PBI - Earnings call transcript Q1 2018

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Operator

Good morning, and welcome to the Pitney Bowes First Quarter Earnings Conference Call .Your lines have been placed in a listen-only mode during the conference call until the question-and-answer segment. Today's call is also being recorded.

If you have any objections, please disconnect your lines at this time. I would now like to introduce participants on today's conference: Mr. Marc Lautenbach, President and Chief Executive Officer; Mr. President, Officer; Vice Executive Monahan, Chief Mr. Operating Michael Chief and Mr. Sutula, Executive Officer; President, Vice Stan Financial Adam President, David, Vice Investor Relations. Mr. David with will the call Safe Harbor now overview. begin the

Adam David

forward-looking future Good about presentation in morning. are Included our and business expected financial performance. this statements

or other the that you can and can be from that measures our attached mind filed discussed our update located statements press result in be reports in presentation, More developments. found any press keep involve Relations in non-GAAP tables projections. actual these press about XXXX this different cause Annual release, forward-looking Investor uncertainties information clicking a in statements at on Also, SEC results release could used Form on measures Report, the Forward-looking risks appropriate that release do obligation our for Please our not the GAAP information our the Relations. on risk or and to our website. www.pb.com materially also in and undertake any and by as find to new we XX-K with and uncertainties to reconciliations to Investor of earnings are website

many Additionally, on discuss can we also provided our of slides be Investor call. These the summarize have points will found the we that during slides Relations website.

start few opening a with remarks. President our will Officer, Chief and Lautenbach, Now, Marc Executive Marc?

Marc B. Lautenbach

The quarter thank headline delivering Good the the is joining and continues call. for to results. morning, and growth, to strategy our you the for company is move

Newgistics, performance business. our positive our an had positives And always performed to the quarter. negatives ecommerce our top in We outstanding very acquisition performance is had there well. line Mail are in we recent Production and As case, business and the

model. That both improve a the start expect long-term off below in the side businesses the was quarter. to had quarter. solid deals performing expectations slow businesses to business we ledger, off said, starts, below the second and the to our no SMB large Also, Software in and revenue On our our got business other of are these

epitomizes quarter growth. continues higher to seeing saying and witnessed our revenue we company. first to The been growth transform what markets The through the we've as business shift as

that against and Our up financial making commitments results more financial details, that will deliver are the will through have a in we strategy on on progress to set take the demonstrate first for us year. I Stan and quarter that you our moment.

Earlier you sale portfolio, is supporting we this update Mail me Equity. let Mail on which also around the industry. Platinum then talk leader a now First, measure announcement this and ourselves. about by we to recent and week, The business announced Production the strategic software pillars its the Production in our of

for and but This to well businesses. as example. our addressing many This we'll not Our leader to tie a I value focus our does is business create our said have our strong company. is and that strategic prime a review what validate this outside have viable in business is past long-term company. by right do the more will is shipping that times our market other a performs shareholders

portfolio the look decisions allocation said, at reducing sale balance resulting the it. plan That our that of strengthen of debt. go sheet we're with portfolio the further proceeds and being a use net to to from have and by to range to We relates as capital majority a continuing along alternatives broad we the

of us assets, not but reducing economies on This business also of we As an to and scale Today is our to talked looking excellence leverage important at three will from operational mailing also the we continue only going we company. to our we're on good see about our continue strategy Day. focus greatest our and Analyst clients. cash strategy, shipping and company's of complexity business foundation, Building generates think a forward, the experience one focus to and with for We'll and pillars profitable highly our our flow, foundation. our provides earnings portion that we core be clients. of about across

double me click each Let of on strategies. these

something In of complexity about has you clients, shipping mail sending is of and for fairly our logical clients. billions last XXX a easier of terms our of done that the nearly Pitney adjacency the that growing. course in a complex, When made we Bowes the shipping for us years, over pieces reducing for of think is market took was what it

see the clients and reduce have they as Today, our we value the because provides of we For sign X.X of helping longer offering. and billion that their for margins. are that nearly their the see and clients, XX% like quarter compared parcel continue marketplace like parcels of our saw cross-border shipping our with us, Newgistics with year, as In Commerce Commerce well increase to using physically first on we and/or than cross-border our X,XXX recently to This clients prior is note to due do the dynamic shippers we continue partnership drive more our lease pro the contract the business Also XX% we in season. fourth XXXX, the the numbers help and quarter tools quarter volume significant through this that multiyear to so first which shipping our up our shippers with our total from shipping quarter, for shipping to Services our long-term new supporting volumes domestic which saw the on and for a nearly forma products quarter, opportunity first we as their to domestic our the product, basis, in part with we Since needs. product included and the Services, we it, as In APIs is offerings complexity can platform. clients. shipped particularly, clients same the in retailers, In nearly long-term of the Shipping digitally is important volumes reduce additional end holiday are complexity with the proposition over those C-Series cross-border Global of SendPro grow new to grow. terms, APIs, have businesses applying One typically XX,XXX through our given is complexity helped largest strategy renewed long-term line. Program launching U.S. item that reduce eBay. units complexity we a

expense ChannelAdvisor, the operational a in value amount also In end several leverage done years, XXXX management to already indicators solid suite. while nearly we our our clients. brand, the shipping million of since last over provider excellence, with in have the new with a cloud-based These regard of $XXX for ChannelAdvisor out is APIs and are work tremendous resonating shipping this ecommerce strategic management will in investing recently of platform, solutions. their area We processes, leading and announced relationship talent. proposition that taking products, our shipping

