Pitney Bowes Inc. First Quarter 2017 Results May 2, 2017 - PowerPoint PPT Presentation

Pitney Bowes Inc. First Quarter 2017 Results May 2, 2017

Forward-Looking Statements This document contains “forward - looking statements” about the Company’s expected or potential future business and financial performance. Forward-looking statements include, but are not limited to, statements about its future revenue and earnings guidance and other statements about future events or conditions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to: mail volumes; macroeconomic factors, including global and regional business conditions that adversely impact customer demand and foreign currency exchange rates; timely development, market acceptance and regulatory approvals, if needed, of new products; changes in postal regulations; competitive factors, including pricing pressures, technological developments and introduction of new products and services by competitors; the continued availability and security of key information systems and the cost to comply with information security requirements and privacy laws; a breach of security, including a cyberattack or other comparable event; management of outsourcing arrangements; our ability to fully utilize the new enterprise business platform in the United States and successfully implement it internationally without significant disruptions to existing operations; the success of our investment in rebranding the Company; the risk of losing some of the Company’s larger clients in the Global Ecommerce segment; integrating newly acquired businesses, including operations and product and service offerings; changes in our credit ratings; management of credit risk; changes in interest rates and fuel prices; increased customs and regulatory risks associated with cross-border transactions; and other factors beyond its control as more fully outlined in the Company's 2016 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission. Pitney Bowes assumes no obligation to update any forward-looking statements contained in this document as a result of new information, events or developments. Note: Consolidated statements of income; revenue and EBIT by business segment; and reconciliation of GAAP to non-GAAP measures for the three months ended March 31, 2017 and 2016, and consolidated balance sheets at March 31, 2017 and December 31, 2016 are attached. Pitney Bowes Inc | First Quarter 2017 Earnings 2

Use of Non-GAAP Measures The Company's financial results are reported in accordance with generally accepted accounting principles (GAAP); however, in our disclosures we use certain non-GAAP measures, such as adjusted earnings before interest and taxes, Adjusted EPS, revenue growth on a constant currency basis, free cash flow and Segment EBIT. The Company reports measures such as adjusted earnings before interest and taxes (EBIT) and Adjusted EPS and adjusted income from continuing operations to exclude the impact of special items like restructuring charges, tax adjustments, goodwill and asset write-downs, and costs related to dispositions and market exits. While these are actual Company expenses, they can mask underlying trends associated with its business. Such items are often inconsistent in amount and frequency and as such, the adjustments allow an investor greater insight into the current underlying operating trends of the business. In addition, revenue growth is presented on a constant currency basis to exclude the impact of changes in foreign currency exchange rates since the prior period under comparison. Constant currency measures are intended to help investors better understand the underlying operational performance of the business excluding the impacts of shifts in currency exchange rates over the period. Constant currency is calculated by converting our current quarter reported results using the prior year’s exchange rate for the comparable quarter. This comparison allows an investor insight into the underlying revenue performance of the business and true operational performance from a comparable basis to prior period. A reconciliation of reported revenue to constant currency can be found in the Company’s attached financial schedules. Pitney Bowes Inc | First Quarter 2017 Earnings 3

Use of Non-GAAP Measures The Company reports free cash flow in order to provide investors insight into the amount of cash that management could have available for other discretionary uses. Free cash flow adjusts GAAP cash from operations for capital expenditures, restructuring payments, unusual tax settlements, contributions to the Company’s pension fund and cash used for other special items. A reconciliation of GAAP cash from operations to free cash flow can be found in the Company’s attached financial schedules. In addition, Management uses segment EBIT to measure profitability and performance at the segment level. Segment EBIT is determined by deducting from revenue the related costs and expenses attributable to the segment. Segment EBIT excludes interest, taxes, general corporate expenses not allocated to a particular business segment, restructuring charges and goodwill and asset impairments, which are recognized on a consolidated basis. A reconciliation of Segment EBIT to the Company’s total Net Income can be found in the Company’s attached financial schedules. Pitney Bowes has provided a quantitative reconciliation to GAAP in supplemental schedules. This information may also be found at the Company's web site www.pb.com/investorrelations . Pitney Bowes Inc | First Quarter 2017 Earnings 4

