PBI - Earnings call transcript Q3 2020

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Operator

Good morning, and welcome to the Pitney Bowes' Third Quarter Earnings 2020 Results 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 your speakers for today's conference call. Mr. Chief Mr. and President Lautenbach, Executive Officer; Marc Stan and Mr. Vice President Financial Officer; and Chief Sutula, Executive 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 risks 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 operating a with remarks. President our will Officer, Chief and Lautenbach, Now, Marc Executive Marc?

Marc Lautenbach

our in to have decade, And we call. quarter. continues in of Thank double organic good turned Overall, while is the times. proud the growth everyone well over second revenue a This challenging numbers. and and joining an facing in especially We growth the some we what rate you, Adam. that accomplish, achieved XX%. solid put not rate extremely I'm thank for you quarter a up team saw these grew

we spent our growth half area conditions, investments Although in off revenue. of the shift well right recognize taking why rate, necessary comprising making years to and the those our which advance opportunity current investments of with the several complements actions contributing related environment we growth the paying is that in is to current large accelerated our revenues to shipping our the shipping overall last portfolio. this And our portfolio are

seeing all the that still adoption. pre-pandemic in post-COVID is marketing where shopping will not in habits us. and these a to survey surprising consumers, What online, is question However, more results in now so been communications they remains conducting see of a including for areas, look the do U.S. gauge weekly of habits with their environment. team world? changed, shopping than like the on surveys we ecommerce has are and nearly X half Our which several post-COVID market, what that consumers it show Based XX% have of they how times

the performance. successful of to that last as But five know certain right. products in the the each a the in up remains dramatically, results the experience. are that it’s clients from to we over and consumer Stan experience. While look that have the the adapted duration adopted your post with a have invested our revenue sequential doorstep fortunate will terrible get on only this of our changed market buying, And our showing for details to turned has quarter-over-quarter this can an retailers pandemic is perspective, at purchase online unknown, the environment help business strong quarter. Because how afford area and discuss to months, the of and important segments we services given shifted be do consumers has

it said million year, quarter, this is calls, I which a prior over know of XX% I've but grew business first business. revenue for on the ecommerce exceeding Our $XXX in prior this has is repeating. generate barely annual ago, XX%. over and business for billion $X.X and track year-to-date on bears over in that to revenue, eight existed is us This grown now years a

continue resonate us. a services of the number number front that to with share clients. and An taking as indication process our parcels of significant value we're opportunity in with new We and a sign more still record proposition market of

become As which we more We're that taking in a team the discussed last the volume is we the have years. us anticipated prepare focused acceleration steps of a holiday season. in us work achieving successful and peak front demand bringing of level for two scale originally But quarter, to more to efficient, is necessary to on. in we

the few clients all another, peak signed know be three new holiday and to holiday their flat helps running announced pricing. we market, Unlike months, how of facilities shipping increase Over for in that we costs. others a the easy peak of which will upgraded on the our some use leases simple, we understand rate to course last and budget for

and be SendTech our businesses. to quarter-to-quarter the would easy Given improvement the it performance overlook of Presort ecommerce, in

We’re their investments us product in equally we've interact and to our ways leverage we these new channels. to clients over new value investments in find These Within last well-positioned businesses adding the money. and and with SendTech, years. made focused to offerings invested several conduct and by have saving business allowed

XX% channel, X,XXX we is year-over-year. through increase of As clients which quarter, acquired in SendPro nearly a result, digital our the third over an

We and are building shipping that new capabilities subscription-based. and more new and out financing, revenue are streams around delivering profit

and grew in at for for subscriptions shipping We XX%. revenue offerings capabilities, take over rates grew shipping activation continue our see double-digit our to rate a improved our paid which

sales revenue prior equipment We also versus saw a the of nice improvement improving quarter. with in level placements,

We very business fourth of And the which we and within devices our that EBIT model grew Shipment are is quarter, important have these devices, range. quarter entered in mail nicely us. long-term margin a placing been healthy a turn the for in continues backlog. finishing to strong market with new now this

and from our improved the overall SendTech's capital the allocation in second to our expanded the revenue revenues a in shipping essential cash, creating we're across delivering fourth our space, similar improving thank Given continue to business clients partners also contribution we and into our progress And Mail and this Presort, Flats. doing are remiss Matter Printed is around decline and strong Bound the improvement this strategy. quarter and Presort and Marketing to what we’ve bottom-line. Services didn't and portfolio making we In improved momentum I our would SendTech, profit for top-line margins again, to continued quarter. Overall, the I new expect stream if be employees, alike.

highest and we health safety, continue necessary take around Our remains their all priority actions. and to

very remain a this season, into of holiday head be important diligent of safety. mindful everyone's we and as will most busy as Now, we

mentioned our our that is of company of hallmarks As one resilience. before, the endure. I And to culture has enabled

positioned we that, turn how come over where at from to Looking entered. longer let we we will it Stan. term and stronger perspective, that I of convinced I'm a me out we this With pandemic are like are than much

