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Pitney Bowes Announces First Quarter 2021 Financial Results
“We delivered a solid start to the year, with every business making a meaningful contribution to our first quarter results,” said
First Quarter 2021
- Revenue of
$915 million , growth of 15 percent on a reported basis and 14 percent excluding the impact of currency - GAAP EPS of (
$0.18 ), which includes a loss related to debt refinancing - Adjusted EPS of
$0.07 - EPS reflects a
$0.02 tax benefit associated with an affiliate reorganization. - GAAP cash from operations of
$66 million ; free cash flow net use of$1 million . - The Company reduced debt by
$126 million from year-end 2020 and took several actions to refine its capital structure which reduced near-term refinancing risk, improved pricing of its Term Loan B and extended the duration of maturities across its capital structure. - Global Ecommerce grew revenue 41 percent on a reported basis and 40 percent excluding the impact of currency; EBIT margins and EBITDA margins improved over prior year.
- Presort Services grew revenue, EBIT margins and EBITDA margins over prior year.
- SendTech EBIT margins and EBITDA margins improved over prior year, which is the second consecutive quarter of EBIT and EBITDA year-over-year dollar growth.
Earnings per share results are summarized in the table below:
|
First Quarter* |
|||
|
2021 |
|
2020 |
|
GAAP EPS |
( |
|
( |
|
Discontinued operations |
(0.02) |
|
(0.06) |
|
GAAP EPS from continuing operations |
( |
|
( |
|
Restructuring charges |
0.01 |
|
0.02 |
|
|
- |
|
1.15 |
|
Loss on debt refinancing |
0.22 |
|
0.16 |
|
Adjusted EPS |
|
|
|
* The sum of the earnings per share may not equal the totals due to rounding.
Business Segment Reporting
Global Ecommerce facilitates domestic retail ecommerce shipping solutions, including delivery, returns and fulfillment, and global cross-border ecommerce transactions.
Presort Services provides sortation services to qualify large volumes of First Class Mail, Marketing Mail, Marketing Mail Flats and Bound Printed Matter for postal workshare discounts.
Sending Technology Solutions offers physical and digital mailing and shipping technology solutions, financing, services, supplies and other applications for small and medium businesses to help simplify and save on the sending, tracking and receiving of letters, parcels and flats.
Global Ecommerce
|
First Quarter |
|||||||
($ millions) |
2021 |
2020 |
% Change |
% Change |
||||
Revenue |
|
|
|
|
41% |
|
40% |
|
EBITDA |
( |
|
( |
|
28% |
|
|
|
EBIT |
( |
|
( |
|
11% |
|
|
Revenue benefited primarily from growth in volumes across all services. EBIT and EBITDA benefited from improved Cross Border and Digital Delivery Service margins, partly offset by higher costs in Domestic Parcel Services. EBIT and EBITDA improved through the quarter with March being EBITDA positive.
Presort Services
|
First Quarter |
|||||||
($ millions) |
2021 |
2020 |
% Change |
% Change |
||||
Revenue |
|
|
|
|
2% |
|
2% |
|
EBITDA |
|
|
|
|
13% |
|
|
|
EBIT |
|
|
|
|
21% |
|
|
Revenue benefited primarily from growth in Marketing Mail. EBIT and EBITDA margins improved over prior year and were the highest margins in five quarters.
SendTech Solutions
|
First Quarter |
|||||||
($ millions) |
2021 |
2020 |
% Change |
% Change |
||||
Revenue |
|
|
|
|
(1%) |
|
(3%) |
|
EBITDA |
|
|
|
|
6% |
|
|
|
EBIT |
|
|
|
|
7% |
|
|
Revenue benefited from growth in equipment sales, business services and rentals, partly offset by declines in financing, supplies and support services. EBIT margin improved from prior year and was the highest margin in three quarters.
Full Year 2021 Expectations
The Company’s full year 2021 expectations are consistent with what was communicated last quarter. The Company expects annual revenue to grow in the low-to-mid single digit range, making 2021 the fifth consecutive year of constant currency growth. The Company expects adjusted EPS to grow over prior year driven largely by improvement in Global Ecommerce, which is expected to be EBITDA positive for the full year. The Company also expects lower free cash flow primarily due to specific items that benefited 2020 and are not expected to continue at the same level in 2021.
