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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Pitney Bowes Inc | NYSE:PBI | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.03 | -0.57% | 5.22 | 5.51 | 5.17 | 5.31 | 3,468,088 | 01:00:00 |
Pitney Bowes Inc. (NYSE: PBI), a global technology company that provides commerce solutions in the areas of ecommerce, shipping, mailing and financial services, today announced its financial results for the second quarter 2020.
“I want to acknowledge and thank all of the essential workers, including the Pitney Bowes team, for their dedication to their work in what is an unprecedented time. And, likewise, our hearts go out to all who lost loved ones to this virus,” said Marc B. Lautenbach, CEO and President, Pitney Bowes.
“It is times like these that test the resilience of our business,” Lautenbach continued. “We are fortunate to have taken significant actions over the past several years to move into shipping and invest in our digital capabilities, which now enables us to leverage the benefits of a more agile, flexible and contemporary business. We have momentum and are well positioned to emerge from this time as a better and stronger Company.”
Financial Overview:
Other Highlights:
Second Quarter Results
Revenue totaled $837 million, which was growth of 6 percent over prior year on a reported basis and 7 percent when adjusted for the impact of currency.
GAAP earnings per share was a loss of $0.02, which included charges of $0.07 for taxes on the settlement of certain investment securities, $0.02 for discontinued operations and $0.02 for restructuring and asset impairments, partly offset by a $0.05 gain on sale of an equity investment.
Adjusted earnings per share were $0.04.
GAAP cash from operations was $153 million and free cash flow was $148 million. Free cash flow increased over prior year as a result of higher accounts payable and accrued liabilities driven by growth in Global Ecommerce and higher customer deposits. Free cash flow also benefited from the higher run-off of finance receivables.
During the quarter, the Company used cash to invest $34 million in capital expenditures, pay $9 million in dividends to its common shareholders and make $5 million in restructuring payments.
On a year-to-date basis, GAAP cash from operations is $87 million and free cash flow is $101 million.
Earnings per share results for the second quarter are summarized in the table below:
Second Quarter*
2020
2019
GAAP EPS
($0.02
)
$0.13
Discontinued operations
0.02
0.03
GAAP EPS from continuing operations
$0.00
$0.16
Taxes on settlement of investment securities
0.07
-
Gain on sale of an equity investment
(0.05
)
-
Restructuring and asset impairments
0.02
0.02
Transaction costs
-
0.01
Adjusted EPS
$0.04
$0.19
* The sum of the earnings per share may not equal the totals due to rounding.
Business Segment Reporting
The Commerce Services group includes the Global Ecommerce and Presort Services segments. Global Ecommerce facilitates domestic retail and ecommerce shipping solutions, including fulfillment and returns, and global cross-border ecommerce transactions. Presort Services provides sortation services to qualify large volumes of First Class Mail, Marketing Mail, Marketing Mail Flats and Bound Printed Matter for postal workshare discounts.
The Sending Technology Solutions segment offers physical and digital mailing and shipping technology solutions, financing, services, supplies and other applications for small and medium businesses to help simplify and save on the sending, tracking and receiving of letters, parcels and flats.
The sum of the segment results may not equal the totals due to rounding.
Commerce Services
Second Quarter
($ millions)
2020
2019
Y/Y Reported
Y/Y Ex Currency
Revenue
Global Ecommerce
$398
$282
41%
41%
Presort Services
118
128
(8%)
(8%)
Commerce Services
$517
$410
26%
26%
EBITDA
Global Ecommerce
($2)
$1
>(100%)
Presort Services
20
23
(9%)
Commerce Services
$19
$24
(21%)
EBIT
Global Ecommerce
($19)
($16)
(21%)
Presort Services
13
15
(19%)
Commerce Services
($6)
-
>(100%)
Global Ecommerce
Revenue driven by significant growth in Domestic Parcel Delivery services volumes as well as Digital Delivery volumes. EBIT margin improved from the first quarter and versus prior year. EBIT and EBITDA margins benefited from lower transportation and warehousing costs per unit as a result of scale achieved in the quarter, offset by incremental costs associated with Covid-19.
Presort Services
Revenue declined due to lower Marketing Mail and First Class volumes. Marketing Mail Flats and Bound Printed Matter volumes grew significantly over prior year. EBIT and EBITDA margins were impacted by the lower revenue.
