PBI - Earnings call transcript Q4 2020

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Operator

Good morning, and welcome to the Pitney Bowes Fourth Quarter 2020 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 your participants on today's conference call. Mr. Chief Ms. and President Lautenbach, Executive Officer; Marc Ana Officer; Mr. Executive Vice Chief Financial President and Maria Chadwick, Joe President Catapano, Mr. and Vice and Chief Officer; Accounting Adam Relations David, Investor Planning. Vice and Financial President, Mr. overview. the a David call now begin safe will harbor with

Adam David

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

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

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

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

Marc Lautenbach

and Adam you, Thank morning. good

Capital, culture being strong that and and our business. is with Operating Financial several that, Ana Chief GE the executive Legacy at PB experience me held saying fit very Global Let I prior most her Solutions operational of well. President the that Capital's, and will the joining Officer Officer. start by and recently CFO into as brings team of delighted GE Ana CEO Chief and financial how to Ana am positions

and our our thank Their one to efforts at sum and personifies. throughout word team prepared our is am turn choose could Pitney The one our how very our our currency XXXX, up managed determined. highest If world constant is an in a made of the would through have for the again in team business, grew to and business the proud of employees. To would was predicted I exactly comprised recognize on was of XX% state to remarkable had of to quarter hard total I our be modern-day our XXXX. our year. record best I Bowes. the to employees shown Revenue we how No progress ending I the work Before shipping-related And fourth the knowledge, like this growth in revenues the extraordinary rate year. XX%. challenges. That changed organic what it revenue.

prior For which sales, from melting profit our SendTech Presort prior that year and improvement and SendTech is the business. significant prior was quarters shipping services revenue equipment a in in year. both business the and from resulting a growth performance, considered performance quarter, revenue is in EBITDA. Ecommerce XX% in over cube. SaaS-based performance This by offerings growing many a solid strong a double-digit powered our Global turned positive in prior flat with turned quarters And profit strong market. in embedded improving ice

do. focused to been products offerings expanding determined team business. accomplishments shipping short what In we digital channel and our have investments to few but also have in a made hard while given would years a all, is this new life the ago imagine However, these have our and can this

company company. of hit, out a terrible is lens, remains our when strong health stronger needed we to ensuring during first the this year a we at from had well-being focus unpredictable come the moment to time; on objectives: secondly, wanted It broader we often the financially the several economic the change necessary to and of Looking We pandemic employees they this true two and we that moments over work our of leverage safe investments and be employees our determined essential dislocation work. opportunities. last years and the made capture have those was their create to pivoted provided practices our did opportunities team to PPE protocols the to and as

in made also which proved had actions financial position an From sailing months solid way Global smooth of to of years. Ecommerce It we we in achieved our certainly revenue, planned. coming apparent business of than and XX well is place rate wasn't billion balance business customers at are growing network was ensure was refinancing a we was a and in debt sheet It to we important fortify $X.X the a this XX%. decisions liquidity several over This on the accelerated We build-out solid but took position. by our our won turned scale by it planned ago. always turned out much we on earlier annual had just achieving. perspective, record company's and to early stronger, the that better we pandemic much Simultaneously, than our new

remarkable attention, equally ecommerce tells business a our transformation While an understandably of the growth of astonishing story. gets lot SendTech

for in U.S. which always of the our the labor and our quarter, particularly in business. low Mail in that transformations Epitomizing middle being and to mailing growth impact machines. straight unprecedented previous middle a the large business to single the enduring our never a transportation has the remarkable accomplishment XX% with declining are our is the cash the to increase the services purpose These now even also year. natural the to financial our had and deleterious the shipments year. leverages along effort. is and business Services All The execution and a particularly in operating business area, This of pleased which and well since fairly provide contribution a ongoing our growth and from transformations value the team mail said, adjacency transformation The messy of relative compared on in offset in increase is market the I'm a great to most market, which generation inflation our devices a are the end more notable, devices costs as grew Also shipping. meaningful core in SendTech group a to Importantly, performed complicated. global pandemic cost e-commerce. of shipping line depression. meaningful a quarter meaningfully in a created our performance fourth moved clients middle the revenue, in increase a It's multi-purpose the in of but dislocation strengths. fourth demand transformation cash significant new economic our particularly of is flow the e-commerce one and pandemic market of disciplined of result with cash profit new

the throughout Difficulty]. labor capacity new was a tested we meet challenge optimize quarter facilities than to of This to doubled [Technical and it help three our in order service, setup the Admittedly, more our demand.

