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Pitney Bowes Announces First Quarter 2024 Financial Results

Pitney Bowes (NYSE: PBI) (“Pitney Bowes” or the “Company”), a global shipping and mailing company that provides technology, logistics, and financial services, today announced its financial res...

Business Wire

STAMFORD, Conn.: Pitney Bowes (NYSE: PBI) (“Pitney Bowes” or the “Company”), a global shipping and mailing company that provides technology, logistics, and financial services, today announced its financial results for the first quarter 2024.

Jason Dies, Interim Chief Executive Officer, commented:

“We came out of the gate strong with first quarter results that reflect enterprise-wide changes in our operating intensity and efficiency efforts. Net income improved $5 million over prior year. Adjusted EBIT grew by more than $23 million on relatively flat revenue. This includes solid segment-level performance and systematic cost reductions, resulting in an 8% decline in operating expenses.

At the segment level, Presort Services achieved record revenue and EBIT while SendTech once again delivered solid profit increases and margin expansion. Global Ecommerce grew domestic parcel volumes in a challenging market and reduced operating expense as we continue efforts to maximize value.

We are very encouraged by improvements in execution over the past six months and our results for the first quarter in particular. We continue to see opportunities in the remainder of the year. We will build on this momentum by maintaining strong execution and a disciplined focus on costs to increase cashflow and create capacity for investment in high-margin growth areas.”

First Quarter Financial Highlights

  • Revenue in the quarter was $831 million, flat compared to prior year
  • GAAP EPS improved $0.02 over prior year; Adjusted EPS was flat versus prior year
  • Net income was a loss of $3 million, an improvement of $5 million over prior year despite higher interest and tax expense; adjusted EBIT was $56 million, up $23 million or 71 percent over prior year
  • GAAP cash from operating activities was a use of $13 million, an improvement of $27 million year-over-year; Free Cash Flow was a use of $17 million, an improvement of $43 million year-over-year
  • Cost reduction actions as part of 2023 restructuring plan generated significant benefit in the quarter; now expect savings to exceed $75 to $85 million target
  • Cash and short-term investments were $538 million at quarter-end

Earnings per share results are summarized in the table below:

 

First Quarter

 

2024

2023

GAAP EPS

($0.02)

($0.04)

Restructuring Charges

$0.02

$0.01

Foreign Currency Gain on Intercompany Loans

($0.02)

-

Gain on Debt Redemption

-

($0.01)

Proxy Solicitation Fees

-

$0.03

Transaction Costs

$0.01

-

Adjusted EPS

($0.01)

($0.01)

Business Segment Reporting

Effective January 1, 2024, we moved the digital delivery services offering from our Global Ecommerce segment to the SendTech Solutions segment in order to leverage our technology and innovation capabilities to better serve our clients. Prior periods have been recast to conform to our current segment presentation.

Quarterly historical financial information consistent with this change can be found within the Financial Reporting section of the Company's Investor Relations website.

SendTech Solutions

SendTech 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.

 

First Quarter

($ millions)

2024

2023

% Change

Reported

Revenue

$327

$335

(2%)

Adjusted Segment EBITDA

$111

$105

6%

Adjusted Segment EBIT

$101

$96

6%

Shipping-related revenue grew 8%, partially offsetting the decline in mailing-related revenue of 4%. The timing of our product lifecycle and a continued reduction in our meter base drove the revenue decline in the quarter.

Favorable revenue mix, improvements in supply chain management, and cost reduction actions drove lower COGS and SG&A, resulting in higher Adjusted Segment EBITDA and EBIT.

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.

 

First Quarter

($ millions)

2024

2023

% Change

Reported

Revenue

$170

$159

7%

Adjusted Segment EBITDA

$49

$35

39%

Adjusted Segment EBIT

$40

$27

50%

Presort achieved record revenue as higher revenue per piece offset a 2% decline in volumes.

Higher revenue per piece, improved labor productivity from automation refresh and process improvements, and transportation optimization drove margin expansion, resulting in record Adjusted Segment EBITDA and EBIT.

Global Ecommerce

Global Ecommerce provides business to consumer logistics services for domestic and cross-border delivery, returns and fulfillment.

