Harte Hanks, Inc. (NASDAQ:HHS) Q1 2024 Earnings Call Transcript

Michael Kupinski: And then thanks for breaking out the Inside Out acquisition 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 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 that will be around 30% to 35%. 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. I would also say that Kelly and Ron Lee, our lead 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 actually will 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 we think out over the next couple of years could certainly translate to $9 million of new growth. 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 build up in one division or another and facing a backlog challenge.

So, so far, we’re really very pleased with how sales services is doing, the new leadership there that Ron brings, but just also how well positioned we are to onboard and effectively deliver across all 4 segments.

Michael Kupinski: And 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, you can just kind of add some color on that?

Kirk Davis: Yes, we have that capability already in our fulfillment business, which is located in Kansas City. The reference that we made to the grocer comes with 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, where the logistics arm for them and make sure that product gets delivered to many different destinations.

Michael Kupinski: And so in terms of your distribution for food items, have you been able to capitalize on that yet?

Kirk Davis: I just want to be clear. So, we definitely are capitalizing on 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 how many different product lines it could handle. But for example, we’ve handled baby formula efficiently out of that complex. So I could follow-up with you on that. But 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.

Michael Kupinski: 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 in terms of improving your go-to-market product suite. 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 partnerships that you developed that might be start to contribute as we go into the Q2 and Q3?