Pitney Bowes Announces Full Year And Fourth Quarter 2019 Financial Results; 2020 Guidance
Wednesday, February 05, 2020
Press release from the issuing company
Stamford, Conn. – Pitney Bowes Inc., 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 full year and fourth quarter 2019.
Full Year 2019:
“2019 was another important step forward in transforming our Company,” said Marc B. Lautenbach, President and CEO, Pitney Bowes. “We delivered our third consecutive year of revenue growth on a constant currency basis. We substantially realigned our business and our product portfolio, strengthened our balance sheet, and set ourselves up to drive profitable revenue growth going forward. Importantly, over the last two years, we have reduced our debt by over $1 billion, while maintaining significant investment in the business.
“In 2020, Pitney Bowes enters its 100th year, a noteworthy accomplishment few can claim,” Lautenbach added. “Our transformation continues to build on our three logical core adjacencies of shipping and mail along with the financing of mission-critical assets for our clients.”
Ransomware Attack Update:
Beginning on October 12, 2019, the Company was affected by a ransomware attack that temporarily disrupted customer access to some services. The Company has seen no evidence that customer or employee data was improperly accessed.
Debt Management and Software Solutions Sale:
In the fourth quarter, the Company:
Full Year 2019 Results
Revenue totaled $3.2 billion, which was flat versus prior year. Revenue increased 2 percent when adjusted for both the impact of currency and the January 2019 sale of direct operations in 6 smaller European markets (market exits).
Commerce Services revenue grew 9 percent over prior year and 10 percent when adjusted for the impact of currency. Sending Technology Solutions (SendTech Solutions) revenue declined 9 percent and 8 percent when adjusted for the impact of currency. SendTech Solutions revenue declined 6 percent when adjusted for both the impact of currency and market exits.
GAAP earnings per diluted share (GAAP EPS) were $1.10. Adjusted earnings per diluted share (Adjusted EPS) were $0.68.
GAAP cash from operations was $252 million and free cash flow was $169 million. During the year, the Company used cash to reduce debt by $526 million, repurchase $105 million of its common shares, pay $35 million in dividends to its common shareholders and $27 million in restructuring payments.
Fourth Quarter 2019 Results
Revenue totaled $831 million, which was a decrease of 3 percent versus prior year and 2 percent when adjusted for both the impact of currency and market exits.
Commerce Services revenue grew 5 percent over prior year. SendTech Solutions revenue declined 11 percent from prior year and 9 percent when adjusted for both the impact of currency and market exits.
GAAP earnings per diluted share were $1.03. Adjusted earnings per diluted share were $0.14.
GAAP cash from operations during the quarter was $70 million and free cash flow was $66 million. Compared to prior year, the decline in free cash flow was driven largely by a change in working capital, the impact of the ransomware attack and lower net income. During the quarter, the Company reduced debt by $329 million, paid $9 million in dividends to its common shareholders and made $8 million in restructuring payments.
Earnings per share results for the fourth quarter and full year are summarized in the table below:
* The sum of the earnings per share may not equal the totals above 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 and Bound and Packet 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 results for each segment within the group may not equal the subtotals for the group due to rounding.
Revenue grew driven by volume growth across all platforms partially offset by business interruption related to the ransomware attack. EBIT and EBITDA margins were largely impacted by investments in market growth opportunities, including engineering, facilities and marketing, higher costs related to the ransomware attack and lower fulfillment margins. The Company estimates that revenue was adversely impacted by approximately $7 million and EBIT and EBITDA by approximately $6 million as result of the ransomware attack.
Revenue grew driven by investments in acquisitions for expansion along with growth in existing volumes across all mail classes partially offset by business interruption related to the ransomware attack. EBIT and EBITDA margins increased compared to prior quarter and prior year driven by lower labor and transportation costs per unit partially offset by lower revenue per piece due to the ransomware attack. The Company estimates that revenue, EBIT and EBITDA were adversely impacted by approximately $4 million as result of the ransomware attack.
* Excluding $11 million related to market exits and $1 million related to the impacts of currency
Revenue declined driven by lower equipment, financing, support services and supplies along with business interruption related to the ransomware attack partially offset by higher rentals and business services revenue. EBIT and EBITDA margins decreased versus prior year driven by lower equipment sales margins primarily due to higher tariff costs and costs related to the ransomware attack. EBIT and EBITDA margins were also impacted by the overall lower segment revenue. The Company estimates that revenue, EBIT and EBITDA were adversely impacted by approximately $8 million as result of the attack.
The Company expects for full year 2020:
This guidance excludes any unusual items that may occur, such as 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. Additionally, the Company does not 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.
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.
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