Harte Hanks, Inc. (HHS) Q4 2011 Earnings Report, Transcript and Summary

Good day, and welcome to the Fourth Quarter 2011 Earnings Conference Call hosted by Harte-Hanks. Today’s conference is being recorded. At this time, I'd like to turn the conference over to Mr. Larry Franklin. Please go ahead, sir.

Good morning. On the call with me today is Doug Shepard, our Executive Vice President and Chief Financial Officer; Robert Munden, Senior Vice President, General Counsel; Jessica Huff, Vice President of Finance, Controller; and Gary Skidmore, Executive Vice President and President of Harte-Hanks Direct Marketing. And before I begin my comments, Robert will make a few statements.

Thanks, Larry. Our call may include forward-looking statements. Examples may include statements about our strategies, initiatives and business plans, adjustments to our cost structure, financial outlook and capital resources, competitive factors, business and industry expectations, legal and regulatory involvements, economic conditions in the United States and elsewhere, 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 statements in today's earnings release. Our call may also include 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 Investor Relations section of our website at harte-hanks.com. I'll now turn the call back over to Larry.

Thanks, Robert. Before talking about the individual businesses, a couple of comments about company results. For the quarter, revenue decreased 4.8%; operating income was down 5.1%; net income was down 5.6%; and earnings per share of $0.23 was down $0.042. And I'll add some more detail about performance as we discussed each of the businesses, and then when I'm finished, Doug will provide additional details. Let's look at Shoppers first. The senior leadership changes that we announced back in the second quarter are going extremely well and in a moment, I'll update you on the many initiatives underway that we remain convinced will increase efficiency and performance in both the short and long term. Shopper revenues of $56.1 million for the quarter was down 8.3%, slightly worse than the decline in the previous quarter. [Indiscernible] for the quarter was a loss of $67,000 compared to a profit of $887,000 in the same quarter of last year. Looking at the more important industry SIC Codes for our revenue color, real estate continues to struggle with double-digit declines. However, the decline in Q4 is slightly less than in the previous quarter. The broad services category declined from Q3 due to reduced spending by career colleges, while health services continued to do better than the category as a whole. The consumer spending categories held flat with Q3 but declined from last year from the loss of a large grocery account that we've talked about this year. Furniture and retail continue to grow on the strength of recent wins. Automotive was down slightly to last year caused by declines in Auto services. Dealers continued to have good results growing in each quarter in 2011. Distribution revenue declined at a slightly faster rate than the book, the ROP revenue. One of our 2011 initiatives was to increase our account penetration. In Q4, we saw a slight decline in the average weekly territory accounts compared to last year and a very slight decrease in revenue per account. That trend has been improving each quarter. Inside sales which primarily sells to the real estate and real estate services clients continues to be more challenging than the outside our territory sales. We also continue to be the champion of small and local businesses online by helping customers find these businesses online and improving responses to our digital initiatives. Our Power Sites, the centerpiece of our web strategy, have continued to grow in popularity with Internet users and results for our customers. We have just implemented a rate increase in our Power Site category. Our PennySaverUSA.com site experienced 34% growth in visits year-over-year for the full year in 2011 and for the quarter, our mobile traffic to the site was 16% of our total visits. As we will celebrate in 2012, our 50th anniversary of the Pennysaver, we continue to look for new and better ways to connect buyers and sellers at the local level. Turning into cost. Consistent with recent trends, we've experienced a low double-digit increase in paper costs for the quarter. The USPS recently implemented a 2.1% postage increase effective January 22. And at the current postal distribution level, this will add about $1,700,000 postage costs annually in 2012. Some comments on the initiatives from Q3. The order interest system in California is complete and fully implemented allowing reductions in our key staffing in early 2012. Obviously, we're still working out some of the bugs. The California pre-press consolidation is nearing completion. The ad composition will occur in 1 plant instead of 4 that we had at the beginning of 2011. That will allow us to reduce both fixed and