PITNEY BOWES INC /DE/ Q1 FY2025 earnings call

• Continued repositioning Pitney Bowes as a cash generative and profitable technology enabled services company. - Q1 revenue $493 million, in line with expectations, down 5% year-over-year. Adjusted EPS $0.33, up 74% year-over-year. Adjusted EBIT $120 million, up 28% year-over-year. Free cash flow was a use of $20 million. - Three main progress drivers: sustaining high margins in SendTech, sustaining high margins in Presort, remaining disciplined on cost controls at corporate level. - Reaffirmed full year guidance, took additional cost cut steps, increased dividend. - SendTech focused on maximizing profitability and minimizing churn in mailing business, growing shipping business, emphasizing lease extensions over new equipment placements. - Global financial services: $1.15 billion of finance receivables, aiming to grow Pitney Bowes Bank’s associated leases to at least $120 million by end of 2025, evaluating expansion of Receivables Purchase Program. - Presort intends to sustain efficient and lean model, pursue small roll up acquisitions with high ROI. - Accounting changes: condensed revenue categories into three, moved marketing and innovation expenses from corporate to SendTech.

In Q1, revenue was $493 million. SendTech revenue was $298 million, down 9% year-over-year, accounting for approximately 60.45% of total revenue. SendTech gross profit was down year-over-year but gross margin improved to 68.9%. Global financial services within SendTech had net finance receivables ending the quarter at $1.15 billion. Presort services revenue was $178 million, up 5% year-over-year, accounting for approximately 36.1% of total revenue. Presort EBIT was $55 million, up $14 million or 36%. Corporate expenses were $32 million, down $10 million from the prior year.

• Reaffirmed full year guidance. - Q1 removed $34 million of annualized costs, exiting the quarter with an annualized run rate of $157 million, raising cost savings target to $180 million to $200 million of annualized net savings. - Do not expect tariffs to have a meaningful impact on the business. - Expect $330 million to $370 million in free cash flow for the full year.

• Forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from projections, including macroeconomic environment and tariffs.

Q: Kartik Mehta asked about the impact of emphasizing lease extensions versus new equipment on revenue.

A: Lance Rosenzweig said they expect lease extensions to result in more stable revenue and cash flow, not that the number of new equipment placements is few and far between.

Q: Unidentified Analyst asked about changes at USPS and impact on business.

A: Bob Gold said he was with USPS leadership last week, partnership with USPS is strong and excited about USPS future.

Q: Anthony Lebiedzinski asked about the source of increased cost savings and SendTech shipping percentage.

A: Bob Gold said cost savings are across the business, bottoms up built, focusing on indirect and external spend; Lance added a cultural shift towards cost management. They don't have a specific announced goal for shipping as a percentage of SendTech.

Q: Peter Sakon asked about SendTech equipment sales quantification and Presort pricing adjustment.

A: Lance Rosenzweig said they don't provide breakdown of equipment vs services sales; on Presort, announced pricing changes are subject to final approval, impact is modestly positive.

Q: Justin Dopierala asked about stock repurchase average price and capital allocation.

A: Bob Gold said he doesn't have the average price at fingertips; Lance said they track repurchases closely. On capital allocation, they'll continue opportunistically buying shares and debt based on markets.

Q: David Steinhardt asked about average price paid for repurchased shares and credit rating related capital allocation.

A: Bob Gold said he doesn't have the average price; Lance said it's early to preview long-term debt levels and capital allocation for tuck-in acquisitions and repurchases.