Market Overview

Pitney Bowes Announces Full Year and Fourth Quarter 2018 Financial Results

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Pitney Bowes Inc. (NYSE:PBI), a global technology company that provides
commerce solutions in the areas of ecommerce, shipping, mailing, and
data, today announced its financial results for the full year and fourth
quarter 2018.

"The fourth quarter and 2018 were important moments in the
transformation of our company," said Marc B. Lautenbach, President and
CEO, Pitney Bowes. "Revenue grew in 2018, marking the second year of
consecutive growth and making the last two years the best revenue growth
performance in a decade."

Full Year 2018:

  • Revenue of $3.5 billion, an increase over prior year of 13 percent as
    reported and 2 percent on a proforma basis
  • GAAP EPS of $1.19; Adjusted EPS of $1.16
  • GAAP cash from operations of $392 million; free cash flow of $318
    million
  • Total debt decreased by $565 million versus prior year

Fourth Quarter 2018:

  • Revenue of $947 million, an increase over prior year of 3 percent as
    reported
  • GAAP EPS of $0.24; Adjusted EPS of $0.38
  • GAAP cash from operations of $103 million; free cash flow of $153
    million

Recent Announcements:

  • On January 31, 2019, the Company announced
    that it signed a definitive agreement to sell its SMB direct
    operations in six smaller European countries to BAVARIA Industries
    Group AG.
  • On February 4, 2019, the Board of Directors authorized an incremental
    $100 million share repurchase and revised the quarterly dividend to
    $0.05 on the Company's common share.

Share Repurchase and Dividend

The Board of Directors authorized an incremental $100 million share
repurchase, which brings the total authorization to $121 million, and
declared a quarterly cash dividend of $0.05 per common share. The amount
of dividend reflects a reduction from the previous quarter's dividend of
$0.1875 per share. The dividend will be payable on March 11, 2019 to
stockholders of record on February 15, 2019. In addition, a quarterly
cash dividend of $0.53 per share of the Company's $2.12 convertible
preference stock will be payable on April 1, 2019 to stockholders of
record on March 15, 2019, and a quarterly cash dividend of $0.50 per
share on the Company's 4 percent convertible cumulative preferred stock
will be payable on May 1, 2019 to stockholders of record on April 15,
2019.

"Six years ago, Pitney Bowes was in markets that were declining and our
revenue was declining," said Lautenbach. "Today, roughly half of Pitney
Bowes revenue is coming from growth markets. Importantly, Pitney Bowes
is winning in those markets and growing revenue as evidenced by the
strong growth in our Global Ecommerce segment. Consequently, there are
opportunities available for Pitney Bowes to create value for our
shareholders and continue to grow. Therefore, it is appropriate for the
Company's capital allocation to evolve. Our new capital allocation
policy provides sufficient flexibility for Pitney Bowes to take
advantage of these opportunities and at the same time still return
capital to our shareholders. I am confident our capital allocation will
unlock value for our shareholders."

Full Year 2018 Results

Revenue totaled $3.5 billion, an increase over prior year of 13 percent
as reported and 12 percent at constant currency. On a proforma basis,
revenue increased over prior year by 2 percent as reported and 1 percent
at constant currency.

GAAP earnings per diluted share (GAAP EPS) were $1.19. Adjusted earnings
per diluted share (Adjusted EPS) were $1.16.

GAAP cash from operations was $392 million and free cash flow was $318
million. During the year, the Company used cash to reduce debt by $565
million, return $140 million in dividends to shareholders and to pay $53
million for restructuring payments.

Fourth Quarter 2018 Results

Revenue totaled $947 million, which was an increase over prior year of 3
percent as reported and 4 percent at constant currency.

Commerce Services revenue grew 12 percent. Small and Medium Business
(SMB) Solutions revenue declined 7 percent as reported and 6 percent at
constant currency. Software Solutions revenue increased 17 percent as
reported and 19 percent at constant currency.

GAAP EPS was $0.24. Adjusted EPS was $0.38.

GAAP cash from operations during the quarter was $103 million and free
cash flow was $153 million. Compared to the prior year, free cash flow
increased by $19 million largely due to the timing of accounts payable
and higher net income. This was partly offset by other working capital
items. During the quarter, the Company used cash to return $35 million
in dividends to shareholders and to pay $14 million for restructuring
payments.