Stan Sutula

Thank third improved morning. Comparing EBIT you, Marc, doubled and dollars. quarter good revenue the growth to results and our we second overall our quarter,

to million cash we about flow revolving year, $XXX million generate strong And quarter continue the prior the repaid growing at over which drawn $XX We against in third credit year-to-date. facility. $XXX puts million us

as we drawn down in a reminder, up. against had COVID purely ramped a precautionary April revolver measure when As our

funds, in the current have that and repay prudent generation, quarter. we the flow cash third our for need it no was it for Given to us

we focused providing and employees play moving COVID healthy environment the safe well communities. see the effects We right out expect on of Even gain momentum We the clients, our in across to a business. direction, as impact, and partners as with are quarter. the continue our in COVID and remain for we fourth to

of the quarter. through you Let me the take details third

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

operations the EPS $X.XX quarter costs, includes of partly XX% a and EPS insurance third million income. capital, flow year. around due cash by accounts were year's which COVID-related cash last quarter GAAP working cash largely the receivable, was Free was net EPS from Free million. flow in $XXX attack. which which Adjusted from changes related growth of the to timing For year malware lower $XXX $XX totaled the to prior was improved by prior and $X.XX. was was GAAP proceeds offset revenue over million, partly for offset was

$XXX of in million million largely Looking against third of the second short-term due at investments. our with lower than position credit cash through facility. ended our the the the drawn and the $XXX revolving This capital quarter we is quarter, repayment quarter end to the

was was to net in cash sheet. the during longer $XXX Additionally, balance million term which and invested investments into quarter, securities, the short-term approximately neutral

$X million During to return used million cash and in the of flow free We invested to $X our in $XX capital shareholders the expenditures. made restructuring million form payments in we quarter, approximately dividends.

with credit at about primarily prior Looking customer both to and we repayment amortization year-to-date total perspective, in Wheeler our of debt just loans. funded over the on by which facility, debt, lower driven $XXX From addition deposits term million new $XXX million. total from grew quarter to in deals, is X% Bowes million the funded $X.X Pitney billion $X Financial revolving quarter, year we over the the ended to bringing second a Bank, the our And million. within $XXX the amount around principal of million of $XX

operating million and when quarter. net on of and an the our $XXX cash you investments our at company net into end finance terms In short-term our was of basis approximately debt the take implied position consideration, debt, receivables

$XXX year. a from $XXX Turning starting compared mix of of a services prior year, of and We Gross largely X million from our support financing line Business equipment portfolio. was decline is sales about had rentals X%, to was reflects a X%, shifting is decline the prior XX%. of with XX%. This which services of item of in profit of XX% supplies margin by million, declines to with revenue as XX%. the of which prior X%, $XX year. grew P&L, SG&A performance million points of

prior by down is just a was million SG&A $XX which was decline, XX%, $XX which Compared over R&D which prior largely was $X margin financing from was EBIT was down offset was provision to taxes for quarter expense including of from is year. $X over driven X.X the the million end was by million, prior operating improvement at about margin expense, primarily and which rate X was outstanding on declined or EBIT an average of tax prior partly adjusted our the year. earnings million profit EBIT $X about As expense. quarter prior gross year, and declined $XX than million which was from shares points, the X.X EBIT year. of million percentage by million about for of million, X% shares points Interest lower X%. XXX XX%. Weighted $X interest higher was revenue, and million The year. were expense, revenue

in year, driven million saw progress represents is by discuss quarter million, over which In through Parcel $XXX Let XX% Services a which than and our prior first volumes driven APIs. to performance our in prior services, nearly our a over of border quarter Border year. around was million, demand. logistics Services, XX prior business me we $XX from continue was we was improved year. represented by Global growth driven as over growth Within This $XXX of positive the Within over growth million over the now Cross innovate we of to cross EBITDA our doubled million. Domestic more year each experience. our of and prior Group material domestic $X larger by time customer in EBIT client segments growth Commerce Ecommerce growing achieved strong deliveries. year grew XX% XX% And Digital this XXX% improvement XX% with loss a and was was million $XXX volumes over quarters shipping digital revenue quarter. the in prior the prior revenue volumes nearly the of from a

recorded was loss $X a loss improvement an quarter million of Looking both prior EBITDA $X million, year. a the were approximately and at of million EBIT, we in $XX of of from which

EBIT X.X% was quarter point X over of minus third quarter-to-quarter. a improvement year flat prior roughly The and margin

postage, moved scale, quarter. As we as and transportation we per continue saw gain piece we to improve through the cost labor

data, in and serve our quality opportunities automation reporting to invest In We and efficiency capture are And improve this advancements to continue to front of three cloud of invested to in we business operational new and in our systems share clients. better in facilities in window upgraded the based us. of another. capture for making this quarter, alerts ongoing we and

continue be expect impacted continue some to also we and items, COVID-related which to reduce to time. others direct over by We

we volumes. capacity additional investments announced, is implemented prepared very and previously are the And peak in that handle With we competitive the been we as for making, pricing to the we've have peak holiday holiday the market. season

Presort million quarter. revenue year. was second increase was million, X% decline $XX from Looking Services, at of which prior a This represents the a over $XXX

Printed on volumes EBIT while margin First down and existed new for X% profit XX%. Mail both of margins prior productivity initiatives. Mail improved revenue Class hours as slightly quarter-to-quarter, X% a remain a and part were from prior nearly business our and $XX ago. We pieces. improved to area was billion the XX%. a still grew declined represents Marketing hour, fewer $XX volumes million have And our to EBITDA And our declined year was EBIT small prior significantly quarter. pieces lower relatively per Matter XX%. barely and Flats volumes XXX,XXX result this sort that volumes equipment of and improved from which portfolio, was stream million this compared year, processed. second Mail primarily year, margin in of and Bound was labor the from year EBITDA resulting Marketing but EBITDA we fed X.X focused to the EBIT a

expect to forward. productivity continue gains going We these

of This from year, million of over SendTech quarter. our improvement an a was improvement second revenue Equipment decline year. to prior is was declined significant which from second prior Turning $XX which quarter. versus is $XXX the sales segment, million, a XX% X% the

only year as from business We monthly declining also through X% saw improvement a quarter September nice the prior started to the environment with recover.

