STAMFORD, Conn. — (BUSINESS WIRE) — July 30, 2014 — Pitney Bowes Inc. (NYSE: PBI) today reported financial results for the second quarter 2014.
Highlights
- Revenue of $958 million, up 1 percent as reported and flat on a constant currency basis
- Adjusted EPS from continuing operations of $0.46
- GAAP EPS from continuing operations of $0.43; GAAP EPS of $0.46
- Free cash flow of $162 million; cash from operations of $175 million
- The Company increases 2014 guidance for revenue growth and adjusted EPS from continuing operations; narrows the range for GAAP EPS from continuing operations; and reaffirms free cash flow guidance for the year
“We are pleased with our second quarter financial results, which are consistent with our long-term strategic direction,” said Marc B. Lautenbach, President and CEO, Pitney Bowes. “Our Digital Commerce business performed very well, delivering 27 percent revenue growth, while profitability in our core mailing businesses continued to improve.
“Our performance through the first six months continues to substantiate the strategy we detailed 15 months ago, and further validates our long-term economic model. We remain ahead of schedule in our multi-year journey to transform Pitney Bowes and are confident in our ability to deliver against our objectives. As a result, we are increasing our 2014 guidance for both revenue and adjusted earnings per share.”
SECOND QUARTER 2014 RESULTS
Revenue in the second quarter totaled $958 million, which was growth of 1 percent on a reported basis and flat on a constant currency basis. On a reported basis, revenue for the quarter benefited from 27 percent growth in the Digital Commerce Solutions segment. Revenue in the Small and Medium Business (SMB) Solutions group declined 3 percent, primarily resulting from an acceleration in the implementation of the channel shift strategy. The Enterprise Business Solutions revenue declined 8 percent when compared to the prior year, which included revenue from large deals in the Production Mail segment.
Adjusted earnings per diluted share from continuing operations for the second quarter 2014 were $0.46 compared with $0.46 for the second quarter 2013, which included $0.05 per share of non-recurring tax benefits. Excluding the tax benefits in the prior year, adjusted earnings per share this year increased 11 percent versus the prior year.
Second quarter earnings per diluted share from continuing operations, on a Generally Accepted Accounting Principles (GAAP) basis were $0.43. GAAP earnings per diluted share from continuing operations included a restructuring charge of $0.03 per share associated with the previously announced cost reduction plans.
GAAP earnings per diluted share of $0.46 included income from discontinued operations of $0.03 per share.
| Earnings Per Share Reconciliation* | Q2 2014 | Q2 2013 | ||||
| Adjusted EPS from continuing operations | $0.46 | $0.46 | ||||
| Restructuring charges | ($0.03 | ) | ($0.06 | ) | ||
| GAAP EPS from continuing operations | $0.43 | $0.39 | ||||
| Discontinued operations – income (loss) | $0.03 | ($0.44 | ) | |||
| GAAP EPS | $0.46 | ($0.05 | ) | |||
| * The sum of the earnings per share may not equal the totals above due to rounding. |
FREE CASH FLOW RESULTS
Free cash flow for the quarter was $162 million, while on a GAAP basis the Company generated $175 million in cash from operations. In comparison to the prior year, free cash flow benefited from the timing of tax payments and growth in bank reserve deposits. During the quarter, the Company used $47 million of cash for dividends and $15 million for restructuring payments.
BUSINESS SEGMENT REPORTING
The Company’s business segment reporting reflects the clients served in each market and the way it manages these segments. The reporting segment groups are: Small & Medium Business (SMB) Solutions group; Enterprise Business Solutions group; and the Digital Commerce Solutions segment.
The Small and Medium Business (SMB) Solutions group offers mailing equipment, financing, services and supplies for small and medium businesses to efficiently create mail and evidence postage. This group includes the North America Mailing and International Mailing segments. North America Mailing includes the operations of U.S. and Canada Mailing. International Mailing includes all other SMB operations around the world.
The Enterprise Business Solutions group provides mailing equipment and services for large enterprise clients to process mail, including sortation services to qualify large mail volumes for postal worksharing discounts. This group includes the global Production Mail and Presort Services segments.
