UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023March 31, 2024
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number: 1-03579
PITNEY BOWES INC.
(Exact name of registrant as specified in its charter)
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State of incorporation: | Delaware | | I.R.S. Employer Identification No. | 06-0495050 |
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Address of Principal Executive Offices: | 3001 Summer Street, | Stamford, | Connecticut | 06926 | |
Telephone Number: | (203) | 356-5000 | | | | |
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class | | Trading Symbol(s) | | Name of Each Exchange on Which Registered |
Common Stock, $1 par value per share | | PBI | | New York Stock Exchange |
6.7% Notes due 2043 | | PBI.PRB | | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer | þ | Accelerated filer | ☐ | Non-accelerated filer | o |
Smaller reporting company | ☐ | Emerging growth company | ☐ | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ
As of October 27, 2023, 176,331,236April 26, 2024, 178,875,218 shares of common stock, par value $1 per share, of the registrant were outstanding.
PITNEY BOWES INC.
INDEX
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| Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30,March 31, 2024 and 2023 and 2022 | |
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| Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30,March 31, 2024 and 2023 and 2022 | |
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| Condensed Consolidated Balance Sheets at September 30, 2023March 31, 2024 and December 31, 20222023 | |
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| Condensed Consolidated Statements of Cash Flows for the NineThree Months Ended September 30,March 31, 2024 and 2023 and 2022 | |
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Item 6: | Exhibits | |
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PART I. FINANCIAL INFORMATION
Item 1: Financial Statements
PITNEY BOWES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except per share amounts)
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| | | Three Months Ended March 31, | |
| | | Three Months Ended March 31, | |
| | | Three Months Ended March 31, | |
| | | | | 2024 | | | | | | | 2024 | | 2023 |
Revenue: | Revenue: | | | | | | | | Revenue: | | | | | | | |
Business services | Business services | $ | 483,987 | | | $ | 518,405 | | | $ | 1,480,975 | | | $ | 1,667,267 | |
Support services | Support services | 101,855 | | | 107,642 | | | 310,454 | | | 325,619 | |
Financing | Financing | 68,572 | | | 67,757 | | | 202,323 | | | 207,084 | |
Equipment sales | Equipment sales | 76,705 | | | 83,528 | | | 238,766 | | | 262,810 | |
Supplies | Supplies | 35,695 | | | 37,455 | | | 111,035 | | | 116,761 | |
Rentals | Rentals | 16,937 | | | 16,127 | | | 51,217 | | | 49,810 | |
Total revenue | Total revenue | 783,751 | | | 830,914 | | | 2,394,770 | | | 2,629,351 | |
Costs and expenses: | Costs and expenses: | | | | | | | |
Cost of business services | Cost of business services | 419,859 | | | 452,715 | | | 1,276,814 | | | 1,433,474 | |
Cost of business services | |
Cost of business services | |
Cost of support services | Cost of support services | 35,589 | | | 36,618 | | | 107,447 | | | 111,463 | |
Financing interest expense | Financing interest expense | 16,813 | | | 13,692 | | | 46,112 | | | 37,827 | |
Cost of equipment sales | Cost of equipment sales | 52,952 | | | 60,595 | | | 166,303 | | | 188,181 | |
Cost of supplies | Cost of supplies | 10,498 | | | 10,529 | | | 32,607 | | | 33,074 | |
Cost of rentals | Cost of rentals | 4,289 | | | 6,270 | | | 14,859 | | | 19,052 | |
Selling, general and administrative | Selling, general and administrative | 209,416 | | | 209,576 | | | 674,085 | | | 678,999 | |
Research and development | Research and development | 10,362 | | | 9,812 | | | 31,129 | | | 32,400 | |
Restructuring charges and asset impairments | 16,578 | | | 4,264 | | | 42,620 | | | 12,672 | |
Goodwill impairment | — | | | — | | | 118,599 | | | — | |
Restructuring charges | |
| Interest expense, net | Interest expense, net | 26,782 | | | 23,685 | | | 72,044 | | | 66,816 | |
Other components of net pension and postretirement (income) cost | (2,683) | | | 1,427 | | | (6,144) | | | 3,229 | |
Other income, net | — | | | (8,398) | | | (3,064) | | | (20,299) | |
Interest expense, net | |
Interest expense, net | |
Other components of net pension and postretirement income | |
Other income | |
Total costs and expenses | Total costs and expenses | 800,455 | | | 820,785 | | | 2,573,411 | | | 2,596,888 | |
(Loss) income before taxes | (16,704) | | | 10,129 | | | (178,641) | | | 32,463 | |
(Benefit) provision for income taxes | (4,185) | | | 4,642 | | | (16,850) | | | 1,819 | |
Income (loss) before taxes | |
Provision (benefit) for income taxes | |
| Net (loss) income | $ | (12,519) | | | $ | 5,487 | | | $ | (161,791) | | | $ | 30,644 | |
Net loss | |
| Net loss | |
| Net loss | |
| | Basic net (loss) earnings per share | $ | (0.07) | | | $ | 0.03 | | | $ | (0.92) | | | $ | 0.18 | |
Basic net loss per share | |
| Basic net loss per share | |
| Basic net loss per share | |
| Diluted net (loss) earnings per share | $ | (0.07) | | | $ | 0.03 | | | $ | (0.92) | | | $ | 0.17 | |
Diluted net loss per share | |
| Diluted net loss per share | |
| Diluted net loss per share | |
`
See Notes to Condensed Consolidated Financial Statements
PITNEY BOWES INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited; in thousands)
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| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Net (loss) income | $ | (12,519) | | | $ | 5,487 | | | $ | (161,791) | | | $ | 30,644 | |
Other comprehensive loss, net of tax: | | | | | | | |
Foreign currency translation, net of tax of $(262), $(2,393), $314 and $(5,466), respectively | (25,640) | | | (56,419) | | | (5,560) | | | (122,122) | |
Net unrealized (loss) gain on cash flow hedges, net of tax of $(439), $963, $(1,001) and $3,138, respectively | (1,316) | | | 2,853 | | | (3,003) | | | 9,415 | |
Net unrealized loss on investment securities, net of tax of $(1,972), $(2,545), $(1,360) and $(11,353), respectively | (6,280) | | | (9,583) | | | (4,330) | | | (36,148) | |
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Amortization of pension and postretirement costs, net of tax of $1,032, $2,461, $3,397 and $6,792, respectively | 3,158 | | | 7,749 | | | 10,386 | | | 23,714 | |
Other comprehensive loss, net of tax | (30,078) | | | (55,400) | | | (2,507) | | | (125,141) | |
Comprehensive loss | $ | (42,597) | | | $ | (49,913) | | | $ | (164,298) | | | $ | (94,497) | |
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| | | Three Months Ended March 31, |
| | | | | 2024 | | 2023 |
Net loss | | | | | $ | (2,885) | | | $ | (7,737) | |
Other comprehensive (loss) income, net of tax: | | | | | | | |
Foreign currency translation, net of tax of $(496) and $174, respectively | | | | | (15,399) | | | 10,887 | |
Net unrealized loss on cash flow hedges, net of tax of $(414) and $(687), respectively | | | | | (1,241) | | | (2,062) | |
Net unrealized (loss) gain on investment securities, net of tax of $(303) and $1,028, respectively | | | | | (967) | | | 3,272 | |
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Amortization of pension and postretirement costs, net of tax of $1,628 and $1,142, respectively | | | | | 5,041 | | | 3,489 | |
Other comprehensive (loss) income, net of tax | | | | | (12,566) | | | 15,586 | |
Comprehensive (loss) income | | | | | $ | (15,451) | | | $ | 7,849 | |
See Notes to Condensed Consolidated Financial Statements
PITNEY BOWES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands, except per share amount)
| | September 30, 2023 | | December 31, 2022 |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
ASSETS | ASSETS | | | | ASSETS | | | |
Current assets: | Current assets: | | | | Current assets: | | | |
Cash and cash equivalents | Cash and cash equivalents | $ | 557,696 | | | $ | 669,981 | |
Short-term investments (includes $2,280 and $1,882, respectively, reported at fair value) | 21,732 | | | 11,172 | |
Accounts and other receivables (net of allowance of $4,124 and $5,344, respectively) | 288,592 | | | 343,557 | |
Short-term finance receivables (net of allowance of $14,128 and $11,395, respectively) | 550,152 | | | 564,972 | |
Short-term investments (includes $1,858 and $2,382, respectively, reported at fair value) | |
Accounts and other receivables (net of allowance of $8,948 and $6,139, respectively) | |
Short-term finance receivables (net of allowance of $13,536 and $14,347, respectively) | |
Inventories | Inventories | 83,781 | | | 83,720 | |
Current income taxes | Current income taxes | 6,392 | | | 8,790 | |
Other current assets and prepayments | Other current assets and prepayments | 109,189 | | | 115,824 | |
| Total current assets | Total current assets | 1,617,534 | | | 1,798,016 | |
| Total current assets | |
| Total current assets | |
Property, plant and equipment, net | Property, plant and equipment, net | 391,649 | | | 420,672 | |
Rental property and equipment, net | Rental property and equipment, net | 24,652 | | | 27,487 | |
Long-term finance receivables (net of allowance of $8,571 and $10,555 respectively) | 641,251 | | | 627,124 | |
Long-term finance receivables (net of allowance of $8,432 and $8,880 respectively) | |
Goodwill | Goodwill | 945,418 | | | 1,066,951 | |
Intangible assets, net | Intangible assets, net | 66,111 | | | 77,944 | |
Operating lease assets | Operating lease assets | 309,995 | | | 296,129 | |
Noncurrent income taxes | Noncurrent income taxes | 55,378 | | | 46,613 | |
| Other assets (includes $214,752 and $229,936, respectively, reported at fair value) | 370,716 | | | 380,419 | |
Other assets (includes $217,746 and $227,131, respectively, reported at fair value) | |
Other assets (includes $217,746 and $227,131, respectively, reported at fair value) | |
Other assets (includes $217,746 and $227,131, respectively, reported at fair value) | |
Total assets | Total assets | $ | 4,422,704 | | | $ | 4,741,355 | |
| LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | |
Current liabilities: | Current liabilities: | | | | Current liabilities: | | | |
Accounts payable and accrued liabilities | Accounts payable and accrued liabilities | $ | 793,609 | | | $ | 907,083 | |
Customer deposits at Pitney Bowes Bank | Customer deposits at Pitney Bowes Bank | 642,556 | | | 628,072 | |
Current operating lease liabilities | Current operating lease liabilities | 58,270 | | | 52,576 | |
Current portion of long-term debt | Current portion of long-term debt | 56,533 | | | 32,764 | |
Advance billings | Advance billings | 87,739 | | | 105,207 | |
Current income taxes | Current income taxes | 1,819 | | | 2,101 | |
| Total current liabilities | Total current liabilities | 1,640,526 | | | 1,727,803 | |
| Total current liabilities | |
| Total current liabilities | |
Long-term debt | Long-term debt | 2,101,595 | | | 2,172,502 | |
Deferred taxes on income | Deferred taxes on income | 238,391 | | | 263,131 | |
Tax uncertainties and other income tax liabilities | Tax uncertainties and other income tax liabilities | 21,386 | | | 23,841 | |
Noncurrent operating lease liabilities | Noncurrent operating lease liabilities | 279,920 | | | 265,696 | |
Other noncurrent liabilities | Other noncurrent liabilities | 265,995 | | | 227,729 | |
Total liabilities | Total liabilities | 4,547,813 | | | 4,680,702 | |
| Commitments and contingencies (See Note 13) | Commitments and contingencies (See Note 13) | |
Commitments and contingencies (See Note 13) | |
Commitments and contingencies (See Note 13) | | | | |
| Stockholders’ (deficit) equity: | |
Common stock, $1 par value (480,000 shares authorized; 323,338 shares issued) | 323,338 | | | 323,338 | |
Stockholders’ deficit: | |
Stockholders’ deficit: | |
Stockholders’ deficit: | |
Common stock, $1 par value (480,000 shares authorized; 270,338 shares issued) | |
Common stock, $1 par value (480,000 shares authorized; 270,338 shares issued) | |
Common stock, $1 par value (480,000 shares authorized; 270,338 shares issued) | |
| Retained earnings | Retained earnings | 4,872,439 | | | 5,125,677 | |
Retained earnings | |
Retained earnings | |
Accumulated other comprehensive loss | Accumulated other comprehensive loss | (838,071) | | | (835,564) | |
Treasury stock, at cost (147,011 and 149,307 shares, respectively) | (4,482,815) | | | (4,552,798) | |
Total stockholders’ (deficit) equity | (125,109) | | | 60,653 | |
Total liabilities and stockholders’ (deficit) equity | $ | 4,422,704 | | | $ | 4,741,355 | |
Treasury stock, at cost (92,669 and 93,972 shares, respectively) | |
Total stockholders’ deficit | |
Total liabilities and stockholders’ deficit | |
See Notes to Condensed Consolidated Financial Statements
PITNEY BOWES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)
| | Three Months Ended March 31, | | | Three Months Ended March 31, |
| 2024 | | | 2024 | | 2023 |
Cash flows from operating activities: | | Cash flows from operating activities: | | | |
Net loss | |
| | Nine Months Ended September 30, |
| 2023 | | 2022 |
Cash flows from operating activities: | | | |
Net (loss) income | $ | (161,791) | | | $ | 30,644 | |
| Adjustments to reconcile net (loss) income to net cash from operating activities: | | | |
Adjustments to reconcile net income or loss to net cash from operating activities: | |
Adjustments to reconcile net income or loss to net cash from operating activities: | |
Adjustments to reconcile net income or loss to net cash from operating activities: | | | | |
Depreciation and amortization | Depreciation and amortization | 120,032 | | | 124,752 | |
Allowance for credit losses | Allowance for credit losses | 11,393 | | | 6,355 | |
Stock-based compensation | Stock-based compensation | 7,281 | | | 15,237 | |
Amortization of debt fees | Amortization of debt fees | 7,604 | | | 6,737 | |
(Gain) loss on debt redemption/refinancing | (3,064) | | | 4,993 | |
Restructuring charges and asset impairments | 42,620 | | | 12,672 | |
Gain on debt redemption | |
Restructuring charges | |
Restructuring payments | Restructuring payments | (25,152) | | | (11,761) | |
Pension contributions and retiree medical payments | Pension contributions and retiree medical payments | (30,739) | | | (23,411) | |
Gain on sale of assets | — | | | (14,372) | |
Gain on sale of businesses | — | | | (10,920) | |
Goodwill impairment | 118,599 | | | — | |
| | Other, net | |
| Other, net | |
| Other, net | |
Changes in operating assets and liabilities, net of acquisitions/divestitures: | Changes in operating assets and liabilities, net of acquisitions/divestitures: | | | | Changes in operating assets and liabilities, net of acquisitions/divestitures: | | | |
Accounts and other receivables | Accounts and other receivables | 48,914 | | | 24,895 | |
Finance receivables | Finance receivables | 8,144 | | | (1,125) | |
Inventories | Inventories | 54 | | | (12,233) | |
Other current assets and prepayments | Other current assets and prepayments | 5,239 | | | (22,234) | |
Accounts payable and accrued liabilities | Accounts payable and accrued liabilities | (117,376) | | | (120,993) | |
Current and noncurrent income taxes | Current and noncurrent income taxes | (34,819) | | | (14,633) | |
Advance billings | Advance billings | (16,106) | | | (774) | |
Other, net | 4,714 | | | 15,400 | |
| | Net cash from operating activities | |
| Net cash from operating activities | |
| Net cash from operating activities | Net cash from operating activities | (14,453) | | | 9,229 | |
Cash flows from investing activities: | Cash flows from investing activities: | | | | Cash flows from investing activities: | | | |
Capital expenditures | Capital expenditures | (77,598) | | | (97,533) | |
Purchases of investment securities | Purchases of investment securities | (11,248) | | | (5,722) | |
Proceeds from sales/maturities of investment securities | Proceeds from sales/maturities of investment securities | 16,100 | | | 24,835 | |
Net investment in loan receivables | Net investment in loan receivables | (17,039) | | | (31,101) | |
Proceeds from asset sales | — | | | 50,766 | |
Proceeds from sale of businesses | — | | | 109,326 | |
Acquisitions | — | | | (1,154) | |
Settlement of derivative contracts | (6,988) | | | (48,987) | |
Other investing activities | 1,337 | | | 15,961 | |
| | Other investing activities, net | |
| Other investing activities, net | |
| Other investing activities, net | |
| Net cash from investing activities | |
| Net cash from investing activities | |
| Net cash from investing activities | Net cash from investing activities | (95,436) | | | 16,391 | |
Cash flows from financing activities: | Cash flows from financing activities: | | | | Cash flows from financing activities: | | | |
| Proceeds from the issuance of debt, net of discount | 266,750 | | | — | |
Repayments of debt | (308,755) | | | (112,965) | |
Premiums and fees paid to redeem/refinance debt | (10,531) | | | (4,759) | |
| Principal payments of debt | |
| Principal payments of debt | |
| Principal payments of debt | |
| Dividends paid to stockholders | |
Dividends paid to stockholders | |
Dividends paid to stockholders | Dividends paid to stockholders | (26,330) | | | (26,013) | |
Customer deposits at Pitney Bowes Bank | Customer deposits at Pitney Bowes Bank | 88,456 | | | 31,359 | |
Common stock repurchases | — | | | (13,446) | |
Other financing activities | (11,649) | | | (10,356) | |
| Other financing activities, net | |
Other financing activities, net | |
Other financing activities, net | |
Net cash from financing activities | Net cash from financing activities | (2,059) | | | (136,180) | |
Effect of exchange rate changes on cash and cash equivalents | Effect of exchange rate changes on cash and cash equivalents | (337) | | | (25,273) | |
Change in cash and cash equivalents | Change in cash and cash equivalents | (112,285) | | | (135,833) | |
Cash and cash equivalents at beginning of period | Cash and cash equivalents at beginning of period | 669,981 | | | 732,480 | |
| Cash and cash equivalents at end of period | Cash and cash equivalents at end of period | $ | 557,696 | | | $ | 596,647 | |
| Cash and cash equivalents at end of period | |
| Cash and cash equivalents at end of period | |
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See Notes to Condensed Consolidated Financial Statements
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
1. Description of Business and Basis of Presentation
Description of Business
Pitney Bowes Inc. (we, us, our, or the company) is a global shipping and mailing company that provides technology, logistics, and financial services to small and medium sized businesses, large enterprises, including more than 90 percent of the Fortune 500, retailers and government clients around the world. These clients rely on us to remove the complexity and increase the efficiency in their sending of mail and parcels. For additional information, visit www.pitneybowes.com.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In addition, the December 31, 20222023 Condensed Consolidated Balance Sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. In management's opinion, all adjustments, consisting only of normal recurring adjustments, considered necessary to fairly state our financial position, results of operations and cash flows for the periods presented have been included. Operating results for the periods presented are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2023.2024. These statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report to Stockholders on Form 10-K for the year ended December 31, 2022 (20222023 (2023 Annual Report).
Factors Affecting Comparability
Certain transactions and changes occurred during 2022 that impactDuring the comparability to our 2023 financial results. These transactions and changes include:
•the sale of our Borderfree cross-border ecommerce solutions business (Borderfree) in July 2022. Accordingly, revenue and costs for the ninethree months ended September 30, 2022 include revenueMarch 31, 2024, the Company identified an error and costs for Borderfree throughrecorded an out of period adjustment of $5 million to correct the sale date. Net income of Borderfree for the year-to-date 2022 period was not significant.
•a change in the presentationunderstatement of revenue in prior periods, of which $4 million originated in 2020 and prior. The impact of the adjustment is not material to the consolidated financial statements for digital delivery services effective October 1, 2022, from a gross basisany prior interim or annual periods and is not expected to a net basis. Throughout 2023, revenue and costs of revenue for certain digital delivery services are reported on a net basis as business services revenue; whereas in 2022, revenue and costs of revenue for these services were reported as business services revenue and cost of business services, respectively. The change primarily impacts our Global Ecommerce segment.be material to the 2024 annual period.
