STAMFORD, Conn., November 01, 2018 - Pitney Bowes Inc. (NYSE: PBI), a global technology company that provides commerce solutions in the areas of ecommerce, shipping, mailing, and data, today announced its financial results for the third quarter 2018.
Quarterly Financial Results:
- Revenue of $833 million, an increase of 14 percent versus prior year
- GAAP EPS of $0.41; Adjusted EPS of $0.27
- GAAP cash from operations of $116 million; free cash flow of $94 million
- The Company is reaffirming its prior 2018 annual guidance
“Through the first nine months of the year, revenue is up, spending is down, and we have substantially reduced our debt,” said Marc B. Lautenbach, President and CEO, Pitney Bowes. “In the same period, we have introduced several new innovative shipping, mailing, software and data solutions, delivered new shipping capabilities through contemporary API technology, and most recently, opened up a highly automated Fulfillment, Delivery and Returns Super Center in Greenwood, Indiana. Today, shipping revenues represent more than 30 percent of our overall revenue and that number continues to grow.”
Third Quarter 2018 Results
Revenue totaled $833 million, which was an increase of 14 percent versus prior year.
Commerce Services revenue grew 59 percent. Small and Medium Business (SMB) Solutions revenue declined 4 percent as reported and 3 percent at constant currency. Software Solutions revenue decreased 19 percent.
GAAP earnings per diluted share (GAAP EPS) were $0.41, which included a net benefit of $0.16 from discontinued operations primarily relating to the gain on the sale of DMT Production Mail and supporting software, $0.04 benefit related to the 2017 Tax Legislation, offset by a $0.03 loss related to the early extinguishment of debt and $0.03 for restructuring charges. Adjusted earnings per diluted share (Adjusted EPS) were $0.27. GAAP and adjusted EPS included a net benefit of $0.03 largely from the resolution of tax examinations.
The Company’s earnings per share results for the third quarter are summarized in the table below:
| Third Quarter* | ||||||
| 2018 | 2017 | |||||
| GAAP EPS | $0.41 | $0.31 | ||||
| Discontinued operations | ($0.16) | ($0.06) | ||||
| GAAP EPS from continuing operations | $0.25 | $0.24 | ||||
| Tax Legislation | ($0.04) | - | ||||
| Loss on Extinguishment of Debt | $0.03 | - | ||||
| Restructuring charges, net | $0.03 | $0.01 | ||||
| Transaction costs | - | $0.02 | ||||
| Adjusted EPS | $0.27 | $0.26 | ||||
* The sum of the earnings per share may not equal the totals above due to rounding.
GAAP Cash from Operations and Free Cash Flow Results
GAAP cash from operations during the quarter was $116 million and free cash flow was $94 million. Compared to the prior year, free cash flow declined by $11 million largely due to the timing of accounts payable and improvement in finance receivables. This was partly offset by the timing of accounts receivable.
The Company used cash to pay down $305 million of debt, return $35 million in dividends to shareholders and to pay $12 million for restructuring payments.
Third Quarter 2018 Business Segment Reporting
The business reporting groups reflect how the Company manages these groups and the clients served in each market.
The Commerce Services group includes the Global Ecommerce and Presort Services segments. Global Ecommerce facilitates global cross-border ecommerce transactions and domestic retail and ecommerce shipping solutions, including fulfillment and returns. Presort Services provides sortation services to qualify large volumes of First Class Mail; Marketing Mail; and Bound and Packet Mail (Standard Flats and Bound Printed Matter) for postal workshare discounts.
The SMB Solutions group offers mailing and shipping solutions, financing, services, and supplies for small and medium businesses to help simplify and save on the sending, tracking and receiving of letters, parcels and flats. This group includes the North America Mailing and International Mailing segments.
Software Solutions provide customer engagement, customer information, location intelligence software and data.
The results for each segment within the group may not equal the subtotals for the group due to rounding.
