Pitney Bowes Announces Second Quarter 2023 Financial Results
Pitney Bowes (NYSE: PBI), a global shipping and mailing company that provides technology, logistics, and financial services, today announced its financial results for the second quarter 2023.
“We saw similar trends that affected first quarter results continue into the second quarter, and we took several significant actions to position the company well for the second half of the year,” said Marc B. Lautenbach, President and Chief Executive Officer. “SendTech and Presort both grew profits, while the decline in cross-border weighed on the performance of Global Ecommerce. Domestic parcel volumes grew close to 30 percent, which we expect to continue in the second half. Importantly, the refinancing of our 2024 notes and execution of the restructuring plan announced last quarter further position the company for the long-term.”
Second Quarter Financial Highlights
Revenue in the quarter was $776 million, a decrease of 11 percent on a reported basis and 5 percent on a comparable basis versus prior year (1) GAAP EPS was a loss of $0.81 and Adjusted EPS was a loss of $0.02 in the quarter versus GAAP EPS and Adjusted EPS of $0.02 in second quarter 2022 GAAP EPS a includes a loss of $0.67 for a non-cash goodwill impairment charge related to the Global Ecommerce segment resulting from performance through June 30, 2023 and continuing changes in macroeconomic conditions GAAP cash from operating activities was breakeven; Free Cash Flow was a net use of $11 million Cash and short-term investments were $561 million at quarter-end On track to deliver $75 million in annual expense savings by yearend 2024 from the previously announced restructuring plan and productivity efforts Signed a $275 million private placement offering in July 2023; net proceeds will be used to redeem the outstanding balance of the 2024 Notes and a portion of the Term Loan ASecond Quarter Business Highlights
Global Ecommerce processed 50 million domestic parcels in the quarter, which is up 29 percent from second quarter 2022 Presort grew Adjusted Segment EBIT by 59 percent and Adjusted Segment EBIT margins by 500 basis points versus prior year SendTech grew Adjusted Segment EBIT by 2 percent and Adjusted Segment EBIT margins by 200 basis points versus prior year SendTech shipping-related revenues increased 14 percent year-over-year; SaaS subscription revenues increased 29 percent Segment Adjusted EBIT was $80 million in the quarter and flat versus prior year(1) Comparable basis is defined in the “Use of Non-GAAP Measures” section
Earnings per share results are summarized in the table below:
Second Quarter
2023
2022
GAAP EPS
($0.81)
$0.02
Goodwill Impairment
$0.67
-
Restructuring Charges
$0.09
$0.02
Proxy Solicitation Fees
$0.02
-
Tax Benefit on Sale of Business
-
($0.03)
Loss on Sale of Business, Including Transaction Costs
-
$0.02
Adjusted EPS (2)
($0.02)
$0.02
(2) The sum of the earnings per share may not equal the totals due to rounding.
Business Segment Reporting
Global Ecommerce
Global Ecommerce provides business to consumer logistics services for domestic and cross-border delivery, returns and fulfillment.
Second Quarter
($ millions)
2023
2022
% Change
Reported
% Change
Comparable
Basis
Revenue
$313
$394
(21%)
(9%)
Adjusted Segment EBITDA
($21)
($7)
>(100%)
Adjusted Segment EBIT
($38)
($29)
(32%)
Revenue and Adjusted Segment EBIT decline was driven by the continuing weakness in cross-border, specifically from a change in how two clients access our offerings.
These declines were partially offset by a 19 percent increase in Domestic parcel revenue and lower operating expenses in the quarter.
Presort Services
Presort Services provides sortation services that enable clients to qualify for USPS workshare discounts in First Class Mail, Marketing Mail, Marketing Mail Flats and Bound Printed Matter.
Second Quarter
($ millions)
2023
2022
% Change
Reported
Revenue
$143
$139
3%
Adjusted Segment EBITDA
$29
$20
45%
Adjusted Segment EBIT
$20
$13
59%
Presort processed 3.6 billion pieces, which represented a decline of 5 percent versus prior year. Revenue per piece improvement and growth in higher yielding mail classes drove growth in revenue.
Adjusted Segment EBIT growth versus prior year driven by higher revenue, improved labor productivity from investments in automation, and lower unit transportation costs.
SendTech Solutions
Sending Technology Solutions offers physical and digital mailing and shipping technology solutions, financing, services, supplies and other applications for small and medium businesses, retail, enterprise, and government clients around the world to help simplify and save on the sending, tracking and receiving of letters, parcels and flats.
