Pitney Bowes Achieves Revenue and Earnings Guidance in First Quarter
Press release from the issuing company
STAMFORD, Conn., April 17, 2001 - Pitney Bowes Inc. (NYSE: PBI) today announced first quarter results that featured growth in diluted earnings per share from continuing operations to 53 cents, excluding the restructuring charge, from 50 cents the year before. Revenue grew two percent during the quarter to $966.3 million. Income from continuing operations declined one percent to $131.6 million before the restructuring charge.
During the quarter, as previously announced, the company recorded a pre-tax restructuring charge of $75 million, of which $43 million was related to continuing operations, and the remaining $32 million related to discontinued operations. These costs are associated with infrastructure and process improvements, and the planned spin-off of the Office Systems business. The company expects to record an additional $25 million to $35 million in the second quarter of 2001 to complete the previously announced restructuring plan.
Pitney Bowes Chairman and Chief Executive Officer Michael J. Critelli commented, "Pitney Bowes delivered revenue and earnings per share improvement during the quarter despite the fact that 2001 thus far has been a challenging year for most of corporate America. The continued, steady demand for our integrated mail and document management solutions in this economic environment, many of which are mission-critical to our customers, indicates that our products and services are just what many companies need to run their operations efficiently and reduce their costs. We also completed several strategic transactions during the quarter which will complement our suite of solutions for global customers of all sizes, positioning us for continued growth in the future.
"We continue our focus on improving shareholder value by building our base of loyal customers, and by extension, a large recurring revenue stream. Using a combination of internal development, acquisitions and partnerships we are creating the advanced solutions that global customers require to support their growing and increasingly complex, integrated applications. This customer-focused market development pays off. Today, approximately 75 percent of our revenues are recurring in nature, providing financial stability in a challenging economic environment. Our strong balance sheet gives us the financial flexibility to make investments and acquisitions to grow the business."
As previously announced, the company's recent acquisition activity exemplifies its strategic actions to expand internationally, meet the dynamic needs of global customers, and deliver shareholder value, according to Mr. Critelli. "It's good news for our customers and our shareholders that we have entered into an agreement to acquire Danka Services International (DSI), a division of Danka Business Systems. This business will strengthen our Enterprise Solutions segment which specializes in physical and electronic document management and high- volume mail production. In combination with other previously announced acquisition activity, the DSI agreement provides a solid platform for accelerated global growth, giving Pitney Bowes the critical mass, complementary technology and international presence to help customers optimize the management of the messages, money and business information contained in their integrated mail and document stream."
Pitney Bowes Management Services achieved its sixth consecutive quarter of improving revenue growth, recording a 15 percent increase over 2000. The growth in business came from both new, value-added services for existing clients, and new enterprise contracts through the acquisition of Services Integration Group, L.P., the outsourcing unit of Shell Services International Inc. Upon completion of the transaction referenced earlier, Danka Systems International will be integrated into Management Services. This acquisition is an important element in the Management Services' strategy to support global enterprises with sophisticated, high value document management throughout a document's physical and electronic lifecycle. The parties expect the transaction to close during the second quarter of 2001.
During the quarter, the Company repurchased two million shares, leaving $228 million of authorization for future share repurchases. Free cash flow from continuing operations, excluding payments associated with the restructuring plan and spin-off, exceeded $120 million during the quarter.
Compared to year 2000 results, the company expects revenue growth for the second quarter 2001 to be in the range of two to four percent and four to six percent for the second half of the year, prior to the inclusion of any revenues from the recently announced plan to acquire Danka Services International. Excluding restructuring charges, diluted earnings per share from continuing operations are expected to be in the range of 58 to 59 cents for the second quarter 2001 and $2.35 to $2.37 for the full year.
First quarter 2001 revenue included $471.5 million from sales, up seven percent from $441.2 million in the first quarter of 2000; $368.0 million from rentals and financing, down three percent from $380.7 million; and $126.9 million from support services, up three percent from $122.9 million. Income from continuing operations for the period was $103.9 million, or 42 cents per diluted share, or $131.6 million, or 53 cents per diluted share before the restructuring charge, compared to first-quarter 2000 income from continuing operations of $133.5 million, or 50 cents per diluted share. First quarter 2001 net income was $103.9 million or 42 cents per diluted share compared to first quarter 2000 net income of $146.9 or 55 cents per diluted share. First quarter 2001 net income did not include any income from discontinued operations, while first quarter 2000 net income included $18.1 million of income from discontinued operations, or seven cents per diluted share and a $4.7 million charge from an accounting change or two cents per diluted share.
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