Conference Call and Webcast
Management of
About
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-
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
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.
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, the efficacy and availability of vaccines, its continuing impact on our operations, employees, the availability and cost of labor and transportation, 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 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 operations, or the financial health of posts, in the
Note: Consolidated statements of income; revenue, EBIT and EBITDA by business segment; and reconciliations of GAAP to non-GAAP measures for the three months ended
Consolidated Statements of Loss | |||||||||||
(Unaudited; in thousands, except per share amounts) | |||||||||||
Three months ended |
|||||||||||
|
2021 |
|
|
2020 |
|
||||||
Revenue: | |||||||||||
Business services |
$ |
570,454 |
|
$ |
444,379 |
|
|||||
Support services |
|
118,697 |
|
|
122,015 |
|
|||||
Financing |
|
77,812 |
|
|
89,078 |
|
|||||
Equipment sales |
|
86,803 |
|
|
76,273 |
|
|||||
Supplies |
|
42,224 |
|
|
45,709 |
|
|||||
Rentals |
|
19,207 |
|
|
18,814 |
|
|||||
Total revenue |
|
915,197 |
|
|
796,268 |
|
|||||
Costs and expenses: | |||||||||||
Cost of business services |
|
499,534 |
|
|
374,665 |
|
|||||
Cost of support services |
|
36,717 |
|
|
39,760 |
|
|||||
Financing interest expense |
|
11,886 |
|
|
12,489 |
|
|||||
Cost of equipment sales |
|
61,840 |
|
|
57,359 |
|
|||||
Cost of supplies |
|
11,211 |
|
|
12,240 |
|
|||||
Cost of rentals |
|
6,447 |
|
|
6,378 |
|
|||||
Selling, general and administrative |
|
238,102 |
|
|
248,633 |
|
|||||
Research and development |
|
11,316 |
|
|
12,116 |
|
|||||
Restructuring charges |
|
2,889 |
|
|
3,817 |
|
|||||
|
- |
|
|
198,169 |
|
||||||
Interest expense, net |
|
25,158 |
|
|
25,883 |
|
|||||
Other components of net pension and postretirement expense (income) |
|
350 |
|
|
(151 |
) |
|||||
Other expense, net |
|
51,394 |
|
|
33,487 |
|
|||||
Total costs and expenses |
|
956,844 |
|
|
1,024,845 |
|
|||||
Loss from continuing operations before taxes |
|
(41,647 |
) |
|
(228,577 |
) |
|||||
Benefit for income taxes |
|
(13,992 |
) |
|
(10,030 |
) |
|||||
Loss from continuing operations |
|
(27,655 |
) |
|
(218,547 |
) |
|||||
(Loss) income from discontinued operations, net of tax |
|
(3,886 |
) |
|
10,064 |
|
|||||
Net loss |
$ |
(31,541 |
) |
$ |
(208,483 |
) |
|||||
Basic loss per share (1): | |||||||||||
Continuing operations |
$ |
(0.16 |
) |
$ |
(1.28 |
) |
|||||
Discontinued operations |
|
(0.02 |
) |
|
0.06 |
|
|||||
Net loss |
$ |
(0.18 |
) |
$ |
(1.22 |
) |
|||||
Diluted loss per share (1): | |||||||||||
Continuing operations |
$ |
(0.16 |
) |
$ |
(1.28 |
) |
|||||
Discontinued operations |
|
(0.02 |
) |
|
0.06 |
|
|||||
Net loss |
$ |
(0.18 |
) |
$ |
(1.22 |
) |
|||||
Weighted-average shares used in diluted earnings per share |
|
172,856 |
|
|
170,912 |
|
|||||
(1 |
) |
The sum of the earnings per share amounts may not equal the totals due to rounding. | |||||||||
Consolidated Balance Sheets | ||||||||||
(Unaudited; in thousands) | ||||||||||
Assets | 2021 |
2020 |
||||||||
Current assets: | ||||||||||
Cash and cash equivalents |
$ |
680,727 |
|
$ |
921,450 |
|
||||