We will continue with how with in our as a our operate to and operate we platforms, clients we drive in business internally. network our how and efficiency both partners and

track quarter committed to our of structure next continue years, another the and have spend results. $XXX to gross look on out we're will first taking two to at over on our which million optimizing expense based achieve We

in remain to as quarter. when the it of to will balance We continue comes first the quality disciplined evidenced our sheet,

of non-U.S. are we repatriating back As we in cash. million process approximately the mentioned, $XXX in previously

a have to the the near-term We March remaining cash used already and balance notes, reduce portion we'll our of repay to use debt.

further software Production addition, to sale and the we used a of net of Mail the the In debt. near-term majority reduce supporting proceeds from our

Turning and to experience. leveraging of economies scale

are leveraging XXX and APIs where Our developed data, shipping, APIs are businesses within we and external date, our how information have a over technology payments, created of we and that using location in-house. standardized internal intelligence, APIs management. great are example customer To and we

portfolio, enabling are Within across which contemporary we one the that is example competitiveness, creating products is as serve clients. Software of efficiencies A important clients, product a has our our Pitney Commerce and value data all Cloud, clients. improving to discovery the mentioned of this most on how we assets allows delivery increased good the platform. and our Data Marketplace, Bowes our Pitney Bowes of earlier, our modern And I and improving

of clients have with, hundreds for business thousands that decades. we of have often doing been We

value these new through what digital clients and shared from our a creating different nearly to a very technologies, We century. experience for relationship are we providing had done

extension to our services year. capacity of area to days but started service expand Early the through base for to clients in financial to still, up ramp an have quarter. we needs that excess the addition, is using financial offerings our client our fund the volumes first the shipping fund expect we In bank by to throughput

integrating progress from Ecommerce contribution growth, Turning it due also and results, delivered Presort growth saw strong our incremental to we our businesses. revenue as made largely we Newgistics which with Global very to

the a Our significant we over last work have years. of revenue done growth the is point proof few

portfolio and talent, has acquisitions We logical technology through end in in have also strategic and our adjacencies investing in to to capabilities, contributed markets, growth. addition which our organically this transformed growing

which our you We over and as we to against out to financial on of guidance. it agenda through Stan our update continue to details annual me that, the strategic With you is quarter important progress to take objectives. make achieve set long-term let the and turn Stan?

Stanley J. Sutula III

good Marc, you, and Thank morning.

As as the always, and throughout pluses minuses business. were there Marc mentioned,

markets, see to we In overall Commerce our with XX% for leaves to Services shipping-related comprising the of our financial growth year. results, revenue. the shift XX% However, quarter, us revenue total over higher portfolio contributing well-positioned offerings the and to first business continued

that Production first supporting Mail million. portfolio. recently our Platinum week, Equity me $XXX we for announced to to into entered and Let agreement to change the definitive Earlier a announced its sell talk software about this we

the sale are expect adjustment subject to numbers We this deal. from to These $XXX net approximately upon be million. finalizing proceeds

plan net pay that proceeds of to majority the debt. We also announced we use down to the

results. the in a its in still before Mail a annual and financial our As strong discuss you Mail quarter Marc second I other this to quarter, will to take our few as impact our the Production details performs supporting important note results. businesses. Beginning discontinued a that first sale. after divestiture to software items not of the our through From but reported as we be I through I first is are quarter results. and guidance Production are reported mentioned, solely our as and announced reaffirming reflect our tie go addresses have perspective, will business are operations. does updated well have The shipping There our

close and early our Analyst Global Also, deal is the group. Ecommerce are of in comprised quarter. now the Commerce as this or in late second showing we to Services third group at expect quarter this Presort This quarter, and mentioned starting as We on segments. a reporting Day,

into segment. Newgistics Ecommerce Global the rolls up

unchanged. segments Software Production remains The separately. group segment and shown SMB Mail Our be will

quarterly include results revenue, costs, our and Additionally, Newgistics incremental expenses.

have added our press we that statements. financial notice and EBITDA by Lastly, segment will you to release

as the additional measure operational While we profit of in primary use each of EBITDA believe segment and we the segment, useful economics way EBIT light look is at recent an measure we and secondary performance acquisitions. our the of more larger businesses especially our a for

going otherwise an to Turning talking non-GAAP measures statements with unless all and past, about results, about be as on earnings basis press noted, earnings-related and items, the talking posted financial in currency be comparisons Relations including Investor our cash the adjusted my basis our a to website. when can found flow. when our release on of Reconciliations constant GAAP in statements will on revenue forward

over million quarter, For totaled first XX% growth or of the prior revenue $XXX year.

GAAP and SMB grew related X%, declined charges at to GAAP transaction for cost, EPS largely due flow from business, announced predominantly divestiture. within Mail primarily in Looking cash the $XX million. was the X%, for grew million accounts million, free Production GAAP the year, cash Software to $X.XX. Presort Compared X%. EPS group, the of by was $XX receivable. XX%, $XX working Services to quarter. and totaling our grew revenue Free included largely cash timing EPS $X.XX operations prior flow $X.XX was Adjusted Services capital, was and Commerce declined

to of we year. addition, our normalizes order outsourced the discount made one large capture vendors deep which in to a within a In prepayment

in the debt our XXXX cash quarter, flow shareholders last million. to we the mostly by third to and reduced we by for of debt on our balance that than quarter we $X the investments to our quarter our restructuring had on XXXX partially repaying but at free million debt cash sheet. result $XXX Capital of million pay and higher used capital for end the paydowns. $XX principal first million totaled the common short-term our the in total repaid Looking repatriated. from using At Newgistics At year $XXX payments. expenditures dividends strategy, $XX March million loan million in term acquisition, was as offset prior fund we we $XX From our issued perspective, yearend our quarter, a debt million we the of cash we allocation in paid a note year, end level quarter, the $XXX the and in

the we end cash, During non-U.S. which $XXX quarter, of through repatriated over is of now million about April $XXX million. just the

repatriated debt to and previously, to use pay maturities announced cash of debt. As from will net proceeds also used down remaining recently the to plan near-term we the mentioned near-term divestiture we majority the the further reduce be

revenue growth XX%, the continued Global is from attributable performance compared by line grew On grew XX% pro Business revenue in the by services services to contribution Newgistics. prior at P&L, basis, incremental which Ecommerce. starting the as Looking driven with a year. Business item forma largely to

