Chelmsford, Massachusetts – August 8, 2024 - Harte Hanks, Inc. (NASDAQ: HHS), a leading global customer experience company focused on bringing companies closer to customers for over 100 years, today announced financial results for the second quarter ended June 30, 2024.

Kirk Davis, Chief Executive Officer, said: "In my first year, I have been laser-focused on building an exceptionally strong executive team, united in our mission to redefine our company. Last quarter, I emphasized the importance of enhancing our customer organization and announced our plan to recruit the company's first Chief Customer and Data Officer. Today, I am thrilled to confirm that Sharona Sankar-King will assume this pivotal role, joining us on September 4th from Bain & Company. Sharona's expertise in integrating data and analytics across product lines will be transformative, accelerating our ability to harness Gen AI for innovative customer solutions. Her leadership will be a powerful catalyst in driving our ambitious growth objectives."

"While we are committed to rapidly building a modern, growing company, we remain firmly grounded in the present" continued Mr. Davis. "Our sales and marketing reorganization, which we concluded in April is maturing well. As we shared last quarter, we have new clients progressing through our sales cycle and are expanding our sales pipeline. We also continue to execute on the specific cost savings initiatives we identified in Project Elevate, resulting from our engagement with the Kearney organization throughout Q4 of 2023 and Q1 of 2024. "

•The Company ended the quarter with a cash balance of $11.0 million on June 30, 2024.

•Contribution payment of $6.1 million executed for the termination of Pension Plan I.

•Total revenues for Q2 2024 were $45.0 million, down 5.7% compared to $47.8 million in Q2 2023.

•Operating income was $1.4 million compared to $1.7 million in the same quarter in the prior year.

•Harte Hanks recorded $0.4 million in restructuring charges in Q2 2024, related to execution of Project Elevate.

•Net loss, inclusive of the $38.2 million in pension termination charges and $10.1 million in tax benefit, was $27.8 million, or $3.84 per basic and diluted share, compared to net income of $0.6 million, or $0.08 per basic and diluted share, in the prior year quarter.

•The second quarter of 2024 had EBITDA of $2.4 million compared to EBITDA of $2.7 million in the same period in the prior year. Adjusted EBITDA, which excludes stock-based compensation, severance and restructuring charges, was $3.6 million for Q2 2024 and $4.4 million for the same quarter in 2023.

•Customer Care, $12.4 million in revenue, 27% of total – Segment revenue for the quarter decreased $2.5 million or 17.0% versus the prior year and EBITDA totaled $2.3 million for the quarter, a decline of 14.3% compared to the same period in the prior year. The year over year decline related to the timing of fluctuating work that shifted between quarters with a specific client.

•Sales Services, $4.4 million in revenue, 10% of total - Segment revenue for the quarter increased $2.1 million or 92.2% versus the prior year and EBITDA totaled $1.0 million for the quarter, an increase of 297% compared to the same period in the prior year. This increase in revenue related to the growth with a large fintech client.

•Fulfillment & Logistics Services, $20.5 million in revenue, 46% of total – Segment revenue for the quarter increased $0.9 million or 4.4% versus the prior year quarter and EBITDA totaled $1.6 million, decline of 19.4%. The contribution margin was impacted by investments in technology, the increased cost of facilities, and in the revenue mix between lower margin logistics and the higher margin fulfillment services. The profitability is expected to improve through the year as the revenue mix shifts to fulfillment in the second half of the year.

•Marketing Services, $7.7 million in revenue, 17% of total – Segment revenue for the quarter decreased $3.2 million or 29.1% compared to the prior year quarter and EBITDA for the second quarter totaled $0.8 million vs. $1.3 million for the second quarter of 2023. Revenue decline is the result of customer turnover and reductions in client spending. The reduction in EBITDA was the result of lower revenues and the expected contribution margin.

Second quarter revenues were $45.0 million, down 5.7% from $47.8 million in the second quarter of 2023 due to decreased revenue in two of the Company’s operating segments.

Second quarter operating income was $1.4 million, compared to $1.7 million in the second quarter of 2023. The decrease resulted from a restructuring expense during the quarter.