SendTech Solutions
Second Quarter
($ millions)
2020
2019
Y/Y Reported
Y/Y Ex Currency
Revenue
$321
$378
(15%)
(15%)
EBITDA
$113
$137
(17%)
EBIT
$104
$125
(16%)
Revenue declined driven by lower equipment sales, support services, supplies and financing. Business services revenues grew as clients increased their usage of shipping offerings and capabilities. Covid-19 adversely impacted in-period revenue, particularly equipment sales and supplies. EBIT and EBITDA margins performed relatively in-line with prior year despite the lower revenue.
2020 Guidance
Given the continued level of uncertainty around the depth and duration of Covid-19, and consistent with direction provided last quarter, the Company has suspended its 2020 annual guidance.
Conference Call and Webcast
Management of Pitney Bowes will discuss the Company’s results in a broadcast over the Internet today at 8:00 a.m. ET. Instructions for listening to the earnings results via the Web are available on the Investor Relations page of the Company’s web site at www.pitneybowes.com.
About Pitney Bowes
Pitney Bowes (NYSE:PBI) is a global technology company providing commerce solutions that power billions of transactions. Clients around the world, including 90 percent of the Fortune 500, rely on the accuracy and precision delivered by Pitney Bowes solutions, analytics, and APIs in the areas of ecommerce fulfillment, shipping and returns; cross-border ecommerce; office mailing and shipping; presort services; and financing. For 100 years, Pitney Bowes has been innovating and delivering technologies that remove the complexity of getting commerce transactions precisely right. For additional information visit Pitney Bowes, the Craftsmen of Commerce, at www.pitneybowes.com.
Use of Non-GAAP Measures
The Company's financial results are reported in accordance with generally accepted accounting principles (GAAP); however, in its disclosures the Company uses certain non-GAAP measures, such as adjusted earnings before interest and taxes (EBIT), adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted earnings per share (EPS), revenue growth on a constant currency basis and free cash flow.
The Company reports measures such as adjusted EBIT, adjusted EBITDA and adjusted EPS to exclude the impact of items like discontinued operations, restructuring charges, gains, losses and costs related to acquisitions and dispositions, asset impairment charges, goodwill impairment charges and other unusual or one-time items. While these are actual Company income or expenses, they can mask underlying trends associated with its business. Such items are often inconsistent in amount and frequency and as such, the non-GAAP measures provide investors greater insight into the underlying operating trends of the business.
In addition, 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. A reconciliation of reported revenue to constant currency revenue can be found in the attached financial schedules.
The Company reports free cash flow in order to provide investors insight into the amount of cash that management could have available for other discretionary uses. Free cash flow adjusts GAAP cash from operations for cash flows of discontinued operations, capital expenditures, restructuring payments, changes in customer deposits held at the Pitney Bowes Bank, transaction costs and other special items. A reconciliation of GAAP cash from operations to free cash flow can be found in the attached financial schedules.
Segment EBIT is the primary measure of profitability and operational performance at the segment level. Segment EBIT is determined by deducting from segment revenue the related costs and expenses attributable to the segment. Segment EBIT excludes interest, taxes, general corporate expenses not allocated to a particular business segment, restructuring charges and goodwill and asset impairments, which are recognized on a consolidated basis. The Company also provides segment EBITDA, which further excludes depreciation and amortization expense for the segment, as an additional useful measure of segment profitability and operational performance. A reconciliation of segment EBIT and EBITDA to net income can be found in the attached financial schedules.
Pitney Bowes has provided a quantitative reconciliation to GAAP in supplemental schedules. This information can be found at the Company's web site www.pb.com/investorrelations.
