Pitney Bowes Announces Third Quarter 2022 Financial Results

STAMFORD, Conn.--(BUSINESS WIRE)--November 1, 2022--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 2022.

“We continue to successfully navigate the cross-currents in the global economy and remain singularly focused on emerging from this environment in a stronger position,” said Marc B. Lautenbach, President and CEO, Pitney Bowes. “Similar to last quarter, SendTech and Presort both grew on a constant currency basis and Global Ecommerce declined as a result of international macroeconomic challenges, including US dollar strength. The resilience of SendTech and Presort will serve us well going forward and the improved service levels we are seeing in our Domestic Parcel network within Global Ecommerce will drive substantial volume and margin expansion.”

Third Quarter Financial Highlights

• Revenue in the quarter was $831 million, a decrease of 5 percent on a reported basis and 4 percent, constant currency, versus the comparable quarter in 2021
• GAAP EPS was $0.03 and Adjusted EPS was $0.00 in the quarter versus $0.05 and $0.08, respectively, in third quarter 2021
• Adjusted EBIT was $38 million compared to $39 million in second quarter 2022 and a decline of $12 million on a year-over-year basis
• GAAP cash from operating activities in the quarter was a net use of $36 million
• Free cash flow was a net use of $16 million versus a net source of $30 million in third quarter 2021; the year-over-year decline was driven by changes in working capital and lower net income partially offset by lower capital expenditures and an increase in customer deposits
• Cash and short-term investments were $607 million at the end of the quarter

Third Quarter Business Highlights

• Domestic Parcel revenue grew by 2 percent with improved gross margins despite lower volumes
• Presort revenue grew 4 percent on a year-over-year basis and with a 500 basis point EBIT margin improvement relative to second quarter 2022
• SendTech revenue grew on a constant currency basis driven by high-teens growth in shipping-related revenues
• Equipment revenue and financial receivables both grew year-over-year

Earnings per share results are summarized in the table below

			Third Quarter
			2022			2021
GAAP EPS			$0.03			$0.05
Discontinued Operations			-			-
GAAP EPS from Continuing Operations			$0.03			$0.05
Restructuring Charges			$0.02			$0.02
Gain on Sale of Businesses			($0.05)			-
Loss on Debt Redemption			-			$0.01
Adjusted EPS			$0.00			$0.08

* The sum of the earnings per share may not equal the totals due to rounding.

Business Segment Reporting

Global Ecommerce
Global Ecommerce provides business to consumer logistics services for domestic and cross-border delivery, returns and fulfillment.

		Third Quarter
($ millions)		2022		2021		% Change Reported		% Change Ex Currency
Revenue		$354		$398		(11%)		(10%)
EBITDA		($17)		$0		>(100%)
EBIT		($35)		($21)		(66%)

The segment revenue decline was largely driven by lower volumes, especially Cross-border, where US Dollar strength is pressuring international ecommerce activity. Domestic Parcel volumes were 36 million in the quarter, 4 million lower compared to prior year, with revenues increasing 2 percent driven by better per parcel yields.

Decreases in segment margins were the result of lower volumes in Cross-border and Digital Shipping Solutions, offset by modest improvements in Domestic Parcel.

Presort Services
Presort Services provides sortation services that enable clients to qualify for USPS workshare discounts in First Class Mail, Marketing Mail, Marketing Mail Flats and Bound Printed Matter.

		Third Quarter
($ millions)		2022		2021		% Change Reported		% Change Ex Currency
Revenue		$145		$139		4%		4%
EBITDA		$28		$27		2%
EBIT		$21		$21		(2%)

Revenue growth was driven by better revenue per piece and new client additions which was partially offset by lower volumes from existing clients.

EBIT margins improved 500 basis points sequentially to 14%, primarily from higher revenue per piece and productivity gains.

SendTech Solutions
Sending Technology Solutions offers physical and digital mailing and shipping technology solutions, financing, services, supplies and other applications for small and medium businesses, retail, enterprise, and government clients around the world to help simplify and save on the sending, tracking and receiving of letters, parcels and flats.

		Third Quarter
($ millions)		2022		2021		% Change Reported		% Change Ex Currency
Revenue		$332		$338		(2%)		1%
EBITDA		$102		$107		(4%)
EBIT		$95		$99		(4%)

Better year-over-year Equipment sales and a strong increase in Business Services revenues largely offset lower Finance and Support Services. Equipment sales and Business Services revenue continued to benefit from new mailing products and shipping solutions. Shipping-related revenues experienced high-teens percent growth on a year-over-year basis.

