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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
or
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from           to
Commission File Number: 001-07120
HARTE HANKS, INC.
(Exact name of registrant as specified in its charter)
Delaware
1 Executive Drive, Chelmsford, MA 01824
74-1677284
(State or other jurisdiction of(Address of principal executive offices,(I.R.S. Employer
incorporation or organization) including zip code)Identification Number)
(512) 434-1100
(Registrant’s telephone number including area code)
None
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of each exchange on which registered
Common StockHHSNASDAQ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated fileroAccelerated filero
Non-accelerated filerxSmaller reporting companyx
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
The number of shares outstanding of the issuer’s common stock as of October 31, 2024 was 7,288,983 shares.


HARTE HANKS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
FORM 10-Q REPORT
For the Quarterly Period Ended September 30, 2024

            

2

PART 1. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Harte Hanks, Inc. and Subsidiaries Condensed Consolidated Balance Sheets
In thousands, except shares and per share amountsSeptember 30,
2024
December 31,
2023
ASSETS(unaudited)
Current assets
Cash and cash equivalents$5,944 $18,364 
Accounts receivable (less allowance for doubtful accounts of $54 and $474 at September 30, 2024 and December 31, 2023, respectively)
33,275 34,313 
Contract assets and unbilled accounts receivable9,260 7,935 
Prepaid expenses2,119 1,915 
Prepaid income taxes and income tax receivable1,758 1,758 
Other current assets1,467 928 
Total current assets53,823 65,213 
Property, plant and equipment (less accumulated depreciation of $38,845 and $36,533, respectively)
9,310 8,855 
Right-of-use assets22,926 25,417 
Other assets  
Intangible assets, net2,280 2,820 
Goodwill1,926 1,926 
Deferred tax assets, net17,128 17,268 
Other long-term assets734 1,258 
Total other assets22,068 23,272 
Total assets$108,127 $122,757 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities  
Accounts payable and accrued expenses$20,880 $23,176 
Accrued payroll and related expenses4,476 5,615 
Deferred revenue and customer advances3,400 3,195 
Customer postage and program deposits1,430 1,815 
Other current liabilities2,995 9,495 
Current portion of lease liabilities3,762 4,815 
Total current liabilities36,943 48,111 
Pension liabilities - Qualified plans8,931 10,540 
Pension liabilities - Nonqualified plan17,968 18,630 
Long-term lease liabilities, net of current portion21,469 23,691 
Other long-term liabilities1,767 1,928 
Total liabilities87,078 102,900 
Stockholders’ equity  
Common stock, $1 par value, 25,000,000 shares authorized; 12,221,484 shares issued, 7,353,162 and 7,224,718 shares outstanding at September 30, 2024 and December 31, 2023, respectively
12,221 12,221 
Additional paid-in capital125,173 157,889 
Retained earnings817,057 844,920 
Less treasury stock, 4,868,322 shares at cost at September 30, 2024 and 4,996,766 shares at cost at December 31, 2023
(916,993)(951,083)
Accumulated other comprehensive loss(16,409)(44,090)
Total stockholders’ equity21,049 19,857 
Total liabilities and stockholders’ equity$108,127 $122,757 
See Accompanying Notes to Condensed Consolidated Financial Statements
3

Harte Hanks, Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
Three months ended September 30,Nine months ended September 30,
In thousands, except per share amounts2024202320242023
Revenue$47,630 $47,119 $138,113 $142,001 
Operating expenses
Labor24,176 22,953 70,343 74,084 
Production and distribution14,421 15,378 41,850 43,158 
Advertising, selling, general and administrative5,260 4,922 17,051 16,071 
Restructuring expenses836  2,116  
Depreciation and amortization expense1,039 952 3,107 3,051 
Total operating expenses45,732 44,205 134,467 136,364 
Operating income1,898 2,914 3,646 5,637 
Other expense, net
Interest expense (income), net57 1 107 (150)
Pension plan termination charges  37,505  
Other expense, net831 383 2,104 3,760 
Total other expense, net888 384 39,716 3,610 
Income (loss) before income taxes1,010 2,530 (36,070)2,027 
Income tax expense (benefit) 868 1,912 (8,207)1,620 
Net income (loss) 142 618 (27,863)407 
Income (loss) per common share
Basic$0.02 $0.09 $(3.83)$0.06 
Diluted$0.02 $0.08 $(3.83)$0.05 
Weighted average shares used to compute income (loss) per share
Basic7,3247,2397,2737,340
Diluted7,3987,3147,2737,509
Comprehensive income (loss) net of tax:
Net income (loss) $142 $618 $(27,863)$407 
Adjustment to pension liability, net102 503 29,626 1,421 
Foreign currency translation adjustment(8)(559)(1,945)1,645 
Total other comprehensive income (loss), net of tax$94 $(56)$27,681 $3,066 
Comprehensive income (loss)$236 $562 $(182)$3,473 
See Accompanying Notes to Condensed Consolidated Financial Statements
4

Harte Hanks, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
In thousandsCommon
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
Balance at December 31, 2023$12,221 $157,889 $844,920 $(951,083)$(44,090)$19,857 
Stock-based compensation— 552 — — — 552 
Vesting of RSUs— (5,264)— 5,177 — (87)
Net loss— — (171)— — (171)
Other comprehensive loss— — — — (189)(189)
Balance at March 31, 2024$12,221 $153,177 $844,749 $(945,906)$(44,279)$19,962 
Stock-based compensation— 734 — — — 734 
Vesting of RSUs— (8,208)— 8,178 — (30)
Net loss— — (27,834)— — (27,834)
Other comprehensive income— — — — 27,776 27,776 
Balance at June 30, 2024$12,221 $145,703 $816,915 $(937,728)$(16,503)$20,608 
Stock-based compensation368 368 
Vesting of RSUs(20,898)20,735 (163)
Net income142 142 
Other comprehensive income$94 94 
Balance at September 30, 2024$12,221 $125,173 $817,057 $(916,993)$(16,409)$21,049 
In thousandsCommon
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
Balance at December 31, 2022$12,221 $218,411 $846,490 $(1,010,012)$(48,302)$18,808 
Stock-based compensation— 540 — — — 540 
Vesting of RSUs— (21,538)— 21,326 — (212)
Net loss— — (791)— — (791)
Other comprehensive income— — — — 2,620 2,620 
Balance at March 31, 2023$12,221 $197,413 $845,699 $(988,686)$(45,682)$20,965 
Stock-based compensation— 502 — — — 502 
Vesting of RSUs— (10,529)— 10,409 — (120)
Repurchase of common stock— — — (1,879)— (1,879)
Net income— — 580 — — 580 
Other comprehensive income— — — — 502 502 
Balance at June 30, 2023$12,221 $187,386 $846,279 $(980,156)$(45,180)$20,550 
Stock-based compensation— 160 — — — 160 
Vesting of RSUs— (27,333)— 27,055 — (278)
Repurchase of common stock— — — (490)— (490)
Net income— — 618 — — 618 
Other comprehensive loss— — — — (56)(56)
Balance at September 30, 2023$12,221 $160,213 $846,897 $(953,591)$(45,236)$20,504 

See Accompanying Notes to Condensed Consolidated Financial Statements
5

Harte Hanks, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30,
In thousands20242023
Cash Flows from Operating Activities
Net (loss) income(27,863)$407 
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization expense3,107 3,051 
Stock-based compensation1,654 1,203 
Pension cost (payment), net31,027 16 
Deferred income taxes(10,254)(453)
Changes in assets and liabilities:
Accounts receivable and contract assets(287)3,816 
Prepaid expenses, income tax receivable and other current assets(79)4,106 
Accounts payable and accrued expenses(1,989)(3,785)
Deferred revenue and customer advances205 1,091 
Customer postage and program deposits(385)222 
Other accrued expenses and liabilities(2,168)(3,564)
Net cash (used in) provided by operating activities(7,032)6,110 
Cash Flows from Investing Activities
Purchases of property, plant and equipment(3,119)(1,480)
Proceeds from sale of property, plant and equipment1 3 
Net cash used in investing activities(3,118)(1,477)
Cash Flows from Financing Activities
Debt financing costs (6)
Payment of finance leases(45)(144)
Repurchase of common stock (2,370)
Treasury stock activities(280)(610)
Net cash used in financing activities(325)(3,130)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(1,945)1,421 
Net (decrease) increase in cash and cash equivalents and restricted cash(12,420)2,924 
Cash and cash equivalents and restricted cash at beginning of period18,864 11,364 
Cash and cash equivalents and restricted cash at end of period$6,444 
(1)
$14,288 
Supplemental disclosures
Cash (received) paid for interest$(34)$198 
Cash paid for (received) income taxes, net$1,194 $(3,369)
Non-cash investing and financing activities
Purchases of property, plant and equipment included in accounts payable$1,402 $1,935 
(1) This amount is comprised of the below balances:
Cash and cash equivalents$5,944 $13,288 
Cash held in Escrow account included in other assets 500 1,000 
Cash and cash equivalents at end of period$6,444 $14,288 
See Accompanying Notes to Condensed Consolidated Financial Statements
6

Harte Hanks, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note A - Overview and Significant Accounting Policies
Background
Harte Hanks, Inc. together with its subsidiaries (“Harte Hanks,” “Company,” “we,” “our,” or “us”) is a leading global customer experience company. With offices in North America, Asia-Pacific and Europe, Harte Hanks works with some of the world’s most respected brands.
Segment Reporting
The Company operates four reportable segments: Marketing Services; Customer Care; Sales Services; and Fulfillment & Logistics Services. Our Chief Executive Officer (“CEO”) is considered to be our chief operating decision maker. Our CEO reviews our operating results on an aggregate basis for purposes of allocating resources and evaluating financial performance by using the two financial measures: revenue and operating income.
Accounting Principles
Our unaudited interim condensed consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 10-K”).
Consolidation
The accompanying unaudited interim condensed consolidated financial statements include the accounts of Harte Hanks, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. As used in this report, the terms “Harte Hanks,” “the Company,” “we,” “us,” or “our” may refer to Harte Hanks, Inc., one or more of its consolidated subsidiaries, or all of them taken as a whole, as the context may require.
Interim Financial Information
The condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Rule 8-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.
Use of Estimates
Preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from those estimates due to uncertainties. Such estimates include, but are not limited to, estimates related to lease accounting; pension accounting; fair value for purposes of assessing long-lived assets for impairment; revenue recognition; income taxes; stock-based compensation and contingencies. On an ongoing basis, management reviews its estimates and assumptions based on currently available information. Changes in facts and circumstances could result in revised estimates and assumptions.
Operating Expense Presentation in Condensed Consolidated Statements of Comprehensive (Loss) Income
The “Labor” line in the Condensed Consolidated Statements of Comprehensive Loss (Income) includes all employee payroll and benefits costs, including stock-based compensation and temporary labor costs. The “Production and distribution” and “Advertising, selling, general and administrative” lines do not include any labor, depreciation, or amortization expense.
7

Revenue Recognition
We recognize revenue upon the transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to be entitled to receive in exchange for those products or services based on the relevant contract. We apply the following five-step revenue recognition model:
Identification of the contract, or contracts, with a customer
Identification of the performance obligations in the contract
Determination of the transaction price
Allocation of the transaction price to the performance obligations in the contract
Recognition of revenue when (or as) we satisfy the performance obligation
Certain client programs provide for adjustments to billings based upon whether we achieve certain performance criteria. In these circumstances, revenue is recognized when the foregoing conditions are met. We record revenue net of any taxes collected from customers and subsequently remitted to governmental authorities. Any payments received in advance of the performance of services or delivery of the product are recorded as deferred revenue until such time as the services are performed or the product is delivered. Costs incurred for search engine marketing solutions payable to the engine host and postage costs of mailings are billed to our clients and are not directly reflected in our revenue.
Revenue from agency and digital services, direct mail, logistics, fulfillment and contact center is recognized when the work is performed. Fees for these services are determined by the terms set forth in each contract. These fees are typically a set fixed price or rate by transaction occurrence, service provided, time spent, or product delivered.
Fair Value of Financial Instruments
Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") 820, Fair Value Measurements and Disclosures, (“ASC 820”) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a fair value hierarchy that prioritizes the inputs used in valuation methodologies into three levels:
Level 1
Quoted prices in active markets for identical assets or liabilities.
Level 2Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Because of their maturities and/or variable interest rates, certain financial instruments have fair values approximating their carrying values. These instruments include cash and cash equivalents and restricted cash, accounts receivable, trade payables, and debt. The fair value of the assets in our funded pension plan is discussed in Note H, Employee Benefit Plans.
Leases
We determine if an arrangement is a lease at its inception. Operating and finance leases are included in the lease right-of-use (“ROU”) assets and in the current portion and long-term portion of lease liabilities on our condensed consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of each lease based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement date of each lease to determine the present value of lease payments. The operating lease ROU assets also include any lease payments made and exclude lease incentives. Our lease terms may include options to extend or terminate the lease, which are included in the lease ROU assets when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, which are generally accounted for separately. For certain real estate leases, we account for the lease and non-lease components as a single lease component.
8

Note B - Recent Accounting Pronouncements
Recent Accounting Guidance Not Yet Adopted
In November 2023, the FASB issued accounting standards update (“ASU”) 2023-07, which enhances the disclosures required for reportable segments in annual and interim consolidated financial statements. ASU 2023-07 is effective for the Company for annual reporting periods beginning with the fiscal year ending December 31, 2024, and for interim reporting periods beginning in fiscal year 2025. Early adoption is permitted. The Company is currently evaluating the impact that this update will have on its disclosures in the consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, which requires enhanced income tax disclosures, including disaggregation of information in the rate reconciliation table and disaggregated information related to income taxes paid. The amendments in ASU 2023-09 are effective for the annual periods beginning with the fiscal year ending December 31, 2025. The Company is currently evaluating the impact that this update will have on its disclosures in the consolidated financial statements.
No other new accounting pronouncements recently adopted or issued had or are expected to have a material impact on the condensed consolidated financial statements.
Note C - Revenue from Contracts with Customers
Consistent with GAAP, we present sales taxes assessed on revenue-producing transactions on a net basis.
Disaggregation of Revenue
We disaggregate revenue by four key revenue streams which are aligned with our reportable segments. The nature of the services offered by each key revenue stream is different. The following table summarizes revenue from contracts with customers for the three and nine months ended September 30, 2024 and 2023 by our four reportable segments and the pattern of revenue recognition:
Three Months Ended September 30, 2024
In thousandsRevenue for performance obligations recognized over timeRevenue for performance obligations recognized at a point in timeTotal
Marketing Services$7,960 $1,090 $9,050 
Customer Care13,068  13,068 
Sales Services4,205  4,205 
Fulfillment and Logistics Services17,644 3,663 21,307 
Total Revenues$42,877 $4,753 $47,630 
Three Months Ended September 30, 2023
In thousandsRevenue for performance obligations recognized over timeRevenue for performance obligations recognized at a point in timeTotal
Marketing Services$9,272 $1,319 $10,591 
Customer Care11,832  11,832 
Sales Services2,166  2,166 
Fulfillment and Logistics Services18,625 3,905 22,530 
Total Revenues$41,895 $5,224 $47,119 
9

Nine Months Ended September 30, 2024
In thousandsRevenue for performance obligations recognized over timeRevenue for performance obligations recognized at a point in timeTotal
Marketing Services$22,408 $3,301 $25,709 
Customer Care37,894  37,894 
Sales Services13,281  13,281 
Fulfillment and Logistics Services49,901 11,328 61,229 
Total Revenues$123,484 $14,629 $138,113 
Nine Months Ended September 30, 2023
In thousandsRevenue for performance obligations recognized over timeRevenue for performance obligations recognized at a point in timeTotal
Marketing Services$29,321 $3,430 $32,751 
Customer Care38,372  38,372 
Sales Services7,253  7,253 
Fulfillment and Logistics Services52,044 11,581 63,625 
Total Revenues$126,990 $15,011 $142,001 
Our contracts with customers may consist of multiple performance obligations. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price (“SSP”) basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct good or service that forms part of a single performance obligation. For most performance obligations, we determine SSP based on the price at which the performance obligation is sold separately. Although uncommon, if the SSP is not observable through past transactions, we estimate the SSP taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Further discussion of other performance obligations in each of our major revenue streams follows:
Marketing Services
Our Marketing Services segment delivers strategic planning, data strategy, performance analytics, creative development and execution, technology enablement, marketing automation, and database management. We create relevancy by leveraging data, insight, and our extensive experience in leading clients as they engage their customers through digital, traditional, and emerging channels. We are known for helping clients build deep customer relationships, create connected customer experiences, and optimize each and every customer touch point in order to deliver desired business outcomes.
Most marketing services performance obligations are satisfied over time and often offered on a per project basis. We have concluded that the best approach to measure the progress toward completion of the project-based performance obligations is the input method, which is based on either the costs or labor hours incurred to date depending upon whether costs or labor hours more accurately depict the transfer of value to the customer.
Our database solutions are built around centralized marketing databases with services rendered to build custom database, database hosting services, customer or target marketing lists and data processing services.
These performance obligations, including services rendered to build a custom database, database hosting services, customer or target marketing lists and data processing services, may be satisfied over time or at a point in time. We provide software as a service (“SaaS”) solutions to host data for customers and have concluded that these solutions are stand-ready obligations to be recognized over time on a monthly basis. Our promise to provide certain data related services meets the over-time recognition criteria because our services do not create an asset with an alternative use, and we have an enforceable right to payment. For performance obligations recognized over time, we choose either the input (i.e., labor hour) or output method (i.e., number of customer records) to measure the progress toward completion depending on the nature of the services provided. Some of our other data-related services do not meet the over-time criteria and are therefore, recognized at a point-in-time, typically upon the delivery of a specific deliverable.
10

Our contracts may include outsourced print production work for our clients. These contracts may include a promise to purchase postage on behalf of our clients. In such cases, we have determined we are an agent, rather than principal and therefore recognize net consideration as revenue.
Customer Care
We deliver customer care services in the United States, Asia, and Europe to provide advanced solutions such as voice, SMS/chat, email, integrated voice response, web self-service, social cloud monitoring, and analytics.
Performance obligations are stand-ready obligations and are satisfied over time. With regard to account management and SaaS, we use a time-elapsed output method to recognize revenue. For performance obligations where we charge customers a transaction-based fee, we use the output method based on transaction quantities. In most cases, our contracts provide us the right to invoice for services provided, therefore, we generally use the “as invoiced” practical expedient to recognize revenue associated with these performance obligations unless significant discounts are offered in a contract and prices for services do not represent their SSPs.
Sales Services
Our Sales Services segment enables customers to optimize their go-to-market function by offering a range of outsourced services including sales process optimization, sales play development, inbound lead qualification and outbound sales prospecting.
Performance obligations are stand-ready obligations and are satisfied over time. With regard to account management and SaaS, we use a time-elapsed output method to recognize revenue. For performance obligations where we charge customers a transaction-based fee, we use the output method based on transaction quantities. In most cases, our contracts provide us the right to invoice for services provided, therefore, we generally use the “as invoiced” practical expedient to recognize revenue associated with these performance obligations unless significant discounts are offered in a contract and prices for services do not represent their SSPs.
Fulfillment & Logistics Services
Our services, delivered internally and with our partners, include printing, lettershop, advanced mail optimization (including commingling services), logistics and transportation optimization, monitoring and tracking, to support traditional and specialized mailings. Our print and fulfillment centers in Massachusetts and Kansas provide custom kitting services, print on demand, product recall support, trade marketing fulfillment, ecommerce product fulfillment, sampling programs, and freight optimization, thereby allowing our customers to efficiently and effectively distribute literature and other marketing materials.
Most performance obligations offered within this revenue stream are satisfied over time and utilize the input or output method, depending on the nature of the service, to measure progress toward satisfying the performance obligation. For performance obligations where we charge customers a transaction-based fee, we utilize the output method based on the quantities fulfilled. Services provided through our fulfillment centers are typically priced at a per transaction basis and our contracts provide us the right to invoice for services provided and reflects the value to the customer of the services transferred to date. In most cases, we use the “as invoiced” practical expedient to recognize revenue associated with these performance obligations unless significant discounts are offered in a contract and prices for services do not represent their standalone selling prices. Our direct mail business contracts may have included a promise to purchase postage on behalf of our clients; in such cases, we have determined we are an agent, rather than principal and therefore recognize net consideration as revenue.
Transaction Price Allocated to Future Performance Obligations
We have elected to apply certain optional exemptions that limit the disclosure requirements over remaining performance obligations at period end to exclude the performance obligations that have an original expected duration of one year or less, transactions using the “as invoiced” practical expedient, or when a performance obligation is a series and we have allocated the variable consideration directly to the services performed. As of September 30, 2024, we had no transaction prices allocated to unsatisfied or partially satisfied performance obligations.
11