Support X%. services grew Software revenue declined X%.

of had profit year, of X%, X%, group. decline of and Equipment XX in of largely our which a addition the a to driven in million last Mail. growth our in decline is also offset driven by performance X%, the year. of to We from our of due but Production is of which in in financing Gross supplies prior was with partially not X% by half sales XX.X%. decline results This all by the declines rentals margin SMB portfolio of declined $XXX a was points the Newgistics SMB

higher offset ecommerce by from Compared in to was decline points million SMB prior of or of $X million half expenses SMB. prior the year, the and and SG&A of decline which mix the but other and was is lower an of portfolio was which Newgistics, year. X prior The $XXX revenue in SG&A of corporate. in due largely XX.X% was in investments the reflective shifting improvement to partially year, our

several Remember on to incremental We the is nearly two gross $XXX on to the to SG&A next deliver expense increased year, the commitment as are improved last and that up and than start point that have was over a our Compared by out savings X.X% years. years. already of over revenue. R&D track or less prior revenue. million good expense million percent taken $XXX in $X million R&D this we of one million to a of $XX

outstanding EBIT $XX spend points, XX.X%. year, $XXX was and to prior $X declined also advantage due As continue the including Interest to prior our XX.X%, declined expense, was debt taxes EBIT issuances EBIT our new our margin by million year our last mostly expense, year. redemptions portfolio margin than primarily opportunities. by attributable and about X than decline. for The is for million to markets, growth over was earnings and the provision of X our and timing of within the adjusted about X year. was rate shift about prior the of which Compared on $XX $XX to shifts year. these tax was recent than we at driven the to shares XXX by which was is million take guidance points, the gross lower which quarter Diluted interest end higher prior higher were EBIT legislation million, profit changes million, R&D to financing the tax million weighted million year and shares

business performance the discuss now me each our this quarter. segments of of Let

incremental million, pro over EBIT of $XXX prior EBITDA from and over of full was over forma the EBITDA million, X.X%. year Services prior revenue $XX Commerce $XX $XXX XX% revenue was included XXX% which for over and Ecommerce, Global the a margin revenue grew year. year. was In quarter prior Newgistics. XX% million was was which On group, group and EBIT margin a XX.X%. Within was revenue was of growth growth basis, was million

in a delivered on revenue fulfillment benefited performance Newgistics, both X% volumes. pro from and and its forma growth basis, a parcel strong

Excluding Ecommerce both which Newgistics, cross-border driven grew shipping was strong in revenue volumes. Global by XX%, and performance domestic

quarter, first the operated through norm. well perform to continued APIs shipping our Our platform stability the industry and at

mentioned, was million market was year holiday Services, over the Class revenue quarter, initiatives X.X%, of of growth margin network revenue of and the Presort given optimization, with and lower operational drive simplification, primarily $XX over was $XX flats Within volumes automation, initiatives by margin long As prior a EBITDA is partially prior term by and processed These year the higher opportunities operational negative was more prior EBITDA along from our API was million, to of XX.X%. which driven in areas was piece, included from volumes intangible largest than margin margin will million, mail million for EBIT technology X% largely revenue processed. upgrades. $XXX transportation as on driven quarter higher and million investments First year X.X%. volume growth and improved Class season. per compared Newgistics the our doubled typically volumes and and growth. to $X strong was which quarter increased first which offset labor and costs. excellence the EBIT also EBIT EBIT of is mail loss a in XX% excellence driven Standard by but was was margin was by amortization was profitability. EBITDA $X an EBIT fourth assets related incremental XX.X%. acquisition. EBITDA the decline and The Marc

largely declined lower from and level sales products XX%. million, a top was term which to of for due Mailing X% lease the client line EBIT was was EBIT the extensions. of and group, Within decline which sales was the Equipment was prior of and $XXX North margin in million long year. decline a revenue our was EBITDA was year. EBITDA within from America lower margin of million was XX%, SMB group X% which $XXX was revenue a range. $XXX prior $XXX million, market

We higher where also tougher equipment sales prior had a X% closed grew year. that last to amount of due a year compare deals large partially

and revenue full revenue revenues. of to lower the EBITDA staffing partially recognized attach overall year favorably of the In new good EBIT benefited timing and largely rates, over also a sales while is we by X% but impacted streams make our by from margin XXX. due streams recognition expenses. quarter, million experienced Software million lower by which $XX ASC to of and Mailing, printer offset the Solutions, million from being and financing, revenue sales, $X was $XX a Revenue $XXX of addition, expect was streams prior to margin our margin XX.X%. timing $XXX not inside standard was declined largely progress revenue recurring average the decline. in with was ASC EBITDA material. remedied a Equipment to was offset we XX.X%. mix to longer Recurring Recurring to $XX decline margin year offering, million C-Series by was from was continue year. in which quarter. EBITDA revenue of EBITDA which the important note was the quarter, level margin and year. SendPro the of company was of UK terms $XX which in result was we decline lease EBIT were France. quarter, EBIT was It's and Germany revenue of low partially impact as and was Throughout declined XXX XX.X%. $XX EBIT million, million improved quarter service prior during respectively, the do legacy be throughout this In revenue largely the contributed recognition. growth driven million, the was year or growth from margin that implementation around lower and The weakness International rentals expenses. second products. revenue equipment and higher payments the of was with The million, sales by reflect In prior prior X% XX.X%. the Results and relative EBIT driven

declined revenue lower quarter. the year of from a impact, in this level Excluding by deals prior driven large

