Business Wire | Apr 30, 2021 07:00AM EDT

Pitney Bowes Announces First Quarter 2021 Financial Results

Apr. 30, 2021

STAMFORD, Conn.--(BUSINESS WIRE)--Apr. 30, 2021--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 first quarter 2021.

"We delivered a solid start to the year, with every business making a meaningful contribution to our first quarter results," said Marc B. Lautenbach, President and CEO, Pitney Bowes. "Revenue continued to demonstrate strong growth, every business improved its EBIT performance from prior year, and we strengthened our balance sheet. As we enter the final chapter of our transformation, we are well-positioned to reach our ultimate goal of achieving improved profitable revenue growth."

First Quarter 2021

* Revenue of $915 million, growth of 15 percent on a reported basis and 14 percent excluding the impact of currency * GAAP EPS of ($0.18), which includes a loss related to debt refinancing * Adjusted EPS of $0.07 * EPS reflects a $0.02 tax benefit associated with an affiliate reorganization. * GAAP cash from operations of $66 million; free cash flow net use of $1 million. * The Company reduced debt by $126 million from year-end 2020 and took several actions to refine its capital structure which reduced near-term refinancing risk, improved pricing of its Term Loan B and extended the duration of maturities across its capital structure. * Global Ecommerce grew revenue 41 percent on a reported basis and 40 percent excluding the impact of currency; EBIT margins and EBITDA margins improved over prior year. * Presort Services grew revenue, EBIT margins and EBITDA margins over prior year. * SendTech EBIT margins and EBITDA margins improved over prior year, which is the second consecutive quarter of EBIT and EBITDA year-over-year dollar growth.

Earnings per share results are summarized in the table below:

First Quarter*

2021 2020

GAAP EPS ($0.18) ($1.22)

Discontinued operations (0.02) (0.06)

GAAP EPS from continuing operations ($0.16) ($1.28)

Restructuring charges 0.01 0.02

Goodwill impairment charge - 1.15

Loss on debt refinancing 0.22 0.16

Adjusted EPS $0.07 $0.05

* 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

First Quarter

($ millions) 2021 2020 % Change % Change Reported Ex Currency

Revenue $413 $292 41% 40%

EBITDA ($8) ($11) 28%

EBIT ($26) ($29) 11%

Revenue benefited primarily from growth in volumes across all services. EBIT and EBITDA benefited from improved Cross Border and Digital Delivery Service margins, partly offset by higher costs in Domestic Parcel Services. EBIT and EBITDA improved through the quarter with March being EBITDA positive.

Presort Services

First Quarter

($ millions) 2021 2020 % Change % Change Reported Ex Currency

Revenue $143 $141 2% 2%

EBITDA $27 $23 13%

EBIT $19 $16 21%

Revenue benefited primarily from growth in Marketing Mail. EBIT and EBITDA margins improved over prior year and were the highest margins in five quarters.

SendTech Solutions

First Quarter

($ millions) 2021 2020 % Change % Change Reported Ex Currency

Revenue $359 $363 (1%) (3%)

EBITDA $122 $116 6%

EBIT $114 $107 7%

Revenue benefited from growth in equipment sales, business services and rentals, partly offset by declines in financing, supplies and support services. EBIT margin improved from prior year and was the highest margin in three quarters.

Full Year 2021 Expectations

The Company's full year 2021 expectations are consistent with what was communicated last quarter. The Company expects annual revenue to grow 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 driven largely by improvement in Global Ecommerce, which is expected to be EBITDA positive for the full year. The Company also expects lower free cash flow primarily due to specific items that benefited 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 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 sitewww.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 vaccines, 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; the loss of, or significant 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 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 ended March 31, 2021 and 2020, and consolidated balance sheets at March 31, 2021 and December 31, 2020 are attached.

Pitney Bowes Inc.Consolidated Statements of Loss(Unaudited; in thousands, except per shareamounts) Three months ended March 31, 2021 2020

Revenue: Business services $ 570,454 $ 444,379

Support services 118,697 122,015

Financing 77,812 89,078

Equipment sales 86,803 76,273

Supplies 42,224 45,709

Rentals 19,207 18,814

Total revenue 915,197 796,268

Costs and expenses: Cost of business services 499,534 374,665

Cost of support services 36,717 39,760

Financing interest expense 11,886 12,489

Cost of equipment sales 61,840 57,359

Cost of supplies 11,211 12,240

Cost of rentals 6,447 6,378

Selling, general and administrative 238,102 248,633

Research and development 11,316 12,116

Restructuring charges 2,889 3,817

Goodwill impairment - 198,169

Interest expense, net 25,158 25,883

Other components of net pension and 350 (151 ) postretirement expense (income) Other expense, net 51,394 33,487

Total costs and expenses 956,844 1,024,845

Loss from continuing operations before taxes (41,647 ) (228,577 )

Benefit for income taxes (13,992 ) (10,030 )

Loss from continuing operations (27,655 ) (218,547 )

(Loss) income from discontinued operations, net of (3,886 ) 10,064 taxNet loss $ (31,541 ) $ (208,483 )

Basic loss per share (1): Continuing operations $ (0.16 ) $ (1.28 )

Discontinued operations (0.02 ) 0.06

Net loss $ (0.18 ) $ (1.22 )

Diluted loss per share (1): Continuing operations $ (0.16 ) $ (1.28 )

Discontinued operations (0.02 ) 0.06

Net loss $ (0.18 ) $ (1.22 )

Weighted-average shares used in diluted earnings 172,856 170,912 per share (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, December 31, 2021 2020Current assets: Cash and cash equivalents $ 680,727 $ 921,450