Contract Balances
We record a receivable when revenue is recognized prior to invoicing when we have an unconditional right to consideration (only the passage of time is required before payment of that consideration is due) and a contract asset when the right to payment is conditional upon our future performance such as delivery of an additional good or service (e.g. customer contract requires customer’s final acceptance of custom database solution or the delivery of a final marketing strategy presentation before customer payment is required). If invoicing occurs prior to revenue recognition, the unearned revenue is presented on our Condensed Consolidated Balance Sheet as a contract liability, referred to as deferred revenue.
The following table summarizes our contract balances as of September 30, 2024 and December 31, 2023:
In thousandsSeptember 30, 2024December 31, 2023
Unbilled accounts receivable8,952 7,677 
Contract assets308 258 
Deferred revenue and customer advances3,400 3,195 
Deferred revenue, included in other long-term liabilities213 294 
Revenue recognized during the nine months ended September 30, 2024 from amounts included in deferred revenue at the beginning of the period was approximately $2.9 million. Revenue recognized during the nine months ended September 30, 2023 from amounts included in deferred revenue at the beginning of the period was approximately $3.9 million.
Costs to Obtain and Fulfill a Contract
We recognize an asset for the direct costs incurred to obtain and fulfill our contracts with customers to the extent that we expect to recover these costs and if the benefit is longer than one year. These costs are amortized to expense over the expected period of the benefit in a manner that is consistent with the transfer of the related goods or services to which the asset relates. We impair the asset when recoverability is not anticipated. We capitalized a portion of commission expense, implementation and other costs that represents the cost to obtain a contract. The remaining unamortized contract costs were $0.3 million and $0.6 million as of September 30, 2024 and December 31, 2023, respectively. They are included in other current assets and other assets on our balance sheet. For the periods presented, no impairment was recognized.
Note D - Leases
We have operating and finance leases for corporate and business offices, service facilities, call centers and certain equipment. Leases with an initial term of 12 months or less are generally not recorded on the balance sheet, unless the arrangement includes an option to purchase the underlying asset, or an option to renew the arrangement, that we are reasonably certain to exercise (short-term lease). Our leases have remaining lease terms of one to eight years, some of which may include options to extend the leases for up to an additional five years.
As of September 30, 2024, assets recorded under finance and operating leases were approximately $0.5 million and $22.4 million, respectively, and accumulated amortization associated with finance leases was $0.2 million. As of December 31, 2023, assets recorded under finance and operating leases were approximately $0.1 million and $25.3 million, respectively, and accumulated amortization associated with finance leases was $0.1 million. Operating lease right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The discount rate used to determine the commencement date present value of lease payment is the interest rate implicit in the lease, or when that is not readily determinable, we utilize our incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.
There was no impairment of leases during the three and nine months ended September 30, 2024 and 2023.
12

The following table presents supplemental balance sheet information related to our financing and operating leases:
In thousandsAs of September 30, 2024As of December 31, 2023
Operating LeasesFinance LeasesTotalOperating LeasesFinance LeasesTotal
Right-of-use Assets$22,392 $534 $22,926 $25,288 $129 $25,417 
Liabilities
Current portion of lease liabilities3,665 97 3,762 4,773 42 4,815 
Long-term lease liabilities21,114 355 21,469 23,687 4 23,691 
Total Lease Liabilities$24,779 $452 $25,231 $28,460 $46 $28,506 
For the three and nine months ended September 30, 2024 and 2023, the components of lease expense were as follows:
Three months ended September 30,Nine months ended September 30,
In thousands2024202320242023
Operating lease cost$1,314 $1,338 $3,996 $4,160 
Finance lease cost:
Amortization of right-of-use assets30 35 61 115 
Interest on lease liabilities9 2 17 6 
Total Finance lease cost39 37 78 121 
Variable lease cost412 537 1,443 1,525 
Sublease income(53)(177)(368)(676)
Total lease cost, net$1,712 $1,735 $5,149 $5,130 
Other information related to leases was as follows:
In thousandsNine Months Ended September 30, 2024Nine Months Ended September 30, 2023
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$8,464 $9,525 
Operating cash flows from finance leases15 6 
Financing cash flows from finance leases79 144 
Weighted Average Remaining Lease term
Operating leases6.65.6
Finance leases4.51.3
Weighted Average Discount Rate
Operating leases5.73 %3.56 %
Finance leases8.15 %7.04 %
13

The maturities of the Company’s finance and operating lease liabilities as of September 30, 2024 are as follows:
In thousandsOperating Leases Finance Leases
Year Ending December 31,
Remainder of 2024$1,398 $35 
20254,656 120 
20264,232 117 
20274,198 117 
20284,094 117 
2029 and beyond11,397 32 
Total future minimum lease payments29,975 538 
Less: imputed interest5,196 86 
Total lease liabilities$24,779 $452 
Note E - Convertible Preferred Stock and Share Repurchase Program
Convertible Preferred Stock
On March 20, 2023, the Company cancelled all shares of Series A Preferred Stock pursuant to the Certificate of Elimination filed with the Secretary of State of Delaware.
Share Repurchase Program
On May 2, 2023, the Board of Directors of Harte Hanks approved a share repurchase program to maximize shareholder value with authorization to repurchase $6.5 million of the Company’s Common Stock. In the three and nine months ended September 30, 2024, we didn't repurchase any shares of common stock. In the three and nine months ended September 30, 2023, we repurchased 0.1 million and 0.4 million shares of Common Stock for $0.5 million and $2.4 million, respectively.
Note F — Debt - Credit Facility
On December 21, 2021, the Company entered into a three-year, $25.0 million asset-based revolving credit facility (the "Credit Facility") with Texas Capital Bank ("TCB"). The Company’s obligations under the Credit Facility are guaranteed on a joint and several basis by the Company’s material subsidiaries (the “Guarantors”). The Credit Facility is secured by substantially all of the assets of the Company and the Guarantors pursuant to a Pledge and Security Agreement, dated as of December 21, 2021, among the Company, TCB and the other Guarantors party thereto (the "Security Agreement"). On December 29, 2023, the Company extended the maturity date for the Credit Facility by a period of six months to June 30, 2025. The extension was executed with substantially similar terms and conditions as the original Credit Facility.
The Credit Facility provides for loans up to the lesser of (a) $25.0 million, and (b) the amount available under a “borrowing base” calculated primarily by reference to the Company's cash and cash equivalents and accounts receivables. The Credit Facility allows the Company to use up to $3.0 million of its borrowing capacity to issue letters of credit.
The loans under the Credit Facility accrue interest at a variable rate equal to the Secured Overnight Financing Rate (SOFR) plus a margin of 2.25% per annum. The interest rate was 7.27% as of September 30, 2024. The outstanding amounts advanced under the Credit Facility are due and payable in full on June 30, 2025. As of September 30, 2024 and December 31, 2023, we had letters of credit outstanding in the amount of $1.0 million and $0.8 million, respectively. No amounts were drawn against these letters of credit at September 30, 2024. These letters of credit exist to support insurance programs relating to worker’s compensation and general liability. Unused commitment balances accrue fees at a rate of 0.25%.
As of September 30, 2024 and December 31, 2023, we had the ability to borrow $24.0 million and $24.2 million, respectively, under the Credit Facility. As of September 30, 2024 and December 31, 2023, we had no borrowings outstanding under the Credit Facility
14

