HARRIS 70% JUMP IN EBITA AND PROFIT! FUTURE BRIGHT
I was very impressed with the financial numbers from yesterday's year end report for 2012: raised the EBITDA 70% and profit; lowered debt by almost 6 million; and had higher revenue than last qtr with much lower expenses and the future looks bright under Al... you can tell that he is really good at company turnarounds and has Harris set for future earnings to always be positive and increase as any new sales or bookings will just add to an already positive earnings dynamics.
The 4th quarter for HPOL is always their best quarter, it's a seasonal business. The year over year decline in revenue is more telling. HPOL does data collection for their customers – phone and internet surveys. Their customers are market research professionals in the client company.
They outsource most of the data collection, and their customers can buy direct, that hurts their ability to charge margin. Al is just cutting headcount and cost in front of continuing decline – it just adds to the distress in the company.
At their peak around 2002 or 2003, HPOL’s revenue mix was around 45% internet surveys and 55% phone surveys. They had three proprietary offerings to their customers; their call centers had a reputation for the highest quality in the industry, they had a proprietary list of names of people willing to take Internet surveys (proprietary Internet panel), they had written their own survey and presentation programs (proprietary systems). This let them bill higher fees then the rest of the industry.
As the quarterly call alluded to, the Internet panel collapsed, and the last CEO/CIO stripped the proprietary systems out of the company. The current CIO is the AA of the last – no help there.
Around 2003 they closed their call centers and outsourced that data collection. That removed their ability to charge margin on that revenue, and it made their quality the same as (or worse than) everyone else. Their sales and margins went into an immediate decline. They’ve lost most of the sales from the companies they acquired since then.
The company seems to always imply that their Internet sales are from the panel, but most of that number has come from internet names their customers provide – and a lot of it is paired with traditional call center business. Both customer supplied list and call center work is low margin for them. At its peak the Internet panel probably provided around $30M of unique revenue – and that’s their new focus.
The stock price is where I said it would be in my last post 6 months ago.