STAMFORD, Conn.--(BUSINESS WIRE)--Jul. 30, 2020-- 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:

• Revenue of $837 million, growth of 6 percent as reported and 7 percent when adjusted for the impact of currency
• GAAP EPS loss of $0.02; Adjusted EPS of $0.04
• GAAP cash from operations of $153 million; free cash flow of $148 million.
• Given the continued uncertainty around Covid-19 and consistent with direction from the last quarter, the Company has suspended its 2020 annual guidance.

Other Highlights:

• The Company ended the second quarter with over $1 billion in cash and short-term investments and remains confident in its liquidity position.
• The Company’s next bond maturity is not due until October 2021 for $172 million.

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

Source: Pitney Bowes Inc.