Market Overview

Pitney Bowes Announces Second Quarter 2019 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 second quarter 2019.

Quarterly Results:

  • Revenue of $861 million, a decrease of 1 percent; flat when adjusted for the impact of currency; an increase of 2 percent when adjusted for both the impact of currency and market exits
  • GAAP EPS of $0.13; Adjusted EPS of $0.21
  • GAAP cash from operations of $17 million; free cash flow of $13 million
  • Returned a total of $70 million to shareholders through the repurchase of 11.8 million shares of stock for $61 million and $9 million in dividends
  • The Company is reaffirming its 2019 annual guidance

"I am pleased with our overall performance in the second quarter," said Marc B. Lautenbach, President and CEO, Pitney Bowes. "Parcel volumes through our domestic ecommerce network increased 42 percent, which is an important metric as we continue to scale this business. The Company's revenue in the second quarter continued to grow on a comparable basis and earnings were in-line with our expectations. We continued to make progress against our strategic objectives as we move our portfolio to the growth areas of the market, and are positioned to meet our financial goals for the year and over the long-term."

Second Quarter 2019 Results

Revenue totaled $861 million, which was a decline of 1 percent versus prior year. Revenue was flat versus the prior year when adjusted for the impact of currency and increased 2 percent when adjusted for both the impact of currency and the previously announced sale of direct operations in 6 smaller European markets (market exits).

Commerce Services revenue grew 13 percent as reported and 14 percent when adjusted for the impact of currency. Small and Medium Business (SMB) Solutions revenue declined 8 percent as reported and 7 percent when adjusted for the impact of currency. SMB revenue declined 4 percent when adjusted for both the impact of currency and market exits. Software Solutions revenue declined 21 percent as reported and 20 percent adjusted for currency.

GAAP earnings per diluted share (GAAP EPS) were $0.13. Adjusted earnings per diluted share (Adjusted EPS) were $0.21.

The Company's earnings per share results for the second quarter are summarized in the table below:

 

Second Quarter*

 

2019

2018

GAAP EPS

$0.13

$0.27

Discontinued operations

$0.04

($0.01)

GAAP EPS from continuing operations

$0.17

$0.27

Restructuring charges and asset impairments, net

$0.03

$0.04

Transaction costs

$0.01

-

Tax adjustments, net

-

($0.03)

Adjusted EPS

$0.21

$0.28

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

GAAP Cash from Operations and Free Cash Flow Results

GAAP cash from operations during the quarter was $17 million and free cash flow was $13 million. Compared to prior year, the decline in free cash flow was driven by the timing of working capital, largely within accounts payable, and the decline in net income. These impacts were partially offset by lower capital expenditures and the timing of reserve account deposits.

During the quarter, the Company repurchased $61 million of its shares, reduced debt by $13 million and paid $9 million in dividends to its common shareholders.

Second Quarter 2019 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 (Marketing Mail Flats and Bound Printed Matter) for postal workshare discounts.

The SMB Solutions group offers mailing and shipping 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. 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)

Second Quarter

Revenue

2019

2018

Y/Y

Reported

Y/Y

Ex Currency

Global Ecommerce

$282

$239

18%

19%

Presort Services

128

123

4%

4%

Commerce Services

$410

$362

13%

14%

 

 

 

 

 

EBITDA

 

 

 

 

Global Ecommerce

$1

$9

(86%)

 

Presort Services

23

19

18%

 

Commerce Services

$24

$29

(17%)

 

 

 

 

 

 

EBIT

 

 

 

 

Global Ecommerce

($16)

($6)

>(100%)

 

Presort Services

15

13

23%

 

Commerce Services

($0)

$7

>(100%)

 

 

 

 

 

 

Global Ecommerce

Revenue increased from prior year driven by growth in domestic parcel and shipping solutions volumes. EBIT and EBITDA margin percentages declined from prior year driven by a shift in the mix of business to faster growing, but lower-margin services. Margins were also impacted by investments in market growth opportunities, including marketing programs, along with investments in operational excellence initiatives.