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 its future revenue and earnings guidance and other statements about future events or conditions. 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. These risks and uncertainties include the severity, magnitude and duration of the Covid-19 pandemic (Covid-19), including governments' responses to Covid-19, its continuing impact on our operations, employees, the availability and cost of labor, global supply chain and demand across our and our clients' businesses as well as any deterioration or instability in global macroeconomic conditions. Other factors, which could cause future financial performance to differ materially from the expectations, and which may also be exacerbated by Covid-19 or a negative change in the economy, include, without limitation: declining physical mail volumes; changes in postal regulations, or the financial health of posts in the U.S. or other major markets or the loss of, or significant changes to, our contractual relationship with the United States Postal Service (USPS); expenses and potential impacts resulting from a breach of security, including cyber-attacks or other comparable events; our ability to continue to grow volumes, gain additional economies of scale and improve profitability within our Commerce Services group; the loss of some of our larger clients in our Commerce Services group; our success at managing customer credit risk; third-party suppliers' ability to provide products and services required by our clients; changes in labor conditions and transportation costs; capital market disruptions or credit rating downgrades that adversely impact our ability to access capital markets at reasonable costs; our success in developing and marketing new products and services and obtaining regulatory approvals, if required; competitive factors, including pricing pressures, technological developments and the introduction of new products and services by competitors and other factors as more fully outlined in the Company's 2019 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission. 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, EBIT and EBITDA by business segment; and reconciliations of GAAP to non-GAAP measures for the three months and six months ended June 30, 2020 and 2019, and consolidated balance sheets at June 30, 2020 and December 31, 2019 are attached.
Pitney Bowes Inc. Consolidated Statements of Income (Loss) (Unaudited; in thousands, except per share amounts) Three months ended June 30, Six months ended June 30,
2020
2019
2020
2019
Revenue: Business services
$
528,990
$
417,963
$
973,369
$
824,508
Support services
113,786
127,705
235,801
256,304
Financing
85,462
92,419
174,540
189,462
Equipment sales
57,837
85,551
134,110
175,338
Supplies
32,773
46,490
78,482
97,443
Rentals
18,644
18,445
37,458
40,602
Total revenue
837,492
788,573
1,633,760
1,583,657
Costs and expenses: Cost of business services
454,311
337,918
828,976
664,964
Cost of support services
36,725
40,520
76,485
82,367
Financing interest expense
11,939
11,043
24,428
22,407
Cost of equipment sales
47,920
58,570
105,279
122,235
Cost of supplies
8,379
11,758
20,619
25,308
Cost of rentals
6,022
8,418
12,400
18,133
Selling, general and administrative
233,631
241,467
482,264
503,136
Research and development
7,467
13,572
19,583
26,149
Goodwill impairment
-
-
198,169
-
Restructuring charges and asset impairments
4,922
5,899
8,739
9,599
Interest expense, net
26,446
28,019
52,329
55,621
Other components of net pension and postretirement income
386
(1,618
)
235
(2,256
)
Other (income) expense
(17,375
)
(27
)
16,112
17,683
Total costs and expenses
820,773
755,539
1,845,618
1,545,346
Income (loss) from continuing operations before taxes
16,719
33,034
(211,858
)
38,311
Provision for income taxes
17,016
3,724
6,986
11,544
(Loss) income from continuing operations
(297
)
29,310
(218,844
)
26,767
(Loss) income from discontinued operations, net of tax
(3,032
)
(5,613
)
7,032
(5,729
)
Net (loss) income$
(3,329
)
$
23,697
$
(211,812
)
$
21,038
Basic (loss) earnings per share (1): Continuing operations
$
-
$
0.17
$
(1.28
)
$
0.15
