Q1 2024 Harte Hanks Inc Earnings Call
Operator: Greetings. Welcome to the Harte Hanks First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Tom Bauman of SNK-IR. You may begin.
Greetings and welcome to the Harte Hanks first quarter 'twenty 'twenty four earnings conference call. At this time, all participants are in a listen only mode.
Tom Bauman: And answer session will follow the formal presentation, if anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded.
Tom Bauman: I'll now turn the conference over to your host Tom bombing of S. N. K IR you may begin.
Tom Bauman: Thank you. Hosting the call today are Kirk Davis, Chief Executive Officer; Kelly Waller, Senior Vice President of Sales and Marketing; and David Garrison, Chief Financial Officer. Before we begin, I want to remind participants that during the call, management's prepared remarks may contain forward-looking statements that are subject to risks and uncertainties. Management may also make additional forward-looking statements in response to your questions today. Therefore, the company claims protection under the Safe Harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Tom Bauman: Thank you hosting the call today are Kirk Davis, Chief Executive Officer, Kelly Waller, Senior Vice President of sales and marketing and <unk>.
Tom Bauman: David Garrison Chief Financial Officer before.
Tom Bauman: Actual results may differ from those discussed today, and therefore, we refer you to a more detailed discussion of these risks and uncertainties in the company's filings with the SEC. In addition, any projections as to the company's future performance represented by management include estimates as of today, May 9, 2024, and the company assumes no obligation to update these projections in the future as market conditions change. This webcast and certain financial information provided on the call, including reconciliations of non-GAAP financial measures to comparable GAAP financial measures, are available in the earnings press release that was issued shortly after the market closed. A copy of that press release and other corporate disclosure is available on the Investor Relations section of the Harte Hanks website at hartehanks.com.
Tom Bauman: Before we begin I want to remind participants that during the call management's prepared remarks may contain forward looking statements that are subject to risks and uncertainties.
Tom Bauman: Management May also make additional forward looking statements in response to your questions today.
Tom Bauman: Therefore, the company claims protection under Safe Harbor for forward looking statements contained in the private Securities Litigation Reform Act of 1995.
Tom Bauman: Actual results may differ from results discussed today, and therefore, we refer you to a more detailed discussion of these risks and uncertainties in the company's filings with the SEC.
Tom Bauman: In addition, any projections as to the company's future performance represented by management include estimates as of today May nine 2024, and the company assumes no obligation to update these projections in the future as market conditions change.
Tom Bauman: This webcast and certain financial information provided on the call, including reconciliations of non-GAAP financial measures to comparable GAAP financial measures are available in the earnings press release that was issued shortly after the market closed.
Tom Bauman: A copy of that press release and other corporate disclosure is available on the Investor Relations section of the Harte Hanks website at Harte Hanks dotcom.
Tom Bauman: With that, I would now like to turn the call over to Kirk. Kirk, the call is yours.
Tom Bauman: With that I would now like to turn the call over to Kirk Kirk the call is yours.
Kirk Davis: Thank you, Tom. And good afternoon, everyone.
Kirk: Thank you Tom and good afternoon, everyone.
Kirk Davis: I appreciate you joining our Q1 'twenty 'twenty four earnings conference call.
Kirk Davis: I appreciate you joining our Q1 2024 earnings conference call. Joining me today from our Chelmsford, Massachusetts office are Kelly Waller, our Senior Vice President of Sales and Marketing, and David Garrison, our Chief Financial Officer. Kelly and David were the first two new executive appointments I made last fall.
Kirk Davis: Joining me today from our Chelmsford, Massachusetts Apis are Kelly wall, our senior Vice President of sales and marketing and David Garrison, our Chief Financial Officer.
Kirk Davis: And David were the first two new executive appointments I made last fall.
Kirk Davis: We are fortunate to have assembled an exceptionally strong leadership team. Our team comprises both seasoned executives who have been instrumental to our company for many years and new leaders we've recruited to lead sales, finance, and our newly established transformation office, led by David Fisher. Later in the call, we will delve into our first quarter performance in much greater detail.
Kirk Davis: We are fortunate to have assembled and exceptionally strong leadership team.
Kirk Davis: Our team comprises both seasoned executives who have been instrumental to our company for many years and new leaders, we've recruited to lead sales finance and our newly established transformation office led by David Fischer.
Kirk Davis: Later in the call, we will delve into our first quarter performance in much greater detail. However.
Kirk Davis: However, I want to highlight up front that on a same-store basis, Q1 was our company's best revenue performance in the past five quarters, at minus 3.5%. We are confident we are developing a durable growth engine for our company. More broadly, I'd like to review the progress we are making on our Elevate program, launched last October. Elevate aims to propel us towards greater agility, innovation, and organic growth and customer centricity, ensuring that we exceed the expectations of our stakeholders.
Kirk Davis: However, I want to highlight upfront that on a same store basis Q1 was our company's best revenue performance in the past five quarters.
Kirk Davis: Minus three 5% we are confident we are developing a durable growth engine for our company.
Kirk Davis: More broadly I'd like to review the progress we are making on our elevate program.
Kirk Davis: Launched last October.
Kirk Davis: <unk> aims to propel us towards greater agility innovation and organic growth and customer centricity, ensuring that we exceed the expectations of our stakeholders.
Kirk Davis: Our LLV program continues to evolve and revolves around four key areas and work streams. The first is our sales and marketing transformation. While there's no finish line in sales, we have nearly completed the restructuring and expansion of our sales and marketing organization. Under the leadership of Kelly Waller, we have centralized our sales organization, undergone significant staffing and structural changes, expanded our sales force, and established strategic channels, all of which are currently fueling strong pipeline growth year over year. The caliber of talent
Kirk Davis: Our elevate program continues to evolve and revolves around four key areas and work streams.
Kirk Davis: First is our sales and marketing transformation.
Kirk Davis: While there is no finish line in sales, we have nearly completed the restructuring and expansion of our sales and marketing organization.
Kirk Davis: Under the leadership of Kelly Waller, we have centralized our sales organization undergone significant re staffing and structural changes.
Kirk Davis: Spanned at our sales force and established strategic channels, all of which are currently feeling strong pipeline growth year over year.
Kirk Davis: The caliber of talent.