“We turned in a solid first quarter performance, driven by double-digit growth in Global Ecommerce, growth in both Production Mail and Presort Services businesses, and slight growth in our Software Solutions business. In addition, North America Mailing’s revenue rate of decline improved compared to prior quarters, driven by growth in equipment sales, and International Mailing performed similarly year-to-year compared to the prior quarter. In many ways, our results in the first quarter are what we envisioned and expected from the long-term growth initiatives and strategic investments we have been putting in place over the past four years. We are off to a good start and remain committed to meeting our financial objectives for the year. ” - Marc B. Lautenbach, President and CEO Pitney Bowes Inc. Pitney Bowes Inc | First Quarter 2017 Earnings 5

First Quarter 2017 Results Pitney Bowes Inc | First Quarter 2017 Earnings 6

First Quarter 2017 – Financial Highlights  Revenue of $837 million  Decline of 0.9% as reported  Growth of 0.2% constant currency  GAAP EPS of $0.35  Adjusted EPS of $0.36  GAAP cash from operations of $154 million  Free Cash Flow of $111 million  Growth of $46 million, or 71% Pitney Bowes Inc | First Quarter 2017 Earnings 7

First Quarter 2017 – Adjusted Results (1) $ millions, except EPS Q1 2017 Q1 2016 $845 $837 Adj GAAP EPS SG&A:Revenue 2017 = $0.35 2017 = 36.6% 2016 = $0.30 2016 = 38.3% Adj EBIT Margin Tax Rate 2017 = 16.4% $0.36 $0.34 on Adjusted $324 $306 2016 = 17.0% Earnings 2017 = 32.6% 2016 = 36.7% $144 $137 $40 $32 Revenue SG&A Taxes Adj EBIT Adj EPS Q1 2017 revenue Y/Y change: Q1 2017 Free Cash Flow: $111MM, 0.2% constant currency basis $46MM growth over prior year (0.9%) reported basis GAAP cash from operations: $154MM 8 (1) A reconciliation of GAAP to Non-GAAP measures can be found in the appendix of this presentation.

First Quarter 2017 - Earnings Per Share Reconciliation (1) Q1 Q1 2017 2016 GAAP EPS $0.35 $0.30 Restructuring and asset impairments, net $0.01 $0.02 Dispositions expense - $0.01 Adjusted EPS $0.36 $0.34 (1) The sum of earnings per share may not equal the totals above due to rounding. Pitney Bowes Inc | First Quarter 2017 Earnings 9

First Quarter 2017 – Revenue Results ($000) 2% 0% 9% Rpt Rpt Rpt 10% 3% 2% CC CC CC (4%) (7%) Rpt Rpt (4%) (6%) CC CC (7%) (12%) Rpt Rpt (6%) (11%) CC CC Pitney Bowes Inc | First Quarter 2017 Earnings 10

First Quarter 2017 Business Segment Results (1) (1) Segment results for the quarter and prior year may not equal the subtotals for each segment group due to rounding Pitney Bowes Inc | First Quarter 2017 Earnings 11

First Quarter 2017 Financial Performance – SMB Solutions Group Q1 Q1 Y/Y % Y/Y % ($ millions) 2017 2016 Reported Ex Currency North America Mailing $356 $371 (4%) (4%) International Mailing 93 105 (11%) (7%) SMB Revenue $449 $476 (6%) (5%) North America Mailing $141 $161 (12%) International Mailing 13 11 19% SMB EBIT $154 $172 (10%) North America Mailing • Equipment sales grew 5 percent • Middle and bottom of the line products, which includes the new SendPro offerings, performed well • Web channel experienced strong growth • Growth in equipment sales offset by a decline in the recurring revenue streams, largely around lower financing and supplies revenue • EBIT margin impacted by a decline in the higher-margin recurring revenue streams International Mailing • Equipment sales and recurring revenue streams both contributed to the decline • Rate of decline in recurring revenue streams improved compared to the prior quarter • EBIT margin increased due to improved equipment sales margins and lower expenses Pitney Bowes Inc | First Quarter 2017 Earnings 12