Pitney Bowes Announces Second Quarter 2021 Financial Results

Rhea-AI Summary

Pitney Bowes Inc. (NYSE: PBI) reported its Q2 2021 financial results, achieving a 7% revenue growth to $899 million. GAAP EPS stood at $0.11, boosted by a £0.03 tax benefit. The company emphasized the strong performance of its Global Ecommerce segment, which became EBITDA positive, and Presort Services saw a 14% revenue increase. SendTech Solutions also reported growth, with a revenue rise of 8%. The full-year outlook predicts low-to-mid single-digit revenue growth and an adjusted EPS between $0.35 and $0.42.

Positive

• Q2 2021 revenue increased by 7% to $899 million.
• Global Ecommerce achieved EBITDA positivity, indicating strong growth potential.
• GAAP EPS rose to $0.11, reflecting a solid recovery compared to last year.
• Presort Services experienced a 14% rise in revenue year-over-year.
• SendTech Solutions reported an 8% revenue increase, marking continuous growth.

Negative

• Lower free cash flow expected compared to the previous year.
• Challenges in financing may impact future revenue growth.

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 second quarter 2021.

“We delivered a solid second quarter and first half of the year,” said Marc B. Lautenbach, President and CEO, Pitney Bowes. “Once again, each business made a positive contribution to the quarter. Importantly, Global Ecommerce made significant progress and was EBITDA positive in the quarter putting this business on-track to our commitment of EBITDA positive for the full year. SendTech and Presort Services also grew revenue and profit over prior year. We are well-positioned to reach our goal of achieving improved profitable revenue growth.”

Second Quarter 2021

• Revenue of $899 million, growth of 7 percent on a reported basis and 6 percent excluding the impact of currency
• GAAP EPS and Adjusted EPS of $0.11
• EPS reflects a $0.03 tax benefit associated with a UK tax legislation change
• GAAP cash from operations of $79 million; free cash flow of $87 million
• Global Ecommerce EBIT margin improved by over 200 basis points compared to prior year; EBITDA was positive.
• Presort grew revenue and EBIT margin over prior year.
• SendTech grew revenue; EBIT grew over prior year for the third consecutive quarter.

Earnings per share results are summarized in the table below:

	Second Quarter*
	2021	2020
GAAP EPS	$0.11	($0.02)
Discontinued operations, net of tax	0.01	0.02
GAAP EPS from continuing operations	$0.12	$0.00
Restructuring charges	0.02	0.02
Gain on sale of business	(0.02)	-
Gain on sale of assets	(0.01)	-
Gain on sale of equity investment	-	(0.05)
Tax on surrender of company owned life insurance policies	-	0.07
Adjusted EPS	$0.11	$0.04

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

Business Segment Reporting

Global Ecommerce facilitates domestic retail ecommerce shipping solutions, including delivery, returns and fulfillment, 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.

Sending Technology Solutions 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.

Global Ecommerce

	Second Quarter
($ millions)	2021	2020	% Change Reported	% Change Ex Currency
Revenue	$418	$398	5%	3%
EBITDA	$8	($2)	>100%
EBIT	($11)	($19)	43%

Revenue grew over prior year despite a tough comparison. EBIT and EBITDA benefited largely from Cross Border services and lower bad debt expense.

Presort Services

	Second Quarter
($ millions)	2021	2020	% Change Reported	% Change Ex Currency
Revenue	$135	$118	14%	14%
EBITDA	$23	$20	12%
EBIT	$16	$13	28%

Revenue grew across all mail classes and benefited from an easier prior year comparison. EBIT and EBITDA improved from prior year largely due to the revenue growth and higher gross margin.

SendTech Solutions

	Second Quarter
($ millions)	2021	2020	% Change Reported	% Change Ex Currency
Revenue	$346	$321	8%	6%
EBITDA	$115	$113	1%
EBIT	$107	$104	3%

Revenue benefited from growth in equipment sales, supplies, business services and support services, partly offset by a decline in financing. Revenue also benefited from an easier prior year comparison. EBIT and EBITDA improved from prior year largely due to the revenue growth.

