Harte Hanks Inc (HHS) 2023 Q2 法說會逐字稿

Greetings and welcome to the Harte Hanks's second-quarter 2023 earnings call. (Operator Instructions) Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Tom Baumann of FNK IR.

歡迎參加 Harte Hanks 的 2023 年第二季度財報電話會議。 （操作員說明）請注意，本次會議正在錄製中。現在我將會議交給東道主 FNK IR 的 Tom Baumann 先生。

Sir, the floor is yours.

先生，地板是你的了。

Thank you. Hosting the call today are Kirk Davis, Chief Executive Officer; and Lauri Kearnes, Chief Financial Officer.

謝謝。今天主持電話會議的是首席執行官 Kirk Davis；勞裡·卡恩斯 (Lauri Kearnes)，首席財務官。

Before we begin, I want to remind participants that during the call, management's prepared remarks may contain forward-looking statements that are subject to risks and uncertainties. Management may also make additional forward-looking statements in response to your questions today. Therefore, the company claims protection under Safe Harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

在開始之前，我想提醒與會者，在電話會議期間，管理層準備的發言可能包含前瞻性陳述，這些陳述存在風險和不確定性。管理層還可能針對您今天的問題做出額外的前瞻性陳述。因此，該公司要求 1995 年《私人證券訴訟改革法案》中包含的前瞻性陳述受到安全港保護。

Actual results may differ from results discussed today and therefore, we refer you to a more detailed discussion of these risks and uncertainties in the company's filings with the SEC. In addition, any projections as to the company's future performance represented by management include estimates as of today, August 10, 2023, and the company assumes no obligation to update these projections in the future as market conditions change.

實際結果可能與今天討論的結果有所不同，因此，我們建議您參閱該公司向 SEC 提交的文件中對這些風險和不確定性的更詳細討論。此外，管理層對公司未來業績的任何預測均包括截至今天（2023 年 8 月 10 日）的估計，公司不承擔未來隨著市場條件變化而更新這些預測的義務。

This webcast and certain financial information provided in the call, including reconciliations of non-GAAP financial measures to comparable GAAP financial measures are available in the earnings press release that was issued shortly after the market closed. A copy of that press release and other corporate disclosure is available on the Investor Relations section of Harte Hanks website at hartehanks.com.

該網絡廣播和電話會議中提供的某些財務信息，包括非公認會計原則財務指標與可比公認會計原則財務指標的調節表，可在收市後不久發布的收益新聞稿中找到。該新聞稿和其他公司披露的副本可在 Harte Hanks 網站 hartehanks.com 的投資者關係部分獲取。

With that, I would now like to turn the call over to Kirk. Kirk, welcome to Harte Hanks.

現在，我想將電話轉給柯克。柯克，歡迎來到哈特·漢克斯。

Thank you, Tom, and good afternoon. This is my first earnings call as CEO of Harte Hanks, having joined the company just eight weeks ago. However, I have long been aware of Harte Hanks as a key player in the industry. My familiarity with the company and the findings from my due diligence completed before accepting this opportunity were largely confirmed in my first month.

謝謝你，湯姆，下午好。這是我作為 Harte Hanks 首席執行官的第一次財報電話會議，我八週前剛剛加入該公司。然而，我很早就意識到哈特·漢克斯是這個行業的關鍵人物。我對公司的熟悉程度以及在接受這個機會之前完成的盡職調查的結果在我的第一個月得到了很大程度上的證實。

Harte Hanks has a world-class team, significant expertise, and valuable offerings that are well aligned with the needs of our global customers. My predecessor did an excellent job in materially improving our balance sheet. He also effectively aligned the business with its current opportunities, eliminating unprofitable business lines, and rationalizing the cost structure. The business today is profitable on an EBITDA-generating basis, with relatively stable revenues, solid relationships with a customer base comprised of global brands, and offerings that are well positioned to grow.

Harte Hanks 擁有世界一流的團隊、豐富的專業知識和有價值的產品，完全符合我們全球客戶的需求。我的前任在實質性改善我們的資產負債表方面做得非常出色。他還有效地將業務與當前機會結合起來，消除了不盈利的業務線，並合理化了成本結構。如今，該業務在 EBITDA 產生的基礎上實現盈利，收入相對穩定，與由全球品牌組成的客戶群建立了牢固的關係，並提供了有利於增長的產品。

I've come to Harte Hanks with 25 years of CEO experience in publishing and digital transformation. I've had the privilege of leading or advising C-level executives, Boards, investors, and key decision-makers within publicly held and private equity-backed publishing and digital media verticals.

我加入 Harte Hanks 時已在出版和數字化轉型方面擁有 25 年的首席執行官經驗。我有幸為上市公司和私募股權支持的出版和數字媒體垂直行業的首席高管、董事會、投資者和關鍵決策者提供領導或建議。

I understand the needs of a modern corporation, the areas where Harte Hanks can provide value in the digital world, and the pain points of our customers. I also bring significant experience in business development, M&A, and B2B and B2C revenue-generating activities. Harte Hanks has a solid platform for sustainable profitability. My job is to evolve the organization, so it becomes a solid platform for long-term growth, while preserving and, in fact, expanding its profitability over time.

我了解現代企業的需求、Harte Hanks 可以在數字世界中提供價值的領域以及我們客戶的痛點。我還在業務開發、併購以及 B2B 和 B2C 創收活動方面帶來了豐富的經驗。哈特·漢克斯擁有可持續盈利的堅實平台。我的工作是發展組織，使其成為長期增長的堅實平台，同時保持並事實上隨著時間的推移擴大其盈利能力。

For the last few years, Harte Hanks, like many companies, faced changes directly resulting from the pandemic. During the pandemic, as our customers had to change their business practices and find new digital ways to interact and engage with customers, we saw new opportunities; new opportunities which led to meaningful and incremental growth. We picked up call center projects, logistics projects, marketing services projects that all helped our customers navigate the pandemic.

