Good morning. My name is Jeremy and I will be your conference operator today. At this time, I would like to welcome everyone to the Harte-Hanks First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Mr. Munden, you may begin the conference.

Thank you, Operator. Our call will include forward-looking statements, such as statements about our strategies, adjustments to our cost structure, financial outlook and capital resources, competitive factors, business and industry expectations, anticipated effects of acquisitions, dispositions, litigation and regulatory changes, economic forecasts for the markets we serve and other statements that are not historical facts. Actual results may materially differ from those projected or implied in these statements because of various risks and uncertainties, including those described in our most recent Form 10-K and other filings with the SEC and in the cautionary statement in today's earnings release. Our call may also reference non-GAAP financial measures. Please refer to today's earnings release for the required reconciliations and other related disclosures. Our earnings release is available on the Investors tab at our Web site at hartehanks.com. I'll now turn the call back over to the operator.

Thank you. And I will now turn the call over to Mr. Robert Philpott, CEO of Harte-Hanks.

Thank you, Jeremy. Good afternoon, everyone, and welcome to Harte-Hank's first quarter 2015 earnings call. As usual, Doug Shepard, our CFO, joins me on today's call, and in a few moments, he will take you through the detail of our earnings release. I am speaking to you from the 3Q Digital offices in San Francisco today. And I am also joined by David Rodnitzky the CEO of 3Q Digital. As many of you will recall, Harte-Hanks acquired 3Q Digital in March and I thought this would be a good opportunity for David to introduce the business and to explain its part in the evolving Harte-Hanks story. And obviously we’ll give you an opportunity to put your questions to him later on this call. But today we’ll focus on our performance in the first quarter of 2015, where the impact of the 3Q acquisition was not financially material as the deal closed very close to the end of the first quarter. At first glance we’re presenting a challenging set of numbers today, particularly in relation to revenue. However, I don’t believe that this reflects the underlying progress that we’re making towards our goal of leadership and smarter customer interaction. And it’s important, therefore, that I spend some time upfront on our call to explain why I believe that there is a fundamentally more positive interpretation on how we’re rebuilding the business for longer term success. And I’ll comment here separately on our Customer Interaction Division and Trillium Software Division. I think it’s fair to say that I’ve been consistent in my view that sales is the life blood for any organization and therefore this is my starting point in looking at the performance in Harte-Hanks. In the first three months of 2015, our Customer Interaction team has built a strong sales…

Thank you, Robert and good morning. During the quarter, we purchased 3Q Digital and subsequent to the quarter, we sold our B2B research businesses Aberdeen and Market Intelligence. 3Q Digital is a leading digital marketing agency that participates in a part of the marketing industry with strong growth and delivers the typical profits of a market leading agency. The B2B research businesses we sold had underperformed last several years and required goodwill acquisition impairment in 2013. The combination of brining on 3Q Digital and selling the B2B research business will be revenue neutral on an annual basis in 2015 but will be a positive contributor to profits. Turning to our first quarter results, our consolidated revenues were 121.7 million compared to 132.7 million of revenues in the same quarter last year. Customer Interaction revenue declined 7.9 %, let me walk through the results of this business segment by industry vertical. Our technology and financial verticals delivered revenue growth during the quarter. The technology vertical increased from additional contact center activity with existing clients. The financial vertical increased from the addition of two new clients using our analytics, database and creative services along with mail activity. One of these clients is the previously mentioned large financial services customer we announced in the third quarter conference call last year. Our healthcare vertical is essentially flat, reflecting a win of a contact center pharmaceutical client offset by different pharmaceutical client reducing its mailing activity. Our select markets auto and consumer brands in retail verticals declined for the quarter. The select markets vertical declined due to a tough comparison to last year. We discuss last year, our contact centers had a significant non-recurring implementation of online streaming activities for a large client that strived over the last week of March and the first two…

Okay. Thank you, Doug. Now let me start this part by breaking with the revenue of the major strategic M&A activity in the first quarter and early in the second quarter. We had singled at our Investor Day in May I think it was in 2014 that there were several businesses within Harte-Hanks that were no longer core our strategy. And this was not a question of performance only of relevance to our ambition to be a leader in smarter customer interaction. And we could have chosen to own these businesses for some time but I was concerned that the management of non-core assets will become distracting to a leadership team that neither to stay focused on the task or reimaging our core business. And after several parties expressed interest in our B2B research businesses we accepted an offer for them that we believed to be in the best interests of our shareholders. The transaction involved a relatively simple clean break from the rest of Harte-Hanks with either disruptive impact for staff or clients. And it is another milestone on our strategic journey completed as planned. However, the most important strategic step forward was undoubtedly the acquisition of 3Q Digital in March and I’ll remind you that this is the first acquisition by Harte-Hanks for something like five years. Until the point the 3Q joint Harte-Hanks we had effectively been excluded from client conversations that involved digital execution. That is no longer the case. But this day was not simply about acquiring a digital capability. It was also about giving access to senior leadership talent which would influence the direction of Harte-Hanks overall. And so with that layup it’s the right moment for me to introduce you to David Rodnitzky, CEO of 3Q Digital now part of Harte-Hanks. David?

