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PITNEY BOWES INC /DE/ 10-K Analysis & Summary – 2/21/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

Pitney Bowes Inc.

Filing date:

02/21/2025

TLDR:

Pitney Bowes’ 2024 financial performance shows a mixed picture with improved income from continuing operations but a significant net loss due to discontinued operations. The company is undergoing a strategic shift away from Global Ecommerce, focusing on cost rationalization and core segments.

ELI5:

Pitney Bowes is changing its business strategy by focusing on its main services and cutting costs. While they’re making more money from their ongoing operations, they still lost money overall because they stopped some parts of their business.

Accession #:

0000078814-25-000015

Published on

Analyst Summary

  • Revenue decreased by 2.5% from 2023 to 2024.
  • Income from continuing operations improved significantly due to cost reductions and a tax benefit.
  • Net loss decreased by 47% year-over-year due to the loss from discontinued operations.
  • Gross profit margin increased from 49.6% in 2023 to 52.4% in 2024.
  • Operating profit margin decreased from 2.5% in 2023 to 7.2% in 2024.
  • Net profit margin increased from -18.6% in 2023 to -10.0% in 2024.
  • Return on Assets (ROA) increased from -9.0% in 2023 to -6.0% in 2024.
  • Return on Equity (ROE) decreased from 104.6% in 2023 to 35.2% in 2024.
  • Basic and Diluted EPS both increased from -$2.20 in 2023 to -$1.13 and -$1.12 in 2024, respectively.
  • Current ratio decreased from 1.08 in 2023 to 0.79 in 2024.
  • Quick ratio decreased from 1.05 in 2023 to 0.75 in 2024.
  • Cash ratio decreased from 0.33 in 2023 to 0.29 in 2024.
  • Debt-to-equity ratio decreased from 5.82 in 2023 to 3.32 in 2024.
  • Debt-to-assets ratio increased from 0.50 in 2023 to 0.57 in 2024.
  • Interest coverage ratio decreased from 0.56 in 2023 to 0.52 in 2024.
  • Inventory turnover decreased from 16.2 in 2023 to 15.6 in 2024.
  • Days Sales Outstanding (DSO) decreased from 35.1 days in 2023 to 28.8 days in 2024.
  • Days Payable Outstanding (DPO) decreased from 95.3 days in 2023 to 90.5 days in 2024.
  • Asset turnover increased from 0.49 in 2023 to 0.60 in 2024.
  • SendTech Solutions Adjusted Segment EBIT decreased from $408,091 in 2023 to $401,800 in 2024.
  • Presort Services Adjusted Segment EBIT increased from $110,912 in 2023 to $165,784 in 2024.

Opportunities and Risks

  • Decline in physical mail volumes.
  • Competition in the shipping market.
  • Reliance on third-party suppliers and transportation services.
  • Cybersecurity threats and data privacy regulations.
  • Macroeconomic conditions and changes in postal regulations.
  • Risks associated with the Ecommerce Restructuring, including potential liabilities from Remaining Claims.
  • Growth in SaaS shipping solutions.
  • Efficiency gains from automation in Presort Services.
  • Strategic acquisitions and divestitures.

Potential Implications

Company Performance

  • Monitor the successful execution of strategic initiatives, particularly cost rationalization and growth in SaaS shipping solutions.
  • Assess the impact of macroeconomic factors and changes in postal regulations on the company’s performance.
  • Evaluate the potential liabilities associated with the Ecommerce Restructuring and the Remaining Claims.

Pitney Bowes Inc. (PBI) 2024 10-K Filing Analysis

Executive Summary

This report analyzes Pitney Bowes Inc.’s 2024 10-K filing. Key findings include a strategic shift away from Global Ecommerce, a focus on cost rationalization, and a mixed performance across segments. While the company shows improved income from continuing operations, the net loss remains significant due to discontinued operations. The overall assessment is cautiously neutral, with a “Hold” recommendation. Investors should monitor the successful execution of strategic initiatives and the impact of macroeconomic factors.