Presort Services

Revenue growth was driven by volume growth across all mail classes along with higher revenue per piece. The major volume drivers were higher Marketing Mail and Flats processed. EBIT and EBITDA margin percentages increased from prior year and prior quarter primarily due the higher revenue per piece along with lower labor costs.

SMB Solutions

($ millions)

Second Quarter

 

Revenue

2019

2018

Y/Y

Reported

Y/Y

Ex Currency

Y/Y Ex Currency

& Market Exits*

North America Mailing

$303

$319

(5%)

(5%)

(5%)

International Mailing

75

93

(20%)

(15%)

(3%)

SMB Solutions

$378

$412

(8%)

(7%)

(4%)

 

 

 

 

 

 

EBITDA

 

 

 

 

 

North America Mailing

$123

$128

(4%)

 

 

International Mailing

14

15

(9%)

 

 

SMB Solutions

$137

$144

(5%)

 

 

 

 

 

 

 

EBIT

 

 

 

 

North America Mailing

$113

$120

(6%)

 

International Mailing

12

13

(9%)

 

SMB Solutions

$125

$133

(6%)

 

* Excluding $12 million related to market exits and $5 million related to the impacts of currency

North America Mailing

Revenue declined on lower equipment sales and recurring revenue streams. The recurring revenue stream decline was driven by lower support services, supplies and financing revenue partially offset by higher business services. EBIT and EBITDA margin percentages were relatively flat to prior year driven by the lower revenue along with higher tariff costs partially offset by lower expenses.

International Mailing

Reported revenue was negatively impacted by the previously announced market exits. Excluding the effect from currency and market exits, the revenue decline was driven by lower services and supplies revenue partially offset by higher rentals revenue. The revenue decline was driven by weakness in the UK and Germany partially offset by growth in France. EBIT and EBITDA margin percentages increased versus prior year driven by lower expenses.

Software Solutions

($ millions)

Second Quarter

 

2019

2018

Y/Y

Reported

Y/Y

Ex Currency

Revenue

$72

$92

(21%)

(20%)

EBITDA

$4

$21

(79%)

 

EBIT

$2

$18

(89%)

 

Software Solutions

Revenue declined from prior year driven by lower license revenue partially offset by higher data subscriptions and SaaS revenue. Prior year included several large renewal license deals. In addition, new license deals were down compared to prior year. EBIT and EBITDA margin percentages decreased from prior year largely driven by the lower license revenue.

2019 Guidance

The Company is reaffirming its prior annual guidance for 2019. Guidance reflects the shift of the business to the fourth quarter as shipping continues to be a larger part of the portfolio.

  • Revenue, on a constant currency (CC) basis, to be in the range of 1 percent to 3 percent growth when compared to 2018.
  • Adjusted EPS from continuing operations to be in the range of $0.90 to $1.05.
  • Free cash flow to be in the range of $200 million to $250 million.

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 2018 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.

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; office mailing and shipping; presort services; location data; customer information and engagement software; services; and financing. 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.

Disclosure Using Social Media

Pitney Bowes announces material information to its investors using SEC filings, press releases, public conference calls and webcasts. The Company already makes frequent use of its investor relations website to disseminate material information, as well as social media platforms, including Twitter, Facebook and LinkedIn. Investors, buy and sell-side analysts, media and influencers should note that the Company plans to continue to announce material financial information using the Pitney Bowes investor relations website, SEC filings, and press releases, public conference calls and webcasts. Pitney Bowes is notifying investors, media and others interested in the company that in the future, the Company may choose to communicate material information through its social media channels, or it is possible that information it discloses through social media channels may be deemed to be material. Therefore, Pitney Bowes encourages investors, the media, and others interested in the Company to review the information posted on the Company's investor relations site (https://www.investorrelations.pitneybowes.com/), Twitter (https://twitter.com/PBnews and https://twitter.com/PitneyBowes), Facebook (https://www.facebook.com/PitneyBowes/), and LinkedIn (https://www.linkedin.com/company/pitney-bowes/). The Company may communicate on social media platforms not listed here as well as create new accounts in the future. Any updates to the list of social media channels Pitney Bowes will use to announce material information will be posted on the Investor Relations page.

