STAMFORD, Conn.--(BUSINESS WIRE)--Pitney Bowes Inc. (NYSE:PBI), a global technology company providing innovative technology solutions to power commerce, today reported financial results for the second quarter 2017.
Quarterly Financial Results:
- Revenue of $821 million, a decline of 2 percent as reported and flat at constant currency
- GAAP EPS of $0.26; Adjusted EPS of $0.33
- GAAP cash from operations of $31 million; free cash flow of $18 million
- Issued $400 million of 5 year notes
- Based on year-to-date results, the Company is narrowing its annual guidance range for revenue, adjusted EPS and free cash flow
"We continued to make progress on our strategic agenda in the second quarter, investing in our brand, systems, products, and capabilities,” said Marc B. Lautenbach, President and CEO, Pitney Bowes. “While our financial performance improved in certain areas, it was short of the capabilities and the potential we have created. That said, our financial performance was indicative of a company going through a transformation. Today, we are well-positioned to take advantage of the investments we have made to create the conditions for long-term success.”
Second Quarter 2017 Results
Revenue totaled $821 million for the quarter, which was a decline of two percent as reported and flat at constant currency versus prior year.
Digital Commerce Solutions revenue grew 4 percent as reported and 7 percent at constant currency. Small and Medium Business (SMB) Solutions revenue declined 3 percent as reported and 2 percent at constant currency. Enterprise Business Solutions revenue declined 4 percent as reported and 3 percent at constant currency.
GAAP earnings per diluted share (GAAP EPS) were $0.26, which included $0.09 for restructuring and asset impairment charges as well as a gain of $0.03 from the gain on sale of technology for a mining industry application, used mostly in Australia, to a channel partner. Adjusted earnings per diluted share (Adjusted EPS) were $0.33. GAAP and Adjusted EPS included a benefit of $0.05 from the resolution of tax examinations.
The Company’s earnings per share results for the second quarter are summarized in the table below:
| Second Quarter* | |||||||||||||||
|
2017 |
2016 |
||||||||||||||
| GAAP EPS | $0.26 | $0.28 | |||||||||||||
| Restructuring charges and asset impairments, net | $0.09 | $0.09 | |||||||||||||
| Gain on sale of technology | ($0.03 | ) | - | ||||||||||||
| Discontinued operations | - | $0.01 | |||||||||||||
| Adjusted EPS | $0.33 | $0.39 | |||||||||||||
| * The sum of the earnings per share may not equal the totals above due to rounding. |
GAAP Cash from Operations and Free Cash Flow Results
GAAP cash from operations during the quarter was $31 million while free cash flow was $18 million. In comparison to the prior year, free cash flow decreased primarily due to the timing of accounts payable and accrued liability payments, as well as the lower net income. During the quarter, the Company used cash to pay down $150 million of debt, pay $35 million in dividends to shareholders and $7 million for restructuring payments.
Debt Management
During the quarter, the Company issued $400 million of 3.875 percent 5-year fixed rate notes. The Company used a portion of these proceeds to repay a $150 million term loan in the second quarter. The Company intends to use the remaining proceeds, together with cash on-hand and other financing options, to repay the $385 million notes that come due in September.
Second Quarter 2017 Business Segment Reporting
The Company’s business segment reporting reflects the clients served in each market and the way it manages these segments. The reporting segment groups are the SMB Solutions group; the Enterprise Business Solutions group; and the Digital Commerce Solutions group. The segment results for the quarter and prior year may not equal the subtotals for each segment group due to rounding.
The SMB Solutions group offers mailing and office shipping solutions, financing, services, and supplies for small and medium businesses to help simplify and save on the sending, tracking and receiving of letters, parcels and flats. This group includes the North America Mailing and International Mailing segments.
The Enterprise Business Solutions group includes the global Production Mail and Presort Services segments. Production Mail provides mailing and printing equipment and services for large enterprise clients to process mail. Presort Services provides sortation services to qualify large mail and parcel volumes for postal worksharing discounts.
