Pitney Bowes(PBI) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for the periods ended June 30, 2025 and 2024 Item 1: Financial Statements This section presents the unaudited condensed consolidated financial statements and detailed notes for Pitney Bowes Inc. for the periods ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations This section presents the company's condensed consolidated statements of operations for Q2 and H1 2025 and 2024 | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Revenue | $461,909 | $489,745 | $955,329 | $1,011,014 | | Total Costs and Expenses | $422,638 | $497,599 | $869,326 | $971,264 | | Income (loss) from continuing operations before taxes | $39,271 | $(7,854) | $86,003 | $39,750 | | Net income (loss) | $29,975 | $(24,867) | $65,397 | $(27,752) | | Basic EPS (Continuing Operations) | $0.17 | $(0.06) | $0.36 | $0.12 | | Diluted EPS (Continuing Operations) | $0.17 | $(0.06) | $0.36 | $0.12 | - Net income for the three months ended June 30, 2025, was $29.975 million, a significant improvement from a net loss of $(24.867) million in the prior year period. Similarly, for the six months ended June 30, 2025, net income was $65.397 million, compared to a net loss of $(27.752) million in the prior year[7] Condensed Consolidated Statements of Comprehensive Income This section presents the company's condensed consolidated statements of comprehensive income for Q2 and H1 2025 and 2024 | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $29,975 | $(24,867) | $65,397 | $(27,752) | | Other comprehensive income (loss), net of tax | $47,299 | $(1,712) | $74,895 | $(14,278) | | Comprehensive income (loss) | $77,274 | $(26,579) | $140,292 | $(42,030) | - Comprehensive income significantly improved, reaching $77.274 million for the three months ended June 30, 2025, compared to a loss of $(26.579) million in the prior year. For the six-month period, comprehensive income was $140.292 million, up from a loss of $(42.030) million, primarily driven by foreign currency translation gains[9] Condensed Consolidated Balance Sheets This section presents the company's condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024 | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total Assets | $3,238,838 | $3,397,516 | | Total Liabilities | $3,775,647 | $3,975,949 |\ | Total Stockholders' Deficit | $(536,809) | $(578,433) | - Total assets decreased by $158.678 million from December 31, 2024, to June 30, 2025, primarily due to a decrease in cash and cash equivalents. Total liabilities also decreased by $200.302 million, leading to a reduction in stockholders' deficit[11] Condensed Consolidated Statements of Cash Flows This section presents the company's condensed consolidated statements of cash flows for Q2 and H1 2025 and 2024 | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash from operating activities | $94,709 | $79,945 | | Net cash from investing activities | $(74,100) | $(27,713) | | Net cash from financing activities | $(208,492) | $(60,807) | | Change in cash and cash equivalents | $(184,549) | $(11,264) | - Net cash from operating activities increased by $14.764 million YoY for the six months ended June 30, 2025. However, net cash used in investing activities significantly increased by $46.387 million, and net cash used in financing activities increased by $147.685 million, primarily due to common stock repurchases and debt redemption/refinancing[13] Notes to Condensed Consolidated Financial Statements This section provides detailed notes to the condensed consolidated financial statements, explaining key accounting policies and financial items 1. Description of Business and Basis of Presentation This note describes Pitney Bowes Inc.'s business, its global operations, and the basis of financial statement presentation - Pitney Bowes Inc. is a technology-driven company providing SaaS shipping solutions, mailing innovation, and financial services globally, serving over 90% of the Fortune 500[14] - The company revised its segment reporting effective April 1, 2025, moving a cross-border services contract to SendTech Solutions and recasting prior periods. It also revised revenue and cost of revenue presentation effective January 1, 2025, to better align with offerings, and reallocated marketing and innovation expenses to SendTech Solutions[16][17] - Certain revenues and expenses from the Global Ecommerce segment are reported as discontinued operations due to its wind-down in August 2024[18] 