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

Pitney Bowes Announces Third Quarter 2021 Financial Results

Nov. 03, 2021

STAMFORD, Conn.--(BUSINESS WIRE)--Nov. 03, 2021--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 % Change Reported 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 % Change Reported 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 % Change Reported 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 Statementsof Operations(Unaudited; inthousands, except pershare amounts) Three months ended Nine months ended September September 30, 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 472,216 482,965 1,454,564 1,311,941 services Cost of support 38,250 37,647 112,646 114,132 services Financing interest 11,710 11,626 35,369 36,054 expense 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 225,024 238,618 699,316 720,882 administrative Research and 10,621 9,255 32,996 28,838 development 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 46 (109 ) 708 126 postretirement expense (income) Other expense (income), 3,193 (6,325 ) 40,941 9,787 net Total costs and 868,479 880,571 2,698,735 2,726,189 expenses Income (loss) from 6,970 11,327 (8,886 ) (200,531 )continuing operationsbefore taxes(Benefit) provision for (1,525 ) 554 (10,602 ) 7,540 income taxesIncome (loss) from 8,495 10,773 1,716 (208,071 )continuing operationsIncome (loss) from 572 616 (4,334 ) 7,648 discontinued operations,net of taxNet 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 179,409 174,704 178,949 171,388 used in diluted earningsper share (1)

The sum of the earnings per share amounts may not equal the totals due to rounding.(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, December 31, 2021 2020Current 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' equityCurrent 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 35,380 38,163 liabilitiesNoncurrent 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 BowesInc.BusinessSegmentRevenue(Unaudited;inthousands) Three months ended September Nine months ended September 30, 30,

2021 2020 % 2021 2020 % Change Change

Global $ 398,011 $ 409,981 (3 %) $ 1,229,526 $ 1,100,757 12 % Ecommerce Presort 139,296 127,705 9 % 417,041 386,552 8 % Services Sending 338,142 354,212 (5 %) 1,043,282 1,038,349 0 % Technology Solutions Total 875,449 891,898 (2 %) 2,689,849 2,525,658 7 % revenue - GAAP Currency (5,268 ) - (27,593 ) - impact on revenue Revenue, at $ 870,181 $ 891,898 (2 %) $ 2,662,256 $ 2,525,658 5 % constant currencyPitney BowesInc.Business Segment EBIT &EBITDA(Unaudited; inthousands) Three months ended September 30, 2021 2020 % change

EBIT (1) D&A EBITDA EBIT (1) D&A EBITDA EBIT EBITDA Global Ecommerce $ (20,950 ) $ 20,935 $ (15 ) $ (19,757 ) $ 16,824 $ (2,933 ) (6 %) >100%

Presort Services 21,062 6,235 27,297 14,481 8,031 22,512 45 % 21 %

Sending 98,950 7,694 106,644 112,599 7,955 120,554 (12 %) (12 %)TechnologySolutions Segment total $ 99,062 $ 34,864 133,926 $ 107,323 $ 32,810 140,133 (8 %) (4 %)

Reconciliation of SegmentEBITDA to Net Income:Segment (34,864 ) (32,810 )depreciation andamortizationUnallocated (49,176 ) (53,429 )corporateexpensesRestructuring (3,701 ) (3,766 )chargesLoss on debt (3,193 ) - refinancingInterest, net (36,022 ) (38,801 )

Benefit 1,525 (554 )(provision) forincome taxesIncome from 8,495 10,773 continuingoperationsIncome fromdiscontinued 572 616 operations, netof taxNet income $ 9,067 $ 11,389

Nine months ended September 30, 2021 2020 % change

EBIT (1) D&A EBITDA EBIT (1) D&A EBITDA EBIT EBITDA Global Ecommerce $ (58,157 ) $ 58,171 $ 14 $ (68,126 ) $ 52,187 $ (15,939 ) 15 % >100%