part become through total opened handling the of growing one While also network these with we facilities they've works our pain, flagship late typical critical quarter over in our overall of last year domestic parcels XXXX. along a newer sites

we cost with broader to this mitigate transportation reliance maintain proactively of in was use trends. third-party cost in In service. addition, industry try To at and both peak, upgraded this, line a in service and challenged, our packages to was which

see Going and transportation of balance forward, our this above assets, opportunity fleet we PB to performed our use expectations third-party which own peak.

to We each efficient areas. of across these invest will more continue become to

then am now growth. often successful investments; most it's anatomy our structure past, are correlated the The within have to I odd certain manage revenue it's factors transformations in quick said transformations worth about I've asked As repeating. and growth; growth profitable the cost the wins; revenue walls Transformations efficiencies. employee a to generate of I for sustained and and highly four engagement. them: think revenue and

revenue the achieved the several last years growth and engagement middle have reached highs. in our pandemic employee new of We

next tremendous the profitable am pandemic are out, While I accomplished, successful revenue economy the of will how on what few turn stage done. it We're to through but of transformations, recognize very our uncertainty and to our there team over to about me is be let this take to Joe our results. that proud has more of the all work there ever With last do. precipice accomplishing growth. transformation. enter of we chapter have you companies play the in what excited I'm we to poised continues

Joe Catapano

Thank you, good morning. Marc and

can details an Let be full me of our year followed start of during constant statements noted, Unless talking call will about the made revenue by quarter. measures with EPS my press when fourth basis Reconciliations comparisons currency on otherwise to talking providing by a our results be on overview our about schedules and on Relations the of flow. all in and adjusted and website. cash our earnings including our non-GAAP GAAP an when items found Investor earnings release basis posted related

year, For declined was consecutive was revenue declined Adjusted Services loss our of and than $X.X of is year prior revenue fourth which year the full XX%; $X.XX. X%. growth. was Presort of and currency growth Ecommerce XX% $X.XX constant a less billion, was EPS grew Global X%; SendTech over and EPS GAAP

noteworthy the million reminder year. million charge cash cash GAAP non-cash operations were was cash cash year, items goodwill principally $XXX that $XX free million. a recorded from a flow in GAAP increased impairment Free $XXX includes that a few flow. quarter. the free EPS there first prior As and was we Through flow benefited over

in First, our in a focus strong DSO. on our collections resulted improvement

clients. Presort a due higher support our to and PB in initiatives We deposits customer of to also part level saw Bank

a finance due second pandemic. lower our placements Second, the rate the in quarter result at as SendTech greater receivables declined to of a equipment largely of the

we spending as uncertainty to reduce early through free the the flow other see finally, half the to puts are given to improve we the when and typically reprioritize time. understanding key market we and year. momentum can investments the were You level the through takes prudent businesses as on trends generated at but There pandemic the drivers And second in areas built SendTech year began strong starting CapEx surfaced these for our to made of cash as business the experienced, the of XXXX the decision the reopen.

balance investments. allocation, Looking cash capital we and at $XXX year sheet million and short-term the our ended in with

the $XX free return to flow to of year form dividends. the shareholders we cash in used million For our

year the technology reflect our capital throughout in and our made new Our investments totaled $XXX and facilities existing and products. expenditures million

our which total Bowes debt also prior is As part $XXX million million a a with million in Bank in we $XXX grew perspective, ended for of payments. $XX Financial $XX funded from deposits of $X.X Wheeler million year. to billion in we and under the customer debt transformation restructuring deals year ongoing From made the our year. reduction Within Pitney new

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

the Ecommerce to quarter, of SendTech Turning and fourth growth Global in and both year. billion represents delivered grew XX% details we which Presort of flat $X prior were to the revenue XX%.

the was primarily from benefit $XX free grew flow For cash prior tax $X.XX was EPS jurisdictions. the GAAP cash quarter quarter operations tax driven cash related to certain balances predominantly flow and $X.XX. $X.XX the EPS $XX quarter $XXX million working the capital. in year was adjusted million international reflects a was timing in GAAP of tax over EPS by million. and Free for deferred

used reduce capital expenditures $XX in free million, quarter we pay $X million the million invest in flow to and $XX dividends. debt During cash