2. Revenue This note details the company's revenue recognition policies and disaggregated revenue by major service and product lines Disaggregated Revenue by Major Service/Product Lines (Three Months Ended June 30) | Major Service/Product Lines (in thousands) | 2025 Revenue | 2024 Revenue | | :--------------------------------------- | :----------- | :----------- | | Services | $290,423 | $297,253 | | Products | $90,880 | $108,262 | | Financing and other | $80,606 | $84,230 | | Total consolidated revenue | $461,909 | $489,745 | Disaggregated Revenue by Major Service/Product Lines (Six Months Ended June 30) | Major Service/Product Lines (in thousands) | 2025 Revenue | 2024 Revenue | | :--------------------------------------- | :----------- | :----------- |\ | Services | $608,855 | $619,943 | | Products | $184,070 | $222,386 | | Financing and other | $162,404 | $168,685 | | Total consolidated revenue | $955,329 | $1,011,014 | - Services revenue includes digital shipping/mailing solutions, maintenance, professional, subscription services, mail processing, and cross-border solutions, recognized over time based on value transferred or ratably over contract periods. Products revenue from equipment and supplies is recognized upon delivery or acceptance/installation. Financing and other revenue includes sales-type/operating leases, finance income, late fees, and investment income[24][25][26] 3. Segment Information This note provides financial information for the company's reportable segments: SendTech Solutions and Presort Services - The company operates in two reportable segments: SendTech Solutions and Presort Services. SendTech Solutions offers physical and digital shipping/mailing technology, financing, and related services. Presort Services provides mail sortation services for postal worksharing discounts[30] Segment Revenue (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | SendTech Solutions | $311,716 | $339,273 | $627,322 | $686,094 | | Presort Services | $150,193 | $146,858 | $328,007 | $316,665 | | Total Segment Revenue | $461,909 | $486,131 | $955,329 | $1,002,759 | Adjusted Segment EBIT (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | SendTech Solutions | $101,255 | $96,023 | $198,282 | $191,937 | | Presort Services | $35,940 | $27,048 | $90,719 | $67,377 | | Total Adjusted Segment EBIT | $137,195 | $123,071 | $289,001 | $259,314 | 4. Discontinued Operations This note details the wind-down and deconsolidation of the Global Ecommerce segment, reporting its financial impact - On August 8, 2024, Pitney Bowes initiated an orderly wind-down of a majority of its Global Ecommerce reporting segment (Ecommerce Restructuring). An affiliate of Hilco Commercial Industrial, LLC acquired 81% of the voting interests in DRF Logistics, LLC, with Pitney Bowes retaining 19% voting and 100% economic interests[35] - The Ecommerce Debtors filed for Chapter 11 bankruptcy, leading to deconsolidation from Pitney Bowes. The Plan of Liquidation became effective on December 9, 2024, substantially consummating the separation[36][37] Loss from Discontinued Operations (in thousands) | Metric | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :----------------------------- | | Revenue | $303,426 | $612,666 | | Total costs and expenses | $334,234 | $681,404 | | Loss from discontinued operations, net of tax | $(14,742) | $(49,731) | 5. Earnings per Share (EPS) This note presents the basic and diluted earnings per share from continuing operations for the reported periods Basic and Diluted EPS (Continuing Operations) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS (Continuing Operations) | $0.17 | $(0.06) | $0.36 | $0.12 | | Diluted EPS (Continuing Operations) | $0.17 | $(0.06) | $0.36 | $0.12 | - Basic and diluted EPS from continuing operations significantly improved in 2025, reporting $0.17 for the three months and $0.36 for the six months ended June 30, compared to losses of $(0.06) and gains of $0.12 in the respective prior year periods[42] 6. Inventories This note provides a breakdown of the company's inventories, including raw materials, supplies, and finished products Inventories (in thousands) | Inventory Type | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Raw materials | $31,064 | $20,405 | | Supplies and service parts | $20,931 | $15,095 | | Finished products | $27,006 | $24,336 | | Total inventories | $79,001 | $59,836 | - Total inventories increased by $19.165 million from December 31, 2024, to June 30, 