The Digital Commerce Solutions segment leverages digital and mobile channels that make the Company’s clients’ customer-facing functions more effective. This segment includes software, marketing services, a digital document exchange, shipping and ecommerce solutions.
SMB Solutions Group
| 2Q 2014 | Y-O-Y Change | Change ex Currency | ||||||
| Revenue | $524 million | (3 | %) | (4 | %) | |||
| EBIT | $183 million | 3 | % | |||||
Within the SMB Solutions Group:
|
North America Mailing |
||||||||
| 2Q 2014 | Y-O-Y Change | Change ex Currency | ||||||
| Revenue | $371 million | (5 | %) | (5 | %) | |||
| EBIT | $157 million | 0 | % | |||||
The North America Mailing business accelerated the implementation of the SMB go-to-market strategy, resulting in lower equipment sales revenue in the first two months of the quarter. Results in the month of June, however, were back on trend. Recurring revenue streams declined at a lesser rate than prior year, supporting the Company’s long-term stabilization objective, and benefited from continued growth in supplies revenue.
As a result of the accelerated go-to-market implementation and lower marketing spend than the previous year, EBIT margin improved during the quarter.
|
International Mailing |
||||||||
|
2Q 2014 |
Y-O-Y Change |
Change ex Currency | ||||||
| Revenue | $153 million | 2 | % | (2 | %) | |||
| EBIT | $ 26 million | 32 | % | |||||
The modest revenue decline, on a constant currency basis, in International Mailing resulted from lower equipment sales in Europe. However, as a result of the stabilizing installed equipment base in prior periods, the segment continues to experience an improvement in year-over-year trend for recurring revenue streams. EBIT margin improved versus the prior year due to cost reduction initiatives, including the go-to-market implementation.
Enterprise Business Solutions Group
| 2Q 2014 | Y-O-Y Change | Change ex Currency | ||||||
| Revenue | $223 million | (8 | %) | (8 | %) | |||
| EBIT | $ 33 million | (11 | %) | |||||
Within the Enterprise Business Solutions Group:
|
Worldwide Production Mail |
||||||||
| 2Q 2014 | Y-O-Y Change | Change ex Currency | ||||||
| Revenue | $112 million | (17 | %) | (18 | %) | |||
| EBIT | $ 11 million | (33 | %) | |||||
The Production Mail revenue comparison this quarter reflected the impact of several large inserting and production print equipment installations in the second quarter of the prior year. However, recurring revenue continued to benefit from an increase in supplies revenue related to growth in the production printer installed base. EBIT margin was impacted by the lower revenue and the related margin contribution.
|
Presort Services |
||||||||
| 2Q 2014 | Y-O-Y Change | Change ex Currency | ||||||
| Revenue | $111 million | 4 | % | 4 | % | |||
| EBIT | $ 22 million | 5 | % | |||||
Presort Services revenue benefited from ongoing improved qualification of mail for presort discounts. EBIT margin improved versus the prior year due to lower facility costs and improved operational productivity.
Digital Commerce Solutions
| 2Q 2014 | Y-O-Y Change | Change ex Currency | ||||||
| Revenue | $211 million | 27 | % | 26 | % | |||
| EBIT | $ 18 million | 17 | % | |||||
Digital Commerce Solutions revenue benefited primarily from continued strong growth in the Company’s ecommerce solutions for cross-border package delivery. The Company also experienced improved revenue growth in the other major elements of the Digital Commerce Solutions segment, including software, shipping solutions and marketing services. Software revenue benefited from license sales in the business applications vertical market. EBIT and EBIT margin reflect the benefit of revenue growth, partially offset by continued investments in ecommerce technology and infrastructure. EBIT margin was also impacted by investment in software channel specialization and increased research and development spend.
2014 GUIDANCE
This guidance discusses future results which are inherently subject to unforeseen risks and developments. As such, discussions about the business outlook should be read in the context of an uncertain future, as well as the risk factors identified in the safe harbor language at the end of this release and as more fully outlined in the Company's 2013 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission.
Based on results year-to-date and the outlook for the remainder of the year, the Company is increasing annual guidance for revenue growth and adjusted earnings per share from continuing operations and narrowing the range for GAAP earnings per share from continuing operations. The Company is reaffirming annual guidance for free cash flow.
