Pitney Bowes Q2 2025 Earnings Report

Pitney Bowes EPS Results

• Actual EPS: $0.27
• Consensus EPS: $0.27
• Beat/Miss: Met Expectations
• One Year Ago EPS: $0.03

Pitney Bowes Revenue Results

• Actual Revenue: $461.91 million
• Expected Revenue: $475.92 million
• Beat/Miss: Missed by -$14.01 million
• YoY Revenue Growth: -5.70%

Pitney Bowes Announcement Details

• Quarter: Q2 2025
• Date: 7/30/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, July 30, 2025
• Conference Call Time: 5:00PM ET

Pitney Bowes (NYSE:PBI), a shipping and mailing company, provides technology, logistics, and financial services to small and medium-sized businesses, large enterprises, retailers, and government clients in the United States and internationally. It operates through Global Ecommerce, Presort Services, and SendTech Solutions segments. The Global Ecommerce segment provides domestic parcel services, cross-border solutions, and digital delivery services. The Presort Services segment offers mail sortation services, which allow clients to qualify volumes of first-class mail, marketing mail, marketing mail flats, and bound printed matter for postal work sharing discounts. The SendTech Solutions segment provides physical and digital mailing and shipping technology solutions, and other applications for sending, tracking and receiving of letters, parcels, and flats as well as financing alternatives to finance equipment and product purchases. It markets its products, solutions, and services through direct and inside sales force, global and regional partner channels, direct mailings, and digital channels. The company was formerly known as Pitney Bowes Postage Meter Company. Pitney Bowes Inc. was incorporated in 1920 and is headquartered in Stamford, Connecticut.

Pitney Bowes Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: The board appointed Paul Evans as CFO, leveraging his public-company CEO experience and prior Pitney Bowes board roles to bolster financial leadership.
• Positive Sentiment: Q2 delivered significant earnings and cash flow growth, with the company nearly exhausting its $150 million buyback, raising the dividend again, and boosting its repurchase authorization to $400 million now that leverage is below 3x.
• Neutral Sentiment: Pitney Bowes launched a two-phase strategic review targeting internal efficiencies, already uncovering multiple opportunities for future value creation.
• Negative Sentiment: Full-year guidance was revised with a $50 million revenue reduction and a tightened top-end EBIT margin due to prior Presort customer losses described as an unforced error by management.
• Positive Sentiment: Management increased its EPS guidance by $0.10, attributing the uplift to ongoing share repurchases and disciplined capital allocation.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the Q2 twenty twenty five Pitney Bowles Earnings Conference Call. At this time, all participants are in listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during this session, you will need to press star one on one on your telephone.

[Operator]

You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one on one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Alex Brown, Director of Investor Relations. Please go ahead.

[Alex Brown, Director - Investor Relations at Pitney Bowes]

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 ks, and other reports filed with the SEC that are located on our website at www.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.

[Alex Brown, Director - Investor Relations at Pitney Bowes]

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 recast historical segment information on our Investor Relations website. With that, I'd like to turn the call over to our CEO, Kurt Wolfe.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

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 and 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.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

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.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

This saves you time and will provide more time for questions, the latter of which is important as 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 cash flow growth on a year over year basis. We continue to honor our commitment to return capital to shareholders by almost exhausting our $150,000,000 share repurchase authorization and by increasing our dividend by $0 for the third quarter in a row.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Additionally, the Board has increased our share repurchase authorization to 400,000,000 Given our strong free cash flow, liquidity position and increased financial flexibility as a result of our adjusted leverage ratio now being below 3x, 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 50,000,000 tightened our EBIT margin range by bringing down the high end of our range, reiterated our free cash flow guidance and increased our EPS range by $0.10 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 Presort customers.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

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 in execution across the entire organization. The increase in EPS is largely driven by our ongoing share repurchases. That concludes my comments.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

And with that, operator, please open the line for questions.

[Operator]

Thank you. At this time, we'll conduct a question and answer session. To withdraw your question, please press 11 again. Please stand by while we compile the Q and A roster. And our first question comes from the line of Kartik Mehta of Northcoast Research. Your line is now open.