variable costs but in the quarter, it caused some duplication of costs as we hired and trained in the location that was being consolidated into while maintaining redundancy in the locations that we were leaving. Similar to Florida, inside sales consolidation discussed last quarter. Inside sales consolidations. We completed the ones from California and in Southern California again, that allows to reduce fixed costs going forward. We continue to estimate annualized $78 million of savings in 2012 from these initiatives and from the restructuring that was discussed back in our -- or executed back in the second and third quarters. As we've said, we don't expect to see significant improvement in California and Florida economies in the near term and while unemployment rates remain high in both states, we are seeing some slight improvement. With the changes that we are making and those being planned, we are building a solid foundation for our Shopper business going forward. None of us underestimate the job ahead, but I'm confident of this leadership group and our people's ability, dedication, determination for improving our financial performance in 2012, and I'm excited about the year. Our Direct Marketing business had another good quarter. Adjusted revenue growth of 2.2%, that's excluding the large project for one of our former customers last year. On an adjusted basis, this quarter was our highest revenue quarter in 3 years. Our Agency business had a really good quarter both top and bottom line. Our Contact Center business had strong holiday call volume and great performance on the service we provide for the e-reader client and other consumer electronics. And our mail business did very well in the quarter. During the quarter, we continued to invest in our Database businesses. We're investing in our Pharma Agency solution and new Trillium solutions. We're creating these new solutions and adding some exceptional people as we execute our multichannel strategy. In the quarter, we consolidated our Market Intelligence Data business in Europe with our Information Arts business that we acquired in 2010. This will allow us to have a more powerful data and database offering in Europe. I continue to have great confidence in our ability and in our people who are effectively and aggressively implementing our inside, driven, multichannel, digital and direct marketing strategy. There are a number of examples in the highlight section of the release, and I'd like to mention just a few of them that we executed in the quarter. We provided additional services for our global, digital program for one of the largest beverage companies in the world. We're rolling out programs for multiple brands in countries around world. We expanded our multichannel initiatives for L'Oreal and other global consumer brands including strategy, building marketing databases, in-site, and deploying traditional and digital communications programs. We had a strong quarter. The work we do in -- for the work we do in the automotive industry selling multiple Trillium licenses and growing existing multichannel engagements. And the launch of Demand Curve, our powerful demand generation and lead management system for tech companies is going very well. We have several current engagements and a healthy pipeline, all of these are big global brands. All of these cases and many others are leveraging the investments that we have made in new solutions that we've talked about in previous calls like Momentium, QuickStart and others. And during this era of big data, no company is better prepared to help clients with their data challenges than Harte-Hanks. We continue to win with Trillium, the world's leading data quality software platform. John Nicoli and his team are doing an amazing job leading this business. We're making significant and very important investments to further develop the core Trillium system and some very unique solutions, like those that we announced for picking and the insurance industry. At the end of the quarter, we were told by one of our large department stores that they were changing their marketing strategy, therefore, reducing their spend with us. They will continue to be a large and important customer that we expect to grow from this point for providing them new services. But the event will reduce our revenue and growth in the first half of the year and will impact our profits. And as we said in the press release, we expect the quarter 4 revenue trend to continue into 2012, and that our profits are likely to be flat to down slightly in the first half of 2012. But we expect to grow both revenue and profits for the full year. In spite of the occasional setbacks, we continue to have great confidence in our HDM strategy. We have an amazing list of customers, hundreds of the world's leading brands and we have exceptionally talented people. We are strong financially, and we're excited about our future. And I'll turn it back to -- I'll turn it over to Doug.

