STAMFORD, Conn.--(BUSINESS WIRE)--Pitney Bowes Inc. (NYSE: PBI), a technology-driven company that provides SaaS shipping solutions, mailing innovation, and financial services to clients around the world, today announced the Company’s financial results for the third quarter of fiscal year 2024 and provided a progress update on the strategic initiatives announced on May 22, 2024. The Company also updated its full year guidance for Fiscal Year 2024 following continued strong business performance and accelerated execution of cost initiatives.
Third Quarter Financial Highlights
- Revenue was $499 million, down 1% year-over-year
- GAAP EPS was a loss of $0.75, including a loss of $1.42 per share from discontinued operations
- Adjusted EPS was $0.21, an improvement of $0.05 over the prior year
- Net loss of $138 million, including a $261 million loss from discontinued operations
- Adjusted EBIT was $103 million, up 22% versus the prior year
- GAAP cash from operating activities was $66 million
- Free Cash Flow was $75 million, an improvement of $19 million year-over-year; Free Cash Flow excludes $29 million of restructuring payments in the third quarter
Update on Strategic Initiatives
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GEC Exit: The wind-down process is progressing as expected and should be largely complete by year-end. The Company remains focused on resolving legacy obligations in the most efficient manner possible and continues to target approximately $150 million in one-time costs from the wind-down. These exit costs are anticipated to improve go-forward earnings by approximately $136 million annually.
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Cost Rationalization: The Company accelerated the execution of its cost reduction initiatives and, as of the end of the third quarter, had removed $90 million in annualized costs. The Company is increasing its net annual cost savings forecast to $150 million to $170 million.
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Cash Optimization: The Company has largely completed its overseas cash repatriation, bringing $117 million back to the U.S. year-to-date. Additionally, the GEC wind-down is stabilizing cash flows and, once complete, is estimated to result in a reduction of the amount of unrestricted cash the Company maintains by approximately $100 million. Further, the Company’s initiative to purchase captive lease receivables at Pitney Bowes Bank accelerated the realization of $31 million of net cash year-to-date. The Company continues to identify additional ways to optimize cash and expects to realize an additional $100 million in cash optimization over the next several years associated with initiatives at Pitney Bowes Bank.
- Balance Sheet Deleveraging: Progress on exiting GEC, reducing non-essential expenses, and optimizing cash positions has positioned the Company to pay down debt in the coming quarters. The Company has more than $100 million of excess cash on the balance sheet that can be used to reduce debt. Discussions are ongoing with the Company’s current and prospective lending partners to identify ways to strategically deleverage on favorable terms.
Lance Rosenzweig, Chief Executive Officer and a member of the Board, commented:
“Our positive third quarter results reflect the sustained strength of our core, cash-generating businesses. Pitney Bowes achieved $103 million in Adjusted EBIT for the third quarter, representing 22% year-over-year improvement on relatively steady revenue. We drove significant improvements in segment-level EBIT during the quarter. This strong performance validates our emphasis on efficiency and our commitment to becoming a more streamlined organization.
We also continued to build on our momentum with respect to our four previously announced strategic initiatives. We are working on an accelerated basis to complete these initiatives and solidify the turnaround of this storied brand. As we approach the end of 2024, we remain committed to increasing profitability, ensuring that we are effectively managing our capital and building a solid foundation for improved financial strength in 2025 – while continually exploring all paths to maximizing value for shareholders.”
Earnings per share results are summarized in the table below:
Third Quarter |
||
2024 |
2023 |
|
GAAP EPS |
($0.75) |
($0.07) |
Discontinued Operations |
$1.42 |
$0.17 |
Restructuring Charges |
$0.13 |
$0.06 |
Foreign Currency Gain on Intercompany Loans |
$0.08 |
- |
Strategic Review Costs (1) |
$0.01 |
- |
Asset Impairment |
$0.05 |
- |
Charges in connection with GEC Restructuring |
$0.16 |
- |
Tax benefit from affiliate reorganization |
($0.89) |
- |
Loss on debt refinancing |
$0.01 |
- |
Adjusted EPS |
$0.21 |
$0.16 |
(1) |
Strategic Review Costs include legal, accounting and other expenses related to the strategic review of GEC, including preparation for a potential GEC exit. |
Discontinued Operations
As a result of the Global Ecommerce exit process announced last quarter, a majority of the Global Ecommerce reporting segment is now reported as discontinued operations in the Condensed Consolidated Financial Statements. Prior periods have been recast to conform to the current period presentation.
The remaining portion of the Global Ecommerce reportable segment that did not qualify for discontinued operations treatment is now reported in an "Other" category. Included in this category are operations that the Company is currently in the process of exiting and a smaller continuing operation.