在過去的幾年裡，哈特·漢克斯和許多公司一樣，面臨著由疫情直接導致的變化。在大流行期間，由於我們的客戶必須改變他們的業務實踐並尋找新的數字方式與客戶互動和接觸，我們看到了新的機會；新的機遇帶來了有意義的增量增長。我們選擇了呼叫中心項目、物流項目、營銷服務項目，這些項目都幫助我們的客戶應對了這一流行病。

As my predecessor said for the last few quarters, much of the business was going to naturally run off as a new normal was defined and our customers adapted to the environment. However, that run off occurred at a slower pace than we projected, which benefited our results over the past few years, but is now fully wound down.

正如我的前任在過去幾個季度所說的那樣，隨著新常態的確定以及我們的客戶適應環境，大部分業務將​​自然消失。然而，這次流失的速度比我們預期的要慢，這有利於我們過去幾年的業績，但現在已經完全結束。

Over the past few quarters, we've also experienced the macro pressures that are prevalent in the market. And as a result, have seen spending slowed and program re-evaluations from existing customers who are more cognizant of their expense structures than they were in the past. The result has been modest headwinds on revenue. We haven't yet seen signals that this behavior is changing. So we believe the third and fourth quarters of 2023 will look, by and large, like the second quarter from a revenue standpoint.

過去幾個季度，我們也經歷了市場普遍存在的宏觀壓力。結果，支出放緩，現有客戶對計劃進行重新評估，他們比過去更了解自己的支出結構。結果是收入受到了適度的阻力。我們還沒有看到這種行為正在改變的信號。因此，我們認為從收入角度來看，2023 年第三和第四季度總體上將與第二季度相似。

Effectively, from a revenue standpoint, we think the Q2 results we are reporting today should serve as our near-term baseline. My focus today is on accelerating the organic growth opportunities we're built for. We know demand for digital solutions is growing. Companies are looking to enhance their marketing service capabilities, especially lead generation.

實際上，從收入的角度來看，我們認為今天報告的第二季度業績應該作為我們的近期基準。我今天的重點是加速我們的有機增長機會。我們知道對數字解決方案的需求正在增長。公司正在尋求增強其營銷服務能力，尤其是潛在客戶開發能力。

And companies are looking to tie fulfillment services to marketing to better engage and care for their customers, so that we can better capitalize on these opportunities. We need to market our company more effectively and improve our sales and marketing functions. Initially, we will reallocate costs from within the company for any additional investment we deem appropriate. Toward this end, we expect to name a new Senior Vice President of Sales before year-end, replacing a sales leader who recently retired.

公司正在尋求將履行服務與營銷聯繫起來，以更好地吸引和關心他們的客戶，以便我們能夠更好地利用這些機會。我們需要更有效地營銷我們的公司並改善我們的銷售和營銷職能。最初，我們將從公司內部重新分配成本，用於我們認為適當的任何額外投資。為此，我們預計在年底前任命一位新的銷售高級副總裁，以取代最近退休的銷售主管。

This is an opportunity to tap an executive, with skills and experience for our near- and long-term opportunities. Specifically, we expect to hire sales leadership and sales talent with deep experience in digital solutions, cross-selling, and expertise in executing land-and-expand strategies to take advantage of our rich client base.

這是一個為我們的近期和長期機會挖掘具有技能和經驗的高管的機會。具體來說，我們希望聘請在數字解決方案、交叉銷售以及執行土地和擴張戰略方面擁有豐富經驗的銷售領導和銷售人才，以利用我們豐富的客戶群。

Simultaneously, to create more expansive customer relationships, we are cross-training our existing sales team to become enterprise-wide sellers as opposed to representing select services that we offer. We have undertaken an audit of all elements of our lead generation and go-to-market strategies. We are hyper-focused on this. As a result, we expect to have a more capital-efficient, go-to-market strategy that supports our growth ambitions.

同時，為了建立更廣泛的客戶關係，我們正在對現有的銷售團隊進行交叉培訓，使其成為企業範圍內的銷售人員，而不是代表我們提供的精選服務。我們對潛在客戶開發和進入市場策略的所有要素進行了審核。我們非常關注這一點。因此，我們期望有一個資本效率更高的進入市場戰略來支持我們的增長雄心。

To augment our internal focus on growth, we are launching a partnership next week with a business development company that will facilitate opportunities for us with Fortune 1000 clientele. Think of the engagement as sales as a service, designed to mirror a team of direct sales resources.

為了加強我們內部對增長的關注，我們將於下週與一家業務開發公司建立合作夥伴關係，這將為我們與財富 1000 強客戶提供更多機會。將參與視為銷售即服務，旨在反映直銷資源團隊。

So this will be additive to our internal efforts. They bring an extensive strategic rolodex and deep industry insights. In turn, we offer attractive services that they are eager to promote within their network.

因此，這將有助於我們的內部努力。他們帶來了廣泛的戰略名片和深刻的行業見解。反過來，我們提供他們渴望在其網絡中推廣的有吸引力的服務。

And speaking of sales as a service, I'd like to highlight my enthusiasm for the company, InsideOut, that we acquired late last year. Working closely with the dynamic founder of this business, we will incorporate and market this division as part of an end-to-end revenue generation solution for mid and large enterprises grappling with revenue and growth challenges.

說到銷售即服務，我想強調我對我們去年年底收購的 InsideOut 公司的熱情。我們將與該業務充滿活力的創始人密切合作，將該部門納入並營銷，作為端到端創收解決方案的一部分，為應對收入和增長挑戰的中型和大型企業提供解決方案。

Historically, we've excelled in combining powerful data solutions with our marketing services capabilities to deliver marketing qualified leads for our customers. We'll now be featuring our ability from end to end, a full-cycle offering that links leveraging data, creating demand for a product of service, and closing deals. This strikes us as a highly scalable solution.

從歷史上看，我們擅長將強大的數據解決方案與我們的營銷服務能力相結合，為我們的客戶提供合格的營銷線索。現在，我們將展示我們端到端的能力，這是一個將數據利用、創造對服務產品的需求以及完成交易聯繫起來的全週期產品。這是一個高度可擴展的解決方案，給我們留下了深刻的印象。

The enhancements to our sales and marketing functions will take some time, at least a couple of quarters. Abstinent recession, we expect to see benefits in 2024. I believe that once these investments are in place, we can step up our growth rate and achieve more effective cross-selling. And higher revenue should result in expanded EBITDA margins.