Company Overview

Pitney Bowes Inc. (PBI) is a technology-driven company providing shipping solutions, mailing innovation, and financial services. The company operates primarily in the Sending Technology Solutions and Presort Services segments. Recent developments include the Ecommerce Restructuring and a focus on cost optimization.

Detailed Analysis

Financial Statement Analysis

Income Statement

Revenue decreased by 2.5% from 2023 to 2024. However, income from continuing operations improved significantly, driven by cost reductions and a tax benefit. The net loss, while still substantial, decreased by 47% year-over-year due to the loss from discontinued operations.

Key Ratios:

  • Gross Margin: Improved in SendTech Solutions due to business services growth.
  • Operating Expenses: Decreased due to cost rationalization efforts.

Balance Sheet

Total assets decreased significantly, primarily due to the deconsolidation of the Global Ecommerce segment. Cash and cash equivalents also decreased. Long-term debt remains a significant liability.

Cash Flow Statement

Cash flow from operating activities improved significantly, driven by a decline in finance receivables and lower payments of accounts payable and accrued liabilities. Cash flow from financing activities decreased due to higher net debt repayments.

Management’s Discussion and Analysis (MD&A)

Management highlights the strategic initiatives, including the Ecommerce Restructuring and cost rationalization. The outlook suggests a continued decline in mailing-related revenues but growth in shipping offerings. Presort Services is expected to improve due to automation and technology investments.

Risk and Opportunity Assessment

Risks:

  • Decline in physical mail volumes.
  • Competition in the shipping market.
  • Reliance on third-party suppliers and transportation services.
  • Cybersecurity threats and data privacy regulations.
  • Macroeconomic conditions and changes in postal regulations.
  • Risks associated with the Ecommerce Restructuring, including potential liabilities from Remaining Claims.

Opportunities:

  • Growth in SaaS shipping solutions.
  • Efficiency gains from automation in Presort Services.
  • Strategic acquisitions and divestitures.

Red Flags & Uncommon Metrics

  • Restructuring Charges: Significant restructuring charges indicate ongoing efforts to streamline operations, but also highlight potential disruptions.
  • Loss from Discontinued Operations: The substantial loss from discontinued operations underscores the challenges associated with the Global Ecommerce segment.
  • Pension Settlement Charges: The $91 million pension settlement charge suggests efforts to manage long-term liabilities, but also represents a significant one-time expense.

Conclusion & Actionable Insights

Pitney Bowes is undergoing a significant transformation, with a strategic shift away from Global Ecommerce and a focus on core segments. While the company shows improved income from continuing operations, the net loss remains significant. The success of strategic initiatives and the ability to navigate macroeconomic challenges will be critical for future performance.

Overall Assessment: Hold

Recommendations:

  • Monitor the successful execution of strategic initiatives, particularly cost rationalization and growth in SaaS shipping solutions.
  • Assess the impact of macroeconomic factors and changes in postal regulations on the company’s performance.
  • Evaluate the potential liabilities associated with the Ecommerce Restructuring and the Remaining Claims.

Pitney Bowes Financial Analysis – 2024

1. Financial Ratio and Metric Analysis:

Profitability:

  • Gross Profit Margin:

    • Calculation: (Total Revenue – Cost of Revenue) / Total Revenue
      • 2024: ($2,026,598 – $964,298) / $2,026,598 = 52.4%
      • 2023: ($2,078,925 – $1,048,315) / $2,078,925 = 49.6%
    • Trend: The gross profit margin increased from 49.6% in 2023 to 52.4% in 2024, representing a 5.6% increase.
    • Industry: The industry average gross profit margin for business support services is around 40-50%. Pitney Bowes is performing slightly above average.
  • Operating Profit Margin:

    • Calculation: Operating Income / Total Revenue. Operating Income = Loss from continuing operations before income taxes + Interest expense, net + Other expense (income)
      • 2024: (-$52,327 + $110,094 + $88,723) / $2,026,598 = 7.2%
      • 2023: (-$43,920 + $98,769 – $3,064) / $2,078,925 = 25.6%
    • Trend: The operating profit margin decreased from 2.5% in 2023 to 7.2% in 2024, representing a 68% decrease.
    • Industry: The industry average operating profit margin for business support services is around 10-15%. Pitney Bowes is performing below average.
  • Net Profit Margin:

    • Calculation: Net Income / Total Revenue
      • 2024: -$203,597 / $2,026,598 = -10.0%
      • 2023: -$385,627 / $2,078,925 = -18.6%
    • Trend: The net profit margin increased from -18.6% in 2023 to -10.0% in 2024, representing a 46.2% increase.
    • Industry: The industry average net profit margin for business support services is around 5-10%. Pitney Bowes is performing far below average.
  • Return on Assets (ROA):

    • Calculation: Net Income / Total Assets
      • 2024: -$203,597 / $3,397,516 = -6.0%
      • 2023: -$385,627 / $4,272,185 = -9.0%
    • Trend: The ROA increased from -9.0% in 2023 to -6.0% in 2024, representing a 33.3% increase.
    • Industry: The industry average ROA for business support services is around 5-8%. Pitney Bowes is performing far below average.
  • Return on Equity (ROE):

    • Calculation: Net Income / Total Stockholders’ Equity
      • 2024: -$203,597 / -$578,433 = 35.2%
      • 2023: -$385,627 / -$368,576 = 104.6%
    • Trend: The ROE decreased from 104.6% in 2023 to 35.2% in 2024, representing a 66.3% decrease.
    • Industry: The industry average ROE for business support services is around 15-20%. Pitney Bowes is performing far above average.
  • Earnings Per Share (EPS) – Basic and Diluted:

    • Calculation: From the income statement.
    • Basic EPS:
      • 2024: -$1.13
      • 2023: -$2.20
    • Diluted EPS:
      • 2024: -$1.12
      • 2023: -$2.20
    • Trend: Basic and Diluted EPS both increased from -$2.20 in 2023 to -$1.13 and -$1.12 in 2024, respectively, representing a 49% increase.
    • Industry: The industry average EPS for business support services is around $1-2. Pitney Bowes is performing far below average.

Liquidity:

  • Current Ratio:

    • Calculation: Current Assets / Current Liabilities
      • 2024: $1,317,954 / $1,672,727 = 0.79
      • 2023: $2,058,090 / $1,898,442 = 1.08
    • Trend: The current ratio decreased from 1.08 in 2023 to 0.79 in 2024, representing a 26.9% decrease.
    • Industry: A current ratio of 1.5 to 2.0 is generally considered healthy. Pitney Bowes is performing below average.
  • Quick Ratio (Acid-Test Ratio):

    • Calculation: (Current Assets – Inventory) / Current Liabilities
      • 2024: ($1,317,954 – $59,836) / $1,672,727 = 0.75
      • 2023: ($2,058,090 – $63,048) / $1,898,442 = 1.05
    • Trend: The quick ratio decreased from 1.05 in 2023 to 0.75 in 2024, representing a 28.6% decrease.
    • Industry: A quick ratio of 1.0 or greater is generally considered healthy. Pitney Bowes is performing below average.
  • Cash Ratio:

    • Calculation: (Cash and Cash Equivalents + Short-Term Investments) / Current Liabilities
      • 2024: ($469,726 + $16,374) / $1,672,727 = 0.29
      • 2023: ($600,054 + $22,166) / $1,898,442 = 0.33
    • Trend: The cash ratio decreased from 0.33 in 2023 to 0.29 in 2024, representing a 12.1% decrease.
    • Industry: A cash ratio of 0.5 or greater is generally considered healthy. Pitney Bowes is performing below average.

