Harte Hanks (1)Harte Hanks reported first quarter 2014 revenues of $132.7 million compared to $132.4 million in the same quarter last year, a 0.3% increase. This is the first quarterly revenue increase reported by the company since 2011. The increase in revenues was primarily due to a significant increase, over the prior year quarter, in our Select vertical due to a new client win and expansion of relationships with existing clients.

In addition, our Healthcare Insurance and Pharmaceuticals vertical increased 24% due to the implementation of new mail business and our Automotive and Consumer Brands vertical increased 14%. These gains were offset by our Retail, Technology and Financial verticals which decreased 8% to 10%, each. These declines were from a combination of client reductions in marketing spend and client losses.

Operating income for the quarter was $4.6 million compared to $9.4 million for the same quarter last year. The operating income decline was a result of an increase in outsourced revenues and expenses associated with changes we are making in the business, including investments in key personnel to generate revenue growth. Labor costs increased from these investments in key individuals as well as headcount reductions which resulted in approximately $1.0 million of severance, the benefits of which will impact our performance from April onwards. Production costs increased as a result of higher expenses related to an increase in outsourced revenues. Other general businesses expenses were held largely flat.

First quarter 2014 diluted earnings per share from continuing operations were $0.03 as compared to $0.10 for the same quarter in 2013. Excluding the previously mentioned severance and the 2013 gains from the sale of land and currency exchange, first quarter diluted earnings per share from continuing operations were $0.04 for 2014 compared to $0.08 in 2013.

Capital expenditures for the quarter were $2.7 million compared to $4.7 million in the prior year’s first quarter.

Commenting on the first quarter performance, Chief Executive Officer Robert Philpott said,  “First quarter 2014 results highlight that Harte Hanks is now well underway with the changes required of an industry leader. I am delighted that we have stemmed the decline on our revenues although the battle for consistent growth remains. We continue to target a reduction in our cost base, especially the effective use of labor, as we strive to become more competitive in the market. This is an on-going process and the benefits of these actions will be felt in the months ahead. One quarter of revenue growth will not distract management from focusing on expense management when further action is required.

“While I am pleased with the progress we made this quarter, the reasons for revenue volatility we have previously discussed are still present. However, I am confident that we are moving in a positive direction towards achieving our twin long-term goals of revenue growth and resource efficiency and will enhance stockholder value.”

About Harte Hanks:

Harte Hanks is one of the world’s leading, insight-driven multi-channel marketing organizations, delivering impactful business results for some of the world’s best-known brands. Through strategic agencies and our core marketing services, we develop integrated solutions that connect brands with prospects and customers, moving them beyond awareness to transactions and brand loyalty. Visit the Harte Hanks website at http://HarteHanks.com or call (800) 456-9748.

Source: Harte Hanks Earnings Release