我們銷售和營銷職能的增強需要一些時間，至少需要幾個季度。抑制經濟衰退，我們預計將在 2024 年看到效益。我相信，一旦這些投資到位，我們就可以加快增長率並實現更有效的交叉銷售。更高的收入應該會導致 EBITDA 利潤率擴大。

I'd now like to discuss how we're thinking about our cost structure. I'm confident we can further lower costs in our business without hindering our ability to delight customers. We need to quickly evolve our culture around this aspect of our company. As I get started here, there are a couple of targeted cost-out efforts going on that are timely and important.

我現在想討論一下我們如何考慮我們的成本結構。我相信我們可以進一步降低業務成本，而不會影響我們取悅客戶的能力。我們需要圍繞公司的這一方面快速發展我們的文化。當我開始這裡時，有一些有針對性的成本削減工作正在進行，這些工作是及時且重要的。

Last quarter, we announced the convergence of our customer care and marketing services segments. We are also focused on reducing costs associated with customer churn. Also, in the normal course of business, we operate with annual budgets. And if we're behind, it's generally expected that incremental steps be taken throughout the year to bridge the gaps.

上季度，我們宣布整合客戶服務和營銷服務部門。我們還致力於降低與客戶流失相關的成本。此外，在正常業務過程中，我們按年度預算運營。如果我們落後了，人們普遍預計全年會採取漸進措施來彌補差距。

That's what's happening today. As of now, we're in the early stages of thinking about how we formally assess our full potential for material improvement in our cost structure, and how we organize and incentivize our teams to achieve it. We'll provide an update on these initiatives next quarter. I'll just add that maintaining our profitability is a key goal of this management team and the Board of Directors.

這就是今天發生的事情。截至目前，我們正處於思考如何正式評估成本結構材料改進的全部潛力，以及如何組織和激勵我們的團隊實現這一目標的早期階段。我們將在下季度提供這些舉措的最新信息。我只想補充一點，保持我們的盈利能力是該管理團隊和董事會的主要目標。

Last, I'd be remiss if I didn't acknowledge that we, too, recognize that generative artificial intelligence represents an important opportunity for our business. As a customer of companies, such as Microsoft and Amazon and there are others, we will benefit from the investment these market leaders are making through the technologies deployed with us. Of course, we need a road map for how we plan to incorporate end-market AI capabilities as part of our services, along with other emerging technologies.

最後，如果我不承認我們也認識到生成人工智能對我們的業務來說是一個重要的機會，那就是我的失職。作為微軟、亞馬遜等公司的客戶，我們將從這些市場領導者通過我們部署的技術進行的投資中受益。當然，我們需要一個路線圖，說明我們計劃如何將終端市場人工智能功能以及其他新興技術納入我們的服務中。

So this will be a recurring theme for our discussions with you. We are focused on both short-term and long-term opportunities.. And we're confident we can build a stronger company and a more profitable company.

因此，這將是我們與您討論時反復出現的主題。我們關注短期和長期機會。我們有信心能夠建立一家更強大、利潤更高的公司。

And now I will turn the call over to Lauri to walk through our results.

現在我將把電話轉給勞裡，讓他詳細介紹我們的結果。

Thank you, Kirk. Second-quarter revenues were $47.8 million, down 1.6% compared to $48.6 million in the second quarter last year. And up 1.4% sequentially, compared to the first quarter. Revenue growth was led by our customer care segment, which largely offset declines in our other two segments.

謝謝你，柯克。第二季度收入為 4780 萬美元，比去年第二季度的 4860 萬美元下降 1.6%。與第一季度相比，環比增長 1.4%。收入增長由我們的客戶服務部門帶動，這在很大程度上抵消了其他兩個部門的下降。

Operating income was $1.7 million, compared to $4 million in the second quarter last year. We reported positive net income of $0.6 million or $0.08 per diluted share, compared to net income of $4.5 million or $0.52 per diluted share in the prior year.

營業收入為 170 萬美元，而去年第二季度為 400 萬美元。我們報告的淨利潤為 60 萬美元，即稀釋後每股收益 0.08 美元，而上一年的淨利潤為 450 萬美元，即稀釋後每股收益 0.52 美元。

Results this quarter included $1.2 million of pension expense, as well as $503,000 in stock-based compensation and $1.2 million in severance, largely related to the CEO transition. Our operating expenses for the second quarter were $46.1 million, essentially flat on a sequential basis. And up 3% from $44.5 million in the year-ago quarter due to the change in the revenue mix, resulting in higher transportation costs in our fulfillment and logistics segment.

本季度的業績包括 120 萬美元的養老金費用、503,000 美元的股票薪酬和 120 萬美元的遣散費，這在很大程度上與首席執行官的換屆有關。我們第二季度的運營費用為 4610 萬美元，與上一季度基本持平。由於收入結構的變化，導致我們的履行和物流部門的運輸成本增加，較去年同期的 4450 萬美元增長了 3%。

Our EBITDA was $2.7 million, compared to $4.6 million last year. Due to higher severance expense and the non-recurring charges related to the CEO transition, we are providing adjusted EBITDA as well. Our adjusted EBITDA was $4.4 million compared to $5.2 million.

我們的 EBITDA 為 270 萬美元，而去年為 460 萬美元。由於較高的遣散費以及與首席執行官過渡相關的非經常性費用，我們還提供調整後的 EBITDA。調整後的 EBITDA 為 440 萬美元，而去年同期為 520 萬美元。

From a segment contribution margin perspective, our customer care segment delivered $3 million in EBITDA, up 18.3%. Our fulfillment and logistics services segment delivered $1.9 million in EBITDA, down $1.2 million or 39% year-over-year.

從部門邊際貢獻來看，我們的客戶服務部門實現了 300 萬美元的 EBITDA，增長了 18.3%。我們的履行和物流服務部門實現 EBITDA 190 萬美元，同比下降 120 萬美元，即 39%。

Marketing services EBITDA was $1.3 million, declining by approximately $500,000 or 27%. As long as currency adjustments don't negatively impact net income, we expect profitability both in terms of EBITDA and GAAP net income for each quarter of 2023.