Business Segment Reporting
SendTech Solutions
SendTech Solutions offers physical and digital shipping and mailing technology solutions, financing, services, supplies and other applications for small and medium businesses, retail, enterprise, and government clients around the world to help simplify and save on the sending, tracking and receiving of letters, parcels and flats.
|
Third Quarter |
||
($ millions) |
2024 |
2023 |
% Change
|
Revenue |
$313 |
$327 |
(4%) |
Adjusted Segment EBITDA |
$114 |
$109 |
5% |
Adjusted Segment EBIT |
$104 |
$99 |
5% |
Revenue decline was driven by a decrease in the Company’s mailing install base and near-term headwinds related to the Company’s product migration. Shipping-related revenue grew 8%, driven by a 29% increase in business services revenue.
Simplification and cost reduction initiatives drove higher Adjusted Segment EBITDA and EBIT. Mail and shipping revenues and EBIT were negatively impacted by efforts to migrate customers from arrangements that recognize revenue upfront to SaaS type arrangements that drive recurring revenue and profit.
Presort Services
Presort Services provides sortation services that enable clients to qualify for USPS workshare discounts in First Class Mail, Marketing Mail, Marketing Mail Flats and Bound Printed Matter.
|
Third Quarter |
||
($ millions) |
2024 |
2023 |
% Change
|
Revenue |
$166 |
$152 |
9% |
Adjusted Segment EBITDA |
$55 |
$37 |
47% |
Adjusted Segment EBIT |
$46 |
$29 |
59% |
Presort sorted 3.7 billion pieces of mail in the quarter, growing volumes by 3% year-over-year. Higher volumes and revenue per piece expansion drove revenue growth.
Higher revenue per piece, continued labor and transportation cost productivity, and cost reductions drove growth in Adjusted Segment EBITDA and EBIT.
Updated Full Year 2024 Guidance
The Company now expects full-year revenue to decline at a low-single-digit rate.
The Company is also raising its full-year Adjusted EBIT guidance to $355 to $360 million.
Conference Call and Webcast
Management of Pitney Bowes will discuss the Company’s results in a broadcast over the Internet today at 5:00 p.m. ET. Instructions for listening to the earnings results via the Web are available on the Investor Relations page of the Company’s website at www.pitneybowes.com.
About Pitney Bowes
Pitney Bowes (NYSE: PBI) is a technology-driven company that provides SaaS shipping solutions, mailing innovation, and financial services to clients around the world – including more than 90 percent of the Fortune 500. Small businesses to large enterprises, and government entities rely on Pitney Bowes to reduce the complexity of sending mail and parcels. For the latest news, corporate announcements, and financial results, visit www.pitneybowes.com/us/newsroom. For additional information, visit Pitney Bowes at www.pitneybowes.com.
Adjusted Segment EBIT
Adjusted Segment EBIT is the primary measure of profitability and operational performance at the segment level. Adjusted Segment EBIT includes segment revenues and related costs and expenses attributable to the segment, but excludes interest, taxes, restructuring charges, goodwill and asset impairment charges, corporate expenses, and other items not allocated to a business segment. We also report Adjusted Segment EBITDA as an additional useful measure of segment profitability and operational performance, which is calculated as Adjusted Segment EBIT plus depreciation and amortization expense of the segment.
Use of Non-GAAP Measures
Pitney Bowes’ financial results are reported in accordance with generally accepted accounting principles (GAAP). Pitney Bowes also discloses certain non-GAAP measures, such as revenue growth on a constant currency basis, adjusted earnings before interest and taxes (Adjusted EBIT), adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), adjusted earnings per share (Adjusted EPS) and free cash flow.
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.
Adjusted EBIT, Adjusted EBITDA and Adjusted EPS exclude the impact of restructuring charges, goodwill and asset impairment charges, foreign currency gains and losses on intercompany loans, certain costs associated with the Ecommerce Restructuring, gains and losses related to acquisitions and dispositions, gains and losses on debt redemptions and other unusual items that we believe are not indicative to our core business operations.
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.
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 https://www.investorrelations.pitneybowes.com/.
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, future events or conditions, and expected cost savings, elimination of future losses, and anticipated deleveraging in connection with Pitney Bowes’ announced strategic initiatives. 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; the potential adverse effects and risks and uncertainties associated with the GEC exit and wind-down on the Company’s operations, management and employees, and the ability to successfully implement the Company’s 2024 worldwide cost reduction and optimization initiatives and realize the expected benefits therefrom, the loss of some of Pitney Bowes’ larger clients in the Presort Services segments; the loss of, or significant changes to, United States Postal Service (USPS) commercial programs, or the Company’s contractual relationships with the USPS or their performance under those contracts; 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 and nine months ended September 30, 2024 and 2023, and consolidated balance sheets at September 30, 2024 and December 31, 2023 are attached. We have not provided a reconciliation of our future expectations as to Adjusted EBIT as such reconciliation is not available without unreasonable efforts.
