Harte Hanks, Inc.

And welcome to the Hart-Hanks third quarter 2023 earnings call. At this time, all participants are in a listen-only mode and the floor will be open for questions after the presentation. If anyone should require operator assistance during the conference, please press star zero on your phone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Mr. Tom Bauman, Investor Relations. Tom, over to you.

Thank you. Hosting the call today are Kirk Davis, Chief Executive Officer, and David Garrison, Interim 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 Safe Harbor or forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. 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. In addition, any projections as to the company's future performance represented by management include estimates as of today, November 9, 2023. and the company assumes no obligations 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 Hart Hanks website at hardhanks.com. With that, I would now like to turn the call over to Kirk. Kirk, the call is yours.

Thank you, Tom, and good afternoon, everyone. It's a privilege to be here. After my remarks, I'll introduce David Garrison to cover our financial results. This is my first full reporting quarter with Hard Hanks. Despite my short time here, I'm confident in what we need to do. I see Hart Hanks as competitively positioned in the market with differentiated offerings and the expertise to assist global brands to better identify, engage, and service their customers. However, I'm finding that customers, and importantly, prospective customers, aren't generally aware of everything we can help them with. That's a marketing and sales opportunity we'll certainly address. And I share this from firsthand experience. My commitment when I joined the company was to be a customer facing CEO. Our team appreciates my interest and desire to assist in bringing new customers on board or to help troubleshoot a customer concern. I've participated with staff on over a dozen meetings we've had with potential clients, essentially one every week over the past three months. I've also pitched in to help resolve an at-risk customer's concerns in which we were able to resolve. The strength here is that our customer retention is strong, although we obviously experience spending fluctuations based on a variety of factors. And customer retention will strengthen further as we expand the services we're providing to customers. That can serve as a hedge in instances when a customer's needs change and we lose a portion of their business, yet retain the customer due to other services we provide for them. Our company experienced this shortly before I arrived. A longstanding financial services client, insourced services we had been providing for many years, which was a setback, yet the customer continues to utilize us for other services today. The key is to stay close to our customers and anticipate their needs, and that philosophy will embody our culture. Beyond solidifying and deepening existing customer relations, I see our best and most immediate opportunities being related to our marketing and sales organization, which I'll detail in a moment. Our employees take great pride in consistently meeting, and usually exceeding the service levels expected by our clients. As for changes we've begun making, I sense our employees are energized and appreciate that we have embarked on an exciting new era. Ideas are flowing, and as an aside, one of our valued employees led development of an AI-driven tool to assist the sales organization. She just took it on herself. So we're off to a productive start. Be assured, Hart Hanks has a spirited workforce and has significant potential. To be sure, I inherited a challenging situation, which has been a theme in my career. We face difficult comparisons with limited immediate sales momentum. We are adapting to a new post-pandemic revenue baseline, which has exposed gaps in our new business and pipeline development. But that will change. Again, I want to recognize the well-deserved pride that surrounds the extraordinary services we provided and accompanying pandemic-related revenue lift we realized. While those gains are entirely behind us, there are enduring benefits we have realized from the past few years of hard work, which include our strong cash position, having no debts, along with generating a positive operating income and EBITDA and our $25 million credit facility. And we also plan to reduce our pension liabilities in the first half of 24. Moving forward, our sales and marketing organization is where we need a turnaround. Our lead generation and pipeline development programs, along with our sales conversion results, are insufficient. These challenges reflect an underperformance, strategic gaps, and to some extent, inadequate investment. We've completed a thorough assessment, a marketing audit, of what we need and what we need to do differently. You may recall I introduced several immediate steps we needed to take on our August 10th earnings call. I'd like to revisit those commitments. First, I highlighted that we expected to recruit a new corporate senior vice president for sales and marketing before year end. In October, we announced that Kelly Waller, a proven executive with a diverse track record of sales leadership success, was appointed to the role. Ms. Waller comes