營銷服務 EBITDA 為 130 萬美元，下降約 50 萬美元，即 27%。只要匯率調整不會對淨利潤產生負面影響，我們預計 2023 年每個季度的 EBITDA 和 GAAP 淨利潤都會實現盈利。

Turning to our operating segments. Customer care revenue increased by $1.8 million or 11.9% from the previous year. And year-over-year EBITDA increased 18.3% to $3 million. Our InsideOut business performed well and it contributed $2.3 million in revenue and $246,000 in EBITDA. The customer care pipeline is improving with opportunities, including in the verticals: pharma, government, healthcare, technology, and consumer products.

轉向我們的運營部門。客戶服務收入比上年增加 180 萬美元，即 11.9%。 EBITDA 同比增長 18.3%，達到 300 萬美元。我們的 InsideOut 業務表現良好，貢獻了 230 萬美元的收入和 246,000 美元的 EBITDA。客戶服務渠道正在隨著機遇而改善，包括垂直行業：製藥、政府、醫療保健、技術和消費品。

New business wins for the quarter included a multinational pharmaceutical company, which has engaged Harte Hanks to develop the strategy for their long-term customer service experience. The scope includes the analysis and validation of their customer service division, benchmarking, gap analysis. And a blueprint with an implementation roadmap to inform their 2024 plans, and to optimize their customer care strategy and delivery.

本季度的新業務包括一家跨國製藥公司，該公司聘請 Harte Hanks 為其長期客戶服務體驗制定戰略。範圍包括對其客戶服務部門的分析和驗證、基準測試、差距分析。以及包含實施路線圖的藍圖，以告知他們的 2024 年計劃，並優化他們的客戶服務策略和交付。

Also, one of the largest consultancy firms in the world have selected Harte Hanks to support a government's rollout of Medicaid renewal support for its constituents. This program helps Medicaid users renew for services, as well as provide education on how to engage and leverage the online systems to improve the use of these systems.

此外，世界上最大的諮詢公司之一選擇哈特·漢克斯來支持政府為其選民推出醫療補助續簽支持。該計劃幫助醫療補助用戶續訂服務，並提供有關如何參與和利用在線系統的教育，以改善這些系統的使用。

Fulfillment and logistics revenue decreased slightly to $19.6 million. And EBITDA decreased 39% to $1.9 million. While we continue to expect operational leverage and further benefits from consolidating our operations into the Kansas City and Boston facilities, we have experienced EBITDA margin compression resulting from a higher concentration of growth in our lower-margin logistics revenue.

履行和物流收入小幅下降至 1,960 萬美元。 EBITDA 下降 39% 至 190 萬美元。雖然我們繼續期望通過將我們的業務整合到堪薩斯城和波士頓設施來獲得運營槓桿和進一步的收益，但由於利潤率較低的物流收入增長更加集中，我們經歷了 EBITDA 利潤率壓縮。

New business wins for the quarter included a new logo business with a major international manufacturer, providing fulfillment support for a new program of direct-to-customer hearing aid sales. As a major player in the industry, the manufacturer is well positioned for growth as the hearing aid market pivots from prescription-only into the over-the-counter space.

本季度的新業務勝利包括與一家主要國際製造商的新徽標業務，為直接面向客戶的助聽器銷售新計劃提供履行支持。作為該行業的主要參與者，隨著助聽器市場從處方藥轉向非處方藥領域，該製造商已做好了增長的準備。

Also a leading branding company selected Harte Hanks' fulfillment to manage the production, kitting, and distribution of over 150,000 curated food and beverage product gift boxes for a Fortune 50 retail partner. After producing several million kits on this partner's behalf over the past year, this represents the first instance where the relationship has fully leveraged our FDA-approved, climate-controlled facility for food grade items.

另外，一家領先的品牌公司選擇 Harte Hanks 的履行來管理財富 50 強零售合作夥伴超過 150,000 個精選食品和飲料產品禮盒的生產、配套和分銷。去年代表該合作夥伴生產了數百萬個套件後，這是該合作夥伴首次充分利用我們經 FDA 批准的氣候控制設施來生產食品級產品。

Marketing services revenue decreased 18.8% to $10.9 million. And EBITDA decreased 27% to $1.3 million. The largest driver of the year-over-year revenue declines relate to direct mail campaigns not continuing in the current quarter. We also had project work conclude last year in financial services and CPG verticals.

營銷服務收入下降 18.8% 至 1,090 萬美元。 EBITDA 下降 27% 至 130 萬美元。收入同比下降的最大驅動因素與本季度未繼續的直郵活動有關。我們去年還完成了金融服務和消費品垂直領域的項目工作。

And we continue to face challenges in growth given the macro environment. We are working to expand our pipeline of near-term opportunities across all verticals.

鑑於宏觀環境，我們繼續面臨增長挑戰。我們正在努力擴大所有垂直領域的近期機會渠道。

New business wins for the quarter included a major insurance carrier supporting government employees, which has selected Harte Hanks to facilitate their e-mail transition to a new CRM. While this organization is an existing customer for our customer care, and fulfillment and logistics segments, this is the first engagement for this client with our marketing services team. Also, one of the largest online travel agencies has expanded its services with Harte Hanks to support an Always On nurture program for their global business customers.

本季度的新業務勝利包括一家為政府僱員提供支持的大型保險公司，該保險公司選擇 Harte Hanks 來幫助他們將電子郵件過渡到新的 CRM。雖然該組織是我們的客戶服務、履行和物流部門的現有客戶，但這是該客戶第一次與我們的營銷服務團隊合作。此外，最大的在線旅行社之一還與 Harte Hanks 合作擴展了其服務，以支持其全球商業客戶的 Always On 培育計劃。

Each of our three segments continued to deliver positive operating income and EBITDA.

我們的三個部門均繼續實現正營業收入和 EBITDA。

Now turning to our balance sheet. As of June 30, 2023, we had cash and cash equivalents of $13.4 million compared to $10.4 million at December 31, 2022. Our combined long-term pension liability on the balance sheet as of June 30 was $36.7 million.