Short-term investments |
|
16,200 |
|
|
18,974 |
|
||||
Accounts and other receivables, net |
|
327,755 |
|
|
389,240 |
|
||||
Short-term finance receivables, net |
|
551,061 |
|
|
568,050 |
|
||||
Inventories |
|
63,680 |
|
|
65,845 |
|
||||
Current income taxes |
|
44,288 |
|
|
23,219 |
|
||||
Other current assets and prepayments |
|
124,394 |
|
|
120,145 |
|
||||
Total current assets |
|
1,808,105 |
|
|
2,106,923 |
|
||||
Property, plant and equipment, net |
|
405,226 |
|
|
391,280 |
|
||||
Rental property and equipment, net |
|
37,708 |
|
|
38,435 |
|
||||
Long-term finance receivables, net |
|
597,012 |
|
|
605,292 |
|
||||
|
1,144,064 |
|
|
1,152,285 |
|
|||||
Intangible assets, net |
|
152,265 |
|
|
159,839 |
|
||||
Operating lease assets |
|
196,843 |
|
|
201,916 |
|
||||
Noncurrent income taxes |
|
68,732 |
|
|
72,653 |
|
||||
Other assets |
|
531,226 |
|
|
491,514 |
|
||||
Total assets |
$ |
4,941,181 |
|
$ |
5,220,137 |
|
||||
Liabilities and stockholders' equity | ||||||||||
Current liabilities: | ||||||||||
Accounts payable and accrued liabilities |
$ |
820,286 |
|
$ |
880,616 |
|
||||
Customer deposits at |
|
589,406 |
|
|
617,200 |
|
||||
Current operating lease liabilities |
|
39,587 |
|
|
39,182 |
|
||||
Current portion of long-term debt |
|
19,972 |
|
|
216,032 |
|
||||
Advance billings |
|
118,166 |
|
|
114,550 |
|
||||
Current income taxes |
|
6,839 |
|
|
2,880 |
|
||||
Total current liabilities |
|
1,594,256 |
|
|
1,870,460 |
|
||||
Long-term debt |
|
2,418,885 |
|
|
2,348,361 |
|
||||
Deferred taxes on income |
|
282,192 |
|
|
279,451 |
|
||||
Tax uncertainties and other income tax liabilities |
|
37,936 |
|
|
38,163 |
|
||||
Noncurrent operating lease liabilities |
|
174,798 |
|
|
180,292 |
|
||||
Other noncurrent liabilities |
|
413,951 |
|
|
437,015 |
|
||||
Total liabilities |
|
4,922,018 |
|
|
5,153,742 |
|
||||
Stockholders' equity: | ||||||||||
Common stock |
|
323,338 |
|
|
323,338 |
|
||||
Additional paid-in-capital |
|
15,269 |
|
|
68,502 |
|
||||
Retained earnings |
|
5,161,029 |
|
|
5,201,195 |
|
||||
Accumulated other comprehensive loss |
|
(847,538 |
) |
|
(839,131 |
) |
||||
|
(4,632,935 |
) |
|
(4,687,509 |
) |
|||||
Total stockholders' equity |
|
19,163 |
|
|
66,395 |
|
||||
Total liabilities and stockholders' equity |
$ |
4,941,181 |
|
$ |
5,220,137 |
|
||||
Business Segment Revenue | |||||||||
(Unaudited; in thousands) | |||||||||
Three months ended |
|||||||||
|
2021 |
|
2020 |
% Change |
|||||
Global Ecommerce |
$ |
413,086 |
$ |
292,323 |
41% |
||||
Presort Services |
|
143,126 |
|
140,720 |
2% |
||||
Sending Technology Solutions |
|
358,985 |
|
363,225 |
(1%) |
||||
Total revenue - GAAP |
|
915,197 |
|
796,268 |
15% |
||||
Currency impact on revenue |
|
(8,803) |
|
- |
|||||
Revenue, at constant currency |
$ |
906,394 |
$ |
796,268 |
14% |
||||
Business Segment EBIT & EBITDA | ||||||||||||||||
(Unaudited; in thousands) | ||||||||||||||||
Three months ended |
||||||||||||||||
2021 |
2020 |
% change | ||||||||||||||
EBIT (1) | D&A | EBITDA | EBIT (1) | D&A | EBITDA | EBIT | EBITDA | |||||||||
Global Ecommerce |
$ |
(26,376) |
$ |
18,176 |
$ |
(8,200) |
$ |
(29,475) |
$ |
18,065 |
$ |
(11,410) |
11% |
28% |
||
Presort Services |
|
19,051 |
|
7,499 |
|
26,550 |
|
15,695 |
|
7,774 |
|
23,469 |
21% |
13% |
||
Sending Technology Solutions |
|