to us from Finastra, a global provider of financial software applications and marketplaces, with $1.8 billion in revenue, where she served as Global Vice President of Bid Market. Kelly's ideas for growing our business were clear differentiators among several very strong candidates. In August, I expressed my enthusiasm for the acquisition we completed last December of Inside Out, an inside sales company that is capitalizing on the evolution underway in sales organizations. Not a breakout year for us in 23, but we've learned much, and we believe this division will become a strong growth driver for us in 2024. We are taking immediate steps to scale the business. To fuel our growth ambitions, on Monday, we announced the appointment of Ron Lee as our Senior Vice President of Inside Sales. Ron is an experienced sales executive with a proven track record of driving revenue growth and operational improvement through talent development, leveraging analytics and innovating. Prominent in Ron's background are the 10 years he spent at ADP developing and executing ADP's global inside sales strategy. Together, They will bring an immediate focus on improving our existing marketing and sales organization. We are also in the process of cross training our sales staff to be enterprise-wide sales representatives. In August, I also spoke about a partnership we plan to initiate with a highly regarded business development firm in which I have collaborated with in the past. The engagement with Landmark Ventures has already resulted in over a dozen high-level conversations with wonderful companies and which we expect will very affordably enrich our pipeline for 2024. There are several additional steps we are evaluating to improve our sales and marketing performance. We are evaluating an opportunity to expand our international sales coverage. This would facilitate larger scope deals. We do not currently have a dedicated sales team in Europe. We also plan to utilize our inside sales division to service our own company. And I'll add that we are pursuing strategic partnerships as an important untapped opportunity to boost indirect sales. That's straight out of a B2B company sales playbook. Finally, on our last call, I reinforced that we were committed to formally assessing our full potential to achieve a material improvement in our cost structure And thus, we would explore how we align our company around that objective because costs represent important opportunity too. We recently announced to our employees worldwide that we are incorporating all our 24 ambitions into a comprehensive, highly actionable plan that balances all of our objectives as we begin our second century of continuous service. I'm pleased to share that we've launched Project Elevate, a transformative plan to elevate our performance, efficiency, growth, profitability, and employee experience. We see a path to balancing growth investments in conjunction with implementing cost and process improvements that will result in increased profitability. To augment and accelerate our efforts, we engaged the Kearney Organization a leading global management consulting firm that works with three-quarters of the Fortune Global 500. I hired Kearney in a prior CEO role that resulted in a highly successful rebalancing of that company's organizational reporting structure, growth strategy, and cost structure. Here, with Kearney as a partner, Project Elevate will target a lower cost structure and higher profitability inclusive of a reallocation of some of our savings to increase our investment in sales and marketing. Also, better leveraging our existing technology infrastructure along with identifying new technology solutions are also in scope with Kearney. An added benefit of our collaboration with Kearney is the access we'll have to Silicon Foundry, a Kearney company, Silicon Foundry can help us align with the best partners and technologies to evolve our business models and create our roadmap for a rapid AI deployment. We expect to conclude our engagement with Kearney sometime in January, at which time our Project Elevate playbook for 2024 will be developed and will be in full execution mode. Obviously, the tone at the top is key to our success, and I'm grateful to the talented senior leadership team we have at Hart Hanks for embracing this pivotal opportunity. I emphatically believe in Hart Hanks. I'm excited we've made such a huge stride in our sales leadership so quickly. In my first call, I said that Q2 revenue represented a near-time baseline, a near-term baseline. As we look to the second half of the year, that remains applicable. Despite the constant change that surrounds our business segments, we continue to be trusted and relied on by our customers representing world-class companies from across the world. With the success we expect from Project Elevate, we view 2024 as a company-defining year in which we will position our sales and marketing organization to achieve sustainable growth. Now I will turn the call over to David Garrison, our newly appointed interim CFO, to walk through our results. I want to welcome David to the team. He joins us at an important point in our evolution and brings more than 20 years of public company experience as a CFO. David also brings expertise in cost containment, process improvement, deep ERP experience, and more. David, welcome to Hart Hanks.