The business experienced temporary impacts from the enterprise business platform cutover in the U.S., and, as a result, the revenue rate of decline was greater than prior quarters. Equipment sales declined double digits and recurring revenue streams declined at a high single-digit rate. The equipment sales impact resulted principally from lost daily sales activity and productivity during the cutover period. The recurring revenue streams were impacted in part by financing fee waivers and lower supply purchases during this transition. The Company estimates that the North America Mailing segment revenue was unfavorably impacted by an estimated $15 million to $20 million, or 5 percentage points of growth, in the quarter due to this transition. Of this estimated amount, approximately two-thirds was attributed to equipment sales and one-third was attributed to the recurring revenue streams. EBIT margin was slightly lower than prior year due to the overall lower revenue.
International Mailing
Revenue trends compared to prior year continued to improve. Although reported revenue declined, when adjusted for both the impact of currency and market exits, revenue would have been flat to prior year. Equipment sales increased versus prior year most notably in France, Italy and Japan, in part due to improved sales productivity as disruption from go-to-market changes, especially in France, have subsided. The decline in recurring revenue streams was the lowest in seven quarters. EBIT margin declined versus the prior year primarily as a result of the mix of equipment sales.
Enterprise Business Solutions Group |
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($ millions) | Second Quarter | |||||||||||||||||
Y/Y |
Y/Y |
Y/Y Ex Currency |
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Revenue |
2016 |
2015 |
Reported |
Ex Currency |
& Market Exits* |
|||||||||||||
Production Mail | $ | 96 | $ | 98 | (2 | %) | (2 | %) | 1 | % | ||||||||
Presort Services | 116 | 114 | 2 | % | 2 | % | 2 | % | ||||||||||
Enterprise Business Total | $ | 212 | $ | 212 | 0 | % | 0 | % | 1 | % | ||||||||
EBIT | ||||||||||||||||||
Production Mail | $ | 13 | $ | 10 | 29 | % | ||||||||||||
Presort Services | 21 | 24 | (10 | %) | ||||||||||||||
Enterprise Business Total | $ | 34 | $ | 34 | 2 | % |
* Excluding $0.2 million related to the impacts of currency and adjusting prior year for $2.9 million related to the divested revenues resulting from the exit of direct operations in Mexico, South Africa and five markets in Asia |