114,470 |
|
7,604 |
|
122,074 |
|
106,562 |
|
9,039 |
|
115,601 |
7% |
6% |
||
Segment total |
$ |
107,145 |
$ |
33,279 |
|
140,424 |
$ |
92,782 |
$ |
34,878 |
|
127,660 |
15% |
10% |
||
Reconciliation of Segment EBITDA to Net Income: | ||||||||||||||||
Segment depreciation and amortization |
|
(33,279) |
|
(34,878) |
||||||||||||
Unallocated corporate expenses |
|
(57,465) |
|
(43,722) |
||||||||||||
Restructuring charges |
|
(2,889) |
|
(3,817) |
||||||||||||
Interest, net |
|
(37,044) |
|
(38,372) |
||||||||||||
|
- |
|
(198,169) |
|||||||||||||
Loss on debt refinancing |
|
(51,394) |
|
(36,987) |
||||||||||||
Transaction costs |
|
- |
|
(292) |
||||||||||||
Benefit for income taxes |
|
13,992 |
|
10,030 |
||||||||||||
Loss from continuing operations |
|
(27,655) |
|
(218,547) |
||||||||||||
(Loss) income from discontinued operations, net of tax |
|
(3,886) |
|
10,064 |
||||||||||||
Net loss |
$ |
(31,541) |
$ |
(208,483) |
||||||||||||
(1) Segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges, and other items that are not allocated to a particular business segment. | ||||||||||||||||
Reconciliation of Reported Consolidated Results to Adjusted Results | ||||||||
(Unaudited; in thousands, except per share amounts) | ||||||||
Three months ended |
||||||||
|
2021 |
|
2020 |
|||||
Reconciliation of reported net loss to adjusted EBIT and EBITDA | ||||||||
Net loss |
$ |
(31,541) |
$ |
(208,483) |
||||
Loss (income) from discontinued operations, net of tax |
|
3,886 |
|
(10,064) |
||||
Benefit for income taxes |
|
(13,992) |
|
(10,030) |
||||
Loss from continuing operations before taxes |
|
(41,647) |
|
(228,577) |
||||
Restructuring charges |
|
2,889 |
|
3,817 |
||||
|
- |
|
198,169 |
|||||
Loss on debt refinancing |
|
51,394 |
|
36,987 |
||||
Transaction costs |
|
- |
|
292 |
||||
Adjusted net income before tax |
|
12,636 |
|
10,688 |
||||
Interest, net |
|
37,044 |
|
38,372 |
||||
Adjusted EBIT |
|
49,680 |
|
49,060 |
||||
Depreciation and amortization |
|
39,594 |
|
40,719 |
||||
Adjusted EBITDA |
$ |
89,274 |
$ |
89,779 |
||||
Reconciliation of reported diluted loss per share to adjusted diluted earnings per share | ||||||||
Diluted loss per share |
$ |
(0.18) |
$ |
(1.22) |
||||
Loss (income) from discontinued operations, net of tax |
|
0.02 |
|
(0.06) |
||||
Restructuring charges |
|
0.01 |
|
0.02 |
||||
|
- |
|
1.15 |
|||||
Loss on debt refinancing |
|
0.22 |
|
0.16 |
||||
Adjusted diluted earnings per share (1) |
$ |
0.07 |
$ |
0.05 |
||||
Reconciliation of reported net cash from operating activities to free cash flow | ||||||||
Net cash provided by (used in) operating activities |
$ |
65,924 |
$ |
(67,355) |
||||
Net cash used in operating activities - discontinued operations |
|
- |
|
37,805 |
||||
Capital expenditures |
|
(43,328) |
|
(25,778) |
||||
Restructuring payments |
|
3,955 |
|
6,047 |
||||
Change in customer deposits at |
|
(27,794) |
|
(888) |
||||
Transaction costs paid |
|
- |
|
1,740 |
||||
Free cash flow |
$ |
(1,243) |
$ |
(48,429) |
||||
(1) The sum of the earnings per share amounts may not equal the totals due to rounding. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20210430005042/en/
Editorial -
Chief Communications Officer
203/351-6785
Financial -
VP, Investor Relations
203/351-7175
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