Company Updates Full Year Guidance Following
Continued Strong Business Performance and Accelerated
Execution of Cost Initiatives
Pitney Bowes Inc. (NYSE: PBI), a technology-driven company that
provides SaaS shipping solutions, mailing innovation, and financial
services to clients around the world, today announced the Company’s
financial results for the third quarter of fiscal year 2024 and
provided a progress update on the strategic initiatives announced
on May 22, 2024. The Company also updated its full year guidance
for Fiscal Year 2024 following continued strong business
performance and accelerated execution of cost initiatives.
Third Quarter Financial
Highlights
- Revenue was $499 million, down 1% year-over-year
- GAAP EPS was a loss of $0.75, including a loss of $1.42 per
share from discontinued operations
- Adjusted EPS was $0.21, an improvement of $0.05 over the prior
year
- Net loss of $138 million, including a $261 million loss from
discontinued operations
- Adjusted EBIT was $103 million, up 22% versus the prior
year
- GAAP cash from operating activities was $66 million
- Free Cash Flow was $75 million, an improvement of $19 million
year-over-year; Free Cash Flow excludes $29 million of
restructuring payments in the third quarter
Update on Strategic
Initiatives
- GEC Exit: The wind-down process is progressing as
expected and should be largely complete by year-end. The Company
remains focused on resolving legacy obligations in the most
efficient manner possible and continues to target approximately
$150 million in one-time costs from the wind-down. These exit costs
are anticipated to improve go-forward earnings by approximately
$136 million annually.
- Cost Rationalization: The Company accelerated the
execution of its cost reduction initiatives and, as of the end of
the third quarter, had removed $90 million in annualized costs. The
Company is increasing its net annual cost savings forecast to $150
million to $170 million.
- Cash Optimization: The Company has largely completed its
overseas cash repatriation, bringing $117 million back to the U.S.
year-to-date. Additionally, the GEC wind-down is stabilizing cash
flows and, once complete, is estimated to result in a reduction of
the amount of unrestricted cash the Company maintains by
approximately $100 million. Further, the Company’s initiative to
purchase captive lease receivables at Pitney Bowes Bank accelerated
the realization of $31 million of net cash year-to-date. The
Company continues to identify additional ways to optimize cash and
expects to realize an additional $100 million in cash optimization
over the next several years associated with initiatives at Pitney
Bowes Bank.
- Balance Sheet Deleveraging: Progress on exiting GEC,
reducing non-essential expenses, and optimizing cash positions has
positioned the Company to pay down debt in the coming quarters. The
Company has more than $100 million of excess cash on the balance
sheet that can be used to reduce debt. Discussions are ongoing with
the Company’s current and prospective lending partners to identify
ways to strategically deleverage on favorable terms.
Lance Rosenzweig, Chief Executive Officer and a member of the
Board, commented:
“Our positive third quarter results reflect the sustained
strength of our core, cash-generating businesses. Pitney Bowes
achieved $103 million in Adjusted EBIT for the third quarter,
representing 22% year-over-year improvement on relatively steady
revenue. We drove significant improvements in segment-level EBIT
during the quarter. This strong performance validates our emphasis
on efficiency and our commitment to becoming a more streamlined
organization.
We also continued to build on our momentum with respect to our
four previously announced strategic initiatives. We are working on
an accelerated basis to complete these initiatives and solidify the
turnaround of this storied brand. As we approach the end of 2024,
we remain committed to increasing profitability, ensuring that we
are effectively managing our capital and building a solid
foundation for improved financial strength in 2025 – while
continually exploring all paths to maximizing value for
shareholders.”
