Pitney Bowes Inc.

Good afternoon and welcome to the Pitney Bowes fourth quarter and full year 2024 earnings release call. Your lines have been placed in 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 the participants on today's conference call. Mr. Lance Rosenzweig, chief executive officer and board member, Mr. John Wittek, interim chief financial officer, and Mr. Alex Brown, Director of Investor Relations. Mr. Brown will now begin the call with a Safe Harbor overview.

Good afternoon and thank you for joining us. Concluded in today's presentation are forward-looking statements about our future business and financial performance. Forward-looking statements involve risks along with uncertainties that can cause actual results to be materially different from our projections. More information about these items can be found in our earnings press release, our 2023 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 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. You can find reconciliations for these non-GAAP measures to the appropriate GAAP measure in the tables attached to our press release. We have also provided a slide presentation and a spreadsheet with historical segment information on our website. Finally, in our prepared remarks, revenue comparisons will be on a constant currency basis with other items such as EBIT EBITDA, EPS, and free cash flow on an adjusted basis. At this time, I'd like to turn the call over to our CEO, Lance.

Thank you, Alex, and good afternoon, everyone. 2024 was a transformative year for Pitney Bowes. We made swift and meaningful progress on all four of our strategic initiatives, exiting GEC, dramatically reducing costs and excess overhead, freeing up trapped cash, and deleveraging our balance sheet. Pitney Bowes is now a more efficient and focused company on a path to sustained value creation. Our full year results bear this out. Revenue was $2.027 billion, in line with our expectations for a softer point in Centec's product cycle and down 3% year over year. Adjusted EPS was $0.82, up 21 cents or 34% over the prior year. Adjusted EBIT was 385 million, up 77 million or 25% over the prior year. And free cash flow was $290 million, which excludes 86 million of restructuring payments. Before I dive in further, I want to say how excited I am to have Bob Gold joining us next month as our new CFO. Bob's background and experience make him an excellent fit for Pitney Bowes. In his prior roles, he has helped successfully transform companies into more efficient, cash-generating, and profitable organization, and has significant capital allocation, cost containment, debt management, and transaction experience. He's an excellent addition to our management team as we work to enhance value for our shareholders, and I look forward to introducing many of you to Bob in the coming weeks. I also want to extend my sincere appreciation to John for his exceptional service to Pitney Bowes over the past six years, most recently as interim CFO. John has been a wonderful partner since I joined the company, and he and his team have been instrumental in achieving each of our strategic objectives. John is retiring at the end of the quarter, and we wish him continued success going forward. With that, let's shift to an update on our strategic initiatives and then discuss why we are so excited about the opportunities for Pitney Bowes in 2025 and beyond. Exiting the global e-commerce segment was a critical step in simplifying our business structure. As we near the completion of the wind-down, we have been able to firm up details around one-time costs, which are now expected to be approximately $165 million. $120 million of these costs were paid out by year-end with a remainder expected to be paid out in the first half of 2025. The $165 million in exit costs are offset by a tax asset of approximately $164 million recorded in 2024 GAAP earnings. We expect to realize this asset predominantly over the next three years by reducing cash taxes. Moving on to cost takeout, We removed approximately $30 million in annualized costs during the fourth quarter, which brings our run rate exiting 2024 to approximately $120 million in annualized savings. We now expect to achieve a total of $170 million to $190 million in net annualized savings, up from the previously announced target of $150 million to $170 million. the remaining savings will be realized over the course of 2025 and into 2026. These cost reductions will be primarily driven by further overhead reductions, IT system simplification, reduced vendor spend, and facility consolidation. Going forward, Pitney Bowes will operate with a mindset of continual improvement and cost savings. Lastly, we have focused on simplifying and strengthening our balance sheet through cash optimization and deleveraging. On cash optimization, with the GEC wind down largely complete, we now anticipate needing to hold approximately $100 million less in cash on our balance sheet. We have also reduced the amount of cash we hold offshore by approximately $90 million and now plan to hold around $50 million overseas. Further, the Pitney Bowes Bank Receivables Purchase Program has accelerated the net realization of $41 million of cash from leases in 2024, freeing up approximately that amount of cash flow to the parent company level. Overall, these initiatives have unlocked more than $200 million that we can deploy more efficiently. On the deleveraging front, our goal was to prioritize our high-cost debt and our near-term maturities. We have made excellent progress in both areas. Over the past three months, we paid off our most expensive