Pitney Bowes Announces Full Year and Fourth Quarter 2015 Financial Results

STAMFORD, Conn.--()--Pitney Bowes Inc. (NYSE:PBI), a global technology company that provides products and solutions that power commerce, today reported financial results for the full year and the fourth quarter 2015. The Company also provided annual guidance for 2016.

Full-Year 2015:

  • Revenue of $3.6 billion, a decline of 3 percent on a constant currency basis and 6 percent on a reported basis
  • Adjusted EPS of $1.75; GAAP EPS of $2.03. EPS includes a $0.07 per share negative impact of foreign exchange during the year.
  • SG&A expenses of $1.3 billion, a reduction of $98 million year-over-year
  • Free cash flow of $456 million; GAAP cash from operations of $515 million
  • Repurchased $135 million of common stock; reduced debt by $280 million and refinanced $110 million of debt

Fourth Quarter 2015:

  • Revenue of $937 million, a decline of 2 percent on a constant currency basis and 5 percent on a reported basis
  • Adjusted EPS of $0.48; GAAP EPS of $0.44. EPS includes a $0.02 per share negative impact of foreign exchange during the quarter.
  • SG&A expenses of $341 million, a reduction of $6 million
  • Free cash flow of $157 million; GAAP cash from operations of $164 million
  • Repurchased $35 million of common stock and refinanced $110 million of debt using funds from a $150 million bank term loan

“We made substantial progress against our strategic objectives in 2015 and entered 2016 in a stronger position," said Marc B. Lautenbach, President and CEO, Pitney Bowes. “In the fourth quarter, most of our businesses performed in-line with our long term expectations; however, our Software business fell short of what we had expected. As we look forward, we continue to feel good about where we are in our transformation and our ability to deliver long term value to our shareholders.”

FULL YEAR 2015 RESULTS

For the full year, revenue totaled $3.6 billion, a decline of 3 percent on a constant currency basis and 6 percent on a reported basis when compared to the prior year. As part of its previously announced go-to-market strategy, in 2014 the Company exited a non-core product line in Norway and transitioned from a direct sales model to a dealer sales network in six smaller European markets for the International Mailing and Production Mail segments. For comparative purposes, revenue for 2015 would have declined 2 percent on a constant currency basis when revenue in the current and prior years is adjusted for the impact of these divested revenues.

On a Generally Accepted Accounting Principles (GAAP) basis, earnings per diluted share were $2.03.

Adjusted earnings per diluted share from continuing operations were $1.75 and exclude:

  • $0.32 which includes a gain from the sale of Imagitas of $0.44 and net acquisition and disposition related expenses of $0.12;
  • $0.09 of restructuring and asset impairment charges;
  • $0.02 of legal settlement expense;
  • $0.04 benefit related to a previous investment divestiture;
  • $0.03 of income from discontinued operations.

Earnings per share for the year were reduced by $0.07 due to the impacts of foreign exchange. Additionally, adjusted earnings per share were adversely impacted by the 33.5 percent tax rate, which was at the high-end of the Company’s guidance range primarily due to a greater percentage of U.S. sourced income.

Free cash flow for the year was $456 million and the Company generated $515 million of cash from operations on a GAAP basis. In addition to investing in the business, the Company used the cash to pay $150 million in dividends to its common shareholders; repurchase $135 million worth of its common stock and make $62 million in restructuring payments during the year. In comparison to the prior year, free cash flow was lower primarily due to the timing of working capital requirements.

FOURTH QUARTER 2015 RESULTS

Revenue totaled $937 million, a decline of 2 percent on a constant currency basis and 5 percent on a reported basis when compared to the prior year.

Revenue benefited from 14 percent growth on a constant currency basis and 11 percent growth on a reported basis in the Digital Commerce Solutions group, driven by growth in Global Ecommerce offset partially by lower results in the Software segment.

Revenue in the Enterprise Business Solutions group grew 1 percent on a constant currency basis and declined 2 percent on a reported basis. This resulted from continued growth in Presort Services offset by a decline in Production Mail.

In the Small and Medium Business (SMB) Solutions group, revenue declined 3 percent on a constant currency basis and 6 percent on a reported basis. North America Mailing had a decline of only one percent for equipment sales in the U.S. compared to the prior year. Total revenue for International Mailing had the lowest rate of decline on a constant currency basis since the implementation of the new go-to-market strategy.

