Pitney bowes announces third quarter 2020 financial results
Stamford, conn.--(business wire)--pitney bowes inc. (nyse: pbi), a global technology company that provides commerce solutions in the areas of ecommerce, shipping, mailing and financial services, today announced its financial results for the third quarter 2020. “we grew revenue 13 percent in the third quarter, which is the strongest organic revenue growth rate we have achieved in well over a decade,” said marc b. lautenbach, president and ceo, pitney bowes. “i am extremely proud of what the team has accomplished, especially during these challenging times. “several years ago, we implemented a strategy to shift our portfolio to the growth areas of the market,” lautenbach continued. “the investments we have made are paying off especially with our shipping-related revenues, which comprise half of our overall revenue. although uncertainties remain given the covid-19 pandemic, we are pleased with the momentum in our businesses and believe we are well positioned to capitalize on the market opportunities ahead of us.” third quarter - financial overview: revenue of $892 million, growth of 13 percent gaap eps of $0.07; adjusted eps of $0.08 gaap cash from operations of $104 million; free cash flow of $85 million third quarter - other highlights: the company repaid the $100 million drawn against the revolving credit facility. the company ended the third quarter with $820 million in cash and short-term investments. shipping-related revenues represented 50 percent of total revenue. global ecommerce revenue exceeded $400 million for the first time, representing 47 percent growth. global ecommerce domestic parcel volumes more than doubled from prior year. presort services productivity measures resulted in 115,000 fewer labor hours to sort nearly 4.1 billion pieces. sendtech shipping revenue was $32 million and grew at a double-digit rate. sendtech shipped nearly 12,000 units of the sendpro mailstation since launching in april. third quarter results revenue totaled $892 million, which was growth of 13 percent over prior year. gaap earnings per share were $0.07 and adjusted earnings per share were $0.08. gaap cash from operations was $104 million and free cash flow was $85 million. free cash flow increased over prior year largely due to changes in working capital, particularly around timing of accounts receivable, which was partly offset by lower net income. during the quarter, the company repaid the $100 million drawn against the revolving credit facility, invested $21 million in capital expenditures, paid $9 million in dividends and made $5 million in restructuring payments. on a year-to-date basis, gaap cash from operations is $191 million and free cash flow is $186 million. earnings per share results for the third quarter are summarized in the table below: third quarter* 2020 2019 gaap eps $0.07 ($0.02) discontinued operations - 0.05 gaap eps from continuing operations $0.06 $0.03 restructuring and asset impairments 0.02 0.20 adjusted eps $0.08 $0.24 * the sum of the earnings per share may not equal the totals due to rounding. business segment reporting the commerce services group includes the global ecommerce and presort services segments. global ecommerce facilitates domestic retail and ecommerce shipping solutions, including fulfillment and returns, and global cross-border ecommerce transactions. presort services provides sortation services to qualify large volumes of first class mail, marketing mail, marketing mail flats and bound printed matter for postal workshare discounts. the sending technology solutions segment offers physical and digital mailing and shipping technology solutions, financing, services, supplies and other applications for small and medium businesses to help simplify and save on the sending, tracking and receiving of letters, parcels and flats. the sum of the segment results may not equal the totals due to rounding. commerce services third quarter ($ millions) 2020 2019 b/(w) reported