Pitney Bowes Announces First Quarter 2023 Financial Results

Pitney Bowes (NYSE: PBI), a global shipping and mailing company that provides technology, logistics, and financial services, today announced its financial results for the first quarter 2023.

“The trends in the first quarter were largely a continuation of the dynamics we experienced last quarter,” said Marc B. Lautenbach, President and Chief Executive Officer. “Our SendTech and Presort businesses performed as expected. We remain pleased with domestic parcel improvement, network performance and volume growth, although with softer than expected revenue per parcel.”

“In addition, strong service levels in domestic parcel are driving a robust new business pipeline, while cross-border continues to face headwinds. That said, to be clear, the long-term value creation remains centered in domestic parcel, and we continue to be confident in that business.”

First Quarter Financial Highlights

• Revenue in the quarter was $835 million, a decrease of 10 percent on a reported basis and 4 percent on a comparable basis versus prior year (1)
• GAAP EPS was a loss of $0.04 and Adjusted EPS was a loss of $0.01 in the quarter versus GAAP EPS of $0.12 and Adjusted EPS of $0.08 in first quarter of 2022
• Net loss of $8 million in the quarter compares to net income of $21 million in first quarter 2022; Adjusted EBIT was $33 million compared to $53 million in first quarter 2022
• GAAP cash from operating activities was a net use of $40 million; Free Cash Flow was a net use of $61 million (2)
• Cash and short-term investments were $527 million at quarter-end
• Announced a restructuring plan which, combined with other productivity efforts, will target $75 million of annual expense savings by yearend 2024

First Quarter Business Highlights

• Global Ecommerce processed 50 million domestic parcels in the quarter, up 22 percent from 41 million in first quarter 2022
• Global Ecommerce on-time delivery performance remains excellent, and is now in the mid-90 percent range
• Presort grew Adjusted Segment EBIT margins by nearly 500 basis points in the quarter versus prior year
• SendTech shipping-related revenues grew 8 percent in the quarter; SaaS subscription revenues grew 24 percent

Earnings per share results are summarized in the table below:

Business Segment Reporting

Global Ecommerce

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

Revenue decline was driven by cross-border, which continues to face macroeconomic challenges as well as a reduction in parcel volumes primarily from two clients. Domestic parcel revenue grew from higher volumes. Revenue growth was, however, lower than expected due to softer revenue per piece.

Adjusted Segment EBIT declined, primarily due to lower cross-border revenue.

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.

Revenue declined modestly due to lower first class and marketing mail volumes. The decline was partially offset by new client additions and higher revenue per piece.

Adjusted Segment EBIT improved driven by higher revenue per piece, improved labor productivity from investments in automation, and lower unit transportation costs.

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.

Lower equipment sales and financing revenue drove the decline in total revenue. Shipping-related revenue growth partially offset this decline.

Adjusted Segment EBIT decreased as a result of lower financing and support services revenues, both of which are tied to the secular decline in mail.

Full Year 2023 Guidance

We continue to expect flat to mid-single digit percentage revenue growth on a comparable basis.

We also continue to expect adjusted EBIT performance to outpace the percent change in revenue.

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. ET. 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

Our financial results are reported in accordance with generally accepted accounting principles (GAAP). We also disclose certain non-GAAP measures, such as adjusted earnings before interest and taxes (Adjusted EBIT), adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), adjusted earnings per share (Adjusted EPS), revenue growth on a comparable basis and free cash flow.

Adjusted EBIT, Adjusted EBITDA and Adjusted EPS exclude the impact restructuring charges, gains, losses and costs related to the sale of assets, acquisitions and dispositions, losses on debt redemptions and refinancings and other unusual items. Management believes that these non-GAAP measures provide investors greater insight into the underlying operating trends of the business.

We disclose revenue growth on a comparable basis, which excludes three items. First, the comparison excludes the impacts of foreign currency. Second, we are excluding the impact of the divestiture of the Borderfree business effective July 1, 2022. Third, we are excluding the impact of a change in the presentation of revenue beginning in the fourth quarter of 2022, from a gross basis to net basis due to an adjustment in terms of one of our contracts with the United States Postal Service. The change in revenue presentation impacts both our Global Ecommerce and SendTech Solutions segments. The change in revenue presentation does not impact gross profit. Management believes that excluding these items provides investors with a better understanding of the underlying revenue performance.

Free cash flow adjusts cash flow from operations calculated in accordance with GAAP for discontinued operations, capital expenditures, restructuring payments and other special items. Management believes free cash flow provides investors better insight into the amount of cash available for other discretionary uses.

Adjusted 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. Adjusted Segment EBIT excludes interest, taxes, unallocated corporate expenses, restructuring charges, and other items not allocated to a business segment. The Company also reports Adjusted 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. While conditions related to the COVID-19 pandemic have improved, the pandemic continues to be dynamic, and near-term challenges across the economy remain and the effects that they may have on our, and our clients' businesses remain uncertain. Other factors which could cause future financial performance to differ materially from expectations 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; our ability to continue to grow and manage unexpected fluctuations in volumes, gain additional economies of scale and improve profitability within our Global Ecommerce segment; the loss of some of our larger clients in our Global Ecommerce and Presort Services segments; the loss of, or significant changes to, United States Postal Service (USPS) commercial programs, or our contractual relationships with the USPS or their performance under those contracts; the impacts of inflation and rising prices, higher interest rates and a slow-down in economic activity, including a global recession, to the company, our clients and retail consumers; and other factors as more fully outlined in the Company's 2022 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission during 2023. 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, adjusted segment EBIT and adjusted segment EBITDA by business segment; and reconciliations of GAAP to non-GAAP measures for the three months ended March 31, 2023 and 2022, and consolidated balance sheets at March 31, 2023 and December 31, 2022 are attached.

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