Pitney Bowes Inc.

Good morning and welcome to the Pitney Bowes Third Quarter Earnings 2022 Results 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 your participants for today's conference call. Mr. Mark Lautenbach, President and Chief Executive Officer. Ms. Anna Chadwick, Executive Vice President and Chief Financial Officer, and Mr. Ned Zachar, Vice President, Investor Relations. Mr. Zachar will now begin the call with a safe harbor overview.

Good morning, everybody. This is Ned Zachar, and I manage the Investor Relations program for Petty Bowes, and I'd like to welcome everyone to the call this morning. We very much appreciate your interest and participation. Part of my duties includes covering the usual and customary safe harbor information for these calls, so please bear with me for just a few minutes. 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. For more information about these risks and uncertainties, please see our earnings press release our 2021 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 that are used in the press release or discussed in our presentation materials, You can find reconciliations to the appropriate GAAP measures in the tables attached to our press release and also on our website. Additionally, we have provided a slide presentation on our investor relations website that summarizes many of the points we will discuss during today's call. Our format today is going to be familiar. Mark Ladenbach, our President and Chief Executive Officer, will begin with opening remarks, which will be followed by Anna Chadwick, our Chief Financial Officer, who will provide an in-depth discussion of our financial results. I'd now like to turn the presentation over to Mark. Mark, the floor is yours.

Thanks, Ned. Good morning, and thank you for joining today's call. There continues to be many different currents running through the economy and our business. While we are focused on navigating the moment, our focus is on how we come out of these cross currents. In many, probably most ways the third quarter resembled the second quarter. Santec and Presort both grew at constant currency and global e-commerce declined driven by the unprecedented strength of the dollar. The strength and the resilience of our Santec and Presort businesses will serve us very well in this turbulent market. But even more importantly, these businesses are very well positioned going forward. As you all know, these businesses are strong and reliable cash producers today and into the future. The fact that these businesses are both growing with margins close to the long-term plan bodes very well for the future. As I mentioned, our global e-commerce business is fighting through a dollar which is at unprecedented highs, a very choppy retail sector, and evolving consumer behaviors. We continue to believe that the currency markets will stay unsettled for the foreseeable future. I would characterize our domestic delivery business and our digital expedite business as hold and serve in the quarter as we continue to add new customers, which is being offset from some weakness in our existing customers' volumes. To be clear, we see the decline in volume from our existing clients as a market phenomenon. Our ability to win new customers and regain volume from existing customers is a direct result of our increased service levels, which position us very well vis-a-vis our competitors. That said, the most important dynamic since our last earnings call isn't found on our third quarter income statement. The most important dynamic is new customers we have won, existing customers where we have firmed our going forward relationship, and our resolution with the USPS on ongoing economics that position us very well going forward. In the third quarter, we signed Shein. If you're not familiar with Shein, it's one of the largest online fashion retailers in the world. We started processing parcels for Shein in the third quarter and we expect Shein's volumes to substantially increase in the fourth quarter. This is a tremendously exciting win. We also came to terms with eBay North America and eBay UK in the third quarter. As you probably know, eBay has been an important customer to Pitney Bowes for over a decade. We could not be more delighted with our going forward relationship with eBay. Next, we came to a new agreement with the USPS related to our digitally based shipping offerings, meaning how we enable shippers to pay for and label packages to send directly through USPS. As we discussed during the last earnings call, USPS ended the agreements they had with posted resellers effective October 1st. While PB was not a USPS reseller, the USPS had structured the market in a way that it made economic sense for us to work through resellers. In the quarter, we successfully concluded a going forward agreement with the USPS that enables us to essentially retain the economics we earned through the resellers reflecting the value we provide to the USPS and shippers in the market. As this market is evolving, we are continuing to see opportunities to expand our digital shipping offerings based on the value and innovation we bring. The most concrete example of this is an agreement we have entered into with one of the largest platform companies in the world to enable shipping from their platform. A quick final point on all of these third-quarter dynamics. were able to win these new customers and craft a new going forward agreement with USPS because we have consistently invested in our future. We've invested in our network, our service levels, our capabilities, and perhaps most importantly, our team. We've sustained these investments during COVID, supply chain issues, and a potential looming recession. Others might have gone weak-kneed in the face of all these dynamics, but we have remained resolute The sustained investment positions PB very well going forward. Finally, we continue to build on our third quarter momentum. In the third quarter, we began the quarter at 2.8 million parcels per week and finished the quarter at 2.9 million parcels per week, so a slight improvement, but basically holding steady. Through the first three weeks of the fourth quarter, we are running at approximately 3.6 million parcels per week, So you can clearly see the impact of our improved service levels driving volume to our network. Let me dimensionalize this further. Annualizing this weekly volume increase equals 40 to 45 million incremental parcels a year. We're looking forward to adding peak volumes to this new baseline. A few comments about capital expenditures and expense going forward. Now that we largely have what we need to compete and win in our markets. As I mentioned at the outset of my remarks, our focus is navigating the moment and ensuring we come out of this economic tumult a stronger company. Consequently, our bias on capital expenditures and expense is towards being conservative. Anna will have more to say, but we expect material savings in 2023 gross expense and CapEx. To conclude, As Ana foreshadowed at the last earnings call, the third quarter was similar to the second quarter financially. But again, looking back in the third quarter, I'm quite confident that the headline won't be any particular financial metric for the quarter, but the substantial wins that position our business for success going forward. Now let me turn it over to Ana.