Harte Hanks (NYSE: HHS) reported fourth quarter 2013 revenues of $152.2 million compared to $157.8 million in the same quarter last year, a 3.5% decrease. The decline in revenues was primarily driven by a 13.6% decline in our Retail vertical due to clients making mail format changes. In addition, several of client segments in the technology industry continue to struggle, and this was reflected in the Technology vertical decreasing 4.3%.
These decreases were offset by growth in the Healthcare vertical of 26.0%, largely from supporting healthcare plan enrollment activities in the fall, as well as an increase of approximately 3.4% in the Automotive and Consumer brands vertical and 2.6% in our Financial vertical. Select Markets, Harte Hanks’ smallest revenue vertical, declined 16.2% in the quarter.
Operating income for the quarter was $12.5 million compared to $21.1 million for the same quarter last year. Included in the quarter were $1.6 million for severance, $1.4 million in consulting fees and $1.2 million for a legal settlement and related legal fees. Adjusting for these charges, operating income would have declined 20.9% for the quarter compared to the fourth quarter of 2012. Consistent with our third quarter, most of the margin decline came from business lines with labor costs that in the short-term do not vary in proportion to revenue changes.
For the year, the company’s revenue was $559.6 million compared to $581.1 million last year. 2013 income from continuing operations was $24.4 million compared to $35.4 million for the same period last year.
Commenting on the fourth quarter performance, Chief Executive Officer Robert Philpott said: “Management focus has continued on structural re-organization and alignment of the business. This is reflected in the actions and charges we have taken in both the third and fourth quarters. We also made some further progress on expense management towards the end of the year.
“We had anticipated that the deterioration in the business performance would accelerate in the fourth quarter, following a disappointing September. However this proved to be too pessimistic a view on revenue. We were encouraged by the revenue performance for most of our verticals in the fourth quarter, including the renewal rate for major client projects. This bodes well for 2014.”
“Although this is a time of transition at Harte Hanks, we remain confident that we have a fundamentally sound business and that we are developing a concrete plan to return the company to growth. We will continue to examine the expense base in the business aggressively which will, in turn, afford management the opportunity to invest in those markets which offer the potential for long-term growth.”
Source: Harte Hanks Press Release