The Digital Commerce Solutions group includes the Software Solutions and Global Ecommerce segments. Software Solutions provide customer engagement, customer information and location intelligence software. Global Ecommerce facilitates global cross-border ecommerce transactions and domestic retail and ecommerce shipping solutions.
|
SMB Solutions Group |
||||||||||||||||||
| ($ millions) | Second Quarter | |||||||||||||||||
|
Y/Y |
Y/Y |
|||||||||||||||||
| Revenue |
2017 |
2016 |
Reported |
Ex Currency |
||||||||||||||
| North America Mailing | $341 | $343 | (1 | %) | - | |||||||||||||
| International Mailing |
95 |
108 |
(11 |
%) |
(7 |
%) |
||||||||||||
| SMB Solutions | $436 | $451 | (3 | %) | (2 | %) | ||||||||||||
| EBIT | ||||||||||||||||||
| North America Mailing | $121 | $147 | (18 | %) | ||||||||||||||
| International Mailing |
14 |
12 |
12 |
% |
||||||||||||||
| SMB Solutions | $135 | $159 | (15 | %) | ||||||||||||||
North America Mailing
Equipment sales grew again this quarter driven by Mail Finishing, which includes the initial SendPro products launched last year. Field sales and inside sales, along with the web channel experienced strong growth in the quarter. This growth in equipment sales was offset by a decline in the recurring revenue streams, largely around lower service, financing and rental revenue. EBIT margin was lower than prior year largely due to the decline in recurring streams.
International Mailing
Equipment sales and recurring revenue streams both contributed to the revenue decline. The equipment sales decline was driven by weakness in the UK, France and Italy which was partially offset by growth in Japan. EBIT margin increased versus prior year due to improved equipment sales margins and lower expenses.
|
Enterprise Business Solutions Group |
||||||||||||||||||
| ($ millions) | Second Quarter | |||||||||||||||||
|
Y/Y |
Y/Y |
|||||||||||||||||
| Revenue |
2017 |
2016 |
Reported |
Ex Currency |
||||||||||||||
| Production Mail | $86 | $96 | (11 | %) | (10 | %) | ||||||||||||
| Presort Services |
118 |
116 |
2 |
% |
2 |
% |
||||||||||||
| Enterprise Business | $204 | $212 | (4 | %) | (3 | %) | ||||||||||||
| EBIT | ||||||||||||||||||
| Production Mail | $ 8 | $13 | (41 | %) | ||||||||||||||
| Presort Services |
19 |
21 |
(9 |
%) |
||||||||||||||
| Enterprise Business | $27 | $34 | (21 | %) | ||||||||||||||
Production Mail
Equipment sales declined versus prior year largely due to lower sorter equipment placements, partially offset by higher inserter equipment sales. Support services revenue declined as a result of the shift last year of some in-house mail production clients moving to third party service bureaus who tend to self-service. EBIT margin declined from prior year primarily as a result of the decline in revenue in addition to the mix of inserter equipment sales.
Presort Services
The revenue growth was driven by higher Standard Class volumes processed along with improved revenue per piece related to Flats. EBIT margin declined from prior year driven by increased mail processing costs and the resolution of certain client contractual disputes.
|
Digital Commerce Solutions Group |
||||||||||||||||
| ($ millions) | Second Quarter | |||||||||||||||
|
Y/Y |
Y/Y |
|||||||||||||||
| Revenue |
2017 |
2016 |
Reported |
Ex Currency |
||||||||||||
| Software Solutions | $86 | $90 | (4 | %) | (2 | %) | ||||||||||
| Global Ecommerce |
95 |
83 |
14 |
% |
16 |
% |
||||||||||
| Digital Commerce | $181 | $173 | 4 | % | 7 | % | ||||||||||
| EBIT | ||||||||||||||||
| Software Solutions | $8 | $10 | (26 | %) | ||||||||||||
| Global Ecommerce |
(4 |
) |
(1 |
) |
>(100%) |
|||||||||||
| Digital Commerce | $4 | $9 | (63 | %) | ||||||||||||
Software Solutions
The revenue decline was driven by lower license revenue. Revenue benefited from growth in Location Intelligence license revenue but was offset by lower Customer Information Management revenue. The Company is continuing to see progress in developing the indirect channel. EBIT margin declined from prior year largely driven by the lower licensing revenue.
Global Ecommerce
The sustained double-digit revenue growth was largely driven by strong volumes in the UK outbound marketplace as well as growth in domestic shipping. The EBIT loss was driven primarily by investments in market growth opportunities. The Company continues to invest in its cross-border solutions and domestic shipping capabilities.
2017 Guidance
Based on year-to-date results, the Company is narrowing its annual guidance range for revenue, adjusted EPS and free cash flow.
