PITNEY BOWES INC /DE/ [PBI-PB] Filings

10-Q 1 pbi-20230630.htm 10-Q pbi-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission file number: 1-03579

PITNEY BOWES INC.

(Exact name of registrant as specified in its charter)

State of incorporation:

Delaware

I.R.S. Employer Identification No.

06-0495050

Address of Principal Executive Offices:

3001 Summer Street,

Stamford,

Connecticut

06926

Telephone Number:

(203)

356-5000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, $1 par value per share

PBI

New York Stock Exchange

6.7% Notes due 2043

PBI.PRB

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of July 28, 2023, 176,026,252 shares of common stock, par value $1 per share, of the registrant were outstanding.

PITNEY BOWES INC.

INDEX


		Page Number

Part I - Financial Information:

Item 1:	Financial Statements

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022	3

	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2023 and 2022	4

	Condensed Consolidated Balance Sheets at June 30, 2023 and December 31, 2022	5

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

Item 3:	Quantitative and Qualitative Disclosures about Market Risk	44

Item 4:	Controls and Procedures	44


Part II - Other Information:

Item 1:	Legal Proceedings	45

Item 1A:	Risk Factors	45

Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	45

Item 5:	Other Information	45

Item 6:	Exhibits	46


Signatures		47

PART I. FINANCIAL INFORMATION

Item 1: Financial Statements

PITNEY BOWES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in thousands, except per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue:
Business services	$	473,497	$	551,478	$	996,988	$	1,148,862
Support services	103,315		107,625		208,599		217,977
Financing	66,702		67,298		133,751		139,327
Equipment sales	79,451		89,986		162,061		179,282
Supplies	36,505		38,245		75,340		79,306
Rentals	17,011		16,863		34,280		33,683
Total revenue	776,481		871,495		1,611,019		1,798,437
Costs and expenses:
Cost of business services	410,638		477,544		856,955		980,759
Cost of support services	35,018		37,711		71,858		74,845
Financing interest expense	14,763		12,533		29,299		24,135
Cost of equipment sales	56,180		63,815		113,351		127,586
Cost of supplies	10,884		11,028		22,109		22,545
Cost of rentals	5,142		7,473		10,570		12,782
Selling, general and administrative	222,549		226,638		464,669		469,423
Research and development	10,274		11,254		20,767		22,588
Restructuring charges	22,443		4,224		26,042		8,408
Goodwill impairment	118,599		—		118,599		—
Interest expense, net	22,920		21,007		45,262		43,131
Other components of net pension and postretirement (income) cost	(1,751)		958		(3,461)		1,802
Other income, net	(228)		—		(3,064)		(11,901)
Total costs and expenses	927,431		874,185		1,772,956		1,776,103
(Loss) income before taxes	(150,950)		(2,690)		(161,937)		22,334
Benefit for income taxes	(9,415)		(7,026)		(12,665)		(2,823)


Net (loss) income	$	(141,535)	$	4,336	$	(149,272)	$	25,157



Basic net (loss) earnings per share	$	(0.81)	$	0.02	$	(0.85)	$	0.14



Diluted net (loss) earnings per share	$	(0.81)	$	0.02	$	(0.85)	$	0.14

See Notes to Condensed Consolidated Financial Statements

PITNEY BOWES INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net (loss) income	$	(141,535)	$	4,336	$	(149,272)	$	25,157
Other comprehensive income (loss), net of tax:
Foreign currency translation, net of tax of $403, $(2,907), $576 and $(3,074), respectively	9,193		(48,138)		20,080		(65,703)
Net unrealized gain (loss) on cash flow hedges, net of tax of $125, $407, $(562) and $2,176, respectively	375		1,229		(1,687)		6,562
Net unrealized (loss) gain on investment securities, net of tax of $(415), $(3,661), $612 and $(8,808), respectively	(1,322)		(11,043)		1,950		(26,565)

Amortization of pension and postretirement costs, net of tax of $1,223, $1,870, $2,365 and $4,331, respectively	3,739		8,229		7,228		15,965
Other comprehensive income (loss), net of tax	11,985		(49,723)		27,571		(69,741)
Comprehensive loss	$	(129,550)	$	(45,387)	$	(121,701)	$	(44,584)