Note G — Stock-Based Compensation
We maintain stock incentive plans for the benefit of certain officers, directors, and employees. Our stock incentive plans provide for the ability to issue stock options, cash stock appreciation rights, performance stock units, phantom stock units and cash performance stock units. Our cash stock appreciation rights, phantom stock units and cash performance stock units settle solely in cash and are treated as the current liability, which are adjusted each reporting period based on changes in our stock price.
Compensation expense for stock-based awards is based on the fair values of the awards on the date of grant and is recognized on a straight-line basis over the vesting period of the entire award in the “Labor” line of the Condensed Consolidated Statements of Comprehensive Income (Loss). We recognized $0.4 million and $0.2 million of stock-based compensation expense during the three months ended September 30, 2024 and 2023, respectively. We recognized $1.7 million and $1.2 million of stock-based compensation expense during the nine months ended September 30, 2024 and 2023, respectively.
Note H — Employee Benefit Plans
Prior to January 1, 1999, we provided a defined benefit pension plan for which most of our employees were eligible to participate (the “Qualified Pension Plan”). In conjunction with significant enhancements to our 401(k) plan, we elected to freeze benefits under the Qualified Pension Plan as of December 31, 1998.
In 1994, we adopted a non-qualified, unfunded, supplemental pension plan (the “Restoration Pension Plan”) covering certain employees, which provides for incremental pension payments so that total pension payments equal those amounts that would have been payable from the principal pension plan were it not for limitations imposed by income tax regulation. The benefits under the Restoration Pension Plan were intended to provide benefits equivalent to our Qualified Pension Plan as if such plan had not been frozen. We elected to freeze benefits under the Restoration Pension Plan as of April 1, 2014.
At the end of 2020, the Board of Directors of the Company approved the division of the Qualified Pension Plan into two distinct plans, “Qualified Pension Plan I” and “Qualified Pension Plan II.” The assets and liabilities of the Qualified Pension Plan that were attributable to certain participants in Qualified Pension Plan II were spun off and transferred into Qualified Pension Plan II effective as of the end of December 31, 2021, in accordance with Internal Revenue Code section 414(I) and ERISA Section 4044.
In January 2023, the Board of Directors of the Company approved the termination of the Qualified Pension Plan I. The termination process took approximately 18 months and was completed in June 2024, which resulted in the transfer of our obligations pursuant to this pension plan to an insurance company. We made total cash payment of $7.2 million to terminate the Qualified Pension Plan I during the nine months ended September 30, 2024. We made a $6.1 million cash contribution in the three months ended June 30, 2024. This contribution with the liquidation of pension assets was used to purchase annuities from an insurance company, which settled the liabilities for Pension Plan I participants. We paid another $1.1 million during the three months ended September 30, 2024 as the insurance company was onboarding pension participants and final filings were submitted to the Pension Benefit Guaranty Corporation. We recognized $37.5 million of pension termination charges which were reflected in our Condensed Consolidated Statements of Comprehensive Income (Loss) for nine months ended September 30, 2024.
The overfunded or underfunded status of our defined benefit post-retirement plans is recorded as an asset or liability on our condensed consolidated balance sheets. The funded status is measured as the difference between the fair value of plan assets and the projected benefit obligation. Periodic changes in the funded status are recognized through other comprehensive income in the Condensed Consolidated Statements of Comprehensive Income (Loss). We currently measure the funded status of our defined benefit plans as of December 31, the date of our year-end Consolidated Balance Sheets.
Net pension cost for both plans included the following components:
Three Months Ended September 30,Nine Months Ended September 30,
In thousands2024202320242023
Interest cost$702 $1,772 $4,330 $5,316 
Expected return on plan assets(470)(1,554)(3,163)(4,662)
Recognized actuarial loss137 630 1,420 1,890 
Net periodic benefit cost$369 $848 $2,587 $2,544 
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Based on current estimates, we will be required to make a $2.0 million contribution to the combined qualified Pension Plan in 2024. We made $1.6 million of such $2.0 million aggregate contribution in the nine months ended September 30, 2024.
We are not required to make, and do not intend to make, any contributions to our Restoration Pension Plan in 2024 other than to the extent needed to cover benefit payments. We made benefit payments under this supplemental plan of $1.4 million in both the nine months ended September 30, 2024 and 2023.
Note I - Income Taxes
The income tax expense was $0.9 million and $1.9 million for the three months ended September 30, 2024 and 2023, respectively. The provision for income taxes resulted in an effective tax rate of 85.9% for the three months ended September 30, 2024 and 75.6% for the three months ended September 30, 2023. The effective income tax rate for the three months ended September 30, 2024 and 2023 differs from the federal statutory rate of 21%, primarily due to the U.S. state income taxes and the impact of income earned in foreign jurisdictions.
The income tax benefit was $8.2 million and income tax provision was $1.6 million for the nine months ended September 30, 2024 and 2023, respectively. The provision for income taxes resulted in an effective tax rate of 22.8% for the nine months ended September 30, 2024 and 79.9% for the nine months ended September 30, 2023. The effective income tax rate for the nine months ended September 30, 2024 and 2023 differs from the federal statutory rate of 21%, primarily due to the U.S. state income taxes and the impact of income earned in foreign jurisdictions.
Harte Hanks, or one of our subsidiaries file income tax returns in the U.S. federal, U.S. state, and foreign jurisdictions. For U.S. state, federal and foreign returns, we are no longer subject to tax examinations for years prior to 2021. The Company has reviewed all of its tax positions in order to determine whether all, a portion, or none of any related tax benefit should be recognized and has not identified or recorded any ASC 740-10 reserve.
We have elected to classify any interest expense and penalties related to income taxes within income tax expense in our Condensed Consolidated Statements of Comprehensive Income (Loss). We did not have a significant amount of interest or penalties accrued at September 30, 2024 or December 31, 2023.
Note J - Earnings (Loss) Per Share
Basic income (loss) per share (“EPS”) is calculated using income available to common stockholders, divided by the weighted average number of shares outstanding during the period. Diluted earnings per share is calculated using income available to common stockholders divided by the weighted average number of shares of common stock including both shares outstanding and shares potentially issuable in connection with restricted common stock awards and stock option under our stock incentive plans.
Reconciliations of basic and diluted EPS were as follows:
Three months ended September 30,Nine months ended September 30,
In thousands, except per share amounts2024202320242023
Numerator:
Net income (loss) $142 $618 $(27,863)$407 
Denominator:
Basic EPS denominator: weighted-average common shares outstanding7,3247,2397,2737,340
Diluted EPS denominator7,3987,3147,2737,509
Basic (loss) income per Common Share$0.02 $0.09 $(3.83)$0.06 
Diluted (loss) income per Common Share$0.02 $0.08 $(3.83)$0.05 
For the three months ended September 30, 2024 and 2023, respectively, the following shares have been excluded from the calculation of shares used in the diluted EPS calculation: 354,239 and 132,193 shares of anti-dilutive market price options; 13,567 and 58,869 of anti-dilutive unvested restricted shares.
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For the nine months ended September 30, 2024 and 2023, respectively, the following shares have been excluded from the calculation of shares used in the diluted EPS calculation: 335,431 and 8,098 shares of anti-dilutive market price options; 23,114 and 40,389 of anti-dilutive unvested restricted shares.
Note K — Comprehensive Income (Loss)
Comprehensive income (loss) for a period encompasses net income (loss) and all other changes in equity other than from transactions with our stockholders.
Changes in accumulated other comprehensive loss by component were as follows:
In thousandsDefined Benefit
Pension Items
Foreign Currency
Items
Total
Balance at December 31, 2023$(42,456)$(1,634)$(44,090)
Other comprehensive loss, net of tax, before reclassifications (1,945)(1,945)
Amounts reclassified from accumulated other comprehensive income, net of tax, to other, net, on the condensed consolidated statements of comprehensive income29,626  29,626 
Net current period other comprehensive loss, net of tax29,626 (1,945)27,681 
Balance at September 30, 2024$(12,830)$(3,579)$(16,409)
In thousandsDefined Benefit Pension ItemsForeign Currency ItemsTotal
Balance at December 31, 2022$(44,120)$(4,182)$(48,302)
Other comprehensive income, net of tax, before reclassifications 1,421 1,421 
Amounts reclassified from accumulated other comprehensive income, net of tax, to other, net, on the condensed consolidated statements of comprehensive income1,645  1,645 
Net current period other comprehensive income, net of tax1,645 1,421 3,066 
Balance at September 30, 2023$(42,475)$(2,761)$(45,236)
Reclassification amounts related to the defined pension plans are included in the computation of net periodic pension benefit cost (see Note H, Employee Benefit Plans).
Note L — Litigation and Contingencies
In the normal course of our business, we are obligated under some agreements to indemnify our clients as a result of third party claims if the claim alleges that we have infringed upon the proprietary rights of third parties, or alternatively, in some contractual instances, if the third party claims relating to other ad hoc contract obligations. The terms and duration of these indemnity commitments vary and, in some cases may be indefinite, and some of these contractual commitments do not limit the maximum amount of future payments we could become obligated to make thereunder. Accordingly, our actual aggregate maximum exposure related to these types of commitments is not reasonably estimated. Historically, we have not been obligated to make significant payments for obligations of this nature, and no liabilities have been recorded for these obligations in our consolidated financial statements.
We are also subject to various claims and legal proceedings in the ordinary course of conducting our businesses and, from time to time, we may become involved in additional claims and lawsuits incidental to our businesses. We routinely assess the likelihood of adverse judgments or outcomes, as well as ranges of probable losses. To the extent losses are reasonably estimable, we accrue for them. Accruals are recorded for these matters to the extent that management concludes a loss is probable and the financial impact, should an adverse outcome occur, is reasonable estimable.
In the opinion of management, appropriate and adequate accruals for legal matters have been made, and management believes that the probability of a material loss beyond the amounts accrued is remote. Nevertheless, we cannot predict the impact of future developments affecting our pending or future claims and lawsuits. We expense legal costs as incurred, and all recorded legal liabilities are adjusted as required as better information becomes available to us. The factors we
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consider when recording an accrual for contingencies include, among others: (i) the opinions and views of our general counsel and outside legal counsel; (ii) our previous experience with similar claims; and (iii) the decision of our management as to how we intend to respond to the complaints.
Note M — Restructuring Activities
During the second half of 2023, we engaged a consulting firm to help review and analyze the structure and operations of the Company. This review included greater than 200 meetings with personnel at all levels of the firm and led to the initiation of our transformation program named "Project Elevate". The program involves the optimization and rationalization of our business resources as well as the partial reinvestment of savings into the Company's sales and marketing team, technology, and strategy. A business transformation office was established at the beginning of 2024 to manage and measure these initiatives. Reorganization cost reductions from Project Elevate during 2024 through 2026 are estimated to be $16.0 million. For the year ended December 31, 2023, we recorded restructuring charges of $5.7 million. We expect to incur total restructuring charges of $10.1 million through the end of 2025.
For the three and nine months ended September 30, 2024, we recorded restructuring charges of $0.8 million and $2.1 million, respectively.
The following table summarizes the restructuring charges which are recorded in “Restructuring Expense” in the Condensed Consolidated Statement of Comprehensive Income (Loss).
In thousandsThree months ended Sep 30, 2024Nine months ended Sep 30, 2024
Consulting and employee expense$215 $677 
Severance243 1,025 
Facility and other expenses378 414 
Total$836 $2,116 
The following table summarizes the changes in liabilities related to restructuring activities:
Nine months ended Sep 30, 2024
In thousandsConsulting and Employee Expense
Severance
Facility, asset impairment and other expense
Total
Beginning balance:$3,574 $144 $38 $3,756 
Additions673 1,026 263 1,962 
Payments and adjustment(4,247)(907)(301)(5,455)
Ending balance:$ $263 $ $263 
Note N — Segment Reporting
Harte Hanks is a leading global customer experience company. Beginning in 2024, we have organized our operations into four reportable segments based on the types of products and services we provide: Marketing Services, Customer Care, Sales Services and Fulfillment & Logistics Services. The Sales Service is our new reportable segment for 2024 as it has become strategically more important for our company. It was included in Customer Care segment in 2023. 2023 segment reporting has been restated to reflect this change.
Our Marketing Services segment leverages data, insight, and experience to support clients as they engage customers through digital, traditional, and emerging channels. We partner with clients to develop strategies and tactics to identify and prioritize customer audiences in B2C and B2B transactions. Our key service offerings include strategic business, brand, marketing and communications planning, data strategy, audience identification and prioritization, predictive modeling, creative development and execution across traditional and digital channels, website and app development, platform architecture, database build and management, marketing automation, and performance measurement, reporting and optimization.
Our Customer Care segment offers intelligently responsive contact center solutions, which use real-time data to effectively interact with each customer. Customer contacts are handled through phone, e-mail, social media, text messaging, chat and
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digital self-service support. We provide these services utilizing our advanced technology infrastructure, human resource management skills and industry experience.
Our Sales Services segment enables customers to optimize their go-to-market function by offering a range of outsourced services including sales process optimization, sales play development, inbound lead qualification and outbound sales prospecting.
Our Fulfillment & Logistics segment consists of mail and product fulfillment and logistics services. We offer a variety of product fulfillment solutions, including printing on demand, managing product recalls, and distributing literature and promotional products to support B2B trade, drive marketing campaigns, and improve customer experience. We are also a provider of third-party logistics and freight optimization in the United States.
There are two principal financial measures reported to our CEO (the chief operating decision maker) for use in assessing segment performance and allocating resources. Those measures are revenue and operating income (loss)”). Operating income for segment reporting disclosed below, is revenues less operating costs and allocated corporate expenses. Segment operating expenses include allocations of certain centrally incurred costs such as employee benefits, occupancy, information systems, accounting services, internal legal staff, and human resources administration. These costs are allocated based on actual usage or other appropriate methods. Unallocated corporate expenses are corporate overhead expenses not attributable to the operating groups. Interest income and expense are not allocated to the segments. The Company does not allocate assets to our reportable segments for internal reporting purposes, nor does our CEO evaluate reportable segments using discrete asset information. The accounting policies of the segments are consistent with those described in the Note A, Overview and Significant Accounting Policies.
The following table presents financial information by segment for the three months ended September 30, 2024:
In thousandsMarketing ServicesCustomer CareSales ServicesFulfillment & LogisticsRestructuringUnallocated CorporateTotal
Revenue$9,050 $13,068 $4,205 $21,307 $ $ $47,630 
Segment operating expense6,158 9,995 3,318 19,192 836 5,195 44,694 
Contribution margin (loss)$2,892 $3,073 $887 $2,115 $(836)$(5,195)$2,936 
Overhead allocation792 567 189 775  (2,323) 
Depreciation and amortization167 44 198 266  363 1,038 
Operating income (loss)$1,933 $2,462 $500 $1,074 $(836)$(3,235)$1,898 
The following table presents financial information by segment for the three months ended September 30, 2023:
In thousandsMarketing ServicesCustomer CareSales ServicesFulfillment & LogisticsRestructuringUnallocated CorporateTotal
Revenue$10,591 $11,832 $2,166 $22,530 $ $ $47,119 
Segment operating expense8,370 9,380 1,959 18,995  4,549 43,253 
Contribution margin (loss)$2,221 $2,452 $207 $3,535 $ $(4,549)$3,866 
Overhead allocation706 668  680  (2,054) 
Depreciation and amortization71 57 196 249  379 952 
Operating income (loss)$1,444 $1,727 $11 $2,606 $ $(2,874)$2,914 
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The following table presents financial information by segment for the nine months ended September 30, 2024:
In thousandsMarketing ServicesCustomer CareSales ServicesFulfillment & LogisticsRestructuring ExpenseUnallocated CorporateTotal
Revenue$25,709 $37,894 $13,281 $61,229 $ $ $138,113 
Segment operating expense19,355 28,856 9,891 54,348 2,116 16,795 131,361 
Contribution margin (loss)$6,354 $9,038 $3,390 $6,881 $(2,116)$(16,795)$6,752 
Overhead allocation2,454 1,761 587 2,403  (7,205) 
Depreciation and amortization509 160 589 757  1,091 3,106 
Operating income (loss)$3,391 $7,117 $2,214 $3,721 $(2,116)$(10,681)$3,646 
The following table presents financial information by segment for the nine months ended September 30, 2023:
In thousandsMarketing ServicesCustomer CareSales ServicesFulfillment & LogisticsRestructuring ExpenseUnallocated CorporateTotal
Revenue$32,751 $38,372 $7,253 $63,625 $ $ $142,001 
Segment operating expense26,464 30,259 6,275 54,435  15,880 133,313 
Contribution margin (loss)$6,287 $8,113 $978 $9,190 $ $(15,880)$8,688 
Overhead allocation2,261 2,102  2,203  (6,566) 
Depreciation and amortization167 438 586 736  1,124 3,051 
Operating income (loss)$3,859 $5,573 $392 $6,251 $ $(10,438)$5,637 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Note Regarding Forward-Looking Statements
This report, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contains “forward-looking statements” within the meaning of the federal securities laws. All such statements are qualified by this cautionary note, which is provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. Forward-looking statements will also be included from time to time in our other public filings, press releases, our website, and oral and written presentations by management. Statements other than historical facts are forward-looking and may be identified by words such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “seeks,” “could,” “intends,” or words of similar meaning. Examples include statements regarding (1) our strategies and initiatives, including actions designed to respond to market conditions and improve our performance, (2) our financial outlook for revenues, earnings (loss) per share, operating income (loss), expense related to equity-based compensation, capital resources and other financial items, if any, (3) expectations for our businesses and for the industries in which we operate, including the impact of economic conditions of the markets we serve on the marketing expenditures and activities of our clients and prospects, (4) competitive factors, (5) acquisition and development plans, (6) expectations regarding legal proceedings and other contingent liabilities, (7) expectations regarding cost savings due to Project Elevate and (8) other statements regarding future events, conditions, or outcomes.
These forward-looking statements are based on current information, expectations, and estimates and involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from what is expressed in or indicated by the forward-looking statements. In that event, our business, financial condition, results of operations, or liquidity could be materially adversely affected and investors in our securities could lose part or all of their investments. A discussion of some of these risks, uncertainties, assumptions, and other factors can be found in our filings with the SEC, including the factors discussed under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 10-K”), “Part II - Item 1A. Risk Factors” in this Quarterly Report, and in our other reports filed or furnished with the SEC. The forward-looking statements included in this report and those included in our other public filings, press releases, our website, and oral and written presentations by
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management are made only as of the respective dates thereof, and we undertake no obligation to update publicly any forward-looking statement in this report or in other documents, our website, or oral statements for any reason, even if new information becomes available or other events occur in the future, except as required by law.
Overview
The following MD&A section is intended to help the reader understand the results of operations and financial condition of Harte Hanks, including any material changes in the Company’s financial condition and results of operations since December 31, 2023, and as compared with the three and six months ended September 30, 2023. This section is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the accompanying notes included herein as well as our 2023 10-K. Our 2023 10-K contains a discussion of other matters not included herein, such as disclosures regarding critical accounting policies and estimates, and contractual obligations. See Note A, Overview and Significant Accounting Policies, in the Notes to Condensed Consolidated Financial Statements for further information.
Harte Hanks, Inc. is a leading global customer experience company operating in four reportable segments: Marketing Services, Customer Care, Sales services and Fulfillment & Logistics Services. Our mission is to partner with clients to provide them with a robust customer-experience, or CX, strategy, data-driven analytics and actionable insights combined with seamless program execution to better understand, attract, and engage their customers. Our services include strategic planning, data strategy, performance analytics, creative development and execution; technology enablement; marketing automation; B2B and B2C e-commerce; cross-channel customer care; and product, print, and mail fulfillment.
We are affected by the general, national, and international economic and business conditions in the markets where we and our customers operate. Marketing budgets are largely discretionary in nature and, as a consequence, are easier for our clients to reduce in the short-term than other expenses. Our revenues are also affected by the economic fundamentals of each industry that we serve, various market factors, including the demand for services by our clients, the financial condition of and budgets available to our clients, and regulatory factors, among other factors. Due to increases in inflation and interest rates throughout the globe, and other geopolitical uncertainties, including but not limited to the ongoing armed conflicts in multiple regions, there is continued uncertainty and significant volatility and disruption in the global economy and financial markets. We remain committed to making the investments necessary to execute our multichannel strategy while also continuing to adjust our cost structure to appropriately reflect our operations and outlook.
Management is closely monitoring inflation and wage pressure in the market, and the potential impact on our business. While inflation has not had a material impact on our business, it is possible a material increase in inflation could have an impact on our clients, and in turn, on our business.
Recent Developments
Project Elevate
Our management team continuously reviews and adjusts our cost structure and operating footprint to optimize our operations, and invest in improved technology. During the second half of 2023, we engaged a consulting firm to help review and analyze the structure and operations of the Company. This review included greater than 200 meetings with personnel at all levels of the firm and led to the initiation of our transformation program named "Project Elevate". The program involves the optimization and rationalization of our business resources as well as the partial reinvestment of savings into the Company's sales and marketing team, technology, and strategy. A business transformation office was established at the beginning of 2024 to manage and measure these initiatives. We expect to meet our Project Elevate saving target for this year of $6 million and remain confident in our two-year target of exiting 2025 with $16 million in savings.
For the three and nine months ended September 30, 2024, we recorded restructuring charges related to this business transformation effort of $0.8 million and $2.1 million, respectively.
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Qualified Pension Plan I termination
In January 2023, the Board of Directors of the Company approved the termination of the Qualified Pension Plan I. The termination process was completed in June 2024 and resulted in the transfer of our obligations pursuant to this pension plan to an insurance company. We made total cash contributions of $7.2 million to terminate the Qualified Pension Plan I. In connection with this termination, we recognized $37.5 million of pension termination charges which were reflected in our Condensed Consolidated Statements of Comprehensive Income (Loss) for nine months ended September 30, 2024.
Changes in Segment Reporting
Starting in the first quarter of 2024, to improve our strategic posture in terms of go-to-market approach and cost structure, we removed the Sales Services business from the Customer Care segment and made the Sales Services business its own segment.
Results of Operations
Operating results were as follows:
 Three months ended September 30,Nine months ended September 30,
In thousands, except per share amounts2024
% Change
20232024
% Change
2023
Revenue$47,630 1.1%$47,119 $138,113 -2.7%$142,001 
Operating expenses45,732 3.5%44,205 134,467 -1.4%136,364 
Operating income$1,898 -34.9%$2,914 $3,646 -35.3%$5,637 
Operating margin4.0%-35.6%6.2%2.6%-33.5%4.0%
Other expense, net888 384 39,716 3,610 
Income tax (benefit) provision868 1,912 (8,207)1,620 
Net (loss) income$142 $618 $(27,863)$407 
Basic and diluted EPS from operations$0.02 $0.09 $(3.83)$0.05 
Consolidated Results
Three months ended September 30, 2024 vs. Three months ended September 30, 2023
Revenues
Revenue increased $0.5 million, or 1.1%, to $47.6 million in the three months ended September 30, 2024, compared to the three months ended September 30, 2023 driven by increased revenue in our Customer Care and Sales Services segments which were partially offset by the decreased revenue in Fulfillment & Logistics Services and Marketing Services segments. Those decreases were the result of fluctuations in timing of high volume periods associated with ongoing programs, and the conclusion of relationships with some customers.
Operating Expenses
Operating expenses were $45.7 million in the three months ended September 30, 2024, an increase of $1.5 million, or 3.5%, compared to $44.2 million in the three months ended September 30, 2023.
Labor expense increased $1.2 million, or 5.3%, primarily due to higher labor cost associated with higher revenue.
Production and Distribution expenses decreased $1.0 million, or 6.2%, primarily due to lower volumes of brokered freight and lower fuel charges and production supplies cost as compared to the prior year quarter.
Advertising, Selling, General and Administrative expenses increased $0.3 million, or 6.9%, primarily due to higher sales and marketing expense as compared to the prior year quarter.
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The largest components of our operating expenses are labor, transportation expenses and outsourced costs. Each of these costs is, at least in part, variable and tends to fluctuate in line with revenues and the demand for our services. Transportation rates have decreased over the last nine months due to dropping demand and supply fluctuations within the transportation industry. Future changes in transportation expenses will continue to impact our total production costs and total operating expenses, and in turn our margins, and may have an impact on future demand for our supply chain management services. Postage costs for mailings are borne by our clients and are not directly reflected in our revenues or expenses.
Other expense, net
Other expense, net, for the three months ended September 30, 2024 was $0.9 million compared to $0.4 million, in the prior year quarter. The $0.5 million increase in other expense, net was mainly associated with changes in foreign currency gain and loss accounts the three months ended September 30, 2024 as compared to the prior year quarter.
Income Taxes
The income tax benefit of $0.9 million in the third quarter of 2024 represents a decrease in income tax provision of $1.0 million when compared to the third quarter of 2023. Our effective tax rate was 85.9% for the second quarter of 2024, an increase of 10.4% when compared to the third quarter of 2023. The effective tax rate differs from the federal statutory rate of 21.0%, primarily due to the U.S. state income taxes and income earned in foreign jurisdictions.
Nine months ended September 30, 2024 vs. Nine months ended September 30, 2023
Revenues
Revenue decreased $3.9 million, or 2.7%, to $138.1 million, in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023 due to decreased revenue in three of our operating segments. The reduction in revenues in the nine month period relates to the conclusion of programs, and the ordinary turnover of customers at a higher rate than initiation of new programs and revenues from new customer. Our sales and marketing organization is amidst a transformation that includes an expansion of staff, a new centralized reporting structure, partnership channel development, and expanded international sales focus. Assuming a supportive economy, we expect improved revenues in the fourth quarter of 2024.
Operating Expenses
Operating expenses were $134.5 million in the nine months ended September 30, 2024, a decrease of $1.9 million, or 1.4%, compared to $136.4 million in the nine months ended September 30, 2023. Cost controls to match revenues and Project Elevate led to the decline in operating expense. The company expects further cost reductions in excess of new costs attributable to revenue growth.
Labor expense decreased $3.7 million, or 5.0%, primarily due to lower labor cost and bonus expense associated with lower revenue.
Production and Distribution expenses decreased $1.3 million, or 3.0%, primarily due to lower fuel charges and software costs as compared to the prior year.
Advertising, Selling, General and Administrative expenses increased $1.0 million, or 6.1%, primarily due to higher sales and marketing expenses.
The largest components of our operating expenses are labor, transportation expenses and outsourced costs. Each of these costs is, at least in part, variable and tends to fluctuate in line with revenues and the demand for our services. There has been significant variability in transportation rates in recent years due to demand and supply fluctuations within the transportation industry. Future changes in transportation expenses will continue to impact our total production costs and total operating expenses, and revenues. Postage costs for mailings are borne by our clients and are not directly reflected in our revenues or expenses.
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Other expense, net
Other expense, net, for the nine months ended September 30, 2024 was $39.7 million compared to $3.6 million, in the prior year period. The $36.1 million increase in other expense, net was mainly due to the pension termination charge incurred in the nine months ended September 30, 2024.
Income Taxes
The income tax benefit of $8.2 million in the nine months ended September 30, 2024 represents an increase in income tax benefit of $9.8 million when compared to the same period of 2023. Our effective tax rate was 22.8% for the nine months ended September 30, 2024, as compared to the effective tax rate of 79.9% for the same period of 2023. The effective tax rate differs from the federal statutory rate of 21.0%, primarily due to the U.S. state income taxes and income earned in foreign jurisdictions.
Segment Results
The following is a discussion and analysis of the results of our reportable segments for the three and nine months ended September 30, 2024 and 2023. There are two principal financial measures reported to our CEO (the chief operating decision maker) for use in assessing segment performance and allocating resources. Those measures are revenue and operating income. For additional information, see Note N, Segment Reporting, in the Notes to Condensed Consolidated Financial Statements.
Marketing Services:
Three months ended September 30,Nine months ended September 30,
In thousands2024% Change20232024% Change2023
Revenue$9,050 (14.6)%$10,591 $25,709 (21.5)%$32,751 
Operating income1,933 33.9 %1,444 3,391 (12.1)%3,859 
Three months ended September 30, 2024 vs. Three months ended September 30, 2023
Marketing Services segment revenue decreased $1.5 million, or 14.6%, due to customer turnover, the decline of client spending in excess of new business. Operating income for the three months ended September 30, 2024 increased $0.5 million, or 33.9% from the prior year quarter due to the reduced labor cost.
Nine months ended September 30, 2024 vs. Nine months ended September 30, 2023
Marketing Services segment revenue decreased $7.0 million, or 21.5%, due to customer turnover and the additional client spending reductions. This segment is our most economically sensitive segment with regard to changes in client's marketing strategy. Operating income for the nine months ended September 30, 2024 decreased $0.5 million , or 12.1% from the prior year quarter primarily due to the reduced labor cost.
Customer Care:
Three months ended September 30,Nine months ended September 30,
In thousands2024% Change20232024% Change2023
Revenue$13,068 10.4%$11,832 $37,894 (1.2)%$38,372 
Operating income2,462 42.6%1,727 7,117 27.7%5,573 
Three months ended September 30, 2024 vs. Three months ended September 30, 2023
Customer Care segment revenue increased $1.2 million, or 10.4%, primarily driven by the timing of fluctuations with specific programs. Operating income was $2.5 million for the three months ended September 30, 2024, compared to operating income of $1.7 million for the three months ended September 30, 2023. The $0.7 million increase in operating income was driven by the higher revenue.
24

Nine months ended September 30, 2024 vs. Nine months ended September 30, 2023
Customer Care segment revenue decreased $0.5 million, or 1.2%, which can be impacted by one-time project-based engagements, temporary surges or declines in call volumes among retained customers due to specific programs and events. We also encounter fluctuations based on the geographic regions customers select for staff support. We are leveraging our Amazon Connect cloud-based platform to test and pilot new AI tools, and are exploring how we can augment growth by providing more technical support as clients migrate to more capable contact center platforms. Operating Income was $7.1 million for the nine months ended September 30, 2024, compared to operating income of $5.6 million for the nine months ended September 30, 2023. The increase of $1.5 million was primarily driven by the lower labor cost.
Sales Services:
Three months ended September 30,Nine months ended September 30,
In thousands2024% Change20232024% Change2023
Revenue$4,205 94.1%$2,166 $13,281 83.1%$7,253 
Operating income500 4445.5%11 2,214 464.8%392 
Three months ended September 30, 2024 vs. Three months ended September 30, 2023
Sales Services segment revenue increased $2.0 million, or 94.1%, primarily due to increased work from a large fintech customer. Operating Income was $0.5 million for the three months ended September 30, 2024, compared to operating income of $11 thousand for the three months ended September 30, 2023. The $0.5 million increase was driven by the higher revenues.
Nine months ended September 30, 2024 vs. Nine months ended September 30, 2023
Sales Services segment revenue increased $6.0 million, or 83.1%, primarily due to growth in work from a large fintech customer. Operating Income was $2.2 million for the nine months ended September 30, 2024, compared to $0.4 million for the six months ended September 30, 2023. The $1.8 million increase was driven by the increased revenues.
Fulfillment & Logistics Services:
Three months ended September 30,Nine months ended September 30,
In thousands2024% Change20232024% Change2023
Revenue$21,307 (5.4)%$22,530 $61,229 (3.8)%$63,625 
Operating income1,074 (58.8)%2,606 3,721 (40.5)%6,251 
Three months ended September 30, 2024 vs. Three months ended September 30, 2023
Fulfillment & Logistics Services segment revenue decreased $1.2 million, or 5.4%, primarily due to the lower volume from the existing customers not being offset by growth in new programs and customers. Operating income decreased by $1.5 million primarily due to revenue mix, and higher technology and facility expenses.
Nine months ended September 30, 2024 vs. Nine months ended September 30, 2023
Fulfillment & Logistics Services segment revenue decreased by $2.4 million, or 3.8%, due to lost customers and the lower volume from existing customers. We currently have a robust sales pipeline for fulfillment opportunities, particularly for the fourth quarter. The pipeline transcends an otherwise seasonally stronger fourth quarter juxtaposed to the other quarters. The logistics industry is experiencing much higher cost pressure. This is partially the result of market leaders competing for more dominant position, acquiring smaller logistics providers, achieving scale through lowering pricing, as they focus on consolidating market share. Operating income decreased by $2.5 million, or 40.5% due to the lower revenue and higher facility and technology expenses.
25

