Pitney Bowes Announces Fourth Quarter and Full Year 2020 Financial Results

Rhea-AI Summary

Pitney Bowes reported strong financial results for Q4 and full year 2020. Q4 revenue reached $1.0 billion, up 24%, driven by a 60% surge in Global Ecommerce revenue, exceeding $500 million for the first time. Full year revenue was $3.6 billion, an 11% increase. However, the company reported a GAAP EPS loss of $1.06 for 2020. Despite the challenges posed by the pandemic, Pitney Bowes aims for low-to-mid single digit revenue growth in 2021, with adjusted EPS expected to rise.

Positive

• Fourth quarter revenue of $1.0 billion, growth of 24%
• Global Ecommerce revenue grew 60% to exceed $500 million
• Full year revenue of $3.6 billion, an 11% increase
• Reduced debt by $175 million in 2020
• Expecting annual revenue growth in the low-to-mid single digit range for 2021

Negative

• GAAP EPS loss of $1.06 for full year 2020
• Increased higher costs in Global Ecommerce impacting EBIT

Pitney Bowes Inc. (NYSE: PBI), a global technology company that provides commerce solutions in the areas of ecommerce, shipping, mailing and financial services, today announced its financial results for the fourth quarter and full year 2020.

"The fourth quarter was a remarkable ending to an extraordinary year,” said Marc B. Lautenbach, President and CEO, Pitney Bowes. “Revenue growth was the highest modern day, organic growth rate on-record for us.

“We have been on a journey to transform the business,” Lautenbach continued. “Even with the tremendous uncertainty in our economy and how the pandemic will play out, we are now poised to enter this next chapter of our transformation, profitable revenue growth. While I am proud of what the team has accomplished, we all recognize there is more work to do and we are ready.”

Fourth Quarter 2020

• Revenue of $1.0 billion, growth of 24 percent on a reported basis and 23 percent excluding the impact of currency
• GAAP EPS of $0.11; Adjusted EPS of $0.13
• EPS reflects $0.03 in tax benefits primarily related to deferred tax balances in certain international tax jurisdictions.
• GAAP cash from operations of $111 million; free cash flow of $97 million
• The Company reduced debt by $31 million.
• Shipping-related revenues represented 54 percent of total revenue.
• Global Ecommerce revenue exceeded $500 million for the first time, representing growth of 60 percent over prior year.
• Global Ecommerce EBIT dollars and margin improved from prior quarter and over prior year, with positive EBITDA in the quarter.
• Presort Services revenue improved from prior quarter and was flat to prior year.
• SendTech grew revenue, EBIT and EBITDA dollars from prior quarter and over prior year.
• SendTech shipping revenue was $35 million and grew at a double-digit rate.

Full Year 2020

• Revenue of $3.6 billion, growth of 11 percent
• GAAP EPS loss of $1.06; Adjusted EPS of $0.30
• GAAP cash from operations of $298 million; free cash flow of $279 million
• The Company ended the year with $940 million in cash and short term investments.
• The Company reduced debt by $175 million.
• Shipping-related revenues represented 50 percent of total revenue.
• Global Ecommerce revenue of $1.6 billion, representing growth of 41 percent.
• Presort Services processed a total of 16.7 billion pieces.
• SendTech shipped 20,000 units of the SendPro Mailstation since launching in April.

Earnings per share results are summarized in the table below:

	Fourth Quarter							Full Year
	2020				2019			2020				2019
GAAP EPS	$	0.11			$	1.03		($	1.06	)		$	1.10
Discontinued Operations	($	0.01	)		($	0.98	)	($	0.06	)		($	0.87	)
GAAP EPS from Continuing Operations	$	0.09			$	0.05		($	1.12	)		$	0.23
Goodwill Impairment		-				-		$	1.13				-
Loss on Extinguishment of Debt		-			$	0.03		$	0.16			$	0.03
Restructuring Charges and Asset Impairments	$	0.04			$	0.06		$	0.09			$	0.30
Tax on Settlement of Investment Securities		-				-		$	0.07				-
Loss on Dispositions and Transaction Costs		-			$	0.01			-			$	0.13
Gain on Sale of an Equity Investment		-				-		($	0.05	)			-
Adjusted EPS	$	0.13			$	0.14		$	0.30			$	0.68

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

Business Segment Reporting

The Commerce Services group includes the Global Ecommerce and Presort Services segments. Global Ecommerce facilitates domestic retail and ecommerce shipping solutions, including fulfillment and returns, and global cross-border ecommerce transactions. Presort Services provides sortation services to qualify large volumes of First Class Mail, Marketing Mail, Marketing Mail Flats and Bound Printed Matter for postal workshare discounts.