See Notes to Condensed Consolidated Financial Statements

PITNEY BOWES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands, except per share amount)


	June 30, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	541,704	$	669,981
Short-term investments (includes $2,399 and $1,882, respectively, reported at fair value)	18,972		11,172
Accounts and other receivables (net of allowance of $4,217 and $5,344, respectively)	272,963		343,557
Short-term finance receivables (net of allowance of $11,522 and $11,395, respectively)	559,979		564,972
Inventories	92,783		83,720
Current income taxes	11,159		8,790
Other current assets and prepayments	117,132		115,824


Total current assets	1,614,692		1,798,016
Property, plant and equipment, net	401,905		420,672
Rental property and equipment, net	25,936		27,487
Long-term finance receivables (net of allowance of $10,595 and $10,555 respectively)	640,097		627,124
Goodwill	952,302		1,066,951
Intangible assets, net	70,062		77,944
Operating lease assets	284,783		296,129
Noncurrent income taxes	44,859		46,613

Other assets (includes $227,583 and $229,936, respectively, reported at fair value)	388,728		380,419
Total assets	$	4,423,364	$	4,741,355

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	812,474	$	907,083
Customer deposits at Pitney Bowes Bank	639,425		628,072
Current operating lease liabilities	53,984		52,576
Current portion of long-term debt	264,980		32,764
Advance billings	82,828		105,207
Current income taxes	2,929		2,101


Total current liabilities	1,856,620		1,727,803
Long-term debt	1,884,798		2,172,502
Deferred taxes on income	236,859		263,131
Tax uncertainties and other income tax liabilities	24,745		23,841
Noncurrent operating lease liabilities	254,051		265,696
Other noncurrent liabilities	241,778		227,729
Total liabilities	4,498,851		4,680,702

Commitments and contingencies (See Note 13)

Stockholders’ (deficit) equity:
Common stock, $1 par value (480,000 shares authorized; 323,338 shares issued)	323,338		323,338

Retained earnings	4,908,641		5,125,677
Accumulated other comprehensive loss	(807,993)		(835,564)
Treasury stock, at cost (147,557 and 149,307 shares, respectively)	(4,499,473)		(4,552,798)
Total stockholders’ (deficit) equity	(75,487)		60,653
Total liabilities and stockholders’ (deficit) equity	$	4,423,364	$	4,741,355

See Notes to Condensed Consolidated Financial Statements

PITNEY BOWES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in thousands)


	Six Months Ended June 30,
	2023		2022
Cash flows from operating activities:
Net (loss) income	$	(149,272)	$	25,157

Adjustments to reconcile net (loss) income to net cash from operating activities:
Depreciation and amortization	79,770		85,472
Allowance for credit losses	7,164		7,092
Stock-based compensation	6,075		9,866
Amortization of debt fees	4,413		2,985
(Gain) loss on debt redemption/refinancing	(3,064)		4,993
Restructuring charges	26,042		8,408
Restructuring payments	(12,883)		(8,255)
Pension contributions and retiree medical payments	(25,196)		(18,559)
Gain on sale of assets	—		(14,372)
Gain on sale of businesses	—		(2,522)
Goodwill impairment	118,599		—

Changes in operating assets and liabilities, net of acquisitions/divestitures:
Accounts and other receivables	67,506		50,340
Finance receivables	3,837		1,260
Inventories	(9,065)		(4,078)
Other current assets and prepayments	(1,561)		(33,833)
Accounts payable and accrued liabilities	(108,836)		(72,101)
Current and noncurrent income taxes	(27,903)		(14,069)
Advance billings	(22,948)		(285)
Other, net	7,564		18,195


Net cash from operating activities	(39,758)		45,694
Cash flows from investing activities:
Capital expenditures	(54,646)		(64,174)
Purchases of investment securities	(9,973)		(3,988)
Proceeds from sales/maturities of investment securities	12,088		18,601
Net investment in loan receivables	(14,835)		(22,537)
Proceeds from asset sales	—		50,766
Proceeds from sale of businesses	—		3,284