On a GAAP basis, earnings per diluted share were $0.44 for the fourth quarter.

Adjusted earnings per diluted share from continuing operations were $0.48 and exclude:

  • $0.02 of expenses related to the exit of certain geographic markets during the quarter;
  • $0.05 for restructuring charges and asset impairments;
  • $0.03 of income from discontinued operations.

Earnings per share this quarter were reduced by $0.02 due to the impacts of foreign exchange.

Free cash flow during the quarter was $157 million, which was similar to the prior year. The Company generated $164 million of cash from operations on a GAAP basis. The Company used the cash to pay $37 million in dividends to its common shareholders; repurchase $35 million worth of its common stock and make $16 million in restructuring payments.

The Company’s results for the quarter and full year are summarized in the table below:

 
($ millions, except EPS)         Fourth Quarter     Full Year

2015

   

2014

2015

   

2014

Revenue $937 $984 $3,578 $3,822
 

Adjusted EPS from continuing operations

$0.48 $0.51 $1.75 $1.90
Gain on sale of Imagitas and net acquisition

and disposition related expenses

($0.02)

-

$0.32

-

Restructuring charges and asset impairments ($0.05) ($0.22) ($0.09) ($0.29)
Legal settlement -

-

($0.02)

-

Investment divestiture - - $0.04 $0.05
Extinguishment of debt - - - ($0.19)
GAAP EPS from continuing operations $0.41 $0.29 $2.00 $1.47
Discontinued operations – income $0.03 $0.02 $0.03 $0.17
GAAP EPS $0.44 $0.31 $2.03 $1.64
 

Free Cash Flow

$157 $154 $456 $571
 

* The sum of the earnings per share may not equal the totals above due to rounding.

DEBT MANAGEMENT

During the year, the Company paid down $280 million of debt using cash on the balance sheet and the issuance of commercial paper. In the fourth quarter, the Company used funds from a new $150 million bank term loan to refinance $110 million of debt. In January 2016, the Company obtained an additional $300 million of bank term loans and refinanced $371 million of debt that matured in January.

BUSINESS SEGMENT REPORTING

The Company revised its business segment reporting in the second quarter 2015 for its Digital Commerce Solutions segment. The Company’s business segment reporting reflects the clients served in each market and the way it manages these segments for growth and profitability. The primary reporting segment groups are the SMB Solutions group; the Enterprise Business Solutions group; and the Digital Commerce Solutions group.

The SMB Solutions group offers mailing equipment, financing, services and supplies for small and medium businesses to efficiently create mail and evidence postage. This group includes the North America Mailing and International Mailing segments. North America Mailing includes the operations of U.S. and Canada Mailing. International Mailing includes all other SMB operations around the world.

The Enterprise Business Solutions group provides mailing and printing equipment and services for large enterprise clients to process mail, including sortation services to qualify large mail volumes for postal worksharing discounts. This group includes the global Production Mail and Presort Services segments.

The Digital Commerce Solutions group provides customer engagement, customer information and location intelligence software; and solutions that facilitate global cross-border ecommerce transactions and shipping solutions for businesses of all sizes. This group includes the Software Solutions and Global Ecommerce segments.

The Other segment is comprised of the Imagitas marketing services business, which was sold on May 29, 2015.

 

SMB Solutions Group

(millions, except percentages)         Fourth Quarter

Revenue

2015

   

2014

   

Y/Y

Reported

   

Y/Y

Ex Currency

North America Mailing $363 $376 (3%) (2%)
International Mailing

114

134

(15%)

(6%)

SMB Solutions Total $477 $510 (6%) (3%)
 

EBIT

North America Mailing $165 $166 (1%)
International Mailing

14

21

(32%)

SMB Solutions Total $179 $187 (4%)
 

North America Mailing

Revenue declined on a constant currency basis at a lesser rate than through the first nine months of the year. In the U.S., equipment sales declined one percent versus the prior year while recurring revenue streams continued to perform in-line with prior quarters. EBIT margin improved versus the prior year due to the mix of business and lower employee-related costs.