Full Year 2021 Expectations

The Company’s full year 2021 expectations remain in-line with its previous communications. The Company continues to expect annual revenue to grow in the low-to-mid single digit range. The Company continues to expect adjusted EPS to grow over prior year driven largely by the improvement in Global Ecommerce, which is expected to be EBITDA positive for the full year. More specifically, adjusted EPS is expected to be in the range of $0.35 to $0.42. The Company also continues to expect lower free cash flow as compared to prior year primarily due to certain items that benefited 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. 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 technology company providing commerce solutions. 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: 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. 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. A reconciliation of reported revenue to constant currency revenue can be found in the attached financial schedules.

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. The Company reports free cash flow to provide investors insight into the amount of cash that management could have available for other discretionary uses. 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 and 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 other unusual or one-time items, 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.

Complete reconciliations of non-GAAP measures to comparable GAAP measures can also be found at the Company's web site: www.pb.com/investorrelations

This document contains “forward-looking statements” about the Company’s expected or potential future business and financial performance. Forward-looking statements include, but are not limited to, statements about 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), including its effects on the cost and availability of labor and transportation and global supply chains. 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 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, 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 Global Ecommerce and Presort Services segments; 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 Global Ecommerce and Presort Services segments; 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 2020 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 six months ended June 30, 2021 and 2020, and consolidated balance sheets at June 30, 2021 and December 31, 2020 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,
			2021				2020				2021				2020
Revenue:
		Business services	$	567,022			$	528,990			$	1,137,476			$	973,369
		Support services		115,156				113,786				233,853				235,801
		Financing		73,453				85,462				151,265				174,540
		Equipment sales		86,267				57,837				173,070				134,110
		Supplies		38,655				32,773				80,879				78,482
		Rentals		18,650				18,644				37,857				37,458
		Total revenue		899,203				837,492				1,814,400				1,633,760
Costs and expenses:
		Cost of business services		482,814				454,311				982,348				828,976
		Cost of support services		37,679				36,725				74,396				76,485
		Financing interest expense		11,773				11,939				23,659				24,428
		Cost of equipment sales		61,561				47,920				123,401				105,279
		Cost of supplies		10,467				8,379				21,678				20,619
		Cost of rentals		6,013				6,022				12,460				12,400
		Selling, general and administrative		236,190				233,631				474,292				482,264
		Research and development		11,059				7,467				22,375				19,583
		Restructuring charges		4,844				4,922				7,733				8,739
		Goodwill impairment		-				-				-				198,169
		Interest expense, net		24,346				26,446				49,504				52,329
		Other components of net pension and postretirement cost		312				386				662				235
		Other (income) expense		(13,646	)			(17,375	)			37,748				16,112
		Total costs and expenses		873,412				820,773				1,830,256				1,845,618
Income (loss) from continuing operations before taxes				25,791				16,719				(15,856	)			(211,858	)
Provision (benefit) for income taxes				4,915				17,016				(9,077	)			6,986
Income (loss) from continuing operations				20,876				(297	)			(6,779	)			(218,844	)
(Loss) income from discontinued operations, net of tax				(1,020	)			(3,032	)			(4,906	)			7,032
Net income (loss)			$	19,856			$	(3,329	)		$	(11,685	)		$	(211,812	)
Basic earnings (loss) per share (1):
		Continuing operations	$	0.12			$	-			$	(0.04	)		$	(1.28	)
		Discontinued operations		(0.01	)			(0.02	)			(0.03	)			0.04
		Net income (loss)	$	0.11			$	(0.02	)		$	(0.07	)		$	(1.24	)
Diluted earnings (loss) per share (1):
		Continuing operations	$	0.12			$	-			$	(0.04	)		$	(1.28	)
		Discontinued operations		(0.01	)			(0.02	)			(0.03	)			0.04
		Net income (loss)	$	0.11			$	(0.02	)		$	(0.07	)		$	(1.24	)
Weighted-average shares used in diluted earnings per share				178,979				171,478				173,367				171,167
(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, 2021				December 31, 2020
Current assets:
	Cash and cash equivalents	$	799,470			$	921,450
	Short-term investments		14,904				18,974
	Accounts and other receivables, net		309,177				389,240
	Short-term finance receivables, net		552,858				568,050
	Inventories		67,538				65,845
	Current income taxes		37,384				23,219
	Other current assets and prepayments		117,425				120,145
Total current assets			1,898,756				2,106,923
Property, plant and equipment, net			429,785				391,280
Rental property and equipment, net			38,814				38,435
Long-term finance receivables, net			588,602				605,292
Goodwill			1,130,164				1,152,285
Intangible assets, net			144,692				159,839
Operating lease assets			205,584				201,916
Noncurrent income taxes			69,150				72,653
Other assets			507,748				491,514
Total assets		$	5,013,295			$	5,220,137
Liabilities and stockholders' equity
Current liabilities:
	Accounts payable and accrued liabilities	$	820,065			$	880,616
	Customer deposits at Pitney Bowes Bank		632,833				617,200
	Current operating lease liabilities		41,835				39,182
	Current portion of long-term debt		97,015				216,032
	Advance billings		119,645				114,550
	Current income taxes		5,844				2,880
Total current liabilities			1,717,237				1,870,460
Long-term debt			2,330,698				2,348,361
Deferred taxes on income			286,338				279,451
Tax uncertainties and other income tax liabilities			37,155				38,163
Noncurrent operating lease liabilities			182,746				180,292
Other noncurrent liabilities			405,751				437,015
Total liabilities			4,959,925				5,153,742
Stockholders' equity:
	Common stock		323,338				323,338
	Additional paid-in-capital		5,903				68,502
	Retained earnings		5,172,185				5,201,195
	Accumulated other comprehensive loss		(831,303	)			(839,131	)
	Treasury stock, at cost		(4,616,753	)			(4,687,509	)
Total stockholders' equity			53,370				66,395
Total liabilities and stockholders' equity		$	5,013,295			$	5,220,137

