Pitney Bowes Inc.

Thank you for standing by. My name is Janice and I will be your conference operator today. At this time, I would like to welcome everyone to the Q1 2025 PT Boats, Inc. Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask questions during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you. I would like to turn the call over to Alex Brown, Director, Investor Relations. Please go ahead.

Good afternoon, 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 along with 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 2024 Form 10-K, 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 forelooking statements as a result of new information or developments. Also included in today's presentation are non-GAAP measures, specifically EBIT, EBITDA, EPS, and free cash flow are all on an adjusted basis. You can find reconciliations for these items 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 investor relations website. With that, I now like to turn the call over to Lance.

Thank you, Alex, and good afternoon, everyone. In the first quarter, we continued repositioning Pitney Bowes as a cash-generative and profitable technology-enabled services company. We produced strong results that have enabled us to reiterate robust full-year guidance and increase our dividend for the second consecutive quarter. In terms of our results, Revenue was 493 million in line with previously disclosed expectations for this point in our product lifecycle and down 5% year over year. Adjusted EPS was 33 cents, up 74% year over year. Adjusted EBIT was 120 million, up 28% year over year. And free cash flow was a use of 20 million, excluding $13 million of restructuring payments. The use of cash was based on timing factors and is consistent with our budget and guidance. There were three main drivers of progress in the quarter. Sustaining high margins in CENTEC, sustaining high margins in presort, and remaining disciplined on cost controls at the corporate level. In light of our momentum, we have taken three notable steps today. First, we've reaffirmed the company's full-year guidance. This reflects our belief in the strength and resilience of our business, even against an uncertain economic backdrop and tariffs. And to be clear, our guidance bakes in tariffs based on what we know currently. Second, we are taking additional steps to cut costs and deleverage to strengthen our financial position. And third, Given our improved financial position and stable outlook, we've increased our quarterly dividend for a second consecutive quarter from $0.06 to $0.07 a share. Even in the current macroeconomic environment, we expect to remain on track to meaningfully grow cash flow and increase profitability in 2025. We are fortunate to operate businesses that are relatively insulated from consumer pullbacks and macro policy decisions, such as tariffs. On the cost front, we're keeping our foot on the pedal. We removed an additional $34 million of annualized costs in Q1, reaching an annualized run rate of $157 million at the end of the quarter. Consequently, we are raising our cost savings targets. to $180 million to $200 million. In terms of debt management, we repurchased $37 million of debt at an average cost slightly below par through the end of last week. Additionally, we now expect to drop below our 3x leverage ratio target by Q3 of this year. Once we get there, we will no longer be limited with respect to restricted payments under our covenants. This will further increase our ability to take value enhancing actions, such as continuing to increase dividends and repurchasing shares at attractive prices. Now I'll summarize our 2025 business level priorities. In CENTEC, we're focused on maximizing profitability and minimizing churn in our mailing business, while continuing to grow our shipping business. As we have stated in previous calls, our shipping business has similar profitability characteristics to our mailing business, and we expect shipping growth to more than offset revenue slowdowns elsewhere in Centec over the next 12 to 24 months. We are specifically focused on high margin customer groups in targeted verticals. As far as global financial services, this business has been a hidden gem for Pitney Bowes. For the past 50 years, we have financed captive equipment, enabled postage payments for our clients, and as of the end of this quarter, we had $1.15 billion of finance receivables. You're going to begin hearing more from us about our efforts to capture value via the Pitney Bowes Bank's Receivables Purchase Program, which involves the sale of eligible leases to the bank. These sales accelerate time to cash, allowing us to reduce parent company interest costs while also improving bank profitability. The Pitney Bowes Bank held $84 million of associated leases at the end of Q1. and we're aiming to grow that figure to at least 120 million by the end of 2025. We expect this program to accelerate the return of an additional 100 million in cash over the next few years, and we are evaluating other ways to expand the program. Bob will talk more about Global Financial Services in a bit. In PreSort, we intend to sustain our efficient and lean model that benefits from unique economies of scale and a true moat in the industry. On past calls, we mentioned our focus on tuck-in acquisitions that meet a very high return on invested capital threshold. We intend to continue pursuing these small roll-up transactions that generate high ROIs with very short payback periods. However, I want to be clear that we are not pursuing high cost or transformative acquisitions anywhere throughout the company. Looking forward, we have significant momentum in our pursuit of strong cash flow, earnings, and overall value. Also, we are committed to generating meaningful value for shareholders by returning a significant portion of that cash flow to them. I am incredibly optimistic about what we can accomplish by remaining disciplined and focused here in 2025. With that, I welcome Bob Gold to his first earnings call with us. Bob, over to you.