Kirk Davis: We have attracted customers, and the quality and composition of our sales pipeline have outpaced our expectations. Today, Kelly will highlight some of the early successes we have already had. Our increased investment in marketing is also yielding positive outcomes. By bolstering our digital presence and creating better and more innovative content to drive website traffic and enhance our social activity, we are effectively boosting brand awareness, traffic, and generating more organic leads. The second key area of Project Elevate is our focus on margin expansion and business optimization. We are in the early stages of a multi-year program.
Kirk Davis: We have attracted and the quality and composition of our sales pipeline.
Kirk Davis: Out paced our expectations.
Kirk Davis: Today Kellie will highlight some of the early successes we have already had.
Kirk Davis: Our increased investment in marketing is also yielding positive outcomes.
Kirk Davis: By bolstering, our digital presence and creating better and more innovative content to drive website traffic and enhance our social activity. We are effectively boosting brand awareness traffic and generating more organic leads.
Kirk Davis: The second key area of project elevate is our focus on margin expansion and business optimization.
Kirk Davis: We are in the early stages of a multiyear program as we previously shared we established a transformation office to thoughtfully execute our plans we embarked on an effort with the current organization and acclaimed global consulting firm to catalyze our efforts and pinpointing.
Kirk Davis: As we previously shared, we established a transformation office to thoughtfully execute our plan. We embarked on an effort with the Kearney Organization, an acclaimed global consulting firm, to catalyze our efforts in pinpointing inefficiencies and cost-saving opportunities that would not jeopardize our customer delivery capability. This entailed exhaustive benchmarking against industry peers and best practices, coupled with a meticulous look at how technological advancements could streamline operations. As a result, we have identified an immediate opportunity to reduce costs by $6 million by year-end, with a two-year forecasted annual savings of $16 million exiting 2025.
Kirk Davis: Inefficiencies and cost saving opportunities that would not jeopardize our customer delivery capabilities. This.
Kirk Davis: This entailed exhaustive benchmarking against industry peers, and best practices, coupled with meticulous look at how technological advancements could streamline operations.
Kirk Davis: As a result, we have identified an immediate opportunity to reduced costs by $6 million by year end with a two year forecasted annual savings of 16 million exiting 2025.
Kirk Davis: Our third strategic focus area centers around harnessing artificial intelligence and data-driven decision-making. Our foundational efforts here involve rigorous due diligence, experimentation, and learning. Through this process, we have pinpointed numerous practical use cases to leverage AI to enhance the customer experience, fortify our value proposition, and contemplate new business models. Highlighting the pivotal role of partnerships in our evolution, a standout example is our alliance with Amazon. In 2023, as part of our ongoing efforts to modernize and transform, we made a significant investment in our partnership with Amazon Web Services. Presently, we are collaborating with AWS's generative AI experts on initiatives aimed at revolutionizing our customer care business. These initiatives involve integrating AI and machine learning capabilities to streamline customer issue resolution.
Kirk Davis: Our third strategic focus area centers around harnessing artificial intelligence and data driven decision making.
Kirk Davis: Our foundational efforts here involve rigorous due diligence experimentation and learning through this process. We have pinpointed numerous practical use cases to leverage AI to enhance customer experience fortify our value proposition.
Kirk Davis: And contemplate new business models highlight.
Kirk Davis: Highlighting the pivotal role of partnerships and our evolution. A standout example is our alliance with Amazon.
Kirk Davis: In 2023 is part of our ongoing efforts to modernize and transform we made a significant investment in our partnership with Amazon Web services.
Kirk Davis: Presently we are collaborating with AWS is generative AI experts on initiatives aimed at revolution in our customer care business.
Kirk Davis: These initiatives involve integrating AI and machine learning capabilities to streamline customer issue resolution.
Kirk Davis: We are developing use cases focused on addressing our clients' most intricate challenges. These endeavors will help us in delivering new business models across different use cases. We also believe these advancements will embolden our efforts to win new business, initially for customer care, but inevitably throughout all of our services. Our fourth major initiative involves creating a more customer-centric culture, in a quest to redefine our operational framework with an unwavering commitment to elevating the customer experience.
Kirk Davis: We are developing use cases focused on addressing our clients' most intricate challenges.
Kirk Davis: These endeavors will help us and provisioning new business models across different use cases. We also believe these advancements will embolden our efforts to win new business initially for customer care, but inevitably throughout all of our services.
Kirk Davis: Our fourth major initiative involves creating a more customer centric culture.
Kirk Davis: In our quest to redefine our operational framework with an unwavering commitment to elevating customer experience, we are investing in a pivotal new role within our executive leadership team.
Kirk Davis: We are investing in a pivotal new role within our executive leadership team, a chief customer officer. This strategic appointment will signify our dedication to placing the customer at the forefront of every decision and action we undertake. As retention plays a pivotal role in our success, having a dedicated focus on enhancing our customer experience will serve to enable net growth more quickly from our sales development effort. Additionally, emphasizing our commitment to evolving alongside our customers, understanding their journey, and prioritizing the voice of the customer will undoubtedly strengthen our position during both the customer acquisition phase and our ability to expand relationships, especially key.
Kirk Davis: Chief customer officer this.
Kirk Davis: This strategic appointment will signify our dedication to placing the customer at the forefront of every decision and action we undertake.
Kirk Davis: As retention plays a pivotal role in our success, having a dedicated focus on enhancing our customer experience will serve to enable in that growth more quickly from our sales development efforts.
Kirk Davis: Additionally, emphasizing our commitment to evolving alongside our customers understanding their journey and prioritizing the voice of the customer will undoubtedly strengthen our position during both the customer acquisition phase, but also in our ability to expand relationships.
Kirk Davis: Especially key.
Kirk Davis: We expect to hire a visionary executive who excels at envisioning and implementing data-driven and AI-powered solutions to improve our clients' experiences and results and drive growth. This individual will play a pivotal role, serving as the heartbeat of our organization, fostering a culture where each team member is deeply committed to delivering unparalleled service to our customers. We expect to name a Chief Customer Officer in early Q3. I would now like to introduce Kelly Waller, our Senior Vice President for Sales and Marketing.
Kirk Davis: We expect to hire a visionary executives, who excels at envisioning and implementing data driven and AI powered solutions to improve our clients' experiences and results and drive growth. This.
Kelly Waller: This individual will play a pivotal role serving as the heartbeat of our organization fostering a culture, where each team member is deeply committed to delivering unparalleled service to our customers. We expect to name a chief customer officer in early Q3.