conducted product which also continued and a of fourth is points ahead improvement that and the and from for believe it digital With line, is see remote replacement supplies. U.S., setups the the revenues two-thirds its capabilities, April, with for yield in shows We to is our we as in a kind a we sequential SendPro which for large and to market. U.S. devices to our competition equipment quarter order which year, what capability. with declined our well in for is over transactions device in a offices branch our declined offering, volume This a is second It Shipments improve. our quarter investments revenue backlog. quarter. to launching demand in first to mail the organizations. are expectations. rate easier a the of we and we grew significant have Since single-digit in improvement XX%, the our usage is reorder entered supplies exceeding healthy Mailstation, Financing clients the for finishing cloud for continue shipped leading nearly new good product sales In high units, meter XX,XXX This of making our continues of are online. demand mailers, ideal of at started a prior positive response fourth X%. the indicator Supplies

into securities. from rentals This includes and gains and to the quarter year, reinvestment proceeds related services largely prior on lower sale X% long-term the declined Combined, portfolio. support of

We at $XX continue million third SendTech rate. quarter our in double-digit to reaching see revenues, growing a growth and in the shipping

the activity over by year. goes XX% offerings. SendTech impact shipping SaaS-based online hardware quarter, SendPro EBIT shipping their finance clients subscriber shipping our third was The margin us our in $XXX Despite margin solid the growth of and $XXX in XX%. In was who offering was from EBIT EBIT SaaS-based XX%. grew paid with EBITDA the our label remains model million, and and within base our was volumes year. revenue, margin million, and its Specifically, prior range. EBITDA prior decline their long-term doubled beyond from SendTech's

Importantly, to second down quarter in remains small portfolio are the of uptick trending delinquency related financing the the healthy rates quality saw our from and we that COVID. initial

in quarter. second trends We seeing are improvements payment also the from behavior

monitor continue approach disciplined and take management credit risk to We daily. to a

questions, Before we take let your recap. me

$XXX on We an XX%, revolving grew the facility not down to the caused we work pandemic decade. and cash end have using our grow million balance our credit our having services, continue paid in quarter. business. maintaining liquidity million we over rate made of industries, channels and to our position to this our While organic be a with sheet and third investments to fortunate of still of our balance approximately disruptions strong the network and are We the focused sheet remain able cash have in well across $XXX achieved revenue has on products, position, a clients at

have We traction. mailing earnings create around continue getting in our All simplified to suspend measures productivity in and noteworthy strong to underpinning uncertainty fourth and our XXXX around model Overall, accomplishments proof focused we options in ecommerce improvement, in revenue, the and shipping COVID, revenue Presort largely SendTech the capabilities. is financing ecommerce business global achieved both shipping with with progress around other guidance. Due business sequential strategy points quarter. continued to expect continued we will a

We are us on very operating but focused a has and in served long-term, remain that well. the environment, dynamic

ahead to us a company. capitalize exit the We stronger we believe as of this are pandemic market that will and well-positioned opportunities on

your Now questions, to take Marc like before we make would brief a statement.

Marc Lautenbach

CFO, be to of IBM subsequently of Stan was gone last Jim. the the the when years I ago, soon to been Stan I me years. Salce, Pitney I this of make weeks. was then Stan was. call a results, now a take for running XX given and And jobs years to growth difficult the to think role going years ambitions put was still a to ago several and most Jim I was to Obviously, XX industry. and leaving for Thanks, we're time position sustained obviously over to and and IBM, of to a what the candidly, Jim company great transition I concerned, and help Americas company. role the his was support aspirations become able the in Bowes executive. at helped Stan today's He’s will Stan us which been who there the But to thought Jim I convince one got ambitious last systems has Stan. next the said, the the is had a And put sustained is his say join from terrific his on profit programs months. he that coming on Stan a and for change. has of CFO successful steps Stan Kavanaugh, enjoyed in in IBM. refinancing the be at Mark be IBM, from and one out X transformations talk and IBM, that growth. first was and large announcing detour candidly, and was to the leadership important is and his or at what of important one most as in couple My fellow the with Bowes at It his super most the of over going in behind important basis on for to an we're along I aspirations. of accomplished But He a make was was ambitions seen. we've and Sutula Colgate-Palmolive over years a going CFO strength. then to Loughridge about and difficulty met company our and that about his we're next is about revenue always future. the have a and to professionally began a XX I a I've you talked ever the I is X an the recently, since I see to land what both sets be was today, would revenue as backfill. terrific the this have opportunity that the well aspiration career relationship helped sideline CFO as years, last new lot. and hard And me Pitney of to More process well. was at reengineering steps, we And XX and executive talking Stan and personally had that I And joining Debbie

several lifelong the lose moment Over on is last to now. a to the Board, fulfill as where and wonderful is been a what announce myself, the that it's has quarters, much such now is move company the Stan to hate And as it colleague, and clear to imminently hate that, I strong to become to for time Stan, ambition.

an I time, such such great So kept hate strong a I soon Pitney candidly company get such to have enough, for wonderful person person incredible at on wonderful quality with and that but we'd while lose executive opportunity. myself assessment. same agree account hate my see and a the trying billion colleague, $XX Stan and it's Bowes to for a such a the be convince I to couldn't to

will that search. end be better external would continues candidates, you, through internal next we've of begun better. and a get tell slate of to I a us Stan got great with We've list and So week. the and

coming a executive. we'll Stan. I'm And hope my that have weeks the it's to within So quite we're backfill able great confident

that, with take we'll your questions this morning. for So

Operator

first the Kartik [Operator from Mehta of Research. Instructions] comes line Your question Northcoast from