[Kartik Mehta, Executive Managing Director & Director - Research at Northcoast Research Partners LLC]

Hey. Good afternoon. Kurt, just going back to your comments on and execution of the share buyback. Obviously, you bought a significant amount of shares in the last one hundred and twenty days. And I'm wondering, with the new authorization, do you intend to continue buyback in 2025?

[Kartik Mehta, Executive Managing Director & Director - Research at Northcoast Research Partners LLC]

Or is this you want to wait, make sure see how the business is performing, see what free cash flow is before reengaging with the buyback?

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Kartik, thank you for the question. What I can say is obviously we can't really comment on future activity and purchases in the market. What I can say is I think the rate at which we've been purchasing shares historically, the prices at which we've been purchasing them, says something about where we see value in the company. I'd also point to the incentive structure that I that, you know, I negotiated for myself, which is based almost exclusively on options that don't begin know, don't have or have strike prices of twelve, fourteen, and 16. So you have some idea of where I see value in the company.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

So I can't comment on what we will do, but I'm sure you can infer from all of that maybe where we see value in the company. I'd also highlight that, again, with us getting under a three point o leverage ratio, we now have increased access to restricted payments. And then even if we go back above that three point o, the fact that we've gotten below it essentially replenishes all of those baskets. So even if we weren't below, you know, we didn't have the unrestricted access for being below three point zero, we still have roughly 300,000,000 in those baskets that we can use.

[Kartik Mehta, Executive Managing Director & Director - Research at Northcoast Research Partners LLC]

And then Kurt, just on the strategic review, obviously, you've been undertaking that for a while, as you said, you know, since you became CEO. Now, obviously, new CFO in the fold. And I'm wondering, does that change the timing at all for the strategic review and if not any commentary on when you think that might be finished and you might be finished with the process?

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Yeah. Kartik, so on that, I would say is I think Paul hopefully coming in accelerates, not slows down any sort of review. Paul and I have a great working relationship. Paul has been on the board for nine months and been heavily involved, so he knows the business very well, which is atypical for an incoming CFO. And again, as I said, we work incredibly well together.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

As far as just timing, we we've conveyed it as a two step process. The first step in the process is an internal review. And after we've completed that, we'd move on to the second half of the process. And we're being incredibly thorough during this first step of the fur of the process. As I've highlighted, you know, first of all, you know, two things I would say to that.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

One is as we're going through this, we're finding numerous opportunities to create value for shareholders. So that's a great outcome of the process. And second of all, what I'd highlight is, you know, we all need to learn from our mistakes. And pointing to GEC as an example, that was a situation in which I would point to two problems we had in trying to grow that business. One, I don't think we operated efficiently enough as an overall company to be competitive in the logistics space.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

So one of the things we need to address regardless of how the second half of the strategic review goes, we need to get far more efficient in how we operate and effective in how we operate. Secondarily, when we made that decision, part of the thinking, as far as I understand it, is that we would be able to take advantage of shared transportation between the two businesses, between Presort and GEC, and that turned out not to be the case. So before we make any decisions, a, we need to figure out how we operate as effectively and efficiently as possible and we need to understand our business to a level of granularity that we don't make any mistakes when we are determining how we're going to proceed or what is ultimately in the best interest of shareholders with respect to the company. As far as the timing question, realistically my guess is that the internal review will probably continue throughout the remainder of 2025 and then the more fulsome review would begin at some point in 2026.

[Kartik Mehta, Executive Managing Director & Director - Research at Northcoast Research Partners LLC]

Perfect. And then just one last question, Kurt. Just on the Presort business, it seems like you're taking a little bit different strategy than previous management as you indicated. Is the thought that maybe if you go after some of these larger customers with lower EBIT that fell pressure margins? Or are there opportunities to take costs out either through automation or other ways and be able to maintain margins in that business?