Thank you, Larry, and good morning. Here's a company-wide overview of the fourth quarter and full year 2011. Consolidated revenue decrease 4.8% for the quarter and 1.1% for the year. Direct Marketing decreased 3.6% for the quarter and increased 2.2% for the year. Excluding the nonrecurring pharmaceutical recall in last year's fourth quarter, Direct Marketing's revenue increased 2.2% for the quarter and 5% for the year. Shoppers decreased 8.3% for the quarter and 8.8% for the year. Consolidated operating income decreased 5.1% for the quarter and 17.2% for the year. For the quarter, Direct Marketing declined 1%, while Shoppers decreased $1 million. For the year, Direct Marketing decreased 1% and Shoppers decreased 79.8%. Consolidated operating income margin was 10.6% for the quarter, consistent with last year's fourth quarter. And for the year, our operating income was 8.9% versus 10.6% for 2010. For the quarter, our free cash flow was $16.2 million versus $17.3 million in 2010. For the year, free cash flow was $47.4 million as compared to $62 million in 2010. We ended the year with $21 million in capital expenditures, bringing $0.5 million more than the $17.5 million we spent last year. For 2012, we again expect our capital spending to be approximately $20 million. Turning to our 2 businesses. In the quarter, Direct Marketing revenue decreased through 3.6% and operating income decreased 1%. Operating income margins increased to 15.8% compared to a margin of 15.4% in the 2010 fourth quarter. For the year, operating income margins finished at 13.6%, a decrease from the 2010 margin of 14.4%. Our margin increase was driven by strong quarters in our Agency and Contact Center businesses. In the quarter, our retail vertical market represented 31% of Direct Marketing revenue; high tech was 24%; black markets were 23%; healthcare pharma was 11%; and financial was 11%. For the year, retail represented 28% of Direct Marketing revenue; select markets were 25%; high tech was 24%; financial, 13%; and healthcare Pharma, 10%. Our top 25 Direct Marketing customers represented 46% of Direct Marketing revenue for the quarter. Moving over to Shoppers. Shoppers’ fourth quarter revenue decreased 8.3% and 8.8% for the year. Shoppers operating income for the quarter decreased $1 million. For the year, operating income margin was 1.3% as compared to 6% in 2010. Revenues were relatively flat in Communications and decreased in remaining sectors. Distribution revenues decreased more than ROP revenues, and we experienced a bigger decrease in the number of accounts we published for than in the revenue per account. Below operating income, we have a large gain in the other income section of the P&L for $2.1 million. In most quarters, our gain/loss on foreign currency translation would account for mostly amount in this line. But this quarter, the largest impact is the gain from a sale of vacant land we owned for a longtime next-door to our Brea California plant. The pretax gain for this transaction was $2.3 million. Our fourth quarter effective tax rate was 40.9%, which was higher than the 2010 fourth quarter effective tax rate of 34.6%. Lower state taxes during 2010 drove the increase. Our 2011 effective tax rate was 40.3% compared to 37.9% for 2010. The rate increase is primarily due to favorable tax elements we received in 2010. For 2012, we expect our effective tax rate to be approximately 38% to 40%. On the balance sheet, net accounts receivables were $146.4 million versus $151 million at year end 2010. Days sales outstanding at the end of December was 64 days compared to 59 days at last year's December. At December 31, we reduced our total debt balance by $13.6 million to $179.4 million compared to $193 million at the end of 2010. Our net debt balance was $92.7 million versus $107 million at 12/31/10, a reduction of $14.3 million. We currently have $70 million available under our revolver excluding outstanding loans of credit in addition to a cash balance of approximately $87 million at the end of the year. In early March 2012, we have a term loan of $60 million maturing, and we plan to retire it with cash on the balance sheet and we'll have our fully available revolver flexibility as we fuel in cash throughout the remainder of 2012. With that, operator, we will turn the call over for questions.

[Operator Instructions] And our first question comes from Edward Atorino with Benchmark.

Could you go through the dynamics of the loss of that business? I know you can't go into a lot of detail, but is it sort of a lot in the first half and then it comes back or is it sort of get stretched out? The big account that's cut back.

No, it will be -- when you say stretched out, it'll affect the entire year. And so whatever -- we'll try to grow it to where it's going but it will be at this point anyway, we're planning for it to be permanently reduced level. Anything to add to that?

