Pitney Bowes Inc
) reported third-quarter 2013 adjusted earnings per share of 49
cents, which was 22.5% above the Zacks Consensus Estimate of 40
cents. Quarterly earnings were up 11.4% year over year from 44
cents per share. The year-over-year increase was driven by the
absence of any restructuring and asset impairments charges that
impacted last year's earnings.
The company reported a net loss of $5.5 million in the quarter
compared to $76.5 million profit earned in the prior-year
quarter. On GAAP basis, the company reported a loss of 3 cents
owing to a 40 cents per share negative impact from discontinued
operations. This loss was primarily a result of the taxes levied
on the North America Management Services business, which the
company divested in the last quarter.
Total revenue for the third quarter was $938.8 million, down
1.2% from $949.8 million in the prior-year quarter. The top line
was impacted by lower recurring revenues from the company's SMB
group and sluggish performance in its Enterprise Business
However, there was considerable growth in the Digital Commerce
Solutions segment. Also, the International Mailing revenues are
seeing an uptrend driven by the continuous roll-outs of the new
model in North America. The company also divested some of its
non-performing assets including its non-core furniture business
in Norway. Revenues for the quarter were below the Zacks
Consensus Estimate of $955 million.
Small and Medium Business
(SMB) segment sales declined 4% year over year to $565 million,
as a result of a 6% fall in North America Mailing revenues, which
stood at $423 million. Revenues in International Mailing segment
increased 1% to $142 million.
Enterprise Business Solutions
segment sales remained flat at $222 million. The segment reported
a 1% year-over-year increase in revenues from worldwide
production mail. The worldwide production mail benefited from the
installation of large production print in Asia Pacific and
inserting equipment orders in North America. In addition,
increased base of the production print installation also added to
the company's revenues. However, revenues of Presort Services
declined 1% year over year to $105 million as revenues from
higher first class mail volume were offset by those from lower
direct mail volumes.
Digital Commerce Solutions
segment reported revenues of $152 million, a 9% year-over-year
increase that was driven by a 5% improvement in Software revenues
and greater than 20% increase in business services revenues. The
marginal decline in Marketing services was offset by the
performance of the business services. The key driver
behind the growth of business services was larger volume of
transactions in the e-commerce solutions provided by the
The company incurred total SG&A expense of approximately
$355.2 million in the quarter versus approximately $370.9 million
in the third quarter of 2012. R&D expense was $24.8 million
versus $30.2 million in the prior year quarter. Income from
continuing operations of the company was $81.3 million compared
with $92.5 million in the prior-year period. Lower income was
attributable to higher interest expense and a higher cost of
Exiting the quarter, cash and cash equivalents were $759.6
million, down from $913.2 million as of Dec 31, 2012. However,
the long-term debt had decreased to $3.3 billion from $3.6
billion as of Dec 31, 2012. The shareholder's equity
significantly dropped to $11.2 million compared to prior-year
figure of $110.6 million. Free cash flow for the quarter was $208
The company has announced an early debt retirement by using
the advances from the sale of its North America to repay its
Concurrent with the earnings release, Pitney reaffirmed its
guidance for 2013.
For 2013, the company reaffirmed revenues, excluding the
impact of currency, to range between a decline of 1% to a 2%
increase year over year. The company increased adjusted earnings
per share from continuing operations guidance from the range of
$1.62 - $1.77 a share to $1.68 - $1.83, which includes a tax
benefit of 6 cents per share recorded in the quarter. Free cash
flow for 2013 is expected to be in the range of $575 million to
$675 million, in line with the previous guidance range.
Pitney Bowes currently has a Zacks Rank #4 (Sell). However,
some other companies that can be considered at the moment are
Progress Software Corp.
Ricoh Company Ltd.
Tyco International Ltd.
). All three carry a Zacks Rank #2 (Buy).
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