The Company now expects:
- Revenue to be in the range of one to three percent growth when compared to the prior year versus the one percent decline to two percent growth range previously expected. Guidance excludes the impacts of currency and reflects the expected ongoing stabilization of the mail-related businesses, as well as continued growth in Digital Commerce Solutions;
- Adjusted earnings per share from continuing operations to be in the range of $1.80 to $1.90 versus the range of $1.75 to $1.90 previously expected. Guidance reflects the operational performance year-to-date; the increased revenue outlook; and the timing of investment in solutions and infrastructure, such as ERP;
- GAAP earnings per share from continuing operations to be in the range of $1.55 to $1.65 versus the range of $1.53 to $1.68 previously expected. Guidance reflects the incremental $0.03 per share charge for restructuring costs this quarter, which now total $0.06 per share year-to date and $0.19 per share of debt extinguishment costs in the first quarter.
The Company still expects:
- Free cash flow to be in the range of $475 million to $575 million.
This guidance excludes any further actions that are under consideration by the Company to streamline its operations and further reduce its cost structure.
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.pb.com.
About Pitney Bowes
Pitney Bowes provides technology solutions for small, mid-size and large firms that help them connect with customers to build loyalty and grow revenue. Many of the company’s solutions are delivered on open platforms to best organize, analyze and apply both public and proprietary data to two-way customer communications. Pitney Bowes includes direct mail, transactional mail and call center communications in its solution mix along with digital channel messaging for the Web, email and mobile applications.
Pitney Bowes: Every connection is a new opportunity™ www.pb.com
The Company's financial results are reported in accordance with generally accepted accounting principles (GAAP). The Company uses measures such as adjusted earnings per share, adjusted income from continuing operations and free cash flow to exclude the impact of special items like restructuring charges, tax adjustments, and goodwill and asset write-downs, because, while these are actual Company expenses, they can mask underlying trends associated with its business. Such items are often inconsistent in amount and frequency and as such, the adjustments allow an investor greater insight into the current underlying operating trends of the business.
The use of free cash flow provides investors insight into the amount of cash that management could have available for other discretionary uses. It adjusts GAAP cash from operations for capital expenditures, as well as special items like cash used for restructuring charges, unusual tax settlements or payments and contributions to its pension funds. Management uses segment EBIT to measure profitability and performance at the segment level. EBIT is determined by deducting 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. In addition, financial results are 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 measures are intended to help investors better understand the underlying operational performance of the business excluding the impacts of shifts in currency exchange rates over the intervening period.
Pitney Bowes has provided a quantitative reconciliation to GAAP in supplemental schedules. This information may also be found at the Company's web site www.pb.com/investorrelations.
This document contains “forward-looking statements” about its expected or potential future business and financial performance. For us 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: mail volumes; the uncertain economic environment; timely development, market acceptance and regulatory approvals, if needed, of new products; fluctuations in customer demand; changes in postal regulations; interrupted use of key information systems; management of outsourcing arrangements; the implementation of a new enterprise resource planning system; changes in business portfolio; foreign currency exchange rates; changes in our credit ratings; management of credit risk; changes in interest rates; the financial health of national posts; and other factors beyond its control as more fully outlined in the Company's 2013 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 and six months ended June 30, 2014 and 2013, and consolidated balance sheets at June 30, 2014 and December 31, 2013 are attached.
