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

Ana Maria Chadwick: Sure. So as I mentioned, cross-border is really a headwind when you compare year-on-year. And when you look at it more quarter-over-quarter, it gives you a better representation of the true performance and I’ll mention two things around that. The business is operating, I would say, kind of flattish when you look at it may be slightly book down quarter-over-quarter, excluding cross-border. And I did mention we did some investments around those site closures that affected our profitability. But those are investments that will pay fruits into the future. So I anticipate progress from the cost actions. We’re seeing our operating expenses down year-over-year and quarter-over-quarter, and that’s in addition to the improvements we’re doing in the cost of goods sold around the optimization of the network, and the warehousing that I mentioned.

Anthony Lebiedzinski: Got it. Okay. And then in terms of the expanded restructuring as far as that additional $40 million, where is that — where are those savings coming from? Just curious to get more details.

Ana Maria Chadwick: Sure. So I’ll give you a sense. Overall, we are looking at our entire expense base. We’ll see about half of them come from cost of goods sold and productivity-related things and probably about the other half from some of our overhead and reprioritizing programs and other activities that we do. As you know, it’s a sensitive topic. We’re working through it internally with our employee base, and I’ll end it there.

Jason Dies: Yes. I’ll just jump in on top of that. One of the things we’re trying to do as part of this cost effort is we’re really trying to be smart in how we go about it, right? So one of the themes that I’ve been working with the teams on is how do we take complexity out of the business, how do we make things more simple. And so in addition to just taking out cost for cost sake, which we need to do, it’s really important that we’re doing it in a way that’s going to make the business stronger ultimately as we go forward. And that’s been one of the focus areas that we’ve been working on as a leadership team over the past 30 days is how do we do that in a smarter way that’s going to keep the cost out for the long-term and allow us to be more effective as we go forward in the market.

Anthony Lebiedzinski: Understood, well thank you very much and best of luck.

Jason Dies: Thank you.

Operator: And next, we’ll go to Peter Sakon with CreditSights. Please go ahead.

Peter Sakon: Hi, just a followup on the cost cutting question, can you break out by segment this cost saving the $115 million? You said half is overhead. So is it half coming from unallocated corporate overhead?

Ana Maria Chadwick: Listen, we’re in the process of working through our specifics. I will tell you a lot of that will be felt in the business units, and we’re already feeling it. A lot of what you saw on the margin expansion in SendTech and Presort is a testament to the restructuring that we started earlier in the year and the cost actions we’ve taken throughout. The vast majority of this will go to the segments, and you should see an improved margin as we move forward.

Jason Dies: Yes. I’ll just add in again. From my perspective, I want to see the cost cuts coming from all parts of the business. That said, it is really important that the business units who ultimately fund and need the resources, make sure that they’re making the right decisions for what do they need to run and execute on the business. So as part of this work we’ve done over the last 30 days to go after the incremental cost opportunity. We’ve really been focused on working with the business unit leaders, having them meet with each of the functional leaders across the shared services and really engaging in some very productive discussions on what do we need to run the business, how can we think about processes differently? And how do we make sure that at the end of the day, the business units have what they need to be effective in the markets?