Pitney Bowes Announces First Quarter 2021 Financial Results | Financial Buzz

Pitney Bowes Announces First Quarter 2021 Financial Results

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 first quarter 2021.

“We delivered a solid start to the year, with every business making a meaningful contribution to our first quarter results,” said Marc B. Lautenbach, President and CEO, Pitney Bowes. “Revenue continued to demonstrate strong growth, every business improved its EBIT performance from prior year, and we strengthened our balance sheet. As we enter the final chapter of our transformation, we are well-positioned to reach our ultimate goal of achieving improved profitable revenue growth.”

First Quarter 2021

  • Revenue of $915 million, growth of 15 percent on a reported basis and 14 percent excluding the impact of currency
  • GAAP EPS of ($0.18), which includes a loss related to debt refinancing
  • Adjusted EPS of $0.07
  • EPS reflects a $0.02 tax benefit associated with an affiliate reorganization.
  • GAAP cash from operations of $66 million; free cash flow net use of $1 million.
  • The Company reduced debt by $126 million from year-end 2020 and took several actions to refine its capital structure which reduced near-term refinancing risk, improved pricing of its Term Loan B and extended the duration of maturities across its capital structure.
  • Global Ecommerce grew revenue 41 percent on a reported basis and 40 percent excluding the impact of currency; EBIT margins and EBITDA margins improved over prior year.
  • Presort Services grew revenue, EBIT margins and EBITDA margins over prior year.
  • SendTech EBIT margins and EBITDA margins improved over prior year, which is the second consecutive quarter of EBIT and EBITDA year-over-year dollar growth.

Earnings per share results are summarized in the table below:

 

First Quarter*

 

2021

 

2020

GAAP EPS

($0.18)

 

($1.22)

Discontinued operations

(0.02)

 

(0.06)

GAAP EPS from continuing operations

($0.16)

 

($1.28)

Restructuring charges

0.01

 

0.02

Goodwill impairment charge

 

1.15

Loss on debt refinancing

0.22

 

0.16

Adjusted EPS

$0.07

 

$0.05

* 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

 

First Quarter

($ millions)

2021

2020

% Change

Reported

% Change

Ex Currency

Revenue

$413

 

$292

 

41%

 

40%

EBITDA

($8)

 

($11)

 

28%

 

 

EBIT

($26)

 

($29)

 

11%

 

 

Revenue benefited primarily from growth in volumes across all services. EBIT and EBITDA benefited from improved Cross Border and Digital Delivery Service margins, partly offset by higher costs in Domestic Parcel Services. EBIT and EBITDA improved through the quarter with March being EBITDA positive.

Presort Services

 

First Quarter

($ millions)

2021

2020

% Change

Reported

% Change

Ex Currency

Revenue

$143

 

$141

 

2%

 

2%

EBITDA

$27

 

$23

 

13%

 

 

EBIT

$19

 

$16

 

21%

 

 

Revenue benefited primarily from growth in Marketing Mail. EBIT and EBITDA margins improved over prior year and were the highest margins in five quarters.

SendTech Solutions

 

First Quarter

($ millions)

2021

2020

% Change

Reported

% Change

Ex Currency

Revenue

$359

 

$363

 

(1%)

 

(3%)

EBITDA

$122

 

$116

 

6%

 

 

EBIT

$114

 

$107

 

7%

 

 

Revenue benefited from growth in equipment sales, business services and rentals, partly offset by declines in financing, supplies and support services. EBIT margin improved from prior year and was the highest margin in three quarters.

Full Year 2021 Expectations

The Company’s full year 2021 expectations are consistent with what was communicated last quarter. The Company expects annual revenue to grow 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 driven largely by improvement in Global Ecommerce, which is expected to be EBITDA positive for the full year. The Company also expects lower free cash flow primarily due to specific 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. 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 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 vaccines, 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; the loss of, or significant 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 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 ended March 31, 2021 and 2020, and consolidated balance sheets at March 31, 2021 and December 31, 2020 are attached.