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Yeah, absolutely. So I guess what I'd say is there's two ways to look at it. One is margin and one is dollars. To me, the most important thing is dollars. You know, if we give up some percentage margin, as long as our EBIT dollars are going up, that's a win for everybody.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

And as far as what the opportunity is, I guess what I would highlight, and I understand different perspectives on this issue, Just what I would point to is we have a tremendous operation. We have a leader, Debbie Pfeiffer, who is we believe is peerless in terms of her ability to drive an efficient organization. I think, you know, our belief, and we have a lot of data that we look at, we believe we're the most efficient player in the space. We believe that we get mail to customers typically faster than many of our competitors. We believe our service levels are at the highest level.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

So when we look at it, if there's a customer that we can't serve profitably, we don't think there's anybody else that can serve profitably. So from that lens, there's not a customer that we shouldn't be able to get. So there were situations in the past, and again, I understand different perspectives. Personally, I don't agree with the thought, was that we were gonna maintain our percentage margin, and unfortunately, we lost some large customers that we, to my understanding, could've kept at a profitable level. It just would've maybe brought our margin percentage down even though it would have been additive to revenue and to actual EBIT dollars.

[Kartik Mehta, Executive Managing Director & Director - Research at Northcoast Research Partners LLC]

Perfect. Thanks, Kurt. I really appreciate it. It makes sense. Thank you.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Of course.

[Operator]

Thank you. One moment for our next question. And our next question comes from the line of Anthony Lebiedzinski of Sidoti. Your line is now open.

[Anthony Lebiedzinski, Senior Equity Analyst - Specialty Retail/Consumer at Sidoti & Company, LLC]

Good afternoon and thank you for taking the questions. So first on SendTech, in previous conference calls you guys had talked about the shipping sub segment within SendTech, how that's grown. Can you give us an update how that's tracking so far this year? And how do you see that shipping sub segment doing for the balance of the year?

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Yeah. Hey, Anthony. Yeah. So just to be you know, I'll answer the question, but just something that everybody should be aware of. We did a recast of our shipping segment.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

And what this what this involved is, as you recall, when we exited GEC, there was one piece of business that was profitable that is shipping related. Going forward, we'll talk about core shipping and just shipping overall. And what the difference will be is that overall shipping will be core shipping plus this one relationship that we have in the shipping space. This business actually handles packages. It's not a software business, so it's very different than our core software our core shipping software business.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

So if you look at the overall shipping revenue, it was actually down 2.5 year over year for the quarter. However, that was due to significant declines in the non core part of the business. If you strip out that one customer and that one relationship, which we'll continue to do on a quarterly basis, if you strip that out, we had 6% growth. It's not where we wanna be. We're driving to make sure we're at double digits every quarter, but we did come in at about 6% year over year growth for the quarter.

[Anthony Lebiedzinski, Senior Equity Analyst - Specialty Retail/Consumer at Sidoti & Company, LLC]

Got you. Okay. Thanks for that clarification. Okay. All right.

[Anthony Lebiedzinski, Senior Equity Analyst - Specialty Retail/Consumer at Sidoti & Company, LLC]

So as far as that, I was more kind of interested in that SaaS piece, shipping as a software. In terms of that business, do you still have a positive outlook on that, how that's going to grow going forward?

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Yeah, the SaaS business continues to do very well. The growth there Just for the SaaS business itself, that was up 17% year over year for the quarter. And again, we expect that to continue to outpace the underlying core shipping revenue.

[Anthony Lebiedzinski, Senior Equity Analyst - Specialty Retail/Consumer at Sidoti & Company, LLC]

Gotcha. Okay. Alright. Thanks for that. And then in terms of the pre sort, so in your letter, you talked about reversing the losses.

[Anthony Lebiedzinski, Senior Equity Analyst - Specialty Retail/Consumer at Sidoti & Company, LLC]

Have you already been able to do that so far in the third quarter? Or is this more of an expectation that you think you will be able to reverse the customer losses?

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

What I would say is I think we're very close to starting to reverse some of those losses. But to this point, we've not reversed any of it yet.

[Anthony Lebiedzinski, Senior Equity Analyst - Specialty Retail/Consumer at Sidoti & Company, LLC]

Gotcha. Okay. Alright. And then the prior CEO was open to doing acquisitions and pre sort. What is your view on that strategy?