Net loss for the quarter was $27.8 million, or $3.84 per basic and diluted share, compared to net income of $0.6 million, or $0.08 per basic and diluted share, in the second quarter of the prior year. The net loss included $38.2 million of pension plan termination charges and a related tax benefit of $10.1 million, without which the results would have been approximately $0.3 million of net income for the quarter.

Harte Hanks ended the quarter with $11.0 million in cash and cash equivalents and $24.0 million of capacity on its credit line. The Company has no outstanding debt as of June 30, 2024. The Company’s financial position continues to be strong, and it is well-positioned to execute on its long-term growth strategies in 2024 and beyond.

The Company will host a conference call and live webcast to discuss these results at 4:30 p.m. EDT today, August 8, 2024. Interested parties may access the webcast at https://www.webcaster4.com/Webcast/Page/2810/50867 or access the conference call by dialing 888-506-0062 in the United States or 973-528-0011 from outside the U.S. and using access code 821775.

A replay of the call can also be accessed via phone through August 22, 2024, by dialing (877) 481-4010 from the U.S., or (919) 882-2331 from outside the U.S. The conference call replay passcode is 50867.

About Harte Hanks:

Harte Hanks (NASDAQ: HHS) is a leading global customer experience company whose mission is to partner with clients to provide them with CX strategy, data-driven analytics and actionable insights combined with seamless program execution to better understand, attract and engage their customers.

Using its unparalleled resources and award-winning talent in the areas of Customer Care, Fulfillment and Logistics, and Marketing Services, Harte Hanks has a proven track record of driving results for some of the world’s premier brands, including GlaxoSmithKline, Unilever, Pfizer, Warner Bros Discovery, Volvo, Ford, FedEx, Midea, and IBM among others. Headquartered in Chelmsford, Massachusetts, Harte Hanks has over 2,000 employees in offices across the Americas, Europe, and Asia Pacific.

As used herein, “Harte Hanks” or “the Company” refers to Harte Hanks, Inc. and/or its applicable operating subsidiaries, as the context may require. Harte Hanks’ logo and name are trademarks of Harte Hanks, Inc.

Our press release and related earnings conference call contain “forward-looking statements” within the meaning of U.S. federal securities laws. All such statements are qualified by this cautionary note, provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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. 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. These risks, uncertainties, assumptions and other factors include: (a) local, national and international economic and business conditions, including (i) market conditions that may adversely impact marketing expenditures, and (ii) the impact of economic environments and competitive pressures on the financial condition, marketing expenditures and activities of our clients and prospects; (iii) the demand for our products and services by clients and prospective clients, including (iv) the willingness of existing clients to maintain or increase their spending on products and services that are or remain profitable for us, and (vi) our ability to predict changes in client needs and preferences; (b) economic and other business factors that impact the industry verticals we serve, including competition, inflation and consolidation of current and prospective clients, vendors and partners in these verticals; (c) our ability to manage and timely adjust our facilities, capacity, workforce and cost structure to effectively serve our clients; (d) our ability to improve our processes and to provide new products and services in a timely and cost-effective manner though development, license, partnership or acquisition; (e) our ability to protect our facilities against security breaches and other interruptions and to protect sensitive personal information of our clients and their customers; (f) our ability to respond to increasing concern, regulation and legal action over consumer privacy issues, including changing requirements for collection, processing and use of information; (g) the impact of privacy and other regulations, including restrictions on unsolicited marketing communications and other consumer protection laws; (h) fluctuations in fuel prices, paper prices, postal rates and postal delivery schedules; (i) the number of shares, if any, that we may repurchase in connection with our repurchase program; (j) unanticipated developments regarding litigation or other contingent liabilities; (k) our ability to complete reorganizations, including cost-saving initiatives; and (l) other factors discussed from time to time in our filings with the Securities and Exchange Commission, including under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 which was filed on April 1, 2024. The forward-looking statements in this press release and our related earnings conference call are made only as of the date hereof, and we undertake no obligation to update publicly any forward-looking statement, even if new information becomes available or other events occur in the future.

The Company reports its financial results in accordance with generally accepted accounting principles (“GAAP”). However, the Company may use certain non-GAAP measures of financial performance in order to provide investors with a better understanding of operating results and underlying trends to assess the Company’s performance and liquidity in this press release and our related earnings conference call. We have presented herein a reconciliation of these measures to the most directly comparable GAAP financial measure.

