Pitney Bowes Announces Second Quarter 2017 Financial Results

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, 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.

In addition, Management uses segment EBIT to measure profitability and performance at the segment level. Segment EBIT is determined by deducting from 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. A reconciliation of Segment EBIT to the Company’s total Net Income can be found in the Company’s attached financial schedules.

Pitney Bowes has provided a quantitative reconciliation to GAAP in supplemental schedules. This information may also 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, the introduction of new products and services by competitors, and fuel prices; our success in developing new products and services, including digital-based products and services, obtaining regulatory approvals, if needed, of new products if required, and the market’s acceptance of these new products and services; our ability to fully utilize the new enterprise business platform in the United States and successfully implement it internationally without significant disruptions to existing operations; a breach of security, including a cyberattack or other comparable event; the continued availability and security of key information systems and the cost to comply with information security requirements and privacy laws; the success of our investment in rebranding the Company; changes in postal or banking regulations; the risk of losing some of the Company’s larger clients in the Global Ecommerce segment; macroeconomic factors, including global and regional business conditions that adversely impact customer demand, foreign currency exchange rates, interest rates and labor conditions; capital market disruptions or credit rating downgrades that adversely impact our ability to access capital markets at reasonable costs; management of outsourcing arrangements; integrating newly acquired businesses, including operations and product and service offerings; management of customer credit risk; and other factors beyond its control as more fully outlined in the Company's 2016 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 six months ended June 30, 2017 and 2016, and consolidated balance sheets as of June 30, 2017 and December 31, 2016 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,

2017

  2016

2017

  2016
Revenue:
Equipment sales $ 158,625 $ 152,641 $ 321,599 $ 312,002
Supplies 63,228 65,274 130,046 137,325
Software 86,664 90,615 164,531 168,673
Rentals 95,999 102,869 195,869 206,959
Financing 83,653 91,609 169,398 189,032
Support services 115,299 131,418 234,146 259,678
Business services   217,903     201,460     442,422     406,806  
 
Total revenue   821,371     835,886     1,658,011     1,680,475  
 
Costs and expenses:
Cost of equipment sales 77,189 78,055 146,751 149,594
Cost of supplies 19,909 19,624 41,380 40,314
Cost of software 24,795 26,983 50,103 53,798
Cost of rentals 21,576 18,415 42,238 38,910
Financing interest expense 12,843 13,495 25,817 28,410
Cost of support services 73,190 74,742 146,544 149,991
Cost of business services 153,063 140,830 303,906 276,368
Selling, general and administrative 297,468 289,116 603,771 615,998
Research and development 32,958 34,513 64,814 61,081
Restructuring charges and asset impairments, net 26,927 26,076 29,009 33,009
Interest expense, net   27,600     20,799     53,276     40,100  
 
Total costs and expenses   767,518     742,648     1,507,609     1,487,573  
 
Income before income taxes 53,853 93,238 150,402 192,902
Provision for income taxes   4,952     33,394     36,368     70,418  
 
Income from continuing operations 48,901 59,844 114,034 122,484
Loss from discontinued operations, net of tax   -     (1,660 )   -     (1,660 )
 
Net income 48,901 58,184 114,034 120,824
Less: Preferred stock dividends attributable to noncontrolling interests   -     4,594     -     9,188  
 
Net income - Pitney Bowes Inc. $ 48,901   $ 53,590   $ 114,034   $ 111,636  
 
Amounts attributable to common stockholders:
Net income from continuing operations $ 48,901 $ 55,250 $ 114,034 $ 113,296
Loss from discontinued operations, net of tax   -     (1,660 )   -     (1,660 )
 
Net income - Pitney Bowes Inc. $ 48,901   $ 53,590   $ 114,034   $ 111,636  
 
Basic earnings per share attributable to common stockholders (1) :
Continuing operations $ 0.26 $ 0.29 $ 0.61 $ 0.60
Discontinued operations   -     (0.01 )   -     (0.01 )
 
Net income - Pitney Bowes Inc. $ 0.26   $ 0.29   $ 0.61   $ 0.59  
 
Diluted earnings per share attributable to common stockholders (1) :
Continuing operations $ 0.26 $ 0.29 $ 0.61 $ 0.59
Discontinued operations   -     (0.01 )   -     (0.01 )
 
Net income - Pitney Bowes Inc. $ 0.26   $ 0.28   $ 0.61   $ 0.59  
 
Weighted-average shares used in diluted earnings per share   187,377,059     188,362,278     186,944,571     190,806,261  
(1)   The sum of the earnings per share amounts may not equal the totals due to rounding.
 

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