HARTE HANKS INC - Press Release of Harte Hanks, Inc. dated March 17, 2025 announcing Fourth Quarter and Fiscal 2024 results

Revenue for the fourth quarter and full year of 2024 was $47.1 million and $185.2 million compared to $49.5 million and $191.5 million for the same periods of 2023 or a decrease of 4.8% and 3.3%, respectively. EBITDA for the fourth quarter and full year of 2024 was a negative $0.3 million and positive $6.5 million compared to a negative $1.1 million and positive $7.6 million for the same periods in 2023. The 2024 EBITDA loss included noncash items, $1.6 million of goodwill impairment and $1.5 million of intangible asset impairment, in the fourth quarter associated with the write-down of the InsideOut acquisition. The Company ended the year with $9.9 million in cash, zero debt, and a fully terminated Pension Plan I, positioning it for future growth in 2025 and beyond.

The Company continued to make significant progress on Project Elevate, a strategic initiative aimed at optimizing the cost structure and streamlining operations. David Fisher, Interim Chief Operating Officer, emphasized the Company's focus on driving innovation and operational excellence. "We continue to execute on Project Elevate to optimize our cost structure and streamline our organization. These initiatives have eliminated cost consistent with our expectations in 2024 and will continue to address business-critical initiatives in 2025. It’s a pivotal time as the Company continues its efforts to identify a CEO, while the organization remains focused on driving innovation and operational excellence during this transition period. The next phase of innovation will be driven by heightened strategic ownership within our segments, aligning our resources to meet each segments’ needs, and modernizing our business to exceed customers’ expectations.”

•Fulfillment & Logistics Services, $20.8 million in revenue, 44% of total – Segment revenue decreased $0.6 million or 2.7% versus the prior year quarter and EBITDA totaled $1.3 million, down 31.4%. The lower EBITDA was the result of the increased cost of warehouse space and operational costs associated with an investment in technology. Both cost increases will enable expansion across our fulfillment operations.

•Marketing Services, $11.3 million in revenue, 24% of total – Segment revenue decreased $1.6 million or 12.1% compared to the prior year quarter and EBITDA for the fourth quarter was a negative $1.5 million or in equilibrium with the prior year. The impairment of goodwill and intangible assets reduced EBITDA by $3.2 million without which the segment maintained the same earnings year over year, despite the reduction in revenues.

Full-year revenues in 2024 were $185.2 million, down 3.3% from $191.5 million in 2023. Operating income in 2024 was $2.1 million, compared to operating income of $3.4 million in 2023 or a year over year decrease of 37.7%. Net loss for 2024 was $30.3 million, or $4.15 per basic and diluted share, compared to net loss of $1.6 million, or $0.21 per basic and diluted share in 2023. The 2024 net loss was primarily attributable to the $37.5 million in pension plan termination charges.

Using its unparalleled resources and award-winning talent in the areas of Customer Care, Fulfillment and Logistics, and Marketing Services, Harte Hanks has a proven track record of driving results for some of the world’s premier brands, including PNC Bank, GlaxoSmithKline, Unilever, Pfizer, Warner Bros Discovery, Ford, FedEx, Midea, and IBM among others. Headquartered in Chelmsford, Massachusetts, Harte Hanks has over 2,000 employees in offices across the Americas, Europe, and Asia Pacific.

Our press release contains “forward-looking statements” within the meaning of U.S. federal securities laws. All such statements are qualified by this cautionary note, provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements other than historical facts are forward-looking and may be identified by words such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “seeks,” “could,” “intends,” or words of similar meaning. These forward-looking statements are based on current information, expectations and estimates and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to vary materially from what is expressed in or indicated by the forward-looking statements. In that event, our business, financial condition, results of operations or liquidity could be materially adversely affected and investors in our securities could lose part or all of their investments. These risks, uncertainties, assumptions and other factors include: (a) local, national and international economic and business conditions, including (i) market conditions that may adversely impact marketing expenditures, and (ii) the impact of economic environments and competitive pressures on the financial condition, marketing expenditures and activities of our clients and prospects; (iii) the demand for our products and services by clients and prospective clients, including (iv) the willingness of existing clients to maintain or increase their spending on products and services that are or remain profitable for us, and (vi) our ability to predict changes in client needs and preferences; (b) economic and other business factors that impact the industry verticals we serve, including competition, inflation and consolidation of current and prospective clients, vendors