They will continue to be a very large customer.

Absolutely.

On the Shoppers business, did they get any help from the big promotions in the holiday season last year, or did that sort of fade? So what's the – I don’t know if I -- what is the current trend? Is it sort of hanging in there or is it continuing to fade the way the advertising is?

Yes, it was -- as I said, the quarter had 8.3%. I think the third quarter may have been 7.5% down. And we cycle against the big grocery account that we lost in the first -- in January of last year. And so it'll, I think, stable out from here.

Again, cost savings front loaded or that'd be spread out?

In fact, some of the cost savings that I was trying to explain there was there was they will -- some of them are obviously already being realized. There are others that will be realized at the beginning of the year. And then as we get further away from the consolidations of those 4 pre-press productions processes and locations into one, we believe that we'll continue to have increased efficiencies there, which will help on the cost side. We feel good about where our cost structure is now, and that would revenues reasonably close to where they are, we should have some good profit growth throughout the year. It will be obviously you'll see more of it in the second or third quarter because the fourth quarter is the seasonally low revenue quarter. And then January is seasonally low, but we feel good about where the -- what the bottom line can be. We just want to get the growth on the top line.

Mail costs are going up. Your paper cost is fairly stable?

Stable. Paper cost in the fourth quarter were mid -- actually low double-digit increases in price. We're looking at mid-single digits.

Yes.

We still -- they'll still be up in Q -- in 2012 from where they are in -- where they were in 2011.

Because of reduced volume?

Yes. Well, because of there's supply...

The supply and demand with the paper is large and providers out there and competition, et cetera. As Larry said, it was double digits for most of '11, and we do expect it to be up mid-single digits in '12.

And we'll now move on to our next question from Carter Malloy with Stephens Inc.

So first of all, I wanted to go back and just give a little more color if we could on your outlook for 2012, the increase in the back half of the year more or less. Could you talk about the mix of the 2 businesses? You're saying the current revenue trends but even assuming that I lift those up, it could be in the back half. I'm having a tough time getting an absolute year-over-year growth for total revenue.

Before Doug talks about, when we say we're going to continue the revenue trend into 2012, that's the HDM revenue trends, which is the 2.2% that we came out of it half, which is slightly below where we had been running for the year or so.

Then obviously, we've reiterated that we're comfortable on the Shoppers side with the savings and the changes that we've made there in achieving $7 million to $8 million in savings and efficiencies that we could put action on there in the summer and late fall.

Right. So that's on the cost side. I certainly want to get to that in a moment. But as we look at the Shoppers business overall this year, I still have to assume that it's closer to flat growth in the back than the decline we're currently seeing in order to get to revenue.

You're talking about the revenue numbers, right, Carter?

Correct. I'm still thinking on revenue if that's okay.

Yes, you're right.

Okay. And then on the expense side, you've got $700 million of -- it was pretty big on the savings side. You guys are investing a little bit on the direct side of your business. And overall just looking it on absolute basis for revenue, revenue is up a little bit this year. Profit is up a little bit this year and that would indicate to me that your expenses are actually going to be flat or even down a little bit on the absolute basis and that takes into account inflation of wages and everything else. Is that a correct assumption on my part?

Yes.

All right. That's easy. And then, on the paper cost side as well, I wanted to -- just some help with cost modeling. You guys called out $1.7 million annual postage. Can we assume the paper cost is a little greater than that on an absolute impact for the year?

No. Our paper costs -- it was about 10% of our...

Total revenue.

Total revenue, and postage is about 38%.

35%, 40% range.

Yes. So 30.1% on the 40% would be greater than the 5% also on the paper.

Got it. And when you talk about percent of total revenue, you're looking at just within the Shoppers business, correct?

Yes.

Got it. Very helpful. The department store, the cut back, I assume they are top 10 client but they're not going away, right? You just said they're reducing some?