Commerce Services
| ($ millions) | Third Quarter | |||||||||||||||
| Revenue |
2018 |
2017 |
Y/Y Reported |
Y/Y Ex Currency |
||||||||||||
| Global Ecommerce | $233 | $106 | 119% | 120% | ||||||||||||
| Presort Services |
125 |
119 |
5% |
5% |
||||||||||||
| Commerce Services | $358 | $225 | 59% | 59% | ||||||||||||
| EBIT | ||||||||||||||||
| Global Ecommerce |
($14) |
($10) |
(49%) | |||||||||||||
| Presort Services |
17 |
19 |
(10%) |
|||||||||||||
| Commerce Services | $3 | $10 | (69%) | |||||||||||||
| EBITDA | ||||||||||||||||
| Global Ecommerce | $1 | ($2) | 142% | |||||||||||||
| Presort Services |
24 |
26 |
(6%) |
|||||||||||||
| Commerce Services | $25 | $24 | 6% | |||||||||||||
Global Ecommerce
Results for 2018 include a full quarter of Newgistics. Newgistics delivered 19 percent proforma revenue growth, which was driven by strong performance in both parcel and fulfillment revenue. On a proforma basis, the segment’s revenue grew 10 percent over prior year driven by Newgistics along with continued growth in domestic shipping solutions partly offset by lower cross border revenue.
The EBIT loss was driven primarily by investments in market growth opportunities, operational excellence initiatives and higher transportation and labor costs, as well as the amortization of acquisition-related intangible assets. EBITDA improved from prior year as a result of the higher revenue.
Presort Services
Revenue growth was driven by higher volumes of First Class mail but partly offset by lower Standard Class mail volumes processed. EBIT and EBITDA margins declined from prior year primarily due to higher labor and transportation costs along with lower revenue per piece.
SMB Solutions
| ($ millions) | Third Quarter | |||||||||||||||
| Revenue |
2018 |
2017 |
Y/Y Reported |
Y/Y Ex Currency |
||||||||||||
| North America Mailing | $314 | $320 | (2%) | (2%) | ||||||||||||
| International Mailing |
85 |
94 |
(9%) |
(7%) |
||||||||||||
| SMB Solutions | $399 | $414 | (4%) | (3%) | ||||||||||||
| EBIT | ||||||||||||||||
| North America Mailing | $118 | $108 | 9% | |||||||||||||
| International Mailing |
13 |
9 |
45% |
|||||||||||||
| SMB Solutions | $131 | $117 | 12% | |||||||||||||
| EBITDA | ||||||||||||||||
| North America Mailing | $135 | $125 | 9% | |||||||||||||
| International Mailing |
16 |
13 |
21% |
|||||||||||||
| SMB Solutions | $152 | $138 | 10% | |||||||||||||
North America Mailing
Equipment sales grew over prior year largely due to placements of the SendPro C-Series product. Recurring revenue streams declined largely around rentals, financing and supplies, partially offset by growth in business services. The year-over-year decline in the recurring revenue streams continues to moderate. EBIT and EBITDA margins were higher than prior year due to lower expenses.
International Mailing
Equipment sales and recurring revenue streams both contributed to the revenue decline. The equipment sales decline was driven by weakness in the UK and France, partially offset by growth in Japan and Australia. EBIT and EBITDA margins increased versus prior year primarily driven by lower expenses.
Software Solutions
| ($ millions) | Third Quarter | |||||||||||||||
|
2018 |
2017 |
Y/Y Reported |
Y/Y Ex Currency |
|||||||||||||
| Revenue | $76 | $94 | (19%) | (19%) | ||||||||||||
| EBIT | $4 | $19 | (81%) | |||||||||||||
| EBITDA | $6 | $21 | (71%) | |||||||||||||
Software Solutions
Revenue declined from prior year driven by lower license revenue, primarily in Location Intelligence and Customer Information Management. License revenue benefited last year from a large Location Intelligence deal. EBIT and EBITDA margins decreased from prior year largely driven by the lower revenue.
2018 Guidance
The Company is reaffirming its prior annual guidance for 2018.
- Revenue, on a constant currency basis, to be in the range of 11 percent to 15 percent growth, when compared to 2017.