現在轉向我們的資產負債表。截至2023 年6 月30 日，我們的現金和現金等價物為1,340 萬美元，而2022 年12 月31 日為1,040 萬美元。截至6 月30 日，我們資產負債表上的長期養老金負債總額為3,670萬美元。

As we announced in our Q4 earnings call, we are moving forward with a termination of our largest qualified pension plan. We are on track to have that completed in the first half of 2024. As of June 30, 2023, we have no debt and maintain a $25 million credit facility.

正如我們在第四季度財報電話會議中宣布的那樣，我們正在終止我們最大的合格養老金計劃。我們有望在 2024 年上半年完成這項工作。截至 2023 年 6 月 30 日，我們沒有債務，並維持著 2500 萬美元的信貸額度。

With that, I will turn this back over to the operator to take your questions. Thank you.

這樣，我會將其轉回接線員以回答您的問題。謝謝。

(Operator Instructions) Julio Romero, Sidoti & Company.

（操作員說明）Julio Romero，Sidoti & Company。

Thank you. And hey, good afternoon, Lauri and Kirk.

謝謝。嘿，下午好，勞里和柯克。

Hi, Julio.

嗨，胡里奧。

Hey, Julio. Nice to meet you.

嘿，胡里奧。很高興見到你。

Same here. Congratulations on the role. I wanted to start by maybe -- Kirk, maybe digging more into some of your thoughts on strategy. You identified some items in the prepared remarks. If you could just speak more to what does Harte Hanks need to, maybe, do differently or adjust from an operational perspective and maybe just a rank order of thoughts there?

同樣在這裡。恭喜你扮演這個角色。我想從柯克開始，也許可以更深入地了解你對戰略的一些想法。您在準備好的評論中指出了一些內容。如果你能更多地談談哈特·漢克斯需要做什麼，也許，做不同的事情或從操作的角度進行調整，也許只是一個想法的排名順序？

Sure. Well, as we've disclosed, we've had some revenue challenges this year. I think the management team is going to be focused on having an appreciation for a relatively stable revenue base. Take that baseline and model our expenses around working toward a 10% margin in the business. That's what we'd like to do. '

當然。嗯，正如我們所披露的，我們今年遇到了一些收入挑戰。我認為管理團隊將專注於欣賞相對穩定的收入基礎。以此為基準，圍繞業務利潤率 10% 的目標制定我們的支出模型。這就是我們想做的。 '

That's going to take some time and a deep commitment, but that's our objective. And then I think we have a lot of optionality at that point. I think we'll have a lot of support. I think there are opportunities to do more strategic acquisitions, such as we did last year but that's our highest priority.

這需要一些時間和堅定的承諾，但這就是我們的目標。然後我認為我們在這一點上有很多選擇。我想我們會得到很多支持。我認為有機會進行更多的戰略收購，就像我們去年所做的那樣，但這是我們的首要任務。

And why we're doing that, because we can address that the fastest. I think the other thing that I've highlighted, and I gave you a lot of specific actions around this, is to rejuvenate the revenue operations here; sales and marketing. My view is that Harte Hanks needs to be its own best customer. And we're not today.

為什麼我們要這樣做，因為我們可以最快地解決這個問題。我認為我強調的另一件事是重振這裡的收入運營，並且圍繞這個問題我給了你們很多具體行動；銷售和營銷。我的觀點是哈特·漢克斯需要成為自己最好的客戶。而我們今天卻不是這樣。

We do a fantastic job for our clients, which engenders amazing loyalty and support, many long-standing -- decade-long relationships. But when I look and audit everything that we're doing for ourselves today to optimize our prospects for growing revenue, we're just leaving too much on the table. So in the near term, that's the focus. And I think when we get to that point, a lot of strategic options open up for the company.

我們為客戶提供了出色的工作，這帶來了令人驚嘆的忠誠度和支持，以及許多長達十年的長期關係。但是，當我審視和審核我們今天為自己所做的一切以優化我們的收入增長前景時，我們只是留下了太多的東西。所以在短期內，這是重點。我認為，當我們達到這一點時，公司就會面臨很多戰略選擇。

And I'm looking forward to that. But right now, we're in hurry-up offense here to get our costs in line.

我很期待這一點。但現在，我們正在緊急進攻，以控製成本。

Thank you. That's good color there. And maybe if you could just talk to the response you've received from the Harte Hanks' team and the employees, and how that has gone?

謝謝。那裡的顏色很好。也許您能談談從哈特·漢克斯團隊和員工那裡收到的回應，情況如何？

Yeah. It's been amazing. I have had a chance to do town halls, large-scale conference calls, a lot of feedback, a lot of energy. A marketing company that offers the services that we do to our clients responds very well to a growth mandate. And we will have a growth mandate. We do have a growth mandate.

是的。太棒了。我有機會參加市政廳、大型電話會議，得到很多反饋，付出很多精力。為客戶提供服務的營銷公司對增長任務的反應非常好。我們將有一個增長任務。我們確實有增長任務。

But the first thing that we need to do is make sure our costs are aligned, and we provide some stability to our outlook. And we'll do that.

但我們需要做的第一件事是確保我們的成本保持一致，並為我們的前景提供一定的穩定性。我們會這麼做的。

But I've had a chance to spend several days with the senior management team. That's been fantastic. It's a talented group. We were doing our marketing audit that I asked for to uncover what all are we not doing that we know we generate more leads, that would ultimately fuel more growth. I mean, many of our opportunities are the result of RFPs, right?

但我有機會與高級管理團隊一起度過了幾天。那太棒了。這是一個才華橫溢的團體。我們正在進行我要求的營銷審計，以發現我們沒有做什麼，我們知道我們會產生更多的潛在客戶，這最終會推動更多的增長。我的意思是，我們的許多機會都是 RFP 的結果，對嗎？

I mean, it's not -- you should be prospecting or cold calling as it's put. But the fact of the matter is that, a lot of diligence is done in companies when they think about changing a vendor or outsourcing a service. And they want to evaluate several options. And so they have a very formal process of doing that.