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

The sum of the segment results may not equal the totals due to rounding.

Commerce Services

	Fourth Quarter
($ millions)			2020			2019			B/(W) Reported		B/(W) Ex Currency
Revenue
Global Ecommerce			$518			$324			60%		60%
Presort Services			135			135			0%		0%
Commerce Services			$653			$459			42%		42%
EBITDA
Global Ecommerce			$3			$0			>100%
Presort Services			21			30			(30%)
Commerce Services			$24			$30			(20%)
EBIT
Global Ecommerce			($15)			($18)			19%
Presort Services			13			22			(42%)
Commerce Services			($2)			$4			>(100%)

Global Ecommerce

Revenue benefited from growth in volumes in Domestic Parcel, Cross Border and Digital Delivery Services. EBIT and EBITDA benefitted from the increased demand and a peak surcharge, offset by higher costs, particularly around postal, transportation and labor.

Presort Services

Revenue was flat to prior year driven by flat First Class revenue, a decline in Marketing Mail and growth in Marketing Mail Flats and Bound Printed Matter. EBIT and EBITDA margins were relatively in line with prior quarters. Compared to prior year, EBIT and EBITDA declined largely due to higher medical claims and increased labor costs as well as Covid-related direct costs.

SendTech Solutions

	Fourth Quarter
($ millions)			2020			2019			B/(W) Reported		B/(W) Ex Currency
Revenue			$376			$372			1%		0%
EBITDA			$126			$122			4%
EBIT			$118			$112			5%

Revenue growth over prior year driven by equipment sales and business services, partly offset by declines in support services, supplies and financing revenues. EBIT and EBITDA margins improved from prior year driven largely by lower expenses.

2021 Expectations

The Company expects annual revenue to grow over prior year in the low-to-mid single digit range, making 2021 the fifth consecutive year of constant currency growth. The Company expects adjusted EPS to grow over prior year. The Company also expects lower free cash flow primarily due to the changes in certain working capital items that benefitted 2020 and are not expected to continue at the same level in 2021.

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.pitneybowes.com.

About Pitney Bowes

Pitney Bowes (NYSE:PBI) is a global technology company providing commerce solutions that power billions of transactions. Clients around the world, including 90 percent of the Fortune 500, rely on the accuracy and precision delivered by Pitney Bowes solutions, analytics, and APIs in the areas of ecommerce fulfillment, shipping and returns; cross-border ecommerce; office mailing and shipping; presort services; and financing. For 100 years, Pitney Bowes has been innovating and delivering technologies that remove the complexity of getting commerce transactions precisely right. For additional information visit Pitney Bowes, the Craftsmen of Commerce, at www.pitneybowes.com.

Use of Non-GAAP Measures

The Company's financial results are reported in accordance with generally accepted accounting principles (GAAP); however, in 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.

The Company reports measures such as adjusted EBIT, adjusted EBITDA and adjusted EPS to exclude the impact of items like discontinued operations, restructuring charges, gains, losses and costs related to acquisitions and dispositions, asset impairment charges, goodwill impairment charges and other unusual or one-time items. While these are actual Company income or expenses, they can mask underlying trends associated with its business. Such items are often inconsistent in amount and frequency and as such, the 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. A reconciliation of reported revenue to constant currency revenue can be found in the attached financial schedules.

The Company reports free cash flow in order to provide investors insight into the amount of cash that management could have available for other discretionary uses. Free cash flow adjusts GAAP cash from operations for cash flows of discontinued operations, capital expenditures, restructuring payments, changes in customer deposits held at the Pitney Bowes Bank, transaction costs and other special items. A reconciliation of GAAP cash from operations to free cash flow can be found in the attached financial schedules.

Segment EBIT is the primary measure of profitability and operational performance at the segment level. Segment EBIT is determined by deducting from segment 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. The Company also provides segment EBITDA, which further excludes depreciation and amortization expense for the segment, as an additional useful measure of segment profitability and operational performance. A reconciliation of segment EBIT and EBITDA to net income can be found in the attached financial schedules.

