Ecommerce growth was driven by strong increases in the number of packages shipped and benefited from the initial ramp-up of the Company’s UK outbound cross-border services. The strengthening U.S. dollar had a dampening effect on the rate of increase in the number of purchases from the U.S. over the course of the quarter.
Software revenue growth was led by a significant increase in licensing revenue, particularly enterprise location intelligence software, reflecting on-going investments in product and channel specialization. Revenue growth in the areas of shipping solutions and marketing services resulted from new client acquisitions for their respective product offerings.
EBIT margin improved 80 basis points versus the prior year, which reflects the benefit of earnings leverage from revenue growth, net of the impact of continued investments in technology and infrastructure.
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 2013 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. This guidance also assumes that the global economy and foreign exchange markets in 2015 will not change significantly from current levels. Should recent volatility in foreign exchange markets continue, however, it could have a material effect on our reported results as compared to the guidance we are providing.
The Company expects in 2015:
- Revenue growth, excluding the impacts of currency, to be driven by double-digit growth in Digital Commerce Solutions, flat to modest growth in Enterprise Business Solutions and a low single-digit decline in SMB Solutions.
- The actions taken in 2014 to exit a non-core product line in Norway and transition to a dealer sales network in six smaller European markets are expected to adversely impact total revenue comparisons for 2015 by about $30 million, or by about 1 percent.
- Incremental investment of $0.07 to $0.09 per share related to the implementation of a new ERP system and $0.08 to $0.09 per share related to expanded marketing programs, including the new brand. These expenses are expected to be higher in the first half of the year versus the second half of the year.
- On-going reductions in SG&A costs as a result of the expected benefits from the 2013 and 2014 restructuring and go-to-market programs. These benefits are expected to substantially offset the incremental expenses associated with the new ERP system and the expanded marketing programs.
- A tax rate in the range of 31 to 34 percent.
- Free cash flow in 2015 to be slightly lower than 2014 primarily due to the further stabilization of finance receivables and incremental capital investment related to the new ERP system.
Based on the above assumptions, the Company’s 2015 guidance is as follows:
- Revenue, on a constant currency basis, is expected to be in the range of flat to 3 percent growth when compared to 2014. However, if current currency exchange rates are in place all year, reported revenue would be lower than constant currency revenue by more than 3 percentage points.
- Earnings per diluted share from continuing operations to be in the range of $1.85 to $2.00, which includes the incremental investment of $0.15 to $0.18 per share related to the implementation of a new ERP system and expanded marketing programs, including the new brand. This guidance is on a GAAP basis and does not anticipate any potential adjustments to earnings.
- Free cash flow to be in the range of $475 million to $550 million.
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. EST. 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 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 .
