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Pitney Bowes Announces Third Quarter 2021 Financial Results

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STAMFORD, Conn., November 03, 2021--(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

%