Second Quarter
($ millions)
2023
2022
% Change
Reported
% Change
Comparable
Basis
Revenue
$321
$339
(5%)
(4%)
Adjusted Segment EBITDA
$105
$103
1%
Adjusted Segment EBIT
$97
$96
2%
Decline in segment revenue was primarily driven by lower in-period equipment sales as we entered a phase of our product lifecycle where we have less new lease opportunities offset by a corresponding increase in lease extensions. Growth in shipping-related revenues partially offset the decline in revenues.
Simplification and cost reduction actions more than offset the secular mailing install base decline, driving improvement in Adjusted Segment EBIT.
Full Year 2023 Guidance
We expect full year revenue to be on the lower end of our previously provided guidance, resulting in relatively flat growth on a comparable basis.
We continue to expect adjusted EBIT performance to outpace the percent change in revenue.
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 shipping and mailing company that provides technology, logistics, and financial services to more than 90 percent of the Fortune 500. Small business, retail, enterprise, and government clients around the world rely on Pitney Bowes to remove the complexity of sending mail and parcels. For additional information, visit: www.pitneybowes.com
Use of Non-GAAP Measures
Our financial results are reported in accordance with generally accepted accounting principles (GAAP). We also disclose certain non-GAAP measures, such as adjusted earnings before interest and taxes (Adjusted EBIT), adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), adjusted earnings per share (Adjusted EPS), revenue growth on a comparable basis and free cash flow.
Adjusted EBIT, Adjusted EBITDA and Adjusted EPS exclude the impact of restructuring charges, goodwill impairment, gains, losses and costs related to the sale of assets, acquisitions and dispositions, losses on debt redemptions and refinancings and other unusual items. Management believes that these non-GAAP measures provide investors greater insight into the underlying operating trends of the business.
We disclose revenue growth on a comparable basis, which excludes three items. First, the comparison excludes the impacts of foreign currency. Second, we are excluding the impact of the divestiture of the Borderfree business effective July 1, 2022. Third, we are excluding the impact of a change in the presentation of revenue beginning in the fourth quarter of 2022, from a gross basis to net basis due to an adjustment in terms of one of our contracts with the United States Postal Service. The change in revenue presentation impacts both our Global Ecommerce and SendTech Solutions segments. The change in revenue presentation does not impact gross profit. Management believes that excluding these items provides investors with a better understanding of the underlying revenue performance.
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.
Adjusted Segment EBIT is the primary measure of profitability and operational performance at the segment level and is determined by deducting from segment revenue the related costs and expenses attributable to the segment. Adjusted Segment EBIT excludes interest, taxes, unallocated corporate expenses, restructuring charges, goodwill impairment, and other items not allocated to a business segment. The Company also reports Adjusted Segment EBITDA as an additional useful measure of segment profitability and operational performance.
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 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 future revenue and earnings guidance and 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. 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; our ability to continue to grow and manage unexpected fluctuations in volumes, gain additional economies of scale and improve profitability within our Global Ecommerce segment; the loss of some of our larger clients in our Global Ecommerce and Presort Services segments; the loss of, or significant changes to, United States Postal Service (USPS) commercial programs, or our contractual relationships with the USPS or their performance under those contracts; the impacts on our cost of debt due to recent increases in interest rates and the potential for future interest rate hikes ; and other factors as more fully outlined in the Company's 2022 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission during 2023. 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 months ended June 30, 2023 and 2022, and consolidated balance sheets at June 30, 2023 and December 31, 2022 are attached.