Equipment partially was the a deals. indirect was level Software over X.X%. revenue The was prior In make and X.X%. in Mail, million X.X%. EBITDA was by Software's digits upfront revenue lower $X the printer EBIT of relatively is also the by year double of flat revenue mix which by license was and the margin driven year, offset to EBIT growth million $X from to $XX sales. products was and was the progress margin XX.X%. year. SaaS to equipment of by higher placements. benefited this revenue. higher revenue overall and first EBIT pipeline offset in The $XX Production sales margin margin from but EBIT quarter, and million impacted X% $XX improvement EBITDA growth grew contributed was million EBITDA partially the was driven continues was inserter channel prior was performance and margin deals within by million prior margin was quarter. higher EBITDA over The XX% and

now update on Let guidance. me you annual our

solely to As earlier, XXXX, reaffirming updating revenue guidance are software. million of I generated portfolio annual two In in annually. we sale Production its of and Mail million pieces $XX of $XXX it the mentioned and supporting EBIT reflect our and these our

which portfolio. portfolio. our to allocated recorded $X as sale. its to expense million Mail will all which direct currently portion existing to is well support financing areas costs and with is of to are our business expect software Mail continue business, shared Production within about Production transfer and is in remain of of as of that the in important the Bowes with will supporting a services Pitney the order revenues there It Also Software associated segment, We to remain cost with other the note our that

of announcement or to Mail's the than offer transition to first relationship CSG. service a Equity. with profit costs our expanded of TSA a quarter ending the with we given expected second quarter better agreement From recent Platinum perform with expect perspective, with the business's Production along we those However, portion timing backlog

and of revenue that is is related the note that by spread be quarter. the software Also, that sale after supporting closed. would In the earnings commences the deal part evenly the TSA addition, that is expectation to

further previously, to net of the of reduce plan we details the upon will debt and to the near-term maturities mentioned As transaction. proceeds provide use additional majority a finalization

and and impacts guidance announced of year consideration, currency, Looking to be the prior growth. our each the XX% compared into excluding the range at taking of to of now revenue, measures we to expect in divestiture when XX%

earnings We per to be of $XXX the $X.XX expect now $X.XX. be in range to expect And adjusted free now flow in share the range cash to million. we to of $XXX million

Our remain to reflect adjusted and the only Production tax rate sale to on XX% earnings the expected Again, supporting guidance software. of in range is to XX%. the Mail its changes the of

second to close the in line. your third please questions. quarter Operator, we'll customary take subject that, or in We in closing the transaction conditions. this the open now early to expect With late

Operator

Thank you.

First line Ananda Loop Capital. from Baruah, question is the of ahead. Please go

Ananda Baruah

guys. morning. Hi, Good hear okay? Can me you

Unknown Speaker

Ananda, up more? little speak bit can a you

Ananda Baruah

Yes.

that another sort little taking businesses on provides a the and for Thanks. the move. helpful. Could – be as say Hey. actions guys going you forward? the for today the prepared the Thanks the synergy business sort client just the of between business mailing you exist but, strategic That really, see question in congratulations between the morning. the units the as import and between them, opportunities you just could business would going remind you. you operationally them us then You Hey, about bit of got view how overall remaining Good it. and to maybe, they Marc, core connectivity I'm the opportunities talked synergies that exist remaining it remarks of

Marc B. Lautenbach

And one Thanks. can't question, I on. often that communicate it's enough think an we important

perspective, in much portfolio was mailing secular we that think little market about you if going a in all a of decline. pretty company XXXX, So, historical a were the bit through

in of a to As important mailing, certainly company. a we as that continue got still in sit chunk today, SMB. But big will shipping our moving to business We've well. we're mailing we're be

to markets think we're were going that portfolio that markets we're secular mailing declines from So, what are rotating if you through doing, growing. for to the shipping about

SMB see shipping that synergy. with be So, is which would first product feature. very a And has CSG new you (XX:XX) the shipping in multi-carrier that unique our

Services. in see clearly it Commerce You

see it in Newgistics. You

begin you portfolio. this So, the coherence to see across logical

So, opportunities synergies like that around other all around around create libraries, of to carrier us gives APIs, technologies. kinds

we'd you important our mailing again, are common Secondly, we identified our, to be addresses. what Obviously, common of Services as or clients, the to delivered around via put – Services. you shipping. get to really Location economically that relates Intelligence had call and well addresses the they it's and we've is broadly is synergies. and I'll Services. talked example, it can the (XX:XX) to and we're for about Commerce obvious use chassis, SMB, that, doing denominator. Software-as-a-Service of Underneath begin But Many and more perhaps Commerce in but the when in not import also whether decompose chassis, you're more a portfolio Software where Software, Commerce through Addresses volume able We CIM. a most functions, the the example, that, significant

shipment. business allowed – has address us when has the The So, higher that reapplied technology in read a address technology to get to that higher was developed in conversion a allowed get a Software for technologies customer their been is ahead rates. putting Commerce our clients to Services

