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Pitney Bowes Announces Third Quarter 2022 Financial Results

Pitney Bowes (NYSE: PBI), a global shipping and mailing company that provides technology, logistics, and financial services, today announced its financial results for the third quarter 2022.

“We continue to successfully navigate the cross-currents in the global economy and remain singularly focused on emerging from this environment in a stronger position,” said Marc B. Lautenbach, President and CEO, Pitney Bowes. “Similar to last quarter, SendTech and Presort both grew on a constant currency basis and Global Ecommerce declined as a result of international macroeconomic challenges, including US dollar strength. The resilience of SendTech and Presort will serve us well going forward and the improved service levels we are seeing in our Domestic Parcel network within Global Ecommerce will drive substantial volume and margin expansion.”

Third Quarter Financial Highlights

  • Revenue in the quarter was $831 million, a decrease of 5 percent on a reported basis and 4 percent, constant currency, versus the comparable quarter in 2021
  • GAAP EPS was $0.03 and Adjusted EPS was $0.00 in the quarter versus $0.05 and $0.08, respectively, in third quarter 2021
  • Adjusted EBIT was $38 million compared to $39 million in second quarter 2022 and a decline of $12 million on a year-over-year basis
  • GAAP cash from operating activities in the quarter was a net use of $36 million
  • Free cash flow was a net use of $16 million versus a net source of $30 million in third quarter 2021; the year-over-year decline was driven by changes in working capital and lower net income partially offset by lower capital expenditures and an increase in customer deposits
  • Cash and short-term investments were $607 million at the end of the quarter

Third Quarter Business Highlights

  • Domestic Parcel revenue grew by 2 percent with improved gross margins despite lower volumes
  • Presort revenue grew 4 percent on a year-over-year basis and with a 500 basis point EBIT margin improvement relative to second quarter 2022
  • SendTech revenue grew on a constant currency basis driven by high-teens growth in shipping-related revenues
  • Equipment revenue and financial receivables both grew year-over-year

Earnings per share results are summarized in the table below

 

Third Quarter

 

2022

 

2021

GAAP EPS

$0.03

 

$0.05

Discontinued Operations

-

 

-

GAAP EPS from Continuing Operations

$0.03

 

$0.05

Restructuring Charges

$0.02

 

$0.02

Gain on Sale of Businesses

($0.05)

 

-

Loss on Debt Redemption

-

 

$0.01

Adjusted EPS

$0.00

 

$0.08

* 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.

 

Third Quarter

($ millions)

2022

 

2021

 

% Change

Reported

 

% Change

Ex Currency

Revenue

$354

 

$398

 

(11%)

 

(10%)

EBITDA

($17)

 

$0

 

>(100%)

 

 

EBIT

($35)

 

($21)

 

(66%)

 

 

The segment revenue decline was largely driven by lower volumes, especially Cross-border, where US Dollar strength is pressuring international ecommerce activity. Domestic Parcel volumes were 36 million in the quarter, 4 million lower compared to prior year, with revenues increasing 2 percent driven by better per parcel yields.

Decreases in segment margins were the result of lower volumes in Cross-border and Digital Shipping Solutions, offset by modest improvements in Domestic Parcel.

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)

2022

 

2021

 

% Change

Reported

 

% Change

Ex Currency

Revenue

$145

 

$139

 

4%

 

4%

EBITDA

$28

 

$27

 

2%

 

 

EBIT

$21

 

$21

 

(2%)

 

 

Revenue growth was driven by better revenue per piece and new client additions which was partially offset by lower volumes from existing clients.

EBIT margins improved 500 basis points sequentially to 14%, primarily from higher revenue per piece and productivity gains.

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.

 

Third Quarter

($ millions)

2022

 

2021

 

% Change

Reported

 

% Change

Ex Currency

Revenue

$332

 

$338

 

(2%)

 

1%

EBITDA

$102

 

$107

 

(4%)

 

 

EBIT

$95

 

$99

 

(4%)

 

 

Better year-over-year Equipment sales and a strong increase in Business Services revenues largely offset lower Finance and Support Services. Equipment sales and Business Services revenue continued to benefit from new mailing products and shipping solutions. Shipping-related revenues experienced high-teens percent growth on a year-over-year basis.

