Pitney Bowes Announces Second Quarter 2023 Financial Results

STAMFORD, Conn.--()--Pitney Bowes (NYSE: PBI), a global shipping and mailing company that provides technology, logistics, and financial services, today announced its financial results for the second quarter 2023.

“We saw similar trends that affected first quarter results continue into the second quarter, and we took several significant actions to position the company well for the second half of the year,” said Marc B. Lautenbach, President and Chief Executive Officer. “SendTech and Presort both grew profits, while the decline in cross-border weighed on the performance of Global Ecommerce. Domestic parcel volumes grew close to 30 percent, which we expect to continue in the second half. Importantly, the refinancing of our 2024 notes and execution of the restructuring plan announced last quarter further position the company for the long-term.”

Second Quarter Financial Highlights

  • Revenue in the quarter was $776 million, a decrease of 11 percent on a reported basis and 5 percent on a comparable basis versus prior year (1)
  • GAAP EPS was a loss of $0.81 and Adjusted EPS was a loss of $0.02 in the quarter versus GAAP EPS and Adjusted EPS of $0.02 in second quarter 2022
  • GAAP EPS a includes a loss of $0.67 for a non-cash goodwill impairment charge related to the Global Ecommerce segment resulting from performance through June 30, 2023 and continuing changes in macroeconomic conditions
  • GAAP cash from operating activities was breakeven; Free Cash Flow was a net use of $11 million
  • Cash and short-term investments were $561 million at quarter-end
  • On track to deliver $75 million in annual expense savings by yearend 2024 from the previously announced restructuring plan and productivity efforts
  • Signed a $275 million private placement offering in July 2023; net proceeds will be used to redeem the outstanding balance of the 2024 Notes and a portion of the Term Loan A

Second Quarter Business Highlights

  • Global Ecommerce processed 50 million domestic parcels in the quarter, which is up 29 percent from second quarter 2022
  • Presort grew Adjusted Segment EBIT by 59 percent and Adjusted Segment EBIT margins by 500 basis points versus prior year
  • SendTech grew Adjusted Segment EBIT by 2 percent and Adjusted Segment EBIT margins by 200 basis points versus prior year
  • SendTech shipping-related revenues increased 14 percent year-over-year; SaaS subscription revenues increased 29 percent
  • Segment Adjusted EBIT was $80 million in the quarter and flat versus prior year

(1) Comparable basis is defined in the “Use of Non-GAAP Measures” section

Earnings per share results are summarized in the table below:

 

 

 

 

Second Quarter

 

2023

2022

GAAP EPS

($0.81)

$0.02

Goodwill Impairment

$0.67

-

Restructuring Charges

$0.09

$0.02

Proxy Solicitation Fees

$0.02

-

Tax Benefit on Sale of Business

-

($0.03)

Loss on Sale of Business, Including Transaction Costs

-

$0.02

Adjusted EPS (2)

($0.02)

$0.02

(2) The sum of the earnings per share may not equal the totals due to rounding.

Business Segment Reporting

Global Ecommerce

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

 

Second Quarter

($ millions)

2023

2022

% Change
Reported

% Change
Comparable
Basis

Revenue

$313

$394

(21%)

(9%)

Adjusted Segment EBITDA

($21)

($7)

>(100%)

 

Adjusted Segment EBIT

($38)

($29)

(32%)

Revenue and Adjusted Segment EBIT decline was driven by the continuing weakness in cross-border, specifically from a change in how two clients access our offerings.

These declines were partially offset by a 19 percent increase in Domestic parcel revenue and lower operating expenses in the quarter.

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.

 

Second Quarter

($ millions)

2023

2022

% Change
Reported

Revenue

$143

 

$139

 

3%

Adjusted Segment EBITDA

$29

 

$20

 

45%

Adjusted Segment EBIT

$20

 

$13

 

59%

Presort processed 3.6 billion pieces, which represented a decline of 5 percent versus prior year. Revenue per piece improvement and growth in higher yielding mail classes drove growth in revenue.

