Pitney Bowes Announces First Quarter 2024 Financial Results

Rhea-AI Summary

Pitney Bowes (NYSE: PBI) announced its financial results for the first quarter of 2024, with net income improving by $5 million compared to the prior year. Adjusted EBIT grew by over $23 million while operating expenses declined by 8%. Revenue remained flat at $831 million. Cost reduction actions from the 2023 restructuring plan generated significant benefits, with expected savings exceeding $75 to $85 million. SendTech Solutions saw a 6% increase in adjusted segment EBIT, while Presort Services achieved a 7% revenue growth and a 39% increase in adjusted segment EBITDA. Global Ecommerce experienced a 2% revenue decline due to changes in cross-border revenue, but domestic parcel volumes grew by 20%. The company is maintaining guidance for 2024, expecting revenue growth to range from flat to a low-single digit decline.

Positive

• Net income improved by $5 million compared to the prior year.

• Adjusted EBIT grew by over $23 million.

• Operating expenses declined by 8%.

• Cost reduction actions from the 2023 restructuring plan generated significant benefits.

• Presort Services achieved a 7% revenue growth and a 39% increase in adjusted segment EBITDA.

• Global Ecommerce experienced a 20% growth in domestic parcel volumes.

• The company is maintaining guidance for 2024, expecting revenue growth to range from flat to a low-single digit decline.

Negative

• Revenue remained flat at $831 million.

• Adjusted EPS was flat compared to the prior year.

• Net income was a loss of $3 million, despite the improvement of $5 million over the prior year.

• Global Ecommerce saw a 2% revenue decline due to changes in cross-border revenue.

• Adjusted EBIT for Global Ecommerce declined by 7%.

Insights

Financial Analyst

Pitney Bowes demonstrated resilience in a flat revenue landscape by optimizing their cost structure, which is evident in the $23 million increase in adjusted EBIT and the $5 million improvement in net income. The 8% reduction in operating expenses echoes a successful implementation of their restructuring plan, with benefits surpassing the initial savings target. However, the modest improvement in GAAP EPS by $0.02 and flat adjusted EPS may not signal robust growth to investors. Looking at segment performance, SendTech's shift towards shipping-related revenue, growing by 8%, presents a strategic adaptation to market demands, yet a decline in mailing-related revenue might hint at an underlying challenge in maintaining core business components.

Market Research Analyst

The strategic realignment of the digital delivery services from Global Ecommerce to SendTech could bolster the latter's technology-driven growth, but the real test will be in its execution and market reception. Pitney Bowes' record revenue and EBIT in Presort Services signifies strong operational efficiency, which is commendable in the competitive logistics space. However, the 49% decline in cross-border revenue within Global Ecommerce raises concerns about the segment's international competitiveness and client dependency. The company's guidance for the year suggests cautious optimism, maintaining revenue and EBIT margin projections despite external cost pressures.

Investment Advisor

For retail investors, Pitney Bowes offers a picture of a company that is navigating through market challenges with a focus on operational efficiency and cost management. The improvement in free cash flow, alongside a substantial cash reserve of $538 million, may provide a buffer against future uncertainties. While the overall financial health seems stable, investors should weigh the potential risks associated with the company's segment transitions and external pressures like increasing interest and tax expenses. Observing how the company capitalizes on domestic parcel growth amid declining cross-border transactions might be key to assessing future performance.

STAMFORD, Conn.--(BUSINESS WIRE)-- Pitney Bowes (NYSE: PBI) (“Pitney Bowes” or the “Company”), a global shipping and mailing company that provides technology, logistics, and financial services, today announced its financial results for the first quarter 2024.

Jason Dies, Interim Chief Executive Officer, commented:

“We came out of the gate strong with first quarter results that reflect enterprise-wide changes in our operating intensity and efficiency efforts. Net income improved $5 million over prior year. Adjusted EBIT grew by more than $23 million on relatively flat revenue. This includes solid segment-level performance and systematic cost reductions, resulting in an 8% decline in operating expenses.

At the segment level, Presort Services achieved record revenue and EBIT while SendTech once again delivered solid profit increases and margin expansion. Global Ecommerce grew domestic parcel volumes in a challenging market and reduced operating expense as we continue efforts to maximize value.

