Harte Hanks, Inc. (HHS) research, news, and more from GeoInvesting

Company description

Thu, 01 Dec 2022 14:20:50 GMT

Harte-Hanks Inc is a marketing services company that provides multichannel marketing solutions as well as consulting, data analytics, and strategic assessment. The company's offerings focus on business-to-business, retail, finance, and automotive segments through digital, social, mobile, and print media offerings. Harte-Hanks strives to develop better customer relationships through its marketing and analytical services for clients. The majority of its revenue is derived from its marketing services in the retail, technology, and consumer brand segments.

Research

Tue, 25 Jun 2024 15:12:02 GMT

Harte-Hanks, Inc. (NASDAQ:HHS) ($7.59, $54.9M market cap) has finalized the successful divestment and termination of its obligations to its pension plan. Recall, in past conference calls management had discussed cost saving measures that could reduce cost by $16 million over the next two years.

As we previously discussed, if everything else remains constant this could possibly add nearly $2 per share in earnings.

We imagine this termination is part of those cost saving measures, as it might fit into a broader context of financial prudence where companies often look for ways to offload long-term liabilities, especially in uncertain economic times. Such strategic moves not only improve a company's immediate financial health but also streamline operations and focus on core business areas.

“This plan termination and annuity agreement is a positive step to increasing Harte Hanks cash flow, as our Plan I pension payments will end as of July 31st, 2024, and our related PBGC insurance premium payments will stop shortly thereafter. This termination will also further streamline our balance sheet, removing the ongoing obligation related to Plan I. More importantly, we're ensuring participants will be well taken care of by Nationwide, a company dedicated to extraordinary customer service," commented David Garrison, Chief Financial Officer of Harte Hanks.”

Research

Tue, 02 Apr 2024 14:41:25 GMT

Harte-Hanks, Inc. (NASDAQ:HHS) ($7.33, $52.8M market cap) reported strong non-GAAP EPS in its Q4 2023 release which we highlighted in our March 15, 2024 email. Today we wanted to highlight some InfoArb we found in the related conference call transcript.

“In October, we engaged the Kearney organization, an international global consulting firm that specializes in business transformation, to augment and accelerate our efforts. Executive and middle management team leaders have done an extraordinary job engaging with Kearney and investing their time in over 200 diligence and discovery sessions. As a result, we have identified approximately $16 million in cost reductions to implement over two years, of which an estimated $6 million will occur in 2024.”

With only 7.3 million shares outstanding, if everything else remained constant, a $6 million cost reduction could add $0.82 in EPS for 2024 and $2.19 over the two year period.

HHS operates as a customer experience company in the United States and internationally.

Research

Fri, 15 Mar 2024 04:00:00 GMT

Reported Q4 2023 results:

Sales of $49.5 million vs $54.8 million in the prior year and ahead of analyst estimates of $47.0 million
EPS of $0.50 vs $0.13 in the prior year and well ahead of analyst estiamtes of $0.12

"we are taking steps, in collaboration with the Kearney Organization, to optimize our cost structure to enable us to invest in sales and marketing without depleting our cash reserves," continued Davis. "We have identified costs we can eliminate totaling approximately $16 million over next two years with $6 million of savings expected in 2024. David Fisher, our new Chief Transformation Officer, is working closely with David Garrison, our new Chief Financial Officer, to execute these important changes."

"I believe the opportunity for Harte Hanks is significant," concluded Davis. "Our solutions meet the current and expected needs of customers, and we drive tangible value for clients and their customers. We can deliver organic growth, expanding the number of logos we work with and deepening our relationship with these customers over time. We are confident that we can streamline our organization to expand profitability and cash generation as we grow. The benefits of Project Elevate are expected to become evident in the second half of 2024 and into 2025."

Research

Wed, 03 May 2023 15:33:28 GMT

Removing HHS From Select Long Model Portfolio

Despite the board authorizing a $6.5 million buyback, which represents roughly 10% of the total outstanding shares, we have decided to remove HHS from our model portfolio as recession fears have slowed down customer projects. Conference call comments show the company has limited visibility beyond Q2:

“We have limited visibility beyond the second quarter, and we have reevaluated our expectations for the year. So our previously shared expectations for fiscal year 2023 are no longer relevant.”