| Pitney Bowes Inc. | ||||||||||||||||
| Consolidated Statements of Income | ||||||||||||||||
|
(Unaudited) |
||||||||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Revenue: | ||||||||||||||||
| Equipment sales | $ | 191,518 | $ | 225,224 | $ | 380,574 | $ | 421,991 | ||||||||
| Supplies | 76,284 | 71,275 | 155,801 | 144,493 | ||||||||||||
| Software | 109,065 | 100,482 | 200,620 | 187,494 | ||||||||||||
| Rentals | 122,443 | 129,404 | 246,022 | 258,518 | ||||||||||||
| Financing | 107,644 | 112,820 | 217,694 | 226,707 | ||||||||||||
| Support services | 158,190 | 160,303 | 316,442 | 322,892 | ||||||||||||
| Business services | 193,306 | 151,154 | 378,794 | 297,930 | ||||||||||||
| Total revenue | 958,450 | 950,662 | 1,895,947 | 1,860,025 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of equipment sales | 88,818 | 112,079 | 171,352 | 206,622 | ||||||||||||
| Cost of supplies | 23,505 | 22,246 | 47,659 | 45,092 | ||||||||||||
| Cost of software | 33,484 | 25,604 | 63,648 | 50,395 | ||||||||||||
| Cost of rentals | 25,193 | 25,114 | 50,637 | 51,512 | ||||||||||||
| Financing interest expense | 20,413 | 18,951 | 40,066 | 37,970 | ||||||||||||
| Cost of support services | 96,722 | 99,337 | 195,703 | 201,866 | ||||||||||||
| Cost of business services | 135,024 | 108,168 | 263,960 | 210,523 | ||||||||||||
| Selling, general and administrative | 338,384 | 353,923 | 689,759 | 705,577 | ||||||||||||
| Research and development | 28,649 | 27,331 | 54,841 | 56,582 | ||||||||||||
| Restructuring charges | 8,299 | 19,031 | 18,140 | 19,031 | ||||||||||||
| Other interest expense | 22,714 | 31,347 | 47,631 | 62,086 | ||||||||||||
| Interest income | (1,232 | ) | (1,302 | ) | (2,085 | ) | (3,050 | ) | ||||||||
| Other expense, net | - | - | 61,657 | 25,121 | ||||||||||||
| Total costs and expenses | 819,973 | 841,829 | 1,702,968 | 1,669,327 | ||||||||||||
| Income from continuing operations before income taxes | 138,477 | 108,833 | 192,979 | 190,698 | ||||||||||||
| Provision for income taxes | 46,335 | 24,218 | 54,371 | 42,013 | ||||||||||||
| Income from continuing operations | 92,142 | 84,615 | 138,608 | 148,685 | ||||||||||||
| Income (loss) from discontinued operations, net of tax | 6,717 | (89,254 | ) | 9,518 | (81,224 | ) | ||||||||||
| Net income (loss) before attribution of noncontrolling interests | 98,859 | (4,639 | ) | 148,126 | 67,461 | |||||||||||
| Less: Preferred stock dividends of subsidiaries attributable | ||||||||||||||||
|
to noncontrolling interests |
4,594 | 4,594 | 9,188 | 9,188 | ||||||||||||
| Net income (loss) - Pitney Bowes Inc. | $ | 94,265 | $ | (9,233 | ) | $ | 138,938 | $ | 58,273 | |||||||
| Amounts attributable to common stockholders: | ||||||||||||||||
| Income from continuing operations | $ | 87,548 | $ | 80,021 | $ | 129,420 | $ | 139,497 | ||||||||
| Income (loss) from discontinued operations | 6,717 | (89,254 | ) | 9,518 | (81,224 | ) | ||||||||||
| Net income (loss) - Pitney Bowes Inc. | $ | 94,265 | $ | (9,233 | ) | $ | 138,938 | $ | 58,273 | |||||||
| Basic earnings per share attributable to common stockholders (1): | ||||||||||||||||
| Continuing operations | 0.43 | 0.40 | 0.64 | 0.69 | ||||||||||||
|
Discontinued operations |
0.03 | (0.44 | ) | 0.05 | (0.40 | ) | ||||||||||
| Net income (loss) - Pitney Bowes Inc. | $ | 0.47 | $ | (0.05 | ) | $ | 0.69 | $ | 0.29 | |||||||
| Diluted earnings per share attributable to common stockholders (1): | ||||||||||||||||
| Continuing operations | 0.43 | 0.39 | 0.63 | 0.69 | ||||||||||||
| Discontinued operations | 0.03 | (0.44 | ) | 0.05 | (0.40 | ) | ||||||||||