Pitney Bowes has provided a quantitative reconciliation to GAAP in supplemental schedules. This information can 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 the severity, magnitude and duration of the Covid-19 pandemic (Covid-19), including governments' responses to Covid-19, the efficacy and availability of a vaccine, its continuing impact on our operations, employees, the availability and cost of labor and transportation, global supply chain and demand across our and our clients' businesses as well as any deterioration or instability in global macroeconomic conditions. Other factors, which could cause future financial performance to differ materially from expectations, and which may also be exacerbated by Covid-19 or a negative change in the economy, include, without limitation: declining physical mail volumes; changes in postal regulations or operations, or the financial health of posts in the U.S. or other major markets or significant changes to the broader postal or shipping industry; changes in our contractual relationships with the United States Postal Service (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 Commerce Services group; changes in labor and transportation availability and costs; third-party suppliers' ability to provide products and services required by us and our clients; competitive factors, including pricing pressures, technological developments and the introduction of new products and services by competitors; the loss of some of our larger clients in our Commerce Services group; expenses and potential impacts resulting from a breach of security, including cyber-attacks or other comparable events; our success at managing customer credit risk; and other factors as more fully outlined in the Company's 2019 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 months and twelve months ended December 31, 2020 and 2019, and consolidated balance sheets at December 31, 2020 and December 31, 2019 are attached.

Pitney Bowes Inc.
Consolidated Statements of Income (Loss)
(Unaudited; in thousands, except per share amounts)
	Three months ended December 31,								Twelve months ended December 31,
	2020				2019				2020				2019
Revenue:
Business services	$	666,983			$	467,192			$	2,191,306			$	1,710,801
Support services		119,972				123,609				473,292				506,187
Financing		80,276				88,051				341,034				368,090
Equipment sales		101,200				87,148				314,882				352,104
Supplies		41,165				45,026				159,282				187,287
Rentals		18,821				20,317				74,279				80,656
Total revenue		1,028,417				831,343				3,554,075				3,205,125
Costs and expenses:
Cost of business services		592,137				386,086				1,904,078				1,389,569
Cost of support services		35,856				38,847				149,988				162,300
Financing interest expense		12,108				11,215				48,162				44,648
Cost of equipment sales		71,671				62,116				236,716				244,210
Cost of supplies		10,928				12,349				41,679				49,882
Cost of rentals		7,145				8,307				25,600				31,530
Selling, general and administrative		242,441				246,761				963,323				1,003,989
Research and development		9,546				12,837				38,384				51,258
Restructuring charges and asset impairments		8,207				12,990				20,712				69,606
Goodwill impairment		-				-				198,169				-
Interest expense, net		26,249				26,585				105,753				110,910
Other components of net pension and postretirement (income) expense		(1,834	)			(1,087	)			(1,708	)			(4,225	)
Other (income) expense		(1,636	)			5,956				8,151				24,306
Total costs and expenses		1,012,818				822,962				3,739,007				3,177,983
Income (loss) from continuing operations before taxes		15,599				8,381				(184,932	)			27,142
(Benefit) provision for income taxes		(813	)			344				6,727				(13,007	)
Income (loss) from continuing operations		16,412				8,037				(191,659	)			40,149
Income from discontinued operations, net of tax		2,467				168,659				10,115				154,460
Net income (loss)	$	18,879			$	176,696			$	(181,544	)		$	194,609
Basic earnings (loss) per share (1):
Continuing operations	$	0.10			$	0.05			$	(1.12	)		$	0.23
Discontinued operations		0.01				0.99				0.06				0.88
Net income (loss)	$	0.11			$	1.04			$	(1.06	)		$	1.10
Diluted earnings (loss) per share (1):
Continuing operations	$	0.09			$	0.05			$	(1.12	)		$	0.23
Discontinued operations		0.01				0.98				0.06				0.87
Net income (loss)	$	0.11			$	1.03			$	(1.06	)		$	1.10
Weighted-average shares used in diluted earnings per share		176,835				171,659				171,519				177,449
(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	December 31, 2020				December 31, 2019
Current assets:
Cash and cash equivalents	$	921,450			$	924,442
Short-term investments		18,974				115,879
Accounts and other receivables, net		389,240				373,471
Short-term finance receivables, net		568,050				629,643
Inventories		65,845				68,251
Current income taxes		23,219				5,565
Other current assets and prepayments		120,145				101,601
Assets of discontinued operations		-				17,229
Total current assets		2,106,923				2,236,081
Property, plant and equipment, net		391,280				376,177
Rental property and equipment, net		38,435				41,225
Long-term finance receivables, net		605,292				625,487
Goodwill		1,152,285				1,324,179
Intangible assets, net		159,839				190,640
Operating lease assets		201,916				200,752
Noncurrent income taxes		72,653				71,903
Other assets		489,201				400,456
Total assets	$	5,217,824			$	5,466,900
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities	$	878,303			$	793,690
Customer deposits at Pitney Bowes Bank		617,200				591,118
Current operating lease liabilities		39,182				36,060
Current portion of long-term debt		216,032				20,108
Advance billings		114,550				101,920
Current income taxes		2,880				17,083
Liabilities of discontinued operations		-				9,713
Total current liabilities		1,868,147				1,569,692
Long-term debt		2,348,361				2,719,614
Deferred taxes on income		279,451				274,435
Tax uncertainties and other income tax liabilities		38,163				38,834
Noncurrent operating lease liabilities		180,292				177,711
Other noncurrent liabilities		437,015				400,518
Total liabilities		5,151,429				5,180,804
Stockholders' equity:
Common stock		323,338				323,338
Additional paid-in-capital		68,502				98,748
Retained earnings		5,201,195				5,438,930
Accumulated other comprehensive loss		(839,131	)			(840,143	)
Treasury stock, at cost		(4,687,509	)			(4,734,777	)
Total stockholders' equity		66,395				286,096
Total liabilities and stockholders' equity	$	5,217,824			$	5,466,900

