Pitney Bowes (NYSE: PBI), a global shipping and mailing company
that provides technology, logistics, and financial services, today
announced its financial results for the third quarter 2022.
“We continue to successfully navigate the cross-currents in the
global economy and remain singularly focused on emerging from this
environment in a stronger position,” said Marc B. Lautenbach,
President and CEO, Pitney Bowes. “Similar to last quarter, SendTech
and Presort both grew on a constant currency basis and Global
Ecommerce declined as a result of international macroeconomic
challenges, including US dollar strength. The resilience of
SendTech and Presort will serve us well going forward and the
improved service levels we are seeing in our Domestic Parcel
network within Global Ecommerce will drive substantial volume and
margin expansion.”
Third Quarter Financial Highlights
- Revenue in the quarter was $831 million, a decrease of 5
percent on a reported basis and 4 percent, constant currency,
versus the comparable quarter in 2021
- GAAP EPS was $0.03 and Adjusted EPS was $0.00 in the quarter
versus $0.05 and $0.08, respectively, in third quarter 2021
- Adjusted EBIT was $38 million compared to $39 million in second
quarter 2022 and a decline of $12 million on a year-over-year
basis
- GAAP cash from operating activities in the quarter was a net
use of $36 million
- Free cash flow was a net use of $16 million versus a net source
of $30 million in third quarter 2021; the year-over-year decline
was driven by changes in working capital and lower net income
partially offset by lower capital expenditures and an increase in
customer deposits
- Cash and short-term investments were $607 million at the end of
the quarter
Third Quarter Business Highlights
- Domestic Parcel revenue grew by 2 percent with improved gross
margins despite lower volumes
- Presort revenue grew 4 percent on a year-over-year basis and
with a 500 basis point EBIT margin improvement relative to second
quarter 2022
- SendTech revenue grew on a constant currency basis driven by
high-teens growth in shipping-related revenues
- Equipment revenue and financial receivables both grew
year-over-year
Earnings per share results are summarized in the table below
Third Quarter
2022
2021
GAAP EPS
$0.03
$0.05
Discontinued Operations
-
-
GAAP EPS from Continuing
Operations
$0.03
$0.05
Restructuring Charges
$0.02
$0.02
Gain on Sale of Businesses
($0.05)
-
Loss on Debt Redemption
-
$0.01
Adjusted EPS
$0.00
$0.08
* The sum of the earnings per share may
not equal the totals due to rounding.
Business Segment Reporting
Global Ecommerce Global Ecommerce provides business to
consumer logistics services for domestic and cross-border delivery,
returns and fulfillment.
Third Quarter
($ millions)
2022
2021
% Change
Reported
% Change
Ex Currency
Revenue
$354
$398
(11%)
(10%)
EBITDA
($17)
$0
>(100%)
EBIT
($35)
($21)
(66%)
The segment revenue decline was largely driven by lower volumes,
especially Cross-border, where US Dollar strength is pressuring
international ecommerce activity. Domestic Parcel volumes were 36
million in the quarter, 4 million lower compared to prior year,
with revenues increasing 2 percent driven by better per parcel
yields.
Decreases in segment margins were the result of lower volumes in
Cross-border and Digital Shipping Solutions, offset by modest
improvements in Domestic Parcel.
Presort Services Presort Services provides sortation
services that enable clients to qualify for USPS workshare
discounts in First Class Mail, Marketing Mail, Marketing Mail Flats
and Bound Printed Matter.
Third Quarter
($ millions)
2022
2021
% Change
Reported
% Change
Ex Currency
Revenue
$145
$139
4%
4%
EBITDA
$28
$27
2%
EBIT
$21
$21
(2%)
Revenue growth was driven by better revenue per piece and new
client additions which was partially offset by lower volumes from
existing clients.
EBIT margins improved 500 basis points sequentially to 14%,
primarily from higher revenue per piece and productivity gains.
SendTech Solutions Sending Technology Solutions offers
physical and digital mailing and shipping technology solutions,
financing, services, supplies and other applications for small and
medium businesses, retail, enterprise, and government clients
around the world to help simplify and save on the sending, tracking
and receiving of letters, parcels and flats.
Third Quarter
($ millions)
2022
2021
% Change
Reported
% Change
Ex Currency
Revenue
$332
$338
(2%)
1%
EBITDA
$102
$107
(4%)
EBIT
$95
$99
(4%)
Better year-over-year Equipment sales and a strong increase in
Business Services revenues largely offset lower Finance and Support
Services. Equipment sales and Business Services revenue continued
to benefit from new mailing products and shipping solutions.