higher lower interest prior due a million lower was with corporate revenue grew declined year million rentals $XXX $X.X year. equipment was and our of starting and $XX financing prior a of is performance adjusted which had prior rate including X-point quarter about of note as year. $XX revenue X margin influx taxes support prior P&L, expenses. service SG&A the points X%. than year the to end of revenue from Business to declines expense million X.X-point $XXX profit services to prior from in X% $XX than under from for quarter decline suppliers shifting Ecommerce. $XXX declined It expense on provision $X.X employee-related weighted were were approximately expenses X% largely corporate million services of portfolio of improvement year million earnings Compared XX%. million XXX We Interest was that reflects and XX% prior and Global relatively was sales profit. was in The EBIT which less grew gross while million higher Gross diluted compared EBIT driven million XX%. annual which prior year. and of improvement important mix the was unallocated about X% bringing expense prior unallocated our was of $X to the rate X% about $XX is parcel of declined which were the and largely full year. Within to XX%. about lower million cost year is or just flat and SG&A the demand financing Average $X gross This was million by for million which outstanding expenses was was XX% about margin the Turning EBIT our EBIT or million. both XX%. X% was driven to and primarily were tax to at margin shares R&D which than tax were by year.

prior lines grew Compared of Parcel's to grew business. by and prior or million Domestic segments grew growth Cross over $XXX time to over business me $XXX just Within XX% volumes now parcels. and the grew each XX% the XX% which achieved performance revenue Border million volumes this Global revenue. million quarterly volumes quarter. across was year more Digital under Let volumes discuss Ecommerce XX% each XX%. was of year first in XX of we of our our of

This Looking quarter. $X margin the over $X from and in higher significant which improved was also quarters. pressure a market two significant an at higher labor dynamics we by from million. quarter. EBITDA seeing was This prior we year and from loss year growth market year peak a which million EBIT points prior recorded increase points by and prior spot our driven from million benefited partly offset demand. improvement Revenue improvement productivity. was $X million EBIT $XX from costs higher of demand the prior are costs. put prior of on and The transportation prior year prior was from three an also

service We come network invest drive our from for to which our will across our improve continue clients across efficiencies will reduce part network. to automation costs and in

yield addressing are will more temporary structure workforce. which We a labor our labor more from productive shifting to permanent

at We are spot more makes reliant opportunities become us also along and less becoming to looking efficient at capturing with market network it for our deeper on discounts. where transportation the sense postal

million prior X%. declined we market, daily our XXXX, is which Within the was Overall, our flat capture average with to surcharge similar Additionally, will Presort increase. general annual to in rate along year. Services, revenue volumes $XXX

Printed volumes First Class Mail volumes Flats Mail volumes grew declined X%, while Matter X%. grew XX%. Marketing Marketing Bound and Mail

stream have portfolio, as and was relatively we the $XX still million prior margin line was facility COVID-related XX%. from EBIT the XX%. costs past, EBIT our in of and discussed As were was higher new relatively prior EBITDA labor increased year EBITDA margins with due in largely workers. and and and safety declined medical claims is and quarters for costs this well and $XX representing but a small us. to direct as EBIT part was profit EBITDA the million revenue for margin of health

prior represents basis. our excluding of was the about made we which on currency including $XXX X% our and growth our around Marc impact SendTech capabilities; in Revenue our to the to was channel flat digital a million, and talked products. year SendTech have reported segment. of Turning business investments

fourth $XX quarter, We In still in to The stream to contributes revenues financing our SendTech's over a devices shipping over our million. front is over and volumes is driven placements XX% strong with of clients leveraging products. Mail Station XX% XX% us. portfolio and year by prior those great about are our by XX%. clients our offering our its our we new grew clients Equipment multipurpose shipping subscriptions C to impact grew their for XX% the SaaS-based paid to SendPro resonating prior central bringing new of channel future nearly SendTech's in today that opportunity also sales high-margin as attract our Shipping and year. of through digital growth overall offerings. multipurpose revenue are by grew shipping-related grew online to value And

value with resonate our Our continues to clients. proposition

or and monitor was earlier are year risk. disciplined credit managing When prior the rentals million, and financing the year. EBITDA in financing of was which is XX% that saw long-term revenues which range year. quarter. over our our our we and down quality pandemic. for combined sales online XX% in approach margin X%, year we is from million declined the turned last period we improved quarter at remote lockdowns. the take against portfolio and the the EBIT result an station both also and nine organizations. in XX,XXX very Supplies mail offices We quarters. lower Central is declined points as units. was healthy the in approximately conducted of prior one transactions saw performance $XXX recent million of our X% $XXX initial $X from of improving Our which for were Since launching particularly, mailers of second have the height same of in an volume is improvement prior quarters, from usage quarters In is significant the quarter, COVID a supply's setups our small delinquency Station strong The in a improvement from ideal XX%, the the decline growth shipped from declined and delinquency within in a equipment branch margin year. over improvement model. Mail EBIT is the over April U.S. point which rates Support to of represents prior EBITDA option replacement XX%, uptick trending The larger prior increased We services rates remains which demand. growth projected continually fourth and in on our of XX% a up