Solvency/Leverage:

  • Debt-to-Equity Ratio:

    • Calculation: Total Debt / Total Stockholders’ Equity
      • 2024: $1,919,708 / abs(-$578,433) = 3.32
      • 2023: $2,146,032 / abs(-$368,576) = 5.82
    • Trend: The debt-to-equity ratio decreased from 5.82 in 2023 to 3.32 in 2024, representing a 42.9% decrease.
    • Industry: The industry average debt-to-equity ratio for business support services is around 1.0 to 2.0. Pitney Bowes is performing above average.
  • Debt-to-Assets Ratio:

    • Calculation: Total Debt / Total Assets
      • 2024: $1,919,708 / $3,397,516 = 0.57
      • 2023: $2,146,032 / $4,272,185 = 0.50
    • Trend: The debt-to-assets ratio increased from 0.50 in 2023 to 0.57 in 2024, representing a 14% increase.
    • Industry: The industry average debt-to-assets ratio for business support services is around 0.3 to 0.6. Pitney Bowes is performing around average.
  • Interest Coverage Ratio (Times Interest Earned):

    • Calculation: EBIT / Interest Expense. EBIT = Loss from continuing operations before income taxes + Interest expense, net
      • 2024: (-$52,327 + $110,094) / $110,094 = 0.52
      • 2023: (-$43,920 + $98,769) / $98,769 = 0.56
    • Trend: The interest coverage ratio decreased from 0.56 in 2023 to 0.52 in 2024, representing a 7.1% decrease.
    • Industry: An interest coverage ratio of 1.5 or greater is generally considered healthy. Pitney Bowes is performing below average.

Activity/Efficiency:

  • Inventory Turnover:

    • Calculation: Cost of Revenue / Average Inventory
      • 2024: $964,298 / (($59,836 + $63,048) / 2) = 15.6
      • 2023: $1,048,315 / (($63,048 + $66,256) / 2) = 16.2
    • Trend: The inventory turnover decreased from 16.2 in 2023 to 15.6 in 2024, representing a 3.7% decrease.
    • Industry: The industry average inventory turnover for business support services is around 10-15. Pitney Bowes is performing around average.
  • Days Sales Outstanding (DSO):

    • Calculation: (Accounts Receivable / Total Revenue) * 365
      • 2024: ($159,951 / $2,026,598) * 365 = 28.8 days
      • 2023: ($200,242 / $2,078,925) * 365 = 35.1 days
    • Trend: The DSO decreased from 35.1 days in 2023 to 28.8 days in 2024, representing a 17.9% decrease.
    • Industry: The industry average DSO for business support services is around 30-45 days. Pitney Bowes is performing above average.
  • Days Payable Outstanding (DPO):

    • Calculation: (Accounts Payable / Cost of Revenue) * 365
      • 2024: ($239,740 / $964,298) * 365 = 90.5 days
      • 2023: ($273,604 / $1,048,315) * 365 = 95.3 days
    • Trend: The DPO decreased from 95.3 days in 2023 to 90.5 days in 2024, representing a 5% decrease.
    • Industry: The industry average DPO for business support services is around 30-45 days. Pitney Bowes is performing far above average.
  • Asset Turnover:

    • Calculation: Total Revenue / Total Assets
      • 2024: $2,026,598 / $3,397,516 = 0.60
      • 2023: $2,078,925 / $4,272,185 = 0.49
    • Trend: The asset turnover increased from 0.49 in 2023 to 0.60 in 2024, representing a 22.4% increase.
    • Industry: The industry average asset turnover for business support services is around 0.5 to 1.0. Pitney Bowes is performing around average.