- Adjusted EPS from continuing operations to be in the range of $1.15 to $1.30.
- Free cash flow to be in the range of $300 million to $350 million.
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 2017 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 and 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 2018 will not change significantly. The Company’s guidance also includes changes in accounting standards implemented at the beginning of the year.
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; presort services; office mailing and shipping; location data; and software. 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. 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 can be found in the Company’s 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 capital expenditures, restructuring payments, unusual tax settlements, special contributions to the Company’s pension fund and cash used for other special items. A reconciliation of GAAP cash from operations to free cash flow can be found in the Company’s 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 has also included segment EBITDA as a useful measure for profitability and operational performance, and an additional way to look at the economics of the segments, especially in light of some of the Company’s more recent, larger acquisitions. Segment EBITDA further excludes depreciation and amortization expense for the segment. A reconciliation of segment EBIT and EBITDA to total 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, but are not limited to: declining physical mail volumes; competitive factors, including pricing pressures, technological developments and the introduction of new products and services by competitors; our success in developing new products and services, including digital-based products and services; obtaining regulatory approvals, if required, and the market’s acceptance of these new products and services; changes in postal or banking regulations; changes in, or loss of, our contractual relationships with the United States Postal Service or posts in our other major markets; changes in labor conditions and transportation costs; macroeconomic factors, including global and regional business conditions that adversely impact customer demand, foreign currency exchange rates, interest rates and tariffs; economic tensions between governments and changes in international trade policies and other factors as more fully outlined in the Company's 2017 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 months and nine months ended September 30, 2018 and 2017, and consolidated balance sheets as of September 30, 2018 and December 31, 2017 are attached.
| Pitney Bowes Inc. | |||||||||||||||||
| Consolidated Statements of Income | |||||||||||||||||
| (Unaudited; in thousands, except share and per share amounts) | |||||||||||||||||
| Three months ended | Nine months ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||
| Revenue: | |||||||||||||||||
| Equipment sales | $ | 100,937 | $ | 103,514 | $ | 317,058 | $ | 349,401 | |||||||||
| Supplies | 50,403 | 53,627 | 165,853 | 173,321 | |||||||||||||
| Software | 76,026 | 94,226 | 244,022 | 248,391 | |||||||||||||
| Rentals | 91,115 | 95,333 | 277,550 | 290,087 | |||||||||||||
| Financing | 76,730 | 81,079 | 233,504 | 250,477 | |||||||||||||
| Support services | 74,117 | 75,783 | 219,311 | 223,056 | |||||||||||||
| Business services | 363,528 | 229,711 | 1,117,942 | 672,133 | |||||||||||||
