Pitney Bowes Announces Third Quarter 2021 Financial Results

Rhea-AI Summary

Pitney Bowes (NYSE: PBI) reported its third quarter 2021 financial results, revealing revenues of $875 million, a 2% decrease from the prior year, but an 11% increase compared to Q3 2019. GAAP EPS settled at $0.05, with adjusted EPS at $0.08. Key highlights include a 9% revenue growth in Presort Services and a 100 basis points improvement in Global Ecommerce gross margin. Despite challenges in domestic parcel volumes, management remains optimistic about maintaining positive EBITDA for Global Ecommerce by year-end.

Positive

• Presort Services revenue increased by 9% year-over-year.
• Adjusted EPS remained stable at $0.08, consistent with the prior year.
• Global Ecommerce gross margin improved by 100 basis points.

Negative

• Overall revenue declined by 2% compared to the previous year.
• Domestic Parcel volumes decreased, impacting Global Ecommerce revenue, which fell 3% year-over-year.

STAMFORD, Conn.--(BUSINESS WIRE)-- 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 2021.

“We continue to see solid demand for services and products across our portfolio,” said Marc B. Lautenbach, President and CEO, Pitney Bowes. “We have taken important steps to ensure that we are well-prepared for the upcoming peak season. Global Ecommerce remains on-track to generate positive EBITDA for full year 2021.”

Third Quarter 2021 Highlights:

• Revenues of $875 million, down 2 percent from prior year; growth of 11 percent over third quarter 2019;
• GAAP EPS of $0.05;
• Adjusted EPS $0.08;
• GAAP cash from operations of $71 million;
• Free cash flow of $30 million;
• Presort revenue growth of 9 percent over prior year and EBIT margin of 15 percent;
• Global Ecommerce gross margin improved by 100 basis points over prior year;
• SendTech reported growth in Equipment Sales of 5 percent over prior year;
• Redeemed 2022 notes for $72 million.

Earnings per share results are summarized in the table below:

	Third Quarter*
	2021	2020
GAAP EPS	$0.05	$0.07
Discontinued operations, net of tax	-	-
GAAP EPS from continuing operations	$0.05	$0.06
Restructuring charges	0.02	0.02
Loss on debt refinancing	0.01	-
Adjusted EPS	$0.08	$0.08

* 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	Third Quarter
	($ millions)	2021		2020		% Change Reported		% Change Ex Currency
Revenue		$398		$410		(3%)		(4%)
EBITDA		-		($3)		NM
EBIT		($21)		($20)		(6%)

Lower revenue was driven by a decrease in Domestic Parcel volumes against a tough prior year comparison, which was partly offset by an increase in revenue per parcel and a strong Cross Border performance. Gross margin improved over prior year despite higher labor and transportation costs, as well as an $8 million charge reflecting the estimated cost of a price assessment. EBITDA and EBIT were also impacted by the $8 million charge in the quarter.

	Presort Services	Third Quarter
	($ millions)	2021		2020		% Change Reported		% Change Ex Currency
Revenue		$139		$128		9%		9%
EBITDA		$27		$23		21%
EBIT		$21		$14		45%

Revenue growth was largely driven by higher revenue per piece along with an increase in volumes. Revenue per piece benefited in part from investments made in the network and technology to enable a higher level of five-digit sortation services. EBITDA and EBIT improved significantly from prior year despite higher labor and transportation costs.

	SendTech Solutions	Third Quarter
	($ millions)	2021		2020		% Change Reported		% Change Ex Currency
Revenue		$338		$354		(5%)		(5%)
EBITDA		$107		$121		(12%)
EBIT		$99		$113		(12%)

Revenue reflects growth in Equipment Sales and SaaS-based Shipping subscriptions offset by declines in Financing, Services and Supplies. EBITDA and EBIT were down from prior year driven by the decline in Financing revenues along with higher freight and shipping costs.

Full Year 2021 Expectations

The Company’s full year 2021 expectations remain in-line with its previous communications.