EBITDA and EBIT declined as a result of lower, high-margin Finance and Service revenues.

Full Year 2022 Guidance

The Company is reaffirming the previously communicated revenue and EBIT guidance. The Company expects full year revenue (constant currency) to range from a low-single digit percentage decline to a low single digit percentage increase. The Company also expects full year EBIT to range from a high-single digit percentage decline to a mid-single digit percentage increase.

The Company also expects positive free cash flow for full year 2022.

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. EDT. 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

The Company's financial results are reported in accordance with generally accepted accounting principles (GAAP); however, in its disclosures the Company uses certain non-GAAP measures, such as adjusted earnings before interest and taxes (EBIT), adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted earnings per share (EPS), revenue growth on a constant currency basis and free cash flow.

Adjusted EBIT, Adjusted EBITDA and Adjusted EPS exclude the impact of discontinued operations, restructuring charges, gains, losses and costs related to acquisitions and dispositions, asset and goodwill impairment charges, and other unusual or one-time items. Such items are often inconsistent in amount and frequency and as such, the Company believes that these non-GAAP measures provide investors greater insight into the 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 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.

Free cash flow adjusts cash from operations calculated in accordance with GAAP for discontinued operations, capital expenditures, restructuring payments, changes in customer deposits held at the Pitney Bowes Bank and other special items. The Company reports free cash flow to provide investors insight into the amount of cash that management could have available for other discretionary uses.

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. Segment EBIT excludes interest, taxes, unallocated corporate expenses, restructuring charges, asset and goodwill impairment charges, and other items not allocated to a segment. The Company also reports 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. In particular, we continue to navigate the impacts of the Covid-19 pandemic (Covid-19) as well as the risk of a global recession, and the effects that they may have on our, and our client’s business. Other factors which could cause future financial performance to differ materially from expectations, and which may also be exacerbated by Covid-19 or the risk of a global recession or a negative change in the economy, 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 loss of, or significant changes to, United States Postal Service (USPS) commercial programs, or our contractual relationships with the USPS or USPS' performance under those contracts; our ability to continue to grow and manage volumes, gain additional economies of scale and improve profitability within our Global Ecommerce segment; changes in labor and transportation availability and costs; and other factors as more fully outlined in the Company's 2021 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, EBIT and EBITDA by business segment; and reconciliations of GAAP to non-GAAP measures for the three and nine months ended September 30, 2022 and 2021, and consolidated balance sheets at September 30, 2022 and December 31, 2021 are attached.

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

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue:
Business services

$

518,405

 

$

551,384

 

$

1,667,267

 

$

1,688,860

 

Support services

 

107,642

 

 

113,413

 

 

325,619

 

 

347,266

 

Financing

 

67,757

 

 

71,936

 

 

207,084

 

 

223,201

 

Equipment sales

 

83,528

 

 

83,234

 

 

262,810

 

 

256,304

 

Supplies

 

37,455

 

 

38,211

 

 

116,761

 

 

119,090

 

Rentals

 

16,127

 

 

17,271

 

 

49,810

 

 

55,128

 

Total revenue

 

830,914

 

 

875,449

 

 

2,629,351

 

 

2,689,849

 

 
Costs and expenses:
Cost of business services

 

452,715

 

 

472,216

 

 

1,433,474

 

 

1,454,564

 

Cost of support services

 

36,618

 

 

38,250

 

 

111,463

 

 

112,646

 

Financing interest expense

 

13,692

 

 

11,710

 

 

37,827

 

 

35,369

 

Cost of equipment sales

 

60,595

 

 

62,221

 

 

188,181

 

 

185,622

 

Cost of supplies

 

10,529

 

 

10,705

 

 

33,074

 

 

32,383

 

Cost of rentals

 

6,270

 

 

6,480

 

 

19,052

 

 

18,940

 

Selling, general and administrative

 

209,576

 

 

225,024

 

 

678,999

 

 

699,316

 

Research and development

 

9,812

 

 

10,621

 

 

32,400

 

 

32,996

 

Restructuring charges

 

4,264

 

 

3,701

 

 

12,672

 

 

11,434

 

Interest expense, net

 