Thank you, Robert. I’d like to start off by saying how pleased we are to be part of the Harte-Hanks family. Since I’m sure that 3Q digital is new to many of you I’m going to spend a few moments on why 3Q Digital decided to join Harte-Hanks and then I’ll go into some details about what we do, our market opportunity and how we differentiate ourselves from our competitors. Our primary criteria in selecting a potential acquirer was to find a company that would help us grow aggressively, while maintaining core values. We wanted to find the company that would help us to offer even more marketing services to a wider variety of clients. With Harte-Hanks we found just that. The combination of traditional marketing channels that Harte-Hanks already excels at along with the digital marketing strength of 3Q Digital truly creates an integrated origination through which clients can optimize all of their customer interaction points. Moreover after talking to Robert Philpott and numerous members of his team at length, we were convinced the Harte-Hanks was a company that wanted its team members to be successful, fulfilled and at the cutting edge of their field. Culture is extremely important to us at 3Q Digital and we would not have sold the business to a company that didn’t share a core values. So I’m pleased to say that the culture we have at Harte-Hanks have been as advertised. For example we wanted to make sure that we sold to a company that treated its clients as partners, building mutual beneficial long-term partnerships with customers is clearly a part of the DNA here at Harte-Hanks. Although we are less than two months into our relationship we are already working closely with numerous parts of our new organization. Firstly our sales teams…

Okay, thank you for that David. And let me remind everyone on the call that you’ll have an opportunity to put questions directly to David in a few moments. And we will of course continue our acquisition activities throughout the year. We now have an established pipeline of potential acquisition opportunities and that’s both for Customer Interaction and for Trillium Software. Our strategy calls for additional acquisitions in 2015 to provide additional breadth of services and to add talent. And while you can never be certain when deal negotiations will reach a success conclusion, we anticipate announcing further acquisitions during the year. Acquisition activity continues to be centered on digital marketing and marketing analytics. Finally looking ahead to the second quarter, we see further progress on sales, that’s great news, but a continued challenge on the revenue due mainly to the prior year comparison. I’ll repeat what I said earlier that this situation will not reverse until the second half of 2015. However, we will enjoy some financial benefit from the inclusion of 3Q performance and our performance on both our revenue and operating income basis during the next quarter. And in addition as Doug had mentioned, the elimination of Aberdeen and Market Intelligence from our numbers will improve our operating margins. And while we focus our attention on our sales efforts of course we will retain tight control of expenses. With that I want to thank everybody on today’s call for your continued interest in the business and for your ongoing support to our shared ambitions. I do want to also give to some advance notice that it is our intention to host an Investor Day again in 2015 and this will take place in New York on September 17th. Full details will be sent out by Doug nearer to the date. And with that I’ll now hand you back to our operator who will give you details again on how may participate in a Q&A session with Doug, myself and David. Thank you.

[Operator Instructions] Your first question comes from Michael Kupinski from Noble Financial.

Let’s start with 3Q. Are there significant or any particular verticals that you’re seeing interest in Harte Hanks traditional advertising offerings that 3Q did not have a prior relationship with?

For us or for 3Q Digital?

Sorry, repeat the question Mike.

Yes, so I was wondering, are there any particular verticals that you’re seeing interest in, in particular with Harte-Hanks traditional advertising offerings that 3Q did not have a prior relationship with?

Yes so as you probably know Harte-Hanks has several verticals in which they are very strong and focused on and the sales teams have been pretty active in presenting us to these clients and I would say that so far if I had to talk about specific verticals, the two where we’ve seen that the most activity have been in retail and in technology. We already have a great client roaster in both of those channels however the size of clients that we are being introduced to through Harte-Hanks is much more significant than what we were doing prior to the acquisition in those verticals.

And is it fair to say that 3Q has established relationships in virtually all different types of verticals or were you specific in particular areas of your business?

I think it’s fair to say that we have relationships across all verticals. So yes I mean I think that is -- we have retail, we have technology, we have some science and healthcare, we have enterprise software. So, the pretty broad based, we certainly have never specialized in one vertical in particular. At the end of clients work with us because we drive great return on advertising and that concept was driving great return on advertising is generally agnostic to vertical.

And typically in the past, when Harte Hanks had a modest increase in postal rates there was not much of an impact on the company’s mail activities. Are you seeing more sensitivity to postal rates than in the past?

I wouldn’t say that there is more sensitivity. It’s primarily the retailers and banks they are using mailing activity, mail solicitation et cetera and they’ve always been sensitive to changes in postal rates but I would say to any different term, historical terms.