Settlement of derivative contracts	6,185		(19,470)
Other investing activities	485		10,000


Net cash from investing activities	(60,696)		(27,518)
Cash flows from financing activities:


Repayments of debt	(53,803)		(106,779)
Premiums and fees paid to redeem/refinance debt	(4,464)		(4,759)
Dividends paid to stockholders	(17,525)		(17,313)
Customer deposits at Pitney Bowes Bank	52,348		(15,912)
Common stock repurchases	—		(13,446)
Other financing activities	(9,109)		(8,295)
Net cash from financing activities	(32,553)		(166,504)
Effect of exchange rate changes on cash and cash equivalents	4,730		(13,455)
Change in cash and cash equivalents	(128,277)		(161,783)
Cash and cash equivalents at beginning of period	669,981		732,480


Cash and cash equivalents at end of period	$	541,704	$	570,697

See Notes to Condensed Consolidated Financial Statements

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

1. Description of Business and Basis of Presentation

Description of Business

Pitney Bowes Inc. (we, us, our, or the company) is a global shipping and mailing company that provides technology, logistics, and financial services to small and medium sized businesses, large enterprises, including more than 90 percent of the Fortune 500, retailers and government clients around the world. These clients rely on us to remove the complexity and increase the efficiency in their sending of mail and parcels. For additional information, visit www.pitneybowes.com.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In addition, the December 31, 2022 Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. In management's opinion, all adjustments, consisting only of normal recurring adjustments, considered necessary to fairly state our financial position, results of operations and cash flows for the periods presented have been included. Operating results for the periods presented are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2023. These statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report to Stockholders on Form 10-K for the year ended December 31, 2022 (2022 Annual Report).

Factors Affecting Comparability

Certain transactions and changes occurred during 2022 that impact the comparability of our 2023 financial results to the prior periods. These transactions and changes include:

•the sale of our Borderfree cross-border ecommerce solutions business (Borderfree) in July 2022. Accordingly, reported revenue and costs for the three and six months ended June 30, 2022 include revenue and costs for Borderfree. Net income of Borderfree for these periods was not significant.

•a change in the presentation of revenue for digital delivery services effective October 1, 2022, from a gross basis to a net basis. Accordingly, in 2023, revenue and costs of revenue for certain digital delivery services are reported on a net basis as business services revenue; whereas for the three and six months ended June 30, 2022, revenue and cost of revenue for these services were reported as business services revenue and cost of business services, respectively. The change primarily impacts our Global Ecommerce business.

Accounting Pronouncements Adopted in 2023

On January 1, 2023, we adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which requires disclosure of gross write-offs of finance receivables by year of origination. The adoption of this standard did not have a material impact on our financial statement disclosures.

Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The transition to new reference interest rates will require certain contracts to be modified and the ASU is intended to provide temporary optional expedients and exceptions to U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The accommodations provided by the ASU are effective through December 31, 2024, and may be applied at the beginning of any interim period within that time frame. We continue to assess the impact of this standard on our condensed consolidated financial statements.

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

2. Revenue

Disaggregated Revenue

The following tables disaggregate our revenue by source and timing of recognition:


	Three Months Ended June 30, 2023
	Global Ecommerce		Presort Services		SendTech Solutions		Revenue from products and services		Revenue from leasing transactions and financing		Total consolidated revenue
Major products/service lines
Business services	$	312,754	$	143,107	$	17,636	$	473,497	$	—	$	473,497
Support services	—		—		103,315		103,315		—		103,315
Financing	—		—		—		—		66,702		66,702
Equipment sales	—		—		19,060		19,060		60,391		79,451
Supplies	—		—		36,505		36,505		—		36,505
Rentals	—		—		—		—		17,011		17,011
Subtotal	312,754		143,107		176,516		632,377		$	144,104	$	776,481

Revenue from leasing transactions and financing	—		—		144,104		144,104


Total revenue	$	312,754	$	143,107	$	320,620	$	776,481

Timing of revenue recognition from products and services
Products/services transferred at a point in time	$	—	$	—	$	73,495	$	73,495
Products/services transferred over time	312,754		143,107		103,021		558,882
Total	$	312,754	$	143,107	$	176,516	$	632,377


