管理層發言
Good day, and welcome to the Pitney Bowes Second Quarter 2026 Earnings Call. Operator instructions were provided to participants. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Alex Brown, Director of Investor Relations. Please go ahead.
Good morning, and thank you for joining us. Included in today's presentation are forward-looking statements about our future business and financial performance. Forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from our projections. More information about these items can be found in our earnings press release, our Form 10-K and other reports filed with the SEC that are located on our website at www.pb.com under Investor Relations. Please keep in mind that we do not undertake any obligation to update forward-looking statements as a result of new information or developments. Also included in today's presentation are non-GAAP measures, specifically adjusted EBIT, adjusted EBITDA, adjusted EPS and adjusted free cash flow. You can find a reconciliation for these items to the appropriate GAAP measures in the tables attached to our press release. We've also provided a slide presentation and spreadsheet with historical segment information on our website. With that, I'd like to turn the call over to Kurt.
Good morning, and thank you for joining us today. Second quarter results built on first quarter momentum and give us confidence to raise our adjusted EBIT, adjusted EPS and adjusted free cash flow guidance. I will now cover a few key highlights from the quarter. Presort continues to win new business and maintains a robust sales pipeline. That said, higher transportation costs materially impacted Presort's second quarter profitability. Moving to SendTech, continued operational improvements led to higher margins despite increased spending on future growth. At Pitney Bowes Bank, Steve and his team have made significant progress on building out our infrastructure, which will support future growth. Also, the bank is now originating loans through three pilot programs, which leverage and enhance existing client relationships. Moving to capital allocation, we reduced debt by more than $200 million over the past four months and pushed out our nearest maturity to March of 2029.
Having reduced debt by approximately $55 million year-to-date, we are once again in a solid position to allocate capital opportunistically. Additionally, last month, we initiated the second phase of our strategic review. Given the nature of the review, we will not be commenting on potential outcomes or timing on this call. The highlights I just covered reflect the momentum we continue to build toward achieving profitable organic growth in the coming years. Finally, I would like to thank my leadership team and our more than 6,000 team members for their hard work and dedication, which drove our strong second quarter results. And with that, we will open the call for questions.
分析師問答
Operator instructions were provided to participants. Our first question will come from the line of Aaron Kimson with Citizens.
Can you provide some color on the three new products Steve and the team are piloting at the bank as well as the decision to start breaking the bank out separately in next year's financials?
Yes, Aaron, thanks for the question. As we've talked about, it's really important to us that we take advantage of the opportunities that we have at the bank to leverage existing strengths in the company. There are now three pilots that Steve and his team are focused on. The first is extending asset-based lending to certain Presort customers. These are large customers with strong financial health, so we believe there's a low level of risk associated with that. That's one thing that's up and running that we're evaluating. A second pertains to our shipping software business. With the post office, unlike the private companies, they don't offer terms of credit to shipping software customers. The one advantage we have vis-à-vis our competitors is that we can offer credit through our bank. So it gives us a real advantage, not just in terms of getting access to attractive loans, but it also is a competitive advantage in trying to win shipping software customers.
The third pilot, which is the most recent we've initiated, ties to the logistics space. We have relationships with a lot of third-party logistics providers. As you know, throughout the logistics supply chain, merchants deliver products to 3PLs that are using shipping services and transportation companies, and there's a lag effect in terms of payment on all of that. One of the things we're exploring is the opportunity not just to work with 3PLs to extend short-term credit to address that, but we're also working to extend credit from the 3PLs back into the merchant space. One of the really attractive parts of that is with the 3PLs we can get information on the actual assets sitting in their facilities, so we have some level of understanding of the collateral that would underlie those loans. Again, all three are in the pilot stage. We expect to pilot more initiatives, all focused on leveraging our existing relationships.
We don't expect all of these to work, but we're taking a very slow approach to each of them. We want to make sure that we don't repeat the mistakes of the past and move too quickly. As I'm sure everybody listening to this call appreciates, lending in the banking industry has risks associated with leverage. So we're being very cautious as we explore these, which is why we continue to expect the bank to shrink despite the fact that we're running three pilots that we hope we can extend more broadly within the company.