• Revenue still expected to grow over prior year in the low-to-mid single digit range;
• Adjusted EPS still expected to grow over prior year and be in the range of $0.35 to $0.42;
• Management continues to expect Global Ecommerce EBITDA to be positive for full year 2021; and
• Free cash flow is still expected to be lower as compared to prior year, primarily due to increased capital investments.

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 Pitney Bowes 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. 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 nine months ended September 30, 2021 and 2020, and consolidated balance sheets at September 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 September 30,								Nine months ended September 30,
			2021				2020				2021				2020
Revenue:
	Business services	$	551,384			$	550,954			$	1,688,860			$	1,524,323
	Support services		113,413				117,519				347,266				353,320
	Financing		71,936				86,218				223,201				260,758
	Equipment sales		83,234				79,572				256,304				213,682
	Supplies		38,211				39,635				119,090				118,117
	Rentals		17,271				18,000				55,128				55,458
	Total revenue		875,449				891,898				2,689,849				2,525,658
Costs and expenses:
	Cost of business services		472,216				482,965				1,454,564				1,311,941
	Cost of support services		38,250				37,647				112,646				114,132
	Financing interest expense		11,710				11,626				35,369				36,054
	Cost of equipment sales		62,221				59,766				185,622				165,045
	Cost of supplies		10,705				10,132				32,383				30,751
	Cost of rentals		6,480				6,055				18,940				18,455
	Selling, general and administrative		225,024				238,618				699,316				720,882
	Research and development		10,621				9,255				32,996				28,838
	Restructuring charges		3,701				3,766				11,434				12,505
	Goodwill impairment		-				-				-				198,169
	Interest expense, net		24,312				27,175				73,816				79,504
	Other components of net pension and postretirement expense (income)		46				(109	)			708				126
	Other expense (income), net		3,193				(6,325	)			40,941				9,787
	Total costs and expenses		868,479				880,571				2,698,735				2,726,189
Income (loss) from continuing operations before taxes			6,970				11,327				(8,886	)			(200,531	)
(Benefit) provision for income taxes			(1,525	)			554				(10,602	)			7,540
Income (loss) from continuing operations			8,495				10,773				1,716				(208,071	)
Income (loss) from discontinued operations, net of tax			572				616				(4,334	)			7,648
Net income (loss)		$	9,067			$	11,389			$	(2,618	)		$	(200,423	)
Basic earnings (loss) per share (1):
	Continuing operations	$	0.05			$	0.06			$	0.01			$	(1.21	)
	Discontinued operations		-				-				(0.02	)			0.04
	Net income (loss)	$	0.05			$	0.07			$	(0.02	)		$	(1.17	)
Diluted earnings (loss) per share (1):
	Continuing operations	$	0.05			$	0.06			$	0.01			$	(1.21	)
	Discontinued operations		-				-				(0.02	)			0.04
	Net income (loss)	$	0.05			$	0.07			$	(0.02	)		$	(1.17	)
Weighted-average shares used in diluted earnings per share			179,409				174,704				178,949				171,388