The Company's earnings per share results for the fourth quarter and full
year are summarized in the table below*

  Fourth Quarter   Full Year
    2018   2017   2018   2017
GAAP EPS $ 0.24   $ 0.48   $ 1.19   $ 1.39
Discontinued Operations   $ 0.08       ($0.07 )     ($0.13 )     ($0.21 )
GAAP EPS from Continuing Operations $ 0.32 $ 0.41 $ 1.06 $ 1.18
Pension Settlement $ 0.12 - $ 0.12 -
Tax Legislation ($0.11 ) ($0.21 ) ($0.20 ) ($0.21 )
Restructuring Charges and Asset Impairments, net $ 0.03 $ 0.09 $ 0.11 $ 0.20
Transaction Costs $ 0.01 $ 0.01 $ 0.01 $ 0.02
Loss on Extinguishment of Debt - $ 0.01 $ 0.03 $ 0.01
State Tax Valuation Allowance – DMT Sale - - $ 0.01 -
Gain on Sale of Technology     -       -       -       ($0.03 )
Adjusted EPS $ 0.38 $ 0.32 $ 1.16 $ 1.18
* The sum of the earnings per share may not equal the totals above
due to rounding.
 

Fourth Quarter 2018 Business Segment Reporting

The business reporting groups reflect how the Company manages these
groups and the clients served in each market.

The Commerce Services group includes the Global Ecommerce and Presort
Services segments. Global Ecommerce facilitates global cross-border
ecommerce transactions and domestic retail and ecommerce shipping
solutions, including fulfillment and returns.
Presort Services
provides sortation services to qualify large volumes of First Class
Mail; Marketing Mail; and Bound and Packet Mail (Standard Flats and
Bound Printed Matter) for postal workshare discounts.

The SMB Solutions group offers mailing and shipping solutions,
financing, services, and supplies for small and medium businesses to
help simplify and save on the sending, tracking and receiving of
letters, parcels and flats.
This group includes the North America
Mailing and International Mailing segments.

Software Solutions provide customer engagement, customer information,
location intelligence software and data.

The results for each segment within the group may not equal the
subtotals for the group due to rounding.

Commerce Services

($ millions)   Fourth Quarter
Revenue 2018  

2017

 

Y/Y
Reported

 

Y/Y
Ex Currency

Global Ecommerce $     304 $     263 16 % 16 %
Presort Services       133         128   4 % 4 %
Commerce Services $ 438 $ 391 12 % 12 %
 
EBITDA
Global Ecommerce $ 12 $ 15 (20 %)
Presort Services       24         34   (30 %)
Commerce Services $ 36 $ 49 (27 %)
 
EBIT
Global Ecommerce ($4 ) $ -

>(100

%)

Presort Services       17         28   (40 %)
Commerce Services $ 12 $ 28 (56 %)
 

Global Ecommerce

Revenue increased from prior year driven by growth in domestic parcel,
fulfillment and shipping solutions volumes partially offset by lower
cross border volumes. This is the first quarter with Newgistics
reporting in both periods. Newgistics revenue grew 23 percent over prior
year.

The EBIT loss was driven primarily by investments in market growth
opportunities and operational excellence initiatives, higher
transportation and labor costs as well as the amortization of
acquisition-related intangible assets.

Presort Services

Revenue growth was driven by higher volumes of First Class mail,
Standard Class mail and Bound and Packet mail processed. EBIT and EBITDA
margins declined from prior year primarily due to higher costs related
to the launch of a marketing mail pilot program, as well as higher labor
and transportation costs and lower revenue per piece.

SMB Solutions

($ millions)   Fourth Quarter
Revenue

2018

 

2017

 

Y/Y
Reported

 

Y/Y
Ex Currency

North America Mailing $     321 $     340 (6 %) (6 %)
International Mailing       91         102   (10 %) (7 %)
SMB Solutions $ 412 $ 442 (7 %) (6 %)
 
EBITDA
North America Mailing $ 134 $ 144 (7 %)
International Mailing       26         17   49 %
SMB Solutions $ 160 $ 162 (1 %)
EBIT
North America Mailing $ 117 $ 129 (9 %)
International Mailing       22         12   77 %
SMB Solutions $ 139 $ 141 (1 %)
 

North America Mailing

The year-over-year decline in recurring revenue streams continues to
stabilize and is in-line with the average of the last two quarters.
Recurring revenue streams declined largely around rentals, supplies and
support services, which was partially offset by growth in financing and
business services. Revenue declined in equipment sales largely due to a
decline in top of the line products. EBIT and EBITDA margins were lower
than prior year due to the decline in revenue partly offset by lower
expenses.