Pitney Bowes Inc.
Business Segment Revenue
(Unaudited; in thousands)
	Three months ended December 31,											Twelve months ended December 31,
	2020				2019				% Change			2020				2019				% Change
Global Ecommerce	$	518,140			$	323,942			60	%		$	1,618,897			$	1,151,510			41	%
Presort Services		134,660				135,120			-				521,212				529,588			(2	%)
Commerce Services		652,800				459,062			42	%			2,140,109				1,681,098			27	%
Sending Technology Solutions		375,617				372,281			1	%			1,413,966				1,524,027			(7	%)
Total revenue - GAAP		1,028,417				831,343			24	%			3,554,075				3,205,125			11	%
Currency impact on revenue		(3,980	)			-							(1,467	)			-
Revenue, at constant currency	$	1,024,437			$	831,343			23	%		$	3,552,608			$	3,205,125			11	%

Pitney Bowes Inc.
Business Segment EBIT & EBITDA
(Unaudited; in thousands)
	Three months ended December 31,
	2020									2019									% change
	EBIT (1)			D&A		EBITDA				EBIT (1)			D&A		EBITDA				EBIT		EBITDA
Global Ecommerce	$	(14,768	)	$	17,490	$	2,722			$	(18,177	)	$	17,687	$	(490	)		19	%	>100%
Presort Services		13,041			8,107		21,148				22,478			7,765		30,243			(42	%)	(30	%)
Commerce Services		(1,727	)		25,597		23,870				4,301			25,452		29,753			>(100%)		(20	%)
Sending Technology Solutions		117,656			8,545		126,201				112,227			9,411		121,638			5	%	4	%
Segment total	$	115,929		$	34,142		150,071			$	116,528		$	34,863		151,391			(1	%)	(1	%)
Reconciliation of Segment EBITDA to Net Income:
Segment depreciation and amortization							(34,142	)								(34,863	)
Interest, net							(38,357	)								(37,800	)
Unallocated corporate expenses (2)							(53,766	)								(51,246	)
Restructuring charges and asset impairments							(8,207	)								(12,990	)
Loss on debt extinguishment							-									(5,956	)
Transaction costs							-									(155	)
Benefit (provision) for income taxes							813									(344	)
Income from continuing operations							16,412									8,037
Income from discontinued operations, net of tax							2,467									168,659
Net income						$	18,879								$	176,696
	Twelve months ended December 31,
	2020									2019									% change
	EBIT (1)			D&A		EBITDA				EBIT (1)			D&A		EBITDA				EBIT		EBITDA
Global Ecommerce	$	(82,894	)	$	69,676	$	(13,218	)		$	(70,146	)	$	68,385	$	(1,761	)		(18	%)	>(100%)
Presort Services		55,799			31,769		87,568				70,693			29,440		100,133			(21	%)	(13	%)
Commerce Services		(27,095	)		101,445		74,350				547			97,825		98,372			>(100%)		(24	%)
Sending Technology Solutions		441,085			34,316		475,401				490,322			39,758		530,080			(10	%)	(10	%)
Segment Total	$	413,990		$	135,761		549,751			$	490,869		$	137,583		628,452			(16	%)	(13	%)
Reconciliation of Segment EBITDA to Net (Loss) Income:
Segment depreciation and amortization							(135,761	)								(137,583	)
Interest, net							(153,915	)								(155,558	)
Unallocated corporate expenses (2)							(200,406	)								(211,529	)
Restructuring charges and asset impairments							(20,712	)								(69,606	)
Goodwill impairment							(198,169	)								-
Gain on sale of equity investment							11,908									-
Loss on debt extinguishment							(36,987	)								(6,623	)
Loss on dispositions and transaction costs							(641	)								(20,411	)
(Provision) benefit for income taxes							(6,727	)								13,007
(Loss) income from continuing operations							(191,659	)								40,149
Income from discontinued operations, net of tax							10,115									154,460
Net (loss) income						$	(181,544	)							$	194,609

