Pitney Bowes Reports Slightly Lower 2010 Revenue but Remains Positive on Future
Business Segment Results
The company reports its business segments in two groups based on the customers served: Small and Medium Business (SMB) Solutions and Enterprise Business Solutions. The SMB Solutions Group consists of the company’s global Mailing operations. The Enterprise Business Solutions Group includes the company’s global Production Mail, Software, Management Services, Mail Services and Marketing Services operations.
U.S. Mailing had a second consecutive quarter of year-over-year equipment sales growth among its mid-and larger-sized customers, benefiting from increased placements of the new Connect+ mailing system and improved retention rates among existing customers. Achieving sequential quarters of year-over-year equipment sales growth in the U.S. Mailing segment is a key milestone towards returning the other revenue components of the core business to growth. The segment’s overall revenue continued to be affected by lower rental and financing revenue as a result of lower equipment sales in prior periods. However, the decline in financing revenue continues to moderate and overall revenue declined at its lowest rate in eight quarters. EBIT margin improved by 190 basis points versus the prior year, as a result of ongoing productivity improvements related to the company’s Strategic Transformation program, lower credit losses, and ongoing benefits from previous lease extensions.
International Mailing revenue grew both on a reported basis and excluding the impact of foreign currency when compared with the prior year. The segment also had a second consecutive quarter of year-over-year equipment sales growth, helped by sales of the new Connect+ mailing system, which was introduced in the UK during the quarter. The Connect+ mailing system will be rolled-out to other parts of Europe and Canada throughout 2011. Revenue also had a modest benefit from the initial placements of recently approved meter systems in Italy and growth in meters in service in Canada, both of which are expected to generate additional revenues in the future. Additionally, there was growth in support services revenue during the quarter. As in the U.S., financing revenue declined as a result of lower equipment sales in prior periods. EBIT declined versus the prior year in part due to mix of revenue and higher pension costs versus the prior year.
Enterprise Business Solutions