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

Ana Maria Chadwick: Yes. The first thing I’ll mention is, as we commented in the remarks, we’re doing a lot around restructuring. And we closed down 4 sites that were older technology and had adjacent sites with more modern technology and sufficient capacity creating an opportunity to better serve our clients without disruption. We are looking at our cost overhead and infrastructure and leaving no stone unturned. In addition to that, our unit economics, which I pointed to are improving. They’re improving from two sources. They’re improving from our ability to better route our transportation, make our network more efficient but also from the volume, productivity also gets impacted by the growth. So again, the team is working really hard to look at every opportunity, and we’ll continue to do so.

Jason Dies: Yes. And I’d just say, Ana said it well, there are multiple pieces here. The first is cost actions that we are taking both for the short term and for the medium term. Ana also touched on the fact that we have opportunity to continue to improve our rate per piece, which will obviously drive better economics. And then it’s pretty clear that we are seeing significant growth in volumes in the domestic parcel business, which if you think about the way that clients are reacting to our offerings, it’s an extremely positive sign for the business going forward. Clients clearly see value in what we’re bringing to the table. So a lot of short-term work clearly on how do we continue to go after cost and the in-period economics. But the client confidence in our offering and in our ability to deliver is certainly something I look forward to with a positive note.

Kartik Mehta: And then in the industry, what are you seeing in terms of pricing and what do you anticipate for the holiday season?

Jason Dies: Yes. So I think a couple of things. So you saw a varied reaction on different companies’ approaches to peak pricing activity. So first off, that created a little bit of confusion, I think, in the market, it created some uncertainty. You’ve seen in other announcements already this earnings season that there is clear market overcapacity right now, which is creating some significant pricing pressures. That said, we clearly have some opportunity to go after pricing as a lever that we can use going forward. But let’s be clear, I don’t want anyone to be confused that we are careful and thoughtful about the volumes that we’re bringing in to improve our profit margin and to improve our fixed cost leverage. But that said, we are in a very competitive environment. You’ve heard that in the other forms. And I will tell you that one thing that we watch very carefully is our win rate, and that has been fairly consistent over the past few quarters.

Kartik Mehta: Thank you very much. I really appreciate it.

Operator: Next we can go to Anthony Lebiedzinski with Sidoti & Company. Please go ahead.

Anthony Lebiedzinski: Hi good morning and thank you for taking our questions and welcome Jason and Phil. So first, it’s nice to see Presort and SendTech continuing their solid performance. Ana, I know you talked about the automation efforts helping, I think, specifically Presort, but it’s an area that you guys talked about this for a while, so it’s not necessarily new. But just wondering, are there any additional opportunities to further improve with automation or do you think you’re kind of tapped out with those efforts?

Ana Maria Chadwick: Thanks for the question, Anthony. Productivity is a never-ending game. I mean, this is really — Presort is the game of pennies, and I’ll tell you, the team is very focused. They’re tackling right now a lot of optimization in transportation. And we did sort of refreshes. They’re working on conveyors as well. So, the rate and pace will vary over time, but I do expect continued productivity as we explore new automation and technologies as well.

Anthony Lebiedzinski: That’s great to hear. And as far as the GEC, so I don’t know if it’s necessarily easy to do this, but if we were to exclude the cross-border, which seems to be the biggest headwind within GEC. If we were to hypothetically exclude that, with the rest of the business for GEC, would that be better in terms of profitability versus last year or the same or worse? Can you give us maybe some sense in regards to that?