Form 10-Q - Quarterly report [Sections 13 or 15(d)]

Table of Contents

U.S.

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-07120

HARTE HANKS, INC.

(Exact name of registrant as specified in its charter)

Delaware	74-1677284
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

1 Executive Drive, Suite 303, Chelmsford, MA 01824

(Address of principal executive offices, including zip code)

(512) 434-1100

(Registrant’s telephone number including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	HHS	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The number of shares outstanding of the issuer’s common stock as of July 15, 2023 was7,210,875 shares.

Table of Contents

HARTE HANKS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

FORM 10-Q REPORT

For the Quarterly Period Ended June 30, 2023

		Page

Part I.	Financial Information

Item 1.	Condensed Consolidated Financial Statements

	Condensed Consolidated Balance Sheets — June 30, 2023 (Unaudited) and December 31, 2022 (Audited)	3

	Condensed Consolidated Statements of Comprehensive Income — Three and Six months ended June 30, 2023 and 2022 (Unaudited)	4

	Condensed Consolidated Statements of Changes in Stockholders’ Equity— Three and Six months ended June 30, 2023 and 2022 (Unaudited)	6

	Condensed Consolidated Statements of Cash Flows — Six months ended June 30, 2023 and 2022 (Unaudited)	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	31

Part II.	Other Information

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Defaults Upon Senior Securities	32

Item 4.	Mine Safety Disclosure	32

Item 5.	Other Information	32

Item 6.	Exhibits	33

Table of Contents

Item 1. Condensed Consolidated Financial Statements

Harte Hanks, Inc. and Subsidiaries Condensed Consolidated Balance Sheets

	*June 30,*			*December 31,*
In thousands, except per share and share amounts	*2023*			*2022*
	(unaudited)			(audited)
ASSETS
Current assets
Cash and cash equivalents	$	13,364		$	10,364
Accounts receivable (less allowance for doubtful accounts of $215 and $163, respectively)		36,095			39,700
Unbilled accounts receivable		8,235			7,893
Contract assets		259			309
Prepaid expenses		3,339			2,176
Prepaid income taxes and income tax receivable		1,468			4,262
Other current assets		1,190			1,607
Total current assets		63,950			66,311
Property, plant and equipment (less accumulated depreciation of $37,394 and $44,013, respectively)		9,734			10,523
Right-of-use assets		18,011			19,169
Other assets
Intangible assets, net		3,180			3,540
Goodwill		2,398			2,398
Deferred tax assets, net		15,944			16,306
Other long-term assets		1,443			1,737
Total other assets		22,965			23,981

Total assets	$	114,660		$	119,984

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	17,887		$	22,465
Accrued payroll and related expenses		5,572			6,679
Deferred revenue and customer advances		6,701			4,590
Customer postage and program deposits		1,663			1,223
Other current liabilities		2,680			2,862
Current portion of lease liabilities		5,903			5,747
Total current liabilities		40,406			43,566

Pension liabilities - Qualified plans		17,962			18,674
Pension liabilities - Nonqualified plan		18,730			19,098
Long-term lease liabilities, net of current portion		14,631			16,575
Other long-term liabilities		2,381			3,263
Total liabilities		94,110			101,176

Stockholders’ equity
Common stock, $1 par value, 25,000,000 shares authorized;12,221,484 shares issued, 7,201,071 and 7,702,614 shares outstanding at June 30, 2023 and December 31, 2022, respectively		12,221			12,221
Additional paid-in capital		187,386			218,411
Retained earnings		846,279			846,490
Less treasury stock, 5,020,413 shares at cost at June 30, 2023 and 4,818,870 shares at cost at December 31, 2022		(980,156	)		(1,010,012	)
Accumulated other comprehensive loss		(45,180	)		(48,302	)
Total stockholders’ equity		20,550			18,808
Total liabilities and stockholders’ equity	$	114,660		$	119,984

See Accompanying Notes to Condensed Consolidated Financial Statements

Table of Contents

Harte Hanks, Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

	*Three Months Ended June 30,*
In thousands, except per share amounts	*2023*		*2022*
Revenue	$	47,762	$	48,553
Operating expenses
Labor		26,666		25,109
Production and distribution		13,328		13,507
Advertising, selling, general and administrative		5,065		5,340
Depreciation and amortization expense		1,033		586
Total operating expenses		46,092		44,542
Operating income		1,670		4,011
Other expense (income), net
Interest expense, net		59		95
Other expense (income), net		791		(1,216	)
Total other expense (income), net		850		(1,121	)
Income before income taxes		820		5,132
Income tax expense		240		671
Net income		580		4,461
Less: Preferred Stock dividends		—		124
Less: Earnings attributable to participating securities		—		542
Net income attributable to common stockholders	$	580	$	3,795

Earnings per common share
Basic	$	0.08	$	0.54
Diluted	$	0.08	$	0.52

Weighted average shares used to compute income per share attributable to common shares
Basic		7,358		7,017
Diluted		7,505		7,388

Comprehensive income, net of tax:
Net income	$	580	$	4,461

Adjustment to pension liability, net		402		578
Foreign currency translation adjustment		100		(2,607	)
Total other comprehensive income (loss), net of tax	$	502	$	(2,029	)

Comprehensive income	$	1,082	$	2,432

Table of Contents

Harte Hanks, Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

	*Six Months Ended June 30,*
In thousands, except per share amounts	*2023*			*2022*
Operating revenues	$	94,882		$	97,615
Operating expenses
Labor		51,131			51,027
Production and distribution		27,780			26,225
Advertising, selling, general and administrative		11,149			11,273
Depreciation expense		2,099			1,184
Total operating expenses		92,159			89,709
Operating income		2,723			7,906
Other income, net
Interest (income) expense, net		(151	)		230
Other expense (income), net		3,377			(1,255	)
Total other expense (income), net		3,226			(1,025	)
(Loss) income before income taxes		(503	)		8,931
Income tax (benefit) expense		(292	)		1,125
Net (loss) income		(211	)		7,806
Less: Preferred stock dividends		—			246
Less: Earnings attributable to participating securities		—			946
(Loss) income attributable to common stockholders	$	(211	)	$	6,614

(Loss) income per common share
Basic	$	(0.03	)	$	0.94
Diluted	$	(0.03	)	$	0.91

Weighted-average shares used to compute income per share attributable to common shares
Basic		7,392			7,004
Diluted		7,392			7,338

Comprehensive income
Net (loss) income	$	(211	)	$	7,806

Adjustment to pension liability		1,142			1,588
Foreign currency translation adjustment		1,980			(3,111	)
Total other comprehensive income (loss), net of tax	$	3,122		$	(1,523	)

Comprehensive income	$	2,911		$	6,283

See Accompanying Notes to Condensed Consolidated Financial Statements

Table of Contents

Harte Hanks, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)

														*Accumulated*
					*Additional*									*Other*			*Total*
	*Preferred*		*Common*		*Paid-in*			*Retained*			*Treasury*			*Comprehensive*			*Stockholders’*
In thousands	*Stock*		*Stock*		*Capital*			*Earnings*			*Stock*			*Loss*			*Equity*
Balance at December 31, 2022	$	-	$	12,221	$	218,411		$	846,490		$	(1,010,012	)	$	(48,302	)	$	18,808
Stock-based compensation		—		—		540			—			—			—			540
Vesting of RSUs		—		—		(21,538	)		—			21,326			—			(212	)
Net loss		—		—		—			(791	)		—			—			(791	)
Other comprehensive income		—		—		—			—			—			2,620			2,620
Balance at March 31, 2023	$	-	$	12,221	$	197,413		$	845,699		$	(988,686	)	$	(45,682	)	$	20,965
Stock-based compensation		—		—		502			—			—			—			502
Vesting of RSUs		—		—		(10,529	)		—			10,409			—			(120	)
Repurchase of common stock		—		—		—			—			(1,879	)		—			(1,879	)
Net Income		—		—		—			580			—			—			580
Other comprehensive income		—		—		—			—			—			502			502
Balance at June 30, 2023	$	-	$	12,221	$	187,386		$	846,279		$	(980,156	)	$	(45,180	)	$	20,550

													*Accumulated*
					*Additional*								*Other*			*Total*
	*Preferred*		*Common*		*Paid-in*			*Retained*		*Treasury*			*Comprehensive*			*Stockholders’*
In thousands	*Stock*		*Stock*		*Capital*			*Earnings*		*Stock*			*Loss*			*Deficit*
Balance at December 31, 2021	$	9,723	$	12,121	$	290,711		$	811,094	$	(1,085,313	)	$	(53,328	)	$	(24,715	)
Stock-based compensation		—		—		427			—		—			—			427
Vesting of RSUs		—		—		(12,706	)		—		12,572			—			(134	)
Net income		—		—		—			3,345		—			—			3,345
Other comprehensive income		—		—		—			—		—			506			506
Balance at March 31, 2022	$	9,723	$	12,121	$	278,432		$	814,439	$	(1,072,741	)	$	(52,822	)	$	(20,571	)
Exercise of Stock Options		—		—		(6,266	)		—		6,133			—			(133	)
Stock-based compensation		—		—		561			—		—			—			561
Net Income		—		—		—			4,461		—			—			4,461
Other comprehensive loss		—		—		—			—		—			(2,029	)		(2,029	)
Balance at June 30, 2022	$	9,723	$	12,121	$	272,727		$	818,900	$	(1,066,608	)	$	(54,851	)	$	(17,711	)

See Accompanying Notes to Condensed Consolidated Financial Statements

Table of Contents

Harte Hanks, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows

(Unaudited)

	*Six Months Ended June 30,*
In thousands	*2023*				*2022*
Cash Flows from Operating Activities
Net (loss) income	$	(211	)		$	7,806
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization expense		2,099				1,184
Stock-based compensation		1,042				850
Net pension cost (payment)		180				(365	)
Deferred income taxes		(326	)			—
Changes in assets and liabilities:
Accounts receivable and contract assets		3,313				(581	)
Prepaid expenses, income tax receivable and other current assets		2,710				526
Accounts payable and accrued expenses		(4,433	)			1,510
Deferred revenue and customer advances		2,111				2,222
Customer postage and program deposits		440				(1,745	)
Other accrued expenses and liabilities		(2,338	)			(1,545	)
Net cash provided by operating activities		4,587				9,862

Cash Flows from Investing Activities
Purchases of property, plant and equipment		(1,256	)			(3,616	)
Proceeds from sale of property, plant and equipment		1				57
Net cash used in investing activities		(1,255	)			(3,559	)

Cash Flows from Financing Activities
Borrowings		—				5,000
Debt financing costs		(6	)			(123	)
Payment of finance leases		(95	)			(101	)
Repurchase of common stock		(1,879	)			—
Treasury stock activities		(332	)			(268	)
Net cash (used in) provided by financing activities		(2,312	)			4,508

Effect of exchange rate changes on cash, cash equivalents and restricted cash		1,980				(3,111	)

Net increase in cash and cash equivalents and restricted cash		3,000				7,700
Cash and cash equivalents and restricted cash at beginning of period		11,364				15,133
Cash and cash equivalents and restricted cash at end of period	$	14,364		(1)	$	22,833

Supplemental disclosures
Cash paid for interest	$	164			$	186
Cash (received) paid for income taxes, net	$	(4,668	)		$	478
Non-cash investing and financing activities
Purchases of property, plant and equipment included in accounts payable	$	2,009			$	2,576

(1) This amount is comprised of the below balances:
Cash and cash equivalents	$	13,364			$	10,570
Restricted cash		—				2,337
Cash held in Escrow account included in other current assets (see Note L)		1,000				9,926
Cash and cash equivalents and restricted cash at end of period	$	14,364			$	22,833

See Accompanying Notes to Condensed Consolidated Financial Statements

Table of Contents

Harte Hanks, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note A - Overview and Significant Accounting Policies

Background

Harte Hanks, Inc. together with its subsidiaries (“Harte Hanks,” “Company,” “we,” “our,” or “us”) is a leading global customer experience company. With offices in North America, Asia-Pacific and Europe, Harte Hanks works with some of the world’s most respected brands.

Segment Reporting

The Company operates three business segments: Marketing Services; Customer Care; and Fulfillment & Logistics Services. Our Chief Executive Officer (“CEO”) is considered to be our chief operating decision maker. Our CEO reviews our operating results on an aggregate basis for purposes of allocating resources and evaluating financial performance by using the three financial measures: revenue, operating income and operating income plus depreciation and amortization (EBITDA).

Accounting Principles

Our unaudited interim condensed consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “2022 10-K”).

Consolidation

The accompanying unaudited interim condensed consolidated financial statements include the accounts of Harte Hanks, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. As used in this report, the terms “Harte Hanks,” “the Company,” “we,” “us,” or “our” may refer to Harte Hanks, Inc., one or more of its consolidated subsidiaries, or all of them taken as a whole, as the context may require.

Table of Contents

Interim Financial Information

The condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Rule 8-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S.GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The prior period amounts in Labor, Production and Distribution, Advertising, Selling, General and Administrative expenses in the condensed consolidated Statements of Comprehensive Income, have been reclassified to conform to the current period's presentation. The most notable change is the reclassification of the $2.8 million of lease expense from Production and Distribution expense to Advertising, Selling, General and Administrative expense.

Use of Estimates

Preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from those estimates due to uncertainties. Such estimates include, but are not limited to, estimates related to lease accounting; pension accounting; fair value for purposes of assessing long-lived assets for impairment; revenue recognition; income taxes; stock-based compensation and contingencies. On an ongoing basis, management reviews its estimates and assumptions based on currently available information. Changes in facts and circumstances could result in revised estimates and assumptions.

Operating Expense Presentation in Condensed Consolidated Statements of Comprehensive Income

The “Labor” line in the Condensed Consolidated Statements of Comprehensive Income includes all employee payroll and benefits costs, including stock-based compensation and temporary labor costs. The “Production and distribution” and “Advertising, selling, general and administrative” lines do not include any labor, depreciation, or amortization expense.

Revenue Recognition

We recognize revenue upon the transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to be entitled to receive in exchange for those products or services based on the relevant contract. We apply the following five-step revenue recognition model:

•

Identification of the contract, or contracts, with a customer

•

Identification of the performance obligations in the contract

•

Determination of the transaction price

•

Allocation of the transaction price to the performance obligations in the contract

•

Recognition of revenue when (or as) we satisfy the performance obligation

Certain client programs provide for adjustments to billings based upon whether we achieve certain performance criteria. In these circumstances, revenue is recognized when the foregoing conditions are met. We record revenue net of any taxes collected from customers and subsequently remitted to governmental authorities. Any payments received in advance of the performance of services or delivery of the product are recorded as deferred revenue until such time as the services are performed or the product is delivered. Costs incurred for search engine marketing solutions payable to the engine host and postage costs of mailings are billed to our clients and are not directly reflected in our revenue.

Revenue from agency and digital services, direct mail, logistics, fulfillment and contact center is recognized when the work is performed. Fees for these services are determined by the terms set forth in each contract. These fees are typically a fixed price or rate by transaction occurrence, service provided, time spent, or product delivered.

For arrangements requiring design and build of a database, revenue is not recognized until client acceptance occurs. Up-front fees billed during the setup phase for these arrangements are deferred until client acceptance occurs and direct build costs are capitalized. Pricing for these types of arrangements is typically based on a fixed price determined in the contract. Revenue from other database marketing solutions is recognized ratably over the contractual service period. Pricing for these services is typically based on a fixed price per month or per contract.

Table of Contents

Fair Value of Financial Instruments

Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") 820, Fair Value Measurements and Disclosures, (“ASC 820”) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a fair value hierarchy that prioritizes the inputs used in valuation methodologies into three levels:

Level 1

Quoted prices in active markets for identical assets or liabilities.

Level 2

Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Because of their maturities and/or variable interest rates, certain financial instruments have fair values approximating their carrying values. These instruments include cash and cash equivalents and restricted cash, accounts receivable, trade payables, and long-term debt. The fair value of the assets in our funded pension plan is discussed in Note H, Employee Benefit Plans.

Leases

We determine if an arrangement is a lease at its inception. Operating and finance leases are included in the lease right-of-use (“ROU”) assets and in the current portion and long-term portion of lease liabilities on our condensed consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of each lease based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement date of each lease to determine the present value of lease payments. The operating lease ROU assets also include any lease payments made and exclude lease incentives. Our lease terms may include options to extend or terminate the lease, which are included in the lease ROU assets when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, which are generally accounted for separately. For certain real estate leases, we account for the lease and non-lease components as a single lease component.

Table of Contents

Note B - Recent Accounting Pronouncements

Recently adopted accounting pronouncements

In October 2021, the Financial Accounting Standards Board (FASB) issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Liabilities from Contracts with Customers.” This ASU requires an acquiring entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. The ASU is effective for fiscal years and interim periods beginning after December 15, 2022.

The Company adopted this standard on January 1, 2023 on a prospective basis. The adoption of this new standard did not have a material impact on the Company's financial statements.

Table of Contents

Note C - Revenue from Contracts with Customers

Under Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers ("ASC 606"), an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that are within the scope of the new standard, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. This standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. This standard also includes criteria for the capitalization and amortization of certain contract acquisition and fulfillment costs.