Adjusted Segment EBIT growth versus prior year driven by higher revenue, improved labor productivity from investments in automation, and lower unit transportation costs.

SendTech Solutions

Sending Technology Solutions offers physical and digital mailing and shipping technology solutions, financing, services, supplies and other applications for small and medium businesses, retail, enterprise, and government clients around the world to help simplify and save on the sending, tracking and receiving of letters, parcels and flats.

 

Second Quarter

($ millions)

2023

 

2022

 

% Change
R
eported

 

% Change
Comparable
Basis

Revenue

$321

 

$339

 

(5%)

 

(4%)

Adjusted Segment EBITDA

$105

 

$103

 

1%

 

 

Adjusted Segment EBIT

$97

 

$96

 

2%

 

 

Decline in segment revenue was primarily driven by lower in-period equipment sales as we entered a phase of our product lifecycle where we have less new lease opportunities offset by a corresponding increase in lease extensions. Growth in shipping-related revenues partially offset the decline in revenues.

Simplification and cost reduction actions more than offset the secular mailing install base decline, driving improvement in Adjusted Segment EBIT.

Full Year 2023 Guidance

We expect full year revenue to be on the lower end of our previously provided guidance, resulting in relatively flat growth on a comparable basis.

We continue to expect adjusted EBIT performance to outpace the percent change in revenue.

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

We disclose revenue growth on a comparable basis, which excludes three items. First, the comparison excludes the impacts of foreign currency. Second, we are excluding the impact of the divestiture of the Borderfree business effective July 1, 2022. Third, we are excluding the impact of a change in the presentation of revenue beginning in the fourth quarter of 2022, from a gross basis to net basis due to an adjustment in terms of one of our contracts with the United States Postal Service. The change in revenue presentation impacts both our Global Ecommerce and SendTech Solutions segments. The change in revenue presentation does not impact gross profit. Management believes that excluding these items provides investors with a better understanding of the underlying revenue performance.

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, 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 on our cost of debt due to recent increases in interest rates and the potential for future interest rate hikes ; and other factors as more fully outlined in the Company's 2022 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission during 2023. 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 months ended June 30, 2023 and 2022, and consolidated balance sheets at June 30, 2023 and December 31, 2022 are attached.

 
Pitney Bowes Inc.
Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)
 
Three months ended June 30, Six months ended June 30,

 

2023

 

2022

 

2023

 

2022

Revenue:
Business services

$

473,497

$

551,478

$

996,988

$

1,148,862

Support services

 

103,315

 

107,625

 

208,599

 

217,977

Financing

 

66,702

 

67,298

 

133,751

 

139,327

Equipment sales

 

79,451

 

89,986

 

162,061

 

179,282

Supplies

 

36,505

 

38,245

 

75,340

 

79,306

Rentals

 

17,011

 

16,863

 

34,280

 

33,683

Total revenue

 

776,481

 

871,495

 

1,611,019

 

1,798,437

 
Costs and expenses:
Cost of business services

 

410,638

 

477,544

 

856,955

 

980,759

Cost of support services

 

35,018

 

37,711

 

71,858

 

74,845

Financing interest expense

 

14,763

 

12,533

 

29,299

 

24,135

Cost of equipment sales

 

56,180

 

63,815

 

113,351

 

127,586

Cost of supplies

 

10,884

 

11,028

 

22,109

 

22,545

Cost of rentals

 

5,142

 

7,473

 

10,570

 

12,782

Selling, general and administrative

 

222,549

 

226,638

 

464,669

 

469,423

Research and development

 

10,274

 

11,254

 

20,767

 

22,588

Restructuring charges

 

22,443

 

4,224

 

26,042

 

8,408

Goodwill impairment

 

118,599

 

-

 

118,599

 

-

Interest expense, net

 

22,920

 

21,007

 

45,262

 

43,131

Other components of net pension and postretirement (income) cost

 

(1,751)

 