	Three Months Ended June 30, 2022
	Global Ecommerce		Presort Services		SendTech Solutions		Revenue from products and services		Revenue from leasing transactions and financing		Total consolidated revenue
Major products/service lines
Business services	$	393,770	$	138,934	$	18,774	$	551,478	$	—	$	551,478
Support services	—		—		107,625		107,625		—		107,625
Financing	—		—		—		—		67,298		67,298
Equipment sales	—		—		21,400		21,400		68,586		89,986
Supplies	—		—		38,245		38,245		—		38,245
Rentals	—		—		—		—		16,863		16,863
Subtotal	393,770		138,934		186,044		718,748		$	152,747	$	871,495

Revenue from leasing transactions and financing	—		—		152,747		152,747


Total revenue	$	393,770	$	138,934	$	338,791	$	871,495

Timing of revenue recognition from products and services
Products/services transferred at a point in time	$	—	$	—	$	76,153	$	76,153
Products/services transferred over time	393,770		138,934		109,891		642,595
Total	$	393,770	$	138,934	$	186,044	$	718,748

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)



	Six Months Ended June 30, 2023
	Global Ecommerce		Presort Services		SendTech Solutions		Revenue from products and services		Revenue from leasing transactions and financing		Total consolidated revenue
Major products/service lines
Business services	$	661,145	$	302,009	$	33,834	$	996,988	$	—	$	996,988
Support services	—		—		208,599		208,599		—		208,599
Financing	—		—		—		—		133,751		133,751
Equipment sales	—		—		39,055		39,055		123,006		162,061
Supplies	—		—		75,340		75,340		—		75,340
Rentals	—		—		—		—		34,280		34,280
Subtotal	661,145		302,009		356,828		1,319,982		$	291,037	$	1,611,019


Revenue from leasing transactions and financing	—		—		291,037		291,037


Total revenue	$	661,145	$	302,009	$	647,865	$	1,611,019

Timing of revenue recognition from products and services
Products/services transferred at a point in time	$	—	$	—	$	150,559	$	150,559
Products/services transferred over time	661,145		302,009		206,269		1,169,423
Total	$	661,145	$	302,009	$	356,828	$	1,319,982



	Six Months Ended June 30, 2022
	Global Ecommerce		Presort Services		SendTech Solutions		Revenue from products and services		Revenue from leasing transactions and financing		Total consolidated revenue
Major products/service lines
Business services	$	812,297	$	299,478	$	37,087	$	1,148,862	$	—	$	1,148,862
Support services	—		—		217,977		217,977		—		217,977
Financing	—		—		—		—		139,327		139,327
Equipment sales	—		—		42,699		42,699		136,583		179,282
Supplies	—		—		79,306		79,306		—		79,306
Rentals	—		—		—		—		33,683		33,683
Subtotal	812,297		299,478		377,069		1,488,844		$	309,593	$	1,798,437


Revenue from leasing transactions and financing	—		—		309,593		309,593


Total revenue	$	812,297	$	299,478	$	686,662	$	1,798,437

Timing of revenue recognition from products and services
Products/services transferred at a point in time	$	—	$	—	$	154,526	$	154,526
Products/services transferred over time	812,297		299,478		222,543		1,334,318
Total	$	812,297	$	299,478	$	377,069	$	1,488,844

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

Our performance obligations for revenue from products and services are as follows:

Business services includes fulfillment, delivery and return services, cross-border solutions, mail processing services and shipping subscription solutions. Revenue for fulfillment, delivery and return services and cross-border solutions and mail processing services is recognized over time using an output method based on the number of parcels or mail pieces either processed or delivered, depending on the service type, since that measure best depicts the value of goods and services transferred to the client over the contract period. Contract terms for these services initially range from one to five years and contain annual renewal options. Revenue for shipping subscription solutions is recognized ratably over the contract period as the client obtains equal benefit from these services through the period.

Support services includes providing maintenance, professional and subscription services for our equipment and digital mailing and shipping technology solutions. Contract terms range from one to five years, depending on the term of the lease contract for the related equipment. Revenue for maintenance and subscription services is recognized ratably over the contract period and revenue for professional services is recognized when services are provided.