Kartik Mehta

the terms a about little getting there. bit maybe more what out wondering was I detail profits. thought profitability? the best congrats, of Marc, might about from more I EBIT luck. of be would Hope could Ecommerce outlook ask -- are give bit I'm to you're the your the revenue, happening all, incremental just in happening. wondering revenue little what's Global benefiting little of trends from Obviously, And First really I wanted business. you that if wish bit could segment And to you a that kind incremental help about you driving a talk you of as losses, Stan. if for the

Marc Lautenbach

Sure.

a -- improved perspective, a look on the on not cost performance and quarter-to-quarter you the labor in alluded, What was a warehouse if basis long-term. quarter and way alluded consistent Stan with and candidly transportation unit in on we the it, that said cost. the didn't the perspective, revenue improve So expected he on perspective the precisely the thus, increased at a postage

there's couple Now of the different X a mentioned, that. is, quarter. underneath dynamics Stan to in network warehouses new One the added we

expense utilized not So you utilized the warehouses. say all had incremental would I at and partially or

So that was X. number

thing that second I efficient and is, ultimately we're The said this warehouses not we will in as the the quarter be. as second inside

So us. drove performance, kind expecting. cost Warehouse the if you scale in revenue we is of look of a were at it still the at that benefits level front unit

is, but As going a would quarter you a or rationale tell frame for I uncertainty the -- for X profitable principal I to reason about to going is on resist point it of much business the be mathematically, it's logical I'm particular fourth relates calling of And profit. a be there's to will predicated time quarter, What hard out an fourth could to just you so very it's the have confidence. notion ton this lay forward, COVID, in inflection for the important factors. why around hard

that network. the expect. own our warehouse a don't we within cetera, inside COVID. et facility the get that to efficiency And demand substantially the improve COVID first level hell, The We user lose second to doesn't is go is at et continues worse. cetera. And End the doesn't

and third a cost quarter call say overall. the for to going the not knocking yield I door see, unit particular kind I'm of profit quarter we're of we So benefits that the profit. will on

Kartik Mehta

you I this Stan, other -- Can talk little you saw is? then maybe a just that I'm around benefit quarter. that? bit wondering was if context income a you that some about what can And could give

Stan Sutula

Yes.

look of Kartik, we income, the as we've And all, gotten we thanks the malware disclosed churn. previously, attack you other So go When have for had proceeds year. last from some at the question. first

the the -- primary in from other is [RIV] the insurance and income proceeds the companies. driver So

from We that finished through the What continue COVID business. work are definitely received the the had about And proceeds look, of impact this tell be of the we puts as COVID though, outpaced on run I just talked we on long-term. outpaces going we would takes go the and you to -- through the [RIV] that There proceeds. business we we to is would gain for the COVID emphasize, overall. talking I in quarter, impact the quarter. value the here but we

Marc Lautenbach

I’ll make just about your question, one the point quarter, to Kartik. other fourth

meaningful increases. the is One price the of put the in pretty industry the days forward things industry meaningful that XX over last happened

suit price We put customer-friendly extent a more increases competitors much hopefully peak. Our out for followed a albeit to way. in competitors slightly and lesser than

volume quarter-to-quarter fourth the it's look So per and a if quarter you at in basis. look at you at price the expected on increase a the benefit parcel level, a meaningful

price the there's next leverage year think how I've increase in been more fourth out and you why business as that it's -- the some pricing about marketplace. about really important a dynamic. that the quarter is I'm business, for prices the overall that work into confident than So But and

Kartik Mehta

to kind you're just the -- even putting COVID-XX, of costs last you're you able an range, costs it's if And question. a additional pressure the P&L? on frame just to the seeing get up the it's then, Stan, of type Are just of idea because of

Stan Sutula

-- you finger activity your it's buying, one then if and you are broader as we're look, put like impacts. PPE an Look, business, look would expect, on, the there Yes. it's to easy across

assume direct of millions, very the a sales in you does more now. should of But right side a is and I'd the neighborhood about talking say, I'm impact high that not single-digit business. impact we're So to, include the

to you do not off, staggered a paid So or up that time impact the site into can't for exposed. about when you've talking SendTech impact tested the the positive And we What client can't new we're have including install, we're I'm been impact. for recognize facilities. shifts, about remember, and get have setting you is the revenue, hence, if the PPE, talking

up. all have set you to go So that

better significantly workers we're business. managing our impact expense are it going our expense to at is that aside, keep put But safe have the and on And to going an thousands for facilities. primary of not So and spare we're We, we focus, into still getting I on. think, that to it. taking healthy

Operator

Your Sidoti next the & comes Company. of Anthony Lebiedzinski from line question from

Anthony Lebiedzinski

on opportunities. next First congratulations, new Stan,

So good. it pretty certainly sounds

we revenue quarter, back could the throughout the the I trends and your segments on, could September. mimic, some meaningful you Stan, revenue guys seeing just go can SendTech that the about touched as would step you that different just talk think, throughout improvement business if over good? you also in you saw So to trends be of if progression the But the quarter?

