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Note P - Segment Reporting
 6 Months Ended
Jun. 30, 2021
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

Note P — Segment Reporting

 

Harte Hanks is a leading global customer experience company. We have organized our operations into three business segments based on the types of products and services we provide: Marketing Services, Customer Care, Fulfillment & Logistics Services.

 

Our Marketing Services segment leverages data, insight, and experience to support clients as they engage customers through digital, traditional, and emerging channels. We provide omni-channel marketing solutions across the entire customer journey.  We partner with clients to develop strategies and tactics to identify and prioritize customer audiences in B2C and B2B transactions.  Our key service offerings include strategic business, brand, marketing and communications planning, data strategy, audience identification and prioritization, predictive modeling, creative development and execution across traditional and digital channels, website and app development, platform architecture, database build and management, marketing automation, and performance measurement, reporting and optimization.  

 

Our Customer Care segment offers intelligently responsive contact center solutions, which use real-time data to effectively interact with each customer.  Customer contacts are handled through phone, e-mail, social media, text messaging, chat and digital self-service support.  We provide these services utilizing our advanced technology infrastructure, human resource management skills and industry experience.

 

Our Fulfillment & Logistics Services segment consists of mail and product fulfillment and logistics services.  We offer a variety of product fulfillment solutions, including printing on demand, managing product recalls, and distributing literature and promotional products to support B2B trade, drive marketing campaigns, and improve customer experience.  We are also a provider of third-party logistics and freight optimization in the United States.  Prior to the sale of our direct mail equipment in 2020, this segment also included our direct mail operations.  Outsourced direct mail is now included in our Marketing Services segment.

 

There are three principal financial measures reported to our CEO (the chief operating decision maker) for use in assessing segment performance and allocating resources. Those measures are revenue, operating income (loss) and operating income (loss) plus depreciation and amortization (“EBITDA”). Operating income (loss) for segment reporting, disclosed below, is revenues less operating costs and allocated corporate expenses. Segment operating expenses include allocations of certain centrally incurred costs such as employee benefits, occupancy, information systems, accounting services, internal legal staff, and human resources administration. These costs are allocated based on actual usage or other appropriate methods.  Unallocated corporate expenses are corporate overhead expenses not attributable to the operating groups. Interest income and expense are not allocated to the segments.  The Company does not allocate assets to our reportable segments for internal reporting purposes, nor does our CEO evaluate operating segments using discrete asset information.  The accounting policies of the segments are consistent with those described in the Note A, Overview and Significant Accounting Policies.

 

The following table presents financial information by segment:

 

Three Months ended June 30, 2021

  

Marketing Services

    

Customer Care

    

Fulfillment and Logistics Services

    

Restructuring

    

Unallocated corporate

    

Total

  
                   

(In thousands)

                          

Revenues

   $ 14,208     $ 19,191     $ 15,860     $ —     $ —     $ 49,259  

Segment Operating Expense

   $ 11,377     $ 15,138     $ 13,426     $ —     $ 5,476     $ 45,417  

Restructuring

   $ —     $ —     $ —     $ 1,744     $ —     $ 1,744  

Contribution margin

   $ 2,831     $ 4,053     $ 2,434     $ (1,744 )   $ (5,476 )   $ 2,098  

Overhead Allocation

   $ 1,105     $ 703     $ 779     $ —     $ (2,587 )   $ —  

EBITDA

   $ 1,726     $ 3,350     $ 1,655     $ (1,744 )   $ (2,889 )   $ 2,098  

Depreciation

   $ 144     $ 203     $ 192     $ —     $ 124     $ 663  

Operating income (loss)

   $ 1,582     $ 3,147     $ 1,463     $ (1,744 )   $ (3,013 )   $ 1,435  

 

Three Months ended June 30, 2020

  

Marketing Services

    

Customer Care

    

Fulfillment and Logistics Services

    

Restructuring

    

Unallocated corporate

    

Total

  
                   

(In thousands)

                          

Revenues

   $ 12,965     $ 15,227     $ 13,409     $ —     $ —     $ 41,601  

Segment Operating Expense

   $ 10,479     $ 12,226     $ 13,450     $ —     $ 5,069     $ 41,224  

Restructuring

   $ —     $ —     $ —     $ 5,219     $ —     $ 5,219  

Contribution margin

   $ 2,486     $ 3,001     $ (41 )   $ (5,219 )   $ (5,069 )   $ (4,842 )

Overhead Allocation

   $ 1,286     $ 873     $ 973     $ —     $ (3,132 )   $ —  

EBITDA

   $ 1,200     $ 2,128     $ (1,014 )   $ (5,219 )   $ (1,937 )   $ (4,842 )

Depreciation

   $ 140     $ 240     $ 495     $ —     $ 168     $ 1,043  

Operating income (loss)

   $ 1,060     $ 1,888     $ (1,509 )   $ (5,219 )   $ (2,105 )   $ (5,885 )

 

Six Months ended June 30, 2021

  

Marketing Services

    

Customer Care

    

Fulfillment and Logistics Services (1)

    

Restructuring

    

Unallocated corporate

    

Total

  
                   

(In thousands)

                          

Revenues

   $ 27,086     $ 35,735     $ 30,192     $ —     $ —     $ 93,013  

Segment Operating Expense

   $ 22,418     $ 28,212     $ 25,600     $ —     $ 10,929     $ 87,159  

Restructuring

   $ —     $ —     $ —     $ 3,942     $ —     $ 3,942  

Contribution margin

   $ 4,668     $ 7,523     $ 4,592     $ (3,942 )   $ (10,929 )   $ 1,912  

Overhead Allocation

   $ 2,360     $ 1,573     $ 1,720     $ —     $ (5,653 )   $ —  

EBITDA

   $ 2,308     $ 5,950     $ 2,872     $ (3,942 )   $ (5,276 )   $ 1,912  

Depreciation

   $ 295     $ 457     $ 359     $ —     $ 250     $ 1,361  

Operating income (loss)

   $ 2,013     $ 5,493     $ 2,513     $ (3,942 )   $ (5,526 )   $ 551  

 

Six Months ended June 30, 2020

  

Marketing Services

    

Customer Care

    

Fulfillment and Logistics Services

    

Restructuring

    

Unallocated corporate

    

Total

  
                   

(In thousands)

                          

Revenues

   $ 26,465     $ 23,707     $ 31,951     $ —     $ —     $ 82,123  

Segment Operating Expense

   $ 21,571     $ 20,572     $ 31,592     $ —     $ 10,631     $ 84,366  

Restructuring

   $ —     $ —     $ —     $ 6,585     $ —     $ 6,585  

Contribution margin

   $ 4,894     $ 3,135     $ 359     $ (6,585 )   $ (10,631 )   $ (8,828 )

Overhead Allocation

   $ 2,633     $ 1,802     $ 2,051     $ —     $ (6,486 )   $ —  

EBITDA

   $ 2,261     $ 1,333     $ (1,692 )   $ (6,585 )   $ (4,145 )   $ (8,828 )

Depreciation

   $ 322     $ 457     $ 1,047     $ —     $ 338     $ 2,164  

Operating income (loss)

   $ 1,939     $ 876     $ (2,739 )   $ (6,585 )   $ (4,483 )   $ (10,992 )

 

(1) Operating expense in this segment includes $0.8 million favorable litigation settlement as well as the related legal expenses.