Pitney Bowes Meets Target for 1Q, Facility Management Interest Strong
Press release from the issuing company
STAMFORD, Conn., April 23, 2002 - Pitney Bowes Inc. last week announced diluted earnings per share of 53 cents for the first quarter, which is consistent with previous guidance. This compares to 53 cents in 2001, excluding the impact of a restructuring charge, and 42 cents including the impact of the restructuring charge.
Revenue grew by nine percent to $1.0 billion. Excluding the impact of foreign currency, revenue grew 10 percent.
Net income for the first quarter 2002 was $129.5 million and free cash flow for the quarter was $189 million excluding payments related to special items from the prior year. Including special items, free cash flow was $168 million. The company repurchased 1.7 million shares during the quarter, leaving $228 million of authorization for future share repurchases.
In describing the company's quarterly performance, Pitney Bowes Chairman and Chief Executive Officer Michael J. Critelli noted, "Our business delivered results in line with previous guidance, despite the effects of weak economies across many of our major markets around the world. During the quarter, some customers continued to delay their new purchase and upgrade decisions, especially for higher priced equipment. However, while the economic environment is difficult, it also highlights now more than ever, the value of our integrated mail and document management solutions for customers of all sizes. In addition, customers are more aware of the additional security our mailing systems and outsourcing services can provide to their operations."
"We are very pleased with the progress we have made integrating our recent acquisitions into the business and the resulting synergies. During the quarter, we also significantly enhanced our positioning for long-term growth with the introduction of several new products from each of our businesses. We also continued our steady stream of secure, technologically advanced, cost-effective solutions. Global Mailing introduced two new products to help businesses process their mail more efficiently: the U580 Mail Processor for the creation and distribution of professional looking mail, and the OfficeRight Mailer which saves time and money by automating envelope-inserting for low-volume mailings.
Pitney Bowes Management Services announced a three-tiered, secure mail-handling service to match leading-edge technology and expertise with the customers' desired level of security. Document Messaging Technologies introduced a new high speed sorter, Olympus II MT, designed to enhance efficiency for high-volume pre-sort service bureaus and commercial mail centers, and received industry analyst Giga Information Group's highest rating for an electronic presentment and payment solution."
"We also continued to implement improvements in our customer-facing processes which will enhance our ability to deliver a quality customer experience while at the same time reducing our cost structure."
Mr. Critelli continued, "Pitney Bowes is about to enter an exciting phase in both the company's and the mailing industry's history. Later this month, we will introduce a new family of digital, networked mailing systems that will for the first time provide all our customers, as well as postal carriers, with convenient access to valuable postal services and information to help them manage their mail and document flow more effectively, securely and cost-efficiently than was ever possible. Our knowledge base, experience, constant innovation, and infrastructure upgrades make us well positioned to broaden our participation in the $900 billion mail stream market."
The Global Mailing Segment includes worldwide revenue and related expenses from the sale, rental and financing of mail finishing, mail creation and shipping equipment, related supplies and services, postal payment solutions, small business solutions and software. In the first quarter, Global Mailing revenue increased three percent while operating profit declined one percent. Excluding revenue from the recent acquisitions of Bell & Howell's international operations and Secap SA, and foreign currency impacts, Global Mailing revenue was down one percent when compared to the prior year.
Global Mailing's business in the U.S. faced a similar business environment as in the fourth quarter. Also, it experienced a shift in product mix to lower margin products and services, resulting in slightly lower operating profit.
Within the Global Mailing segment, international mailing's double-digit revenue growth was supported by recent acquisitions and improving business trends in the UK. However, international revenues were adversely impacted by declines in revenue in both Canada and Germany.
The Enterprise Solutions Segment includes Pitney Bowes Management Services (PBMS) and Document Messaging Technologies (DMT). Revenues from Management Services include facilities management contracts for advanced mailing, reprographic, document management and other added-value services to large enterprises. Revenues from Document Messaging Technologies include sales, service and financing of high speed, software-enabled production mail systems, sorting equipment, incoming mail systems, electronic statement, billing and payment solutions, and mailing software. The Enterprise Solutions segment reported revenue growth of 26 percent and a decline in operating profit of seven percent.
PBMS reported revenue growth of 37 percent to $234 million when compared to the prior year, and operating profit growth of 66 percent. Excluding the revenue from the recent acquisition of Danka Services International (DSI), PBMS revenue was flat for the quarter. Contraction in the financial services and technology industries had an adverse impact on PBMS' growth. However, there continues to be strong interest among many large enterprises for integrated mailroom and document management services as they seek enhanced operating efficiencies and security.
DMT reported revenue of $57 million for the quarter, a decline of three percent from the prior year, with a substantially greater decline in operating profit. Slower placements of high margin equipment, an increase in lower margin service revenue and continued investment in new product development contributed to the decline in operating profit during the quarter.
Total Messaging Solutions, the combined results of the Global Mailing and Enterprise Solutions segments, showed a nine percent increase in revenue and a two percent decline in operating profit.
The Capital Services Segment includes primarily asset- and fee-based income generated by financing or arranging transactions of critical large-ticket customer assets. Revenue for the quarter declined three percent while operating profit increased 12 percent, which is consistent with the company's ongoing objective to shift to fee-based transactions.
Compared to the prior year, the company expects revenue growth for the second quarter of 2002 to be in the range of eight to ten percent and seven to eight percent for the full year. Diluted earnings per share are expected to be in the range of 58 to 60 cents for the second quarter 2002 and $2.37 to $2.40 for the full year.
First quarter 2002 revenue included $541.2 million from sales, up 15 percent from $471.5 million in the first quarter of 2001; $370.2 million from rentals and financing, up one percent from $368.0 million in 2001; and $138.2 million from support services, up nine percent from $126.9 million. Net income for the period was $129.5 million, or 53 cents per diluted share compared to first quarter of 2001 net income of $103.9 million or 42 cents per diluted share. Excluding the impact of the prior year restructuring charge, net income was $131.6 million or 53 cents per diluted share in the first quarter of 2001.
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