| Net income (loss) - Pitney Bowes Inc. | $ | 0.46 | $ | (0.05 | ) | $ | 0.68 | $ | 0.29 | |||||||
| (1) | The sum of the earnings per share amounts may not equal the totals above due to rounding. | |
| Pitney Bowes Inc. | ||||||||
| Consolidated Balance Sheets | ||||||||
|
(Unaudited in thousands, except per share data) |
||||||||
|
Assets |
June 30,
|
December 31,
|
||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,005,901 | $ | 907,806 | ||||
| Short-term investments | 23,976 | 31,128 | ||||||
| Accounts receivable, gross | 423,103 | 482,949 | ||||||
| Allowance for doubtful accounts receivable | (13,589 | ) | (13,149 | ) | ||||
| Accounts receivable, net | 409,514 | 469,800 | ||||||
| Finance receivables | 1,071,415 | 1,127,261 | ||||||
| Allowance for credit losses | (22,852 | ) | (24,340 | ) | ||||
| Finance receivables, net | 1,048,563 | 1,102,921 | ||||||
| Inventories | 101,252 | 103,580 | ||||||
| Current income taxes | 31,580 | 28,934 | ||||||
| Other current assets and prepayments | 125,540 | 147,067 | ||||||
| Assets held for sale | 46,976 | 46,976 | ||||||
| Total current assets | 2,793,302 | 2,838,212 | ||||||
| Property, plant and equipment, net | 242,742 | 245,171 | ||||||
| Rental property and equipment, net | 215,793 | 226,146 | ||||||
| Finance receivables | 885,818 | 974,972 | ||||||
| Allowance for credit losses | (10,819 | ) | (12,609 | ) | ||||
| Finance receivables, net | 874,999 | 962,363 | ||||||
| Investment in leveraged leases | 33,431 | 34,410 | ||||||
| Goodwill | 1,728,385 | 1,734,871 | ||||||
| Intangible assets, net | 102,760 | 120,387 | ||||||
| Non-current income taxes | 66,598 | 73,751 | ||||||
| Other assets | 538,073 | 537,397 | ||||||
| Total assets | $ | 6,596,083 | $ | 6,772,708 | ||||
|
Liabilities, noncontrolling interests and stockholders' equity |
||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 1,504,887 | $ | 1,644,582 | ||||
| Current income taxes | 191,687 | 157,340 | ||||||
| Notes payable and current portion of long-term obligations | 274,879 | - | ||||||
| Advance billings | 439,038 | 425,833 | ||||||
| Total current liabilities | 2,410,491 | 2,227,755 | ||||||
| Deferred taxes on income | 39,509 | 39,701 | ||||||
| Tax uncertainties and other income tax liabilities | 166,920 | 190,645 | ||||||
| Long-term debt | 2,964,843 | 3,346,295 | ||||||
| Other non-current liabilities | 436,194 | 466,766 | ||||||
| Total liabilities | 6,017,957 | 6,271,162 | ||||||
| Noncontrolling interests (Preferred stockholders' equity in subsidiaries) | 296,370 | 296,370 | ||||||
| Stockholders' equity: | ||||||||
| Cumulative preferred stock, $50 par value, 4% convertible | 1 | 4 | ||||||
| Cumulative preference stock, no par value, $2.12 convertible | 563 | 591 | ||||||
| Common stock, $1 par value | 323,338 | 323,338 | ||||||
| Additional paid-in-capital | 172,565 | 196,977 | ||||||
| Retained Earnings | 4,778,506 | 4,715,564 | ||||||
| Accumulated other comprehensive loss | (559,351 | ) | (574,556 | ) | ||||
| Treasury Stock, at cost | (4,433,866 | ) | (4,456,742 | ) | ||||
| Total Pitney Bowes Inc. stockholders' equity | 281,756 | 205,176 | ||||||
| Total liabilities, noncontrolling interests and stockholders' equity | $ | 6,596,083 | $ | 6,772,708 | ||||
| (1) | Certain prior year amounts have been revised. | |
| Pitney Bowes Inc. | |||||||||||
| Revenue and EBIT | |||||||||||
| Business Segments | |||||||||||
| June 30, 2014 | |||||||||||
|
(Unaudited) |
|||||||||||
| (Dollars in thousands) | Three Months Ended June 30, | ||||||||||