Super detailed. And then secondly, can you help us think about the price and quantity function for the Mail Exchange program in Presort? Does it make sense to potentially ship volume out of that program given the higher transit costs you're seeing? My understanding is that space is more and more about price than anything else, including delivery time.
Yes. So on that question, Mail Exchange is actually an advantage we have. We have a national network. As we look at how to maximize the five-digit discount, what we can do is move mail to another location. We can overcome the fuel cost even at these elevated levels and still drive a benefit for our shareholders. So we're not at a point where it doesn't work.
And Aaron, I would just add that we're very long-term focused across all businesses. Within Presort, we see a tremendous opportunity to continue to win customers, and Mail Exchange creates value for our customers. As Paul mentioned, by moving mail among our facilities, we can get to a five-digit sort faster than competitors. Oftentimes, what you'll see competitors do is sit on mail in order to get it to that five-digit sort. By moving and transporting mail across our facilities, we can get that five-digit sort, which we pass along as a discount to our customers, and we're able to get mail to the end recipient faster than our competitors. Unfortunately, it does create an additional cost for us, but it creates value for our customers. We have a lower overall cost structure. It is hitting us right now, but we're investing in the future of the business. We want to get to growth, and at some point transportation costs will decline, but we don't want to be shortsighted and overreact to short-term movement in transportation costs.
One moment for our next question. Our next question will come from the line of Jasper Bibb with Truist Securities.
It was a really nice quarter for SendTech margins. Could you talk a little bit more about the drivers there? It seems like still pretty healthy margin expansion on a year-over-year basis, even if you back out the tariff refund and some of the cost cutting.
Long term, we see SendTech margins in the mid-30s. Last year margins were depressed because we were a taker of the tariff. This year, we received a tariff refund, which elevated our margins. For what you're looking at, I'd say mid-30s is where we see the long run for that business.
That makes sense. And then the SendTech revenue declines narrowed again. You also had bookings up year-over-year. I know you don't guide at the segment level, but what does this tell us about what SendTech might look like in the second half? And do you think SendTech revenue would maybe be growing in the second half if not for the impact of some of those noncore customer exits you've talked about in the past couple of quarters?
I'll start with the end of your question regarding the noncore customers. We want to be clear and transparent about that. There are certain customer contracts that we're losing; these contracts used to be part of the GEC business, which is why we refer to them as noncore SendTech. Those will have a material impact on revenue, as we've said. Regarding the second half, I wish I could say we're going to get to growth excluding those, but a couple of factors work against us. We continue to lose mailing meters. We're making efforts to stem that and reduce the rate at which we lose those, and I'm confident we can make that happen. Second, with the bank, for the long-term health of the business, we're actively shrinking the bank balance sheet by getting out of low-value assets. This gets to the risk of banks with leverage. We could grow quickly by buying many loans funded by borrowed CDs to generate net interest margin and drive revenue growth, but that's an unattractive way to grow.
So we're actively shrinking our least attractive assets to create a healthier balance sheet. As we get to a point where our pilot programs are proven and we're originating loans, those originated loans are much more attractive on a risk-adjusted basis. That shrinkage will create a headwind going forward; it's been a headwind all year but is the right thing to do long term. We do think shipping software is an area of opportunity for growth, but right now that's not enough to offset the two headwinds I mentioned. We expect to get to revenue growth in SendTech as the bank originates loans (assuming we don't break it out) and as shipping software grows. We also addressed Mailstream on Demand, a small product that's growing and that we're investing in to accelerate growth. But it's a small business, and it'll take time to become large enough to impact revenue meaningfully. To be candid, I don't see growth in core SendTech in the second half.
One moment for our next question. Our next question will come from the line of Alex Lakritz with Goldman Sachs.
This is George Tong at Goldman. A quick question following up on the SendTech piece. Can you talk about how quickly the shipping software is growing and how you see industry-level volume declines comparing to that? In other words, where do you think the crossover happens? It sounds like it's not going to happen in the second half, but is this a 2027 story? Is it likely going to happen beyond next year?