We are very encouraged by improvements in execution over the past six months and our results for the first quarter in particular. We continue to see opportunities in the remainder of the year. We will build on this momentum by maintaining strong execution and a disciplined focus on costs to increase cashflow and create capacity for investment in high-margin growth areas.”

First Quarter Financial Highlights

• Revenue in the quarter was $831 million, flat compared to prior year
• GAAP EPS improved $0.02 over prior year; Adjusted EPS was flat versus prior year
• Net income was a loss of $3 million, an improvement of $5 million over prior year despite higher interest and tax expense; adjusted EBIT was $56 million, up $23 million or 71 percent over prior year
• GAAP cash from operating activities was a use of $13 million, an improvement of $27 million year-over-year; Free Cash Flow was a use of $17 million, an improvement of $43 million year-over-year
• Cost reduction actions as part of 2023 restructuring plan generated significant benefit in the quarter; now expect savings to exceed $75 to $85 million target
• Cash and short-term investments were $538 million at quarter-end

Earnings per share results are summarized in the table below:

	First Quarter
	2024	2023
GAAP EPS	($0.02)	($0.04)
Restructuring Charges	$0.02	$0.01
Foreign Currency Gain on Intercompany Loans	($0.02)	-
Gain on Debt Redemption	-	($0.01)
Proxy Solicitation Fees	-	$0.03
Transaction Costs	$0.01	-
Adjusted EPS	($0.01)	($0.01)

Business Segment Reporting

Effective January 1, 2024, we moved the digital delivery services offering from our Global Ecommerce segment to the SendTech Solutions segment in order to leverage our technology and innovation capabilities to better serve our clients. Prior periods have been recast to conform to our current segment presentation.

Quarterly historical financial information consistent with this change can be found within the Financial Reporting section of the Company's Investor Relations website.

SendTech Solutions

SendTech 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.

	First Quarter
($ millions)	2024	2023	% Change Reported
Revenue	$327	$335	(2%)
Adjusted Segment EBITDA	$111	$105	6%
Adjusted Segment EBIT	$101	$96	6%

Shipping-related revenue grew 8%, partially offsetting the decline in mailing-related revenue of 4%. The timing of our product lifecycle and a continued reduction in our meter base drove the revenue decline in the quarter.

Favorable revenue mix, improvements in supply chain management, and cost reduction actions drove lower COGS and SG&A, resulting in higher Adjusted Segment EBITDA and EBIT.

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.

	First Quarter
($ millions)	2024	2023	% Change Reported
Revenue	$170	$159	7%
Adjusted Segment EBITDA	$49	$35	39%
Adjusted Segment EBIT	$40	$27	50%

Presort achieved record revenue as higher revenue per piece offset a 2% decline in volumes.

Higher revenue per piece, improved labor productivity from automation refresh and process improvements, and transportation optimization drove margin expansion, resulting in record Adjusted Segment EBITDA and EBIT.

Global Ecommerce

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

	First Quarter
($ millions)	2024	2023	% Change Reported
Revenue	$333	$341	(2%)
Adjusted Segment EBITDA	($21)	($19)	(14%)
Adjusted Segment EBIT	($35)	($33)	(7%)

Lower Global Ecommerce revenue was driven by a 49% decline in cross-border revenue from changes in how two of our largest clients access our services that occurred in the second quarter 2023. Domestic parcel volumes grew 20% to 60 million processed in the quarter, driving domestic parcel revenue growth of 8%.

Adjusted Segment EBITDA and EBIT declined as a result of the decline in cross-border revenue and lower domestic parcel revenue per piece. Cost actions partially offset the impact of these items and drove a 19% improvement in operating expenses.

Full Year 2024 Guidance

We are maintaining our guidance and expect revenue growth to range from flat to a low-single digit decline and EBIT margins to remain relatively flat on a year-over-year basis.

We are planning similar levels of capital expenditures in 2024 as in 2023 and expect interest expense and taxes to increase over prior year.