The Company presents the non-GAAP financial measure “Adjusted Operating Income” as a useful measure to both management and investors in their analysis of the Company’s financial results because it facilitates a period-to-period comparison of Operating Income excluding stock-based compensation and severance. The most directly comparable measure for this non-GAAP financial measure is Operating Income.

The Company presents the non-GAAP financial measure “EBITDA” as a supplemental measure of operating performance in order to provide an improved understanding of underlying performance trends. The Company defines “EBITDA” as Net Income adjusted to exclude income tax expense, other expense (income), net, and depreciation and amortization expense. The Company defines “Adjusted EBITDA” as EBITDA adjusted to exclude stock-based compensation, restructuring expense and severance. The most directly comparable measure for EBITDA and Adjusted EBITDA is Net Income. We believe EBITDA and Adjusted EBITDA are an important performance metric because it facilitates the analysis of our results, exclusive of certain non-cash items, including items which do not directly correlate to our business operations; however, we urge investors to review the reconciliation of non-GAAP EBITDA to the comparable GAAP Net Income, which is included in this press release, and not to rely on any single financial measure to evaluate the Company’s financial performance.

The use of non-GAAP measures does not serve as a substitute and should not be construed as a substitute for GAAP performance but should provide supplemental information concerning our performance that our investors and we find useful. The Company evaluates its operating performance based on several measures, including these non-GAAP financial measures. The Company believes that the presentation of these non-GAAP financial measures in this press release and earnings conference call presentations are useful supplemental financial measures of operating performance for investors because they facilitate investors’ ability to evaluate the operational strength of the Company’s business. However, there are limitations to the use of these non-GAAP measures, including that they may not be calculated the same by other companies in our industry limiting their use as a tool to compare results. Any supplemental non-GAAP financial measures referred to herein are not calculated in accordance with GAAP and they should not be considered in isolation or as substitutes for the most comparable GAAP financial measures.

HHS@fnkir.com

(a)Adjusted Operating Margin equals Adjusted Operating Income divided by Revenues.

For immediate release:

August 8, 2024

Chelmsford, Massachusetts – August 8, 2024 -- Harte Hanks, Inc. (NASDAQ: HHS), a leading global customer experience company focused on bringing companies closer to customers for over 100 years, announced today that Sharona Sankar-King, a highly experienced strategy, business, and operational excellence leader, will be joining Harte Hanks as Chief Customer and Data Officer, a key new position on the senior leadership team. Ms. Sankar-King is coming to Harte Hanks from her years at Bain & Company, where she served as an Expert Partner and global leader in Engagement & Marketing. She will be based in New York, reporting directly to Kirk Davis, Harte Hanks' Chief Executive Officer.

“Ms. Sankar-King brings the ideal blend of consulting, customer success management, and data analytics to Harte Hanks,” commented Mr. Davis. “Her expertise will be critical to leverage our robust data assets, to expand our wallet share with our top-tier clients, and develop new solutions to enable growth. As I have communicated, the Chief Customer Officer is a critical position for Harte Hanks, giving us the capability to better understand the evolving needs of customers andto develop new offerings to better serve our clients. I am eager to welcome Sharona to our team.”

Over the course of her tenure at Bain & Company, Sharona served in Bain’s Customer and Advanced Analytics practices, supporting clients across industries to help them deliver on their customer engagement and marketing ambitions. In this senior role, she was responsible for leveraging her expertise in B2C and B2B marketing, customer experience, marketing technology, and data analytics to fuel growth strategies and customer-centric transformations for large-scale, high-profile C-suite clients. In addition, Ms. Sankar-King served as an expert advisor to Bain’s Private Equity clients, helping them navigate the customer data, mar-tech, and ad-tech landscape. Most recently, Ms. Sankar-King co-authored a Harvard Business Review article on Generative AI approaches. She has become a highly sought-after expert in helping companies set their Gen AI ambition, identify high-priority use cases, mobilize efforts, and accelerate business value from this new and transformative technology.