George, I would say it's more of a 2027 story or even further out. I know everybody is looking for revenue growth at the company, but we have a long history of chasing revenue that turned out not to be profitable and led to problems. We're now operating with a measure twice, cut once approach, which I think will be much more successful long term and better for shareholders. With respect to shipping, we're rationalizing and consolidating our offerings. We have a reasonably sized shipping software business, but it's spread across, I believe, five different software offerings and multiple physical offerings, plus analytics and tracking offerings. We have too many offerings for our size; investing in all of them spreads investments too thin and we don't pick winners. One of our key focuses now is identifying where we have the best competitive advantage, where investment will get the best return and create the greatest long-term revenue growth opportunity. Right now, shipping software is close to breakeven, maybe a little above, but part of that is because we're rationalizing the space. As we get through the process and focus resources on our best products and services, we expect growth.
That makes sense. And then turning to Presort: revenue growth there turned positive in June, and you're continuing to target positive volume growth in the third quarter. To what extent would you say the improvement there is being driven by company-specific share gains compared to underlying market trends? How sustainable would you say these share gains are as you look into 2027?
I'll start. I think it's an effort from Debbie and her team. We've invested in our sales force. We see growth in their pipeline, which is a positive sign. We need to see that pipeline turn into backlog, that backlog into revenue, and that revenue into cash. There are positive signs, but I'd say the improvements are largely due to our efforts rather than broader industry tailwinds.
To add, we lost a lot of business in the first half of last year. Since that time, we've had very few losses and a lot of wins. Based on that, we have every reason to believe we're winning market share and have been over the last year. The industry is slowly declining, but our aggregate share across marketing mail and first-class mail gives us room to continue gaining share. We have the low-cost structure in the industry and high service levels. Our Net Promoter Scores are over 90, which is exceptionally high. We're well positioned to gain share, and everything we're seeing internally suggests we are taking share right now.
And our next question will come from the line of Justin Dopierala with Domo Capital.
You were talking about Mail Exchange earlier and the higher freight costs you're experiencing there. But as investors think about how the majority of your business deals with freight costs, doesn't the USPS reimburse most of these?
They do, but it's on a lag effect. Any increase in transportation costs will show up in their next calculation of costs, which would ultimately flow through to any rate increases, but that wouldn't happen until likely July of next year.
Got it. But it would be something that investors should look forward to going forward?
Correct. Yes.
Okay. And then I was wondering if you could reconcile the headwinds you're expecting in the second half of this year with the increasing guidance that you gave.
Yes, absolutely. Let me make a few points. First, under my leadership, we've tried to be very transparent about the challenges we face. As an investor, I was frustrated hearing only good news and never the bad, so we're trying to be clear about the challenges. Second, the leadership team and our 6,000 employees have shown an incredible ability to mitigate and reduce the impact of headwinds. Our 2025 results reflect that. Finally, we're confident in our ability to continue to execute, which is why we raised adjusted EBIT, adjusted EPS and adjusted free cash flow guidance. That reflects the fact that some of these headwinds we expected. We didn't expect the transportation cost spike, but other components we knew were coming. Our team is executing well, and execution has outpaced some of the unexpected headwinds, which is why we're comfortable raising guidance.
Got it. And lastly, how should investors think about both the sales and distribution of shares by Hestia?
Happy to answer that. I'll start by saying I believe I'm the largest individual shareholder of Pitney Bowes. These are shares I bought with my own money; this is my investment in the company, not from salary or bonuses. I personally own tens of millions of dollars worth of our stock because I believe we can create a lot more value. Regarding Hestia Capital and the shares and distributions, it's a deep-value investment firm. Since taking a position, the stock has gone from $3 to above $18. We've held Pitney Bowes shares for years. There is a partnership agreement that governs how I manage the fund and my investments on behalf of limited partners. So I might see something as an incredible investment personally, but it may not meet Hestia's criteria. Shares sold by Hestia don't reflect my personal view; they reflect the agreement with my LPs. Regarding distributions, the last distribution was 1.5 million shares; I personally took over 1 million of those shares due to my conviction in the company.