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

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, foreign currency gains and losses on intercompany loans, 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 of higher interest rates and the potential for future interest rate increases on our cost of debt; and other factors as more fully outlined in the Company's 2023 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission during 2024. Pitney Bowes assumes no obligation to update any forward-looking statements contained in this document as a result of new information, events or developments.

Note: Consolidated statements of income; revenue, adjusted segment EBIT and adjusted segment EBITDA by business segment; and reconciliations of GAAP to non-GAAP measures for the three ended March 31, 2024 and 2023, and consolidated balance sheets at March 31, 2024 and December 31, 2023 are attached.

Pitney Bowes Inc.
Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)
	Three months ended March 31,
		2024				2023
Revenue:
Business services	$	535,597			$	523,491
Support services		96,333				105,284
Financing		67,663				67,049
Equipment sales		77,403				82,610
Supplies		36,721				38,835
Rentals		16,792				17,269
Total revenue		830,509				834,538
Costs and expenses:
Cost of business services		446,367				446,317
Cost of support services		33,055				36,840
Financing interest expense		16,603				14,536
Cost of equipment sales		52,559				57,171
Cost of supplies		10,195				11,225
Cost of rentals		4,684				5,428
Selling, general and administrative		216,197				242,120
Research and development		9,481				10,493
Restructuring charges		4,315				3,599
Interest expense, net		27,766				22,342
Other components of net pension and postretirement income		(387	)			(1,710	)
Other income		-				(2,836	)
Total costs and expenses		820,835				845,525
Income (loss) before taxes		9,674				(10,987	)
Provision (benefit) for income taxes		12,559				(3,250	)
Net loss	$	(2,885	)		$	(7,737	)
Net loss per share:
Basic	$	(0.02	)		$	(0.04	)
Diluted	$	(0.02	)		$	(0.04	)
Weighted-average shares used in diluted earnings per share		176,997				174,626

Pitney Bowes Inc.
Consolidated Balance Sheets
(Unaudited; in thousands)
Assets	March 31, 2024				December 31, 2023
Current assets:
Cash and cash equivalents	$	516,092			$	601,053
Short-term investments		21,859				22,166
Accounts and other receivables, net		307,201				342,236
Short-term finance receivables, net		547,235				563,536
Inventories		78,683				70,053
Current income taxes		987				564
Other current assets and prepayments		110,041				92,309
Total current assets		1,582,098				1,691,917
Property, plant and equipment, net		370,110				383,628
Rental property and equipment, net		22,580				23,583
Long-term finance receivables, net		638,380				653,085
Goodwill		729,291				734,409
Intangible assets, net		58,277				62,250
Operating lease assets		304,939				309,958
Noncurrent income taxes		58,884				60,995
Other assets		338,488				352,360
Total assets	$	4,103,047			$	4,272,185
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable and accrued liabilities	$	784,020			$	875,476
Customer deposits at Pitney Bowes Bank		599,976				640,323
Current operating lease liabilities		60,087				60,069
Current portion of long-term debt		58,111				58,931
Advance billings		89,014				89,087
Current income taxes		34,212				6,523
Total current liabilities		1,625,420				1,730,409
Long-term debt		2,076,054				2,087,101
Deferred taxes on income		199,769				211,477
Tax uncertainties and other income tax liabilities		19,054				19,091
Noncurrent operating lease liabilities		272,024				277,981
Other noncurrent liabilities		303,081				314,702
Total liabilities		4,495,402				4,640,761
Stockholders' deficit:
Common stock		270,338				270,338
Retained earnings		3,027,030				3,077,988
Accumulated other comprehensive loss		(863,811	)			(851,245	)
Treasury stock, at cost		(2,825,912	)			(2,865,657	)
Total stockholders' deficit		(392,355	)			(368,576	)
Total liabilities and stockholders' deficit	$	4,103,047			$	4,272,185

Pitney Bowes Inc.
Business Segment Revenue
(Unaudited; in thousands)
	Three months ended March 31,
	2024				2023			% Change
Global Ecommerce
Revenue, as reported	$	333,265			$	340,641		(2	%)
Impact of currency on revenue		(719	)
Revenue, constant currency	$	332,546			$	340,641		(2	%)
Presort Services
Revenue, as reported	$	169,807			$	158,902		7	%
Sending Technology Solutions
Revenue, as reported	$	327,437			$	334,995		(2	%)
Impact of currency on revenue		(72	)
Revenue, constant currency	$	327,365			$	334,995		(2	%)
Consolidated
Revenue, as reported	$	830,509			$	834,538		(0	%)
Impact of currency on revenue		(791	)
Revenue, constant currency	$	829,718			$	834,538		(1	%)

