Net Income Improves by $5 Million with Growth Across the Business
First Quarter Financial Highlights
- Revenues improved by 12% to $49.0 million , compared to $43.8 million in the same period in the prior year.
- Growth was broad-based, with revenue for each segment increasing, led by 28% growth in Fulfillment & Logistics services and 7% growth in Customer Care.
- Diluted EPS of $0.39 for the first quarter of 2022 vs. $(0.28) for the same period in the prior year.
- Operating income of $3.9 million , compared to an operating loss of $0.9 million in the same period in the prior year.
- Net income of $3.3 million , compared to a net loss of $1.8 million in the same period in the prior year.
- EBITDA improved to $4.5 million compared to negative $0.2 million in the same period in the prior year. 1
- Customer Care , $17.8 million in revenue, 36% of total – Revenue increased by 7.2%, or $1.2 million , from the prior year quarter and year-over-year EBITDA improved to $3.5 million from $2.6 million . New business wins for the quarter included:
- A premium television network expanded its existing services with Harte Hanks Customer Care, from event based to ongoing steady state work. Consistent delivery by Harte Hanks’ Philippines team led to high levels of customer satisfaction and contributed to the client’s decision to expand their services.
- An existing Fulfillment & Logistics client experienced a production issue with a consumer product and hired Harte Hanks to respond to its customers concerns and facilitate returns. Within a week’s notice, Harte Hanks Customer Care hired and onboarded over 200 agents to proactively engage with our clients’ consumers.
- Fulfillment & Logistics Services, $18.4 million in revenue, 38% of total – Revenue increased by 28.4%, or $4.1 million , compared to the prior year quarter; and year-over-year EBITDA improved to $2.4 million from $1.2 million . New business wins for the quarter included:
- A large nutritional CPG partner engaged Harte Hanks to fulfill and distribute custom sample kits of their top selling nutritional drinks to key consumer demographics.
- A growing eCommerce alternative to Amazon hired Harte Hanks to manage all Middle Mile freight for dozens of top selling brands. Harte Hanks was selected to manage this multi-million-dollar account based on our competitive pricing, technology platform, and comprehensive customer service.
- Marketing Services, $12.9 million in revenue, 26% of total – Revenue increased by 0.4% or $46,000 compared to the prior year quarter and year-over-year EBITDA improved to $1.5 million from $0.6 million . New business wins for the quarter included:
- A targeted healthcare marketing platform for the Pharma/OTC industry selected Harte Hanks and our Data Solutions team to secure and enhance targeted lists with a wide array of health conditions to enable our client to provide disease-state and therapy-specific educational content that powers more productive patient-physician dialogues at every step of the patient journey.
- A global technology manufacturer chose Harte Hanks to utilize its proprietary knowledge to expand the audience of customers and prospects in North America demonstrating Intent-to-purchase. Using our expertise, Harte Hanks identifies individuals as they search for products and services on the internet to help manufacturers deliver “on target” product messaging. Harte Hanks was selected because of its skill in a wide variety of data and predictive modeling solutions which are needed to execute targeted campaigns.
Harte Hanks CEO, Brian Linscott , commented: “The new, streamlined Harte Hanks has developed clear differentiators and compelling solutions that are in demand from our top-tier customer base. The result is increased and diversified revenue by segment and customer, and a stable platform for long-term profitable growth. Our growing presence in the healthcare and consumer products verticals is driving incremental opportunities, enabling us to better utilize our existing capacity in Kansas City and Boston . Additionally, we continue to prove our expertise in Customer Care, as more and more customers rely on us to deliver unique solutions for their most valuable asset, their customers. We are increasingly confident that 2022 will be a year of bottom-line growth for Harte Hanks.”
“Our focus this year, in addition to growing our business and expanding our relationships with our customers, is improving our operating margins by fully taking advantage of our asset-lite operating model and investment in technology,” continued Mr. Linscott. “The initial results validate our strategy, with consistent and growing profitability including a $5.0 million positive swing in net income. Harte Hanks is now built for sustainable profitability, and we are working to leverage our platform to create lasting shareholder value.”
Consolidated First Quarter 2022 Results
First quarter revenues were $49.0 million, up 12.1% from $43.8 million in the first quarter of 2021. All three segments delivered year-over-year growth.
First quarter operating income was $3.9 million , compared to an operating loss of $0.9 million in the first quarter of 2021. The improvement resulted from the Company’s revenue increases and cost reduction efforts.
Net income for the quarter was $3.3 million , up from a net loss of $1.8 million in the first quarter last year. Income attributable to common stockholders for the first quarter was $2.8 million, or $0.40 per basic share and $0.39 per fully diluted share, compared to loss attributable to common shareholders of $1.9 million , or $(0.28) per basic and diluted share.
Balance Sheet and Liquidity
Harte Hanks ended the quarter with $12.2 million in cash, cash equivalents and restricted cash, compared to $15.1 million at December 31, 2021 . At March 31, 2021 , the Company had no short-term debt, $5 million in long-term debt and $51.3 million in outstanding long-term pension liability. On December 31, 2021 , the Company had no short-term debt, $5 million in long-term debt and $52.5 million in outstanding long-term pension liability.
The company anticipates receiving a net operating loss (NOL) tax refund of $7.6 million in 2022 which will further enhance liquidity.