That's correct.

They are a top 10 client.

And will continue to be.

Okay. And then one more, and I'll get out of your way. Free cash flow, you guys are still turning quite a bit of free cash. Is the lean there to continue on buyback or you guys looking at the strategic M&A?

Well, right now, we have a $6 million payment coming first week of March. So we hope to use our free cash flow and everything to retire that debt. And then we'll use the remainder of '12 to accumulate cash and obviously have our large revolver out there as a back stop of M&A opportunities stock repurchases. If those type of things arise, we will have more than enough cash to address it.

Okay. And this maybe a little bit off question, but as you look at M&A opportunities, there are actually some very interesting. It would seem smaller, extremely and inexpensive opportunities on the trend side of the world, is that something you would evaluate? Are you still leaning towards expand the Direct Marketing business?

It would be expanding the Direct Marketing business.

[Operator Instructions] Then our next question comes from Alexia Quadrani with JPMorgan.

Just a couple of questions. First on the Direct Marketing side. It's sort of a bigger picture question. But, Larry, could you maybe talk to us -- I know it's very difficult to figure out what normal times will be given where we are. But is there any color you can give us in what we should expect from the Direct Marketing business maybe in year 2 or year 3 when we see a more normalized environment? You don't have the head of this client going back and onetime comp that you're circling and stuff like that. Like, how should we view this business longer term, Direct Marketing side?

On the Direct Marketing side. With the businesses that we own, we are the parts of the Direct Marketing business where we own businesses. We think a more normal revenue, top line growth rate ought to be above, mid-single digits and below double digits. We are firmly committed over time to improving the profitability on the revenues that we have. Now, as you well know, that's going to be lumpy and it's going to be -- we have this -- the good things happen, the bad things happen. But it's an attractive industry simply because there is opportunity for share. It's attractive industry because as we build out solutions that address these changing marketing challenges that our clients have, and we really are, and do become more critical to them than there -- it allows us, we believe, to or will allow us to increase our ongoing profitability. So somewhere in the mid-single to whatever is between mid-single and double-digit revenue growth and improving profits.

So the struggles, I guess, that you're seeing now in the business seem to be more economic-related versus really competitive, would you say that's a fair statement? I mean, I may have missed it, but did you say that the pullback in the client, did you say if that was just sort of a pullback because of their own issues or are they moving some business...

No, no, no. No, it's a strategic change in their marketing. And some of what we are facing is economic, obviously, and then some of it is what -- where we're electing to spend our dollars to be able to accelerate the growth rate in the future. So it's a combination of our investing, our managing, our internal operations and getting the growth in the business in those categories where there is the higher value, bigger opportunities for growth. As the market goes from toward more, toward the digital space, if you will, those are lower dollar, the revenue opportunities than in the more traditional space. So there's a shifting of the revenue streams that can take place, and we intend to aggressively participate in the traditional land -- I don't like the word traditional but, in that business as well as the digital space.

Great. And just a follow-up. On the Shoppers side of the business, I think you mentioned that there was a bigger decrease in the number of account you worked for in the quarter. Is that, again, is that -- you're still [indiscernible] the California economy and some of these accounts going out of business or is that more of a competitive issue as well?

No. And the ones that I will talk about was the territory account. It's -- I think it's more of the economy and as I've said, the revenue per account, the trends while still very, very slightly negative, from last year, they are improving a little bit. And in fact, in our California business or in our Shopper business in California, we have added some really talented, new and additional sales talent there. And we have a very talented sales organization in California. But we've talked about the restructurings that took place back in June when Mike Paulson took over from Pete Gorman. Mike has been with us for, I don't know, 20-plus years and just very, very talented, knows this business cold and we brought over on the press side, Loren Dalton who will continue to lead the web initiative along with So Young Park but will also have sole responsibility for our revenues in the California market. And then we have a new national sales leader and a new leader for our Northern California operation. So we are putting new talent on the street out there, and it'll pay off for us.