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

I mean, it's unbelievably attractive, and we're constantly scanning the horizon for opportunities. As I think every CEO has mentioned, these acquisitions are completed at very low multiples. And then when we they're brought into our system, as I mentioned, the level of efficiency we have is peerless in the industry, so that that profitability shoots up significantly. So so they're just incredibly accretive to the business, and we continue to pursue them every chance we get.

[Anthony Lebiedzinski, Senior Equity Analyst - Specialty Retail/Consumer at Sidoti & Company, LLC]

Understood. Okay. Alright. And then just lastly, I guess more of a housekeeping question here. So in terms of your increased EPS guidance, what are you guys assuming for the diluted share count for the back half and sort of full year?

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Yeah. Don't want to give that simply because it certainly gives some sense of where we are or where we think we may be in terms of share repurchases, but if you take our EBIT guidance, apply an assumed interest rate, assumed tax rate, and then look at our EBIT guidance versus our EPS guidance, that probably give you some sense of where we might be on a diluted share count, but I don't think

[Anthony Lebiedzinski, Senior Equity Analyst - Specialty Retail/Consumer at Sidoti & Company, LLC]

Okay. That sounds fair. All right, well, you very much and best of luck.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Thank you, Anthony.

[Operator]

Thank you. One moment for our next question. And our next question comes from the line of Matthew Swope of Baird. Your line is now open.

[Matt Swope, Managing Director at Robert W. Baird & Co]

Thank you very much. Kurt, could you talk about the management changes that have gone on? I think everybody's been a bit surprised. I mean, we knew you were deeply involved. But to see you step into the CEO role after Lance was made permanent in October.

[Matt Swope, Managing Director at Robert W. Baird & Co]

And then I know Bob was just made permanent in February. Are the management changes tied to sort of the unforced errors you referenced? Or could you just talk more broadly about that and how we think about the management stability going forward?

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Absolutely. Yeah. So two things I'd say on that. And I'll just address the most recent change. You know, the board can speak to you know, the board could speak to the change in CEO.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

With respect to the CFO position, this they in no way the change in no way reflected on Bob. You know, he's an excellent CFO. Just, you know, it's not often that I that I feel like we have an opportunity to bring in a talent like Paul. And I think as you guys talk to him in the coming quarters, and I'm sure he'll, you know, if there's any questions in his wheelhouse, I'm sure I'll get to them today. It's not often we have an opportunity to get somebody like that into the organization.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

He and I have worked together for five years. We have a tremendous working relationship. We we have the same values. We have the same focus within running a business in terms of creating urgency, creating discipline, data driven decision making, etcetera. So, you know, it was just you know, it's really a comment on the opportunity that we had to bring somebody of Paul's caliber.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

And as I'm sure all of you can imagine, it's not often that a board member gives up a board seat for an executive role, but I think, you know, and I don't know if Paul wants to speak to it after this, but, know, there's a tremendous opportunity. I think Paul sees it as well. But and then the other half the other thing I would just say before, you Paul maybe talks about what he's seeing, I would just highlight that change has been a huge catalyst for value creation at Pitney Bowes. You know? And again, I know corporate America typically operates at a certain pace.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

My operating background was all at startups. So the rate at which I work, the rate of change at which I pursue is very aggressive and anytime there's an opportunity to create more value than the disruption causes, we're always gonna seize that opportunity. So I like to think that every change we've made has been significant value creation, but I do recognize that people see a lot of lot of change and that's maybe not typical. But with all that said, again, I I I really think it'd be great for Paul to talk about it because, you know, what he's done, I think, is pretty unusual and really speaks to the opportunity at Bittany Bowes.

[Paul Evans, EVP, CFO & Treasurer at Pitney Bowes]

Hi, Matt.

[Paul Evans, EVP, CFO & Treasurer at Pitney Bowes]

Nice to meet you over the phone. Yeah. Look, as I sat on the board, and I've been on the board for nine months, and I was the audit chair and then the EC chair, and so I was deeply involved. And at heart, I'm still an operator, and I saw an opportunity to come alongside Kurt again and with an incredibly supportive board and an incredibly talented management team, it seemed to be an easy decision for me. And all the things that the company has in front of them, it's something that's in my wheelhouse to do. So I'm just really glad to be here and to accelerate returning this company to where it should be.