International Mailing

Revenue declined at its lowest rate all year, benefiting from improved equipment sales trends in most of the major markets where the Company has completed the shift in its go-to-market strategy. Equipment sales revenue grew on a constant currency basis, driven in part by increased sales in the UK. In France, equipment sales declined at a lesser rate than in previous quarters as the new sales structure increased productivity. However, equipment sales growth was offset by a decline in the recurring revenue streams. During the quarter, the Company sold, or entered into agreements to sell assets and convert to a dealer model in Mexico, South Africa and five markets in Asia.

International Mailing’s EBIT margin declined versus the prior year due to the impact of currency on costs and reduced, higher-margin recurring stream revenue.

 

Enterprise Business Solutions Group

(millions, except percentages)         Fourth Quarter

Revenue

2015

   

2014

   

Y/Y

Reported

   

Y/Y

Ex Currency

Production Mail $122 $132 (7%) (3%)
Presort Services

122

117

4%

4%

Enterprise Business Total $245 $249 (2%) 1%
 

EBIT

Production Mail $17 $20 (15%)
Presort Services

28

30

(8%)

Enterprise Business Total $45 $50 (10%)
 

Production Mail

Revenue trends improved versus the prior two quarters and benefited from growth in inserting equipment sales, driven in part by the new Epic™ product line, and higher supplies revenue. Revenue was adversely impacted by fewer printer installations than the prior year. EBIT margin declined versus the prior year due to product mix and increased engineering investments.

Presort Services

Revenue benefited from higher volumes of First Class and Standard mail processed versus the prior year, as well as new client acquisitions. EBIT margin declined versus the prior year due in part to investments made to expand the network into two new U.S. markets.

 

Digital Commerce Solutions Group

(millions, except percentages)         Fourth Quarter

Revenue

2015

   

2014

   

Y/Y

Reported

   

Y/Y

Ex Currency

Software Solutions $103 $116 (12%) (7%)
Global Ecommerce

112

77

45%

46%

Digital Commerce Total $215 $194 11% 14%
 

EBIT

Software Solutions $14 $21 (34%)
Global Ecommerce

9

8

23%

Digital Commerce Total $23 $28 (19%)
 

Software Solutions

Revenue declined due to lower licensing revenues in the Americas and Europe. The Company has allocated additional resources to expand its channel reach and focus on several high-potential industries and solutions. EBIT margin declined as a result of the lower amount of licensing revenue, which has a high margin.

Global Ecommerce

Results included a full quarter of revenue from Borderfree and growth in UK marketplace revenue. A number of new retail clients and expanded payment options also added to revenue in the quarter. However, outbound package shipments from the U.S. continued to be pressured by the strong U.S. dollar. This was especially true with regard to the Canadian and Australian dollars, which both declined in value by 15 percent versus the U.S. currency in comparison to the prior year. These markets represent two of the top three markets for volume shipped from the U.S.

EBIT margin declined versus the prior year due to the amortization of acquisition-related intangible assets, which offset the early stages of synergy savings.

 

Other

($ millions)         Fourth Quarter

2015

   

2014

   

Y/Y

Reported

   

Y/Y

Ex Currency

Revenue $0 $31 NM NM

EBIT

$0 $5 NM
 

The Other segment is comprised of the Imagitas marketing services business, which was sold in May 2015.

2016 GUIDANCE

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 2014 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. This guidance also assumes that the global economy and foreign exchange markets in 2016 will not change significantly from year-end 2015 levels. Volatility in the foreign exchange markets could have a material effect on the Company’s reported results compared to guidance. From a sensitivity perspective, for each 5 percent movement of the exchange rates material to the Company’s business, reported revenue growth could be impacted by an approximately 150 basis point change and adjusted earnings per share could be impacted by about $0.03 per share.

The Company expects in 2016:

  • Revenue, excluding the impacts of currency; to be driven by growth in the double-digit range in Digital Commerce Solutions; flat to modest growth in Enterprise Business Solutions and a low single-digit decline in SMB Solutions.
  • Revenue is expected to benefit from:
    • the completion of the go-to-market shift in the Company’s major markets;
    • new product launches across the portfolio;
    • recent acquisitions, including Borderfree, Real Time Content (RTC) and Enroute Systems Corporation;
    • the addition of new brands and retailers in ecommerce;
    • the expansion of the Company’s Presort Services network.
  • Ongoing improvement in SG&A as a percent of revenue as a result of the expected benefits from the implementation of the new ERP program. The majority of these benefits in 2016 are expected to be realized in the second half of the year, after the U.S. launch and stabilization period.
  • Incremental Marketing expense related to the Company’s new advertising campaign that is expected to be the highest in the first and fourth quarters.
  • A tax rate in the range of 32 to 35 percent.