Earnings per share results are summarized in the table
below:
Third Quarter
2024
2023
GAAP EPS
($0.75)
($0.07)
Discontinued Operations
$1.42
$0.17
Restructuring Charges
$0.13
$0.06
Foreign Currency Gain on
Intercompany Loans
$0.08
-
Strategic Review Costs (1)
$0.01
-
Asset Impairment
$0.05
-
Charges in connection with GEC
Restructuring
$0.16
-
Tax benefit from affiliate
reorganization
($0.89)
-
Loss on debt refinancing
$0.01
-
Adjusted EPS
$0.21
$0.16
(1)
Strategic Review Costs include legal, accounting and other expenses
related to the strategic review of GEC, including preparation for a
potential GEC exit.
Discontinued Operations
As a result of the Global Ecommerce exit process announced last
quarter, a majority of the Global Ecommerce reporting segment is
now reported as discontinued operations in the Condensed
Consolidated Financial Statements. Prior periods have been recast
to conform to the current period presentation.
The remaining portion of the Global Ecommerce reportable segment
that did not qualify for discontinued operations treatment is now
reported in an "Other" category. Included in this category are
operations that the Company is currently in the process of exiting
and a smaller continuing operation.
Business Segment
Reporting
SendTech Solutions SendTech Solutions offers physical and
digital shipping and mailing technology solutions, financing,
services, supplies and other applications for small and medium
businesses, retail, enterprise, and government clients around the
world to help simplify and save on the sending, tracking and
receiving of letters, parcels and flats.
Third Quarter
($ millions)
2024
2023
% Change
Reported
Revenue
$313
$327
(4%)
Adjusted Segment EBITDA
$114
$109
5%
Adjusted Segment EBIT
$104
$99
5%
Revenue decline was driven by a decrease in the Company’s
mailing install base and near-term headwinds related to the
Company’s product migration. Shipping-related revenue grew 8%,
driven by a 29% increase in business services revenue.
Simplification and cost reduction initiatives drove higher
Adjusted Segment EBITDA and EBIT. Mail and shipping revenues and
EBIT were negatively impacted by efforts to migrate customers from
arrangements that recognize revenue upfront to SaaS type
arrangements that drive recurring revenue and profit.
Presort Services Presort Services provides sortation
services that enable clients to qualify for USPS workshare
discounts in First Class Mail, Marketing Mail, Marketing Mail Flats
and Bound Printed Matter.
Third Quarter
($ millions)
2024
2023
% Change
Reported
Revenue
$166
$152
9%
Adjusted Segment EBITDA
$55
$37
47%
Adjusted Segment EBIT
$46
$29
59%
Presort sorted 3.7 billion pieces of mail in the quarter,
growing volumes by 3% year-over-year. Higher volumes and revenue
per piece expansion drove revenue growth.
Higher revenue per piece, continued labor and transportation
cost productivity, and cost reductions drove growth in Adjusted
Segment EBITDA and EBIT.
Updated Full Year 2024
Guidance
The Company now expects full-year revenue to decline at a
low-single-digit rate.
The Company is also raising its full-year Adjusted EBIT guidance
to $355 to $360 million.
Conference Call and
Webcast
Management of Pitney Bowes will discuss the Company’s results in
a broadcast over the Internet today at 5:00 p.m. ET. Instructions
for listening to the earnings results via the Web are available on
the Investor Relations page of the Company’s website at
www.pitneybowes.com.
About Pitney Bowes
Pitney Bowes (NYSE: PBI) is a technology-driven company that
provides SaaS shipping solutions, mailing innovation, and financial
services to clients around the world – including more than 90
percent of the Fortune 500. Small businesses to large enterprises,
and government entities rely on Pitney Bowes to reduce the
complexity of sending mail and parcels. For the latest news,
corporate announcements, and financial results, visit
www.pitneybowes.com/us/newsroom. For additional information, visit
Pitney Bowes at www.pitneybowes.com.
Adjusted Segment EBIT Adjusted Segment EBIT is the
primary measure of profitability and operational performance at the
segment level. Adjusted Segment EBIT includes segment revenues and
related costs and expenses attributable to the segment, but
excludes interest, taxes, restructuring charges, goodwill and asset
impairment charges, corporate expenses, and other items not
allocated to a business segment. We also report Adjusted Segment
EBITDA as an additional useful measure of segment profitability and
operational performance, which is calculated as Adjusted Segment
EBIT plus depreciation and amortization expense of the segment.