[Matt Swope, Managing Director at Robert W. Baird & Co]

That's helpful. Thank you, Paul. Nice to meet you as well. Kurt, do you guys do you see you and Paul in these roles for two years, three years? And I know it's hard to predict the future, but is this is this a permanent thing, or is this a temporary sort of fix?

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Yeah. Yeah. So Matthew, I can speak for myself. Paul can speak for him. I will serve as long as the board and I both all agree that I'm the best person for the job.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

As you know, and probably everybody on this call knows, I have a tremendous amount of money invested in this company. There's nothing more important to me financially as well. It's just emotionally and just from a commitment to success than seeing this company be successful. I like to believe that today, I'm the right person for the job. I'm committed to it as long as I am the right person.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

If the path that we end up on is not suited to my skill set, then we'll bring in somebody who's better suited to run the company. But for now, everything I've seen that there's I'm committed as long as I'm the right person.

[Paul Evans, EVP, CFO & Treasurer at Pitney Bowes]

Yeah. And I guess to speak for myself, I don't have an end date. I'm gonna be here until the job's done, and I don't think the job's ever done. So as long as the the board will have me and Kurt will have me, I will be here.

[Matt Swope, Managing Director at Robert W. Baird & Co]

I appreciate both of those. And Kurt, I will say I do absolutely admire how much difference you have made in the company and very much respect how much you have invested in the company. You have absolutely put your money where your mouth is. Can I ask, as you go through the share buyback process, are you selling any of your personal shares or Hestia shares into the buyback?

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Yeah. So what I can say on that is any shares that I would execute would be filed by Form 4s, and I think it's been quite some time since any Form 4s have been filed. So I think it's pretty safe to assume that shares haven't been sold. Yeah. And I would just highlight as well that, you know, I did have a 10 b five one in place, and that did expire.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

So at this at this point in time, I do not have a 10 b five one in place for myself or for Hestia.

[Matt Swope, Managing Director at Robert W. Baird & Co]

Gotcha. No. Very helpful. And maybe I will take advantage of Paul's presence on the call as well. And I'll put on my debt hat for a second.

[Matt Swope, Managing Director at Robert W. Baird & Co]

And I was reading through and Kurt in your letter when you talked about the potential refinancing of the bonds and the 2027 notes in particular not becoming callable at par until March. Can I just ask how you guys are looking at as the high yield market is as wide open as I've seen it for a while? We're seeing lots of deals get done right now at levels that people didn't foresee as possible before, for whatever the call premium is right now, 1.7 points or so. Do you think it might make sense to refinance those bonds earlier than that call date? And maybe you would make up more than the savings on the coupon that you might get by refinancing in such a hot market?

[Paul Evans, EVP, CFO & Treasurer at Pitney Bowes]

Yeah, I'll take that. Of course, we're going look at that. Look, my charge is I want to look at the what's our average life of our debt, what's the coupon on our debt. Obviously, there's still some remnant restrictions that we need to clear ourselves to get back to the normal company that we are. So obviously, we're looking at our RCF, our TLA, our TLB, the 27s.

[Paul Evans, EVP, CFO & Treasurer at Pitney Bowes]

I mean, we have the liquidity. We could pay off the 27s. And we'll balance that against what's an appropriate level of leverage that a company like this should have. But, I mean, obviously, you can see that, you know, we're generating a a significant amount of free cash flow, and so it's a good option to have. But we're certainly how you described it is is in our thought process. And just to add

[Matt Swope, Managing Director at Robert W. Baird & Co]

to But that one plan. I'm sorry.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

No, no, to add to that. And this is one of the reasons I really appreciate joint working with Paul is we see things very similarly and play off each other very well. Retiring debt and issuing debt don't necessarily always have to coincide. So just because we're not currently contemplating calling the debt or potentially paying it off previously, if there's a timing mismatch, Paul and I have already been through if there's a timing mismatch in terms of the raising and potential raising and payoff of debt, or the call provision going away. We're very, very value driven and it's just a simple mathematical calculation of you know, what do we get on our cash, you know, what what are we paying up, you know, and then, you know, what are we avoiding in terms of interest premiums or payments.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

And it's a pretty simple calculation of what price would you buy back your debt. But you know, so hopefully that makes clear, you know, how we're thinking about it as well.