[Operator Instructions] Our next question comes from Michael Kupinski with Noble Financial.

Just one follow-up question on the department store retailer that you lost there, or a portion of the business. Can you just -- what's the percentage of revenues for the Direct Marketing? You said top 10, but what -- can you identify what the actual teller map may be accounted for?

Yes, Mike, we don't, on individual clients, disclose...

I thought I'd try. Could you talk about -- certainly, with some of your larger retailers, they have a lot of add-on products and so forth, can you talk at least about the margins? Was it above or below the corporate Direct Marketing rate?

It's just about any incremental customer. Dollar revenue we have is above our overall Direct Marketing profit rates. As clients within an industry change their marketing strategy, then there are other clients in that industry that will determine how they will respond to a change in the strategy of the...

The competitive environment.

Competitive environment. So that can be a plus. And so it'll be interesting to watch it play out here over the next coming weeks and months. But as we have emphasized, long-time excellent customer, still a good sized customer and we have other really, really top-notch customers in that same category.

And in terms of...

They're longer, actually.

And at least, your thoughts in terms of the guidance and looking for growth for the year, your thoughts are that these businesses should gone away and doesn't replace and in terms of your competitive landscape, you're not really factoring that in, in terms of the prospects of gaining from clients or additional work.

Well, we'll continue to have the plans that we onboard this year and the ones that a lot of customers that are growing. But when this first occurs, then you got to ratchet down that -- over time will fill-in and continue to grow. It will -- if we had kept that business, then our growth rate obviously would have been higher. Our level of revenue would have been higher. And while it's disappointing, it's not -- we're aggressively working it.

Okay. And, Doug, can you just identify what were the international sales in Direct Marketing in the quarter and what would they do?

They were essentially flat. They were -- they're always in the 10% range of the total Direct Marketing revenues.

We should have some growth there because of the new national database client that we have won and are onboarding, but I think it wasn't flat for the quarter, at least.

Okay. And you've given us some guidance in terms of the expenses and payroll expenses were lower than expected on my model and I assumed that, that came from Direct Marketing because of the added expenses that you have in Shoppers due to consolidation. I was just wondering, where are you seeing the expense savings in payroll and Direct Marketing?

Are you comparing to last year?

Yes.

We have, as you recall...

I know. You had the pharmaceutical thing.

Last year, we had a very outstanding fourth quarter, and we've talked about the cost of the incentive comp. It was last year. So last year's numbers on the payroll side were higher than would typically be the case in the fourth quarter.

Okay. Okay, and then in the Shoppers, just going back to that, could you see some progression in the quarter or was this -- in terms of the pace of revenues, you're saying you saw some improvement, was that at the end of the quarter? Or was it a steady progression? Or was it...

We saw improvement in the territory revenue per account. Actually in the quarter, the October -- November was the real soft quarter -- soft month for us. And if you look at December, coming out, it was actually a little better than or slightly -- just a little below last year in December. But November was the tough comparisons. Our performance was not good.

Okay. And I was interested in your talk a little bit about Trillium and some opportunities there. And it seems like you're kind of breaking into new fields with the software sales. And I noticed your Medicare claims that in the medical field, I may have missed this, but is this an expansion in the advanced categories for Trillium in terms of software sales because it seems to be they're breaking into new areas. I was just wondering if you could maybe size the opportunity that you see for the software sales.

In the past, we have talked about some new solution, we're able to build around the core product Trillium for the banking and insurance industry, and what's driving this is the growth of big data through all industries, the enormous amounts of information that companies have to manage to do well in their business. And there are regulatory environments that also help us find opportunities to solve problems for customers. Now the industry, while the product has been additionally develop to help with customer data in the marketing space and we still have good growth there because the tool is so good at dealing with unstructured data, it creates new opportunities for us across industries who have big amount of data like those that we mentioned in the press release and those that we've mentioned in the new applications that we're building.