Based on the above assumptions, the Company’s 2016 guidance is as follows:

  • Revenue, on a constant currency basis, is expected to be in the range of a 1 percent decline to 2 percent growth when compared to 2015.
  • Earnings per diluted share from continuing operations to be in the range of $1.80 to $2.00 on both an adjusted and GAAP basis. This guidance does not anticipate any potential adjustments to earnings.
  • Free cash flow to be in the range of $425 million to $525 million.

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. EST. 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.pb.com.

About Pitney Bowes

Pitney Bowes (NYSE: PBI) is a global technology company offering innovative products and solutions that enable commerce in the areas of customer information management, location intelligence, customer engagement, shipping and mailing, and global ecommerce. More than 1.5 million clients in approximately 100 countries around the world rely on products, solutions and services from Pitney Bowes. For additional information, visit Pitney Bowes at www.pitneybowes.com.

The Company's financial results are reported in accordance with generally accepted accounting principles (GAAP). The Company uses measures such as adjusted earnings before interest and taxes (EBIT), adjusted earnings per share, adjusted income from continuing operations and free cash flow to exclude the impact of special items like restructuring charges, tax adjustments, and goodwill and asset write-downs, because, 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.

The use of free cash flow provides investors insight into the amount of cash that management could have available for other discretionary uses. It adjusts GAAP cash from operations for capital expenditures, as well as special items like cash used for restructuring charges, unusual tax settlements or payments and contributions to its pension funds. 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. 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.

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: mail volumes; the uncertain economic environment; timely development, market acceptance and regulatory approvals, if needed, of new products; fluctuations in customer demand; changes in postal regulations; interrupted use of key information systems; management of outsourcing arrangements; the implementation of a new enterprise resource planning system; changes in business portfolio; the success of our investment in rebranding the Company; the risk of customer concentration in our Digital Commerce Solutions group; integrating newly acquired businesses, including operations and product and service offerings; foreign currency exchange rates; changes in our credit ratings; management of credit risk; changes in interest rates; the financial health of national posts; and other factors beyond its control as more fully outlined in the Company's 2014 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 twelve months ended December 31, 2015 and 2014, and consolidated balance sheets at December 31, 2015 and 2014 are attached.

 
Pitney Bowes Inc.
Consolidated Statements of Income

(Unaudited; in thousands, except per share data)

 
        Three months ended December 31,     Twelve months ended December 31,
2015     2014 2015     2014
Revenue:
Equipment sales $ 199,831 $ 212,339 $ 695,159 $ 770,371
Supplies 72,925 71,691 288,103 300,040
Software 103,265 116,852 386,506 429,743
Rentals 107,934 119,560 441,663 484,629
Financing 103,043 107,330 410,035 432,859
Support services 139,149 154,372 554,764 625,135
Business services   210,800   201,769   801,830     778,727
 
Total revenue   936,947   983,913   3,578,060     3,821,504
 
Costs and expenses:
Cost of equipment sales 98,363 103,388 331,069 365,724
Cost of supplies 22,890 23,546 88,802 93,675
Cost of software 27,996 30,337 113,580 123,760
Cost of rentals 21,061 23,065 84,188 97,338
Financing interest expense 17,620 18,829 71,791 78,562
Cost of support services 78,107 88,800 322,960 377,003
Cost of business services 140,642 138,257 546,201 544,729
Selling, general and administrative 340,643 346,903 1,279,961 1,378,400
Research and development 26,463 29,030 110,156 109,931
Restructuring charges and asset impairments, net 11,477 61,894 25,782 84,560
Interest expense, net 22,383 23,184 87,583 90,888
Other expense (income), net   78   -   (94,838 )   45,738
 
Total costs and expenses   807,723   887,233   2,967,235     3,390,308
 
Income from continuing operations before income taxes 129,224 96,680 610,825 431,196
 