The Company’s guidance for the full year 2017 is now expected to be:
- Revenue, on a constant currency basis, to be in the range of flat to 1 percent growth, when compared to 2016. This has been updated from the original range of a 2 percent decline to 1 percent growth.
- Adjusted EPS to be in the range of $1.70 to $1.78. This has been updated from the original range of $1.70 to $1.85.
- Free cash flow to be in the range of $400 million to $430 million. This has been updated from the original range of $400 million to $460 million.
The Company is also narrowing its annual tax range on adjusted earnings. The Company now expects to be in the range of 31 percent to 33 percent as compared to the original range of 31 percent to 35 percent.
This guidance discusses future results, which are inherently subject to unforeseen risks and developments. As such, discussions about the business outlook should be read in the context of an uncertain future, as well as the risk factors identified in the safe harbor language at the end of this release and as more fully outlined in the Company's 2016 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission.
This guidance excludes any unusual items that may occur or additional portfolio or restructuring actions, not specifically identified, as the Company implements plans to further streamline its operations and reduce costs. Revenue guidance is provided on a constant currency basis. The Company cannot reasonably predict the impact that future changes in currency exchange rates will have on revenue and net income. Additionally, the Company cannot provide GAAP EPS and GAAP cash from operations guidance due to the uncertainty of future potential restructurings, goodwill and asset write-downs, unusual tax settlements or payments and contributions to its pension funds, acquisitions, divestitures and other potential adjustments, which could (individually or in the aggregate) have a material impact on the Company’s performance. The Company’s guidance is based on an assumption that the global economy and foreign exchange markets in 2017 will not change significantly.
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 powering billions of transactions – physical and digital – in the connected and borderless world of commerce. Clients around the world, including 90 percent of the Fortune 500, rely on products, solutions and services from Pitney Bowes in the areas of customer information management, location intelligence, customer engagement, shipping, mailing, and global ecommerce. And with the innovative Pitney Bowes Commerce Cloud, clients can access the broad range of Pitney Bowes solutions, analytics, and APIs to drive commerce. 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 our disclosures we use certain non-GAAP measures, such as adjusted earnings before interest and taxes, Adjusted EPS, revenue growth on a constant currency basis, free cash flow and Segment EBIT.
The Company reports measures such as adjusted earnings before interest and taxes (EBIT) and Adjusted EPS and adjusted income from continuing operations to exclude the impact of special items like restructuring charges, tax adjustments, goodwill and asset write-downs, and costs related to dispositions. While these are actual Company expenses, they can mask underlying trends associated with its business. Such items are often inconsistent in amount and frequency and as such, the adjustments allow an investor greater insight into the current 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 measures are intended to help investors better understand the underlying operational performance of the business excluding the impacts of shifts in currency exchange rates over the period. Constant currency is calculated by converting our current quarter reported results using the prior year’s exchange rate for the comparable quarter. This comparison allows an investor insight into the underlying revenue performance of the business and true operational performance from a comparable basis to prior period. A reconciliation of reported revenue to constant currency revenue can be found in the Company’s 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 capital expenditures, restructuring payments, unusual tax settlements, contributions to the Company’s pension fund and cash used for other special items. A reconciliation of GAAP cash from operations to free cash flow can be found in the Company’s attached financial schedules.
In addition, Management uses segment EBIT to measure profitability and performance at the segment level. Segment EBIT is determined by deducting from 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. A reconciliation of Segment EBIT to the Company’s total Net Income can be found in the Company’s attached financial schedules.
Pitney Bowes has provided a quantitative reconciliation to GAAP in supplemental schedules. This information may also 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, but are not limited to: declining physical mail volumes; competitive factors, including pricing pressures, technological developments, the introduction of new products and services by competitors, and fuel prices; our success in developing new products and services, including digital-based products and services, obtaining regulatory approvals, if needed, of new products if required, and the market’s acceptance of these new products and services; our ability to fully utilize the new enterprise business platform in the United States and successfully implement it internationally without significant disruptions to existing operations; a breach of security, including a cyberattack or other comparable event; the continued availability and security of key information systems and the cost to comply with information security requirements and privacy laws; the success of our investment in rebranding the Company; changes in postal or banking regulations; the risk of losing some of the Company’s larger clients in the Global Ecommerce segment; macroeconomic factors, including global and regional business conditions that adversely impact customer demand, foreign currency exchange rates, interest rates and labor conditions; capital market disruptions or credit rating downgrades that adversely impact our ability to access capital markets at reasonable costs; management of outsourcing arrangements; integrating newly acquired businesses, including operations and product and service offerings; management of customer credit risk; and other factors beyond its control as more fully outlined in the Company's 2016 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 and EBIT by business segment; and reconciliation of GAAP to non-GAAP measures for the three months and six months ended June 30, 2017 and 2016, and consolidated balance sheets as of June 30, 2017 and December 31, 2016 are attached.
