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 is calculated by converting the current period non-U.S. dollar denominated revenue using the prior year’s exchange rate for the comparable quarter. We believe that excluding the impacts of currency exchange rates provides investors a better understanding of the underlying revenue performance. A reconciliation of reported revenue to constant currency revenue can be found in the attached financial schedules.
The Company reports free cash flow in order to provide investors insight into the amount of cash that management could have available for other discretionary uses. Free cash flow adjusts GAAP cash from operations for cash flows of discontinued operations, capital expenditures, restructuring payments, changes in customer deposits held at the Pitney Bowes Bank, transaction costs and other special items. A reconciliation of GAAP cash from operations to free cash flow can be found in the attached financial schedules.
Segment EBIT is the primary measure of profitability and operational performance at the segment level. Segment EBIT is determined by deducting from segment 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. The Company also provides segment EBITDA, which further excludes depreciation and amortization expense for the segment, as an additional useful measure of segment profitability and operational performance. A reconciliation of segment EBIT and EBITDA to net income can be found in the attached financial schedules.
Pitney Bowes has provided a quantitative reconciliation to GAAP in supplemental schedules. This information can 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 the severity, magnitude and duration of the Covid-19 pandemic (Covid-19), including governments' responses to Covid-19, the efficacy and availability of vaccines, its continuing impact on our operations, employees, the availability and cost of labor and transportation, global supply chain and demand across our and our clients' businesses as well as any deterioration or instability in global macroeconomic conditions. Other factors, which could cause future financial performance to differ materially from expectations, and which may also be exacerbated by Covid-19 or a negative change in the economy, include, without limitation: declining physical mail volumes; changes in postal regulations or operations, or the financial health of posts, in the U.S. or other major markets or significant changes to the broader postal or shipping industry; the loss of, or significant changes in, our contractual relationships with the United States Postal Service (USPS) or USPS’ performance under those contracts; our ability to continue to grow and manage volumes, gain additional economies of scale and improve profitability within our Global Ecommerce and Presort Services segments; changes in labor and transportation availability and costs; third-party suppliers' ability to provide products and services required by us and our clients; competitive factors, including pricing pressures, technological developments and the introduction of new products and services by competitors; the loss of some of our larger clients in our Global Ecommerce and Presort Services segments; expenses and potential impacts resulting from a breach of security, including cyber-attacks or other comparable events; our success at managing customer credit risk; and other factors as more fully outlined in the Company's 2020 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, EBIT and EBITDA by business segment; and reconciliations of GAAP to non-GAAP measures for the three months ended March 31, 2021 and 2020, and consolidated balance sheets at March 31, 2021 and December 31, 2020 are attached.
Pitney Bowes Inc. | |||||||||||
Consolidated Statements of Loss | |||||||||||
(Unaudited; in thousands, except per share amounts) | |||||||||||
Three months ended March 31, | |||||||||||
|
2021 |
|
|
2020 |
|
||||||
Revenue: | |||||||||||
Business services | $ |
570,454 |
|
$ |
444,379 |
|
|||||
Support services |
|
118,697 |
|
|
122,015 |
|
|||||
Financing |
|
77,812 |
|
|
89,078 |
|
|||||
Equipment sales |
|
86,803 |
|
|
76,273 |
|
|||||
Supplies |
|
42,224 |
|
|
45,709 |
|
|||||
Rentals |
|
19,207 |
|
|
18,814 |
|
|||||
Total revenue |
|
915,197 |
|
|
796,268 |
|
|||||
Costs and expenses: | |||||||||||
Cost of business services |