Stan Sutula

you for business. the by interesting It's thank Anthony, because question. it Sure. varies

if tends So be vacation nature, a look, time, et August international the most heavy a businesses, to for take given you cetera. lull

If take certainly that the of -- total, saw we but go at in let total me look a kind segment-by-segment. you

in So September, really Global XX%. June. started that's rate Ecommerce through then it some full that and July, same the catching And here, end grew to started off with of still in a but quarter. essentially the gain coming through at the up the momentum was stronger volume came of down growing August as

had is, all up had about to to there. And on Ecommerce, you make. the labor we coming is we that. set that surge we get to have that We a in And pull August, when lull tougher getting volume? decision elected should holiday we one handle in talked back we not out staffing a knew manage elected we was, peak Global to it that So that of QX decision we to up, the the try to and because in do things season

staffing. the So we maintained that for activity

tell month by quarter. the is actually I the coming I but seasonality would and amount small momentum in from volumes. that and and If month. happening, And that we bounce September you a of of would Presort, of you, bit you a by got a has what's for well, X% had both bit to depending down week And down on little growth, go a growth little really gained heading we those up Presort into tell as and the September.

SendTech think interesting the I one. is

and better, from August in last we then down ended quarter. up July. double-digits and we a we got So were X%. were And That's September material where down improvement

aspects quarter, I down XX%. And quarter, think the as quarter, exited equipment The there, we sales. those XX%. we we down one important Last were down the we're of X%. were

within Mailstation ability and get that COVID, changed other Now install our revenue. go-to-market to grow we've could be impacted machines with the But us new clients. try to to by also that avenues in gives the that

tell momentum towards as would exited we growth. And I with that. we quarter, quarter expect you, continued here look So see good some to I fourth on the think

Anthony Lebiedzinski

Got it.

quarter, to think And we flow flow free how to far has your balance continue the the cash free free expect improve? the should year-to-date XXXX, flow So year? of about third in the could as for cash cash improved as we

Stan Sutula

So thanks the flow was quite free and free for $XX again, Free -- flow, cash question quarter that. year-to-year. Anthony, flow good cash at cash the for that's on of up million

important more the I one on year-to-date one basis. $XXX interesting more think is the or million a

want you we how But becoming a runoff, adding receivable tell because and that you're flow. of is from that's never some the assets which story news back certainly earning comes sheet. balance good less to free that's to there, cash generate that would I Now finance

look where If last a year-to-date, we're we you take year. landed we than higher actually at are where

in Now was timing the quarter, the of around third accounts in third the quarter drivers some receivable. one

DSO. while a receivable, improved big was we accounts our So it contributor,

on of flow a The and and broke leadership to a really I'm have out, up revert be They day. it macro I've it's flow. first bring every has we'll collections, allowed deliver here and and it week view. fourth inventory lot We think balance in going cash talk COVID cash been important and team. CapEx step a to think the how that's I generate? timing, question around could But And of cash. about back there every When delinquencies, a a done I And terrific that managing free we was strong proud take hawk back being quarter. to of team the levels proactive, Some knows investment. on us job managing much this free

looking you from fundamentals. back, that we'll to the And we're for portrays billings, going those, on to the as flip-flop the the improving. in level I do is in of the I'm ahead into confident receivable step And combination, back. well in amount. think you year on basis we the know, But and And a think next of when what that a a out December, particularly future. and that's out quarter We're going will see fourth see at year-to-date a level at I bit, good full the the happens that. look you I come That as accounts on depends DSO timing. for So close I look and be last a year quarter, year. think by position also material

Anthony Lebiedzinski

it. Got

accelerated I last at XQ XQ. from growth And question, Ecommerce, Global Okay. to guess the the looking revenue my

or some as as versus from Just clients new could us up that out growth color if you you parse maybe year? signed growth this organic give perhaps far for

Stan Sutula

on-boarding. over organic. in in been are would We those activity I all QX, no There's XXX they're Ecommerce. acquisition added clients and tell still Global Well, you,

not facilities a expanding So X those all X of fourth, and up will beginning that. be running. new week the we have facilities felt the benefit and new Adding next from as full and of

that have also volume and look But of at we beginning to whose up and I week satisfy quarter, a in. cohort for be not the the the we number one up when next running well. And this new So The peak. added will significant we of portrays yet at clients think X running. is

Anthony, trying is to BXB BXC. ecommerce. the really in a to a convert serve We're value says, made marketplace though, with not bringing clients. is it to I what that investments built clients, on resonating that We've the we're we're a and think better those

that focus resonated think, I in clients. So weaving and has with technology,

third going And we're in see to expect incremental to -- that So clients be continued I largely all quarter us. again, contributions. would going incremental are the front of

Marc Lautenbach

I the being mean answer it's specific. question impact -- and little would without to customers the all short very just that. build your I organic, new on from think there's is I so

customers third new So as the quarter same roughly the the were in new customers in the second quarter.

front us. of that's So in

the step really in industry you a than made point, have network a else fit-for-purpose at important level, industry. is is ecommerce-oriented, If an that which back Stan anyone different business-to-consumer, we

industry The say I'd out the is is other capacity. of thing

just up that talking sticky quite So to else there's we candidly And that we the this have because relationships in capabilities entered go. nowhere believe are we're share the picking these to because or way we're of customer.