 
Pitney Bowes Inc.
Consolidated Statements of Loss
(Unaudited; in thousands, except per share amounts)
 
Three months ended March 31,

 

2021

 

 

2020

 

Revenue:
Business services

$

570,454

 

$

444,379

 

Support services

 

118,697

 

 

122,015

 

Financing

 

77,812

 

 

89,078

 

Equipment sales

 

86,803

 

 

76,273

 

Supplies

 

42,224

 

 

45,709

 

Rentals

 

19,207

 

 

18,814

 

Total revenue

 

915,197

 

 

796,268

 

 
Costs and expenses:
Cost of business services

 

499,534

 

 

374,665

 

Cost of support services

 

36,717

 

 

39,760

 

Financing interest expense

 

11,886

 

 

12,489

 

Cost of equipment sales

 

61,840

 

 

57,359

 

Cost of supplies

 

11,211

 

 

12,240

 

Cost of rentals

 

6,447

 

 

6,378

 

Selling, general and administrative

 

238,102

 

 

248,633

 

Research and development

 

11,316

 

 

12,116

 

Restructuring charges

 

2,889

 

 

3,817

 

Goodwill impairment

 

 

 

198,169

 

Interest expense, net

 

25,158

 

 

25,883

 

Other components of net pension and postretirement expense (income)

 

350

 

 

(151

)

Other expense, net

 

51,394

 

 

33,487

 

Total costs and expenses

 

956,844

 

 

1,024,845

 

 
Loss from continuing operations before taxes

 

(41,647

)

 

(228,577

)

Benefit for income taxes

 

(13,992

)

 

(10,030

)

Loss from continuing operations

 

(27,655

)

 

(218,547

)

(Loss) income from discontinued operations, net of tax

 

(3,886

)

 

10,064

 

Net loss

$

(31,541

)

$

(208,483

)

 
Basic loss per share (1):
Continuing operations

$

(0.16

)

$

(1.28

)

Discontinued operations

 

(0.02

)

 

0.06

 

Net loss

$

(0.18

)

$

(1.22

)

 
Diluted loss per share (1):
Continuing operations

$

(0.16

)

$

(1.28

)

Discontinued operations

 

(0.02

)

 

0.06

 

Net loss

$

(0.18

)

$

(1.22

)

 
Weighted-average shares used in diluted earnings per share

 

172,856

 

 

170,912

 

 

(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 March 31,
2021
December 31,
2020
Current assets:
Cash and cash equivalents

$

680,727

 

$

921,450

 

Short-term investments

 

16,200

 

 

18,974

 

Accounts and other receivables, net

 

327,755

 

 

389,240

 

Short-term finance receivables, net

 

551,061

 

 

568,050

 

Inventories

 

63,680

 

 

65,845

 

Current income taxes

 

44,288

 

 

23,219

 

Other current assets and prepayments

 

124,394

 

 

120,145

 

Total current assets

 

1,808,105

 

 

2,106,923

 

Property, plant and equipment, net

 

405,226

 

 

391,280

 

Rental property and equipment, net

 

37,708

 

 

38,435

 

Long-term finance receivables, net

 

597,012

 

 

605,292

 

Goodwill

 

1,144,064

 

 

1,152,285

 

Intangible assets, net

 

152,265

 

 

159,839

 

Operating lease assets

 

196,843

 

 

201,916

 

Noncurrent income taxes

 

68,732

 

 

72,653

 

Other assets

 

531,226

 

 

491,514

 

Total assets

$

4,941,181

 

$

5,220,137

 

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

$

820,286

 

$

880,616

 

Customer deposits at Pitney Bowes Bank

 

589,406

 

 

617,200

 

Current operating lease liabilities

 

39,587

 

 

39,182

 

Current portion of long-term debt

 

19,972

 

 

216,032

 

Advance billings

 

118,166

 

 

114,550

 

Current income taxes

 

6,839

 

 

2,880

 

Total current liabilities

 

1,594,256

 

 

1,870,460

 

Long-term debt

 

2,418,885

 

 

2,348,361

 

Deferred taxes on income

 

282,192

 

 

279,451

 

Tax uncertainties and other income tax liabilities

 

37,936

 

 

38,163

 

Noncurrent operating lease liabilities

 

174,798

 

 

180,292

 

Other noncurrent liabilities

 

413,951

 

 

437,015

 

Total liabilities

 

4,922,018

 

 

5,153,742

 

 
Stockholders’ equity:
Common stock

 

323,338

 

 

323,338

 

Additional paid-in-capital

 

15,269

 

 

68,502

 