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. In addition, this quarter the Company reported the comparison of revenue excluding the impact of currency and market exits to prior year, which excludes the impact of changes in foreign currency exchange rates since the prior period and also excludes the revenues associated with the recent market exits in several smaller markets. 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, as well as reported revenue to "revenue excluding the impact of currency and market exits" 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; changes in, or loss of, our contractual relationships with the U.S. Postal Service or posts in other major markets; changes in postal regulations; competitive factors, including pricing pressures, technological developments and the introduction of new products and services by competitors; the United Kingdom's potential exit from the European Union (Brexit); our success in developing and marketing new products and services, and obtaining regulatory approvals, if required; changes in banking regulations or the loss of our Industrial Bank charter; changes in labor conditions and transportation costs; macroeconomic factors, including global and regional business conditions that adversely impact customer demand, foreign currency exchange rates and interest rates; changes in global political conditions and international trade policies, including the imposition or expansion of trade tariffs and other factors as more fully outlined in the Company's 2018 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 and six months ended June 30, 2019 and 2018, and consolidated balance sheets as of June 30, 2019 and December 31, 2018 are attached.

Pitney Bowes Inc.
Consolidated Statements of Income
(Unaudited; in thousands, except share and per share amounts)
 
 
Three months ended June 30, Six months ended June 30,

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue:
Equipment sales

$

85,551

 

$

93,811

 

$

175,338

 

$

200,519

 

Supplies

 

46,490

 

 

55,457

 

 

97,443

 

 

115,450

 

Software

 

72,206

 

 

91,703

 

 

145,524

 

 

167,997

 

Rentals

 

18,445

 

 

19,454

 

 

40,602

 

 

44,419

 

Financing

 

92,419

 

 

97,129

 

 

189,462

 

 

197,478

 

Support services

 

127,683

 

 

138,598

 

 

256,304

 

 

279,248

 

Business services

 

417,985

 

 

369,088

 

 

824,508

 

 

756,712

 

Total revenue

 

860,779

 

 

865,240

 

 

1,729,181

 

 

1,761,823

 

 
Costs and expenses:
Cost of equipment sales

 

58,570

 

 

58,948

 

 

122,235

 

 

121,417

 

Cost of supplies

 

11,758

 

 

15,738

 

 

25,308

 

 

32,685

 

Cost of software

 

23,419

 

 

26,957

 

 

46,802

 

 

51,086

 

Cost of rentals

 

8,418

 

 

8,464

 

 

18,133

 

 

21,212

 

Financing interest expense

 

11,043

 

 

11,194

 

 

22,407

 

 

22,258

 

Cost of support services

 

40,448

 

 

42,306

 

 

82,227

 

 

88,371

 

Cost of business services

 

337,918

 

 

290,567

 

 

664,964

 

 

584,946

 

Selling, general and administrative

 

278,545

 

 

289,427

 

 

579,527

 

 

592,237

 

Research and development

 

22,630

 

 

23,574

 

 

44,404

 

 

48,069

 

Restructuring charges and asset impairments, net

 

7,279

 

 

11,503

 

 

10,877

 

 

12,407

 

Interest expense, net

 

28,019

 

 

30,775

 

 

55,621

 

 

62,789

 

Other components of net pension and postretirement cost

 

(1,618

)

 

(2,499

)

 

(2,256

)

 

(4,218

)

Other (income) expense

 

(27

)

 

-

 

 

17,683

 

 

-

 

Total costs and expenses

 

826,402

 

 

806,954

 

 

1,687,932

 

 

1,633,259

 

 
Income from continuing operations before taxes

 

34,377

 

 

58,286

 

 

41,249

 

 

128,564

 

Provision for income taxes

 

4,099

 

 

7,899

 

 

12,400

 

 

26,694

 

Income from continuing operations

 

30,278

 

 

50,387

 

 

28,849

 

 

101,870

 

(Loss) income from discontinued operations, net of tax

 

(6,581

)

 

1,208

 

 

(7,811

)

 

9,695

 

Net income

$

23,697

 

$

51,595

 

$

21,038

 

$

111,565

 

 
Basic earnings (loss) per share (1):
Continuing operations

$

0.17

 

