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Segment Reporting | 3 Months Ended
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Mar. 31, 2025
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 consists of 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 of 2024 caused management to combine this segment with Marketing Services segment for better alignment with 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 our 2024 financial statements for the effects of ASU 2023-07 and the change in the composition of our reportable segments as described above. The following table presents financial information by segment for the three months ended March 31, 2025:
In thousands |  | Marketing Services |  | Customer Care |  | Fulfillment & Logistics |  | Restructuring Expense |  | Unallocated Corporate |  | Total
Revenue |  | $ | 8,782 |  |  | $ | 13,001 |  |  | $ | 19,778 |  |  | $ | — |  |  | $ | — |  |  | $ | 41,561 |
Segment labor expense |  | 4,487 |  |  | 8,016 |  |  | 4,562 |  |  | — |  |  | 2,734 |  |  | 19,799 |
Other segment operating expense |  | 2,511 |  |  | 2,100 |  |  | 12,644 |  |  | — |  |  | 2,646 |  |  | 19,901 |
Restructuring expense |  | — |  |  | — |  |  | — |  |  | 838 |  |  | — |  |  | 838 |
Contribution margin (loss) |  | $ | 1,784 |  |  | $ | 2,885 |  |  | $ | 2,572 |  |  | $ | (838) |  |  | $ | (5,380) |  |  | $ | 1,023 |
Overhead allocation |  | 711 |  |  | 826 |  |  | 882 |  |  | — |  |  | (2,419) |  |  | — |
EBITDA |  | $ | 1,073 |  |  | $ | 2,059 |  |  | $ | 1,690 |  |  | $ | (838) |  |  | $ | (2,961) |  |  | $ | 1,023 |
Depreciation and amortization |  | 217 |  |  | 51 |  |  | 501 |  |  | — |  |  | 294 |  |  | 1,063 |
Operating income (loss) |  | $ | 856 |  |  | $ | 2,008 |  |  | $ | 1,189 |  |  | $ | (838) |  |  | $ | (3,255) |  |  | $ | (40) |
The following table presents financial information by segment for the three months ended March 31, 2024:
In thousands |  | Marketing Services |  | Customer Care |  | Fulfillment & Logistics |  | Restructuring Expense |  | Unallocated Corporate |  | Total
Revenue |  | $ | 13,583 |  |  | $ | 12,442 |  |  | $ | 19,423 |  |  | $ | — |  |  | $ | — |  |  | $ | 45,448 |
Segment labor expense |  | 7,274 |  |  | 8,099 |  |  | 4,500 |  |  | — |  |  | 3,612 |  |  | 23,485 |
Other segment operating expense |  | 3,215 |  |  | 1,308 |  |  | 12,543 |  |  | — |  |  | 2,623 |  |  | 19,689 |
Restructuring expense |  | — |  |  | — |  |  | — |  |  | 853 |  |  | — |  |  | 853 |
Contribution margin (loss) |  | $ | 3,094 |  |  | $ | 3,035 |  |  | $ | 2,380 |  |  | $ | (853) |  |  | $ | (6,235) |  |  | $ | 1,421 |
Overhead allocation |  | 1,000 |  |  | 582 |  |  | 801 |  |  | — |  |  | (2,383) |  |  | — |
EBITDA |  | $ | 2,094 |  |  | $ | 2,453 |  |  | $ | 1,579 |  |  | $ | (853) |  |  | $ | (3,852) |  |  | $ | 1,421 |
Depreciation and amortization |  | 372 |  |  | 62 |  |  | 248 |  |  | — |  |  | 364 |  |  | 1,046 |
Operating income (loss) |  | $ | 1,722 |  |  | $ | 2,391 |  |  | $ | 1,331 |  |  | $ | (853) |  |  | $ | (4,216) |  |  | $ | 375 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 48 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482785/280-10-55-48 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards 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