Business Wire | Aug 3, 2021 07:00AM EDT

Pitney Bowes Announces Second Quarter 2021 Financial Results

Aug. 03, 2021

STAMFORD, Conn.--(BUSINESS WIRE)--Aug. 03, 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 second quarter 2021.

"We delivered a solid second quarter and first half of the year," said Marc B. Lautenbach, President and CEO, Pitney Bowes. "Once again, each business made a positive contribution to the quarter. Importantly, Global Ecommerce made significant progress and was EBITDA positive in the quarter putting this business on-track to our commitment of EBITDA positive for the full year. SendTech and Presort Services also grew revenue and profit over prior year. We are well-positioned to reach our goal of achieving improved profitable revenue growth."

Second Quarter 2021

* Revenue of $899 million, growth of 7 percent on a reported basis and 6 percent excluding the impact of currency * GAAP EPS and Adjusted EPS of $0.11 * EPS reflects a $0.03 tax benefit associated with a UK tax legislation change * GAAP cash from operations of $79 million; free cash flow of $87 million * Global Ecommerce EBIT margin improved by over 200 basis points compared to prior year; EBITDA was positive. * Presort grew revenue and EBIT margin over prior year. * SendTech grew revenue; EBIT grew over prior year for the third consecutive quarter.

Earnings per share results are summarized in the table below:

Second Quarter*

2021 2020

GAAP EPS $0.11 ($0.02)

Discontinued operations, net of tax 0.01 0.02

GAAP EPS from continuing operations $0.12 $0.00

Restructuring charges 0.02 0.02

Gain on sale of business (0.02) -

Gain on sale of assets (0.01) -

Gain on sale of equity investment - (0.05)

Tax on surrender of company owned life insurance policies - 0.07

Adjusted EPS $0.11 $0.04

* 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

Second Quarter

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

Revenue $418 $398 5% 3%

EBITDA $8 ($2) >100%

EBIT ($11) ($19) 43%

Revenue grew over prior year despite a tough comparison. EBIT and EBITDA benefited largely from Cross Border services and lower bad debt expense.

Presort Services

Second Quarter

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

Revenue $135 $118 14% 14%

EBITDA $23 $20 12%

EBIT $16 $13 28%

Revenue grew across all mail classes and benefited from an easier prior year comparison. EBIT and EBITDA improved from prior year largely due to the revenue growth and higher gross margin.

SendTech Solutions

Second Quarter

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

Revenue $346 $321 8% 6%

EBITDA $115 $113 1%

EBIT $107 $104 3%

Revenue benefited from growth in equipment sales, supplies, business services and support services, partly offset by a decline in financing. Revenue also benefited from an easier prior year comparison. EBIT and EBITDA improved from prior year largely due to the revenue growth.

Full Year 2021 Expectations

The Company's full year 2021 expectations remain in-line with its previous communications. The Company continues to expect annual revenue to grow in the low-to-mid single digit range. The Company continues to expect adjusted EPS to grow over prior year driven largely by the improvement in Global Ecommerce, which is expected to be EBITDA positive for the full year. More specifically, adjusted EPS is expected to be in the range of $0.35 to $0.42. The Company also continues to expect lower free cash flow as compared to prior year primarily due to certain 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. 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 technology company providing commerce solutions. 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. 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 six months ended June 30, 2021 and 2020, and consolidated balance sheets at June 30, 2021 and December 31, 2020 are attached.

Pitney Bowes Inc.ConsolidatedStatements ofOperations(Unaudited; inthousands, except pershare amounts) Three months ended June Six months ended June 30, 30, 2021 2020 2021 2020

Revenue: Business $ 567,022 $ 528,990 $ 1,137,476 $ 973,369 services Support services 115,156 113,786 233,853 235,801

Financing 73,453 85,462 151,265 174,540

Equipment sales 86,267 57,837 173,070 134,110

Supplies 38,655 32,773 80,879 78,482

Rentals 18,650 18,644 37,857 37,458

Total revenue 899,203 837,492 1,814,400 1,633,760

Costs and expenses: Cost of business 482,814 454,311 982,348 828,976 services Cost of support 37,679 36,725 74,396 76,485 services Financing 11,773 11,939 23,659 24,428 interest expense Cost of 61,561 47,920 123,401 105,279 equipment sales Cost of supplies 10,467 8,379 21,678 20,619

Cost of rentals 6,013 6,022 12,460 12,400

Selling, general 236,190 233,631 474,292 482,264 and administrative Research and 11,059 7,467 22,375 19,583 development Restructuring 4,844 4,922 7,733 8,739 charges Goodwill - - - 198,169 impairment Interest 24,346 26,446 49,504 52,329 expense, net Other components of net pension 312 386 662 235 and postretirement cost Other (income) (13,646 ) (17,375 ) 37,748 16,112 expense Total costs and 873,412 820,773 1,830,256 1,845,618 expenses Income (loss) from 25,791 16,719 (15,856 ) (211,858 )continuing operationsbefore taxesProvision (benefit) 4,915 17,016 (9,077 ) 6,986 for income taxesIncome (loss) from 20,876 (297 ) (6,779 ) (218,844 )continuing operations(Loss) income fromdiscontinued (1,020 ) (3,032 ) (4,906 ) 7,032 operations, net oftaxNet income (loss) $ 19,856 $ (3,329 ) $ (11,685 ) $ (211,812 )