|
499,534 |
|
|
374,665 |
|
|||||
Cost of support services |
|
36,717 |
|
|
39,760 |
|
|||||
Financing interest expense |
|
11,886 |
|
|
12,489 |
|
|||||
Cost of equipment sales |
|
61,840 |
|
|
57,359 |
|
|||||
Cost of supplies |
|
11,211 |
|
|
12,240 |
|
|||||
Cost of rentals |
|
6,447 |
|
|
6,378 |
|
|||||
Selling, general and administrative |
|
238,102 |
|
|
248,633 |
|
|||||
Research and development |
|
11,316 |
|
|
12,116 |
|
|||||
Restructuring charges |
|
2,889 |
|
|
3,817 |
|
|||||
Goodwill impairment |
|
- |
|
|
198,169 |
|
|||||
Interest expense, net |
|
25,158 |
|
|
25,883 |
|
|||||
Other components of net pension and postretirement expense (income) |
|
350 |
|
|
(151 |
) |
|||||
Other expense, net |
|
51,394 |
|
|
33,487 |
|
|||||
Total costs and expenses |
|
956,844 |
|
|
1,024,845 |
|
|||||
Loss from continuing operations before taxes |
|
(41,647 |
) |
|
(228,577 |
) |
|||||
Benefit for income taxes |
|
(13,992 |
) |
|
(10,030 |
) |
|||||
Loss from continuing operations |
|
(27,655 |
) |
|
(218,547 |
) |
|||||
(Loss) income from discontinued operations, net of tax |
|
(3,886 |
) |
|
10,064 |
|
|||||
Net loss | $ |
(31,541 |
) |
$ |
(208,483 |
) |
|||||
Basic loss per share (1): | |||||||||||
Continuing operations | $ |
(0.16 |
) |
$ |
(1.28 |
) |
|||||
Discontinued operations |
|
(0.02 |
) |
|
0.06 |
|
|||||
Net loss | $ |
(0.18 |
) |
$ |
(1.22 |
) |
|||||
Diluted loss per share (1): | |||||||||||
Continuing operations | $ |
(0.16 |
) |
$ |
(1.28 |
) |
|||||
Discontinued operations |
|
(0.02 |
) |
|
0.06 |
|
|||||
Net loss | $ |
(0.18 |
) |
$ |
(1.22 |
) |
|||||
Weighted-average shares used in diluted earnings per share |
|
172,856 |
|
|
170,912 |
|
|||||
(1 |
) |
The sum of the earnings per share amounts may not equal the totals due to rounding. | |||||||||
Pitney Bowes Inc. | ||||||||||
Consolidated Balance Sheets | ||||||||||
(Unaudited; in thousands) | ||||||||||
Assets | March 31,
2021 |
December 31,
2020 |
||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ |
680,727 |
|
$ |
921,450 |
|
||||
Short-term investments |
|
16,200 |
|
|
18,974 |
|
||||
Accounts and other receivables, net |
|
327,755 |
|
|
389,240 |
|
||||
Short-term finance receivables, net |
|
551,061 |
|
|
568,050 |
|
||||
Inventories |
|
63,680 |
|
|
65,845 |
|
||||
Current income taxes |
|
44,288 |
|
|
23,219 |
|
||||
Other current assets and prepayments |
|
124,394 |
|
|
120,145 |
|
||||
Total current assets |
|
1,808,105 |
|
|
2,106,923 |
|
||||
Property, plant and equipment, net |
|
405,226 |
|
|
391,280 |
|
||||
Rental property and equipment, net |
|
37,708 |
|
|
38,435 |
|
||||
Long-term finance receivables, net |
|
597,012 |
|
|
605,292 |
|
||||
Goodwill |
|
1,144,064 |
|
|
1,152,285 |
|
||||
Intangible assets, net |
|
152,265 |
|
|
159,839 |
|
||||
Operating lease assets |
|
196,843 |
|
|
201,916 |
|
||||
Noncurrent income taxes |
|
68,732 |
|
|
72,653 |
|
||||
Other assets |
|
531,226 |
|
|
491,514 |
|
||||
Total assets | $ |
4,941,181 |
|
$ |
5,220,137 |
|
||||
Liabilities and stockholders' equity | ||||||||||
Current liabilities: | ||||||||||
Accounts payable and accrued liabilities | $ |
820,286 |
|
$ |
880,616 |
|
||||
Customer deposits at Pitney Bowes Bank |
|
589,406 |
|
|
617,200 |
|
||||
Current operating lease liabilities |
|
39,587 |
|
|
39,182 |
|
||||
Current portion of long-term debt |
|
19,972 |
|
|
216,032 |
|
||||
Advance billings |
|
118,166 |
|
|
114,550 |
|
||||
Current income taxes |
|
6,839 |
|
|
2,880 |
|
||||
Total current liabilities |
|
1,594,256 |
|
|
1,870,460 |
|
||||
Long-term debt |
|
2,418,885 |
|
|
2,348,361 |
|
||||
Deferred taxes on income |
|
282,192 |
|
|
279,451 |
|
||||
Tax uncertainties and other income tax liabilities |
|
37,936 |
|
|
38,163 |
|
||||
Noncurrent operating lease liabilities |
|
174,798 |
|
|
180,292 |
|
||||
Other noncurrent liabilities |
|
413,951 |
|
|
437,015 |
|
||||
Total liabilities |
|
4,922,018 |
|
|
5,153,742 |
|
||||
Stockholders' equity: | ||||||||||
Common stock |
|
323,338 |
|
|
323,338 |
|
||||
Additional paid-in-capital |
|
15,269 |
|
|
68,502 |
|
||||
Retained earnings |
|
5,161,029 |
|
|
5,201,195 |
|
||||
Accumulated other comprehensive loss |
|
(847,538 |
) |
|
(839,131 |
) |
||||
Treasury stock, at cost |
|
(4,632,935 |
) |
|
(4,687,509 |
) |
||||
Total stockholders' equity |
|
19,163 |
|
|
66,395 |
|
||||