Liquidity and Capital Resources
Sources and Uses of Cash
Our cash and cash equivalent balances were $5.9 million and $18.4 million at September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024, we had the ability to borrow an additional $24.0 million under our Credit Facility.
We received a $5.3 million tax refund in March 2023, as a result of the tax NOL carryback provisions in the CARES Act.
Our principal sources of liquidity are cash on hand, cash provided by operating activities, and borrowings available under our Credit Facility. Our cash is primarily used for general corporate purposes, working capital requirements, and capital expenditures. At this time, we believe that we will be able to continue to meet our liquidity requirements and fund our fixed obligations such as finance and operating leases and unfunded pension plan benefit payments and other needs for our operations in the short term and beyond. Although the Company believes that it will be able to meet its cash needs for the short and medium term, if unforeseen circumstances arise the Company may need to seek alternative sources of liquidity.
Operating Activities
Net cash used in the operating activities for the nine months ended September 30, 2024 was $7.0 million, compared to net cash provided by operating activities of $6.1 million for the nine months ended September 30, 2023. The $13.1 million year-over-year decrease in cash provided by operating activities was primarily due to the $7.2 million payment to termination the Qualified Pension Plan I during the nine months ended September 30, 2024. as well as the $6.6 million changes in other assets and current liabilities.
Investing Activities
Net cash used in investing activities was $3.1 million for the nine months ended September 30, 2024, as compared to the $1.5 million used in investing activities during the same period in 2023. The $1.6 million increase in cash used in investing activities was primarily related to purchase of property, plant and equipment activities in the nine months ended September 30, 2024.
Financing Activities
Net cash used in financing activities was $0.3 million for the nine months ended September 30, 2024, as compared to $3.1 million of net cash used in financing activities during the nine months ended September 30, 2023. The $2.8 million decrease in cash used in financing activities was primarily related to the $2.4 million used to repurchase our common stock in the nine months ended September 30, 2023.
Foreign Holdings of Cash
Consolidated foreign holdings of cash as of September 30, 2024 and December 31, 2023 were $1.8 million and $5.4 million, respectively.
Debt
On December 21, 2021, the Company entered into a three-year, $25 million asset-based revolving credit facility (the "Credit Facility") with Texas Capital Bank ("TCB"). The Company’s obligations under the Credit Facility are guaranteed on a joint and several basis by the Company’s material subsidiaries (the “Guarantors”). The Credit Facility is secured by substantially all of the assets of the Company and the Guarantors pursuant to a Pledge and Security Agreement, dated as of December 21, 2021, among the Company, TCB and the other Guarantors party thereto (the "Security Agreement"). On December 29, 2023, the Company extended the maturity date for the Credit Facility by a period of 6 months, to June 30, 2025. The extension was executed with substantially similar terms and conditions as the original Facility.
The Credit Facility provides for loans up to the lesser of (a) $25.0 million, and (b) the amount available under a "borrowing base" calculated primarily by reference to the Company's cash and cash equivalents and accounts receivables. The Credit Facility allows the Company to use up to $3.0 million of its borrowing capacity to issue letters of credit.
26

The loans under the Credit Facility accrue interest at a variable rate equal to the Secured Overnight Financing Rate (SOFR) plus a margin of 2.25% per annum. The latest rate was 7.27% as of September 30, 2024. The outstanding amounts advanced under the Credit Facility are due and payable in full on June 30, 2025.
The Company may repay and reborrow all or any portion of the loans advanced under the Credit Facility at any time, without premium or penalty. The Credit Facility is subject to mandatory prepayments (i) from the net proceeds of asset dispositions not otherwise permitted under the Credit Facility; (ii) if the unpaid principal balance under the Credit Facility plus the aggregate face amount of all outstanding letters of credit exceeds the borrowing base; (iii) in an amount equal to 50% of the net proceeds of issuances of capital stock (subject to customary exceptions); or (iv) in an amount equal to the net proceeds from any issuance of debt not otherwise permitted under the Credit Facility.
The Credit Facility contains certain covenants restricting the Company's and its subsidiaries' ability to create, incur, assume or become liable for indebtedness; make certain investments; pay dividends or repurchase the Company's stock; create, incur or assume liens; consummate mergers or acquisitions; liquidate, dissolve, suspend or cease operations; or modify accounting or tax reporting methods (other than as required by U.S. GAAP).
As of September 30, 2024 and December 31, 2023, we had no borrowings outstanding under the Credit Facility. At each of September 30, 2024 and December 31, 2023, we had letters of credit outstanding in the amount of $1.0 million and $0.8 million, respectively. No amounts were drawn against these letters of credit at September 30, 2024 and December 31, 2023. These letters of credit exist to support insurance programs relating to workers’ compensation, insurance, and reducing cash security deposits on leased property. We had no other off-balance sheet financing activities at September 30, 2024 and December 31, 2023.
As of September 30, 2024, we had the ability to borrow $24.0 million under the Credit Facility.
Dividends
We did not pay any dividends in the three months ended September 30, 2024 and 2023.
Share Repurchase
On May 2, 2023, the Board of Directors of Harte Hanks approved a share repurchase program to maximize shareholder value with authorization to repurchase $6.5 million of the Company’s Common Stock. During 2023, we repurchased 0.4 million shares of common stock for a total combined purchase price of $2.4 million. During 2024, we repurchased zero shares of stock during the three and nine months ended September 30, 2024. In the three and nine months ended September 30, 2023, we repurchased 0.4 million shares of Common Stock for $2.4 million.
Outlook
We consider such factors as total cash and cash equivalents and restricted cash, current assets, current liabilities, total debt, revenues, operating income, cash flows from operations, investing activities, and financing activities when assessing our liquidity. Our management of cash is designed to optimize returns on cash balances and to ensure that it is readily available to meet our operating, investing, and financing requirements as they arise. We believe that there are no conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern for the twelve months following the issuance of these Condensed Consolidated Financial Statements.
Critical and Recent Accounting Policies
Critical accounting estimates are defined as those that, in our judgment, are most important to the portrayal of our Company’s financial condition and results of operations and which require complex or subjective judgments or estimates. Actual results could differ materially from those estimates under different assumptions and conditions. Refer to the 2023 10-K for a discussion of our critical accounting estimates.
Our Significant Accounting policies are described in Note A, Overview and Significant Accounting Policies, in the Notes to Condensed Consolidated Financial Statements.
See Recent Accounting Pronouncements under Note B of the Notes to Condensed Consolidated Financial Statements for a discussion of certain accounting standards that have been recently issued.
27

Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer ("CEO") and Chief Financial Officer (“CFO”), as appropriate to allow timely decisions regarding required disclosure.
Our management, including our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of September 30, 2024, the end of the period covered by this Quarterly Report on Form 10-Q. Based upon such evaluation, our CEO and CFO concluded that the design and operation of these disclosure controls and procedures were effective, at the “reasonable assurance” level, to ensure information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms.
Changes in Internal Control over Financial Reporting
There were no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Information regarding legal proceedings is set forth in Note L, Litigation and Contingencies, in the Notes to Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q, which information is incorporated herein by reference.
Item 1a. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our 2023 10-K, which could materially affect our business, financial condition, or future results. The risks described in our 2023 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and operating results. There have been no material changes during the nine months ended September 30, 2024 to the risk factors previously disclosed in the 2023 10-K.
28

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
We did not sell any unregistered equity securities during the quarter ended September 30, 2024.
The following table provides information with respect to purchases by the Company of shares of our Common Stock during the quarter ended September 30, 2024:
PeriodTotal Number of Shares (or units) PurchasedAverage Price per Share (or unit)Total number of Shares Purchased as Part of a Publicly Announced Plan or Program
Approximate dollar value of shares that may yet be purchased under the program(1)
in thousands
July 1, 2024 to July 31, 2024$— $4,131 
August 1, 2024 to August 30, 2024$— 4,131 
September 1, 2024 to September 30, 2024$— 4,131 
$4,131 
(1)On May 2, 2023, the Board of Directors of Harte Hanks approved a share repurchase program to maximize shareholder value with authorization to repurchase $6.5 million of the Company’s Common Stock. No repurchases were made during the quarter ended September 30, 2024 . After giving effect to the repurchases made under the plan through September 30, 2024, the Company has remaining authority of $4.1 million to repurchase shares under the program.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
29

Item 6. Exhibits
Exhibit
No.
Description of Exhibit
*31.1
*31.2
*32.1
*32.2
*101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data Files because its XBRL tags are embedded within the Inline XBRL Document.
*101.SCHInline XBRL Taxonomy Extension Schema Document
*101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
*101.LABInline XBRL Taxonomy Extension Labels Linkbase Document
*101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
*101.DEFInline XBRL Definition Linkbase Document
*104Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)
__________________________________
*Filed or furnished herewith, as applicable.
**Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
HARTE HANKS, INC.
November 14, 2024/s/ Kirk Davis
DateKirk Davis
Chief Executive Officer
November 14, 2024/s/ David Garrison
DateDavid Garrison
Chief Financial Officer
30
Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Kirk Davis, Chief Executive Officer of Harte Hanks, Inc. (the “Company”), hereby certify that:
1.I have reviewed this quarterly report on Form 10-Q of the Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
November 14, 2024/s/ Kirk Davis
DateKirk Davis
Chief Executive Officer

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, David Garrison, Chief Financial Officer of Harte Hanks, Inc. (the “Company”), hereby certify that:
1.I have reviewed this quarterly report on Form 10-Q of the Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
November 14, 2024/s/ David Garrison
DateDavid Garrison
Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Kirk Davis, Chief Executive Officer of Harte Hanks, Inc. (the “Company”), hereby certify that the accompanying report on Form 10-Q for the quarter ended September 30, 2024 and filed with the Securities and Exchange Commission on the date hereof pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (the “Report”) by the Company fully complies with the requirements of those sections.
I further certify that, based on my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
November 14, 2024 /s/ Kirk Davis
Date Kirk Davis
 Chief Executive Officer
Note: This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, David Garrison, Chief Financial Officer of Harte Hanks, Inc. (the “Company”), hereby certify that the accompanying report on Form 10-Q for the quarter ended September 30, 2024 and filed with the Securities and Exchange Commission on the date hereof pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (the “Report”) by the Company fully complies with the requirements of those sections.
I further certify that, based on my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
November 14, 2024/s/ David Garrison
DateDavid Garrison
Chief Financial Officer
Note: This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