So it's by a changed. unique a opportunity. but we compounded on COVID coming, It's have clearly what's how to buying one going saw habits degree, it's and with been that,

Operator

Ananda Loop from question of comes Our from Baruah Capital. the next line

Ananda Baruah

if here, could. got I couple -- We a I

-- in mentioned into December the it prepared was it’s you for the a where quarter. the anecdotally there guess this I even quarter. about, So in think for remarks, something momentum is strong momentum this December strong Or I we're

in do have the moving ourselves think can kind of set can a can about a higher And that? of love least, that, know at how but level, across of momentum? we to and just a we could sort clarify we parts, and we'd so get giving then how of context, little from And guidance, the And leverage And so that follow-ups. earnings bit about so to any how for I about to businesses maybe I you're think that margins couple guidance? then think the you not

Stan Sutula

let Okay. A on, that question can lot we me what do. see in but

our on momentum for quarters, investing have not long-term. curve, the network a last Ecommerce over point, all, results. you're coming in the in If capacity first on particular, manifestation And is Global the that's the been we we of that coming would handle think the of seeing invested we way able stayed in what to So I in. always of have ahead in our had focused through not of couple

in with that surge momentum dramatic seen we've in business So volumes.

in well-prepared season We peak domestic quarter continue. than heading and handle here into feel the in momentum see Our and peak doubled you'll surge to I volumes more think on the deliveries that the revenue. a dramatic

So X% we grew that. grown we've feel we And XX% about remember, in quarter pretty and the good year-to-date.

a I look get sign this, better X%, a the just at much put it time but in while better think And we're performance not down when And good it's than really the quarter-by-quarter. for into it's that's seen GEC. momentum, QX. we've SendTech was has we team

productivity, our subscribers you it's exist made her Marketing Marketing a heading to When for you We've got grew into the well revenue investments for XX%. to Mail, effect And grow adapted profit that. better and that and Bound clients and future. million. you out a business do that shipping. have and is Printed a I'm feel a I Class the year foundation think with done Debbie reopen, We First over slowly think well. but That's very portrays the Mail have about I'm little by and over what future. Flats, encouraged see the in see essentially definitely that over are we've $XX to Presort, by and business. ago, then paid and Shipping the starting ability in Pfeiffer growing as stream for that build that Matter double-digit XX%. and they team encouraged business growing didn't good to And over It's what new And of Mail

So profit and that another revenue new represents stream.

momentum that We quarter the opportunity be and of a it out see I benefits that think gives next No. heading it straight GEC, improve will And with is line? scale QX, incremental think, we to But of but margins. the and heading us base, quarter the year. some to and We've I I again, of in And going fourth are So signs the scale. like there seen see QX. headwinds. also the in into

heading I I in like become of company, That margin haven't traveled you headwind We to that a It as Presort, have -- we think are. And for to Jason next the I offerings, we in stronger our out well SendTech the going as entered. build next this some his through Dies of come will SendTech despite think proceeds they're go range this which picks for be they business, themselves We've every I forward. other pandemic a we the foundation then up year. I Presort like but we've year. done model have headwind and It's we into solid. as run. where business still the it, we mean all allows [RIV] improvement. to their are the a with of volume as a In the great and of Presort stuff. long-term heading kind expand opportunity than and margin and declines, in think demonstrate not year, out They're positioned there got off well to and good businesses, there's go team,

Marc Lautenbach

overall The aggregate quarter. over Presort both was the than higher and the SendTech for rate quarter

it, to In is question you X answer way I mailing at one the look to to would So quarter. just and it, rates quarter. think or what phrase of of as businesses, your guess, about exit rate the where circumstance exit Global macroeconomic the has the to off. first Ecommerce, In taken Global stronger I is, all, the you point Ecommerce overall than the was

the XX% So we XX% do the now Internet recently a did their via of of ecommerce. consumers study, shopping

that yet. macroeconomic strong we in and momentum helps haven't increase the price new that revenue, there's candidly, -- with The impact of haven't So customers marketplace. the felt

it. yes, -- look one way it's that's So to at

for still We're the making it about too And COVID, down And to world. overall there now going and and is I mean, I at kind predicted the shut as few continue of the COVID. offices around now be thought no shutting I understand the United almost it's to microeconomic. from hard most because reflect to macroeconomic a at I the November, that. look well ever to that's world, and it's what was way the in it offices I just States. way is have scattered aren't and to be the back would a down on around other March weeks. level open There's both as that's what impact we cautious with predictions The is why wild a card, of

about So high predicting humility future degree a of we the here. have

Ananda Baruah

And helpful. Marc, that's

I of then dovetail, ask question and sort me item. have more one housekeeping -- quick question one Let a

what's differently. get going And strategy? a ecommerce, in the this to levers think we how lot share a ourselves be guys about front occurred reason you given it, it I of thinking of should about Given gains intermediate-term the and near profitability know And work thinking differently obviously have at the going We we thinking on bunch opportunity, there's about to of differently were least the to we differently with asking you -- you, I'm If the any in all investment the the our guys that aware be is with about what's I on thinking should opportunity that want pre-COVID? scale of are about that in comes and modeling. given should sort to in we this and volume investments, the question. exercise with volume be

Marc Lautenbach

differently In general, thinking I would not this no, answer it about say with caveat. is, the we're

out you model, speak the in kind but a overall project in as about couple years, where as is EBIT would that you at And same talked well mix If the level to might of it we efficiency be of of what curve. that had as a less the are original the slightly margin.

might EBITDA more and couple EBIT long-term less consistent years. not opportunity, but opportunity I a But think, effects. overall is margin what the slightly therefore, revenue of it's and be the that's So It see. we next over issue, with pretty

Ananda Baruah

now Stan, that quick bleed sort complete then into well? the of quarter, And to of it. the December September will is any Got that for spoke or income the of as other you dynamics housekeeping. quarter that

Stan Sutula

there's how no that have were going would have the But other as you So other know, in there. some a proceeds And that out. as we still discussions We other again, with we small ongoing client. [RIV] said settlement the did on way insurance one income insurance working play companies. all with guarantee

through out. work insurance to see going the it how continue? with continue quarter. plays that we'll that companies, and is the think, we of into the COVID, will We'll rest So heading