2023
2022
2023
2022
Revenue: Business services$
473,497
$
551,478
$
996,988
$
1,148,862
Support services
103,315
107,625
208,599
217,977
Financing
66,702
67,298
133,751
139,327
Equipment sales
79,451
89,986
162,061
179,282
Supplies
36,505
38,245
75,340
79,306
Rentals
17,011
16,863
34,280
33,683
Total revenue
776,481
871,495
1,611,019
1,798,437
Costs and expenses: Cost of business services
410,638
477,544
856,955
980,759
Cost of support services
35,018
37,711
71,858
74,845
Financing interest expense
14,763
12,533
29,299
24,135
Cost of equipment sales
56,180
63,815
113,351
127,586
Cost of supplies
10,884
11,028
22,109
22,545
Cost of rentals
5,142
7,473
10,570
12,782
Selling, general and administrative
222,549
226,638
464,669
469,423
Research and development
10,274
11,254
20,767
22,588
Restructuring charges
22,443
4,224
26,042
8,408
Goodwill impairment
118,599
-
118,599
-
Interest expense, net
22,920
21,007
45,262
43,131
Other components of net pension and postretirement (income) cost
(1,751)
958
(3,461)
1,802
Other income, net
(228)
-
(3,064)
(11,901)
Total costs and expenses
927,431
874,185
1,772,956
1,776,103
(Loss) income before taxes
(150,950)
(2,690)
(161,937)
22,334
Benefit for income taxes
(9,415)
(7,026)
(12,665)
(2,823)
Net (loss) income$
(141,535)
$
4,336
$
(149,272)
$
25,157
(Loss) earnings per share: Basic$
(0.81)
$
0.02
$
(0.85)
$
0.14
Diluted$
(0.81)
$
0.02
$
(0.85)
$
0.14
Weighted-average shares used in diluted earnings per share
175,695
176,969
175,094
177,673
(1) The sum of the earnings per share amounts may not equal the totals due to rounding.2023 December 31,
2022 Current assets: Cash and cash equivalents
$
541,704
$
669,981
Short-term investments
18,972
11,172
Accounts and other receivables, net
272,963
343,557
Short-term finance receivables, net
559,979
564,972
Inventories
92,783
83,720
Current income taxes
11,159
8,790
Other current assets and prepayments
117,132
115,824
Total current assets
1,614,692
1,798,016
Property, plant and equipment, net
401,905
420,672
Rental property and equipment, net
25,936
27,487
Long-term finance receivables, net
640,097
627,124
952,302
1,066,951
Intangible assets, net
70,062
77,944
Operating lease assets
284,783
296,129
Noncurrent income taxes
44,859
46,613
Other assets
388,728
380,419
Total assets$
4,423,364
$
4,741,355
Liabilities and stockholders' (deficit) equity Current liabilities: Accounts payable and accrued liabilities$
812,474
$
907,083
Customer deposits at Pitney Bowes Bank
639,425
628,072
Current operating lease liabilities
53,984
52,576
Current portion of long-term debt
264,980
32,764
Advance billings
82,828
105,207
Current income taxes
2,929
2,101
Total current liabilities
1,856,620
1,727,803
Long-term debt
1,884,798
2,172,502
Deferred taxes on income
236,859
263,131
Tax uncertainties and other income tax liabilities
24,745
23,841
Noncurrent operating lease liabilities
254,051
265,696
Other noncurrent liabilities
241,778
227,729
Total liabilities
4,498,851
4,680,702
Stockholders' (deficit) equity: Common stock
323,338
323,338
Retained earnings
4,908,641
5,125,677
Accumulated other comprehensive loss
(807,993)
(835,564)
Treasury stock, at cost
(4,499,473)
(4,552,798)
Total stockholders' (deficit) equity
(75,487)
60,653
Total liabilities and stockholders' (deficit) equity$
4,423,364
$
4,741,355
Three months ended June 30, Six months ended June 30,
2023
2022
% Change
2023
2022
% Change
Global Ecommerce
Revenue, as reported
$
312,754
$
393,770
(21%)
$
661,145
$
812,297
(19%)
Impact of change in revenue presentation
(37,790)
(75,376)
Impact of Borderfree divestiture
(10,820)
(22,550)
Comparable revenue before currency
312,754
345,160
(9%)
661,145
714,371
(7%)
Impact of currency on revenue
437
3,278
Comparable revenue
$
313,191
$
345,160
(9%)
$
664,423
$
714,371
(7%)
Presort Services
Revenue, as reported
$
143,107
$
138,934
3%
$
302,009
$
299,478
1%
Sending Technology Solutions
Revenue, as reported
$
320,620
$
338,791
(5%)
$
647,865
$
686,662
(6%)
Impact of change in revenue presentation
(4,853)
(8,543)
Comparable revenue before currency
320,620
333,938
(4%)
647,865
678,119
(4%)
Impact of currency on revenue
725
5,569
Comparable revenue
$
321,345
$
333,938
(4%)
$
653,434
$
678,119
(4%)
Consolidated
