STAMFORD, Conn. — (BUSINESS WIRE) — October 29, 2015 — Pitney Bowes Inc. (NYSE: PBI), a global technology company that provides products and solutions that power commerce, today reported financial results for the third quarter 2015.
Quarterly Financial Results:
- Revenue of $870 million, a decline of 4 percent on a constant currency basis and 8 percent as reported.
- Adjusted EPS of $0.43; GAAP EPS of $0.44. EPS includes a $0.02 per share negative impact of foreign exchange during the quarter.
- SG&A of $309 million, a decline of $33 million versus prior year.
- Gross Margin of 58.8 percent, improvement of 150 basis points versus prior year.
- Free cash flow of $131 million; GAAP cash from operations of $150 million.
- Repurchased $100 million of stock or 4.9 million shares.
- Company reaffirms adjusted EPS, GAAP EPS and free cash flow guidance; updates revenue guidance.
Strategic Updates:
- As announced in September, the Board of Directors authorized an incremental $100 million share repurchase.
- The Company launched its initial implementation of the new ERP platform in Canada in early October and remains on schedule to achieve the targeted savings and efficiencies associated with this program.
- The Company introduced several new products and solutions, including:
- SMB group launched the Relay™ Multi-Channel Communications Suite globally;
- Production Mail expanded its offerings in print, insertion and sortation equipment through its new AcceleJet™, Epic™ and TrueSort™ products;
- Software expanded its offerings with the EngageOne® Video solution, which helps enterprises up-sell and cross-sell through personalized videos.
- The Company made significant progress integrating its Borderfree acquisition while also achieving initial cost synergies.
"We made solid progress on our strategic plan in the third quarter," said Marc B. Lautenbach, President and CEO, Pitney Bowes. “Our North America SMB business continued to stabilize with equipment sales growing for the quarter. We improved our operational excellence with increased margins and very solid cash flow performance in the quarter. Our ERP project, which promises to unlock substantial value in our Company, got off to a very good start in early October with a successful launch in Canada. Finally, although our Ecommerce business continued to face currency headwinds, the integration of Borderfree remains on track. Overall, Digital Commerce grew 10 percent on a constant currency basis and I remain very optimistic about the long-term prospects of this business."
THIRD QUARTER 2015 - FINANCIAL RESULTS
Revenue was $870 million, a decline of 4 percent on a constant currency basis and 8 percent on a reported basis when compared to prior year.
Digital Commerce Solutions revenue grew 10 percent on a constant currency basis and 6 percent on a reported basis. Enterprise Business Solutions revenue declined 1 percent on a constant currency basis and 3 percent on a reported basis. SMB Solutions revenue declined 3 percent on a constant currency basis and 8 percent on a reported basis.
Adjusted earnings per diluted share were $0.43. Prior year adjusted earnings per diluted share were $0.51 and included $0.08 per share of tax benefits. Excluding the tax benefits in the prior year, adjusted earnings per diluted share this quarter would have been flat to the prior year.
Generally Accepted Accounting Principles (GAAP) earnings per diluted share were $0.44 and included a $0.01 per share net tax benefit related to the Company’s previous divestiture of an investment and other acquisition and disposition related transactions.
Earnings per share this quarter were reduced by $0.02 per share due to the impacts of foreign exchange. As expected, earnings per share this quarter were also impacted by the loss of three months of Imagitas earnings, which were estimated to be approximately $0.03 per share, and $0.01 per share of expense for three months of amortization of intangibles related to Borderfree.
The Company’s earnings per share results for the quarter are summarized in the table below:
Third Quarter * | |||||||||
2015 |
2014 |
||||||||
Adjusted EPS from continuing operations | $ | 0.43 | $ | 0.51 | |||||
Net tax benefit from transactions | $ | 0.01 | - | ||||||
Investment divestiture | - | $ | 0.05 | ||||||
Restructuring charges | - | ($0.01 | ) | ||||||
GAAP EPS from continuing operations | $ | 0.44 | $ | 0.55 | |||||
Discontinued operations - income | - | $ | 0.10 | ||||||
GAAP EPS | $ | 0.44 | $ | 0.65 | |||||
* The sum of the earnings per share may not equal the totals above due to rounding |
Free cash flow during the quarter was $131 million and cash provided by operating activities was $150 million on a GAAP basis. In comparison to the prior year, third quarter free cash flow was higher primarily due to lower working capital requirements and lower capital expenditures due to less of an investment in the Company’s new ERP platform. During the quarter, the Company used cash to pay $38 million in dividends to its common shareholders, repurchase $100 million worth of its shares and make $15 million in restructuring payments.