XXXX. update Let me on close with an

macroeconomic around in will to uncertainty speak we market ongoing uncertain conditions, the our outlook. and the pandemic more XXXX the broadly Given

to year growth. We constant the annual revenue consecutive the currency single-digit expect making over grow to of in year prior XXXX mid low fifth range

We this also low business to EPS our year. the segments, range we revenue expect grow demonstrate adjusted also and Within double-digit improvement. expect to Global expect over to significant grow in Ecommerce prior profit we

in We help the of around expect through devices and shipping revenues. recurring-related offset the momentum, capabilities in particularly, second the our continue XXXX new SendTech, and decline we multipurpose partially XXXX for to half saw

XXXX. aware XXXX offset the expect also Presort we in we that few half XXXX, year-to-year insurance volume of improvements. partly costs on headwinds RIV unit We of be a we second through trends the to overall will improvement variable a as basis in business are proceeds. to in it saw employee-related continue also In to the In relates compensation. XXXX, There expect recorded higher

expect XX% the is on where range, to earnings we than in annual our we Additionally, adjusted tax higher XX% XXXX. rate be ended to which

XXXX We in flow expect are expected and due same earlier to continue items comments benefited discussed that level in XXXX. primarily lower in specific not cash XXXX free I at the to my the

Looking the at timing the through year.

to Our growing, that portfolio shipping. continues to shift particularly, markets are around

the largest fourth our continue be for will year. quarter As quarter to the a result,

Specifically quarter, we single-digit prior prior and the With questions. high over in year please be line to with relatively grow year. operator, to revenue for to in low the in that, line the first expect open EPS double-digit range

Operator

Loop Please line first go of from Your ahead. Instructions] question [Operator you. the Thank Capital. Baruah Ananda comes from

Ananda Baruah

I Hey, for guys. Marc, a good and solid if on taking execution performance. an could. couple morning overall question and the congrats Thanks

moment just you with to profit. throughout follow-up. EBITDA e-commerce And guess, about a or the asking, you a operating a then a could suppose have around I'm not have to regards that profitability using improvement ago could that put I you And year. can context profit I quarter the I'm seem suggest Thanks. in little for with -- perhaps us? XXXX, two find significant Just I would remark in profit

Marc Lautenbach

question. for you Thank Sure. the

So two of look of the business, dynamics. point clumps I as that of would you at dynamics to kind

context middle The to close that last business. and first that's would X,XXX the three the pointed added new of of in as half efficiencies is that out employees. new we I our say of Joe got year, added control we we I put as peak, And facilities. the inside we workforce. And

that market our dynamics, dependent pointed So I the we a on I on own basis. expect in and to time. liked. happens would you're productivity to transportation Joe improve have quarter time And Also rate the subject want your hiring obviously, you year-to-year destiny than spot as And the same efficiency don't to more control own for extent would the the were you out, at employees, you're when at those less when to. fourth that the

that time. that in fourth why reason things in from your lost I I perspective context the And to from know question positive don't an there's continue the to -- control, going asked were that first dynamics be profit, the perspective the think improve. in are of you we So to for of I lots time believe operating of the EBITDA a shouldn't quarter we long

-- of throughout My are important not The moderate the we inflation will labor are the other will in are our what which dynamics conversely side is which happen transportation going expectation are is expect get to not Or dynamics and that them dynamics. those in for around are as price as those bit, industry I inflation. continue year. for but a control to

perspective yes, do So, from significantly XXXX. business an an EBITDA become and to expect better in EBIT we that

Ananda Baruah

a quick maybe to mentioned XXXX, the context, about that's to the surcharge typical well benefit of increases. the to follow-up asking distinction for it. of the beyond that's not benefit comments I so I -- if the am of me. above carry around, can it's few what And to of between guys do forward. ago overall a second context That's from you really degree you some I were a recently a going any year? and guys Can about And, the this it near going you to then And appreciate made of from maybe around is I anticipating just sort as that those part guess, surcharge you comment is sort in think little surcharge little near give that just carry calendar term the helpful. bit a guess, And distinct but sort you're surcharges? there if and moments you just half rate about you right term us in sort a XXXX, announcement