Under ASC 606, revenue is recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Our contracts with customers state the terms of sale, including the description, quantity, and price of the product sold or service provided. Payment terms can vary by contract, but the period between invoicing and when payment is due is not significant. The Company's contracts with its customers generally do not include rights of return or a significant financing component.

Consistent with GAAP, we present sales taxes assessed on revenue-producing transactions on a net basis.

Disaggregation of Revenue

We disaggregate revenue by three key revenue streams which are aligned with our business segments. The nature of the services offered by each key revenue stream is different. The following table summarizes revenue from contracts with customers for the three and six months ended June 30, 2023 and 2022 by our three business segments and the pattern of revenue recognition:

	*Three Months Ended June 30, 2023*
In thousands	Revenue for performance obligations recognized over time		Revenue for performance obligations recognized at a point in time		Total
Marketing Services	$	10,035	$	886	$	10,921
Customer Care		17,211		0		17,211
Fulfillment and Logistics Services		15,997		3,633		19,630
Total Revenues	$	43,243	$	4,519	$	47,762

	*Three Months Ended June 30, 2022*
In thousands	Revenue for performance obligations recognized over time		Revenue for performance obligations recognized at a point in time		Total
Marketing Services	$	10,610	$	2,840	$	13,450
Customer Care		15,382		—		15,382
Fulfillment and Logistics Services		17,203		2,518		19,721
Total Revenues	$	43,195	$	5,358	$	48,553

	*Six Months Ended June 30, 2023*
In thousands	Revenue for performance obligations recognized over time		Revenue for performance obligations recognized at a point in time		Total
Marketing Services	$	20,186	$	1,974	$	22,160
Customer Care		31,627		—		31,627
Fulfillment and Logistics Services		33,420		7,675		41,095
Total Revenues	$	85,233	$	9,649	$	94,882

	*Six Months Ended June 30, 2022*
In thousands	Revenue for performance obligations recognized over time		Revenue for performance obligations recognized at a point in time		Total
Marketing Services	$	21,491	$	4,883	$	26,374
Customer Care		33,123		—		33,123
Fulfillment and Logistics Services		32,095		6,023		38,118
Total Revenues	$	86,709	$	10,906	$	97,615

Table of Contents

Our contracts with customers may consist of multiple performance obligations. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price (“SSP”) basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct good or service that forms part of a single performance obligation. For most performance obligations, we determine SSP based on the price at which the performance obligation is sold separately. Although uncommon, if the SSP is not observable through past transactions, we estimate the SSP taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Further discussion of other performance obligations in each of our major revenue streams follows:

Marketing Services

Our Marketing Services segment delivers strategic planning, data strategy, performance analytics, creative development and execution, technology enablement, marketing automation, and database management. We create relevancy by leveraging data, insight, and our extensive experience in leading clients as they engage their customers through digital, traditional, and emerging channels. We are known for helping clients build deep customer relationships, create connected customer experiences, and optimize each and every customer touch point in order to deliver desired business outcomes.

Most marketing services performance obligations are satisfied over time and often offered on a per project basis. We have concluded that the best approach to measure the progress toward completion of the project-based performance obligations is the input method, which is based on either the costs or labor hours incurred to date depending upon whether costs or labor hours more accurately depict the transfer of value to the customer.

The variable consideration in these contracts primarily relates to time and material-based services and reimbursable out-of-pocket travel costs, both of which are estimated using the expected value method. For time and material-based contracts, we use the “as invoiced” practical expedient.

Our database solutions are built around centralized marketing databases with services rendered to build custom database, database hosting services, customer or target marketing lists and data processing services.

These performance obligations, including services rendered to build a custom database, database hosting services, customer or target marketing lists and data processing services, may be satisfied over time or at a point in time. We provide software as a service (“SaaS”) solutions to host data for customers and have concluded that these solutions are stand-ready obligations to be recognized over time on a monthly basis. Our promise to provide certain data related services meets the over-time recognition criteria because our services do not create an asset with an alternative use, and we have an enforceable right to payment. For performance obligations recognized over time, we choose either the input (i.e., labor hour) or output method (i.e., number of customer records) to measure the progress toward completion depending on the nature of the services provided. Some of our other data-related services do not meet the over-time criteria and are therefore, recognized at a point-in-time, typically upon the delivery of a specific deliverable.

Our contracts may include outsourced print production work for our clients. These contracts may include a promise to purchase postage on behalf of our clients. In such cases, we have determined we are an agent, rather than principal and therefore recognize net consideration as revenue.

We charge our customers for certain data-related services at a fixed transaction-based rate, e.g., per thousand customer records processed. Because the quantity of transactions is unknown at the onset of a contract, our transaction price is variable, and we use the expected value method to estimate the transaction price. The uncertainty associated with the variable consideration typically resolves within a short period of time since the duration of these contracts is generally less than two months.

Customer Care

We operate tele-service workstations in the United States, Asia, and Europe to provide advanced contact center solutions such as: speech, voice and video chat, integrated voice response, analytics, social cloud monitoring, and web self-service.

Performance obligations are stand-ready obligations and are satisfied over time. With regard to account management and SaaS, we use a time-elapsed output method to recognize revenue. For performance obligations where we charge customers a transaction-based fee, we use the output method based on transaction quantities. In most cases, our contracts provide us the right to invoice for services provided, therefore, we generally use the “as invoiced” practical expedient to recognize revenue associated with these performance obligations unless significant discounts are offered in a contract and prices for services do not represent their SSPs.

The variable consideration in our contracts results primarily from the transaction-based fee structure of some performance obligations as the total transaction quantities to be provided are unknown at the onset of a contract, and are estimated using the expected value method.

Fulfillment & Logistics Services

Our services, delivered internally and with our partners, include printing, lettershop, advanced mail optimization (including commingling services), logistics and transportation optimization, monitoring and tracking, to support traditional and specialized mailings. Our print and fulfillment centers in Massachusetts and Kansas provide custom kitting services, print on demand, product recall support, trade marketing fulfillment, ecommerce product fulfillment, sampling programs, and freight optimization, thereby allowing our customers to efficiently and effectively distribute literature and other marketing materials.

Table of Contents

Most performance obligations offered within this revenue stream are satisfied over time and utilize the input or output method, depending on the nature of the service, to measure progress toward satisfying the performance obligation. For performance obligations where we charge customers a transaction-based fee, we utilize the output method based on the quantities fulfilled. Services provided through our fulfillment centers are typically priced on a per transaction basis and our contracts allow us to invoice for services provided and reflect the value to the customer of the services provided to date. In most cases, we use the “as invoiced” practical expedient to recognize revenue associated with these performance obligations unless significant discounts are offered in a contract and prices for services do not represent their standalone selling prices. Prior to the closure of our direct mail production facilities, our direct mail business contracts may have included a promise to purchase postage on behalf of our clients; in such cases, we have determined we are an agent, rather than principal and therefore recognize net consideration as revenue.

Upfront Non-Refundable Fees

We may receive non-refundable upfront fees from customers for implementation of our SaaS database solutions products or for providing training in connection with our contact center solutions. These activities are not deemed to transfer a separate promised service and therefore, represent advanced payments. Where customers have an option to renew a contract, the customer is not required to pay similar upfront fees upon renewal. As a result, we have determined that these renewal options provide for the purchase of future services at a reduced rate and therefore, provide a material right. These upfront non-refundable fees are recognized over the period of benefit which is generally consistent with estimated customer life (four to five years for database solutions contracts and six months to one year for contact center contracts). The balance of upfront non-refundable fees collected from customers was immaterial as of June 30, 2023 and December 31, 2022.

Transaction Price Allocated to Future Performance Obligations

We have elected to apply certain optional exemptions that limit the disclosure requirements over remaining performance obligations at period end to exclude the performance obligations that have an original expected duration of one year or less, transactions using the “as invoiced” practical expedient, or when a performance obligation is a series and we have allocated the variable consideration directly to the services performed. As of June 30, 2023, we had no transaction prices allocated to unsatisfied or partially satisfied performance obligations.

Contract Balances

We record a receivable when revenue is recognized prior to invoicing when we have an unconditional right to consideration (only the passage of time is required before payment of that consideration is due) and a contract asset when the right to payment is conditional upon our future performance such as delivery of an additional good or service (e.g. customer contract requires customer’s final acceptance of custom database solution or delivery of final marketing strategy presentation before customer payment is required). If invoicing occurs prior to revenue recognition, the unearned revenue is presented on our Condensed Consolidated Balance Sheet as a contract liability, referred to as deferred revenue. The following table summarizes our contract balances as of June 30, 2023 and December 31, 2022:

In thousands	*June 30, 2023*		*December 31, 2022*
Contract assets		259		309
Deferred revenue and customer advances		6,701		4,590
Deferred revenue, included in other long-term liabilities		363		432

Revenue recognized during the six months ended June 30, 2023 from amounts included in deferred revenue at the beginning of the period was approximately $3.5 million. Revenue recognized during the six months ended June 30, 2022 from amounts included in deferred revenue at the beginning of the period was approximately $2.5 million.

Costs to Obtain and Fulfill a Contract

We recognize an asset for the direct costs incurred to obtain and fulfill our contracts with customers to the extent that we expect to recover these costs and if the benefit is longer than one year. These costs are amortized to operating expense over the expected period of the benefit in a manner that is consistent with the transfer of the related goods or services to which the asset relates. We impair the asset when recoverability is not anticipated. We capitalized a portion of commission expense, implementation and other costs that represents the cost to obtain a contract. The remaining unamortized contract costs were $0.5 million and $1.0 million as of June 30, 2023 and December 31, 2022, respectively. For the periods presented, no impairment was recognized.

Table of Contents

Note D - Leases

We have operating and finance leases for corporate and business offices, service facilities, call centers and certain equipment. Leases with an initial term of 12 months or less are generally not recorded on the balance sheet, unless the arrangement includes an option to purchase the underlying asset, or an option to renew the arrangement, that we are reasonably certain to exercise (short-term lease). Our leases have remaining lease terms of one to eight years, some of which may include options to extend the leases for up to an additional five years.

We subleased our Fullerton (CA), Jacksonville (FL) and Uxbridge (UK) facilities. The lease and sublease for Fullerton (CA) facility expired in April 2023, the lease and sublease for Uxbridge (UK) facility will expire in October 2023 and the lease and sublease for Jacksonville (FL) facility will expire at the end of July 2024.

As of June 30, 2023, assets recorded under finance and operating leases were approximately $0.5 million and $17.5 million, respectively, and accumulated amortization associated with finance leases was $1.0 million. As of December 31, 2022, assets recorded under finance and operating leases were approximately $0.6 million and $18.6 million, respectively, and accumulated amortization associated with finance leases was $1.0 million. Operating lease right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The discount rate used to determine the commencement date present value of lease payment is the interest rate implicit in the lease, or when that is not readily determinable, we utilize our incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Since none of our leases has a readily determinable implicit interest rate, we use our incremental borrowing rate under our Texas Capital Bank Revolver Facility as the discount rate. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.

There was no impairment of leases during the three and six months ended June 30, 2023 and 2022.

The following table presents supplemental balance sheet information related to our financing and operating leases:

In thousands	*As of June 30, 2023*
	Operating Leases		Finance Leases		*Total*
Right-of-use Assets	$	17,491	$	520	$	18,011

Liabilities
Current portion of lease liabilities		5,810		93		5,903
Long-term lease liabilities		14,602		29		14,631
Total Lease Liabilities	$	20,412	$	122	$	20,534

In thousands	*As of December 31, 2022*
	Operating Leases		Finance Leases		*Total*
Right-of-use Assets	$	18,574	$	595	$	19,169

Liabilities
Short-term lease liabilities		5,587		160		5,747
Long-term lease liabilities		16,523		52		16,575
Total Lease Liabilities	$	22,110	$	212	$	22,322

For the three and six months ended June 30, 2023 and 2022, the components of lease expense were as follows:

In thousands	*Three Months Ended June 30, 2023*			*Three Months Ended June 30, 2022*
Operating lease cost	$	1,366		$	1,419

Finance lease cost:
Amortization of right-of-use assets		40			41
Interest on lease liabilities		2			4
Total Finance lease cost		42			45
Variable lease cost		486			447
Sublease income		(213	)		(160	)
Total lease cost, net	$	1,681		$	1,751

In thousands	*Six Months Ended June 30, 2023*			*Six Months Ended June 30, 2022*
Operating lease cost	$	2,822		$	3,000

Finance lease cost:
Amortization of right-of-use assets		80			87
Interest on lease liabilities		4			9
Total Finance lease cost		84			96
Variable lease cost		988			986
Sublease income		(499	)		(411	)
Total lease cost, net	$	3,395		$	3,671

Table of Contents

Other information related to leases was as follows:

In thousands	*Six Months Ended June 30, 2023*			*Six Months Ended June 30, 2022*
Supplemental Cash Flows Information

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,453		$	7,097
Operating cash flows from finance leases		4			8
Financing cash flows from finance leases		95			101

Weighted Average Remaining Lease term
Operating leases		5.6			6.2
Finance leases		1.2			1.8

Weighted Average Discount Rate
Operating leases		3.63	%		3.40	%
Finance leases		6.21	%		5.53	%

The maturities of the Company’s finance and operating lease liabilities as of June 30, 2023 are as follows:

In thousands	*Operating Leases (1)*		*Finance Leases*
Year Ending December 31,
Remainder of 2023	$	3,228	$	68
2024		5,297		50
2025		2,885		8
2026		2,374		1
2027		2,291		—
2027 and beyond		6,229		—
Total future minimum lease payments		22,304		127
Less: imputed interest		1,892		5
Total lease liabilities	$	20,412	$	122

(1) Non-cancelable sublease proceeds for the remainder of the fiscal year ending December 31, 2023 and the fiscal year ending December 31, 2024 of $0.3 million and $0.4 million, respectively, are not included in the table above.

Table of Contents

Note E - Convertible Preferred Stock and Share Repurchase Program

Convertible Preferred Stock

Our Amended and Restated Certificate of Incorporation authorizes us to issue 1.0 million shares of preferred stock. On January 30, 2018, we issued 9,926 shares of our Series A Preferred Stock to Wipro, LLC d/b/a Wipro US Branch IT Services (“Wipro”) at an issue price of $1,000 per share, for gross proceeds of $9.9 million pursuant to a Certificate of Designation filed with the State of Delaware on January 29, 2018. We incurred $0.2 million of transaction fees in connection with the issuance of the Series A Preferred Stock which were netted against the gross proceeds of $9.9 million on our Condensed Consolidated Financial Statements.

On June 30, 2022, the Company entered into a share repurchase agreement (the “Repurchase Agreement”) with Wipro, pursuant to which the Company agreed to repurchase all 9,926 shares of the Company’s Series A Preferred Stock then outstanding in exchange for (i) a cash payment equal to their liquidation value, or total cash payment of $9,926,000 and (ii) 100,000 shares of the Company’s common stock, par value $1.00 per share (the “Common Stock”). The cash portion of the repurchase price was paid into escrow at the signing of the Repurchase Agreement on June 30, 2022 and held in escrow until the closing of the repurchase on December 2, 2022.

On March 20, 2023, the Company cancelled all shares of Series A Preferred Stock pursuant to the Certificate of Elimination filed with the Secretary of State of Delaware.

Share Repurchase Program

On May 2, 2023, the Board of Directors of Harte Hanks approved a share repurchase program to maximize shareholder value with authorization to repurchase $6.5 million of the Company’s Common Stock. In the three months ended June 30, 2023, we repurchased 0.3 million shares of common stock for $1.9 million.

Table of Contents

Note F — Long-Term Debt

Credit Facility

As of June 30, 2023 and December 31, 2022, we had no outstanding borrowings under the New Credit Facility (as defined below).

As of June 30, 2023 and December 31, 2022, we had letters of credit outstanding in the amount of $0.8 million. No amounts were drawn against these letters of credit at June 30, 2023. These letters of credit exist to support insurance programs relating to worker’s compensation, automobile, and general liability.

As of June 30, 2023, we had the ability to borrow $24.2 million under the New Credit Facility.

On December 21, 2021, the Company entered into a new three-year, $25.0 million asset-based revolving credit facility (the "New Credit Facility") with Texas Capital Bank. The Company’s obligations under the New Credit Facility are guaranteed on a joint and several basis by the Company’s material subsidiaries (the “Guarantors”). The New Credit Facility is secured by substantially all of the assets of the Company and the Guarantors pursuant to a Pledge and Security Agreement, dated as of December 21, 2021, among the Company, Texas Capital Bank and the other grantors party thereto (the "Security Agreement").

The New Credit Facility is subject to certain covenants restricting the Company's and its subsidiaries' ability to create, incur, assume or become liable for indebtedness; make certain investments; pay dividends or repurchase the Company's stock; create, incur or assume liens; consummate mergers or acquisitions; liquidate, dissolve, suspend or cease operations; or modify accounting or tax reporting methods (other than as required by U.S. GAAP). The Company was in compliance with all of the requirements as of June 30, 2023.

The loans under the New Credit Facility accrue interest at a variable rate equal to the Bloomberg Short-Term Bank Yield Index Rate plus a margin of 2.25% per annum. The interest rate was 6.81% as of June 30, 2023. The outstanding amounts advanced under the New Credit Facility are due and payable in full on December 21, 2024. Unused commitment balances accrued fees at a rate of 0.25%.