and partners in these verticals; (c) our ability to manage and timely adjust our facilities, capacity, workforce and cost structure to effectively serve our clients; (d) our ability to improve our processes and to provide new products and services in a timely and cost-effective manner though development, license, partnership or acquisition; (e) our ability to protect our facilities against security breaches and other interruptions and to protect sensitive personal information of our clients and their customers; (f) our ability to respond to increasing concern, regulation and legal action over consumer privacy issues, including changing requirements for collection, processing and use of information; (g) the impact of privacy and other regulations, including restrictions on unsolicited marketing communications and other consumer protection laws; (h) fluctuations in fuel prices, paper prices, postal rates and postal delivery schedules; (i) the number of shares, if any, that we may repurchase in connection with our repurchase program; (j) unanticipated developments regarding litigation or other contingent liabilities; (k) our ability to complete reorganizations, including cost-saving initiatives; and (l) other factors discussed from time to time in our filings with the Securities and Exchange Commission, including under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 which was filed on April 1, 2024. The forward-looking statements in this press release are made only as of the date hereof, and we undertake no obligation to update publicly any forward-looking statement, even if new information becomes available or other events occur in the future.

The Company reports its financial results in accordance with generally accepted accounting principles (“GAAP”). However, the Company may use certain non-GAAP measures of financial performance in order to provide investors with a better understanding of operating results and underlying trends to assess the Company’s performance and liquidity in this press release. We have presented herein a reconciliation of these measures to the most directly comparable GAAP financial measure.

The Company presents the non-GAAP financial measure “Adjusted Operating Income” as a useful measure to both management and investors in their analysis of the Company’s financial results because it facilitates a period-to-period comparison of Operating (loss) income excluding stock-based compensation, goodwill and intangible impairment, severance and restructuring. The most directly comparable measure for this non-GAAP financial measure is Operating Income.

The Company presents the non-GAAP financial measure “EBITDA” as a supplemental measure of operating performance in order to provide an improved understanding of underlying performance trends. The Company defines “EBITDA” as Net loss adjusted to exclude income tax expense (benefit), other expense (income), net, depreciation, and amortization expense. The Company defines “Adjusted EBITDA” as EBITDA adjusted to exclude stock-based compensation, severance, restructuring, and goodwill and intangible impairment. The most directly comparable measure for EBITDA and Adjusted EBITDA is Net Income. We believe EBITDA and Adjusted EBITDA are an important performance metric because it facilitates the analysis of our results, exclusive of certain non-cash items, including items which do not directly correlate to our business operations; however, we urge investors to review the reconciliation of non-GAAP EBITDA to the comparable GAAP Net Income, which is included in this press release, and not to rely on any single financial measure to evaluate the Company’s financial performance.

The use of non-GAAP measures do not serve as a substitute and should not be construed as a substitute for GAAP performance but should provide supplemental information concerning our performance that our investors and we find useful. The Company evaluates its operating performance based on several measures, including these non-GAAP financial measures. The Company believes that the presentation of these non-GAAP financial measures in this press release is a useful supplemental financial measures of operating performance for investors because they facilitate investors’ ability to evaluate the operational strength of the Company’s business. However, there are limitations to the use of these non-GAAP measures, including that they may not be calculated the same by other companies in our industry limiting their use as a tool to compare results. Any supplemental non-GAAP financial measures referred to herein are not calculated in accordance with GAAP and they should not be considered in isolation or as substitutes for the most comparable GAAP financial measures.


