Core Thesis - Pitney Bowes Inc. (PBI) is undergoing a significant transformation after exiting its Global Ecommerce segment, which incurred nearly $740 million in losses from 2022 to 2024, setting the stage for a potential turnaround [2][4]. Business Segments - PBI operates two main businesses: SendTech, which is experiencing structural decline due to falling postal volumes, and Presort, which has shown steady annual revenue growth of 4-5% since 2021, with EBITDA expanding over 20% annually [3]. - Presort has become the resilient growth engine for the company, leveraging partnerships with USPS to capture higher revenue per piece despite declining mail volumes [3]. Financial Outlook - PBI anticipates 2025 revenue of approximately $1.9 billion and free cash flow between $330 million and $370 million, resulting in a P/FCF of just 6x and a yield of 13% [4]. - The company is under new leadership with CEO Kurt Wolf, who has a compensation structure aligned with shareholder interests, and has initiated $90 million in buybacks in the first half of 2025, with authorization expanded to $400 million [4][5]. Strategic Initiatives - PBI is exploring value unlocks from PB Bank, which holds customer deposits and issues loans, potentially through a transaction similar to Harley-Davidson's [5]. - Despite the risks associated with SendTech's decline, the stability and strong cash generation from Presort, along with a management team invested in the company's success, present a compelling investment opportunity [5]. Market Performance - The stock price of PBI was trading at $12.00 as of September 3rd, with trailing and forward P/E ratios of 15.00 and 8.95, respectively [1]. - Since the previous bullish coverage, the stock price has appreciated approximately 26%, reflecting positive restructuring progress [6].

Financial Data and Key Metrics Changes - The company reported significant earnings and cash flow growth year over year, with an adjusted leverage ratio now below 3x, allowing for aggressive share repurchases [8][9][10] - Revenue guidance was reduced by $50 million, while EBIT margin guidance was tightened, and EPS guidance was increased by $0.10, primarily due to prior management's decisions regarding customer retention [9][10] Business Line Data and Key Metrics Changes - The shipping segment saw a 2.5% year-over-year decline, largely due to non-core business losses, but core shipping revenue grew by 6% [29][30] - The SaaS segment within shipping experienced a 17% year-over-year growth, indicating strong performance in that area [30] Market Data and Key Metrics Changes - The company is focused on regaining lost customers in the Presort business, with expectations of reversing losses in the near future [31][85] - The management emphasized the importance of being the low-cost provider in the industry to regain market share [86] Company Strategy and Development Direction - The company initiated a strategic review focused on internal improvements, identifying numerous opportunities for value creation [9][10] - Management is actively scanning for acquisition opportunities, particularly in the Presort business, which could be accretive to overall profitability [32] Management's Comments on Operating Environment and Future Outlook - Management expressed frustration over previous customer losses, attributing them to unforced errors, and emphasized the need for operational efficiency [10][85] - The CEO highlighted the commitment to returning capital to shareholders through share repurchases and dividends, reflecting confidence in the company's financial position [8][9] Other Important Information - The board increased the share repurchase authorization from $150 million to $400 million, reflecting strong free cash flow and financial flexibility [9][70] - The management team is committed to driving growth and change within the company, with a focus on employee dedication and operational efficiency [92] Q&A Session Summary Question: Future share buyback plans - The CEO indicated that while future share buyback activities cannot be commented on, the historical purchasing rate reflects the company's perceived value [13][14] Question: Strategic review timing - The CEO stated that the strategic review is a two-step process, with the internal review expected to continue throughout 2025 [17] Question: Presort business strategy - The CEO clarified that the focus is on increasing EBIT dollars rather than maintaining percentage margins, indicating a shift in strategy [20][21] Question: Update on SendTech shipping segment - The CEO provided an update that core shipping revenue grew by 6%, while the SaaS segment grew by 17% year over year [29][30] Question: Customer loss reversal - The CEO mentioned that while they are close to reversing customer losses, no reversals have occurred yet [31] Question: Acquisition strategy - The CEO expressed a strong interest in pursuing acquisitions, noting their potential to significantly enhance profitability [32] Question: EPS guidance assumptions - The CEO refrained from providing specific assumptions regarding diluted share count for the back half of the year [33] Question: Structural weakness in Presort business - The CEO confirmed that the majority of revenue reduction is tied to competitive losses, emphasizing the strength of the Presort and SendTech businesses [85][86] Question: Potential value unlocking in Pitney Bowes Bank - The CFO acknowledged the undervalued nature of the Pitney Bowes Bank and indicated that they are exploring opportunities to unlock value [89]