In connection with entering into the New Credit Facility, the Company and Texas Capital Bank terminated the Old Texas Capital Credit Facility. Prior to termination of the Old Texas Capital Credit Facility, the Company used cash on hand to pay down $12.1 million outstanding under the Old Texas Capital Credit Facility and the remaining $5.0 million of loans outstanding under the Old Texas Capital Credit Facility were deemed to be outstanding under the New Credit Facility. Unlike the Old Texas Capital Credit Facility, Texas Capital Bank did not require the New Credit Facility to be guaranteed by HHS.

Cash payments for interest were $29 thousand and $97 thousand for the three months ended June 30, 2023 and 2022, respectively. Cash payments for interest were $167 thousand and $196 thousand for the six months ended June 30, 2023 and 2022, respectively.

Note G — Stock-Based Compensation

We maintain stock incentive plans for the benefit of certain officers, directors, and employees. Our stock incentive plans provide for the ability to issue stock options, cash stock appreciation rights, performance stock units, phantom stock units and cash performance stock units. Our cash stock appreciation rights, phantom stock units and cash performance stock units settle solely in cash and are treated as the current liability, which are adjusted each reporting period based on changes in our stock price.

Compensation expense for stock-based awards is based on the fair values of the awards on the date of grant and is recognized on a straight-line basis over the vesting period of the entire award in the “Labor” line of the Condensed Consolidated Statements of Comprehensive Income. We recognized $0.5 million and $0.6 million of stock-based compensation expense during the three months ended June 30, 2023 and 2022, respectively. We recognized $1.0 million and $0.8 million of stock-based compensation expense during the six months ended June 30, 2023 and 2022, respectively.

Table of Contents

Note H — Employee Benefit Plans

Prior to January 1, 1999, we provided a defined benefit pension plan for which most of our employees were eligible to participate (the “Qualified Pension Plan”). In conjunction with significant enhancements to our 401(k) plan, we elected to freeze benefits under the Qualified Pension Plan as of December 31, 1998.

In 1994, we adopted a non-qualified, unfunded, supplemental pension plan (the “Restoration Pension Plan”) covering certain employees, which provides for incremental pension payments so that total pension payments equal those amounts that would have been payable from the principal pension plan were it not for limitations imposed by income tax regulation. The benefits under the Restoration Pension Plan were intended to provide benefits equivalent to our Qualified Pension Plan as if such plan had not been frozen. We elected to freeze benefits under the Restoration Pension Plan as of April 1, 2014.

At the end of 2020, the Board of Directors of the Company approved the division of the Qualified Pension Plan into two distinct plans, “Qualified Pension Plan I” and “Qualified Pension Plan II.” The assets and liabilities of the Qualified Pension Plan that were attributable to certain participants in Qualified Pension Plan II were spun off and transferred into Qualified Pension Plan II effective as of the end of December 31, 2020, in accordance with Internal Revenue Code section 414 (I) and ERISA Section 4044.

In January 2023, the Board of Directors of the Company approved the termination of the Qualified Pension Plan I. The termination process will take approximately 18 months to complete and will result in the transfer of our obligations pursuant to this pension plan to a third-party provider.

The overfunded or underfunded status of our defined benefit post-retirement plans is recorded as an asset or liability on our balance sheets. The funded status is measured as the difference between the fair value of plan assets and the projected benefit obligation. Periodic changes in the funded status are recognized through other comprehensive income in the Consolidated Statements of Comprehensive Income. We currently measure the funded status of our defined benefit plans as of December 31, the date of our year-end Consolidated Balance Sheets.

Net pension cost for both plans included the following components:

	*Three Months Ended June 30,*						*Six Months Ended June 30,*
In thousands	*2023*			*2022*			*2023*			*2022*
Interest cost	$	1,772		$	1,260		$	3,544		$	2,520
Expected return on plan assets		(1,554	)		(1,468	)		(3,108	)		(2,936	)
Recognized actuarial loss		630			719			1,260			1,438
Net periodic benefit cost	$	848		$	511		$	1,696		$	1,022

Based on current estimates, we will be required to make a $1.6 million contribution to the combined qualified Pension Plan in 2023. We made $0.6 million of such $1.6 million aggregate contribution in the six months ended June 30, 2023.

We are not required to make, and do not intend to make, any contributions to our Restoration Pension Plan in 2023 other than to the extent needed to cover benefit payments. We made benefit payments under this supplemental plan of $0.9 million in the six months ended June 30, 2023 and 2022.

Note I - Income Taxes

The income tax provision was $0.2 million and $0.7 million for the three months ended June 30, 2023 and 2022, respectively. The provision for income taxes resulted in an effective income tax rate of 29.3% for the three months ended June 30, 2023 and 13.1% for the three months ended June 30, 2022.

The income tax benefit was $0.3 million and income tax provision was $1.1 million for the six months ended June 30, 2023 and 2022, respectively. The provision for income taxes resulted in an effective income tax rate of 58.1% for the six months ended June 30, 2023 and 12.6% for the six months ended June 30, 2022.

Coronavirus Aid, Relief and Economic Security Act

In response to the COVID-19 pandemic, the CARES Act was signed into law in March 2020. The CARES Act lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (“2017 Tax Act”). Under the CARES Act, corporate taxpayers may carryback net operating losses (“ NOLs”) realized during 2018 through 2020 for up to five years, which was not previously allowed under the 2017 Tax Act. The CARES Act also eliminates the 80% of taxable income limitations by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019 or 2020. Taxpayers may generally deduct interest up to the sum of 50% of adjusted taxable income plus business interest income (30% limit under the 2017 Tax Act) for tax years beginning January 1, 2019 and 2020. The CARES Act allows taxpayers with alternative minimum tax credits to claim a refund in 2020 for the entire amount of the credits instead of recovering the credits through refunds over a period of years, as originally enacted by the 2017 Tax Act. In addition, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation. As of December 31, 2020, the Company filed federal net operating loss carryback claims resulting in an income tax refund for $6.4 million and $3.2 million for tax years 2019 and 2018, respectively. As of June 30, 2023, the Company has received the tax refunds from the carryback of the losses.

Table of Contents

We or one of our subsidiaries file income tax returns in the U.S. federal, U.S. state, and foreign jurisdictions. For U.S. state returns, we are no longer subject to tax examinations for tax years prior to 2017. For U.S. federal and foreign returns, we are no longer subject to tax examinations for tax years prior to 2017.

We have elected to classify any interest expense and penalties related to income taxes within income tax expense in our Condensed Consolidated Statements of Comprehensive Income. We did not have a significant amount of interest or penalties accrued at June 30, 2023 or December 31, 2022.

Note J - Earnings Per Share

In periods in which the Company has net income, the Company is required to calculate earnings per share (“EPS”) using the two-class method. The two-class method is required because the Company’s Series A Preferred Stock is considered a participating security with objectively determinable and non-discretionary dividend participation rights. Series A Preferred stockholders have the right to participate in dividends above their five percent dividend rate should the Company declare dividends on its common stock at a dividend rate higher than the five percent (on an as-converted basis). Under the two-class method, undistributed and distributed earnings are allocated on a pro-rata basis to the common and the preferred stockholders. The weighted-average number of common and preferred stock outstanding during the period is then used to calculate EPS for each class of shares.

In December 2022, we repurchased all 9,926 shares of the Company’s Series A Preferred Stock then outstanding.

In periods in which the Company has a net loss, basic loss per share is calculated using the treasury stock method. The treasury stock method is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period. The two-class method is not used, because the calculation would be anti-dilutive.

Reconciliations of basic and diluted EPS were as follows:

	*Three Months Ended June 30,*
In thousands, except per share amounts	*2023*		*2022*
Numerator:
Net income	$	580	$	4,461
Less: Preferred stock dividends		—		124
Less: Earnings attributable to participating securities		—		542
Numerator for basic EPS: income attributable to common stockholders		580	$	3,795

Effect of dilutive securities:
Add back: Allocation of earnings to participating securities		—		542
Less: Re-allocation of earnings to participating securities considering potentially dilutive securities		—		(518	)
Numerator for diluted EPS		580		3,819

Denominator:
Basic EPS denominator: weighted-average common shares outstanding		7,358		7,017
Diluted EPS denominator		7,505		7,388

Basic income per Common Share	$	0.08	$	0.54
Diluted income per Common Share	$	0.08	$	0.52

For the three months ended June 30, 2023 and 2022, respectively, the following shares have been excluded from the calculation of shares used in the diluted EPS calculation: 7,428 and 13,063 shares of anti-dilutive market price options; 45,338 and 0 of anti-dilutive unvested restricted shares; and 0 and 1,001,614 shares of anti-dilutive Series A Preferred Stock (as if converted).

	*Six Months Ended June 30,*
In thousands, except per share amounts	*2023*			*2022*
Numerator:
Net (loss) income	$	(211	)	$	7,806
Less: Preferred stock dividend		—			246
Less: Earnings attributable to common stockholders		—			946
Numerator for basic EPS: (loss) income attributable to common stockholders		(211	)		6,614

Effect of dilutive securities:
Add back: Allocation of earnings to participating securities		—			946
Less: Re-allocation of earnings to participating securities considering potentially dilutive securities		—			(908	)
Numerator for diluted EPS	$	(211	)	$	6,652

Denominator:
Basic EPS denominator: weighted-average common shares outstanding		7,392			7,004
Diluted EPS denominator		7,392			7,338

Basic (loss) income per Common Share	$	(0.03	)	$	0.94
Diluted (loss) income per Common Share	$	(0.03	)	$	0.91

For the six months ended June 30, 2023 and 2022, respectively, the following shares have been excluded from the calculation of shares used in the diluted EPS calculation: 8,668 and 15,074 shares of anti-dilutive market price options; 45,906 and 76,925 of anti-dilutive unvested restricted shares; and 0 and 1,001,614 shares of anti-dilutive Series A Preferred Stock (as if converted).

Table of Contents

Note K — Comprehensive Income

Comprehensive Income for a period encompasses net income (loss) and all other changes in equity other than from transactions with our stockholders.

Changes in accumulated other comprehensive income by component were as follows:

	*Defined Benefit*			*Foreign Currency*
In thousands	*Pension Items*			*Items*			*Total*
Balance at December 31, 2022	$	(44,120	)	$	(4,182	)	$	(48,302	)
Other comprehensive income, net of tax, before reclassifications		—			1,980			1,980
Amounts reclassified from accumulated other comprehensive income, net of tax, to other, net, on the condensed consolidated statements of comprehensive income		1,142			—			1,142
Net current period other comprehensive income, net of tax		1,142			1,980			3,122
Balance at June 30, 2023	$	(42,978	)	$	(2,202	)	$	(45,180	)

	*Defined Benefit*			*Foreign Currency*
In thousands	*Pension Items*			*Items*			*Total*
Balance at December 31, 2021	$	(54,394	)	$	1,066		$	(53,328	)
Other comprehensive loss, net of tax, before reclassifications		—			(3,111	)		(3,111	)
Amounts reclassified from accumulated other comprehensive income, net of tax, to other, net, on the condensed consolidated statements of comprehensive income		1,588			—			1,588
Net current period other comprehensive income (loss), net of tax		1,588			(3,111	)		(1,523	)
Balance at June 30, 2022	$	(52,806	)	$	(2,045	)	$	(54,851	)

Reclassification amounts related to the defined pension plans are included in the computation of net periodic pension benefit cost (see Note H, Employee Benefit Plans).

Note L — Acquisition of Inside Out Solutions, LLC

On December 1, 2022 (the “Closing Date”), we purchased substantially all of the assets (the “Transaction”) of Inside Out Solutions, LLC, a Florida limited liability company (“InsideOut”), for an aggregate purchase price of approximately $7.5 million (the “Purchase Price”) pursuant to an asset purchase agreement, dated as of December 1, 2022 by and between Harte Hanks and InsideOut (the “Asset Purchase Agreement”).

InsideOut is a premium sales enablement agency offering technology and data driven support to technology, media telecommunications, business services, industrial, and financial technology customers in the North American and European markets with its headquarters in St. Petersburg, Florida.

The acquisition of InsideOut further expands our capabilities within our marketing services and customer care segments and strengthens our ability to drive profitable revenue growth within our current sales enablement offerings, including: (i) demand generation which creates qualified marketing leads for our clients, and (ii) inside sales offerings to further promote a client’s internal growth objectives. In addition, the owner and CEO of InsideOut entered into a two-year consulting agreement with the Company, which will ensure consistency in our delivery of these sales enablement offerings, post-closing.

Pursuant to the Asset Purchase Agreement, $5.75 million of the Purchase Price was paid in cash at closing, $1.0 million in cash was placed in escrow to satisfy indemnification obligations, if any, and separately, to satisfy earn-outs related to future revenue performance. In addition, $0.75 million of the Purchase Price was paid at closing in shares of Common Stock issued in a private placement. The share amount was based on the volume weighted closing price over the fifteen trading days ending on November 28, 2022. The $1.0 million of cash in the escrow account is included in other current assets in our balance sheet as of June 30, 2023 and December 31, 2022.

The Purchase Price is subject to a post-closing net working capital true-up 180-days after the Closing Date if net working capital is not between $1.3 million and $1.6 million.

The acquisition was accounted for under the acquisition method of accounting with the Company treated as the acquiring entity. Accordingly, the consideration paid by the Company to complete the acquisition has been recorded to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of the acquisition. The carrying values for current assets and liabilities were deemed to approximate their fair values due to the short-term nature of these assets and liabilities. The following table shows the amounts recorded as of their acquisition date.

In thousands	*Amount*
Accounts receivable	$	1,445
Prepaid expenses		148
Property, plant and equipment		177
Total assets acquired		1,770
Less: Current liabilities assumed		(761	)
Net assets acquired	$	1,009

We recognized $3.6 million of intangible assets and $2.4 million of goodwill associated with this acquisition. The amount of goodwill recorded reflects expected earning potential and synergies with our Customer Care segment. We are amortizing the intangible assets on a straight-line basis over its useful life of five years. The amortization expense for the three and six months ended June 30, 2023 were $180 thousand and $360 thousand, respectively. A summary of the Company’s intangible asset as of June 30, 2023 is as follows:

Weighted

Average

Gross

Accumulated

Net Carrying

In thousands

Amortization Period

Carrying Amount

Amortizations

Amount

Customer Relationships

5 years

3,600

420

3,180

Estimated future amortization expense related to intangible assets as of June 30, 2023 is as follows:

In thousands
Year Ending December 31,	*Amount*
Remainder of 2023	$	360
2024		720
2025		720
2026		720
2027		660
Total	$	3,180

The Company's result of operations for the three and six months ended June 30, 2023 includes revenue of $2.3 million and $5.1 million, respectively, and net earnings of $0.1 million and 0.6 million, respectively, from the InsideOut operation.

Table of Contents

Note M — Litigation and Contingencies

In the normal course of our business, we are obligated under some agreements to indemnify our clients as a result of claims that we infringe on the proprietary rights of third parties. The terms and duration of these commitments vary and, in some cases, may be indefinite, and certain of these commitments do not limit the maximum amount of future payments we could become obligated to make thereunder; accordingly, our actual aggregate maximum exposure related to these types of commitments is not reasonably estimable. Historically, we have not been obligated to make significant payments for obligations of this nature, and no liabilities have been recorded for these obligations in our condensed consolidated financial statements.

We are also subject to various claims and legal proceedings in the ordinary course of conducting our businesses and, from time to time, we may become involved in additional claims and lawsuits incidental to our businesses. We routinely assess the likelihood of adverse judgments or outcomes to these matters, as well as ranges of probable losses; to the extent losses are reasonably estimable. Accruals are recorded for these matters to the extent that management concludes a loss is probable and the financial impact, should an adverse outcome occur, is reasonable estimable.

In the opinion of management, appropriate and adequate accruals for legal matters have been made, and management believes that the probability of a material loss beyond the amounts accrued is remote. Nevertheless, we cannot predict the impact of future developments affecting our pending or future claims and lawsuits. We expense legal costs as incurred, and all recorded legal liabilities are adjusted as required as better information becomes available to us. The factors we consider when recording an accrual for contingencies include, among others: (i) the opinions and views of our legal counsel; (ii) our previous experience; and (iii) the decision of our management as to how we intend to respond to the complaints.

Table of Contents

Note N — 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 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 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.