| Total revenue | 832,856 | 733,273 | 2,575,240 | 2,206,866 | |||||||||||||
| Costs and expenses: | |||||||||||||||||
| Cost of equipment sales | 39,353 | 49,328 | 132,513 | 145,450 | |||||||||||||
| Cost of supplies | 13,967 | 15,209 | 46,652 | 48,277 | |||||||||||||
| Cost of software | 24,743 | 24,107 | 75,257 | 70,622 | |||||||||||||
| Cost of rentals | 21,827 | 20,447 | 66,959 | 61,869 | |||||||||||||
| Financing interest expense | 11,954 | 12,629 | 36,525 | 38,446 | |||||||||||||
| Cost of support services | 43,259 | 39,468 | 125,995 | 122,889 | |||||||||||||
| Cost of business services | 291,650 | 166,984 | 882,529 | 470,890 | |||||||||||||
| Selling, general and administrative (1) | 269,387 | 288,093 | 847,281 | 861,738 | |||||||||||||
| Research and development | 32,760 | 29,316 | 94,155 | 88,598 | |||||||||||||
| Restructuring charges and asset impairments, net | 7,232 | 1,470 | 19,639 | 29,109 | |||||||||||||
| Other components of net pension and postretirement cost (1) | (1,852 | ) | 1,356 | (6,070 | ) | 4,079 | |||||||||||
| Interest expense, net | 25,483 | 28,601 | 85,959 | 81,877 | |||||||||||||
| Other expense, net | 7,964 | - | 7,964 | - | |||||||||||||
| Total costs and expenses | 787,727 | 677,008 | 2,415,358 | 2,023,844 | |||||||||||||
| Income from continuing operations before taxes | 45,129 | 56,265 | 159,882 | 183,022 | |||||||||||||
|
(Benefit) provision for income taxes |
(1,976 | ) | 10,828 | 20,745 | 38,700 | ||||||||||||
| Income from continuing operations | 47,105 | 45,437 | 139,137 | 144,322 | |||||||||||||
| Income from discontinued operations, net of tax | 29,848 | 11,921 | 39,543 | 27,070 | |||||||||||||
| Net income | $ | 76,953 | $ | 57,358 | $ | 178,680 | $ | 171,392 | |||||||||
| Basic earnings per share attributable to common stockholders (2): | |||||||||||||||||
| Continuing operations | $ | 0.25 | $ | 0.24 | $ | 0.74 | $ | 0.77 | |||||||||
| Discontinued operations | 0.16 | 0.06 | 0.21 | 0.15 | |||||||||||||
| Net income | $ | 0.41 | $ | 0.31 | $ | 0.95 | $ | 0.92 | |||||||||
| Diluted earnings per share attributable to common stockholders (2): | |||||||||||||||||
| Continuing operations | $ | 0.25 | $ | 0.24 | $ | 0.74 | $ | 0.77 | |||||||||
| Discontinued operations | 0.16 | 0.06 | 0.21 | 0.14 | |||||||||||||
| Net income | $ | 0.41 | $ | 0.31 | $ | 0.95 | $ | 0.92 | |||||||||
| Weighted-average shares used in diluted earnings per share | 188,414,719 | 187,756,543 | 188,190,057 | 187,200,225 | |||||||||||||
| (1) | Effective January 1, 2018, components of net periodic pension and postretirement costs, other than service costs, are required to be reported separately. Accordingly, for the three and nine months ended September 30, 2017, $1.4 million and $4.1 million of costs have been reclassified from selling, general and administrative expense to other components of net pension and postretirement cost. | |
| (2) | 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, except share amounts) | |||||||||||
|
Assets |
September 30,
2018 |
December 31,
2017 |
|||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 759,231 | $ | 1,009,021 | |||||||
| Short-term investments | 55,929 | 48,988 | |||||||||
| Accounts receivable, net | 378,036 | 427,022 | |||||||||
| Short-term finance receivables, net | 787,121 | 828,003 | |||||||||
| Inventories | 48,199 | 40,769 | |||||||||
| Current income taxes | 11,395 | 58,439 | |||||||||
| Other current assets and prepayments | 92,916 | 74,589 | |||||||||