International Mailing

Equipment sales and recurring revenue streams both contributed to the
revenue decline. The equipment sales decline was driven by weakness in
the UK and France, partly offset by growth in Japan. EBIT and EBITDA
margins increased versus prior year primarily driven by lower expenses.

Software Solutions

($ millions)   Fourth Quarter

2018

 

2017

 

Y/Y
Reported

 

Y/Y
Ex Currency

Revenue $     97 $     83 17 % 19 %
EBITDA $ 25 $ 11 121 %
EBIT $ 23 $ 9 155 %
 

Software Solutions

Revenue increased from prior year driven by higher license revenue,
primarily in Data and Location Intelligence, strong growth in SaaS
revenues, as well as from the implementation of the new revenue
recognition standard (ASC 606). Revenue also benefited from growth in
smaller deals. EBIT and EBITDA margins increased from prior year largely
driven by operating leverage on the higher revenue.

2019 Guidance

The Company expects for the full year 2019:

  • Revenue, on a constant currency (CC) basis, to be in the range of 1
    percent to 4 percent growth, when compared to 2018.
  • Adjusted EPS from continuing operations to be in the range of $1.05 to
    $1.20.
  • Free cash flow to be in the range of $225 million to $275 million.
    Free cash flow will be impacted by third party leasing initiatives.

The Company's 2019 guidance has been adjusted for the financial results
related to the sale of SMB direct operations in six smaller European
countries as a result of the recently signed definitive agreement. The
year-to-year revenue comparison will be adversely impacted by
approximately $40 million, or 1 percent, as a result of this sale. The
Company's 2019 guidance also considers the incremental expense
associated with the current tariff level of 10 percent with China.

In aggregate, these items are expected to adversely impact EPS by
approximately $0.04 to $0.05. Additionally, if the current tariff level
with China increases to 25 percent, the Company has estimated that this
would have an additional adverse impact of approximately $0.04 to $0.06
on EPS results.

The Company's 2019 guidance reflects the new lease accounting standard
(ASC 842), which is not expected to have a material impact on overall
2019 results. Prior years will be recast in the first quarter to conform
to the new standard.

This guidance discusses future results, which are inherently subject to
unforeseen risks and developments. As such, discussions about the
business outlook should be read in the context of an uncertain future,
as well as the risk factors identified in the safe harbor language at
the end of this release and as more fully outlined in the Company's 2017
Form 10-K Annual Report and other reports filed with the Securities and
Exchange Commission. This guidance excludes any unusual items that may
occur or 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. The Company cannot reasonably predict the impact that
future changes in currency exchange rates will have on revenue and net
income. Additionally, the Company cannot 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. The Company's guidance is based on an assumption that the
global economy and foreign exchange markets in 2019 will not change
significantly. The Company's guidance also includes changes in
accounting standards implemented at the beginning of the year.

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.

About Pitney Bowes

Pitney Bowes (NYSE:PBI) is a global technology company providing
commerce solutions that power billions of transactions. Clients around
the world, including 90 percent of the Fortune 500, rely on the accuracy
and precision delivered by Pitney Bowes solutions, analytics, and APIs
in the areas of ecommerce fulfillment, shipping and returns;
cross-border ecommerce; presort services; office mailing and shipping;
location data; and software. For nearly 100 years Pitney Bowes has been
innovating and delivering technologies that remove the complexity of
getting commerce transactions precisely right. For additional
information visit Pitney Bowes, the Craftsmen of Commerce, at www.pitneybowes.com.

Use of Non-GAAP Measures

The Company's financial results are reported in accordance with
generally accepted accounting principles (GAAP); however, in its
disclosures the Company uses certain non-GAAP measures, such as adjusted
earnings before interest and taxes (EBIT), adjusted earnings before
interest, taxes, depreciation and amortization (EBITDA), adjusted
earnings per share (EPS), revenue growth on a constant currency basis
and free cash flow.