| % | |||||||||||
| 2014 | 2013 |
Change |
|||||||||
|
Revenue |
|||||||||||
| North America Mailing | $ | 371,194 | 392,197 | (5 | %) | ||||||
| International Mailing | 153,260 | 150,357 | 2 | % | |||||||
| Small & Medium Business Solutions | 524,454 | 542,554 | (3 | %) | |||||||
| Production Mail | 111,756 | 134,422 | (17 | %) | |||||||
| Presort Services | 111,281 | 106,961 | 4 | % | |||||||
| Enterprise Business Solutions | 223,037 | 241,383 | (8 | %) | |||||||
| Digital Commerce Solutions | 210,959 | 166,725 | 27 | % | |||||||
| Total revenue | $ | 958,450 | $ | 950,662 | 1 | % | |||||
|
EBIT (1) |
|||||||||||
| North America Mailing | $ | 156,781 | $ | 157,518 | - | ||||||
| International Mailing | 26,449 | 20,075 | 32 | % | |||||||
| Small & Medium Business Solutions | 183,230 | 177,593 | 3 | % | |||||||
| Production Mail | 10,558 | 15,787 | (33 | %) | |||||||
| Presort Services | 22,412 | 21,246 | 5 | % | |||||||
| Enterprise Business Solutions | 32,970 | 37,033 | (11 | %) | |||||||
| Digital Commerce Solutions | 17,929 | 15,363 | 17 | % | |||||||
| Total EBIT | $ | 234,129 | $ | 229,989 | 2 | % | |||||
| Unallocated amounts: | |||||||||||
| Interest, net (2) | (41,895 | ) | (48,996 | ) | |||||||
| Corporate and other expenses | (45,458 | ) | (53,129 | ) | |||||||
| Restructuring charges | (8,299 | ) | (19,031 | ) | |||||||
| Income from continuing operations before income taxes | $ | 138,477 | $ | 108,833 | |||||||
| (1) | Earnings before interest and taxes (EBIT) excludes general corporate expenses and restructuring charges. | |
| (2) | Interest, net includes financing interest expense, other interest expense and interest income. | |
| Pitney Bowes Inc. | |||||||||||
| Revenue and EBIT | |||||||||||
| Business Segments | |||||||||||
| June 30, 2014 | |||||||||||
|
(Unaudited) |
|||||||||||
| (Dollars in thousands) | Six Months Ended June 30, | ||||||||||
| % | |||||||||||
| 2014 | 2013 |
Change |
|||||||||
|
Revenue |
|||||||||||
| North America Mailing | $ | 752,221 | 781,033 | (4 | %) | ||||||
| International Mailing | 306,528 | 303,333 | 1 | % | |||||||
| Small & Medium Business Solutions | 1,058,749 | 1,084,366 | (2 | %) | |||||||
| Production Mail | 216,972 | 243,875 | (11 | %) | |||||||
| Presort Services | 227,772 | 217,861 | 5 | % | |||||||
| Enterprise Business Solutions | 444,744 | 461,736 | (4 | %) | |||||||
| Digital Commerce Solutions | 392,454 | 313,923 | 25 | % | |||||||
| Total Revenue | $ | 1,895,947 | $ | 1,860,025 | 2 | % | |||||
|
EBIT (1) |
|||||||||||
| North America Mailing | $ | 317,119 | $ | 305,976 | 4 | % | |||||
| International Mailing | 51,268 | 37,465 | 37 | % | |||||||
| Small & Medium Business Solutions | 368,387 | 343,441 | 7 | % | |||||||
| Production Mail | 18,295 | 23,619 | (23 | %) | |||||||
| Presort Services | 46,308 | 44,734 | 4 | % | |||||||
| Enterprise Business Solutions | 64,603 | 68,353 | (5 | %) | |||||||
| Digital Commerce Solutions | 27,460 | 15,084 | 82 | % | |||||||
| Total EBIT | $ | 460,450 | $ | 426,878 | 8 | % | |||||
| Unallocated amounts: | |||||||||||
| Interest, net (2) | (85,612 | ) | (97,006 | ) | |||||||
| Corporate and other expenses | (102,062 | ) | (95,022 | ) | |||||||
| Restructuring charges | (18,140 | ) | (19,031 | ) | |||||||
| Other expense, net | (61,657 | ) | (25,121 | ) | |||||||
| Income from continuing operations before income taxes | $ | 192,979 | $ | 190,698 | |||||||
| (1) | Earnings before interest and taxes (EBIT) excludes general corporate expenses and restructuring charges. | |