23,685

 

 

24,312

 

 

66,816

 

 

73,816

 

Other components of net pension and postretirement expense

 

1,427

 

 

46

 

 

3,229

 

 

708

 

Other (income) expense, net

 

(8,398

)

 

3,193

 

 

(20,299

)

 

40,941

 

Total costs and expenses

 

820,785

 

 

868,479

 

 

2,596,888

 

 

2,698,735

 

 
Income (loss) from continuing operations before taxes

 

10,129

 

 

6,970

 

 

32,463

 

 

(8,886

)

Provision (benefit) for income taxes

 

4,642

 

 

(1,525

)

 

1,819

 

 

(10,602

)

Income from continuing operations

 

5,487

 

 

8,495

 

 

30,644

 

 

1,716

 

Income (loss) from discontinued operations, net of tax

 

-

 

 

572

 

 

-

 

 

(4,334

)

Net income (loss)

$

5,487

 

$

9,067

 

$

30,644

 

$

(2,618

)

 
Basic earnings (loss) per share:
Continuing operations

$

0.03

 

$

0.05

 

$

0.18

 

$

0.01

 

Discontinued operations

 

-

 

 

-

 

 

-

 

 

(0.02

)

Net income (loss)

$

0.03

 

$

0.05

 

$

0.18

 

$

(0.02

)

 
Diluted earnings (loss) per share:
Continuing operations

$

0.03

 

$

0.05

 

$

0.17

 

$

0.01

 

Discontinued operations

 

-

 

 

-

 

 

-

 

 

(0.02

)

Net income (loss)

$

0.03

 

$

0.05

 

$

0.17

 

$

(0.02

)

 
Weighted-average shares used in diluted earnings per share

 

176,966

 

 

179,409

 

 

177,418

 

 

178,949

 

 

(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 September 30,

2022
December 31,

2021
Current assets:
Cash and cash equivalents

$

596,647

 

$

732,480

 

Short-term investments

 

10,014

 

 

14,440

 

Accounts and other receivables, net

 

287,751

 

 

334,630

 

Short-term finance receivables, net

 

551,476

 

 

560,680

 

Inventories

 

89,946

 

 

78,588

 

Current income taxes

 

27,442

 

 

13,894

 

Other current assets and prepayments

 

146,636

 

 

157,341

 

Total current assets

 

1,709,912

 

 

1,892,053

 

Property, plant and equipment, net

 

427,958

 

 

429,162

 

Rental property and equipment, net

 

28,451

 

 

34,774

 

Long-term finance receivables, net

 

597,198

 

 

587,427

 

Goodwill

 

1,045,940

 

 

1,135,103

 

Intangible assets, net

 

79,399

 

 

132,442

 

Operating lease assets

 

259,248

 

 

208,428

 

Noncurrent income taxes

 

56,339

 

 

68,398

 

Other assets

 

388,704

 

 

471,084

 

Total assets

$

4,593,149

 

$

4,958,871

 

 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities

$

766,170

 

$

922,543

 

Customer deposits at Pitney Bowes Bank

 

663,420

 

 

632,062

 

Current operating lease liabilities

 

45,761

 

 

40,299

 

Current portion of long-term debt

 

27,133

 

 

24,739

 

Advance billings

 

94,100

 

 

99,280

 

Current income taxes

 

2,051

 

 

9,017

 

Total current liabilities

 

1,598,635

 

 

1,727,940

 

Long-term debt

 

2,189,566

 

 

2,299,099

 

Deferred taxes on income

 

273,455

 

 

286,445

 

Tax uncertainties and other income tax liabilities

 

31,566

 

 

31,935

 

Noncurrent operating lease liabilities

 

239,788

 

 

192,092

 

Other noncurrent liabilities

 

268,415

 

 

308,728

 

Total liabilities

 

4,601,425

 

 

4,846,239

 

 
Stockholders' equity:
Common stock

 

323,338

 

 

323,338

 

Additional paid-in-capital

 

-

 

 

2,485

 

Retained earnings

 

5,128,030

 

 

5,169,270

 

Accumulated other comprehensive loss

 

(905,453

)

 

(780,312

)

Treasury stock, at cost

 

(4,554,191

)