Kirk Davis: Kelly joined Harte Hanks from a $1.8 billion fintech company where she spearheaded global sales efforts. The remarkable pace and caliber of the sales transformation she is orchestrating are truly exciting, and it is energizing our entire company. In my career, I've seldom seen an executive have such a profound impact in such a brief span of time. Kelly will delve into the strategies she has employed and showcase some of the recent victories our team has achieved. Kelly.
Kirk Davis: I would now like to introduce Kelly Waller, our senior Vice President for sales and marketing.
Kirk Davis: Kelly joined Harte Hanks from a $1 8 billion Fintech company, where she spearheaded global sales efforts.
Kirk Davis: The remarkable pace and caliber of the sales transformation. She is orchestrating is truly exciting and it is energizing our entire company and.
Kirk Davis: In my career I've seldom seen an executive has such a profound impact in such a brief span of time.
Kirk Davis: Kelly will dwelled into the strategies. She is employed and showcase some of the recent victories our team has achieved.
Kirk Davis: Kelly.
Kelly Waller: Thank you, Kirk. As you know, I'm happy to be here and quite proud of the team that we have built. Our relentless efforts have transformed our sales and marketing division from an underperforming entity into a sales force capable of driving organic growth. Through the implementation of new and pivotal go-to-market strategies, we've created a robust action plan aimed at realizing our growth objectives. Central to our strategy is geographic expansion with a keen focus on better penetrating the European market and venturing into the SMB segment for the first time.
Kelly: Thank you Kirk.
Kelly: No I'm happy to be here and quite proud of the team that we have built.
Kelly Waller: This effort has transformed our sales and marketing division from an underperforming entity into our sales force capable of driving organic right.
Kelly Waller: Through the implementation of new and pivotal go to market strategies, we've created a robust action plan aimed at realizing our growth objectives.
Kelly Waller: Central to our strategy is geographic expansion with a keen focus on better penetrating the European market and venturing into the SMB segment for the first time.
Kelly Waller: We're proud to report significant strides in this direction with the establishment of a dedicated European sales team and the imminent launch of a compelling S&B product pilot beginning next month. This product, a comprehensive suite of B2B marketing and sales services, marks a milestone in our journey toward expansion. Additionally, we have fortified our sales and marketing teams by introducing two new units, the Partner Sales Team and an Inside Sales Team, to complement our existing Field Sales Team and Client Services Team.
Kelly Waller: We're proud to report significant strides in this direction with the establishment of a dedicated European sales team and the imminent launch as a compelling SMB product highlights beginning next month.
Kelly Waller: This product a comprehensive suite of database marketing and sales services marks a milestone in our journey towards expansion.
Kelly Waller: Additionally, we have fortified our sales and marketing teams by introducing two new units the partner sales gain and an inside sales team to complement our existing field sales team and client services team.
Kelly Waller: By augmenting our workforce and bolstering our marketing campaigns, particularly in digital channels such as SEO, Google, social media, and personalized events, we have achieved strong pipeline growth over the last couple of months. Obviously, this leads to our focus on conversions, which our sales organization is highly incentivized to achieve.
Kelly Waller: By augmenting, our workflows and bolstering our marketing campaigns, particularly in digital channels, such as SCO physical social media I'm personalized events, we have achieved strong pipeline right at the last couple of months.
Kelly Waller: Obviously this leads to oxide pits, Oh conversions in which our sales organization is highly incentivized to achieve.
Kelly Waller: The growth in our pipeline is beginning to yield results, which we anticipate will scale. We are having success in expanding our relationship with existing customers. Taken together, we believe this is the outset of our upward ascent, so I'd like to share some examples of the early successes we're seeing in both new customer acquisition and expansion. In our Fulfillment and Logistics segment, led by Patrick O'Brien, we are progressing well as we expand our partnerships with existing clients, which is a major opportunity for us.
Kelly Waller: The growth in our pipeline is beginning to yield results, which we anticipate will scale.
Kelly Waller: We are having success in expanding our relationship with existing customers taken together. We believe this is the outset upward ascent.
Kelly Waller: So I'd like to share. Some examples of the early successes, we're seeing in both new customer acquisition and expansion.
Kelly Waller: And also filming and logistics segment led by Patrick Hi, Brian We are progressing well as we expand our partnerships with existing clients, which is a major opportunity for us.
Kelly Waller: For example, we have an established robust partnership with a prominent agency through our kitting capabilities. Our specialization in kitting, particularly for retail and e-commerce, involves bundling related products into packages or kits for distribution as a Unified Entity. This is an exciting and expanding service we offer. Our kitting capability is in demand, and we expect continued growth, especially in the second half of the year. The growth should compound nicely.
Kelly Waller: For example, we have established and they have an established robust partnership with it from an agency to all kitting capabilities, our specialization in kitchen, particularly for retail and E. Commerce involve bundling related products into packages or kids for distribution of the unified.
Kelly Waller: <unk>. This is an exciting and expanding service we offer.
Kelly Waller: Our kitchen capability is in demand and we expect continued growth, especially in the second half of the year.
Kelly Waller: The growth should compound nicely.
Kelly Waller: Also, within our fulfillment and logistics segment, we have secured a new client through our established partnership with a prominent procurement and creative production firm. This partnership has connected us with one of the world's most innovative pharmaceutical companies, entrusting us with the delivery of B2B and B2C literature and samples, as well as providing kitting services. These surveys are set to commence, which bodes well for the second half of the year.
Kelly Waller: Also within our fulfillment and logistics segment, we have secured a new client to our established partnership with a prominent procurement and creative production.
Kelly Waller: This partnership has connected us with one of the world's most innovative pharmaceutical companies entrusting us with a delivery of beta b and B to C metric churn sample as well as providing kitting services.
Kelly Waller: He said is all set to commence which bodes well for the second half of the year.
Kelly Waller: Additionally, another opportunity arose from our long-standing quarter-century partnership with a leading medical device and healthcare company. This partnership has presented an opportunity for us to step into the fulfillment arena with the client, effectively serving as its e-commerce hub. Our onboarding process is underway, and we will be fully operational by Q3.
Kelly Waller: Additionally, another opportunity arise from our long standing quarter century partnership with a leading medical device and healthcare company. This partnership has presented an opportunity for us to step into the fulfillment arena with decline effectively serving as its e-commerce hub, our onboarding processes under.