The Company reports measures such as adjusted EBIT, adjusted EPS and
adjusted net income to exclude the impact of special items like
restructuring charges, tax adjustments, goodwill and asset write-downs,
and costs related to dispositions and acquisitions.
While these
are actual Company expenses, they can mask underlying trends associated
with its business.
Such items are often inconsistent in amount
and frequency and as such, the adjustments allow an investor greater
insight into the current underlying operating trends of the business.

In addition, revenue growth is presented on a constant currency basis
to exclude the impact of changes in foreign currency exchange rates
since the prior period under comparison.
Constant currency
measures are intended to help investors better understand the underlying
operational performance of the business excluding the impacts of shifts
in currency exchange rates over the period.
Constant currency is
calculated by converting our current quarter reported results using the
prior year's exchange rate for the comparable quarter.
This
comparison allows an investor insight into the underlying revenue
performance of the business and true operational performance from a
comparable basis to prior period.
A reconciliation of reported
revenue to constant currency revenue can be found in the Company's
attached financial schedules.

The Company reports free cash flow in order to provide investors
insight into the amount of cash that management could have available for
other discretionary uses.
Free cash flow adjusts GAAP cash from
operations for capital expenditures, restructuring payments, unusual tax
settlements, special contributions to the Company's pension fund and
cash used for other special items.
A reconciliation of GAAP cash
from operations to free cash flow can be found in the Company's attached
financial schedules.

Segment EBIT is the primary measure of profitability and operational
performance at the segment level.
Segment EBIT is determined by
deducting from segment revenue the related costs and expenses
attributable to the segment.
Segment EBIT excludes interest,
taxes, general corporate expenses not allocated to a particular business
segment, restructuring charges and goodwill and asset impairments, which
are recognized on a consolidated basis. The Company has also included
segment EBITDA as a useful measure for profitability and operational
performance, and an additional way to look at the economics of the
segments, especially in light of some of the Company's more recent,
larger acquisitions.
Segment EBITDA further excludes depreciation
and amortization expense for the segment. A reconciliation of segment
EBIT and EBITDA to net income can be found in the attached financial
schedules.

Pitney Bowes has provided a quantitative reconciliation to GAAP in
supplemental schedules. This information can be found at the Company's
web site
www.pb.com/investorrelations.

This document contains "forward-looking statements" about the
Company's expected or potential future business and financial
performance. Forward-looking statements include, but are not limited to,
statements about its future revenue and earnings guidance and other
statements about future events or conditions.
Forward-looking
statements are not guarantees of future performance and involve risks
and uncertainties that could cause actual results to differ materially
from those projected. These risks and uncertainties include, but are not
limited to: declining physical mail volumes; competitive factors,
including pricing pressures, technological developments and the
introduction of new products and services by competitors; our success in
developing new products and services, including digital-based products
and services; obtaining regulatory approvals, if
required, and
the market's acceptance of these new products and services; changes in
postal or banking regulations; changes in, or loss of, our contractual
relationships with the United States Postal Service or posts in our
other major markets; changes in labor conditions and transportation
costs; macroeconomic factors, including global and regional business
conditions that adversely impact customer demand, foreign currency
exchange rates, interest rates and tariffs; economic tensions between
governments and changes in international trade policies, Brexit and
other factors as more fully outlined in the Company's 2017 Form 10-K
Annual Report and other reports filed with the Securities and Exchange
Commission.
Pitney Bowes assumes no obligation to update any
forward-looking statements contained in this document as a result of new
information, events or developments.

Note: Consolidated statements of income; revenue and EBIT by business
segment; and reconciliation of GAAP to non-GAAP measures for the three
months and twelve months ended December 31, 2018 and 2017, and
consolidated balance sheets as of December 31, 2018 and December 31,
2017 are attached

Pitney Bowes Inc.
Consolidated Statements of Income
(Unaudited; in thousands, except share and per share amounts)
 
  Three months ended December 31,   Twelve months ended December 31,
2018   2017

2018

 

2017

Revenue:
Equipment sales $ 113,393 $ 127,290 $ 430,451 $ 476,691
Supplies 52,451 58,091 218,304 231,412
Software 96,832 83,452 340,855 331,843
Rentals 85,507 94,036 363,057 384,123
Financing 81,274 80,508 314,778 330,985
Support services 74,103 76,736 293,413 299,792
Business services   443,580     396,293     1,561,522     1,068,426  
Total revenue   947,140     916,406     3,522,380     3,123,272  
 
