Pitney Bowes announces third quarter 2020 financial results

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.

Pitney Bowes announces third quarter 2020 financial results
Pitney Bowes announces third quarter 2020 financial results

Pitney Bowes announces third quarter 2020 financial results

Pitney Bowes recently announced its financial results for the third quarter of 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.