b/(w) ex currency revenue global ecommerce $410 $279 47% 47% presort services 128 131 (3%) (3%) commerce services $538 $410 31% 31% ebitda global ecommerce ($3) ($4) 34% presort services 23 25 (11%) commerce services $20 $21 (6%) ebit global ecommerce ($20) ($22) 9% presort services 14 18 (18%) commerce services ($5) ($4) (28%) global ecommerce revenue increased driven by strong volume growth in domestic parcel, digital delivery and cross border services. ebit margin improved from prior year driven by increased volumes, partly offset by investments to support growth and gain share along with incremental costs associated with covid-19. presort services revenue improved from second quarter as the year-over-year volume declines moderated. revenue declined from prior year due to lower marketing mail and first class volumes processed. marketing mail flats and bound printed matter volumes continued to grow at a double-digit rate over prior year. ebit and ebitda margins improved slightly quarter-to-quarter. compared to prior year, ebit and ebitda margins were impacted primarily by the lower revenue. sendtech solutions third quarter ($ millions) 2020 2019 b/(w) reported b/(w) ex currency revenue $354 $380 (7%) (7%) ebitda $121 $141 (14%) ebit $113 $131 (14%) revenue improved from second quarter as year-over-year declines moderated. revenue declined from prior year largely driven by lower equipment sales, support services, supplies and financing. business services revenues grew over prior year as clients increased their usage of shipping offerings and capabilities. ebit and ebitda margins declined from prior year primarily driven by the lower revenue performance. 2020 guidance given the continued level of uncertainty around the depth and duration of covid-19, the company will not provide guidance which is consistent with prior quarters. 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; and financing. for 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 ebitda and adjusted eps to exclude the impact of items like discontinued operations, restructuring charges, gains, losses and costs related to acquisitions and dispositions, asset impairment charges, goodwill impairment charges and other unusual or one-time items. while these are actual company income or expenses, they can mask underlying trends associated with its business. such items are often inconsistent in amount and frequency and as such, the non-gaap measures provide investors greater insight into the 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 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, its continuing impact on our operations, employees, the availability and cost of labor, 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 the 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 the financial health of posts in the u.s. or other major markets or the loss of, or significant changes to, our contractual relationship with the united states postal service (usps); our ability to continue to grow and manage volumes, gain additional economies of scale and improve profitability within our commerce services group; changes in political conditions and their potential impacts on the operations of the usps and broader mailing and shipping industry; the loss of some of our larger clients in our commerce services group; expenses and potential impacts resulting from a breach of security, including cyber-attacks or other comparable events; changes in labor conditions and transportation costs; our success at managing customer credit risk; third-party suppliers' ability to provide products and services required by us and our clients; capital market disruptions or credit rating downgrades that adversely impact our ability to access capital markets at reasonable costs; and other factors as more fully outlined in the company's 2019 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 and nine months ended september 30, 2020 and 2019, and consolidated balance sheets at september 30, 