2025, primarily driven by increases in raw materials and supplies and service parts[43] 7. Finance Assets and Lessor Operating Leases This note details finance receivables, including sales-type leases and loans, and the accounting for credit losses - Finance receivables, primarily within the SendTech Solutions segment, consist of sales-type leases, secured loans, and unsecured loans, with maturities generally ranging from three to five years for leases and secured loans, and monthly for unsecured loans[44] Net Investment in Finance Receivables (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Net investment in sales-type lease receivables | $758,654 | $801,026 | | Net investment in loan receivables | $386,960 | $344,898 | | Net investment in finance receivables | $1,145,614| $1,145,924 | - The allowance for credit losses is based on historical experience, portfolio nature, client ability to pay, and economic outlook. The company ceases revenue recognition for receivables over 90 days past due and writes off uncollectible accounts after exhausting collection efforts[47][48] 8. Intangible Assets and Goodwill This note provides information on the company's intangible assets and goodwill, including changes due to currency impact Intangible Assets, Net (in thousands) | Intangible Asset Type | June 30, 2025 Net Carrying Amount | December 31, 2024 Net Carrying Amount | | :-------------------- | :-------------------------------- | :------------------------------------ | | Customer relationships | $15,537 | $14,390 | | Software & technology | $1,230 | $1,390 | | Total intangible assets | $16,767 | $15,780 | Goodwill by Segment (in thousands) | Segment | December 31, 2024 | Currency Impact | June 30, 2025 | | :----------------- | :---------------- | :-------------- | :------------ | | SendTech Solutions | $497,240 | $27,527 | $524,767 | | Presort Services | $223,763 | — | $223,763 | | Total goodwill | $721,003 | $27,527 | $748,530 | - Total intangible assets increased by $987 thousand from December 31, 2024, to June 30, 2025, primarily due to an increase in customer relationships. Goodwill increased by $27.527 million, entirely attributable to currency impact within the SendTech Solutions segment[59][63] 9. Fair Value Measurements and Derivative Instruments This note details the fair value measurements of financial assets and liabilities and the company's derivative instruments Financial Assets Accounted for at Fair Value (in thousands) | Asset Type | June 30, 2025 Total | December 31, 2024 Total | | :-------------------------------- | :------------------ | :---------------------- | | Money market funds | $83,885 | $146,560 | | Equity securities | $11,941 | $12,518 | | Commingled fixed income securities | $2,190 | $2,146 | | Government and related securities | $15,163 | $15,744 | | Corporate debt securities | $43,299 | $42,159 | | Mortgage-backed / asset-backed securities | $90,366 | $98,464 | | Total assets | $246,844 | $317,591 | - The company measures certain financial assets and liabilities at fair value on a recurring basis, classifying them into Level 1, Level 2, or Level 3 based on the observability of inputs. Investment securities classified as available-for-sale are recorded at fair value, with changes due to market conditions in AOCL and credit conditions in earnings[64][65][70] - At June 30, 2025, substantially all investment portfolio securities were in an unrealized loss position, but no allowance for credit loss or impairment charge was recorded due to the intent and ability to hold them until recovery or maturity[73] 10. Restructuring Charges This note outlines the restructuring charges incurred by the company, primarily related to the 2024 Plan and headcount reductions Restructuring Charges (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Amounts charged to expense - continuing operations | $15,206 | $34,165 | | Cash payments | $(21,518) | $(26,697) | | Balance at June 30 | $15,456 | $34,714 | - Restructuring charges for continuing operations decreased significantly from $34.165 million in the first half of 2024 to $15.206 million in the first half of 2025. The 2024 Plan, which eliminated approximately 3,200 positions and incurred cumulative charges of $89 million, was officially completed by the end of Q2 2025[80][81] 11. Debt This note details the company's debt structure, including principal amounts, new credit agreements, and compliance with covenants Total Debt (in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Principal