Basic earnings (loss)per share (1): Continuing $ 0.12 $ - $ (0.04 ) $ (1.28 ) operations Discontinued (0.01 ) (0.02 ) (0.03 ) 0.04 operations Net income $ 0.11 $ (0.02 ) $ (0.07 ) $ (1.24 ) (loss) Diluted earnings(loss) per share (1): Continuing $ 0.12 $ - $ (0.04 ) $ (1.28 ) operations Discontinued (0.01 ) (0.02 ) (0.03 ) 0.04 operations Net income $ 0.11 $ (0.02 ) $ (0.07 ) $ (1.24 ) (loss) Weighted-averageshares used in 178,979 171,478 173,367 171,167 diluted earnings pershare (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 June 30, December 31, 2021 2020Current assets: Cash and cash equivalents $ 799,470 $ 921,450

Short-term investments 14,904 18,974

Accounts and other receivables, net 309,177 389,240

Short-term finance receivables, net 552,858 568,050

Inventories 67,538 65,845

Current income taxes 37,384 23,219

Other current assets and prepayments 117,425 120,145

Total current assets 1,898,756 2,106,923

Property, plant and equipment, net 429,785 391,280

Rental property and equipment, net 38,814 38,435

Long-term finance receivables, net 588,602 605,292

Goodwill 1,130,164 1,152,285

Intangible assets, net 144,692 159,839

Operating lease assets 205,584 201,916

Noncurrent income taxes 69,150 72,653

Other assets 507,748 491,514

Total assets $ 5,013,295 $ 5,220,137

Liabilities and stockholders' equityCurrent liabilities: Accounts payable and accrued liabilities $ 820,065 $ 880,616

Customer deposits at Pitney Bowes Bank 632,833 617,200

Current operating lease liabilities 41,835 39,182

Current portion of long-term debt 97,015 216,032

Advance billings 119,645 114,550

Current income taxes 5,844 2,880

Total current liabilities 1,717,237 1,870,460

Long-term debt 2,330,698 2,348,361

Deferred taxes on income 286,338 279,451

Tax uncertainties and other income tax 37,155 38,163 liabilitiesNoncurrent operating lease liabilities 182,746 180,292

Other noncurrent liabilities 405,751 437,015

Total liabilities 4,959,925 5,153,742

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

Additional paid-in-capital 5,903 68,502

Retained earnings 5,172,185 5,201,195

Accumulated other comprehensive loss (831,303 ) (839,131 )

Treasury stock, at cost (4,616,753 ) (4,687,509 )

Total stockholders' equity 53,370 66,395

Total liabilities and stockholders' equity $ 5,013,295 $ 5,220,137

Pitney BowesInc.Business Segment Revenue(Unaudited;inthousands) Three months ended June 30, Six months ended June 30, 2021 2020 % 2021 2020 % Change Change

Global $ 418,429 $ 398,453 5 % $ 831,515 $ 690,776 20 % Ecommerce Presort 134,619 118,127 14 % 277,745 258,847 7 % Services Sending 346,155 320,912 8 % 705,140 684,137 3 % Technology Solutions Total 899,203 837,492 7 % 1,814,400 1,633,760 11 % revenue - GAAP Currency (13,521 ) - (22,324 ) - impact on revenue Revenue, at $ 885,682 $ 837,492 6 % $ 1,792,076 $ 1,633,760 10 % constant currencyPitney BowesInc.Business Segment EBIT & EBITDA(Unaudited; inthousands) Three months ended June 30, 2021 2020 % change

EBIT (1) D&A EBITDA EBIT (1) D&A EBITDA EBIT EBITDA Global $ (10,831 ) $ 19,060 $ 8,229 $ (18,894 ) $ 17,297 $ (1,597 ) 43 % >100%Ecommerce Presort 16,134 6,798 22,932 12,582 7,857 20,439 28 % 12 %Services Sending 107,121 7,537 114,658 104,268 8,776 113,044 3 % 1 %TechnologySolutions Segment total $ 112,424 $ 33,395 145,819 $ 97,956 $ 33,930 131,886 15 % 11 %

Reconciliation of Segment EBITDA toNet Income (Loss):Segmentdepreciation (33,395 ) (33,930 )andamortizationUnallocated (56,316 ) (49,489 )corporateexpensesRestructuring (4,844 ) (4,922 )chargesGain on sale of 10,201 - businessGain on sale of 1,434 - assetsLoss on debt (989 ) - refinancingGain on sale of - 11,908 equityinvestmentTransaction - (349 )costsInterest, net (36,119 ) (38,385 )