Table of Contents

The following table presents financial information by segment:

Three Months ended June 30, 2023	*Marketing Services*		*Customer Care*		*Fulfillment and Logistics Services*		*Unallocated Corporate*			*Total*
					(In thousands)
Revenues	$	10,921	$	17,211	$	19,630	$	—		$	47,762
Segment Operating Expense	$	8,835	$	13,541	$	16,931	$	5,752		$	45,059
Contribution margin (loss)	$	2,086	$	3,670	$	2,699	$	(5,752	)	$	2,703
Shared Services	$	766	$	720	$	765	$	(2,251	)	$	—
EBITDA	$	1,320	$	2,950	$	1,934	$	(3,501	)	$	2,703
Depreciation and amortization	$	47	$	371	$	241	$	374		$	1,033
Operating income (loss)	$	1,273	$	2,579	$	1,693	$	(3,875	)	$	1,670

Three Months ended June 30, 2022	*Marketing Services*		*Customer Care*		*Fulfillment and Logistics Services*		*Unallocated Corporate*			*Total*
					(In thousands)
Revenues	$	13,450	$	15,382	$	19,721	$	—		$	48,553
Segment Operating Expense	$	10,584	$	12,212	$	15,770	$	5,390		$	43,956
Contribution margin (loss)	$	2,866	$	3,170	$	3,951	$	(5,390	)	$	4,597
Shared Services	$	1,052	$	677	$	779	$	(2,508	)	$	—
EBITDA	$	1,814	$	2,493	$	3,172	$	(2,882	)	$	4,597
Depreciation and amortization	$	89	$	201	$	202	$	94		$	586
Operating income (loss)	$	1,725	$	2,292	$	2,970	$	(2,976	)	$	4,011

Six Months ended June 30, 2023	*Marketing Services*		*Customer Care*		*Fulfillment and Logistics Services*		*Unallocated Corporate*			*Total*
					(In thousands)
Revenues	$	22,160	$	31,627	$	41,095	$	—		$	94,882
Segment Operating Expense	$	18,094	$	25,195	$	35,440	$	11,331		$	90,060
Contribution margin	$	4,066	$	6,432	$	5,655	$	(11,331	)	$	4,822
Shared Services	$	1,555	$	1,434	$	1,523	$	(4,512	)	$	—
EBITDA	$	2,511	$	4,998	$	4,132	$	(6,819	)	$	4,822
Depreciation and amortization	$	96	$	771	$	487	$	745		$	2,099
Operating income (loss)	$	2,415	$	4,227	$	3,645	$	(7,564	)	$	2,723

Six Months ended June 30, 2022	*Marketing Services*		*Customer Care*		*Fulfillment and Logistics Services (1)*		*Unallocated Corporate*			*Total*
					(In thousands)
Revenues	$	26,374	$	33,123	$	38,118	$	—		$	97,615
Segment Operating Expense	$	20,934	$	25,773	$	30,929	$	10,889		$	88,525
Contribution margin	$	5,440	$	7,350	$	7,189	$	(10,889	)	$	9,090
Shared Services	$	2,165	$	1,395	$	1,630	$	(5,190	)	$	—
EBITDA	$	3,275	$	5,955	$	5,559	$	(5,699	)	$	9,090
Depreciation and amortization	$	191	$	403	$	404	$	186		$	1,184
Operating income (loss)	$	3,084	$	5,552	$	5,155	$	(5,885	)	$	7,906

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements

This report, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contains “forward-looking statements” within the meaning of the federal securities laws. All such statements are qualified by this cautionary note, which is provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. Forward-looking statements will also be included from time to time in our other public filings, press releases, our website, and oral and written presentations by management. Statements other than historical facts are forward-looking and may be identified by words such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “seeks,” “could,” “intends,” or words of similar meaning. Examples include statements regarding (1) our strategies and initiatives, including actions designed to respond to market conditions and improve our performance, (2) our financial outlook for revenues, earnings (loss) per share, operating income (loss), expense related to equity-based compensation, capital resources and other financial items, if any, (3) expectations for our businesses and for the industries in which we operate, including the impact of economic conditions of the markets we serve on the marketing expenditures and activities of our clients and prospects, (4) competitive factors, (5) acquisition and development plans, (6) expectations regarding legal proceedings and other contingent liabilities, and (7) other statements regarding future events, conditions, or outcomes.

These forward-looking statements are based on current information, expectations, and estimates and involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from what is expressed in or indicated by the forward-looking statements. In that event, our business, financial condition, results of operations, or liquidity could be materially adversely affected and investors in our securities could lose part or all of their investments. A discussion of some of these risks, uncertainties, assumptions, and other factors can be found in our filings with the SEC, including the factors discussed under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “2022 10-K”), Part II, and in our other reports filed or furnished with the SEC. The forward-looking statements included in this report and those included in our other public filings, press releases, our website, and oral and written presentations by management are made only as of the respective dates thereof, and we undertake no obligation to update publicly any forward-looking statement in this report or in other documents, our website, or oral statements for any reason, even if new information becomes available or other events occur in the future, except as required by law.

Overview

The following MD&A is intended to enable the reader to understand the results of operations and financial condition of Harte Hanks, including any material changes in the Company’s financial condition and results of operations since December 31, 2022, and as compared with the three and six months ended June 30, 2022. This section is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the accompanying notes included herein as well as our 2022 10-K. Our 2022 10-K contains a discussion of other matters not included herein, such as disclosures regarding critical accounting policies and estimates, and contractual obligations. See Note A, Overview and Significant Accounting Policies, in the Notes to Condensed Consolidated Financial Statements for further information.

Harte Hanks, Inc. is a leading global customer experience company operating in three business segments: Marketing Services, Customer Care, and Fulfillment & Logistics Services. Our mission is to partner with clients to provide them with a robust customer-experience, or CX, strategy, data-driven analytics and actionable insights combined with seamless program execution to better understand, attract, and engage their customers. Our services include strategic planning, data strategy, performance analytics, creative development and execution; technology enablement; marketing automation; B2B and B2C e-commerce; cross-channel customer care; and product, print, and mail fulfillment.

Table of Contents

We are affected by the general, national, and international economic and business conditions in the markets where we and our customers operate. Marketing budgets are largely discretionary in nature, and as a consequence are easier for our clients to reduce in the short-term than other expenses. Our revenues are also affected by the economic fundamentals of each industry that we serve, various market factors, including the demand for services by our clients, and the financial condition of and budgets available to our clients, among other factors. Due to the COVID-19 pandemic, recent increases in inflation and interest rates throughout the globe, and other geopolitical uncertainties, including but not limited to the ongoing war between Russia and Ukraine, there is continued uncertainty and significant disruption in the global economy and financial markets. We remain committed to making the investments necessary to execute our multichannel strategy while also continuing to adjust our cost structure to appropriately reflect our operations and outlook. .

Management is closely monitoring inflation and wage pressure in the market, and the potential impact to our business. While inflation has not had a material impact to our business, it is possible a material increase in inflation could have an impact on our clients, and in turn, in our business.

Recent Developments

Chief Executive Officer Transition

Effective as of June 19, 2023, our Board of Directors appointed media-industry veteran Kirk Davis to serve as our Chief Executive Officer and nominated Mr. Davis to the Board of Directors, to serve until our 2024 annual meeting of stockholders and until his successor is elected or qualified, or until his earlier death, resignation or removal. Mr. Davis has decades of media and marketing expertise, most recently served as CEO of legacy publishing company Metro Corp. and previously served as CEO of GateHouse Media, which was the second-largest regional publishing company in the United States before merging with Gannett in 2019.

Changes in Segment Reporting

To improve our strategic posture in terms of go-to-market approach and cost structure, we have begun the process of combining our Marketing Services and Customer Care segment into a single segment called Customer Experience. We expect the revised segment structure to be complete by the end of 2023.

Share Repurchase Program

On May 2, 2023, the Board of Directors of Harte Hanks approved a share repurchase program to maximize shareholder value with authorization to repurchase $6.5 million of the Company’s Common Stock. In the three months ended June 30, 2023, we repurchased 0.3 million shares of common stock for $1.9 million.

Acquisition of Inside Out Solutions, LLC

On December 1, 2022, we purchased substantially all of the assets (the “Transaction”) of Inside Out Solutions, LLC, a Florida limited liability company (“InsideOut”), for an aggregate purchase price of approximately $7.5 million (the “Purchase Price”) pursuant to an asset purchase agreement, dated as of December 1, 2022 by and between Harte Hanks and InsideOut (the “Asset Purchase Agreement”).

The acquisition of InsideOut further expands our customer experience capabilities within our Marketing Services and Customer Care segments and strengthens our ability to drive profitable revenue growth within our current sales enablement offerings, including: (i) demand generation which creates qualified marketing leads for our clients, and (ii) inside sales offerings to further promote a client’s internal growth objectives. In addition, the owner and CEO of InsideOut entered into a two-year consulting agreement with us, which will ensure consistency in our delivery of these sales enablement offerings, post-closing.

Table of Contents

Results of Operations

Operating results were as follows:

	Three Months Ended June 30,									Six Months Ended June 30,
In thousands, except percentages	2023			2022			% Change			2023			2022			% Change
Revenues	$	47,762		$	48,553			(1.6	)%	$	94,882		$	97,615			(2.8	)%
Operating expenses		46,092			44,542			3.5	%		92,159			89,709			2.7	%
Operating income	$	1,670		$	4,011			(58.4	)%	$	2,723		$	7,906			(65.6	)%

Operating margin		3.5	%		8.3	%					2.9	%		8.1	%

Income (loss) before income taxes	$	820		$	5,132			(84.0	)%	$	(503	)	$	8,931			(105.6	)%

Diluted earnings (loss) per common share from operations	$	0.08		$	0.52			(84.6	)%	$	(0.03	)	$	0.91			(103.3	)%

Consolidated Results

Revenues

Three months ended June 30, 2023 vs. Three months ended June 30, 2022

Revenues decreased $0.8 million, or 1.6%, in the three months ended June 30, 2023, compared to the three months ended June 30, 2022. Revenue in our Customer Care segment increased $1.8 million, or 11.9%, to $17.2 million, and revenue in our Marketing Services segment decreased $2.5 million, or 18.8%, to $10.9 million. Revenue in our Fulfillment & Logistics Services segment decreased slightly by $0.1 million.

Six months ended June 30, 2023 vs. Six months ended June 30, 2022

Revenues decreased $2.7 million, or 2.8%, in the six months ended June 30, 2023, compared to the six months ended June 30, 2022. Revenue in our Fulfillment & Logistics Services segment increased $3.0 million, or 7.8%, to $41.1 million, which partially offset the below decrease. Revenue in our Marketing Services segment decreased $4.2 million, or 16.0%, to $22.2 million, and revenue in our Customer Care segment decreased $1.5 million, or 4.5%, to $31.6 million.

Operating Expenses

Three months ended June 30, 2023 vs. Three months ended June 30, 2022

Operating expenses were $46.1 million in the three months ended June 30, 2023, a slight increase of $1.6 million, or 3.5%, compared to $44.5 million in the three months ended June 30, 2022.

Labor expense increased $1.6 million, or 6.2%, in the three months ended June 30, 2023, compared to the three months ended June 30, 2022 primarily due to increased severance expense paid to the prior CEO and as a result of a reduction in force in our Marketing Services segment. Production and distribution expenses decreased $0.2 million, or 1.3%, in the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to lower brokered costs associated with lower brokered revenue as compared to the prior year quarter. Advertising, Selling, General and Administrative expenses decreased $0.3 million, or 5.2%, in the three months ended June 30, 2023, compared to three months ended June 30, 2022 primarily due to lower professional fees.

The largest components of our operating expenses are labor, transportation expenses and outsourced costs. Each of these costs is, at least in part, variable and tends to fluctuate in line with revenues and the demand for our services. Transportation rates have increased over the last few years due to demand and supply fluctuations within the transportation industry. Future changes in transportation expenses will continue to impact our total production costs and total operating expenses, and in turn our margins, and may have an impact on future demand for our supply chain management services.

Postage costs for mailings are borne by our clients and are not directly reflected in our revenues or expenses.

Six months ended June 30, 2023 vs. Six months ended June 30, 2022

Operating expenses were $92.2 million in the six months ended June 30, 2023, an increase of $2.5 million, or 2.7%, compared to $89.7 million in the six months ended June 30, 2022.

Production and distribution expenses increased $1.6 million, or 5.9%, in the six months ended June 30, 2023,, compared to the six months ended June 30, 2022, primarily due to the change in revenue mix resulting in higher transportation costs in our Fulfillment & Logistics Services segment, which was partially offset by lower brokered costs due to lower brokered revenue as compared to the prior year quarter. Advertising, Selling, General and Administrative expenses decreased $0.1 million, or 1.1%, in the six months ended June 30, 2023, compared to six months ended June 30, 2022 primarily due to lower professional fees. Labor expense increased $0.1 million, or 0.2%, in the six months ended June 30, 2023, compared to the six months ended June 30, 2022 primarily due to higher severance expense.

Postage costs for mailings are borne by our clients and are not directly reflected in our revenues or expenses.

Table of Contents

Interest (Income) expense, net

Three months ended June 30, 2023 vs. Three months ended June 30, 2022

Interest expense, net, in the three months ended June 30, 2023 was $59k as compared to interest expense, net of $95k for the three months ended June 30, 2022. The $36k decrease in interest expense is primarily due to the lower debt level.

Six months ended June 30, 2023 vs. Six months ended June 30, 2022

Interest income, net, in the six months ended June 30, 2023 was $151k as compared to interest expense, net of $230k for the six months ended June 30, 2022. The $381k increase in interest income is primarily due to the interest income we received from the IRS related to our tax refund claims during the first quarter of 2023.

Other expense (income), net

Three months ended June 30, 2023 vs. Three months ended June 30, 2022

Other expense, net, for the three months ended June 30, 2023 was $0.8 million of expense compared to $1.2 of other income, net, in the prior year quarter . The increase in other expense, net was mainly associated with changes in foreign currency gain and loss.

Six months ended June 30, 2023 vs. Six months ended June 30, 2022

Other expense, net, for the six months ended June 30, 2023 was $3.4 million of expense compared to $1.3 million of other income, net, in the prior year quarter . The increase in other expense, net was mainly associated with changes in foreign currency gain and loss.

Income Taxes

Three months ended June 30, 2023vs. Three months ended June 30, 2022

The income tax provision of $0.2 million in the second quarter of 2023 represents a decrease in income tax provision of $0.4 million when compared to the second quarter of 2022. Our effective tax rate was 29.3% for the second quarter of 2023, an increase of 16.2% from the second quarter of 2022. The effective tax rate differs from the federal statutory rate of 21.0%, primarily due to the change in valuation allowance, U.S. state income taxes and income earned in foreign jurisdictions.

Six months ended June 30, 2023 vs. Six months ended June 30, 2022

The income tax benefit of $0.3 million in the six months ended June 30, 2023 represents a decrease in income tax provision of $1.4 million when compared to the six months ended June 30, 2022. Our effective tax rate was 58.1% for the six months ended June 30, 2023, an increase of 45.5% from the six months ended June 30, 2022. The effective tax rate differs from the federal statutory rate of 21.0%, primarily due to the change in valuation allowance, U.S. state income taxes and income earned in foreign jurisdictions.

Segment Results

The following is a discussion and analysis of the results of our reporting segments for the three months ended June 30, 2023 and 2022. 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”). For additional information, see Note N, Segment Reporting, in the Notes to Condensed Consolidated Financial Statements.

Marketing Services:

	Three Months Ended June 30,									Six Months Ended June 30,
In thousands	2023			% Change			2022			2023			% Change			2022
Revenues	$	10,921			-18.8	%	$	13,450		$	22,160			-16.0	%	$	26,374
EBITDA		1,320			-27.2	%		1,814			2,511			-23.3	%		3,275
Operating Income		1,273			-26.2	%		1,725			2,415			-21.7	%		3,084
Operating Income % of Revenue		11.7	%					12.8	%		10.9	%					11.7	%

Table of Contents

Three months ended June 30, 2023vs. Three months ended June 30, 2022

Marketing Services segment revenue decreased $2.5 million, or 18.8%, due to a decrease in direct mail service volume from existing customers. Operating income for the three months ended June 30, 2023 decreased $0.5 million from the prior year quarter due to the reduced revenue.

Six months ended June 30, 2023 vs. Six months ended June 30, 2022

Marketing Services segment revenue decreased $4.2 million, or 16.0%, due to a decrease in direct mail service volume from existing customers. Operating income for the six months ended June 30, 2023 decreased $0.7 million from the prior year quarter due to the lower revenue.

Customer Care:

	Three Months Ended June 30,									Six Months Ended June 30,
In thousands	2023			% Change			2022			2023			% Change			2022
Revenues	$	17,211			11.9	%	$	15,382		$	31,627			-4.5	%	$	33,123
EBITDA		2,950			18.3	%		2,493			4,998			-16.1	%		5,955
Operating Income		2,579			12.5	%		2,292			4,227			-23.9	%		5,552
Operating Income % of Revenue		15.0	%					14.9	%		13.4	%					16.8	%

Three months ended June 30, 2023vs. Three months ended June 30, 2022

Customer Care segment revenue increased $1.8 million, or 11.9%, primarily due to increased project work and revenue associated with InsideOut, which was acquired in December 2022. Operating Income was $2.6 million for the three months ended June 30, 2023, compared to operating income of $2.3 million for the three months ended June 30, 2022. The $0.3 million increase was driven by the higher revenue.

Six months ended June 30, 2023 vs. Six months ended June 30, 2022

Customer Care segment revenue decreased $1.5 million, or 4.5%, primarily due to the decrease in both non-recurring pandemic-related projects and a large non-recurring recall project in 2022 which was partially offset by $5.1 million revenue from InsideOut. Operating Income was $4.2 million for the six months ended June 30, 2023, compared to operating income of $5.5 million for the six months ended June 30, 2022. The $1.3 million decrease was due to lower revenue which was partially offset by cost reduction efforts.