Provision for income taxes   44,204   33,134   189,778     112,815
 
Income from continuing operations 85,020 63,546 421,047 318,381
 
Income from discontinued operations, net of tax   5,853   3,576   5,271     33,749
 
Net income before attribution of noncontrolling interests 90,873 67,122 426,318 352,130
 
Less: Preferred stock dividends of subsidiaries attributable
to noncontrolling interests   4,594   4,594   18,375     18,375
 
Net income - Pitney Bowes Inc. $ 86,279 $ 62,528 $ 407,943   $ 333,755
 
 
Amounts attributable to common stockholders:
Income from continuing operations $ 80,426 $ 58,952 $ 402,672 $ 300,006
Income from discontinued operations, net of tax   5,853   3,576   5,271     33,749
 
Net income - Pitney Bowes Inc. $ 86,279 $ 62,528 $ 407,943   $ 333,755
 
Basic earnings per share attributable to common stockholders (1):
Continuing operations $ 0.41 $ 0.29 $ 2.01 $ 1.49
Discontinued operations   0.03   0.02   0.03     0.17
 
Net income - Pitney Bowes Inc. $ 0.44 $ 0.31 $ 2.04   $ 1.65
 
Diluted earnings per share attributable to common stockholders (1):
Continuing operations $ 0.41 $ 0.29 $ 2.00 $ 1.47
Discontinued operations   0.03   0.02   0.03     0.17
 
Net income - Pitney Bowes Inc. $ 0.44 $ 0.31 $ 2.03   $ 1.64
 
Weighted-average shares used in diluted EPS   197,959,779   203,110,509   200,944,874     203,961,446
 

(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 per share data)

 

Assets

        December 31,

2015

    December 31,

2014 (1)

Current assets:
Cash and cash equivalents $ 677,431 $ 1,079,145
Short-term investments 102,122 32,121
 
Accounts receivable, gross 466,589 448,017
Allowance for doubtful accounts   (9,262 )   (10,742 )
Accounts receivable, net 457,327 437,275
 
Short-term finance receivables 950,684 1,019,412
Allowance for credit losses   (15,514 )   (19,108 )
Short-term finance receivables, net 935,170 1,000,304
 
Inventories 88,824 84,827
Current income taxes 6,584 28,584
Other current assets and prepayments 64,325 57,173
Assets held for sale   -     52,271  
 
Total current assets 2,331,783 2,771,700
 
Property, plant and equipment, net 330,088 285,091
Rental property and equipment, net 180,662 200,380
 
Long-term finance receivables 769,303 828,723
Allowance for credit losses   (6,249 )   (9,002 )
Long-term finance receivables, net 763,054 819,721
 
Goodwill 1,745,957 1,672,721
Intangible assets, net 187,378 82,173
Non-current income taxes 70,294 98,806
Other assets   532,245     569,110  
 
Total assets $ 6,141,461   $ 6,499,702  
 

Liabilities, noncontrolling interests and stockholders' equity

Current liabilities:
Accounts payable and accrued liabilities $ 1,457,614 $ 1,572,971
Current income taxes 16,620 30,527
Current portion of long-term debt and notes payable 461,085 324,879
Advance billings   353,025     386,846  
 
Total current liabilities 2,288,344 2,315,223
 
Deferred taxes on income 205,668 114,950
Tax uncertainties and other income tax liabilities 68,429 86,127
Long-term debt 2,507,912 2,927,127
Other non-current liabilities   596,017     682,646  
 
Total liabilities   5,666,370     6,126,073  
 
Noncontrolling interests (Preferred stockholders' equity in subsidiaries) 296,370 296,370
 
Stockholders' equity:
Cumulative preferred stock, $50 par value, 4% convertible 1 1
Cumulative preference stock, no par value, $2.12 convertible 505 548
Common stock, $1 par value 323,338 323,338
Additional paid-in-capital 161,280 178,852
Retained earnings 5,155,537 4,897,708
Accumulated other comprehensive loss (888,635 ) (846,156 )
Treasury stock, at cost   (4,573,305 )   (4,477,032 )
Total Pitney Bowes Inc. stockholders' equity   178,721     77,259  
 
Total liabilities, noncontrolling interests and stockholders' equity $ 6,141,461   $ 6,499,702  
 

(1)Certain prior year amounts have been revised.