Costs and expenses:
Cost of equipment sales 49,253 55,666 181,766 201,116
Cost of supplies 14,308 18,025 60,960 66,302
Cost of software 25,424 24,411 100,681 95,033
Cost of rentals 19,371 20,834 86,330 82,703
Financing interest expense 12,332 12,219 48,857 50,665
Cost of support services 42,276 41,000 168,271 163,889
Cost of business services 363,555 302,162 1,246,084 773,052
Selling, general and administrative (1) 275,835 309,167 1,123,116 1,170,905
Research and development 31,433 30,105 125,588 118,703
Restructuring charges and asset impairments, net 7,438 27,114 27,077 56,223
Other components of net pension and postretirement cost (1) 28,495 1,334 22,425 5,413
Interest expense, net 24,941 31,620 110,900 113,497
Other expense   -     3,856     7,964     3,856  
Total costs and expenses   894,661     877,513     3,310,019     2,901,357  
 
Income from continuing operations before taxes 52,479 38,893 212,361 221,915
(Benefit) provision for income taxes   (8,362 )   (38,147 )   12,383     553  
Income from continuing operations 60,841 77,040 199,978 221,362
(Loss) income from discontinued operations, net of tax   (15,856 )   12,908     23,687     39,978  
Net income $ 44,985   $ 89,948   $ 223,665   $ 261,340  
 
Basic earnings (loss) per share attributable to common stockholders (2):
Continuing operations $ 0.32 $ 0.41 $ 1.07 $ 1.19
Discontinued operations   (0.08 )   0.07     0.13     0.21  
Net income $ 0.24   $ 0.48   $ 1.19   $ 1.40  
 
Diluted earnings (loss) per share attributable to common
stockholders (2):
Continuing operations $ 0.32 $ 0.41 $ 1.06 $ 1.18
Discontinued operations   (0.08 )   0.07     0.13     0.21  
Net income $ 0.24   $ 0.48   $ 1.19   $ 1.39  
 
Weighted-average shares used in diluted earnings per share   188,806,855     188,046,578     188,381,647     187,435,080  

(1)

  Effective January 1, 2018, components of net periodic pension and
postretirement costs, other than service costs, are required to be
reported separately. Accordingly, for the three and twelve months
ended December 30, 2017, $1.3 million and $5.4 million of costs have
been reclassified from selling, general and administrative expense
to other components of net pension and postretirement cost.
 

(2)

The sum of the earnings per share amounts may not equal the totals
due to rounding.
 

Pitney Bowes Inc.
Consolidated Balance Sheets
(Unaudited; in thousands, except share amounts)
 

Assets

 

December 31,
2018

 

December 31,
2017

Current assets:
Cash and cash equivalents $ 866,742 $ 1,009,021
Short-term investments 56,449 48,988
Accounts receivable, net 455,807 427,022
Short-term finance receivables, net 789,661 828,003
Inventories 41,964 40,769
Current income taxes 5,947 58,439
Other current assets and prepayments 99,332 83,293
Assets of discontinued operations   4,854     334,848  
Total current assets 2,320,756 2,830,383
 
Property, plant and equipment, net 410,114 373,503
Rental property and equipment, net 178,099 183,956
Long-term finance receivables, net 592,165 652,087
Goodwill 1,766,511 1,774,645
Intangible assets, net 227,137 272,186
Noncurrent income taxes 61,420 59,909
Other assets   416,701     540,751  
Total assets $ 5,972,903   $ 6,687,420  
 

Liabilities and stockholders' equity

Current liabilities:
Accounts payable and accrued liabilities $ 1,401,635 $ 1,458,854
Current income taxes 15,165 8,823
Current portion of long-term debt 199,535 271,057
Advance billings 237,529 257,766
Liabilities of discontinued operations   3,276     72,808  
Total current liabilities 1,857,140 2,069,308
 
Deferred taxes on income 295,808 249,143
Tax uncertainties and other income tax liabilities 39,548 102,051
Long-term debt 3,066,073 3,559,278
Other noncurrent liabilities   474,862     519,079  
Total liabilities   5,733,431     6,498,859  
 
Stockholders' equity:
Cumulative preferred stock, $50 par value, 4% convertible 1 1
Cumulative preference stock, no par value, $2.12 convertible 396 441
Common stock, $1 par value 323,338 323,338
Additional paid-in-capital 121,475 138,367
Retained earnings 5,416,777 5,229,584
Accumulated other comprehensive loss (948,426 ) (792,173 )
Treasury stock, at cost   (4,674,089 )   (4,710,997 )
Total stockholders' equity   239,472     188,561  
Total liabilities and stockholders' equity $ 5,972,903   $ 6,687,420  
 

Pitney Bowes Inc.