Kelly Waller: Way I mean, it will be fully operational by Q3.
Kelly Waller: Shifting focus to logistics, as a preferred logistics partner for a rapidly expanding printing company in the Midwest, we are privileged to partner alongside them as they expand. Alongside them, we recently onboarded a national grocery client. Our intensified digital marketing efforts have yielded many leads and results already in our customer care segment, which is led by Ben Chacko. For example, we have attracted a reputable managed health care system client from California seeking assistance during their open enrollment period.
Kelly Waller: Shifting focus to logistics as a preferred logistics partner for our rapidly expanding printing company in the Midwest, we are privileged upon alongside them as they expand.
Kelly Waller: Alongside that we recently on boarded a national grocery clients.
Kelly Waller: Our intensified digital marketing efforts have yielded many leads and results already in our customer care segment, which is led by Ben checking.
Kelly Waller: We have attracted a reputable managed health care system clients in California seeking assistance during the open enrollment period. This opportunity has proved beneficial in Q2 and presents additional growth opportunities.
Kelly Waller: This opportunity proved beneficial in Q2 and presents additional growth opportunities. Furthermore, our Customer Care segment has successfully secured a new client that specializes in technology-driven vehicle safety devices. Under this collaboration, customers seeking support for the product will be directed to our dedicated Harte Hanks Customer Care team. This new addition to our client portfolio is set to commence operations with Harte Hanks soon, transitioning from a self-managed team to our specialized customer care services.
Kelly Waller: Furthermore, our customer care segment has successfully secured a new client specializes in technology driven vehicles safety devices under this collaboration customers seeking support for the project will be directed to our dedicated Harte Hanks custom Maquettes Hain. This new addition to our client portfolio.
Kelly Waller: Is set to commence operations with Harte Hanks in transitioning from a self managed team to a specialized customer care services.
Kelly Waller: In marketing services, one of our existing clients, a global leader in the beauty industry, has engaged us to expand marketing support to include a well-established moisturizer brand within its consumer products division. Also, in marketing services, with a tie-in with our sales services division, we are thrilled to be expanding our relationship with a leading international travel agency who has entrusted our team to help them engage property owners and consumers with their platform and is now expanding utilization of our services for a new division focused on reactivating their B2B database and intensifying new prospects in the U.S. The project is expected to be rolled out in the coming months.
Kelly Waller: In marketing services, one of our existing clients a global leader in the beauty industry has engaged us to expand marketing support to include a well established moisturizer brand within its consumer products Division.
Kelly Waller: Also in marketing services with a tie in with our sales services Division, we are thrilled to be expanding our relationship with a leading international travel agency, who was entrusted our team to help them engage property owners and consumers with that platform and is now expanding utilization of all sepsis Bermuda vision focused on.
Kelly Waller: Reactivating, the B to B database and intensifying new prospects in the U S. The project is expected to rollout in the coming months.
Kelly Waller: Lastly, I want to highlight a client testimonial we received that opened new opportunities for Harte Hanks. Recently, our strategy team played a pivotal role in aiding a health insurance client to chart a strategy to overcome long-standing perceptions about its offering and brand. The response we received from the client following the conclusion of the initial engagement inspired everybody involved. The Client Road
Kelly Waller: Lastly.
Kelly Waller: Wanted to highlight our client testimonial, we received that opens new opportunities for Harte Hanks Reis.
Kelly Waller: Recently, our strategy team played a pivotal role in aiding our health insurance clients to charter in strategy to overcome long standing perceptions about this offering and brands.
Kelly Waller: The response, we received from the client following the conclusion of the initial engagement and spud everybody involved.
Kelly Waller: The client rent, we are destined to do something great with us. Thank you all feel dedication to this process. What we produced here will inspire thousands of employees and nearly a million members powerful stuff.
Kelly Waller: We are destined to do something great with this. Thank you all for your dedication to this process. What we produce here will inspire thousands of employees and nearly a million members. Powerful stuff.
Kelly Waller: As a result, we are now expanding our work with this client. I am sure you can appreciate how this type of feedback motivates us all. There are additional wins, of course, but we are anticipating much more new business as the year progresses. I'd like to conclude my remarks by sharing some personal reflections on my journey with our company thus far. What's truly thrilling to me is the remarkable transformation we have accomplished in standing up a reimagined and expanded sales and marketing organization.
Kelly Waller: As a result, we are now expanding our work with this client I'm sure you can appreciate how this type of feedback motivates us all.
Kelly Waller: There are additional wins of course, but we are anticipating much more new business as the year progresses.
Kelly Waller: I'd like to conclude my remarks by sharing some personal reflections on my journey with our company thus far.
Kelly Waller: That's truly thrilling to me, it's a remarkable transformation, we have accomplished and standing up a re imagined and expanded sales and marketing organization, we successfully revitalized and expanded our team welcoming many talented individuals in key sales marketing partnership and training roles.
Kelly Waller: We successfully revitalized and expanded our team, welcoming many talented individuals in key sales, marketing, partnership, and training roles. We're launching our first Harte Hanks Global Marketing and Sales Services Conference, ABLE 360, in late June in London. It's truly an exciting time to be part of this organization, and thank you. I'll pass the call back to Kirk.
Kirk Davis: We're launching our first Harte Hanks global marketing and sales services conference enables 360 in late June in London.
Kirk Davis: It's truly an exciting time to be part of this organization and thank you I'll pass the call back to cut.
Kirk Davis: Thank you Kelly.
Kirk Davis: In addition to the strategies Kelly outlined, we also have reinvigorated another sales channel in our company to cultivate new clients. In December 2022, our company acquired a premium sales enablement agency, which brought us experience and capabilities to enable clients to pilot outbound sales programs to forge new customer relationships, among other services. In late 2023, we made additional strategic investments in this business that spanned leadership, expanding our sales team, and adding training resources.
Kirk Davis: In addition to strategies Kelly outlined we also have reinvigorated another sales channel and our company to cultivate new clients.
Kirk Davis: In December 2022, our company acquired a premium sales enablement agency, which brought us experience and capabilities to enable clients to pilot outbound sales programs to forge new customer relationships among other services.
Kirk Davis: In late 2023, we made additional strategic investments in this business that spans leadership, expanding our sales team and adding training resources. This commitment coincided with the onboarding of a new global Fintech client presently we are deeply immersed in training our.