[Matt Swope, Managing Director at Robert W. Baird & Co]

Nope. That's helpful. And maybe just one last one for me. You've been, you know, congratulations on getting to the three times earlier than you said you would. You mentioned it in your comments today.

[Matt Swope, Managing Director at Robert W. Baird & Co]

And it sounded like you might be comfortable going above three times leverage again. Can you talk about that? How much higher above three times would you be comfortable going? Would that be a new higher level? Would that be for a temporary either acquisition or share buyback opportunity?

[Matt Swope, Managing Director at Robert W. Baird & Co]

How do I know Paul is brand new or at least new in this seat. How do you guys think about where leverage could go from here?

[Paul Evans, EVP, CFO & Treasurer at Pitney Bowes]

Mean, look, philosophically, could we go higher? Sure, we could go higher. But to go higher and not have a use of that is not the best thing. We don't want to sit it on the balance sheet a bunch of negative ARBs that we'll deal with. But we clearly could go higher.

[Paul Evans, EVP, CFO & Treasurer at Pitney Bowes]

And your idea, your suggestion, would you go higher if there was an accretive acquisition in front of us? Of course, we would. But right now, we're sort of staying around the three times.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Yeah. And and Paul and I have had this discussion as well. I think every you know, everybody at this company believes we could carry significant not significantly. We could carry a ratio above three point o in terms of our leverage ratio. We think it could be higher, but we recognize that us believing it and the market believing it are two different things.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

And we have to be cognizant of the market and what the market wants. So while we believe we can run at a higher level, we need to get the market to understand and see what we see and get confident in the future of the company, which also includes getting to revenue growth. And I think we're confident we'll get there. And once the market sees that, I think the market will be much more receptive to us going above that three point o. And at that point, we'd be more serious considering maybe increasing.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

But at this point, we wanna be sensitive to the market and what opportunities the market presents.

[Matt Swope, Managing Director at Robert W. Baird & Co]

Great. Well, thank you both very much for your time and look forward to working with both of you.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Thank you, Matt. Thank you.

[Operator]

You. One moment for our next question. And our next question comes from the line of David Steinhardt of Quaternion. Your line is now open.

[David Steinhardt, MD & Portfolio Manager at Contrarian Capital Management]

Hi, Paul. Welcome to the company. Well, to the CFO role. I'm sure you've been instrumental as a Board member. In the early innings of strategic review, how do you see the Presort business and SendTech business working hand in hand with each other?

[David Steinhardt, MD & Portfolio Manager at Contrarian Capital Management]

Are they potentially distinct businesses, or do you still see benefits in them operating together under the Pitney Bowes roof?

[Paul Evans, EVP, CFO & Treasurer at Pitney Bowes]

Well, I think we'll we'll go take I'll take a shot at that as somebody who's just come off the board into management. And so holistically, I see an opportunity how they they can complement each other. And so I don't think that that value has been recognized in our stock price. And so there's definitely things to do there. So I come to the table with those ideas, and Kurt and I work with the team on how to optimize those businesses. Kurt?

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Yeah. And I guess I would just add to that, at least from my perspective, half of my background is an entrepreneur. As an entrepreneur, you're constantly looking for opportunity, and I think we've uncovered a lot of opportunity for synergies between the business, whether it's cross sales, you know, one example, GFS potentially could offer value to presort customers. That's not something we've historically done.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

But the other half of me is an investor, and I have seen a lot of companies think they're smarter than the market, think they that they can do things that aren't necessarily easy to execute. So, you know, I've I've been burned as an investor when companies don't know what they're doing and and and get ahead of those you know, get ahead of themselves or get over their skis. So I think we see a lot of opportunities to to further, you know, create value between the businesses. But at this point, there's nothing significant that we're that we're, you know, we're evaluating, but there's nothing significant on the horizon in terms of actually execution.