Short-term investments 16,200 18,974

Accounts and other receivables, net 327,755 389,240

Short-term finance receivables, net 551,061 568,050

Inventories 63,680 65,845

Current income taxes 44,288 23,219

Other current assets and prepayments 124,394 120,145

Total current assets 1,808,105 2,106,923

Property, plant and equipment, net 405,226 391,280

Rental property and equipment, net 37,708 38,435

Long-term finance receivables, net 597,012 605,292

Goodwill 1,144,064 1,152,285

Intangible assets, net 152,265 159,839

Operating lease assets 196,843 201,916

Noncurrent income taxes 68,732 72,653

Other assets 531,226 491,514

Total assets $ 4,941,181 $ 5,220,137

Liabilities and stockholders' equityCurrent liabilities: Accounts payable and accrued liabilities $ 820,286 $ 880,616

Customer deposits at Pitney Bowes Bank 589,406 617,200

Current operating lease liabilities 39,587 39,182

Current portion of long-term debt 19,972 216,032

Advance billings 118,166 114,550

Current income taxes 6,839 2,880

Total current liabilities 1,594,256 1,870,460

Long-term debt 2,418,885 2,348,361

Deferred taxes on income 282,192 279,451

Tax uncertainties and other income tax 37,936 38,163 liabilitiesNoncurrent operating lease liabilities 174,798 180,292

Other noncurrent liabilities 413,951 437,015

Total liabilities 4,922,018 5,153,742

Stockholders' equity: Common stock 323,338 323,338

Additional paid-in-capital 15,269 68,502

Retained earnings 5,161,029 5,201,195

Accumulated other comprehensive loss (847,538 ) (839,131 )

Treasury stock, at cost (4,632,935 ) (4,687,509 )

Total stockholders' equity 19,163 66,395

Total liabilities and stockholders' equity $ 4,941,181 $ 5,220,137

Pitney Bowes Inc.Business Segment Revenue(Unaudited; in thousands) Three months ended March 31, 2021 2020 % Change

Global Ecommerce $ 413,086 $ 292,323 41%

Presort Services 143,126 140,720 2%

Sending Technology Solutions 358,985 363,225 (1%)

Total revenue - GAAP 915,197 796,268 15%

Currency impact on revenue (8,803) -

Revenue, at constant currency $ 906,394 $ 796,268 14%

Pitney Bowes Inc.Business Segment EBIT & EBITDA(Unaudited; in thousands) Three months ended March 31, 2021 2020 % change

EBIT (1) D&A EBITDA EBIT (1) D&A EBITDA EBIT EBITDA Global $ (26,376) $ 18,176 $ (8,200) $ (29,475) $ 18,065 $ (11,410) 11% 28%Ecommerce Presort 19,051 7,499 26,550 15,695 7,774 23,469 21% 13%Services Sending 114,470 7,604 122,074 106,562 9,039 115,601 7% 6%TechnologySolutions Segment total $ 107,145 $ 33,279 140,424 $ 92,782 $ 34,878 127,660 15% 10%

Reconciliationof SegmentEBITDA to NetIncome:Segmentdepreciation (33,279) (34,878)andamortizationUnallocated (57,465) (43,722)corporateexpensesRestructuring (2,889) (3,817)chargesInterest, net (37,044) (38,372)

Goodwill - (198,169)impairmentLoss on debt (51,394) (36,987)refinancingTransaction - (292)costsBenefit for 13,992 10,030income taxesLoss from (27,655) (218,547)continuingoperations(Loss) incomefrom (3,886) 10,064discontinuedoperations,net of taxNet loss $ (31,541) $ (208,483)

(1) Segment EBIT excludes interest, taxes, general corporate expenses,restructuring charges, and other items that are not allocated to a particularbusiness segment. Pitney Bowes Inc.Reconciliation of Reported Consolidated Results toAdjusted Results(Unaudited; in thousands, except per share amounts) Three months ended March 31, 2021 2020

Reconciliation of reported net loss to adjustedEBIT and EBITDANet loss $ (31,541) $ (208,483)

Loss (income) from discontinued operations, net of 3,886 (10,064)taxBenefit for income taxes (13,992) (10,030)

Loss from continuing operations before taxes (41,647) (228,577)

Restructuring charges 2,889 3,817

Goodwill impairment - 198,169

Loss on debt refinancing 51,394 36,987

Transaction costs - 292

Adjusted net income before tax 12,636 10,688

Interest, net 37,044 38,372

Adjusted EBIT 49,680 49,060

Depreciation and amortization 39,594 40,719

Adjusted EBITDA $ 89,274 $ 89,779

Reconciliation of reported diluted loss per shareto adjusted diluted earnings per shareDiluted loss per share $ (0.18) $ (1.22)

Loss (income) from discontinued operations, net of 0.02 (0.06)taxRestructuring charges 0.01 0.02

Goodwill impairment - 1.15

Loss on debt refinancing 0.22 0.16

Adjusted diluted earnings per share ^(1) $ 0.07 $ 0.05

Reconciliation of reported net cash from operatingactivities to free cash flowNet cash provided by (used in) operating activities $ 65,924 $ (67,355)

Net cash used in operating activities - - 37,805discontinued operationsCapital expenditures (43,328) (25,778)

Restructuring payments 3,955 6,047

Change in customer deposits at PB Bank (27,794) (888)

Transaction costs paid - 1,740

Free cash flow $ (1,243) $ (48,429)

^(1) The sum of the earnings per share amounts may not equal the totals due torounding. View source version on businesswire.com: https://www.businesswire.com/news/home/20210430005042/en/

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