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Pitney Bowes (PBI) Q4 Earnings Top Estimates, Sales Down Y/Y

Zacks Equity Research
·5 mins read

Pitney Bowes Inc. PBI reported fourth-quarter 2019 adjusted earnings of 14 cents per share beating the Zacks Consensus Estimate by 27.3%. However, the figure declined 54.8% year over year.

Total revenues declined 3% year over year to $831.3 million. Adjusting for foreign currency exchange impact of approximately $1 million, revenues of $832.4 million were down 3% year over year.

Notably, Pitney Bowes has divested SMB businesses based across six European countries — Sweden, Denmark, Norway, Finland, Italy and Switzerland — to BAVARIA Industries Group AG in a bid to enhance go-to-market strategy. This limited revenue growth by $2.1 million. Considering impact from currency and market exit, revenues (at cc) declined 2% year over year to $830.3 million.

Quarter in Detail

Commerce Services (55.2% of total revenues) improved 5% from the year-ago quarter (up 5% after adjusted for currency) to $459.1 million. Global Ecommerce revenues improved 6% to $323.9 million, while Presort Services of $135.1 million inched up 1% year over year.

Global Ecommerce revenues benefited from strong performance of parcel platforms. Presort Services revenues improved on the back of increased volumes across all mail classes. However, impact from ransomware attack on Oct 12, 2019, limited growth.

Sending Technology Solutions (44.8% of revenues) declined 11% year over year (down 11% after adjusted for currency) to $372.3 million. Revenues declined 9% when adjusted for both currency and exits from select Europe-based markets.

Impact from ransomware attack, lower revenues from equipment, support services and financing weighed on the segmental performance. Nonetheless, higher rentals and improvement in business services limited the decline.
 

Pitney Bowes Inc. Price, Consensus and EPS Surprise

Pitney Bowes Inc. Price, Consensus and EPS Surprise
Pitney Bowes Inc. Price, Consensus and EPS Surprise

Pitney Bowes Inc. price-consensus-eps-surprise-chart | Pitney Bowes Inc. Quote

Operating Details

In the fourth quarter, adjusted EBITDA declined 29.7% from the year-ago quarter to $105.9 million.

Segment EBITDA decreased 20.4% from the year-ago quarter to $151.4 million. Commerce Services EBITDA declined 16% from the year-ago quarter to $30.2 million. Sending Technology Solutions EBITDA fell 21% year over year to $121.6 million.

Segment EBIT declined 26.7% from the year-ago quarter to $116.5 million.

Commerce Services EBIT came in at $4.3 million, down 65% year over year. Global Ecommerce EBIT came in at ($18.2 million) compared with ($4.3 million) in the year-ago quarter, on account of lower fulfillment margins and higher investments. However, Presort Services EBIT surged 34% to $22.5 million on the back of lower transportation and labor costs, which offset impact from ransomware and client mix that led to lower revenue per piece.

Sending Technology Solutions EBIT fell 23% year over year to $112.2 million on costs pertaining to higher tariffs and ransomware attack.

Balance Sheet & Cash Flow

As of Dec 31, 2019, cash and cash equivalents (including short term investments) were $1.04 billion compared with $651.9 million as of Sep 30, 2019.

Long-term debt (including current portion) was $2.74 billion, down from $3.07 billion reported at the end of previous quarter.

Net cash from operations was $69.9 million compared with $95.5 million in the previous quarter. Free cash flow came in at $66.5 million compared with $69.3 million in the prior quarter.

In the reported quarter, Pitney Bowes paid out dividends worth $9 million.

Notably, on Feb 4, 2020, Pitney Bowes’ board of directors announced a cash dividend of 5 cents per share, payable Mar 9, 2020, to shareholders as on Feb 14, 2020.

The company incurred expenses of $8 million under restructuring payments and capital expenditures worth $42 million in the reported quarter.

Guidance

For 2020, Pitney Bowes projects revenues (cc basis) to be in the range of 1.5% decline to 1% growth over 2019 tally. Adjusted earnings are anticipated between 60 cents and 70 cents per share.

Free cash flow is anticipated between $140 million and $170 million.

Zacks Rank & Stocks to Consider

Currently, Pitney Bowes carries a Zacks Rank #3 (Hold).

Alteryx AYX, Cirrus Logic CRUS and Garmin GRMN are some better-ranked stocks in the broader computer and technology sector, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Alteryx, Cirrus Logic and Garmin is pegged at 39.85%, 15.27% and 7.35%, respectively.

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