Shipping-related revenues experienced high-teens percent growth on
a year-over-year basis.
EBITDA and EBIT declined as a result of lower, high-margin
Finance and Service revenues.
Full Year 2022 Guidance
The Company is reaffirming the previously communicated revenue
and EBIT guidance. The Company expects full year revenue (constant
currency) to range from a low-single digit percentage decline to a
low single digit percentage increase. The Company also expects full
year EBIT to range from a high-single digit percentage decline to a
mid-single digit percentage increase.
The Company also expects positive free cash flow for full year
2022.
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. EDT. 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 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.
Adjusted EBIT, Adjusted EBITDA and Adjusted EPS exclude the
impact of discontinued operations, restructuring charges, gains,
losses and costs related to acquisitions and dispositions, asset
and goodwill impairment charges, and other unusual or one-time
items. Such items are often inconsistent in amount and frequency
and as such, the Company believes that these 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.
Free cash flow adjusts cash from operations calculated in
accordance with GAAP for discontinued operations, capital
expenditures, restructuring payments, changes in customer deposits
held at the Pitney Bowes Bank and other special items. The Company
reports free cash flow to provide investors insight into the amount
of cash that management could have available for other
discretionary uses.
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. Segment EBIT excludes interest, taxes,
unallocated corporate expenses, restructuring charges, asset and
goodwill impairment charges, and other items not allocated to a
segment. The Company also reports 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. In particular, we continue to navigate the
impacts of the Covid-19 pandemic (Covid-19) as well as the risk of
a global recession, and the effects that they may have on our, and
our client’s business. Other factors which could cause future
financial performance to differ materially from expectations, and
which may also be exacerbated by Covid-19 or the risk of a global
recession or a negative change in the economy, 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; the loss of, or significant changes to, United
States Postal Service (USPS) commercial programs, or our
contractual relationships with the USPS or USPS' performance under
those contracts; our ability to continue to grow and manage
volumes, gain additional economies of scale and improve
profitability within our Global Ecommerce segment; changes in labor
and transportation availability and costs; and other factors as
more fully outlined in the Company's 2021 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 and nine months ended September 30, 2022 and
2021, and consolidated balance sheets at September 30, 2022 and
December 31, 2021 are attached.
Pitney Bowes Inc. Consolidated Statements of
Operations (Unaudited; in thousands, except per share amounts)
Three months ended September 30, Nine months ended
September 30,
2022
2021
2022
2021
Revenue: Business services
$
518,405
$
551,384
$
1,667,267
$
1,688,860
Support services
107,642
113,413
325,619
347,266
Financing
67,757
71,936
207,084
223,201
Equipment sales
83,528
83,234
262,810
256,304
Supplies
37,455
38,211
116,761
119,090
Rentals
16,127
17,271
49,810
55,128
Total revenue
830,914
875,449
2,629,351
2,689,849
Costs and expenses: Cost of business services
452,715
472,216
1,433,474
1,454,564
Cost of support services
36,618
38,250
111,463
112,646
Financing interest expense
13,692
11,710
