Pitney Bowes : Financial Statements Q3 2020

Pitney Bowes Inc.

Consolidated Statements of Income (Loss)

(Unaudited; in thousands, except per share amounts)

Three months ended September 30,		Nine months ended September 30,
2020	2019	2020	2019

Revenue:
Business services	$
Support services
Financing
Equipment sales
Supplies
Rentals
Total revenue
Costs and expenses:
Cost of business services
Cost of support services
Financing interest expense
Cost of equipment sales
Cost of supplies
Cost of rentals
Selling, general and administrative
Research and development
Restructuring charges
Goodwill impairment
Interest expense, net
Other components of net pension and postretirement (income), expense
Other (income) expense, net
Total costs and expenses
Income (loss) from continuing operations before taxes
Provision (benefit) for income taxes
Income (loss) from continuing operations
Income (loss) from discontinued operations, net of tax
Net income (loss)	$
Basic earnings (loss) per share (1):
Continuing operations	$
Discontinued operations
Net income (loss)	$
Diluted earnings (loss) per share (1):
Continuing operations	$
Discontinued operations
Net income (loss)	$

550,954 $

117,519

86,218

79,572

39,635

18,000

891,898

482,965

37,647

11,626

59,766

10,132

6,055

238,618

9,255

3,766

-

27,175

(109)

(6,325)

880,571

11,327

554

10,773

616

11,389 $

0.06 $

-

0.07 $

0.06 $

-

0.07 $

419,101 $

126,274

90,577

89,618

44,818

19,737

790,125

338,519

41,086

11,026

59,859

12,225

5,090

254,092

12,272

47,017

-

28,704

(882)

667

809,675

(19,550)

(24,895)

5,345

(8,470)

(3,125) $

0.03 $

(0.05)

(0.02) $

0.03 $

(0.05)

(0.02) $

1,524,323	$	1,243,609
353,320		382,578
260,758		280,039
213,682		264,956
118,117		142,261
55,458		60,339
2,525,658		2,373,782
1,311,941		1,003,483
114,132		123,453
36,054		33,433
165,045		182,094
30,751		37,533
18,455		23,223
720,882		757,228
28,838		38,421
12,505		56,616
198,169		-
79,504		84,325
126		(3,138)
9,787		18,350
2,726,189		2,355,021
(200,531)		18,761
7,540		(13,351)
(208,071)		32,112
7,648		(14,199)
(200,423)	$	17,913
(1.21)	$	0.18
0.04		(0.08)
(1.17)	$	0.10
(1.21)	$	0.18
0.04		(0.08)
(1.17)	$	0.10

Weighted-average shares used in diluted earnings per share	174,704	171,201	171,388	179,096

(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)

		September 30,			December 31,
Assets		2020			2019
Current assets:
Cash and cash equivalents	$	799,177	$	924,442
Short-term investments		21,185			115,879
Accounts and other receivables, net		348,565			373,471
Short-term finance receivables, net		559,148			629,643
Inventories		66,974			68,251
Current income taxes		11,477			5,565
Other current assets and prepayments		115,981			101,601
Assets of discontinued operations		-			17,229
Total current assets		1,922,507			2,236,081
Property, plant and equipment, net		367,466			376,177
Rental property and equipment, net		40,352			41,225
Long-term finance receivables, net		587,548			625,487
Goodwill		1,142,144			1,324,179
Intangible assets, net		167,493			190,640
Operating lease assets		213,490			200,752
Noncurrent income taxes		69,305			71,903
Other assets		533,726			400,456
Total assets	$	5,044,031	$	5,466,900
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities	$	760,363	$	793,690
Customer deposits at Pitney Bowes Bank		610,582			591,118
Current operating lease liabilities		38,007			36,060
Current portion of long-term debt		63,509			20,108
Advance billings		102,919			101,920
Current income taxes		2,527			17,083
Liabilities of discontinued operations		-			9,713
Total current liabilities		1,577,907			1,569,692
Long-term debt		2,531,712			2,719,614
Deferred taxes on income		279,526			274,435
Tax uncertainties and other income tax liabilities		40,642			38,834
Noncurrent operating lease liabilities		192,789			177,711
Other noncurrent liabilities		342,330			400,518
Total liabilities		4,964,906			5,180,804
Stockholders' equity:
Common stock		323,338			323,338
Additional paid-in-capital		67,512			98,748
Retained earnings		5,190,914			5,438,930
Accumulated other comprehensive loss		(813,572)			(840,143)
Treasury stock, at cost		(4,689,067)			(4,734,777)
Total stockholders' equity		79,125			286,096
Total liabilities and stockholders' equity	$	5,044,031	$	5,466,900

Pitney Bowes Inc. Business Segment Revenue (Unaudited; in thousands)

		Three months ended September 30,			Nine months ended September 30,
		2020			2019		% Change			2020			2019		% Change
REVENUE
Global Ecommerce	$	409,981	$	278,995	47%	$	1,100,757	$	827,568	33%
Presort Services		127,705			131,483		(3%)			386,552			394,468		(2%)
Commerce Services		537,686			410,478		31%			1,487,309			1,222,036		22%
Sending Technology Solutions		354,212			379,647		(7%)			1,038,349			1,151,746		(10%)
Total revenue - GAAP		891,898			790,125	13%			2,525,658			2,373,782	6%
Currency impact on revenue		(2,454)			-					2,514			-
Revenue, at constant currency	$	889,444	$	790,125	13%	$	2,528,172	$	2,373,782	7%

Pitney Bowes Inc.