Marc Lautenbach

You bet.

for question. the thanks So

the industry and if is think habit there's to characterize dynamics, been So what the increase, fairly would vanilla pricing has used standard the last peak individual several years. expect hold. to That to that. it's customer The and of is a in is you place I pricing we that over the the situations. on top about pricing to which degree tailored as And

So we at quarter has the if our pricing look you fourth helped. what actually saw increase was

the the of So put large is the those that around we of costs prices what price transportation we the most place happened value preponderance labor in peak, the increases increases. realized the price consumed from

So is pricing around cost. variable that will and the around the hold less to happens to I price increases continue more expect and what

If you, on what's the of, from demand industry. back influx kind in incredible perspective say going such step of an and there's a broader been

different take industry tried to how the haven't tried accommodate in either they've that. or participants different approaches to had You've

that's to the players the and up within those put demand of of effect is amount that of the individual on pressure one we're costs a fair of some the trying step net but it's prices of So businesses. all demand take more

half, And work say going from question now cost of price would think that's to as your the it a first I you year. point out I as to a itself of the think out bifurcated itself it's and not half I'm going half second the between first work we're will confident right do and at itself out. the second the as I work the So we of a but year get disequilibrium in to half perspective

Ananda Baruah

helpful. really that's And

it for saying Net neutral then op in year if the So completely it some that the degree second cost say I potential it net And down net half then a net -- some work guys half. in of like normalizes margin. first the itself probably would in mean for the be situation. a doesn't margin would you half first profit that be to there's benefit can't and

Marc Lautenbach

to there. too that going to I'm not Yeah, I -- mean, unknowns precision off there's go level many answer. of of

themselves that that tricking going that of themselves fact they I'm work the confident out. degree and to work the time frame these be So, I'd if had I things beyond are confidence out will

Ananda Baruah

That's really a helpful, Thanks Marc. lot.

Marc Lautenbach

you. welcome. You're Thank

Operator

comes the go Mehta Your Please line from Research. next Kartik of Northcoast question ahead. from

Kartik Mehta

own Hey, good maybe understand talking a have that cost your maybe contracts destiny there. that you'll or in that bit more? to and you about place little just morning does Marc. I mean transportation the to so wanted buy that about control that can Ecommerce you to need Does and controlling mean trucks, have Global just that

Marc Lautenbach

I answered you an find unsatisfying I yes that suppose if would just answer.

Kartik Mehta

You're probably right.

Marc Lautenbach

the Yeah, we market. of kidding. spot just is are the I'm at No answer looking on are depending much the we balance how

I XX%. quarter went up probably market year. the So quarters dependent just fourth just short XX% to spot mean, it you. calibrate on first through it for the of the several we're in of last And then

that's implications. got two So

that to all that to whatever the at on point of going destiny levels you you can't that control spot service in And time. the market vulnerable you're is economically is own your extent like. out First second the

levels. have is at of more got we peak. So be contracts terms in my certainty for we have if on cost and service of surprised will next that to both we didn't have But entered year's I'd more that into that expectation look trying trucks sure top as

Kartik Mehta

business, from little guess another may quarter Ecommerce therefore that related And becomes to could a revenue really growth be of increase and in could the to the the get costs these that strong cost standpoint have what difficult but -- you're XXXX be anticipating? margin the you a cost? Global I

Marc Lautenbach

question. good it, Got

So we lease the trucks.

So from that perspective both the cost revenue and match. should the

that that the we -- both other shouldn't to the of a as but is disruption quarter not as well well would really expect -- fourth terms economics, thing sight might of levels. performed would be our I we've said, fleet in general So our in it service in which profitability Joe

on dependent in terms whatever of performed is been experience third being on our but at vulnerable of least would in service very market, levels, say levels. to service that wasn't client the parties try we was happened into service way I of postal our impact don't for that ingested certainly perform you're And the sure terms has was So well going a When is also you fleet what the to better spot maximize within economical. but network. what

from downstream think is both in cost, I spot your payback but on is solid of also trucks So which in market, kind the across of postal the the benefits savings terms cost. pretty

Kartik Mehta

then just question, one Marc. And last

wondering I benefit in guidance EPS you double you single quarter line. growth bottom to but low revenue first think the get I'm when the why digits, high of revenue said And the digits to not fall you gave line? might

