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Segment Reporting
 12 Months Ended
Dec. 31, 2024
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting
Harte Hanks is a leading global customer experience company. Based on the types of products and services we provide, we have organized our operations into three business segments: Marketing Services, Customer Care, and Fulfillment and logistics.
Our Marketing Services segment leverages data, insight, and experience to support clients as they engage customers through digital, traditional, and emerging channels. We partner with clients to develop strategies and tactics to identify and prioritize customer audiences in B2C and B2B transactions. Our key service offerings include strategic business, brand, marketing, and communications planning; data strategy; audience identification and prioritization; predictive modeling; creative development and execution across traditional and digital channels; website and app development; platform architecture; database build and management, marketing automation, and performance measurement, reporting and optimization.
Our Customer Care segment offers intelligently responsive contact center solutions that 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 segment comprises mail, 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, driving marketing campaigns, and improving customer experience. We are also a third-party logistics and freight optimization provider in the United States.
There are three principal financial measures reported to our Interim COO (the chief operating decision maker) for use in assessing segment performance and allocating resources. Those measures are revenue, operating income and operating income plus depreciation and amortization (“EBITDA”). Operating income for segment reporting, disclosed below, is revenues less operating costs and allocated corporate expenses. Segment operating expenses are generally directly attributed to our segments and 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 Interim COO evaluate operating segments using discrete asset information. The accounting policies of the segments are consistent with those described in Note B, Significant Accounting Policies.
SEC Regulation S-K 229.10(e)1(ii)(A) defines EBITDA as earnings before interest, taxes, depreciation and amortization. EBITDA is presented to provide additional information to investors about the Company’s operations on a basis consistent with the measures that the Company uses to manage its operations and evaluate its performance. Management also uses this measurement to evaluate working capital requirements. EBITDA should not be considered in isolation or as a substitute for operating income and net income prepared in accordance with U.S. GAAP or as a measure of the Company’s profitability.
In the first quarter of 2024, the Sales Service segment was separated from Customer Care into its own operating segment for interim reporting. Changes in the operations of Sales Service during the fourth quarter caused management to combine this segment with Marketing Services segment for better alignment of our business strategy.
We adopted ASU 2023-07 beginning with our 2024 annual reporting,and now disclose segment labor expenses separate from other segment operating expenses. We recast 2023 for the effects of ASU 2023-07 and change in the composition of our reportable segments as described above.
The following table presents financial information by segment year ended December 31, 2024:
(In thousands)Marketing ServicesCustomer CareFulfillment & LogisticsRestructuringUnallocated CorporateTotal
Operating revenue
$50,332 $52,918 $81,992 $— $— $185,242 
Segment labor expense26,440 34,175 20,263 — 12,891 93,769 
Other segment operating expense11,468 6,260 52,770 — 8,927 79,425 
Restructuring expense— — — 2,402 — 2,402 
Contribution margin$12,424 $12,483 $8,959 $(2,402)$(21,818)$9,646 
Overhead Allocation4,074 2,355 3,198 — (9,627)— 
Goodwill and intangible assets impairment charges3,168 — — — — 3,168 
EBITDA (unaudited)$5,182 $10,128 $5,761 $(2,402)$(12,191)$6,478 
Depreciation and amortization expense1,459 207 1,256 — 1,463 4,385 
Operating income (loss)$3,723 $9,921 $4,505 $(2,402)$(13,654)$2,093 
The following table presents financial information by segment year ended December 31, 2023:
(In thousands)Marketing ServicesCustomer CareFulfillment & LogisticsRestructuringUnallocated CorporateTotal
Operating revenue
$52,910 $53,620 $84,962 $— $— $191,492 
Segment labor expense30,938 35,345 19,418 — 12,267 97,968 
Other segment operating expense12,351 6,013 53,797 — 8,080 80,241 
Restructuring expense— — — 5,687 — 5,687 
Contribution margin$9,621 $12,262 $11,747 $(5,687)$(20,347)$7,596 
Overhead allocation2,984 2,774 2,891 — (8,649)— 
EBITDA (unaudited)$6,637 $9,488 $8,856 $(5,687)$(11,698)$7,596 
Depreciation and amortization expense1,093 500 1,142 — 1,502 4,237 
Operating income (loss)$5,544 $8,988 $7,714 $(5,687)$(13,200)$3,359