BUSINESS SEGMENT REPORTING
The Company revised its business segment reporting in the second quarter 2015 for its Digital Commerce Solutions segment. The Company’s business segment reporting reflects the clients served in each market and the way it manages these segments for growth and profitability. The primary reporting segment groups are the SMB Solutions group; the Enterprise Business Solutions group; and the Digital Commerce Solutions group.
The SMB Solutions group offers mailing equipment, financing, services and supplies for small and medium businesses to efficiently create mail and evidence postage. This group includes the North America Mailing and International Mailing segments. North America Mailing includes the operations of U.S. and Canada Mailing. International Mailing includes all other SMB operations around the world.
The Enterprise Business Solutions group provides mailing and printing equipment and services for large enterprise clients to process mail, including sortation services to qualify large mail volumes for postal worksharing discounts. This group includes the global Production Mail and Presort Services segments.
The Digital Commerce Solutions group provides customer engagement, customer information and location intelligence software; and solutions that facilitate global cross-border ecommerce transactions and shipping solutions for businesses of all sizes. This group includes the Software Solutions and Global Ecommerce segments.
The Other segment is comprised of the Imagitas marketing services business, which was sold on May 29, 2015.
SMB Solutions Group |
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($ millions) | Third Quarter | ||||||||||||||||
Revenue |
2015 |
2014 |
Y/Y Reported |
Y/Y Ex Currency |
Y/Y Ex Currency and Divested Revenues* |
||||||||||||
North America Mailing | $353 | $363 | (3%) | (2%) | (2%) | ||||||||||||
International Mailing | 105 | 132 | (21%) | (9%) | (7%) | ||||||||||||
SMB Solutions Total | $458 | $496 | (8%) | (3%) | (3%) | ||||||||||||
EBIT | |||||||||||||||||
North America Mailing | $159 | $160 | 0% | ||||||||||||||
International Mailing | 11 | 16 | (33%) | ||||||||||||||
SMB Solutions Total | $170 | $176 | (3%) | ||||||||||||||
* Excludes the impacts of currency and the divested revenues in Europe related to the transition to a dealer sales network in six smaller European markets completed in the third quarter of 2014.
North America Mailing
North America Mailing revenue experienced the lowest rate of decline in 6 quarters, benefiting from 2 percent growth in equipment sales as productivity continues to improve. Recurring revenue stream trends also continued to be in-line with prior quarters. EBIT margin continued to improve versus the prior year due to the mix of business, organizational streamlining and on-going cost reduction initiatives.
International Mailing
During the quarter, currency adversely affected revenue comparisons by 12 percentage points. For comparative purposes, revenue declined 7 percent when adjusted for the impacts of both currency and the reduction in revenue resulting from the exit of direct operations in some European countries completed in the third quarter of 2014.
The rate of decline in revenue is stabilizing in most of the major markets where the go-to-market resource shift has been completed. The Company has been focused on the transition and training of the new sales organization in France, which is expected to result in improved productivity. EBIT margin declined versus the prior year due to lower mail finishing equipment sales, the impact of currency on costs and the temporary incremental costs related to the transition of the sales organization in France.
Enterprise Business Solutions Group |
||||||||||||||||
($ millions) | Third Quarter | |||||||||||||||
Revenue |
2015 |
2014 |
Y/Y Reported |
Y/Y Ex Currency |
Y/Y Ex Currency and Divested Revenues* |
|||||||||||
Production Mail | $102 | $113 | (10%) | (5%) | (4%) | |||||||||||
Presort Services | 116 | 111 | 4% | 4% | 4% | |||||||||||
Enterprise Business Total | $218 | $225 | (3%) | (1%) | 0% | |||||||||||
EBIT | ||||||||||||||||
Production Mail | $12 | $10 | 30% | |||||||||||||
Presort Services | 26 | 22 | 18% | |||||||||||||
Enterprise Business Total | $38 | $31 | 22% |
* Excluding the impacts of currency and the divested revenues in Europe related to the transition to a dealer sales network in six smaller European markets completed in the third quarter of 2014.