v3.24.3
Document And Entity Information - shares
9 Months Ended
Sep. 30, 2024
Oct. 31, 2024
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2024  
Document Transition Report false  
Entity File Number 001-07120  
Entity Registrant Name HARTE HANKS, INC.  
Entity Incorporation, State or Country Code DE  
Entity Address, Address Line One 1 Executive Drive  
Entity Address, City or Town Chelmsford  
Entity Address, State or Province MA  
Entity Address, Postal Zip Code 01824  
Entity Tax Identification Number 74-1677284  
City Area Code 512  
Local Phone Number 434-1100  
Title of 12(b) Security Common Stock  
Trading Symbol HHS  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   7,288,983
Entity Central Index Key 0000045919  
Current Fiscal Year End Date --12-31  
Amendment Flag false  
Document Fiscal Year Focus 2024  
Document Fiscal Period Focus Q3  
v3.24.3
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Current assets    
Cash and cash equivalents $ 5,944 $ 18,364
Accounts receivable (less allowance for doubtful accounts of $54 and $474 at September 30, 2024 and December 31, 2023, respectively) 33,275 34,313
Contract assets and unbilled accounts receivable 9,260 7,935
Prepaid expenses 2,119 1,915
Prepaid income taxes and income tax receivable 1,758 1,758
Other current assets 1,467 928
Total current assets 53,823 65,213
Property, plant and equipment (less accumulated depreciation of $38,845 and $36,533, respectively) 9,310 8,855
Right-of-use assets 22,926 25,417
Other assets    
Intangible assets, net 2,280 2,820
Goodwill 1,926 1,926
Deferred tax assets, net 17,128 17,268
Other long-term assets 734 1,258
Total other assets 22,068 23,272
Total assets 108,127 122,757
Current liabilities    
Accounts payable and accrued expenses 20,880 23,176
Accrued payroll and related expenses 4,476 5,615
Deferred revenue and customer advances 3,400 3,195
Customer postage and program deposits 1,430 1,815
Other current liabilities 2,995 9,495
Current portion of lease liabilities 3,762 4,815
Total current liabilities 36,943 48,111
Long-term lease liabilities, net of current portion 21,469 23,691
Other long-term liabilities 1,767 1,928
Total liabilities 87,078 102,900
Stockholders’ equity    
Common stock, $1 par value, 25,000,000 shares authorized; 12,221,484 shares issued, 7,353,162 and 7,224,718 shares outstanding at September 30, 2024 and December 31, 2023, respectively 12,221 12,221
Additional paid-in capital 125,173 157,889
Retained earnings 817,057 844,920
Less treasury stock, 4,868,322 shares at cost at September 30, 2024 and 4,996,766 shares at cost at December 31, 2023 (916,993) (951,083)
Accumulated other comprehensive loss (16,409) (44,090)
Total stockholders’ equity 21,049 19,857
Total liabilities and stockholders’ equity 108,127 122,757
Qualified Plan    
Current liabilities    
Pension liabilities 8,931 10,540
Nonqualified Plan    
Current liabilities    
Pension liabilities $ 17,968 $ 18,630
v3.24.3
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Statement of Financial Position [Abstract]    
Accounts receivable, allowance $ 54 $ 474
Property, plant and equipment, accumulated depreciation $ 38,845 $ 36,533
Common stock, par value (in dollars per share) $ 1 $ 1
Common stock, shares authorized (in shares) 25,000,000 25,000,000
Common stock, shares issued (in shares) 12,221,484 12,221,484
Common stock, shares outstanding (in shares) 7,353,162 7,224,718
Treasury store shares at cost (in shares) 4,868,322 4,996,766
v3.24.3
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Income Statement [Abstract]        
Revenue $ 47,630 $ 47,119 $ 138,113 $ 142,001
Operating expenses        
Labor 24,176 22,953 70,343 74,084
Production and distribution 14,421 15,378 41,850 43,158
Advertising, selling, general and administrative 5,260 4,922 17,051 16,071
Restructuring expenses 836 0 2,116 0
Depreciation and amortization expense 1,039 952 3,107 3,051
Total operating expenses 45,732 44,205 134,467 136,364
Operating income (loss) 1,898 2,914 3,646 5,637
Other expense, net        
Interest expense (income), net 57 1 107 (150)
Pension plan termination charges 0 0 37,505 0
Other expense, net 831 383 2,104 3,760
Total other expense, net 888 384 39,716 3,610
Income (loss) before income taxes 1,010 2,530 (36,070) 2,027
Income tax expense (benefit) 868 1,912 (8,207) 1,620
Net income (loss) $ 142 $ 618 $ (27,863) $ 407
Income (loss) per common share        
Basic (in dollars per share) $ 0.02 $ 0.09 $ (3.83) $ 0.06
Diluted (in dollars per share) $ 0.02 $ 0.08 $ (3.83) $ 0.05
Weighted average shares used to compute income (loss) per share        
Basic (in shares) 7,324 7,239 7,273 7,340
Diluted (in shares) 7,398 7,314 7,273 7,509
Comprehensive income (loss) net of tax:        
Net income (loss) $ 142 $ 618 $ (27,863) $ 407
Adjustment to pension liability, net 102 503 29,626 1,421
Foreign currency translation adjustment (8) (559) (1,945) 1,645
Total other comprehensive income (loss), net of tax 94 (56) 27,681 3,066
Comprehensive income (loss) $ 236 $ 562 $ (182) $ 3,473
v3.24.3
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($)
$ in Thousands
Total
Common Stock
Additional Paid-in Capital
Retained Earnings
Treasury Stock
Accumulated Other Comprehensive Loss
Beginning balance at Dec. 31, 2022 $ 18,808 $ 12,221 $ 218,411 $ 846,490 $ (1,010,012) $ (48,302)
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Stock-based compensation 540   540      
Vesting of RSUs (212)   (21,538)   21,326  
Net (loss) income (791)     (791)    
Other comprehensive (loss) income 2,620         2,620
Ending balance at Mar. 31, 2023 20,965 12,221 197,413 845,699 (988,686) (45,682)
Beginning balance at Dec. 31, 2022 18,808 12,221 218,411 846,490 (1,010,012) (48,302)
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Repurchase of common stock (2,400)          
Net (loss) income 407          
Other comprehensive (loss) income 3,066          
Ending balance at Sep. 30, 2023 20,504 12,221 160,213 846,897 (953,591) (45,236)
Beginning balance at Mar. 31, 2023 20,965 12,221 197,413 845,699 (988,686) (45,682)
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Stock-based compensation 502   502      
Vesting of RSUs (120)   (10,529)   10,409  
Repurchase of common stock (1,879)       (1,879)  
Net (loss) income 580     580    
Other comprehensive (loss) income 502         502
Ending balance at Jun. 30, 2023 20,550 12,221 187,386 846,279 (980,156) (45,180)
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Stock-based compensation 160   160      
Vesting of RSUs (278)   (27,333)   27,055  
Repurchase of common stock (490)       (490)  
Net (loss) income 618     618    
Other comprehensive (loss) income (56)         (56)
Ending balance at Sep. 30, 2023 20,504 12,221 160,213 846,897 (953,591) (45,236)
Beginning balance at Dec. 31, 2023 19,857 12,221 157,889 844,920 (951,083) (44,090)
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Stock-based compensation 552   552      
Vesting of RSUs (87)   (5,264)   5,177  
Net (loss) income (171)     (171)    
Other comprehensive (loss) income (189)         (189)
Ending balance at Mar. 31, 2024 19,962 12,221 153,177 844,749 (945,906) (44,279)
Beginning balance at Dec. 31, 2023 19,857 12,221 157,889 844,920 (951,083) (44,090)
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Repurchase of common stock 0          
Net (loss) income (27,863)          
Other comprehensive (loss) income 27,681          
Ending balance at Sep. 30, 2024 21,049 12,221 125,173 817,057 (916,993) (16,409)
Beginning balance at Mar. 31, 2024 19,962 12,221 153,177 844,749 (945,906) (44,279)
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Stock-based compensation 734   734      
Vesting of RSUs (30)   (8,208)   8,178  
Net (loss) income (27,834)     (27,834)    
Other comprehensive (loss) income 27,776         27,776
Ending balance at Jun. 30, 2024 20,608 12,221 145,703 816,915 (937,728) (16,503)
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Stock-based compensation 368   368      
Vesting of RSUs (163)   (20,898)   20,735  
Repurchase of common stock 0          
Net (loss) income 142     142    
Other comprehensive (loss) income 94         94
Ending balance at Sep. 30, 2024 $ 21,049 $ 12,221 $ 125,173 $ 817,057 $ (916,993) $ (16,409)
v3.24.3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Cash Flows from Operating Activities    
Net (loss) income $ (27,863) $ 407
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:    
Depreciation and amortization expense 3,107 3,051
Stock-based compensation 1,654 1,203
Pension cost (payment), net 31,027 16
Deferred income taxes (10,254) (453)
Changes in assets and liabilities:    
Accounts receivable and contract assets (287) 3,816
Prepaid expenses, income tax receivable and other current assets (79) 4,106
Accounts payable and accrued expenses (1,989) (3,785)
Deferred revenue and customer advances 205 1,091
Customer postage and program deposits (385) 222
Other accrued expenses and liabilities (2,168) (3,564)
Net cash (used in) provided by operating activities (7,032) 6,110
Cash Flows from Investing Activities    
Purchases of property, plant and equipment (3,119) (1,480)
Proceeds from sale of property, plant and equipment 1 3
Net cash used in investing activities (3,118) (1,477)
Cash Flows from Financing Activities    
Debt financing costs 0 (6)
Payment of finance leases (45) (144)
Repurchase of common stock 0 (2,370)
Treasury stock activities (280) (610)
Net cash used in financing activities (325) (3,130)
Effect of exchange rate changes on cash, cash equivalents and restricted cash (1,945) 1,421
Net (decrease) increase in cash and cash equivalents and restricted cash (12,420) 2,924
Cash and cash equivalents and restricted cash at beginning of period 18,864 11,364
Cash and cash equivalents and restricted cash at end of period 6,444 14,288
Supplemental disclosures    
Cash (received) paid for interest (34) 198
Cash paid for (received) income taxes, net 1,194 (3,369)
Non-cash investing and financing activities    
Purchases of property, plant and equipment included in accounts payable 1,402 1,935
Cash and cash equivalents 5,944 13,288
Cash held in Escrow account included in other assets 500 1,000
Cash and cash equivalents at end of period $ 6,444 $ 14,288
v3.24.3
Overview and Significant Accounting Policies
9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Overview and Significant Accounting Policies Overview and Significant Accounting Policies
Background
Harte Hanks, Inc. together with its subsidiaries (“Harte Hanks,” “Company,” “we,” “our,” or “us”) is a leading global customer experience company. With offices in North America, Asia-Pacific and Europe, Harte Hanks works with some of the world’s most respected brands.
Segment Reporting
The Company operates four reportable segments: Marketing Services; Customer Care; Sales Services; and Fulfillment & Logistics Services. Our Chief Executive Officer (“CEO”) is considered to be our chief operating decision maker. Our CEO reviews our operating results on an aggregate basis for purposes of allocating resources and evaluating financial performance by using the two financial measures: revenue and operating income.
Accounting Principles
Our unaudited interim condensed consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 10-K”).
Consolidation
The accompanying unaudited interim condensed consolidated financial statements include the accounts of Harte Hanks, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. As used in this report, the terms “Harte Hanks,” “the Company,” “we,” “us,” or “our” may refer to Harte Hanks, Inc., one or more of its consolidated subsidiaries, or all of them taken as a whole, as the context may require.
Interim Financial Information
The condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Rule 8-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.
Use of Estimates
Preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from those estimates due to uncertainties. Such estimates include, but are not limited to, estimates related to lease accounting; pension accounting; fair value for purposes of assessing long-lived assets for impairment; revenue recognition; income taxes; stock-based compensation and contingencies. On an ongoing basis, management reviews its estimates and assumptions based on currently available information. Changes in facts and circumstances could result in revised estimates and assumptions.
Operating Expense Presentation in Condensed Consolidated Statements of Comprehensive (Loss) Income
The “Labor” line in the Condensed Consolidated Statements of Comprehensive Loss (Income) includes all employee payroll and benefits costs, including stock-based compensation and temporary labor costs. The “Production and distribution” and “Advertising, selling, general and administrative” lines do not include any labor, depreciation, or amortization expense.
Revenue Recognition
We recognize revenue upon the transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to be entitled to receive in exchange for those products or services based on the relevant contract. We apply the following five-step revenue recognition model:
Identification of the contract, or contracts, with a customer
Identification of the performance obligations in the contract
Determination of the transaction price
Allocation of the transaction price to the performance obligations in the contract
Recognition of revenue when (or as) we satisfy the performance obligation
Certain client programs provide for adjustments to billings based upon whether we achieve certain performance criteria. In these circumstances, revenue is recognized when the foregoing conditions are met. We record revenue net of any taxes collected from customers and subsequently remitted to governmental authorities. Any payments received in advance of the performance of services or delivery of the product are recorded as deferred revenue until such time as the services are performed or the product is delivered. Costs incurred for search engine marketing solutions payable to the engine host and postage costs of mailings are billed to our clients and are not directly reflected in our revenue.
Revenue from agency and digital services, direct mail, logistics, fulfillment and contact center is recognized when the work is performed. Fees for these services are determined by the terms set forth in each contract. These fees are typically a set fixed price or rate by transaction occurrence, service provided, time spent, or product delivered.
Fair Value of Financial Instruments
Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") 820, Fair Value Measurements and Disclosures, (“ASC 820”) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a fair value hierarchy that prioritizes the inputs used in valuation methodologies into three levels:
Level 1
Quoted prices in active markets for identical assets or liabilities.
Level 2Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Because of their maturities and/or variable interest rates, certain financial instruments have fair values approximating their carrying values. These instruments include cash and cash equivalents and restricted cash, accounts receivable, trade payables, and debt. The fair value of the assets in our funded pension plan is discussed in Note H, Employee Benefit Plans.
Leases
We determine if an arrangement is a lease at its inception. Operating and finance leases are included in the lease right-of-use (“ROU”) assets and in the current portion and long-term portion of lease liabilities on our condensed consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of each lease based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement date of each lease to determine the present value of lease payments. The operating lease ROU assets also include any lease payments made and exclude lease incentives. Our lease terms may include options to extend or terminate the lease, which are included in the lease ROU assets when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, which are generally accounted for separately. For certain real estate leases, we account for the lease and non-lease components as a single lease component.
v3.24.3
Recent Accounting Pronouncements
9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Recent Accounting Pronouncements Recent Accounting Pronouncements
Recent Accounting Guidance Not Yet Adopted
In November 2023, the FASB issued accounting standards update (“ASU”) 2023-07, which enhances the disclosures required for reportable segments in annual and interim consolidated financial statements. ASU 2023-07 is effective for the Company for annual reporting periods beginning with the fiscal year ending December 31, 2024, and for interim reporting periods beginning in fiscal year 2025. Early adoption is permitted. The Company is currently evaluating the impact that this update will have on its disclosures in the consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, which requires enhanced income tax disclosures, including disaggregation of information in the rate reconciliation table and disaggregated information related to income taxes paid. The amendments in ASU 2023-09 are effective for the annual periods beginning with the fiscal year ending December 31, 2025. The Company is currently evaluating the impact that this update will have on its disclosures in the consolidated financial statements.
No other new accounting pronouncements recently adopted or issued had or are expected to have a material impact on the condensed consolidated financial statements.
v3.24.3
Revenue from Contracts with Customers
9 Months Ended
Sep. 30, 2024
Revenue from Contract with Customer [Abstract]  
Revenue from Contracts with Customers Revenue from Contracts with Customers
Consistent with GAAP, we present sales taxes assessed on revenue-producing transactions on a net basis.
Disaggregation of Revenue
We disaggregate revenue by four key revenue streams which are aligned with our reportable segments. The nature of the services offered by each key revenue stream is different. The following table summarizes revenue from contracts with customers for the three and nine months ended September 30, 2024 and 2023 by our four reportable segments and the pattern of revenue recognition:
Three Months Ended September 30, 2024
In thousandsRevenue for performance obligations recognized over timeRevenue for performance obligations recognized at a point in timeTotal
Marketing Services$7,960 $1,090 $9,050 
Customer Care13,068 — 13,068 
Sales Services4,205 — 4,205 
Fulfillment and Logistics Services17,644 3,663 21,307 
Total Revenues$42,877 $4,753 $47,630 
Three Months Ended September 30, 2023
In thousandsRevenue for performance obligations recognized over timeRevenue for performance obligations recognized at a point in timeTotal
Marketing Services$9,272 $1,319 $10,591 
Customer Care11,832 — 11,832 
Sales Services2,166 — 2,166 
Fulfillment and Logistics Services18,625 3,905 22,530 
Total Revenues$41,895 $5,224 $47,119 
Nine Months Ended September 30, 2024
In thousandsRevenue for performance obligations recognized over timeRevenue for performance obligations recognized at a point in timeTotal
Marketing Services$22,408 $3,301 $25,709 
Customer Care37,894 — 37,894 
Sales Services13,281 — 13,281 
Fulfillment and Logistics Services49,901 11,328 61,229 
Total Revenues$123,484 $14,629 $138,113 
Nine Months Ended September 30, 2023
In thousandsRevenue for performance obligations recognized over timeRevenue for performance obligations recognized at a point in timeTotal
Marketing Services$29,321 $3,430 $32,751 
Customer Care38,372 — 38,372 
Sales Services7,253 — 7,253 
Fulfillment and Logistics Services52,044 11,581 63,625 
Total Revenues$126,990 $15,011 $142,001 
Our contracts with customers may consist of multiple performance obligations. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price (“SSP”) basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct good or service that forms part of a single performance obligation. For most performance obligations, we determine SSP based on the price at which the performance obligation is sold separately. Although uncommon, if the SSP is not observable through past transactions, we estimate the SSP taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Further discussion of other performance obligations in each of our major revenue streams follows:
Marketing Services
Our Marketing Services segment delivers strategic planning, data strategy, performance analytics, creative development and execution, technology enablement, marketing automation, and database management. We create relevancy by leveraging data, insight, and our extensive experience in leading clients as they engage their customers through digital, traditional, and emerging channels. We are known for helping clients build deep customer relationships, create connected customer experiences, and optimize each and every customer touch point in order to deliver desired business outcomes.
Most marketing services performance obligations are satisfied over time and often offered on a per project basis. We have concluded that the best approach to measure the progress toward completion of the project-based performance obligations is the input method, which is based on either the costs or labor hours incurred to date depending upon whether costs or labor hours more accurately depict the transfer of value to the customer.
Our database solutions are built around centralized marketing databases with services rendered to build custom database, database hosting services, customer or target marketing lists and data processing services.
These performance obligations, including services rendered to build a custom database, database hosting services, customer or target marketing lists and data processing services, may be satisfied over time or at a point in time. We provide software as a service (“SaaS”) solutions to host data for customers and have concluded that these solutions are stand-ready obligations to be recognized over time on a monthly basis. Our promise to provide certain data related services meets the over-time recognition criteria because our services do not create an asset with an alternative use, and we have an enforceable right to payment. For performance obligations recognized over time, we choose either the input (i.e., labor hour) or output method (i.e., number of customer records) to measure the progress toward completion depending on the nature of the services provided. Some of our other data-related services do not meet the over-time criteria and are therefore, recognized at a point-in-time, typically upon the delivery of a specific deliverable.
Our contracts may include outsourced print production work for our clients. These contracts may include a promise to purchase postage on behalf of our clients. In such cases, we have determined we are an agent, rather than principal and therefore recognize net consideration as revenue.
Customer Care
We deliver customer care services in the United States, Asia, and Europe to provide advanced solutions such as voice, SMS/chat, email, integrated voice response, web self-service, social cloud monitoring, and analytics.
Performance obligations are stand-ready obligations and are satisfied over time. With regard to account management and SaaS, we use a time-elapsed output method to recognize revenue. For performance obligations where we charge customers a transaction-based fee, we use the output method based on transaction quantities. In most cases, our contracts provide us the right to invoice for services provided, therefore, we generally use the “as invoiced” practical expedient to recognize revenue associated with these performance obligations unless significant discounts are offered in a contract and prices for services do not represent their SSPs.
Sales Services
Our Sales Services segment enables customers to optimize their go-to-market function by offering a range of outsourced services including sales process optimization, sales play development, inbound lead qualification and outbound sales prospecting.
Performance obligations are stand-ready obligations and are satisfied over time. With regard to account management and SaaS, we use a time-elapsed output method to recognize revenue. For performance obligations where we charge customers a transaction-based fee, we use the output method based on transaction quantities. In most cases, our contracts provide us the right to invoice for services provided, therefore, we generally use the “as invoiced” practical expedient to recognize revenue associated with these performance obligations unless significant discounts are offered in a contract and prices for services do not represent their SSPs.
Fulfillment & Logistics Services
Our services, delivered internally and with our partners, include printing, lettershop, advanced mail optimization (including commingling services), logistics and transportation optimization, monitoring and tracking, to support traditional and specialized mailings. Our print and fulfillment centers in Massachusetts and Kansas provide custom kitting services, print on demand, product recall support, trade marketing fulfillment, ecommerce product fulfillment, sampling programs, and freight optimization, thereby allowing our customers to efficiently and effectively distribute literature and other marketing materials.
Most performance obligations offered within this revenue stream are satisfied over time and utilize the input or output method, depending on the nature of the service, to measure progress toward satisfying the performance obligation. For performance obligations where we charge customers a transaction-based fee, we utilize the output method based on the quantities fulfilled. Services provided through our fulfillment centers are typically priced at a per transaction basis and our contracts provide us the right to invoice for services provided and reflects the value to the customer of the services transferred to date. In most cases, we use the “as invoiced” practical expedient to recognize revenue associated with these performance obligations unless significant discounts are offered in a contract and prices for services do not represent their standalone selling prices. Our direct mail business contracts may have included a promise to purchase postage on behalf of our clients; in such cases, we have determined we are an agent, rather than principal and therefore recognize net consideration as revenue.