Kirk Davis: This commitment coincided with the onboarding of a new global fintech client. Presently, we are deeply immersed in training our sales force on the client's offerings, pricing structures, and packaging options. Our collaborative efforts aim to ensure a successful pilot with the client. Reflecting on our first quarter.
Kirk Davis: <unk> sports on the clients' offerings pricing structures and packaging options are collaborative efforts aimed to ensure a successful pilot with the client.
Kirk Davis: Reflecting on our first quarter.
Kirk Davis: We are excited about our progress. I want to reiterate that in Q1, we had our best same store comparison to prior years that we have reported in the past five quarters. I joined Harte Hanks in late June of last year. During my first conference call in August, I predicted that our revenue in Q3 and Q4 of 2023 would approximate what we reported in Q2. Taken together, Q3 and Q4 revenue surpassed that expectation, which was gratifying only from the perspective that we understood our trend and risk factors at the time.
Kirk Davis: We are excited about our progress.
Kirk Davis: And I want to reiterate in Q1, we had our best same store comparison to prior years that we have reported.
Kirk Davis: In the past five quarters.
Kirk Davis: Joined Harte Hanks in late June of last year. During my first conference call in August I related that our revenue in Q3, and Q4 of 2023 would approximate what we reported in Q2.
Kirk Davis: Taken together Q3, and Q4 revenue surpassed that expectation, which was gratifying only from the perspective that we understood our trend and risk factors at the time.
Kirk Davis: We had not yet hired Kelly, so the transformative changes we knew were needed were not yet in scope. We understood the transformation of our sales and marketing organization would require some time. We wanted to do it right, and we have. Fast forward. We have now progressed to where we are nurturing a notably stronger pipeline, already negotiating some deals, and anticipating momentum will continue building as we progress through the remainder of 2024. I would now like to turn the call over to David Garrison, our CFO. Thereafter, I have some closing remarks, and then David and I will be happy to take your questions.
Kirk Davis: We had not yet hired Shelley so the transformative changes, we knew where needed we're not yet in scope.
David Garrison: We understood the transformation of our sales and marketing organization would require some time, we wanted to do it right and we have.
David Garrison: Fast forward, we have now progressed to where we are nurturing and notably stronger pipeline already negotiating some deals and anticipating momentum. We'll continue building as we progress through the remainder remainder of 2024.
Kirk Davis: I would now like to turn the call over to David garrison. Our CFO thereafter, I have some closing remarks, and then David and I will be happy to take your questions David.
David Garrison: Thank you, Kirk. I will now review the first quarter consolidated results, including revenues for each business segment. Please note that starting in 2024, we will begin reporting four segments instead of three. The new segment, as discussed in our 10K, will be referred to as sales services. It relates to the Inside Out acquisition made in 2022 and has been separated from the customer care segment.
David Garrison: Thank you Kirk.
David Garrison: I'll now review the first quarter consolidated results, including revenues for each business segment.
David Garrison: Please note that starting in 2024, we begin reporting four segments instead of three.
David Garrison: The new segment as discussed in our 10-K will be referred to as sales services. It relates to the inside out acquisition made in 2022 and has been separated from the customer care segment.
David Garrison: First quarter revenues were $45.4 million, a decline of 3.5%, compared to $47.1 million for the first quarter of 2023. Growth in the customer care and sales services segment was offset by declines in the two other segments. Revenues in the customer care segment were $12.4 million in the first quarter of 2024, compared to $11.6 million in the same quarter of the previous year. Sales services increased to $4.7 million compared to $2.8 million in the first quarter of 2023. Growth in these two segments is the result of expansion with existing clients and the first quarter of a new FinTech client in sales services.
David Garrison: First quarter revenues were $45 4 million a decline of three 5%.
David Garrison: <unk> to $47 1 million for the first quarter in 2023.
David Garrison: Growth in the customer care and sales services segment was offset by the declines in the two other segments.
David Garrison: Revenues in the customer care segment were $12 4 million in the first quarter of 2024 compared to $11 6 million in the same quarter prior year.
David Garrison: <unk> services increased to $4 7 million compared to $2 8 million in the first quarter of 2023 growth in these two segments.
David Garrison: Were the result of expansion with existing clients in the first quarter of a new fintech client in sales services.
David Garrison: The marketing service segment revenues fell to $8.9 million in Q1 of 2024, compared to $11.2 million in the prior year. Customer budget reductions and a program conclusion account for the decrease in this segment year-over-year. Fulfillment and logistics revenues were $19.4 million in the first quarter of 2024, compared to $21.5 million in the prior year. The decrease in revenue is related to cost compression in the logistics space as costs shrink from reductions in overall market demand.
David Garrison: The marketing service segment revenues fell to $8 9 million in Q1 of 2024 compared to $11 2 million in the prior year custom.
David Garrison: Customer budget reductions and a program conclusion account for the decrease in this segment year over year.
David Garrison: Fulfillment and logistics revenues were $19 4 million in the first quarter of 2024 compared to $21 5 million in the prior year.
David Garrison: The decrease in revenue is related to cost compression in the logistics space as cost shrink from reductions in overall market demand.
David Garrison: Operating expenses in Q1 were $45.1 million, including restructuring expenses of $0.9 million, compared to $46.1 million in the same period of 2023. The commencement of Project Elevate resulted in $0.9 million of restructuring expenses for this quarter. This expenditure relates to staffing reductions completed in the first quarter, leading to a $2.3 million annualized expense reduction that will improve EBITDA. We expect to incur additional expenses estimated at $2.5 million in executing Project Elevate during 2024.
David Garrison: Operating expenses in Q1 were $45 1 million, including.
David Garrison: Restructuring expenses of <unk> 9 million compared to $46 1 million in the same period of 2023.
David Garrison: The commencement of project elevate resulted in <unk> 9 million of restructuring expenses for this quarter.
David Garrison: This expenditure related to staffing reductions completed in the first quarter, leading to a $2.3 million annualized expense reduction.
David Garrison: It will improve EBITDA.
David Garrison: We expect to incur additional expenses estimated at $2 5 million in executing project elevate.
David Garrison: During 2024.
David Garrison: The operating income in Q1 2024 was $0.4 million compared to the operating income of $1.1 million in the first quarter of 2023. After adjusting for stock compensation, severance, and restructuring expenses, the adjusted operating income in the first quarter of 2024 was $1.8 million compared to $1.6 million in the first quarter of 2023. The adjusted operating margin was 3.9% in Q1 2024 compared to 3.4% in the same quarter in 2023. The first quarter of 2024 had an EBITDA of $1.4 million compared to an EBITDA of $2.1 million in 2023.