Accounting Pronouncements Adopted in 20232024
OnEffective January 1, 2023,2024, we adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which requires disclosure of gross write-offs of finance receivables by year of origination. The adoption of this standard did not have a material impact on our financial statement disclosures.
Accounting Pronouncements Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The transition to new reference interest rates will requirerequired certain contracts to be modified and the ASU is intended to provide temporary optional expedients and exceptions to U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates.modified. The accommodations provided by the ASU are effective through December 31, 2024, and may be applied at the beginning of any interim period within that time frame. We continue to assess the impactadoption of this standard did not have an impact on our condensed consolidated financial statements.
Accounting Pronouncements Not Yet Adopted
In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires additional transparency for income tax disclosures, including the rate reconciliation table and cash taxes paid. This standard is effective for annual periods beginning after December 15, 2024. We are currently assessing the impact this standard will have on our disclosures.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires enhanced disclosures about significant segment expenses and information used to assess segment performance. This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently assessing the impact this standard will have on our disclosures.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
2. Revenue
Disaggregated Revenue
The following tables disaggregate our revenue by source and timing of recognition:
| | Three Months Ended September 30, 2023 |
| Global Ecommerce | Presort Services | SendTech Solutions | Revenue from products and services | Revenue from leasing transactions and financing | Total consolidated revenue |
| Three Months Ended March 31, 2024 | | | Three Months Ended March 31, 2024 |
| Global Ecommerce | | | Global Ecommerce | Presort Services | SendTech Solutions | Revenue from products and services | Revenue from leasing transactions and financing | Total consolidated revenue |
Major products/service lines | Major products/service lines | |
Business services | |
Business services | |
Business services | Business services | $ | 313,161 | | $ | 152,451 | | $ | 18,375 | | $ | 483,987 | | $ | — | | $ | 483,987 | |
Support services | Support services | — | | — | | 101,855 | | 101,855 | | — | | 101,855 | |
Financing | Financing | — | | — | | — | | — | | 68,572 | | 68,572 | |
Equipment sales | Equipment sales | — | | — | | 18,353 | | 18,353 | | 58,352 | | 76,705 | |
Supplies | Supplies | — | | — | | 35,695 | | 35,695 | | — | | 35,695 | |
Rentals | Rentals | — | | — | | — | | — | | 16,937 | | 16,937 | |
Subtotal | Subtotal | 313,161 | | 152,451 | | 174,278 | | 639,890 | | $ | 143,861 | | $ | 783,751 | |
| Revenue from leasing transactions and financing | Revenue from leasing transactions and financing | — | | — | | 143,861 | | 143,861 | | |
Revenue from leasing transactions and financing | |
Revenue from leasing transactions and financing | |
| Total revenue | |
| Total revenue | |
| Total revenue | Total revenue | $ | 313,161 | | $ | 152,451 | | $ | 318,139 | | $ | 783,751 | | |
| Timing of revenue recognition from products and services | Timing of revenue recognition from products and services | | |
| Timing of revenue recognition from products and services | |
| Timing of revenue recognition from products and services | |
Products/services transferred at a point in time | |
Products/services transferred at a point in time | |
Products/services transferred at a point in time | Products/services transferred at a point in time | $ | — | | $ | — | | $ | 71,634 | | $ | 71,634 | | |
Products/services transferred over time | Products/services transferred over time | 313,161 | | 152,451 | | 102,644 | | 568,256 | | |
Products/services transferred over time | |
Products/services transferred over time | |
Total | Total | $ | 313,161 | | $ | 152,451 | | $ | 174,278 | | $ | 639,890 | | |
Total | |
Total | |
| | Three Months Ended September 30, 2022 |
| Global Ecommerce | Presort Services | SendTech Solutions | Revenue from products and services | Revenue from leasing transactions and financing | Total consolidated revenue |
| Three Months Ended March 31, 2023 | | | Three Months Ended March 31, 2023 |
| Global Ecommerce | | | Global Ecommerce | Presort Services | SendTech Solutions | Revenue from products and services | Revenue from leasing transactions and financing | Total consolidated revenue |
Major products/service lines | Major products/service lines | |
Business services | |
Business services | |
Business services | Business services | $ | 354,326 | | $ | 144,824 | | $ | 19,255 | | $ | 518,405 | | $ | — | | $ | 518,405 | |
Support services | Support services | — | | — | | 107,642 | | 107,642 | | — | | 107,642 | |
Financing | Financing | — | | — | | — | | — | | 67,757 | | 67,757 | |
Equipment sales | Equipment sales | — | | — | | 20,389 | | 20,389 | | 63,139 | | 83,528 | |
Supplies | Supplies | — | | — | | 37,455 | | 37,455 | | — | | 37,455 | |
Rentals | Rentals | — | | — | | — | | — | | 16,127 | | 16,127 | |
Subtotal | Subtotal | 354,326 | | 144,824 | | 184,741 | | 683,891 | | $ | 147,023 | | $ | 830,914 | |
| Revenue from leasing transactions and financing | Revenue from leasing transactions and financing | — | | — | | 147,023 | | 147,023 | | |
Revenue from leasing transactions and financing | |
Revenue from leasing transactions and financing | |
| Total revenue | |
| Total revenue | |
| Total revenue | Total revenue | $ | 354,326 | | $ | 144,824 | | $ | 331,764 | | $ | 830,914 | | |
| Timing of revenue recognition from products and services | Timing of revenue recognition from products and services | | |
| Timing of revenue recognition from products and services | |
| Timing of revenue recognition from products and services | |
Products/services transferred at a point in time | |
Products/services transferred at a point in time | |
Products/services transferred at a point in time | Products/services transferred at a point in time | $ | — | | $ | — | | $ | 76,667 | | $ | 76,667 | | |
Products/services transferred over time | Products/services transferred over time | 354,326 | | 144,824 | | 108,074 | | 607,224 | | |
Products/services transferred over time | |
Products/services transferred over time | |
Total | Total | $ | 354,326 | | $ | 144,824 | | $ | 184,741 | | $ | 683,891 | | |
Total | |
Total | |
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
| | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Nine Months Ended September 30, 2023 |
| Global Ecommerce | Presort Services | SendTech Solutions | Revenue from products and services | Revenue from leasing transactions and financing | Total consolidated revenue |
Major products/service lines | | | | | | |
Business services | $ | 974,306 | | $ | 454,460 | | $ | 52,209 | | $ | 1,480,975 | | $ | — | | $ | 1,480,975 | |
Support services | — | | — | | 310,454 | | 310,454 | | — | | 310,454 | |
Financing | — | | — | | — | | — | | 202,323 | | 202,323 | |
Equipment sales | — | | — | | 57,408 | | 57,408 | | 181,358 | | 238,766 | |
Supplies | — | | — | | 111,035 | | 111,035 | | — | | 111,035 | |
Rentals | — | | — | | — | | — | | 51,217 | | 51,217 | |
Subtotal | 974,306 | | 454,460 | | 531,106 | | 1,959,872 | | $ | 434,898 | | $ | 2,394,770 | |
| | | | | | |
| | | | | | |
Revenue from leasing transactions and financing | — | | — | | 434,898 | | 434,898 | | | |
| | | | | | |
| | | | | | |
Total revenue | $ | 974,306 | | $ | 454,460 | | $ | 966,004 | | $ | 2,394,770 | | | |
| | | | | | |
Timing of revenue recognition from products and services | | | | |
Products/services transferred at a point in time | $ | — | | $ | — | | $ | 222,193 | | $ | 222,193 | | | |
Products/services transferred over time | 974,306 | | 454,460 | | 308,913 | | 1,737,679 | | | |
Total | $ | 974,306 | | $ | 454,460 | | $ | 531,106 | | $ | 1,959,872 | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Nine Months Ended September 30, 2022 |
| Global Ecommerce | Presort Services | SendTech Solutions | Revenue from products and services | Revenue from leasing transactions and financing | Total consolidated revenue |
Major products/service lines | | | | | | |
Business services | $ | 1,166,623 | | $ | 444,302 | | $ | 56,342 | | $ | 1,667,267 | | $ | — | | $ | 1,667,267 | |
Support services | — | | — | | 325,619 | | 325,619 | | — | | 325,619 | |
Financing | — | | — | | — | | — | | 207,084 | | 207,084 | |
Equipment sales | — | | — | | 63,088 | | 63,088 | | 199,722 | | 262,810 | |
Supplies | — | | — | | 116,761 | | 116,761 | | — | | 116,761 | |
Rentals | — | | — | | — | | — | | 49,810 | | 49,810 | |
Subtotal | 1,166,623 | | 444,302 | | 561,810 | | 2,172,735 | | $ | 456,616 | | $ | 2,629,351 | |
| | | | | | |
| | | | | | |
Revenue from leasing transactions and financing | — | | — | | 456,616 | | 456,616 | | | |
| | | | | | |
| | | | | | |
Total revenue | $ | 1,166,623 | | $ | 444,302 | | $ | 1,018,426 | | $ | 2,629,351 | | | |
| | | | | | |
Timing of revenue recognition from products and services | | | | |
Products/services transferred at a point in time | $ | — | | $ | — | | $ | 231,194 | | $ | 231,194 | | | |
Products/services transferred over time | 1,166,623 | | 444,302 | | 330,616 | | 1,941,541 | | | |
Total | $ | 1,166,623 | | $ | 444,302 | | $ | 561,810 | | $ | 2,172,735 | | | |
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Our performance obligations for revenue from products and services are as follows:
Business services includes fulfillment, delivery and return services, cross-border solutions, mail processing services and shipping subscription solutions. RevenueRevenues for fulfillment, delivery and return services, and cross-border solutions, and mail processing services isare recognized over time using an output method based on the number of parcels or mail pieces either processed or delivered, depending on the service type, since that measure best depicts the value of goods and services transferred to the client over the contract period. Contract terms for these services initially range from one to five years and contain annual renewal options. Revenue for shipping subscription solutions is recognized ratably over the contract period as the client obtains equal benefit from these services through the period.
Support services includes providing maintenance, professional and subscription services for our equipment and digital mailing and shipping technology solutions. Contract terms range from one to five years, depending on the term of the lease contract for the related equipment.years. Revenue for maintenance and subscription services is recognized ratably over the contract period and revenue for professional services is recognized when services are provided.
Equipment sales generally includes the sale of mailing and shipping equipment, excluding sales-type leases. We recognize revenue upon delivery for self-install equipment and upon acceptance or installation for other equipment. We provide a warranty that the equipment is free of defects and meets stated specifications. The warranty is not considered a separate performance obligation.
Supplies includes revenue from the sale of supplies for our mailing equipment and is recognized upon delivery.
Revenue from leasing transactions and financing includes revenue from sales-type and operating leases, finance income, late fees and investment income, gains and losses at the Pitney Bowes Bank.Bank (the Bank).
Advance Billings from Contracts with Customers
| | Balance sheet location | | September 30, 2023 | | December 31, 2022 | | Increase/ (decrease) |
| Balance sheet location | | | Balance sheet location | | March 31, 2024 | | December 31, 2023 | | Increase/ (decrease) |
Advance billings, current | Advance billings, current | Advance billings | | $ | 80,405 | | | $ | 97,904 | | | $ | (17,499) | |
Advance billings, noncurrent | Advance billings, noncurrent | Other noncurrent liabilities | | $ | 1,858 | | | $ | 906 | | | $ | 952 | |
Advance billings are recorded when cash payments are due in advance of our performance. Revenue is recognized ratably over the contract term. Items in advance billings primarily relate to support services on mailing equipment. Revenue recognized during the period includes $81$48 million of advance billings at the beginning of the period. AdvanceCurrent advance billings current,shown above at both September 30, 2023March 31, 2024 and December 31, 2022 also includes2023 does not include $8 million and $7 million, respectively, from leasing transactions.
Future Performance Obligations
Future performance obligations primarily include revenue streamsmaintenance and subscription services bundled with our leasing contracts, primarily maintenance and subscription services.contracts. The transaction prices allocated to future performance obligations will be recognized as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Remainder of 2023 | | 2024 | | 2025-2028 | | Total |
SendTech Solutions | | $ | 65,822 | | | $ | 236,924 | | | $ | 395,164 | | | $ | 697,910 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Remainder of 2024 | | 2025 | | 2026-2029 | | Total |
SendTech Solutions | | $ | 182,639 | | | $ | 208,922 | | | $ | 298,162 | | | $ | 689,723 | |
The amounts above do not include revenue for performance obligations under contracts with terms less than 12 months or revenue for performance obligations where revenue is recognized based on the amount billable to the customer.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
3. Segment Information
Effective January 1, 2024, we moved the digital delivery services offering from the Global Ecommerce segment to the SendTech Solutions segment in order to leverage our technology and innovation capabilities to better serve our clients. Prior periods have been recast to conform to our current segment presentation.
Our reportable segments are Global Ecommerce, Presort Services and SendTech Solutions. The principal products and services of each reportable segment are as follows:
Global Ecommerce: Includes the revenue and related expenses from business to consumer logistics services for domestic and cross-border delivery, returns and fulfillment.
Presort Services: Includes revenue and related expenses from sortation services that enable clients to qualify for USPS workshare discounts inlarge volumes of First Class Mail, Marketing Mail and Marketing Mail Flats and Bound Printed Matter.Matter for postal worksharing discounts.
SendTech Solutions: Includes the revenue and related expenses from physical and digital mailing and shipping technology solutions, financing, services, supplies and other applications to help clients simplify and save on the sending, tracking and receiving of letters, parcels and flats.
Management measures segment profitability and performance using adjusted segment earnings before interest and taxes (EBIT). Adjusted segment EBIT is calculated by deducting from segment revenue the related costs and expenses attributable to the segment. Adjusted segment EBIT excludes interest, taxes, unallocatedgeneral corporate expenses, restructuring charges, and asset impairments, goodwill impairment charges and other items not allocated to a particular business segments.segment. Costs related to shared assets are allocated to the relevant segments. Management believes that adjusted segment EBIT provides investors a useful measure of operating performance and underlying trends of the business. Adjusted segment EBIT may not be indicative of our overall consolidated performance and therefore, should be read in conjunction with our consolidated results of operations. The following tables provide information about our reportable segments and a reconciliation of adjusted segment EBIT to net (loss) income.income or loss.
| | Revenue |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| | | | | Revenue | |
| | | | | Revenue | |
| | | | | Revenue | |
| | | Three Months Ended March 31, | | | | | Three Months Ended March 31, |
| | | | | 2024 | | | | | | | 2024 | | 2023 |
Global Ecommerce | Global Ecommerce | $ | 313,161 | | | $ | 354,326 | | | $ | 974,306 | | | $ | 1,166,623 | |
Presort Services | Presort Services | 152,451 | | | 144,824 | | | 454,460 | | | 444,302 | |
SendTech Solutions | SendTech Solutions | 318,139 | | | 331,764 | | | 966,004 | | | 1,018,426 | |
Total revenue | Total revenue | $ | 783,751 | | | $ | 830,914 | | | $ | 2,394,770 | | | $ | 2,629,351 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted Segment EBIT |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Global Ecommerce | $ | (41,712) | | | $ | (34,881) | | | $ | (114,033) | | | $ | (77,402) | |
Presort Services | 29,124 | | | 20,561 | | | 76,458 | | | 53,044 | |
SendTech Solutions | 97,761 | | | 95,234 | | | 291,912 | | | 295,374 | |
Total adjusted segment EBIT | 85,173 | | | 80,914 | | | 254,337 | | | 271,016 | |
Reconciliation of adjusted segment EBIT to net (loss) income: | | | | | | |
Unallocated corporate expenses | (41,704) | | | (42,908) | | | (145,762) | | | (141,537) | |
Restructuring charges and asset impairments | (16,578) | | | (4,264) | | | (42,620) | | | (12,672) | |
Interest expense, net | (43,595) | | | (37,377) | | | (118,156) | | | (104,643) | |
Proxy solicitation fees | — | | | — | | | (10,905) | | | — | |
Goodwill impairment | — | | | — | | | (118,599) | | | — | |
Gain (loss) on debt redemption/refinancing | — | | | — | | | 3,064 | | | (4,993) | |
Gain on sale of assets | — | | | — | | | — | | | 14,372 | |
Gain on sale of businesses, including transaction costs | — | | | 13,764 | | | — | | | 10,920 | |
| | | | | | | |
Benefit (provision) for income taxes | 4,185 | | | (4,642) | | | 16,850 | | | (1,819) | |
| | | | | | | |
| | | | | | | |
Net (loss) income | $ | (12,519) | | | $ | 5,487 | | | $ | (161,791) | | | $ | 30,644 | |
| | | | | | | | | | | | | | | |
| | | | | Adjusted Segment EBIT |
| | | Three Months Ended March 31, |
| | | | | 2024 | | 2023 |
Global Ecommerce | | | | | $ | (35,427) | | | $ | (33,172) | |
Presort Services | | | | | 40,329 | | | 26,905 | |
SendTech Solutions | | | | | 101,278 | | | 95,637 | |
Total adjusted segment EBIT | | | | | 106,180 | | | 89,370 | |
Reconciliation of adjusted segment EBIT to net income or loss: | | | | | | |
Interest expense, net | | | | | (44,369) | | | (36,878) | |
Unallocated corporate expenses | | | | | (49,770) | | | (56,349) | |
Restructuring charges | | | | | (4,315) | | | (3,599) | |
| | | | | | | |
Proxy solicitation fees | | | | | — | | | (6,367) | |
Gain on debt redemption | | | | | — | | | 2,836 | |
Foreign currency gain on intercompany loans | | | | | 4,638 | | | — | |
| | | | | | | |
Transaction costs | | | | | (2,690) | | | — | |
(Provision) benefit for income taxes | | | | | (12,559) | | | 3,250 | |
| | | | | | | |
| | | | | | | |
Net loss | | | | | $ | (2,885) | | | $ | (7,737) | |
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
4. Earnings per Share (EPS)
The calculation of basic and diluted earnings per share is presented below. The sum of the earnings per share amounts may not equal the totals due to rounding.
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2024 | | 2023 |
Numerator: | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Net loss | | | | | $ | (2,885) | | | $ | (7,737) | |
Denominator: | | | | | | | |
Weighted-average shares used in basic EPS | | | | | 176,997 | | | 174,626 | |
Dilutive effect of common stock equivalents (1) | | | | | — | | | — | |
Weighted-average shares used in diluted EPS | | | | | 176,997 | | | 174,626 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Basic net loss per share | | | | | $ | (0.02) | | | $ | (0.04) | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Diluted net loss per share | | | | | $ | (0.02) | | | $ | (0.04) | |
| | | | | | | |
Common stock equivalents excluded from calculation of diluted earnings per share because their impact would be anti-dilutive: | | | | | 7,063 | | | 8,148 | |
(1) Due to the net loss for the three months ended March 31, 2024 and 2023, an additional 4.5 million and 4.7 million, respectively, of common stock equivalents were also excluded from the calculation of diluted earnings per share.
5. Inventories
Inventories are stated at the lower of cost, determined on the first-in, first-out (FIFO) basis, or net realizable value. Inventories consisted of the following:
| | | | | | | | | | | |
| March 31, 2024 | | December 31, 2023 |
Raw materials | $ | 26,930 | | | $ | 21,201 | |
Supplies and service parts | 26,940 | | | 25,522 | |
Finished products | 24,813 | | | 23,330 | |
| | | |
| | | |
Total inventories | $ | 78,683 | | | $ | 70,053 | |
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
4. Earnings per Share
The calculation of basic and diluted earnings per share (EPS) is presented below.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Numerator: | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Net (loss) income | $ | (12,519) | | | $ | 5,487 | | | $ | (161,791) | | | $ | 30,644 | |
Denominator: | | | | | | | |
Weighted-average shares used in basic EPS | 176,099 | | | 173,847 | | | 175,428 | | | 173,881 | |
Dilutive effect of common stock equivalents (1) | — | | | 3,119 | | | — | | | 3,537 | |
Weighted-average shares used in diluted EPS | 176,099 | | | 176,966 | | | 175,428 | | | 177,418 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Basic net (loss) earnings per share | $ | (0.07) | | | $ | 0.03 | | | $ | (0.92) | | | $ | 0.18 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Diluted net (loss) earnings per share | $ | (0.07) | | | $ | 0.03 | | | $ | (0.92) | | | $ | 0.17 | |
| | | | | | | |
Common stock equivalents excluded from calculation of diluted earnings per share because their impact would be anti-dilutive: | 10,574 | | | 13,967 | | | 9,665 | | | 9,573 | |
(1) Due to the net loss for the three and nine months ended September 30, 2023, an additional 4.3 million and 4.2 million, respectively, of common stock equivalents were also excluded from the calculation of diluted earnings per share.