EBITDA and EBIT declined as a result of lower, high-margin Finance and Service revenues.

Full Year 2022 Guidance

The Company is reaffirming the previously communicated revenue and EBIT guidance. The Company expects full year revenue (constant currency) to range from a low-single digit percentage decline to a low single digit percentage increase. The Company also expects full year EBIT to range from a high-single digit percentage decline to a mid-single digit percentage increase.

The Company also expects positive free cash flow for full year 2022.

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: 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.

Adjusted EBIT, Adjusted EBITDA and Adjusted EPS exclude the impact of discontinued operations, restructuring charges, gains, losses and costs related to acquisitions and dispositions, asset and 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.

Free cash flow adjusts cash from operations calculated in accordance with GAAP for discontinued operations, capital expenditures, restructuring payments, changes in customer deposits held at the Pitney Bowes Bank 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.

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, unallocated corporate expenses, restructuring charges, asset and goodwill impairment charges, and other items not allocated to a segment. The Company also reports segment EBITDA as an additional useful measure of segment profitability and operational performance.

Complete reconciliations of non-GAAP measures to comparable GAAP measures can be found in the attached financial schedules and at the Company's web site at 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) as well as the risk of a global recession, and the effects that they may have on our, and our client’s business. Other factors which could cause future financial performance to differ materially from expectations, and which may also be exacerbated by Covid-19 or the risk of a global recession 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, United States Postal Service (USPS) commercial programs, or our contractual relationships with the 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 segment; changes in labor and transportation availability and costs; and other factors as more fully outlined in the Company's 2021 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 and nine months ended September 30, 2022 and 2021, and consolidated balance sheets at September 30, 2022 and December 31, 2021 are attached.

Pitney Bowes Inc.
Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)
				Three months ended September 30,								Nine months ended September 30,
					2022				2021				2022				2021
Revenue:
			Business services	$	518,405			$	551,384			$	1,667,267			$	1,688,860
			Support services		107,642				113,413				325,619				347,266
			Financing		67,757				71,936				207,084				223,201
			Equipment sales		83,528				83,234				262,810				256,304
			Supplies		37,455				38,211				116,761				119,090
			Rentals		16,127				17,271				49,810				55,128
			Total revenue		830,914				875,449				2,629,351				2,689,849
Costs and expenses:
			Cost of business services		452,715				472,216				1,433,474				1,454,564
			Cost of support services		36,618				38,250				111,463				112,646
			Financing interest expense		13,692				11,710				37,827				35,369
			Cost of equipment sales		60,595				62,221				188,181				185,622
			Cost of supplies		10,529				10,705				33,074				32,383
			Cost of rentals		6,270				6,480				19,052				18,940
			Selling, general and administrative		209,576				225,024				678,999				699,316
			Research and development		9,812				10,621				32,400				32,996
			Restructuring charges		4,264				3,701				12,672				11,434
			Interest expense, net		23,685				24,312				66,816				73,816
			Other components of net pension and postretirement expense		1,427				46				3,229				708
			Other (income) expense, net		(8,398	)			3,193				(20,299	)			40,941
			Total costs and expenses		820,785				868,479				2,596,888				2,698,735
Income (loss) from continuing operations before taxes					10,129				6,970				32,463				(8,886	)
Provision (benefit) for income taxes					4,642				(1,525	)			1,819				(10,602	)
Income from continuing operations					5,487				8,495				30,644				1,716
Income (loss) from discontinued operations, net of tax					-				572				-				(4,334	)
Net income (loss)				$	5,487			$	9,067			$	30,644			$	(2,618	)
Basic earnings (loss) per share:
			Continuing operations	$	0.03			$	0.05			$	0.18			$	0.01
			Discontinued operations		-				-				-				(0.02	)
			Net income (loss)	$	0.03			$	0.05			$	0.18			$	(0.02	)
Diluted earnings (loss) per share:
			Continuing operations	$	0.03			$	0.05			$	0.17			$	0.01
			Discontinued operations		-				-				-				(0.02	)
			Net income (loss)	$	0.03			$	0.05			$	0.17			$	(0.02	)
Weighted-average shares used in diluted earnings per share					176,966				179,409				177,418				178,949
(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, 2022				December 31, 2021
Current assets:
	Cash and cash equivalents	$	596,647			$	732,480
	Short-term investments		10,014				14,440
	Accounts and other receivables, net		287,751				334,630
	Short-term finance receivables, net		551,476				560,680
	Inventories		89,946				78,588
	Current income taxes		27,442				13,894
	Other current assets and prepayments		146,636				157,341
Total current assets			1,709,912				1,892,053
Property, plant and equipment, net			427,958				429,162
Rental property and equipment, net			28,451				34,774
Long-term finance receivables, net			597,198				587,427
Goodwill			1,045,940				1,135,103
Intangible assets, net			79,399				132,442
Operating lease assets			259,248				208,428
Noncurrent income taxes			56,339				68,398
Other assets			388,704				471,084
Total assets		$	4,593,149			$	4,958,871
Liabilities and stockholders' equity
Current liabilities:
	Accounts payable and accrued liabilities	$	766,170			$	922,543
	Customer deposits at Pitney Bowes Bank		663,420				632,062
	Current operating lease liabilities		45,761				40,299
	Current portion of long-term debt		27,133				24,739
	Advance billings		94,100				99,280
	Current income taxes		2,051				9,017
Total current liabilities			1,598,635				1,727,940
Long-term debt			2,189,566				2,299,099
Deferred taxes on income			273,455				286,445
Tax uncertainties and other income tax liabilities			31,566				31,935
Noncurrent operating lease liabilities			239,788				192,092
Other noncurrent liabilities			268,415				308,728
Total liabilities			4,601,425				4,846,239
Stockholders' equity:
	Common stock		323,338				323,338
	Additional paid-in-capital		-				2,485
	Retained earnings		5,128,030				5,169,270
	Accumulated other comprehensive loss		(905,453	)			(780,312	)
	Treasury stock, at cost		(4,554,191	)			(4,602,149	)
Total stockholders' (deficit) equity			(8,276	)			112,632
Total liabilities and stockholders' equity		$	4,593,149			$	4,958,871