Pitney Bowes Inc.
Business Segment Revenue
(Unaudited; in thousands)
		Three months ended June 30,										Six months ended June 30,
		2021				2020			% Change			2021				2020			% Change
	Global Ecommerce	$	418,429			$	398,453		5	%		$	831,515			$	690,776		20	%
	Presort Services		134,619				118,127		14	%			277,745				258,847		7	%
	Sending Technology Solutions		346,155				320,912		8	%			705,140				684,137		3	%
	Total revenue - GAAP		899,203				837,492		7	%			1,814,400				1,633,760		11	%
	Currency impact on revenue		(13,521	)			-						(22,324	)			-
	Revenue, at constant currency	$	885,682			$	837,492		6	%		$	1,792,076			$	1,633,760		10	%

Pitney Bowes Inc.
Business Segment EBIT & EBITDA
(Unaudited; in thousands)
	Three months ended June 30,
	2021									2020									% change
	EBIT (1)			D&A		EBITDA				EBIT (1)			D&A		EBITDA				EBIT		EBITDA
Global Ecommerce	$	(10,831	)	$	19,060	$	8,229			$	(18,894	)	$	17,297	$	(1,597	)		43	%	>100%
Presort Services		16,134			6,798		22,932				12,582			7,857		20,439			28	%	12	%
Sending Technology Solutions		107,121			7,537		114,658				104,268			8,776		113,044			3	%	1	%
Segment total	$	112,424		$	33,395		145,819			$	97,956		$	33,930		131,886			15	%	11	%
Reconciliation of Segment EBITDA to Net Income (Loss):
Segment depreciation and amortization							(33,395	)								(33,930	)
Unallocated corporate expenses							(56,316	)								(49,489	)
Restructuring charges							(4,844	)								(4,922	)
Gain on sale of business							10,201									-
Gain on sale of assets							1,434									-
Loss on debt refinancing							(989	)								-
Gain on sale of equity investment							-									11,908
Transaction costs							-									(349	)
Interest, net							(36,119	)								(38,385	)
Provision for income taxes							(4,915	)								(17,016	)
Income (loss) from continuing operations							20,876									(297	)
Loss from discontinued operations, net of tax							(1,020	)								(3,032	)
Net income (loss)						$	19,856								$	(3,329	)
	Six months ended June 30,
	2021									2020									% change
	EBIT (1)			D&A		EBITDA				EBIT (1)			D&A		EBITDA				EBIT		EBITDA
Global Ecommerce	$	(37,207	)	$	37,236	$	29			$	(48,369	)	$	35,363	$	(13,006	)		23	%	>100%
Presort Services		35,185			14,297		49,482				28,277			15,631		43,908			24	%	13	%
Sending Technology Solutions		221,591			15,140		236,731				210,830			17,815		228,645			5	%	4	%
Segment Total	$	219,569		$	66,673		286,242			$	190,738		$	68,809		259,547			15	%	10	%
Reconciliation of Segment EBITDA to Net Loss:
Segment depreciation and amortization							(66,673	)								(68,809	)
Unallocated corporate expenses							(113,781	)								(93,211	)
Restructuring charges							(7,733	)								(8,739	)
Loss on debt refinancing							(52,383	)								(36,987	)
Gain on sale of business							10,201									-
Gain on sale of assets							1,434									-
Goodwill impairment							-									(198,169	)
Gain on sale of equity investment							-									11,908
Transaction costs							-									(641	)
Interest, net							(73,163	)								(76,757	)
Benefit (provision) for income taxes							9,077									(6,986	)
Loss from continuing operations							(6,779	)								(218,844	)
(Loss) income from discontinued operations, net of tax							(4,906	)								7,032
Net loss						$	(11,685	)							$	(211,812	)
(1) Segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges, 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,