Discontinued operations
(0.02
)
(0.03
)
0.04
(0.03
)
Net (loss) income$
(0.02
)
$
0.13
$
(1.24
)
$
0.12
Diluted (loss) earnings per share (1): Continuing operations
$
-
$
0.16
$
(1.28
)
$
0.15
Discontinued operations
(0.02
)
(0.03
)
0.04
(0.03
)
Net (loss) income$
(0.02
)
$
0.13
$
(1.24
)
$
0.12
Weighted-average shares used in diluted earnings per share
171,478
178,281
171,167
182,638
(1) The sum of the earnings per share amounts may not equal the totals due to rounding. Pitney Bowes Inc. Consolidated Balance Sheets (Unaudited; in thousands) Assets June 30, 2020 December 31, 2019 Current assets: Cash and cash equivalents$
862,897
$
924,442
Short-term investments
153,221
115,879
Accounts and other receivables, net
391,748
373,471
Short-term finance receivables, net
555,196
629,643
Inventories
73,653
68,251
Current income taxes
1,893
5,565
Other current assets and prepayments
121,924
101,601
Assets of discontinued operations
-
17,229
Total current assets
2,160,532
2,236,081
Property, plant and equipment, net
375,465
376,177
Rental property and equipment, net
40,875
41,225
Long-term finance receivables, net
583,839
625,487
Goodwill
1,132,785
1,324,179
Intangible assets, net
175,460
190,640
Operating lease assets
199,162
200,752
Noncurrent income taxes
68,449
71,903
Other assets
379,611
400,456
Total assets
$
5,116,178
$
5,466,900
Liabilities and stockholders' equity Current liabilities: Accounts payable and accrued liabilities
$
732,048
$
793,690
Customer deposits at Pitney Bowes Bank
613,449
591,118
Current operating lease liabilities
35,432
36,060
Current portion of long-term debt
163,257
20,108
Advance billings
122,606
101,920
Current income taxes
11,723
17,083
Liabilities of discontinued operations
-
9,713
Total current liabilities
1,678,515
1,569,692
Long-term debt
2,553,490
2,719,614
Deferred taxes on income
270,376
274,435
Tax uncertainties and other income tax liabilities
35,928
38,834
Noncurrent operating lease liabilities
177,901
177,711
Other noncurrent liabilities
355,388
400,518
Total liabilities
5,071,598
5,180,804
Stockholders' equity: Common stock
323,338
323,338
Additional paid-in-capital
68,498
98,748
Retained earnings
5,188,119
5,438,930
Accumulated other comprehensive loss
(836,262
)
(840,143
)
Treasury stock, at cost
(4,699,113
)
(4,734,777
)
Total stockholders' equity
44,580
286,096
Total liabilities and stockholders' equity
$
5,116,178
$
5,466,900
Pitney Bowes Inc. Business Segment Revenue (Unaudited; in thousands) Three months ended June 30, Six months ended June 30,
2020
2019
% Change
2020
2019
% Change
REVENUE Global Ecommerce$
398,453
$
282,319
41
%
$
690,776
$
548,573
26
%
Presort Services
118,127
128,138
(8
%)
258,847
262,985
(2
%)
Commerce Services
516,580
410,457
26
%
949,623
811,558
17
%
Sending Technology Solutions
320,912
378,116
(15
%)
684,137
772,099
(11
%)
Total revenue - GAAP
837,492
788,573
6
%
1,633,760
1,583,657
3
%
Currency impact on revenue
2,627
-
4,967
-
Revenue, at constant currency$
840,119
$
788,573
7
%
$
1,638,727
$
1,583,657
3
%
Pitney Bowes Inc. Business Segment EBIT & EBITDA (Unaudited; in thousands) Three months ended June 30,
2020
2019
% change
EBIT (1) D&A EBITDA EBIT (1) D&A EBITDA EBIT EBITDA Global Ecommerce$
(18,894
)
$
17,297
$
(1,597
)
$
(15,576
)
$
16,883
$
1,307
(21
%)
>(100%) Presort Services
12,582
7,857
20,439
15,462
7,088
22,550
(19
%)
(9
%)
Commerce Services
(6,312
)
25,154
18,842
(114
)
23,971
23,857
>(100%)
(21
%)
Sending Technology Solutions
104,268
8,776
113,044
124,738
11,911
136,649
(16
%)
(17
%)
Segment total$
97,956
$
33,930
131,886
$
124,624
$
35,882
160,506
(21
%)
(18
%)
Reconciliation of Segment EBITDA to Net (Loss) Income: Segment depreciation and amortization
(33,930
)
(35,882
)
Unallocated corporate expenses (2)
(49,489
)
(45,048
)
Interest, net
(38,385
)
(39,062
)
Restructuring charges and asset impairments
(4,922
)
(5,899
)
Gain on sale of equity investment
11,908
-
Transaction costs
(349
)
(1,581
)
Provision for income taxes
(17,016
)
(3,724
)
(Loss) income from continuing operations
(297
)
29,310
Loss from discontinued operations, net of tax
(3,032
)
(5,613
)
Net (loss) income$
(3,329
)
$