Before joining Bain, Ms. Sankar-King spent two years as Executive Vice President, Head of Marketing Science – impacting data-driven creative strategy, measurement, content development, and production for BBDO (Omnicom). In this role, she launched the Marketing Science Practice, a Center of Excellence supporting creative strategy and execution. Before BBDO, she served as Managing Partner, North America Lead for digital media optimization & advanced data analytics for MEC (now called Wavemaker) at GroupM, part of WPP, overseeing a portfolio of Fortune 500 clients. Prior experience includes positions of increasing responsibility at Experian, Digitas (Publicis), Foote, Cone, & Belding, Time Inc., and Hearst Book Group.

Over her multiple decades-long career, Sharona has spearheaded product development, new go-to-market strategies, and data monetization initiatives that have a proven track record of impact on company growth for the firms she has served.

Ms. Sankar-King earned her Master of Applied Statistics from Columbia University and a Bachelor of Science in Psychology from Pennsylvania State University.

“Harte Hanks is a fascinating company, with world-class customers, a wide range of valuable capabilities, and over a century of success,” commented Ms. Sankar-King. “As Harte Hanks embarks on its second century, there are many opportunities to more effectively utilize data, develop customer-centric AI-driven offerings, and create compelling new revenue streams. I am excited to play an important role in developing these solutions alongside Kirk and the strong senior leadership team he has put into place.”

Harte Hanks (NASDAQ: HHS) is a leading global customer experience company whose mission is to partner with clients to provide them with CX strategy, data-driven analytics, and actionable insights combined with seamless program execution to better understand, attract and engage their customers.

Using its unparalleled resources and award-winning talent in the areas of Customer Care, Fulfillment and Logistics, and Marketing Services, Harte Hanks has a proven track record of driving results for some of the world’s premier brands, including GlaxoSmithKline, Unilever, Pfizer, HBOMax, Volvo, Ford, FedEx, Midea and IBM among others. Headquartered in Chelmsford, Massachusetts, Harte Hanks has over 2,000 employees in offices across the Americas, Europe, and Asia Pacific.

As used herein, “Harte Hanks” or “the Company” refers to Harte Hanks, Inc. and/or its applicable operating subsidiaries, as the context may require. Harte Hanks’ logo and name are trademarks of Harte Hanks.

Our press release and related earnings conference call contain “forward-looking statements” within the meaning of U.S. federal securities laws. All such statements are qualified by this cautionary note, provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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. 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.

These risks, uncertainties, assumptions and other factors include: (a) local, national and international economic and business conditions, including (i) market conditions that may adversely impact marketing expenditures, and (ii) the impact of economic environments and competitive pressures on the financial condition, marketing expenditures and activities of our clients and prospects; (iii) the demand for our products and services by clients and prospective clients, including (iv) the willingness of existing clients to maintain or increase their spending on products and services that are or remain profitable for us, and (vi) our ability to predict changes in client needs and preferences; (b) economic and other business factors that impact the industry verticals we serve, including competition, inflation and consolidation of current and prospective clients, vendors and partners in these verticals; (c) our ability to manage and timely adjust our facilities, capacity, workforce and cost structure to effectively serve our clients; (d) our ability to improve our processes and to provide new products and services in a timely and cost-effective manner though development, license, partnership or acquisition; (e) our ability to protect our facilities against security breaches and other interruptions and to protect sensitive personal information of our clients and their customers; (f) our ability to respond to increasing concern, regulation and legal action over consumer privacy issues, including changing requirements for collection, processing and use of information; (g) the impact of privacy and other regulations, including restrictions on unsolicited marketing communications and other consumer protection laws; (h) fluctuations in fuel prices, paper prices, postal rates and postal delivery schedules; (i) the number of shares, if any, that we may repurchase in connection with our repurchase program; (j) unanticipated developments regarding litigation or other contingent liabilities; (k) our ability to complete reorganizations, including cost-saving initiatives; and (l) other factors discussed from time to time in our filings with the Securities and Exchange Commission, including under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 which was filed on March 31, 2023. The forward-looking statements in this press release and our related earnings conference call are made only as of the date hereof, and we undertake no obligation to update publicly any forward-looking statement, even if new information becomes available or other events occur in the future.

HHS@fnkir.com