		2021				2020				2021				2020
Reconciliation of reported net income (loss) to adjusted EBIT and EBITDA
Net income (loss)		$	19,856			$	(3,329	)		$	(11,685	)		$	(211,812	)
Loss (income) from discontinued operations, net of tax			1,020				3,032				4,906				(7,032	)
Provision (benefit) for income taxes			4,915				17,016				(9,077	)			6,986
Income (loss) from continuing operations before taxes			25,791				16,719				(15,856	)			(211,858	)
Restructuring charges			4,844				4,922				7,733				8,739
Gain on sale of business			(10,201	)			-				(10,201	)			-
Gain on sale of assets			(1,434	)			-				(1,434	)			-
Loss on debt refinancing			989				-				52,383				36,987
Goodwill impairment			-				-				-				198,169
Gain on sale of equity investment			-				(11,908	)			-				(11,908	)
Transaction costs			-				349				-				641
Adjusted net income before tax			19,989				10,082				32,625				20,770
Interest, net			36,119				38,385				73,163				76,757
Adjusted EBIT			56,108				48,467				105,788				97,527
Depreciation and amortization			39,822				41,068				79,416				81,787
Adjusted EBITDA		$	95,930			$	89,535			$	185,204			$	179,314
Reconciliation of reported diluted earnings (loss) per share to adjusted diluted earnings per share (1)
Diluted earnings (loss) per share		$	0.11			$	(0.02	)		$	(0.07	)		$	(1.24	)
Loss (income) from discontinued operations, net of tax			0.01				0.02				0.03				(0.04	)
Restructuring charges			0.02				0.02				0.03				0.03
Gain on sale of business			(0.02	)			-				(0.02	)			-
Gain on sale of assets			(0.01	)			-				(0.01	)			-
Loss on debt refinancing			-				-				0.22				0.16
Goodwill impairment			-				-				-				1.14
Gain on sale of equity investment			-				(0.05	)			-				(0.05	)
Tax on surrender of company owned life insurance policies			-				0.07				-				0.07
Adjusted diluted earnings per share		$	0.11			$	0.04			$	0.19			$	0.09
Reconciliation of reported net cash from operating activities to free cash flow
Net cash from operating activities		$	78,805			$	153,777			$	144,729			$	86,422
Net cash used in operating activities - discontinued operations			-				618				-				38,423
Capital expenditures			(40,375	)			(34,176	)			(83,703	)			(59,954	)
Restructuring payments			4,870				5,318				8,825				11,365
Change in customer deposits at PB Bank			43,427				23,219				15,633				22,331
Transaction costs paid			-				377				-				2,117
Free cash flow		$	86,727			$	149,133			$	85,484			$	100,704
(1) The sum of the earnings per share amounts may not equal the totals due to rounding.

 

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FAQ

What were Pitney Bowes' Q2 2021 earnings results?

Pitney Bowes reported Q2 2021 revenue of $899 million and GAAP EPS of $0.11, compared to a loss of $0.02 in the same quarter last year.

How did Global Ecommerce perform in Q2 2021?

Global Ecommerce was EBITDA positive in Q2 2021, contributing significantly to the overall growth of the company.

What is the outlook for Pitney Bowes in 2021?

Pitney Bowes expects low-to-mid single-digit revenue growth and adjusted EPS between $0.35 and $0.42 for the full year.

What is the revenue growth rate for SendTech Solutions in Q2 2021?

SendTech Solutions reported an 8% increase in revenue year-over-year in Q2 2021.

How did Presort Services perform in the latest quarter?

Presort Services saw a 14% increase in revenue compared to the same quarter last year, reflecting strong business growth.