Pitney Bowes Inc.

Good morning and welcome to the Pitney Bowes first quarter 2021 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 Maria Chadwick, Executive Vice President and Chief Financial 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 2020 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 Industrial 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 our press release or discussed in this presentation, You can find reconciliations to the appropriate gap 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 Lombach, will start with a few opening remarks.

Mark? Thank you, Adam, and thank you, everyone, for joining today's call. We got off to a solid start for the year, with every business making an important contribution to the quarter. Overall, revenue at constant currency grew 14%, and every business improved their EBIT performance. For the second consecutive quarter, Centec improved EBIT on a year-to-year basis. As I've mentioned before, the transformation of Centec from a business and sector decline to a business well-positioned to capture new value in the shipping market is one of the most impressive transformations I've ever seen. The business has leveraged digital technologies to transform our offerings and our go-to-market strategy. Centex platform is built on IoT technologies that are delivered on a fast chassis and this business is very well positioned going forward. Our pre-sort business continued with the momentum we saw at the end of last year with both revenue and EBIT improving on a year-to-year basis. Globally, commerce revenue at constant currency grew 40% for the quarter, and EBIT margins improved nearly 400 basis points on a year-to-year basis. Importantly, profit performance improved throughout the quarter as our labor model continued to mature and pricing changes kicked in. In the month of March, domestic parcel services per unit labor cost delivered the best performance compared to any quarter since the second quarter of last year. We expect unit labor costs to continue to improve, and transportation and automation efficiencies are primarily still in front of us. Transportation costs remain high in both our e-commerce and pre-sort businesses, so further insourcing of transportation as well as the deployment of automation will benefit both businesses. A lot of opportunity in front of us as we continue to invest in areas that will yield future productivity benefits. We also made several important additions to our global e-commerce team. While I'm sure the team will continue to evolve, we have a group of professionals and consultants guiding our business who have built business-to-consumer networks centered on induction to the USPS system. Cash performance for the quarter was also relatively strong, prepared to prior year off of an improved working capital performance. The team continues to demonstrate strong operational discipline. We also executed a successful refinancing quarter. There were two objectives to the refinancing. First, we wanted to push out the maturities, further decreasing our refinancing risk. Secondly, and more importantly from my perspective, we created strategic flexibility. We achieved both those objectives. I have described four chapters of transformations, quick wins, sustained investment, revenue growth, and finally, profitable revenue growth. Last quarter I said we were poised to enter that fourth chapter, profitable revenue growth. It's hard to call the first quarter an inflection point given the nominal EBIT increase, but revenue and profit did increase and I very much like how we're positioned going forward. Each business is poised to continue to make progress during this year, and for that matter, going forward beyond this year.