 

 
Pitney Bowes Inc.
Revenue and EBIT
Business Segments

(Unaudited; in thousands)

 
          Three Months Ended December 31,
          %
2015 2014 Change

Revenue

 
North America Mailing $ 363,316 $ 376,421 (3 %)
International Mailing   113,930     133,621   (15 %)
Small & Medium Business Solutions   477,246     510,042   (6 %)
 
Production Mail 122,298 131,730 (7 %)
Presort Services   122,247     117,350   4 %
Enterprise Business Solutions   244,545     249,080   (2 %)
 
Software Solutions 102,992 116,462 (12 %)
Global Ecommerce   112,164     77,244   45 %
Digital Commerce Solutions   215,156     193,706   11 %
 
Other   -     31,085   (100 %)
 
Total revenue $ 936,947   $ 983,913   (5 %)
 

EBIT (1)

 
North America Mailing $ 164,537 $ 165,764 (1 %)
International Mailing   14,485     21,363   (32 %)
Small & Medium Business Solutions   179,022     187,127   (4 %)
 
Production Mail 16,793 19,678 (15 %)
Presort Services   27,709     29,995   (8 %)
Enterprise Business Solutions   44,502     49,673   (10 %)
 
Software Solutions 13,627 20,573 (34 %)
Global Ecommerce   9,267     7,533   23 %
Digital Commerce Solutions   22,894     28,106   (19 %)
 
Other   -     5,275   (100 %)
 
Total EBIT 246,418 270,181 (9 %)
 
Unallocated amounts:
Interest, net (2) (40,003 ) (42,013 )
Corporate and other expenses (61,136 ) (69,594 )
Restructuring charges and asset impairments, net (11,477 ) (61,894 )
Other expense, net (78 ) -
Acquisition/disposition related expenses   (4,500 )   -  
 
Income from continuing operations before income taxes $ 129,224   $ 96,680  
 
(1) Segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges and other items, which are not allocated to a particular business segment.
(2) Includes financing interest expense and interest expense, net.
 

 
Pitney Bowes Inc.
Revenue and EBIT
Business Segments

(Unaudited; in thousands)

 
          Twelve Months Ended December 31,
        %
2015 2014 Change

Revenue

 
North America Mailing $ 1,435,140 $ 1,491,927 (4 %)
International Mailing   445,328     572,440   (22 %)
Small & Medium Business Solutions   1,880,468     2,064,367   (9 %)
 
Production Mail 421,178 462,199 (9 %)
Presort Services   473,612     456,556   4 %
Enterprise Business Solutions   894,790     918,755   (3 %)
 
Software Solutions 385,908 428,662 (10 %)
Global Ecommerce   362,087     281,643   29 %
Digital Commerce Solutions   747,995     710,305   5 %
 
Other   54,807     128,077   (57 %)
 
Total revenue $ 3,578,060   $ 3,821,504   (6 %)
 

EBIT (1)

 
North America Mailing $ 646,913 $ 642,521 1 %
International Mailing   51,070     88,710   (42 %)
Small & Medium Business Solutions   697,983     731,231   (5 %)
 
Production Mail 48,254 47,543 1 %
Presort Services   104,655     98,230   7 %
Enterprise Business Solutions   152,909     145,773   5 %
 
Software Solutions 48,531 51,193 (5 %)
Global Ecommerce   19,229     16,633   16 %
Digital Commerce Solutions   67,760     67,826   (0 %)
 
Other   10,569     19,240   (45 %)
 
Total EBIT 929,221 964,070 (4 %)
 
Unallocated amounts:
Interest, net (2) (159,374 ) (169,450 )
Corporate and other expenses (213,095 ) (233,126 )
Restructuring charges and asset impairments, net (25,782 ) (84,560 )
Other income (expense), net 94,838 (45,738 )
Acquisition/disposition related expenses   (14,983 )   -  
 
Income from continuing operations before income taxes $ 610,825   $ 431,196  
 
(1) Segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges and other items, which are not allocated to a particular business segment.
(2) 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 data)
 
