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Harte-Hanks Reports First Quarter EPS Growth of 38% on Revenue Growth of 13.6%
SAN ANTONIO--(BUSINESS WIRE)--April 26, 2005--Harte-Hanks, Inc. (NYSE:HHS)
Note: Harte-Hanks will hold a first quarter earnings conference call on April 26, 2004 at 10AM CDT. The number is 800-988-9498 domestic or 210-234-0004 international, pass code 121693. There will be an audio replay available shortly after the call through May 3, 2005. To access, please call 866-363-1838 passcode 1216 or visit www.harte-hanks.com/earnings_audio/audio_stream.html.
Harte-Hanks, Inc. (NYSE:HHS) today reported first quarter 2005 diluted earnings per share of $0.29 on revenues of $268.3 million. These results compare to diluted earnings per share of $0.21 on $236.3 million in revenue for the first quarter of 2004.
The following table presents financial highlights of the company's operations for the first quarter of 2005 and 2004. Full financial results are attached.
RESULTS FROM OPERATIONS
In thousands, except -------------------------------------------------
Commenting on the first quarter 2005 performance, Chief Executive Officer Richard Hochhauser said, "Our people delivered a stand-out quarter and we are obviously pleased with the results. Diluted earnings per share increased 38.1% on 13.6% revenue growth. Operating income grew 34.1% and we generated $23.9 million of free cash flow, an increase of 45% from our free cash flow in the first quarter of 2004."
Discussing the performance of individual business segments, Hochhauser said, "The first quarter for direct marketing was nothing short of spectacular, with revenue up 17.4% and operating income up 57.6%. Operating income margins improved 370 basis points year-over-year, hitting 14.4%. Business overall continued to show strength, and we particularly benefited from a large, complex, world-wide project that we launched for one of our significant customers in the quarter. This project added about a third of our revenue growth for the quarter -- adding to an otherwise outstanding revenue and profit performance -- and for the most part has come to a conclusion. Our high-tech/telecom and select vertical markets had strong revenue performances, with growth in excess of 20% over the prior year, and retail also was strong with low teens growth. Financial was up in the low-single digits, and pharma/healthcare was down in the mid-single digits."
Turning to Shoppers performance, Hochhauser said, "Shoppers had yet another really solid quarter. Operating income increased 13.7% on revenue growth of 7.5%. Shopper growth was driven by ROP (in-book advertising), especially real estate and employment related advertising, and increased circulation. We are also excited about the acquisition of the Tampa Flyer, which we announced in the first quarter and completed last week, and future opportunities this shopper will present to us in Florida."
Concluding, Hochhauser said, "Saying we are pleased with our earnings per share performance in the first quarter does not do justice to the performance our people delivered. Our first quarter of 2004, however, was our least robust quarterly performance last year. From a year-over-year comparison standpoint, therefore, and given the successful project in direct marketing in this quarter, we do not expect to see this extraordinary level of revenue or earnings growth over the remainder of the year. With this strong first quarter and continued strength in both of our businesses, our goal for the year, which initially was to deliver similar earnings growth in 2005 as we saw in 2004, has slightly improved."
Statements in this release concerning the Company's business outlook or future financial performance and other statements that are not historical facts are "forward-looking statements" as the term is defined under applicable Federal Securities Laws. Forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those statements. Such risks, uncertainties, and factors include, but are not limited to, public concern over consumer privacy issues, which may lead to enactment of legislation restricting or prohibiting the collection and use of information that is currently legally available, competitive pressures, fluctuations in paper prices and postal rates, and general or regional economic conditions, as well as other risks detailed in the Company's filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K.
Highlights of the first quarter included:
-- On April 20, 2005 Harte-Hanks completed its acquisition of The Tampa Flyer (acquisition agreement was announced on March 24, 2005). The Tampa Flyer is a weekly shopper publication
-- On February 17, 2005 Harte-Hanks acquired its long-standing Australian partner Communique Direct pursuant to an option entered into June 2003. Communique Direct provides a range of
-- During the quarter, Harte-Hanks commenced work on four new database engagements covering four of our industry verticals -- Financial, Retail, High Tech and Select.
-- Harte-Hanks signed a number of renewals and expansions in the first quarter with large high-tech/telecom companies for its CI Technology Database. The CI Technology Database is one of
-- Using expanded print on demand capabilities, Harte-Hanks won a large engagement to create and deliver global business-to-business direct mail programs for a leading specialized software manufacturer. This engagement is an expansion of a previous relationship with the client whereby
-- Harte-Hanks renewed an annual agreement to provide technical support services to a leading global software manufacturer. Services include inbound customer care, technical support, and
-- Harte-Hanks Direct Marketing named Christine M. Cournoyer as its new Managing Director of the Billerica, Massachusetts database solutions team. Cournoyer has extensive experience
-- Harte-Hanks Direct Marketing promoted Li Saul to its newly-named creative position: senior creative officer, direct marketing. She was previously senior vice president, creative services, and executive direct for direct marketing. In this new role, Saul formally has overview responsibility for all creative functions at various direct marketing businesses of Harte-Hanks, as well as the specification and implementation of Harte-Hanks Direct Marketing branding and graphics
-- Harte-Hanks paid a regular cash dividend, increased from 4.0 cents per share to 5.0 cents per share, on March 15, 2005 to shareholders of record on March 1, 2005. This is the tenth
-- Harte-Hanks purchased 0.6 million shares of its common stock in the first quarter. This leaves approximately 5.0 million shares under its current repurchase authorization.
-- The annual meeting of shareholders will be held at 10 A.M. on May 17, 2005 at 200 Concord Plaza Drive, first floor, San Antonio, Texas.
Harte-Hanks, Inc., San Antonio, TX, is a worldwide, direct and targeted marketing company that provides direct marketing services and shopper advertising opportunities to a wide range of local, regional, national and international consumer and business-to-business marketers. Harte-Hanks Direct Marketing improves the return on its clients' marketing investment with a range of services organized around five solution points: Construct and update the database -- Access the data -- Analyze the data -- Apply the knowledge -- Execute the programs. Experts at each element within this process, Harte-Hanks Direct Marketing is highly skilled at tailoring solutions for each of the vertical markets it serves. Harte-Hanks Shoppers is North America's largest owner, operator and distributor of shopper publications, with shoppers that are zoned into more than 1,000 separate editions with a weekly circulation of approximately 12 million in California and Florida.
For more information, contact: Chief Financial Officer Dean Blythe 210-829-9138 or e-mail at email@example.com.
This release and other information about Harte-Hanks can be found on the World Wide Web at http://www.harte-hanks.com
Operating revenues $268,293 $236,252
Diluted earnings per common
DEPRECIATION AND AMORTIZATION
Net Income $25,073 $18,789
Property, plant and
Liabilities and Stockholders'
Long-term debt -- --
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