Pitney Bowes Inc.
) reported first-quarter 2013 pro forma earnings per share of 42
cents, which was in line with the Zacks Consensus Estimate.
Quarterly earnings were down 19.2% year over year from 52 cents
per share. Earnings for the first quarter 2012 include net tax
benefit of 37 cents as a result of an agreement between the
company and the IRS on the tax treatment of a number of issues as
well as revised tax calculations.
GAAP earnings for the quarter were 34 cents a share, including
costs associated with the recent debt tender.
Total revenue was $1.17 billion, down 4.4% year over year from
$1.22 billion. The top line benefited from growth in the
Production Mail and Mail Services segments. This was fully offset
by continued decline of recurring revenue streams in the Small
and Medium Business segment. Revenues were also in line
with the Zacks Consensus Estimate.
Small and Medium Business (SMB) Solutions segment sales
declined 5% year over year on a constant currency basis to $598
million, as a result of a 7% fall in North America Mailing
revenues. Revenues in International Mailing segment was flat year
Enterprise Business Solutions segment sales increased by 4%
year over year to $569 million, led by a 3% increase in revenue
from worldwide production mail and 4% revenue growth in Mail
services. This was partially offset by a 20% revenue decline in
Software, 2% decline in Management services and a 16% decline in
The company incurred total SG&A expense of approximately
$377.2 million in the quarter versus approximately $405.5 million
in the first quarter of 2012. R&D expense was $33.3 million
versus $34.1 million. Income from continuing operations of the
company was $101.7 million compared with $161 million in the
prior-year period. Lower income was attributable to higher cost
of equipment sales and higher cost of business services.
Cash and cash equivalents were $909.7 million with long-term
debt of $3.6 billion and shareholder's equity of $73.1 million
compared to prior-year figures of $913.2 million, $3.7 billion
and shareholders' equity of $110.6 million, respectively.
Free cash flow for the quarter was $107 million. During the
quarter, the company used $75 million of cash for dividends and
$16 million for restructuring payments.
Initiatives during the Quarter
During the quarter, the company collaborated with GrayHair
Software Inc. to improve its customer service solutions with IMb
(Intelligent Mail Barcode) compliance and mail tracking in the
U.S. his new mail tracking software, MailTrak with Commingle
solutions will help Pitney's Presort Services Customers
significantly who are looking for greater postal discounts with
better visibility of their mails. This service will be offered in
four different options.
Concurrent with the earnings release, Pitney reiterated its
guidance for 2013. The company expects its revenue growth trend
to improve in 2013 with a number of initiatives designed to drive
new growth opportunities. In 2013, the company expects revenue
growth in its Enterprise Solutions Group and an improvement in
revenues in its SMB Solutions Group though the segment is
expected to witness negative growth.
For 2013, revenue growth, excluding the impact of currency, is
expected to be in the range of flat to up 3%. The company expects
earnings per share from continuing operations to be in the range
of $1.85 to $2.00. Free cash flow for 2013 is expected to be in
the range of $600 million to $700 million.
Pitney Bowes currently has a Zacks Rank #3 (Hold). However,
some other companies that can be considered at the moment are
Progressive Software Corp
), which has a Zacks Rank #1 and
Adobe Systems Inc
) having Zacks Rank #2 (Buy).
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