5. Inventories
Inventories are stated at the lower of cost, determined on the first-in, first-out (FIFO) basis, or net realizable value. Inventories consisted of the following:
| | | | | | | | | | | |
| September 30, 2023 | | December 31, 2022 |
Raw materials | $ | 25,494 | | | $ | 25,539 | |
Supplies and service parts | 28,775 | | | 27,573 | |
Finished products | 29,512 | | | 30,608 | |
| | | |
| | | |
Total inventory, net | $ | 83,781 | | | $ | 83,720 | |
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
6. Finance Assets and Lessor Operating Leases
Finance Assets
Finance receivables are comprised of sales-type lease receivables, secured loans and unsecured loans. Sales-type leases and secured loans are from financing options for the purchase or lease of Pitney Bowes equipment or other manufacturers' equipment and are generally due in installments over periods ranging from three to five years. Unsecured loans compriseare revolving credit lines offered to our clients for postage, supplies and working capital purposes. These revolving credit linesUnsecured loans are generally due monthly; however, clients may rollover outstanding balances. Interest is recognized on finance receivables using the effective interest method. Annual fees are recognized ratably over the period covered and client acquisition costs are expensed as incurred. All finance receivables are in our SendTech Solutions segment and we segregate finance receivables into a North America portfolio and an International portfolio.
Finance receivables consisted of the following:
| | September 30, 2023 | | December 31, 2022 |
| North America | | International | | Total | | North America | | International | | Total |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
| North America | | | North America | | International | | Total | | North America | | International | | Total |
Sales-type lease receivables | Sales-type lease receivables | | | | | | | | | | | | Sales-type lease receivables | | | |
Gross finance receivables | Gross finance receivables | $ | 989,069 | | | $ | 135,913 | | | $ | 1,124,982 | | | $ | 967,298 | | | $ | 158,167 | | | $ | 1,125,465 | |
Unguaranteed residual values | Unguaranteed residual values | 38,570 | | | 7,555 | | | 46,125 | | | 38,832 | | | 8,798 | | | 47,630 | |
Unearned income | Unearned income | (249,639) | | | (42,059) | | | (291,698) | | | (239,238) | | | (48,334) | | | (287,572) | |
Allowance for credit losses | Allowance for credit losses | (14,352) | | | (2,454) | | | (16,806) | | | (14,131) | | | (2,893) | | | (17,024) | |
Net investment in sales-type lease receivables | Net investment in sales-type lease receivables | 763,648 | | | 98,955 | | | 862,603 | | | 752,761 | | | 115,738 | | | 868,499 | |
Loan receivables | Loan receivables | | | | | | | | | | | | Loan receivables | | | | | |
Loan receivables | Loan receivables | 317,269 | | | 17,424 | | | 334,693 | | | 311,887 | | | 16,636 | | | 328,523 | |
Allowance for credit losses | Allowance for credit losses | (5,747) | | | (146) | | | (5,893) | | | (4,787) | | | (139) | | | (4,926) | |
Net investment in loan receivables | Net investment in loan receivables | 311,522 | | | 17,278 | | | 328,800 | | | 307,100 | | | 16,497 | | | 323,597 | |
Net investment in finance receivables | Net investment in finance receivables | $ | 1,075,170 | | | $ | 116,233 | | | $ | 1,191,403 | | | $ | 1,059,861 | | | $ | 132,235 | | | $ | 1,192,096 | |
Maturities of gross finance receivables at September 30, 2023March 31, 2024 were as follows:
| | Sales-type Lease Receivables | | Loan Receivables |
| North America | | International | | Total | | North America | | International | | Total |
Remainder 2023 | $ | 103,877 | | | $ | 38,932 | | | $ | 142,809 | | | $ | 214,865 | | | $ | 17,424 | | | $ | 232,289 | |
2024 | 343,412 | | | 44,439 | | | 387,851 | | | 35,617 | | | — | | | 35,617 | |
| Sales-type Lease Receivables | | | Sales-type Lease Receivables | | Loan Receivables |
| North America | | | North America | | International | | Total | | North America | | International | | Total |
Remainder 2024 | |
2025 | 2025 | 255,720 | | | 27,813 | | | 283,533 | | | 29,217 | | | — | | | 29,217 | |
2026 | 2026 | 170,704 | | | 15,739 | | | 186,443 | | | 20,025 | | | — | | | 20,025 | |
2027 | 2027 | 91,804 | | | 6,777 | | | 98,581 | | | 13,163 | | | — | | | 13,163 | |
2028 | |
Thereafter | Thereafter | 23,552 | | | 2,213 | | | 25,765 | | | 4,382 | | | — | | | 4,382 | |
Total | Total | $ | 989,069 | | | $ | 135,913 | | | $ | 1,124,982 | | | $ | 317,269 | | | $ | 17,424 | | | $ | 334,693 | |
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Aging of Receivables
The aging of gross finance receivables was as follows:
| | September 30, 2023 |
| Sales-type Lease Receivables | | Loan Receivables | |
| North America | | International | | North America | | International | | Total |
| March 31, 2024 | | | March 31, 2024 |
| Sales-type Lease Receivables | |
| North America | |
| North America | |
| North America | | | International | | North America | | International | | Total |
Past due amounts 0 - 90 days | Past due amounts 0 - 90 days | $ | 980,673 | | | $ | 134,330 | | | $ | 314,832 | | | $ | 17,113 | | | $ | 1,446,948 | |
Past due amounts > 90 days | Past due amounts > 90 days | 8,396 | | | 1,583 | | | 2,437 | | | 311 | | | 12,727 | |
Total | Total | $ | 989,069 | | | $ | 135,913 | | | $ | 317,269 | | | $ | 17,424 | | | $ | 1,459,675 | |
|
| | December 31, 2022 |
| Sales-type Lease Receivables | | Loan Receivables | |
| North America | | International | | North America | | International | | Total |
| December 31, 2023 | | | December 31, 2023 |
| Sales-type Lease Receivables | |
| North America | |
| North America | |
| North America | | | International | | North America | | International | | Total |
Past due amounts 0 - 90 days | Past due amounts 0 - 90 days | $ | 959,203 | | | $ | 155,596 | | | $ | 308,872 | | | $ | 16,503 | | | $ | 1,440,174 | |
Past due amounts > 90 days | Past due amounts > 90 days | 8,095 | | | 2,571 | | | 3,015 | | | 133 | | | 13,814 | |
Total | Total | $ | 967,298 | | | $ | 158,167 | | | $ | 311,887 | | | $ | 16,636 | | | $ | 1,453,988 | |
|
Allowance for Credit Losses
We provide an allowance for credit losses based on historical loss experience, the nature of our portfolios, adverse situations that may affect a client's ability to pay and current economic conditions and outlook based on reasonable and supportable forecasts. We continually evaluate the adequacy of the allowance for credit losses and adjust as necessary. The assumptions used in determining an estimate of credit losses are inherently subjective and actual results may differ significantly from estimated reserves.
We establishedestablish credit approval limits based on the client's credit quality of the client and the type of equipment financed. We cease financing revenue recognition for lease receivables and for unsecured loan receivables that are more than 90 days past due. Revenue recognition is resumed when the client's payments reduce the account aging to less than 60 days past due. Finance receivables are written off against the allowance after all collection efforts have been exhausted and management deems the account to be uncollectible. We believe that our credit risk is low because of the geographic and industry diversification of our clients and small account balances for most of our clients.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Activity in the allowance for credit losses for finance receivables was as follows:
| | Sales-type Lease Receivables | |
| North America | |
| North America | |
| North America | | | International | | North America | | International | | Total |
Balance at January 1, 2024 | |
| | Sales-type Lease Receivables | | Loan Receivables | |
| North America | | International | | North America | | International | | Total |
Balance at January 1, 2023 | $ | 14,131 | | | $ | 2,893 | | | $ | 4,787 | | | $ | 139 | | | $ | 21,950 | |
| Amounts charged to expense | |
Amounts charged to expense | |
Amounts charged to expense | Amounts charged to expense | 1,339 | | | 800 | | | 3,246 | | | 305 | | | 5,690 | |
Write-offs | Write-offs | (3,227) | | | (1,209) | | | (3,722) | | | (292) | | | (8,450) | |
Recoveries | Recoveries | 2,058 | | | 151 | | | 1,488 | | | — | | | 3,697 | |
Other | Other | 51 | | | (181) | | | (52) | | | (6) | | | (188) | |
Balance at September 30, 2023 | $ | 14,352 | | | $ | 2,454 | | | $ | 5,747 | | | $ | 146 | | | $ | 22,699 | |
Balance at March 31, 2024 | |
| | Sales-type Lease Receivables | |
| Sales-type Lease Receivables | |
| Sales-type Lease Receivables | |
| North America | |
| North America | |
| North America | | | International | | North America | | International | | Total |
Balance at January 1, 2023 | |
| | Sales-type Lease Receivables | | Loan Receivables | |
| North America | | International | | North America | | International | | Total |
Balance at January 1, 2022 | $ | 19,546 | | | $ | 3,246 | | | $ | 3,259 | | | $ | 167 | | | $ | 26,218 | |
| Amounts charged to expense | |
Amounts charged to expense | |
Amounts charged to expense | Amounts charged to expense | (1,913) | | | 189 | | | 2,459 | | | 259 | | | 994 | |
Write-offs | Write-offs | (4,625) | | | (587) | | | (3,684) | | | (212) | | | (9,108) | |
Recoveries | Recoveries | 2,273 | | | 35 | | | 1,916 | | | 1 | | | 4,225 | |
Other | Other | (103) | | | (589) | | | (10) | | | (62) | | | (764) | |
Balance at September 30, 2022 | $ | 15,178 | | | $ | 2,294 | | | $ | 3,940 | | | $ | 153 | | | $ | 21,565 | |
Balance at March 31, 2023 | |
The table below shows write-offs of gross finance receivables by year of origination.
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| September 30, 2023 |
| Sales Type Lease Receivables | | Loan Receivables | | Total |
| 2023 | | 2022 | | 2021 | | 2020 | | 2019 | | Prior | | |
Write-offs | $ | 833 | | | $ | 912 | | | $ | 1,141 | | | $ | 748 | | | $ | 447 | | | $ | 355 | | | $ | 4,014 | | | $ | 8,450 | |
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| March 31, 2024 |
| Sales Type Lease Receivables | | Loan Receivables | | Total |
| 2024 | | 2023 | | 2022 | | 2021 | | 2020 | | Prior | | |
Write-offs | $ | 21 | | | $ | 193 | | | $ | 566 | | | $ | 249 | | | $ | 172 | | | $ | 133 | | | $ | 1,327 | | | $ | 2,661 | |
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| | | March 31, 2023 |
| | | Sales Type Lease Receivables | | Loan Receivables | | Total |
| | | 2022 | | 2021 | | 2020 | | 2019 | | Prior | | |
Write-offs | | | $ | 455 | | | $ | 675 | | | $ | 412 | | | $ | 250 | | | $ | 158 | | | $ | 1,155 | | | $ | 3,105 | |
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PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Credit Quality
The extension of credit and management of credit lines to new and existing clients uses a combination of a client's credit score, where available, a detailed manual review of their financial condition and payment history, or an automated process. Once credit is granted, the payment performance of the client is managed through automated collections processes and is supplemented with direct follow up should an account become delinquent. We have robust automated collections and extensive portfolio management processes to ensure that our global strategy is executed, collection resources are allocated and enhanced tools and processes are implemented as needed.
Over 85% of our finance receivables are within the North American portfolio. We use a third-party to score the majority of this portfolio on a quarterly basis using a proprietary commercial credit score. The relative scores are determined based on a number of factors, including financial information, payment history, company type and ownership structure. We stratify the third party's credit scores of our clients into low, medium and high-risk accounts. Due to timing and other issues, our entire portfolio may not be scored at period end. We report these amounts as "Not Scored"; however, absence of a score is not indicative of the credit quality of the account. The third-party credit score is used to predict the payment behaviors of our clients and the probability that an account will become greater than 90 days past due during the subsequent 12-month period.
•Low risk accounts are companies with very good credit scores and a predicted delinquency rate of less than 5%.
•Medium risk accounts are companies with average to good credit scores and a predicted delinquency rate between 5% and 10%.
•High risk accounts are companies with poor credit scores, are delinquent or are at risk of becoming delinquent. The predicted delinquency rate would be greater than 10%.
We do not use a third-party to score our International portfolio because the cost to do so is prohibitive as there is no single credit score model that covers all countries. Accordingly, the entire International portfolio is reported in the Not Scored category. This portfolio comprises less than 15% of total finance receivables. Most of the International credit applications are small dollar applications (i.e. below $50 thousand) and are subjected to an automated review process. Larger credit applications are manually reviewed, which includes obtaining client financial information, credit reports and other available financial information.
The table below shows gross finance receivables by relative risk class and year of origination based on the relative scores of the accounts within each class.
| | September 30, 2023 |
| Sales Type Lease Receivables | | Loan Receivables | | Total |
| 2023 | | 2022 | | 2021 | | 2020 | | 2019 | | Prior | |
| March 31, 2024 | | | March 31, 2024 |
| Sales Type Lease Receivables | | | Sales Type Lease Receivables | | Loan Receivables | | Total |
| 2024 | |
Low | |
Low | |
Low | Low | $ | 214,237 | | | $ | 241,101 | | | $ | 172,532 | | | $ | 108,325 | | | $ | 55,651 | | | $ | 16,531 | | | $ | 239,612 | | | $ | 1,047,989 | |
Medium | Medium | 37,123 | | | 40,116 | | | 29,949 | | | 20,506 | | | 12,288 | | | 4,007 | | | 62,663 | | | 206,652 | |
High | High | 3,426 | | | 4,495 | | | 2,909 | | | 2,231 | | | 824 | | | 801 | | | 7,632 | | | 22,318 | |
Not Scored | Not Scored | 56,364 | | | 46,715 | | | 32,930 | | | 14,264 | | | 6,319 | | | 1,338 | | | 24,786 | | | 182,716 | |
Total | Total | $ | 311,150 | | | $ | 332,427 | | | $ | 238,320 | | | $ | 145,326 | | | $ | 75,082 | | | $ | 22,677 | | | $ | 334,693 | | | $ | 1,459,675 | |
| | December 31, 2022 |
| Sales Type Lease Receivables | | Loan Receivables | | Total |
| 2022 | | 2021 | | 2020 | | 2019 | | 2018 | | Prior | |
| December 31, 2023 | |
| December 31, 2023 | |
| December 31, 2023 | |
| Sales Type Lease Receivables | | | Sales Type Lease Receivables | | Loan Receivables | | Total |
| 2023 | |
Low | |
Low | |
Low | Low | $ | 286,297 | | | $ | 206,511 | | | $ | 140,800 | | | $ | 95,485 | | | $ | 34,721 | | | $ | 12,674 | | | $ | 239,635 | | | $ | 1,016,123 | |
Medium | Medium | 53,419 | | | 40,669 | | | 27,013 | | | 19,668 | | | 6,751 | | | 3,441 | | | 56,048 | | | 207,009 | |
High | High | 6,492 | | | 3,840 | | | 3,119 | | | 1,942 | | | 750 | | | 508 | | | 6,800 | | | 23,451 | |
Not Scored | Not Scored | 71,435 | | | 53,831 | | | 29,957 | | | 19,232 | | | 5,889 | | | 1,021 | | | 26,040 | | | 207,405 | |
Total | Total | $ | 417,643 | | | $ | 304,851 | | | $ | 200,889 | | | $ | 136,327 | | | $ | 48,111 | | | $ | 17,644 | | | $ | 328,523 | | | $ | 1,453,988 | |
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Lease Income
Lease income from sales-type leases, excluding variable lease payments, was as follows:
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| | | Three Months Ended March 31, | |
| | | Three Months Ended March 31, | |
| | | Three Months Ended March 31, | |
| | | | | 2024 | | | | | | | 2024 | | 2023 |
Profit recognized at commencement | Profit recognized at commencement | $ | 29,476 | | | $ | 31,576 | | | $ | 92,138 | | | $ | 100,951 | |
Interest income | Interest income | 38,588 | | | 40,480 | | | 116,700 | | | 123,783 | |
Total lease income from sales-type leases | Total lease income from sales-type leases | $ | 68,064 | | | $ | 72,056 | | | $ | 208,838 | | | $ | 224,734 | |
Lessor Operating Leases
We also lease mailing equipment under operating leases with terms of one to five years. Maturities of these operating leases are as follows:
| Remainder 2023 | $ | 7,096 | |
2024 | 17,430 | |
Remainder 2024 | |
2025 | 2025 | 19,044 | |
2026 | 2026 | 14,827 | |
2027 | 2027 | 3,449 | |
2028 | |
Thereafter | Thereafter | 1,048 | |
Total | Total | $ | 62,894 | |
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
7. Intangible Assets and Goodwill
Intangible assets consisted of the following:
| | September 30, 2023 | | December 31, 2022 |
| Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
| Gross Carrying Amount | | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount |
Customer relationships | Customer relationships | $ | 155,712 | | | $ | (91,603) | | | $ | 64,109 | | | $ | 155,715 | | | $ | (80,188) | | | $ | 75,527 | |
Software & technology | Software & technology | 21,941 | | | (19,939) | | | 2,002 | | | 22,000 | | | (19,583) | | | 2,417 | |
| Total intangible assets | Total intangible assets | $ | 177,653 | | | $ | (111,542) | | | $ | 66,111 | | | $ | 177,715 | | | $ | (99,771) | | | $ | 77,944 | |
Total intangible assets | |
Total intangible assets | |
Amortization expense for both the three months ended September 30,March 31, 2024 and 2023 and 2022 was $4 million and $5 million, respectively and amortization expense for the nine months ended September 30, 2023 and 2022 was $12 million and $20 million, respectively.million.
Future amortization expense as of September 30, 2023March 31, 2024 is shown in the table below. Actual amortization expense may differ due to, among other things, fluctuations in foreign currency exchange rates, acquisitions, divestitures and impairment charges.
| Remainder 2023 | $ | 3,928 | |
2024 | 15,714 | |
Remainder 2024 | |
2025 | 2025 | 15,510 | |
2026 | 2026 | 14,520 | |
2027 | 2027 | 11,467 | |
2028 | |
Thereafter | Thereafter | 4,972 | |
Total | Total | $ | 66,111 | |
Goodwill
Changes in the carrying value of goodwill by reporting segment are shown in the table below.
| | | | | | December 31, 2023 | |
| | | | | December 31, 2023 | |
| | | | | December 31, 2023 | | | | | | | Currency impact | | March 31, 2024 |
| | | December 31, 2022 | | Impairment | | | Currency impact | | September 30, 2023 |
Global Ecommerce | | $ | 339,184 | | | $ | (118,599) | | | | $ | — | | | $ | 220,585 | |
Presort Services | |
Presort Services | |
Presort Services | Presort Services | | 223,763 | | | — | | | | — | | | 223,763 | |
SendTech Solutions | SendTech Solutions | | 504,004 | | | — | | | | (2,934) | | | 501,070 | |
Total goodwill | Total goodwill | | $ | 1,066,951 | | | $ | (118,599) | | | | $ | (2,934) | | | $ | 945,418 | |
Global Ecommerce goodwill is net of accumulated goodwill impairment charges of $317 million and $198 million at September 30, 2023 and December 31, 2022, respectively.