Presort Services 56,247 20,532 76,779 42,758 23,662 66,420 32 % 16 %

Sending 320,541 22,835 343,376 323,429 25,771 349,200 (1 %) (2 %)TechnologySolutions Segment Total $ 318,631 $ 101,538 420,169 $ 298,061 $ 101,620 399,681 7 % 5 %

Reconciliation of SegmentEBITDA to Net Loss:Segment (101,538 ) (101,620 )depreciation andamortizationUnallocated (162,957 ) (146,640 )corporateexpensesRestructuring (11,434 ) (12,505 )chargesLoss on debt (55,576 ) (36,987 )refinancingGain on sale of 10,201 - businessGain on sale of 1,434 11,908 assetsGoodwill - (198,169 )impairmentTransaction - (641 )costsInterest, net (109,185 ) (115,558 )

Benefit 10,602 (7,540 )(provision) forincome taxesIncome (loss) 1,716 (208,071 )from continuingoperations(Loss) income from (4,334 ) 7,648 discontinued operations, netof taxNet loss $ (2,618 ) $ (200,423 )

(1)Segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges, and other items that are not allocated to a particular business segment. Segment EBIT excludes interest, taxes, general corporate expenses,(1) restructuring charges, and other items that are not allocated to a particular business segment.Pitney Bowes Inc.Reconciliation of Reported Consolidated Resultsto Adjusted Results(Unaudited; inthousands, except pershare amounts) Three months ended Nine months ended September 30, September 30, 2021 2020 2021 2020

Reconciliation ofreported net income(loss) to adjustedEBIT and EBITDANet income (loss) $ 9,067 $ 11,389 $ (2,618 ) $ (200,423 )

(Income) loss from (572 ) (616 ) 4,334 (7,648 )discontinuedoperations, net of tax(Benefit) provision (1,525 ) 554 (10,602 ) 7,540 for income taxesIncome (loss) from 6,970 11,327 (8,886 ) (200,531 )continuing operationsbefore taxesRestructuring charges 3,701 3,766 11,434 12,505

Loss on debt 3,193 - 55,576 36,987 refinancingGoodwill impairment - - - 198,169

Gain on sale of - - (10,201 ) - businessGain on sale of assets - - (1,434 ) (11,908 )

Transaction costs - - - 641

Adjusted net income 13,864 15,093 46,489 35,863 before taxInterest, net 36,022 38,801 109,185 115,558

Adjusted EBIT 49,886 53,894 155,674 151,421

Depreciation and 41,809 38,616 121,225 120,403 amortizationAdjusted EBITDA $ 91,695 $ 92,510 $ 276,899 $ 271,824

Reconciliation ofreported dilutedearnings (loss) pershare to adjusteddiluted earnings pershare ^(1)Diluted earnings $ 0.05 $ 0.07 $ (0.02 ) $ (1.17 )(loss) per shareLoss (income) from - - 0.02 (0.04 )discontinuedoperations, net of taxRestructuring charges 0.02 0.02 0.05 0.05

Loss on debt 0.01 - 0.23 0.16 refinancingGoodwill impairment - - - 1.14

Gain on sale of - - (0.02 ) - businessGain on sale of assets - - (0.01 ) (0.05 )

Tax on surrender of - - - 0.07 company owned lifeinsurance policiesAdjusted diluted $ 0.08 $ 0.08 $ 0.26 $ 0.17 earnings per share Reconciliation ofreported net cash fromoperating activitiesto free cash flowNet cash provided by $ 71,446 $ 104,744 $ 216,174 $ 191,166 operating activitiesNet cash used inoperating activities - - - - 38,423 discontinuedoperationsCapital expenditures (57,204 ) (20,833 ) (140,907 ) (80,787 )

Restructuring payments 6,023 4,504 14,847 15,869

Change in customer 9,879 (2,867 ) 25,512 19,464 deposits at PB BankTransaction costs paid - 377 - 2,117

Free cash flow $ 30,144 $ 85,925 $ 115,626 $ 186,252

(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/20211103005149/en/

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