Business Segments

(Unaudited; in thousands)

 
  Three months ended December 31,   Twelve months ended December 31,
2018   2017   % Change 2018   2017   % Change
REVENUE
Global Ecommerce $ 304,327 $ 263,403 16 % $ 1,022,862 $ 552,242 85 %
Presort Services   133,273     127,698   4 %   515,795     497,901   4 %
Commerce Services   437,600     391,101   12 %   1,538,657     1,050,143   47 %
 
North America Mailing 320,945 340,412 (6 %) 1,275,025 1,357,405 (6 %)
International Mailing   91,478     101,615   (10 %)   367,843     384,097   (4 %)
Small & Medium Business Solutions   412,423     442,027   (7 %)   1,642,868     1,741,502   (6 %)
 
Software Solutions   97,117     83,278   17 %   340,855     331,627   3 %
Total revenue $ 947,140   $ 916,406   3 % $ 3,522,380   $ 3,123,272   13 %
 
EBIT
Global Ecommerce $ (4,345 ) $ (5 ) >(100%) $ (32,379 ) $ (17,899 ) (81 %)
Presort Services   16,742     28,045   (40 %)   73,768     97,506   (24 %)
Commerce Services   12,397     28,040   (56 %)   41,389     79,607   (48 %)
 
North America Mailing 117,435 128,567 (9 %) 470,268 498,571 (6 %)
International Mailing   21,780     12,292   77 %   63,820     48,531   32 %
Small & Medium Business Solutions   139,215     140,859   (1 %)   534,088     547,102   (2 %)
 
Software Solutions   22,644     8,890   >100%   47,094     33,818   39 %
Segment EBIT (1) $ 174,256   $ 177,789   (2 %) $ 622,571   $ 660,527   (6 %)
 
EBITDA
Global Ecommerce $ 11,654 $ 14,523 (20 %) $ 28,667 $ 18,763 53 %
Presort Services   23,928     34,158   (30 %)   100,606     124,047   (19 %)
Commerce Services   35,582     48,681   (27 %)   129,273     142,810   (9 %)
 
North America Mailing 134,190 144,431 (7 %) 538,518 563,374 (4 %)
International Mailing   25,738     17,246   49 %   79,962     67,093   19 %
Small & Medium Business Solutions   159,928     161,677   (1 %)   618,480     630,467   (2 %)
 
Software Solutions   24,860     11,267   >100%   56,634     42,796   32 %
Segment EBITDA (2) $ 220,370   $ 221,625   (1 %) $ 804,387   $ 816,073   (1 %)
 
 

Reconciliation of segment EBITDA to
net income

 
Segment EBITDA $ 220,370 $ 221,625 $ 804,387 $ 816,073
Less: Segment depreciation and amortization (3)   (46,114 )   (43,836 )   (181,816 )   (155,546 )
Segment EBIT 174,256 177,789 622,571 660,527
Corporate expenses   (43,224 )   (62,599 )   (180,481 )   (214,072 )
Adjusted EBIT 131,032 115,190 442,090 446,455
Interest, net (4) (37,273 ) (43,839 ) (159,757 ) (164,162 )
Pension settlement (31,329 ) - (31,329 ) -
Restructuring charges and asset impairments, net (7,438 ) (27,114 ) (27,077 ) (56,223 )
Loss on extinguishment of debt - (3,856 ) (7,964 ) (3,856 )
Gain on sale of technology - - - 6,085
Transaction costs (2,513 ) (1,488 ) (3,602 ) (6,384 )
Benefit (provision) for income taxes   8,362     38,147     (12,383 )   (553 )
Income from continuing operations 60,841 77,040 199,978 221,362
(Loss) income from discontinued operations, net of tax   (15,856 )   12,908     23,687     39,978  
Net income $ 44,985   $ 89,948   $ 223,665   $ 261,340  
(1)   Segment EBIT excludes interest, taxes, general corporate expenses,
restructuring charges, and other items that are not allocated to a
particular business segment.
(2) Segment EBITDA is calculated as Segment EBIT plus segment
depreciation and amortization expense.
(3) Includes depreciation and amortization expense of reporting segments
only. Does not include corporate depreciation and amortization
expense.
(4) Includes financing interest expense and interest expense, net.
 