 
        Three Months Ended December 31,   Twelve Months Ended December 31,
2015       2014         2015       2014
 
Income from continuing operations
after income taxes, as reported: $ 80,426 $ 58,952 $ 402,672 $ 300,006
Restructuring charges and asset impairments, net 9,481 44,188 18,089 59,349
Loss (gain) on sale/disposition of businesses 4,149 - (84,250 ) -
Acquisition and disposition transaction costs 48 - 11,475 -
Legal settlement - - 4,250 -
Acquisition related compensation expense - - 7,246 -
Investment divestiture - - (7,756 ) (9,774 )
Extinguishment of debt   -     -     -     37,833  
Income from continuing operations
after income taxes, as adjusted: $ 94,104   $ 103,140   $ 351,726   $ 387,414  
 
 
Diluted earnings per share from
continuing operations, as reported: $ 0.41 $ 0.29 $ 2.00 $ 1.47
Restructuring charges and asset impairments, net 0.05 0.22 0.09 0.29
Loss (gain) on sale/disposition of businesses 0.02 - (0.42 ) -
Acquisition and disposition transaction costs - - 0.06 -
Legal settlement - - 0.02 -
Acquisition related compensation expense - - 0.04 -
Investment divestiture - - (0.04 ) (0.05 )
Extinguishment of debt   -     -     -     0.19  
Diluted earnings per share from continuing
operations, as adjusted: $ 0.48   $ 0.51   $ 1.75   $ 1.90  
 
 
Net cash provided by operating activities,
as reported: $ 163,924 $ 258,094 $ 514,639 $ 655,526
Capital expenditures (36,686 ) (59,286 ) (166,329 ) (180,556 )
Restructuring payments 16,030 14,011 62,086 56,162

(Receipts) payments related to investment

  divestiture

- (59,475 ) 20,602 (5,737 )
Reserve account deposits 1,428 253 (24,202 ) (15,666 )
Acquisition related compensation payment - - 10,483 -
Tax payment related to sale of Imagitas 5,306 - 21,224 -
Cash transaction fees related to acquisitions
and dispositions 6,856 - 17,971 -
Extinguishment of debt   -     -     -     61,657  
 
Free cash flow, as adjusted: $ 156,858   $ 153,597   $ 456,474   $ 571,386  
 
 
 
Note: The sum of the earnings per share amounts may not equal the totals due to rounding.
 

 
Pitney Bowes Inc.
Reconciliation of Reported Consolidated Results to Adjusted Results
(Unaudited; in thousands)
 
 
        Three Months Ended December 31,       Twelve Months Ended December 31,
2015     2014 2015     2014
 
Income from continuing operations
after income taxes, as reported $ 80,426 $ 58,952 $ 402,672 $ 300,006
Restructuring charges and asset impairments, net 9,481 44,188 18,089 59,349
Loss (gain) on sale/disposition of businesses 4,149 - (84,250 ) -
Acquisition and disposition transaction costs 48 - 11,475 -
Legal settlement - - 4,250 -
Acquisition related compensation expense - - 7,246 -
Investment divestiture - - (7,756 ) (9,774 )
Extinguishment of debt           -       -         -         37,833  
Income from continuing operations
after income taxes, as adjusted 94,104 103,140 351,726 387,414
Provision for income taxes, as adjusted 46,581 50,840 186,651 155,705
Preferred stock dividends of subsidiaries
attributable to noncontrolling interests           4,594       4,594         18,375         18,375  
Income from continuing operations
before income taxes, as adjusted 145,279 158,574 556,752 561,494
Interest, net           40,003       42,013         159,374         169,450  
Adjusted EBIT 185,282 200,587 716,126 730,944
Depreciation and amortization           45,826       54,728         173,312         197,234  
Adjusted EBITDA         $ 231,108     $ 255,315       $ 889,438       $ 928,178  
 

Contacts

For Pitney Bowes Inc.
Editorial
Bill Hughes, 203-351-6785
Chief Communications Officer
or
Financial
Charles F. McBride, 203-351-6349
VP, Investor Relations

Contacts

For Pitney Bowes Inc.
Editorial
Bill Hughes, 203-351-6785
Chief Communications Officer
or
Financial
Charles F. McBride, 203-351-6349
VP, Investor Relations