| Pitney Bowes Inc. | ||||||||||||||||
| Consolidated Statements of Income | ||||||||||||||||
| (Unaudited; in thousands, except share and per share amounts) | ||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
|
2017 |
2016 |
2017 |
2016 | |||||||||||||
| Revenue: | ||||||||||||||||
| Equipment sales | $ | 158,625 | $ | 152,641 | $ | 321,599 | $ | 312,002 | ||||||||
| Supplies | 63,228 | 65,274 | 130,046 | 137,325 | ||||||||||||
| Software | 86,664 | 90,615 | 164,531 | 168,673 | ||||||||||||
| Rentals | 95,999 | 102,869 | 195,869 | 206,959 | ||||||||||||
| Financing | 83,653 | 91,609 | 169,398 | 189,032 | ||||||||||||
| Support services | 115,299 | 131,418 | 234,146 | 259,678 | ||||||||||||
| Business services | 217,903 | 201,460 | 442,422 | 406,806 | ||||||||||||
| Total revenue | 821,371 | 835,886 | 1,658,011 | 1,680,475 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of equipment sales | 77,189 | 78,055 | 146,751 | 149,594 | ||||||||||||
| Cost of supplies | 19,909 | 19,624 | 41,380 | 40,314 | ||||||||||||
| Cost of software | 24,795 | 26,983 | 50,103 | 53,798 | ||||||||||||
| Cost of rentals | 21,576 | 18,415 | 42,238 | 38,910 | ||||||||||||
| Financing interest expense | 12,843 | 13,495 | 25,817 | 28,410 | ||||||||||||
| Cost of support services | 73,190 | 74,742 | 146,544 | 149,991 | ||||||||||||
| Cost of business services | 153,063 | 140,830 | 303,906 | 276,368 | ||||||||||||
| Selling, general and administrative | 297,468 | 289,116 | 603,771 | 615,998 | ||||||||||||
| Research and development | 32,958 | 34,513 | 64,814 | 61,081 | ||||||||||||
| Restructuring charges and asset impairments, net | 26,927 | 26,076 | 29,009 | 33,009 | ||||||||||||
| Interest expense, net | 27,600 | 20,799 | 53,276 | 40,100 | ||||||||||||
| Total costs and expenses | 767,518 | 742,648 | 1,507,609 | 1,487,573 | ||||||||||||
| Income before income taxes | 53,853 | 93,238 | 150,402 | 192,902 | ||||||||||||
| Provision for income taxes | 4,952 | 33,394 | 36,368 | 70,418 | ||||||||||||
| Income from continuing operations | 48,901 | 59,844 | 114,034 | 122,484 | ||||||||||||
| Loss from discontinued operations, net of tax | - | (1,660 | ) | - | (1,660 | ) | ||||||||||
| Net income | 48,901 | 58,184 | 114,034 | 120,824 | ||||||||||||
| Less: Preferred stock dividends attributable to noncontrolling interests | - | 4,594 | - | 9,188 | ||||||||||||
| Net income - Pitney Bowes Inc. | $ | 48,901 | $ | 53,590 | $ | 114,034 | $ | 111,636 | ||||||||
| Amounts attributable to common stockholders: | ||||||||||||||||
| Net income from continuing operations | $ | 48,901 | $ | 55,250 | $ | 114,034 | $ | 113,296 | ||||||||
| Loss from discontinued operations, net of tax | - | (1,660 | ) | - | (1,660 | ) | ||||||||||
| Net income - Pitney Bowes Inc. | $ | 48,901 | $ | 53,590 | $ | 114,034 | $ | 111,636 | ||||||||
| Basic earnings per share attributable to common stockholders (1): | ||||||||||||||||
| Continuing operations | $ | 0.26 | $ | 0.29 | $ | 0.61 | $ | 0.60 | ||||||||
| Discontinued operations | - | (0.01 | ) | - | (0.01 | ) | ||||||||||
| Net income - Pitney Bowes Inc. | $ | 0.26 | $ | 0.29 | $ | 0.61 | $ | 0.59 | ||||||||
| Diluted earnings per share attributable to common stockholders (1): | ||||||||||||||||