So, we are in more depth, getting lot The see and create multiple ones opportunities talked I'm a different to haven't that excited more is one twofold. we which synergies. about about,

between our network. First Presort network synergies of and all, Newgistics our

of one is with XX of mail repurpose synergy Presort also And, pieces moving these look broadly assets tap. shipping, to it our to dependable I and you As would that to billion just all important. know-how able point at about world beginning of being to would Newgistics with able we're so shipping you and economic the USPS, to forward some And businesses. an offer if say of I our to kind going the add being packages reapplied the incredible and think network relationship is

Our relationship with USPS is critical.

going we've way a So, to be to of to that of experience, accretive We've our and are businesses is working strategy, caught specifically, another. we're which up economies here. economies fancy of play within that a one about ensure just scale purposeful these called saying

We've thousands credit a which opportunity hundreds outlined to So, extend a other I financial into just going great a comment But Day, the answer, capabilities question. market. but services. that of clients. got credit on, the good to relationships for GFS. Stan move the aspect, fund is more as on long-winded great apologize and second markets. GFS reminded used got was to with of which into it's we more, let I sorry, We've Analyst capability, great capability know, We've we me just was meters. see I'm in capability SMB that principally to me,

question. the for thanks So

Ananda Baruah

Yeah. No, was to context. also. up appreciate all And on with follow services question a going I actually, financial the I

So, you sort there stop great. it. no, cede floor. you Yeah, that's got Thank much. I so and to I'll the of just appreciate

Operator

Okay.

line Our next of Mehta, Research. the Kartik question ahead. from is go Northcoast Please

Kartik Mehta

Marc, the and you're thought buying for proceeds thought wondering, shares Marc about using the in morning, given back Good that of the about pay-down. Mail was board And Production which and and what Hey. debt manner talked is, in to you stock you and maybe the using business Stan. how them? the proceeds where I'm the considering using

Marc B. Lautenbach

to so to long-winded and I think want indulge transparent moment we for answer. it. that important question, how and You a rather you me I sure about complete is can This have a about an give make we're

capital. criteria. that to organically outlined investments acquisitions and March where priorities Day We very you take talked to our I'm So, going back through conformed first then Analyst X business in for on to the financial we rigorous about

third grade deleveraging The the was cash second the sheet ratios. of the priority was of dividends. and principally shareholders achievement over of return to through long the investment term balance And

after last sheet. to we the that it's history, particular, priority a when September our Certainly recount fairly that make Newgistics acquisition. out a told in I'll earnings then, two for events? the point asked run for balance we told be the to gave similar market call of litany it our do fundamental a investors, to finally, similar debt Why would points. answer. through to deleverage I not money back I raising And question and were and We broadly You us

what prioritization about is. our of clear The first capital is we've been very

business. terms It's that's in I from to a an terms think allocation. turn understand important investing perspective, also candidly what on running of in you're investor capital hard in. dime of important to It's the

about we think five-year period. As time think we allocation, over three, about capital a

that's So reason. one

simple think do very going capital the is, question you you is the prioritization have do, it's to that that But point do level the do. is a level, to at why you're I broader answer the allocation is higher think important and and of say is this. you I Second what this,

growth, that's example If As we an I portfolio to kind would of secular to for had use another so if think around to declining illustrate And the growing is you the that we create XXXX flexibility or go going going is I'll the point. principle interested, opportunity. have – XXXX, portfolio Newgistics from that we portfolio capital to while. flexibility. to able about raise the a incredible towards where didn't it, today, to at missed move We've the have to opportunity. which the were was we're asset get buy to think wouldn't moving then been money asset, Newgistics was are to to we a XXXX decline and we X% be had looking We a allocation

importance I use as to example moving you're the to and that company particular illustrate flexibility of transforming So, growth. the

preferences investor. it. true I And it you we in. to how is in know capital all if terms I investing debt And at the allocation. different understand This a investor look be transparent equity an I that think what important that's of it's about so think you're So, or you're

So it is growth. the comes our future, transform question why to a is, logical my up. success And evidence to objective the that I it this company, move is is that, that I secure principal results. in price adjacency. But Shipping stock get think where the with of

acquisition, business but lot about million, five for Ecommerce a you less the several business whatever it than was. through If a ago, was through dollar $XX growth sure well. organic it million, years it million now $XX partially as It's think started where hundred

You look grew that X% at or Newgistics, XX%.

investor that results you're a delivering on company with a management perspective, perspective, capital growth team from So, logical said areas. that's from how about and with betting is consistent they moving adjacent this into you applying as think an a a market to

So, I point. a think it's important really

I debt leverage about September. investors bunch do. we're what But so clear would we I balance decisions in they think important what our that want are sheet really a about to investors it's told of motivations make that can our

important it's think I to I want do going what because to that say you're to continue flexibility.

Kartik Mehta

see discussion, a where the is or flexibility on and you the or all and at And Global grow a maybe that as you or is that be broader flexibility? Marc, the you reflection think this about is it covenants this are probably debt reflection Presort, where buzz. strictly you a on could Are appreciate other Ecommerce areas opportunities, worried other EBIT? Maybe, I in because revenue

Marc B. Lautenbach

covenants, the And a of about let me broad but points. make couple talk

We $XXX cash. million of have

of not are got cash We poor. We've cash. plenty

sense can technologies we organic motivation that move out are cash see provide that would to make affords buy. see we is strong – market opportunities the the develop do. think or are we We not so shipping continue need we what I in We a said. It do to But Our around either what capital some network. precisely allocation to flexibility, flexibility to and continued the in building is internally position to us to we grow. around

Stanley J. Sutula III

we're of Yeah. to with this It's but around the issue is And the were do everything quarter that proceeds, quarter. below be we we amount financial going debt million saw down in we'll have significant it $XXX form using to is with repatriated, that back first Kartik, around slightly a of Has around to repatriation. said able flexibility. really to on combined you an whatsoever. do in repatriating not the roughly the covenants And with take levels we to successful It nothing maintaining strategic XXXX has on covenants, covenants. just first Currently, year $XXX million over cash flexibility.