Investors can expect at least one future distribution, which almost entirely will go to me. Once again, this reflects that I personally have tremendous optimism as the CEO and investor in the company, and I want exposure myself. When it's all said and done, my personal exposure to Pitney Bowes could be higher at the end of this process than it was six months ago. I understand concerns about the investment firm selling or distributing shares, but as the CEO and an individual investor, I'm increasing my exposure, and I hope that is reassuring to shareholders.
And our next question will come from the line of Anthony Lebiedzinski with Sidoti.
Certainly nice to see the better-than-expected results, especially at SendTech. Kurt, one of the things you pointed out in your shareholder letter is that you're improving your sales execution. Could you share some examples of what you're doing differently now to improve that? How do you see that going forward as far as your ability to improve SendTech?
I can give a few examples. Historically, we had very poor sales support, and our salespeople were spending more than 50% of their time servicing customers rather than hunting for new business. Todd has done a tremendous job building out sales support so salespeople have more time to actively sell. As an aside, we've been investing in growth through OpEx, not just CapEx, so the improved results reflect increased spending to grow the business. Another area is integration between enterprise sales and other parts of the company. For example, offering bank credit to SendTech customers is a cross-sell opportunity, but more importantly there are cross-sell opportunities between Presort and SendTech. Mailstream on Demand is considered part of SendTech but involves Presort significantly, and there was little coordination historically. We're coordinating more now. We also have a new business group targeting untapped areas within SendTech, such as a government group leveraging our existing government business but focused on new opportunities. Todd has overhauled the sales team to bring in the right talent for that type of selling, and it's shown in results. That group historically underperformed but is now at or above budget regularly. Those are three examples among others. It's opening new addressable markets for us and improving our ability to execute and grow SendTech over time.
That's very helpful color. Switching to Presort, can you share more details about the impact of higher fuel costs in Q2 and your implied guidance for the second half? We saw a big spike in fuel costs, some easing, and then a recent uptick over the last week or two. What actions are you taking to mitigate these costs?
In Q2 the impact of elevated fuel costs was around $6 million. We rely on rolling stock, so we're like many companies facing challenges tied to geopolitical events and resulting fuel-price effects. We expect elevated fuel costs in the second half. We're taking steps to mitigate the impact, though I don't want to go deep into our mitigation playbook. Another factor is changes affecting CDL drivers, which has reduced availability in the system and impacted anyone relying on rolling stock. Despite these headwinds, fuel costs and the loss of CDL drivers, we see healthy growth in our pipeline and expect further increases in volume. Debbie's team is running the business efficiently, and as Kurt mentioned, despite these headwinds we raised adjusted EPS, adjusted EBIT and adjusted free cash flow guidance.
Our next question will come from the line of Kartik Mehta with Northcoast Research.
Good morning. Can you hear me?
Kartik, we couldn't hear you earlier. If you'd like, we can arrange a follow-up. I don't want to make everybody wait here.
I show no further questions in the queue. I will now turn the call back over to Mr. Kurt Wolf for any closing remarks.
Yes. Thank you. I'd like to close by acknowledging the recent passing of George Harvey for everyone's knowledge. He led the company from 1983 to 1997, which was a period of tremendous value creation for shareholders. What stood out about Mr. Harvey was his focus on culture. It can be seen as a cliché, but it's an apt business saying: culture eats strategy for breakfast. As an ex-consultant, I've observed this firsthand in many companies. One thing that stands out to me at Pitney Bowes is the strength of our culture, and Mr. Harvey built much of the culture that's contributing to our success today. I'd like to thank him for his contributions. I can't emphasize enough the winning culture we have at Pitney Bowes, particularly the level of focus on team and the willingness to sacrifice on behalf of the company. It's truly extraordinary and one of the reasons I'm so invested in the company. Every shareholder listening should feel encouraged by the more than 6,000 employees and their dedication and hard work on behalf of the company. A tip of the hat to Mr. Harvey. I appreciate everyone tuning in. Thank you all.
This concludes today's program. Thank you all for participating. You may now disconnect.