debt in its entirety, the $275 million in oak tree notes, and we paid it off with internally generated cash. In addition, this month, we successfully refinanced our near-term maturities through the issuance of a new revolving credit facility, a $160 million term loan A, and a $615 million term loan B. Our nearest maturity is now our notes due in March 2027. I'd like to thank our internal teams and our outside advisors for working so effectively together to deliver these successes in each of our four key initiatives. Let's now talk about why we are so excited about the future of Pitney Bowes. We started 2025 with strong momentum and a solid foundation from which to grow cash flow and earnings. The core tenets that will guide us this year are what I call the three S's, simplicity, speed, and sales. Leadership will be measuring the organization's rate of continued evolution and improvement based on these priorities, and you'll hear me refer back to them periodically. Pitney Bowes has historically been a complicated business, so we will continue to drive simplification by breaking down silos and focusing on a narrower set of high margin opportunities. Our exit from GEC was an important step in simplifying our company. In 2025, we are taking additional steps to simplify our operations, systems, and processes throughout the company. Speed goes hand in hand with simplifying the company, and I believe we have demonstrated our ability to operate with urgency. Prioritizing both of these tenets has already enabled us to have greater flexibility with capital allocation. In terms of sales, we are evolving Pitney Bowes from a business in slowly declining markets to a growing company with exciting long-term prospects. And we intend to do this without the need for transformative M&A or excessive growth-related spend. In particular, we see meaningful opportunities to grow our cash-generating and profitable business segments, Centec and PreSort, as well as global financial services, and have already been doing so in earnest. In Centec, our growth engine is our shipping technology business, which includes product offerings in office shipping, enterprise fulfillment software, and e-commerce. Each of these offerings include SaaS subscriptions, with additional revenue streams including hardware, professional services, and carrier rebates. Our Shipping360 platform integrates our offerings, is carrier agnostic, and brings our clients significant cost savings and advanced analytics. In the fourth quarter, shipping technology-related revenue grew 18%. To accelerate our growth in Centec, we have reorganized much of our sales force from a geographically based organization to a vertical market organization to benefit from our differentiated product offerings in mailing and shipping technology. Our key vertical markets include healthcare, banking and financial services, and government. The Pitney Bowes presort business has grown in 11 of the last 12 years, declining only during COVID. Presorts adjusted EBIT grew nearly 50% in 2024, driven largely by a combination of higher revenue per piece and cost reductions. In 2025, we will look to continue to profitably grow PreSort, both organically and through tuck-in acquisitions that provide the opportunity to gain greater economies of scale. We recently closed the acquisition of Royal Alliance's PreSort business, which has added 100 million pieces of first-class mail to our pre-sort business annually. We are continually looking at similar tuck-in acquisitions that would be rapidly accretive and expand our capabilities and markets. At Global Financial Services, we are looking to expand the depth and breadth of our offerings to our base of over half a million customers while continuing to generate significant cash for Pitney Bowes. Due to our growth initiatives and based on our current forecasts, we believe that we are on track to reach an inflection point where Pitney Bowes will become a growing company, and we will provide more context around that in future quarterly updates. In light of our improved financial position, our leadership team and board have given a great deal of thought to capital allocation. There are four elements that comprise our go-forward capital allocation framework. First, we will continue to invest in organic growth initiatives that generate a risk-adjusted return that is well above our cost of capital. Second, we will target opportunistic tuck-in acquisitions that are quickly accretive and can generate a very attractive risk-adjusted ROI. We do not currently anticipate any large transformative acquisitions. Third, we will continue to retire debt on a reasonable timeframe as we seek to maintain an optimal leverage profile which we believe is 3.0 over the next two years. And fourth, we will return capital to shareholders through our dividend and through share buybacks utilizing our newly authorized share repurchase facility of $150 million. I want to emphasize that we are fully committed to prudently increasing the amount of capital that we return to shareholders, and we intend to do this on a consistent basis beginning with today's one penny per share increase in dividends and moving forward by utilizing our new share repurchase facility. In future quarterly calls, we intend to provide relevant updates on each of these buckets in a clear and coherent fashion. In closing, I want to emphasize that we are committed to continuing our strong execution and identifying additional ways to maximizing value for shareholders. Now I'll turn the call over to John to discuss our fourth quarter and full-year results in greater detail.