$

0.27

 

$

0.16

 

$

0.54

 

Discontinued operations

 

(0.04

)

 

0.01

 

 

(0.04

)

 

0.05

 

Net income

$

0.13

 

$

0.28

 

$

0.12

 

$

0.60

 

 
Diluted earnings (loss) per share (1):
Continuing operations

$

0.17

 

$

0.27

 

$

0.16

 

$

0.54

 

Discontinued operations

 

(0.04

)

 

0.01

 

 

(0.04

)

 

0.05

 

Net income

$

0.13

 

$

0.27

 

$

0.12

 

$

0.59

 

 
Weighted-average shares used in diluted earnings per share

 

178,280,533

 

 

188,113,750

 

 

182,638,896

 

 

188,056,884

 

 

(1

)

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

June 30,

2019

December 31,

2018

Current assets:
Cash and cash equivalents

$

771,042

 

$

867,262

 

Short-term investments

 

59,516

 

 

59,391

 

Accounts and other receivables, net

 

419,776

 

 

456,138

 

Short-term finance receivables, net

 

682,828

 

 

752,773

 

Inventories

 

73,347

 

 

62,279

 

Current income taxes

 

22,474

 

 

5,947

 

Other current assets and prepayments

 

132,878

 

 

100,625

 

Assets of discontinued operations

 

-

 

 

4,854

 

Total current assets

 

2,161,861

 

 

2,309,269

 

 
Property, plant and equipment, net

 

416,512

 

 

410,114

 

Rental property and equipment, net

 

36,917

 

 

46,228

 

Long-term finance receivables, net

 

554,075

 

 

536,369

 

Goodwill

 

1,754,610

 

 

1,766,511

 

Intangible assets, net

 

212,596

 

 

227,137

 

Operating lease assets

 

180,983

 

 

156,788

 

Noncurrent income taxes

 

63,013

 

 

66,326

 

Other assets

 

377,420

 

 

419,677

 

Total assets

$

5,757,987

 

$

5,938,419

 

 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities

$

1,295,712

 

$

1,390,362

 

Current operating lease liabilities

 

34,612

 

 

37,208

 

Current portion of long-term debt

 

214,927

 

 

199,535

 

Advance billings

 

211,061

 

 

229,379

 

Current income taxes

 

6,011

 

 

15,284

 

Liabilities of discontinued operations

 

-

 

 

3,276

 

Total current liabilities

 

1,762,323

 

 

1,875,044

 

 
Long-term debt

 

3,029,246

 

 

3,066,073

 

Deferred taxes on income

 

264,191

 

 

254,353

 

Tax uncertainties and other income tax liabilities

 

45,586

 

 

39,548

 

Noncurrent operating lease liabilities

 

154,648

 

 

127,237

 

Other noncurrent liabilities

 

449,021

 

 

474,322

 

Total liabilities

 

5,705,015

 

 

5,836,577

 

 
Stockholders' equity:
Cumulative preferred stock, $50 par value, 4% convertible

 

-

 

 

1

 

Cumulative preference stock, no par value, $2.12 convertible

 

-

 

 

396

 

Common stock, $1 par value

 

323,338

 

 

323,338

 

Additional paid-in-capital

 

105,341

 

 

121,475

 

Retained earnings

 

5,282,374

 

 

5,279,682

 

Accumulated other comprehensive loss

 

(907,678

)

 

(948,961

)

Treasury stock, at cost

 

(4,750,403

)

 

(4,674,089

)

Total stockholders' equity

 

52,972

 

 

101,842

 

Total liabilities and stockholders' equity

$

5,757,987

 

$

5,938,419

 

Pitney Bowes Inc.
Business Segment Revenue
(Unaudited; in thousands)
 
Three months ended June 30, Six months ended June 30,

2019

2018

% Change

2019

2018

% Change

REVENUE
Global Ecommerce

$

282,319

$

239,100

18%

$

548,573

$

485,690

13%

Presort Services

 

128,138

 

122,730

4%

 

262,985

 

257,188

2%

Commerce Services

 

410,457

 

361,830

13%

 