At the end of the second quarter of 2023, we determined that the performance of our Global Ecommerce reporting unit through June 30, 2023 and continuing changes in macroeconomic conditions, was a triggering event that caused us to evaluate the Global Ecommerce goodwill for impairment. To assess Global Ecommerce goodwill for impairment, we determined the fair value of the reporting unit and compared it to the unit's carrying value, including goodwill. We engaged a third-party to assist in the determination of the fair value of the reporting unit.
T
he fair value was estimated using a discounted cash flow model based on management developed cash flow projections, which included judgements and assumptions related to revenue growth rates, operating margins, operating income, and a discount rate. We determined that the estimated fair value of the reporting unit was less than its carrying value and recorded a non-cash, pre-tax goodwill impairment charge of $119 million in the second quarter of 2023. Future changes in any of these judgements or assumptions could materially affect the determination of fair value and result in an additional impairment charge in the future. The estimates and assumptions are considered Level 3 inputs under the fair value hierarchy.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
8. Fair Value Measurements and Derivative Instruments
We measure certain financial assets and liabilities at fair value on a recurring basis. Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. An entity is required to classify certain assets and liabilities measured at fair value based on the following fair value hierarchy that prioritizes the inputs used to measure fair value:
Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities.
Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3– Unobservable inputs that are supported by little or no market activity, may be derived from internally developed methodologies based on management’s best estimate of fair value and that are significant to the fair value of the asset or liability.
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect its placement within the fair value hierarchy. The following tables show, by level within the fair value hierarchy, our financial assets and liabilities that are accounted for at fair value on a recurring basis.
| | September 30, 2023 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| March 31, 2024 | | | March 31, 2024 |
| Level 1 | | | Level 1 | | Level 2 | | Level 3 | | Total |
Assets: | Assets: | | | | | | | | Assets: | | | |
Investment securities | Investment securities | | | | | | | | Investment securities | | | |
Money market funds | Money market funds | $ | 13,365 | | | $ | 137,444 | | | $ | — | | | $ | 150,809 | |
Equity securities | Equity securities | — | | | 13,778 | | | — | | | 13,778 | |
Commingled fixed income securities | Commingled fixed income securities | 1,500 | | | 5,756 | | | — | | | 7,256 | |
Government and related securities | Government and related securities | 10,456 | | | 17,350 | | | — | | | 27,806 | |
Corporate debt securities | Corporate debt securities | — | | | 50,820 | | | — | | | 50,820 | |
Mortgage-backed / asset-backed securities | Mortgage-backed / asset-backed securities | — | | | 114,327 | | | — | | | 114,327 | |
Derivatives | Derivatives | | | |
Interest rate swap | Interest rate swap | — | | | 11,683 | | | — | | | 11,683 | |
Interest rate swap | |
Interest rate swap | |
| Total assets | Total assets | $ | 25,321 | | | $ | 351,158 | | | $ | — | | | $ | 376,479 | |
Liabilities: | | | | | | | |
Derivatives | | | | | | | |
Total assets | |
Total assets | |
| Foreign exchange contracts | $ | — | | | $ | (715) | | | $ | — | | | $ | (715) | |
Total liabilities | $ | — | | | $ | (715) | | | $ | — | | | $ | (715) | |
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| December 31, 2023 |
| Level 1 | | Level 2 | | Level 3 | | Total |
Assets: | | | | | | | |
Investment securities | | | | | | | |
Money market funds | $ | 13,366 | | | $ | 188,484 | | | $ | — | | | $ | 201,850 | |
Equity securities | — | | | 15,341 | | | — | | | 15,341 | |
Commingled fixed income securities | 1,581 | | | 5,741 | | | — | | | 7,322 | |
Government and related securities | 11,489 | | | 18,999 | | | — | | | 30,488 | |
Corporate debt securities | — | | | 54,330 | | | — | | | 54,330 | |
Mortgage-backed / asset-backed securities | — | | | 119,901 | | | — | | | 119,901 | |
Derivatives | | | | | | | |
Interest rate swap | — | | | 8,425 | | | — | | | 8,425 | |
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Total assets | $ | 26,436 | | | $ | 411,221 | | | $ | — | | | $ | 437,657 | |
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PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
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| December 31, 2022 |
| Level 1 | | Level 2 | | Level 3 | | Total |
Assets: | | | | | | | |
Investment securities | | | | | | | |
Money market funds | $ | 29,087 | | | $ | 238,536 | | | $ | — | | | $ | 267,623 | |
Equity securities | — | | | 13,233 | | | — | | | 13,233 | |
Commingled fixed income securities | 1,520 | | | 6,526 | | | — | | | 8,046 | |
Government and related securities | 10,253 | | | 18,796 | | | — | | | 29,049 | |
Corporate debt securities | — | | | 52,319 | | | — | | | 52,319 | |
Mortgage-backed / asset-backed securities | — | | | 126,882 | | | — | | | 126,882 | |
Derivatives | | | | | | | |
Interest rate swap | — | | | 15,283 | | | — | | | 15,283 | |
Foreign exchange contracts | — | | | 479 | | | — | | | 479 | |
Total assets | $ | 40,860 | | | $ | 472,054 | | | $ | — | | | $ | 512,914 | |
Liabilities: | | | | | | | |
Derivatives | | | | | | | |
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Foreign exchange contracts | $ | — | | | $ | (1,472) | | | $ | — | | | $ | (1,472) | |
Total liabilities | $ | — | | | $ | (1,472) | | | $ | — | | | $ | (1,472) | |
Investment Securities
The valuation of investment securities is based on thea market approach using inputs that are observable, or can be corroborated by observable data, in an active marketplace. The following information relates to our classification within the fair value hierarchy:
•Money Market Funds: Money market funds typically invest in government securities, certificates of deposit, commercial paper and other highly liquid, low risk securities. Money market funds are principally used for overnight deposits and are classified as Level 1 when unadjusted quoted prices in active markets are available and as Level 2 when they are not actively traded on an exchange.
•Equity Securities: Equity securities are comprised of mutual funds investing in U.S. and foreign stocks. These mutual funds are classified as Level 2.
•Commingled Fixed Income Securities: Commingled fixed income securities are comprised of mutual funds that invest in a variety of fixed income securities, including securities of the U.S. government and its agencies, corporate debt, mortgage-backed securities and asset-backed securities. Fair value is based on the value of the underlying investments owned by each fund, minus its liabilities, divided by the number of shares outstanding, as reported by the fund manager. These mutual funds are classified as Level 1 when unadjusted quoted prices in active markets are available and as Level 2 when they are not actively traded on an exchange.
•Government and Related Securities: Debt securities are classified as Level 1 when unadjusted quoted prices in active markets are available. Debt securities are classified as Level 2 where fair value is determined using quoted market prices for similar securities or benchmarking model derived prices to quoted market prices and trade data for identical or comparable securities.
•Corporate Debt Securities: Corporate debt securities are valued using recently executed comparable transactions, market price quotations or bond spreads for the same maturity as the security. These securities are classified as Level 2.
•Mortgage-Backed Securities / Asset-Backed Securities: These securities are valued based on external pricing indices or external price/spread data. These securities are classified as Level 2.
Derivative Securities
•Foreign Exchange Contracts: The valuation of foreign exchange derivatives is based on the market approach using observable market inputs, such as foreign currency spot and forward rates and yield curves. These securities are classified as Level 2.
•Interest Rate Swaps: The valuation of interest rate swaps is based on an income approach using inputs that are observable or that can be derived from, or corroborated by, observable market data. These securities are classified as Level 2.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Available-For-Sale Securities
Investment securities classified as available-for-sale are recorded at fair value with changes in fair value due to market conditions recorded in accumulated other comprehensive loss (AOCL), and changes in fair value due to credit conditions recorded in earnings. There were no unrealized losses due to credit losses charged to earnings in the ninethree months ended September 30, 2023.March 31, 2024.
Available-for-sale securities consisted of the following:
| | September 30, 2023 |
| Amortized cost | | | Gross unrealized losses | | Estimated fair value |
| March 31, 2024 | |
| March 31, 2024 | |
| March 31, 2024 | |
| Amortized cost | | | Amortized cost | | | | Gross unrealized losses | | Estimated fair value |
Government and related securities | Government and related securities | $ | 35,125 | | | | $ | (9,054) | | | $ | 26,071 | |
Corporate debt securities | Corporate debt securities | 65,271 | | | | (14,451) | | | 50,820 | |
Commingled fixed income securities | Commingled fixed income securities | 1,778 | | | | (278) | | | 1,500 | |
Mortgage-backed / asset-backed securities | Mortgage-backed / asset-backed securities | 148,113 | | | | (33,786) | | | 114,327 | |
Total | Total | $ | 250,287 | | | | $ | (57,569) | | | $ | 192,718 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2022 |
| Amortized cost | | Gross unrealized gains | | Gross unrealized losses | | Estimated fair value |
Government and related securities | $ | 35,744 | | | $ | 11 | | | $ | (8,210) | | | $ | 27,545 | |
Corporate debt securities | 66,300 | | | — | | | (13,981) | | | 52,319 | |
Commingled fixed income securities | 1,749 | | | — | | | (229) | | | 1,520 | |
Mortgage-backed / asset-backed securities | 156,352 | | | — | | | (29,470) | | | 126,882 | |
Total | $ | 260,145 | | | $ | 11 | | | $ | (51,890) | | | $ | 208,266 | |
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
| | | | | | | | | | | | | | | | | | | |
| December 31, 2023 |
| Amortized cost | | | | Gross unrealized losses | | Estimated fair value |
Government and related securities | $ | 35,048 | | | | | $ | (7,018) | | | $ | 28,030 | |
Corporate debt securities | 65,008 | | | | | (10,678) | | | 54,330 | |
Commingled fixed income securities | 1,788 | | | | | (207) | | | 1,581 | |
Mortgage-backed / asset-backed securities | 146,022 | | | | | (26,121) | | | 119,901 | |
Total | $ | 247,866 | | | | | $ | (44,024) | | | $ | 203,842 | |
Investment securities in a loss position were as follows:
| | September 30, 2023 | | December 31, 2022 |
| Fair Value | | Gross unrealized losses | | Fair Value | | Gross unrealized losses |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
| Fair Value | | | Fair Value | | Gross unrealized losses | | Fair Value | | Gross unrealized losses |
Greater than 12 continuous months | Greater than 12 continuous months | | | | | | | |
Government and related securities | |
Government and related securities | |
Government and related securities | Government and related securities | $ | 26,071 | | | $ | 9,054 | | | $ | 17,063 | | | $ | 2,753 | |
Corporate debt securities | Corporate debt securities | 50,820 | | | 14,451 | | | 48,812 | | | 13,749 | |
| Mortgage-backed / asset-backed securities | Mortgage-backed / asset-backed securities | 114,327 | | | 33,786 | | | 114,839 | | | 28,040 | |
Mortgage-backed / asset-backed securities | |
Mortgage-backed / asset-backed securities | |
Total | Total | $ | 191,218 | | | $ | 57,291 | | | $ | 180,714 | | | $ | 44,542 | |
| Less than 12 continuous months | Less than 12 continuous months | |
Government and related securities | $ | — | | | $ | — | | | $ | 10,061 | | | $ | 5,457 | |
Less than 12 continuous months | |
Less than 12 continuous months | |
| Corporate debt securities | |
| Corporate debt securities | |
| Corporate debt securities | Corporate debt securities | — | | | — | | | 3,508 | | | 232 | |
Commingled fixed income securities | Commingled fixed income securities | 1,500 | | | 278 | | | 1,520 | | | 229 | |
Mortgage-backed / asset-backed securities | — | | | — | | | 12,042 | | | 1,430 | |
| Total | Total | $ | 1,500 | | | $ | 278 | | | $ | 27,131 | | | $ | 7,348 | |
Total | |
Total | |
At September 30, 2023,March 31, 2024, all securities in the investment portfolio were in an unrealized loss position. However, we have the ability and intent to hold these securities until recovery of the unrealized losses or expect to receive the stated principal and interest at maturity. Accordingly, we have not recognized an impairment loss and our allowance for credit losses on these investment securities is not significant.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Scheduled maturities of available-for-sale securities at September 30, 2023March 31, 2024 were as follows:
| | Amortized cost | | Estimated fair value |
| Amortized cost | | | Amortized cost | | Estimated fair value |
Within 1 year | Within 1 year | $ | 2,567 | | | $ | 2,280 | |
After 1 year through 5 years | After 1 year through 5 years | 15,107 | | | 13,669 | |
After 5 years through 10 years | After 5 years through 10 years | 71,033 | | | 56,861 | |
After 10 years | After 10 years | 161,580 | | | 119,908 | |
Total | Total | $ | 250,287 | | | $ | 192,718 | |
Actual maturities may not coincide with scheduled maturities as certain securities contain early redemption features and/or allow for the prepayment of obligations.
Held-to-Maturity Securities
Held-to-maturity securities at September 30, 2023March 31, 2024 and December 31, 20222023 totaled $25$225 million and $22$265 million, respectively. Held-to-maturity securities primarily consistinclude certificates of deposits with maturities less than 90 days and highly-liquid government securities with maturities less than two years.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Derivative Instruments
In the normal course of business, weWe are exposed to the impact of changes in interest rates and foreign currency exchange rates and interest rates. We limit these risks by following established risk management policies and procedures, including the use of derivatives. Wemay use derivative instruments to limit the effects ofon our financial results from changes in interest rates and currency exchange rate fluctuations on financial results and manage the cost of debt.rates. We do not use derivatives for trading or speculative purposes. Derivative instruments
Interest Rate Swaps
At March 31, 2024, we had outstanding interest rate swap agreements that effectively convert $200 million of variable rate debt to fixed rates. Under the terms of the interest rate swaps, we pay fixed-rate interest of 0.585% and receive variable-rate interest based on one-month SOFR plus 0.1%. The variable interest rates under the term loans and the swaps reset monthly.
These swaps are designated as cash flow hedges and are recorded at fair value andat the accounting for changesend of each reporting period. Changes in fair value depends on the intended useare reflected in AOCL. The impact of the derivative, the resulting designation and the effectiveness of the instrument in offsetting the risk exposure it is designed to hedge.these interest rate swaps was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, |
| | Derivative Gain (Loss) Recognized in AOCL (Effective Portion) | | Location of Gain (Loss) (Effective Portion) | | Gain (Loss) Reclassified from AOCL to Earnings (Effective Portion) |
Derivative Instrument | | 2024 | | 2023 | | | 2024 | | 2023 |
| | | | | | | | | | |
| | | | | | | | | | |
Interest rate swap | | $ | (1,517) | | | $ | (2,586) | | | Interest expense | | $ | 2,591 | | | $ | 137 | |
| | | | | | | | | | |
| | | | | | | | | | |
| | |
| | | | | | |
| | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Foreign Exchange Contracts
We mayDuring the quarter ended March 31, 2024, we did not enter into any foreign currency exchange contracts.
In the first quarter of 2023, we had outstanding foreign exchange contracts to mitigate the currency risk associated with anticipated inventory purchases between affiliates and from third parties. TheseThe impact of these derivative contracts are designated as cash flow hedges. The effective portionon our financial results was not material.
In the first quarter of the gain or loss on cash flow hedges is included in AOCL in the period that the change in fair value occurs and is reclassified to earnings in the period that the hedged item is recorded in earnings. There were no2023, we also had outstanding contracts associated with these anticipated transactions at September 30, 2023. At December 31, 2022, outstanding contracts associated with these anticipated transactions had a notional value of $1 million.
Interest Rate Swaps
We have interest rate swap agreements with an aggregate notional value of $200 million that are designated as cash flow hedges. The fair value of the interest rate swaps is recorded as a derivative asset or liability at the end of each reporting period with the change in fair value reflected in AOCL.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
The fair value of derivative instruments was as follows:
| | | | | | | | | | | | | | | | | | | | |
Designation of Derivatives | | Balance Sheet Location | | September 30, 2023 | | December 31, 2022 |
Derivatives designated as hedging instruments | | | | | | |
Foreign exchange contracts | | Other current assets and prepayments | | $ | — | | | $ | 15 | |
| | Accounts payable and accrued liabilities | | — | | | (23) | |
| | | | | | |
Interest rate swaps | | Other assets | | 11,683 | | | 15,283 | |
| | | | | | |
Derivatives not designated as hedging instruments | | | | | | |
Foreign exchange contracts | | Other current assets and prepayments | | — | | | 464 | |
| | Accounts payable and accrued liabilities | | (715) | | | (1,449) | |
| | | | | | |
| | Total derivative assets | | $ | 11,683 | | | $ | 15,762 | |
| | Total derivative liabilities | | (715) | | | (1,472) | |
| | Total net derivative asset | | $ | 10,968 | | | $ | 14,290 | |
Results of cash flow hedging relationships were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, |
| | Derivative Gain (Loss) Recognized in AOCL (Effective Portion) | | Location of Gain (Loss) (Effective Portion) | | Gain (Loss) Reclassified from AOCL to Earnings (Effective Portion) |
Derivative Instrument | | 2023 | | 2022 | | | 2023 | | 2022 |
Foreign exchange contracts | | $ | — | | | $ | 134 | | | Cost of sales | | $ | — | | | $ | 80 | |
| | | | | | | | | | |
Interest rate swap | | (1,600) | | | 3,936 | | | Interest expense | | 137 | | | 137 | |
| | $ | (1,600) | | | $ | 4,070 | | | | | $ | 137 | | | $ | 217 | |
| | | | | | | | | | |
| | Nine Months Ended September 30, |
| | Derivative Gain (Loss) Recognized in AOCL (Effective Portion) | | Location of Gain (Loss) (Effective Portion) | | Gain (Loss) Reclassified from AOCL to Earnings (Effective Portion) |
Derivative Instrument | | 2023 | | 2022 | | | 2023 | | 2022 |
Foreign exchange contracts | | $ | (25) | | | $ | 257 | | | Cost of sales | | $ | (33) | | | $ | 143 | |
| | | | | | | | | | |
Interest rate swap | | (3,600) | | | 12,863 | | | Interest expense | | 412 | | | 412 | |
| | $ | (3,625) | | | $ | 13,120 | | | | | $ | 379 | | | $ | 555 | |
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Nondesignated Derivative Instruments
We also enter into foreign exchange contracts to minimize the impact on earnings from the revaluation of short-term interest-bearing intercompany loans and related interest denominated in a foreign currency. These foreign exchange contracts arewere not designated as hedging instruments. Accordingly,instruments and the revaluation of intercompany loans and interest and the change in fair value of these derivatives arewere recorded in earnings. All outstanding contracts at September 30, 2023 mature within three months.