 

(4,602,149

)

Total stockholders' (deficit) equity

 

(8,276

)

 

112,632

 

Total liabilities and stockholders' equity

$

4,593,149

 

$

4,958,871

 

 
Pitney Bowes Inc.
Business Segment Revenue
(Unaudited; in thousands)
 
Three months ended September 30, Nine months ended September 30,

2022

2021

% Change

2022

2021

% Change

 
Global Ecommerce

$

354,326

$

398,011

(11

%)

$

1,166,623

$

1,229,526

(5

%)

Presort Services

 

144,824

 

139,296

4

%

 

444,302

 

417,041

7

%

Sending Technology Solutions

 

331,764

 

338,142

(2

%)

 

1,018,426

 

1,043,282

(2

%)

Total revenue - GAAP

 

830,914

 

875,449

(5

%)

 

2,629,351

 

2,689,849

(2

%)

Currency impact on revenue

 

13,354

 

-

 

28,123

 

-

Revenue, at constant currency

$

844,268

$

875,449

(4

%)

$

2,657,474

$

2,689,849

(1

%)

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

2022

2021

% change

EBIT (1)

 

D&A

 

EBITDA

 

EBIT (1)

 

D&A

 

EBITDA

 

EBIT

 

EBITDA

           
Global Ecommerce

$

(34,881

)

 

$

17,982

 

$

(16,899

)

$

(20,950

)

 

$

20,935

 

$

(15

)

(66

%)

 

>(100

%)

Presort Services

 

20,561

 

 

 

7,182

 

 

27,743

 

 

21,062

 

 

 

6,235

 

 

27,297

 

(2

%)

 

2

%

Sending Technology Solutions

 

95,234

 

 

 

7,248

 

 

102,482

 

 

98,950

 

 

 

7,694

 

 

106,644

 

(4

%)

 

(4

%)

Segment total

$

80,914

 

 

$

32,412

 

 

113,326

 

$

99,062

 

 

$

34,864

 

 

133,926

 

(18

%)

 

(15

%)

           
Reconciliation of Segment EBITDA to Net Income:          
Segment depreciation and amortization    

 

(32,412

)

   

 

(34,864

)

 
Unallocated corporate expenses    

 

(42,908

)

   

 

(49,176

)

 
Restructuring charges    

 

(4,264

)

   

 

(3,701

)

 
Gain on sale of business    

 

13,764

 

   

 

-

 

 
Loss on debt refinancing    

 

-

 

   

 

(3,193

)

 
Interest, net    

 

(37,377

)

   

 

(36,022

)

 
(Provision) benefit for income taxes    

 

(4,642

)

   

 

1,525

 

 
Income from continuing operations    

 

5,487

 

   

 

8,495

 

 
Income from discontinued operations, net of tax    

 

-

 

   

 

572

 

 
Net income    

$

5,487

 

   

$

9,067

 

 
           
           
           
Nine months ended September 30,

2022

2021

% change

EBIT (1)

 

D&A

 

EBITDA

 

EBIT (1)

 

D&A

 

EBITDA

 

EBIT

 

EBITDA

           
Global Ecommerce

$

(77,402

)

 

$

60,906

 

$

(16,496

)

$

(58,157

)

 

$

58,171

 

$

14

 

(33

%)

 

>(100

%)
Presort Services

 

53,044

 

 

 

20,601

 

 

73,645

 

 

56,247

 

 

 

20,532

 

 

76,779

 

(6

%)

 

(4

%)

Sending Technology Solutions

 

295,374

 

 

 

22,159

 

 

317,533

 

 

320,541

 

 

 

22,835

 

 

343,376

 

(8

%)

 

(8

%)

Segment Total

$

271,016

 

 

$

103,666

 

 

374,682

 

$

318,631

 

 

$

101,538

 

 

420,169

 

(15

%)

 

(11

%)

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

 

(103,666

)

   

 

(101,538

)

 
Unallocated corporate expenses    

 

(141,537

)

   

 

(162,957

)

 
Restructuring charges    

 

(12,672

)

   

 

(11,434

)

 
Gain on sale of assets    

 

14,372

 

   

 

1,434

 

 
Gain on sale of business, including transaction costs    

 