Marc Lautenbach

Yeah. Well, the line strong of let and had the bottom flow-through the and that it's didn't in to and because inflation get labor. fourth if transportation we particular Adam of the of had elaborate the rates at we anticipated We think growth. dynamics quarter I look revenue you quite I'll

think the through I continue to those first dynamics same are probably quarter. going

that's some I of of being at those Adam, and the we've moderation transportation you XX quarter, through days. – think least same said, will first That least saw at costs days. elaborate seen So XX fourth dynamics in let context. first provide the more you the sort that the persist through I'll

Adam David

Kartik. Yeah,

year was was first items two rate our other quarter in relatively The the last low. tax

the of higher a some a in And rights expect receive last bit rate. proceeds quarter of tax did we year. we So first

two add I'd those So, points.

Kartik Mehta

Thank you question. the for it. very much. Thanks Appreciate

Operator

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

Shannon Cross

given into bit a little to for seeing. much. trends the of a for very would little than some seems puts you cautious guess XXXX. I more, and wanted expected have I takes that revenue It you're Thank dig I

saw quarter given have fourth the in do you strong. that about and e-commerce, is growth So, was won't know seems – I follow-up. think that some but the XXXX – one-timers I mail meter such understand what if first Then third since just – talk on you're you've a quarter we in were Just you. I trying do well that Thank you trajectory maybe, bit mean, you can to that a as the repeat? the fairly side seeing as there

Marc Lautenbach

question. Great Sure.

power That's drone times When we of uncertain a so. to would guess, start So, me. lifetime. of Chairman macroeconomic Federal economic have at all much the I Reserve as meaningful which follow I a you statement his most the with as least states do the statement, you

but right year unfolds. So you're trying cautious how think say, about balanced, I that we're are, would to I prudence Shannon, dictates you're the be we

mail the on If Mail speaking businesses perform between better year to broadly dynamics I our this basis. and expect you shipping, year-to-year break a

you Presort, those if and were throughout the rate So the look SendTech at was of flattish, improvement Mail from the an which business year. exit

of in volumes suspect we continue kind I But at you I be data of going strong. expect growth if fourth can year? I fourth at XX% the quarter is growth look lap you quarter the expect do If the shipping look this that point, that with particular a in to are to not. XX% another

the So I from gets comparison the perspective. back mean, half year of as pretty you difficult the get into a shipping

So dynamics. that are – the those

Shannon Cross

the you Okay. you've network Thank you. your And basically had then you I'm past. that – relative the if plans curious, in accelerated you said, build-out to

seeing maybe investing XXXX we and you. XXXX capacity facilities your to in you're on Thank where where automation in based to I'm the end network? in to get new you your required much going idea given Like, future? the So, in now build go how to what's Just curious And then get of an if of are be what the terms of back you talked time you by out? also, in estimates? the demand the you're is utilization about the

Marc Lautenbach

be seeing in terms physical where on network in say the of There's think, will – footprint. the say, I of size I our of from facilities, a facilities. physical couple there's new which footprint tune the to to substantial. we'll a changes would Automation And the will Yeah. basic of us. the footprint contemplate outgrown. not I of the overall facilities. the we would I'd we're demand, And a more appropriate changes front it but continue places, of might then and environment, And we've couple perspective, obviously, depend some footprint demand is expect is there. fine

the So as bit we roll next to will plan out is could, our the we're a over supply – warehouses. Candidly, roll we'd out years. pretty constrained. couple That it as of have but we automate ambitious automation little fast

what manufacturer's be So dependent on is. the capability it will

technology is There's on to – by is that of half. dimension which amount last an available to and the network. shipping that that in their example the available there's as of puts does service just you. locations, In how So for the the facts ingests kind do how and which postal basis sortation in automated parcels reduces technology an the manpower essence

payback. get as it, very a can it quick has as technology, but So that good we'll also we get

Shannon Cross

just if more actually, And in. I Okay. sneak one could

existing versus you you. how to new it of this will the and just expand expect year, think out and growth you of Thank you customers And business? go as it. XXXX? of sign end logos so need do the that's think from come seeing customers to grow signed the And of If had e-commerce you the you're those much

Marc Lautenbach

will We on plans – to customers the customers. not in nominal we are year the of don't it. last new to. and underneath with some clients like We keeping growth a amount is sign we'd we I terms year really had I predicated, continue The predicated new mean, signing of very suspect, successful plan have

focus successful. those Our making now customers is

Shannon Cross

Thanks.

