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Form 8-K PITNEY BOWES INC /DE/ For: Apr 28

April 28, 2022 7:02 AM EDT

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Exhibit 99.1

Pitney Bowes Announces First Quarter 2022 Financial Results

STAMFORD, Conn.--(BUSINESS WIRE)--April 28, 2022--Pitney Bowes (NYSE: PBI), a global shipping and mailing company that provides technology, logistics, and financial services, today announced its financial results for the first quarter 2022.

“Our first quarter performance was very good and marks a continuation of the trend that we were on for most of last year,” said Marc B. Lautenbach, President and CEO of Pitney Bowes. “We saw substantial margin expansion in our Global Ecommerce business and excellent execution in our SendTech and Presort businesses. Importantly, Global Ecommerce recorded its highest quarterly gross margin ever and SendTech and Presort, in aggregate, once again grew top line in the first quarter.”

Financial Highlights

  • Revenue in the quarter was $927 million, an increase of 1 percent from the comparable quarter in 2021
  • GAAP EPS in the quarter was $0.12; Adjusted EPS was $0.08 versus $0.07 in first quarter 2021
  • Adjusted EBIT in the quarter was $53 million, an increase of 6 percent from the comparable quarter in 2021
  • GAAP cash from operations in the quarter was $11 million
  • Free cash flow was a net use of $30 million versus a net use of $1 million in first quarter 2021; year-over-year decrease was driven primarily by changes in working capital
  • Debt reduced by $99 million during the quarter, primarily through the early redemption of the 2023 Notes

Business Highlights

  • Improved Global Ecommerce EBIT margins by over 300 basis points on a year-over-year basis with positive EBITDA
  • Processed 41 million domestic standard delivery and return parcels through our Global Ecommerce network in the quarter compared to 42 million parcels in first quarter 2021
  • Implemented additional network enhancements in Global Ecommerce that are expected to drive meaningful service and efficiency benefits
  • Grew Presort revenue 12 percent on a year-over-year basis
  • Processed 4.4 billion pieces through our Presort network in the quarter
  • Launched a new state-of-the-art Presort facility in Las Vegas capable of processing all portfolio products
  • Reported SendTech revenue decline of 3 percent, with a 3 percent increase in equipment revenue from the comparable quarter in 2021
  • Increased shipping-related revenue in SendTech 26 percent on year-over-year basis
  • Launched PitneyShip Pro, a new enterprise-oriented, cloud-based sending solution with combined shipping and mailing capabilities

Earnings per share results are summarized in the table below

 


First Quarter

 


2022


2021

GAAP EPS


$0.12


($0.18)

Discontinued Operations


-


$0.02

GAAP EPS from Continuing Operations


$0.12


($0.16)

Loss on Debt Redemption/Refinancing


$0.02


$0.22

Restructuring Charges


$0.02


$0.01

Gain on Sale of Assets/Business


($0.08)


-

Transaction Costs


$0.01


-

Adjusted EPS


$0.08


$0.07

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

Business Segment Reporting

Global Ecommerce

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

 


First Quarter

($ millions)


2022


2021


% Change

Reported


% Change

Ex Currency

Revenue


$419


$413


1%


1%

EBITDA


$8


($8)


>100%


 

EBIT


($14)


($26)


48%


 

Revenue growth benefited from better pricing, partially offset by lower volumes. Improvements in EBITDA and EBIT were primarily driven by higher domestic parcel revenues as well as efficiency gains in transportation and improvements in labor productivity.


Presort Services

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.

 


First Quarter

($ millions)


2022


2021


% Change

Reported


% Change

Ex Currency

Revenue


$161


$143


12%


12%

EBITDA


$26


$27


(2%)


 

EBIT


$20


$19


3%


 

Revenue growth driven by continued improvement in net revenue per piece along with expansion in marketing mail volumes. EBITDA and EBIT margins declined in the quarter due to higher labor and transportation costs.

SendTech Solutions

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.