	Three Months Ended December 31,				Year Ended December 31,
In thousands, except per share amounts	2024		2023		2024		2023
Operating revenue	$	47,129	$	49,491	$	185,242	$	191,492
Operating expenses
Labor	23,426		23,884		93,769		97,968
Production and distribution	14,794		16,410		56,644		59,568
Advertising, selling, general and administrative	5,730		4,602		22,781		20,673
Restructuring expense	286		5,687		2,402		5,687
Goodwill impairment charge	1,631		—		1,631		—
Intangible assets impairment charge	1,537		—		1,537		—
Depreciation and amortization expense	1,278		1,186		4,385		4,237
Total operating expenses	48,682		51,769		183,149		188,133
Operating (loss) income	(1,553)		(2,278)		2,093		3,359
Other expenses, net
Interest expense (income), net	80		15		187		(135)
Pension Plan termination charges	-		-		37,505		-
Other expenses, net	231		1,653		2,335		5,413
Total other expenses, net	311		1,668		40,027		5,278
Loss before income taxes	(1,864)		(3,946)		(37,934)		(1,919)
Income tax expense (benefit)	570		(1,969)		(7,637)		(349)
Net loss	(2,434)		(1,977)		(30,297)		(1,570)

Loss per common share
Basic and Diluted	$	(0.33)	$	(0.27)	$	(4.15)	$	(0.21)

Weighted-average common shares outstanding
Basic and Diluted	7,355		7,221		7,293		7,310


Comprehensive income, net of tax
Net loss	$	(2,434)	$	(1,977)	$	(30,297)	$	(1,570)

Adjustment to pension liabilities	2,647		243		32,273		1,664
Foreign currency translation adjustments	165		903		(1,780)		2,548
Total other comprehensive income, net of tax	2,812		1,146		30,493		4,212

Comprehensive income (loss)	$	378	$	(831)	$	196	$	2,642


In thousands	December 31, 2024		December 31, 2023

ASSETS
Current assets
Cash and cash equivalents	$	9,934	$	18,364
Accounts receivable (less allowance of $50 and $474 at December 31, 2024 and 2023, respectively)	31,648		34,313
Contract assets and unbilled accounts receivable	8,215		7,935
Prepaid expenses	1,511		1,915
Prepaid income tax and income tax receivable	938		1,758
Other current assets	1,368		928
Total current assets	53,614		65,213

Net property, plant and equipment	8,956		8,855
Right-of-use assets	22,460		25,417
Other assets	16,752		23,272
Total assets	$	101,782	$	122,757

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	21,832	$	23,176
Accrued payroll and related expenses	3,210		5,615
Deferred revenue and customer advances	1,589		3,195
Customer postage and program deposits	1,625		1,815
Other current liabilities	3,145		9,495
Short-term lease liabilities	3,736		4,815
Total current liabilities	35,137		48,111

Pension liabilities - Qualified plans	5,445		10,540
Pension liabilities - Nonqualified plan	17,103		18,630
Long-term lease liabilities	20,860		23,691
Other long-term liabilities	1,548		1,928
Total liabilities	80,093		102,900

Stockholders’ equity
Common stock	12,221		12,221
Additional paid-in capital	124,194		157,889
Retained earnings	814,623		844,920
Less treasury stock	(915,752)		(951,083)
Accumulated other comprehensive loss	(13,597)		(44,090)
Total stockholders’ equity	21,689		19,857

Total liabilities and stockholders’ equity	$	101,782	$	122,757


	Three Months Ended December 31,						Year Ended December 31,
In thousands, except per share data	2024			2023			2024			2023
Net loss	$	(2,434)		$	(1,977)		(30,297)			$	(1,570)
Income tax expense (benefit)	570			(1,969)			(7,637)			(349)
Other expenses, net	311			1,668			40,027			5,278
Depreciation and amortization expense	1,278			1,186			4,385			4,237
EBITDA	$	(275)		$	(1,092)		$	6,478		$	7,596

Stock-based compensation	330			215			1,984			1,418
Severance	—			399			8			1,775
Restructuring expense	286			5,687			2,402			5,687
Goodwill impairment charge	1,631			—			1,631			—
Intangible assets impairment charge	1,537			—			1,537			—
Adjusted EBITDA	$	3,509		$	5,209		$	14,040		$	16,476

Operating (loss) income	$	(1,553)		$	(2,278)		$	2,093		$	3,359
Stock-based compensation	330			215			1,984			1,418
Goodwill impairment charge	1,631			—			1,631			—
Intangible assets impairment charge	1,537			—			1,537			—
Severance	—			399			8			1,775
Restructuring expense	286			5,687			2,402			5,687
Adjusted operating income	$	2,231		$	4,023		$	9,655		$	12,239
Adjusted operating margin (a)	4.7		%	8.1		%	5.2		%	6.4		%