Thanks Doug. And then also you mentioned a high level of committed revenues, kind of highlighting 2014. Are the margins better on the committed revenues or any significant amounts of investments that are needed for those committed revenues going forward or can you give us some color on what the expense line might look like?

Sure. There is nothing about the forward commitments that we’re getting would suggest that we’d either had to offer inducement in the form of reduced pricing for example, to get that forward commitment nor do we think that there is anything particular about the type of work that we’re bidding that would indicate that the margins would slip as a result of that. It’s simply that we have a more established and coordinated salesforce no we are out there and making sure that we know should happen is being recorded and we are contractually connected to our clients. And that gives us the confidence it gives the security on our outlook for the business. So, it’s more about that rather than it’s through anything that we have to offer to secure that work Mike.

And then finally, at one of our company's recent conference there were some ad agencies that indicated they plan to increase the amount of spend on direct marketing for political advertising. Can you remind me, I know that government political advocacy has been a category for you in the past and I was just wondering how much political advertising did you have in the last cycle and what type of visibility do you have in political advertising as we head into the fourth quarter of this year and into 2016?

I think I’d need to look up the exact number but it’s not a sector that we break out but we do know that it’s a tiny part of the overall business. It’s not something we built a plan around. It’s not something that we expect to contribute significantly to our plans for 2015. So, once we know it’s there, it’s not part of that’s not central to our own plans.

[Operator Instructions] Our next question comes from the line of Dan Salmon with BMO Capital Markets.

I apologize I jumped on a little late, so some of this may have been covered before. But David maybe you just mentioned a little bit about 3Q's orientation by advertiser vertical. Could you maybe just give us a quick history on the evolution of the offering? I think from more of a foundation in SEM to multi-channel and what you may briefly see going forward, just through your high level view for the strategy? And then I've got just one more follow-up after that for Robert.

Sure. So as you know, we started as a search engine marketing agency. And essentially over the last few years, we’ve really been listening to clients and observing where customers are interacting with our clients’ products and services across the Web and we’ve made decisions to invest in channels that we see as very important to our clients. So, from that perspective what we’ve done is we’ve basically been hiring experts in these marketing channels and examples would be social media advertising, search engine optimization. We recently hired a person to head our mobile acquisition team for mobile advertising and so forth. And we believe that advertisers want a service provider that is able to offer them multiple channels across multiple devices and that’s what we’re working toward. In terms of the future, certainly I think that mobile advertising is going to be very important and as I mentioned we brought someone on to head our mobile ad acquisition team I believe in February. And then we are looking at categories like native advertising which is content marketing and ongoing user experience testing and usability as categories where we see demands from customers going forward.

And Robert just maybe quickly on Trillium, you've highlighted I think some of the challenges in the sales pipeline and you want to focus on investing there. Could you also just maybe catch us up a little bit on, you talked about the international opportunity and sort optimizing the sales force there with some of your third-party resellers. Just a little color about how that's progressing?

Yes, we’ve gone through an evaluation of the reseller network that we have for international sales within Trillium in a number of cases we have terminated deals where we didn’t believe the performance of the reseller was consistent with the value of the product that we had. And we’ve focused our attention in a smaller number of markets. That process I think I’ve referred to in our last quarter call and said that there was still work to do on that and there still is a little bit of work to do on that area. Some of the markets parts of Europe, parts in Asia have been less strong than we’ve seen in their economies than in the past. But we expect that situation to rebound for us as we concentrate our effort amongst the smaller group of resellers. I think in time, we will expand that reseller network again but it will be with what I would say will probably be more appropriate partners for the business.

Your next question comes from the line of Adam Peck with Heartland Funds.

Rob, I think you had said that you have good visibility on 90% of the revenues that were achieved in all of 2014, is that correct?

That is correct.

So you are saying that essentially if you take out the sales decline this quarter, it looks like at worst sales will be flat for the rest of 2015?

I think, what we're saying is -- it's on the revenue that we have the visibility that was there, so let's just stick on the revenue. If we looked at the revenue situation or we're very confident at we have forward visibility at this stage, we can't rely on things that happened in the market subsequently. But at this stage would be here with better visibility on our revenue than we had in 2014.

Do you think then this would be the low point in the year as far as revenue perspective?

As I said, I think that there is still tough competitors particularly for the month of April we had that major contract that occurred and straddled the very end of quarter one in 2014 and the first month of the second quarter in 2015. So I think those competitors are challenging during that period. So I expect there still to be challenged in the second quarter. I think the situation changes, when we get to the second half of the year and that's both will Trillium and with Customer Interaction but particularly with Customer Interaction that that turnaround occurs and the balance between the positive sales news that we have, is more reflected in the revenue performance in the second half.

There are no further questions at this time.

Okay. Well that just reminds me to thank everybody for your attention this morning and any additional questions could be sent to Doug, myself or David directly. Thank you.

That does conclude today's teleconference. You may now disconnect.