Marc B. Lautenbach

why at do. going about Doing reason care The do investment need It's to I you're the of altar to one the saying I what about ask you're grade ratios? what other have we're flexibility Let to do I me, you want is often Flexibility care abstraction. do make point. mathematical me People important. investment grade is some is that to not important. ratios bowing

Kartik Mehta

Marc. I appreciate it,

– it right seems would Pitney to perspective Just great for and and the is itself be best now my back take shares very investment Pitney would be like some you accretive. for to of the buy proceeds

it's at a you. conversation So, thank longer us to but another for maybe time, have

Marc B. Lautenbach

of invest with to great to agree I that respond in. just me businesses have we extent Let to the a set you that.

that's I say look at to broad think as deploy certainly I level, a and stock persuasive the the at this most our it that So, But look opportunities see investment investment, a array we isn't, – capital, at to not I things. of persuasive that is.

you. it's can compelling move long-term think at we the secure in the to a do to best as and to is thank for growth that enterprise. be the great level. But we I And this going that buy future. invest most thing we for best But our that's capabilities shareholders need our

Operator

go Shannon line Cross, from Cross question Please Research. ahead. Next the of is

Shannon S. Cross

cash for as number I get How of Hi. how a prepayment onetime cash much did Thank if quarter? this or you trying have was much Just it's that services? of my magnitude very Stan, a to impact much (XX:XX) questions well. taking flow question. for couple the a

Stanley J. Sutula III

Sure.

a it's good Shannon, So, question.

business, two-thirds cash we we (XX:XX) is remember, go at on those about by areas that, within short do that And take year-to-year a of you normally normalizes prepays, IAR. a take predominantly position go it if and view a this we term money that. the clients saves down the but strictly So, then And year-to-year. into a after And which either timing deficit issues, or look about look, grown cover, where timing. was if the that driven free as in we're discount this of don't us about obviously flow, on $XX And postage, a third was Presort. look, year. compelling it's we've we'll We prepay, delta. that And million

about to So, related year-to-year a that you think the could third prepay. of

Shannon S. Cross

Okay. then, Marc Stan, Thank don't care. I know, you. don't or I And

dividend think now. terms I In dividend, right the yield at a of X.X% you're

I you You to well. unfortunately, sometimes due Obviously, do are and to company, payments things Marc, capital but I growth when to of thinking a how sold a had dividend. first as mean, the company the in, you cash. transition you about shifts the dividend that to came structure arguably generated more had think, you you cut as

as curious your I'm so just thoughts there. And to

Marc B. Lautenbach

like reaffirmed my go the the an a especially equity marketplaces you We've got important was it think question, of argument should that but kind with or at premise be because I multiple question that you're gist sounds an business, I I'm very question it's thanks question the Yeah, the the and fundamentally similar similar follows: was question. Day. for investment of I'll transformed growth a the going my Analyst have to growth answer. we in monotonous your the as a and dividend. we perspective of answer therefore, business. think to that from rephrase was competitive

is. dividend you a that what next at competitive As informs level, think about what the

is first competitive The you are peers. relative to your

second change. is company. of the the As point net the And your size calculus to your peers change, the

becoming over make company. last we'll would of But progress I I we We think that terms forward. going So, right in the now say in-flight growth progress several a quarters. are made more

out, becomes more at the and the proof As we the on and capital points relook allocation market will that apparent of put if our inevitably size priorities. the we settles to board, company

time. be So, But point question context it's we the capital so the I to appreciate the little of your allocation fits now, bit a in to kind transition, more happen at Right fluid.

Shannon S. Cross

this do do of – you. but year or strategic is as sort look the point? are you Thank at all last and at throughout play all the of this how together, and of that, I options question, you we'll things announcements be mean, think steady you And Presort just sort the I'm know a like I curious, pretty getting

Marc B. Lautenbach

start Mail, not to – Mail. the any on not rumors Production Production Street,

Shannon S. Cross

Yeah.

a apologize. day. Sorry. long I It's Mail, been Production

Marc B. Lautenbach

I work you know awfully what That's do. hard. you

So...

Shannon S. Cross

Did you (XX:XX) Anyway... see Director's announcement? the

Marc B. Lautenbach

Visentin. My John own colleague,

Shannon S. Cross

just going Yes. my so back Yes. (XX:XX) but to I Anyway, – question, apologize

Marc B. Lautenbach

the in think value evolving I the to evolve is portfolio evolve. marketplace. to – to it company evolve see where we So, And be will and because continue will continues the will

acceptable laid how think terms in returns. the about out pretty coherence, in specific leaders would we we So, in of particular, criteria strategic marketplace, divestitures

at the all look dimensions our time. we across So, three these portfolio

we going about will think it any but it. not transparent how particular about I'm So, to move, foreshadow be

Shannon S. Cross

so you much. Thank Okay.