(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, 2021				December 31, 2020
Current assets:
	Cash and cash equivalents	$	729,149			$	921,450
	Short-term investments		14,060				18,974
	Accounts and other receivables, net		313,765				389,240
	Short-term finance receivables, net		556,985				568,050
	Inventories		69,496				65,845
	Current income taxes		32,290				23,219
	Other current assets and prepayments		127,513				120,145
Total current assets			1,843,258				2,106,923
Property, plant and equipment, net			467,396				391,280
Rental property and equipment, net			36,461				38,435
Long-term finance receivables, net			582,352				605,292
Goodwill			1,124,705				1,152,285
Intangible assets, net			137,118				159,839
Operating lease assets			212,028				201,916
Noncurrent income taxes			67,049				72,653
Other assets			484,247				491,514
Total assets		$	4,954,614			$	5,220,137
Liabilities and stockholders' equity
Current liabilities:
	Accounts payable and accrued liabilities	$	871,798			$	880,616
	Customer deposits at Pitney Bowes Bank		642,712				617,200
	Current operating lease liabilities		41,347				39,182
	Current portion of long-term debt		24,733				216,032
	Advance billings		104,094				114,550
	Current income taxes		4,078				2,880
Total current liabilities			1,688,762				1,870,460
Long-term debt			2,314,151				2,348,361
Deferred taxes on income			283,395				279,451
Tax uncertainties and other income tax liabilities			35,380				38,163
Noncurrent operating lease liabilities			193,861				180,292
Other noncurrent liabilities			390,402				437,015
Total liabilities			4,905,951				5,153,742
Stockholders' equity:
	Common stock		323,338				323,338
	Additional paid-in-capital		2,463				68,502
	Retained earnings		5,172,527				5,201,195
	Accumulated other comprehensive loss		(841,230	)			(839,131	)
	Treasury stock, at cost		(4,608,435	)			(4,687,509	)
Total stockholders' equity			48,663				66,395
Total liabilities and stockholders' equity		$	4,954,614			$	5,220,137

Pitney Bowes Inc.
Business Segment Revenue
(Unaudited; in thousands)
		Three months ended September 30,										Nine months ended September 30,
			2021				2020		% Change				2021				2020		% Change
	Global Ecommerce	$	398,011			$	409,981		(3	%)		$	1,229,526			$	1,100,757		12	%
	Presort Services		139,296				127,705		9	%			417,041				386,552		8	%
	Sending Technology Solutions		338,142				354,212		(5	%)			1,043,282				1,038,349		0	%
	Total revenue - GAAP		875,449				891,898		(2	%)			2,689,849				2,525,658		7	%
	Currency impact on revenue		(5,268	)			-						(27,593	)			-
	Revenue, at constant currency	$	870,181			$	891,898		(2	%)		$	2,662,256			$	2,525,658		5	%

Pitney Bowes Inc.
Business Segment EBIT & EBITDA
(Unaudited; in thousands)
	Three months ended September 30,
	2021									2020									% change
	EBIT (1)			D&A		EBITDA				EBIT (1)			D&A		EBITDA				EBIT		EBITDA
Global Ecommerce	$	(20,950	)	$	20,935	$	(15	)		$	(19,757	)	$	16,824	$	(2,933	)		(6	%)	>100%
Presort Services		21,062			6,235		27,297				14,481			8,031		22,512			45	%	21	%
Sending Technology Solutions		98,950			7,694		106,644				112,599			7,955		120,554			(12	%)	(12	%)
Segment total	$	99,062		$	34,864		133,926			$	107,323		$	32,810		140,133			(8	%)	(4	%)
Reconciliation of Segment EBITDA to Net Income:
Segment depreciation and amortization							(34,864	)								(32,810	)
Unallocated corporate expenses							(49,176	)								(53,429	)
Restructuring charges							(3,701	)								(3,766	)
Loss on debt refinancing							(3,193	)								-
Interest, net							(36,022	)								(38,801	)
Benefit (provision) for income taxes							1,525									(554	)
Income from continuing operations							8,495									10,773
Income from discontinued operations, net of tax							572									616
Net income						$	9,067								$	11,389
	Nine months ended September 30,
	2021									2020									% change
	EBIT (1)			D&A		EBITDA				EBIT (1)			D&A		EBITDA				EBIT		EBITDA
Global Ecommerce	$	(58,157	)	$	58,171	$	14			$	(68,126	)	$	52,187	$	(15,939	)		15	%	>100%
Presort Services		56,247			20,532		76,779				42,758			23,662		66,420			32	%	16	%
Sending Technology Solutions		320,541			22,835		343,376				323,429			25,771		349,200			(1	%)	(2	%)
Segment Total	$	318,631		$	101,538		420,169			$	298,061		$	101,620		399,681			7	%	5	%
Reconciliation of Segment EBITDA to Net Loss:
Segment depreciation and amortization							(101,538	)								(101,620	)
Unallocated corporate expenses							(162,957	)								(146,640	)
Restructuring charges							(11,434	)								(12,505	)
Loss on debt refinancing							(55,576	)								(36,987	)
Gain on sale of business							10,201									-
Gain on sale of assets							1,434									11,908
Goodwill impairment							-									(198,169	)
Transaction costs							-									(641	)
Interest, net							(109,185	)								(115,558	)
Benefit (provision) for income taxes							10,602									(7,540	)
Income (loss) from continuing operations							1,716									(208,071	)
(Loss) income from discontinued operations, net of tax							(4,334	)								7,648
Net loss						$	(2,618	)							$	(200,423	)