23,697
Six months ended June 30,
2020
2019
% change
EBIT (1) D&A EBITDA EBIT (1) D&A EBITDA EBIT EBITDA Global Ecommerce$
(48,369
)
$
35,363
$
(13,006
)
$
(30,176
)
$
33,341
$
3,165
(60
%)
>(100%) Presort Services
28,277
15,631
43,908
30,528
14,008
44,536
(7
%)
(1
%)
Commerce Services
(20,092
)
50,994
30,902
352
47,349
47,701
>(100%)
(35
%)
Sending Technology Solutions
210,830
17,815
228,645
247,141
20,768
267,909
(15
%)
(15
%)
Segment Total$
190,738
$
68,809
259,547
$
247,493
$
68,117
315,610
(23
%)
(18
%)
Reconciliation of Segment EBITDA to Net (Loss) Income: Segment depreciation and amortization
(68,809
)
(68,117
)
Unallocated corporate expenses (2)
(93,211
)
(102,006
)
Interest, net
(76,757
)
(78,028
)
Goodwill impairment
(198,169
)
-
Restructuring charges and asset impairments
(8,739
)
(9,599
)
Gain on sale of equity investment
11,908
-
Loss on debt extinguishment
(36,987
)
-
Loss on dispositions and transaction costs
(641
)
(19,549
)
Provision for income taxes
(6,986
)
(11,544
)
(Loss) income from continuing operations
(218,844
)
26,767
Income (loss) from discontinued operations, net of tax
7,032
(5,729
)
Net (loss) income$
(211,812
)
$
21,038
(1) Segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges, and other items that are not allocated to a particular business segment. (2) Includes corporate depreciation and amortization expense of $7,138 and $5,210 for the three months ended June 30, 2020 and 2019, respectively and $12,978 and $9,860 for the six months ended June 30, 2020 and 2019, respectively. Pitney Bowes Inc. Reconciliation of Reported Consolidated Results to Adjusted Results (Unaudited; in thousands, except per share amounts) Three months ended June 30, Six months ended June 30,
2020
2019
2020
2019
Reconciliation of reported net (loss) income to adjusted net income, adjusted EBIT and adjusted EBITDA Net (loss) income
$
(3,329
)
$
23,697
$
(211,812
)
$
21,038
Loss (income) from discontinued operations, net of tax
3,032
5,613
(7,032
)
5,729
Goodwill impairment
-
-
196,600
-
Restructuring charges and asset impairments
3,183
4,242
5,854
6,987
Gain on sale of equity investment
(8,943
)
-
(8,943
)
-
Tax on settlement of investment securities
12,229
-
12,229
-
Loss on extinguishment of debt
-
-
27,777
-
Loss on dispositions and transaction costs
264
1,171
487
20,786
Adjusted net income
6,436
34,723
15,160
54,540
Interest, net
38,385
39,062
76,757
78,028
Provision for income taxes, as adjusted
3,646
5,791
5,610
12,919
Adjusted EBIT
48,467
79,576
97,527
145,487
Depreciation and amortization
41,068
41,092
81,787
77,977
Adjusted EBITDA
$
89,535
$
120,668
$
179,314
$
223,464
Reconciliation of reported diluted (loss) earnings per share to adjusted diluted earnings per share Diluted (loss) earnings per share
$
(0.02
)
$
0.13
$
(1.24
)
$
0.12
Loss (income) from discontinued operations, net of tax
0.02
0.03
(0.04
)
0.03
Goodwill impairment
-
-
1.14
-
Restructuring charges and asset impairments
0.02
0.02
0.03
0.04
Gain on sale of equity investment
(0.05
)
-
(0.05
)
-
Tax on settlement of investment securities
0.07
-
0.07
-
Loss on debt extinguishment
-
-
0.16
-
Loss on dispositions and transaction costs
-
0.01
-
0.11
Adjusted diluted earnings per share
$
0.04
$
0.19
$
0.09
$
0.30
Note: The sum of the earnings per share amounts may not equal the totals due to rounding. Reconciliation of reported net cash from operating activities to free cash flow Net cash provided by operating activities
$
153,093
$
17,054
$
86,809
$
86,782
Net cash used in (provided by) operating activities - discontinued operations
618
(4,277
)
38,423
(5,534
)
Capital expenditures
(34,176
)
(31,493
)
(59,954
)
(59,187
)
Restructuring payments
5,318
4,759
11,365
13,005
Change in customer deposits at PB Bank
23,219
14,720
22,331
(8,316
)
Transaction costs paid
377
4,269
2,117
6,108
Free cash flow
$
148,449
$
5,032
$
101,091
$
32,858
View source version on businesswire.com: https://www.businesswire.com/news/home/20200730005082/en/
Editorial - Bill Hughes Chief Communications Officer 203/351-6785
Financial - Adam David VP, Investor Relations 203/351-7175
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