Equipment sales generally includes the sale of mailing and shipping equipment, excluding sales-type leases. We recognize revenue upon delivery for self-install equipment and upon acceptance or installation for other equipment. We provide a warranty that the equipment is free of defects and meets stated specifications. The warranty is not considered a separate performance obligation.

Supplies includes revenue from supplies for our mailing equipment and is recognized upon delivery.

Revenue from leasing transactions and financing includes revenue from sales-type and operating leases, finance income, late fees and investment income, gains and losses at the Pitney Bowes Bank.

Advance Billings from Contracts with Customers


	Balance sheet location	June 30, 2023		December 31, 2022		Increase/ (decrease)
Advance billings, current	Advance billings	$	74,743	$	97,904	$	(23,161)
Advance billings, noncurrent	Other noncurrent liabilities	$	828	$	906	$	(78)

Advance billings are recorded when cash payments are due in advance of our performance. Revenue is recognized ratably over the contract term. Items in advance billings primarily relate to support services on mailing equipment. Revenue recognized during the period includes $80 million of advance billings at the beginning of the period. Advance billings, current, at June 30, 2023 and December 31, 2022 also includes $8 million and $7 million, respectively, from leasing transactions.

Future Performance Obligations

Future performance obligations include revenue streams bundled with our leasing contracts, primarily maintenance and subscription services. The transaction prices allocated to future performance obligations will be recognized as follows:


	Remainder of 2023		2024		2025-2028		Total
SendTech Solutions	$	131,067	$	227,613	$	341,507	$	700,187

The amounts above do not include revenue for performance obligations under contracts with terms less than 12 months or revenue for performance obligations where revenue is recognized based on the amount billable to the customer.

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

3. Segment Information

Our reportable segments are Global Ecommerce, Presort Services and SendTech Solutions. The principal products and services of each reportable segment are as follows:

Global Ecommerce: Includes the revenue and related expenses from business to consumer logistics services for domestic and cross-border delivery, returns and fulfillment.

Presort Services: Includes revenue and related expenses from sortation services that enable clients to qualify for USPS workshare discounts in First Class Mail, Marketing Mail, Marketing Mail Flats and Bound Printed Matter.

SendTech Solutions: Includes the revenue and related expenses from physical and digital mailing and shipping technology solutions, financing, services, supplies and other applications to help clients simplify and save on the sending, tracking and receiving of letters, parcels and flats.

Management measures segment profitability and performance using adjusted segment earnings before interest and taxes (EBIT). Adjusted segment EBIT is calculated by deducting from segment revenue the related costs and expenses attributable to the segment. Adjusted segment EBIT excludes interest, taxes, unallocated corporate expenses, restructuring charges, goodwill impairment, and other items not allocated to business segments. Costs related to shared assets are allocated to the relevant segments. Management believes that adjusted segment EBIT provides investors a useful measure of operating performance and underlying trends of the business. Adjusted segment EBIT may not be indicative of our overall consolidated performance and therefore, should be read in conjunction with our consolidated results of operations. The following tables provide information about our reportable segments and a reconciliation of adjusted segment EBIT to net (loss) income.


	Revenue
	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Global Ecommerce	$	312,754	$	393,770	$	661,145	$	812,297
Presort Services	143,107		138,934		302,009		299,478
SendTech Solutions	320,620		338,791		647,865		686,662
Total revenue	$	776,481	$	871,495	$	1,611,019	$	1,798,437


	Adjusted Segment EBIT
	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Global Ecommerce	$	(38,115)	$	(28,825)	$	(72,321)	$	(42,521)
Presort Services	20,429		12,851		47,334		32,483
SendTech Solutions	97,480		95,565		194,151		200,140
Total adjusted segment EBIT	79,794		79,591		169,164		190,102
Reconciliation of adjusted segment EBIT to net (loss) income:
Unallocated corporate expenses	(47,709)		(40,761)		(104,058)		(98,595)
Restructuring charges	(22,443)		(4,224)		(26,042)		(8,408)
Interest expense, net	(37,683)		(33,540)		(74,561)		(67,266)
Proxy solicitation fees	(4,538)		—		(10,905)		—
Goodwill impairment	(118,599)		—		(118,599)		—
Gain (loss) on debt redemption/refinancing	228		—		3,064		(4,993)
Gain on sale of assets	—		—		—		14,372
Loss on sale of businesses, including transaction costs	—		(3,756)		—		(2,878)

Benefit for income taxes	9,415		7,026		12,665		2,823


Net (loss) income	$	(141,535)	$	4,336	$	(149,272)	$	25,157

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

4. Earnings per Share

The calculation of basic and diluted earnings per share (EPS) is presented below.