Retained earnings

 

5,161,029

 

 

5,201,195

 

Accumulated other comprehensive loss

 

(847,538

)

 

(839,131

)

Treasury stock, at cost

 

(4,632,935

)

 

(4,687,509

)

Total stockholders’ equity

 

19,163

 

 

66,395

 

Total liabilities and stockholders’ equity

$

4,941,181

 

$

5,220,137

 

 
 
Pitney Bowes Inc.
Business Segment Revenue
(Unaudited; in thousands)
 
Three months ended March 31,

 

2021

 

2020

% Change

 
Global Ecommerce

$

413,086

$

292,323

41%

 
Presort Services

 

143,126

 

140,720

2%

 
Sending Technology Solutions

 

358,985

 

363,225

(1%)

 
Total revenue – GAAP

 

915,197

 

796,268

15%

 
Currency impact on revenue

 

(8,803)

 

 
Revenue, at constant currency

$

906,394

$

796,268

14%

 
 
Pitney Bowes Inc.
Business Segment EBIT & EBITDA
(Unaudited; in thousands)
 
Three months ended March 31,

2021

2020

% change
EBIT (1) D&A EBITDA EBIT (1) D&A EBITDA EBIT EBITDA
 
Global Ecommerce

$

(26,376)

$

18,176

$

(8,200)

$

(29,475)

$

18,065

$

(11,410)

11%

28%

 
Presort Services

 

19,051

 

7,499

 

26,550

 

15,695

 

7,774

 

23,469

21%

13%

 
Sending Technology Solutions

 

114,470

 

7,604

 

122,074

 

106,562

 

9,039

 

115,601

7%

6%

 
Segment total

$

107,145

$

33,279

 

140,424

$

92,782

$

34,878

 

127,660

15%

10%

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

 

(33,279)

 

(34,878)

Unallocated corporate expenses

 

(57,465)

 

(43,722)

Restructuring charges

 

(2,889)

 

(3,817)

Interest, net

 

(37,044)

 

(38,372)

Goodwill impairment

 

 

(198,169)

Loss on debt refinancing

 

(51,394)

 

(36,987)

Transaction costs

 

 

(292)

Benefit for income taxes

 

13,992

 

10,030

Loss from continuing operations

 

(27,655)

 

(218,547)

(Loss) income from discontinued operations, net of tax

 

(3,886)

 

10,064

Net loss

$

(31,541)

$

(208,483)

 
(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 March 31,

 

2021

 

2020

 
Reconciliation of reported net loss to adjusted EBIT and EBITDA
Net loss

$

(31,541)

$

(208,483)

Loss (income) from discontinued operations, net of tax

 

3,886

 

(10,064)

Benefit for income taxes

 

(13,992)

 

(10,030)

Loss from continuing operations before taxes

 

(41,647)

 

(228,577)

Restructuring charges

 

2,889

 

3,817

Goodwill impairment

 

 

198,169

Loss on debt refinancing

 

51,394

 

36,987

Transaction costs

 

 

292

Adjusted net income before tax

 

12,636

 

10,688

Interest, net

 

37,044

 

38,372

Adjusted EBIT

 

49,680

 

49,060

Depreciation and amortization

 

39,594

 

40,719

Adjusted EBITDA

$

89,274

$

89,779

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

$

(0.18)

$

(1.22)

Loss (income) from discontinued operations, net of tax

 

0.02

 

(0.06)

Restructuring charges

 

0.01

 

0.02

Goodwill impairment

 

 

1.15

Loss on debt refinancing

 

0.22

 

0.16

Adjusted diluted earnings per share (1)

$

0.07

$

0.05

 
Reconciliation of reported net cash from operating activities to free cash flow
Net cash provided by (used in) operating activities

$

65,924

$

(67,355)

Net cash used in operating activities – discontinued operations

 

 

37,805

Capital expenditures

 

(43,328)

 

(25,778)

Restructuring payments

 

3,955

 

6,047

Change in customer deposits at PB Bank

 

(27,794)

 

(888)

Transaction costs paid

 

 

1,740

Free cash flow

$

(1,243)

$

(48,429)

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

 

Contacts

Editorial –

Bill Hughes

Chief Communications Officer

203/351-6785

Financial –

Adam David

VP, Investor Relations

203/351-7175