David Garrison: The operating income in Q1, 2024 was <unk> 4 million compared to the operating income of $1 1 million in the first quarter of 2023.
David Garrison: After adjusting for stock compensation severance and restructuring expenses. The adjusted operating income in the first quarter of 2024 is $1 8 million compared to $1 6 million.
David Garrison: In the first quarter of 2023.
David Garrison: The adjusted operating margin is three 9% in Q1 2024 compared to three 4% in the same quarter in 2023.
David Garrison: The first quarter of 2024 had an EBITDA of $1 4 million compared to an EBITDA of $2 1 million in 2023, when adjusting for stock compensation severance and restructuring expenses the adjusted EBITDA.
David Garrison: When adjusting for stock compensation, severance, and restructuring expenses, the adjusted EBITDA is $2.8 million for Q1 of 2024 and $2.7 million for the same period in 2023. Turning to the balance sheet, As of March 31st, 2024, we had cash and cash equivalents of $11.5 million compared to $18.4 million at the end of 2023. Our current $25 million dollar line of credit, which was extended until June of 2025, has not been drawn against, and the company has no debt.
Speaker Change: Is 'twenty is $2 8 million for.
David Garrison: For Q1 of 2024.
David Garrison: $2 7 million for the same periods in 2023.
David Garrison: Turning to the balance sheet.
David Garrison: As of March 31, 2024, we had cash and cash equivalents of $11 5 million compared to $18 4 million at the end of 2023.
David Garrison: Our current $25 million line of credit.
David Garrison: Which was extended until June of 2025 has not been drawn against and the company has no debt.
David Garrison: Target to terminate pension one during June continues without any changes. As a reminder, the long-term pension liability on our balance sheet is $28.6 million as the termination funding requirement, and is listed as an other current liability. The pension termination contribution of $7.5 million will be made in June. Thank you for your support, and I'd like to turn the call back over to Kirk.
David Garrison: Target Determinate pension won during June continues without any obstacles.
Kirk Davis: As a reminder, long terminix pension liability on our balance sheet is $28 $6 million as the termination funding requirement.
Kirk Davis: Is listed as in other current liability.
Kirk Davis: The pension terminate termination contribution.
Kirk Davis: Seven 5 million will be made in June.
David Garrison: Thank you for your support and I'd like to turn the call back over to Kirk.
Kirk Davis: Thank you David.
Kirk Davis: In closing, I'd like to underscore our unwavering focus on our customers and their journey. Through extensive engagement with both our customers and prospective clients, I have had the privilege of gaining profound insights into their needs and aspirations. Our aim is to translate these insights into tangible enhancements across our organizational framework, incentive plans, and by improving the caliber of thought leadership we offer. Through in-depth dialogues with employees and clientele alike, we have identified compelling opportunities to bolster our customer acquisition efforts and fortify our frontline teams and their mission to elevate the customer experience.
Kirk Davis: In closing I'd like to underscore our unwavering focus on our customers in their journey.
Kirk Davis: Through extensive engagement with both our customers and prospective clients I've had the privilege of gaining profound insights into their needs and aspirations. Our aim is to translate these insights into tangible enhancements across our organizational frameworks incentive plans and by improving.
Kirk Davis: The caliber of thought leadership, we offer.
Kirk Davis: Through in depth dialogues with employees and clientele alike, we have identified compelling opportunities to bolster our customer acquisition endeavors and fortify our frontline teams and their mission to elevate the customer experience.
Kirk Davis: It will be an exciting milestone for Harte Hanks to appoint a chief customer officer, which we believe will be a strong brand differentiator. As we progress through this transformative period, I'm inspired by the enthusiasm and dedication demonstrated by our employees, while we deeply value our century-old legacy. We're equally thrilled about forging a new chapter for Harte Hanks, one that's responsive to the changing business environment and focused on providing outstanding customer experiences. We thank you for your ongoing support. We look forward to updating you on our progress in August. Thank you very much, and at this time, we would be happy to take your questions.
Kirk Davis: It will be an exciting milestone for harte hanks to appoint achieve customer officer, which we believe will be a strong brand differentiator.
Kirk Davis: As we progressed through this transformative period I'm inspired by the enthusiasm and dedication demonstrated by our employees.
Kirk Davis: While we deeply value our century old legacy we're equally thrilled about forging a new chapter for Harte Hanks won that's responsive to the changing business environment and focused on providing outstanding customer experiences.
Kirk Davis: We thank you for your ongoing support we look forward to updating you on our progress in August.
Kirk Davis: You very much and at this time, we would be happy to take your questions.
Operator: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question. You may press star two if you would like to remove your question from the question. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Our first questioner is Michael Kapinski with Noble Capital Markets.
Speaker Change: At this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Operator: A confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Operator: Moment, please while we poll for questions.
Michael Kapinski: Our first question here is Michael Kaplinsky with noble capital markets.
Michael Kapinski: Thank you for taking the questions. Good afternoon and congratulations on getting this company on track, Kurt. I know it's a lot of work. A couple of questions. In terms of your European expansion, where are those operations located, and can you kind of give us some sense of whether or not the European operations are profitable at this point? Or when do you anticipate that they'll swing towards contribution margin going forward?
Michael Kapinski: Thank you for taking the questions. Good afternoon, and congratulations on getting this company on track Kurt I know, that's a lot of work.
Michael Kapinski: Couple of questions in terms of your European expansion, where are those operations located in can you kind of give us. Some sense of are these are is the European operations profitable at this point or when do you anticipate that they'll swing towards contribution margin going forward.
Kirk Davis: First of all, thanks for your comment, Michael. It's good to speak with you. So our beachhead in Europe is Portugal, and we are ramping up the team there as we speak. And I'm sorry, what was the second part of your question?
Kurt: First of all thanks for your comment Michael it's good to speak with you.
Kurt: So our beachhead in Europe is Portugal.
Speaker Change: And we are ramping up the team there as we speak and I'm sorry, what was the second part of your question.
Michael Kapinski: I was just wondering if it's profitable already, or when do you anticipate that we'll start to see contribution margin coming from your European operations?