Pitney Bowes Inc.
Business Segment Revenue
(Unaudited; in thousands)
			Three months ended September 30,									Nine months ended September 30,
			2022			2021			% Change			2022			2021			% Change
	Global Ecommerce		$	354,326		$	398,011		(11	%)		$	1,166,623		$	1,229,526		(5	%)
	Presort Services			144,824			139,296		4	%			444,302			417,041		7	%
	Sending Technology Solutions			331,764			338,142		(2	%)			1,018,426			1,043,282		(2	%)
	Total revenue - GAAP			830,914			875,449		(5	%)			2,629,351			2,689,849		(2	%)
	Currency impact on revenue			13,354			-						28,123			-
	Revenue, at constant currency		$	844,268		$	875,449		(4	%)		$	2,657,474		$	2,689,849		(1	%)

Pitney Bowes Inc.
Business Segment EBIT & EBITDA
(Unaudited; in thousands)
			Three months ended September 30,
			2022											2021											% change
			EBIT (1)				D&A			EBITDA				EBIT (1)				D&A			EBITDA				EBIT			EBITDA
Global Ecommerce			$	(34,881	)		$	17,982		$	(16,899	)		$	(20,950	)		$	20,935		$	(15	)		(66	%)		>(100	%)
Presort Services				20,561				7,182			27,743				21,062				6,235			27,297			(2	%)		2	%
Sending Technology Solutions				95,234				7,248			102,482				98,950				7,694			106,644			(4	%)		(4	%)
Segment total			$	80,914			$	32,412			113,326			$	99,062			$	34,864			133,926			(18	%)		(15	%)
Reconciliation of Segment EBITDA to Net Income:
Segment depreciation and amortization											(32,412	)										(34,864	)
Unallocated corporate expenses											(42,908	)										(49,176	)
Restructuring charges											(4,264	)										(3,701	)
Gain on sale of business											13,764											-
Loss on debt refinancing											-											(3,193	)
Interest, net											(37,377	)										(36,022	)
(Provision) benefit for income taxes											(4,642	)										1,525
Income from continuing operations											5,487											8,495
Income from discontinued operations, net of tax											-											572
Net income										$	5,487										$	9,067
			Nine months ended September 30,
			2022											2021											% change
			EBIT (1)				D&A			EBITDA				EBIT (1)				D&A			EBITDA				EBIT			EBITDA
Global Ecommerce			$	(77,402	)		$	60,906		$	(16,496	)		$	(58,157	)		$	58,171		$	14			(33	%)		>(100	%)
Presort Services				53,044				20,601			73,645				56,247				20,532			76,779			(6	%)		(4	%)
Sending Technology Solutions				295,374				22,159			317,533				320,541				22,835			343,376			(8	%)		(8	%)
Segment Total			$	271,016			$	103,666			374,682			$	318,631			$	101,538			420,169			(15	%)		(11	%)
Reconciliation of Segment EBITDA to Net Income (Loss):
Segment depreciation and amortization											(103,666	)										(101,538	)
Unallocated corporate expenses											(141,537	)										(162,957	)
Restructuring charges											(12,672	)										(11,434	)
Gain on sale of assets											14,372											1,434
Gain on sale of business, including transaction costs											10,920											10,201
Loss on debt redemption/refinancing											(4,993	)										(55,576	)
Interest, net											(104,643	)										(109,185	)