37,827
35,369
Cost of equipment sales
60,595
62,221
188,181
185,622
Cost of supplies
10,529
10,705
33,074
32,383
Cost of rentals
6,270
6,480
19,052
18,940
Selling, general and administrative
209,576
225,024
678,999
699,316
Research and development
9,812
10,621
32,400
32,996
Restructuring charges
4,264
3,701
12,672
11,434
Interest expense, net
23,685
24,312
66,816
73,816
Other components of net pension and postretirement expense
1,427
46
3,229
708
Other (income) expense, net
(8,398
)
3,193
(20,299
)
40,941
Total costs and expenses
820,785
868,479
2,596,888
2,698,735
Income (loss) from continuing operations before taxes
10,129
6,970
32,463
(8,886
)
Provision (benefit) for income taxes
4,642
(1,525
)
1,819
(10,602
)
Income from continuing operations
5,487
8,495
30,644
1,716
Income (loss) from discontinued operations, net of tax
-
572
-
(4,334
)
Net income (loss)
$
5,487
$
9,067
$
30,644
$
(2,618
)
Basic earnings (loss) per share: Continuing operations
$
0.03
$
0.05
$
0.18
$
0.01
Discontinued operations
-
-
-
(0.02
)
Net income (loss)
$
0.03
$
0.05
$
0.18
$
(0.02
)
Diluted earnings (loss) per share: Continuing operations
$
0.03
$
0.05
$
0.17
$
0.01
Discontinued operations
-
-
-
(0.02
)
Net income (loss)
$
0.03
$
0.05
$
0.17
$
(0.02
)
Weighted-average shares used in diluted earnings per share
176,966
179,409
177,418
178,949
(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 September 30,2022 December
31,2021 Current assets: Cash and cash equivalents
$
596,647
$
732,480
Short-term investments
10,014
14,440
Accounts and other receivables, net
287,751
334,630
Short-term finance receivables, net
551,476
560,680
Inventories
89,946
78,588
Current income taxes
27,442
13,894
Other current assets and prepayments
146,636
157,341
Total current assets
1,709,912
1,892,053
Property, plant and equipment, net
427,958
429,162
Rental property and equipment, net
28,451
34,774
Long-term finance receivables, net
597,198
587,427
Goodwill
1,045,940
1,135,103
Intangible assets, net
79,399
132,442
Operating lease assets
259,248
208,428
Noncurrent income taxes
56,339
68,398
Other assets
388,704
471,084
Total assets
$
4,593,149
$
4,958,871
Liabilities and stockholders'
equity Current liabilities: Accounts payable and accrued
liabilities
$
766,170
$
922,543
Customer deposits at Pitney Bowes Bank
663,420
632,062
Current operating lease liabilities
45,761
40,299
Current portion of long-term debt
27,133
24,739
Advance billings
94,100
99,280
Current income taxes
2,051
9,017
Total current liabilities
1,598,635
1,727,940
Long-term debt
2,189,566
2,299,099
Deferred taxes on income
273,455
286,445
Tax uncertainties and other income tax liabilities
31,566
31,935
Noncurrent operating lease liabilities
239,788
192,092
Other noncurrent liabilities
268,415
308,728
Total liabilities
4,601,425
4,846,239
Stockholders' equity: Common stock
323,338
323,338
Additional paid-in-capital
-
2,485
Retained earnings
5,128,030
5,169,270
Accumulated other comprehensive loss
(905,453
)
(780,312
)
Treasury stock, at cost
(4,554,191
)
(4,602,149
)
Total stockholders' (deficit) equity
(8,276
)
112,632
Total liabilities and stockholders' equity
$
4,593,149
$
4,958,871
Pitney Bowes Inc. Business Segment Revenue
(Unaudited; in thousands)
Three months ended September
30, Nine months ended September 30,
2022
2021
% Change
2022
2021
% Change
Global Ecommerce
$
354,326
$
398,011
(11
%)
$
1,166,623
$
1,229,526
(5
%)
Presort Services
144,824
139,296
4
%
444,302
417,041
7
%
Sending Technology Solutions
331,764
338,142
(2
%)
1,018,426
1,043,282
(2
%)
Total revenue - GAAP
830,914
875,449
(5
%)
2,629,351
2,689,849
(2
%)
Currency impact on revenue
13,354
-
28,123
-
Revenue, at constant currency
$
844,268
$
875,449
(4
%)
$
2,657,474
$
2,689,849
(1
%)
Pitney Bowes Inc.