Transaction Price Allocated to Future Performance Obligations
We have elected to apply certain optional exemptions that limit the disclosure requirements over remaining performance obligations at period end to exclude the performance obligations that have an original expected duration of one year or less, transactions using the “as invoiced” practical expedient, or when a performance obligation is a series and we have allocated the variable consideration directly to the services performed. As of September 30, 2024, we had no transaction prices allocated to unsatisfied or partially satisfied performance obligations.
Contract Balances
We record a receivable when revenue is recognized prior to invoicing when we have an unconditional right to consideration (only the passage of time is required before payment of that consideration is due) and a contract asset when the right to payment is conditional upon our future performance such as delivery of an additional good or service (e.g. customer contract requires customer’s final acceptance of custom database solution or the delivery of a final marketing strategy presentation before customer payment is required). If invoicing occurs prior to revenue recognition, the unearned revenue is presented on our Condensed Consolidated Balance Sheet as a contract liability, referred to as deferred revenue.
The following table summarizes our contract balances as of September 30, 2024 and December 31, 2023:
In thousandsSeptember 30, 2024December 31, 2023
Unbilled accounts receivable8,952 7,677 
Contract assets308 258 
Deferred revenue and customer advances3,400 3,195 
Deferred revenue, included in other long-term liabilities213 294 
Revenue recognized during the nine months ended September 30, 2024 from amounts included in deferred revenue at the beginning of the period was approximately $2.9 million. Revenue recognized during the nine months ended September 30, 2023 from amounts included in deferred revenue at the beginning of the period was approximately $3.9 million.
Costs to Obtain and Fulfill a Contract
We recognize an asset for the direct costs incurred to obtain and fulfill our contracts with customers to the extent that we expect to recover these costs and if the benefit is longer than one year. These costs are amortized to expense over the expected period of the benefit in a manner that is consistent with the transfer of the related goods or services to which the asset relates. We impair the asset when recoverability is not anticipated. We capitalized a portion of commission expense, implementation and other costs that represents the cost to obtain a contract. The remaining unamortized contract costs were $0.3 million and $0.6 million as of September 30, 2024 and December 31, 2023, respectively. They are included in other current assets and other assets on our balance sheet. For the periods presented, no impairment was recognized.
v3.24.3
Leases
9 Months Ended
Sep. 30, 2024
Leases [Abstract]  
Leases Leases
We have operating and finance leases for corporate and business offices, service facilities, call centers and certain equipment. Leases with an initial term of 12 months or less are generally not recorded on the balance sheet, unless the arrangement includes an option to purchase the underlying asset, or an option to renew the arrangement, that we are reasonably certain to exercise (short-term lease). Our leases have remaining lease terms of one to eight years, some of which may include options to extend the leases for up to an additional five years.
As of September 30, 2024, assets recorded under finance and operating leases were approximately $0.5 million and $22.4 million, respectively, and accumulated amortization associated with finance leases was $0.2 million. As of December 31, 2023, assets recorded under finance and operating leases were approximately $0.1 million and $25.3 million, respectively, and accumulated amortization associated with finance leases was $0.1 million. Operating lease right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The discount rate used to determine the commencement date present value of lease payment is the interest rate implicit in the lease, or when that is not readily determinable, we utilize our incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.
There was no impairment of leases during the three and nine months ended September 30, 2024 and 2023.
The following table presents supplemental balance sheet information related to our financing and operating leases:
In thousandsAs of September 30, 2024As of December 31, 2023
Operating LeasesFinance LeasesTotalOperating LeasesFinance LeasesTotal
Right-of-use Assets$22,392 $534 $22,926 $25,288 $129 $25,417 
Liabilities
Current portion of lease liabilities3,665 97 3,762 4,773 42 4,815 
Long-term lease liabilities21,114 355 21,469 23,687 23,691 
Total Lease Liabilities$24,779 $452 $25,231 $28,460 $46 $28,506 
For the three and nine months ended September 30, 2024 and 2023, the components of lease expense were as follows:
Three months ended September 30,Nine months ended September 30,
In thousands2024202320242023
Operating lease cost$1,314 $1,338 $3,996 $4,160 
Finance lease cost:
Amortization of right-of-use assets30 35 61 115 
Interest on lease liabilities17 
Total Finance lease cost39 37 78 121 
Variable lease cost412 537 1,443 1,525 
Sublease income(53)(177)(368)(676)
Total lease cost, net$1,712 $1,735 $5,149 $5,130 
Other information related to leases was as follows:
In thousandsNine Months Ended September 30, 2024Nine Months Ended September 30, 2023
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$8,464 $9,525 
Operating cash flows from finance leases15 
Financing cash flows from finance leases79 144 
Weighted Average Remaining Lease term
Operating leases6.65.6
Finance leases4.51.3
Weighted Average Discount Rate
Operating leases5.73 %3.56 %
Finance leases8.15 %7.04 %
The maturities of the Company’s finance and operating lease liabilities as of September 30, 2024 are as follows:
In thousandsOperating Leases Finance Leases
Year Ending December 31,
Remainder of 2024$1,398 $35 
20254,656 120 
20264,232 117 
20274,198 117 
20284,094 117 
2029 and beyond11,397 32 
Total future minimum lease payments29,975 538 
Less: imputed interest5,196 86 
Total lease liabilities$24,779 $452 
Leases Leases
We have operating and finance leases for corporate and business offices, service facilities, call centers and certain equipment. Leases with an initial term of 12 months or less are generally not recorded on the balance sheet, unless the arrangement includes an option to purchase the underlying asset, or an option to renew the arrangement, that we are reasonably certain to exercise (short-term lease). Our leases have remaining lease terms of one to eight years, some of which may include options to extend the leases for up to an additional five years.
As of September 30, 2024, assets recorded under finance and operating leases were approximately $0.5 million and $22.4 million, respectively, and accumulated amortization associated with finance leases was $0.2 million. As of December 31, 2023, assets recorded under finance and operating leases were approximately $0.1 million and $25.3 million, respectively, and accumulated amortization associated with finance leases was $0.1 million. Operating lease right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The discount rate used to determine the commencement date present value of lease payment is the interest rate implicit in the lease, or when that is not readily determinable, we utilize our incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.
There was no impairment of leases during the three and nine months ended September 30, 2024 and 2023.
The following table presents supplemental balance sheet information related to our financing and operating leases:
In thousandsAs of September 30, 2024As of December 31, 2023
Operating LeasesFinance LeasesTotalOperating LeasesFinance LeasesTotal
Right-of-use Assets$22,392 $534 $22,926 $25,288 $129 $25,417 
Liabilities
Current portion of lease liabilities3,665 97 3,762 4,773 42 4,815 
Long-term lease liabilities21,114 355 21,469 23,687 23,691 
Total Lease Liabilities$24,779 $452 $25,231 $28,460 $46 $28,506 
For the three and nine months ended September 30, 2024 and 2023, the components of lease expense were as follows:
Three months ended September 30,Nine months ended September 30,
In thousands2024202320242023
Operating lease cost$1,314 $1,338 $3,996 $4,160 
Finance lease cost:
Amortization of right-of-use assets30 35 61 115 
Interest on lease liabilities17 
Total Finance lease cost39 37 78 121 
Variable lease cost412 537 1,443 1,525 
Sublease income(53)(177)(368)(676)
Total lease cost, net$1,712 $1,735 $5,149 $5,130 
Other information related to leases was as follows:
In thousandsNine Months Ended September 30, 2024Nine Months Ended September 30, 2023
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$8,464 $9,525 
Operating cash flows from finance leases15 
Financing cash flows from finance leases79 144 
Weighted Average Remaining Lease term
Operating leases6.65.6
Finance leases4.51.3
Weighted Average Discount Rate
Operating leases5.73 %3.56 %
Finance leases8.15 %7.04 %
The maturities of the Company’s finance and operating lease liabilities as of September 30, 2024 are as follows:
In thousandsOperating Leases Finance Leases
Year Ending December 31,
Remainder of 2024$1,398 $35 
20254,656 120 
20264,232 117 
20274,198 117 
20284,094 117 
2029 and beyond11,397 32 
Total future minimum lease payments29,975 538 
Less: imputed interest5,196 86 
Total lease liabilities$24,779 $452 
v3.24.3
Convertible Preferred Stock and Share Repurchase Program
9 Months Ended
Sep. 30, 2024
Equity [Abstract]  
Convertible Preferred Stock and Share Repurchase Program Convertible Preferred Stock and Share Repurchase Program
Convertible Preferred Stock
On March 20, 2023, the Company cancelled all shares of Series A Preferred Stock pursuant to the Certificate of Elimination filed with the Secretary of State of Delaware.
Share Repurchase Program
On May 2, 2023, the Board of Directors of Harte Hanks approved a share repurchase program to maximize shareholder value with authorization to repurchase $6.5 million of the Company’s Common Stock. In the three and nine months ended September 30, 2024, we didn't repurchase any shares of common stock. In the three and nine months ended September 30, 2023, we repurchased 0.1 million and 0.4 million shares of Common Stock for $0.5 million and $2.4 million
v3.24.3
Debt - Credit Facility
9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Debt - Credit Facility Debt - Credit Facility
On December 21, 2021, the Company entered into a three-year, $25.0 million asset-based revolving credit facility (the "Credit Facility") with Texas Capital Bank ("TCB"). The Company’s obligations under the Credit Facility are guaranteed on a joint and several basis by the Company’s material subsidiaries (the “Guarantors”). The Credit Facility is secured by substantially all of the assets of the Company and the Guarantors pursuant to a Pledge and Security Agreement, dated as of December 21, 2021, among the Company, TCB and the other Guarantors party thereto (the "Security Agreement"). On December 29, 2023, the Company extended the maturity date for the Credit Facility by a period of six months to June 30, 2025. The extension was executed with substantially similar terms and conditions as the original Credit Facility.
The Credit Facility provides for loans up to the lesser of (a) $25.0 million, and (b) the amount available under a “borrowing base” calculated primarily by reference to the Company's cash and cash equivalents and accounts receivables. The Credit Facility allows the Company to use up to $3.0 million of its borrowing capacity to issue letters of credit.
The loans under the Credit Facility accrue interest at a variable rate equal to the Secured Overnight Financing Rate (SOFR) plus a margin of 2.25% per annum. The interest rate was 7.27% as of September 30, 2024. The outstanding amounts advanced under the Credit Facility are due and payable in full on June 30, 2025. As of September 30, 2024 and December 31, 2023, we had letters of credit outstanding in the amount of $1.0 million and $0.8 million, respectively. No amounts were drawn against these letters of credit at September 30, 2024. These letters of credit exist to support insurance programs relating to worker’s compensation and general liability. Unused commitment balances accrue fees at a rate of 0.25%.
As of September 30, 2024 and December 31, 2023, we had the ability to borrow $24.0 million and $24.2 million, respectively, under the Credit Facility. As of September 30, 2024 and December 31, 2023, we had no borrowings outstanding under the Credit Facility
v3.24.3
Stock-Based Compensation
9 Months Ended
Sep. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
We maintain stock incentive plans for the benefit of certain officers, directors, and employees. Our stock incentive plans provide for the ability to issue stock options, cash stock appreciation rights, performance stock units, phantom stock units and cash performance stock units. Our cash stock appreciation rights, phantom stock units and cash performance stock units settle solely in cash and are treated as the current liability, which are adjusted each reporting period based on changes in our stock price.
Compensation expense for stock-based awards is based on the fair values of the awards on the date of grant and is recognized on a straight-line basis over the vesting period of the entire award in the “Labor” line of the Condensed Consolidated Statements of Comprehensive Income (Loss). We recognized $0.4 million and $0.2 million of stock-based compensation expense during the three months ended September 30, 2024 and 2023, respectively. We recognized $1.7 million and $1.2 million of stock-based compensation expense during the nine months ended September 30, 2024 and 2023, respectively.
v3.24.3
Employee Benefit Plans
9 Months Ended
Sep. 30, 2024
Retirement Benefits [Abstract]  
Employee Benefit Plans Employee Benefit Plans
Prior to January 1, 1999, we provided a defined benefit pension plan for which most of our employees were eligible to participate (the “Qualified Pension Plan”). In conjunction with significant enhancements to our 401(k) plan, we elected to freeze benefits under the Qualified Pension Plan as of December 31, 1998.
In 1994, we adopted a non-qualified, unfunded, supplemental pension plan (the “Restoration Pension Plan”) covering certain employees, which provides for incremental pension payments so that total pension payments equal those amounts that would have been payable from the principal pension plan were it not for limitations imposed by income tax regulation. The benefits under the Restoration Pension Plan were intended to provide benefits equivalent to our Qualified Pension Plan as if such plan had not been frozen. We elected to freeze benefits under the Restoration Pension Plan as of April 1, 2014.
At the end of 2020, the Board of Directors of the Company approved the division of the Qualified Pension Plan into two distinct plans, “Qualified Pension Plan I” and “Qualified Pension Plan II.” The assets and liabilities of the Qualified Pension Plan that were attributable to certain participants in Qualified Pension Plan II were spun off and transferred into Qualified Pension Plan II effective as of the end of December 31, 2021, in accordance with Internal Revenue Code section 414(I) and ERISA Section 4044.
In January 2023, the Board of Directors of the Company approved the termination of the Qualified Pension Plan I. The termination process took approximately 18 months and was completed in June 2024, which resulted in the transfer of our obligations pursuant to this pension plan to an insurance company. We made total cash payment of $7.2 million to terminate the Qualified Pension Plan I during the nine months ended September 30, 2024. We made a $6.1 million cash contribution in the three months ended June 30, 2024. This contribution with the liquidation of pension assets was used to purchase annuities from an insurance company, which settled the liabilities for Pension Plan I participants. We paid another $1.1 million during the three months ended September 30, 2024 as the insurance company was onboarding pension participants and final filings were submitted to the Pension Benefit Guaranty Corporation. We recognized $37.5 million of pension termination charges which were reflected in our Condensed Consolidated Statements of Comprehensive Income (Loss) for nine months ended September 30, 2024.
The overfunded or underfunded status of our defined benefit post-retirement plans is recorded as an asset or liability on our condensed consolidated balance sheets. The funded status is measured as the difference between the fair value of plan assets and the projected benefit obligation. Periodic changes in the funded status are recognized through other comprehensive income in the Condensed Consolidated Statements of Comprehensive Income (Loss). We currently measure the funded status of our defined benefit plans as of December 31, the date of our year-end Consolidated Balance Sheets.
Net pension cost for both plans included the following components:
Three Months Ended September 30,Nine Months Ended September 30,
In thousands2024202320242023
Interest cost$702 $1,772 $4,330 $5,316 
Expected return on plan assets(470)(1,554)(3,163)(4,662)
Recognized actuarial loss137 630 1,420 1,890 
Net periodic benefit cost$369 $848 $2,587 $2,544 
Based on current estimates, we will be required to make a $2.0 million contribution to the combined qualified Pension Plan in 2024. We made $1.6 million of such $2.0 million aggregate contribution in the nine months ended September 30, 2024.
We are not required to make, and do not intend to make, any contributions to our Restoration Pension Plan in 2024 other than to the extent needed to cover benefit payments. We made benefit payments under this supplemental plan of $1.4 million in both the nine months ended September 30, 2024 and 2023.
v3.24.3
Income Taxes
9 Months Ended
Sep. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The income tax expense was $0.9 million and $1.9 million for the three months ended September 30, 2024 and 2023, respectively. The provision for income taxes resulted in an effective tax rate of 85.9% for the three months ended September 30, 2024 and 75.6% for the three months ended September 30, 2023. The effective income tax rate for the three months ended September 30, 2024 and 2023 differs from the federal statutory rate of 21%, primarily due to the U.S. state income taxes and the impact of income earned in foreign jurisdictions.
The income tax benefit was $8.2 million and income tax provision was $1.6 million for the nine months ended September 30, 2024 and 2023, respectively. The provision for income taxes resulted in an effective tax rate of 22.8% for the nine months ended September 30, 2024 and 79.9% for the nine months ended September 30, 2023. The effective income tax rate for the nine months ended September 30, 2024 and 2023 differs from the federal statutory rate of 21%, primarily due to the U.S. state income taxes and the impact of income earned in foreign jurisdictions.
Harte Hanks, or one of our subsidiaries file income tax returns in the U.S. federal, U.S. state, and foreign jurisdictions. For U.S. state, federal and foreign returns, we are no longer subject to tax examinations for years prior to 2021. The Company has reviewed all of its tax positions in order to determine whether all, a portion, or none of any related tax benefit should be recognized and has not identified or recorded any ASC 740-10 reserve.
We have elected to classify any interest expense and penalties related to income taxes within income tax expense in our Condensed Consolidated Statements of Comprehensive Income (Loss). We did not have a significant amount of interest or penalties accrued at September 30, 2024 or December 31, 2023.
v3.24.3
Earnings (Loss) Per Share
9 Months Ended
Sep. 30, 2024
Earnings Per Share [Abstract]  
Earnings (Loss) Per Share Earnings (Loss) Per Share
Basic income (loss) per share (“EPS”) is calculated using income available to common stockholders, divided by the weighted average number of shares outstanding during the period. Diluted earnings per share is calculated using income available to common stockholders divided by the weighted average number of shares of common stock including both shares outstanding and shares potentially issuable in connection with restricted common stock awards and stock option under our stock incentive plans.
Reconciliations of basic and diluted EPS were as follows:
Three months ended September 30,Nine months ended September 30,
In thousands, except per share amounts2024202320242023
Numerator:
Net income (loss) $142 $618 $(27,863)$407 
Denominator:
Basic EPS denominator: weighted-average common shares outstanding7,3247,2397,2737,340
Diluted EPS denominator7,3987,3147,2737,509
Basic (loss) income per Common Share$0.02 $0.09 $(3.83)$0.06 
Diluted (loss) income per Common Share$0.02 $0.08 $(3.83)$0.05 
For the three months ended September 30, 2024 and 2023, respectively, the following shares have been excluded from the calculation of shares used in the diluted EPS calculation: 354,239 and 132,193 shares of anti-dilutive market price options; 13,567 and 58,869 of anti-dilutive unvested restricted shares.
For the nine months ended September 30, 2024 and 2023, respectively, the following shares have been excluded from the calculation of shares used in the diluted EPS calculation: 335,431 and 8,098 shares of anti-dilutive market price options; 23,114 and 40,389 of anti-dilutive unvested restricted shares.
v3.24.3
Comprehensive Income (Loss)
9 Months Ended
Sep. 30, 2024
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]  
Comprehensive Income (Loss) Comprehensive Income (Loss)
Comprehensive income (loss) for a period encompasses net income (loss) and all other changes in equity other than from transactions with our stockholders.
Changes in accumulated other comprehensive loss by component were as follows:
In thousandsDefined Benefit
Pension Items
Foreign Currency
Items
Total
Balance at December 31, 2023$(42,456)$(1,634)$(44,090)
Other comprehensive loss, net of tax, before reclassifications— (1,945)(1,945)
Amounts reclassified from accumulated other comprehensive income, net of tax, to other, net, on the condensed consolidated statements of comprehensive income29,626 — 29,626 
Net current period other comprehensive loss, net of tax29,626 (1,945)27,681 
Balance at September 30, 2024$(12,830)$(3,579)$(16,409)
In thousandsDefined Benefit Pension ItemsForeign Currency ItemsTotal
Balance at December 31, 2022$(44,120)$(4,182)$(48,302)
Other comprehensive income, net of tax, before reclassifications— 1,421 1,421 
Amounts reclassified from accumulated other comprehensive income, net of tax, to other, net, on the condensed consolidated statements of comprehensive income1,645 — 1,645 
Net current period other comprehensive income, net of tax1,645 1,421 3,066 
Balance at September 30, 2023$(42,475)$(2,761)$(45,236)
Reclassification amounts related to the defined pension plans are included in the computation of net periodic pension benefit cost (see Note H, Employee Benefit Plans).
v3.24.3
Litigation and Contingencies
9 Months Ended
Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
Litigation and Contingencies Litigation and Contingencies
In the normal course of our business, we are obligated under some agreements to indemnify our clients as a result of third party claims if the claim alleges that we have infringed upon the proprietary rights of third parties, or alternatively, in some contractual instances, if the third party claims relating to other ad hoc contract obligations. The terms and duration of these indemnity commitments vary and, in some cases may be indefinite, and some of these contractual commitments do not limit the maximum amount of future payments we could become obligated to make thereunder. Accordingly, our actual aggregate maximum exposure related to these types of commitments is not reasonably estimated. Historically, we have not been obligated to make significant payments for obligations of this nature, and no liabilities have been recorded for these obligations in our consolidated financial statements.
We are also subject to various claims and legal proceedings in the ordinary course of conducting our businesses and, from time to time, we may become involved in additional claims and lawsuits incidental to our businesses. We routinely assess the likelihood of adverse judgments or outcomes, as well as ranges of probable losses. To the extent losses are reasonably estimable, we accrue for them. Accruals are recorded for these matters to the extent that management concludes a loss is probable and the financial impact, should an adverse outcome occur, is reasonable estimable.
In the opinion of management, appropriate and adequate accruals for legal matters have been made, and management believes that the probability of a material loss beyond the amounts accrued is remote. Nevertheless, we cannot predict the impact of future developments affecting our pending or future claims and lawsuits. We expense legal costs as incurred, and all recorded legal liabilities are adjusted as required as better information becomes available to us. The factors we
consider when recording an accrual for contingencies include, among others: (i) the opinions and views of our general counsel and outside legal counsel; (ii) our previous experience with similar claims; and (iii) the decision of our management as to how we intend to respond to the complaints.
v3.24.3
Restructuring Activities
9 Months Ended
Sep. 30, 2024
Restructuring and Related Activities [Abstract]  
Restructuring Activities Restructuring Activities
