Harte-Hanks Q4 direct marketing revenue up 14%

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Harte-Hanks' fourth-quarter 2010 direct marketing revenue increased 14.2% compared with the same period of 2009, the services provider said February 1 in an earnings report.

Overall Q4 revenue at the San Antonio, TX-based company increased 8.5% year-over-year to $239.9 million. Fourth-quarter net income increased 15.7% year-over-year to $15.6 million, while Q4 operating income increased 26.6% compared with 2009's Q4 to $25.1 million.

Revenue for each Harte-Hanks direct marketing vertical increased by about 10% in the fourth quarter compared to Q4 2009. The improvement was attributed to Harte-Hanks' pharmaceutical and healthcare revenue, which increased by about 55% due to a “one-time project related to a voluntary product recall for a long-standing customer,” Doug Shepard, EVP and CFO of Harte-Hanks, said on an earnings call. The company did not provide additional details about the project.

Net and operating income both increased in 2010, compared with the prior year. Net income in FY 2010 rose 12.3% to $53.6 million, while operating income increased 10.5% to $91 million compared with FY 2009. Harte-Hanks' operating revenue increased from $860.1 million to $860.5 million in 2010, an increase of less than $400 thousand.

Larry Franklin, president and CEO of Harte-Hanks, said on an earnings call that the company's Q4 growth was “outstanding” and that it had a “much stronger top-end bottom-line than anticipated.” He noted strong performances in the company's software and data businesses, including the sale of 20 new digital products in Q4, most of which Franklin said went to existing clients.

“Most [of the 20 product sales] aren't big dollar deals, but they're important to our day-to-day business,” he added.

Franklin predicted Harte-Hanks will continue to see margin improvements this year. However, he added “we do not expect to have the same level of growth over the next few quarters” because of the revenue generated by the one-time pharmaceutical deal in Q4 2010.

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