Pitney Bowes Inc.

Good day and thank you for standing by. Welcome to the Q2 2025 Pitney Bowles earnings conference call. At this time, all participants are in listen only mode. After the speakers presentation, there'll be a question and answer session. To ask a question during this session, you'll need to press star 101 on your telephone. You will then hear automated message advising your hand is raised. To withdraw your question, please press star 101 again. Please advise that today's conference is being recorded. I'd like to hand the conference over to your first speaker today, Alex Brown, director of financial 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 10K and other reports filed with the SEC that are located on our website at .pb.com and clicking on investor relations. Please keep in mind that 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. Specifically, EBIT, EBITDA, EPS and free cash flow are all on an adjusted basis. You can find reconciliations for these items to the appropriate gap measure and the tables attached to our press release. We have also provided a slide presentation and a spreadsheet with recast historical segment information on our investor relations website. With that, I'd like to turn the call over to our CEO, Kurt Wolff.

Thank you, Alex, and thanks to everybody joining today's call. I'm here with Paul Evans, our newly appointed CFO who will also participate in today's Q&A. A few quick comments on our new CFO. Paul has prior experience as a public company CEO and CFO and knows Pitney Bowes extremely well due to his previous service as a board member, audit committee chair and value enhancement committee chair. It's rare that a board member is willing to give up their seat to take an operating role, but Paul sees the same opportunities that I do and was eager to roll up his sleeves and get to work. Paul and I have a great history of working together, dating back to our days on the GameStop board during that company's turnaround. We had tremendous success working there together and I'm incredibly excited at the prospects of what we can do at Pitney Bowes. A quick note on the changes we've made to our earnings process. We are now issuing a short CEO letter to accompany our press release. This provides you with immediate context alongside our earnings press release, rather than making you wait to hear pre-recorded commentary. This saves you time and will provide more time for questions, the latter of which is important is we are optimistic that we'll see significant growth in our research coverage over the coming months. Finally, this is a much more efficient process and as with all things at Pitney Bowes, I'm striving to instill efficiency as a guiding principle of everything that we do. Next, I'd like to briefly touch on a few highlights from the quarter. Our businesses continue to drive significant earnings and cashflow growth on a year over year basis. We continue to honor our commitment to return capital to shareholders by almost exhausting our 150 million share repurchase authorization and by increasing our dividend by a penny for the third quarter in a row. Additionally, the board has increased our share repurchase authorization to 400 million. Given our strong free cashflow liquidity position and increased financial flexibility as a result of our adjusted leverage ratio now being below three X, we are comfortable with our ability to aggressively repurchase shares at prices we believe to be attractive. During the quarter, we initiated the first phase of our strategic review, which is focused on internal improvements. This has yielded numerous opportunities for value creation and I look forward to speaking about them on future calls. I'd like to conclude with an update on full year guidance. We reduced our revenue guidance range by 50 million, tightened our EBIT margin range by bringing down the high end of our range, reiterated our free cashflow guidance and increased our EPS range by 10 cents. The reduction in revenue guidance is largely due to decisions by prior management to accept customer losses rather than offer price concessions to at-risk pre-sort customers. These concessions would have allowed us to keep these customers, albeit at lower margins. I'm incredibly frustrated with this unforced error and we have addressed the issue. Reduction in the top end of our EBIT guidance is driven by the aforementioned loss of pre-sort customers, partially offset by continued improvements and execution across the entire organization. The increase in EPS is largely driven by our ongoing share repurchases. That concludes my comments. And with that, operator, please open the line for questions.