Pitney Bowes Inc.

Good morning and welcome to the Pitney Bowes Fourth Quarter 2020 Earnings Conference Call. Your lines have been placed in a listen-only mode during the conference call until the question and answer segment. Today's call is also being recorded. If you have any objections, please disconnect your lines at this time. I would now like to introduce participants on today's conference call. Mr. Mark Lautenbach, President and Chief Executive Officer. Ms. Anna Marie Chadwick, Executive Vice President and Chief Financial Officer. Mr. Joe Catapano, Vice President and Chief Accounting Officer, and Mr. Adam David, Vice President, Investor Relations and Financial Planning. Mr. David will now begin the call with a safe harbor overview.

Good morning. Included in this presentation are forward-looking statements about our expected 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 risks and uncertainties can be found in our earnings press release, our 2019 Form 10-K annual report, and other reports filed with the SEC that are located on our website at www.pb.com and by clicking on Investor Relations. Please keep in mind that we do not undertake any obligation to update any forward-looking statements as a result of new information or developments. Also, for non-GAAP measures used in the press release or discussed in this presentation, you can find reconciliations to the appropriate GAAP measures in the tables attached to our press release and also on our investor relations website. Additionally, we have provided slides that summarize many of the points we will discuss during the call. These slides can also be found on our investor relations website. Now, our President and Chief Executive Officer, Mark Lautenbach, will start with a few opening remarks. Mark.

Thank you, Adam, and good morning. Let me start by saying how delighted I am that Ana is joining the team as our Chief Financial Officer. Ana held several executive positions at GE Capital, most recently being President and CEO of GE Capital's Global Legacy Solutions, and prior to that, the Chief Operating Officer and CFO of that business. Ana brings with her a strong financial and operational experience, and will fit into the PB culture very well. Before I turn to the state of our business, I would again like to recognize and thank our employees. No one could have predicted how the world changed in 2020, but I am very proud of how our team was prepared and managed through the challenges. Their efforts and hard work showing the progress we made in our business throughout the year. If I had to choose one word to sum up our employees in 2020, it would be determined. That is exactly what our team personifies. The fourth quarter was a remarkable ending to an extraordinary year. Revenue at constant currency grew 23%. To the best of our knowledge, this is the highest modern-day organic growth rate on record for Pitney Bowes. And our shipping-related revenues comprised 54% of our total revenue. For the quarter, global e-commerce grew 60%, with profit improving from prior year and prior quarters, resulting in positive EBITDA. Pre-sort turned in flat revenue performance, which is a significant improvement from prior quarters and better than the market. And Centac turned in strong performance growing both revenue and profit over prior year. This was powered by strong equipment sales, double-digit growth in our SaaS-based shipping offerings, and a solid performance in our services business. Centac is a business that many considered a melting ice cube. However, the investments we have made in our digital channel and products, while also expanding our shipping offerings, have given new life to this business. In all, these accomplishments would have been hard to imagine a few short years ago, but this is what a determined and focused team can do. Looking at the year from a broader lens, when the pandemic hit, We had two objectives. First, we needed to focus on the health and well-being of our employees and ensuring the company remained strong financially during this unpredictable time. Secondly, we wanted to come out of this terrible moment a stronger company. It is often true that moments of economic dislocation create opportunities, and our team was determined to leverage the investments we have made over the last several years to capture those opportunities. to change our work protocols and practices and provided our employees the necessary PPE to be safe as they did their essential work. We also took the important actions to fortify our balance sheet by refinancing our debt, and we made prude decisions to ensure we had a solid liquidity position. It was apparent early on that the company's financial position was solid, and we turned to coming out of this pandemic stronger, which we are well on our way of achieving. From an annual perspective, global e-commerce turned in $1.6 billion in revenue, growing at a record rate of just over 40%. This business won new customers and achieved scale much earlier than we had planned. Simultaneously, we accelerated our planned network build-out by several years. It certainly wasn't always smooth sailing, but the business is in a much better place than it was 12 months ago. While e-commerce astonishing growth understandably gets a lot of attention, the transformation of our CENTAC business tells an equally remarkable story. Importantly, the business performed well relative to the mail market, but even more enduring, the business has moved to a natural adjacency in shipping. This is a new, large growth area, which along with the ongoing transformation of our financial services business, and a meaningful contribution from our global services group leverages our core strengths. Epitomizing the transformation of CENTAC is the growth of shipping revenue, which is now a meaningful offset to our declining mail business. Also notable, US shipments of our low end and middle market devices grew 13% for the year. These multipurpose devices provide new value to clients as compared to our previous generation. Thank you. Thank you. and Never a Straight Line, and transformations in the middle of a pandemic are particularly complicated. The unprecedented increase in demand in the e-commerce market created cost inflation, particularly in labor and transportation costs in the fourth quarter, which had a deleterious impact on our profit in e-commerce. This quarter tested capacity throughout the industry. Admittedly, it was a challenge in order to optimize our service We more than doubled our labor and set up three new facilities to help meet the demand. While these facilities, along with the newer flagship sites we opened late last year, worked through typical growing pains, they've also become a critical part of our overall network, handling over one quarter of our total domestic parcels in 2020. In addition, our use and reliance of third-party transportation this peak, both in cost and service, was challenged. which was in line with broader industry trends. To mitigate this, we proactively upgrade packages at a cost to try to maintain service. Going forward, we see opportunity to balance our use of third-party transportation and our own PV fleet assets, which performed above expectations this peak. We will continue to invest to become more efficient across each of these areas. As I've said in the past, as now within our four walls, to manage the cost structure and generate efficiencies. I am often asked about the anatomy of transformations, and I think it's worth repeating. Transformations have a certain arc to them. Quick wins, sustained investments, revenue growth, and then profitable revenue growth. The most highly correlated factors for successful transformations are revenue growth and employee engagement. We've achieved revenue growth the last several years, and our employee engagement in the middle of the pandemic reached new highs. Well, there continues to be tremendous uncertainty in our economy and how the pandemic will play out. We are poised to enter the last stage of successful transformations, profitable revenue growth. I am proud of what the team has accomplished, but we all recognize there is more work to do. I'm excited about this next chapter of our transformation. We're on the precipice of accomplishing what very few companies have ever done. With that, let me turn it over to Joe to take you through our results.