| Continuing operations | $ | 0.26 | $ | 0.29 | $ | 0.61 | $ | 0.59 | ||||||||
| Discontinued operations | - | (0.01 | ) | - | (0.01 | ) | ||||||||||
| Net income - Pitney Bowes Inc. | $ | 0.26 | $ | 0.28 | $ | 0.61 | $ | 0.59 | ||||||||
| Weighted-average shares used in diluted earnings per share | 187,377,059 | 188,362,278 | 186,944,571 | 190,806,261 | ||||||||||||
| (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, except share amounts) | ||||||||
|
June 30, |
December 31, |
|||||||
|
Assets |
2017 |
2016 |
||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 840,564 | $ | 764,522 | ||||
| Short-term investments | 164,716 | 38,448 | ||||||
| Accounts receivable, net | 389,262 | 455,527 | ||||||
| Short-term finance receivables, net | 857,764 | 893,950 | ||||||
| Inventories | 121,478 | 92,726 | ||||||
| Current income taxes | 28,732 | 11,373 | ||||||
| Other current assets and prepayments | 89,061 | 68,637 | ||||||
| Total current assets | 2,491,577 | 2,325,183 | ||||||
| Property, plant and equipment, net | 327,140 | 314,603 | ||||||
| Rental property and equipment, net | 182,997 | 188,054 | ||||||
| Long-term finance receivables, net | 662,384 | 673,207 | ||||||
| Goodwill | 1,604,320 | 1,571,335 | ||||||
| Intangible assets, net | 152,019 | 165,172 | ||||||
| Noncurrent income taxes | 75,105 | 74,806 | ||||||
| Other assets | 541,806 | 524,773 | ||||||
| Total assets | $ | 6,037,348 | $ | 5,837,133 | ||||
|
Liabilities and stockholders' equity (deficit) |
||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 1,339,287 | $ | 1,378,822 | ||||
| Current income taxes | 17,349 | 34,434 | ||||||
| Current portion of long-term debt | 985,291 | 614,485 | ||||||
| Advance billings | 291,180 | 299,878 | ||||||
| Total current liabilities | 2,633,107 | 2,327,619 | ||||||
| Deferred taxes on income | 214,287 | 204,289 | ||||||
| Tax uncertainties and other income tax liabilities | 51,112 | 61,276 | ||||||
| Long-term debt | 2,543,476 | 2,750,405 | ||||||
| Other noncurrent liabilities | 565,993 | 597,204 | ||||||
| Total liabilities | 6,007,975 | 5,940,793 | ||||||
| Stockholders' equity (deficit): | ||||||||
| Cumulative preferred stock, $50 par value, 4% convertible | 1 | 1 | ||||||
| Cumulative preference stock, no par value, $2.12 convertible | 463 | 483 | ||||||
| Common stock, $1 par value | 323,338 | 323,338 | ||||||
| Additional paid-in-capital | 131,691 | 148,125 | ||||||
| Retained earnings | 5,152,241 | 5,107,734 | ||||||
| Accumulated other comprehensive loss | (859,315 | ) | (940,133 | ) | ||||
| Treasury stock, at cost | (4,719,046 | ) | (4,743,208 | ) | ||||
| Total Pitney Bowes Inc. stockholders' equity (deficit) | 29,373 | (103,660 | ) | |||||
| Total liabilities and stockholders' equity (deficit) | $ | 6,037,348 | $ | 5,837,133 | ||||
|
Pitney Bowes Inc. |
||||||||||||||||||||||
|
Business Segments - Revenue and EBIT |
||||||||||||||||||||||
|
(Unaudited; in thousands) |
||||||||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||
| 2017 |
2016 (1) |
% Change | 2017 |
2016 (1) |
% Change | |||||||||||||||||
|
Revenue |
||||||||||||||||||||||
| North America Mailing | $ | 341,096 | $ |
343,218 |
|
(1 | %) | $ | 696,674 | $ |
714,671 |
|
(3 | %) | ||||||||
| International Mailing | 95,322 | 107,581 | (11 | %) | 188,380 | 212,567 | (11 | %) | ||||||||||||||