 


First Quarter

($ millions)


2022


2021


% Change

Reported


% Change

Ex Currency

Revenue


$348


$359


(3%)


(2%)

EBITDA


$112


$122


(9%)


 

EBIT


$105


$114


(9%)


 

A 3 percent increase in Equipment sales and 26 percent increase in shipping-related revenue were more than offset by a 7 percent decrease in both Financing and Support Services. The decline in high-margin Financing and Support Services revenue resulted in lower EBITDA and EBIT.

2022 Expectations

The Company continues to expect annual revenue and adjusted EBIT to grow over prior year in the low-to-mid single digit range. Additionally, we expect to generate similar levels of free cash flow in 2022 as 2021.

The Company will adjust 2022 guidance should macroeconomic conditions warrant.


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: 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.

Adjusted EBIT, Adjusted EBITDA and Adjusted EPS exclude the impact of discontinued operations, restructuring charges, gains, losses and costs related to acquisitions and dispositions, asset and 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.


Free cash flow adjusts cash from operations calculated in accordance with GAAP for 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.

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, unallocated corporate expenses, restructuring charges, asset and goodwill impairment charges, and other items not allocated to a segment. The Company also reports segment EBITDA as an additional useful measure of segment profitability and operational performance.

Complete reconciliations of non-GAAP measures to comparable GAAP measures can be found in the attached financial schedules and at the Company's web site at www.pb.com/investorrelations

This document contains “forward-looking statements” about the Company’s expected or potential future business and financial performance. Forward-looking statements include, but are not limited to, statements about future revenue and earnings guidance and future events or conditions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from those projected. In particular, we continue to navigate the impacts of the Covid-19 pandemic (Covid-19), and the effect that its unpredictability is having on our, and our client’s business, financial performance and results of operations. 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 segment; changes in labor and transportation availability and costs; and other factors as more fully outlined in the Company's 2021 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, 2022 and 2021, and consolidated balance sheets at March 31, 2022 and December 31, 2021 are attached.


Pitney Bowes Inc.



Consolidated Statements of Operations



(Unaudited; in thousands, except per share amounts)







 


Three months ended March 31,



2022


2021

Revenue:




Business services

$

597,384

 


$

570,454

 


Support services

 

110,352

 


 

118,697

 


Financing

 

72,029

 


 

77,812

 


Equipment sales

 

89,296

 


 

86,803

 


Supplies

 

41,061

 


 

42,224

 


Rentals

 

16,820

 


 

19,207

 



Total revenue

 

926,942

 


 

915,197

 





 
Costs and expenses:




Cost of business services

 

503,215

 


 

499,534

 


Cost of support services

 

37,134

 


 

36,717

 


Financing interest expense

 

11,602

 


 

11,886

 


Cost of equipment sales

 

63,771

 


 

61,840

 


Cost of supplies

 

11,517

 


 

11,211

 


Cost of rentals

 

5,309

 


 

6,447

 


Selling, general and administrative

 

242,785

 


 

238,102

 


Research and development

 

11,334

 


 

11,316

 


Restructuring charges

 

4,184

 


 

2,889

 


Interest expense, net

 

22,124

 


 

25,158

 


Other components of net pension and postretirement expense

 

844

 


 

350

 


Other (income) expense, net

 

(11,901

)


 

51,394

 



Total costs and expenses

 

901,918

 


 

956,844

 





 
Income (loss) from continuing operations before taxes

 

25,024

 


 

(41,647

)

Provision (benefit) for income taxes

 

4,203

 


 

(13,992

)

Income (loss) from continuing operations

 

20,821

 


 

(27,655

)

Loss from discontinued operations, net of tax

 

-

 


 

(3,886

)

Net income (loss)

$

20,821

 


$

(31,541

)





 
Basic earnings (loss) per share (1):




Continuing operations

$

0.12

 


$

(0.16

)


Discontinued operations

 

-

 


 

(0.02

)


Net income (loss)

$

0.12

 


$

(0.18

)





 
Diluted earnings (loss) per share (1):




Continuing operations

$

0.12

 


$

(0.16

)


Discontinued operations

 

-

 


 

(0.02

)