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

(2) Includes corporate depreciation and amortization expense of $6,080 and $5,765 for the three months ended December 31, 2020 and 2019, respectively and $24,864 and $21,559 for the twelve months ended December 31, 2020 and 2019, respectively.

Pitney Bowes Inc.
Reconciliation of Reported Consolidated Results to Adjusted Results
(Unaudited; in thousands, except per share amounts)
		Three months ended December 31,								Twelve months ended December 31,
		2020				2019				2020				2019
Reconciliation of reported net income (loss) to adjusted net income, adjusted EBIT and adjusted EBITDA
Net income (loss)		$	18,879			$	176,696			$	(181,544	)		$	194,609
Income from discontinued operations, net of tax			(2,467	)			(168,659	)			(10,115	)			(154,460	)
Restructuring charges and asset impairments			7,148				10,719				15,641				52,427
Goodwill impairment			-				-				196,600				-
Gain on sale of equity investment			-				-				(8,943	)			-
Tax on surrender of company owned life insurance policies			-				-				12,229				-
Loss on debt extinguishment			-				4,464				27,777				4,961
Loss on dispositions and transaction costs			-				999				487				22,313
Adjusted net income			23,560				24,219				52,132				119,850
Interest, net			38,357				37,800				153,915				155,558
Provision for income taxes, as adjusted			246				3,264				7,537				3,933
Adjusted EBIT			62,163				65,283				213,584				279,341
Depreciation and amortization			40,222				40,628				160,625				159,142
Adjusted EBITDA		$	102,385			$	105,911			$	374,209			$	438,483
Reconciliation of reported diluted earnings (loss) per share to adjusted diluted earnings per share
Diluted earnings (loss) per share		$	0.11			$	1.03			$	(1.06	)		$	1.10
Diluted earnings per share - discontinued operations			(0.01	)			(0.98	)			(0.06	)			(0.87	)
Restructuring charges and asset impairments			0.04				0.06				0.09				0.30
Goodwill impairment			-				-				1.13				-
Gain on sale of equity investment			-				-				(0.05	)			-
Tax on settlement of investment securities			-				-				0.07				-
Loss on debt extinguishment			-				0.03				0.16				0.03
Loss on dispositions and transaction costs			-				0.01				-				0.13
Adjusted diluted earnings per share		$	0.13			$	0.14			$	0.30			$	0.68
Note: The sum of the earnings per share amounts may not equal the totals due to rounding.
Reconciliation of reported net cash from operating activities to free cash flow
Net cash provided by operating activities		$	110,777			$	84,479			$	297,887			$	271,961
Net cash (provided by) used in operating activities - discontinued operations			(511	)			6,587				37,912				(9,272	)
Capital expenditures			(24,201	)			(42,032	)			(104,988	)			(137,253	)
Restructuring payments			4,145				8,303				20,014				27,148
Change in customer deposits at PB Bank			6,618				13,216				26,082				16,341
Transaction costs paid			-				10,463				2,117				19,488
Free cash flow		$	96,828			$	81,016			$	279,024			$	188,413

 

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FAQ

What were Pitney Bowes' Q4 2020 financial results?

Pitney Bowes reported Q4 2020 revenue of $1.0 billion, a 24% increase, with GAAP EPS of $0.11.

How did Global Ecommerce perform for Pitney Bowes in 2020?

Global Ecommerce revenue exceeded $1.6 billion in 2020, showing a growth of 41% compared to the previous year.

What is the adjusted EPS for Pitney Bowes in 2020?

The adjusted EPS for Pitney Bowes in 2020 was $0.30.

What are the revenue growth expectations for Pitney Bowes in 2021?

Pitney Bowes expects revenue to grow in the low-to-mid single digit range in 2021.

What impact did the pandemic have on Pitney Bowes' financial results?

The pandemic introduced uncertainty; however, Pitney Bowes reported notable growth in ecommerce solutions.