Operator

Your next Maxim the Group. question Allen go line from of ahead. Klee from Please comes the

Allen Klee

had a from surcharge? increase in Good heard Ecommerce how came that I you price Global Could the peak thought a much revenue say morning. surcharge. you the of us with the plus I quarter tell you just

Marc Lautenbach

Let on me number. Adam or defer Joe to that

Adam David

don't peak certainly but give want the Allen. out one reasons, to obviously far help as we for as Allen, number that mean it I surcharge revenue. competitive take can specific Yes, a did our I

driving the was However, item important volumes. largest to our increase in revenue far the by keep year-to-year that it's mind

volumes businesses. about by more we lines across As all XX% talked increased over of or our

the that increase from volume year-to-year the really drove a was it most perspective. So, of revenue

Allen Klee

you. Thank CapEx of a in XXXX? decline SG&A lower higher your percent XXXX SG&A you XXXX revenue. do anticipate as percent in decline XXXX or that revenue to And again? think of you be in highlighted And than you that will will as a ability Do

Marc Lautenbach

you why that? take don't Adam,

Adam David

Yes.

part second first. the answer I'll So,

recall as CapEx, in hit, you and spend did So, reprioritizing Allen, our pandemic we the about second we quarter talked the that. when

much CapEx in So, than years. lower our prior in came

lot CapEx CapEx A e-commerce. automation points efficiencies of in As XXXX, Marc go those into back talked we around and for will levels. the return investments out we look normal the building expect to to to

revenue, of There's across As far our as mean to SG&A and as to SG&A reduce look yes, a to I we as forward we long-term that as a opportunities opportunities plan, to improve. services costs. expect shared be percent in percent continues of revenue continue

shared We there. the there's services continue all to benchmark opportunity

channel. market, business our a of right; done go a is web our to more now via SendTech And and we'll we is more more within how as work sales continue shifting we the our we've web. of inside which on which is example certainly to We've sold more most efficient efficient forward think over the the lot to look ship here from Another sales go-to-market I direct sales the channel.

SG&A So, certainly front. from opportunity continued an

Marc Lautenbach

I down. would that. model suggests comes our at model, it moderate if it our while increase -- just to on either you levels long-term at I look revenue expense add flatter mean that stays continues

leverage of the and that's model. dynamics the that creates one of So, -- it's business

Allen Klee

that that I don't second you. questions deposits you But to in available? for little equipment, view potential that on much we to expand of of prudent us can to have what's work. new into And it's that that say know then the two -- Financial, there's we're to that to and you just much to in general, continue? And remind could how a pull not money an maybe One if changed want back planning how opportunity Thank Great. in bit the my for related you want last increase like to to put you Wheeler XXXX? just are much this your And behind excess SendTech. give business Wheeler dig

Marc Lautenbach

Sure.

if take might. those I both of Let me

sales. different couple drove SendTech were within that there equipment of So, factors a

quarter, grew more devices. being middle-end First new in of year and that shipping which the realize We'll there value government the Joe that principally from But that the revenue fourth from fairly those in because deal that's large some was revenue low the of we we the all, fourth embodied said realized last pointed had and quarter. in devices out, deal was XXXX. substantially as a of in

new. relatively was So, the product

bit products. But So, of you a surcharge a I'm source always important little revenue on tapped revenue fairly we've initial that's us something for get forward. you going into introduce an that pretty new confident as

substantially So, to that expect shipping offset fourth reiterate, being I see. SendTech and like whether by I But or decline quarter continue. of core now dynamic market we'll would quarter as the every the revenue Mail the Joe and not looks out pointed in is

company. to rates important our think that's we the As opportunity Wheeler for an still

in we drives or deposits We that opportunities $XXX have costs. deposits put earnings. money we million put there's Adam, are -- million And $XXX to advantaged or work, to of I'll think Joe in that defer like to to that economically but incremental to of those great we work terms way a would think

capital If you our that our evolved, business. shipping higher And evolved, say, from perspective. last it more has is the principally credit to we've loans as of loans, envisioned accretive it working if what capital advantage lease-based to thinking I Mail analogous however, velocity started, this a would the moved look had at how we business has we've it's market to reliable those thinking when that several as for relatively it, a done our working has somewhat is you The over a for will, shipping, decades. businesses. to

it you're value any other of residual The you when capital take advantage unlike loans. making you're take where value risk, when providing is, working you loans don't risk residual

it's great economic our putting work now, as economic was and rate So those conditions. But depend years ago, convinced I of will a pace as several opportunity. to deposits on I'm

credit perspective. well that there's we Just base again to a understand from repeat, a customer

the We advantage those the source. expense terms clients. funding of already gone have through acquiring of economic And in we've

structural within marketplace that you I as as capital So compelling. you the very of to think long bring control, you advantages kind stay as are long to stay installed as your we in base, which can continue

Allen Klee

very Thank you much.