(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 September 30,								Nine months ended September 30,
			2021				2020				2021				2020
Reconciliation of reported net income (loss) to adjusted EBIT and EBITDA
Net income (loss)		$	9,067			$	11,389			$	(2,618	)		$	(200,423	)
(Income) loss from discontinued operations, net of tax			(572	)			(616	)			4,334				(7,648	)
(Benefit) provision for income taxes			(1,525	)			554				(10,602	)			7,540
Income (loss) from continuing operations before taxes			6,970				11,327				(8,886	)			(200,531	)
Restructuring charges			3,701				3,766				11,434				12,505
Loss on debt refinancing			3,193				-				55,576				36,987
Goodwill impairment			-				-				-				198,169
Gain on sale of business			-				-				(10,201	)			-
Gain on sale of assets			-				-				(1,434	)			(11,908	)
Transaction costs			-				-				-				641
Adjusted net income before tax			13,864				15,093				46,489				35,863
Interest, net			36,022				38,801				109,185				115,558
Adjusted EBIT			49,886				53,894				155,674				151,421
Depreciation and amortization			41,809				38,616				121,225				120,403
Adjusted EBITDA		$	91,695			$	92,510			$	276,899			$	271,824
Reconciliation of reported diluted earnings (loss) per share to adjusted diluted earnings per share (1)
Diluted earnings (loss) per share		$	0.05			$	0.07			$	(0.02	)		$	(1.17	)
Loss (income) from discontinued operations, net of tax			-				-				0.02				(0.04	)
Restructuring charges			0.02				0.02				0.05				0.05
Loss on debt refinancing			0.01				-				0.23				0.16
Goodwill impairment			-				-				-				1.14
Gain on sale of business			-				-				(0.02	)			-
Gain on sale of assets			-				-				(0.01	)			(0.05	)
Tax on surrender of company owned life insurance policies			-				-				-				0.07
Adjusted diluted earnings per share		$	0.08			$	0.08			$	0.26			$	0.17
Reconciliation of reported net cash from operating activities to free cash flow
Net cash provided by operating activities		$	71,446			$	104,744			$	216,174			$	191,166
Net cash used in operating activities - discontinued operations			-				-				-				38,423
Capital expenditures			(57,204	)			(20,833	)			(140,907	)			(80,787	)
Restructuring payments			6,023				4,504				14,847				15,869
Change in customer deposits at PB Bank			9,879				(2,867	)			25,512				19,464
Transaction costs paid			-				377				-				2,117
Free cash flow		$	30,144			$	85,925			$	115,626			$	186,252

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

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211103005149/en/

Editorial -

Bill Hughes

Chief Communications Officer

203/351-6785

Financial -

Ned Zachar, CFA

VP, Investor Relations

203/614-1092

Source: Pitney Bowes Inc.

FAQ

What were Pitney Bowes' Q3 2021 earnings results?

Pitney Bowes reported Q3 2021 revenues of $875 million, with GAAP EPS of $0.05 and adjusted EPS of $0.08.

How did Pitney Bowes perform in Global Ecommerce for Q3 2021?

Global Ecommerce revenues decreased by 3% in Q3 2021, primarily due to a drop in domestic parcel volumes.

What is the full year revenue expectation for Pitney Bowes in 2021?

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

What guidance did Pitney Bowes provide regarding adjusted EPS for 2021?

The company anticipates adjusted EPS for 2021 to be in the range of $0.35 to $0.42.