amount | $1,925,804 | $1,955,529 | | Less: unamortized costs, net | $29,089 | $35,821 | | Total debt | $1,896,715| $1,919,708 | | Less: current portion long-term debt | $15,150 | $53,250 | | Long-term debt | $1,881,565| $1,866,458 | - In Q1 2025, the company redeemed outstanding Notes due March 2028 and entered into a new senior secured credit agreement, including a $265 million revolving credit facility, a $160 million term loan due March 2028, and a $615 million term loan due March 2032. Proceeds were used to repay existing term loans and for general corporate purposes[82] - The company was in compliance with all financial covenants under the New Credit Agreement as of June 30, 2025. It intends to redeem the Notes due March 2027 before September 2026 to avoid potential springing maturity dates for other loans[84][85] 12. Pensions and Other Benefit Programs This note presents the net periodic benefit cost for the company's defined benefit pension plans and postretirement benefit plans Net Periodic Benefit (Income) Cost (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Defined Benefit Pension Plans (US) | $(53) | $(1,964) | $(109) | $(3,928) | | Defined Benefit Pension Plans (Foreign) | $1,876 | $935 | $3,636 | $1,871 | | Nonpension Postretirement Benefit Plans | $492 | $936 | $996 | $1,869 | | Total Net Periodic Benefit (Income) Cost | $2,315 | $(93) (sum of above) | $4,523 | $(188) (sum of above) | - Net periodic benefit cost for US Defined Benefit Pension Plans showed an income of $(53) thousand for Q2 2025, compared to an income of $(1.964) million in Q2 2024. Foreign Defined Benefit Pension Plans and Nonpension Postretirement Benefit Plans both incurred costs, with foreign plans increasing and nonpension plans decreasing YoY[86] 13. Income Taxes This note details the company's effective tax rates, tax provisions, and unrecognized tax benefits for the reported periods - The effective tax rate for the three months ended June 30, 2025, was 23.7%, including a $2 million benefit from tax matter resolutions. For the six months, the rate was 24.0%, including a $2 million benefit from restricted stock vesting and another $2 million from tax matter resolutions[87] - For the three months ended June 30, 2024, a tax provision of $2 million was recorded on a pre-tax loss of $8 million, mainly due to restructuring charges. For the six months, a $18 million provision was recorded on $40 million pre-tax income, also due to restructuring charges and a $2 million charge for restricted stock vesting[88] - The company expects a potential decrease of up to 35% in unrecognized tax benefits within the next 12 months due to ongoing tax return examinations and expiring statutes of limitation[89] 14. Commitments and Contingencies This note describes the company's various legal proceedings, commitments, and contingencies, including purported class actions - Pitney Bowes is involved in various litigations, including contractual rights, intellectual property, and client/employee disputes, some of which are purported class actions. These include a Recharacterization Proceeding against Trilogy Leasing Co., LLC and related suits by Trilogy and Mitsubishi[91][92][93][94] - Despite the inherent uncertainties, management believes the final outcome of outstanding matters will not have a material adverse effect on the company's financial position, results of operations, or cash flows[95] 15. Stockholders' Deficit This note details the changes in the company's stockholders' deficit, including impacts from net income, dividends, and stock repurchases Changes in Stockholders' Deficit (in thousands) | Metric | Balance at January 1, 2025 | Net Income (Loss) | Other Comprehensive Income (Loss) | Dividends Paid | Issuance of Common Stock | Stock-based Compensation Expense | Repurchase of Common Stock | Balance at June 30, 2025 | | :-------------------- | :------------------------- | :---------------- | :-------------------------------- | :------------- | :----------------------- | :------------------------------- | :------------------------- | :----------------------- | | Common stock | $270,338 | — | — | — | — | — | — | $270,338 | | Retained earnings | $2,671,868 | $65,397 | — | $(23,606) | $(55,954) | $12,287 | — | $2,669,992 | | Accumulated other comprehensive loss | $(839,171) | — | $74,895 | — | — | — | — | $(764,276) | | Treasury stock | $(2,681,468) | — | — | — | $58,879 | — | $(90,274) | $(2,712,863) | | Total