| Assets of discontinued operations | 18,273 | 334,848 | |||||||||
| Total current assets | 2,151,100 | 2,821,679 | |||||||||
| Property, plant and equipment, net | 399,347 | 373,503 | |||||||||
| Rental property and equipment, net | 179,058 | 183,956 | |||||||||
| Long-term finance receivables, net | 600,129 | 652,087 | |||||||||
| Goodwill | 1,765,083 | 1,774,645 | |||||||||
| Intangible assets, net | 238,167 | 272,186 | |||||||||
| Noncurrent income taxes | 54,114 | 59,909 | |||||||||
| Other assets | 526,937 | 540,750 | |||||||||
| Total assets | $ | 5,913,935 | $ | 6,678,715 | |||||||
|
Liabilities and stockholders' equity |
|||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued liabilities | $ | 1,342,097 | $ | 1,450,149 | |||||||
| Current income taxes | 40,018 | 8,823 | |||||||||
| Current portion of long-term debt | 192,649 | 271,057 | |||||||||
| Advance billings | 224,141 | 257,766 | |||||||||
| Liabilities of discontinued operations | 10,446 | 72,808 | |||||||||
| Total current liabilities | 1,809,351 | 2,060,603 | |||||||||
| Deferred taxes on income | 230,663 | 234,643 | |||||||||
| Tax uncertainties and other income tax liabilities | 101,362 | 116,551 | |||||||||
| Long-term debt | 3,076,968 | 3,559,278 | |||||||||
| Other noncurrent liabilities | 443,925 | 519,079 | |||||||||
| Total liabilities | 5,662,269 | 6,490,154 | |||||||||
| Stockholders' equity: | |||||||||||
| Cumulative preferred stock, $50 par value, 4% convertible | 1 | 1 | |||||||||
| Cumulative preference stock, no par value, $2.12 convertible | 403 | 441 | |||||||||
| Common stock, $1 par value | 323,338 | 323,338 | |||||||||
| Additional paid-in-capital | 117,918 | 138,367 | |||||||||
| Retained earnings | 5,290,761 | 5,229,584 | |||||||||
| Accumulated other comprehensive loss | (804,609 | ) | (792,173 | ) | |||||||
| Treasury stock, at cost | (4,676,146 | ) | (4,710,997 | ) | |||||||
| Total stockholders' equity | 251,666 | 188,561 | |||||||||
| Total liabilities and stockholders' equity | $ | 5,913,935 | $ | 6,678,715 | |||||||
| Pitney Bowes Inc.
Business Segments (Unaudited; in thousands) |
|||||||||||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||
| 2018 | 2017 | % Change | 2018 | 2017 | % Change | ||||||||||||||||||||
| REVENUE | |||||||||||||||||||||||||
| Global Ecommerce | $ | 232,845 | $ | 106,181 | >100% | $ | 718,535 | $ | 288,839 | >100% | |||||||||||||||
| Presort Services | 125,334 | 119,074 | 5 | % | 382,522 | 370,203 | 3 | % | |||||||||||||||||
| Commerce Services | 358,179 | 225,255 | 59 | % | 1,101,057 | 659,042 | 67 | % | |||||||||||||||||
| North America Mailing | 313,965 | 320,091 | (2 | %) | 954,080 | 1,016,993 | (6 | %) | |||||||||||||||||
| International Mailing | 84,970 | 93,858 | (9 | %) | 276,365 | 282,482 | (2 | %) | |||||||||||||||||
| Small & Medium Business Solutions | 398,935 | 413,949 | (4 | %) | 1,230,445 | 1,299,475 | (5 | %) | |||||||||||||||||
| Software Solutions | 75,742 | 94,069 | (19 | %) | 243,738 | 248,349 | (2 | %) | |||||||||||||||||
| Total revenue | $ | 832,856 | $ | 733,273 | 14 | % | $ | 2,575,240 | $ | 2,206,866 | 17 | % | |||||||||||||
| EBIT | |||||||||||||||||||||||||
| Global Ecommerce | $ | (14,330 | ) | $ | (9,594 | ) | (49 | %) | $ | (28,034 | ) | $ | (17,894 | ) | (57 | %) | |||||||||
| Presort Services | 17,435 | 19,474 | (10 | %) | 57,026 | 69,461 | (18 | %) | |||||||||||||||||
| Commerce Services | 3,105 | 9,880 | (69 | %) | 28,992 | 51,567 | (44 | %) | |||||||||||||||||