2020 and december 31, 2019 are attached. three months ended september 30, nine months ended september 30, 2020 2019 2020 2019 $ 550,954 $ 419,101 $ 1,524,323 $ 1,243,609 117,519 126,274 353,320 382,578 86,218 90,577 260,758 280,039 79,572 89,618 213,682 264,956 39,635 44,818 118,117 142,261 18,000 19,737 55,458 60,339 891,898 790,125 2,525,658 2,373,782 482,965 338,519 1,311,941 1,003,483 37,647 41,086 114,132 123,453 11,626 11,026 36,054 33,433 59,766 59,859 165,045 182,094 10,132 12,225 30,751 37,533 6,055 5,090 18,455 23,223 238,618 254,092 720,882 757,228 9,255 12,272 28,838 38,421 3,766 47,017 12,505 56,616 - - 198,169 - 27,175 28,704 79,504 84,325 (109 ) (882 ) 126 (3,138 ) (6,325 ) 667 9,787 18,350 880,571 809,675 2,726,189 2,355,021 11,327 (19,550 ) (200,531 ) 18,761 554 (24,895 ) 7,540 (13,351 ) 10,773 5,345 (208,071 ) 32,112 616 (8,470 ) 7,648 (14,199 ) $ 11,389 $ (3,125 ) $ (200,423 ) $ 17,913 $ 0.06 $ 0.03 $ (1.21 ) $ 0.18 - (0.05 ) 0.04 (0.08 ) $ 0.07 $ (0.02 ) $ (1.17 ) $ 0.10 $ 0.06 $ 0.03 $ (1.21 ) $ 0.18 - (0.05 ) 0.04 (0.08 ) $ 0.07 $ (0.02 ) $ (1.17 ) $ 0.10 174,704 171,201 171,388 179,096 (1) $ 799,177 $ 924,442 21,185 115,879 348,565 373,471 559,148 629,643 66,974 68,251 11,477 5,565 115,981 101,601 - 17,229 1,922,507 2,236,081 367,466 376,177 40,352 41,225 587,548 625,487 1,142,144 1,324,179 167,493 190,640 213,490 200,752 69,305 71,903 533,726 400,456 $ 5,044,031 $ 5,466,900 $ 760,363 $ 793,690 610,582 591,118 38,007 36,060 63,509 20,108 102,919 101,920 2,527 17,083 - 9,713 1,577,907 1,569,692 2,531,712 2,719,614 279,526 274,435 40,642 38,834 192,789 177,711 342,330 400,518 4,964,906 5,180,804 323,338 323,338 67,512 98,748 5,190,914 5,438,930 (813,572 ) (840,143 ) (4,689,067 ) (4,734,777 ) 79,125 286,096 $ 5,044,031 $ 5,466,900 2020 2019 % change 2020 2019 % change $ 409,981 $ 278,995 47 % $ 1,100,757 $ 827,568 33 % 127,705 131,483 (3 %) 386,552 394,468 (2 %) 537,686 410,478 31 % 1,487,309 1,222,036 22 % 354,212 379,647 (7 %) 1,038,349 1,151,746 (10 %) 891,898 790,125 13 % 2,525,658 2,373,782 6 % (2,454 ) - 2,514 - $ 889,444 $ 790,125 13 % $ 2,528,172 $ 2,373,782 7 % 2020 2019 % change ebit (1) d&a ebitda ebit (1) d&a ebitda ebit ebitda $ (19,757 ) $ 16,824 $ (2,933 ) $ (21,793 ) $ 17,356 $ (4,437 ) 9 % 34 % 14,481 8,031 22,512 17,687 7,667 25,354 (18 %) (11 %) (5,276 ) 24,855 19,579 (4,106 ) 25,023 20,917 (28 %) (6 %) 112,599 7,955 120,554 130,954 9,579 140,533 (14 %) (14 %) $ 107,323 $ 32,810 140,133 $ 126,848 $ 34,602 161,450 (15 %) (13 %) (32,810 ) (34,602 ) (38,801 ) (39,730 ) (53,429 ) (58,277 ) (3,766 ) (47,017 ) - (667 ) - (707 ) (554 ) 24,895 10,773 5,345 616 (8,470 ) $ 11,389 $ (3,125 ) 2020 2019 % change ebit (1) d&a ebitda ebit (1) d&a ebitda ebit ebitda $ (68,126 ) $ 52,187 $ (15,939 ) $ (51,969 ) $ 50,697 $ (1,272 ) (31 %) 42,758 23,662 66,420 48,215 21,675 69,890 (11 %) (5 %) (25,368 ) 75,849 50,481 (3,754 ) 72,372 68,618 (26 %) 323,429 25,771 349,200 378,095 30,347 408,442 (14 %) (15 %) $ 298,061 $ 101,620 399,681 $ 374,341 $ 102,719 477,060 (20 %) (16 %) (101,620 ) (102,719 ) (115,558 ) (117,758 ) (146,640 ) (160,283 ) (12,505 ) (56,616 ) (198,169 ) - 11,908 - (36,987 ) (667 ) (641 ) (20,256 ) (7,540 ) 13,351 (208,071 ) 32,112 7,648 (14,199 ) $ (200,423 ) $ 17,913 2020 2019 2020 2019 $ 11,389 $ (3,125 ) $ (200,423 ) $ 17,913 (616 ) 8,470 (7,648 ) 14,199 2,639 34,722 8,493 41,709 - - 196,600 - - - (8,943 ) - - - 12,229 - - 497 27,777 497 - 527 487 21,313 13,412 41,091 28,572 95,631 38,801 39,730 115,558 117,758 1,681 (12,250 ) 7,291 669 53,894 68,571 151,421 214,058 38,616 40,537 120,403 118,514 $ 92,510 $ 109,108 $ 271,824 $ 332,572 $ 0.07 $ (0.02 ) $ (1.17 ) $ 0.10 - 0.05 (0.04 ) 0.08 0.02 0.20 0.05 0.23 - - 1.14 - - - (0.05 ) - - - 0.07 - - - 0.16 - - - - 0.12 $ 0.08 $ 0.24 $ 0.17 $ 0.53 $ 103,815 $ 95,502 $ 190,624 $ 182,284 - (10,324 ) 38,423 (15,858 ) (20,833 ) (36,034 ) (80,787 ) (95,221 ) 4,504 5,840 15,869 18,845 (2,867 ) 11,441 19,464 3,125 - 2,917 2,117 9,025 $ 84,619 $ 69,342 $ 185,710 $ 102,200
