Sale unlocks value for shareholders while
advancing the Company’s transformation efforts to focus on removing
the complexities of shipping and mailing for clients
Majority of the net proceeds to be used to pay
down near-term debt maturities
Company updates 2019 annual guidance
Pitney Bowes Inc. (NYSE: PBI), a global technology company that
provides commerce solutions in the areas of ecommerce, shipping,
mailing, data, and financial services, today announced that it has
entered into a definitive agreement to sell its Software Solutions
business to Syncsort for $700 million in cash. The transaction is
expected to close before the end of the calendar year, pending
regulatory approvals and other customary closing conditions.
“Our software and data business has made great progress over the
last few years achieving two consecutive years of growth and I am
very confident of the prospects for this business going forward,”
said Marc B. Lautenbach, President and CEO. “We have always said,
however, if a business was worth more to someone else than to us,
we would consider a sale. The sale of our Software Solutions
business to Syncsort confirms that philosophy. Our software and
data business, together with Syncsort, provides instant scale that
creates value for our clients, partners, and the Pitney Bowes
Software Solutions team.
Lautenbach continued: “While it is never easy to make these kind
of decisions, I am convinced that this is the right thing to do for
the long term. Pitney Bowes will move forward as a streamlined,
global technology company focused on shipping, mailing and related
financial services that operates in markets where we have true
competitive advantage.”
Following the conclusion of the Company’s evaluation of
strategic alternatives in 2018, Pitney Bowes’ senior management,
along with the Pitney Bowes Board of Directors, committed to
consider other options to unlock value for shareholders. Since
then, the Company has divested its Document Messaging Technologies
(DMT) Production Mail and supporting software business; sold its
direct operations within the Global SMB business in six smaller
European countries; paid down debt; altered the return of cash to
shareholders from a dividend to a share buyback; launched Wheeler
Financial Services; and continued to invest in its core business
with new products in Global SMB and new capabilities in Commerce
Services, including the expansion of its domestic delivery
network.
Use of Net Proceeds
The Company plans to use the majority of the net proceeds from
the sale to pay down near-term debt maturities.
“We have several tranches of debt that are maturing over the
next two years and we will use the majority of the net proceeds
from this transaction to pay down that debt and we will refinance
the remainder,” said Stan Sutula, Executive Vice President and CFO.
“Further, we have well-established relationships with our bank
group and are structuring a proactive refinancing plan that
reflects a diversity of funding sources and will leverage the
capital markets, as appropriate.”
2019 Guidance
Beginning with the third quarter, Pitney Bowes Software
Solutions will be recorded as discontinued operations and prior
periods will be recast to exclude Software Solution’s results from
continuing operations. The recast financial statements will be
posted to the Company’s Investor Relations website by the end of
September.
For 2019, the Company is updating its annual revenue growth
rate, adjusted EPS and free cash flow guidance as follows:
- Revenue to be in the range of 1 to 2 percent growth on a
constant currency basis when compared to the recast 2018
revenue
- Adjusted EPS to be in the range of $0.65 to $0.75
- Free cash flow to be in the range of $175 to $205 million
This updated annual adjusted EPS guidance reflects the impact of
the sale of Software Solutions as well as the impact from the
higher level of tariffs, which were not assumed in the Company’s
original guidance. These impacts are expected to be partially
offset by a deferred tax asset valuation allowance reversal, which
based on current results and future income projections is currently
expected to be recorded in the third quarter, and as a result the
Company expects third quarter attainment to the full year for
adjusted EPS to be in the range of 32 to 34 percent.
Guidance reflects the shift of the business to the fourth
quarter as shipping continues to be a larger part of the portfolio.
As a result, the Company expects its fourth quarter attainment to
the full year for revenue to be in the range of 26 to 28
percent.
As a result of this transaction, the Company will further
streamline its operations and reduce spend. The dilution from the
divestiture is expected to be earnings neutral in the 12 months
following the closing of this transaction as a result of the lower
interest expense related to the pay down of debt and overall spend
reductions.
Prior to the close, Pitney Bowes will continue to work closely
with its software clients, partners and systems integrators, while
partnering with Syncsort to ensure a smooth transition. This
transaction is subject to regulatory approvals and other customary
closing conditions.
Goldman Sachs & Co LLC is serving as financial advisor and
Cravath, Swaine & Moore is serving as legal advisor to Pitney
Bowes.
About Syncsort
Syncsort is the global leader in Big Iron to Big Data software.
We organize data everywhere to keep the world working – the same
data that powers machine learning, AI and predictive analytics. We
use our decades of experience so that more than 7,000 customers,
including 84 of the Fortune 100, can quickly extract value from
their critical data anytime, anywhere. Our products provide a
simple way to optimize, assure, integrate, and advance data,
helping to solve for the present and prepare for the future. Learn
more at syncsort.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; location data; customer information and
engagement software; services; and financing. For nearly 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
Forward Looking Statements
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, but are not limited to: declining physical
mail volumes; changes in, or loss of, our contractual relationships
with the U.S. Postal Service or posts in other major markets;
changes in postal regulations; competitive factors, including
pricing pressures, technological developments and the introduction
of new products and services by competitors; the United Kingdom's
potential exit from the European Union (Brexit); our success in
developing and marketing new products and services, and obtaining
regulatory approvals, if required; changes in banking regulations
or the loss of our Industrial Bank charter; changes in labor
conditions and transportation costs; macroeconomic factors,
including global and regional business conditions that adversely
impact customer demand, foreign currency exchange rates and
interest rates; changes in global political conditions and
international trade policies, including the imposition or expansion
of trade tariffs and other factors as more fully outlined in the
Company's 2018 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190826005187/en/
Media: Bill Hughes Chief Communications Officer 203-351-6785
Emily Simmons Communications, Software Solutions
843-467-1071
Financial: Adam David VP, Investor Relations 203-351-7175
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