Business Segment EBIT & EBITDA

(Unaudited; in thousands)

							Three months ended September 30,
				2020							2019				% change
		EBIT (1)		D&A		EBITDA			EBIT (1)		D&A		EBITDA		EBIT	EBITDA
Global Ecommerce	$	(19,757)	$	16,824	$	(2,933)	$	(21,793)	$	17,356	$	(4,437)	9%	34%
Presort Services		14,481		8,031		22,512			17,687		7,667		25,354		(18%)	(11%)
Commerce Services		(5,276)		24,855		19,579			(4,106)		25,023		20,917	(28%)	(6%)
Sending Technology Solutions		112,599		7,955		120,554			130,954		9,579		140,533	(14%)	(14%)
Segment total	$	107,323	$	32,810		140,133		$	126,848	$	34,602		161,450		(15%)	(13%)
Reconciliation of Segment EBITDA to Net (Loss) Income:
Segment depreciation and amortization						(32,810)							(34,602)
Interest, net						(38,801)							(39,730)
Unallocated corporate expenses (2)						(53,429)							(58,277)
Restructuring charges and asset impairments						(3,766)							(47,017)
Loss on debt extinguishment						-							(667)
Transaction costs and other						-							(707)
(Provision) benefit for income taxes						(554)							24,895
Income from continuing operations						10,773							5,345
Income (loss) from discontinued operations, net of tax				616							(8,470)
Net income (loss)					$	11,389						$	(3,125)

							Nine months ended September 30,
				2020							2019				% change
	EBIT (1)		D&A		EBITDA			EBIT (1)		D&A		EBITDA		EBIT	EBITDA
Global Ecommerce	$	(68,126)	$	52,187	$	(15,939)	$	(51,969)	$	50,697	$	(1,272)	(31%)	>(100%)
Presort Services		42,758		23,662		66,420			48,215		21,675		69,890		(11%)	(5%)
Commerce Services		(25,368)		75,849		50,481			(3,754)		72,372		68,618	>(100%)	(26%)
Sending Technology Solutions		323,429		25,771		349,200			378,095		30,347		408,442	(14%)	(15%)
Segment Total	$	298,061	$	101,620		399,681		$	374,341	$	102,719		477,060		(20%)	(16%)
Reconciliation of Segment EBITDA to Net Income:
Segment depreciation and amortization						(101,620)							(102,719)
Interest, net						(115,558)							(117,758)
Unallocated corporate expenses (2)						(146,640)							(160,283)
Restructuring charges and asset impairments						(12,505)							(56,616)
Goodwill impairment						(198,169)							-
Gain on sale of equity investment						11,908							-
Loss on debt extinguishment						(36,987)							(667)
Loss on dispositions and transaction costs						(641)							(20,256)
(Provision) benefit for income taxes						(7,540)							13,351
(Loss) income from continuing operations						(208,071)							32,112
Income (loss) from discontinued operations, net of tax					7,648							(14,199)
Net (loss) income					$	(200,423)						$	17,913

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 corporate depreciation and amortization expense of $5,806 and $5,935 for the three months ended September 30, 2020 and 2019, respectively and $18,783 and $15,795 for the nine months ended September 30, 2020 and 2019, respectively.

Pitney Bowes Inc.

Reconciliation of Reported Consolidated Results to Adjusted Results (Unaudited; in thousands, except per share amounts)

			Three months ended			Nine months ended
			September 30,			September 30,
			2020			2019			2020			2019
Reconciliation of reported net income (loss) to adjusted net income,
adjusted EBIT and adjusted EBITDA
Net income (loss)	$	11,389	$	(3,125)	$	(200,423)	$	17,913
(Income) loss from discontinued operations, net of tax			(616)			8,470			(7,648)			14,199
Restructuring charges and asset impairments			2,639			34,722			8,493			41,709
Goodwill impairment			-			-			196,600			-
Gain on sale of equity investment			-			-			(8,943)			-
Tax on surrender of company owned life insurance policies			-			-			12,229			-
Loss on debt extinguishment			-			497			27,777			497
Loss on dispositions and transaction costs			-			527			487			21,313
Adjusted net income			13,412			41,091			28,572			95,631
Interest, net			38,801			39,730			115,558			117,758
Provision (benefit) for income taxes, as adjusted			1,681			(12,250)			7,291			669
Adjusted EBIT			53,894			68,571			151,421			214,058
Depreciation and amortization			38,616			40,537			120,403			118,514
Adjusted EBITDA	$	92,510	$	109,108	$	271,824	$	332,572
Reconciliation of reported diluted earnings (loss) per share to
adjusted diluted earnings per share
Diluted earnings (loss) per share	$	0.07	$	(0.02)	$	(1.17)	$	0.10
(Income) loss from discontinued operations, net of tax			-			0.05			(0.04)			0.08
Restructuring charges and asset impairments			0.02			0.20			0.05			0.23
Goodwill impairment			-			-			1.14			-
Gain on sale of equity investment			-			-			(0.05)			-
Tax on surrender of company owned life insurance policies			-			-			0.07			-
Loss on debt extinguishment			-			-			0.16			-
Loss on dispositions and transaction costs			-			-			-			0.12
Adjusted diluted earnings per share	$	0.08	$	0.24	$	0.17	$	0.53

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	$	103,815	$	95,502	$	190,624	$	182,284
Net cash (provided by) used in operating activities - discontinued operations		-			(10,324)			38,423			(15,858)
Capital expenditures		(20,833)			(36,034)			(80,787)			(95,221)
Restructuring payments		4,504			5,840			15,869			18,845
Change in customer deposits at PB Bank		(2,867)			11,441			19,464			3,125
Transaction costs paid		-			2,917			2,117			9,025
Free cash flow	$	84,619	$	69,342	$	185,710	$	102,200