Business Segment EBIT & EBITDA
(Unaudited; in thousands)
Three months
ended September 30,
2022
2021
% change
EBIT (1)
D&A
EBITDA
EBIT (1)
D&A
EBITDA
EBIT
EBITDA
Global Ecommerce
$
(34,881
)
$
17,982
$
(16,899
)
$
(20,950
)
$
20,935
$
(15
)
(66
%)
>(100
%)
Presort Services
20,561
7,182
27,743
21,062
6,235
27,297
(2
%)
2
%
Sending Technology Solutions
95,234
7,248
102,482
98,950
7,694
106,644
(4
%)
(4
%)
Segment total
$
80,914
$
32,412
113,326
$
99,062
$
34,864
133,926
(18
%)
(15
%)
Reconciliation of
Segment EBITDA to Net Income:
Segment depreciation and amortization
(32,412
)
(34,864
)
Unallocated corporate expenses
(42,908
)
(49,176
)
Restructuring charges
(4,264
)
(3,701
)
Gain on sale of business
13,764
-
Loss on debt refinancing
-
(3,193
)
Interest, net
(37,377
)
(36,022
)
(Provision) benefit for income taxes
(4,642
)
1,525
Income from continuing operations
5,487
8,495
Income from discontinued operations, net of tax
-
572
Net income
$
5,487
$
9,067
Nine months ended September 30,
2022
2021
% change
EBIT (1)
D&A
EBITDA
EBIT (1)
D&A
EBITDA
EBIT
EBITDA
Global Ecommerce
$
(77,402
)
$
60,906
$
(16,496
)
$
(58,157
)
$
58,171
$
14
(33
%)
>(100
%) Presort Services
53,044
20,601
73,645
56,247
20,532
76,779
(6
%)
(4
%)
Sending Technology Solutions
295,374
22,159
317,533
320,541
22,835
343,376
(8
%)
(8
%)
Segment Total
$
271,016
$
103,666
374,682
$
318,631
$
101,538
420,169
(15
%)
(11
%)
Reconciliation of
Segment EBITDA to Net Income (Loss):
Segment depreciation and amortization
(103,666
)
(101,538
)
Unallocated corporate expenses
(141,537
)
(162,957
)
Restructuring charges
(12,672
)
(11,434
)
Gain on sale of assets
14,372
1,434
Gain on sale of business, including transaction costs
10,920
10,201
Loss on debt redemption/refinancing
(4,993
)
(55,576
)
Interest, net
(104,643
)
(109,185
)
(Provision) benefit for income taxes
(1,819
)
10,602
Income from continuing operations
30,644
1,716
Loss from discontinued operations, net of tax
-
(4,334
)
Net income (loss)
$
30,644
$
(2,618
)
(1)
Segment EBIT excludes interest, taxes, general corporate expenses,
restructuring charges, and other items that are not allocated to a
particular business segment. In 2022, we refined the methodology
for allocating transportation costs between Global Ecommerce and
Presort Services, resulting in an increase in Global Ecommerce EBIT
and a corresponding decrease in Presort Services EBIT of $3 million
and $9 million for the three and nine months ended September 30,
2022, respectively.
Pitney Bowes Inc. Reconciliation of
Reported Consolidated Results to Adjusted Results (Unaudited;
in thousands, except per share amounts)
Three months
ended September 30, Nine months ended September 30,
2022
2021
2022
2021
Reconciliation of reported net income (loss) to adjusted
EBIT and EBITDA Net income (loss)
$
5,487
$
9,067
$
30,644
$
(2,618
)
(Income) loss from discontinued operations, net of tax
-
(572
)
-
4,334
Provision (benefit) for income taxes
4,642
(1,525
)
1,819
(10,602
)
Income (loss) from continuing operations before taxes
10,129
6,970
32,463
(8,886
)
Restructuring charges
4,264
3,701
12,672
11,434
Gain on sale of assets
-
-
(14,372
)
(1,434
)
Gain on sale of business, including transaction costs
(13,764
)
-
(10,920
)
(10,201
)
Loss on debt redemption/refinancing
-
3,193
4,993
55,576
Adjusted net income before tax
629
13,864
24,836
46,489
Interest, net
37,377
36,022
104,643
109,185
Adjusted EBIT
38,006
49,886
129,479
155,674
Depreciation and amortization
39,280
41,809
124,752
121,225
Adjusted EBITDA
$
77,286
$
91,695
$
254,231
$
276,899
Reconciliation of reported diluted earnings (loss) per
share to adjusted diluted earnings per share Diluted earnings
(loss) per share
$
0.03
$
0.05
$
0.17
$
(0.02
)
Loss from discontinued operations, net of tax
-
-
-
0.02
Restructuring charges
0.02
0.02
0.05
0.05
Gain on sale of assets
-
-
(0.06
)
(0.01
)
Gain on sale of business, including transaction costs
(0.05
)
-
(0.09
)
(0.02
)
Loss on debt redemption/refinancing
-
0.01
0.02
0.23
Adjusted diluted earnings per share (1)
$
(0.00
)
$
0.08
$
0.10
$
0.26
(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
$
(36,465
)
$
71,446
$
9,229
$
216,174
Capital expenditures
(33,359
)
(57,204
)
(97,533
)
(140,907
)
Restructuring payments
3,506
6,023
11,761
14,847
Change in customer deposits at PB Bank
47,271
9,879
31,359
25,512
Transaction costs paid
3,268
-
5,400
-
Free cash flow
$
(15,779
)
$
30,144
$
(39,784
)
$
115,626
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221031005756/en/
Editorial - Bill Hughes Chief Communications Officer
203.351.6785
Financial - Ned Zachar, CFA VP, Investor Relations
203.614.1092
Alex Brown Senior Manager, Investor Relations 203.351.7639
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