| (2) | Interest, net includes financing interest expense, other interest expense and interest income. | |
|
Pitney Bowes Inc. |
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|
Reconciliation of Reported Consolidated Results to Adjusted Results |
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| (Unaudited) | ||||||||||||||||
|
(Dollars in thousands, except per share data) |
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| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| GAAP income from continuing operations | ||||||||||||||||
| after income taxes, as reported | $ | 87,548 | $ | 80,021 | $ | 129,420 | $ | 139,497 | ||||||||
| Restructuring charges | 5,577 | 13,126 | 12,258 | 13,126 | ||||||||||||
| Extinguishment of debt | - | - | 37,833 | 15,325 | ||||||||||||
| Income from continuing operations | ||||||||||||||||
| after income taxes, as adjusted | $ | 93,125 | $ | 93,147 | $ | 179,511 | $ | 167,948 | ||||||||
| GAAP diluted earnings per share from | ||||||||||||||||
| continuing operations, as reported | $ | 0.43 | $ | 0.39 | $ | 0.63 | $ | 0.69 | ||||||||
| Restructuring charges | 0.03 | 0.06 | 0.06 | 0.06 | ||||||||||||
| Extinguishment of debt | - | - | 0.19 | 0.08 | ||||||||||||
| Diluted earnings per share from continuing | ||||||||||||||||
| operations, as adjusted | $ | 0.46 | $ | 0.46 | $ | 0.88 | $ | 0.83 | ||||||||
| GAAP net cash provided by operating activities, | ||||||||||||||||
| as reported | $ | 174,831 | $ | 146,875 | $ | 280,447 | $ | 279,035 | ||||||||
| Capital expenditures | (42,207 | ) | (34,602 | ) | (72,350 | ) | (73,441 | ) | ||||||||
| Restructuring payments | 14,593 | 10,980 | 33,530 | 27,255 | ||||||||||||
| Reserve account deposits | 11,803 | 1,138 | (3,356 | ) | (26,189 | ) | ||||||||||
| Extinguishment of debt | 3,300 | - | 61,657 | 25,121 | ||||||||||||
| Free cash flow, as adjusted | $ | 162,320 | $ | 124,391 | $ | 299,928 | $ | 231,781 | ||||||||
| Note: The sum of the earnings per share amounts may not equal the totals above due to rounding. |
| Pitney Bowes Inc. | |||||||||||
| Reconciliation of Reported Consolidated Results to Adjusted Results | |||||||||||
| (Unaudited) | |||||||||||
| (Dollars in thousands, except per share data) | |||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||
| GAAP income from continuing operations | |||||||||||
| after income taxes, as reported | $ | 87,548 | $ | 80,021 | $ | 129,420 | $ | 139,497 | |||
| Restructuring charges | 5,577 | 13,126 | 12,258 | 13,126 | |||||||
| Extinguishment of debt | - | - | 37,833 | 15,325 | |||||||
| Income from continuing operations | |||||||||||
| after income taxes, as adjusted | 93,125 | 93,147 | 179,511 | 167,948 | |||||||
| Provision for income taxes, as adjusted | 49,057 | 30,123 | 84,077 | 57,715 | |||||||
| Preferred stock dividends of subsidiaries | |||||||||||
| attributable to noncontrolling interests | 4,594 | 4,594 | 9,188 | 9,188 | |||||||
| Income from continuing operations before income taxes, as adjusted | 146,776 | 127,864 | 272,776 | 234,851 | |||||||
| Interest, net | 41,895 | 48,996 | 85,612 | 97,006 | |||||||
| Adjusted EBIT from continuing operations | 188,671 | 176,860 | 358,388 | 331,857 | |||||||
| Depreciation and amortization | 49,122 | 52,667 | 92,863 | 103,199 | |||||||
| Adjusted EBITDA from continuing operations | $ | 237,793 | $ | 229,527 | $ | 451,251 | $ | 435,056 | |||
Contact:
Pitney Bowes Inc.
Editorial:
Bill Hughes, 203-351-6785
Chief
Communications Officer
or
Financial:
Charles F. McBride,
203-351-6349
VP, Investor Relations
or
Website:
www.pitneybowes.com