During the second half of 2023, we engaged a consulting firm to help review and analyze the structure and operations of the Company. This review included greater than 200 meetings with personnel at all levels of the firm and led to the initiation of our transformation program named "Project Elevate". The program involves the optimization and rationalization of our business resources as well as the partial reinvestment of savings into the Company's sales and marketing team, technology, and strategy. A business transformation office was established at the beginning of 2024 to manage and measure these initiatives. Reorganization cost reductions from Project Elevate during 2024 through 2026 are estimated to be $16.0 million. For the year ended December 31, 2023, we recorded restructuring charges of $5.7 million. We expect to incur total restructuring charges of $10.1 million through the end of 2025.
For the three and nine months ended September 30, 2024, we recorded restructuring charges of $0.8 million and $2.1 million, respectively.
The following table summarizes the restructuring charges which are recorded in “Restructuring Expense” in the Condensed Consolidated Statement of Comprehensive Income (Loss).
In thousandsThree months ended Sep 30, 2024Nine months ended Sep 30, 2024
Consulting and employee expense$215 $677 
Severance243 1,025 
Facility and other expenses378 414 
Total$836 $2,116 
The following table summarizes the changes in liabilities related to restructuring activities:
Nine months ended Sep 30, 2024
In thousandsConsulting and Employee Expense
Severance
Facility, asset impairment and other expense
Total
Beginning balance:$3,574 $144 $38 $3,756 
Additions673 1,026 263 1,962 
Payments and adjustment(4,247)(907)(301)(5,455)
Ending balance:$— $263 $— $263 
v3.24.3
Segment Reporting
9 Months Ended
Sep. 30, 2024
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting
Harte Hanks is a leading global customer experience company. Beginning in 2024, we have organized our operations into four reportable segments based on the types of products and services we provide: Marketing Services, Customer Care, Sales Services and Fulfillment & Logistics Services. The Sales Service is our new reportable segment for 2024 as it has become strategically more important for our company. It was included in Customer Care segment in 2023. 2023 segment reporting has been restated to reflect this change.
Our Marketing Services segment leverages data, insight, and experience to support clients as they engage customers through digital, traditional, and emerging channels. We partner with clients to develop strategies and tactics to identify and prioritize customer audiences in B2C and B2B transactions. Our key service offerings include strategic business, brand, marketing and communications planning, data strategy, audience identification and prioritization, predictive modeling, creative development and execution across traditional and digital channels, website and app development, platform architecture, database build and management, marketing automation, and performance measurement, reporting and optimization.
Our Customer Care segment offers intelligently responsive contact center solutions, which use real-time data to effectively interact with each customer. Customer contacts are handled through phone, e-mail, social media, text messaging, chat and
digital self-service support. We provide these services utilizing our advanced technology infrastructure, human resource management skills and industry experience.
Our Sales Services segment enables customers to optimize their go-to-market function by offering a range of outsourced services including sales process optimization, sales play development, inbound lead qualification and outbound sales prospecting.
Our Fulfillment & Logistics segment consists of mail and product fulfillment and logistics services. We offer a variety of product fulfillment solutions, including printing on demand, managing product recalls, and distributing literature and promotional products to support B2B trade, drive marketing campaigns, and improve customer experience. We are also a provider of third-party logistics and freight optimization in the United States.
There are two principal financial measures reported to our CEO (the chief operating decision maker) for use in assessing segment performance and allocating resources. Those measures are revenue and operating income (loss)”). Operating income for segment reporting disclosed below, is revenues less operating costs and allocated corporate expenses. Segment operating expenses include allocations of certain centrally incurred costs such as employee benefits, occupancy, information systems, accounting services, internal legal staff, and human resources administration. These costs are allocated based on actual usage or other appropriate methods. Unallocated corporate expenses are corporate overhead expenses not attributable to the operating groups. Interest income and expense are not allocated to the segments. The Company does not allocate assets to our reportable segments for internal reporting purposes, nor does our CEO evaluate reportable segments using discrete asset information. The accounting policies of the segments are consistent with those described in the Note A, Overview and Significant Accounting Policies.
The following table presents financial information by segment for the three months ended September 30, 2024:
In thousandsMarketing ServicesCustomer CareSales ServicesFulfillment & LogisticsRestructuringUnallocated CorporateTotal
Revenue$9,050 $13,068 $4,205 $21,307 $— $— $47,630 
Segment operating expense6,158 9,995 3,318 19,192 836 5,195 44,694 
Contribution margin (loss)$2,892 $3,073 $887 $2,115 $(836)$(5,195)$2,936 
Overhead allocation792 567 189 775 — (2,323)— 
Depreciation and amortization167 44 198 266 — 363 1,038 
Operating income (loss)$1,933 $2,462 $500 $1,074 $(836)$(3,235)$1,898 
The following table presents financial information by segment for the three months ended September 30, 2023:
In thousandsMarketing ServicesCustomer CareSales ServicesFulfillment & LogisticsRestructuringUnallocated CorporateTotal
Revenue$10,591 $11,832 $2,166 $22,530 $— $— $47,119 
Segment operating expense8,370 9,380 1,959 18,995 — 4,549 43,253 
Contribution margin (loss)$2,221 $2,452 $207 $3,535 $— $(4,549)$3,866 
Overhead allocation706 668 — 680 — (2,054)— 
Depreciation and amortization71 57 196 249 — 379 952 
Operating income (loss)$1,444 $1,727 $11 $2,606 $— $(2,874)$2,914 
The following table presents financial information by segment for the nine months ended September 30, 2024:
In thousandsMarketing ServicesCustomer CareSales ServicesFulfillment & LogisticsRestructuring ExpenseUnallocated CorporateTotal
Revenue$25,709 $37,894 $13,281 $61,229 $— $— $138,113 
Segment operating expense19,355 28,856 9,891 54,348 2,116 16,795 131,361 
Contribution margin (loss)$6,354 $9,038 $3,390 $6,881 $(2,116)$(16,795)$6,752 
Overhead allocation2,454 1,761 587 2,403 — (7,205)— 
Depreciation and amortization509 160 589 757 — 1,091 3,106 
Operating income (loss)$3,391 $7,117 $2,214 $3,721 $(2,116)$(10,681)$3,646 
The following table presents financial information by segment for the nine months ended September 30, 2023:
In thousandsMarketing ServicesCustomer CareSales ServicesFulfillment & LogisticsRestructuring ExpenseUnallocated CorporateTotal
Revenue$32,751 $38,372 $7,253 $63,625 $— $— $142,001 
Segment operating expense26,464 30,259 6,275 54,435 — 15,880 133,313 
Contribution margin (loss)$6,287 $8,113 $978 $9,190 $— $(15,880)$8,688 
Overhead allocation2,261 2,102 — 2,203 — (6,566)— 
Depreciation and amortization167 438 586 736 — 1,124 3,051 
Operating income (loss)$3,859 $5,573 $392 $6,251 $— $(10,438)$5,637 
v3.24.3
Overview and Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Segment Reporting
Segment Reporting
The Company operates four reportable segments: Marketing Services; Customer Care; Sales Services; and Fulfillment & Logistics Services. Our Chief Executive Officer (“CEO”) is considered to be our chief operating decision maker. Our CEO reviews our operating results on an aggregate basis for purposes of allocating resources and evaluating financial performance by using the two financial measures: revenue and operating income.
Accounting Principles
Accounting Principles
Our unaudited interim condensed consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 10-K”).
Consolidation
Consolidation
The accompanying unaudited interim condensed consolidated financial statements include the accounts of Harte Hanks, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. As used in this report, the terms “Harte Hanks,” “the Company,” “we,” “us,” or “our” may refer to Harte Hanks, Inc., one or more of its consolidated subsidiaries, or all of them taken as a whole, as the context may require.
Interim Financial Information
Interim Financial Information
The condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Rule 8-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.
Use of Estimates
Use of Estimates
Preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from those estimates due to uncertainties. Such estimates include, but are not limited to, estimates related to lease accounting; pension accounting; fair value for purposes of assessing long-lived assets for impairment; revenue recognition; income taxes; stock-based compensation and contingencies. On an ongoing basis, management reviews its estimates and assumptions based on currently available information. Changes in facts and circumstances could result in revised estimates and assumptions.
Operating Expenses Presentation in Condensed Consolidated Statements of Comprehensive (Loss) Income
Operating Expense Presentation in Condensed Consolidated Statements of Comprehensive (Loss) Income
The “Labor” line in the Condensed Consolidated Statements of Comprehensive Loss (Income) includes all employee payroll and benefits costs, including stock-based compensation and temporary labor costs. The “Production and distribution” and “Advertising, selling, general and administrative” lines do not include any labor, depreciation, or amortization expense.
Revenue Recognition
Revenue Recognition
We recognize revenue upon the transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to be entitled to receive in exchange for those products or services based on the relevant contract. We apply the following five-step revenue recognition model:
Identification of the contract, or contracts, with a customer
Identification of the performance obligations in the contract
Determination of the transaction price
Allocation of the transaction price to the performance obligations in the contract
Recognition of revenue when (or as) we satisfy the performance obligation
Certain client programs provide for adjustments to billings based upon whether we achieve certain performance criteria. In these circumstances, revenue is recognized when the foregoing conditions are met. We record revenue net of any taxes collected from customers and subsequently remitted to governmental authorities. Any payments received in advance of the performance of services or delivery of the product are recorded as deferred revenue until such time as the services are performed or the product is delivered. Costs incurred for search engine marketing solutions payable to the engine host and postage costs of mailings are billed to our clients and are not directly reflected in our revenue.
Revenue from agency and digital services, direct mail, logistics, fulfillment and contact center is recognized when the work is performed. Fees for these services are determined by the terms set forth in each contract. These fees are typically a set fixed price or rate by transaction occurrence, service provided, time spent, or product delivered.
Fair Value of Financial Instruments
Fair Value of Financial Instruments
Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") 820, Fair Value Measurements and Disclosures, (“ASC 820”) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a fair value hierarchy that prioritizes the inputs used in valuation methodologies into three levels:
Level 1
Quoted prices in active markets for identical assets or liabilities.
Level 2Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Because of their maturities and/or variable interest rates, certain financial instruments have fair values approximating their carrying values. These instruments include cash and cash equivalents and restricted cash, accounts receivable, trade payables, and debt. The fair value of the assets in our funded pension plan is discussed in Note H, Employee Benefit Plans.
Leases
Leases
We determine if an arrangement is a lease at its inception. Operating and finance leases are included in the lease right-of-use (“ROU”) assets and in the current portion and long-term portion of lease liabilities on our condensed consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of each lease based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement date of each lease to determine the present value of lease payments. The operating lease ROU assets also include any lease payments made and exclude lease incentives. Our lease terms may include options to extend or terminate the lease, which are included in the lease ROU assets when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, which are generally accounted for separately. For certain real estate leases, we account for the lease and non-lease components as a single lease component.
Recent Accounting Guidance Not Yet Adopted
Recent Accounting Guidance Not Yet Adopted
In November 2023, the FASB issued accounting standards update (“ASU”) 2023-07, which enhances the disclosures required for reportable segments in annual and interim consolidated financial statements. ASU 2023-07 is effective for the Company for annual reporting periods beginning with the fiscal year ending December 31, 2024, and for interim reporting periods beginning in fiscal year 2025. Early adoption is permitted. The Company is currently evaluating the impact that this update will have on its disclosures in the consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, which requires enhanced income tax disclosures, including disaggregation of information in the rate reconciliation table and disaggregated information related to income taxes paid. The amendments in ASU 2023-09 are effective for the annual periods beginning with the fiscal year ending December 31, 2025. The Company is currently evaluating the impact that this update will have on its disclosures in the consolidated financial statements.
No other new accounting pronouncements recently adopted or issued had or are expected to have a material impact on the condensed consolidated financial statements.
Revenue from Contracts with Customers Revenue from Contracts with Customers
Consistent with GAAP, we present sales taxes assessed on revenue-producing transactions on a net basis.
Disaggregation of Revenue
We disaggregate revenue by four key revenue streams which are aligned with our reportable segments. The nature of the services offered by each key revenue stream is different.
Our contracts with customers may consist of multiple performance obligations. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price (“SSP”) basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct good or service that forms part of a single performance obligation. For most performance obligations, we determine SSP based on the price at which the performance obligation is sold separately. Although uncommon, if the SSP is not observable through past transactions, we estimate the SSP taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Further discussion of other performance obligations in each of our major revenue streams follows:
Marketing Services
Our Marketing Services segment delivers strategic planning, data strategy, performance analytics, creative development and execution, technology enablement, marketing automation, and database management. We create relevancy by leveraging data, insight, and our extensive experience in leading clients as they engage their customers through digital, traditional, and emerging channels. We are known for helping clients build deep customer relationships, create connected customer experiences, and optimize each and every customer touch point in order to deliver desired business outcomes.
Most marketing services performance obligations are satisfied over time and often offered on a per project basis. We have concluded that the best approach to measure the progress toward completion of the project-based performance obligations is the input method, which is based on either the costs or labor hours incurred to date depending upon whether costs or labor hours more accurately depict the transfer of value to the customer.
Our database solutions are built around centralized marketing databases with services rendered to build custom database, database hosting services, customer or target marketing lists and data processing services.
These performance obligations, including services rendered to build a custom database, database hosting services, customer or target marketing lists and data processing services, may be satisfied over time or at a point in time. We provide software as a service (“SaaS”) solutions to host data for customers and have concluded that these solutions are stand-ready obligations to be recognized over time on a monthly basis. Our promise to provide certain data related services meets the over-time recognition criteria because our services do not create an asset with an alternative use, and we have an enforceable right to payment. For performance obligations recognized over time, we choose either the input (i.e., labor hour) or output method (i.e., number of customer records) to measure the progress toward completion depending on the nature of the services provided. Some of our other data-related services do not meet the over-time criteria and are therefore, recognized at a point-in-time, typically upon the delivery of a specific deliverable.
Our contracts may include outsourced print production work for our clients. These contracts may include a promise to purchase postage on behalf of our clients. In such cases, we have determined we are an agent, rather than principal and therefore recognize net consideration as revenue.
Customer Care
We deliver customer care services in the United States, Asia, and Europe to provide advanced solutions such as voice, SMS/chat, email, integrated voice response, web self-service, social cloud monitoring, and analytics.
Performance obligations are stand-ready obligations and are satisfied over time. With regard to account management and SaaS, we use a time-elapsed output method to recognize revenue. For performance obligations where we charge customers a transaction-based fee, we use the output method based on transaction quantities. In most cases, our contracts provide us the right to invoice for services provided, therefore, we generally use the “as invoiced” practical expedient to recognize revenue associated with these performance obligations unless significant discounts are offered in a contract and prices for services do not represent their SSPs.
Sales Services
Our Sales Services segment enables customers to optimize their go-to-market function by offering a range of outsourced services including sales process optimization, sales play development, inbound lead qualification and outbound sales prospecting.
Performance obligations are stand-ready obligations and are satisfied over time. With regard to account management and SaaS, we use a time-elapsed output method to recognize revenue. For performance obligations where we charge customers a transaction-based fee, we use the output method based on transaction quantities. In most cases, our contracts provide us the right to invoice for services provided, therefore, we generally use the “as invoiced” practical expedient to recognize revenue associated with these performance obligations unless significant discounts are offered in a contract and prices for services do not represent their SSPs.
Fulfillment & Logistics Services
Our services, delivered internally and with our partners, include printing, lettershop, advanced mail optimization (including commingling services), logistics and transportation optimization, monitoring and tracking, to support traditional and specialized mailings. Our print and fulfillment centers in Massachusetts and Kansas provide custom kitting services, print on demand, product recall support, trade marketing fulfillment, ecommerce product fulfillment, sampling programs, and freight optimization, thereby allowing our customers to efficiently and effectively distribute literature and other marketing materials.
Most performance obligations offered within this revenue stream are satisfied over time and utilize the input or output method, depending on the nature of the service, to measure progress toward satisfying the performance obligation. For performance obligations where we charge customers a transaction-based fee, we utilize the output method based on the quantities fulfilled. Services provided through our fulfillment centers are typically priced at a per transaction basis and our contracts provide us the right to invoice for services provided and reflects the value to the customer of the services transferred to date. In most cases, we use the “as invoiced” practical expedient to recognize revenue associated with these performance obligations unless significant discounts are offered in a contract and prices for services do not represent their standalone selling prices. Our direct mail business contracts may have included a promise to purchase postage on behalf of our clients; in such cases, we have determined we are an agent, rather than principal and therefore recognize net consideration as revenue.
Transaction Price Allocated to Future Performance Obligations
We have elected to apply certain optional exemptions that limit the disclosure requirements over remaining performance obligations at period end to exclude the performance obligations that have an original expected duration of one year or less, transactions using the “as invoiced” practical expedient, or when a performance obligation is a series and we have allocated the variable consideration directly to the services performed.
Contract Balances
We record a receivable when revenue is recognized prior to invoicing when we have an unconditional right to consideration (only the passage of time is required before payment of that consideration is due) and a contract asset when the right to payment is conditional upon our future performance such as delivery of an additional good or service (e.g. customer contract requires customer’s final acceptance of custom database solution or the delivery of a final marketing strategy presentation before customer payment is required). If invoicing occurs prior to revenue recognition, the unearned revenue is presented on our Condensed Consolidated Balance Sheet as a contract liability, referred to as deferred revenue.
Costs to Obtain and Fulfill a Contract
We recognize an asset for the direct costs incurred to obtain and fulfill our contracts with customers to the extent that we expect to recover these costs and if the benefit is longer than one year. These costs are amortized to expense over the expected period of the benefit in a manner that is consistent with the transfer of the related goods or services to which the asset relates. We impair the asset when recoverability is not anticipated. We capitalized a portion of commission expense, implementation and other costs that represents the cost to obtain a contract.
v3.24.3
Revenue from Contracts with Customers (Tables)
9 Months Ended
Sep. 30, 2024
Revenue from Contract with Customer [Abstract]  
Disaggregation of Revenue The following table summarizes revenue from contracts with customers for the three and nine months ended September 30, 2024 and 2023 by our four reportable segments and the pattern of revenue recognition:
Three Months Ended September 30, 2024
In thousandsRevenue for performance obligations recognized over timeRevenue for performance obligations recognized at a point in timeTotal
Marketing Services$7,960 $1,090 $9,050 
Customer Care13,068 — 13,068 
Sales Services4,205 — 4,205 
Fulfillment and Logistics Services17,644 3,663 21,307 
Total Revenues$42,877 $4,753 $47,630 
Three Months Ended September 30, 2023
In thousandsRevenue for performance obligations recognized over timeRevenue for performance obligations recognized at a point in timeTotal
Marketing Services$9,272 $1,319 $10,591 
Customer Care11,832 — 11,832 
Sales Services2,166 — 2,166 
Fulfillment and Logistics Services18,625 3,905 22,530 
Total Revenues$41,895 $5,224 $47,119 
Nine Months Ended September 30, 2024
In thousandsRevenue for performance obligations recognized over timeRevenue for performance obligations recognized at a point in timeTotal
Marketing Services$22,408 $3,301 $25,709 
Customer Care37,894 — 37,894 
Sales Services13,281 — 13,281 
Fulfillment and Logistics Services49,901 11,328 61,229 
Total Revenues$123,484 $14,629 $138,113 
Nine Months Ended September 30, 2023
In thousandsRevenue for performance obligations recognized over timeRevenue for performance obligations recognized at a point in timeTotal
Marketing Services$29,321 $3,430 $32,751 
Customer Care38,372 — 38,372 
Sales Services7,253 — 7,253 
Fulfillment and Logistics Services52,044 11,581 63,625 
Total Revenues$126,990 $15,011 $142,001 
Contract Balances
The following table summarizes our contract balances as of September 30, 2024 and December 31, 2023:
In thousandsSeptember 30, 2024December 31, 2023
Unbilled accounts receivable8,952 7,677 
Contract assets308 258 
Deferred revenue and customer advances3,400 3,195 
Deferred revenue, included in other long-term liabilities213 294 
v3.24.3
Leases (Tables)
9 Months Ended
Sep. 30, 2024
Leases [Abstract]  
Supplemental Balance Sheet Information
The following table presents supplemental balance sheet information related to our financing and operating leases:
In thousandsAs of September 30, 2024As of December 31, 2023
Operating LeasesFinance LeasesTotalOperating LeasesFinance LeasesTotal
Right-of-use Assets$22,392 $534 $22,926 $25,288 $129 $25,417 
Liabilities
Current portion of lease liabilities3,665 97 3,762 4,773 42 4,815 
Long-term lease liabilities21,114 355 21,469 23,687 23,691 
Total Lease Liabilities$24,779 $452 $25,231 $28,460 $46 $28,506 