[David Steinhardt, MD & Portfolio Manager at Contrarian Capital Management]

Understood. And this is more of a housekeeping question. In terms of the repurchase authorization increasing from a 150,000,000 to 400,000,000, is there an expiration in mind for that authorization?

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Yeah. I don't think there's any expiration tied to it.

[David Steinhardt, MD & Portfolio Manager at Contrarian Capital Management]

Understood. Thank you.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Yeah. Thanks, David.

[Operator]

Thank you. One moment for our next question. And our next question comes from the line of Justin Dobbarella of Dammel Capital Management. Your line is now open.

[Justin Dopierala, Founder & President at DOMO Capital Management]

Thank you. Hey, Kurt and Paul, congratulations on your appointments to CEO and CFO. It's fantastic having the GameStop dream team back together.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Thank you, Justin.

[Justin Dopierala, Founder & President at DOMO Capital Management]

I have several questions. But first of I just wanna commend you on the very aggressive share repurchases that have been made as well as the new plan you've announced. I mean, this is exactly what shareholders have wanted and speaks to how important it is to have a CEO that's a large shareholder so that everyone is appropriately aligned.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Yeah. No. Thank you. Yep.

[Justin Dopierala, Founder & President at DOMO Capital Management]

Kurt yeah. Kurt Kurt, in your letter to shareholders, you mentioned expanding the coverage you receive from research analysts. I'm just wondering if you can provide some additional commentary around the importance of that.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Yeah, appreciate the question. As you can imagine, we already have several companies covering us and we really value the coverage, but we believe we're doing something really special at this company and right now we have three or four analysts covering us who can kinda spread the word, but the the the more we can grow that, the more people get to hear exactly what it is that we're doing, and it just facilitates I think of it as, you know, as as a sales funnel. In order to get an investor into the stock, first they have to get that first level of interest and want to put the time in to understand the company. Having as much coverage as we can, it's just more opportunities for people that are looking at us with when we cross the screen to reach out to somebody and and and get an initial understanding, decide if they want to delve further into it. And I think it's particularly important for us because we are a bit of an anomaly in the stock market or a bit of an orphan, which I think leads you know, I think it's great because it leads to undervaluation and we can buy back stock.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

So it's great in that perspective. But, you know, at some point, we do want full coverage of the company. And and, you know, and when I say we're an orphan, of course, you know, we don't have direct competitors to speak of, certainly not in the public market. So having that coverage just really helps attract people to at least spend the time to get to know the story and we're convinced once people understand the story that they'll be very interested in investing. So we think it's really important for us.

[Justin Dopierala, Founder & President at DOMO Capital Management]

It makes a lot of sense. I know you haven't provided 2026 guidance, but is it safe to say that free cash flow of over $300,000,000 a year going forward is sustainable?

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Yeah. I mean, we we don't wanna comment on that. We have you know, we we're very confident in the business, but, you know, we haven't we we we don't give guidance that far in advance. But I do appreciate your question. But no, it's not something we're answering at this time.

[Justin Dopierala, Founder & President at DOMO Capital Management]

Alright. And I know in the past you've talked about getting credit rating upgrades. Is that something you see is likely in the foreseeable future?

[Paul Evans, EVP, CFO & Treasurer at Pitney Bowes]

I mean, look, we're certainly gonna go meet with the agencies. Obviously, they're lagging on our performance, and we'll talk to them about that. And it's always helpful. It's not mandatory. We get to investment grade, but it's certainly helpful with some.

[Paul Evans, EVP, CFO & Treasurer at Pitney Bowes]

You know, and I bring a lot to bear on that back to my time at NRG in the nineties. So I've got a long track record with them. And and so, you know, I look forward to sitting down with them and telling them why they're lagging on our rating.

[Justin Dopierala, Founder & President at DOMO Capital Management]

Got it. You know, I know you guys have talked a lot about pre start and what happened during the quarter. I just wanna ask, can you confirm that there's no signs of structural weakness in the business at all there?