| North America Mailing | 118,070 | 107,963 | 9 | % | 352,833 | 370,004 | (5 | %) | |||||||||||||||||
| International Mailing | 12,794 | 8,809 | 45 | % | 42,040 | 36,239 | 16 | % | |||||||||||||||||
| Small & Medium Business Solutions | 130,864 | 116,772 | 12 | % | 394,873 | 406,243 | (3 | %) | |||||||||||||||||
| Software Solutions | 3,525 | 18,531 | (81 | %) | 24,450 | 24,928 | (2 | %) | |||||||||||||||||
| Segment EBIT (1) | $ | 137,494 | $ | 145,183 | (5 | %) | $ | 448,315 | $ | 482,738 | (7 | %) | |||||||||||||
| EBITDA | |||||||||||||||||||||||||
| Global Ecommerce | $ | 820 | $ | (1,970 | ) | >100% | $ | 17,013 | $ | 4,240 | >100% | ||||||||||||||
| Presort Services | 24,302 | 25,778 | (6 | %) | 76,678 | 89,889 | (15 | %) | |||||||||||||||||
| Commerce Services | 25,122 | 23,808 | 6 | % | 93,691 | 94,129 | (0 | %) | |||||||||||||||||
| North America Mailing | 135,332 | 124,516 | 9 | % | 404,328 | 418,943 | (3 | %) | |||||||||||||||||
| International Mailing | 16,204 | 13,372 | 21 | % | 54,225 | 49,847 | 9 | % | |||||||||||||||||
| Small & Medium Business Solutions | 151,536 | 137,888 | 10 | % | 458,553 | 468,790 | (2 | %) | |||||||||||||||||
| Software Solutions | 6,042 | 20,754 | (71 | %) | 31,774 | 31,529 | 1 | % | |||||||||||||||||
| Segment EBITDA (2) | $ | 182,700 | $ | 182,450 | 0 | % | $ | 584,018 | $ | 594,448 | (2 | %) | |||||||||||||
|
Reconciliation of segment EBITDA to net income |
|||||||||||||||||||||||||
| Segment EBITDA | $ | 182,700 | $ | 182,450 | $ | 584,018 | $ | 594,448 | |||||||||||||||||
| Less: Segment depreciation and amortization (3) | (45,206 | ) | (37,267 | ) | (135,703 | ) | (111,710 | ) | |||||||||||||||||
| Segment EBIT | 137,494 | 145,183 | 448,315 | 482,738 | |||||||||||||||||||||
| Corporate expenses | (39,696 | ) | (41,322 | ) | (137,257 | ) | (151,473 | ) | |||||||||||||||||
| Adjusted EBIT | 97,798 | 103,861 | 311,058 | 331,265 | |||||||||||||||||||||
| Interest, net (4) | (37,437 | ) | (41,230 | ) | (122,484 | ) | (120,323 | ) | |||||||||||||||||
| Restructuring charges and asset impairments, net | (7,232 | ) | (1,470 | ) | (19,639 | ) | (29,109 | ) | |||||||||||||||||
| Loss on debt extinguishment | (7,964 | ) | - | (7,964 | ) | - | |||||||||||||||||||
| Gain on sale of technology | - | - | - | 6,085 | |||||||||||||||||||||
| Transaction costs | (36 | ) | (4,896 | ) | (1,089 | ) | (4,896 | ) | |||||||||||||||||
| Benefit (provision) for income taxes | 1,976 | (10,828 | ) | (20,745 | ) | (38,700 | ) | ||||||||||||||||||
| Income from continuing operations | 47,105 | 45,437 | 139,137 | 144,322 | |||||||||||||||||||||
| Income from discontinued operations, net of tax | 29,848 | 11,921 | 39,543 | 27,070 | |||||||||||||||||||||
| Net income | $ | 76,953 | $ | 57,358 | $ | 178,680 | $ | 171,392 | |||||||||||||||||
| (1) | Segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges, and other items that are not allocated to a particular business segment. | |
| (2) | Segment EBITDA is calculated as Segment EBIT plus segment depreciation and amortization expense. | |
| (3) | Includes depreciation and amortization expense of reporting segments only. Does not include corporate depreciation and amortization expense. | |
| (4) | 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 amounts) | ||||||||||||||||||||||||
|
Three months ended September 30, |
Nine months ended September 30, |
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| 2018 | 2017 | Y/Y Chg. | 2018 | 2017 | Y/Y Chg. | |||||||||||||||||||