Production Mail
While inserting equipment sales grew versus prior year, there were no production print installations during the quarter, which adversely impacted revenue. Revenue also declined partially due to lower support services. EBIT margin improved versus the prior year due to the mix of higher-margin inserting equipment sales as well as on-going cost reduction initiatives.
Presort Services
Revenue benefited from higher volumes of First Class and Standard mail processed versus the prior year. EBIT margin improved versus the prior year due to the revenue growth and on-going operational productivity.
Digital Commerce Solutions Group |
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($ millions) | Third Quarter | ||||||||||||||
Revenue | 2015 | 2014 | Y/Y
Reported |
Y/Y
Ex Currency |
|||||||||||
Software Solutions | $98 | $112 | (13%) | (7%) | |||||||||||
Global Ecommerce | 97 | 72 | 34% | 36% | |||||||||||
Digital Commerce Total | $194 | $184 | 6% | 10% | |||||||||||
EBIT | |||||||||||||||
Software Solutions | $15 | $19 | (23%) | ||||||||||||
Global Ecommerce | (1) | (1) | (83%) | ||||||||||||
Digital Commerce Total | $13 | $18 | (27%) |
Software Solutions
Revenue comparisons were adversely impacted by lower licensing revenue in the Americas when compared to the prior year, which included a large licensing deal. Excluding the impact of that deal, Software’s results were in-line with expectations as the business continues to acquire new enterprise clients through targeted industry and application-specific solutions. EBIT margin declined as a result of a lower amount of licensing revenue, which has a higher-margin.
Global Ecommerce
Results included a full quarter of revenue from Borderfree and the continued expansion of the eBay UK outbound cross-border service. Outbound package shipments from the U.S. continued to be pressured by the strong U.S. dollar. EBIT margin was impacted primarily by amortization of intangibles and investments related to the Borderfree acquisition, offsetting benefits from initial integration synergies.
Other |
|||||||||||||||
($ millions) | Third Quarter | ||||||||||||||
2015 | 2014 | Y/Y
Reported |
Y/Y
Ex Currency |
||||||||||||
Revenue | $0 | $37 | NM | NM | |||||||||||
EBIT | $0 | $8 | NM |
The Other segment is comprised of the Imagitas marketing services business, which was sold in May 2015.
2015 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 2014 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission.
The Company expects improving trends in the business to continue into the fourth quarter as a result of actions taken to achieve its long-term strategic initiatives. The Company is reaffirming its annual adjusted EPS, GAAP EPS and free cash flow guidance. The Company is updating its annual revenue guidance based on year-to-date results and the outlook for the remainder of the year.
The Company now expects:
- Annual revenue to be in the range of flat to a decline of 2 percent when compared to 2014 on a constant currency basis.
The Company still expects:
- Adjusted EPS to be in the range of $1.75 to $1.90;
- GAAP EPS to be in the range of $2.06 to $2.21;
- Free cash flow to be in the range of $450 million to $525 million.
As a reminder, GAAP EPS guidance for the year includes the following:
- $0.44 per share of Other income related to the net gain from the sale of Imagitas;
- $0.05 per share of Other expense for the resolution of an outstanding legal matter and transaction costs and fees related to the Borderfree and Imagitas transactions;
- $0.04 per share of Restructuring and asset impairment charges;
- $0.04 per share of compensation expense related to the vesting of options associated with the Borderfree acquisition.
This guidance excludes any unusual items that may occur or additional portfolio or restructuring actions, not specifically identified, as the Company implements plans to further streamline its operations and reduce costs.
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.pb.com.
About Pitney Bowes
Pitney Bowes (NYSE: PBI) is a global technology company offering innovative products and solutions that enable commerce in the areas of customer information management, location intelligence, customer engagement, shipping and mailing, and global ecommerce. More than 1.5 million clients in approximately 100 countries around the world rely on products, solutions and services from Pitney Bowes. For additional information, visit Pitney Bowes at www.pitneybowes.com.