The impactmark-to-market adjustment on earnings from the change in fair value of these foreign exchange contracts exclusivefor the three months ended March 31, 2023, was a gain of $2 million and significantly offset the corresponding impactloss on earnings from the revaluation of the intercompany loans and related interest, was as follows:loans.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Three Months Ended September 30, | | | | |
| | | | Derivative Gain (Loss) Recognized in Earnings | | | | |
Derivatives Instrument | | Location of Derivative Gain (Loss) | | 2023 | | 2022 | | | | |
Foreign exchange contracts | | Selling, general and administrative expense | | $ | (11,614) | | | $ | (24,116) | | | | | |
| | | | | | | | | | |
| | | | Nine Months Ended September 30, | | | | |
| | | | Derivative Gain (Loss) Recognized in Earnings | | | | |
Derivatives Instrument | | Location of Derivative Gain (Loss) | | 2023 | | 2022 | | | | |
Foreign exchange contracts | | Selling, general and administrative expense | | $ | (4,150) | | | $ | (45,299) | | | | | |
Fair Value of Financial Instruments
Our financial instruments include cash and cash equivalents, available-for-sale and held-to-maturity investment securities, accounts receivable, loan receivables, derivative instruments, accounts payable and debt. The carrying value of cash and cash equivalents, held-to-maturity investment securities, accounts receivable, loans receivable, and accounts payable approximate fair value. The fair value of available-for-sale investment securities and derivative instruments are presented above. The fair value of debt is estimated based on recently executed transactions and market price quotations. The inputs used to determine the fair value of debt were classified as Level 2 in the fair value hierarchy. The carrying value and estimated fair value of debt was as follows:
| | | | | | | | | | | |
| September 30, 2023 | | December 31, 2022 |
Carrying value | $ | 2,158,128 | | | $ | 2,205,266 | |
Fair value | $ | 1,804,017 | | | $ | 1,856,878 | |
| | | | | | | | | | | |
| March 31, 2024 | | December 31, 2023 |
Carrying value | $ | 2,134,165 | | | $ | 2,146,032 | |
Fair value | $ | 1,929,648 | | | $ | 1,893,620 | |
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
9. Restructuring Charges and Asset Impairments
In May 2023, we approved a worldwide restructuring plan (the 2023 Plan) designed to improve profitability and cash flow by reducing complexity, streamlining processes, and driving further operational efficiencies.flow. This will be achieved through the elimination of 850-950 positions worldwide in part through further centralization and standardization of processes, including the expansion of our shared services activities, increased automation, and the consolidation or closure of select facilities in North America. Total charges are expected to be $60 million-$60-$70 million consisting of employee severance and facility consolidation costs. Wewe expect to substantially complete these actions by the end of the first half of 2024. Total charges under the 2023 Plan to date are $62 million.
Activity in our restructuring reserves was as follows:
| | 2023 Plan | | | 2023 Plan | | Prior Plan | | Total |
Balance at January 1, 2024 | |
Amounts charged to expense | |
Cash payments | |
Noncash activity | |
Balance at March 31, 2024 | |
| | 2023 Plan | | Prior Plan | | Total |
Balance at January 1, 2023 | |
Balance at January 1, 2023 | |
Balance at January 1, 2023 | Balance at January 1, 2023 | $ | — | | | $ | 7,647 | | | $ | 7,647 | |
Amounts charged to expense | Amounts charged to expense | 39,021 | | | 3,599 | | | 42,620 | |
Cash payments | Cash payments | (13,906) | | | (11,246) | | | (25,152) | |
Noncash activity | (8,049) | | | — | | | (8,049) | |
Balance at September 30, 2023 | $ | 17,066 | | | $ | — | | | $ | 17,066 | |
| Balance at January 1, 2022 | $ | — | | | $ | 5,747 | | | $ | 5,747 | |
Amounts charged to expense | — | | | 12,672 | | | 12,672 | |
Cash payments | — | | | (11,761) | | | (11,761) | |
Noncash activity | — | | | (1,378) | | | (1,378) | |
Balance at September 30, 2022 | $ | — | | | $ | 5,280 | | | $ | 5,280 | |
Balance at March 31, 2023 | |
Balance at March 31, 2023 | |
Balance at March 31, 2023 | |
Components of restructuring expense were as follows:
| | | Three Months Ended September 30, 2023 | | | Three Months Ended September 30, 2022 |
| | 2023 Plan | | Prior Plan | | Total | | | Prior Plan | |
Severance | $ | 10,007 | | | $ | — | | | $ | 10,007 | | | | $ | 2,846 | | |
Facilities and other | 6,571 | | | — | | | 6,571 | | | | 1,418 | | |
Total | $ | 16,578 | | | $ | — | | | $ | 16,578 | | | | $ | 4,264 | | |
| | | Nine Months Ended September 30, 2023 | | | Nine Months Ended September 30, 2022 |
| | 2023 Plan | | Prior Plan | | Total | | | Prior Plan | |
| | Three Months Ended March 31, 2024 | |
| | Three Months Ended March 31, 2024 | |
| | Three Months Ended March 31, 2024 | | | | | | | | | Three Months Ended March 31, 2023 |
| Severance | |
Severance | |
Severance | Severance | $ | 30,972 | | | $ | 3,057 | | | $ | 34,029 | | | | $ | 9,223 | | |
Facilities and other | Facilities and other | 8,049 | | | 542 | | | 8,591 | | | | 3,449 | | |
Facilities and other | |
Facilities and other | |
Total | Total | $ | 39,021 | | | $ | 3,599 | | | $ | 42,620 | | | | $ | 12,672 | | |
Total | |
Total | |
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
10. Debt
Total debt consisted of the following:
|
|
| Interest rate | | September 30, 2023 | | December 31, 2022 |
| Interest rate | | March 31, 2024 | | December 31, 2023 |
Notes due March 2024 | 4.625% | | $ | — | | | $ | 236,749 | |
| Term loan due March 2026 | |
Term loan due March 2026 | |
Term loan due March 2026 | Term loan due March 2026 | SOFR + 2.25% | | 297,500 | | | 351,500 | |
Notes due March 2027 | Notes due March 2027 | 6.875% | | 380,000 | | | 396,750 | |
Notes due March 2028 | Notes due March 2028 | SOFR + 6.9% | | 275,000 | | | — | |
Term loan due March 2028 | Term loan due March 2028 | SOFR + 4.0% | | 438,750 | | | 442,125 | |
Notes due March 2029 | Notes due March 2029 | 7.25% | | 350,000 | | | 350,000 | |
Notes due January 2037 | Notes due January 2037 | 5.25% | | 35,841 | | | 35,841 | |
Notes due March 2043 | Notes due March 2043 | 6.70% | | 425,000 | | | 425,000 | |
| Other debt | Other debt | | 1,500 | | | 2,446 | |
Other debt | |
Other debt | |
Principal amount | Principal amount | | 2,203,591 | | | 2,240,411 | |
Less: unamortized costs, net | Less: unamortized costs, net | | 45,463 | | | 35,145 | |
Total debt | Total debt | | 2,158,128 | | | 2,205,266 | |
Less: current portion long-term debt | Less: current portion long-term debt | | 56,533 | | | 32,764 | |
Long-term debt | Long-term debt | | $ | 2,101,595 | | | $ | 2,172,502 | |
During the quarter, we issued an aggregate $275 million of senior secured notes. The notes mature inAt March 2028 and bear interest of SOFR plus 6.9%, payable quarterly. The notes were issued with original issue discount of 3%, and the net proceeds were used to redeem the March31, 2024, notes and repay $30 million of the term loan due March 2026.
Through September 30, 2023, we purchased an aggregate $39 million of the March 2024 notes and March 2027 notes and recognized a gain of $3 million. Additionally, we made scheduled principal repayments of $27 million on our term loans. At September 30, 2023, the interest rate on the 2026 Term Loan was 7.7%, the interest rate on the 2028 Term Loan was 9.4% and the interest rate on the March 2028 notes was 12.3%12.2%.
The credit agreement that governs our $500 million secured revolving credit facility and the term loansloan due March 2026 contains certain financial covenants. These covenants require us to maintain, on a quarterly basis, a maximum leverage ratio and non-financial covenants. Ina minimum interest coverage ratio, both of which are defined and calculated in accordance with the credit agreement. The maximum leverage ratio decreases from 4.25x to 4.0x as of June 2023, we amended this credit agreement30, 2024 and the minimum interest coverage ratio increases from 1.75x to provide additional flexibility in managing our capital structure.2.0x as of March 31, 2025. At September 30, 2023,March 31, 2024, we were in compliance with allthese financial covenants. Additionally, management expects that we will remain in compliance with these financial covenants over the next twelve months. However, events and circumstances could occur, some beyond our control, that could adversely impact our compliance with these covenants and require us to obtain a waiver from our lenders, modify our existing covenants or refinance certain debt to cure the noncompliance. If we are unable to cure the noncompliance, amounts due under our revolving credit facility and term loan due March 2026 could be called by our lenders. At March 31, 2024, there were no outstanding borrowings under the revolving credit facility. Borrowings under the revolving credit facility, term loans and March 2028 notesour secured debt are secured by assets of the company.
We have outstanding interest rate swaps that effectively convert $200 million of our variable rate debt to fixed rates. In January 2023, the reference rate of the interest rate swaps was amended to align with the secured revolving credit facility. Under the terms of the interest rate swaps, we pay fixed-rate interest of 0.585% and receive variable-rate interest based on one-month SOFR plus 0.1%. The variable interest rates under the term loans and the swaps reset monthly.
The Pitney Bowes Bank (the Bank), a wholly owned subsidiary, is a member of the Federal Home Loan Bank of Des Moines and has access to certain credit products as a funding source known as "advances." As of September 30, 2023, the Bank had yet to apply for any advances.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
11. Pensions and Other Benefit Programs
The components of net periodic benefit (income) cost were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Defined Benefit Pension Plans | | Nonpension Postretirement Benefit Plans |
| United States | | Foreign | | |
| Three Months Ended | | Three Months Ended | | Three Months Ended |
| September 30, | | September 30, | | September 30, |
| 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 |
Service cost | $ | 11 | | | $ | 14 | | | $ | 190 | | | $ | 291 | | | $ | 98 | | | $ | 191 | |
Interest cost | 15,440 | | | 11,072 | | | 5,379 | | | 3,270 | | | 1,163 | | | 884 | |
Expected return on plan assets | (21,280) | | | (17,586) | | | (7,575) | | | (6,423) | | | — | | | — | |
| | | | | | | | | | | |
Amortization of prior service (credit) cost | (5) | | | (11) | | | 72 | | | 60 | | | — | | | — | |
Amortization of net actuarial loss (gain) | 4,209 | | | 8,317 | | | 525 | | | 1,625 | | | (977) | | | (131) | |
Settlement | 366 | | | 350 | | | — | | | — | | | — | | | — | |
Net periodic benefit (income) cost | $ | (1,259) | | | $ | 2,156 | | | $ | (1,409) | | | $ | (1,177) | | | $ | 284 | | | $ | 944 | |
Contributions to benefit plans | $ | 2,722 | | | $ | 2,103 | | | $ | 491 | | | $ | 348 | | | $ | 2,330 | | | $ | 2,401 | |
| | | | | | | | | | | |
| Defined Benefit Pension Plans | | Nonpension Postretirement Benefit Plans |
| United States | | Foreign | | |
| Nine Months Ended | | Nine Months Ended | | Nine Months Ended |
| September 30, | | September 30, | | September 30, |
| 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 |
Service cost | $ | 31 | | | $ | 62 | | | $ | 578 | | | $ | 978 | | | $ | 275 | | | $ | 549 | |
Interest cost | 47,618 | | | 33,354 | | | 15,935 | | | 10,354 | | | 3,774 | | | 2,763 | |
Expected return on plan assets | (64,506) | | | (53,311) | | | (22,434) | | | (20,437) | | | — | | | — | |
| | | | | | | | | | | |
Amortization of prior service (credit) cost | (15) | | | (33) | | | 214 | | | 192 | | | — | | | — | |
Amortization of net actuarial loss (gain) | 13,042 | | | 24,781 | | | 1,552 | | | 5,172 | | | (1,690) | | | 44 | |
Settlement | 680 | | | 350 | | | — | | | — | | | — | | | — | |
Net periodic benefit (income) cost | $ | (3,150) | | | $ | 5,203 | | | $ | (4,155) | | | $ | (3,741) | | | $ | 2,359 | | | $ | 3,356 | |
Contributions to benefit plans | $ | 5,756 | | | $ | 4,401 | | | $ | 16,036 | | | $ | 8,961 | | | $ | 8,947 | | | $ | 10,049 | |
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Defined Benefit Pension Plans | | Nonpension Postretirement Benefit Plans |
| United States | | Foreign | | |
| Three Months Ended | | Three Months Ended | | Three Months Ended |
| March 31, | | March 31, | | March 31, |
| 2024 | | 2023 | | 2024 | | 2023 | | 2024 | | 2023 |
Service cost | $ | 12 | | | $ | 10 | | | $ | 188 | | | $ | 194 | | | $ | 92 | | | $ | 89 | |
Interest cost | 14,966 | | | 16,089 | | | 5,201 | | | 5,222 | | | 1,136 | | | 1,305 | |
Expected return on plan assets | (21,909) | | | (21,613) | | | (6,450) | | | (7,344) | | | — | | | — | |
| | | | | | | | | | | |
Amortization of prior service (credit) cost | (5) | | | (5) | | | 74 | | | 70 | | | — | | | — | |
Amortization of net actuarial loss (gain) | 4,972 | | | 4,417 | | | 1,923 | | | 505 | | | (295) | | | (356) | |
| | | | | | | | | | | |
Net periodic benefit (income) cost | $ | (1,964) | | | $ | (1,102) | | | $ | 936 | | | $ | (1,353) | | | $ | 933 | | | $ | 1,038 | |
Contributions to benefit plans | $ | 1,069 | | | $ | 1,127 | | | $ | 6,998 | | | $ | 15,033 | | | $ | 3,700 | | | $ | 3,778 | |
| | | | | | | | | | | |
| | | |
| | | | | |
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| | | | | | | | | | | |
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| | | | | | | | | | | |
12. Income Taxes
The effective tax rate for the three months ended September 30, 2023March 31, 2024 was 25.1%.129.8% compared to 29.6% for the prior year period. The effective tax rate for the nine months ended September 30, 2023 was 9.4% and includes a benefit of $1 million on the $119 million goodwill impairment charge as the majority of this chargeinterim periods is nondeductible.
Thedetermined using an annual effective tax rate, adjusted for the three and nine months ended September 30, 2022, was 45.8% and 5.6%, respectively, and includes a charge of $2 million due to state tax legislationdiscrete items. The forecasted annual income earned in foreign jurisdictions offset by U.S. losses will result in minimal consolidated pre-tax income. Accordingly, unfavorable tax adjustments related to the U.S. taxation of our foreign operations and state valuation allowance adjustments has resulted in a benefit of $1 million as a result of the finalizationhigh quarterly and filing of state income tax returns. Theannual effective tax rate for the nine months ended September 30, 2022 also includesrate.
On a regular basis, we conclude tax benefitreturn examinations, statutes of $4 million on the pre-tax gainlimitation expire, and court decisions interpret tax law. We regularly assess tax uncertainties in light of $4 million from the sale of Borderfreethese developments; and as the tax basis was higher than book basis and a $1 million benefit associated with the 2019 sale of a business.
As is the case with other large corporations, our tax returns are examined by tax authorities in the U.S. and other global taxing jurisdictions in which we have operations. As a result, it is reasonably possible that the amount of unrecognized tax benefits will decrease in the next 12 months, and this decrease could be up to 15%10% of our unrecognized tax benefits.
With regard to U.S Federal income tax, theThe Internal Revenue Service examination of our consolidated U.S. Federal income tax returns for tax years prior to 20192020 are closed to audit, butexcept for review of the Tax Cuts and Jobs Act Sec. 965 transition tax. On a state and local level, the company isreturns for most jurisdictions are closed through 2017 in most jurisdictions.2017. For our significant non-U.S. jurisdictions, Canada is closed to examination through 2018 except for a specific issue under current exam. For France, Germanyexam, and the U.K., the company isFrance and Germany are closed through 2021, 2019 2016, and 20202016, respectively. We also have other less significant tax filings currently subject to examination.
13. Commitments and Contingencies
From time to time, in the ordinary course of business, we are involved in litigation pertaining to, among other things, contractual rights under vendor, insurance or other contracts; intellectual property or patent rights; equipment, service, payment or other disputes with clients; or disputes with employees. Some of these actions may be brought as a purported class action on behalf of a purported class of customers, employees, or others. Due to uncertainties inherent in litigation, any actions could have an adverse effect on our financial position, results of operations or cash flows; however, in management's opinion, the final outcome of outstanding matters will not have a material adverse effect on our business.