Fulfillment & Logistics Services:

	Three Months Ended June 30,									Six Months Ended June 30,
In thousands	2023			% Change			2022			2023			% Change			2022
Revenues	$	19,630			-0.5	%	$	19,721		$	41,095			7.8	%	$	38,118
EBITDA		1,934			-39.0	%		3,172			4,132			-25.7	%		5,559
Operating Income		1,693			-43.0	%		2,970			3,645			-29.3	%		5,155
Operating Income % of Revenue		8.6	%					15.1	%		8.9	%					13.5	%

Three months ended June 30, 2023vs. Three months ended June 30, 2022

Fulfillment & Logistics Services segment revenue decreased by $0.1 million. Operating income was $1.7 million for the three months ended June 30, 2023 compared to $3.0 million for the three months ended June 30, 2022. The $1.3 million decrease in operating income was primarily due to the change in revenue mix and higher transportation costs associated with higher logistics revenue.

Six months ended June 30, 2023 vs. Six months ended June 30, 2022

Fulfillment & Logistics Services segment revenue increased $3.0 million, or 7.8%, primarily driven by the increase in work from existing customers. Operating income was $3.6 million for the six months ended June 30, 2023 compared to $5.2 million for the six months ended June 30, 2022. The $1.5 million decrease in operating income was primarily due to the change in revenue mix and higher transportation costs associated with higher logistics revenue.

Table of Contents

Liquidity and Capital Resources

Sources and Uses of Cash

Our cash and cash equivalent balances were $13.4 million and $10.4 million at June 30, 2023 and December 31, 2022, respectively. As of June 30, 2023, we had the ability to borrow an additional $24.2 million under our New Credit Facility. The cash deposited in an escrow account to satisfy our contingent payment obligations in connection with the acquisition of InsideOut is not included in our cash and cash equivalent or restricted cash balances as of June 30, 2023.

During 2020, we received an aggregate of $9.6 million in tax refunds related to our net operating loss ("NOL") and capital loss carryback for the 2013-2018 tax years. We received $2.5 million in tax refunds in 2022 and received an additional tax refund of $5.3 million in March 2023, as a result of the change to the tax NOL carryback provisions included in the CARES Act. Our principal sources of liquidity are cash on hand, cash provided by operating activities, and borrowings available under our New Credit Facility. Our cash is primarily used for general corporate purposes, working capital requirements, and capital expenditures. We expect to incur approximately $3 million to $4 million of capital expenditures in 2023 mainly to fund our new ERP system and Kansas City facility expansion.

At this time, we believe that we will be able to continue to meet our liquidity requirements and fund our fixed obligations (such as debt services, finance and operating leases and unfunded pension plan benefit payments) and other cash needs for our operations in both the short and medium term through a combination of cash on hand, cash flow from operations, and borrowings under the New Credit Facility. Although the Company believes that it will be able to meet its cash needs for the short and medium term, if unforeseen circumstances arise the company may need to seek alternative sources of liquidity.

Operating Activities

Net cash provided by the operating activities for the six months ended June 30, 2023 was $4.6 million, compared to net cash provided by operating activities of $9.9 million for the six months ended June 30, 2022. The $5.3 million year-over-year decrease in cash provided by operating activities was primarily driven by lower net income of $8.0 million and the $5.9 million decrease in accounts payable and accrued expenses, which was partially offset by a $3.9 million decrease in accounts receivable and contract assets, a $1.2 million decrease in prepaid and other current assets, as well as a $2.1 million increase in customer postage and program deposits in the six months ended June 30, 2023 as compared to the same period in 2022.

Investing Activities

Net cash used in investing activities was $1.3 million for the six months ended June 30, 2023, compared to $3.6 million for the six months ended June 30, 2022. The $2.3 million year-over-year decrease in cash used in investing activities was primarily due to the $2.4 million less cash used to purchase property, plant and equipment (mainly for our new ERP system) in the six months ended June 30, 2023 as compared to 2022.

Financing Activities

Net cash used in financing activities was $2.3 million for the six months ended June 30, 2023, as compared to $4.5 million of net cash provided by financing activities for the six months ended June 30, 2022. The decrease was primarily related to the additional borrowing of $5.0 million under our New Credit Facility in the six months ended June 30, 2022 and the $1.9 million used to repurchase our common stock in the six months ended June 30, 2023.

Foreign Holdings of Cash

Consolidated foreign holdings of cash as of June 30, 2023 and 2022 were $4.5 million and $1.7 million, respectively.

Long Term Debt

On December 21, 2021, the Company entered into a new three-year, $25.0 million asset-based revolving credit facility with Texas Capital Bank. The Company’s obligations under the New Credit Facility are guaranteed on a joint and several basis by the Company’s material subsidiaries (the “Guarantors”). The New Credit Facility is secured by substantially all of the assets of the Company and the Guarantors pursuant to a Pledge and Security Agreement, dated as of December 21, 2021, among the Company, TCB and the other grantors party thereto (the "Security Agreement").

The New Credit Facility provides for loans up to the lesser of (a) $25.0 million, and (b) the amount available under a "borrowing base" calculated primarily by reference to the Company's cash and cash equivalents and accounts receivables. The New Credit Facility allows the Company to use up to $3.0 million of its borrowing capacity to issue letters of credit.

The loans under the New Credit Facility accrue interest at a variable rate equal to the Bloomberg Short-Term Bank Yield Index Rate plus a margin of 2.25% per annum. The outstanding amounts advanced under the New Credit Facility are due and payable in full on December 21, 2024.

The Company may voluntarily prepay all or any portion of the loans advanced under the New Credit Facility at any time, without premium or penalty. The New Credit Facility is subject to mandatory prepayments (i) from the net proceeds of asset dispositions not otherwise permitted under the New Credit Facility; (ii) if the unpaid principal balance under the New Credit Facility plus the aggregate face amount of all outstanding letters of credit exceeds the borrowing base; (iii) in an amount equal to 50% of the net proceeds of issuances of capital stock (subject to customary exceptions); or (iv) in an amount equal to the net proceeds from any issuance of debt not otherwise permitted under the New Credit Facility.

The New Credit Facility contains certain covenants restricting the Company's and its subsidiaries' ability to create, incur, assume or become liable for indebtedness; make certain investments; pay dividends or repurchase the Company's stock; create, incur or assume liens; consummate mergers or acquisitions; liquidate, dissolve, suspend or cease operations; or modify accounting or tax reporting methods (other than as required by U.S. GAAP).

In connection with entering into the New Credit Facility, the Company and Texas Capital Bank terminated the old Texas Capital Credit Facility. Prior to termination of the old Texas Capital Credit Facility, the Company used cash on hand to pay down $8.1 million outstanding and the remaining $5.0 million of loans outstanding were deemed to be outstanding under the New Credit Facility. Texas Capital Bank did not require the New Credit Facility to be guaranteed by HHS Guaranty, LLC, an entity formed to provide credit support for the Company by certain members of the Shelton family (descendants of one of the Company's founders) or any other third-party credit support.

Table of Contents

As of June 30, 2023 and December 31, 2022, we had $0 million of borrowings outstanding under the New Credit Facility. At each of June 30, 2023 and December 31, 2022, we had letters of credit in the amount of $0.8 million outstanding. No amounts were drawn against these letters of credit at June 30, 2023 and December 31, 2022. These letters of credit exist to support insurance programs relating to workers’ compensation, automobile, and general liability. We had no other off-balance sheet financing activities at June 30, 2023 and December 31, 2022.

As of June 30, 2023, we had the ability to borrow an additional $24.2 million under the New Credit Facility.

On April 20, 2020, the Company received loan proceeds in the amount of $10.0 million under the Small Business Administration ("SBA") PPP Term Note.

On June 10, 2021, we received notice that the entire amount of our PPP Loan was forgiven by the SBA because we used the proceeds from the loan as contemplated under the CARES Act. We recorded the $10.0 million of debt extinguishment as "Gain from extinguishment of debt (Paycheck Protection Program Term Note)" in the Condensed Consolidated Statements of Comprehensive Income (Loss).

Dividends

We did not pay any dividends in three months ended June 30, 2023 and 2022. We currently intend to retain any future earnings and do not expect to pay cash dividends on our common stock in the foreseeable future. Any future dividend declaration can be made only upon, and subject to, approval of our Board, based on its business judgment.

Share Repurchase

Outlook

We consider such factors as total cash and cash equivalents and restricted cash, current assets, current liabilities, total debt, revenues, operating income, cash flows from operations, investing activities, and financing activities when assessing our liquidity. Our management of cash is designed to optimize returns on cash balances and to ensure that it is readily available to meet our operating, investing, and financing requirements as they arise. We believe that there are no conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern for the twelve months following the issuance of the Consolidated Financial Statements.

Critical and Recent Accounting Policies

Critical accounting estimates are defined as those that, in our judgment, are most important to the portrayal of our Company’s financial condition and results of operations and which require complex or subjective judgments or estimates. Actual results could differ materially from those estimates under different assumptions and conditions. Refer to the 2022 10-K for a discussion of our critical accounting estimates.

Our Significant Accounting policies are described in Note A, Overview and Significant Accounting Policies, in the Notes to Condensed Consolidated Financial Statements.

See Recent Accounting Pronouncements under Note B of the Notes to Condensed Consolidated Financial Statements for a discussion of certain accounting standards that have been recently issued.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer ("CEO") and Chief Financial Officer (“CFO”), as appropriate to allow timely decisions regarding required disclosure.

Our management, including our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of June 30, 2023, the end of the period covered by this Quarterly Report on Form 10-Q. Based upon such evaluation, our CEO and CFO concluded that the design and operation of these disclosure controls and procedures were effective, at the “reasonable assurance” level, to ensure information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Information regarding legal proceedings is set forth in Note M, Litigation and Contingencies, in the Notes to Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q, which information is incorporated herein by reference.

Item 1a. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our 2022 10-K, which could materially affect our business, financial condition, or future results. The risks described in our 2022 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and operating results. There have been no material changes during the three months ended June 30, 2023 to the risk factors previously disclosed in the 2022 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We did not sell any unregistered equity securities during the quarter ended June 30, 2023.

The following table provides information with respect to purchases by the Company of shares of our Common Stock during the quarter ended June 30, 2023:

Period	Total Number of Shares (or units) Purchased		Average Price per Share (or unit)		Total number of Shares Purchased as Part of a Publicly Announced Plan or Program		Approximate dollar value of shares that may yet be purchased under the program (1) (in thousands)
April 1, 2023 to April 30, 2023		-	$	—		-	$	6,500
May 1, 2023 to May 31, 2023		231,922	$	5.86		231,922		5,141
June 1, 2023 to June 30, 2023		82,636	$	6.29		82,636		4,621
		314,558				314,558	$	4,621

(1) In May 2023, the Board of Directors of Harte Hanks approved a share repurchase program to maximize shareholder value with authorization to repurchase $6.5 million of the Company’s Common Stock.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Table of Contents

Item 6. Exhibits

Exhibit No.		Description of Exhibit
*10.1		Employment Agreement between the Company and Kirk Davis, effective as of June 19, 2023 (filed as Exhibit 10.1 to the Company's Form 8-K dated June 20, 2023)

*31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*32.1		Furnished Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2		Furnished Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data Files because its XBRL tags are embedded within the Inline XBRL Document.
*101.SCH		Inline XBRL Taxonomy Extension Schema Document
*101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
*101.LAB		Inline XBRL Taxonomy Extension Labels Linkbase Document
*101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
*101.DEF		Inline XBRL Definition Linkbase Document

*104		Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

*Filed or furnished herewith, as applicable.

**Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.

Table of Contents

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		HARTE HANKS, INC.

August 11, 2023		/s/ Kirk Davis
Date		Kirk Davis
		Chief Executive Officer


August 11, 2023		/s/ Laurilee Kearnes
Date		Laurilee Kearnes
		Vice President, and Chief Financial Officer

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kirk Davis, Chief Executive Officer of Harte Hanks, Inc. (the “Company”), hereby certify that:

1.	I have reviewed this quarterly report on Form 10-Q of the Company;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

August 11, 2023		/s/ Kirk Davis
Date		Kirk Davis
		Chief Executive Officer

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Laurilee Kearnes, Vice President and Chief Financial Officer of Harte Hanks, Inc. (the “Company”), hereby certify that:

1.	I have reviewed this quarterly report on Form 10-Q of the Company;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

August 11, 2023		/s/ Laurilee Kearnes
Date		Laurilee Kearnes
		Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Kirk Davis, Chief Executive Officer of Harte Hanks, Inc. (the “Company”), hereby certify that the accompanying report on Form 10-Q for the quarter ended June 30, 2023 and filed with the Securities and Exchange Commission on the date hereof pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (the “Report”) by the Company fully complies with the requirements of those sections.

I further certify that, based on my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 11, 2023		/s/ Kirk Davis
Date		Kirk Davis
		Chief Executive Officer

Note: This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Laurilee Kearnes, Vice President and Chief Financial Officer of Harte Hanks, Inc. (the “Company”), hereby certify that the accompanying report on Form 10-Q for the quarter ended June 30, 2023 and filed with the Securities and Exchange Commission on the date hereof pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (the “Report”) by the Company fully complies with the requirements of those sections.

I further certify that, based on my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 11, 2023		/s/ Laurilee Kearnes
Date		Laurilee Kearnes
		Vice President and Chief Financial Officer

Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Jun. 30, 2023	Jul. 15, 2023
Document Information [Line Items]
Entity Central Index Key	0000045919
Entity Registrant Name	HARTE HANKS INC
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2023
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-07120
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	74-1677284
Entity Address, Address Line One	1 Executive Drive, Suite 303
Entity Address, City or Town	Chelmsford
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	01824
City Area Code	512
Local Phone Number	434-1100
Title of 12(b) Security	Common Stock
Trading Symbol	HHS
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		7,210,875

Condensed Consolidated Balance Sheets (Current period Unaudited) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current assets
Cash and cash equivalents	$ 13,364	$ 10,364
Accounts receivable (less allowance for doubtful accounts of $215 and $163, respectively)	36,095	39,700
Unbilled accounts receivable	8,235	7,893
Contract assets	259	309
Prepaid expenses	3,339	2,176
Prepaid income taxes and income tax receivable	1,468	4,262
Other current assets	1,190	1,607
Total current assets	63,950	66,311
Property, plant and equipment (less accumulated depreciation of $37,394 and $44,013, respectively)	9,734	10,523
Right-of-use assets	18,011	19,169
Other assets
Intangible assets, net	3,180	3,540
Goodwill	2,398	2,398
Deferred tax assets, net	15,944	16,306
Other long-term assets	1,443	1,737
Total other assets	22,965	23,981
Total assets	114,660	119,984
Current liabilities
Accounts payable and accrued expenses	17,887	22,465
Accrued payroll and related expenses	5,572	6,679
Deferred revenue and customer advances	6,701	4,590
Customer postage and program deposits	1,663	1,223
Other current liabilities	2,680	2,862
Current portion of lease liabilities	5,903	5,747
Total current liabilities	40,406	43,566
Long-term lease liabilities, net of current portion	14,631	16,575
Other long-term liabilities	2,381	3,263
Total liabilities	94,110	101,176
Stockholders’ equity
Common stock, $1 par value, 25,000,000 shares authorized;12,221,484 shares issued, 7,201,071 and 7,702,614 shares outstanding at June 30, 2023 and December 31, 2022, respectively	12,221	12,221
Additional paid-in capital	187,386	218,411
Retained earnings	846,279	846,490
Less treasury stock, 5,020,413 shares at cost at June 30, 2023 and 4,818,870 shares at cost at December 31, 2022	(980,156)	(1,010,012)
Accumulated other comprehensive loss	(45,180)	(48,302)
Total stockholders’ equity	20,550	18,808
Total liabilities and stockholders’ equity	114,660	119,984
Qualified Plan [Member]
Current liabilities
Pension liabilities	17,962	18,674
Nonqualified Plan [Member]
Current liabilities
Pension liabilities	$ 18,730	$ 19,098

Condensed Consolidated Balance Sheets (Current period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Accounts receivable, allowance for doubtful accounts	$ 215	$ 163
Accumulated depreciation	$ 37,394	$ 44,013
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized (in shares)	25,000,000	25,000,000
Common stock, shares issued (in shares)	12,221,484	12,221,484
Common stock, shares outstanding (in shares)	7,201,071	7,702,614
Treasury stock, shares (in shares)	5,020,413	4,818,870