The Company's financial results are reported in accordance with generally accepted accounting principles (GAAP). The Company uses measures such as adjusted earnings before interest and taxes (EBIT), 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. Segment EBIT is determined by deducting from 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. 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 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 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 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: 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; the success of our investment in rebranding the Company; the risk of customer concentration in our Digital Commerce Solutions group; integrating newly acquired businesses, including operations and product and service offerings; 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 2014 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 nine months ended September 30, 2015 and 2014, and consolidated balance sheets at September 30, 2015 and December 31, 2014 are attached.
Pitney Bowes Inc. | ||||||||||||||||
Consolidated Statements of Income | ||||||||||||||||
(Unaudited; in thousands, except per share data) |
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Three months ended September 30, |
Nine months ended September 30, |
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2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenue: | ||||||||||||||||
Equipment sales | $ | 163,857 | $ | 177,458 | $ | 495,328 | $ | 558,032 | ||||||||
Supplies | 71,174 | 72,548 | 215,178 | 228,349 | ||||||||||||
Software | 97,700 | 112,271 | 283,241 | 312,891 | ||||||||||||
Rentals | 108,420 | 119,047 | 333,729 | 365,069 | ||||||||||||
Financing | 99,925 | 107,835 | 306,992 | 325,529 | ||||||||||||
Support services | 136,820 | 154,321 | 415,615 | 470,763 | ||||||||||||
Business services | 191,645 | 198,164 | 591,030 | 576,958 | ||||||||||||
Total revenue | 869,541 | 941,644 | 2,641,113 | 2,837,591 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of equipment sales | 78,650 | 90,984 | 232,706 | 262,336 | ||||||||||||
Cost of supplies | 21,629 | 22,470 | 65,912 | 70,129 | ||||||||||||
Cost of software | 27,219 | 29,775 | 85,584 | 93,423 | ||||||||||||
Cost of rentals | 21,423 | 23,636 | 63,127 | 74,273 | ||||||||||||
Financing interest expense | 17,533 | 19,667 | 54,171 | 59,733 | ||||||||||||
Cost of support services | 79,747 | 92,500 | 244,853 | 288,203 | ||||||||||||
Cost of business services | 130,004 | 142,512 | 405,559 | 406,472 | ||||||||||||
Selling, general and administrative | 309,211 | 341,738 | 939,318 | 1,031,497 | ||||||||||||
Research and development | 29,153 | 26,060 | 83,693 | 80,901 | ||||||||||||
Restructuring charges and asset impairments, net | 36 | 4,526 | 14,305 | 22,666 | ||||||||||||
Interest expense, net | 20,165 | 22,158 | 65,200 | 67,704 | ||||||||||||
Other (income) expense, net | (1,781 | ) | (15,919 | ) | (94,916 | ) | 45,738 | |||||||||
Total costs and expenses | 732,989 | 800,107 | 2,159,512 | 2,503,075 | ||||||||||||
Income from continuing operations before income taxes | 136,552 | 141,537 | 481,601 | 334,516 | ||||||||||||
Provision for income taxes | 42,676 | 25,310 | 145,574 | 79,681 | ||||||||||||
Income from continuing operations | 93,876 | 116,227 | 336,027 | 254,835 | ||||||||||||
Income (loss) from discontinued operations, net of tax | - | 20,655 | (582 | ) | 30,173 | |||||||||||