As of September 30, 2023, we have entered into real estate and equipment leases with aggregate payments of $18 million and terms ranging from
three
to seven years that have not commenced.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
14. Stockholders’ Deficit
Changes in stockholders’ deficit were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Common stock | | | | Retained earnings | | Accumulated other comprehensive loss | | Treasury stock | | Total deficit |
Balance at January 1, 2024 | | | | | $ | 270,338 | | | | | $ | 3,077,988 | | | $ | (851,245) | | | $ | (2,865,657) | | | $ | (368,576) | |
| | | | | | | | | | | | | | | |
Net loss | | | | | — | | | | | (2,885) | | | — | | | — | | | (2,885) | |
Other comprehensive loss | | | | | — | | | | | — | | | (12,566) | | | — | | | (12,566) | |
Dividends paid ($0.05 per common share) | | | | | — | | | | | (8,832) | | | — | | | — | | | (8,832) | |
Issuance of common stock | | | | | — | | | | | (41,631) | | | — | | | 39,745 | | | (1,886) | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Stock-based compensation expense | | | | | — | | | | | 2,390 | | | — | | | — | | | 2,390 | |
| | | | | | | | | | | | | | | |
Balance at March 31, 2024 | | | | | $ | 270,338 | | | | | $ | 3,027,030 | | | $ | (863,811) | | | $ | (2,825,912) | | | $ | (392,355) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Common stock | | | | Retained earnings | | Accumulated other comprehensive loss | | Treasury stock | | Total deficit |
Balance at January 1, 2023 | | | | | $ | 323,338 | | | | | $ | 5,125,677 | | | $ | (835,564) | | | $ | (4,552,798) | | | $ | 60,653 | |
| | | | | | | | | | | | | | | |
Net loss | | | | | — | | | | | (7,737) | | | — | | | — | | | (7,737) | |
Other comprehensive income | | | | | — | | | | | — | | | 15,586 | | | — | | | 15,586 | |
Dividends paid ($0.05 per common share) | | | | | — | | | | | (8,725) | | | — | | | — | | | (8,725) | |
Issuance of common stock | | | | | — | | | | | (51,608) | | | — | | | 48,550 | | | (3,058) | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Stock-based compensation expense | | | | | — | | | | | 3,245 | | | — | | | — | | | 3,245 | |
| | | | | | | | | | | | | | | |
Balance at March 31, 2023 | | | | | $ | 323,338 | | | | | $ | 5,060,852 | | | $ | (819,978) | | | $ | (4,504,248) | | | $ | 59,964 | |
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
14. Stockholders’ (Deficit) Equity
Changes in stockholders’ (deficit) equity were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Common stock | | Additional paid-in capital | | Retained earnings | | Accumulated other comprehensive loss | | Treasury stock | | Total (deficit) equity |
Balance at July 1, 2023 | | | | | $ | 323,338 | | | $ | — | | | $ | 4,908,641 | | | $ | (807,993) | | | $ | (4,499,473) | | | $ | (75,487) | |
| | | | | | | | | | | | | | | |
Net loss | | | | | — | | | — | | | (12,519) | | | — | | | — | | | (12,519) | |
Other comprehensive loss | | | | | — | | | — | | | — | | | (30,078) | | | — | | | (30,078) | |
Dividends paid ($0.05 per common share) | | | | | — | | | — | | | (8,805) | | | — | | | — | | | (8,805) | |
Issuance of common stock | | | | | — | | | (1,206) | | | (14,878) | | | — | | | 16,658 | | | 574 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Stock-based compensation expense | | | | | — | | | 1,206 | | | — | | | — | | | — | | | 1,206 | |
| | | | | | | | | | | | | | | |
Balance at September 30, 2023 | | | | | $ | 323,338 | | | $ | — | | | $ | 4,872,439 | | | $ | (838,071) | | | $ | (4,482,815) | | | $ | (125,109) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Common stock | | Additional paid-in capital | | Retained earnings | | Accumulated other comprehensive loss | | Treasury stock | | Total (deficit) equity |
Balance at July 1, 2022 | | | | | $ | 323,338 | | | $ | — | | | $ | 5,137,248 | | | $ | (850,053) | | | $ | (4,566,379) | | | $ | 44,154 | |
| | | | | | | | | | | | | | | |
Net income | | | | | — | | | — | | | 5,487 | | | — | | | — | | | 5,487 | |
Other comprehensive loss | | | | | — | | | — | | | — | | | (55,400) | | | — | | | (55,400) | |
Dividends paid ($0.05 per common share) | | | | | — | | | — | | | (8,700) | | | — | | | — | | | (8,700) | |
Issuance of common stock | | | | | — | | | (5,371) | | | (6,005) | | | — | | | 12,188 | | | 812 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Stock-based compensation expense | | | | | — | | | 5,371 | | | — | | | — | | | — | | | 5,371 | |
| | | | | | | | | | | | | | | |
Balance at September 30, 2022 | | | | | $ | 323,338 | | | $ | — | | | $ | 5,128,030 | | | $ | (905,453) | | | $ | (4,554,191) | | | $ | (8,276) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | Common stock | | Additional paid-in capital | | Retained earnings | | Accumulated other comprehensive loss | | Treasury stock | | Total (deficit) equity |
Balance at January 1, 2023 | | | | | $ | 323,338 | | | $ | — | | | $ | 5,125,677 | | | $ | (835,564) | | | $ | (4,552,798) | | | $ | 60,653 | |
| | | | | | | | | | | | | | | |
Net loss | | | | | — | | | — | | | (161,791) | | | — | | | — | | | (161,791) | |
Other comprehensive loss | | | | | — | | | — | | | — | | | (2,507) | | | — | | | (2,507) | |
Dividends paid ($0.15 per common share) | | | | | — | | | — | | | (26,330) | | | — | | | — | | | (26,330) | |
Issuance of common stock | | | | | — | | | (7,281) | | | (65,117) | | | — | | | 69,983 | | | (2,415) | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Stock-based compensation expense | | | | | — | | | 7,281 | | | — | | | — | | | — | | | 7,281 | |
| | | | | | | | | | | | | | | |
Balance at September 30, 2023 | | | | | $ | 323,338 | | | $ | — | | | $ | 4,872,439 | | | $ | (838,071) | | | $ | (4,482,815) | | | $ | (125,109) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | Common stock | | Additional paid-in capital | | Retained earnings | | Accumulated other comprehensive loss | | Treasury stock | | Total (deficit) equity |
Balance at January 1, 2022 | | | | | $ | 323,338 | | | $ | 2,485 | | | $ | 5,169,270 | | | $ | (780,312) | | | $ | (4,602,149) | | | $ | 112,632 | |
| | | | | | | | | | | | | | | |
Net income | | | | | — | | | — | | | 30,644 | | | — | | | — | | | 30,644 | |
Other comprehensive loss | | | | | — | | | — | | | — | | | (125,141) | | | — | | | (125,141) | |
Dividends paid ($0.15 per common share) | | | | | — | | | — | | | (26,013) | | | — | | | — | | | (26,013) | |
Issuance of common stock | | | | | — | | | (17,722) | | | (45,871) | | | — | | | 61,404 | | | (2,189) | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Stock-based compensation expense | | | | | — | | | 15,237 | | | — | | | — | | | — | | | 15,237 | |
Repurchase of common stock | | | | | — | | | — | | | — | | | — | | | (13,446) | | | (13,446) | |
Balance at September 30, 2022 | | | | | $ | 323,338 | | | $ | — | | | $ | 5,128,030 | | | $ | (905,453) | | | $ | (4,554,191) | | | $ | (8,276) | |
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
15. Accumulated Other Comprehensive Loss
Reclassifications out of AOCL were as follows:
| | | | | | Gain (Loss) Reclassified from AOCL | |
| | | | | Gain (Loss) Reclassified from AOCL | |
| | | | | Gain (Loss) Reclassified from AOCL | |
| | | Three Months Ended March 31, | | | | | Three Months Ended March 31, |
| | | | | 2024 | | | | | | | 2024 | | 2023 |
Cash flow hedges | |
| | Gain (Loss) Reclassified from AOCL |
Cost of sales | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Cash flow hedges | | | | | | | |
Cost of sales | |
| Cost of sales | Cost of sales | — | | | 80 | | | $ | (33) | | | $ | 143 | |
Interest expense, net | Interest expense, net | 137 | | | 137 | | | 412 | | | 412 | |
Total before tax | Total before tax | 137 | | | 217 | | | 379 | | | 555 | |
Income tax provision | Income tax provision | 34 | | | 54 | | | 95 | | | 138 | |
Net of tax | Net of tax | $ | 103 | | | $ | 163 | | | $ | 284 | | | $ | 417 | |
| Available-for-sale securities | Available-for-sale securities | |
Available-for-sale securities | |
Available-for-sale securities | |
Financing revenue | Financing revenue | $ | (20) | | | $ | (3) | | | $ | (11) | | | $ | (9) | |
Selling, general and administrative expense | — | | | 64 | | | — | | | 86 | |
Total before tax | (20) | | | 61 | | | (11) | | | 77 | |
Financing revenue | |
Financing revenue | |
| Income tax (benefit) provision | |
| Income tax (benefit) provision | |
| Income tax (benefit) provision | Income tax (benefit) provision | (5) | | | 15 | | | (3) | | | 20 | |
Net of tax | Net of tax | $ | (15) | | | $ | 46 | | | $ | (8) | | | $ | 57 | |
| Pension and postretirement benefit plans | Pension and postretirement benefit plans | |
Pension and postretirement benefit plans | |
Pension and postretirement benefit plans | |
| Prior service costs | |
| Prior service costs | |
| Prior service costs | Prior service costs | (67) | | | (49) | | | $ | (199) | | | $ | (159) | |
Actuarial losses | Actuarial losses | (3,757) | | | (9,811) | | | (12,904) | | | (29,997) | |
Settlement | (366) | | | (350) | | | (680) | | | (350) | |
| Total before tax | |
Total before tax | |
Total before tax | Total before tax | (4,190) | | | (10,210) | | | (13,783) | | | (30,506) | |
Income tax benefit | Income tax benefit | (1,032) | | | (2,461) | | | (3,397) | | | (6,792) | |
Net of tax | Net of tax | $ | (3,158) | | | $ | (7,749) | | | $ | (10,386) | | | $ | (23,714) | |
Changes in AOCL, net of tax were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash flow hedges | | Available for sale securities | | Pension and postretirement benefit plans | | Foreign currency adjustments | | Total |
Balance at January 1, 2023 | $ | 12,503 | | | $ | (39,440) | | | $ | (716,056) | | | $ | (92,571) | | | $ | (835,564) | |
Other comprehensive loss before reclassifications | (2,719) | | | (4,338) | | | — | | | (5,560) | | | (12,617) | |
Reclassifications into earnings | (284) | | | 8 | | | 10,386 | | | — | | | 10,110 | |
Net other comprehensive (loss) income | (3,003) | | | (4,330) | | | 10,386 | | | (5,560) | | | (2,507) | |
Balance at September 30, 2023 | $ | 9,500 | | | $ | (43,770) | | | $ | (705,670) | | | $ | (98,131) | | | $ | (838,071) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash flow hedges | | Available for sale securities | | Pension and postretirement benefit plans | | Foreign currency adjustments | | Total |
Balance at January 1, 2024 | $ | 6,962 | | | $ | (33,463) | | | $ | (757,452) | | | $ | (67,292) | | | $ | (851,245) | |
Other comprehensive income (loss) before reclassifications | 702 | | | (1,453) | | | — | | | (15,399) | | | (16,150) | |
Reclassifications into earnings | (1,943) | | | 486 | | | 5,041 | | | — | | | 3,584 | |
Net other comprehensive (loss) income | (1,241) | | | (967) | | | 5,041 | | | (15,399) | | | (12,566) | |
Balance at March 31, 2024 | $ | 5,721 | | | $ | (34,430) | | | $ | (752,411) | | | $ | (82,691) | | | $ | (863,811) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash flow hedges | | Available for sale securities | | Pension and postretirement benefit plans | | Foreign currency adjustments | | Total |
Balance at January 1, 2022 | $ | 3,803 | | | $ | (6,249) | | | $ | (756,639) | | | $ | (21,227) | | | $ | (780,312) | |
Other comprehensive income (loss) before reclassifications | 9,832 | | | (36,091) | | | — | | | (122,122) | | | (148,381) | |
Reclassifications into earnings | (417) | | | (57) | | | 23,714 | | | — | | | 23,240 | |
Net other comprehensive income (loss) | 9,415 | | | (36,148) | | | 23,714 | | | (122,122) | | | (125,141) | |
Balance at September 30, 2022 | $ | 13,218 | | | $ | (42,397) | | | $ | (732,925) | | | $ | (143,349) | | | $ | (905,453) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash flow hedges | | Available for sale securities | | Pension and postretirement benefit plans | | Foreign currency adjustments | | Total |
Balance at January 1, 2023 | $ | 12,503 | | | $ | (39,440) | | | $ | (716,056) | | | $ | (92,571) | | | $ | (835,564) | |
Other comprehensive (loss) income before reclassifications | (1,958) | | | 3,280 | | | — | | | 10,887 | | | 12,209 | |
Reclassifications into earnings | (104) | | | (8) | | | 3,489 | | | — | | | 3,377 | |
Net other comprehensive (loss) income | (2,062) | | | 3,272 | | | 3,489 | | | 10,887 | | | 15,586 | |
Balance at March 31, 2023 | $ | 10,441 | | | $ | (36,168) | | | $ | (712,567) | | | $ | (81,684) | | | $ | (819,978) | |
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
16. Supplemental Financial Statement Information
Activity in the allowance for credit losses on accounts and other receivables and other assets is presented below. See Note 76 for information regarding the allowance for credit losses on finance receivables.
| | | | | | | | | | | | | | | |
| | | | | Nine Months Ended September 30, |
| | | | | 2023 | | 2022 |
Balance at beginning of year | | | | | $ | 5,864 | | | $ | 29,179 | |
| | | | | | | |
Amounts charged to expense | | | | | 5,703 | | | 5,361 | |
Write-offs, recoveries and other | | | | | (7,443) | | | (28,110) | |
Balance at end of period | | | | | $ | 4,124 | | | $ | 6,430 | |
| | | | | | | |
Accounts and other receivables | | | | | $ | 4,124 | | | $ | 5,910 | |
Other assets | | | | | — | | | 520 | |
Total | | | | | $ | 4,124 | | | $ | 6,430 | |
Other income, net consisted of the following:
| | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | | 2022 | | 2023 | | 2022 |
(Gain) loss on debt redemption/refinancing | | | $ | — | | | $ | (3,064) | | | $ | 4,993 | |
| | | | | | | |
| | | | | | | |
Gain on sale of assets | | | — | | | — | | | (14,372) | |
Gain on sale of businesses | | | (8,398) | | | — | | | (10,920) | |
Other income, net | | | $ | (8,398) | | | $ | (3,064) | | | $ | (20,299) | |
| | | | | | | | | | | | | | | |
| | | | | Three Months Ended March 31, |
| | | | | 2024 | | 2023 |
Balance at beginning of year | | | | | $ | 6,139 | | | $ | 5,864 | |
| | | | | | | |
Amounts charged to expense | | | | | 4,025 | | | 2,523 | |
Write-offs, recoveries and other | | | | | (1,216) | | | (2,304) | |
Balance at end of period | | | | | $ | 8,948 | | | $ | 6,083 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Supplemental cash flow information is as follows:
| | Nine Months Ended September 30, |
| 2023 | | 2022 | |
| Three Months Ended March 31, | |
| Three Months Ended March 31, | |
| Three Months Ended March 31, | |
| 2024 | |
| Cash interest paid | Cash interest paid | $ | 134,157 | | | $ | 114,752 | | |
Cash income tax payments, net of refunds | $ | 18,200 | | | $ | 16,533 | | |
| Cash interest paid | |
| Cash interest paid | |
Cash income tax (refunds) payments, net | |
Cash income tax (refunds) payments, net | |
Cash income tax (refunds) payments, net | |
Noncash activity | |
Noncash activity | |
Noncash activity | Noncash activity | | |
Capital assets obtained under capital lease obligations | Capital assets obtained under capital lease obligations | $ | 4,804 | | | $ | 21,665 | | |
Capital assets obtained under capital lease obligations | |
Capital assets obtained under capital lease obligations | |
|
Other, net within cash flows from operating activities includes $3 million of losses from the disposal of fixed assets for both the three months ended March 31, 2024 and 2023.
As of March 31, 2024, we have entered into real estate and equipment leases with aggregate payments of $17 million and terms ranging from three to seven years that have not commenced.
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains statements that are forward-looking. We caution readers that any forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (Securities Act) and Section 21E of the Securities Exchange Act of 1934 (Exchange Act) may change based on various factors. Forward-looking statements are based on current expectations and assumptions, which we believe are reasonable; however, such statements are subject to risks and uncertainties, and actual results could differ materially from those projected or assumed in any of our forward-looking statements. Words such as "estimate," "target," "project," "plan," "believe," "expect," "anticipate," "intend" and similar expressions may identify such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Forward-looking statements in this Form 10-Q speak only as of the date hereof, and forward-looking statements in documents that are incorporated by reference speak only as of the date of those documents.
Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in our forward-looking statements. Our results of operations, financial condition and forward-looking statements are subject to change and to inherent risks and uncertainties, such as those disclosed or incorporated by reference in our filings with the Securities and Exchange Commission. Other factors which could cause future financial performance to differ materially from expectations, include, without limitation:
•declining physical mail volumes
•changes in postal regulations or the operations and financial health of posts in the U.S. or other major markets, or changes to the broader postal or shipping markets
•our ability to continue to grow and manage unexpected fluctuations in volumes, gain additional economies of scale and improve profitability within our Global Ecommerce segment
•the loss of some of our larger clients in our Global Ecommerce and Presort Services segments
•the loss of, or significant changes to, United States Postal Service (USPS) commercial programs or our contractual relationships with the USPS or USPS' performance under those contracts
•the impacts on our cost of debt due to recent increases inhigher interest rates and the potential for future interest rate hikesincreases on our cost of debt
•declines in demand for our ecommerce services resulting from supply chain delays or interruptions affecting our retail clients, or changes in retail consumer behavior or spending patterns
•changes in international trade policies, including the imposition or expansion of trade tariffs, and other geopolitical risks, including those related to China
•global supply chain issues adversely impacting our third-party suppliers' ability to provide us products and services
•expenses and potential impacts resulting from a breach of security, including cyber-attacks or other comparable events affecting us, our clients, or our suppliers
•changesthe impacts of inflation and rising prices, higher interest rates and a slow-down in laboreconomic activity, including a global recession, or a U.S. government shutdown, to the company, our clients and transportation availability and costsretail consumers
•competitive factors, including pricing pressures, technological developments and the introduction of new products and services by competitors
•capital market disruptions or credit rating downgrades that adversely impact our ability to access capital markets at reasonable costs
•the impacts of inflationchanges in labor and rising prices, higher interest ratestransportation availability and a slow-down in economic activity, including a global recession, or a U.S. government shutdown, to the company, our clients and retail consumerscosts
•changes in foreign currency exchange rates, especially the impact a strengthening U.S. dollar could have on our global operations
•our success at managing customer credit risk
•changes in banking regulations, major bank failures or the loss of our Industrial Bank charter
•changes in tax laws, rulings or regulations
•our success in developing and marketing new products and services and obtaining regulatory approvals, if required
•the continued availability and security of key information technology systems and the cost to comply with information security requirements and privacy laws
•our success at managing relationships and costs with outsource providers of certain functions and operations
•increased environmental and climate change requirements or other developments in these areas
•intellectual property infringement claims
•the use of the postal system for transmitting harmful biological agents, illegal substances or other terrorist attacks
•impact of pandemics (including the lingering effects of COVID-19) and acts of nature and the impact of a pandemic on the Company and the services and solutions we offer
Further information about factors that could materially affect us, including our results of operations and financial condition, is contained in Item 1A. "Risk Factors" in our 20222023 Annual Report, as supplemented by Part II, Item 1A in this Quarterly Report on Form 10-Q.
RESULTS OF OPERATIONS
OUTLOOK
We earn a larger percentage of our revenue in the fourth quarter as compared to other quarters, primarily driven by increased shipping volumes during the holiday season. We believe we are well-positioned to process the holiday shipping volumes. For the full year 2023, we expect consolidated revenue onto be flat to a comparable basis (see Factors Affecting Comparability below), tolow single-digit decline between 3%-4% and adjusted EBIT margins to remainbe relatively flat in 2024 compared to 2022.2023. Within SendTech Solutions, we expect revenue and profit declines due in part to lower equipment sales as initial lease terms of prior equipment sales expire and customers are expected to renew these leases for a fixed term rather than purchase new equipment. We also expect revenue to decline from lower meter populations due to the migration to cloud-based solutions. These declines will be partially offset by higher shipping revenues.
Within Presort Services, we anticipate total volumes to be relatively flat in 2024 compared to 2023, but revenue, margin and profit to improve due to higher revenue-per-piece and lower costs driven by the investments made to improve productivity.
Within Global Ecommerce, we expect revenue growth in domestic parcel services driven by increased volumes, partially offsets softness in ouroffset by lower revenue from cross-border services and digital delivery services operations. Throughout 2023, cross-border operations have been adversely impacted by macroeconomic challenges and a reduction inlower domestic parcel volumes, primarily from two clients, as compared to 2022.revenue per piece. We anticipate this revenue trend to continue during the remainder of 2023. We anticipate full year margin and profit improvements in domestic parcel as compared to the prior year; however, these improvements will be more than offset by declines2023.
We continue to make progress on our worldwide restructuring program and expect annualized cost savings in both cross-border and digital delivery services operations primarily driven by lower volumes.
Presort Services revenue has benefited from pricing actions designed to offset inflationary pressure on costs. In addition, incremental volumes from prior year acquisitions and growth in Marketing Mail Flats and Bound Printed Matter volumes, have offset the impact on revenue from lower First Class Mail and Marketing Mail volumes. We expect full year revenue growth compared to 2022 and margin and profit improvements driven by pricing actions and our investments in network management, automation and higher-throughput sortation equipment.
In SendTech Solutions, revenue growth from new products and our cloud-enabled shipping solutions partially offset the expected decline in mailing related revenues and we expect to see this trend continue through the remainderexcess of the year. Overall segment margins are expected to remain within their historical range.
In May 2023, we approved a worldwide restructuring plan (the 2023 Plan) designed to improve profitability and cash flow by reducing complexity, streamlining operating processes, and driving further operational efficiencies. We have identified additional actions under the 2023 Plan and are updating our initial estimates. The updated 2023 Plan includes the elimination of 850-950 positions worldwide in part through further centralization and standardization of processes, including the expansion of our shared services activities, increased automation, and the consolidation or closure of select facilities in North America. Total charges are expected to be $60 million-$75-$7085 million with cash-related charges of $50 million-$60 million, the majority of which will be paidtarget by the end of 2024. The 2023 Plan is expected to generate annualized cost savings2024, a portion of $75 million-$85 million by the end of 2024. Wewhich was realized in 2023. However, we also expect these actions will be substantially completed by the end of the first half of 2024.
Certain factors beyond our control could have adverse impacts on our 2023 results including, but not limited to, reduced consumer spending due to inflationary pressures and rising prices, higher interest rates, downward pricing pressure in the market for shipping services, a slow-down in economic activity, higher fuel and transportationtax costs and other adverse geopolitical developments, including those relatedthe restoration of variable compensation costs in 2024 to China. Inflationary pressures and rising prices could put increased pressure on wages, particularly warehouse and transportation employees, and result in higher component costs. Higher fuel and freight costs could also adversely impact our operations.significantly offset these savings.
OVERVIEW OF CONSOLIDATED RESULTS
Factors Affecting Comparability
Certain transactions and changes occurred in 2022 that impact the comparability of our 2023 financial results to the prior periods. These transactions and changes include:
•the sale of our Borderfree cross-border ecommerce solutions business (Borderfree) in July 2022. Accordingly, reported revenue and costs for the nine months ended September 30, 2022 include revenue and costs for Borderfree. Net income of Borderfree for these periods was not significant.
