Pitney Bowes(US:PBI)2023-11-02 16:11Financial Data and Key Metrics Changes - Total revenue for Q3 2023 was $784 million, a decline of 1% year-over-year [12] - Adjusted EBITDA grew by $6 million year-over-year to $84 million [12] - Adjusted EBIT increased by $5 million to $43 million, but higher interest expenses resulted in adjusted EPS of 0 [12] Business Segment Data and Key Metrics Changes - SendTech: Reported revenues of $318 million, down 3% year-over-year, but EBIT margin expanded by 200 basis points due to improved productivity [13][15] - Presort: Generated revenue of $152 million, up 5% from the prior year, with adjusted segment EBIT increasing by 42% to $29 million [16][17] - Global E-commerce (GEC): Revenues were $313 million, down 1% year-over-year, with adjusted EBIT loss of $42 million compared to a loss of $35 million last year [18] Market Data and Key Metrics Changes - Domestic parcel processed 51 million packages, representing a growth of 38% year-over-year, translating to 29% revenue growth [19] - Cross-border revenue declined by $57 million, impacting overall GEC performance [18] Company Strategy and Development Direction - The company is focused on cost reduction and restructuring, with an increased target for annualized expense savings from $75 million to approximately $115 million [10][21] - The SendTech and Presort segments are seen as cornerstones for sustained value, while GEC is being re-evaluated to reduce losses [9][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the unsustainable losses in GEC and is taking short-term actions to improve profitability [26] - The company expects full-year revenue to decline between 3% and 4% on a comparable basis, with adjusted EBIT margins remaining flat [22] Other Important Information - The company has made significant progress in restructuring, with $17 million in charges recorded during the quarter [21] - The capital structure remains a priority, with a focus on reinvesting in the business and selective acquisitions [63] Q&A Session Summary Question: What changes are anticipated in the e-commerce business to achieve profitability? - Management recognizes the unsustainable losses and is exploring short-term improvements while restructuring operations [26][27] Question: What is the outlook for pricing in the industry during the holiday season? - There is significant pricing pressure due to market overcapacity, but management is cautiously optimistic about leveraging pricing strategies [30][31] Question: Are there further automation opportunities in Presort? - Continuous productivity improvements are expected as the team focuses on optimizing transportation and automation [34] Question: What are the sources of the additional $40 million in restructuring savings? - Savings will come from cost of goods sold and overhead reductions, with a focus on simplifying operations [38][39] Question: Is there a plan for drastic actions regarding GEC? - Management believes in the value of the domestic parcel side of GEC and is focused on improving profitability rather than drastic measures [50][51] Question: How is the company preparing for the holiday season regarding labor? - The company has improved its ability to flex labor in response to volume changes, ensuring better preparedness for peak season [53][55] Question: What is the focus for capital structure moving forward? - The priority is on reinvesting in the business, with considerations for acquisitions and market repurchases [63]