Kirk Davis: Was just wondering if it's profitable already or when do you anticipate that we will start to see contribution margin coming from your European operations.
Kirk Davis: Yeah, so we are, actually, extremely proud of our European operations from a delivery perspective. We are outperforming customer expectations. It's a profitable and growing geography for our company, and we're very proud of the team that we have there. And I would expect that in the third quarter, our additional sales efforts in Europe will start to bear fruitful. We are developing a strong international pipeline at the same time we're doing as well as we are in the United States.
Speaker Change: Yes. So we are actually we're extremely proud of our European operations from a delivery perspective.
Speaker Change: We are.
Kirk Davis: Outperforming customer expectations is a is a profitable and growing.
Kirk Davis: G O for our company.
Kirk Davis: And we're very proud of the team that we have there and I would expect that in the third quarter are our additional sales efforts in Europe will start to be fruitful. We are developing a strong international pipeline at the same time, we're doing.
Kirk Davis: As well as we are in the United States.
Michael Kapinski: Gotcha. And then thanks for breaking out the inside-out acquisition into your sales service segment. Can you kind of give us a sense of what you anticipate for this segment in terms of growth potential, what type of revenues we should look for here in terms of revenue growth, and then also margin potential?
Speaker Change: Gotcha and then thanks for breaking out the inside out acquisition into your sales service segment can you kind of give us a sense of what you anticipate this segment in terms of the growth potential what type of revenues that you can expect we could we should look for here in terms of revenue growth and then also margin potential.
Kirk Davis: Sure, so I think this will be a margin business. It'll be around 30 to 35%.
Speaker Change: Sure. So I think this will be a margin business it will be around 30% to 35%.
Kirk Davis: What we're what we're doing right now is focusing intensely on onboarding and coming up the curve for a large client that we're very very proud to have as the client profile that if we do an exceptional job.
Kirk Davis: What we're doing right now is focusing intensely on onboarding and coming up the curve for a large client that we're very, very proud to have. It's a client profile that, if we do an exceptional job, has the capacity to invest more with us in the years to come. So it's a thrilling opportunity.
Kirk Davis: Has the capacity to invest more with us in the years to come so it's a thrilling opportunity.
Kirk Davis: I would also say that Kelly and Ron Lee, our leads in our inside sales or sales services business, have done some great work on a go-to-market strategy that is really going to be targeting the B2B marketplace in software and tech, in particular, which is an area that we feel we can excel in delivery through our sales services division. So, we will actually be launching this program in the next few weeks, and I believe in August we can give an update, but it's a business that, over the next couple of years, could certainly translate to $9 million of new growth.
Kirk Davis: I would also say that Kelly and Ron Lee our need in our inside sales our sales services business have done some great work on a go to market strategy that is really going to be targeting.
Kirk Davis: The <unk> marketplace and software and tech in particular, which is the area that we feel we can excel and delivery through our sales services Division.
Kirk Davis: We actually will be launching this program in the next few weeks and I believe in August we could give an update but it's it's a business that we think out over the next couple of years could certainly translate to $9 million of new growth and that's apart from <unk>.
Kirk Davis: And that's apart from our regular pipeline sales efforts, which our sales services division is very much poised to benefit from. In fact, right now, when we think about our pipeline, there's a very good distribution between marketing services, customer care, sales services, and fulfillment logistics. So it's just as we would want to see it because as we bring in new business, it's nice that it's evenly distributed across the company because it emboldens our execution ability as opposed to if we had a super-large new business, you know, built up in one division or another and faced a backlog challenge.
Kirk Davis: Our regular pipeline sales efforts, which are sales services division is.
Kirk Davis: Is very much poised to benefit from in fact right now when we think about our pipeline is theres a very good distribution between marketing services customer care sales services and fulfillment logistics. So it's just as we would want to see it because as we bring in new business. It's nice to this.
Kirk Davis: Evenly distributed across the company because it emboldens our execution ability as opposed to if we had a super large new business.
Kirk Davis: Buildup in one division or another and facing a backlog challenge so.
Kirk Davis: So, so far, we're really very pleased with how sales services is doing and the new leadership there that Ron brings, but also how well positioned we are to onboard and effectively deliver across all four segments.
Kirk Davis: So far.
Kirk Davis: We're really very pleased with how sales services is doing and the new leadership there that Ron brings but just also how well positioned we are to onboard and effectively deliver across all four segments.
Michael Kapinski: Terrific. In the logistics Division, I know, and pardon me if I got this incorrect, but I thought you meant you were getting a grocery store distribution. And I know that, if I recall, you were seeking FDA approval to be able to provide services for food items in your distribution. Is that what we were talking about there? Or can you just kind of add some color to that?
Speaker Change: That's terrific and the logistics Division I know and pardon me if I got this incorrect, but I thought you meant you were getting a grocery store.
Michael Kapinski: Distribution and I know that if I recall, you were seeking FDA approval to be able to provide services for food items in your distribution is that what we're talking about there or.
Michael Kapinski: You can just kind of add some wheeler on that.
Kirk Davis: Yeah, we have that capability already in our fulfillment business, which is located in Kansas City. The reference that we made to the grocer comes from an emerging and fabulous relationship we have with a successful printing company that we've developed a good partnership with. And so, as they secure large new printing clients, we're the logistics arm for them and make sure that product gets delivered to many different destinations. Oh, gotcha. And so in terms of your distribution.
Speaker Change: Yes, we have that capability already.
Kirk Davis: And our fulfillment business.
Kirk Davis: Which is located in Kansas City.
Kirk Davis: The reference that we made to the.
Kirk Davis: To the grocery Tom's with an emerging and fabulous relationship we have with the successful printing company that.
Kirk Davis: That we've developed a good partnership with and so as they secure large new printing clients, where the where the logistics arm for them.
Kirk Davis: And make sure that product gets to <unk>.
Kirk Davis: Delivered too.
Kirk Davis: Many different destinations.
Michael Kapinski: Oh, gotcha. And so, in terms of your distribution for food items, have you been able to capitalize on that yet?
Kirk Davis: Gotcha and so in terms of your distribution for food items that we have you been able to capitalize on that yet.
Kirk Davis: We have, I just want to be clear. So our, our, we, we, definitely are capitalizing on the distribution of products across the pharmaceutical complex. We're not doing a great deal in grocery right now, but we do have an FDA-approved facility in Kansas City. I'm not sure what the capabilities are for, you know, how many different product lines it could handle. For example, we've handled baby formula efficiently out of that, out of that complex.