Operator

of Your line question Lebiedzinski Anthony go comes Sidoti. from ahead. Please next from the

Anthony Lebiedzinski

the taking morning Yes. and thank Good questions. you for

So, first, regard follow-up wanted sales. questions to the just the to in on previous equipment

large So, fourth have the you if equipment government to out had, in grown that quarter? the to back we that deal sales business the

Marc Lautenbach

revenue total overall flattish. was that is close of right kind is grown. enough still around have The that would sales the recollection? it probably Equipment Adam,

Adam David

right, that's Yes, Marc.

Anthony Lebiedzinski

Got it.

a far profitability then, those to year ago. EPS of, what's main that expected, in of first segments? us And guidance Okay. Thanks three a Can from that you as that. embedded as mentioned, you quarter for for for expectations flat as your sense the give you be kind each to

Marc Lautenbach

you let I'll Adam, handle that one.

Adam David

Yes. to I we're here segment-by-segment going mean, guidance not obviously quarter. for give Anthony, the

Shannon the asked the was as do I here forward we who quarter. throughout I As think, question, expect mentioned, move it improvement we

from and standpoint we quarter, First improvement mentioned, as we as certainly move but we proceeds, we right lower a year. some year throughout the tax EPS continued last did an have expect rate

e-commerce quarter, the With with quarter our holiday a and right, fourth piece naturally being the season largest being the of bigger, bigger business.

Anthony Lebiedzinski

it. Got

you labor Okay. could would seeing out? talked And the anything else of could transportation that you a little headwinds course certainly cost the an know that Any but and mentioned, materialize several far as increase about there. you tailwinds over of sort year? as cost automation, call bit there I

Marc Lautenbach

general just say would I Well, efficiencies.

there's think just you their skill maturation we X,XXX into a entered as dynamics and to of by if will operating the job I about new again, itself. that efficiency in certain all productivity mean brand So were GEC, people that yield within particular, peak,

little aside, So, get just settles put a bit, more quick efficiencies. we can. as would matures as expect that But automation as out to we'll we network the and

Anthony Lebiedzinski

right. Best of you. Thank luck. All

Operator

there additional time, the no And now back like are to to call turn Lautenbach any Mr. I'd further remarks. this at for questions.

Marc Lautenbach

Yes. Thank you, The and thanks questions and for questions. instructive. terrific the were

is equally instructive. answer our hopefully, So more

to partner. a as job he's of well and terrific off Before Sutula in over like last the terrific of a I year-end go Joe the any has and starting I'd been sat through further, done year, Joe ably Catapano. getting us close a for as thank months couple Stan

partnership. your on for you have Ana thank just And to again, delighted we're Joe, So Board.

guidance. get as quickly as there As guidance, like us I'd desire I it provide Candidly, specific the to can. relates to I understand to for

that as well as from understand So, a of your that. we'll year we importance perspective particularly of the perspective. didn't right that the the as think year We the how degree of have of as to had soon we now a in investor numbers give you in can that. half confidence I unfolded, confidence the then do set we do degree just back the

the to where of would as get few and something concluded of pick as quickly that we'll very we I is, So, doing that my in done. precipice just we're remarks up companies I can. have that formal

have this Pitney a is gone that in I've And business companies, many needed follow company. of mark things growth of that. models same revenue how are to become recreate and a as disruption the to reach to poised challenges over terrific that order we so do chapter company going And business has guidance the and on. said all that the cadre we're moves You preponderance we as fully through of profitable the transformed that last believe through our suggested, the Bowes of of digital whom disrupted. of decade, some the of We're last through

And half would as year, can we an like talk. sometime provide clarity of to can. we if first to Day continue to we'll possibly you as much the to the in So, we do Investor

as a can. that do either we of we transparent in So, to course, would we way But want virtual as was be to have nonetheless, safe. or that

this remarks, talking you forward to Take to and So conclude with we that, we'll morning's soon. look care.

Operator

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

You may now disconnect.

Pitney Bowes (PBI) 2 Feb 212020 Q4 Earnings call transcript