Positive Swing in Quarterly Operating Income of $3.2 Million; $18.2 Million Improvement for the Year

Harte Hanks, Inc., a global customer experience company, today announced financial results for the fourth quarter and full year period ended December 31, 2021.

Fourth Quarter Financial Highlights

• Revenues improved by 10% to $52.0 million, compared to $47.1 million in the same period in the prior year.
• Diluted EPS $0.20 for fourth quarter of 2021 vs. $0.11 for fourth quarter of 2020.
• Operating income of $2.9 million, compared to an operating loss of $0.4 million in the same period in the prior year.
• Net income of $1.8 million, compared to net income of $1.0 million in the same period in the prior year.
• EBITDA improved to $3.5 million compared to $0.3 million in the same period in the prior year.¹

Full-Year Financial Highlights

• Revenues improved by 10% to $194.6 million, compared to $176.9 million in the prior year
• $1.76 diluted EPS for the year vs. $(0.34) for 2020.
• Operating income of $7.6 million, compared to an operating loss of $10.6 million, in the prior year.
• Net income of $15.0 million, compared to a net loss of $1.7 million in the prior year.
• EBITDA improved to $10.2 million compared to a loss of ($7.0) million in the prior year .¹

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The fourth quarter segment results were as follows:

1)    Customer Care, $19.2 million in revenue, 37% of total – Revenue increased by 12.7% or $2.2 million from the prior year quarter and year-over-year EBITDA improved to $2.6 million from $2.5 million. New business wins for the quarter included:

a. Harte Hanks was selected by a regional sports network to support customer interaction for their direct-to-consumer product launch. Harte Hanks will build the self-service solution and support phone, email, chat, and SMS customer interactions as we leverage our streaming industry experience.

b. A company with an advanced ecommerce social cart that allows its customers to invite others into their transaction experience retained Harte Hanks to assist with its sports and entertainment customer interaction and digital ticket distribution experiences.

c.  A consulting company’s government practice selected Harte Hanks to support unemployment interactions and claims processing for a state government. Harte Hanks was selected due to our experience and top performance in their vendor network.

2)    Fulfillment & Logistics, $18.2 million in revenue, 35% of total – Revenue increased by 24.5% or $3.6 million compared to the prior year quarter; and year-over-year EBITDA improved to $2.1 million from $30,000. New business wins for the quarter included:

a. Expanding our partnership with a healthcare & nutrition company, winning a $1 million-plus program to fulfill prebuilt sample kits to pediatrician’s offices nationwide.

b. A long standing retail customer selected Harte Hanks to manage and deliver time-sensitive print materials on additional distribution lanes due to our on-time performance and low-cost pricing.

3)    Marketing Services, $14.6 million in revenue, 28% of total – Revenue decreased by 5.4% or $0.8 million compared to the prior year quarter and year-over-year EBITDA improved to $2.6 million from $2.1 million. New business wins for the quarter included:

a.  A global multinational technology manufacturer chose Harte Hanks to implement and execute a full-service omni-channel demand generation program. Harte Hanks was selected because of its wide variety of solutions and services required to execute the campaigns. The program leverages analytics, creative, marketing services, media buys, and outbound calling lead generation.

b.  An existing client that distributes salon professional products, where we provide data driven marketing strategy to drive topline sales through customer loyalty in the B2B beauty space, increased our existing strategy and analytics remit after we helped them achieve $1.4 billion in annual sales.

Harte Hanks CEO, Brian Linscott, commented: “Our strategy and focus on core offerings enabled an improvement in our financial performance as we continue to service our valued customers.  Our restructuring efforts are now behind us, our shares have been listed on the Nasdaq Global Market, and we have significantly improved our balance sheet.  The benefits of our new, asset-lite operating model have been validated by our results with a $17.7 million revenue increase for the year; driving an $18.2 million increase in operating income and a $16.7 million increase in net income. The financial results for both the quarter and full-year clearly demonstrate the substantially improved earnings power of Harte Hanks.”

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“We enter 2022 a stronger company with sustainable profitability growth, sufficient liquidity, and a loyal customer base,” continued Mr. Linscott. “Our focus in 2022 is expanding our gross and operating margins across all segments, and to generate free cash flow. We are encouraged by the early results so far this year. New revenue opportunities are giving us confidence that current revenue levels are sustainable. We are even more confident in our ability to again generate positive net income for the full year, with year-over-year improvement in EBITDA and cash generation. The future of Harte Hanks is bright.”

Fourth Quarter 2021 Results

Fourth quarter revenues were $52.0 million, up from $47.1 million in the fourth quarter of 2020 and up sequentially from $49.6 million in the third quarter of 2021. Growth in both our Customer Care and Fulfillment & Logistics segments led our fourth quarter performance.

Fourth quarter operating income was $2.9 million, compared to an operating loss of $0.4 million in the fourth quarter of 2020. The improvement resulted from the Company’s revenue increases and cost reduction efforts, including a 22% reduction in advertising, selling, general and administrative expenses.

Fourth quarter Adjusted Operating Income² was $4.7 million, compared to $1.2 million in the fourth quarter of 2020. The improvement in Adjusted Operating Income reflects improved revenue and continued cost-cutting actions. Income attributable to common stockholders for the fourth quarter was $1.4 million, or $0.20 per both basic and diluted share.

Full-Year 2021 Results

Full-year revenues were $194.6 million, up from $176.9 million in 2020. Full-year operating income was $7.6 million, compared to an operating loss of $10.6 million in 2020. Adjusted Operating Income² was $15.5 million, compared to an Adjusted Operating Loss of $0.4 million in 2020. Income attributable to common stockholders was $12.6 million, or $1.85 and $1.76 per basic and diluted share, respectively.

Balance Sheet and Liquidity

Harte Hanks ended the year with $15.1 million in cash, cash equivalents and restricted cash, compared to $33.6 million on December 31, 2020. 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. On December 31, 2020, the Company had $4.9 million in short-term debt, $22.2 million in long-term debt and $67.5 million in outstanding long-term pension liability. The $22.1 million reduction in total debt was due primarily to the paydown of debt during the year and the forgiveness of the Company’s PPP loan.

The company anticipates receiving a net operating loss (NOL) tax refund of $7.8 million in 2022 which will further enhance liquidity.

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