New credit facility. On December 21, 2021, the company announced a $25 million secured revolving credit agreement with Texas Capital Bank. According to the company’s press release, the new line of credit will be used to repay existing debt, invest in growth initiatives, and will be a source of working capital. The credit line is secured by certain subsidiaries of Harte Hanks.Expanded credit, greater flexibility. The $25 million line of credit is a significant increase from the company’s existing line of $15 million. Moreover, the credit agreement is for three years, which is longer than the company’s previous agreements. We believe the expansion of the credit line, as well as the agreement's extended time frame, will allow the company greater financial flexibility moving forward.A signal of improving financial stability. In addition to being an expansion of the company’s credit, the new agreement also eliminates the company’s need to have a third-party guarantee, having qualified for the credit based on its own financial position. As such, it serves as a strong indication that the company is successfully making progress towards financial stability. We are maintaining our financial assessment at 3 checks, but the move indicates the prospect of a future raise in our assessment. Maintaining price target. Near current levels, the HHS shares trade at 3.6 times Enterprise Value to our 2022 adj. EBITDA estimate. Even factoring in the company’s pension obligations, the shares still trade at a compelling 7.9 times. Our price target of $17 reflects a multiple of 12 times, which we believe is below the company's anticipated long term cash flow growth rate. Read More >>