Buying Growth To Cost Harte Hanks Inc (NYSE:HHS) $200 Million


Harte Hanks Inc (NYSE:HHS) is looking to acquisition deals to drive topline growth. The company plans to invest about $200 million in acquisitions in the coming years. For Harte, the acquisitions will not only be targeted at fueling revenue growth but also diversifying revenue streams as was the recent case with the acquisition of Aleutian.

The acquisition of Aleutian saw Harte Hanks Inc (NYSE:HHS) double down in consulting business, an area that the company is pushing into to unlock new growth. Harte has renamed Aleutian to Harte Hanks Consulting.

The acquisition of Aleutian was completed in 1Q2016. However, the revenue contribution from Aleutian was “very small” during the quarter, but the future is promising.

Organic growth

At the same time Harte is rooting for acquisitions with a $200 million budget to drive growth, the management also remains focused on enhancing organic growth. The idea is that building a powerful growth engine internally and buying strategic assets to complement those internal efforts should create greater value for the shareholders.

Harte Hanks Inc (NYSE:HHS) recently secured a contract from Monitronics Security, the first one after it added Aleutian to its portfolio. As part of the deal, Harte will take care of Monitronics’ digital display advertising, paid search and paid social marketing efforts. Harte’s marketing services for Monitronics under the latest deal will cover geographies such as the U.S., Canada and Puerto Rico.

1Q2016 highlight

Harte Hanks Inc (NYSE:HHS) generated adjusted revenue of $111 million in 1Q2016, a 5% YoY decline from $121 million in the corresponding quarter a year ago. Coming to the bottom-line, the company posted EPS loss of $0.03, a sharp decline from EPS profit of $0.03 a year ago. Unfavorable forex translation terms and divestment of certain assets tempered with topline growth in the latest quarter. Additionally, 1Q is typically a slow quarter for Harte, but management is working to change that so that the company can post strong results year round.

Harte Hanks Inc (NYSE:HHS) counts several Fortune 500 companies as its clients.


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