Use of Non-GAAP Measures Pitney Bowes’ financial results
are reported in accordance with generally accepted accounting
principles (GAAP). Pitney Bowes also discloses certain non-GAAP
measures, such as revenue growth on a constant currency basis,
adjusted earnings before interest and taxes (Adjusted EBIT),
adjusted earnings before interest, taxes, depreciation and
amortization (Adjusted EBITDA), adjusted earnings per share
(Adjusted EPS) and free cash flow.
Revenue growth is presented on a constant currency basis to
exclude the impact of changes in foreign currency exchange rates
since the prior period under comparison. Constant currency is
calculated by converting the current period non-U.S. dollar
denominated revenue using the prior year’s exchange rate for the
comparable quarter. We believe that excluding the impacts of
currency exchange rates provides investors a better understanding
of the underlying revenue performance.
Adjusted EBIT, Adjusted EBITDA and Adjusted EPS exclude the
impact of restructuring charges, goodwill and asset impairment
charges, foreign currency gains and losses on intercompany loans,
certain costs associated with the Ecommerce Restructuring, gains
and losses related to acquisitions and dispositions, gains and
losses on debt redemptions and other unusual items that we believe
are not indicative to our core business operations.
Free cash flow adjusts cash flow from operations calculated in
accordance with GAAP for capital expenditures, restructuring
payments and other special items. Management believes free cash
flow provides investors better insight into the amount of cash
available for other discretionary uses.
Complete reconciliations of non-GAAP measures to comparable GAAP
measures can be found in the attached financial schedules and at
the Company's web site at
https://www.investorrelations.pitneybowes.com/.
This document contains “forward-looking statements” about the
Company’s expected or potential future business and financial
performance. Forward-looking statements include, but are not
limited to, statements about future revenue and earnings guidance,
future events or conditions, and expected cost savings, elimination
of future losses, and anticipated deleveraging in connection with
Pitney Bowes’ announced strategic initiatives. Forward-looking
statements are not guarantees of future performance and involve
risks and uncertainties that could cause actual results to differ
materially from those projected. Factors which could cause future
financial performance to differ materially from expectations
include, without limitation, declining physical mail volumes;
changes in postal regulations or the operations and financial
health of posts in the U.S. or other major markets or changes to
the broader postal or shipping markets; the potential adverse
effects and risks and uncertainties associated with the GEC exit
and wind-down on the Company’s operations, management and
employees, and the ability to successfully implement the Company’s
2024 worldwide cost reduction and optimization initiatives and
realize the expected benefits therefrom, the loss of some of Pitney
Bowes’ larger clients in the Presort Services segments; the loss
of, or significant changes to, United States Postal Service (USPS)
commercial programs, or the Company’s contractual relationships
with the USPS or their performance under those contracts; and other
factors as more fully outlined in the Company's 2023 Form 10-K
Annual Report and other reports filed with the Securities and
Exchange Commission during 2024. Pitney Bowes assumes no obligation
to update any forward-looking statements contained in this document
as a result of new information, events or developments.
Note: Consolidated statements of income; revenue, adjusted
segment EBIT and adjusted segment EBITDA by business segment; and
reconciliations of GAAP to non-GAAP measures for the three and nine
months ended September 30, 2024 and 2023, and consolidated balance
sheets at September 30, 2024 and December 31, 2023 are attached. We
have not provided a reconciliation of our future expectations as to
Adjusted EBIT as such reconciliation is not available without
unreasonable efforts.
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version on businesswire.com: https://www.businesswire.com/news/home/20241107086529/en/
For Investors:
Alex Brown investorrelations@pb.com
For Media:
Longacre Square Partners Joe Germani
jgermani@longacresquare.com
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