我的意思是，這不是——你應該像它所說的那樣進行勘探或推銷電話。但事實是，當公司考慮更換供應商或外包服務時，他們會做很多努力。他們想要評估幾種選擇。因此他們有一個非常正式的流程來做到這一點。

We invest a lot of time in that process. It equates to a sales cycle that can be six months long. And so we want to excel at that. But the key is to generate more leads and be discovered when those procurement officers, and executives, and C-suite folks are looking at viable companies to outsource these services to.

我們在這個過程中投入了大量時間。這相當於長達六個月的銷售週期。所以我們希望在這方面表現出色。但關鍵是要產生更多的潛在客戶，並在採購官員、高管和首席高管尋找可行的公司來外包這些服務時被發現。

So it's been a great eight weeks here. And I'm going down to Florida in a couple of weeks. And spend time with the team at InsideOut, which is the acquisition we did last year. I've written to employees on a few occasions to tell them and make sure they're up for the journey. And it's been a great reception.

在這裡度過了美好的八週。幾週後我要去佛羅里達。花時間與 InsideOut 的團隊相處，這是我們去年收購的。我曾多次寫信給員工，告訴他們並確保他們做好了踏上旅程的準備。這是一個很好的接待。

But everybody knows we're going to be on the move, and it seems to be resonating. So I think we want to win. There's a lot of preparation that you have to put into winning. And that's what we're all about.

但每個人都知道我們將繼續前進，而且這似乎引起了共鳴。所以我認為我們想贏。為了贏得勝利，你必須做很多準備。這就是我們的目的。

Got it. That's really helpful. And then just wanted to ask about the revenue trends. You talked to some customers curtailing budgets for '23. Did revenue trends improve as you progress throughout the quarter? In other words was -- how is June trending relative to May and April?

知道了。這真的很有幫助。然後只是想問一下收入趨勢。您與一些客戶討論了 23 年削減預算的問題。隨著整個季度的進展，收入趨勢是否有所改善？換句話說，六月相對於五月和四月的趨勢如何？

Yeah. So I would go back to what the company conveyed in May, which was acknowledging that there's been a lot of re-evaluation of marketing spend, of logistics spend particularly in financial services, B2B tech. And that was really clouding visibility. And, I guess, it's fair to say that it was essentially a reset last quarter on what to expect.

是的。因此，我想回顧一下該公司在 5 月份所傳達的信息，即承認對營銷支出、物流支出進行了大量重新評估，特別是在金融服務、B2B 技術方面。這確實讓能見度變得模糊。而且，我想，可以公平地說，這本質上是對上季度預期的重置。

Here's the lay of the land. The majority of our largest long-standing customers have reduced spending this year. And that's going to persist for the balance of the year. We're seeing a fairly, broad-based response to the uncertainty or cautiousness in the marketplace.

這就是這片土地的情況。我們大多數最大的長期客戶今年都減少了支出。這種情況將持續到今年剩餘時間。我們看到了對市場的不確定性或謹慎態度的公平、廣泛的反應。

I mean, many companies have reduced spending. I think broadly speaking, that's a predominant theme this year. On the plus side though, we have fantastic customer satisfaction and loyalty. They both remain intact, and that's good.

我的意思是，許多公司都減少了支出。我認為從廣義上講，這是今年的主要主題。但從好的方面來說，我們擁有出色的客戶滿意度和忠誠度。它們都完好無損，這很好。

We stay close to our customers. And frankly, we understand what they're doing and why. Frankly, I'm discussing doing that here with you today. We have had a couple of large accounts, reduced spending substantially. That happens when there's a major change in the company's strategy.

我們與客戶保持密切聯繫。坦率地說，我們理解他們在做什麼以及為什麼這樣做。坦率地說，我今天在這裡與你們討論這樣做。我們有幾個大賬戶，大幅減少了支出。當公司戰略發生重大變化時就會發生這種情況。

So when that occurs, we have to assess our resource allocation and staff devoted to those accounts. And regrettably, sometimes that means we have to reduce staff. We staff up accounts that are growing with us or sometimes for seasonal reasons. But we got to maintain a variable staffing model when we encounter a setback or an account loss.

因此，當這種情況發生時，我們必須評估我們的資源分配和專門負責這些賬戶的人員。遺憾的是，有時這意味著我們必須裁員。我們會為與我們一起成長的客戶配備人員，有時也會因為季節性原因而配備人員。但當我們遇到挫折或賬戶損失時，我們必須維持可變的人員配置模式。

So while we get our revenue, operations, and activities ramped up, and we will, that's not an incredible challenge here. It's really a phenomenal opportunity. But while we're doing that, we have an opportunity to get our expenses in line. And I think that's what everybody is looking for. And that's what we're going to get done.

因此，雖然我們的收入、運營和活動都會增加，而且我們會的，但這並不是一個令人難以置信的挑戰。這確實是一個非凡的機會。但當我們這樣做時，我們就有機會控制開支。我認為這就是每個人都在尋找的。這就是我們要做的事情。

Well, I appreciate the color. Thanks very much for taking the questions and I'll pass it on.

嗯，我很欣賞這個顏色。非常感謝您提出問題，我會將其轉達。

My pleasure.

我的榮幸。

Michael Kupinski, NOBLE Capital Markets.

邁克爾·庫平斯基 (Michael Kupinski)，NOBLE 資本市場。

Thank you and good afternoon. Kirk, welcome to Harte Hanks.

謝謝你，下午好。柯克，歡迎來到哈特·漢克斯。

Thanks. Nice to meet you.

謝謝。很高興見到你。

Nice meeting you as well. A couple of questions. You mentioned the cost structure is too high. Can you give us some thoughts, and I know that you've only been there eight weeks. But can you give us some thoughts on the cost cutting? Were these initiatives started before you joined? And is there a particular division that needs to align cost?

