Good day everyone. And welcome to the Harte Hanks' Fourth Quarter 2017 Earnings Conference Call. Today's conference is being recorded. During the conference we will have a question-and-answer session [Operator Instructions]. At this time I would like to turn the conference over to Scott Hamilton, Investor Relations. Please go ahead, sir.

Thank you, Ashley. Good afternoon everyone. Thanks for joining us for our fourth quarter 2017 earnings call. Joining me on the call today is our CEO, Karen Puckett and Jon Biro, our new Chief Financial Officer, who joined Harte Hanks in November. The call will include forward-looking statements; such as statements about our strategies, adjustments to our cost structure, financial outlook, capital resources, competitive factors; business and industry expectations, anticipated performance and outcomes, future 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 differ materially 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. These refer to today's earnings release we refer and reconciliations and other related disclosures. Our earnings release is available on the Investor's section of our website at hartehanks.com. With that I'll turn the call over to you Karen.

Thank you, Scott, and good afternoon everyone. I'm pleased that for the second quarter in a row we generated positive adjusted operating income. In the fourth quarter adjusted operating income was 1.7 million, despite the revenue challenges we've experienced all the year. Through today, we have dramatically improved our balance sheet and enhanced our liquidity. We've improved customer satisfaction, introduced new data base services and added a new sales channel with our Wipro relationship. I believe these developments have put us in a much better position to continue our strategic turnaround. John will talk about it more, but at the end of 2017, we're debt free and had 8.1 million in cash and added before the 2018 transaction including the preferred stock investment of almost 10 million and the sale of 3Q which relieved us of a 35 million earn-out liability. And also we have solid financial base we can use to build upon. We also improved customer satisfaction which we measure on a quarterly basis. These satisfaction surveys along with direct client feedback show us that we're continuing to make progress. Since we began surveying customers in 2016, we've seen our satisfactory score steadily increase. We believe we're well positioned to take advantage of some significant trends taking place in the marketing world. Customers, whether they're a consumer or a business are expecting marketers to understanding beyond the basic demographics of age, income, geography or vertical and the evolving what is called hyper personalization, customers are demanding that marketers not only understand who they're, but also understand why they're with the big buyer journey. Customers expect the message they received to be relevant and meaningful to them as individuals. Technology increasingly enables this kind of hyper personal marketing, however, technology deployed with an equally involved understanding of the customer…

Thank you, Karen. Good afternoon everyone. It's great to be here for my first earnings conference call. Through the fourth quarter of 2017, sequential revenue growth was 5.8% due to seasonal factors. On a year-over-year basis, fourth quarter revenues were down 9.3%, with retail down significantly and B2B, consumer and healthcare down to a lesser extent. Fourth quarter 2017 adjusted operating income was 1.7 million, compared to 4.4 million in the year-ago quarter, due to lower revenues, partially offset by lower labor costs, due to headcount reductions, and lower production costs, mostly within our direct mail and logistics service area. Operating loss in the quarter was 33.7 million and included a goodwill impairment charge of 34.5 million. This compares to an operating loss of 34.5 million in the year ago quarter, which also included a goodwill impairment charge of 38.7 million. Note that we've now written off 100% of our goodwill. Full year 2017 revenues were 384 million, compared to 404 million, in 2016, representing a 5.1% revenue decline. Revenues declined in our retail vertical and to a lesser extent in our healthcare and B2B verticals due to reduced direct mail volumes, partially offset by an increase in agency services in our financial vertical. 2017 adjusted operating loss was 3.7 million. An improvement compared to a $12.5 million adjusted operating loss in 2016. Despite revenue declines, the adjusted operating loss improved due to lower labor expenses due to headcount reductions and lower production expenses as a result of direct mail volume declines plus lower advertising, selling, general and administrative expenses also contributed to the improvement largely due to a decline in employee related expenses. As Karen mentioned, we expect to continue to experience revenue pressure in 2018, due to anticipated client losses and volume reductions in traditional service areas. We…

Thank you. [Operator Instructions] And our first question is from Michael Kupinski with Noble Capital Markets.

Thank you. Thanks for taking the questions. First, I was wondering if you can give us the pro forma revenues for the first quarter 2017 for 3Q. I assume that you're going to treat that as discontinued operations in the first quarter of 2018.

We actually Mike, haven't determined that definitively. Our inclination is that we will not treat them as a going concern or as a discontinued operation. You can see though the pro forma's that we filed in 8-K in early March shows you the nine months revenue and if you divide that by three, that will give you a pretty good sense of the quarterly revenue.

Got you, okay. And then I was wondering in terms of the - your headcount at the year-end versus the year earlier period, what was the headcount ESPs?

We ended the year - I think we were about 5,400. I don't recall what it was the previous year, but it's definitely down because that was the big driver of the cost reduction year-over-year.

Got you and I would -

Yeah, it will be posted in our 10-K.

Okay, I would that have thought that maybe payroll expenses would have been a little bit lower in the fourth quarter, were there any special things going on in the fourth quarter that would have - because you had the pace and cadence of the decreases and payroll expenses seems like it lessened in the fourth quarter. It was down 8.2% I believe in the third quarter.

Yeah, the payroll, it did move up. There is a little bit of leverage on the payroll expense. Our revenues did increase 5.8%; I think our labor was up a little bit less than that. So it is revenue provided.

Can you give us a flavor for the current total business and as you head into the first - as you're in the first quarter, whether the cadence of the declines in revenue were moderate heading into the first quarter, any thoughts on that?

I think we're yet to see that to have some headwinds when we think about the top line and we mentioned the retail vertical certainly going to be a concern, also have some weakness in our contact center service line. I think the pressure is going to increase as we progress throughout the year, but as I said, we're going to be aggressive in taking cost status when the top line is under pressure.

I was just going to add. Yeah, what Jon says is correct and then obviously we'll continue to focus on new services that we have the opportunity and we're in early in the year, so we'll - we have an opportunity to continue to drive that.

Good and if I look at - if I'm looking at this correctly, if you look at the fourth quarter, the decline in the retail revenue was about 7.6 million down by maybe 23% and if you look at your fourth quarter year earlier 110 million, the 7.6 million largely is from retail that accounts for the biggest portion of the decline. Can you give us a sense of what retail, how that looks into the first quarter? I mean because obviously the variance in terms of retail is kind of the big driver to the declines in revenue that we're seeing so far.

Look I think we're going to continue to see pressure again on the retail vertical. The fourth quarter, we did see a pretty big decline sequentially and so - again we're not going to give a forecast, but we'll probably going to see another sequential decline I think as we move into first quarter, especially due to that fact that Q4 tends to be seasonally strong.

Right, but I'm - all I'm asking is, if retail is declining at the same pace that we've seen in the fourth quarter or is that showing signs of moderating?

Yeah, I wouldn't throw out our forecast Mike. There's too much uncertainty right now. All I can say is you can count on us to get aggressive taking out cost if we see the trend continue here. I mean, we hope it's going to moderate, but it hasn't for a while. So making predictions at this point I think is not something we want to do.

Got you, okay. I think that's all I have.

Okay, thanks Mike.

Thank you, Mike.

[Operator Instructions] It appears there are no further questions at this time.

Okay, well, thank you very much for joining us. Once again if you would like to schedule a meeting with myself and management please free to get hold of me, Scott Hamilton. My contact information is on the press release. Thanks everyone for joining.

This concludes today's call. Thank you for participation. You may now disconnect.