Harte-Hanks Posts First Quarter of Revenue Growth Since 2007

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).