958

 

(3,461)

 

1,802

Other income, net

 

(228)

 

-

 

(3,064)

 

(11,901)

Total costs and expenses

 

927,431

 

874,185

 

1,772,956

 

1,776,103

 
(Loss) income before taxes

 

(150,950)

 

(2,690)

 

(161,937)

 

22,334

Benefit for income taxes

 

(9,415)

 

(7,026)

 

(12,665)

 

(2,823)

Net (loss) income

$

(141,535)

$

4,336

$

(149,272)

$

25,157

 
(Loss) earnings per share:
Basic

$

(0.81)

$

0.02

$

(0.85)

$

0.14

Diluted

$

(0.81)

$

0.02

$

(0.85)

$

0.14

 
Weighted-average shares used in diluted earnings per share

 

175,695

 

176,969

 

175,094

 

177,673

 
(1) The sum of the earnings per share amounts may not equal the totals due to rounding.
 
Pitney Bowes Inc.
Consolidated Balance Sheets
(Unaudited; in thousands)
 
Assets June 30,
2023
December 31,
2022
Current assets:
Cash and cash equivalents

$

541,704

$

669,981

Short-term investments

 

18,972

 

11,172

Accounts and other receivables, net

 

272,963

 

343,557

Short-term finance receivables, net

 

559,979

 

564,972

Inventories

 

92,783

 

83,720

Current income taxes

 

11,159

 

8,790

Other current assets and prepayments

 

117,132

 

115,824

Total current assets

 

1,614,692

 

1,798,016

Property, plant and equipment, net

 

401,905

 

420,672

Rental property and equipment, net

 

25,936

 

27,487

Long-term finance receivables, net

 

640,097

 

627,124

Goodwill

 

952,302

 

1,066,951

Intangible assets, net

 

70,062

 

77,944

Operating lease assets

 

284,783

 

296,129

Noncurrent income taxes

 

44,859

 

46,613

Other assets

 

388,728

 

380,419

Total assets

$

4,423,364

$

4,741,355

 
Liabilities and stockholders' (deficit) equity
Current liabilities:
Accounts payable and accrued liabilities

$

812,474

$

907,083

Customer deposits at Pitney Bowes Bank

 

639,425

 

628,072

Current operating lease liabilities

 

53,984

 

52,576

Current portion of long-term debt

 

264,980

 

32,764

Advance billings

 

82,828

 

105,207

Current income taxes

 

2,929

 

2,101

Total current liabilities

 

1,856,620

 

1,727,803

Long-term debt

 

1,884,798

 

2,172,502

Deferred taxes on income

 

236,859

 

263,131

Tax uncertainties and other income tax liabilities

 

24,745

 

23,841

Noncurrent operating lease liabilities

 

254,051

 

265,696

Other noncurrent liabilities

 

241,778

 

227,729

Total liabilities

 

4,498,851

 

4,680,702

 
Stockholders' (deficit) equity:
Common stock

 

323,338

 

323,338

Retained earnings

 

4,908,641

 

5,125,677

Accumulated other comprehensive loss

 

(807,993)

 

(835,564)

Treasury stock, at cost

 

(4,499,473)

 

(4,552,798)

Total stockholders' (deficit) equity

 

(75,487)

 

60,653

Total liabilities and stockholders' (deficit) equity

$

4,423,364

$

4,741,355

 
Pitney Bowes Inc.
Business Segment Revenue
(Unaudited; in thousands)

 

 

Three months ended June 30, Six months ended June 30,

 

 

2023

 

2022

% Change

 

2023

 

2022

% Change

 

Global Ecommerce

Revenue, as reported

$

312,754

$

393,770

(21%)

$

661,145

$

812,297

(19%)

Impact of change in revenue presentation

 

(37,790)

 

(75,376)

Impact of Borderfree divestiture

 

(10,820)

 

(22,550)

Comparable revenue before currency

 

312,754

 

345,160

(9%)

 

661,145

 

714,371

(7%)