 

First Quarter

($ millions)

2024

2023

% Change

Reported

Revenue

$333

$341

(2%)

Adjusted Segment EBITDA

($21)

($19)

(14%)

Adjusted Segment EBIT

($35)

($33)

(7%)

Lower Global Ecommerce revenue was driven by a 49% decline in cross-border revenue from changes in how two of our largest clients access our services that occurred in the second quarter 2023. Domestic parcel volumes grew 20% to 60 million processed in the quarter, driving domestic parcel revenue growth of 8%.

Adjusted Segment EBITDA and EBIT declined as a result of the decline in cross-border revenue and lower domestic parcel revenue per piece. Cost actions partially offset the impact of these items and drove a 19% improvement in operating expenses.

Full Year 2024 Guidance

We are maintaining our guidance and expect revenue growth to range from flat to a low-single digit decline and EBIT margins to remain relatively flat on a year-over-year basis.

We are planning similar levels of capital expenditures in 2024 as in 2023 and expect interest expense and taxes to increase over prior year.

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 charges, foreign currency gains and losses on intercompany loans, gains, losses and costs related to acquisitions and dispositions, gains and losses on debt redemptions and other unusual items. Management believes that these non-GAAP measures provide investors greater insight into the underlying operating trends of the business.

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, foreign currency gains and losses on intercompany loans, 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 of higher interest rates and the potential for future interest rate increases on our cost of debt; and other factors as more fully outlined in the Company's 2023 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission during 2024. 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 ended March 31, 2024 and 2023, and consolidated balance sheets at March 31, 2024 and December 31, 2023 are attached.

Pitney Bowes Inc.  
Consolidated Statements of Operations  
(Unaudited; in thousands, except per share amounts)  
   
Three months ended March 31,

 

2024

 

 

 

2023

 

Revenue:  
Business services

$

535,597

 

 

$

523,491

 

Support services

 

96,333

 

 

 

105,284

 

Financing

 

67,663

 

 

 

67,049

 

Equipment sales

 

77,403

 

 

 

82,610

 

Supplies

 

36,721

 

 

 

38,835

 

Rentals

 

16,792

 

 

 

17,269

 

Total revenue

 

830,509

 

 

 

834,538

 

   
Costs and expenses:  
Cost of business services

 

446,367

 

 

 

446,317

 

Cost of support services

 

33,055

 

 

 

36,840

 

Financing interest expense

 

16,603

 

 

 

14,536

 

Cost of equipment sales

 

52,559

 

 

 

57,171

 

Cost of supplies

 

10,195

 

 

 

11,225

 

Cost of rentals

 

4,684

 

 

 

5,428

 

Selling, general and administrative

 

216,197

 

 

 

242,120

 

Research and development

 

9,481

 

 

 

10,493

 

Restructuring charges

 

4,315

 

 

 

3,599

 

Interest expense, net

 

27,766

 

 

 

22,342

 

Other components of net pension and postretirement income

 

(387

)

 

 

(1,710

)

Other income

 

-

 

 

 

(2,836

)

Total costs and expenses

 

820,835

 

 

 

845,525

 

   
Income (loss) before taxes

 

9,674

 

 

 

(10,987

)

Provision (benefit) for income taxes

 

12,559

 

 

 

(3,250

)

Net loss

$

(2,885

)

 

$

(7,737

)

   
Net loss per share:  
Basic

$

(0.02

)

 

$

(0.04

)

Diluted

$

(0.02

)

 

$

(0.04

)

   
Weighted-average shares used in diluted earnings per share

 

176,997

 

 

 

174,626

 

 
Pitney Bowes Inc.  
Consolidated Balance Sheets  
(Unaudited; in thousands)  
   
Assets March 31,
2024
  December 31,
2023
Current assets:  
Cash and cash equivalents

$

516,092

 

 

$

601,053

 

Short-term investments

 

21,859

 

 

 

22,166

 

Accounts and other receivables, net

 

307,201

 

 

 

342,236

 

Short-term finance receivables, net

 

547,235

 

 

 

563,536

 

Inventories

 

78,683

 

 

 

70,053

 

Current income taxes

 

987

 

 

 

564

 

Other current assets and prepayments

 

110,041

 

 

 

92,309

 

Total current assets

 

1,582,098

 

 

 

1,691,917

 

Property, plant and equipment, net

 

370,110

 

 

 

383,628

 

Rental property and equipment, net

 

22,580

 

 

 

23,583

 

Long-term finance receivables, net

 

638,380

 

 

 

653,085

 

Goodwill

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