Michael Kapinski: We have.
Michael Kapinski: To be clear so R. R.
Kirk Davis: We definitely are capitalizing on distribution of products across.
Kirk Davis: The pharmaceutical complex, we're not doing a great deal in grocery and what we do have an FDA approved facility in Kansas City.
Kirk Davis: Im not sure what the capabilities are for.
Kirk Davis: How many different product lines that can handle but for example, we've handled baby formula.
Kirk Davis: Efficiently out of that out of that complex. So.
Speaker Change: I can follow up with you on that but I think I think right now.
Kirk Davis: It is well suited and outfitted to do to do.
Kirk Davis: So I can follow up with you on that. But I think, I think right now it is well suited and outfitted to do food product distribution. We don't have a great deal of it right now, but we're growing in numerous other areas in that complex.
Kirk Davis: The deferred product distribution, we don't have a great deal of it right now, but we're growing we're growing in numerous other areas.
Kirk Davis: Complex.
Michael Kapinski: Gotcha. One final question. You indicated in the past you were seeking partnerships, and I know you spent a lot of time talking about how you've improved your sales strategy and your go-to-market products and so forth. I was just wondering, in terms of partnerships that you highlighted in your last call in terms of improving your go-to-market product suite, can you kind of give us an update on how those are performing?
Speaker Change: Gotcha. One final question you indicated in the past you were seeking partnerships and I know you spent a lot of time talking about how you've improved upon your sales strategy and your go to market products and so forth I was just wondering in terms of partnerships that you highlighted in your last call.
Michael Kapinski: In terms of improving your go to market product suite.
Michael Kapinski: Can you kind of give us an update on how those are performing I know that you spend a little time on some of those but I was just wondering specifically if you can point to specific.
Michael Kapinski: I know that you spend a little time on some of those, but I was specifically wondering if you could point to specific partnerships that you've developed that might start to contribute as we go into Q2 and Q3.
Michael Kapinski: Gartner ships that you develop that.
Michael Kapinski: It might be you start start to contribute as we go into Q2 and Q3.
Kirk Davis: Yeah, I think in August we'll be able to share some outcomes with our partnership strategy. In fact, we just had a very, very deep dive this past week at our senior leadership team meeting where our head of partnerships, you know, walked us through at least a dozen. But one that I'm particularly excited about that looks like it's getting out of the gate well is our relationship with a company that does an exceedingly large amount of work in helping companies find good companies to handle customer care. And so this is an organization that does, you know, a strong business in that regard.
Speaker Change: Yes, I think in August we'll be able to share.
Kirk Davis: Some outcomes with our partnership strategy, we felt.
Kirk Davis: <unk>, we just had a very very deep dive. This past weekend, our senior leadership team meeting, where our head of partnerships walked us through at least a dozen.
Kirk Davis: But one that I'm, particularly excited about that looks like is getting out of the gate well is.
Kirk Davis: Our relationship with with a company that does.
Kirk Davis: An exceedingly large amount of work and helping companies find good.
Kirk Davis: Companies to handle customer care.
Kirk Davis: And we've been working with them for three or four months to obviously prove our abilities and capabilities and the geos that we can service effectively. And just this week, we got our first opportunity with that company, but we expect that to be A very strong pipeline builder for us, and I'll also harken back to the very first partnership we established within my first two months here, which is with a business development company that enables us to be in front of Fortune 1000 type companies on a two to three times a month basis.
Kirk Davis: And so this is a organization that does.
Kirk Davis: A strong.
Kirk Davis: Business in that in that regard and we've been working with them for three or four months too.
Kirk Davis: Obviously prove our abilities and capabilities and the Geos that we can service effectively.
Kirk Davis: And just this week, we got our first opportunity.
Kirk Davis: With that company, but we expect that to be.
Kirk Davis: A very strong pie.
Kirk Davis: Pipeline builder for Us and I'll also harken back to the very first partnership we established within my first two months here, which is where the business development company.
Kirk Davis: That enables us to be in front of Fortune 1000 type companies.
Kirk Davis: On a two to three times a month basis.
Kirk Davis: And we have now developed a number of new customers through that pipeline, but we are looking, we are looking at other partnerships, particularly in the care area. And I do believe we'll have some positive news to share on our next call in that respect. And really, just to be completely transparent here, we have over a dozen conversations in scope right now to build this network. And once we accomplish that, that'll serve as a multiplier effect for us, in addition to our team's acquisition efforts.
Kirk Davis: And we have now developed a number of new customers through that pipeline, but we are looking we are looking at other partnerships, particularly in the care area.
Kirk Davis: And I do believe we will have some positive news to share on our next call in that respect.
Kirk Davis: And really just to just to be completely transparent here, we have over a dozen conversations in scope right now to build this this network and when once we accomplish that that will serve as a multiplier effect for US in addition to R. R.
Kirk Davis: Our team's acquisition efforts. So it's an important channel I've commented previously that BBB companies can typically see 30% of the revenue coming from the source.
Kirk Davis: So it's an important channel. I've commented previously that B2B companies can typically see 30% of their revenue come from this source. It's de minimis for us today, but we are poised to make that a strong contributor over the next six months.
Kirk Davis: It's de Minimis for us today.
Kirk Davis: We are we are poised to make that a strong contributor over the next six months.
Michael Kapinski: Thanks Kurt. That's all I have.
Speaker Change: Thanks, Curt that's all I have good luck to you and your team.
Kurt: Thanks, so much Michael.
Operator: A reminder that if you would like to pose a question, please press star one on your keypad at this time. Star one. Please wait one moment. We have reached the end of our question and answer session today and, with it, the conclusion of today's conference call. You may disconnect your lines at any time and thank you for your participation.
Michael Kapinski: Good luck to you and your team. Thanks. Okay. Thanks so much, Michael. A reminder that if you would like to,
Michael Kapinski: A reminder, that if you would like to pose a question to please press star one on your keypad at this time.
Michael Kapinski: <unk> please.
Michael Kapinski: Please label Amendment.
Michael Kapinski: We have reached the end of our question and answer session today and with it. The conclusion of today's conference call. You may disconnect. Your lines at any time and thank you for your participation.
Michael Kapinski: Yeah.
Michael Kapinski: Okay.
Michael Kapinski: Okay.