Impact of currency on revenue

 

437

 

3,278

Comparable revenue

$

313,191

$

345,160

(9%)

$

664,423

$

714,371

(7%)

 

Presort Services

Revenue, as reported

$

143,107

$

138,934

3%

$

302,009

$

299,478

1%

 

Sending Technology Solutions

Revenue, as reported

$

320,620

$

338,791

(5%)

$

647,865

$

686,662

(6%)

Impact of change in revenue presentation

 

(4,853)

 

(8,543)

Comparable revenue before currency

 

320,620

 

333,938

(4%)

 

647,865

 

678,119

(4%)

Impact of currency on revenue

 

725

 

5,569

Comparable revenue

$

321,345

$

333,938

(4%)

$

653,434

$

678,119

(4%)

 

Consolidated

Revenue, as reported

$

776,481

$

871,495

(11%)

$

1,611,019

$

1,798,437

(10%)

Impact of change in revenue presentation

 

(42,643)

 

(83,919)

Impact of Borderfree divestiture

 

(10,820)

 

(22,550)

Comparable revenue before currency

 

776,481

 

818,032

(5%)

 

1,611,019

 

1,691,968

(5%)

Impact of currency on revenue

 

1,162

 

8,847

Comparable revenue

$

777,643

$

818,032

(5%)

$

1,619,866

$

1,691,968

(4%)

 

Pitney Bowes Inc.
Adjusted Segment EBIT & EBITDA
(Unaudited; in thousands)
 
Three months ended June 30,

2023

2022

% change

Adjusted
Segment
EBIT (1)
D&A Adjusted
Segment
EBITDA
Adjusted
Segment
EBIT (1)
D&A Adjusted
Segment
EBITDA
Adjusted
Segment
EBIT
Adjusted
Segment
EBITDA
 
Global Ecommerce

$

(38,115)

$

16,620

$

(21,495)

$

(28,825)

$

21,480

$

(7,345)

(32%)

>(100%)
Presort Services

 

20,429

 

8,337

 

28,766

 

12,851

 

7,000

 

19,851

59%

45%

Sending Technology Solutions

 

97,480

 

7,383

 

104,863

 

95,565

 

7,908

 

103,473

2%

1%

Segment total

$

79,794

$

32,340

 

112,134

$

79,591

$

36,388

 

115,979

0%

(3%)

 
Reconciliation of Segment Adjusted EBITDA to Net (Loss) Income:
Segment depreciation and amortization

 

(32,340)

 

(36,388)

Unallocated corporate expenses

 

(47,709)

 

(40,761)

Restructuring charges

 

(22,443)

 

(4,224)

Goodwill impairment

 

(118,599)

 

-

Gain on debt redemption

 

228

 

-

Proxy solicitation fees

 

(4,538)

 

-

Loss on sale of business, including transaction costs

 

-

 

(3,756)

Interest, net

 

(37,683)

 

(33,540)

Benefit for income taxes

 

9,415

 

7,026

Net (loss) income

$

(141,535)

$

4,336

 
 
 
Six months ended June 30,

2023

2022

% change
EBIT (1) D&A EBITDA EBIT (1) D&A EBITDA EBIT EBITDA
 
Global Ecommerce

$

(72,321)

$

33,034

$

(39,287)

$

(42,521)

$

42,924

$

403

(70%)

>(100%)
Presort Services

 

47,334

 

16,859

 

64,193

 

32,483

 

13,419

 

45,902

46%

40%

Sending Technology Solutions

 

194,151

 

14,850

 

209,001

 

200,140

 

14,911

 

215,051

(3%)

(3%)

Segment total

$

169,164

$

64,743

 

233,907

$

190,102

$

71,254

 

261,356

(11%)

(11%)

 
Reconciliation of Segment EBITDA to Net (Loss) Income:
Segment depreciation and amortization

 

(64,743)

 

(71,254)

Unallocated corporate expenses

 

(104,058)

 

(98,595)