Harte-Hanks, Inc. (NASDAQ:HHS) ($8.50, $63.6M market cap), operates as a customer experience company in the United States and internationally. The company announced Q1 2023 results:

Sales of $47.1 million vs $49.1 million in the prior year and below analyst estimates of $50.5 million
Loss per share of $0.11 vs EPS of $0.39 and missing analyst estimates of EPS of $0.20

“As discussed last quarter, we expected modest revenue gains in Q1 in comparison to Q1 2022 despite a tough comparison due to non-continuing pandemic related projects and a large recall event that fell in the first half of last year. Instead, as a result of the economic environment we have experienced reduced client spend and delays in project starts that drove a modest decline in revenue for the quarter. First quarter revenue pressure was partially offset by incremental revenue from the InsideOut acquisition, coupled with increased lower-margin logistics revenue when compared to last year. Notwithstanding the lower first quarter revenues, we delivered positive EBITDA that demonstrated the durability of our business model. For the second quarter, we expect sequential improvement to EBITDA."

“In addition, the Board of Directors has authorized an expansion of our capital allocation strategy to include a new share buyback program. This action underscores the Board's confidence in the strength of our balance sheet, and our ability to execute our strategy to maximize shareholder value and deliver sustainable profits,"

Research

Wed, 08 Mar 2023 05:00:00 GMT

Harte-Hanks, Inc. (NASDAQ:HHS) ($10.20, $74.6M market cap), operates as a customer experience company in the United States and internationally. The company announced Q4 2022 results:

Sales of $54.8 million vs $52.0 million in the prior year, ahead of analyst estimates of $52.2 million
Non-GAAP EPS of $0.13 vs non-GAAP EPS $0.40 of there is an additional $0.17 and $0.08 respectively in expenses in the quarters, we need to determine if these are one time in nature. If they are, non-GAAP EPS for Q4 2022 at $0.30 vs $0.48. Analysts EPS estimates for the quarter were $0.10
Full year non-GAAP EPS for 2022 was $1.98, giving the stock a current P/E of 5.2.

The conference call included some InfoArb on the company’s pension liability, where management stated it is in the process of transferring part of the liability to a third party:

“We have begun the process to fully fund and transfer one of our qualified pension plans to a third party. We expect this process to take approximately 18 months to complete and expect to make a $7 million contribution to the plan prior to the transfer. As of December 31, 2022, we had nothing drawn on our line of credit and maintained a $25 million credit facility.”

Currently, the company has qualified plans that total $18.7 million and a non-qualified plan liability of $19.1 million. In our Fireside Chat with the CEO, he stated that HHS is looking at alternatives to remove the pension liabilities from the balance sheet.

As this occurs, we believe the company’s valuation multiples should expand. In the meantime, we think it’s reasonable for the stock to trade at a trailing P/E range of 10 to 15, which would translate into a price of $19.98 to $29.70.

Also, on the related Q4 conference call, the CEO said he expects EBITDA to grow significantly in 2023.

“We expect continued positive net income and a significant year-over-year improvement in full year EBITDA, driving higher free cash flows during 2023 as we target revenue and EBITDA growth for the full year even when considering a challenging first quarter comparison.”

Contributor Articles

Mon, 19 Dec 2022 13:08:51 GMT

Scott Weis of Semco Capital has offered a bullish pitch on Harte-Hanks, Inc. (NASDAQ:HHS) ($12.15, $88.1M market cap), a 100 year old company that is a classic big cap inside a microcap. The revenue base for this $80m market cap is >$200m. HHS struggled for years and has historically been known as a paper and mailing company. That is not the case any more.

He believes with modest growth and 10% EBITDA margins (that have the potential to expand another 100-400 bps) that HHS deserves a multiple of 10x EPS or 8-10x EBITDA. Both metrics put the stock >$20/share or 73% upside.

Scott Weis, Semco Capital

Please see the full pitch here.

(Please note that we are also adding HHS to our Select Long Disclosures Model Portfolio )