STAMFORD, Conn., April 26 -- Pitney Bowes Inc. today announced first quarter 2004 results that exceeded previous revenue and diluted earnings per share guidance.
Commenting on the quarter, Chairman and CEO Michael J. Critelli stated, "We are very pleased that the year is off to a robust start as we grow our existing businesses and continue to execute our long-term growth strategies. The quarter featured good organic growth largely driven by increased global demand for our mailing solutions and services by customers of all sizes.
"We are also pleased to see that our growth strategies are gaining traction. We are expanding our participation in the mail stream and diversifying our customer base with the continued growth in small business solutions, the enlargement of our pre-sort network, and the growing use of our advanced technologies to process consumer originated mail in retail outlets and on eBay. We are positioning ourselves to provide higher value document management solutions with our definitive agreement to acquire Group 1 Software and build our customer communication management capability. And, our international presence is growing as a result of strong customer acceptance of our new digital mailing solutions."
Revenue for the quarter grew seven percent to $1.17 billion and net income was $126.6 million. Diluted earnings per share, excluding a charge as part of the company's restructuring program, were $.58. This amount exceeded previous guidance because of strong organic growth in the Global Mailstream Solutions segment and favorable currency translation. During the quarter, the company took several actions as part of its previously announced restructuring program and recorded an after-tax charge of $9.6 million or $.04 per diluted share. Including this charge, fully diluted earnings per share for the first quarter were $.54. First quarter 2004 earnings per share included $.02 per diluted share from non-core Capital Services operations compared to $.04 per diluted share in the first quarter of 2003.
The company generated $275 million in cash from operations during the quarter. Subtracting $75 million in capital expenditures and excluding $17 million in payments associated with restructuring initiatives, free cash flow was $217 million. During the quarter the company repurchased 2.3 million shares for $ 96 million.
In the first quarter, revenue increased nine percent and earnings before interest and taxes (EBIT) increased seven percent in the Global Mailstream Solutions segment. Global Mailstream continued to experience good customer demand worldwide for its revolutionary digital mailing systems, mail creation products and distribution solutions applications.
The segment also benefited from strong growth in its small business operations and in its supplies revenue. Additionally, its pre-sort operations continued to expand during the quarter and again grew revenue at a double- digit pace.
Non-U.S. revenue experienced strong organic growth and favorable foreign currency exchange rates. The UK, Canada and Japan all had double-digit revenue growth in local currency, helped by the recent introduction of new digital mailing systems. Germany was the only European country in which revenue did not grow on a local currency basis.
The Global Enterprise Solutions segment reported eight percent revenue growth and two percent EBIT growth for the quarter.
Pitney Bowes Management Services (PBMS) reported revenue of $265 million, an eight-percent increase over the prior year and margins consistent with the prior year. The company continues to focus on strategies for enhancing value to its customers and working more efficiently and cost-effectively. The Government Solutions operations continued to grow as the integration of DDD Company progressed.
Document Messaging Technologies reported revenue of $64 million for the quarter, an increase of four percent versus the prior year. Overall business trends are positive with a good backlog and ongoing success with the APSTM Series Advanced Productivity System platform. Margins declined slightly because of a lower level of customer financing during the quarter.
In the Capital Services segment revenue declined 26 percent and EBIT declined 24 percent as the result of the ongoing planned strategy to reduce exposure to non-core, long-term financing.
Based on existing economic and business conditions and the expected acquisition of Group 1 Software in the third quarter, the company anticipates second quarter revenue growth in the range of four percent to six percent and full year revenue growth in the range of five percent to seven percent. As previously announced, over the course of this year the company expects to incur additional restructuring charges. The company is still finalizing plans related to future restructuring actions, a portion of which will be recorded in the second quarter of 2004. Therefore, earnings guidance is provided excluding the impact of these future charges. The company expects diluted earnings per share to be in the range of $.60 to $.62 for the second quarter 2004 and reaffirms its full year guidance of diluted earnings per share in the range of $2.44 to $2.51, exclusive of restructuring charges, but inclusive of the expected impacts from the proposed acquisition of Group 1 Software.
In year-over-year comparisons, first quarter 2004 revenue included $331.4 million from sales of equipment and supplies, up 14 percent; $201.4 million from rentals, up three percent; $158.4 million from core financing, up four percent; $19.5 million from non-core financing down 36 percent; $300.7 million from business services, up 10 percent; and $160.5 million from support services, up eight percent. Net income for the period was $126.6 million, or $.54 per diluted share, up twelve percent compared to the first quarter of 2003. Excluding the after-tax impact of the $15 million restructuring charge, net income was $136.2 million or $.58 per diluted share in the first quarter of 2004.
WhatTheyThink is the global printing industry's leading independent media organization with both print and digital offerings, including WhatTheyThink.com, PrintingNews.com and WhatTheyThink magazine versioned with a Printing News and Wide-Format & Signage edition. Our mission is to provide cogent news and analysis about trends, technologies, operations, and events in all the markets that comprise today’s printing and sign industries including commercial, in-plant, mailing, finishing, sign, display, textile, industrial, finishing, labels, packaging, marketing technology, software and workflow.