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator:




Net (loss) income	$	(141,535)	$	4,336	$	(149,272)	$	25,157
Denominator:
Weighted-average shares used in basic EPS	175,695		173,490		175,094		173,859
Dilutive effect of common stock equivalents (1)	—		3,479		—		3,814
Weighted-average shares used in diluted EPS	175,695		176,969		175,094		177,673



Basic net (loss) earnings per share	$	(0.81)	$	0.02	$	(0.85)	$	0.14



Diluted net (loss) earnings per share	$	(0.81)	$	0.02	$	(0.85)	$	0.14

Common stock equivalents excluded from calculation of diluted earnings per share because their impact would be anti-dilutive:	11,426		9,602		9,833		9,602

(1) Due to the net loss for the three and six months ended June 30, 2023, an additional 3.7 million and 4.1 million, respectively, of common stock equivalents were also excluded from the calculation of diluted earnings per share.

5. Inventories

Inventories are stated at the lower of cost, determined on the first-in, first-out (FIFO) basis, or net realizable value. Inventories consisted of the following:


	June 30, 2023		December 31, 2022
Raw materials	$	28,137	$	25,539
Supplies and service parts	33,046		27,573
Finished products	31,600		30,608


Total inventory, net	$	92,783	$	83,720

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

6. Finance Assets and Lessor Operating Leases

Finance Assets

Finance receivables are comprised of sales-type lease receivables, secured loans and unsecured loans. Sales-type leases and secured loans are from financing options for the purchase or lease of Pitney Bowes equipment or other manufacturers' equipment and are generally due in installments over periods ranging from three to five years. Unsecured loans comprise revolving credit lines offered to our clients for postage, supplies and working capital purposes. These revolving credit lines are generally due monthly; however, clients may rollover outstanding balances. Interest is recognized on finance receivables using the effective interest method. Annual fees are recognized ratably over the period covered and client acquisition costs are expensed as incurred. All finance receivables are in our SendTech Solutions segment and we segregate finance receivables into a North America portfolio and an International portfolio.

Finance receivables consisted of the following:


	June 30, 2023						December 31, 2022
	North America		International		Total		North America		International		Total
Sales-type lease receivables
Gross finance receivables	$	986,317	$	143,792	$	1,130,109	$	967,298	$	158,167	$	1,125,465
Unguaranteed residual values	38,837		8,346		47,183		38,832		8,798		47,630
Unearned income	(246,871)		(45,218)		(292,089)		(239,238)		(48,334)		(287,572)
Allowance for credit losses	(14,255)		(2,434)		(16,689)		(14,131)		(2,893)		(17,024)
Net investment in sales-type lease receivables	764,028		104,486		868,514		752,761		115,738		868,499
Loan receivables
Loan receivables	317,513		19,477		336,990		311,887		16,636		328,523
Allowance for credit losses	(5,264)		(164)		(5,428)		(4,787)		(139)		(4,926)
Net investment in loan receivables	312,249		19,313		331,562		307,100		16,497		323,597
Net investment in finance receivables	$	1,076,277	$	123,799	$	1,200,076	$	1,059,861	$	132,235	$	1,192,096

Maturities of gross finance receivables at June 30, 2023 were as follows:


	Sales-type Lease Receivables						Loan Receivables
	North America		International		Total		North America		International		Total
Remainder 2023	$	197,140	$	43,305	$	240,445	$	224,057	$	19,477	$	243,534
2024

PITNEY BOWES INC /DE/ [PBI-PB] Filings

PITNEY BOWES INC /DE/ [PBI] Filings