| Reconciliation of reported revenue to revenue excluding currency | ||||||||||||||||||||||||
| Revenue, as reported | $ | 832,856 | $ | 733,273 | $ | 2,575,240 | $ | 2,206,866 | ||||||||||||||||
| Currency impact on revenue | 4,023 | - | (19,586 | ) | - | |||||||||||||||||||
| Revenue, at constant currency | $ | 836,879 | $ | 733,273 | 14 | % | $ | 2,555,654 | $ | 2,206,866 | 16 | % | ||||||||||||
| Reconciliation of reported net income to adjusted earnings | ||||||||||||||||||||||||
| Net income | $ | 76,953 | $ | 57,358 | $ | 178,680 | $ | 171,392 | ||||||||||||||||
| Income from discontinued operations, net of tax | (29,848 | ) | (11,921 | ) | (39,543 | ) | (27,070 | ) | ||||||||||||||||
| Restructuring charges and asset impairments, net | 5,290 | 999 | 14,422 | 19,434 | ||||||||||||||||||||
| Loss on debt extinguishment | 5,933 | - | 5,933 | - | ||||||||||||||||||||
| Transaction costs | 27 | 3,099 | 813 | 3,099 | ||||||||||||||||||||
| Gain on sale of technology | - | - | - | (5,605 | ) | |||||||||||||||||||
| Tax legislation | (7,986 | ) | - | (13,966 | ) | - | ||||||||||||||||||
| Adjusted net income | 50,369 | 49,535 | 146,339 | 161,250 | ||||||||||||||||||||
| Provision for income taxes, as adjusted | 9,992 | 13,096 | 42,235 | 49,692 | ||||||||||||||||||||
| Interest, net | 37,437 | 41,230 | 122,484 | 120,323 | ||||||||||||||||||||
| Adjusted EBIT | 97,798 | 103,861 | 311,058 | 331,265 | ||||||||||||||||||||
| Depreciation and amortization | 50,319 | 43,178 | 152,181 | 129,888 | ||||||||||||||||||||
| Adjusted EBITDA | $ | 148,117 | $ | 147,039 | $ | 463,239 | $ | 461,153 | ||||||||||||||||
| Reconciliation of reported diluted earnings per share to adjusted diluted earnings per share | ||||||||||||||||||||||||
| Diluted earnings per share | $ | 0.41 | $ | 0.31 | $ | 0.95 | $ | 0.92 | ||||||||||||||||
| Income from discontinued operations, net of tax | (0.16 | ) | (0.06 | ) | (0.21 | ) | (0.14 | ) | ||||||||||||||||
| Restructuring charges and asset impairments, net | 0.03 | 0.01 | 0.08 | 0.10 | ||||||||||||||||||||
| Loss on debt extinguishment | 0.03 | - | 0.03 | - | ||||||||||||||||||||
| Transaction costs | - | 0.02 | - | 0.02 | ||||||||||||||||||||
| Gain on sale of technology | - | - | - | (0.03 | ) | |||||||||||||||||||
| Tax legislation | (0.04 | ) | - | (0.07 | ) | - | ||||||||||||||||||
| Adjusted diluted earnings per share | $ | 0.27 | $ | 0.26 | $ | 0.78 | $ | 0.86 | ||||||||||||||||
| Note: The sum of the earnings per share amounts may not equal the totals due to rounding. | ||||||||||||||||||||||||
| Reconciliation of reported net cash from operating activities to free cash flow | ||||||||||||||||||||||||
| Net cash provided by operating activities | $ | 115,592 | $ | 145,930 | $ | 290,626 | $ | 330,577 | ||||||||||||||||
| Net cash provided by operating activities - discontinued operations | (2,428 | ) | (3,924 | ) | (44,200 | ) | (18,020 | ) | ||||||||||||||||
| Capital expenditures | (40,511 | ) | (42,507 | ) | (140,533 | ) | (118,351 | ) | ||||||||||||||||
| Restructuring payments | 11,572 | 10,791 | 39,100 | 28,442 | ||||||||||||||||||||
| Reserve account deposits | 905 | (5,022 | ) | 6,864 | (2,508 | ) | ||||||||||||||||||
| Transaction costs paid | 9,205 | - | 13,242 | - | ||||||||||||||||||||
| Free cash flow | $ | 94,335 | $ | 105,268 | $ | 165,099 | $ | 220,140 | ||||||||||||||||
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