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Pitney Bowes (PBI) Down 0.9% Since Last Earnings Report: Can It Rebound?

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Zacks Equity Research
·3 min read
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A month has gone by since the last earnings report for Pitney Bowes (PBI). Shares have lost about 0.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Pitney Bowes due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Pitney Bowes Q4 Earnings Top Estimates, Revenues Up Y/Y

Pitney Bowes Inc. reported fourth-quarter 2020 adjusted earnings of 13 cents per share, beating the Zacks Consensus Estimate by 30%. However, the bottom line declined 7.1% year over year.

Total revenues improved 24% year over year to $1.028 billion. Adjusting for foreign currency exchange, revenues increased 23% year over year to $1.024 billion. Management is optimistic on investments in shipping starting to pay off. Notably, Shipping-related revenues represented 54% of total revenues in the reported quarter.

Quarter in Detail

Commerce Services increased 42% (up 42% after adjusted for currency) from the year-ago quarter’s figure to $652.8 million. Global Ecommerce revenues surged 60% to $518.1 million, while Presort Services of $134.7 million remained almost flat on a year-over-year basis.

Global Ecommerce revenues benefited from strong growth in Domestic Parcel, Digital Delivery and Cross Border Services volumes.

In Presort Services space, revenues remained flat due to declining Marketing Mail and flat First Class revenues and First Class volumes despite growth in Marketing Mail Flats and Bound Printed Matter volumes.

Sending Technology Solutions inched up 1% year over year (flat after adjusting for currency) to $375.6 million. The improvement was due to higher business service revenues, driven by increased usage of shipping offerings and capabilities, and equipment sales. In fact, SendTech shipping revenues were $35 million, growing at a double-digit rate. Moreover, SendTech shipped nearly 20,000 units of the SendPro Mailstation since its launch in April.

However, COVID-19 induced sluggishness in support services, supplies and financing limited the upside.

Adjusted EBITDA Details

In the fourth quarter, adjusted EBITDA declined 3.3% from the year-ago quarter’s figure to $102.4 million.

Segment EBITDA fell 1% from the year-ago quarter’s figure to $150.1 million. Segment EBIT declined 1% from the year-ago quarter’s figure to $115.9 million.

Balance Sheet & Cash Flow

As of Dec 31, 2020, cash and cash equivalents and short-term investments were $940 million compared with $820.4 million as of Sep 30, 2020.

As of Dec 31, 2020, long-term debt (including current portion) was $2.56 billion, compared with $2.6 billion as of Sep 30, 2020.

Cash flow generated was $110.8 million compared with $103.8 million of net cash generated in operations in the previous quarter. Free cash flow was $96.8 million compared with free cash flow of $84.6 million in the prior quarter.

The company incurred expenses of $4 million under restructuring payments and capital expenditures worth $24 million in the reported quarter.

Guidance

For 2021, the company expects revenues to grow over 2020 in the low-to-mid single digit range, marking it as the fifth consecutive year of growth. The company also expects adjusted earnings per share to grow on a year-over-year basis.

However, the company anticipates lower free cash flow due to changes in certain working capital items that helped 2020 performance, “and are not expected to continue at the same level in 2021.”

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.


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