Year ended December 31, 2024	Marketing Services		Customer Care		Fulfillment & Logistics		Restructuring Expense		Unallocated Corporate		Total

Revenues	$	50,332	$	52,918	$	81,992	$	—	$	—	$	185,242
Segment labor expense	26,440		34,175		20,263		—		12,891		93,769
Other segment operating expense	11,468		6,260		52,770		—		8,927		79,425
Restructuring expense	—		—		—		2,402		—		2,402
Contribution margin	$	12,424	$	12,483	$	8,959	$	(2,402)	$	(21,818)	$	9,646
Overhead Allocation	4,074		2,355		3,198		—		(9,627)		—
Goodwill and intangible assets impairment charges	3,168		—		—		—		—		3,168
EBITDA (unaudited)	$	5,182	$	10,128	$	5,761	$	(2,402)	$	(12,191)	$	6,478
Depreciation and amortization expense	1,459		207		1,256		—		1,463		4,385
Operating income (loss)	$	3,723	$	9,921	$	4,505	$	(2,402)	$	(13,654)	$	2,093


Year ended December 31, 2023	Marketing Services		Customer Care		Fulfillment & Logistics		Restructuring Expense		Unallocated Corporate		Total
Revenues	$	52,910	$	53,620	$	84,962	$	—	$	—	$	191,492
Segment labor expense	30,938		35,345		19,418		—		12,267		97,968
Other segment operating expense	12,351		6,013		53,797		—		8,080		80,241
Restructuring expense	—		—		—		5,687		—		5,687
Contribution margin	$	9,621	$	12,262	$	11,747	$	(5,687)	$	(20,347)	$	7,596
Overhead allocation	2,984		2,774		2,891		—		(8,649)		—
EBITDA (unaudited)	$	6,637	$	9,488	$	8,856	$	(5,687)	$	(11,698)	$	7,596
Depreciation and amortization expense	1,093		500		1,142		—		1,502		4,237
Operating income (loss)	$	5,544	$	8,988	$	7,714	$	(5,687)	$	(13,200)	$	3,359


Three months ended December 31, 2024	Marketing Services		Customer Care		Fulfillment & Logistics		Restructuring Expense		Unallocated Corporate		Total
Revenues	$	11,342	$	15,024	$	20,763	$	—	$	—	$	47,129
Segment labor expense	5,660		9,628		5,351		—		2,787		23,426
Other segment operating expense	3,002		1,951		13,334		—		2,237		20,524
Restructuring expense	—		—		—		286		—		286
Contribution margin	$	2,680	$	3,445	$	2,078	$	(286)	$	(5,024)	$	2,893
Overhead Allocation	1,033		594		795		—		(2,422)		—
Goodwill and intangible assets impairment charges	3,168		—		—		—		—		3,168
EBITDA (unaudited)	$	(1,521)	$	2,851	$	1,283	$	(286)	$	(2,602)	$	(275)
Depreciation and amortization expense	362		47		499				370		1,278
Operating (loss) income	$	(1,883)	$	2,804	$	784	$	(286)	$	(2,972)	$	(1,553)


Three months ended December 31, 2023	Marketing Services		Customer Care		Fulfillment & Logistics		Restructuring Expense		Unallocated Corporate		Total
Revenues	$	12,907	$	15,248	$	21,336	$	—	$	—	$	49,491
Segment labor expense	7,118		9,349		4,346		—		3,071		23,884
Other segment operating expense	3,432		1,750		14,433		—		1,397		21,012
Restructuring expense	—		—		—		5,687		—		5,687
Contribution margin	$	2,357	$	4,149	$	2,557	$	(5,687)	$	(4,468)	$	(1,092)
Overhead Allocation	723		672		687		—		(2,082)		—
EBITDA (unaudited)	$	1,634	$	3,477	$	1,870	$	(5,687)	$	(2,386)	$	(1,092)
Depreciation and amortization expense	340		61		407		—		378		1,186
Operating income (loss)	$	1,294	$	3,416	$	1,463	$	(5,687)	$	(2,764)	$	(2,278)