Pitney Bowes Announces Second Quarter 2018 Financial Results

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 has also included segment EBITDA as a useful measure for profitability and operational performance, and an additional way to look at the economics of the segments, especially in light of some of the Company’s more recent, larger acquisitions. Segment EBITDA further excludes depreciation and amortization expense for the segment. A reconciliation of segment EBIT and EBITDA to total 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 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 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, but are not limited to: declining physical mail volumes; competitive factors, including pricing pressures, technological developments, the introduction of new products and services by competitors, and fuel prices; our success in developing new products and services, including digital-based products and services, obtaining regulatory approvals, if needed, of new products, and the market’s acceptance of these new products and services; our ability to fully utilize the enterprise business platform in North America, and successfully deploy it in major international markets without significant disruptions to existing operations; a breach of security, including a cyberattack or other comparable event; the continued availability and security of key information technology systems and the cost to comply with information security requirements and privacy laws; changes in postal or banking regulations; changes in, or loss of, our contractual relationships with the United States Postal Service; the risk of losing large clients in the Global Ecommerce segment; macroeconomic factors, including global and regional business conditions that adversely impact customer demand, foreign currency exchange rates, interest rates and labor conditions; capital market disruptions or credit rating downgrades that adversely impact our ability to access capital markets at reasonable costs; management of outsourcing arrangements; integrating newly acquired businesses, including operations and product and service offerings; management of customer credit risk and other factors beyond its control as more fully outlined in the Company's 2017 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 and EBIT by business segment; and reconciliation of GAAP to non-GAAP measures for the three months and six months ended June 30, 2018 and 2017, and consolidated balance sheets as of June 30, 2018 and December 31, 2017 are attached.

             
Pitney Bowes Inc.
Consolidated Statements of Income
(Unaudited; in thousands, except share and per share amounts)
 
 
Three months ended June 30, Six months ended June 30,
2018 2017 2018 2017
Revenue:
Equipment sales $ 105,750 $ 121,384 $ 216,121 $ 245,887
Supplies 55,457 58,639 115,450 119,694
Software 91,702 81,319 167,996 154,165
Rentals 91,809 95,447 186,435 194,754
Financing 76,671 83,653 156,774 169,398
Support services 72,171 72,068 145,194 147,273
Business services   367,876     217,903   754,414     442,422
Total revenue   861,436     730,413   1,742,384     1,473,593
 
Costs and expenses:
Cost of equipment sales 47,106 51,506 93,160 96,122
Cost of supplies 15,738 16,216 32,685 33,068
Cost of software 26,459 23,361 50,514 46,515
Cost of rentals 21,078 21,143 45,132 41,422
Financing interest expense 12,346 12,843 24,571 25,817
Cost of support services 39,609 41,772 82,736 83,421
Cost of business services 293,480 153,063 590,879 303,906
Selling, general and administrative (1) 282,456 283,073 577,894 573,645
Research and development 31,073 30,328 61,395 59,282
Restructuring charges and asset impairments, net 11,503 25,990 12,407 27,639
Other components of net pension and postretirement cost (1) (2,499 ) 1,267 (4,218 ) 2,723
Interest expense, net   29,623     27,600   60,476     53,276
Total costs and expenses   807,972     688,162   1,627,631     1,346,836
 
Income from continuing operations before taxes 53,464 42,251 114,753 126,757
Provision for income taxes   6,458     790   22,721     27,872
Income from continuing operations 47,006 41,461 92,032 98,885
Income from discontinued operations, net of tax   1,208     7,440   9,695     15,149
Net income $ 48,214   $ 48,901 $ 101,727   $ 114,034
 
Basic earnings per share attributable to common stockholders (2) :
Continuing operations $ 0.25 $ 0.22 $ 0.49 $ 0.53
Discontinued operations   0.01     0.04   0.05     0.08
Net income $ 0.26   $ 0.26 $ 0.54   $ 0.61
 
Diluted earnings per share attributable to common stockholders (2) :
Continuing operations $ 0.25 $ 0.22 $ 0.49 $ 0.53
Discontinued operations   0.01     0.04   0.05     0.08
Net income $ 0.26   $ 0.26 $ 0.54   $ 0.61
 
Weighted-average shares used in diluted earnings per share   188,113,750     187,377,059   188,056,884     186,944,571
(1)  

Effective January 1, 2018, components of net periodic pension and postretirement costs, other than service costs, are required to be reported separately. Accordingly, for the three and six months ended June 30, 2017, $1.3 million and $2.7 million of costs have been reclassified from selling, general and administrative expense to other components of net pension and postretirement cost.

 
(2) The sum of the earnings per share amounts may not equal the totals due to rounding.
 

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