Net income (loss)

$

0.12

 


$

(0.18

)





 
Weighted-average shares used in diluted earnings per share

 

178,034

 


 

172,856

 





 

(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,
2022

December 31,
2021
Current assets:




Cash and cash equivalents

$

622,575

 


$

732,480

 


Short-term investments

 

11,383

 


 

14,440

 


Accounts and other receivables, net

 

297,713

 


 

334,630

 


Short-term finance receivables, net

 

564,835

 


 

560,680

 


Inventories

 

87,661

 


 

78,588

 


Current income taxes

 

12,778

 


 

13,894

 


Other current assets and prepayments

 

145,167

 


 

157,341

 

Total current assets

 

1,742,112

 


 

1,892,053

 

Property, plant and equipment, net

 

430,498

 


 

429,162

 

Rental property and equipment, net

 

33,849

 


 

34,774

 

Long-term finance receivables, net

 

588,040

 


 

587,427

 

Goodwill

 

1,129,027

 


 

1,135,103

 

Intangible assets, net

 

124,739

 


 

132,442

 

Operating lease assets

 

236,477

 


 

208,428

 

Noncurrent income taxes

 

66,208

 


 

68,398

 

Other assets

 

436,114

 


 

471,084

 

Total assets

$

4,787,064

 


$

4,958,871

 






 
Liabilities and stockholders' equity



Current liabilities:




Accounts payable and accrued liabilities

$

876,645

 


$

922,543

 


Customer deposits at Pitney Bowes Bank

 

619,103

 


 

632,062

 


Current operating lease liabilities

 

41,600

 


 

40,299

 


Current portion of long-term debt

 

24,746

 


 

24,739

 


Advance billings

 

102,289

 


 

99,280

 


Current income taxes

 

2,864

 


 

9,017

 

Total current liabilities

 

1,667,247

 


 

1,727,940

 

Long-term debt

 

2,199,833

 


 

2,299,099

 

Deferred taxes on income

 

286,536

 


 

286,445

 

Tax uncertainties and other income tax liabilities

 

31,358

 


 

31,935

 

Noncurrent operating lease liabilities

 

220,614

 


 

192,092

 

Other noncurrent liabilities

 

288,594

 


 

308,728

 

Total liabilities

 

4,694,182

 


 

4,846,239

 






 
Stockholders' equity:




Common stock

 

323,338

 


 

323,338

 


Additional paid-in-capital

 

-

 


 

2,485

 


Retained earnings

 

5,141,636

 


 

5,169,270

 


Accumulated other comprehensive loss

 

(800,330

)


 

(780,312

)


Treasury stock, at cost

 

(4,571,762

)


 

(4,602,149

)

Total stockholders' equity

 

92,882

 


 

112,632

 

Total liabilities and stockholders' equity

$

4,787,064

 


$

4,958,871

 






 

Pitney Bowes Inc.





Business Segment Revenue





(Unaudited; in thousands)












 







 



Three months ended March 31,




2022


2021


% Change








 

Global Ecommerce

$

418,527


$

413,086


1

%


Presort Services

 

160,544


 

143,126


12

%


Sending Technology Solutions

 

347,871


 

358,985


(3

%)


Total revenue - GAAP

 

926,942


 

915,197


1

%


Currency impact on revenue

 

3,992


 

-




Revenue, at constant currency

$

930,934


$

915,197


2

%








 

Pitney Bowes Inc.










Business Segment EBIT & EBITDA








(Unaudited; in thousands)





















 











 











 


Three months ended March 31,



2022


2021


% change



EBIT (1)

D&A

EBITDA


EBIT (1)

D&A

EBITDA


EBIT

EBITDA












 
Global Ecommerce

$

(13,696

)

$

21,444

$

7,748

 


$

(26,376

)

$

18,176

$

(8,200

)


48

%

>100

%

Presort Services

 

19,632

 

 

6,418

 

26,050

 


 

19,051

 

 

7,499

 

26,550

 


3

%

(2

%)

Sending Technology Solutions

 

104,575

 

