Pitney Bowes Inc. (PBI) reported fourth-quarter 2011 earnings per share from continuing operations of 97 cents, above the Zacks Consensus Estimate of 60 cents and prior-year earnings of 66 cents. The earnings for the quarter include net tax benefit of 37 cents as a result of agreement between the company and the IRS on the tax treatment of a number of issues, as well as revised tax calculations.
For 2011, the company’s earnings per share from continuing operations were $2.70 compared with $2.23 in 2010.
Total Revenue
Total revenue was $1.3 billion, down 6.5% y/y as a result of a fall in SMB sales, some delayed large business deals and prevailing global economic uncertainty. Foreign currency effect was neutral to total revenue.
For 2011, total revenue was $5.3 billion, down 3% year over year.
The company reported a revenue increase in all its segments.
Segment Performance
Small and Medium Business (SMB) Solutions segmentsalesdeclined 6% year over year on a constant currency basis to $666 million, as a result of a fall in North America Mailing revenue by 9%, partially offset by a 1% increase in International Mailing revenue.
Enterprise Business Solutions segment sales decreased by 7% year over year to $675 million, led by 9% decline in revenue from Worldwide Production Mail, 8% in Management Services, 10% in Software and 2% in Mail Services. The negative effect was partially offset by 4% increase in Marketing Services revenue.
Income
The company incurred total SG&A expense of approximately $435.3 million in the quarter versus approximately $455.7 million in the fourth quarter of 2010. R&D expense was $40.9 million versus $38.9 million. Income from continuing operations of the company was $53.8 million compared with $77.3 million in the prior-year period.
Balance Sheet
Cash and cash equivalents were $856.2 million with long-term debt of $3.7 billion and shareholder’s deficit of $39 million.
Free cash flow in the quarter was $215.3 million versus $289.5 million in fourth quarter of 2010.
Outlook
The company expects its revenue growth trend to improve in 2012 with a number of initiatives designed to drive new growth opportunities. For 2012, revenue growth, excluding the impact of currency, is expected to be in the range of 2% growth to a decline of 2% as compared to 2011. The company expects earnings per share from continuing operations to be in the range of $2.05 to $2.25. Free cash flow for 2012 is expected to be in the range of $700 million to $800 million.
Pitney Bowes Inc. was incorporated in the state of Delaware on April 23, 1920, as Pitney Bowes Postage Meter Company. The company is the largest provider of mail processing equipment and integrated mail solutions in the world. It offers a full suite of equipment, supplies, software and services for end-to-end mailstream solutions, which enable its customers to optimize the flow of physical and electronic mail, documents and packages across their operations. A major competitor of Pitney Bowes is Siemens Inc. (SI).
We currently maintain our Neutral rating on Pitney Bowes Inc. with a Zacks #4 Rank (short-term Sell recommendation) over the next one-to-three months.
PITNEY BOWES IN (PBI): Free Stock Analysis Report
SIEMENS AG-ADR (SI): Free Stock Analysis Report
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