(Provision) benefit for income taxes											(1,819	)										10,602
Income from continuing operations											30,644											1,716
Loss from discontinued operations, net of tax											-											(4,334	)
Net income (loss)										$	30,644										$	(2,618	)

(1)

Segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges, and other items that are not allocated to a particular business segment. In 2022, we refined the methodology for allocating transportation costs between Global Ecommerce and Presort Services, resulting in an increase in Global Ecommerce EBIT and a corresponding decrease in Presort Services EBIT of $3 million and $9 million for the three and nine months ended September 30, 2022, respectively.

Pitney Bowes Inc.
Reconciliation of Reported Consolidated Results to Adjusted Results
(Unaudited; in thousands, except per share amounts)
		Three months ended September 30,								Nine months ended September 30,
		2022				2021				2022				2021
Reconciliation of reported net income (loss) to adjusted EBIT and EBITDA
Net income (loss)		$	5,487			$	9,067			$	30,644			$	(2,618	)
(Income) loss from discontinued operations, net of tax			-				(572	)			-				4,334
Provision (benefit) for income taxes			4,642				(1,525	)			1,819				(10,602	)
Income (loss) from continuing operations before taxes			10,129				6,970				32,463				(8,886	)
Restructuring charges			4,264				3,701				12,672				11,434
Gain on sale of assets			-				-				(14,372	)			(1,434	)
Gain on sale of business, including transaction costs			(13,764	)			-				(10,920	)			(10,201	)
Loss on debt redemption/refinancing			-				3,193				4,993				55,576
Adjusted net income before tax			629				13,864				24,836				46,489
Interest, net			37,377				36,022				104,643				109,185
Adjusted EBIT			38,006				49,886				129,479				155,674
Depreciation and amortization			39,280				41,809				124,752				121,225
Adjusted EBITDA		$	77,286			$	91,695			$	254,231			$	276,899
Reconciliation of reported diluted earnings (loss) per share to adjusted diluted earnings per share
Diluted earnings (loss) per share		$	0.03			$	0.05			$	0.17			$	(0.02	)
Loss from discontinued operations, net of tax			-				-				-				0.02
Restructuring charges			0.02				0.02				0.05				0.05
Gain on sale of assets			-				-				(0.06	)			(0.01	)
Gain on sale of business, including transaction costs			(0.05	)			-				(0.09	)			(0.02	)
Loss on debt redemption/refinancing			-				0.01				0.02				0.23
Adjusted diluted earnings per share (1)		$	(0.00	)		$	0.08			$	0.10			$	0.26
(1) The sum of the earnings per share amounts may not equal the totals due to rounding.
Reconciliation of reported net cash from operating activities to free cash flow
Net cash from operating activities		$	(36,465	)		$	71,446			$	9,229			$	216,174
Capital expenditures			(33,359	)			(57,204	)			(97,533	)			(140,907	)
Restructuring payments			3,506				6,023				11,761				14,847
Change in customer deposits at PB Bank			47,271				9,879				31,359				25,512
Transaction costs paid			3,268				-				5,400				-
Free cash flow		$	(15,779	)		$	30,144			$	(39,784	)		$	115,626