 

7,003

 

111,578

 


 

114,470

 

 

7,604

 

122,074

 


(9

%)

(9

%)

Segment total

$

110,511

 

$

34,865

 

145,376

 


$

107,145

 

$

33,279

 

140,424

 


3

%

4

%












 
Reconciliation of Segment EBITDA to Net Income (Loss):








Segment depreciation and amortization


 

(34,865

)




 

(33,279

)




Unallocated corporate expenses


 

(57,834

)




 

(57,465

)




Restructuring charges


 

(4,184

)




 

(2,889

)




Gain on sale of assets


 

14,372

 




 

-

 




Gain on sale of business


 

2,522

 




 

-

 




Loss on debt redemption/refinancing


 

(4,993

)




 

(51,394

)




Transaction costs


 

(1,644

)




 

-

 




Interest, net


 

(33,726

)




 

(37,044

)




(Provision) benefit for income taxes


 

(4,203

)




 

13,992

 




Income (loss) from continuing operations


 

20,821

 




 

(27,655

)




Loss from discontinued operations, net of tax


 

-

 




 

(3,886

)




Net income (loss)


$

20,821

 




$

(31,541

)















 

(1)


Segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges, and other items that are not allocated to a particular business segment. In 2022, we refined the methodology for allocating transportation costs between Global Ecommerce and Presort Services, resulting in a $3 million increase in Global Ecommerce EBIT and corresponding decrease in Presort Services EBIT.


Pitney Bowes Inc.



Reconciliation of Reported Consolidated Results to Adjusted Results
(Unaudited; in thousands, except per share amounts)





 


Three months ended March 31,



2022


2021





 
Reconciliation of reported net income (loss) to adjusted EBIT and EBITDA



Net income (loss)

$

20,821

 


$

(31,541

)

Loss from discontinued operations, net of tax

 

-

 


 

3,886

 

Provision (benefit) for income taxes

 

4,203

 


 

(13,992

)

Income (loss) from continuing operations before taxes

 

25,024

 


 

(41,647

)

Restructuring charges

 

4,184

 


 

2,889

 

Gain on sale of assets

 

(14,372

)


 

-

 

Gain on sale of business

 

(2,522

)


 

-

 

Loss on debt redemption/refinancing

 

4,993

 


 

51,394

 

Transaction costs

 

1,644

 


 

-

 

Adjusted net income before tax

 

18,951

 


 

12,636

 

Interest, net

 

33,726

 


 

37,044

 

Adjusted EBIT

 

52,677

 


 

49,680

 

Depreciation and amortization

 

42,002

 


 

39,594

 

Adjusted EBITDA

$

94,679

 


$

89,274

 





 
Reconciliation of reported diluted earnings (loss) per share to adjusted diluted earnings per share



Diluted earnings (loss) per share

$

0.12

 


$

(0.18

)

Loss from discontinued operations, net of tax

 

-

 


 

0.02

 

Restructuring charges

 

0.02

 


 

0.01

 

Gain on sale of assets

 

(0.06

)


 

-

 

Gain on sale of business

 

(0.02

)


 

-

 

Loss on debt redemption/refinancing

 

0.02

 


 

0.22

 

Transaction costs

 

0.01

 


 

-

 

Adjusted diluted earnings per share (1)

$

0.08

 


$

0.07

 





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





 
Reconciliation of reported net cash from operating activities to free cash flow

Net cash from operating activities

$

10,562

 


$

65,923

 

Capital expenditures

 

(32,555

)


 

(43,328

)

Restructuring payments

 

3,285

 


 

3,955

 

Change in customer deposits at PB Bank

 

(12,959

)


 

(27,794

)

Transaction costs paid

 

2,132

 


 

-

 

Free cash flow

$

(29,535

)


$

(1,244

)





 

 

Contacts

Editorial -
Bill Hughes
Chief Communications Officer
203.351.6785

Financial -
Ned Zachar, CFA
VP, Investor Relations
203.614.1092

Alex Brown
Senior Manager, Investor Relations
203.351.7639



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