Pitney Bowes Inc.
Reconciliation of Reported Consolidated Results to Adjusted
Results
(Unaudited; in thousands, except per share amounts)
 
 

Three months ended
December 31,

 

Twelve months ended
December 31,

2018   2017   Y/Y Chg. 2018   2017   Y/Y Chg.
     
Reconciliation of reported revenue to revenue excluding
currency
Revenue, as reported $ 947,140 $ 916,406 3 % $ 3,522,380 $ 3,123,272 13 %
Currency impact on revenue   6,787     -         (12,797 )   -      
Revenue, at constant currency $ 953,927   $ 916,406     4 % $ 3,509,583   $ 3,123,272     12 %
 
Reconciliation of reported revenue growth to pro forma revenue
growth
Revenue, as reported $ 3,522,380 $ 3,123,272 13 %
Less: Newgistics revenue included in PBI revenue   555,022     139,794      
PBI excluding Newgistics 2,967,358 2,983,478 (1 %)
Actual Newgistics revenue, including preacquisition period   555,022     480,018     16 %
Proforma revenue 3,522,380 3,463,496 2 %
Currency impact on revenue   (12,797 )      
Proforma revenue, at constant currency $ 3,509,583   $ 3,463,496     1 %
 
Reconciliation of reported net income to adjusted earnings
Net income $ 44,985 $ 89,948 $ 223,665 $ 261,340
Loss (income) from discontinued operations, net of tax 15,856 (12,908 ) (23,687 ) (39,978 )
Pension settlement 23,402 - 23,402 -
Restructuring charges and asset impairments, net 6,530 17,813 20,950 37,248
Tax legislation (20,316 ) (38,774 ) (36,909 ) (38,774 )
State tax valuation allowance - Production Mail Business sale - - 2,628 -
Transaction costs 1,876 953 2,690 4,052
Loss on extinguishment of debt - 2,375 5,933 2,375
Gain on sale of technology   -     -     -     (5,605 )
Adjusted net income 72,333 59,407 218,672 220,658
Provision for income taxes, as adjusted 21,426 11,944 63,661 61,635
Interest, net   37,273     43,839     159,757     164,162  
Adjusted EBIT 131,032 115,190 442,090 446,455
Depreciation and amortization   51,112     49,762     203,293     179,650  
Adjusted EBITDA $ 182,144   $ 164,952   $ 645,383   $ 626,105  
 
 
Reconciliation of reported diluted earnings per share to
adjusted diluted earnings per share
Diluted earnings per share $ 0.24 $ 0.48 $ 1.19 $ 1.39
Loss (income) from discontinued operations, net of tax 0.08 (0.07 ) (0.13 ) (0.21 )
Pension settlement 0.12 - 0.12 -
Restructuring charges and asset impairments, net 0.03 0.09 0.11 0.20
Tax legislation (0.11 ) (0.21 ) (0.20 ) (0.21 )
State tax valuation allowance - Production Mail Business sale - - 0.01 -
Transaction costs 0.01 0.01 0.01 0.02
Loss on extinguishment of debt - 0.01 0.03 0.01
Gain on sale of technology   -     -     -     (0.03 )
Adjusted diluted earnings per share $ 0.38   $ 0.32   $ 1.16   $ 1.18  
 
Note: The sum of the earnings per share amounts may not equal
the totals due to rounding.
 
 
Reconciliation of reported net cash from operating activities
to free cash flow
Net cash provided by operating activities $ 102,660 $ 165,236 $ 392,261 $ 495,813
Net cash (used in) provided by operating activities - discontinued
operations
72,278 (10,986 ) 29,103 (29,006 )
Capital expenditures (50,911 ) (49,746 ) (191,444 ) (168,097 )
Restructuring payments 13,898 9,012 52,974 37,454
Reserve account deposits 14,144 13,462 21,008 10,954
Transaction costs paid   961     7,396     14,203     7,396  
Free cash flow $ 153,030   $ 134,374   $ 318,105   $ 354,514  

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