Components of Lease Expense
For the three and nine months ended September 30, 2024 and 2023, the components of lease expense were as follows:
Three months ended September 30,Nine months ended September 30,
In thousands2024202320242023
Operating lease cost$1,314 $1,338 $3,996 $4,160 
Finance lease cost:
Amortization of right-of-use assets30 35 61 115 
Interest on lease liabilities17 
Total Finance lease cost39 37 78 121 
Variable lease cost412 537 1,443 1,525 
Sublease income(53)(177)(368)(676)
Total lease cost, net$1,712 $1,735 $5,149 $5,130 
Other information related to leases was as follows:
In thousandsNine Months Ended September 30, 2024Nine Months Ended September 30, 2023
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$8,464 $9,525 
Operating cash flows from finance leases15 
Financing cash flows from finance leases79 144 
Weighted Average Remaining Lease term
Operating leases6.65.6
Finance leases4.51.3
Weighted Average Discount Rate
Operating leases5.73 %3.56 %
Finance leases8.15 %7.04 %
Maturities of Finance and Operating Lease Liabilities
The maturities of the Company’s finance and operating lease liabilities as of September 30, 2024 are as follows:
In thousandsOperating Leases Finance Leases
Year Ending December 31,
Remainder of 2024$1,398 $35 
20254,656 120 
20264,232 117 
20274,198 117 
20284,094 117 
2029 and beyond11,397 32 
Total future minimum lease payments29,975 538 
Less: imputed interest5,196 86 
Total lease liabilities$24,779 $452 
v3.24.3
Employee Benefit Plans (Tables)
9 Months Ended
Sep. 30, 2024
Retirement Benefits [Abstract]  
Net Period of Net Periodic Cost
Net pension cost for both plans included the following components:
Three Months Ended September 30,Nine Months Ended September 30,
In thousands2024202320242023
Interest cost$702 $1,772 $4,330 $5,316 
Expected return on plan assets(470)(1,554)(3,163)(4,662)
Recognized actuarial loss137 630 1,420 1,890 
Net periodic benefit cost$369 $848 $2,587 $2,544 
v3.24.3
Earnings (Loss) Per Share (Tables)
9 Months Ended
Sep. 30, 2024
Earnings Per Share [Abstract]  
Reconciliations of Basic and Diluted EPS
Reconciliations of basic and diluted EPS were as follows:
Three months ended September 30,Nine months ended September 30,
In thousands, except per share amounts2024202320242023
Numerator:
Net income (loss) $142 $618 $(27,863)$407 
Denominator:
Basic EPS denominator: weighted-average common shares outstanding7,3247,2397,2737,340
Diluted EPS denominator7,3987,3147,2737,509
Basic (loss) income per Common Share$0.02 $0.09 $(3.83)$0.06 
Diluted (loss) income per Common Share$0.02 $0.08 $(3.83)$0.05 
v3.24.3
Comprehensive Income (Loss) (Tables)
9 Months Ended
Sep. 30, 2024
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]  
Changes in Accumulated Other Comprehensive Loss by Component
Changes in accumulated other comprehensive loss by component were as follows:
In thousandsDefined Benefit
Pension Items
Foreign Currency
Items
Total
Balance at December 31, 2023$(42,456)$(1,634)$(44,090)
Other comprehensive loss, net of tax, before reclassifications— (1,945)(1,945)
Amounts reclassified from accumulated other comprehensive income, net of tax, to other, net, on the condensed consolidated statements of comprehensive income29,626 — 29,626 
Net current period other comprehensive loss, net of tax29,626 (1,945)27,681 
Balance at September 30, 2024$(12,830)$(3,579)$(16,409)
In thousandsDefined Benefit Pension ItemsForeign Currency ItemsTotal
Balance at December 31, 2022$(44,120)$(4,182)$(48,302)
Other comprehensive income, net of tax, before reclassifications— 1,421 1,421 
Amounts reclassified from accumulated other comprehensive income, net of tax, to other, net, on the condensed consolidated statements of comprehensive income1,645 — 1,645 
Net current period other comprehensive income, net of tax1,645 1,421 3,066 
Balance at September 30, 2023$(42,475)$(2,761)$(45,236)
v3.24.3
Restructuring Activities (Tables)
9 Months Ended
Sep. 30, 2024
Restructuring and Related Activities [Abstract]  
Restructuring Expense
The following table summarizes the restructuring charges which are recorded in “Restructuring Expense” in the Condensed Consolidated Statement of Comprehensive Income (Loss).
In thousandsThree months ended Sep 30, 2024Nine months ended Sep 30, 2024
Consulting and employee expense$215 $677 
Severance243 1,025 
Facility and other expenses378 414 
Total$836 $2,116 
Changes in Liabilities
The following table summarizes the changes in liabilities related to restructuring activities:
Nine months ended Sep 30, 2024
In thousandsConsulting and Employee Expense
Severance
Facility, asset impairment and other expense
Total
Beginning balance:$3,574 $144 $38 $3,756 
Additions673 1,026 263 1,962 
Payments and adjustment(4,247)(907)(301)(5,455)
Ending balance:$— $263 $— $263 
v3.24.3
Segment Reporting (Tables)
9 Months Ended
Sep. 30, 2024
Segment Reporting [Abstract]  
Financial Information by Segment
The following table presents financial information by segment for the three months ended September 30, 2024:
In thousandsMarketing ServicesCustomer CareSales ServicesFulfillment & LogisticsRestructuringUnallocated CorporateTotal
Revenue$9,050 $13,068 $4,205 $21,307 $— $— $47,630 
Segment operating expense6,158 9,995 3,318 19,192 836 5,195 44,694 
Contribution margin (loss)$2,892 $3,073 $887 $2,115 $(836)$(5,195)$2,936 
Overhead allocation792 567 189 775 — (2,323)— 
Depreciation and amortization167 44 198 266 — 363 1,038 
Operating income (loss)$1,933 $2,462 $500 $1,074 $(836)$(3,235)$1,898 
The following table presents financial information by segment for the three months ended September 30, 2023:
In thousandsMarketing ServicesCustomer CareSales ServicesFulfillment & LogisticsRestructuringUnallocated CorporateTotal
Revenue$10,591 $11,832 $2,166 $22,530 $— $— $47,119 
Segment operating expense8,370 9,380 1,959 18,995 — 4,549 43,253 
Contribution margin (loss)$2,221 $2,452 $207 $3,535 $— $(4,549)$3,866 
Overhead allocation706 668 — 680 — (2,054)— 
Depreciation and amortization71 57 196 249 — 379 952 
Operating income (loss)$1,444 $1,727 $11 $2,606 $— $(2,874)$2,914 
The following table presents financial information by segment for the nine months ended September 30, 2024:
In thousandsMarketing ServicesCustomer CareSales ServicesFulfillment & LogisticsRestructuring ExpenseUnallocated CorporateTotal
Revenue$25,709 $37,894 $13,281 $61,229 $— $— $138,113 
Segment operating expense19,355 28,856 9,891 54,348 2,116 16,795 131,361 
Contribution margin (loss)$6,354 $9,038 $3,390 $6,881 $(2,116)$(16,795)$6,752 
Overhead allocation2,454 1,761 587 2,403 — (7,205)— 
Depreciation and amortization509 160 589 757 — 1,091 3,106 
Operating income (loss)$3,391 $7,117 $2,214 $3,721 $(2,116)$(10,681)$3,646 
The following table presents financial information by segment for the nine months ended September 30, 2023:
In thousandsMarketing ServicesCustomer CareSales ServicesFulfillment & LogisticsRestructuring ExpenseUnallocated CorporateTotal
Revenue$32,751 $38,372 $7,253 $63,625 $— $— $142,001 
Segment operating expense26,464 30,259 6,275 54,435 — 15,880 133,313 
Contribution margin (loss)$6,287 $8,113 $978 $9,190 $— $(15,880)$8,688 
Overhead allocation2,261 2,102 — 2,203 — (6,566)— 
Depreciation and amortization167 438 586 736 — 1,124 3,051 
Operating income (loss)$3,859 $5,573 $392 $6,251 $— $(10,438)$5,637 
v3.24.3
Overview and Significant Accounting Policies (Details)
9 Months Ended
Sep. 30, 2024
segment
Accounting Policies [Abstract]  
Number of reportable segments 4
Number of operating segments 4
v3.24.3
Revenue from Contracts with Customers - Narrative (Details)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2024
USD ($)
Sep. 30, 2023
USD ($)
Sep. 30, 2024
USD ($)
segment
Sep. 30, 2023
USD ($)
Dec. 31, 2023
USD ($)
Revenue from Contract with Customer [Abstract]          
Number of reportable segments | segment     4    
Transaction price allocated to unsatisfied or partially satisfied performance obligations $ 0   $ 0    
Revenue recognized included in deferred revenue     2,900 $ 3,900  
Remaining unamortized contract costs 300   300   $ 600
Impairment recognized $ 0 $ 0 $ 0 $ 0  
v3.24.3
Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Disaggregation of Revenue [Line Items]        
Total Revenues $ 47,630 $ 47,119 $ 138,113 $ 142,001
Revenue for performance obligations recognized over time        
Disaggregation of Revenue [Line Items]        
Total Revenues 42,877 41,895 123,484 126,990
Revenue for performance obligations recognized at a point in time        
Disaggregation of Revenue [Line Items]        
Total Revenues 4,753 5,224 14,629 15,011
Marketing Services        
Disaggregation of Revenue [Line Items]        
Total Revenues 9,050 10,591 25,709 32,751
Marketing Services | Revenue for performance obligations recognized over time        
Disaggregation of Revenue [Line Items]        
Total Revenues 7,960 9,272 22,408 29,321
Marketing Services | Revenue for performance obligations recognized at a point in time        
Disaggregation of Revenue [Line Items]        
Total Revenues 1,090 1,319 3,301 3,430
Customer Care        
Disaggregation of Revenue [Line Items]        
Total Revenues 13,068 11,832 37,894 38,372
Customer Care | Revenue for performance obligations recognized over time        
Disaggregation of Revenue [Line Items]        
Total Revenues 13,068 11,832 37,894 38,372
Customer Care | Revenue for performance obligations recognized at a point in time        
Disaggregation of Revenue [Line Items]        
Total Revenues 0 0 0 0
Sales Services        
Disaggregation of Revenue [Line Items]        
Total Revenues 4,205 2,166 13,281 7,253
Sales Services | Revenue for performance obligations recognized over time        
Disaggregation of Revenue [Line Items]        
Total Revenues 4,205 2,166 13,281 7,253
Sales Services | Revenue for performance obligations recognized at a point in time        
Disaggregation of Revenue [Line Items]        
Total Revenues 0 0 0 0
Fulfillment and Logistics Services        
Disaggregation of Revenue [Line Items]        
Total Revenues 21,307 22,530 61,229 63,625
Fulfillment and Logistics Services | Revenue for performance obligations recognized over time        
Disaggregation of Revenue [Line Items]        
Total Revenues 17,644 18,625 49,901 52,044
Fulfillment and Logistics Services | Revenue for performance obligations recognized at a point in time        
Disaggregation of Revenue [Line Items]        
Total Revenues $ 3,663 $ 3,905 $ 11,328 $ 11,581
v3.24.3
Revenue from Contracts with Customers - Contract Balances (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Revenue from Contract with Customer [Abstract]    
Unbilled accounts receivable $ 8,952 $ 7,677
Contract assets 308 258
Deferred revenue and customer advances 3,400 3,195
Deferred revenue, included in other long-term liabilities $ 213 $ 294
v3.24.3
Leases - Narrative (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
Lessee, Lease, Description [Line Items]          
Finance lease right of use asset $ 534   $ 534   $ 129
Operating lease right of use asset 22,392   22,392   25,288
Accumulated amortization 200   200   $ 100
Impairment of leases $ 0 $ 0 $ 0 $ 0  
Minimum          
Lessee, Lease, Description [Line Items]          
Remaining lease term (in years)     1 year    
Maximum          
Lessee, Lease, Description [Line Items]          
Remaining lease term (in years)     8 years    
Renewal term (in years)     5 years    
v3.24.3
Leases - Supplemental Balance Sheet Information (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Leases [Abstract]    
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] Right-of-use Assets Right-of-use Assets
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] Right-of-use Assets Right-of-use Assets
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] Current portion of lease liabilities Current portion of lease liabilities
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] Current portion of lease liabilities Current portion of lease liabilities
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] Long-term lease liabilities Long-term lease liabilities
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] Long-term lease liabilities Long-term lease liabilities
Finance Lease, Liability, Statement of Financial Position [Extensible Enumeration] Current portion of lease liabilities, Long-term lease liabilities Current portion of lease liabilities, Long-term lease liabilities
Operating Leases, Right-of-use Assets $ 22,392 $ 25,288
Finance Leases, Right-of-use Assets 534 129
Right-of-use Assets 22,926 25,417
Operating Leases, Current portion of lease liabilities 3,665 4,773
Finance Leases, Current portion of lease liabilities 97 42
Current portion of lease liabilities 3,762 4,815
Operating Leases, Long-term lease liabilities 21,114 23,687
Finance Leases, Long-term lease liabilities 355 4
Long-term lease liabilities 21,469 23,691
Operating Leases, Total Lease Liabilities 24,779 28,460
Finance Leases, Total Lease Liabilities 452 46
Total Lease Liabilities $ 25,231 $ 28,506
v3.24.3
Leases - Components of Lease Expense (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Leases [Abstract]        
Operating lease cost $ 1,314 $ 1,338 $ 3,996 $ 4,160
Amortization of right-of-use assets 30 35 61 115
Interest on lease liabilities 9 2 17 6
Total Finance lease cost 39 37 78 121
Variable lease cost 412 537 1,443 1,525
Sublease income (53) (177) (368) (676)
Total lease cost, net $ 1,712 $ 1,735 5,149 5,130
Cash paid for amounts included in the measurement of lease liabilities:        
Operating cash flows from operating leases     8,464 9,525
Operating cash flows from finance leases     15 6
Financing cash flows from finance leases     $ 79 $ 144
Weighted Average Remaining Lease term        
Operating leases (in years) 6 years 7 months 6 days 5 years 7 months 6 days 6 years 7 months 6 days 5 years 7 months 6 days
Finance leases (in years) 4 years 6 months 1 year 3 months 18 days 4 years 6 months 1 year 3 months 18 days
Weighted Average Discount Rate        
Operating leases 5.73% 3.56% 5.73% 3.56%
Finance leases 8.15% 7.04% 8.15% 7.04%
v3.24.3
Leases - Maturities of Finance and Operating Lease Liabilities (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Operating Leases    
Remainder of 2024 $ 1,398  
2025 4,656  
2026 4,232  
2027 4,198  
2028 4,094  
2029 and beyond 11,397  
Total future minimum lease payments, operating leases 29,975  
Less: imputed interest 5,196  
Total lease liabilities 24,779 $ 28,460
Finance Leases    
Remainder of 2024 35  
2025 120  
2026 117  
2027 117  
2028 117  
2029 and beyond 32  
Total future minimum lease payments, finance leases 538  
Less: imputed interest 86  
Total lease liabilities $ 452 $ 46
v3.24.3
Convertible Preferred Stock and Share Repurchase Program (Details) - USD ($)
$ in Thousands, shares in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Jun. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
May 02, 2023
Equity [Abstract]            
Cash payment           $ 6,500
Shares repurchased (in shares) 0.0 0.1   0.0 0.4  
Repurchase of common stock $ 0 $ 490 $ 1,879 $ 0 $ 2,400  
v3.24.3
Debt - Credit Facility (Details) - USD ($)
9 Months Ended
Dec. 29, 2023
Dec. 21, 2021
Sep. 30, 2024
Dec. 31, 2023
Line of Credit Facility [Line Items]        
Letter of credit outstanding     $ 1,000,000.0 $ 800,000
Amount drawn on letters of credit     0  
Line of credit facility, fair value of amount outstanding     $ 0  
Texas Capital Bank        
Line of Credit Facility [Line Items]        
Interest rate     7.27%  
Unused commitment fee rate     0.25%  
Revolving Credit Facility | Texas Capital Bank        
Line of Credit Facility [Line Items]        
Margin per annum   2.25%    
New Credit Facility        
Line of Credit Facility [Line Items]        
Additional borrowing capacity     $ 24,000,000.0 24,200,000
Line of credit facility, fair value of amount outstanding       $ 0
New Credit Facility | Revolving Credit Facility | Texas Capital Bank        
Line of Credit Facility [Line Items]        
Term (in years)   3 years    
Maximum borrowing capacity   $ 25,000,000.0    
Renewal term (in months) 6 months      
New Credit Facility | Letter of Credit | Texas Capital Bank        
Line of Credit Facility [Line Items]        
Maximum borrowing capacity   $ 3,000,000    
v3.24.3
Stock-Based Compensation (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Share-Based Payment Arrangement [Abstract]        
Stock-based compensation expense $ 0.4 $ 0.2 $ 1.7 $ 1.2
v3.24.3
Employee Benefit Plans - Narrative (Details)
$ in Thousands
1 Months Ended 3 Months Ended 9 Months Ended
Jan. 31, 2023
Sep. 30, 2024
USD ($)
Jun. 30, 2024
USD ($)
Sep. 30, 2023
USD ($)
Sep. 30, 2024
USD ($)
Sep. 30, 2023
USD ($)
Dec. 31, 2020
plan
Defined Benefit Plan Disclosure [Line Items]              
Number of defined benefit plans (in plans) | plan             2
Pension plan termination charges   $ 0   $ 0 $ 37,505 $ 0  
Nonqualified Plan              
Defined Benefit Plan Disclosure [Line Items]              
Benefit payments         1,400 $ 1,400  
Qualified Plan I | Qualified Plan              
Defined Benefit Plan Disclosure [Line Items]              
Termination term (in months) 18 months            
Cash contribution, termination amount   1,100 $ 6,100   7,200    
Qualified Plan II              
Defined Benefit Plan Disclosure [Line Items]              
Contribution   $ 2,000     2,000    
Benefit payments         $ 1,600    
v3.24.3
Employee Benefit Plans - Net Period of Net Periodic Cost (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Retirement Benefits [Abstract]        
Interest cost $ 702 $ 1,772 $ 4,330 $ 5,316
Expected return on plan assets (470) (1,554) (3,163) (4,662)
Recognized actuarial loss 137 630 1,420 1,890
Net periodic benefit cost $ 369 $ 848 $ 2,587 $ 2,544
v3.24.3
Income Taxes (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Income Tax Disclosure [Abstract]        
Income tax expense (benefit) $ 868 $ 1,912 $ (8,207) $ 1,620
Effective income tax rate 85.90% 75.60% 22.80% 79.90%
v3.24.3
Earnings (Loss) Per Share - Reconciliations of Basic and Diluted EPS (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2024
Jun. 30, 2024
Mar. 31, 2024
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Sep. 30, 2024
Sep. 30, 2023
Numerator:                
Net income (loss) $ 142 $ (27,834) $ (171) $ 618 $ 580 $ (791) $ (27,863) $ 407
Denominator:                
Basic EPS denominator: weight-average common shares outstanding (in shares) 7,324     7,239     7,273 7,340
Diluted EPS denominator (in shares) 7,398     7,314     7,273 7,509
Basic (loss) income per Common Share (in dollars per share) $ 0.02     $ 0.09     $ (3.83) $ 0.06
Diluted (loss) income per Common Share (in dollars per share) $ 0.02     $ 0.08     $ (3.83) $ 0.05
v3.24.3
Earnings (Loss) Per Share - Narrative (Details) - shares
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Employee Stock Option        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Shares excluded from calculation of diluted EPS (in shares) 354,239 132,193 335,431 8,098
Restricted Stock        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Shares excluded from calculation of diluted EPS (in shares) 13,567 58,869 23,114 40,389
v3.24.3
Comprehensive Income (Loss) (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2024
Jun. 30, 2024
Mar. 31, 2024
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Sep. 30, 2024
Sep. 30, 2023
AOCI Attributable to Parent, Net of Tax [Roll Forward]                
Beginning balance $ 20,608 $ 19,962 $ 19,857 $ 20,550 $ 20,965 $ 18,808 $ 19,857 $ 18,808
Other comprehensive (loss) income, net of tax, before reclassifications             (1,945) 1,421
Amounts reclassified from accumulated other comprehensive income, net of tax, to other, net, on the condensed consolidated statements of comprehensive income             29,626 1,645
Total other comprehensive income (loss), net of tax 94 27,776 (189) (56) 502 2,620 27,681 3,066
Ending balance 21,049 20,608 19,962 20,504 20,550 20,965 21,049 20,504
Total                
AOCI Attributable to Parent, Net of Tax [Roll Forward]                
Beginning balance (16,503) (44,279) (44,090) (45,180) (45,682) (48,302) (44,090) (48,302)
Total other comprehensive income (loss), net of tax 94 27,776 (189) (56) 502 2,620    
Ending balance (16,409) $ (16,503) (44,279) (45,236) $ (45,180) (45,682) (16,409) (45,236)
Defined Benefit Pension Items                
AOCI Attributable to Parent, Net of Tax [Roll Forward]                
Beginning balance     (42,456)     (44,120) (42,456) (44,120)
Other comprehensive (loss) income, net of tax, before reclassifications             0 0
Amounts reclassified from accumulated other comprehensive income, net of tax, to other, net, on the condensed consolidated statements of comprehensive income             29,626 1,645
Total other comprehensive income (loss), net of tax             29,626 1,645
Ending balance (12,830)     (42,475)     (12,830) (42,475)
Foreign Currency Items                
AOCI Attributable to Parent, Net of Tax [Roll Forward]                
Beginning balance     $ (1,634)     $ (4,182) (1,634) (4,182)
Other comprehensive (loss) income, net of tax, before reclassifications             (1,945) 1,421
Amounts reclassified from accumulated other comprehensive income, net of tax, to other, net, on the condensed consolidated statements of comprehensive income             0 0
Total other comprehensive income (loss), net of tax             (1,945) 1,421
Ending balance $ (3,579)     $ (2,761)     $ (3,579) $ (2,761)
v3.24.3
Restructuring Activities - Narrative (Details)
$ in Thousands
3 Months Ended 6 Months Ended 9 Months Ended 12 Months Ended 36 Months Ended
Sep. 30, 2024
USD ($)
Sep. 30, 2023
USD ($)
Dec. 31, 2023
meeting
Sep. 30, 2024
USD ($)
Sep. 30, 2023
USD ($)
Dec. 31, 2023
USD ($)
Dec. 31, 2026
USD ($)
Restructuring Cost and Reserve [Line Items]              
Number of meetings held, minimum (in meetings) | meeting     200        
Restructuring expenses $ 836 $ 0   $ 2,116 $ 0 $ 5,700  
Expected cost to be incurred $ 10,100     $ 10,100      
Forecast              
Restructuring Cost and Reserve [Line Items]              
Reorganization cost reductions             $ 16,000
v3.24.3
Restructuring Activities - Restructuring Expense (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
Restructuring Cost and Reserve [Line Items]          
Restructuring expenses $ 836 $ 0 $ 2,116 $ 0 $ 5,700
Consulting and employee expense          
Restructuring Cost and Reserve [Line Items]          
Restructuring expenses 215   677    
Severance          
Restructuring Cost and Reserve [Line Items]          
Restructuring expenses 243   1,025    
Facility and other expenses          
Restructuring Cost and Reserve [Line Items]          
Restructuring expenses $ 378   $ 414    
v3.24.3
Restructuring Activities - Changes in Liabilities (Details)
$ in Thousands
9 Months Ended
Sep. 30, 2024
USD ($)
Restructuring Reserve [Roll Forward]  
Beginning balance: $ 3,756
Additions 1,962
Payments and adjustment (5,455)
Ending balance: 263
Consulting and Employee Expense  
Restructuring Reserve [Roll Forward]  
Beginning balance: 3,574
Additions 673
Payments and adjustment (4,247)
Ending balance: 0
Severance  
Restructuring Reserve [Roll Forward]  
Beginning balance: 144
Additions 1,026
Payments and adjustment (907)
Ending balance: 263
Facility, asset impairment and other expense  
Restructuring Reserve [Roll Forward]  
Beginning balance: 38
Additions 263
Payments and adjustment (301)
Ending balance: $ 0
v3.24.3
Segment Reporting - Narrative (Details)
9 Months Ended
Sep. 30, 2024
segment
Segment Reporting [Abstract]  
Number of reportable segments 4
v3.24.3
Segment Reporting - Financial Information by Segment (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Segment Reporting Information [Line Items]        
Revenue $ 47,630 $ 47,119 $ 138,113 $ 142,001
Segment operating expense 44,694 43,253 131,361 133,313
Contribution margin (loss) 2,936 3,866 6,752 8,688
Overhead allocation 0 0 0 0
Depreciation and amortization 1,038 952 3,106 3,051
Operating income (loss) 1,898 2,914 3,646 5,637
Operating Segments | Marketing Services        
Segment Reporting Information [Line Items]        
Revenue 9,050 10,591 25,709 32,751
Segment operating expense 6,158 8,370 19,355 26,464
Contribution margin (loss) 2,892 2,221 6,354 6,287
Overhead allocation 792 706 2,454 2,261
Depreciation and amortization 167 71 509 167
Operating income (loss) 1,933 1,444 3,391 3,859
Operating Segments | Customer Care        
Segment Reporting Information [Line Items]        
Revenue 13,068 11,832 37,894 38,372
Segment operating expense 9,995 9,380 28,856 30,259
Contribution margin (loss) 3,073 2,452 9,038 8,113
Overhead allocation 567 668 1,761 2,102
Depreciation and amortization 44 57 160 438
Operating income (loss) 2,462 1,727 7,117 5,573
Operating Segments | Sales Services        
Segment Reporting Information [Line Items]        
Revenue 4,205 2,166 13,281 7,253
Segment operating expense 3,318 1,959 9,891 6,275
Contribution margin (loss) 887 207 3,390 978
Overhead allocation 189 0 587 0
Depreciation and amortization 198 196 589 586
Operating income (loss) 500 11 2,214 392
Operating Segments | Fulfillment and Logistics Services        
Segment Reporting Information [Line Items]        
Revenue 21,307 22,530 61,229 63,625
Segment operating expense 19,192 18,995 54,348 54,435
Contribution margin (loss) 2,115 3,535 6,881 9,190
Overhead allocation 775 680 2,403 2,203
Depreciation and amortization 266 249 757 736
Operating income (loss) 1,074 2,606 3,721 6,251
Restructuring        
Segment Reporting Information [Line Items]        
Revenue 0 0 0 0
Segment operating expense 836 0 2,116 0
Contribution margin (loss) (836) 0 (2,116) 0
Overhead allocation 0 0 0 0
Depreciation and amortization 0 0 0 0
Operating income (loss) (836) 0 (2,116) 0
Unallocated Corporate        
Segment Reporting Information [Line Items]        
Revenue 0 0 0 0
Segment operating expense 5,195 4,549 16,795 15,880
Contribution margin (loss) (5,195) (4,549) (16,795) (15,880)
Overhead allocation (2,323) (2,054) (7,205) (6,566)
Depreciation and amortization 363 379 1,091 1,124
Operating income (loss) $ (3,235) $ (2,874) $ (10,681) $ (10,438)

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