Restructuring charges

 

(26,042)

 

(8,408)

Goodwill impairment

 

(118,599)

 

-

Gain (loss) on debt redemption

 

3,064

 

(4,993)

Proxy solicitation fees

 

(10,905)

 

-

Gain on sale of assets

 

-

 

14,372

Loss on sale of business, including transaction costs

 

-

 

(2,878)

Interest, net

 

(74,561)

 

(67,266)

Benefit for income taxes

 

12,665

 

2,823

Net (loss) income

$

(149,272)

$

25,157

 

(1) Adjusted segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges, goodwill impairment, and other
items that are not allocated to a particular business segment.

 
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,

 

2023

 

2022

 

2023

 

2022

 
Reconciliation of reported net (loss) income to adjusted EBIT and adjusted EBITDA
Net (loss) income

$

(141,535)

$

4,336

$

(149,272)

$

25,157

Benefit for income taxes

 

(9,415)

 

(7,026)

 

(12,665)

 

(2,823)

(Loss) income before taxes

 

(150,950)

 

(2,690)

 

(161,937)

 

22,334

Restructuring charges

 

22,443

 

4,224

 

26,042

 

8,408

Goodwill impairment

 

118,599

 

-

 

118,599

 

-

(Gain) loss on debt redemption

 

(228)

 

-

 

(3,064)

 

4,993

Proxy solicitation fees

 

4,538

 

-

 

10,905

 

-

Gain on sale of assets

 

-

 

-

 

-

 

(14,372)

Loss on sale of business, including transaction costs

 

-

 

3,756

 

-

 

2,878

Adjusted net (loss) income before tax

 

(5,598)

 

5,290

 

(9,455)

 

24,241

Interest, net

 

37,683

 

33,540

 

74,561

 

67,266

Adjusted EBIT

 

32,085

 

38,830

 

65,106

 

91,507

Depreciation and amortization

 

39,873

 

43,470

 

79,770

 

85,472

Adjusted EBITDA

$

71,958

$

82,300

$

144,876

$

176,979

 
Reconciliation of reported diluted (loss) earnings per share to adjusted diluted (loss) earnings per share
Diluted (loss) earnings per share

$

(0.81)

$

0.02

$

(0.85)

$

0.14

Restructuring charges

 

0.09

 

0.02

 

0.11

 

0.03

Goodwill impairment

 

0.67

 

-

 

0.67

 

-

(Gain) loss on debt redemption

 

(0.00)

 

-

 

(0.01)

 

0.02

Proxy solicitation fees

 

0.02

 

-

 

0.05

 

-

Gain on sale of assets

 

-

 

-

 

-

 

(0.06)

Loss on sale of business, including transaction costs

 

-

 

0.02

 

-

 

0.00

Tax benefit on sale of business

 

-

 

(0.03)

 

-

 

(0.03)

Adjusted diluted (loss) earnings per share (1)

$

(0.02)

$

0.02

$

(0.04)

$

0.10

 
(1) The sum of the earnings per share amounts may not equal the totals due to rounding.
 
Reconciliation of reported net cash from operating activities to free cash flow
Net cash from operating activities

$

(44)

$

35,132

$

(39,758)

$

45,694

Capital expenditures

 

(25,980)

 

(31,619)

 

(54,646)

 

(64,174)

Restructuring payments

 

8,242

 

4,970

 

12,883

 

8,255

Proxy solicitation fees paid

 

7,244

 

-

 

10,282

 

-

Transaction costs paid

 

-

 

-

 

-

 

2,132

Free cash flow

$

(10,538)

$

8,483

$

(71,239)

$

(8,093)

 

Contacts

Editorial -
Kathleen Raymond
Head of Communications
203.351.7233

Financial -
Alex Brown
Senior Manager, Investor Relations
203.351.7639

Contacts

Editorial -
Kathleen Raymond
Head of Communications
203.351.7233

Financial -
Alex Brown
Senior Manager, Investor Relations
203.351.7639