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Harte-Hanks Posts First Quarter of Revenue Growth Since 2007

October 28, 2010
SAN ANTONIO, TX—Oct. 28, 2010—Harte-Hanks, Inc. reported third-quarter 2010 operating income of $25.1 million (up 4.8 percent) and net income of $13.8 million (down 1.7 percent) on revenues of $216.7 million (up 3.5 percent). These results compare to operating income of $23.9 million and net income of $14.1 million on $209.3 million in revenues for the third quarter of 2009.

For the nine months ended Sept. 30, 2010, the company’s revenues decreased 2.8 percent to $624.5 million and operating income increased 5.3 percent to $65.9 million.

Commenting on the third quarter performance, Chairman, President and CEO Larry Franklin said, “It was good to see revenue growth in the third quarter, our first quarter of growth since the first quarter of 2007. Although Shoppers revenue declined in the quarter by 4.2 percent, this was the lowest decline since the first quarter of 2007. Shoppers operating income reflects excellent improvement as our people continue to effectively manage through the current difficult environment.

“Direct marketing revenue increased 7.3 percent in the quarter with operating income declining 4.0 percent. There was a complex one-time project for a long-standing customer during the third quarter that accounted for approximately 60 percent of the direct marketing revenue growth and will also positively affect our fourth quarter revenue by approximately the same amount. Our direct marketing profit reflects the investments we are making and will continue to make in the multichannel direct and digital strategy. We are also investing in the digital business in Shoppers.“

Discussing the performance of individual business segments, Doug Shepard, executive vice president and CFO, said, “Our direct marketing revenues reflect an increase of over 40 percent from our pharma/healthcare vertical compared to the third quarter of 2009. The growth in the pharma/healthcare vertical was helped by the large, one-time project which was completed early in the fourth quarter of 2010. Our retail, select and high-tech verticals experienced revenue growth rates in the single digits (as a percentage). Our financial vertical declined in the single digits (as a percentage).

“Shoppers revenue decreased 4.2 percent in the third quarter compared to the third quarter of 2009. This is the fifth consecutive quarter of improvement in quarterly revenue comparisons to the prior year quarter. Operating income improved 58.4 percent to $5.3 million."

Concluding, Franklin said, “We are pleased to have returned to revenue growth in direct marketing in the quarter, however we don't expect to have the same rate of growth over the next few quarters. We are excited about the progress we are making with our digital and multichannel strategy. More importantly, we intend to continue our investments in the people, structure and products necessary to build our multichannel business, which we believe will lead to improved long-term results.

“Our Shoppers revenue performance will continue to reflect the California and Florida economies which are not improving, especially California. We are continuing our investments in our Shoppers digital products, which are already showing impressive growth.

“In the fourth quarter, the company expects to show slight operating income improvement compared to the 2009 fourth quarter which included a $6.9 million charge. This expectation reflects our anticipated Shoppers revenue and the investments we are making in our digital strategy in both businesses. Customer response in both businesses is confirming that our digital focus is working and will provide tremendous long term value.”

About Harte-Hanks:
Harte-Hanks is a worldwide direct and targeted marketing company that provides multichannel direct and digital marketing services and shopper advertising opportunities to a wide range of local, regional, national and international consumer and business-to-business marketers. Harte-Hanks Direct Marketing helps its clients obtain insight about their customers through database and marketing analytics. Based on that insight Harte-Hanks Direct Marketing designs, implements and executes multichannel marketing programs on behalf of its clients using direct and digital communications. Harte-Hanks Shoppers is North America's largest owner, operator and distributor of shopper products which bring buyers and sellers together at a local level though its proven multichannel offerings, including targeted print, digital advertising, and classifieds.

Its print publications are zoned into more than 950 separate editions and reach 11.5 million addresses each week in California and Florida. Shoppers also provide advertisers with PowerSites to help small- and medium-size businesses establish a web presence and improve lead generation, PowerClick SEM services, and mobile distribution of their ads and coupons. For consumers, PennySaverUSA.com and TheFlyer.com offer local online and mobile classifieds for garage sales, pets, used and new cars, real estate, as well as thousands of coupons and business listings. Visit us at www.PennySaverUSA.com, www.TheFlyer.com, and www.PowerSites.net.
 
Source: Financial release.
 

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