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenue	$ 47,762		$ 48,553		$ 94,882	$ 97,615
Operating expenses
Labor	26,666		25,109		51,131	51,027
Production and distribution	13,328		13,507		27,780	26,225
Advertising, selling, general and administrative	5,065		5,340		11,149	11,273
Depreciation and amortization expense	1,033		586		2,099	1,184
Total operating expenses	46,092		44,542		92,159	89,709
Operating income	1,670		4,011		2,723	7,906
Other expense (income), net
Interest expense, net	59		95		(151)	230
Other expense (income), net	791		(1,216)		3,377	(1,255)
Total other expense (income), net	850		(1,121)		3,226	(1,025)
Income before income taxes	820		5,132		(503)	8,931
Income tax expense	240		671		(292)	1,125
Net income	580	$ (791)	4,461	$ 3,345	(211)	7,806
Less: Preferred Stock dividends	0		124		0	246
Less: Earnings attributable to participating securities	0		542		0	946
Net income attributable to common stockholders	$ 580		$ 3,795		$ (211)	$ 6,614
Earnings per common share
Basic (in dollars per share)	$ 0.08		$ 0.54		$ (0.03)	$ 0.94
Diluted (in dollars per share)	$ 0.08		$ 0.52		$ (0.03)	$ 0.91
Weighted average shares used to compute income per share attributable to common shares
Basic (in shares)	7,358		7,017		7,392	7,004
Diluted (in shares)	7,505		7,388		7,392	7,338
Comprehensive income, net of tax:
Net (loss) income	$ 580	(791)	$ 4,461	3,345	$ (211)	$ 7,806
Adjustment to pension liability, net	402		578		1,142	1,588
Foreign currency translation adjustment	100		(2,607)		1,980	(3,111)
Total other comprehensive income (loss), net of tax	502	$ 2,620	(2,029)	$ 506	3,122	(1,523)
Comprehensive income	$ 1,082		$ 2,432		$ 2,911	$ 6,283

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenue	$ 47,762		$ 48,553		$ 94,882	$ 97,615
Operating expenses
Labor	26,666		25,109		51,131	51,027
Production and distribution	13,328		13,507		27,780	26,225
Advertising, selling, general and administrative	5,065		5,340		11,149	11,273
Depreciation and amortization expense	1,033		586		2,099	1,184
Total operating expenses	46,092		44,542		92,159	89,709
Operating income	1,670		4,011		2,723	7,906
Other expense (income), net
Interest expense, net	59		95		(151)	230
Other expense (income), net	791		(1,216)		3,377	(1,255)
Total other expense (income), net	850		(1,121)		3,226	(1,025)
Income before income taxes	820		5,132		(503)	8,931
Income tax expense	240		671		(292)	1,125
Net income	580	$ (791)	4,461	$ 3,345	(211)	7,806
Less: Preferred Stock dividends	0		124		0	246
Less: Earnings attributable to participating securities	0		542		0	946
Net income attributable to common stockholders	$ 580		$ 3,795		$ (211)	$ 6,614
Earnings per common share
Basic (in dollars per share)	$ 0.08		$ 0.54		$ (0.03)	$ 0.94
Diluted (in dollars per share)	$ 0.08		$ 0.52		$ (0.03)	$ 0.91
Weighted average shares used to compute income per share attributable to common shares
Basic (in shares)	7,358		7,017		7,392	7,004
Diluted (in shares)	7,505		7,388		7,392	7,338
Comprehensive income, net of tax:
Net (loss) income	$ 580	(791)	$ 4,461	3,345	$ (211)	$ 7,806
Adjustment to pension liability, net	402		578		1,142	1,588
Foreign currency translation adjustment	100		(2,607)		1,980	(3,111)
Total other comprehensive income (loss), net of tax	502	$ 2,620	(2,029)	$ 506	3,122	(1,523)
Comprehensive income	$ 1,082		$ 2,432		$ 2,911	$ 6,283

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock, Common [Member]	AOCI Attributable to Parent [Member]	Total
Balance at Dec. 31, 2021	$ 9,723	$ 12,121	$ 290,711	$ 811,094	$ (1,085,313)	$ (53,328)	$ (24,715)
Stock-based compensation	0	0	427	0	0	0	427
Vesting of RSUs	0	0	(12,706)	0	12,572	0	(134)
Net (loss) income	0	0	0	3,345	0	0	3,345
Other comprehensive income (loss)	0	0	0	0	0	506	506
Balance at Mar. 31, 2022	9,723	12,121	278,432	814,439	(1,072,741)	(52,822)	(20,571)
Balance at Dec. 31, 2021	9,723	12,121	290,711	811,094	(1,085,313)	(53,328)	(24,715)
Net (loss) income							7,806
Other comprehensive income (loss)						(1,523)	(1,523)
Balance at Jun. 30, 2022	9,723	12,121	272,727	818,900	(1,066,608)	(54,851)	(17,711)
Balance at Mar. 31, 2022	9,723	12,121	278,432	814,439	(1,072,741)	(52,822)	(20,571)
Stock-based compensation	0	0	561	0	0	0	561
Net (loss) income	0	0	0	4,461	0	0	4,461
Other comprehensive income (loss)	0	0	0	0	0	(2,029)	(2,029)
Exercise of Stock Options	0	0	(6,266)	0	6,133	0	(133)
Balance at Jun. 30, 2022	9,723	12,121	272,727	818,900	(1,066,608)	(54,851)	(17,711)
Balance at Dec. 31, 2022	0	12,221	218,411	846,490	(1,010,012)	(48,302)	18,808
Stock-based compensation	0	0	540	0	0	0	540
Vesting of RSUs	0	0	(21,538)	0	21,326	0	(212)
Net (loss) income	0	0	0	(791)	0	0	(791)
Other comprehensive income (loss)	0	0	0	0	0	2,620	2,620
Balance at Mar. 31, 2023	0	12,221	197,413	845,699	(988,686)	(45,682)	20,965
Balance at Dec. 31, 2022	0	12,221	218,411	846,490	(1,010,012)	(48,302)	18,808
Net (loss) income							(211)
Other comprehensive income (loss)						3,122	3,122
Balance at Jun. 30, 2023	0	12,221	187,386	846,279	(980,156)	(45,180)	20,550
Balance at Mar. 31, 2023	0	12,221	197,413	845,699	(988,686)	(45,682)	20,965
Stock-based compensation	0	0	502	0	0	0	502
Vesting of RSUs	0	0	(10,529)	0	10,409	0	(120)
Net (loss) income	0	0	0	580	0	0	580
Other comprehensive income (loss)	0	0	0	0	0	502	502
Repurchase of common stock	0	0	0	0	(1,879)	0	(1,879)
Balance at Jun. 30, 2023	$ 0	$ 12,221	$ 187,386	$ 846,279	$ (980,156)	$ (45,180)	$ 20,550

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash Flows from Operating Activities
Net (loss) income	$ (211)	$ 7,806
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization expense	2,099	1,184
Stock-based compensation	1,042	850
Net pension cost (payment)	180	(365)
Deferred income taxes	(326)	0
Changes in assets and liabilities:
Accounts receivable and contract assets	3,313	(581)
Prepaid expenses, income tax receivable and other current assets	2,710	526
Accounts payable and accrued expenses	(4,433)	1,510
Deferred revenue and customer advances	2,111	2,222
Customer postage and program deposits	440	(1,745)
Other accrued expenses and liabilities	(2,338)	(1,545)
Net cash provided by operating activities	4,587	9,862
Cash Flows from Investing Activities
Purchases of property, plant and equipment	(1,256)	(3,616)
Proceeds from sale of property, plant and equipment	1	57
Net cash used in investing activities	(1,255)	(3,559)
Cash Flows from Financing Activities
Borrowings	0	5,000
Debt financing costs	(6)	(123)
Payment of finance leases	(95)	(101)
Repurchase of common stock	(1,879)	0
Treasury stock activities	(332)	(268)
Net cash (used in) provided by financing activities	(2,312)	4,508
Effect of exchange rate changes on cash, cash equivalents and restricted cash	1,980	(3,111)
Net increase in cash and cash equivalents and restricted cash	3,000	7,700
Cash and cash equivalents and restricted cash at beginning of period	11,364	15,133
Cash and cash equivalents and restricted cash at end of period	14,364	22,833
Supplemental disclosures
Cash paid for interest	164	186
Cash (received) paid for income taxes, net	(4,668)	478
Non-cash investing and financing activities
Purchases of property, plant and equipment included in accounts payable	2,009	2,576
Cash and cash equivalents	13,364	10,570
Restricted cash	0	2,337
Cash held in Escrow account included in other current assets (see Note L)	1,000	9,926
Cash and cash equivalents and restricted cash at end of period	$ 14,364	$ 22,833

Note A - Overview and Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Significant Accounting Policies [Text Block]

Note A - Overview and Significant Accounting Policies

Background

Segment Reporting

Accounting Principles

Consolidation

Interim Financial Information

Use of Estimates

Operating Expense Presentation in Condensed Consolidated Statements of Comprehensive Income

Revenue Recognition

•

Identification of the contract, or contracts, with a customer

•

Identification of the performance obligations in the contract

•

Determination of the transaction price

•

Allocation of the transaction price to the performance obligations in the contract

•

Recognition of revenue when (or as) we satisfy the performance obligation

Fair Value of Financial Instruments

Level 1

Quoted prices in active markets for identical assets or liabilities.

Level 2

Level 3

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Leases

Note B - Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Accounting Standards Update and Change in Accounting Principle [Text Block]

Note B - Recent Accounting Pronouncements

Recently adopted accounting pronouncements

The Company adopted this standard on January 1, 2023 on a prospective basis. The adoption of this new standard did not have a material impact on the Company's financial statements.

Note C - Revenue From Contracts With Customers

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

Note C - Revenue from Contracts with Customers

Consistent with GAAP, we present sales taxes assessed on revenue-producing transactions on a net basis.

Disaggregation of Revenue

	*Three Months Ended June 30, 2023*
In thousands	Revenue for performance obligations recognized over time		Revenue for performance obligations recognized at a point in time		Total
Marketing Services	$	10,035	$	886	$	10,921
Customer Care		17,211		0		17,211
Fulfillment and Logistics Services		15,997		3,633		19,630
Total Revenues	$	43,243	$	4,519	$	47,762

	*Three Months Ended June 30, 2022*
In thousands	Revenue for performance obligations recognized over time		Revenue for performance obligations recognized at a point in time		Total
Marketing Services	$	10,610	$	2,840	$	13,450
Customer Care		15,382		—		15,382
Fulfillment and Logistics Services		17,203		2,518		19,721
Total Revenues	$	43,195	$	5,358	$	48,553

	*Six Months Ended June 30, 2023*
In thousands	Revenue for performance obligations recognized over time		Revenue for performance obligations recognized at a point in time		Total
Marketing Services	$	20,186	$	1,974	$	22,160
Customer Care		31,627		—		31,627
Fulfillment and Logistics Services		33,420		7,675		41,095
Total Revenues	$	85,233	$	9,649	$	94,882

	*Six Months Ended June 30, 2022*
In thousands	Revenue for performance obligations recognized over time		Revenue for performance obligations recognized at a point in time		Total
Marketing Services	$	21,491	$	4,883	$	26,374
Customer Care		33,123		—		33,123
Fulfillment and Logistics Services		32,095		6,023		38,118
Total Revenues	$	86,709	$	10,906	$	97,615

Marketing Services

Customer Care

Fulfillment & Logistics Services

Upfront Non-Refundable Fees

Transaction Price Allocated to Future Performance Obligations

Contract Balances

In thousands	*June 30, 2023*		*December 31, 2022*
Contract assets		259		309
Deferred revenue and customer advances		6,701		4,590
Deferred revenue, included in other long-term liabilities		363		432

Costs to Obtain and Fulfill a Contract

Note D - Leases

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Lessee, Operating and Finance Leases [Text Block]

Note D - Leases

There was no impairment of leases during the three and six months ended June 30, 2023 and 2022.

The following table presents supplemental balance sheet information related to our financing and operating leases:

In thousands	*As of June 30, 2023*
	Operating Leases		Finance Leases		*Total*
Right-of-use Assets	$	17,491	$	520	$	18,011

Liabilities
Current portion of lease liabilities		5,810		93		5,903
Long-term lease liabilities		14,602		29		14,631
Total Lease Liabilities	$	20,412	$	122	$	20,534

In thousands	*As of December 31, 2022*
	Operating Leases		Finance Leases		*Total*
Right-of-use Assets	$	18,574	$	595	$	19,169

Liabilities
Short-term lease liabilities		5,587		160		5,747
Long-term lease liabilities		16,523		52		16,575
Total Lease Liabilities	$	22,110	$	212	$	22,322

For the three and six months ended June 30, 2023 and 2022, the components of lease expense were as follows:

In thousands	*Three Months Ended June 30, 2023*			*Three Months Ended June 30, 2022*
Operating lease cost	$	1,366		$	1,419

Finance lease cost:
Amortization of right-of-use assets		40			41
Interest on lease liabilities		2			4
Total Finance lease cost		42			45
Variable lease cost		486			447
Sublease income		(213	)		(160	)
Total lease cost, net	$	1,681		$	1,751

In thousands	*Six Months Ended June 30, 2023*			*Six Months Ended June 30, 2022*
Operating lease cost	$	2,822		$	3,000

Finance lease cost:
Amortization of right-of-use assets		80			87
Interest on lease liabilities		4			9
Total Finance lease cost		84			96
Variable lease cost		988			986
Sublease income		(499	)		(411	)
Total lease cost, net	$	3,395		$	3,671

Other information related to leases was as follows:

In thousands	*Six Months Ended June 30, 2023*			*Six Months Ended June 30, 2022*
Supplemental Cash Flows Information

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,453		$	7,097
Operating cash flows from finance leases		4			8
Financing cash flows from finance leases		95			101

Weighted Average Remaining Lease term
Operating leases		5.6			6.2
Finance leases		1.2			1.8

Weighted Average Discount Rate
Operating leases		3.63	%		3.40	%
Finance leases		6.21	%		5.53	%

The maturities of the Company’s finance and operating lease liabilities as of June 30, 2023 are as follows:

In thousands	*Operating Leases (1)*		*Finance Leases*
Year Ending December 31,
Remainder of 2023	$	3,228	$	68
2024		5,297		50
2025		2,885		8
2026		2,374		1
2027		2,291		—
2027 and beyond		6,229		—
Total future minimum lease payments		22,304		127
Less: imputed interest		1,892		5
Total lease liabilities	$	20,412	$	122

Note E - Convertible Preferred Stock and Share Repurchase Program

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Preferred Stock [Text Block]

Note E - Convertible Preferred Stock and Share Repurchase Program

Convertible Preferred Stock

On March 20, 2023, the Company cancelled all shares of Series A Preferred Stock pursuant to the Certificate of Elimination filed with the Secretary of State of Delaware.

Share Repurchase Program

Note F - Long-term Debt

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Long-Term Debt [Text Block]

Note F — Long-Term Debt

Credit Facility

As of June 30, 2023 and December 31, 2022, we had no outstanding borrowings under the New Credit Facility (as defined below).

As of June 30, 2023, we had the ability to borrow $24.2 million under the New Credit Facility.

Note G - Stock-based Compensation

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

Note G — Stock-Based Compensation

Note H - Employee Benefit Plans

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Retirement Benefits [Text Block]

Note H — Employee Benefit Plans

Net pension cost for both plans included the following components:

	*Three Months Ended June 30,*						*Six Months Ended June 30,*
In thousands	*2023*			*2022*			*2023*			*2022*
Interest cost	$	1,772		$	1,260		$	3,544		$	2,520
Expected return on plan assets		(1,554	)		(1,468	)		(3,108	)		(2,936	)
Recognized actuarial loss		630			719			1,260			1,438
Net periodic benefit cost	$	848		$	511		$	1,696		$	1,022

Note I - Income Taxes

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note I - Income Taxes

Coronavirus Aid, Relief and Economic Security Act

Note J - Earnings Per Share

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Earnings Per Share [Text Block]

Note J - Earnings Per Share

In December 2022, we repurchased all 9,926 shares of the Company’s Series A Preferred Stock then outstanding.

Reconciliations of basic and diluted EPS were as follows:

	*Three Months Ended June 30,*
In thousands, except per share amounts	*2023*		*2022*
Numerator:
Net income	$	580	$	4,461
Less: Preferred stock dividends		—		124
Less: Earnings attributable to participating securities		—		542
Numerator for basic EPS: income attributable to common stockholders		580	$	3,795

Effect of dilutive securities:
Add back: Allocation of earnings to participating securities		—		542
Less: Re-allocation of earnings to participating securities considering potentially dilutive securities		—		(518	)
Numerator for diluted EPS		580		3,819

Denominator:
Basic EPS denominator: weighted-average common shares outstanding		7,358		7,017
Diluted EPS denominator		7,505		7,388

Basic income per Common Share	$	0.08	$	0.54
Diluted income per Common Share	$	0.08	$	0.52

	*Six Months Ended June 30,*
In thousands, except per share amounts	*2023*			*2022*
Numerator:
Net (loss) income	$	(211	)	$	7,806
Less: Preferred stock dividend		—			246
Less: Earnings attributable to common stockholders		—			946
Numerator for basic EPS: (loss) income attributable to common stockholders		(211	)		6,614

Effect of dilutive securities:
Add back: Allocation of earnings to participating securities		—			946
Less: Re-allocation of earnings to participating securities considering potentially dilutive securities		—			(908	)
Numerator for diluted EPS	$	(211	)	$	6,652

Denominator:
Basic EPS denominator: weighted-average common shares outstanding		7,392			7,004
Diluted EPS denominator		7,392			7,338

Basic (loss) income per Common Share	$	(0.03	)	$	0.94
Diluted (loss) income per Common Share	$	(0.03	)	$	0.91

Note K - Comprehensive Income

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

Note K — Comprehensive Income

Comprehensive Income for a period encompasses net income (loss) and all other changes in equity other than from transactions with our stockholders.