Net income before attribution of noncontrolling interests | 93,876 | 136,882 | 335,445 | 285,008 | ||||||||||||
Less: Preferred stock dividends of subsidiaries attributable to noncontrolling interests |
4,594 | 4,593 | 13,781 | 13,781 | ||||||||||||
Net income - Pitney Bowes Inc. | $ | 89,282 | $ | 132,289 | $ | 321,664 | $ | 271,227 | ||||||||
Amounts attributable to common stockholders: | ||||||||||||||||
Income from continuing operations | $ | 89,282 | $ | 111,634 | $ | 322,246 | $ | 241,054 | ||||||||
Income (loss) from discontinued operations, net of tax | - | 20,655 | (582 | ) | 30,173 | |||||||||||
Net income - Pitney Bowes Inc. | $ | 89,282 | $ | 132,289 | $ | 321,664 | $ | 271,227 | ||||||||
Basic earnings per share attributable to common stockholders (1): | ||||||||||||||||
Continuing operations | $ | 0.45 | $ | 0.55 | $ | 1.60 | $ | 1.19 | ||||||||
Discontinued operations | - | 0.10 | - | 0.15 | ||||||||||||
Net income - Pitney Bowes Inc. | $ | 0.45 | $ | 0.65 | $ | 1.60 | $ | 1.34 | ||||||||
Diluted earnings per share attributable to common stockholders (1): | ||||||||||||||||
Continuing operations | $ | 0.44 | $ | 0.55 | $ | 1.60 | $ | 1.18 | ||||||||
Discontinued operations | - | 0.10 | - | 0.15 | ||||||||||||
Net income - Pitney Bowes Inc. | $ | 0.44 | $ | 0.65 | $ | 1.59 | $ | 1.33 | ||||||||
Weighted-average shares used in diluted EPS | 201,016,809 | 203,968,557 | 201,884,967 | 203,959,978 | ||||||||||||
(1) The sum of the earnings per share amounts may not equal the totals due to rounding. |
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Pitney Bowes Inc. | ||||||||||
Consolidated Balance Sheets | ||||||||||
(Unaudited; in thousands, except per share data) |
||||||||||
Assets |
September 30,
2015 |
December 31, 2014 (1) |
||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 715,976 | $ | 1,079,145 | ||||||
Short-term investments | 34,318 | 32,121 | ||||||||
Accounts receivable, gross | 411,804 | 448,017 | ||||||||
Allowance for doubtful accounts | (12,680 | ) | (10,742 | ) | ||||||
Accounts receivable, net | 399,124 | 437,275 | ||||||||
Short-term finance receivables | 956,767 | 1,019,412 | ||||||||
Allowance for credit losses | (16,143 | ) | (19,108 | ) | ||||||
Short-term finance receivables, net | 940,624 | 1,000,304 | ||||||||
Inventories | 103,195 | 84,827 | ||||||||
Current income taxes | 33,057 | 40,542 | ||||||||
Other current assets and prepayments | 71,454 | 57,173 | ||||||||
Assets held for sale | - | 52,271 | ||||||||
Total current assets | 2,297,748 | 2,783,658 | ||||||||
Property, plant and equipment, net | 317,005 | 285,091 | ||||||||
Rental property and equipment, net | 188,485 | 200,380 | ||||||||
Long-term finance receivables | 774,690 | 828,723 | ||||||||
Allowance for credit losses | (6,551 | ) | (9,002 | ) | ||||||
Long-term finance receivables, net | 768,139 | 819,721 | ||||||||
Goodwill | 1,753,888 | 1,672,721 | ||||||||
Intangible assets, net | 192,318 | 82,173 | ||||||||
Non-current income taxes | 70,731 | 96,377 | ||||||||
Other assets | 553,467 | 569,110 | ||||||||
Total assets | $ | 6,141,781 | $ | 6,509,231 | ||||||
Liabilities, noncontrolling interests and stockholders' equity |
||||||||||
Current liabilities: | ||||||||||
Accounts payable and accrued liabilities | $ | 1,379,337 | $ | 1,572,971 | ||||||
Current income taxes | 79,689 | 90,167 | ||||||||
Current portion of long-term debt and notes payable | 521,091 | 324,879 | ||||||||
Advance billings | 353,467 | 386,846 | ||||||||