| Small & Medium Business Solutions | 436,418 | 450,799 | (3 | %) | 885,054 | 927,238 | (5 | %) | ||||||||||||||
| Production Mail | 85,570 | 95,874 | (11 | %) | 174,525 | 183,299 | (5 | %) | ||||||||||||||
| Presort Services | 118,452 | 115,765 | 2 | % | 251,129 | 243,161 | 3 | % | ||||||||||||||
| Enterprise Business Solutions | 204,022 | 211,639 | (4 | %) | 425,654 | 426,460 | (0 | %) | ||||||||||||||
| Software Solutions | 86,425 | 90,464 | (4 | %) | 164,645 | 168,386 | (2 | %) | ||||||||||||||
| Global Ecommerce | 94,506 | 82,984 | 14 | % | 182,658 | 158,391 | 15 | % | ||||||||||||||
| Digital Commerce Solutions | 180,931 | 173,448 | 4 | % | 347,303 | 326,777 | 6 | % | ||||||||||||||
| Total revenue | $ | 821,371 | $ | 835,886 | (2 | %) | $ | 1,658,011 | $ | 1,680,475 | (1 | %) | ||||||||||
|
EBIT |
||||||||||||||||||||||
| North America Mailing | $ | 120,877 | $ | 146,897 | (18 | %) | $ | 261,885 | $ | 307,728 | (15 | %) | ||||||||||
| International Mailing | 13,969 | 12,468 | 12 | % | 27,238 | 23,644 | 15 | % | ||||||||||||||
| Small & Medium Business Solutions | 134,846 | 159,365 | (15 | %) | 289,123 | 331,372 | (13 | %) | ||||||||||||||
| Production Mail | 7,631 | 12,914 | (41 | %) | 16,595 | 19,738 | (16 | %) | ||||||||||||||
| Presort Services | 19,270 | 21,214 | (9 | %) | 49,987 | 50,124 | (0 | %) | ||||||||||||||
| Enterprise Business Solutions | 26,901 | 34,128 | (21 | %) | 66,582 | 69,862 | (5 | %) | ||||||||||||||
| Software Solutions | 7,555 | 10,151 | (26 | %) | 10,304 | 7,579 | 36 | % | ||||||||||||||
| Global Ecommerce | (4,030 | ) | (683 | ) | >(100%) | (8,300 | ) | (4,152 | ) | (100 | %) | |||||||||||
| Digital Commerce Solutions | 3,525 | 9,468 | (63 | %) | 2,004 | 3,427 | (42 | %) | ||||||||||||||
| Segment EBIT (2) | $ | 165,272 | $ | 202,961 | (19 | %) | $ | 357,709 | $ | 404,661 | (12 | %) | ||||||||||
| Reconciliation of segment EBIT to net income | ||||||||||||||||||||||
| Segment EBIT | $ | 165,272 | $ | 202,961 | $ | 357,709 | $ | 404,661 | ||||||||||||||
| Corporate expenses | (50,134 | ) | (48,777 | ) | (105,290 | ) | (106,544 | ) | ||||||||||||||
| Adjusted EBIT | 115,138 | 154,184 | 252,419 | 298,117 | ||||||||||||||||||
| Interest, net (3) | (40,443 | ) | (34,294 | ) | (79,093 | ) | (68,510 | ) | ||||||||||||||
| Restructuring charges and asset impairments, net | (26,927 | ) | (26,076 | ) | (29,009 | ) | (33,009 | ) | ||||||||||||||
| Gain on sale of technology | 6,085 | - | 6,085 | - | ||||||||||||||||||
| Acquisition/disposition related expenses | - | (576 | ) | - | (3,696 | ) | ||||||||||||||||
| Income before income taxes | 53,853 | 93,238 | 150,402 | 192,902 | ||||||||||||||||||
| Provision for income taxes | (4,952 | ) | (33,394 | ) | (36,368 | ) | (70,418 | ) | ||||||||||||||
| Income from continuing operations | 48,901 | 59,844 | 114,034 | 122,484 | ||||||||||||||||||
| Loss from discontinued operations, net of tax | - | (1,660 | ) | - | (1,660 | ) | ||||||||||||||||
| Net income | $ | 48,901 | $ | 58,184 | $ | 114,034 | $ | 120,824 | ||||||||||||||
| (1) | Prior period amounts have been recast to conform to the current year presentation. | |
| (2) | Segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges, and other items that are not allocated to a particular business segment. | |