•a change in the presentation of revenue for digital delivery services effective October 1, 2022, from a gross basis to a net basis. Accordingly, in 2023, revenue and costs of revenue for certain digital delivery services are reported on a net basis as business services revenue; whereas for the three and nine months ended September 30, 2022, revenue and cost of revenue for these services were reported as business services revenue and cost of business services, respectively. The change primarily impacts our Global Ecommerce segment.
Constant Currency
In the tables below, we report the change in revenue on a reported basis and a constant currency basis. Constant currency measures exclude the impact of changes in currency exchange rates from the prior period under comparison. We believe that excluding the impacts of currency exchange rates provides investors with a better understanding of the underlying revenue performance. Constant currency change is calculated by converting the current period non-U.S. dollar denominated revenue using the prior year’s exchange rate.
Financial Results Summary - Three and Nine Months Ended September 30:March 31:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| | | | | Favorable/(Unfavorable) |
| 2023 | | 2022 | | Actual % Change | | Constant Currency % change |
Total revenue | $ | 783,751 | | | $ | 830,914 | | | (6) | % | | (6) | % |
Total costs and expenses | 800,455 | | | 820,785 | | | 2 | % | | |
(Loss) income before taxes | (16,704) | | | 10,129 | | | >(100%) | | |
(Benefit) provision for income taxes | (4,185) | | | 4,642 | | | >(100%) | | |
Net (loss) income | $ | (12,519) | | | $ | 5,487 | | | >(100%) | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, |
| | | | | Favorable/(Unfavorable) |
| 2024 | | 2023 | | Actual % Change | | Constant Currency % change |
Total revenue | $ | 830,509 | | | $ | 834,538 | | | — | % | | (1) | % |
Total costs and expenses | 820,835 | | | 845,525 | | | 3 | % | | |
Income (loss) before taxes | 9,674 | | | (10,987) | | | >100% | | |
Provision (benefit) for income taxes | 12,559 | | | (3,250) | | | >(100%) | | |
Net loss | $ | (2,885) | | | $ | (7,737) | | | 63 | % | | |
Revenue decreased $47$4 million in the thirdfirst quarter of 20232024 compared to the prior year period primarily due to a decreaselower support services revenue of $9 million, lower equipment sales of $5 million and lower supplies revenue of $2 million, partially offset by an increase in business services revenue of $34 million, lower equipment sales of $7 million and lower support services revenue of $6$12 million.
Total costs and expenses decreased $20$25 million compared to the prior year period primarily due to:
•Costs of revenue (excluding financing interest expense) decreased $44$10 million primarily due to lower cost of business servicesequipment sales of $33$5 million and lower cost of equipment salessupport services of $8$4 million.
•Selling, general and administrative (SG&A) expense was flatdecreased $26 million compared to the prior year period primarily driven by lower salary expense of $5$8 million lower stock-based compensation expensedue to savings as a result of $4 million and lower credit card fees of $2 million, which was offset by higher credit loss provisionthe 2023 Plan, non-cash foreign currency revaluation gains on intercompany loans of $5 million, higher variable compensation expense of $4 million and higherlower professional and outsourcing fees of $2 million.
•Restructuring charges$4 million and asset impairments increased $12 million compared to the prior year period primarily driven by actions taken under the 2023 Plan.
cost savings initiatives.
•Interest expense, net, represents interest on our outstanding debt, net of interest income. We allocate a portion of gross interest expense to financing interest expense based on our effective interest rate and average finance receivables for the period. Total interest expense, net, for the third quarter of 2023, including financing interest expense, increased $6$7 million compared to the prior year period primarily due to higher interest rates.
The effective tax rate for the three months ended September 30, 2023March 31, 2024 was 25.1%129.8%. See Note 12 for more information.
Net loss for the thirdfirst quarter of 2024 was $13$3 million compared to a net incomeloss of $5$8 million in the prior year period.
| | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| | | | | Favorable/(Unfavorable) |
| 2023 | | 2022 | | Actual % Change | | Constant Currency % change |
Total revenue | $ | 2,394,770 | | | $ | 2,629,351 | | | (9) | % | | (9) | % |
Total costs and expenses | 2,573,411 | | | 2,596,888 | | | 1 | % | | |
(Loss) income before taxes | (178,641) | | | 32,463 | | | >(100%) | | |
(Benefit) provision for income taxes | (16,850) | | | 1,819 | | | >100% | | |
Net (loss) income | $ | (161,791) | | | $ | 30,644 | | | >(100%) | | |
Revenue decreased $235 million in the first nine months of 2023 compared to the prior year primarily due to a decrease in business services revenue of $186 million, lower equipment sales of $24 million and lower support services revenue of $15 million.
Total costs and expenses decreased $23 million compared to the prior year primarily due to:
•Costs of revenue (excluding financing interest expense) decreased $187 million primarily due to lower cost of business services of $157 million and lower cost of equipment sales of $22 million.
•SG&A expense declined $5 million compared to the prior year period primarily driven by lower credit cards fees of $9 million, lower amortization expense of $8 million, lower stock based compensation expense of $8 million, and lower marketing expenses of $4 million, partially offset by incremental proxy solicitation fees of $11 million, higher variable compensation expense of $9 million and higher credit loss provision of $5 million.
•Restructuring charges and asset impairments increased $30 million compared to the prior year period primarily driven by actions taken under the 2023 Plan.
•A non-cash goodwill impairment charge of $119 million associated with our Global Ecommerce reporting unit.
•Interest expense, net represents interest on our outstanding debt, net of interest income. We allocate a portion of gross interest expense to financing interest expense based on our effective interest rate and average finance receivables for the period. Total interest expense, net for the first nine months of 2023, including financing interest expense, increased $14 million compared to the prior year period primarily due to higher interest rates.
•Other income, net declined $17 million compared to the prior year period primarily driven by prior year gains of $25 million from the sale of assets and businesses, partially offset by a favorable year-over-year impact of $8 million associated with the redemption/refinancing of debt.
The effective tax rate for the nine months ended September 30, 2023 was 9.4%, primarily due to the nondeductibility of the goodwill impairment charge. See Note 12 for more information.
Net loss for the first nine months of 2023 was $162 million compared to net income of $31 million in the prior year period.
SEGMENT RESULTS
Effective January 1, 2024, we moved the digital delivery services offering from the Global Ecommerce segment to the SendTech Solutions segment in order to leverage our technology and innovation capabilities to better serve our clients. Prior periods have been recast to conform to our current segment presentation.
Management measures segment profitability and performance by deducting from segment revenue the related costs and expenses attributable to the segment. Segment results exclude interest, taxes, unallocated corporate expenses, restructuring charges, and other items not allocated to a business segment.
Global Ecommerce
Global Ecommerce includes the revenue and related expenses from business to consumer logistics services for domestic and cross-border delivery, returns and fulfillment. Our domestic parcel services provide retailers domestic parcel delivery and returns services for its end consumers through our nationwide parcel sortation centers and transportation network. Our cross-border services offers our clients a range of services to manage their international shopping and parcel shipping experience. Using our digital delivery services, clients can purchase postage, print shipping labels and access shipping and tracking services from multiple carriers. Delivery and return parcels using our digital delivery services are not physically processed through our network.
Financial performance for the Global Ecommerce segment was as follows:
| | Three Months Ended September 30, |
| | Favorable/(Unfavorable) |
| 2023 | | 2022 | | Actual % Change | | Constant Currency % change |
| Three Months Ended March 31, | | | Three Months Ended March 31, |
| | | | | Favorable/(Unfavorable) | | | | | | | Favorable/(Unfavorable) |
| 2024 | | | 2024 | | 2023 | | Actual % Change | | Constant Currency % change |
Business Services Revenue | Business Services Revenue | $ | 313,161 | | | $ | 354,326 | | | (12) | % | | (12) | % | Business Services Revenue | $ | 333,265 | | | $ | | $ | 340,641 | | | (2) | | (2) | % | | (2) | % |
Cost of Business Services | Cost of Business Services | 309,240 | | | 333,964 | | | 7 | % | |
Gross Margin | Gross Margin | 3,921 | | | 20,362 | | | (81) | % | |
Gross Margin | |
Gross Margin | |
Gross Margin % | |
Gross Margin % | |
Gross Margin % | Gross Margin % | 1.3 | % | | 5.7 | % | |
| Selling, general and administrative | Selling, general and administrative | 42,893 | | | 53,562 | | | 20 | % | |
| Selling, general and administrative | |
| Selling, general and administrative | |
Research and development | |
Research and development | |
Research and development | Research and development | 2,740 | | | 1,681 | | | (63) | % | |
Adjusted segment EBIT | Adjusted segment EBIT | $ | (41,712) | | | $ | (34,881) | | | (20) | % | |
Adjusted segment EBIT | |
Adjusted segment EBIT | |
Global Ecommerce revenue decreased $41$7 million in the thirdfirst quarter of 20232024 compared to the prior year period. The change in revenue presentation for digital delivery services accounted for $40 million of this decrease. Cross-border revenue declined $57$30 million due to lower volumes primarily driven by changes in how two of our largest clients access our services, and digital delivery services revenue declined $2 million. These declines wereservices. This was partially offset by domestic parcel delivery revenue growth of $60$23 million, driven by an increase in domestic parcel volumes.
Gross margin decreased $16$11 million and gross margin percentage decreased to 1.3%1.0% from 5.7%4.3% compared to the prior year period. Domestic parcel delivery services gross margin decreased $9 million compared to the prior year period primarily due to client/product mix and pricing pressures, which more than offset the increase in volumes and lower cost per piece, driven in part by lower transportation costs. Cross-border services gross margin declined $13$2 million, primarily due to the decline in volumes. Digital delivery services gross margin declined $1 million. Domestic parcel delivery services gross margin decreased $2 million primarily due to $4 million of one-time costs in the current period related to facility consolidation.
SG&A expensesexpense declined $11$8 million compared to the prior year period, primarily due to lower employee-related expenses of $5$6 million due to savings from the 2023 Plan and lower credit card fees of $2 million and lower amortization expenseloss provision of $1 million.
Adjusted segment EBIT was a loss of $42$35 million forin the thirdfirst quarter of 20232024 compared to a loss of $35$33 million in the prior year period.
| | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| | | | | Favorable/(Unfavorable) |
| 2023 | | 2022 | | Actual % Change | | Constant Currency % change |
Business Services Revenue | $ | 974,306 | | | $ | 1,166,623 | | | (16) | % | | (16) | % |
Cost of Business Services | 935,058 | | | 1,058,457 | | | 12 | % | | |
Gross Margin | 39,248 | | | 108,166 | | | (64) | % | | |
Gross Margin % | 4.0 | % | | 9.3 | % | | | | |
| | | | | | | |
Selling, general and administrative | 144,781 | | | 177,700 | | | 19 | % | | |
Research and development | 8,500 | | | 7,868 | | | (8) | % | | |
Adjusted segment EBIT | $ | (114,033) | | | $ | (77,402) | | | (47) | % | | |
Global Ecommerce revenue decreased $192 million in the first nine months of 2023 compared to the prior year period. The change in revenue presentation for digital delivery services and the sale of Borderfree accounted for $139 million of the decrease. Cross-border revenue declined $143 million due to lower volumes, primarily driven by changes in how two of our largest clients access our services and digital delivery services revenue declined $26 million due to a decrease in the number of shipping labels printed. These declines were partially offset by domestic parcel delivery revenue growth of $138 million, driven by an increase in domestic parcel volumes.
Gross margin decreased $69 million and gross margin percentage decreased to 4.0% from 9.3% compared to the prior year period. Cross-border services gross margin declined $41 million, primarily due to the decline in volumes. Digital delivery services gross margin declined $11 million primarily due to the decline in the number of shipping labels printed. The sale of Borderfree contributed a decline in gross margin of $8 million. Domestic parcel delivery services gross margin was flat compared to the prior year primarily due to $4 million of one-time costs in the third quarter related to facility consolidation which offset revenue from increased parcel volumes.
SG&A expenses declined $33 million compared to the prior year period, primarily due to lower amortization expense of $9 million, lower credit card fees of $9 million and lower employee-related expenses of $8 million.
Adjusted segment EBIT was a loss of $114 million for the first nine months of 2023 compared to a loss of $77 million in the prior year period.
Presort Services
We are the largest workshare partner of the USPS and national outsource provider of mail sortation services that allow clients to qualify large volumes of First Class Mail, Marketing Mail, and Marketing Mail Flats and Bound Printed Matter for postal worksharing discounts.
Financial performance for the Presort Services segment was as follows:
| | Three Months Ended September 30, |
| | Favorable/(Unfavorable) |
| 2023 | | 2022 | | Actual % Change | | Constant Currency % change |
| Three Months Ended March 31, | | | Three Months Ended March 31, |
| | | | | Favorable/(Unfavorable) | | | | | | | Favorable/(Unfavorable) |
| 2024 | | | 2024 | | 2023 | | Actual % Change | | Constant Currency % change |
Business Services Revenue | Business Services Revenue | $ | 152,451 | | | $ | 144,824 | | | 5 | % | | 5 | % | Business Services Revenue | $ | 169,807 | | | $ | | $ | 158,902 | | | 7 | | 7 | % | | 7 | % |
Cost of Business Services | Cost of Business Services | 104,685 | | | 107,789 | | | 3 | % | |
Gross Margin | Gross Margin | 47,766 | | | 37,035 | | | 29 | % | |
Gross Margin | |
Gross Margin | |
Gross Margin % | |
Gross Margin % | |
Gross Margin % | Gross Margin % | 31.3 | % | | 25.6 | % | |
| Selling, general and administrative | Selling, general and administrative | 18,582 | | | 16,438 | | | (13) | % | |
| Selling, general and administrative | |
| Selling, general and administrative | |
| Other components of net pension and postretirement costs | |
| Other components of net pension and postretirement costs | |
| Other components of net pension and postretirement costs | Other components of net pension and postretirement costs | 60 | | | 36 | | | (67) | % | |
Adjusted segment EBIT | Adjusted segment EBIT | $ | 29,124 | | | $ | 20,561 | | | 42 | % | |
Adjusted segment EBIT | |
Adjusted segment EBIT | |
RevenueDespite a 2% decrease in total mail volumes, revenue increased $8$11 million in the thirdfirst quarter of 20232024 compared to the prior year period asprimarily due to pricing actions to mitigate inflationary pressures on costs offset the revenue decline driven by a 5% decrease in total mail volumes.pressures. The processing of Marketing Mail Flats and Bound Printed Matter and First Class Mail contributed revenue increases of $6 million and $5 million, and $4 million, respectively, while the processing of Marketing Mail contributed a revenue decrease of $1 million.respectively.
Gross margin increased $11$16 million and gross margin percentage increased from 25.6% to 31.3% compared to29.2% in the prior year period driven byto 36.8% primarily due to the increase in revenue and the benefits from investments made in network management, automation and higher-throughput sortation equipment. Transportation costs declined $4 million due to improved network management, which was partially offset by higher production laborGross margin also benefited from lower transportation costs of $2 million.million driven by improvements in network management.
SG&A expenses increased $2$3 million primarily due to higher employee-related expensescredit loss provision of $2 million and higher professional fees of $1 million.
Adjusted segment EBIT was $29$40 million forin the thirdfirst quarter of 20232024 compared to $21$27 million in the prior year period.
Revenue and adjusted segment EBIT were favorably impacted by a $5 million adjustment related to prior periods. Refer to Note 1 Basis of Presentation for further information.
| | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| | | | | Favorable/(Unfavorable) |
| 2023 | | 2022 | | Actual % Change | | Constant Currency % change |
Business Services Revenue | $ | 454,460 | | | $ | 444,302 | | | 2 | % | | 2 | % |
Cost of Business Services | 321,249 | | | 343,745 | | | 7 | % | | |
Gross Margin | 133,211 | | | 100,557 | | | 32 | % | | |
Gross Margin % | 29.3 | % | | 22.6 | % | | | | |
| | | | | | | |
Selling, general and administrative | 56,582 | | | 47,380 | | | (19) | % | | |
| | | | | | | |
Other components of net pension and postretirement costs | 171 | | | 133 | | | (29) | % | | |
Adjusted segment EBIT | $ | 76,458 | | | $ | 53,044 | | | 44 | % | | |
Revenue for the first nine months of 2023 increased $10 million compared to the prior year period as pricing actions to mitigate inflationary pressures on costs offset the revenue decline driven by a 7% decrease in total mail volumes. The processing of Marketing Mail Flats and Bound Printed Matter and First Class Mail contributed revenue increases of $14 million and $3 million, respectively, while the processing of Marketing Mail contributed to a revenue decrease of $7 million.
Gross margin increased $33 million and gross margin percentage increased from 22.6% to 29.3% compared to the prior year period driven by higher revenues and investments in network management, automation and higher-throughput sortation equipment. Transportation costs declined $14 million due to improved network management and production labor costs declined $3 million due to higher mail throughput per labor hour.
SG&A expenses increased $9 million primarily due to higher employee-related expenses of $8 million and higher professional fees of $1 million.
Adjusted segment EBIT was $76 million in the first nine months of 2023 compared to $53 million in the prior year period.
SendTech Solutions
SendTech Solutions provides clients with physical and digital mailing and shipping technology solutions and other applications to help simplify and save on the sending, tracking and receiving of letters, parcels and flats, as well as supplies and maintenance services for these offerings. We offer financing alternatives that enable clients to finance equipment and product purchases, a revolving credit solution that enables clients to make meter rental payments and purchase postage, services and supplies, and an interest-bearing deposit solution to clients who prefer to prepay postage. We also offer financing alternatives that enable clients to finance or lease other manufacturers’ equipment and provide working capital.
Financial performance for the SendTech Solutions segment was as follows:
| | Three Months Ended September 30, |
| | Favorable/(Unfavorable) |
| 2023 | | 2022 | | Actual % change | | Constant Currency % change |
| Three Months Ended March 31, | | | Three Months Ended March 31, |
| | | | | Favorable/(Unfavorable) | | | | | | | Favorable/(Unfavorable) |
| 2024 | | | 2024 | | 2023 | | Actual % change | | Constant Currency % change |
Business services | Business services | $ | 18,375 | | | $ | 19,255 | | | (5) | % | | (5) | % | Business services | $ | 32,525 | | | $ | | $ | 23,948 | | | 36 | | 36 | % | | 36 | % |
Support services | Support services | 101,855 | | | 107,642 | | | (5) | % | | (6) | % | Support services | 96,333 | | | 105,284 | | 105,284 | | | (9) | | (9) | % | | (8) | % |
Financing | Financing | 68,572 | | | 67,757 | | | 1 | % | | 1 | % | Financing | 67,663 | | | 67,049 | | 67,049 | | | 1 | | 1 | % | | 1 | % |
Equipment sales | Equipment sales | 76,705 | | | 83,528 | | | (8) | % | | (8) | % | Equipment sales | 77,403 | | | 82,610 | | 82,610 | | | (6) | | (6) | % | | (6) | % |
Supplies | Supplies | 35,695 | | | 37,455 | | | (5) | % | | (6) | % | Supplies | 36,721 | | | 38,835 | | 38,835 | | | (5) | | (5) | % | | (6) | % |
Rentals | Rentals | 16,937 | | | 16,127 | | | 5 | % | | 3 | % | Rentals | 16,792 | | | 17,269 | | 17,269 | | | (3) | | (3) | % | | (3) | % |
Total revenue | Total revenue | 318,139 | | | 331,764 | | | (4) | % | | (5) | % | Total revenue | 327,437 | | | 334,995 | | 334,995 | | | (2) | | (2) | % | | (2) | % |
| Cost of business services | Cost of business services | 8,106 | | | 10,668 | | | 24 | % | |
Cost of business services | |
Cost of business services | |
Cost of support services | |
Cost of support services | |
Cost of support services | Cost of support services | 33,136 | | | 36,357 | | | 9 | % | |
Cost of equipment sales | Cost of equipment sales | 52,745 | | | 60,125 | | | 12 | % | |
Cost of equipment sales | |
Cost of equipment sales | |
Cost of supplies | |
Cost of supplies | |
Cost of supplies | Cost of supplies | 10,469 | | | 10,470 | | | — | % | |
Cost of rentals | Cost of rentals | 4,259 | | | 6,211 | | | 31 | % | |
Cost of rentals | |
Cost of rentals | |
Total costs of revenue | |
Total costs of revenue | |
Total costs of revenue | Total costs of revenue | 108,715 | | | 123,831 | | | 12 | % | |
| Gross margin | Gross margin | 209,424 | | | 207,933 | | | 1 | % | |
| Gross margin | |
| Gross margin | |
Gross margin % | |
Gross margin % | |
Gross margin % | Gross margin % | 65.8 | % | | 62.7 | % | |
| Selling, general and administrative | Selling, general and administrative | 106,906 | | | 107,372 | | | — | % | |
| Selling, general and administrative | |
| Selling, general and administrative | |
Research and development | |
Research and development | |
Research and development | Research and development | 5,322 | | | 5,410 | | | 2 | % | |
Other components of pension and post retirement costs | Other components of pension and post retirement costs | (565) | | | (83) | | | >(100%) | |
Other components of pension and post retirement costs | |
Other components of pension and post retirement costs | |
Adjusted Segment EBIT | Adjusted Segment EBIT | $ | 97,761 | | | $ | 95,234 | | | 3 | % | |
Adjusted Segment EBIT | |
Adjusted Segment EBIT | |
SendTech Solutions revenue decreased $14$8 million in the thirdfirst quarter of 2023 compared to the prior year period, primarily driven by lower equipment sales, support services revenue and supplies revenue. Equipment sales declined $7 million as we are seeing initial leases of some of our advanced technology products expiring and customers opting to extend these leases rather than purchase new equipment. Support services revenue declined $6 million primarily due the declining meter population and the continuing shift to cloud-enabled products. Supplies revenue declined $2 million primarily due to a declining meter population. Business services revenue decreased $1 million; however, the change in revenue presentation for digital delivery services reduced revenue by $4 million. The underlying increase of $3 million is primarily due to growth in enterprise shipping subscriptions.
