversion, little there. But and

insights we're about for progress away was again sales being the only about months some exciting more to a able So talk momentum. And the couple from that making of share we're me. and

May. forward again in I to appreciate support the look speaking with you and So

Operator

This everyone. you, today's concludes Thank event.

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

Harte Hanks (HHS) 14 Mar 242023 Q4 Earnings call transcript