Harte Hanks, Inc. (NASDAQ:HHS) Q1 2023 Earnings Conference Call May 2, 2023 4:30 PM ET

Company Participants

Tom Baumann - Investor Relations

Brian Linscott - Chief Executive Officer

Lauri Kearnes - Chief Financial Officer

Conference Call Participants

Michael Kupinski - Noble Capital Markets

Julio Romero - Sidoti & Company

Operator

Greetings and welcome to the Harte Hanks' First Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded.

I will now turn the conference over to your host, Tom Baumann of FNK IR. You may begin.

Tom Baumann

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

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 the Safe Harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. 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, May 2, 2023, and the company assumes no obligation to update these projections in the future as market conditions change.

This webcast and certain financial information provided on 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.

With that, I would now like to turn the call over to Brian. Brian, the call is yours.

Brian Linscott

Thank you, Tom, and good afternoon. We anticipated a challenging first quarter for Harte Hanks, but macroeconomic headwinds were stronger than we expected. However, despite the revenue challenges, we continued to generate positive EBITDA, demonstrating that we have established a strong business poised to successfully navigate macroeconomic challenges.

We maintain positive EBITDA despite lower revenue levels versus the year ago period, which was artificially high as a result of one-time product recall project and pandemic-related projects. The fulfillment and logistics segment continued to grow. However, the year-over-year growth was driven by lower margin logistics revenue that was offset by reduced financial services revenue, resulting in less favorable revenue mix and lower overall EBITDA margins during the quarter.