10,920

 

   

 

10,201

 

 
Loss on debt redemption/refinancing    

 

(4,993

)

   

 

(55,576

)

 
Interest, net    

 

(104,643

)

   

 

(109,185

)

 
(Provision) benefit for income taxes    

 

(1,819

)

   

 

10,602

 

 
Income from continuing operations    

 

30,644

 

   

 

1,716

 

 
Loss from discontinued operations, net of tax    

 

-

 

   

 

(4,334

)

 
Net income (loss)    

$

30,644

 

   

$

(2,618

)

 
           

(1)

Segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges, and other items that are not allocated to a particular business segment. In 2022, we refined the methodology for allocating transportation costs between Global Ecommerce and Presort Services, resulting in an increase in Global Ecommerce EBIT and a corresponding decrease in Presort Services EBIT of $3 million and $9 million for the three and nine months ended September 30, 2022, respectively.
Pitney Bowes Inc.
Reconciliation of Reported Consolidated Results to Adjusted Results
(Unaudited; in thousands, except per share amounts)
 
Three months ended September 30, Nine months ended September 30,

2022

2021

2022

2021

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

$

5,487

 

$

9,067

 

$

30,644

 

$

(2,618

)

(Income) loss from discontinued operations, net of tax

 

-

 

 

(572

)

 

-

 

 

4,334

 

Provision (benefit) for income taxes

 

4,642

 

 

(1,525

)

 

1,819

 

 

(10,602

)

Income (loss) from continuing operations before taxes

 

10,129

 

 

6,970

 

 

32,463

 

 

(8,886

)

Restructuring charges

 

4,264

 

 

3,701

 

 

12,672

 

 

11,434

 

Gain on sale of assets

 

-

 

 

-

 

 

(14,372

)

 

(1,434

)

Gain on sale of business, including transaction costs

 

(13,764

)

 

-

 

 

(10,920

)

 

(10,201

)

Loss on debt redemption/refinancing

 

-

 

 

3,193

 

 

4,993

 

 

55,576

 

Adjusted net income before tax

 

629

 

 

13,864

 

 

24,836

 

 

46,489

 

Interest, net

 

37,377

 

 

36,022

 

 

104,643

 

 

109,185

 

Adjusted EBIT

 

38,006

 

 

49,886

 

 

129,479

 

 

155,674

 

Depreciation and amortization

 

39,280

 

 

41,809

 

 

124,752

 

 

121,225

 

Adjusted EBITDA

$

77,286

 

$

91,695

 

$

254,231

 

$

276,899

 

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

$

0.03

 

$

0.05

 

$

0.17

 

$

(0.02

)

Loss from discontinued operations, net of tax

 

-

 

 

-

 

 

-

 

 

0.02

 

Restructuring charges

 

0.02

 

 

0.02

 

 

0.05

 

 

0.05

 

Gain on sale of assets

 

-

 

 

-

 

 

(0.06

)

 

(0.01

)

Gain on sale of business, including transaction costs

 

(0.05

)

 

-

 

 

(0.09

)

 

(0.02

)

Loss on debt redemption/refinancing

 

-

 

 

0.01

 

 

0.02

 

 

0.23

 

Adjusted diluted earnings per share (1)

$

(0.00

)

$

0.08

 

$

0.10

 

$

0.26

 

 
(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

$

(36,465

)

$

71,446

 

$

9,229

 

$

216,174

 

Capital expenditures

 

(33,359

)

 

(57,204

)

 

(97,533

)

 

(140,907

)

Restructuring payments

 

3,506

 

 

6,023

 

 

11,761

 

 

14,847

 

Change in customer deposits at PB Bank

 

47,271

 

 

9,879

 

 

31,359

 

 

25,512

 

Transaction costs paid

 

3,268

 

 

-

 

 

5,400

 

 

-

 

Free cash flow

$

(15,779

)

$

30,144

 

$

(39,784

)

$

115,626

 

Contacts

Editorial -

Bill Hughes

Chief Communications Officer

203.351.6785

Financial -

Ned Zachar, CFA

VP, Investor Relations

203.614.1092

Alex Brown

Senior Manager, Investor Relations

203.351.7639

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