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Yeah. I I guess what I can say is we obviously don't share internal numbers. I would just say that I believe about 90% the reduction we see is tied directly to presort, which is almost entirely driven by competitive losses that we otherwise could have kept. So, you know, again, like I said, it's incredibly frustrating. This this was an unforced error, You know?

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

And were were it not for that, you know, I I we would not be changing our revenue guidance and then our EBIT guidance as well. You know, we didn't you know, we've been doing a great job driving efficiencies throughout the organization. You know, clearly, these would have been Clearly, might have been lower margins, but they still would have generated EBIT. It really was just an unforced error. Again, Presort as well as SendTech are incredibly strong businesses.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

The margins, the profitability, our ability to compete, and again, time, we really wanna introduce our business leaders to the broader investment community. We think we have some great leaders, Debbie being amongst them. She's going out, pounding the pavement, trying to win back customers and also gain new customers. And again, the one advantage we have for us is we're essentially the low cost provider in the industry. So if we're aggressive on sales, we should be able to continue to take share.

[Justin Dopierala, Founder & President at DOMO Capital Management]

Gotcha. And then this last one's little bit long. I don't know if you'll be able to answer, but I did see some kinda commentary in your letter as well. But I guess long story short is, you know, there's some local news today in Milwaukee with Harley Davidson doing a strategic partnership with KKR and PIMCO, which spent the shares rocketing higher. They're unlocking over a billion dollars of cash by transforming their financial services business into a capital light financing business.

[Justin Dopierala, Founder & President at DOMO Capital Management]

And what they're doing is selling the existing and future retail loans, but they're not giving up control. So the Harley Davidson financial services segment seems to have a lot of parallels with the Pitney Bowes Bank. I don't know if you've seen this yet or are able to answer, but I was just curious if you think you'd have a similar opportunity to unlock value in the same way for Pitney Bowes Bank.

[Paul Evans, EVP, CFO & Treasurer at Pitney Bowes]

What you've hit on is one of the reasons I wanted to come alongside Curt. I think it's an incredibly undervalued asset and the opportunity we have to bring value to our shareholders. Yeah, I mean, that's a template that you have out there and I'm sure folks will be calling us on that. So we're aware of it. We're studying it. And I would just say just stay tuned.

[Justin Dopierala, Founder & President at DOMO Capital Management]

Fantastic. Thank you.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Any more questions, Justin? Great.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

All right. Well, at this point, I don't see any more questions in the queue, we'll just wrap it up. And I'll I'll just end by saying, again, I you know, my first seventy days at Pitney Bowes have been fantastic. Some of the things I've learned is we have an amazing team here. I always knew just how great our businesses were.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

Again, think they're very underappreciated for the quality of the businesses, but it's becoming even more apparent just the quality of the team here. And as we continue to build the leadership team here at the company, and we continue to push hard on pushing through change, driving growth, and and really moving the the company forward. It's just incredibly encouraging just the commitment that our employees have to the company, which is, I think, pretty unique. Yeah. I was an ex consultant who worked at a lot of companies.

[Kurt Wolf, CEO & Board of Director at Pitney Bowes]

It's rare that you see a company that has employees that this dedicated to to the company. So, you know, I'm incredibly excited for us to be able to talk to the employees about here's our path forward because that it's a it's a group of individuals that once they know what it is that we're going out to do, I would put them up against anybody in terms of willingness to do the hard work for the good of the company. So I think all shareholders should feel very encouraged that they have such a great group of employees at the company that they are owners of. So thank you everyone.

[Operator]

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Participants

Executives

• Alex Brown, Director - Investor Relations
• Kurt Wolf, CEO & Board of Director

Analysts

• Kartik Mehta, Executive Managing Director & Director - Research at Northcoast Research Partners LLC
• Anthony Lebiedzinski, Senior Equity Analyst - Specialty Retail/Consumer at Sidoti & Company, LLC
• Matt Swope, Managing Director at Robert W. Baird & Co
• Paul Evans, EVP, CFO & Treasurer at Pitney Bowes
• David Steinhardt, MD & Portfolio Manager at Contrarian Capital Management
• Justin Dopierala, Founder & President at DOMO Capital Management