Revenue, as reported
$
776,481
$
871,495
(11%)
$
1,611,019
$
1,798,437
(10%)
Impact of change in revenue presentation
(42,643)
(83,919)
Impact of Borderfree divestiture
(10,820)
(22,550)
Comparable revenue before currency
776,481
818,032
(5%)
1,611,019
1,691,968
(5%)
Impact of currency on revenue
1,162
8,847
Comparable revenue
$
777,643
$
818,032
(5%)
$
1,619,866
$
1,691,968
(4%)
2023
2022
% change
AdjustedSegment
EBIT (1) D Adjusted
Segment
EBITDA Adjusted
Segment
EBIT (1) D Adjusted
Segment
EBITDA Adjusted
Segment
EBIT Adjusted
Segment
EBITDA Global Ecommerce
$
(38,115)
$
16,620
$
(21,495)
$
(28,825)
$
21,480
$
(7,345)
(32%)
>(100%) Presort Services
20,429
8,337
28,766
12,851
7,000
19,851
59%
45%
Sending Technology Solutions
97,480
7,383
104,863
95,565
7,908
103,473
2%
1%
Segment total$
79,794
$
32,340
112,134
$
79,591
$
36,388
115,979
0%
(3%)
Reconciliation of Segment Adjusted EBITDA to Net (Loss) Income: Segment depreciation and amortization
(32,340)
(36,388)
Unallocated corporate expenses
(47,709)
(40,761)
Restructuring charges
(22,443)
(4,224)
Goodwill impairment
(118,599)
-
Gain on debt redemption
228
-
Proxy solicitation fees
(4,538)
-
Loss on sale of business, including transaction costs
-
(3,756)
Interest, net
(37,683)
(33,540)
Benefit for income taxes
9,415
7,026
Net (loss) income$
(141,535)
$
4,336
Six months ended June 30,2023
2022
% change EBIT (1) D EBITDA EBIT (1) D EBITDA EBIT EBITDA Global Ecommerce$
(72,321)
$
33,034
$
(39,287)
$
(42,521)
$
42,924
$
403
(70%)
>(100%) Presort Services
47,334
16,859
64,193
32,483
13,419
45,902
46%
40%
Sending Technology Solutions
194,151
14,850
209,001
200,140
14,911
215,051
(3%)
(3%)
Segment total$
169,164
$
64,743
233,907
$
190,102
$
71,254
261,356
(11%)
(11%)
Reconciliation of Segment EBITDA to Net (Loss) Income: Segment depreciation and amortization
(64,743)
(71,254)
Unallocated corporate expenses
(104,058)
(98,595)
Restructuring charges
(26,042)
(8,408)
Goodwill impairment
(118,599)
-
Gain (loss) on debt redemption
3,064
(4,993)
Proxy solicitation fees
(10,905)
-
Gain on sale of assets
-
14,372
Loss on sale of business, including transaction costs
-
(2,878)
Interest, net
(74,561)
(67,266)
Benefit for income taxes
12,665
2,823
Net (loss) income$
(149,272)
$
25,157
(1) Adjusted segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges, goodwill impairment, and other
items that are not allocated to a particular business segment.
2023
2022
2023
2022
Reconciliation of reported net (loss) income to adjusted EBIT and adjusted EBITDA Net (loss) income$
(141,535)
$
4,336
$
(149,272)
$
25,157
Benefit for income taxes
(9,415)
(7,026)
(12,665)
(2,823)
(Loss) income before taxes
(150,950)
(2,690)
(161,937)
22,334
Restructuring charges
22,443
4,224
26,042
8,408
Goodwill impairment
118,599
-
118,599
-
(Gain) loss on debt redemption
(228)
-
(3,064)
4,993
Proxy solicitation fees
4,538
-
10,905
-
Gain on sale of assets
-
-
-
(14,372)
Loss on sale of business, including transaction costs
-
3,756
-
2,878
Adjusted net (loss) income before tax
(5,598)
5,290
(9,455)
24,241
Interest, net
37,683
33,540
74,561
67,266
Adjusted EBIT
32,085
38,830
65,106
91,507
Depreciation and amortization
39,873
43,470
79,770
85,472
Adjusted EBITDA$
71,958
$
82,300
$
144,876
$
176,979
Reconciliation of reported diluted (loss) earnings per share to adjusted diluted (loss) earnings per share Diluted (loss) earnings per share$
(0.81)
$
0.02
$
(0.85)
$
0.14
Restructuring charges
0.09
0.02
0.11
0.03
Goodwill impairment
0.67
-
0.67
-
(Gain) loss on debt redemption
(0.00)
-
(0.01)
0.02
Proxy solicitation fees
0.02
-
0.05
-
Gain on sale of assets
-
-
-
(0.06)
Loss on sale of business, including transaction costs
-
0.02
-
0.00
Tax benefit on sale of business
-
(0.03)
-
(0.03)
Adjusted diluted (loss) earnings per share (1)$
(0.02)
$
0.02
$
(0.04)
$
0.10
(1) 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 from operating activities$
(44)
$
35,132
$
(39,758)
$
45,694
Capital expenditures
(25,980)
(31,619)
(54,646)
(64,174)
Restructuring payments
8,242
4,970
12,883
8,255
Proxy solicitation fees paid
7,244
-
10,282
-
Transaction costs paid
-
-
-
2,132
Free cash flow$
(10,538)
$
8,483
$
(71,239)
$
(8,093)
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