Revenue increased from prior year across all platforms. The major volume driver was the domestic parcel platform. EBIT and EBITDA margins were impacted by investments in market growth opportunities, including engineering, facilities and marketing programs. Compared to prior year, the margin decline was also driven by a shift in the mix of business to faster growing, but lower-margin services along with additional fulfillment costs in order to meet client service level agreements.
Presort Services
Revenue growth was driven by volume growth across all mail classes. Gross margin increased versus prior quarter and prior year driven by lower labor cost per unit partially offset by lower revenue per piece. EBIT and EBITDA margins increased from prior quarter and were relatively flat compared to prior year.
SendTech Solutions
($ millions) |
Third Quarter |
|||||||||
|
2019 |
2018 |
Y/Y |
Y/Y |
|
Y/Y Ex Currency |
||||
|
|
|
Reported |
Ex Currency |
|
& Market Exits* |
||||
Revenue |
$380 |
$402 |
(6%) |
(5%) |
|
(3%) |
||||
EBITDA |
$141 |
$144 |
(2%) |
|
|
|
||||
EBIT |
$131 |
$135 |
(3%) |
|
|
|
* Excluding $9 million related to market exits and $3 million related to the impacts of currency |
SendTech Solutions
Reported revenue was impacted by the previously announced market exits. Excluding the effect from currency and market exits, the revenue decline was driven by lower support services, financing and supplies revenue partially offset by higher equipment sales and business services. EBIT and EBITDA margins increased versus prior year driven by lower expenses partially offset by higher tariff costs.
2019 Guidance
On October 12, 2019, the Company experienced a ransomware attack. At this point, virtually all operations are up and running and no data has been compromised. The Company has insurance to cover these types of events and expects a significant portion of any profit impact, including the profit associated with any loss of revenue due to the ransomware attack, to ultimately be covered by insurance.
Given this ransomware attack is a unique event, the majority of the incremental costs and subsequent insurance recoveries will be excluded from the Company’s adjusted EPS.
As a result, the Company is reaffirming its adjusted EPS and free cash flow annual guidance. The Company expects the impact of the ransomware attack to full year revenue could be approximately one-half percent.
- Revenue, on a constant currency basis is expected to be in the range of 1 percent to 2 percent growth when compared to 2018. This range does not contemplate any impact of the ransomware attack, which could be approximately one-half percent.
- Adjusted EPS from continuing operations to be in the range of $0.65 to $0.75.
- Free cash flow to be in the range of $175 million to $205 million.
This guidance excludes any unusual items that may occur or additional portfolio or restructuring actions, not specifically identified, as the Company implements plans to further streamline its operations and reduce costs. Revenue guidance is provided on a constant currency basis. Additionally, the Company cannot provide GAAP EPS and GAAP cash from operations guidance due to the uncertainty of future potential restructurings, goodwill and asset write-downs, unusual tax settlements or payments, special contributions to its pension funds, acquisitions, divestitures and other potential adjustments, which could, individually or in the aggregate, have a material impact on the Company’s performance.
Conference Call and Webcast
Management of Pitney Bowes will discuss the Company’s results in a broadcast over the Internet today at 8:00 a.m. ET. Instructions for listening to the earnings results via the Web are available on the Investor Relations page of the Company’s web site at www.pitneybowes.com.
About Pitney Bowes
Pitney Bowes (NYSE:
PBI) is a global technology company providing commerce solutions that power billions of transactions. Clients around the world, including 90 percent of the Fortune 500, rely on the accuracy and precision delivered by Pitney Bowes solutions, analytics, and APIs in the areas of ecommerce fulfillment, shipping and returns; cross-border ecommerce; office mailing and shipping; presort services; location data; customer information and engagement software; services; and financing. For nearly 100 years Pitney Bowes has been innovating and delivering technologies that remove the complexity of getting commerce transactions precisely right. For additional information visit Pitney Bowes, the Craftsmen of Commerce, at
www.pitneybowes.com .