• Revenue: $47.6 million, a 1.1% increase from $47.1 million in Q3 2023.
• Customer Care Revenue: $13.1 million, up from $11.8 million in Q3 2023.
• Sales Services Revenue: $4.2 million, increased from $2.2 million in Q3 2023.
• Marketing Services Revenue: $9.1 million, down from $10.6 million in Q3 2023.
• Fulfillment and Logistics Revenue: $21.3 million, decreased from $22.5 million in Q3 2023.
• Operating Expenses: $45.7 million, including $836,000 in restructuring expenses, compared to $44.2 million in Q3 2023.
• Operating Income: $1.9 million, down from $2.9 million in Q3 2023.
• Adjusted Operating Income: $3.1 million, compared to $3.2 million in Q3 2023.
• Adjusted Operating Margin: 6.5%, compared to 6.9% in Q3 2023.
• EBITDA: $2.9 million, down from $3.9 million in Q3 2023.
• Adjusted EBITDA: $4.1 million, compared to $4.2 million in Q3 2023.
• Cash and Cash Equivalents: $5.9 million as of September 30, 2024, compared to $13.3 million as of September 30, 2023.
• Cash on Hand: $9.8 million as of October 31, 2024.
• Line of Credit: $25 million, not drawn against, extended until June 2025.
• Pension Plan Termination: $6.1 million cash contribution in June 2024, with an additional $1.1 million in Q3 2024 for final expenses.

• Warning! GuruFocus has detected 2 Warning Signs with HHS.

Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Harte-Hanks Inc (NASDAQ:HHS) reported a 1.1% year-over-year revenue increase in Q3 2024, showing improvement from previous quarters.
• The company has secured new clients and expanded programs with existing customers, including a top 15 financial services client and a global luxury automotive brand.
• The Customer Excellence and Growth (CEG) division aims to enhance customer experience and drive growth through data and AI capabilities.
• Project Elevate is on track to deliver $6 million in EBITDA improvement through cost optimization and operational efficiencies.
• Harte-Hanks Inc (NASDAQ:HHS) has no debt and maintains a $25 million line of credit, providing financial flexibility.

Negative Points

• The company anticipates a low- to mid-single digit revenue decline in Q4 2024, indicating potential volatility in revenue growth.
• Operating income decreased to $1.9 million in Q3 2024 from $2.9 million in the same quarter of 2023.
• Cash and cash equivalents decreased to $5.9 million as of September 30, 2024, compared to $13.3 million a year earlier.
• The marketing services segment experienced a revenue decline due to customer budget reductions and program terminations.
• Project Elevate incurred restructuring charges of $836,000 in Q3 2024, with additional expenses expected through Q4 2025.

Q & A Highlights

Q: Can you elaborate on the revenue growth in the customer care and sales services segments? A: David Garrison, CFO, explained that the customer care segment saw revenues of $13.1 million in Q3 2024, up from $11.8 million the previous year, driven by expanded workloads from entertainment industry clients. Sales services increased to $4.2 million from $2.2 million, primarily due to increased volume from a large client.

Q: What factors contributed to the decline in the marketing services segment? A: David Garrison, CFO, noted that marketing services revenues fell to $9.1 million from $10.6 million due to customer budget reductions and the conclusion of certain programs.

Q: How is the company addressing the decline in fulfillment and logistics revenues? A: David Garrison, CFO, mentioned that the decline to $21.3 million from $22.5 million was due to lower logistics volume and rates. However, new and expanded programs in fulfillment operations are expected to counterbalance this.

Q: Could you provide more details on Project Elevate and its expected impact? A: David Garrison, CFO, stated that Project Elevate aims for a $6 million EBITDA improvement through personnel optimization, contract streamlining, and enhanced warehouse operations. The project involves restructuring costs and is expected to conclude in Q4 2025.

Q: What is the status of the company's pension plan termination? A: David Garrison, CFO, explained that the pension plan was terminated in June 2024, with assets liquidated to purchase annuities for participants. The company contributed $6.1 million in June and an additional $1.1 million in Q3 for final expenses, reducing liabilities significantly.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.