Valuation:

  • Price-to-Earnings Ratio (P/E):

    • Calculation: Stock Price / EPS
      • 2024: $10.32 / abs(-$1.13) = -9.13
    • Trend: N/A
    • Industry: The industry average P/E ratio for business support services is around 15-20. Pitney Bowes is performing far below average.
  • Price-to-Book Ratio (P/B):

    • Calculation: Market Cap / Total Stockholders’ Equity
      • 2024: (182405867 * $10.32) / abs(-$578,433,000) = 3.26
    • Trend: N/A
    • Industry: The industry average P/B ratio for business support services is around 2-4. Pitney Bowes is performing around average.
  • Price-to-Sales Ratio (P/S):

    • Calculation: Market Cap / Total Revenue
      • 2024: (182405867 * $10.32) / $2,026,598,000 = 0.93
    • Trend: N/A
    • Industry: The industry average P/S ratio for business support services is around 1-2. Pitney Bowes is performing below average.
  • Enterprise Value to EBITDA (EV/EBITDA):

    • Calculation: (Market Cap + Total Debt – Cash) / EBITDA. EBITDA = Loss from continuing operations before income taxes + Interest expense, net + Depreciation and amortization
      • 2024: ((182405867 * $10.32) + $1,919,708,000 – $469,726,000) / (-$52,327,000 + $110,094,000 + $114,485,000) = 15.1
    • Trend: N/A
    • Industry: The industry average EV/EBITDA ratio for business support services is around 10-15. Pitney Bowes is performing around average.

Growth Rates:

  • Revenue Growth:

    • Calculation: (Current Year Revenue – Previous Year Revenue) / Previous Year Revenue
      • 2024: ($2,026,598 – $2,078,925) / $2,078,925 = -2.5%
    • Trend: Revenue decreased by 2.5%
    • Industry: The industry average revenue growth for business support services is around 5-10%. Pitney Bowes is performing below average.
  • Net Income Growth:

    • Calculation: (Current Year Net Income – Previous Year Net Income) / Previous Year Net Income
      • 2024: (-$203,597 – (-$385,627)) / (-$385,627) = -47.2%
    • Trend: Net income increased by 47.2%
    • Industry: The industry average net income growth for business support services is around 10-15%. Pitney Bowes is performing above average.
  • EPS Growth:

    • Calculation: (Current Year EPS – Previous Year EPS) / Previous Year EPS
      • 2024: (-$1.13 – (-$2.20)) / (-$2.20) = -48.6%
    • Trend: EPS increased by 48.6%
    • Industry: The industry average EPS growth for business support services is around 10-15%. Pitney Bowes is performing above average.

Other Relevant Metrics:

  • SendTech Solutions Adjusted Segment EBIT:

    • Calculation: Given in the financial statements.
    • 2024: $401,800
    • 2023: $408,091
    • Trend: The SendTech Solutions Adjusted Segment EBIT decreased from $408,091 in 2023 to $401,800 in 2024, representing a 1.5% decrease.
    • Significance: This metric reflects the profitability of the SendTech Solutions segment, a key business area for Pitney Bowes. A decrease suggests challenges in maintaining profitability within this segment.
  • Presort Services Adjusted Segment EBIT:

    • Calculation: Given in the financial statements.
    • 2024: $165,784
    • 2023: $110,912
    • Trend: The Presort Services Adjusted Segment EBIT increased from $110,912 in 2023 to $165,784 in 2024, representing a 49.5% increase.
    • Significance: This metric reflects the profitability of the Presort Services segment, a key business area for Pitney Bowes. An increase suggests improved profitability within this segment.

2. Commentary:

Pitney Bowes’ financial performance in 2024 presents a mixed picture. While the company demonstrated improvements in gross profit margin, net profit margin, ROA, and EPS, these metrics still lag behind industry averages, indicating ongoing challenges in achieving sustainable profitability. The decrease in revenue and operating profit margin raises concerns about the company’s ability to generate top-line growth and maintain operational efficiency. The company’s liquidity position, as reflected by the current, quick, and cash ratios, remains weak, suggesting potential difficulties in meeting short-term obligations. However, the decrease in the debt-to-equity ratio indicates improved financial leverage.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️