Changes in accumulated other comprehensive income by component were as follows:

	*Defined Benefit*			*Foreign Currency*
In thousands	*Pension Items*			*Items*			*Total*
Balance at December 31, 2022	$	(44,120	)	$	(4,182	)	$	(48,302	)
Other comprehensive income, net of tax, before reclassifications		—			1,980			1,980
Amounts reclassified from accumulated other comprehensive income, net of tax, to other, net, on the condensed consolidated statements of comprehensive income		1,142			—			1,142
Net current period other comprehensive income, net of tax		1,142			1,980			3,122
Balance at June 30, 2023	$	(42,978	)	$	(2,202	)	$	(45,180	)

	*Defined Benefit*			*Foreign Currency*
In thousands	*Pension Items*			*Items*			*Total*
Balance at December 31, 2021	$	(54,394	)	$	1,066		$	(53,328	)
Other comprehensive loss, net of tax, before reclassifications		—			(3,111	)		(3,111	)
Amounts reclassified from accumulated other comprehensive income, net of tax, to other, net, on the condensed consolidated statements of comprehensive income		1,588			—			1,588
Net current period other comprehensive income (loss), net of tax		1,588			(3,111	)		(1,523	)
Balance at June 30, 2022	$	(52,806	)	$	(2,045	)	$	(54,851	)

Reclassification amounts related to the defined pension plans are included in the computation of net periodic pension benefit cost (see Note H, Employee Benefit Plans).

Note L - Acquisition of Inside Out Solutions, LLC

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Business Combination Disclosure [Text Block]

Note L — Acquisition of Inside Out Solutions, LLC

The Purchase Price is subject to a post-closing net working capital true-up 180-days after the Closing Date if net working capital is not between $1.3 million and $1.6 million.

In thousands	*Amount*
Accounts receivable	$	1,445
Prepaid expenses		148
Property, plant and equipment		177
Total assets acquired		1,770
Less: Current liabilities assumed		(761	)
Net assets acquired	$	1,009

Weighted

Average

Gross

Accumulated

Net Carrying

In thousands

Amortization Period

Carrying Amount

Amortizations

Amount

Customer Relationships

5 years

3,600

420

3,180

Estimated future amortization expense related to intangible assets as of June 30, 2023 is as follows:

In thousands
Year Ending December 31,	*Amount*
Remainder of 2023	$	360
2024		720
2025		720
2026		720
2027		660
Total	$	3,180

Note M - Litigation and Contingencies

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note M — Litigation and Contingencies

Note N - Segment Reporting

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note N — Segment Reporting

The following table presents financial information by segment:

Three Months ended June 30, 2023	*Marketing Services*		*Customer Care*		*Fulfillment and Logistics Services*		*Unallocated Corporate*			*Total*
					(In thousands)
Revenues	$	10,921	$	17,211	$	19,630	$	—		$	47,762
Segment Operating Expense	$	8,835	$	13,541	$	16,931	$	5,752		$	45,059
Contribution margin (loss)	$	2,086	$	3,670	$	2,699	$	(5,752	)	$	2,703
Shared Services	$	766	$	720	$	765	$	(2,251	)	$	—
EBITDA	$	1,320	$	2,950	$	1,934	$	(3,501	)	$	2,703
Depreciation and amortization	$	47	$	371	$	241	$	374		$	1,033
Operating income (loss)	$	1,273	$	2,579	$	1,693	$	(3,875	)	$	1,670

Three Months ended June 30, 2022	*Marketing Services*		*Customer Care*		*Fulfillment and Logistics Services*		*Unallocated Corporate*			*Total*
					(In thousands)
Revenues	$	13,450	$	15,382	$	19,721	$	—		$	48,553
Segment Operating Expense	$	10,584	$	12,212	$	15,770	$	5,390		$	43,956
Contribution margin (loss)	$	2,866	$	3,170	$	3,951	$	(5,390	)	$	4,597
Shared Services	$	1,052	$	677	$	779	$	(2,508	)	$	—
EBITDA	$	1,814	$	2,493	$	3,172	$	(2,882	)	$	4,597
Depreciation and amortization	$	89	$	201	$	202	$	94		$	586
Operating income (loss)	$	1,725	$	2,292	$	2,970	$	(2,976	)	$	4,011

Six Months ended June 30, 2023	*Marketing Services*		*Customer Care*		*Fulfillment and Logistics Services*		*Unallocated Corporate*			*Total*
					(In thousands)
Revenues	$	22,160	$	31,627	$	41,095	$	—		$	94,882
Segment Operating Expense	$	18,094	$	25,195	$	35,440	$	11,331		$	90,060
Contribution margin	$	4,066	$	6,432	$	5,655	$	(11,331	)	$	4,822
Shared Services	$	1,555	$	1,434	$	1,523	$	(4,512	)	$	—
EBITDA	$	2,511	$	4,998	$	4,132	$	(6,819	)	$	4,822
Depreciation and amortization	$	96	$	771	$	487	$	745		$	2,099
Operating income (loss)	$	2,415	$	4,227	$	3,645	$	(7,564	)	$	2,723

Six Months ended June 30, 2022	*Marketing Services*		*Customer Care*		*Fulfillment and Logistics Services (1)*		*Unallocated Corporate*			*Total*
					(In thousands)
Revenues	$	26,374	$	33,123	$	38,118	$	—		$	97,615
Segment Operating Expense	$	20,934	$	25,773	$	30,929	$	10,889		$	88,525
Contribution margin	$	5,440	$	7,350	$	7,189	$	(10,889	)	$	9,090
Shared Services	$	2,165	$	1,395	$	1,630	$	(5,190	)	$	—
EBITDA	$	3,275	$	5,955	$	5,559	$	(5,699	)	$	9,090
Depreciation and amortization	$	191	$	403	$	404	$	186		$	1,184
Operating income (loss)	$	3,084	$	5,552	$	5,155	$	(5,885	)	$	7,906

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Segment Reporting, Policy [Policy Text Block]

Segment Reporting

Accounting Principles [Policy Text Block]

Accounting Principles

Consolidation, Policy [Policy Text Block]

Consolidation

Basis of Accounting, Policy [Policy Text Block]

Interim Financial Information

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

Presentation Of Operating Expense In Consolidated Statements of Comprehensive Income [Policy Text Block]

Operating Expense Presentation in Condensed Consolidated Statements of Comprehensive Income

Revenue [Policy Text Block]

Revenue Recognition

•

Identification of the contract, or contracts, with a customer

•

Identification of the performance obligations in the contract

•

Determination of the transaction price

•

Allocation of the transaction price to the performance obligations in the contract

•

Recognition of revenue when (or as) we satisfy the performance obligation

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments

Level 1

Quoted prices in active markets for identical assets or liabilities.

Level 2

Level 3

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Lessee, Leases [Policy Text Block]

Leases

Note C - Revenue From Contracts With Customers (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Disaggregation of Revenue [Table Text Block]

	*Three Months Ended June 30, 2023*
In thousands	Revenue for performance obligations recognized over time		Revenue for performance obligations recognized at a point in time		Total
Marketing Services	$	10,035	$	886	$	10,921
Customer Care		17,211		0		17,211
Fulfillment and Logistics Services		15,997		3,633		19,630
Total Revenues	$	43,243	$	4,519	$	47,762

	*Three Months Ended June 30, 2022*
In thousands	Revenue for performance obligations recognized over time		Revenue for performance obligations recognized at a point in time		Total
Marketing Services	$	10,610	$	2,840	$	13,450
Customer Care		15,382		—		15,382
Fulfillment and Logistics Services		17,203		2,518		19,721
Total Revenues	$	43,195	$	5,358	$	48,553

	*Six Months Ended June 30, 2023*
In thousands	Revenue for performance obligations recognized over time		Revenue for performance obligations recognized at a point in time		Total
Marketing Services	$	20,186	$	1,974	$	22,160
Customer Care		31,627		—		31,627
Fulfillment and Logistics Services		33,420		7,675		41,095
Total Revenues	$	85,233	$	9,649	$	94,882

	*Six Months Ended June 30, 2022*
In thousands	Revenue for performance obligations recognized over time		Revenue for performance obligations recognized at a point in time		Total
Marketing Services	$	21,491	$	4,883	$	26,374
Customer Care		33,123		—		33,123
Fulfillment and Logistics Services		32,095		6,023		38,118
Total Revenues	$	86,709	$	10,906	$	97,615

Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block]

In thousands	*June 30, 2023*		*December 31, 2022*
Contract assets		259		309
Deferred revenue and customer advances		6,701		4,590
Deferred revenue, included in other long-term liabilities		363		432

Note D - Leases (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Lessee, Leases, Supplemental Balance Sheet Information [Table Text Block]

In thousands	*As of June 30, 2023*
	Operating Leases		Finance Leases		*Total*
Right-of-use Assets	$	17,491	$	520	$	18,011

Liabilities
Current portion of lease liabilities		5,810		93		5,903
Long-term lease liabilities		14,602		29		14,631
Total Lease Liabilities	$	20,412	$	122	$	20,534

In thousands	*As of December 31, 2022*
	Operating Leases		Finance Leases		*Total*
Right-of-use Assets	$	18,574	$	595	$	19,169

Liabilities
Short-term lease liabilities		5,587		160		5,747
Long-term lease liabilities		16,523		52		16,575
Total Lease Liabilities	$	22,110	$	212	$	22,322

Lease, Cost [Table Text Block]

In thousands	*Three Months Ended June 30, 2023*			*Three Months Ended June 30, 2022*
Operating lease cost	$	1,366		$	1,419

Finance lease cost:
Amortization of right-of-use assets		40			41
Interest on lease liabilities		2			4
Total Finance lease cost		42			45
Variable lease cost		486			447
Sublease income		(213	)		(160	)
Total lease cost, net	$	1,681		$	1,751

In thousands	*Six Months Ended June 30, 2023*			*Six Months Ended June 30, 2022*
Operating lease cost	$	2,822		$	3,000

Finance lease cost:
Amortization of right-of-use assets		80			87
Interest on lease liabilities		4			9
Total Finance lease cost		84			96
Variable lease cost		988			986
Sublease income		(499	)		(411	)
Total lease cost, net	$	3,395		$	3,671

In thousands	*Six Months Ended June 30, 2023*			*Six Months Ended June 30, 2022*
Supplemental Cash Flows Information

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,453		$	7,097
Operating cash flows from finance leases		4			8
Financing cash flows from finance leases		95			101

Weighted Average Remaining Lease term
Operating leases		5.6			6.2
Finance leases		1.2			1.8

Weighted Average Discount Rate
Operating leases		3.63	%		3.40	%
Finance leases		6.21	%		5.53	%

Lease, Liability, Maturity [Table Text Block]

In thousands	*Operating Leases (1)*		*Finance Leases*
Year Ending December 31,
Remainder of 2023	$	3,228	$	68
2024		5,297		50
2025		2,885		8
2026		2,374		1
2027		2,291		—
2027 and beyond		6,229		—
Total future minimum lease payments		22,304		127
Less: imputed interest		1,892		5
Total lease liabilities	$	20,412	$	122

Note H - Employee Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Defined Benefit Plans Disclosures [Table Text Block]

	*Three Months Ended June 30,*						*Six Months Ended June 30,*
In thousands	*2023*			*2022*			*2023*			*2022*
Interest cost	$	1,772		$	1,260		$	3,544		$	2,520
Expected return on plan assets		(1,554	)		(1,468	)		(3,108	)		(2,936	)
Recognized actuarial loss		630			719			1,260			1,438
Net periodic benefit cost	$	848		$	511		$	1,696		$	1,022

Note J - Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	*Three Months Ended June 30,*
In thousands, except per share amounts	*2023*		*2022*
Numerator:
Net income	$	580	$	4,461
Less: Preferred stock dividends		—		124
Less: Earnings attributable to participating securities		—		542
Numerator for basic EPS: income attributable to common stockholders		580	$	3,795

Effect of dilutive securities:
Add back: Allocation of earnings to participating securities		—		542
Less: Re-allocation of earnings to participating securities considering potentially dilutive securities		—		(518	)
Numerator for diluted EPS		580		3,819

Denominator:
Basic EPS denominator: weighted-average common shares outstanding		7,358		7,017
Diluted EPS denominator		7,505		7,388

Basic income per Common Share	$	0.08	$	0.54
Diluted income per Common Share	$	0.08	$	0.52

	*Six Months Ended June 30,*
In thousands, except per share amounts	*2023*			*2022*
Numerator:
Net (loss) income	$	(211	)	$	7,806
Less: Preferred stock dividend		—			246
Less: Earnings attributable to common stockholders		—			946
Numerator for basic EPS: (loss) income attributable to common stockholders		(211	)		6,614

Effect of dilutive securities:
Add back: Allocation of earnings to participating securities		—			946
Less: Re-allocation of earnings to participating securities considering potentially dilutive securities		—			(908	)
Numerator for diluted EPS	$	(211	)	$	6,652

Denominator:
Basic EPS denominator: weighted-average common shares outstanding		7,392			7,004
Diluted EPS denominator		7,392			7,338

Basic (loss) income per Common Share	$	(0.03	)	$	0.94
Diluted (loss) income per Common Share	$	(0.03	)	$	0.91

Note K - Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	*Defined Benefit*			*Foreign Currency*
In thousands	*Pension Items*			*Items*			*Total*
Balance at December 31, 2022	$	(44,120	)	$	(4,182	)	$	(48,302	)
Other comprehensive income, net of tax, before reclassifications		—			1,980			1,980
Amounts reclassified from accumulated other comprehensive income, net of tax, to other, net, on the condensed consolidated statements of comprehensive income		1,142			—			1,142
Net current period other comprehensive income, net of tax		1,142			1,980			3,122
Balance at June 30, 2023	$	(42,978	)	$	(2,202	)	$	(45,180	)

	*Defined Benefit*			*Foreign Currency*
In thousands	*Pension Items*			*Items*			*Total*
Balance at December 31, 2021	$	(54,394	)	$	1,066		$	(53,328	)
Other comprehensive loss, net of tax, before reclassifications		—			(3,111	)		(3,111	)
Amounts reclassified from accumulated other comprehensive income, net of tax, to other, net, on the condensed consolidated statements of comprehensive income		1,588			—			1,588
Net current period other comprehensive income (loss), net of tax		1,588			(3,111	)		(1,523	)
Balance at June 30, 2022	$	(52,806	)	$	(2,045	)	$	(54,851	)

Note L - Acquisition of Inside Out Solutions, LLC (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

In thousands	*Amount*
Accounts receivable	$	1,445
Prepaid expenses		148
Property, plant and equipment		177
Total assets acquired		1,770
Less: Current liabilities assumed		(761	)
Net assets acquired	$	1,009

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]

Weighted

Average

Gross

Accumulated

Net Carrying

In thousands

Amortization Period

Carrying Amount

Amortizations

Amount

Customer Relationships

5 years

3,600

420

3,180

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

In thousands
Year Ending December 31,	*Amount*
Remainder of 2023	$	360
2024		720
2025		720
2026		720
2027		660
Total	$	3,180

Note N - Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block]

Three Months ended June 30, 2023	*Marketing Services*		*Customer Care*		*Fulfillment and Logistics Services*		*Unallocated Corporate*			*Total*
					(In thousands)
Revenues	$	10,921	$	17,211	$	19,630	$	—		$	47,762
Segment Operating Expense	$	8,835	$	13,541	$	16,931	$	5,752		$	45,059
Contribution margin (loss)	$	2,086	$	3,670	$	2,699	$	(5,752	)	$	2,703
Shared Services	$	766	$	720	$	765	$	(2,251	)	$	—
EBITDA	$	1,320	$	2,950	$	1,934	$	(3,501	)	$	2,703
Depreciation and amortization	$	47	$	371	$	241	$	374		$	1,033
Operating income (loss)	$	1,273	$	2,579	$	1,693	$	(3,875	)	$	1,670

Three Months ended June 30, 2022	*Marketing Services*		*Customer Care*		*Fulfillment and Logistics Services*		*Unallocated Corporate*			*Total*
					(In thousands)
Revenues	$	13,450	$	15,382	$	19,721	$	—		$	48,553
Segment Operating Expense	$	10,584	$	12,212	$	15,770	$	5,390		$	43,956
Contribution margin (loss)	$	2,866	$	3,170	$	3,951	$	(5,390	)	$	4,597
Shared Services	$	1,052	$	677	$	779	$	(2,508	)	$	—
EBITDA	$	1,814	$	2,493	$	3,172	$	(2,882	)	$	4,597
Depreciation and amortization	$	89	$	201	$	202	$	94		$	586
Operating income (loss)	$	1,725	$	2,292	$	2,970	$	(2,976	)	$	4,011

Six Months ended June 30, 2023	*Marketing Services*		*Customer Care*		*Fulfillment and Logistics Services*		*Unallocated Corporate*			*Total*
					(In thousands)
Revenues	$	22,160	$	31,627	$	41,095	$	—		$	94,882
Segment Operating Expense	$	18,094	$	25,195	$	35,440	$	11,331		$	90,060
Contribution margin	$	4,066	$	6,432	$	5,655	$	(11,331	)	$	4,822
Shared Services	$	1,555	$	1,434	$	1,523	$	(4,512	)	$	—
EBITDA	$	2,511	$	4,998	$	4,132	$	(6,819	)	$	4,822
Depreciation and amortization	$	96	$	771	$	487	$	745		$	2,099
Operating income (loss)	$	2,415	$	4,227	$	3,645	$	(7,564	)	$	2,723