deficit | $(578,433) | $65,397 | $74,895 | $(23,606) | $2,925 | $12,287 | $(90,274) | $(536,809) | - The total stockholders' deficit improved from $(578.433) million at January 1, 2025, to $(536.809) million at June 30, 2025, driven by net income and other comprehensive income, partially offset by dividends paid and common stock repurchases[97] 16. Accumulated Other Comprehensive Loss This note explains the changes in accumulated other comprehensive loss, primarily driven by foreign currency adjustments and pension plans Changes in AOCL, Net of Tax (in thousands) | Component | Balance at January 1, 2025 | Net Other Comprehensive Income | Balance at June 30, 2025 | | :-------------------- | :------------------------- | :----------------------------- | :----------------------- | | Available for sale securities | $(29,597) | $3,698 | $(25,899) | | Pension and postretirement benefit plans | $(704,818) | $10,189 | $(694,629) | | Foreign currency adjustments | $(104,756) | $61,008 | $(43,748) | | Total | $(839,171) | $74,895 | $(764,276) | - Accumulated Other Comprehensive Loss (AOCL) decreased from $(839.171) million at January 1, 2025, to $(764.276) million at June 30, 2025, primarily due to significant foreign currency translation gains and reclassifications related to pension and postretirement benefit plans[99] 17. Supplemental Financial Statement Information This note provides supplemental cash flow information, including cash interest paid and cash income tax payments Supplemental Cash Flow Information (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Cash interest paid | $71,923 | $85,539 | | Cash income tax payments (refunds), net | $11,859 | $31,323 | | Capital assets obtained under capital lease obligations | $1,313 | $9,090 | - Cash interest paid decreased by $13.616 million, and net cash income tax payments decreased by $19.464 million for the six months ended June 30, 2025, compared to the prior year[103] Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, results of operations, and future outlook Forward-Looking Statements This section highlights forward-looking statements, emphasizing inherent risks and uncertainties that could affect future financial performance - The MD&A contains forward-looking statements subject to risks and uncertainties, and actual results may differ materially from projections. The company does not undertake to update these statements publicly, except as required by law[104] - Key factors that could affect future financial performance include changes in postal regulations, declines in mail/shipping volumes, loss of major clients, trade policy changes, global supply chain issues, economic conditions, interest rates, foreign currency exchange rates, labor/transportation costs, inability to execute strategic initiatives, loss of key employees, and cybersecurity incidents[107] Ecommerce Restructuring This section details the orderly wind-down and deconsolidation of the Global Ecommerce segment, including its financial reporting impact - On August 8, 2024, Pitney Bowes initiated an orderly wind-down of its Global Ecommerce reporting segment. This involved an affiliate of Hilco Commercial Industrial, LLC subscribing for 81% of the voting interests in DRF Logistics, LLC, with Pitney Bowes retaining 19% voting and 100% economic interests[108] - Following the GEC Sale, the Ecommerce Debtors filed for Chapter 11 bankruptcy, leading to their deconsolidation. As a result, certain revenues and expenses for Q2 and H1 2024 are reported as discontinued operations, and the remaining portion of Global Ecommerce is now reported as 'Other' for segment reporting[108][109] Outlook This section provides an outlook for SendTech Solutions and Presort Services segments, including revenue expectations and margin improvements - For SendTech Solutions, mailing-related revenues are expected to decline due to lower meter populations and a higher mix of lease extensions over new equipment sales. This decline is anticipated to be partially offset by growth in shipping offerings, especially SaaS solutions, leading to more stable cash flows from lease extensions[110] - Presort Services expects roughly flat revenue growth compared to the prior year, as volume declines are partially offset by pricing actions. Margin increases are anticipated from continued improvements in efficiencies and productivity[111] - The company continuously assesses the potential impact of volatile U.S. government tariffs on imported goods