Total current liabilities | 2,333,584 | 2,374,863 | ||||||||
Deferred taxes on income | 131,416 | 64,839 | ||||||||
Tax uncertainties and other income tax liabilities | 94,822 | 86,127 | ||||||||
Long-term debt | 2,471,055 | 2,927,127 | ||||||||
Other non-current liabilities | 672,507 | 682,646 | ||||||||
Total liabilities | 5,703,384 | 6,135,602 | ||||||||
Noncontrolling interests (Preferred stockholders' equity in subsidiaries) | 296,370 | 296,370 | ||||||||
Stockholders' equity: | ||||||||||
Cumulative preferred stock, $50 par value, 4% convertible | 1 | 1 | ||||||||
Cumulative preference stock, no par value, $2.12 convertible | 519 | 548 | ||||||||
Common stock, $1 par value | 323,338 | 323,338 | ||||||||
Additional paid-in-capital | 156,195 | 178,852 | ||||||||
Retained earnings | 5,106,214 | 4,897,708 | ||||||||
Accumulated other comprehensive loss | (900,852 | ) | (846,156 | ) | ||||||
Treasury stock, at cost | (4,543,388 | ) | (4,477,032 | ) | ||||||
Total Pitney Bowes Inc. stockholders' equity | 142,027 | 77,259 | ||||||||
Total liabilities, noncontrolling interests and stockholders' equity | $ | 6,141,781 | $ | 6,509,231 | ||||||
(1) Certain prior year amounts have been revised. |
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Pitney Bowes Inc. | ||||||||||||
Revenue and EBIT | ||||||||||||
Business Segments | ||||||||||||
(Unaudited; in thousands) |
||||||||||||
Three Months Ended September 30, | ||||||||||||
% | ||||||||||||
2015 | 2014 | Change | ||||||||||
Revenue |
||||||||||||
North America Mailing | $ | 353,159 | $ | 363,285 | (3 | %) | ||||||
International Mailing | 104,615 | 132,291 | (21 | %) | ||||||||
Small & Medium Business Solutions | 457,774 | 495,576 | (8 | %) | ||||||||
Production Mail | 101,646 | 113,497 | (10 | %) | ||||||||
Presort Services | 115,912 | 111,434 | 4 | % | ||||||||
Enterprise Business Solutions | 217,558 | 224,931 | (3 | %) | ||||||||
Software Solutions | 97,638 | 112,006 | (13 | %) | ||||||||
Global Ecommerce | 96,571 | 71,870 | 34 | % | ||||||||
Digital Commerce Solutions | 194,209 | 183,876 | 6 | % | ||||||||
Other | - | 37,261 | (100 | %) | ||||||||
Total revenue | $ | 869,541 | $ | 941,644 | (8 | %) | ||||||
EBIT(1) |
||||||||||||
North America Mailing | $ | 159,319 | $ | 159,638 | (0 | %) | ||||||
International Mailing | 10,739 | 16,079 | (33 | %) | ||||||||
Small & Medium Business Solutions | 170,058 | 175,717 | (3 | %) | ||||||||
Production Mail | 12,401 | 9,570 | 30 | % | ||||||||
Presort Services | 25,908 | 21,927 | 18 | % | ||||||||
Enterprise Business Solutions | 38,309 | 31,497 | 22 | % | ||||||||
Software Solutions | 14,613 | 18,921 | (23 | %) | ||||||||
Global Ecommerce | (1,240 | ) | (676 | ) | (83 | %) | ||||||
Digital Commerce Solutions | 13,373 | 18,245 | (27 | %) | ||||||||
Other | - | 7,980 | (100 | %) | ||||||||
Total EBIT | 221,740 | 233,439 | (5 | %) | ||||||||
Unallocated amounts: | ||||||||||||
Interest, net (2) | (37,698 | ) | (41,825 | ) | ||||||||
Corporate and other expenses | (49,235 | ) | (61,470 | ) | ||||||||
Restructuring charges and asset impairments, net | (36 | ) | (4,526 | ) | ||||||||
Other income, net | 1,781 | 15,919 | ||||||||||
Income from continuing operations before income taxes | $ | 136,552 | $ | 141,537 |
(1) | Segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges and other items, which are not allocated to a particular business segment. | |
(2) | Includes financing interest expense and interest expense, net. | |
Pitney Bowes Inc. | ||||||||||||