| (3) | Includes financing interest expense and interest expense, net. | |
| 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, | |||||||||||||||||||||
| 2017 | 2016 | Y/Y Chg. | 2017 | 2016 | Y/Y Chg. | |||||||||||||||||
| Reconciliation of reported revenue to revenue excluding currency | ||||||||||||||||||||||
| Revenue, as reported | $ | 821,371 | $ | 835,886 | (2 | %) | $ | 1,658,011 | $ | 1,680,475 | (1 | %) | ||||||||||
| Unfavorable impact on revenue due to currency | 10,621 | NM | 20,166 | NM | ||||||||||||||||||
| Revenue, excluding currency | $ | 831,992 | $ | 835,886 | (0 | %) | $ | 1,678,177 | $ | 1,680,475 | (0 | %) | ||||||||||
| Reconciliation of reported net income to adjusted earnings | ||||||||||||||||||||||
| Net income | $ | 48,901 | $ | 58,184 | $ | 114,034 | $ | 120,824 | ||||||||||||||
| Loss from discontinued operations, net of tax | - | 1,660 | - | 1,660 | ||||||||||||||||||
| Restructuring charges and asset impairments, net | 17,751 | 16,931 | 19,104 | 21,559 | ||||||||||||||||||
| Gain on sale of technology | (5,605 | ) | - | (5,605 | ) | - | ||||||||||||||||
| Acquisition/disposition related expenses | - | 364 | - | 2,539 | ||||||||||||||||||
| Net income, as adjusted | 61,047 | 77,139 | 127,533 | 146,582 | ||||||||||||||||||
| Provision for income taxes, as adjusted | 13,648 | 42,751 | 45,793 | 83,025 | ||||||||||||||||||
| Income from continuing operations before income taxes, as adjusted | 74,695 | 119,890 | 173,326 | 229,607 | ||||||||||||||||||
| Interest, net | 40,443 | 34,294 | 79,093 | 68,510 | ||||||||||||||||||
| EBIT, as adjusted | 115,138 | 154,184 | 252,419 | 298,117 | ||||||||||||||||||
| Depreciation and amortization | 43,865 | 45,238 | 88,160 | 89,538 | ||||||||||||||||||
| EBITDA, as adjusted | $ | 159,003 | $ | 199,422 | $ | 340,579 | $ | 387,655 | ||||||||||||||
| Reconciliation of reported diluted earnings per share to adjusted diluted earnings per share | ||||||||||||||||||||||
| Diluted earnings per share | $ | 0.26 | $ | 0.28 | $ | 0.61 | $ | 0.59 | ||||||||||||||
| Loss from discontinued operations, net of tax | - | 0.01 | - | 0.01 | ||||||||||||||||||
| Restructuring charges and asset impairments, net | 0.09 | 0.09 | 0.10 | 0.11 | ||||||||||||||||||
| Gain on sale of technology | (0.03 | ) | - | (0.03 | ) | - | ||||||||||||||||
| Acquisition/disposition related expenses | - | - | - | 0.01 | ||||||||||||||||||
| Diluted earnings per share, as adjusted | $ | 0.33 | $ | 0.39 | $ | 0.68 | $ | 0.72 | ||||||||||||||
| 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 (1) | $ | 30,641 | $ | 95,091 | $ | 184,647 | $ | 158,584 | ||||||||||||||
| Capital expenditures | (40,701 | ) | (30,689 | ) | (76,621 | ) | (71,359 | ) | ||||||||||||||
| Restructuring payments | 6,600 | 12,210 | 19,016 | 33,866 | ||||||||||||||||||
| Pension contribution | - | - | - | 36,731 | ||||||||||||||||||
| Reserve account deposits | 21,860 | 9,110 | 2,514 | (7,143 | ) | |||||||||||||||||
| Other | - | 146 | - | 335 | ||||||||||||||||||
| Free cash flow | $ | 18,400 | $ | 85,868 | $ | 129,556 | $ | 151,014 | ||||||||||||||
|
(1) |
Net cash provided by operating activities for the three and six months ended June 30, 2016 has been revised for a new accounting standard adopted January 1, 2017. |