Total liabilities and stockholders' equity | $ |
4,941,181 |
|
$ |
5,220,137 |
|
||||
Pitney Bowes Inc. | |||||||||
Business Segment Revenue | |||||||||
(Unaudited; in thousands) | |||||||||
Three months ended March 31, | |||||||||
|
2021 |
|
2020 |
% Change |
|||||
Global Ecommerce | $ |
413,086 |
$ |
292,323 |
41% |
||||
Presort Services |
|
143,126 |
|
140,720 |
2% |
||||
Sending Technology Solutions |
|
358,985 |
|
363,225 |
(1%) |
||||
Total revenue - GAAP |
|
915,197 |
|
796,268 |
15% |
||||
Currency impact on revenue |
|
(8,803) |
|
- |
|||||
Revenue, at constant currency | $ |
906,394 |
$ |
796,268 |
14% |
||||
Pitney Bowes Inc. | ||||||||||||||||
Business Segment EBIT & EBITDA | ||||||||||||||||
(Unaudited; in thousands) | ||||||||||||||||
Three months ended March 31, | ||||||||||||||||
2021 |
2020 |
% change | ||||||||||||||
EBIT (1) | D&A | EBITDA | EBIT (1) | D&A | EBITDA | EBIT | EBITDA | |||||||||
Global Ecommerce | $ |
(26,376) |
$ |
18,176 |
$ |
(8,200) |
$ |
(29,475) |
$ |
18,065 |
$ |
(11,410) |
11% |
28% |
||
Presort Services |
|
19,051 |
|
7,499 |
|
26,550 |
|
15,695 |
|
7,774 |
|
23,469 |
21% |
13% |
||
Sending Technology Solutions |
|
114,470 |
|
7,604 |
|
122,074 |
|
106,562 |
|
9,039 |
|
115,601 |
7% |
6% |
||
Segment total | $ |
107,145 |
$ |
33,279 |
|
140,424 |
$ |
92,782 |
$ |
34,878 |
|
127,660 |
15% |
10% |
||
Reconciliation of Segment EBITDA to Net Income: | ||||||||||||||||
Segment depreciation and amortization |
|
(33,279) |
|
(34,878) |
||||||||||||
Unallocated corporate expenses |
|
(57,465) |
|
(43,722) |
||||||||||||
Restructuring charges |
|
(2,889) |
|
(3,817) |
||||||||||||
Interest, net |
|
(37,044) |
|
(38,372) |
||||||||||||
Goodwill impairment |
|
- |
|
(198,169) |
||||||||||||
Loss on debt refinancing |
|
(51,394) |
|
(36,987) |
||||||||||||
Transaction costs |
|
- |
|
(292) |
||||||||||||
Benefit for income taxes |
|
13,992 |
|
10,030 |
||||||||||||
Loss from continuing operations |
|
(27,655) |
|
(218,547) |
||||||||||||
(Loss) income from discontinued operations, net of tax |
|
(3,886) |
|
10,064 |
||||||||||||
Net loss | $ |
(31,541) |
$ |
(208,483) |
||||||||||||
(1) Segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges, and other items that are not allocated to a particular business segment. | ||||||||||||||||
Pitney Bowes Inc. | ||||||||
Reconciliation of Reported Consolidated Results to Adjusted Results | ||||||||
(Unaudited; in thousands, except per share amounts) | ||||||||
Three months ended March 31, | ||||||||
|
2021 |
|
2020 |
|||||
Reconciliation of reported net loss to adjusted EBIT and EBITDA | ||||||||
Net loss | $ |
(31,541) |
$ |
(208,483) |
||||
Loss (income) from discontinued operations, net of tax |
|
3,886 |
|
(10,064) |
||||
Benefit for income taxes |
|
(13,992) |
|
(10,030) |
||||
Loss from continuing operations before taxes |
|
(41,647) |
|
(228,577) |
||||
Restructuring charges |
|
2,889 |
|
3,817 |
||||
Goodwill impairment |
|
- |
|
198,169 |
||||
Loss on debt refinancing |
|
51,394 |
|
36,987 |
||||
Transaction costs |
|
- |
|
292 |
||||
Adjusted net income before tax |
|
12,636 |
|
10,688 |
||||
Interest, net |
|
37,044 |
|
38,372 |
||||
Adjusted EBIT |
|
49,680 |
|
49,060 |
||||
Depreciation and amortization |
|
39,594 |
|
40,719 |
||||
Adjusted EBITDA | $ |
89,274 |
$ |
89,779 |
||||
Reconciliation of reported diluted loss per share to adjusted diluted earnings per share | ||||||||
Diluted loss per share | $ |
(0.18) |
$ |
(1.22) |
||||
Loss (income) from discontinued operations, net of tax |
|
0.02 |
|
(0.06) |
||||
Restructuring charges |
|
0.01 |
|
0.02 |
||||
Goodwill impairment |
|
- |
|
1.15 |
||||
Loss on debt refinancing |
|
0.22 |
|
0.16 |
||||
Adjusted diluted earnings per share (1) | $ |
0.07 |
$ |
0.05 |
||||
Reconciliation of reported net cash from operating activities to free cash flow | ||||||||
Net cash provided by (used in) operating activities | $ |
65,924 |
$ |
(67,355) |
||||
Net cash used in operating activities - discontinued operations |
|
- |
|
37,805 |
||||
Capital expenditures |
|
(43,328) |
|
(25,778) |
||||
Restructuring payments |
|
3,955 |
|
6,047 |
||||
Change in customer deposits at PB Bank |
|
(27,794) |
|
(888) |
||||
Transaction costs paid |
|
- |
|
1,740 |
||||
Free cash flow | $ |
(1,243) |
$ |
(48,429) |
||||
(1) The sum of the earnings per share amounts may not equal the totals due to rounding. |