Pitney Bowes Inc.
Adjusted Segment EBIT & EBITDA
(Unaudited; in thousands)
	Three months ended March 31,
	2024									2023									% 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	$	(35,427	)	$	14,033	$	(21,394	)		$	(33,172	)	$	14,431	$	(18,741	)		(7%)	(14%)
Presort Services		40,329			8,758		49,087				26,905			8,523		35,428			50%	39%
Sending Technology Solutions		101,278			9,996		111,274				95,637			9,450		105,087			6%	6%
Segment total	$	106,180		$	32,787		138,967			$	89,370		$	32,404		121,774			19%	14%
Reconciliation of Segment Adjusted EBITDA to Net Loss:
Segment depreciation and amortization							(32,787	)								(32,404	)
Interest expense, net							(44,369	)								(36,878	)
Unallocated corporate expenses							(49,770	)								(56,349	)
Restructuring charges							(4,315	)								(3,599	)
Foreign currency gain on intercompany loans							4,638									-
Transaction costs							(2,690	)								-
Proxy solicitation fees							-									(6,367	)
Gain on debt redemption							-									2,836
Benefit (provision) for income taxes							(12,559	)								3,250
Net loss						$	(2,885	)							$	(7,737	)

(1)

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

Pitney Bowes Inc.
Reconciliation of Reported Consolidated Results to Adjusted Results
(Unaudited; in thousands, except per share amounts)
		Three months ended March 31,
		2024				2023
Reconciliation of reported net loss to adjusted EBIT and adjusted EBITDA
Net loss		$	(2,885	)		$	(7,737	)
Provision (benefit) for income taxes			12,559				(3,250	)
Income (loss) before taxes			9,674				(10,987	)
Restructuring charges			4,315				3,599
Foreign currency gain on intercompany loans			(4,638	)			-
Gain on debt redemption			-				(2,836	)
Transaction costs			2,690				-
Proxy solicitation fees			-				6,367
Adjusted net income before tax			12,041				(3,857	)
Interest, net			44,369				36,878
Adjusted EBIT			56,410				33,021
Depreciation and amortization			40,879				39,897
Adjusted EBITDA		$	97,289			$	72,918
Reconciliation of reported diluted loss per share to adjusted diluted loss per share
Diluted loss per share		$	(0.02	)		$	(0.04	)
Restructuring charges			0.02				0.01
Foreign currency gain on intercompany loans			(0.02	)			-
Gain on debt redemption			-				(0.01	)
Transaction costs			0.01				-
Proxy solicitation fees			-				0.03
Adjusted diluted loss per share		$	(0.01	)		$	(0.01	)
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		$	(12,525	)		$	(39,714	)
Capital expenditures			(19,957	)			(28,666	)
Restructuring payments			14,989				4,641
Proxy solicitation fees paid			-				3,038
Free cash flow		$	(17,493	)		$	(60,701	)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240502722177/en/

Editorial -

Kathleen Raymond

Head of Communications

203.351.7233

Financial -

Phil Landler

VP, Investor Relations

203.351.6141

Source: Pitney Bowes Inc.

FAQ

What are Pitney Bowes' financial results for the first quarter of 2024?

Pitney Bowes announced its financial results for the first quarter of 2024, with revenue remaining flat at $831 million.

How did Pitney Bowes' net income change in the first quarter of 2024?

Net income improved by $5 million compared to the prior year, despite being a loss of $3 million.

What cost reduction actions did Pitney Bowes take?

Cost reduction actions from the 2023 restructuring plan generated significant benefits for Pitney Bowes, with expected savings exceeding $75 to $85 million.

What guidance is Pitney Bowes providing for full year 2024?

Pitney Bowes is maintaining its guidance for 2024, expecting revenue growth to range from flat to a low-single digit decline.