and is considering various mitigating actions[112] OVERVIEW OF CONSOLIDATED RESULTS This section provides an overview of the company's consolidated financial results for the three and six months ended June 30, 2025 and 2024 Consolidated Financial Results Summary (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Actual % Change | | :-------------------- | :--- | :--- | :-------------- | | Total revenue | $461,909 | $489,745 | (6)% | | Cost of revenue | $214,383 | $239,266 | 10% | | Operating expenses | $208,255 | $258,333 | 19% | | Net income (loss) | $29,975 | $(24,867) | >100% | Consolidated Financial Results Summary (Six Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Actual % Change | | :-------------------- | :--- | :--- | :-------------- | | Total revenue | $955,329 | $1,011,014 | (6)% | | Cost of revenue | $438,682 | $487,788 | 10% | | Operating expenses | $430,644 | $483,476 | 11% | | Net income (loss) | $65,397 | $(27,752) | >100% | - Consolidated revenue decreased by $28 million (6%) for Q2 2025 and $56 million (6%) for H1 2025, primarily due to lower products, services, and financing revenue. Net income significantly improved for both periods, turning from a loss in 2024 to a gain in 2025, largely due to decreased costs of revenue and operating expenses, and the absence of discontinued operations losses in 2025[116][117][118][120][121][122] SEGMENT RESULTS This section analyzes the financial performance of the company's reportable segments: SendTech Solutions and Presort Services SendTech Solutions This section details the financial performance of the SendTech Solutions segment, including revenue, gross margin, and Adjusted Segment EBIT SendTech Solutions Financial Performance (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Actual % Change | | :-------------------- | :--- | :--- | :-------------- | | Total revenue | $311,716 | $339,273 | (8)% | | Gross margin % | 66.1% | 64.4% | 1.7 pp | | Adjusted Segment EBIT | $101,255 | $96,023 | 5% | SendTech Solutions Financial Performance (Six Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Actual % Change | | :-------------------- | :--- | :--- | :-------------- | | Total revenue | $627,322 | $686,094 | (9)% | | Gross margin % | 66.3% | 64.4% | 1.9 pp | | Adjusted Segment EBIT | $198,282 | $191,937 | 3% | - SendTech Solutions revenue decreased by 8% in Q2 2025 and 9% in H1 2025, primarily due to lower products revenue from customers extending leases and declining meter populations. Despite lower revenue, gross margin percentage increased due to headcount reductions and cost savings initiatives, leading to a 5% increase in Adjusted Segment EBIT for Q2 and 3% for H1[129][130][131][132][133] Presort Services This section details the financial performance of the Presort Services segment, including revenue, gross margin, and Adjusted Segment EBIT Presort Services Financial Performance (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Actual % Change | | :-------------------- | :--- | :--- | :-------------- | | Services revenue | $150,193 | $146,858 | 2% | | Gross Margin % | 36.0% | 31.4% | 4.6 pp | | Adjusted segment EBIT | $35,940 | $27,048 | 33% | Presort Services Financial Performance (Six Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Actual % Change | | :-------------------- | :--- | :--- | :-------------- | | Services revenue | $328,007 | $316,665 | 4% | | Gross Margin % | 38.8% | 34.3% | 4.5 pp | | Adjusted segment EBIT | $90,719 | $67,377 | 35% | - Presort Services revenue increased by 2% in Q2 2025 and 4% in H1 2025, driven by pricing actions despite mail volume declines. Gross margin percentage significantly improved to 36.0% (Q2) and 38.8% (H1) due to higher revenue, lower transportation costs, and savings from the 2024 Plan, resulting in a 33% (Q2) and 35% (H1) increase in Adjusted Segment EBIT[134][135][136][137][138] CORPORATE EXPENSES This section analyzes corporate expenses, highlighting reductions due to cost savings initiatives and compensation adjustments Corporate Expenses (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Corporate expenses | $34,902 | $44,293 | $67,019 | $86,495 | - Corporate expenses decreased by $9 million (21%) in Q2 2025 and $19 million (23%) in H1 2025, primarily due to lower salary and variable compensation expenses from the 2024 Plan, and reduced insurance expenses from cost savings initiatives. These reductions were partially offset by higher non-cash foreign currency revaluation losses on