Again, eyes of that to going We coming and that's our to health open. the thousands not wide knowing not we we're reasons of on and because guidance dynamic it's of scrimp safety production in so our providing facilities, area. focused going one not go. and employees where That's have we're to keeping stay

that bigger a to we're going scrimp flow area. So not in through, that impact, that has but will if

Operator

the line from comes Corporation. Securities question National next from Your of Allen Klee

Allen Klee

when strategy had that ramp about Financial mentioned improving Wheeler with your that to have in think been past? how thought be you enough we of that kind maybe You what sequentially, you'd comfortable reconsider should guys up delinquencies you might to the

Stan Sutula

Yes. Thanks, Allen.

So it -- bumped up. at delinquencies, when we well, certainly look we

going portfolio, performed Our has through I very that. well think,

a that reaching I team, Christopher clients been and of think Now that out Johnson And part arrangements. and be of affected his they're some to proactive. out going that's those are to positive We're effect overall. is, think we working

of for That million this about $XX business Now year-to-date. of $X in be year. said We've wrote us quarter. business million we puts this million the about of originated would $X $XX fundings terms through portfolio, less the million -- believe that than we

up don't a demonstrated evolves and could that deals profile, do with less very to And ballpark. that just part we're leave we've Look, do discipline. of lot there, we would has it's this in If that going long-term third-party cash see to make the the business. portfolio, I develops, the profitability. not I and us not are going great think sense that market as different part we think and not we probably I market look of going a are you at give lending, leasing. see What consumption, We opportunity, we be opportunity turns is think is which good you and but to returns just how on and prudent. do business, to fill good the of we're still there going financially. has not a to we're if third-party the guidance that that And a will

Marc Lautenbach

to duration. and mean, to thing. that with become one easier a velocity. is price higher shorter more view It's a Stan equipment risk. I market pretty focusing so Stan's little say What the lending. now mean, started that price hard capital. has focused principally out working risk. we're on said would we obviously That's is I I That It's what on were bit right. we price

I'm risk. answer ability the is, can price cautious question price about highly better. to So your risk I capital the the to we'll when can But right principal our team deploy now, or more price

Allen Klee

on thing Ecommerce. last my Global And is

Cross nearly a about volumes XX%. area And there's more progress What with unit still talked out are the question better actually Border get you other is, up your were of in economics doing getting work that mentioned being you then try the of productivity you First, improving warehouse. to warehouse? to one

just more You help got a going understand a you dig new to customer. what's into Could little there? on that us

Marc Lautenbach

doing the so not first were, new what mean, to utilization, utilized obviously, in mean, not very is are right? the in better I answer or in I order Sure. you warehouse on is, in large brought so the get quarter. the quarter. the on we facilities utilized They X

number labor those Number prosecution the inside still learning the there's X-walls a utilization. is their X new, jobs. So around and of in order is two of of pretty labor curve is --

own of The look point where of the one third is to thing coming at you would if network the is, each from, I is facilities kind its world.

of summation the look all sites technology initiatives measured of standardization have of year warehouse or our we across of tens millions the important. in processes, dollars of of at standardization easily really next is it's the So different around the you on so. that When the network over efficiency,

Stan Sutula

there, a about don't end-to-end a Allen, that, And they're team Yes, And we And other progress. We're function how single a time we thing studies, And items. the this Border. studies. attack process We looking is the things. automation. using We're few view there's think across motion a making of demand Smith Cross sits the lens. streamlining and about good his Border robotics. just Cross done Nick from do add I our the around we're talked I'd every in from processes And facilities. used productivity. is When angle. that only to some and previously One, We question marketplace. we've recovering just we've was really

client, growing only beginning did that but you is seen in of it that new is areas If activity, a has certainly reopen. helpful. referenced client And then we've with not an The that and And of volumes. pandemic, type business. shut we've simply to we that nice client existing back the a uptick been domestic seen think many down

spend as client business that that. we on So something experience have is we and good think we time do that

So see I'm part again. encouraged that up pick of to it

at step I we're This think multi to would and the contributes But back I it here. growing total. that components have. is look -- we

returns. got delivery. domestic We've have We've certainly got fulfillment. we So

digital experience, we which We manage side. the have physical the with

up Cross Global have that's Ecommerce. Border. We makes And what

business, born to So manifest and in in client we're not ecommerce, growth good we're good born and And that I seeing experience think I for again, gaining do the share. think that BXB. a

Operator

from the of comes Cross line question Shannon Cross next Your from Research.

Shannon Cross

miss we'll you. Congrats and to Stan,

think recruiters at great companies probably out I or to think HP Fieler you about, these -- as to Steve so looking you're are Apple, go into interesting, days imaging CFOs, think at -- Colgate it's trainers I we sorry. is and going the HP Google, there is to if it going

you're like think, fourth you've ability and, wish talk I quarter And I well. guess question pricing that volumes training increases are how it some hold into of first in perspective the incremental some follow-up. can is those had then price marketplace? great power quarter? you the I to about of a my a overall, And seeing bit we go from or ecommerce you some you So a about announced in price costs, and thinking the you seems first ground, because you as have increases