[Operator Instructions] And our next question will come from Dan Salmon with BMO Capital Markets.

I'll actually pick up on that less question and in the area of doing this sort of regulatory type work for the finance industry, are you bumping in more to, what I sort of think of as traditional IT services companies like [indiscernible] and see in a different competitive set there?

Those companies are typically our partners in these kinds of engagements. As large banks, insurance companies have to deal with these data problems, where it's usually a master contractor, a consulting firm that brings in specialists. So we see them as channels for our products and solutions, and we have the unique ability to meet certain requirements of the engagements of these large consulting companies with their customers. So we have great relationships there.

Okay, that's great. And then on the investments, I guess, it's a broader question across the database products and Trillium more broadly. You mentioned also, Larry, I think in your prepared remarks about how a lot of these -- at least, the significant part was to prove your offering in Europe and just wondering if there's a timeline you have for seeing either margin or revenue improvement there because of these investments?

Well, the investment in Europe is about taking 2 businesses that have a lot of synergy and bringing them together so that the services that they both currently provide can be leveraged more. And that's our information. Arts business that we bought in third quarter 2010 and our Market Intelligence business that we have there for some time. So that's what the European thing is about. The products and solutions that we are developing across the rest of the business are to take advantage of market growth. Pharma is one where we are investing to have a more robust and broader solution for our Pharma business and our agencies especially. In the Database business where we host and manage marketing databases for our customers, we're building improved Ci customer data integration products that deal again with this idea of unstructured data. If you think about what happens with data from social media, for example, the data doesn't come to you in fields as has been the traditional case, and so our tools and our services are not only well equipped but they are being developed more to respond to that opportunity with the customers, so that they have a better -- the point of the direct marketing database is for our customers have a better understanding of their customer base and then to use that information to market more precisely and with better success. We're also building solutions for other vertical markets like Pharma where there are growth opportunities for us.

That’s good. That’s helpful color. And then just one last question. On the [indiscernible] verticals, specifically in the prepared remarks, you mentioned demand curve is having a good pickup, but we're still seeing a bit of pressure there. When do you expect to see that release at any time here in 2012?

Well, demand curve has actually taken off probably faster than we thought it would. It's doing very well. We have many engagements with large global technology companies. The #1 requirement, if you look at spending, plans and spending needs of high-tech market, is to find prospects and manage them from again the vast amounts of transactions where you have hundreds of thousands of millions of visitors to a website, how do you know which one is a great opportunity and how do you put your resources against that to win? And our Demand Curve helps our customers do that: Manage the data, understand the customers, give leads and then grow their business. The decline in the quarter with the tech business really is not in that sector. It's more in the consumer product sector with a couple of customers that were down year-over-year. But -- and maybe a trillion lessons here. The larger trends in the tech space are very -- looked very good for us.

And we'll now take a follow-up from Edward Atorino.

I have 2 comments. When a corporate expense sort of held up and with the cost reductions, is that going to come down a little bit year-over-year in 2012? Running about 2 8, 2 7 a quarter.

No, it won't come down. It's driven primarily by pension expense and noncash comp. So it will be about the same.

Got you. And with the $6-million payment to bank, debt interest expense would be down year-over-year, right?

60, about -- yes, it will be down. But you got to remember, today's world at LIBOR at about, what, 25, 50 basis points plus 100, I mean, interest expense is so cheap. But yes, it'll be down because we'll have a $60-million reduction in debt, first week of March.

It was 60 or 6?

6-0.

We have the increased rate from...

Yes, from the old debt.

Right. The old debt with the new debt.

But it'll [indiscernible] obviously, we'll give a third of the debt, yes.

So something like $1 million to $3 million, $2 million, $3 million?

Yes, just a little bit higher.

And it appears there are no further questions.

Okay, thank you very much, and we appreciate your interest. And to all of the Harte-Hanks people, let's make 2012 a great year.

And that does conclude today's conference. We thank you for your participation.