Revenue and EBIT | ||||||||||||
Business Segments | ||||||||||||
(Unaudited; in thousands) |
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Nine Months Ended September 30, | ||||||||||||
% | ||||||||||||
2015 | 2014 | Change | ||||||||||
Revenue |
||||||||||||
North America Mailing | $ | 1,071,824 | $ | 1,115,506 | (4 | %) | ||||||
International Mailing | 331,398 | 438,819 | (24 | %) | ||||||||
Small & Medium Business Solutions | 1,403,222 | 1,554,325 | (10 | %) | ||||||||
Production Mail | 298,880 | 330,469 | (10 | %) | ||||||||
Presort Services | 351,365 | 339,206 | 4 | % | ||||||||
Enterprise Business Solutions | 650,245 | 669,675 | (3 | %) | ||||||||
Software Solutions | 282,916 | 312,200 | (9 | %) | ||||||||
Global Ecommerce | 249,923 | 204,399 | 22 | % | ||||||||
Digital Commerce Solutions | 532,839 | 516,599 | 3 | % | ||||||||
Other | 54,807 | 96,992 | (43 | %) | ||||||||
Total revenue | $ | 2,641,113 | $ | 2,837,591 | (7 | %) | ||||||
EBIT(1) |
||||||||||||
North America Mailing | $ | 482,376 | $ | 476,757 | 1 | % | ||||||
International Mailing | 36,585 | 67,347 | (46 | %) | ||||||||
Small & Medium Business Solutions | 518,961 | 544,104 | (5 | %) | ||||||||
Production Mail | 31,461 | 27,865 | 13 | % | ||||||||
Presort Services | 76,946 | 68,235 | 13 | % | ||||||||
Enterprise Business Solutions | 108,407 | 96,100 | 13 | % | ||||||||
Software Solutions | 34,904 | 30,620 | 14 | % | ||||||||
Global Ecommerce | 9,962 | 9,100 | 9 | % | ||||||||
Digital Commerce Solutions | 44,866 | 39,720 | 13 | % | ||||||||
Other | 10,569 | 13,965 | (24 | %) | ||||||||
Total EBIT | 682,803 | 693,889 | (2 | %) | ||||||||
Unallocated amounts: | ||||||||||||
Interest, net (2) | (119,371 | ) | (127,437 | ) | ||||||||
Corporate and other expenses | (151,959 | ) | (163,532 | ) | ||||||||
Restructuring charges and asset impairments, net | (14,305 | ) | (22,666 | ) | ||||||||
Other income (expense), net | 94,916 | (45,738 | ) | |||||||||
Acquisition related compensation expense | (10,483 | ) | - | |||||||||
Income from continuing operations before income taxes | $ | 481,601 | $ | 334,516 |
(1) | Segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges and other items, which are not allocated to a particular business segment. | |
(2) | Includes financing interest expense and interest expense, net. | |
Pitney Bowes Inc. | ||||||||||||||||
Reconciliation of Reported Consolidated Results to Adjusted Results | ||||||||||||||||
(Unaudited; in thousands, except per share data) | ||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Income from continuing operations | ||||||||||||||||
after income taxes, as reported: | $ | 89,282 | $ | 111,634 | $ | 322,246 | $ | 241,054 | ||||||||
Restructuring charges and asset impairments, net | 47 | 2,903 | 8,607 | 15,161 | ||||||||||||
Gain on sale of Imagitas | 30 | - | (88,399 | ) | - | |||||||||||
Acquisition and disposition transaction costs | 5,323 | - | 11,428 | - | ||||||||||||
Legal settlement | (370 | ) | - | 4,250 | - | |||||||||||
Acquisition related compensation expense | - | - | 7,246 | - | ||||||||||||
Investment divestiture | (7,756 | ) | (9,774 | ) | (7,756 | ) | (9,774 | ) | ||||||||
Extinguishment of debt | - | - | - | 37,833 | ||||||||||||
Income from continuing operations | ||||||||||||||||
after income taxes, as adjusted: | $ | 86,556 | $ | 104,763 | $ | 257,622 | $ | 284,274 | ||||||||
Diluted earnings per share from | ||||||||||||||||
continuing operations, as reported: | $ | 0.44 | $ | 0.55 | $ | 1.60 | $ | 1.18 | ||||||||
