Pitney Bowes Inc. (NYSE:PBI) Q3 2023 Earnings Call Transcript

Pitney Bowes Inc. (NYSE:PBI) Q3 2023 Earnings Call Transcript November 2, 2023

Operator: Good morning and welcome to the Pitney Bowes Third Quarter 2023 Earnings Conference Call. Your lines have been placed in a listen-only mode during the conference call until the question-and-answer segment. Today’s call is also being recorded. If you have any objections, please disconnect your lines at this time. I would now like to introduce participants on today’s conference call; Mr. Jason Dies, Interim Chief Executive Officer; Ms. Ana Maria Chadwick, Executive Vice President and Chief Financial Officer; and Mr. Philip Landler, Vice President Investor Relations and Global Strategy. Mr. Landler will now begin the call with a Safe Harbor overview.

Philip Landler: Good morning. I’m Philip Landler. Thank you for joining us. I’ll be managing the Pitney Bowes Investor Relations program going forward and will be partnering with Alex Brown whom many of you know from prior earnings calls. Part of my duties include covering the Safe Harbor information for these calls, so let me briefly cover that. Including today’s presentation our forward-looking statements about our future business and financial performance. Forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from our projections. More information about these risks and uncertainties can be found in our earnings press release, our 2022 Form 10-K annual report and other reports filed with the SEC that are located on our website at www.pb.com and by clicking on Investor Relations.

Please keep in mind we do not undertake any obligation to update forward-looking statements as a result of new information or developments. Also for non-GAAP measures that are used in the press release or discussed in our presentation materials, you can find reconciliations to the appropriate GAAP measures in the tables attached to our press release. Finally, we have provided a slide presentation and spreadsheet with historical segment information on our website. And now, I’d like to turn the call over to our Interim CEO, Jason Dies.

Jason Dies: Good morning, everyone. I want to begin by thanking you for your ongoing investment in Pitney Bowes. As you will hear today, my portion of these calls will be just as focused on our path forward as the preceding quarter’s results. Since today is my first call, I’m going to take a few minutes to cover three areas. First, a brief overview of my background. Second, context on my leadership style. And lastly, a high-level summary of what I’ve been focused on since stepping into my new role on October 2nd. With respect to my background, I joined Pitney Bowes in 2015 after two decades in roles of increasing responsibility at IBM. Spending the past eight years in various leadership positions here at Pitney Bowes has equipped me with a strong understanding of our opportunities, challenges, clients and partners.

I spent my initial years overseeing our Production Mail business, which we divested in April 2018. Following that, I led a successful transformation of our SendTech segment, resulting in strong revenue, cash flow and growth opportunities in shipping. I subsequently began also overseeing our Presort segment. So I’ve led the company’s two profit and cash flow drivers. This experience as well as my working relationships with the leaders of our global e-commerce segment and functional groups is enabling me to hit the ground running in my new role. When it comes to leadership style, I believe in maintaining a culture that prioritizes accountability and outcomes. I expect teams to be highly adaptable and proactive, especially when our clients’ needs or the broader operating environment require us to course correct.

See also 30 Happiest Countries in the World and 20 Most Feminist Countries in the World.

Q&A Session

Fortunately, we have a number of dedicated, passionate and very talented individuals who embody these operating principles. The positive responses I’m getting from our teams are very encouraging. It reflects the fact that change is in our DNA at Pitney Bowes, which is why we are a 103-year-old company that has always evolved with the times. In my first 30 days, I’ve been conducting a review of our business segments and corporate functions. This means working with our teams to take a fresh look at our cost structures, infrastructure and resources, operating markets and opportunities. The primary objectives of this discovery phase are to identify near-term value drivers and establish the pillars of our next long-term strategic road map. Importantly, we’re going to capitalize on immediate opportunities even while planning for the future.

It’s still very early in the process, but I can shed some light on preliminary observations and areas of opportunity. Our SendTech strategy is proving effective, as evidenced by the segment’s strong EBIT and margin expansion last quarter. Our cost management efforts, product refresh and growth in shipping position the segment to continue to transform and ideally increase its revenues over the long term. For these reasons, we believe SendTech can be a sustained source of meaningful value. Our Presort strategy is also driving the strong results we have anticipated, including top line growth and EBIT growth again last quarter. We expect to sustain this momentum. Like with SendTech, Presort can be a cornerstone of Pitney Bowes in an ongoing source of significant value.

With respect to GEC, our team has built an extremely valuable foundation and succeeded in driving domestic parcel growth. However, we are focused on actions with the aim of not continuing to incur the level of losses we’ve been reporting. As we continue prioritizing clients and making sure we deliver during peak season, our efforts are centered on taking action to realize the segment’s potential. As far as cost reduction and restructuring opportunities, we’re ahead of schedule on hitting our previously stated target of $75 million of annualized expense savings by the end of 2024. I was actively involved in this initiative over the course of the year. And based on that progress, as well as additional analysis we’ve done in recent weeks, we are increasing our target for annualized expense savings by $40 million, bringing us to a new overall target of approximately $115 million.

Throughout the coming weeks and months, we’re going to continue to leave no stone unturned. I look forward to continuing to share updates on our near-term actions and long-term planning. And in the same spirit, we welcome constructive feedback from you. In closing, I want to be clear that Pitney Bowes is a strong company with great businesses, and we are all committed to streamlining the organization and improving performance. Nobody here is satisfied with our recent financial results. We have a valuable foundation that is anchored by two profitable cash-generative segments, growth opportunities across all of our businesses and a motivated and talented employee base. This is a foundation we can leverage to ultimately deliver much stronger results in the future.

Let me now turn it over to Ana to discuss our results and financials in detail.

Ana Maria Chadwick: Thank you, Jason, and good morning, everyone. Before I begin my financial review, I’ll note that the year-over-year revenue information will be discussed on a comparable basis, which as previously discussed adjust for the impact of currency and a revenue presentation change for our digital services that was implemented beginning fourth quarter last year. This revenue presentation change primarily affects global e-commerce revenues, and, to a lesser extent, SendTech. The change does not affect profitability. Also, unless otherwise noted, I will speak to other items such as EBIT, EBITDA and EPS on an adjusted basis. Total revenue for the quarter was $784 million, a decline of 1% versus prior year. Adjusted EBITDA grew $6 million year-over-year to $84 million in the quarter.