Marc Lautenbach

said, constraints industry, their That about at participants is in look networks. we're degree, you -- answer a than they're if talking pricing how all being works short about lower used not year. and They're all to. the complaining they're about within The margins out the continued other certain to next talking

certain, close when drift business. commentary have that this recently on marketplace, look conclusion we're not more me I think hear it's and continued the but to not pay constraints in So a I a we a hear not while earnings, said, I others to prices -- follower dilutive announced the overall margin at that network, attention. I but it's And supply as ways when price open pressures supply it's some we're across an that I up, here, continue that are likely That their leader, than the personally to question. follower leads in

go you've that the think which as suggest assets is well. on prices of that top I down. of not labor, up, preponderance got And increasing So

Stan Sutula

our from we leveraging just a wider good that that. leverage looked thing our really that that. and forward. about I as think, also tied that, to that is, structure. I'd think that more only that market, that's in pricing at we've help we But gotten seeing the of and scale we business, brought large some we quarter Gregg brings -- some flow-through position number a and as combination continue a in the benefits clients capacity grow limited holiday go We're QX. And in of some pricing go could area. the gives I And as we've Shannon, then scale, we clients his add the we peak candidly, smarter that a to leaves us us talked lot in and get talked I last team, technology, what large price Zegras of better adding we in think bigger, clients in of when through to we and technology do QX, serve we get number sophisticated that a weave into a

Marc Lautenbach

potentially they our mean assume stay if I million do parcels, to million of won't conditions, of available improve, mean pricing you, get say I if math, if volume kind at you to I across that least is of increase magnitude what's XXX but the just of you are. to where kind $X.XX you order of $X of realizable price to XXX

Shannon Cross

how leverage, And should the significant are, point that be there some Yes. within sizes, since but assuming past various hopefully, process, It I up sure some do go so I commensurately costs seems have you're whatever COVID for given the of pretty reasons guess, like be new there I'm we'll last here. at ecommerce think been in about signing able speed to many? couple much you so quarters? ramp time to customers are And you've that expertise don't gained

Stan Sutula

And up capacity go added helps. into that experienced. not the we tracking, when opened technology absolutely clients. clients. are clients again, good candidly, because to that as the affair. a become through And just brought they the Nick management partners teams Shannon. do actually a ready this That's And in so just endeavor Smith's the we’ve experience. question, sometimes, volume it's better oftentimes, the this, get why good It's then ramp we that we more ramped sided one And our Yes. our improving significantly team, often as with weave a they and reporting getting for oftentimes, up, And the network and of job I client start they've think to the not better with go far want at up, are getting better they I ramp done in bang you, process. we'll our cutover, big so we're up tell a would

between is they this to but the that on think go want what facilities going the do so we're how into, I partnership and fast seeing X are space. in And often an acceleration

Shannon Cross

as you you interim? you team? the Stan, relying question. running on Marc, an Great. One congrats. And are Or CFO Do have search? again, during just your are last

Marc Lautenbach

while Both. after the Officer, Accounting middle Chief We've Joe search. function Catapano our the of in look will the we're announced

we of search. broad hands search go on has of able terribly I obviously, don't as to to Joe, So I be the set said, the understanding lead will But expect company, a long. and conduct while the

We have here. had start a head

Operator

are no this And questions. there further at time,

Marc Lautenbach

Terrific.

for moving Stan, basis. our of for others that not Listen, what of thanks, to story, and expect you us Colgate-Palmolive personal I'd fully be for you've me all contribution if new on wish regular for products. continue but you've a only for have been be see X-walls be And you from these of partner. to your I've all one you Bowes And are we'll last while. And And certain, some following I'm to the inside speak perspective, remiss, close. we investing we’ll I sorely well, I a been you'll company. Pitney a again, Let missed incredible that done been opportunity, an that and

investing and Some for of you following long are a while.

and is a our be growth those performance, ago. performance who've of For I the the the and company tele you digital bit, time and that thing in a and time a we're issues because to takes new is several in XX% this move saw years. invest see couple takes of of to X% conscious last recently, industries year, not channels. new would More that in following products conclusion, quarter's great years easy than made purposeful the different years. short now to to channel opposite a build for to other XXXX. was It the precisely channels, conclude been the others we've and come capabilities. of the few you last It succeeding for growth spite to new there’s that reticence easy, decisions do It to succeeding it It's expensive. the is, and over would company

demand, had modest of to third we've long-term our continues value. continue is always more But be more not be got We're long-term do. like. pointed on But growth. we would as I looks really one, starting quarter what our creating much North But That a reflect a put level pointed Star. the and quarter points see long-term glimpse. and made I another And recently, slug. done, not to story, automate capabilities, grow If ago. will we've creating it's years as others can products Ecommerce what now long-term and was of aspiration to ecommerce. haven't ecommerce, Global and tell but in those new you of didn't wouldn't a able short business in it's few the with we certainly is be to nature invest that exist, reengineer SendTech and do the look new didn't you see of XX%. process at it's invested front And we business If the painful value to channels every to that front we'll as exist hard of the you're to and It's that what disruptive objective a Fourth board. of investments. to at demand even more and back, you to the in

how many said, worth different do theories I as and because how I a how painful you different as it's But it ways, is We've you overall look is It some So it of create more was, create value. more approach. thoughts a with our long-term but value sure. you is approach, the for you think taken businesses. in run consistent it on a reflection there's industry, to at it is

got quarter. to will again, soon. a all the you we wish safe. of more Thank of fourth in we'll Be much. to We've lot you well, very talk and Stan, work you So do.

Operator

conference AT&T Ladies today. and Thank your gentlemen, participation conclude for and using Teleconference. for your that for you does

disconnect. now may You

Pitney Bowes (PBI) 30 Oct 202020 Q3 Earnings call transcript