Marc B. Lautenbach

a day. Thank you, Shannon. good Have

Operator

Next question is go ahead. from Glenn the Mattson, Thalmann. Please line of Ladenburg

Glenn G. Mattson

morning. Good Hi.

with you in SG&A, to company Mail, the I be by you're going some there's has planned it the to something. you're wouldn't cuts but cuts guidance, add cuts extend as at that be sale in why a those SG&A, point? wonder, to there given I smaller been of size or or guess million this going some Just smaller relates Production to $XXX

Marc B. Lautenbach

a Stan been answer sell Well, obviously Mail contemplating on been we've I'll but we let I didn't mean for something whim. mean, It's Production while. I a

a $XXX to degree, our the So, of gross million cuts divestiture. contemplated

to continue at sure is deal costs we stranded that work TSA with The and that number that. We there deal you whatever make be. agreement it's of appropriate with to how might important that aspect

on but for internally, processed in synchronization working different a So, these I things a get understand been of bit. externally kind level and this we've

Stanley J. Sutula III

our it's as know think time, a least recover. here the gate, at take number $XXX we performed which slow really opportunity $XXX we units and were Production lot those we of well our obviously, opportunity. leverage Mail, care the out stranded a If there's is first we think has with on first costs But hard and looked I And But when have continue We're of we well. look the done signal Yeah, in number. of out I track is – this what processes, right on do. and are and we've we first very million. quarter to looking total to obviously million we look actually quarter. incredibly as $XXX as investment at still we to over think that the systems to million, have That is – the quarter important a Glenn, big

better business. our into insight So, is is bringing what this

we down there with through, go better target, improve urgency processes deal deal clients our our speed not and we that As we the competition. just evolving everybody extend come of how we're how to how We're serve a with out straight our X. looking and and into market with

the start. very leaves as pretty So, But well. positioned we're We're look to candidly get a will big good more, we number million confident at we in get more. that, off us very the if year a $XXX and well can attainment, we is The for $XXX million. if

Glenn G. Mattson

Okay.

mentioned that levels You of that, expand on had you – some the guys on on the on you the inside staffing please? inside lower Can further business, SMB sales.

Marc B. Lautenbach

markets particularly look little our I under bit We are mean, up United very a labor now the tightening. April, our you I think experienced all States the we has if of read Sure. newspapers, we as see that SMB low got that particular, unemployment, a at We head in facility. Spokane business on a ourselves count. the horse. back in they're in and back They've dose staff

Stanley J. Sutula III

well a new as there piece. in particular We leadership that have

Glenn G. Mattson

what SMB little – was back else you there of one the or that than do business into And the weaker can to behind was the a expected factors (XX:XX)? get driving that continued

Marc B. Lautenbach

to staffing is well think an SMB yes. important the to We was factor right new business. as That right answer getting your is the the combination the decline combination. as question that the the contributing product of of So,

the pricing strategy offers product possible that our rates, the highest that ensure tools and fine it's tune right of fine of the to right basic kind tuning recipe got with we've to have the think the kind on forward. just we continue pricing staffing We conversion we but going with the is

Glenn G. Mattson

think of then pipeline can you that Software, And some background the mentioned pipeline the out always channel when rates pipeline to nice, to XX% I talk you to just the of the I indirect sure But that but pipeline moving one conversion of that? XX% around and Okay. or quality contributed I guess thing stood growth, on is about that. and just over wasn't

Marc B. Lautenbach

to next to was So wrong. me if pipeline. relative comment I'm me. the sitting Stan's He'll correct

end all to So, pipeline point, what is the care is about dollars. we in interesting your but

pipeline, wouldn't those but it's that without have we indirect we without that think channel, partners. as about not So gotten just the dollars dollars

produce measures that not total have we we should think in is how channel So specific only very of incremental. but what

and this macro with to pipeline the particular is anything quality two, The second renewals. than very statement lot the one. – Point a of have a a do high of in is in of pipeline we terms point the of the quality quarter that's So more channel. because

are amount We unusual that not clients agreement familiar software have the renewals, license of for have which those the the with means business that expiring. an who is

an is is impending salesman's there which dream. a So event

more We is would quarter way think we're the of channel So work to being deliver say very broadly, this a particularly I the the still the the can But prove but about all this still second of that in it said, process. the remainder that need in pipeline, can. in year. optimistic quality I

do. we've So work to got more

Glenn G. Mattson

with they pursue public this Thanks part of was guess to on and question, for which of of the that. of then the decided you that recommendations study? And overall did, strategic share recommended on the the more last of or you from guys you study one about sale I I this the recommendations guess and to The at maybe investing just I which this recommendations the the extent And depth business, Lazard would some guess was outlook. point what those how in ignore?

Marc B. Lautenbach

had Candidly, that the that it Mail end is Production six I thinking isn't do just been for mean, I little we've be to years and about months. circumspect several it's we your user something market growth been of the a sale last over market that the overall something about I'll and evolving. with But thought how question. about answer of how the

So, the dynamics of buyers like marketplace. that's great of being our that opportunities, are That given business describe under but not as business to business. consolidate. end particular it, acceptable going as ever said, but of to it's that we inside the a that with capital got technology market the We user flattish pressure think get has that's, we margins begins that

alternatives, internally think would was about for that we and got both really is went through decided conversation externally. and with asset. I strategic board this So, say, we as price the the right fair one good the timing we the We a

just I better do to going well outside a is think do in. this it's of will think company portfolio forward. the really I going than and great

Lazard. alternatives. the specific not talk that strategic from about we going will recommendations to I'm that, recommendations didn't clearly about any thought ignore say we Beyond I any as

Glenn G. Mattson

Okay. answers. Thanks those for

Operator

next question from Klee, the ahead. Please Our is Sidoti. Allen line go

Allen Klee

Yes. Hi.

you're terms granularity are you seeing when in them any to if can going coming to it's how going about of SendPro or to of rentals American just with declining meters, North SMB, think renew of the terms For – or expectations? provide in your kind in postal postal what due meter of with renewing buckets and going that's

Stanley J. Sutula III

Yeah.

haven't trend as come happened. So, when of say renewal would time of the they clients changed end, come on up, comes a materially you I get renewals, in what mix in, towards terms the through