認識你也很高興。有幾個問題。您提到成本結構太高。你能給我們一些想法嗎？我知道你只在那里呆了八週。但您能給我們一些關於削減成本的想法嗎？這些舉措是在您加入之前就開始的嗎？是否有特定部門需要調整成本？

So yes, the company is impressively focused on costs and trying to size that opportunity. And that gets more challenging when it's been iterative, and you've been at that quarter after quarter. And we've been in that mode.

所以，是的，該公司非常關注成本並試圖抓住這一機會。當它是迭代的時候，這會變得更具挑戰性，而且你已經一個季度又一個季度地進行迭代。我們一直處於這種模式。

So what I'm really talking about here is dedicating resources and talent that brings objectivity to looking broadly across the entire globe and portfolio, with a lens of prioritizing those services that have the best trajectory and/or best margins. And keeping in mind the target margin that we'd like to achieve. And that drives a very intense, extensive process that can take a few months to complete and scope.

因此，我在這裡真正談論的是投入資源和人才，客觀地廣泛審視整個全球和投資組合，並優先考慮那些具有最佳軌跡和/或最佳利潤的服務。並牢記我們想要實現的目標利潤。這推動了一個非常緊張、廣泛的過程，可能需要幾個月的時間才能完成並確定範圍。

But I've done that before a few times. And it's really not a drill. And it's not a reaction to a tough month or a tough quarter. It's an extraordinarily deep dive into the business to all facets, the unit level economics.

但我之前已經做過幾次了。這真的不是演習。這並不是對艱難的一個月或艱難的季度的反應。這是對業務各個方面、單位層面經濟學的極其深入的探討。

And so I think it will be a combination of our team, and we'll probably augment those resources somewhat to do as extensive job as I would like. But it does start with trying to have some target in mind, and we do. And that's to have a 10% margin. So that's what we want to get to.

因此，我認為這將是我們團隊的結合，我們可能會在一定程度上增加這些資源，以完成我想要的廣泛工作。但它確實是從嘗試在心中設定一些目標開始的，我們確實這樣做了。那就是有10%的利潤。這就是我們想要達到的目標。

And I don't think there's one particular area that I go into the exercise with more concerned about or another. I'm gaining a deep understanding of how to augment and accelerate growth uniquely in our fulfillment and logistics division. For example, juxtapose, customer care or marketing services. And I think over time, as both those divisions get stronger, they afford the company a lot of strategic optionality.

我認為在這項工作中沒有哪個特定領域是我更關心的。我對如何在我們的履行和物流部門中獨特地增強和加速增長有了深入的了解。例如，並置、客戶服務或營銷服務。我認為隨著時間的推移，隨著這兩個部門變得更加強大，它們為公司提供了很多戰略選擇。

But everything is in scope; our overhead, our field. And this is something that you can track with us over the next quarter, or maybe two, because we're going to be very excited to talk about what we discovered. But I can't prescribe it exactly, eight weeks in here. I just know the results of an effort as comprehensive as I'm thinking about are not incremental.

但一切都在範圍之內；我們的開銷，我們的領域。您可以在下一個季度或兩個季度與我們一起跟踪這一點，因為我們將非常興奮地談論我們的發現。但我不能準確地規定，在這里八週。我只知道，像我所考慮的那樣全面的努力的結果並不是漸進的。

Got you. And in terms of the sales development partnership that you were talking about. Some investors and analysts, like myself, that have been around the company for some period of time recognize the problems that the company got into with some contracts with Wipro in the past, which obviously turned the company negative in earnings.

明白你了。就您所說的銷售發展合作夥伴關係而言。一些投資者和分析師，比如我自己，在該公司工作了一段時間，認識到該公司過去與 Wipro 的一些合同存在問題，這顯然使該公司出現了負收益。

So I was just wondering if you can maybe -- and maybe you don't have the history here. Maybe Lauri can help out to talk about the type of relationship that you're referring to in terms of sales development? And if this relationship is more like a rev share or just give us the basis of what type of arrangement you're looking for?

所以我只是想知道你是否可以——也許你沒有這裡的歷史。也許勞裡可以幫忙談談您在銷售發展方面所指的關係類型？如果這種關係更像是收益分成，或者只是為我們提供您正在尋找的安排類型的基礎？

Yeah. So Michael, let me start. And then I'll let Kirk fill in a little bit more on what this opportunity is. It is very different from what we've done in the past and certainly different from Wipro. So this is a very, not like -- we're not putting a lot of cost into this upfront.

是的。邁克爾，讓我開始吧。然後我會讓柯克進一步補充一下這個機會是什麼。這與我們過去所做的事情非常不同，當然也與 Wipro 不同。所以這是一個非常非常不一樣的情況——我們不會為此投入大量成本。

But it's an ongoing -- it's incremental. Think of it as somewhat of an incremental to our sales team, looking for opportunities for us. So there's only some commission on an ongoing basis if we get that revenue. So it's not any large fixed cost like we had with the previous relationship with Wipro.

但這是一個持續的過程——它是漸進的。將其視為對我們銷售團隊的增量，為我們尋找機會。因此，如果我們獲得該收入，則只會持續獲得一些佣金。因此，這並不像我們之前與 Wipro 的關係那樣有很大的固定成本。

And I'll let Kirk talk about it a little more.

我會讓柯克再多談一點。

Sure. I'm not intimately familiar with that prior relationship. And I'm actually very familiar with the relationship that I talked about on this call. So the company we retained on a proof-of-concept basis is Landmark Ventures. I consulted for the Board of an agency in India for a couple of years, and had the opportunity to meet the team at Landmark, and work with them over a couple of years. And I had a fantastic experience.

當然。我對之前的關係不太熟悉。事實上，我對我在這次電話會議中談到的關係非常熟悉。因此，我們保留的基於概念驗證的公司是 Landmark Ventures。我為印度一家機構的董事會提供了幾年的諮詢，並有機會與 Landmark 的團隊見面，並與他們合作了幾年。我有一個美妙的經歷。

Essentially, we'll be among hundreds of companies seeking to network, solve problems, to provide or seek growth, or it could be efficiency solutions. As I said, we'll start with a 90-day proof of concept. We've passed their test. I put our executive team in front of them, and they did a seasonally good job.

