Revenue declined from prior year driven by lower license revenue partially offset by higher data updates, SaaS and services revenue. Revenue also benefited from continued growth in smaller deals. Prior year license revenue benefited from a $7 million Location Intelligence deal. EBIT and EBITDA margins decreased from prior year largely driven by the lower license revenue.
2019 Guidance
The Company is updating its 2019 annual guidance and now expects:
- Revenue, on a constant currency (CC) basis, to be in the range of 1 percent to 3 percent growth when compared to 2018.
- Adjusted EPS from continuing operations to be in the range of $0.90 to $1.05.
- Free cash flow to be in the range of $200 million to $250 million. Free cash flow guidance includes the funding of third party financing initiatives.
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 2018 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission.
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. Revenue guidance is provided on a constant currency basis. The Company cannot reasonably predict the impact that future changes in currency exchange rates will have on revenue and net income. Additionally, the Company cannot provide GAAP EPS and GAAP cash from operations guidance due to the uncertainty of future potential restructurings, goodwill and asset write-downs, unusual tax settlements or payments, special contributions to its pension funds, acquisitions, divestitures and other potential adjustments, which could, individually or in the aggregate, have a material impact on the Company’s performance. The Company’s guidance is based on an assumption that the global economy and foreign exchange markets in 2019 will not change significantly.
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; location data; customer information and engagement software; services; and financing. For nearly 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 EPS and adjusted net income to exclude the impact of special items like restructuring charges, tax adjustments, goodwill and asset write-downs, and costs related to dispositions and acquisitions. 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.
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. Constant currency is
calculated by converting our current quarter reported results using the
prior year’s exchange rate for the comparable quarter. In
addition, this quarter the Company reported the comparison of revenue
excluding the impact of currency and market exits to prior year, which
excludes the impact of changes in foreign currency exchange rates since
the prior period and also excludes the revenues associated with the
recent market exits in several smaller markets. This comparison
allows an investor insight into the underlying revenue performance of
the business and true operational performance from a comparable basis to
prior period. A reconciliation of reported revenue to constant
currency revenue, as well as reported revenue to “revenue excluding the
impact of currency and market exits” can be found in the Company’s
attached financial schedules.