811,558

 

742,878

9%

 
North America Mailing

 

303,417

 

318,901

(5%)

 

618,891

 

659,712

(6%)

International Mailing

 

74,699

 

92,806

(20%)

 

153,208

 

191,236

(20%)

Small & Medium Business Solutions

 

378,116

 

411,707

(8%)

 

772,099

 

850,948

(9%)

 
Software Solutions

 

72,206

 

91,703

(21%)

 

145,524

 

167,997

(13%)

Total revenue

$

860,779

$

865,240

(1%)

$

1,729,181

$

1,761,823

(2%)

 
 
Reconciliation of reported revenue to revenue excluding
currency and Market Exits
Total revenue

$

860,779

$

865,240

(1%)

$

1,729,181

$

1,761,823

(2%)

Currency impact on revenue

 

7,224

 

-

 

17,207

Revenue, at constant currency

 

868,003

 

865,240

0%

 

1,746,388

 

1,761,823

(1%)

Less revenue from Market Exits

 

(2,356)

 

(14,014)

 

(8,369)

 

(28,893)

Revenue, excluding currency and Market Exits

$

865,647

$

851,226

2%

$

1,738,019

$

1,732,930

0%

 
Pitney Bowes Inc.
Business Segment EBIT & EBITDA
(Unaudited; in thousands)
 
Three Months Ended June 30,

2019

2018

% change

EBIT (1) D&A EBITDA EBIT (1) D&A EBITDA EBIT EBITDA
 
Global Ecommerce

$ (15,576)

$ 16,883

$ 1,307

$ (5,993)

$ 15,467

$ 9,474

>(100%)

(86%)

Presort Services

15,462

7,087

22,549

12,565

6,623

19,188

23%

18%

Commerce Services

(114)

23,970

23,856

6,572

22,090

28,662

>(100%)

(17%)

 
North America Mailing

112,804

9,794

122,598

120,139

8,049

128,188

(6%)

(4%)

International Mailing

11,934

2,115

14,049

13,091

2,322

15,413

(9%)

(9%)

Small & Medium Business Solutions

124,738

11,909

136,647

133,230

10,371

143,601

(6%)

(5%)

 
Software Solutions

2,002

2,356

4,358

18,433

2,564

20,997

(89%)

(79%)

 
Segment Total

$ 126,626

$ 38,235

164,861

$ 158,235

$ 35,025

193,260

(20%)

(15%)

 
Reconciliation of Segment EBITDA to Net Income:
Segment depreciation and amortization (2)

(38,235)

(35,025)

Unallocated corporate expenses

(43,785)

(46,477)

Restructuring charges and asset impairments, net

(7,279)

(11,503)

Gain on disposition of businesses

27

-

Interest, net

(39,062)

(41,969)

Transaction costs

(2,150)

-

Provision for income taxes

(4,099)

(7,899)

Income from continuing operations

30,278

50,387

(Loss) income from discontinued operations, net of tax

(6,581)

1,208

Net income

$ 23,697

$ 51,595

 
 
 
Six Months Ended June 30,

2019

2018

% change

EBIT (1) D&A EBITDA EBIT (1) D&A EBITDA EBIT EBITDA
 
Global Ecommerce

$ (30,176)

$ 33,341

$ 3,165

$ (13,704)

$ 29,897

$ 16,193

>(100%)

(80%)

Presort Services

30,528

14,008

44,536

39,591

12,785

52,376

(23%)

(15%)

Commerce Services

352

47,349

47,701

25,887

42,682

68,569

(99%)

(30%)

 
North America Mailing

223,417

16,234

239,651

248,707

15,548

264,255

(10%)

(9%)

International Mailing

23,724

4,533

28,257

29,113

5,932

35,045

(19%)

(19%)

Small & Medium Business Solutions

247,141

20,767

267,908

277,820

21,480

299,300

(11%)

(10%)

 
Software Solutions

3,694

4,836

8,530

20,925

4,808

25,733

(82%)

(67%)

 
Segment Total

$ 251,187

$ 72,952

324,139

$ 324,632

$ 68,970

393,602

(23%)

(18%)