intercompany loans[139][140] LIQUIDITY AND CAPITAL RESOURCES This section discusses the company's liquidity position, cash flow activities, and capital resources, including debt and share repurchases - As of June 30, 2025, Pitney Bowes had $301 million in cash, cash equivalents, and short-term investments. The company believes existing cash, operational cash flow, and revolving credit facility capacity will be sufficient for the next 12 months[142] Cash Flow Summary (in thousands) | Metric | 2025 | 2024 | Change | | :-------------------------------- | :--- | :--- | :----- | | Net cash from operating activities | $94,709 | $79,945 | $14,764 | | Net cash from investing activities | $(74,100) | $(27,713) | $(46,387) | | Net cash from financing activities | $(208,492) | $(60,807) | $(147,685) | | Change in cash and cash equivalents | $(184,549) | $(11,264) | $(173,285) | - Cash flows from operating activities improved by $15 million in H1 2025, while investing activities declined by $46 million due to higher loan receivables investments and an acquisition. Financing activities declined by $148 million, primarily due to $90 million in common stock repurchases, $42 million lower customer deposits, and $21 million in debt redemption/refinancing fees[144][145][146] Item 3: Quantitative and Qualitative Disclosures about Market Risk This section confirms no material changes to quantitative and qualitative market risk disclosures from the 2024 Annual Report - No material changes to market risk disclosures were identified compared to the 2024 Annual Report[156] Item 4: Controls and Procedures This section confirms the effectiveness of disclosure controls and internal controls over financial reporting as of June 30, 2025, with no material changes - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025, ensuring timely and accurate information disclosure[158] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, such internal control[158] PART II. OTHER INFORMATION This section provides additional information on legal proceedings, risk factors, equity sales, defaults, and other corporate matters Item 1: Legal Proceedings This section refers to Note 14 for details on ongoing legal proceedings, including contractual, intellectual property, and client/employee disputes - Legal proceedings are detailed in Note 14 of the Condensed Consolidated Financial Statements[160] Item 1A: Risk Factors This section confirms no material changes to the risk factors identified in Item 1A of the company's 2024 Annual Report - No material changes to the risk factors were identified compared to Item 1A of the 2024 Annual Report[161] Item 2: Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activities, including the authorized program and shares repurchased in Q2 and July 2025 - The Board of Directors authorized a new $150 million share repurchase program on February 11, 2025, which was increased to $400 million in July 2025[162] Repurchases of Common Stock (Three Months Ended June 30, 2025) | Month | Total number of shares purchased | Average price paid per share | | :--------- | :------------------------------- | :--------------------------- | | April 2025 | 1,319,150 | $8.29 | | May 2025 | 1,565,765 | $9.65 | | June 2025 | 4,700,827 | $10.47 | | Total | 7,585,742 | $9.92 | - From July 1, 2025, through July 25, 2025, the company purchased an additional 3,475,960 shares for a total of $40 million[162] Item 3: Defaults Upon Senior Securities This section confirms that no defaults upon senior securities occurred during the reporting period - No defaults upon senior securities occurred[163] Item 4: Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[164] Item 5: Other Information This section reports the termination of Mr. Kurt Wolf's Rule 10b5-1 trading arrangement upon his CEO appointment, with no other changes - Mr. Kurt Wolf terminated his Rule 10b5-1 trading arrangement upon his appointment as CEO on May 22, 2025[165] - No other director or officer modified a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[165] Item 6: Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, employment agreements, and certifications - Exhibits include Amended and Restated Certificate of Incorporation and By-laws, employment letters for Kurt Wolf and Lance Rosenzweig, the 2024 Stock Plan, CEO and CFO certifications (31.1, 31.2, 32.1, 32.2), and Inline XBRL taxonomy documents[166] Signatures This section contains the required signatures for the Form 10-Q filing