Pitney Bowes(PBI) - 2023 Q4 - Annual Report

Financial Performance - Total revenue for 2023 was $3,266,348, a decrease of 8% compared to $3,538,042 in 2022[88] - Net loss for 2023 was $385,627, compared to net income of $36,940 in the prior year, representing a significant decline[91] - Total revenue for 2023 was $1,293,423 million, a decrease of 5% compared to $1,359,679 million in 2022[1] - Adjusted Segment EBIT for 2023 was $405 million, up from $401 million in the prior year[2] - The company expects consolidated revenue to be flat to a low single-digit decline in 2024 compared to 2023[83] Revenue Breakdown - Global Ecommerce revenue decreased by $221 million in 2023, with domestic parcel delivery revenue growth of $158 million partially offsetting declines in cross-border services[94] - Presort Services revenue increased by 3% to $617,599 in 2023, driven by pricing actions despite a 6% decrease in total mail volumes[98] - Equipment sales revenue declined by $31 million, primarily due to customers extending leases instead of purchasing new equipment[1] Cost and Expenses - The company anticipates annualized cost savings of $75-$85 million by the end of 2024 from its worldwide restructuring program[84] - Selling, general and administrative expenses decreased by $13 million, driven by lower outsourcing and professional fees[1] - Unallocated corporate expenses increased by $7 million to $210,931 million, primarily due to higher variable compensation and depreciation expenses[4] Margins and Profitability - Gross margin for Global Ecommerce decreased to 4.6% in 2023 from 8.6% in the prior year, primarily due to lower volumes in cross-border services[95] - Gross margin decreased by $12 million, but gross margin percentage increased to 65.1% from 62.8% year-over-year[1] - Adjusted segment EBIT for Presort Services increased by 35% to $110,912 in 2023, reflecting improved operational efficiency[99] Cash Flow and Capital Expenditures - Cash and cash equivalents at December 31, 2023, totaled $623 million, including $136 million held at foreign subsidiaries[6] - Net cash from operating activities decreased by $97 million to $79,468 million in 2023[7] - Capital expenditures for 2023 were $103 million, down from $125 million in 2022[17] Debt and Interest Rates - Outstanding principal debt as of December 31, 2023, was $2.2 billion, with 64% at fixed rates and a weighted average interest rate of 9.7% on variable rate debt[14] - The weighted average interest rate of variable-rate debt was 9.7% at December 31, 2023, with a 100 basis point change potentially increasing interest expense by approximately $8 million[144] Tax and Impairment - The effective tax rate for 2023 was 5.1%, primarily due to the nondeductibility of the aggregate goodwill impairment charge[91] - The company recorded noncash, pre-tax goodwill impairment charges of $119 million and $220 million for the Global Ecommerce reporting unit in the second and fourth quarters, respectively[127] Credit Risk and Allowances - The total allowance for credit losses as a percentage of finance receivables was 2% at both December 31, 2023 and 2022, with a potential $3 million reduction in pre-tax income for a 0.25% increase in the allowance rate[131] - Trade accounts receivable allowance for credit losses was also 2% at both December 31, 2023 and 2022, with a potential $1 million reduction in pre-tax income for a 0.25% increase in the allowance rate[132] - The company is exposed to credit risk on accounts receivable, mitigated by a diverse client base with no single client comprising more than 10% of consolidated net sales in 2023 or 2022[145] Pension and Benefits - The discount rate for the U.S. Qualified Pension Plan was 5.55% for 2023, projected to decrease to 5.15% for 2024, with a 0.25% change impacting the projected benefit obligation by $24 million[136] - The expected rate of return on plan assets for the U.S. Plan was 6.5% for 2023, projected to increase to 6.7% for 2024, with a 0.25% change impacting annual pension expense by $3 million[137] Foreign Operations and Currency - 11% of the company's consolidated revenue was generated from operations outside the United States in 2023, with no material impact from foreign currency translation on revenues or operating results[140] - The company decided to discontinue the use of foreign exchange contracts to hedge intercompany loans, with a 1% change in the British Pound, Canadian Dollar, or Euro potentially impacting earnings by $5 million, $3 million, and $2 million, respectively[143] - The fair value of other reporting units exceeded their carrying values, indicating no impairment existed as of the beginning of the fourth quarter[128]