Gross margin increased $1 million and gross margin percentage increased to 65.8% from 62.7% compared to the prior year period, primarily due to improvements in business services gross margin due to the growth in revenue, rentals gross margin driven in part by a current period favorable adjustment and support services gross margin driven by a shift away from lower margin clients.
SG&A expenses were flat2024 compared to the prior year period.
Adjusted segment EBIT was $98 Support services revenue declined $9 million in the third quarter of 2023 compared to $95 million in the prior year period.
| | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| | | | | Favorable/(Unfavorable) |
| 2023 | | 2022 | | Actual % change | | Constant Currency % change |
Business services | $ | 52,209 | | | $ | 56,342 | | | (7) | % | | (7) | % |
Support services | 310,454 | | | 325,619 | | | (5) | % | | (4) | % |
Financing | 202,323 | | | 207,084 | | | (2) | % | | (2) | % |
Equipment sales | 238,766 | | | 262,810 | | | (9) | % | | (9) | % |
Supplies | 111,035 | | | 116,761 | | | (5) | % | | (5) | % |
Rentals | 51,217 | | | 49,810 | | | 3 | % | | 3 | % |
Total revenue | 966,004 | | | 1,018,426 | | | (5) | % | | (5) | % |
| | | | | | | |
Cost of business services | 21,922 | | | 30,408 | | | 28 | % | | |
Cost of support services | 104,466 | | | 110,658 | | | 6 | % | | |
Cost of equipment sales | 165,211 | | | 186,798 | | | 12 | % | | |
Cost of supplies | 32,451 | | | 32,901 | | | 1 | % | | |
Cost of rentals | 14,703 | | | 18,879 | | | 22 | % | | |
Total costs of revenue | 338,753 | | | 379,644 | | | 11 | % | | |
| | | | | | | |
Gross margin | 627,251 | | | 638,782 | | | (2) | % | | |
Gross margin % | 64.9 | % | | 62.7 | % | | | | |
| | | | | | | |
Selling, general and administrative | 322,027 | | | 327,230 | | | 2 | % | | |
Research and development | 15,000 | | | 16,430 | | | 9 | % | | |
Other components of pension and post retirement costs | (1,688) | | | (252) | | | >(100%) | | |
Adjusted Segment EBIT | $ | 291,912 | | | $ | 295,374 | | | (1) | % | | |
SendTech Solutions revenue decreased $52 million in the first nine months of 2023 comparedprimarily due to the prior year period.declining meter population and continuing shift to cloud-enabled products. Equipment sales declined $24$5 million primarily due to customers opting to extend leases of their existing advanced-technology equipment rather than purchase new equipment. Support services revenue declined $15 million primarily due to the declining meter population and continuing shift to cloud-enabled products. Supplies revenue declined $6$2 million primarily driven by a declining meter population. FinancingThese revenue declined $5 million primarily due to $6 million of lower lease extensions and lower late fees of $2 million,declines were partially offset by higher investment income of $5 million. Businessan increase in business services revenue decreased $4 million; however, the changeof $9 million primarily driven by growth in revenue presentation forenterprise shipping subscriptions of $3 million and digital delivery services reduced revenue by $13 million. The underlying increase of $9$3 million is primarily due to growth in enterprise shipping subscriptions.labels printed.
Gross margin decreased $12 million primarily duewas flat compared to the decline in revenue;prior year period; however, gross margin percentage increased to 64.9%66.6% from 62.7%65.0% compared to the prior year period. The increase in gross profitmargin percentage was primarily driven by improvements in business services gross margin due to growth in enterprise shipping subscriptions rentalsand growth in digital delivery services. Despite revenue declines, gross margin due in part to a $2 million prior year unfavorable scrap adjustment and a current year favorable adjustment andpercentage for support services, equipment sales gross margin due to cost management.and supplies also improved.
SG&A expensesexpense declined $5$6 million, primarily driven by lower outsourcingemployee-related expenses of $2 million, lower marketing expenses of $1 million, lower credit loss provision of $1 million and professional fees.cost savings initiatives.
Adjusted segment EBIT was $292$101 million in the first nine monthsquarter of 20232024 compared to $295$96 million for the prior year period.
UNALLOCATED CORPORATE EXPENSES The majority of operating expenses are recorded directly or allocated to our reportable segments. Operating expenses not recorded directly or allocated to our reportable segments are reported as unallocated corporate expenses. Unallocated corporate expenses primarily represents corporate administrative functions such as finance, marketing, human resources, legal, information technology, and research and development.
Unallocated corporate expenses were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended September 30, |
| | | | | | | | | | | Favorable/(Unfavorable) |
| | | | | | | 2023 | | 2022 | | Actual % change |
Unallocated corporate expenses | | | | | | | $ | 41,704 | | | $ | 42,908 | | | 3 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | | | | | | | Favorable/(Unfavorable) |
| | | | | | | 2024 | | 2023 | | Actual % change |
Unallocated corporate expenses | | | | | | | $ | 49,770 | | | $ | 56,349 | | | 12 | % |
Unallocated corporate expenses for the thirdfirst quarter of 20232024 decreased $1$7 million compared to the prior year period primarily due to lower professional and outsourcing fees of $3 million and lower marketing expenses of $1 million, partially offset by higher variable compensationsalary expense of $2 million.
| | | | | | | | | | | | | | | | | | | | | | | |
| | | Nine Months Ended September 30, |
| | | | | | | | | | | Favorable/(Unfavorable) |
| | | | | | | 2023 | | 2022 | | Actual % change |
Unallocated corporate expenses | | | | | | | $ | 145,762 | | | $ | 141,537 | | | (3) | % |
Unallocated corporate expenses for the first nine months of 2023 increased $4 million compared to the prior year period primarily due to higher variable compensation expense of $4 million and higher insurance costs of $2 million, partially offset by lower marketing expenses of $3 million.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2023, we had cash, cash equivalents and short-term investments of $579 million, which includes $117 million held at our foreign subsidiaries used to support the liquidity needs of those subsidiaries. Our ability to maintain adequate liquidity for our operations is dependent upon a number of factors, including our revenue and earnings, our ability to manage costs and improve productivity, our clients' ability to pay their balances on a timely basis and the impacts of changing macroeconomic and geopolitical conditionsconditions. At March 31, 2024, we had cash, cash equivalents and short-term investments of $538 million, which includes $116 million held at our abilityforeign subsidiaries used to manage costssupport their liquidity needs.
The credit agreement that governs our $500 million secured revolving credit facility and improve productivity. the term loan due March 2026 contains certain financial covenants. These covenants require us to maintain, on a quarterly basis, a maximum leverage ratio and a minimum interest coverage ratio, both of which are defined and calculated in accordance with the credit agreement. The maximum leverage ratio decreases from 4.25x to 4.0x as of June 30, 2024 and the minimum interest coverage ratio increases from 1.75x to 2.0x as of March 31, 2025. At March 31, 2024, we were in compliance with these financial covenants. Additionally, management expects that we will remain in compliance with these financial covenants over the next twelve months. However, events and circumstances could occur, some beyond our control, that could adversely impact our compliance with these covenants and require us to obtain a waiver from our lenders, modify our existing covenants or refinance certain debt to cure the noncompliance. If we are unable to cure the noncompliance, amounts due under our revolving credit facility and term loan due March 2026 could be called by our lenders. At March 31, 2024, there were no outstanding borrowings under the revolving credit facility. Borrowings under our secured debt are secured by assets of the company.
At this time, we believe that existing cash and investments, cash generated from operations and borrowing capacity under our $500 million revolving credit facility will be sufficient to fund our cash needs for the next 12 months.
Cash Flow Summary
Changes in cash and cash equivalents were as follows:
| | 2023 | | 2022 | | Change |
| 2024 | | | 2024 | | 2023 | | Change |
Net cash from operating activities | Net cash from operating activities | $ | (14,453) | | | $ | 9,229 | | | $ | (23,682) | |
Net cash from investing activities | Net cash from investing activities | (95,436) | | | 16,391 | | | (111,827) | |
Net cash from financing activities | Net cash from financing activities | (2,059) | | | (136,180) | | | 134,121 | |
Effect of exchange rate changes on cash and cash equivalents | Effect of exchange rate changes on cash and cash equivalents | (337) | | | (25,273) | | | 24,936 | |
Change in cash and cash equivalents | Change in cash and cash equivalents | $ | (112,285) | | | $ | (135,833) | | | $ | 23,548 | |
Operating Activities
Cash flows from operating activities in 2023 declined $24the first quarter of 2024 improved $27 million compared to the prior year period. This declineperiod driven primarily by changes in working capital items. The improvement was further driven by lower earnings, higher interestpension and retiree medical benefit payments of $19 million, higher restructuring payments of $13$8 million and higher pension contributionslower tax payments of $7 million, partially offset by higher collectionsrestructuring payments of accounts receivables and finance receivables of $33 million, lower inventory purchases of $12 million, lower prepayments of $19 million due to timing and changes in other working capital items.$10 million.
Investing Activities
Cash flows from investing activities for 2023 declined $112the first quarter of 2024 improved $30 million compared to the prior year period primarily due to prior year proceedshigher cash from investment activity of $160$9 million, from the salelower investments in loans receivable of businesses and our Shelton, Connecticut office building, partially offset by lower payments of $42$11 million from settlements of derivative contracts and lower capital expenditures of $20$9 million.
Financing Activities
Cash flows from financing activities for 2023the first quarter of 2024 improved $134$21 million compared to the prior year period primarily due to lower net paymentsrepayments of debt of $71$17 million.
We paid dividends of $9 million an increase in customer account deposits at the Bank of $57 million and $13 million of common stock repurchases in the prior year period.
Financings and Capitalization
During the quarter, we issued an aggregate $275 million of senior secured notes. The notes mature in March 2028 and bear interest of SOFR plus 6.9%, payable quarterly, and were issued with original issue discount of 3%. Net proceeds were used to redeem the March 2024 notes and repay $30 million of the March 2026 term loan.
Through September 30, 2023, we purchased an aggregate $39 million of the March 2024 notes and March 2027 notes and recognized a gain of $3 million. Additionally, we made scheduled principal repayments of $27 million on our term loans.
The credit agreement that governs our $500 million secured revolving credit facility and term loans contains financial and non-financial covenants. In June 2023, we amended the credit agreement to provide additional flexibility in managing our capital structure. At September 30, 2023, we were in compliance with all covenants and there were no outstanding borrowings under the revolving credit facility. Borrowings under the revolving credit facility, term loans and notes due March 2028 are secured by assets of the company.
The Pitney Bowes Bank, a wholly owned subsidiary, is a member of the Federal Home Loan Bank of Des Moines. As a member, the Bank has access to certain credit products as a funding source known as "advances." As of September 30, 2023, the Bank had yet to apply for any advances.
quarter. Each quarter, our Board of Directors considers whether to approve the payment of a dividend. Under the terms of the March 2028 note purchase agreement, the annual amount of permitted dividend payments is capped at the lesser of $36 million or a maximum dividend yield of 6.25%. In addition, share repurchases would further limit this amount. We currently expect to continue paying a quarterly dividend; however, no assurances can be given.
Contractual Obligations and Off-Balance Sheet Arrangements
At September 30, 2023, we have entered into real estate and equipment leases with aggregate payments of $18 million and terms ranging from three to seven years that have not commenced. Most of these leases are expected to commence in the first half of 2024.
At September 30, 2023,March 31, 2024, there are no off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on our financial condition, results of operations or liquidity.
Critical Accounting Estimates
Goodwill
The performance of our Global Ecommerce reporting unit through June 30, 2023, and continuing changes in macroeconomic conditions, was a triggering event causing us to evaluate the Global Ecommerce goodwill for impairment at June 30, 2023. To assess Global Ecommerce goodwill for impairment, we determined the fair value of the Global Ecommerce reporting unit and compared it to the unit's carrying value, including goodwill. We engaged a third-party to assist in the determination of the fair value of the reporting unit. We determined that the reporting unit's estimated fair value was less than its carrying value and recorded a non-cash, pre-tax goodwill impairment charge of $119 million in the second quarter of 2023 to reduce the carrying value of the Global Ecommerce reporting unit to its estimated fair value.
The fair value of the reporting unit was estimated using a discounted cash flow model based on management developed cash flow projections, which included judgements and assumptions related to revenue growth rates, operating margins, operating income, and a discount rate. The judgements and assumptions used to estimate the fair value were inherently subjective and changes in any of the judgements or assumptions could materially affect the determination of fair value and result in an additional impairment charge in the future.
Regulatory Matters
There have been no significant changes to the regulatory matters disclosed in our 20222023 Annual Report.
Item 3: Quantitative and Qualitative Disclosures About Market Risk
There were no material changes to the disclosures made in our 20222023 Annual Report.
Item 4: Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures are also designed to reasonably ensure that such information is accumulated and communicated to management, including our Interim Chief Executive Officer (CEO) and Interim Chief Financial Officer (CFO), to allow timely decisions regarding disclosures.
With the participation of our CEO and CFO, management evaluated our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) and internal controls over financial reporting as of the end of the period covered by this report. Our CEO and CFO concluded that, as of the end of the period covered by this report, such disclosure controls and procedures were effective to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the required time periods. In addition, no changes in internal control over financial reporting occurred during the quarter covered by this report that materially affected, or are reasonably likely to materially affect, such internal control over financial reporting.
It should be noted that any system of controls is based in part upon certain assumptions designed to obtain reasonable (and not absolute) assurance as to its effectiveness, and there can be no assurance that any design will succeed in achieving its stated goals. Notwithstanding this caution, the CEO and CFO have reasonable assurance that the disclosure controls and procedures were effective as of September 30, 2023.March 31, 2024.
PART II. OTHER INFORMATION
Item 1: Legal Proceedings
See Note 13 to the Condensed Consolidated Financial Statements.
Item 1A: Risk Factors
There were no material changes to the risk factors identified in our 20222023 Annual Report. However, we are supplementing the risk factors described in Item 1A of our 2023 Annual Report with the following additional risk factor:
Changes within our senior management and our Board of Directors could create uncertainties and impact our business.
Wehave undergone recent changes in our senior management and in the composition of our Board of Directors. These changes, and the potential for future changes, may create continuity risks and challenges to our ability to execute our business and strategy. In addition, such changes may, among other things, create uncertainty among certain investors, customers, employees, and others concerning our future direction and performance, make it more difficult to attract and retain qualified personnel, impact our credit rating, impact our ability to access capital markets at reasonable costs and adversely impact our business.
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
Repurchases of Equity Securities
There were no purchases of our common stock during the three months ended September 30,March 31, 2023.2024. We have remaining authorization to purchase up to $3 million of our common stock.
Item 3: Defaults Upon Senior Securities
None.
Item 4: Mine Safety Disclosures
Not applicable.
Item 5: Other Information
None.
Item 6: Exhibits
| Exhibit Number | Exhibit Number | Description | | Exhibit Number in this Form 10-Q | Exhibit Number | Description | | Exhibit Number in this Form 10-Q |
3(i)(a) | | 3(i)(a) | | | 3(i)(a) |
3(a) | 3(a) | | | 3(i)(a) | 3(a) | | | 3 |
3 | | | 3 |
10.1 | 10.1 | | | 10.1 | 10.1 | Cooperation Agreement, dated as of January 31, 2024, by and between Hestia Capital Partners, LP, Helios I, LP, Hestia Capital Partners GP, LLC, Hestia Capital Management, LLC and Kurtis J. Wolf, on the one hand, and Pitney Bowes Inc., on the other hand (incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the Commission on February 1, 2024) | | 10.1 |
10.2 | | | 10.2 |
10.3 | | | 10.3 |
10.4 | | | 10.4 |
10.5 | | | 10.5 |
10.6 | | | 10.6 |
10.7 | | | 10.7 |
10.8 | | | 10.8 |
10.9 | | | 10.9 |
10.10 | | | 10.10 |
10.11 | | | 10.11 |
10.12 | | | 10.12 |
10.2 * | | 10.2 * | | | 10.2 |
10.3 * | | 10.3 * | | | 10.3 |
31.1 | 31.1 | | | 31.1 | 31.1 | | | 31.1 |
31.2 | 31.2 | | | 31.2 | 31.2 | | | 31.2 |
32.1 | 32.1 | | | 32.1 | 32.1 | | | 32.1 |
32.2 | 32.2 | | | 32.2 | 32.2 | | | 32.2 |
101.SCH | 101.SCH | Inline XBRL Taxonomy Extension Schema Document | | | 101.SCH | Inline XBRL Taxonomy Extension Schema Document | | |
101.CAL | 101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document | | | 101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document | | |
101.DEF | 101.DEF | Inline XBRL Taxonomy Definition Linkbase Document | | | 101.DEF | Inline XBRL Taxonomy Definition Linkbase Document | | |
101.LAB | 101.LAB | Inline XBRL Taxonomy Label Linkbase Document | | | 101.LAB | Inline XBRL Taxonomy Label Linkbase Document | | |
101.PRE | 101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document | | | 101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document | | |
104 | 104 | The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL. (included as Exhibit 101). | |
* Pursuant to Item 601(a)(5) of Regulation S-K, certain exhibits and schedules have been omitted. The registrant hereby agrees to furnish
supplementally a copy of any omitted attachment to the SEC upon request.Exhibits identified above with an asterisk (*) are management contracts or compensatory plans or arrangements.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | | | | |
| | PITNEY BOWES INC. |
| | |
Date: | NovemberMay 2, 20232024 | |
| | |
| | /s/ John A. Witek |
| | |
| | John A. Witek |
| | /s/ Ana Maria Chadwick |
| | |
| | Ana Maria Chadwick |
| | Executive Vice President andInterim Chief Financial Officer |
| | |
| | (Duly Authorized Officer and Principal Financial Officer) |
| | |
| | /s/ Joseph R. Catapano |
| | |
| | Joseph R. Catapano |
| | Vice President and Chief Accounting Officer |
| | (Duly Authorized Officer and Principal Accounting Officer) |