Third quarter 2018 revenues were $63.6 million, compared to $94.4 million during the same quarter last year, a $30.8 million, or a 32.7%, decline. This decline was due to lower revenue in all industry verticals, led by Retail and Consumer Brands, along with the absence of 3Q Digital revenue which contributed revenue of $9.4 million in the third quarter of 2017. Excluding this impact, third quarter 2018 revenue would have declined $21.5 million or 25.2%. The 3Q Digital business was sold in the first quarter of 2018.
Third quarter operating loss was $10.4 million, compared to operating income of $950,000 in the same quarter last year. The loss was due to lower revenue, which was partially offset by the impact of our cost reduction efforts which lowered operating expenses, including lower managed payroll (net of higher severance expense), lower production and distribution expenses, as a result of lower transportation costs, and the absence of expenses related to the company’s 3Q Digital business. Also impacting third quarter 2018 operating loss was a $3.8 million asset impairment charge relating to certain internally developed software.
Third quarter 2018 Adjusted Operating Loss was $8.5 million, compared to Adjusted Operating Income of $1.8 million in the year-ago quarter. The decline in Adjusted Operating Income was due to the impact of lower revenue, partially offset by our cost reduction efforts, which reduced expenses.
Loss attributable to common stockholders for the third quarter of 2018 was $10.1 million, or Basic and Diluted Loss per common share of $1.62. In the year ago period, the loss was $2.5 million, or Basic and Diluted Loss per common share of $0.40.
“In a little over a year, we have turned over the entire independent board and replaced senior management. The new Harte Hanks leadership team is taking aggressive action to restore operational and financial credibility to our hard-working employees, valued customers and shareholders,” commented Alfred V. Tobia Jr., Harte Hanks’ Chairman. “We are refocusing attention on the traditional Harte Hanks service lines, which remain profitable. The board and the Office of the CEO is committed to establishing a clear strategy and achievable goals.”
“We expect to generate positive quarterly EBITDA at some point in the second half of 2019 and believe we have sufficient cash, ample working capital and more than $19 million on an undrawn revolving line of credit which provides the necessary runway to achieve this goal,” Tobia added. “In addition, by the end of 2019, we anticipate receipt of more than $13 million in tax refunds, which would further bolster our balance sheet, as we work to transition to profitability.”
Jon Biro, Chief Financial Officer, added, “In its first 60 days, the current Harte Hanks leadership took action to reduce annualized fixed costs by more than $6 million. Heading into the fourth quarter we are working with leaders across each of our business lines to identify additional areas for potential cost savings. Based on the initiatives we are working on today, I believe there will be meaningful opportunities to further streamline our organization. We will enter 2019 a leaner, more focused organization; I am confident that we have the balance sheet and resources needed to restore profitability and revitalize growth.”
Source: Harte Hanks Earnings Release