Provision for (4,915 ) (17,016 )income taxesIncome (loss) from 20,876 (297 )continuing operationsLoss from discontinued (1,020 ) (3,032 )operations, net of taxNet income $ 19,856 $ (3,329 )(loss) Six months ended June 30, 2021 2020 % change

EBIT (1) D&A EBITDA EBIT (1) D&A EBITDA EBIT EBITDA

Global $ (37,207 ) $ 37,236 $ 29 $ (48,369 ) $ 35,363 $ (13,006 ) 23 % >100%Ecommerce Presort 35,185 14,297 49,482 28,277 15,631 43,908 24 % 13 %Services Sending 221,591 15,140 236,731 210,830 17,815 228,645 5 % 4 %TechnologySolutions Segment Total $ 219,569 $ 66,673 286,242 $ 190,738 $ 68,809 259,547 15 % 10 %

Reconciliation of SegmentEBITDA to Net Loss:Segmentdepreciation (66,673 ) (68,809 )andamortizationUnallocated (113,781 ) (93,211 )corporateexpensesRestructuring (7,733 ) (8,739 )chargesLoss on debt (52,383 ) (36,987 )refinancingGain on sale of 10,201 - businessGain on sale of 1,434 - assetsGoodwill - (198,169 )impairmentGain on sale of - 11,908 equityinvestmentTransaction - (641 )costsInterest, net (73,163 ) (76,757 )

Benefit 9,077 (6,986 )(provision) forincome taxesLoss from (6,779 ) (218,844 )continuingoperations(Loss) income from discontinued (4,906 ) 7,032 operations, net of taxNet loss $ (11,685 ) $ (211,812 )

(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 to Adjusted Results(Unaudited; in thousands, except per share amounts)Three months ended June 30,Six months ended June 30,2021

2020

2021

2020

Reconciliation of reported net income (loss) to adjusted EBIT and EBITDANet income (loss)$

19,856

$

(3,329

)

$

(11,685

)

$

(211,812

)

Loss (income) from discontinued operations, net of tax1,020

3,032

4,906

(7,032

)

Provision (benefit) for income taxes4,915

17,016

(9,077

)

6,986

Income (loss) from continuing operations before taxes25,791

16,719

(15,856

)

(211,858

)

Restructuring charges4,844

4,922

7,733

8,739

Gain on sale of business(10,201

)

-

(10,201

)

-

Gain on sale of assets(1,434

)

-

(1,434

)

-

Loss on debt refinancing989

-

52,383

36,987

Goodwill impairment-

-

-

198,169

Gain on sale of equity investment-

(11,908

)

-

(11,908

)

Transaction costs-

349

-

641

Adjusted net income before tax19,989

10,082

32,625

20,770

Interest, net36,119

38,385

73,163

76,757

Adjusted EBIT56,108

48,467

105,788

97,527

Depreciation and amortization39,822

41,068

79,416

81,787

Adjusted EBITDA$

95,930

$

89,535

$

185,204

$

179,314

Reconciliation of reported diluted earnings (loss) per share to adjusted diluted earnings per share (1)Diluted earnings (loss) per share$

0.11

$

(0.02

)

$

(0.07

)

$

(1.24

)

Loss (income) from discontinued operations, net of tax0.01

0.02

0.03

(0.04

)

Restructuring charges0.02

0.02

0.03

0.03

Gain on sale of business(0.02

)

-

(0.02

)

-

Gain on sale of assets(0.01

)

-

(0.01

)

-

Loss on debt refinancing-

-

0.22

0.16

Goodwill impairment-

-

-

1.14

Gain on sale of equity investment-

(0.05

)

-

(0.05

)

Tax on surrender of company owned life insurance policies-

0.07

-

0.07

Adjusted diluted earnings per share$

0.11

$

0.04

$

0.19

$

0.09

Reconciliation of reported net cash from operating activities to free cash flowNet cash from operating activities$

78,805

$

153,777

$

144,729

$

86,422

Net cash used in operating activities - discontinued operations-

618

-

38,423

Capital expenditures(40,375

)

(34,176

)

(83,703

)

(59,954

)

Restructuring payments4,870

5,318

8,825

11,365

Change in customer deposits at PB Bank43,427

23,219

15,633

22,331

Transaction costs paid-

377

-

2,117

Free cash flow$

86,727

$

149,133

$

85,484

$

100,704

(1) The sum of the earnings per share amounts may not equal the totals due to rounding. View source version on businesswire.com: https://www.businesswire.com/news/home/20210803005244/en/

CONTACT: Editorial - Bill Hughes Chief Communications Officer 203/351-6785

CONTACT: Financial - Adam David VP, Investor Relations 203/351-7175