XX,XXX So, we've need the and if take portfolio a certainly the we would over anymore, demonstrate existing are what shared gives the have there then which time. up, client doesn't options there. over ideally, And there sold transaction, extend of. trade success our we've new need We or then we client that they that they meter extended the our for are their SaaS profitable the product, had they to and is of C-series, advantage And also client cancels. online lease

If the we I'll X. consistent through haven't don't we a lumpy equipment that equipment at XX, say we talked plus America They through would going bit remind that minus change I pattern. XX, grew year. materially. North last sales plus And seen looked year plus are And quarters, we time. sales. a little the follow X, about is So, the through just

that in at said, take here, lower think contributing as And look start the in factors we're some when staffing this XQ. Marc we the a a be is solid we and we So, of look at here to back first off and quarter better temporary, will shape. with

Allen Klee

do had Okay. debt sale Production and questions. this Mail two forward pay Thank repatriated I of the how One you. down on additional rest the modeling-related you cash, was to based going expect for of much year?

Stanley J. Sutula III

and the that, of said a we look for short-term Marc take if cash Allen, question. we have thanks at investments. million $XXX So

Production approximately the $XXX to going Mail. sale million we're of So yield from

we we recall, to redemption for over of going of done cash course, to have repatriate million. we paid for here $XXX if are generate take cash free of quarter the levels you and put all free to down said where million would you just $XXX We the we already $XXX we the That that year, just first remaining of million. leave million level us If to $XXX down cash you down debt cash together, a debt. March have $XXX were similar $XXX incremental flow, million around million. use We've look year-end. now that at with pay $XXX that dividend. approximately below flow When we'll at million to And of our and near-term XXXX

also lots in So, market strategic a to near-term of needs. the certainly reduce to in anytime but parts our there flexibility and sheet, need deleverages position moving our with of be out any near handle future. of the lots balance in It leaves that us helps the in

Allen Klee

Okay. Great. with Mail? Production is much And associated how CapEx

Stanley J. Sutula III

I amount enormous Mail. is, think, low-single Production it an not digit Where There's the millions. in of CapEx

businesses. of other in combinations bigger the our So are CapEx

Allen Klee

the Great. Could a then us tell hear kind it's grown and sequentially ChannelAdvisor Okay. APIs, ChannelAdvisor little see? encouraging other maybe and outlook And about more XQ your of growth quarter. the how and – you partners does was a off kind tough with it your you biggest of off what maybe to

Stanley J. Sutula III

APIs. higher on of first, level like So little shipping bit it's a a

We over is continue So volumes, here. we took the growing to an journey momentum business. in which continue that peak, I through of this quarter to gives gain XX% think fourth you a indication progress make year, last we you

at look XXx. up if a you the we're almost fact, volumes In on year-to-year basis,

good talked heavy trajectory, platform we issues in we print about improvement off as significant about you And at ChannelAdvisor, our again, and since We're industry in that and a that's stability. we a And attractive we reach. investments a model the candidly last coming plus But ChannelAdvisor, here to haven't types with summer. extends tracking, stability It's labels This whether any as from us exciting with as ability both brings think experience, an a that's opportunity services think their it I really performed well with of capability, we lot So partners. all the other other know, announcement offering, the excited deal Obviously, norms. as extend think of very price, a for here. shipping, eBay. with returns, it's we of our clients, a offer Newgistics. really they stable or to bring platform

Marc B. Lautenbach

but levels. ChannelAdvisor packages. marketplace, great excited versus They the at have a just not don't transactional Stan ChannelAdvisor, the they you just partnership tremendously different lots look a about access fee, is add, the business will broadly I reception charge it's model of industry. level. are at because They They have competitors charge others if advantaged a so in subscription is than and transaction to in where they economically

important and Hard They're they So, their of to great industry. great competitive one importance in business model market. differentiated incredibly an we a to access I the announcement. the is market, the access have others to initiative the versus They in combination with to that underestimate think company. think have model. that advantaged our APIs is their their And an business access packages,

Allen Klee

Great. Rucker anything regarding can this on and you have Okay. of some ideas. question new Cliff that? related is potentially there that Ecommerce mentioned My you hire the create can last expand guys Is

Marc B. Lautenbach

Listen, the Cliff's experience tremendous say would whole. as industry the with of USPS a executive. comes wealth He and from a I a

So, so, we're It's he a relationship with of brings our proof excited. relationships. point USPS He further brings knowledge.

out. pointing that for So, thanks

Allen Klee

Okay. Thank you very much.

Operator

questions like queue. to Mr. make remarks? any Lautenbach, would additional Thank further No you. you in

Marc B. Lautenbach

of the want with just Sure. we I off that entire because had. conversation last to of the question comments build Kartik's

We see money about. That's business. In our extended right get on like we tremendously Would our that's of what earnings means for As we're question capital, me lot investing not how value. technologies behind ways, now. we optimize that executives' for about in creating share a would several capital but we excited putting We're didn't some expedient or long-term relationship didn't to year, probably to just to work. this APIs. which about it investing put be in deploy our the buybacks a To mention years. we're contemplate Kartik's eBay with opportunities point, us, our to

shares about with business. the we kind grow back as continue and going got our themselves that to I've in we're too need in think companies not capital, So, buying that providing to invest many hamstrung business. seen markets growth of they to their flexibility

an others the goes new was we of It it balance quarter important are about proof this along year. we're quarter, moving first the with point. I'm So, relates positive as that to markets positive more as to. the And first

talk XX we'll and you to in you thank So, days.

Operator

Executive and Thank while you. TeleConference. gentlemen, Ladies conference. does joining your do you We conclude for thank using that AT&T

You disconnect. may now

Pitney Bowes (PBI) 2 May 182018 Q1 Earnings call transcript