Restructuring charges and asset impairments, net | - | 0.01 | 0.04 | 0.07 | ||||||||||||
Gain on sale of Imagitas | - | - | (0.44 | ) | - | |||||||||||
Acquisition and disposition transaction costs | 0.03 | - | 0.06 | - | ||||||||||||
Legal settlement | - | - | 0.02 | - | ||||||||||||
Acquisition related compensation expense | - | - | 0.04 | - | ||||||||||||
Investment divestiture | (0.04 | ) | (0.05 | ) | (0.04 | ) | (0.05 | ) | ||||||||
Extinguishment of debt | - | - | - | 0.19 | ||||||||||||
Diluted earnings per share from continuing | ||||||||||||||||
operations, as adjusted: | $ | 0.43 | $ | 0.51 | $ | 1.28 | $ | 1.39 | ||||||||
Net cash provided by operating activities, | ||||||||||||||||
as reported: | $ | 150,384 | $ | 116,985 | $ | 350,715 | $ | 397,432 | ||||||||
Capital expenditures | (40,708 | ) | (48,920 | ) | (129,643 | ) | (121,270 | ) | ||||||||
Restructuring payments | 15,281 | 8,621 | 46,056 | 42,151 | ||||||||||||
(Receipts) payments related to investment divestiture | (5,773 | ) | 53,738 | 20,602 | 53,738 | |||||||||||
Reserve account deposits | (4,166 | ) | (12,563 | ) | (25,630 | ) | (15,919 | ) | ||||||||
Acquisition related compensation payment | - | - | 10,483 | - | ||||||||||||
Tax payment related to sale of Imagitas | 15,918 | - | 15,918 | - | ||||||||||||
Cash transaction fees related to acquisitions | ||||||||||||||||
and dispositions | - | - | 11,116 | - | ||||||||||||
Extinguishment of debt | - | - | - | 61,657 | ||||||||||||
Free cash flow, as adjusted: | $ | 130,936 | $ | 117,861 | $ | 299,617 | $ | 417,789 | ||||||||
Note: The sum of the earnings per share amounts may not equal the totals due to rounding. |
||||||||||||||||
Pitney Bowes Inc. | |||||||||||||||||
Reconciliation of Reported Consolidated Results to Adjusted Results | |||||||||||||||||
(Unaudited; in thousands) | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||
GAAP income from continuing operations | |||||||||||||||||
after income taxes, as reported | $ | 89,282 | $ | 111,634 | $ | 322,246 | $ | 241,054 | |||||||||
Restructuring charges and asset impairments, net | 47 | 2,903 | 8,607 | 15,161 | |||||||||||||
Gain on sale of Imagitas | 30 | - | (88,399 | ) | - | ||||||||||||
Acquisition and disposition transaction costs | 5,323 | - | 11,428 | - | |||||||||||||
Legal settlement | (370 | ) | - | 4,250 | - | ||||||||||||
Acquisition related compensation expense | - | - | 7,246 | - | |||||||||||||
Investment divestiture | (7,756 | ) | (9,774 | ) | (7,756 | ) | (9,774 | ) | |||||||||
Extinguishment of debt | - | - | - | 37,833 | |||||||||||||
Income from continuing operations | |||||||||||||||||
after income taxes, as adjusted | 86,556 | 104,763 | 257,622 | 284,274 | |||||||||||||
Provision for income taxes, as adjusted | 43,657 | 20,788 | 140,070 | 104,865 | |||||||||||||
Preferred stock dividends of subsidiaries | |||||||||||||||||
attributable to noncontrolling interests | 4,594 | 4,593 | 13,781 | 13,781 | |||||||||||||
Income from continuing operations | |||||||||||||||||
before income taxes, as adjusted | 134,807 | 130,144 | 411,473 | 402,920 | |||||||||||||
Interest, net | 37,698 | 41,825 | 119,371 | 127,437 | |||||||||||||
Adjusted EBIT | 172,505 | 171,969 | 530,844 | 530,357 | |||||||||||||
Depreciation and amortization | 42,333 | 49,643 | 127,486 | 142,506 | |||||||||||||
Adjusted EBITDA | $ | 214,838 | $ | 221,612 | $ | 658,330 | $ | 672,863 |
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