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Pitney Bowes Announces Fourth Quarter and Full Year 2020 Financial Results

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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

View source version on businesswire.com: https://www.businesswire.com/news/home/20210202005102/en/

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