Pitney Bowes Announces First Quarter 2020 Financial Results

Global Ecommerce

Revenue growth driven by growth in Delivery and Fulfilment Services. EBIT and EBITDA margins were impacted by the mix of business and incremental costs associated with new facilities that opened during the fourth quarter 2019.

Covid-19 adversely impacted revenue and drove lower productivity across all sites, which was in part due to the difficulty in predicting accurate levels of consumer demand which impacted staffing levels. The business implemented CDC guidelines around social distancing at each sorting facility and incurred higher costs related to sanitizing facilities, staggered break and shift scheduling as well as health and temperature screenings.

Presort Services

Revenue growth was driven by investments in acquisitions for expansion along with higher revenue per piece. Volumes grew in First Class Mail and Marketing Mail Flats, which was partly offset by a decline in Marketing Mail. EBIT and EBITDA growth versus prior year were negatively impacted by $4 million from unrealized losses on certain investment securities driven by changes in the financial markets. Labor costs per piece improved from prior year as a result of productivity initiatives.

Covid-19 had an impact primarily on Marketing Mail volumes in addition to productivity across all sites during the first quarter. The business implemented CDC guidelines around social distancing at each sorting facility and incurred higher costs related to sanitizing facilities, staggered break and shift scheduling as well as health and temperature screenings.

SendTech Solutions

 

First Quarter

($ millions)

2020

 

2019

 

Y/Y

Reported

 

Y/Y

Ex Currency

Revenue

$363

 

$394

 

(8%)

 

(7%)

EBITDA

$116

 

$131

 

(12%)

 

 

EBIT

$107

 

$122

 

(13%)

 

 

 

Revenue declined driven by lower equipment, financing, support services, supplies, and rentals, partly offset by higher business services revenue.

Covid-19 adversely impacted revenue, particularly equipment sales and supplies. In addition to the revenue loss, EBIT and EBITDA were negatively impacted by $10 million as a result of the increase in credit loss provisions to reflect the current macro-environment conditions resulting from Covid-19 in connection with the application of the CECL accounting standard.

2020 Guidance

Based on the level of uncertainty around the depth and duration of Covid-19, in addition to the impact on clients, consumer demand and suppliers, and how it may ultimately impact each of our businesses, the Company is suspending guidance for the current financial year.

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 technology company providing commerce solutions that power billions of transactions. 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 Pitney Bowes, the Craftsmen of Commerce, 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. While these are actual Company income or expenses, they can mask underlying trends associated with its business. Such items are often inconsistent in amount and frequency and as such, the 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. The Company also reported revenue growth excluding the impact of currency and market exits, which excludes the impact of changes in foreign currency exchange rates since the prior period and the revenues associated with 2019 market exits in several smaller markets. We believe that excluding the impacts of currency exchange rates and the revenues associated with the recent market exits in several smaller markets provides investors a better understanding of the underlying revenue performance. A reconciliation of reported revenue to constant currency revenue and “constant currency revenue excluding the impact of currency and market exits” can be found in the attached financial schedules.

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