本質上，我們將成為數百家尋求網絡、解決問題、提供或尋求增長的公司之一，或者它可能是效率解決方案。正如我所說，我們將從 90 天的概念驗證開始。我們已經通過了他們的測試。我把我們的執行團隊放在他們面前，他們在季節性方面做得很好。

And they were very intrigued by the connections and success that this particular company has with their Fortune 1000 clients. So it will augment our pipeline. It will augment our staff's efforts. I would expect that we'll have 45 over the course of the year if we extend engagement -- well, 45 or so discussions with key decision makers.

他們對這家特定公司與財富 1000 強客戶的聯繫和成功非常感興趣。因此，它將擴大我們的管道。它將增強我們員工的努力。我預計，如果我們擴大參與範圍，今年我們將進行 45 次左右的討論——嗯，與關鍵決策者進行 45 次左右的討論。

And we'll also have the opportunity, actually, to host an event with Landmark Ventures with 18 to 25 major stakeholders from Fortune 1000 companies. So if we're successful and landing business together, then we share in the success of that with commissions. And there's a tail on those commissions if we decide to part company at some point down the road.

事實上，我們還將有機會與 Landmark Ventures 一起舉辦一場活動，與會者包括來自財富 1000 強公司的 18 至 25 名主要利益相關者。因此，如果我們成功並共同開展業務，那麼我們將通過佣金分享成功。如果我們決定在未來的某個時刻分手，這些佣金就會有尾數。

But they are very good at what they do. And I think our company will meet the moment. And we'll have some very, very exciting discussions. It's a month-to-month deal. So if at some point, we don't think it's worthwhile, then we have to wait 30 days.

但他們非常擅長自己所做的事情。我認為我們公司將會迎來這個時刻。我們將進行一些非常非常令人興奮的討論。這是按月進行的交易。因此，如果在某個時候，我們認為不值得，那麼我們必須等待 30 天。

But this is happening fast. We're launching it next week. But I've had two years of experience with the company. I think we're going to have a good run.

但這一切發生得很快。我們將於下週推出它。但我已經在公司工作了兩年了。我想我們將會有一個良好的運行。

Great. Thanks for that color. And one other question. The customer care division was one of the areas that benefited from the pandemic. And so I was anticipating that maybe that portion of the business might be trailing off or have a little bit more weakness.

偉大的。謝謝那個顏色。還有一個問題。客戶服務部門是受益於這一流行病的領域之一。所以我預計這部分業務可能會萎縮或者有更多的弱點。

But in the last quarter, it came in better than expected and showed some pretty decent growth. And I was just wondering if that business came in unexpected, or it was a business that came in unexpectedly? Or is there an improving trend in customer care at this point?

但在上個季度，它的表現好於預期，並顯示出相當不錯的增長。我只是想知道這筆生意是意外而來，還是意外而來的生意？或者目前客戶服務方面是否有改善的趨勢？

Yeah. Hi, Michael. So customer care, obviously, is benefiting from our InsideOut acquisition. We did have, in Q2, one of our streaming customers had, I would say -- I'm not sure I'd say them, but they definitely had some additional support requirements during Q2 that certainly helped out the quarter.

是的。嗨，邁克爾。因此，客戶服務顯然受益於我們對 InsideOut 的收購。我想說，在第二季度，我們的一個流媒體客戶確實有——我不確定我是否會這麼說，但他們在第二季度肯定有一些額外的支持需求，這無疑對本季度有所幫助。

And we saw some of that increase. So we did have a big ramp in May for that support. And that led to a little bit higher revenues for the quarter.

我們看到其中一些有所增加。所以我們在五月份確實獲得了很大的支持。這導致該季度的收入略有增加。

And so that, at this point, doesn't look like that's going to continue into Q3 at this point?

那麼，目前來看，這種情況不會持續到第三季度嗎？

Yeah. I mean, we have these ramps from time to time. I don't expect that similar type of ramp in Q3. But then in Q4, we'll have more of our healthcare open enrollment-type ramp. So we'll see a little bit of down into Q3 with some expected seasonality in Q4.

是的。我的意思是，我們時不時會有這些坡道。我預計第三季度不會出現類似的增長。但在第四季度，我們將有更多的醫療保健開放註冊類型的增加。因此，我們將在第三季度看到一些下滑，並在第四季度看到一些預期的季節性。

Got you. Okay. Thank you. That's all I have.

明白你了。好的。謝謝。這就是我的全部。

Okay. Thanks. Michael.

好的。謝謝。邁克爾.

Thank you. We have no further questions in queue at this time. So I will hand it back to Mr. Davis for any closing remarks you may have.

謝謝。目前我們沒有其他問題在排隊。因此，我將把它交還給戴維斯先生，供您發表任何結束語。

Thanks very much. And I just want to thank you all for joining the call. I appreciate the opportunity to speak on behalf of all of us here at Harte Hanks, and our commitment to running a good business and performing for our shareholders. I want to be clear on how I see us propelling the business forward. We need to commit to and organize around an effort to take a comprehensive look at our costs and lowering them.

非常感謝。我只想感謝大家加入這次電話會議。我很高興有機會代表 Harte Hanks 的所有人發言，也很高興我們致力於經營良好的業務並為股東提供服務。我想明確說明我如何看待我們推動業務向前發展。我們需要致力於並組織努力，全面審視我們的成本並降低它們。

We can address this much faster than we can expect revenue to grow, at least net grow, but I'll tell you I'm very excited about that, too. It's just -- there's a sales cycle and there's a lot we need to put in place, but we are all over it right now. So I'm looking forward to keeping you updated, and we look forward to talking to you at Q3 results. So, thanks so much.

我們解決這個問題的速度比我們預期的收入增長（至少是淨增長）要快得多，但我會告訴你，我對此也感到非常興奮。只是——有一個銷售週期，我們需要落實很多工作，但我們現在已經完成了。因此，我期待著向您通報最新情況，我們期待在第三季度的結果中與您交談。所以，非常感謝。

Thank you. This concludes today's conference and you may disconnect your lines at this time. And we thank you for your participation.

謝謝。今天的會議到此結束，您現在可以掛斷電話了。我們感謝您的參與。