Six Months ended June 30, 2022	*Marketing Services*		*Customer Care*		*Fulfillment and Logistics Services (1)*		*Unallocated Corporate*			*Total*
					(In thousands)
Revenues	$	26,374	$	33,123	$	38,118	$	—		$	97,615
Segment Operating Expense	$	20,934	$	25,773	$	30,929	$	10,889		$	88,525
Contribution margin	$	5,440	$	7,350	$	7,189	$	(10,889	)	$	9,090
Shared Services	$	2,165	$	1,395	$	1,630	$	(5,190	)	$	—
EBITDA	$	3,275	$	5,955	$	5,559	$	(5,699	)	$	9,090
Depreciation and amortization	$	191	$	403	$	404	$	186		$	1,184
Operating income (loss)	$	3,084	$	5,552	$	5,155	$	(5,885	)	$	7,906

Note A - Overview and Significant Accounting Policies (Details Textual) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)
Number of Reportable Segments			3
Selling, General and Administrative Expense	$ 5,065	$ 5,340	$ 11,149	$ 11,273
Moving of Lease Expense From Production and Distribution [Member]
Selling, General and Administrative Expense			$ 2,800

Note C - Revenue From Contracts With Customers (Details Textual) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Revenue, Remaining Performance Obligation, Amount	$ 0
Contract with Customer, Liability, Revenue Recognized	3,500	$ 2,500
Capitalized Contract Cost, Net	500		$ 1,000
Capitalized Contract Cost, Impairment Loss	$ 0	$ 0

Note C - Revenue From Contracts With Customers - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Total Revenue	$ 47,762	$ 48,553	$ 94,882	$ 97,615
Marketing Services [Member]
Total Revenue	10,921	13,450	22,160	26,374
Customer Care [Member]
Total Revenue	17,211	15,382	31,627	33,123
Fulfillment and Logistics Services [Member]
Total Revenue	19,630	19,721	41,095	38,118
Transferred over Time [Member]
Total Revenue	43,243	43,195	85,233	86,709
Transferred over Time [Member] \| Marketing Services [Member]
Total Revenue	10,035	10,610	20,186	21,491
Transferred over Time [Member] \| Customer Care [Member]
Total Revenue	17,211	15,382	31,627	33,123
Transferred over Time [Member] \| Fulfillment and Logistics Services [Member]
Total Revenue	15,997	17,203	33,420	32,095
Transferred at Point in Time [Member]
Total Revenue	4,519	5,358	9,649	10,906
Transferred at Point in Time [Member] \| Marketing Services [Member]
Total Revenue	886	2,840	1,974	4,883
Transferred at Point in Time [Member] \| Customer Care [Member]
Total Revenue	0	0	0	0
Transferred at Point in Time [Member] \| Fulfillment and Logistics Services [Member]
Total Revenue	$ 3,633	$ 2,518	$ 7,675	$ 6,023

Note C - Revenue From Contracts With Customers - Contract Balances (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Contract assets	$ 259	$ 309
Deferred revenue and customer advances	6,701	4,590
Deferred revenue, included in other long-term liabilities	$ 363	$ 432

Note D - Leases (Details Textual) - USD ($) $ in Thousands	6 Months Ended
Note D - Leases (Details Textual) - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Finance Lease, Right-of-Use Asset, after Accumulated Amortization	$ 500		$ 600
Operating Lease, Right-of-Use Asset	17,500		18,600
Finance Lease, Right-of-Use Asset, Accumulated Depreciation	1,000		$ 1,000
Asset Impairment Charges, Total	0	$ 0
Lessor, Operating Lease, Payment to be Received, Year One	300
Lessor, Operating Lease, Payment to be Received, Year Two	$ 400
Minimum [Member]
Lessee, Lease Remaining Lease Term (Year)	1 year
Maximum [Member]
Lessee, Lease Remaining Lease Term (Year)	8 years
Lessee, Lease, Renewal Term (Year)	5 years

Note D - Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Operating Lease, Right-of-Use Asset	$ 17,500	$ 18,600
Finance Lease, Right-of-Use Asset, after Accumulated Amortization	500	600
Right-of-use Assets, total	18,011	19,169
Current portion of lease liabilities, operating leases	5,810
Current portion of lease liabilities, finance leases	93
Current portion of lease liabilities, total	5,903	5,747
Long-term lease liabilities, total	14,631	16,575
Total Lease Liabilities, finance leases	122
Right of Use Assets [Member]
Operating Lease, Right-of-Use Asset	17,491	18,574
Finance Lease, Right-of-Use Asset, after Accumulated Amortization	520	595
Short-term Lease Liabilities [Member]
Current portion of lease liabilities, operating leases		5,587
Current portion of lease liabilities, finance leases		160
Current portion of lease liabilities, total		5,747
Long-term Lease Liabilities [Member]
Long-term lease liabilities, operating leases	14,602	16,523
Long-term lease liabilities, finance leases	29	52
Long-term lease liabilities, total	14,631	16,575
Short-term Lease Liabilities and Long-term Lease Liabilities [Member]
Total Lease Liabilities, operating leases	20,412	22,110
Total Lease Liabilities, finance leases	122	212
Total Lease Liabilities, total	$ 20,534	$ 22,322

Note D - Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Operating lease cost	$ 1,366	$ 1,419	$ 2,822	$ 3,000
Amortization of right-of-use assets	40	41	80	87
Interest on lease liabilities	2	4	4	9
Total Finance lease cost	42	45	84	96
Variable lease cost	486	447	988	986
Sublease income	(213)	(160)	(499)	(411)
Total lease cost, net	$ 1,681	$ 1,751	3,395	3,671
Operating cash flows from operating leases			6,453	7,097
Operating cash flows from finance leases			4	8
Financing cash flows from finance leases			$ 95	$ 101
Weighted Average Remaining Lease term, Operating leases (Year)	5 years 7 months 6 days	6 years 2 months 12 days	5 years 7 months 6 days	6 years 2 months 12 days
Weighted Average Remaining Lease term, Finance leases (Year)	1 year 2 months 12 days	1 year 9 months 18 days	1 year 2 months 12 days	1 year 9 months 18 days
Weighted Average Discount Rate, Operating leases	3.63%	3.40%	3.63%	3.40%
Weighted Average Discount Rate, Finance leases	6.21%	5.53%	6.21%	5.53%

Note D - Leases - Maturities of Finance and Operating Lease Liabilities (Details) - USD ($)
$ in Thousands

Jun. 30, 2023

Dec. 31, 2022

Remainder of 2023, operating leases

^[1]

$ 3,228

Remainder of 2022, finance leases

2024, operating leases

5,297

2024, finance leases

2025, operating leases

2,885

2025, finance leases

2026, operating leases

2,374

2026, finance leases

2027, operating leases

2,291

2027, finance leases

2027 and beyond, operating leases

6,229

2027 and beyond, finance leases

Total future minimum lease payments, operating leases

22,304

Total future minimum lease payments, finance leases

127

Less: Imputed interest, operating leases

1,892

Less: Imputed interest, finance leases

Total lease liabilities, finance leases

122

Short-term Lease Liabilities and Long-term Lease Liabilities [Member]

Total lease liabilities, operating leases

20,412

$ 22,110

Total lease liabilities, finance leases

$ 122

$ 212

[1]	Non-cancelable sublease proceeds for the remainder of the fiscal year ending December 31, 2022 and the fiscal year ending December 31, 2023 and 2024 of $0.8 million, $0.9 million and $0.4 million, respectively, are not included in the table above.

Note E - Convertible Preferred Stock and Share Repurchase Program (Details Textual) - USD ($)		1 Months Ended	3 Months Ended
	Jan. 30, 2018	Dec. 31, 2022	Jun. 30, 2023	May 02, 2023	Jun. 30, 2022
Preferred Stock, Shares Authorized (in shares)		1,000,000.0
Stock Repurchase Program, Authorized Amount				$ 6,500,000
Common Stock, Par or Stated Value Per Share (in dollars per share)		$ 1	$ 1
Treasury Stock, Shares, Acquired (in shares)			300,000
Treasury Stock, Value, Acquired, Cost Method			$ 1,879,000
Preferred Stock [Member]
Treasury Stock, Value, Acquired, Cost Method			(0)
Common Stock [Member]
Treasury Stock, Value, Acquired, Cost Method			$ (0)
Wipro [Member]
Common Stock, Par or Stated Value Per Share (in dollars per share)					$ 1.00
Wipro [Member] \| Common Stock [Member]
Stock Repurchase Program, Number of Shares Authorized to be Repurchased (in shares)					100,000
Series A Preferred Stock [Member]
Treasury Stock, Shares, Acquired (in shares)		9,926
Series A Preferred Stock [Member] \| Wipro [Member]
Stock Issued During Period, Shares, New Issues (in shares)	9,926
Shares Issued, Price Per Share (in dollars per share)	$ 1,000
Stock Issued During Period, Value, New Issues	$ 9,900,000
Payments of Stock Issuance Costs	200,000
Proceeds from Issuance of Preferred Stock and Preference Stock	$ 9,900,000
Series A Preferred Stock [Member] \| Wipro [Member] \| Preferred Stock [Member]
Stock Repurchase Program, Number of Shares Authorized to be Repurchased (in shares)					9,926
Stock Repurchase Program, Authorized Amount					$ 9,926,000

Note F - Long-term Debt (Details Textual) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 21, 2021	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2021	Dec. 31, 2022
Letters of Credit Outstanding, Amount		$ 800		$ 800			$ 800
Proceeds from Lines of Credit, Total				0
Interest Expense, Debt		$ 29	$ 97	$ 167	$ 196
Texas Capital Bank [Member]
Debt Instrument, Interest Rate, Effective Percentage		6.81%		6.81%
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage				0.25%
Revolving Credit Facility [Member] \| Texas Capital Bank [Member] \| Bloomberg Short-Term Bank Yield Index Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	2.25%
New Credit Facility [Member]
Long-Term Line of Credit		$ 0		$ 0			$ 0
New Credit Facility [Member] \| Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity		$ 24,200		$ 24,200
New Credit Facility [Member] \| Revolving Credit Facility [Member] \| Texas Capital Bank [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 25,000
Debt Instrument, Term (Year)	3 years
Texas Capital Credit Facility [Member]
Long-Term Line of Credit						$ 5,000
Repayments of Long-term Lines of Credit						$ 12,100

Note G - Stock-based Compensation (Details Textual) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Share-Based Payment Arrangement, Expense	$ 0.5	$ 0.6	$ 1.0	$ 0.8

Note H - Employee Benefit Plans (Details Textual) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Qualified Plan II [Member]
Defined Benefit Plan, Plan Assets, Contributions by Employer	$ 0.6
Qualified Plan II [Member] \| Pension Plan [Member]
Defined Benefit Plan, Expected Future Benefit Payment, Year One	1.6
Restoration Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Benefits Paid	$ 0.9	$ 0.9

Note H - Employee Benefit Plans - Net Period of Net Periodic Cost (Details) - Pension Plan [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Interest cost	$ 1,772	$ 1,260	$ 3,544	$ 2,520
Expected return on plan assets	(1,554)	(1,468)	(3,108)	(2,936)
Recognized actuarial loss	630	719	1,260	1,438
Net periodic benefit cost	$ 848	$ 511	$ 1,696	$ 1,022

Note I - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2020
Income Tax Expense (Benefit)	$ 240	$ 671	$ (292)	$ 1,125
Effective Income Tax Rate Reconciliation, Percent	29.30%	13.10%	58.10%	12.60%
Tax Year 2019 [Member]
Proceeds from Income Tax Refunds					$ 6,400
Tax Year 2018 [Member]
Proceeds from Income Tax Refunds					$ 3,200

Note J - Earnings Per Share (Details Textual) - shares	1 Months Ended	3 Months Ended			6 Months Ended
Note J - Earnings Per Share (Details Textual) - shares	Dec. 31, 2022	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Treasury Stock, Shares, Acquired (in shares)		300,000
Share-Based Payment Arrangement, Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)		7,428		13,063	8,668	15,074
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)		45,338		0	45,906	76,925
Convertible Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)		0		1,001,614	0	1,001,614
Series A Preferred Stock [Member]
Preferred Stock, Dividend Rate, Percentage			5.00%
Treasury Stock, Shares, Acquired (in shares)	9,926

Note J - Earnings Per Share - Reconciliations of Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Net income	$ 580	$ (791)	$ 4,461	$ 3,345	$ (211)	$ 7,806
Less: Preferred Stock dividends	0		124		0	246
Less: Earnings attributable to participating securities	0		542		0	946
Net income attributable to common stockholders	580		3,795		(211)	6,614
Add back: Allocation of earnings to participating securities	0		542		0	946
Less: Re-allocation of earnings to participating securities considering potentially dilutive securities	0		(518)		0	(908)
Numerator for diluted EPS	$ 580		$ 3,819		$ (211)	$ 6,652
Basic (in shares)	7,358		7,017		7,392	7,004
Diluted (in shares)	7,505		7,388		7,392	7,338
Basic (in dollars per share)	$ 0.08		$ 0.54		$ (0.03)	$ 0.94
Diluted (in dollars per share)	$ 0.08		$ 0.52		$ (0.03)	$ 0.91

Note K - Comprehensive Income - Changes in Accumulated Other Comprehensive Loss by Component (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Balance	$ 20,965	$ 18,808	$ (20,571)	$ (24,715)	$ 18,808	$ (24,715)
Total other comprehensive income (loss), net of tax	502	2,620	(2,029)	506	3,122	(1,523)
Balance	20,550	20,965	(17,711)	(20,571)	20,550	(17,711)
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
Balance		(44,120)		(54,394)	(44,120)	(54,394)
Other comprehensive income, net of tax, before reclassifications					0	0
Amounts reclassified from accumulated other comprehensive income, net of tax, to other, net, on the condensed consolidated statements of comprehensive income					1,142	1,588
Total other comprehensive income (loss), net of tax					1,142	1,588
Balance	(42,978)		(52,806)		(42,978)	(52,806)
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]
Balance		(4,182)		1,066	(4,182)	1,066
Other comprehensive income, net of tax, before reclassifications					1,980	(3,111)
Amounts reclassified from accumulated other comprehensive income, net of tax, to other, net, on the condensed consolidated statements of comprehensive income					0	0
Total other comprehensive income (loss), net of tax					1,980	(3,111)
Balance	(2,202)		(2,045)		(2,202)	(2,045)
AOCI Attributable to Parent [Member]
Balance	(45,682)	(48,302)	(52,822)	(53,328)	(48,302)	(53,328)
Other comprehensive income, net of tax, before reclassifications					1,980	(3,111)
Amounts reclassified from accumulated other comprehensive income, net of tax, to other, net, on the condensed consolidated statements of comprehensive income					1,142	1,588
Total other comprehensive income (loss), net of tax	502	2,620	(2,029)	506	3,122	(1,523)
Balance	$ (45,180)	$ (45,682)	$ (54,851)	$ (52,822)	$ (45,180)	$ (54,851)

Note L - Acquisition of Inside Out Solutions, LLC (Details Textual) - USD ($) $ in Thousands		3 Months Ended	6 Months Ended
	Dec. 01, 2022	Jun. 30, 2023	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022
Cash Held in Escrow		$ 1,000	$ 1,000		$ 9,926
Goodwill, Ending Balance		2,398	2,398	$ 2,398
Inside Out Solutions, LLC [Member]
Cash Held in Escrow		1,000	1,000	$ 1,000
Inside Out Solutions, LLC [Member]
Business Combination, Consideration Transferred, Total	$ 7,500
Payments to Acquire Businesses, Gross	5,750
Cash Held in Escrow	1,000
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable	750
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	3,600
Goodwill, Ending Balance	2,400
Amortization of Intangible Assets		180	360
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual		2,300	5,100
Business Combination, Pro Forma Information, Earnings or Loss of Acquiree since Acquisition Date, Actual		$ 100	$ 600
Inside Out Solutions, LLC [Member] \| Minimum [Member]
Working Capital	1,300
Inside Out Solutions, LLC [Member] \| Maximum [Member]
Working Capital	$ 1,600

Note L - Acquisition of Inside Out Solution, LLC - Business Acquisition Assets and Liabilities (Details) - Inside Out Solutions, LLC [Member] $ in Thousands	Dec. 31, 2022 USD ($)
Accounts receivable	$ 1,445
Prepaid expenses	148
Property, plant and equipment	177
Total assets acquired	1,770
Less: Current liabilities assumed	(761)
Net assets acquired	$ 1,009

Note L - Acquisition of Inside Out Solutions, LLC - Summary of Intangible Assets (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Weighted Average Amortization Period (Year)	5 years
Total	$ 3,180
Inside Out Solutions, LLC [Member] \| Customer Relationships [Member]
Gross Carrying Amount	3,600
Accumulated Amortizations	420
Total	$ 3,180