- 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.
This article first appeared on
GuruFocus.
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