 
Reconciliation of Segment EBITDA to Net Income:
Segment depreciation and amortization (2)

(72,952)

(68,970)

Unallocated corporate expenses

(99,474)

(97,559)

Restructuring charges and asset impairments, net

(10,877)

(12,407)

Loss on disposition of businesses

(17,683)

-

Interest, net

(78,028)

(85,047)

Transaction costs

(3,876)

(1,055)

Provision for income taxes

(12,400)

(26,694)

Income from continuing operations

28,849

101,870

(Loss) income from discontinued operations, net of tax

(7,811)

9,695

Net income

$ 21,038

$ 111,565

 
 
(1) Segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges, and other items that are not allocated to a particular business segment.
(2) Includes depreciation and amortization expense of reporting segments only, and excludes corporate depreciation and amortization expense of $5,213 and $5,572 for the three months ended June 30, 2019 and 2018, respectively, and $9,861 and $11,365 for the six months ended June 30, 2019 and 2018, respectively.
Pitney Bowes Inc.
Reconciliation of Reported Consolidated Results to Adjusted Results
(Unaudited; in thousands, except per share amounts)
 
Three months ended June 30, Six months ended June 30,

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 
Reconciliation of reported net income to adjusted earnings
Net income

$

23,697

 

$

51,595

 

$

21,038

 

$

111,565

 

Loss (income) from discontinued operations, net of tax

 

6,581

 

 

(1,208

)

 

7,811

 

 

(9,695

)

Restructuring charges and asset impairments, net

 

5,252

 

 

8,461

 

 

7,911

 

 

9,132

 

(Gain) loss on disposition of businesses

 

(27

)

 

-

 

 

19,396

 

 

-

 

Transaction costs

 

1,602

 

 

-

 

 

2,891

 

 

786

 

Tax legislation

 

-

 

 

(5,980

)

 

-

 

 

(5,980

)

Adjusted net income

 

37,105

 

 

52,868

 

 

59,047

 

 

105,808

 

Provision for income taxes, as adjusted

 

6,674

 

 

16,921

 

 

14,638

 

 

36,216

 

Interest, net

 

39,062

 

 

41,969

 

 

78,028

 

 

85,047

 

Adjusted EBIT

 

82,841

 

 

111,758

 

 

151,713

 

 

227,071

 

Depreciation and amortization

 

43,448

 

 

40,597

 

 

82,813

 

 

80,335

 

Adjusted EBITDA

$

126,289

 

$

152,355

 

$

234,526

 

$

307,406

 

 
Reconciliation of reported diluted earnings per share to adjusted
diluted earnings per share
Diluted earnings per share

$

0.13

 

$

0.27

 

$

0.12

 

$

0.59

 

Loss (income) from discontinued operations, net of tax

 

0.04

 

 

(0.01

)

 

0.04

 

 

(0.05

)

Restructuring charges and asset impairments, net

 

0.03

 

 

0.04

 

 

0.04

 

 

0.05

 

(Gain) loss on disposition of businesses

 

(0.00

)

 

-

 

 

0.11

 

 

-

 

Transaction costs

 

0.01

 

 

-

 

 

0.02

 

 

0.00

 

Tax legislation

 

-

 

 

(0.03

)

 

-

 

 

(0.03

)

Adjusted diluted earnings per share

$

0.21

 

$

0.28

 

$

0.32

 

$

0.56

 

 
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

$

16,925

 

$

85,040

 

$

86,782

 

$

154,493

 

Net cash used in (provided by) operating activities - discontinued operations

 

3,267

 

 

(16,916

)

 

6,881

 

 

(41,772

)

Capital expenditures

 

(32,441

)

 

(50,640

)

 

(61,327

)

 

(79,481

)

Restructuring payments

 

6,139

 

 

11,943

 

 

14,283

 

 

27,528

 

Reserve account deposits

 

14,720

 

 

(695

)

 

(8,316

)

 

5,959

 

Transaction costs paid

 

4,269

 

 

1,444

 

 

6,108

 

 

4,037

 

Free cash flow

$

12,879

 

$

30,176

 

$

44,411

 

$

70,764

 

 

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